ValueGuide Jan15

Value
Guide
January 2015
For Private Circulation only
www.sharekhan.com
FROM PROMISE
TO PERFORMANCE
Intelligent Investing
Regular Features
Products & Services
Traders Edge
Market Outlook
Stock Ideas
Stock Updates
Sector Updates
Viewpoints
Report Card
Earnings Guide
PMS
Top Equity Picks
Wealth Creator NEW
MF Picks
Advisory
Technical view
Commodities and Currencies
F&O Insights
January 2015
Sharekhan ValueGuide
CONTENTS
From Sharekhans Desk

From promise to performance
In the ongoing test series
between India and
Australia being played in
the island continent, the
Indian cricket team has
lost the first two matches
while the third one has
ended in a draw. The
point to note is that India
has lost both the matches by a small margin and that too despite having
enjoyed the upper hand at some point of each game. At the dawn of the
new year we cannot help wondering if India would be able to effectively
build on its economic recovery cycle, given the strong base of 2014, and
not fritter away its advantageous position unlike Team India.
06
PMS DESK
ProPrime - Top Equity

35
ProPrime - Diversified Equity 36
ProTech - Index
Futures Fund
37
ProTech - Trailing Stops
38
Top SIP Fund Picks
42
DERIVATIVES
26 View
27
ADVISORY DESK
MID Trades
39 Derivative Ideas
39
Crude Oil
Gold
Silver
Copper
28 Lead
29 Zinc
29
Nickel
29
29
TECHNICALS
Gold
Silver
Crude Oil
31 Copper
31 RM seed
31 Dhaanya Index
32
32
32
FUNDAMENTALS
INR-USD
INR-EUR
33
33
INR-GBP
INR-JPY
33
33
TECHNICALS
USD-INR
EUR-INR
34 GBP-INR
34 JPY-INR
34
34
29
30
CURRENCY
MUTUAL FUNDS DESK

41
TECHNICALS
Nifty
4
I
FUNDAMENTALS
07
11
14
Top MF Picks (equity)
15
17 REGULAR FEATURES
24 Report Card
24 Earnings Guide
COMMODITY
RESEARCH BASED EQUITY PRODUCTS

Market Outlook
Top Picks Basket
Wealth Creator portfolio
EQUITY
FUNDAMENTALS
Stock Ideas
Stock Updates
Sector Updates
Viewpoint
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disclaimer
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January 2015
REPORT CARD
EQUITY
FUNDAMENTALS
STOCK IDEAS STANDING (AS ON JANUARY 02, 2015)

COMPANY
CURRENT PRICE AS ON PRICE

RECO
02-JAN-15
TARGET
52 WEEK
HIGH
LOW
ABSOLUTE PERFORMANCE
1M
3M
6M
12M
1M
RELATIVE TO SENSEX
3M
6M
12M
AUTOMOBILES
Apollo Tyres
Ashok Leyland
Bajaj Auto
Gabriel Industries NEW
M&M
Maruti Suzuki
Rico Auto Industries NEW
TVS Motor
BSE Auto Index
BANKS & FINANCE
Allahabad Bank
Andhra Bank
Axis (UTI) Bank
Bajaj Finance
Bajaj Finserv
Bank of Baroda
Bank of India
Capital First
Corp Bank
Federal Bank
HDFC
HDFC Bank
ICICI Bank
IDBI Bank
LIC Housing Finance NEW
PTC India Fin. Ser. NEW
Punjab National Bank
SBI
Union Bank of India
Yes Bank
BSE Bank Index
CONSUMER GOODS
GSK Consumers
Godrej Consumer Products
Hindustan Unilever
ITC
Jyothy Laboratories
Marico
Zydus Wellness
BSE FMCG Index
IT / IT SERVICES
CMC
Firstsource Solution
HCL Technologies
Infosys
Persistent Systems
Tata Consultancy Services
Wipro
BSE IT Index
CAPITAL GOODS / POWER
Bharat Heavy Electricals
CESC
Crompton Greaves
Finolex Cable NEW
Greaves Cotton
Kalpataru Power Transmission
PTC India
Thermax
Va Tech Wabag NEW
V-Guard Industries
January 2015
Buy
Buy
Hold
Buy
Buy
Buy
Buy
Hold
223.7
53.4
2,451.8
97.1
1,224.7
3,359.6
46.2
267.5
18,837.2
265.0
58.0
2,625.0
110.0
1,440.0
4,000.0
55.0
**
243.0
101.8
58.3
14.9
2,695.0 1,793.2
99.3
19.4
1,433.7
846.3
3,469.0 1,540.4
51.5
7.7
280.8
64.0
19,529.2 11,224.1
-5.0
-2.5
-5.8
12.0
-3.2
0.1
11.6
15.1
-1.3
13.7
26.7
5.0
21.2
-11.9
13.1
36.9
16.8
6.3
9.8
47.1
6.6
81.5
1.6
27.7
141.3
59.2
19.3
118.5
200.8
31.8
314.7
32.4
90.8
294.4
245.0
56.6
-3.1
-0.6
-4.0
14.2
-1.3
2.0
13.8
17.3
0.6
8.1
20.5
-0.2
15.3
-16.2
7.6
30.2
11.1
1.1
1.1
35.4
-1.9
67.0
-6.5
17.5
122.1
46.5
9.8
61.1
121.7
-2.8
205.6
-2.4
40.6
190.7
154.3
15.4
Buy
Hold
Buy
Hold
Hold
Buy
Buy
Buy
Hold
Buy
Hold
Hold
Buy
Hold
Buy
Buy
Hold
Buy
Hold
Buy
132.0
96.3
514.3
3,443.8
1,275.7
1,096.3
307.8
379.2
338.2
149.0
1,171.9
965.3
362.3
77.0
466.8
68.3
219.8
315.3
240.3
792.2
21,830.1
145.0
104.0
556.0
3,450.0
**
1,232.0
334.0
380.0
388.0
155.6
**
**
424.0
95.3
**
90.0
**
378.0
250.0
930.0
150.0
72.2
110.0
53.5
520.4
216.5
3,536.0 1,460.0
1,416.9
658.4
1,125.6
509.0
357.0
165.6
387.0
125.0
417.8
220.0
153.0
72.4
1,178.0
755.0
974.0
616.8
367.3
188.7
116.5
52.9
479.7
186.2
71.8
12.7
231.5
101.8
327.1
145.5
259.7
100.5
804.9
291.4
21,967.2 11,373.1
3.5
9.0
4.3
11.3
10.9
1.1
5.6
6.4
3.6
1.7
4.2
2.3
2.3
4.8
9.2
21.0
0.3
-1.1
9.6
10.3
2.7
35.5
49.1
35.4
24.3
13.3
22.0
32.3
22.2
6.8
20.5
11.6
11.2
26.8
27.3
45.7
54.9
25.0
30.1
26.0
42.1
24.5
-6.3
-5.2
33.5
65.2
33.3
24.4
1.2
78.3
-15.5
15.7
17.9
14.9
24.8
-28.0
44.7
98.2
11.0
16.7
3.1
39.3
23.1
42.7
55.1
104.2
121.1
75.5
73.7
33.1
160.1
31.3
83.0
50.2
48.2
71.1
18.9
124.1
394.2
83.1
83.6
95.1
121.9
73.0
5.5
11.1
6.4
13.4
13.1
3.0
7.6
8.4
5.6
3.7
6.2
4.3
4.3
6.9
11.3
23.4
2.3
0.8
11.7
12.5
4.7
28.9
41.8
28.8
18.3
7.8
16.0
25.9
16.3
1.6
14.6
6.1
5.8
20.6
21.1
38.6
47.4
18.9
23.7
19.9
35.2
18.4
-13.8
-12.7
22.8
52.0
22.7
14.5
-6.9
64.0
-22.2
6.4
8.5
5.7
14.8
-33.8
33.1
82.4
2.1
7.3
-5.1
28.1
13.2
5.2
14.3
50.5
62.9
29.3
28.1
-1.9
91.7
-3.2
34.9
10.7
9.2
26.1
-12.3
65.2
264.2
35.0
35.3
43.8
63.6
27.5
Hold
Hold
Reduce
Buy
Hold
Buy
Hold
5,900.3
970.1
756.0
368.3
262.2
330.0
800.7
7,776.9
6,005.0
1,030.0
710.0
415.0
285.0
340.0
875.0
5,999.0 4,011.0
1,119.0
667.0
829.8
536.0
400.3
311.1
300.6
171.3
350.2
198.6
952.0
435.0
8,278.4 6,310.1
2.2
0.0
-6.2
0.7
1.6
0.0
0.0
-0.8
5.8
-2.0
3.5
1.2
10.6
6.3
25.1
3.4
28.8
20.1
20.7
11.8
47.7
34.5
30.0
15.1
35.4
16.5
37.1
19.0
41.5
55.3
51.0
22.2
4.2
2.0
-4.4
2.6
3.6
1.9
1.9
1.2
0.7
-6.7
-1.5
-3.8
5.2
1.1
19.0
-1.7
18.5
10.5
11.1
2.9
35.9
23.8
19.6
5.9
-0.2
-14.2
1.1
-12.3
4.3
14.5
11.3
-9.9
Hold
Buy
Buy
Buy
Hold
Buy
Buy
1,972.3
35.3
1,605.3
2,013.2
1,874.4
2,579.5
557.3
10,721.1
**
51.0
1,780.0
2,540.0
**
3,010.0
645.0
2,407.0
44.4
1,776.3
2,201.1
1,921.7
2,839.7
621.9
11,326.2
1,334.0
22.1
1,232.6
1,440.0
880.0
1,968.8
474.7
8,155.2
-3.1
4.8
-2.2
-5.3
17.2
-2.9
-5.7
-3.7
-9.6
-14.5
-7.4
5.5
26.2
-6.9
-9.5
-1.2
-0.8
-12.1
9.7
26.2
77.2
9.5
4.0
17.5
24.0
61.7
30.5
18.3
95.8
22.7
2.2
21.7
-1.2
6.8
-0.3
-3.5
19.5
-1.0
-3.9
-1.8
-14.0
-18.7
-11.9
0.3
20.1
-11.4
-13.9
-6.0
-8.7
-19.1
1.0
16.1
63.0
0.7
-4.3
8.1
-8.6
19.2
-3.8
-12.8
44.3
-9.5
-24.6
-10.3
Hold
Buy
Buy
Buy
Buy
Buy
Buy
Hold
Buy
Buy
275.3
675.0
186.6
268.7
145.0
235.0
96.0
1,049.9
1,506.6
1,139.1
**
800.0
260.0
285.0
155.0
245.0
126.0
1,100.0
1,900.0
1,200.0
291.5
828.1
231.0
283.9
155.9
243.3
104.9
1,132.0
1,748.0
1,198.0
145.6
399.0
101.5
73.4
56.5
70.5
52.1
615.0
502.1
403.1
1.4
-5.0
-1.1
2.6
5.0
33.4
-2.8
3.8
-4.8
5.3
38.0
-10.0
-6.5
25.4
10.8
51.6
18.3
16.2
-9.2
29.9
6.9
-6.3
-9.3
35.7
19.3
22.8
-0.4
7.8
5.1
93.7
64.7
52.2
48.4
220.7
128.7
161.6
59.4
50.6
171.2
140.0
3.4
-3.2
0.8
4.6
7.1
36.0
-0.9
5.8
-2.9
7.4
31.3
-14.3
-11.1
19.2
5.4
44.2
12.5
10.5
-13.6
23.6
-1.7
-13.8
-16.5
24.9
9.8
13.0
-8.3
-0.8
-3.3
78.2
21.4
12.2
9.3
136.4
68.6
92.8
17.5
11.0
99.9
76.9
EQUITY
REPORT CARD
FUNDAMENTALS
STOCK IDEAS STANDING (AS ON JANUARY 02, 2015)

COMPANY
Triven Turbine NEW
BSE Power Index
BSE Capital Goods Index
INFRASTRUCTURE / REAL ESTATE
Gayatri Projects
ITNL
IRB Infra
Jaiprakash Associates
Larsen & Toubro
Pratibha Industries
Punj Lloyd
CNX Infra Index
BSE Real Estate Index
OIL & GAS
Oil India
Reliance Ind
Selan Exploration Technology
BSE Oil and Gas Index
PHARMACEUTICALS
Aurobindo Pharma
Cipla
Cadila Healthcare
Divi's Labs
Glenmark Pharmaceuticals
JB Chemicals
Ipca Laboratories
Lupin
Sun Pharmaceutical Industries
Torrent Pharma
BSE Health Care Index
BUILDING MATERIALS
Grasim
The Ramco Cements
Shree Cement
UltraTech Cement
DISCRETIONARY CONSUMPTION
Eros International Media
Century Plyboards (India) NEW
Cox and Kings NEW
KDDL NEW
KKCL
Raymond
Relaxo Footwear
Speciality Restaurants
Sun TV Network
Zee Entertainment Enterprises
DIVERSIFIED / MISCELLANEOUS
Aditya Birla Nuvo
Bajaj Holdings
Bharti Airtel
Bharat Electronics
Gateway Distriparks
Max India
Ratnamani Metals and Tubes
Supreme Industries
Technocraft Industries NEW
United Phosphorus
BSE500 Index
CNX500 INDEX
CNXMCAP INDEX
CURRENT PRICE AS ON PRICE

52 WEEK
RECO
02-JAN-15
TARGET
HIGH
LOW
Buy
116.2
128.0
126.0
52.0
2,115.9
2,408.1 1,491.0
15,760.4
16,809.8 9,274.1
RELATIVE TO SENSEX
1M
3M
6M
12M
7.5
18.7
12.3
60.4
1.7
2.3
-17.1
-4.5
-1.2
5.8
-12.4
17.6
Hold
Buy
Buy
Hold
Buy
Buy
Reduce
166.8
193.4
267.3
27.6
1,534.7
45.6
38.2
3,107.1
1,571.9
180.0
284.0
320.0
40.0
1,840.0
65.0
30.0
192.0
257.5
289.7
89.9
1,776.6
66.7
60.9
3,524.1
2,272.7
49.5
98.7
67.2
23.1
951.5
22.9
24.8
2,195.9
1,160.5
11.4
2.9
-1.3
-7.1
-6.4
-11.1
3.8
-3.7
-6.1
-5.7
11.3
17.3
3.0
6.1
-9.3
5.1
3.4
0.0
0.7
-7.6
8.7
-63.4
-11.6
-26.5
-27.0
-9.4
-24.9
176.1
48.5
192.1
-48.0
49.6
59.9
26.3
29.9
10.8
13.6
4.9
0.6
-5.3
-4.6
-9.4
5.8
-1.8
-4.3
-10.3
5.9
11.6
-2.0
0.9
-13.7
0.0
-1.6
-4.8
-7.4
-15.0
0.0
-66.4
-18.7
-32.4
-32.9
-16.6
-30.9
103.5
9.5
115.3
-61.7
10.2
17.8
-6.9
-4.2
-18.3
Buy
Buy
Buy
579.0
885.6
360.6
9,917.1
720.0
1,190.0
550.0
670.0
1,145.3
677.4
12,132.0
438.0
793.1
295.1
8,248.2
0.1
-8.0
-4.7
-5.8
-2.2
-4.5
-29.1
-5.8
-1.6
-13.0
-40.9
-10.6
30.9
2.1
20.2
16.8
2.1
-6.2
-2.8
-4.0
-7.0
-9.1
-32.5
-10.4
-9.5
-20.0
-45.7
-17.7
-3.5
-24.8
-11.4
-13.9
Buy
Hold
Hold
Hold
Buy
Hold
Hold
Buy
Buy
Buy
1,132.5
630.2
1,627.7
1,752.9
767.9
204.7
726.6
1,432.3
826.3
1,192.5
14,720.2
1,272.0
658.0
1,640.0
1,860.0
915.0
251.0
785.0
1,512.0
1,018.0
**
1,172.0
673.0
1,760.2
1,888.1
841.0
257.9
906.9
1,500.0
932.5
1,205.0
15,238.6
375.0
366.5
730.3
1,210.0
496.1
115.1
630.0
855.0
552.5
461.5
9,881.4
-1.5
-1.5
2.2
1.2
-5.9
-5.4
4.5
-3.1
-1.7
3.6
-2.8
17.2
0.9
24.3
-1.9
9.2
-7.3
-7.3
3.3
-4.0
34.8
3.2
51.2
42.5
53.2
17.3
33.9
24.3
-17.1
33.7
19.4
66.4
27.5
200.8
61.4
108.6
44.0
47.1
61.4
0.0
59.1
44.2
158.0
49.4
0.4
0.5
4.2
3.1
-4.0
-3.6
6.6
-1.2
0.2
5.6
-0.9
11.5
-4.0
18.2
-6.7
3.9
-11.8
-11.8
-1.8
-8.7
28.3
-1.9
39.1
31.1
41.0
8.0
23.2
14.4
-23.7
23.0
9.8
53.1
17.4
121.7
18.9
53.8
6.1
8.4
19.0
-26.3
17.2
6.3
90.2
10.1
Buy
Buy
Hold
Buy
3,495.7
344.8
9,325.9
2,742.1
4,020.0
420.0
9,500.0
2,935.0
3,789.0
380.0
9,500.0
2,872.0
2,426.4
155.6
4,100.1
1,634.0
-0.4
3.1
4.7
10.9
0.1
9.8
11.7
3.5
2.4
16.7
29.7
4.1
33.1
90.3
114.3
59.0
1.5
5.1
6.8
13.0
-4.8
4.4
6.3
-1.5
-5.8
7.4
19.4
-4.2
-1.9
40.3
57.9
17.2
Hold
Buy
Buy
Buy
Hold
Hold
Buy
Hold
Hold
Buy
379.5
162.1
305.9
250.1
1,950.0
516.0
599.8
195.6
375.7
381.0
**
200.0
395.0
300.0
**
**
**
222.0
425.0
**
399.4
176.7
368.0
274.0
2,000.0
579.5
619.9
214.0
488.0
402.4
136.5
21.9
128.0
69.0
971.4
255.7
214.1
109.0
298.6
254.2
5.8
-0.8
9.4
4.4
6.7
-2.6
22.0
6.7
18.1
-0.2
41.3
42.6
0.4
51.0
7.1
19.8
16.3
34.2
10.4
21.5
58.6
100.0
35.6
89.8
15.5
24.2
51.6
31.9
-17.5
28.7
128.1
555.6
151.6
236.5
72.7
81.3
150.5
52.9
5.1
37.1
7.9
1.2
11.5
6.5
8.8
-0.7
24.4
8.8
20.4
1.7
34.5
35.6
-4.5
43.6
1.9
14.0
10.6
27.6
5.0
15.6
45.9
84.0
24.8
74.6
6.3
14.3
39.5
21.4
-24.1
18.5
68.1
383.2
85.4
148.0
27.3
33.6
84.6
12.7
-22.5
1.0
Buy
Buy
Hold
Buy
Buy
Buy
Buy
Hold
Buy
Buy
1,730.1
1,436.4
365.1
2,924.7
350.4
387.5
690.9
597.4
184.9
352.3
10,866.4
6,866.5
12,699.8
2,000.0
1,636.0
450.0
3,500.0
400.0
485.0
815.0
620.0
270.0
430.0
1,916.2
1,638.0
420.0
3,140.8
362.8
442.8
717.0
688.5
218.3
388.7
11,089.3
6,995.7
12,812.4
1,030.0
869.7
281.9
893.0
121.8
177.1
120.2
392.9
75.2
176.6
7,320.9
4,596.1
7,346.7
-2.0
1.0
-5.0
16.3
10.2
3.8
20.2
-3.7
3.2
2.2
-0.5
-0.4
1.7
5.0
4.1
-9.5
42.4
31.8
23.7
62.2
-7.6
5.4
4.0
7.2
7.4
11.7
23.7
6.1
9.0
35.1
46.7
33.7
75.4
8.3
-4.9
5.8
10.0
10.2
13.1
44.4
66.7
12.1
190.6
162.3
81.6
422.2
45.2
82.6
81.1
42.9
43.7
62.7
-0.1
3.0
-3.2
18.6
12.4
5.8
22.6
-1.8
5.2
4.2
1.4
1.5
3.7
-0.1
-1.0
-13.9
35.4
25.4
17.6
54.3
-12.1
0.3
-1.1
2.0
2.2
6.2
13.8
-2.4
0.2
24.3
35.0
23.1
61.4
-0.4
-12.5
-2.7
1.2
1.4
4.1
6.5
22.9
-17.4
114.2
93.3
33.9
284.9
7.0
34.6
33.5
5.3
5.9
19.9
In Top Picks basket
ABSOLUTE PERFORMANCE
1M
3M
6M
12M
5.4
24.7
22.1
117.7
-0.2
7.6
-9.9
29.5
-3.1
11.3
-4.8
59.5
** Price target under review
January 2015
from sharekhans desk
FROM SHAREKHANS DESK
January 2015
From promise to performance

In the ongoing test series between India and Australia being played in the island continent,
the Indian cricket team has lost the first two matches while the third one has ended in a
draw. The point to note is that India has lost both the matches by a small margin and that
too despite having enjoyed the upper hand at some point of each game. At the dawn of the
new year we cannot help wondering if India would be able to effectively build on its economic
recovery cycle, given the strong base of 2014, and not fritter away its advantageous position
unlike Team India.
In 2014, the macro-economic situation improved considerably on the back of a stable
government, improving policy framework and easing of energy prices. No wonder, Indias
positioning changed dramatically from being part of the fragile economy pack in 2013 to
being one of the preferred emerging economies globally.
But to sustain the momentum, a lot would need to be done by the Narendra Modi government
in terms of reforms and delivering on expectations. Our Market Outlook report titled
Action speak louder than words on page 7 discusses in detail what India needs to do
right in 2015 to maintain its advantage and the momentum in its stock market. But thats
for the full year and even a longer investment horizon.
In the immediate period, the stock market will take its cues from events like the forthcoming
Union Budget, India Incs third quarter results and the Reserve Bank of India (RBI)s monetary
policy review in early February domestically and global factors like the snap elections in
Greece and the Russian economic crisis.
In terms of the Q3FY2015 results, the Streets expectations have already been pruned after
the lacklustre Q2FY2015 performance. Moreover, the quarterly numbers are expected to
get affected by the sharp movement of the dollar against the other major currencies (crosscurrency movements) in case of the exporting companies, like those from the information
technology services sector, and a sharp correction in the commodity prices (which could
result in provisions for mark down in the value of inventories).
So the positive driver of sentiment would be the heightened expectations from the budget
and possible rate cuts by the RBI in the review meet in February 2015. Given the limited
time the government had before its first budget and the political logjam obstructing some
important policy initiatives in the Parliament, the Union Budget is seen as an opportunity
for the new government to push forth its policy and reformist agenda, and the hopes are
high. Similarly, the consensus is that the RBI would oblige with a rate cut sooner than later.
Thus, hope would continue to drive optimism in the initial phase of the second lap of the
multi-year rally in the Indian equity market. But eventually the government would have to
come good on promises of delivering on economic recovery and reforms to sustain the
momentum.
Heres wishing you a happy and prosperous New Year!
EQUITY
MARKET OUTLOOK
FUNDAMENTALS
MARKET OUTLOOK
DECEMBER 24, 2014
Actions speak louder than words

2014, reversal of fortunes: Calendar year 2014 turned out to be a
landmark year for India. After three decades, a single political party
gained absolute majority in the general election in this year. The
new government, though criticised for moving slow on many of its
electoral promises, has made significant progress on two fronts: (1)
It has taken steps to revitalise the bureaucracy to end policy logjam;
and (2) Indias foreign policy has turned pro-active under the
Narendra Modi regime and put India back on the global centre
stage. God has also been kind. The sharp correction in the prices of
commodities especially crude oil has dramatically improved the
macro situation and eased pressure on Indias fiscal health. The
country can today look forward to a credit rating upgrade instead
of the real threat of a potential rating downgrade to the Junk
status it faced about 15 months back.
Valuation supportive; equities to sustain uptrend: Though 2015

could see a higher level of volatility (bouts of risk aversion globally),
we expect the overall uptrend in the Indian equity market to remain
intact. The benchmark indices are trading at ~12x FY2017E earnings
which is way below the average valuation multiple of 15x (and
closer to the bottoming out level of 10x) and leaves enough scope
for an upside in response to the improving trajectory of growth in
the corporate earnings driven by a supportive domestic macro
environment. The Nifty and the Sensex, the benchmark indices,
have not corrected by even 10% on any single occasion since the
last 15 months and the trend is likely to continue in spite of the
expectations of higher volatility in 2015. Thus, we retain our positive
stance on equities and continue to see corrections driven by global
risk aversion as accumulation opportunities.
2015, time to deliver on economic recovery and reforms: No doubt,

it is not an easy task for the government to undo the legacy of a
slumping economy with low business confidence and to get the
economy back on track. However, the time has come to take
aggressive and bold policy decisions rather than just looking at
improving the situation by focusing on execution and smooth
implementation of the existing policies. With little progress in the
winter session of the Parliament, the forthcoming Union Budget
would be an important event for the domestic businesses and foreign
investors. A lot of attention would also be paid to the timing of the
Reserve Bank of India (RBI)s commencement of the interest rate
cut cycle in 2015.
We are positive on rate-sensitive sectors like bank & financial

services and auto & auto ancillaries in addition to our favourable
view on the urban consumer discretionary spending-driven
businesses and quality cyclical stocks.
Long-term view of multi-year rally: We retain our view that the
Indian equity market is in a multi-year rally and the Sensex is set to
appreciate to 70,000 to 90,000 levels over the next three to four
years.
SENSEX ONE-YEAR FORWARD P/E BAND
Globally, situation might not be as benign anymore: In 2015, the

risk will emerge from the expected changes in the economic order
globally. Unlike the status quo of the past few years, the US economy
is recovering and the Federal Reserve (Fed) is scheduled to commence
interest rate hikes in 2015. On the other hand, the rest of the world
including Europe, Japan and China is still slowing down and would
maintain close to zero interest rates and could provide additional
doses of monetary stimulus to support growth. In such an
environment, the US dollar could strengthen and bond yields in the
USA could also firm up resulting in an outflow of some money
from the emerging equity markets (and the other risky assets like
commodities and bullions) back to the US government debt in 2015.
This could cause uncertainty and volatility in the global financial
markets.
25
20
15
10
PER
Avg PER
+1 sd
Dec-14
Dec-13
Dec-12
Dec-11
Dec-10
Dec-09
Dec-08
Dec-07
Dec-06
Dec-05
Dec-04
Dec-03
Dec-02
Dec-01
Dec-00
-1 sd
Source: Bloomberg, Sharekhan Research
January 2015
MARKET OUTLOOK
EQUITY
Macro environment turning favourablelow crude prices, rate cuts

to be tailwinds: From the economys perspective, 2014 was quite
an eventful year as economic growth started limping up and inflation
dived to 4.3% from double digit in FY2013 (Consumer Price Index).
Even as macro indicators like non-gold imports, non-oil imports,
car sales, Purchasing Managers Index data are showing a gradual
uptick, the sentiments have changed dramatically which should
revive investments and growth ahead. Consequently, many reputed
institutions have scaled up their gross domestic product (GDP)
growth forecast for India (6.0-6.5% for FY2016) and Standard &
Poors has revised its outlook to Stable from Negative. Banks
which suffered a jolt in 2014 are likely to witness stable trends.
However, the biggest positive for Indias economy has been a sharp
drop in crude oil prices which has cushioned the fiscal position,
the current account gap and the domestic inflation scenario.
in Bihar in December 2015), there is headroom for non-populist

reforms (subsidy reduction, land and labour reforms, tariff hikes
etc). In the forthcoming Union Budget and outside the budget, the
government may announce path-breaking measures to boost the
manufacturing sector (especially the Make in India campaign),
revive railways and consolidate the fiscal position.
Bond yields declined, RBI rate cut likely in early 2015: In view of a
sharp dip in inflation, expectations have built up of a rate cut by
the RBI which has led to a sharp moderation in the benchmark
yields. As per the RBI guidance, the rate cut cycle is likely to begin
by early 2015 which should bring down the cost of capital and
improve the investment climate. The demand which suffered during
the economic slowdown is likely to get a boost in a lower-interest
rate environment. The credit growth of banks which sagged in 2014
is likely to get a boost from rate cuts.
CONSENSUS ESTIMATES FOR FY2015, FY2016
BOND YIELDS (%)
Fiscal deficit (as % of GDP)
-4.2
-3.9
Real GDP growth (%)
5.50
6.50
8.0
7.5
Time for bigger policy moves: After the wash-out winter session of
the Parliament, 2015 would test the governments ability to push
forward the key reforms (related to land, labour, taxes, foreign
direct investment etc) to improve economic growth. However, the
government has re-energised the bureaucracy and is trying to remove
procedural bottlenecks as Mr Modi himself is taking charge of the
Project Management Group to clear projects worth $300 billion.
In case of the Goods and Services Tax, the government has been
swift to built a consensus. In the near term, coal allocation and
subsidy related reforms will be under focus. In addition,
infrastructure and railways are the other sectors that could see
positive reforms as these sectors can propel the GDP growth.
G-Sec 1 Year Bond Yield
9-Dec-14
62.4
18-Nov-14
63
INR/USD
8.5
28-Oct-14
-1.9
7-Oct-14
-1.80
CA deficit ( as % of GDP)
9.0
16-Sep-14
7.25
26-Aug-14
5-Aug-14
Policy rate (repo) (%)
9.5
15-Jul-14
6.20
24-Jun-14
3-Jun-14
CPI inflation (%)
13-May-14
FY16
22-Apr-14
FY15
1-Apr-14
Particulars
FUNDAMENTALS
G-Sec 10 Year Bond Yield

Earnings expansion remains healthy, global issues key monitorables:

The FY2015 and FY2016 consensus earnings estimates (Sensex)
have been upgraded by about 5% each since April 2014 and factor
in an 18-20% growth. Even as the earnings growth expectation of
~18% is fairly healthy (especially when compared with the ~8%
growth seen over FY2008-14), it could have been much higher had
the global economy not slowed down. Around 50% of the revenues
in the index companies are denominated in foreign exchange and
the revenues could fall short of expectations if the global slowdown
extends. Going ahead, operating leverage and expansion in operating
profit margins will play out in 2015 and may partly compensate
for a slower revenue growth (which is expected to revive with some
lag). The pace of monetary easing by the RBI in 2015 will also be a
key factor for earnings momentum.
Political and economic scenarios conducive to bold measures: After

getting a historic mandate in May 2014, the Modi governments
popularity remains largely intact, as suggested by the recent state
election results. Given that the crude oil prices have crashed, inflation
has declined sharply and there are no major elections in 2015 (except
CRUDE OIL PRICES, INFLATION (WPI)
SENSEX CONSENSUS EARNINGS ESTIMATES FOR FY2016
120.0
110.0
100.0
90.0
80.0
70.0
60.0
50.0
WPI Inflation %
Nov-14
Oct-14
Sep-14
Aug-14
Jul-14
Jun-14
May-14
Apr-14
Mar-14
Feb-14
Jan-14
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
Brent crude price ($/barrel)

January 2015
EQUITY
MARKET OUTLOOK
FUNDAMENTALS
KEY MONITORABLE EVENTS GLOBALLY

Events
Timing/range
Beginning of rate hikes by US Fed
H1CY2015
Impact
Negative (pressure on currencies of EMs, slower economic recovery)
US bond yields rising
2.75-3.00%
Negative (reversal of inflows from EMs, thereby weakening of currencies of the EMs)
ECB QE announcement
Q1CY2015
Positive (will keep liquidity afloat amid likely tightening by the USA)
Elections in EU (Greece, Spain,
2015
Negative (political indecisiveness and deflation could hinder recovery)
Japan election
Q1CY2015
Positive (re-election of Shinzo Abe will drive another round of QE by Japan and BoJ)
Chinas economic data
6.80-7.00%
Negative (while weak data is sentimentally negative, it will force aggressive easing by government)
Commodity prices
$70-75/bbl
Positive (will support faster recovery in global economy while rising prices could affect India negatively; further
decline in prices negative for global economy)
Italy, the UK)
Russia-Ukraine conflict
Negative (escalation of conflict could raise geo-political risks and increase risk aversion)
India uniquely positioned to ride growth path: With most of the

global economies in tatters, the Indian economy has emerged
stronger and is likely to improve its growth rate taking it closer to
the pre-crisis levels. Despite a ~30% run-up in the stock market
indices in 2014, the markets valuations are attractive (15x FY2016E
earnings and 12x FY2017E earnings). On a relative basis too, the
valuations appear reasonable as the MSCI India trades at a nearly
20% premium to the MSCI World which is below the long-term
mean. In the near term, the markets focus will be on developments
related to global issues, the Union Budget, the RBIs monetary policy
and India Incs quarterly results. In the medium to long term, Indias
economic fundamentals remain firm which will drive a multi-year
rally in its equity market.
SENSEX CONSENSUS EARNINGS ESTIMATES FOR FY2017
Key risk: The calendar year 2015 will be quite significant from the
global perspective and any negative development (though a crisis is
ruled out at this stage) could have repercussions for the Indian
economy and market sentiment.
Global economies to contract though crisis ruled out: Given the

deepening of the slowdown in major global economies (especially
China, Japan, European Union and some emerging markets [EMs]),
the global growth could suffer. The sharp fall in crude oil prices
has severely affected the crude exporting nations leading to an
exodus of the foreign institutional investors and a sharp fall in the
currencies of Brazil, Venezuela, Russia etc. The governments of
China and Japan have undertaken massive stimulus programmes
to boost growth and more steps are likely in 2015. However, the
US economy is growing as per the Feds expectations and a gradual
hike in interest rates may happen some time in 2015. From Indias
perspective, the deepening of the global slowdown could elongate
the recovery of its economy (especially of its exports) and there
could be some knee-jerk reaction to rate hikes in the USA.
Multi-year rally ahead: Over the long term, we believe that the
Indian equity market is set for a multi-year rally on the back of an
economy that is recovering and returning to its potential growth
rate of 7.5-8.0%, a better policy environment and a recovery in the
investment cycle. With the Indian economy moving from the vicious
to the virtuous cycle, equities would far outpace the returns from
all the other asset classes and the increased allocation of domestic
investors along with the already fair share of foreign inflows into
Indian equities will drive the market to newer heights. Consequently,
we believe the market is set to appreciate to 70,000 to 90,000 levels
over the next three to four years.
SENSEX ONE-YEAR FORWARD P/E BAND
SENSEX VALUATIONS (VS MSCI WORLD P/E)

25
25
20
20
15
15
10
10
PER
India PE
Avg PER
+1 sd
Dec-14
Dec-13
Dec-12
Dec-11
Dec-10
Dec-09
Dec-08
Dec-07
Dec-06
Dec-05
Dec-04
Dec-03
Dec-02
Dec-00
Nov-14
Nov-13
May-14
Nov-12
May-13
Nov-11
May-12
Nov-10
May-11
Nov-09
May-10
Nov-08
May-09
Nov-07
May-08
May-07
Nov-06
Nov-05
May-06
Global PE
Dec-01
5
5
-1 sd
Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a postition in the companies mentioned in the article.
January 2015
EQUITY
SHAREKHAN TOP PICKS
FUNDAMENTALS
SHAREKHAN TOP PICKS
Sharekhan Top Picks

Sharekhans Top Picks basket ended 2014 with a bang by
handsomely outperforming the benchmark indices, the Nifty and
the Sensex, once again in December. Since the last revision in early
December, the Top Picks folio has appreciated by 2.2% as compared
with a decline of 3.2% in the Nifty and that of 3.8% in the Sensex
during the same period.
do better than the CNX Mid-cap Index as well as the Nifty and the
Sensex. Thus, the Top Picks folio not only outperformed in the
trending upmove in the market during the October-November
period but also sustained the momentum in December to build on
the gains of the previous months despite volatility in the month.
We are making a lone change in the folio this month. State Bank of
India (SBI) is replacing Axis Bank in which we are booking profits
to increase our exposure to the public sector banks. The softening
of the bond yield would boost the Q3FY2015 earnings of the public
sector banks including SBI, which is our preferred pick in the public
sector banking space.
During the last month, the performance of our select basket of stocks
was boosted by a strong appreciation of close to 26.6% in the stock
price of PTC India Financial Services, which was added to the folio
in the last month. The sustained buying interest in Gateway
Distriparks and Relaxo Footwear also aided the Top Picks folio to
CONSISTENT OUTPERFORMANCE (ABSOLUTE RETURNS; NOT ANNUALISED)

1 month
3 months
Top Picks
Sensex
Nifty
CNX Mid-cap
2.2
-3.8
-3.2
1.8
(%)
6 months
1 year
3 years
5 years
24.7
7.5
8.0
12.7
63.6
29.9
30.9
55.1
148.2
77.8
79.7
99.2
130.6
56.2
58.9
66.6
14.3
3.1
4.0
10.2
ABSOLUTE RETURNS (TOP PICKS VS BENCHMARK INDICES)
CONSTANTLY BEATING NIFTY AND SENSEX (CUMULATIVE RETURNS) SINCE

APRIL 2009
Sharekhan
(Top Picks)
Sensex
Nifty
CNX
MIDCAP
CY2014
63.6
29.9
30.9
55.1
400
CY2013
12.4
8.5
6.4
-5.6
350
CY2012
35.1
26.2
29.0
36.0
CY2011
-20.5
-21.2
-21.7
-25.0
CY2010
16.8
11.5
12.9
11.5
CY2009
116.1
76.1
72.0
114.0
Since Inception
(Jan 2009)
359.2
174.1
171.6
247.4
500
450
NAME
300
250
200
150
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
100
Sharekhan
CMP*
(RS)
FY14
PER
FY15E
FY16E
FY14
Ashok Leyland
52
-28.8
102.2
19.1
Gabriel India
89
27.3
17.2
12.4
Gateway Distriparks
353
27.0
23.4
ICICI Bank
353
20.8
Idea Cellular
153
27.6
1,427
70
Relaxo Footwears
565
38.4
Reliance Industries
893
12.8
SBI
313
21.4
TCS
2,557
26.2
VA Tech Wabag
1,474
36.0
Lupin
PTC India Financials
ROE (%)
FY15E
FY16E
-10.7
2.9
17.3
23.7
21.0
13.3
18.5
15.6
19.9
34.8
13.8
Nif ty
PRICE
TARGET (RS)#
UPSIDE
(%)
13.6
58
13
26.8
110
24
14.6
16.2
**
**
14.0
14.5
15.7
424
20
17.1
12.0
11.9
12.2
190
24
25.1
22.0
26.5
27.7
24.4
1,512
12.8
9.0
16.1
15.5
19.7
90
29
29.6
21.7
21.3
21.2
25.4
**
**
12.1
10.8
11.3
10.9
11.0
1,190
33
16.6
12.7
10.0
11.4
13.5
378
21
23.4
20.0
31.6
30.0
27.8
3,010
18
31.2
24.9
14.0
14.1
15.8
1,900
29
*CMP as on December 31, 2014 # Price target for next 6-12 months
January 2015
Sens ex
** Under review
10
EQUITY
NAME
FUNDAMENTALS
CMP
(RS)
ASHOK LEYLAND
52
FY14
-28.8
SHAREKHAN TOP PICKS

PER
FY15E
102.2
FY16E
FY14
ROE (%)
FY15E
FY16E
19.1
-10.7
2.9
13.6
PRICE
TARGET (RS)
58
UPSIDE
(%)
13
Remarks: Ashok Leyland Ltd (ALL) is the second largest CV manufacturer in India with a market share of 25% in the heavy truck segment and
an even higher share of about 40% in the bus segment. Given the scale of economic slowdown, the segment had halved over FY201214. With a pick-up in the economy a sharp recovery in the segment is expected.
ALL entered the LCV segment with the launch of the Dost in JV with Nissan. The JV has also launched the Partner LCV and the Stile
van. Going forward, we expect the company to gain a foothold in the LCV segment and expand its market share.
The company is also concentrating on verticals other than CVs to de-risk its business model. It has a strong presence in the export
market and continues to expand in newer geographies. The diesel genset business is also showing signs of recovery after a tepid
performance in FY2013-14. Additionally, ALLs defence business is expected to get a leg-up due to the governments focus on indigenous
manufacture of defence products and FDI in the sector.
ALLs OPM has recovered from the lows on the back of a reduction in discounts and price hikes taken by the company. The margins
are expected to expand further given the operating leverage. The company has raised Rs660 crore via QIP and is in the process of
selling its non-core assets to pare its debts. With no significant capex planned we expect deleveraging of its balance sheet and
improvement in the return ratios.
GABRIEL INDIA
89
27.3
17.2
12.4
17.3
23.7
26.8
110
24
Remarks: Gabriel India is expected to continue to rally led by a strong financial performance due to a strong growth momentum in the twowheeler segment and its clients.
We believe the company will continue to enjoy its growth pace in the upcoming years, given the strong growth of its clients, Honda
Motorcycle and Scooter India (HMSI) and TVS Motor Company, and the expansion plans of HMSI. Additionally, an early sign of
recovery in the passenger vehicle (PV) and commercial vehicle (CV) segments will give impetus to the overall financial performance
which would reflect strongly in the FY2017 financials.
A strong traction in the two-wheeler volume, improving CV and PV segments along with the de-leveraging of the balance sheet would
expand the margins and boost the earnings in the next couple of years. We remain positive on the demand outlook for the automobile
industry and maintain our Buy rating on the stock.
GATEWAY DISTRIPARKS
353
27.0
23.4
21.0
13.3
14.6
16.2
**
**
Remarks: An improvement in exim trade along with a rise in port traffic at the major ports signals an improving business environment for the
logistic companies. Gateway Distriparks being a major player in the CFS and rail logistic segments is expected to witness an improvement
in the volumes of its CFS and rail divisions going ahead.
The improving trend in the rail freight and cold chain subsidiaries would sustain on account of the recent efforts to control costs and
improve utilisation.
We continue to have faith in the companys long-term growth story based on the expansion of each of its three business segments, ie
CFS, rail transportation and cold storage infrastructure segments. The coming on stream of the Faridabad facility and the strong
operational performance will further enhance the performance of the rail operations. Also, the expected turnaround in the global trade
should have a positive impact on the CFS operations. We maintain our Buy rating on the stock.
ICICI BANK
353
20.8
18.5
15.6
14.0
14.5
15.7
424
20
Remarks: With an improvement in the liability profile, ICICI Bank is better positioned to expand its market share especially in the retail segment.
We expect its advances to grow at ~19% compound annual growth rate (CAGR) over FY2014-16 leading to a CAGR of 17.0% in the
net interest income.
ICICI Banks asset quality has stabilised and fresh non-performing asset (NPA) additions are within manageable limits. We believe the
strong operating profits should help the bank to absorb the stress which anyway is expected to recede due to an uptick in the economy.
Led by a pick-up in the advance growth and a significant improvement in the margin, the RoE is likely to expand to ~16% by FY2016
while the return on assets (RoA) is likely to improve to 1.8%. This would be driven by a 15.3% growth (CAGR) in the profit over
FY2014-16.
The stock trades at 2.3x FY2016E BV. Moreover, given the improvement in the profitability led by lower NPA provisions, a healthy
growth in the core income and improved operating metrics, we recommend a Buy with a price target of Rs424.
11
January 2015
EQUITY
SHAREKHAN TOP PICKS

NAME
CMP
(RS)
IDEA CELLULAR
153
FY14
27.6
PER
FY15E
19.9
FUNDAMENTALS
FY16E
FY14
ROE (%)
FY15E
FY16E
17.1
12.0
11.9
12.2
PRICE
TARGET (RS)
190
UPSIDE
(%)
24
Remarks: Idea Cellular is the fastest growing Indian telecom player with an aggregate market share of 16.7%. Its revenues have grown at a
CAGR of 21% over FY2010-14, outperforming the industry, which has grown at a CAGR of 6.1% over the same period. Its market
share over the same period has seen a substantial improvement from 11.5% in FY2010 to 16.7% in Q2FY2015. Growing revenues and
gaining market share in a cut-throat competitive market with a dozen players is remarkable and displays the companys strong execution
and brand-building capabilities.
With the cancellation of 2G licences by the Supreme Court and emergence of forced consolidation in the telecom market, the operators
have turned rational. Over the last two to three quarters, we have witnessed a marked improvement (4-6%) in the voice pricing
environment led by a reduction in the discounts and free minutes. The current average realised rate is still at a discount to the headline
tariff, presenting an opportunity to further reduce the discounts and freebies, thereby improving the realisation. We expect the voice
rates to remain firm in the short term but grow at a CAGR of 6.8% in the medium term over FY2014-17.
Despite competition in the market place, Idea Cellular has displayed strong execution, resilience, improvement in market share and
strength in balance sheet. We continue to believe that the Indian voice and data market is likely to improve and Idea Cellular with its
strong brand equity and superior execution capabilities would gain disproportionately owing to its strong execution capabilities, solid
asset base and stable balance sheet (its net debt/EBITDA ratio has improved from 2.4x in Q4FY2014 to 1.32x in Q2FY2015 via equity
raising and robust cash generation). Hence, we hold a positive view on the stock and expect it to deliver a return of 15-18% from the
current levels.
LUPIN
1,427
34.8
25.1
22.0
26.5
27.7
24.4
1,512
Remarks: A vast geographical presence, focus on niche segments like oral contraceptives, ophthalmic products, para-IV filings and branded
business in the USA are the key elements of growth for Lupin. The company has remarkably improved its brand equity in the domestic
and international generic markets to occupy a significant position in the branded formulation business. Its inorganic growth strategy
has seen a stupendous success in the past. The company is now debt-free and that enhances the scope for inorganic initiatives.
The company has shown a sharp improvement in the base business margin in H1FY2015 on the back of cost rationalisation measures
and better product mix. The management has given a guidance to sustain the operating profit margin (OPM) at 27% to 28% in FY2015
(vs 25% in FY2014), which especially impress us. Lupin has recently forged an alliance with Merck Serono to out-licence select drugs
and an agreement with Salix Pharma to in-licence products for the Canadian market, which will support growth in the long term.
The company is expected to see stronger traction in the US business on the back of the key generic launches in recent months and a
strong pipeline in the US generic business (over 95 abbreviated new drug applications pending approvals including 86 first-to-files) to
ensure the future growth. The key products that are going to provide a lucrative generic opportunity for the company include Nexium
(market size of $2.2 billion), Lunesta (market size of $800 million) and Namenda (market size of $1.75 billion) that will be going out of
patent protection in CY2015. The company has recently got FIPB clearance to raise FII investment limits to 49% (from 32% currently).
PTC INDIA FINANCIALS
70
13.8
12.8
9.0
16.1
15.5
19.7
90
29
Remarks: PTC India Financial Services (PFS) stands to benefit from the governments strong thrust on the renewable energy sector (mainly
solar and wind) which should result in a robust growth in loan book (35% CAGR over FY2014-17). About 70% of the incremental
disbursement will be from the renewable segments (loan sanction pipeline of Rs7,000 crore or 1.2x of the existing loan book) which
has lesser quality issues due to low gestation period and fuel supply risk, thanks to fiscal support from the government.
Given the favourable interest rate scenario, the interest spreads may sustain at healthy levels (~4.5%). Any likely downward movement
in hedging cost will further reduce the funding cost. The company also has ~Rs240 crore of equity investments in power projects; these
have appreciated significantly and will result in substantial gains going ahead.
We expect PFS to register a strong growth in earnings (~40% CAGR over FY2014-17 excluding one-off gains in FY2014) without
factoring in gains on equity investments. The asset quality is likely to remain robust and the company is likely to deliver high RoAs
(~3.5%) which leaves further scope for rerating.
RELAXO FOOTWEARS
565
38.4
29.6
21.7
21.3
21.2
25.4
**
**
Remarks: Relaxo Footwear is a proxy play on the fast growing mid-priced branded footwear segment, which is expected to grow at high double
digits over the next three to five years. The company has integrated operations from manufacturing to branding which enables it to reap
the brand benefits with control over quality.
Over FY2010-14, the companys revenues and earnings have grown at a CAGR of 20.6% and 34.9% respectively. Its balance sheet and
return ratios have also been strong. Going forward, we believe that the companys strategy to leverage its brand strength (its advertising
and brand promotional push via association with leading Bollywood stars as brand ambassadors) along with favourable demographics
would enable it to clock a strong 22.8% revenue growth and a 33.5% earnings growth over FY2014-17.
Its strong presence in the lucrative mid-priced footwear segment (through its top-of-the-mind recall brands like Hawaii, Flite and Sparx)
along with its integrated manufacturing set-up, lean working capital requirement and vigilant management puts it in a sweet spot to cash
in on the strong growth opportunity unfolding in the footwear category due to a shift from unbranded to branded products. Thus, we remain
positive on the business, with a Buy rating on the stock.
January 2015
12
EQUITY
NAME
FUNDAMENTALS
CMP
(RS)
RELIANCE INDUSTRIES
893
FY14
12.8
SHAREKHAN TOP PICKS

PER
FY15E
12.1
FY16E
FY14
ROE (%)
FY15E
FY16E
10.8
11.3
10.9
11.0
PRICE
TARGET (RS)
1,190
UPSIDE
(%)
33
Remarks: Reliance Industries Ltd (RIL) has a strong presence in the refining, petrochemical and upstream exploration businesses. The refining
division of the company is the highest contributor to its earnings and is operating efficiently with a better gross refining margin (GRM)
compared with its peers in the domestic market due to the ability of its plant to refine more of heavier crude. However, the gas
production from the Krishna-Godavari-D6 (KG-D6) field has fallen significantly in the last two years. With the government approval for
additional capex in its allocated gas fields, we believe the production will improve going ahead.
Though there is uncertainty regarding gas production and pricing of gas from the KG-D6 field, but the traction in volume from shale gas
assets is playing positively for the company. Moreover, the upcoming incremental capacities in the petrochemical and refinery businesses
are going to drive the future earnings growth as the downstream businesses are on the driving seat and contributing the lions share of
the profitability and cash flow. Hence, the uncertainty related to the domestic gas production and pricing is having a limited material
impact.
In recent past there have been signs of improvement in the benchmark GRM which suggests that there could be a healthy improvement
in the GRM of RIL too. The stock is available at attractive valuation considering the size, strong balance sheet and cash flow generating
ability of the company.
SBI
313
21.4
16.6
12.7
10.0
11.4
13.5
378
21
Remarks: SBI is India's largest bank based on most comparable parameters, such as asset size, branch network (18,000 branches) and customer
base. With a revival in the investment cycle and pick-up in consumption, SBI being the largest bank is likely to benefit disproportionately.
On the capitalisation front, SBI is better placed (tier-1 CAR at ~10%) compared with the other state-owned banks which should result
in lesser equity dilutions.
SBI has a market share of ~18% and along with its associate banks it commands a market share of ~25% in the banking system.
Going ahead, it will merge its associate banks which will give it an unmatched hold in the domestic banking sector and boost economies
of scale. In addition, the likely monetisation of the insurance and other subsidiaries will strengthen the capital position of the bank.
SBI also stands to benefit from the pending reforms in government-owned banks (autonomy, holding company structure, reduction in
government stake, easing of investment norms). This builds a genuine case for expansion of its valuation multiples. Even as the asset
quality has stabilised, the likely increase in treasury profits (due to a decline in bond yields) will take care of the provisioning requirement
and hence cushion the profitability. We have a Buy rating on SBI with a price target of Rs378.
TCS
2,557
26.2
23.4
20.0
31.6
30.0
27.8
3,010
18
Remarks: TCS pioneered the IT services outsourcing business from India and is the largest IT service firm in the country. It is a leader in most
service offerings and has further consolidated its position as a full service provider by delivering a robust financial and operational
performance consistently over the years.
The consistency and predictability of the earnings performance has put the company on the top of its league. Moreover, the quality of
its performance has also been quite impressive, ie it has been able to report a broad-based growth in all its service lines, geographies
and verticals consistently.
Though cross-currency head winds and softness in some verticals will affect the earnings in the near term, we believe the overall
improvement in the USA will drive the growth in the coming years. Also, the companys increasing capabilities in the digital space,
which is a high-growth area, consolidates its position among the top-tier global IT companies. We maintain TCS as our top pick in the
IT sector and have a Buy rating on the stock.
VA TECH WABAG
1,474
36.0
31.2
24.9
14.0
14.1
15.8
1,900
29
Remarks: Va Tech Wabag (VTW) is a truly Indian MNC, having global presence in water treatment with superior technology, strong execution
capability and professional management. Globally, fresh water supplies are relatively static and the potential scarcity will drive significant
investments in this area and a large chunk of this would be from the developing world, where VTW is favourably placed to capture large
opportunities ahead.
While opportunities from new projects are huge, we see a jump in recurring business from the operations and maintenance (O&M)
segment, which would be less working capital intensive and have stable margins. Moreover, the efforts by the management to rationalise
the cost structure of its overseas business would help the company to improve the overall margin in the coming years.
We expect the earnings of VTW to grow at a CAGR of 20% in the next two to three years and the RoE to sustain at 15-17%. A presence
in a sunrise industry, an asset-light business model and a strong balance sheet (virtually debt-free) are positives to vindicate the belief
that VTW is one of the few quality engineering companies in India. We remain positive on the stock.
13
January 2015
EQUITY
WEALTH CREATOR PORTFOLIO
WEALTH CREATOR PORTFOLIO
FUNDAMENTALS
DECEMBER 31, 2014
Wealth Creator portfolio

Portfolio performance review
Objective: To build a balanced and actively managed portfolio of

quality companies that will help create meaningful wealth for
investors in the multi-year rally expected in the Indian equity market.
The Wealth Creator folio has sustained its strong

outperformance and registered a weighted average return of
2.7% since the last revision on November 17, 2014.
Importantly, the gain of 0.9% in the large-cap stocks in the
folio is much better than the decline in the Nifty and the Sensex
in the same period. Similarly, the mid-cap stocks in the folio
have gained by 5.8%, almost double the appreciation of 2.9%
in the CNX Midcap Index in the same period.
Since its inception (on August 21, 2014), the returns of the
Wealth Creator folio have far exceeded the gains in the
benchmark indices.
In addition to some bottom-up picks, the portfolio contains stocks

identified based on three key themes:
Policy push: Stocks from sectors benefiting from improvement

in the policy environment
Early gainers: Beneficiaries of an economic recovery (stocks from

auto, banking & financial, logistic sectors)
Evergreen: Steady performers that provide stable and consistent

returns
COMPARATIVE RETURNS
Particulars
Returns (on December 31, 2014)

Since Nov 17, 2014
Since inception (Aug 21, 2014)
Wealth Creator folio (weighted average returns)
2.7%
17.7%
- Large-cap (64%)
0.9%
13.9%
- Mid-cap (36%)
5.8%
24.5%
Sensex
-1.9%
4.4%
Nifty
-1.1%
5.0%
CNX Mid-cap
2.9%
12.3%
UPDATE ON WEALTH CREATOR PORTFOLIO

Sr No
Scrip
Weights
Reco price (Rs)

31-Dec-14
Target price (Rs)

Oct-17
Potential upside
Large-caps (64% weightage)

1
ICICI Bank
8%
353
770
118.1%
Larsen & Toubro
8%
1,495
3,800
154.2%
Hero MotoCorp
8%
3,106
6,350
104.4%
Cummins
8%
874
1,708
95.4%
State Bank of India
8%
313
580
85.3%
Sun Pharmaceutical
8%
827
1,650
99.5%
Tata Consultancy Services
8%
2,558
5,100
99.4%
Tata Motors DVR
8%
335
850
153.7%
PTC India Financials
4%
70
144
105.7%
10
Finolex Cables
4%
262
650
148.1%
11
Gateway Distriparks
4%
353
745
111.0%
12
IRB Infra
4%
264
680
157.6%
13
Network 18 Media
4%
67
150
123.9%
14
Gabriel India
4%
89
200
124.7%
Mid-caps (36% weightage; 4% each)
15
Selan Exploration
4%
355
1,340
277.5%
16
Triveni Turbine
4%
114
265
132.5%
17
Dhanuka Agri
4%
552
1260
128.3%
* Please note we see scope for upward revision in price target (three-year) of some of the stocks, the same would be done after the Q3 results and a detailed interaction with the management
January 2015
14
EQUITY
STOCK IDEA
FUNDAMENTALS
KDDL
BUY
DECEMBER 22, 2014
CMP: RS216
Time to dial KDDL

KEY POINTS
COMPANY DETAILS
Price target:
Rs300
Market cap:
Rs195 cr
52-week high/low:
Rs268/69
NSE volume (No of shares):
0.3 lakh
BSE code:
532054
Sharekhan code:
KAMLADLS
Free float (No of shares):
0.4 cr
Steady growth in manufacturing business and free cash to support retail growth
ahead: KDDL (erstwhile Kamla Dials and Devices) is one of the largest manufacturers
of watch dials and hands, serving both international and domestic clients. With a
revival in growth, the demand for premium and luxury watches, and their components
is expected to grow in double digits. The management expects the dial and hand
vertical to grow at 10-15% over the next two to three years. The margins may be
maintained at the current levels or may improve slightly over the next two years led
by value addition and absorption of fixed costs while the capex may remain low at
Rs10-12 crore per annum, thereby generating free cash. The free cash could be used
to support the strong growth in the retail business.
Ethos, luxury watch retailer, deploying both brick and click to drive sales: KDDL is
also present in luxury watch retailing in India via its 75% subsidiary, Ethos. Ethos
employs a very intelligent combination of brick and click models to serve its customers,
drive sales and enhance profitability. The company retails over 60 high-end luxury
watch brands through its 42 pan-India stores. It also generates leads through its
online retail portal which enables it to improve its asset turnover and reduce its
inventory cycle, thereby adding to the overall margin and profitability. We believe
that aided by the online platform Ethos is very well placed to cash in on the strong
growth opportunity in the high-growth luxury watch market.
Unique business + strong growth potential available at undemanding valuation; initiate

Buy with a price target of Rs300: We like Ethos unique high-end watch retailing
business, which is expected to grow manifold by cashing in on the growth in the
luxury watch segment and the increasing trend towards online e-tailing. This unique
high-growth potential business along with a steady manufacturing business that
generates free cash is attractively priced at the current levels and offers significant
returns over the medium to long term. We put a Buy rating on the stock, valuing
KDDL using the SOTP method (the manufacturing vertical is valued at 6x its FY2016E
earnings + the high-end watch retailing subsidiary Ethos is valued at 1x its FY2016E
sales) to arrive at a price target of Rs300.
Key risk: A lower than expected improvement in the overall discretionary demand
would pose a risk to our revenue and earnings estimates.
SHAREHOLDING PATTERN
Foreign
5%
Public & Others
28%
Non-promoter
corporate
14%
Promoters
53%
PRICE CHART
280
260
240
220
200
180
160
140
120
100
80
60
Particulars
Net sales (Rs cr)
Dec-14
Sep-14
Jun-14
Mar-14
Dec-13
VALUATIONS (CONSOLIDATED)
Growth (%)
Operating profit (Rs cr)
Growth (%)
Operating profit margin (%)
PRICE PERFORMANCE
(%)
1m
3m
6m
12m
Absolute
-8.5
5.2
68.8
188.3
Relative
to Sensex
-6.4
4.0
54.3
114.7
Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding

or having a postition in the companies mentioned in the article.
Net earnings post-minority int.

Growth (%)
Adjusted EPS (Rs)
PER (x)
RoCE (%)
RoE (%)
FY2013
271.8
FY2014
334.7
FY2015E
403.3
FY2016E
497.1
FY2017E
613.1
17
18.1
23
30.1
20
40.8
23
50.7
23
63.0
-36
6.7
66
9.0
35
10.1
24
10.2
24
10.3
(2.8)
NA
8.5
404
9.8
15
13.4
36
17.9
34
NA
NA
9.9
21.7
10.7
20.1
14.7
14.7
19.6
11.0
12.8
NA
14.7
18.6
15.2
18.1
15.5
19.5
15.7
20.1
For detailed report, please visit the Research section of our website, sharekhan.com.
15
January 2015
STOCK IDEA
EQUITY
VA TECH WABAG
BUY
FUNDAMENTALS
DECEMBER 18, 2014
CMP: RS1,488
Gallons of opportunity, take a sip of it

KEY POINTS
COMPANY DETAILS
Price target:
Rs1,900
Market cap:
Rs3,957 cr
52-week high/low:
Rs1,748/504
51,665
BSE code:
533269
NSE code:
WABAG
Sharekhan code:
WABAG
1.9 cr
Increasing fresh water scarcity + Niche expertise = Gallons of opportunity: Globally,

fresh water supplies are relatively static and with a rising population and urbanisation,
the intensity of fresh water scarcity is on the rise. Therefore, investments in areas like
recycling and water treatment, water conditioning and desalination are likely to increase
in the coming days. The global water market is estimated at $425-500 billion and is
expected to grow at a 6% CAGR till 2030, and a large chunk is expected to be in the
developing world. Against this backdrop, VA Tech Wabag (VTW) is well placed with
niche technical expertise and an impressive track record as its strengths.
Domestic demand outlook to improve significantly over the next two years: With rising
urbanisation and industrialisation in India, the demand for usable water, sewerage and
solid waste management is going to rise; consequently, we expect significant spending
in these spaces. In the last few years (2005-12), the governments allocation to water
supply and sanitation has been about Rs45,000 crore cumulatively and under Jawaharlal
Nehru National Urban Renewal Mission (JNNURM), the government plans to spend
around Rs7-8 lakh crore in the next 20 years. Now, with the pro-reform BJP-led
government at the centre, the water segment is expected to get substantial focus and
budgetary allocation including the Clean Ganga project. Moreover, we expect
acceleration in project ordering and execution in FY2016 and FY2017.
ViewBuy niche growth story: Given the large opportunity ahead and inherent
strengths of VTW, like professional management, niche technical expertise and global
presence, the company will be one of the preferred investment opportunities in the
water segment. We expect the earnings to grow by 23% (CAGR) during FY2014-17,
backed by an 18% revenue growth and margin expansion with increasing share of
O&M business and cost rationalisation efforts of the management in international
subsidiaries. The company is poised to generate RoCE and RoE in the range of 2225% and 16-17% respectively in the coming few years and with healthy cash
generation from operations, the net cash is likely to remain positive. We initiate
coverage on VTW with a Buy recommendation and a price target of Rs1,900 (based
on 25x FY2017E earnings).
Working capital intensive business, but well managed by VTW: Though the business
model of VTW is highly working capital intensive, the company managed the spread
of payable and receivable well.
Others
21%
Promoters
29%
DIIs
21%
FII
29%
PRICE CHART
1800
1600
1400
1200
1000
800
600
400
Dec-14
Sep-14
Jun-14
Dec-13
Mar-14
VALUATIONS (CONSOLIDATED)
PRICE PERFORMANCE
(%)
1m
3m
6m
12m
Absolute
-5.3
2.9
12.9
182.8
Relative
to Sensex
-0.2
2.4
7.2
114.8
Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding

or having a postition in the companies mentioned in the article.
January 2015
Particulars
Net sales (Rs cr)
FY2013
1,618.9
FY2014
2,239.0
FY2015E
2,619.9
FY2016E
3,100.1
FY2017E
3,716.9
Growth (YoY) %
OPM (%)
12.1
9.6
38.3
8.7
17.0
8.6
18.3
8.8
19.9
9.2
Net profit (Rs cr)

Adjusted EPS (Rs)
90.3
34.0
108.7
40.9
125.5
47.3
157.3
59.2
202.3
76.2
EPS Growth (YoY) %

PER (x)
22.2
43.7
20.3
36.3
15.5
31.5
25.3
25.1
28.6
19.5
P/B (x)
EV/EBIDTA (x)
5.5
22.3
4.7
18.0
4.2
15.3
3.7
12.4
3.3
9.7
RoCE (%)
RoE (%)
20.1
13.3
21.3
14.0
21.0
14.1
22.9
15.8
25.5
17.8
RoIC (%)
33.6
34.3
34.9
39.2
45.1
16
EQUITY
STOCK UPDATE
FUNDAMENTALS
BAJAJ FINANCE
HOLD
CMP: RS3,250
DECEMBER 9, 2014
Price target revised to Rs3,450,
downgraded to Hold
COMPANY DETAILS
Price target:
Rs3,450
Market cap:
Rs16,297 cr
52-week high/low:
Rs3,375/1,455
0.3 lakh
BSE code:
500034
NSE code:
BAJFINANCE
Sharekhan code:
BAJFINANCE
1.9 cr
KEY POINTS
Bajaj Finance has appreciated by 83% since our initiation (on May 21, 2014) led by a
sustained earnings performance, improving visibility on interest rates (leading to a
decline in the cost of funds) and regulatory framework. Consequently, the valuations
have inched up to 2.9x FY2016E BV compared with 1.6x FY2016E BV at the time of
our initiation.
Going ahead, the company plans to reduce beta (high-risk but high-yielding loans) in
its portfolio and increase the proportion of mortgage and SME loans. This should
result in some moderation in the net interest margins and RoAs (~3% from 3.5%
level). On the asset quality front, the company is expected to sustain its healthy trends
and is well ahead of the other NBFCs in recognising NPAs on 90-day past due basis.
Public &
others
19%
MF & FI
7%
Promoter
61%
Foreign
13%
PRICE PERFORMANCE
(%)
1m
3m
6m
12m
Absolute
12.9
26.3
52.7
120.2
Relative to Sensex
11.9
22.6
37.0
61.8
Sharekhan Limited, its analyst or dependant(s) of the analyst might be

holding or having a postition in the companies mentioned in the article.
While we like the business model of Bajaj Finance and expect a strong earnings growth
of 24% CAGR, the valuations are factoring in the positives. Currently, the stock is
trading at 2.4x FY2017E BV, which is a 5-10% premium to the other major NBFCs
and leaves limited room for an upside. Therefore, we have downgraded our
recommendation to Hold with a revised price target of Rs3,450 (2.5x FY2017E BV).
BANK OF BARODA
BUY
CMP: RS1,085
DECEMBER 4, 2014
Price target revised to Rs1,236
COMPANY DETAILS
Price target:
Rs1,236
Market cap:
Rs45,662 cr
52 week high/low:
Rs1,107/509
NSE volume (no. of shares):
12.3 lakh
BSE code:
532134
NSE code:
BANKBARODA
Sharekhan code:
BANKBARODA
Free float (no. of shares):
18.8 cr
KEY POINTS
While the asset quality is a concern for the public sector banks, BoB is relatively better
placed than its peers. As of Q2FY2015, the stressed loans (gross NPAs + restructured
loans) were at 9.1% compared with the sector average of 11.9%. The NPA provision
coverage is also reasonable at 65.4% and is better provided on wage revision front.
Public &
others
8%
MF & FI
18%
Promoter
56%
Foreign
18%
PRICE PERFORMANCE
(%)
Despite a tough macro environment, Bank of Baroda (BoB) reported a stable performance
at the operating level. The banks focus on reducing the bulk deposits (preferential rate
deposits and CDs) and a calibrated growth in advances have contributed to an increase
in margins (domestic NIM at 3.02% in Q2FY2015). We expect its net interest income
to grow by 19.3% CAGR over FY2014-17.
1m
3m
6m
12m
Absolute
14.6
22.9
26.8
73.1
Relative to Sensex
12.3
17.2
9.7
24.9
BoBs capital position (tier-1 CAR of 9.3%) is relatively better compared with the
other PSBs and hence the bank is suitably placed in the recovery cycle. We expect BoBs
earnings to grow at a CAGR of 18.1% over FY2014-17 resulting in an RoA of 0.8%
by FY2017. We have rolled over our valuations to FY2017 estimates resulting in a
revision in the price target to Rs1,236 (1.04x FY2017E BV). We maintain our Buy
rating on the stock.

17
January 2015
STOCK UPDATE
EQUITY
FUNDAMENTALS
CESC
BUY
CMP: RS665
DECEMBER 8, 2014
Fuel uncertainty hangover emerges;
price target revised down to Rs800
COMPANY DETAILS
Price target:
Rs800
Market cap:
Rs8,859 cr
52-week high/low:
Rs828/387
KEY POINTS
5.2 lakh
BSE code:
500084
NSE code:
CESC
Sharekhan code:
CESC
6.3 cr
The coal ministry has decided that when a power plant is sold its coal linkages will not
be automatically part of the sale; rather the new owners of the plant will have to make
a fresh application for coal linkages. The ruling has been invoked for the acquisition of
the 600-MW power plant at Chandrapur in Maharashtra by CESC from a consortium
led by the Dhariwals of the Manikchand Gutkha group. The plant had coal linkages
from South-Eastern Coalfields but as per the latest decision of the coal ministry CESC
will have to make a fresh application for coal linkages.
The Chandrapur power plant of CESC was already suffering because of inadequate
power supply agreements, as only 100MW out of the 600MW of power it produces
has been tied up with the Tamil Nadu State Electricity Board. Now with this
development, it has hit another hurdle as fuel uncertainty will add to its woes. Therefore,
we value the asset at an 80% discount to the equity invested in it in our sum-of-theparts valuation.
Recently, CESC raised Rs490 crore through a qualified institutional placement by issuing
0.76 crore shares (ie 3.5% of the existing shares base). We believe almost half of the
funds will be earmarked for expanding its transmission & distribution network while the
remaining half could be used to bid for coal mines the bidding for which is expected to
commence soon. After factoring in the latest development and its possible consequences
we have revised down our price target for CESC by 9% to Rs800. However, we continue
to recommend the stock as a Buy in view of the positive developments in the sector and
the continued improvement in the companys subsidiaries.
Others
8%
Institutions
16%
Promoters
52%
Foreign
24%
PRICE PERFORMANCE
(%)
1m
3m
6m
Absolute
1.4
-7.5
14.1
12m
80.1
Relative to Sensex
-0.5
-12.3
-0.4
30.5

FIRSTSOURCE SOLUTIONS
BUY
CMP: RS35
DECEMBER 11, 2014
Growth on track, weakness in stock offers
opportunity to Buy
COMPANY DETAILS
Price target:
Rs51
Market cap:
Rs2,301 cr
52-week high/low:
Rs44/19
23.5 lakh
BSE code:
532809
NSE code:
FSL
Sharekhan code:
FSL
28.9 cr
KEY POINTS
We have interacted with the management of Firstsource Solutions Ltd (FSL) to get an
insight into the current state of business. We also touched upon the broad expectations
for the Q3FY2015 earnings performance. The management expects the top line growth
to accelerate in FY2016 by more than 8% and the margin to rise to more than 14%
with exit margins of around 13.8-14% by Q4FY2015. It expects a comfortable earnings
growth of 25% plus in FY2016. In Q3FY2015, owing to seasonal weakness, the earnings
are expected to remain flattish, the top line growth is expected to be muted, the margins are
expected to be stable on a sequential basis and the bottom line is likely to remain flattish.
Public & Foreign
8% Institutions
Others
7%
24%
Non-promoter
corporate
5%
Promoters
56%
PRICE PERFORMANCE
(%)
1m
3m
6m
Absolute
-17.6
-18.8
-0.1
12m
67.3
Relative to Sensex
-17.5
-21.1
-8.9
25.8

In the last one month, FSL has corrected by about 18% owing to its lacklustre quarterly
performance in Q2FY2015 and the anticipation of a further drop in the earnings
momentum in FY2015. However, FSLs earnings are expected to grow at a 28% CAGR
over FY2014-16. It is expected to improve its balance sheet (by deleveraging its books
through internal accruals) and improve its RoE profile. We, therefore, believe the
correction in the stock price is overdone and the current weakness offers a good
opportunity to buy into the stock. Further, an impairment of goodwill in the books in
Q4FY2015 and FY2016 would not really have any impact on the companys business.
The stock is trading at an attractive valuation of 7x PER and 5.4x EV/EBITDA based
on FY2016 earnings estimates. We maintain our Buy rating on the stock with an
unchanged price target of Rs51.
January 2015
18
EQUITY
STOCK UPDATE
FUNDAMENTALS
GLAXOSMITHKLINE CONSUMER HEALTHCARE

HOLD
CMP: RS5,808
DECEMBER 10, 2014
To benefit from falling dairy prices;
price target revised to Rs6,005
COMPANY DETAILS
Price target:
Rs6,005
Market cap:
Rs24,452 cr
52-week high/low:
Rs5,950/4,064
KEY POINTS
10,210 lakh
BSE code:
500676
NSE code:
GSKCONS
Sharekhan code:
GSKCONS
1.2 cr
GlaxoSmithKline Consumer Healthcare (GSK Consumer), one of the largest health

food drink companies in India, would reap the benefits of the correcting prices of milk
and skimmed milk powder in the domestic and international markets. The price of
milk powder (which constitutes about 20% of the companys raw material cost) has
corrected by almost 20% from its high in the recent past.
We believe the benefit of falling milk and milk powder prices would start to flown in
from Q3FY2015. However, greater benefits of the softening input prices could be seen
in Q4FY2015. The company also stands to benefit from an improvement in its revenue
mix due to high sales of the premium products in the coming years. Accordingly, we
have increased our earnings estimates for FY2016 and FY2017 by 3% and 5%
respectively to factor in the higher than expected gross profit margins.
GSK Consumer is one of the leading players in the domestic health food drink segment
with strong price power. With improving consumer sentiment in urban India, we expect
the companys sales volume growth to come back on track (in the range of 6-8% from
the current level of 2-3%) while falling dairy prices would boost the margin. In line
with the upward revision in the earnings estimates, our revised price target now stands
at Rs6,005. We maintain our Hold recommendation on the stock.
Key risk to earnings estimates: Any significant upsurge in the milk and milk powder
prices and sustained slowdown in the health food drink segment would act as key risks
to our earnings estimates.
Others
14%
FIIs
12%
Domestic
institutions
1%
Promoters
73%
PRICE PERFORMANCE
(%)
1m
3m
6m
12m
Absolute
1.3
10.6
24.1
25.5
Relative to Sensex
0.4
7.3
11.3
-7.8

GLENMARK PHARMACEUTICALS
BUY
CMP: RS782
DECEMBER 29, 2014
Price target revised up to Rs915; upgraded to Buy
COMPANY DETAILS
Price target:
Rs915
Market cap:
Rs21,346 cr
52 week high/low:
Rs840/496
7.4 lakh
BSE code:
532296
NSE code:
GLENMARK
Sharekhan code:
GLENMARK
14.0 cr
KEY POINTS
Gearing up: Glenmark Pharmaceuticals is stepping ahead to gain from its key novel molecule
and generic product pipeline built over the past few years in the US, European and Latin
American markets. While the Q2FY2015 results already reflected a bounce back in the
Latin American business (up 139%) and the European business (up 25%), the US business
is likely to crack the stagnation with a fresh wave of approvals nearing and its first-to-file
(FTF) opportunity on genetic Zetia (market size $1.3 billion) ticking in Q4FY2017.
Institutions
6%
Public and
others
9%
Near-term upside from GRC 17536: The company is said to be in an advanced stage of
talks with a few multinational players to out-licence its novel molecule GRC 17536,
which has successfully completed phase-II clinical trials on 138 patients in Europe and
India. GRC 17536 is expected to have a market potential worth $1 billion. A successful
out-licencing deal would earn the company a sizeable amount of upfront payment,
developmental milestone based payments and royalties on sales. We expect the outlicencing deal to close in the next few months.
Non-promoter
corporate
1%
Foreign
36%
Promoters
48%
PRICE PERFORMANCE
(%)
1m
3m
6m
12m
Absolute
-3.8
13.1
35.8
46.7
Relative to Sensex
0.2
10.3
24.1
11.7

We revise price target up to Rs915; upgraded to Buy: We anticipate an increased run

rate of product approvals in the US market over FY2016-17 and a decent upside from
monetisation of novel molecule GRC 17536 (though not factored in our price target as
the out-licencing deals remain under negotiation stage). We revise our price target up
by 13% to Rs915 which includes Rs860 for the base business (16x FY2017E core
EPS), Rs55 for its R&D pipeline and Rs10 for its exclusivity opportunity on generic
Zetia. We upgrade our recommendation to Buy on the stock.
19
January 2015
STOCK UPDATE
EQUITY
FUNDAMENTALS
ICICI BANK
BUY
CMP: RS362
DECEMBER 4, 2014
Price target revised to Rs424
COMPANY DETAILS
Price target:
Rs424
Market cap:
Rs209,499 cr
52 week high/low:
Rs366/189
25.0 lakh
BSE code:
532174
NSE code:
ICICIBANK
Sharekhan code:
ICICIBANK
115.7 cr
KEY POINTS
ICICI Bank continues to deliver a strong operating performance (with PPP growth of
~25% over the past eight quarters) led by a healthy loan growth, an expansion in the
margins and a check on the opex growth. We believe the sharp improvement in its
liability profile and the net interest margins will sustain at high levels. In addition, the
likely pick-up in the fee income (especially the corporate fees due to the recovery in
economy) could improve the operating profits.
Public &
others
37%
Even as the asset quality has shown a marginal stress in recent times, it remains
significantly better than that of the PSU banks. The management expects stressed loan
formation to be lesser in FY2015 vs FY2014 and the credit cost to be contained to
90BPS in FY2015. Any recovery in the economy or policy initiatives by the government
will result in an improvement in the asset quality by FY2016.
Foreign
41%
MF & FI
22%
PRICE PERFORMANCE
(%)
1m
3m
6m
12m
Absolute
9.0
13.5
25.0
67.9
Relative to Sensex
6.8
8.2
8.2
21.1

ICICI Bank is a structural growth story and is likely to benefit from the recovery in the
economy due to its improved liability base, increase in branch network and healthy
capital position. We have revised our estimates and valuation multiple upwards (2.1x
FY2017E BV for ICICI Bank [stand-alone]) on increasing visibility on the interest rates
and a likely pick-up in the economy. This results in a revision in our SOTP-based price
target to Rs424. We maintain our Buy rating.
KALPATARU POWER TRANSMISSION

BUY
CMP:RS216
DECEMBER 26, 2014
Growth and value unlocking ahead,
price target revised to Rs245
COMPANY DETAILS
Price target:
Rs245
Market cap:
Rs3,315 cr
52 week high/low:
Rs232/71
2.7 lakh
BSE code:
522287
NSE code:
KALPATPOWR
Sharekhan code:
KALPATPOWR
6.2 cr
The key takeaways from our interaction with the management of Kalpataru Power
Transmission Ltd (KPTL) are as follows:
KPTLs stand-alone business of T&D remains healthy with improving outlook for
domestic order flow driven by significant investment in transmission projects from
PGCIL. The management also expects better demand from SEB and opportunities in
the proposed separate feeder lines for agri-based users (similar to Gujarat) and grid
connectivity across SAARC
Others, 9
The agri-logistic subsidiary, Shree Shubham Logistics (SSL), is chalking out aggressive
expansion plans and to fund that, we believe, the company may look out for external
resources, which could unlock substantial value.
Institutions,
22
The construction subsidiary, JMC Projects (stand-alone), is on track to achieve margin

expansion which would be instrumental in improving its profitability and cash flow.
However, on the consolidated basis it needs external funds to support the remaining
funding for its road BOOT projects and some losses from the operational BOOT projects.
Foreign, 9
Promoters,
59
PRICE PERFORMANCE
(%)
1m
3m
6m
12m
Absolute
14.7
31.4
13.3
130.6
Relative to Sensex
20.0
28.9
4.9
75.4

The management sounded positive about the growth outlook and margin in the T&D
business. JMC Projects is on track to achieve margin expansion and we see potential
value unlocking from SSL. Hence, we retain our Buy rating on KPTL and revise our
price target to Rs245 (based on SOTP method).
January 2015
20
EQUITY
STOCK UPDATE
FUNDAMENTALS
MARUTI SUZUKI INDIA

BUY
CMP: RS3,339
DECEMBER 11, 2014
Yen depreciation a positive, maintain Buy with a
revised price target of Rs4,000
COMPANY DETAILS
Price target:
Rs4,000
Market cap:
Rs100,852 cr
52-week high/low:
Rs3,434/1,541
3.1 lakh
BSE code:
532500
NSE code:
MARUTI
Sharekhan code:
MARUTI
13.2 cr
KEY POINTS
Public & Others
Corporate
3%
Bodies
5%
Foreign
22%
Institutions
15%
Promoters
55%
PRICE PERFORMANCE
(%)
1m
3m
6m
12m
Absolute
0.5
14.3
35.4
90.5
Relative to Sensex
0.6
11.0
23.6
43.3

The Japanese Yen (JPY) has witnessed a sharp depreciation against the US Dollar (USD)
since mid October of this year. From the levels of 105 the JPY has depreciated by nearly
12.5% and is currently trading near the 120 mark. Maruti Suzuki India (Maruti) has a
significant exposure to the JPY by way of imports (both direct as well as indirect) and
royalty payments to its parent company, Suzuki Motor, Japan. The current trend of JPY
depreciation will have a favourable effect on the margins of the company going forward.
Maruti has been a key beneficiary of the change in consumer sentiment after the general
election and continues to report a double-digit volume growth, given its extensive
product portfolio especially in the entry car segment, strong sales and wide service
network. The company reported a domestic volume growth of 14.7% in H1FY2015,
thereby significantly outperforming the industry growth of 4.2% and expanding its
market share by 405BPS. Maruti has a robust product pipeline, including an entrylevel model in the fast growing compact sports utility vehicle segment which will be
rolled out over the medium term and help it maintain its leadership position.
The depreciation of the JPY will have a positive effect on Marutis profitability but with a
lag as the company hedges its near-term foreign exchange exposure. We have raised our
OPM estimates for FY2016 and FY2017 by 30BPS and 100BPS respectively. Consequently,
our earnings estimates for FY2016 and FY2017 are higher by 3% and 8.8% respectively.
We remain positive on the stock and reiterate a Buy recommendation with a revised price
target of Rs4,000 (earlier Rs3,600), discounting FY2017E EBITDA 10.5x.
PTC INDIA FINANCIAL

BUY
CMP: RS65
DECEMBER 30, 2014
Growth outlook remains strong,
COMPANY DETAILS
Price target:
Rs90
Market cap:
Rs3,670 cr
52-week high/low:
Rs66/13
45.6 lakh
BSE code:
533344
NSE code:
PFS
Sharekhan code:
PFS
22.5 cr
KEY POINTS
PTC India Financial Services (PFS) stands to benefit from the governments thrust on
the renewable energy sector (mainly solar and wind) which should result in a robust
growth in the loan book (35% CAGR over FY2014-17). About 70% of the incremental
disbursement will be from the renewable segment (loan sanction pipeline of Rs7,000
crore or 1.2x of the existing loan book), which has lesser quality issues due to a low
gestation period, lesser fuel supply risk and fiscal support from the government.
Public &
others
29%
MF & FI
3%
Given the favourable interest rate scenario, the interest spreads may sustain at healthy
levels (~4.5%). Any likely downward movement in the hedging cost will further reduce
the funding cost. The company also has ~Rs240 crore of equity investments in power
projects which have appreciated significantly and will result in substantial gains going
ahead.
Promoter
60%
Foreign
8%
PRICE PERFORMANCE
(%)
1m
3m
6m
12m
Absolute
14.1
39.5
104.0
397.1
Relative to Sensex
19.5
35.2
85.6
278.4
We expect PFS to register a strong growth in earnings (~40% CAGR over FY2014-17)
excluding the one-off gains in FY2014 and without factoring in the gains on equity
investment. The asset quality is likely to remain robust and the company is likely to
deliver high RoA (~3.5%) which leaves further scope for re-rating. We have revised
upwards our earnings estimates for FY2016 and FY2017, and valued the stock at Rs90
(2.5x FY2017E BV). We maintain our Buy rating.

21
January 2015
STOCK UPDATE
EQUITY
FUNDAMENTALS
SELAN EXPLORATION TECHNOLOGY

BUY
CMP: RS380
DECEMBER 4, 2014
Crude meltdown to dent earnings but growth story
intact; price target revised down to Rs550
COMPANY DETAILS
Price target:
Rs550
Market cap:
Rs623 cr
52 week high/low:
Rs677/289
55,352
BSE code:
530075
NSE code:
SELAN
Sharekhan code:
SELAN
0.9 cr
KEY POINTS
Promoters
43.0%
Others
54.8%
Foreign
0.2%
Institutions
2.0%
PRICE PERFORMANCE
(%)
1m
3m
6m
12m
Absolute
-20.3
-32.8
-39.2
25.3
Relative to Sensex
-21.9
-36.0
-47.4
-9.6

Q2 performance remained subdued, on expected lines: In Q2FY2015, the net revenues

(which have been adjusted for the petroleum profit) of Selan Exploration Technology
(Selan) remained negative as the realisation of crude oil prices turned weaker while the
production volume was flat to negative during this period. The weaker realisation
reflected on its profitability during this quarter as earnings declined by 19% YoY and
8% QoQ to Rs9.6 crore. Globally, the average crude oil prices turned weaker and
slipped from ~$110 to below $90 per barrel during Q2.
Revising estimates; delay in ramp-up and correction in crude prices: We have finetuned our FY2015 and FY2016 estimates to factor in the revised production ramp-up
schedule and the sharp decline in crude oil prices. We are factoring in the average
realisation of $80-85 per barrel range over FY2016-17 which accounts for a certain
amount of pull-back in the price from the recent plunge below $70 per barrel, which is
unlikely to sustain. In this note, we have also done a sensitivity analysis to show the
changes in our price target with a change in the average crude oil prices globally.
Valuation; negatives discounted, the risk-reward favourable: Selans exploration share
price now discounts most of the negatives, with a sharp decline in the crude oil prices as
one of the key external changes affecting its earnings and valuations. We retain our
bullish stance based on two reasons. First, we are confident about the managements
ability to achieve its target of an exponential jump in the production volumes over the
next two to three years. Second, we feel that the recent plunge in crude oil prices is not
sustainable and the crude oil prices would stabilise around $80-85 per barrel sooner than
later. Consequently, we retain our Buy recommendation with a price target of Rs550.
STATE BANK OF INDIA

BUY
CMP: RS319
DECEMBER 2, 2014
Price target revised to Rs378, Buy maintained
COMPANY DETAILS
Price target:
Rs378
Market cap:
Rs237,970 cr
52 week high/low:
Rs327/145
30.1 lakh
BSE code:
500112
NSE code:
SBIN
Sharekhan code:
SBIN
30.9 cr
KEY POINTS
Given its market share of ~19% in advances (about 25% including the share of its associate
banks), within the public sector bank (PSB) space State Bank of India (SBI) is our preferred
play on the revival in economic growth. As several macro indicators (core sector growth,
Purchasing Managers Index, trade data, etc) suggest a gradual pick-up in the economy,
SBI stands to benefit due to its strong liability franchisee (current account and savings
account ratio of about 43%) and healthy capital adequacy ratio (tier-I capital adequacy
ratio of 10.1 %; which leaves scope for growth in the advances).
Public &
others
10%
While asset quality remains a concern in the current scenario, SBI has shown moderation
in slippages and stable NPAs in the past two quarters. The stressed loans of the bank are
at 6.1%, which is better compared with the other PSBs. Going ahead, as the RBI is likely
to extend the 5/25 scheme (as per the recent monetary policy announcement) to the
existing projects (in the infrastructure sector), it will help in containing fresh NPA additions.
MF & FI
20%
Promoter
59%
Foreign
11%
PRICE PERFORMANCE
(%)
1m
3m
6m
12m
Absolute
18.2
27.6
25.7
78.3
Relative to Sensex
15.4
19.9
5.4
27.7

Though the stock has appreciated considerably in the past few weeks due to the banks
healthy performance in Q2FY2015 and an improving outlook on the interest rate front,
we retain our positive stance on SBI due to the expected improvement in its return ratios
(especially return on assets) and a healthy compounded annual growth of 27% in its
earnings over FY2014-17. The stock currently trades at close to its mean valuation (1.5x
FY2017E stand-alone book value). We revise our sum-of-the-parts price target to Rs378
(on rolling forward the valuation to the FY2017 estimates) and maintain our Buy rating.
January 2015
22
EQUITY
STOCK UPDATE
FUNDAMENTALS
V-GUARD INDUSTRIES
HOLD
CMP:RS1,089
DECEMBER 26, 2014
Rich valuation, downgraded to Hold
COMPANY DETAILS
Price target:
Rs1,200
Market cap:
Rs3,238 cr
52 week high/low:
Rs1,147/403
56,742
BSE code:
532953
NSE code:
VGUARD
Sharekhan code:
VGUARD
Free float (no. of shares) :
1.0 cr
KEY POINTS
The management of V-Guard Industries (V-Guard) is confident of achieving a 20%
revenue growth for the next two to three years. The recovery of the business from a
low base in Andhra Pradesh (post-division of Andhra Pradesh into two states) and
revival of infrastructure related spending across the country in the next two to three
years should drive the growth. But the performance could be softer in the near term as
the improved consumer confidence is yet to reflect at the store level.
Crude prices have crashed in the last couple of months which could have a positive
effect on its margin in two ways: (a) prices of some of its inputs could soften being
derivatives of crude oil; and (b) the transportation cost could come down. Consequently,
lower crude prices could affect the overall OPM by 40-50BPS, subject to its competitors
pricing strategy.
Others, 10
DIIs, 4
FII, 19
Promoters,
66
PRICE PERFORMANCE
(%)
1m
3m
6m
12m
Absolute
3.0
25.5
87.8
131.2
Relative to Sensex
7.8
23.2
73.9
75.9

We have fine-tuned our estimates considering the above mentioned developments. We

believe V-Guard is well on track to record a revenue growth of 18-20% and deliver an
earnings growth of 20-24% over FY2014-17. Further, positives like high return ratios
and healthy balance sheet are in favour of the stock. But after appreciating substantially
in the recent past, the valuation looks stretched now at 30x and 25x its FY2016E and
FY2017E earnings. Though we continue to like the story due to its rich valuation, yet
we revise down our rating from Buy to Hold with a revised price target of Rs1,200
(27.5x FY2016E EPS).
ZYDUS WELLNESS
HOLD
CMP: RS791
DECEMBER 3, 2014
Play on revival in urban consumer demand;
COMPANY DETAILS
Price target:
Rs875
Market cap:
Rs3,090 cr
52 week high/low:
Rs829/435
30,645
BSE code:
531335
NSE code:
ZYDUSWELL
Sharekhan code:
ZYDUSWELL
1.1 cr
KEY POINTS
Q2FY2015 marked a turnaround in Zydus Wellness performance with the company
reporting a positive growth in volumes (and growth in revenues) after a phase of declining
trend or flattish growth for several quarters. The revival is driven by the change made
in the distribution strategy along with improving sentiments towards its urban-centric
products like Sugarfree and Nutralite. In some of its categories like Everyuth face wash,
the company is trying to mitigate the competitive pressure by launching new variants
and introducing Re1 pack in the domestic market.
Others
12%
In addition to expectations of a sustained recovery in volume sales driven by an

improvement in the consumer sentiment, the companys margins would get supported
by the softening of raw material prices (including palm oil) and a favourable revenue
mix. Thus, we believe that Zydus Wellness will be one of the key beneficiaries of
improving urban consumer sentiment, which could translate into a better performance
in the next two to three years.
FIIs
9%
Domestic
institutions
7%
Promoters
72%
PRICE PERFORMANCE
(%)
1m
3m
6m
12m
Absolute
27.7
30.0
50.0
45.3
Relative to Sensex
25.1
23.3
28.7
5.1

We have revised upwards our earnings estimates for FY2016 and FY2017 by ~2% and
~7% to factor in the better than expected revenue growth (especially in the Nutralite
brand) and higher than expected operating margins. We maintain our Hold
recommendation on the stock with a revised price target of Rs875 (valuing the stock
24x its FY2017E earnings).
23
January 2015
VIEWPOINT
EQUITY
SECTOR UPTADE
FUNDAMENTALS
JANUARY 01, 2015

Q3FY2015 IT earnings preview
Key points
Seasonally soft quarter, further dampened by cross-currency

headwinds: Given the furlough and holidays, the December
quarter is usually a soft quarter for the sector and this time around
it was further affected by cross-currency headwinds, as the euro,
pound and the Australian Dollar depreciated close to 6%, 5%
and 7.8% respectively against US dollar during the quarter. We
expect the reported revenues growth of top four information
technology (IT) companies to be in the range of 0.3-1.1%, though
the constant currency growth should be in the range of 2.2-3.1%
quarter on quarter (QoQ). Tata Consultancy Services (TCS) will
continue to lead the pack with 3.1% quarter-on-quarter
(Q-o-Q) growth (including the Mitsubishi joint venture), however
on organic basis HCL Technologies will deliver the highest growth
among the top four to around 2.9% Q-o-Q growth, followed by
Infosys with 2.7% and Wipro with 2.2% Q-o-Q growth. Among
the mid-cap coverage, Persistent Systems is expected to report
4.7% sequential growth, while Firstscource Solutions Ltd (FSL)
to deliver a 0.9% Q-o-Q fall.
Stable margin trend: For the quarter, despite the rupee tailwinds,
we do not expect any material gain on the margin front. For
Q3FY2015, TCS is likely to report 14-basis-point (BPS)
improvement in earnings before interest and tax (EBIT) margins
as compared with 52BPS for Infosys. For Wipro, the adjusted
EBIT margin for IT services is expected to remain stable on a Qo-Q basis at 21.5% against 21.4% in Q2FY2015, while HCL
Technologies staggered wage hike will affect the margins;
however, the operational efficiency and currency gain will keep

the margins broadly stable, we expect the margins to decline by
31BPS QoQ. In our midcap coverage, Persistent Systems and FSL
is expected to deliver margin improvement of 173BPS and 10BPS
QoQ respectively.
Key issues to watch out for would be: (1) Focus on the
managements commentary on the IT budget for CY2015 and
the overall demand commentary; (2) outlook on energy and
utilities, and manufacturing verticals owing to a steep fall in crude
oil prices; (3) outlook on reinvesting currency gains into the
business, given the recent depreciation of rupee; and (4) hedging
policy, given the volatile movement in cross currencies.
Valuation: In the last one month CNX IT has corrected close to
6% owing to the fear of growth tapering off in FY2016 and
negative impact of cross-currency headwinds. We believe, FY2016
will see an overall improvement in demand environment driven
by the improvement in the US geography, though it could fall
short of earlier expectations, but still will be better than FY2015.
The recent underperformance of IT stocks has already priced in
the negatives and offers an opportunity to buy for a decent return
in the next 12 months. Our order of stock preference in tier I will
be Infosys, TCS, and Tech Mahindra (unrated) and in the midcap
space, we like Persistent Systems and FSL.
Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or
having a postition in the companies mentioned in the article.
AKZO NOBEL INDIA
VIEWPOINT
CMP: RS1,385
VIEW: POSITIVE
DECEMBER 1, 2014
A colourful outlook; discounted valuation
Key points
consecutive years). With improving profitability, the free cash

is expected to improve in the coming years. The return ratios
have remained strong with the RoE and RoCE remaining in the
upwards of 15% and 20% respectively. The company has paid
cumulatively a dividend of Rs155 per share in the last two years.
With no major capex plan going ahead and cash flow expected
to improve, the dividend pay-out is expected to remain strong
in the coming years as well.
Strong player in premium decorative paint segment: Akzo Nobel

India (Akzo) is one of the strong players in the premium
decorative paint segment and the fourth largest player in the
overall domestic paint segment with a market share of 11%. Its
Dulux brand is the recognised brand in the premium to midpremium decorative paint segment in India. With a better
economic outlook and efforts to increase its presence in the mass
market segment, the launch of a new brand, Duwel, is expected
to drive a high double-digit revenue growth in Akzos decorative
paint business over the next few years.
Soft raw material prices and operating leverage to support
margins: Like most other paint companies, Akzo would benefit
from the softness in the prices of some of the key raw materials.
It would also get a boost from better utilisation of its Gwalior
facility (whose current capacity utilisation is 35%) that provides
scope for operating leverage benefits in the coming years. Hence,
we expect the companys OPM to improve to 10% from the
current level of 8% over the next two years.
Strong balance sheet with buoyant dividend pay-out: Akzo has
one of the strongest balance sheets amongst the peers with no
debt and a cash kitty of close to Rs400 crore (after the recent
capex programme and strong dividend pay-out of two
January 2015
Available at a discount to peers; leaves scope for rating: Akzo is

among the key beneficiaries of improving consumer sentiment
especially in urban India and would achieve an earnings growth
of over 20% CAGR in the next two to three years. However, it
trades at an unjustified discount to its peers (at 27x FY2016E
earnings it is at steep discount of 30-35% to Asian Paints and
Berger Paints). Thus, we have a positive view on the stock and
expect about 20% returns of the stock from the current levels.
Key risk: Any disruption in the improvement of the macro

environment and rise in competition in the premium paint
segment remain the key risks to Akzos earnings estimates.
24
EQUITY
VIEWPOINT
FUNDAMENTALS
CCL PRODUCTS
VIEWPOINT
CMP: RS160
BOOK PROFITS
DECEMBER 15, 2014
Positives priced in; Book profits with 30% gains in seven weeks
Key points
After our report on October 28, 2014, CCL Products stock

price has appreciated by almost 30% to about Rs162. Our key
investment arguments for CCL Products were: (1) it is the largest
instant coffee player with an enhanced base in Vietnam (the
second largest instant coffee producer in the world) and (2) it is
a commodity player with a strong balance sheet and healthy
return ratios.
facility would help the company to post improved operating

margins going ahead.
The company aims to enhance its production by over 25% and

exploit the opportunities in newer markets such as the USA and
Africa in the near term. The newly operational Vietnamese
Though the business fundamentals of the company are intact,

the valuation of the stock has gone up to 16x FY2016E earnings
in the recent run-up which, we believe, has largely priced in the
near-term positives and narrowed the valuation gap as
compared with its peers. Hence, we advise our investors to
Book profit with about 30% gains in a short time and wait for
a better entry point.
TOURISM FINANCE CORPORATION OF INDIA
VIEWPOINT
CMP: RS82
BOOK PROFITS
DECEMBER 8, 2014
Too fast, too soon, book profits with ~45% gains
Key points
Since our report dated November 25, 2014, the stock has
appreciated by ~45% and reached its all-time high of Rs85.
Our thesis on Tourism Finance Corporation of India (TFCI)
was largely based upon (a) improving prospects for the tourism
sector which should lead to a strong growth in the loan book in
the coming years and (b) the stocks inexpensive valuations on
an absolute basis and relative to its peers. While the fundamentals
still remain healthy, the valuations have gone up to 1.1x
FY2016E BV (0.7x FY2016E BV as of the date our report was
published) which largely factors in the near-term positives.
TFCI is likely to expand its advances book at a robust pace

(~50% CAGR) over the next couple of years, resulting in a strong
earnings growth and an improvement in the return ratios. The
asset quality which remains healthy (gross NPAs of 0.3%) is
likely to sustain going ahead.
However, a sharp appreciation in the stock price has resulted in

the narrowing of the valuation gap vis--vis the peers and hence
the stock price largely factors in the near-term positives. With a
gain of ~45% in less than two weeks, we recommend our
investors to book profits from the stock.
25
January 2015
EQUITY
TREND & VIEW
TECHNICALS
Bulls and bears at loggerheads

Daily view on Nifty
The Nifty has taken off its previous swing high and is now
inching towards the upper end of the rising channel. The upper
end of the rising channel comes at the 8455-8580 level, which
is also our short-term target.
8800
8750
8700
8650
8600
8550
8500
8450
8400
8350
8300
100.0%
78.6%
61.8%
50.0%
8250
8200
8150
8100
38.2%
The Nifty has started its wave III/C of wave V up and now on
the lower side 8147 is a very crucial support in the immediate
term.
23.6%
8050
8000
7950
0.0%
7900
7850
7800
7750
Above 8360, the Nifty is likely to touch the above mentioned

level, which is close to the 78.6% retracement mark.
7700
7650
7600
7550
7500
7450
KST (0.60707)
The momentum indicator, Know Sure Thing, is well in buy

mode, thereby confirming the up move.
4
3
2
1
0
-1
-2
-3
-4
18
25
1
8
September
15
22
29
7
13
October
20
27
3
10
November
17
24
1
8
December
15
22
29
5
2015
12
Weekly view on Nifty

On the weekly chart too it is clear that the Nifty has started its
wave III/C up of wave 5 and now 8147 is a very good shortterm reversal level. However, 8300 is also a very crucial support,
so the support band for the Nifty in November is 8147 to 8300
levels on the lower side whereas the upside targets come at 8590
and 8627.
9000
8500
8000
7500
7000
The wave 1 equality target for wave 5 comes to 9705, which is

an extremely bullish scenario. However, for that level to come
the Nifty has to surpass its hurdles at 8590 and 8627 levels.
6500
6000
The daily indicators are well in buy mode but the weekly
indicators are in sell mode which is the only concern for bulls
at the current juncture.
KST (2.75566)
10
-5
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
2014
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
2015
Feb
Mar
Monthly view on Nifty

The Nifty finally posted a negative close last month which

indicates that the wave 4 down has either started or is complete.
For it to be marked as complete the index has to take off its
previous swing high of 8627. If it fails to do so there would be
a downside risk of wave C down in wave 4. If it manages to
surpass the swing high of the previous month then the equality
target in wave 5 comes to the 9705-9900 level.
10000
9500
3
9000
8500
8000
4?
7500
7000
1
6500
6000
2
5500
5000
On the lower side, 8147 is a very crucial support and till that is
held the probability of an upside will remain quite high.
However, failing to do so will lead to another round of selling
which will then take the index to approximately 7800.
4500
4000
KST (2 5.3307)
30
25
20
15
So, all eyes should be on 8147 as thats the decisive level on the
lower side whereas 8627 is a decisive level on the higher side.
10
5
0
-5
-1 0
20 10
2011
20 12
2013
20 14
2015
Medium term
Trend
Trend reversal
Support
Resistance
Target
Down
8627
7723
8627
7723
January 2015
26
EQUITY
MONTHLY VIEW
DERIVATIVES
Derivative View: Market jitters to continue

In 2014 the Indian equity benchmark indices delivered an
exciting performance and recorded one of the best years in the
stock markets history. Bulls had assumed control of the market
at the start of the year in anticipation of a new government.
However, after the new government came to power, the market
indices made further gains and touched life-time highs every
alternate day. The prime index, the Nifty, rallied by more than
2,000 points in one year, but in December the market looked a
little on the seller side on account of global uncertainty, fall in
commodity prices and slow measures taken by the new
government. All these factors caused the Nifty to slide from its
life-time high of 8668 to a low of 8000. The one-sided movement
in the Nifty on the downside was mainly backed by a build-up
of short positions by market participants. However, some short
covering was seen in the last few trading sessions, but Nifty
was unable to sustain at higher levels and finally ended the series
at 8174 with a significant loss of around 4%.
roll-over of 86.91%. It is also marginally lower than the threemonth and six-month average roll-overs of 85.15% and 84.65%
respectively. In this expiry we saw less roll-overs of around 66%
in Nifty compared with the three-month and the six-month
average. The roll-over cost had gone past Rs103 in the last
trading day of the series indicating that not many short positions
got carried forward to this series.
Top 5 stock futures with highest OI in current series
STOCK FUTURES (SHAREKHAN SCRIP CODE)
ROLL-OVER: MARKET-WIDE VS NIFTY
70.0%
67.61%
83.01%
73.41%
85.48%
72.35%
83.43%
63.62%
85.11%
76.01%
86.91%
66.05%
83.88%
60.0%
20.0%
10.0%
3843.83
RELIANCE
2979.71
SBIN
1777.87
ICICIBANK
1737.37
INFY
1651.79
STOCK OPTIONS (SHAREKHAN SCRIP CODE)
90.0%
80.0%
30.0%
HDFCBANK
Top 5 stock options with highest OI in current series
100.0%
50.0%
40.0%
OPEN INTEREST (RS CR)
OPEN INTEREST (RS CR)
SBIN
495.68
RELIANCE
487.18
INFY
414.29
ICICIBANK
328.08
TATASTEEL
279.70
Nifty
Aug
Sep
Oct
Nov
Dec
Jan
0.0%
View
Market Wide
On the options front, in the January series, currently the 8600 call
option has the highest number of shares in open interest (OI)
followed by the 8400 strike price. On the put side, the build-up is
seen in the 8000 strike price, which has the highest number of shares
in OI, followed by the 8200 strike price. In the past couple of trading
sessions, we have seen that the India Vix has been continuously
rising and we feel that this trend could continue going forward.
The put/call ratio has also been continuously increasing since the
start of the series and currently stands at around 1.12. Looking at
the current situation in the market, it seems that fresh positive triggers
are on hold and we will have to keep an eye on crude, currency and
interest rates. However, its a sell-on-rise kind of market and we
continue to have a cautious view on the market.
The Nifty kick-started the New Year series by opening up with

a gap of around 90 points. The new series started the month
with Rs17,632 crore in Nifty futures vs Rs18,759 crore in the
previous series; Rs59,713 crore in stock futures vs Rs60,791
crore in the previous series; Rs65,929 crore in index options vs
Rs78,021 crore in the previous series; and Rs4,448 crore in
stock options vs Rs5,352 crore in the previous series. The rollover in Nifty stood at 66.05%, which is significantly lower than
the previous months roll-over of 76.01%. It is also lower than
the three-month and six-month average roll-overs of 70.66%
and 70.73% respectively. The market-wide roll-over stood at
83.88%, which was marginally lower than the previous months
27
January 2015
MONTHLY VIEW
COMMODITY
FUNDAMENTALS
Commodities: Seen volatile on Greece elections, China slowdown and index rebalancing
Macro-economy
Key points

China: Industrial output slows as factory halt compounds slowdown

The final China HSBC Manufacturing PMI confirms first contraction
in seven months
China: PPI fell for the 33rd straight month in November 2014
Russia's economic crisis just keeps on getting worse due to falling
oil prices
The ruble crashes by 40% against the dollar since the start of the year
Oil-led deflationary pressure weighing on commodities
US economy grew by 5% in third quarter, the most in a decade
Fed signals tightening by mid 2015; however, the markets still sceptical
Dollar Index rallies to nine-year high against basket of other currencies
Durable goods orders in the USA unexpectedly fell 0.7% in
November 2014
US home sales dropped sharply in November
US consumer sentiment rises to best since 2007
US services sector expanded in November at the second fastest pace
in more than 9 years
ECB expects the euro zone economy to grow by just 1.0% in 2015
and by 1.5% in 2016
ECB cuts its inflation forecast to 0.7% in 2015 from 1.1%
Euro zone flash PMI signals a slight gain in momentum at year-end
German ZEW Indicator of Economic Sentiment increases significantly
German Ifo Business Climate Index continues to rise
Draghi reinforces ECB stimulus; says ECB may buy government bonds
Greek parliament fails to elect president, expected date of election
January 25, 2015
Japan's GDP shrank an annualised 1.9% in July-September 2014
from the previous quarter
Japans inflation slips to 14-month low
BoJ said to reject adding stimulus to ease blow to CPI from oil
UK GDP (QoQ) below forecast of 0.8% in Q3, actual 0.7%
UK posts first real pay growth since 2009 as joblessness falls
COMMODITY PRICES IN DECEMBER 2014 (IN $)

Commodity
High
Low
Close
Mon chg %
Copper
6,532.0
6,230.0
6,300.0
-0.8
Zinc
2,257.0
2,107.0
2,178.0
-1.7
Lead
2,058.0
1,815.0
1,858.0
-8.4
Nickel
17,200.0
14,875.0
15,150.0
-6.9
Gold
0.8
1,239.0
1,141.7
1,184.1
Silver
17.4
14.2
15.6
0.8
Crude oil
69.5
52.4
53.3
-19.5
MONTHLY CHANGE IN DOE PETROLEUM STOCKS (NOV-DEC 2014)

Crude oil
Change in (000' bbls)
Dist.
Gasoline
6120
9547
20481
26th Dec 2014
385455
125721
229048
Change in (%)
1.61
8.22
9.82
Refinary utlization rate was at 94.4% in the last week of December
MONTHLY CHANGE IN SHFE STOCKS (NOV-DEC 2014)

Copper
Change (in Tonne)
Lead
Zinc
-26592
17244
-4371
26th Dec 2014
105522
64375
83757
Change (in %)
19.53
-6.36
-24.10
MONTHLY CHANGE IN LME STOCKS (NOV-DEC 2014)

Copper
Lead
Zinc
Nickel
12725
4200
18600
8652
31st Dec 2014
177025
221975
691600
413148
Change (in %)
7.74
1.93
2.76
2.14
Change (in Tonne)
NoteLME: London Metal Exchange , SHFE: Shanghai Futures Exchange, DOE: Department of Energy (US)
Crude oil: Record US production, price wars among OPEC cartel and weak global demand weighing on prices
Key points
Libyan crude output seen at the lowest since May 2014 after port attacks
Libyan oil production has fallen below 300,000 barrels a day after ISIS attacks
Shale supplies boost US output to the highest level in almost 30 years
US production expanded to 9.13 million barrels a day
OPEC pumped 30.56 million barrels a day in November 2014
The number of rigs drilling for oil in the USA shrank to the lowest since April 2014
Saudi Arabia, Iraq and Kuwait have cut their export prices with deep discounts
President Barack Obamas administration opened the door for expanded oil exports
Chinas strategic oil reserves may boost its imports by as much as 700,000 barrels a day in 2015
The IEA cuts its 2015 global oil demand growth estimate by 230,000 barrels a day to 0.9 million barrels a day
WTI NYMEX crude oil
CMP: $53.70
Crude oil prices dropped by more than 19% in December 2014; the decline in the prices reflects strong US production and a weak global
demand outlook. The decision of the Organization of Petroleum Exporting Countries (OPEC) to keep the output unchanged added to the
downside pressure on oil prices. OPEC supplies almost 40% of oil to the world markets and, therefore, its members, especially Saudi
Arabia, can control the supply to balance it with the demand when the prices are turbulent. Non-OPEC production has grown rampantly
and this growth is being led by the USA. Meanwhile, the US Energy Information Administration projected that global oil consumption in
2015 will expand by 230,000 barrels a day, less than projected in November 2014. It also boosted estimates for the supply outside OPEC
by 200,000 barrels a day. The demand for OPECs crude will shrink next year by about 300,000 barrels a day to 28.9 million, the least
since 2003, the group said. Prices declined further as President Barack Obamas administration opened the door for expanded oil exports
by saying a lightly processed form of crude known as condensate can be sold outside the USA. The expected range in the near term is $49
to $58 with an upward bias as winter can boost the demand for fuels.
January 2015
28
COMMODITY
FUNDAMENTALS
MONTHLY VIEW
Bullions: Firm dollar, rallying equities and declining oil continue to be negative themes
Key points
Silver likely to benefit more than gold in commodity index rebalancing
Lower oil prices decreased gold's appeal as a hedge against oil-led inflation
The US mint sold a record number of silver coins in 2014
The US mint American Eagle gold coin sales are on track to fall nearly 40% in 2014
Global demand for gold has fallen by 6% in the three months ended in September 2014: WGC
Global jewellery demand declined by 4% while bar and coin demand slumped by 21% in the third quarter: WGC
Russia has tripled gold reserves since 2005 and is holding the most since at least 1993: IMF
China's gold imports from Hong Kong in November 2014 rose by 27% from October
Assets in the SPDR Gold Trust contracted to 710.81 metric tonne, the lowest in more than 6 years
Gold
CMP: $1,182 (spot)
Gold settled down only less than 1% in 2014, despite a stronger dollar and expectations of an interest rate rise in the USA. Still, the near-term outlook
appears slightly weaker for bullions, with equities roaring at all-time highs, the dollar powering higher above 90 (at a multi-year high) and oil continuing
its precipitous fall that has been the talk of the last quarter of 2014. This year also saw exchange traded fund (ETF) investors withdraw further from the
gold market: outflows of 157 tonne have been registered since the start of the year, though this figure is much lower than the 869 tonne recorded last
year. The US Dollar appreciated significantly as the US economy expanded by 5% in third quarter and there was speculation that the US Federal Reserve
would bring forward the timing of raising interest rates in 2015. In Asia, especially in China gold demand has been strong and is growing rapidly since
2008. For gold bulls, the Russian economic crisis and the upcoming election in Greece are supporting points. We expect the metal to trade between
$1,130 and $1,245 in the near term, with a bearish bias.
Silver
CMP: $15.65 (spot)
It is believed that silver stands to benefit from the annual reweighting of both the S&P GSCI and the Bloomberg Commodity Index as the
metal has fallen sharply and its prospects, going forward, look supportive as the global economy recovers. We expect the metal to trade
between $14.70 and $17.70 with an upward bias.
Base metals: Seen sideways to lower; copper likely to outperform

Key points
Chinas copper output rose by 14% in November 2014 from the previous year
Chinas zinc output rose by 8% in November 2014 from the previous year
Chinas lead output rose by 6.2% in November 2014 from the previous year
Nickel output in China declined 5% in November 2014 MoM
Copper production in top exporter Chile fell to 7.3% for the fifth straight month in November last
China's implied consumption of refined copper rose 8.9% MoM in November last
A sharp drop in the ruble could see Russian nickel producers stepping up production
Chinas property home completions are set to fall by 1% to 3% annually from next year
Chinas State Reserve Bureau will remain an active buyer of copper
Global zinc metal deficit narrows in January-October 2014
Copper
CMP: Rs399 (February contract)
In January the reweighting of the commodity indices will have the biggest impact on nickel, aluminium, and zinc, which will need to be sold, while
copper can benefit. The actively traded lead and zinc spread is likely to strengthen over this period due to the selling in zinc and the small degree of
buying in lead. A rallying dollar, suffering major economies and falling oil prices are pressurising the metal pack. Meanwhile Peoples Bank of China
also estimated that China's economic growth could slow to 7.1% in 2015 from an expected 7.4% this year, held back by a sagging property sector.
Copper ended 2014 near its lowest levels in four years. The copper market seems to be shifting to a supply surplus. London Metal Exchange
inventories have been falling with prices since their peak in mid-2013. Chinas State Reserve Bureau purchased as much as 700,000 metric tonne of
the metal in 2014 and will probably buy as much as 200,000 tonne more over the next two months. We expect the red metal to trade between Rs390
and Rs410 in the near term.
Lead
CMP: Rs118 (January contract)
The prices of lead tend to rise in winter usually between November and February, as low temperature often causes car batteries to fail giving rise
to replacement demand and fresh demand also. Meanwhile prices also got support from the reports by Shanghai Securities News that the smelters
in Henan province will trim production by as much as 30% in 2015. Improving growth in the global auto sector is also expected to support the
lead demand in the coming months. The expected price range is Rs114-122.
Zinc
CMP: Rs137.50 (January contract)
According to International Lead and Zinc Study Group, the real consumption of zinc is likely to be lagging the implied consumption and is more
likely to be expanding at a single-digit pace. Chinas import growth slowed considerably in recent months to 9% year on year in the first ten
months of 2014. In addition, exports have accelerated following the discovery of fraudulent finance activity in the port of Qingdao, with China
becoming a net exporter in October 2014 for the first time in more than seven years. However, zinc prices are expected to get support from the
global auto sector. The latest figures from the European Automobile Manufacturers' Association indicate that passenger-car registrations posted
their 14th monthly year-on-year increase in October 2014: sales rose by 6.1% in the first ten months of 2014. We look for a range of Rs131-142
with a downward bias.
29
January 2015
COMMODITY
MONTHLY VIEW
Nickel
FUNDAMENTALS
CMP: Rs966 (January contract)
Nickel prices rallied in early and mid 2014 on Indonesias ore export curbs, which started in January 2014 and led to a mining boom in
the Philippines. However, larger than expected Philippine exports and slowing Chinese growth reversed the rally. Prices declined further
as the ruble crashed by 40% from the start of the year to record lows and helped Russian metal-mining companies to win back investors
favour, avoiding a broader sell-off in equities as the weakening ruble helps boost their profits from exports. The alloying metal is likely
to trade between Rs920 and Rs1,010 in the near term.
CMP as on December 31, 2014
Events watch: Major economic events in January 2015

Region
Event
01/01/2015
Date
China
Manufacturing PMI
01/02/2015
USA
ISM Manufacturing PMI
01/05/2015
01/05/2015
Euro zone
USA
German retail sales MoM

Total vehicle sales
01/06/2015
USA
ISM Non-manufacturing PMI
01/06/2015
01/07/2015
USA
USA
Factory orders MoM

ADP non-farm employment change
01/08/2015
China
Trade balance
01/09/2015
USA
Change in non-farm payroll
01/09/2015
China
CPI YoY
14/1/2015
USA
Core retail sales MoM
0.50%
15/1/2015
USA
PPI MoM
-0.20%
15/1/2015
USA
Philadelphia Fed Manufacturing Index
16/1/2015
USA
CPI MoM
-0.30%
19/1/2015
China
GDP q/y
7.30%
19/1/2015
China
Industrial production MoM
7.20%
20/1/2015
Euro zone German Flash Manufacturing PMI
20/1/2015
Euro zone German ZEW Economic Sentiment
23/1/2015
USA
25/1/2015
Euro zone Greek parliamentary election
26/1/2015
Euro zone German Ifo Business Climate
105.5
27/1/2015
29/1/2015
USA
USA
Core durable goods orders MoM

FOMC statement
30/1/2015
USA
Advance GDP QoQ
30/1/2015
USA
Chicago PMI
January 2015
Existing home sales
Survey
Actual
Prior
50
50.1
50.3
57.6
58.7
0.20%
16.9M
1.90%
17.2M
58
59.3
-0.40%
226K
-0.70%
208K
54.5B
243K
321K
1.50%
1.40%
24.5
34.9
4.93M
-0.70%
-
5%
58.2
30
Impact
Manufacturing data slipped slightly from prior release, so slightly bearish for the industrial
commodities as the nation is the biggest consumer of metals, but it also improves the possibility
of further stimulus from China in near term, hence losses are likely to be limited
Declining manufacturing activity in USA would be bearish for industrial commodities and bullish
for the bullions
Stronger than expected data would be supportive for the euro and industrial commodities
It is the annualised number of cars and trucks sold domestically during the previous month;
positive data will support industrial metals depending upon their uses in auto sector; stronger
data bullish for dollar too
The data is crucial as services constitute nearly 70% of the US economy; better than expected
data bullish for the dollar and industrials, but bearish for precious metals
Dropping factory orders would be bearish for the dollar and industrial commodities
Decline in data would be bearish for industrials and the dollar, as job creation is an important
leading indicator of consumer spending, which accounts for a majority of overall economic
activity
Widening trade surplus is an indication of more exports in comparison to imports but we need
to look at both imports and exports to gauge the health of both Chinese and other global
economies
Going by the ADP figure the NFP data could be in the same line of release and would have
same impact as ADP
Falling inflation expectations around the world are stoking the fear of deflation; if the data trail
the forecast, it would lead to concerns that the economy is not able to move ahead in the desired
fashion; thus data lower than forecast would weigh on both industrial and bullion complexes,
though expectations of further stimulus would keep the downside limited
Indicator of consumer spending behaviour on retail basis is crucial for industrial metals; better
than expected data would be bullish for industrial commodities and bearish for bullion; such a
data would be dollar supportive
Higher than the estimated would be raising concerns about interest rates as it would force the
Fed to hike the rates sooner than later, which means that the dollar would rally and commodities
would fall
This is a crucial manufacturing indicator; a better than expected data would buoy the dollar
while bullions would fall; industrial commodities would initially fall on a stronger dollar but
eventually rise on increased demand prospects
A higher than expected reading would be bullish for the dollar and somewhat bearish for
industrial commodities as rate hike expectations would rise
Key indicator of economic growth; rise in GDP will lead to bullishness in metals and energy
counters
Topping the estimates would be bullish for industrial commodities as it is a key indicator to
judge the demand for industrial commodities, however stronger data would dampen the
expectations of stimulus as well, thus upside could be limited; previous data trailed the forecast,
thus continuing trend would be a worrisome factor
German economy appears to be losing steam; the confirmation of the trend would weigh on
the euro and the industrial commodities
It's a leading indicator of economic health as it is an economic survey of Germany for the next
six months; better than expected data would support the euro and commodities
Better than expected data would be supportive for the dollar and industrial commodities; the
bullion complex would fall but the housing sector is sending mixed signals currently
Crucial for Greeces economy as markets are concerned that the opposition Syriza Party
may win the election and disrupt Greeces international bail-out
This survey is highly respected due to its large sample size and historic correlation with
German and wider euro zone economic conditions; better than expected data would be
supportive for the euro and industrial commodities
It's a leading indicator of production, higher orders will lead to higher prices of industrial metals
It's the primary tool the FOMC uses to communicate with investors about monetary policy; it
contains the outcome of their vote on interest rates and other policy measures; a hawkish
stance is likely to send dollar higher and commodities lower
A key indicator of economic growth, a rise in GDP will lead to bullishness in metals and
energy counters but bullion would fall; the dollar would rally
Stronger than expected data would bode well for dollar and industrial commodities
COMMODITY
TREND & VIEW
TECHNICALS
Gold: Retracement holds the key

Gold had broken a medium-term trend line drawn from three

crucial swing lows.
However, it had found support near the lower end of a mediumterm falling channel.
From there it has formed a leading diagonal on the upside and

retraced the same till the 61.8% retracement mark.
The daily and weekly momentum indicators are in bullish mode.
On the upside, gold can test the recent high of $1,238 beyond
which it can stretch till $1,270. The recent low of $1,131 will
act as a major support.
KST (-0.81013)
0
-5
1370
1360
1350
1340
1330
1320
1310
1300
1290
1280
1270
1260
1250
1240
0.0%
1230
1220
23.6%
1210
1200
38.2%
1190
50.0%
1180
61.8%
1170
1160
1150
1140
100.0%
Trend
Up
Trend
reversal
Supports
$1,131
$1,170/1,142
Resistances
1130
Target
1120
1110
Dec
2014
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
2015
Feb
$1,210/1,231 $1,238/1,270
Silver: Bullish potential

After a break-down from a crucial trend line support silver had

tumbled down sharply. It had found support near the lower
end of a medium-term falling channel.
To end the fall silver has formed an expanding ending diagonal.
The low of $14.42 will act as a strong support over the short
term as well as medium term.
KST (-1.88624)
5
0
-5
SILVER [CASH] (15.6500, 15.7000, 15.6000, 15.6400, -0.02000)
22.5
22.0
100.0%
21.5
21.0
20.5
20.0
19.5

Currently, the white metal is trading near the 61.8% retracement

of the recent rise.
19.0
61.8%
18.5
50.0%
On the upside, silver is expected to test the recent high of $17.33.

The subsequent level on the upside will be $18.
18.0
17.5
0.0%
38.2%
17.0
23.6%
16.5
38.2%
23.6%
16.0
50.0%
Trend
Up
Trend
reversal
$14.42
Supports
Resistances
Target
61.8%
15.5
15.0
$15.07/14.70
$16.45/17.16
$17.33/18
14.5
100.0%
0.0%
14.0
une
July
Augus t
Septem ber
October
Novem ber
Decem ber
2015
February
Crude oil: Tumbling down

NYMEX crude oil has been cracking down for the last several
months.
KST (-9.08613)
0
-5
-10
For the last few sessions it has been trading in a sideways

manner.
-15
LIGHT CRUDE CONTINUOUS 1000 BARRELS [NYMEX] (53.8700, 54.0200, 52.4400, 53.2700, -0.85000)
105
100
In terms of price pattern it has formed a triangular pattern and

broken out on the downside.
95
As per the wave structure, the equality target for the current leg
comes to $47.10.
80
On the other hand, the swing high of $57.56 will act as a crucial
resistance.
90
85
75
70
65
60
55
Trend
Down
Trend
reversal
Supports
$57.56
$51/49.50
Resistances
Target
50
25
$55.74/57
2
8
15
Septem ber
22
29
6
13
October
20
27
3
10
17
Novem ber
24
1
8
15
Decem ber
22
29
5
2015
12
19
26
2
Feb
$47.10
31
January 2015
TREND & VIEW
COMMODITY
TECHNICALS
Copper: Bullish development

COMEX copper has taken support near a falling trend line

from the previous lows.
0
-5
On the higher side it is facing resistance near the 20-day moving

average.
Structurally it has the potential to form an ending diagonal

pattern before moving higher.
KST (-1.73401)
HG COPPER CONTINUOUS 25000 LBS [COMEX] (2.85300, 2.86100, 2.81550, 2.82550, -0.02850)
3.40
3.35
3.30
3.25
3.20
The short-term momentum indicator is showing a positive

divergence which is in favour of bulls.
3.15
3.10
3.05
The key level on the downside will be $2.75 on a closing basis.
On the other hand, $2.947 will be the key level to watch out
for on the upside.
Trend
Up
Trend
reversal
Supports
Resistances
Target
$2.75
$2.8 /2.77
$2.87/2.90
$2.947
3.00
2.95
2.90
2.85
2.80
2.75
014
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
2015
Fe
RM seed: Going for a dip

NCDEX RM seed has been rallying smartly for the last several
months.
70
60
50
40
30
RAPESEED 20KG- 1 MONTH (4,269.00, 4,293.00, 4,235.00, 4,248.00, -47.0000)
The agri-commodity formed a couple of bearish candles near

the channel resistance.
The daily momentum indicator has triggered a bearish crossover from the overbought zone.
80
However, it has reached the upper end of a multi-month rising

channel.
Relative Strength Index (65.8097)
4500
4450
4400
4350
4300
4250
4200
4150
4100
4050
4000
3950
Thus RM seed has entered a correction mode. The key levels

on the downside will be Rs4,150 and Rs4,100.
3900
3850
3800
3750
3700
The recent high of Rs4,397 will act as a crucial hurdle.
3650
3600
3550
3500
3450
Trend
Trend
reversal
Supports
Resistances
Target
3400
3350
3300
July
Down
Rs4,397
Rs4,225/
Rs4,200
Rs4,300/
Rs4,338
Augus t
Septem ber
October
Novem ber
Decem ber
2015
Rs4,150/
Rs4,100
Dhaanya Index: Heading north

The Dhaanya Index has broken out from a multi-month

downward sloping channel.
It has crossed the high of 2721, suggesting that the index has a
larger upside potential.
The daily and weekly momentum indicators are in sync with

the bullish potential.

KST (5.44529)
40
30
20
10
0
* DHAANYA - NCDEX FUTURE INDEX (2,752.98, 2,784.82, 2,697.22, 2,698.86, -53.5999)
3300
3250
3200
3150
3100
3050
3000
2950
2900
2850
2800
The index is expected to test the high of 2905. Once that is

crossed the index can head till 2975.
2750
2700
2650
2600
2550
The reversal for the bullish view can be placed below 2550.
2500
2450
2400
2350
2300
2250
2200
Trend
Up
January 2015
Trend
reversal
Supports
Resistances
Target
2550
2616/2560
2784/2900
2905/2975
2150
2100
2050
2000
N D 2012
32
A MJ
J A S
O N D 2013
A MJ
J A
S O N D 2014
A M J J A
S O N D 2015
MJ
CURRENCY
FUNDAMENTALS
MONTHLY VIEW
Currencies: Euro down on divergence in global monetary policy

Key points
In November 2014 Indias trade deficit widened to $16.9 billion,
the largest since May 2013
Greeces Parliament failed to elect a president in the final vote
UK CPI eased to 1.0% in November last, the lowest since September 2002
Rating agency Moodys downgraded Japans sovereign debt rating
by one notch
US GDP grew at an annual rate of 5.0% in the third quarter, the
fastest growth in 11 years
December 2014 contract price movement
CURRENCY LEVELS IN DECEMBER 2014 (IN RS)

Currency
High
Low
Close
Monthly chg (%)
USD-INR
63.89
61.77
63.68
2.64
EUR-INR
79.81
75.79
77.65
0.52
GBP-INR
100.46
96.27
98.97
1.74
JPY-INR
54.66
50.93
52.86
0.72
December 2014 contract price movement

55
63.5
54.5
7 9 .5
100
7 8 .5
99
7 7 .5
98
7 6 .5
97
7 5 .5
96
54
63
53.5
62.5
53
52.5
62
52
USDINR
JPY INR
EURINR
USD-INR
29-Dec-14
27-Dec-14
25-Dec-14
23-Dec-14
21-Dec-14
19-Dec-14
17-Dec-14
15-Dec-14
13-Dec-14
9-Dec-14
11-Dec-14
7-Dec-14
5-Dec-14
29-Dec-14
25-Dec-14
21-Dec-14
17-Dec-14
13-Dec-14
9-Dec-14
5-Dec-14
51
1-Dec-14
61
1-Dec-14
51.5
3-Dec-14
61.5
G B PINR
CMP: Rs 63.27 (SPOT)
The Indian Rupee ended on a negative note in December 2014 and made a 13-month low of 63.88 on the back of a rise in the demand for
the dollar from importers and weakness in the emerging market currencies as the dollar gained against the other major currencies.
Outflows from local shares ahead of the year end also weighed on the Indian Rupee. The dollar gained strength against the other major
currencies due to positive economic data and expectations that the US Federal Reserve may start increasing its benchmark interest rates
sooner. The trade deficit widened to $16.9 billion in November last and was the largest since May 2013. The Index of Industrial
Production contracted to 4.2% in October 2014. However, further fall was prevented as the Reserve Bank of India signalled that it may
ease the monetary policy early next year and the governments decision to hike excise tax on diesel and gasoline raised expectations that
the fiscal deficit target would be met. The governments decision to hike excise tax on diesel by Re1 per litre and on gasoline by Rs2.25
per litre may help to raise Rs40 billion and thus help the government to meet its fiscal deficit target of 4.1%. The pair is likely to trade
with an upward bias with an upside target of Rs66.
GBP-INR
CMP: Rs98.61 (SPOT)
The pound fell by 0.8% vs the dollar in December 2014 touching a 15-month low of 1.5483 as Bank of England (BoE) kept its interest
rates at record low amid signs that Britains economic recovery is receding. Further, UK property slowdown and sluggish economic data
from the country stoked worries among the investors that the UK economic growth is losing momentum. The UK Consumer Price Index
(CPI) eased to 1.0% in November from 1.3% in October in 2014. It was the lowest rate of inflation since September 2002. The UK
current account deficit widened to 27 billion pound. The rate of economic growth from a year ago was revised down to 2.6% from 3%.
Market participants bet that the UK central bank may trail behind the Federal Reserve in raising interest rates. The GBP-INR pair is likely
to trade between Rs97 and Rs99.80 with an upward bias.
EUR-INR
CMP: Rs76.54 (SPOT)
The euro fell by 2.4% against the dollar in December 2014. The euro remained under pressure as the European Central Bank (ECB)
president Mario Draghi said the central bank is open to buying a wide variety of assets for further stimulus to revive the euro-area
economy. The single currency weakened despite stronger than expected German ZEW Economic sentiment. The euro fell below 1.2100
as the European Consumer Price Index slowed to 0.2% and remained below the central banks target, thus triggering the expectations
among the market participants that the ECB may add more stimulus next year. The outcome of the Targeted Long-Term Refinancing
Operation proved negative too. In Greece the Parliament failed to elect a president in the final vote triggering an early parliamentary
election. The markets are concerned that the opposition Syriza Party may win the election and disrupt Greeces international bail-out. The
euro-rupee pair is likely to trade between Rs76 and Rs78 with a downward bias in the near term.
JPY-INR
CMP: Rs52.86 (SPOT)
The yen-dollar pair depreciated by 1.7% in December on the back of a divergence in monetary policies. Rating agency Moodys
downgraded Japans sovereign debt rating by one notch. Weak economic data from Japan added to the downside pressure. Japans
gross domestic product (GDP) contracted by 0.5% in the third quarter of 2014. However, a sharp fall was prevented on the back of
demand for safe haven as political instability in Greece and falling oil prices led to some tentative safe-haven buying. The JPY-INR pair
is likely to trade between Rs52.80 and Rs54.20 in the near term.
CMP as on December 31, 2014
33
January 2015
TREND & VIEW
CURRENCY
EUR-INR: A channelised play
USD-INR:A bullish stance

The USD-INR has been moving up along with its key daily
moving averages.
For several sessions it traded between two converging trend
lines.
Structurally it formed a bullish triangle and the price broke out
on the upside. The currency pair retraced 50% of the previous
fall, ie 63.50, and is expected to head till the 61.8% retracement
mark, ie 64.77.
The upper end of the rising channel, ie 64.50, would be an
intermediate level to watch out for. The reversal can be tightened
to 62.58 on a closing basis.

TECHNICALS
The EUR-INR has been falling for the last several months. The
entire fall is unfolding in a channelised manner.
Near the lower channel line it formed an ending diagonal pattern
and broke out on the upside.
However, it couldnt surpass the upper end of the channel. From
there it started tumbling down.
The lower end of the channel, ie 75, will be the key area from
where the currency pair can attempt a bounce.
The level of 74 will act as a crucial support on a closing basis.
The key levels on the upside will be 77.30 and 77.83.

MACD (0.34149)
MACD (-0.17142)
0.0
0.0
-0.5
-0.5
USDINR - INDIAN RUPEE (63.4300, 63.4875, 63.2400, 63.2700, -0.08000)
65.0
EURINR (76.6730, 76.7040, 75.9180, 75.9240, -0.74200)
87.0
86.5
86.0
85.5
85.0
84.5
84.0
83.5
83.0
64.5
64.0
63.5
63.0
62.5
82.5
82.0
81.5
62.0
81.0
61.5
80.5
80.0
61.0
79.5
60.5
79.0
60.0
78.5
78.0
77.5
59.5
77.0
76.5
59.0
76.0
75.5
58.5
75.0
74.5
58.0
74.0
73.5
57.5
014
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
2015
Feb
Feb
The GBP-INR seems to be forming a multi-week wedge pattern.

Recently it crossed the key daily and weekly moving averages
but couldnt sustain in the higher territory.
Structurally it is moving down to form the last leg of the potential
wedge pattern. The level 96.25-96.15 would be a key support
zone.
The lower end of the pattern is near 95.20, which will act as a
major support on a closing basis. On the higher side, the level
99.80 and 100.46 will be the key levels to watch out for.

Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
2015
Feb
JPY-INR: Potential to pull back
GBP-INR: Keep an eye

Mar
As can be seen from the adjacent chart, the JPY-INR had tumbled
down sharply. It had reached near the lower end of the multimonth falling channel as well as near the extended Fibonacci
target. Near those levels bulls had rushed in to provide support.
Consequently, the currency pair had formed a bullish outside
bar on the weekly chart. Thus, the low of 0.5079 will act as a
crucial support. From there the currency pair had entered the
pull-back mode; however, the pull-back is breaking up into
waves of lower degrees. The weekly momentum indicator is
also recovering from the oversold territory. The key levels on
the upside will be 0.5507 and 0.5620.
Relative Strength Index (34.2010)
KST (-0.83613)
70
60
10
50
40
30
-5
GBPINR (98.9270, 99.2280, 96.9610, 96.9610, -1.89600)
20
JPYINR (0.52780, 0.53360, 0.52390, 0.52500, -0.00280)
110
0.74
0.73
109
0.72
0.71
108
107
0.70
106
0.69
105
0.68
104
0.67
103
0.66
102
0.65
101
0.64
100
0.63
0.62
99
0.61
98
0.60
97
96
0.0%
95
23.6%
38.2%
50.0%
61.8%
0.59
0.58
94
93
0.57
0.56
0.55
92
0.54
100.0%
91
0.53
90
0.52
89
0.51
161.8%
88
0.50
87
0.49
J
O N
2013
Currency
View
USD-INR
O N
2014
2015
2013
2014
2015
M A
Reversal
Supports
Resistances
Target
Up
62.58
62.97/62.80
63.88/64.20
64.50/64.77
GBP-INR
Up
95.20
96.25/96
98.35/99.22
99.80/100.46
EUR-INR
Up
74.00
75.66/75
76.75/77.24
77.30/77.83
JPY-INR
Up
0.5079
0.5200/0.5130
0.5336/0.5480
0.5507/0.5620
January 2015
34
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PROPRIME - TOP EQUITY

Product performance
as on December 31, 2014
OVERVIEW
The ProPrimeTop Equity PMS strategy is suitable for the long-term investors looking
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INVESTMENT STRATEGY
(In %)
Scheme
Sensex
Nifty
1 month
-1.1
-4.2
-3.6
3 month
8.3
6.2
7.3
6 month
6.0
8.2
8.8
39.6
29.9
31.4
1 year
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Best month
12.9
11.2
12.4
Worst month
-10.5
-8.9
-9.3
Investments are made primarily in the Nifty Fifty or the BSE 100 scrips.
Best quarter
21.7
13.5
14.5
Attempts to have an exposure of minimum of 70% in the Nifty Fifty stocks and
that of minimum of 90% in the BSE 100 stocks.
Worst quarter
-13.0
-6.1
-10.4
Endeavours to create a core portfolio of blue-chip companies with a proven track

record and have partial exposure to quality companies in the mid-cap space.
*26-Sep-11
Disclaimer: Returns are based on a clients

returns since inception and may be different from
those depicted in the risk disclosure document.
Top 10 stocks
PRICING
Minimum investment of Rs25 lakh
Axis Bank
Charges
Bharti Airtel
Gateway Distriparks
2% per annum; AMC fee charged every quarter
Hero MotoCorp
0.5% brokerage
ICICI Bank
20% profit sharing after the 12% hurdle is crossed at the end of
every fiscal
Larsen & Toubro

Reliance Industries
State Bank of India
Tata Motors
Fund Manager: Gaurav Dua
Wipro
FUND OBJECTIVE
A good return on money through long-term investing in quality companies
35
January 2015
PMS
PMS FUNDS
DESK
PROPRIME - DIVERSIFIED EQUITY

OVERVIEW
The ProPrimeDiversified Equity PMS strategy is suitable for long-term investors
looking to create an equity portfolio through disciplined investments that will lead to a
growth in the portfolios value with medium to high risk.
Product performance
(In %)
INVESTMENT STRATEGY
Disciplined investment decisions are taken in specific stocks based on thorough

fundamental research.
A balanced mix of value and growth stocks (mid-cap and small-cap) is created
that represents investment opportunities across sectors and market capitalisation.
Invests in quality value and growth stocks with good earnings visibility and healthy
balance sheet.
The fund manager, with the help of extensive, in-house, superior research,
identifies fundamentally sound companies to invest in.
The fund manager strives to capture the short-term trading opportunities to

maximise the potential of the swings in specific stocks.
Scheme
S&P CNX 500
1 month
-4.2
-2.1
3 month
1.5
9.4
6 month
-1.3
9.7
1 year
45.7
37.8
319.2
400.5
Best month
50.9
34.4
Worst month
-23.2
-27.2
Best quarter
71.1
51.2
Worst quarter
-28.5
-28.6
Since inception*
*27-Aug-04

Top 10 stocks
Apollo Tyres
PRICING
Charges
Ashok Leyland
Bank of Baroda
Bharti Airtel
2% per annum; AMC fee charged every quarter
Federal Bank
0.5% brokerage
Hero MotoCorp
20% profit sharing after the 12% hurdle is crossed at the end of every
fiscal
ICICI Bank
IL&FS Transport Networks
Lupin
Reliance Industries
FUND OBJECTIVE
A good return on money through long-term investing regardless of short-term volatility
January 2015
36
PMS
DESK
PMS FUNDS
PROTECH - INDEX FUTURES FUND

If you were searching for "Nifty Thrifty" then you are in the right place,
the name of the fund has been changed to "Index Futures Fund",
to represent the product better; everything else remains the same.
OVERVIEW
The ProTechIndex Futures Fund PMS strategy is suitable for long-term investors
who desire to profit from both bullish and bearish market conditions. The strategy
involves going long (buying) or going short (selling without holding) on Nifty futures
by predicting the market direction based on a back-tested automated model.
INVESTMENT STRATEGY
Product performance
(In %)
Scheme
Sensex
Nifty
1 month
2.9
-4.2
-3.6
3 months
12.0
3.3
4.0
FY13-14
8.8
18.9
18.0
The strategy has the potential to generate profits irrespective of the market
direction by going long or short on Nifty futures.
FY12-13
3.7
8.2
7.3
FY11-12
13.1
-10.5
-9.2
An automated basic back-testing model is used to predict the market direction

for the Nifty which then decides the strategy to be deployed in terms of going
long or short.
FY10-11
9.2
10.9
11.1
FY09-10
14.7
80.5
73.8
180.4
171.6
174.1
Best month
28.9
-23.9
-26.4
Worst month
-17.1
0.0
0.6
Best quarter
33.3
49.3
42.0
Worst quarter
-11.7
17.3
22.3
The portfolio is not leveraged, ie its exposure never exceeds its value.
PRICING
Charges
Since inception*
*01-Feb-2006
AMC fees:
0%
Brokerage:
0.05%
Profit sharing:
Flat 20% charged on a quarterly basis

Investments in
FUND MANAGERS VIEW
Nifty Index
By the middle of the last month we had earned handsome gains on our short trades as
we were in early. But at the end the month a lot was given back too. Still a return of
2.86% is better compared with the previous months. Overall, the Index Futures
Fund has had a good quarter as the last three signals were all profitable. We are able
to see a more trending market, as I had been hoping for for quite some time. It has
taken years of waiting to see that change. When we are clearly out of the non-trending
phase we should see returns above normal or more than what were recorded after
2009 on an annual basis. It has been a long wait.
The market is trading up and down in an expanding trading range of almost 5-8%
but with higher tops and higher bottoms each time. So, it is hard to call it a trend
reversal but the market is making bigger and bigger moves.
Fund Manager: Rohit Srivastava

FUND OBJECTIVE
Absolute returns irrespective of market conditions.
37
January 2015
PMS FUNDS
PMS
DESK
PROTECH - TRAILING STOPS

OVERVIEW
Our ProTechTrailing Stops PMS strategy is ideal for Traders and Investors looking for Regular Income from trading and desire to make profits in both bullish and
bearish market conditions. It is designed to payout book profits on monthly basis.*
It is also for those investors who are looking for better income than Fixed Income
or Deposits. This strategy involves going Long (buying) or Short (selling without
holding) on stock futures.
Product performance
(In %)
* Terms and conditions apply
INVESTMENT STRATEGY
Scheme
Sensex
Nifty
1 month
-1.9
-4.2
-3.6
3 months
-0.2
3.3
4.0
This strategy spots the winning trades based on technical analysis vs time framebased portfolios, basically the momentum calls.
FY13-14
-1.1
18.9
18.0
FY12-13
14.9
8.2
7.3
A risk model has been developed for stock portfolio allocation that reduces the
risk and portfolio volatility through staggered building of positions.
FY11-12
29.0
-6.1
-4.6
It is non-leveragedthe exposure will never exceed the value of the portfolio.
FY10-11
FY09-10
44.5
48.4
49.2
Best month
9.1
11.3
12.4
Worst month
-4.4
-2.0
-1.7
Since inception*
PRICING
Charges
Best quarter
9.9
-12.7
-12.5
AMC fees:
0%
Worst quarter
-8.2
9.2
9.9
Brokerage:
0.05%
*09th May 2011
Profit sharing:
Flat 20% charged on a quarterly basis

FUND MANAGERS VIEW

Stocks are hard to spot as market movements are not aligning with stock movements.
There are those stocks that are going down in a rising market and the others that are
going up in a falling market, causing the stock-based approach to fail in the last few
months. A broad-based market is the one that expands in both directions with most
stocks and is easy to capture. In other words, we are in a low probability game with
stocks but this should change soon. When it does the Trailing Stops should see returns
every month as it had till a year back. It has been a long wait and as we enter the last
quarter of the year, returns are turning marginally negative for the year. We dont
expect this trend to continue into the new financial year.
Investments in
Nifty Index
Stock futures
The market is trading up and down in an expanding trading range of almost 5-8%
but with higher tops and higher bottoms each time. So it is hard to call it a trend
reversal but the market is making bigger and bigger moves.
Fund Manager: Rohit Srivastava
FUND OBJECTIVE
Absolute returns irrespective of market conditions.
January 2015
38
ADVISORY
MONTHLY PERFORMANCE
DESK
Advisory Products and Services

The Advisory Desk is a central desk consisting of a Mumbai-based
expert team that runs various sample model portfolios (for illustrative
purposes only) for clients of all profiles, be they traders or investors.
These products are different from Sharekhans research-based
technical and fundamental offerings as these essentially try to capture
the trading opportunities in stocks where momentum is expected
before or after some event including the announcement of results or
where some news/event is probable.
Advisory products are ideal for those who do not have time to either
monitor the market tick by tick or shift through pages of research for
data or pour over complex charts to catch a trend. However, all
these products require perfect discipline and money management.
For investors
PORTFOLIO DOCTOR
It is a service under which the Portfolio Doctor reviews an existing portfolio based on various parameters and suggests
changes to improve its performance. To avail of this service please write to the Portfolio Doctor at
portfoliodoctor@sharekhan.com.
ALPHA DELIVERY PICKS

This is a long only, cash market delivery product where stock ideas are rolled out based on short-term triggers with
proper fundamental rationales. The buying price range, stop loss and probable target are clearly defined at the time of
initiation. These ideas are for a maximum period of one to two months for the medium-term investor and for one to
seven trading sessions for swing traders. For more details of this product please write to us at alphapicks@sharekhan.com.
For traders
SHAREKHANS PRE-MARKET ACTION
These ideas are put out in Sharekhans Pre-market Action report along with stop loss and targets valid for a day. There
is a market watch list of stocks with positive and negative bias for intra-day traders. For more details please write to us
at premarket@sharekhan.com.
MID DERIVATIVE CALLS

These calls are based on the analysis of open interest, implied volatility and put-call ratio in the derivative market. It is
a leveraged product and ideal for aggressive traders. These calls have pre-defined stop loss, targets, time frame and
quantity to execute. For details of the product please write to us at derivative@sharekhan.com.
Report Card
MID performance*
MID Derivative Calls performance*

Ticket size (Rs)
Product
Alpha Delivery Picks

Alpha Swing
Alpha Medium-term
Month
Dec 2014 YTD FY2015 Dec 2014
YTD FY2015
No. of calls
7
60
16
97
Profit booked
1
36
9
72
Stop loss hit
6
21
7
25
Strike rate (%)
14
60
56
74
Month
100,000
Dec 2014
YTD FY2015
No. of calls
28
274
Profit booked
15
177
Stop loss hit

Strike rate (%)
13
54
97
65
Please note we have discontinued MID Intra-day Calls *Based on closed calls
39
January 2015
January 2015
40
MUTUAL FUNDS
DESK
MF PICKS
SHAREKHANS TOP MUTUAL FUND PICKS (EQUITY)
DECEMBER 10, 2014

Data as on December 03, 2014
Scheme name
Large-cap funds
Reliance Top 200 Fund
Birla Sun Life Top 100 Fund
SBI Magnum Bluechip Fund
Birla Sun Life Frontline Equity Fund - Plan A
Principal Large Cap Fund
Indices
BSE Sensex
Mid-cap funds
Principal Emerging Bluechip Fund
SBI Magnum Midcap Fund
UTI Mid Cap Fund
Mirae Asset Emerging Bluechip Fund
Tata Mid Cap Growth Fund - Plan A
Indices
BSE MID CAP
Multi-cap funds
Birla Sun Life Pure Value Fund
Franklin India High Growth Companies Fund
ICICI Prudential Value Discovery Fund
SBI Magnum Global Fund 94
Kotak Select Focus Fund
Indices
BSE 500
Tax saving funds
Axis Long Term Equity Fund
DSP BlackRock Tax Saver Fund
Religare Invesco Tax Plan
HSBC Tax Saver Equity Fund
HDFC Long Term Advantage Fund
Indices
CNX500
Thematic funds
ICICI Prudential Exports and Other Services Fund
Franklin Build India Fund
Birla Sun Life India GenNext Fund
L&T India Special Situations Fund
Canara Robeco FORCE Fund - Reg
Indices
S&P Nifty (CNX Nifty)
Balanced funds
Star
rating

NAV (Rs)
Absolute
6 months
Returns (%)
Compounded annualised
1 year
3 years
5 years
Since inception
23.9
43.0
26.6
160.2
46.4
27.2
20.3
24.8
19.9
17.1
66.5
56.1
53.1
51.5
50.7
28.3
27.7
27.2
26.4
22.9
15.9
16.2
13.9
15.2
13.1
12.7
17.3
11.8
25.4
18.5
28442.7
14.4
36.4
19.0
10.6
17.0
64.4
52.8
75.1
27.6
93.4
35.4
35.1
43.8
36.3
36.4
89.2
80.1
102.0
92.5
89.3
38.5
38.3
38.1
37.9
33.7
18.8
20.1
22.8
19.0
36.0
18.7
21.9
25.9
11.6
10499.9
20.6
64.3
22.1
9.7
23.4
38.6
28.4
108.4
122.0
22.4
21.7
42.1
26.8
33.2
28.8
111.8
83.6
82.6
70.3
64.0
36.8
36.7
35.9
32.4
28.1
21.9
19.7
22.8
21.2
16.1
22.4
15.2
26.0
15.7
16.7
10985.7
16.3
43.8
20.0
10.3
16.3
28.5
31.2
33.7
26.7
244.1
31.3
23.0
29.1
21.9
19.8
69.2
59.4
62.9
59.3
53.9
33.6
28.7
27.4
27.0
25.4
15.9
18.1
14.7
16.5
23.7
15.6
16.6
13.2
25.8
6935.6
16.4
44.6
20.5
10.3
10.0
42.2
27.6
50.1
34.4
24.7
43.7
42.9
31.5
22.2
29.0
62.9
97.1
51.7
57.4
60.2
39.6
37.8
28.2
27.2
26.2
22.1
19.9
20.8
16.7
18.2
17.3
21.3
18.8
15.6
18.9
8537.7
15.1
37.7
19.1
10.7
15.0
17.1
SBI Magnum Balanced Fund
89.6
22.7
45.9
25.9
13.8
Tata Balanced Fund - Plan A
158.4
24.2
54.6
25.7
16.4
17.4
ICICI Prudential Balanced
90.2
21.2
50.7
25.4
18.0
15.7
HDFC Balanced Fund
105.3
22.6
56.9
24.7
19.3
18.0
18.1
21.0
49.7
24.6
16.8
--
12.3
29.0
15.8
10.0
13.8
L&T India Prudence Fund

Indices
Crisil Balanced Fund Index
Every individual has a different investment requirement, which depends on his financial goals and risk-taking capacities. We at Sharekhan
first understand the individuals investment objectives and risk-taking capacity, and then recommend a suitable portfolio. So, we suggest
that you get in touch with our Mutual Fund Advisor before investing in the best funds.
Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a postition in the mutual funds mentioned in the article.
41
January 2015
MUTUAL FUNDS
MF PICKS
SHAREKHANS TOP SIP FUND PICKS
DESK
DECEMBER 10, 2014

Data as on December 03, 2014
Investment period
Total amount invested (Rs)
Funds would have grown to (Rs)
NAV
1 year
12,000
Present
Avg. annual
value (Rs)
return (%)
Present
value (Rs)
3 years
36,000
Avg. annual
return (%)
5 years
60,000
Present Avg. annual
value (Rs)
return (%)
Large-cap funds
Reliance Top 200 Fund
23.9
15,818.2
35.2
59,765.5
19.0
106,173.6
12.3
Birla Sun Life Top 100 Fund
43.0
15,253.0
30.0
58,772.3
18.3
106,061.0
12.3
Birla Sun Life Frontline Equity Fund - Plan A
160.2
15,039.0
28.0
57,346.5
17.3
102,640.3
11.5
SBI Magnum Bluechip Fund
26.6
15,070.1
28.3
57,242.8
17.2
102,168.9
11.4
Principal Large Cap Fund
46.4
14,752.1
25.3
54,690.8
15.4
95,378.7
9.9
28,442.7
14,161.6
19.6
51,236.7
12.8
89,344.2
8.4
38.6
17311.2
49.3
73407.1
27.7
129915.6
17.0
BSE Sensex
Multi-cap funds
Birla Sun Life Pure Value Fund
Franklin India High Growth Companies Fund
28.4
17108.7
47.3
68955.7
25.0
123815.6
15.9
ICICI Prudential Value Discovery Fund
108.4
16300.9
39.8
66808.1
23.6
122968.4
15.7
SBI Magnum Global Fund 94
122.0
15977.8
36.7
63487.4
21.5
117281.9
14.6
PineBridge India Equity Fund - Std
23.0
16065.8
37.6
59556.9
18.8
104936.2
12.0
10,985.7
14,586.8
23.5
52,489.7
13.78
89,987.2
8.58
UTI Mid Cap Fund
75.1
17,305.6
49.2
74,004.8
28.0
132,189.5
17.4
Sundaram SMILE Fund - Reg
65.8
18,682.1
61.5
74,008.0
28.0
124,627.2
16.0
SBI Magnum Midcap Fund
52.8
16,208.5
38.9
69,629.8
25.4
125,686.8
16.2
Tata Mid Cap Growth Fund - Plan A
93.4
16,937.4
45.7
68,008.5
24.4
120,965.2
15.3
Reliance Long Term Equity Fund
31.9
16,855.7
45.0
67,996.8
24.4
118,960.7
14.9
10,499.9
15,611.2
33.0
56,737.0
16.9
93,427.8
9.4
BSE 500
Mid-cap funds
BSE Mid-cap
Tax saving funds
Axis Long Term Equity Fund
28.5
15,955.3
36.5
65,465.5
22.7
123,443.9
15.8
Religare Invesco Tax Plan
33.7
15,693.3
33.7
60,377.7
19.4
108,512.8
12.8
DSP BlackRock Tax Saver Fund
31.2
15,397.0
31.3
59,242.1
18.6
104,972.7
12.1
BNP Paribas Long Term Equity Fund
27.9
15,501.5
32.0
59,081.1
18.5
108,500.8
12.8
26.7
15,161.7
29.1
57,926.0
17.7
103,056.6
11.6
8,537.7
14,245.1
20.4
51,167.8
12.8
89,303.8
8.4
HSBC Tax Saver Equity Fund

CNX Nifty
Every individual has a different investment requirement, which depends on his financial goals and risk-taking capacities. We at Sharekhan
first understand the individuals investment objectives and risk-taking capacity, and then recommend a suitable portfolio. So, we suggest
that you get in touch with our Mutual Fund Advisor before investing in the best funds.
Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a postition in the mutual funds mentioned in the article.
January 2015
42
EQUITY
EARNINGS GUIDE
FUNDAMENTALS
Sharekhan Earnings Guide

Company
CMP
(Rs)
Prices as on January 02, 2015

Sales
FY14
FY15E
Net profit
EPS
(%) EPS
growth
FY16E FY16/FY14
FY16E
FY14
FY15E
FY16E
FY14
FY15E
PE (x)
RoCE (%)
RoNW (%)
FY14 FY15E FY16E FY15E FY16E FY15E
FY16E
DPS
Div
yield
(Rs) (%)
AUTOMOBILES
Apollo Tyres
223.7
13310.3
13584.9
15428.9
1051.8
1163.1
1271.3
20.7
22.8
25.0
10%
10.8
9.8
9.0
24.0
21.6
22.6
20.1
0.8
0.3
53.4
9735.7
12820.4
17033.6
-476.3
143.6
767.1
-1.8
0.5
2.7
-29.8
105.8
19.8
6.5
14.2
2.9
13.6
0.0
2451.8
20149.5
22820.8
25921.3
3297.1
3464.3
4054.7
113.9
119.7
140.1
9%
21.5
20.5
17.5
46.8
47.1
33.7
33.8
50.0
97.1
1286.6
1540.5
1844.8
46.8
74.3
102.7
3.3
5.2
7.2
52%
29.8
18.8
13.6
25.9
31.4
23.7
26.8
0.9
0.9
M&M
1224.7
38817.1
43023.1
49752.4
3852.3
4015.6
4632.0
62.2
63.7
73.3
10%
19.7
19.2
16.7
20.1
20.6
21.3
21.0
14.0
1.1
Maruti Suzuki
3359.6
43700.6
49045.8
57835.0
2783.0
3530.5
4827.2
92.1
116.9
159.8
29%
36.5
28.7
21.0
19.2
22.2
15.7
18.0
12.0
0.4
46.2
1480.1
1236.8
1162.5
2.7
28.3
53.8
0.2
2.1
4.0
29%
231.5
22.1
11.6
9.9
10.5
5.5
7.7
0.1
0.2
267.5
7857.7
10313.2
12231.0
260.4
379.4
503.0
5.5
8.0
10.6
29%
48.8
33.5
25.3
24.5
28.3
24.3
26.3
1.4
0.5
132.0
7477.1
8098.7
9021.6
1172.0
966.6
1381.9
21.5
17.7
25.4
9%
6.1
7.4
5.2
7.9
10.6
2.5
1.9
96.3
5070.2
5615.0
6375.6
435.6
780.1
1057.3
7.4
13.2
17.9
56%
13.0
7.3
5.4
8.6
10.9
1.1
1.1
514.3
19356.9
22461.9
26199.0
6217.7
7125.6
8525.7
26.5
30.3
36.3
17%
19.4
17.0
14.2
17.3
17.9
4.0
0.8
Bajaj Finance
3443.8
2215.3
2727.8
3448.9
719.0
870.4
1098.0
144.5
174.9
220.7
24%
23.8
19.7
15.6
20.0
21.1
16.0
0.5
Bajaj Finserv
1275.7
6021.0
1544.1
97.0
13.2
0.0
0.0
1.8
0.1
Bank of Baroda
1096.3
16428.1
19211.9
22739.9
4541.1
5035.0
6218.0
105.4
116.9
144.4
17%
10.4
9.4
7.6
13.3
14.6
21.5
Bank of India
307.8
15122.4
17264.3
20085.6
2729.3
3160.1
3691.2
42.4
49.1
57.4
16%
7.3
6.3
5.4
10.2
11.0
5.0
1.6
Capital First
379.2
328.2
461.5
597.2
58.4
110.0
160.5
7.1
13.4
19.6
66%
53.3
28.3
19.4
9.1
12.2
2.0
0.5
Corp Bank
338.2
5431.4
6120.2
7089.8
561.7
936.4
1147.3
33.5
55.9
68.5
43%
10.1
6.1
4.9
9.0
10.2
6.8
Federal Bank
149.0
2922.5
3431.7
4042.9
838.9
974.8
1180.1
9.8
11.4
13.8
19%
15.2
13.1
10.8
13.3
14.5
2.0
1.3
Ashok Leyland
Bajaj Auto
Gabriel Industries
Rico Auto Industries

TVS Motor
BANKS & FINANCE

Allahabad Bank
Andhra Bank
Axis (UTI) Bank
HDFC
1171.9
6803.0
8204.1
9733.6
5440.2
6350.9
7402.6
34.8
40.7
47.4
17%
33.6
28.8
24.7
20.0
20.5
14.0
1.2
HDFC Bank
965.3
26402.3
31459.7
37627.4
8478.4
10520.9
13154.2
35.3
43.9
54.8
25%
27.3
22.0
17.6
22.1
23.3
6.8
0.7
ICICI Bank
362.3
26903.4
30556.1
35687.7
9810.5
10997.8
13052.2
17.0
19.0
22.6
15%
21.3
19.0
16.0
14.5
15.7
4.6
1.3
IDBI Bank
77.0
9000.2
8570.4
9992.8
1121.4
945.2
1495.2
7.0
5.9
9.3
15%
11.0
13.1
8.3
3.9
6.0
1.0
1.3
466.8
1898.9
2243.1
2766.0
1317.2
1452.3
1797.9
26.1
28.8
35.6
17%
17.9
16.2
13.1
18.0
19.3
4.5
68.3
211.6
334.0
466.0
207.7
220.0
315.0
5.1
5.4
7.8
24%
13.5
12.6
8.8
15.5
19.7
1.0
1.5
PNB
219.8
20722.7
23347.4
27027.1
3342.6
4256.9
5407.6
18.5
23.5
29.9
27%
11.9
9.3
7.4
11.3
13.0
2.0
0.9
SBI
315.3
67835.1
76173.7
88887.8 10891.5
14055.7
18316.6
14.6
18.8
24.5
30%
21.6
16.7
12.8
11.4
13.5
3.0
Union Bank of India
240.3
10700.9
12237.8
13934.0
1696.2
1936.2
2224.3
26.9
30.7
35.3
15%
8.9
7.8
6.8
10.1
10.7
4.0
1.7
Yes Bank
792.2
4437.8
5483.0
6737.7
1617.8
1938.0
2365.5
44.9
46.8
57.1
13%
17.7
16.9
13.9
20.7
18.9
8.0
LIC Housing Finance

PTC India Fin. Ser.
CONSUMER GOODS
GSK Consumers*
5900.3
4682.9
4135.2
4665.3
674.8
576.2
682.0
160.4
137.0
162.1
1%
36.8
43.1
36.4
44.1
44.0
29.1
29.0
45.0
0.8
Godrej Consumer
970.1
7582.6
8387.8
9942.1
753.7
871.1
1059.8
22.1
25.6
31.1
19%
43.9
37.9
31.2
19.7
21.9
22.8
23.4
5.3
0.5
Hindustan Unilever
756.0
28539.0
32646.5
36860.8
3717.0
3953.5
4428.1
17.2
18.3
20.5
9%
44.0
41.3
36.9
127.6
103.1
93.0
74.9
13.0
1.7
ITC
368.3
33238.6
38578.4
45595.1
8785.2
9972.3
11757.6
11.0
12.5
14.8
16%
33.5
29.5
24.9
43.8
43.8
35.0
34.8
6.0
1.6
Jyothy Laboratories
262.2
1323.9
1541.3
1882.4
85.2
155.1
214.6
4.7
8.5
11.6
57%
55.8
30.8
22.6
11.9
16.1
20.0
24.3
3.0
1.1
Marico^
330.0
4686.5
5839.7
6748.8
485.4
593.8
742.6
7.5
9.2
11.5
24%
44.0
35.9
28.7
41.4
40.5
36.5
33.2
3.5
1.1
Zydus Wellness
800.7
403.6
422.1
482.7
98.3
97.3
116.6
25.2
24.9
29.8
9%
31.8
32.2
26.9
29.4
29.2
27.1
26.7
6.0
0.7
1.1
IT / IT SERVICES
CMC
1972.3
2212.6
2492.3
2877.4
266.0
306.8
353.6
87.8
101.2
116.7
15%
22.5
19.5
16.9
28.5
28.7
24.3
23.6
22.5
Firstsource Solution
35.3
3105.9
3236.9
3530.0
193.0
263.9
333.6
2.9
3.7
4.9
30%
12.2
9.5
7.2
11.6
13.6
11.9
13.2
0.0
HCL Technologies**
1605.3
32918.0
36289.2
40093.2
6370.1
7573.1
8363.9
90.3
107.3
118.5
15%
17.8
15.0
13.5
43.6
37.8
36.5
31.3
22.0
1.4
Infosys
2013.2
50133.0
54096.4
60876.8 10861.0
12624.1
14127.1
94.6
109.9
123.0
14%
21.3
18.3
16.4
35.8
34.4
26.2
25.4
31.5
1.6
Persistent Systems
1874.4
1669.2
1905.2
2196.8
249.3
312.4
361.2
62.3
78.1
90.3
20%
30.1
24.0
20.8
31.7
30.9
23.3
22.6
12.0
0.6
TCS
2579.5
81809.4
96332.0
113172.7
19116.9
21426.9
25195.3
97.7
109.5
127.9
14%
26.4
23.6
20.2
40.6
38.8
31.6
30.0
32.0
1.2
557.3
43426.9
47237.1
52302.9
7796.7
8758.5
9987.5
31.8
35.8
40.8
13%
17.5
15.6
13.7
20.2
20.7
21.9
21.4
8.0
1.4
BHEL
275.3
38388.8
33808.0
33143.0
3338.0
2864.6
3868.0
14.1
11.7
15.8
6%
19.5
23.5
17.4
12.1
15.1
8.2
10.3
2.8
CESC
675.0
5510.0
6232.9
6656.3
652.0
697.5
705.0
48.9
52.4
52.9
4%
13.8
12.9
12.8
8.0
7.7
9.2
8.4
7.0
Crompton Greaves
186.6
13480.6
14862.0
16543.0
244.3
540.0
709.0
3.9
8.6
11.3
70%
47.9
21.7
16.6
14.2
17.1
13.4
15.6
0.4
0.2
Finolex Cable
268.7
2359.0
2608.0
2965.0
189.9
223.0
249.0
12.9
14.6
16.3
12%
20.8
18.4
16.5
21.7
21.7
18.6
17.8
1.6
0.6
Greaves Cotton^
145.0
1718.9
1804.9
2021.4
118.7
155.1
208.6
4.9
6.4
8.5
32%
29.8
22.6
21.5
23.1
14.5
16.9
19.9
0.6
0.4
Kalpataru Power
235.0
4055.0
4528.0
5241.0
146.0
177.0
229.0
9.5
11.6
14.9
25%
24.7
20.3
15.8
15.4
17.4
8.8
10.4
1.5
0.6
96.0
11510.7
12756.9
14673.0
164.7
196.5
227.0
5.6
6.6
7.7
18%
17.2
14.5
12.4
11.2
12.3
15.6
15.9
2.0
2.1
Thermax
1049.9
4302.2
4721.9
5364.0
220.4
316.8
391.0
18.5
26.6
32.8
33%
56.8
39.5
32.0
20.9
23.2
14.9
16.4
6.0
0.6
Va Tech Wabag
1506.6
2239.0
2619.9
3100.1
108.7
125.5
157.3
40.9
47.3
59.2
20%
36.8
31.9
25.4
22.9
25.5
15.8
17.8
8.0
0.5
Wipro
CAPITAL GOODS / POWER
PTC India
Note: For Grasim and Apollo Tyres we have shifted our estimates to consolidated
43
January 2015
EQUITY
Company
V-Guard Industries
Triven Turbine
FUNDAMENTALS
CMP
(Rs)
EARNINGS GUIDE
Sales
Net profit
EPS
(%) EPS
growth
FY16E FY16/FY14
PE (x)
RoCE (%)
RoNW (%)
FY14 FY15E FY16E FY15E FY16E FY15E
DPS
FY16E
Div
yield
(Rs) (%)
FY14
FY15E
FY16E
FY14
FY15E
FY16E
FY14
FY15E
1139.1
1517.6
1774.0
2077.0
70.1
87.3
107.2
23.5
29.3
35.9
24%
48.4
38.9
31.7
31.0
31.9
24.8
25.1
4.5
0.4
116.2
515.4
701.6
991.3
68.0
94.8
144.9
2.1
2.9
4.4
45%
55.3
40.1
26.4
59.2
51.7
42.4
35.9
0.8
0.7
INFRASTRUCTURE / REAL ESTATE

Gayatri Projects
166.8
1812.5
1619.5
2168.4
64.8
33.7
69.7
21.4
11.1
23.0
4%
7.8
15.0
7.2
8.9
10.3
5.0
9.6
2.0
1.2
ITNL
193.4
6587.0
7199.0
7933.1
391.7
495.4
620.9
15.9
20.1
25.2
26%
12.2
9.6
7.7
9.4
9.9
9.1
10.1
4.0
2.1
IRB Infra
1.5
267.3
3731.9
3879.6
4929.8
459.1
532.2
686.2
13.8
16.0
20.6
22%
19.3
16.7
12.9
10.7
13.0
14.2
16.3
4.0
Jaiprakash Asso
27.6
13327.0
13853.7
15854.8
455.5
-78.0
251.4
2.1
-0.4
1.2
-26%
12.9
-75.3
23.4
7.3
7.7
-0.6
1.8
0.0
Larsen & Toubro
1534.7
56598.9
64365.0
74986.0
4904.6
5575.0
6549.0
52.9
60.1
70.7
16%
29.0
25.5
21.7
16.7
18.7
15.6
16.3
14.3
0.9
Pratibha Industries
45.6
2283.6
2763.3
3128.4
39.0
50.1
95.1
3.9
5.0
9.4
56%
11.8
9.2
4.8
13.4
15.2
7.5
13.0
0.2
0.4
Punj Lloyd
38.2
10845.3
11208.3
NA
-702.2
-298.9
NA
-21.1
-9.0
NA
0%
-1.8
-4.2
2.5
NA
-15.1
NA
0.0
13362.0
2977.0
3308.1
4294.0
49.6
55.0
71.4
20%
11.7
10.5
8.1
16.5
19.9
15.3
18.2
21.5
3.7
463342.1 22493.0
23854.5
26637.1
69.6
73.8
82.4
9%
12.7
12.0
10.7
9.0
9.1
10.9
11.0
9.5
1.1
29.4
4%
13.3
16.6
12.3
16.0
19.4
12.9
15.7
5.0
1.4
OIL & GAS

Oil India
579.0
9609.0
10820.7
Reliance Ind
885.6
434460.0
438977.6
Selan Exploration
360.6
101.3
89.0
121.0
44.5
35.6
48.2
27.2
21.7
PHARMACEUTICALS
Aurobindo Pharma
1132.5
8099.8
11703.5
13061.7
1375.9
1651.1
1893.6
47.2
56.6
65.0
17%
24.0
20.0
17.4
28.6
28.5
36.5
30.4
3.0
0.3
630.2
10100.4
12117.4
14948.0
1388.4
1536.3
2148.9
17.3
19.1
26.8
24%
36.4
32.9
23.5
17.6
21.4
14.3
17.3
2.0
0.3
Cadila Healthcare
1627.7
7224.0
8344.6
9981.9
803.5
1072.3
1594.8
39.2
52.4
77.9
41%
41.5
31.1
20.9
20.6
25.8
22.8
25.8
9.0
0.6
Divi's Labs
1752.9
2532.1
3051.6
3684.5
810.5
834.7
1031.9
61.1
62.9
77.7
13%
28.7
27.9
22.5
31.7
32.2
25.8
26.1
20.0
1.1
Glenmark Pharma
767.9
5983.9
7062.8
8361.9
759.8
883.1
1138.0
28.0
32.6
42.0
22%
27.4
23.6
18.3
18.8
20.7
23.3
23.4
4.0
0.5
JB Chemicals
204.7
1000.6
1096.6
1269.9
108.3
137.9
156.7
12.8
16.3
18.5
20%
16.0
12.6
12.5
15.4
10.5
12.5
12.8
3.0
1.5
Ipca Laboratories
726.6
3181.8
3336.5
4091.7
477.4
460.4
660.4
37.8
36.5
52.4
18%
19.2
19.9
27.3
21.6
26.9
21.0
24.3
2.5
0.3
1432.3
11086.6
13555.9
16128.9
1836.3
2546.2
2904.0
41.0
56.8
64.8
26%
35.0
25.2
22.1
39.0
35.4
27.7
24.4
6.0
0.4
826.3
16004.4
18008.1
20598.7
5721.8
6367.6
7051.1
27.6
30.7
34.0
11%
29.9
26.9
24.3
31.5
28.1
27.6
24.1
0.0
1192.5
4036.0
4807.1
5513.6
664.0
818.6
955.8
39.2
48.4
56.5
20%
30.4
24.6
21.1
29.8
24.9
35.5
30.5
5.0
0.4
3495.7
29004.2
33632.0
37936.0
1946.8
1911.0
2131.0
212.0
208.2
232.0
5%
16.5
16.8
15.1
13.1
13.7
7.9
7.8
22.5
0.6
344.8
3761.2
3999.9
5139.0
123.0
247.6
370.0
5.2
10.4
15.5
73%
66.7
33.1
22.2
9.6
13.1
6.1
7.6
1.0
0.3
Shree Cement**
9325.9
5887.0
7429.0
8366.0
809.0
946.0
1387.0
248.3
271.5
398.2
27%
37.6
34.3
23.4
18.0
21.0
18.0
22.0
22.0
0.2
UltraTech Cement
2742.1
20080.0
24925.7
28113.7
2048.9
2569.0
2840.0
74.8
93.8
103.7
18%
36.7
29.2
26.4
14.2
15.3
13.2
12.9
9.0
0.3
Cipla
Lupin
Sun Pharma
Torrent Pharma
BUILDING MATERIALS
Grasim
The Ramco Cements
DISCRETIONARY CONSUMPTION
Eros Intl Media
379.5
1134.6
1321.9
1545.1
199.7
242.7
280.0
21.7
26.4
30.5
19%
17.5
14.4
12.4
19.6
20.7
18.2
17.6
0.0
Cox and Kings
305.9
2307.6
2603.3
2550.2
266.0
378.9
353.0
19.5
27.8
25.9
15%
15.7
11.0
11.8
11.5
10.7
23.9
18.8
1.0
0.3
Century Plyboards (I)
162.1
1348.0
1681.0
2033.0
77.0
129.0
179.0
3.5
5.8
8.1
52%
46.3
27.9
20.0
21.0
25.0
36.9
35.6
1.0
0.6
KDDL
250.1
334.7
403.3
497.1
8.5
9.8
13.4
9.9
10.7
14.7
22%
25.3
23.4
17.0
15.2
15.5
18.1
19.5
1.5
0.6
KKCL
1950.0
367.2
428.7
517.1
67.0
68.5
86.6
54.4
56.3
70.2
14%
35.8
34.6
27.8
30.5
31.1
22.5
24.7
15.5
0.8
Raymond
516.0
4558.0
5198.0
5785.0
130.2
111.5
134.5
21.2
18.2
21.9
2%
24.3
28.4
23.6
10.9
12.2
7.3
8.2
2.0
0.4
Relaxo Footwear
599.8
1205.8
1454.0
1767.4
65.6
84.5
109.6
10.9
14.1
18.3
30%
55.0
42.5
32.8
24.1
26.9
20.7
20.7
0.5
0.1
Speciality Restaurants 195.6
263.9
315.1
389.3
18.9
12.6
23.6
4.0
2.7
5.8
20%
48.9
72.4
33.7
5.5
10.0
4.1
7.5
1.0
0.5
Sun TV Network
375.7
2223.6
2406.8
2708.1
748.0
794.4
919.5
19.0
20.2
23.3
11%
19.8
18.6
16.1
34.2
35.3
24.2
25.0
9.5
2.5
Zee Entertainment
381.0
4421.7
4848.1
5627.4
893.1
953.4
1148.5
9.3
9.9
12.0
14%
41.0
38.5
31.7
28.3
30.5
19.1
20.6
2.0
0.5
9237.3
10260.1
0.4
DIVERSIFIED / MISCELLANEOUS
Aditya Birla Nuvo
1730.1
8338.4
Bajaj Holdings
1436.4
385.2
365.1
85746.0
94372.0
Bharti Airtel
Bharat Electronics
484.7
538.3
584.2
37.3
41.4
44.9
10%
46.4
41.8
38.5
8.7
8.8
7.0
7.1
7.0
1987.6
178.6
3.0
30.0
2.1
104502.0
3935.0
5887.0
6595.0
9.8
14.7
16.5
30%
37.3
24.8
22.1
12.0
13.6
9.0
9.1
1.6
0.4
0.8
2924.7
6275.5
7263.6
8202.6
931.6
1057.5
1204.9
116.5
132.2
150.6
14%
25.1
22.1
19.4
15.4
15.2
11.6
11.5
22.3
Gateway Distriparks
350.4
1008.1
1071.4
1079.6
142.0
163.9
182.2
13.1
15.1
16.8
13%
26.8
23.2
20.9
14.6
16.2
19.0
20.1
7.0
Max India
387.5
11683.0
139.5
5.2
74.4
1.8
0.5
Ratnamani Metals
690.9
1326.1
1675.0
2001.0
142.8
183.9
228.9
30.6
39.4
49.0
27%
22.6
17.5
14.1
28.9
30.9
21.9
22.7
4.0
0.6
Supreme Industries**
597.4
3962.0
4456.0
5296.0
274.0
312.0
386.0
21.6
24.5
30.4
19%
27.7
24.4
19.7
28.7
30.7
24.7
25.2
8.0
1.3
Technocraft Industries 184.9
1045.0
1039.0
1225.0
104.0
89.0
110.0
32.9
28.3
34.9
3%
5.6
6.5
5.3
17.6
19.4
14.8
16.1
5.0
2.7
10770.9
11910.3
13377.2
1028.6
1098.7
1187.2
23.6
25.6
27.7
8%
14.9
13.8
12.7
15.0
15.8
17.0
17.5
2.5
0.7
United Phosphorus
352.3
^Marico estimates excluding Kayas financials

*GSK Consumer FY2014 financial numbers are estimated for 15 months as the company changed its accounting year end to March 2014, hence not comparable
#We have annualised these ratios to make them comparable
** June year ended
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January 2015
EQUITY
EARNINGS GUIDE
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Remarks
Automobiles
Apollo Tyres
Apollo Tyres is the market leader in truck and bus tyre segments with a 28% market share. The management is
expecting strong demand traction in the European operations (particularly the summer tyre segment) and is
gaining market share in Europe. Further, the domestic operations would see a pick-up in demand in H2FY15. The
margins may sustain at higher levels due to subdued raw material prices. The company will be investing $560mn
over the next three years to set up a greenfield facility in Hungary and Rs2,000 crore to expand capacity at
Chennai facility. We maintain our Buy recommendation on the stock with a price target of Rs265.
Ashok Leyland
Ashok Leyland, the second largest CV manufacturer in India, is a pure CV play. It has ventured into LCV space
with the launch of Dost in collaboration with Nissan. The MHCV volumes have been under pressure over the past
two years due to a subdued economic environment. The discounts in the system have come down and the company
has managed to take price hikes which propped up margins. A strong government at the centre is expected to
focus on growth led by manufacturing and infrastructure sectors which will improve CV segments volumes. The
company has raised Rs660 crore via QIP and is in the process of selling non-core assets to pare its debts. We have
a Buy recommendation on the stock with a price target of Rs58.
Bajaj Auto
Bajaj Auto, a leading two-wheeler maker, is moving up the value chain by concentrating on the executive and
premium motorcycle segments. It has focused on its Pulsar and Discover brands to establish a strong presence
especially in the premium segment. Additionally, it derives a third of its volumes from exports and has a strong
presence in the SAARC region and Africa. After a loss of market share in FY14, we expect it to claw back market
share in FY15 with the launch of the new Discovers. Exports will continue to drive its overall volumes. Profitability
remains strong with industry leading EBITDA margin.
Gabriel India
Gabriel is one of Indias leading manufacturers of shock absorbers and front forks with a diversified customer
base. A pick-up in the volumes post-election in both the PV and CV segments as well as higher growth in the twowheeler segment, increase in market share with HMSI and continued growth in the aftermarket sales are expected
to drive the revenue growth going forward. Moreover, with increasing utilisation levels and higher proportion of
revenues from the profitable CV segment, the OPM is expected to expand from 6.6% in FY13 to 7.9% in FY16.
Further, a reduction in debt level would lead to higher return ratios, going forward. Therefore, we recommend a
Buy with a price target of Rs110.
M&M
M&M is a leading maker of tractors and UVs in India. Though the automotive demand is under pressure due to
declining demand for UVs and LCVs, but the demand for tractors remains strong. We expect demand for the
automobile segment to pick up with an improvement in customer sentiment. Additionally, new launches especially
in the compact UV space will drive volume growth. Also the tractor segment is expected to grow at 8-10% over
the next few years which will benefit M&M. The value of its subsidiaries adds to its sum-of-the-parts valuation.
Higher farm income, strong rural positioning and lower vulnerability to interest rates make it a proxy play on
food inflation.
Maruti Suzuki
Rico Auto Inds.
TVS Motor
Allahabad Bank
Maruti Suzuki is Indias largest small car manufacturer. Though the demand for diesel cars is witnessing pressure
due to a hike in diesel prices, but the petrol segment is witnessing a recovery due to the narrowing differential
between petrol and diesel prices. The company plans to launch 14 new models over the next five years (including
some in the high-value UV space) which would boost its volumes and realisation. The recent launch of Celerio and
Ciaz have been well received. The company has also launched the new Alto K10 with automatic transmission
which will be the cheapest automatic available in the country. We expect customer sentiment to improve on the
back of a strong government at the centre. Additionally, the PV segment is expected to benefit from the pent-up
demand over the past two years and will benefit Maruti Suzuki most due to its high market share in the entry level
segment. We remain positive on the stock with a price target of Rs3,600.
Rico is one of the largest producers of high-pressure non-ferrous die castings for the auto sector. It has recently
divested its 50% stake in a joint venture with FCC Co., Japan for Rs495 crore. The significant cash flow (nearly
equivalent to current market cap) is expected to be a game changer for the company and enable it to deleverage its
balance sheet and fund future capex. Additionally, a lower interest burden will result in an exponential growth in
the earnings and free cash flow. The company will be commissioning three new plants in the next 12 months and
is poised to benefit from an auto demand revival. We have a Buy recommendation on the stock with a price target
of Rs55.
TVS Motor is the fourth largest two-wheeler manufacturer in the country with a strong presence in the scooter
segment. The scooter segment has grown at a CAGR of 25% over the past five years as opposed to 12% CAGR
in motorcycles and currently contributes 25% of the total two-wheeler volumes. With the launch of the Jupiter in
October 2013, the company has balanced its scooter portfolio and witnessed incremental volumes. Additionally,
new launches such as Star City+, refreshed Wego and new Scooty Zest have helped maintain the growth momentum.
The company will launch two new motorcycles in H2FY15. Exports, especially of three-wheelers, are doing
extremely well. We expect a margin expansion of 40-50BPS over FY14-16. We have a Hold on the stock with a
price target of Rs250.
Banks & Finance
With a wide network of over 2,800 branches spread across India, Allahabad Bank enjoys a stronghold in north and east
India. But it has reported a rise in slippages resulting in deterioration of its asset quality. Relatively higher proportion
of stressed assets and low tier-I CAR remain concerns, though the low valuation partly factors the same.
45
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EARNINGS GUIDE
Remarks
Andhra Bank
Andhra Bank, with a wide network of over 2,100 branches across the country, has a strong presence in south
India especially in Andhra Pradesh. Though it is trading at an attractive valuation, but the concerns on asset
quality front and the political situation within the state could affect its operations. Valuation factors the same.
Axis Bank
Axis Bank continues to grow faster than the industry and is diversifying its book in favour of retail segment. The
banks liability profile has improved significantly which would help to sustain margins at healthy levels. We
expect the earnings growth to remain reasonably strong driven by a healthy operating performance while asset
quality pressures will be manageable.
Bajaj Finance
Bajaj Finance, owned by Bajaj Finserv, is one of the most diversified NBFCs in the country and biggest bank
assurance partner for Bajaj Allianz Insurance. It has assets spread across products, viz loans for consumer durables,
two- and three-wheelers, loans to small and medium enterprises (SMEs), mortgage loans, commercial loans etc.
The asset quality and provisioning remain among best in system.
Bajaj Finserv
Bajaj Finserv is a financial conglomerate having presence in financing business (vehicle finance, consumer finance
and distribution) and is among the top players in life insurance and general insurance. Its consumer finance
business (Bajaj Finance) and general insurance business report a robust performance. The life insurance business
is showing signs of a pick-up after being affected by a change in regulations.
Bank of Baroda
Bank of Baroda is among the top public sector banks (PSBs) having a sizeable overseas presence (102 offices in 24
countries) and a strong network of over 4,800 branches across the country. It has a stronghold in western and
eastern India. Its performance metrics remain superior to that of the other PSBs, though the asset quality trends
will be the key monitorable.
Bank of India
Bank of India has a network of over 4,600 branches, spread across the country and abroad, along with a diversified
product and services portfolio, and steadily growing assets. The operating performance has weakened due to
margin deterioration. Further, the rising stress on the asset quality and relatively weaker capital position constrain
balance sheet growth.
Capital First
Capital First (erstwhile Future Capital Holdings) has been acquired by global private equity firm, Warburg Pincus
(a 72% stake). The present management has taken several initiatives to tap the high-growth retail product segments,
like gold loans, loan against property and loan against shares. It has a strong CAR and sound asset quality. Its
loan book is expected to sustain a 25-30% growth in the next three years. As a result of several initiatives taken,
the operating leverage will play out and may lead to significant pick-up in profitability over medium term.
Corp Bank
Corporation Bank is a mid-sized PSB having a relatively higher presence in south India. It is predominantly
exposed to the corporate segment, which constitutes about 44% of its book. Due to a higher dependence on the
wholesale business and a low CASA ratio, it lags its peers in terms of operational performance. Also, the rise in
NPAs could keep provisioning high and weaken earnings performance.
Federal Bank
Federal Bank is among the better performing old private sector banks in India with a strong presence in south
India, especially Kerala. Under the new management, the bank has taken several initiatives, which would improve
the quality of its earnings and asset book. The asset quality has consistently improved in the past several quarters
and the operating performance is picking up gradually.
HDFC
HDFC is among the top mortgage lenders providing housing loans to individuals, corporates and developers. It
has interests in banking, asset management and insurance through its key subsidiaries. As these subsidiaries are
growing faster than HDFC, the value contributed by them would be significantly higher going forward. Due to
dominant market share and consistent return ratios, it trades at a premium to the other NBFCs.
HDFC Bank
HDFC Bank was established in 1994 as part of the liberalisation of the Indian banking industry by the RBI. The
bank continues to report a strong growth in advances with focus on the retail segment. Its relatively high margins
(compared with its peers), strong branch network and better asset quality make HDFC Bank a safe bet. However,
delay in FIPB approval for increase in foreign investment limit remains a near-term concern.
ICICI Bank
ICICI Bank is Indias largest private sector bank with a network of over 3,700 branches in India and a presence in
around 18 countries. The bank has once again entered an expansionary mode after making a conscious effort to
contract its advances book due to asset quality concerns. The operating profit improved significantly and is the
key driver of the earnings growth. The bank offers substantial value unlocking opportunities from the insurance
and securities businesses.
IDBI Bank
IDBI Bank is one of leading PSBs of India. It is gradually working towards improving its liability base and expanding
the retail book which is likely to reflect in the form of better margins and return ratios. However, due to rising
asset quality risks, low tier-I CAR and slower business growth, the stock is likely to underperform in the near term.
LIC Housing
LICHFL is the third largest mortgage financier (including banks) in India with a market share of 11% and loan
book of over Rs90,000 crore. It is promoted by Life Insurance Corporation of India, which is the largest insurance
provider in India. With over 200 branches, 1,241 direct sales agents, 6,535 home loan agents and 782 customer
relationship associates, the company has among the strongest distribution structures in India to support business
expansion. Going ahead, a revival in the economy and moderation in the borrowing rates could be the key triggers
for the stock. Therefore, considering stable RoE of ~20%, sound asset quality and healthy growth outlook, the
companys fundamentals are strong.
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Remarks
PNB
Punjab National Bank has one of the best liability mixes in the banking space, with low-cost deposits constituting
around 40% of its total deposits. This helps it to maintain one of the highest margins among PSBs. A strong
liability franchise and technology focus will help the bank to increase its core lending operations and fee income
related-businesses. In view of the weakness in the economy and relatively higher exposure to troubled sectors, the
asset quality stress may remain in the near term.
PFS
PTC India Financial Services, owned by PTC India, is focused on providing financial solutions to projects in the
energy value chain. Given the robust lending opportunities in the renewable energy segment and likely reforms in
thermal power segment, the company expects to double its loan book over next 12-15 months. With nil net NPAs,
its asset quality remains among the best in the system.
SBI
State Bank of India is the largest bank of India with loan assets of over Rs12 lakh crore. The loan growth for FY14
was in line with the industry average while the core operating performance was relatively strong. The successful
merger of the associate banks and value unlocking from insurance business could provide further upside for the
bank. While the bank is favourably placed in terms of liability base and the operating profit is also improving, the
asset quality would remain a key monitorable in the near term.
Union Bank
Union Bank of India has a strong branch network and an all-India presence. The bank aspires to become the
largest retail bank. Hence, it has ramped up its manpower and infrastructure to ramp up retail, SME lending.
However, rising stressed loans and weak capital ratios remain concerns with the bank.
Yes Bank
Yes Bank, a new generation private bank, started its operations in November 2004 and is the only greenfield bank
approved by the RBI in the last decade. The bank is promoted by Rana Kapoor and Ashok Kapur. It follows a
unique business model based on knowledge banking, which offers product depth and a sustainable competitive
edge over established banking players. While the operating performance remains healthy, recent capital raising
will increase the balance sheet growth over the next couple of years.
GSK Consumers
GCPL
Godrej Consumer Products is a major player in personal wash, hair colour and household insecticide market
segments in India. The recent acquisitions of Darling Group, Tura, Megasari and Latin American companies have
helped the company to expand its geographic footprint. We believe the decent sales volume growth in the domestic
business coupled with a strong growth in the Indonesian, African and Argentine businesses would help it to
achieve 18% CAGR top line growth and 20% bottom line growth over FY14-17.
HUL
Hindustan Unilever is Indias largest FMCG company. The subdued volume growth due to the uncertain and
inflationary environment is likely to sustain the pressure on its profitability in the near term. Overall, we expect its
bottom line to grow at a CAGR of around 10% over FY14-16. The stocks current premium valuation does not
justify the true business fundamentals of the company. Hence we recommend a Reduce rating on the stock. In the
long term, it will be one of the key beneficiaries of the Indian consumerism story.
ITC
ITC has a strategy of effectively utilising the excess cash generated from its cash cow, the cigarette business, to
strengthen and enhance its other non-cigarette businesses. This would nurture the growth of these businesses some
of which are at a nascent stage. Thus, the company will deliver a sustained and steady growth in the coming years.
Jyothy Labs
Jyothy Laboratories is the market leader in the fabric whitener segment in India. With the successful integration of
Henkel and the induction of a new management team led by S Raghunanadan, it is transforming itself from a onebrand wonder to an aggressive FMCG player. We expect its top line to grow at a CAGR of 20%. A stable OPM
and lower interest cost would aid the PAT to grow strongly in the near term.
Marico
Marico is among Indias leading FMCG companies. Its core brands, Parachute and Saffola, have a strong footing
in the market. It follows a three-pronged strategy which hinges on expansion of its existing brands, launch of new
product categories (especially in the beauty and wellness space) and growth through acquisitions. While the domestic
product portfolio is likely to achieve a steady growth in volumes, the international business is now gaining
momentum on the back of an increase in distribution and strong performance by the core brands.
Zydus Wellness
CMC
Zydus Wellness is bearing the brunt of a limited product portfolio of three brands (Nutralite, Sugar Free and
Everyuth) that cater to a niche category. The company would benefit from improving urban consumer sentiment
and a new distribution system in FY2016. Thus, we expect a better operating performance from it in FY2016.
IT/IT services
As per the scheme of amalgamation, CMC as an entity will cease to exist in the next six months as it will get fully
integrated into TCS. Thus, by the record date of the swap ratio, the stock price of CMC will eventually trade at a
discount of around 21% to that of TCS as per the swap ratio of 79 shares of TCS for every 100 shares of CMC. We
retain our Hold rating on the stock for the existing shareholders, in line with our positive view on TCS (for which we
have a price target of Rs3,010). But for fresh investment it would be more prudent to buy into TCS rather than
CMC, as the latter will cease to exist as an entity in the next few quarters.
Consumer goods
GSK Consumer Healthcare is a leading player in the MFD segment with a close to 70% share in the domestic market.
Judicious new launches and brand extensions, and the expansion of its distribution reach have helped it to stay ahead
of the competition and maintain its pricing power over the years. In a bid to de-risk its business model, it has expanded
its product portfolio by entering into new categories such as biscuits, noodles, energy bars, sports drinks and oats in
the recent years. With cash balance of close to Rs1,700 crore the company can invest in growth initiatives as well as
reward its investors with a healthy dividend payment.
47
January 2015
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FUNDAMENTALS
EARNINGS GUIDE
Remarks
Firstsource
Firstsource Solutions is a specialized BPO service provider. It has scripted a remarkable turn-around from being
on the brink of a financial burn-out to being an operationally sound company with a large scope for further
improvement. The health of its balance sheet (which was one of the prime concerns) is improving gradually as the
company is gradually reducing its debt burden through internal accruals. The revenue visibility remains strong as
the existing top clients continue to be in good shape while operational efficiencies and reduction in interest expenses
due to lower debt augur well for the earnings growth trajectory in FY15 and FY16.
HCL Tech
HCL Technologies is one of the leading Indian IT service vendors. It has reported consistent financial performance
in the past several quarters on the back of a ramp-up in business from the large deals bagged earlier and strong
momentum in the IMS space. It continues to demonstrate a strong growth visibility with a robust backlog of deals
and successful execution with market share gain strategy through vendor churns/consolidation. We remain positive
on the company in view of its order wins and superior earnings visibility.
Infosys
Infosys is India's premier IT and IT-enabled services company. We believe that top level exits and lower predictability
of growth (currently lagging peers) is weighing on the companys performance. With the new CEO, Vishal Sikka, at
the helm, the investors will now keenly focus on the companys roadmap for future under the completely new
leadership bench. Nevertheless, the valuations seem reasonable at the moment and a much better operating
environment in the USA and Europe give us confidence of an improved growth momentum after the completion of
transition period.
Persistent
Persistent Systems has proven expertise and strong presence in newer technologies, strength to improve its IP base
and the best-in-the-class margin profile which sets it apart from the other mid-cap IT companies. We maintain our
confidence due to an optimistic management outlook driven by acceleration in the product engineering services
business, new technologies and increased momentum in the IP space after consolidating the HP Client Automation
revenues.
TCS
Tata Consultancy Services pioneered the IT services outsourcing business in India and is the largest IT service firm
in the country. It is a leader in most service offerings and has further consolidated its leadership through the
inorganic route. With a strong base it is well placed to garner incremental deals across sectors. Its consistent
quarterly performance (better than peers) coupled with the higher predictability of its earnings would keep it the
Streets favourite counter in the IT space.
Wipro
BHEL
Wipro is one of the leading Indian IT service companies. It has lagged the other IT biggies in terms of performance
for several quarters. The leadership and organisational changes that the company had adopted a couple of years
ago have just started to show tangible results which is reflected in the positive management commentary.
Additionally, the overall improvement in the demand environment bodes well for the companys revenue visibility.
Capital goods/Power
Bharat Heavy Electricals, Indias biggest power equipment manufacturer, has been the prime beneficiary of the multifold increase in the investments made in the domestic power sector over the last few years. However, the order inflow
has been showing signs of slowing down which would remain a major concern for the company. The key challenge
before the company now would be to maintain a robust order inflow and margin amid rising competition and lower
order inflow. The current order book of Rs103,700 crore stands at around 2.7x FY14 sales.
CESC
CESC is the power distributor in Kolkata and Howrah (backed by 1,225MW of power generation capacity) which
is a strong cash generating business. Further, 600MW of regulated generation capacity (to serve Kolkata distribution)
would come on stream next year in Haldia. However, another 600MW is ready in Chandrapur which is looking
for coal and power purchase linkage. The losses in the retail business have reduced in the last two years and the
company is expected to break even at the operating level in FY15. The newly acquired subsidiary, FirstSource, is
performing well in line with expectations. We retain our Buy recommendation on CESC.
Crompton Greaves Crompton Greaves key businessesindustrial and power systemshold high potential in view of the investment
opportunities in the power transmission and distribution sector. Its consumer products segment is expected to
witness a high growth. Though the domestic operations remain relatively stable, but the international operations
went through a restructuring. While the European subsidiaries are on recovery path post-restructuring, the
subsidiaries in Canada and the USA are yet to turn positive. However, the management expects a turn-around
soon. Demerger of consumer business would unlock substantial value in the stock. Hence, we remain positive on
this stock.
Finolex Cables
Finolex Cables, a leading manufacturer of power and communications cables, is set to benefit from an improving
demand environment in its core business of cables and leveraging its brand strength to build a high-margin consumer
product business (of switchgears, lamps etc). However, due to its derivative exposure in the past, it suffered losses
followed by valuation de-rating. More importantly, there is no more exposure hence the overhang of the derivative
should fade away. We see healthy earnings growth, return ratios in high teens and high cash flow boding well for
the stock; hence, we remain positive on the stock.
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Greaves Cotton
Greaves Cotton is a mid-sized and well-diversified engineering company. Its core competencies are in diesel/petrol
engines, power gensets, agro engines, pump sets (engine segment) and construction equipment (infrastructure
equipment segment). The foray in the mini tractor segment and international markets would open new growth
avenues. The management has taken a strategic call to close and hive off the loss-making divisions. The steps
taken include (1) the closure of the legacy casting unit in Pune; (2) the hive-off of the engineering unit in Germany;
and (3) the closure of operations at the infrastructure division. With the closure of the infrastructure business and
an expected improvement in the engine business, we expect the company to return to its 15%-plus OPM level by
FY16 and hence recommend a Buy with a price target of Rs155.
Kalpataru
Kalpataru Power Transmission is a leading EPC player in the transmission & distribution space in India.
Opportunities in this space are likely to grow significantly, thereby providing healthy growth visibility (also current
consol order book is 1.4x its FY14 sales). The OPM of the stand-alone business is likely to remain around 9-10%;
however the OPM of JMC Projects (a subsidiary) is showing signs of improvement after a significant drop in the
last two years. Subham Logistic is also expected to contribute meaningfully to the bottom line and add value. We
retain our Buy rating.
PTC India
PTC India is a leading power trading company in India with a market share of 35-40% in the short-term trading
market. In the last few years, the company has made substantial investments in areas like power generation
projects and power project financing which will start contributing to its earnings. Long pending receivables was
one of the drags on the companys balance sheet and return ratios; however, the concern has receded after receiving
payment from UPSEB. We retain Buy due to expectations of a healthy volume uptick with an increasing share of
long-term contract business.
Thermax
The energy and environment businesses of Thermax are direct beneficiaries of the continuous rise in India Incs
capex. Thermax group book stands at Rs6,067 crore, which is around 1x its FY14 consolidated revenues. However,
the company has shown its ability to maintain a double-digit margin in a tough environment. The management
sounded positive with a likely recovery in industrial capex cycle. We retain Hold on the stock due to its rich
valuation.
Triveni Turbines
Triveni Turbines Ltd (TTL) is a market leader in the up to 30MW steam turbine segment. TTL is at an inflexion
point with a strong ramp-up in the after-market segment and overseas business while the domestic market is
showing distinct signs of a pick-up. The company has also formed a JV with GE for steam turbines of 30-100MW
range which is likely to grow multifold in the next 4-5 years. TTL is virtually a debt-free company with a limited
capex requirement and an efficient working capital cycle, reflected in very healthy return ratios. Further, boosted
by the expected uptick in the domestic capex cycle, the companys earnings are likely to grow by 25%+ per annum
over the next 3-4 years.
V Guard Ind
Gayatri Proj
V-Guard Industries is an established brand in the electrical and household goods space, particularly in south
India. Over the years, it has successfully ramped up its operation and network to become a multi-product company.
It has recently also forayed into regions other than the south and is particularly focusing on the tier-II and III cities
where there is a lot of pent-up demand for its products. We expect a CAGR of 22% in its earnings over FY14-17
and RoE of 25% during this period.
Infrastructure/Real estate
Gayatri Projects is a Hyderabad-based infrastructure company with a very strong presence in irrigation, road and
industrial construction businesses. The order book stands at Rs7,206 crore, which is 3.6x its FY13 revenues. It is
also expanding its power and road BOT portfolio and plans to unlock value by offloading stake to private equity.
The company has potential to transform itself into a bigger entity.
IL&FS Trans
IL&FS Transportation Networks is Indias largest player in the BOT road segment with a pan-India presence and
a diverse project portfolio. The fair mix of annuity and toll projects, and state and NHAI projects along with the
geographical diversification across 12 states reduce the risk to a large extent and provide comfort. Further, a
strong pedigree along with the outsourcing of civil construction activity helps it to scale up its portfolio faster.
Thus, it is well equipped to capitalise on the huge and growing opportunity in the road infrastructure sector.
IRB Infra
IRB Infrastructure Developers is the largest toll road BOT player in India and the second largest BOT operator in
the country with all its projects being toll based. It has an integrated business model with an in-house construction
arm which provides a competitive advantage in bidding for the larger projects and captures the entire value from
the BOT asset. Further, it has a profitable portfolio as majority of its operational projects have become debt-free
and it has presence in high-growth corridors which provides healthy cash flow. Thus, it is well poised to benefit
from the huge opportunity in the road development projects on the back of its proven execution capability and the
scale of its operations.
Jaiprakash Asso
Jaiprakash Associates, Indias leading cement and construction company, is all set to reap the benefits of Indias
infrastructure spending. The company has also monetised very well the real estate properties of Yamuna Expressway.
The marked improvement in the macro environment has improved accessibility to capital and thus eased the
concerns of liquidity to some extent. However, higher leverage could act as drag on the valuation.
L&T
Larsen & Toubro, being the largest engineering and construction company in India, is a direct beneficiary of the
domestic infrastructure capex cycle. The strong potential of its international business, its sound execution track record
and bulging order book, and the strong performance of subsidiaries further reinforce our faith in it. Recent measures
planned by the company to improve its return ratios augur well. Hence, we remain positive on the stock.
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Remarks
Pratibha Ind
Pratibha Industries is a dominant player in water & irrigation and urban infrastructure segments. It has also diversified
into other high-margin areas like road BOT, power and oil & gas. The current order book stands at Rs8,000 crore,
which is 3.7x its FY13 revenues. The company is facing margin pressure and higher interest expenditure on account
of the rising debt to finance working capital needs. We currently remain cautious and await positive developments
in terms of debt and working capital requirements.
Punj Lloyd
Punj Lloyd is the second largest EPC player in the country with a global presence. However, since FY09 the
profitability has come under severe pressure due to cost overruns/liquidated damages in some of Simon Carves (a
subsidiary) projects. Thus, it has put Simon Carves under administration. Further, Libyan projects will take another
few quarters to begin execution. Therefore, the successful execution of its projects along with debt reduction and
working capital management will drive its growth as it enjoys a robust order book.
Oil India
Reliance Ind
Selan Exploration
Aurobindo Pharma
Oil & gas

Oil India has several hydrocarbon discoveries across reserves in Rajasthan and the north-eastern region of India.
The total proven and proven and probable reserves of the company stand at 473 million barrels (mmbbls) and
941mmbbls respectively. In addition to the huge oil reserves, the companys reserve-replacement ratio is quite
healthy at 1.6x, which implies a comfortable level of accretion of oil reserves through new discoveries. Further, it
offers healthy dividend yield, which provides comfort to investors. The full benefit of the recent policy reforms
like deregulation of diesel and gas price revision are expected to reflect in the FY16 numbers and augur well for
the company.
Reliance Industries holds a great promise in E&P business with gas production from the KG basin. Further, a likely
revision in the natural gas prices will be a positive trigger. In the refining space, we expect its GRM to pick up with
a likely improvement in the light-heavy crude oil price differential. The company is likely to fetch a premium over
Singapore Complex GRM due to its superior refinery complexity and captive use of KG-D6 gas. We expect the
petrochem margins to be maintained in the medium term on an uptick in the domestic demand. Currently, the decline
in gas output from the KG-D6 basin is weighing on the stock price; however, incremental capacity in the petchem
business would be the earnings driver in the coming years.
Selan Exploration Technology is an oil E&P company with five oil fields in the oil-rich Cambay Basin of Gujarat.
The initiatives taken to monetise the oil reserves in its Bakrol and Lohar oil fields are likely to improve production.
Further, it intends to explore its next field, Indrora, which is the most prolific one with significant reserves. Based
on this, we expect it to ramp up production significantly, subject to approval for the new wells. We expect
production ramp-up in FY16 and hence we expect the earnings to grow significantly in the next two to three years.
Pharmaceuticals
Aurobindo Pharma is set to post a healthy growth on the back of a ramp-up in the USA and the European market,
thanks to a strong product pipeline built over a period and focus on niche segments like injectibles, hormones,
penems and sterile products. The expected increase in the export-led business and a favourable tilt in the revenue
mix are likely to boost the margin, resulting in a faster growth in the earnings as compared with the revenues. It
has recently acquired the commercial operations (revenue size EUR320mn) of Actavis Plc in seven western European
countries, which is a strategic fit. We expect the revenues and net profit to grow at a CAGR of 25% and 17% over
FY14-16 respectively.
Cadila
Cadila Healthcares performance in the US generic vertical is likely to improve on the back of new product
approvals. Besides, its consumer business and exports to the emerging markets will help it to achieve its target of
generating revenues of $3 billion by FY16. It got DCGI approval for its first NCE called Lipaglyn to treat type-II
diabetes; this will add value to its R&D pipeline. However, recently it received an adverse observation report
(Form-483) on one of its products filed with the US regulator from its Moraiya plant which will be a key overhang
on the stock.
Cipla
Cipla has brought about a paradigm shift in its business strategy. To revive growth, it has (1) enhanced focus on
technology-intensive products in the inhalation and nasal spray segments; (2) established front-end presence in the
key markets like South Africa and Europe; (3) developed an appetite for inorganic expansions; and (4) invested in
future growth areas like biosimilars. Though consolidation of CiplaMedpro would hurt earnings in the short
term, but the base business would continue to grow steadily, the growth would be fast-tracked in H2FY15 on the
back of the launch of combination inhalers in Europe, ramp-up in generics in the USA and synergy from
consolidation.
Divis Labs
The new DSN SEZ facility at Vishakhapatnam that started in June 2011 augurs well for Divis Laboratories. The
company is likely to see an improvement in economies of scale which will also lead to tax benefits after USFDA
approvals for three additional production blocks expected to come in Q2FY15. A near debt-free balance sheet and
strong cash flow are likely to help build a war chest for pursuing strategic investments (biosimilars) and exploit
the growth opportunities in niche segments, like oncology and steroids for contraceptives.
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January 2015
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EARNINGS GUIDE
FUNDAMENTALS
Remarks
Glenmark Pharma
Glenmark Pharmaceuticals exhibited an impressive operating performance during FY14 in the core business on
key generic launches, though, higher R&D expenses and tax payments restricted the profit growth. Through
successful development and out-licencing of six molecules in a short span of eight years, it has become Indias best
play on research-led innovation. It has built a pipeline of 14 molecules and clinched six out-licencing deals worth
$1,672 million (active deals worth $938). It has received over $200 million as initial milestone payment. Its core
business has seen stupendous success due to its focus on niche specialties. It has recently announced a plan to set
up a new facility in the USA to de-risk the business. We are confident of its long-term growth prospects.
Ipca Lab
Ipca Laboratories has successfully capitalised on its inherent strength of producing low-cost drugs to tap the
export markets. Its ongoing efforts in the branded formulations business in the emerging economies, the revival in
the UK operations, the pan-European initiatives, the likely approval of one additional product under institutional
business and a significant scale-up in the US business will drive its formulation exports. It has received USFDAs
approval for the Indore SEZ (US supplies started in Q1FY15). But it has recently got an adverse inspection report
(Form-483) by USFDA on its Ratlam API facility which will hamper the US business for nearly six months.
J B Chemicals
Two years after selling the OTC business in Russia and CIS, JB Chemicals and Pharmaceuticals has reestablished
itself in the export market while retaining leadership in the domestic branded formulation market. A major chunk
of the proceeds from the sale of the OTC business has stayed in its balance sheet while the operating performance
of the company has improved in recent quarters. We expect the company to fast forward growth rates on the back
of focus on regulated markets like the USA. The utlisation of surplus cash of over Rs500 crore would provide the
key trigger to the stock.
Lupin
The expected ramp-up in the launch of oral contraceptives, ophthalmic products, branded franchise (with addition
of in-licenced product-Alinia and Locoid lotion) in the USA and a robust pipeline of new launches in the domestic
and overseas markets provide strong growth visibility for Lupin. Further, with an expanded field force and therapy
focused marketing division, its formulation business in the domestic market has been performing better than the
industry. The deal with Eli-Lilly to distribute human insulin would open an incremental revenue stream for Lupin
in the Indian market.
Sun Pharma
The combination of Sun Pharmaceuticals, Taro, Dusa Pharma and the generic business of URL Pharma offers an
excellent business model, as has been reflected in the 42% Y-o-Y revenue growth and 59% profit growth in FY14.
It has recently announced plans to acquire Ranbaxy Laboratories for $4 billion through a share swapping deal.
The acquisition augurs well for the company as it will help establish a leadership position in key markets including
India, apart from leading to synergy of $250 million in next two years. With a strong cash balance, it is well
positioned to capitalise on the growth opportunities and inorganic initiatives. The company has recently got
Form-483 from USFDA for its Halol facility, though the observations are not serious and we expect the resolution
to come in 3-4 months.
Torrent Pharma
Grasim
The Ramco Cements
A well-known name in the domestic formulation market, Torrent Pharmaceuticals has been investing in expanding
its international presence. With the investment phase now over, it should start gaining from its international
operations in the USA, Russia and Brazil. The impending turnaround of its German acquisition, Heumann, will
also drive its profitability. Better field force productivity, focus on developed market and stronger balance sheet
would result in a sustainable earnings growth. It has recently acquired the 30 key brands of Elder Pharma for
Rs2,000 crore, which is a strategic fit in long run.
Building materials
Grasim is better placed compared with the other large players in the cement space due to its strong balance sheet,
comfortable debt/equity ratio, attractive valuation and diversified business. The demand for VSF products remains
strong in the global market and Grasim being a leading domestic player is well placed to capture the incremental
demand.
The Ramco Cements, one of the most cost-efficient cement producers in India, will benefit from the capacity
addition carried out ahead of its peers in the southern region. The 3mtpa expansion will provide the much-needed
volume growth in the future. The regional demand remains lacklustre but on account of the improvement in the
realisation due to supply discipline and a likely change in the market mix its profitability will improve (marginally)
in FY15.
Shree Cement
Shree Cements cement grinding capacity has grown to 18.2mtpa which will support its volume growth in the
coming years. It has set up 300MW power plant entirely for merchant sale which is expected to support its
revenue growth going ahead. Thus, a volume growth of the cement division and the additional revenue accruing
from the sale of surplus power will drive the earnings of the company.
UltraTech Cement
UltraTech Cement is Indias largest cement company with approximately 52mtpa cement capacity. It has benefited
from an improvement in its market mix. Further, the ramping-up of the new capacity and savings accruing from
the new captive power plants will improve its cost efficiency.
51
January 2015
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FUNDAMENTALS
EARNINGS GUIDE
Remarks
Discretionary consumption
Cox & Kings:
Cox & Kings is an integrated player with a strong presence in the global leisure travel segment and the education
tourism segment in Europe. It has 30% market share in the global outbound tourism market and a market leader
in education tourism in the UK. An improving global macro environment (conducive to travel & tourism industry)
and the companys focus on de-leveraging its balance sheet will help it to achieve a double-digit earnings growth
in the medium term. The stock is currently trading at a discount to some of its domestic and international peers.
Hence, we recommend a Buy on it with a price target of Rs395.
Eros Intl Media
Eros International Media is one of the largest integrated film studios in India with multi-platform revenue streams
and a well-established distribution network across the globe. With its proven track record, an impressive movie
slate and alliance with HBO coming into foray, it is well poised to gain from the rising discretionary spending on
film entertainment driven by the countrys favourable demographics. Thus, it is a compelling value play on the
Indian media and entertainment industry.
KKCL
Kewal Kiran Clothing is a branded apparel play with four brands in its kitty. Killer, its flagship denim brand, has
created a niche space in the minds of consumers. With a gross market turnover of over Rs300 crore, Killer is ahead
of its rival, Spykar. A strong brand profile, a disciplined management and a consistent track record coupled with
a robust balance sheet put it in a sweet spot.
Raymond
Raymond is present in the fast-growing discretionary & lifestyle category of branded textiles and apparels. With
growing incomes, rise in aspirations to lead a luxurious life, greater discretionary spending and favourable
demographics, the segment of branded apparels & fabrics presents a good growth opportunity and Raymond with
its brands and superior distribution set-up is very well geared to encash the same. Any development with regard to
the Thane land in the form of either joint development or disposal would lead to value unlocking and provide
significant cash to the company.
Relaxo Footwear Relaxo Footwear is present in the fast-growing footwear category, wherein it caters to customers with its four topof-the-mind-recall brands, viz, Hawaii, Sparx, Flite and Schoolmate. It has emerged as an attractive investment
opportunity due to its growing scale, strong brand positioning and healthy financial performance.
Speciality Rest.
Speciality Restaurants is a leading player in the fine-dining space with a portfolio of well-established brands such
as Mainland China and Sigree. It is a good proxy on the Indian consumption story as several factors such as
demographics, increasing disposable income and the trend of nuclear families are playing in its favour. Given the
strong brand franchisee, an improving outlook on the margin and a broadening of the valuation gap with comparable
listed peers, we maintain our Hold rating on the stock.
Sun TV Network Sun TV is the undisputed leader in the south Indian TV entertainment market. The broadcasters are one of key
beneficiaries of the mandatory digitisation process initiated by the government as its implementation is expected
to lead to a six-fold increase in ARPU of cable subscribers from Rs4 currently to Rs15-20 post-DAS regime.
However, on account of a delay in the implementation of DAS in phases 3 and 4 the revenue accretion is expected
to be delayed. Though it is a dominant player in the south Indian advertising market (where it enjoys a 30%
market share), but its ad revenue growth has been soft in recent quarters. We believe that the delay DAS process,
muted ad revenue growth and ongoing CBI enquiries will remain an overhang in the near term.
Zee Entertainment
Zee Entertainment Enterprises, part of the Essel group, is one of India's leading TV media and entertainment
companies. It has a bouquet of 34 channels across Hindi, regional, sports and lifestyle genres. It is best placed to benefit
from the digital addressable system regime rolled out by the government. The company has consistently outgrown
the industry in terms of advertising growth and is a leader in terms of market share. Anticipating an overall
improvement in the domestic macro environment the management expects this trend to continue going ahead.
Diversified/Miscellaneous
Aditya Birla Nuvo
We like the strong positioning that Aditya Birla Nuvos businesses enjoy in their respective fields. It is amongst the
top five players in the insurance, asset management and telecom segments (Idea Cellular is the fastest growing telecom
company, third in ranking). Madura Garments, with its marquee brands, and consistent and resilient growth, is a
profitable set-up. In an improving macro-economic environment the company would be well placed to grow.
Bajaj Holdings
Bajaj Holdings & Investment Ltd (BHIL, erstwhile Bajaj Auto) was demerged in December 2007, whereby its
manufacturing business was transferred to the new Bajaj Auto Ltd (BAL) and its strategic business consisting of the
wind farm and financial services businesses was vested with Bajaj FinServ (BFS). All the businesses and properties,
assets, investments and liabilities of erstwhile Bajaj Auto, other than the manufacturing and strategic ones, now remain
with BHIL. BHIL is a primary investment company focused on new business opportunities. It holds more than 30%
stake each in BAL and BFS. We have a Buy recommendation on the stock with a price target of Rs1,636.
Bharti Airtel
Bharti Airtel is the leader in the Indian mobile telephony space. With the regulatory overhang receding and the industry
as well as the company focusing on the quality of revenues rather than volume, better times can be expected ahead
for the sector and hence the company. We remain optimistic about the company.
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January 2015
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EARNINGS GUIDE
FUNDAMENTALS
Remarks
BEL
Bharat Electronics, a PSU manufacturing electronic, communication and defence equipment, is benefiting from the
enhanced budgetary outlay for strengthening and modernising the countrys security. The growth in revenues is also
expected to be aided by the civilian and export orders. The companys current order book of around Rs23,500 crore
provides revenue visibility for the next three to four years. The huge cash reserve would also support the stock.
Century Plyboard Century Plyboard is a leading player in the organised plywood industry with a market share of 25%. A strong growth
in the sector, Centurys premium positioning and brand equity strength, and the impending GST roll-out would enable
it to post a revenue growth (CAGR) of 22% over FY14-17. On the back of a revenue growth and better absorption
of fixed costs, the earnings are likely to grow at a much stronger rate of 47% CAGR over FY14-17. It is a quality
consumer play in a niche growing segment. Its robust return ratios and strong growth potential make us positive on
the stock. We have a Buy rating on it with a price target of Rs200.
GDL
Max India
With its dominant presence in the container freight station segment and recent forays into the rail freight and cold
chain businesses, Gateway Distriparks has evolved as an integrated logistic player. Its CFS business is a cash cow
while its investments in the rail and cold storage businesses have started bearing fruits. It is one of the largest
players in the CFS business and has also evolved as the largest player in the rail freight business as well as the cold
storage business. The proposed capex for all the three segments will strengthen its presence in each of the segments
and increase its pan-India presence. We expect its revenues and net profit to grow at 20% and 16% CAGR
respectively over FY13-15.
Max India is a unique investment opportunity providing direct exposure to two sunrise industries of insurance
and healthcare services. Max New York Life, its life insurance subsidiary, is among the leading private sector
players, has gained the critical mass and enjoys some of the best operating parameters in the industry. As the
insurance sector is showing signs of stablisation, the companys favourable product mix and a strong distribution
channel will result in a healthy growth in the annual premium equivalent. The company has turned profitable on
a consolidated basis and has announced dividend in past couple of years.
Ratnamani Metals Ratnamani Metals & Tubes is the largest stainless steel tube and pipe maker in India. In spite of the challenging
business environment due to increasing competition, the stock is attractively valued. The management has maintained
a strong outlook on the potential opportunities in the oil & gas sector and inter-connection of the rivers across the
country.
Supreme Ind
Supreme Industries is a leading manufacturer of plastic products with a significant presence across piping, packaging,
industrial and consumer segments. Despite a decline in volume growth, we expect double-digit volume growth in
plastic business. The management sees signs of demand revival (low inventory with dealers) and has guided for a
revenue growth of 18-20% and OPM of 13.5-14.0% for FY15.The company is witnessing traction in the composite
cylinder and bathroom fitting businesses along with a gradual pick-up in pipes and other CPVC products. We
have a Hold rating with a price target of Rs620 (valuation of 19X FY16E largely factors in most of the positives
including revival of plastic volumes).
Technocraft Ind
Technocraft Industries India Ltd (TIIL; a diversified player with interests in drum closures, scaffoldings, yarn and
garments) is the second largest player globally in the drum closure manufacturing space (market share of 35%).
While drum closure business (the cash cow with high margin and return ratios) is expected to grow steadily, the
scaffolding & formwork business is set to grow above 20% annually for the next couple of years. The financial
health is expected to improve steadily with a leaner balance sheet, healthy return ratios and cash flow; however,
the stock is attractively trading at 5x FY16E earnings and 2x FY16E EBITDA. We remain positive on the stock.
United Phos
A leading global producer of crop protection products, intermediates, specialty chemicals and other industrial
chemicals, United Phosphorus has presence across value-added agricultural inputs ranging from seeds to crop
protection products and post-harvest activities. A diversified geography and the recent acquisition of DVA Agro
Brazil will help the company to have a strong presence in the Brazilian market and aid in inorganic growth. Its
revenues are likely to grow at 12-15% and EBIDTA margin is expected to remain at 18-20% in FY15. It has also
started to focus on premium products in agro-chemicals and will slowly stop selling commodities and low-margin
products.
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RESEARCH BASED EQUITY PRODUCTS

STOCK IDEAS STANDING (AS ON JANUARY 02, 2015)

CURRENT PRICE AS ON PRICE

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CURRENT PRICE AS ON PRICE

In Top Picks basket

** Price target under review

from sharekhans desk

FROM SHAREKHANS DESK

From promise to performance

DECEMBER 24, 2014

Actions speak louder than words

Valuation supportive; equities to sustain uptrend: Though 2015

2015, time to deliver on economic recovery and reforms: No doubt,

We are positive on rate-sensitive sectors like bank & financial

SENSEX ONE-YEAR FORWARD P/E BAND

Globally, situation might not be as benign anymore: In 2015, the

Source: Bloomberg, Sharekhan Research

Macro environment turning favourablelow crude prices, rate cuts

in Bihar in December 2015), there is headroom for non-populist

CONSENSUS ESTIMATES FOR FY2015, FY2016

BOND YIELDS (%)

Fiscal deficit (as % of GDP)

Real GDP growth (%)

G-Sec 1 Year Bond Yield

Policy rate (repo) (%)

CPI inflation (%)

G-Sec 10 Year Bond Yield

Earnings expansion remains healthy, global issues key monitorables:

Political and economic scenarios conducive to bold measures: After

SENSEX CONSENSUS EARNINGS ESTIMATES FOR FY2016

Brent crude price ($/barrel)

Source: Bloomberg, Sharekhan Research

KEY MONITORABLE EVENTS GLOBALLY

Beginning of rate hikes by US Fed

US bond yields rising

Elections in EU (Greece, Spain,

Negative (political indecisiveness and deflation could hinder recovery)

Chinas economic data

Italy, the UK)

India uniquely positioned to ride growth path: With most of the

SENSEX CONSENSUS EARNINGS ESTIMATES FOR FY2017

Source: Bloomberg, Sharekhan Research

Global economies to contract though crisis ruled out: Given the

SENSEX VALUATIONS (VS MSCI WORLD P/E)

Source: Bloomberg, Sharekhan Research

Source: Bloomberg, Sharekhan Research

SHAREKHAN TOP PICKS

SHAREKHAN TOP PICKS

Sharekhan Top Picks

CONSISTENT OUTPERFORMANCE (ABSOLUTE RETURNS; NOT ANNUALISED)

ABSOLUTE RETURNS (TOP PICKS VS BENCHMARK INDICES)

CONSTANTLY BEATING NIFTY AND SENSEX (CUMULATIVE RETURNS) SINCE

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