IEA-Equity
Strategy
India Equity Analytics
JLR VOLUME UPDATE : NOVEMBER 2013
16th Dec, 2013
16th Dec 2013
JLR wholly ow...
JLR VOLUME UPDATE : NOVEMBER 2013
Strong Performance For The Month.
JLR wholly owned subsidiary of Tata Motors come up wit...
Persistent System.
"BUY"
13th Dec' 13
"Persistently innovating.."
Company update
CMP
Target Price
Previous Target Price
...
Persistent System.
Operating Metrics
2QFY12
Client Concentration
Top1
Top 5
Top 10
Billing Rate-USD/ppm
Onsite - Linear
Of...
Coal India LTD.
Company Update
CMP
Target Price
Previous Target Price
Upside
Change from Previous
289
350
350
21%
NA
Mar...
Coal India LTD.
Coal India 2QFY2014 top-line was above our estimate. The company’s net sales grew
5.8% yoy to 15,411cr. Sa...
Coal India LTD.
B/S PERFORMANCE
Share capital
Reserve & Surplus
Total equity
Long-term borrowings
Short-term borrowings
Lo...
LUPIN
"BUY"
11th Dec' 13
"Optimistic Guidance "
Result Update
BUY
CMP
Target Price
Previous Target Price
Upside
Change...
LUPIN
Sales and PAT Trend (Rs)
company reported its net sales at Rs 2631 Cr
up by 18 % YoY on the back of strong
business...
TATA Steel Ltd.
Initial Coverage
CMP
Target Price
Previous Target Price
Upside
Change from Previous
420
440
NA
5%
NA
Mar...
TATA Steel Ltd.
TATA Steel Profile:
Tata Steel is among the top ten global steel companies with an annual crude steel
capa...
TATA Steel Ltd.
OPERATION & PAT
Net Revenue from Operation
Other Income
Total Income
Cost Of Projects
Freight and forwardi...
TATA Steel Ltd.
B/S Performance
Share capital
Reserve & Surplus
Total equity
Minority Interest
Long-term borrowings
Short-...
NIIT Tech
"BUY"
9th Dec' 13
"Next Journey to Billion Dollar"
Company update
Buy
CMP
Target Price
Previous Target Price...
NIIT Tech
Operating Metrics;
Sales Mix-Verticles
.
Banking and Finacial Services
Insurance
Transport
Manufacturing
Governm...
Amara Raja Batteries Limited
"BUY"
06th
Dec' 13
OPTIMISTIC MANAGEMENT SPEECH
Result Update
BUY
CMP
Target Price
Previ...
Amara Raja Batteries Limited
SALES & PAT TREND
Growth in sales came on the back of the
strong
demand
in
the automotive
rep...
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Narnolia Securities Limited India Equity Analytics Strategy 16th Dec, 2013

India Equity Analytics highlights the JLR volume update which came in November 2013 with annual increase by 25%. The JLR includes 6244 units of Jaguar and 31159 units of Land Rover.
Published on: Mar 3, 2016
Published in: Economy & Finance      Sports      Business      
Source: www.slideshare.net


Transcripts - Narnolia Securities Limited India Equity Analytics Strategy 16th Dec, 2013

  • 1. IEA-Equity Strategy India Equity Analytics JLR VOLUME UPDATE : NOVEMBER 2013 16th Dec, 2013 16th Dec 2013 JLR wholly owned subsidiary of Tata Motors come up with November 2013 volume, the company for the month sold 37403 units up by 25% YoY. This total volume of JLR includes 6244 units of Jaguar and 31159 units of Land Rover. This month’s performance in particular is marked by stellar performance by Jaguar .................................................... ( Page : 2) Persistent System : "Persistently innovating.." "BUY" 13th Dec 2013 With the potential revenue growth, strong deal pipeline and multi-year relationships with marquee clientele in the Infrastructure vertical, we upgrade this stock and expect for better earning visibility across niche IT players.we rate “BUY” on the stock and we revise our target price from Rs 890to Rs 960. At a CMP of Rs 876, stock trades at 13.8x FY14E earnings........................ ( Page : 3-4) COAL INDIA : "BUY" 12th Dec 2013 We expect modest increase in sales volumes growth during FY2013-15 on account of poor offtake capabilities of CIL. Also, we expect CIL’s margins to decline during FY2014 due to lower e-auction realizations and higher staff costs/other expenses.News flows related to further divestment in CIL by the government is likely to keep the stock price under pressure in our view. we recommend Buy rating on the stock with our previous target price Rs.350............................................ ( Page : 5-7) LUPIN : "Optimistic Guidance " "BUY" 11th Dec 2013 The management of the company in its latest interaction said that company is confident of logging 15-20 % CAGR in US and India in the days to come on the back of rich pipeline as well as acquisition based strategy . ……………………………………… ( Page : 8-9) TATA Steel Ltd : "HOLD" 10th Dec 2013 Over the past two quarters, Tata Steel has reported strong growth in volumes in the domestic operations despite weak demand. Its Europe operations have been broadly better than expectations indicating some stability and predictability from its Europe operations. Tata Steel’s earnings growth is likely to be driven by higher sales volume in FY2014-15 on the back of 2.9mn ton brownfield expansion project in Jamshedpur and steady improvement in profitability of European operations. We have arrived at "Hold" rating on the stock watching our step for a target price of Rs.340 in near term. ................... ( Page : 10-13) NIIT Tech : "Next Journey to Billion Dollar" "BUY" 9th Dec 2013 NIIT Tech management expressed its confidence of driving growth in the organization and looking at an aspirational goal of USD 1 billion revenue in next 5 years.its order wins in the recent quarters have been healthy, lending visibility on revenue growth. At a CMP of Rs332, trades at 7.5x FY14E earnings. We retain “ buy” view on the stock with a price target of Rs360 (revised from Rs310)............................................. ( Page : 14- 15) Amara Raja Batteries Limited : OPTIMISTIC MANAGEMENT SPEECH "BUY" 6th Dec 2013 Amara Raja had posted its 2QYFY14 sales at Rs 805 Cr up by 12.3 % YoY on the back of the strong demand in the automotive replacement and industrial battery business. There was double digit growth in both of these segments.The automotive battery business reported double digit growth in revenues........................................ ( Page : 16-17) Narnolia Securities Ltd, 402, 4th floor 7/1, Lords Sinha Road Kolkata 700071, Ph 033-32011233 Toll Free no : 1-800-345-4000 email: research@narnolia.com, website : www.narnolia.com
  • 2. JLR VOLUME UPDATE : NOVEMBER 2013 Strong Performance For The Month. JLR wholly owned subsidiary of Tata Motors come up with November 2013 volume, the company for the month sold 37403 units up by 25% YoY. This total volume of JLR includes 6244 units of Jaguar and 31159 units of Land Rover. This month’s performance in particular is marked by stellar performance by Jaguar with volume growth of almost 55 % YoY while the Land Rover portfolio has grown by 20 % YoY.The new F type Jaguar is getting good response.Company manage to sell 557 units of F-Type this month. The volumes for JLR across geographies came relatively, good all the geographies have done well except for UK where volume de grew by 1%YoY. The markets of china continues to do well for the company. The Chinese market have grown over 40% YoY for the JLR followed by ROW markets. The performance of JLR on Geography Wise has been Tabulated as under : Monthly Performance of JLR : Geography Wise Model Nov-13 Nov-12 Change % (YoY) UK 5231 5276 -1% North America 6657 4843 37% Europe 7300 6829 7% China 9751 6879 42% Asia Pacific 1882 1428 32% All other markets 6582 4638 42% (Source: Company/Eastwind) The various models under JLR portfolio have grown well for the company however Jaguar XJmodel has done exceptionally well .The company has sold 6244 units of Jaguar for the Nov2013.The Land Rover is also growing good for the company. The Range Rover Evoque has grown by 10% YoY to 10953 units for the month. The Table shows the Performance of Jaguar Portfolio : Model Wise. Monthly Performance of Jaguar : Model Wise Model Nov-13 Nov-12 Change % (YoY) XF 3825 2743 39% XJ 1628 1004 62% XK 234 284 -18% F-TYPE 557 NA (Source: Company/Eastwind) The Table shows the Performance of Land Rover Portfolio : Model Wise. Monthly Performance of Land Rover: Model Wise Model Nov-13 Nov-12 Change % (YoY) Defender 1615 1274 27% Freelander 4124 4517 -9% Discovery 3424 3683 -7% New Range Rover Sport 6833 0 NA Range Rover Sport 106 4909 NA Range Rover 2 1417 NA Range Rover Evoque 10953 9919 10% New Range Rover 4102 143 NA (Source: Company/Eastwind) Earlier management said that company would invest 1.5 billion pounds for new technicallyadvanced aluminum vehicle architecture in forthcoming models. The first new model to utilize this innovative architecture will be an all-new mid-sized sports sedan from Jaguar. The product will be launched by 2015. We continue to like Tata Motors, led by strong volume traction at JLR to continue over the coming months as new Range Rover Sport get rolled out across more geographies, in addition to continued traction from RR and F-Type, which in turn will boost realisation and margin. The stock is trading at price of Rs 370 on the back of splendid performance from its cash machine JLR portfolio. We are still positive for the stock in the light of management commentary and continuous good performance by JLR though domestic operations are still painful for the company. Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report.
  • 3. Persistent System. "BUY" 13th Dec' 13 "Persistently innovating.." Company update CMP Target Price Previous Target Price Upside Change from Previous Market Data BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs Crores) Average Daily Volume Nifty BUY 876 960 890 10% 8% 533179 PERSISTENT 906/477 3505 12139 6237 Stock Performance Absolute Rel. to Nifty 1M 7.5 4.9 1yr 83.5 77.8 YTD 126.6 107.9 Share Holding Pattern-% Current Promoters FII DII Others 38.96 15.28 21.23 24.53 1 year forward P/E-x 1QFY14 4QFY13 38.96 14.84 19.31 26.89 38.96 12.39 21.59 27.06 Persistent Sytem’s management remains confident of FY14 with deal pipeline being strong and remains focused on increasing the share of IP-led revenues in its portfolio. The management expects to see more than 15% dollar revenue growth, more than NASSCOM guidance of 12-14 % for FY14E. With the potential revenue growth, strong deal pipeline and multi-year relationships with marquee clientele in the Infrastructure vertical, we upgrade this stock and expect for better earning visibility across niche IT players. Recently , Persistent System reported superlative set of numbers during the 2QFY14 with 21%(QoQ) sales growth in INR term and 8.6%(QoQ) growth in USD term led by 38%(QOQ) growth on the intellectual property (IP) revenues. PAT growth was at 6.5% (QoQ). Margin ramp up: During the quarter, Its EBITDA margin improved by 180bps to 23.3%, positively impacted by currency gain(270bps), while during the quarter company wage hike to its off shore employee at a range of 8-9% was impacted margin by 310 bps adversely. However, management expects to maintain margin at a range of 24-25% for FY14E. On segmental front: The Company’s cash cow segment Infrastructure and System, which contributes 69% on sales, grew by 21% and life science (13% contribution on sales) was up by 57% sequentially. While, Telecom space (17.6% contribution on sales) increased marginally by 3% (QoQ). Clients Metrics: During the quarter, company added 2 clients at 32 under medium category( >$1mn to $3mn) and 1 client at 16 from large ( > $ 3Mn) . Revenue from top-1 client was improved from 21.2% (1QFY14) to 22.5% . DSO at 62days, almost 12 quarters low. Persistent's management suggests that deal pipeline are looking strong and seeing good activity and traction in the market across the board. Its focus on some of newer technologies like cloud, analytics and mobility are gaining a lot of traction because of pickup in demand environment. The emerging themes, (CAMB) Cloud, Analytics, Mobility, and Big data could also see strong demand traction ahead. Because of actively investment in these themes, management is very confident to see healthy growth and also they expressed their confidence to beat the NASSCOM guidance (1214% revenue growth for FY14E). View and Valuation: The company’s focus is shifting greater proportion to IP led services and company has marquee clientele in cutting-edge technologies around cloud, mobility, collaboration and analytics; witnessing faster growth. Considering the company’s ability to achieve scale and growth, we rate “BUY” on the stock and we revise our target price from Rs 890 to Rs 960. At a CMP of Rs 876, stock trades at 13.8x FY14E earnings. Financials Rs, Crore 2QFY14 1QFY14 (QoQ)-% 2QFY13 (YoY)-% Revenue 432.37 357.29 21.0 326.86 32.3 EBITDA 100.8 76.8 31.3 89.06 13.2 PAT 60.8 57.1 6.5 44.71 36.0 EBITDA Margin 23.3% 21.5% 180bps 27.2% (390bps) PAT Margin 14.1% 16.0% (190bps) 13.7% 40bps (Source: Company/Eastwind) Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. 3
  • 4. Persistent System. Operating Metrics 2QFY12 Client Concentration Top1 Top 5 Top 10 Billing Rate-USD/ppm Onsite - Linear Offshore - Linear Yeild per Employee(excld- Trainee) Employee Metrics Total Employee Attrition Utilization rate %(xclude IP Led ) 3QFY12 4QFY13 1QFY13 QFY13 3QFY13 4QFY13 16.0% 38.6% 49.4% 15.9% 37.0% 48.3% 17.2% 36.6% 48.8% 17.8% 33.5% 45.3% 20.7% 36.3% 47.0% 21.1% 37.3% 49.4% 12665 3803 3208 12387 3778 3247 12603 3895 3350 12789 3898 3345 12863 3978 3746 12772 4032 3817 6900 17.7% 73.8% 6706 17.4% 74.1% 6628 18.3% 71.7% 6536 18.9% 74.1% 6370 16.9% 75.2% 6719 16.0% 77.3% 1QFY14 2QFY14 21.2% 34.7% 46.0% 22.5% 36.4% 47.3% 14014 4143 3769 14567 4111 3602 14283 4109 3919 6970 14.4% 72.5% 7144 14.2% 70.0% 7457 14.0% 71.7% 21.6% 36.7% 47.9% Financials Rs in Cr, Sales Employee Cost Cost of technical professionals Other expenses Total expenses EBITDA Depreciation Other Income EBIT Interest Cost Profit (+)/Loss (-) Before Taxes Provision for Taxes Net Profit (+)/Loss (-) Growth-% (YoY) Sales EBITDA PAT Expenses on Sales-% Employee Cost Other expenses Tax rate Margin-% EBITDA EBIT PAT Valuation: CMP No of Share NW EPS BVPS RoE-% P/BV P/E FY10 601.16 368.74 0 86.05 454.79 146.37 33.52 11.23 112.85 0 124.08 9.05 115.03 FY11 775.84 481.62 30.67 105.24 617.53 158.31 42.39 34.44 115.92 0 150.36 10.62 139.74 FY12 1000.3 599.05 41.68 135.2 775.93 224.37 61.1 34.44 163.27 0.00 197.71 55.09 142.62 FY13 1294.5 719 54 218 990.78 303.72 78 34.44 225.44 0.03 259.851 75.37 184.481 FY14E 1657.54 895.07 82.88 290.07 1268.02 389.52 93.54 66.30 295.98 0.00 362.29 108.69 253.60 FY15E 2053.93 1119.39 102.70 379.98 1602.06 451.86 84.18 71.89 367.68 0.00 439.57 131.87 307.70 1.2% 60.2% 74.1% 29.1% 8.2% 21.5% 28.9% 41.7% 2.1% 29.4% 35.4% 29.4% 28.0% 28.3% 37.5% 23.9% 16.0% 21.3% 61.3% 14.3% 7.3% 62.1% 13.6% 7.1% 59.9% 13.5% 27.9% 55.5% 16.9% 29.0% 54.0% 17.5% 30.0% 54.5% 18.5% 30.0% 24.3% 18.8% 19.1% 20.4% 14.9% 18.0% 22.4% 16.3% 14.3% 23.5% 17.4% 14.3% 23.5% 17.9% 15.3% 22.0% 17.9% 15.0% 310.0 4.0 639.0 28.8 159.7 18.0% 1.9 10.8 366.7 4.0 747.1 34.9 186.8 18.7% 2.0 10.5 409.2 4.0 840.5 35.7 210.1 17.0% 1.9 11.5 541.0 4.0 1018.3 46.1 254.6 18.1% 2.1 11.7 876.0 4.0 1234.4 63.4 308.6 20.5% 2.8 13.8 876.0 4.0 1504.7 76.9 376.2 20.4% 2.3 11.4 (Source: Company/Eastwind) Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. 4
  • 5. Coal India LTD. Company Update CMP Target Price Previous Target Price Upside Change from Previous 289 350 350 21% NA Market Data BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs Crores) Average Daily Volume (Nos.) Nifty 533278 COALINDIA 372/238 176226 17622 6308 Stock Performance-% 1M -1.3 2.8 Absolute Rel. to Nifty 1yr -21.2 8.8 YTD -21.4 8.6 "Buy" 12nd Dec' 13 CCI’s Rs 1,773-crore penalty: The Competition Commission of India (CCI) imposed a Rs 1,773 cr fine on Coal India, the country' monopoly commercial coal miner, based on a complaint filed by two power companies that India's monopoly producer of coal abused its dominance. The government owns 90% stake in Coal India, and has traditionally drawn hefty dividend income from the cash rich coal company. In 2012-13, the company paid a total dividend of Rs 8,843 cr out of which the government's share was Rs 7,959 cr. A Rs 1800-crore fine could possibly mean less profits for the company and less dividend income for its owners. But as the main owner, the government, will pocket this amount in the form of a fine, it will not be poorer in any way. Coal India to get Rs 2,119 cr extra on coal price revision : Coal India Ltd is likely to get additional revenue of Rs 2,119 cr in this fiscal on account of revision in dry fuel prices.CIL (Coal India Ltd) has revised and rationalized the basic notified prices of all the grades of non-coking coal except GI, G2 and G5.The estimated additional revenue due to revision of basic notified price for the current financial year is Rs 2,119 cr.CIL had revised the prices of all grades of coal, barring three, for all its eight producing subsidiaries with effect from May 28 this year. Mahanadi Coalfields which is expected to contribute Rs 686 crore, followed by Rs 664 crore from Northern Coalfields and Rs 495 crore from South Eastern Coalfields. Share Holding Pattern-% Promoters FII DII Others 2QFY14 90.0 5.5 5.3 2.2 1QFY14 4QFY13 90.0 90.0 5.4 5.4 2.3 2.0 2.4 2.6 1 yr Forward P/B The company’s net sales grew 5.8% yoy to 15,411cr (above our estimate of 15,083cr). Sales volumes stood at 109mn ton in 2QFY2014 compared to 102mn ton in 2QFY2013. The blended realizations declined by 1.4% yoy to 1,414/ton (despite price hike) due to lower realization on FSA coal.Despite 5.8% yoy growth in top-line, EBITDA decreased by 8.2% yoy to 3,176cr due to higher raw material costs (18.1% yoy to 2,251cr) and contractual expenses (27.6% yoy to 1,394cr). The depreciation expenses increased by 27.8% yoy to 495cr; hence, adjusted net profit was flat yoy at 3,043cr . Coal India 2QFY2014 top-line was above our estimate. The company’s net sales grew 5.8% yoy to 15,411cr. Sales volumes stood at 109mn ton in 2QFY2014 compared to 102mn ton in 2QFY2013. The blended realizations declined by 1.4% yoy to 1,414/ton despite price hikes. Its FSA coal’s realizations were lower than expected due to lower grade coal. The company liquidated 11mn ton of old stock. Source - Comapany/EastWind Research Financials : Net Revenue EBITDA Depriciation Interest Cost Tax PAT Q2FY14 15411 2794 495 8 1412 3052 Y-o-Y % 5.8 -2.4 27.8 -22.2 -4.2 -0.8 Q-o-Q % -6.4 -29.4 4.1 7.0 -27.9 -18.2 Q2FY13 14573 2862 387 10 1475 3078 Q1FY14 16472 3958 476 7 1958 3731 (In Crs) Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. 5
  • 6. Coal India LTD. Coal India 2QFY2014 top-line was above our estimate. The company’s net sales grew 5.8% yoy to 15,411cr. Sales volumes stood at 109mn ton in 2QFY2014 compared to 102mn ton in 2QFY2013. The blended realizations declined by 1.4% yoy to 1,414/ton despite price hikes. Its FSA coal’s realizations were lower than expected due to lower grade coal. The company liquidated 11mn ton of old stock. CIL’s e-auction realizations have declined over the past one year on account of decline in international coal price coupled with weak domestic demand. Going forward, we expect CIL’s profitability to be affected due to lower e-auction realizations, sticky staff costs and other expenses. Moreover, given the price hike taken during 4QFY2013, we do not expect CIL to undertake any further price hikes in the near-term. OUTLOOK: We expect modest increase in sales volumes growth during FY2013-15 on account of poor offtake capabilities of CIL. Also, we expect CIL’s margins to decline during FY2014 due to lower e-auction realizations and higher staff costs/other expenses.News flows related to further divestment in CIL by the government is likely to keep the stock price under pressure in our view. we recommend Buy rating on the stock with our previous target price Rs.350. OPERATING MATRIX Coal Production in MT Coal Offtake in MT Revenue Generation From unit Ton Avg Man Power (in numbers) Productivity Per Man FY10 431 416 1073 404744 1066 FY11 431 425 1183 390243 1105 FY12 436 433 1441 377447 1155 FY13 452 465 1468 364736 1240 P/L PERFORMANCE Net Revenue from Operation Cost Of Projects & Contractual Power and fuel contractual expenses Employee benefit Expence Expenditure EBITDA Depriciation Interest Cost Tax PAT ROE FY11 50234 7573 1755 4580 20481 40390 9843 1673 79 5595 10868 33 FY12 62415 5123 2013 4901 26705 40857 21558 1969 54 6484 20588 51 FY13 68303 6556 2333 5802 27943 50219 18084 1813 45 7623 17356 36 FY14E 69864 8383 2595 6057 28943 53738 16126 1860 34 7332 15870 33.1 Narnolia Securities Ltd, 6
  • 7. Coal India LTD. B/S PERFORMANCE Share capital Reserve & Surplus Total equity Long-term borrowings Short-term borrowings Long-term provisions Trade payables Short-term provisions Total liabilities Intangibles Tangible assets Capital work-in-progress Long-term loans and advances Inventories Trade receivables Cash and bank balances Short-term loans and advances Total Assets RATIOS P/B EPS Debtor to Turnover% Creditors to Turnover% Inventories to Turnover% CASH FLOWS Cash from Operation Changes In Working Capital Net Cash From Operation Cash From Investment Cash from Finance Net Cash Flow during year Trading At : FY10 6316 20956 27273 343 1620 2545 772 1404 5443 0 12035 2211 610 4402 2169 39078 8066 17921 FY10 0.0 0.0 4.9 1.7 1.0 FY11 6316 26998 33314 1334 33 22461 645 12387 8490 779 12065 2057 845 5586 3419 45806 11180 21646 FY11 5.7 17.3 22.8 4.3 3.7 FY12 6316 34137 40453 1305 0 28271 829 15595 9785 759 12681 1848 1017 6071 5663 58203 13478 24688 FY12 5.5 32.6 29.2 4.3 3.1 FY13 6316 42156 48472 1078 0 31144 837 20447 12385 712 12754 3496 1181 5618 10480 62236 16189 25479 FY13 4.0 27.5 52.7 4.2 2.8 FY10 FY11 FY12 10727 12819 16323 -131 -3822 3565 10596 8997 19888 950 697 -10410 2163 2911 -7382 13708 12606 2095 Down 21% from its 52week High Up 14% from its 52 week Low FY13 15948 -6839 9109 -1833 -7852 -575 Narnolia Securities Ltd, 7
  • 8. LUPIN "BUY" 11th Dec' 13 "Optimistic Guidance " Result Update BUY CMP Target Price Previous Target Price Upside Change from Previous 873 1006 15% - Market Data BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs, Cr) Average Daily Volume Nifty 500257 LUPIN 946/569 39101 395892 6332 Stock Performance-% 1M Absolute Rel. to Nifty 1yr -1 -4 46 39 YTD 41 23 Share Holding Pattern-% Promoters FII DII Others Current 1QFY14 4QFY1 3 46.8 46.8 46.8 31.5 30.7 28.8 12.1 12.4 14.3 9.7 10.1 10.0 One Year Forward P/E The management of the company in its latest media interaction stated that the company is confident of logging 15-20 % CAGR in US and India in the days to come on the back of rich pipeline as well as acquisition based strategy. Management further said that company is expecting to launch about 100 new drugs in next three years. This new launch will include an entire range of oral contraceptives and opthal products. Lupin earlier posted slightly better than expected 2QFY14 results ,the company reported its net sales at Rs 2631 Cr up by 18 % YoY on the back of‐ strong business performance from US and Europe formulation segment. The segment grew by 31% YoY to Rs. 1108.9 Cr during 2Q FY14, against Rs. 844.4 Cr for Q2, FY 2012 13.This segment contributes 42% to overall Company sales.US brands business contributed 10% of total US sales, whereas the generics business contributed 90% for the quarter under review. The Indian formulation business contributed ‐ 25% of the Company’s  overall revenues for the quarter.Company’s India formulation business grew by 9% ‐ recording revenues of Rs. 6,635 m. during Q2, FY 2013 14, as compared to Rs. 6,064 m. for Q2, FY 2012 13. The company’s rest other business geographies to have performed relatively good for the company. The operating EBITDA for the 2QFY14 came at Rs 660 Cr and OPM stands at 24.7%.The RM cost decreased by 7.7% to 32.0% of net sales at Rs. 841.3 Cr during 2QFY14 as compared to Rs. 889.8 Cr for 2Q FY 13.Manufacturing & other expenses increased by to 30.4% of net sales at Rs. 798.8 Cr during 2Q FY14 as compared to Rs. 591.7 Cr for the same period last fiscal.Revenue expenditure on R&D stood at 8.3% of net sales at Rs. 217.2 Cr. The Net profits for 2QFY14 came at Rs 417 Cr. The higher incidence of tax during the quarter is due to tax provision of Rs 51 Cr made on dividends received from subsidiaries The company has filed 7 ANDAs and received 6 ANDA approvals in the quarter. Cumulative ANDA filings with the US FDA now stand at 183 with the company having received 92 approvals to date. We have slightly raise our TP to Rs 1006 on the back management guidance post the results. The management is quite optimistic for its business outlook going forward and believes that the company will achieve its set target going forward. Financials Revenue EBITDA PAT EBITDA Margin PAT Margin 2QFY14 2668 660 417 24.7% 15.6% 1QFY14 2476 590 405 23.8% 16.4% (QoQ)-% 7.8 11.9 3.0 90bps (70bps) 2QFY13 2301 515 297 22.4% 12.9% Rs, Crore (YoY)-% 15.9 28.2 40.4 240bps 270bps (Source: Company/Eastwind) Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. 8
  • 9. LUPIN Sales and PAT Trend (Rs) company reported its net sales at Rs 2631 Cr up by 18 % YoY on the back of strong business performance from US and Europe formulation segment. (Source: Company/Eastwind) OPM % (Source: Company/Eastwind) NPM % The higher incidence of tax during the quarter is due to tax provision of Rs 51 Cr made on dividends received from subsidiaries (Source: Company/Eastwind) Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. 9
  • 10. TATA Steel Ltd. Initial Coverage CMP Target Price Previous Target Price Upside Change from Previous 420 440 NA 5% NA Market Data BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs Crores) Average Daily Volume (Nos.) Nifty 500470 TATASTEEL 448/195 40863 28604 6363 Stock Performance-% 1M 21.7 23.4 Absolute Rel. to Nifty 1yr 5.5 0.3 YTD 9.5 3.5 Share Holding Pattern-% Promoters FII DII Others 2QFY14 31.4 13.6 26.1 29.0 1QFY14 4QFY13 31.4 31.4 13.2 13.9 26.3 27.3 29.2 27.5 1 yr Forward P/B Source - Comapany/EastWind Research "Hold" 10th Dec' 13 Company Update: TATA Steel’s consolidated net sales increased 7.4% yoy to 36,645Cr. TSE sales volumes grew by 10.0% yoy to 3.46mt .The consolidated EBITDA increased by 60.4% yoy to 3,705cr. The company’s tax expenses declined 32.3% yoy. There was an exceptional gain related to deferred tax write-back of 390cr. Adjusting for this, the net profit stood at 527cr, compared to a loss of 407cr in 2QFY2013. From the Management Corner the key takeaways are : Focus on Domestic Market: The Management aims to sell incremental sales volumes from Jamshedpur expansion mainly in the domestic market. This is unlike other flat steel producers such as JSW Steel and Essar Steel who have been opportunistically raising exports, considering INR depreciation against the USD alongside low domestic demand. Odisha Project could provide further upside in long-term: The Company aims to make value added steel products at the new facility in Odisha (3mtpa) where the blended realizations could be potentially higher than existing products by 2015. We believe timely clearance for expansion of iron ore mine is critical for the plant. The company's Odisha plant is highly automated and will require fewer employees/ton compared to its Jamshedpur facility. Debt levels to rise: Debt of the company is likely to rise till 2015 as it draws debt for Odisha expansion. On the back of a consistent operational improvement at the company’s European operations We are positive on the stock in long run .However, on the back of ongoing capacity expansion, the gross debt is expected to increase from 66074 crore (FY13) to 76919 crore (FY14E) and 77543 crore (FY15E). Outlook: Over the past two quarters, Tata Steel has reported strong growth in volumes in the domestic operations despite weak demand. Its Europe operations have been broadly better than expectations indicating some stability and predictability from its Europe operations. Tata Steel’s earnings growth is likely to be driven by higher sales volume in FY2014-15 on the back of 2.9mn ton brownfield expansion project in Jamshedpur and steady improvement in profitability of European operations. We have arrived at "Hold" rating on the stock watching our step for a target price of Rs.340 in near term. Financials : Net Sales EBIDTA Other Income Interest Cost Depriciation Tax PAT Q2FY14 36645 3705 203 1067 1444 447 917 Y-o-Y % 7.4 60.4 0.5 9.8 8.2 -32.4 -325.3 Q-o-Q % 11.7 0.5 10.3 7.6 2.9 27.4 -18.2 Q2FY13 34133 2310 202 972 1335 661 (407) Q1FY14 32805 3688 184 992 1403 351 1121 (In Crs) Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. 10
  • 11. TATA Steel Ltd. TATA Steel Profile: Tata Steel is among the top ten global steel companies with an annual crude steel capacity of over 28 mtpa. It is now one of the world's most geographically-diversified steel producers, with operations in 26 countries and a commercial presence in over 50 countries. The Tata Steel Group, with a turnover of US$ 24.82 billion in FY 2012- 2013, across five continents and is a Fortune 500 company. Tata Steel’s larger production facilities include those in India, the UK, the Netherlands, Thailand, Singapore, China and Australia. Operating companies within the Group include Tata Steel Limited (India), Tata Steel Europe Limited (formerly Corus), NatSteel, and Tata Steel Thailand (formerly Millennium Steel). INDIAN Operation: The Indian Steel industry witnessed an increase in crude steel production of 5.4% y-o-y, where as the real consumption increased only by 3.3% with imports registering a sharp increase on account of lower import duties applicable to ASEAN countries. The slowdown in fixed asset investment and lackluster automotive demand impacted margins of steelmakers adversely. In Financial Year 2013-14, Indian operations are expected to benefit on account of stabilization of the commissioned capacity, sourcing coke internally and reduced impact of exchange fluctuations because of part liquidation of foreign currency loans. The shift to an enhanced product-mix with new cold rolling facilities being set up and the collaboration with Nippon Steel to produce high strength automotive steels is expected to aid profitability. EUROPIAN Operation: The apparent steel demand in the European Union continued to deteriorate during Financial Year 2012-13 having decreased by about 9.7% in 2012. In aggregate, the steel demand in Europe is currently about 30% below pre-crisis levels, which has impacted the demand and customer buying behavior significantly. TSE’s performance in the Financial Year 2012-13 was also impacted on account of operational issues faced in rebuilding the Blast Furnace at Port Talbot, UK and undertaking of major repairs of the Blast Furnace at Ijmuiden. Even though the market demand was relatively muted. The rebuilding of the Blast Furnace and other management tasks and initiatives may position TSE on a better platform for Financial Year 2013-14 even though the market is expected to be subdued for the next 12 months. The European operations are undertaking structural improvement measures including supply chain transformation, differentiated product strategy, reduction of manufacturing costs and overheads (head count currently 25% below pre-crisis levels). Narnolia Securities Ltd, 11
  • 12. TATA Steel Ltd. OPERATION & PAT Net Revenue from Operation Other Income Total Income Cost Of Projects Freight and forwarding Employee benefit Expence Total Expenditure EBITDA Depriciation Interest Cost PBT Tax Minority Interest Exceptional items PAT Net Worth ROE% Book value per share P/B FY10 102393 1186 103579 44092 5549 16463 94350 8043 4492 3022 1715 2152 -15 -1684 -2009 22814 -1.4 257 2.64 FY11 118753 680 119433 53283 6390 15840 102006 16747 4415 3956 9056 3246 60 3046 8983 35386 16.8 371 0.90 FY12 132900 1573 134473 65745 6660 17229 120483 12417 4517 4250 5223 3636 173 3362 5390 42616 4.8 439 0.98 FY13 134712 479 135191 60536 7434 18918 122390 12321 5575 3968 3257 3229 214 -7390 -7058 34172 1.0 352 1.13 VALUATION NPM % OPM % EBITDA % P/E ROCE% EPS FY10 -0.31 3.43 7.76 -185.06 -2.41 -23 FY11 4.97 10.33 14.02 5.38 9.11 94 FY12 1.51 5.87 9.23 20.51 5.18 55 FY13 0.25 4.99 9.11 116.19 -6.87 -73 Source - Comapany/EastWind Research Source - Comapany/EastWind Research Source - Comapany/EastWind Research Narnolia Securities Ltd, 12
  • 13. TATA Steel Ltd. B/S Performance Share capital Reserve & Surplus Total equity Minority Interest Long-term borrowings Short-term borrowings Total Borrowings Deferred tax liabilities (net) Long-term provisions Trade payables Short-term provisions Total liabilities Intangibles Goodwill on consolidation Tangible assets Capital work-in-progress Non-current Investments Long-term loans and advances Inventories Trade receivables Cash and bank balances Short-term loans and advances Current investments Total Assets Cash Flows Cash from Operation Net Cash From Operation Cash From Investment Cash from Finance Net Cash Flow during year Trading At : FY10 887 21927 22814 884 28059 25041 53100 1769 3789 22020 2806 109738 1635 14542 31778 12383 3237 4801 18687 11624 6788 1961 2181 109738 FY11 959 34427 35386 889 49251 3794 53045 2188 4585 18457 3395 135488 1790 15298 34778 13552 4688 8685 24055 14812 10859 3547 3159 135488 FY12 971 41645 42616 1091 45238 4699 49937 2504 4715 20529 3476 146852 2851 17355 39081 20196 2623 6837 25598 14878 10799 3717 1398 146852 FY13 971 33201 34172 1669 46858 8115 54972 3155 5356 21779 2943 146906 2959 13065 51978 14277 2497 7098 24091 13994 9860 4061 760 146906 FY10 FY11 FY12 5600 13638 10312 10502 6463 11385 (4700) (8379) 3705 (5135) 5993 (8462) 667 4077 6628 4.8% Down from its 52week High 112% Up from its 52 week Low FY13 10195 13324 (12321) (2045) (1042) Narnolia Securities Ltd, 13
  • 14. NIIT Tech "BUY" 9th Dec' 13 "Next Journey to Billion Dollar" Company update Buy CMP Target Price Previous Target Price Upside Change from Previous 332 360 310 8% 16% Market Data BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs Crores) Average Daily Volume Nifty 532541 NIITTECH 344/234 2011 20884 6260 Stock Performance Absolute Rel. to Nifty 1M 18.4 18.29 1yr 19.5 6.1 YTD 26.8 23.1 Share Holding Pattern-% Promoters FII DII Others Current 31.19 29.21 19.94 19.66 1 year forward P/E 1QFY14 4QFY13 31.23 31.29 29.04 27.79 19.67 19.52 20.06 21.4 In an interview to Media, NIIT Tech management expressed its confidence of driving growth in the organization and looking at an aspirational goal of USD 1 billion revenue in next 5 years. The Company's growth in past 3years gives the confidence of driving growth going forward. NIIT Tech has been strong performer from the slowdown with CAGR of 30% in the last 3 years and even we look at it in dollar terms, it has been about 22-23%. Next journey to USD 1 billion in next 5 years, company would report at a CAGR of 20% in INR term and 18% in USD term for FY13-19E. Aspects of growth strategy: Aggressive in the US market:The company is expecting slight uptrend in the US market (Us market contributes 41% of sales) led by recent healthy demand environment. The company’s focus would be very sharply on those developed markets particularly the US as well as Asian market going forward. That will be one aspect of growth strategy. Scouting for acquisition: NIIT Tech’s focus is on strengthening the industry segments by meaning full acquisition particularly in the insurance and the travel space. Its management has indicated that they are constantly on the lookout and in conversation with the potential assets. Therefore, certain amount of inorganic initiative is important to sustain the growth momentum. Eyeing on Infrastructure services: NIIT Tech’s large engagements typically involved with significant amount of infrastructure management services, which is a strong practice in the organization. The travel vertical and the infrastructure management services line will be key areas of focus for NIIT, going forward. Consistent in order addition: Fresh orders of USD 84Mn versus USD 154 mn in Q1 were secured during the quarter leading to USD 263Mn worth of orders executable over the next 12 months. In 1QFY14, Company had huge business in the domestic market which was USD 65 million intake from the Airports Authority of India (AAI). But in Q2 FY14, order has primarily been in the international market. During the 2QFY14, they secured fresh orders of $84 million, leading to $248 million worth of orders executable over the next 12 months. View and Valuation: We expects good growth from Travel & Tourism vertical in FY'14 but not the same level of the growth, But the BFSI expected to be softer. However, the MFG and Govt verticals expected to improve going forward. Company’s Order wins in the recent quarters have been healthy, lending visibility on revenue growth. At a CMP of Rs332, trades at 7.5x FY14E earnings. We retain “ buy” view on the stock with a price target of Rs360 (revised from Rs310). Financials Revenue EBITDA PAT EBITDA Margin PAT Margin 2QFY14 587.3 88.6 60.4 15.1% 10.3% 1QFY14 541.9 78.2 52 14.4% 9.6% (QoQ)-% 8.4 13.3 16.2 70bps 70bps 2QFY13 500.1 84.8 43.1 17.0% 8.6% Rs, Crore (YoY)-% 17.4 4.5 40.1 (190bps) (170bps) (Source: Company/Eastwind) Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. 14
  • 15. NIIT Tech Operating Metrics; Sales Mix-Verticles . Banking and Finacial Services Insurance Transport Manufacturing Government Others Sales Mix-Geography Americas EMEA RoW Revenue Concentration % DSO-days Top-5 Top-10 Headcounts No of Headcounts 1QFY13 13% 21% 40% 7% 8% 11% 2QFY13 13% 20% 42% 6% 5% 14% 3QFY13 12% 19% 42% 6% 8% 13% 4QFY13 12% 19% 37% 6% 11% 15% 1QFY14 12% 18% 36% 7% 13% 14% 2QFY14 14% 19% 37% 6% 10% 14% 36% 39% 25% 38% 39% 23% 37% 40% 23% 38% 37% 25% 39% 35% 26% 41% 36% 23% 84 30% 43% 75 32% 47% 76 34% 48% 82 32% 47% 98 31% 46% 100 36% 49% 7444 7617 7882 8158 8207 8017 FY10 913.7 503.71 239.75 743.46 170.24 35.81 7.64 134.43 0 142.07 14.42 127.65 FY11 1232.25 601.36 393.1 994.46 237.79 31.46 13.6 206.33 2.22 217.71 32.3 185.41 FY12 1576.48 891.12 415.26 1306.38 270.1 36.42 30.37 233.68 3.84 260.21 63.75 196.46 FY13 2021.36 1115.1 576.96 1692.06 329.3 56.69 22.75 272.61 1.91 293.45 75.05 218.4 FY14E 2385.41 1347.75 667.91 2015.67 369.74 65.73 71.56 304.00 4.89 370.68 105.64 265.03 FY15E 2863.75 1589.38 816.17 2405.55 458.20 73.49 71.59 384.71 3.67 452.64 131.26 321.37 -6.8% 2.3% 9.6% 34.9% 39.7% 45.2% 27.9% 13.6% 6.0% 28.2% 21.9% 11.2% 18.0% 12.3% 21.4% 20.1% 23.9% 21.3% 55.1% 26.2% 10.1% 48.8% 31.9% 14.8% 56.5% 26.3% 24.5% 55.2% 28.5% 25.6% 56.5% 28.0% 28.5% 55.5% 28.5% 29.0% 18.6% 14.7% 14.0% 19.3% 16.7% 15.0% 17.1% 14.8% 12.5% 16.3% 13.5% 10.8% 15.5% 12.7% 11.1% 16.0% 13.4% 11.2% 170.25 5.88 579.78 21.7 98.6 22.0% 1.7 7.8 184.65 5.93 752.11 31.3 126.8 24.7% 1.5 5.9 270.9 5.96 922.2 33.0 154.7 21.3% 1.8 8.2 262.35 6.02 1094.12 36.3 181.7 20.0% 1.4 7.2 332 6.02 1350.45 44.0 224.3 19.6% 1.5 7.5 332 6.02 1662.62 53.4 276.2 19.3% 1.2 6.2 Financials; Rs in Cr, Sales Employee Cost Other expenses Total expenses EBITDA Depreciation Other Income EBIT Interest Cost Profit (+)/Loss (-) Before Taxes Provision for Taxes Net Profit (+)/Loss (-) Growth-% (YoY) Sales EBITDA PAT Expenses on Sales-% Employee Cost Other expenses Tax rate Margin-% EBITDA EBIT PAT Valuation: CMP No of Share NW EPS BVPS RoE-% P/BV P/E (Source: Company/Eastwind) Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. 15
  • 16. Amara Raja Batteries Limited "BUY" 06th Dec' 13 OPTIMISTIC MANAGEMENT SPEECH Result Update BUY CMP Target Price Previous Target Price Upside Change from Previous 328 365 315 11% 4% Market Data BSE Code 500008 NSE Symbol 52wk Range H/L Mkt Capital (Rs, Cr) Average Daily Volume Nifty AMARAJABAT 342/207 5,606 163647 6241 Company hopeful to maintain double digits growth for second half of the year. Amara Raja had posted its 2QYFY14 sales at Rs 805 Cr up by 12.3 % YoY on the back of the strong demand in the automotive replacement and industrial battery business. There was double digit growth in both of these segments. The automotive battery business reported double digit growth in revenue, supported by strong volume expansion both in 4 wheeler and 2 wheeler batteries in the replacement market, however the OEM demand continued to be sluggish. The trading volume in the home UPS business suffered due to unfavorable season on account of mild summer and good monsoon. The operating EBITDA for the 2QFY14 came at Rs 142 Cr and OPM at 17.6%.The OPM improves by nearly 118 bps mainly due to decrease in purchase of stock in trade as percentage of sales. The purchase of stock in trade as percentage of sales stands at 3% versus 7% for the same time last fiscal. However RM cost to sales have increased to 64% from 59% due to rise in the price of major component of RM, lead and an employee benefit cost was higher by 60 bps to 4.8% during the period. Stock Performance-% Absolute Rel. to Nifty 1M 4.0 5.0 1yr 29.0 23.0 YTD 69.0 53.0 Share Holding Pattern-% Promoters FII DII Others Current 1QFY14 4QFY1 3 52.1 52.1 52.1 11.1 10.8 10.1 15.0 14.2 15.3 21.9 22.9 22.6 The net profits for the 2QFY14 came at Rs 95 Cr and NPM at 11.7% .The other income for the quarter came at Rs 7 Cr and Tax rate stands at 29 %. The management of the company after results said that company will maintain its margins at 17-18 % for the rest of the fiscal with no pricing moderation. The management further said that company is confident of maintaining double digit growth for the second half of the year. The company believes that there is improvement in the market share. The Company's effort to enhance the capacities of Two-wheeler battery in the existing plant has witnessed some delay and is likely to go on stream by end January 2014. The enhanced capacities will support the Company to commence business with other major Two-wheeler OEM's and to grow the aftermarket business in a big manner. The green field project for enhancement of Four-wheeler capacity is progressing as per schedule and is likely to commence production by Q2 of next financial year. One Year Forward P/Bv Band The stock is currently trading at CMP Rs 328 and it has achieve our first TP Rs 315.The strong 2QFY14 results , Optimistic management speech and strong business outlook going forward raises positive view on the stock. We have slightly tweaked our TP up to Rs 365 on the back of above fundamental reasons. Financials Revenue EBITDA PAT EBITDA Margin PAT Margin 2QFY14 807 142 95 17.6% 11.8% 1QFY14 894 145 98 16.2% 11.0% (QoQ)-% (9.7) (2.1) (3.1) 140bps 80bps 2QFY13 719 118 70 16.4% 9.7% Rs, Crore (YoY)-% 12.2 20.3 35.7 120bps 200bps (Source: Company/Eastwind) Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. 16
  • 17. Amara Raja Batteries Limited SALES & PAT TREND Growth in sales came on the back of the strong demand in the automotive replacement and industrial battery business. There was double digit growth in both of these segments. (Source: Company/Eastwind) OPM & NPM TREND The expansion in OPM seems largely due to decrease in purchase of stocks in trade costs by 430 bps to 3% . (Source: Company/Eastwind) RM Cost as % Sales Lead costs which accounts for a major chunk of its expenses were higher than the year ago quarter. As a per cent of sales, raw materials were at 64 % up 500 bps over the year-ago period. (Source: Company/Eastwind) Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. 17
  • 18. Risk Disclosure & Disclaimer: This report/message is for the personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to you. Narnolia Securities Ltd. (Hereinafter referred as NSL) is not soliciting any action based upon it. This report/message is not for public distribution and has been furnished to you solely for your information and should not be reproduced or redistributed to any other person in any from. The report/message is based upon publicly available information, findings of our research wing “East wind” & information that we consider reliable, but we do not represent that it is accurate or complete and we do not provide any express or implied warranty of any kind, and also these are subject to change without notice. The recipients of this report should rely on their own investigations, should use their own judgment for taking any investment decisions keeping in mind that past performance is not necessarily a guide to future performance & that the the value of any investment or income are subject to market and other risks. Further it will be safe to assume that NSL and /or its Group or associate Companies, their Directors, affiliates and/or employees may have interests/ positions, financial or otherwise, individually or otherwise in the recommended/mentioned securities/mutual funds/ model funds and other investment products which may be added or disposed including & other mentioned in this report/message. 18

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