IEA Report: 3rd January, 2017

IEA Report
3rd Jan 2017

MARUTI
"BUY"
3rd Jan 2017
We expect current demonetization issue may not be impacting much in the long run to the passenger vehicle segment because more than 75%
vehicles are financed. But this issue may be hampering sales in near future due to cash crunch in the economy. We assume volumes in the second
half may be down by 10% in comparison to the first half 2017. Higher sales of premium segment cars will further increase the realization per car,
which will in turn maintain the margins going ahead despite the rising commodity prices. Hence we have positive view on this stock and we
recommend "BUY" with a target price of Rs.6100. ..................................... ( Page : 2-4)
IRB
2nd Jan 2017
"ACCUMULATE"
Firstly EPC revenue was impacted due to heavy monsoon during Q2FY17 and secondly suspension of toll collection for the period of 24 days
because of demonetization will affect the top line of the company in FY17. We expect top line of Rs. 5627 Cr (Growth of 10% YoY) with healthy
52.7% EBITDA margin in FY17E. Significant reduction in debt post the InvIT IPO and an arbitral award will boost the bottom line of the company. At
a current price of Rs. 191 stock trades at 7.3x to FY17 expected EV/EBITDA and 1.3x to P/B. The stock has corrected nearly 18% post
demonetization announcement which makes this stock attractive at this price with present fundamentals. Hence, we revised our rating from HOLD
to ACCUMULATE with target price of Rs.235 . ............................................ ( Page : 5-8 )
BIOCON
"Neutral"
30th Dec 2016
As per the management, exports have not been impacted due to demonetization, Indian business saw lower sales in the month of November. The
dependence of the company on domestic business is ~ 31% in total revenue. Recently Biocon has Submitted Trastuzumab dossier to the United
States Food & Drug Association (USFDA) which is an important milestone for Biocon and its review process is expected to take 18-24 months. The
market size of Trastuzumab injection is valued at about $6.5 billion, according to IMS data. Crestor Generic has been approved by USFDA and
Biocon is on track to launch the product in near future. This will be a huge opportunity for Biocon to take first mover advantage with its bio-similar
products. On the contrary ongoing price control pressure in India and US and discontinuance of key products may put some uncertainties in near
term. Hence we maintain Neutral rating in this stock. ( Page : 9-11)
BEL
"BUY"
29th Dec 2016
The company is having robust order intake during H1FY17 which gives decent revenue growth visibility going forward and this is expected to
remain in the range of Rs 10000cr-15000cr over the next two-three years. Currently, the defence sector is in the limelight due to the governments
strong focus on making defence procurements central to the Make in India campaign. The company has ~35% market share in Indias defence
electronics segment and is likely to be one of the biggest beneficiaries of the offset clause. Based on above mentioned reasons we see strong
medium-term earnings visibility for the company, hence we recommend BUY at a target price of Rs 1670 (Potential upside 22%).
..................................................... ( Page : 12-15)
VOLTAS
"NEUTRAL"
28th Dec 2016
The company is cautious in taking new orders in the EMPS segment and its focus is primarily on Govt. projects i.e. smart cities, rural electrification
and water treatment wherein execution cycle is steady and payments are secured. Management expects profitability to improve after closing most
of its low-margin and loss-making legacy projects by end-FY17. Going forward we expect near-term earnings to be under pressure due to lower
sales and margin in the UCP segment and continued subdued performance in EMPS segment. Right now we are not seeing any major uptick in
demand so we revised our estimates with flat revenue growth from 5% to 0.7% in FY17E and presently we are NEUTRAL on this stock at a revised
target of Rs 330 (from Rs 345). ..................................... ( Page : 16-19)
ASHOKLEY
"BUY"
27th Dec 2016
Going forward, We assume that the upcoming emission norms BS-IV to BS-VI, focus towards the export markets, improvement in demand from
infrastructure segment, diminution of investments in subsidiaries will help the company to focus on its commercial vehicle business and
government's initiative to develop defence products in the country can be volume boosters for the company in FY17. The current demonetization
issue has impacted the transport sector most because a lot of transactions happen through cash. The sales may be down by 10-12% for next couple
of months but we are hopeful that the situation might improve in 4QFY17 due to pre-buying during the quarter. We expect that the company will
maintain a healthy ROE of over 20% going ahead. We maintain 'BUY' looking at the huge growth potential going ahead but considering the
uncertain demand scenario we reduce our target to Rs.110. .................... ( Page : 20-22)
Narnolia Securities Ltd
IEA Edition No.-
919
BUY
MARUTI SUZUKI INDIA LIMITED
Result Update
CMP
3-Jan-17
5466
Target Price
Previous Target Price
Upside
Change from Previous
6100
12%
-
Market Data
BSE Code
NSE Symbol
532500
MARUTI
52wk Range H/L

Mkt Capital (Rs Cr)
Av. Volume
Nifty
Maruti reported 3% growth in sales volume in the 3QFY17, despite the

current demonetisation issue. Domestic volumes grew by 4% on account of
higher sales of premium segment cars (Baleno and Brezza). Exports have
shown 1% of de-growth YoY primarily led by currency issue in various
countries and higher import duty imposition by Sri-Lankan government on
800-1000 cc cars. Realization improved on account of better product mix
and price increase during the quarter. Management has stated that the first
phase of the Gujarat plant will begin its commercial production in 4QFY17
and this plant will take care of new models and the exports. There will be
some cost pressure going ahead due to higher depreciation and fixed cost
on new plant. The management is also exploring new geogarphies to
expand it reach in Latin American and Europen market.
5972/3202
165120
52910
8,180
Stock Performance
2QFY17 Result Highlights

Maruti reported Rs.17843 crore of net sales in 2QFY17 a growth of 29%
over previous year. This was driven by 18% volume growth and 9%
realization growth YoY.
1Month
1Year
YTD
EBITDA margin improved to 17% by 150bps YoY higher steel prices and
employee cost.
7.8
6.7
-3.8
2.6
18.4
15.5
Royalty stood at Rs.1088 crore (6.1% of sales) during the quarter due to
appreciation in Yen.
Absolute
Rel.to Nifty
Maruti reported a PAT of Rs.2398 crore a growth of 60.2% YoY on account

of higher other income in the quarter.
Share Holding Pattern-%

2QFY17 1QFY17
Promoter
Public
Others
Total
56.2
43.8
-100.0
4QFY16
56.2
43.8
-100.0
56.2
43.8
-100.0
Company Vs NIFTY
140
MARUTI
NIFTY
130
120
Outlook
We expect current demonetization issue may not be impacting much in the
long run to the passenger vehicle segment because more than 75%
vehicles are financed. But this issue may be hampering sales in near future
due to cash crunch in the economy. We assume volumes in the second half
may be down by 10% in comparison to the first half 2017. Higher sales of
premium segment cars will further increase the realization per car, which will
in turn maintain the margins going ahead despite the rising commodity
prices. Hence we have positive view on this stock and we recommend
"BUY" with a target price of Rs.6100.
110
Rs. In crore
100
90
Dec-16
Oct-16
Nov-16
Sep-16
Jul-16
Aug-16
Jun-16
May-16
Apr-16
Mar-16
Feb-16
Jan-16
Dec-15
80
Naveen Kumar Dubey
Financials
2QFY17
1QFY17
2QFY16
QoQ
YoY
Sales
EBITDA
Net Profit
EBIDTA%
PAT %
17843
3037
2398
17.0%
13.4%
14927
2216
1486
14.8%
10.0%
13851
2245
1497
16.2%
10.8%
20%
37%
61%
29%
35%
60%
naveen.dubey@narnolia.com
Narnolia Securities Ltd,
MARUTI
Investment Arguments
In the recent past a series of new product launches have been successful for the company. It was a strategic decision to enter
in those segments where it has very few or no products. The same way the company is planning to launch 15 new products till
2020.
Maruti is onset to unleash the potential in the international business by targeting European and Latin American markets.
Recently launched and upcoming new products are technologically sound and competent to the export markets.
Gujarat plant will begin its commercial production in 4QFY17 and this plant will take care of new models and the exports. It will
take 6 months to ramp up the production and there will be some cost pressure going ahead due to higher depreciation and fixed
cost on new plant.
Maruti is also aggressively working towards bringing down the import content in its cars from an average 16% at the end of
FY16 to 10% as part of its vision 2.0 plan. Currently about 14 percent of imports are yen denominated. Management expects to
bring it down to 5 percent. Typically, 1% movement in yen leads to around 1% change in the operating profit of Maruti.
Management Highlights
Lower double digit growth guidance for FY17 due to current demonetisation issue. 25% decline in retail sales in rural areas and
25% enquiries have been impacted in urban areas.
Maximum impact on taxi part, specially Ola and Uber. They contributes to 30% of the volumes.
Export may remain flat in FY17
Management expects 50000 Baleno's to be exported to Japan. Apart from Japan, the vehicle is being exported to Europe,
Australia, New Zealand and Latin America.
Maruti's newly launched light commercial vehicle, Super Carry, is also exported to South Africa and Tanzania and will be
exported to SAARC countries in the future.
Gujarat plant is likely to be commissioned in Q4FY17. Management expects it will take 6 months to ramp up.
Steel prices have started going up and its impact may be seen in second half of the year.
Margins can come under pressure once the Gujarat plant becomes operational due to higher fixed cost and depreciation.
Capex- Rs.4500 crore,(Rs.2000 crore for maintenace and R&D, Rs.1000 crore on marketing expenses and Rs.1500 crore on
product development.
The waiting period for Brezza is 27 weeks and for Baleno 33 weeks. Maruti has increased the production for Baleno by 25% to
meet customer requirements.
The company has 15 new models in the pipeline, which will come out by 2020.
Volumes Trend
Volume
Volume Growth
18%
17%
16%
2%

Please refer to the Disclaimers at the end of this Report
387251
4%
418,470
374182
353335
341329
7%
346712
323,911
321,898
10%
348443
13%
360402
14%
12%
299,894
450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
-
3%
20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
MARUTI
Financials Snap Shot
FY14
Revenue (Net of Excise Duty)
44,451
Other Income
831
Total Revenue
45,281
COGS
31,853
GPM
28%
Other Expenses
5,970
EBITDA
5,204
EBITDA Margin (%)
12%
Depreciation
2,116
EBIT
3,088
Interest
185
PBT
3,734
Tax
902
Tax Rate (%)
24%
Reported PAT
2,855
Dividend Paid
424
No. of Shares
30
INCOME STATEMENT
FY15
FY16
50,801
58,612
865
472
51,666
59,084
35,615
39,318
30%
33%
6,741
8,115
6,844
9,119
13%
16%
2,515
2,867
4,329
6,252
218
94
4,976
6,630
1,185
1,999
24%
30%
3,807
4,699
884
1,237
30
30
FY17E
65,460
134
65,594
44,348
32%
8,709
10,068
15%
2,425
7,643
67
7,710
2,513
33%
5,266
1,386
30
EPS
Book Value
DPS
Payout (incl. Div. Tax.)
Valuation(x)
P/E
Price / Book Value
Dividend Yield (%)
Profitability Ratios
RoE
RoCE
Turnover Ratios
Asset Turnover (x)
Debtors (No. of Days)
Inventory (No. of Days)
Creditors (No. of Days)
Net Debt/Equity (x)
FY14
151
21,345
21,496
627
1,238
596
22,124
13,673
2,640
1,489
649
5,000
873
7,561
31,411
BALANCE SHEET
FY15
FY16
151
151
24,167
27,598
24,318
27,749
278
147
53
91
484
475
24,597
27,896
14,380
13,989
1,890
1,013
1,144
1,387
43
77
5,657
7,127
1,652
2,137
(234)
(3,965)
34,479
40,270
FY17E
151
31,477
31,628
147
101
475
31,775
15,178
1,549
551
7,960
2,391
(3,850)
45,529
CASH FLOW STATEMENT

FY14
FY15
FY16
FY17E
OP/(Loss) before Tax
3,734
4,976
6,630
7,710
Depreciation
2,116
2,515
2,867
2,425
Direct Taxes Paid
(858)
(1,075)
(1,948)
(2,513)
OP before WC changes
5,111
6,779
9,089
10,271
CF from Op. Activity
4,995
6,539
8,584
8,246
(13,100) (17,354) (12,189)
(87)
Capex
(3,545)
(3,279)
(2,443)
(3,614)
CF from Inv. Activity
(4,997)
(4,581)
(7,319)
(6,328)
Repayment of Long Term Borrowings
(22)
(211)
(292)
Interest Paid
(170)
(222)
(104)
(67)
Divd Paid (incl Tax)
(283)
(424)
(909)
(1,386)
CF from Fin. Activity
(74)
(2,004)
(1,239)
(1,443)
Inc/(Dec) in Cash
(76)
(45)
26
474
Add: Opening Balance
165
89
43
77
Closing Balance
89
43
69
551
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

FY14
94
712
14.0
15%
RATIOS
FY15
FY16
126
156
805
919
29.3
41.0
23%
26%
FY17E
174
1,047
45.9
26%
24.0
3.2
0.62%
29.3
4.6
0.79%
23.9
4.0
1.10%
28.1
4.7
0.94%
13%
14%
16%
18%
17%
22%
17%
24%
1.4
12.2
20.2
41.1
0.0
1.5
8.2
27.4
40.6
0.0
1.5
8.6
29.7
44.4
0.0
1.4
8.6
32.0
44.4
0.0
ACCUMULATE
IRB Infrastructure Developers Ltd.
Result Update
CMP
Target Price
Upside
196
235
20%
-
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Cr)
Av. Volume
Nifty
532947
IRB
269/177
6,888
159708
8104
Stock Performance
Absolute
Rel.to Nifty
1Month
3 Month
1Year
3.8
5.3
-24.4
-17.1
-20.0
-22.2

2QFY17
Promoters
Public
57%
43%
1QFY17 4QFY16
57%
43%
58%
42%
Company Vs NIFTY
120
IRB
NIFTY
2-Jan-17
Robust construction revenue visibility:IRB has reported strong construction revenue growth of 28% YoY in H1FY17
despite heavy monsoon. Current order book stands at Rs.11061Cr
(including Kishangarh-Glubpura project) i.e. 4x of FY16 construction
revenue. Healthy order book provides robust construction revenue visibility
going forward. Execution during the Q2FY17 was impacted due to heavy
and extended monsoon but we expect to ramp up in execution in the 2nd
half of the year. Ramp up in the execution of ongoing projects and Agra
Etawah will drive the EPC revenue growth in FY17 and 3 projects in
Rajasthan will drive the growth in FY18.
Arbitration awards:Recently, IRB Goa Tollway Pvt. Ltd. and IRB Ahmadabad-Vadodara super
express tollway Pvt. Ltd, wholly owned subsidiaries of the company, has
won an arbitral award of Rs. 241Cr and Rs. 20 Cr respectively. It will help
the company to reduce its debt.
InvIT will unlock Value:IRB has filed DRHP (Draft Red Hiring Prospectus) for its InvIT with SEBI
and company is in an advanced stage to get approval. IRB is in the process
to raise Rs. 4300 Cr through InvIT IPO. These proceed will be utilized for the
debt reduction and for the future projects.
Demonetization Impact: Toll collection on all national highways remains to suspend for 24 days due
to demonetization. As per our calculation, IRB lost around Rs. 150 Cr of toll
collection across all the projects. Revenue loss will be compensated by
NHAI in two parts (i) some portion in cash and (ii) balance portion will be
compensated by way of extension of the concession period. The company
does not witness any big dip in traffic post the commencement of tolling. we
expect little stretch in working capital on a consolidated level as toll
collection has impacted. Executions of projects remain stable as we do not
see any major challenges on that front.
110
100
In Rs. Cr
90
80
70
60
50
40
Sandip Jabuani
sandip.jabuani@narnolia.com
Financials
Sales
EBITDA
Depreciation
Interest
Net Profit
EBIDTA%
PAT %
TaX % of PBT
Q2FY16
1,149
605
203
240
149
53%
13%
22%
Q1FY17
1,517
774
221
328
182
51%
12%
29%

Q2FY17
1,291
709
227
340
142
55%
11%
19%
YoY%
12%
17%
12%
42%
-5%
QoQ%
-15%
-8%
3%
3%
-22%
Concall Highlights :-
No big dip in traffic post the tolling resume on all toll plaza
IRB has secured Kishangarh Udaipur project in December, after winning this
project company has completed its target of acquiring new projects of 330 km in
FY17.
IRR of 16-18% on Kishangarh Udaipur project after premium payment to NHAI
IRB is pre-qualified in project worth Rs. 16600 Cr.
The company aims to win 300 km project (including 230 km already won)
NHAI and related State authority will compensate revenue loss by way of adjusting
premium and revenue share payment.
Current Toll collection at Agra-Etwah project is 35lakh/day and likely to go up by 4550% post full completion of the project
IRB has filed DRHP of InvIT and waiting for the Sebis replay and expect to lunch
in January
The Company will have to infuse equity of Rs. 1600-1800 Cr over period of two years.
Tax reversal of Rs.15-18 Cr in Q2FY17
Solapur- Yedeshi and Kaithal Rajasthan project will gets complete by H1FY18
Company has received appointment date for the 1)Gulabpura- Chittorgarh and
Udaipur- Gujarat Border project and work will start from 1st april 2017
Outlook and Valuation :-
Firstly EPC revenue was impacted due to heavy monsoon during Q2FY17 and secondly
suspension of toll collection for the period of 24 days because of demonetization will
affect the top line of the company in FY17. We expect top line of Rs. 5627 Cr (Growth of
10% YoY) with healthy 52.7% EBITDA margin in FY17E. Significant reduction in debt
post the InvIT IPO and an arbitral award will boost the bottom line of the company. At a
current price of Rs. 191 stock trades at 7.3x to FY17 expected EV/EBITDA and 1.3x to
P/B. The stock has corrected nearly 18% post demonetization announcement which
makes this stock attractive at this price with present fundamentals. Hence, we revised
our rating from HOLD to ACCUMULATE with target price of Rs.235
About the Comapny :IRB Infrastructure Developers Limited is a road buildoperatetransfer (BOT) operator.
The Company's principal activity is the construction and maintenance of roads. Its
business segments include Road Infrastructure Projects, which includes development
and operation of roadways; Real Estate, which includes real estate development, and
Others, which includes windmill (sale of electricity generated by windmill), hospitality and
airport infrastructure. Its construction business complements its BOT vertical by
executing engineering, procurement and construction, and operation and management
(O&M) aspects of BOT concessions. It has a portfolio of over 20 Road BOT projects. It
has in-house integrated project execution capabilities in both its business verticals,
including construction, and operation and maintenance of highways.
Order Book
Order book
Book to bill
17
15
12
10
9,746
17,321
11,468
12,116
12,631
12,954
11,587
11,348
11,974
7,795
8,739
11
10
14
12
11,394
12
7,030
20,000
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
-
20
18
16
15
14
12
10
8
6
4
2
-
Comapny has received

appointment date and start work
from 1st April 2017
As % of Order Book
8%
Work on Agra Ethawah project

(Rs.2133 Cr) has started from
August 2016 onwards and we
expect ramp up in H2FY17
13%
Yedeshi Aurangabad
Kaithal Rajasthan Border
6%
16%
2%
2%
Solapur Yedeshi
Sindhudurg Airport
Agra Etawah
Gulabpura -Chittorgarh
18%
18%
Udaipur -Gj Border

O & M Contracts
Goa Kundapur
17%
Revenue Mix
1,200
Construction
BOT Toll
70%
EBITDA M
60%
1,000
56%
800
600
45%
50%
59%
58%
58%
57%
50%
53%
52%
48%
51%
56%
40%
30%
400
755
569
913
601
978
593
808
524
703
476
613
524
516
503
510
483
477
435
606
431
598
320
591
315
20%
690
277
200
50%
10%
0%

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
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
3732
121
3853
1650
0
148
1754
47%
477
1277
756
642
182
28%
459
194
33
INCOME STATEMENT
FY15
FY16
3847
5130
113
124
3960
5254
1306
2054
0
0
140
170
2212
2661
57%
52%
707
853
1505
1807
931
1063
686
868
144
232
21%
27%
543
636
164
164
35
35
FY14
332
3228
3561
9398
897
22
12959
13041
48
6
1501
408
289
879
15712
BALANCE SHEET
FY15
FY16
351
351
4009
4476
4361
4827
10804
12652
631
1189
19
16
15165
17479
36599
39169
80
78
5
104
1580
1559
234
305
219
169
477
510
39393
42181
FY17E
5627
128
5755
0
0
0
2965
53%
903
2062
1347
843
194
23%
647
164
35
FY17E
351
4958
5309
15117
1189
16
20427
40594
78
114
0
335
322
-1378
42088
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
Op. before WC change
Non Current Investment
Capex
Repayment of LTB
Interest Paid
Inc/(Dec) in Cash
Closing Balance

RATIOS
FY15
FY16
15
18
124
137
5
5
30%
26%
FY17E
18
151
5
25%
5.66%
15
2
2.00%
10
1
2.45%
13%
9%
12%
10%
13%
10%
12%
10%
0.2
0.5
59.4
39.9
2.64
0.1
0.5
72.6
22.2
2.48
0.1
7.4
54.9
21.7
2.62
0.1
7.4
54.9
21.7
2.85
FY14
14
107
6
42%
7
1
FY14
642
477
232
1749
1656
0
3002
(2743)
888
740
194
1274
186
257
443
13
2
2.01%
CASH FLOW
FY15
FY16
686
868
707
853
216
312
2216
2719
1823
2342
1
0
2311
3161
(2295)
(3175)
794
1140
1317
1435
78
254
474
667
2
(165)
443
445
445
279
FY17E
841
903
194
3091
2116
0
2328
(2328)
0
1347
164
954
742
1559
2301
Neutral
BIOCON LTD
30-Dec-16
Company Update
CMP
930
Target Price
Upside
880
-
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Cr)
Av. Volume(,000)
Nifty
532523
BIOCON
1020/431
18,604
73
8,693
0.5
2.5
3M
12M
82.8
80.6
67.4
63.1
Small Molecules business has reported revenue of Rs 389 Cr, a growth

of 15% led by a better product-mix of differentiated APIs and a higher
contribution from statins.
Net R&D expenditure during the quarter stood at Rs. 65 Cr, an increase
of 14% YOY. At a Gross level, R&D spends in Q2 were Rs 113 Cr.

2QFY17
Promoters
Public
Others
Total
1QFY17 4QFY16
60.7
37.4
1.9
100.0
60.7
37.5
1.8
100.0
60.7
37.4
-100.0
Novel Biologics and Biosimilars reported a growth of 26% at Rs 96 Cr on

account of good performance in key emerging markets.
Branded Formulations business includes our finished dosages business
in India and overseas including UAE. Q2 FY17 sales at Rs 137 Cr reported
a growth of 15%.
Licensing Income this quarter stood at Rs 32 Cr while Other Income
reported was Rs 52 Cr.
Company Vs NIFTY
200
Q2FY17_Result Update
EBITDA rose 45% to Rs 277 Cr; Net Profit stood at Rs 147 Cr a growth of
52% over last year.
Stock Performance
1M
Absolute
Rel.to Nifty
As per the management, exports have not been impacted due to

demonetization, Indian business saw lower sales in the month of
November. The dependence of the company on domestic business is ~
31% in total revenue. Recently Biocon has Submitted Trastuzumab dossier
to the United States Food & Drug Association (USFDA) which is an
important milestone for Biocon and its review process is expected to take
18-24 months. The market size of Trastuzumab injection is valued at about
$6.5 billion, according to IMS data. Crestor Generic has been approved by
USFDA and Biocon is on track to launch the product in near future. This
will be a huge opportunity for Biocon to take first mover advantage with its
bio-similar products. On the contrary ongoing price control pressure in
India and US and discontinuance of key products may put some
uncertainties in near term. Hence we maintain Neutral rating in this
stock.
BIOCON
Research business through Syngene reported revenue of Rs. 286 Cr (

up by 14% ) as compared to the revenue of Rs.250 Cr in the corresponding
quarter of FY16.
NIFTY
180
160
140
120
Financials
2012
2013
2014
2015
Rs,Cr
2016
100
Sales
EBITDA
Net Profit
EPS
P/E
2148
517
338
17
14.1
2538
475
509
25
10.8
2933
518
414
21
20.5
3143
617
497
25
18.9
3570
784
896
30
19.0
Dec-16
Oct-16
Nov-16
Sep-16
Aug-16
Jul-16
Jun-16
Apr-16
May-16
Feb-16
Mar-16
Jan-16
Dec-15
80
Aditya Gupta
aditya.gupta@narnolia.com

Segment Revenue
286
638
263
270
526
602
250
576
316
225
581
632
238
587
220
172
527
531
188
535
192
183
513
548
188
166
457
CRAMS(Rs in Cr)
542
140
486
155
129
463
533
122
440
BIOPHARMA(Rs in Cr)
Management Speak/ Key take aways From Conference call
Recently Biocon and its partner Mylan announced that the results of the clinical trial study of its biosimilar trastuzumab have
been published in the Journal of the American Medical Association (JAMA).
The company has also filed for 3 biosimilars with European Union regulator and is likely to file those with the USFDA too
Stopping sale of Abraxane has also impacted Indian business. Some decline in branded formulation business is expected to be
reflected in books.
Going ahead the management is expects to sustain revenue and margins at second quarter levels.
Biocon will file insulin largine in the US in FY18.
The company has gained traction in many emerging markets with its biosimilars.
Going ahead management expects that speciality is the way to go and Biocon believes that there will be better returns if a
company focuses on specialty.
BUSINESS MODEL
For reporting purpose, Biocon classifies its
operations into four segments i.e. Small
Molecules, Biologics, Branded Formulations
and Research Services.
Small Molecules includes API's
,immunosuppressants & Generic formulations
business
Biologics vertical comprises Novel biologics
and Biosimilars,recombinant proteinsi ncluding
rh-insulin,insulin analogs, monoclonal
antibodies
Branded Formulations includes finished
dosages
Research Services business through Syngene
10
INCOME STATEMENT
FY13 FY14 FY15 FY16
Rev. (Net of Excise Duty)
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
2,485
53
2,538
1,045
42%
576
475
19%
179
296
8
408
98
24%
509
116
20
2,877
56
2,933
1,186
41%
707
518
18%
204
315
2
538
107
20%
414
175
20
3,090
53
3,143
1,256
41%
737
564
18%
221
343
9
519
96
18%
497
119
20
3,485
85
3,570
1,330
38%
831
688
20%
242
446
10
652
257
39%
896
119
20
FY13
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
FY13 FY14 FY15 FY16
Share Capital
Reserves and surplus
Shareholders' funds
Long term Debt
Total Borrowings
Non Current liabilities
Long term provisions
Short term Provisions
Current liabilities
Total liabilities
Net Fixed Assets
Non Current Investments
Other non Current assets
Current assets
Total Assets
100
2,595
2,695
164
249
502
4
247
905
4,416
1,823
65
41
2,240
4,416
100
2,927
3,027
606
850
656
8
177
1,136
5,751
2,731
65
47
2,639
5,751
100
3,171
3,271
770
1,031
608
15
158
1,294
6,375
3,307
137
2,563
6,375
100
3,956
4,056
2,072
2,467
415
30
88
1,233
8,482
3,910
166
3,993
8,482
25
135
6
0.23
RATIOS
FY14 FY15
21
151
9
0.42
25
164
6
0.24
FY16
45
203
6
0.13
11
2
2%
21
3
2%
19
3
1%
11
2
1%
19%
10%
14%
9%
15%
8%
22%
7%
0.56
75
59
51
0
0.50
76
48
44
0
0.48
91
53
51
0
0.41
86
54
57
1
CASH FLOW STATEMENT

FY13 FY14 FY15 FY16
Depreciation
Direct Taxes Paid
Proceeds from sale of Crr.Inv
Capex
Repay. of Long Term Borr.
Interest Paid
Inc/(Dec) in Cash
Closing Balance

610
179
(94)
758
471
1,904
(359)
(376)
(21)
(8)
(100)
(9)
87
387
474
538
204
(149)
672
561
1,642
(789)
(938)
(19)
(1)
(150)
426
49
508
557
624
221
(133)
698
211
2,943
(838)
(509)
(15)
(1)
(100)
186
(112)
574
463
1,227
242
(247)
818
526
2,784
(811)
(954)
(54)
(11)
(200)
1,087
659
468
1,127
11
BUY
BHARAT ELECTRONICS LTD.
29-Dec-16
Result Update
CMP
Target Price
Upside
1374
1670
22%
-
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Cr)
Av. Volume
Nifty
500049
BEL
1540/1009
30,880
41373
8044
Stock Performance
Absolute
Rel.to Nifty
1Month
1Year
YTD
13.2
10.6
22.0
17.1
15.0
17.2
74.41
75.02
75.02
Public
25.59
24.98
24.98
Others
--
--
--
100
100
100
Company Vs NIFTY
130
125
120
115
110
105
100
95
90
85
80
BEL
Key Highlights:
Company has entered into strategic alliance with defence laboratories,
ordinance factory board and other global OEMs to develop products like
Surface to air sytems, air defence radars, Battlefield management system,
sonar systems, next generation night vision devices, gun upgrades/ new
gun programmes, inertial navigation systems, medium altitude long
endurance unmanned aerial vehicles (UAVs) and maintenance of aerostat
surveillance and communication systems.
1QFY17
Promoter
Total
Order inflow grew 108% YoY to Rs 41300cr, led by finalization of orders like
electronic warfare suite, advanced composite communication system, ship
data network, and annual maintenance contract for Rohini radar. For FY17
Key orders like Akash missile system, mobile cellular communication
system, Commander TI Sights, Samyukta upgrade, Long range surface to
air missile and L-band tropo upgrade are supposed to be finalized.
Company plans to set up Rs 500cr Greenfield weapon systems facility in

Andhra Pradesh which will focus on the design, development and
production of weapon systems like fire control, missile systems and other
weapon upgrade systems. Company expects the facility to be ready over the
next two years.

######## 2QFY17
Strong order book visibility
NIFTY
Outlook and Valuation

The company is having robust order intake during H1FY17 which gives
decent revenue growth visibility going forward and this is expected to remain
in the range of Rs 10000cr-15000cr over the next two-three years. Currently,
the defence sector is in the limelight due to the governments strong focus
on making defence procurements central to the Make in India campaign.
The company has ~35% market share in Indias defence electronics
segment and is likely to be one of the biggest beneficiaries of the offset
clause. Based on above mentioned reasons we see strong medium-term
earnings visibility for the company, hence we recommend BUY at a target
price of Rs 1670 (Potential upside 22%).
Rs in Cr
Bibha Kashyap
Financials
Sales
EBITDA
Net Profit
EBIDTA%
P/E
FY12
5847
636
847
10.9%
0.1
FY13
6173
663
912
10.7%
0.1
FY14
6388
922
952
14.4%
0.1
FY15
6915
1175
1197
17.0%
0.2
FY16
7759
1538
1387
19.8%
0.2
bibha.kashyap@narnolia.com
12
Domestic Order book

32333 32022 32139
35000
34675
30000
22884 22077 21617
21053 21648
25000
Order inflow is expected to

remain in the range of Rs
10000cr-15000cr over the
next two-three years.
20000
12776
15000
10000
5000
827
2780
763
4127
2824
1980
541
1003
Domestic Orders Intake (Rs/Cr)
Domestic Orders Book (Rs/Cr)
Export Order book
1,400
1,195
1,287 1,244
1,197
1,200
1,094 1,065
1,000
794
800
701
691
600
400
200
-
Export order book (Rs/Cr)
Trend of Net Sales and PAT
Trend of Gross Margin & EBITDA Margin
Net Sales (Rs/Cr)

3,500
3,056
663
2,000
1,500
1,582
1,009
1,000
1,172
997
192
500
-
3,135
795
2,831
723
3,000
2,500
PAT (Rs/Cr)
59
1,266
1,071
272
147
26
1,5251,500
296
206
77
900
800
700
600
1,756 500
400
346
300
847
200
100
36
-
Gross Margin %
EBIDTA Margin %
60%
50%
48%
0%
19%
12%
9%
0.2%
52%
46%
19%
17%
15%
20%
53%
31%
27%
25%
30%
45%
50%
37%
36%
40%
10%
43% 45%
42%
41%
49%
1%
-4%
-5%
-10%

13
Investment arguments:
Company has a strong balance sheet with zero debt and cash balance of Rs. 7553 cr (~25% of market capitalization). It is also
paying dividends consistently since 1990. Accelerated order inflow and steady performance makes it a preferred defense play.
The government notified increase in Foreign Direct Investment (FDI) limit to 49% through approval route in the defense sector,
aimed to cut imports by indigenizing defence production.
Segments like Radar and Missile systems, Communication and Network Centric Systems, Tank Electronics, Gun upgrades &
EO systems and Electronic Warfare & Avionics systems will continue to drive the Companys growth in the coming 4 to 5 years.
The Defence Sector is increasingly being opened up for private sector participation with evolutions of Defence Procurement
Procedure.
Company is working on new strategic areas like Electronic Ammunition Fuzes, Homeland Security Solutions, Navigational
Complex Systems and Inertial Navigation Systems in line with the emerging needs of the Customers.
BEL is also taking collaborative R&D initiatives for joint developments with reputed foreign companies and Indian MSMEs to
quickly harness specialized technologies into the new products.
Order status at the end of Q2FY17
Acquired
Electronic warfare suite (Shakti & Nayan)

Advance composite communication system
Ship data network
Ground based ELINT
Annual maintenance contract of Rohini
radar
Supply
3D technical control radar

Akash weapon system (Army)
L 70 Gun upgrade
Weapon locating radar
Hand Held thermal- imager with laser
range finder
Expected order
Akash missile system (7 Sqdn)

Mobile cellular communication system
Commander TI sights
Long range surface to Air missile
L-Band tropo upgrade
Samyukta upgrade
About the Company:
Bharat Electronics Limited is engaged in design, manufacture and supply of electronics products/systems for the defense
requirements, as well as for nondefense markets. The Company's principal products/services include weapon systems, radar and
fire control systems, and communication. Its defense products include defense communication; radars; naval systems; command,
control, communications, computers, and intelligence systems; weapon systems; telecom and broadcast systems; electronic
warfare; electro optics, and solar photovoltaic systems. Its nondefense products include turnkey system solutions; civilian radars;
e-governance systems, and homeland security. Its other range of products include electronic voting machines, communication
equipment, radar warning receiver and casings. It offers electronic manufacturing services in areas of printed circuit board
assembly and testing; precision machining and fabrication; opto electronics components and assemblies, and offsets, among
others.

14

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
FY13
6273
625
6898
3917
1
569
663
11%
136
526
1
1151
236
21%
912
178
8
FY14
6518
437
6955
3788
1
762
922
14%
150
772
4
1205
254
21%
952
186
8
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
FY13
80
6407
6487
0
0
0
6488
928
237
3364
5331
1174
720
5594
14851
FY14
80
7140
7220
0
0
0
7221
1153
269
4156
4605
1234
605
6192
14976
FY15
7093
507
7599
3935
1
702
1175
17%
166
1008
3
1513
316
21%
1197
239
8
RATIOS
FY16
7549
533
8082
3916
1
772
1538
20%
200
1338
6
1865
471
25%
1387
277
8
EPS
Book Value
DPS
Valuation(x)
P/E
Price / Book Value
Dividend Yield (%)
RoE
RoCE
Turnover Ratios
Asset Turnover (x)
Net Debt/Equity (x)
FY13
114
811
22
20%
FY14
119
903
23
20%
FY15
150
1015
30
20%
FY16
173
1123
35
20%
10
1
1.9%
10
1
2.0%
7
1
2.8%
8
1
2.6%
14%
8%
13%
11%
15%
12%
15%
15%
0.4
196
303
68
0.0
0.4
233
322
69
0.0
0.5
196
318
61
0.0
0.4
181
393
58
0.0
BALANCE SHEET
FY15
80
8037
8117
0
25
0
8117
1213
140
3805
6038
1184
786
7064
15726
CASH FLOW STATEMENT
FY16
240
8746
8986
0
28
0
8986
1664
224
3741
7553
1194
666
7242
18525

Depreciation
Direct Taxes Paid
FY13
1147
136
245
753
(1540)
FY14
1206
150
206
777
(570)
FY15
1513
166
356
1343
1434
FY16
1869
200
438
1714
2268
CAPEX
Repayment of LTB
Interest Paid
Inc/(Dec) in Cash
Closing Balance
388
1753
0
1
157
(157)
56
1752
1809
375
759
(0)
4
209
(213)
(23)
1809
1786
227
(839)
0
3
220
(209)
386
1786
2171
657
(1424)
(0)
6
296
(320)
525
2171
2696

15
NEUTRAL
Voltas Ltd.
28-Dec-16
Result Update
CMP
Target Price
Upside
Impact of Demonetisation
313
330
345
6%
-
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Cr)
Av. Volume
Nifty
500575
VOLTAS
406/211
10,372
1694
7947
Stock Performance
Absolute
Rel.to Nifty
1Month
1Year
YTD
7.9
5.2
14.5
9.5
1.4
3.6

2QFY17 1QFY17
4QFY16
Promoter
30.3
30.3
30.3
Public
69.7
69.7
69.7
Others
--
--
--
100
100
100
Total
Company Vs NIFTY
150
VOLTAS
NIFTY
140
130
120
110
Initial impact of demonetisation in the month of November was bit low

because people are still using the old currency notes. However,December
has seen a bigger impact especially in the Tier III and tier IV towns where it
has been impacted to the tune of more than 50 %. And in the bigger cities,
the impact of this is about 25-30% on consumer durable business.
Management believes that demonetization impact is not likely to be
substantial as it has occurred during seasonally weak quarter for UCP
segment and things are likely to stabilize in coming 2-3 months.
Key Highlights:
Voltas reoprted its 2QFY17 results which is in line with our estimates.The
Consolidated Sales/Income from Operations for the quarter ended
September 30, 2016 was Rs. 972 cr as compared to Rs. 1044 cr in the
corresponding quarter last year owing to lower revenues in International
Projects. However, Profit before tax was higher by 22%, at Rs. 125 cr as
compared to Rs.103 cr last year. Profit after tax was also higher by 15%, at
Rs. 74 cr as compared to Rs. 65 cr last year. EBITDA margin improved
84bps YoY to 7.0% on higher profitability in UC; this, coupled with higher
other incomeEMPS booked an Rs 120cr order for a water treatment plant in
Agra, taking its total order book to Rs 4250cr (+13.8% YoY). Unitary cooling
segment grew a robust 13.5% YoY, driven by inventory restocking on higher
demand during the festive season.
Outlook and Valuation
The company is cautious in taking new orders in the EMPS segment and its
focus is primarily on Govt. projects i.e. smart cities, rural electrification and
water treatment wherein execution cycle is steady and payments are
secured. Management expects profitability to improve after closing most of
its low-margin and loss-making legacy projects by end-FY17. Going forward
we expect near-term earnings to be under pressure due to lower sales and
margin in the UCP segment and continued subdued performance in EMPS
segment. Right now we are not seeing any major uptick in demand so we
revised our estimates with flat revenue growth from 5% to 0.7% in FY17E
and presently we are NEUTRAL on this stock at a revised target of Rs 330
(from Rs 345).
Rs in Cr
100
90
80
70
Bibha Kashyap
Financials
Sales
EBITDA
Net Profit
EBIDTA%
P/E
FY13
5531
245
207
4.4%
0.0
FY14
5266
266
245
5.0%
0.0
FY15
5183
410
384
7.9%
0.1
FY16
5857
437
386
7.5%
0.1
FY17E
5896
419
337
7.1%
0.1
bibha.kashyap@narnolia.com
16
Segment wise performance:

Electro-Mechanical Projects and Services: Segment Revenue for the quarter was lower at Rs. 543 cr as compared to
Rs. 635 cr in the corresponding quarter last year partly owing to slower than expected progress on certain projects.
Segment Result was Rs. 5 cr as compared to Rs. 17 cr, last year. Order Book of the Segment stood higher at Rs. 4252
cr as compared to Rs. 3736 cr in the same quarter last year. Orders booked during the quarter include Rs. 121 cr for
water treatment plant for Agra smart city.
Engineering Products and Services: Segment Revenue and Result for the quarter were Rs. 75 cr and Rs 30 cr as
compared to Rs. 96 cr and Rs 34 cr, respectively in the corresponding quarter last year. The industrial environment in
India for both, Textile and Mining businesses remains challenging for capital equipment sales, due to the weak
investment cycle.
Unitary Cooling Products for Comfort and Commercial use: Voltas continues to be the market leader for the Room Air
Conditioners in India. Segment Revenue was higher at Rs. 354 cr as compared to Rs. 312 cr in the corresponding
quarter last year, on account of improved volumes and greater festive season demand. Segment Result was also
higher at Rs. 41 cr as compared to Rs. 34 cr in the corresponding quarter last year.
Trend of Gross margin & EBITDA margin(%):
EMP order book position (Rs in Cr)
Order Intake
Gross Margin %
2187
2065
2032
2385
35%
35%
30%
25%
29%
24%
31%
33%
26% 27%
31%
32%
29% 28% 29%
28%
20%
10%
382
EBIDTA %
37%
15%
731
959
1879
2035
2141
1369
500
1871
1728
201
2021
2018
594
1,908
1,985
544
1,856
2,093
40%
680
2,207
1,472
395
1,629
2,160
International Order Book
694
2,023
1,589
275
2,131
240
500
785
1,000
1,524
1,500
1,815
2,088
2,000
2,261
2,500
1209
3,000
2,286
Domestic Order Book
5%
4% 4%
8% 8% 6%
6% 7%
10% 8%
6%
10% 11% 8%
4%
0%

17
Investment arguments:
Company sustained its leadership in the UCP segment(i.e. 22%) which will help to register better sales growth in the
current quarter.
Company sold 50000 units coolers last quarter and mabagement expects their marketing efforts to benefit volumes
going ahead and as per the management Air cooler will grow ahead of market.
The company has been selective in taking new orders with minimum margins of 4-5% in the international market. Its
aspirational EBIT margin target remains at 4-5% for the international market in FY17.
The company has cut prices selectively on few products with selective sale promotions due to the higher
competitive pressures.
Despite the aggressive competition, the company retained its market leadership position with 22% market share.
New efficiency norms for ACs from January
Seeking to reduce carbon emissions, the government said that a new efficiency rating system for air-conditioners,
based on Indian climatic conditions, will be made compulsory for all models starting January 2018.All air-conditioners
will need energy-saving and intelligent regulation of compressors in place of the conventional thermostat-triggered cutoffs, said the Bureau of Energy Efficiency (BEE), the standard setter for appliances. Today, ACs with this technology is
costlier by about Rs.7000-8000 a unit. But as more units adopt it, cost will come down. As per the management,
Company is ready to comply with the new guidelines set by BEE for 2018. They will continue to provide energyefficient products to their customers.
The Governments initiatives on creating new Smart Cities and upgradation of the infrastructure of existing cities
represents an area of significant potential. The Companys expertise at installation, testing, commissioning and
operation of sensor networks across some of the worlds largest building complexes and its existing infrastructure of
support technicians and service partners, positions it effectively to handle the complex task of managing the
maintenance of Smart City information networks.
In International front, Despite the declining oil prices, spend on infrastructure will get a boost especially in Dubai and
Qatar owing to the EXPO 2020 and FIFA world cup 2022. Voltas remains one of the few large MEP contractors with
required project qualifications and domain expertise. Voltas continues to be a preferred contractor in the Middle East,
holds the Company in good stead against competition for these mega events.
About the Company:
Voltas Limited is an India-based air-conditioning and engineering company. Its segments include Electro-mechanical
Projects and Services, Engineering Products and Services, and Unitary Cooling Products for Comfort and Commercial
use. The electro-mechanical projects and services include electrical, mechanical and refrigeration solutions and
electrical and mechanical solutions international. , Engineering products and services includes textile machinery and
mining and construction equipment. The unitary cooling products are sub-divided into: air conditioners, commercial
refrigeration and water cooler and dispensers. The Companys operating subsidiaries include Universal Comfort
Products Limited, Auto Aircon (India) Limited, Saudi Ensas Company for Engineering Services WLL, Weathermaker
Limited and Lalbuksh Voltas Engineering Services & Trading LLC.

18
FY14
7.4
55.0
1.9
25%
RATIOS
FY15
FY16
11.6
11.7
63.5
72.4
2.2
2.6
19%
23%
FY17E
10.2
79.5
3.0
30%
21.7
2.9
1.16%
24.1
4.4
0.77%
23.6
3.8
0.96%
32.6
4.2
0.92%
13%
13%
18%
18%
16%
17%
13%
15%
1.1
92.5
85.3
112.8
0.00
1.1
94.3
88.0
108.6
0.00
1.0
81.4
79.0
108.7
0.00
1.0
89.4
84.1
108.7
0.00
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
5266
100
5366
3854
1
551
266
5%
25
241
23
318
94
30%
245
62
33
FY15
5183
109
5292
3597
1
586
410
8%
28
382
23
467
128
27%
384
72
33
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
33
1786
1819
5
258
2
1825
210
2
1335
282
1627
279
1487
4746
FY15
33
2069
2102
5
117
2
2107
193
4
1339
252
1541
354
1218
4888
FY16
5857
118
5975
4126
1
625
437
7%
28
409
15
511
160
31%
386
87
33
FY17E
5896
130
6025
4180
1
619
419
7%
32
387
26
490
153
31%
337
101
33
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
33
2362
2395
0
260
2
2395
222
0
1307
197
1745
408
1356
5599
FY17E
33
2598
2631
0
262
2
2631
227
0
1444
193
1757
424
1532
5874

Depreciation
Direct Taxes Paid
CAPEX
Repayment of LTB
Interest Paid
Inc/(Dec) in Cash
Closing Balance

FY14
340
25
89
351
230
0
25
(285)
0
23
57
(79)
(134)
407
273
CASH FLOW STATEMENT

FY15
FY16
FY17E
514
552
490
28
28
32
104
153
153
341
505
548
311
275
284
0
0
86
34
52
37
(104)
(367)
(189)
0
0
0
23
14
0
71
88
101
(236)
36
(99)
(29)
(56)
(4)
273
243
197
243
188
193
19
"BUY"
ASHOK LEYLAND LTD.
27-Dec-16
Result Update
CMP
77
Target Price
110
120
Upside
44%
Market Data
BSE Code
500477
NSE Symbol
ASHOKLEY
52wk Range H/L
113/74
Mkt Capital (Rs Cr)
21,799
Av. Volume
567130
Nifty
7,908
Ashok Leyland reported 6.4% decline in revenues during 2QFY17. CV

volumes contracted by 10% YoY but realization increased by 4% YoY during
the quarter. Domestic M&HCV market share increased by 220 bps QoQ to
33% in 2QFY17, due to intense competition from competitors in the form of
discounting. The country would be moving to BS-IV norms in April, 2017 and
a significant amount of pre-buying expected, especially in the fourth quarter
of FY17. Ashok Leyland is already manufacturing commercial vehicles with
EURO-IV engines in India and EURO-VI engines for export market, which is
similar to BS-IV and BS-VI norms. Management's focused approach
towards curtailing debt and concentrating in its core CV business will help
the company to gain further market share and revenue growth in domestic
and exports businesses.
2QFY17 Result Highlights
Revenue declined by 6.4% YoY to Rs.4622 crore in 2QFY17 due to 15%YoY
decline in M&HCV segment. Realisation grew by 4%YoY due to higher sales
in the exports market combined with higher revenues from spare parts.
Stock Performance
1Month
1Year
YTD
Absolute
-0.6
-12.9
-13.0
Rel.to Nifty
2.0
-13.5
-12.5
EBITDA margin contracted by 40 bps due to higher other expenses during

the quarter.
PAT margin grew by 260 bps to 6.4% due to lower interset cost and tax
expenses.

2QFY17 1QFY17
Promoter
Public
Others
Total
4QFY16
50.4
50.4
50.4
49.6
-100.0
49.6
-100.0
49.6
-100.0
Company Vs NIFTY
130
ASHOKLEY
NIFTY
125
120
115
110
105
Outlook
Going forward, We assume that the upcoming emission norms BS-IV to BSVI, focus towards the export markets, improvement in demand from
infrastructure segment, diminution of investments in subsidiaries will help
the company to focus on its commercial vehicle business and government's
initiative to develop defence products in the country can be volume boosters
for the company in FY17. The current demonetization issue has impacted
the transport sector most because a lot of transactions happen through
cash. The sales may be down by 10-12% for next couple of months but we
are hopeful that the situation might improve in 4QFY17 due to pre-buying
during the quarter. We expect that the company will maintain a healthy ROE
of over 20% going ahead. We maintain 'BUY' looking at the huge growth
potential going ahead but considering the uncertain demand scenario we
reduce our target to Rs.110.
Rs. In crore
100
95
90
85
Dec-16
Nov-16
Oct-16
Sep-16
Aug-16
Jul-16
Jun-16
May-16
Apr-16
Mar-16
Jan-16
Feb-16
Dec-15
80
Naveen Kumar Dubey

naveen.dubey@narnolia.com
Financials
2QFY17
1QFY17
2QFY16
QoQ
YoY
Sales
EBITDA
Net Profit
EBIDTA%
PAT %
4622
536
294
11.6%
6.4%
4259
476
282
11.2%
6.6%
4940
594
287
12.0%
5.8%
9%
13%
5%
-6%
-10%
3%

20
ASHOKLEY
Investment Arguments
The country would be moving to BS-IV norms in April, 2017 and a significant amount of pre-buying expected, especially in the
fourth quarter of FY17. Ashok Leyland's subsidiary, Albonair, holds a significant potential moving forward because Albonair does
exhaust emission systems, selective catalytic reduction emission systems which are necessary for being BS-IV compliant.
Export is only 12% of total volumes, therefore the company is targeting the African and Middle East countries to expand its
export contribution by setting up own assembly plants in these countries under the company's global expansion project. The
exports is an important part of Ashok Leyland's strategic intent to globalise its product portfolio and derisk itself from supplying
only into India.
The management expects its defence business to log four-fold jump in revenues at over Rs 2,000 crore in next five years as it
gears up to provide an entire range of mobility solutions, including missile carrying vehicles to the armed forces. Ashok Leyland is
the largest supplier of logistics vehicles to the Indian Army.
The management has focused approach towards its core commercial vehicle business. We expect that the company will be
benefitting from recovery in the M&HCV demand and its EBITDA margin will expand on account of operating leverage. The
company is also working on to reduce its debt and generate more cash to fulfill its future expansion requirements.
Management Highlights
Management expects Q4 to be promising due to the implementation of BS-IV norms.
If there is economic growth in the country CV industry will move ahead. Going ahead we see CV industry to grow about 12-15%
annually.
30% market share in M&HCV space and in south region overall market share is 51%.
Domestic truck business contributes 50-55 percent of total revenue.
Marginal impact of commodity prices but it will be passed on to the customers.
Net debt stood at Rs.1870 crore.
Price increase on November 1, 2016 of 1%.
Ashok Leyland have acquired 100% ownership of the JVs, we will continue to be associated with Nissan for the technology of
the existing Dost, Partner, and Mitr models.
The management is focusing on to improve profitability and ROCE of the company going ahead.
Defence Revenue to be close to around Rs 1,500 crore by FY18.
M&HCV volume and growth trend

M&HCV
40000
71%
60%
26262
25000
10000
70%
29840
30000
15000
80%
35246
35000
20000
Growth YoY
44%
21489
14908
18207
14%
18279
64%
40%
23232
27%
34%
24025
25346
50%
40%
30%
12%
20%
10%
0%
0%
-15%
5000
0
-10%
-20%
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16

1QFY17
2QFY17
21
ASHOKLEY
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
11,487
92
11,579
8,138
71%
1,581
422
4%
530
(108)
805
(821)
(68)
8%
(164)
266
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
266
3,723
3,989
5,491
1,264
411
9,480
7,087
270
1,381
113
2,592
256
400
17,534
INCOME STATEMENT
FY15
FY16
15,341
20,659
189
152
15,530
20,811
10,443
13,558
68%
66%
1,845
2,396
1,517
2,932
10%
14%
580
524
937
2,408
872
968
254
1,592
172
528
68%
33%
134
1,071
150
316
285
285
BALANCE SHEET
FY15
FY16
285
285
4,227
4,708
4,511
4,992
6,219
7,597
827
1,093
510
536
10,731
12,589
6,060
5,894
166
162
1,354
1,515
905
1,758
3,082
2,966
599
1,081
522
1,016
19,525
22,963
FY14
RATIOS
FY15
FY16
0
4
16
18
0.5
1.1
112%
30%
FY17E
23,458
171
23,630
15,365
66%
2,698
3,383
14%
519
2,865
1,194
1,842
611
33%
1,232
364
285
EPS
Book Value
DPS
Valuation(x)
P/E
Price / Book Value
Dividend Yield (%)
RoE
RoCE
Turnover Ratios
Asset Turnover (x)
Net Debt/Equity (x)
FY17E
285
5,575
5,860
7,217
938
536
13,077
5,871
162
1,721
2,094
3,213
1,147
1,222
23,951
CASH FLOW STATEMENT

FY14
FY15
FY16
FY17E
(300)
(42)
1,627
1,842
Depreciation
530
580
524
519
Direct Taxes Paid
(97)
(112)
(545)
(611)
195
1,725
2,431
3,554
(104)
496
(952)
3,080
Capex
(408)
(251)
(212)
(377)
(126)
552
(652)
Repayment of Long Term Borrowings
(1,586)
(1,996)
(2,362)
(380)
Interest Paid
(499)
(803)
(316)
(1,194)
(187)
(154)
(364)
461
381
1,246
(2,092)
Inc/(Dec) in Cash
(20)
751
846
336
127
106
858
1,758
Closing Balance
106
858
1,718
2,094

(1)
15
0%
FY17E
4
21
1.3
30%
-38.4
1.6
0.00%
73.2
2.2
1.53%
9.2
2.0
3.23%
8.0
1.7
3.71%
-4%
-1%
3%
9%
21%
19%
21%
22%
0.7
43.9
69.2
82.4
1.4
0.8
32.2
54.8
73.3
1.4
0.9
26.8
55.5
52.4
1.5
1.0
26.8
55.5
50.0
1.2
22
N arnolia Securities Ltd

201 | 2nd Floor | Marble Arch Bu ild ing | 236B-AJC Bose
Road | Kolkata-700 020 , Ph : 033-40501500
email: narnolia@narnolia.com,
w ebsite : w w w .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.

IEA Report: 3rd January, 2017

Hochgeladen von

Dokumentinformationen

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

IEA Report: 3rd January, 2017

Hochgeladen von

Copyright:

Verfügbare Formate

IEA Report

3rd Jan 2017

3rd Jan 2017

2nd Jan 2017

30th Dec 2016

29th Dec 2016

28th Dec 2016

27th Dec 2016

IEA Edition No.-

52wk Range H/L

Maruti reported 3% growth in sales volume in the 3QFY17, despite the

2QFY17 Result Highlights

Maruti reported a PAT of Rs.2398 crore a growth of 60.2% YoY on account

Share Holding Pattern-%

Naveen Kumar Dubey

Narnolia Securities Ltd

CASH FLOW STATEMENT

Narnolia Securities Ltd

Share Holding Pattern-%

Narnolia Securities Ltd

Outlook and Valuation :-

Comapny has received

Work on Agra Ethawah project

Udaipur -Gj Border

Narnolia Securities Ltd

Financials Snap Shot

OP/(Loss) before Tax

Narnolia Securities Ltd

Small Molecules business has reported revenue of Rs 389 Cr, a growth

Share Holding Pattern-%

Novel Biologics and Biosimilars reported a growth of 26% at Rs 96 Cr on

As per the management, exports have not been impacted due to

Research business through Syngene reported revenue of Rs. 286 Cr (

Narnolia Securities Ltd

Management Speak/ Key take aways From Conference call

Financials Snap Shot

CASH FLOW STATEMENT

Narnolia Securities Ltd

Company plans to set up Rs 500cr Greenfield weapon systems facility in

Share Holding Pattern-%

Strong order book visibility

Outlook and Valuation

Domestic Order book

Order inflow is expected to

Domestic Orders Intake (Rs/Cr)

Domestic Orders Book (Rs/Cr)

Export Order book

Export order book (Rs/Cr)

Trend of Net Sales and PAT

Trend of Gross Margin & EBITDA Margin

Net Sales (Rs/Cr)

Narnolia Securities Ltd

Electronic warfare suite (Shakti & Nayan)

3D technical control radar

Akash missile system (7 Sqdn)

About the Company:

Narnolia Securities Ltd

Financials Snap Shot

CASH FLOW STATEMENT

OP/(Loss) before Tax

Narnolia Securities Ltd

Share Holding Pattern-%

Initial impact of demonetisation in the month of November was bit low

Segment wise performance: