IEA Report

21th Mar 2017

EXIDEIND Part Book Profit 21th Mar 2017
We expect that managements strategy of cost control and technology up-gradation may improve the margin up to 100bps by 2017-18.
Technological innovation, segment branding and increased distribution reach along with GST implementation will help the company to gain
market share going forward. We recommended this stock at Rs.175 for a target price of Rs.220 and the stock has achieved our recommended
target. So we advise our investors to Book Part Profit at current levels and considering the future growth potential of the stock we revise our
target and recommend fresh BUY for a target price of Rs.240 and we value insurance business at Rs.19 per share.
............................................................ ( Page : 2-4)

IRB "BUY" 20th Mar 2017

IRB had filed draft red herring prospectus (DRHP) with SEBI and was waiting for SEBIs approval. Now, SEBI has given the nod and IRB is ready to
launch InvIT IPO of 4300 Cr in month of April. InvIT is near to become reality in Indian capital market as the SEBI gives a nod to IRB to launch its
Infrastructure Trust. IRB will launch it in April 2017. IRB is planning to raise Rs. 4300 Cr through InvIT IPO. The proceeds will be used for the debt
repayment and as a growth capital for the on-going and upcoming projects. Encouraging traffic growth and strong recovery in economic activity
nullified the demonetization impact in Q3FY17. Based on the strong order book, we expect EPC revenue to grow @ 12% in FYT17E and 30% in
FY18E. According to us, the launch of InvIT , robust EPC revenue growth and strong toll collection will be a growth driver for the company going
forward and hence, we maintain BUY on the stock with revised target price of Rs.285 from 265. ................................................ ( Page : 5-9)

NBFC-Gold Loan "Neutral" 17th Mar 2017

Recently RBI capped the cash transaction of gold loan to Rs 20,000 for the NBFCs involved in gold loan business. NBFCs cannot issue more than Rs
20,000 in cash against gold loan. The earlier provision for NBFC was that high value loans against gold of Rs 1 lakh and above must only be
disbursed by cheque. RBI reduced the amount to Rs 20,000 from the earlier Rs 1 lakh in line with the provisions of the Income Tax Act.
We believe this change in norm will have significant impact in near terms on the portfolio of gold loan NBFCs. We expect huge disruption in
disbursement and collection in gold loan NBFCs. The key impacted company will be Manappuram Finance and Muthoot Finance as these are two
major players in gold loan business. We are NEUTRAL in both the companies till further updates. .................................................... ( Page : 10)

CANBK "ACCUMULATE" 16th Mar 2017

We expect the trend to continue as management is hopeful of significant recoveries and up-gradation in coming 1 or 2 quarters. However given
the bulky nature of book, improvement in economic environment remains the key. We expect the credit cost to moderate marginally to 1.4% in
FY18 as ageing related provisions will remain high given the spike in NPA in last 5 quarters. We expect the loan growth to remain muted at 8% in
FY18 due to sluggish corporate loan demand. However recognition of reversal of interest income in 3Q on account of S4A and SDR will largely
prevent further significant fall in yield and any further fall will be subject to MCLR. So we expect NIM to improve from current levels on the back
of decline in cost of fund and expect NII to grow at a CAGR of 30% over next 2 years due to lower base. We also believe the trading gains will be
muted in current quarter given the sharp spike in Bond Yield. We are initiating coverage on this stock and recommend 'ACCUMULATE' with
target price of Rs 325. ......................................... ( Page : 11-12)

SUNPHARMA "BUY" 15th Mar 2017

Synergies from the Ranbaxy acquisitions are gaining momentum and the company is on track to achieve the targeted benefits. Lifting of import
ban from Mohali facility will improve US revenue. Sunpharma has further strengthened the branded ophthalmic pipeline through the acquisition
of Ocular Technologies. Though the company has maintained its guidance of 8-10% sales growth for FY17E, we are optimistic for stronger and
healthy growth in longer term. Next big trigger for the company can be Halol plant resolution.Considering above arguments we recommend
BUY rating on this stock with the target price of Rs. 795. We are analysing the financial viewpoint of mohali plant and will update as and more
clarity willl emerge. .................................... ( Page : 13-15)

JKIL "BUY" 10th Mar 2017

JKIL is the one of the best EPC Company with lower Debt to equity. Strong order book and execution of Mumbai metro projects boosted revenue
in Q3FY17and we expect it to continue. Earlier we had a concern related to execution of JNPT road project but now we have received clarification
from management and we expect healthy execution from JNPT projects in FY18 as the utility shifting work will complete in Q4FY17. However, still
we do not have clear view on higher level of debtors but we believe it will not affect working capital in bigger way. We expect 9%, 20% and 27%
revenue growth in FY17, FY18 & FY19 respectively based on the strong order book and Mumbai metro projects. So considering the clarification on
JNPT road projects and strong revenue growth going forward, we recommend BUY on the stock with unchanged target price of Rs.330.
..................................................... ( Page : 16-21)
Narnolia Securities Ltd IEA Edition No.- 978
 Part Book Profit
EXIDE INDUSTRIES LTD 21-Mar-17

Result Update Exide Industries Limited is well placed to take advantage of growing mobility
CMP 218 demand in the country. The company has plans to invest Rs 1,400 crore
Target Price 240 over the next two years to introduce more durable automotive batteries in
Previous Target Price 220 India. Batteries with the new technology will be initially rolled out from our
Haldia plant and gradually, other facilities will also start producing the same.
Upside 10%
Unorganized players constitute over 35% market share in the Indian battery
Change from Previous - industry and introduction of Goods and Services Tax in FY18 will play a
major role in the growth of Exide. We expect that the industrial battery
Market Data segments demand will pick up gradually in line with the economic
improvement going ahead. To promote eco-friendly vehicles, the
BSE Code 500086
government has been offering incentives on electric and hybrid vehicles
NSE Symbol EXIDEIND under the National Electric Mobility Mission Plan which will also boost
52wk Range H/L 225/130 demand for Exide. The nation-wide rollout of this scheme is scheduled from
Mkt Capital (Rs Cr) 1 April, 2017.
18,607
Av. Volume 2,00,169
Nifty 9,127 Result Update

Stock Performance Revenue grew by 12.6%YoY to Rs. 1729 crore in 3QFY17. The growth in
1Month 3Month 1Year top-line was supported by higher sales of Passenger vehicles and 2
wheelers segment.
Absolute 1.7 25.9 60.9
Rel.to Nifty -1.0 13.0 40.9 EBITDA Margin decreased by 230 bps YoY. Other expenses remain higher
due to sales and promotion expenses.
Share Holding Pattern-% PAT Margin decreased by 20 bps YoY. Company reported Rs.2.63 crore of
3QFY17 2QFY17 1QFY17 other comprehensive income under the new IndAS.
Promoter 45.99 45.99 45.99
Outlook and Valuation
Public 54.01 54.01 54.01
Others -- -- -- We expect that managements strategy of cost control and technology up-
Total 100.00 100.00 100.00 gradation may improve the margin up to 100bps by 2017-18. Technological
innovation, segment branding and increased distribution reach along with
GST implementation will help the company to gain market share going
Company Vs NIFTY forward. We recommended this stock at Rs.175 for a target price of Rs.220
160 EXIDEIND NIFTY and the stock has achieved our recommended target. So we advise our
150 investors to Book Part Profit at current levels and considering the future
growth potential of the stock we revise our target and recommend fresh
140
BUY for a target price of Rs.240 and we value insurance business at Rs.19
130
per share.
120
110 Rs. In crore
100 Financials 3QFY17 2QFY17 3QFY16 QoQ YoY
90 Sales 1729 1929 1536 -10% 13%
80 EBITDA 230 293 239 -22% -4%
Jul-16

Sep-16

Feb-17
Jan-17
Dec-16
Jun-16

Aug-16
May-16

Oct-16
Nov-16
Apr-16

Mar-17
Mar-16

Net Profit 154 182 140 -15% 10%

EBIDTA% 13.3% 15.2% 15.6%
Naveen Kumar Dubey PAT % 8.9% 9.4% 9.1%
naveen.dubey@narnolia.com
Narnolia Securities Ltd 2
Please refer to the Disclaimers at the end of this Report
 EXIDEIND
Investment Arguments
Capex in new technology - Exide has planned to invest Rs.1400 crore over the next two years to introduce more durable
automotive batteries in India. Out of total Rs.1400 crores, Rs 700 crore has been invested in its plant at Haldia in West Bengal from
where batteries with punch-grid technology have started rolling out this year. The remaining Rs 700 crore of the planned capex will
be invested across the rest of the four automotive battery manufacturing plants over 2017-18. The plant will roll-out 1 mn batteries
and these batteries would be targeting primarily aftermarket.
Technological Innovation- Exide has tie ups with technological partners like East Penn Inc. USA, Hitachi chemicals Japan,
Furukawa Battery Co.Ltd Japan which provides requisites technology to develop better products. These companies have technical
expertise in 2Ws, 4Ws and Industrial segments batteries and they provide technological edge to the Exide over its peers and
unorganized players.
Market share shift towards organized from unorganized - Unorganized players constitutes over 35% market share in the
Indian battery industry.major unorganized players operate in Tractor, 3Ws and CV space. We believe that the introduction of GST
will bring down the price differential between organized and unorganized players, so there could be a prompt shift of market share
towards the organized players from unorganized players.
Telecom a big opportunity- Exide has 10% market share in the telecom segment, and it is very small portion of total revenue.
The teleocom industry has started data escalation and tower companies offer immense potential for industrial batteries. So it can be
a good opportunity for Exide to capture more market share. According to the management, industrial segment should grow over
15% in next two years.
Life Insurance business remains profitable for last consecutive 3 years. The company has started investing on branding and
promotion of its insurance arm to make it one of the big insurance companies of India.

Plant Location and Capacity

Capacity
Auto MC Industrial HUPS Systems
Plant Location mn units mn units Mah mn units
Shamnagar (1946) 1.6 636
Chinchwad (1969) 2.9
Haldia (1981) 2.1 1102 adding 1 mn capacity in auto space in FY17
Hosur (1997) 2.8 1086
Taloja (1998) 2.8 0.6
Bawal (2003) 8.4
Ahmednagar (2010) 8.9
Roorkee (2011) 0.5
Haridwar (2012) 0.5
Total 12.2 17.9 2824.0 1.0

Key Risk
Increase in Lead prices can affect the margins because of competitive replacement market.
Power defict in the country has reduced from 3.6% to 2.1% in FY16, so improving power condition in the country can hamper fast
growing inverter segment growth.
Economic slowdown in the country can negatively impact both the industrial and automotive segments.

Narnolia Securities Ltd 3

Please refer to the Disclaimers at the end of this Report

 EXIDEIND

Financials Snap Shot

INCOME STATEMENT RATIOS
FY14 FY15 FY16 FY17E FY14 FY15 FY16 FY17E
Revenue (Net of Excise Duty)
8309 9535 9479 10155 EPS 6.4 7.2 8.4 9.3
Other Income 73 95 135 186 Book Value 40.7 45.2 50.9 57.1
Total Revenue 8382 9630 9615 10341 DPS 2.1 2.6 2.8 3.1
COGS 4014 4652 4429 4753 Payout (incl. Div. Tax.) 33% 36% 33% 33%
GPM 48% 49% 47% 47% Valuation(x)
Other Expenses 2466 2959 2550 2742 P/E 18.9 24.6 16.6 18.9
EBITDA 862 937 1055 1152 Price / Book Value 3.0 3.9 2.7 3.1
EBITDA Margin (%) 10% 10% 11% 11% Dividend Yield (%) 1.74% 1.45% 2.02% 1.77%
Depreciation 140 155 180 211 Profitability Ratios
EBIT 721 782 875 941 RoE 16% 16% 16% 16%
Interest 8 3 2 3 RoCE 21% 20% 20% 19%
PBT 787 874 1009 1123 Turnover Ratios
Tax 241 257 292 337 Asset Turnover (x) 0.7 0.7 0.6 0.6
Tax Rate (%) 31% 29% 29% 30% Debtors (No. of Days) 29 26 28 28
Reported PAT 545 615 714 786 Inventory (No. of Days) 118 129 103 103
Dividend Paid 179 219 239 263 Creditors (No. of Days) 48 40 44 44
No. of Shares 85 85 85 85 Net Debt/Equity (x) 0 0 0 0

BALANCE SHEET CASH FLOW STATEMENT

FY14 FY15 FY16 FY17E FY14 FY15 FY16 FY17E
Share Capital 85 85 85 85 OP/(Loss) before Tax 787 874 1009 1123
Reserves 3375 3756 4245 4769 Depreciation 140 155 180 211
Net Worth 3460 3841 4330 4854 Direct Taxes Paid (235) (253) (278) (337)
Long term Debt 4 3 2 2 Operating profit before working
950capital changes
831 1298 1338
Short term Debt 30 51 109 117 CF from Op. Activity 872 180 1616 983
Deferred Tax 112 131 131 131
Total Capital Employed 3464 3844 4332 4856 Capex (158) (332) (423) (263)
Net Fixed Assets 1167 1314 1602 1654 CF from Inv. Activity (602) (56) (1351) (824)
Capital WIP 63 115 192 192 Repayment of Long Term Borrowings
(38) (2) (1) 0
Debtors 658 690 722 774 Interest Paid (8) (3) (1) (3)
Cash & Bank Balances 287 207 294 194 Divd Paid (incl Tax) (171) (223) (238) (263)
Trade payables 1101 1046 1132 1213 CF from Fin. Activity (215) (199) (182) (259)
Total Provisions 245 292 327 350 Inc/(Dec) in Cash 55 (74) 83 (100)
Net Current Assets 1365 1537 1896 1817 Add: Opening Balance 221 287 207 294
Total Assets 12494 13887 15326 16824 Closing Balance 287 207 294 194

Narnolia Securities Ltd 4

Please refer to the Disclaimers at the end of this Report

 Maintain BUY
IRB Infrastructure Developers Ltd. 20-Mar-17

Result Update IRB will Launch InvIT in April:-

CMP 244 IRB had filed draft red herring prospectus (DRHP) with SEBI and was waiting
Target Price 285 for SEBIs approval. Now, SEBI has given the nod and IRB is ready to launch
Previous Target Price 265 InvIT IPO of 4300 Cr in month of April. InvIT are the trust that manages the
income generating assets of 6 SPVs. IRB will transfer 6 project namely Surat
Upside 17%
Dahisar, Bharuch Surat, Jaipur- Deoli, Tumkar Chaitradurg, Omalur Salem
Change from Previous 8% and Talegaone Amravati to trust at mutually agreed valuation. IRB values its
transferring assets at 8000 Cr Enterprise Value (EV) and 3000 Cr of equity
Market Data valuation. Trust will acquire 100% equity stake from IRB and issue units of
BSE Code 532947 trust as consideration. Then the Trust will offer fresh units worth of Rs. 4300
NSE Symbol IRB Cr to investors through Offer for Sale and the proceed from it will infuse as
52wk Range H/L debt into six SPVs. IRB and other sponsors can also sell its units through
266/177
Offer for sale. Post this transaction IRBs debt to equity will improve
Mkt Capital (Rs Cr) 8,577 significantly from 2.8x to 2.2X, which will result in lower interest outgo and
Av. Volume 203192 improvement in the bottom line.
Nifty 9160
Robust construction revenue visibility:-
Stock Performance Currently, 5 projects are under construction and in next 8-10 months time
1Month 3 Month 1Year period another 3 projects in Rajasthan namely Gujarat/Rajasthan, Kishangarh
Absolute 6.9 26.7 5.9 - Udaipur and Kishangarh - Gulabpura will come under execution. Recently,
company has executed concession agreement with NHAI for the Kishangarh
Rel.to Nifty 3.1 14.2 -16.3
to Gulabpura road project. We expect work will start on Gujarat Rajsthan and
Kishangarh Udaipur projects from April and June 2017 respectively. Order
Share Holding Pattern-% book stands at Rs. 12011 Cr i.e. 3.45x of TTM EPC revenue. All the projects
3QFY17 2QFY17 1QFY17 are well on track and management confident to complete projects on time.
Promoters 57% 57% 57% Current on-going projects will drive the revenue growth and we expect
Public 43% 43% 43% revenue growth of 40-45% in FY18E.
Other 0% 0% 0%
Total 100% 100% 100% Strong Recovery in Toll Collection :-
IRB has witnessed encouraging traffic growth post the demonization. Average
Company Vs NIFTY daily toll collection in month of December has grown by 3% to Rs. 7.79 Cr
130
compared to Rs. 7.53 Cr in month of October. IRB's most of the operation
IRB NIFTY
120 road projects are in western part of the country which is seeing good recovery
110 in traffic movement. Management expects 10-12% growth in BOT revenue
100 including 5-6% traffic growth.
90
80
70 In Rs. Cr
60
Financials Q3FY17 Q2FY17 Q3FY16 YoY (+/-) QoQ (+/-)
50
40
Sales 1411 1291 1333 6% 9%
EBITDA 743 709 688 8% 5%
PAT 184 142 170 8% 30%
EBIDTA% 52.7% 54.9% 51.6% 110 bps (220) bps
Sandip Jabuani PAT 13.1% 11.0% 12.7% 40 bps 210 bps
sandip.jabuani@narnolia.com
5
Narnolia Securities Ltd
Please refer to the Disclaimers at the end of this Report
 Structure of theTrust :- Socure :- InvIT DRHP

Projects transfer to Trust :-

IRB Length Annual Toll Debt as on Concession Remaing Concession

Projects State
Holding (Kms) Collection 31st Dec Period(In Years) Period (In Years)
Surat-Dahisar 100% Maharstra 239 613 2016
742 12 5
Tumkar Chitradurga 100% Karnataka 114 202 926 26 21
Baruch - Surat 100% Gujarat 65 194 503 15 6
Jaipur - Deoli 100% Rajsthan 146 121 869 25 20
Omalur Salem Namakkal74% Tamil Nadu 69 75 206 20 10
Talegaon Amravati 100% Maharstra 67 47 479 22 16

Trust will receive interest on debt infuse inform of equity into SPVs and the interest income will be a tax exempted for the trust.
Trusts will also received dividend from SPVs. Trust has to distribute dividend to its unit holder based on net distributable cash
flow available and not on the basis of accounting profit.
IRB Infrastructure Developers is the Sponsor of the Trust
IRB Infrastructure (Standalone Company) is act as project Manager
IDBI Trusteeship Services will act as Trustee of the Trust (InvIT)

Outlook and Valuation :-

InvIT is near to become reality in Indian capital market as the SEBI gives a nod to IRB to launch its Infrastructure Trust. IRB will
launch it in April 2017. IRB is planning to raise Rs. 4300 Cr through InvIT IPO. The proceeds will be used for the debt repayment
and as a growth capital for the on-going and upcoming projects. Encouraging traffic growth and strong recovery in economic
activity nullified the demonetization impact in Q3FY17. Based on the strong order book, we expect EPC revenue to grow @ 12% in
FYT17E and 30% in FY18E. According to us, the launch of InvIT , robust EPC revenue growth and strong toll collection will be a
growth driver for the company going forward and hence, we maintain BUY on the stock with revised target price of Rs.285
from 265

Narnolia Securities Ltd 6

Please refer to the Disclaimers at the end of this Report
Quartely Performance 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 YoY% QoQ%
Net Sales 883 964 990 1,109 1,149 1,333 1,537 1,517 1,291 1,411 6% 9%
Other Operating Income - - - - - - - - - -
Net Sales 883 964 990 1,109 1,149 1,333 1,537 1,517 1,291 1,411 6% 9%
Contarct Site Exp 193 240 239 273 314 488 597 553 379 447 -8% 18%
RM Cost 75 75 103 126 138 64 51 76 82 85 31% 3%
COGS 268 314 341 399 452 552 648 629 461 532 -4% 15%
Employee Expenses 50 45 53 48 60 57 81 64 60 67 17% 11%
Other Expenses 42 49 25 33 32 36 68 50 60 69 89% 14%
Total Expenditure 360 408 420 480 544 646 797 743 582 667 3% 15%
EBITDA 523 555 571 629 605 688 740 774 709 743 8% 5%
Depreciation 180 179 172 202 203 226 222 221 227 180 -20% -21%
EBIT 343 377 399 427 402 461 517 553 482 563 22% 17%
Intreset 227 237 251 235 240 264 327 328 340 339 28% 0%
PBT 145 169 176 220 192 229 225 256 176 254 11% 45%
Tax 23 35 40 55 43 61 73 74 33 70 15% 109%
PAT 122 133 138 165 150 170 151 182 142 184 9% 30%

Margin Profile YoY (+/-) QoQ (+/-)

Gross Margin 69.60% 67.38% 65.53% 63.99% 60.65% 58.57% 57.86% 58.54% 64.28% 62.31% 374 (197)
EBIDTA 59.2% 57.6% 57.6% 56.7% 52.7% 51.6% 48.1% 51.0% 54.9% 52.7% 110 (220)
EBIT 38.9% 39.1% 40.2% 38.5% 35.0% 34.6% 33.7% 36.5% 37.3% 39.9% 530 260
PAT 13.8% 13.8% 14.0% 14.9% 13.0% 12.7% 9.8% 12.0% 11.0% 13.1% 40 210

Opearting Matrix 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 -28% -14%
Construction yet to comm. 5,402 5,403 7,551 2,133 2,133 8,828 2,133 2,133 3,987 5,436 -38% 36%
9,656 9,178 10,770 10,269 9,636 15,503 7,943 6,951 9,621 10,262 -34% 7%
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 -4% -1%
Total 11,587 12,954 12,631 12,116 11,468 17,321 9,746 8,739 11,394 12,011 -31% 5%

Toll Collection at Major Projects YoY% QoQ%

Munbai- Pune 136 147 149 160 146 162 165 188 173 137 -15% -21%
Surat - Dahisar 131 145 147 151 145 156 162 161 148 111 -29% -25%
Tumkar Chitradurga 45 47 48 50 49 51 51 53 50 40 -22% -20%
Baruch - Surat 45 49 48 49 45 49 50 49 47 37 -25% -21%
Ahem.-Vadodra (NE-1) 35 42 43 44 37 53 86 88 83 69 31% -16%
Jaipur - Deoli 24 27 29 33 26 29 32 32 27 22 -24% -16%
Pathankot - Amritsar - 8 21 23 22 27 27 29 28 24 -12% -15%
Thane- Bhiwandi Bypass 17 19 19 20 19 20 21 20 19 15 -24% -19%
Omalur Salem Namakkal 19 21 19 19 18 17 21 20 19 15 -11% -22%
Talegaon Amravati 10 11 12 12 10 12 13 13 12 10 -15% -13%

Narnolia Securities Ltd

Please refer to the Disclaimers at the end of this Report 7
Order Book
Order book Book to bill

20,000 17,321 20

15,000 12,954 12,631 15

11,587 12,116 11,468 11,394 12,011
9,746
10,000 8,739 10

5,000 5

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

Order Book break up project wise

Yedeshi Aurangabad
6% 4%
9%
2% Kaithal Rajasthan Border
12% 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

Narnolia Securities Ltd 8

Please refer to the Disclaimers at the end of this Report
 Financials Snap Shot
INCOME STATEMENT RATIOS
FY14 FY15 FY16 FY17E FY14 FY15 FY16 FY17E
Net Revenue 3732 3847 5130 5694 EPS 14 15 18 18
Other Income 121 113 124 119 Book Value 107 124 137 151
Total Revenue 3853 3960 5254 5812 DPS 6 5 5 5
EBITDA 1754 2212 2661 3041 Payout (incl. Div. Tax.) 42% 30% 26% 26%
EBITDA Margin (%) 47% 57% 52% 53% Valuation(x)
Depreciation 477 707 853 935 P/E 7 15 13 15
EBIT 1277 1505 1807 2106 Price / Book Value 1 2 2 2
Interest 756 931 1063 1346 Dividend Yield (%) 6% 2% 2% 2%
PBT 642 686 868 878 Profitability Ratios
Tax 182 144 232 246 RoE 13% 12% 13% 12%
Tax Rate (%) 28% 21% 27% 28% RoCE 9% 10% 10% 10%
Reported PAT 459 543 636 633 Turnover Ratios
Dividend Paid 194 164 164 164 Asset Turnover (x) 0.2 0.1 0.1 0.1
No. of Shares 33 35 35 35 Debtors (No. of Days) 1 0 7 7
Inventory (No. of Days) 59 73 55 55
Creditors (No. of Days) 40 22 22 22
Net Debt/Equity (x) 2.64 2.48 2.62 2.68

BALANCE SHEET CASH FLOW

FY14 FY15 FY16 FY17E FY14 FY15 FY16 FY17E
Share Capital 332 351 351 351 OP/(Loss) before Tax 642 686 868 878
Reserves 3228 4009 4476 4942 Depreciation 477 707 853 935
Net Worth 3561 4361 4827 5293 Direct Taxes Paid 232 216 312 246
Long term Debt 9398 10804 12652 14192 Op. before WC change 1749 2216 2719 3159
Short term Debt 897 631 1189 1189 CF from Op. Activity 1656 1823 2342 2104
Deferred Tax 22 19 16 16 Non Current Investment 0 1 0 0
Total CE 12959 15165 17479 19485 Capex 3002 2311 3161 2261
Net Fixed Assets 13041 36599 39169 40494 CF from Inv. Activity (2743) (2295) (3175) (2261)
Capital WIP 48 80 78 78 Repayment of LTB 888 794 1140 0
Debtors 6 5 104 115 Interest Paid 740 1317 1435 1346
Cash Balances 1501 1580 1559 0 Divd Paid (incl Tax) 194 78 254 164
Trade payables 408 234 305 339 CF from Fin. Activity 1274 474 667 30
Total Provisions 289 219 169 324 Inc/(Dec) in Cash 186 2 (165) (127)
Net Current Assets 879 477 510 1349 Add: Opening Balance 257 443 445 1559
Total Assets 15712 39393 42181 42046 Closing Balance 443 445 279 1432

Narnolia Securities Ltd 9

Please refer to the Disclaimers at the end of this Report

 NEUTRAL
NBFC- Manappuram, Muthoot 17-Mar-17

MANAPPURAM FINANCE After Demonetization RBI Imposes Cash Transaction

CMP 94 Recently RBI capped the cash transaction of gold loan to Rs 20,000 for the
Target Price Neutral NBFCs involved in gold loan business. NBFCs cannot issue more than Rs 20,000
in cash against gold loan. The earlier provision for NBFC was that high value
BSE Code 531213
loans against gold of Rs 1 lakh and above must only be disbursed by cheque. RBI
NSE Symbol MANAPPURAM reduced the amount to Rs 20,000 from the earlier Rs 1 lakh in line with the
52wk Range H/L 107/34 provisions of the Income Tax Act.
Mkt Capital (Rs Cr) 7909
We believe this change in norm will have significant impact in near terms on
Company Vs NIFTY
the portfolio of gold loan NBFCs. We expect huge disruption in
240 MANAPPURAM NIFTY disbursement and collection in gold loan NBFCs. The key impacted company
220 will be Manappuram Finance and Muthoot Finance as these are two major
200
players in gold loan business. We are NEUTRAL in both the companies till
180
further updates.
160
140
Restriction in cash transaction imposes Short term challenge.
120
100
The average ticket size in gold loan business ranges between Rs 30k to 40k.
80
Loans above Rs 1 Lakh are done by cheque as per the RBI rule. Portfolio above
Rs 1Lakh in Manappuram finance is 50% and that in Muthoot Finance is only
30%. Online transaction accounts for about 7 to 8% in both the company. Rest of
the portfolio is cash dominated. We believe in near term disbursement and
MUTHOOT FINANCE collections will fall as 30 to 40 percent of the portfolio deals in cash above Rs
CMP 349 20000 and below Rs 1Lakh. This may also lead to increase in delinquencies in
Target Neutral near term. We believe the impact on the portfolio will be same as we experienced
Price
BSE Code 533398 during demonetization period. As both of the company is focus towards online and
electronic format of transaction, we believe this shift from cash mode to electronic
NSE MUTHOOTFIN
mode will take few months. Also there are chances of temporary switch of some
Symbol
52wk 405/172 customers to unorganized sector that are in urgent need of cash with no bank
Mkt Capital (Rs Cr) 13937 accounts.
Company Vs NIFTY
200 MUTHOOTFIN NIFTY Financial Performance
180
AUM (Gold) 3QFY16 2QFY17 3QFY17 YoY % QoQ%
160
Manappuram 9,639 12,383 12,267 27.3% -0.9%
140
Muthoot 24,991 27,456 27,000 8.0% -1.7%
120 NII
100 Manappuram 379 543 580 53.1% 6.8%
80 Muthoot 580 792 749 29.2% -5.4%
PAT
Manappuram 100 192 203 101.9% 5.3%
Muthoot 187 297 291 55.9% -1.9%
DEEPAK KUMAR
Deepak.kumar@narnolia.com
Narnolia Securities Ltd 10
Please refer to the Disclaimers at the end of this Report
 ACCUMULATE
CANARA BANK 16-Mar-17

Result Update Stake sale in Can Fin Homes Ltd and Right Issue will boost the CRAR
CMP 290 Canara Bank sold its 13.45% stake in Can Fin Homes Ltd at Rs 753.77 Cr.
Target Price 325 It sold 35.8 Lakh shares at Rs 2105 per share to Singapore-government
backed Caladium Investment. Post the sale, Canara Bank would own 30%
Previous Target Price
in Can Fin Homes Ltd. The decision to sell the stake in its home loan arm is
Upside 12% as per the plan of management to monetize the non-core assets to boost
Change from Previous the Capital Adequacy ratio. Apart from this Canara Bank is also opened for
right issue till 16th March 2016 for an amount of Rs 1124 Cr at Rs 207 per
Market Data share. Out of this Rs 745 Cr would come from Government and balance
from other shareholder. Post this right issue and stake sale we estimate Tier-
BSE Code 532483 1 Capital to improve by about 50 bps from current 9.01%.
NSE Symbol
CANBK
52wk Range H/L 330/171 Result Update
Mkt Capital (Rs Cr) 16181
Av. Volume (,000) 149 PAT increased nearly by 4x to Rs 322 due to lower base and primarily on
Nifty 9085 account of higher trading gains of Rs 750 Cr. NII continues to be muted with
8% growth due to flattish advances growth and reversal of interest income
on account of S4A and SDR accounts. NIMs were stable QoQ at 2.19%.
Stock Performance
Demonetization helped CASA deposits growth at 30% YoY which led the
1Month 3 Month 1Year
CASA ratio improved to 32% vs 29% a quarter ago. Slippages decline to Rs
Absolute (1.7) 65.7 13.6 2225 Cr from Rs 2449 Cr QoQ while GNPA and NNPA stood at 9.97% and
Rel.to Nifty (5.1) 44.4 2.5 6.72% from 9.81% and 6.69% QoQ respectively. Management expects 1-2
large corporate accounts resolution to take place by end of FY17 which will
lead to upgrade of Rs 1000-1500 Cr. Also management expects slippages
Share Holding Pattern-%
of less than Rs 1500 during 4QFY17 and guided for loan growth of 7 to 8
3QFY17 2QFY17 1QFY17 percent in FY17.
Promoters 66.3 66.3 66.3
Public 33.7 33.7 33.7 View and Valuation
Others - - -
Total 100.0 100.0 100.0 Over the last 3 quarters delinquencies have been declining and net stress
addition remained stable. We expect the trend to continue as management
is hopeful of significant recoveries and up-gradation in coming 1 or 2
Company Vs NIFTY
quarters. However given the bulky nature of book, improvement in economic
180 CANBK NIFTY environment remains the key. We expect the credit cost to moderate
170
160
marginally to 1.4% in FY18 as ageing related provisions will remain high
150 given the spike in NPA in last 5 quarters. We expect the loan growth to
140 remain muted at 8% in FY18 due to sluggish corporate loan demand.
130
However recognition of reversal of interest income in 3Q on account of S4A
120
110 and SDR will largely prevent further significant fall in yield and any further
100 fall will be subject to MCLR. So we expect NIM to improve from current
90
levels on the back of decline in cost of fund and expect NII to grow at a
80
CAGR of 30% over next 2 years due to lower base. We also believe the
trading gains will be muted in current quarter given the sharp spike in Bond
Yield. We are initiating coverage on this stock and recommend
DEEPAK KUMAR 'ACCUMULATE' with target price of Rs 325.
Deepak.kumar@narnolia.com
Narnolia Securities Ltd 11
Please refer to the Disclaimers at the end of this Report
 CANBK

Quarterly Performance (Rs in Crore)

Financials 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 YoY % QoQ%
Interest Inc. 11052 11103 11140 11268 10882 10733 10202 10405 10288 -5% -1%
Interest Exp. 8671 8617 8623 8621 8655 8359 7894 7963 7874 -9% -1%
NII 2380 2486 2517 2647 2227 2374 2307 2442 2414 8% -1%
Other Income 1176 1326 1113 1210 1168 1383 1585 1782 1792 53% 1%
Total Income 3557 3812 3629 3857 3395 3757 3892 4224 4206 24% 0%
Ope Exp. 1759 2079 1626 1913 1843 2110 2073 2083 2224 21% 7%
PPP 1797 1732 2004 1944 1552 1647 1819 2141 1981 28% -7%
Provisions 841 1010 1360 1212 1429 6332 1493 1586 1485 4% -6%
PBT 956 723 644 732 123 -4685 326 555 497 304% -10%
Tax 300 110 165 203 39 -780 97 198 175 353% -12%
Net Profit 656 613 479 529 84 -3905 229 357 322 281% -10%

Profitability Metrix
Ratios 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 YoY(bps) QoQ(bps
Yield On Assets 8.8 8.8 8.3 8.3 8.1 8.1 7.6 7.5 7.4 -0.7 )
-0.1
Cost of Fund 6.8 6.8 6.4 6.4 6.9 6.3 5.9 5.8 5.7 -1.2 -0.1
NIM 2.2 2.3 2.2 2.2 2.2 2.2 2.2 2.2 2.2 0.0 0.0
NII Growth % 6.9 (1.9) 3.6 11.8 (6.5) (4.5) (8.3) (7.7) 8.4
C/I Ratio 49.5 54.6 44.8 49.6 54.3 56.2 53.3 49.3 52.9 -1.4 3.6
Other Inc./Net Inc. % 33.1 34.8 30.7 31.4 34.4 36.8 40.7 42.2 42.6 8.2 0.4
Tax % 31.4 15 26 27.7 31.4 16.6 29.8 35.7 35.2 3.8 -0.5
PAT Growth % 60.2 0.3 (40.7) (15.6) (87.1) (737.5) (52.2) (32.5) 281.3
RoE 11.3 11.1 7.0 7.1 5.2 (10.7) 3.5 4.4 4.6 -0.6 0.1
RoA 0.5 0.5 0.4 0.4 0.1 (0.5) 0.2 0.2 0.2 0.2 0.0

Business Metrix (Rs in Crore)

3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 YoY % QoQ%
Net Advances 312269 330036 324063 323077 331915 324715 321283 327129 331636 -0.1% 1.4%
Deposits 462450 473840 471877 485206 490599 479792 465314 484321 510327 4.0% 5.4%
CASA Deposits 105018 113532 109683 116002 118125 123542 128270 131738 153705 30.1% 16.7%
CASA % 22.7 24.0 23.2 23.9 24.1 25.7 27.6 27.2 30.1 6.0 2.9

Assets Quality 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 YoY % QoQ%
GNPA (Rs) 10574 13040 13081 14021 19813 31638 32334 33315 34339 73% 3%
GNPA % 2.9 3.4 4.0 4.3 5.8 9.4 9.7 9.8 10.0 4.1 0.2
NNPA (Rs) 7556 8740 8888 9383 12940 20833 21494 21887 22296 72% 2%
NNPA % 2.4 2.7 2.7 2.9 3.9 6.4 6.7 6.7 6.7 2.8 0.0
PCR % 56.0 60.0 59.0 59.8 54.0 50.1 50.8 51.8 52.5 -1.4 0.8

Narnolia Securities Ltd 12

Please refer to the Disclaimers at the end of this Report

 BUY
SUN PHARMACEUTICAL INDUSTRIES LTD
15th March 2017

Company Update Recently USFDA has informed Sunpharma that it will lift the Import Alert
CMP 706 imposed on the Mohali (Punjab) manufacturing facility and remove the
facility from the Official Action Initiated (OAI) status. This Mohali facility is a
Target Price 795
part of Ranbaxy Laboratories Ltd. and USFDA has imposed ban on this
Previous Target Price 16% facility in 2013.Lift of ban will clear the path for Sun Pharma to supply
Upside approved products from the Mohali facility to the US market, subject to
Change from Previous normal US FDA regulatory requirements.US formulations business
contributes about 46% of its total sales.And by his Ranbaxy integration will
gaining momentum and and will help the company to achieve its revenue
Market Data guidance of Rs. 2000 Cr in FY18.
BSE Code 524715
News Update
NSE Symbol SUNPHARMA
52wk Range H/L 876/572 Sun Pharma opens first production unit in Egypt, total investment of USD
Mkt Capital (Rs Cr) 170561 12.5 million was inaugurated on 21 feb 2017, signalling growing bussines
ties between India and the key Middle East nation.
Av. Volume(,000) 330019
Nifty 9,087 On 17 Feb 2017, Sun Pharma gets European Medicines Agency nod for
Tobramycin.
Stock Performance Sun Pharma recalls 2.7 lakh bottles of antidepressant in US.The tablets
1M 3M 12M have been manufactured by Sun Pharma at its Halol plant in India.
Absolute 4.3 1.6 -20.5 Sun Pharma recalls anti-depressant drug Bupropion Hydrochloride.The
Rel.to Nifty 2.7 -6.6 -39.2 recall is classified as class-III, which means the products are unlikely to
cause any adverse health reactions, but violate FDA labelling or
manufacturing rules.
Share Holding Pattern-% Sun Pharma to sell Ohm Labs site at New Jersey
3QFY17 2QFY17 1QFY17
Promoters 54.4 55.0 55.0 Outlook

Public 45.6 45.0 45.0 Synergies from the Ranbaxy acquisitions are gaining momentum and the
company is on track to achieve the targeted benefits. Lifting of import ban
Others 0.0 0.00 0.00
from Mohali facility will improve US revenue. Sunpharma has further
Total 100.0 100.0 100.0
strengthened the branded ophthalmic pipeline through the acquisition of
Company Vs NIFTY Ocular Technologies. Though the company has maintained its guidance of
130 SUNPHARMA NIFTY 8-10% sales growth for FY17E, we are optimistic for stronger and healthy
120 growth in longer term. Next big trigger for the company can be Halol plant
110 resolution.Considering above arguments we recommend BUY rating on
100 this stock with the target price of Rs. 795. We are analysing the financial
90 viewpoint of mohali plant and will update as and more clarity willl emerge.
80
70 Rs,Cr
60 Financials 2012 2013 2014 2015 2016
50
Sales 8019 11300 16080 27433 27219
40
EBITDA 3204 4896 7002 8064 7431
Net Profit 2657 2983 3141 4541 3665
EPS 26 29 15 22 18
Aditya Gupta ROE 22% 20% 17% 17% 12%
aditya.gupta@narnolia.com
Narnolia Securities Ltd 13
Please refer to the Disclaimers at the end of this Report
 Segmental Revenue

Latest Events
16 Dec 2016- The necessary formalities for closure of acquisition transaction have been concluded and we have successfully
completed the acquisition of Ocular Technologies.
12 dec 2016- Sun Pharma, Moebius Medical ink pact to develop pain management product.Moebius Medical will conduct
requisite pre-clinical studies and will assume responsibility for product development and manufacturing through the end of Phase-
II studies, as per the pact
7 Dec 2016- Company has undergone an inspection by USFDA recently and post that the health regulator issued a Form-483
observation letter For Halol Plant. The company is in the process of responding to the letter.

Financial Performance

EBITDA EBITDA Margins

50% 46% 46% 46% 3000

44% 44% 44% 44% 44% 44%
45% 41%
2500
40%
31% 33%
35% 31% 2000
27% 28% 27%
30% 26%
25% 1500
20% 14%
1000
15%
10%
1175

1551

2001

1801

2180

1850

2520

1873
1242

1275

1275

1843

1733

2165

1934

2169

1768

500
892

5%
0% 0
1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14 4QFY14 1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17

About the Company

Sun Pharmaceuticals (SUNP) is one of the fastest growing companies in India as well as globally. It has a highly impressive
track record of organic and inorganic growth. Various US acquisitions augment SUNPs pipeline with differentiated products, and
SUNP has turned around business in a highly profitable manner Taro/ TDPL/ Natcos brands/ etc. It has one of the highest
margins/ return ratios amongst global peers. In Apr 14, SUNP announced its biggest M&A deal ever Ranbaxy (RBXY). SUNP
currently is the second largest player in the domestic market, while the merged entity will become the largest player. Its API
business footprint is strengthened through 11 world class API manufacturing facilities across the globe. Sun Pharma fosters
excellence through innovation supported by strong R&D capabilities comprising about 1800 scientists and R&D investments of
over 7% of annual revenues.

Narnolia Securities Ltd 14

Please refer to the Disclaimers at the end of this Report
 Financials Snap Shot
INCOME STATEMENT RATIOS
FY13 FY14 FY15 FY16 FY13 FY14 FY15 FY16
Revenue 11300 16080 27433 27219 EPS 29 15 22 18
Other Income 388 552 452 459 Book Value 145 89 128 152
Total Revenue 11688 16633 27885 27678 DPS 5 3 2 2
COGS 2,073 2,779 6,739 6,483 Payout (incl. Div. Tax.) 17% 19% 8% 10%
GPM 18% 17% 25% 24% Valuation(x)
Other Expenses 2,796 4,225 8,201 8,508 P/E 14 38 47 58
EBITDA 4896 7002 8064 7431 Price / Book Value 3 6 8 7
EBITDA Margin (%) 43% 44% 29% 27% Dividend Yield (%) 1% 1% 0% 0%
Depreciation 336 409 1295 1014 Profitability Ratios
EBIT 4,560 6,592 6,769 6,417 RoE 20% 17% 17% 12%
Interest 43 44 579 477 RoCE 30% 35% 24% 19%
PBT 4,905 7,101 6,642 6,399 Turnover Ratios
Tax 846 702 915 935 Asset Turnover (x) 1 1 1 1
Tax Rate (%) 17% 10% 14% 15% Debtors (No. of Days) 78 50 71 91
Reported PAT 2983 3141 4541 3665 Inventory (No. of Days) 83 71 75 86
Dividend Paid 512 606 363 363 Creditors (No. of Days) 34 30 42 47
No. of Shares 104 207 207 207 Net Debt/Equity (x) 0.0 0.0 0.1 0.1

BALANCE SHEET CASH FLOW STATEMENT

FY13 FY14 FY15 FY16 FY13 FY14 FY15 FY16
Share Capital 104 207 207 241 OP/(Loss) before Tax 4,315 4,581 6,403 6,765
Reserves and surplus 14,886 18,318 26,252 31,164 Depreciation 336 409 1,195 1,014
Shareholders' funds 14,990 18,525 26,459 31,404 Direct Taxes Paid 1,073 789 1,740 1,988
Long term Debt 115 49 1,368 3,117 Operating profit before working
4,475capital4,541
changes 7,101 8,492
Total Borrowings 198 2,489 7,596 8,338 CF from Op. Activity 3,357 3,959 5,322 6,769
Non Current liabilities 1,001 2,886 2,817 2,365 Purchase of Non Current investments
(15,672) (28,265) (28,802) (40,089)
Long term provisions 787 2,602 2,532 2,080 Capital expenditure on fixed assets
(845) including
(906)capital
(2,366)
advances
(3,382)
and capital wo
Short term Provisions 1,482 1,961 3,336 3,417 CF from Inv. Activity (2,635) (2,367) (2,671) (4,455)
Current liabilities 2,758 3,549 9,256 8,026 Repayment of Long Term Borrowings
(111) (89) (6,662) (9,076)
Total liabilities 20,583 29,371 49,028 54,220 Interest Paid 38 23 251 300
Net Fixed Assets 5,077 5,824 11,020 13,361 Divd Paid (incl Tax) 512 606 363 869
Non Current Investments 1,106 788 599 593 CF from Fin. Activity (665) 507 (1,087) (1,924)
Other non Current assets 8 0 55 96 Inc/(Dec) in Cash 57 2,099 1,563 390
Current assets 11,503 18,686 29,122 30,865 Add: Opening Balance 2,013 2,260 4,479 7,729
Total Assets 20,583 29,371 49,028 54,220 Closing Balance 2,069 4,359 7,286 8,120

Narnolia Securities Ltd 15

Please refer to the Disclaimers at the end of this Report

 BUY
J.Kumar Infraprojects Limited 9-Mar-17

Result Update JKIL has a strong order book of Rs. 9680 Cr at the end of the Q3FY17. It
CMP 248 gives revenue visibilities for approx. 6.5 years (based on TTM revenue),
Target Price 330 which is positive for the company. Earlier we had a concern regarding
Previous Target Price 33% execution timeline of JNPT road projects, but recently we have received
clarification from the management and now we are in a position to make a
Upside
clear view. The unexecuted portion of JNPT road projects stands at Rs. 980
Change from Previous
Cr (equivalent to ~10% of Order Book) and we expect healthy execution in
FY18 as the utility shifting work will be completed in Q4FY17. Mumbai metro
Market Data projects are continue to be a growth driver for the JKIL and we expect
BSE Code 532940 around Rs. 1275 Cr of revenue from 3 Mumbai metro projects in FY18 and
NSE Symbol JKIL Rs. 1770 Cr in FY19. However, we are still not clear on the higher level of
52wk Range H/L 328/105 debtors, but we dont think it will impact working capital in the bigger way.
Mkt Capital (Rs Cr) 1,880 We will update on the same as and when any clarity emerge.
Av. Volume 94368
Nifty 8927 Growth Driver:- Mumbai Metro projects
Mumbai metro projects are continue to be a growth driver for the JKIL for
Stock Performance next 3-4 years. The unexecuted work on all 3 Mumbai metro projects
1Month 3 Month 1Year contributes nearly 67% to current order book. All the initial ground work is
Absolute 7.4 33.0 -15.9 completed and we expect full swing in execution and management is
confident to complete significant portion of line 2A and 7 by FY19.We
Rel.to Nifty 5.6 24.8 -35.1
expect Rs. 1275 Cr of revenue from 3 Mumbai metro projects in FY18,
around Rs.1000 Cr revenue from line 3 only in FY19 and Rs.770 Cr of
Share Holding Pattern-% revenue from line 2A & 7 in FY19. This will not only support the better
3QFY17 2QFY17 1QFY17 revenue growth but also strengthen the operating margin as the metro
Promoters 44% 44% 43% projects have better margin compare to normal road projects.
Public 56% 56% 57%
Others 0% 0% 0% Strong Order Pipeline :-
Total 100% 100% 100%
Around Rs. 10000 Cr of new metro projects in state of Maharashtra will be
bided out in next 1-2 years. JKIL will bid for the Mumbai metro line 2B and 4,
Company Vs NIFTY total of 10 packages of 500 Cr each, tunnel work of Mumbai- Pune
150 JKIL NIFTY expressway, Mumbai- Nasik expressway, Vijayawada and Bangalore metro
130 projects. But JKIL will go slow in terms of new order acquisition in order to
110 focus on execution.
90
Q3FY17 Result Highlights:-
70
JKIL reported robust revenue growth of ~19% YoY to Rs.369 Cr as
50
against Rs.310 Cr on account of work commencement on Mumbai metro
30 projects.
10
EBITDA has clocked 10.8% of growth to Rs.63 Cr as against Rs.57 Cr in
corresponding period last year led by higher revenue growth.
Profit after Tax has grew by 10.8% to Rs. 27 Cr as against Rs. 24 Cr.
Sandip Jabuani Order book as on 31st Dec 2017 stands at Rs. 9700 Cr out of this 6850 Cr
sandip.jabuani@narnolia.com in metro ( including Delhi metro project).
Narnolia Securities Ltd 16
Please refer to the Disclaimers at the end of this Report
 Mangment/ Concall Highlights:-

Will Maintain top line of 1600 Cr in FY17 and Rs. 2000 Cr in FY18
Employee expense has gone during the quarter as the JKIL has started metro project in big way and full fledge revenue yet to
come
Preliminary work has completed on Mumbai metro project and work is in full swing
Debtors of 563 Cr at the end of the Q3FY17, but has come down to 440 Cr in Feb
Inventory at the end of Q3FY17: - 106 Cr of RM, 280 Cr of WIP
Protest by localized people against tree cutting but its awarding authority concern and it will not hamper execution.
Advances of 125 Cr has taken from line 3 & 7 and in month time advances will receive from line 2A
Payment cycle for Mumbai metro project is 45 days from date of bill raised
No significant revenue during the Q3FY17 from JNPT project due to utility work is going on
Mgt. expects 200-250 Cr of revenue from Mumbai metro, 200 Cr from other road and flyover projects
Pending work on Delhi metro is tune of 250 Cr at the end of the Q3FY17
Unexecuted portion of JNPT road project is 1050 Cr
Utility revenue of 30 Cr was booked from JNPT road project in Q3FY17
480 Cr of Debt as on 31st Dec 2016
FY18 Top line :- 1300-1400 Cr from Mumbai metro, 400 Cr from JNPT, 200 cr from others
Will maintain 17-18% EBITDA margin going forward
Debt FY17:- 350-400 Cr, FY18 :- 500-550 Cr
Current Working capital days is 174 and expect to bring down to 160 days
1000 Cr of revenue from Line 3, 700-800 Cr of revenue from line 2A &7 in FY19

View and Valuation::-

JKIL is the one of the best EPC Company with lower Debt to equity. Strong order book and execution of Mumbai metro projects
boosted revenue in Q3FY17and we expect it to continue. Earlier we had a concern related to execution of JNPT road project but
now we have received clarification from management and we expect healthy execution from JNPT projects in FY18 as the utility
shifting work will complete in Q4FY17. However, still we do not have clear view on higher level of debtors but we believe it will
not affect working capital in bigger way. We expect 9%, 20% and 27% revenue growth in FY17, FY18 & FY19 respectively based
on the strong order book and Mumbai metro projects. So considering the clarification on JNPT road projects and strong
revenue growth going forward, we recommend BUY on the stock with unchanged target price of Rs.330.

Mumbai Metro Projects Details

Metro projects Lenghts(Km) Value Strech Execution Period Type Agency Agency
Line 2A 18.6 1350 Dahisar to DN Nagar 30 Months Elevated DMRC
Line 3 9.2 5001 Dharavi - International Airport 54 Months Underground MMRD
Line 7 5.9 360 Andheri (E) - Dahisar (E) 30 Months Elevated MMRD

Narnolia Securities Ltd 17

Please refer to the Disclaimers at the end of this Report

 About the Company :-

J. Kumar Infraprojects Limited is engaged in construction activities. The Company designs and constructs roads, bridges,
flyovers, subways, over bridges, skywalks and railway terminus/stations, among others. The Company's offerings in civil
construction segment include office/commercial buildings, sports complexes and swimming pools. In Irrigation Projects segment,
the Company builds dams, canals, aqueducts and irrigation tanks, and spillways. The Company has approximately 20 hydraulic
piling rigs, which are used to build pile foundations for buildings and flyovers, marine structures and offshore platforms. Its Piling
segment caters to various real estate and infrastructure companies. The Company's projects include Underground Metro CC-24,
Delhi Metro Tunnel, Ahmedabad Metro, Balewadi Bridge and Dhankawadi Flyover. Its other projects include Kapurbawadi
Flyover, Kherwadi Flyover, Amarmahal Flyover, Amarmahal Flyover, Thakur Flyover, Bhivandi Flyover and Aurangabad Flyover.

JKIL

Transporation Eng. Civil Construction Irrigation Others

Roads Terminus/Stations Earthen Dams Micro Pillings

Flyover Buildings Minor Irrigation Tank Micro Tunneling
Bridges Sports Complexes Spillways Ready Mix Concrete
Skywalk Swiming Pools Canals
GradeSeparator Aqueducts
Pedstrain Subways
ROBs/RUBs
Strom water drainage

Key Clinets

Vidharbh Irrigation
DMRC,MEGA, UPRNN, MCX, Development,
PWDs, Indian Pimpari Irrigation HCC,HDIL, Punj
MSRDC, MMRD, M
railway Division, Bambla Lloyd, JSW, LANCO
CMG
Canal Division

Narnolia Securities Ltd 18

Please refer to the Disclaimers at the end of this Report

Quartely Performance 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 YoY% QoQ%
Net Sales 296 297 393 355 322 299 390 391 303 363 21% 20%
Other Operating Income 5 7 10 9 9 11 13 13 7 6 -41% -2%
Net Sales 300 303 403 364 331 310 404 403 310 369 19% 19%
Change in Invenotry 5 17 7 26 18 12 (1) 32 6 23 1 3
RM Cost 169 156 240 218 196 171 247 246 190 220 28% 16%
COGS 173 173 246 244 215 183 247 279 195 243 33% 24%
Employee Expenses 17 18 23 17 18 21 24 19 22 31 49% 38%
Other Expenses 26 27 40 20 21 33 44 21 23 20 -39% -13%
Labour Exp 22 26 26 16 17 16 26 17 13 12 -25% -6%
Total Expenditure 238 244 335 296 271 253 341 335 253 306 21% 21%
EBITDA 62 60 68 67 60 57 63 68 56 63 11% 12%
Depreciation 12 12 13 12 13 13 13 13 13 14 12% 8%
EBIT 50 47 55 55 47 44 50 55 43 49 11% 13%
Intreset 18 18 23 19 16 13 14 18 17 15 21% -11%
PBT 35 31 38 38 34 34 45 43 32 40 15% 25%
Tax 15 7 10 12 12 11 16 13 9 13 24% 49%
PAT 20 24 27 26 22 24 29 30 23 27 11% 15%

Margin Profile 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 YoY (+/-) QoQ (+/-)
Gross Margin 42.3% 43.0% 38.8% 33.0% 35.1% 40.9% 38.9% 30.9% 37.0% 34.2% (670 bps) (280 bps)
EBIDTA 20.8% 19.7% 16.9% 18.5% 18.1% 18.3% 15.7% 16.9% 18.2% 17.1% (120 bps) (110 bps)
EBIT 16.7% 15.6% 13.7% 15.1% 14.3% 14.2% 12.4% 13.6% 13.9% 13.2% (100 bps) (70 bps)
PAT 6.7% 7.9% 6.8% 7.1% 6.6% 7.7% 7.1% 7.3% 7.4% 7.2% (50 bps) (20 bps)

Growth YoY
Sales Growth 27% 11% -11% 8% 10% 2% 0% 11% -6% 19%
EBIDTA Growth 45% 19% -7% 11% -4% -5% -7% 1% -6% 11%
EBIT Growth 44% 14% -10% 9% -6% -7% -9% 0% -9% 11%
PAT Growth 15% 21% -13% 13% 8% 0% 5% 14% 5% 11%

Operating Matrix FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 YoY% Q3FY16 Q3FY17 YoY%
Opening Order Book 737 1219 1480 1266 2512 3661 3122 3024 -3% 3658 10000 173%
Revenue Booking 365 723 878 879 955 1146 1285 1328 3% 310 369 19%
Order Intake 847 984 664 2125 2104 607 1187 1518 28% 32 0 -100%
Closing Order Book 1219 1480 1266 2512 3661 3122 3024 3214 6% 3380 9700 187%

Strong revenue growth of 19% in Q3FY17 was on account of work commencement on Mumbai metro projects.
JKIL will slow and selective in terms of new order intake in order to focus on execution. Management has guided for Rs.2000
Cr of new order inflow for the next year to maintain 10000 Cr + order book.

We anticipate healthy operating margin in range of 16-18%, margin depend on revenue mix (tunnel work has better margin comparatively)

Narnolia Securities Ltd 19

Please refer to the Disclaimers at the end of this Report

Robust Order book :-

Order Book Growth %

JKIL will go slow in terms

10,000

9,700
12000 2.5

8,646
10000 2 of new order intake to
8000 1.5 focus more on execution.
Avg. order intake will be
3658.3
6000 1

3,380
2915.4

3,214
3198
3100

3024

4000 0.5 in range of Rs.2000 Cr in

2000 0
order to maintain 10000
0 -0.5
Cr plus Order book

Quarterly Sales Trend :-

Sales Growth %

450 30%
393 390 391
400 355 369 25%
350 322 20%
296 297 299 303
300 15%
250 10%
200 5%
Mumbai metro
150 0% projects will drive the
100 -5%
50 -10%
revenue growth going
- -15% ahead

Order Book Break up:-

Line 3

Line2 A

1,506 Line 7

449 Delhi Metro

324
NH-348 and Amra Marg
372 (JNPT Road )
4,852
Gavanphata interchange
284 (JNPT Road)
Karalphata interchange
254
(JNPT Road)
338 Kurla to Vakola flyover
1,301
Others

Healthy Debt to Equity position with strong Intreset covarge ratio:-

D/E Intreset Coverage Ratio

4.00
3.58 3.52
3.50 3.23
2.97
3.00 2.65
2.50 D/E will remain strong
2.00 in range of 0.25 to 0.38
1.50
1.00 0.80
0.55
0.33 0.42
0.50 0.25
-
FY12 FY13 FY14 FY15 FY16

Narnolia Securities Ltd 20

Please refer to the Disclaimers at the end of this Report

 Financials Snap Shot
INCOME STATEMENT RATIOS
FY16 FY17E FY18E FY19E FY16 FY17E FY18E FY19E
Revenue 1409 1537 1866 2372 EPS 14 15 17 25
Other Income 18 29 23 23 Book Value 170 182 195 216
Total Revenue 1426 1566 1889 2395 DPS 2.0 2.2 2.4 3.6
EBITDA 248 267 341 438 Payout (incl. Div. Tax.) 15% 15% 15% 15%
EBITDA Margin (%) 18% 17% 18% 18% Valuation(x)
Depreciation 51 60 89 85 P/E 20.2 20.1 21.5 18.6
EBIT 197 207 252 353 Price / Book Value 1.6 1.6 1.8 2.1
Interest 61 69 88 99 Dividend Yield 1% 1% 1% 1%
PBT 154 167 187 276 Profitability Ratios
Tax 51 55 62 91 RoE 8% 8% 8% 11%
Tax Rate (%) 33% 33% 33% 33% RoCE 12% 12% 12% 16%
Reported PAT 103 112 125 185 Turnover Ratios
Dividend Paid 15 16 18 27 Asset Turnover (x) 0.7 0.7 0.8 0.9
No. of Shares 8 8 8 8 Debtors (No. of Days) 77 102 102 102
Inventory (No. of Days) 126 100 100 100
Creditors (No. of Days) 30 30 30 30
Net Debt/Equity (x) 0.25 0.29 0.37 0.38

BALANCE SHEET CASH FLOW

FY16 FY17E FY18E FY19E FY16 FY17E FY18E FY19E
Share Capital 38 38 38 38 OP/(Loss) before Tax 154 167 187 276
Reserves 1245 1338 1441 1594 Depreciation 51 60 89 85
Net Worth 1283 1376 1479 1632 Direct Taxes Paid 43 55 62 91
Long term Debt 29 13 73 73 Op. befor WC Change 249 267 341 438
Short term Debt 294 380 470 550 CF from Op. Activity 64 164 141 161
Deferred Tax 17 17 17 17 Non Current investments 0 0 0 0
Total Capital Employed 1312 1389 1552 1705 Capex 55 75 300 60
Net Fixed Assets 497 512 724 698 CF from Inv. Activity (226) (122) (252) (38)
Capital WIP 68 68 68 68 Repayment of LTB (75) (16) 60 0
Debtors 296 430 522 664 Interest Paid 61 69 88 99
Cash & Bank Balances 174 185 116 113 Divd Paid (incl Tax) 16 20 22 33
Trade payables 114 124 151 192 CF from Fin. Activity 171 (18) 40 (52)
Total Provisions 25 25 29 63 Inc/(Dec) in Cash 9 23 (71) 71
Net Current Assets 762 827 896 1079 Add: Opening Balance 20 174 185 116
Total Assets 1965 2144 2477 2783 Closing Balance 29 197 114 187

Narnolia Securities Ltd 21

Please refer to the Disclaimers at the end of this Report

 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

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