IEA Report 30th January

IEA Report
30th Jan 2017

CANFINHOME
"BUY"
30th Jan 2017
CANFINHOME is one of the fastest growing HFCs in the industry. The loan book has registered the growth of 39% CAGR over the last 5 years.
Despite this robust growth, the company has the best assets quality in the industry. We remain bullish on CANFINHOME as it has the ability to
sustain the momentum of strong loan growth as the company has main focus on lower ticket size loan. Strong presence in south and strategically
expanding the network with efficient management will help the company to grow rapidly. Various initiatives taken by the Government towards
affordable housing will further boost the demand. With the strong CRAR of 18.8% we expect the loan book to grow at 27% CAGR till FY19 from
FY16. Tight control on operating expenses and lower credit cost with stability in NIM we expect the PAT to grow at a CAGR of 33% in FY19 over
FY16 value. We expect RoE (Avg.) of 26% in FY19 and maintain 'BUY' with the target price of Rs 2175. .......................................... ( Page : 2-6)
MARUTI
"BUY"
30th Jan 2017
We expect capacity expansion in Gujarat, stability in Japanese Yen, increasing finance penetration and new model launches can pave the way of
future growth prospects for Maruti. 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. We expect ROE to improve by 370 bps to 21% in FY17. Hence we recommend "BUY"
and maintain our previous target price of Rs.6100 .................................... ( Page : 7-9)
BIOCON
"Neutral"
27th Jan 2017
Approval from USFDA and EMA for Bio-similar Trastuzumab will help the company to take advantage of this huge opportunity. Apart from that
Biocons management expects growth from Malaysian facility to boost further by expected qualification of this facility by emerging markets
regulators in coming quarters. 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 : 10-12)
JYOTHYLAB
"BUY"
27th Jan 2017
Going forward, management is confident of demand revival as demonetization effect will ease of. As far as margin is concern, the company is
looking to increase prices by 5-7% going ahead which gives us confidence that company may protect margin going forwards. Implementation of
GST may be game changer for Organized FMCG players. It may boost market share of the company in times to come. Lastly, JYOTHYLAB gets large
chunk of its revenue from South market and South market conditions are improving rapidly which is positive for this company. Considering better
volume growth in Q3FY17, companys guidance for pricing growth, dominance in South market and expected implementation of GST in FY18, We
have positive view on this company with price target of Rs 410............... ( Page : 13-15)
IRB
"BUY"
27th Jan 2017
Encouraging traffic growth during the quarter and strong recovery in economic activity nullify the demonetization impact. Most of the project has
seen improvement in traffic especially in western part of the country. We expect 5-6% traffic growth in near term. Based on better than expected
result and strong recovery in toll collection during the Q3FY17 we expect 11% revenue growth in FY17E and robust 40-45% revenue growth in
FY18E. And Introduction of InvIT will help IRB to grow higher. At current price of Rs.228, stock trading at 7.3x to FY17E EV/EBITDA and 1.5x to P/B
which lower than its average P/B of 1.8x. Hence, we recommend to BUY with target price of Rs. 265. ............................................ ( Page : 16-20)
HDFCBANK
"BUY"
25th Jan 2017
We continue to like HDFC Bank given its strong fundamentals, steady loan growth, adequate capital, best in assets quality, strong branch network
and intensive digitalization initiatives. While this quarter saw some uneven activities, we expect the operations of banking to come to its normal
situation. Despite of intensive competition, we expect the margins of HDFCBANK to sustain in the range of 4%-4.3% backed by normal CASA level of
40% and healthy growth in retail assets. Earning momentum will be maintained with core revenue of 19% plus growth going forward backed by
healthy domestic loan growth with higher yield products. We expect the RoE of 19% and maintain BUY with our previous target price of Rs 1400.
......................................... ( Page : 21-26)
TVSMOTOR
"BUY"
25th Jan 2017
We expect that management's strong focus to gain market share, the launch of new products in scooter segment, restructuring of three wheeler
segment will ensure strong positioning of TVS Motors in the domestic market. TVS-BMW alliance will further strengthen company's presence in
premium bike segment which in turn boost company's margin by the change in product mix and give an opportunity to expand it's footprint in
foreign markets. We expect TVS Motors to report 20% ROE in FY17. Hence we have a positive view on this stock and we recommend "BUY" for a
target price of Rs.465. ........................................... ( Page : 27-29)
Narnolia Securities Ltd
IEA Edition No.-
941
BUY
Can Fin Home Ltd.
30-Jan-17
Result Update
CMP
1763
Target Price
Previous Target Price
Upside
Change from Previous
2175
2175
23%
Market Data
BSE Code
NSE Symbol
511196
CANFINHOME
1887/841
4693
11
8641
52wk Range H/L

Mkt Capital (Rs Cr)
Av. Volume (,000)
Nifty
Stock Performance
1Month
Absolute
Rel.to Nifty
1Year
11.5
5.9
6.9
1.2
Share Holding Pattern-%

3QFY17
Promoters
Public
Others
Total
44.1
55.9
0.0
100.0
43.5
56.6
0.0
100.0
43.5
56.6
0.0
100.0
160
140
120
100
Jan-17
Dec-16
Nov-16
Oct-16
Sep-16
Aug-16
Jul-16
Jun-16
Apr-16
May-16
80
Mar-16
The share of core housing loan portfolio is stable with 88% YoY and noncore portfolio at 12%. LAP is 6% of the portfolio. In the overall portfolio the
share of non salaried customer has increased to 23% as on 3Q FY17 from
18% in 3Q FY16. Management is confident of achieving 27% YoY loan
growth to achieve Rs 13500 Cr mark.
NIFTY
180
Jan-16
The loan portfolio of CANFINHOME grew by 28% YoY to Rs 12688 Cr

backed by healthy growth in both core and non-core housing loan portfolio.
The disbursement grew by 25% and sanction grew by 24% YoY. However
disbursement declined by 7% QoQ, as management highlighted it was the
impact of demonetization.
Assets Quality Remains Intact
CANFINHOME
Feb-16
Commenting on demonetization management said that the impact was low

despite the slowdown in the month of November in terms of sanctions and
disbursement.
2QFY17 1QFY17
Company Vs NIFTY
200
Loan book growth momentum continued with the healthy rate of 28% YoY.
Assets quality remains intact.
Healthy Loan Book Growth
YTD
70.7
54.5
Strong growth momentum continues.

CANFINHOME once again posted a very strong set of result in 3Q FY17 as
per our expectation, reflecting the very marginal impact of demonetization
on demand side. NII grew by 40% YoY backed by healthy loan growth.
Operating expenses grew by 15% reflecting the strong control on C/I ratio
which improved to 16.25% as against 18.44% of corresponding quarter
previous year. Supported by strong NII growth and stringent control on C/I
ratio helped the operating profit to grow by 34% YoY. Provisions on NPA
and standard assets declined by 14% YoY. Overall PAT grew by a healthy
rate of 41% YoY.
The assets quality of CANFINHOME remains the best in the industry with
GNPA GNPA at 24 bps, flat QoQ and improvement of 3 bps YoY. With the
strong provision coverage NNPA stands at only 1bps against 4 bps QoQ.
Sequentially PCR increased to 94% against 88%. Management highlighted
that the slippage for the 9 months were lower as compared it with 9 months
of FY16. Going forward we expect the assets quality of CANFINHOME to
remain stable due to low exposure in LAP profile (6% LAP with lower ticket
size and low LTV). However shift in customer profile from salaried to self
employed remains under our key watch.
DEEPAK KUMAR
Deepak.kumar@narnolia.com
Please refer to the Disclaimers at the end of this Report
CANFINHOME
NIM Improves
NIM of CANFINHOME increased by 32 bps to 3.49% backed by declining cost of fund. Calculated cost of fund
declined by 58 bps YoY whereas yield on loan portfolio declined by 19 bps YoY. The change in both borrowing
profile as well as lending profile has helped the CANFINHOME to continuously report the improvement in NIM.
The change in borrowing mix with more inclined towards NCD/CP and reducing bank borrowing has helped cost of
fund to decline. The bank borrowing now constitutes 20% of the borrowing against 44% in FY14. Contribution from
NCD/CP has increased to 48% on 3Q FY17 from 5% in FY14.
On lending side gradual shift of customer profile towards self employed segment (14% in FY14 to 23% in 3Q FY17)
from salaried segment and increase in LAP portfolio to 6% from 4% in FY14 has helped the Yield to stabilize.
Stringent control on C/I Ratio.

The operating expenses grew by 15% YoY signifying the strong control on Cost to income ratio which improves to
16.3% against 18.4% a year back and 17.5% a quarter back. Employee expenses grew by 24% YoY whereas other
expenses grew by 7% YoY. The total network (branch+statellite offices) remained flat at 170 QoQ. Going forward
we expect the C/I ratio in the range of 15.6% in FY19.
(Rs in Crore)
Quarterly Performance
Financials
Interest Inc.
Interest Exp.
NII
Other Income
Total Income
Ope Exp.
PPP
Provisions
PBT
Tax
Net Profit
3QFY15
208
160
48
8
55
13
42
3
40
14
26
4QFY15
220
168
52
7
59
14
46
6
39
16
23
1QFY16
237
173
64
6
70
16
54
4
51
19
32
2QFY16
254
183
71
9
80
17
64
8
56
21
35
3QFY16
270
191
79
13
92
17
75
7
68
26
42
4QFY16
283
197
87
12
99
18
81
1
79
32
47
1QFY17
299
207
92
10
102
18
84
6
79
29
50
2QFY17
320
219
101
12
113
20
93
6
87
32
55
3QFY17
341
230
110
9
119
19
100
6
94
34
60
YoY %
26%
21%
40%
-29%
30%
15%
34%
-14%
39%
34%
41%
QoQ%
6%
5%
9%
-26%
5%
-2%
7%
0%
8%
6%
8%
Outlook & Valuation

CANFINHOME is one of the fastest growing HFCs in the industry. The loan book has registered the growth of 39%
CAGR over the last 5 years. Despite this robust growth, the company has the best assets quality in the industry. We
remain bullish on CANFINHOME as it has the ability to sustain the momentum of strong loan growth as the
company has main focus on lower ticket size loan. Strong presence in south and strategically expanding the
network with efficient management will help the company to grow rapidly. Various initiatives taken by the
Government towards affordable housing will further boost the demand. With the strong CRAR of 18.8% we expect
the loan book to grow at 27% CAGR till FY19 from FY16. Tight control on operating expenses and lower credit cost
with stability in NIM we expect the PAT to grow at a CAGR of 33% in FY19 over FY16 value. We expect RoE (Avg.)
of 26% in FY19 and maintain 'BUY' with the target price of Rs 2175.

CANFINHOME
Concall Highlights:
>> Impact of demonetization on whole quartter was low despite the slowdown in the month of November in terms of
sanctions and disbursement.
>> Salaried class segment remains the priority area.
>> 3/4th of the business comes from south region, 20% from NCR and rest from other parts of the country.
>> Loan growth momentum will continue.
>> Company reduced the home loan rate from 9.7% to 8.95% and in rural segment it reduced from 9.25% to 8.85%.
>> To mark the 30th Anniversary of the company on Oct 2017, management has planned to convert the Satellite
offices into full fledged branches going forward.
>> LTV in housing segment is 70% and Average ticket size is Rs 18-20 Lakh.
>> More than 50% of the portfolio is in affordable segment.
>> Tier capital is 16.25%.
>> 60% of the business is sourced through DSA.
Effeciency Ratio
C/I Ratio (%)
Empl. Exp/Oper Exp.(%)
Provision/PPP (%)
Tax Rate (%)
Op. Profit/ Net Income (%)
PAT/Net Income (%)
Margins
Yield% (Cal.)
Cost of Fund% (Cal.)
Spread% (Cal)
NIM% (Rep.)
90.00
80.00
70.00
60.00
50.00
40.00
30.00
20.00
10.00
-
3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 YoY(+/-)
23.4
23.4
22.4
20.7
18.4
18.0
17.8
17.5
16.3
-2.18
47.8
46.8
45.4
56.2
49.8
46.5
51.5
50.3
53.8
3.99
5.9
13.7
6.5
11.8
9.4
1.7
6.5
6.4
6.0
-3.37
35.1
41.8
36.7
36.9
37.7
40.3
36.6
36.9
36.5
-1.16
76.6
76.6
77.6
79.3
81.6
82.0
82.2
82.5
83.7
2.18
46.8
38.5
46.0
44.2
46.1
48.1
48.7
48.7
50.0
3.91
QoQ(+/-)
-1.26
3.47
-0.43
-0.40
1.26
1.28
3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 YoY(+/-)
11.33
11.09
11.17
11.29
11.24
11.04
10.97
11.06
11.05 -0.19
9.52
9.31
9.14
9.11
8.90
8.61
8.52
8.45
8.32
-0.58
1.81
1.78
2.03
2.18
2.34
2.43
2.45
2.61
2.73
0.39
2.50
2.55
3.04
3.10
3.17
3.24
3.39
3.44
3.49
0.32
QoQ(+/-)
-0.01
-0.13
0.12
0.05
Operating Profit/ Net Income (%)
PAT/Net Income %
C/I Ratio %
Provision/PPP (%)
NIM% (Rep.)
Yield% (Cal.)
Cost of Fund% (Cal.)
12.00
40.00
35.00
10.00
30.00
8.00
25.00
20.00
6.00
15.00
4.00
10.00
5.00
-
2.00
-
4
CANFINHOME
3QFY15
Lending Book
Loan Book
4QFY15
1QFY16
7,634
8,231
8,717
Disbursement
853
876
807
Sanction
916
906
873
Total Loan portfolio
2QFY16
3QFY16
9,303
4QFY16
1QFY17
2QFY17
3QFY17
YoY(+/-) QoQ(+/-)
9,895
10,643
11,183
11,980
12,688
28.2%
949
968
1,199
1,052
1,299
1,207
24.7%
-7.1%
1,099
1,086
1,360
1,191
1,517
1,351
24.4%
-10.9%
Loan Growth % YoY
Disbursement
14,000
5.9%
Disbursement Growth % YoY
50% 1,400
45%
40% 1,200
35% 1,000
30%
800
25%
20% 600
15%
400
10%
200
5%
0%
-
12,000
10,000
8,000
6,000
4,000
2,000
-
45.00
40.00
35.00
30.00
25.00
20.00
15.00
10.00
5.00
-
Portfolio Composition %
Housing Loan %
Salaried & Professionals %
Non Housing Loans %
84
90
105.0
82
Self Employed & Non Professionals %

80
78
80
77
70
100.0
60
95.0
11.3
11.6
50
11.6
11.8
12.1
40
90.0
30
85.0
88.7
88.3
20
88.4
87.9
88.2
3QFY16
4QFY16
2QFY17
3QFY15
20
23
4QFY15
3QFY16
4QFY16
2QFY17
3QFY17
10
80.0
4QFY15
18
22
16
YoY %
QoQ%
GNPA (Rs)
19
14
23
27
26
20
27
30
30
14.7%
1.0%
NNPA (Rs)
-52.0%
-47.2%
GNPA (%)
NNPA (%)
PCR (%)
0.25
64
0.17
100
0.26
0.08
67
0.29
0.10
67
0.27
0.04
85
0.19
100
0.24
0.04
84
0.24
0.04
88
0.24
0.01
94
-0.03
-0.03
8.72
0.00
-0.03
5.73
Assets Quality
PCR%
4QFY15
3QFY17
GNPA (%)
1QFY16
2QFY16
3QFY16
NNPA (%)
1QFY17
2QFY17
3QFY17
Borrowing Composition %
0.35
110.00
0.30
100.00
120
0.25
90.00
100
0.20
80.00
80
0.15
70.00
60
0.10
60.00
40
0.05
50.00
20
40.00
4QFY16
Refinance from NHB
FY13

5
FY14
Bank Loans
FY15
Deposits from public
FY16
2QFY17
NCD/CP
3QFY17
CANFINHOME
Financials Snap Shot
INCOME STATEMENT
(Rs in Crore)
FY15
FY16
FY17E
FY18E
FY19E
RATIOS
Profitability Metrix (%)
FY15
FY16
FY17E
FY18E
FY19E
Interest Income
788
1,044
1,317
1,643
2,043
Int. Exp/Int.Earned (%)
77.5
71.2
68.1
67.1
67.0
Interest Expenses
610
743
898
1,103
1,368
Op. Profit/ Net Inc. (%)
73.3
80.4
83.1
84.1
84.4
Net Interest Income
178
301
420
540
675
PAT/Net Income (%)
41.6
46.2
49.4
50.2
50.4
29
38
42
52
65
ROAA %
1.2
1.7
1.9
1.9
1.9
ROAE %
14.1
19.0
23.6
25.2
25.8
207
340
463
593
741
EPS (Rs)
32.3
59.0
85.9
111.8
140.3
Empl. Benefits Expense
25
33
41
49
60
Op. Cost Metrix (%)
Commission&Brokerage
10
11
Cost to Inc. (%)
26.7
19.6
16.9
15.9
15.6
Depreciation
Empl./Ope. Expense %
44.8
49.5
52.0
52.1
51.9
Other Expenses
18
22
25
31
41
Comm./Ope. Exp %
13.7
12.0
11.5
10.6
9.5
Operating Expenses
55
67
78
94
116
Other Exp./Ope. Exp %
32.5
33.4
32.0
33.4
35.4
152
273
385
498
626
Tax %
37.3
38.1
36.6
36.5
36.5
14
19
24
30
37
137
254
361
469
588
NII Gr. YoY %
32.2
69.5
39.4
28.7
25.0
TOTAL TAX
51
97
132
171
215
Net Income Gr. YoY %
33.2
64.4
36.1
28.0
25.1
PROFIT AFTER TAX
86
157
229
298
373
Op. Expense Gr. YoY%
25.9
20.7
16.9
20.9
22.5
Op. Pofit Gr. YoY %
36.1
80.3
40.8
29.5
25.6
PAT Gt. YoY %
13.7
82.5
45.6
30.1
25.5
Yield on Avg. Loan %
11.2
11.2
11.0
10.8
10.6
Cost Of Borrowing %
9.9
8.9
8.4
8.1
7.9
Spread %
1.4
2.2
2.6
2.7
2.7
2.5
3.2
3.5
3.6
3.5
14
20
25
30
35
Fee Income
Income from Invest.
Net Income
Pre Provisioning Profit

Net Provisions
PROFIT BEFORE TAX
BALANCE SHEET
(Rs in Crore)
FY15
FY16
FY17E
FY18E
FY19E
LIABILITY
Share Capital
Growth Ratio YOY (%)
Spread Analysis (%)
27
27
27
27
27
Reserves and surplus
745
851
1,034
1,272
1,571
NIM %
Shareholders' Fund
771
878
1,061
1,299
1,598
Asset-Quality Profile
7,375
9,478
12,079
15,382
19,407
124
189
241
307
388
Net NPAs (Rs cr)
64
249
318
404
510
Gross NPAs %
0.2
0.2
0.2
0.2
0.2
8,334
10,795
13,699
17,393
21,903
Net NPAs %
PCR %(Incl. Others)
100
100
100
100
100
Loans/Borrowings (X)
1.1
1.1
1.1
1.1
1.1
Debt/Equity (x)
9.6
10.8
11.4
11.8
12.1
Total Borrowing
Provisions
Other Liability
Total LIABILITY
ASSETS
Investments
Gross NPAs (Rs cr)
BS Ratio %
15
15
16
16
17
8,231
10,643
13,517
17,166
21,629
Fixed Assets
10
11
12
Other Assets
71
110
140
178
224
CRAR
18.4
20.7
18.8
18.4
18.0
Cash Balance
17
17
21
20
Tier I
15.6
17.6
16.2
15.6
15.0
Total ASSETS
8,334
10,795
13,699
17,393
21,903
Tier II
2.8
3.1
2.6
2.8
3.0
Advances

BUY
MARUTI SUZUKI INDIA LIMITED
30-Jan-17
Result Update
CMP
5922
Target Price
6100

Upside
Premiumisation led to double digit revenue growth

Maruti once again reported a strong quarterly performance. Net revenue
stood at Rs.16865 crore with a growth of 12% YoY. Domestic volumes grew
by 4%YoY on account of higher sales of premium segment cars (Baleno and
Brezza) despite the demonetisation issue during the quarter. 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 8001000 cc cars. Realization improved by 8.5%YoY 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
February 2017 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, but we expect that higher volumes will protect the
margins.
3%
Market Data
BSE Code
NSE Symbol
532500
MARUTI
52wk Range H/L
5972/3202
Mkt Capital (Rs Cr)

Av. Volume
178877
41176
Nifty
8,641
3QFY17 Result Highlights
Stock Performance
1Month
3Month
1Year
Absolute
11.5
0.7
44.7
Rel.to Nifty
4.8
0.6
28.3
Maruti reported Rs.16865 crore of net sales in 3QFY17 a growth of 12% over
previous year. This was driven by 3.5% volume growth and 8.5% realization
growth YoY.
EBITDA margin improved to 14.8% by 50bps YoY on account of lower other
expenses during the quarter.

3QFY17 2QFY17
Promoter
Public
Others
Total
Royalty stood at Rs.928 crore (5.5% of sales) during the quarter due to stable
Yen.
1QFY17
56.2
56.2
56.2
43.8
-100.0
43.8
-100.0
43.8
-100.0
Maruti reported a PAT of Rs.1745 crore a growth of 47.5% YoY on account of

higher other income in the quarter.
Outlook
We expect capacity expansion in Gujarat, stability in Japanese Yen,
increasing finance penetration and new model launches can pave the way of
future growth prospects for Maruti. 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. We expect ROE to improve
by 370 bps to 21% in FY17. Hence we recommend "BUY" and maintain our
previous target price of Rs.6100.
Company Vs NIFTY
150
MARUTI
NIFTY
140
130
120
110
Rs. In crore
100
Financials
3QFY17
2QFY17
3QFY16
QoQ
YoY
90
Sales
EBITDA
Net Profit
EBIDTA%
PAT %
16865
2489
1745
14.8%
10.3%
17843
3037
2398
17.0%
13.4%
15013
2145
1183
14.3%
7.9%
-5%
-18%
-27%
12%
16%
47%
Jan-17
Dec-16
Nov-16
Oct-16
Sep-16
Aug-16
Jul-16
Jun-16
May-16
Apr-16
Feb-16
Mar-16
Jan-16
80
Naveen Kumar Dubey

naveen.dubey@narnolia.com

MARUTI
Investment Arguments
Segment focused launches to propel demand- 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.
Unleashing the potential in the international business- 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 to deliver high margin products- It 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.
Reducing dependency on Yen to improve profitability- 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 and 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 will be commissioning in Q4FY17. Management expects it will take 6 months to ramp up.
Steel prices have started going up and some of its impact can be seen in 4QFY17.
Margins can come under pressure once the Gujarat plant becomes operational due to higher fixed cost and depreciation.
Capex- Rs.3500 crore, large chunk of it would be for new model and rest would be for R&D and maintenance of old plants.
Royalty rate for the quarter stood at 5.5%.
The waiting period for Brezza is 18 weeks and for Baleno 24 weeks. Maruti has increased the production for Baleno by 25% to
meet customer requirements.Ignis has also waiting period of 8-10 weeks.
The company has 15 new models in the pipeline, which will come out by 2020.
Volumes Trend
Volume
Volume Growth
18%
17%
16%
2%

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
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
INCOME STATEMENT
FY14
FY15
FY16
44,451
50,801 58,612
831
865
472
45,281
51,666 59,084
31,853
35,615 39,318
28%
30%
33%
5,970
6,741
8,115
5,204
6,844
9,119
12%
13%
16%
2,116
2,515
2,867
3,088
4,329
6,252
185
218
94
3,734
4,976
6,630
902
1,185
1,999
24%
24%
30%
2,855
3,807
4,699
424
884
1,237
30
30
30
FY17E
66,012
2,241
68,253
44,931
32%
8,521
10,177
15%
2,972
7,205
67
9,379
2,682
29%
6,766
1,676
30
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
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
32,640
32,791
118
102
475
32,909
19,543
1,013
1,754
3,041
7,689
1,959
(1,094)
46,674
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)
OP/(Loss) before Tax

Depreciation
Direct Taxes Paid
OP before WC changes
CF from Op. Activity
Purchase of investments
Capex
CF from Inv. Activity
Repayment of Borrowings
Interest Paid
Divd Paid (incl Tax)
CF from Fin. Activity
Inc/(Dec) in Cash
Add: Opening Balance
Closing Balance

FY14
94
712
14.0
15%
RATIOS
FY15
FY16
126
156
805
919
29.3
41.0
23%
26%
FY17E
224
1,086
55.5
25%
24.0
3.2
0.62%
29.3
4.6
0.79%
23.9
4.0
1.10%
26.6
5.5
0.93%
13%
14%
16%
18%
17%
22%
21%
22%
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
CASH FLOW STATEMENT

FY14
FY15
FY16
3,734
4,976
6,630
2,116
2,515
2,867
(858) (1,075) (1,948)
5,111
6,779
9,089
4,995
6,539
8,584
(13,100) (17,354) (12,189)
(3,545) (3,279) (2,443)
(4,997) (4,581) (7,319)
(22)
(211)
(292)
(170)
(222)
(104)
(283)
(424)
(909)
(74) (2,004) (1,239)
(76)
(45)
26
165
89
43
89
43
69
1.4
9.7
25.8
42.5
0.0
FY17E
9,379
2,972
(2,682)
12,488
10,365
(437)
(8,526)
(5,545)
(29)
(67)
(1,724)
(1,809)
3,010
77
3,087
Neutral
BIOCON LTD
27-Jan-17
Company Update
CMP
1017
Target Price
Upside
930
880
-9%
6%
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Cr)
Av. Volume(,000)
Nifty
532523
BIOCON
1050/431
20,426
113
8,578
Stock Performance
1M
Absolute
Rel.to Nifty
7.6
2.1
Promoters
Public
Others
Total
Biologics business has shown a growth of 61% led by good regulatory

progress in its bio-similar and insulin analogs global development
programs.
Licencing income in this quarter stood at Rs. 79 Cr.
106.7
90.3
59.6
52.4
Small molecules business grown by 24% to Rs. 390 Cr. led by good
traction in its business in India, Europe, LatAm, NAFTA for Statins,
immune suppressants and specialty
60.7
37.4
1.9
100.0
60.7
37.4
-100.0
Company Vs NIFTY
180
PAT has increased sharply by 65% to Rs. 171 Cr in 3QFY17 vs Rs.104

Cr in 3QFY16.
12M
2QFY17 3QFY16
60.7
37.5
1.8
100.0
Q3FY17_Result Update
3M

3QFY17
Biocon has posted robust revenue growth of 30% to Rs. 1038 Cr in

3QFY17 vs Rs. 800Cr in the same quarter of FY16. EBITDA margin has
improved by 350bps YoY to 26.6%. Recently USFDA has accepted
Trastuzumab for review with the target action date 3 Sep 2017. The
application for approval was filed in Nov. 2016, this is a significant
milestone for Biocon. The market size of Trastuzumab injection is valued at
about USD 6.5 billion, according to IMS data. Recently Biocon wins MYR
300 Million Contract for Insulin from MoH(Ministry of Health), Malaysia for
supplying rh-insulin cartridges and re-usable insulin pens. Several
regulatory filings are pending for audit to enable commercial sales from
new Malaysian facility.
BIOCON
NIFTY
170
160
150
140
R&D expenses for 3QFY17 is Rs. 100 Cr, out of which Rs. 85Cr is shown
in P&L and Rs. 15 Cr has been capitalized.
Outlook:
Approval from USFDA and EMA for Bio-similar Trastuzumab will help the
company to take advantage of this huge opportunity. Apart from that
Biocons management expects growth from Malaysian facility to boost
further by expected qualification of this facility by emerging markets
regulators in coming quarters. 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.
130
120
110
100
90
Jan-17
Dec-16
Nov-16
Oct-16
Sep-16
Aug-16
Jul-16
Jun-16
Apr-16
May-16
Feb-16
Mar-16
Jan-16
80
Aditya Gupta
Financials
2012
2013
2014
2015
Rs,Cr
2016
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
aditya.gupta@narnolia.com
10
Segment Revenue
1,200
Licensing income
Crams
Biopharma
79
1,000
23
800
600
10
4
183
188
19
172
9
192
220
513
535
527
548
531
19
238
225
250
587
581
576
32
17
316
270
263
24
400
200
526
632
602
317
286
638
705
Management Speak/ Key take aways From Conference call
Management is optimistic to maintain margins at the current levels, and expects margins to improve further after entering in
Europe and US markets.
Management has maintained guidance of Rs.350 Cr for R&D exp. in FY17.
Bio-similar pipeline will continue to progress as management plans to file insulin glargine in US and Adlizumab in both Europe and
US .
Company plans to file multiple ANDA applications in FY18.
Company has recently wins MYR 300 Million Contract for Insulin from MoH, Malaysia for the period of 3 years, which can be
extended to 2 years further. Under this contract company will supply rh-insulin cartridges and re-usable insulin pens for people with
diabetes in Malaysia.
Malaysian facility has been commercialized in 3QFY17, which manufactures Insulin.
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
11
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
OP before WC changes
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
12
BUY
JYOTHY LABORATORIES LTD
27th Jan. 2017
Company Update
CMP
356
Target Price
Upside
410
NA
15%
NA
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Cr)
Av. Volume(,000)
Nifty
532926
JYOTHYLAB
381/253
6,465
76
8,603
Stock Performance
1M
Absolute
Rel.to Nifty
8.7
1.0
3M
12M
-1.2
0.0
32.8
14.6

3QFY17 2QFY17 1QFY17
Promoters
66.9
66.9
66.9
Public
33.1
33.1
33.2
Others
--
--
--
100
100
100
Total
Company Vs NIFTY
140
JYOTHYLAB
NIFTY
130
120
110
JYOTHYLABs result for Q3FY17 was better than our expectations

considering tough demand environment. Overall volume for this quarter
grew by 3.6% YoY led by proactive measure of the management like
switching production plans to maximize small skus production, helping
reduce payment burden on retailers etc. Going forward, management is
confident of demand revival as demonetization effect will ease of. As far as
margin is concern, the company is looking to increase prices by 5-7%
going ahead which gives us confidence that company may protect margin
going forwards. Implementation of GST may be game changer for
Organized FMCG players. It may boost market share of the company in
times to come. Lastly, JYOTHYLAB gets large chunk of its revenue from
South market and South market conditions are improving rapidly which is
positive for this company. Considering better volume growth in Q3FY17,
companys guidance for pricing growth, dominance in South market and
expected implementation of GST in FY18, We have positive view on this
company with the BUY rating with price target of Rs 410.
Q3FY17_Result Update
JYOTHYLABs sales for this quarter grew by 3% YoY to Rs400 cr led by

3.6% YoY volume improvement. EBITDA declined by 1.3% led by inflation
in key input prices. Gross margin for this quarter, declined by 293 bps YoY
led by increase in major raw material prices. In spite of sharp increase in
input prices, the company managed other cost items efficiently and
controlled EBITDA margin decline to 55 bps YoY which is commendable.
PAT margin improved by 18 bps YoY to 5.4% in Q3FY17. PAT grew by7%
YoY to Rs 22 cr.
Concall Highlights:
The company will take Selective price increase (price increase as well as
reduction of promotion) in Q4FY17 to achieve desired gross margin levels.
Going forward, the company is looking for 5-7% price hike.
In the month of Jan till date company is witnessing double digit growth.
Expected Tax Rate: Q4FY17: 21%, FY18:21% (MAT credit)
Approx. 75% of the business in South is back to normal.
North and East are still struggling.
From 4QFY17 on wards ad expenses will be back to the normal.
Next year ad and promotion expenses will be in the range of 15% of the
sales.
Margin will back to the normal going forward.
100
Financials
2015
2016
2017E
2018E
Rs,Cr
2019E
90
Sales
EBITDA
Net Profit
EPS
ROE
1515
163
121
7
16%
1647
220
158
9
19%
1758
261
133
7
15%
1958
270
147
8
16%
2161
288
161
9
18%
80
Rajeev Anand
rajeev.anand@narnolia.com

13
Overall volume growth(%)

16%
14%
Overall volume growth(%)
14%
12%
10%
10%
10%
9%
9%
9%
8%
8%
6%
6%
4%
4%
2%
0%
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
Net Sales and PAT(in cr.)

500
Sales
450
50
46
PAT
45
39
400
40
36
32
350
300
26
27
35
30
26
250
25
22
20
200
20
150
15
100
10
50
361
401
404
407
385
445
440
434
400
0
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
EBITDA and NPM (%)

20.0%
EBITDA %
18.0%
16.0%
14.4%
14.0%
12.0%
12.2%
10.1%
10.3%
13.2%
7.3%
14.7%
14.1%
12.7%
10.4%
10.1%
10.0%
8.0%
18.0%
NPM%
8.0%
6.7%
7.4%
6.4%
5.4%
4.9%
6.0%
4.0%
2.0%
0.0%
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17

14
FY16
8.7
46.7
4.8
55%
RATIOS
FY17E
FY18E
7.4
8.1
48.1
49.6
6.0
6.6
82%
81%
FY19E
8.9
50.7
7.8
88%
36
6.7
1.5%
48
7.4
1.7%
44
7.1
1.9%
40
7.0
2.2%
18.7%
22.1%
15.3%
26.3%
16.3%
26.2%
17.5%
27.6%
0.9
21
83
36
0.0
1.0
24
85
39
0.0
1.1
23
83
36
0.0
1.1
22
82
36
0.0
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
FY16
1647
15
1661
799
51.5%
461
220
13.4%
31
189
6
197
39
19.9%
158
87
18
FY17E
1758
11
1769
883
49.8%
431
261
14.8%
30
231
61
181
48
26.6%
133
109
18
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
FY16
18
828
846
7
0
25
853
1076
6
94
61
161
75
-411
1767
FY17E
18
853
871
7
45
25
878
1096
6
116
61
188
80
-341
1817
FY18E
1958
11
1969
990
49.5%
487
270
13.8%
33
237
58
190
44
23.0%
147
119
18
FY19E
2161
11
2172
1102
49.0%
537
288
13.3%
33
256
58
209
48
23.0%
161
141
18
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
FY18E
18
880
898
7
30
25
905
1063
6
123
90
193
82
-294
1843
FY19E
18
899
917
7
15
25
925
1030
6
130
131
213
87
-252
1882

Depreciation
Direct Taxes Paid
Oper. Prof. bef. WC chang.
Non Current investments
Capital expenditure
Repaym. of LT Borrowings
Interest Paid
Inc/(Dec) in Cash
Closing Balance

FY16
197
31
-52
240
191
0
-27
0
0
-10
-174
-302
-111
218
107
CASH FLOW STATEMENT

FY17E
FY18E
181
190
30
33
-48
-44
272
281
174
223
0
0
-50
0
-49
0
0
0
-61
-58
-109
-119
-125
-194
0
29
61
61
61
90
FY19E
209
33
-48
299
257
0
0
0
0
-58
-141
-216
41
90
131
15
BUY
IRB Infrastructure Developers Ltd.
Result Update
CMP
Target Price
Upside
Strong Performance, nullify Demonetization Impact :228

265
235
16%
13%
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Cr)
Av. Volume
Nifty
532947
IRB
177/266
8,020
181822
8603
1Month
3 Month
1Year
20.7
11.9
-7.4
-6.4
-3.0
-18.9
IRB has reported better number than our expectation in Q3FY17. Net sales
grew by 5.8% YoY to Rs. 1411 Cr as compared to Rs.1333 Cr in the
corresponding quarter previous year despite of demonetization which led to
suspension of toll collection for 23 days. But on the contrary, average daily
toll collection for December month (from 3rd Dec to 31st Dec) has grown by
3% to 7.79 Cr compare to 7.53 in October month. Total income from toll
collection grew by 16% YoY (including 150 Cr of claim against toll loss during
the suspension of 23 days) compared to Q3FY16. While EPC revenue has
grown by 3% YoY to Rs. 834 Cr. Things are improving faster post the
demonetization and management has envisaged 5-6% traffic growth in next 36 months which provides strong recovery in toll collection. We expect robust
revenue growth in EPC segment based on healthy order book (3.45x of TTM
construction revenue).
Actual toll collection for the Q3FY17 was Rs. 517 Cr and company has raised
a claim of Rs. 150 Cr for the revenue loss during the suspension period.
Revenue and profitability loss on the state highways will compensate in cash
by the respective state authorities but NHAI compensates only for interest
and O&M expenses incurred during the period in cash for national highways.
Principal and profitability on national highways will compensate by way of
extension of the concession period.
Stock Performance
Absolute
Rel.to Nifty
25-Jan-17

3QFY17
Promoters
Public
2QFY17 1QFY17
57%
43%
57%
43%
57%
43%
Q3FY17 Result Update : Net sales grew by the 5.8% YoY to Rs. 1411 Cr in Q3FY17 as compared to
Rs. 1333 Cr in Q3FY16
EBITDA margin has improved by 110 bsp to Rs. 743 Cr as against Rs 688
Cr on account of better gross margin.
Depreciation during the quarter has came down due to lower toll collection.
Rs. 180 Cr in Q3FY17 compared to Rs. 226 Cr in Q3FY16
Company Vs NIFTY
130
IRB
NIFTY
IRB reported 8.6% YoY growth in PAT with 40 bps improvement on back of
lower depreciation and interest cost.
125
120
115
105
Order book as on 31st December stands at Rs.12011 Cr including Rs. 1750

Cr of O&M projects.
100
In Rs. Cr
110
95
90
85
Jan-17
Dec-16
Nov-16
Oct-16
Sep-16
Aug-16
Jul-16
Jun-16
May-16
Apr-16
Feb-16
Mar-16
Jan-16
80
Sandip Jabuani
sandip.jabuani@narnolia.com
Financials
Sales
EBITDA
PAT
EBIDTA%
PAT
Q3FY16
1333
688
170
51.6%
12.7%
Q2FY17
1291
709
142
54.9%
11.0%

Q3FY17
1411
743
184
52.7%
13.1%
YoY (+/-)
6%
8%
8%
110 bps
40 bps
QoQ (+/-)
9%
5%
30%
(220) bps
210 bps
16
Investment Argument:Robust construction revenue visibility:Currently, 5 projects are under construction and in next 8-10 months time period another 3 projects in Rajasthan namely
Gujarat/Rajasthan, Kishangarh - Udaipur and Kishangarh - Gulabpura will come under execution. Order book stands at Rs. 12011
Cr i.e. 3.45x of TTM EPC revenue. All the projects are well on track and management confident to complete projects on time.
Current on-going projects will drive the revenue growth and we expect revenue growth of 40-45% in FY18E.
Strong Recovery in Toll Collection:IRB has witnessed encouraging traffic growth post the demonization. Average daily toll collection in month of December has
grown by 3% to Rs. 7.79 Cr compared to Rs. 7.53 Cr in month of October. IRB's most of the operation road projects are in
western part of the country which is seeing good recovery in traffic movement. Management expects 10-12% growth in BOT
revenue including 5-6% traffic growth.
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 expect it to launch before March 2017. 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.
Concall Highlights :-
Traffic growth is encouraging despite demonization.

December toll collection is up by 3% compare to October month.And management expect 5-6% traffic growth in next 3-6 months
Suspension of toll collection led to low depreciation and amortization as the company follows revenue pattern based policy.
One of the road projects reported 10% reduction in traffic growth due to demonization.
IRB is pre- qualified for the 11738 Cr worth of projects.
Q4FY17 will be much more promising than Q3FY17 in terms of traffic growth.
IRB has raised claim of Rs.150 Cr as toll collection was suspended for the 23 days.
Sufficient cash surplus for funding equity requirement of on-going and up-coming projects
Equity requirement is Rs.1700 Cr including 3 new projects over period of 4 years. ( Rs.170 cr in FY17, 500 cr each in
FY18,FY19 and FY20)
No major impact of demonization on EPC segment.
Work on Udaipur to Rajsthan/Gujarat border project will start from April, on Kishangarh Udaipur- Ahemdabad from June and
recently won project Kishangarh Gulabpura by October
Current average toll collection of 30lakh/day on Agra- Ethwah
IRB has received 139 Cr grant in Yedeshi Aurngabad during the quarter and it will complete before monsoon.
Waiting for SEBI approval for InvIT and expect to launch it before March 2017.
Outlook and Valuation :Encouraging traffic growth during the quarter and strong recovery in economic activity nullify the demonetization impact. Most of
the project has seen improvement in traffic especially in western part of the country. We expect 5-6% traffic growth in near term.
Based on better than expected result and strong recovery in toll collection during the Q3FY17 we expect 11% revenue growth in
FY17E and robust 40-45% revenue growth in FY18E. And Introduction of InvIT will help IRB to grow higher. At current price of
Rs.228, stock trading at 7.3x to FY17E EV/EBITDA and 1.5x to P/B which lower than its average P/B of 1.8x. Hence, we
recommend to BUY with target price of Rs. 265.

17
Quartely Performance 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 YoY% QoQ%
Net Sales
Other Operating Income
Net Sales
Contarct Site Exp
RM Cost
COGS
Employee Expenses
Other Expenses
Total Expenditure
EBITDA
Depreciation
EBIT
Intreset
PBT
Tax
PAT
883
883
193
75
268
50
42
360
523
180
343
227
145
23
122
964
964
240
75
314
45
49
408
555
179
377
237
169
35
133
990
990
239
103
341
53
25
420
571
172
399
251
176
40
138
1,109
1,109
273
126
399
48
33
480
629
202
427
235
220
55
165
1,149
1,149
314
138
452
60
32
544
605
203
402
240
192
43
150
1,333
1,333
488
64
552
57
36
646
688
226
461
264
229
61
170
1,537
1,537
597
51
648
81
68
797
740
222
517
327
225
73
151
1,517
1,517
553
76
629
64
50
743
774
221
553
328
256
74
182
1,291
1,291
379
82
461
60
60
582
709
227
482
340
176
33
142
1,411
1,411
447
85
532
67
69
667
743
180
563
339
254
70
184
Margin Profile
Gross Margin
EBIDTA
EBIT
PAT
69.60% 67.38% 65.53% 63.99% 60.65% 58.57% 57.86% 58.54% 64.28% 62.31%
59.2% 57.6% 57.6% 56.7% 52.7% 51.6% 48.1% 51.0% 54.9% 52.7%
38.9% 39.1% 40.2% 38.5% 35.0% 34.6% 33.7% 36.5% 37.3% 39.9%
13.8% 13.8% 14.0% 14.9% 13.0% 12.7%
9.8%
12.0% 11.0% 13.1%
Opearting Matrix
9%
6%
-8%
31%
-4%
17%
89%
3%
8%
-20%
22%
28%
11%
15%
9%
9%
18%
3%
15%
11%
14%
15%
5%
-21%
17%
0%
45%
109%
30%
YoY (+/-)QoQ (+/-)

374
(197)
110
(220)
530
260
40
210
YoY% QoQ%
Construction Order
2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Ongoing BOT Projects
4,254
3,776
3,219
8,136
7,503
6,675
5,810
4,818
5,634
4,826
Construction yet to comm. 5,402
5,403
7,551
2,133
2,133
8,828
2,133
2,133
3,987
5,436
9,621 10,262
9,656
9,178 10,770 10,269
9,636 15,503
7,943
6,951
BOT Projects in O&M
1,932
3,776
1,861
1,847
1,832
1,818
1,803
1,788
1,773
1,750
Total
11,587 12,954 12,631 12,116 11,468 17,321
9,746
8,739 11,394 12,011
Toll Collection at Major Projects

Munbai- Pune
Surat - Dahisar
Tumkar Chitradurga
Baruch - Surat
Ahem.-Vadodra (NE-1)
Jaipur - Deoli
Pathankot - Amritsar
Thane- Bhiwandi Bypass
Omalur Salem Namakkal
Talegaon Amravati
6%
136
131
45
45
35
24
17
19
10
147
145
47
49
42
27
8
19
21
11
149
147
48
48
43
29
21
19
19
12
160
151
50
49
44
33
23
20
19
12
146
145
49
45
37
26
22
19
18
10
162
156
51
49
53
29
27
20
17
12
165
162
51
50
86
32
27
21
21
13

188
161
53
49
88
32
29
20
20
13
173
148
50
47
83
27
28
19
19
12
137
111
40
37
69
22
24
15
15
10
-28%
-38%
-34%
-4%
-31%
-14%
36%
7%
-1%
5%
YoY% QoQ%
-15% -21%
-29% -25%
-22% -20%
-25% -21%
31% -16%
-24% -16%
-12% -15%
-24% -19%
-11% -22%
-15% -13%
18
Order Book
Order book
20,000
15,000
Book to bill
20
17,321
11,587
12,954
12,631
12,116
11,468
9,746
10,000
12,011
11,394
8,739
15
10
5,000
2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Order Book break up project wise
6%
9%
Yedeshi Aurangabad
4%
2%
12%
Kaithal Rajasthan Border

2%
Solapur Yedeshi
Sindhudurg Airport
Agra Etawah
15%
17%
Gulabpura -Chittorgarh
Udaipur -Gj Border
O & M Contracts
17%
16%
Kishangarh Gulabpura
Goa Kundapur
Revenue Mix

19
Net Revenue
Other Income
Total Revenue
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
1754
0
477
1277
756
642
182
28%
459
194
33
INCOME STATEMENT
FY15
FY16
3847
5130
113
124
3960
5254
2212
2661
1
1
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
5694
119
5812
3041
1
935
2106
1346
878
246
28%
633
164
35
FY17E
351
4942
5293
14192
1189
16
19485
40494
78
115
0
339
324
-1349
42046
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%
FY14
14
107
6
42%
7
15
1
FY17E
18
151
5
26%
13
2
15
2
6%
2%
2%
2%
13%
9%
12%
10%
13%
10%
12%
10%
0.2
1
59
40
2.64
0.1
0
73
22
2.48
0.1
7
55
22
2.62
0.1
7
55
22
2.68
FY14
642
477
232
1749
1656
0
3002
(2743)
888
740
194
1274
186
257
443
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
878
935
246
3159
2104
0
2261
(2261)
0
1346
164
30
(127)
1559
1432
20
BUY
HDFC BANK
25-Jan-17
Result Update
CMP
1267
Target Price
Upside
1400
1400
10%
0%
Stable Performance
HDFCBANK reported a stable performance, slightly beating our expectation
of PAT backed by lower operating expenses. PAT grew by 15% YoY backed
by similar growth in its operating profit. Operating profit growth was
supported by stringent control over cost to income ratio and healthy NII
growth. C/I ratio was flat YoY to 42% but sequentially it declined by 2.4%.
Total operating expenses grew by 15% YoY. Other income grew by 9%
YoY. Provisions for loans grew by 9.5% YoY and it declined by 4.4% QoQ.
Net Interest Margin declined by 20 bps YoY to 4.1%.
Market Data
BSE Code
NSE Symbol
500180
HDFCBANK
1318/928
323957
514
8476
52wk Range H/L

Mkt Capital (Rs Cr)
Av. Volume (,000)
Nifty
NII grew by 18% YoY, (lowest growth since 10 quarters) mainly due to
moderation in advances growth reflecting the impact of repayment of loans
linked to FCNR deposits. Total net advances grew by 13% YoY. Deposit of
the bank grew by healthy rate of 21% despite of redemption of FCNR
Deposits. CASA ratio spiked to 45% mainly due demonetization event.
Sequentially assets quality was stable with GNPA at 1.05% against 1.02%.
NNPA was at 0.32% against 0.30% a quarter back.
Stock Performance
1Month
Absolute
Rel.to Nifty
3 Month
6.7
1.2
1Year
23.9
7.4
Domestic Advances growth was backed by Retail Growth.
5.9
2.3

QFY17
Promoters
Public
Others
Total
2QFY17 1QFY17
26.1
73.9
0.0
100.0
26.4
73.6
0.0
100.0
26.3
73.7
0.0
100.0
Company Vs NIFTY
130
Advances growth in this quarter moderated to 13% YoY mainly due to

repayment in overseas loan linked to FCNR Deposits. The domestic loan
portfolio of bank grew by 17.5% YoY while it saw contraction of 41% YoY in
overseas loan. Now the domestic loan book constitutes 96% of the
advances. Healthy retail loan growth continued in personal loan, credit card,
home and LAS which YoY grew by 32%, 20%, 25% and 36% respectively.
On the vehicle segment auto, commercial vehicle and two-wheeler grew by
16% each YoY. On sequential basis some of the loan product got impacted
due to demonetization. Business banking book contracted by 3% QoQ
largely due to huge repayment in demonetization period.
CASA Deposits Spiked
HDFCBANK
NIFTY
Overall deposits registered a healthy growth of 21% YoY mainly due to

demonetization drive. However this strong growth was despite of FCNR
redemption of nearly Rs 20000 Cr (US $3 Bn). CASA deposit grew by 37%
YoY backed by 38% and 37% growth in both SA and CA respectively. CASA
ratio spiked to 45% against 40% a quarter back. However we expect the
most of the CASA deposits to outflow from the bank after the increase in
withdrawal limit by RBI and hence expect the CASA at 42% level to sustain.
125
120
115
110
105
100
95
90
85
Jan-17
Dec-16
Nov-16
Oct-16
Sep-16
Aug-16
Jul-16
Jun-16
Apr-16
May-16
Mar-16
Jan-16
Feb-16
80
DEEPAK KUMAR
Deepak.kumar@narnolia.com
21
HDFCBANK
Stable Assets Quality
Assets quality was broadly stable on sequential basis with GNPA at 1.05% against 1.02% and NNPA at 0.32%
against 0.30%. Provision coverage ratio was 70% against 71% QoQ. Assets quality of HDFCBANK remains one of
the best in the industry. Going forward we are less concerned about the assets quality given its portfolio mix towards
secured retail loans and better rated corporate loan. We expect the credit cost of 65 bps going forward.
NIM Impacted by Demonetization

NIM declined by 20 bps YoY and 10 bps QoQ to 4.10% reflecting the impact of demonetization. NIM got impacted
mostly due to lower loan growth as well as negative carry of interest for fortnight on excess liquidity imposed by RBI.
Going forward CASA will have major impact on NIM. However management believes the NIM to range between 4%4.3%.
Fee Income Moderated

Other income growth moderated to 9% YoY. Fee income registered the 10% growth YoY. The fee income was
mainly impacted by the waive-off of card fee during the demonetization period. Management highlighted that the
third party distribution fee growth was also muted largely impacted by muted insurance income. However
management hopes to recover the same in further quarter. FX & Derivatives income grew by 7% YoY. Treasury gain
grew by 22% YoY.
(Rs in Crore)
Quarterly Performance
Financials
Interest Inc.
Interest Exp.
NII
Other Income
Total Income
Ope Exp.
PPP
Provisions
PBT
Tax
Net Profit
3QFY15
12396
6696
5700
2535
8235
3456
4779
560
4218
1424
2795
Profitability Metrix
3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 YoY(bps) QoQ(bps)
10.5
10.5
10.6
10.4
10.1
9.9
9.8
9.7
9.6
-0.58
-0.11
5.9
5.9
6.0
6.0
5.8
5.6
5.5
5.4
5.3
-0.46
-0.10
4.4
4.4
4.3
4.2
4.3
4.3
4.4
4.2
4.1
-0.20
-0.10
30.8
29.9
27.8
27.6
28.9
27.8
26.5
26.6
27.4
-1.45
0.82
42.0
44.9
45.2
45.4
42.3
44.4
45.0
44.7
42.3
-0.01
-2.42
11.7
12.2
15.0
13.5
11.4
11.6
14.9
12.4
10.8
-0.57
-1.60
33.8
32.3
34.6
34.2
33.9
33.5
34.6
34.5
34.4
0.47
-0.09
33.9
32.7
30.5
31.1
33.8
32.7
30.6
31.7
33.8
-0.02
2.04
23.0
21.4
23.5
21.2
24.0
24.0
21.8
19.6
17.6
-6.46
-2.10
19.4
21.4
25.9
19.8
21.7
18.9
19.2
16.2
15.2
-6.49
-1.07
22.9
24.9
26.2
24.2
20.0
21.5
20.0
19.5
15.2
-4.81
-4.24
20.2
20.6
20.7
20.5
20.1
20.2
20.2
20.4
15.1
-4.97
-5.27
Yield On Earning Assets %

Cost of Deposits %
NIM %
Other Income as a % of
Total
Net%Income
C/I
Ratio
Provision/PPP %
Tax %
PAT/Total Net Income %
NII Growth % (YoY)
Opex Growth % (YoY)
PPP Growth % (YoY)
PAT Growth % (YoY)
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
3QFY17
17606
9297
8309
3143
11452
4843
6609
716
5893
2028
3865
YoY %
14%
11%
18%
9%
15%
15%
15%
9%
16%
18%
15%
QoQ%
3%
2%
4%
8%
5%
-1%
10%
-4%
12%
11%
12%
22
HDFCBANK
Yield On Earning Assets %
Cost of Deposits %
NIM %
PAT Growth % (YoY)
NII Growth % (YoY)
C/I Ratio %
12.0
30.0
10.0
47.0
46.0
45.0
44.0
43.0
42.0
41.0
40.0
39.0
25.0
8.0
20.0
6.0
15.0
4.0
10.0
2.0
5.0
Other income Break Up

Fees & Commissions
FX & Derivatives
Profit / (loss) on Invest.
Miscellaneous Income
Including
Recoveries
Total
Other
Income
(Rs in Crore)
3QFY15
1807
253
266
210
2535
4QFY15
1835
329
196
204
2564
1QFY16
1713
348
126
275
2462
2QFY16
1869
320
162
201
2552
3QFY16
2005
277
328
262
2872
1QFY17
1978
315
277
237
2807
2QFY17
2104
295
284
219
2901
3QFY17
2207
297
399
240
3143
YoY%
10%
7%
22%
-8%
9%
QoQ%
5%
1%
41%
10%
8%
Fee Income/ Advances %
Other Income/Total Net Income %

31.0
0.60
30.0
0.50
29.0
0.40
28.0
4QFY16
2172
283
116
295
2866
0.30
27.0
26.0
25.0
24.0
0.20
0.10
-
Outlook & Valuation:

We continue to like HDFC Bank given its strong fundamentals, steady loan growth, adequate capital, best in assets quality,
strong branch network and intensive digitalization initiatives. While this quarter saw some uneven activities, we expect the
operations of banking to come to its normal situation. Despite of intensive competition, we expect the margins of HDFCBANK to
sustain in the range of 4%-4.3% backed by normal CASA level of 40% and healthy growth in retail assets. Earning momentum will
be maintained with core revenue of 19% plus growth going forward backed by healthy domestic loan growth with higher yield
products. We expect the RoE of 19% and maintain BUY with our previous target price of Rs 1400.
23
HDFCBANK
Concall Highlights:
>> Around Rs 13000 Cr (US $2 Bn) of overseas loan got repayment linked to FCNR Deposits.
>> Around Rs 20000 Cr (US $3 Bn) FCNR Deposits got redemption during the quarter.
>> Domestic loan book is now at 96% of the portfolio. While it grew by 17% YoY.
>> Due to demonetization bank witnessed higher repayment and prepayment in Overdraft and cash credit facility
which affected the loan growth. There was slightly muted disbursement on retail lending.
>> Decline in NIM was due to various factor including the impact of negative carry of interest on excess liquidity
imposed by RBI during the quarter to some extent. However management expect the NIM in the range of 4-4.3% going
forward.
>> Other expenses was lower as commission to dealer got impacted due to muted retail loan disbursement. There
was also reduction in staff number.
>> Fee income was impacted due to waive off of fee on card business. Also third party fee was muted mainly due to
lower insurance business fee.
Assets Quality Performance

GNPA (Rs)
GNPA %
NNPA (Rs)
NNPA %
Slippages (Rs)
Restructured Assets %
Specific PCR %
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
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
3QFY17
5232
1.05
1564
0.32
1948*
0.10
70
YoY Ch.
23%
0.08
24%
0.03
26%
0.00
-0.27
QoQ Ch.
3%
0.03
5%
0.02
35%
0.00
-0.53
*3Q FY17 Slippage is Basel disclosure number and hence may not be comaparable.
GNPA %
1.20
1.00
0.80
0.60
0.40
0.20
-
NNPA %
Restructured Assets %
Specific PCR %
74
73
72
71
70
69
68
67

24
HDFCBANK
Advances
Net Advances (Rs in Cr)
Advances Growth YoY %
>> Growth QoQ %
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
3QFY17
495043
13.45
0.13
Break-up of Advances % (As per internal business classification)

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.
3QFY15
13.14
7.20
5.76
14.05
3.95
4.43
7.19
2.78
1.37
1.13
0.35
61.33
38.67
4QFY15
12.79
7.12
6.60
13.65
4.45
4.42
6.83
3.02
1.38
1.11
0.37
61.75
38.25
1QFY16
13.11
7.61
7.04
13.34
4.42
4.41
6.93
2.81
1.38
1.11
0.35
62.53
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
3QFY17
13.24
9.46
7.16
12.84
4.83
4.78
6.97
3.27
1.44
0.97
0.45
65.41
34.59
Deposits
Deposits (Rs in Cr)
>> Growth YoY %
>> Growth QoQ %
CA %
SA %
CASA %
>>CASA Growth YoY %
>> Growth QoQ %
Credit Deposit Ratio%
3QFY15
414128
18.59
6.00
13.79
27.11
40.90
11.00
0.46
83.81
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
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
3QFY17
634705
21.13
7.26
15.95
29.40
45.36
37.43
20.40
78.00
Retail Adv. %
Corp. and Overseas Adv. %
Adv. Growth YoY %
70.0
30.0
60.0
25.0
50.0
40.0
30.0
20.0
10.0
-
20.0
15.0
10.0
5.0
-
CA % (of Deposits )
SA % (of Deposits)
CASA %
>>CASA Growth YoY %
50
45
40
35
30
25
20
15
10
5
-

40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
-
25
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)
FY13
26,822
7,820
282
141
35,065
19,254
15,811
6,853
22,664
11,236
11,428
1,677
9,751
3,024
6,726
FY14
31,687
9,037
356
56
41,136
22,653
18,483
7,920
26,402
12,042
14,360
1,588
12,772
4,294
8,478
FY15
37,181
10,706
517
66
48,470
26,074
22,396
8,996
31,392
13,988
17,404
2,076
15,329
5,113
10,216
FY16
44,828
14,120
362
912
60,221
32,630
27,592
10,752
38,343
16,980
21,364
2,726
18,638
6,342
12,296
(Rs in Crore)
Capital
Reserves & Surplus
Deposits
Borrowings
Other Liabilities & Provisions
Total Capital & Liabilities
FY13
FY14
FY15
FY16
476
480
501
506
35738 42999 61508 72172
296247 367337 450796 546424
33007 39439 45214 53018
34864 41344 32484 36725
400332 491600 590503 708846
Cash & Balances with RBI

Bal. with Bank&Money at Call
Investments
Advances
Fixed Assets
Other Assets
Total Assets
14627 25346 27510 30058

12653 14238
8821
8861
111614 120951 166460 163886
239721 303000 365495 464594
2703
2940
3122
3343
19014 25125 19095 38104
400332 491600 590503 708846
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
7
FY13
80.9
47.0
FY14
82.5
45.0
FY15
81.1
44.0
FY16
85.0
43.0
17.5
32.1
49.6
15.8
29.8
45.6
15.1
29.4
44.6
14.9
29.4
44.3
12.3
8.5
10.5
6.0
6.4
4.1
4.6
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
20.3
1.8
54.9
14.7
30.2
31.0
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
1.01
3018
0.30
797
74
0.20
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
0.10
16.8
11.1
5.7
16.1
11.8
4.3
16.8
13.7
3.1
15.5
13.2
2.3
BUY
TVS MOTOR COMPANY LTD
25-Jan-17
Result Update
CMP
401
Target Price
465
365
Upside
16%
27%
Results in line, Higher Moped sales supported volumes
TVS Motors has reported results in line with our estimates in 3QFY17. Net
sales grew by 3% to Rs. 2983 crore (vs our estimates of Rs.2991 crore).
This growth was supported by 2% of volume growth and 1% of realization
growth. Domestic volumes grew by only 4% due to demonetization issue.
Exports volume de-grew by 9% because of currency availability issues in
African countries and devaluation in currency in Egypt where the company
has significance presence in three wheelers. Mopeds segment reported
robust 27% growth in 3QFY17 despite the currency ban. The automobile
industry is recovering very rapidly from the hangover of demonetization
issue. The management is also very auspicious based on the robust
pipeline of launches across all categories in FY18. Scooters and premium
segment motorcycles will drive the higher realisation and margins for the
company. The most awaited concept bike in alliance with BMW will also be
launched in 2017.
Market Data
BSE Code
532343
NSE Symbol
TVSMOTOR
52wk Range H/L
418/256
Mkt Capital (Rs Cr)
19,061
Av. Volume
130329
Nifty
8,476
Result Update
Stock Performance
1Month
3Month
1Year
Absolute
13.8
-0.9
39.3
TVS Motors 3QFY17 revenues grew by 3% YoY to Rs.2983 crore. The

growth came from higher sales of Mopeds during the quarter.
Rel.to Nifty
8.3
1.0
25.3
Gross Margin improved by 30 bps YoY due to soft commodity prices.

EBITDA Margin remained 7.3% same as previous year.

3QFY17 2QFY17
Promoter
Public
Others
Total
Depreciation was higher during the quarter. As per Ind AS amortization of

some tools & dies were accounted in depreciation.
1QFY17
57.40
57.40
57.40
42.60
-100.00
42.60
-100.00
42.60
-100.00
PAT margin improved by 20 bps on account of lower tax rate due to higher
R&D expenses.
Outlook and Valuation
We expect that management's strong focus to gain market share, launch of
new products in scooter segment, restructuring of three wheeler segment
will ensure strong positioning of TVS Motors in the domestic market. TVSBMW alliance will further strengthen company's presence in premium bike
segment which in turn boost company's margin by change in product mix
and give opportunity to expand it's footprint in foreign markets. We expect
TVS Motors to report 20% ROE in FY17. Hence we have positive view on
this stock and we recommend "BUY" for a target price of Rs.465.
Company Vs NIFTY
150
TVSMOTOR
NIFTY
140
130
120
110
Rs. In crore
100
Financials
3QFY17
2QFY17
3QFY16
QoQ
YoY
90
Sales
EBITDA
Net Profit
EBIDTA%
PAT %
2983
218
133
7.3%
4.4%
3426
277
177
8.1%
5.2%
2896
210
120
7.3%
4.2%
-13%
-21%
-25%
3%
4%
10%
Jan-17
Dec-16
Nov-16
Oct-16
Sep-16
Aug-16
Jul-16
Jun-16
Apr-16
May-16
Mar-16
Jan-16
Feb-16
80
Naveen Kumar Dubey

naveen.dubey@narnolia.com

27
TVSMOTOR
Investment Arguments
Strong pipeline of new launches- New product launches in scooter and premium segment motorcycle will help company to
achieve its target of 18% markets share by FY18 from currently 15.5%. New premium segment products will also boost the
realization and margins for the company going ahead.
TVS-BMW alliance to deliver synergies- TVS has entered in a contract manufacturing agreement with BMW motorrad with an
investment of Euro 20mn. The project is going as per plan and the first product will be launched in FY17. The strategic alliance
will help TVS to earn higher realization and margins and will provide a platform to both TVS and BMW to showcase their
technological expertise.
Restructuring of Three wheeler business- Three wheelers segment of the company has not been placed well in the domestic
market in comparison to market leader Bajaj Auto. The management is moving towards the non-permit driven markets to increase
the penetration in different parts of the country.
Improvement in Indonesian Subsidiary- Indonesian subsidiary has reported 55% growth in volumes in first half as compared
to previous year. TVS has invested Rs.33 crore in the 3QFY17 and will invest Rs.25 crore in 4QFY17 considering the
improvement on EBITDA level.
Concall Highlights
Management expects double digit growth in FY18.

Capex plan Rs.400 crore in FY17.
BMW project going as per plan and the product will be launched in 2017.
Urban and rural mix are 55% and 45% respectively. Urban sales is higher due to scooterization.
Newly launched Victor monthly run-rate is 20000 units.
Moped segment growth is coming from new model launches and 40% contribution of total sales is from North region.
Management is also looking into non permit driven markets for 3 wheelers.
Exports have been sluggish due to restricted availability of dollars and currency devaluation in some countries.
Market share target 18% in 2 wheelers and 27-28% for 3 wheelers in exports.
25 crore of investment in Indonesian subsidiary in 4QFY17 looking at the growth on 9 month basis.
The Indonesian subsidiary has started showing improvements in topline with 55% growth in 1HFY17 vs HFY16.
Margin guidance of 10 percent by FY18.
Inventory days-28 in 3QFY17 and it will be 30-32 days in 4QFY17.
No big pressure on commodity prices of rising steel price.
The company will review prices in 4QFY17 depending on the commodity price increases.
Tax benefit in Himachal plant will lapse in FY17. It contributes around 10% of total production.
Tax rate would be in the range of 24-25% in FY17.
Plant Detail
Plant Location
Nalagarh, Himachal Pradesh
Mysore, Karnataka
Hosur, Tamil Nadu
Capacity
6 Lakhs units
5 Lakhs units
26 Lakhs units
Vehicles Manufactured
Two Wheeler
Two Wheeler
Two/Three Wheeler
Key Risks
1. Dollar availability issue in export market
2. Focus on gaining market share can hamper margins in short term
28
TVSMOTOR
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
8,384
27
8,410
5,903
30%
1,448
492
6%
149
343
80
289
120
42%
186
78
48
INCOME STATEMENT
FY15
FY16
10,312
11,516
24
39
10,335
11,555
7,311
8,073
29%
30%
1,739
1,942
603
758
6%
7%
179
216
424
541
62
68
386
512
124
148
32%
29%
328
369
106
139
48
48
FY17
12,769
48
12,817
9,002
30%
2,154
789
6%
264
525
59
514
144
28%
370
139
48
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
48
1,113
1,161
518
108
133
1,679
1,565
48
353
98
1,033
135
(66)
3,632
BALANCE SHEET
FY15
FY16
48
48
1,113
1,277
1,325
1,583
560
509
465
391
160
185
1,885
2,092
1,730
1,997
93
415
491
28
54
1,295
1,622
162
107
192
(23)
4,569
4,922
FY17
48
1,535
1,814
354
433
185
2,168
2,128
545
109
1,799
119
(30)
5,285
EPS
Book Value
DPS
Valuation(x)
P/E
Price / Book Value
Dividend Yield (%)
RoE
RoCE
Turnover Ratios
Asset Turnover (x)
Net Debt/Equity (x)

Depreciation
Direct Taxes Paid
OP before WC
Capex
Repayment of Borrowings
Interest Paid
Inc/(Dec) in Cash
Closing Balance

FY14
3.9
24.4
1.6
42%
RATIOS
FY15
FY16
6.9
7.8
27.9
33.3
2.2
2.9
32%
38%
FY17
7.8
38.2
2.9
38%
24.8
4.0
2%
25.0
6.2
1%
30.9
7.2
1%
51.4
10.5
1%
16%
20%
25%
23%
23%
26%
20%
24%
2.3
15.4
41.2
45.0
0.4
2.3
14.7
50.8
45.8
0.4
2.3
15.6
45.8
51.4
0.3
2.4
15.6
45.8
51.4
0.2
CASH FLOW STATEMENT

FY14
FY15
FY16
307
444
512
149
179
216
(134)
(159)
(148)
466
591
796
470
83
889
(318)
(108)
(109)
(272)
(376)
(484)
(235)
(415)
(583)
(47)
(46)
(68)
(69)
(84)
(139)
(252)
(96)
(337)
(17)
(428)
(31)
77
96
28
60
(331)
(4)
FY17
514
264
(144)
837
756
(395)
(395)
(59)
(139)
(305)
56
54
109
29
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 30th January

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 30th January

Hochgeladen von

Copyright:

Verfügbare Formate

IEA Report

30th Jan 2017

30th Jan 2017

30th Jan 2017

27th Jan 2017

27th Jan 2017

27th Jan 2017

25th Jan 2017

25th Jan 2017

IEA Edition No.-

52wk Range H/L

Share Holding Pattern-%

The loan portfolio of CANFINHOME grew by 28% YoY to Rs 12688 Cr

Assets Quality Remains Intact

Commenting on demonetization management said that the impact was low

Healthy Loan Book Growth

Strong growth momentum continues.

Stringent control on C/I Ratio.

Outlook & Valuation

Narnolia Securities Ltd

Operating Profit/ Net Income (%)

Cost of Fund% (Cal.)

Total Loan portfolio

Loan Growth % YoY

Disbursement Growth % YoY

Salaried & Professionals %

Non Housing Loans %

Self Employed & Non Professionals %

Refinance from NHB

Narnolia Securities Ltd

Deposits from public

Int. Exp/Int.Earned (%)

Op. Profit/ Net Inc. (%)

Net Interest Income

PAT/Net Income (%)

Empl. Benefits Expense

Op. Cost Metrix (%)

Cost to Inc. (%)

Other Exp./Ope. Exp %

NII Gr. YoY %

Net Income Gr. YoY %

PROFIT AFTER TAX

Op. Expense Gr. YoY%

Op. Pofit Gr. YoY %

PAT Gt. YoY %

Yield on Avg. Loan %

Pre Provisioning Profit

Growth Ratio YOY (%)

Spread Analysis (%)

Reserves and surplus

Net NPAs (Rs cr)

PCR %(Incl. Others)

Gross NPAs (Rs cr)

Narnolia Securities Ltd

Previous Target Price

Premiumisation led to double digit revenue growth

Change from Previous

52wk Range H/L

Mkt Capital (Rs Cr)

3QFY17 Result Highlights

Share Holding Pattern-%

Maruti reported a PAT of Rs.1745 crore a growth of 47.5% YoY on account of

Naveen Kumar Dubey

Narnolia Securities Ltd