IEA Report 31st January

IEA Report
31th Jan 2017

"Part Book
31th Jan 2017
Profit"
The electro-mechanical projects business continuous to be adversely impacted and it is likely to be further affected due to the expected slowdown
in the real state sector after demonetization. The overall prospects of the Unitary-cooling products business continuous to be robust with the
addition of new product lines such as water purifiers and Air purifiers coupled with premium brand equity and distribution strength.The company
remains confident of sustaining its performance in the last quarter. On the other hand company is planning to invest Rs 450 crore in the next three
years. The air-conditioner maker is getting consumers focus after entering the residential air conditioner and water purifier segment. We raised
our target from Rs 535 to Rs 590 and recommend book part profit near to Rs 530 and keep 50% for booking profit at Rs 590.
................................................ ( Page : 2-5)
BLUESTARCO
BEL
"Book Profit"
31th Jan 2017
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. Key projects expected to support revenue for FY17 are 3D tactical
control radar, Akash weapon systems, L 70 gun upgrade, weapon locating radar, hand held thermal imager with laser ranger finder, passive night
vision device etc. 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. Considering all these above mentioned reason we had recommended BUY to the stock at CMP of Rs 1374 at a target price of Rs
1670 (~22% upside). We are close to achieve our target hence we recommend Book Profit at current levels.
............................................................................ ( Page : 6-9)
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 : 10-14)
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 : 15-17)
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 : 18-20)
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 : 21-23)
Narnolia Securities Ltd
IEA Edition No.-
942
Party book profit

BLUE STAR LTD.
31-Jan-17
Result Update
CMP
521
Target Price
Previous Target Price
590
535
Upside
Change from Previous
13%
-
Q3FY17_Result Highlights
Market Data
Key Highlights
BSE Code
NSE Symbol
500067
BLUESTARCO
581/306
4,975
10854
8633
52wk Range H/L

Mkt Capital (Rs Cr)
Av. Volume
Nifty
Stock Performance
Absolute
Rel.to Nifty
1Month
3 Month
1Year
12.4
6.8
55.8
41.2
8.0
8.3
3QFY17
2QFY17 1QFY17
39.12
60.88
39.04
60.96
--
--
--
100
100
100
Total
Company Vs NIFTY
160
BLUESTARCO
The overall prospects of the Unitary-cooling products business continuous

to be robust with the addition of new product lines such as water purifiers
and Air purifiers coupled with premium brand equity and distribution
strength.
Outlook and Valuation
39.09
60.91
Others
The electro-mechanical projects business continuous to be adversely

impacted and it is likely to be further affected due to the expected slowdown
in the real state sector after demonetization.
The company remains confident of sustaining its performance in the last

quarter.
Share Holding Pattern-%

Promoter
Public
The Company has reported a Total Operating Income of Rs 899 cr for the
quarter ended Sep 30, 2016 on a consolidated basis as compared to Rs 777
cr in the same period last year representing a growth of 16%. EBITDA Rs 41
cr As compare to 35 cr in the same period last year. Financial Expenses for
the quarter declined by 22% to Rs 8.75 crores from Rs 11.27 crores in
Q2FY16, mainly due to reduced cost of borrowings.
NIFTY
150
140
The electro-mechanical projects business continuous to be adversely

impacted and it is likely to be further affected due to the expected slowdown
in the real state sector after demonetization. The overall prospects of the
Unitary-cooling products business continuous to be robust with the addition
of new product lines such as water purifiers and Air purifiers coupled with
premium brand equity and distribution strength.The company remains
confident of sustaining its performance in the last quarter. On the other hand
company is planning to invest Rs 450 crore in the next three years. The airconditioner maker is getting consumers focus after entering the residential
air conditioner and water purifier segment. We raised our target from Rs 535
to Rs 590 and recommend book part profit near to Rs 530 and keep 50% for
booking profit at Rs 590.
130
120
110
Rs 'Cr
100
90
Financials
FY13
FY14
FY15
FY16
FY17E
80
Sales
EBITDA
Net Profit
EBIDTA%
P/E
2924
90
39
3.1%
0.01
2934
150
78
5.1%
0.03
3182
167
54
5.3%
0.02
3770
216
109
5.7%
0.03
4161
245
147
5.9%
0.04
Bibha Kashyap
bibha.kashyap@narnolia.com
Investment Arguments :
The wide product range including state-of-the-art inverter split air conditioners, enhanced distribution reach and
premium brand equity will further strenghten the performance of the product business.
The electro-mechanical projects business has been showing signs of improvement in some markets and application
segments.
With additional product lines being added to the Companys portfolio such as water purifiers, Blue Star expects air
coolers and air purifiers, to sustain its growth momentum in FY17 as well.
Substantial repayment of debt would be constrained by working capital needs as the company expects strong
growth in FY17.
The companys Room-Air conditioning (RAC) business has been outgrowing the industry by 10% points over the
last few quarters, resulting in the company consistently increasing its market share.
Order book :
2500
2000
Book to bill
1.17
1.07
1.02
0.87
0.90
1.09
1.12
0.97
1.04
0.97
0.92
0.89
0.94
0.97
0.93
0.92
0.92
0.95
0.95
0.89
Order book(Cr)
1500
500
2019
2162
1678
1614
1848
1676
1628
1412
1438
1744
1737
1478
1572
1492
1412
1388
1493
1604
1605
1628
1628
1,776
1840
1794
1000
1QFY12
2QFY12
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
1.4
1.2
1
0.8
0.6
0.4
0.2
0
Trend of Gross Margin and EBITDA Margin(%):

Gross Margin %
EBIDTA %
8%
6%
4%
2%
0%
-2%
-4%
-6%
1QFY12
2QFY12
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
35%
30%
25%
20%
15%
10%
5%
0%

Please refer to the Disclaimers at the end of this Report
Recent management commentaries:

The electro-mechanical projects business continuous to be adversely impacted and it is likely to be further affected
due to the expected slowdown in the real state sector after demonetization.
Company has increased market share in room air conditioner business and commercial refrigeration products like
water coolers and deep freezers.
The company remains confident of sustaining its performance in the last quarter.
The overall prospects of the Unitary-cooling products business continuous to be robust with the addition of new
product lines such as water purifiers and Air purifiers coupled with premium brand equity and distribution strength.
Segment wise performance

The Electro-Mechanical Projects and Packaged Air Conditioning Systems business, accounting for 62% of the total
revenues in the quarter, increased by 21% to Rs 554.55 crores from Rs 458.30 crores propelled by Government
infrastructure-related projects. Segment Results registered a marginal increase of 12% to Rs 28.70 crores. While the
revenue and profitability are in line with the expectations during the quarter, poor inflows of orders and escalating input
costs continue to be matter of concern.
The Unitary Products revenues in the quarter increased by 34% to Rs 318.41 crores from Rs 237.66 crore mainly due
to enhanced penetration and higher channel productivity. However, Segment Results grew 10% to Rs 14.54 crores
over the same period owing to significant investments in marketing and product development in the new businesses
such as water purifiers and Air purifiers.
The Professional Electronics and Industrial Systems business revenues increased by 42% to Rs 53.51 crores, while
Segment Results registered an increase of 15% to Rs 7.32 crores on account of changes in the business mix.
Segment wise Revenue(Cr)

Electro Mechanical Projects & Packaged Air-conditioning systems
Cooling Products
376
34 169
396
47 156
481
70 307
342
396
32
374
43 169
349
42 155
355453
60
335 484
26
396
37 205
357
37 196
505
454
46
327 556
25
459
12 246
238 439
9
546
540
18
419
744
11
292 533
9
320 516
2
367
334
31
283 463
67
368
52 164
382
59 157
33
800
700
600
500
400
300
200
100
-
342
328
Professional Electronics & Industrial Equipment

Financials Snap Shot
FY14
8.6
51.2
2.3
0.3
RATIOS
FY15
FY16
6.0
12.1
50.7
73.7
4.7
7.6
0.8
0.6
23.3
3.9
1%
51.1
6.1
2%
28.1
4.6
2%
25.4
6.6
2%
17%
24%
12%
26%
16%
23%
26%
33%
1.3
95.9
81.5
103.2
0.0
1.5
82.3
78.9
101.5
0.1
1.5
80.5
75.6
105.9
0.0
1.6
80.5
70.0
103.5
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
FY14
2934
18
2952
2087
1
450
150
5%
38
113
54
76
2
3%
78
21
9
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
18
443
461
0
494
2
461
271
1
771
68
830
73
491
2336
FY15
3182
8
3190
2214
1
533
167
5%
43
124
49
43
-8
-19%
54
42
9
FY16
3770
17
3787
2607
1
600
216
6%
60
156
43
135
27
20%
109
68
9
FY17E
4161
20
4182
2953
1
646
245
6%
53
193
29
184
37
20%
147
68
9
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
FY14
76
38
-19
171
67
Capex
CF from Inv. Activity
Repayment of LTB
Interest Paid
Divd Paid (incl Tax)
CF from Fin. Activity
Inc/(Dec) in Cash
Add: Opening Balance
Closing Balance
-40
11
0
-54
-27
-26
52
17
68
BALANCE SHEET
FY15
18
438
456
24
373
1
479
279
2
718
44
885
88
311
2175
FY16
18
472
663
18
345
2
681
285
6
831
54
1094
46
417
2590
FY17E
18
551
569
18
343
2
587
296
6
918
53
1180
44
301
2617

FY17E
16.4
63.3
7.6
0.5
CASH FLOW STATEMENT

FY15
FY16
FY17E
43
135
184
43
60
53
-26
-52
-37
186
191
266
215
242
177
-60
-49
25
-50
-39
-190
-24
68
44
-55
-44
0
-43
-107
-205
-7
44
54
-64
-79
0
-29
-68
-100
-1
54
53
Book Profit
BHARAT ELECTRONICS LTD.
31-Jan-17
Result Update
CMP
Target Price
Upside
1592
1670
5%
-
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Cr)
Av. Volume
Nifty
500049
BEL
1624.30/1009
35,470
39653
8635
Absolute
Rel.to Nifty
1Year
YTD
12.1
6.5
37.7
23.1
25.0
25.3

2QFY17
Promoter
74.41
74.41
75.02
Public
25.59
25.59
24.98
Others
--
--
--
100
100
100
Company Vs NIFTY
135
BEL
Key highlights
Outlook and Valuation
####### 4-Nov-16
Total
Q3FY17 result beat our estimates: BEL reported revenue of Rs 2191cr

(estimate of Rs 1868cr) as compared to Rs 1600cr in corresponding quarter
of FY16. EBITDA of Rs 483cr as compared to Rs 277cr in Q3FY16. Net
profit grew by 33.3% to Rs 378cr as compared to Rs 285cr in the
corresponding quarter previous year. Other income has declined in this
particular quarter by Rs 78cr from Rs 133cr in Q3FY16 primarily on account
of buyback of shares by the company. Currently, the company's order book
stands at Rs 34,000cr with inflows of orders worth Rs 6000cr till the third
quarter which provides strong revenue visibility going forward. The backlog
includes orders like weapon locating radar, integrated air command and
control system, advanced composite communication system, ship data
network, weapon locating radar, etc.
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.
Stock Performance
1Month
Q3FY17_Performance highlights
NIFTY
125
115
105
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. Key
projects expected to support revenue for FY17 are 3D tactical control radar,
Akash weapon systems, L 70 gun upgrade, weapon locating radar, hand
held thermal imager with laser ranger finder, passive night vision device etc.
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. Considering all these above mentioned reason we had
recommended BUY to the stock at CMP of Rs 1374 at a target price of Rs
1670 (~22% upside). We are close to achieve our target hence we
recommend Book Profit at current levels.
Rs in Cr
95
85
75
Bibha Kashyap
Financials
Sales
EBITDA
Net Profit
EBIDTA%
P/E
FY14
6518
922
952
14.1%
0.1
FY15
7093
1175
1197
16.6%
0.2
FY16
7549
1538
1387
20.4%
0.2
FY17E
8289
1563
1405
18.9%
0.2
FY18E
10007
2004
1783
20.0%
0.2
bibha.kashyap@narnolia.com
10
Domestic Order book

32333 32022 32139
35000
34675 34000
30000
22884 22077 21617
25000
21053 21648
Currently, the company's

order book stands at Rs
34,000cr with inflows of
orders worth Rs 6000cr till the
third quarter which provides
strong revenue visibility going
forward.
20000
12776
15000
10000
5000
827
2780
763
541
2824
1980
4127
6000
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
2,831
723
3,000
663
2,500
2,000
1,500
1,000
500
1,172
PAT (Rs/Cr)
3,135
795
997
192
1,582
1,266
1,5251,574
1,071
280
272
206
147
26
77
900
800
700
2,091 600
1,756
500
400
346 374
300
847
200
100
36
-
Gross Margin %
EBIDTA Margin %
60%
50%
48%
31%
22%
12%
9%
10%
19%
17%
17%
15%
0%
45%
27%
25%
30%
52% 53%
46%
37%
36%
40%
20%
43% 45%
42%
52% 53%
49%
1%
-4%
-5%
-10%

11
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.

12

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
FY15
7093
507
7599
3935
1
702
1175
17%
166
1008
3
1513
316
21%
1197
273
8
FY16
7549
533
8082
3916
1
772
1538
20%
200
1338
6
1865
471
25%
1387
477
24
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
FY15
80
8037
8117
0
25
0
8117
1213
140
3805
6038
1184
786
7064
15726
FY16
240
8746
8986
0
28
0
8986
1664
224
3741
7553
1194
1178
7242
18525
FY17E
8289
541
8831
4026
0
1192
1563
19%
218
1345
7
1879
475
25%
1405
444
22
RATIOS
FY18E
10007
592
10599
4730
0
1473
2004
20%
212
1792
8
2377
594
25%
1783
444
22
EPS
Book Value
DPS
Valuation(x)
P/E
Price / Book Value
Dividend Yield (%)
RoE
RoCE
Turnover Ratios
Asset Turnover (x)
Net Debt/Equity (x)
FY15
150
1015
34
23%
FY16
58
374
20
34%
FY17E
63
445
20
32%
FY18E
80
514
20
25%
7
1
3.2%
23
4
1.5%
22
3
1.4%
20
3
1.2%
15%
12%
15%
15%
14%
14%
16%
16%
0.5
196
318
61
0.0
0.4
181
393
58
0.0
0.4
179
400
56
0.0
0.4
179
402
56
0.0
BALANCE SHEET
FY17E
220
9721
9941
0
31
0
9941
1836
393
4065
8837
1272
1158
8133
20379
CASH FLOW STATEMENT
FY18E
220
11259
11479
0
38
0
11480
1851
393
4908
10394
1535
1279
9781
23522

Depreciation
Direct Taxes Paid
FY15
1513
166
356
1343
1434
FY16
1869
200
438
1714
2268
FY17E
1879
218
475
1563
1455
FY18E
2377
212
594
2004
1355
CAPEX
Repayment of LTB
Interest Paid
Inc/(Dec) in Cash
Closing Balance
227
(839)
0
3
220
(209)
386
1786
2171
657
(1424)
(0)
6
296
(320)
525
2171
2696
389
185
0
7
444
(351)
1289
7553
8842
227
370
0
8
444
(368)
1357
8837
10194

13
BUY
Can Fin Home Ltd.
30-Jan-17
Result Update
CMP
1763
Target Price
Upside
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

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
14
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.

15
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
-
16
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
FY14

Bank Loans
FY15
Deposits from public
FY16
2QFY17
NCD/CP
3QFY17
17
CANFINHOME
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)

Gross NPAs %
0.2
0.2
0.2
0.2
0.2
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
64
249
318
404
510
8,334
10,795
13,699
17,393
21,903
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
Narnolia Securities
Ltd
18
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

19
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%
20
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
EPS
Book Value
DPS
Valuation(x)
P/E
Price / Book Value
Dividend Yield (%)
RoE
RoCE
Turnover Ratios
Asset Turnover (x)
Net Debt/Equity (x)
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
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
CASH FLOW STATEMENT

FY14
FY15
FY16
3,734
4,976
6,630
Depreciation
2,116
2,515
2,867
Direct Taxes Paid
(858)
(1,075) (1,948)
5,111
6,779
9,089
4,995
6,539
8,584
Purchase of investments (13,100) (17,354) (12,189)
Capex
(3,545)
(3,279) (2,443)
(4,997)
(4,581) (7,319)
Repayment of Borrowings
(22)
(211)
(292)
Interest Paid
(170)
(222)
(104)
(283)
(424)
(909)
(74)
(2,004) (1,239)
Inc/(Dec) in Cash
(76)
(45)
26
165
89
43
Closing Balance
89
43
69

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
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
21
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
22
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
23
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
24
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

25
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

26
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
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
1758
11
1769
883
49.8%
431
261
14.8%
30
231
61
181
48
26.6%
133
109
18
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
FY17E
18
853
871
7
45
25
878
1096
6
116
61
188
80
-341
1817
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 FY19E
181
190
209
30
33
33
-48
-44
-48
272
281
299
174
223
257
0
0
0
-50
0
0
-49
0
0
0
0
0
-61
-58
-58
-109
-119
-141
-125
-194
-216
0
29
41
61
61
90
61
90
131
27
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.

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IEA Report

31th Jan 2017

31th Jan 2017

30th Jan 2017

30th Jan 2017

27th Jan 2017

27th Jan 2017

Narnolia Securities Ltd

IEA Edition No.-

Party book profit

52wk Range H/L

The overall prospects of the Unitary-cooling products business continuous

Outlook and Valuation

The electro-mechanical projects business continuous to be adversely

The company remains confident of sustaining its performance in the last

Share Holding Pattern-%

The electro-mechanical projects business continuous to be adversely

Narnolia Securities Ltd

Trend of Gross Margin and EBITDA Margin(%):

Narnolia Securities Ltd

Recent management commentaries:

Segment wise performance

Segment wise Revenue(Cr)

Professional Electronics & Industrial Equipment

Narnolia Securities Ltd

Financials Snap Shot

OP/(Loss) before Tax

Narnolia Securities Ltd

CASH FLOW STATEMENT

Share Holding Pattern-%

Outlook and Valuation

Q3FY17 result beat our estimates: BEL reported revenue of Rs 2191cr

Company has entered into strategic alliance with defence laboratories,

Domestic Order book

Currently, the company's

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

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 (%)