India Morning Bell 5th December 2014

Country
India I Equities
Daily
5 December 2014
India Morning Bell
Sensex: 28563
All the latest research and data
Nifty: 8564
Nestl India Green shoots visible; upgrading, to a Buy. In

3QCY14 Nestl India reported 9% revenue growth. Domestic revenue
was up 10% yoy, exports declined 3.9% yoy. We have upgraded our
recommendation on the stock to a Buy, with a revised target price of
`7,124. Our target is based on a target PE of 34x CY16e earnings. We
believe that, with better growth rates and return ratios, Nestl India will
be seen as a candidate for a re-rating.
Hinduja Global Solutions SMAC helping BPM companies climb
the value chain; Buy. We believe that, given the significant
acceleration in the business, HGS is poised for stronger growth in the
next two years. Also, perceived risks like the switch to self service may
not hold true as the company has been able to refresh its offerings
accordingly and generate growth despite the transition. Hence, we retain
our Buy recommendation.
Tourism Finance Corporation of India Consolidation phase
over. Between FY12 and FY14, the Tourism Finance Corporation of
India consolidated its business with a 5.9% asset CAGR. Under the new
MD, Mr. Sangar, however, TFCI is gearing up to benefit from an
upswing in tourism. With a focused management, strong underwriting
skills and high return ratios, TFCI is well placed to benefit from the
expected upswing in the tourism sector. At the CMP, the stock trades at
1.4x FY14 BV.
India: Non-core WPI now on a downward trend
12
WPI inflation, 3-year average, %
10
9
8
7
Sensex
Nifty
Dow Jones
S & P 500
FTSE
Nikkei*
Hang Seng*
4 Dec14
1 Day
YTD
28563
8564
17900
2072
6679
17830
24058
0.4%
0.3%
-0.1%
-0.1%
-0.6%
-0.3%
1.0%
34.9%
35.9%
8.0%
12.1%
-1.0%
9.4%
3.2%
4 Dec 14
1 Day
Avg '14
649
2,964
22,310
2.1%
-5.4%
-30.0%
527
2,644
32,107
4 Dec 14*
MTD
YTD
653
576
77
753
689
151
136,724
121,892
16,430
2,684
2,734
-50
27,552
27,651
-99
823,596
812,799
10,104
200
294
-95
512
407
105
28,192
25,716
2,241
Volumes (US$m)
Cash BSE
Cash NSE
Derivatives (NSE)
Flows (US$m)
FII Cash
Buy
Sell
Net
FII - Derivatives
Buy
Sell
Net
DII Cash
Buy
Sell
Net
Others
5
4
3
WPI
Source: GoI
Non-core
Core
Oct-14
Oct-13
Oct-12
Oct-11
Oct-10
Oct-09
Oct-08
Oct-07
Oct-06
Oct-05
Oct-04
Oct-03
Oct-02
Oct-01
Oct-00
Oct-99
2
Oct-98
Chart of the day
11
Markets
Oil Brent (US$/bbl)*

Gold (US$/oz)*
Steel (US$/MT)
`/US$
US$/Euro*
Yen/US$*
Call Rate
10-year G-Secs
EMBI spreads
4 Dec 14
1 Day
YTD
69.3
1,203.7
572.5
61.9
1.2
119.9
7.4%
8.0%
352.2
-0.4%
-0.1%
-3.8%
0.0%
0.0%
-0.1%
-60.bps
0.bps
-1.9bps
-34.5%
-0.2%
-2.1%
-0.2%
11.0%
-12.2%
-135.bps
-85.7bps
17.9bps
@7:30am *Provisional Source: BSE, Bloomberg
Anand Rathi Shares and Stock Brokers Limited (hereinafter ARSSBL) is a full service brokerage and equities research firm and the views expressed therein are solely
of ARSSBL and not of the companies which have been covered in the Research Report. This report is intended for the sole use of the Recipient and is to be circulated
only within India and to no countries outside India. Disclosures and analyst certifications are present in Appendix.
Anand Rathi Research
India Equities
5 December 2014
India Morning Bell
Market Data
Large Caps
Mid Caps
Small Caps
(>US$1bn)
(US$250m-1bn)
(US$100m-250m)
Price Performance
Top-5 gainers
Company
Price Performance
CMP (INR)
1 wk (%)
1 Mth (%)
BERGER PAINTS
424
19.5
6.6
WOCKHARDT LTD
936
15.6
EXIDE INDUS LTD
174
14.7
1 wk (%)
1 Mth (%)
JET AIRWAYS IND
378
54.4
62.7
SPICEJET LTD
23.5
GULF OIL LUBRICA
505
34.1
52.7
TAKE SOLUTIONS
56
39.1
37.1
10.7
STRIDES ARCOLAB
911
23.8
36.7
SEQUENT SCIENTIF
536
27.5
19.0
556
26.6
38.7
70
26.0
78.0
1 Mth (%)
1096
13.6
17.7
ORIENTAL BANK OF
310
13.4
8.6
CMP (INR)
1 wk (%)
1 Mth (%)
681
(14.9)
(15.7)
1325
(8.6)
(2.0)
VEDANTA RESOURCE
CONTAINER CORP
GMR INFRASTRUCTU
Price Performance
Top-5 gainers
Company
CMP (INR)
PUNJAB NATL BANK
Top-5 losers
Company
Top-5 gainers
Company
BAJAJ CORP LTD
353
16.0
24.2
ATUL AUTO LTD
ZYDUS WELLNESS
801
14.8
27.7
ONMOBILE GLOBAL
CMP (INR)
1 wk (%)
1 Mth (%)
SUZLON ENERGY
13
(9.6)
(2.2)
ABAN OFFSHORE
543
(8.4)
(13.0)
Top-5 losers
Company
Top-5 losers
Company
CMP (INR)
1 wk (%)
21
39.6
1 Mth (%)
50.0
CMP (INR)
1 wk (%)
KAILASH AUTO FIN
12
(22.3)
(56.4)
NITIN FIRE PROT
33
(11.8)
(30.2)
18
(8.5)
(15.0)
KAVERI SEED
844
(7.5)
(8.5)
RS SOFTWARE INDI
542
(10.4)
(15.9)
OIL & NATURAL GA
361
(6.7)
(11.0)
JK CEMENTS LTD
606
(6.7)
0.3
GUJARAT NATURAL
182
(8.7)
(10.9)
NATIONAL ALUMIN
58
(6.6)
1.0
85
(5.7)
(25.5)
15
(8.4)
0.7
FUTURE RETAIL LT
GAMMON INFRASTRU
Volume
Volume
Volume
Volume spurts
Company
Volume spurts
Company
Volume spurts
Company
CMP (INR)
1 wk avg
1/4 wk (%)
CMP (INR)
1 wk avg
1/4 wk (%)
CMP (INR)
1 wk avg
1/4 wk (%)
GUJARAT GAS CO
594
1,280,553
191.4
MOTILAL OSWAL
259
271,523
171.4
ICVL CHEMICALS L
195
1,518
282.9
OBEROI REALTY
258
1,115,807
171.7
GULF OIL LUBRICA
505
547,895
150.6
TAKE SOLUTIONS
56
2,238,107
266.4
CROMPTON GREAVES
189
24,660,992
157.0
STRIDES ARCOLAB
911
1,177,743
141.8
TRIBHOVANDAS BHI
169
591,423
173.4
BERGER PAINTS
424
1,471,113
135.9
JET AIRWAYS IND
378
8,013,150
133.7
GOODYEAR INDIA
659
129,274
134.1
34,281
26,418
81.6
SUN PHARMA ADV
200
1,301,477
124.1
ATUL AUTO LTD
556
1,010,260
127.5
CMP (INR)
200D Avg
(%)
CMP (INR)
200D Avg
(%)
Above 200 DMA

Company
CMP (INR)
200D Avg
(%)
800
429
85.3
BOMBAY BURMAH TR
457
182
151.2
ICVL CHEMICALS L
195
53
263.3
641
2,403
359
1,465
78.8 #
64.4 #
CENTURY PLYBOARD
JK TYRE & IND LT
163
639
80
319
104.3
99.5
EXDON TRADING CO
VISAGAR POLYTEX
308
805
85
234
259.4
253.3
EICHER MOTORS
14,359
8,901
61.1 #
GATI LTD
269
138
95.7
KAMALAKSHI FINAN
439
126
245.7
ASHOK LEYLAND
55
34
60.8
KITEX GARMENTS
523.7
285.6
82.3
SAFAL HERBS LTD
71
25
171.0
CMP (INR)
200D Avg
(%)
12
33
(63.4)
MRF LTD
Technicals
Above 200 DMA
Company
Technicals
NATIONAL BUILDIN
WHIRLPOOL OF IND
AJANTA PHARMA
Below 200 DMA

Company
CMP (INR)
200D Avg
(%)
142
250
(42.7)
JINDAL STEEL & P
Above 200 DMA

Company
Below 200 DMA

Company
SUZLON ENERGY
Technicals
CMP (INR)
200D Avg
(%)
13
19
(27.7)
Below 200 DMA

Company
KAILASH AUTO FIN
JAIPRAKASH ASSOC
30
52
(42.2)
PIPAVAV DEFENCE
35
47
(25.1)
SKIL INFRASTRUCT
29
54
(47.6)
VEDANTA RESOURCE
681
972
(30.0)
FUTURE RETAIL LT
85
113
(24.5)
KAPPAC PHARMA
262
421
(38.2)
18
26
(27.3)
JAYPEE INFRATECH
21
27
(22.6)
ESS DEE ALUMINIU
352
539
(34.6)
260
326
(20.2)
JAIPRAKASH POWER
13
17
(21.2)
FINANCIAL TECHNO
188
270
(30.5)
GMR INFRASTRUCTU
CAIRN INDIA
Source: Bloomberg
India Equities
Consumer
India I Equities
Company Update
Change in Estimates Target Reco
5 December 2014
Nestl India
Rating: Buy
Target Price: `7,124
Share Price: `6,325
Green shoots visible; upgrading, to a Buy

Key takeaways
Key data
NEST IN / NEST.BO
`6624 / `4536
28047 / 8390
US$1.2m
`609bn / US$10bn
96m
Improving revenue growth. In 3QCY14 Nestl India reported 9% revenue

growth. Domestic revenue was up 10% yoy, exports declined 3.9% yoy.
Domestic revenue growth was the highest in the past nine years. The company
said that better realisations helped drive domestic revenue growth.
Nevertheless, despite the better realizations, because of the rupee depreciation
curtailed coffee exports resulted in a drop in export revenue.
52-week high / low

Sensex / Nifty
3-m average volume
Market cap
Shares outstanding
EBITDA margin steady. Higher raw material prices resulted in the gross
margin dropping 110bps. However, slightly lower staff costs and other
expenditure helped the company report a 70-bp higher EBITDA margin. On
completion of major capex, depreciation was up just 1% yoy. Repayment of
debt resulted in a 98% drop in interest cost. Other income also dropped, 19%
yoy. The effective income-tax rate was down 70bps yoy. Net profit was up
16% yoy.
Promoters
- of which, Pledged
Free Float
- Foreign Institutions
- Domestic Institutions
- Public
62.8
37.2
14.3
4.8
18.1
Revenues
EBITDA
PAT
62.8
37.2
14.5
5.1
17.7
62.8
37.2
13.7
5.3
18.3
CY14e
CY15e
2.6
(3.4)
1.2
0.0
1.2
2.2
Relative price performance

7,000
Sensex
6,500
6,000
5,500
NEST
5,000
Dec-14
Oct-14
Aug-14
Jun-14
Apr-14
4,500
Feb-14
` take. We have upgraded our recommendation on the stock to a Buy (from

Our
a Hold), with a revised target price of `7,124 (earlier `5,193). Our target is based
on a target PE of 34x CY16e earnings (the mean PE of the past 14 years). We
believe that, with better growth rates and return ratios, Nestl India will be seen
as a candidate for a re-rating. Risks. Higher raw-material prices and more-thanexpected increase in competition.
Sep 14 Jun 14 Mar 14
Estimates revision (%)
Dec-13
Focus on nutrition, health and wellness. In its recent management meet, the
company was confident of building brands and a portfolio on the nutrition,
health and wellness platform to deliver long-term profitable growth.
Distribution expansion would drive volume growth and improve its marketing
drives. While innovation and renovation would create sub-categories, we
believe the margin would improve because of falling raw-material and crude-oil
prices and internal cost efficiencies.
Shareholding pattern (%)
Source: Bloomberg
Key financials (YE Dec)
CY12
CY13
CY14e
CY15e
CY16e
Sales (` m)
83,023
90,619
102,460
116,038
131,634
Net profit (` m)
11,006
11,340
13,364
15,584
18,158
114.2
117.6
138.6
161.6
188.3
9.6
3.0
17.8
16.6
16.5
PE (x)
55.4
53.8
45.6
39.1
33.6
PBV (x)
31.1
23.6
18.5
14.6
11.5
RoE (%)
67.2
49.9
45.4
41.7
38.3
RoCE (%)
49.0
35.7
35.9
39.0
40.8
0.8
0.8
0.9
0.9
1.0
75.2
39.0
3.9
(21.6)
(41.8)
EPS (`)
Growth (%)
Dividend yield (%)

Net gearing (%)
Source: Company, Anand Rathi Research
Anand Rathi Shares and Stock Brokers Limited (hereinafter ARSSBL) is a full service brokerage and equities research firm and the views expressed therein are solely of
ARSSBL and not of the companies which have been covered in the Research Report. This report is intended for the sole use of the Recipient and is to be circulated only within
India and to no countries outside India. Disclosures and analyst certifications are present in Appendix.
India Equities
5 December 2014
Nestle India Green shoots visible; upgrading, to a Buy
Quick Glance Financials and Valuations

Fig 2 Balance sheet (` m)
Fig 1 Income statement (` m)

Year-end: Dec
Net sales
Sales growth (%)
- Oper. expenses
EBIDTA
EBITDA margins (%)
- Interest
- Depreciation
+ Other income
- Tax
Income tax rate
PAT
Extraordinary items
Minority Interest
Adjusted PAT
FDEPS (`/sh)
FDEPS Growth
CY12
CY13
CY14e
CY15e
CY16e
83,023
10.8
64,765
18,258
22.0
266
2,772
633
4,847
30.6
11,006
(327)
10,679
114.2
9.6
90,619
9.1
71,228
19,391
21.4
365
3,300
1,222
5,609
33.1
11,340
(169)
11,171
117.6
3.0
102,460
13.1
80,311
22,149
21.6
429
3,900
2,126
6,582
33.0
13,364
13,364
138.6
17.8
116,038
13.3
90,687
25,352
21.8
334
4,255
2,497
7,676
33.0
15,584
15,584
161.6
16.6
131,634
13.4
102,859
28,775
21.9
239
4,517
3,082
8,943
33.0
18,158
18,158
188.3
16.5
CY12
CY13
CY14e
964
17,020
17,984
20,752
1,621
40,357
35,484
4,903
4,903
(2,399)
2,370
40,357
15,101
(2.9)
203.3
964
22,723
23,688
23,829
2,155
49,671
36,640
9,755
9,755
(4,218)
7,494
49,671
8,735
(4.7)
268.0
964
29,883
30,847
19,079
2,155
52,080
35,740
15,755
15,755
(4,943)
5,529
52,080
(50)
(4.8)
342.3
CY15e
CY16e
964
964
38,699 49,975
39,663 50,939
14,329
9,579
2,155
2,155
56,146 62,673
34,985 33,968
20,755 25,755
20,755 25,755
(5,694) (6,564)
6,101
9,514
56,146 62,673
(10,372) (23,536)
(4.9)
(5.0)
433.7
550.7
Fig 4 Ratio analysis @ `6,325
Fig 3 Cash-flow statement (` m)

Consolidated PAT
+Depreciation
Cash profit
- Incr./(Decr.) in WC
Operating cash flow
-Capex
Free cash flow
-Dividend
+ Equity raised
+ Debt raised
-Investments
-Misc. items
Net cash flow
+Opening cash
Closing cash
Share capital
Reserves & surplus
Shareholders fund
Minority interest
Debt
Def Tax Liability
Capital employed
Fixed assets
Investments
of which, Liquid
Working capital
Cash
Capital deployed
Net Debt
W C turn (%)
Book Value (`/sh)
Year-end: Dec
Year-end: Dec
CY12
CY13
CY14e
CY15e
CY16e
11,006
2,772
13,778
2,635
16,937
(9,744)
7,194
(5,426)
594
32
2,394
3,513
5,907
11,340
3,300
14,640
2,815
17,949
(3,279)
14,669
(5,462)
759
(2,214)
7,753
5,907
13,661
13,364
3,900
17,264
725
17,990
(3,000)
14,990
(6,204)
(4,750)
(6,000)
(1,965)
7,494
5,529
15,584
4,255
19,839
751
20,590
(3,500)
17,090
(6,768)
(4,750)
(5,000)
572
5,529
6,101
18,158
4,517
22,675
870
23,545
(3,500)
20,045
(6,881)
(4,750)
(5,000)
3,414
6,101
9,514
Year-end: Dec
CY12
CY13
CY14e
CY15e
CY16e
P/E (x)
P/B (x)
EV/Sales (x)
EV/EBITDA (x)
RoAE (%)
RoACE (%)
Dividend yield (%)
Dividend payout (%)
RM to sales (%)
Ad spend to sales (%)
EBITDA growth (%)
EPS growth (%)
PAT margin (%)
FCF/EPS
OCF/Sales
55.4
31.1
7.5
34.0
67.2
49.0
0.8
42.5
45.5
4.3
17.6
9.6
13.3
65.4
20.4
53.8
23.6
6.8
32.0
49.9
35.7
0.8
41.2
45.5
4.4
6.2
3.0
12.5
129.4
19.8
45.6
18.5
6.1
28.0
45.4
35.9
0.9
39.7
45.2
4.4
14.2
17.8
13.0
112.2
17.6
39.1
14.6
5.3
24.5
41.7
39.0
0.9
37.1
45.0
4.4
14.5
16.6
13.4
109.7
17.7
33.6
11.5
4.7
21.5
38.3
40.8
1.0
32.4
44.9
4.4
13.5
16.5
13.8
110.4
17.9
Fig 5 PE band
Fig 6 Revenue break-up
(`)
7,000
Beverages
14%
6,000
36x
5,000
30x
4,000
24x
3,000
Chocolate &
confectionery
14%
Milk Production &

Nutritional
Products
44%
18x
2,000
12x
Nestle
1,000
Prepared dishes
& Cooking aids
28%
Source: Bloomberg, Anand Rathi Research
Nov-14
Nov-13
Nov-12
Nov-11
Nov-10
Nov-09
Nov-08
Nov-07
Nov-06
Nov-05
Nov-04
Nov-03
Nov-02
Nov-01
Nov-00
Source: Company
5 December 2014
Result Highlights
Fig 7 Estimates vs Actuals
(` m)
3QCY14e
3QCY14
Change (%)
Net Sales
26,301
25,578
(2.7)
EBITDA
5,276
5,419
2.7
EBITDA Margin (%)

PAT
20.1
21.2
3,197
3,275
12.2
12.8
PAT Margin (%)
2.4
Source: Company
Fig 8 Revenue growth rates

(`m)
(%)
25
30,000
25,000
20
20,000
15
15,000
10
10,000
5
5,000
0
Revenues
Sept 14
Jun 14
Mar 14
Dec 13
Jun 13
Sept 13
Mar 13
Dec 12
Sept 12
Jun 12
Mar 12
Dec 11
Sept 11
June 11
Growth (RHS)
Source: Bloomberg, Company, Anand Rathi Research
Fig 9 EBITDA margins

(%)
25
20
15
10
Sept 14
Jun 14
Mar 14
Dec 13
Sept 13
Jun 13
Mar 13
Dec 12
Sept 12
Jun 12
Mar 12
Dec 11
Sept 11
June 11
5 December 2014
Fig 10 Net profit growth

(%)
24
18
12
Sept 14
Jun 14
Mar 14
Dec 13
Sept 13
Jun 13
Mar 13
Dec 12
Sept 12
Jun 12
Mar 12
Dec 11
Sept 11
June 11
-6
Domestic revenue growth rates moving up

Every quarter for the past 9-10, the companys domestic revenue growth
rate has been better. Its 10% domestic revenue growth was the highest of
the past nine quarters. We believe that, with the improving urban economy,
its domestic revenue growth rate would rise.
Fig 11 Domestic revenue growth
(%)
80
70
60
50
40
30
20
10
0
Domestic
Sept 14
Jun 14
Mar 14
Dec 13
Sept 13
Jun 13
Mar 13
Dec 12
Sept 12
Jun 12
Mar 12
Dec 11
Sept 11
June 11
-10
Exports
Management meet takeaway

In the recent management meet, senior management sounded confident of
building brands and portfolio around the nutrition, health and wellness
platform for long-term profitable growth. The distribution expansion would
drive volume growth and widen the companys market reach. While
innovation and renovation will create sub-categories, we believe that the
margin would expand due to falling raw-material and crude-oil prices, and
internal cost efficiencies.
We see the focus on the nutrition and wellness category bearing fruit in the
near future as it is expected to grow at double digits (by volume). Nestl
Indias focus on sub-segmentation sharply focusing on strengthening
relations with medical practitioners (current coverage: 70,000 doctors)
would lead to growth in its infant nutrition division. However, it would also
benefit as the competition is expected to be left behind as the companys
reach and distribution become more complex.
We have factored in a rebound in sales of the chocolates and confectionery,
5 December 2014
and of the prepared dishes segments in coming months.

The management commented that the portfolio rationalisation was over and
may lead to a slight re-alignment. With the governments focus on bringing
down inflation, we believe that inflation will slide; this would help expand
the companys margins.
Underperformance in the past three years
In the past three years the stock has sharply undershot the Sensex and the
BSE FMCG. We believe that, with better growth rates and return ratios, it
would outstrip the two in the next 2-3 years.
Fig 12 Underperformed the BSE FMCG and the Sensex in the past three years
8,000
Sensex
7,000
6,000
BSE FMCG
5,000
Nestle
Nov-14
Oct-14
Sep-14
Aug-14
Jul-14
Jun-14
May-14
Apr-14
Mar-14
Feb-14
Jan-14
Dec-13
Nov-13
4,000
Source: Bloomberg, Anand Rathi Research
Valuation
We have upgraded our recommendation on the stockfrom a Hold to a
Buy, with a revised target price of `7,300 (earlier `5,193). Our target price is
based on the target PE of 34x CY16e earnings (the mean PE of the past 14
years). We believe that, with better growth rates and return ratios, Nestl
India will prove ripe for a re-rating.
Fig 13 Mean PE and Standard deviation
70
60
+2SD
50
+1SD
40
Mean
30
20
-1SD
10
-2SD
Nov-14
Nov-13
Nov-12
Nov-11
Nov-10
Nov-09
Nov-08
Nov-07
Nov-06
Nov-05
Nov-04
Nov-03
Nov-02
Nov-01
Nov-00
Risks
Higher raw-material prices
More-than-expected competitive pressures.
Appendix
Analyst Certification
The views expressed in this Research Report accurately reflect the personal views of the analyst(s) about the subject securities or issuers and no part of the
compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research
analyst(s) in this report. The research analysts are bound by stringent internal regulations and also legal and statutory requirements of the Securities and Exchange
Board of India (hereinafter SEBI) and the analysts compensation are completely delinked from all the other companies and/or entities of Anand Rathi, and have
no bearing whatsoever on any recommendation that they have given in the Research Report.
Important Disclosures on subject companies
Rating and Target Price History (as of 4 December 2014)
7,300
Nestle
6,400
13
5,500
14
1012
9
4,600
15
11
3,700
4
2,800
2
1,900
6
5
8
7
Jul-14
Nov-14
Mar-14
Jul-13
Nov-13
Mar-13
Jul-12
Nov-12
Mar-12
Nov-11
Apr-11
Aug-11
Dec-10
Apr-10
Aug-10
Aug-09
Dec-09
Apr-09
Aug-08
Dec-08
Apr-08
Jan-08
1,000
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Date
Rating
12-Dec-08 Hold
6-May-09
Sell
4-Mar-10
Sell
1-Apr-10
Sell
23-Apr-10
Sell
2-Nov-10
Sell
24-Feb-11
Buy
27-Jun-11
Buy
8-Nov-11
Buy
4-Jan-13
Buy
9-Apr-13
Buy
10-May-13
Buy
31-Oct-13
Hold
17-Feb-14 Hold
2-Apr-14
Hold
TP
(`)
1,495
1,520
2,003
2,075
2,416
2,905
4,096
4,550
5,100
5,634
5,106
5,582
5,750
5,380
5,193
Share
Price (`)
1,360
1,758
2,631
2,712
2,865
3,536
3,443
3,934
4,418
4,942
4,471
4,870
5,595
5,075
4,860
The research analysts, strategists, or research associates principally responsible for the preparation of Anand Rathi Research have received compensation based
upon various factors, including quality of research, investor client feedback, stock picking, competitive factors, firm revenues and overall investment banking
revenues.
Anand Rathi Ratings Definitions
Analysts ratings and the corresponding expected returns take into account our definitions of Large Caps (>US$1bn) and Mid/Small Caps (<US$1bn) as described
in the Ratings Table below:
Ratings Guide
Large Caps (>US$1bn)
Mid/Small Caps (<US$1bn)
Buy
>15%
>25%
Anand Rathi Research Ratings Distribution (as of 4 December 2014)

Buy
Anand Rathi Research stock coverage (196)
60%
% who are investment banking clients
4%
Hold
5-15%
5-25%
Sell
<5%
<5%
Hold
27%
0%
Sell
13%
0%
Other Disclosures
This report has been issued by ARSSBL which is a SEBI regulated entity, and which is in full compliance with all rules and regulations as are applicable to its
functioning and governance. The investors should note that ARSSBL is one of the companies comprising within ANAND RATHI group, and ANAND RATHI as a
group consists of various companies which may include (but is not limited to) its subsidiaries, its affiliates, its group companies who may hold positions, views,
stakes and may service the companies covered in this report independent of ARSSBL. Investors are cautioned to be aware that there could arise a potential
conflict of interest in the views held by ARSSBL and other companies of Anand Rathi who maybe affiliated, connected or catering to the companies mentioned in
the Research Report; even though, ARSSBL and Anand Rathi are fully complaint with all procedural and operational regulatory requirements. Thus, investors
should not use this as a sole basis for making their investment decision and should consider the recommendations mentioned in the Research Report bearing in
mind the aforementioned.
Further, the information herein has been obtained from various sources which we believe is reliable, and we do not guarantee its accuracy or completeness.
Neither the information nor any opinion expressed herein constitutes an offer, or an invitation to make an offer, to buy or sell any securities or any options, futures
or other derivatives related to such securities (hereinafter referred to as Related Investments). ARSSBL and/or Anand Rathi may trade for their own accounts as
market maker / jobber and/or arbitrageur in any securities of the companies mentioned in the Research Report or in related investments, and may be on taking a
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Additional information on recommended securities/instruments is available on request.
Technology
India I Equities
Company Update
5 December 2014
Hinduja Global Solutions
Rating: Buy
Target Price: `980
Share Price: `668
SMAC helping BPM companies climb the value chain; Buy

Investor-day takeaways
Key data
HGSL IN / HGSL.BO
52-week high / low

Sensex / Nifty
3-m average volume
Market cap
Shares outstanding
`736 / `429
28047 / 8390
US$0.5m
`14bn / US$.23bn
20.6m
Sep 14
Jun 14
Mar14
Promoters
- of which, Pledged
Free Float
- Public
67.91
32.09
16.65
0.61
14.83
68.02
31.98
16.14
0.01
15.83
68.05
31.95
15.69
0.01
16.25

700
HGSL
650
600
Sensex
550
500
450
Dec-14
Oct-14
Nov-14
Sep-14
Jul-14
Aug-14
Jun-14
Apr-14
May-14
Mar-14
Jan-14
Feb-14
400
Dec-13
Evolving role of BPM companies. The opportunity in business-process

management (BPM) is an immense US$410bn; of that, outsourced customer
care is US$60bn. Interestingly, SMAC has impacted BPM in two ways 1) the
way people interact with companies is changing in favour of non-voice nextgen offerings, leading to slower growth for voice, and 2) sharper company
focus on consumers, resulting in greater volumes for BPM companies. The plus
is that, with the move to enriched customer interaction, BPM companies also
rise up the value chain, from a pure-cost focus to a cost-plus-experience-plusrevenue focus as some of these new technologies enabling BPM companies to
improve the overall customer experience and, hence, cross selling.
M&A strategy shifts to small niche firms. In the past, HGS has grown
organically and inorganically (mostly to enter new markets). Now, its altered
strategy is to acquire small but niche technologies (essentially startups): HGS
will bring to these niche companies access to markets and clients. It believes
that the strategic benefit that larger peers had due to investment-intensive
platforms may no longer exist. It has operations in all the major regions and,
hence, does not expect any large acquisitions.
Significant growth expectations ahead. HGS is seeing increased traction
in business especially in the US. In Nov14 its deal pipeline of an annualised
contract value (ACV, US$643m) was up 39% from Apr14, suggesting strong
growth ahead. The growth would be driven by the healthcare sector (up 35%
yoy in 2QFY15), for which the company has gradually moved up from costbasis back-office work to outcome-oriented higher-value jobs.
Our
` take. We believe that, given the significant acceleration in the business,
HGS is poised for stronger growth in the next two years. Also, perceived risks
like the switch to self service may not hold true as the company has been able
to refresh its offerings accordingly and generate growth despite the transition.
Hence, we retain our Buy recommendation. Risk. Slower-than-anticipated
global recovery.
Source: Bloomberg
Key financials (YE Mar)
Sales (US$m)
Sales (`m)
FY13
FY14
FY15e
FY16e
366
412
465
528
FY17e
600
19,834
25,048
27,939
31,646
35,967
906
1,695
1,552
1,831
2,151
EPS (`)
44
82
75
89
104
Growth (%)
-15
87
-8
18
17
PE (x)
17.2
9.2
10.0
8.5
7.2
PBV (x)
1.3
1.1
1.0
0.9
0.8
RoE (%)
13
10
11
12
RoCE (%) after tax
10
Dividend yield (%)
Net profit (`m)
India Equities
5 December 2014
Hinduja Global Solutions SMAC helping BPM companies climb the value chain; Buy


Year-end: Mar
Revenues (US$ m)
growth (%)
Revenues (`m)
growth (%)
Effective USD:INR
Cost of Revenues
SG&A
EBITDA
EBITDA margins (%)
D&A
EBIT
EBIT margins (%)
Other income
Tax
ETR (%)
Minority Interest
Net Profit
Net margins (%)
EPS (`)
EPS growth (%)
FY13
FY14
FY15e
FY16e
FY17e
366
12
19,834
28
54.1
(13,412)
(4,185)
2,237
11.3
(772)
1,465
7.4
333
(402)
-30
(53)
906
4.6
44
-15
412
12
25,048
26
60.8
(16,921)
(4,908)
3,219
12.9
(862)
2,357
9.4
340
(614)
-27
0
1,695
6.8
82
87
465
13
27,939
12
60.1
(18,934)
(5,655)
3,351
12.0
(1,029)
2,322
8.3
243
(595)
-28
0
1,552
5.6
75
-8
528
14
31,646
13
59.9
(21,412)
(6,192)
4,042
12.8
(1,219)
2,823
8.9
179
(765)
-29
0
1,831
5.8
89
18
600
14
35,967
14
59.9
(24,646)
(6,701)
4,620
12.8
(1,401)
3,219
8.9
152
(898)
-29
0
2,151
6.0
104
17
Cash from Operations

PBT
Operating Profit before WC
Chg. in Trade Receivables
Chg. in Other CA
Chg. in Trade Payables
Chg. in Other CL
Others including taxes
PBT
Cash from Investments
Cash from Investments
Capex
Acquisitions
Investments & Others
Cash from Financing
Equity Issuance
Change in Borrowings
Dividends including DDT
Others
Net Cash from Financing
FY14
FY15e
FY16e
FY17e
1,534
2,359
(857)
280
(351)
1,431
2,483
3,611
(1,293)
620
(587)
2,351
2,341
3,370
(603)
(243)
211
89
(746)
2,078
2,823
4,042
(777)
(308)
190
94
(931)
2,310
3,219
4,620
(907)
(358)
236
98
(1,081)
2,608
(587)
(834)
1,518
931
(1,537)
(446)
(1,345)
(1,200)
224
(976)
(1,300)
179
(1,121)
(1,300)
152
(1,148)
(1,764)
(480)
(438)
(2,682)
9
877
(638)
(388)
(136)
(757)
(485)
(417)
(1,659)
(757)
(490)
(406)
(1,653)
(757)
(494)
(321)
(1,573)
Employees (EoP)
Rev/Employee (US$)
EBITDA/Employee (`)
FY15e
FY16e
FY17e
21,486
206
15,382
15,588
0
5,537
361
21,486
3,948
7,126
1,663
12,172
5,295
658
3,994
2,226
3,421
1,549
0
1,872
22,071
206
16,723
16,929
0
4,780
361
22,071
4,028
7,126
1,828
12,793
6,072
671
3,529
2,521
3,705
1,739
0
1,965
22,970
206
18,380
18,586
0
4,023
361
22,970
3,928
7,126
2,012
13,945
6,979
684
3,417
2,865
4,039
1,975
0
2,064
Year-end: Mar
Return Ratios
RoCE % (post-tax)
RoIC % (post-tax)
RoE %
Cash Ratios
CFO:Sales
Receivable days (incl. unbill)
Payable days
DuPont Analysis
RoE %
Operating eff. (EBIT mgn %)
Invest eff. (PBT/EBIT %)
Tax Burden % (PAT/PBT)
Total Asset turnover
Leverage % (Assets/Equity)
Valuation ratios
P/E (x)
P/B (x)
EV/EBITDA (x)
EV / Operating CF (x)
FY13
FY14
FY15e
FY16e
FY17e
6
8
8
9
11
13
8
10
10
9
11
11
10
12
12
7
82
17
9
78
22
7
78
23
7
78
23
7
78
23
8
7
93
67
107
156
13
9
98
73
127
146
10
8
92
72
131
142
11
9
92
71
145
134
12
9
95
71
160
127
17.2
1.3
7.7
12.1
9.2
1.1
5.4
7.4
10.0
1.0
5.2
8.3
8.5
0.9
4.3
7.5
7.2
0.8
3.7
6.6
Fig 6 Assumptions
FY13
FY14
FY15e
FY16e
FY17e
23,100 24,669 28,763 31,642 34,639

15,865 16,692 16,168 16,697 17,334
96,848 130,483 116,496 127,742 133,372
FY14
21,176
206
14,314
14,521
0
6,294
361
21,176
3,777
7,126
1,511
11,884
4,692
645
4,551
1,995
3,121
1,338
0
1,783
Fig 5 Key Parameters

Year-end: Mar
FY13
18,128
206
12,149
12,355
0
5,508
266
18,128
2,997
6,458
1,255
9,952
3,600
872
4,062
1,418
2,535
815
0
1,720
Fig 4 Ratio analysis @ `668
Fig 3 Cash-flow statement (` m)

FY13
Sources of Funds
Share capital
Reserves & Surplus
S/Hs Equity
Minority Interest
Total Debt
Other LT Liabilities
Application of Funds
Net Fixed Assets
Intangible/Goodwill
Other LT Assets
Current Assets
Accounts Receivable
Unbilled Revenues
Cash & Investments
Other CAs
Current Liabilities
Accounts Payable
Unearned revenue
Other CLs
Year-end: Mar
Year-end: Mar
Year-end: Mar
Chg in Realization
No. of seats
US$:`
FY13
FY14
FY15e
FY16e
FY17e
NA
23,036
54.1
0
26,385
60.8
1
28,436
60.1
2
34,246
59.9
4
33,183
59.9
5 December 2014
Hinduja Global Solutions SMAC helping BPM companies climb the value chain; Buy
Factsheet
Fig 7 Revenue by delivery location
(%)
2QFY14
3QFY14
4QFY14
1QFY15
North America
28
29
25
27
27
Canada
23
23
23
19
18
Continental Europe
2QFY15
11
11
10
India
25
25
25
26
28
Philippines
15
15
17
17
17
Fig 8 Revenue by vertical

(%)
2QFY14
3QFY14
4QFY14
1QFY15
Telecoms
34
32
31
29
29
Hi-Tech/PES(cons. elec)
17
16
15
15
13
Life Sciences(chem, biotech & ins)
30
30
32
35
36
Media and Entertainment
Others
BFSI
2QFY15
Fig 9 Client Concentration LTM

(%)
Top-client
Top-5 clients
Top-10 clients
Top-20 clients
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
13
45
62
81
13
47
63
80
14
47
62
78
14
49
63
77
15
49
62
76
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
60
23
9
8
59
23
9
8
58
22
11
9
62
19
11
8
63
18
11
8
2QFY15
Fig 10 Revenue by currency exposure

(%)
North America
Canada
Continental Europe
India
Fig 11 Workforce Spread

2QFY14
3QFY14
4QFY14
1QFY15
North America
10
10
10
10
Canada
12
11
12
10
Continental Europe
India
Philippines
Total
60
59
58
59
60
15
17
17
18
19
24,669
25,676
26,036
26,803
28,120
Fig 12 Client details

2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
Active Clients
133
135
139
141
143
Revenue per Active Client (US$ m)
0.8
0.8
0.8
0.8
0.8
Appendix
The views expressed in this Research Report accurately reflect the personal views of the analyst(s) about the subject securities or issuers and no part of the
compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research
analyst(s) in this report. The research analysts are bound by stringent internal regulations and also legal and statutory requirements of the Securities and Exchange
Board of India (hereinafter SEBI) and the analysts compensation are completely delinked from all the other companies and/or entities of Anand Rathi, and have
no bearing whatsoever on any recommendation that they have given in the Research Report.
Important Disclosures on subject companies
Rating and Target Price History (as of 4 December 2014)
HGSL
700
Date
28-Oct-14
Rating
Buy
TP
(`)
980
Share
Price (`)
651
650
1
600
550
500
Dec-14
Nov-14
Oct-14
Sep-14
Aug-14
Jul-14
Jun-14
May-14
Apr-14
Mar-14
Feb-14
Jan-14
450
The research analysts, strategists, or research associates principally responsible for the preparation of Anand Rathi Research have received compensation based
upon various factors, including quality of research, investor client feedback, stock picking, competitive factors, firm revenues and overall investment banking
revenues.
Analysts ratings and the corresponding expected returns take into account our definitions of Large Caps (>US$1bn) and Mid/Small Caps (<US$1bn) as described
in the Ratings Table below:
Ratings Guide
Buy
>15%
>25%
Anand Rathi Research Ratings Distribution (as of 4 December 2014)

Buy
60%
4%
Hold
5-15%
5-25%
Sell
<5%
<5%
Hold
27%
0%
Sell
13%
0%
Other Disclosures
This report has been issued by ARSSBL which is a SEBI regulated entity, and which is in full compliance with all rules and regulations as are applicable to its
functioning and governance. The investors should note that ARSSBL is one of the companies comprising within ANAND RATHI group, and ANAND RATHI as a
group consists of various companies which may include (but is not limited to) its subsidiaries, its affiliates, its group companies who may hold positions, views,
stakes and may service the companies covered in this report independent of ARSSBL. Investors are cautioned to be aware that there could arise a potential
conflict of interest in the views held by ARSSBL and other companies of Anand Rathi who maybe affiliated, connected or catering to the companies mentioned in
the Research Report; even though, ARSSBL and Anand Rathi are fully complaint with all procedural and operational regulatory requirements. Thus, investors
should not use this as a sole basis for making their investment decision and should consider the recommendations mentioned in the Research Report bearing in
mind the aforementioned.
Further, the information herein has been obtained from various sources which we believe is reliable, and we do not guarantee its accuracy or completeness.
Neither the information nor any opinion expressed herein constitutes an offer, or an invitation to make an offer, to buy or sell any securities or any options, futures
or other derivatives related to such securities (hereinafter referred to as Related Investments). ARSSBL and/or Anand Rathi may trade for their own accounts as
market maker / jobber and/or arbitrageur in any securities of the companies mentioned in the Research Report or in related investments, and may be on taking a
different position from the ones which haven been taken by the public orders. ARSSBL and/or Anand Rathi and its affiliates, directors, officers, and employees may
have a long or short position in any securities of the companies mentioned in the Research Report or in Related Investments. ARSSBL and/or Anand Rathi, may
from time to time, perform investment banking, investment management, financial advisory or any other services not explicitly mentioned herein, or solicit
investment banking or other business from, any entity and/or company mentioned in this Research Report; however, the same shall have no bearing whatsoever
on the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the other
companies of Anand Rathi, even though there might exist an inherent conflict of interest.
Furthermore, this Research Report is prepared for private circulation and use only. It does not have regard to the specific investment objectives, financial situation
and the specific financial needs or objectives of any specific person who may receive this Research Report. Investors should seek financial advice regarding the
appropriateness of investing in any securities or investment strategies discussed or recommended in this Research Report, and, should understand that
statements regarding future prospects may or may not be realized, and we can not guarantee the same as analysis and valuation is a tool to enable investors to
make investment decisions but, is not an exact and/or a precise science. Investors should note that income from such securities, if any, may fluctuate and that
each security's price or value may rise or fall. Past performance is not necessarily a guide to future performance. Foreign currency rates of exchange may
adversely affect the value, price or income of any security or related investments mentioned in this report.

This material was produced by ARSSBL, solely for information purposes and for the use of the recipient. It is not to be reproduced under any circumstances and is
not to be copied or made available to any person other than the recipient. It is distributed in the United States of America by Enclave Capital LLC (19 West 44th
Street, Suite 1700, New York, NY 10036) and elsewhere in the world by ARSSBL or an authorized affiliate of ARSSBL (such entities and any other entity, directly
or indirectly, controlled by ARSSBL, the Affiliates). This document does not constitute an offer of, or an invitation by or on behalf of ARSSBL or its Affiliates or any
other company to any person, to buy or sell any security. The information contained herein has been obtained from published information and other sources, which
ARSSBL or its Affiliates consider to be reliable. None of ARSSBL or its Affiliates accepts any liability or responsibility whatsoever for the accuracy or completeness
of any such information. All estimates, expressions of opinion and other subjective judgments contained herein are made as of the date of this document. Emerging
securities markets may be subject to risks significantly higher than more established markets. In particular, the political and economic environment, company
practices and market prices and volumes may be subject to significant variations. The ability to assess such risks may also be limited due to significantly lower
information quantity and quality. By accepting this document, you agree to be bound by all the foregoing provisions.
3. ARSSBL or its affiliates may have or not received compensation for investment banking services from the issuer of these securities in the past 12 months and do
not expect to receive compensation for investment banking services from the issuer of these securities within the next three months.
4. However, one or more of ARSSBL or its Affiliates may, from time to time, have a long or short position in any of the securities mentioned herein and may buy or
sell those securities or options thereon, either on their own account or on behalf of their clients.
6. ARSSBL or its Affiliates may or may not, to the extent permitted by law, act upon or use the above material or the conclusions stated above, or the research or
analysis on which they are based before the material is published to recipients and from time to time, provide investment banking, investment management or other
services for or solicit to seek to obtain investment banking, or other securities business from, any entity referred to in this report.
Enclave Capital LLC is distributing this document in the United States of America. ARSSBL accepts responsibility for its contents. Any US customer wishing to
effect transactions in any securities referred to herein or options thereon should do so only by contacting a representative of Enclave Capital LLC.
2014 Anand Rathi Shares and Stock Brokers Limited. All rights reserved. This report or any portion thereof may not be reprinted, sold or redistributed without the
prior written consent of Anand Rathi Shares and Stock Brokers Limited.
BFSI
India I Equities
Visit note
5 December 2014
Tourism Finance Corporation of India
Rating: Non-rated
Target Price: n.a
Share Price: `73
Consolidation phase over

Key takeaways
Key financials (YE Mar)
FY10
FY11
FY12
FY13
FY14
Net Interest Income(`m)
396
601
571
856
943
Net profit (`m)
341
444
495
555
585
EPS (`)
4.2
5.5
6.1
6.9
7.2
Growth (%)
17.6
30.3
11.4
12.2
5.4
PE (x)
17.3
13.3
11.9
10.6
10.1
PABV (x)
1.9
1.7
1.6
1.4
1.4
RoE (%)
11.5
13.7
13.8
13.9
13.7
RoA (%)
4.9
5.5
4.7
4.3
4.3
Dividend yield (%)
1.6
1.6
1.6
1.6
1.6
Net NPA (%)
Sep 14
Jun 14
Mar 14
Promoters
- of which, Pledged
Free Float
- Public
66.3
33.7
0.5
0.5
32.7
66.9
33.1
0.5
0.3
32.3
66.8
33.1
0.2
0.3
32.6

75
65
55
TFCI
45
35
Bankex
25
Dec-14
Oct-14
Aug-14
15
Jun-14
Valuations. With a focused management, strong underwriting skills and high

return ratios, TFCI is well placed to benefit from the expected upswing in the
tourism sector. At the CMP, the stock trades at 1.4x FY14 BV.
`74 / `21
28563 / 8564
US$1.1m
`6bn / US$97m
80.7m
Apr-14
Strong return ratios, high capital adequacy. A strong niche in hotel

finance and low borrowing costs have driven TFCIs high, 3.5%, spreads.
TFCI also operates on a lean-cost model. It has an employee base of 35,
which has resulted in cost-income coming at a low 17%. The combination of
high spreads, low-cost operating model and steady asset quality has driven the
high RoA of more than 4.3% in the last six years.
TFCI IN / TFCI.BO
52-week high / low

Sensex / Nifty
3-m average volume
Market cap
Shares outstanding
Feb-14
Healthy credit appraisal in hotel finance drives stable asset quality. The
hotels sector has been recently under stress. However, led by the large
database at its disposal and its strong grasp of the mechanics of the hotels
sector, TFCI has developed a robust credit-appraisal system. As a result, the
NBFC has maintained sound asset quality, with GNPA at 0.2% (Mar14), and
a negligible restructuring book of about `0.3bn.
Key data
Dec-13
Management change driving robust loan growth. Between FY12 and

FY14, the Tourism Finance Corporation of India (TFCI) consolidated its
business with a 5.9% asset CAGR. Under the new MD, Mr. Sangar, however,
TFCI is gearing up to benefit from an upswing in tourism. Disbursements for
1HFY15 are `3.5bn, equivalent to disbursements for all of FY14. The strong
disbursement growth stands in stark contrast to bank lending to the hotel
segment, which at end-Sep14 was down 6% from a year ago. Over 80% of
TFCIs loans comprise term and project lending to the hotels sector. It has
expanded its repertoire to include tourism and entertainment-related projects.
With its dominance in the tourism sector, management believes a robust, 30%,
loan growth is possible in the next 2-3 years.
Source: Bloomberg
India Equities
7 December 2014
The Tourism Finance Corporation of India Consolidation phase over

Fig 4 Bank exposure to hotels sector slowing down
Year-end: Mar
FY10
FY11
FY12
FY13
FY14
Net interest income

NII growth (%)
Non-interest inc
Total income
Total Inc growth (%)
Oper. expenses
Operating profit
Oper. profit growth (%)
Provisions
PBT
Tax
PAT
PAT growth (%)
FDEPS (`/sh)
DPS (`/sh)
396
15.2
147
544
14.0
83
461
17.4
0
461
120
341
17.6
4.2
1.2
601
51.7
213
814
49.7
126
688
49.3
688
244
444
30.3
5.5
1.2
571
(5.0)
199
771
(5.3)
140
631
(8.3)
631
136
495
11.4
6.1
1.2
856
49.8
83
939
21.8
154
784
24.3
60
724
169
555
12.2
6.9
1.2
943
10.1
122
1,065
13.4
178
887
13.0
46
841
256
585
5.4
7.2
1.2
Source: Company, Anand Rathi Research * not meaningful
Source: RBI, Anand Rathi Research.

Year-end: Mar
Fig 5 TFCI sanction breakup
FY10
FY11
FY12
FY13
FY14
Share capital
Reserves & surplus
Net worth
Borrowings
Current liab & prov
Total liabilities
807
2,262
3,069
3,894
322
7,286
807
2,594
3,401
4,808
677
8,891
807
2,966
3,773
7,586
590
11,959
807
3,393
4,200
8,094
1,626
13,920
807
3,558
4,365
8,621
439
13,425
Advances
Investments
Cash & bank bal
Fixed & other assets
Total assets
No. of shares (m)
Borrowing growth (%)
Loans growth (%)
5,856
752
324
354
7,285
80.7
8.4
27.7
7,938
530
86
337
8,891
80.7
23.5
35.6
10,383
988
281
307
11,959
80.7
57.8
30.8
11,634
1,808
108
370
13,920
80.7
6.7
12.0
11,729
1,349
237
110
13,425
80.7
6.5
0.8
Source: Company, Anand Rathi Research .
Fig 3 Key ratios @ `___

Year-end: Mar
NIM (%)
Other inc. / total inc. (%)
Cost-income (%)
Provision coverage (%)
Dividend payout (%)
Borrowings-loans (%)
Investment-deposit (%)
Gross NPA (%)
Net NPA (%)
BV (`)
Adj BV (`)
CAR (%)
RoE (%)
RoA (%)
Dividend yield (%)
FY11
FY12
FY13
FY14
6.2
27.1
15.2
100.0
28.4
66.5
n.a
2.6
38.0
38.0
58.2
11.5
4.9
1.6
8.0
26.2
15.5
100.0
21.8
60.6
n.a
0.4
42.1
42.1
50.7
13.7
5.5
1.6
5.7
25.9
18.1
100.0
19.6
73.1
n.a
0.5
46.7
46.7
40.5
13.8
4.7
1.6
6.8
8.8
16.5
100.0
17.4
69.5
n.a
0.1
52.0
52.0
37.2
13.9
4.3
1.6
7.1
11.5
16.7
100.0
16.6
73.4
n.a
0.2
54.1
54.1
39.9
13.7
4.3
1.6
Fig 6 Disbursement trend
FY10
Source: Company,Anand Rathi research
Appendix
The views expressed in this Research Report accurately reflect the personal views of the analyst(s) about the subject securities or issuers and no part of the compensation of the research
analyst(s) was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst(s) in this report. The research analysts are bound by
stringent internal regulations and also legal and statutory requirements of the Securities and Exchange Board of India (hereinafter SEBI) and the analysts compensation are completely
delinked from all the other companies and/or entities of Anand Rathi, and have no bearing whatsoever on any recommendation that they have given in the Research Report.
The research analysts, strategists, or research associates principally responsible for the preparation of Anand Rathi Research have received compensation based upon various factors,
including quality of research, investor client feedback, stock picking, competitive factors, firm revenues and overall investment banking revenues.
Analysts ratings and the corresponding expected returns take into account our definitions of Large Caps (>US$1bn) and Mid/Small Caps (<US$1bn) as described in the Ratings Table
below:
Ratings Guide
Buy
>15%
>25%
Anand Rathi Research Ratings Distribution (as of 3 September 2014)

Buy
60%
4%
Hold
5-15%
5-25%
Sell
<5%
<5%
Hold
27%
0%
Sell
13%
0%
Other Disclosures
This report has been issued by ARSSBL which is a SEBI regulated entity, and which is in full compliance with all rules and regulations as are applicable to its functioning and governance.
The investors should note that ARSSBL is one of the companies comprising within ANAND RATHI group, and ANAND RATHI as a group consists of various companies which may
include (but is not limited to) its subsidiaries, its affiliates, its group companies who may hold positions, views, stakes and may service the companies covered in this report independent of
ARSSBL. Investors are cautioned to be aware that there could arise a potential conflict of interest in the views held by ARSSBL and other companies of Anand Rathi who maybe affiliated,
connected or catering to the companies mentioned in the Research Report; even though, ARSSBL and Anand Rathi are fully complaint with all procedural and operational regulatory
requirements. Thus, investors should not use this as a sole basis for making their investment decision and should consider the recommendations mentioned in the Research Report
bearing in mind the aforementioned.
Further, the information herein has been obtained from various sources which we believe is reliable, and we do not guarantee its accuracy or completeness. Neither the information nor
any opinion expressed herein constitutes an offer, or an invitation to make an offer, to buy or sell any securities or any options, futures or other derivatives related to such securities
(hereinafter referred to as Related Investments). ARSSBL and/or Anand Rathi may trade for their own accounts as market maker / jobber and/or arbitrageur in any securities of the
companies mentioned in the Research Report or in related investments, and may be on taking a different position from the ones which haven been taken by the public orders. ARSSBL
and/or Anand Rathi and its affiliates, directors, officers, and employees may have a long or short position in any securities of the companies mentioned in the Research Report or in
Related Investments. ARSSBL and/or Anand Rathi, may from time to time, perform investment banking, investment management, financial advisory or any other services not explicitly
mentioned herein, or solicit investment banking or other business from, any entity and/or company mentioned in this Research Report; however, the same shall have no bearing
whatsoever on the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the other companies of
Anand Rathi, even though there might exist an inherent conflict of interest.
Furthermore, this Research Report is prepared for private circulation and use only. It does not have regard to the specific investment objectives, financial situation and the specific
financial needs or objectives of any specific person who may receive this Research Report. Investors should seek financial advice regarding the appropriateness of investing in any
securities or investment strategies discussed or recommended in this Research Report, and, should understand that statements regarding future prospects may or may not be realized,
and we can not guarantee the same as analysis and valuation is a tool to enable investors to make investment decisions but, is not an exact and/or a precise science. Investors should
note that income from such securities, if any, may fluctuate and that each security's price or value may rise or fall. Past performance is not necessarily a guide to future performance.
Foreign currency rates of exchange may adversely affect the value, price or income of any security or related investments mentioned in this report.
This material was produced by ARSSBL, solely for information purposes and for the use of the recipient. It is not to be reproduced under any circumstances and is not to be copied or
made available to any person other than the recipient. It is distributed in the United States of America by Enclave Capital LLC (19 West 44th Street, Suite 1700, New York, NY 10036) and
elsewhere in the world by ARSSBL or an authorized affiliate of ARSSBL (such entities and any other entity, directly or indirectly, controlled by ARSSBL, the Affiliates). This document
does not constitute an offer of, or an invitation by or on behalf of ARSSBL or its Affiliates or any other company to any person, to buy or sell any security. The information contained herein
has been obtained from published information and other sources, which ARSSBL or its Affiliates consider to be reliable. None of ARSSBL or its Affiliates accepts any liability or
responsibility whatsoever for the accuracy or completeness of any such information. All estimates, expressions of opinion and other subjective judgments contained herein are made as of
the date of this document. Emerging securities markets may be subject to risks significantly higher than more established markets. In particular, the political and economic environment,
company practices and market prices and volumes may be subject to significant variations. The ability to assess such risks may also be limited due to significantly lower information
quantity and quality. By accepting this document, you agree to be bound by all the foregoing provisions.
3. ARSSBL or its affiliates may have or not received compensation for investment banking services from the issuer of these securities in the past 12 months and do not expect to receive
compensation for investment banking services from the issuer of these securities within the next three months.
4. However, one or more of ARSSBL or its Affiliates may, from time to time, have a long or short position in any of the securities mentioned herein and may buy or sell those securities or
options thereon, either on their own account or on behalf of their clients.
6. ARSSBL or its Affiliates may or may not, to the extent permitted by law, act upon or use the above material or the conclusions stated above, or the research or analysis on which they
are based before the material is published to recipients and from time to time, provide investment banking, investment management or other services for or solicit to seek to obtain
investment banking, or other securities business from, any entity referred to in this report.
Enclave Capital LLC is distributing this document in the United States of America. ARSSBL accepts responsibility for its contents. Any US customer wishing to effect transactions in any
securities referred to herein or options thereon should do so only by contacting a representative of Enclave Capital LLC.
2014 Anand Rathi Shares and Stock Brokers Limited. All rights reserved. This report or any portion thereof may not be reprinted, sold or redistributed without the prior written consent of
Anand Rathi Shares and Stock Brokers Limited.
Appendix
The views expressed in this Research Report accurately reflect the personal views of the analyst(s) about the subject securities or issuers and no part of the compensation of the research
analyst(s) was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst(s) in this report. The research analysts are bound by
stringent internal regulations and also legal and statutory requirements of the Securities and Exchange Board of India (hereinafter SEBI) and the analysts compensation are completely
delinked from all the other companies and/or entities of Anand Rathi, and have no bearing whatsoever on any recommendation that they have given in the Research Report.
The research analysts, strategists, or research associates principally responsible for the preparation of Anand Rathi Research have received compensation based upon various factors,
including quality of research, investor client feedback, stock picking, competitive factors, firm revenues and overall investment banking revenues.
Analysts ratings and the corresponding expected returns take into account our definitions of Large Caps (>US$1bn) and Mid/Small Caps (<US$1bn) as described in the Ratings Table
below:
Ratings Guide
Buy
>15%
>25%
Anand Rathi Research Ratings Distribution (as of 3 September 2014)

Buy
60%
4%
Hold
5-15%
5-25%
Sell
<5%
<5%
Hold
27%
0%
Sell
13%
0%
Other Disclosures
This report has been issued by ARSSBL which is a SEBI regulated entity, and which is in full compliance with all rules and regulations as are applicable to its functioning and governance.
The investors should note that ARSSBL is one of the companies comprising within ANAND RATHI group, and ANAND RATHI as a group consists of various companies which may
include (but is not limited to) its subsidiaries, its affiliates, its group companies who may hold positions, views, stakes and may service the companies covered in this report independent of
ARSSBL. Investors are cautioned to be aware that there could arise a potential conflict of interest in the views held by ARSSBL and other companies of Anand Rathi who maybe affiliated,
connected or catering to the companies mentioned in the Research Report; even though, ARSSBL and Anand Rathi are fully complaint with all procedural and operational regulatory
requirements. Thus, investors should not use this as a sole basis for making their investment decision and should consider the recommendations mentioned in the Research Report
bearing in mind the aforementioned.
Further, the information herein has been obtained from various sources which we believe is reliable, and we do not guarantee its accuracy or completeness. Neither the information nor
any opinion expressed herein constitutes an offer, or an invitation to make an offer, to buy or sell any securities or any options, futures or other derivatives related to such securities
(hereinafter referred to as Related Investments). ARSSBL and/or Anand Rathi may trade for their own accounts as market maker / jobber and/or arbitrageur in any securities of the
companies mentioned in the Research Report or in related investments, and may be on taking a different position from the ones which haven been taken by the public orders. ARSSBL
and/or Anand Rathi and its affiliates, directors, officers, and employees may have a long or short position in any securities of the companies mentioned in the Research Report or in
Related Investments. ARSSBL and/or Anand Rathi, may from time to time, perform investment banking, investment management, financial advisory or any other services not explicitly
mentioned herein, or solicit investment banking or other business from, any entity and/or company mentioned in this Research Report; however, the same shall have no bearing
whatsoever on the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the other companies of
Anand Rathi, even though there might exist an inherent conflict of interest.
Furthermore, this Research Report is prepared for private circulation and use only. It does not have regard to the specific investment objectives, financial situation and the specific
financial needs or objectives of any specific person who may receive this Research Report. Investors should seek financial advice regarding the appropriateness of investing in any
securities or investment strategies discussed or recommended in this Research Report, and, should understand that statements regarding future prospects may or may not be realized,
and we can not guarantee the same as analysis and valuation is a tool to enable investors to make investment decisions but, is not an exact and/or a precise science. Investors should
note that income from such securities, if any, may fluctuate and that each security's price or value may rise or fall. Past performance is not necessarily a guide to future performance.
Foreign currency rates of exchange may adversely affect the value, price or income of any security or related investments mentioned in this report.
This material was produced by ARSSBL, solely for information purposes and for the use of the recipient. It is not to be reproduced under any circumstances and is not to be copied or
made available to any person other than the recipient. It is distributed in the United States of America by Enclave Capital LLC (19 West 44th Street, Suite 1700, New York, NY 10036) and
elsewhere in the world by ARSSBL or an authorized affiliate of ARSSBL (such entities and any other entity, directly or indirectly, controlled by ARSSBL, the Affiliates). This document
does not constitute an offer of, or an invitation by or on behalf of ARSSBL or its Affiliates or any other company to any person, to buy or sell any security. The information contained herein
has been obtained from published information and other sources, which ARSSBL or its Affiliates consider to be reliable. None of ARSSBL or its Affiliates accepts any liability or
responsibility whatsoever for the accuracy or completeness of any such information. All estimates, expressions of opinion and other subjective judgments contained herein are made as of
the date of this document. Emerging securities markets may be subject to risks significantly higher than more established markets. In particular, the political and economic environment,
company practices and market prices and volumes may be subject to significant variations. The ability to assess such risks may also be limited due to significantly lower information
quantity and quality. By accepting this document, you agree to be bound by all the foregoing provisions.
3. ARSSBL or its affiliates may have or not received compensation for investment banking services from the issuer of these securities in the past 12 months and do not expect to receive
compensation for investment banking services from the issuer of these securities within the next three months.
4. However, one or more of ARSSBL or its Affiliates may, from time to time, have a long or short position in any of the securities mentioned herein and may buy or sell those securities or
options thereon, either on their own account or on behalf of their clients.
6. ARSSBL or its Affiliates may or may not, to the extent permitted by law, act upon or use the above material or the conclusions stated above, or the research or analysis on which they
are based before the material is published to recipients and from time to time, provide investment banking, investment management or other services for or solicit to seek to obtain
investment banking, or other securities business from, any entity referred to in this report.
Enclave Capital LLC is distributing this document in the United States of America. ARSSBL accepts responsibility for its contents. Any US customer wishing to effect transactions in any
securities referred to herein or options thereon should do so only by contacting a representative of Enclave Capital LLC.
2014 Anand Rathi Shares and Stock Brokers Limited. All rights reserved. This report or any portion thereof may not be reprinted, sold or redistributed without the prior written consent of
Anand Rathi Shares and Stock Brokers Limited.

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All the latest research and data

Nestl India Green shoots visible; upgrading, to a Buy. In

WPI inflation, 3-year average, %

Chart of the day

Oil Brent (US$/bbl)*

@7:30am *Provisional Source: BSE, Bloomberg

India Morning Bell

EXIDE INDUS LTD

JET AIRWAYS IND

GULF OIL LUBRICA

PUNJAB NATL BANK

BAJAJ CORP LTD

ATUL AUTO LTD

KAILASH AUTO FIN

NITIN FIRE PROT

OIL & NATURAL GA

GULF OIL LUBRICA

JET AIRWAYS IND

SUN PHARMA ADV

ATUL AUTO LTD

Above 200 DMA

SAFAL HERBS LTD

Below 200 DMA

JINDAL STEEL & P

Above 200 DMA

Below 200 DMA

Below 200 DMA

ESS DEE ALUMINIU

Anand Rathi Research

Green shoots visible; upgrading, to a Buy

Improving revenue growth. In 3QCY14 Nestl India reported 9% revenue

52-week high / low

Relative price performance

` take. We have upgraded our recommendation on the stock to a Buy (from

Sep 14 Jun 14 Mar 14

Estimates revision (%)

Shareholding pattern (%)

Dividend yield (%)

Nestle India Green shoots visible; upgrading, to a Buy

Quick Glance Financials and Valuations

Fig 1 Income statement (` m)

Fig 4 Ratio analysis @ `6,325

Fig 3 Cash-flow statement (` m)

Source: Company, Anand Rathi Research

Source: Company, Anand Rathi Research

Source: Company, Anand Rathi Research

Source: Company, Anand Rathi Research

Fig 6 Revenue break-up

Milk Production &

Source: Bloomberg, Anand Rathi Research

Anand Rathi Research

Nestle India Green shoots visible; upgrading, to a Buy

EBITDA Margin (%)

PAT Margin (%)

Fig 8 Revenue growth rates

Source: Bloomberg, Company, Anand Rathi Research

Fig 9 EBITDA margins

Source: Bloomberg, Company, Anand Rathi Research

Anand Rathi Research

Nestle India Green shoots visible; upgrading, to a Buy

Fig 10 Net profit growth

Source: Bloomberg, Company, Anand Rathi Research