NiveshDaily - 14 February, 2017

NiveshDaily
February 15, 2017

INDICES
Indices Previous (day) Close % chg From Research Desk
Sensex 28339.3 0.0 %
Nifty 8792.3 ‐0.1%

(As on 14th February, 2017)
 Result Update
Kalpataru Power Transmission Ltd (KPTL)
Good set of numbers, maintain BUY with revised TP of Rs 350

Shilpa Medicare Ltd. (SML)
Shilpa Medicare (SLPA IN) reported numbers far less than our estimates on all counts due
to delay in revenue from Formulations.

Sun Pharmaceutical Industries Ltd.
Revenue in‐line with our expectation but miss on margins. Maintain BUY wih target price
from Rs 776.

Tata Motors (TTMT)
Below our estimates, Maintain HOLD with a revised target price of Rs 523

 First Cut Analysis
Ashiana Housing Limited
Stable set of numbers, bullish on AHL from longer term perspective, estimates and target
price under review till get more clarity from conference call

Daljeet S. Kohli
Head of Research
Tel: +91 22 66188826
daljeet.kohli@indianivesh.in
IndiaNivesh Securities Limited | Research Analyst SEBI Registration No. INH000000511
IndiaNivesh Research 601 & 602, Sukh Sagar, N. S. Patkar Marg, Girgaum Chowpatty, Mumbai 400 007. Tel: (022) 66188800

IndiaNivesh Research is also available on Bloomberg INNS, Thomson First Call, Reuters and Factiva INDNIV.
Result Update
15 February 2017
Kalpataru Power Transmission Ltd (KPTL)
Good set of numbers, maintain BUY with revised TP of Rs 350
Current Previous KPTL’s Q3FY17 standalone revenue grew 28.8% YoY to Rs 11.3bn on strong
execution, higher than our estimate of Rs 10.7bn. EBITDA margin expanded 22bps
CMP : Rs 289
YoY to 10.5% against our estimate of 11%. PAT witnessed 57.4% YoY growth at
Rating : BUY Rating : BUY Rs 571mn, which was a tad higher than our estimate of Rs 548mn.
Target : Rs 350 Target : Rs 321
(NR-Not Rated) Rs Mn (standalone) Q3FY17 Q2FY17 Q3FY16 Q-o-Q % Y-o-Y % Inspl Q3FY17 Variance (%)
Revenue 11286 11154 8764 1.2 28.8 10,742 5.1
STOCK INFO EBIDTA 1191 1220 905 -2.4 31.6 1,182 0.7
INDEX PAT 571 578 363 -1.2 57.4 548 4.3
BSE 522287 Adjusted PAT 571 578 363 -1.2 57.4 548 4.3
EPS (Rs) 3.7 3.8 2.4 -1.2 57.4 3.6 3.4
NSE KALPATPOWR
Margin % Margin % Margin % Basis Points (BPS) Margin % BPS
Bloomberg KPP IN -46
EBITDA % 10.5 10.9 10.3 -39 22 11.0
Reuters KAPT.NS PAT % 5.1 5.2 4.1 -12 92 5.1 -4
Sector Capital Goods Source: Company Filings; IndiaNivesh Research
Face Value (Rs) 2
Equity Capital (Rs mn) 307
Mkt Cap (Rs mn) 34,219
 KPTL’s standalone order book at the end of Q3FY17 stood at Rs 83bn,
52w H/L (Rs) 286 / 160 out of which 88% are transmission orders, while railways, pipelines
Avg Daily Vol (BSE+NSE) 1,38,241
and infra comprising the rest 12% of the order book. Out of the 88%
SHAREHOLDING PATTERN % transmission orders, 55% are international orders and rest 33%
(as on December. 2016) domestic orders. Other than these, KPTL had secured Rs 16.5bn of
Promoters 59.4
Public & Others 40.6 new orders in the fourth quarter (Q4FY17) till date. Additionally, the
company is favourably placed (L1) in orders of over Rs 30bn.
STOCK PERFORMANCE(%) 3m 6m 12m
KPP IN 20.4 51.6 0.7
SENSEX 9.1 22.5 2.3  Due to delay in PGCIL tenders, KPTL did not receive any meaningful
Source: Bloomberg, IndiaNivesh Research orders in Q3FY17. Though from January’17 till date KPTL received
KPP IN v/s SENSEX Rs 16.5bn orders. With a healthy order backlog and focus on
200
150
execution KPTL management is confident of achieving 15-20%
100 revenue growth for over FY17-19.
50
0
Aug-16
Dec-16
Feb-16
Mar-16
May-16
Sep-16
Oct-16
Nov-16
Jul-16
Jan-17
Apr-16
Jun-16
 JMC Projects had an order book of Rs 68bn at the end of Q3FY17,

KPP IN SENSEX with Rs 20.5bn of new order inflow in Q3FY17. Apart from this, JMC
has L1 position in orders worth Rs 14bn.
Source: Bloomberg, IndiaNivesh Research
Valuations
Daljeet S. Kohli
Head of Research  At the CMP of Rs 289, KPTL is trading at 9.1x and 7.4x EV/EBITDA for
Tel: +91 22 66188826 FY17E and FY18E respectively. We have kept our FY18E estimates
intact, however we have tweaked our FY17E estimates after factoring
in 9-months results. We maintain our BUY rating on the stock with a
Monami Manna revised SOTP based target price of Rs 350.
Research Analyst
Tel: +91 22 66188848
Financial Performance
monami.manna@indianivesh.in
YE March EBITDA
Net Sales EBITDA Adj.PAT Adj.EPS (Rs) RoE (%) Adj.P/E(x) EV / EBITDA (x)
(Rs Mn) Margin (%)
FY14 40,553 3,863 1,464 9.5 9.5 10.8 30.3 13.1
FY15 44,223 4,267 1,656 10.8 9.6 10.0 26.8 12.3
FY16 43,646 4,669 1,995 13.0 10.7 11.7 22.2 10.5
FY17E 51,013 5,560 2,598 16.9 10.9 12.0 17.1 9.1
FY18E 61,136 6,852 3,052 19.9 11.2 12.2 14.5 7.4
Source: Company, IndiaNivesh Research
IndiaNivesh Securities Limited|Research Analyst SEBI Registration No:INH0000000511

IndiaNivesh Securities Ltd 601 & 602, Sukh Sagar, N. S. Patkar Marg, Girgaum Chowpatty, Mumbai 400 007. Tel: (022) 66188800
Q3FY17 Result Update | Kalpataru Power Transmission Ltd (KPTL)
Q3FY17 and 9MFY17 Financial Performance
Quick Fundamentals (Rs. Mn)

KPTL (Standalone) Q3FY17 Q2FY17 Q3FY16 Q-o-Q % Y-o-Y % 9MFY17 9MFY16 Y-o-Y %
Net sales 11,161 11,012 8,648 1.4 29.1 33,592 29,347 14.5
Other Operating Income 125 142 116 -12.1 8.0 386 375 3.0
Total Revenue 11,286 11,154 8,764 1.2 28.8 33,978 29,721 14.3
Operating Expenses 10,096 9,934 7,859 1.6 28.5 30,259 26,518 14.1
(Increase) / Decrease in Stock in Trade 171 -161 208 NA -177.5 100 599 -83.3
Consumption of raw material 4,756 4,890 3,356 -2.7 41.7 13,552 11,019 23.0
Employees Cost 740 746 672 -0.8 10.2 2,210 2,203 0.3
Other Expenditure 1,581 1,525 1,264 3.7 25.1 4,420 3,883 13.8
Erection & Sub-contracting Charges 2,847 2,934 2,360 -3.0 20.7 9,978 8,814 13.2
EBIDTA 1,191 1,220 905 -2.4 31.6 3,719 3,204 16.1
Depreciation 195 194 211 0.8 -7.3 584 629 -7.1
EBIT 995 1,026 694 -3.0 43.4 3,134 2,575 21.7
Interest Expense 238.7 296.6 263 -19.5 -9.2 783.9 1,044.1 -24.9
Other income 115 153 126 -24.8 -9.0 391 410 -4.4
PBT 871 883 557 -1.3 56.4 2,742 1,940 41.3
Provision for Taxation 300 305 194 -1.5 54.4 947 672 40.9
PAT 571 578 363 -1.2 57.4 1,795 1,268 41.5
Exceptional Items 0 0 0 NA NA 0 0 NA
Net Profit After Tax 571 578 363 -1.2 57.4 1,795 1,268 41.5
Adjsted PAT 571 578 363 -1.2 57.4 1,795 1,268 41.5
EPS (RS.) 3.7 3.8 2.4 -1.2 57.4 11.7 8.3 41.5
Margin % Margin % Margin % Basis Point s(BPS) Margin % Margin % BPS
EBITDA % 10.5 10.9 10.3 -39 22 10.9 10.8 17
EBIT % 8.8 9.2 7.9 -38 90 9.2 8.7 56
PBT % 7.7 7.9 6.4 -19 136 8.1 6.5 154
PAT % 5.1 5.2 4.1 -12 92 5.3 4.3 102
Source: Company Filings; IndiaNivesh Research
 For Q3FY17, domestic transmission contribution from India business

stood at 33% of total order book with PGCIL contributing 18%, SEBs
2% and private 13%. Overseas transmission business contributed
55% of total order book with Africa contributing majorly with 36%,
MENA with 3%, South Asia with 7%, SAARC with 4% and CIS/Europe
with 5%. The rest 12% of the order book consisted of orders from
Infra/Pipeline and Railways segments.
 The net debt on KPTL’s book at the end of Q3FY17 stands at

Rs 5.97bn. For the nine month period (9MFY17) the company’s
interest expenses stood at Rs 764mn. In the last quarter conference
call, the management gave a guidance of keeping its full year FY17
interest costs to 2.5% of its revenue. In this quarter’s concall also the
management said they are maintaining their above guidance on
interest costs for FY17.
IndiaNivesh Securities Ltd 15 Feb 2017 2 of 6

JMC Projects
Quick Fundamentals (Rs. Mn)

JMC Projects (Standalone) Q3FY17 Q2FY17 Q3FY16 Q-o-Q % Y-o-Y % 9MFY17 9MFY16 Y-o-Y %
Net sales 5,481 5,309 5,756 3.3 -4.8 16,380 17,490 -6.3
Other Operating Income 0 0 0 - - 0 0 -
Total Revenue 5,482 5,309 5,756 3.3 -4.8 16,380 17,490 -6.3
Operting Expenses 5,001 4,793 5,253 4.3 -4.8 14,854 15,895 -6.5
(Increase) / Decrease in Stock in Trade -31 173 -75 NA NA 145 -50 NA
Consumption of raw material 2,042 1,970 1,971 3.6 3.6 5,956 6,029 -1.2
Employees Cost 578 539 595 7.2 -2.9 1,729 1,674 3.3
Other Expenditure 425 275 212 54.3 100.6 953 746 27.8
Construction Expense 1,987 1,836 2,550 8.2 -22.1 6,071 7,495 -19.0
EBIDTA 481 516 504 -6.8 -4.5 1,526 1,595 -4.3
Depreciation 145 139 129 4.3 12.5 421 379 11.2
EBIT 336 377 375 -10.8 -10.4 1,105 1,217 -9.2
Interest Expense 211 209 275 0.8 -23.5 654 784 -16.5
Other income 85 17 9 413.9 807.4 118 44 165.5
PBT 211 185 109 14.1 93.0 568 477 19.1
Provision for taxation 29 64 35 -55.2 -16.8 153 160 -4.2
PAT 182 121 75 51.1 143.8 416 318 30.8
Exceptional Items 0 0 0 NA NA 0 0 -
PAT after exceptional items 182 121 75 51.1 143.8 416 318 30.8
Adjsted PAT 182 121 75 51.1 143.8 416 318 30.8
EPS (RS.) 5.4 3.6 2.9 51.1 89.6 12.3 12.2 0.9
Margin % Margin % Margin % (BPS) Margin % Margin % BPS
EBITDA % 8.8 9.7 8.7 -94 2 9.3 9.1 20
EBIT % 6.1 7.1 6.5 -97 -38 6.7 7.0 -21
PBT % 3.8 3.5 1.9 37 195 3.5 2.7 74
PAT % 3.3 2.3 1.3 105 202 2.5 1.8 72
 JMC projects reported 4.8% YoY decline in revenue to Rs 5.5bn

(against Rs 5.7bn in Q3FY16). Decline in revenue was mainly due to
weak execution in few segments. EBITDA margin remained stable
(2bps YoY expansion) at 8.8% led by good realisations in new
projects. The management is expecting poor execution in the second
half (already played out somewhat in Q3FY17 with 5% revenue
decline) due to impact of demonetisation which is likely to impact
real estate projects of JMC. As a result management has guided for
flat top line growth for FY17 while EBITDA margin is expected to be
around 9.5% for FY17.
 As on Q3FY17 end, JMC had an order book of Rs 68bn including

orders of Rs 20.5bn that the company received during the quarter.
Infrastructure segment contributed 14% of the order book, while
factories and buildings contributed 75% of the order book and the
rest 11% came from industrial orders. Other than the above JMC is
also favourably placed (L1) in orders of over Rs 14bn.

Shree Shubham Logistics Ltd (SSL)
 Shree Shubham Logistics Ltd (SSL) revenue in Q3FY17 de-grew by

55% YoY to Rs 126mn, while EBITDA margin stood at 14.9% against a
negative 17.4% in Q3FY16. The company posted a loss of Rs 118mn
in Q3FY17 against a loss of Rs 132mn in Q3FY16. The performance of
SSL was already impacted in the last quarter (Q2FY17) due to low
utilisation (60-70%) of its warehouses. The situation got further
aggravated this quarter (Q3FY17) due to demonetisation, which has
brought down the utilisation level to a dismal 40-45% level.
 With good monsoon this year, SSL management was expecting its
third and fourth quarter to be good with utilisation increasing to 90%
from 60-70%. However now with demonetisation taking its toll on its
warehouse performance, the management is expecting the situation
to improve only from the first quarter of FY18 (Q1FY18). As a result
SSL management is expecting the loss for the full year FY17 to be
around Rs 650mn against its earlier expectation of Rs200mn.
Valuation
 At the CMP of Rs 289, KPTL is trading at 9.1x and 7.4x EV/EBITDA for
FY17E and FY18E respectively. We have kept our FY18E estimates
intact, however we have tweaked our FY17E estimates after
factoring in 9-months results. We maintain our BUY rating on the
stock with a revised SOTP based target price of Rs 350.
Valuation: SOTP
FY18E EBITDA/ equity Value for Per Share
Rs mn Multiple EV (Debt) KPTL Share Method
Book value value KPTL Share Value
KPTL Standalone 6,852 7.5 51,388 7,991 43,397 100.0% 43,397 283 EV/EBITDA
KPTL BOT Projects

Jhajjar KT Transco 2,416 51.0% 1,232 10 DCF
Kalpataru Satpura Transco 1,612 100.0% 1,612 13 DCF
KPTL Developmental projects

Thane Project 600 1.0 600 100.0% 600 4 Book Value
Indore Project 800 1.0 800 100.0% 800 5 Book Value
Mcap
JMC Projects (Consolidated)-Mcap
38 (25% Discount)
Shubham Logistics 518 8.0 4,147 4,828 -681 70.0% -477 -3 EV/EBITDA
Total KPTL Value-Consolidated 350 SOTP


Income Statement (standalone)

Y E Ma rc h (Rs m) FY 14 FY 15 FY 16 FY 17 E FY 18 E
Ne t sa le s 40,553 44,223 43,646 5 1, 0 13 6 1, 13 6
Growth (%) 21.6 9.0 - 1.3 16.9 19.8
Operating expenses - 36,690 - 39,955 - 38,977 - 45,453 - 54,284
O pe ra ting profit 3,863 4,267 4,669 5,560 6,852

Other operating inc ome 0 0 0 0 0
EBITDA 3,863 4,267 4,669 5,560 6,852
Growth (%) 19.9 10.5 9.4 19.1 23.2
Deprec iation - 696 - 852 - 837 - 979 - 1,101
Other inc ome 484 522 509 583 576

EBIT 3,651 3,938 4,340 5 , 16 4 6,327
Financ e Cost - 1459.9 - 1409.3 - 1275.0 - 1173.3 - 1638.2
Exc eptional Item 0 0 0 0 0
P rofit be fore ta x 2 , 19 1 2,529 3,065 3,991 4,688
Tax (c urrent + deferred) - 727 - 873 - 1,070 - 1,393 - 1,636
P rofit / (Loss) for the pe riod 1, 4 6 4 1, 6 5 6 1, 9 9 5 2,598 3,052

Assoc iates, Min Int 0 0 0 0 0
Re porte d ne t profit 1, 4 6 4 1, 6 5 6 1, 9 9 5 2,598 3,052
Extraordinary item 0 0 0 0 0
Adjuste d ne t profit 1, 4 6 4 1, 6 5 6 1, 9 9 5 2,598 3,052
Growth (%) 6.3 13.1 20.5 30.2 17.5

So urce: Co mpany, IndiaNivesh Research
Balance Sheet (standalone)

Y E Ma rc h (Rs m ) FY 14 FY 15 FY 16 FY 17 E FY 18 E
Share capital 307 307 307 307 307
Reserves & surplus 19,235 20,401 22,279 24,536 27,304
Ne t Worth 19 , 5 4 2 20,708 22,586 24,843 2 7 , 6 11
Minority Interest 0 0 0 0 0
Tota l Lia bilitie s 19 , 5 4 2 20,708 22,586 24,843 2 7 , 6 11
Non- c urre nt lia bilitie s 1, 7 17 3,989 3 , 3 10 3,934 4,320
Long- term borrowings 677 2,943 2,716 3,124 3,342
Deferred tax liabilities 138 54 0 0 0
Other Long term liabilities 12 14 385 270 367
Long term provisions 891 978 209 540 611
Curre nt Lia bilitie s 24,701 23,245 2 3 , 12 1 27,220 30,702
Short term borrowings 6,310 6,163 2,870 3,874 4,649
Trade payables 12,503 13,990 14,803 16,594 18,717
Other current Liabilities 5,066 1,963 2,536 3,241 3,362
Short term provisions 821 1,129 2,913 3,511 3,974
Tota l Lia bilitie s a nd Equity 45,960 47,942 4 9 , 0 17 55,996 62,633
Non Curre nt Asse ts 15 , 8 0 2 15 , 9 5 2 17 , 3 4 4 18 , 2 4 7 19 , 5 8 3

Net Block 5,918 5,590 5,426 5,697 6,045
Goodwill 0 0 0 0 0
Non- current Investments 3,834 3,935 4,949 4,949 4,949
Long- term loans and advances 5123 5558 5954 6482 7336
Deferred tax Assets 0 0 0 0 0
Other non current Assets 926 869 1,016 1,120 1,253
Curre nt Asse ts 3 0 , 15 8 3 1, 9 9 1 3 1, 6 7 3 37,750 43,050
Inventories 5438 5989 4244 5441 6172
Sundry Debtors 15,417 17,836 18,988 22,197 25,124

Cash & Bank Balances 647 753 1,062 870 1,759
Other current Assets 4,952 4,164 5,180 5,997 6,323
Loans & Advances 3,703 3,245 2,195 3,241 3,668
Current Investments 2 4 4 4 4
Tota l (Asse ts) 45,960 47,942 4 9 , 0 17 55,996 62,633

Cash Flow Statement (standalone)

Y E Ma rc h (Rs m) FY 14 FY 15 FY 16 FY 17 E FY 18 E
P rofit be fore ta x 2 , 19 1 2,529 3,065 3,991 4,688
Deprec iation 696 852 837 979 1,101
Change in working c apital - 1,299 - 3,379 2,630 - 3,371 - 2,487
Total tax paid - 708 - 957 - 1,124 - 1,363 - 1,636

Others 976 887 767 991 1,062
Ca sh flow from ope ra tions (a ) 1, 8 5 6 - 69 6 , 17 6 1, 2 2 7 2,728
Capital expenditure - 1,227 - 523 - 673 - 1,250 - 1,450
Change in investments - 485 - 104 - 1,013 0 0
Others 110 580 362 479 443
Ca sh flow from inve sting (b) - 1, 6 0 2 - 47 - 1, 3 2 5 - 771 - 1, 0 0 7

Fre e c a sh flow (a + c a pe x) 629 - 592 5,503 - 23 1, 2 7 8
Equity raised/(repaid) 0 0 0 0 0
Debt raised/(repaid) 1664 2119 - 3520 1412 994
Dividend (inc l. tax) 261 265 277 284 284
Others - 2101 - 2162 - 1299 - 2345 - 2110

Ca sh flow from fina nc ing (c ) - 17 6 222 - 4,541 - 648 - 832
Ne t c ha nge in c a sh (a + b+ c ) 78 10 6 3 10 - 19 2 889
Cash at the begning 569 647 753 1,062 870
Cash at the end of the year 647 753 1,062 870 1,759
Key Ratios (standalone )

Y E Ma rc h FY 14 FY 15 FY 16 FY 17 E FY 18 E
Adjusted EPS (Rs) 9.5 10.8 13.0 16.9 19.9
Growth 6.3 13.1 20.5 30.2 17.5
Dividend/share (Rs) 1.5 1.5 1.5 1.5 1.5
Dividend payout ratio 15.7 13.9 11.9 9.1 7.8
EBITDA margin 9.5 9.6 10.7 10.9 11.2
EBIT margin 9.0 8.9 9.9 10.1 10.3
Net Margin 3.6 3.7 4.6 5.1 5.0
Tax rate (%) 33.2 34.5 34.9 34.9 34.9
Debt/Equity(x) 0.4 0.4 0.2 0.3 0.3
Inventory Days 49 49 35 39 37
Sundry Debtor Days 139 147 159 159 150

Trade Payable Days 113 115 124 119 112
Du P ont Ana lysis - RO E
Net margin 3.6 3.7 4.6 5.1 5.0
Asset turnover (x) 0.9 0.9 0.9 1.0 1.0
Leverage fac tor (x) 0.4 0.4 0.2 0.3 0.3
ROE(%) 10.8 10.0 11.7 12.0 12.2

RoCE (%) 9.6 8.6 8.7 9.0 9.2
V a lua tion (x)
PER 30.3 26.8 22.2 17.1 14.5
PCE 10.8 10.6 8.7 7.7 10.7
Pric e/Book 2.3 2.1 2.0 1.8 1.6
EV/EBITDA 13.1 12.3 10.5 9.1 7.4

Q3FY17 Result Update
15 Feb 2017 Shilpa Medicare Ltd. (SML)
Shilpa Medicare (SLPA IN) reported numbers far less than our

estimates on all counts due to delay in revenue from Formulations.
Shilpa Medicare (SLPA IN) reported numbers far less than our estimates on
Current Previous
all counts due to delay in revenue from Formulations. The huge variance
CMP : Rs 667
from our estimates is due to double whammy of sequentially lower growth
Rating : HOLD Rating : BUY in overall business as well as our assumption that formulation sales to US
Target : Rs 731 Target : Rs 711 & Europe should start reflecting in Q3FY17. Due to procedural delay these
(NR‐Not Rated)
shipments have been deferred & sales have started in Q4FY17 hence the
STOCK INFO
miss on financials is temporary & shall be made up with lag of 1‐2
INDEX
BSE 530549 quarters. However the company has incurred expenses on exhibit batches,
NSE SHILPAMED inventory build up for launch of Capacitabine & Azacitidine for US.
Bloomberg SLPA IN
Similarly this quarter saw higher other expenses due to ramp up in R&D &
Reuters SHME.NS
Sector Pharma travel related expenses. Lower top line coupled with high expenses
Face Value (Rs) 1 resulted in 418 bps decline in EBITDA margin despite 395 bps increase in
Equity Capital (Rs mn) 80 gross margin.
Mkt Cap (Rs mn) 53,160
52w H/L (Rs) 787 / 380 We maintain our belief that SLPA is on the path to get into next phase of
Avg Daily Vol (BSE+NSE) 87,182

growth driven by US sales. Besides US, we expect positive surprise to come

from European markets too. Therefore, we maintain positive view on the
SLPA IN Equity 16.8 19.4 64.8 company & highlight it as one of the conviction picks in pharma space.
SENSEX 5.7 0.7 23.3 We expect FY18 to have considerable business from API & some part of
formulation business & FY19 to have full ramp up of US onco business both
SLPA IN Equity v/s SENSEX on API as well as formulation side. We have changed our estimates for
200
150
fY17E & FY18E to factor in the 9MFY7E performance & we introduce our
100 estimates for FY19E. At CMP of Rs 667 SLPA is trading at 53x FY17E/
50
0 35xFY18E & 21xFY19E EPS of Rs 12.5/Rs 19/Rs 31.8 respectively. Since the
Mar‐16
Apr‐16
May‐16
Jun‐16
Jul‐16
Aug‐16
Oct‐16
Nov‐16
Dec‐16
Jan‐17
Feb‐16
Sep‐16
stock has already run up in anticipation of high growth the upside from
SLPA IN SENSEX
CMP is limited. Therefore we downgrade our rating from Buy to HOLD
with price target of Rs 731 valuing it at 23xFY19E (target rolled over from
Source: Bloomberg, IndiaNivesh Research FY18E to FY19E PE multiple unchanged).

Daljeet S. Kohli
Head of Research
Tel: +91 22 66188826 Rs.mn Q3FY17 Q3FY16 y‐o‐y (%) Q2FY17 q‐o‐q (%) INSL Est. Variance (%)
daljeet.kohli@indianivesh.in Revenue 1,836 1,982 (7.4) 2,113 (13.1) 2,603 (29.5)

EBIDTA 348 389 (10.5) 489 (28.8) 643 (45.8)
Adjusted PAT 174 280 (37.7) 382 (54.4) 433 (59.7)
Reported PAT 156 280 (44.2) 383 (59.2) 433 (63.9)




Q3FY17 Result Update | Shilpa Medicare Ltd. (SML)
Chapt er Title
Key results highlights:
Net sales (on consolidated basis, according to Ind As accounting standards & all
previous numbers restated accordingly) came in at Rs 1.8bn, down 7.4% y‐y & 13%
q‐q due to lower development & other regular business & delay in start of
Formulation business. In Q2FY17 the subsidiaries contributed positively however
they again turned into red in Q3FY17.
Despite lower sales gross margin increased 788 bps y‐y due to lower material costs.
However entire benefit of high gross margin was eaten away by high employee
costs & other expenses which shoot up by 433 bps & 420 bps y‐y respectively. The
sharp increase in these costs is due to ramp up in staff strength to cater to
Formulation sales in US/EU, increased R&D expenses & high travel costs. While the
expenses have started in Q3FY17, the sales & other benefits of increased expenses
will show in next few quarters.
On sequential basis sales are lower because company took a conscious call to
sacrifice some development business in lieu of preparation for own ANDAs filings &
launching of Capacitabine, Azacitidine, & Imatinib in US/EU markets. In our view
this is short term sacrifice for long term gain. Gross margin increased 395 bps q‐q
but EBITDA margin declined 418 bps lead by 276 bps increase in employee costs &
537 bps increase in Other expenses.
Due to higher tax outgo at rate of 33.8%in Q3FY17 v/s 18.8% in Q3FY16 & 27.7% in
Q2FY17, the company recorded 20% y‐y & 55% q‐q decline in Adj PAT.

Why the variance from our estimates is so large?
In our Q2FY17 post result note, we mentioned that Q3FY17E is likely to be better
than previous quarters as both the shutdown lines are fully operational hence
revenue from exhibit batches (which had gone substantially lower) would come
back. However according to management they had taken a conscious call to
sacrifice near term revenue from developmental activities for long term gain from
filings of own ANDAs, preparing exhibit batches etc & preparation of launch
quantities of Azacitidine & Capacitabine. Hence development revenue in Q3FY17
was much lower than previous quarters.
We had expected sales of Imatinib to EU to start partly in Q3FY17. However due to
procedural delays in getting required approvals for shipments the company could
not sell Imatinib to EU. However according to management they have now started
some shipments of the same & expect partial sales to reflect in Q4FY17E &good
ramp up to reflect from Q1FY18E.
In our estimates for Q3FY17, we had assumed all the above factors leading to
expectation of high growth on all counts. However due to miss on top line as stated
above, reported numbers are far less than our estimates. We believe this is
temporary blip as the revenue recognition has just slipped over to next quarter but
business remains intact. We believe Q4FY17E/Q1FY8E onwards financials of the
company shall improve significantly on back of launch of 2 above mentioned
products. We wish to highlight that SLPA has already settled litigation with patent
holder for Gleevac in US & is likely to launch it in April 2018.

.


We remain confident that SLPA is on the path to get into next phase of growth
driven by US sales. Besides US, we expect positive surprise to come from European
markets too. Therefore, we maintain positive view on the company & highlight it as
one of the conviction picks in pharma space.

Change in estimates & introduce FY19 numbers
In order to factor in the 9MfY17 performance, delay in EU/US formulation sales &
increased costs pre‐empting sales resulting lower margins we have changed our
estimates for FY17E & FY18E & introduce FY19E numbers. Our previous numbers
for FY17E & FY18E are drastically reduced primarily to factor delay in Formulation
sales & lower developmental revenue. We have reduced estimated EBITDA margin
by ~200 bps to factor higher R&D, employee & travel related costs.

Quick Financials
Old estimates New estimates Change (%) Introducing
Rs mn
FY17E FY18E FY17E FY18E FY17E FY18E FY19E
Sales 8,958 13,081 7,481 10,099 (16.5) (22.8) 13,344
EBITDA 2,142 3,432 1,625 2,407 (24.1) (29.9) 3,366
PAT 1,526 2,479 1,005 1,529 (34.2) (38.3) 2,546
EPS (Rs) 19.8 32.2 12.5 19.1 (36.7) (40.7) 31.8

Outlook & Valuation:
We believe SLPA is on the path to strong growth from US oncology business both in
API as well as Formulation over next couple of years & that the company is at the
point of transition to next orbit of growth. The approvals from US shall be critical &
steady ramp up in US business will be key driver of growth. In our view FY18E is
likely to be a block buster year for the company & strong growth is likely to be
maintained over FY19E & FY20E when benefit of large pipeline of formulation
products is likely to play out.

At CMP of Rs 667 SLPA is trading at 53x FY17E/ 35xFY18E & 21xFY19E EPS of Rs
12.5/Rs 19/Rs 31.8 respectively. Since the upside from CMP is limited we
downgrade our rating from Buy to HOLD with price target of Rs 731 valuing it at
23xFY19E (target rolled over from FY18E to FY19E PE multiple unchanged).


Quarterly results summary

(Consolidated numbers as per Ind‐As)
Particulars (Rs Mn except EPS) Q3FY17 Q3FY16 Y‐o‐Y (%) Q2FY17 Q‐o‐Q (%)
Net Sales 1,836 1,982 (7.4) 2,113 (13.1)
Consumption of raw material 866 1,092 (20.7) 1,080 (19.8)
Empoyee Cost 313 252 24.1 302 3.7
Other Expenditure 308 250 23.5 241 27.8
Total Expenditure 1,487 1,593 (6.6) 1,624 (8.4)
EBITDA 348 389 (10.5) 489 (28.8)
Depreciation & Ammortization 78 84 (8.0) 75 4.2
EBIT 271 305 (11.1) 415 (34.7)
Other Income 40 25 60.5 37 9.1
Interest 7 23 (68.9) 6 22.1
Exceptional loss ‐
Pre‐tax Profit 304 306 (0.9) 446 (31.9)
Tax 96 57 67.9 124 (22.0)
Profit before minority interest 207 249 (16.8) 322 (35.7)

Minority Interest & Share of JV (33) (31) 4.4 60 (154.1)
Adj net profit 174 218 (19.8) 382 (54.4)

Other Comprehensive Income (18) ‐ NM 1 NM
Net Profit (Reported) 156 218 (28.1) 383 (59.2)

EPS (Dil) 2.2 2.8 (22.8) 5.0 (56.1)
O/ Share ( In Million) 80 77 3.9 77 3.9

Key ratios
Particulars (%) Q3FY17 Q3FY16 Bps Q2FY17 Bps
Gross Margins 52.8 44.9 788 48.9 395
EBITDA margin 19.0 19.6 (65) 23.2 (418)
Net Margin 11.3 12.6 (127) 15.2 (395)
Material cost/Net Sales 47.2 55.1 (788) 51.1 (395)
Employee Cost/ Net Sales 17.0 12.7 433 14.3 276
Other Expenditure/ Net Slaes 16.8 12.6 420 11.4 537
Tax Rate 33.8 18.8 1,503 27.7 607



Income Statement (Consolidated)
Y E March (Rs m)
FY15 FY16 FY17E FY18E FY19E
Net sales 6,138 7,194 7,481 10,099 13,344
Growth (%) 7 17 4 35 32
Operating expenses (4,851) (5,640) (5,855) (7,692) (9,977)
Operating profit 1,287 1,554 1,625 2,407 3,366
Other operating income 0 0 0 0 0
EBITDA 1,287 1,554 1,625 2,407 3,366
Growth (%) 10.9 20.8 4.6 48.1 39.8
Depreciation (214) (286) (301) (363) 140
Other income 48 46 121 145 121
EBIT 1,120 1,314 1,445 2,190 3,627
Finance cost (41) (69) (30) (36) (42)
Exceptional item 0 0 0 0 0
Profit before tax 1,080 1,221 1,415 2,154 3,585
Tax (current + deferred) (352) (234) (410) (625) (1,040)
Profit / (Loss) for the period 728 987 1,005 1,529 2,546
Associates, Min Int 11 51 0 0 0
Reported net profit 738 1,038 1,005 1,529 2,546
Extraordinary item 0 (24) 0 0 0
Adjusted net profit 738 1,038 1,005 1,529 2,546
Growth (%) (2) 41 (3) 52 66
Balance Sheet (Consolidated)
Y E March (Rs m ) FY15 FY16 FY17E FY18E FY19E
Share capital 77 77 80 80 80
Reserves & surplus 5,392 6,392 7,346 8,799 11,218
Net Worth 5,469 6,469 7,427 8,879 11,298
Minority Interest 144 148 148 148 148
Total Liabilities 3,432 4,003 4,504 5,544 6,738
Non‐current liabilities 1,541 1,505 2,005 2,505 3,005
Long‐term borrowings 1,023 975 1,475 1,975 2,475
Deferred tax liabilities 378 359 359 359 359
Other Long term liabilities 23 35 35 35 35
Long term provisions 117 135 135 135 135
Current Liabilities 1,891 2,498 2,499 3,039 3,734
Short term borrowings 585 870 870 870 870
Trade payables 755 1,014 991 1,310 1,731
Other current Liabilities 493 607 631 852 1,125
Short term provisions 58 7 7 7 7
Total Liabilities and Equity 9,045 10,619 12,075 14,564 18,182

Non Current Assets 5,769 7,188 8,009 8,959 9,099
Net Block 5,200 6,520 7,313 8,230 8,365
Goodwill 177 231 259 292 297
Non‐current Investments 2 2 2 2 2
Long‐term loans and advances 389 434 434 434 434
Other non current Assets 2 0 0 0 0
Current Assets 3,276 3,432 4,066 5,605 9,083
Inventories 1,308 1,625 1,690 2,281 3,014
Sundry Debtors 814 846 861 1,162 1,535
Cash & Bank Balances 184 159 704 1,264 3,527
Other current Assets 40 35 35 35 35
Loans & Advances 277 239 249 336 443
Total (Assets) 9,045 10,619 12,075 14,564 18,182

Cash Flow Statement (Consolidated)
Y E March (Rs m)
FY15 FY16 FY17E FY18E FY19E
Profit before tax 1,080 1,221 1,415 2,154 3,585
Depreciation 214 286 301 363 (140)
Change in working capital (344) (12) (88) (440) (520)
Total tax paid (234) (253) (410) (625) (1,040)
Others (53) (33) (122) (145) (79)
Cash flow from operations (a) 663 1,210 1,096 1,307 1,807
Capital expenditure (1,490) (1,606) (1,094) (1,280) 5
Change in investments (552) 126 0 0 0
Others 48 48 121 145 121
Cash flow from investing (b) (1,994) (1,433) (973) (1,135) 126
Free cash flow (a+capex) (827) (396) 2 27 1,812
Debt raised/(repaid) 630 237 500 500 500
Dividend (incl. tax) 0 0 0 0 0
Others 777 (52) (80) (112) (169)
Cash flow from financing (c) 1,422 197 423 388 331
Net change in cash (a+b+c) 91 (26) 546 559 2,264
Reconciliation of Other balances 0 0 0 0 0
Cash as per Balance Sheet 184 159 704 1,264 3,527

Key Ratios (Consolidated )
Y E March FY15 FY16 FY17E FY18E FY19E
Adjusted EPS (Rs) 19.2 13.5 12.5 19.1 31.8
Growth (6.9) (29.7) (6.9) 52.2 66.5
EBITDA margin 21.0 21.6 21.7 23.8 25.2
EBIT margin 18.3 18.3 19.3 21.7 27.2
Net Margin 12.0 14.4 13.4 15.1 19.1
Tax rate (%) 32.6 19.2 29.0 29.0 29.0
Debt/Equity(x) 0.3 0.3 0.3 0.3 0.3
Du Pont Analysis ‐ ROE
Net margin 12.0 14.4 13.4 15.1 19.1
Asset turnover (x) 0.8 0.7 0.7 0.8 0.8
Leverage factor (x) 1.7 1.6 1.6 1.6 1.6
ROE(%) 15.7 17.4 14.5 18.8 25.2
RoCE (%) 17.0 15.7 14.9 19.2 26.2
Valuation (x)
PER 34.6 49.3 52.9 34.8 20.9
PCE 26.9 38.6 40.7 28.1 22.1
Price/Book 4.7 7.9 7.2 6.0 4.7
EV/EBITDA 20.5 33.7 33.4 22.5 15.6


Sun Pharmaceutical Industries Ltd.
Revenue in‐line with our expectation but miss on margins. Maintain BUY with
target price from Rs 776.
Q3FY17 Result Updates February 15, 2017

Current Previous
Revenue in‐line with our expectation but miss on margins
CMP : Rs.650
Rating : BUY Rating : BUY Sun Pharmaceuticals Industries’ (SUNP IN) reported revenue in line with our
Target : Rs.776 Target : Rs.782
estimates however due to lower US sales that too with higher contribution of

Authorized generic (AG) sales of Olmesartan & price erosion in base business

lead to drop in margins at all levels. Financials of Q3FY17 reflect part sales of

acquired portfolio of products from Novartis in Japan leading to sharp jump in

ROW sales. Domestic business was impacted by demonetization & recorded

growth of only 5% y‐y v/s normalized growth of 10‐12%.Gross margin

declined 482 bps y‐y due to increased material costs however EBITDA margin
decreased 225 bps due to savings on Other expenses. Due to higher

depreciation, interest expenses, other income & tax charges on y‐y basis adj
PAT declined 5% y‐y (‐34% q‐q).
While 9MFY17 performance was better than company’s previous guidance
management still maintained full year guidance of 10% growth over previous
year. This is because management believes competition in its major product
(Gleevac) is likely to come sooner or later hence cautious guidance.

At CMP of Rs 650, the stock is trading at 22x FY17E EPS of Rs29.4, 19.8x fY18E

EPS of Rs 32.9 and 16.8x FY19E EPS of Rs38.8. We remain positive on SUNP on

the back of RBXY synergy benefit, sustained performance of DF business,

healthy business from niche opportunities as well as robust ANDA pipeline

(subject to approval). We believe the stock is now available at undemanding
valuation & any positive news on resolution of Halol may trigger sharp re‐

rating of stock. However to factor in 9MFY17 performance & continued
pressure on margins as company is in process of building pipeline of specialty
products portfolio which is in investment mode (results expected in 2‐3 years)
we have tweaked our estimates for FY17E/FY18E & introduce estimates for
FY19E. We roll over our target price to FY19E numbers & assigning 20x PER on
FY19E we arrive at target price of Rs 776 (previous rating BUY target Rs 782).

Rs.mn Q3FY17 Q3FY16 Q2FY17 Y‐y (%) Q‐q (%) INSL Est Variance(%)
Revenue 76,832 70,871 77,640 8.4 (1.0) 78,055 (1.6)

EBIDTA 22,237 22,104 26,666 0.6 (16.6) 24,978 (11.0)
Adjusted PAT 14,791 15,564 22,519 (5.0) (34.3) 20,313 (27.2)

Rep. PAT 18,027 22,334 18,636 (19.3) (3.3) 20,313 (11.3)

Daljeet S. Kohli

Head of Research

Tel: +91 22 66188826

IndiaNivesh Securities Limited|Research Analyst SEBI Registration No. INH000000511
IndiaNivesh Research 601 & 602, Sukh Sagar, N. S. Patkar Marg, Girgaum Chowpatty, Mumbai 400 007. Tel: (022) 66188800
Q3FY17 Result Update (contd...)

Result highlights
Sales for the quarter grew at 8% y‐y to Rs 76.8bn. The quarter had benefit of AG sales of
Olmesartan in US & part benefit of sales of products acquired from Novartis in Japan. Taro
reported sales de‐growth of 15% y‐y at USD 220 mn with severe pressure on profitability.
EM recorded 16% y‐y (1.9% q‐q) growth, ROW sales at $113mn recorded growth of 35% y‐y
(44% q‐q) aided by Japanese sales. API sales de‐grew 17% in Q3FY17. DF sales grew at 5% y‐
y (decline 2% q‐q) mainly impacted by demonetization.
Gross margin decreased by 482 bps y‐y (‐557 bps q‐q) due to higher material costs arising
out of lower US sales & high contribution of AG sales of Olmesartan. However, EBITDA
margin decreased 225 bps from 31.2% in Q3FY16 to 28.9% in Q3FY17 & 34.3% in Q2FY17.
Savings on other expenses helped in offsetting some impact of high material costs. In
Q2FY17 margins were abnormally high due to benefit of exclusivity of Gleevac.
Other income (including other operating income) in Q2FY17 included US$ 45 million of
milestone payment from Almirall S.A (Spain) as part of the licensing agreement for the
development and commercialization of Tildrakizumab for psoriasis in Europe. Similarly in
Q3FY17 Taro sold some products & that one off income is booked in Other operating
income. Due to these one offs other income increased 69% y‐y & decreased 43% q‐q.
In Q3FY16 tax out go was exceptionally low at 4.4% while in Q3FY17 tax rate was 17.7%
which resulted in Adj PAT after minority interest decreased 5% y‐y (‐34% q‐q).
The R&D expense at Rs 6130 mn accounted for 8% of net sales.
The company has filed 8 ANDAs in Q3FY17 & received 1 approval in the same period. As at
end of Q2FY17 Sun had 149 ANDA applications pending approval which include 14 tentative
approvals. Additionally Sun has 4 NDA applications pending approval out of which 2 were
filed in current year.
Key takeaways from concall
In order to ward off severe competition in base business management is focusing on
Specialty products. The company is in process of building required organization structure to
build this portfolio. Within Specialty the company’s focus therapies will be dermatology,
oncology & ophthalmology.
As of now Specialty segment is in investment phase. The management expects this segment
to start contributing meaningfully to financials only in long term.
As part of Specialty products portfolio building, the company has acquired a few assets & is
open to acquire more.
In Q3FY17 Sun has commercially launched its first specialty ophthalmology product
(Bromsite). It has also acquired Odomzo which will be first branded oncology product for
Sun.
Sun’s recent acquisition, Ocular technology, which is developing a treatment for dry eye
(Sceria) has announced positive results of phase 3 trials of Sceria.
Taro sales declined 15% y‐y to US$220 mn.
Management has maintained full year revenue growth guidance of 10‐11% despite 9MFY17
performance better than this number. Management is cautious as it believes last 9MFy1
sales had benefit of exclusivity sales of Gleevac. Management expects competition to kick in
sooner or later in this product hence cautious view.
ANDA pipeline remains robust & the cumulative ANDA pending for approval is at 149.

(contd...) Feb 15, 2017 | 2


Update on Halol:
The Company has answered USFDA queries on fresh observations in Form 483 & is
undergoing corrective action plan. Management expects to complete corrective action in
next few quarters. They have replied to USFDA & awaiting response from them.
Management is looking to apply for site transfers for some critical products. Resolution of
Halol remains critical for easing supply constraints & strong growth.
According to management Ranbaxy integration is going on as per schedule. However the
cost synergy is probably not visible in numbers as savings from Ranbaxy are being utilized on
expenses on new products & other developmental activities.
On Glumetza management mentioned did not share any timeline for likely launch of this
product despite the receipt of approval since quite some time. Effectively this implies Lupin
can still enjoy the benefit of lower competition in this product.
Sun is very positive on Tildra & believes this product has high potential. Merck is supposed
to file this product but according to management potential filing of this product can be
some time in FY18 & approval in FY19.

Change in estimates & introducing FY19E
To factor in 9MFY17 performance & continued pressure on margins as company is in
process of building pipeline of specialty products portfolio which is in investment mode
(results expected in 2‐3 years) we have tweaked our estimates for FY17E/FY18E & introduce
estimates for FY19E. We also roll over our target price to FY19E numbers.

Old estimates New estimates Change (%) Introduce
Rs mn
FY17E FY18E FY17E FY18E FY17E FY18E FY19E
Sales 3,15,712 3,52,447 3,11,353 3,47,594 (1.4) (1.4) 3,89,306
EBITDA 1,07,536 1,22,855 98,189 1,18,078 (8.7) (3.9) 1,36,923
PAT 72,128 85,617 70,858 79,162 (1.8) (7.5) 93,378
EPS (Rs) 30.0 35.6 29.4 32.9 (1.9) (7.6) 38.8

Valuation:
At CMP of Rs 650, the stock is trading at 22x FY17E EPS of Rs29.4, 19.8x fY18E EPS of Rs 32.9
and 16.8x FY19E EPS of Rs38.8. We remain positive on SUNP on the back of RBXY synergy
benefit, sustained performance of DF business, healthy business from niche opportunities as
well as robust ANDA pipeline (subject to approval). We believe the stock is now available at
undemanding valuation & any positive news on resolution of Halol may trigger sharp re‐
rating of stock. We assign 20x PER on FY19E to arrive at target price of Rs 776 (previous
rating BUY target Rs 782 valuing the company at 22xFY18E EPS of Rs 35.6).

(contd...) Feb 15, 2017 | 3


Quarterly financial summary
Consoildated financials (Ind As)
Particulars (Rs Mn except EPS) Q3FY17 Q3FY16 Y‐o‐Y % Q2FY17 Q‐o‐Q %
Net Sales 76,832 70,871 8.4 77,640 (1.0)
Total Income 76,832 70,871 8.4 77,640 (1.0)
Consumption of raw material 22,487 17,328 29.8 18,399 22.2
Empoyee Cost 12,151 11,377 6.8 11,991 1.3
Other Expenditure 19,958 20,062 (0.5) 20,584 (3.0)
Total Expenditure 54,595 48,767 12.0 50,974 7.1
EBITDA 22,237 22,104 0.6 26,666 (16.6)
Depreciation & Ammortization 3,068 2,509 22.3 3,038 1.0
EBIT 19,169 19,595 (2.2) 23,628 (18.9)
Other Income 3,516 2,081 68.9 6,205 (43.3)
Interest Expenses/ (income) 1,665 1,276 30.5 537 209.9
Pre‐tax Profit 21,020 20,401 3.0 29,295 (28.2)
Tax 3,729 888 319.9 4,417 (15.6)
Adj Net Profit 17,291 19,513 (11.4) 24,879 (30.5)
Minority Interest 2,500 3,948 (36.7) 2,360 6.0
Net Profit After Minority Interest 14,791 15,564 (5.0) 22,519 (34.3)
Exceptional Items & Other Adj 736 2,821 (74) (6,243) (112)
Net Profit (reported) 18,027 22,334 (19.3) 18,636 (3.3)
EPS 6.1 6.5 (5.0) 9.4 (34.3)
Adj O/ Share ( In Million) 2,407 2,407 ‐ 2,407 ‐


Key ratios
Q3FY17 Q3FY16 Bps Q2FY17 Bps
Gross Margins 70.7 75.6 (482) 76.3 (557)
EBITDA margin 28.9 31.2 (225) 34.3 (540)
Net Margin 19.3 22.0 (271) 29.0 (975)
Material cost/Net Sales 29.3 24.4 482 23.7 557
Employee Cost/ Net Sales 15.8 16.1 (24) 15.4 37
Other Expenditure/ Net Slaes 26.0 28.3 (233) 26.5 (54)
Tax Rate 17.7 4.4 1,338.7 15.1 266.5

Revenue Mix
Rs mn Q3FY17 Q3FY16 Y‐o‐Y % Q2FY17 Q‐o‐Q %
Domestic 19,690 18,752 5.0 20,090 (2.0)
Formulation 19,690 18,752 5.0 20,090 (2.0)
Exports 57,142 52,118 9.6 57,550 (0.7)
Formulation 53,482 47,708 12.1 53,880 (0.7)
US 34,247 32,074 6.8 37,197 (7.9)
ROW 7,626 5,632 35.4 5,293 44.1
Emerging market 11,608 10,002 16.1 11,390 1.9
API 3,660 4,410 (17.0) 3,670 (0.3)
Total 76,832 70,870 8.4 77,640 (1.0)


(contd...) Feb 15, 2017 | 4

Tata Motors (TTMT)
Below our estimates, Maintain HOLD with a revised target price of Rs

523
Tata Motors reported numbers in Q3FY17 was well below our estimates due to
Current Previous weak operating performance of JLR. JLR’s EBITDA fell to 9.3% in Q3FY17 vs
CMP : Rs 467 14.4% in Q3FY16. Additionally a host of factors including incidence of £455 mn
Rating : HOLD Rating : HOLD pound FX hedge bloated the impact further at PAT level. Favourable operating
Target : Rs 523 Target : Rs 560 exchange was offset by realized hedges during the quarter. Management
(NR‐Not Rated) indicated that the consolidated EBITDA margin adjusting the revenue for
STOCK INFO realised FX hedging was around 10.1% (actual 8.9%), still lower than 13.8% in
INDEX Q3FY16.
BSE 500570 Rs.mn Q3FY17 Q2FY17 Q3FY16 QoQ % YoY % INSPL Q3FY17e Variance(%)
NSE TATAMOTORS Net Revenue 6,75,313 6,69,997 7,05,921 1 ‐4 6,32,814 6.72
Bloomberg TTMT IN EBIDTA 51,612 62,826 88,545 ‐18 ‐42 78,271 ‐34.06
PAT before Associate & MI (2,684) 5,746 27,449 ‐147 ‐110 18,404 ‐114.58
Reuters TAMO.NS Adjusted PAT (6,390) 5,585 29,781 ‐214 ‐121 18,404 ‐134.72
Sector Auto Source: Company Filings; IndiaNivesh Research
Face Value (Rs) 2
Equity Capital (Rs mn) 5,774
TTMT hedge book runs at 70‐80% and is set to decline gradually in the coming
Mkt Cap (Rs mn) 15,43,175 months and hence the benefit of weakening pound is likely to reflect in the
52w H/L (Rs) 599 / 290 operating margin going further.
Avg Daily Vol (BSE+NSE) 73,80,107

Recoveries related to Tiajin at £85mn in Q3FY17 compared to £30 mn in Q3FY16

helped the comsolidated PAT from being even more dismal.
TTMT IN Equity (5.0) (6.7) 61.6 Consolidated EBITDA margin contracted by 490 bps YoY to 8.9% due to lower
SENSEX 5.7 0.7 23.3 EBITDA margin of JLR although net revenue declined by 4.4% YoY. Standalone
Source: Bloomberg, IndiaNivesh Research EBITDA margins contracted 450 bps YoY to 1.5% in Q3FY17.

TTMT IN Equity v/s SENSEX JLR registered revenue of £6.5bn, up 13% YoY led by strong retail sales volume
growth of 8.5% at 149,288 units. Net profit stood at 167mn, down 62% YoY due
to lower unfavourable prodcut mix, lower wholesale volumes and FX impact.
Jaguar Land Rover plans to continue to build on new product launches like New
Discovery in Q4FY17, I‐PACE in 2018 and also focusing sales ramp up of existing
product portfolio including the recently launched Jaguar F‐PACE, XF long wheel
base.

On Standalone front, net revenue was up by 2% YoY to Rs. 101 bn on the back of
Daljeet S. Kohli drop in average realization during the quarter, although volumes were up 8%.
Head of Research
Tel: +91 22 66188826 The management expects pre‐buying in MHCV segment before the country‐wide
daljeet.kohli@indianivesh.in adoption of BSIV from the next fiscal On the MHCV front, the company plans to

Rajiv Bharati expand new Signa range across tonnages and applications. Similarly on the PV front
Research Analyst the company launched its new SUV “Hexa” in January 2017 and plans to launch a
Tel: 022‐66188818 new sedan Tigor based on the Tiago platform. As far as LCV business is concerned,
rajiv.bharati@indianivesh.in
the company plans to expand Ultra range across tonnages and applications.
Sriram R Moreover, the company plans to ramp up of Xenon Yodha, refreshes in ACE family in
Research Associate Q4FY17.
Tel:+91 22 61151621
r.sriram@indianivesh.in

Financial Performance

YE March
Net Sales EBITDA Adj.PAT Adj.EPS (Rs)
EBITDA
RoE(%) Adj.P/E(x) EV / EBITDA (x)
(Rs Mn) Margin
FY15 26,27,963 3,92,387 1,40,597 43.7 14.9 23.1 10.7 5.1
FY16 27,55,612 3,67,563 1,11,077 32.7 13.3 16.2 14.3 5.5
FY17E 27,45,472 2,67,038 29,192 8.6 9.7 3.6 54.3 8.3
FY18E 29,31,859 3,52,253 67,716 19.9 12.0 7.8 23.4 6.7
FY19E 32,14,483 4,89,721 1,37,627 40.5 15.2 15.4 11.5 5.3


Q3FY17 Result Update | Tata Motors (TTMT)

TTMT in order to rejig its business has set up 6 strategic themes which are Intense
Topline focus, Cost management, Structural improvements, Customer centricity,
New business models and technologies and Lean and accountable organization.

Quick Fundamentals (Rs. Mn) Q3FY17 Q2FY17 Q3FY16 QoQ % YoY %
Volume (units) 2,82,082 2,98,223 2,73,756 ‐5 3
Revenue 6,68,552 6,62,400 6,83,736 1 ‐2
Other Operating Income 6,761 7,597 22,185 ‐11 ‐70
Total Income 6,75,313 6,69,997 7,05,921 1 ‐4
Cost of Revenues 6,23,701 6,07,171 6,17,376 3 1
Raw Material s (adj.) 4,00,123 3,92,758 4,34,634 2 ‐8
Other Expenditure 1,53,132 1,29,758 1,08,989 18 41
Employee Expenses 70,446 67,939 73,753 4 ‐4
EBIDTA 51,612 62,826 88,545 ‐18 ‐42
Depreciation 42,300 44,540 42,620 ‐5 ‐1
EBIT 9,313 18,286 45,925 ‐49 ‐80
Interest Expense 8,707 10,249 11,383 ‐15 ‐24
Other income 1674 1794 1928 ‐7 ‐13
Exceptional Item (3,706) (162) 2,332
PBT 5,986 9,993 34,138 ‐40 ‐82
Provision for taxation 8,670 4,246 6,690 104 30
PAT (excluding Associate &
(2,684) 5,746 27,449 ‐147 ‐110
MI)
Adjusted PAT (6,390) 5,585 29,781 ‐214 ‐121
PAT (Including Associate &
1,261 8,420 27,280 ‐85 ‐69
MI)
EPS (RS.) 0.37 2.48 8.03
Margins Margin % Margin % Margin % Basis Points (Bps)
EBITDA 7.6 9.4 12.5 ‐173 ‐490
EBIT 1.4 2.7 6.5 ‐135 ‐513
PBT 0.9 1.5 4.8 ‐61 ‐395
PAT ‐0.4 0.9 3.9 ‐126 ‐429


hapter Title
 Tata Motors Q3FY17 consolidated net revenue was above our estimates.
Reported consolidated net profit after adjustments towards income from
associates and minority interest stood at Rs. 1.2 bn on account of lower EBITDA
margin and higher depreciation while consolidated adjusted PAT (removing
insurance proceed on account of explosion on Tianjin port stood at loss of Rs 6.3
bn.
 Consolidated EBITDA margin contracted by 490 bps YoY to 7.6% led by lower
EBITDA margin of JLR and domestic operations.
 Tata Daewoo Commercial Vehicles Co. Ltd. registered net revenues of KRW 268
billion and recorded a net profit of KRW 15 billion in Q3FY17.
 Tata Motors Finance Ltd, the Company's captive financing subsidiary, on a
consolidated basis registered net revenue from operations of Rs 6880Mn and
reported a loss after tax of Rs30Mn for Q3FY17.
Cost Analysis (% of Revenue) Q3FY17 Q2FY17 Q3FY16 bps QoQ bps YoY
Raw Materials (adj.) 59.8% 59.3% 63.6% 56 ‐372
Employee Expenses 10.5% 10.3% 10.8% 28 ‐25
Other Expenses 22.9% 19.6% 15.9% 332 696
Standalone: Depressed by poor EBITDA margin
Quick Fundamentals (Rs. Mn) Q3FY17 Q2FY17 Q3FY16 QoQ % YoY %
Volume (units) 1,32,895 1,34,869 1,23,295 ‐1.5 8
Revenue 1,01,239 1,01,401 98,787 0 2
Other Operating Income 959 1,824 1,631 ‐47 ‐41
Total Income 1,02,199 1,03,225 1,00,418 ‐1 2
Cost of Revenues 1,01,434 1,00,163 95,444 1 6
Raw Material s (adj.) 74,791 74,225 70,395 1 6
Other Expenditure 18,189 17,121 16,799 6 8
Employee Expenses 8,454 8,817 8,250 ‐4 2
EBIDTA 765 3,062 4,974 ‐75 ‐85
Depreci ation 7,290 7,186 5,910 1 23
EBIT (6,525) (4,124) (935) NA NA
Interest Expense 4,137 3,728 3,572 11 16
Other income 940 1,460 4,939 ‐36 ‐81
Exceptional Item 593 (302) 1,824 ‐296 ‐67
PBT (10,316) (6,089) (1,393) NA NA
Provision for taxation 143 218 (24)
PAT (10,459) (6,308) (1,368) NA 664
Adjusted PAT (9,866) (6,610) 456 NA NA
EPS (RS.) ‐3.1 ‐1.9 ‐0.4 NA NA
Margins Margin % Margin % Margin % Basis Points (Bps)
EBITDA 0.7 3.0 5.0 ‐222 ‐421
EBIT ‐6.4 ‐4.0 ‐0.9 ‐239 ‐545
PBT ‐10.1 ‐5.9 ‐1.4 ‐420 ‐871
PAT ‐10.2 ‐6.1 ‐1.4 ‐412 ‐887
 Net Revenue was up 2% YoY to Rs. 101.2 bn due to lower realization despite 8%
increase in overall volumes. MHCV segment de‐grew by 9% YoY, LCV segment
remained flat YoY, and Passenger vehicle Segment grew by 31% YoY on back of
strong sales of newly launched ‘Tiago’. EBITDA margins stood at 0.7%
(contracted 421 bps YoY). The company reported net loss of Rs 10,459 mn due
to lower EBITDA margin, lower other Income ( 940 mn vs 4939 mn) and higher
depreciation (7290 Mnvs 5910 mn)

 EBITDA margins came down mainly due to the de‐growth in the MHCV segment,
high variable marketing spends and rise in input costs. However the company
has taken a price increase in January to mitigate this.
 The company launched its new SUV “Hexa” in January 2017 and plans to launch
a new sedan Tigor based on the Tiago platform.

Cost Analysis (% of Revenue) Q3FY17 Q1FY17 Q3FY16 bps QoQ bps YoY
Raw Materials (adj.) 73.9% 73.2% 71.3% 68 262
Employee Expenses 8.4% 8.7% 8.4% ‐35 0
Other Expenses 18.0% 16.9% 17.0% 108 96

JLR: Bet on new Models to drive growth; but EBITDA margin a worry
 With respect to retail sales volumes‐ North America up by 20%, China (Including
JV) up 38%, Uk down 3% and Overseas down 21%.
 JLR’s operating performance during the quarter was weak, EBITDA (before one‐
time reserve and charges) margin stood at 9.3%. This was due to less favourable
product mix, higher new model launch costs and biennial pay negotiation
setllement and unfavourable variable marketing expense including runout
expenses on account of Evoque 16MY.
 During the quarter, favourable operating exchange was offset by realized
hedges.
 PAT stood at £167 Mn for Q3FY17 compared to £440 Mn in Q3FY16. This was
due to higher depreciation and amortization, Unfavourable unrealized Forex and
commodity hedge revaluation as well as US debt revaluation partially offset by
Higher china JV profitability and lower finance costs.
 Recoveries related to Tiajin were £85mn in Q3FY17 compared to £30 mn in
Q3FY16.
 Jaguar Land Rover plans to continue to build on new product launches like New
Discovery in Q4FY17, I‐PACE in 2018 and also focusing sales ramp up of existing
product portfolio including the recently launched Jaguar F‐PACE, XF long wheel
base.

Valuation
We remain positive on Tata Motors and going forward TTMT would benefit from a)
Recovery in CV business and strong sales on PV segment on account of newly launched
Hexa and Tigor (to be launched in CY17), b) Strong product pipeline in JLR coupled by
volume growth in all markets c) Strong Sales of Tiago in the PV segment. We have
tweaked our estimates for FY17E & FY18E. We also introduce FY19E financials & roll
over valuation to FY19. At CMP of Rs. 467, the stock is trading at PE multiple of 11.5x
FY19e EPS. We maintain HOLD rating on the stock with SOTP based revised target price of
Rs. 523.


Income Statement (Consolidated)

Y E March (Rs m) FY15 FY16 FY17E FY18E FY19E
Net sales 26,27,963 27,55,612 27,45,472 29,31,859 32,14,483
Growth (%) 13 5 0 7 10
Operating expenses (22,35,577) (23,88,049) (24,78,434) (25,79,606) (27,24,762)
Operating profit 3,92,387 3,67,563 2,67,038 3,52,253 4,89,721
Other operating income 0 0 0 0 0
EBITDA 3,92,387 3,67,563 2,67,038 3,52,253 4,89,721
Growth (%) 15.9 (6.3) (27.3) 31.9 39.0
Depreciation (1,33,886) (1,70,148) (1,82,684) (2,12,856) (2,48,012)
Other income 8,987 9,817 7,000 7,700 8,470
EBIT 2,67,488 2,07,232 91,354 1,47,096 2,50,179
Finance cost (48,615) (46,234) (45,810) (53,047) (59,026)
Exceptional item (1,847) (21,196) (5,000) 0 0
Profit before tax 2,17,026 1,39,803 40,544 94,050 1,91,153
Tax (current + deferred) (76,429) (28,726) (11,352) (26,334) (53,526)
Profit / (Loss) for the period 1,40,597 1,11,077 29,192 67,716 1,37,627
Associates, Min Int 0 0 0 0 0
Reported net profit 1,40,597 1,11,077 29,192 67,716 1,37,627
Extraordinary item 0 0 0 0 0
Adjusted net profit 1,40,597 1,11,077 29,192 67,716 1,37,627
Growth (%) 7 (21) (74) 132 103
Balance Sheet (Consolidated)
Y E March (Rs m ) FY15 FY16 FY17E FY18E FY19E
Share capital 6,438 6,790 6,790 6,790 6,800
Reserves & surplus 5,56,181 8,01,035 8,28,767 8,93,097 8,86,215
Net Worth 5,62,619 8,07,825 8,35,557 8,99,887 8,93,015
Minority Interest 4,334 8,883 8,880 8,880 8,890
Total Liabilities 17,92,299 18,49,005 19,62,265 21,55,393 23,39,951
Non‐current liabilities 7,89,577 7,40,798 8,44,308 9,46,303 10,59,794
Long‐term borrowings 5,60,713 5,18,763 6,24,973 7,22,244 8,05,906
Deferred tax liabilities (13,900) 4,397 4,397 4,397 4,397
Other Long term liabilities 91,419 99,465 75,076 74,338 86,622
Long term provisions 1,51,345 1,18,173 1,39,862 1,45,324 1,62,870
Current Liabilities 10,02,721 11,08,208 11,17,958 12,09,090 12,80,157
Short term borrowings 1,31,401 1,12,236 1,38,522 1,61,866 1,77,867
Trade payables 5,74,070 6,36,329 6,25,784 6,72,166 7,10,631
Other current Liabilities 2,36,886 2,72,618 2,72,398 2,81,567 2,95,055
Short term provisions 60,362 87,021 81,250 93,491 96,604
Total Liabilities and Equity 23,59,252 26,65,713 28,06,702 30,64,160 32,41,857

Non Current Assets 14,82,626 17,04,690 18,99,389 21,33,729 24,06,773
Net Block 11,71,196 13,36,872 15,31,571 17,65,911 20,38,955
Goodwill 0 0 0 0 0
Non‐current Investments 1,53,367 2,04,661 2,04,661 2,04,661 2,04,661
Long‐term loans and advances 0 0 0 0 0
Other non current Assets 1,58,063 1,63,157 1,63,157 1,63,157 1,63,157
Current Assets 8,76,626 9,61,024 9,07,314 9,30,432 8,35,084
Inventories 2,92,725 3,33,993 3,12,962 3,36,673 3,71,645
Sundry Debtors 1,25,792 1,29,900 1,29,422 1,38,208 1,51,531
Cash & Bank Balances 2,12,923 1,93,500 1,43,660 1,25,276 (34,148)
Other current Assets 1,08,237 1,35,299 1,35,299 1,35,299 1,35,299
Loans & Advances 1,36,949 1,68,333 1,85,972 1,94,975 2,10,756
Total (Assets) 23,59,252 26,65,713 28,06,702 30,64,160 32,41,857


Cash Flow Statement (Consolidated)

Y E March (Rs m) FY15 FY16 FY17E FY18E FY19E
Profit before tax 2,17,026 1,39,803 40,544 94,050 1,91,153
Depreciation 1,33,886 1,70,148 1,82,684 2,12,856 2,48,012
Change in working capital 1,06,911 (12,343) 9,023 31,754 8,535
Total tax paid (70,284) (47,023) (11,352) (26,334) (53,526)
Others 48,615 46,234 45,810 53,047 59,026
Cash flow from operations (a) 4,36,155 2,96,820 2,66,708 3,65,372 4,53,201
Capital expenditure (2,81,540) (3,35,824) (3,77,383) (4,47,196) (5,21,056)
Change in investments (46,501) (51,294) 0 0 0
Others 25,297 (5,094) 0 0 0
Cash flow from investing (b) (3,02,744) (3,92,212) (3,77,383) (4,47,196) (5,21,056)
Free cash flow (a+capex) 1,54,615 (39,004) (1,10,675) (81,824) (67,855)
Debt raised/(repaid) 1,42,570 (61,115) 1,32,496 1,20,614 99,663
Dividend (incl. tax) 0 0 0 0 0
Others (2,94,790) 1,28,684 (47,272) (56,432) (2,03,525)
Cash flow from financing (c) (86,768) 75,968 60,836 63,440 (91,569)
Net change in cash (a+b+c) 46,643 (19,424) (49,839) (18,384) (1,59,424)
Reconciliation of Other balances 0 0 0 0 0
Cash as per Balance Sheet 2,12,923 1,93,500 1,43,660 1,25,276 (34,148)

Key Ratios (Consolidated )
Y E March FY15 FY16 FY17E FY18E FY19E
Adjusted EPS (Rs) 43.7 32.7 8.6 19.9 40.5
Growth 7.2 (25.1) (73.7) 132.0 103.2
EBITDA margin 14.9 13.3 9.7 12.0 15.2
EBIT margin 10.2 7.5 3.3 5.0 7.8
Net Margin 5.4 4.0 1.1 2.3 4.3
Tax rate (%) 35.2 20.5 28.0 28.0 28.0
Debt/Equity(x) 1.2 0.8 0.9 1.0 1.1
Du Pont Analysis ‐ ROE
Net margin 5.4 4.0 1.1 2.3 4.3
Asset turnover (x) 1.2 1.1 1.0 1.0 1.0
Leverage factor (x) 3.7 3.7 3.3 3.4 3.5
ROE(%) 23.1 16.2 3.6 7.8 15.4
RoCE (%) 12.2 10.4 3.8 5.5 8.7
Valuation (x)
PER 10.7 14.3 54.3 23.4 11.5
PCE 5.5 5.6 7.5 5.7 4.1
Price/Book 2.7 2.0 1.9 1.8 1.8
EV/EBITDA 5.1 5.5 8.3 6.7 5.3


Q3FY17 First Cut
15 February 2017 Ashiana Housing Limited
Stable set of numbers, bullish on AHL from longer term perspective, estimates
and target price under review till get more clarity from conference call
Current Previous Ashiana Housing (AHL) reported Q3FY17 consolidated numbers, which were
below our estimates. Revenue grew 59% YoY to Rs 495mn, much lower than
CMP : Rs 185
our estimate of Rs 1.3bn, due to lower revenue recognition from completed
Rating : UR Rating : BUY projects. Reported EBITDA was positive at Rs 149mn against an EBITDA loss of
Target : UR Target : Rs 183 Rs 12mn in the corresponding quarter previous year. Though the EBITDA
(NR-Not Rated) (UR-Under Review) turned positive for the quarter but it was below our estimate of Rs 188mn.
STOCK INFO EBITDA margin at 30.2% was higher than our estimate of 14%, due to higher
INDEX percentage of sales of high margin projects. Due to strong topline and EBITDA
BSE 523716 growth than previous year, PAT witnessed a multifold jump YoY to to
NSE ASHIANA
Bloomberg ASFI IN
Rs 159.3mn against Rs 7.4mn in Q3FY16. Though the reported PAT number was
Reuters AHFN.NS 5% lower than our estimate of Rs 168mn.
Sector Real Estate
Face Value (Rs) 2 Rs mn (consolidated) Q3FY17 Q2FY17 Q3FY16 Q-o-Q Y-o-Y INSPL Q3FY17 Variance %
Equity Capital (Rs mn) 205 Net Sales 495 1,163 311 -57.5% 58.9% 1,345 -63%
Mkt Cap (Rs mn) 13,837 EBIDTA 149 271 -12 -44.8% NA 188 -21%
52w H/L (Rs) 180 / 115 Net Profit 159 208 7 -23.6% 2052.7% 168 -5%
Avg Daily Vol (BSE+NSE) 34,446 bps bps
EBIDTA Margin % 30.2% 23.3% -3.8% 693 3,396 14.0% 1,622
SHAREHOLDING PATTERN %
Net Margin % 32.2% 17.8% 2.4% 1,442 2,982 12.5% 1,971
(as on Dec,2016)
Source: Company Filings, IndiaNivesh Research
Promoters 61.04
Public & Others 38.96
 During Q3FY17 sales from own operations witnessed a de-growth of 71%
sequentially compared to previous quarter of Q2FY17. Howver sales from
Ashiana (0.4) 16.0 (6.1)
partnership projects saw a quantum jump of 1794% QoQ, thereby boosting
SENSEX 6.2 14.3 8.8
the overall sales figure. As the company has still not uploaded its
presentation which usually gives all the details of its quarterly sales trend,
Ashiana v/s SENSEX delivery details of the projects etc. and also we were unable to interact with
600
the management post its results, we will wait for post result conference call
400
scheduled today at 3.30pm, to get more clarity on AHL’s Q3 performance.
200
0
Valuation
Feb-16
Sep-16
Mar-16
May-16
Dec-16
Nov-16
Oct-16
Jul-16
Jan-17
Apr-16
Jun-16
Aug-16
We expect AHL to report modest 1.1% revenue CAGR over FY16-18E on the back
SENSEX
of improving deliveries in its key projects, while PAT is likely to witness 8.6%
CAGR during FY16-18E with PAT margins expanding by 380bps over the same
period. At CMP Rs 185, AHL is trading at FY17E and FY18E, EV/EBIDTA multiples
of 14.3x and 10.7x respectively. We have a BUY rating on the stock with a target
price of Rs 183 (arrived on the basis of NAV based SOTP valuation) which has
Daljeet S. Kohli already been achieved. With government according infrastructure status to
Head of Research
affordable housing, we are bullish on AHL from medium to longer term
Tel: +91 22 66188826
daljeet.kohli@indianivesh.in perspective as the company mainly operates in the affordable segment. Our
estimates and target price are under review and we will revise our estimates and
Monami Manna target price after getting more clarity from the management in today’
Research Analyst conference call.
Tel: +91 22 66188848
monami.manna@indianivesh.in Financial Performance
YE March EBITDA
Net Sales EBITDA Adj.PAT Adj.EPS (Rs) RoE (%) Adj.P/E(x) EV / EBITDA (x)
(RsMn) Margin %
FY14 1,107 205 224 2.5 18.6 7.9 73.4 78.8
FY15 1,427 373 465 4.5 26.1 8.9 40.8 43.2
FY16 5,212 1,358 1,294 12.7 26.0 20.0 14.5 12.8
FY17E 4,108 1,109 1,063 10.4 27.0 14.3 17.8 14.3
FY18E 5,332 1,466 1,527 13.5 27.5 17.1 13.7 10.7

IndiaNivesh Securities Ltd 601 & 602, SukhSagar, N. S. Patkar Marg, GirgaumChowpatty, Mumbai 400 007. Tel: (022) 66188800
Q3FY17 First Cut Analysis| Ashiana Housing Limited
Q3FY17 and 9MFY17 Financial Performance

Rs Mn (consolidated) Q3FY17 Q2FY17 Q3FY16 Q-o-Q Y-o-Y 9MFY17 9MFY16 Y-o-Y
Inc. from Operations 332 1,154 298 -71% 11% 1,669 1,160 44%
Income from Partnership Firm 163 9 13 1794% 1153% 176 182 -3%
Total Income 495 1,163 311 -57% 59% 1,845 1,341 38%
Project Expenses 617 667 623 -7% -1% 1,974 1,993 -1%
Purchase of Land/Dev. Rights 58 57 57 1% 2% 167 936 -82%
Change in Inv of FG, WIP & SIT (491) (18) (486) NA NA -1,125 -2,153 NA
Employee cost 79 77 68 3% 17% 237 205 16%
Other expenses 82 109 61 -25% 33% 255 183 39%
Total Operating Exp. 345 892 323 -61% 7% 1,508 1,164 30%
EBITDA 149 271 (12) -45% NA 337 178 89%

EBITDA Margin (%) 30.2% 23.3% -3.8% 18.2% 13.2%
Other Income 46 83 68 -44% -32% 185 191 -3%

Depreciation 20 20 28 1% -29% 58 69 -16%
EBIT 176 334 28 -47% 532% 464 300 55%
Finance Costs 17 15 4 17% 302% 42 11 278%

PBT 158 319 24 -50% 574% 422 289 46%
Tax Expenses (1) 111 16 NA -106% 90 37 142%

PAT 159 208 7 -24% 2053% 332 251 32%
Minority Interest 0.0 0.0 0.0 0.0 0.0
PAT after MI 159.3 208.4 7.4 -24% 2053% 332.2 251.3 32%
Effective tax rate (%) -0.6% 34.7% 68.5% 21.4% 12.9%

PAT Margins (%) 32.2% 17.9% 2.4% 18.0% 18.7%
Valuation
We expect AHL to report modest 1.1% revenue CAGR over FY16-18E on the back of
improving deliveries in its key projects, while PAT is likely to witness 8.6% CAGR during
FY16-18E with PAT margins expanding by 380bps over the same period. At CMP Rs 185,
AHL is trading at FY17E and FY18E, EV/EBIDTA multiples of 14.3x and 10.7x respectively.
We have a BUY rating on the stock with a target price of Rs 183 (arrived on the basis of
NAV based SOTP valuation) which has already been achieved. With government
according infrastructure status to affordable housing, we are bullish on AHL from
medium to longer term perspective as the company mainly operates in the affordable
segment. Our estimates and target price are under review and we will revise our
estimates and target price after getting more clarity from the management in today’
conference call.
IndiaNivesh Securities Ltd 15 February 2017 2 of 4

Income statement (Consolidated)

Y E March (Rs m) 2013A 2014A 2015A 2016 2017E 2018E
Net sales 1,487 1,107 1,427 5,212 4,108 5,332
Growth % -25.6% 29.0% 265.3% -21.2% 29.8%
Project Expenses 891 574 642 3,178 2,466 3,174
Employee Expenses 144 186 227 320 252 328
Other Expenses 103 142 186 356 281 364
Total Operating Expenses 1,137 901 1,054 3,855 2,999 3,866
EBITDA 349 205 373 1,358 1,109 1,466
Growth % -41.2% 81.6% 264.2% -18.3% 32.2%
EBITDA Margin % 23.5% 18.6% 26.1% 26.0% 27.0% 27.5%
Depreciation & Amortisation 26 31 80 78 62 80
Other Income 127 121 217 148 156 170
EBIT 323 174 292 1,279 1,048 1,386
EBIT Margin % 22% 16% 20% 25% 26% 26%
Interest 30 18 19 29 23 29
Extra-Ordinary Items 0 (11) 0 0 0 0
PBT 419 277 491 1,399 1,181 1,527
Tax 89 43 27 103 118 153
Effective tax rate % 21.2% 15.3% 5.5% 7.4% 10.0% 10.0%
Minority Interest (0) 0 0 (2) 0 0
PAT 331 224 465 1,294 1,063 1,527
Growth% -32.3% 108.0% 178.0% -17.8% 43.7%
PAT margin % 22.2% 20.2% 32.6% 24.8% 25.9% 28.6%
Balance sheet (Consolidated)

Share Capital 186 186 205 205 205 205
Reserves & Surplus 2,495 2,659 5,024 6,255 7,249 8,703
Net Worth 2,681 2,845 5,229 6,460 7,454 8,908
Total Loan Funds 111 91 340 676 676 646
Deferred Tax 37 34 23 30 30 30
Other Long-term Liabilities 203 232 263 320 354 388
Minority Interest (14) (31) (84) (102) (102) (102)
Total Liabilities 3,017 3,172 5,771 7,384 8,411 9,869
Net Block & Capital WIP 458 570 713 673 674 744
Non Current Investments 165 (233) 201 289 290 291
Current Assets 3,496 5,791 10,914 11,735 12,617 14,505
Inventories 1,992 3,780 6,243 7,313 6,738 8,038
Trade Receivables 122 96 136 270 225 292
Cash & Current Invest. 959 1,138 3,158 2,291 3,696 3,879
Other Current Assets 0 0 42 34 42 42
Short-term Loans & Advances 422 777 1,335 1,827 1,915 2,254
Current Liabilities & Provisions 1,102 2,957 6,057 5,314 5,170 5,671
Trade Payables 84 116 159 223 225 292
Advance from Customers 837 2,631 5,636 4,825 4,552 4,952
Provisions 182 210 262 266 393 427
Net Current Assets 2,393 2,834 4,857 6,422 7,447 8,834
Total Assets 3,017 3,172 5,771 7,384 8,411 9,869

Cash Flow (Consolidated)

PBT 420 277 491 1,407 1,184 1,535
Depreciation & Amortisation 26 31 80 78 62 80
Other adj. prior to WC changes (137) (121) (217) (148) (156) (170)
Changes in working capital (412) (497) (2,092) (1,155) (1,693) (1,153)
Tax & Extra-Ordinary Items (118) (43) (27) (103) (118) (153)
Cash flow from Operations (220) (353) (1,765) 79 (722) 140
Capital expenditure (46) (112) (143) 40 (1) (70)
Free Cash Flow (266) (465) (1,908) 119 (723) 70
Inc/Dec. in Income & Investments 538 121 217 148 156 170
Cash flow from Investments 492 9 74 189 155 100
Equity Capital raised (inc. Share Cap. prem.) 0 0 2,000 0 0 0

Inc./ (Dec.) In long term & Other Borrowings (40) 8 268 401 33 4
Dividend & Interest paid (incl tax) (91) (66) (80) (190) (174) (25)
Cash flow from Financing (132) (58) 2,187 211 (141) (22)
Net change in cash 141 (4) 63 389 (709) 217

Cash at the beginning of the year 435 576 572 635 1,024 337
Suspense Account
Cash at the end of the year 576 572 635 1,024 316 554
Key Ratios (Consolidated)

Y E March 2013A 2014A 2015A 2016A 2017E 2018E
Adj. EPS (Rs) 3.6 2.5 4.5 12.7 10.4 13.5
Cash EPS (Rs) 3.8 2.7 5.3 13.4 11.0 15.7
BVPS (Rs) 28.8 30.6 51.1 63.1 72.8 87.0
ROCE (%) 11.8% 7.6% 8.4% 18.1% 13.1% 16.0%

ROE (%) 12.3% 7.9% 8.9% 20.0% 14.3% 17.1%
DPS (Rs) 0.5 0.5 0.6 0.5 0.6 0.6
Debtor Days 30 32 35 19 20 20
Inventory Days 489 1,247 1,597 512 599 550
Creditor Days 21 38 41 16 20 20
WC Days 499 1,240 1,591 515 599 550
PER (x) 52.1x 73.4x 40.8x 14.5x 17.8x 13.7x

P/BV (x) 6.4x 6.1x 3.6x 2.9x 2.5x 2.1x
P/CEPS (x) 48.3x 67.5x 34.7x 13.8x 16.8x 11.8x
EV/EBITDA (x) 46.9x 78.8x 43.2x 12.8x 14.3x 10.7x
Debt/Equity (x) 0.04x 0.03x 0.06x 0.10x 0.09x 0.07x
Net Debt/Equity (x) -0.32x -0.37x -0.54x -0.25x -0.41x -0.36x
Net Debt/EBITDA (x) -2.43x -5.10x -7.56x -1.19x -2.72x -2.21x

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specific recommendations or views expressed in this report: Daljeet S Kohli, Kamal Sahoo, Santosh Yellapu, Rajiv Bharati, Sriram R, Monami Manna and Saptarshi Mukherjee.
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Definitions of ratings
BUY. We expect this stock to deliver more than 15% returns over the next 12 months.
HOLD. We expect this stock to deliver ‐15% to +15% returns over the next 12 months.
SELL. We expect this stock to deliver <‐15% returns over the next 12 months.
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Research Analyst has not served as an officer, director or employee of Subject Company
One year Price history of the daily closing price of the securities covered in this note is available at www.nseindia.com and www.economictimes.indiatimes.com/markets/stocks/stock‐quotes.
(Choose name of company in the list browse companies and select 1 year in icon YTD in the price chart)

IndiaNivesh Securities Limited
Research Analyst SEBI Registration No. INH000000511
IndiaNivesh Research 601 & 602, Sukh Sagar, N. S. Patkar Marg, Girgaum Chowpatty, Mumbai 400 007.
February 15, 2017
Tel: (022) 66188800 / Fax: (022) 66188899
e‐mail: research@indianivesh.in | Website: www.indianivesh.in

NiveshDaily - 14 February, 2017

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Good set of numbers, maintain BUY with revised TP of Rs 350

 JMC Projects had an order book of Rs 68bn at the end of Q3FY17,

IndiaNivesh Securities Limited|Research Analyst SEBI Registration No:INH0000000511

Q3FY17 and 9MFY17 Financial Performance

Quick Fundamentals (Rs. Mn)

 For Q3FY17, domestic transmission contribution from India business

 The net debt on KPTL’s book at the end of Q3FY17 stands at

IndiaNivesh Securities Ltd 15 Feb 2017 2 of 6

Quick Fundamentals (Rs. Mn)

 JMC projects reported 4.8% YoY decline in revenue to Rs 5.5bn

 As on Q3FY17 end, JMC had an order book of Rs 68bn including

IndiaNivesh Securities Ltd 15 Feb 2017 3 of 6

Shree Shubham Logistics Ltd (SSL)

 Shree Shubham Logistics Ltd (SSL) revenue in Q3FY17 de-grew by

KPTL BOT Projects

KPTL Developmental projects

Total KPTL Value-Consolidated 350 SOTP

IndiaNivesh Securities Ltd 15 Feb 2017 4 of 6

Income Statement (standalone)

O pe ra ting profit 3,863 4,267 4,669 5,560 6,852

Other inc ome 484 522 509 583 576

P rofit / (Loss) for the pe riod 1, 4 6 4 1, 6 5 6 1, 9 9 5 2,598 3,052

Growth (%) 6.3 13.1 20.5 30.2 17.5

Balance Sheet (standalone)

Tota l Lia bilitie s a nd Equity 45,960 47,942 4 9 , 0 17 55,996 62,633

Non Curre nt Asse ts 15 , 8 0 2 15 , 9 5 2 17 , 3 4 4 18 , 2 4 7 19 , 5 8 3

Sundry Debtors 15,417 17,836 18,988 22,197 25,124

So urce: Co mpany, IndiaNivesh Research

IndiaNivesh Securities Ltd 15 Feb 2017 5 of 6

Cash Flow Statement (standalone)

Total tax paid - 708 - 957 - 1,124 - 1,363 - 1,636

Ca sh flow from inve sting (b) - 1, 6 0 2 - 47 - 1, 3 2 5 - 771 - 1, 0 0 7

Others - 2101 - 2162 - 1299 - 2345 - 2110

So urce: Co mpany, IndiaNivesh Research

Key Ratios (standalone )

Sundry Debtor Days 139 147 159 159 150

ROE(%) 10.8 10.0 11.7 12.0 12.2

So urce: Co mpany, IndiaNivesh Research

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Total 76,832 70,870 8.4 77,640 (1.0)

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IndiaNivesh Securities Limited|Research Analyst SEBI Registration No:INH0000000511

Q3FY17 and 9MFY17 Financial Performance

EBITDA 149 271 (12) -45% NA 337 178 89%

Other Income 46 83 68 -44% -32% 185 191 -3%

Finance Costs 17 15 4 17% 302% 42 11 278%

Tax Expenses (1) 111 16 NA -106% 90 37 142%

Effective tax rate (%) -0.6% 34.7% 68.5% 21.4% 12.9%

IndiaNivesh Securities Ltd 15 February 2017 2 of 4

Income statement (Consolidated)

Balance sheet (Consolidated)

IndiaNivesh Securities Ltd 15 February 2017 3 of 4

Cash Flow (Consolidated)

Equity Capital raised (inc. Share Cap. prem.) 0 0 2,000 0 0 0

Net change in cash 141 (4) 63 389 (709) 217