India Daily: February 5, 2021

INDIA DAILY
February 5, 2021 India 4-Feb 1-day 1-mo 3-mo

Sensex 50,614 0.7 5.1 24.6
Nifty 14,896 0.7 5.4 25.1
Contents Global/Regional indices

Dow Jones 30,881 0.5 2.2 10.9
Daily Alerts Nasdaq Composite 13,671 0.4 7.7 17.9
Results FTSE 6,493 (0.2) (1.2) 10.4

Nikkei 28,342 (1.1) 4.0 19.6
Bharti Airtel: Sustained business momentum
Hang Seng 29,114 (0.7) 6.0 17.0
State Bank of India: Delayed but not denied
KOSPI 3,088 (1.3) 4.9 31.0
NTPC: Clean quarter Value traded – India
Godrej Properties: Changing tracks Cash (NSE+BSE) 968 840 750

15,23
Whirlpool: 3QFY21 fares weaker than expected Derivatives (NSE) 42,118 9,830
3
Tata Power: Progressing on the green path Deri. open interest 5,716 3,965 3,705
Apollo Tyres: RM headwinds ahead

IIFL Wealth: Recurring business performance on track Forex/money market
Change, basis points

SIS: International business drives outperformance
4-Feb 1-day 1-mo 3-mo
Bajaj Consumer Care: A good comeback Rs/US$ 73.0 0 (6) (178)
Results, Change in Reco 10yr govt bond, % 6.4 1 30 23
Net investment (US$ mn)

Zee Entertainment Enterprises: No reprieve from concerns
3-Feb MTD CYTD
Thermax: Sharp recovery in business, measured outlook FIIs 368 414 23,373
MFs 270 1,382 (7,093)
Top movers
Change, %
Best performers 4-Feb 1-day 1-mo 3-mo
TTMT in Equity 326 (1.5) 70.5 140.0
TTMT/A in Equity 131 (1.0) 68.4 137.9
VEDL in Equity 176 1.4 3.6 91.7
DLFU in Equity 305 5.1 24.7 87.2
BOB in Equity 82 6.4 24.7 82.1
Worst performers
DRRD in Equity 4,668 0.4 (11.5) (5.4)
BIOS in Equity 410 2.2 (12.2) (0.1)
NEST in Equity 17,074 (0.5) (7.1) 0.5
RIL in Equity 1,924 (0.3) (3.3) 0.6
DABUR in Equity 526 0.3 (3.2) 1.5
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.
BUY
Bharti Airtel (BHARTI)
https://ultraviewer.et/en/own Telecommunication Services FEBRUARY 05, 2021
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RESULT
Sector view: Attractive
Sustained business momentum. Bharti’s 3QFY21 performance was underscored by CMP (`): 601
(1) industry-leading subscriber additions, enhanced operating metrics and network Fair Value (`): 710
expansion in India wireless business, (2) continued healthy growth and improvement in
BSE-30: 50,614
margins for Africa and (3) further rise in contribution from enterprise segment. We
continue to like Bharti as a definite play on industry repair as well as consolidation, the
visibility on either may improve in 12-18 months. BUY stays with FV of Rs710.
Bharti Airtel
Stock data Forecasts/valuations 2021E 2022E 2023E
CMP(Rs)/FV(Rs)/Rating 601/710/BUY EPS (Rs) (0.2) 10.2 21.4
52-week range (Rs) (high-low) 623-362 EPS growth (%) 96.4 4,279.7 110.1
(2,470.
Mcap (bn) (Rs/US$) 3,277/45 P/E (X) 4) 59.1 28.1
ADTV-3M (mn) (Rs/US$) 9,709/133 P/B (X) 5.7 5.5 4.9
Shareholding pattern (%) EV/EBITDA (X) 9.3 7.6 6.1
Promoters 56.2 RoE (%) (0.2) 9.5 18.4
FPIs/MFs/BFIs 19.1/14.4/5.5 Div. yield (%) 1.0 1.0 1.0
Price performance (%) 1M 3M 12M Sales (Rs bn) 1,021 1,141 1,302
Absolute 16.1 32.6 15.7 EBITDA (Rs bn) 471 573 687
Rel. to BSE-30 10.6 6.4 (6.7) Net profits (Rs bn) (1) 55 117
Staying strong on operational front in 3QFY21; reported loss included several one-offs
India wireless business was marked by a strong net subscriber addition of 14.2 mn, well above
our expectations and ahead of Jio’s reported number of 5.2 mn, higher ARPUs at Rs166, 7/11%
qoq increase in voice/data volumes and further expansion of network. Africa business reported
a sustained 22% yoy growth in revenues and highest-ever EBITDA margins at 46.9%. Enterprise
business reported 4.8% sequential increase in EBITDA driven by modest revenue growth and
healthy expansion in margins. Overall revenues of Rs265.2 bn (+5.8% qoq, +24.2% yoy) were
3.6% above our estimate. EBITDA at Rs120.5 bn (+8.9% qoq, +38% yoy), was 6% ahead of
our estimate. PBT remained positive at Rs6.3 bn despite higher interest expense at Rs39.7 bn,
including interest on the pending AGR dues. The company accounted an exceptional loss of
Rs84.3 bn (post-tax) including (1) Rs31.6 bn in lieu of re-assessment of contractual/regulatory
levies, (2) Rs14.2 bn provision pertaining to re-assessment of useful life of assets such as copper
network and impairment of intangible assets and (3) Rs38.9 bn on assessment of deferred tax
assets. Recurring net loss stood at Rs5.3 bn. Profits from discontinued operations included a
gain of Rs94.5 bn on deemed disposal due to loss of control of BHIN post-merger.
Superior performance compared to Jio post last round of tariff hikes

Bharti’s performance post the tariff hikes in December 2019 has been fairly strong on several
parameters as compared to Jio (and VIL). Bharti’s India wireless EBITDA has jumped 62% from
pre-tariff hike base of 2QFY20, a tad ahead of Jio’s overall reported increase of 58% (including
contribution from fixed broadband business) in the same period led by (1) superior gains in
ARPU, which is now at 10% premium to Jio’s overall number from being at same levels pre-
tariff hike, (2) higher incremental margins with costs increasing at a pace much lesser than Jio
Tarun Lakhotia
and (3) stronger 29% growth in voice traffic and 75% growth in data traffic as compared to
Jio’s 20% and 32% respectively. Jio’s net subscriber additions have indeed been higher in the
Aniket Sethi
given period; however, Bharti seems to be gaining ground in the recent quarters.
Fine tune estimates; retain BUY with unchanged FV of Rs710

We broadly retain consolidated EBITDA estimates for FY2022-23, while incorporating (1) BHIN
de-consolidation post-merger, (2) higher India wireless subscribers with modestly lower ARPUs,
(3) higher contribution from Africa business and (4) other minor changes; we reduced FY2021 kspcg.research@kotak.com
EBITDA by 3.5% to factor delay in tariff hikes to 1HFY22. SoTP-valuation remains at Rs710. 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.
Bharti Airtel Telecommunication Services
Segment-wise performance
 India wireless business. India wireless – revenues came in at Rs147.8 bn, +6.8% qoq,
+32% yoy, 0.5% above our estimate. Implied ARPU was at Rs164/sub/month (+1.4%
qoq); reported APUR was at Rs166/month. India wireless EBITDA of Rs64.6 bn (+10%
qoq) was marginally (0.8%) below our estimate. Margins stood at 43.7% (+111 bps qoq)
– the highest print in the past many quarters; incremental EBITDA margin was lower at
60% (versus 70% in the previous quarter).
India wireless operating metrics – (1) subscriber base up 14.2 mn qoq to 307.9 mn, (2)
post-paid subscriber base was up 0.7 mn qoq to EOP count of 15.3 mn (similar run-rate
as previous quarter), (3) data subscriber base grew 12.6 mn qoq to 174.7 mn; 57% of
subs are now using data, (4) LTE subscriber base grew to 165.6 mn (+12.9 mn qoq),
forming 94.8% of total data subs, (5) voice traffic saw a strong increase of 7.4% qoq to
925 bn minutes as MOU touched a new high of 1,027 min/sub/month, (6) total data
volumes stood at 8.5 bn GB, +11% qoq, +52% yoy, (7) data usage per sub per month
came in at nearly 16.7 GB, materially higher than both Jio and VIL and (8) churn inched
up to 1.9% from 1.7% in 2QFY21, still lower than the historical range of 2.2-2.6%.
 Africa wireless business. Revenues were up 6.7% qoq and 22% yoy to Rs76.4 bn,
6.3% above estimate. EBITDA stood at Rs35.85 bn, +11% qoq, +27% yoy and 9%
above our estimate. The company added 2.5 mn subs taking EoP count to 118.9 mn
along with continued improvement in ARPU. Network operating metrics for the business
continue to trend well.
 Homes segment. Weak revenue print (down 3.4% qoq) leading to a sharper 8% qoq
decline in EBITDA print. The segment delivered strongest net adds in many quarters of
215,000 mn, although ARPU moderated further to Rs705/month as Bharti had
introduced lower entry-level plans to compete with Jio in the previous quarter.
 Enterprise segment. Revenue was in line with expectation, up 1.1% qoq. EBITDA
growth was stronger at 4.8% qoq with margins expanding to 38.7%.
Other updates
 EOP net debt was at Rs1.47 tn including lease obligations and Rs1.15 tn excluding lease
obligations. Net debt increased by around Rs45 bn qoq primarily attributed to (1) ~Rs29
bn incurred on acquisition of ~5% stake in Indus and (2) ~Rs20 bn of reduction in cash
balance due to de-consolidation of BHIN post its merger with Indus.
 Overall capex for the quarter was at Rs68.6 bn, modestly higher than Rs65.8 bn in
2QFY21. India wireless capex was at Rs42 bn.
 India wireless network metrics – total sites up 7,414 qoq to 208,606; 99% of these sites
now have an MBB BTS. Total MBB BTS count stood at 568,345, +31,139 qoq. BTS per
MBB site increased to 2.74X.
KOTAK INSTITUTIONAL EQUITIES RESEARCH 3

Telecommunication Services Bharti Airtel
Key takeaways from the earnings call
 Home broadband expansion. There has been a surge in latent demand of fixed
broadband post-Covid. The company is in the process of upgrading legacy copper assets
to fibre in a year’s time and has also partnered with local cable operators in 120+ cities
for last mile connectivity. It has created 1.4 mn home passes in the quarter.
 Requirement for additional spectrum. Bharti is comfortable with its spectrum

footprint for now and is contemplating to renew spectrum in the mid-bands coming up
for renewals. The company may like to strengthen its sub-GHz spectrum portfolio across
the country, which provides better indoor experience. They may selectively consider
capacity spectrum (2300MHz).
 5G deployment. Bharti believes the 5G ecosystem is still in the nascent stage. On the
network side, its transport layer and core network are future-proof along with a large
part of its radio networks. The management does not expect any material uptick in capex
due to 5G implementation.
 No immediate need for asset monetization or equity raise. Bharti has sufficient cash
balance on books with no liquidity issues. The company may look at asset monetization
opportunistically but is under no pressure to reduce net debt.
 Strong traction on the Enterprise side. With the changing work landscape, there is
increase in demand for higher capacity and bandwidth from the large enterprise
customers and the company has managed to gain market share in this segment. It
continues to invest in adjacencies and has witnessed good growth in enterprise solutions
such as Airtel IQ, a cloud-based omni-channel communications platform. Partnerships will
also form a key driver of growth going forward.
 Focus on digital services. Bharti is focused on driving efficiencies for existing business
and developing new streams of revenues through its digital services offerings. It has
entered into partnerships to offer content as well as technological solutions in several
areas. Customer understanding, strong distribution network, smooth payments system
and location-based analytics will help in driving growth in the medium term.
 Other key points: (1) Bharti believes that telecom companies should not get involved in
handset distribution and subsidization game. (2) It continues to seek partnerships to
improve its offerings on both B2C and B2B side of the business. (3) Bharti is engaging
into micro-marketing measures for improving its subscriber market share.
4 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Exhibit 1: Bharti - 3QFY21 results Ind-AS, March fiscal year-ends (Rs mn)
Change (%)
3QFY21 3QFY21E 3QFY20 2QFY21 KIE est. yoy qoq 9MFY21 9MFY20 (% chg.) FY2021E FY2020 (% chg.)
Consolidated results
Revenues 265,178 255,977 213,436 250,604 3.6 24.2 5.8 748,685 616,578 21.4 1,013,807 875,390 15.8
Operating costs (144,648) (142,353) (126,272) (139,907) 1.6 (418,287) (370,219) (559,509) (509,295)
EBITDA 120,530 113,624 87,164 110,697 6.1 38.3 8.9 330,398 246,359 34.1 454,298 366,095 24.1
EBITDA margin (%) 45.5 44.4 40.8 44.2 44.1 40.0 44.8 41.8
Depreciation and Amortization (75,031) (72,054) (68,178) (72,862) 4.1 (219,025) (202,329) (296,866) (276,896)
EBIT 45,499 41,570 18,986 37,835 9.5 139.6 20.3 111,373 44,030 152.9 157,432 89,199 76.5
EBIT margin (%) 17.2 16.2 8.9 15.1 14.9 7.1 15.5 10.2
Net finance (cost)/income (39,227) (36,550) (29,826) (36,883) 7.3 (106,715) (92,102) (144,958) (121,930)
PBT 6,272 5,020 (10,840) 952 24.9 4,658 (48,072) NM 12,473 (32,731) NM
Tax provision (4,391) (1,506) 11,637 (4,135) (9,116) (9,355) 7,842
PAT before minority interest 1,881 3,514 797 (3,183) (4,458) 3,118 (24,889)
Minority interest (4,965) (5,000) (5,704) (7,293) (19,677) (24,000) (18,025)
Equity in earnings of affiliates (2,206) 4,300 (2,015) (2,926) (6,202) (4,000) 6,524
Extraordinary items (84,275) — (10,500) (493) (238,657) (238,657) (285,442)
Reported net income (89,565) 2,814 (17,422) (13,895) (268,994) (263,539) (321,832)
Adjusted net income (5,290) 2,814 (6,922) (13,402) (30,337) (24,882) (36,390)
Reported EPS (Rs) (16.42) 0.55 (3.19) (2.55)
Segmental performance
Wireless - India
Revenues 147,789 146,985 111,653 138,319 0.5 32.4 6.8 414,879 330,134 25.7 558,638 459,663 21.5
EBITDA 64,599 65,129 40,109 58,919 (0.8) 61.1 9.6 175,794 118,840 47.9 242,011 169,560 42.7
OPM (%) 43.7 44.3 35.9 42.6 42.4 36.0 43.3 36.9
EoP Subscribers (mn) 308 303 283 294 1.6 8.8 4.8 308 283 318 284 12.1
ARPU (Rs/sub/month) 164 164 132 161 (0.2) 23.9 1.4 160 131 22.4 155 135 14.4
MOU (min/sub/month) 1,027 1,000 898 1,005 2.7 14.4 2.2 1,009 878 14.8 992 893 11.1
Total minutes (bn) 924.9 895.3 758.9 860.9 3.3 21.9 7.4 2,606.0 2,212.6 17.8 3,580.8 3,034.5 18.0
Data consumption (GB/sub/month) 16.8 16.6 13.9 16.4 1.2 20.4 2.2
Data consumption (bn GBs) 8.5 8.3 5.5 7.6 2.5 52.4 10.7
Wireless - South Asia
Revenues 1,061 1,150 1,155 1,116 (7.7) (8.1) (5.0) 3,265 3,349 (2.5) 4,598 4,552 1.0
EBITDA 39 105 106 116 (62.9) (63.2) (66.4) 253 283 (10.6) 524 429 22.2
OPM (%) 3.7 9.1 9.2 10.4 7.7 8.4 11.4 9.4
Bharti Africa
Revenues 76,442 71,893 62,692 71,660 6.3 21.9 6.7 212,615 177,282 19.9 292,667 242,171 20.9
EBITDA 35,852 32,783 28,331 32,453 9.4 26.5 10.5 96,730 78,619 23.0 134,006 107,259 24.9
EBITDA margin (%) 46.9 45.6 45.2 45.3 45.5 44.3 45.8 44.3
Telemedia services
Revenues 5,674 5,903 5,546 5,873 (3.9) 2.3 (3.4) 17,333 16,726 3.6 23,200 22,451 3.3
EBITDA 3,151 3,424 3,302 3,424 (8.0) (4.6) (8.0) 10,089 8,297 21.6 13,456 11,309 19.0
OPM (%) 55.5 58.0 59.5 58.3 58.2 49.6 58.0 50.4
Enterprise services
Revenues 36,214 36,000 33,176 35,821 0.6 9.2 1.1 107,054 98,569 8.6 143,976 132,331 8.8
EBITDA 14,018 13,320 12,125 13,377 5.2 15.6 4.8 40,106 29,176 37.5 54,279 42,643 27.3
OPM (%) 38.7 37.0 36.5 37.3 37.5 29.6 37.7 32.2
Others (incl DTH)
Revenues 7,892 7,662 7,922 7,548 3.0 (0.4) 4.6 22,889 23,204 (1.4) 30,774 29,239 5.3
EBITDA 5,291 5,363 5,441 5,351 (1.3) (2.8) (1.1) 15,683 16,311 (3.8) 21,234 19,959 6.4
OPM (%) 67.0 70.0 68.7 70.9 68.5 70.3 69.0 68.3
Source: Company, Kotak Institutional Equities estimates

Exhibit 2: Quarterly India wireless KPIs for Bharti and Jio, March fiscal year-ends
Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20

EoP subscribers (mn)
Bharti 281 279 283 284 280 294 308
R-Jio 331 355 370 388 398 406 411
Revenues (Rs bn)
Bharti 109 110 112 130 129 138 148
R-Jio 124 131 140 148 166 175 185
ARPU (Rs/sub/month)
Bharti 129 128 135 154 157 162 166
R-Jio 129 128 128 131 140 145 151
EBITDA (Rs bn)
Bharti 39 40 40 51 52 59 65
R-Jio 47 51 56 62 70 75 81
Costs (Rs bn)
Bharti 70 70 72 79 77 79 83
R-Jio 77 80 84 87 96 100 104
EBITDA margin (%)
Bharti 35.7 36.3 35.9 39.2 40.6 42.6 43.7
R-Jio 37.7 39.1 39.9 41.6 42.3 42.9 43.9
Voice traffic (bn min)
Bharti 737 717 759 822 820 861 925
R-Jio 786 813 826 876 891 936 975
Data traffic (bn MB)
Bharti 4,192 4,829 5,547 6,453 7,240 7,640 8,454
R-Jio 11,162 12,308 12,370 13,148 14,541 14,848 16,241
Data subs (mn)
Bharti 120 124 138 149 149 162 175
R-Jio 331 355 370 388 398 406 411
Data usage per data sub (MB/month)
Bharti 11,882 13,177 14,078 14,988 16,215 16,363 16,727
R-Jio 11,663 11,953 11,372 11,572 12,336 12,313 13,262
Blended churn (% per month)
Bharti 2.6 2.1 2.6 2.6 2.2 1.7 1.9
R-Jio 1.0 0.7 2.1 0.6 0.4 1.7 1.6
Notes:
(a) Jio's numbers include fixed broadband business.
Source: Companies, Kotak Institutional Equities estimates

Exhibit 3: Bharti - condensed consolidated balance sheet, March fiscal year-ends, Rs bn
Dec-19 Mar-20 Jun-20 Sep-20 Dec-20

Assets
Net fixed assets 1,153 1,177 1,171 1,185 1,165
Intangible assets 1,159 1,159 1,142 1,126 1,104
Non-current Investments 95 97 97 98 248
Deferred tax assets 258 291 259 260 222
Other non-current assets 110 118 111 116 95
Total long-term assets 2,776 2,841 2,781 2,783 2,836
Current assets
Short term investments 193 138 140 92 6
Inventories
Receivables 54 46 56 50 46
Cash and equivalents 126 159 157 135 132
Other financial assets 202 213 183 189 192
Other current assets 164 210 204 155 133
Total current assets 738 766 740 620 509
Current assets ex-cash and inv 420 470 443 393 371
Current liabilities
Payables 295 250 272 275 301
Other current liabilities 748 737 804 520 499
ST provisions
Total current liabilities 1,042 987 1,076 795 800
Net current assets (304) (221) (336) (175) (291)
Net current assets ex-cash and inv (622) (517) (634) (402) (430)
Assets held for sale — — — — —
Total Assets 2,472 2,621 2,445 2,608 2,544
Liabilities and shareholders' equity
Share capital 26 26 26 26 26
Reserves and surplus 663 746 584 568 571
Non-controlling interest 223 250 249 250 181
Total Equity 911 1,021 858 843 778
Borrowings 1,465 1,482 1,456 1,597 1,582
DTL 8 17 17 17 16
Other LT liabilities and provisions 88 100 114 152 168
Total liabilities and equity 2,472 2,621 2,445 2,608 2,544
Reported net debt 875 914 893 1,105 1,150

Finance lease obligation 325 331 329 326 325
Effective net debt 1,200 1,245 1,221 1,431 1,474
Source: Company, Kotak Institutional Equities
Exhibit 4: Key India data business performance indicators shared by Bharti
3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 2QFY21 3QFY21

Data (2G+3G+4G) KPIs
Subs ('000s) 107,511 115,147 120,047 124,242 138,443 148,578 149,089 162,185 174,742
As % of total subs 37.8 40.7 43.4 44.5 48.9 52.4 53.3 55.2 56.7
Total volumes (mn MB) 3,216,897 3,705,034 4,191,715 4,828,577 5,547,223 6,452,825 7,239,836 7,639,997 8,453,706
qoq growth (%) 20.9 15.2 13.1 15.2 14.9 16.3 12.2 5.5 10.7
Usage per customer (MB) 10,528 11,048 11,930 13,116 13,928 14,972 16,655 16,409 16,766
4G KPIs
Active 4G subs ('000s) 77,068 86,808 95,173 103,111 123,793 136,309 138,294 152,685 165,629
As % of total data subs 71.7 75.4 79.3 83.0 89.4 91.7 92.8 94.1 94.8

Exhibit 5: Key operating metrics - India mobile and DTH
Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20

India mobile
Customer Base ('000s) 276,817 279,430 283,036 283,667 279,869 293,742 307,948
Net Additions ('000s) (5,823) 2,613 3,606 631 (3,798) 13,873 14,206
Pre-Paid (as % of total base) 94.90 94.90 94.90 94.80 94.80 94.80 94.80
Implied post-paid subs ('000) 14,118 14,251 14,435 14,751 14,553 15,275 16,013
Monthly Churn (%) 2.6 2.1 2.6 2.6 2.2 1.7 1.9
ARPU (Rs/month) 129 128 135 154 157 162 166
MOU (min/month) 888 848 898 965 994 1,005 1,027
RPM (Rs/min) 0.145 0.151 0.150 0.160 0.158 0.161 0.162
Voice
Minutes on network (mn mins) 737,108 716,642 758,897 821,900 820,246 860,854 924,911
Data
Data subs ('000s) 120,047 124,242 138,443 148,578 149,089 162,185 174,742
- 3G/4G subs 95,173 103,111 123,793 136,309 138,294 152,685 165,629
Total MBs on the network (mn MBs) 4,191,715 4,828,577 5,547,223 6,452,825 7,239,836 7,639,997 8,453,706
Data Usage per customer (MB/month) 11,930 13,116 13,928 14,972 16,655 16,409 16,766
Network
No. of cell sites 182,600 185,582 189,857 194,409 196,145 201,192 208,606
Of which Mobile Broadband towers 177,141 181,825 187,240 192,068 194,205 199,464 207,360
Total Mobile Broadband Base stations 443,804 461,891 473,859 503,883 506,957 537,206 568,345
Revenue per cell site per month (Rs) 196,584 195,769 202,375 227,659 220,942 233,150 243,395
2.51 2.54 2.53 2.62 2.61 2.69 2.74
DTH
Digital TV Customers ('000s) 16,027 16,207 16,308 16,613 16,838 17,387 17,872
Net additions 635 180 101 304 226 549 485
Average Revenue Per User (ARPU) 157 162 162 123 149 148 149
Monthly Churn (%) 1.0 1.6 1.8 1.0 1.3 1.5 1.4

Exhibit 6: Bharti - quarterly P&L break-up, India/ Africa, March fiscal year-ends, Rs mn
3QFY20 4QFY20 1QFY21 2QFY21 3QFY21

India/ South Asia business
Revenues 150,744 172,339 168,390 178,944 188,736
EBITDA 58,833 73,381 70,746 78,244 84,678
EBITDA margin (%) 39.0 42.6 42.0 43.7 44.9
D&A (57,245) (59,537) (58,640) (60,361) (61,924)
EBIT 1,588 13,844 12,106 17,883 22,754
Net interest cost (including FX gains/ (losses)) (24,257) (21,746) (23,058) (29,950) (29,704)
PBT (22,669) (7,902) (10,952) (12,067) (6,950)
Provision for taxes 18,359 2,728 4,040 2,197 1,941
ETR (%) 81.0 34.5 36.9 18.2 27.9
PAT before min int and share of assoc earnings (4,310) (5,174) (6,912) (9,870) (5,009)
Minority interest (3,060) (2,728) (5,243) (3,634) (1,092)
Share of associates (2,015) 915 (1,070) (2,926) (2,206)
Recurring PAT (9,385) (6,987) (13,225) (16,430) (8,307)
EPS (Rs/share) (1.7) (1.3) (2.4) (3.0) (1.5)
Africa business
Revenues 62,692 64,888 64,513 71,660 76,442
EBITDA 28,331 28,640 28,425 32,453 35,852
EBITDA margin (%) 45.2 44.1 44.1 45.3 46.9
D&A (10,933) (11,013) (12,492) (12,501) (13,107)
EBIT 17,398 17,627 15,933 19,952 22,745
PBT 11,829 6,922 8,386 13,019 13,222
Provision for taxes (6,722) (1,938) (4,630) (6,332) (6,332)
ETR (%) 56.8 28.0 55.2 48.6 47.9
PAT before min int and share of assoc earnings 5,107 4,984 3,756 6,687 6,890
Share of associates
Recurring PAT 2,463 2,277 1,580 3,028 3,017
EPS (Rs/share) 0.5 0.4 0.3 0.6 0.6
Consolidated
Revenues 213,436 237,227 232,903 250,604 265,178
EBITDA 87,164 102,021 99,171 110,697 120,530
EBITDA margin (%) 40.8 43.0 42.6 44.2 45.5
D&A (68,178) (70,550) (71,132) (72,862) (75,031)
EBIT 18,986 31,471 28,039 37,835 45,499
PBT (10,840) (980) (2,566) 952 6,272
Provision for taxes 11,637 790 (590) (4,135) (4,391)
ETR (%) 107.4 80.6 (23.0) 434.3 70.0
PAT before min int and share of assoc earnings 797 (190) (3,156) (3,183) 1,881
Share of associates (2,015) 915 (1,070) (2,926) (2,206)
Recurring PAT (6,922) (4,710) (11,645) (13,402) (5,290)
Extraordinary items (10,500) (47,660) (153,889) (493) (84,275)
Reported PAT (17,422) (52,370) (165,534) (13,895) (89,565)
EPS (Rs/share) (1.3) (0.9) (2.1) (2.5) (1.0)

Exhibit 7: Key changes to Bharti earnings model, March fiscal year-ends, 2021-23E
Revised Earlier Change (%)

2021E 2022E 2023E 2021E 2022E 2023E 2021E 2022E 2023E
Consolidated
Revenues (Rs mn) 1,013,807 1,164,926 1,333,118 1,021,466 1,140,886 1,302,106 (0.7) 2.1 2.4
EBITDA (Rs mn) 454,298 574,124 681,748 470,906 573,432 687,195 (3.5) 0.1 (0.8)
EBITDA margin (%) 44.8 49.3 51.1 46.1 50.3 52.8 -129 bps -98 bps -164 bps
EBIT (Rs mn) 157,432 258,600 341,593 172,745 247,249 337,340 (8.9) 4.6 1.3
Recurring EPS (Rs/share) (4.6) 11.7 22.2 (0.2) 10.2 21.4
Recurring EPS ex-forex (Rs/share) (4.3) 11.7 22.2 0.0 10.2 21.4
India/SA wireless
Revenues (Rs mn) 563,236 671,307 795,204 564,935 642,894 768,052 (0.3) 4.4 3.5
EBITDA margin (%) 43.1 50.5 53.0 43.8 50.9 54.5 -77 bps -44 bps -156 bps
EBITDA (Rs mn) 242,536 338,827 421,371 247,613 327,251 418,952 (2.1) 3.5 0.6
Capex (Rs mn) 155,967 265,046 151,859 142,752 253,151 140,070 9.3 4.7 8.4
EOP subs base (mn) 318 332 344 303 312 320 5.1 6.5 7.6
ARPU (Rs/sub/month) 155 171 195 159 173 202 (2.8) (1.3) (3.3)
Africa wireless
Revenues (US$ mn) 3,944 4,392 4,840 3,739 4,143 4,546 5.5 6.0 6.5
EBITDA (US$ mn) 1,806 2,027 2,250 1,682 1,879 2,077 7.4 7.9 8.3
EBITDA margin (%) 45.8 46.1 46.5 45.0 45.3 45.7 80 bps 79 bps 79 bps
Capex (US$ mn) 592 747 774 561 704 727 5.5 6.0 6.5
Source: Kotak Institutional Equities estimates
Exhibit 8: Bharti - sum of the parts valuation based on March 2023 estimates
Mar-2022 fair value derivation Mar-2023 basis

India business valuation
India wireless
EV (Rs mn) 3,792,339
EBITDA (Rs mn) - adjusted for Ind-AS 421,371
EV/EBITDA (X) 9.0
India DTH
EV (Rs mn) 182,451
EBITDA (Rs mn) 24,327
EV/EBITDA (X) 7.5
India others (ex-towers, including corporate overheads)
EV (Rs mn) 532,743
EBITDA (Rs mn) 66,593
EV/EBITDA (X) 8.0
Indus valuation
Equity value based on KIE fair valuation (Rs mn) 673,750
Bharti's shareholding (%) 41.7
EV (Rs mn) 281,156
India EV (Rs mn) 4,788,689
Net debt (Rs mn) (including lease liability and AGR provisions) 1,338,818
Equity value - India business (Rs mn) 3,449,872
Equity value - India business (Rs/share) 632
Africa business valuation

Equity value based on CMP 305,795
Bharti's shareholding (%) 56
Equity value - Africa (Rs mn) 169,716
Equity value - Africa (Rs/share) 31
Total core equity value = a + b (Rs/share) 663

Exhibit 9: We build option value to capture the possibility of industry consolidation
Rs bn Rs/share
Current fair value 3,620 663
Add
Upside from potentially higher market share
FY2023E revenue delta assuming Bharti garner's 40% of VIL's revenues 197
Incremental EBITDA at 60% incremental margin 118
EV/EBITDA (X) 9.0
Incremental EV 1,065
Incremental capex to support higher market share (300)
Net equity value accretion 765 140
Ascribing one-third probability 253 46
Revised fair value 3,872 710
Exhibit 10: Key assumptions driving Bharti India wireless model, March fiscal year-ends, 2018-23E
2018 2019 2020 2021E 2022E 2023E

Subscriber base ('000s) 304,192 282,640 283,667 317,967 331,967 343,967
Net adds per month ('000s) 2,545 (1,796) 86 2,858 1,167 1,000
Voice traffic (bn mins) 1,946 2,811 3,035 3,581 3,724 3,836
Change (%) 45.3 44.4 7.9 18.0 4.0 3.0
Data volumes (bn MB) 3,902 11,733 21,510 32,532 40,904 48,956
Change (%) 432.2 200.7 83.3 51.2 25.7 19.7
ARPU (Rs/sub/month) 133 118 135 155 171 195
Change (%) (24.6) (11.6) 14.6 14.4 10.5 14.0
MOU (min/sub/month) 561 798 893 992 955 946
Change (%) 32.0 42.2 11.9 11.1 (3.7) (1.0)
Capex (Rs mn)
Consolidated (ex-spectrum) 267,023 286,872 252,228 253,193 270,809 274,116
As % of revenues 32.3 35.5 28.8 25.0 23.2 20.6
Consolidated overall 302,023 336,872 252,228 253,193 384,707 274,116
As % of revenues 36.5 41.7 28.8 25.0 33.0 20.6

Exhibit 11: Bharti - condensed financials, Ind AS, March fiscal year-ends, 2018-23E (Rs mn)
2018 2019 2020 2021E 2022E 2023E

Profit and loss statement
Revenues 826,388 807,802 875,390 1,013,807 1,164,926 1,333,118
EBITDA 300,791 258,189 366,095 454,298 574,124 681,748
EBIT 108,360 44,714 89,199 157,432 258,600 341,593
PBT 29,992 (50,162) (32,731) 12,473 121,630 206,969
Recurring PAT 18,921 (25,193) (36,390) (24,882) 63,741 121,338
Recurring EPS (Rs/share) 4.7 (6.3) (6.7) (4.6) 11.7 22.2
Balance sheet
Total Equity 783,483 849,480 1,021,295 788,189 840,596 952,741
Borrowings 1,141,676 1,254,283 1,176,190 1,276,495 1,440,088 1,335,088
Other liabilities 580,657 648,212 1,410,305 1,289,574 1,533,402 1,597,269
Total equity and liabilities 2,505,816 2,751,975 3,607,790 3,354,258 3,814,086 3,885,098
Net fixed assets 758,168 903,661 917,545 861,833 892,234 904,101
Net intangibles 1,211,348 1,200,996 1,158,784 1,089,842 1,128,625 1,050,719
Cash and equivalents 135,684 127,287 296,606 159,128 325,024 331,701
Other assets 400,616 520,031 1,234,855 1,243,454 1,468,203 1,598,576
Total assets 2,505,816 2,751,975 3,607,790 3,354,258 3,814,086 3,885,098
Cash flow statement
Operating cash flow 276,194 234,596 181,287 485,743 471,240 459,910
Capex (257,353) (348,616) (248,568) (253,193) (384,707) (274,116)
Free cash flow 18,841 (114,020) (67,281) 232,550 86,533 185,793
Key ratios
Avg. RoAE (%) 1.4 0.5 NM NM 7.8 13.5
Avg. RoACE (%) 5.1 0.9 3.9 2.7 12.7 16.7
Net debt to EBITDA (x) 3.3 4.4 3.2 3.3 2.7 2.1
CRoCI (%) 10.1 8.2 11.0 10.6 13.3 14.3
Notes:
(a) Pro forma estimates for FY2021, adjusted for de-consolidation of Bharti Infratel.

BUY
State Bank of India (SBIN)
https://ultraviewer.et/en/own Banks FEBRUARY 05, 2021
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RESULT
Delayed but not denied. SBI reported 7% yoy earnings decline led by one-off income CMP (`): 355
on recovery from bad loans in 3QFY20. SBI has reported an impressive performance on Fair Value (`): 450
asset quality with slippages at 0.7% loans (9MFY21) and pro-forma gross and net NPLs
BSE-30: 50,614
that were largely unchanged. We expect the impact due to Covid to be relatively lower
given its customer segments and hence, return ratios are likely to expand faster than
anticipated. Maintain BUY rating with FV revised to Rs450 from (Rs340 earlier).
State Bank of India
CMP(Rs)/FV(Rs)/Rating 355/450/BUY EPS (Rs) 23.5 35.8 44.9
52-week range (Rs) (high-low) 358-149 EPS growth (%) 44.7 52.4 25.6
Mcap (bn) (Rs/US$) 3,170/43.5 P/E (X) 15.1 9.9 7.9
QUICK NUMBERS
ADTV-3M (bn) (Rs/US$) 15.3/0.3 P/B (X) 1.6 1.4 1.2
Shareholding pattern (%) BVPS 217.4 260.7 306.9
 NII up 14% yoy. PAT
Promoters 56.9 RoE (%) 8.6 11.9 13.2
down 7% yoy.
Price performance (%) 1M 3M 12M NII (Rs bn) 1,121 1,260 1,402
 GNPL ratio down
Absolute 26.3 71.5 16.0 PPOP (Rs bn) 695 851 947
Rel. to BSE-30 20.3 37.7 (6.6) Net profits (Rs bn) 210 319 401 ~50 bps qoq to
4.8%; NNPL ratio
One-off income in 3QFY20 offsets an otherwise strong quarter down ~40 bps qoq
to 1.2%
SBI reported 7% yoy earnings decline on the back of 5% yoy decline in operating profits. The
base quarter had a one-off income from recovery of bad loans of a significant size. Provisions  Maintain BUY rating
continued to remain high on account of contingent provisions for Covid-related impact. SBI
with FV at Rs450
reported 7% yoy growth in loans while NIM was flat qoq at 3.1%. Non-interest income was
(from Rs340 earlier)
aided less by treasury income and more by recovery in fee income and income from written-off
loans. The bank made higher provisions for accounting for the final wage settlement. Asset
quality was stable with gross NPL at 5.4% and net NPLs at 1.8% closer to 1QFY21 levels.
Restructured loans are at 0.8% while amount disbursed under ECLGS is at ~1% of loans.
A solid performance that reaffirms our understanding of the Covid impact for the bank
Covid brought in uncertainties to forecast impairments or credit costs as the ability to
understand the depth, breadth, pace of recovery and regulatory intervention was not easy. Our
initial hypothesis of Covid was that the impact for corporate banks would be lower as we
entered into Covid with very little corporate capex and the weaker companies were largely
recognized and provided for. We affirmed our view that SBI’s retail book should be up well and M B Mahesh, CFA
this was reemphasized by the bank when they increased disclosure on the customer segments
that appeared to be less impacted by Covid despite a lockdown. Rural India was less affected by Nischint Chawathe
the virus, which implied that agriculture should hold up well. The SME segment was probably
affected a lot more but this book has witnessed substantial impairments in recent years and Abhijeet Sakhare
hardly grown in recent years. This hypothesis has played so far and we believe that the credit
cost estimates have room for reduction as we have greater confidence in the economic recovery. Ashlesh Sonje
Maintain BUY: ahead of the race and could potentially set the pace
Dipanjan Ghosh
SBI is likely to come out of this slowdown faster than the corporate NPL cycle. The bank has
adequate buffers with a well-provided corporate NPL book and a lower credit cost retail loan
book. We maintain BUY with FV of Rs450 (from Rs340), valuing at 1X book and 7X FY2023E
EPS for RoEs in the range of ~12% incorporating earnings upgrade and changes to our
subsidiary valuation. Our credit costs are still above long-term average at 1.7%, suggesting the
scope for earnings upgrade is still quite high but contingent on the nature of economic
recovery. Contact: +91 22 6218 6427
Banks State Bank of India
Exhibit 1: SBI quarterly results

March fiscal year-ends, 3QFY20 – 3QFY21 (Rs mn)
(% chg.)
3QFY21E 3QFY21E 3QFY20 2QFY21 3QFY21E 3QFY20 2QFY21 9MFY21 9MFY20 (% chg.) 2021E 2020 (% chg.) 2022E
Income earned 667,345 675,437 676,920 668,141 (1) (1) (0) 2,000,490 1,946,422 3 2,664,754 2,573,236 4 2,790,669
Income on advances 437,368 436,186 480,633 433,776 0 (9) 1 1,312,154 1,371,692 (4) 1,743,043 1,797,488 (3) 1,843,158
Income on investments 204,721 213,788 172,320 202,537 (4) 19 1 594,312 508,883 17 801,131 682,047 17 840,110
Interest on balance with RBI 25,257 25,463 23,967 31,829 (1) 5 (21) 94,024 65,848 43 120,579 93,700 29 107,400
Interest expense 379,146 386,012 399,132 386,326 (2) (5) (2) 1,164,060 1,193,243 (2) 1,543,365 1,592,388 (3) 1,530,260
Net interest income (NII) 288,199 289,425 277,788 281,815 (0) 4 2 836,430 753,179 11 1,121,389 980,848 14 1,260,409
Non-interest income 92,462 98,068 91,059 85,277 (6) 2 8 272,711 291,440 (6) 393,673 452,215 (13) 441,001
Fees, commission 53,490 55,787 56,350 52,430 (4) (5) 2 150,630 158,520 (5) 230,133 237,251 (3) 257,749
Invt. income 9,590 3,661 6,960 10,840 162 38 (12) 60,640 88,233 (31) 67,000 85,757 (22) 40,000
Forex income 6,100 5,491 6,350 5,280 11 (4) 16 16,060 18,260 (12) 22,653 25,170 (10) 26,051
Other income excl. treasury 82,872 94,407 84,099 74,437 (12) (1) 11 212,071 203,207 4 326,673 366,458 (11) 401,001
Total income 380,661 387,494 368,847 367,092 (2) 3 4 1,109,141 1,044,619 6 1,515,061 1,433,063 6 1,701,409
Operating expenses 207,329 194,086 186,622 202,494 7 11 2 590,601 547,945 8 805,060 751,737 7 850,681
Staff expenses 69,400 81,054 68,546 80,252 (14) 1 (14) 219,972 203,803 8 501,767 457,150 10 516,620
Other operating expenses 137,929 113,032 118,075 122,243 22 17 13 370,628 344,142 8 303,293 294,587 3 334,061
Pre-provision operating profit 173,332 193,407 182,226 164,598 (10) (5) 5 518,540 496,675 4 710,001 681,326 4 850,728
Provisions and extraordinaries 103,424 106,242 72,529 101,183 (3) 43 2 329,620 295,748 428,284 430,699 (1) 421,409
Loan loss provisions 22,904 101,142 81,931 56,190 (77) (72) (59) 173,298 308,822 (44) 412,651 418,986 (2) 420,770
Standard assets 15,060 (2,673) (17,520) (2,570) NM NM NM 15,310 (27,430) NM
Investment depreciation 5,180 - 32,870 6,530 (84) (21) 24,020 11,430 110 15,000 5,386 -
Other provisions 60,280 7,773 (24,752) 41,033 676 NM 47 116,992 2,925 3,899 633 6,327 (90) 639
PBT 69,908 87,165 109,697 63,415 (20) (36) 10 188,920 200,927 (6) 281,717 250,628 12 429,319
Less tax 17,946 22,314 53,863 17,673 (20) (67) 2 49,323 91,854 (46) 72,119 105,747 (32) 109,906
Profit after tax 51,962 64,851 55,834 45,742 (20) (7) 14 139,597 109,073 28 209,597 144,881 45 319,413
Fees to PBT (%) 77 64 NM 83 80 79 82 95 60
Key balance sheet data (Rs bn)
Advances 23,681 23,857 21,999 22,939 (1) 8 3 23,907 23,253 3 25,595
Deposits 35,358 35,572 31,111 34,705 (1) 14 2 35,942 32,416 11 37,028
Investments 13,220 14,004 10,121 13,401 (6) 31 (1) 13,844 10,470 32 13,974
Key calculated ratios (%)
Yield on advances 7.2 8.5 7.3 -122 bps -5 bps 7.2 8.0 -79 bps
Cost of funds 3.9 4.8 4.1 -85 bps -19 bps 4.1 4.8 -62 bps
NIM 2.9 3.3 3.0 -33 bps -3 bps 2.9 2.9 -3 bps
Cost-to-income 54.5 50.1 50.6 55.2 438 bps 387 bps -70 bps 53.2 52.5 79 bps
CD ratio 67.0 70.7 66.1 -373 bps 88 bps 67.0 70.7 -373 bps
Asset quality details
Gross NPLs (Rs bn) 1,172 1,597 1,259 (27) (7) 944 1,491 (37) 862
Gross NPLs (%) 4.8 6.9 5.3 -217 bps -51 bps 3.5 5.8 -229 bps 3.0
Net NPLs (Rs bn) 290 582 365 (50) (20) 318 519 (39) 247
Net NPLs (%) 1.2 2.7 1.6 -142 bps -36 bps 1.3 2.2 -90 bps 1.0
Slippages (Rs bn) 3 201 31 (99) (91) 73 462 349 498 (30) 478
Slippages (%) 0.1 3.7 0.5 -370 bps -49 bps 0.4 2.8 (85.2) 1.5 2.3 -78 bps 2.0
PCR- KS (%) 75 64 71 1172 bps 420 bps 75 64 1172 66 65 106 bps 71
Capital adequacy details (%)
CAR 14.5 13.7 14.7 77 bps -22 bps
Tier I 11.7 11.6 11.9 14 bps -17 bps

State Bank of India Banks
Asset quality getting closer to the best-in-class

 Headline ratios largely unchanged and at 1QFY21 levels after accounting for
Covid. Reported GNPLs declined by ~50 bps qoq to 4.8% on account of the asset
classification standstill. Net NPL ratio declined by ~40 bps qoq to 1.2%. If not for the
Supreme Court order, GNPL and NNPL ratios would have been 5.4% and 1.8%,
respectively. Provision coverage (excluding technical write-offs) on reported NPLs
improved to ~75% (up >400 bps qoq), but stands at a healthy ~68% accounting for pro-
forma slippages.
 Collections give comfort. SBI reported a collection efficiency of ~97% for 3QFY21
which is similar to the number reported for 2QFY21. The SMA-2 book has increased
sharply to ~Rs125 bn (~50 bps of advances) as of 3QFY21 from ~Rs34 bn in 2QFY21. At
the same time within large exposures (>Rs50 mn), the SMA-1 book has declined to ~Rs54
bn (~25 bps of advances) as of 3QFY21 from ~Rs86 bn in 2QFY21.
 Slippages. The bank reported fresh slippages of ~Rs2.4 bn (~4 bps of advances,
annualized) in 3QFY21 from the international book. If not for the Supreme Court order,
slippages would have been relatively higher by ~Rs165 bn for 9MFY21.
 Restructuring. The management indicated that it had received restructuring requests for
~Rs181 bn so far under the RBI’s Covid restructuring scheme (up from ~Rs65 bn till
2QFY21). Out of this, ~Rs39 bn was on the retail portfolio, ~Rs117 bn was on the
corporate portfolio and the rest is from the SME portfolio. With respect to this portfolio,
the bank holds a provision of ~Rs15 bn (~8% coverage on portfolio of restructuring
requests).
 Provisions. Outside of the ~Rs53 bn provision for pro-forma slippages and ~Rs15 bn
provision for restructuring, the bank holds an additional contingency provision for Covid
of ~Rs120 bn. This amounts to ~50 bps coverage on standard assets.
Exhibit 2: Slippages were low since 4QFY20 on account of the moratorium and asset classification
standstill
Break-up of slippages, March fiscal year-ends, 3QFY19 – 4QFY20, 9MFY21 (Rs bn)
3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 9MFY21

Total slippages 65 80 170 88 165 81 185
Corporate 13 23 54 32 95 16 18
Others 52 57 116 56 71 65 167
SME NA NA 40 15 16 2 37
Agri NA NA 42 31 30 52 86
Retail NA NA 24 6 8 6 23
IBG NA NA 2 3 17 5 20
Slippages (%) 1.3 1.6 3.1 1.7 3.7 1.5 0.7
Note:
(a) 9MFY21 data includes proforma slippages; 9MFY21 slippage ratio is not annualized

Exhibit 3: Total stressed loans (NPL + SMA1 + SMA2) has declined qoq, but it does not include pro forma slippages of ~Rs165 bn and
restructuring requests of ~Rs181 bn
Break-up of stress loans and provisions, 3QFY20 – 3QFY21
Amount outstanding Share of total gross loans

3QFY20 4QFY20 1QFY21 2QFY21 3QFY21 3QFY20 4QFY20 1QFY21 2QFY21 3QFY21
(Rs bn) (Rs bn) (Rs bn) (Rs bn) (Rs bn) (%) (%) (%) (%) (%)
Gross NPL 1,597 1,491 1,297 1,259 1,172 6.9 6.2 5.4 5.3 4.8
Net NPL 582 519 427 365 290 2.5 2.1 1.8 1.5 1.2
Watchlist 81 73 18 120 179 0.4 0.3 0.1 0.5 0.7
Total stress loans 1,678 1,564 1,314 1,378 1,352 7.3 6.5 5.5 5.8 5.5
Notes:
(1) For 3QFY19-1QFY20, watch-list refers to SMA-1 and 2 across all verticals (for accounts with exposure of Rs50 mn and above and having an
exposure of <Rs20 bn from the banking system).
(2) Starting 2QFY20, watch-list refers to SMA-1 and SMA-2 accounts with exposure above Rs50 mn, from data submitted to CRILC.
Source: Companies, Kotak Institutional Equities estimates
Exhibit 4: Only agri book has seen an increase in reported GNPA on a yoy basis
Segment break-up of NPLs, March fiscal year-ends, 2014-2020, 3QFY21
Gross NPLs (Rs bn) Gross NPLs (%)

2014 2015 2016 2017 2018 2019 2020 3QFY21 2014 2015 2016 2017 2018 2019 2020 3QFY21
Corporate 287 245 622 801 1,626 1,160 816 594 6.1 4.9 10.9 13.7 21.9 13.6 9.7 7.5
Top-corporate 24 15 207 331 820 1.0 0.5 6.3 9.7 19.9
Mid-corporate 263 230 415 470 806 11.5 10.6 17.1 19.3 24.4
International 38 26 78 68 72 19 17 26 1.8 1.1 2.9 2.4 2.4 0.6 0.5 0.8
SME 155 164 170 159 257 247 252 201 8.6 9.0 7.8 7.0 9.5 8.6 9.4 6.9
Agri 107 107 87 75 212 234 327 293 8.9 8.9 6.9 5.5 11.2 11.6 15.9 13.7
Retail 30 25 25 22 67 67 79 59 1.3 0.9 0.8 0.5 1.2 1.0 1.1 0.7
Total 616 567 982 1,123 2,234 1,728 1,491 1,172 5.0 4.3 6.5 6.9 10.9 7.5 6.2 4.8
Notes:
(1) Data from FY2018 onwards is for the merged entity.
(2) Gross NPL has been calculated based on outstanding NPL in each category to the reported advances. These ratios differ from those reported by the
bank (exposures have been reclassified between various segments).
Exhibit 5: Slippages decreased to 0.1% in 3QFY21; slippages (including pro forma) at 0.7% (not annualized) in 9MFY21
Movement of NPLs, March fiscal year-ends, 3QFY18 – 3QFY21 (Rs bn)
3QFY18 4QFY18 1QFY19 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 2QFY21 3QFY21
Opening 1,861 1,991 2,234 2,128 2,059 1,878 1,728 1,685 1,616 1,597 1,491 1,297 1,259
Addition 268 328 143 109 65 80 170 91 201 83 39 31 3
Reductions 138 85 249 179 246 230 213 160 221 189 233 69 89
Closing Gross NPL 1,991 2,234 2,128 2,059 1,878 1,727 1,685 1,616 1,597 1,491 1,297 1,259 1,172
Provision coverage (without w/off) 49 50 53 54 57 62 61 63 64 65 67 71 75
Provision coverage (reported) 66 66 69 71 75 79 79 81 82 84 86 88 90
Slippages (%) 5.9 7.2 3.0 2.3 1.3 1.6 3.1 1.7 3.7 1.5 0.7 0.5 0.1
Notes:
(a) Data from 1QFY18 onwards refers to merged entity.

Exhibit 6: Other personal loan segment has seen a deterioration in asset quality
GNPL in retail segment, March fiscal year ends, 3QFY19 – 3QFY21 (Rs mn)
3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 2QFY21 3QFY21 QoQ
Home loans 0.9 0.8 1.0 0.9 0.9 1.0 1.1 1.0 0.7 -31 bps
Auto loans 1.1 1.0 1.1 1.0 1.0 1.1 1.3 1.0 0.7 -31 bps
Xpress credit 0.5 0.5 0.6 0.6 0.6 0.5 0.5 0.5 0.4 -11 bps
Other per segment loans 3.1 3.1 3.2 2.5 2.7 2.6 2.4 0.5 1.9 146 bps
Exhibit 7: Further decline in NPL ratios; PCR continues to inch up

Gross NPLs, net NPLs and provision coverage ratio, March fiscal year-end, 2003-2020, 1QFY21 – 3QFY21 (%)
Gross NPLs (LHS) Net NPLs (LHS) PCR (RHS)

12.5 100
10.9
9.3 75
10.0 9.1 71 80
65 67
7.7 60 62
57 7.5
7.5 54 57 57 53 56
60
51 51 50 51 6.5 50
6.2
5.9 43 45 5.7
42 39 5.2 5.4 5.3
5.0 4.8
5.0 4.5 4.5 4.8 4.3 40
3.9 3.8
3.4 3.1 3.0 2.9 3.0 3.3
2.6 3.0
2.6 2.2 1.9
1.9 1.6 1.8 1.8 1.8 2.1 2.1
2.5 1.4 1.6 1.6 1.2 20
0.0 0
2003
2004
2006
2009
2011
2012
2014
2017
2020
2005
2007
2008
2010
2013
2015
2016
2018
2019
1QFY21
2QFY21
3QFY21
Notes:
1) Data from FY2017 onwards refers to merged entity.
Exhibit 8: Exposure to power sector has steadily decreased to 8.2% from a peak level of 9.5%
Power exposure details, March fiscal year-end, 3QFY19 – 3QFY21 (Rs bn)

Power exposure (gross) 1,951 1,996 2,036 1,976 1,992 2,035 1,944 1,912 1,952
(% of gross advances) 9.5 9.1 9.5 9.2 9.1 8.8 8.5 8.3 8.2
Break-up of standard power sector exposure
Public 983 1,056 1,128 1,090 1,082 NA NA NA NA
Private 593 686 650 641 691 NA NA NA NA
Power sector asset quality
NPL 314 253 258 245 219 NA NA NA NA
(% of power exposure) 16.1 12.7 12.7 12.4 11.0 NA NA NA NA
(% of overall GNPLs) 16.7 14.7 15.3 15.1 13.7 NA NA NA NA
Notes:
(1) Break-up between public and private exposure excludes SMA-1 and 2 accounts for 3QFY19.

Exhibit 9: Overall exposure to NBFCs stood at 7.1% of total advances in 1QFY21

NBFC exposure details, March fiscal year-end, 1QFY19-1QFY21 (Rs bn)

Total exposure to NBFCs 1,607 1,500 1,639 1,876 1,736 1,672 1,691 1,789 1,643
(% of advances) 8.6 7.7 8.0 8.6 8.1 7.8 7.7 7.7 7.1
HFCs 530 507 593 625 635 632 680 657 614
Public 69 117 107 119 140 133 170 164 160
Private 461 390 486 506 495 499 510 493 454
Other NBFCs 1,077 993 1,046 1,251 1,101 1,040 1,011 1,132 1,030
Public 571 477 596 713 506 406 516 577 607
Private 506 516 450 538 594 634 496 555 422
Exhibit 10: 42% of overall exposure to NBFCs is backed by public entities (central/state governments and PSUs) as of 1QFY21
Borrower type wise NBFC loan mix, March fiscal year-end, 1QFY21 (%)
NBFC HFC Other NBFCs
Other Central and
private, 19 state Other Other
government private, 21 private, 21 Central and
Backed by
, 28 state
PSU, 26
government
, 51
Backed by
large
Backed by private
large sector
Backed by
private large institutions,
Backed by 20
sector private
PSU, 14
institutions, sector Backed by
40 institutions, PSU, 8
53

Exhibit 11: Detailed sector-wise exposure and NPL ratios

Break-up of SBI's NPLs across sectors, March fiscal year-ends, 2017-2020, 3QFY21
2017 2018 2019 2020 3QFY21

NPL NPL ratio NPL NPL ratio NPL NPL ratio NPL NPL ratio NPL NPL ratio
(Rs bn) (%) (Rs bn) (%) (Rs bn) (%) (Rs bn) (%) (Rs bn) (%)
Coal and mining 19 15.0 17 19.6 5 7.6 22 13.1 3 2.4
Iron and steel 563 42.2 532 42.8 258 28.2 61 8.5 38 6.1
Metal and metal products 46 9.7 42 11.7 23 6.8 17 5.9 13 4.2
Engineering 87 23.1 120 31.5 113 26.4 59 13.9 49 14.4
of which electronics 4 6.4 33 49.7 44 48.7 1 3.1 1 2.4
Electricity 6 6.5 - - - - - - - -
Textiles 165 27.7 150 28.2 80 18.5 41 10.6 33 9.6
Cotton 114 32.2 113 31.9 54 19.2 22 8.9 17 8.0
Jute 0 8.1 1 12.8 0 9.5 0 4.7 0 4.2
Others 50 21.1 36 20.8 25 17.5 19 14.1 15 12.9
Sugar 7 7.9 7 9.2 10 12.1 6 8.0 6 11.9
Tea 2 28.5 2 23.0 1 19.8 1 14.2 1 11.0
Food processing 104 26.6 89 15.3 65 11.9 61 9.1 51 5.5
Vegetable oil and vanaspati 17 28.0 25 39.5 24 41.1 7 12.9 6 11.8
Tobacco/tobacco products 1 12.0 - 4.3 0 3.0 1 43.7 0 12.5
Paper/paper products 10 19.4 9 18.4 6 13.4 6 12.1 6 11.6
Rubber/rubber products 8 8.5 6 7.3 5 6.6 9 10.7 8 10.7
Chemicals/dyes/paints 36 5.2 38 4.2 40 3.9 29 2.9 28 3.6
Fertilizer 0 0.3 4 2.9 10 5.9 11 5.5 10 5.3
Petrochemicals 11 3.7 3 0.7 4 0.6 1 0.3 2 0.4
Drugs and pharmaceuticals 17 14.5 19 16.1 13 9.8 3 2.1 2 1.4
Others 8 4.7 12 6.4 13 12.2 12 7.6 10 7.4
Cement 24 21.3 11 11.7 11 7.0 12 7.6 10 7.4
Leather/leather products 1 4.4 3 10.2 3.3 12.7 4 11.1 5 15.5
Gems and jewelry 18 11.4 22 15.0 8.0 6.0 8 6.1 7 5.2
Construction 24 10.6 18 6.8 13.6 4.5 13 3.0 13 2.9
Petroleum 47 26.8 41 12.5 20.6 5.6 11 2.6 3 1.0
Automobile and trucks 38 24.7 36 27.4 35.9 22.6 12 6.5 9 5.7
Computer software 4 15.6 1 2.7 0.6 3.1 0 0.4 0 0.1
Infrastructure 233 8.8 582 20.8 476.9 13.2 387 10.7 287 9.1
Power 63 3.6 317 17.9 253.5 12.4 170 8.3 99 5.2
Telecom 3 1.1 86 39.6 76.1 28.9 59 16.8 59 39.7
Roads and ports 73 24.5 90 24.1 82.9 15.1 73 12.1 65 10.2
Others 95 23.2 89 20.1 64 8.4 86 14.4 64 13.3
Other industries 127 4.4 209 7.4 208 6.4 336 13.3 292 17.2
Total industry 1,586 14.7 1,961 17.7 1,410 11.6 1,104 9.6 867 8.8
Agriculture 178 6.0 212 11.3 234 11.6 327 15.9 312 15.2
Retail 17 0.5 67 1.2 67 1.0 79 1.1 65 0.9
Others 11 0.4 11 0.9 25 0.9 (8) (0.2) (61) (1.3)
Total 1,792 9.0 2,251 10.9 1,736 7.4 1,501 6.1 1,184 5.0
Loan growth remains subdued
 Headline growth. Overall loan growth was modest at ~7% yoy mainly driven by ~15%
yoy growth in retail. SME portfolio grew 6% yoy and corporate advances grew 2% yoy.
 Retail. Retail loans constitute ~32% of the loan book and have been growing swiftly
driven by home loans (up ~10% yoy) and Xpress credit (personal loans) (up ~36% yoy)
while auto loan portfolio was muted at ~3% yoy. Management had indicated in 2QFY21
that ~94% of the Xpress Credit customers are salaried government employees. This gives
comfort on the quality of the personal loans portfolio.
 ECLGS scheme for MSMEs. The bank has sanctioned ~Rs260 bn (~1.1% of advances)
under the ECLGS scheme to eligible MSMEs and disbursed ~Rs230 bn.

Exhibit 12: Share of retail loans has inched up to ~33%

Loan growth and loan break-up, March fiscal year-ends, 2011-2020, 3QFY21
Loan growth (YoY %) Loan break-up (%)
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 3QFY21 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 3QFY21
Corporate 21.0 12.2 27.4 23.8 6.0 14.6 25.6 3.1 14.8 (0.9) 2.2 35.3 34.2 36.2 38.5 38.2 37.9 36.8 36.2 37.1 34.8 32.1
Large corporate 23.4 15.3 40.3 38.0 16.2 17.1 21.9 2.3 14.4 14.4 16.7 19.8 21.6 21.9 20.6 20.1
Mid-corporate 19.4 10.0 18.2 11.5 (4.7) 11.4 30.6 4.2 20.9 19.9 19.5 18.7 16.6 16.1 16.2 16.1
International 12.7 24.1 24.6 26.8 9.4 13.8 7.3 5.5 0.2 18.1 2.2 14.5 15.6 16.1 17.5 17.9 17.7 14.7 14.7 13.2 14.7 13.4
SME 22.8 41.3 8.9 (2.4) 0.9 20.0 26.1 (1.7) 6.9 (7.3) 5.6 15.9 19.4 17.5 14.7 13.9 14.4 14.1 13.2 12.6 11.0 12.0
Retail 22.2 10.8 14.9 13.3 14.6 20.0 47.2 13.5 18.5 15.4 15.5 21.8 20.9 19.9 19.4 20.8 21.7 24.7 26.7 28.2 30.9 33.8
Agriculture 21.2 (9.0) 25.8 10.7 (0.4) 4.7 52.5 (1.6) 7.7 1.7 1.7 12.6 9.9 10.3 9.8 9.2 8.3 9.8 9.2 8.8 8.5 8.7
SME+Corporate NA NA NA NA NA NA NA 1.8 12.7 (2.5) 3.1
Total 20.3 15.6 20.6 16.2 6.9 15.4 29.3 4.9 12.0 5.6 6.7
Notes:
(1) Numbers post 4QFY17 are for the merged entity.
Exhibit 13: Strong growth momentum in retail segments

Sanctions and disbursements growth in retail segments, September 2020 – December 2020 (%)
Domestic NIM was flat
Domestic NIM was flat qoq at 3.3% with yield on advances largely flat qoq and a slightly
higher decline of ~10 bps qoq in cost of deposits. NIM is over-stated by 8-9 bps on account
of interest reversals which are currently charged to provisions.
There has been consistent improvement in margins over the past few quarters on the back
of (1) increase in share of high yielding retail loans, (2) drop in interest reversals and (3)
gradually declining cost of deposits.
Deposit growth strong at 14% yoy

Deposit growth was strong at ~14% yoy, led by ~16% yoy growth in savings deposit, while
term deposits grew ~13% yoy. Growth was supported by higher liquidity in the system and
SBI has benefitted on account of its wide distribution franchise.

Exhibit 14: Credit/deposit ratio fell steeply to 66% Exhibit 15: Margins have been in the range of 2.9-3.1% for last
CD ratio, March fiscal year-ends, 3QFY18 – 3QFY21 (%) few quarters
NIM (reported), March fiscal year-ends, 3QFY18 – 3QFY21 (%)
80 4.0
77 3.6
75
74 72 72 3.2 3.1 3.1 3.1

72 3.0 3.0
71 2.9
71 71 2.8 2.8
71 2.7 2.8 2.8
70 2.8
69
68 2.5 2.5
67 67
68 2.4
66
65 2.0
3QFY18
4QFY18
1QFY19
2QFY19
3QFY19
4QFY19
1QFY20
2QFY20
3QFY20
4QFY20
1QFY21
2QFY21
3QFY21
3QFY18
4QFY18
1QFY19
2QFY19
3QFY19
4QFY19
1QFY20
2QFY20
3QFY20
4QFY20
1QFY21
2QFY21
3QFY21
Notes: Notes:
(1) Data from 1QFY17 onwards refers to merged entity. (1) Data post 4QFY17 refers to merged entity.
Source: Company, Kotak Institutional Equities Source: Company, Kotak Institutional Equities
Exhibit 16: MCLR rates dropped ~110 bps in the past 12 months
SBI MCLR rates, January 2018 onwards (%)
Jan-18 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21
Overnight 7.70 7.80 7.90 8.10 8.20 8.20 8.10 7.80 7.65 7.45 6.70 6.65 6.65 6.65 6.65 6.65
One month 7.80 7.80 7.90 8.10 8.20 8.20 8.10 7.80 7.65 7.45 6.70 6.65 6.65 6.65 6.65 6.65
Three month 7.85 7.85 7.95 8.15 8.25 8.25 8.15 7.85 7.70 7.50 6.75 6.65 6.65 6.65 6.65 6.65
Six month 7.90 8.00 8.10 8.30 8.40 8.40 8.30 8.00 7.85 7.70 6.95 6.95 6.95 6.95 6.95 6.95
One year 7.95 8.15 8.25 8.45 8.55 8.55 8.45 8.15 7.90 7.75 7.00 7.00 7.00 7.00 7.00 7.00
Two years 8.05 8.25 8.35 8.55 8.65 8.65 8.55 8.20 8.10 7.95 7.20 7.20 7.20 7.20 7.20 7.20
Three years 8.10 8.35 8.45 8.65 8.75 8.75 8.65 8.35 8.20 8.05 7.30 7.30 7.30 7.30 7.30 7.30
Source: Kotak Institutional Equities , Company
Exhibit 17: SBI’s term deposit rates dropped by ~200 bps since June 2019
Term deposit rates for deposits less than Rs20 mn, January 2018 onwards (%)
Jan-18 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21
7-14 days 5.25 5.75 5.75 5.75 5.75 5.75 2.90 4.50 4.50 3.50 2.90 2.90 2.90 2.90 2.90 2.90
15-30days 5.25 5.75 5.75 5.75 5.75 5.75 2.90 4.50 4.50 3.50 2.90 2.90 2.90 2.90 2.90 2.90
31-45days 5.25 5.75 5.75 5.75 5.75 5.75 2.90 4.50 4.50 3.50 2.90 2.90 2.90 2.90 2.90 2.90
46 -90 days 6.25 6.25 6.25 6.25 6.25 6.25 3.90 5.50 5.50 4.50 3.90 3.90 3.90 3.90 3.90 3.90
91-120days 6.25 6.25 6.25 6.25 6.25 6.25 3.90 5.50 5.50 4.50 3.90 3.90 3.90 3.90 3.90 3.90
120-180 days 6.25 6.25 6.25 6.25 6.25 6.25 3.90 6.00 5.80 4.50 3.90 3.90 3.90 3.90 3.90 3.90
181-210 days 6.25-6.5 6.35 6.35-6.4 6.35 6.35 6.35 5.35 6.00 5.80 5.00 4.40 4.40 4.40 4.40 4.40 4.40
211 days-1year 6.50 6.40 6.40 6.40 6.40 6.40 4.40 6.70 6.25 5.00 4.40 4.40 4.40 4.40 4.40 4.40
1 year-2year 6.25 6.40 6.40 6.70 6.80 6.80 7.00 6.50 6.25 5.70 5.10 4.90 4.90 4.90 4.90 4.90
2 year-3year 6.00 6.50 6.60 6.75 6.80 6.80 6.75 6.25 6.25 5.70 5.10 5.10 5.10 5.10 5.10 5.10
3 years-5 years 6.00 6.50 6.70 6.80 6.80 6.80 6.70 6.25 6.25 5.70 5.10 5.10 5.30 5.30 5.30 5.30
5 years-8 years 6.00 6.50 6.75 6.85 6.85 6.85 6.60 6.25 6.25 5.70 5.30 5.30 5.40 5.40 5.40 5.40
8years-10 years 6.00 6.50 6.75 6.85 6.85 6.85 6.00 6.25 6.25 5.70 5.40 5.40 5.40 5.40 5.40 5.40

Exhibit 18: CASA franchise remains strong

CASA ratio break-up across banks, March fiscal year ends, 2009-2020, 1QFY21 – 3QFY21 (%)
Current Savings
50
40
30
26.7 31.9 34.6
34.5 34.5
33.7 32.6 33.6 37.1 36.9 37.3 36.8 37.9 37.9 37.8
20
10
14.9
11.2 11.5 9.4 9.2 8.0 7.9 7.8 7.3 6.9 6.9 6.7 6.0 6.1 6.0
- 2011
2014
2017
2020
2009
2010
2012
2013
2015
2016
2018
2019
1QFY21
2QFY21
3QFY21
Notes:
(1) Data from FY2017 onwards refer to the merged entity.
Operating expenses increase driven by employee costs

Overall operating expenses were up ~11% yoy, driven by a ~15% yoy increase in staff
expenses. Within staff expenses, provision for employees was up 34% yoy on account of
payments of arrears due to wage settlement. Going forward, management has guided that
total salary expenses are likely to stay at ~Rs70 bn per quarter, while provisions for
employees would be at ~Rs50 bn per quarter assuming ~Rs35 bn of retiral benefits expense
per quarter.
Exhibit 19: Cost-to-income higher qoq Exhibit 20: Share of retirement-related costs declined
Operating costs and cost-income ratio, March fiscal year-end, 3QFY17 sequentially
– 3QFY21 (%) Retirement costs and staff costs to total income, March fiscal year-
end, 2012-2020, 3QFY21 (%)
Operating costs (LHS) Cost-income (RHS)
(Rs bn) (%) Retirement costs to staff costs (RHS)
225 70 Staff costs to income (LHS)
45 50
180 62
59 39 40
56 58 57
135 54 55 54
54
51 54 51 52 51 52
48 50 33 30
50
90 46
42 27 20
45 38
21 10
0 30 20 16 23 18 29 27 18 36 42 41 36 47
2QFY18
3QFY18
4QFY18
1QFY19
2QFY19
3QFY19
2QFY20
3QFY20
4QFY20
1QFY21
2QFY21
3QFY21
3QFY17
4QFY17
1QFY18
4QFY19
1QFY20
15 -
2012
2013
2014
2015
2019
2020
2016
2017
2018
1QFY21
2QFY21
3QFY21
Notes:
(1) Data from 1QFY17 refers to merged entity. Notes:
(1) Data post 4QFY17 refers to merged entity.

Exhibit 21: Fee income increased sequentially

March fiscal year-ends, 2QFY19-2QFY21 (Rs mn)
YoY
3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 2QFY21 3QFY21 (%)
Loan processing charges 9,260 15,020 6,170 7,660 11,200 19,240 8,250 12,960 11,420 2
Commission on government business 9,530 11,180 9,630 8,930 9,720 9,140 8,630 9,390 8,430 (13)
Commission on LC/BG 6,000 12,890 7,040 7,170 7,710 8,620 6,760 7,280 8,330 8
Cross selling 4,860 5,830 3,660 4,910 5,580 6,150 3,090 5,280 6,130 10
Others 17,590 40,970 25,270 21,730 22,140 35,580 17,980 17,520 19,180 (13)
Net fee income 47,240 85,890 51,770 50,400 56,350 78,730 44,710 52,430 53,490 (5)
YoY (%) (5) 2 4 0 19 (8) (14) 4 (5)
Other income 80,352 126,851 80,154 120,227 91,059 160,775 94,972 85,277 (15)
(%) of other income 59 68 65 42 62 49 47 61 (368,829)
Exhibit 22: Bancassurance business continues to ramp up in scale

Fee income from bancassurance business, March fiscal year-ends, 2013-2020 (Rs mn)
2013 2014 2015 2016 2017 2018 2019 2020

SBI Life 1,440 1,595 2,446 3,372 4,646 7,148 9,519 11,169
SBI general insurance 339 281 700 623 1,811 2,126 2,709 3,145
Others 307 472 737 896 1,309 17 39 46
Total 2,086 2,348 3,883 4,891 7,766 9,290 12,267 14,361

Other key highlights for the quarter
 Non-interest income was up ~2% yoy. This was in spite of 34% yoy increase in
treasury income due to ~Rs4 bn stake sale in UTI AMC. Fee income is yet to recover to
pre-Covid level and was down ~5% yoy.
 Capital position comfortable. CAR declined by ~20 bps qoq to ~14.5% with CET1
ratio down ~20 bps qoq to 10.3%. Credit RWA to total advances declined by ~30 bps
qoq to 56.1%.
 SBI Mutual fund and SBICARD. SBI Mutual Fund has the highest market share (>15%)
in the mutual fund business. It registered QAAUM growth of ~30% yoy against industry
growth of ~11%. SBICARD is a leading franchise in the credit cards business with a
market share of ~20% in spends and ~19% in cards outstanding. While the card
company reported a decline in profits led by high provisions, we see growth steadily
making a comeback.
 SBI Life Insurance and SBI General Insurance. SBI Life is a private market leader with
~24% share in total new business premium and total AUM of ~Rs2 tn. The company
reported a strong 21% yoy growth in gross written premium. SBI General showed a
growth of 9% yoy in Gross Written Premium compared to industry growth of <3%. PAT
for 9MFY21 was at ~Rs4.0 bn against Rs4.1 bn earned in FY2020.
Exhibit 23: SBI forecasts and valuation

March fiscal year-ends, 2016-2023E
Net int.
income PAT EPS PER ABVPS APBR RoE
(Rs bn) (Rs bn) (Rs) (X) (Rs) (X) (%)
2016 569 100 12.8 27.7 121.3 2.9 7.3
2017 619 105 13.1 27.0 130.0 2.7 6.3
2018 749 (65) (7.3) (48.4) 125.7 2.8 (3.2)
2019 883 9 1.0 367.6 159.3 2.2 0.4
2020 981 145 16.2 21.9 176.4 2.0 6.4
2021E 1,121 210 23.5 15.1 217.4 1.6 8.6
2022E 1,260 319 35.8 9.9 260.7 1.4 11.9
2023E 1,402 401 44.9 7.9 306.9 1.2 13.2
Notes:
(1) ABVPS: Reported book value of the standalone business less net NPLs at 70%
(2) Data from FY2018 is for the consolidated book. Note that the adjusted book value is reduced for
revaluation reserves

Exhibit 24: SBI is trading at 1.3X one-year forward adj. P/B Exhibit 25: SBI is trading at a ~25% premium to public peers
Rolling 1-year forward APBR (consolidated), February 2006 onwards PBR premium to public banks, January 2012 onwards (X)
(X)
3.0
2.0
2.4
1.6
1.8
1.2
1.2
0.8
0.6
0.4
0.0
Feb-06
Feb-07
Feb-08
Feb-09
Feb-12
Feb-13
Feb-14
Feb-17
Feb-18
Feb-19
Feb-20
Feb-10
Feb-11
Feb-15
Feb-16
Feb-21 0.0
Jan-12
Jan-13
Jan-14
Jan-15
Jan-17
Jan-19
Jan-20
Jan-21
Jan-16
Jan-18
Source: Company, Bloomberg, Kotak Institutional Equities estimates
Exhibit 26: SBI SoTP valuation based on FY2023E
Value per share

SBI holding Value FY2023 FY2023
(%) (Rs mn) (Rs) Methodology adopted
SBI 292 Residual income model
Non banking subsidiaries and investments
SBI Life 56% 520,300 58 Based on Appraisal Value; 25% HoldCo discount
SBI MF 63% 136,070 15 5% of AUM; 25% HoldCo discount
SBI Cards 69% 666,908 75 Based on RGM FV; 25% HoldCo discount
NSE 4% 17,290 2 FV based on IFCI stake sale; 30% HoldCo discount
SBI Caps 100% 48,750 5 10X FY2023E PAT; 25% HoldCo discount
Others 20,623 2
Non-bank subsidiaries 160
Total value of the bank 452

Exhibit 27: Key changes to estimates

March fiscal year-ends, 2021-2023E (Rs mn)
New estimates Old estimates % change

2021E 2022E 2023E 2021E 2022E 2023E 2021E 2022E 2023E
Net interest income 1,121,389 1,260,409 1,401,963 1,136,401 1,251,143 1,446,316 (1.3) 0.7 (3.1)
Loan growth 2.8 7.1 12.1 2.8 7.1 8.1 0 bps 0 bps 404 bps
NIM (%) 2.9 3.1 3.2 3.0 2.9 3.0 -4 bps 12 bps 17 bps
Loan loss provisions 412,651 420,770 407,174 412,651 420,770 452,674 - - (10.1)
Other income 393,673 441,001 492,821 382,449 424,729 474,515 2.9 3.8 3.9
Fee income 230,133 257,749 283,524 213,526 245,554 270,110 7.8 5.0 5.0
Treasury income 67,000 40,000 40,000 52,000 40,000 40,000 28.8 - -
Operating expenses 805,060 850,681 947,909 805,060 898,267 1,002,974 - (5.3) (5.5)
Employee expenses 501,767 516,620 577,943 501,767 561,327 627,957 - (8.0) (8.0)
PBT 281,717 429,319 539,055 285,505 356,196 464,537 (1.3) 20.5 16.0
Tax 72,119 109,906 137,998 73,089 91,186 118,921 (1.3) 20.5 16.0
Net profit 209,597 319,413 401,057 212,416 265,010 345,615 (1.3) 20.5 16.0
PBT - treasury+LLP 642,368 810,089 906,229 661,156 736,966 877,211 (2.8) 9.9 3.3
EPS (Rs) 23.5 35.8 44.9 23.8 29.7 38.7 (1.3) 20.5 16.0
Adj. BVPS (Rs) 217 261 307 217 245 277 0.4 6.3 10.9
RoA (%) 0.5 0.7 0.8 0.5 0.6 0.7 -1 bps 14 bps 17 bps
RoE (%) 8.6 11.9 13.2 8.8 10.0 11.7 -11 bps 193 bps 152 bps
Gross NPA (%) 3.5 3.0 2.4 3.8 3.7 3.5 -26 bps -66 bps -109 bps
Slippage ratio (%) 1.5 2.0 2.0 1.8 2.5 2.5 -30 bps -50 bps -50 bps
Credit cost (%) 1.8 1.7 1.5 1.8 1.7 1.7 0 bps 0 bps -20 bps
Cost-income ratio (%) 53 50 50 53 54 52 13 bps -360 bps -219 bps

Exhibit 28: SBI – growth rates and key ratios

March fiscal year-ends, 2017-2023E (%)
2017 2018 2019 2020E 2021E 2022E 2023E
Growth rates (%)
Net loan 7.3 23.2 13.0 6.4 2.8 7.1 12.1
Total Asset 19.8 27.7 6.5 7.3 10.9 4.7 7.4
Deposits 18.1 32.4 7.6 11.3 10.9 3.0 6.1
Current 9.0 24.8 8.3 10.4 12.5 4.5 7.5
Savings 27.0 33.6 7.7 10.5 11.2 3.3 6.3
Fixed 14.1 32.6 7.4 12.0 10.5 2.6 5.7
Net interest income 8.8 21.0 18.0 11.0 14.3 12.4 11.2
Loan loss provisions 14.7 93.0 (18.8) (23.1) (1.5) 2.0 (3.2)
Total other income 25.9 25.8 (17.5) 23.0 (12.9) 12.0 11.8
Net fee income 12.9 41.3 1.3 8.0 (3.0) 12.0 10.0
Net capital gains 108.0 24.9 (76.6) 172.5 (21.9) (40.3) -
Net exchange gains 13.1 4.0 (13.2) 20.0 (10.0) 15.0 10.0
Operating expenses 11.2 29.0 16.3 7.9 7.1 5.7 11.4
Employee expenses 5.5 25.3 23.7 11.4 9.8 3.0 11.9
Key ratios (%)
Yield on average earning assets 7.7 7.8 7.4 7.4 7.0 6.8 7.1
Yield on average loans 7.9 8.1 7.8 8.0 7.4 7.4 7.7
Yield on average investments 8.0 7.9 7.5 6.9 6.7 6.1 6.2
Average cost of funds 5.2 5.3 4.8 4.6 4.1 3.8 3.9
Interest on deposits 5.6 5.7 5.0 4.8 4.2 3.8 4.0
Difference 2.5 2.5 2.6 2.8 2.9 3.0 3.1
Net interest income/earning assets 2.7 2.6 2.7 2.8 2.9 3.1 3.2
New provisions/average net loans 2.3 3.8 2.6 1.9 1.8 1.7 1.5
Interest income/total income 63.6 62.7 70.6 68.4 74.0 74.1 74.0
Fee income to total income 16.7 19.3 18.6 16.6 15.2 15.1 15.0
Operating expenses/total income 47.8 50.2 55.7 52.5 53.1 50.0 50.0
Tax rate 29.4 57.8 46.4 42.2 25.6 25.6 25.6
Dividend payout ratio 20.1 - - - 0.9 0.6 0.4
Share of deposits
Current 7.5 7.0 7.1 7.0 7.1 7.2 7.3
Fixed 55.4 55.5 55.4 55.8 55.6 55.4 55.2
Savings 37.1 37.5 37.5 37.2 37.3 37.4 37.5
Loans-to-deposit ratio 76.8 71.5 75.1 71.7 66.5 69.1 73.1
Equity/assets (EoY) 7.0 6.3 6.0 5.9 5.8 6.2 6.6
Asset quality trends (%)
Gross NPL (%) 6.8 10.7 7.2 5.8 3.5 3.0 2.4
Net NPL (%) 3.7 5.7 3.0 2.2 1.3 1.0 0.9
Slippages (%) 2.7 10.2 1.7 2.3 1.5 2.0 2.0
Provision coverage (%, ex write-off) 48.1 50.4 61.9 65.2 66.3 71.4 66.7
Dupont analysis (%)
Net interest income 2.5 2.4 2.5 2.6 2.7 2.8 2.9
Loan loss provisions 1.4 2.2 1.5 1.1 1.0 0.9 0.9
Net other income 1.4 1.4 1.0 1.2 0.9 1.0 1.0
Operating expenses 1.9 1.9 2.0 2.0 1.9 1.9 2.0
Invt. depreciation 0.0 0.3 (0.0) 0.0 0.0 - -
(1- tax rate) 70.6 42.2 53.6 57.8 74.4 74.4 74.4
RoA 0.4 (0.2) 0.0 0.4 0.5 0.7 0.8
Average assets/average equity 14.9 15.1 16.2 16.9 17.2 16.7 15.6
RoE 6.3 (3.2) 0.4 6.4 8.6 11.9 13.2
Notes:
(1) Data from FY2018 is the consolidated performance of the bank.

Exhibit 29: SBI – key financial summary

2017 2018 2019 2020E 2021E 2022E 2023E
Income statement
Total interest income 1,755,182 2,204,993 2,428,687 2,573,236 2,664,754 2,790,669 3,084,995
Loans 1,195,100 1,413,632 1,616,402 1,797,488 1,743,043 1,843,158 2,088,737
Investments 482,053 703,376 744,062 682,047 801,131 840,110 857,230
Total interest expense 1,136,585 1,456,456 1,545,198 1,592,388 1,543,365 1,530,260 1,683,033
Net interest income 618,597 748,537 883,489 980,848 1,121,389 1,260,409 1,401,963
Loan loss provisions 347,463 670,766 544,545 418,986 412,651 420,770 407,174
Net interest income (after prov.) 271,134 77,771 338,944 561,863 708,737 839,638 994,789
Other income 354,609 446,007 367,749 452,215 393,673 441,001 492,821
Net fee income 162,766 229,968 233,039 237,251 230,133 257,749 283,524
Net capital gains 107,496 134,233 31,469 85,757 67,000 40,000 40,000
Net exchange gains 23,884 24,846 21,558 25,170 22,653 26,051 28,656
Operating expenses 464,728 599,434 696,877 751,737 805,060 850,681 947,909
Employee expenses 264,893 331,787 410,547 457,150 501,767 516,620 577,943
Depreciation on investments 2,984 80,876 (7,621) 5,386 15,000 - -
Other Provisions 9,480 (1,250) 1,361 6,327 633 639 645
Pretax income 148,552 (155,282) 16,075 250,628 281,717 429,319 539,055
Tax provisions 43,711 (89,808) 7,453 105,747 72,119 109,906 137,998
Net Profit 104,841 (65,475) 8,622 144,881 209,597 319,413 401,057
% growth 5.4 (162.5) (113.2) 1,580.3 44.7 52.4 25.6
PBT - Treasury + Provisions 400,983 460,876 522,892 595,570 643,001 810,728 906,874
% growth 5.3 14.9 13.5 13.9 8.0 26.1 11.9
Balance sheet
Cash and bank balance 1,719,716 1,918,986 2,224,901 2,510,970 2,710,685 2,808,036 2,967,269
Cash 120,303 154,724 187,779 201,046 241,255 289,506 347,407
Balance with RBI 1,159,673 1,349,248 1,581,545 1,466,312 1,625,818 1,674,917 1,776,250
Balance with banks 69,339 16,630 46,959 447,703 447,703 447,703 447,703
Net value of investments 7,659,896 10,609,867 9,670,219 10,469,545 13,843,996 13,974,218 13,948,572
Govt. and other securities 5,752,387 8,483,958 7,618,831 8,032,701 11,407,152 11,537,374 11,511,728
Shares 54,457 105,167 98,787 82,214 82,214 82,214 82,214
Debentures and bonds 598,474 779,629 849,484 1,023,638 1,023,638 1,023,638 1,023,638
Net loans and advances 15,710,784 19,348,802 21,858,769 23,252,896 23,907,268 25,595,122 28,694,691
Fixed assets 429,189 399,923 391,976 384,393 274,773 218,408 163,297
Other assets 1,540,077 2,269,942 2,663,277 2,896,136 3,098,865 3,315,786 3,547,891
Total assets 27,059,663 34,547,520 36,809,142 39,513,939 43,835,587 45,911,568 49,321,720
Deposits 20,447,514 27,063,433 29,113,860 32,416,207 35,942,446 37,027,908 39,268,096

Current 1,524,211 1,901,739 2,058,752 2,273,356 2,556,594 2,670,831 2,871,685
Fixed 11,333,689 15,023,949 16,137,588 18,079,132 19,973,897 20,503,053 21,664,951
Savings 7,589,614 10,137,745 10,917,520 12,063,720 13,411,955 13,854,024 14,731,461
Borrowings and bills payable 3,443,605 3,887,598 4,268,928 3,414,786 3,798,255 4,236,354 4,736,988
Other liabilities 1,285,683 1,405,203 1,217,216 1,362,872 1,567,303 1,802,398 2,072,758
Total liabilities 25,176,802 32,356,234 34,600,004 37,193,865 41,308,004 43,066,660 46,077,842
Total shareholders' equity 1,882,861 2,191,286 2,209,138 2,320,074 2,527,583 2,844,909 3,243,878
Notes:
(1) Data from FY2018 is the consolidated performance of the bank.

BUY
NTPC (NTPC)
https://ultraviewer.et/en/own Electric Utilities FEBRUARY 05, 2021
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RESULT
Clean quarter. NTPC continued to report healthy earnings performance for the third CMP (`): 99
consecutive quarter, with 12% yoy growth in adjusted PAT at Rs33 bn and 18.4% yoy Fair Value (`): 125
growth for 9MFY21. Earnings performance from the conventional business has been
BSE-30: 50,614
stable, though we remain watchful of the return profile from recently won solar
projects, as well as liquidation of the receivable build-up. Maintain BUY rating with
unchanged FV of Rs125/share, noting inexpensive valuations of 0.7X P/B and 6X P/E on
March 2023E earnings.
NTPC
Mcap (bn) (Rs/US$) 981/13.5 P/E (X) 6.8 6.5 6.0
ADTV-3M (mn) (Rs/US$) 3,659/50 P/B (X) 0.8 0.7 0.7
Promoters 51.0 RoE (%) 12.2 11.8 11.8
Price performance (%) 1M 3M 12M Sales (Rs bn) 976 1,290 1,418
Absolute 0.0 16.4 (11.6) EBITDA (Rs bn) 308 370 408
Rel. to BSE-30 (4.8) (6.6) (28.7) Net profits (Rs bn) 142 148 161
Modest operational performance, capacity addition lags target
NTPC’s reported PAT at Rs33 bn (+10.7% yoy, -18.4% qoq) was weaker than our ahead-of-
Street estimate of Rs37 bn. Lower EBITDA of Rs74 bn should be seen in the context of higher
fuel cost (and likely adjusted in higher regulatory deferral revenues). Earnings for the quarter
included prior period revenues of Rs2.6 bn compared to prior period sales of Rs4.4 bn in
3QFY20, and Rs0.4 bn in 2QFY21.
Core ROE stood at 17% in 3QFY21 (+16% in FY2020) reflecting the underlying strength of the
cost-plus business as regulated equity for the company increased 14.5% yoy to Rs648 bn.
Generation for the quarter increased 7% yoy to 65.4 BUs with coal-based PLF increasing to
64.3% in 3QFY21 (63.5% in 3QFY20). Overall PAF remained at 89.1%. During the quarter,
NTPC commercialized one unit of 800 MW at Lara and 15MW of solar capacity at Auraiya
taking total commercial capacity addition to 1.5 GW in 9MFY21.
Return profile for solar projects looks worrisome; thermal capacity addition lags target
NTPC has won bids for ~1.4 GW of solar capacity across various states in 9MFY21 with winning
tariffs bids of as low as Rs1.99/unit and Rs2.01/unit in Gujarat (200 MW) and Rajasthan (470
MW), respectively. While NTPC continues to enjoy lower cost of borrowing, we remain watchful
of return profile on these projects even as management has guided for equity IRR of ~11-12%.
For thermal plants, the management continues to guide for commissioning of 3GW
(standalone) in FY2021 (against 1.5GW commissioned in 9MFY21). NTPC currently has 11 GW
of capacities under construction on a standalone-basis that will likely commission over the next Murtuza Arsiwalla
three years, resulting in an increase in regulated equity to Rs860 bn by FY2023E (Rs648 bn
currently). Samrat Verma
Maintain BUY rating with unchanged fair value of Rs125/share
Maintain BUY rating with unchanged fair value of Rs125/share, noting inexpensive valuations at
0.7X P/B and 6X on P/E on FY2023E earnings. We have revised our earnings upwards by 13%
for FY2021E and -0.3% for FY2022E factoring higher surcharge income earned through the
year in 9MFY21 on account of elevated receivables. Contact: +91 22 6218 6427
Electric Utilities NTPC
Exhibit 1: NTPC reported PAT of Rs33 bn (+11% yoy) in 3QFY21 led by an 6.9% yoy increase in generated units to 65.4BUs
Interim results for NTPC (Standalone), March fiscal year-ends (Rs bn)
(% Chg.)
3QFY21 3QFY21E 3QFY20 2QFY21 KIE yoy qoq 9MFY21 9MFY20 (% Chg.) 2021E 2020 (% Chg.) 2022E
Net sales 245 248 235 247 (1.1) 4.3 (0.7) 726 705 3.1 976 959 1.7 1,290
Operating costs
Cost of fuel (134) (130) (131) (137) 2.7 2.3 (2.6) (395) (412) (522) (570) (762)
Personnel costs (13) (13) (12) (13) (2.1) 10.5 (4.5) (39) (35) (52) (47) (49)
Other expenses (25) (24) (23) (24) 1.8 8.5 3.0 (70) (60) (94) (89) (108)
Total expenses (171) (168) (165) (175) 2.2 3.8 (2.0) (503) (507) (668) (706) (920)
EBITDA 74 80 70 72 (7.9) 5.6 2.6 223 198 12.7 308 253 21.4 370
EBITDA margin (%) 30.1 32.3 29.7 29.1 30.7 28.1 31.5 26.4 28.7
Regulatory account deferral 9 6 16 3 47.0 (42.3) 165.9 27 17 25 48 15
Other income 8 7 5 13 8.9 44.3 (43.6) 27 17 34 28 30
Interest & finance charges (20) (19) (18) (18) 4.3 14.1 13.3 (59) (49) (81) (68) (90)
Depreciation (26) (26) (23) (25) (0.5) 10.2 1.0 (76) (65) (103) (86) (122)
PBT 45 48 50 46 (7.1) (10.7) (2.0) 136 131 3.8 183 175 4.3 203
Provision for tax (net) (12) (12) (20) (5) (29) (42) (41) (65) (54)
Net profit 33 37 30 41 (9.6) 10.7 (18.4) 107 89 20.2 142 110 29.1 148
Extraordinary — — — (6) (14) — (14) (9) —
EPS 3.4 3.7 3.0 4.2 11 9 15 11 15
EBITDA margin (%) 30.1 32.3 29.7 29.1 30.7 28.1 31.5 26.4 28.7
Tax rate (%) 26.1 24.0 40.3 11.1 21.4 32.1 22.3 37.2 26.9
Other highlights from the earnings call
 Outstanding receivables for NTPC due for more than 45 days continue to remain high at
Rs167 bn (as of Dec 2020) declining from Rs192 bn in Sep 2020. While NTPC has realized
Rs67.4 bn as part of first tranche released from PFC/REC, they expect to get another Rs80
bn in the second tranche.
 NTPC commercialized only 1.5 GW during 9MFY21 on account of commercialization of

one unit at Khargone (660 MW), one unit at Lara (800MW), 15MW of solar plant at
Auraiya and another 50 MW still far from reaching commercialization target of 3 GW on
standalone basis in FY2021E. NTPC plans to commercialize another 4.8 GW in FY2022E
and 5 GW in FY2023E.
 NTPC has incurred capex of Rs124 bn in 9MFY21 on standalone basis while other group
companies have incurred a capex of Rs88 bn taking total group capex to Rs212 in
9MFY21.
 Net generation for the quarter was higher at 65.4 BUs, increase of 6.9% yoy in
comparison to 61.2 BUs in 3QFY20 as coal plants operated at higher PLF of 64.3%. PAF
for coal-based capacities in 3QFY21 improved to 89.1% from 88.3% in 3QFY20. Coal
production from Pakhri Barwadih coal mines remained at 5.75 mn tons in 9MFY21, a
decline of 18% yoy from 7 mn tons in 9MFY20.
 Regulated equity for NTPC stands enhanced to Rs648 bn (+14.5% yoy) in 3QFY21 from
Rs566 bn in 3QFY20 on the back of assets commercialized. We estimate regulated equity
to grow at 12% CAGR between FY2020 and FY2023E to Rs861 bn as NTPC adds 11 GW
of incremental capacity over the next three years.
 NTPC has already commissioned 1,275 MW of RE projects under EPC mode; 2,760 MW
of solar projects are under implementation and another 1,440 MW under various stages
of tendering.
 Fixed cost under-recovery increased to Rs5.7 bn as of December 2020 (Rs5 in 1HFY21)

which is expected to decline to Rs2-2.5 bn by March 2021.
 Loss of generation due to grid restrictions was at 84.1 BUs (coal-based stations) and 24
BUs (gas-based stations) and another 180 MUs due to fuel supply constraints in 9MFY21.

NTPC Electric Utilities
 FGD equipment has been commissioned for 1.3 GW of capacity, packages for 58.9 GW
are under various stages of implementation and tendered for 3.48 GW. NOx equipment
has been commissioned for 3.5 GW of capacity, for 18 GW has been awarded while
under tendering process for another 43GW.
 During 9MFY21, NTPC has received dividends of Rs5.7 bn from subsidiaries/JVs as against
Rs8.8 bn in 9MFY20.
Exhibit 2: Adjusted PAT for 3QFY21 implies an RoE of 17% on regulated equity
Adjustments to reported earnings of NTPC, March fiscal year-ends (Rs bn)
(% Chg.)
3QFY21 3QFY20 2QFY21 yoy qoq 9MFY21 9MFY20 (% Chg.) 2020 2019 (% Chg.)
Reported PAT 33.2 29.9 35.0 10.7 (5) 93 89 5 101.1 117.5 (14)
Adjustments (0.1) (0.4) 4.3 (82) (102) 11 (1) 20.6 (11.3) (282)
Adjusted PAT 33.1 29.5 39.4 12 (16) 104 88 18 121.7 106.2 15
Other income (post-tax) (6) (4) (11) (21) (14) (22) (15)
Core PAT 27.0 25.3 28.6 7 (6) 82 74 12 99.5 91.2 9
Regulated equity 648 566 635 15 2 637 543 618 540
Core RoE (%) 17 18 18 (7) (7) 17 18 16 17
Exhibit 3: PLF for 3QFY21 improved to 64.3% on account of better demand

Operational performance of NTPC, March fiscal year-ends
(% Chg.)
3QFY21 3QFY20 2QFY21 yoy qoq 9MFY21 9MFY20 (% Chg.) 2020 2019 (% Chg.)
Generation (BU) 65.4 61.2 67.7 6.9 (3.3) 193.3 191.3 1.0 259.6 274.5 (5.4)
Commercial generation (BU) 65.2 60.5 67.5 7.8 (3.5) 192.8 189.8 1.6 257.8 273.5 (5.7)
Energy Sent Out (BU) 60.7 56.3 62.9 7.9 (3.4) 179.5 176.7 1.5 240.2 255.7 (6.1)
Coal (mn tons)
Domestic (mn tons) 45.6 43.5 38.3 4.8 18.9 124.0 123.5 0.4 172.0 175.1 (1.7)
Imported (mn tons) 0.3 0.7 0.2 (60.2) 72.7 0.8 2.2 (63.9) 2.8 1.1 170.5
(Chg. bps)
Availability (%)
Coal 89.1 88.3 91.8 78.0 (272.0) 92.2 87.8 441.0 89.7 87.1 256.0
Gas 94.6 98.8 90.2 (413.0) 440.0 92.7 94.1 (142.7) 93.8 92.2 157.0
Hydro 107.8 109.1 110.2 (130.0) (249.0) 109.1 109.7 (68.3) 109.0 107.9 105.0
PLF (%)
Coal 64.3 63.5 64.3 83.0 4.0 62.3 67.2 (495.0) 68.2 76.7 (848.0)
Gas 6.8 10.4 26.2 (359.0) (1,948.0) 19.5 14.7 476.7 14.1 21.1 (702.0)
Hydro 20.4 22.5 96.4 (205.0) (7,600.0) 56.9 60.0 (317.7) 49.1 43.0 608.0
AuX (%) 6.8 6.9 6.9 (13.8) (10.6) 6.9 6.9 4.0 6.8 6.5 32.0
Exhibit 4: 865 MW of capacity was commercialized on a standalone basis during the quarter
Details of installed and commercial capacity, March fiscal year-ends (MW)
Change (%) Change (GW)
3QFY21 3QFY20 2QFY21 yoy qoq yoy qoq
Commercial capacity
Standalone 51,170 47,985 50,355 6.6 1.6 3.2 0.8
Others 11,805 8,461 11,755 39.5 0.4 3.3 0.1
Consolidated 62,975 56,446 62,110 11.6 1.4 6.5 0.9
Installed capacity
Standalone 51,170 49,695 51,155 3.0 0.0 1.5 0.0
Others 11,805 8,461 11,755 39.5 — 3.3 —
Consolidated 62,975 58,156 62,910 8.3 0.1 4.8 0.1

Electric Utilities NTPC
Exhibit 5: Outstanding debtors for NTPC continue to remain high at Rs268 bn as of Sep 2020
Trade receivables for NTPC, March fiscal year-ends (Rs bn)
Outstanding debtors (Rs bn)

350
290
300 268
250
194
200
156
150 128
100
100 78 81 76 76 84
50
-
Sep-16
Sep-17
Sep-18
Sep-19
Sep-20
Mar-16
Mar-17
Mar-18
Mar-19
Mar-20
Jun-20
Exhibit 6: Current CWIP is 33% of regulated equity, that will propel growth up to FY2023E
Composition of book value of NTPC, March fiscal year-ends, 2018-2023E (Rs/share)
Regulated equity CWIP Subsidiaries / JVs Others

160
140 20
10
120 3
3 27 27
27
100 13 27
18 14 10
13
80 10 23
22
28
60 24
40 84 89
71
55 63
51
20
0
2018 2019 2020 2021E 2022E 2023E
Exhibit 7: Key assumptions behind NTPC estimates, March fiscal year-ends, 2018-23E
2018 2019 2020 2021E 2022E 2023E

Assumptions
Capacity addition (MW) 3,670 1,225 3,970 3,060 5,560 2,220
Commercial capacity (MW) 43,572 44,797 48,767 52,002 57,562 59,782
Regulated equity (Rs mn) 509,207 539,890 618,480 689,229 809,867 860,636
PLF-Coal (%) 78 77 68 63 80 80
PLF-Gas (%) 25 21 14 20 20 20
Average tariff (Rs/kwh) 3.38 3.46 3.59 3.84 5.02 3.88
Average fuel cost (Rs/kwh) 1.91 2.09 2.23 2.03 2.09 2.16

NTPC Electric Utilities
Exhibit 8: Change in estimates for NTPC, March fiscal year-ends, 2021 - 23E
Revised estimates Old estimates Change (%)

2021E 2022E 2023E 2021E 2022E 2023E 2021E 2022E 2023E
Revenues 975,744 1,290,043 1,417,876 1,056,944 1,379,748 1,501,568 (7.7) (6.5) (5.6)
EBITDA 307,530 370,369 408,353 317,781 388,082 418,540 (3.2) (4.6) (2.4)
Net profit 142,071 148,116 160,694 125,683 148,612 158,442 13.0 (0.3) 1.4
Exhibit 9: NTPC: Profit model, balance sheet, cash model, March fiscal year-ends, 2018 - 23E (Rs mn)
2018 2019 2020 2021E 2022E 2023E

Profit model (Rs mn)
Net sales 834,528 903,074 959,324 975,744 1,290,043 1,417,876
EBITDA 216,674 227,715 253,247 307,530 370,369 408,353
Other income (incl. regulatory deferral account) 23,083 56,459 76,069 58,847 44,697 42,549
Interest (39,843) (47,167) (67,820) (80,586) (90,409) (91,853)
Depreciation (70,989) (72,544) (86,229) (102,941) (122,138) (131,729)
Pretax profits 128,925 164,463 175,268 182,849 202,519 227,321
Tax (25,493) (53,387) (65,218) (40,778) (54,403) (66,627)
Net profits 103,432 111,076 110,050 142,071 148,116 160,694
Extraordinary items — 6,423 (8,922) (13,630) — —
Earnings per share (Rs) 10.5 11.2 11.1 14.7 15.3 16.6
Balance sheet (Rs mn)
Total equity 1,017,778 1,074,082 1,135,694 1,202,845 1,306,527 1,419,012
Deferred taxation liability 44,945 63,395 113,365 113,365 113,365 113,365
Total borrowings 1,151,979 1,429,334 1,605,881 1,627,141 1,393,610 1,261,343
Currrent liabilities 387,233 341,967 421,734 410,768 453,904 468,789
Total liabilities and equity 2,601,936 2,908,778 3,276,675 3,354,119 3,267,406 3,262,509
Cash 39,784 21,443 22,091 36,171 8,972 59,188
Current assets 473,323 587,602 688,869 608,145 562,313 585,370
Total fixed assets 1,988,354 2,168,273 2,301,706 2,445,795 2,432,113 2,353,943
Investments 100,475 131,459 264,009 264,009 264,009 264,009
Total assets 2,601,936 2,908,778 3,276,675 3,354,119 3,267,406 3,262,509
Free cash flow (Rs mn)
Operating cash flow, excl. NWC 174,421 190,043 187,357 231,382 270,254 292,422
Working capital (4,075) (159,546) (21,500) 69,757 88,968 (8,172)
Capital expenditure (258,415) 224,589 (223,287) (247,030) (108,456) (53,559)
Investments (10,951) (30,985) (132,550) (—) — —
Free cash flow (99,020) 224,101 (189,979) 54,109 250,766 230,692
Key ratios
Net debt/equity (%) 109 131 139 132 106 85
RoE (%) 10.4 10.6 10.0 12.2 11.8 11.8
RoCE (%) 6.2 4.9 4.5 6.4 7.1 7.8
Book value per share (Rs) 103 109 115 124 135 146

SELL
Godrej Properties (GPL)
https://ultraviewer.et/en/own Real Estate FEBRUARY 05, 2021
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RESULT
Changing tracks. Godrej Properties saw pre-sales of Rs14.9 bn (+25% yoy) in CMP (`): 1,340
3QFY21; while impressive, seemed modest in the context of other Mumbai-based Fair Value (`): 810
developers that saw record sales during the quarter. Cash generation from operations
BSE-30: 50,614
improved, although continued payments towards land purchases led to continued
increase in net debt. Maintain SELL rating with revised FV of Rs810 (from Rs700) as we
incorporate new project wins as well as roll forward to March 2023E-based valuations.
Godrej Properties
CMP(Rs)/FV(Rs)/Rating 1,340/810/SELL EPS (Rs) 5.6 14.3 32.3
52-week range (Rs) (high-low) 1,528-505 EPS growth (%) (47.8) 156.0 125.2
Mcap (bn) (Rs/US$) 338/4.7 P/E (X) 239.2 93.4 41.5
ADTV-3M (mn) (Rs/US$) 1,948/27 P/B (X) 6.8 6.4 5.5
Shareholding pattern (%) EV/EBITDA (X) (419.8) 134.8 60.5
Promoters 64.4 RoE (%) 2.9 7.1 14.2
Price performance (%) 1M 3M 12M Sales (Rs bn) 7 15 17
Absolute (4.8) 37.0 22.0 EBITDA (Rs bn) (1) 3 6
Rel. to BSE-30 (9.3) 9.9 (1.7) Net profits (Rs bn) 1 4 8
Impressive sales performance, collections improve; profitability remains the key

Godrej Properties recognized weak revenues of Rs1.7 bn (-55% yoy, +90% qoq) with delivery
of 1.3 mn sq. ft in its JV projects in 3QFY21. Consequently, EBITDA margins remained negative
32%. Other income (primarily interest income from JVs and liquid investments) increased 5%
yoy to Rs1.4 bn while share of profits from JVs and associates was a lower loss of Rs50 mn in
3QFY21.
Improved project execution during the quarter led to gross collections of Rs12.6 bn (+11% yoy,
+84% qoq) compared to average quarterly collections of Rs10.7 bn in FY2020 and Rs5.5 bn in
1HFY21. Construction spends in 3QFY21 increased to Rs5.1 bn. However, land and approval
payments of Rs5 bn resulted in overall cash outflow of Rs3.5 bn. Net cash flow in last three
quarters has remained negative totaling Rs19.2 bn in 9MFY21.
Capital-intensive business development may necessitate equity infusion
The last seven (10.5 mn sq. ft) out of eight new projects (11.67 mn sq. ft) since 4QFY20 taken
up by Godrej Properties, have been in the owned category, where GPL is buying land and has a
larger economic interest in the project compared to the DM and JV model adopted previously.
Land and related payments of Rs26 bn over this period, have been in excess of the equity raise
of Rs21 bn done in 1QFY20. GPL has once again resolved to raise fresh equity (Rs37.5 bn), likely
prompted by increase in net debt to Rs31 bn (0.64X net debt/equity) compared to Rs11 bn as
of March 2020. We note that GPL has raised Rs31 bn over the past two years, and Rs42 bn
over the past decade in fresh equity raise.
Maintain SELL rating with revised FV of Rs810/share
Murtuza Arsiwalla
GPL holds the pole position in terms of residential sales among the listed real estate developers,
with a multi-city presence making it the prime candidate to play the consolidation theme as well Samrat Verma
as potential up-cycle in the real estate sector. Improvement in margins, and better cash
generation from extant projects would help justify the substantial premium at which Godrej
Properties trades at relative to peers. We currently maintain our SELL rating with a revised FV of
Rs810/share (from Rs700/share).
The revision in Fair Value is on account of (1) inclusion of new projects in the portfolio, and (2)
roll-forward of valuations on the basis of March 2023E (from March 2022E previously). Contact: +91 22 6218 6427
Godrej Properties Real Estate
Exhibit 1: Absence of delivery of owned projects weighed on revenue recognition and reported margins
GPL: results snapshot, March fiscal year-ends (Rs mn)
% change
3QFY21 3QFY21E 3QFY20 2QFY21 3QFY21E 3QFY20 2QFY21 9MFY21 9MFY20 % chg. 2021E 2020 % chg. 2022E
Net sales 1,705 2,179 3,828 895 (22) (55) 90 3,323 12,784 (74) 6,951 24,414 (72) 14,896
Operating costs (2,248) (2,353) (3,405) (1,609) (4) (34) 40 (5,115) (10,884) (53) (7,824) (20,959) (63) (12,214)
EBITDA (543) (173) 423 (714) 214 (228) (24) (1,792) 1,900 (873) 3,455 2,682
Other income 1,408 1,627 1,347 1,607 (13) 5 (12) 4,250 3,481 22 5,542 4,731 17 3,565
Interest costs (449) (500) (575) (493) (10) (22) (9) (1,441) (1,645) (12) (1,920) (2,220) (14) (2,689)
Depreciation (50) (52) (53) (49) (5) (5) 3 (143) (150) (4) (204) (205) (1) (223)
PBT 366 902 1,142 352 (59) (68) NM 873 3,586 2,545 5,760 3,334
Taxes (170) (271) (426) (155) (37) (60) 10 (381) (1,316) (71) (763) (2,203) (65) (1,000)
PAT 195 631 716 197 (69) (73) NM 493 2,270 1,781 3,557 2,334
Share of profit from associates (50) (150) (261) (127) NA (81) (61) (478) (575) (370) (851) 1,154
Adjusted PAT 146 481 455 71 (69) (68) 578 14 1,696 1,412 2,706 3,488
EPS (Rs/share) 0.6 3.1 1.8 0.3 0.1 6.7 5.6 10.7 13.8
Key ratios
EBITDA margin (%) (31.9) (7.9) 11.0 (79.7) (53.9) 14.9 (12.6) 14.2 18.0
PAT margin (%) 8.5 22.1 11.9 7.9 14.8 17.8 25.6 14.6 15.7
Effective tax rate (%) 46.6 30.0 37.3 43.9 43.6 36.7 30.0 38.2 30.0
Operational (a)
Sales (mn sq. ft) 2.39 1.58 1.73 51 38 6.6 5.2 28 9.78 8.80 11 11.98
Sale value (Rs mn) 14,870 11,890 10,690 25 39 40,870 35,330 16 66,146 59,160 12 95,452
Collections (Rs mn) 12,570 11,310 6,840 11 84 23,620 28,750 (18) 44,098 42,760 3 85,156
Other highlights from the results

Business development. During the quarter, GPL has taken up two new land parcels in
Sarjapur and Whitefield in Bengaluru. The two projects in aggregate will offer 1.6 mn sq. ft
and 2.5 mn sq. ft of saleable area respectively. We note that both these projects are 100%
owned by GPL and reflect the change in management strategy to undertake a higher
quantum of owned projects.
Launches. Godrej Properties launched 1.87 mn sq. ft of area across three new
projects/phases in 3QFY21 (2QFY21 saw no new launches). Management remains hopeful
of launching another 12 projects in 4QFY21 and subsequently surpassing sales value of Rs59
bn achieved in FY2020. We have a sales target of Rs66 bn for FY2021E noting sales of
Rs40.8 bn in 9MFY21.
Sales. GPL sold 2.4 mn sq. ft (+25% yoy, +39% qoq) for sales value of Rs14.9 bn in
3QFY21. Of total sales, new launches contributed to 57% sales for sales value of Rs8.4 bn
while existing inventory reported sales of Rs6.3 bn. For the newly launched projects in
3QFY21, GPL sold 75% of the total area launched. Commercial projects reported sales of
Rs280 mn.
Sales under the JV format continue to dominate and accounted for Rs8.3 bn of overall sales.
Sales in MMR (Rs4.6 bn) and Pune (Rs4.4 bn) accounted for 63% of the overall sales, while
NCR (Rs3.8 bn) and Bengaluru (Rs1.5 bn) made up for a smaller share in overall sales.
Execution. During the quarter, GPL delivered two JV projects aggregating 1.3 mn sq. ft—
Godrej Air, Phase 1, Bengaluru (0.66 mn sq. ft) and Godrej 101, NCR (0.63 mn sq. ft).
Management also highlighted that worker count at sites is at 124% of pre-Covid levels as of
end-December 2020 that will likely help build traction on project execution. Construction
outflows of Rs5.1 bn (+46% qoq) in 3QFY21 were better than the execution levels seen in
1HFY21.

Real Estate Godrej Properties
Exhibit 2: Continued land and construction spends overshadowed improvement in cash collections
GPL: gross OCF, March fiscal year-ends, 3QFY18 - 3QFY21 (Rs mn)
Operating cash inflow 9,020 12,770 11,280 11,100 9,180 12,250 8,850 8,590 11,310 14,010 4,210 6,840 12,570
Construction and related outflow (2,640) (3,600) (5,050) (4,600) (4,920) (4,700) (4,590) (4,160) (5,530) (4,740) (3,300) (3,510) (5,140)
Other project related outflow (3,260) (2,350) (3,470) (2,700) (2,950) (3,650) (4,010) (4,030) (3,340) (4,430) (4,420) (3,190) (2,980)
Interest and related outflow (940) 350 (1,180) (1,290) (1,210) (1,100) (1,190) (1,430) (1,850) (1,480) (840) (1,290) (950)
PE exits — — — — — (1,920) — 1,450 — — — — —
Operating cash flow 2,180 7,170 1,580 2,510 100 880 (940) 420 590 3,360 (4,350) (1,150) 3,500
Land and approval costs (1,240) (2,530) (3,110) (1,670) (1,720) (6,880) (9,160) (2,940) (1,760) (3,490) (2,460) (6,970) (5,030)
Advance to JV partners (280) (1,460) (90) (330) (1,090) 1,940 (740) (340) (760) (1,030) (150) (1,130) (1,660)
Net cash flow 660 3,180 (1,620) 510 (2,710) (4,060) (10,840) (2,860) (1,930) (1,160) (6,960) (9,250) (3,190)
Equity raise 10,000 21,000 (340) — — — — —
Ind-AS adjustments (80) (990) 2,330 1,860 140 580 1,940 1,630 1,900 500 1,040 (560) (260)
Net cash flow 580 2,190 10,710 2,370 (2,570) (3,480) 12,100 (1,570) (30) (660) (5,920) (9,810) (3,450)
Exhibit 3: EBITDA margins remained negative at 32% in 3QFY21

GPL: gross margin and EBITDA margin, March fiscal year-ends, 1QFY17 - 3QFY21 (%)
Gross margin (%) EBITDA margin (%)

80.0
57.4
60.0 48.9
38.0 32.9 43.5
32.4 34.8 32.1 35.2 35.1 31.1
40.0 25.6 23.3 28.2 30.6
21.0 16.7 15.8 15.8 19.3
15.4 15.3 13.9
20.0 13.1
7.1 7.4
13.2
6.7 9.5 11.0 13.4
-
(20.0) (7.4) (3.0)
(11.4)
(20.6)
(40.0) (31.9)
(60.0)
(80.0)
(74.1)
(79.7)
(100.0)
1QFY17
3QFY17
1QFY18
2QFY18
4QFY18
1QFY19
3QFY19
1QFY20
2QFY20
4QFY20
1QFY21
3QFY21
2QFY17
4QFY17
3QFY18
2QFY19
4QFY19
3QFY20
2QFY21
Exhibit 4: Contribution from JVs remained negative at Rs50 mn in 3QFY21

GPL: other operating income and share of profit of associates/JVs, March fiscal year-ends, 1QFY17- 3QFY21
(Rs mn)
Other operating income Share of profit from associates/JVs

3,500
3,000
2,500
2,000
1,500
1,000
500
(500)
3QFY17
4QFY17
1QFY18
4QFY18
1QFY19
2QFY19
3QFY19
2QFY20
3QFY20
4QFY20
1QFY21
1QFY17
2QFY17
2QFY18
3QFY18
4QFY19
1QFY20
2QFY21
3QFY21

Exhibit 5: New launches contributed up to 57% of overall sales in 3QFY21

GPL: sales and sales value, March fiscal year-ends, 2015 - 3QFY21
2015 2016 2017 2018 1QFY19 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 2QFY21 3QFY21
Sales (mn sq. ft)
Residential
From new launches (a) 0.92 3.10 2.44 2.97 0.70 0.28 1.88 1.62 0.58 1.56 0.17 2.16 0.26 — 1.39
From existing projects 2.72 0.75 0.54 3.13 0.41 0.78 0.88 1.99 0.76 0.69 1.41 1.42 2.26 1.72 1.01
Residential 3.64 3.85 2.98 6.10 1.11 1.07 2.77 3.61 1.33 2.25 1.58 3.58 2.51 1.72 2.40
Commercial
From new launches — — — — — — — — — — — — — — —
From existing projects 0.25 0.47 0.11 0.24 0.06 0.05 0.03 0.10 0.02 0.01 — 0.03 — 0.01 (0.01)
Commercial 0.25 0.47 0.11 0.24 0.06 0.05 0.03 0.10 0.02 0.01 — 0.03 — 0.01 (0.01)
Total 3.89 4.32 3.09 6.33 1.17 1.12 2.80 3.72 1.35 2.26 1.58 3.61 2.51 1.73 2.39
Growth (%) 31 11 (29) 105 (35) (32) 96 153 15 102 (44) (3) 86 (23) 51
Sales value (Rs mn)
Residential 23,890 35,430 17,390 43,710 7,980 7,890 15,040 20,350 8,890 14,400 11,890 23,720 15,310 10,690 14,590
From new launches (a) 12,370 29,220 10,580 10,580 5,260 2,130 10,110 9,180 3,480 9,870 2,210 14,500 1,090 — 8,350
From existing projects 11,520 6,210 6,810 33,130 2,720 5,760 4,930 11,170 5,410 4,530 9,680 9,220 14,220 10,690 6,240
Commercial 2,890 14,940 2,360 7,120 220 180 230 1,260 90 60 — 110 — — 280
Total 26,780 50,370 19,750 50,830 8,200 8,070 15,270 21,610 8,980 14,460 11,890 23,830 15,310 10,690 14,870
Growth (%) 10 88 (61) 157 (44) (40) 25 105 10 79 (22) 10 70 (26) 25
Avg. realizations (Rs/sq. ft) 6,879 11,665 6,398 8,026 7,012 7,234 5,449 5,811 6,655 6,407 7,510 6,600 6,094 6,183 6,235
Growth (%) (16) 70 (45) 25 (14) (12) (36) (19) (5) (11) 38 14 (8) (3) (17)
Exhibit 6: Contribution from JV projects in overall sales continues to remain high for GPL
GPL: residential sales and area categorized by project type, March fiscal year-ends, 3QFY18 - 3QFY21
Sales (sq. ft) 1,429,843 1,438,414 1,169,503 1,068,792 2,802,425 3,718,690 1,349,271 2,256,989 1,627,207 3,610,790 2,512,288 1,728,995 2,385,225
Own 156,009 48,858 59,561 81,941 292,738 1,266,899 97,908 276,474 214,640 312,518 267,798 117,906 527,874
JV 462,144 930,347 550,494 512,491 1,800,207 1,520,663 649,555 1,285,124 1,009,760 2,635,216 1,668,943 1,052,943 1,427,300
DM 526,631 107,097 236,651 64,182 216,297 193,391 242,126 485,757 — — 294,817 57,433 —
Others 285,059 352,112 322,797 410,178 493,183 737,737 359,682 209,634 402,807 663,056 280,730 500,713 430,051
Sales (Rs mn) 12,200 10,530 8,200 8,070 15,280 21,610 8,970 14,460 12,120 23,830 15,310 10,740 14,870
Own 470 1,090 — 720 1,390 5,650 260 910 1,030 2,640 1,330 1,150 3,460
JV 2,550 6,210 3,890 3,900 8,800 7,980 4,450 9,170 7,710 17,070 10,790 6,000 8,310
DM 3,430 710 1,910 850 1,140 1,420 1,700 2,930 — — 1,820 370 —
Others 5,750 2,520 2,400 2,600 3,950 6,560 2,560 1,450 3,380 4,120 1,370 3,220 3,100
Realization (Rs per sq. ft) 8,532 7,321 7,012 7,551 5,452 5,811 6,648 6,407 7,448 6,600 6,094 6,212 6,234
Own 3,013 22,310 NM 8,787 4,748 4,460 2,656 3,291 4,799 8,448 4,966 9,754 6,555
JV 5,518 6,675 7,066 7,610 4,888 5,248 6,851 7,135 7,635 6,478 6,465 5,698 5,822
DM 6,513 6,630 8,071 13,244 5,271 7,343 7,021 6,032 NM NM 6,173 6,442 NM
Others 20,171 7,157 7,435 6,339 8,009 8,892 7,117 6,917 8,391 6,214 4,880 6,431 7,208

Exhibit 7: Business development continues to see large capital outlay as GPL continues to invest in large land parcels
GPL: area launched, area delivered and business development categorized by type, March fiscal year-ends, 3QFY18- 3QFY21 (mn sq. ft)
Area launched 1.64 2.70 2.55 0.97 5.88 6.38 2.17 4.23 0.48 5.99 1.34 — 1.87
Own — — — — 1.18 1.55 — 0.64 — — — — 0.51
JV 0.99 2.70 1.38 0.97 4.13 4.83 1.25 3.02 0.48 5.64 1.34 — 1.36
DM 0.65 — 1.17 — 0.57 — 0.92 0.57 — — — — —
Business development (mn sq. ft) — 6.00 — 2.90 — 26.60 0.35 — 12.70 6.07 — 1.50 4.10
Own — 0.75 — — — 1.10 0.35 — 1.10 4.90 — 1.50 4.10
JV — 3.55 — 2.90 — 25.50 — — 11.60 1.17 — — —
DM — 1.70 — — — — — — — — — — —
Area delivered — 0.90 — — 1.67 1.55 1.64 — 1.73 1.87 — 2.92 1.29
Own — 0.90 — — 1.29 0.50 0.34 — 0.09 0.50 — — —
JV — — — — — 1.05 1.30 — 1.64 1.37 — 2.92 1.29
DM — — — — — — — — — — — — —
Exhibit 8: We currently factor sales of Rs66 bn in FY2021E

Key segment-wise assumptions, March fiscal year-ends, 2018 – 2023E (Rs mn)
2018 2019 2020 2021E 2022E 2023E

Owned
Sales (mn sq. ft) 1.0 2.0 1.6 1.7 3.2 5.0
Sales (Rs mn) 16,064 11,640 9,053 16,039 33,331 52,656
Realization (Rs / sq. ft) 15,327 5,715 5,799 9,174 10,395 10,484
GCF (annual) (7,581) (3,701) 2,383 (11,599) (802) 718
JV
Sales (mn sq. ft) 4.0 5.7 6.2 7.3 7.2 7.8
Sales (Rs mn) 25,340 33,076 39,329 44,717 51,388 64,262
GCF (annual) 986 1,541 3,805 4,290 6,146 8,005
DM
Sales (mn sq. ft) 0.8 0.9 1.2 0.8 1.5 1.9
Sales (Rs mn) 6,321 7,393 9,093 5,390 10,733 18,184
GCF (annual) 827 974 501 295 918 1,374
Total
Sales (mn sq. ft) 6.2 8.8 8.8 9.8 12.0 14.8
Sales (Rs mn) 50,820 53,160 59,380 66,146 95,452 135,102
GCF (annual) (5,768) (1,187) 6,689 (7,014) 6,262 10,097

Exhibit 9: Vikhroli land bank contributes Rs85/share in our NAV

SoTP of Godrej Properties, March 2023E
Value Inventory Receivables GCF (Attributable)

(Rs mn) (Rs/share) (%) (mn sq. ft) (Rs/sq. ft) (Rs mn) (Rs mn) (Rs mn)
Owned
Ongoing
Mumbai 2,902 12 2 1 26,988 15,805 4,695 9,239
Bangalore 953 4 1 1 7,077 4,099 1,674 4,316
NCR 3,968 16 3 1 13,296 18,446 1,163 11,029
Others 9,123 36 6 25 4,326 106,813 5,244 23,963
Ongoing 16,946 67 12 27 5,328 145,163 12,777 48,547
Forthcoming
Mumbai 26,122 104 18 5 23,313 125,423 — 53,140
Bangalore 5,555 22 4 9 6,389 56,794 450 12,968
NCR 11,853 47 8 3 16,381 53,731 7,650 27,717
Others 966 4 1 2 4,568 10,233 — 1,070
Forthcoming 44,497 177 30 20 12,440 246,182 94,896
JV
Ongoing
Mumbai 9,189 36 6 8 13,639 103,505 23,273 13,619
Bangalore 831 3 1 4 5,575 19,765 10,940 1,703
Pune 3,356 13 2 5 5,981 32,663 16,390 5,592
NCR 2,519 10 2 3 9,432 27,743 19,334 3,845
Others 2,344 9 2 7 7,014 48,412 12,758 4,093
Ongoing 18,239 72 12 26 8,778 232,088 82,696 28,852
Forthcoming
Mumbai 8,830 35 6 11 11,382 119,966 — 14,484
Bangalore 4,102 16 3 9 5,845 50,675 — 5,795
Pune 23,890 95 16 38 6,846 256,838 16,780 42,081
NCR 895 4 1 1 11,565 11,565 — 1,272
Forthcoming 37,717 150 26 58 7,606 439,043 16,780 63,632
DM
Ongoing
Mumbai 1,180 5 1 2 10,590 26,383 — 2,320
Bangalore 1,918 8 1 6 5,483 30,260 — 3,482
NCR 1,744 7 1 4 6,407 27,160 — 3,232
Ongoing 4,842 19 3 12 6,842 83,803 — 9,034
Forthcoming
Mumbai 2,486 10 2 2 22,439 44,879 — 4,488
Forthcoming 2,486 10 2 2 22,439 44,879 — 4,488
Vikhroli 21,487 85 15
NAV 146,214 580 100 145 8,190 1,191,157 120,353 249,449
Premium to NAV 47,666 189
Investments and refundable deposits 22,677 90
Net cash (12,366) (49)
Fair value 204,191 810

Exhibit 10: Payment for land has led to increase in inventory and net debt in FY2021E
GPL: profit model, balance sheet, cash flow model, March fiscal year-ends, 2018 - 23E (Rs mn)
2018 2019 2020 2021E 2022E 2023E

Profit model
Net sales 18,892 28,174 24,414 6,951 14,896 17,495
EBITDA (44) 1,779 3,455 (873) 2,682 5,787
Other income 5,015 4,046 4,731 5,542 3,745 4,290
Interest (1,501) (2,340) (2,220) (1,920) (2,689) (2,829)
Depreciation (161) (143) (205) (204) (223) (255)
Pre-tax profits 3,308 3,341 5,760 2,545 3,514 6,994
Tax (1,019) (951) (2,203) (763) (1,054) (2,098)
Net income 2,289 2,390 3,557 1,781 2,460 4,896
Adjusted net income 2,349 2,530 2,706 1,412 3,614 8,140
Earnings per share (Rs) 11 11 11 6 14 32
Balance sheet
Total equity 22,403 24,690 48,045 49,456 53,071 61,210
Gross borrowings 37,029 35,158 32,136 34,270 38,270 38,270
Non-current liabilities 119 123 144 128 128 128
Current liabilities 11,671 20,957 20,735 27,021 32,976 47,731
Total liabilities and equity 71,222 80,927 101,060 110,875 124,445 147,339
Net fixed assets 1,841 1,962 2,759 2,611 2,619 2,665
Investments in Joint Ventures 2,905 7,229 8,228 7,405 6,442 5,798
Non-current financial assets 7,701 9,236 8,061 7,234 7,234 7,234
Other non-current assets 2,925 7,301 5,568 6,259 6,354 6,451
Current assets 50,410 44,678 55,830 79,750 94,180 117,575
Investments 5,438 10,521 20,616 7,616 7,616 7,616
Total assets 71,222 80,927 101,060 110,875 124,445 147,339
Ratios (%)
Debt/equity 166 143 77 74 76 66
Net debt/equity 136 94 24 58 44 20
RoE (%) 11.1 10.7 7.4 2.9 7.1 14.2
RoCE (%) 5.6 6.8 6.8 3.7 4.8 7.0
Book value per share (Rs) 103 108 191 196 211 243

SELL
Whirlpool (WHIRL)
https://ultraviewer.et/en/own Consumer Durables & Apparel FEBRUARY 04, 2021
load.html
RESULT
Sector view: Cautious
3QFY21 fares weaker than expected. Whirlpool reported a weaker-than-expected CMP (`): 2,445
3Q with yoy revenue growth of 17.5% versus our estimate of 23% growth. Slower Fair Value (`): 1,930
festive demand coupled with possible customer downtrading drove the earnings miss.
BSE-30: 50,614
Lower revenues and higher employee and other expenses led to weaker EBITDA margin
of 6.7%. DCF-based FV increases to Rs1,930 (Rs1,750 earlier) on roll-forward to March
2022 and higher intermediate revenue growth assumptions. SELL stays.
Whirlpool
CMP(Rs)/FV(Rs)/Rating 2,445/1,930/SELL EPS (Rs) 26.1 48.4 62.9
52-week range (Rs) (high-low) 2,787-1,343 EPS growth (%) (30.4) 85.2 30.0
Mcap (bn) (Rs/US$) 311/4.3 P/E (X) 93.6 50.6 38.9
ADTV-3M (mn) (Rs/US$) 303/4 P/B (X) 11.2 10.1 9.1
Promoters 75.0 RoE (%) 12.5 21.0 24.6
Absolute (5.9) 18.5 1.0 EBITDA (Rs bn) 5 8 11
Festive demand drives revenue growth of 17.5% yoy
Whirlpool reported a weaker-than-expected quarter with revenue growth of 17.5% yoy against
our expectation of 23% yoy growth. The miss was probably due to lower-than-anticipated sales
ramp-up in the festive season and possible customer downtrading. While the revenue growth
missed our estimates, the yoy growth print still came in at 17.5%, which could be attributed to
sustained demand for within-the-home consumption items and some increased buying from
the channel towards the quarter-end in anticipation of future price hikes.
Input cost headwinds and higher other expenses led to weaker-than-expected EBITDA margins
Gross margin shrunk by 292 bps yoy to 36.7% on account of higher commodity cost, product
mix (higher demand of lower priced products) and continued discounts to promote retail off-
take and provide some relief to the dealer/distributor channels. We believe margins might
continue to be stressed for the next quarter as input cost headwinds remain and incremental
import duties on compressors levied by the government come into effect. Operating leverage
and higher-than-expected costs (employee expense up 14% yoy, other expenses up 4.7% yoy)
resulted in weak EBITDA print of Rs1 bn (up 12% yoy), which was lower than estimate of Rs1.5
bn. EBITDA margin came in at 6.7% against our estimate of 9.8%. We reckon advertising
expense and freight expense have recovered on a yoy basis.
Revised FV of Rs1,930; CMP baking in decent revenue momentum
Whirlpool’s revenue trajectory may remain decent going ahead as larger players gain share and Garima Mishra
improve their reach via organized retail channels. Further, Whirlpool’s expansive product
portfolio as well as distribution makes it well-positioned across product categories it is present
Shubhangi Nigam
in (barring perhaps ACs). Valuations at 39X FY2023E P/E capture these positives, in our view.
We increase our FV to Rs1,930 (earlier Rs1,750) on account of roll-forward to March 2022 from
December 2021 as well as higher revenue growth assumptions in intermediate years. SELL stays.
Contact: +91 22 6218 6427
Consumer Durables & Apparel Whirlpool
Exhibit 1: Revenue growth lower-than-expected on weaker festive demand

Interim results for Whirlpool, March fiscal year-ends (Rs mn, %)
Change (%)
3QFY21 3QFY21E 3QFY20 2QFY21 KIE yoy qoq 9MFY21 9MFY20 Yoy (%) FY2021E FY2020 Yoy (%)
Total Income 14,940 15,636 12,712 15,995 (4.5) 17.5 (6.6) 41,205 46,389 (11.2) 58,101 59,925 (3.0)
Total Expenditure (13,934) (14,104) (11,816) (14,183) (1.2) 17.9 (1.8) (37,921) (41,030) (7.6) (53,126) (53,192) (0.1)
Raw materials (9,464) (9,851) (7,682) (9,937) (3.9) 23.2 (4.8) (25,978) (28,114) (7.6) (36,604) (36,499) 0.3
Employee expense (1,684) (1,532) (1,473) (1,502) 9.9 14.3 12.1 (4,673) (4,471) 4.5 (6,309) (5,896) 7.0
O ther expenditure (2,786) (2,721) (2,661) (2,744) 2.4 4.7 1.5 (7,270) (8,446) (13.9) (10,214) (10,796) (5.4)
EBITDA 1,006 1,532 897 1,812 (34.3) 12.2 (44.5) 3,284 5,359 (38.7) 4,975 6,733 (26.1)
EBITDA (%) 6.7 9.8 7.1 11.3 8.0 11.6 8.6 11.2
Depreciation (351) (330) (294) (424) 6.4 19.6 (17.2) (1,059) (936) 13.1 (1,439) (1,293) 11.3
Interest (68) (30) (31) (10) 126.7 120.1 615.8 (151) (119) 27.1 — (199) (100.0)
O ther income 284 250 395 348 13.4 (28.1) (18.6) 774 1,036 (25.3) 1,007 1,287 (21.7)
PBT 870 1,422 967 1,726 (38.8) (10.0) (49.6) 2,848 5,340 (46.7) 4,543 6,529 (30.4)
Exceptional items — — — — - - — —
Tax expense (227) (364) (235) (440) (37.7) (3.3) (48.5) (754) (1,450) (48.0) (1,229) (1,766) (30.4)
PAT 644 1,058 732 1,286 (39.2) (12.1) (50.0) 2,095 3,889 (46.1) 3,314 4,763 (30.4)
Adjusted PAT 644 1,058 732 1,286 (39.2) (12.1) (50.0) 2,095 3,889 (46.1) 3,314 4,763 (30.4)
Number of shares (mn) 127 127 127 127 127 127 127 127
EPS 5.1 8.3 5.8 10.1 (39.2) (12.1) (50.0) 16.5 30.7 (46.1) 26.1 37.5 (30.4)
Key ratios (as % of revenues)
RM cost 63.3 63.0 60.4 62.1 63.0 60.6 63.0 60.9
Employee cost 11.3 9.8 11.6 9.4 11.3 9.6 10.9 9.8
O ther expenditure 18.6 17.4 20.9 17.2 17.6 18.2 17.6 18.0
Effective tax rate 26.1 25.6 24.3 25.5 26.5 27.2 27.0 27.0
Exhibit 2: EBITDA margin weakens on account of operating leverage and input cost headwinds
Key operating metrics for Whirlpool, March fiscal year-ends (%, yoy)
1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 2QFY21 3QFY21
Revenue growth 15.0 37.5 18.3 24.0 12.8 1.9 26.5 7.7 19.6 17.9 4.9 (0.1) (48.0) 14.8 17.5
Gross margin 35.9 39.4 41.3 36.4 37.6 38.0 36.8 37.6 37.5 41.9 39.6 38.1 36.0 37.9 36.7
EBITDA margin 14.4 9.8 9.3 11.1 14.8 9.1 8.1 12.6 15.3 10.3 7.1 10.1 4.5 11.3 6.7
EBITDA growth 10.8 26.6 5.7 11.8 15.8 (5.1) 9.4 23.0 23.9 33.4 (8.1) (20.1) (84.6) 26.0 12.2
PAT growth 8.8 25.1 (4.1) 22.9 23.4 6.9 14.1 13.9 16.5 59.0 20.8 (16.0) (91.4) 3.0 (12.1)
FY2021 revised down on lower margin expectations; marginal tweaks to

FY2022-23 estimates
We raise our FY2021 revenue estimates as bake in price hikes expected in 4QFY21. EBITDA
gets revised down on lower GMs and higher costs. FY2022-23 remain broadly unchanged.
Exhibit 3: We modestly tweak our FY2022-23 estimates

Earnings revision table, March fiscal year-ends, 2021-23E (Rs mn, %)
New estimates Old estimates Change (%)

2021E 2022E 2023E 2021E 2022E 2023E 2021E 2022E 2023E
Revenues 58,101 73,114 88,000 55,049 69,273 83,378 5.5 5.5 5.5
Gross profit 21,497 27,783 33,880 21,520 27,081 32,594
Gross margin (%) 37.0 38.0 38.5 39.1 39.1 39.1
EBITDA 4,975 8,142 10,717 5,711 8,150 10,281 (12.9) (0.1) 4.2
EBITDA (%) 8.6 11.1 12.2 10.4 11.8 12.3
PAT 3,314 6,136 7,978 4,173 6,223 7,744 (20.6) (1.4) 3.0
EPS (Rs) 26.1 48.4 62.9 32.9 49.0 61.0 (20.6) (1.4) 3.0

Whirlpool Consumer Durables & Apparel
Exhibit 4: We build in 10% revenue CAGR for the company over FY2020-23E
Key assumptions for Whirlpool’s financial projections, March fiscal year-ends, 2012-23E (Rs mn)
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021E 2022E 2023E 2020-23E CAGR (%)
Volumes (mn units) 2.7 2.7 2.5 2.8 3.0 3.3 4.1 4.4 4.9 4.6 5.5 6.5 10.2
Realization (Rs) 9,721 10,253 11,151 11,901 11,508 11,771 11,928 12,225 12,469 12,719 13,227 13,492 2.7
Net revenues 26,579 27,727 28,346 32,938 34,399 39,408 48,319 53,977 59,925 58,101 73,114 88,000 13.7
EBITDA 2,231 2,220 2,115 3,313 3,835 4,888 5,600 6,422 6,733 4,975 8,142 10,717 16.8
EBITDA margin (%) 8.4 8.0 7.5 10.1 11.1 12.4 11.6 11.9 11.2 8.6 11.1 12.2
Depreciation 497 603 638 681 769 875 1,015 1,113 1,293 1,439 1,588 1,794 11.5
Other income 123 205 280 380 553 730 867 1,047 1,287 1,007 1,858 2,013 16.1
Tax rate (%) 31.8 28.7 29.4 30.0 32.6 33.7 35.2 35.0 27.0 27.0 27.0 27.0
PAT 1,237 1,278 1,229 2,105 2,400 3,105 3,507 4,070 4,763 3,314 6,136 7,978 18.8
Exhibit 5: Our DCF-based SoTP increases to Rs1,930 on roll forward and higher revenue estimates over the medium term
DCF valuation of Whirlpool, March fiscal year-ends, 2018-40E (Rs mn)
2018 2019 2020 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2035E 2040E
Net revenue 48,319 53,977 59,925 58,101 73,114 88,000 102,327 117,942 134,135 151,184 168,086 186,878 207,771 315,249 431,907
EBIT 4,585 5,309 5,440 3,536 6,554 8,923 10,481 12,251 14,055 15,953 18,110 20,634 22,981 36,035 49,370
EBIT margin (%) 9.5 9.8 9.1 6.1 9.0 10.1 10.2 10.4 10.5 10.6 10.8 11.0 11.1 11.4 11.4
Tax expense (1,612) (1,859) (1,472) (956) (1,773) (2,413) (2,835) (3,314) (3,802) (4,315) (4,899) (5,581) (6,216) (9,747) (13,354)
EBIT* (1-tax rate) 2,973 3,449 3,969 2,579 4,781 6,509 7,646 8,937 10,253 11,638 13,211 15,053 16,765 26,288 36,016
Depreciation 1,015 1,113 1,293 1,439 1,588 1,794 2,000 2,206 2,433 2,681 2,928 3,176 3,444 4,312 4,999
Change in working capital 12 390 (1,246) 1,691 272 262 243 261 264 271 256 282 310 471 645
Capital expenditure (1,561) (1,708) (3,308) (301) (2,500) (2,500) (2,500) (2,500) (3,000) (3,000) (3,000) (3,000) (3,500) (5,000) (5,000)
Free cash flows 2,438 3,245 708 5,408 4,140 6,065 7,389 8,905 9,950 11,589 13,395 15,510 17,019 26,070 36,659
Discounted cash flow - 4,140 5,440 5,944 6,424 6,438 6,725 6,971 7,239 7,124 6,332 5,167
WACC (%) 11.5 NPV calculation

Terminal growth rate 6.0 Sum of free cash flow 118,669
Date 31-Mar-22 Terminal value 99,581
Terminal value calculation Enterprise value 218,250
Cash flow in terminal year 36,659 Net debt/(cash) (24,123)
Terminal value 706,518 Equity value 242,373
Discounted terminal value 99,581 Add: value of stake in Elica JV 2,437
Shares o/s (mn) 127
Equity value per share (Rs) 1,930

Consumer Durables & Apparel Whirlpool
Exhibit 6: We expect Whirlpool to deliver 55% EPS CAGR over FY2021-23E

Summary financials of Whirlpool, March fiscal year-ends, 2012-23E (Rs mn)
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021E 2022E 2023E
Sales 26,579 27,727 28,346 32,938 34,399 39,408 48,319 53,977 59,925 58,101 73,114 88,000
EBITDA 2,231 2,220 2,115 3,313 3,835 4,888 5,600 6,422 6,733 4,975 8,142 10,717
O ther income 123 205 280 380 545 730 867 1,047 1,287 1,007 1,858 2,013
Interest (44) (30) (14) (6) (52) (59) (44) (91) (199) — — —
Depreciation (497) (603) (638) (681) (769) (875) (1,015) (1,113) (1,293) (1,439) (1,588) (1,794)
Profit before tax 1,813 1,792 1,742 3,005 3,559 4,685 5,408 6,265 6,529 4,543 8,411 10,936
Tax expense (576) (514) (513) (900) (1,159) (1,580) (1,902) (2,194) (1,766) (1,229) (2,275) (2,958)
PAT 1,237 1,278 1,229 2,105 2,400 3,105 3,507 4,070 4,763 3,314 6,136 7,978
EPS 9.8 10.1 9.7 16.6 18.9 24.5 27.6 32.1 37.5 26.1 48.4 62.9
Equity 4,902 6,175 7,400 9,158 11,657 14,831 17,963 21,427 25,469 27,590 30,781 33,972
Total borrowings — — — — — — — — — — — —
Deferred tax liability 213 249 213 24 30 — — — — — — —
Current liabilities and provisions 6,758 7,421 8,077 9,307 10,826 13,931 14,295 15,664 17,968 17,306 20,909 24,491
Total liabilites 11,872 13,845 15,691 18,489 22,512 28,761 32,258 37,090 43,437 44,896 51,690 58,463
Net fixed assets 3,837 4,149 4,245 3,959 4,029 4,274 4,790 5,515 7,530 6,393 7,305 8,011
Investments 0 0 0 0 0 0 0 1,722 1,722 1,722 1,722 1,722
Cash & cash equivalent 859 1,550 2,918 5,357 8,563 10,590 9,819 11,993 16,623 21,573 24,123 26,871
O ther current assets 7,177 8,146 8,528 9,173 9,921 13,898 17,650 17,860 17,561 15,208 18,540 21,859
Total assets 11,872 13,845 15,691 18,488 22,512 28,761 32,258 37,090 43,437 44,896 51,690 58,463
O perating cash flow 1,840 1,882 1,759 2,434 2,840 3,304 3,822 3,835 5,203 3,746 5,866 7,759
Working capital changes 247 (465) 267 559 636 520 12 390 (1,246) 1,691 272 262
Capital expenditure (1,184) (841) (864) (849) (792) (1,122) (1,561) (1,708) (3,308) (301) (2,500) (2,500)
Free cash flow 903 576 1,162 2,144 2,683 2,702 2,272 2,517 650 5,135 3,638 5,521
Ratios
EBITDA margin (%) 8.4 8.0 7.5 10.1 11.1 12.4 11.6 11.9 11.2 8.6 11.1 12.2
Net debt/equity (X) (0.2) (0.3) (0.4) (0.6) (0.7) (0.7) (0.5) (0.6) (0.7) (0.8) (0.8) (0.8)
Book value (Rs/share) 38.6 48.7 58.3 72.2 91.9 116.9 141.6 168.9 200.7 217.5 242.6 267.8
RoAE (%) 27.1 23.1 18.1 25.4 23.1 23.4 21.4 20.7 20.3 12.5 21.0 24.6

ADD
Tata Power (TPWR)
https://ultraviewer.et/en/own Electric Utilities FEBRUARY 05, 2021
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RESULT
Progressing on the green path. Tata Power reported healthy earnings, (1) losses at CMP (`): 90
Mundra were contained at Rs946 mn, (2) strong performance from Tata Power Solar Fair Value (`): 95
with revenue growth of 86% yoy, though off-set by weaker earnings from the mines in
BSE-30: 50,614
Indonesia. De-leveraging of the balance sheet continues, even as management remains
optimistic on closure of renewable asset monetization. Maintain ADD with revised FV of
Rs95/share (from Rs90/share).
Tata Power
CMP(Rs)/FV(Rs)/Rating 90/95/ADD EPS (Rs) 3.5 5.2 5.8
52-week range (Rs) (high-low) 91-27 EPS growth (%) (20.4) 46.4 11.6
Mcap (bn) (Rs/US$) 287/4 P/E (X) 25.4 17.4 15.6
ADTV-3M (mn) (Rs/US$) 2,723/37 P/B (X) 1.3 1.2 1.1
Promoters 46.9 RoE (%) 5.7 7.3 7.6
Rel. to BSE-30 7.6 34.9 28.0 Net profits (Rs bn) 11 17 18
Steady performance across business segments, reduced interest cost helps boost profitability
Tata Power reported a consolidated PAT of Rs2.5 bn beating our estimate of Rs2 bn primarily
on account of a reduction in interest cost. Finance cost in 3QFY21 reduced to Rs9.6 bn (-14%
yoy) aided by both (1) aggressive paring off debt at Mundra and (2) lower credit cost (~7.3%).
Earnings improvement was further supported by (1) lower losses at Mundra which declined to
Rs946 mn (Rs1.6 bn in 3QFY20 and Rs1.1 bn in 2QFY21), (2) higher profitability from coal
mines at Rs1.7 bn (+41% yoy) despite the 17% yoy reduction in coal realizations at US$44/ton.
With improved project execution, Tata Power Solar provided a further fillip to the reported
earnings with 86% yoy increase in revenues to Rs9.2 bn though PAT reduced 17% yoy to
Rs309 mn due to higher interest cost and forex loss (impact of Rs180 mn).
Additionally, Tata Power has also won two new distribution licenses (WESCO and SOUTHCO)
along with CESU in Odisha. Regulated returns on incremental investment of equity for capex
along with reduction in AT&C losses will drive earnings performance at these circles. TPWR has
made significant progress in bringing down AT&C losses at CESU to 33% over the past two
quarters from 41% in June 2020 which reported a PAT of Rs340 mn in 3QFY21.
De-leveraging of balance sheet continues, listing of renewable InVIT a critical milestone
Tata Power has further reduced its debt in 3QFY21 to Rs364 bn (from Rs436 bn as of March
2020) on the back of (1) asset sales of Rs25 bn, (2) internal cash generation of Rs33 bn, (3)
equity infusion of Rs26 bn, and partially off-set by incremental capex of Rs12 bn. The proposed
listing of renewable assets through a separate InVIT will take off the balance sheet another
Rs110 bn in addition to the equity value for the stake sold.
Murtuza Arsiwalla
Maintain ADD rating with revised FV of Rs95/share
Samrat Verma
Tata Power has done well to monetize non-core assets that have helped de-leverage the
balance sheet. A charted growth path in the renewable as well as regulated business’ and a
shift away from thermal assets is also a step in the right direction. Hereon, we will be keeping
an eye on (1) resolution of Mundra UMPP and its merger with the parent entity, (2) creation of
the renewable InVIT, and (3) growth from renewable business that could provide further upside
to our revised fair value. Maintain ADD rating with revised FV of Rs95/share (from Rs90/share). kspcg.research@kotak.com
Contact: +91 22 6218 6427
Electric Utilities Tata Power
Exhibit 1: Steady performance across business segments along with reduction in finance cost helped post 41% yoy growth in PAT
Interim results for Tata Power (consolidated) , March fiscal year-ends (Rs mn)
(% Chg.)
3QFY21 3QFY21E 3QFY20 2QFY21 vs est. yoy qoq 9MFY21 9MFY20 (% chg.) 2021E 2020 (% chg.) 2022E
Net sales 77,402 76,158 71,713 84,126 2 8 (8) 228,243 220,668 3 296,148 289,477 2 318,996
Employee cost (4,835) (5,862) (3,678) (5,600) (14,487) (10,750) (19,449) (14,406) (20,421)
Cost of power purchased (18,023) (15,742) (15,765) (23,335) (55,610) (49,323) (62,844) (62,205) (69,522)
Cost of fuel (22,502) (25,822) (24,976) (23,213) (67,631) (74,964) (91,564) (99,224) (102,555)
Cost of raw material and components (5,032) (2,194) (2,090) (3,495) (9,500) (8,080)
Other expenditure (8,093) (7,466) (6,152) (7,243) (21,359) (18,408) (43,175) (36,101) (47,971)
EBITDA 18,919 19,071 19,052 21,240 (1) (1) (11) 59,656 59,143 1 79,116 77,541 2 78,527
Depreciation (7,383) (7,194) (6,719) (6,989) (20,817) (19,463) (28,289) (26,336) (29,743)
EBIT 11,536 11,878 12,333 14,251 38,840 39,680 50,827 51,206 48,784
Other income 1,049 1,264 650 1,518 3,442 3,991 4,684 5,626 8,231
Net interest (9,656) (10,943) (11,292) (10,650) (12) (14) (9) (31,199) (34,031) (41,332) (44,937) (39,886)
PBT 2,929 2,199 1,691 5,119 33 73 (43) 11,082 9,641 15 14,180 11,895 19 17,128
Tax (1,027) (1,100) (896) (3,176) (6,097) (6,182) (7,772) (6,415) (8,146)
Minority interest and share of associates 822 972 1,132 1,045 3,021 3,869 4,895 6,535 7,563
Net profit 2,725 2,071 1,927 2,988 32 41 (9) 8,007 7,327 9 11,302 12,015 (6) 16,545
Extraordinary (243) — (138) (192) (663) (1,324) (663) (1,841) —
Reported profit 2,482 2,071 1,789 2,796 20 39 (11) 7,344 6,003 22 10,640 10,174 5 16,545
EPS (Rs/share) 0.9 0.6 0.7 1.1 2.7 2.7 3.5 4.4 5.2
EBITDA margin (%) 24 25 27 25 26 27 27 27 25
Effective tax rate (%) 35 50 53 62 55 64 55 54 48
Standalone performance—higher dividend income from JVs boost profits

Tata Power reported standalone revenues of Rs16.5 bn (-6% yoy), EBITDA of Rs4.6 bn (-
12% yoy) and PAT of Rs6 bn against our estimates of Rs17.1 bn, Rs5.7 bn and Rs1 bn,
respectively. Lower-than-estimated revenues were on account of lower fuel and power
purchase cost. Other income for the quarter increased 201% qoq to Rs7 bn (from Rs13 mn
in 3QFY20) due to higher dividend income from domestic JVs. Tax outlay for the quarter
increased to Rs634 mn resulting in standalone PAT of Rs5.7 bn. Unit sales for the quarter
increased 5% yoy to 3 BUs.
Coal—realization remain under pressure though cost reductions kick-in

Weak coal prices at US$44/ton (-17% yoy) were partially offset by a sustained decline in
production cost for the second consecutive quarter by 20% yoy to US$31/ton as
management re-negotiated its mining contracts restricting drop in gross profit for the coal
business of Tata Power to US$7/ton (-3% yoy,-1% qoq) in 3QFY21. Share of attributable
profit for TPWR increased 41% yoy to Rs1.7 bn (Coal + Infra) from Rs1.2 bn in 3QFY20.
Mundra UMPP—under-recovery declines to Rs0.32/kwh

Mundra UMPP continues to report sustained improvement in performance on account of
reduction in imported coal prices resulting in fuel cost under-recovery remaining at
Rs0.3/kwh in 3QFY21 from Rs0.46/kwh in 1QFY21. Mundra reported positive EBITDA of Rs3
bn for 3QFY21, an improvement from Rs2.6 bn reported in 3QFY20. Improvement in
performance was also supported by purchase of higher GCV coal through distressed spot
market as well as cost competitive shipments. PLF for Mundra declined to 69% in 3QFY21
(76% in 2QFY20) due to planned maintenance shutdown resulting in 9% yoy decline in
sales to 5.8 BUs.
We note that Tata Power management highlighted that with international coal prices
expected to remain soft, cash flows from Mundra plant are expected to be self-sustaining as
the company repaid Rs41.5 bn of debt in CGPL leading to net outstanding debt of Rs38 bn.
While the management continues to remain engaged in discussions with five beneficiary
states for compensatory tariff, it highlighted that offered compensation may not necessarily
happen as per recommendations proposed in GERC’s report.

Tata Power Electric Utilities
Maithon—modest operational performance

Maithon reported revenues of Rs6.6 bn, a decline of 3% yoy on account of adjustment for
availability loss. Interest cost declined 27% yoy to Rs330 mn on account of pre-payment of
term loans and lower working capital borrowing. Generation declined 4% to 1.6 BUs units
along with increase in realization to Rs4 /unit (+1% yoy) even as cost of production
increased 6% to Rs3/unit. Regulated equity for Maithon plant remained flat at Rs14.4 bn in
3QFY21.
Renewables—improved generation, weak capacity addition

TPREL reported EBITDA of Rs1.8 bn (+4%) yoy due to higher generation from wind assets
even as capacity addition remained weak at only 9 MW over the year. Higher costs due to
increase in consumables for wind assets and insurance expenses resulted in lowered PAT of
Rs52 mn (negative PAT of Rs40 mn in 2QFY21). Units generated increased to 506 MUs
(+6% yoy) on account of higher PLF witnessed across wind assets at 14% (vs 12% in
3QFY20) even as solar PLF declined to 23% (vs 24% in 3QFY20).
WPREL reported EBITDA of Rs2.4 bn (+1% yoy) supported by higher generation of 378 MU
(+11% yoy) due to higher solar PLF partially offset by increase in spares consumption.
Reduction in interest cost to Rs982 mn (-12.3% yoy) on account of debt repayment and
higher other income of Rs110 mn (+6% yoy) led to 24% yoy increase in PAT to Rs645 mn.

Exhibit 2: Coal earnings surprised positively with contained costs; positive EBITDA at Mundra due to lower coal prices
Subsidiary-wise key financial and operational metrics (Rs mn)
(% Chg.) (% Chg.) (% Chg.)
3QFY21 3QFY20 2QFY21 (yoy) (qoq) 9MFY21 9MFY20 (% chg.) 2021E 2020 (% chg.) 2022E
Tata Power (Standalone)
Net sales 16,546 17,556 16,543 (6) 0 47,775 53,872 (11) 66,942 70,750 (5) 69,979
EBITDA 4,969 5,627 5,642 (12) (12) 16,205 17,349 (7) 21,828 22,704 (4) 23,684
PAT 5,988 207 1,642 2,787 265 8,307 5,905 41 9,425 8,648 9 10,476
Regulated equity 40,422 37,990 40,230 6 0 40,277 38,630 4 45,920 40,956 12 47,487
Tata Power Delhi Distribution
Net sales 17,542 20,910 21,460 (16) (18) 56,022 64,700 (13) 72,592 83,507 (13) 82,468
EBITDA 2,542 2,900 3,240 (12) (22) 9,172 9,140 0 12,437 12,188 2 12,539
PAT 719 940 1,170 (24) (39) 3,079 3,120 (1) 4,576 4,141 10 4,475
Regulated equity 16,332 15,110 16,240 8 1 16,247 14,987 8 16,520 15,050 10 17,540
Coastal Gujarat Power Ltd (Mundra UMPP)
Net sales 16,922 18,300 19,020 (8) (11) 53,362 52,500 2 68,873 70,169 (2) 71,568
EBITDA 3,022 2,590 3,100 17 (3) 8,822 5,890 50 10,361 7,902 31 3,756
PAT (946) (1,630) (1,100) (42) (14) (3,596) (6,710) (46) (5,819) (8,905) (35) (12,299)
Sales (MU) 5,848 6,458 6,696 (9) (13) 18,401 18,396 0 24,435 24,463 (0) 24,435
Realization (Rs/kwh) 2.9 2.8 2.8 2 2 2.9 2.9 1 2.8 2.9 (2) 2.9
Cost of Production (Rs/kwh) 2.4 2.4 2.4 (2) (0) 2.4 2.6 (6) 2.4 2.5 (6) 2.8
EBITDA incl. other income (Rs/kwh) 0.5 0.4 0.5 29 12 0.5 0.3 50 0.4 0.3 31 0.2
Maithon Power Ltd
Net sales 6,610 6,830 6,440 (3) 3 19,430 20,820 (7) 26,221 27,412 (4) 27,888
EBITDA 1,700 1,990 1,740 (15) (2) 5,280 6,820 (23) 7,003 8,653 (19) 7,170
PAT 641 760 650 (16) (1) 1,981 2,660 (26) 2,658 3,378 (21) 3,097
Sales (MU) 1,655 1,725 1,503 (4) 10 4,570 4,771 (4) 6,249 6,348 (2) 6,509
Realization (Rs/kwh) 4.0 4.0 4.3 1 (7) 4.3 4.4 (2) 4.2 4.3 (3) 4.3
Cost of Production (Rs/kwh) 3.0 2.8 3.1 6 (5) 3.1 2.9 5 3.1 3.0 4 3.2
EBITDA (Rs/kwh) 1.0 1.2 1.2 (11) (11) 1.2 1.4 (18) 1.1 1.4 (18) 1.1
Coal
KPC
Volumes (mn tons) 16 16 15 (3) 8 45 47 (4) 63 62 2 65
Realizations (US$/ton) 44 53 44 (17) (0) 46 56 (18) 46 55 (16) 47
COGS (US$/ton) 31 38 31 (20) (0) 31 37 (16) 30 37 (18) 30
Gross profit (US$/ton) 7 7 7 (3) (1) 8 11 (26) 9 10 (10) 10
Coal + Infra
Net sales 20,263 22,630 17,590 (10) 15 59,983 68,350 (12) 76,188 87,820 (13) 78,536
EBITDA 5,581 5,820 5,630 (4) (1) 17,221 14,590 18 17,411 17,840 (2) 19,098
PAT 1,703 1,210 1,760 41 (3) 5,373 4,960 8 7,794 6,580 18 8,491
TPREL
Capacity (MW) 1,139 1,134 1,139 0 (0) 1,138 1,079 5 1,139 1,139 - 1,839
Generation (MU) 506 478 547 6 (8) 1,659 1,505 10 2,195 2,088 5 3,061
Tariff (Rs/kwh) 4.3 4.3 4.5 0 (3) 4.4 4.5 (3) 4.5 4.5 - 4.5
Net sales 2,158 2,050 2,390 5 (10) 7,148 6,720 6 9,599 9,175 5 13,385
EBITDA 1,773 1,710 2,000 4 (11) 6,003 5,760 4 8,269 7,845 5 11,131
PAT 52 (160) (40) (132) (229) 162 80 102 351 (472) (174) 1,435
WREL
Capacity (MW) 1,010 1,010 1,010 - - 1,010 1,010 - 1,010 1,010 - 1,010
Generation (MU) 378 340 381 11 (1) 1,223 1,200 2 1,593 1,540 3 1,681
Tariff (Rs/kwh) 7.3 7.8 7.1 (7) 2 7.2 7.5 (4) 7.3 7.8 (6) 7.5
Net sales 2,742 2,640 2,710 4 1 8,762 8,910 (2) 11,665 12,027 (3) 12,559
EBITDA 2,417 2,400 2,410 1 0 7,857 8,080 (3) 10,317 10,705 (4) 11,184
PAT 645 520 600 24 8 2,325 2,320 0 2,758 1,828 51 3,716
Tata Power Solar
Net sales 9,230 4,950 10,140 86 (9) 23,420 15,610 50 32,111 21,407 50 38,533
EBITDA 704 500 810 41 (13) 1,344 1,180 14 2,642 1,887 40 3,835
PAT 309 370 670 (17) (54) 719 710 1 1,491 1,227 22 2,589

Exhibit 3: Higher dividend income of Rs7 bn from JVs helped boost profits for standalone business to Rs5.7 bn in 3QFY21
Interim results for Tata Power (standalone), March fiscal year-ends (Rs mn)
(% Chg.)
3QFY21 3QFY21E 3QFY20 2QFY21 KIE yoy qoq 9MFY21 9MFY20 (% chg.) 2021E 2020 (% chg.) 2022E
Net sales 16,546 17,129 17,556 16,543 (3) (6) 0 47,775 53,872 (11) 66,942 70,750 (5) 69,979
Cost of electrical energy purchased (1,000) (1,204) (1,216) (1,725) (17) (18) (42) (3,619) (3,986) (5,261) (4,576) (5,422)
Cost of fuel (6,482) (6,259) (6,804) (5,353) 4 (5) 21 (16,520) (20,992) (24,716) (27,656) (25,387)
Personnel costs, other expenses and provisions (4,094) (3,986) (3,908) (3,824) 3 5 7 (11,430) (11,546) (15,137) (15,814) (15,486)
Total expenses (11,577) (11,450) (11,929) (10,901) 1 (3) 6 (31,570) (36,523) (45,113) (48,046) (46,294)
EBITDA 4,969 5,679 5,627 5,642 (12) (12) (12) 16,205 17,349 (7) 21,828 22,704 (4) 23,684
Depreciation (1,683) (1,686) (1,885) (1,674) (4,989) (5,136) (6,763) (6,858) (7,291)
EBIT 10,285 5,306 3,756 6,292 21,439 17,178 26,970 21,673 30,091
Other income 6,999 1,313 13 2,324 433 52920 201 10,223 4,965 11,904 5,827 13,697
Net interest (3,664) (3,860) (3,784) (3,872) (11,445) (11,508) (15,334) (15,104) 2 (15,541)
PBT 6,621 1,446 (29) 2,420 358 (23170) 174 9,993 5,671 76 11,636 6,569 77 14,550
Tax (634) (434) 236 (778) (1,686) 234 (2,211) 2,078 (4,074)
Net profit 5,988 1,013 207 1,642 491 2787 265 8,307 5,905 41 9,425 8,648 9 10,476
Extraordinary (242) — (138) (192) (662) (1,324) (662) (3,064) —
Reported PAT after statutory appropriation 5,746 1,013 69 1,450 467 8179 296 7,645 4,581 67 8,763 5,584 57 10,476
EPS (Rs/share) 1.9 0.3 0.1 0.6 2.8 2.2 2.9 3.2 3.3
EBITDA margin (%) 30 33 32 34 34 32 33 32 34
Effective tax rate (%) 10 30 823 32 17 (4) 19 (32) 28
Key operating parameters

Units generated (MU) 2,971 2,721 2,812 2,589 9 6 15 7,884 9,046 (13) 11,092 11,676 (5) 11,647
Units sold (MU) 2,982 2,808 2,853 2,810 6 5 6 8,051 9,171 (12) 11,118 11,731 (5) 12,472
Per unit price realization (Rs) 5.5 6.1 6.2 5.9 (9) (10) (6) 7.2 7.0 2 6.0 6.0 (0) 5.6
Fuel cost per unit sold (Rs) 2.4 2.7 2.9 2.6 (8) (14) (8) 2.5 2.7 (6) 2.6 2.7 (4) 2.5
Exhibit 4: Tata Power sum-of-the-parts valuation based on March 2023E
Base Multiple Ownership Value

(Rs mn) Methodology (X) (%) (Rs mn) (Rs/share)
Mumbai Distribution Regulated equity 49,103 P/B 1.5 100 73,654 23
Delhi Distribution Regulated equity 18,560 P/B 1.5 51 14,198 4
Tala Transmission Regulated equity 4,680 DCF 51 1,349 0
Mundra Generation DCF 100 (68,721) (22)
Maithon Generation Regulated equity 14,389 DCF 74 6,850 2
IEL Generation DCF 74 8,621 3
Renewable Generation EBITDA 22,425 EV/EBITDA 8.5 100 61,800 19
Coal Coal EBITDA 19,417 EV/EBITDA 6.5 30 79,175 25
Solar Equipment EBITDA 4,027 EV/EBITDA 8.5 100 26,227 8
Investments 101,643 32
Total 304,797 95

Exhibit 5: Our estimates no compensation for under-recovery at Mundra UMPP

Subsidiary-wise key operational and financial assumptions, March fiscal year-ends, 2018-23E (Rs mn)
2018 2019 2020 2021E 2022E 2023E

Standalone
Revenue 73,006 76,881 70,750 66,942 69,979 83,472
EBITDA 23,581 23,751 22,704 21,828 23,684 26,441
PAT 13,586 6,664 8,648 9,425 10,476 12,549
Regulated equity 39,270 38,990 39,520 45,920 47,487 49,103
Delhi
Revenue 69,297 77,789 83,507 72,592 82,468 87,615
EBITDA 10,097 10,930 12,188 12,437 12,539 12,442
PAT 3,059 3,356 4,141 4,576 4,475 4,811
Mundra
Revenue 63,568 70,643 70,169 68,873 71,568 71,720
EBITDA (987) (2,661) 7,902 10,361 3,756 3,793
PAT (14,104) (16,537) (8,905) (5,819) (12,299) (11,818)
Capacity (MW) 4,000 4,000 4,000 4,000 4,000 4,000
Generation (MU) 24,599 24,752 24,463 24,435 24,435 24,435
PLF (%) 76 77 76 76 76 76
Tariff (Rs/unit) 2.55 2.79 2.62 2.82 2.93 2.94
Fuel cost (Rs/unit) 2.43 2.74 2.34 2.19 2.56 2.56
Coal (US$/ton) 62 60 50 55 60 60
Under-recovery 0.84 0.84 0.46 0.39 0.66 0.65
Net debt 157,868 155,998 150,984 139,129 134,049 128,211
Maithon
Revenue 22,704 27,761 27,412 26,221 27,888 28,323
EBITDA 6,451 7,368 8,653 7,003 7,170 6,695
PAT 1,817 2,729 3,378 2,658 3,097 3,190
Capacity (MW) 1,050 1,050 1,050 1,050 1,050 1,050
Generation (MU) 6,987 6,858 6,348 6,249 6,509 6,509
PLF (%) 81 79 71 72 75 75
Tariff (Rs/unit) 3.25 4.05 4.31 4.20 4.28 4.35
Fuel cost (Rs/unit) 1.93 2.58 2.48 2.54 2.61 2.69
TPREL
Revenue 4,944 7,154 9,175 9,599 13,385 13,385
EBITDA 4,409 6,325 7,845 8,269 11,131 11,018
PAT 2,014 925 (472) 351 1,435 247
Capacity (MW) 624 824 1,139 1,139 1,839 1,839
Generation (MU) 823 1,349 2,056 2,151 3,000 3,000
Tariff (Rs/unit) 6.01 5.30 4.46 4.46 4.46 4.46
Net debt 71,901 79,778 94,263 88,033 117,150 111,209
WREPL
Revenue 11,865 12,717 12,027 11,665 12,559 12,810
EBITDA 10,829 11,513 10,705 10,317 11,184 11,408
PAT 2,325 3,001 1,828 2,758 3,716 4,236
Capacity (MW) 1,008 1,008 1,010 1,010 1,010 1,010
Generation (MU) 1,688 1,756 1,527 1,593 1,681 1,681
Tariff (Rs/unit) 7.03 7.24 7.88 7.32 7.47 7.62
Net debt 46,350 44,085 47,730 40,783 34,569 27,197
Coal
Revenue 86,410 88,730 87,820 76,188 78,536 80,043
EBITDA 28,890 23,560 17,840 17,411 19,098 19,417
PAT 14,240 11,260 6,580 7,794 8,491 8,623
Volumes (mn tons) 57 57 62 63 65 66
Net realization (US$/ton) 60 54 47 39 40 40
Cost (US$/ton) 35 37 37 30 30 30
Gross profit (US$/ton) 25 18 10 9 10 10
Solar
Revenue 27,490 31,753 21,407 32,111 38,533 40,459
EBITDA 2,571 2,124 1,887 2,642 3,835 4,027
PAT 1,004 904 1,227 1,491 2,589 2,735
Consolidated
Revenue 289,214 294,927 289,477 296,148 318,996 341,049
EBITDA 59,471 63,568 77,541 79,116 78,527 80,199
PAT 14,458 5,709 12,015 11,302 16,545 18,462

Exhibit 6: Change in estimates for Tata Power, March fiscal year-ends, 2021-23E (Rs mn)
Revised estimates Old estimates Change (%)

2021E 2022E 2023E 2021E 2022E 2023E 2021E 2022E 2023E
Revenues 296,148 318,996 341,049 299,845 306,976 317,669 (1.2) 3.9 7.4
EBITDA 79,116 78,527 80,199 79,684 78,092 78,321 (0.7) 0.6 2.4
Net profit 11,302 16,545 18,462 12,688 16,882 19,244 (10.9) (2.0) (4.1)
Exhibit 7: Tata Power: Profit model, balance sheet, cash model (consolidated), March fiscal year-ends, 2018 - 23E (Rs mn)
2018 2019 2020 2021E 2022E 2023E

Net sales 289,214 294,927 289,477 296,148 318,996 341,049
EBITDA 59,471 63,568 77,541 79,116 78,527 80,199
Other income 4,327 3,958 5,626 4,684 8,231 10,155
Interest (37,230) (41,700) (44,937) (41,332) (39,886) (39,552)
Depreciation (23,981) (23,932) (26,336) (28,289) (29,743) (31,124)
Pretax profits 2,587 1,894 11,895 14,180 17,128 19,677
Tax (1,643) (6,561) (6,415) (7,772) (8,146) (8,941)
Minority interest & profit from associates 13,514 10,376 6,535 4,895 7,563 7,726
Net profits 14,458 5,709 12,015 11,302 16,545 18,462
Extraordinary items 10,308 16,200 (1,841) (663) — —
Earnings per share (Rs) 5.3 2.1 4.4 3.5 5.2 5.8

Total equity 152,602 167,212 180,660 217,962 234,508 252,970
Deferred taxation liability 5,166 10,568 11,740 11,740 11,740 11,740
Total borrowings 426,836 465,146 460,035 430,091 452,323 446,223
Currrent liabilities 232,616 177,028 215,444 216,698 234,503 249,613
Capital contribution from Consumers
Minority interest 20,153 21,667 23,320 26,371 29,482 32,656
Cash 11,858 7,875 20,882 25,060 45,081 75,110
Current assets 102,131 114,827 127,439 135,064 149,183 160,240
Total fixed assets 535,217 530,262 555,309 547,222 562,103 540,764
Investments 124,289 130,181 132,027 139,972 150,646 161,545
Deferred expenditure 63,878 58,476 55,544 55,544 55,544 55,544
Total assets 837,373 841,620 891,200 902,863 962,557 993,202
Key ratios
Net debt / equity (X) 2.4 2.4 2.2 1.7 1.5 1.3
ROE (%) 10.7 3.6 6.9 5.7 7.3 7.6

REDUCE
Apollo Tyres (APTY)
https://ultraviewer.et/en/own Automobiles & Components FEBRUARY 04, 2021
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RESULT
RM headwinds ahead. Apollo reported 3QFY21 consolidated EBITDA of Rs9.9 bn CMP (`): 227
(+85% yoy), 35% above our estimates due to (1) better-than-expected revenue print Fair Value (`): 210
and (2) one-time positive impact of Rs1.2 bn due to SIPCOT subsidy. However, we
BSE-30: 50,614
expect margins to come down from 4QFY21E due to (1) RM headwinds and (2) an
inferior product mix. Low return ratios of the business restrict re-rating of the company.
Maintain REDUCE rating with a revised Fair Value of Rs210.
Apollo Tyres
CMP(Rs)/FV(Rs)/Rating 227/210/REDUCE EPS (Rs) 4.6 12.9 16.7
52-week range (Rs) (high-low) 240-73 EPS growth (%) (45.3) 183.1 29.2
Mcap (bn) (Rs/US$) 145/2 P/E (X) 49.8 17.6 13.6
ADTV-3M (mn) (Rs/US$) 2,477/34 P/B (X) 1.3 1.2 1.1
Promoters 41.8 RoE (%) 2.8 7.1 8.7
Rel. to BSE-30 20.4 27.5 12.0 Net profits (Rs bn) 3 8 11
3QFY21 consolidated EBITDA 35% above our estimates partly due to one-off positive impact
Apollo Tyres reported a consolidated EBITDA of Rs9.9 bn (+85% yoy), 35% above our estimates
led by (1) better-than-expected revenue print, (2) better-than-expected gross margins due to
low-cost inventory at the start of the quarter and a better product mix, (3) cost savings due to
restructuring of the European business and (4) one-time positive impact of Rs1.2 bn due to
SIPCOT subsidy received cumulatively from FY2018 onwards in 3QFY21. Adjusted for that,
consolidated EBITDA was 19% above our estimates. Consolidated revenues were Rs51.5 bn
(+17% yoy), 11% higher than our estimates largely due to outperformance in Indian
operations. India revenues increased by 24% yoy (20% yoy after adjusting for one-time positive
impact) and European geography revenues increased by 8% yoy (in INR terms) mostly due to
the benefit of EUR appreciation against INR in 3QFY21. Standalone revenues came in at Rs34.2
bn (+24% yoy) mostly led by strong growth across segments in 3QFY21. Adjusted standalone
EBITDA margin came in at 18.7% (+570 bps yoy, -10 bps qoq), 190 bps above our estimates
due to better-than-expected gross margins on account of a better product mix and benefit of
low-cost inventory at the beginning of the quarter. We would like to note that 2QFY21
financials have been restated as the company took an exceptional loss of EUR69 mn owing to
specialization of European plants (EUR54 mn related to employee benefits).
Increase our FY2022-23E consolidated EPS assumptions by 4-17%; maintain REDUCE rating
We have increased our FY2022-23E consolidated EPS estimates by 4-17% led by (1) 3%
increase in revenue assumptions due to better-than-expected replacement demand led by
market share gains and (2) 60 bps increase in FY2022E EBITDA margin assumptions. We expect Hitesh Goel
profitability to improve over the next few years led by (1) improvement in capacity utilization of
Indian and European plants, (2) demand recovery leading to leverage benefits and (3) cost- Rishi Vora
cutting initiatives taken up the company related to employee cost (downsizing in EU
operations). However, we maintain REDUCE rating as we believe the return ratios of the
company will remain below 10% in FY2023E despite achieving ~80% utilization levels, which
will restrict the re-rating of the company. SoTP based FV revised to Rs210 (from Rs175 earlier).
We value the Indian business at 13X March 2023E EPS and European operations at 11X March
2023E EPS. Contact: +91 22 6218 6427
Apollo Tyres Automobiles & Components
Key takeaways from the conference call
 Strong demand trends in replacement segment. Standalone volumes increased by

19% yoy in 3QFY21 led by (1) 24% yoy growth in PCR segment (OEM segment has
performed better than replacement segment) and (2) 17% yoy growth in truck segment
(+30% yoy growth in TBR segment and +5% yoy growth in TBB segment). As per the
company’s internal assessment, the company gained 400 bps market share in the PCR
replacement segment, 500 bps market share in agricultural segment and 300 bps market
share in truck replacement during 7MFY21. Market share gain was aided by (1) import
restrictions (import mix in the PCR segment stood at 15%), (2) premium product offerings
and (3) expansion of distribution network (the company added 450 dealers and >3,000
touch points in rural areas during 9MFY21). The company also gained market share in
TBB segment partly due to exit of Birla from the segment. The company has taken price
hikes of 2-3% in the replacement segment in December 2020. The company highlighted
that RM cost basket will increase by high single digit on a sequential basis in 4QFY21E.
During the quarter, the company received Rs1.4 bn of SIPCOT subsidy (Rs1.2 bn
attributable to previous years) as the subsidy conflict was ruled in the favor of the
company by the Tamil Nadu government.
 European market remained under pressure in 3QFY21. Vredestein revenues came in

at EUR136 mn (-5% yoy), which were under pressure due to lockdowns related to the
second wave of Covid-19 infections in 3QFY21. Vredestein EBITDA came in at EUR18 mn
(EBITDA margin of +13% in 3QFY21 versus +9.3% in 3QFY20). The company has gained
26 bps market share in ultra-high performance PCR replacement tire segment and 75 bps
market share in TBR replacement segment during 9MFY21. In order to improve the
performance of its subsidiary company, Apollo Vredestein B.V. (AVBV) located in
Enschede, the Netherlands, the management of AVBV had initiated certain steps which
included a plan to change the product/sourcing mix and its resultant impact on the
current work force of AVBV. During 3QFY21, the management of AVBV has estimated
the one-time expense for implementation of the plan and recognized an expense
amounting to Rs6 bn (EUR69 mn). The said amount includes expense related to employee
benefits and write-off/impairment of certain assets amounting to Rs4.7 bn (EUR54 mn of
cash outflow) and Rs1.3 bn (non-cash impact of EUR15 mn), respectively. In order to
comply with recognition requirements, the company has recorded the aforesaid
expense in 2QFY21 as an exceptional item. Accordingly, PAT for 2QFY21 is lower by
Rs4.5 bn and current provisions and deferred tax assets as at September 30, 2020 is
higher by Rs4.7 bn and Rs1.5 bn, respectively with a related impact on segment results,
segment liabilities and segment assets of Europe segment as compared to previous period
consolidated financial results published by the company.
 Capex intensity to come down over the next few years. The company plans to incur
Rs16 bn in FY2022E in India towards greenfield capacity in Andhra Pradesh and
maintenance capex. Total capacity in Andhra Pradesh would be 15,000 tires per day in
PCR segment and 3,000 truck tires per day, which will be completed in two phases. The
company may incur additional capex (marginal) in FY2022E if demand trend continues to
remain strong. For Europe business, the company will incur annual capex (mostly
maintenance capex) of EUR25-30 mn in FY2021E. The company will mostly incur
maintenance capex during FY2023E and FY2024E.
 Focus on reducing fixed costs. The company highlighted that they have reduced costs
in FY2021E (most of which is sustainable) by (1) digital launch of products (historical costs
were around US$0.7 mn per launch versus current cost of US$0.12 mn), (2) tight control
on working capital requirements, (3) cut in travelling and consultation expenses (this will
come back in FY2022E), (4) hiring freeze and no salary hikes in FY2021E, (5) cut in
advertisement spends and promotional activities, (6) salary cut taken by the top
management and (7) supply-chain initiatives like network redesign to help reduce costs

Automobiles & Components Apollo Tyres
while optimizing working capital. In European operations, the company has reduced its
workforce size by 528 in the Dutch operations during 2QFY21 (total workforce in Europe
is 2,500 employees). The company highlighted that it will result in cost savings to the
tune of EUR40-50 mn; however, the company will have to hire employees either in
Hungary or Indian operations, hence actual cost savings will be slightly lower than EUR40-
50 mn. During 9MFY21, the company generated free cash flow of Rs12 bn on
consolidated basis.
 Other key points. (1) Prices of key materials in 3QFY21 versus last quarter – natural
rubber: Rs140/kg versus Rs 137/kg qoq, synthetic rubber: Rs115/kg versus Rs90/kg qoq,
carbon black: Rs 65/kg versus Rs 58/kg, (2) margins from OEM business are lower than
replacement business in the domestic business, (3) consolidated net debt stood at Rs38
bn in December 2020 versus Rs60 bn as of March 2020, (4) product mix for standalone
operations during 9MFY21 – 60% from truck segment, 17% from PCR segment, 7%
each from agri and LCV segments and 8% from others, (5) product mix for consolidated
operations during 9MFY21 – 42% from truck segment, 36% from PCR segment, 11%
from agri (including off-highway segment), 5% from LCV segment and 6% from others,
(6) the company incurs manufacturing cost of EUR2.6 per kg in Netherlands plant as
against manufacturing cost of <EUR1 per kg in Hungary plant, (7) the company will
launch Vredestein brand in India during March 2021 and (8) as per the company’s
internal assessment, in the domestic market, the company has a market share of 31% in
truck segment and 22% market share in PCR segment.
Exhibit 1: 3QFY21 consolidated EBITDA was 35% above our estimates due to better-than-expected revenue growth and one-off positive
impact of Rs1.2 bn on account of adjustment-related SIPCOT subsidy
Interim results of Apollo Tyres, consolidated, March fiscal year-ends (Rs mn)
(% chg.)
3QFY21 3QFY21E 3QFY20 2QFY21 3QFY21E 3QFY20 2QFY21 9MFY21 9MFY20 (% chg.) FY2021E FY2020 (% chg.)
Total Income 51,538 46,540 43,997 42,827 10.7 17.1 20.3 123,099 127,169 (3.2) 169,290 163,270 3.7
Total Expenditure (41,645) (39,210) (38,662) (35,879) 6.2 7.7 16.1 (103,885) (112,764) (7.9) (143,102) (144,115) (0.7)
Raw materials (27,039) (25,829) (24,769) (23,013) 4.7 9.2 17.5 (66,360) (71,736) (7.5) (92,919) (90,756) 2.4
Employee expense (6,826) (6,350) (6,445) (6,233) 7.5 5.9 9.5 (18,429) (18,805) (2.0) (24,822) (24,822) —
Other expenditure (7,779) (7,030) (7,448) (6,632) 10.7 4.4 17.3 (19,095) (22,223) (14.1) (25,361) (28,537) (11.1)
EBITDA 9,894 7,330 5,335 6,948 35.0 85.4 42.4 19,214 14,405 33.4 26,188 19,155 36.7
Depreciation (3,273) (3,400) (2,830) (3,308) (3.7) 15.7 (1.1) (9,673) (8,244) (13,014) (11,381)
Interest (1,049) (1,150) (673) (1,167) (8.8) 55.9 (10.1) (3,388) (1,896) (4,392) (2,808)
Other income 636 203 178 385 213.2 257.1 65.3 1,289 493 1,712 469
PBT 6,208 2,983 2,011 2,857 108.1 208.7 117.3 7,443 4,757 56.5 10,494 5,434 93.1
Share of profit from associates — — (1) — 0 — — —
Exceptional income/(loss) (55) — — (6,009) (6,065) — 6,065 —
Tax expenses (1,715) (746) (272) 690 (749) (772) (1,522) (670)
PAT 4,438 2,237 1,739 (2,463) 98.4 155.3 (280.2) 629 3,985 15,037 4,764
Adjusted PAT 4,477 2,237 1,739 1,744 100.1 157.5 156.7 4,875 3,985 22.3 10,792 4,764 126.5
Adjusted EPS (Rs) 7.0 3.5 3.0 2.7 100.1 130.8 156.7 7.6 6.2 22.3 16.9 8.3 103.0
Ratios (%)
Gross margin 47.5 44.5 43.7 46.3 46.1 43.6 45.1 44.4
Employee cost as % of sales 13.2 13.6 14.6 14.6 15.0 14.8 14.7 15.2
Other expenditure as % of sales 15.1 15.1 16.9 15.5 15.5 17.5 15.0 17.5
EBITDA (%) 19.2 15.7 12.1 16.2 15.6 11.3 15.5 11.7
Effective tax rate 27.9 25.0 13.5 -24.1 54.3 16.2 9.2 12.3

Exhibit 2: 3QFY21 standalone EBITDA was 47% above our estimates due to better-than-expected revenue growth and one-off positive
impact of Rs1.2 bn on account of adjustment-related SIPCOT subsidy
Interim results of Apollo Tyres, standalone, March fiscal year-ends (Rs mn)
(% chg.)
3QFY21 3QFY21E 3QFY20 2QFY21 3QFY21E 3QFY20 2QFY21 9MFY21 9MFY20 (% chg.) FY2021E FY2020 (% chg.)
Total Income 34,179 29,621 27,536 29,102 15.4 24.1 17.4 81,006 86,320 (6.2) 113,544 110,620 2.6
Total Expenditure (26,863) (24,638) (23,965) (23,619) 9.0 12.1 13.7 (66,301) (75,889) (12.6) (93,647) (96,691) (3.1)
Raw materials (19,419) (17,792) (16,780) (16,808) 9.1 15.7 15.5 (47,128) (53,874) (12.5) (67,220) (68,375) (1.7)
Employee expense (2,263) (2,200) (2,160) (2,165) 2.9 4.8 4.5 (6,385) (6,362) 0.4 (8,757) (8,261) 6.0
Other expenditure (5,180) (4,646) (5,025) (4,646) 11.5 3.1 11.5 (12,788) (15,654) (18.3) (17,670) (20,055) (11.9)
EBITDA 7,316 4,983 3,571 5,483 46.8 104.9 33.4 14,705 10,431 41.0 19,897 13,929 42.8
Depreciation (1,770) (1,800) (1,528) (1,743) (1.7) 15.8 1.5 (5,227) (4,468) (7,035) (6,207)
Interest (893) (1,050) (549) (1,018) (14.9) 62.6 (12.2) (2,939) (1,516) (3,930) (2,257)
Other income 233 300 86 303 (22) 171 (23.1) 689 316 912 349
PBT 4,886 2,433 1,580 3,026 100.8 209.3 61.5 7,228 4,762 51.8 9,845 5,814 69.3
Exceptional items (55) — — (48) (104) — (104) —
Tax expense (1,477) (613) (273) (815) (2,144) (959) (2,825) (728)
PAT 3,354 1,820 1,307 2,162 84.3 156.7 55.1 4,980 3,803 31.0 6,916 5,086 36.0
Adjusted PAT 3,393 1,820 1,307 2,196 86.4 159.6 54.5 5,053 3,803 32.9 6,988 5,086 37.4
Adjusted EPS 5.3 2.9 2.3 3.4 86.4 132.7 54.5 7.9 6.6 19.1 10.9 8.0 37.4
Ratios (%)
RM as % of sales 56.8 60.1 60.9 57.8 58.2 62.4 59.2 61.8
Employee cost as % of sales 6.6 7.4 7.8 7.4 7.9 7.4 7.7 7.5
Other expenditure as % of sales 15.2 15.7 18.2 16.0 15.8 18.1 15.6 18.1
EBITDA (%) 21.4 16.8 13.0 18.8 18.2 12.1 17.5 12.6
Effective tax rate 30.6 25.2 17.3 26.9 30.1 20.1 29.0 12.5
Exhibit 3: CEAT has outperformed its peers over the past 3 quarters in terms of topline performance
Comparison of key ratios of Apollo standalone, CEAT and MRF, March fiscal year-ends, 3QFY18-3QFY21 (%)
Apollo standalone - key ratios (%)
Revenue growth (yoy) 21.3 19.2 32.5 25.3 17.0 7.7 1.4 (10.8) (11.8) (20.6) (42.9) 4.9 24.1
Raw material cost/sales 61.6 61.5 63.3 64.5 67.1 66.0 63.2 62.9 60.9 59.7 61.5 57.8 56.8
Staff cost/sales 6.4 6.7 6.1 6.1 5.8 5.9 7.1 7.2 7.8 7.8 11.0 7.4 6.6
Other expenses/sales 18.3 17.6 17.1 17.4 16.2 16.7 18.0 18.1 18.2 18.1 16.7 16.0 15.2
EBITDA margin (%) 13.7 14.2 13.5 12.0 11.0 11.5 11.6 11.7 13.0 14.4 10.8 18.8 21.4
CEAT - key ratios (%)
Revenue growth (yoy) 12.1 13.6 15.4 14.8 8.0 4.2 4.3 (2.8) 4.6 (11.3) (36.1) 16.5 26.4
Raw material cost/sales 58.7 61.2 61.4 60.9 59.9 61.3 60.8 59.0 56.9 55.6 60.0 53.4 54.5
Staff cost/sales 6.8 6.4 6.6 7.6 7.9 6.9 7.5 7.2 8.1 8.6 13.4 8.1 8.1
Other expenses/sales 22.1 20.3 21.6 22.4 24.0 22.1 22.3 23.7 24.5 23.4 17.5 23.7 22.7
EBITDA margin (%) 12.4 12.1 10.4 9.0 8.3 9.7 9.4 10.1 10.4 12.5 9.1 14.8 14.7
MRF - key ratios (%)
Revenue growth (yoy) 19.6 15.8 8.1 9.4 6.2 5.4 14.4 0.5 (0.6) (11.0) (44.9) 6.0 Na
Raw material cost/sales 58.4 59.2 60.2 60.3 61.3 60.9 61.1 59.5 59.7 57.2 60.0 55.7 Na
Staff cost/sales 7.3 7.0 7.1 7.3 7.4 7.0 7.0 8.4 8.4 9.5 12.7 8.0 Na
Other expenses/sales 15.8 16.0 17.4 17.6 17.6 18.0 18.2 18.5 16.6 17.6 13.6 15.9 Na
EBITDA margin (%) 18.5 17.7 15.4 14.8 13.7 14.0 13.7 13.7 15.2 15.7 13.6 20.4 Na

Exhibit 4: Standalone volumes increased by 19% yoy in 3QFY21; adjusted EBITDA per kg would have been Rs40 per kg
Quarterly standalone per ton ratios of Apollo Tyres, March fiscal year-ends, 3QFY18-3QFY21 (Rs per kg)
3QFY18 4QFY18 1QFY19 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 2QFY21 3QFY21 Yoy (%) Qoq (%)
Tonnage (tons) 133,400 143,249 150,728 152,410 148,074 144,682 147,713 132,596 128,824 118,639 84,196 139,226 153,301 19.0 10.1
Net sales per kg (Rs) 200.1 198.3 203.0 204.0 210.9 211.6 210.1 209.3 213.7 204.8 210.5 209.0 223.0 4.3 6.7
RM per kg (Rs) 123.3 122.0 128.5 131.6 141.6 139.6 132.9 131.7 130.3 122.2 129.5 120.7 126.7 (2.7) 4.9
GM per kg (Rs) 76.8 76.4 74.5 72.4 69.4 72.0 77.2 77.6 83.5 82.6 81.0 88.3 96.3 15.3 9.0
EBITDA per kg (Rs) 27.5 28.1 27.4 24.4 23.1 24.3 24.4 24.5 27.7 29.5 22.6 39.4 47.7 72.1 21.2
Exhibit 5: Europe revenues increased by 8% yoy in 3QFY21; Europe clocked in EBIT margin of 6.8% in 3QFY21
Interim segmental results of Apollo Tyres, consolidated, March fiscal year-ends, 3QFY18-3QFY21 (Rs mn)
3QFY18 4QFY18 1QFY19 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 2QFY21 3QFY21 Yoy Qoq
Segment revenues
Asia Pacific 27,024 28,850 31,034 31,514 31,586 31,137 31,420 28,278 28,114 24,742 18,182 29,636 34,494 22.7 16.4
Europe 13,991 12,076 12,420 11,814 16,285 12,098 12,388 12,223 16,257 11,638 10,903 13,722 17,469 7.5 27.3
O thers 6,624 7,959 9,027 9,881 10,058 6,866 6,499 8,401 5,970 4,911 2,575 5,850 7,979 33.6 36.4
Less: intersegment (7,139) (8,549) (9,601) (10,634) (10,747) (7,363) (6,994) (9,043) (6,344) (5,190) (2,925) (6,381) (8,404)
Total revenues 40,501 40,336 42,880 42,574 47,183 42,737 43,313 39,858 43,997 36,101 28,734 42,827 51,538 17.1 20.3
Segment EBIT
Asia Pacific 3,169 3,441 3,390 2,778 2,615 2,665 2,346 1,780 2,094 1,780 360 4,113 5,822 178.0 41.5
Europe 572 253 269 (210) 695 (465) (299) (396) 422 (298) (902) (280) 1,182 180.1
O thers 229 247 228 336 313 190 261 241 204 108 91 191 253 24.1 32.9
Less:
Interest expense (410) (476) (430) (461) (485) (434) (584) (640) (673) (912) (1,172) (1,167) (1,049)
O ther unallocable expenses (56) (120) (39) (71) (28) 28 43 (7) (36) — — — —
PBT (after exceptional expenses) 3,503 3,345 3,418 2,372 3,108 1,984 1,767 979 2,011 677 (1,622) 2,857 6,208 208.7 117.3
EBIT (%)
Asia Pacific 11.7 11.9 10.9 8.8 8.3 8.6 7.5 6.3 7.4 7.2 2.0 13.9 16.9
Europe 4.1 2.1 2.2 (1.8) 4.3 (3.8) (2.4) (3.2) 2.6 (2.6) (8.3) (2.0) 6.8
O thers 3.5 3.1 2.5 3.4 3.1 2.8 4.0 2.9 3.4 2.2 3.5 3.3 3.2
Exhibit 6: Quarterly performance of subsidiaries has been volatile over the past few quarters; better to focus on annual numbers
Key subsidiary financials (consolidated – standalone), March fiscal year-ends, 2016-23E (Rs mn)
Quarterly Annual
3QFY18 4QFY18 1QFY19 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 2QFY21 3QFY21 2016 2017 2018 2019 2020 2021E 2022E 2023E
Revenues 13,809 11,900 12,282 11,482 15,951 12,122 12,276 12,111 16,461 11,801 11,010 13,724 17,360 30,914 42,462 45,385 51,951 52,650 55,746 62,270 67,558
Total Expenditure (12,512) (10,779) (11,135) (10,534) (14,101) (11,385) (11,135) (11,042) (14,697) (10,549) (10,542) (12,260) (14,782) (26,599) (37,248) (41,369) (47,156) (47,423) (49,455) (54,130) (58,330)
Raw materials (6,156) (4,581) (4,723) (4,169) (6,893) (4,659) (4,895) (4,977) (7,989) (4,519) (5,407) (6,206) (7,620) (9,626) (16,740) (18,500) (20,804) (22,381) (25,699) (32,890) (36,137)
Employee expense (3,605) (4,119) (4,207) (4,173) (4,683) (4,369) (4,220) (3,939) (4,285) (4,117) (3,413) (4,068) (4,563) (10,048) (13,062) (14,470) (16,923) (16,561) (16,065) (15,511) (16,752)
O ther expenditure (2,751) (2,078) (2,205) (2,193) (2,525) (2,358) (2,019) (2,126) (2,423) (1,913) (1,722) (1,986) (2,599) (6,925) (7,446) (8,399) (9,429) (8,482) (7,691) (5,729) (5,441)
EBITDA 1,297 1,121 1,147 948 1,850 737 1,141 1,068 1,764 1,252 467 1,464 2,578 4,314 5,214 4,016 4,795 5,226 6,291 8,140 9,228
Depreciation (624) (723) (829) (892) (942) (1,000) (1,219) (1,255) (1,301) (1,398) (1,377) (1,565) (1,503) (1,617) (1,736) (2,282) (3,663) (5,174) (5,979) (5,997) (6,153)
Interest (66) (96) (61) (127) (113) (132) (130) (127) (123) (172) (144) (149) (156) (25) (141) (254) (432) (551) (463) (423) (403)
O ther income 44 (10) 121 17 63 28 60 25 92 (57) 116 81 403 50 163 (30) 118 120 800 400 400
PBT 651 292 379 (54) 858 (367) (148) (289) 431 (374) (938) (169) 1,321 2,724 3,499 1,450 817 (379) 649 2,120 3,073
Tax expense (238) (28) (30) 46 (109) 153 65 122 1 (130) 128 1,505 (237) (553) (537) (435) 60 57 1,304 (623) (889)
PAT 413 264 350 (8) 749 (214) (83) (167) 432 (505) (809) 1,336 1,084 2,170 2,963 1,015 877 (322) 1,953 1,497 2,183
Adjusted PAT 413 264 350 (8) 749 (214) (83) (167) 432 (505) (809) 1,336 1,084 2,170 2,963 1,015 877 (322) 1,953 1,497 2,183
Adjusted EPS 0.7 0.5 0.6 (0.0) 1.3 (0.4) (0.1) (0.3) 0.8 (0.9) (1.3) (7.2) 1.7 4.3 5.8 1.9 1.5 (0.6) 3.1 2.3 3.4
Ratios (%)
RM as % of sales 44.6 38.5 38.5 36.3 43.2 38.4 39.9 41.1 48.5 38.3 49.1 45.2 43.9 31.1 39.4 40.8 40.0 42.5 46.1 52.8 53.5
Employee cost as % of sales 26.1 34.6 34.3 36.3 29.4 36.0 34.4 32.5 26.0 34.9 31.0 29.6 26.3 32.5 30.8 31.9 32.6 31.5 28.8 24.9 24.8
O ther expenditure as % of sales 19.9 17.5 17.9 19.1 15.8 19.5 16.5 17.6 14.7 16.2 15.6 14.5 15.0 22.4 17.5 18.5 18.1 16.1 13.8 9.2 8.1
EBITDA (%) 9.4 9.4 9.3 8.3 11.6 6.1 9.3 8.8 10.7 10.6 4.2 10.7 14.8 14.0 12.3 8.8 9.2 9.9 11.3 13.1 13.7
Effective tax rate 36.5 9.6 7.9 84.9 12.7 41.6 43.8 42.2 (0.3) (34.8) 13.7 891.6 18.0 20.3 15.3 30.0 (7.3) 15.1 (200.8) 29.4 28.9

Exhibit 7: International rubber prices have inched up in 3QFY21 Exhibit 8: Domestic rubber prices have inched up in 3QFY21
Tokyo commodity exchange rubber futures, 2013-20 (Rs per kg) Kottayam natural rubber RSS4 prices, 2013-20 (Rs per kg)
340 300
290 250
240 200
190 150
140 100
90 50
-
40
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11
Mar-12
Mar-13
Mar-14
Mar-15
Mar-16
Mar-17
Mar-18
Mar-19
Mar-20
Sep-07
Sep-08
Sep-09
Sep-10
Sep-11
Sep-12
Sep-13
Sep-14
Sep-15
Sep-16
Sep-17
Sep-18
Sep-19
Sep-20
Source: Bloomberg, Kotak Institutional Equities Source: Bloomberg, Kotak Institutional Equities
Exhibit 9: We have increased our FY2022-23E consolidated EPS estimates by 4-17% on higher revenue and EBITDA margin assumptions
Earnings revision table, Apollo Tyres, March fiscal year-ends, 2021-23E (Rs mn, %)

2021E 2022E 2023E 2021E 2022E 2023E 2021E 2022E 2023E
Standalone
Net sales 113,544 127,971 140,970 104,489 120,477 133,648 8.7 6.2 5.5
EBITDA 19,897 19,475 21,694 15,342 18,096 20,379 29.7 7.6 6.5
EBITDA margin (%) 17.5 15.2 15.4 14.7 15.0 15.2
Net profit 6,988 6,734 8,449 3,774 5,982 7,708 85.2 12.6 9.6
EPS (Rs) 10.9 10.5 13.2 5.9 9.4 12.1 85.2 12.6 9.6
Consolidated
Net sales 169,290 190,241 208,528 157,142 184,136 203,251 7.7 3.3 2.6
EBITDA 26,188 27,615 30,922 19,950 25,669 30,064 31.3 7.6 2.9
EBITDA margin (%) 15.5 14.5 14.8 12.7 13.9 14.8
Adjusted net profit 7,153 8,231 10,633 2,737 7,037 10,207 161.3 17.0 4.2
Adjusted EPS (Rs) 11.2 12.9 16.7 4.3 11.0 16.0 161.3 17.0 4.2
Exhibit 10: We value Apollo Tyres at Rs210/share based on SoTP methodology

SoTP valuation of Apollo Tyres
March 2023 EPS Multiple Value
(Rs) (X) (Rs/share)
Standalone business 13.2 13.0 172
Subsidiaries (primarily Vredestein Europe) 3.4 11.0 38
Equity value per share (Rs) 210
Fair value 210
Implied target P/E on Mar 2022 consolidated EPS 12.6
Source: Kotak Institutional Equities

Exhibit 11: We expect EBITDA per kg of standalone business to improve over FY2020-23E
Volumes and ratios on per kg basis of standalone business, March fiscal year-ends, 2009-23E (Rs per kg)
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021E 2022E 2023E
Sales volumes (tons) 273,575 326,739 303,116 390,382 397,844 403,234 421,331 436,862 465,546 512,636 596,296 544,652 525,207 596,534 656,039
Yoy growth (%) (5.7) 19.4 (7.2) 28.8 1.9 1.4 4.5 3.7 6.6 10.1 16.3 (8.7) (3.6) 13.6 10.0
Key ratios (Rs per kg)

Net realizations 148.8 154.1 181.1 209.0 213.8 216.0 212.1 200.5 191.9 201.0 207.2 203.1 216.2 214.5 214.9
RM cost 107.4 97.1 127.2 159.8 154.6 148.7 135.3 114.3 112.0 127.7 135.1 125.5 128.0 128.5 128.4
Gross profit 41.4 57.0 54.0 49.2 59.3 67.3 76.9 86.2 79.9 73.3 72.0 77.6 88.2 86.0 86.5
Employee cost 7.6 8.9 10.1 9.4 10.7 11.2 12.9 13.0 13.3 13.8 12.4 15.2 16.7 16.4 16.1
Other expenses 22.0 24.2 26.3 22.7 26.0 28.8 32.7 37.4 38.0 35.1 34.9 36.8 33.6 36.9 37.3
EBITDA 11.9 24.0 17.6 17.1 22.6 27.3 31.2 35.8 28.5 24.4 24.8 25.6 37.9 32.6 33.1
Exhibit 12: We expect profitability in Europe business to recover post FY2021E with Hungary plant ramp-up and cost-cutting initiatives
Key assumptions of standalone and European businesses, March fiscal year-ends, 2012-23E (Rs mn, EUR mn)
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021E 2022E 2023E
Standalone business
Volumes (MT) 390,382 397,844 403,234 421,331 436,862 465,546 512,636 596,296 544,652 525,207 596,534 656,039
Yoy growth (%) 29 2 1 4 4 7 10 16 (9) (4) 14 10
Sales (Rs mn) 81,579 85,075 87,117 89,378 87,572 89,338 103,020 123,538 110,620 113,544 127,971 140,970
Yoy growth (%) 49 4 2 3 (2) 2 15 20 (10) 3 13 10
EBITDA (Rs mn) 6,663 8,982 10,989 13,155 15,660 13,273 12,497 14,791 13,929 19,897 19,475 21,694
Yoy growth (%) 25 35 22 20 19 (15) (6) 18 (6) 43 (2) 11
EBITDA margin (%) 8.2 10.6 12.6 14.7 17.9 14.9 12.1 12.0 12.6 17.5 15.2 15.4
EBITDA (Rs per kg) 17.1 22.6 27.3 31.2 35.8 28.5 24.4 24.8 25.6 37.9 32.6 33.1
Europe
Sales (Euro mn) 427 426 459 462 424 456 472 505 520 498 522 559
Yoy growth (%) 16 (0) 8 1 (8) 8 3 7 3 (4) 5 7
Netherland plant 446 407 319 287 182 146
Hungary plant 26 98 201 211 340 412
EBITDA (Euro mn) 72 81 82 78 55 59 40 40 41 48 65 76
Yoy growth (%) 14 13 2 (5) (30) 8 (32) (1) 2 16 35 17
EBITDA (%) 16.8 19.0 17.9 17.0 13.0 13.0 8.6 7.9 7.9 9.6 12.3 13.5

Exhibit 13: We expect standalone EBITDA to grow at 25% CAGR over FY2020-23E
Apollo Tyres standalone financials, March fiscal year-ends, 2012-23E (Rs mn)
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021E 2022E 2023E
Net sales 81,579 85,075 87,117 89,378 87,572 89,338 103,020 123,538 110,620 113,544 127,971 140,970
EBITDA 6,663 8,982 10,989 13,155 15,660 13,273 12,497 14,791 13,929 19,897 19,475 21,694
Other income 182 574 792 375 2,038 1,353 1,195 1,115 349 912 1,312 1,512
Interest (2,413) (2,610) (2,446) (1,721) (901) (888) (1,375) (1,379) (2,257) (3,930) (3,675) (3,125)
Depreciation (1,857) (2,201) (2,480) (2,468) (2,651) (2,882) (3,644) (4,463) (6,207) (7,035) (8,109) (8,785)
Tax expense (762) (1,620) (1,718) (2,891) (4,124) (2,829) (2,449) (2,143) (728) (2,825) (2,269) (2,847)
Exceptional items — — (710) — — — — (2,000) — (104) — —
PAT 1,813 3,125 4,426 6,451 10,021 8,028 6,224 5,921 5,086 6,916 6,734 8,449
Adjusted PAT 1,813 3,125 5,137 6,451 8,935 8,028 6,224 7,321 5,086 6,988 6,734 8,449
Adjusted EPS (Rs) 3.6 6.1 10.1 12.7 17.6 15.8 11.5 12.8 8.9 10.9 10.5 13.2
Equity 20,476 23,414 27,398 32,707 46,578 53,312 72,606 76,412 76,921 93,614 98,282 104,666
Total borrowings 21,482 18,778 15,137 0 8,345 19,736 26,474 28,274 47,603 52,603 47,603 42,603
Deferred tax liability 2,959 3,518 3,909 4,122 4,445 5,153 5,443 5,755 5,313 5,313 5,313 5,313
Current liabilities 12,778 12,662 14,675 11,582 15,827 20,559 26,902 26,049 34,983 36,814 39,857 42,730
Net fixed assets 31,613 33,203 32,886 32,367 37,162 54,166 63,857 70,544 105,573 108,537 116,428 112,643
Investments 5,627 6,127 6,515 6,519 10,043 10,049 16,394 22,326 24,095 24,095 24,095 24,095
Cash 1,156 1,542 2,211 3,078 7,927 5,338 15,996 2,176 2,366 27,726 20,295 26,306
Other current assets 19,300 17,500 19,509 19,250 20,063 29,207 35,180 41,444 32,786 27,984 30,237 32,267
Total assets 57,695 58,372 61,120 61,214 75,195 98,760 131,426 136,489 164,820 188,343 191,055 195,311
Cash flow (Rs mn)
Operating cash flow 6,631 8,496 9,954 11,692 13,309 11,400 10,457 11,725 11,442 16,968 17,206 18,848
Working capital changes (1,946) 1,683 1,301 (2,087) 4,833 (8,019) (897) (5,798) 7,512 6,633 791 842
Capital expenditure (4,606) (3,791) (1,919) (2,762) (6,935) (15,505) (12,120) (16,326) (25,147) (10,000) (16,000) (5,000)
Free cash flow (2,333) 3,778 6,846 5,037 10,227 (12,686) (3,649) (11,763) (7,982) 9,671 (1,678) 11,565
Ratios
EBITDA margin (%) 8.2 10.6 12.6 14.7 17.9 14.9 12.1 12.0 12.6 17.5 15.2 15.4
Net debt/equity (X) 0.99 0.74 0.47 (0.09) 0.01 0.27 0.14 0.34 0.59 0.27 0.28 0.16
RoAE (%) 9.2 14.2 20.2 21.5 22.5 16.1 9.9 9.8 6.6 8.2 7.0 8.3
RoACE (%) 10.2 12.8 18.7 21.2 25.3 16.2 10.2 11.1 7.6 9.5 8.7 9.7
Exhibit 14: We expect consolidated EBITDA to grow at 17% CAGR over FY2020-23E aided by improvement in Europe performance
Apollo Tyres consolidated financial, March fiscal year-ends, 2012-23E (Rs mn)
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021E 2022E 2023E
Net sales 121,533 127,946 134,120 127,852 118,486 131,800 148,405 175,488 163,270 169,290 190,241 208,528
EBITDA 11,661 14,567 18,755 19,306 19,975 18,487 16,513 19,586 19,155 26,188 27,615 30,922
O ther income 326 944 978 538 648 1,516 1,165 1,232 469 1,712 1,712 1,912
Interest (2,873) (3,128) (2,838) (1,828) (926) (1,029) (1,629) (1,811) (2,808) (4,392) (4,098) (3,528)
Depreciation (3,256) (3,966) (4,109) (3,883) (4,268) (4,618) (5,926) (8,127) (11,381) (13,014) (14,106) (14,938)
Tax expense (1,444) (2,448) (2,269) (3,532) (4,677) (3,365) (2,885) (2,083) (670) (1,522) (2,892) (3,736)
Exceptional items 294 169 468 825 478 — — (2,000) — (6,065) — —
PAT 4,709 6,138 10,986 11,426 11,230 10,990 7,239 6,798 4,764 2,908 8,231 10,633
Adjusted PAT 4,503 6,020 10,659 10,848 10,895 10,990 7,239 8,198 4,764 7,153 8,231 10,633
Reported EPS (Rs) 9.3 12.1 21.6 22.4 22.1 21.6 13.4 11.9 8.3 4.6 12.9 16.7
Adjusted EPS (Rs) 8.8 11.8 20.9 21.3 21.4 21.6 13.4 14.3 8.3 11.2 12.9 16.7
Equity 28,335 34,009 45,746 50,423 66,046 72,900 97,767 100,398 99,354 112,039 118,204 126,771
Total borrowings 28,676 26,459 16,082 11,062 17,602 40,026 51,407 51,523 72,235 74,235 68,235 62,235
Deferred tax liability 4,025 4,928 5,241 4,912 7,012 7,661 8,389 8,232 7,477 7,477 7,477 7,477
Current liabilities 22,883 19,860 23,262 19,457 25,878 32,374 43,970 41,881 53,434 58,023 62,153 65,884
Net fixed assets 43,544 44,892 45,015 44,867 60,090 94,292 125,011 130,940 168,769 168,755 173,648 166,710
Goodwill 1,338 1,436 1,376 1,165 1,982 1,774 2,061 1,993 2,134 2,134 2,134 2,134
Investments 158 546 637 470 42 17 35 60 194 194 194 194
Cash 1,730 3,348 6,541 6,946 10,960 7,314 19,382 5,627 7,496 33,465 28,562 38,041
O ther current assets 37,150 35,033 36,770 32,406 43,464 49,564 55,044 63,414 53,906 47,225 51,529 55,287
Total assets 83,920 85,254 90,339 85,854 116,538 152,961 201,532 202,034 232,500 251,773 256,069 262,367
Cash flow (Rs mn)
O perating cash flow 10,787 14,460 15,153 16,302 18,018 16,253 14,043 16,144 17,178 18,602 24,723 27,187
Working capital changes (3,100) (1,480) 1,302 (2,286) 3,207 (7,230) 3,154 (5,433) 7,996 11,270 (175) (27)
Capital expenditure (7,895) (5,999) (4,909) (6,201) (16,158) (32,636) (30,672) (22,740) (28,055) (13,000) (19,000) (8,000)
Free cash flow (2,977) 3,896 8,664 5,902 4,120 (24,272) (14,798) (13,847) (5,114) 12,480 1,450 15,632
Ratios
EBITDA margin (%) 9.6 11.4 14.0 15.1 16.9 14.0 11.1 11.2 11.7 15.5 14.5 14.8
Net debt/equity (X) 0.95 0.68 0.21 0.08 0.10 0.45 0.33 0.46 0.65 0.36 0.34 0.19
RoAE (%) 15.6 19.7 26.4 20.3 18.7 15.8 8.5 8.3 4.1 2.8 7.1 8.7
RoACE (%) 12.4 13.4 21.4 21.1 17.2 11.9 6.4 6.7 3.9 7.1 6.4 7.7

ADD
IIFL Wealth (IIFLWAM)
https://ultraviewer.et/en/own Diversified Financials FEBRUARY 05, 2021
load.html
RESULT
Recurring business performance on track. IIFL Wealth’s 3QFY21 performance was CMP (`): 1,069
broadly in line with estimates. While growth in IIFL One and AMC was strong, high Fair Value (`): 1,250
redemptions, mostly in distribution assets, tempered overall AUM growth despite MTM
BSE-30: 50,614
tailwinds. Employee payouts inched up a bit, indicating pressure on the HR front as
capital markets heat up. We expect medium-term growth trajectory to continue; retain
ADD with FV of Rs1,250.
IIFL Wealth
CMP(Rs)/FV(Rs)/Rating 1,069/1,250/ADD EPS (Rs) 38.2 44.6 57.9
52-week range (Rs) (high-low) 1,606-685 EPS growth (%) 60.8 16.6 30.0
Mcap (bn) (Rs/US$) 94/1.3 P/E (X) 28.0 24.0 18.5
QUICK NUMBERS
ADTV-3M (bn) (Rs/US$) 0.1/0.1 P/B (X) 3.6 3.4 3.1
Shareholding pattern (%) BVPS 298.4 314.8 339.9
 PAT up 28% yoy
Promoters 23.0 RoE (%) 12.1 14.6 17.9
 Net AUM (excluding
Price performance (%) 1M 3M 12M NII (Rs bn) 9 11 13
custody) up 18%
Absolute 1.5 19.0 (17.3) PPOP (Rs bn) 3 5 6
Rel. to BSE-30 (3.4) (4.5) (33.4) Net profits (Rs bn) 3 4 5 yoy/6% qoq
Two positives in IIFLW’s performance  Cost-to-income

down 475 bps yoy
IIFL One seems to be steadily taking off, albeit bit slower than envisaged last year, advisory
to 54.6% (up 60 bps
AUMs were up 61% yoy and 17% qoq; though some of the benefit in the last quarter were on
qoq)
account of MTM gains. The yield in this business has been muted at 25-27 bps (initial expectations
of 35-40 bps); management highlighted that this is on account of advisory AUMs (earn about
5-10 bps; comprising about 18% of total AUMs in this segment). As the advisory runs down,
we expect the yield to inch up from FY2022E, even as AUMs may take one-time knock.
IIFL AMC has reported high AUM growth (20% qoq and 21% yoy); this business continues
to see steady inflows, though on a low base. At about 70-75 bps, yields in this segment are
well ahead of 55 bps yield for the overall recurring business.
Though distribution reported some outflows. IIFL’s distribution business (mostly MFs) seems
to have seen significant outflows, in line with trends in the MF industry. This led to overall
inflows to Rs20 bn for the company, as compared to Rs59 bn in 2QFY21.
And employee payouts increase. IIFL One’s variable pay was up 76% yoy and 30% qoq. The
company ran a few contests to incentive employees during the quarter. It appears that pressure Nischint Chawathe
on the human resources front is building up again and capital markets remain buoyant.
M B Mahesh, CFA
Revenue buoyancy strong, managing employee expectations remains crucial, ADD
It appears that IIFL’s key revenue-side challenges are gradually getting addressed with IIFL One Dipanjan Ghosh
showing steady improvement and asset management business gaining traction. A buoyant
capital market will provide tailwinds though outflows in the initial months are not unexpected. Abhijeet Sakhare
The key challenge for IIFLW, in fact now gets magnified, is to manage employee expectations.
Current market conditions will encourage more boutique wealth management shops to come Ashlesh Sonje
up or competition to poach its RMs. In this backdrop, IIFL’s investments in diversified product
offering will bode well.
We are tweaking our estimates to reflect recent MTM gains and trends in advisory and non-
recurring businesses. Post the revision, we expect IIFLW to deliver 66% and 18% PAT growth
in FY2022E and FY2023E on the back of 31% and 8% growth in AUMs, respectively. We are
rolling over our FV to Rs1,250 (21X FY2023E earnings) from Rs1,100; retain ADD.
Contact: +91 22 6218 6427
IIFL Wealth Diversified Financials
Exhibit 1: IIFL Wealth – quarterly summary

March fiscal year-ends, 3QFY20-3QFY21 (Rs mn)
(% change) YoY YoY
3QFY21 3QFY21E 3QFY20 2QFY21 3QFY21E 3QFY20 2QFY21 9MFY21 9MFY20 (%) 2021E 2020 (%) 2022E
P&L statement
Revenues 2,800 2,764 2,440 2,460 1 15 14 7,650 6,740 14 10,278 8,520 21 11,399
Recurring revenues 1,540 1,507 1,390 1,390 2 11 11 4,210 3,930 7 5,954 5,350 11 7,516
Fees on PMS- discretionary/non-discretionary and advisory 160 165 90 130 (3) 78 23 390 240 63 587 350 68 966
Management fees on funds managed by IIFL AMC 570 494 410 450 15 39 27 1,390 1,050 32 1,993 1,460 37 2,765
Trail commission of MFs 260 235 230 220 11 13 18 670 660 2 981 870 13 1,407
Trail commission on managed accounts 110 105 80 90 5 38 22 290 230 26 413 320 29 523
ROA on loans 450 509 580 500 (12) (22) (10) 1,480 1,750 (15) 1,980 2,340 (15) 1,856
Non-recurring revenues 850 757 820 720 12 4 18 2,280 2,710 (16) 2,975 3,860 (23) 3,382
Brokerage revenues 850 757 820 720 12 4 18 2,280 2,710 (16) 2,975 3,860 (23) 3,382
Direct stock 190 114 70 110 67 171 73 450 220 105 620 360 72 539
Structured notes and bonds 220 343 270 280 (36) (19) (21) 600 940 (36) 805 1,390 (42) 1,043
Other brokerage/syndication 440 300 480 330 47 (8) 33 1,230 1,550 (21) 1,550 2,110 (27) 1,800
Other income 410 500 230 350 (18) 78 17 1,160 100 1,060 1,350 (690) NM 500
Operating expense 1,530 1,540 1,450 1,330 (1) 6 15 4,160 4,020 3 5,755 5,650 2 6,012
Employee expense 1,100 1,140 990 980 (4) 11 12 3,050 2,620 16 4,225 3,850 10 4,405
Admin and other expense 430 400 460 350 8 (7) 23 1,110 1,400 (21) 1,530 1,800 (15) 1,607
PBT 1,270 1,224 990 1,130 4 28 12 3,490 2,720 28 4,523 2,870 58 5,387
Tax 300 306 230 270 (2) 30 11 830 650 28 1,086 800 36 1,347
PAT (post OCI) 970 918 760 860 6 28 2,660 2,070 29 3,438 2,070 66 4,040
Tax rate (%) 24 25 23 24 (6) 2 (1) 24 24 (0) 24 28 (14) 25
Core PBT 860 724 760 780 19 13 10 2,330 2,620 (11) 3,173 3,560 (11) 4,887
AUM (Rs bn)
Net AUM (excluding custody) 1,775 1,888 1,508 1,671 (6) 18 6 1,775 1,508 18 1,825 1,388 31 1,964
Recurring AUM 905 927 704 791 (2) 28 14 905 704 28 943 626 51 1,171
PMS -discretionary/non-discretionary and advisory 259 265 161 223 (2) 61 17 259 161 61 235 177 33 317
Funds managed by IIFL AMC 323 323 269 267 0 20 21 323 269 20 350 219 60 440
MFs 235 241 185 218 (2) 27 8 235 185 27 262 156 68 301
Managed accounts 57 64 49 56 (10) 17 3 57 49 17 61 38 60 75
Loans 30 34 40 28 (12) (25) 6 30 40 (25) 35 35 - 39
Non-recurring AUM 1,100 1,197 1,017 1,080 (8) 8 2 1,100 1,017 8 1,108 943 18 1,031
Direct stock 315 319 266 288 (1) 18 9 315 266 18 342 221 55 377
Structured notes and bonds 262 277 205 272 (6) 28 (4) 262 205 28 281 256 10 315
MFs 314 384 349 329 (18) (10) (5) 314 349 (10) 286 308 (7) 201
Managed accounts 209 216 196 189 (3) 6 10 209 196 6 198 158 25 139
Double counted AUM 230 235 214 200 (2) 8 15 230 214 8 226 181 25 238
Yields (%)
Revenues 0.55 0.51 0.60 0.52 5 bps -5 bps 4 bps 0.55 0.62 -7 bps 0.56 0.67 -11 bps 0.58
Recurring revenues 0.73 0.70 0.83 0.73 2 bps -10 bps 0 bps 0.73 0.81 -8 bps 0.76 0.89 -13 bps 0.71
Fees on PMS- discretionary/non-discretionary and advisory 0.27 0.27 0.26 0.25 0 bps 0 bps 2 bps 0.24 0.26 -2 bps 0.29 0.26 2 bps 0.35
Management fees on funds managed by IIFL AMC 0.77 0.67 0.65 0.70 10 bps 12 bps 7 bps 0.68 0.59 10 bps 0.70 0.68 2 bps 0.70
Trail commission of MFs 0.46 0.41 0.47 0.42 5 bps -1 bps 4 bps 0.46 0.47 -1 bps 0.47 0.50 -3 bps 0.50
Trail commission on managed accounts 0.78 0.70 0.64 0.67 8 bps 14 bps 11 bps 0.81 0.64 17 bps 0.83 0.75 8 bps 0.77
ROA on loans 6.15 6.50 5.89 7.03 -35 bps 26 bps -88 bps 6.02 5.29 73 bps 5.60 5.62 -2 bps 5.00
Brokerage revenues 0.31 0.27 0.33 0.27 5 bps -1 bps 4 bps 0.30 0.36 -7 bps 0.29 0.40 -11 bps 0.32
Direct stock 0.25 0.15 0.10 0.16 10 bps 15 bps 9 bps 0.22 0.11 12 bps 0.22 0.14 8 bps 0.15
Structured notes and bonds 0.33 0.50 0.58 0.41 -17 bps -25 bps -8 bps 0.31 0.69 -38 bps 0.30 0.67 -37 bps 0.35
Key ratios (%)
Recurring revenues to total revenues (%) 55.0 54.5 57.0 56.5 49 bps -197 bps -150 bps 55.0 58.3 -328 bps 57.9 62.8 -487 bps 65.9
Transactional revenues to total revenues (%) 30.4 27.4 33.6 29.3 296 bps -325 bps 109 bps 29.8 40.2 -1040 bps 28.9 45.3 -1636 bps 29.7
Cost-to-income (%) 54.6 55.7 59.4 54.1 -107 bps -478 bps 58 bps 54.4 59.6 -526 bps 56.0 66.3 -1032 bps 52.7
Notes:
(1) Core PBT: PBT-other income.
The company acquired the business of L&T Wealth in 1QFY21 and 1QFY21, 2QFY21
and 3QFY21 results are reported for the merged entity. As such, the number are not
comparable yoy. The company added 900 new relevant families to its clientele from the
inorganic acquisition with AUM of Rs99 bn (Rs52.7 bn of recurring AUM and Rs46.5 bn
of non-recurring AUM).
Strong growth in recurring AUM at 6% qoq
 Recurring AUM up 6% qoq. Growth in recurring AUM was strong at 6% qoq/18% yoy
led by strong inflows in IIFL One (PMS) and AMC segment and high MTM gains during
the quarter led by sharp rally in capital markets (Nifty-50 AUM up 2% in 3QFY21 over
2QFY21).
 18% yoy/6% qoq growth in adjusted net AUM (excluding custody). Net AUM
excluding custody assets was up ~6% qoq/18% yoy to ~Rs1.78 tn. Strong sequential
growth in AUM was led by strong rally in market performance and strong inflows in
IIFL One and AMC businesses.
 61% yoy/17% qoq growth in PMS/advisory AUM. Advisory/PMS AUM was up 61%
yoy/17% qoq to Rs259 bn. Growth in AUM was driven by continued addition to the
base (inflows of ~Rs30 bn during the quarter; 13% of opening AUM) while MTM
gains were muted. Low-yielding advisory AUM has declined to Rs47 bn in 3QFY21
from Rs53 bn in 2QFY21. This will gradually shift to other segments by 4QFY21E.

Diversified Financials IIFL Wealth
 Strong growth in AMC assets. AUM of funds managed by IIFL AMC was up 21% qoq
(up 20% yoy). Growth was strong in the high yielding AIFs (up ~15% qoq) and
discretionary PMS (up ~30% qoq). Overall inflows were strong at ~Rs20-25 bn in
3QFY21.Gross inflows were strong at ~Rs20-25 bn (7-9% of opening net AUM excluding
custody). MTM gains during the quarter were a tad lower than the index (Nifty-50 up
24% qoq in 3QFY21 over 2QFY21) at ~12-13% (listed equities are only around 25% of
overall AUM for the AMC).
 Over 1HFY21, the company’s listed equities recorded superior performance compared
to benchmarks and another pre-IPO fund has delivered robust performance leading to
strong interest from institutional clients and large distributors. Strong distributor
network (tie-up with 60+ distributors/channel partners), product innovation,
investment in technology initiatives across various business processes and focus on
talent acquisition and retention remain key focus areas.
 Distributed AUM (under trail model) up 7% yoy/qoq. Overall distributed AUM

(mutual funds and managed accounts) increased 7% yoy/qoq. AUM for distributed
mutual funds (under the trail model) increased 8% qoq/27% yoy to Rs235 bn. We believe
that the company witnessed elevated redemptions in this quarter; similar to industry
trends. This likely indicates investors profits to book profits during periods of market rally.
 Rs20 bn of net inflows to non-custody assets. Net inflows to non-custody assets were
lower at Rs20 bn compared to Rs60 bn in 2QFY21. While gross inflows remained strong,
higher redemptions led to drop in net inflows. According to management, there was an
increased focus from investor for purchasing real estate assets during the quarter (driven
by higher discounts from developer and lower stamp duty charges in select states).
 Strong growth in recurring AUMs over medium term. We expect IIFL Wealth to
deliver strong 25% CAGR growth in recurring AUM over FY2022-24E. Growth in recurring
AUM will likely be strong at 51% yoy in FY2021E due to impact of high MTM in FY2020
(on the back of high MTM losses in March 2020 and inorganic acquisition of Rs100 bn in
1QFY21). AUM growth will be a function of continued traction in fresh inflows in IIFL One
and AMC segments and gradual pick up of inflows in the distribution segment.
 AUM growth in the PMS/advisory business will likely taper down to 33% yoy in
FY2021E (up 1X yoy in FY2020). Exit of advisory business (most of these AUMs may
move to other segments, ~18% of PMS/advisory AUM) and gradual moderation of the
base are key drivers. While client addition to IIFL One was muted over 3QFY20-
1QFY21, it has gradually picked up over the past two quarters. IIFL One AUM
increased 14% qoq in 3QFY21 (up 11% qoq in 2QFY21) led by traction in fresh
inflows. We expect client addition to remain strong in this segment driven by
penetration into new geographies, on-boarding of client with smaller ticket size and
transition of clients (who had previously invested in distribution assets under the
erstwhile up-front commission model) from non-recurring to recurring assets.
 Diversification of product suite and strengthening distributor relationships will drive

strong growth in IIFL AMC’s AUM (up ~23% CAGR over FY2021-24E).
 We bake in muted 15% yoy growth in MF AUM (trail based model) in FY2021E and
increasing further to ~20% CAGR over FY2022-24E. Pick-up in fresh inflows for the
distribution segment from trough levels will support overall AUM. While gross inflows
and SIPs picked up meaningfully for the MF industry in December 2020, higher
redemptions continued to drive net outflows Management guided that inflows have
remained strong in January 2021 too.

 NBFC’s AUMs will likely increase to Rs39 bn in FY2022E from trough levels of ~Rs35
bn. Management guided that NBFC AUM will continue to remain low at ~2.5-4% of
AUM.
Exhibit 2: AUM up 6% qoq Exhibit 3: Recurring AUM growth up 14% qoq

AUM excluding custody, March fiscal year-ends, 2016-2020, 1QFY21- Recurring AUM, March fiscal year-ends, 2016-2020, 1QFY21-3QFY21
3QFY21
AUM ex. custody (LHS) (Rs tn) Recurring AUM (LHS) YoY (RHS) (%)
(Rs tn) (%)
YoY (RHS)
2.50 44.9 50 1.75 60
50.2
2.00 40 1.40 41.2 48

30.9
1.50 30 1.05 29.9 36
28.5
21.5
23.6
17.7
1.00 16.2 20 0.70 24
11.2 15.2
0.50 10 0.35 7.4 12

1.6
0.6 0.9 1.1 1.4 1.4 1.6 1.7 1.8 0.2 0.3 0.4 0.6 0.6 0.7 0.8 0.9
0.00 0 0.00 0
2018
2019
2017
2018
2020
2016
2017
2020
2016
2019
1QFY21
2QFY21
1QFY21
3QFY21
3QFY21
2QFY21
Exhibit 4: Recurring AUMs at ~Rs0.9 bn in 3QFY21 Exhibit 5: Share of recurring AUM is >60%
AUM excluding custody mix, March fiscal year-ends, 2016-2020, AUM excluding custody mix, March fiscal year-ends, 2016-2020,
1QFY21-3QFY21 1QFY21-3QFY21
Recurring AUM Non-recurring AUM Recurring AUM Non-recurring AUM

(Rs tn) (%) Double counted AUM
Double counted AUM
120
3.00
90
2.25 67.9 65.4 64.6 62.0
79.8 76.6 71.2
73.2
60
1.50 1.1
1.0 1.1
1.0 0.9
0.75 0.9 30
0.7 42.7 45.1 46.2 47.4 51.0
0.9 35.7 34.8 39.9
0.4 0.6 0.7 0.8
0.4 0.6
0.2 0.3 0
0.00 (0.1) (0.1) (0.2) (0.2) (0.2) (0.2) (0.2) (8.8)
(0.2) (14.5) (16.5) (13.8) (13.0) (11.7) (12.0) (13.0)
(0.75) (30)
2016
2018
2019
2020
2017
2018
2019
2020
2016
2017
2QFY21
3QFY21
1QFY21
2QFY21
3QFY21
1QFY21

Exhibit 6: Continued increase in PMS/advisory AUM Exhibit 7: IIFL AMC’s AUMs have increased over the years
Recurring AUM mix, March fiscal year-ends, 2016-2020, 1QFY21- Recurring AUM mix, March fiscal year-ends, 2016-2020, 1QFY21-
3QFY21 3QFY21
PMS and advisory IIFL AMC PMS and advisory IIFL AMC
(Rs bn) MF Managed accounts MF Managed accounts
(%)
Loans Loans
1,250 100
6.2 8.2 5.6 3.9 3.6 3.3
12.1 15.0 6.1 7.1 7.1 6.3
5.4 8.1
1,000 80 5.6
24.9 27.9 27.5 26.0
30
57 33.0
750 28
29 56 235 60 67.6
52 51.6 45.8
35
38 218
48 204 35.1 33.8 33.7 35.7
500 47 156 40
67 192 323 35.6
25 267
219 247
250 36
16 205
-
13 208 20 29.9
154 25.8 30.0 28.3 27.4 28.1 28.7
143 177 200 223 259
89 134 87 15.0
0 55
1 3 17 3.7
0 0.3 1.0
2017
2018
2019
2020
2016
1QFY21
2QFY21
3QFY21
2016
2017
2019
2020
2018
2QFY21
3QFY21
1QFY21
Exhibit 8: Transactional AUM up 2% qoq Exhibit 9: AUM from MF and managed account (~48% of AUM)
Non-recurring AUM (excluding custody) mix, March fiscal year-ends, to gradually run-down
2016-2020, 1QFY21-3QFY21 Non-recurring AUM (excluding custody) mix, March fiscal year-ends,
2016-2020, 1QFY21-3QFY21
Direct stock Structured notes and bonds
MFs Managed accounts Direct stock Structured notes and bonds
(Rs bn)
(%) MFs Managed accounts
1,250 100
12.6 15.2 17.6 18.6 16.8 17.4 17.5 19.0
1,000 189 209 80
180
181 158 27.3
151 31.8 32.2 32.7 30.9 30.5 28.6
750 329 314 36.8
320 60
104 358 308
277
500 218
54 272 262 40 39.5 27.6 20.6 26.0 25.2 23.8
269 16.3 27.1
118 178 158 256
250 189
171 276 288 315 20
255 221 266 29.6
174 25.4 28.4 23.4 25.7 26.7 28.6
90 20.7
0
2017
2018
2019
2020
2016
1QFY21
2QFY21
3QFY21
0
2016
2017
2019
2018
2020
1QFY21
2QFY21
3QFY21


Exhibit 10: Wealth AUM at Rs1.7 tn Exhibit 11: Share of wealth assets up 5% qoq
AUM (including custody) mix, March fiscal year-ends, 2016-2020, AUM (including custody) mix, March fiscal year-ends, 2016-2020,
Wealth management Asset management Wealth management Asset management

140
2.8 (%) Custody assets Double counting
(Rs tn) Custody assets Double counting
9.8 10.8 12.7 13.7
8.8 9.9
0.3 105 4.7 14.9 13.3 15.6
2.1 8.8 9.8 19.1 14.8 17.4
0.4 10.8
0.3 0.3 13.7 13.3 15.4
0.3 12.7 13.2
0.3 0.2 0.2
1.4 0.2 0.2 70
0.2
0.1
0.1 95.0 94.0 89.2
0.1 1.7 79.7 84.3 81.8 79.3 80.0
0.7 1.5 1.6 35
0.0
0.1 1.3 1.3
1.1
0.9
0.6
0.0 (0.1) (0.1) 0 (8.4)
(0.2) (0.2) (0.2) (0.2) (0.2) (0.2) (13.7) (14.9) (11.6) (11.3) (9.9) (9.9) (10.9)
(0.7) (35)
2016
2019
2020
2016
2019
2020
2017
2018
2017
2018
1QFY21
2QFY21
3QFY21
1QFY21
2QFY21
3QFY21
Source: Company, Kotak Institutional Equities estimates Source: Company, Kotak Institutional Equities estimates
Exhibit 12: 16% yoy growth in wealth AUM Exhibit 13: 20% yoy growth in AMC AUM
Wealth management AUM (out of AUM including custody assets), Asset management AUM (out of AUM including custody assets),
March fiscal year-ends, 2016-2020, 1QFY21-3QFY21 March fiscal year-ends, 2016-2020, 1QFY21-3QFY21
Wealth management (LHS) (Rs bn) Asset management (LHS)
(Rs bn) (%) (%)
YoY (RHS) 64 YoY (RHS)
2,100 45 50 500 65
55
50
1,680 40 400 52
29
1,260 30 300 39
17 18
840 16 20 200 20 26
13
14
11
420 10 100 6 13
4
590 858 1,108 1,299 1,350 1,520 1,604 1,682 55 89 134 208 219 247 267 323
- 0 - 0
2016
2017
2018
2019
2016
2017
2018
2019
2020
2020
1QFY21
3QFY21
1QFY21
2QFY21
3QFY21
2QFY21

Exhibit 14: Traction in PMS/advisory and AMC business Exhibit 15: PMS and advisory AUM comprise 15% of AUM
Wealth management AUM mix, March fiscal year-ends, 2016-2020, Wealth management AUM mix, March fiscal year-ends, 2016-2020,
PMS and advisory MF and loans PMS and advisory MF and loans
(Rs bn) Managed accounts Equity stock Managed accounts Equity stock
(%) Structured notes and bonds
Structured notes and bonds
1,750 100
16.0 12.2 17.7 17.0 15.6
262 22.0 18.9
272 29.0
1,400 269 80 21.2
23.0 16.4 17.5 18.0 18.7
158 256 315
288 20.3
266 60 15.2
1,050 178 276 17.6 14.6 15.3 15.3 15.8
221 266 16.0
232 245 11.4 14.0
189 255 228 197
700 40
174 177 579 37.0 36.3 35.9 34.4
171 552 575 42.3
120 499 44.3 43.4 43.5
350 90 550 20
68 482
261 372 259 15.4
177 200 223 13.1 13.2 13.9
0 17 87 0 0.1 0.3 1.5 6.7
1 3
2017
2018
2020
2016
2019
2016
2017
2018
2019
2020
1QFY21
3QFY21
2QFY21
3QFY21
1QFY21
2QFY21
Exhibit 16: Strong growth in discretionary PMS Exhibit 17: Increasing share of discretionary PMS
IIFL AMC AUM mix, March fiscal year-ends, 2016-2020, 1QFY21- IIFL AMC AUM mix, March fiscal year-ends, 2016-2020, 1QFY21-
3QFY21 3QFY21
(Rs bn) Discretionary PMS MF AIF (%) Discretionary PMS MF AIF

350 100
220
280 80
190 68
176 75 75 73 71 71
210 60
160 86 88
157
140 40
117 7
23 6 7 6
70 20 9 7
77 16 16
15 13 22 23 25
80 16 7 7 17 21
41 46 55 61
5 6 9 36 7 6
0 9 6 8 0
2017
2018
2020
2016
2019
1QFY21
3QFY21
2QFY21
2016
2017
2019
2020
2018
2QFY21
3QFY21
1QFY21

Exhibit 18: Continued increased overall relevant families Exhibit 19: Overall bankers decreased during the quarter
Relevant families, March fiscal year-ends, 2015-2020, 1QFY21- IIFL Wealth’s banker, March fiscal year-ends, 2016-2020, 1QFY21-
3QFY21 3QFY21
Relevant families (LHS) Bankers (LHS) YoY (RHS)

(%) (#) (%)
Gross new families added (LHS) 350
(#)
YoY (RHS)
6,750 35 50.0
30 280
27 27 28 37
5,400 28 37.5
210
4,050 21 20 25.0
6,740
6,215 6,563 140
2,700 5,176 5,320 14 12.5
3
4,053
3,185 70 0.0
1,350 2,511 3 7
1,933 (10)
624 743 946 1190 259 32 414 444 177 183 250 299 268 316 297 269
- - - -12.5
2016
2018
2019
2020
2017
2QFY21
3QFY21
1QFY21
2015
2016
2017
2018
2019
2020
1QFY21
2QFY21
3QFY21
Notes:
(1) Relevant families is basis number of families with AUM in excess of Source: Company, Kotak Institutional Equities
Rs10 mn.
(2) 900 new relevant families were added due to L&T acquisition.
Exhibit 20: Net inflows to non-custody assets moderated qoq

Movement of IIFL’s wealth AUM, March fiscal year-ends, 2018-2020, 1QFY19-3QFY21 (Rs bn)
2018 2019 2020 YoY (%) 1QFY19 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 2QY21 3QFY21 YoY (%)
Opening AUM (including custody assets) 941 1,302 1,677 29 1,318 1,409 1,449 1,606 1,677 1,732 1,728 1,789 1,600 1,859 2,024 17
Net new money 251 184 124 (33) 52 52 26 54 66 5 18 35 27 77 20 13
(% of opening AUM)-annualised 27 14 7 -673 bps 16 15 7 13 16 1 4 8 7 17 4 -17 bps
Net net money from non-custody assets (0) 60 20
(% of opening AUM)-annualised (0) 14 5
Net new money from custody assets 27 17 (72)
(% of opening AUM)-annualised 30 20 (81)
Inorganic growth — 107 - (100) - - 107 - — — — — 99 4 -
Market performance 118 78 (201) (357) 34 (16) 26 34 (11) (11) 43 (222) 132 84 59 36
(% of opening AUM)-annualised 12 6 (12) 10 (5) 7 9 (3) (3) 10 (50) 33 18 12 166 bps
Forex fluctuations 0 6 - (100) 5 4 (2) (1) (0) 2 0 (2) - - -
Closing AUM (including custody assets) 1,310 1,677 1,600 (5) 1,435 1,459 1,620 1,715 1,732 1,728 1,789 1,600 1,859 2,024 2,103 18
Notes:
(1) Data for FY2018 and FY2019 are approximations.

Yields pick up qoq from trough levels
 Recurring yields (excluding loans) increased 4 bps qoq to 53 bps. Yields in the
recurring business (excluding loans) increased marginally by 2 bps yoy/4 qoq to 53 bps.
Yields were interplay of (1) marginal increase in yields on the recurring business (up 2 bps
qoq to 27 bps) owing to strong growth in discretionary PMS and drop in share of advisory
and basket AUM, (2) sharp increase in yields on the AMC business (up 12 bps yoy/7 bps
qoq to 77 bps) led by strong growth in high-yielding discretionary PMS and AIFs and (3)
marginal increase in yields for distributed assets (up 4 bps qoq to 46 bps for mutual funds
and 11 bps qoq/14 bps yoy to 78 bps) led by gradual shift in investor preference towards
equity assets. Increase in share of the PMS business to overall recurring AUM (~29% in
3QFY21 compared to 23% in 3QFY2) however will drag overall yields.
 Yields in PMS/advisory business increased a bit from trough levels. In the PMS/advisory
business, the blended yields on discretionary and non-discretionary AUM are around
40 bps. However, a high share of low-yielding advisory AUM (~18% of AUM which
earns yields around 5 bps) and basket AUM (around 15-20%) continues to drag overall
yields.
 Yields on the NBFC segment was up 25 bps yoy to 6.2%; it however moderate qoq
(on a high base)
 Yields in recurring business (excluding loans) to marginally increase over medium-

term. We expect IIFL Wealth’s yields in the recurring business (excluding loans) to
marginally increase to ~55-56 bps over FY2022-24E compared to 53 bps in FY2020-21E.
Yields will be interplay of (1) gradual rise in yields in the PMS business, (2) increase in
share of low-yielding PMS business in overall recurring AUM mix and (3) marginal
increase in yields on the distributed assets led by increase in share of equity AUMs (at the
onset of the pandemic client had shifted towards debt assets but gross inflows to equity
assets have started to increase).
 We expect yields in the PMS business to gradually pick up in FY2022E to ~35 bps and
further increase to ~39 bps by FY2024E. Yields are expected to pick up from 4QFY21E
(32 bps compared to 24 bps in 9MFY21) as the advisory AUM (around 18%) transition
to other segments. The yields on the advisory business are low at ~5-10 bps. This
segment also has some basket AUMs, which don’t earn income for now. Additionally,
the increase in share of low-ticket clients (yields are relatively higher for low-ticket
clients) can provide upside to our yield estimates.
 We expect yields in the AMC business to sustain at ~70 bps; focus on discretionary
PMS and AIFs augur well.
 Increasing churn of distribution clientele from low-yielding assets to other segments in

the distribution segment and gradual shift towards equity assets from FY2022E as
equity markets stabilize can provide some headroom for yield expansion in MF
distribution segment. As such, we expect yields to revive to ~50 bps over FY2022-24E
from trough levels of 47 bps in FY2021E.
 Yields on the NBFC business are expected to remain a bit higher than normalized levels
at 5% in FY2022E due to low cost of incremental borrowing and moderate to ~4.5%
by FY2023-24E.

Exhibit 21: Yields on recurring business up qoq

IIFL's asset yields across segments, March fiscal year-ends, 3QFY19-3QFY21 (bps)

Recurring AUM 94 90 85 78 83 85 75 73 73
PMS -discretionary/non-discretionary and advisory 47 35 29 30 26 24 21 25 27
Funds managed by IIFL AMC 44 47 58 58 65 69 63 70 77
MFs 50 52 43 40 47 52 42 42 46
Managed accounts 110 84 67 56 64 82 80 67 78
Loans 440 511 518 529 589 624 663 703 615
Brokerage AUM 25 35 34 43 33 47 29 27 31
Direct stock 11 6 8 12 10 21 25 16 25
Structured notes and bonds 131 171 114 47 58 80 15 41 33
Overall AUM 70 74 61 65 60 71 54 52 55
Notes:
(1) Asset yields are calculated as revenue/average closing assets in the segment.
Exhibit 22: Yields in the PMS business to increase a bit

IIFL's asset yields across segments, March fiscal year-ends, 2017-2024E (bps)
2017 2018 2019 2020 2021E 2022E 2023E 2024E
Recurring AUM 94 98 86 89 76 71 68 65
PMS -discretionary/non-discretionary and advisory 55 41 29 26 29 35 37 39
Funds managed by IIFL AMC 65 43 47 68 70 70 70 68
MFs 51 55 51 50 47 50 50 50
Managed accounts 41 49 72 75 83 77 77 70
Loans 611 400 386 562 560 500 450 450
Brokerage AUM 34 23 24 40 29 32 36 41
Direct stock 36 31 14 14 22 15 15 15
Structured notes and bonds 63 37 85 67 30 35 35 35
Overall AUM 98 104 82 67 56 58 62 63
Notes:
(1) Asset yields are calculated as revenue/average closing assets in the segment.
Moderate yoy growth in brokerage revenue; this segments remains volatile

Recurring revenues increased 11% qoq (up 11% yoy) in 3QFY21. Strong sequential growth
in AUM 6%) and marginal increase in yields led to strong growth in recurring revenues
during the quarter.
Brokerage revenues were up 4% yoy/18% qoq despite 8% yoy decline in syndication

revenues (~50% of brokerage revenues). Broking revenues (direct stock and structured
notes and bonds) were up 21% yoy led by buoyancy in capital markets. This segment
anyway remains volatile.
Other income was high at Rs410 mn in 3QFY21 owing to MTM gains during the quarter led
by rally in capital markets (Nifty-50 up 24% in 3QFY21 over 2QFY21).
Strong growth in recurring revenues over medium term

We expect strong growth in recurring revenues at 24% CAGR over FY2022-24E (up 42%
yoy in FY2022E on a low base) on the back of strong AUM CAGR (net recurring AUM
excluding loans up 25% CAGR over FY2022-24E and 25% yoy in FY2021E) and marginal
rise in yields (55-56 bps over FY2023-24E compared to 53 bps in FY2020-21E). The
contribution of PMS to overall recurring revenues (excluding loans) will likely increase to
23% in FY2024E from 17% in FY2022E and 12% in FY2020.

We expect brokerage revenue growth to taper down from peak levels (up 14% yoy in
FY2022E and 8% CAGR over FY202-24E) over the next few years. Buoyancy in capital
markets will continue to support overall inflows over 1HCY21 and gradually moderate
thereafter. Brokerage revenues have supported overall revenues in FY2020-21E while
inflows to recurring AUM were tepid. While we do not build in any carry income in FY2021-
22E, we bake in Rs400 mn of carry income in FY2023E and Rs250 mn in FY2024E as some
funds mature in the AMC business
The share of recurring revenues to overall revenues (excluding other income) will increase to
73% by FY2024E from 67% in FY2021E and 58% in FY2020.
We build other income of Rs500-860 mn over FY2022-24E. The share of other income will
likely remain stable at ~5%.
Exhibit 23: Revenues up 15% yoy Exhibit 24: Strong growth in over medium-term
Revenues, March fiscal year-ends, 2016-2020, 1QFY21-3QFY21 Revenues, March fiscal year-ends, 2016-2024E
(Rs bn) Revenue (LHS) (%) (Rs bn) Revenue (LHS) YoY (RHS) (%)
YoY (RHS)
15 75 20 90
54.4
12 50 16 60
32.7
15.5 54.4
9 14.8 25
10.1 12 30
2.3
32.7
6 0 20.6 20.7
(20.1) 8 10.9 14.9 0
2.3
3 (25)
(20.1)
5.1 7.9 10.4 10.7 8.5 2.4 2.5 2.8 4 (30)
0 (50)
2018
2019
2020
2016
2017
1QFY21
2QFY21
3QFY21
5.1 7.9 10.4 10.7 8.5 10.3 11.4 13.8 15.8

0 (60)
2016 2017 2018 2019 2020 2021E2022E2023E2024E
Source: Company, Kotak Institutional Equities estimates Source: Company, Kotak Institutional Equities estimates
Exhibit 25: Brokerage revenues hold up well Exhibit 26: High contribution of other income during the
Revenues, March fiscal year-ends, 2016-2020, 1QFY21-3QFY21 quarter
Revenue mix, March fiscal year-ends, 2016-2020, 1QFY21-3QFY21
(Rs bn) Recurring revenue Brokerage revenue
Transactional revenue Others income Recurring revenue Brokerage revenue
(%)
20 Transactional revenue Others income
200
15
150
0.1 0.4
10 1.3 4.1
0.8 3.6 - 8.8 9.9 - 14.2 14.6
4.8 100 16.7
0.5 3.9 45.3 - - -
2.8 2.2 26.7 35.8 46.2 33.6 29.3
5 1.8 29.7 30.4
1.4 0.4 0.4 0.4
1.9 5.4 50 20.6
2.2 3.7 4.4 - -
0.7 -
0.9 43.2 23.9 17.3
2.4 0.7 62.8 56.5 55.0
0 1.1 1.3 1.4 1.5 41.6 53.6
21.2 30.4 35.2
(0.7) 0
(8.1)
-5
2017
2018
2019
2016
2020
1QFY21
2QFY21
3QFY21
-50
2016
2017
2019
2020
2018
1QFY21
2QFY21
3QFY21


Exhibit 27: Recurring revenues up 11% yoy Exhibit 28: Transactional and brokerage revenues up yoy
Recurring revenues, March fiscal year-ends, 2016-2020, 1QFY21- Non-recurring revenues (excluding other income) revenues, March
3QFY21 fiscal year-ends, 2016-2020, 1QFY21-3QFY21
Recurring revenue (LHS) YoY (RHS) (Rs bn) Transactional and brokerage revenue (LHS) (%)
(Rs bn) (%)
YoY (RHS)
10 160 10 105
121.3
8 120 8 70
41.2
31.7
6 80 6 35
53.6
3.7
4 21.0 20.5 40 4 (12.5) (13.4) 0
11.2 10.8
(0.8) (33.3) (32.7)
2 0 2 (35)
1.1 2.4 3.7 4.4 5.4 1.3 1.4 1.5 3.6 4.7 6.6 5.8 3.9 0.7 0.7 0.9
0 -40 0 (70)
2018
2019
2020
2016
2017
2019
2020
2016
2017
2018
1QFY21
2QFY21
3QFY21
1QFY21
2QFY21
3QFY21
Exhibit 29: Fees from PMS, advisory and IIFL AMC’s business Exhibit 30: PMS and advisory fees to witness strong growth
drive recurring revenues going ahead
Recurring revenue mix, March fiscal year-ends, 2016-2020, 1QFY21- Recurring revenue mix, March fiscal year-ends, 2016-2024E
3QFY21
ROA on loans Trail fees of managed accounts
ROA on loans Trail fees of managed accounts Trail fees of MF IIFL AMC fees
Trail fees of MF IIFL AMC fees PMS and advisory
PMS and advisory (Rs bn)
(Rs bn)
6.0 12.5
4.8 10.0
2.0
1.8 0.7
3.6 2.3 7.5
0.6 2.0
0.3 1.9
2.2 1.7
2.4 0.5
1.1 2.1 0.3 0.9 5.0 2.0
- 2.3 4.0 1.4
0.1 0.1 1.0 0.5 0.4
1.2 0.0 1.5 0.5 0.5 2.2 3.4
1.0 0.1 2.5 1.1 2.1 0.3 1.0
0.8 0.1 0.1 - 0.3 2.8
0.8 0.8 0.3 0.1 0.1 0.9 2.0
0.2 0.2 0.6 0.0 1.5
0.0 0.5 0.5 0.4 0.5 0.8 1.0 1.4 2.0
0.2 0.8 1.0
0.5 0.8 0.6 1.0
0.2 0.5 0.2 0.4
2016
2018
2020
2017
2019
1QFY21
2QFY21
3QFY21
0.0 0.0
- 0.0
2016 2017 2018 2019 2020 2021E 2022E 2023E 2024E


Exhibit 31: Muted revenues from most brokerage segments Exhibit 32: Syndication and structured product revenues
Non-recurring revenue mix, March fiscal year-ends, 2016-2020, dominate transactional revenues
1QFY21-3QFY21 Non-recurring revenue mix, March fiscal year-ends, 2016-2024E
Carry income/one-time total income Carry income/one-time total income
Commission on managed accounts Commission on managed accounts
Commision on MF Commision on MF
Other brokerage/syndication Other brokerage/syndication
Structured notes and bonds Structured notes and bonds
(Rs bn) Direct stock (Rs bn)
Direct stock
7.5 7.5
6.0 0.3
6.0
0.5
4.5
4.5 0.1 - -
2.0 - 0.3
3.0 0.5 - - 0.4 -
2.5 - -
0.6 0.3 0.4 2.1 0.4 3.8 2.1 - 2.0
0.5 3.0 - 1.9
0.5 0.6 1.8
1.5 0.7 1.6
1.2 1.1 0.7 1.4 1.4 0.5 0.3 0.4 0.8
0.6 0.3 0.4
0.4 0.5 0.7 0.4 0.4 0.1
0.2 0.3
0.1 0.2
0.2 1.5 1.3
0.0 1.1 0.5
0.7 1.4 1.4 0.8 1.0 1.2
1.2
2016
2018
2020
2017
2019
1QFY21
2QFY21
3QFY21
0.4 0.7
0.4 0.60.60.7 0.5
0.0 0.4 0.5
2016 2017 2018 2019 2020 2021E 2022E 2023E 2024E
Exhibit 33: Asset management revenues up qoq Exhibit 34: Wealth management to witness strong growth going
Business mix wise revenues, March fiscal year-ends, 2016-2020, ahead
1QFY21-3QFY21 Business mix wise revenues, March fiscal year-ends, 2016-2024E
(Rs bn) Wealth management Asset management Wealth (Rs bn)

management Asset management
20.0
20
15.0
16
10.0 1.1 1.5 4.5

0.9 12 4.0
0.9
5.0 0.6 9.3 1.1 1.5 3.0
9.2
6.9 7.7 3.0
4.5 0.9 8 0.9
0.7 0.7 0.9
1.7 1.8 1.9
0.0 11.3
0.6 9.3 9.2 9.7
4 7.7 8.4
6.9 7.3
-5.0 4.5
2016
2019
2020
2017
2018
1QFY21
2QFY21
3QFY21
0
2016 2017 2018 2019 2020 2021E 2022E 2023E 2024E
Notes: Notes:
(1) Other income mix across segments for 1QFY21, 4QF20 and (1) Other income mix across segment for 4QF20 and FY2020 are
FY2020 are based on estimates. based on estimates.
Source: Company, Kotak Institutional Equities Source: Company, Kotak Institutional Equities estimates
Continued focus on cost control; sustainability of such measures is the key

 Operating expenses excluding ESOP expenses down 8% yoy. The company

continued to report strong cost control. However, provisions for variable incentives
(including ESOP expenses) were high during the quarter leading to 15% yoy growth in
overall expenses. This was led by one-time variable incentive of Rs67 mn during the
quarter (led by contests focusing in garnering fresh inflows). Adjusted for ESOP expenses
and one-time variable incentives, employee expenses were muted at 1% yoy.
 Gradual reopening of business has led to increase in overheads (other expenses were
up 23% yoy/down 4% qoq). The management continues invest in ramping up its
digital capabilities.
 Cost-to-income ratio declined 480 bps yoy to 54.6% (up 60 bps qoq).
 Cost ratios will gradually moderate over medium term. We expect IIFL’s cost-to-
income ratio (excluding other income) to moderate to 48.6% in FY2024E from 55.2% in
FY2022E (61.3% in FY2020). Lower discretionary spends, focus on productivity
improvement and modest growth variable incentives (excluding ESOPs) will lead to
decline in cost ratios. Additionally, the transition to a trail based revenue recognition
model by FY2023E will lead to cost ratios similar to FY2019 levels.
 We expect employee expenses to remain a bit high over CY2021E due to buoyancy in
capital markets. We bake-in 19% yoy growth in ex-ESOP employee expenses in
FY2022E on the back of 40% yoy growth in variable incentives (muted at 2% and 8%
yoy respectively in FY2021E and FY2020 and down 15% yoy in FY2019). Retaining
RMs and team leaders remain a key focus area for the company. Assuming markets
were to correct, the company will likely curtail employee expenses to manage overall
earnings.
 IIFL Wealth has successfully retained RMs/team leaders with negligible attrition rate
(among team leaders) at <3% over FY2017-19. However, the current phase of revival
in capital markets likely providing new opportunities for employees will test the
company’s ability to retain talent by tweaking expense assumptions. As such, team
leader attrition rate was high at 6.3% in FY2020.
 Investment in technology and digital initiatives will remain high.

Exhibit 35: Muted growth in operating expenses Exhibit 36: Expenses will remain muted over medium-term
Operating expenses, March fiscal year-ends, 2016-2020, 1QFY21- Operating expense, March fiscal year-ends, 2016-2024E
3QFY21
Operating expense (LHS) YoY (RHS)
Operating expense (LHS) YoY (RHS) (Rs bn) (%)
42.2 41.1
(Rs bn) (%) 7.5 45
42.2 41.1
7.5 45
6.0 30
6.0 30
4.5 9.6 10.2 15

4.5 15 6.6 4.5
6.6 5.5 1.9
2.4 2.3
3.0 (6.4) 0
3.0 (6.4) 0
1.5 -15
1.5 -15
2.8 4.0 5.7 5.3 5.7 1.3 1.3 1.5 2.8 4.0 5.7 5.3 5.7 5.8 6.0 6.6 7.3
0.0 -30 0.0 -30
2022E
2024E
2021E
2023E
2017
2018
2019
2020
2016
2016
2017
2018
2020
2019
1QFY21
2QFY21
3QFY21

Exhibit 37: Variable expense increased in 3QFY21 due to higher Exhibit 38: Share of variable expenses increased in 3QFY21
ESOP expenses and one-off pay-outs to employees Expense mix, March fiscal year-ends, 2018-2020, 1QFY21-3QFY21
Employee expenses, March fiscal year-ends, 2016-2029, 1QFY21-
3QFY21 Fixed employee expense Variable employee expense
Other operating expenses
Employee expense (LHS) YoY (RHS) (%)
(Rs bn) (%) 100
5 120
31.9 30.4 30.0 31.9 25.4 26.3 28.1
80 36.4
4 90
60 20.9 5.7 15.0 24.6 25.6
20.6 24.9 28.8
3 45.3 60
41.9
40
2 19.8 19.5 30 57.9 53.1
14.2 11.1 47.9 48.6 44.9 50.0 48.1
20 43.1
1 (14.9) 0
0
2016
2017
2019
2020
2018
1QFY21
2QFY21
3QFY21
1.9 2.8 4.0 3.4 3.9 1.0 1.0 1.1

0 (30)
2016
2017
2018
2019
2020
1QFY21
2QFY21
3QFY21

Exhibit 39: Cost-to-income ratio marginally increased qoq

Cost-to-income for IIFL Wealth, March fiscal year-ends, 2016-2020, 1QFY21-3QFY21
Cost-to-income
67.5
66.3
63.5
59.5
55.5
55.4
54.3 54.4 54.6
54.1
51.5
51.0
49.7
47.5
2016 2017 2018 2019 2020 1QFY21 2QFY21 3QFY21
Exhibit 40: IIFL Wealth – change in estimates

2021E 2022E 2023E 2024E 2021E 2022E 2023E 2021E 2022E 2023E
Net AUM ex. custody (Rs bn) 1,825 1,964 2,220 2,504 1,775 1,947 2,138 3 1 4
Net AUM ex. custody growth (%) 31.5 7.7 13.0 12.8 27.9 9.7 9.8 358 bps -203 bps 322 bps
Revenues 10,278 11,399 13,759 15,806 9,425 11,160 13,770 9 2 (0)
Recurring revenues 5,954 7,516 8,947 10,733 5,726 7,344 9,036 4 2 (1)
Non-recurring revenues 2,975 3,382 4,062 4,211 2,899 3,316 3,984 3 2 2
Other income 1,350 500 750 863 800 500 750 69 - -
Operating expenses 5,755 6,012 6,590 7,261 5,332 5,808 6,392 8 4 3
Employee expenses 4,225 4,405 4,903 5,490 3,802 4,201 4,705 11 5 4
Other expenses 1,530 1,607 1,687 1,771 1,530 1,607 1,687 - - -
PBT 4,523 5,387 7,169 8,545 4,093 5,352 7,378 11 1 (3)
Tax 1,086 1,347 1,792 2,136 1,048 1,370 1,889 4 (2) (5)
PAT 3,438 4,040 5,377 6,409 3,045 3,982 5,489 13 1 (2)
Core PBT 3,173 4,887 6,419 7,683 3,293 4,852 6,628 (4) 1 (3)
EPS (Rs) 38 45 57.9 68 35 45 61 10 (1) (5)
BVPS (Rs) 298 315 340 368 328 345 376 (9) (9) (10)
Yield management measures (bps)
Overall yields 55.6 57.5 62.2 63.3 54.5 57.3 64 1 bps 0 bps -2 bps
Yields on recurring business 75.9 71.1 67.9 65.3 72.5 68.1 66 3 bps 3 bps 2 bps
Yield on PMS/advisory 28.5 35.0 37.0 39.0 23.0 30.0 30 6 bps 5 bps 7 bps
Yields on funds managed by IIFL AMC 70.0 70.0 70.0 68.0 68.0 70.0 70 2 bps 0 bps 0 bps
Yield on MF 47.0 50.0 50.0 50.0 45.0 52.0 55 2 bps -2 bps -5 bps
Yields on manged accounts 83.0 77.0 77.0 70.0 80.0 75.0 75 3 bps 2 bps 2 bps
ROA on loans 560.0 500.0 450.0 450.0 550.0 450.0 450 10 bps 50 bps 0 bps
Yields on non-recurring business 29.0 31.6 36.0 40.6 29.7 33.9 41 -1 bps -2 bps -5 bps

Exhibit 41: Key growth rates and ratios for IIFL Wealth
March fiscal year-ends, 2018-2024E
2018 2019 2020 2021E 2022E 2023E

Key growth rates (%)
Revenues 32.7 2.3 (20.1) 20.6 10.9 20.7
Recurring 53.6 21.0 20.5 11.3 26.2 19.0
PMS and advisory 300.0 275.0 133.3 67.7 64.5 42.7
Fees by IIFL AMC 300.0 275.0 133.3 67.7 64.5 42.7
Others 64.9 10.8 1.4 (4.7) 12.2 9.3
Non-recurring revenues 41.2 (12.5) (33.3) (22.9) 13.7 20.1
Brokerage revenues (4.3) 22.2 75.5 (22.9) 13.7 8.3
Transactional revenues 71.5 (25.5) (100.0)
Operating expenses 41.1 (6.4) 6.6 1.9 4.5 9.6
Employee expenses 41.9 (14.9) 14.2 9.7 4.3 11.3
Other expenses 39.3 13.5 (6.7) (15.0) 5.0 5.0
PBT 23.9 12.6 (46.6) 57.6 19.1 33.1
PAT 39.8 4.1 (46.1) 66.1 17.5 33.1
Core PBT 50.8 6.5 (27.8) (10.9) 54.0 31.3
AUM excluding custody 30.9 21.5 1.6 31.5 7.7 13.0
Recurring AUM 50.2 29.9 7.4 50.7 24.2 25.1
PMS/advisory 480.5 423.0 103.4 32.5 35.0 35.0
Fund managed by IIFL AMC 49.8 55.1 5.6 59.5 25.7 22.7
Non-recurring AUM 25.6 12.9 (3.0) 17.5 (7.0) (2.6)
Loans 92.2 (29.6) (26.9) (2.6) 10.0 10.0
Investment (42.6) 174.7 113.3 (60.0) 5.0 5.0
Net assets 25.9 2.2 33.1 (32.7) 7.4 7.9
Borrowings 29.5 (12.2) 44.5 (48.3) 10.0 8.3
Total liabilities 26.8 (10.8) 46.0 (39.4) 8.0 6.8
Key ratios (%)
Recurring revenues to total revenues 35 42 63 58 66 65
Non-recurring revenues to total revenues 63 54 45 29 30 30
Cost-to-income 54 50 66 56 53 48
Employee expenses to total expenses 70 64 68 73 73 74
Yields (bps)
Overall yields 104 82 67 56 58 62
Recurring revenues 98 86 89 76 71 68
Fees on PMS and advisory 41 29 26 29 35 37
Funds managed by IIFL AMC 43 47 68 70 70 70
Trail commission of MFs 55 51 50 47 50 50
Trail commission on managed accounts 49 72 75 83 77 77
ROA on loans 400 386 562 560 500 450
Brokerage revenues 23 24 40 29 32 36
Direct stock 31 14 14 22 15 15
Structured notes and bonds 37 85 67 30 35 35
ROE decomposition (%)
Revenues 12.2 11.0 7.5 9.4 12.5 14.1
Recurring 4.3 4.6 4.7 5.5 8.3 9.1
Non-recurring revenues 7.7 6.0 3.4 2.7 3.7 4.2
Other income 0.2 0.5 (0.6) 1.2 0.6 0.8
Operating expenses 6.6 5.5 5.0 5.3 6.6 6.7
PBT 5.6 5.6 2.5 4.2 5.9 7.3
(1-tax rate) 0.8 0.7 0.7 0.8 0.8 0.8
ROA 4.3 4.0 1.8 3.2 4.4 5.5
Average assets/equity (X) 5.1 4.1 3.9 3.8 3.3 3.3
ROE 21.8 16.1 7.0 12.1 14.6 17.9

Exhibit 42: Financial summary for IIFL Wealth

2018 2019 2020 2021E 2022E 2023E

Profit and loss statement
Revenues 10,430 10,670 8,520 10,278 11,399 13,759
Recurring revenues 3,670 4,440 5,350 5,954 7,516 8,947
PMS and advisory 40 150 350 587 966 1,378
Funds managed by IIFL AMC 480 800 1,460 1,993 2,765 3,430
Trail on MF 990 1,010 870 981 1,407 1,655
Trail on managed accounts 100 260 320 413 523 646
NII on loans 2,060 2,220 2,340 1,980 1,856 1,838
Non-recurring revenue 6,620 5,790 3,860 2,975 3,382 4,062
Brokerage revenue 1,800 2,200 3,860 2,975 3,382 3,662
Direct stock 670 380 360 620 539 593
Structured notes and bonds 670 1,430 1,390 805 1,043 1,168
Other brokerage and syndication 460 390 2,110 1,550 1,800 1,900
Transactional revenue 4,820 3,590 — — — 400
Commission on MF 770 620 — — — —
Commission on managed account 3,760 2,500 — — — —
Carry/one-time income 290 470 — — — 400
Other income 140 440 (690) 1,350 500 750
Operating expenses (5,660) (5,300) (5,650) (5,755) (6,012) (6,590)
Employee expenses (3,960) (3,370) (3,850) (4,225) (4,405) (4,903)
Other expenses (1,700) (1,930) (1,800) (1,530) (1,607) (1,687)
PBT 4,770 5,370 2,870 4,523 5,387 7,169
Tax 1,080 1,530 800 1,086 1,347 1,792
PAT 3,690 3,840 2,070 3,438 4,040 5,377
Tax rate (%) 23 28 28 24 25 25
Core PBT 4,630 4,930 3,560 3,173 4,887 6,419
AUM details (Rs bn)
AUM excluding custody 1,124 1,366 1,388 1,825 1,964 2,220
Recurring AUM 449 583 626 943 1,171 1,465
PMS/advisory 17 87 177 235 317 428
Fund managed by IIFL AMC 134 208 219 350 440 540
Non-recurring AUM 861 972 943 1,108 1,031 1,004
Balance sheet
Cash and bank balance 7,452 2,774 11,787 6,250 7,225 8,368
Loans 70,561 49,665 36,319 35,360 38,896 42,786
Investment 11,112 30,526 65,124 26,050 27,352 28,720
Fixed assets 523 5,100 5,754 8,826 9,216 9,930
Other assets 6,017 9,739 11,223 11,124 11,446 11,782
Net assets 95,666 97,803 130,208 87,610 94,135 101,584
Borrowings 69,663 61,145 88,381 45,715 50,301 54,494
Provisions 117 86 93 100 100 100
Other liabilities 7,256 7,469 11,819 14,937 15,189 15,448
Total liabilities 77,037 68,699 100,293 60,752 65,590 70,041
Share capital 161 170 174 180 181 186
Reserves and surplus 18,468 28,934 29,741 26,678 28,364 31,357
Net worth 18,629 29,104 29,915 26,858 28,546 31,543
Net liabilities and shareholders equity 95,666 97,803 130,208 87,610 94,135 101,584

BUY
SIS (SECIS)
https://ultraviewer.et/en/own Commercial & Professional Services FEBRUARY 04, 2021
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RESULT
International business drives outperformance. Strong performance of the CMP (`): 406
international business and recovering India FM business drove a 10% yoy increase in Fair Value (`): 460
EBITDA, beating our estimates by 12%. India FM business is still at 83% of pre-Covid
BSE-30: 50,614
levels. SIS generated strong operating cash flow in 3Q due to healthy collections and
steady growth. It continues to be a beneficiary of consolidation and demand for value-
added services. BUY with SoTP-based FV of Rs460 (Rs425 earlier).
SIS
52-week range (Rs) (high-low) 1,379-314 EPS growth (%) 51.1 (8.9) 19.5
Mcap (bn) (Rs/US$) 60/0.9 P/E (X) 17.8 19.5 16.3
ADTV-3M (mn) (Rs/US$) 73/1 P/B (X) 3.5 3.0 2.6
Promoters 73.7 RoE (%) 22.0 16.7 17.0
Absolute (4.3) 7.9 (20.1) EBITDA (Rs bn) 5 6 6
International business drives revenue outperformance with continued ad-hoc contract wins
SIS posted healthy 3QFY21 performance driven by: (1) international security business revenue
growth of 27% yoy was significantly ahead of our estimate of 12% yoy growth, (2) India FM
business revenues declined 15% yoy (vs KIE estimate of 19% yoy decline), and (3) India security
business revenues declined 2% yoy (vs KIE estimate of 5% yoy decline). The international
business gained from new government business, ad-hoc contract wins and festive season
demand. India businesses are gradually recovering; we expect India security business to recover
to pre-Covid levels by 4QFY21, while the FM business may take longer to recover.
International security business and some pick-up in FM drive decent EBITDA margin print
3QFY21 EBITDA was up 10% yoy (12% ahead of estimates) driven by (1) higher-than-expected
margins of India FM business (4.3% vs KIE estimate of 3.5%), and (2) healthy margins of the
international security business (7.1% vs KIE estimate of 6.7%). This more than offset the
negative surprise in margins of the India security business (5.7% vs KIE estimate of 6%). A
freeze on all discretionary non-IT capex imposed for FY2021 aided lower depreciation expenses.
Strong collections aid healthy OCF/EBITDA level of 145%
SIS’ net debt increased marginally to Rs4.9 bn as of December 2020 from Rs4.6 bn as of
September 2020 despite an outflow of Rs1.9 bn towards acquisition of remainder stake in SXP.
This was on account of strong cash conversion with OCF/EBITDA at 145%, driven by strong
collections, lower working capital needs (lower growth rates) and stable business. This cash
conversion may however come off as growth revives and working capital needs increase.
Garima Mishra
Expect business to remain resilient; retain BUY
We believe demand for SIS’ services should revive going forward as businesses gradually come Shubhangi Nigam
out of lockdowns. India security revenues in December 2020 were at 97% of March 2020
revenue levels, International Security was at 136%, and Facility Management was at 83%. We
make minor revisions to our EBITDA estimates; lower interest and depreciation charge drive a 4-
11% EPS upgrade for FY2022-23. We roll forward to March 2023, assume lower working
capital requirements and revise our SoTP-based FV to Rs460 (Rs425 earlier). Retain BUY. kspcg.research@kotak.com
Contact: +91 22 6218 6427
SIS Commercial & Professional Services
Exhibit 1: International business revenues and higher margins drive higher-than-expected profitability
Quarterly results snapshot of SIS, March fiscal year-ends (Rs mn)
Change (%) Yoy growth Yoy growth

3QFY21 3QFY21E 3QFY20 2QFY21 KIE yoy qoq 9MFY21 9MFY20 (%) FY2021E FY2020 (%)
Total operating income 23,575 21,860 21,782 21,579 8 8 9 66,821 62,754 6 92,178 84,852 9
Cost of materials consumed (70) (70) (84) (70) (0) (17) (0) (202) (242) (723) (256)
Purchases of stock in trade (115) - (283) (163) (59) (29) (388) (353) - (618)
Change in inventory 7 - 139 (56) (95) (113) (30) (15) - 42
Employee expenses (18,065) (17,710) (17,660) (16,713) 2 2 8 (51,665) (51,175) 1 (76,215) (68,963) 11
Other operational cost (3,863) (2,765) (2,559) (3,280) 40 51 18 (10,562) (7,150) (9,972) (9,852)
EBITDA 1,469 1,315 1,335 1,297 12 10 13 3,974 3,819 4 5,267 5,204 1
Other income 384 300 47 665 28 715 (42) 1,280 28 256 531
Financial charges (286) (330) (382) (333) (13) (25) (14) (991) (1,131) (1,377) (1,517)
Depreciation (277) (280) (333) (283) (1) (17) (2) (845) (953) (1,461) (1,283)
Pre-tax profit 1,291 1,005 667 1,345 28 94 (4) 3,418 1,763 94 2,686 2,935 (8)
Taxation (299) (257) 112 (268) 16 nm 12 (767) 550 (269) (636)
Profit after tax 992 748 779 1,078 33 27 (8) 2,651 2,313 15 2,418 2,299 5
Minority interest and associate profits (2) - 4 3 nm (155) (1) (19) (40) (44)
Net profit 990 748 783 1,081 32 26 (8) 2,650 2,294 16 2,378 2,255 5
EPS (Rs) 6.7 5.1 10.7 7.4 32 (37) (9) 18.0 31.3 (43) 16.0 24.2 (34)
EBITDA margin (%) 6.2 6.0 6.1 6.0 5.9 6.1 5.7 6.1
Tax rate (%) 23.2 25.6 (16.9) 19.9 22.4 (31.2) 10.0 21.7
Segment-wise revenues
Security services (India) 8,894 8,632 9,089 8,392 3 (2) 6 25,867 25,932 (0) 38,244 35,151 9
Security services (International) 11,897 10,544 9,397 10,677 13 27 11 32,774 27,565 19 41,986 37,054 13
Facilities management 2,831 2,685 3,326 2,557 5 (15) 11 8,315 9,362 (11) 11,948 12,784 (7)
Less: intersegment revenue (47) - (31) (47) (134) (105) - (136)
Total operating income 23,575 21,860 21,782 21,579 8 8 9 66,821 62,754 92,178 84,852
Segment-wise EBITDA
Security services (India) 508 518 549 488 (2) (8) 4 1,458 1,624 (10) 1,935 2,111 (8)
Security services (International) 839 703 544 747 19 54 12 2,186 1,215 80 2,806 2,211 27
Facilities management 121 94 240 62 29 (50) 96 333 449 (26) 526 878 (40)
Total EBITDA 1,469 1,316 1,335 1,297 12 10 13 3,974 3,819 5,267 5,200
Other income and gains 347 - 52 77
Gains (losses) arising from business combination accounting
(27) - (153) 493
Financial charges (251) - (293) (268)
Depreciation (246) - (275) (253)
PBT 1,291 - 667 1,345
Other operating metrics
Billed India security guard count (#) 151,062 148,617 157,922 146,617 2 (4) 3 151,062 157,922 (4) 157,590 157,590 -
Billed Australia security guard count (#) 9,150 - 9,200 8,800 (1) 4 9,150 9,200 (1) 9,500
Facility management employee count (#) 52,700 - 64,000 50,700 (18) 4 52,700 64,000 (18) 64,500
International business gained from some new government business and some ad-hoc, short-
term contracts; the current revenue run-rate thus may normalize FY2022 onwards. We note
that most of SIS’ international business is in Australia, New Zealand and Singapore where
Covid-related impact is far lower than that in India.
Internal cost-cutting measures such as lower overhead costs, reduced IT spends drove better
margins overall in 3QFY21.
There were certain special items that impacted net profit of the company in 9MFY21. These
included: (1) Rs324 mn (Rs471 mn – Rs147 mn) of unrealized forex movement impact, (2)
Rs325 mn of grants from governments recognized in the international security business, and
(3) gain of Rs424 mn as a result of write-down of liability created for acquisition of
remainder 49% stake in Southern Cross Protection (final prices paid was lower than the
original liability created on books).

Commercial & Professional Services SIS
Exhibit 2: Operating PAT remained flattish yoy for 3QFY21

Details of PAT reconciliation of SIS, March fiscal year-ends (Rs mn)
3QFY20 1QYF21 2QFY21 3QFY21 Yoy (%) 9MFY20 9MFY21 Yoy (%)
Reported PAT 783 579 1,081 990 26 2,294 2,650 16
Less: one-off adjustments
10 - - - 451 -
due to reduced tax rate
Less: the effect of special
3 183 581 309 (104) 1,073
items explained above
Operating PAT 684 396 500 681 (0) 1,947 1,577 (19)
Exhibit 3: Healthy margin performance of the international security business offset India security business weakness
Segmental revenue and EBITDA snapshot of SIS, March fiscal year-ends (Rs mn)
Segmental revenues
India security 4,904 5,228 5,618 5,724 5,650 6,299 7,252 7,787 8,084 8,759 9,089 9,219 8,581 8,392 8,894
International security 6,004 7,729 8,047 8,405 8,497 8,439 8,626 9,019 9,134 9,034 9,397 9,490 10,199 10,677 11,897
India facility management 1,539 1,643 1,713 1,829 1,998 2,213 2,507 2,774 2,897 3,139 3,326 3,420 2,928 2,557 2,831
Total 12,447 14,600 15,377 15,958 16,145 16,950 18,385 19,580 20,115 20,932 21,812 22,129 21,707 21,626 23,622
Segmental EBITDA
India security 359 372 380 379 275 318 422 494 530 538 549 495 462 488 508
International security 253 290 368 370 343 309 397 465 537 490 544 641 600 747 839
India facility management 58 78 96 103 127 156 164 193 181 209 240 249 150 62 121
Total 670 740 844 852 745 783 984 1,152 1,248 1,237 1,334 1,385 1,212 1,297 1,469
Segmental EBITDA margin (%)
India security 7.3 7.1 6.8 6.6 4.9 5.0 5.8 6.3 6.6 6.1 6.0 5.4 5.4 5.8 5.7
International security 4.2 3.8 4.6 4.4 4.0 3.7 4.6 5.2 5.9 5.4 5.8 6.8 5.9 7.0 7.1
India facility management 3.8 4.7 5.6 5.6 6.3 7.0 6.6 7.0 6.2 6.7 7.2 7.3 5.1 2.4 4.3
Total 5.4 5.1 5.5 5.3 4.6 4.6 5.4 5.9 6.2 5.9 6.1 6.3 5.6 6.0 6.2
Exhibit 4: Overall billed employee count declined by 8% yoy

Segmental operating metrics of SIS, March fiscal year-ends
Yoy change
2QFY18 3QFY18 4QFY18 1QFY19 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 2QFY21 3QFY21 (%)
India security
Billed employees 102,839 108,572 107,746 106,860 115,400 131,871 144,257 149,200 154,700 157,922 157,590 141,469 146,617 151,062 (4)
Segment EBITDA (Rs mn) 372 380 379 275 318 422 494 530 538 549 495 462 488 508 (8)
EBITDA per employee (Rs) 3,617 3,500 3,522 2,570 2,752 3,204 3,422 3,555 3,477 3,479 3,142 3,263 3,328 3,364 (3)
International security
Billed employees 6,639 6,656 7,400 7,734 7,080 7,165 10,000 10,500 9,000 9,200 9,500 9,000 8,800 9,150 (1)
Segment EBITDA (Rs mn) 290 368 370 343 309 397 465 537 490 544 641 600 747 839 54
EBITDA per employee (Rs) 43,681 55,288 49,974 44,388 43,692 55,463 46,526 51,096 54,438 59,183 67,446 66,657 84,880 91,731 55
India facility management
Billed headcount 39,389 41,609 42,148 44,669 47,100 53,699 55,441 58,300 58,300 64,000 64,500 54,000 50,700 52,700 (18)
Segment EBITDA (Rs mn) 78 96 103 127 156 164 193 181 209 240 249 150 62 121 (50)
EBITDA per employee (Rs) 1,980 2,307 2,440 2,833 3,306 3,061 3,485 3,103 3,587 3,755 3,856 2,781 1,220 2,303 (39)

Exhibit 5: Consolidated balance sheet of SIS, March fiscal year-ends (Rs mn)
Mar 2018 Sep 2018 Mar 2019 Sep 2019 Mar 2020 Sep 2020
Assets
PP&E 1,267 1,456 1,742 2,663 2,662 2,529
CWIP 10 10 10 17 17 29
Goodwill 4,691 5,691 12,284 12,400 12,323 13,550
Other intangible assets 1,213 1,351 1,719 1,731 1,610 1,704
Intangible assets under development 43 66 75 91 112 79
Investments in associates and JVs 674 585 538 544 380 380
Financial assets 786 883 1,312 975 1,111 1,163
Deferred tax asset 1,163 1,348 2,050 3,086 2,450 2,576
Income tax asset 942 1,249 1,347 1,475 1,924 1,337
Other non-current assets 210 95 96 109 15 4
Total non-current assets 10,998 12,733 21,175 23,091 22,604 23,351
Inventories 142 174 254 292 339 339
Cash and bank balances 43 66 4,197 3,224 4,171 8,039
Other balances 674 585 1,231 1,605 1,966 692
Trade receivables 6,243 8,344 9,530 10,273 11,750 11,969
Other current assets 5,131 6,711 5,857 7,334 5,692 6,284
Total current assets 12,232 15,880 21,069 22,728 23,918 27,324
Total assets 23,230 28,613 42,243 45,819 46,521 50,674
Equity+liabilities
Equity share capital 732 733 733 733 733 734
Other equity 9,551 10,668 11,766 12,835 13,151 15,249
Shareholders' funds 10,283 11,401 12,499 13,569 13,884 15,982
Minority interest 14 6 3 2 3 58
Total equity 10,297 11,407 12,502 13,571 13,887 16,041
Debt 5,361 6,651 9,498 11,158 11,722 5,788
Other non-current liabilities 3,611 3,869 8,954 9,487 6,679 6,531
Deferred tax liabilities 224 276 351 518 519 509
Current liabilities
Trade payables 806 862 661 507 538 783
Provisions 2,185 2,408 2,413 2,495 2,578 3,250
Others 5,285 5,921 7,691 8,084 10,292 17,379
Income tax liabilities 172 10 173 - 307 396
Total equity and liabilities 27,941 31,403 42,243 45,819 46,521 50,674
Net debt (Rs mn) 5,318 6,585 5,300 7,934 7,550 (2,251)

Exhibit 6: Net debt-to-equity ratio of SIS
Mar 2019 Jun 2019 Sep 2019 Mar 2020 Jun 2020 Sep 2020 Dec 2020
Gross debt (Rs mn) 9,750 11,490 11,420 12,140 12,798 12,286 12,710
Net debt (Rs mn) 4,170 6,576 6,589 5,915 5,581 3,454 3,759
Net debt: equity (X) 0.33 0.50 0.49 0.43 0.37 0.22 0.22
Lease liabilities - 1,073 1,060 1,110 1,172 1,164 1,160
Net debt with lease liabilities (Rs mn) 4,170 7,649 7,649 7,025 6,753 4,618 4,919
Note:
(1) Net debt figures exclude lease liabilities
Key highlights of earnings call
 Sectors in focus. SIS is watchful of sectors like real estate, malls, etc. as they are taking
longer to recover. SIS has also decided to not pursue new orders temporarily for next two
quarters in eight sectors, which it believes have higher risk of bad debts and is trying to
sharpen its focus on eight priority sectors like e-commerce etc., which have trended well
in and after Covid.
 Write-back of provisions. Working capital utilization is at an all-time low and SIS has
not borrowed for WC in 9MFY21. It has reversed some provisions undertaken in 9MFY21,
though is still carrying a chunk forward in order to follow a conservative approach. SIS
wants to rejig customer portfolio, optimize working capital exposure, and credit risk in
general. If any provisions continue in 4QFY21 as well, then they might be written back in
FY2022.
 International security business. Revenue run-rate currently is 136% of pre-Covid levels.

Aviation industry has recovered in Australia as Covid-related restrictions have come off.
Temporary increased revenues from specialized Covid quarantine centers continue. In
Australia, the government accounts for 46% of the revenues (including defense). NZ
business saw an uptick due to year-end celebrations and events business picking up.
Headcount increased 4% qoq to 9.1k.
 Facilities management. This business is operating at 83% of pre-Covid levels. In the

past nine months, retail and mall sector seen closures, so the volume has reduced but the
contracts are not cancelled. SIS has launched new solutions in the areas of disinfection,
deep cleaning, sanitization and production support, which might aid in improving wallet
share with customers. Headcount increased to 52.7k (vs 51k in 2QFY21). FM segment
only accounts for 12% of group’s business. Railways form 10% of revenues of this
segment. The business is more than 50% down on a yoy basis due to restricted
operations. However, Ministry of Railways is keen to restore it to full capacity, which will
propel growth from -50% to +10%.
 Cash logistics. Cash in circulation has reached 16% in India which is currently, one of
the highest in recent history. Due to Covid, people are keeping more cash with them for
emergency needs. Direct benefits transfer (DBT) in rural areas has also increased cash
usage. The segment is tracking revenues 6.5% above March 2020 levels. Despite the
ATM pricing reset getting delayed due to the pressures on the banking sector, SIS has
been able to get pricing increase on few contracts. Pricing uptick plus cost measures led
to segment continuing its strong margin trends with EBITDA margin at 10%, up from
8.6% in the previous quarter. Despite increase in fuel prices by 19%, margins improved
through dynamic management of on-ground routes, proactive cost control and

productivity improvement measures. The segment delivered a 21% EBITDA growth in

9MFY21 despite a 9% yoy decline in revenues on account of closure of unprofitable
routes and contracts. There has also been a slow and steady consolidation that is
underway with small players exiting the industry over the past 2-3 years. This reduces
unviable price competition and better economics for the remaining players, partly
explaining the better margin performance this year. We see this process intensify with
greater enforcement of RBI and MHA norms, labor reforms, etc.
 Net debt. Net debt (pre-lease liabilities) increased by Rs0.3 bn sequentially to Rs3.7 bn.
Net debt/EBITDA came at 0.92 in 3QFY21 (vs 0.9 in 2QFY21). SIS has set target of 1X for
the same. Net cash has not changed much because of Rs1.9 bn of SXP payment. Gross
debt on a c/c basis was Rs12.8 bn in Dec 2020 (vs Rs13.25 bn in Mar 2020) and so has
gone down. The cash will be first used for earn-out settlement, then for any other
opportunities of debt reduction. It will be mostly done for international operations than
for Indian business.
 Other balance sheet items. The company demonstrated very strong cash conversion
with OCF/ EBITDA at 145%. This will however revert to 100% or less in the future. High
OCF generation was on the back of strong collections, lower working capital needs and
stable business. Current portion of long-term liabilities now includes: (1) NAB debt
(@2.4% rate) which was due for maturity in April 2021 has received an extension of
facility and will now be shown as long term, and (2) NCDs due in April 2021, it has
received the approval from board for fresh issue for the existing NCD Rs1.50 bn (@9.5%
rate), and it will also move from short to long term liabilities.
 Terminix SIS showed a robust yoy growth on the back of strong wins in the area of
disinfection and sanitization with 26% EBITDA margins for 9MFY21. SIS also initiated
production support services to assist manufacturing, warehousing and ecommerce
companies in their operations and maintenance. The newly passed labor reforms provide
further impetus to the outsourcing of production support services.
 Henderson. Business has been tepid as SG government managed Covid differently.

Whole country had shifted completely to work-from-home and demand for security
services at commercial establishments went down. It will probably become the first
country to get everyone vaccinated and hence leading to new activity and contract
transitions going ahead.
 Labor laws. According to the new laws, the responsibility of compliance for both
contractual and direct employees rests on the principal employer. This makes outsourcing
just for the sake of lower cost unviable in the long term. Per the company, the labor
department is extremely fractured with different departments having data-sets that don’t
sync with each other. Due to these cracks in the system, smaller operators take shortcuts
and are non-compliant. With single registration (Shram Suvidha portal), government will
now have the ability to correlate filings and establish gaps and inconsistencies. This will
lead to organic growth by market share consolidation for SIS (currently <5%). Globally,
market leaders have at least a ~15-20% share. New labor reforms will gradually aid in
shift from unorganized to organized operators and provide opportunities to organically
build market share.
 Inorganic opportunity. There is stress on smaller players due to both labor reforms and
Covid. But the company wants to delay any potential opportunity of acquisition and
wants to focus on integration of acquisitions done in FY2020: Uniq, Henderson and P4G.

Lower India business run-rate drives earnings changes over FY2022-23

We bake in higher revenue run-rate and profitability from the Australia business. We do
expect current revenues and margins to normalize, but still expect ~9% higher EBITDA from
this business over FY2022-23. This partly offsets the lower profitability we bake in from the
India security and FM businesses. Net profit gets revised up by 43% in FY2021 on account
of certain one-time gains (explained above in Exhibit 2). Lower working capital requirements
as well as lower interest cost and depreciation charge drive a 4-11% EPS upgrade for
FY2022-23.
Exhibit 7: Key changes to estimates for SIS, March fiscal year-ends
New estimates Old estimates % revision

2021E 2022E 2023E 2021E 2022E 2023E 2021E 2022E 2023E
Total
Sales (Rs mn) 89,978 94,303 104,185 92,178 97,786 108,649 (2.4) (3.6) (4.1)
Sales growth (%) 6.0 4.8 10.5 8.6 6.1 11.1
EBITDA (Rs mn) 5,344 5,704 6,386 5,267 5,769 6,693 1.5 (1.1) (4.6)
EBITDA margin (%) 5.9 6.0 6.1 5.7 5.9 6.2
PBT (Rs mn) 4,418 3,488 4,155 2,686 3,145 3,996 64.5 10.9 4.0
Tax rate (%) 22.0 10.0 10.0 10.0 10.0 10.0
Net Profit (Rs mn) 3,406 3,103 3,708 2,378 2,794 3,564 43.2 11.1 4.0
EPS (Rs) 22.9 20.8 24.9 16.0 18.8 23.9 43.2 11.1 4.0
EPS growth (%) (6) (9) 19 (34) 18 28
India security
Security guard count (#) 152,862 168,149 184,963 157,590 173,349 190,684 (3.0) (3.0) (3.0)
Revenue (Rs mn) 34,622 37,392 42,909 38,244 42,094 48,525 (9.5) (11.2) (11.6)
EBITDA (Rs mn) 1,945 2,217 2,514 1,935 2,424 2,957 0.5 (8.5) (15.0)
EBITDA margin (%) 5.6 5.9 5.9 5.1 5.8 6.1
International security
Revenue (Rs mn) 44,017 42,595 44,335 41,986 40,645 42,307 4.8 4.8 4.8
EBITDA (Rs mn) 2,914 2,342 2,446 2,806 2,145 2,241 3.8 9.2 9.1
EBITDA margin (%) 6.6 5.5 5.5 6.7 5.3 5.3
Facility management + others
Revenue (Rs mn) 11,339 14,316 16,940 11,948 15,047 17,818 (5.1) (4.9) (4.9)
EBITDA (Rs mn) 485 1,145 1,426 526 1,200 1,495 (7.7) (4.6) (4.6)
EBITDA margin (%) 4.3 8.0 8.4 4.4 8.0 8.4
We roll forward our SoTP-based Fair Value to March 2023 from December 2022. This
coupled with lower debt assumption results in a revised FV of Rs460.
Exhibit 8: SoTP-based fair value of Rs460 (Rs mn)
Parameter Valuation
DCF based EV of Indian businesses - (1) 50,831
EV/EBITDA multiple ascribed to International business (X) 8.0
March 2023 EBITDA of International business 2,446
EV of the Australian business - (2) 19,568
Consolidated EV - (1) + (2) 70,399
Net debt 2,117
Equity value 68,282
Diluted share count (mn) 149
Equity value (Rs/sh) 458

Exhibit 9: Key segmental assumptions for SIS, March fiscal year-ends, 2013-23E
2021-23 CAGR
2013 2014 2015 2016 2017 2018 2019 2020 2021E 2022E 2023E (%)
Segment revenues (Rs mn)
Security guarding (India) 5,603 7,994 10,175 12,320 15,950 21,441 26,988 35,151 34,622 37,392 42,909 11.3
Facility management (India) 390 499 602 1,051 3,882 6,588 9,210 6,707 11,038 13,910 16,433 22.0
Others (India) 748 1,128 2,122 3,050 84 119 154 5,941 301 406 507 29.9
Security services (International) 19,696 21,355 22,607 21,940 23,956 30,186 34,581 37,054 44,017 42,595 44,335 0.4
Total revenues 26,437 30,977 35,506 38,362 43,872 58,334 70,933 84,852 89,978 94,303 104,185 7.6
Yoy growth (%)
Security guarding (India) 40 43 27 21 29 34 26 30 (2) 8 15
Facility management (India) 16 28 21 75 269 70 40 (27) 65 26 18
Others (India) (4) 51 88 44 (97) 41 30 3,761 (95) 35 25
Security services (International) 4 8 6 (3) 9 26 15 7 19 (3) 4
Total 10 17 15 8 14 33 22 20 6 5 10
Revenue contribution of domestic and international businesses (%)
Domestic business 25 31 36 43 45 48 51 56 51 55 57
International business 75 69 64 57 55 52 49 44 49 45 43
Segment EBITDA (Rs mn)
Security guarding (India) 478 532 579 771 1,014 1,486 1,507 2,111 1,945 2,217 2,514 13.7
Facility management (India) 7 1 (4) 22 158 354 636 - 431 1,052 1,296 73.5
Others (India) (29) 1 37 (45) (29) (21) (7) 878 55 93 130 54.2
Security services (International) 794 934 982 967 1,060 1,296 1,515 2,211 2,914 2,342 2,446 -8.4
Total 1,250 1,467 1,594 1,715 2,204 3,116 3,651 5,200 5,344 5,704 6,386 9.3
Segment EBITDA margin (%)
Security guarding (India) 8.5 6.6 5.7 6.3 6.4 6.9 5.6 6.0 5.6 5.9 5.9
Facility management (India) 1.8 0.2 (0.7) 2.1 4.1 5.4 6.9 - 3.9 7.6 7.9
Others (India) (3.9) 0.0 1.7 (1.5) (33.8) (17.3) (4.7) 14.8 18.2 22.9 25.6
Security services (International) 4.0 4.4 4.3 4.4 4.4 4.3 4.4 6.0 6.6 5.5 5.5
Total 4.7 4.7 4.5 4.5 5.0 5.3 5.1 6.1 5.9 6.0 6.1

Exhibit 10: Consolidated financials of SIS, March fiscal year-ends, 2013-23E (Rs mn)
2013 2014 2015 2016 2017 2018 2019 2020 2021E 2022E 2023E
Profit model
Revenue from operations 26,437 30,977 35,506 38,362 43,872 58,334 70,933 84,852 89,978 94,303 104,185
EBITDA 1,244 1,478 1,593 1,694 2,204 3,120 3,652 5,204 5,344 5,704 6,386
Depreciation and amortisation expense (255) (305) (454) (432) (358) (560) (660) (1,283) (1,220) (1,346) (1,566)
EBIT 989 1,172 1,139 1,263 1,845 2,560 2,992 3,921 4,124 4,357 4,820
Other income 140 100 145 139 87 365 177 531 1,556 282 322
Finance costs (311) (256) (477) (475) (767) (925) (938) (1,517) (1,262) (1,152) (987)
Profit before tax 818 1,017 806 926 1,165 2,000 2,231 2,935 4,418 3,488 4,155
Taxation (286) (370) (331) (296) (8) (244) 52 (636) (972) (349) (416)
Profit after tax 533 647 476 630 1,158 1,756 2,282 2,299 3,446 3,139 3,740
Conversion to JV from Subsidiary 0 0 0 93 0 0 0 0 0 0 0
Minority interest in profit/(loss) for the year 39 40 151 34 (60) (118) (135) (44) (40) (36) (32)
Reported PAT 571 687 627 757 1,097 1,639 2,147 2,255 3,406 3,103 3,708
Diluted EPS (Rs/share) 8 10 9 11 16 23 29 24 23 21 25
Weighted average number of shares - diluted (mn) 68 68 68 68 70 73 74 93 149 149 149
Balance sheet
Shareholders' funds 3,319 3,919 3,968 4,492 5,906 10,283 12,499 13,884 17,117 20,061 23,580
Minority Interest 393 364 765 26 3 14 3 3 3 3 3
Loan funds 2,085 2,467 4,436 4,466 6,996 5,569 9,498 11,722 11,222 9,722 8,222
Total sources of funds 5,798 6,750 9,169 8,984 13,273 16,262 22,351 26,127 28,860 30,305 32,323
Net fixed assets 1,142 1,371 1,369 1,377 2,165 2,532 3,546 4,401 4,487 4,530 4,505
Goodwill 1,233 1,226 1,985 1,704 1,859 4,691 12,284 12,323 12,323 12,323 12,323
Investments 115 114 104 120 989 921 1,214 931 931 931 931
Cash balances 2,532 2,969 3,745 3,493 4,292 5,428 5,429 6,137 7,044 6,450 6,105
Net current assets excluding cash 484 690 1,565 1,817 2,972 3,164 4,241 3,464 3,437 4,037 4,763
Deferred tax assets 292 378 401 473 1,587 2,105 3,397 4,374 6,141 7,537 9,199
Total application of funds 5,798 6,750 9,169 8,984 13,273 16,262 22,351 26,127 28,860 30,305 32,323
Key ratios (%)
Revenue growth 10 17 15 8 14 33 22 20 6 5 10
EBITDA growth (25) 19 8 6 30 42 17 43 3 7 12
Net profit growth (33) 20 (9) 21 45 49 31 5 51 (9) 19
EBITDA margin 5 5 4 4 5 5 5 6 6 6 6
Tax rate 35 36 41 32 1 12 (2) 22 22 10 10
Net debt/equity (X) (0.1) (0.1) 0.2 0.2 0.5 0.0 0.3 0.4 0.2 0.2 0.1
RoE 19 19 16 18 21 20 19 17 22 17 17
RoCE 14 14 11 12 17 17 16 14 16 14 15
Cash flow
Operating cash flow before WCchanges 830 1,119 1,282 1,501 1,489 2,407 2,790 4,113 4,161 4,242 4,631
Change in working capital/ other adjustments 336 470 858 (771) (487) (256) (742) (2,100) 28 (601) (726)
Capital expenditure (423) (525) (1,100) (548) (2,886) (1,164) (5,224) (2,759) (1,306) (1,390) (1,541)
Free cash flow 743 1,064 1,039 183 (1,884) 986 (3,176) (745) 2,882 2,251 2,364

ADD
Bajaj Consumer Care (BAJAJCON)
https://ultraviewer.et/en/own Consumer Staples FEBRUARY 05, 2021
load.html
RESULT
A good comeback. BAJAJCON reported 18% yoy growth in revenues led by healthy CMP (`): 263
14% growth in ADHO. Hair oil category growth has nearly normalized led by rural Fair Value (`): 300
demand and gradual recovery in urban demand. This, coupled with the new CEO’s
BSE-30: 50,614
single-minded focus and initiatives on reviving growth (product refresh, aggression in
LUPs, improved communication and visibility across retail channels) are yielding results.
We increase FY2022-23E EPS by 10-12%, raise DCF-based FV to Rs300 (from Rs250)
implying 17X Mar-2023E earnings.
Bajaj Consumer Care
CMP(Rs)/FV(Rs)/Rating 263/300/ADD EPS (Rs) 15.3 16.3 17.6
Mcap (bn) (Rs/US$) 39/0.6 P/E (X) 17.2 16.1 14.9

ADTV-3M (mn) (Rs/US$) 154/2 P/B (X) 5.1 4.4 3.8
Promoters 38.0 RoE (%) 32.0 29.3 27.4
Rel. to BSE-30 8.9 14.0 (1.7) Net profits (Rs bn) 2 2 3
3QFY21 - Good topline growth, RM inflation weighs on profitability
Net operating revenues were up 18% yoy to Rs2.43 bn (KIE Rs2.29 bn). ADHO grew 14% yoy.
Amla hair oil contributed ~3-4% of sales. Gross margin moderated ~360bps yoy due to one-
time liquidation of sanitizer (~150bps impact) and input cost inflation (~250bps impact).
Inflationary pressures were noted in mustard oil (+8% qoq) and LLP (+15% qoq). EBITDA grew
16% yoy to Rs631 mn. EBITDA margin was largely flat at 25.5% (KIE: 27.9%) aided by
operating leverage and some cost control. BAJAJCON has taken 1.5% price hike in 3Q. A&P
spends grew 5% yoy to 19.2% of sales versus 21.7% in 3QFY20. Employee expenses were up
only 3% yoy while other expenses (excluding ad-spends) were up 16% yoy. PBT/PAT grew 16%
yoy each. PAT stood at Rs582 mn. On 9M basis, revenue grew 1% yoy, EBITDA declined 2%
yoy (RM pressure), and PAT grew 2% yoy.
Broadening demand recovery; Continued investments on ADHO re-fresh; Amla hair oils scale-up
Revenue delivery was driven by +37% yoy growth in rural, in addition to recovery in urban.
Alternate channels (MT and CSD) saw good recovery (up 25.4% yoy), post some weakness in
the 1H. GT channel/ international business reported growth of 17.2/17.6% respectively.
Management highlighted increased consumer preference for large packs (launched ADHO
650ml in MT) and economy-end products (Amla hair oil). Channel health improved with yoy
lower distributor inventory days. Jaykumar Doshi
Key focus areas for BAJAJCON to drive sustainable topline recovery include – (1) rural
distribution expansion (van coverage), (2) distribution ramp-up for Amla hair oils (236k outlets Aniket Sethi
as Dec-20 vs 121k in Dec-19), (3) increased aggression on LUPs for ADHO to drive accessibility
(5+1 sachet pack, Rs20 SKUs), (4) marketing support for ADHO refresh (TVC, social media Sushruta Mishra
campaign, and influence engagement), (5) accelerated pace of new launches, and (6)
portfolio/capability investments on e-commerce channel (grew ~3X yoy, 2.5% of sales now).
We increase FY2022-23E EPS by 10-12%, raise DCF-based FV to Rs300 (from Rs250)
We raise growth and margin assumptions and increase FY2022-23E EPS by 10-12%. We raise
DCF-based FV to Rs300 (from Rs250) implying 17X Mar-2023E earnings. kspcg.research@kotak.com
Contact: +91 22 6218 6427
Consumer Staples Bajaj Consumer Care
Conference call highlights
 Demand trends. BAJAJCON registered 18% yoy revenue growth in 3Q, on the back of
continued strong growth in rural markets (+37% yoy) and recovery in urban (+7% yoy).
Revenue contribution of urban/rural has changed to 50/50% currently compared to
56/44% earlier. ADHO registered 14% yoy growth in 3Q led by large packs (launched
650ml ADHO pack in MT channel in Dec-20). Amla Hair oil continues to gain scale in
Northern states, contributing ~3-4% of sales currently. Per Nielsen, value market share of
Bajaj hair oils has increased to 10.3% as of MAT Dec-20. Both urban and rural markets
saw pick-up in market share. Management highlighted increased consumer preference
for economy end products. Secondary sales growth (+19% yoy) was higher than primary
sales growth in 3Q.
 BAJAJCON continues to invest towards rural distribution expansion (van coverage),

distribution ramp-up for Amla hair oils (236k outlets as Dec-20 vs 121k in Dec-19),
increased aggression on LUPs for ADHO to drive accessibility (5+1 sachet pack, Rs20
SKUs), and marketing support for ADHO refresh (TVC, social media campaign, and
influence engagement).
 Rising RM inflation. Gross margin moderated ~360bps yoy due to one-time liquidation
of sanitizer (~150bps impact) and input cost inflation (~250bps impact). Management
highlighted short-term input cost inflation in refined mustard oil (expected to moderate
with new harvest) and LLP. The company has undertaken a 1.5% price hike in the Dec-
2020 quarter. Given pressure on gross margins and A&P dial-up (digital and TVC) to
support upcoming new launches, the company expects yoy moderation in EBITDA
margins in FY22E.
 Normalization in distribution network. Post significant decline in retail outlet reach in

urban markets in 1H, BAJAJCON saw recovery with the recent launch of retail loyalty
programme in select cities. Modern trade channel recovered to pre-Covid levels in 3Q
with good festive season demand. The company is focused on the placement of new
launches (Zero Grey, Amla Hair Oil) with more modern trade retailers. The pace of new
launches is expected to accelerate going forward with premium/e-commerce exclusive
introductions in the near-term, followed by a mass-range launch in GT. Channel health
has improved with reduced distributor inventory days (~26 days currently vs. ~28 days
earlier). With continued weakness in urban wholesale (feeds in rural/semi-urban retail),
BAJAJCON is focusing on direct reach expansion in semi-urban/rural markets.
Management highlighted opportunity for rapid scale up of Amla hair oil, given significant
overlap between key ADHO and Amla hair oil markets. Rural van coverage has been
rolled out in southern states. The company is now focusing on optimizing assortment for
van coverage, and computerized tracking of van-level sales.
 Increased focus on online channel. E-Commerce channel continues to gain salience

(2.5% of sales now), growing ~3X yoy in Dec-20 quarter. Key initiatives here – (1)
Increased digital marketing spends, (2) leveraging social media platforms and influencers’
connect, (3) portfolio expansion on E-Commerce platforms and online-specific new
launches (Bajaj Zero Grey), (4) strengthening internal capabilities to scale online channel
(set up dedicated team), and (5) appointed external agency to help improve brand
presence and scale in the online channel.
 Others. (1) BAJAJCON has set up an outsourced manufacturing unit in Baroda to better
serve Western markets, (2) declared interim dividend of Rs6 per share.

Bajaj Consumer Care Consumer Staples
Exhibit 1: Interim standalone results of Bajaj Consumer, March fiscal year-ends, Rs mn
% chg.
3QFY21 3QFY21E 3QFY20 2QFY21 KIE Est yoy qoq 9MFY21 9MFY20 % chg. FY2021E FY2020 % chg.
Net sales 2,428 2,294 2,055 2,218 6 18 9 6,560 6,491 1 8,926 8,178 9
Other operating income 45 70 60 35 (36) (26) 26 126 197 (36) 264 264 110
Net operating revenues 2,473 2,364 2,115 2,253 5 17 10 6,686 6,688 (0) 9,191 8,442 37
Material cost (887) (794) (683) (758) 12 30 17 (2,342) (2,172) 8 (3,182) (2,729) 36
Gross Profit 1,586 1,570 1,431 1,495 1 11 6 4,344 4,516 (4) 6,009 5,713 38
Gross Margin (%) 64.1 66.4 67.7 66.4 -228 bps -357 bps -225 bps 65.0 67.5 -255 bps 65.4 67.7 40 bps
Employee cost (201) (207) (195) (199) (3) 3 1 (614) (612) 0 (831) (836) 35
Other expenditure (753) (703) (694) (670) 7 9 12 (1,903) (2,035) (6) (2,646) (2,772) 39
Total expenditure (1,841) (1,704) (1,572) (1,626) 8 17 13 (4,859) (4,819) 1 (6,659) (6,336) 37
EBITDA 631 660 543 627 (4) 16 1 1,827 1,869 (2) 2,532 2,106 39
EBITDA margin (%) 25.5 27.9 25.7 27.8 -240 bps -13 bps -228 bps 27.3 28.0 -63 bps 27.5 24.9 22 bps
Other income 92 95 90 84 (3) 2 9 282 215 31 394 299 40
Interest (3) (6) (12) (3) (46) (74) 26 (10) (33) (70) (15) (42) 53
Depreciation (15) (15) (14) (15) (2) 8 1 (43) (40) 9 (61) (53) 41
Pretax profits 706 734 607 694 (4) 16 2 2,056 2,012 2 2,850 2,309 39
Tax (123) (132) (106) (121) (7) 16 2 (359) (352) 2 (483) (403) 34
Recurring PAT 582 602 501 573 (3) 16 2 1,697 1,660 2 2,367 1,906 40
Extraordinary items - - - - - - - -
Net profit (reported) 582 602 501 573 (3) 16 2 1,697 1,660 2 2,367 1,906 40
Recurring EPS 3.9 4.1 3.4 3.9 (3) 16 2 11.5 11.3 2 16.0 12.9 40
Income tax rate (%) 17.5 18.0 17.5 17.5 -53 bps -1 bps 0 bps 17.5 17.5 -1 bps 17.0 17.5 -53 bps
Costs as a % of net operating revenue
Material cost 35.9 33.6 32.3 33.6 227 bps 356 bps 224 bps 35 32 254 bps 35 32 -41 bps
Employee cost 8.1 8.7 9.2 8.8 -63 bps -110 bps -72 bps 9 9 3 bps 9 10 -15 bps
Other expenditure 30.5 29.7 32.8 29.7 74 bps -234 bps 74 bps 28 30 -196 bps 29 33 32 bps
Exhibit 2: Key changes to consolidated earnings, Bajaj Consumer Care, March fiscal year-ends, 2021-23E
FY2019-22E
Revised Earlier Change (%) CAGR (%) / Change (bps)
2021E 2022E 2023E 2021E 2022E 2023E 2021E 2022E 2023E Revised Earlier
Revenues (Rs mn) 9,236 9,935 10,689 9,122 9,498 10,166 1.3 4.6 5.2 2.6 1.1
Revenue growth (%) 8.4 7.6 7.6 7.0 4.1 7.0
EBITDA (Rs mn) 2,431 2,583 2,805 2,386 2,317 2,468 1.9 11.5 13.6 (2.0) (5.4)
EBITDA (%) 26.3 26.0 26.2 26.2 24.4 24.3 -388 bps -548 bps
PAT (Rs mn) 2,260 2,411 2,598 2,211 2,181 2,314 2.2 10.5 12.3 2.8 (0.5)
EPS (Rs/share) 15.3 16.3 17.6 15.0 14.8 15.7 2.2 10.5 12.3 2.8 (0.5)
Exhibit 3: Channel-wise value growth trends, yoy (%)
yoy sales growth (%)

Sales vertical 1QFY19 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 2QFY21 3QFY21
General trade 17.5 2.1 10.3 10.8 6.0 0.8 (7.7) (29.2) (18.2) 9.6 17.2
Modern trade 36.3 23.0 27.9 21.8 20.6 19.1 8.5 (12.2) (22.6)
(26.7) 25.4
Canteen stores department (CSD) (21.8) (45.0) 35.3 (15.6) (100.0) 21.0 (30.8) (46.6) NM
Total Domestic 17.5 1.3 12.5 10.2 5.2 2.9 (7.3) (28.6) (17.0) 4.6 18.2
International busines (94.1) (6.8) 11.8 56.4 1,474.9 (5.6) (13.0) (52.0) (38.3) 19.2 17.6
Underlying value growth 13.2 1.0 12.5 11.1 8.1 2.7 (7.4) (29.2) (17.6) 5.0 18.2

Consumer Staples Bajaj Consumer Care
Exhibit 4: LLP prices increased 17% qoq

BAJAJCON’s quarterly average purchase price for LLP – landed cost net of GST credit (Rs/Kg)

Bajaj Consumer Care Consumer Staples
Exhibit 5: Consolidated profit model, balance sheet, cash model of Bajaj Consumer Care, March fiscal year-ends, 2018-23E
2018 2019 2020 2021E 2022E 2023E

Profit model
Net operating revenues 8,285 9,185 8,522 9,236 9,935 10,689
EBITDA 2,539 2,744 2,051 2,431 2,583 2,805
Other income 244 170 299 394 438 487
Interest expense (12) (12) (42) (15) (13) (11)
Depreciation (74) (71) (58) (61) (67) (73)
Pretax profits 2,698 2,831 2,250 2,749 2,940 3,208
Tax (587) (616) (402) (489) (529) (609)
Net income 2,111 2,216 1,848 2,260 2,411 2,598
Extraordinary items — — — — — —
Reported profit 2,111 2,216 1,848 2,260 2,411 2,598
Recurring Earnings per share (Rs) 14.3 15.0 12.5 15.3 16.3 17.6
Balance sheet
Total shareholder's equity 4,925 4,674 6,532 7,612 8,843 10,114
Total borrowings 135 250 200 200 200 200
Deferred tax liability 7 2 0 0 0 0
Net fixed assets 1,301 1,336 1,322 1,390 1,510 1,624
Investments 3,087 2,535 4,500 4,303 3,906 3,710
Cash 134 143 126 1,327 2,889 4,272
Net current assets 102 471 320 329 274 246
Other non-current assets 11 6 9 9 9 9
Goodwill/intangibles 432 433 454 454 454 454
Total assets 5,067 4,925 6,732 7,812 9,043 10,314
Free cash flow
Operating cash flow, excl. working capital 1,944 2,157 1,584 1,914 2,027 2,170
Working capital changes (143) (394) 206 (11) 51 25
Capital expenditure (181) (98) (70) (129) (188) (186)
Free cash flow 1,620 1,666 1,720 1,774 1,891 2,009
Ratios (%)
Revenue growth 4.0 10.9 (7.2) 8.4 7.6 7.6
Gross margin 67.5 67.0 67.9 64.8 65.3 65.7
EBITDA margin 30.6 29.9 24.1 26.3 26.0 26.2
EPS growth (9.4) 5.0 (16.6) 22.3 6.7 7.8
RoE 42.8 46.2 33.0 32.0 29.3 27.4
RoCE 48.5 53.5 34.2 32.6 29.8 28.2
Key assumptions
ADHO volume growth (% yoy) 2.7 5.8 (7.8) 4.0 8.0 5.0
A&SP as % of sales 14.4 15.2 17.9 16.8 17.8 18.0
Source: Kotak Institutional Equities , Company

REDUCE
Zee Entertainment Enterprises (Z)
https://ultraviewer.et/en/own Media FEBRUARY 05, 2021
load.html
RESULT, CHANGE IN RECO.
No reprieve from concerns. We downgrade Zee to REDUCE from ADD with FV of CMP (`): 249
Rs240 (Rs225) as (1) management has hinted downward revision of FY2022 margin Fair Value (`): 240
guidance citing the need to step up investments in TV/OTT; this rules out earnings
BSE-30: 50,614
upside despite improving macro, (2) ramp up of movie production business (30-40
movies/year from 10-12) and Sugarbox capex would alter capital intensity and drag
cash flows, (3) few BS concerns continue, and (4) stock has run up and does not merit
further re-rating given structural risk to core business and lackluster progress of ZEE5.
Zee Entertainment
Enterprises
CMP(Rs)/FV(Rs)/Rating 249/240/REDUCE EPS (Rs) 12.1 16.6 18.5
Mcap (bn) (Rs/US$) 240/3.3 P/E (X) 20.6 15.0 13.5
ADTV-3M (mn) (Rs/US$) 4,022/55 P/B (X) 2.4 2.1 1.9
Promoters 4.0 RoE (%) 12.0 15.1 15.1
FY2022— Downward revision of margin guidance rules out earnings upside
Zee management has indicated that it would step up investments in TV and OTT in FY2022E
and its EBITDA margin guidance of 30% would be revised downwards post 4Q. Given this, we
do not expect much upside risk to earnings even as ad spends outlook has improved. Further,
Zee has guided higher investments in movie production business as it plans 30-40 movies/year
as against 10 movies at present, implying drag on profitability and W-cap and cash generation.
The management has also indicated that Sugarbox capex may commence starting FY2022.
Balance sheet— a few concerns continue; 3Q cash generation disappoints

 Inventory (adjusted for content syndication deal)— up by Rs1.4 bn qoq to Rs48.8 bn and flat
versus Mar 2020 levels. It indicates gross outgo of Rs8-9 bn towards satellite/digital rights of
movies in 9MFY21, quite high even if one factors renewal of a few old movies in library. We
expected a dip in inventory in 9M due to lack of new movies/fresh content amidst pandemic.
 Cash generation disappointing— Zee’s cash flow from operations (adjusted for cash inflow
of Rs5.5 bn pertaining to content syndication deal) was negative Rs1.75 bn despite strong
EBITDA of Rs6.4 bn. The management attributed it to increase in working capital.
 Advances to aggregators reduced by Rs0.6 bn to Rs3.6 bn. We note that Zee had given these
advances at the beginning of FY2020 and the progress on recovery of these advances or
associated procurement of content is slow.
 Receivables were up 23% to Rs24.8 bn partly due to qoq pickup in revenues. That said,
receivables are up 20% compared to 2QFY20 levels even as revenues are broadly similar. Per
management, Dish TV receivables reduced to Rs4.6 bn in 3Q from Rs5 bn as at end-2QFY21
and Siti is procuring content on cash-and-carry basis from Zee.
 Offshore investments of Rs2.25 bn were divested in 3Q and proceeds have been received. Jaykumar Doshi
ZEE5— key metrics and disclosures do not inspire confidence
ZEE5 reported progress in global MAUs (65.9/54.7 mn in Dec-20/Sep-20) and DAUs (5.4 /5.2
mn in Dec-20/Sep-20). These metrics do not inspire confidence as Zee has moved away from
reporting 3rd party data to internal MIS and disclosures are inadequate. Zee spends Rs2.5-3 bn kspcg.research@kotak.com
Contact: +91 22 6218 6427
/quarter and incurs EBITDA loss of Rs1.5-2 bn/quarter in ZEE5 without any noticeable progress.
Zee Entertainment Enterprises Media
3QFY21 results— operating performance improves as ad spends recover

Zee reported content syndication deal worth Rs5.5 bn and expensed inventory worth Rs4.7
bn pertaining to the same; we have included these revenues and associated costs as an
exceptional item. The management indicated that it sold some content to aggregators in
Germany/Spain; disclosures on this traction are not satisfactory.
Ad revenues grew 6% yoy (KIE 2%) to Rs13 bn as against 29% decline in 2Q. Recovery in
ad revenues is ahead of our expectations and was largely driven by FMCG category.
Domestic subscription revenues grew 9% (KIE 5%) on like-for-like basis (excluding sales of
music rights) to Rs6.9 bn off a high base (+22% yoy). International subscription revenues
(like-for-like excluding sales of music rights) were broadly flay yoy at Rs840 mn. Underlying
EBITDA (excluding content syndication deal) grew 13% yoy to Rs6.4 bn, 15% above our
estimates largely due to a beat in advertising and subscription revenues. Recurring net profit
at Rs4.06 bn was up 4% yoy, in line with our estimate as EBITDA beat was offset by lower
other income and higher taxes (ETR at 38%).
Cash and treasury investments improved by Rs3.7 bn sequentially to Rs18.2 bn. Break-up of
Cash and treasury investments of Rs18.2 bn: Rs 3.9 bn bank balance + FD Rs6.5 bn +
Mutual Fund Rs7.3 bn + NCD Rs0.5 bn. Sequential improvement is weak in context of Rs5.5
bn received from content syndication and additional Rs6.4 bn of EBITDA in 3Q.
ZEE5 reported revenue of Rs1.2 bn (Rs989 mn/Rs949 mn in 2Q/1Q) and EBITDA loss of
Rs1.8 bn (Rs1.9 bn /Rs1.45 bn in 2Q/1Q).
Exhibit 1: Interim results of Zee Entertainment, March fiscal year-ends (Rs mn)
% chg.
3QFY21 3QFY21E 3QFY20 2QFY21 KIE yoy qoq 9MFY21 9MFY20 % chg. FY2021E FY2020 % chg.
Total revenues 21,782 20,962 20,487 17,227 3.9 6.3 26.4 52,129 61,788 (16) 73,615 81,299 (9)
Advertising revenues 13,020 12,554 12,308 9,028 3.7 5.8 44.2 26,259 36,422 (28) 38,924 46,811 (17)
Subscription revenues 7,746 8,008 7,137 7,439 (3.3) 8.5 4.1 22,628 21,459 5 30,441 28,874 5
--Domestic subscription 6,904 7,183 6,317 6,608 (3.9) 9.3 4.5 20,139 19,016 6 27,108 25,622 6
--International subscription 841 825 820 831 1.9 2.6 1.2 2,489 2,444 2 3,333 3,252 2
Other sales (incl. syndication) 1,016 400 1,042 761 154.0 (2.5) 33.6 3,243 3,907 (17) 4,250 5,614 (24)
Total expenditure (15,407) (15,400) (14,829) (14,090) 0.0 3.9 9.3 (40,418) (42,603) (5) (55,848) (64,953) (14)
Content and other direct costs (9,412) (9,600) (8,476) (8,342) (2.0) 11.0 12.8 (24,332) (25,239) (4) (33,868) (38,285) (12)
Employee costs (2,073) (2,000) (2,075) (1,967) 3.7 (0.1) 5.4 (6,041) (6,201) (3) (8,156) (7,805) 4
Advt. and publicity costs (1,798) (1,700) (1,908) (1,760) 5.7 (5.8) 2.1 (4,669) (5,115) (9) (5,773) (6,956) (17)
Other expenses (2,124) (2,100) (2,370) (2,021) 1.1 (10.4) 5.1 (5,376) (6,049) (11) (8,050) (11,907) (32)
EBITDA 6,375 5,562 5,658 3,137 14.6 12.7 103.2 11,711 19,185 (39) 17,767 16,346 9
EBITDA margin (%) 29.3 26.5 27.6 18.2 22.5 31.0 (28) 24.1 20.1 20
Other income 276 557 710 379 (50.5) (61.1) (27.3) 919 2,430 (62) 1,308 2,836 (54)
Fair value through P&L (RPS) (839) (207) (401) (207) (2,170) 190 — (2,597) (100)
Finance costs (b) (21) (20) (200) (13) 6 (89.4) 61.8 (80) (585) (86) (125) (1,449) (91)
D&A expenses (652) (670) (656) (651) (2.7) (0.5) 0.1 (2,022) (1,929) 5 (2,677) (2,706) (1)
Pretax profits 5,138 5,222 5,110 2,644 (1.6) 0.5 94.3 8,358 19,291 (57) 16,272 12,431 31
Extraordinaries 782 — — (971) (189) (1,706) (189) (2,843)
Tax provision (c) (1,937) (1,384) (1,622) (740) (2,961) (4,689) (37) (4,664) (4,317) 8
Minority interest 16 10 6 7 35 37 (5) (5) (5) -
Reported PAT (post RPS impact) 3,999 3,848 3,494 941 3.9 14.4 325.1 5,243 12,932 (59) 11,414 5,266 117
EPS post RPS impact (Rs) 4.2 4.0 3.6 1.0 5.5 13.5 (59) 11.9 5.5 117
PAT (pre-RPS and pre-exceptional) 4,056 4,056 3,895 2,119 0.0 4.1 91.4 7,602 14,448 (47) 11,603 10,706 8
EPS (pre-RPS and pre-exceptional) (Rs) 4.2 4.2 4.1 2.2 0.0 4.1 91.4 7.9 15.0 (47) 12.1 11.1 8
Tax rate (%) 37.7 26.5 31.7 28.0 35 24 29 35
Notes:
(a) Fair value through P&L (RPS) incorporates MTM changes in RPS liability.

Media Zee Entertainment Enterprises
Exhibit 2: Revised earnings estimates of Zee, FY2021-23E (Rs mn)
Revised Previous % change

2021E 2022E 2023E 2021E 2022E 2023E 2021E 2022E 2023E
Consolidated
Ad revenues 38,924 53,325 58,658 37,449 49,807 54,788 3.9 7.1 7.1
Subscription revenues 30,441 32,001 34,234 29,354 31,380 33,575 3.7 2.0 2.0
Other operating revenues 4,250 7,670 9,225 4,350 5,520 6,134 (2.3) 38.9 50.4
Total revenues 73,615 92,996 102,117 71,153 86,707 94,497 3.5 7.3 8.1
Direct costs 33,868 43,750 48,012 34,237 39,893 43,156 (1.1) 9.7 11.3
Employee cost 8,156 8,809 9,690 7,805 8,429 9,272 4.5 4.5 4.5
SG&A expenses 13,823 16,438 18,040 13,565 15,181 16,873 1.9 8.3 6.9
Total expenditure 55,848 68,997 75,741 55,607 63,504 69,302 0.4 8.6 9.3
EBITDA 17,767 23,999 26,375 15,545 23,203 25,195 14.3 3.4 4.7
Adj PAT (excl. RPS impact) 11,603 15,964 17,749 10,478 15,863 17,196 10.7 0.6 3.2
Adj EPS (Rs) (excl. RPS impact) 12.1 16.6 18.5 10.9 16.5 17.9 10.7 0.6 3.2
Key assumptions
Ad revenue growth (%) (a) (16.9) 37.0 10.0 (20.0) 33.0 10.0
Domestic subscription growth (%) (a) 5.8 6.0 8.0 2.0 8.0 8.0
International subscription growth (%) (a) 2.5 (2.0) (2.0) (1.0) (2.0) (2.0)
EBITDA margin (%) 24.1 25.8 25.8 21.8 26.8 26.7

Exhibit 3: ZEE5 has not made much progress over the past 12-15 months and it is significantly behind Hotstar, Jio TV, Netflix and Prime
Video
MAUs of select OTT apps (monthly active users on App; excludes web users)
Hotstar JioTV Amazon Prime Video Sony LIV Netflix India Voot ZEE5
160
140
120
112
100
80 78
60
57
40
34
20 22
18
-
May-19
May-20
Aug-19
Aug-20
Nov-19
Nov-20
Dec-19
Mar-20
Dec-20
Jul-19
Jul-20
Jun-19
Sep-19
Oct-19
Jun-20
Sep-20
Oct-20
Apr-20
Jan-20
Feb-20
Source: Industry interactions, Kotak Institutional Equities estimates
Exhibit 4: Key metrics of OTT players in India
Dec 2020 July 2020 August 2019 August 2018

MAUs DAUs Average time spent MAUs DAUs Average time spent MAUs DAUs Average time spent MAUs DAUs Average time spent
(mn) (mn) (mins per user per day) (mn) (mn) (mins per user per day) (mn) (mn) (mins per user per day) (mn) (mn) (mins per user per day)
Hotstar (a) 130-140 26-29 35-40 115-125 24-26 40-45 110-120 25-28 35-40 75-100 14-18 35-40
SONY LIV 35-40 6-8 30-35 20-25 2-4 28-33 30-35 5-7 35-40 20-30 3-5 20-25
Voot 20-25 4-6 40-45 12-15 2-4 40-45 20-25 7-9 45-50 30-40 4-6 35-40
Airtel TV NA NA NA NA NA NA 20-25 4-6 25-30 15-20 5-7 25-30
ZEE5 25-30 3-5 20-25 40-50 4-6 20-25 20-25 4-6 28-33 15-20 2-3 20-25
Prime Video 65-75 10-15 45-50 85-95 20-25 45-50 55-60 10-13 35-40 25-35 5-7 40-45
Netflix 55-60 10-15 55-60 60-65 20-25 65-75 40-45 10-13 60-70 10-15 4-5 40-45
Sun NXT 2-3 0-0.5 NA 2-3 0-0.5 NA 0-1 0-0.5 NA 2-5 0-0.5 35-40
JioCinema 13-15 1-2 20-25 13-15 1-2 20-25 13-15 2-3 20-25 8-15 2-3 25-30
JioTV Live 75-80 15-20 35-40 40-45 6-8 20-25 45-50 9-12 25-30 40-50 8-10 25-30
Facebook 400-425 310-340 45-50 275-300 195-210 40-45 270-290 190-210 35-40 200-220 140-160 30-40
Youtube 450-475 380-410 75-80 360-390 290-310 75-85 325-350 245-265 60-70 220-240 170-190 50-60
Vodafone Play NA NA NA NA NA NA 5-7 0.5-1.5 12-17 3-7 0.5-1.5 NA
Notes:
(a) Hotstar's MAUs and DAUs on non-cricket days. It is 30-50% higher on key cricketing days (especially IPL).
(b) Above metrics includes (1) Android and iOS as per 3rd party and (2) Web users (per KIE estimates; typically 15-25% of total traffic is through web whereas 75-85% is through app).
Source: Industry interactions, Kotak Institutional Equities estimates

Exhibit 5: Zee’s inventory declined marginally on sequential basis but was up marginally adjusted for
non-recurring content syndication deal was flat
Trends in inventory of Zee Entertainment, March fiscal year-ends (Rs bn)
Inventory (Rs bn)

60
53.5 52.2 52.1
48.8
50
43.1
38.5
40
30 26.3
20 16.8
11.7 11.9 13.2
7.3 8.7
10 5.4
0 2013
2014
2015
2016
2011
2012
2017
2018
2019
Mar-20
Sep-20
Sep-19
Dec-20
Jun-20
Exhibit 6: Zee's net cash and cash equivalents, March fiscal year-ends (Rs bn)
50.0
39.7
40.0
32.4
30.0
23.1
20.0 20.6
18.2
20.0 16.1
14.4 14.8 14.5
12.7 12.4 13.2
10.2
10.0
0.0

Exhibit 7: Hindi genre- BARC ratings market share, 1-Apr-17 to 11-Dec-20 (Week 14, 2017 to Week 49, 2020) (%)
Hindi GEC (Urban + Rural)- Viewership share in the top 7 channels (%)
Star Plus 21.5 18.9 16.3 15.9 17.6 18.8 20.0 19.5 20.5 20.5 19.3 18.1 25.0 26.9 26.0
Colors (TV18) 17.3 18.1 19.9 19.1 17.9 18.5 16.7 18.0 16.4 15.0 16.6 18.8 13.5 15.3 17.7
Zee TV 17.4 20.1 20.9 19.1 21.2 19.3 20.1 19.3 18.6 18.5 17.6 16.1 9.5 16.0 17.5
Sony TV 12.3 13.8 13.4 14.9 13.0 15.4 16.2 17.2 15.4 16.2 15.5 14.2 13.3 12.4 13.0
Sony SAB 14.5 12.3 12.5 13.2 13.9 13.7 12.1 11.9 15.0 16.7 18.3 19.8 24.4 18.2 17.2
&TV (Zee) 5.4 6.4 6.0 5.6 5.0 4.9 4.6 4.9 4.5 4.0 4.0 4.7 6.2 4.4 3.6
Life Ok (Star Bharat) 11.6 10.5 11.0 12.2 11.4 9.5 10.3 9.2 9.5 9.0 8.7 8.3 8.1 6.9 5.1
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Zee Network 22.8 26.4 26.9 24.7 26.2 24.2 24.7 24.2 23.1 22.5 21.6 20.8 15.7 20.4 21.1
Hindi movies (Urban + Rural)- Viewership share in the top 6 channels (%)
Sony Max 27.2 26.8 28.2 27.6 27.9 28.5 25.8 25.2 23.8 22.6 23.3 23.4 23.9 23.2 22.7
Star Gold 20.2 20.2 19.1 19.9 19.8 18.5 20.1 19.8 21.5 20.8 20.8 19.9 20.4 20.4 21.8
Zee Cinema 22.1 20.8 20.7 20.3 20.8 21.9 22.2 21.1 22.1 21.5 20.4 21.1 21.1 20.9 21.0
Movies OK 10.8 12.0 11.7 11.3 11.2 10.8 11.5 12.4 12.6 12.8 13.4 13.3 12.8 13.3 13.4
& Pictures 11.5 11.4 11.3 11.2 11.8 11.1 11.8 12.1 11.6 12.8 12.2 12.9 13.1 13.1 12.2
Sony Max 2 8.2 8.8 9.1 9.6 8.5 9.1 8.6 9.3 8.4 9.5 9.9 9.4 8.8 9.0 8.9
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Zee Network 33.7 32.2 32.0 31.5 32.5 33.0 34.0 33.2 33.7 34.3 32.6 33.9 34.1 34.0 33.2
FTA Hindi GEC (Urban + Rural)- Viewership share in the top 8 channels (%)
Star Bharat 4.1 10.9 10.7 8.9 8.7 9.9 6.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Zee Anmol 19.7 25.0 21.1 21.5 23.3 21.2 22.5 18.3 3.4 5.0 3.8 3.7 10.2 17.7 15.9
Sony PAL 23.9 19.3 18.6 19.2 18.2 16.9 16.0 12.5 7.6 7.9 6.4 5.5 10.4 15.0 15.5
Colors Rishtey 21.2 18.3 13.5 13.2 17.1 13.8 11.0 11.6 3.5 4.9 7.3 6.4 8.6 13.3 13.9
Star Utsav 15.4 10.7 15.7 16.6 14.9 18.3 19.0 15.8 6.2 8.3 8.0 8.0 15.2 26.5 31.3
Zee Big Magic 7.9 7.9 7.0 7.1 8.1 7.8 8.0 11.3 32.9 24.2 21.1 20.0 13.4 6.8 6.7
Dangal TV 4.9 8.1 9.2 9.6 7.9 11.5 12.2 21.4 43.3 46.2 51.1 50.2 24.1 15.8 13.3
DD National 6.9 6.5 4.0 2.2 1.6 1.8 1.5 2.2 3.1 3.4 2.4 6.1 18.1 4.9 3.5
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Zee Network 27.6 32.9 28.1 28.6 31.5 29.0 30.5 29.6 36.2 29.3 24.9 23.7 23.5 24.5 22.5
FTA Hindi movies (Urban + Rural)- Viewership share in the top 4 channels (%)
Sony Wah 29.9 29.7 27.2 29.2 29.2 29.7 29.8 25.6 34.3 27.1 25.7 28.5 21.1 20.6 18.6
Rishtey Cineplex 24.5 26.0 27.2 27.3 26.0 24.6 27.1 30.8 32.3 38.8 39.1 39.0 37.0 36.3 33.1
Zee Anmol Cinema 23.8 21.7 22.6 21.9 21.4 21.5 20.1 21.7 14.3 12.7 15.7 15.9 27.6 29.2 35.8
Star Utsav movies 21.8 22.7 23.0 21.5 23.4 24.2 23.0 21.8 19.1 21.5 19.5 16.5 14.2 13.9 12.5
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Notes:
(a) Top 5-8 channels (relevant channels) in each genre are considered for market share calculation.
(b) Life Ok was rebranded as Star Bharat (Free-to-Air channel) on 28th August 2017. We have split its ratings in 50:50 (Paid/FTA) ratio
for market share calculation of Paid and FTA Hindi GEC groups starting 28th Aug 2017.
Source: BARC, Kotak Institutional Equities estimates

Exhibit 8: Regional genres- BARC ratings market share, 1-Apr-17 to 11-Dec-20 (Week 14, 2017 to Week 49, 2020) (%)
Tamil GEC (Urban + Rural)- Viewership share in the top 6 channels (%)
Sun TV 55.9 49.2 51.5 49.3 45.5 44.2 41.5 40.2 39.6 41.1 44.2 45.8 46.4 41.1 38.5
STAR Vijay 16.5 24.0 21.4 19.9 20.7 21.5 21.8 22.7 23.5 25.7 22.6 20.8 18.1 21.9 26.7
Zee Tamil 13.2 13.9 15.2 17.6 19.6 20.9 22.7 22.1 22.5 19.6 20.3 19.1 15.6 22.0 21.1
Polimer 4.7 3.7 3.6 3.2 3.1 2.5 2.1 2.1 1.7 1.4 1.3 1.3 2.2 1.4 1.3
Kalaignar TV 3.1 2.8 3.4 3.3 2.4 2.2 2.0 3.9 3.9 3.5 3.5 4.0 5.0 3.3 2.9
Jaya TV 3.9 3.8 2.4 2.3 2.2 2.3 2.3 1.6 1.3 1.8 1.7 2.8 4.2 2.9 2.7
Colors Tamil 1.5 3.7 3.1 3.8 3.4 3.3 3.0 2.8 3.1 3.9 3.3 3.0
Sun Life 2.8 2.5 2.4 2.8 2.9 3.2 3.8 4.0 4.1 3.9 3.5 3.1 4.6 4.1 3.7
Total of top 8 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Telugu GEC (Urban + Rural)- Viewership share in the top 4 channels (%)
Zee Telugu 24.3 22.9 24.6 24.0 26.8 25.1 24.8 24.9 23.6 21.1 20.9 21.8 21.5 25.2 24.7
Star Maa TV 22.2 27.7 24.5 25.7 27.8 30.1 31.9 31.0 33.4 36.3 36.6 33.8 30.1 34.2 38.4
Gemini TV (Sun) 29.4 25.6 24.4 24.8 22.4 22.0 21.6 19.6 20.5 19.9 19.6 21.2 24.4 17.7 15.2
ETV Telugu 24.1 23.8 26.4 25.6 23.0 22.8 21.8 24.5 22.5 22.7 22.8 23.2 24.0 23.0 21.6
Total of Top 4 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Kannada GEC (Urban + Rural)- Viewership share in the top 5 channels (%)
Colors Kannada 34.4 35.0 34.8 35.0 33.9 33.5 32.4 31.2 28.1 23.9 24.7 19.1 16.9 20.2 23.6
Colors Super 8.0 8.4 11.4 10.3 8.0 8.9 10.7 9.2 10.2 9.6 7.4 6.4 4.5 2.7 3.1
Zee Kannada 25.6 24.5 22.3 24.7 25.0 29.2 29.6 31.3 32.1 35.9 38.1 39.5 31.9 34.9 33.6
Udaya TV (Sun) 13.6 16.4 18.7 18.0 18.8 17.0 16.1 16.7 16.9 16.9 15.6 18.2 29.1 21.8 17.2
Star Suvarna 18.3 15.6 12.8 12.0 14.4 11.3 11.1 11.7 12.7 13.7 14.3 16.8 17.6 20.4 22.6
Total of Top 5 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Malayalam GEC (Urban + Rural)- Viewership share in the top 4 channels (%)
Star Asianet 54.9 51.9 43.7 48.1 52.8 52.7 49.7 46.9 43.9 46.0 49.1 49.6 36.3 42.6 48.9
Surya TV (Sun) 15.5 20.1 20.3 18.4 16.6 16.8 14.2 12.4 12.6 11.2 11.0 12.3 20.6 14.3 10.5
Mazhavil Manorama 18.2 16.7 21.3 16.9 15.5 15.8 15.0 17.3 17.8 16.0 15.3 14.4 17.4 14.3 13.9
Flowers TV 11.4 11.3 14.8 16.6 15.1 14.7 17.0 19.3 19.8 18.3 14.2 12.9 15.3 17.0 14.5
Zee Keralam 4.0 4.1 5.9 8.5 10.4 10.8 10.4 11.7 12.1
Total of Top 4 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Marathi GEC (Urban + Rural)- Viewership share in the top 6 channels (%)
Zee Marathi 59.8 56.7 55.7 49.8 51.7 51.1 54.5 56.2 53.8 53.6 48.3 41.3 45.6 43.0 33.1
Colors Marathi 17.5 16.6 17.5 20.9 20.2 20.6 20.1 22.3 26.3 24.9 27.2 29.4 15.4 17.5 17.0
Star Pravah 14.8 15.5 17.8 20.1 18.6 19.3 19.2 15.5 14.5 15.7 19.2 23.2 26.9 34.7 46.8
Zee Yuva 7.9 11.1 9.0 9.2 9.5 8.9 6.3 6.1 5.5 5.8 5.3 6.0 12.1 4.8 3.2
Fakt Marathi 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Maiboli 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Total of top 6 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Bangla GEC (Urban + Rural)- Viewership share in the top 4 channels (%)
Star Jalsha 55.7 57.1 55.3 47.7 44.8 38.3 38.9 37.6 35.9 37.2 39.1 42.3 34.5 45.2 45.7
Zee Bangla 32.1 31.7 31.7 38.8 41.0 46.1 45.7 49.1 48.4 47.1 45.4 42.1 35.3 37.3 39.0
Colors Bangla 5.1 6.1 8.2 9.3 8.3 8.9 8.4 7.2 7.1 7.4 7.9 7.8 15.0 9.2 8.6
Sony Aath 7.0 5.2 4.8 4.3 5.8 6.6 7.1 6.1 8.6 8.3 7.6 7.8 15.2 8.3 6.7
Total of Top 4 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Oriya GEC (Urban + Rural)- Viewership share in the top 4 channels (%)
Sarthak TV 48.4 51.3 49.2 45.2 47.0 47.7 46.7 39.1 37.0 38.0 41.1 40.7 33.4 35.0 34.6
Tarang TV 35.3 34.0 37.4 41.1 37.8 36.4 40.5 46.6 48.6 47.3 43.6 41.1 37.1 46.3 47.9
Odisha TV 8.4 8.7 7.8 7.4 8.2 10.2 7.9 10.7 9.7 8.3 7.7 10.0 17.4 8.5 8.5
Colors Oriya 7.9 6.1 5.6 6.4 7.1 5.6 4.8 3.6 4.7 6.3 7.6 8.2 12.1 10.1 9.0
Total of Top 4 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Source: BARC, Kotak Institutional Equities estimates

Exhibit 9: Consolidated financial summary of Zee Entertainment, March fiscal year-ends, 2013-23E (Rs mn)
2016 2017 2018 2019 2020 2021E 2022E 2023E

Total revenues 58,514 64,332 66,857 79,339 81,299 73,615 92,996 102,117
EBITDA 15,094 19,260 20,761 25,639 16,346 17,767 23,999 26,375
Other income 2,016 2,240 2,795 2,515 2,836 1,308 1,604 2,161
Interest (123) (161) (1,448) (1,305) (1,449) (125) (150) (150)
Depreciation (840) (1,152) (1,821) (2,347) (2,706) (2,677) (2,962) (3,381)
Pretax profits 16,147 20,187 20,287 24,501 15,028 16,272 22,491 25,005
Extraordinary items (331) 12,234 2,955 (218) (2,843) 189— — —
Taxes (5,528) (6,805) (8,409) (8,673) (4,317) (4,664) (6,522) (7,251)
Minority interest (22) 5 25 23 (5) (5) (5) (5)
RPS dividends (incl tax) (1,457) 0 0 0 0 0 0 0
PAT 8,810 23,416 14,791 15,670 5,266 11,414 15,964 17,749
Adj PAT (pre-exceptional; excl RPS impact) 10,482 13,386 14,428 15,852 10,706 11,603 15,964 17,749
EPS (Rs) 9.2 24.4 15.4 16.3 5.5 11.9 16.6 18.5
Adj EPS (Rs) - (excl RPS impact) 10.9 13.9 15.0 16.5 11.1 12.1 16.6 18.5

Total Equity 42,145 66,567 75,617 89,239 93,439 100,321 111,418 123,720
Preference capital 20,169 0 0 0 0 0 0 0
Minority interest 85 10 141 143 110 110 110 110
Total borrowings 9 19,088 15,254 11,133 5,950 2,975 0 0
Currrent liabilities 16,532 14,702 20,284 28,814 24,238 21,858 23,792 26,125
Total capital 62,408 85,665 91,012 100,515 99,499 103,406 111,527 123,830
Cash and cash eq 21,346 40,935 33,264 23,798 11,750 16,085 19,176 29,131
Inventories 13,160 16,843 26,278 38,505 53,475 51,475 49,475 47,475
Receivables 13,245 13,059 15,365 18,274 20,847 18,152 21,657 23,781
Loans and advances 12,972 14,156 13,114 24,744 15,421 15,921 17,440 18,978
Other current assets 2,127 3,429 7,026 7,982 7,789 8,189 8,589 8,989
Net fixed assets 14,960 9,721 14,125 14,155 13,182 14,005 17,543 20,162
Investments 576 1,321 2,124 1,872 1,274 1,274 1,274 1,274
Deferred tax assets 556 903 0 0 0 0 0 0
Total assets 62,408 85,665 91,012 100,516 99,499 103,406 111,528 123,830

Operating cash flow, excl. W-cap, ex-taxes 15,713 19,170 22,390 27,802 22,371 17,573 24,159 26,535
Working capital (2,632) (5,670) (8,551) (17,151) (16,758) 1,415 (1,492) 271
Taxes paid (5,827) (6,810) (8,295) (9,299) (3,114) (4,664) (6,522) (7,251)
Capital expenditure (4,064) (2,768) (4,605) (2,823) (1,451) (3,500) (6,500) (6,000)
Other income (net) 1,003 1,001 1,107 956 1,300 1,183 1,454 2,011
Free cash flow (prior to RPS dividends) 4,193 4,923 2,046 (515) 2,348 12,007 11,099 15,566
RPS redemption + RPS dividend payout (excl DDT) (1,457) - (3,834) (4,121) (5,183) (2,975) (5,475) (2,500)
Free cash flow to equity holders 2,736 4,923 (1,788) (4,636) (2,835) 9,032 5,624 13,066
Key assumptions / metrics

Ad revenue growth (%) 28.9 9.2 14.5 19.8 (7.1) (16.9) 37.0 10.0
Domestic subscription revenue growth (%) 14.5 11.7 11.8 17.4 33.2 5.8 6.0 8.0
Overseas subscription revenue growth (%) 15.7 3.0 (2.8) (0.7) (16.0) 2.5 (2.0) (2.0)
Content cost as % of revenue 42.2 40.9 35.3 36.1 44.4 42.9 44.5 44.6
Effective tax rate (%) 34.2 33.7 41.5 35.4 28.7 28.7 29.0 29.0
EBITDA margin (%) 25.8 29.9 31.1 32.3 20.1 24.1 25.8 25.8
ROAE 22.7 43.1 20.8 19.0 5.8 11.8 15.1 15.1
ROACE 21.6 20.5 15.7 21.1 13.2 13.7 17.6 17.6

SELL
Thermax (TMX)
https://ultraviewer.et/en/own Capital Goods FEBRUARY 04, 2021
load.html
RESULT, CHANGE IN RECO.
Sharp recovery in business, measured outlook. 3Q business metrics reflect benefits of CMP (`): 1,207
mix, operating leverage, large order win and meaningful support from orders from energy Fair Value (`): 1,080
transition. The order backlog is still down yoy and management’s outlook on growth is measured
beyond select pockets of support. Mindful of the risk of disruption to its key captive-power BSE-30: 50,614
business, TMX is evaluating go-for-technology partnerships. We bake in part of the
outperformance in 3Q and revise our estimates by 16%. Roll-forward to March 2023E yields a
revised Fair Value of Rs1,080. Downgrade to SELL after the recent rally in the stock.
Thermax
CMP(Rs)/FV(Rs)/Rating 1,207/1,080/BUY EPS (Rs) 25.3 32.8 43.1
52-week range (Rs) (high-low) 1,217-570 EPS growth (%) 34.3 29.4 31.6
Mcap (bn) (Rs/US$) 144/2 P/E (X) 47.6 36.8 28.0
ADTV-3M (mn) (Rs/US$) 50/1 P/B (X) 4.4 4.2 3.9
Promoters 62.0 RoE (%) 9.3 11.6 14.5
3QFY21: surprises on the pace of business recovery, margin improvement boosted by one-off
Thermax reported a 0%/30%/31% yoy growth in revenues/EBITDA/PAT, much ahead of ours

and consensus estimates. Outperformance in segmental profits was driven by the energy
segment reporting the highest margin over the past five years despite a yoy decline in revenues
and sustained losses in Danstoker. The management attributed the same to execution of a
high-margin order apart from reduction in fixed costs to a minimum. Order inflows were
healthy at ~Rs15 bn, benefitting from a large Rs3.5 bn order win. Order backlog at Rs52 bn
was down 4% yoy, 15% lower than FY2019 revenues.
Order pipeline healthy and can help cover up for lost ground, in our view
Without sharing the quantitative outlook, TMX did highlight growth support from the usual
suspects (cement, steel, F&B, pharma, chemicals). It shared support to ordering hereon from
refining capacities’ shift towards clean energy initiatives (waste heat recovery, spent wash),
largely on expected lines. Its outlook on broad-based demand growth was otherwise measured.
It shared limited lead it has versus peers in context of the recently launched National Hydrogen
Mission and limited exposure it intends to have in the B2C water business.
Considering technology tie-ups to obviate the impact on business of energy transition
Thermax is considering all options (technology partnerships, inorganic route) to prepare for the
energy transition in the sector. For its key captive power plant business, key clients may consider
green energy substitutes, an issue that TMX is cognizant of. The transition towards clean energy
does generate business opportunities for TMX in select other energy and environment offerings,
Aditya Mongia
which would mitigate part of the overhang related to the captive power business.
We increase estimates by 20% and March 2023-based FV to Rs1,080; downgrade to SELL Teena Virmani
We revise our estimates for FY2023 by 20% as we build in ~14% higher revenues and some
part of the gross margin improvement seen in 3QFY21 sustaining. We retain our 25X multiple
and increase our Fair Value, gross of roll-forward, to Rs1,080. We downgrade the stock to SELL
from BUY based on expensive 28X FY2023E EPS.
Contact: +91 22 6218 6427
Thermax Capital Goods
Key highlights of results and conference call
 Improving demand outlook from various user industries. The company’s order
booking declined 2.6% yoy to Rs15.6 bn in 3QFY21 while order backlog is maintained at
Rs52 bn. Broad-based recovery was witnessed during the quarter with momentum in
sectors ranging from cement, steel, refinery, distilleries and food & beverage. During the
quarter, majority of inflows were from the energy segment including a large order from
bio refinery worth Rs3.2 bn. The company is witnessing change in ordering pattern with
more focus towards green energy related orders across energy and environment business.
 Subsidiary performance was weak during the quarter. During the quarter, the
company provided for diminution in its value of investments in Danstoker and Indonesia.
Performance of Danstoker was not in line with expectations due to weaker-than-expected
demand recovery and Covid-led restrictions. With the change in energy environment in
Europe, market for district heating has reduced where the company was present. They
are now adding bio mass, boilers, green energy and expect break even to come in a few
quarters. Indonesian operations were also impacted during the quarter and the company
expects it to improve in coming quarters with strong pipeline of bio mass and fuel
flexibility related orders. Cooling business in the US also saw short-term slowdown during
the quarter.
 Margin performance. During 3QFY21, energy segment margins were boosted by

improved operating leverage and change in project mix toward higher margin
international orders. Environment segment margins had an impact of lower margins from
FGD despite sharp qoq improvement in revenues. Chemical segment margins were ahead
of our estimates but impact was felt sequentially on higher styrene prices. Going forward,
we expect the impact of higher commodity prices to be felt in the near term as nearly
90% of the order book is fixed price in nature. However, with short cycle nature of the
orders and with the company trying to negotiate with clients for pass-through of raw
material inflation, we do not see significant downward margin revision to our estimates
for FY2023.
 Focus on cash flows and profitability. Thermax management has indicated that they
remain focused on profitability and cash flows of projects while bidding. In the energy
segment, a lot of refinery orders were budgeted last year and with rise in commodity
prices, the company will be taking a conscious call for bidding for those projects. Similarly
the pipeline for FGD projects is strong, the company would intend to maintain focus on
cash flows and margins while bidding for these projects.
 New areas of growth. Thermax expects to capitalize on the upcoming opportunities

from changing nature of energy business through its portfolio. Nature of orders in energy
segment is changing dramatically outside and at a reasonable pace in India. This does
pose a threat to the traditional business of coal-based captive power plants for Thermax.
The company expects to leverage on the clean energy portfolio through its wide variety of
products for clean air, clean water, fuel flexibility. Recent inflows of orders are in the
same direction. We expect these newer areas to offset the slowdown from its traditional
captive power based portfolio.
 Technology partnerships. Thermax is keen on forging technology partnerships in future

in order to provide improved portfolio of products to cater to changing demand
environment towards a green portfolio.

Capital Goods Thermax
Exhibit 1: Results were ahead of our estimates on better-than-expected revenues. Margins were boosted by improved mix and operating
leverage
Thermax (consolidated) - 3QFY21 - key numbers, March fiscal year-ends (Rs mn)
% change
3QFY21 3QFY21E 3QFY20 2QFY21 vs est. yoy qoq 9MFY21 9MFY20 % change FY2021E FY2020 % change
Total income 14,106 11,699 14,101 11,412 21 0 24 32,167 44,084 (27) 49,908 57,313 (13)
Expenses (12,630) (10,690) (12,969) (10,619) 18 (3) 19 (30,012) (40,657) (26) (45,750) (53,251) (14)
Raw material (7,285) (6,552) (7,862) (6,095) (7) 20 (16,621) (23,862) (30) (26,950) (30,360) (11)
Employee (1,901) (1,799) (1,999) (1,890) (5) 1 (5,615) (6,018) (7) (7,770) (7,990) (3)
Other expenses (3,210) (2,340) (3,123) (2,420) 3 33 (7,226) (10,516) (31) (11,030) (14,404) (23)
EBITDA 1,476 1,009 1,132 793 46 30 86 2,155 3,426 (37) 4,158 4,062 2
Other income 282 243 258 228 16 10 24 719 693 4 971 1,000 (3)
PBDIT 1,758 1,252 1,389 1,021 40 27 72 2,875 4,119 (30) 5,129 5,062 1
Interest (57) (38) (19) (47) 50 193 20 (143) (101) 42 (200) (150) 33
Depreciation (291) (286) (316) (287) 2 (8) 1 (858) (859) (0) (1,146) (1,166) (2)
PBT 1,411 928 1,054 687 52 34 105 1,874 3,159 (41) 3,783 3,745 1
Tax (300) (228) (205) (129) 31 46 133 (356) (1,425) (75) (931) (1,621) (43)
Net profit 1,112 699 850 559 59 31 99 1,518 1,734 (12) 2,853 2,125 34
Extraordinary items (279) — — (247) (525) — (525) —
Reported PAT 833 699 850 312 19 (2) 167 992 1,734 (43) 2,328 2,125 10
Share of profit / loss of JVs and associates — — — — — — — —
Net profit for equity shareholders 833 699 850 312 19 (2) 167 992 1,734 (43) 2,328 2,125 10
Order details
Order booking 15,650 16,060 11,140 (3) 40 32,870 45,460 (28) 53,577 54,980 (3)
Order backlog 52,080 54,390 51,900 (4) 0 52,080 54,390 (4) 53,999 52,380 3
Key ratios (%)

Raw material /sales 53.3 55.6 55.3 53.4 54.7 54.0 53.8
Contribution margin 46.7 44.4 44.7 46.6 45.3 46.0 46.2
Employee exp./sales 13.5 14.2 16.6 17.5 13.7 15.6 13.9
Other expenses/sales 22.8 22.1 21.2 22.5 23.9 22.1 25.1
EBITDA margin 10.5 8.6 8.0 7.0 6.7 7.8 8.3 7.1
PBT margin 10.0 7.9 7.5 6.0 5.8 7.2 7.6 6.5
PAT margin 7.9 6.0 6.0 4.9 4.7 3.9 5.7 3.7
Tax rate 21.2 24.6 19.4 18.7 19.0 45.1 24.6 43.3
EPS (Rs) 7.4 6.2 7.5 2.8 13.5 15.4 20.7 18.9
Notes:
(a) 3QFY21 booked a large Rs3.2 bn order related to bio-refinery for energy segment
Exhibit 2: Healthy margin print was seen in energy segment. Chemicals segment margins were down qoq on higher raw material prices
while environmental segment margin increase was limited on account of FGD project execution
Consolidated segmental revenues and margins of Thermax for 3QFY21, March fiscal year-ends (Rs mn)
% change
3QFY21 3QFY21E 3QFY20 2QFY21 vs est. yoy qoq 9MFY21 9MFY20 % change FY2021E FY2020 % change
Revenues
Energy 10,658 8,921 11,208 8,858 19 (5) 20 24,520 36,258 (32) 37,825 46,760 (19)
Environment 2,534 1,691 1,974 1,550 50 28 63 4,923 5,229 (6) 8,121 7,220 12
Chemical 1,113 1,297 1,168 1,145 (14) (5) (3) 3,101 3,250 (5) 4,634 4,213 10
Less Intersegment (199) (210) (249) (141) (5) (20) 41 (376) (653) (42) (671) (889) (24)
Total 14,106 11,699 14,101 11,412 21 0 24 32,167 44,084 (27) 49,908 57,303 (13)
PBIT
Energy 966 498 647 388 94 49 NM 1,090 2,169 (50) 1,891 2,493 (24)
Environment 180 113 103 103 60 75 NM 178 218 (19) 390 381 2
Chemical 291 315 289 350 (8) 1 (17) 813 602 35 1,158 780 48
Net Interest expense (57) (38) (19) (47) 50 193 20 (143) (101) 42 (200) (150) 33
Net unallocable income (248) 39 35 (107) (733) (804) 132 (342) 271 19 242
Total PBIT 1,189 965 1,074 734 23 11 62 1,738 3,261 (47) 3,459 3,896 (11)
EBIT margin (%)
Energy 9.1 5.6 5.8 4.4 4.4 6.0 5.0 5.3
Environment 7.1 6.7 5.2 6.7 3.6 4.2 4.8 5.3
Chemical 26.1 24.3 24.7 30.5 26.2 18.5 25.0 18.5
Total PBIT 8.4 8.2 7.6 6.4 5.4 7.4 6.9 6.8

Exhibit 3: Large order inflow worth Rs3.2 bn for energy segment boosted overall order inflow for
Thermax
Trends in ordering for Thermax, March fiscal year-ends, 2014-3Q21 (Rs bn)
2016 2017 2018 2019 2020 3Q21
70
60 56 55
51
50 46
40
30
20 16
12
9
10 5
3
-
Total orders Large orders Base orders
Exhibit 4: Order backlog for Thermax is fairly diversified across sectors and stood at Rs52 bn
Break up of order backlog for Thermax across segments, March fiscal year-ends (%)
3QFY21 - Rs52 bn Cement

O thers 8%
20%
Fertilizer and agro

4%
Rubber and related Refinery and

products petchem
3% 31%
Sugar distillery
3%
Power
5%
Metals & Steel Food and

12% Beverages/Packagin
Chemical g
4% 10%
Exhibit 5: We revise our estimates to factor in improved execution and margin improvement in energy and chemical segment
Change in estimates for Thermax, March fiscal year-ends, 2019-23E (Rs mn)
` New estimates Old estimates Revision (%)
2019 2020 2021E 2022E 2023E 2021E 2022E 2023E 2021E 2022E 2023E
Order inflows 56,320 54,980 53,577 72,111 81,848 48,657 63,362 71,787 10 14 14
Net revenues 59,732 57,313 49,908 57,570 73,028 41,883 54,147 65,060 19 6 12
EBITDA 4,574 4,062 4,158 5,154 6,626 3,069 4,490 5,504 35 15 20
EBITDA margin (%) 7.7 7.1 8.3 9.0 9.1 7.3 8.3 8.5
Other income 1,499 1,000 971 1,091 1,174 971 1,108 1,146
PBT 5,010 3,745 3,783 4,962 6,529 2,744 4,315 5,379 38 15 21
PAT 4,150 2,125 2,853 3,692 4,858 2,069 3,211 4,002 38 15 21
EPS (Rs) 36.9 18.9 25.3 32.8 43.1 18.4 28.5 35.5 38 15 21
Growth (%)
Revenues 34 (4) (13) 15 27 (27) 29
EBITDA 14 (11) 2 24 29 (24) 46
PBT 19 (25) 1 31 32 (27) 57
PAT 79 (49) 34 29 32 (3) 55

Capital Goods Thermax
Exhibit 6: We expect chemicals business to reach levels of 60% of energy segment profit by FY2023
Segmental estimates for Thermax (consolidated), March fiscal year-ends, 2017-23E (Rs mn)
2016 2017 2018 2019 2020 2021E 2022E 2023E

Sum of Segments
Order inflow 43,520 43,940 63,800 56,320 54,980 53,577 72,111 81,848
Growth (%) - 1 45 (12) (2) (3) 35 14
Order backlog 41,892 39,268 56,890 53,700 52,380 53,999 67,647 75,336
Growth (%) - (6) 45 (6) (2) 3 25 11
Gross revenues 52,656 45,897 44,649 59,732 57,303 49,908 57,570 73,028
Growth (%) (13) (3) 34 (4) (13) 15 27
EBITDA 4,291 4,330 4,009 4,574 4,062 4,158 5,154 6,626
EBITDA margin (%) 8.1 9.4 9.0 7.7 7.1 8.3 9.0 9.1
PBT 4,671 4,554 4,220 5,010 3,745 3,783 4,962 6,529
PAT 3,232 2,994 2,563 4,160 2,125 2,853 3,692 4,858
EPS 25.1 21.4 20.6 36.9 18.9 25.3 32.8 43.1
Energy segment
Revenue 43,072 36,248 34,811 47,995 46,760 37,825 39,135 45,753
Growth (%) (15.8) (4.0) 37.9 (2.6) (19.1) 3.5 16.9
Order inflow 35,100 34,260 52,240 44,760 32,800 34,440 44,772 51,488
Growth (%) - (2.4) 52.5 (14.3) (26.7) 5.0 30.0 15.0
Order backlog 35,147 33,159 49,671 47,930 35,570 30,808 36,445 42,180
Growth (%) (5.7) 49.8 (3.5) (25.8) (13.4) 18.3 15.7
Bill to book ratio (%) 69.3 57.0 66.6 73.6 73.6 73.6 73.6
EBIT 3,774 3,229 2,834 3,218 2,493 1,891 2,739 3,431
EBIT Margin (%) 8.8 8.9 8.1 6.7 5.3 5.0 7.0 7.5
Environment segment
Revenue 7,208 6,997 6,906 8,283 7,220 8,121 13,536 21,457
Growth (%) (2.9) (1.3) 19.9 (12.8) 12.5 66.7 58.5
Order inflow 5,540 6,630 8,110 7,410 17,770 14,286 21,518 23,666
Growth (%) 19.7 22.3 (8.6) 139.8 (19.6) 50.6 10.0
Order backlog 6,098 5,731 6,860 5,250 16,010 22,174 30,157 32,366
Growth (%) (6.0) 19.7 (23.5) 205.0 38.5 36.0 7.3
EBIT 180 381 290 567 381 390 785 1,287
EBIT Margin (%) 2.5 5.4 4.2 6.8 5.3 4.8 5.8 6.0
Chemical segment
Revenue 3,276 3,319 3,593 4,151 4,213 4,634 5,792 6,951
Growth (%) 1.3 8.3 15.5 1.5 10.0 25.0 20.0
Order inflow 2,880 3,050 3,450 4,150 4,410 4,851 5,821 6,694
Growth (%) 5.9 13.1 20.3 6.3 10.0 20.0 15.0
Order backlog 648 379 359 520 800 1,017 1,046 790
Growth (%) NM (5.3) 45.0 53.8 27.1 2.8 (24.5)
EBIT 516 592 542 617 780 1,158 1,448 1,738
EBIT Margin (%) 15.7 17.8 15.1 14.9 18.5 25.0 25.0 25.0

Exhibit 7: Consolidated financials of Thermax, March fiscal year-ends, 2012-23E (Rs mn)
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021E 2022E 2023E
Profit model
Total operating income 60,912 54,917 50,999 53,955 51,450 44,831 44,649 59,732 57,313 49,908 57,570 73,028
Total operating costs (54,993) (50,015) (46,626) (49,320) (47,158) (40,501) (40,639) (55,157) (53,251) (45,750) (52,416) (66,402)
EBITDA 5,920 4,902 4,373 4,635 4,291 4,330 4,009 4,574 4,062 4,158 5,154 6,626
Other income 830 849 716 1,209 1,224 1,141 1,164 1,499 1,000 971 1,091 1,174
PBDIT 6,749 5,750 5,089 5,844 5,515 5,470 5,173 6,073 5,062 5,129 6,245 7,800
Financial charges (122) (165) (274) (820) (122) (97) (129) (143) (150) (200) (150) (150)
Depreciation (663) (771) (922) (1,341) (722) (819) (824) (920) (1,166) (1,146) (1,133) (1,121)
Pre-tax profit 5,965 4,814 3,893 3,684 4,671 4,554 4,220 5,010 3,745 3,783 4,962 6,529
Taxation (2,043) (1,773) (1,696) (1,708) (1,439) (1,560) (1,658) (849) (1,621) (931) (1,270) (1,671)
Adjusted PAT 3,922 3,041 2,198 1,975 3,232 2,994 2,563 4,160 2,125 2,853 3,692 4,858
Minority interest/ Share of JVs PAT 114 161 262 616 (409) (586) (242) (11) — — — —
Extraordinary items, net of tax — — — (494) — (178) — (895) — (525) — —
Reported PAT 4,035 3,201 2,460 2,098 2,823 2,230 2,321 3,254 2,125 2,328 3,692 4,858
Balance sheet
Shareholders funds 16,293 18,687 20,383 21,464 24,162 25,376 27,147 30,143 30,279 30,959 32,458 34,465
Loan funds 2,708 4,231 7,610 6,165 1,954 1,357 2,337 2,403 2,115 2,115 2,115 2,115
Total sources of funds 20,850 24,793 30,250 29,195 26,270 26,908 29,649 32,645 32,438 33,117 34,617 36,623
Net block 8,441 8,727 15,265 14,314 7,124 7,050 8,505 12,788 12,484 12,339 12,206 12,085
CWIP 2,466 5,175 537 429 600 1,413 1,034 401 553 166 83 41
Net fixed assets 10,907 13,901 15,802 14,743 7,724 8,463 9,539 13,189 13,037 12,504 12,289 12,126
Investments 2,395 4,430 7,079 8,217 11,647 11,888 15,939 8,624 9,105 9,105 9,105 9,105
Cash balances 7,002 3,211 4,508 3,494 2,976 2,210 2,940 3,691 4,761 6,488 7,670 8,766
Net current assets excluding cash 188 2,861 2,317 1,850 2,719 3,194 150 4,922 3,982 3,467 3,999 5,073
Total application of funds 20,850 24,793 30,250 29,195 26,270 26,908 29,649 32,644 32,438 33,118 34,617 36,624
Growth (%)
Revenue growth 14.1 (9.8) (7.1) 5.8 (4.6) (12.9) (0.4) 33.8 (4.0) (12.9) 15.4 26.8
EBITDA growth 3.2 (17.2) (10.8) 6.0 (7.4) 0.9 (7.4) 14.1 (11.2) 2.4 23.9 28.6
Recurring PAT growth 4.0 (22.5) (27.7) (10.1) 63.6 (7.3) (14.4) 62.3 (48.9) 34.3 29.4 31.6
Key ratios (%)
Raw material / sales 63.1 60.4 56.1 58.2 53.3 50.5 52.6 55.9 53.8 54.0 54.0 54.0
Other expenses / sales 18.0 19.6 21.6 20.2 25.6 24.5 22.8 23.6 25.1 22.1 25.1 24.1
Employee expense / sales 9.2 11.1 13.8 13.1 12.8 15.3 15.6 12.8 13.9 15.6 11.9 12.8
EBITDA magin 9.7 8.9 8.6 8.6 8.3 9.7 9.0 7.7 7.1 8.3 9.0 9.1
PAT margin 6.4 5.5 4.3 3.7 6.3 6.7 5.7 7.0 3.7 5.7 6.4 6.7
RoE 27.4 18.3 12.6 12.4 12.4 9.7 8.8 14.5 7.0 9.3 11.6 14.5
RoCE 24.5 15.8 10.3 10.9 10.8 9.4 8.5 13.8 6.8 9.2 11.2 14.0
EPS (consol) (Rs) 35.8 28.4 21.8 23.0 25.1 21.4 20.6 36.9 18.9 25.3 32.8 43.1

December 2020: Results calendar
India Daily Summary - February 5, 2021

Mon Tue Wed Thu Fri Sat
KOTAK INSTITUTIONAL EQUITIES RESEARCH
1-Feb 2-Feb 3-Feb 4-Feb 5-Feb 6-Feb

Castrol India Ajanta Pharma Adani Enterprises Adani Power Aditya Birla Capital Bharat Heavy Electricals
Coromandel International Carborundum Universal Adani Green Energy Adani Transmission Alkem Laboratories Divis Laboratories
Kansai Nerolac Paints Dhanuka Agritech Apollo Tyres Brigade Enterprises Ashoka Buildcon J K Cements
Escorts Astral Poly Technik Container Corp. Britannia Industries
HDFC Bajaj Corp. Dalmia Bharat Cadila Healthcare
IIFL Wealth Bharti Airtel Gillette India Equitas Holdings
PI Industries City Union Bank Godrej Agrovet GlaxoSmithkline Pharma
Tata Consumer Products Indian Hotels Godrej Properties Gujarat Gas
Jubilant Foodworks Hero MotoCorp Jubilant Life Sciences
Procter & Gamble Honeywell Auto Mahindra & Mahindra
SIS HPCL Narayana Hrudaya
The Ramco Cements Ipca Laboratories Pfizer
Thermax Kalpataru Power Transmission Punjab National Bank
Ujjivan Small Finance Bank NTPC SKF India
Rural Electrification Corporation TCNS Clothing Co,
Aditya Birla Fashion Adani Ports & SEZ ABB ACC Bharat Forge Amara Raja Batteries
Balkrishna Industries AIA Engineering Aurobindo Pharma Bosch Glenmark Pharmaceuticals Rajesh Exports
Bharat Petroleum Corp. Aster DM Healthcare Bank of India Coal India Grasim Industries
Godrej Consumer Products Berger Paints India Bata India ITC Hindustan Aeronautics
Jagran Prakashan Endurance Technologies Eicher Motors Karur Vysya Bank Info Edge (India)
NMDC Indian Overseas Bank Gujarat State Petronet MRF Motherson Sumi Systems
Sun TV Network Lemon Tree Hotel Hindalco Industries Natco Pharma Oil & Natural Gas Corp.
Torrent Pharmaceuticals Mahanagar Gas Indraprastha Gas NHPC Phoenix Mills
Max Financial Services Metropolis Healthcare Oil India Sobha
Muthoot Finance Mindspace REIT Petronet LNG Timken India
Tata Steel Page Industries Piramal Enterprises Voltas
Torrent Power S H Kelkar and Company Power Finance Corporation
Varroc Engineering Titan Co. Prestige Estates Projects
Ujjivan Financial Services
Ambuja Cements Mahindra CIE Automative
Source: NSE, Kotak Institutional Equities

106
Kotak Institutional Equities: Valuation summary of KIE Universe stocks
107
Price (Rs) Fair Value Upside Mkt cap. O/S shares EPS (Rs) EPS growth (%) P/E (X) EV/EBITDA (X) P/B (X) RoE (%) Dividend yield (%) ADVT-3M
Company Rating 4-Feb-21 (Rs) (%) (Rs bn) (US$ bn) (mn) 2021E 2022E 2023E 2021E 2022E 2023E 2021E 2022E 2023E 2021E 2022E 2023E 2021E 2022E 2023E 2021E 2022E 2023E 2021E 2022E 2023E (US$ mn)
Automobiles & Components
Amara Raja Batteries REDUCE 961 730 (24) 164 2.2 171 36 46 52 (7) 28 13 27 21.0 18.5 14.6 11.7 10.2 4.0 3.5 3.1 15.8 17.7 17.6 0.9 1.2 1.3 11.8
Apollo Tyres REDUCE 244 210 (14) 155 2.1 638 4.6 12.9 16.7 (45) 183 29 53.5 18.9 14.6 7.5 7.0 5.8 1.4 1.3 1.2 2.8 7.1 8.7 0.5 1.1 1.1 35
Ashok Leyland BUY 136 115 (15) 399 5.5 2,936 (0.3) 3.4 7.5 (121) 1,413 117 NM 39.4 18.1 54.1 18.7 10.8 5.5 5.0 4.2 NM 13.4 25 0.0 0.8 1.7 53
Bajaj Auto BUY 4,224 4,400 4 1,222 17 289 158 191 222 (10) 21 16 26.7 22.1 19.0 21.0 16.5 13.7 5.6 5.1 4.6 22 24 25 2.2 2.7 3.2 48
Balkrishna Industries SELL 1,829 1,250 (32) 354 4.8 193 52 62 77 4 19 24 35.4 29.6 23.8 20.9 17.4 14.1 6.3 5.6 4.9 18.9 20 22 1.2 1.3 1.5 24
Bharat Forge SELL 629 320 (49) 293 4.0 466 (0.2) 12.6 19.0 (102) 7,097 50 NM 49.8 33.1 57.8 24.7 18.7 5.6 5.2 4.6 NM 10.8 14.7 0.0 0.5 0.5 27
CEAT ADD 1,669 1,500 (10) 68 0.9 40 99 107 124 59 8 16 16.8 15.5 13.4 8.6 7.7 6.8 2.1 1.9 1.7 13.1 12.7 13.1 0.7 0.7 0.7 8.2
Eicher Motors SELL 2,963 1,920 (35) 810 11.1 272 57 84 109 (16) 48 31 52.3 35.4 27.1 38.2 27.8 21.5 8.4 7.1 5.9 17.3 22 24 0.4 0.4 0.4 65
Endurance Technologies REDUCE 1,447 1,020 (29) 204 2.8 141 34 49 59 (16) 45 22 43 29.7 24.4 19.9 15.1 12.7 6.0 5.1 4.4 13.9 17.3 17.9 0.4 0.6 0.7 3.1
Escorts BUY 1,402 1,700 21 125 2.6 101 77 89 100 42 15 12 18.1 15.8 14.0 9.9 8.6 7.2 2.7 2.4 2.1 15.1 15.1 14.8 0.8 1.0 1.1 35
Exide Industries REDUCE 203 180 (11) 173 2.4 850 8.3 10.3 11.3 (17) 24 10 24.5 19.8 18.1 13.1 11.0 10.0 2.6 2.4 2.2 10.9 12.7 12.9 2.2 2.2 2.2 13.4
Hero Motocorp SELL 3,441 2,700 (22) 687 9.4 200 136 175 202 (15) 29 15 25.3 19.6 17.1 16.5 12.3 10.5 4.6 4.2 3.8 18.6 22 23 2.6 3.1 3.5 61
Mahindra CIE Automotive SELL 165 110 (33) 63 0.9 378 1.8 8.2 12.1 (81) 347 48 90.1 20.2 13.6 17.5 9.1 6.8 1.3 1.2 1.1 1.5 6.4 8.8 — — — 0.3
Mahindra & Mahindra BUY 867 920 6 1,077 14.8 1,138 19 45 50 (21) 139 12 46.0 19.3 17.3 15.9 12.8 11.1 2.6 2.4 2.1 6.0 12.9 12.9 0.2 0.8 0.9 66
Maruti Suzuki SELL 7,640 5,700 (25) 2,308 31.6 302 160 230 299 (15) 44 30 48 33 26 33.3 21.0 15.3 4.5 4.1 3.6 9.6 12.8 15.0 0.7 0.8 1.0 129
Motherson Sumi Systems ADD 158 155 (2) 499 6.8 3,158 2.7 7.5 9.0 (26) 173 20 57.8 21.2 17.6 11.6 6.2 5.2 4.2 3.4 2.7 7.5 17.7 17.1 0.7 1.0 1.2 30
MRF SELL 92,182 68,000 (26) 391 5.4 4 2,441 3,281 3,947 (27) 34 20 38 28.1 23.4 14.0 11.4 9.5 3.0 2.7 2.4 8.1 10.0 10.9 0.1 0.1 0.1 51
Schaeffler India SELL 4,608 3,500 (24) 144 2.0 31 87 139 166 (26) 61 19 53 33 28 26.7 17.9 15.0 4.5 4.0 3.5 8.8 12.8 13.5 — — — 1.0
SKF REDUCE 1,998 1,450 (27) 99 1.4 49 43 54 67 (26) 26 23 46 37 30 34.0 25.8 20.9 6.7 5.8 5.1 14.4 15.9 16.9 5.4 0.5 0.6 1.3
Tata Motors SELL 326 180 (45) 1,173 14.7 3,829 (8) 18 25 60 320 39 NM 17.8 12.8 6.6 4.3 3.7 2.0 1.8 1.6 NM 10.5 12.9 — — — 318
Timken SELL 1,275 830 (35) 96 1.3 75 22 36 43 (34) 65 20 59 36 30 33.8 21.8 18.1 7.0 6.0 5.1 11.1 18.1 18.4 0.1 0.1 0.1 1.0
TVS Motor SELL 653 360 (45) 310 4.3 475 11 17 21 (19) 65 22 62 37 31 24.4 18.3 15.7 8.0 7.0 6.0 13.4 19.9 21 0.7 0.7 0.8 27
Varroc Engineering BUY 443 380 (14) 60 0.8 135 (20) 23 35 (10,817) 214 56 NM 19.5 12.5 13.8 6.4 5.1 2.2 2.0 1.7 NM 10.1 13.8 — — — 1.5
Automobiles & Components Cautious 10,872 148.5 (4) 123 26 55.4 24.8 19.6 14.9 10.3 8.6 3.7 3.3 2.9 6.7 13.4 15.0 0.8 1.0 1.2 1,011
Banks
AU Small Finance Bank SELL 965 720 (25) 296 4.1 304 38.7 27.4 33.7 75 (29) 23 25 35 29 — — — 5.8 4.8 4.2 23.7 14.0 14.8 — — — 14.3
Axis Bank BUY 744 675 (9) 2,278 31.2 3,060 22.7 42.2 51.3 294 85 22 33 17.6 14.5 — — — 2.4 2.2 2.0 7.5 12.2 13.3 0.5 0.9 1.0 188
Bandhan Bank ADD 347 375 8 559 7.7 1,610 15.7 20.3 24.6 (17) 30 21 22.1 17.1 14.1 — — — 3.4 2.8 2.3 15.3 16.9 17.2 — — — 67
Bank of Baroda ADD 82 80 (2) 379 5.2 4,627 7.9 17.4 20.7 572 120 18 10 4.7 4.0 — — — 0.7 0.6 0.5 5.4 11.1 12.0 1.9 4.3 5.0 48
Canara Bank REDUCE 162 115 (29) 267 3.7 1,647 10.9 9.3 18.4 150 (15) 99 14.9 17.5 8.8 — — — 0.8 0.8 0.7 3.4 2.7 5.2 — — — 54
City Union Bank REDUCE 176 160 (9) 130 1.8 737 7.8 8.0 10.5 21 2 32 23 22.0 16.7 — — — 2.6 2.4 2.1 10.4 9.8 11.9 0.8 0.8 1.1 5.5
DCB Bank BUY 116 150 29 36 0.5 310 10.6 12.2 16.3 (2) 15 33 10.9 9.5 7.1 — — — 1.1 1.0 0.9 9.9 10.4 12.5 0.9 1.1 1.4 4.0

Equitas Holdings BUY 82 100 23 28 0.4 342 7.8 8.3 16.3 30 5 97 10.4 9.9 5.0 — — — 1.0 0.9 0.8 9.2 8.8 15.4 — — — 3.4
Equitas Small Finance Bank BUY 44 50 15 50 0.7 1,138 2.9 3.6 4.9 27 23 36 14.9 12.1 8.9 — — — 1.5 1.4 1.2 11.0 11.5 13.8 — — — 0.0
Federal Bank BUY 86 90 5 171 2.3 1,993 7.5 8.5 12.4 (3) 14 45 11.4 10.0 6.9 — — — 1.2 1.1 1.0 9.9 10.5 13.9 2.0 2.2 3.2 38
HDFC Bank ADD 1,579 1,550 (2) 8,700 119.2 5,483 55.4 65.2 76.4 16 18 17 28 24 21 — — — 4.5 4.0 3.5 16.6 17.2 17.6 0.7 0.8 0.9 225
ICICI Bank BUY 628 650 3 4,338 59.5 6,893 24.8 31.1 35.2 102 26 13 25 20.2 17.9 — — — 3.2 2.8 2.5 13.1 14.0 14.2 0.8 1.0 1.1 200
IndusInd Bank ADD 1,032 950 (8) 782 10.7 756 33.9 62.6 80.6 (47) 85 29 30 16.5 12.8 — — — 2.0 1.8 1.6 7.1 11.4 13.2 0.5 0.9 1.2 208
Karur Vysya Bank BUY 49 65 34 39 0.5 799 4.7 6.6 9.4 61 39 43 10 7.4 5.2 — — — 0.7 0.6 0.6 5.6 7.4 10.0 2.5 3.5 5.0 1.9
Punjab National Bank REDUCE 41 32 (21) 424 5.8 10,481 0.5 4.4 6.0 (8) 858 36 88 9.2 6.8 — — — 0.7 0.8 0.7 0.7 5.4 6.8 — — — 55
RBL Bank BUY 257 270 5 154 2.1 597 9.8 23.9 31.0 (2) 146 29 26 10.7 8.3 — — — 1.3 1.2 1.1 5.0 10.8 12.7 0.6 1.4 1.8 67
SBI Cards and Payment Services ADD 989 1,030 4 930 12.8 939 13.0 19.8 30.1 (2) 53 52 76 50.0 32.8 — — — 14.4 11.4 8.6 20.7 25 30 0.1 0.1 0.2 21
State Bank of India BUY 355 450 27 3,169 43.4 8,925 23.5 35.8 44.9 45 52 26 15 9.9 7.9 — — — 1.6 1.4 1.2 8.6 11.9 13.2 0.1 0.1 0.1 209
Ujjivan Financial Services BUY 254 345 36 31 0.4 121 33.6 44.2 - 25 32 (100) 8 5.7 - — — — 1.2 1.0 — 17.0 19.3 NM 1.6 2.3 0.0 3.3
Ujjivan Small Finance Bank ADD 36 37 3 62 0.8 1,928 (0.3) 1.6 2.9 (118) 575 85 NM 22.6 12.2 — — — 2.3 2.1 1.7 NM 9.2 14.8 0.0 0.0 0.0 1.7
Union Bank REDUCE 35 27 (22) 221 3.0 6,407 3.0 0.5 4.5 136 (83) 789 11 67.5 7.6 — — — 0.6 0.6 0.6 3.4 0.6 4.9 1.3 0.2 2.0 3.9
YES Bank SELL 16 11 (32) 406 5.6 25,055 (0.5) (0.9) (0.2) 96 (96) 74 NM NM NM — — — 1.5 1.6 1.6 NM NM NM 0.0 0.0 0.0 59
Banks Attractive 23,449 321.4 117 40 26 25 17.9 14.2 2.1 1.9 1.7 8.3 10.5 11.9 0.5 0.7 0.9 1,476


Building Products
Astral Poly Technik SELL 2,062 870 (58) 311 4.3 151 19 25 31 17 32 24 108 82 66 61.4 48.1 38.6 17.7 15.1 12.9 17.7 20.0 21 0.1 0.2 0.4 6.7
Building Products Cautious 311 4.3 17 32 24 107 81 65 61.4 48.1 38.6 17.7 15.0 12.9 16.5 18.5 19.7 0.1 0.2 0.4 6.7
Capital goods
ABB SELL 1,518 980 (35) 322 4.4 212 7.5 20.0 26.4 (57) 166 32 202 76 58 148.0 51.8 39.1 9.1 8.5 7.8 4.5 11.6 14.1 0.4 0.5 0.5 3.7
Ashoka Buildcon BUY 102 135 32 29 0.4 281 11.3 11.9 12.9 (18) 6 8 9.1 8.6 8.0 6.7 5.7 4.9 1.0 0.9 0.8 11.6 11.2 11.0 1.8 1.9 2.0 2.6
Bharat Electronics BUY 141 140 (1) 343 4.7 2,437 7.4 7.9 8.1 (1) 7 3 19.1 17.9 17.3 12.2 11.0 10.1 3.1 2.8 2.6 17.0 16.6 15.7 2.0 2.1 2.2 29
BHEL SELL 42 26 (39) 147 2.0 3,482 (3.8) 1.8 2.8 10 148 53 NM 23 15.0 (10.8) 8.6 6.4 0.5 0.5 0.5 NM 2.2 3.4 (4.0) 1.8 2.4 28
Carborundum Universal ADD 449 450 0 85 1.2 189 15 19 22 5 23 19 30 24 20 17.5 13.8 11.5 4.2 3.7 3.3 14.7 16.3 17.3 0.9 1.2 1.4 2.1
Cochin Shipyard BUY 350 520 49 46 0.6 132 35 43 43 (27) 20 1 9.9 8.2 8.1 5.0 4.9 4.6 1.1 1.1 1.0 12.0 13.4 12.5 3.4 3.6 3.9 2.0
Cummins India BUY 785 750 (4) 217 3.0 277 25 33 38 (3) 33 16 32 24 21 32.0 22.6 19.1 5.0 4.7 4.4 16.1 20 22 1.7 2.3 2.7 15.6
Dilip Buildcon BUY 480 515 7 66 0.9 137 25 45 61 (19) 83 35 19.5 10.6 7.9 6.7 5.2 4.5 1.7 1.4 1.2 8.9 14.5 16.7 0.1 0.2 0.2 1.8
IRB Infrastructure BUY 109 145 33 38 0.5 351 7 10 11 (65) 45 7 15.3 10.5 9.8 6.2 5.7 4.5 0.6 0.5 0.5 3.7 5.3 5.4 3.5 1.4 2.1 1.4
Kalpataru Power Transmission BUY 363 475 31 54 0.7 153 25 39 43 (2) 57 12 14.6 9.3 8.4 5.2 4.4 3.7 1.4 1.1 1.0 10.4 13.5 12.9 0.9 1.3 1.4 2.4
KEC International BUY 413 410 (1) 106 1.5 257 22 29 36 1 31 24 18.6 14.3 11.5 10.6 8.3 6.9 3.2 2.7 2.2 18.7 21 21 0.6 0.8 0.9 2.5
L&T BUY 1,530 1,720 12 2,149 29.4 1,403 50 81 99 (21) 60 24 30 19.0 15.4 20.8 15.2 13.7 3.1 2.8 2.5 11.1 15.5 17.3 1.1 1.6 2.0 104
Siemens SELL 1,849 1,150 (38) 659 9.0 356 35 40 41 66 13 4 52 47 45 37.6 33.1 32.0 6.4 5.9 5.4 12.7 13.1 12.6 0.5 0.6 0.6 14.4
Thermax SELL 1,207 1,080 (11) 144 2.0 113 25 33 43 34 29 32 48 37 28 33.5 26.8 20.7 33.5 26.8 20.7 9.3 11.6 14.5 1.0 1.3 1.7 0.7
Capital goods Attractive 4,405 60.4 (15) 64 20 35 21 17.9 2.8 2.6 2.4 8.0 12.1 13.2 0.9 1.4 1.7 210
Commercial & Professional Services
SIS BUY 406 460 13 60 0.8 149 23 21 25 51 (9) 19 17.7 19.5 16.3 11.8 10.9 9.6 3.5 3.0 2.6 22 16.7 17.0 0.3 0.3 0.3 1.0
TeamLease Services ADD 3,142 3,030 (4) 54 0.7 17 53 70 95 159 31 37 59 45 33 51.6 37.8 28.3 8.1 6.9 5.7 14.7 16.5 18.9 — — — 0.9
Commercial & Professional Services Attractive 114 1.6 66 (0) 24 26 26 21 18.2 16.1 13.5 4.8 4.1 3.4 18.2 15.4 16.2 0.1 0.1 0.2 2
Commodity Chemicals
Asian Paints SELL 2,402 2,550 6 2,304 31.6 959 32 41 48 19 26 19 75 59 50 47.8 39.7 34.0 19.5 16.7 14.3 28 30 31 0.6 0.8 1.0 85
Berger Paints SELL 734 565 (23) 713 9.8 971 7 10 12 4 40 22 104 75 61 63.3 47.3 39.7 22.7 19.2 16.2 24 28 29 0.2 0.4 0.5 11.9
Kansai Nerolac REDUCE 584 610 4 315 4.3 539 10 12 15 1 21 26 58 48 38 37.7 31.9 25.6 7.6 7.0 6.3 13.6 15.1 17.3 0.5 0.7 0.9 3.3
Tata Chemicals ADD 530 540 2 135 1.8 255 17 33 38 (46) 94 15 31 15.9 13.8 8.6 6.2 5.3 1.0 1.0 0.9 3.4 6.3 6.9 1.1 2.2 2.5 40
Commodity Chemicals Neutral 3,466 47.5 3 34 20 73 55 46 41.0 32.7 27.9 10.7 9.7 8.7 14.7 17.7 19.0 0.6 0.8 1.0 140
Construction Materials
ACC REDUCE 1,749 1,875 7 328 4.5 188 76 91 97 5 19 7 23 19.3 18.1 10.7 8.9 7.8 2.7 2.5 2.3 12.1 13.5 13.4 2.2 2.6 2.8 36
Ambuja Cements BUY 273 300 10 542 7.4 1,986 12 14 17 16 18 21 22 18.9 15.7 8.7 7.0 5.5 2.3 2.1 1.9 10.3 11.8 12.9 6.2 1.0 1.2 29
Dalmia Bharat BUY 1,268 1,250 (1) 237 3.2 187 38 42 63 169 12 50 34 30 20 10.2 9.4 7.4 2.2 2.0 1.9 6.6 7.0 9.7 — — — 3.2
Grasim Industries ADD 1,189 1,100 (7) 782 10.7 657 59 83 107 13 39 29 20 14.4 11.1 9.6 7.2 5.7 1.3 1.2 1.1 6.7 8.6 10.2 0.1 0.3 0.5 34
J K Cement ADD 2,276 2,000 (12) 176 2.4 77 81 117 138 27 43 18 28 19.5 16.5 13.5 10.2 8.8 4.9 4.0 3.3 19.1 23 22 0.4 0.4 0.4 4.4
JK Lakshmi Cement BUY 358 400 12 42 0.6 118 26 30 35 10 16 16 13.9 12.0 10.3 6.2 5.8 5.5 2.1 1.9 1.6 16.7 16.6 16.7 1.1 1.3 1.5 2.1
Orient Cement ADD 95 90 (5) 19 0.3 205 7.7 6.3 8.6 82 (18) 37 12.3 15.0 11.0 5.9 6.4 5.8 1.6 1.5 1.3 13.4 10.1 12.7 2.1 2.1 2.1 1.0
Shree Cement SELL 27,091 18,250 (33) 977 13.4 36 595 800 933 37 34 17 46 34 29 24.9 19.5 16.7 6.7 5.7 4.9 15.6 18.1 18.0 0.4 0.4 0.4 23
UltraTech Cement ADD 6,183 5,800 (6) 1,785 24.5 289 187 243 292 41 30 20 33 25 21 17.2 13.7 11.7 4.0 3.5 3.0 13.0 14.8 15.4 0.2 0.3 0.4 59
Construction Materials Attractive 4,888 67.0 27 29 22 29 22 18.2 13.1 10.4 8.6 2.8 2.5 2.3 9.9 11.5 12.5 1.1 0.6 0.7 192

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Consumer Durables & Apparel
Crompton Greaves Consumer SELL 413 285 (31) 259 3.6 627 8.0 9.9 11.4 1 24 15 52 42 36 39 32 28 14.4 11.3 9.0 31 30 28 0.7 0.6 0.6 12.1
Havells India SELL 1,134 820 (28) 710 9.7 626 18 21 24 49 17 18 65 55 47 44 38 32 14.3 12.5 10.8 24 24 25 0.5 0.6 0.7 46
Page Industries REDUCE 29,585 25,200 (15) 330 4.5 11 285 461 545 (7) 62 18 104 64 54 66 43 37 34.6 27.4 22.4 36 48 45 0.5 0.9 1.1 20
Polycab ADD 1,320 1,300 (2) 197 2.7 149 49 57 63 (4) 16 10 27 23 21 18 15 13 4.4 3.8 3.3 17.7 17.8 16.8 0.5 0.6 0.6 10.0
TCNS Clothing Co. REDUCE 399 390 (2) 25 0.3 66 (5.3) 13.8 16.9 (149) 359 23 NM 29 24 41 11 9.0 3.9 3.3 2.8 NM 12.4 12.9 — — — 0.4
Voltas SELL 1,003 655 (35) 332 4.6 331 14 21 25 (14) 52 16 71 47 41 63 39 34 7.2 6.5 5.8 10.5 14.5 15.2 0.4 0.5 0.6 25
Whirlpool SELL 2,445 1,930 (21) 310 4.3 127 26 48 63 (30) 85 30 94 51 39 58 35 26 11.2 10.1 9.1 12.5 21 25 0.3 0.8 1.3 4.1
Consumer Durables & Apparel Cautious 2,163 29.6 (0) 37 18 63 46 39 43 32 27 10.7 9.3 16.9 20 20 0.5 0.7 119
Consumer Staples
Bajaj Consumer Care ADD 263 300 14 39 0.5 148 15 16 18 22 7 8 17.1 16.1 14.9 13.7 12.5 11.1 5.1 4.4 3.8 32 29 27 3.0 3.0 3.4 2.1
Britannia Industries ADD 3,580 4,150 16 862 11.8 240 77 78 92 31 2 17 47 46 39 34 33 29 27.6 18.3 16.5 49 48 44 3.0 2.0 2.1 39
Colgate-Palmolive (India) ADD 1,621 1,680 4 441 6.0 272 35 38 43 24 9 13 46 42 37 30.2 27.8 24.7 26.9 25.8 24.5 59 62 67 2.1 2.2 2.5 17.9
Dabur India ADD 526 555 5 930 12.7 1,767 10 11 13 13 13 14 54 47 41 44 38 33 12.8 11.6 10.5 25 26 27 1.1 1.3 1.5 29
Godrej Consumer Products ADD 769 805 5 786 10.8 1,022 16 18 21 14 18 14 49 42 36 34 29 25 8.7 7.9 7.1 18.9 19.8 21 1.0 1.2 1.5 17.7
Hindustan Unilever ADD 2,246 2,625 17 5,276 72.3 2,343 34 41 49 9 20 20 66 55 46 45 38 32 12.3 11.9 11.5 31 22 25 1.5 1.7 2.0 77
ITC BUY 230 255 11 2,830 38.8 12,318 10 12 13 (10) 19 8 22 18.6 17.2 16.0 13.2 12.0 4.3 4.2 4.0 18.9 22 23 3.9 4.6 5.0 103
Jyothy Laboratories ADD 158 170 8 58 0.8 367 6.0 6.3 7.1 28 4 14 26 25 22 18.6 17.7 15.8 4.4 4.1 3.9 17.3 16.9 18.0 2.2 2.5 2.9 1.6
Marico ADD 414 450 9 535 7.3 1,290 9.1 10.2 11.3 12 12 11 46 41 37 33 29 25 16.1 14.7 13.5 37 38 38 1.7 1.9 2.1 16.1
Nestle India REDUCE 17,074 17,500 2 1,646 22.6 96 220 260 301 8 18 16 78 66 57 51 44 38 75.7 50.8 36.9 103 93 75 1.1 0.9 1.0 36
Tata Consumer Products ADD 588 610 4 542 7.4 922 10 12 14 25 19 21 59 49 41 33 29 25 3.7 3.6 3.4 6.5 7.4 8.5 0.6 0.7 0.9 34
United Breweries ADD 1,289 1,375 7 341 4.7 264 4 26 33 (74) 513 28 310 51 39 90 28 23 9.5 8.0 6.9 3.1 17.2 18.8 0.1 0.5 0.7 11.5
United Spirits ADD 590 680 15 429 5.9 727 6 14 17 (48) 136 22 99 42 35 45 26 22 9.8 8.0 6.9 10.3 21 21 — — 0.8 24
Varun Beverages BUY 903 1,100 22 261 3.6 289 11 29 36 (33) 164 25 83 31 25 24 14 13 7.0 5.9 4.8 9.0 20 21 0.1 0.3 0.3 5.0
Consumer Staples Attractive 14,975 205.2 2 22 14 46 38 33 32 27 23 9.2 8.6 8.0 19.8 23 24 1.9 2.0 2.3 414
Diversified Financials
Bajaj Finance SELL 5,505 4,000 (27) 3,317 45.5 600 77 144 191 (13) 87 33 72 38 29 — — — 9.1 7.5 6.1 13.4 21 23 0.1 0.3 0.3 294
Bajaj Finserv ADD 9,701 10,050 4 1,544 21.2 159 276 437 566 30 58 29 35 22 17.2 — — — 4.9 4.2 3.5 14.0 20 22 0.1 0.1 0.1 122
Cholamandalam BUY 464 540 16 381 5.2 820 24 33 35 88 35 7 19.2 14.3 13.4 — — — 4.1 3.3 2.7 22 24 21 0.6 0.8 0.8 33
HDFC ADD 2,708 2,750 2 4,874 66.8 1,789 66 73 87 (36) 11 20 41 37 31 — — — 4.4 4.1 3.8 11.7 11.5 12.8 0.8 0.9 1.1 176
HDFC AMC SELL 3,023 2,175 (28) 644 8.8 213 63 72 82 7 15 13 48 42 37 — — — 13.9 12.1 10.5 31 31 30 1.1 1.3 1.5 16.4
IIFL Wealth ADD 1,069 1,250 17 94 1.3 90 38 45 58 61 17 30 28 24 18.4 — — — 3.6 3.4 3.1 12.1 14.6 17.9 7.5 2.7 3.3 0.8
L&T Finance Holdings ADD 93 105 12 200 2.7 2,005 5 10 12 (45) 104 27 19.9 9.8 7.7 — — — 1.2 1.1 1.0 6.3 11.9 13.5 1.5 1.6 1.6 27

LIC Housing Finance ADD 452 430 (5) 228 3.1 505 53 71 79 12 33 12 8.5 6.4 5.7 — — — 1.4 1.2 1.0 14.0 16.5 16.1 2.0 2.6 3.0 43
Mahindra & Mahindra Financial BUY 182 195 7 224 3.1 1,232 8 14 18 (49) 89 25 24 12.8 10.2 — — — 1.6 1.5 1.3 7.0 11.0 12.6 0.6 1.6 2.0 27
Muthoot Finance REDUCE 1,185 1,150 (3) 475 6.5 401 83 94 104 11 12 11 14.2 12.6 11.4 — — — 3.4 2.8 2.4 26 24 22 1.4 1.6 1.8 39
Shriram City Union Finance BUY 1,414 1,500 6 93 1.3 66 145 180 193 (5) 24 7 9.8 7.9 7.3 — — — 1.2 1.1 1.0 12.5 13.9 13.3 1.3 1.9 2.0 1.2
Shriram Transport BUY 1,421 1,525 7 360 4.9 253 103 134 161 (7) 30 20 13.8 10.6 8.8 — — — 1.7 1.5 1.3 13.1 14.7 15.5 1.1 1.4 1.7 79
Diversified Financials Attractive 12,495 171.2 (11) 36 19 34 25 21 4.2 3.7 3.4 12.3 14.8 16.0 0.7 0.8 0.9 860



Electric Utilities
CESC BUY 616 815 32 82 1.1 133 96 106 117 (3) 11 10 6.4 5.8 5.2 5.1 4.2 3.8 0.6 0.6 0.5 11.2 10.3 10.4 7.3 2.3 2.7 5.4
JSW Energy REDUCE 72 70 (3) 119 1.6 1,640 5.6 5.7 7.0 (11) 0 24 12.8 12.8 10.3 6.5 5.7 5.1 0.9 0.9 0.8 7.6 7.1 8.2 — — — 3.4
NHPC ADD 24 26 8 243 3.3 10,045 3.0 3.2 3.2 6 6 1 8.1 7.7 7.6 11.0 9.9 9.3 0.7 0.7 0.7 9.3 9.5 9.2 6.9 7.4 7.4 2.9
NTPC BUY 99 125 26 980 13.4 9,697 15 15 17 32 4 8 6.8 6.5 6.0 8.4 6.4 5.3 0.8 0.7 0.7 12.2 11.8 11.8 4.0 4.6 5.0 50
Power Grid BUY 205 220 7 1,074 14.7 5,232 22 26 28 8 19 8 9.4 7.9 7.3 7.0 6.2 5.7 1.6 1.4 1.3 17.0 18.6 18.3 5.3 6.3 6.8 32
Tata Power ADD 90 95 6 286 3.9 3,196 3.5 5.2 5.8 (20) 46 12 25.3 17.3 15.5 8.7 8.8 8.2 1.3 1.2 1.1 5.7 7.3 7.6 — — — 37
Electric Utilities Attractive 2,784 38.2 14 11 8 8.7 7.8 7.2 1.0 1.0 0.9 11.8 12.2 12.2 4.2 4.7 5.1 131
Fertilizers & Agricultural Chemicals
Bayer Cropscience SELL 5,412 3,900 (28) 243 3.3 45 141 156 176 9 11 13 38 35 31 27 24 21 7.9 6.7 5.7 22 21 20 0.5 0.6 0.7 2.6
Dhanuka Agritech SELL 746 680 (9) 35 0.5 48 43 41 45 43 (3) 10 17.5 18.0 16.4 13.4 13.3 11.7 4.1 3.6 3.1 26 21 20 1.4 1.7 2.1 0.9
Godrej Agrovet SELL 532 455 (14) 102 1.4 192 15 18 21 34 17 16 34 29 25 18 16 13 4.2 3.7 3.3 12.7 13.4 13.8 1.0 1.2 1.4 1.3
PI Industries SELL 2,252 1,825 (19) 342 4.7 148 51 61 73 53 20 20 45 37 31 31 25 20 6.4 5.7 5.0 19.1 16.5 17.2 0.3 0.5 0.6 18.6
Rallis India ADD 269 310 15 52 0.7 195 12 15 18 30 26 21 22.9 18.2 15.0 16.2 12.7 10.5 3.3 2.9 2.5 15.3 16.9 17.8 1.0 1.1 1.2 2.2
UPL SELL 548 430 (22) 419 5.7 765 34 39 43 46 15 10 16 14.1 12.8 8.1 7.3 6.6 2.3 2.1 1.8 15.0 15.4 15.2 1.6 1.8 2.0 78
Fertilizers & Agricultural Chemicals Cautious 1,193 16.4 40 16 13 25 22 19.4 12.6 11.2 9.9 3.8 3.4 3.0 15.0 15.3 15.2 0.9 1.1 1.3 104
Gas Utilities
GAIL (India) BUY 131 140 7 589 8.1 4,510 8 10 11 (39) 29 11 16.3 12.6 11.4 11.7 8.9 7.8 1.3 1.2 1.2 8.0 9.9 10.5 3.1 3.8 4.6 43
GSPL SELL 205 200 (2) 116 1.6 564 13 12 8 (23) (11) (32) 15.5 17.3 25.6 6.3 6.6 8.7 1.6 1.5 1.4 10.6 8.7 5.6 1.0 1.2 1.0 3.1
Indraprastha Gas ADD 545 500 (8) 382 5.2 700 16 23 26 (3) 42 11 33.8 23.7 21.3 24.1 17.2 15.1 6.5 5.5 4.7 21 25 24 0.5 0.9 1.3 26
Mahanagar Gas BUY 1,101 1,200 9 109 1.5 99 65 91 96 (12) 39 6 16.9 12.1 11.4 10.8 7.7 6.9 3.2 2.8 2.4 20 25 23 2.3 3.2 3.8 15.9
Petronet LNG BUY 250 300 20 376 5.1 1,500 20 22 24 11 11 11 12.8 11.5 10.4 7.0 6.4 5.9 3.2 3.0 2.9 26 27 29 5.9 6.9 8.2 18.4
Gas Utilities Attractive 1,571 21.5 (21) 22 8 17.3 14.1 13.1 10.9 8.9 8.1 2.1 2.0 1.9 12.2 14.0 14.2 2.9 3.6 4.3 107
Health Care Services
Apollo Hospitals ADD 2,732 2,240 (18) 393 5.4 139 (3) 40 60 (119) 1,261 50 NM 68.9 45.8 30.5 22.4 20.2 11.5 10.4 9.0 NM 15.9 21 (0.0) 0.6 0.9 48
Aster DM Healthcare BUY 153 225 47 76 1.0 500 3.6 8.8 11.0 (40) 148 25 42.9 17.3 13.9 8.4 6.3 5.4 2.2 2.0 1.8 5.3 12.1 13.5 — — — 0.7
Dr Lal Pathlabs SELL 2,478 1,520 (39) 207 2.8 83 33 40 43 22 23 7 75.4 61.3 57.1 47.3 38.1 35.4 17.5 15.1 13.2 25 26 25 0.6 0.7 0.8 6.0
HCG BUY 156 150 (4) 20 0.3 143 (9) (2) (2) 28 73 27 NM NM NM 15.9 8.8 7.6 2.3 2.4 2.5 NM NM NM — — — 0.3
Metropolis Healthcare SELL 2,229 1,510 (32) 114 1.6 51 37 41 46 24 10 11 60.0 54.5 49.0 39.1 32.4 28.8 17.5 14.6 12.2 32 29 27 0.5 0.6 0.6 3.4
Narayana Hrudayalaya BUY 488 375 (23) 100 1.4 204 (7.8) 7.2 10.7 (234) 193 48 NM 67.6 45.6 94.5 21.4 17.3 10.2 8.9 7.4 NM 14.0 17.7 — — — 1.8
Health Care Services Attractive 909 12.5 (67) 432 31 292.6 55.0 41.9 27.1 18.9 16.7 8.6 7.8 6.8 3.0 14.2 16.3 0.2 0.5 0.6 60
Hotels & Restaurants
Jubilant Foodworks BUY 2,825 3,150 11 373 5.1 132 17 43 54 (26) 144 26 161.7 66.3 52.5 45.8 28.7 24.0 29.4 21.3 16.6 19.2 37 36 0.2 0.5 0.6 43
Lemon Tree Hotels BUY 43 35 (18) 34 0.5 790 (1.5) (0.0) 0.7 (1,168) 99 5,898 NM NM 63.6 65.2 20.0 13.7 4.8 5.0 5.0 NM NM 7.9 — 0.8 1.3 2.1
Hotels & Restaurants Attractive 407 5.6 (64) 413 36 370.7 72.3 53.1 47.6 27.1 21.8 20.6 16.8 13.9 5.6 23 26 0.2 0.5 0.7 45

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Insurance
HDFC Life Insurance ADD 680 705 4 1,375 18.8 2,010 7.6 9.6 11.9 18 27 24 90 71 57 — — — 17.8 16.0 14.2 21 24 26 0.3 0.4 0.4 45
ICICI Lombard SELL 1,470 1,075 (27) 668 9.2 454 33 34 38 26 3 13 45 43 38 — — — 8.9 7.8 6.7 22 19.9 18.8 0.2 0.4 0.5 17.3
ICICI Prudential Life BUY 477 560 17 684 9.4 1,436 9 11 13 16 29 16 55 43 37 — — — 8.0 7.0 6.1 15.4 17.4 17.5 0.3 0.4 0.5 17.1
Max Financial Services NR 719 — — 248 3.4 343 10 27 16 (6) 180 (40) 75 27 45 — — — — — — 13.5 38 17.3 0.1 0.9 0.2 17.2
SBI Life Insurance BUY 864 1,250 45 864 11.8 1,001 13 16 19 (7) 23 15 65 53 46 — — — 9.5 8.3 7.2 15.5 16.6 16.6 0.2 0.3 0.3 22
Insurance Attractive 3,839 52.6 13 33 9 64.9 48.9 45 10.9 8.8 8.1 16.7 17.9 18.1 0.2 0.3 0.3 119
Internet Software & Services
Info Edge SELL 4,790 2,910 (39) 616 8.4 128.3 26 43 53 (4) 69 23 185.9 110.2 89.9 176.9 103.1 82.0 13.5 12.4 11.2 9.5 11.7 13.1 0.1 0.2 0.3 51
Just Dial SELL 623 570 (9) 39 0.5 61.8 27 30 36 (35) 9 20 22.7 20.9 17.4 15.2 13.8 11.3 3.1 2.7 2.3 13.4 13.9 14.4 — — — 14.4
Internet Software & Services Cautious 654 9.0 (17) 48 22 130.9 88.2 72.3 122.8 82.6 67.4 11.3 10.2 9.2 8.6 11.6 12.7 0.1 0.2 0.3 65
IT Services
HCL Technologies ADD 958 1,120 17 2,599 35.6 2,716 50 53 58 21 7 10 19.3 18.2 16.6 12.2 11.1 9.7 4.3 3.7 3.1 25 22 20 1.1 1.4 1.4 99
Infosys BUY 1,279 1,530 20 5,450 74.7 4,250 46 52 60 17 14 15 28.1 24.6 21.5 18.6 16.4 14.2 7.4 6.5 5.8 28 28 29 2.0 2.3 2.7 175
L&T Infotech REDUCE 4,304 3,810 (11) 752 10.3 176 108 128 151 25 19 17 39.8 33.5 28.6 26.8 23.9 20.5 11.4 9.3 7.6 32 31 29 0.7 0.8 0.9 23
L&T Technology Services ADD 2,619 2,700 3 275 3.8 106 64 89 106 (18) 39 20 41.2 29.6 24.6 25.8 19.3 16.1 8.5 7.1 5.9 22 26 26 0.6 0.8 1.0 10.5
Mindtree SELL 1,714 1,410 (18) 282 3.9 165 67 76 82 74 15 7 25.8 22.4 20.9 16.6 14.9 13.7 7.3 6.0 5.0 31 29 26 1.2 1.3 1.4 25
Mphasis REDUCE 1,590 1,480 (7) 297 4.1 187 66 76 85 5 14 12 23.9 20.9 18.7 15.6 13.5 11.9 4.6 4.1 3.7 20 21 21 2.2 2.2 2.2 9.0
TCS REDUCE 3,188 3,070 (4) 11,964 164.0 3,744 89 106 119 4 19 12 35.7 30.0 26.8 24.7 21.1 19.0 13.1 11.0 10.2 38 40 40 1.0 2.0 3.0 145
Tech Mahindra BUY 969 1,135 17 844 11.6 880 52 60 68 13 16 13 18.7 16.1 14.3 11.1 9.5 8.2 3.5 3.2 2.8 19.8 21 21 2.3 2.5 2.6 61
Wipro ADD 430 465 8 2,457 33.7 5,662 19 21 23 12 13 12 23.1 20.5 18.3 15.1 13.8 12.0 4.6 3.8 3.3 19.3 19.9 19.2 0.5 1.2 1.2 81
IT Services Attractive 24,920 341.5 11 14 12 28.9 25.3 22.5 19.2 16.9 14.9 7.7 6.7 5.9 27 26 26 1.2 1.9 2.4 629
Media
DB Corp. REDUCE 92 81 (12) 16 0.2 175 5.3 14.1 14.2 (66) 167 1 17.5 6.5 6.5 5.7 2.9 3.1 0.9 0.9 0.9 5.4 14.3 14.6 2.2 13.0 14.1 0.5
Jagran Prakashan REDUCE 44 37 (15) 12 0.2 281 3.9 7.3 8.4 (44) 87 NA 11.1 6.0 NA 2.6 1.7 NA 0.6 0.6 NA 5.7 10.3 11.5 4.6 11.4 11.4 0.3
PVR BUY 1,495 1,650 10 91 1.2 55 (93) 40 60 (420) 143 53 NM 37.8 24.7 (25.1) 14.2 11.1 3.9 3.6 3.2 NM 10.0 13.7 (0.6) 0.3 0.4 42
Sun TV Network REDUCE 549 435 (21) 216 3.0 394 39 39 41 10 1 6 14.1 14.0 13.3 9.8 9.6 9.1 3.6 3.5 3.4 26 25 26 4.6 5.0 5.5 24
Zee Entertainment Enterprises REDUCE 249 240 (4) 240 3.3 960 12 17 18 8 38 11 20.6 15.0 13.5 12.6 9.2 8.0 2.4 2.2 1.9 12.0 15.1 15.1 1.4 1.6 1.8 55
Media Cautious 575 7.9 (23) 60 11 24.1 15.1 13.6 14.1 8.9 8.0 2.6 2.5 2.3 10.9 16.3 16.8 2.4 3.2 3.5 122
Metals & Mining
Hindalco Industries BUY 262 375 43 588 8.1 2,220 28 34 36 57 21 6 9.4 7.8 7.3 5.9 5.1 4.5 0.9 0.8 0.7 10.1 11.0 10.5 0.4 0.4 0.4 58
Hindustan Zinc BUY 295 335 14 1,245 17.1 4,225 19 23 24 17 23 3 15.7 12.8 12.4 9.7 7.6 7.4 3.9 3.9 3.9 22 30 31 7.2 7.8 8.0 6.7
Jindal Steel and Power BUY 288 380 32 294 4.0 1,020 58 36 36 863 (38) (2) 4.9 7.9 8.0 3.7 4.2 4.0 0.8 0.7 0.7 17.2 9.5 8.6 — — — 41

JSW Steel ADD 400 415 4 968 13.3 2,402 30 29 35 201 (5) 22 13.2 13.9 11.4 7.5 6.9 5.8 2.2 1.9 1.7 18.2 14.8 15.7 0.5 0.5 0.5 37
National Aluminium Co. SELL 52 30 (42) 96 1.3 1,866 2.4 2.0 2.9 228 (16) 43 21.3 25.4 17.7 7.2 9.1 8.0 0.9 0.9 0.9 4.4 3.6 5.0 0.0 2.0 2.8 14.7
NMDC REDUCE 117 95 (18) 357 4.9 2,931 14.0 10.3 10.0 (4) (26) (3) 8.3 11.3 11.7 8.5 19.3 (25.0) 1.2 1.1 1.1 14.5 10.1 9.3 3.0 4.4 4.3 17.8
Tata Steel BUY 656 800 22 757 10.4 1,146 53 82 96 51 54 17 12.3 8.0 6.8 7.2 5.9 5.5 1.0 0.9 0.8 8.3 11.9 12.4 2.3 2.6 2.6 173
Vedanta REDUCE 176 180 2 656 9.0 3,717 24 21 26 262 (10) 24 7.5 8.3 6.7 4.1 3.8 3.3 1.2 1.2 1.1 16.3 14.7 17.4 15.8 9.6 9.9 66
Metals & Mining Attractive 4,962 68.0 99 4 12 10.6 10.2 9.1 6.2 5.7 5.3 1.4 1.3 1.2 13.6 13.0 13.3 4.6 4.1 4.2 414



Price (Rs) Fair Value Upside Mkt cap. O/S shares EPS (Rs) EPS growth (%) P/E (X) EV/EBITDA (X) P/B (X) RoE (%) Dividend yield (%) ADVT-3mo
Oil, Gas & Consumable Fuels

BPCL BUY 419 425 2 908 12.4 1,967 37 37 39 250 0 6 11.4 11.3 10.7 8.5 8.8 8.0 2.3 2.0 1.9 20.8 18.9 18.3 4.1 4.4 4.7 50.5
Coal India BUY 144 180 25 885 12.1 6,163 17.4 17.4 18.3 (36) 0 5 8.3 8.2 7.9 8.7 7.2 6.3 2.9 3.1 3.2 34.1 36.1 39.6 13.9 13.9 13.9 33.2
HPCL BUY 230 260 13 343 4.7 1,524 46 33 35 549 (28) 3 5.0 6.9 6.6 6.2 7.6 6.9 1.0 0.9 0.9 22.5 14.4 13.8 6.1 5.8 7.5 25.8
IOCL BUY 104 115 11 975 13.4 9,181 19.4 14.6 15.5 592 (25) 6 5.3 7.1 6.7 5.1 5.6 5.3 0.9 0.9 0.8 18.1 12.6 12.5 7.7 6.4 6.7 33.7
Oil India SELL 118 70 (41) 128 1.8 1,084 3.6 6.2 9.5 (82) 71 52 32.5 19.0 12.4 10.3 8.2 6.5 0.5 0.5 0.5 1.6 2.7 4.1 0.7 2.1 3.2 2.4
ONGC SELL 98 60 (39) 1,228 16.8 12,580 4.7 7.0 12.2 (65) 51 73 20.9 13.9 8.0 5.5 4.6 3.5 0.5 0.5 0.5 2.5 3.7 6.2 2.0 3.0 4.6 44.2
Reliance Industries ADD 1,924 2,050 7 11,405 156.3 6,032 73 85 101 10 15 20 26.2 22.8 19.0 15.6 10.4 8.4 2.3 2.0 1.9 9.2 9.7 10.3 0.4 0.4 0.4 427.2
Oil, Gas & Consumable Fuels Attractive 15,873 217.6 25 7 20 17.0 15.9 13.3 10.2 8.2 6.7 1.6 1.5 1.4 9.7 9.2 10.3 2.0 2.1 2.3 617
Pharmaceuticals
Aurobindo Pharma REDUCE 927 830 (10) 543 7.4 586 59 60 63 22 1 6 15.6 15.5 14.6 9.4 8.9 8.0 2.5 2.2 1.9 15.7 14.0 13.2 0.8 1.0 1.2 45.1
Biocon SELL 410 310 (24) 492 6.7 1,202 6.2 8.8 11.1 0 42 25 66 46 37 28.1 20.7 16.9 5.1 4.7 4.2 7.7 10.1 11.4 0.5 0.8 0.9 30.0
Cipla BUY 834 950 14 673 9.2 806 32 34 50 66 8 45 26 24.3 16.8 14.6 13.6 9.5 3.7 3.3 2.9 14.2 13.6 17.0 0.7 0.8 1.2 76.3
Divis Laboratories REDUCE 3,679 3,000 (18) 977 13.4 265 71 86 97 37 21 13 52 42.9 37.9 36.3 30.2 26.6 11.4 9.7 8.4 22.1 22.7 22.0 (0.7) (0.8) (0.9) 61.9
Dr Reddy's Laboratories SELL 4,668 4,300 (8) 776 10.6 166 157 194 258 20 24 33 30 24.1 18.1 17.1 13.6 10.4 4.6 3.9 3.3 15.3 16.4 18.3 0.5 0.7 0.7 91.7
Gland Pharma REDUCE 2,137 2,200 3 349 4.8 163 61 76 89 22 25 17 35 28.3 24.1 24.4 20.4 16.9 5.9 4.9 4.1 16.8 17.3 16.9 — — — —
Laurus Labs REDUCE 347 340 (2) 186 2.5 536 19 19 24 287 5 22 19 17.8 14.6 13.0 11.7 9.3 6.7 4.9 3.7 35.9 27.4 25.1 — — — 18.3
Lupin ADD 1,051 1,200 14 477 6.5 450 25 43 52 17 68 23 41 25 20.0 17.0 11.7 9.5 3.5 3.1 2.8 8.4 12.7 13.7 0.4 0.6 0.7 50.5
Sun Pharmaceuticals ADD 632 635 1 1,515 20.8 2,406 25 24 29 48 (2) 19 25 26 21.8 16.5 14.8 12.6 3.2 2.9 2.6 12.6 11.8 12.0 0.4 0.8 0.9 83.1
Torrent Pharmaceuticals REDUCE 2,682 2,550 (5) 454 6.2 169 71 88 104 24 24 17 38 30 26 18.6 16.2 14.3 8.1 6.9 5.9 21.4 22.7 22.6 0.9 1.1 1.3 17.5
Pharmaceuticals Attractive 6,442 88.3 38 13 22 30 26 21.7 17.6 15.1 12.5 4.3 3.8 3.3 14.3 14.3 15.2 0.3 0.5 0.6 474
Real Estate
Brigade Enterprises BUY 265 230 (13) 55 0.8 204 4.7 13.1 17.2 (26) 177 31 55.8 20.2 15.4 17.5 7.2 6.0 2.3 2.1 1.9 4.2 11.1 13.2 0.9 0.9 0.9 1.1
DLF REDUCE 305 240 (21) 754 10.3 2,475 4.7 7.8 8.9 298 65 14 65 39.2 34.4 50.8 37.5 37.2 2.1 2.1 2.0 3.4 5.4 5.9 0.7 0.7 0.7 62.0
Embassy Office Parks REIT ADD 355 375 6 336 4.6 772 11 13 15 14 19 15 31 26 23 20.8 18.4 16.8 1.3 1.3 1.4 4.0 4.9 6.0 6.2 7.3 8.4 4.8
Godrej Properties SELL 1,340 810 (40) 338 4.6 252 6 14 32 (48) 156 125 239 93 41 (420) 134.8 60.5 6.8 6.4 5.5 2.9 7.1 14.2 — — — 26.7
Mindspace REIT ADD 330 330 0 196 2.7 593 14 16 18 69 10 13 22.8 20.8 18.4 18.5 15.0 13.5 1.2 1.2 1.2 9.1 5.7 6.5 2.5 6.2 6.6 2.3
Oberoi Realty ADD 575 590 3 209 2.9 364 22 28 32 13 31 13 26.7 20.4 18.1 19.7 15.6 14.0 2.2 2.0 1.8 8.7 10.4 10.6 0.3 0.3 0.3 4.5
Prestige Estates Projects ADD 283 275 (3) 113 1.6 401 4 11 20 (58) 185 71 70 25 14.4 10.1 7.7 6.3 2.1 1.9 1.7 3.0 8.1 12.6 0.5 0.5 0.5 2.4
Sobha BUY 464 440 (5) 44 0.6 95 11 33 50 (64) 212 51 43.6 14.0 9.2 7.6 5.5 4.8 1.8 1.6 1.4 4.1 12.2 16.5 1.5 1.5 1.5 2.6
Sunteck Realty BUY 349 300 (14) 51 0.7 140 9 18 16 23 109 (13) 40 19.0 21.7 30.6 15.2 16.9 1.6 1.5 1.4 4.1 8.2 6.7 0.3 0.3 0.3 2.9
Real Estate Attractive 2,236 30.6 53 61 26 52 32 25.6 26.1 18.4 16.0 2.1 2.1 2.0 4.1 6.4 7.7 1.3 1.8 2.0 112
Retailing
Aditya Birla Fashion and Retail BUY 159 180 13 135 1.8 915 (5.7) 2.0 3.5 (201) 135 79 NM 81 45 35.3 10.5 9.1 6.8 5.8 5.2 NM 7.9 12.1 — — — 5.2
Avenue Supermarts SELL 2,960 1,885 (36) 1,917 26.3 648 18 33 43 (15) 87 28 166 89 69 109 59 46 15.7 13.3 11.2 9.9 16.2 17.6 — — — 26.4
Titan Company ADD 1,514 1,625 7 1,344 18.4 888 10 23 29 (38) 123 25 146 65 52 81 42 34 18.3 15.2 12.6 13.1 25.4 26.2 0.2 0.4 0.5 51.9
Retailing Attractive 3,396 46.5 (42) 182 29 218 77 60 89 44 35 15.7 13.2 11.0 7.2 17.0 18.4 0.1 0.2 0.2 84

112
113
Price (Rs) Fair Value Upside Mkt cap. O/S shares EPS (Rs) EPS growth (%) P/E (X) EV/EBITDA (X) P/B (X) RoE (%) Dividend yield (%) ADVT-3mo
Speciality Chemicals
Castrol India BUY 131 165 26 129 1.8 989 6.0 9.0 9.8 (28) 50 8 21.7 14.5 13.4 14.0 9.6 8.8 9.2 8.5 7.9 43.0 61.0 61.2 4.2 6.1 6.5 3.3
Pidilite Industries REDUCE 1,760 1,760 0 894 12.3 508 22 29 35 (5) 30 23 80 62 50 54 42 34 17.3 15.0 12.7 23.1 26.0 27.5 0.4 0.6 0.7 23.0
S H Kelkar and Company BUY 127 130 2 18 0.2 141 8.5 8.8 9.9 83 3 13 15.0 14.5 12.8 9.5 8.4 7.5 1.9 1.7 1.5 13.4 12.2 12.6 1.2 1.8 2.4 1.7
SRF ADD 5,711 5,600 (2) 338 4.6 58 186 225 288 35 21 28 30.7 25.4 19.8 17.9 15.3 12.4 5.0 4.3 3.6 18.7 18.3 19.6 0.3 0.3 0.4 19.0
Speciality Chemicals Attractive 1,380 18.9 2 30 21 47 36 30.0 29.6 23.3 19.5 9.7 8.4 7.2 20.5 23.1 23.8 0.7 1.0 1.2 47
Telecommunication Services
Bharti Airtel BUY 601 710 18 3,277 44.9 5,456 (0.2) 10.2 21.4 NM NM NM NM 59.1 28.1 9.3 7.6 6.1 5.7 5.5 4.9 NM 9.5 18.4 1.0 1.0 1.0 133.1
Indus Towers ADD 254 250 (2) 684 9.4 2,695 17.8 17.8 18.8 20 (0) 6 14.2 14.3 13.5 5.6 5.3 5.0 4.6 4.5 4.3 34.0 31.9 32.4 9.1 6.3 6.3 37.4
Vodafone Idea RS 12 — — 349 4.8 28,735 (8.7) (6.8) (5.0) NM NM NM NM NM NM 11.2 8.9 7.3 (1.0) (0.7) (0.6) 167.0 47.1 26.5 — — — 61
Tata Communications BUY 1,052 1,200 14 300 4.1 285 48 55 64 22 13 17 21.8 19.3 16.5 9.2 8.1 7.0 NM 22.1 10.0 NM 245 83.4 0.4 0.6 0.7 3.0
Telecommunication Services Attractive 4,610 63.2 47 59 153 NM NM 113.9 9.1 7.6 6.3 12.6 16.1 18.9 NM NM 16.6 2.1 1.7 1.7 234
Transportation
Adani Ports and SEZ BUY 568 600 6 1,155 15.8 2,032 23 32 37 (15) 39 16 24.8 17.9 15.4 17.5 12.7 10.8 3.9 3.3 2.8 17.0 20.2 19.7 0.7 0.8 0.9 57.7
Container Corp. SELL 479 410 (14) 292 4.0 609 11 14 18 (35) 26 30 44 35 27 22.7 18.7 15.0 2.8 2.8 2.7 6.6 8.0 10.1 1.2 1.6 2.0 17.8
Gateway Distriparks BUY 163 150 (8) 20 0.3 125 5.4 4.8 7.4 29 (12) 54 29.9 33.9 22.0 9.4 9.6 8.1 1.4 1.4 1.3 4.9 4.1 6.2 1.8 1.8 1.8 0.8
GMR Infrastructure BUY 27 26 (3) 161 2.2 6,036 (3.7) (1.4) (0.5) (23) 63 65 NM NM NM 87.2 19.0 13.5 (3.8) (3.4) (4.4) 66.3 18.3 7.4 — — — 8.1
Gujarat Pipavav Port BUY 96 120 26 46 0.6 483 4.8 6.3 7.3 (21) 31 15 19.9 15.1 13.1 9.0 7.7 6.7 2.2 2.2 2.2 11.2 14.7 17.0 4.7 6.2 7.1 1.1
InterGlobe Aviation BUY 1,672 1,960 17 644 8.8 383 (142) 83 119 (2,095) 158 43 NM 20 14.1 NM - - - - - NM 101.1 65.0 — — — 40
Mahindra Logistics REDUCE 484 440 (9) 35 0.5 71 7.2 12.9 17.7 (20) 81 37 68 37 27 - - - - - - 9.1 15.0 18.1 — — — 0.6
Transportation Attractive 2,353 32.2 (141) 609 32 NM 23 17.6 24.5 10.6 8.6 5.7 4.7 3.8 NM 20.4 21.8 0.6 0.7 0.8 127
KIE universe 155,239 2,127 29.4 31.7 20.7 30 23.0 19.1 14.3 11.6 10.0 3.3 3.0 2.7 10.8 12.9 14.1 1.2 1.4 1.7
Notes:
(a) We have used adjusted book values for banking companies.
(b) 2021 means calendar year 2020, similarly for 2022 and 2023 for these particular companies.
(c) Exchange rate (Rs/US$)= 72.96


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 provided
50%
investment banking services within the previous 12 months.
40% 37.6% * The above categories are defined as follows: 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
30% 26.8%
over the next 12 months; Reduce = We expect this stock to
21.0% deliver -5-+5% returns over the next 12 months; Sell = We
20% expect this stock to deliver less than -5% returns over the next
14.6%
12 months. Our target prices are also on a 12-month horizon
basis. These ratings are used illustratively to comply with
10%
3.9% 3.4% applicable regulations. As of 30/09/2020 Kotak Institutional
1.5% 0.5% Equities Investment Research had investment ratings on 205
0% equity securities.
BUY ADD REDUCE SELL
Source: Kotak Institutional Equities As of December 31, 2020
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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INDIA DAILY

February 5, 2021 India 4-Feb 1-day 1-mo 3-mo

Contents Global/Regional indices

Results FTSE 6,493 (0.2) (1.2) 10.4

Godrej Properties: Changing tracks Cash (NSE+BSE) 968 840 750

Apollo Tyres: RM headwinds ahead

Change, basis points

Results, Change in Reco 10yr govt bond, % 6.4 1 30 23

Net investment (US$ mn)

MFs 270 1,382 (7,093)

Best performers 4-Feb 1-day 1-mo 3-mo

TTMT in Equity 326 (1.5) 70.5 140.0

TTMT/A in Equity 131 (1.0) 68.4 137.9

VEDL in Equity 176 1.4 3.6 91.7

DLFU in Equity 305 5.1 24.7 87.2

BOB in Equity 82 6.4 24.7 82.1

DRRD in Equity 4,668 0.4 (11.5) (5.4)

BIOS in Equity 410 2.2 (12.2) (0.1)

NEST in Equity 17,074 (0.5) (7.1) 0.5

RIL in Equity 1,924 (0.3) (3.3) 0.6

DABUR in Equity 526 0.3 (3.2) 1.5

Superior performance compared to Jio post last round of tariff hikes

Fine tune estimates; retain BUY with unchanged FV of Rs710

KOTAK INSTITUTIONAL EQUITIES RESEARCH 3

Key takeaways from the earnings call

 Requirement for additional spectrum. Bharti is comfortable with its spectrum

4 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Source: Company, Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH 5

Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20

Source: Companies, Kotak Institutional Equities estimates

6 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Exhibit 3: Bharti - condensed consolidated balance sheet, March fiscal year-ends, Rs bn

Dec-19 Mar-20 Jun-20 Sep-20 Dec-20

Reported net debt 875 914 893 1,105 1,150

Source: Company, Kotak Institutional Equities

Exhibit 4: Key India data business performance indicators shared by Bharti

3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 2QFY21 3QFY21

Source: Company, Kotak Institutional Equities

KOTAK INSTITUTIONAL EQUITIES RESEARCH 7

Exhibit 5: Key operating metrics - India mobile and DTH

Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20

Source: Company, Kotak Institutional Equities

8 KOTAK INSTITUTIONAL EQUITIES RESEARCH

3QFY20 4QFY20 1QFY21 2QFY21 3QFY21

Source: Company, Kotak Institutional Equities

KOTAK INSTITUTIONAL EQUITIES RESEARCH 9

Revised Earlier Change (%)

Source: Kotak Institutional Equities estimates

Mar-2022 fair value derivation Mar-2023 basis

Africa business valuation

Source: Kotak Institutional Equities estimates

10 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Exhibit 9: We build option value to capture the possibility of industry consolidation

Source: Kotak Institutional Equities estimates

2018 2019 2020 2021E 2022E 2023E

Source: Company, Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH 11

2018 2019 2020 2021E 2022E 2023E

Source: Company, Kotak Institutional Equities estimates

12 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Exhibit 1: SBI quarterly results

Source: Company, Kotak Institutional Equities estimates