IEA Report 21st December

IEA Report
21th Dec 2016

GLENMARK
"BUY"
21th Dec 2016
Management expects domestic business to grow by 15% in FY17 and US business to grow by 25% on the back of new launches like Zetia, Mycolog II,
Crestor, etc. in FY17.Going forward we believe that US business will remain key driver for growth. Management has guided for 20 new ANDAs
filings in FY17. Considering the long-term opportunities, we recommend buy rating on this stock with a target price of Rs. 1096
.......................................... ( Page : 2-4)
BEML
"BUY"
20th Dec 2016
Company has an order book of roughly about Rs 6600 cr that will set the sales target of Rs 3300 cr for FY17 as whole. However, companys
performance till the first half of FY17 has not been satisfactory, as it has achieved only 23% of annual target, leaving a huge target of 77% to
achieve in remaining six months. The Company has order on hand from Defense and Rail & Metro businesses and orders are steadily flowing in
from Mining & Construction equipment. With dedicated and committed employees, management is confident of reaching the set target for FY17.
Company has guided for Rs 3300 cr of top line for FY17 but after seeing 1st and 2nd quarter results we are not confident on the given guidance,
hence we have reduced our revenue estimate from Rs 2900 cr to Rs 2500 cr . We have positive view on this stock in long term but due to below
expected sales number this quarter we maintain our HOLD rating to the stock at a target price of Rs 1240/-(potential upside of 35%). We will
review target price post further clarity from management on near term business condition. ........................................ ( Page : 5-8)
KNRCON
"Book Profit"
19th Dec 2016
Work commencement on Dindigul Bangalore project and on - going projects will drive the revenue growth. Going forward we expect top line of Rs.
1433 Cr with 15.5% of EBITDA margin and RoE of 9% in FY17. Currently, the stock is trading at 11 times of FY17 Expected EV/EBITDA which is
companys historic highs and also one of the highest in the industry. On the operations front, we still hold positive view on this stock but on the
valuation front we are not very comfortable. We had initiated BUY on KNR Construction at the adjusted CMP of Rs. 111 on 22th April 2016. Hence,
we recommend to Book Profit on this stock, up by 54% from initiating price. ................. ( Page : 9-12)
HDFCBANK
"BUY"
16th Dec 2016
HDFC Bank is one of the leading banks in the industry with the strong fundamentals, best in assets quality, adequate capital, steady loan growth and
consistency in profitability growth. Where some of its peers in large cap are struggling with the deteriorating assets quality, HDFC Bank is well
poised to take the advantage from improving macroeconomic scenario. While in the short term there may be hiccups in the lending activity due to
demonetization drive and this has led to uncertainty over the earnings during this period, but the long term growth and profitability remain intact
for the bank. One of the huge benefits from the demonetization drive will arise in the form of shoot in CASA ratio which will help the bank to cut
the rates further to drive the demand. Strategy of the management to focus on high yield products will help the bank to maintain the NIMs apart
from the expected benefits from spurt in CASA (due to demonetization). We expect the RoE of 19% and maintain BUY rating on this stock with our
previous target price of Rs 1400. ....................... ( Page : 13-18)
GODREJCP
"BUY"
15th Dec 2016
Management is rationalizing ad expenses and has increased home insecticide products prices by 2% in the late September 2016 to counter upward
movement of input prices. Going forward we expect relatively less impact on GODREJCP compared to other FMCG players, as company gets approx
46% of its revenue from international market. Secondly companys proactive initiatives of cutting promotions and increasing price of the products
gives us confidence on margin side. Demonetization will help company to increase market share as compared to regional players which have more
dependence on wholesale channels of distribution. Considering lesser dependence of company in Indian business, proactive approach towards
maintaining the margin and relatively less penetrated product portfolio, we have positive view on this stock and we maintain `BUY with target
price of Rs 1760. .................................... ( Page : 19-20)
COALINDIA
"NEUTRAL"
14th Dec 2016
Drop in realization along with persistent poor offtake and the risk of continued weakness in e-auction premium may keep Coal Indias earnings
subdued for FY2017E. Rising cost base with negative operating leverage leads to earning downgrade.
Earnings risk from weak volume growth and the coming wage revision keep us cautious on CIL.
As far as Q2FY17 result is concern stock price may get volatile, but going ahead attractive dividend yield will support price. Considering all these
things we downgrade our earning outlook for COALINDIA and change our rating to NEUTRAL (with a TP of Rs.310) from BUY.
................................................ ( Page : 21 -25)
Narnolia Securities Ltd
IEA Edition No.-
908
Buy
GLENMARK PHARMACEUTICALS LTD.
Company Update
CMP
932
Target Price
1096
Previous Target Price

Upside
18%
Change from Previous
Market Data
BSE Code
532296
NSE Symbol
GLENMARK
994/671
52wk Range H/L

Mkt Capital (Rs Cr)
26324
100.95
8124
Av. Volume(,000)
Nifty
21th Dec 2016

Glenmark has posted flat revenue of Rs. 2224 Cr in 2QFY17 vs Rs.
2281 Cr in the corresponding period of FY16. This is led by the
growth in the revenue of US formulations business by 28.9% to Rs.
771 Cr. The company has filed 2 new ANDAs and received
approval for 6 ANDAs in 2QFY17.The company has cumulatively
filed 6 new ANDAs in 1HFY17 and received approval for 11 in the
first half of FY17. Glenmark has launched cholesterol drug Zetia
with 6 months exclusivity in the US on December 12.The company
has partnered with Par pharmaceuticals in this product. Total
revenue estimated to be generated is around Rs. 2700-3400 Cr and
post profit sharing with Par pharmaceuticals, Glenmark should
make around Rs. 1300-1700 Cr. The management plans to reduce
debt by Rs. 600-800 Cr. by 1QFY18 on the back of growth in US
business.
Result Highlights of 2QFY17
Absolute
5.2
8.6
17.0
EBITDA margin has improved by 690 bps to 20.2% in 2QFY17.

PAT has inccreased by 50% to Rs. 224 Cr in 2QFY17 as compared to
Rs.149 Cr in the same quarter of FY16.
Rel.to Nifty
2.6
2.2
11.8
India business grew by 10.91% to Rs. 674 Cr in 2QFY17.
Stock Performance
1M
3M
12M
US business grew by 28.87% to Rs. 771 Cr in 2QFY17.

Rest of the World(ROW) grew by 20.38% to Rs. 253 Cr in 2QFY17.
Share Holding Pattern-%

2QFY17
1QFY17 4QFY16
Promoters
46.5
46.5
46.5
Public
Others
Total
53.5
53.5
53.5
100
100
100
Europe Formulations Business decreased by 16.00% at Rs. 134Cr.

Latin America Business decreased by 19.24% at Rs. 133 Cr.
Outlook and Valuation
Management expects domestic business to grow by 15% in FY17 and US

business to grow by 25% on the back of new launches like Zetia, Mycolog II,
Crestor, etc. in FY17.Going forward we believe that US business will remain
key driver for growth. Management has guided for 20 new ANDAs filings in
FY17. Considering the long-term opportunities, we recommend buy rating
on this stock with a target price of Rs. 1096
Company Vs NIFTY
120
GLENMARK
NIFTY
115
110
105
100
95
90
85
Dec-16
Oct-16
Nov-16
Sep-16
Aug-16
Jul-16
Jun-16
Apr-16
May-16
Mar-16
Jan-16
Feb-16
Dec-15
80
Aditya Gupta
Financials
2012
2013
2014
2015
Rs,Cr
2016
Sales
EBITDA
Net Profit
EPS
P/E
4021
714
464
17
18.0
5012
1015
628
23
20.0
6005
1091
546
20
28.1
6630
1210
474
17
45.0
7650
1433
702
26
30.7
aditya.gupta@narnolia.com
Please refer to the Disclaimers at the end of this Report
Concall Highlights
Glenmark has launched cholesterol drug Zetia in US on Dec 12,2016

Total revenue estimated to be generated is around USD 400-500 million and post profit sharing with Par, Glenmark should
make around USD 200-250 million.
Zetia launch would lead to further debt repayment in 1HFY18
Inhaler launch in EU to start from end-4QFY17, with Nordic countries
Tax rate to normalize at ~25% in FY17
R&D stood at ~10.5% of sales (FY17 guidance: 10-11%)
Expect growth to pick up further in 2HFY17, and full year growth is likely to normalize at 15% in FY17E
The company has no pending observations from USFDA on any of its facilities
Sales
250
191
185
200
150
PAT
214
143
198
170
165
157
131
198
191
2000
1500
115
100
1000
1701
1776
11
1655
1909
1778
2307
1655
1909
3QFY14
1681
2QFY14
1487
1602
1QFY14
1704
1463
43
1238
50
2500
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
500
0
Filings with USFDA

ANDA Filed
ANDA Pending
ANDA Approved
180
160
136
140
120
100
103
116
108
85
112
90
83
78
80
60
171
165
155
65
70
FY2014
FY2015
67
4045
5053
95
59
53
41
38
FY2011
FY2012
40
20
0
FY2009
FY2010
FY2013
FY2016
About Company
Glenmark Pharmaceuticals is one of the most successful research focused pharmaceutical companies, with a business model
spanning drug discovery research, APIs and formulations in the domestic and international markets. Glenmark's R&D efforts have
been extremely productive.GPL almost has a leadership position in the Indian drug discovery space (both NCEs and biologics).
GPL has a presence in over 85 countries across the world including India, Europe, Brazil, Latin America (excluding Argentina),
Russia/CIS, Africa and Asia through branded generic formulations. In regulated markets such as US, Europe, Argentina, etc it has
a presence via its non-branded generics. GPLs formulation business is diversified over several therapeutic segments such as
dermatology, internal medicine, respiratory, diabetes, paediatrics, gynaecology, ENT and oncology. Its manufacturing plants are
located in Baddi (India), Nashik (India), Sao Paolo (Brazil) and Vysoke Myto (Czech Republic). In India, GPL markets over 100
molecules and combinations in various therapy areas such as dermatology, respiratory, gynaecology, pain management, diabetes,
cardio-vascular, internal medicine, etc.Glenmark has reclassified it operations into 6 categories- India, US, Europe, Latin America,
ROW markets and APIs. Earlier the classification was on the basis of - 1) Specialty businesses and 2) Generics businesses.
Financials Snap Shot

INCOME STATEMENT
FY13
FY14
FY15
FY16
Revenue (Net of Excise Duty) 5012
6005
6630
7650
EPS
Other Income
6
5
20
20
Book Value
Total Revenue
5019
6010
6650
7670
DPS
COGS
1654
1873
1934
2361
Payout (incl. Div. Tax.)
GPM
33.0%
31.2%
29.2%
30.9%
Valuation(x)
Other Expenses
1561
2015
2283
2477
P/E
EBITDA
1015
1091
1210
1433
Price / Book Value
EBITDA Margin (%)
20%
18%
18%
19%
Dividend Yield (%)
Depreciation
127
217
260
269
Profitability Ratios
EBIT
888
874
950
1164
RoE
Interest
160
189
190
179
RoCE
PBT
739
697
780
1005
Turnover Ratios
Tax
111
151
119
303
Asset Turnover (x)
Tax Rate (%)
15%
22%
15%
30%
Debtors (No. of Days)
Reported PAT
628
546
474
702
Inventory (No. of Days)
Dividend Paid
64
63
63
63
Creditors (No. of Days)
No. of Shares
27
27
27
27
Net Debt/Equity (x)
Souce: Eastwind/Company
Share Capital
Reserves
Net Worth
Long term Debt
Short term Debt
Deferred Tax
Total Capital Employed
Net Fixed Assets
Capital WIP
Debtors
Cash & Bank Balances
Trade payables
Total Provisions
Net Current Assets
Total Assets
FY13
27
2760
2787
1920
2288
262
57
33
1834
7171
2768
60
636
3727
7171
BALANCE SHEET
FY14
FY15
27
27
2969
3073
2997
3000
2429
2574
2782
2922
259
402
111
232
260
59
2596
3364
8634
9688
3036
3270
60
58
873
774
4763
5323
8634
9688
FY16
28
3737
4270
2487
3275
344
247
63
3214
11103
3908
57
987
5910
11103
FY13
23.2
102.9
2.4
10%
RATIOS
FY14
FY15
20.1
17.5
110.5
110.6
2.3
2.3
12%
13%
FY16
25.9
157.4
2.3
9%
20.0
4.5
1%
28.1
5.1
0%
45.0
7.1
0%
30.7
5.1
0%
23%
19%
18%
16%
16%
17%
16%
17%
0.7
119
61
76
0.7
0.7
131
57
83
0.8
0.7
138
70
113
0.9
0.7
100
75
96
0.6
Souce: Eastwind/Company
CASH FLOW STATEMENT

FY13
FY14
FY15
FY16
OP/(Loss) before Tax
739
697
594
1005
Depreciation
127
217
260
269
Direct Taxes Paid
165
263
318
478
Operating profit before working
1081capital1407
changes 1067
1431
CF from Op. Activity
648
854
482
345
Purchase of Non Current investments
-471
-377
-544
-890
Capital expenditure on fixed-464
assets including
-368 capital
-540advances
-880and capi
CF from Inv. Activity
-314
-56
3
452
Repayment of Long Term Borrowings
-256
-628
-691
-1340
Interest Paid
147
194
179
180
Divd Paid (incl Tax)
64
63
63
68
CF from Fin. Activity
195
-98
199
699
Inc/(Dec) in Cash
379
388
141
163
Add: Opening Balance
226
407
623
694
Closing Balance
605
795
764
857

HOLD
BEML LTD.
20-Dec-16
Result Update
CMP
Target Price
Upside
Company has an order book of roughly about Rs 6600 cr that will set the
sales target of Rs 3300 cr for FY17 as whole. However, companys
performance till the first half of FY17 has not been satisfactory, as it has
achieved only 23% of annual target, leaving a huge target of 77% to achieve
in remaining six months. The Company has order on hand from Defense and
Rail & Metro businesses and orders are steadily flowing in from Mining &
Construction equipment. With dedicated and committed employees,
management is confident of reaching the set target for FY17. Company has
guided for Rs 3300 cr of top line for FY17 but after seeing 1st and 2nd
quarter results we are not confident on the given guidance, hence we have
reduced our revenue estimate from Rs 2900 cr to Rs 2500 cr . We have
positive view on this stock in long term but due to below expected sales
number this quarter we maintain our HOLD rating to the stock at a target
price of Rs 1240/-(potential upside of 35%). We will review target price post
further clarity from management on near term business condition.
920
1240
35%
-
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Cr)
Av. Volume
Nifty
500048
BEML
1324.40/770.15
3,810
244
8104
Management highlights:
Stock Performance
Absolute
Rel.to Nifty
1Month
1Year
YTD
13.7
11.1
-12.5
-17.5
3.5
5.8
As per the management company would be looking to double its revenue to

over Rs 6000 Cr by 2020 and Rs 3500 Cr in FY17.
Order book is roughly about Rs 6600 Cr in FY17.
Management expects Mining segment will improve in FY18E and expects
almost another Rs 800-1,000 Cr worth of mining orders.

2QFY17 1QFY17
In Defence segment, lots of opportunities are coming. Management assures
4QFY16
Promoter
54.03
54.03
54.03
Public
45.97
45.97
45.97
--
--
--
100
100
100
Others
Total
that this particular sector will take huge jump in near future. In Defence front
order inflow will be double in FY17 as compare to FY16, these would all be in
the vehicle space, the mine systems, the missile systems, the other vehicles,
etc.
In Metro segment company is having order book roughly about Rs 2000 Cr
of which Rs 1000 Cr will execute in FY17 and rest Rs 1000 Cr will be
executing in FY18E. In FY18E company is having another order worth Rs
2400 Cr. So, total order book in Metro is Rs 3500 Cr in FY18E.
out
Company Vs NIFTY
130
BEML
NIFTY
There
120
110
100
90
80
70
Bibha Kashyap
bibha.kashyap@narnolia.com
are a lot of options and opportunities that are going to emerge. We

have a big special economic zone (SEZ) land in Bangalore so we are already
poised. We will wait for the opportunities and we are talking to a lot of
partners as well.
Rs in Cr
Financials
FY13
FY14
FY15
FY16
FY17E
Sales
2801
2904
2802
2978
2521
EBITDA
-49
115
70
129
145
Net Profit
-83
6
6
53
69
EBIDTA%
-1.7%
4.0%
2.5%
4.3%
5.7%
P/E
0.0
0.0
0.0
0.0
0.0
Order book position:
Trend of Gross margin and EBITDA margin:

Gross Margin %
EBIDTA %
0.75
0.80
0.66
0.70
0.60
0.50
0.40
0.52 0.50 0.13
0.47
0.40 0.43
0.05 0.06 0.37
0.35
0.01 (0.00)
0.30
0.40
0.01
0.37
(0.01)
(0.07)
0.20
0.18
0.47
0.50
0.37
0.02
(0.00)
(0.09)
(0.13)
0.10
-
(0.25)
0.20
0.15
0.10
0.05
(0.05)
(0.10)
(0.15)
(0.20)
(0.25)
(0.30)
Trend of Net sales and PAT:
Net Sales(Cr)
169
155
64
-11
-55
-24

454
-115
346
1009
764
590
577
451
502
780
783
-68
-96
751
-30
676
6
-39
1279
-26
598
1400
1200
1000
800
600
400
200
0
PAT (Cr)
200
150
100
50
0
-50
-100
-150
Trend of Employee benefit and Other expenses:

Employee benefit Expence % as Sales
Other expenses % as Sales
60%
52%
50%
40%
38%
41%
25%
30%
39%
32%
31%
24%
19%
28%
25%
18%
16%
20%
10%
32%
39%
36%
24%
15%
15%
14%
0%
10%
13%
18%
16%
12%
13%
10%
11%
Investment Arguments:
The approval for Tatra trucks has come through with delivery commencing from August 2015. The
order backlog of ~Rs11bn-12bn from Tatra is likely to get executed in 18-24 months. which will help
improve profitability of BEMLs defence business for FY16 &FY17.
All the three segments have done well especially on the defence side it is very good. It is very
satisfied and defence for the future is going to be much more exciting because of Make in India
campaign where management is expecting exciting opportunities, which are already up and running.
That should go very well in FY16-FY17.
Coal India, in its commentary, has stated its intent to spend Rs 1500 Cr -2000Cr annually on
machinery procurement including heavy equipment, dumpers, etc segments where BEML is the
market leader.
Key Risks:
Inventory obsolescence
Metro capex cycle recovery
Production Units:
About the company:

BEML Limited is an India-based company engaged in manufacture of rail coaches and
spare parts and mining equipment. Its segment includes Mining & Construction, Rail &
Metro and Defense. The Trading Division deals in non-Company products. The
International Division exports products manufactured by all the three verticals. Under
Mining and Construction business, the Company manufactures and supplies Mining &
Construction equipment such as Bull Dozers, Excavators, Dumpers, Shovels, Loaders
and Motor Graders to various user segments and under Rail & Metro Business, it
manufactures and supplies Rail Coaches, Metro Cars, Steel and Aluminium Wagons
to the rail sector.

FY14
1.5
506.8
3.0
200%
RATIOS
FY15
FY16
1.4
12.8
505.8
506.6
1.2
4.7
82%
37%
FY17E
16.5
518.5
4.7
28%
196.6
0.6
1.02%
759.6
2.2
0.11%
68.8
1.7
0.53%
55.5
1.8
0.51%
0%
2%
0%
1%
3%
3%
3%
4%
0.6
122.9
271.6
48.9
0.22
0.6
129.2
250.3
70.8
0.20
0.7
148.1
208.7
50.5
0.17
0.6
150.0
209.5
40.0
0.16
INCOME STATEMENT
Revenue
Other Income
Total Revenue
COGS
GPM
Other Expenses
EBITDA
EBITDA Margin (%)
Depreciation
EBIT
Interest
PBT
Tax
Tax Rate (%)
Reported PAT
Dividend Paid
No. of Shares
FY14
2904
64
2967
1694
1
373
115
4%
54
60
111
13
4
29%
6
12
4
FY15
2802
60
2862
1564
1
393
70
2%
53
17
71
6
0
-8%
6
5
4
Share Capital
Reserves
Net Worth
Long term Debt
Short term Debt
Deferred Tax
Net Fixed Assets
Capital WIP
Debtors
Trade payables
Total Provisions
Net Current Assets
Total Assets
FY14
42
2039
2081
465
441
0
2546
686
135
977
18
389
284
2420
4770
FY15
42
2035
2077
414
178
0
2491
660
150
992
145
543
290
2148
4591
FY16
2978
39
3017
1703
1
373
129
4%
54
75
49
65
11
18%
53
19
4
FY17E
2521
26
2546
868
0
758
145
6%
46
99
0
125
25
20%
69
19
4
EPS
Book Value
DPS
Valuation(x)
P/E
Price / Book Value
Dividend Yield (%)
RoE
RoCE
Turnover Ratios
Asset Turnover (x)
Net Debt/Equity (x)
BALANCE SHEET
FY16
42
2068
2110
363
147
0
2472
657
59
1208
66
412
317
2157
4331
FY17E
42
2117
2159
345
101
0
2504
694
150
1036
81
276
281
2096
3961

Depreciation
Direct Taxes Paid
OP before WC changes
FY14
10
54
(26)
171
394
CAPEX
Repayment of LTB
Interest Paid
Inc/(Dec) in Cash
Closing Balance
(43)
(28)
(34)
(109)
(12)
(427)
(61)
78
18

CASH FLOW STATEMENT

FY15
FY16
FY17E
5
65
125
53
54
46
12
(15)
(25)
151
201
170
548
84
212
(41)
(36)
(31)
(67)
(5)
(384)
128
18
146
(24)
(30)
(31)
(45)
(5)
(134)
(79)
146
66
(83)
(83)
(18)
0
(19)
(84)
45
66
112
8
BOOK PROFIT
KNR Construction
17-Dec-16
Result Update
CMP
Target Price
Upside
172
163
128
27%
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Cr)
Av. Volume
Nifty
532942
KNRCON
187/81
2417
6190
8139
Stock Performance
1Month
1Year
YTD
16.3
15.5
22.8
30.4
52.7
47.7
Absolute
Rel.to Nifty

2QFY17
Promoters
Public
1QFY17 4QFY16
58%
42%
61%
39%
61%
39%
Strong Execution drove Revenue and Profitability

KNR reported robust revenue growth of 72% YoY to Rs.373 Cr as compare
to Rs. 178 Cr. Revenue growth has mainly driven by the execution of the
orders received last year, is now contributing to the top line. Currently KNR
order book is Rs. 4579 Cr (5x of FY16 revenue) which provide strong
revenue visibilities and management expecting another Rs.1000-1500 Cr of
new orders in next 4-5 months. This will boost the earning and profitability of
FY17E/FY18E. Management maintains 1200 Cr plus revenue guidance for
KNR and its JV partner (Patel Engineering) has signed a share purchase
agreement with Essel group to sell their entire equity share in Patel KNR
infrastructure Ltd. and Patel KNR heavy infrastructure Ltd., BOT project for
enterprise value of Rs. 850 Cr put to together. KNR holds minority stake of
40% in both project. Current debt on both the project together is Rs.780 Cr.
Hence company likely to get Rs. 40 Cr and this amount utilize as growth
capital.
Q2FY17 Result Update : KNR reported robust revenue growth of 72% YoY to Rs.373 cr as against
Rs.217Cr. Growth driven by execution of the orders received in last year is
now contributing to the top line.
EBITDA of the company clocked 43.2% of growth to Rs.56 cr as against
Rs.39Cr in corresponding period last year led by higher revenue growth.
However EBITDA M decline by 300 bps YoY to 15% on account of high
base.
Adjusted Profit after tax grew by the 29% YoY to Rs. 39 (after adjusting
MAT credit) Cr compare to Rs. 30 Cr (after adjusting prior period item).
KNR infuse 90 cr & 130 Cr as equity in walayar BOT project respectively in
Q2FY17 and H1FY17. Out of this promoters put 40 cr and balance part is
funded by the parent company.
Outlook and Valuation

Work commencement on Dindigul Bangalore project and on - going projects
will drive the revenue growth. Going forward we expect top line of Rs. 1433
Cr with 15.5% of EBITDA margin and RoE of 9% in FY17. Currently, the
stock is trading at 11 times of FY17 Expected EV/EBITDA which is
companys historic highs and also one of the highest in the industry. On the
operations front, we still hold positive view on this stock but on the valuation
front we are not very comfortable. We had initiated BUY on KNR
Construction at the adjusted CMP of Rs. 111 on 22th April 2016. Hence, we
recommend to Book Profit on this stock, up by 54% from initiating price.
Company Vs NIFTY
150
KNRCON
NIFTY
140
130
120
110
100
90
Dec-16
Oct-16
Nov-16
Sep-16
Aug-16
Jul-16
Jun-16
May-16
Apr-16
Feb-16
Mar-16
Jan-16
Dec-15
80
Sandip Jabuani
sandip.jabuani@narnolia.com
Financials
Sales
EBITDA
Net Profit
EBIDTA%
P/E
FY13
765
117
49
15.2%
5.1
FY14
895
131
60
14.7%
4.0

FY15
931
127
70
13.6%
17.1
FY16E
995
174
126
17.5%
9.5
FY17E
1521
234
24
15.4%
9
Investment Argument : The ministry and NHAI has set a target of 25000 Km of road for FY17 on awarding
site and in terms of construction, NHAI is targeting to construction 8000 Km while the
Ministry is targeting 7000 Km
Company has taken strategic decision to exit from BOT asset to focus on EPC
projects, which will help company to keep balance sheet assets light. Post the recent
deal KNR debt on consolidated book will come down by 300 Cr.
Concall/ Managment Intreviwe Update :-
NHAI set to award 25000 km road project in FY17 as compare to 10000 km in FY16
KNR aims to take 1000-1500 cr of new road project in next 4-5 months
Marginal impact of demonization of currency on companys operation
Debt will be come down by Rs. 300 Cr on consolidated books post deal with Essel.
KNR infuse Rs.90 cr and Rs. 130 Cr in walayar project respectively in Q2FY17 and
H1FY17. Out of this promoter put Rs. 40 Cr and balance part was funded by parent
company.
Management maintains revenue guidance of Rs. 1200 Cr plus with 13.5-14.5% of EBITDA
Tax rate for the FY17 will be 8-10%
Company continues to have 80IA benefit on project received in FY17.Hence, FY18 tax
rate will be in range of 10-30% depending on composition of execution.
About the Company:KNR constructions Limited ( from know written as "KNRCL" ) is an ISO 9001:2000
Certified company and listed in Bombay StockExchange Limited (BSE) and National
Stock Exchange of India Limited (NSE). KNRCL is a multidomain infrastructure project
development company providing (EPC) engineering, procurement and construction
services across various fast growing sectors namely roads & highways, irrigation and
urban water infrastructure management. Our project execution strength primarily is in road
transportation engineering projects namely construction and maintenance of roads,
highways, flyovers and bridges wherever integral to the projects undertaken .
Significant experience and Strong track record in timely execution of Projects :-
Timely completion
capabilities will help
KNR construction to
grow higher in
competitive
scenario, comapny
earn bonus of 6Cr on
early completation of
Penchalakona
Yerpedu project.

10
Strong order book gives good Revenue visibility
(In Rs. Cr)
Road Sector
Irrigation
4,500
4,000
3,479
3,500
3,899
3,605
3,412
3,407
3,528
3,000
2,500
2,000
1,500
1,256
1,141
1,123
730
1,000
500
72
59
62
62
60
59
680
57
2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17
EBIDTA %
30%
PAT %
25%
25%
20%
21%
10%
14%
14%
10%
9%
4QFY15
1QFY16
14%
15%
8%
20%
18%
18%
7%
15%
15%
14%
15%
10%
10%
1QFY17
2QFY17
5%
0%
2QFY15
3QFY15
2QFY16
3QFY16
4QFY16
Walayar BOT peoject

Provisional Completion Certificate for 100% of Project length has been issued for the
project on 31st
October
Caters 2015
to commercial traffic towards Kochi Port and Kochi International
Container Transshipment Terminal. The project road serves as an arterial link to

most of the important southern cities such as Salem, Erode, Coimbatore, Trissur,
Palakkad, Kochi, Alappuzha, Kollam, Thiruvananthapuram and Nagercoil
Current Debt is Rs.309 Cr and Toll collection in Q1FY17 is Rs.9.57 Cr
KNR infuse Rs.90 cr and Rs. 130 Cr

in walayar project respectively in
Q2FY17 and H1FY17. Out of this
promoter put Rs. 40 Cr and balance
part was funded by parent
company
Muzaffarpur - Barauni BOT peoject

Provisional Completion Certificate for 75% of Project length has been issued for the
project on 3rd June
2016
Muzaffarpur is an important place for wholesale cloth trade and the largest city of
northern Bihar while Barauni city is situated on holy river Ganga and also an important
industrial city of Bihar having major industrial units such as IOC refinery, Barauni
Thermal Power Plant, Hindustan Fertilizers Corporation and Barauni Dairy

Current Toll collection is 6lakh/day.

KNR will receive 100% COD in next
3-4 months and daily collection
likely to go upto 10lakh/day
11

INCOME STATEMENT
Net Revenue
Other Income
Total Revenue
COGS
GPM
Other Expenses
EBITDA
EBITDA Margin (%)
Depreciation
EBIT
Interest
PBT
Tax
Tax Rate (%)
Reported PAT
Dividend Paid
No. of Shares (In Cr)
FY14
895
17
912
707
21%
21
131
15%
59
73
18
72
7
9%
60
3
3
Share Capital
Reserves
Net Worth
Long term Debt
Short term Debt
Deferred Tax
Net Fixed Assets
Capital WIP
Debtors
Trade payables
Total Provisions
Net Current Assets
Total Assets
FY14
28
583
611
343
50
0
954
858
2
75
57
78
57
117
1454
FY15
931
13
944
723
22%
43
127
14%
55
72
13
71
0
0%
70
3
3
FY16
995
42
1038
748
25%
27
174
18%
48
126
56
112
-21
-19%
126
3
3
FY17E
1433
33
1466
1074
25%
39
222
15%
98
124
79
79
9
11%
70
2
3
EPS
Book Value
DPS
Valuation(x)
P/E
Price / Book Value
Dividend Yield (%)
RoE
RoCE
Turnover Ratios
Asset Turnover (x)
Net Debt/Equity (x)
RATIOS
FY14
21
217
1.2
5%
FY15
25
280
1.2
5%
FY16
45
248
1.2
3%
FY17E
25
272
0.6
3%
0.8
0.1
6.88%
3.4
0.3
1.38%
2.3
0.4
1.16%
6.9
0.6
0.38%
10%
7%
9%
5%
18%
9%
9%
9%
0.6
31
27
32
0.85
0.5
43
28
30
0.91
0.5
49
30
44
0.66
0.6
49
21
44
0.66
BALANCE SHEET
FY15
28
760
788
672
88
0
1460
1343
4
110
44
75
42
174
2012
FY16
28
669
697
631
106
0
1328
1263
7
135
45
119
71
260
2051
CASH FLOW
FY17E
28
737
765
502
173
0
1268
1333
0
194
102
173
87
306
2367

Depreciation
Direct Taxes Paid
Op. before WC Change
Non Current Investment
Capex
Repayment of LTB
Interest Paid
Inc/(Dec) in Cash
Closing Balance

FY14
72
59
24
147
239
0
512
(485)
278
18
3
276
31
19
50
FY15
71
55
33
145
66
0
548
(549)
342
14
3
462
(21)
50
29
FY16
112
48
5
214
256
0
258
(254)
12
57
3
2
3
29
33
FY17E
79
98
9
255
258
0
167
(167)
(129)
79
2
(142)
(52)
45
-7
12
BUY
HDFC BANK
15-Dec-16
Demonetization to provide long term benefits
Result Update
CMP
1176
Target Price
1400
1400
Upside
19%
0%
Market Data
BSE Code
500180
NSE Symbol
HDFCBANK
1318/928
300373
52wk Range H/L

Mkt Capital (Rs Cr)
Av. Volume (,000)
950
8153
Nifty
Stock Performance
1Month
3 Month
1Year
Absolute
(2.9)
12.5
8.7
Rel.to Nifty
(3.9)
5.4
6.1

2QFY17
Promoters
Public
Others
Total
1QFY17 4QFY16
26.4
26.3
26.2
73.6
0.0
100.0
73.7
0.0
100.0
73.8
0.0
100.0
Company Vs NIFTY
125
HDFCBANK
NIFTY
120
115
110
After the AQR review, banking system is again grappling with the new
challenges in the form of demonetization. In near term the operation of the
banks has got hampered due to spurt in cash management activity. This has
no doubt impacted the lending activities of the banks during the
demonetization period. But this demonetization move may come up with
huge opportunities for the banks in long run in the form of spurt in low cost of
funds and expectation of higher trading gains.
With the strong fundamentals and efficient management, HDFC Bank has
the ability to overcome the tough time of the industry. Aggressive on digital
mode, leadership in credit card business and wide network presence will help
HDFC bank to surpass the peers in this demonetization move.
Result Highlights 2Q FY17

HDFC BANK reported 20% YoY growth in its PAT to Rs 3455 Cr backed by
20% growth in NII. NIM was stable to 4.20% YoY. Non Fund based Income
grew by 14% YoY due to surge in profit from sale of investment. Cost to
Income ratio improved marginally to 44.7% against 45.4% a year back.
Operating profit grew by 19% YoY. Provisions and contingencies grew by
10% YoY to Rs 749 Cr but sequentially it declined by 14%. Assets Quality
stabilizes with marginal improvement in GNPA at 1.02% against 1.04% QoQ.
Advances grew by 18% YoY to Rs 494418 Cr. Deposits grew by 17% YoY
led by 19% growth in CASA. SA grew by 22% whereas CA grew by 13%
YoY. CASA was maintained at 40% level of the total deposits.
Assets Quality Stabilizes

GNPA declined marginally to 1.02% against 1.04% on 2Q FY17 but it
increased by 11 bps YoY. NNPA was at 0.30% against 0.32% on 2Q FY16.
Gross slippages during the quarter were Rs 1440 against Rs 1761 Cr QoQ.
Recovery & Upgrades were Rs 764 Cr in this quarter. Restructured assets
were maintained at 0.10% of the gross advances of the bank. Provisions for
the quarter grew by 10% YoY. Specific provision was at 71% against 73% a
year back. Floating provisions outstanding is Rs 1240 Cr. Management
highlighted that the assets quality on retail book remained stable.
105
100
Stable NIM
95
90
85
80
DEEPAK KUMAR
NIM was stable at 4.2% YoY but sequentially NIM declined by 20 bps from
4.4%. This decline in NIM was resulted due to excess liquid investment which
was kept for the FCNR redemption and some part of it may be attributed to
the MCLR regime. However NIM remained within the guided range of 4%4.3%. Going further management is confident to maintain the NIM within the
guided range.
Deepak.kumar@narnolia.com
13
HDFCBANK
Moderate Core Fee Growth
Other Income grew by 14% YoY to Rs 2901 Cr backed by income from sale of investments which increased by 75% YoY to Rs
284 Cr. Fee & commission income grew by 13% YoY to Rs 2104 Cr. Barring FX& Derivatives, total other income grew by 17%
YoY. FX & Derivatives income for the quarter was Rs 295 Cr registering negative growth of 8% YoY.
Healthy Retail Loan Growth

Advances in this quarter grew by 18% YoY led by strong growth on retail banking. As per the internal classification of the bank,
retail loan portfolio grew by 21.7% and corporate loan portfolio grew by 14.3% YoY. Corporate loan growth was low due to
some short term loan matured during the quarter which was lent in the March month. As per the Basel 2 classification retail loan
and corporate loan mix is 54:46 of the portfolio. Under the retail loan personal loan grew by 39% YoY. Loan against securities
grew by 35% YoY. The growth in vehicle loan segment was 19% YoY.
(Rs in Crore)
Quarterly Performance
Financials
Interest Inc.
Interest Exp.
NII
Other Income
Total Income
Ope Exp.
PPP
Provisions
PBT
Tax
Net Profit
2QFY15
11848
6337
5511
2047
7558
3498
4060
456
3604
1223
2381
3QFY15
12396
6696
5700
2535
8235
3456
4779
560
4218
1424
2795
4QFY15
13006
6993
6013
2564
8577
3855
4722
577
4145
1338
2807
1QFY16
14041
7652
6389
2462
8851
4001
4850
728
4122
1426
2696
2QFY16
14773
8092
6681
2552
9233
4190
5043
681
4362
1492
2869
3QFY16
15411
8343
7069
2872
9941
4205
5736
654
5082
1725
3357
4QFY16
15997
8543
7453
2866
10319
4584
5735
662
5072
1698
3374
1QFY17
16516
8735
7781
2807
10588
4769
5819
867
4952
1714
3239
2QFY17
17070
9076
7994
2901
10895
4870
6025
749
5276
1820
3455
YoY %
16%
12%
20%
14%
18%
16%
19%
10%
21%
22%
20%
QoQ%
3%
4%
3%
3%
3%
2%
4%
-14%
7%
6%
7%
Profitability Metrix
Ratios
Yield On Earning Asset %

Overall Cost Of Funds %
NIM %
NII Growth % (YoY)
Other Inc./Tot. Net Inc.%
C/I Ratio %
Empl. Cost/ Tot. Exp. %
Other Exp/Tot. Exp.%
PPP Grpwth % (YoY)
Provision/PPP %
Tax %
PAT Growth %
2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 YoY(bps) QoQ(bps)
10.4
10.5
10.5
10.6
10.4
10.2
10.1
9.9
9.8
(0.06)
(0.13)
5.7
5.9
5.9
6.0
6.0
5.8
5.7
5.6
5.5
(0.08)
(0.04)
4.5
4.4
4.4
4.3
4.2
4.3
4.3
4.4
4.2
(0.20)
23.1
23.0
21.4
23.5
21.2
24.0
24.0
21.8
19.6
37.1
44.5
42.6
38.5
38.2
40.6
38.5
36.1
36.3
(0.05)
0.22
46.3
42.0
44.9
45.2
45.4
42.3
44.4
45.0
44.7
(0.01)
(0.34)
33.4
32.8
34.4
34.0
33.7
34.0
32.7
33.2
34.0
0.01
0.79
66.6
67.2
65.6
66.0
66.3
66.0
67.3
66.8
66.0
(0.00)
(0.79)
19.9
22.9
24.9
26.2
24.2
20.0
21.5
20.0
19.5
11.2
11.7
12.2
15.0
13.5
11.4
11.6
14.9
12.4
(0.08)
(2.46)
33.9
33.8
32.3
34.6
34.2
33.9
33.5
34.6
34.5
0.01
(0.10)
20.1
20.2
20.6
20.7
20.5
20.1
20.2
20.2
20.4

14
HDFCBANK
Yield On Earning Assets %
Overall Cost Of Funds %
PAT Growth %
NIM %
NII Growth % (YoY)
C/I Ratio %
30.0
12.0
47.0
46.0
25.0
10.0
45.0
8.0
20.0
6.0
15.0
4.0
10.0
2.0
5.0
44.0
43.0
42.0
41.0
40.0
39.0
Other income Break Up

Fees & Commissions
FX & Derivatives
Profit / (loss) on Invest.
Miscellaneous Income
Including
Recoveries
Total
Other
Income
(Rs in Crore)
2QFY15
1537
222
95
194
2047
3QFY15
1807
253
266
210
2535
4QFY15
1835
329
196
204
2564
1QFY16
1713
348
126
275
2462
2QFY16
1869
320
162
201
2552
Other Income/Total Net Income %

31.0
30.0
29.0
28.0
4QFY16
2172
283
116
295
2866
1QFY17
1978
315
277
237
2807
2QFY17
2104
295
284
219
2901
YoY%
13%
-8%
75%
9%
14%
QoQ%
6%
-6%
2%
-8%
3%
Fee Income/ Advances %

0.60
0.50
0.40
27.0
0.30
26.0
0.20
25.0
0.10
24.0
3QFY16
2005
277
328
262
2872
Outlook & Valuation:

HDFC Bank is one of the leading banks in the industry with the strong fundamentals, best in assets quality, adequate capital, steady
loan growth and consistency in profitability growth. Where some of its peers in large cap are struggling with the deteriorating assets
quality, HDFC Bank is well poised to take the advantage from improving macroeconomic scenario. While in the short term there may
be hiccups in the lending activity due to demonetization drive and this has led to uncertainty over the earnings during this period, but
the long term growth and profitability remain intact for the bank. One of the huge benefits from the demonetization drive will arise in
the form of shoot in CASA ratio which will help the bank to cut the rates further to drive the demand. Strategy of the management to
focus on high yield products will help the bank to maintain the NIMs apart from the expected benefits from spurt in CASA (due to
demonetization). We expect the RoE of 19% and maintain BUY rating on this stock with our previous target price of Rs
1400.
15
HDFCBANK
Concall Highlights:
>> Cost of FCNR deposits will be close to 8.5%.
>> Sequentially NIM declined by 20 bps out of which close to 10 bps would be due to MCLR and some of it will be due to excess
investment for redemption of FCNR deposits.
>> Margin will broadly remain in the range of 4 to 4.3%.
>> Advances growth was lower due to lower corporate growth under which some of the short term loan which spiked in the March
Qurter has matured in this quarter.
>> In retail sector there is intensified competition on yields and processing fees.
>> Floating provisions is Rs 1240 Cr.
>> Assets Quality on retail side remained stable.
>> Provision breakup for the quarter was- Rs 641 Cr of NPA provision, Rs 101 Cr for general provisions and rest are others.
>> Number of employees increased in this quarter. Hiring has been done largely for business banking and retail business.
Assets Quality Performance

GNPA (Rs)
GNPA %
NNPA (Rs)
NNPA %
Slippages (Rs)
Restructured Assets %
Specific PCR %
2QFY15
3362
1.02
917
0.28
1030
0.10
73
GNPA %
NNPA %
1.20
1.00
0.80
0.60
0.40
0.20
-
3QFY15
3468
0.99
904
0.26
1164
0.10
74
4QFY15
3438
0.93
896
0.25
1720
0.10
74
1QFY16
3652
0.95
1028
0.27
1390
0.10
72
2QFY16
3828
0.91
1038
0.25
1300
0.10
73
3QFY16
4255
0.97
1261
0.29
1551
0.10
70
Restructured Assets %
4QFY16
4393
0.94
1320
0.28
1700
0.10
70
1QFY17
4921
1.04
1493
0.32
1761
0.10
70
2QFY17
5069
1.02
1489
0.30
1440
0.10
71
YoY Ch.
32%
0.11
43%
0.05
11%
0.00
-2.26
QoQ Ch.
3%
-0.02
0%
-0.02
-18%
0.00
0.98
Specific PCR %
74
73
72
71
70
69
68
67

16
HDFCBANK
Advances
Net Advances (Rs in Cr)
Advances Growth YoY %
>> Growth QoQ %
2QFY15
327273
21.84
4.86
3QFY15
347088
16.97
6.05
4QFY15
365495
20.63
5.30
1QFY16
382010
22.40
4.52
2QFY16
418541
27.89
9.56
3QFY16
436364
25.72
4.26
4QFY16
464594
27.11
6.47
1QFY17
470622
23.20
1.30
2QFY17
494418
18.13
5.06
Break-up of Advances % (As per internal business classification)

2QFY15
3QFY15
4QFY15
1QFY16
13.46
13.14
12.79
13.11
7.13
7.20
7.12
7.61
5.98
5.76
6.60
7.04
14.22
14.05
13.65
13.34
3.95
3.95
4.45
4.42
4.28
4.43
4.42
4.41
7.48
7.19
6.83
6.93
2.61
2.78
3.02
2.81
1.37
1.37
1.38
1.38
1.18
1.13
1.11
1.11
0.33
0.35
0.37
0.35
61.98
61.33
61.75
62.53
38.02
38.67
38.25
37.47
2QFY16
12.81
7.75
6.81
13.74
4.67
4.30
6.92
2.88
1.38
1.04
0.36
62.66
37.34
3QFY16
12.91
8.13
6.52
13.66
4.61
4.51
6.82
3.06
1.40
1.01
0.38
63.00
37.00
4QFY16
12.33
8.12
6.86
13.15
4.94
4.42
6.66
3.15
1.37
0.99
0.41
62.38
37.62
1QFY17
12.66
8.72
7.14
12.84
4.76
4.52
6.68
3.22
1.41
1.04
0.40
63.39
36.61
2QFY17
13.03
9.11
6.79
13.31
5.03
4.32
6.79
3.29
1.44
1.03
0.42
64.55
35.45
Deposits
Deposits (Rs in Cr)
>> Growth YoY %
>> Growth QoQ %
CA %
SA %
CASA %
>>CASA Growth YoY %
>> Growth QoQ %
Credit Deposit Ratio%
2QFY16
506909
29.75
4.70
13.77
25.95
39.72
19.41
4.94
82.57
3QFY16
523997
26.53
3.37
14.13
25.85
39.98
23.67
4.04
83.28
4QFY16
546424
21.21
4.28
16.18
27.06
43.25
19.05
12.81
85.02
1QFY17
573755
18.50
5.00
13.26
26.61
39.87
19.24
-3.19
82.03
2QFY17
591731
16.73
3.13
13.38
27.03
40.41
18.76
4.51
83.55
Advances Break Up %
Auto
Personal Loans
Home Loans
Business Banking
Kisan Gold Card
Credit Cards
CV/CE
Others
Two Wheelers
Gold Loans
Loans against securities
Total Retail Advances
Corp. and Overseas Adva.
Retail Adv. %
70.0
60.0
50.0
40.0
30.0
20.0
10.0
-
2QFY15
390682
24.81
5.00
14.80
28.36
43.16
19.71
5.39
83.77
3QFY15
414128
18.59
6.00
13.79
27.11
40.90
11.00
0.46
83.81
Corp. and Overseas Adv. %
4QFY15
450796
22.72
8.85
16.32
27.71
44.03
20.58
17.18
81.08
1QFY16
484175
30.13
7.40
13.82
25.81
39.63
19.92
-3.34
78.90
CA %
Adv. Growth YoY %
30.0
25.0
20.0
15.0
10.0
5.0
-
50
45
40
35
30
25
20
15
10
5
-

SA %
CASA %
>>CASA Growth YoY %
25.0
20.0
15.0
10.0
5.0
-
17
HDFCBANK
INCOME STATEMENT
Int./disc. on advances / bills

Income on Investments
Int. on bal.with RBI
Others
Total Interest Income
Total Interest expended
Net Interest Income
Other Income
Total Income
Total Operating Expenses
Pre Provisioning Profit
Provisions and Contingencies
Profit Before Tax
Tax
PAT
BALANCE SHEET
(Rs in Crore)
FY14
31,687
9,037
356
56
41,136
22,653
18,483
7,920
26,402
12,042
FY15
37,181
10,706
517
66
48,470
26,074
22,396
8,996
31,392
13,988
FY16
44,828
14,120
362
912
60,221
32,630
27,592
10,752
38,343
16,980
1,588
12,772
4,294
8,478
2,076
15,329
5,113
10,216
2,726
18,638
6,342
12,296
FY17E
54,070
16,035
237
947
71,289
38,042
33,246
12,777
46,023
20,729
14,360
3,353
21,941
7,592
14,350
(Rs in Crore)
Capital
Reserves & Surplus
Deposits
Borrowings
Other Liabilities & Provisions
Total Capital & Liabilities
FY14
FY15
FY16
FY17E
480
501
506
506
42999 61508 72172 83556
367337 450796 546424 661363
39439 45214 53018 60971
41344 32484 36725 38561
491600 590503 708846 844957
Cash & Balances with RBI

Bal. with Bank&Money at Call
Investments
Advances
Fixed Assets
Other Assets
Total Assets
25346 27510 30058 36221

14238
8821
8861
13768
120951 166460 163886 180274
303000 365495 464594 562159
2940
3122
3343
3677
25125 19095 38104 48858
491600 590503 708846 844957
RATIOS
Business Ratios
Credit-Deposit(%)
CASA %
Efficiency Ratios
Emp. Cost as a % of Total Inco. (%)
Other Exp./Total Inco. (%)
Cost Income Ratio (%)
Spread Analysis As Calculated
Yield on Advances (%)
Yield on Investments (%)
Yield on Earning Assets (%)
Cost of Deposits (%)
Cost of Fund (%)
Interest Spread (%)
NIM (%)
Profitability Ratio
RoE %
RoA %
Int. Expended / Int. Earned (%)
Provisions/PPP (%)
Other Income/Net Income (%)
Tax Rate (%)
Asset Quality Ratio
GNPA (%)
GNPA(Rs)
NNPA (%)
NNPA (Rs)
PCR (%)
Os. Std. Restr. Assets (%)
Capital Adequacy Ratio
Capital Adequacy Ratio (%)
Tier I Capital (%)
Tier II Capital (%)
Narnolia Securities
Ltd
18
FY14
82.5
45.0
FY15
81.1
44.0
FY16
85.0
43.0
FY17E
85.0
42.0
34.7
65.3
45.6
34.0
66.0
44.6
33.6
66.4
44.3
33.0
67.0
45.0
12.2
8.6
10.4
5.7
6.0
4.5
4.4
11.8
8.7
10.4
5.7
5.8
4.6
4.4
11.5
8.9
10.3
5.9
5.9
4.4
4.3
11.2
8.7
10.0
5.4
5.7
4.4
4.3
21.3
1.9
55.1
11.1
30.0
33.6
19.4
1.9
53.8
11.9
28.7
33.4
18.3
1.9
54.2
12.8
28.0
34.0
18.9
1.9
53.4
13.3
27.8
34.6
0.98
2989
0.30
820
73
0.20
0.93
3438
0.25
896
74
0.10
0.94
4393
0.28
1320
70
0.10
16.1
11.8
4.3
16.8
13.7
3.1
15.5
13.2
2.3
BUY
Godrejcp
15th Dec 2016
Company Update
CMP
1455
Target Price
1760
1760
Upside
21%
Market Data
BSE Code
532424
NSE Symbol
GODREJCP
1710/1120
49,554
266
8182
52wk Range H/L

Mkt Capital (Rs Cr)
Av. Volume(,000)
Nifty
Stock Performance
1M
3M
12M
Absolute
0.1
-10.2
16.7
Rel.to Nifty
1.5
-4.1
10.2

2QFY17
1QFY17 4QFY16
Promoters
63.3
63.3
63.3
Public
36.7
36.7
36.7
Others
0.0
0.0
0.0
100.0
100.0
100.0
Total
The company has indicated that due to demonetization liquidity in market is

stressed .The company is witnessing pressure at wholesale level where
maximum cash transactions are involved. The company gets ~40-45%
sales through wholesale network which is impacted by demonetization. On
the positive side, it is getting upward traction from modern trade and ecommerce which is growing in double digits.To counter the effect of
demonetization, GODREJCP is expanding its direct reach and extended the
credit terms to different channel partners. Management is rationalizing ad
expenses and has increased home insecticide products prices by 2% in the
late September 2016 to counter upward movement of input prices. Going
forward we expect relatively less impact on GODREJCP compared to other
FMCG players, as company gets approx 46% of its revenue from
international market. Secondly companys proactive initiatives of cutting
promotions and increasing price of the products gives us confidence on
margin side. Demonetization will help company to increase market share as
compared to regional players which have more dependence on wholesale
channels of distribution. Considering lesser dependence of company in
Indian business, proactive approach towards maintaining the margin and
relatively less penetrated product portfolio, we have positive view on this
stock and we maintain `BUY with target price of Rs 1760.
Q2FY17_Result Update
Sales grew by ~11% YoY to Rs 2439 Cr led by 18%growth in domestic

Household Insecticides business. Domestic Soap business declined by
~10% YoY to Rs 377 Cr and hair color business showed flat growth with Rs.
139 Cr of sales. International business grew by ~16% YoY to Rs.1120 Cr.
Gross margin improved by 94 Bps YoY to ~57% due to declined in input
prices. EBITDA margin improved by 43 Bps YoY to ~19%.PAT margin
improved by 296 Bps YoY to ~13% led by lower exceptional item(in 2QFY17
(Rs 0.47 cr Vs Rs77.51 cr in 2QFY17). PAT grew by 44% YoY to Rs 318 Cr.
Concall Highlights(Demonetization )
Company Vs NIFTY
150
GODREJCP
NIFTY
140
130
120
110
Demonetization: liquidity has hit. Situation is improving.

Expects modern trade and e-commerce to do well going forward.
The company has withdrawn consumer offers which in turn led to effective
price increase in 3QFY17.
Hair color is more impacted than home insecticide.
Saving from Project pie in India is estimated to be Rs 100 cr in FY17.
Retail is improving but wholesale is a question mark.
100
90
Financials
80
Sales
EBITDA
Net Profit
Rajeev Anand
EPS
rajeev.anand@narnolia.com
ROE
FY13
6416
982
796
23
24%
FY14
7602
1150
760
22
20%

FY15
8276
1365
907
27
21%
FY16
8968
1639
1119
33
22%
Rs,Cr
FY17E
10258
2007
1406
41
23%
19
Net Revenue
Other Income
Total Revenue
COGS
GPM
Other Expenses
EBITDA
EBITDA Margin (%)
Depreciation
EBIT
Interest
PBT
Tax
Tax Rate (%)
Reported PAT
Dividend Paid
No. of Shares
FY14
7602
63
7665
3555
53.2%
2149
1150
15%
82
1068
107
1024
210
21%
760
199
34.0
INCOME STATEMENT
FY15
FY16
8276
8968
92
67
8368
9035
3842
3846
53.6%
57.1%
2293
2523
1365
1639
16%
18%
91
103
1275
1536
100
100
1266
1503
272
317
22%
21%
907
1119
211
225
34.0
34.0
Share Capital
Reserves
Net Worth
Long term Debt
Short term Debt
Deferred Tax
Capital Employed
Net Fixed Assets
Capital WIP
Debtors
Trade payables
Total Provisions
Net Current Assets
Total Assets
FY14
34
3741
3775
1590
111
5
5366
1736
167
711
705
1234
80
652
8325
BALANCE SHEET
FY15
FY16
34
34
4277
5064
4311
5098
2023
2449
147
182
3
2
6334
7547
1732
1780
225
41
805
1118
894
746
1087
1037
124
100
230
624
9142
10153
FY17E
10258
61
10319
4233
58.7%
2253
2007
20%
137
1870
135
1796
377
21%
1406
235
34.0
FY17E
34
6178
6212
4227
207
2
10439
3750
0
1447
996
1180
115
1244
13229
EPS
Book Value
DPS
Valuation(x)
P/E
Price / Book Value
Dividend Yield (%)
RoE
RoCE
Turnover Ratios
Asset Turnover (x)
Net Debt/Equity (x)

Depreciation
Direct Taxes Paid
O.Profit before WC changes
Non Current investment
Capex
Repay of LT Borrowings
Interest Paid
Inc/(Dec) in Cash
Closing Balance

FY14
22.3
110.9
5.8
26%
RATIOS
FY15
FY16
26.6
32.9
126.6
149.7
6.2
6.6
23%
20%
FY17E
41.3
182.5
6.9
17%
38.2
7.7
0.7%
30.2
6.4
0.8%
41
9.0
0.5%
39
8.8
0.4%
20%
20%
21%
20%
22%
20%
23%
18%
0.9
34
111
59
0.4
0.9
35
102
48
0.5
0.9
46
124
42
0.5
0.8
52
130
42
0.7
CASH FLOW STATEMENT

FY14
FY15
FY16 FY17E
896
1024
1266
1503
77
82
91
103
-207
-238
-257
-317
1009
1162
1400
1706
820
1129
1005
711
0
34
34
34
-264
-133
-190
455
-865.2
-494.8 -1213.8 148.0
-84
-113
-119
-100
-188
-199
-211
-225
282
-633
-12
-325
237
1
-221
534
388
624
625
894
624
625
404
1428
625
404
561
996
20

201 | 2nd Floor | Marble Arch Building | 236B-AJC Bose Road |
Kolkata-700 020 , Ph : 033-40501500
email: narnolia@narnolia.com, website
: www.narnolia.com
Risk Disclosure & Disclaimer: This report/message is for the personal information of
the authorized recipient and does not construe to be any investment, legal or taxation
advice to you. Narnolia Securities Ltd. (Hereinafter referred as NSL) is not soliciting any
action based upon it. This report/message is not for public distribution and has been
furnished to you solely for your information and should not be reproduced or
redistributed to any other person in any from. The report/message is based upon publicly
available information, findings of our research wing East wind & information that we
consider reliable, but we do not represent that it is accurate or complete and we do not
provide any express or implied warranty of any kind, and also these are subject to change
without notice. The recipients of this report should rely on their own investigations,
should use their own judgment for taking any investment decisions keeping in mind that
past performance is not necessarily a guide to future performance & that the the value of
any investment or income are subject to market and other risks. Further it will be safe to
assume that NSL and /or its Group or associate Companies, their Directors, affiliates
and/or employees may have interests/ positions, financial or otherwise, individually or
otherwise in the recommended/mentioned securities/mutual funds/ model funds and
other investment products which may be added or disposed including & other
mentioned in this report/message.

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IEA Report

21th Dec 2016

21th Dec 2016

20th Dec 2016

19th Dec 2016

16th Dec 2016

15th Dec 2016

14th Dec 2016

IEA Edition No.-

Previous Target Price

Change from Previous

52wk Range H/L

21th Dec 2016

EBITDA margin has improved by 690 bps to 20.2% in 2QFY17.

India business grew by 10.91% to Rs. 674 Cr in 2QFY17.

US business grew by 28.87% to Rs. 771 Cr in 2QFY17.

Share Holding Pattern-%

Europe Formulations Business decreased by 16.00% at Rs. 134Cr.

Outlook and Valuation

Management expects domestic business to grow by 15% in FY17 and US

Glenmark has launched cholesterol drug Zetia in US on Dec 12,2016

Filings with USFDA

Financials Snap Shot

CASH FLOW STATEMENT

Narnolia Securities Ltd

As per the management company would be looking to double its revenue to

Share Holding Pattern-%

In Defence segment, lots of opportunities are coming. Management assures

are a lot of options and opportunities that are going to emerge. We

Please refer to the Disclaimers at the end of this Report

Order book position:

Trend of Gross margin and EBITDA margin:

0.52 0.50 0.13

Trend of Net sales and PAT:

Narnolia Securities Ltd

Trend of Employee benefit and Other expenses:

Other expenses % as Sales

About the company:

Narnolia Securities Ltd

Financials Snap Shot

OP/(Loss) before Tax

Narnolia Securities Ltd

CASH FLOW STATEMENT

Share Holding Pattern-%

Strong Execution drove Revenue and Profitability

Outlook and Valuation

Narnolia Securities Ltd

Concall/ Managment Intreviwe Update :-

Significant experience and Strong track record in timely execution of Projects :-

Narnolia Securities Ltd

Strong order book gives good Revenue visibility

(In Rs. Cr)

2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17

Walayar BOT peoject

Container Transshipment Terminal. The project road serves as an arterial link to

Current Debt is Rs.309 Cr and Toll collection in Q1FY17 is Rs.9.57 Cr

KNR infuse Rs.90 cr and Rs. 130 Cr

Muzaffarpur - Barauni BOT peoject

Narnolia Securities Ltd

Current Toll collection is 6lakh/day.

Financials Snap Shot

OP/(Loss) before Tax

Narnolia Securities Ltd