Kotak Daily 18-Jan-24

India Daily
January 18, 2024 NIFTY-50 [Jan 17]: 21,572
Contents
Daily Alerts
Results
Asian Paints: Weak topline print
 3QFY24 - topline growth decelerates; EBITDA margin at peak
 DD volume growth guidance implies mid-to-high single-digit value growth
 We tweak estimates, rollover and revise FV to Rs3,100 (Rs3,050 earlier)
LTIMindtree: Muted quarter; somber near-term outlook
 0.7% qoq growth, led entirely by manufacturing vertical
 Sharp furlough impact on EBIT margin
 Subdued FY2024E and weak FY2025E; merger synergies not visible
 Retain REDUCE with FV of Rs5,500
Change in Reco
NMDC: Prices, growth and valuations at peak, downgrade to SELL
 Seaborne iron ore price rally lacks fundamental legs
 NMDC prices have peaked amid weak steel prices and strong supply
 Strong volume in 9MFY24 is an aberration
 Unfavorable risk-reward at 7X EV/EBITDA FY2025E; downgrade to SELL
Gujarat Pipavav Port: Price hike may impede growth; downgrade to REDUCE
 ADSEZ’s dominance to impede growth, especially after recent price hike
 Recent MoUs around green hydrogen unlikely to have a material impact for now
 MoU with GMB does not shed more light on the endgame for concession renewal
 We broadly retain estimates; increase FV on potential boost from recent MOUs
Private Circulation Only.

This document may only be distributed to QIBs (qualified institutional buyers) as defined under rule 144A of the Securities A ct of 1933
RESULT
Asian Paints (APNT) REDUCE

Commodity Chemicals
CMP(₹): 3,242 Fair Value(₹): 3,100 Sector View: Cautious NIFTY-50: 21,572 January 17, 2024
Weak topline print Company data and valuation summary

APNT’s 5.5% value growth in domestic decorative paints is weak in context Stock data
of the late festive season (2.6% yoy in 2HCY23). Profitability was marginally
CMP(Rs)/FV(Rs)/Rating 3,242/3,100/REDUCE
ahead of expectations and at the pre-pandemic peak. We remain cautious,
52-week range (Rs) (high-low) 3,568-2,686
given the deceleration in underlying demand and potential impact of Grasim’s
Mcap (bn) (Rs/US$) 3,110/37.4
launch on industry profitability, likely resulting in negligible FY2024-26E EPS
ADTV-3M (mn) (Rs/US$) 2,727/32.8
CAGR. Rollover and revise FV to Rs3,100, valuing APNT at 50X FY2026E P/E.
3QFY24—topline growth decelerates; EBITDA margin at peak Shareholding pattern (%)
Standalone revenues grew 5.2% yoy (KIE 6%), led by 12% growth (KIE 9%) in
domestic decorative paints volume; price/mix decline of 650 bps was due to a 8.0
price cut (130 bps) and continued deterioration in the product mix (400-500 bps 12.5
impact; partly downtrading and largely due to higher sales of 5.8

52.6
3.5
economy/commodity products). APNT noted that the benefit of the extended
festive season was offset by demand moderation in the latter part of the 17.7
quarter. The standalone GM (44.4%, up 550/30 bps yoy/qoq) was aided by good
growth in luxury products and softening RM prices, coupled with operational, Promoters FPIs MFs BFI s Retail Others
Private Circulation Only. This document may only be distributed to QIBs (qualified institutional buyers) as defined under rule 144A of the Securities Act of 1933
formulation and sourcing efficiencies. The employee cost declined 4.8% qoq.
Price performance (%) 1M 3M 12M
Standalone EBITDA margin was robust at 24% (similar to the pre-pandemic Absolute (2) 4 10
peak and better adjusted for product mix deterioration). Other income grew 47% Rel. to Nifty (3) (5) (9)
yoy to Rs2.4 bn (17.5% ahead), aided by a Rs656 mn dividend from PPG AP. Rel. to MSCI India (5) (9) (13)
Consolidated revenues grew 5.4% yoy, 0.5%/3% below our/street estimate. Forecasts/Valuations 2024E 2025E 2026E
Industrial business delivered DD growth. Home Décor saw some progress on EPS (Rs) 58.3 60.1 62.3
integrating offerings within the Beautiful Homes network. The Bath/Kitchen EPS growth (%) 34.6 3.1 3.7
business revenues were down 5%/flat yoy. The International business saw P/E (X) 55.6 53.9 52.0
increased profitability, with growth in the MEA, but remained constrained by P/B (X) 16.6 14.6 13.0
macro headwinds in South Asia/Egypt. Consolidated GM expanded by 505/25 EV/EBITDA (X) 38.8 37.4 35.6
bps yoy/qoq to 43.6% (KIE: 43.5%), whereas the consolidated EBITDA margin RoE (%) 32.2 28.8 26.4
expanded 390/235 bps yoy/qoq to 22.6% (KIE: 21.8%). Recurring PAT grew 35% Div. yield (%) 0.9 1.0 1.1
yoy to Rs14.3 bn (KIE: Rs14 bn). Interim dividend was Rs5.15/share. APNT Sales (Rs bn) 362 400 444
completed its brownfield expansion at Khandala (+100K KLPA) and Kasna EBITDA (Rs bn) 79 82 86
(+20K KLPA). Net profits (Rs bn) 56 58 60
DD volume growth guidance implies mid-to-high single-digit value growth Source: Bloomberg, Company data, Kotak Institutional Equities estimates
We note that higher sales of economy/commodity products boosts APNT’s Prices in this report are based on the market close of
January 17, 2024
volume growth significantly. APNT expects value growth to lag volume growth
by 300-400 bps (over and above price cuts). Given this, the company’s guidance
of continued DD volume growth (essentially implies mid-to-high single-digit
value growth) in decorative paints is not encouraging and it indicates weakness
in underlying demand after two good years (FY2022-23). On the profitability
front, APNT expects RM deflation to continue and stable margins in 4Q. Despite
EBITDA margin of 22% in 9MFY24, it retained its guidance of 18-20%, factoring Related Research
in higher ATL spends (and perhaps some impact of the Grasim launch). → Asian Paints: A tad weaker
We tweak estimates, rollover and revise FV to Rs3,100 (Rs3,050 earlier) → Asian Paints: Weak topline, peak margins
We trim our FY2024-26E revenue estimates by 1-3%, tweak other assumptions → Asian Paints: Impressive recovery in margins
and maintain EPS. We roll over and revise the FV to Rs3,100 (50X March 2026E
EPS). Full sector coverage on KINSITE
Jaykumar Doshi Umang Mehta Praneeth Reddy

jaykumar.doshi@kotak.com umang.mehta@kotak.com praneethkumar.reddy@kotak.com
+91-22-4336-0885 +91-22-4336-0881 +91-22-4336-0882
3
Conference call highlights

Demand environment. APNT noted that the benefit of the extended festive season was offset by
demand moderation (versus the festive period) in the latter part of the quarter. While the decorative
business revenues grew 5.5%, overall coatings growth (decorative + industrial) for APNT stood at 6.1%
during the quarter. The volume-value gap widened, partly on account of the 1.3% price cuts (1% cut
taken during 3Q and 0.3% in 1H) taken by the company. While T3/T4 towns (rural) were showing some
stress in 2Q, APNT witnessed some early signs of recovery in 3Q (similar double-digit 4-year CAGRs
in urban/rural).
In terms of product mix, both economy and luxury ranges grew in double digits (volume), even as
premium products lagged. Within emulsions, economy/premium contributed 80% to revenues, while
luxury contributes the rest. APNT expanded its distribution reach to 162K outlets (+2K qoq).
Waterproofing witnessed consistent growth in the retail and B2B segments; the projects business
grew significantly higher than the retail business, led by the builder, factories and government sectors.
APNT expects the 3Q volume momentum (double-digit) to sustain in 4Q, subject to elections not
playing a spoilsport. A large part of the volume/value gap of 4.0-4.5% (ex-price cuts impact) is likely
to continue, going forward. The upcoming election is likely to have a mixed impact on 4Q/1Q—uptick
in government spending/excess money in the market will likely be offset by deferment in home
painting. Green shoots witnessed in T3/4 markets bodes well for rural growth. Industrial business
(both auto and general industrial) outlook is positive, but macro headwinds in some international
geographies are likely to persist (Nepal is unlikely to turnaround in 4Q; Bangladesh could see some
improvement, given that the elections are over). APNT is vigilant on geo-political developments and
potential fallouts (particularly on crude).
Margin outlook. APNT witnessed RM deflation of 0.2% during the quarter and it took price cuts of
100 bps (taking cumulative YTD price cuts to 1.3%). Management expects the soft RM price trend
witnessed in 9MFY24 to continue in 4Q, as the company expects global crude oil consumption to
decline (large economies are not growing, two ongoing wars and more). APNT is closely monitoring
the prices of crude derivatives/additives/monomers and others; it will take decisions on price cuts
based on prevailing RM trends. Price cuts in select products have a greater positive impact on demand
as against price cuts across products. Price cuts help in smaller towns at times to stop downtrading.
APNT does not look at price cuts as a major demand driver. Despite the strong 9M margin print,
management has retained 18-20% EBITDA margin guidance as they would look to increase ATL/brand
building spends to improve the share of voice.
New launches. Over the past 6-7 years, APNT has applied for over 120 patents (60/30
granted/commercialized) and launched 280 new products, whose contribution to revenues stands at
about 12%. APNT launches products that are differentiated (unique chemistries) and ‘New to World’.
For instance—it launched (1) SmartCare Damp Proof Xtreme, which was the first product that could
be applied on 70% damp walls and (2) Woodtech Flash Instant Polish to disrupt the bottom-of-pyramid
wood finish market. About 30-40% of APNT’s portfolio has differentiated properties (such as Royal
Glitz anti-crack) versus competition.
Industrial business. (1) AP PPG (protective and powder coatings) business grew 10.1% yoy to Rs2.88
bn. PBT margin improved 445 bps yoy to 22.2% (all-time high), led by RM deflation and price hikes. (2)
PPG AP (auto refinishes) grew 12.3% yoy to Rs5.76 bn and PBT margin expanded 165 bps yoy to
11.5% due to enhanced sales mix (strategic interventions on technology front) and RM deflation.
Projects business has seen strong growth over the past 6-7 years. APNT is a part of majority (~80%)
of marquee projects (parliament, NHAI, metro, airports). The company’s one-consumer initiative is
working well to cross-sell different propositions. Margins in projects would be lower than retail, but
would differ from project to project. Highly technical products command a higher margin.
Home décor. APNT targets to increase Home Décor revenue contribution to 8-10% of decorative
business by FY2026E from 4% at present. APNT now has 54 Beautiful Homes stores across India.
 Sleek (kitchen business) revenues were flat yoy, after four quarters of revenue declines. APNT
noted some green shoots and expects revenue growth to improve, going forward. Strong focus on
operational efficiencies resulted in PBT breakeven during the quarter.
Asian Paints
Commodity Chemicals India Research
4
 Ess Ess (bath business) declined 5% yoy; better than the trend of the past two quarters.
Management noted that a lot of work needs to be done to boost category growth and to align with
the BH store network.
 White Teak (decorative lighting) and Weatherseal (uPVC doors and windows) are both on an
expansion spree and the company is deploying money in expanding teams and other overheads.
International business revenues were flat in INR terms, but grew 5.2% in constant currency terms
(currency headwinds in Eqypt and Bangladesh). Though the business registered good growth in the
Middle East and Africa, performance was subdued in Asia—(1) Nepal was impacted by liquidity
crunch; ex-Nepal, international business grew 7%/13% in INR/constant currency terms, (2) macro
uncertainties continued in Bangladesh and (3) stabilizing economic conditions supported recovery in
Sri Lanka. Profitability improved (PBT of Rs580 mn, up 58% yoy) due to RM deflation and efficiencies.
Capex plans, including brownfield and backward integration projects, are progressing well. By March
2024E, APNT expects to have committed Rs20 bn to these initiatives. The cement project is likely to
be commissioned by December 2025E and VAM/VAE project could be 4-5 months after that.
Others. (1) Safe painting service has been rechristened as Beautiful Homes Painting Service in over
650 towns in India; APNT is deploying vertical integration in painting tools, including spraying
machines in a bid to graduate the country from brushing/rolling to spraying, (2) a sizeable part of
APNT’s media spends are going toward digital/social media, (3) beautifulhomes.com has 5 mn annual
visitors and 500K+ Instagram followers, (4) APNT is looking at the bath/kitchens business as part of
its integrated home décor strategy, rather than as standalone businesses and (5) BH store owners are
primarily APNT’s paint dealers, who typically expect payback of 2.5-3.0 years on their investment; out
of 54 stores at present, 35-40 store owners would have got back their investments so far.
Exhibit 1: Key changes to estimates, Asian Paints, March fiscal year-ends, 2024-26E
Revised Earlier Change (%)
2024E 2025E 2026E 2024E 2025E 2026E 2024E 2025E 2026E
Revenues (Rs mn) 361,605 399,667 444,319 367,616 410,872 456,740 (1.6) (2.7) (2.7)
Revenue growth (%) 4.8 10.5 11.2 6.6 11.8 11.2
Gross margin (%) 43.3 42.4 41.3 43.1 42.0 40.8 19 bps 32 bps 44 bps
EBITDA (Rs mn) 79,069 82,078 86,205 80,759 83,856 87,484 (2.1) (2.1) (1.5)
EBITDA margin (%) 21.9 20.5 19.4 22.0 20.4 19.2 -11 bps 12 bps 24 bps
Net income (Rs mn) 55,940 57,657 59,802 56,188 57,661 59,269 (0.4) (0.0) 0.9
EPS (Rs/share) 58.3 60.1 62.3 58.6 60.1 61.8 (0.4) (0.0) 0.9
Domestic Deco volume growth (%) 10.0 13.0 13.0 10.0 14.0 13.0
Pricing + mix (%) (6.0) (2.5) (2.0) (4.0) (2.0) (2.0)
Source: Kotak Institutional Equities estimates
Asian Paints
5
Exhibit 2: Interim consolidated results of Asian Paints, March fiscal year-ends (Rs mn)
(% change)
3QFY24 3QFY24E 3QFY23 2QFY24 KIE Est yoy qoq 9MFY24 9MFY23 (% chg.)
Net operating revenue 91,031 91,517 86,367 84,786 (0.5) 5.4 7.4 267,640 257,013 4.1
Material cost (51,336) (51,716) (53,058) (48,015) (0.7) (3.2) 6.9 (151,755) (161,033) (5.8)
Gross profit 39,695 39,801 33,310 36,771 (0.3) 19.2 8.0 115,885 95,980 20.7
Gross margin (%) 43.6 43.5 38.6 43.4 11 bps 503 bps 23 bps 43.3 37.3 595 bps
Employee cost (5,702) (5,946) (5,038) (5,961) (4.1) 13.2 (4.3) (17,120) (15,060) 13.7
Other expenditure (13,432) (13,900) (12,158) (13,648) (3.4) 10.5 (1.6) (39,829) (36,969) 7.7
Total expenditure (70,470) (71,562) (70,253) (67,623) (1.5) 0.3 4.2 (208,704) (213,062) (2.0)
EBITDA 20,561 19,955 16,114 17,162 3.0 27.6 19.8 58,936 43,951 34.1
EBITDA margin (%) 22.6 21.8 18.7 20.2 78 bps 392 bps 234 bps 22.0 17.1 492 bps
Other income 1,386 1,426 866 1,652 (2.8) 60.1 (16.1) 5,009 2,810 78.2
Interest (544) (494) (414) (509) 10.3 31.5 6.9 (1,511) (1,055) 43.1
Depreciation (2,204) (2,178) (2,141) (2,087) 1.2 2.9 5.6 (6,274) (6,379) (1.6)
Pretax profits 19,199 18,709 14,426 16,218 2.6 33.1 18.4 56,160 39,327 42.8
Tax (4,926) (4,747) (3,811) (4,186) 3.8 29.2 17.7 (14,413) (10,421) 38.3
Recurring PAT 14,273 13,962 10,614 12,033 2.2 34.5 18.6 41,747 28,906 44.4
Extraordinary items — — — — — (242)
Minority interest/share of associates 204 55 113 22 273.7 81.5 846.3 288 59 389.0
Net profit (reported) 14,477 14,017 10,727 12,054 3.3 35.0 20.1 42,035 28,723 46.3
Recurring PAT post MI 14,477 14,017 10,727 12,054 3.3 35.0 20.1 42,035 28,965 45.1
Recurring EPS 15.1 14.6 11.2 12.6 3.3 35.0 20.1 43.8 30.2 45.1
Income tax rate (%) 25.7 25.4 26.4 25.8 28 bps -77 bps -15 bps 25.7 26.5
Costs as a % of net operating revenue
Material cost 56.4 56.5 61.4 56.6 -12 bps -504 bps -24 bps 56.7 62.7 -596 bps
Employee cost 6.3 6.5 5.8 7.0 -24 bps 43 bps -77 bps 6.4 5.9 53 bps
Other expenditure 14.8 15.2 14.1 16.1 -44 bps 67 bps -135 bps 14.9 14.4 49 bps
Source: Company, Kotak Institutional Equities
Exhibit 3: Interim standalone results of Asian Paints, March fiscal year-ends (Rs mn)
(% change)
3QFY24 3QFY24E 3QFY23 2QFY24 KIE Est yoy qoq 9MFY24 9MFY23 (% chg.)
Net operating revenue 79,130 79,734 75,218 73,422 (0.8) 5.2 7.8 233,692 224,524 4.1
Material cost (43,994) (44,492) (45,943) (41,036) (1.1) (4.2) 7.2 (130,812) (139,980) (6.5)
Gross profit 35,136 35,243 29,276 32,387 (0.3) 20.0 8.5 102,880 84,544 21.7
Gross margin (%) 44.4 44.2 38.9 44.1 20 bps 548 bps 29 bps 44.0 37.7 636 bps
Employee cost (4,279) (4,550) (3,792) (4,495) (6.0) 12.8 (4.8) (12,820) (11,284) 13.6
Other expenditure (11,886) (12,116) (10,536) (12,044) (1.9) 12.8 (1.3) (35,243) (32,531) 8.3
Total expenditure (60,159) (61,158) (60,271) (57,575) (1.6) (0.2) 4.5 (178,876) (183,795) (2.7)
EBITDA 18,971 18,576 14,948 15,847 2.1 26.9 19.7 54,816 40,729 34.6
EBITDA margin (%) 24.0 23.3 19.9 21.6 67 bps 410 bps 239 bps 23.5 18.1 531 bps
Other income 2,381 2,026 1,621 1,723 17.5 46.9 38.2 6,271 3,930 59.6
Interest (310) (250) (247) (275) 24.0 25.3 12.7 (848) (682) 24.5
Depreciation (1,900) (1,891) (1,891) (1,789) 0.5 0.5 6.2 (5,410) (5,622) (3.8)
Pretax profits 19,142 18,461 14,430 15,506 3.7 32.7 23.4 54,830 38,356 42.9
Tax (4,707) (4,672) (3,571) (3,904) 0.7 31.8 20.6 (13,708) (9,691) 41.4
Recurring PAT 14,435 13,788 10,859 11,603 4.7 32.9 24.4 41,122 28,665 43.5
Extraordinary items — — — — — —
Net profit (reported) 14,435 13,788 10,859 11,603 4.7 32.9 24.4 41,122 28,665 43.5
Recurring EPS 15.0 14.4 11.3 12.1 4.7 32.9 24.4 42.9 29.9 43.5
Income tax rate (%) 24.6 25.3 24.7 25.2 -73 bps -16 bps -59 bps 25.0 25.3 -27 bps
Costs as a % of net operating revenues
Material cost 55.6 55.8 61.1 55.9 -21 bps -549 bps -30 bps 56.0 62.3 -637 bps
Employee cost 5.4 5.7 5.0 6.1 -30 bps 36 bps -72 bps 5.5 5.0 46 bps
Other expenditure 15.0 15.2 14.0 16.4 -18 bps 101 bps -139 bps 15.1 14.5 59 bps
Asian Paints
6
APNT’s 4-year volume CAGR stood at 14.9% in 3QFY24

Exhibit 4: Asian Paints—volume growth, March fiscal year-ends (yoy, %)
120 106
100
80
60 48
34 37
40 30
22 18
13 11 17 14 16
20 10 2 9 6 10
12 11 8 10 10 6 12
3 -
10
-
(20) (38)
(40)
4QFY17
2QFY18
4QFY18
2QFY19
4QFY19
1QFY20
3QFY20
1QFY21
3QFY21
1QFY22
2QFY22
4QFY22
2QFY23
4QFY23
2QFY24
3QFY24
1QFY18
3QFY18
1QFY19
3QFY19
2QFY20
4QFY20
2QFY21
4QFY21
3QFY22
1QFY23
3QFY23
1QFY24
Exhibit 5: Asian Paints—softening RM prices resulted in sequential improvement in gross margins
Asian Paints
7
Exhibit 6: Asian Paints—segment-wise quarterly revenue and PBT, March fiscal year-ends
4QFY21 1QFY22 2QFY22 3QFY22 4QFY22 1QFY23 2QFY23 3QFY23 4QFY23 1QFY24 2QFY24 3QFY24
Sales (Rs mn)
Decorative Paints 55,780 46,780 60,590 73,902 66,460 74,370 72,140 74,024 74,932 80,003 72,343 77,979
Kitchen Business 950 660 1,050 1,084 1,280 1,110 1,180 1,007 980 960 968 1,001
Bath Business 930 550 930 1,008 1,090 1,190 1,020 898 960 847 814 854
PPG-AP 3,330 2,550 3,770 4,150 3,960 4,160 4,690 5,133 4,280 4,719 4,953 5,760
AP-PPG 1,930 1,550 1,800 2,110 2,470 2,420 2,250 2,616 2,900 2,942 2,506 2,880
Profitability (Rs mn)

Decorative Paints 11,040 13,740 8,270 13,657 12,550 13,670 10,200 14,440 16,540 20,182 15,536 19,212
Kitchen Business (PBT) (10) (80) 0 0 (20) (70) (40) (60) (110) (20) (30) 0
Bath Business (PBT) 0 (20) 30 13 10 50 0 (10) 0 0 (30) (70)
PPG-AP 160 (60) 270 400 250 320 570 914 560 820 770 1,280
AP-PPG 110 40 50 120 210 120 140 256 330 390 280 330
Standalone (Rs mn)

Sales 56,710 47,330 61,520 74,910 67,550 75,560 73,160 74,922 75,892 80,850 73,157 78,833
PBT (before exceptional) 11,040 13,720 8,300 13,670 12,560 13,720 10,200 14,430 16,540 20,182 15,506 19,142
PBT Margin (%)

Decorative Paints 19.8 29.4 13.6 18.5 18.9 18.4 14.1 19.5 22.1 25.2 21.5 24.6
Kitchen Business (PBT) (1.1) (12.1) 0.0 0.0 (1.6) (6.3) (3.4) (6.0) (11.2) (2.1) (3.1) 0.0
Bath Business (PBT) 0.0 (3.6) 3.2 1.3 0.9 4.2 0.0 (1.1) 0.0 0.0 (3.7) (8.2)
PPG-AP 4.8 (2.4) 7.2 9.6 6.3 7.7 12.2 17.8 13.1 17.4 15.5 22.2
AP-PPG 5.7 2.6 2.8 5.7 8.5 5.0 6.2 9.8 11.4 13.3 11.2 11.5
Revenue growth (%)

Decorative Paints 45.7 93.2 35.5 27.4 19.1 59.0 19.1 0.2 12.7 7.6 0.3 5.3
Kitchen Business (PBT) 84.0 144.4 72.1 33.8 34.7 68.2 12.4 (7.1) (23.4) (13.5) (18.0) (0.6)
Bath Business (PBT) 84.0 111.8 69.0 38.1 17.2 116.4 9.7 (10.9) (11.9) (28.8) (20.2) (4.9)
PPG-AP 39.0 209.8 33.0 5.0 18.9 63.1 24.4 23.7 8.1 13.4 5.6 12.2
AP-PPG 63.0 166.2 55.0 33.0 28.0 56.1 25.0 24.0 17.4 21.6 11.4 10.1
Notes:
(1) For decorative paints, we have reduced the Bath business (Ess Ess) from Standalone revenue and PBT. Kitchen business is in its subsidiary Sleek and hence, not
included in standalone numbers
Exhibit 7: Asian Paints—key assumptions, March fiscal year-ends, 2016-26E

2016 2017 2018 2019 2020 2021 2022 2023 2024E 2025E 2026E
Key assumptions
Domestic decorative volume growth (%) 12.0 9.5 6.8 14.3 11.0 15.5 31.0 14.0 10.0 13.0 13.0
Domestic decorative realisation growth (%) (3.4) (1.8) (4.8) (0.6) (4.5) (4.9) 5.7 6.6 (6.0) (2.5) (2.0)
Domestic sales growth (%) 1.6 6.2 12.4 16.0 4.9 7.7 36.0 19.4 4.8 10.3 10.7
International sales growth (%) 15.0 (3.7) 10.4 6.8 0.7 6.3 16.3 6.5 2.0 6.1 5.8
Gross margin (%) 43.6 44.7 42.4 41.4 43.7 44.3 37.1 38.7 43.3 42.4 41.3
EBITDA margin (%) 19.4 19.8 19.0 18.2 20.6 22.4 16.5 18.2 21.9 20.5 19.4
Source: Company, Kotak Institutional Equities estimates
Asian Paints
8
Exhibit 8: Asian Paints—consolidated profit model, balance sheet, March fiscal year-ends, 2016-26E
2016 2017 2018 2019 2020 2021 2022 2023 2024E 2025E 2026E
Profit model (Rs mn)
Net sales 142,715 150,620 168,246 193,415 202,113 217,128 291,013 344,886 361,605 399,667 444,319
EBITDA 27,692 29,864 31,976 35,245 41,618 48,556 48,036 62,598 79,069 82,078 86,205
Other income 2,134 2,624 2,206 2,271 3,043 3,031 3,800 3,865 6,240 6,701 7,041
Interest (407) (300) (351) (510) (1,023) (916) (954) (1,445) (2,008) (1,810) (1,909)
Depreciation (2,756) (3,348) (3,605) (4,307) (7,805) (7,913) (8,164) (8,580) (8,467) (9,365) (11,239)
Pretax profits 26,663 28,841 30,227 32,699 35,833 42,758 42,719 56,439 74,834 77,605 80,098
Tax (8,445) (9,433) (10,410) (10,988) (9,586) (10,976) (11,029) (14,935) (19,270) (20,565) (21,226)
Minority interest (242) (272) (128) (116) (183) (389) (227) 50 376 618 929
Extraordinary items (525) 259 700 — 988 — (1,157) (489) — — —
Net income 17,452 19,394 20,389 21,595 27,052 31,393 30,306 41,065 55,940 57,657 59,802
Recurring net income 17,976 19,136 19,689 21,595 26,064 31,393 31,463 41,553 55,940 57,657 59,802
Recurring EPS (Rs) 18.7 19.9 20.5 22.5 27.2 32.7 32.8 43.3 58.3 60.1 62.3
Balance sheet (Rs mn)
Total shareholder's equity 65,248 76,039 84,102 95,197 101,302 128,063 138,116 159,922 187,087 213,646 239,638
Total borrowings 3,037 5,455 5,208 6,160 3,401 3,402 7,757 9,722 8,461 7,961 7,461
Deferred tax liability 2,950 3,430 3,975 5,397 4,438 4,156 3,489 3,348 3,348 3,348 3,348
Minority interest 3,837 3,755 3,277 3,631 4,035 4,229 3,875 4,537 4,160 3,543 2,613
Total liabilities and equity 75,072 88,679 96,562 110,384 113,176 139,850 153,236 177,529 203,056 228,498 253,061
Net fixed assets 33,240 33,678 48,101 57,396 51,725 48,933 47,969 53,527 58,685 80,020 96,939
Goodwill 1,990 1,935 3,273 3,213 3,200 3,026 2,429 2,285 2,285 2,285 2,285
Investments 27,121 26,520 21,407 25,697 20,189 47,368 32,475 42,617 42,617 42,617 42,617
Cash 4,242 8,012 4,047 4,449 7,828 6,108 8,643 8,438 26,619 24,427 24,749
Net current assets 8,480 18,534 19,735 19,630 30,235 34,415 61,720 70,663 72,850 79,149 86,470
Total assets 75,072 88,679 96,562 110,384 113,176 139,850 153,236 177,529 203,056 228,498 253,060
Free cash flow (Rs mn)
Operating cash flow, excl. w-cap 20,452 21,301 21,931 26,417 33,690 38,898 37,817 49,655 63,370 65,064 68,927
Working capital 1,978 (6,028) (797) (4,274) (7,371) (2,065) (27,952) (7,721) (2,187) (6,299) (7,321)
Capital expenditure (8,022) (6,672) (14,088) (11,336) (3,669) (2,543) (4,987) (12,475) (13,625) (30,699) (28,158)
Free cash flow 14,408 8,601 7,047 10,807 22,650 34,291 4,878 29,460 47,557 28,066 33,447
Growth
Revenue growth 0.6 5.5 11.7 15.0 4.5 7.4 34.0 18.5 4.8 10.5 11.2
EBITDA growth 23.9 7.8 7.1 10.2 18.1 16.7 (1.1) 30.3 26.3 3.8 5.0
EPS growth 26.4 6.5 2.9 9.7 20.7 20.4 0.2 32.1 34.6 3.1 3.7
Ratios (%)
Gross margin (%) 43.6 44.7 42.4 41.4 43.7 44.3 37.1 38.7 43.3 42.4 41.3
A&P (% of sales) 3.9 4.1 3.9 4.1 4.5 3.6 3.2 3.3 3.8 4.3 4.5
Employee cost (% of sales) 6.9 6.9 6.6 6.6 6.8 7.1 6.1 5.9 6.4 6.3 6.2
EBITDA margin (%) 19.4 19.8 19.0 18.2 20.6 22.4 16.5 18.2 21.9 20.5 19.4
Net profit margin (%) 12.6 12.7 11.7 11.2 12.9 14.5 10.8 12.0 15.5 14.4 13.5
RoE (%) 31.9 27.1 24.6 24.1 26.5 27.4 23.6 27.9 32.2 28.8 26.4
RoCE (%) 34.2 28.5 24.4 22.9 24.3 27.9 24.7 28.0 33.5 30.6 27.3
Asian Paints
RESULT
LTIMindtree (LTIM) REDUCE

IT Services
CMP(₹): 6,276 Fair Value(₹): 5,500 Sector View: Neutral NIFTY-50: 21,572 January 17, 2024
Muted quarter; somber near-term outlook Company data and valuation summary
LTIM reported a weak quarter, with muted 0.7% qoq growth and EBIT margin Stock data
decline of 60 bps, both missing estimates. Management indicated weak near-
CMP(Rs)/FV(Rs)/Rating 6,276/5,500/REDUCE
term growth and a delay in margin ambition due to demand challenges. LTIM
52-week range (Rs) (high-low) 6,443-4,120
needs to demonstrate visible translation of synergies to deals and revenue,
Mcap (bn) (Rs/US$) 1,859/22.4
and increase the growth gap with Tier 1 peers to justify premium valuations.
ADTV-3M (mn) (Rs/US$) 2,428/29.2
A shift in the outlook on demand and profitability is disappointing and drives
4-5% EPS downgrades for FY2024-26E. Stock trades at expensive valuations Shareholding pattern (%)
of 27X FY2025E and will correct after poor results. Retain REDUCE with FV of
Rs5,500 (Rs5,910 earlier)
3.5
7.5
0.7% qoq growth, led entirely by manufacturing vertical 5.0
7.2
LTIM reported revenue of US$1,084 mn growing 0.8% qoq. Sequential growth
8.1
of 0.7% in c/c missed our estimate by 30 bps. Growth was impacted by a high
68.7
degree of furloughs across verticals, amid weak discretionary spending.
Manufacturing (20.3% of revenue) contributed US$28 mn incrementally or 2.6%
qoq growth, offsetting declines in BFSI, hi-tech and retail. North America ((- Promoters FPI s MFs BFIs Retail Others
)0.2%) and Europe ((-)4.5%) declined sequentially, with RoW, or essentially India,
Private Circulation Only. This document may only be distributed to QIBs (qualified institutional buyers) as defined under rule 144A of the Securities A ct of 1933
Price performance (%) 1M 3M 12M
contributing to growth. Growth was healthy in top accounts, with the top-5
Absolute 2 20 47
(27.5% of revenue) and top-10 (35.3% of revenue) growing 3.4% and 3.7% qoq,
Rel. to Nifty 2 11 27
respectively. Ex-top 10 declined 0.8% qoq, resulting in muted growth overall. Rel. to MSCI India (1) 7 24
Sharp furlough impact on EBIT margin
Forecasts/Valuations 2024E 2025E 2026E
EBIT margin declined 60 bps qoq and missed our estimate by 30 bps to 15.4%.
EPS (Rs) 159.8 186.8 224.7
A 200 bps impact from furloughs was partially offset by an 80 bps tailwind from
EPS growth (%) 7.2 16.9 20.3
SG&A reduction and 60 bps benefit from operational efficiencies. Net profit of
P/E (X) 39.3 33.6 27.9
Rs11.7 bn increased 0.6% qoq and 16.8% yoy and was 0.5% ahead of estimates,
P/B (X) 9.6 8.3 7.0
aided by strong other income and a lower-than-expected tax rate. EV/EBITDA (X) 26.9 23.5 19.6
Subdued FY2024E and weak FY2025E; merger synergies not visible RoE (%) 26.4 26.5 27.2
A few factors will lead to a subdued 4QFY24—(1) furlough reversals are not Div. yield (%) 1.1 1.3 1.4
Sales (Rs bn) 357 395 453
immediate, but gradual in certain clients, (2) weak discretionary spending
EBITDA (Rs bn) 65 74 87
environment that is worse than management expectations and (3) longer ramp -
Net profits (Rs bn) 47 55 66
up timelines of larger deals. Deal win TCV of US$1.5 bn grew 15.4% qoq and
20% yoy, including consolidation wins. Growth will likely improve in FY2025E, Source: Bloomberg, Company data, Kotak Institutional Equities estimates
but the quantum will be lower than our earlier estimate. Merger synergies are Prices in this report are based on the market close of
not visible. We model 9.8% US$ growth inFY2025E, an increase of 5.1% from January 17, 2024
FY2024E. We expect 13.2% revenue growth in FY2026.
Retain REDUCE with FV of Rs5,500

Stock trades at expensive valuations of 32X FY2026E earnings. A weak show
together with a muted near-term outlook does not do favors. We cut our
FY2024-26E US$ revenue estimates by 1-3% and EBIT margin by 20-60 bps,
resulting in EPS cuts of 4-5%. Presence across scale verticals, high-quality
clients, good breadth of capabilities and experienced senior leadership team
are elements that can drive healthy growth. Execution appears to be lacking and
needs corrective action. We value the stock at 25X (earlier 26X) FY2026E
earnings, resulting in Fair Value of Rs5,500 (earlier Rs5,910). Retain REDUCE.
Full sector coverage on KINSITE
Kawaljeet Saluja Sathishkumar S Vamshi Krishna

kawaljeet.saluja@kotak.com sathishkumar@kotak.com vamshi.krishna@kotak.com
+91-22-4336-0860 +91-22-4336-0879 +91-22-6166-1801
10
EBIT margin outlook cut

LTIM had guided for FY2024E exit EBIT margin of 17-18%. The company has now indicated that the EBIT
margin will be lower than originally envisaged and will likely take time to recover. It is running an
unsustainable utilization rate of 87.4%, which needs to be pulled back. Further upfront investments are
required to ramp up large deals. We now forecast EBIT margins of 16.0% and 16.5% for FY2024E and
FY2025E, respectively, down from 16.6% and 17.1% earlier.
Needs material growth above Tier 1 peers or increase in payout to sustain valuation premium
LTIM is set to grow at a middling 4.7% in FY2024E and a moderate 9.8% in FY2025E, according to our
estimates, which is just 1-2% higher than HCLT and TCS. Weaker margins and lower payout imply lower
RoE and RoIC than Tier 1. As such, LTIM needs to pick up growth significantly above Tier 1 peers to
justify valuations. We value LTIM at 25X 1-year forward multiple, 1X lower than TCS. We work with an
assumption that growth challenges are temporary. Return of discretionary spending can result in better
growth in FY2026E. We model 13.2% growth in FY2026, 3-4% higher than Tier 1 peers.
Promise of synergy benefits has not translated to revenue growth

LTI and Mindtree have complementary clients, verticals and services and appear to be a perfect match
in theory. Although management has called out a few synergy deals from time to time, the reality is that
revenue growth will decline to 4.7% in FY2024 from 19.2% in FY2023. Instead of aiding growth through
synergy, higher size seems to have become a challenge to growth. Management highlighted that a weak
macro environment played spoilsport to synergy realization. We partly agree, but also believe that
execution could have been better. Cross-sell of Mindtree’s discretionary portfolio into LTIM’s clients
would have been difficult considering the environment. However, the opposite would have still been
possible.
LTI’s portfolio appears to be doing well; Mindtree’s could be under trouble

It is natural that in a weak discretionary spending environment Mindtree’s portfolio of services, which is
more discretionary led would be under pressure. The nature of deal wins announced in a press release
indicates that most are associated with LTI. For example, out of 6 deal wins, 3 were from energy & utilities
where Mindtree did not have presence.
Watch out for client-specific issues

LTIM has large exposure to a US financial services client. This client is going through a restructuring
process and has indicated a 20k headcount layoff over the next three years and focus on productivity
initiatives. We note that Citi has spent quite lavishly on tech in the past couple of years. Given the focus
on productivity initiatives and layoffs, tech spending growth could get moderated. Sourcing strategy and
outcome of vendor consolidation, if any, will also be keenly watched. LTIM also has a few other clients
who are pulling back on their tech spends. Client metrics indicate that growth in top-5 and top-10 are still
reasonably good, given the environment. The top-10 to 20 and top-20 to 40 account buckets are less
healthy.
Senior management exits do not appear to be a serious concern right now

A few senior management personnel have quit LTIM in the past year, including a few in the Dec 2023
quarter. Per se, the list leadership churn appears to be due to role redundancies.
Headcount declines sequentially; attrition reduces further, but higher than peers
Net headcount declined 1.3% qoq to 82,471, while attrition reduced 100 bps qoq to 14.2. Attrition on ttm
basis is slightly higher than Tier 1 peers. LTIM operates at very high utilization of 87.4%, which is
unsustainable. The company is making steady progress in reducing subcontractor costs further. LTIM
is hiring and making freshers billable to leverage a pyramid benefit.
LTIMindtree
IT Services India Research
11
Key highlights from the earnings call

Demand. Clients remain cautious on spends, with cost optimization being at the top of clients’
agenda. Management does not see much improvement in discretionary spends. In fact, the December
quarter’s revenue growth was impacted due to higher-than-expected furloughs and a significant drop
in discretionary activity, which was not compensated by other services. Vertical-wise commentary is
as follows: (1) BFSI—revenues declined sequentially due to elevated furloughs, partly offset by pass-
through revenues during the quarter. Within the vertical, insurance remains fairly resilient, while BFS
has been impacted. Clients remain cautious on spends. Furloughs would reverse gradually and the
near-term outlook for the vertical remains weak. (2) Hi-tech, media and entertainment. Revenues
grew sequentially, despite higher-than-anticipated furloughs. This vertical is expected to remain
resilient. (3) Manufacturing and resources. Seasonal pass-through revenues were higher than usual
and led to a sharp uptick in revenues. The company won a transformation and vendor consolidation
deal in energy & utilities during the quarter. (4) Retail, CPG & TTH. Clients in retail & CPG are
increasingly focused on cost optimization and supplier consolidation and leveraging automation.
LTIM is engaging with TTH clients by leveraging its data capabilities. (5) Health, life sciences and
public services. Revenues grew at a reasonable 1% qoq.
BFSI top client. Management indicated that weakness in BFS is broad-based and not specific to a
particular client. Furthermore, it does not see much impact, despite indications of increased
insourcing by top clients in the vertical. LTIM engages with the client in core areas such as core
platforms in corporate banking and regulatory compliance, which are continuing in line with plans, at
least for now. It continues to closely track developments in this account.
Furloughs. During the quarter, furloughs were both higher and wider than expected and impacted all
verticals. Management indicated that verticals such as O&G, which typically are not impacted by
furloughs. Recovery is likely to be more gradual, impacting revenues in 4QFY24E as well.
Pass-through revenues. This was significantly higher than the usual sub-1% qoq uptick. Some part
of it was also attributable to deal ramp-ups during the quarter. Management expects 4QFY24 to also
have a significantly higher pass-through component and would diminish in the June 2024 quarter.
Growth in rest of the portfolio of services is likely to compensate for a fall in pass-through revenues
in 1QFY25.
Merger synergies. During the merger, the companies aspired to quickly integrate and leverage their
capabilities to benefit from a strong demand environment. However, this has significantly changed
since leading to the merged company underperforming initial synergy expectations. However,
management indicated that the large deal pipeline remains strong at US$4.6 bn, up 30% yoy and
participating in advisor-driven deals as the best alternative to larger peers. Many deals are in final
stages.
Utilization. Utilization (ex-trainees) increased to 87.4%, up 80 bps qoq. This is likely to moderate to
85%, a level at which the management is more comfortable to operate with an adequate bench
strength to quickly train resources and ramp-up large deals.
Margins. EBIT margin declined 60 bps sequentially owing to impact of (1) higher furloughs, lower
working days and seasonal pass-through revenue (200 bps), partly offset by (1) lower SG&A (80 bps)
and (2) operating efficiencies (60 bps). The company will continue to optimize its cost structure as
part of its margin improvement program, including identifying accounts with sub-optimal margins,
pyramid rationalization, lowering average cost of delivery as supply-side issues have eased and
leveraging long-tenure deals for better resource allocation. LTIM has limited levers to flex margins
with utilization above optimal levels, partial pass-through revenues continuing into 4Q and moderating
growth. As a consequence, it deferred earlier aspiration of reaching a 17-18% EBIT margin by 4QFY24E
by a few more quarters. Full-year EBIT margin aspiration of 17-18% by FY2025E has also now been
pushed back further.
Hiring & attrition. Headcount declined 1% qoq to 82.5K employees. The company plans to step-up
hiring to enhance bench strength. The company onboarded over 500 freshers during the quarter. LTM
attrition moderated 100 bps qoq to 14.2%
 Client tiers. US$100 mn+ clients were flat qoq at 2, while US$50 mn and US$20 mn clients declined
by 2 and 1, sequentially to 12 and 40, respectively.
LTIMindtree
12
Cash generation. Healthy FCF generation with FCF/PAT at 144% during the quarter. DSO (incl.
unbilled) was at 85 days, down 9 days sequentially. Management plans to lower DSO further to 75
days.
Exhibit 1: LTIMindtree’s interim results (consolidated Ind-AS), March fiscal year-ends, Rs mn

% chg.
3QFY24 3QFY24E 3QFY23 2QFY24 KIE yoy qoq 9MFY24 9MFY23 % chg. FY2024E % chg.
Revenue (US$ mn) 1,084 1,086 1,047 1,076 (0.2) 3.5 0.8 3,218 3,048 5.6 4,311 5.0
Revenues 90,166 90,398 86,200 89,054 (0.3) 4.6 1.2 266,241 244,917 8.7 357,266 7.7
EBITDA 15,849 16,220 13,748 16,313 (2.3) 15.3 (2.8) 48,517 44,993 7.8 65,284 7.0
Depreciation (1,990) (2,034) (1,781) (2,082) (2.2) 11.7 (4.4) (5,919) (5,404) 9.5 (7,967) 10.2
EBIT 13,859 14,186 11,967 14,231 (2.3) 15.8 (2.6) 42,598 39,589 7.6 57,317 6.5
Other Income 1,769 1,444 1,028 1,453 22.5 72.1 21.7 4,661 3,407 36.8 6,172 34.3
Forex gains/(loss) 426 354 490 (21) 20.4 (13.1) (2,128.6) 282 1,558 (81.9) 1,100 6.3
Finance costs (607) (479) (379) (470) 26.8 60.2 29.1 (1,537) (1,053) (2,025) 36
Profit Before Tax 15,447 15,505 13,106 15,193 (0.4) 17.9 1.7 46,004 43,501 5.8 62,564 8.0
Provision for Tax (3,754) (3,876) (3,099) (3,570) (3.2) 21.1 5.2 (11,165) (10,544) 5.9 (15,305) 10.5
Minority Interest (4) — (2) (5) (17) (16) (17)
Net Profit (before EO) 11,689 11,629 10,005 11,618 0.5 16.8 0.6 34,822 32,941 5.7 47,242 7.2
Extraordinary charge (net of taxes) — — — — — — —
Net Profit- Reported 11,689 11,629 10,005 11,618 0.5 16.8 0.6 34,822 32,941 5.7 47,242 7.2
Recurring EPS (Rs/share) 39.4 39.3 33.8 39.2 0.3 16.6 0.5 117.6 111.3 5.7 159.8 7.2
As % of revenues
EBITDA margin (post Fx gain/loss) 18.1 18.3 16.5 18.3 18.3 19.0 18.6
EBITDA margin (ex FX gain/loss) 17.6 17.9 15.9 18.3 18.2 18.4 18.3
EBIT margin (post forex gains/losses) 15.8 16.1 14.5 16.0 16.1 16.8 16.4
EBIT margin (ex Fx gain/loss) 15.4 15.7 13.9 16.0 16.0 16.2 16.0
Net profit margin (%) 13.0 12.9 11.6 13.0 13.1 13.4 13.2
Effective tax rate (%) 24.3 25.0 23.6 23.5 24.3 24.2 24.5
Exhibit 2: Key changes to estimates, March fiscal year-ends, 2024-26E (Rs mn)
New Old Change (%)
2024E 2025E 2026E 2024E 2025E 2026E 2024E 2025E 2026E
Revenues 357,266 395,311 452,801 361,175 408,112 466,791 (1.1) (3.1) (3.0)
EBITDA (before Fx gain/(loss)) 65,284 73,840 86,725 68,151 78,461 90,624 (4.2) (5.9) (4.3)
EBIT (before Fx gain/(loss)) 57,317 65,372 77,669 60,057 69,718 81,288 (4.6) (6.2) (4.5)
Net profit 47,242 55,221 66,426 48,944 58,200 68,863 (3.5) (5.1) (3.5)
EPS (Rs/ share) 159.8 186.8 224.7 165.6 196.9 233.0 (3.5) (5.1) (3.5)
Revenues (US$ mn) 4,311 4,734 5,359 4,356 4,888 5,524 (1.0) (3.1) (3.0)
US$ revenue growth (%) 5.0 9.8 13.2 6.1 12.2 13.0
Revenue growth (c/c, %) 4.7 9.8 13.2 5.8 12.2 13.0
Revenue growth (organic c/c, %) 4.7 9.8 13.2 5.8 12.2 13.0
EBITDA margin (before Fx gain/(loss)) (%) 18.3 18.7 19.2 18.9 19.2 19.4 -60 bps -55 bps -26 bps
EBIT margin (before Fx gain/(loss)) (%) 16.0 16.5 17.2 17.0 17.1 17.4 -100 bps -55 bps -26 bps
Net profit margin (%) 13.2 14.0 14.7 13.6 14.3 14.8
Forex gains/(loss) 1,100 2,367 3,215 1,040 2,444 3,314 5.8 (3.1) (3.0)
Exchange rate (Rs/US$) 82.9 83.5 84.5 82.9 83.5 84.5 (0.0) 0.0 0.0
LTIMindtree
13
Exhibit 3: Segmental revenue breakup, Dec 2023 quarter

Revenues Growth (%) Contribution to C/C growth (%)
US$ mn qoq yoy revenues (%) qoq yoy
Total revenues 1,084 0.8 3.5 100.0 0.7 3.1
Geographical split of revenues
North America 788 (0.2) 4.1 72.7
Europe 157 (4.5) 0.8 14.5
RoW 139 14.1 3.5 12.8
Vertical split of revenues
BFSI 386 (1.7) (1.4) 35.6
Hi-tech and media 248 (3.0) 0.5 22.9
Manufacturing and resources 220 14.3 20.1 20.3
Retail, CPG, travel 159 (3.2) 0.1 14.7
Health, life sciences, public services 70 0.8 6.8 6.5
Revenue metrics
Top 5 clients 298 3.4 8.3 27.5
Top 10 clients 383 3.7 8.1 35.3
Top 20 clients 497 2.3 4.9 45.9
Top 40 clients 634 2.3 5.2 58.5
Ex-top 20 clients 586 (0.5) 2.4 54.1
Exhibit 4: Deal win TCV, US$ mn, June 2022-December 2023
1,600
1,500
1,500
1,410
1,400 1,350
1,300
1,300
1,250
1,194
1,200
1,083
1,100
1,000
Jun-22 Sep-22 Dec-22 Mar-23 Jun-23 Sep-23 Dec-23
LTIMindtree
14
Exhibit 5: Book-to-bill ratio (X), June 2022-December 2023
1.5
1.4 1.4
1.4 1.3
1.3 1.3
1.3 1.2 1.2

1.2
1.2
1.2
1.1
1.1
1.1
1.0
Jun-22 Sep-22 Dec-22 Mar-23 Jun-23 Sep-23 Dec-23
EBIT margin declined 60 bps sequentially

Exhibit 6: EBIT margin trend, %, June 2015–December 2023
EBIT margin (%)

22.0
20.0
18.0
16.0
15.4
14.0
12.0
10.0
Jun-17
Jun-18
Jun-21
Jun-22
Jun-15
Jun-16
Jun-19
Jun-20
Jun-23
Sep-16
Sep-17
Sep-20
Sep-21
Sep-15
Sep-18
Sep-19
Sep-22
Sep-23
Dec-15
Dec-16
Dec-19
Dec-20
Dec-22
Dec-23
Dec-17
Dec-18
Dec-21
Mar-16
Mar-18
Mar-19
Mar-22
Mar-23
Mar-17
Mar-20
Mar-21
Note: EBIT margin for quarters except Dec-22, Sep-22 and Dec-21 based on consolidated pro-forma numbers
LTIMindtree
15
Subcontracting costs (% of revenues) were down 30 bps sequentially

Exhibit 7: Subcontracting costs as a % of revenues trend, December 2021-December 2023
10.0 Subcontracting costs as a % of revenue

9.5
8.7 8.8 8.9 8.8
9.0 8.6
8.5
8.0 7.7
7.5
7.4
7.5 7.2
7.0
6.5
6.0
5.5
5.0
Dec-21 Mar-22 Jun-22 Sep-22 Dec-22 Mar-23 Jun-23 Sep-23 Dec-23
Attrition rate declines 100 bps sequentially to 14.2% on LTM basis

Exhibit 8: Attrition (LTM) trend, %, June 2021-December 2023
Attrition rate (%, LTM)

30.0
23.8 24.0 24.1

25.0 22.1 22.3
20.2
18.6 17.8
20.0
14.5 15.2
14.2
15.0
10.0
5.0
-
Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22 Dec-22 Mar-23 Jun-23 Sep-23 Dec-23
LTIMindtree
16
Exhibit 9: Segmental margin trend (%), December 2021-December 2023

Segmental revenue (Rs mn)
BFSI 24,124 25,208 27,497 29,700 32,012 32,992 32,604 32,517 32,067
Hi-tech and media 17,012 17,852 19,480 20,960 20,576 19,988 20,611 21,143 20,605
Manufacturing & resources 12,598 12,432 12,431 13,346 15,098 15,231 15,057 15,948 18,336
Retail, CPG, travel 10,746 11,199 11,986 12,700 13,092 13,346 13,181 13,669 13,283
Health and public services 4,327 4,595 5,048 5,572 5,422 5,353 5,568 5,777 5,875
Segment results (Rs mn)
BFSI 4,997 4,734 4,963 5,593 5,685 5,880 5,687 5,592 5,465
Hi-tech and media 4,054 4,357 4,558 5,069 3,783 4,103 4,808 5,031 4,497
Manufacturing & resources 2,498 2,531 2,129 2,422 1,914 2,685 2,655 2,431 2,482
Retail, CPG, travel 2,191 2,137 2,341 2,582 2,651 2,608 2,473 2,674 2,458
Health and public services 777 751 945 991 513 761 732 585 947
Segment margins (%)
BFSI 20.7 18.8 18.0 18.8 17.8 17.8 17.4 17.2 17.0
Hi-tech and media 23.8 24.4 23.4 24.2 18.4 20.5 23.3 23.8 21.8
Manufacturing & resources 19.8 20.4 17.1 18.1 12.7 17.6 17.6 15.2 13.5
Retail, CPG, travel 20.4 19.1 19.5 20.3 20.2 19.5 18.8 19.6 18.5
Health and public services 18.0 16.3 18.7 17.8 9.5 14.2 13.1 10.1 16.1
Exhibit 10: Key model assumptions, March fiscal year-ends, 2019-2026E

2019 2020 2021 2022 2023 2024E 2025E 2026E
INR/USD rate 70.1 71.3 74.0 74.8 80.8 82.9 83.5 84.5
Revenues (US$ mn) 2,350 2,613 2,747 3,502 4,106 4,311 4,734 5,359
% growth 18.8 11.2 5.1 27.5 17.2 5.0 9.8 13.2
C/c revenue growth (%) 19.2 4.7 9.8 13.2
C/c revenue growth (organic %) 19.2 4.7 9.8 13.2
EBITDA margin (%) 17.9 16.7 21.5 20.1 18.4 18.3 18.7 19.2
EBIT margin (%) 16.0 13.8 18.6 17.8 16.2 16.0 16.5 17.2
NPM (%) 13.8 11.5 15.0 15.1 13.3 13.2 14.0 14.7
Headcount 48,373 53,428 59,805 79,594 84,548 84,945 97,454 112,954
Headcount addition 6,511 5,055 6,377 19,789 4,954 397 12,509 15,500
Blended pricing change (USD, %) 0.4 (1.8) (4.6) 3.5 (2.6) 1.4 (0.5) 0.6
LTIMindtree
17
Exhibit 11: Key quarterly operating metrics, December 2021-December 2023

Revenues (US$ mn) 918 945 980 1,022 1,047 1,058 1,059 1,076 1,084
qoq growth (%) 7.0 2.9 3.7 4.3 2.4 1.0 0.1 1.6 0.8
c/c qoq growth (%) 7.5 3.2 5.0 5.5 1.9 0.7 0.1 1.7 0.7
Revenues (Rs mn) 68,807 71,990 76,439 82,278 86,200 86,910 87,021 89,054 90,166
Exchange rate 74.9 76.2 78.0 80.5 82.4 82.2 82.2 82.8 83.2
Revenue by verticals (%)
Banking, Financial services & Insurance 35.0 35.4 36.1 36.2 37.4 38.0 37.5 36.5 35.6
High-Tech, Media & Entertainment 24.7 25.0 25.4 25.3 23.6 23.0 23.7 23.8 22.9
Manufacturing & Resources 18.3 17.4 16.3 16.2 17.5 17.5 17.3 17.9 20.3
Retail. CPG, Travel, Transportation & Hospitality 15.4 15.7 15.7 15.4 15.2 15.4 15.1 15.3 14.7
Health, Life Sciences & Public Services 6.5 6.4 6.6 6.8 6.3 6.1 6.4 6.5 6.5
Revenue by geographies (%)
North America 68.9 69.5 71.7 72.9 72.3 71.9 73.1 73.4 72.7
Europe 16.9 17.0 15.3 14.6 14.9 15.4 15.2 15.3 14.5
RoW 14.2 13.5 13.0 12.5 12.8 12.7 11.7 11.3 12.8
Currency revenue mix (%)
USD 72.2 72.8 75.6 77.4 77.3 76.6 77.4 77.9 76.2
EUR 9.1 9.2 8.4 7.3 7.0 7.9 7.8 7.7 7.5
INR 6.6 5.9 5.4 4.8 5.5 5.0 4.4 4.6 5.9
GBP 3.9 3.7 2.7 2.9 3.0 3.1 3.0 2.8 2.9
Others 8.2 8.3 7.9 7.5 7.2 7.4 7.4 7.0 7.5
Effort mix (%)
Onsite 15.4 15.0 14.7 14.7 14.9 14.9 14.8 14.8 15.0
Offshore 84.6 85.0 85.3 85.3 85.1 85.1 85.2 85.2 85.0
Utilization (%)
Excluding trainees 84.0 83.2 83.5 83.5 82.9 81.7 84.8 86.6 87.4
Revenue concentration (%)
Top 5 clients 25.5 25.5 26.8 26.7 26.3 25.4 26.7 26.8 27.5
Top 10 clients 34.0 33.5 34.5 34.3 33.8 32.9 34.1 34.3 35.3
Top 20 clients 45.2 44.8 45.5 45.1 45.3 44.0 44.9 45.2 45.9
Top 40 clients 59.1 58.4 58.7 57.4 57.6 56.8 57.2 57.6 58.5
Client profile (ttm)
Active clients 650 673 708 719 723 728 723 737 739
New clients added 34 29 43 22 28 31 19 30 23
> US$1 mn 316 327 337 361 374 383 388 391 388
> US$5 mn 120 125 130 137 144 146 148 146 149
> US$10 mn 76 76 79 77 81 81 88 90 89
> US$20 mn 31 37 40 38 37 38 40 41 40
> US$50 mn 9 10 10 11 11 13 13 14 12
>US$100 mn 2 2 2 2 2 2 2 2 2
Employee metrics
Total employees (consolidated) 74,173 79,594 84,030 86,936 86,462 84,546 82,738 83,532 82,471
Development 70,710 75,869 79,998 82,681 82,197 80,283 77,555 78,276 77,203
Sales and support 3,463 3,725 4,032 4,255 4,265 4,263 5,183 5,256 5,268
Attrition (%) 22.1 23.8 24.0 24.1 22.3 20.2 17.8 15.2 14.2
DSO (billed) 65 62 56 56 61 60 60 68 62
DSO (billed + unbilled) 94 90 87 85 90 91 93 94 85
Deal win TCV (US$ mn) 1,194 1,083 1,250 1,350 1,410 1,300 1,500
LTIMindtree
18
Exhibit 12: Condensed consolidated financials for LTIMindtree, March fiscal year-ends, 2019-26E (Rs mn)
2019 2020 2021 2022 2023 2024E 2025E 2026E
Profit model
Revenues 2,350 2,613 2,747 3,502 4,106 4,311 4,734 5,359
EBITDA 29,478 31,190 43,818 52,571 61,030 65,284 73,840 86,725
Depreciation and amortization (3,113) (5,484) (5,921) (5,970) (7,227) (7,967) (8,469) (9,056)
EBIT 26,365 25,706 37,897 46,601 53,803 57,317 65,372 77,669
Other income 1,743 1,927 3,882 3,196 4,594 6,172 7,942 9,817
Forex gains/(loss) 2,091 2,038 378 4,498 1,035 1,100 2,367 3,215
Interest expense (29) (1,355) (1,292) (1,229) (1,489) (2,025) (2,052) (2,134)
Pretax profits 30,170 28,316 40,865 53,066 57,943 62,564 73,629 88,567
Tax (7,450) (6,804) (10,379) (13,551) (13,845) (15,305) (18,407) (22,142)
Adjusted profit from continuing ops 22,720 21,512 30,486 39,515 44,098 47,259 55,221 66,426
Adj diluted EPS (Rs) 76.9 72.8 103.1 133.6 149.1 159.8 186.8 224.7
Dividend per share (Rs) 28.0 28.0 40.0 45.0 60.0 70.0 80.0 90.0
Weighted avg fully diluted shares (mn) 295.6 295.6 295.6 295.6 295.6 295.6 295.6 295.6
Balance sheet
Total equity 82,007 85,619 116,261 142,929 165,992 192,559 224,133 263,955
Borrowings 941 3,204 859 519 1,253 - - -
Long term liabilities 1,096 16,273 16,201 16,391 18,137 18,137 18,137 18,137
Current liabilities 24,438 34,719 37,384 45,985 49,579 56,255 60,266 65,386
Total liabilities and equity 108,482 139,815 170,705 205,824 234,961 266,951 302,537 347,478
Tangible fixed assets 7,221 21,052 18,776 25,335 31,259 32,127 33,400 35,437
Goodwill and Intangibles 12,159 12,965 13,928 14,422 14,555 14,651 14,793 15,019
Other non-current assets 5,965 7,005 6,407 16,681 17,250 17,250 17,250 17,250
Cash and cash equivalents 32,150 41,056 71,941 72,344 76,738 101,113 125,798 154,693
Other current assets 50,987 57,737 59,653 77,001 95,126 101,810 111,296 125,079
Total assets 108,482 139,815 170,705 205,783 234,928 266,951 302,537 347,478
Cash flow
Operating cash flow, excl. w-capital 24,768 27,374 34,925 42,279 48,640 49,859 57,800 67,799
Working capital changes (5,408) (1,893) 6,835 (12,861) (17,653) (8) (5,475) (8,663)
Capital expenditure (3,239) (3,685) (3,279) (10,528) (9,346) (8,932) (9,883) (11,320)
Acquisitions (2,092) (488) (426) (779) (1,486) - - -
Other income (net) 877 1,710 2,658 4,449 1,266 6,172 7,942 9,817
Free cash flow (includes other income) 14,906 23,018 40,713 22,560 21,421 47,092 50,384 57,633
Key ratios/metrics
EBITDA margin before forex gains/loss (%) 17.9 16.7 21.5 20.1 18.4 18.3 18.7 19.2
EBIT margin before forex gains/loss (%) 16.0 13.8 18.6 17.8 16.2 16.0 16.5 17.2
NPM (excluding extraordinaries) (%) 13.8 11.5 15.0 15.1 13.3 13.2 14.0 14.7
US$ revenues from continuing ops 2,350 2,613 2,747 3,502 4,106 4,311 4,734 5,359
US$ revenue growth (%) 18.8 11.2 5.1 27.5 17.2 5.0 9.8 13.2
Net cash and cash equivalents 31,209 37,852 71,082 71,825 75,485 101,113 125,798 154,693
Effective tax rate (%) 24.7 24.0 25.4 25.5 23.9 24.5 25.0 25.0
RoAE (%) 30.7 25.7 30.2 30.5 28.5 26.4 26.5 27.2
RoACE (%) 23.9 22.0 24.1 24.2 24.5 22.5 21.9 22.1
Note: 2019-2022 data is based on consolidated pro forma numbers
LTIMindtree
CHANGE IN RECO.
NMDC (NMDC) SELL

Metals & Mining
CMP(₹): 206 Fair Value(₹): 200 Sector View: Cautious NIFTY-50: 21,572 January 18, 2024
Prices, growth and valuations at peak, downgrade to SELL Company data and valuation summary
NMDC has had a stellar run in the past one year—iron ore prices +25%, volume Stock data
+25% in 9MFY24 and the stock has outperformed all peers. We believe the
CMP(Rs)/FV(Rs)/Rating 206/200/SELL
earnings run-rate is at its peak and cannot be extrapolated as (1) we see
52-week range (Rs) (high-low) 227-104
downside to spot iron ore prices as the recent rally, mainly on optimism
Mcap (bn) (Rs/US$) 605/7.3
around Chinese stimulus, lacks fundamental grounds and (2) volume growth
ADTV-3M (mn) (Rs/US$) 2,864/34.4
has peaked and we see a moderate 3.8% CAGR over FY2024-26E, similar to
the past decade. Our EPS estimates are 11%/16% below consensus for Shareholding pattern (%)
FY2025/26E. Risk-reward at 6.7X EV/EBITDA FY2025E is unfavorable.
Downgrade to SELL. 10.6
2.7
9.4
Seaborne iron ore price rally lacks fundamental legs
8.2
The benchmark 62% Fe spot iron ore price rallied from US$110/ton to peak of 60.8
8.3
US$145/ton in 3QFY24, led by (1) lack of steel production cuts and higher
exports in China, (2) positive sentiments around government stimulus and (3)
three-year low iron ore inventory at Chinese ports. In CY2023, despite weak Promoters FPIs MFs BFIs Retail Others
domestic demand, higher exports and higher flat steel production (BF-based) in
Price performance (%) 1M 3M M
China supported iron ore demand. Negative steel spreads suggest exports at
Absolute 6 25 64
current run-rate are unstainable whereas domestic demand remains weak. Iron Rel. to Nifty 5 16 44
ore prices have started correcting, -10% in past two weeks, with rising port Rel. to MSCI India 3 12 41
inventory. We expect the correction in prices to continue and forecast prices at
US$110/105/ton in FY2025/26E versus spot at US$127/ton. Forecasts/Valuations 2024E 2025E 2026E
EPS (Rs) 20.8 19.7 20.1
NMDC prices have peaked amid weak steel prices and strong supply EPS growth (%) 41.6 (5.1) 1.8
NMDC hiked fines prices by 16% in 2HCY23, in line with the strength in seaborne P/E (X) 9.9 10.4 10.3
prices. Current prices are now close to export parity. Domestic HRC prices are P/B (X) 2.4 2.1 1.9
down 2% in the past two months and the ongoing weakness in steel market EV/EBITDA (X) 6.4 6.7 6.4
eliminates upside risks to NMDC prices. Domestic iron ore production has RoE (%) 25.2 21.3 19.6
grown by 14% in past 12 months whereas net exports at 40 mn tons are +165% Div. yield (%) 5.0 4.8 4.9
yoy. A weak iron ore import demand by China in CY2024-25E could create excess Sales (Rs bn) 216 189 195
supply in India and pose downside risk to prices beyond export parity level. EBITDA (Rs bn) 79 73 74
Strong volume in 9MFY24 is an aberration
Source: Bloomberg, Company data, Kotak Institutional Equities estimates
NMDC has witnessed ~25% yoy growth in 9MFY24, however, we believe this is
Prices in this report are based on the market close of
an aberration and cannot be extrapolated as (1) FY2023 was a low base with January 17, 2024
-6% yoy volume due to export duty in 1HFY23, (2) offtake to 3 mtpa NMDC steel
plant from 1HFY24 and (3) strong exports by India, net exports at 29.1 mn tons,
+205% in 9MFY24, tightened the domestic iron ore market. Increasing captive
iron ore by integrated steel companies remains a structural headwind for
NMDC. We forecast 3.8% CAGR volume for FY2024-26E, similar to past decade.
Related Research
Unfavorable risk-reward at 7X EV/EBITDA FY2025E; downgrade to SELL
NMDC has been the best performing metal stock in the past one year and up → NMDC: Strong domestic volumes and buoyant
60% since our upgrade in November 2022 (report). Our EBITDA estimates are → seaborne prices miss; robust volume
NMDC: Earnings
10%/18% below consensus and we believe the spot iron ore prices and volume performance
→ NMDC: Price increase driving upgrades
performance of FY2024E is being extrapolated by the Street. The stock now is
trading at 6.7/6.4X EV/EBITDA FY2025/26E, above past 5-year average of 3.8X.
We downgrade to SELL (from ADD) with an unchanged FV of Rs200/share. Full sector coverage on KINSITE
Sumangal Nevatia Siddharth Mehrotra

sumangal.nevatia@kotak.com siddharth.mehrotra@kotak.com
+91-22-4336-0861 +91-22-4336 0863
20
Spot international iron ore prices have come off from recent highs
Exhibit 1: China iron ore (Fe 62%) price movement, January 2018-24 (US$/ton)
China import iron ore fines 62% Fe CFR (US$/ton)

260
220
180
140
100
60
Sep-21
Sep-22
Sep-18
Sep-19
Sep-20
Sep-23
May-20
May-21
May-18
May-19
May-22
May-23
Jan-18
Jan-19
Jan-20
Jan-21
Jan-22
Jan-23
Jan-24
Chinese port inventory has started rising post October 2023 Iron ore inventory at Chinese ports has started increasing
Exhibit 2: Chinese iron ore port inventory, annual, 2020-23 (mn Exhibit 3: Chinese iron ore port inventory, January 2018-24,
tons) (mn tons)
China Iron ore port inventory (Mn tons) Chinese port stocks (mn tons)
170 2023 2022 2021 170
160
150
150
130
140
110
130
120 90
110 70
100
50
Jan-18
Jan-19
Jan-20
Jan-21
Jan-22
Jan-23
Jan-24
Oct-20
Oct-18
Oct-19
Oct-21
Oct-22
Oct-23
Jul-18
Jul-19
Jul-20
Jul-21
Jul-22
Jul-23
Apr-18
Apr-19
Apr-20
Apr-21
Apr-22
Apr-23
90
80
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec
Source: Bloomberg, Kotak Institutional Equities Source: Bloomberg, Kotak Institutional Equities
NMDC
Metals & Mining India Research
21
Chinese steel production is expected to rise yoy China net steel exports are at a seven-year high in CY2023
Exhibit 4: Chinese steel production, annual, 2015-25E (mn Exhibit 5: Chinese net exports, annual, 2015-25E (mn tons)
tons)
mn tons
China Steel Production (% yoy)
120
8 100
6 96
5.7 100
6 5.2 84
4
80 69
4 3 62
2.2 56 55 57 59
2 60 53
- 40
(0.0) 19
(0.5)
(2) 20
(1.9)
(2.4)
(4) (3)
2024E
-
2025E
2023E
2016
2017
2020
2021
2015
2018
2019
2022
2024E
2025E
2023E
2015
2019
2020
2016
2017
2018
2021
2022
Source: Bloomberg, Kotak Institutional Equities Source: Bloomberg, Kotak Institutional Equities
China steel spreads remain in negative territory

Exhibit 6: China steel spreads, calendar year ends, January 2018-24 (US$/ton)
350 Rebar Spread (US$/ton) HRC Spread (US$/ton)

300
250
200
150
100
50
-
(50)
(100)
(150)
Oct-18
Oct-19
Oct-20
Oct-21
Oct-22
Oct-23
Apr-18
Jul-18
Apr-19
Jul-19
Apr-20
Jul-20
Apr-21
Jul-21
Apr-22
Jul-22
Apr-23
Jul-23
Jan-18
Jan-19
Jan-20
Jan-21
Jan-22
Jan-23
Jan-24
Source: Bloomberg, Kotak Institutional Equities estimates
NMDC
22
We forecast lower seaborne iron ore prices as supply ramps up

Exhibit 7: Global iron-ore price forecast, March fiscal year-ends, 2018-26E (US$/ton)
Iron ore (62% Fe) China CFR (US$/ton) Spot prices (US$/ton)
160
150
140
125
120
116 118 110 105
100 94
80 69 71
60
40
20
-
2018 2019 2020 2021 2022 2023 2024E 2025E 2026E
NMDC hiked iron ore prices by ~5% on blended basis following higher seaborne prices in January 2024
Exhibit 8: NMDC’s iron ore prices, fines, lumps, January 2018-24 (Rs/ton)
NMDC-Fines (Rs/ton) NMDC - lumps (6-40 mm)

8,800
7,800
6,800
5,800
4,800
3,800
2,800
1,800
Sep-18
Sep-19
Sep-20
Sep-23
Sep-21
Sep-22
May-19
May-21
May-23
May-18
May-20
May-22
Jan-18
Jan-19
Jan-20
Jan-21
Jan-22
Jan-23
Jan-24
NMDC
23
NMDC's iron-ore prices are at mere 3% discount to export parity

Exhibit 9: Premium/discount of NMDC's prices to exported iron ore prices as of January 2024 (%)
Export parity price computation

Fines 62% Fe, CFR China (US$/ton) 127
Less: Port charges (US$/ton) (5)
Less: Ocean freight (US$/ton) (7)
Net export realizations (US$/ton) 115
Less; Export duty @ 30% for Odisha miners (US$/ton) (35)
Net export realization - (DMT basis) (US$/ton) 81
Net export realization - (WMT basis) (US$/ton) 76
Net export realization - (WMT basis) Rs/ton 6,296
Less: Inland freight cost for Odisha miners Rs/ton (1,200)
Ex-mine realizations Rs/ton 5,096
Less: Royalty, DMF payments Rs/ton (849)
Net realizations—ex-mines Rs/ton 4,246
NMDC prices Rs/ton 4,098
Premium/(Discount) to export parity -3%
Weak domestic steel prices place cap on higher domestic iron ore prices
Exhibit 10: Rebar and HRC prices, January 2021-24 (Rs/ton)
Rebar 12mm (Rs/ton) HRC prices (Rs/ton)
80,000
70,000
60,000
50,000
40,000
30,000
20,000
Nov-21
Nov-22
Nov-23
Sep-21
Sep-22
Sep-23
Jul-21
Jul-22
Jul-23
May-21
May-22
May-23
Jan-21
Jan-22
Jan-23
Jan-24
Mar-21
Mar-22
Mar-23
NMDC
24
We factor in lower NMDC realizations for FY2025/26E in line with seaborne iron ore price forecasts
Exhibit 11: Domestic iron-ore price forecast, March fiscal year-ends, 2018-26E (Rs/ton)
NMDC's fines realizations (Rs/ton) Spot prices (Rs/ton)

4,500
4,000
3,500 3,756
2,860 3,231 3,172 3,160
3,000 2,652 3,186
2,680
2,500 2,270
2,000
1,500
1,000
500
-
2018 2019 2020 2021 2022 2023 2024E 2025E 2026E
Exhibit 12: Monthly sales volumes growth, December 2020-23, (%) Exhibit 13: Sales volumes YTD growth, December 2022-23, (%)
140 Sales volume (% yoy) 50.0% Sales volumes (YTD % yoy)

120
40.0%
100
80 30.0%
60 20.0%
40
20 10.0%
- 0.0%
(20)
-10.0%
(40)
(60) -20.0%
Jun/21
Jun/22
Jun/23
Mar/22
Mar/23
Mar/21
Dec/20
Sep/21
Dec/21
Dec/22
Dec/23
Sep/22
Sep/23
Aug/23
Jun/23
Mar/23
Jan/23
Feb/23
Nov/23
Dec/22
Dec/23
Sep/23
Oct/23
May/23
Jul/23
Apr/23
Source: Company, Kotak Institutional Equities estimates Source: Company, Kotak Institutional Equities estimates
NMDC
25
We forecast 3.8% CAGR over FY2024-26E, similar to long-term CAGR of 4.1% over FY2014-24E
Exhibit 14: Total iron ore volumes for NMDC, March fiscal year-ends, 2014-26E
Total Iron ore volumes (mn tons)
60.0
3.8% CAGR
50.0
4.1% CAGR
40.0
30.0
20.0
10.0
2026E
2024E
2025E
2015
2018
2020
2023
2014
2016
2017
2019
2021
2022
Exhibit 15: NMDC, changes in estimates, March fiscal year-ends, 2024-26E
Revised Estimate Previous Estimate % Change

Units 2024E 2025E 2026E 2024E 2025E 2026E 2024E 2025E 2026E
Assumptions
China CFR Fe 62% US$/ton 118 110 105 115 110 105 3 - -
EBITDA Rs/ton 1,732 1,554 1,508 1,678 1,554 1,508 3 - -
Iron-ore sales volumes mn tons 45.5 47.0 49.0 45.0 47.0 49.0 1 - -
Earnings estimates
Revenues Rs mn 216,339 188,621 195,399 210,287 188,621 195,399 3 - -
EBITDA Rs mn 78,805 73,030 73,872 75,491 73,030 73,872 4 - -
PAT adjusted Rs mn 60,902 57,788 58,854 58,436 57,759 58,770 4 0 0
EPS (Rs) Rs/share 20.8 19.7 20.1 19.9 19.7 20.1 4 0 0
INR Rs/US$ 82.9 83.5 84.5 82.9 83.5 84.5 - - -
Exhibit 16: NMDC, key assumptions, March fiscal year-ends, 2018-26E

2018 2019 2020 2021 2022 2023 2024E 2025E 2026E
Iron ore (62% Fe) (US$/ton) 69 71 94 125 150 116 118 110 105
Domestic lumps price (ex-mine) 2,544 3,238 2,900 3,679 5,853 4,329 4,319 3,648 3,635
Domestic fines price (ex-mine) 2,270 2,860 2,652 3,231 2,680 3,186 3,756 3,172 3,160
Total Iron ore volumes (mn tons) 36 32 32 33 41 38 46 47 49
Cost/ton (Rs) 1,609 1,655 1,805 1,972 3,280 3,039 3,023 2,459 2,480
Cost/ton (Rs) (Ex-Royalty) 910 908 1,080 1,015 706 922 1,030 1,049 1,073
EBITDA/ton (Rs) 1,610 2,100 1,907 2,638 3,104 1,583 1,732 1,554 1,508
EBITDA/ton (US$) 25 30 27 36 42 20 21 19 18
NMDC
26
Cash balance remains high We expect a high payout to result in 9-10% dividend yield
Exhibit 17: Cash per share for NMDC, March fiscal year-ends, Exhibit 18: Dividend, dividend yield, March fiscal year-ends,
2018-26E (Rs) 2018-26E (Rs, %)
Cash per Share (Rs/share) Dividend (Rs/share) Dividend Yield (%) (RHS)
50 46
16.0 14.7 8%
45 42 14.0 7%
40 36 12.0 6%
10.4
35 9.9 10.0
10.0 5%
30 27
24 8.0 6.6 4%
25
20 6.0 3%
20 17 7.8
15 5.5 5.3
4.0 2%
15 4.3
10 8 2.0 1%
5 - 0%
2018
2019
2020
2021
2022
2023
2026E
2024E
2025E
-
2018 2019 2020 2021 2022 2023 2024E 2025E 2026E
Source: Company, Kotak Institutional Equities estimates Source: Company, Kotak Institutional Equities estimates
NMDC’s Fair Value is highly sensitive to iron ore prices

Exhibit 19: Sensitivity of NMDC Fair Value to iron ore volumes(mn tons) and prices (US$/ton), FY2026E
Volumes (mn tons)

200 45 47 49 51 53
95 155 160 166 172 177
Iron Ore Prices
(US$/Ton)
100 170 177 183 190 196

105 186 193 200 208 215
110 202 210 218 225 233
115 218 226 235 243 252
Our EBITDA estimate is 10%/18% below consensus for FY2025/26E

Exhibit 20: Total iron ore volumes for NMDC, March fiscal year-ends, 2025-26E
EBITDA EPS
0%
-2%
-4%
-6%
-8%
-10%
-10%
-12% -11%
-14%
-16%
-18% -16%
-20% -18%
2025E 2026E
NMDC
27
NMDC trades substantially above its recent historic valuations NMDC trades substantially above its recent historic valuations
Exhibit 21: EV/EBIDTA band chart on 1Y forward basis, January Exhibit 22: P/E band chart on 1Y forward basis, January 2018-
2018-24 (X) 24 (X)
(X) NMDC EV/EBITDA - 1Y FWD (X) NMDC PER - 1Y FWD
8 -1sd 5 Year Avg 20
+1sd
-1sd 5 Year Avg
7 18
16
6
14
5 12
4 10
3 8
6
2
4
1 2
- -
Jul-22
Jul-23
Jul-18
Jul-19
Jul-20
Jul-21
Jan-18
Jan-19
Jan-23
Jan-24
Jan-20
Jan-21
Jan-22
Jan-18
Jan-19
Jan-21
Jan-23
Jan-24
Jan-20
Jan-22
Jul-18
Jul-19
Jul-20
Jul-21
Jul-23
Jul-22
Source: Bloomberg, Kotak Institutional Equities estimates Source: Bloomberg, Kotak Institutional Equities estimates
We maintain Fair Value at Rs200/share on the basis of 6X March 2026E EV/EBITDA

Exhibit 23: NMDC, valuation details, March 2026E financials
Enterprise
EBITDA EV/EBITDA Value Rs/share
(Rs mn) (X) (Rs mn) (Rs)
March 2026E 73,872 6.0 439,535 150
Net cash 148,669 51

Equity value 588,204 200
Fair Value (Rs) 200
NMDC
28
Exhibit 24: NMDC, financial summary, March fiscal year-ends, 2018-26E (Rs mn)
2018 2019 2020 2021 2022 2023 2024E 2025E 2026E
Profit model (Rs mn)
Net sales 116,149 121,527 116,992 153,701 259,648 176,669 216,339 188,621 195,399
EBITDA 58,088 67,966 60,104 87,959 126,245 60,525 78,805 73,030 73,872
Other income 5,197 5,883 5,138 3,499 7,185 7,682 7,098 9,486 11,014
Depreciaton (2,560) (2,789) (2,944) (2,278) (2,877) (3,362) (3,630) (4,428) (5,365)
Interest (371) (403) (99) (168) (391) (752) (416) (416) (416)
Profit before tax 60,354 70,657 62,199 89,011 130,162 64,093 81,857 77,672 79,104
Extra-ordinary items 1,443 1,334 (8,678) (3,432) — 12,373 — — —
Taxes (23,733) (25,565) (17,413) (23,053) (35,751) (21,082) (20,955) (19,884) (20,251)
Net profit 38,064 46,425 36,109 62,527 94,411 55,384 60,902 57,788 58,854
Earnings per share (Rs) 11.7 14.7 14.6 22.5 32.2 14.7 20.8 19.7 20.1
Balance sheet (Rs mn)
Equity 243,538 259,515 275,340 297,561 180,317 226,351 256,801 285,695 315,122
Borrowings 5,001 3,642 5,656 19,945 17,925 4,160 4,160 4,160 4,160
Current liabilities 30,411 26,979 22,110 50,297 49,320 50,414 51,370 50,702 50,865
Other non-current liabilities 7,141 7,684 8,334 46 1,561 1,553 1,553 1,553 1,553
Total liabilities 286,091 297,820 311,439 367,849 249,123 282,477 313,884 342,110 371,700
Net fixed assets 26,717 27,207 30,167 31,124 36,625 31,986 43,356 53,928 63,563
Capital work in progress 125,199 137,925 155,012 171,281 13,333 19,980 24,980 29,980 34,980
Investments 7,865 9,393 9,856 9,849 8,950 9,347 9,347 9,347 9,347
Cash 54,382 46,077 23,923 58,060 79,775 70,978 105,396 122,378 136,275
Current assets 34,012 33,562 49,094 47,415 77,408 87,095 67,713 63,384 64,443
Other non current assets 37,916 43,655 43,387 50,120 33,034 63,092 63,092 63,092 63,092
Total assets 286,091 297,819 311,439 367,848 249,123 282,477 313,884 342,110 371,700
Net debt (49,381) (42,436) (18,268) (38,115) (61,850) (66,818) (101,236) (118,218) (132,115)
Free cash flow (Rs mn)
Operating cash flow excl. WC 46,381 53,595 45,637 70,415 92,493 61,548 64,531 62,215 64,219
Working capital changes (8,676) (8,629) (21,433) 5,277 (23,075) (31,455) 20,338 3,660 (895)
Net finance cost/ income 3,525 4,095 3,578 2,221 (391) (752) 7,098 9,486 11,014
Cash flow from operations 41,231 49,061 27,781 77,913 69,027 29,341 91,967 75,361 74,338
Capital expenditure (20,524) (19,972) (23,990) (15,973) (11,983) (14,013) (20,000) (20,000) (20,000)
Free cash flow 20,707 29,089 3,791 61,940 57,044 15,328 71,967 55,361 54,338
Ratios
EV/EBITDA 10.7 9.0 10.5 6.7 4.4 9.2 6.6 6.9 6.7
P/E 18.1 14.4 14.5 9.5 6.6 14.5 10.2 10.8 10.6
P/B 2.8 2.5 2.4 2.1 3.6 2.8 2.5 2.2 2.0
Book value (Rs/share) 77 85 90 102 62 77 88 97 108
Dividend (Rs/share) 4.3 5.5 5.3 7.8 14.7 6.6 10.4 9.9 10.0
Dividend yield (%) 2.0 2.6 2.5 3.6 6.9 3.1 4.9 4.6 4.7
FCF yield (%) 2.6 3.8 0.1 9.6 9.8 3.4 10.4 7.4 6.9
RoAE (%) 16.2 18.5 13.5 21.8 40.0 27.8 25.5 21.5 19.8
RoACE (%) 16.2 18.2 13.3 20.9 37.1 26.6 25.2 21.3 19.6
NMDC
CHANGE IN RECO.
Gujarat Pipavav Port (GPPV)

Transportation REDUCE
January 17, 2024
CMP(₹): 161 Fair Value(₹): 154 Sector View: Attractive NIFTY-50: 21,572
Price hike may impede growth; downgrade to REDUCE Company data and valuation summary
The recent sharp 7% uptick in pricing after another quarter of share loss to Stock data
ADSEZ raises risks of volume underperformance for GPPV continuing. We do
CMP(Rs)/FV(Rs)/Rating 161/154/REDUCE
note that recent MoUs announced related to green hydrogen and uptick in
52-week range (Rs) (high-low) 170-88
investments in Gujarat, though we expect the same to have a meaningful
Mcap (bn) (Rs/US$) 78/0.9
impact beyond the current concession. The MoU with the Gujarat Maritime
ADTV-3M (mn) (Rs/US$) 549/6.6
Board does not shed more light on the prospects and terms of extension of
concession. We downgrade to REDUCE after the recent rally. Revised FV of Shareholding pattern (%)
Rs154 factors in a 6% boost from higher growth beyond the end of the
concession.
2.8
11.9
ADSEZ’s dominance to impede growth, especially after recent price hike 2.4
44.0
ADSEZ continues to dominate port volume growth in Gujarat, limiting yoy 18.8
growth for GPPV’s container volumes in 3QFY24 to 6% or half of the growth for
the country. The decision to increase prices for containers by 7% taken in 20.1
January makes GPPV the port with the fastest-pricing CAGR over the past four
Promoters FPI s MFs BFIs Retail Others
years (6%) versus west coast ports. Note that past instances of large increase s
(Jan 2016, Jan 2017 and Jan 2021) have been followed by a period of volume Price performance (%) 1M 3M 12M
underperformance. Absolute 6 16 70
Rel. to Nifty 6 7 51
Recent MoUs around green hydrogen unlikely to have a material impact for now Rel. to MSCI India 3 3 47
The recent Vibrant Gujarat Summit saw three events of relevance for GPPV—(1)
Forecasts/Valuations 2024E 2025E 2026E
MoU signed with NTPC’s subsidiary NGEL to develop a green hydrogen
EPS (Rs) 7.6 9.0 10.3
ecosystem, including production of green ammonia at GPPV’s land for the
EPS growth (%) 12.4 17.4 15.1
domestic and import markets, (2) the MoU signed with Welspun New Energy to
P/E (X) 21.1 17.9 15.6
facilitate a collaboration in joint production and off-take arrangements for
P/B (X) 3.2 3.1 2.9
green molecules (ammonia, methanol) and (3) Suzuki suggesting investing
EV/EBITDA (X) 12.6 10.7 9.5
Rs350 bn to construct the second car plant in Gujarat (produces another 1
RoE (%) 15.6 17.5 19.2
mn units per year). Our discussion with the company and peer port companies Div. yield (%) 3.2 3.7 4.2
suggests slow movement on the green hydrogen front in the near-medium term. Sales (Rs bn) 10 11 13
We are cognizant that the existing concession of the port ends in 2029. EBITDA (Rs bn) 6 7 7
MoU with GMB does not shed more light on the endgame for concession renewal
Source: Bloomberg, Company data, Kotak Institutional Equities estimates
The MoU with the Gujarat Maritime Board (GMB) entails an investment of Rs33
bn starting FY2030; the same hinges on the extension of the concession. The Prices in this report are based on the market close of
January 17, 2024
MoU does enhance the case of renewal of the concession asset, though it does
not share the modalities and timelines of the same from the GMB.
We broadly retain estimates; increase FV on potential boost from recent MOUs

We had largely factored the increase in realizations of January in our earlier
estimates; the incremental increase gets negated by lower growth estimates. We
increase our FV by 6% on higher medium-term estimates to incorporate business
prospects from recently signed MoUs and uptick in investments in Gujarat after
the recent summit. We roll forward to an FV of Rs154. The stock trades at 10X
FY2026E EV/EBITDA, which is high in our assessment, given the lack of clarity
on the case and terms of concession renewal five years from now.
Full sector coverage on KINSITE
Sai Siddhardha
Aditya Mongia Deepak Krishnan
Pasupuleti
aditya.mongia@kotak.com deepak.krishnan@kotak.com sai.siddhardha@kotak.com
+91-22-4336-0884 +91-22-4336-0866 +91-22-4336-0883
30
GPPV has taken a large 7% price increase in CY2024

Increase taken in container prices by GPPV over the past nine years
9 8
8
8
7
7
6 6
5
5
4 4
3
2
2
2 2
1
0
0
Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21 Jan-22 Jan-23 Jan-24
Source: CMA CGM, Kotak Institutional Equities
Pipavav has taken the maximum increase in tariff among ports over the past four years
Comparison of tariff increases by ports on the west coast
Change over four years

30
27
25
24
25
20
16
15
10
-
Mundra Hazira Nhava Sheva - GTI Pipavav
Yoy change in tariff (%)

12%
10%
10%
8% 7%
6%
4%
4%
2%
2%
0%
Mundra Hazira Nhava Sheva - GTI Pipavav
Source: CMA CGM, Kotak Institutional Equities
Gujarat Pipavav Port

Transportation India Research
31
GPPV has grown at half the pace of the sector in 3QFY24

Growth in 3QFY24 on various subsets of port container volumes yoy, March fiscal year-end (%)
Yoy growth in 3QFY24 on containers (%)

20 18
16
12
12
8
8 6
0
Gujarat Pipavav Port volumes Port volumes Port volumes
(market (ADSEZ) (market)
excluding
ADSEZ)
Source: Industry reports, Kotak Institutional Equities estimates
We assume a CAGR of 8.5% over FY2023-26

Annual trajectory of container volumes for Gujarat Pipavav, March fiscal year-ends
('000 TEUs) Annual container cargo (%)

Container volumes ('000 TEU) yoy growth (%)
1,200 40.0
980
1,000 903 908 30.0
873
833
748 764
800 695 703 20.0
663 627
600 10.0
400 0.0
200 (10.0)
0 (20.0)
2024E
2025E
2026E
2016
2017
2018
2019
2020
2021
2022
2023
The new uptick in investments in Gujarat brings in prospects for meaningful impact on Hazira, Kandla, Mundra, Pipavav ports
Company capital outlay announcements at Gujarat Global Summit, March fiscal year-ends, FY2024
Company Capital outlay, Rs bn Outlay period Location Asset Port near by
Green energy park generating 30GW renewable energy, with 3
Adani 2,000 2024-29 Khavda Kandla
Giga factoriers for solar modules, wind turbines and hydrogen.
Construct second factory to increase production capacity from
Maruti Suzuki 350 Operational from FY2029 TBD TBD
current levels of 0.75 mn to 1 mn in the state.
Reliance Setup world class carbon fibre facility and a green energy Giga
TBD 2024-TBD Surat Hazira
Industries complex across 5000 acre.
Setup a semi conductor fab unit and 20 GW lithium ion storage
Tata group TBD 2024-TBD Sanand/Dholera Mundra/ Pipavav
battery plant.
Steel manufacturing plant with a production capacity of 24 mn
Arcelor Mittal TBD Operational from FY2029 Surat Hazira
ton/annum.
Two semi conductor manufacturing facilities, co located with
Micron Tech 210 2024-TBD Sanand Mundra
Simm Tech

32
We model marginal improvement in realizations over a strong 2QFY24 where the mix in container shipments
has been higher in EXIM, resulting in a higher average realization
Average realization at Pipavav port, CY2009-FY2026E (Rs per ton)
Average realizations
700 658
638
650 610 608
584 576
600
541 539
550 512 507 513
500 477
448 456
450 423
400 364
350 319
300 280 289
250
FY2025E
CY2009
CY2011
CY2013
FY2024E
FY2026E
CY2010
CY2012
FY2016
FY2018
FY2019
FY2020
FY2021
FY2023
FY2015
FY2017
FY2022
2QFY24
1QFY24
We assume a 9%/13% CAGR in volumes/revenues over FY2024E-26E

Volume and tariff details of GPPL, March fiscal year-ends, 2016-26E
2016 2017 2018 2019 2020 2021 2022 2023 2024E 2025E 2026E
Volumes
Container volumes (TEUs) 694,614 663,380 703,000 903,000 873,000 748,000 627,304 764,034 832,797 907,749 980,369
Yoy growth (%) (10.8) (4.5) 6.0 28.4 (3.3) (14.3) (16.1) 21.8 9.0 9.0 8.0
Bulk volumes (tons) 2,478,743 2,112,078 1,820,000 2,008,000 2,331,000 3,129,977 4,183,884 3,913,429 3,052,475 3,357,722 3,525,608
Yoy growth (%) (28.0) (14.8) (13.8) 10.3 16.1 34.3 33.7 (6.5) (22.0) 10.0 5.0
Liquid volumes (tons) 706,877 685,960 1,020,000 639,000 820,000 693,719 808,810 1,037,796 1,245,355 1,369,891 1,780,858
Yoy growth (%) 132 (3) 49 (37) 28 (15) 17 28 20 10 30
Ro/ro volumes 19,644 83,607 98,000 76,000 47,000 10,158 23,173 38,900 97,250 106,975 117,673
Total volumes (mn tons) 13 12 13 15 15 14 14 16 16 18 19
Yoy growth (%) (15.9) (5.8) 5.0 20.2 0.3 (7.3) (3.5) 13.7 2.4 9.3 9.2
Tariffs (blended rate)

Container (Rs/TEU) 6,492 6,687 6,286 5,657 5,827 6,118 6,424 7,067 7,279 7,715 7,947
yoy increase (%) 14.0 3.0 (6.0) (10.0) 3.0 5.0 5.0 10.0 3.0 6.0 3.0
Bulk (Rs/ton) 483 483 435 435 478 545 529 582 599 617 636
yoy increase (%) — — (10.0) — 10.0 14.0 (3.0) 10.0 3.0 3.0 3.0
Liquid (Rs/ton) 500 508 457 411 493 508 523 576 599 623 648
yoy increase (%) — 1.5 (10.0) (10.0) 20.0 3.0 3.0 10.0 4.0 4.0 4.0
Ro/ro realization 3,000 3,150 3,150 3,150 3,308 3,473 3,647 3,829 4,020 4,221
Overall realization (Rs / ton) 504 541 510 458 478 514 538 580 608 638 658
yoy increase (%) 7.9 7.3 (5.8) (10.2) 4.4 7.4 4.8 7.7 4.9 4.9
Revenues (Rs mn)

Container 4,510 4,436 4,419 5,109 5,087 4,577 4,030 5,399 6,062 7,004 7,791
Bulk 1,198 1,021 792 873 1,115 1,707 2,213 2,277 1,830 2,073 2,242
Liquid 353 348 466 263 404 352 423 597 746 853 1,153
Ro/ro 59 263 309 239 155 35 85 149 391 452
Total revenues 6,524 6,597 6,529 7,043 7,377 7,348 7,428 9,100 9,772 11,200 12,608
yoy increase (%) (8.2) 1.1 (1.0) 7.9 4.7 (0.4) 1.1 22.5 7.4 14.6 12.6

33
We marginally increase our EBITDA estimates by 1% net of higher realization and lower volumes
Change in estimates for GPPL, March fiscal year-ends, 2020-26E
Revised estimates Previous estimates % change
2020 2021 2022 2023 2024E 2025E 2026E 2024E 2025E 2026E 2024E 2025E 2026E
Volumes
Container volumes (TEUs) 873,000 748,000 627,304 764,034 832,797 907,749 980,369 855,718 924,176 998,110 (3) (2) (2)
Yoy growth (%) (3.3) (14.3) (16.1) 21.8 9.0 9.0 8.0 12.0 8.0 8.0
Bulk volumes (tons) 2,331,000 3,129,977 4,183,884 3,913,429 3,052,475 3,357,722 3,525,608 3,130,743 3,443,818 3,616,008 (3) (3) (3)
Yoy growth (%) 16.1 34.3 33.7 (6.5) (22.0) 10.0 5.0 (20.0) 10.0 5.0
Liquid volumes (tons) 820,000 693,719 808,810 1,037,796 1,245,355 1,369,891 1,780,858 1,276,489 1,404,138 1,825,379 (2) (2) (2)
Yoy growth (%) 28 (15) 17 28 20 10 30 23 10 30
Ro/ro volumes 47,000 10,158 23,173 38,900 97,250 106,975 117,673 48,625 53,488 58,836 100 100 100
Yoy growth (%) (38.2) (78.4) 128.1 67.9 150.0 10.0 10.0 25.0 10.0 10.0
Total volumes (mn tons) 15 14 14 16 16 18 19 16 18 19 (2) (2) (2)
Yoy growth (%) 0.3 (7.3) (3.5) 13.7 2.4 9.3 9.2 4.8 8.5 9.2
Tariffs (blended rate)

Container (Rs/TEU) 5,827 6,118 6,424 7,067 7,279 7,715 7,947 7,420 7,791 8,025 (2) (1) (1)
yoy increase (%) 3.0 5.0 5.0 10.0 3.0 6.0 3.0 5.0 5.0 3.0
Bulk (Rs/ton) 478 545 529 582 599 617 636 599 617 636 — — —
yoy increase (%) 10.0 14.0 (3.0) 10.0 3.0 3.0 3.0 3.0 3.0 3.0
Liquid (Rs/ton) 493 508 523 576 599 623 648 599 623 648 — — —
yoy increase (%) 20.0 3.0 3.0 10.0 4.0 4.0 4.0 4.0 4.0 4.0
Ro/ro realization 3,308 3,473 3,647 3,829 4,020 4,221 4,432 4,020 4,221 4,432 — — —
yoy increase (%) 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0
Overall realization (Rs / ton) 478 514 538 580 608 638 658 604 630 649 1 1 1
yoy increase (%) 4.4 7.4 4.8 7.7 4.9 4.9 3.1 4.1 4.3 3.1
Revenues (Rs mn)

Container 5,087 4,577 4,030 5,399 6,062 7,004 7,791 6,349 7,200 8,010 (5) (3) (3)
Bulk 1,115 1,707 2,213 2,277 1,830 2,073 2,242 1,877 2,126 2,299 (3) (3) (2)
Liquid 404 352 423 597 746 853 1,153 764 874 1,182 (2) (2) (2)
Ro/ro 155 35 85 149 391 452 522 195 226 261 100 100 100
Total revenues 7,377 7,348 7,428 9,100 9,772 11,200 12,608 9,930 11,245 12,653 (2) (0) (0)
yoy increase (%) 4.7 (0.4) 1.1 22.5 7.4 14.6 12.6 9.1 13.2 12.5
EBITDA 4,466 4,240 4,126 5,022 5,502 6,533 7,490 5,556 6,474 7,413 (1) 1 1
EBITDA margin (%) 60.5 57.7 55.5 55.2 56.3 58.3 59.4 56.0 57.6 58.6
PBT 3,586 3,265 3,071 4,291 4,940 5,798 6,672 4,995 5,743 6,595 (1) 1 1
Tax (662) (1,082) (1,093) (1,001) (1,243) (1,459) (1,679) (1,257) (1,445) (1,660)
Tax rate (%) 18.5 33.1 35.6 23.3 25.2 25.2 25.2 25.2 25.2 25.2
PAT 2,924 2,184 1,978 3,290 3,697 4,339 4,993 3,738 4,297 4,935 (1) 1 1
EPS 6.0 4.5 4.1 6.8 7.6 9.0 10.3 7.7 8.9 10.2 (1) 1 1
SoTP-based Fair Value at Rs154/share

Sum-of-the-parts valuation of GPPL (Rs/share)
Value Stake GPPL stake value Per share
(Rs bn) (%) (Rs bn) (Rs) Method of valuation
Pipavav port 69,374 100.0 69,374 144 One-year forward FCFE valuation
Pipavav Rail Corporation Ltd (PRCL) 12,750 38.8 4,947 10 15X two-year forward EPS
Total value for GPPV 82,124 74,321 154

34
The CMP is factoring in the best case scenario of royalty; downside can be large in the worst case scenarip
Scenario analysis at differing outcomes of additional royalty in the renewed concession beyond
2029
Additional One-year Implied March 2026

royalty forward FV EV/EBITDA multiple
(%) (Rs/share) (X)
0 175 10.4
5 164 9.7
10 154 9.0
15 143 8.3
20 132 7.6
25 121 6.9
30 118 6.7
35 118 6.7
40 118 6.7
Note:
(a) FV is calculated based on value beyond 2029 being maximum of DCF (based on revised royalty) and depreciated replacement
value
Source: Kotak Institutional Equities estimates

35
Profit, balance sheet and cash model of GPPV, March fiscal year-ends, 2016-26E (Rs mn)
2016 2017 2018 2019 2020 2021 2022 2023 2024E 2025E 2026E
Profit model
Net sales 6,600 6,831 6,489 7,020 7,353 7,335 7,435 9,170 9,772 11,200 12,608
Total operating costs (2,839) (2,645) (2,748) (3,149) (2,888) (3,095) (3,310) (4,148) (4,270) (4,667) (5,118)
EBITDA 3,761 4,186 3,741 3,872 4,466 4,240 4,126 5,022 5,502 6,533 7,490
EBITDA margin (%) 57.0 61.3 57.6 55.1 60.7 57.8 55.5 54.8 56.3 58.3 59.4
Other income 258 354 370 470 509 423 286 510 726 589 568
Financial charges (2) (4) (3) (4) (74) (63) (48) (80) (80) (80) (80)
Depreciation (964) (1,065) (1,036) (1,128) (1,314) (1,334) (1,293) (1,161) (1,208) (1,244) (1,307)
Pre-tax profit 3,054 3,470 3,072 3,210 3,586 3,265 3,071 4,291 4,940 5,798 6,672
Taxation (1,392) (971) (1,087) (1,153) (662) (1,082) (1,093) (1,001) (1,243) (1,459) (1,679)
Adjusted PAT 1,661 2,499 1,985 2,057 2,924 2,184 1,978 3,290 3,697 4,339 4,993
EPS (Rs) 3.4 5.2 4.1 4.3 6.0 4.5 4.1 6.8 7.6 9.0 10.3
Balance sheet
Shareholders' funds 19,164 20,195 20,141 20,210 20,848 20,321 20,324 23,107 24,156 25,362 26,747
Equity share capital 4,834 4,834 4,834 4,834 4,834 4,834 4,834 4,834 4,834 4,834 4,834
Reserves and surplus 14,329 15,361 15,306 15,376 16,014 15,487 15,490 18,273 19,321 20,527 21,913
Loan funds — — — — — — — — — — —
Total sources of funds 19,164 20,195 20,141 20,210 20,848 20,321 20,324 23,107 24,156 25,362 26,747
Total fixed assets 17,309 17,684 17,186 16,354 15,882 15,200 14,572 14,577 16,031 17,524 19,991
Investments 830 830 830 830 830 830 830 3,154 3,154 3,154 3,154
Cash and bank balances 2,898 3,522 4,315 5,337 6,495 7,254 8,558 8,948 8,417 8,121 6,950
Net current assets excl. cash (599) (2,258) (2,187) (1,849) (1,865) (1,956) (2,185) (2,165) (2,040) (2,031) (1,941)
Total application of funds 19,164 20,195 20,141 20,210 20,848 20,321 20,324 23,107 24,156 25,362 26,747
Cash flow statement
Cash flow from operations before WC changes 3,855 4,289 3,719 3,859 4,517 4,244 4,083 4,748 5,360 6,295 7,305
Changes in working capital 841 319 (70) (338) (486) 196 331 25 (125) (9) (90)
Income tax (801) (588) (614) (642) (636) (599) (610) (1,073) (988) (1,459) (1,679)
Cash flow from operations 3,894 4,020 3,035 2,879 3,395 3,841 3,803 3,701 4,247 4,827 5,536
Capex (3,648) (1,430) (533) (294) (148) (448) (511) (578) (2,865) (2,737) (3,774)
Free cash flows 246 2,590 2,502 2,585 3,248 3,393 3,292 3,122 1,381 2,090 1,762
Growth (%)
Revenue growth (24) 4 (5) 8 5 (0) 1 23 7 15 13
EBITDA growth (25) 11 (11) 4 15 (5) (3) 22 10 19 15
Recurring PAT growth (62) 50 (21) 4 42 (25) (9) 66 12 17 15
Key ratios
EBITDA margin (%) 57.0 61.3 57.6 55.1 60.7 57.8 55.5 54.8 56.3 58.3 59.4
Recurring PAT margin (%) 25.2 36.6 30.6 29.3 39.8 29.8 26.6 35.9 37.8 38.7 39.6
Effective tax rate (%) 46 28 35 36 18 33 36 23 25 25 25
Net debt to equity (X) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0)
BVPS (Rs) 40 42 42 42 43 42 42 48 50 52 55
RoE (%) 9 13 10 10 14 11 10 15 16 18 19
RoCE (%) 9 13 10 10 14 11 10 15 16 18 19

36
December 2023: Results calendar

Mon Tue Wed Thu Fri Sat
15-Jan 16-Jan 17-Jan 18-Jan 19-Jan 20-Jan
Angel One Bank of Maharashtra Asian Paints 360 ONE Atul Can Fin Homes
Jio Financial Services Federal Bank Happiest Minds Finolex Industries Central Bank of India ICICI Bank
HDFC Bank ICICI Prudential Life Home First Finance CESC IDBI Bank
ICICI Lombard IIFL Finance Indiamart CreditAccess Gramin IDFC Bank
ICICI Securities LTIMindtree IndusInd Bank Hatsun Agro J K Cement
L&T Technology Services Oracle Financial Jindal Stainless Hindustan Unilever Kotak Mahindra Bank
Mastek Hindustan Zinc Persistent Systems
Metro Brands One 97 Communications Rossari Biotech
Polycab RBL Bank Union Bank
Poonawalla Fincorp Reliance Industries
Ramkrishna Forg. Sunteck Realty
Shoppers Stop Supreme Industries
Sterling & Wilson Tejas Networks
Supreme Petrochem UltraTech Cement
Tata Communications
22-Jan 23-Jan 24-Jan 25-Jan 26-Jan 27-Jan
Coforge Axis Bank Aarti Drugs ACC APL Apollo Tubes
Colgate-Palmolive (India) CG Power & Industrial Bajaj Auto AU Small Finance Bank Capri Global
Lloyds Metals Glenmark Life Sciences Balkrishna Industries Cholamandalam Craftsman Automation
MRPL Granules India Bharat Dynamics Cipla HPCL
Oberoi Realty Havells India Birlasoft Cyient Yes Bank
Tamilnad Mercantile Bank Hitachi Energy Blue Dart Expres Equitas Small Finance Bank
VST Industries ICRA Canara Bank IEX
Zensar Technologies Indus Towers CEAT Indraprastha Gas
Infibeam Avenues Container Corp. Intellect Design
JSW Energy Dalmia Bharat JSW Steel
KEI Industries DCB Bank Kfin Technologies
L&T Finance Holdings DLF Maharashtra Scooters
Mahanagar Gas Exide Industries Privi Speciality Chemicals
Pidilite Industries Indian Overseas Bank SBFC
Rallis India IOCL SBI Cards and Payment Services
REC Laurus Labs SBI Life Insurance
Route Mobile Laxmi Organic Shriram Finance
Sona BLW Precision MAS Financial Services Sterlite Technologies
Tanla Platforms Motilal Oswal Financial Services Syngene International
Tata Elxsi PNB Housing Tata Technologies
United Spirits Rainbow Children's Medicare
Tata Steel
Tech Mahindra
TVS Motor
UCO Bank
Ujjivan Small Finance Bank
29-Jan 30-Jan 31-Jan 1-Feb 2-Feb 3-Feb
Bajaj Finance Apar Industries Amara Raja Energy & Mobility Aditya Birla Capital Alkyl Amines Clean Science & Technology
Bharat Electronics Bajaj Finserv Ambuja Cements Aether Industries Bank of India State Bank of India
CSB Bank Bajaj Holdings & Investment Bank of Baroda Bata India Bikaji Foods
ITC Blue Star Dabur India Castrol India LIC Housing Finance
Latent View Dr Reddy's Laboratories Godrej Consumer Products Deepak Fertilisers Mahindra Holidays
Marico Gillette India IDFC Five Star Business Finance Mahindra Lifespace Developers
Nippon AMC Jubilant Ingrevia IRB Infrastructure Gujarat Alkalies Medplus Health Services
Nuvoco Vistas Corp Kaynes Technology Jubilant Foodworks HFCL Tata Motors
Petronet LNG KPIT Technologies Jyothy Laboratories MphasiS Torrent Pharmaceuticals
Tata Investment Corp. L&T Kalyan Jewellers Raymond
UTI AMC Mahindra & Mahindra Financial Mankind Pharma Rites
Piramal Pharma Maruti Suzuki Sumitomo Chemical
SIS Motherson Sumi Wiring Titan Company
Star Health and Allied Insurance P&G Hygiene Tube Investments
TeamLease Services Shree Cement V-Guard Industries
Vaibhav Global Sun Pharmaceuticals
Voltas Westlife Foodworld
ZF Commercial
5-Feb 6-Feb 7-Feb 8-Feb 9-Feb 10-Feb
Avanti Feeds CAMS Cummins India Apollo Hospitals Emami MCX India
Cholamandalam Financial Endurance Technologies Manappuram Finance Biocon Indigo Paints
Kansai Nerolac Gujarat State Fertilizers & Chemicals Nestle India Esab India Tata Power
Orient Cement Max Financial Services Tata Consumer Products Escorts Kubota
Navin Fluorine Page Industries
P&G Health
Timken
TTK Prestige
BASF India Bosch Crompton Greaves Consumer
GlaxoSmithkline Pharma Hindalco Industries Gland Pharma
Gujarat Pipavav Port RHI Magnesita
HEG
JM Financial
Lakshmi Machine Works
TCI Expresss
ABB Rain Industries
Source: BSE, NSE, Kotak Institutional Equities
India Research
37
Kotak Institutional Equities: Valuation summary of KIE Universe stocks

Price (Rs) Fair Value Upside Mkt cap. O/S shares EPS (Rs) P/E (X) P/B (X) EV/EBITDA (X) RoE (%) Dividend yield (%) ADV-3M (US$ mn)
Company Rating 17-Jan-24 (Rs) (%) (Rs bn) (US$ bn) (mn) 2024E 2025E 2026E 2024E 2025E 2026E 2024E 2025E 2026E 2024E 2025E 2026E 2024E 2025E 2026E 2024E 2025E 2026E Traded Delivered
Automobiles & Components
Apollo Tyres SELL 472 345 (27) 300 3.6 638 27 27 28 17 18 17 2.1 1.9 1.8 8 7 7 13 11 11 1.1 1.3 1.5 17 7
Ashok Leyland REDUCE 171 170 (1) 503 6.1 2,936 9 9 9 18 18 18 4.8 4.2 3.7 11 11 11 29 25 21 2.2 2.2 2.2 27 14
Bajaj Auto SELL 7,166 4,900 (32) 2,074 25 283 258 270 295 28 26 24 7.5 7.1 6.7 22 20 19 28 28 29 2.9 3.0 3.3 41 22
Balkrishna Industries SELL 2,556 1,900 (26) 494 5.9 193 68 78 89 38 33 29 5.8 5.1 4.5 22 18 16 16 17 17 0.7 0.8 0.8 9 5
Bharat Forge SELL 1,206 760 (37) 561 6.8 466 24 34 40 49 36 30 7.4 6.4 5.4 23 19 17 16 19 19 0.5 0.6 0.6 14 7
CEAT SELL 2,423 1,400 (42) 98 1.2 40 149 118 117 16 21 21 2.5 2.3 2.1 7 8 8 16 12 11 1.5 1.2 1.2 9 4
CIE Automotive SELL 492 470 (5) 187 2.2 378 22 26 29 23 19 17 3.1 2.8 2.5 13 11 10 15 15 16 1.1 1.3 1.5 4 2
Eicher Motors SELL 3,751 2,900 (23) 1,027 12.4 272 145 147 160 26 25 23 6.7 5.9 5.2 22 20 18 28 25 24 1.2 1.3 1.6 27 13
Endurance Technologies SELL 2,042 1,280 (37) 287 3.5 141 46 57 65 45 36 31 5.8 5.2 4.6 22 18 16 13 14 15 0.5 0.6 0.7 4 3
Escorts Kubota SELL 2,901 2,100 (28) 321 3.9 111 98 107 111 30 27 26 3.4 3.1 2.8 25 22 21 12 11 11 0.5 0.6 0.6 12 5
Exide Industries SELL 319 250 (22) 271 3.3 850 12 15 16 26 22 20 2.3 2.1 1.9 14 12 11 9 10 10 0.8 0.8 0.8 11 5
Hero Motocorp REDUCE 4,371 3,475 (20) 874 10.5 200 205 227 240 21 19 18 4.9 4.6 4.2 14 13 12 24 25 24 3.3 3.6 3.8 35 16
Mahindra & Mahindra BUY 1,598 1,680 5 1,987 23.9 1,159 89 90 103 18 18 15 3.5 3.0 2.6 15 12 10 22 18 18 0.8 0.8 1.0 48 28
Maruti Suzuki SELL 10,052 8,450 (16) 3,160 38.0 314 377 385 420 27 26 24 4.7 4.2 3.8 18 17 15 19 17 17 1.5 1.5 1.7 70 42
MRF SELL 134,878 77,500 (43) 572 6.9 4 4,961 4,567 4,935 27 30 27 3.4 3.1 2.8 13 13 12 13 11 11 0.3 0.3 0.3 10 3
Samvardhana Motherson ADD 108 100 (7) 733 8.8 6,776 4 5 6 30 21 18 3.0 2.7 2.4 10 8 8 10 14 14 0.7 0.7 0.8 19 10
Schaeffler India SELL 3,325 2,720 (18) 520 6.3 156 61 69 78 55 48 43 10.8 9.6 8.5 37 32 28 21 21 21 0.1 0.1 0.0 3 2
SKF SELL 4,655 3,925 (16) 230 2.8 49 107 138 158 43 34 29 8.6 7.4 6.3 31 24 21 20 22 21 0.7 0.9 1.0 2 1
Sona BLW Precision REDUCE 577 520 (10) 338 4.1 583 9 12 14 64 49 41 12.5 10.4 8.7 37 29 24 21 23 23 0.4 0.5 0.6 12 7
Tata Motors REDUCE 806 630 (22) 3,085 37.1 3,829 52 64 67 15 13 12 4.9 3.4 2.7 6 5 5 37 32 25 0.3 0.3 0.3 98 40
Timken SELL 3,392 2,450 (28) 255 3.1 75 55 69 88 61 49 39 10.5 8.7 7.2 42 33 26 19 19 20 0.1 0.1 0.0 4 2
TVS Motor SELL 2,017 1,150 (43) 958 11.5 475 42 47 53 48 43 38 12.9 10.6 8.9 28 25 22 30 27 25 0.5 0.6 0.6 23 12
Uno Minda ADD 695 600 (14) 398 4.8 571 15 17 19 47 42 37 8.1 6.9 5.9 27 23 20 17 17 16 0.3 0.4 0.4 4 2
Varroc Engineering SELL 540 420 (22) 83 1.0 153 16 25 30 35 21 18 6.6 5.1 4.0 12 10 8 19 24 22 — — — 5 2
Automobiles & Components Cautious 19,452 234.0 24.5 22.3 20.4 4.9 4.3 3.7 12.6 11.4 10.3 20 19.2 18.1 1.1 1.2 1.3 516 253
Banks
AU Small Finance Bank SELL 757 615 (19) 507 6.1 667 24 33 44 32 23 17 4.1 3.4 2.8 — — — 14 16 18 — — — 18 8
Axis Bank BUY 1,082 1,100 2 3,338 40.2 3,077 79 84 94 14 13 11 2.3 2.0 1.8 — — — 18 17 16 1.1 1.2 1.3 105 57
Bandhan Bank BUY 228 270 18 368 4.4 1,611 23 26 30 10 9 8 1.7 1.4 1.2 — — — 17 17 17 1.5 1.7 1.9 33 15
Bank of Baroda ADD 226 250 11 1,166 14.0 5,178 30 29 32 7 8 7 1.2 1.0 0.9 — — — 15 13 13 2.7 2.6 2.9 47 20
Canara Bank ADD 457 500 9 829 10.0 1,814 79 91 100 6 5 5 1.2 1.0 0.8 — — — 18 18 17 3.5 4.1 4.5 37 13
City Union Bank ADD 144 140 (3) 107 1.3 740 12 14 17 12 10 9 1.5 1.3 1.1 — — — 12 12 13 1.7 2.0 2.3 9 4
DCB Bank BUY 150 150 0 47 0.6 312 19 21 26 8 7 6 1.1 0.9 0.8 — — — 12 12 14 1.3 1.7 2.5 7 4
Equitas Small Finance Bank ADD 110 110 - 124 1.5 1,122 7 10 12 15 11 9 2.2 1.9 1.6 — — — 15 17 19 — — — 7 4
Federal Bank BUY 146 175 20 355 4.3 2,419 15 15 18 10 10 8 1.3 1.2 1.1 — — — 14 12 13 2.0 2.1 2.4 23 11
HDFC Bank BUY 1,538 1,860 21 11,673 140.4 7,580 84 95 109 18 16 14 2.8 2.5 2.2 — — — 18 16 16 1.2 1.4 1.6 302 184
ICICI Bank BUY 982 1,150 17 6,887 82.8 6,984 53 56 61 18 18 16 3.1 2.7 2.4 — — — 17 16 15 1.1 1.1 1.2 164 90
IndusInd Bank BUY 1,644 1,600 (3) 1,279 15.4 776 110 123 141 15 13 12 2.1 1.9 1.7 — — — 15 14 15 1.0 1.1 1.3 66 33
Karur Vysya Bank BUY 169 170 1 135 1.6 802 17 20 23 10 9 7 1.5 1.3 1.1 — — — 15 16 16 2.6 3.0 3.5 7 4
Punjab National Bank REDUCE 97 95 (2) 1,070 12.9 11,011 8 13 14 13 8 7 1.2 1.0 0.9 — — — 8 13 13 2.3 3.7 4.2 57 16
SBI Cards and Payment Services BUY 752 925 23 715 8.6 946 25 31 46 30 24 16 6.0 4.9 3.8 — — — 22 22 26 0.4 0.5 0.6 17 10
State Bank of India BUY 626 760 21 5,587 67.2 8,925 61 63 71 10 10 9 1.7 1.4 1.3 — — — 16 14 14 1.9 1.9 1.9 112 51
Ujjivan Small Finance Bank ADD 59 58 (1) 115 1.4 1,928 6 6 7 10 9 9 2.1 1.7 1.5 — — — 24 20 18 0.0 0.0 0.0 9 4
Union Bank ADD 132 135 2 978 11.8 7,412 18 22 23 7 6 6 1.2 1.0 0.9 — — — 16 16 15 3.3 4.0 4.2 29 13
YES Bank REDUCE 25 17 (31) 712 8.6 31,315 0 1 1 88 29 18 1.8 1.7 1.6 — — — 2 6 9 0.0 0.0 0.0 86 25
Banks Attractive 35,992 432.9 14.0 12.6 11.1 2.0 1.8 1.6 14.4 14.1 14.2 1.4 1.6 1.7 1,136 565
Source: Company, Bloomberg, Kotak Institutional Equities estimates
India Research
38

Building Products
Astral SELL 1,775 1,600 (10) 477 5.7 269 23 29 35 76 61 51 14.7 12.1 10.1 45 38 32 21 22 22 0.2 0.2 0.3 12 6
Building Products Cautious 477 5.7 76.1 61.1 50.6 14.6 12.1 10.1 45.4 37.6 31.8 19.2 19.9 19.9 0.2 0.2 0.3 12 6
Capital goods
ABB REDUCE 4,773 4,200 (12) 1,011 12.2 212 58 66 80 83 72 60 16.7 13.8 11.4 65 57 46 22 21 21 0.1 0.1 0.1 14 6
Bharat Electronics SELL 186 118 (36) 1,357 16.3 7,310 5 5 6 39 37 33 8.8 8.0 7.2 28 26 23 24 23 23 1.2 1.3 1.4 35 19
BHEL SELL 207 65 (69) 721 8.7 3,482 (1) (0) 2 NM NM 101 2.7 2.7 2.6 NM 106 39 NM NM 3 0.0 0.0 (0.1) 70 22
Carborundum Universal REDUCE 1,143 1,120 (2) 217 2.6 190 24 32 41 48 36 28 6.8 5.9 5.1 29 23 18 15 18 20 0.4 0.6 0.7 3 2
Cochin Shipyard REDUCE 849 530 (38) 223 2.7 263 23 24 32 37 36 27 4.6 4.3 3.9 28 23 17 13 13 15 0.8 0.9 1.0 43 11
Cummins India ADD 2,010 2,040 1 557 6.7 277 51 59 68 40 34 30 9.5 8.5 7.7 38 32 27 25 26 27 1.4 1.6 1.9 12 6
Dixon Technologies SELL 6,368 4,200 (34) 381 4.6 59 76 99 129 84 64 49 21.8 16.2 12.2 48 37 29 30 29 28 0.0 0.0 0.0 37 11
G R Infraprojects SELL 1,152 1,010 (12) 111 1.3 97 77 81 99 15 14 12 1.9 1.7 1.4 10 9 8 13 12 13 0.0 0.0 0.0 1 1
IRB Infrastructure ADD 46 46 1 275 3.3 6,039 1 2 2 35 22 19 2.1 2.1 2.1 12 10 9 6 10 11 3.6 4.4 5.0 20 8
Kalpataru Projects BUY 737 745 1 120 1.4 160 37 55 68 20 13 11 2.2 1.9 1.7 8 7 6 12 16 17 0.4 0.6 0.7 4 2
KEC International REDUCE 615 610 (1) 158 1.9 257 19 34 47 33 18 13 3.8 3.2 2.6 13 9 7 12 19 22 0.3 0.6 0.8 3 2
L&T REDUCE 3,571 2,700 (24) 4,908 59.0 1,373 93 111 131 38 32 27 7.0 6.2 5.5 25 21 19 18 21 21 0.8 0.9 1.1 70 42
Siemens SELL 4,107 3,500 (15) 1,463 17.6 356 62 75 84 66 55 49 10.0 8.8 7.7 49 41 37 16 17 17 0.4 0.5 0.5 16 8
Thermax ADD 3,089 3,150 2 368 4.4 113 53 63 77 59 49 40 47.4 37.3 28.5 47 37 28 15 16 17 0.4 0.5 0.5 4 2
Capital goods Cautious 11,871 142.8 46.7 38.5 31.8 6.5 5.9 5.3 28.8 24.1 20.5 14.0 15.4 16.7 0.7 0.8 0.9 332 141
Commercial & Professional Services
SIS BUY 463 500 8 67 0.8 147 23 28 35 20 16 13 2.5 2.2 1.9 12 10 9 13 14 15 0.0 0.0 0.0 0 0
TeamLease Services REDUCE 3,159 2,430 (23) 53 0.6 17 70 96 125 45 33 25 6.4 5.4 4.4 38 28 22 14.4 17.8 19.2 — — — 2 1
Commercial & Professional Services Neutral 120 1.4 26.7 21.0 16.7 3.4 3.0 2.5 17.1 13.9 11.5 12.9 14.1 15.1 0.0 0.0 0.0 3 1
Commodity Chemicals
Asian Paints REDUCE 3,242 3,100 (4) 3,110 37.4 959 58 60 62 56 54 52 16.6 14.6 13.0 39 37 36 32 29 26 0.9 1.0 1.1 33 19
Berger Paints SELL 595 500 (16) 694 8.3 1166 11 11 12 55 53 50 13.3 11.7 10.2 34 34 32 26 23 22 0.8 0.8 0.8 8 4
Indigo Paints REDUCE 1,482 1,375 (7) 71 0.8 48 33 37 40 45 40 37 7.8 6.8 6.1 28 24 23 19 18 17 0.5 0.6 0.9 2 1
Kansai Nerolac REDUCE 339 295 (13) 274 3.3 808 9 9 10 37 37 35 5.4 5.0 4.7 24 24 23 15 14 14 1.0 1.4 1.4 2 1
Tata Chemicals SELL 1,084 790 (27) 276 3.3 255 53 39 42 21 28 26 1.3 1.3 1.3 8 9 9 7 5 5 1.8 1.3 1.4 13 5
Commodity Chemicals Cautious 4,425 53.2 48.6 49.2 47.0 8.7 8.0 7.4 30.0 30.1 28.6 18.0 16.3 15.8 1.0 1.0 1.1 57 29
Construction Materials
ACC REDUCE 2,252 1,970 (13) 423 5.1 188 92 111 130 24 20 17 2.7 2.5 2.2 14 11 9 12 13 13 0.8 1.0 1.2 14 6
Ambuja Cements SELL 521 350 (33) 1,034 12.4 2,463 14 19 20 37 28 26 2.6 2.4 2.2 12 10 9 9 9 9 0.4 0.6 0.6 22 10
Dalmia Bharat ADD 2,192 2,350 7 411 4.9 185 55 102 126 40 21 17 2.5 2.2 2.0 14 10 8 6 11 12 0.4 0.7 0.9 11 6
Grasim Industries NR 2,068 - (100) 1,369 16.5 658 124 133 145 17 16 14 1.6 1.4 1.3 8 8 6 10 10 10 0.5 0.7 0.8 15 8
J K Cement SELL 4,036 2,600 (36) 312 3.8 77 103 127 152 39 32 26 5.8 5.0 4.3 16 14 12 16 17 17 0.4 0.4 0.4 6 2
Nuvoco Vistas Corp ADD 342 365 7 122 1.5 357 5 11 15 67 31 23 1.4 1.3 1.2 9 9 8 2 4 5 0.0 0.0 0.0 2 1
Orient Cement REDUCE 264 200 (24) 54 0.7 205 11 14 16 23 19 17 3.0 2.7 2.3 10 9 7 14 15 15 0.8 0.8 0.8 5 2
Shree Cement SELL 26,137 17,900 (32) 943 11.3 36 643 753 867 41 35 30 4.7 4.2 3.8 20 17 15 12 13 13 0.4 0.5 0.6 7 3
The Ramco Cements SELL 952 690 (27) 225 2.7 236 27 36 48 35 27 20 3.0 2.7 2.4 14 12 10 9 11 13 0.3 0.4 0.5 6 3
UltraTech Cement SELL 9,855 7,200 (27) 2,845 34.2 289 277 357 405 36 28 24 4.7 4.1 3.6 20 17 14 14 16 16 0.4 0.5 0.3 40 23
Construction Materials Cautious 7,738 93.1 29.1 23.6 20.8 2.8 2.6 2.3 13.3 11.3 9.7 9.8 10.9 11.2 0.5 0.6 0.5 128 65
India Research
39

Consumer Durables & Apparel
Aditya Birla Fashion and Retail REDUCE 224 200 (11) 212 2.6 998 (8) (6) (4) NM NM NM 5.6 4.8 5.2 17 12 10 NM NM NM — — — 10 4
Campus Activewear ADD 284 290 2 87 1.0 304 4 5 6 78 63 48 13.0 10.8 9.1 35 30 25 18 19 20 — — 0.5 4 2
Eureka Forbes BUY 468 670 43 91 1.1 208 4 6 10 109 73 48 2.3 2.3 2.2 52 39 26 2 3 5 — — — 1 0
Havells India SELL 1,431 1,140 (20) 897 10.8 628 20 25 30 70 57 48 12.3 11.1 9.9 47 38 32 18 20 22 0.6 0.7 0.8 13 7
Page Industries SELL 37,693 34,500 (8) 420 5.1 11 539 663 778 70 57 48 25.3 20.9 17.5 43 36 30 40 40 39 0.8 1.0 1.2 13 6
Polycab SELL 4,439 4,120 (7) 667 8.0 150 116 128 149 38 35 30 8.4 7.2 6.1 26 24 20 24 22 22 0.6 0.7 0.8 68 29
TCNS Clothing Co. REDUCE 377 420 11 24 0.3 69 (3) 1 4 NM 445 107 4.1 3.9 3.5 18 14 11.8 NM 1 3 — — — 1 0
Vedant Fashions REDUCE 1,163 1,200 3 282 3.4 248 18 22 27 64 53 44 17.2 14.1 11.4 39 32 27 29 29 29 — — — 4 2
Voltas SELL 1,053 770 (27) 348 4.2 331 11 22 27 99 49 39 6.1 5.6 5.1 70 36 32 6 12 14 0.4 0.6 0.8 19 10
Whirlpool SELL 1,379 1,020 (26) 175 2.1 127 20 28 39 68 50 35 4.7 4.4 4.0 36 27 20 7 9 11 0.3 0.3 0.4 2 1
Consumer Durables & Apparel Cautious 3,406 41.0 73.4 54.7 43.4 8.4 7.4 6.7 34.4 27.2 22.7 11.5 13.6 15.42 0.5 0.6 0.7 143 67
Consumer Staples
Britannia Industries ADD 5,062 4,800 (5) 1,219 14.7 241 88 98 110 58 52 46 31.1 28.1 25.2 40 36 32 57 57 58 1.6 1.8 2.0 18 11
Colgate-Palmolive (India) REDUCE 2,500 2,325 (7) 680 8.2 272 47 51 56 53 49 44 37.4 35.5 33.6 36 33 30 72 75 78 1.8 2.0 2.1 12 6
Dabur India ADD 549 590 7 974 11.7 1,772 11 13 14 49 44 39 9.8 8.8 7.9 39 34 30 21 21 21 1.0 1.1 1.3 14 9
Godrej Consumer Products ADD 1,101 1,150 4 1,126 13.5 1,023 19 23 26 58 48 42 7.4 6.8 6.3 39 33 29 13 15 16 0.7 1.0 1.2 14 10
Hindustan Unilever ADD 2,563 2,775 8 6,022 72.4 2,350 45 50 57 57 51 45 11.7 11.3 10.8 40 35 32 21 23 24 1.6 1.8 2.0 49 34
ITC ADD 467 470 1 5,822 70.0 12,428 16 18 20 29 26 24 8.2 7.9 7.5 22 20 18 27 30 32 3.0 3.3 3.6 57 35
Jyothy Labs REDUCE 504 370 (27) 185 2.2 367 10 11 13 49 44 40 10.5 9.3 8.3 37 34 30 23 22 22 0.9 1.1 1.2 6 2
Marico REDUCE 528 550 4 683 8.2 1,290 12 13 14 46 42 38 15.1 12.9 11.0 32 30 26 36 33 32 1.1 1.2 1.4 9 6
Nestle India ADD 2,543 2,450 (4) 2,452 29.5 964 31 37 42 82 69 61 85.7 81.0 78.6 54 47 41 113 120 130 1.1 1.4 1.6 29 16
Sula Vineyards ADD 617 600 (3) 52 0.6 84 11 13 15 56 49 41 8.6 7.6 6.7 30 27 24 16 17 17 0.4 0.5 0.7 7 4
United Breweries ADD 1,827 1,675 (8) 483 5.8 264 19 31 38 96 59 48 11.3 10.3 9.5 56 37 31 12 18 21 0.8 1.3 1.6 6 3
United Spirits ADD 1,095 1,075 (2) 797 9.6 727 16 19 22 70 57 51 11.2 10.3 9.4 46 38 34 17 19 19 0.2 0.9 1.1 13 7
Varun Beverages ADD 1,249 1,250 0 1,622 19.5 1,299 16 20 24 80 64 51 23.6 17.8 13.6 46 37 30 34 32 30 0.2 0.2 0.2 30 17
Consumer Staples Attractive 23,173 278.7 48.5 42.5 38.0 11.7 11.0 10.3 34.6 30.2 26.8 24 26 27 1.6 1.8 2.0 285 170
Diversified Financials
360 One BUY 647 750 16 232 2.8 355 21 24 30 31 27 22 6.7 6.3 5.9 — — — 23 24 28 2.4 2.8 3.4 5 3
Aavas Financiers BUY 1,530 2,025 32 121 1.5 79 64 78 95 24 20 16 3.2 2.8 2.4 — — — 14 15 16 0.0 0.0 0.0 5 3
ABSL AMC REDUCE 483 480 (1) 139 1.7 288 24 25 27 20 19 18 5.0 4.5 4.1 — — — NM NM NM 2.9 3.1 3.3 1 0
Aptus Value Housing Finance ADD 342 330 (3) 171 2.1 498 12 14 17 29 25 21 4.6 3.9 3.2 — — — 17 17 17 1.2 0.0 0.0 3 2
Bajaj Finance REDUCE 7,359 7,400 1 4,548 54.7 617 234 294 363 31 25 20 6.0 5.0 4.1 — — — 22 22 22 0.4 0.5 0.6 100 49
Bajaj Finserv ADD 1,586 1,725 9 2,531 30.4 1,593 67 84 98 24 19 16 4.6 3.9 3.6 — — — 21 22 23 0.1 0.1 0.1 26 12
Cholamandalam ADD 1,288 1,250 1,082 13.0 839 40 50 61 32 26 21 5.8 4.9 3.8 — — — 20 20 20 0.2 0.2 0.3 25 14
Computer Age Management Services ADD 2,824 2,800 (1) 139 1.7 49 67 79 93 42 36 30 15.3 13.2 11.3 — — — 39 40 40 1.6 1.8 2.1 17 9
CRISIL SELL 4,102 3,300 (20) 300 3.6 73 87 93 105 47 44 39 — — — 33 32 32 1.4 1.5 1.7 2 1
Five Star Business Finance ADD 730 840 15 213 2.6 291 26 32 39 28 23 19 4.2 3.5 3.0 — — — 16 17 17 — — — 7 4
HDFC AMC ADD 3,334 3,650 9 712 8.6 214 87 101 113 39 33 30 10.7 9.9 9.1 — — — 29 31 32 1.9 2.3 2.5 18 9
Home First Finance BUY 965 1,175 22 85 1.0 88 33 40 49 29 24 20 4.1 3.5 3.0 — — — 15 16 17 — — 0.5 5 3
ICRA REDUCE 5,511 5,100 (7) 53 0.6 10 162 180 201 34 31 27 — — — 15 16 17 — — 0 0 0
Kfin Technologies ADD 523 520 (1) 89 1.1 169 13 15 18 39 34 29 8.3 6.8 6.0 — — — 17 17 18 — 0.9 1 9 5
L&T Finance Holdings SELL 170 100 (41) 422 5.1 2,480 8 10 12 21 17 14 1.8 1.7 1.6 — — — 9 10 12 1.5 1.8 2.1 17 7
LIC Housing Finance BUY 575 650 13 316 3.8 550 88 82 85 7 7 7 1.2 1.1 0.9 — — — 17 14 13 2.5 2.3 2.4 15 6
Mahindra & Mahindra Financial ADD 279 310 11 345 4.2 1,234 14 20 26 20 14 11 2.0 1.8 1.7 — — — 10 13 15 1.0 1.5 1.9 14 7
Muthoot Finance ADD 1,417 1,500 6 569 6.8 401 100 122 144 14 12 10 2.3 2.0 1.7 — — — 18 19 19 1.4 1.7 2.0 8 3
Nippon AMC ADD 486 500 3 305 3.7 623 15 17 19 33 29 26 8.4 8.2 8.4 — — — 26 29 32 2.7 3.1 3.4 6 3
SBFC REDUCE 86 75 (13) 92 1.1 1,091 2 3 3 41 31 25 3.8 3.4 3.0 — — — 10 10 12 0.0 0.0 0.0 3 2
Shriram Finance BUY 2,288 2,300 1 859 10.3 376 187 224 263 12 10 9 1.8 1.6 1.4 — — — 15 16 17 1.2 1.5 1.7 30 18
UTI AMC REDUCE 851 900 6 108 1.3 127 46 42 46 18 20 18 2.7 2.6 2.6 — — — 15 13 14 4.3 4.0 4.4 2 1
Diversified Financials Attractive 13,432 161.6 23.8 19.7 16.6 4.0 3.4 3.0 16.7 17.4 18.0 0.7 0.9 1.0 317 160
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Electric Utilities
CESC BUY 138 105 (24) 183 2.2 1,326 11 14 14 13 10 10 1.3 1.3 1.2 7 7 6 11 13 13 3.7 3.8 4.1 17 7
JSW Energy SELL 472 225 (52) 776 9.3 1,640 10 15 18 49 32 26 3.9 3.5 3.1 19 14 12 8 12 13 0.4 0.4 0.4 24 9
NHPC ADD 73 55 (25) 733 8.8 10,045 4 5 6 17 15 12 1.9 1.8 1.7 17 10 8 12 12 14 3.2 3.5 4.1 22 10
NTPC SELL 309 265 (14) 2,999 36.1 9,895 19 22 24 15.9 14.0 13 1.9 1.7 1.6 11 9 8 12 13 13 2.4 2.6 2.8 49 27
Power Grid ADD 239 220 (8) 2,225 26.8 9,301 18 19 20 13.0 12.5 12 2.5 2.3 2.1 8 7 7 20 19 18 4.5 4.7 4.9 46 29
Tata Power SELL 349 245 (30) 1,115 13.4 3,196 9 8 10 40 43 34 3.5 3.3 3.0 15 14 13 9 8 9 — — — 73 27
Electric Utilities Attractive 8,032 96.6 17.3 15.7 14.3 2.2 2.1 1.9 10.5 9.3 8.4 13.0 13.3 13.4 2.6 2.7 2.9 231 110
Fertilizers & Agricultural Chemicals
Bayer Cropscience REDUCE 5,959 5,080 (15) 268 3.2 45 188 210 232 32 28 26 9.4 9.0 8.5 22 20 18 30 32 34 2.7 3.0 3.3 2 1
Godrej Agrovet ADD 546 530 (3) 105 1.3 192 17 23 30 33 24 18 3.6 3.3 2.9 19 14 11 11 14 17 1.3 1.7 2.3 1.5 0.7
Rallis India REDUCE 257 210 (18) 50 0.6 195 9 11 13 28 24 21 2.7 2.5 2.3 15 13 11 10 11 12 1.4 1.6 1.8 5 2
UPL REDUCE 551 550 (0) 414 5.0 751 27 40 52 20 14 11 1.4 1.3 1.2 7 6 5 7 10 12 1.1 1.6 2.1 18 9
Fertilizers & Agricultural Chemicals Cautious 836 10.1 24.6 18.2 14.4 2.3 2.1 1.9 9.2 7.9 6.7 9.4 11.7 13.4 1.6 2.1 2.5 26 13
Gas Utilities
GAIL (India) SELL 164 125 (24) 1,079 13.0 6,575 12 13 13 13 13 12 1.8 1.7 1.7 11 10 9 14 14 14 4.6 4.9 5.2 41 20
GSPL BUY 317 375 18 179 2.2 564 22 17 19 14 18 17 1.8 1.7 1.6 7 9 8 13 9 10 2.6 2.8 2.9 5 3
Indraprastha Gas SELL 433 390 (10) 303 3.6 700 31 29 30 14 15 14 3.7 3.3 2.9 10 11 10 28 23 21 2.3 2.4 2.5 14 8
Mahanagar Gas SELL 1,256 1,050 (16) 124 1.5 99 131 93 90 10 13 14 2.5 2.2 2.0 6 8 8 28 17 15 3.4 2.6 2.5 7 3
Petronet LNG SELL 233 175 (25) 349 4.2 1,500 23 23 24 10 10 10 2.1 1.8 1.5 6 6 6 21 19 17 4.3 2.1 1.1 15 9
Gas Utilities Cautious 2,034 24.5 12.7 13.0 12.4 2.1 1.9 1.8 9.1 8.9 8.5 16.2 14.7 14.2 3.9 3.7 3.7 83 42
Health Care Services
Apollo Hospitals BUY 5,926 5,900 (0) 852 10.2 144 64 103 135 93 58 44 12.2 10.4 8.6 36 27 22 14 19 21 0.2 0.3 0.3 27 13
Aster DM Healthcare ADD 437 415 (5) 218 2.6 498 9 13 16 48 33 28 4.5 4.0 3.6 12 10 9 10 13 14 — — — 5 2
Dr Lal Pathlabs SELL 2,438 1,850 (24) 203 2.4 83 42 49 56 58 50 43 11.1 10.0 9.1 32 28 24 20 21 22 0.9 1.1 1.2 8 3
Global Health REDUCE 1,030 885 (14) 276 3.3 268 18 20 25 58 51 41 9.8 8.4 7.2 32 28 23 18 18 19 0.3 0.3 0.4 4 2
KIMS ADD 2,007 2,075 3 161 1.9 80 45 55 68 44 36 30 7.9 6.5 5.3 23 19 15 20 20 20 0.0 0.0 0.0 3 2
Max Healthcare REDUCE 732 630 (14) 711 8.6 971 13 16 20 55 47 37 7.6 6.6 5.7 38 31 24 15 15 17 0.2 0.2 0.2 11 7
Metropolis Healthcare REDUCE 1,567 1,425 (9) 80 1.0 51 30 43 52 52 36 30 7.4 6.5 5.7 26 21 18 15 19 20 0.6 0.8 1.0 8 3
Narayana Hrudayalaya REDUCE 1,259 1,170 (7) 257 3.1 204 39 42 49 32 30 25 8.8 6.8 5.4 22 19 16 31 26 24 — — — 6 3
Rainbow Children's Medicare REDUCE 1,236 1,100 (11) 125 1.5 102 22 28 31 55 44 39 10.1 8.5 7.2 29 23 20 20 21 20 0.3 0.4 0.4 3 2
Health Care Services Cautious 2,885 34.7 57.6 45.0 36.3 8.7 7.5 6.3 28.4 23.0 19.0 15.1 16.6 17.4 0.2 0.3 0.3 75 38
Hotels & Restaurants
Chalet Hotels ADD 725 660 (9) 149 1.8 205 12 19 29 59 39 25 8.3 6.8 5.4 27 21 16 15 19 24 0.0 0.0 0.0 2 1
Devyani International ADD 187 195 4 225 2.7 1,204 1 2 2 140 122 92 19.9 18.4 16.7 33 27 22 15 16 19 0.0 0.0 0.0 6 3
Indian Hotels ADD 462 460 (0) 656 7.9 1,420 9 14 17 51 34 28 7.1 5.9 4.9 29 21 17 15 19 19 0.1 0.1 0.1 14 8
Jubilant Foodworks REDUCE 528 500 (5) 348 4.2 660 4 7 8 127 80 64 15.6 13.5 11.5 31 24 21 13 18 19 0.2 0.3 0.4 14 7
Lemon Tree Hotels REDUCE 134 105 (21) 106 1.3 792 3 5 6 42 28 23 10.9 8.9 7.3 18 13 11 28 36 34 1.1 1.3 1.5 10 5
Restaurant Brands Asia REDUCE 122 110 (10) 61 0.7 495 (1) (1) (0) NM NM NM 3.3 3.4 3.4 24 18 14 NM NM NM 0.0 0.0 0.0 4 2
Samhi Hotels BUY 186 230 24 41 0.5 218 (8) 6 9 NM 31 20 3.8 3.3 2.9 21 13 11 NM 11 15 0.0 0.0 0.0 2
Sapphire Foods BUY 1,411 1,640 16 90 1.1 64 10 11 15 146 125 93 6.8 6.5 6.0 19 16 14 5 5 7 0.0 0.0 0.0 4 2
Westlife Foodworld REDUCE 860 800 (7) 134 1.6 156 6 7 10 140 125 85 20.8 18.5 15.9 34 30 24 16 16 20 0.0 0.0 0.0 2 1
Hotels & Restaurants Attractive 1,809 21.8 84.5 50.4 39.0 9.0 7.8 6.6 27.7 20.7 17.0 10.6 15.4 16.9 0.1 0.2 0.2 58 30
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Insurance
HDFC Life Insurance BUY 607 800 32 1,305 15.7 2,020 8 9 10 79 67 58 9.5 8.9 8.4 — — — 12 14 15 0.3 0.4 0.4 26 14
ICICI Lombard REDUCE 1,454 1,400 (4) 716 8.6 491 39 48 57 37 30 25 6.0 5.2 4.5 — — — 17 19 19 0.7 0.8 1.0 9 5
ICICI Prudential Life BUY 515 650 26 742 8.9 1,439 6 7 8 86 76 64 6.9 6.4 5.9 — — — 8 9 10 0.6 0.6 0.6 14 8
LIC BUY 888 1,040 17 5,613 67.5 6,325 47 47 51 19 19 17 8.2 6.2 4.9 — — — 51 37 31 — — — 34 16
Max Financial Services BUY 928 1,100 19 320 3.9 345 2 2 2 560 498 433 — — — — — — 1 1 1 — — — 10 6
PB Fintech ADD 879 850 (3) 396 4.8 450 0 6 12 8,451 153 73 — — — 0 5 9 — — — 13 9
SBI Life Insurance BUY 1,421 1,625 14 1,423 17.1 1,004 19 20 21 76 72 67 11.0 9.7 8.7 — — — 15 14 14 0.2 0.2 0.2 20 11
Star Health and Allied Insurance ADD 557 550 (1) 326 3.9 582 12 18 23 46 31 24 5.3 4.5 3.8 — — — 12 16 17 — — — 5 3
Insurance Attractive 10,841 130.4 29.6 28.1 25.4 7.9 6.5 5.5 27 23 22 0.1 0.1 0.1 130 70
Internet Software & Services
Cartrade Tech SELL 703 460 (35) 33 0.4 51.5 8 11 13 83 63 55 1.7 1.7 1.6 50 32 25 2.1 2.7 3.0 0.0 0.0 0.0 2 1
FSN E-commerce Ventures ADD 168 170 1 481 5.8 2,875.0 0 1 2 463 179 104 32.9 27.9 22.0 125 75 51 7.3 16.9 24 — — — 18 9
Indiamart SELL 2,601 2,700 4 156 1.9 60.7 57 70 83 45 37 31 8.3 6.8 5.6 37 28 23 17.6 20.0 19.6 0.1 0.1 0.1 8 4
Info Edge ADD 5,174 5,360 4 669 8.1 129.0 62 69 81 84 75 64 5.8 5.5 5.2 68 60 50 7.1 7.5 8.4 0.3 0.3 0.4 17 8
Just Dial BUY 868 1,050 21 74 0.9 85.0 40 51 59 21 17 15 1.8 1.7 1.5 15 9 6 9.0 10.2 10.6 — — — 4 2
Zomato BUY 127 130 2 1,110 13.3 9,131 0 1 3 766 94 46 5.8 5.4 4.7 (19,607) 87 39 0.8 5.9 10.9 0.0 0.0 0.0 99 45
Internet Software & Services Attractive 2,523 30.3 141 76 49 6.2 5.7 5.1 119 62 40 4.4 7.4 10.3 0.1 0.1 0.1 149 68
IT Services
Cyient BUY 2,273 2,400 6 252 3.0 111 70 87 98 32 26 23 5.5 5.0 4.4 18 16 14 19 20 20 1.6 2.1 2.3 12 6
HCL Technologies ADD 1,576 1,650 5 4,276 51.4 2,714 58 65 72 27 24 22 6.3 6.0 5.7 17 15 14 24 25 27 3.2 3.5 3.7 44 26
Infosys BUY 1,640 1,800 10 6,808 81.9 4,146 59 66 75 28 25 22 8.4 7.7 7.1 18 16 14 31 32 34 2.7 3.0 3.4 111 68
KPIT Technologies SELL 1,541 940 (39) 423 5.1 273 21 28 36 73 56 43 19.1 15.2 12.0 42 33 26 30 31 31 0.4 0.5 0.7 25 10
L&T Technology Services SELL 5,540 4,700 (15) 586 7.0 106 123 142 164 45 39 34 10.2 8.9 7.8 29 26 23 24 24 25 0.7 1.0 1.1 12 4
LTIMindtree REDUCE 6,276 5,500 (12) 1,859 22.4 296 160 187 225 39 34 28 9.6 8.3 7.0 27 23 20 26 27 27 1.1 1.3 1.4 29 13
Mphasis REDUCE 2,627 2,590 (1) 496 6.0 188 83 97 114 32 27 23 5.9 5.5 5.0 20 17 15 19 21 23 2.3 2.5 2.7 17 8
Persistent Systems REDUCE 7,712 6,985 (9) 593 7.1 77 145 183 227 53 42 34 12.7 10.6 8.8 33 27 22 26 28 28 0.6 0.8 1.0 40 16
RateGain ADD 729 650 (11) 86 1.0 109 12 15 17 61 48 42 9.4 7.8 6.5 43 36 29 17 18 17 0.0 0.0 0.0 5 2
Tata Elxsi SELL 8,598 5,450 (37) 535 6.4 62 132 157 185 65 55 46 21.8 18.5 15.8 48 40 34 36 37 37 0.8 1.0 1.2 16 7
TCS ADD 3,885 4,115 6 14,214 171.0 3,649 127 141 157 31 27 25 14.8 13.3 12.0 21 19 17 49 51 51 1.5 2.9 3.2 90 54
Tech Mahindra REDUCE 1,327 1,300 (2) 1,167 14.0 890 35 59 72 38 22 18 4.3 4.2 3.9 20 13 11 11 19 22 2.3 3.3 3.5 32 16
Wipro REDUCE 482 430 (11) 2,520 30.3 5,287 21 23 25 23 21 19 3.4 2.9 2.7 14 12 11 15 15 15 0.2 0.2 1.9 44 20
IT Services Neutral 33,815 406.7 30.2 26.7 23.7 8.6 7.8 7.1 19.7 17.6 15.6 28.3 29.1 29.9 1.8 2.5 2.9 477 248
Media
PVR INOX ADD 1,509 1,700 13 148 1.8 98 18 41 56 82 37 27 1.8 1.7 1.6 19 14 11 2 5 6 0.1 0.3 0.4 12 6
Sun TV Network BUY 666 725 9 262 3.2 394 49 52 55 14 13 12 2.6 2.3 2.2 9 8 8 20 19 19 3.8 4.1 4.5 8 3
Zee Entertainment Enterprises REDUCE 246 275 12 236 2.8 960 7 8 9 35 29 27 2.1 2.1 2.0 20 17 16 6 7 7 1.2 1.6 1.6 66 25
Media Attractive 647 7.8 23.1 19.9 18.1 2.2 2.1 2.0 13.9 12.1 10.8 9.5 10.4 10.8 2.0 2.3 2.5 85 33
Metals & Mining
Hindalco Industries ADD 560 535 (5) 1,259 15.1 2,220 38 41 45 15 14 13 1.2 1.1 1.0 7.0 6.5 5.8 9 9 9 0.7 0.7 0.8 36 16
Hindustan Zinc SELL 316 265 (16) 1,335 16.1 4,225 20 20 20 16 16 16 10.3 10.3 10.3 9.3 9.1 8.7 65 64 66 6.3 6.2 6.4 3 2
Jindal Steel and Power BUY 722 800 11 737 8.9 1,020 48 60 83 15 12 9 1.7 1.5 1.3 7.9 7.0 5.3 12 13 16 0.3 0.8 1.7 19 7
JSW Steel REDUCE 813 820 1 1,987 23.9 2,417 53 69 89 15 12 9 2.6 2.2 1.8 8.4 6.9 5.6 18 20 22 1.0 1.3 1.6 20 9
National Aluminium Co. SELL 134 75 (44) 245 3.0 1,837 7 7 7 20 20 20 1.8 1.7 1.6 10.3 9.9 9.4 9 9 8 2.0 2.0 2.0 35 14
NMDC SELL 206 200 (3) 605 7.3 2,931 21 20 20 10 10 10 2.4 2.1 1.9 6.4 6.7 6.4 25 21 20 5.0 4.8 4.9 34 15
SAIL SELL 113 60 (47) 467 5.6 4,130 4 6 7 26 20 17 0.8 0.8 0.8 8.6 8.0 7.7 3 4 5 1.4 1.8 2.1 41 17
Tata Steel REDUCE 132 145 10 1,619 19.5 12,224 5 11 16 26 12 8 1.6 1.4 1.3 9.8 6.7 5.5 6 13 17 1.0 2.2 3.0 54 26
Vedanta SELL 265 220 (17) 985 11.8 3,717 17 20 21 16 13 13 2.3 2.3 2.2 5.4 5.0 4.7 15 18 18 5.6 6.6 6.8 31 15
Metals & Mining Cautious 9,239 111.1 16.5 13.0 10.8 1.9 1.8 1.6 7.8 6.7 5.8 11.8 13.7 14.9 2.5 2.9 3.3 274 120
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Oil, Gas & Consumable Fuels
BPCL SELL 472 400 (15) 1,023 12.3 2,093 121 47 49 4 10 10 1.5 1.4 1.3 3.1 6.3 5.8 43 14 14 11.5 4.5 4.6 43 20
Coal India REDUCE 380 275 (28) 2,340 28.1 6,163 33 28 31 11 13 12 3.6 3.3 3.0 10.9 15.0 12.9 34 26 26 5.3 5.3 5.3 55 25
HPCL SELL 449 310 (31) 637 7.7 1,419 100 59 57 4 8 8 1.8 1.5 1.4 5.0 8.0 7.9 44 21 19 8.9 5.2 5.1 43 17
IOCL SELL 144 100 (31) 2,035 24.5 14,121 24 15 14 6 9 10 1.3 1.3 1.2 4.5 5.9 6.0 23 14 12 8.2 5.3 4.8 42 19
Oil India ADD 381 335 (12) 414 5.0 1,084 53 55 56 7 7 7 1.1 1.0 0.9 5.9 5.5 5.4 16 15 14 3.5 5.3 5.6 18 9
ONGC ADD 232 210 (10) 2,919 35.1 12,580 41 41 39 6 6 6 0.9 0.8 0.8 3.4 3.4 3.3 17 15 13 5.3 5.6 5.2 37 19
Reliance Industries BUY 2,723 2,725 0 18,425 221.6 6,766 109 130 138 25 21 20 2.4 2.1 1.9 12.9 11.0 9.8 10 11 10 — 0.3 0.3 185 115
Oil, Gas & Consumable Fuels Neutral 27,792 334.3 12.4 13.7 13.6 1.9 1.7 1.6 7.7 8.0 7.5 15.4 12.6 11.7 2.5 2.0 1.9 422 223
Pharmaceuticals
Biocon REDUCE 280 235 (16) 336 4.0 1,202 4 9 16 64 31 18 1.5 1.4 1.3 15 12 9 2 5 8 0.5 1.1 2.0 15 6
Cipla ADD 1,294 1,320 2 1,045 12.6 806 49 55 59 26 23 22 3.9 3.5 3.1 16 14 13 16 16 15 0.9 1.0 1.1 27 14
Concord Biotech REDUCE 1,388 1,300 (6) 145 1.7 105 29 38 49 47 37 28 9.6 8.0 6.6 33 26 20 22 24 25 0.5 0.7 0.9 3 2
Divis Laboratories SELL 3,729 2,775 (26) 990 11.9 265 64 83 102 58 45 37 7.3 6.8 6.2 41 31 25 13 16 18 1.0 1.1 1.3 21 9
Dr Reddy's Laboratories REDUCE 5,650 5,375 (5) 942 11.3 166 323 339 322 18 17 18 3.4 2.9 2.5 11 10 10 21 18 15 0.7 0.8 0.8 30 16
Gland Pharma SELL 1,954 1,365 (30) 322 3.9 164 54 65 72 36 30 27 3.6 3.2 2.9 22 18 16 11 11 11 - - - 8 4
Laurus Labs SELL 412 270 (34) 222 2.7 536 7 12 16 58 34 25 5.0 4.4 3.7 23 17 13 9 14 16 - - - 11 4
Lupin SELL 1,400 1,005 (28) 637 7.7 455 39 45 56 36 31 25 4.6 4.1 3.6 18 15 13 13 14 15 0.5 0.6 0.7 21 10
Mankind Pharma ADD 2,199 2,000 (9) 881 10.6 401 45 56 69 49 39 32 10.0 8.4 7.0 35 28 23 22 23 24 0.5 0.6 0.8 25 14
Sun Pharmaceuticals ADD 1,299 1,280 (1) 3,117 37.5 2,399 38 46 53 34 28 25 4.9 4.3 3.8 22 18 16 15 16 16 0.6 0.7 0.8 28 16
Torrent Pharmaceuticals REDUCE 2,472 1,950 (21) 837 10.1 338 49 60 76 51 41 32 11.1 9.0 7.3 24 22 18 24 24 25 0.3 0.4 0.5 8 4
Pharmaceuticals Neutral 10,203 122.7 32.8 27.6 24.0 4.4 3.9 3.5 19.3 16.4 14.2 13.5 14.2 14.5 0.5 0.6 0.7 222 112
Real Estate
Brigade Enterprises BUY 977 780 (20) 226 2.7 231 14 21 28 72 46 34 6.5 5.8 5.0 21 15 11 9 13 16 0.3 0.3 0.3 6 3
Brookfield India Real Estate Trust ADD 254 280 10 111 1.3 439 6 12 17 45 21 15 1.1 1.1 1.2 17 12 11 2 4 6 7.4 8.9 9.8 1 1
DLF ADD 775 590 (24) 1,919 23.1 2,475 13 16 20 61 48 40 4.8 4.4 4.0 69 55 43 8 10 10 0.3 0.3 0.3 36 16
Embassy Office Parks REIT ADD 350 360 3 332 4.0 948 10 14 17 36 25 20 1.4 1.5 1.6 16 13 12 4 6 8 6.3 7.4 8.4 17 15
Godrej Properties SELL 2,319 1,370 (41) 645 7.8 278 21 43 50 110 54 46 6.5 5.8 5.2 (282) 181 210 6 11 12 — — — 18 7
Macrotech Developers ADD 1,130 910 (19) 1,089 13.1 964 17 50 59 65 23 19 7.6 5.7 4.4 42 16 13 12 29 26 — — — 20 9
Mindspace REIT ADD 331 350 6 196 2.4 593 10 13 15 32 26 23 1.3 1.4 1.4 14 13 12 4 5 6 6.2 6.6 7.1 1 1
Nexus Select Trust ADD 130 135 4 198 2.4 1,515 5 5 6 27 24 21 6.6 8.3 10.8 15 14 13 28 30 44 7.1 7.1 7.6 1 1
Oberoi Realty REDUCE 1,531 1,080 (29) 557 6.7 364 47 57 103 33 27 15 4.0 3.5 2.8 23 17 9 13 14 21 0.1 0.1 0.1 14 6
Phoenix Mills ADD 2,418 2,190 (9) 432 5.2 179 49 74 85 49 33 28 4.7 4.1 3.6 20 16 14 10 13 14 0.1 0.2 0.2 11 6
Prestige Estates Projects ADD 1,289 910 (29) 517 6.2 401 41 14 22 31 93 58 4.5 4.3 4.0 23 21 18 15 5 7 0.1 0.1 0.1 17 8
Signature Global ADD 1,126 910 (19) 158 1.9 141 14 24 30 81 46 37 18.7 13.3 9.8 61 34 25 44 33 30 — — — 4— 2
Sobha BUY 1,327 835 (37) 126 1.5 95 29 66 50 45 20 26 4.6 3.8 3.4 23 11 12 11 21 14 0.3 0.3 0.4 13 4
Sunteck Realty BUY 451 520 15 66 0.8 140 20 23 58 23 20 8 2.1 1.9 1.5 18 15 6 10 10 22 0.2 0.2 0.2 6 3
Real Estate Attractive 6,572 79.0 49.9 34.6 26.9 4.1 3.8 3.5 31.6 21.5 16.9 8.2 11.0 12.9 1.0 1.1 1.2 165 81
Retailing
Avenue Supermarts SELL 3,786 3,650 (4) 2,464 29.6 651 40 51 64 96 74 59 13.2 11.2 9.4 60 47 38 15 16 17 — — — 18 12
Metro Brands REDUCE 1,227 1,250 2 334 4.0 272 14 17 21 90 70 58 18.4 15.5 12.9 44 36 30 22 24 24 — — 1— 2 1
Titan Company ADD 3,830 3,775 (1) 3,400 40.9 888 41 50 62 92 76 61 35.7 27.1 20.6 61 49 40 34 40 38 0.3 0.4 0.5 34 18
Trent ADD 3,148 2,700 (14) 1,119 13.5 356 25 36 51 124 87 61 32.0 23.4 16.9 64 47 36 30 31 32 — — — 22 11
Retailing Neutral 6,198 88.0 97.3 76.6 60.5 21.9 17.6 14.1 60.3 47.4 38.3 22 23 23 0.2 0.2 0.2 76 42
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Specialty Chemicals
Aarti Industries SELL 583 540 (7) 211 2.5 363 11 16 25 55 37 24 4.0 3.7 3.3 24 19 14 8 11 15 0.3 0.4 0.8 14 6
Atul SELL 6,629 4,070 (39) 196 2.4 30 134 167 203 49 40 33 3.9 3.6 3.3 28 23 19 8 9 11 0.3 0.5 0.6 4 2
Castrol India ADD 168 150 (11) 166 2.0 989 9 10 10 20 17 16 8.1 7.5 6.9 13 12 11 43 45 45 4.2 4.8 5.1 12 6
Clean Science & Technology ADD 1,474 1,480 0 157 1.9 106 18 32 53 81 46 28 13.4 10.8 8.2 58 34 21 18 26 34 0.2 0.4 0.6 3 2
Deepak Nitrite REDUCE 2,325 2,120 (9) 317 3.8 136 60 69 79 39 34 29 6.6 5.6 4.8 26 24 21 18 18 18 0.3 0.3 0.3 12 4
Navin Fluorine ADD 3,446 3,620 5 171 2.1 50 69 99 143 50 35 24 6.9 5.8 4.8 31 22 16 15 18 22 0.2 0.2 0.3 9 5
Pidilite Industries ADD 2,758 2,750 (0) 1,403 16.9 508 38 45 52 72 62 53 17.1 15.1 13.6 49 42 37 25 26 27 0.7 0.9 1.1 12 7
PI Industries ADD 3,421 3,630 6 519 6.2 152 103 110 124 33 31 27 6.0 5.2 4.5 26 22 20 20 18 17 0.4 0.4 0.6 19 11
SRF BUY 2,310 2,630 14 685 8.2 296 50 73 102 46 32 23 5.9 5.1 4.3 25 18 14 14 17 21 0.5 0.6 — 13 6
Vinati Organics SELL 1,715 1,510 (12) 176 2.1 104 36 49 62 47 35 28 6.7 5.8 4.9 34 25 20 15 18 19 0.3 0.4 0.5 1 1
Specialty Chemicals Neutral 4,000 48.1 47.8 38.5 30.7 7.7 6.8 5.9 30.6 24.8 20.2 16.2 17.6 19.1 0.6 0.8 0.8 100 49
Telecommunication Services
Bharti Airtel ADD 1,085 1,050 (3) 6,374 76.7 5,967 26 39 51 42 28 21 7.4 5.6 4.6 10 8 6 18 23 23 0.5 0.5 0.6 60 39
Indus Towers ADD 211 200 (5) 569 6.8 2,695 19 21 13 11 10 16 2.2 1.8 1.8 4 4 4 22 20 11 0.7 6.2 3.6 25 9
Vodafone Idea RS 15 — — 735 8.8 48,680 (7) (6) (7) NM NM NM NM NM NM 19 19 22 NM NM NM — — — 70 19
Tata Communications SELL 1,698 1,400 (18) 484 5.8 285 37 44 64 46 39 26 24.6 17.2 11.6 14 11 9 61 52 53 0.8 0.9 1.4 23 11
Telecommunication Services Attractive 8,162 98.2 NM 5,076.8 264.9 86 60 110 10.7 9.0 8.1 NM 1.2 41 0.5 0.9 0.7 178 78
Transportation
Adani Ports and SEZ BUY 1,167 1,340 15 2,521 30.3 2,160 44 52 62 26 22 19 4.7 3.9 3.3 17 14 12 19 19 19 0.3 0.3 0.5 86 33
Container Corp. SELL 850 700 (18) 518 6.2 609 21 24 28 41 35 30 4.4 4.2 3.9 25 22 19 11 12 13 1.1 1.3 1.6 13 7
Delhivery BUY 404 410 1 297 3.6 729 (5) (1) 1 NM NM 284 3.2 3.2 3.0 1,529 72 40 NM NM 1 — — — 8 5
Gateway Distriparks ADD 112 124 10 56 0.7 500 6 7 8 20 17 14 2.8 2.5 2.2 14 12 10 15 16 17 1.5 1.6 1.8 2 1
GMR Airports REDUCE 83 55 (34) 503 6.1 6,036 (1) (0) 0 NM NM 401 NM NM NM 27 15 13 83 16 NM — — — 44 18
Gujarat Pipavav Port REDUCE 161 154 (5) 78 0.9 483 8 9 10 21 18 16 3.2 3.1 2.9 13 11 9 16 18 19 3.2 3.7 4.2 7 3
InterGlobe Aviation BUY 3,059 3,300 8 1,181 14.2 383 179 175 199 17 17 15 197.2 16.0 3.5 6 5 3 NM 170 68 — — — 24 13
JSW Infrastructure SELL 208 180 (13) 437 5.3 2,100 4 6 7 46 33 28 5.6 5.0 17.9 24 19 18 16 16 17 0.2 0.6 0.7 16 8
Mahindra Logistics REDUCE 438 340 (22) 32 0.4 71 3 10 20 136 42 22 5.5 5.0 4.2 14 10 8 4 12 21 — — — 2 1
Transportation Attractive 5,622 67.6 31.0 26.2 22.1 6.5 5.2 4.3 15.1 12.0 10.1 21 20 19.6 0.3 0.4 0.5 203 89
KIE universe 262,416 3,156 24.3 21.9 19.4 3.8 3.4 3.0 14.3 13.0 11.6 15.6 15.5 15.6 1.3 1.5 1.6
Notes:
(a) We have used adjusted book values for banking companies.
(b) 2022 means calendar year 2021, similarly for 2023 and 2024 for these particular companies.
(c) Exchange rate (Rs/US$)= 83.1
India Research
44
DISCLAIMERS, DISCLOSURES & LEGAL

“Each of the analysts named below hereby certifies that, with respect to each subject company and its securities for which the analyst is
responsible in this report, (1) all of the views expressed in this report accurately reflect his or her personal views about the subject companies
and securities, and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or
views expressed in this report: “Kawaljeet Saluja, Sathishkumar S., Vamshi Krishna, Jaykumar Doshi, Umang Mehta, Praneeth Reddy, Aditya
Mongia, Deepak Krishnan, Sai Siddhardha Pasupuleti, Sumangal Nevatia, Siddharth Mehrotra.”
Distribution of ratings/investment banking relationships

Kotak Institutional Equities Research coverage universe
Percentage of companies covered by Kotak Institutional

70%
Equities, within the specified category.
60%
Percentage of companies within each category for which
Kotak Institutional Equities and or its affiliates has
50%
provided investment banking services within the previous
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40% * The above categories are defined as follows: Buy = We
31.0% expect this stock to deliver more than 15% returns over
30% 26.3% the next 12 months; Add = We expect this stock to deliver
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19.6% expect this stock to deliver -5-+5% returns over the next
20% 12 months; Sell = We expect this stock to deliver less than
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10% 6.7% are also on a 12-month horizon basis. These ratings are
3.1% 2.4% used illustratively to comply with applicable regulations. As
0.0% of 31/12/2023 Kotak Institutional Equities Investment
0%
Research had investment ratings on 255 equity securities.
BUY ADD REDUCE SELL
Source: Kotak Institutional Equities

As of December 31, 2023
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.
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January 18, 2024 NIFTY-50 [Jan 17]: 21,572

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Asian Paints (APNT) REDUCE

Weak topline print Company data and valuation summary

impact; partly downtrading and largely due to higher sales of 5.8

Jaykumar Doshi Umang Mehta Praneeth Reddy

Conference call highlights

Source: Kotak Institutional Equities estimates

Source: Company, Kotak Institutional Equities

Source: Company, Kotak Institutional Equities

APNT’s 4-year volume CAGR stood at 14.9% in 3QFY24

Exhibit 5: Asian Paints—softening RM prices resulted in sequential improvement in gross margins

Source: Company, Kotak Institutional Equities

Profitability (Rs mn)

Standalone (Rs mn)

PBT Margin (%)

Revenue growth (%)

Source: Company, Kotak Institutional Equities

Exhibit 7: Asian Paints—key assumptions, March fiscal year-ends, 2016-26E

Source: Company, Kotak Institutional Equities estimates

Source: Company, Kotak Institutional Equities estimates

LTIMindtree (LTIM) REDUCE

FY2024E. We expect 13.2% revenue growth in FY2026.

Retain REDUCE with FV of Rs5,500

Kawaljeet Saluja Sathishkumar S Vamshi Krishna

EBIT margin outlook cut

Promise of synergy benefits has not translated to revenue growth

LTI’s portfolio appears to be doing well; Mindtree’s could be under trouble

Watch out for client-specific issues

Senior management exits do not appear to be a serious concern right now

Key highlights from the earnings call

Exhibit 1: LTIMindtree’s interim results (consolidated Ind-AS), March fiscal year-ends, Rs mn

Source: Company, Kotak Institutional Equities estimates

Source: Company, Kotak Institutional Equities estimates

Exhibit 3: Segmental revenue breakup, Dec 2023 quarter

Source: Company, Kotak Institutional Equities

Exhibit 4: Deal win TCV, US$ mn, June 2022-December 2023

Source: Company, Kotak Institutional Equities

Exhibit 5: Book-to-bill ratio (X), June 2022-December 2023

1.3 1.2 1.2

Source: Company, Kotak Institutional Equities

EBIT margin declined 60 bps sequentially

EBIT margin (%)

Source: Company, Kotak Institutional Equities

Subcontracting costs (% of revenues) were down 30 bps sequentially

10.0 Subcontracting costs as a % of revenue

Source: Company, Kotak Institutional Equities

Attrition rate declines 100 bps sequentially to 14.2% on LTM basis

Attrition rate (%, LTM)

23.8 24.0 24.1

Source: Company, Kotak Institutional Equities

Exhibit 9: Segmental margin trend (%), December 2021-December 2023

Source: Company, Kotak Institutional Equities

Exhibit 10: Key model assumptions, March fiscal year-ends, 2019-2026E

Source: Company, Kotak Institutional Equities estimates

Exhibit 11: Key quarterly operating metrics, December 2021-December 2023

Source: Company, Kotak Institutional Equities

Note: 2019-2022 data is based on consolidated pro forma numbers

Source: Company, Kotak Institutional Equities estimates

NMDC (NMDC) SELL

Sumangal Nevatia Siddharth Mehrotra

China import iron ore fines 62% Fe CFR (US$/ton)

170 2023 2022 2021 170