Ten Baggers 6.0: Strategy

Strategy
THEMATIC January 06, 2017
Ten Baggers 6.0 Exhibit A: Ten baggers 6.0

Ticker Company
Mcap
Over the past five years, our proprietary ‘greatness’ framework has (US$ mn)
played a pivotal role in helping us identify structurally sound businesses Attractive valuations*
in India. These companies were identified based on their relentless TCS IN TCS+ 67,681
improvement in financial performance over long periods (i.e. six years). ITC IN ITC+ 44,009
The first five iterations of our annual ten baggers portfolio have done HCLT IN HCL Technologies+ 17,538
remarkably well with ~24% TSR (on a CAGR basis over the past five GPPV IN Guj Pipavav Port 941
years). The sub-BSE500 ten baggers list too has delivered a whopping BRIT IN Britannia Industries++ 5,060
~45% TSR on a CAGR basis over the last four years. Using FY16 annual PIDI IN Pidilite Industries+ 4,614
reports, we now refresh our annual list of ten baggers. Clients interested TRP IN Torrent Pharma+ 3,380
in accessing our proprietary models can now use our ‘HAWK’ platform to MACA IN Mahindra CIE+ 1,044
screen the entire universe of listed companies (ex-financials) on the
TELX IN Tata Elxsi 657
basis of their accounting and greatness scores.
Moderate valuations**
Our relentless focus on franchises that keep improving HUVR IN Hind. Unilever+ 26,532
In spite of the recent demonetisation-driven disruption (click here), we find that PAG IN Page Industries+ 2,262
structurally strong companies, like the ones we aim to identify through our ten- VTEX IN Vardhman Textile 1,039
bagger portfolios, tend to be all-weather performers. These companies have Rich valuations***
credible management teams that are focused on building cash-generative
EIM IN Eicher Motors++ 8,936
franchises and, hence, remain consistent performers through economic booms
MRCO IN Marico++ 4,947
and busts. Both in live portfolios and back-tests, the approach delivers
MRF IN MRF 3,227
impressive alpha in most years whilst investing in high-quality franchises.
BRGR IN Berger Paints++ 3,057
A back-test of the ‘greatness’ framework has yielded impressive returns
AJP IN Ajanta Pharma 2,317
1,000 AIAE IN AIA Engineering+ 1,796
18.6% CAGR
Greatness PI IN P I Industries+ 1,692
800
model KJC IN Kajaria Ceramics 1,158
600 14.3% CAGR
FNXC IN Finolex Cables+ 936
400 ATLP IN Atul 894

12.6% CAGR Universe
ARTO IN Aarti Industries 847
200 (average
HTSMF IN Hatsun AgroProd+. 819
basis)
- RLXF IN Relaxo Footwear 707
Jan-04
Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
BSE500 JCHAC IN Johnson Con. Hit 553

VO IN Vinati Organics+ 476
LOG IN La Opala RG 377
Source: Ambit Capital research. Note: The back-test is based on annual rebalancing with forward-looking SRTY IN TVS Srichakra 369
returns being calculated from December 31 of year X to December 31 of year X+1; for example, in the AVNT IN Avanti Feeds 340
exhibit above for the most recent year, the framework included numbers until FY15 and returns have been
Source: Ambit Capital research. Note: Mcap as on 05 Jan
calculated from 31 December 2015 to 31 December 2016. 2017.
The ‘greatness’ philosophy works… year after year * Trading below five-year P/E, P/B, EV/EBITDA
(on at least two of these three measures)
Consistent improvements in corporate performance are more important than ** Trading below either five-year P/E, five-year P/B or five-
year EV/EBITDA (on one of these three measures)
’great leaps’ - this has been the guiding philosophy of our ’greatness‘ *** Trading above five-year P/E, P/B, EV/EBITDA
framework, which lies at the core of our process of identifying structurally sound # denotes new entrant to our ten baggers portfolio
+/(++) Indicates that the Ambit sector lead has a bottom-
businesses. Not only do the great firms perform significantly better than an up BUY/(SELL) on the name
average firm various measures, more importantly, they show a more consistent
and calibrated approach to growth over long periods. In this note, we update
our ’greatness‘ framework to include FY16 numbers. The framework uses the
following attributes to measure consistent financial improvements: judicious
capex, conversion of capex to sales, pricing discipline, balance sheet discipline,
Research Analysts
cash generation and net profit improvement, and return ratio improvement.
Karan Khanna, CFA
This year’s portfolio
+91 22 3043 3251
Of the 99 firms from BSE500 that pass more than two-thirds of the tests in our karan.khanna@ambit.co
greatness framework, the best 30 that clear our accounting and corporate
governance filters make it to this year’s list. Of these 30 firms, we have bottom- Nitin Bhasin
up coverage with BUYs on 13 firms (see exhibit on the right). 70% of the stocks +91 22 3043 3241
in this year’s portfolio also featured in last year’s portfolio, implying 30% churn. nitin.bhasin@ambit.co
Ambit Capital and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, investors should be aware that Ambit Capital
may have a conflict of interest that could affect the objectivity of this report. Investors should not consider this report as the only factor in making their investment decision.
Strategy
CONTENTS
Philosophy and framework…………………………………………………………………… 3
Quantifying greatness …………………………………………………………………………5
Does this approach work? …………………………………………………………………….6
Ten baggers 6.0 ………………………………………………………………………………..8
Greatness framework on sub-BSE500 firms……………………………………………….13
Performance check: Jan 2016 ten-bagger list…………………………………………....15
Performance check: Jan 2016’s sub-BSE500 firms………………………………….……17
Valuations - A long-term perspective! …………………………………………………….18
Appendix – January 2017 ten-baggers’ business activity description .………………..20
January 06, 2017 Ambit Capital Pvt. Ltd. Page 2

Strategy
Philosophy and framework

‘’Greatness is not in where we stand, but in what direction we are moving….’’
- Oliver Wendell Holmes
The ’greatness‘ framework
This quote appropriately captures the driving philosophy behind our ’greatness‘
framework that lies at the core of our process of identifying potential ten baggers. We The framework essentially
had unveiled this framework on 19 January 2012 with the first iteration of the hinges on using publicly
’Tomorrow’s ten baggers‘ note. This framework studies a firm’s structural strengths by available historical data to
assess which firms have, over
focusing not on absolutes but on improvements over a period of time and the
a sustained period of time
consistency of those improvements. (FY11-16), been able to
relentlessly and consistently:
A basic sketch of the underlying process behind the making of a great firm has been
captured in Exhibit 1 below. (a) Invest capital;
(b) Turn investment into
Exhibit 1: The ’greatness‘ framework sales;
(c) Turn sales into profit;
a. Investment (gross b. Conversion of (d) Turn profit into
block) investment to sales balance sheet strength;
(asset turnover, sales) (e) Turn all of that into
free cash flow; and
(f) Invest free cash flows
again.
c. Pricing discipline
(PBIT margin) Clearly, this approach will
have limited value if there is a
structural break in the sector
or in the company, which
makes past performance a
e. Cash generation d. Balance sheet meaningless guide to future
discipline (D/E, cash performance. (For identifying
(CFO)
structural breaks of this sort,
ratio)
for example in the Indian
boiler-turbine-generator
Source: Ambit Capital research sector or in the Indian utilities
sector, we look to our sector
We rank the BSE500 universe of firms (excluding financial services firms and leads for help.)
excluding firms with insufficient data) on our ’greatness‘ score, which consists of six
equally weighted headings—investments, conversion to sales, pricing discipline,
However, to the extent that
balance sheet discipline, cash generation and EPS improvement, and return ratio
such structural breaks tend to
improvement. be the exception than the
Under each of these six headings, we further look at two kinds of improvements: rule, the greatness model
helps in creating a shortlist of
 Percentage improvements in performance over FY14-16 vs FY11-13; and stocks that investors can then
analyse in greater detail.
 Consistency in performance over FY11-16; i.e. improvements adjusted for
underlying volatility in financial data Put simply, the greatness
model separates the wheat
A complete list of factors that are considered whilst quantifying greatness has been from the chaff. Yet, it does not
provided in Exhibit 2 on the next page. cook the whole meal for you!

Strategy
Exhibit 2: Factors used for quantifying greatness

Head Criteria
1 Investments a. Above median gross block increase (FY14-16 over FY11-13)*
b. Above median gross block increase to standard deviation
2 Conversion to sales a. Improvement in asset turnover (FY14-16 over FY11-13)*
b. Positive improvement in asset turnover adjusted for standard
deviation
c. Above median sales increase (FY14-16 over FY11-13)*
d. Above median sales increase to standard deviation
3 Pricing discipline a. Above median PBIT margin increase (FY14-16 over FY11-13)*
b. Above median PBIT margin increase to standard deviation
4 Balance sheet discipline a. Below median debt-equity decline (FY14-16 over FY11-13)*
b. Below median debt-equity decline to standard deviation
c. Above median cash ratio increase (FY14-16 over FY11-13)*
d. Above median cash ratio increase to standard deviation
Cash generation and
5 a. Above median CFO increase (FY14-16 over FY11-13)*
PAT improvement
b. Above median CFO increase to standard deviation
c. Above median adj. PAT increase (FY14-16 over FY11-13)*
d. Above median adj. PAT increase to standard deviation
6 Return ratio improvement a. Improvement in RoE (FY14-16 over FY11-13)*
b. Positive improvement in RoE adjusted for standard deviation
Both improvement and the
c. Improvement in RoCE (FY14-16 over FY11-13)* consistency of those
d. Positive improvement in RoCE adjusted for standard deviation improvements are important
Source: Ambit Capital research. Note: * Rather than comparing one annual endpoint to another annual endpoint
(say, FY11 to FY16), we prefer to average the data out over FY11-13 and compare that to the averaged data
from FY14-16. This gives a more consistent picture of performance (as opposed to simply comparing FY11 to
FY16).
We rank the BSE500 universe of firms (excluding financial services firms) on this score
to arrive at this year’s rankings on this measure of structural strength. After removing
financial services firms and firms with insufficient data, 411 firms from the BSE500
were ranked based on this measure. The highlights from the distribution of these
firms on our ’greatness‘ score are displayed on the next page.
On page 6, we show a back-test of this framework over FY04-2016 and find that it
works on a consistent basis. On pages 15-17, we show the real world performance of
these sets of portfolios over the last year and demonstrate that the construct works in
the real world as well. On a total shareholder returns basis (i.e. assuming dividends
are reinvested into the same stock on the ex-dividend date), the lists from the BSE500
universe have cumulatively delivered ~24% total CAGR returns (over the past four
years) vs 14% total CAGR returns for the BSE500 Index. Similarly, the lists from the
sub-BSE500 universe that we had published in our previous four iterations have
cumulatively delivered ~45% total CAGR returns (over the past four years) vs ~14%
CAGR returns for the BSE Small-cap Index.
On pages 8-12, we delve into this year’s list of 30 firms that constitute our ten
baggers 6.0. This is followed by a list of 11 firms from the sub-BSE500 universe that
do well on the same framework.

Strategy
Quantifying greatness
From the universe of BSE500 firms, after removing financial services firms and firms *The greatness score is
with insufficient data, 411 firms were scored on the six headings highlighted on the
calculated by assigning
previous page. The cut-off for greatness was placed at 67%* and only 99 firms (24%
equal weightages to the six
of the total population of 411 firms) could manage a score above this cut-off.
factors outlined in Exhibit 2
Exhibit 3: Distribution of firms on the greatness score (total population: 411 firms) on page 4.
90.0 Zone of mediocrity Good, not great Zone of 'greatness'
80.0 Thus, each of these six
224 firms score 88 firms Only 99 firms score
factors carries a weightage
No. of firms
70.0 < 50% (between 50% >67%

60.0 and 67%) of 16.7%. The scoring on
sub-criteria within each of
50.0 these factors is binary, with
40.0 a firm getting either 1 or 0
30.0 based on whether it has
done better than the
20.0
respective threshold or not.
10%-20%
20%-30%
30%-40%
40%-50%
50%-60%
60%-70%
70%-80%
80%-90%
0%-10%
90%-100%
These scores are then
cumulated to arrive at a
Source: Ambit Capital research
final greatness score on 100
In the next exhibit, we present key financial data on the three zones defined above: for the firm.
Mediocrity (224 firms), Good but not great (88 firms), and Great (99 firms).
Exhibit 4: Zones of greatness - Financial summary
Good but not
Mediocre Great
great
Number of firms 224 88 99
Mcap (US$ mn)* 669 809 1,053
Share price (3-year CAGR)# 18% 25% 43%
Gross block (3-year CAGR) 10% 10% 14%
Sales (3-year CAGR) 6% 12% 15%
Adj PAT (3-year CAGR) 2% 18% 29%
CFO (3-year CAGR) 6% 21% 27%
PBIT Margin (3-year average) 9% 14% 15%
RoE (3-year average) 9% 17% 24%
RoCE (3-year average) 11% 18% 27%
Net debt equity (3-year average) 0.31 0.28 0.07
FY17 P/E 20.7 22.4 22.2
FY17 P/B 2.6 3.4 4.7
FY18 P/E 16.5 18.3 19.7
FY18 P/B 2.3 2.9 3.8
Source: Capitaline, Ambit Capital research; Note: All figures are based on median values of the firms analysed
*Mcap as of 05 January 2017. # indicates share price performance from 03 January 2014 to 05 January 2017.
With regard to fundamentals, the superiority of the great firms compared with the
other two groups is evident in Exhibit 4 above. Of these 99 great firms, we identify
the ones that perform the best on our accounting and corporate governance filters,
and this leads to our final list of 30 great companies. Before we move onto these 30
potential ten baggers, we shall discuss a back-test of the ‘greatness’ framework in the
next section to see whether ‘great’ firms have indeed managed to deliver superior
returns historically.

Strategy
Does this approach work?

The ‘greatness’ approach has served us well in live portfolios, both in the ten-baggers
format and as a tool for stock selection in the Good & Clean portfolios (click here for
the latest G&C portfolio which was published on 01 December 2016). That this
approach works on a cross-cyclical basis is supported by a back-test of the
framework.
Our back-test of the ‘greatness’ framework in India, going back to 2003 (which
implies using data since 1997-98), shows that ‘great’ firms have historically delivered
superior results. Using average returns as a measure to gauge the performance of
‘great’ firms, we note that they have managed to outperform the universe by 4.4%
(on average returns) and the BSE500 index by 6.1% (in CAGR terms; over a 13-year
period from 2004 to 2016).
‘Great’ firms are those that score more than 67% on our framework. We rebalance
these buckets once a year (on 31 December), taking into account the preceding six
years of financial data (FY11-16 in the case of ten baggers 6.0). The performance
over the subsequent year is measured on a calendar year basis.
Exhibit 5: Average performance of ‘Great’ firms vs the Universe and BSE500 Index
(2004-2016)
1,000
Greatness
800
18.6% CAGR model Over 2004-16, ‘Great’ firms have
outperformed the universe by
600 14.3% CAGR 4.4% points per annum (on
Universe
(average average returns) and the BSE500
400 basis) Index by 6.1% points per annum
12.6% CAGR
200 BSE500
-
Jan-04
Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
Source: Ambit Capital research; Note: The back-test is based on annual rebalancing with forward-looking returns
being calculated from December 31 of year X to December 31 of year X+1; for example, in the exhibit above for
the most recent year, the framework included numbers until FY15 and returns have been calculated from 31
December 2015 to 31 December 2016. (Note: The above exhibit only considers the share price returns and not
the total shareholder returns).
Outperformance was also seen on a median basis. A median firm in the universe has
delivered 4.5% CAGR returns (over 2004-2016). In contrast, a median ‘great’ firm
has managed to deliver 8.5% CAGR returns, thus resulting in an outperformance of
~4% (on a CAGR basis) for ‘great’ firms vs the universe.
Exhibit 6: Median performance of ‘Great’ firms vs the Universe (2004-2016)
350
300 Outperformance was also seen
250 8.5% Greatness on a median basis
CAGR model
200
150 Universe
4.5% (median
100 CAGR basis)
50
0
Jan-04
Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
Source: Ambit Capital research; Note: The back-test is based on annual rebalancing with forward-looking returns
being calculated from December 31 of year X to December 31 of year X+1; for example, in the exhibit above for
the most recent year, the framework included numbers until FY15 and returns have been calculated from 31
December 2015 to 31 December 2016. (Note: The above exhibit only considers the share price returns and not
the total shareholder returns).

Strategy
Note that this back-test does not consider accounting or management quality, which
we believe are factors that should improve the performance of our live portfolios.
That’s what the next section of this note focuses on.
Before we delve into this year’s list of 30 firms that constitute our ten baggers 6.0, the
following two exhibits show the performance of the live ten-baggers portfolio since
January 2012 when we first unveiled this framework. Whilst the BSE500 ten baggers
have managed to outperform the BSE500 Index by ~10% points per annum (on a
cumulative basis) over the last five years, the ten baggers from the sub-BSE500
universe that we highlighted in the previous four iterations have managed to
outperform the BSE Small-cap Index by a whopping 31% points per annum (on a
cumulative basis). Outperformance for all our live ten-baggers from the BSE500 and
the sub-BSE500 universe demonstrates that the construct works in the real world too.
Exhibit 7: Performance of the BSE500 ten-bagger portfolios (since 19 January 2012)
80.0
70.0
57.1
60.0 51.7
50.0 42.8
Return (%)
40.0
30.0
20.0 9.5
6.7
10.0 The live performance of our
- ten-bagger portfolios has been
(10.0) 2012 2013 2014 2015 2016 impressive too
Tenbagger iteration return index return cumulative alpha
Source: Bloomberg, Ambit Capital research. Note: Performance in exhibit 7 above is on a total-return basis; i.e.
assuming that dividends are reinvested back into the same stock on the ex-dividend date.
Exhibit 8: Performance of sub-BSE500 ten-bagger portfolios (since 14 January 2013)
150.0 127.2 133.9
103.5
100.0
Return (%)
41.5
50.0
-
2013 2014 2015 2016
(50.0)
Small-caps tenbagger iteration return BSE Smallcap index return cumulative alpha

Strategy
Ten baggers 6.0

In the latest iteration of the ten-bagger exercise, to identify stocks for the portfolio,
we first use the previous ten-baggers 5.0 portfolio (click here for the ten baggers 5.0
portfolio published on 5th January 2016) as the starting point and eliminate firms that
no longer clear our ‘greatness’ filters (i.e. where the ‘greatness score’ is less than
67%) as well as ‘accounting’ filters (i.e. where the stock falls in the bottom three An overlay of accounting,
deciles on accounting in our accounting model). We also remove firms where, basis corporate governance and
the work done by our sector leads, we believe there are structural issues in the subjective checks to the greatness
underlying business (i.e. businesses where a great past is not likely to translate into a framework is the last but critical
great future). step
To identify replacements for the stocks that get eliminated in the process, we start
with firms with the highest ‘greatness score’. Within these firms, we remove firms:
 That fall in the ‘Zone of Darkness’ in our accounting model (i.e. the bottom 3
deciles on accounting quality; for a full exposition of our accounting filter, please
refer to our 16th December 2016 note);
 Firms with suspect corporate governance; and
 Firms with structural issues around the underlying business (e.g., new, well-
capitalised competitors have entered the market or adverse regulatory changes
has taken place).
This overlay of ‘greatness’, ‘accounting’, corporate governance and subjective checks
allows us to identify the 30 firms that comprise our ten-baggers portfolio.
There are 9 changes (implying 30% churn) with respect to last year’s list (refer to our
5th January 2016 note). A summary of these changes is as follows:
 Exits: Sundaram Fasteners, Tata Motors and Supreme Industries drop out on
account of deterioration in their greatness scores whilst Lupin and TVS Motor
drop out on account of deterioration in their accounting scores. We also exclude
Mindtree, Idea Cellular, GSK Consumer and Persistent Systems on account of our
sector analysts’ structural SELLs on these firms.
Exhibit 9: Reasons behind the stocks exiting our ten-bagger portfolio
Company name Reasons for exclusion
Marginally misses the ‘greatness’ cut-off; gets a low score on investment in Gross Block and Sales improvement on
Sundaram Fasteners
the 'greatness' model
Tata Motors* Low score on pricing discipline and improvement in return ratios on the 'greatness' model
Supreme Industries* Low score on pricing discipline, improvement in return ratios and cash flows improvement on the 'greatness' model
Lupin* Features in 'D9' on accounting in our accounting model
TVS Motor Company Features in 'D8' on accounting in our accounting model
Mindtree Senior management attrition worries us
Likely to generate negative FCF over FY16-20 with RoCE remaining in low single digits. No sanctity of valuations at
Idea Cellular
5x EV/EBITDA.
GSK Consumer Inability to drive volume growth despite low category penetration
Persistent Systems Lacks winning ingredients to win in the next stage of digital
Source: Ace Equity, Capitaline, Ambit Capital research. Note: * We have a Bottom-up ‘BUY’ on these stocks
 Entrants: Relaxo Footwears, Pidilite Industries, Johnson Controls – Hitachi, Avanti

Feeds, Vardhman Textile, Mahindra CIE, TVS Srichakra, Tata Elxsi and Aarti
Industries are the 9 stocks that are added to the portfolio using FY16 data
(implying that these firms’ greatness scores improved when FY16 data was added
to the model and FY10 data was taken out of the model). Note that Avanti Feeds
also featured in the previous edition of our sub-BSE500 ten baggers portfolio.

Strategy
Having identified the 30 great firms that exhibit the ingredients required to be
tomorrow’s winners, we run a valuation check to ascertain if they are currently
trading at reasonable prices for outright investments. In our view, whilst valuations do
matter on a tactical basis, how the underlying fundamentals evolve for the firm over
long periods plays a more important role in determining returns than the beginning-
of-the-period valuation itself. Further, the performance of the previous iterations of
our ten-bagger portfolio corroborates our finding that beginning of the period
valuations do not play a significant role in shaping subsequent investment
returns. We discuss this in detail in the final section of this note.
To determine whether a particular stock is cheap or not, we categorise these stocks
into three buckets based on their relative attractiveness on valuations with respect to
their own history. We compare these firms with respect to their five-year average
valuations on three metrics—P/B, P/E and EV/EBITDA. We find nine firms to be
inexpensive (on at least two of the three metrics): TCS, ITC, HCL Tech, Gujarat For the long-term investor,
Pipavav Port, Britannia Industries, Pidilite Industries, Torrent Pharma, Mahindra CIE beginning-of-period valuations
and Tata Elxsi. However, for the long term, all 30 stocks remain candidates to be ten do not have a significant impact
baggers from our perspective (as we have reiterated time and again that current on returns
period valuations do not have a significant effect on long-term returns! Please see
pages 18-19 for details).
We have bottom-up coverage with BUYs on 13 of these names. These are: TCS, ITC,
HCL Technologies, Pidilite Industries, Torrent Pharma, Mahindra CIE, HUL, Page
Industries, AIA Engineering, PI Industries, Finolex Cables, Hatsun Agro Products and
Vinati Organics.

Strategy
Exhibit 10: January 2017 ten baggers - Valuation perspective

Blended FY16 and FY17 Overall cheap
Mcap Cheap w.r.t. history?
Sr. No. Ticker Company valuations on how many
US$ mn)
P/E P/B EV/EBITDA P/E P/B EV/EBITDA counts?
Attractive valuations*
1 TCS IN TCS 67,681 18.3 5.9 13.3 Yes Yes Yes 3.0
2 ITC IN ITC 44,009 29.2 8.4 19.4 Yes Yes - 2.0
3 HCLT IN HCL Technologies 17,538 15.4 4.0 11.0 Yes Yes Yes 3.0
4 GPPV IN Guj Pipavav Port 941 25.5 3.2 15.4 Yes Yes Yes 3.0
5 BRIT IN Britannia Industries# 5,060 40.3 17.2 26.2 Yes Yes - 2.0
6 PIDI IN Pidilite Industries 4,614 38.8 10.2 23.8 Yes - Yes 2.0
7 TRP IN Torrent Pharma. 3,380 17.9 6.2 13.7 Yes Yes - 2.0
8 MACA IN Mahindra CIE 1,044 27.3 2.7 12.1 Yes - Yes 2.0
9 TELX IN Tata Elxsi 657 26.6 10.3 14.9 Yes - Yes 2.0
10 HUVR IN Hind. Unilever 26,532 42.4 47.3 29.3 - - - -
11 PAG IN Page Industries 2,262 60.3 27.3 37.2 - Yes - 1.0
12 VTEX IN Vardhman Textile 1,039 10.7 1.7 5.0 - - Yes 1.0
Rich valuations***
13 EIM IN Eicher Motors# 8,936 45.9 15.4 24.9 - - - -
14 MRCO IN Marico# 4,947 43.5 15.0 28.2 - - - -
15 MRF IN MRF 3,227 12.7 2.9 6.6 - - - -
16 BRGR IN Berger Paints# 3,057 51.0 13.0 26.7 - - - -
17 AJP IN Ajanta Pharma 2,317 34.9 11.6 22.5 - - - -
18 AIAE IN AIA Engineering 1,796 28.0 5.0 17.5 - - - -
19 PI IN P I Industries 1,692 32.5 8.7 24.0 - - - -
20 KJC IN Kajaria Ceramics 1,158 32.1 7.8 15.8 - - - -
21 FNXC IN Finolex Cables 936 23.3 4.0 14.8 - - - -
22 ATLP IN Atul 894 21.1 4.3 12.0 - - - -
23 ARTO IN Aarti Industries 847 20.3 4.8 11.5 - - - -
24 HTSMF IN Hatsun AgroProd. 819 76.6 21.7 17.9 - - - -
25 RLXF IN Relaxo Footwear 707 39.0 9.0 18.8 - - - -
26 JCHAC IN Johnson Con. Hit 553 60.3 9.5 21.9 - - - -
27 VO IN Vinati Organics 476 23.6 5.5 14.5 - - - -
28 LOG IN La Opala RG 377 42.0 10.1 25.4 - - - -
29 SRTY IN TVS Srichakra 369 13.9 5.4 8.4 - - - -
30 AVNT IN Avanti Feeds 340 14.9 6.1 9.2 - - - -
Source: Bloomberg, Capitaline, Ambit Capital research.
* Trading below five-year average P/E, P/B, EV/EBITDA (on at least two of these three measures)
** Trading below either five-year average P/E, five-year P/B or five-year EV/EBITDA (on one of these three measures)
*** Trading above five-year average P/E, P/B and EV/EBITDA
# denotes that the relevant Ambit sector lead has a bottom-up SELL in the name
Note: (1) There are a few stocks that cleared both the greatness and accounting filters but did not make it to the final list of 30 stocks based on our lack of
conviction on the names. These are: P&G Hygiene, Mindtree, KRBL, Kaveri Seed Co, Suven Life Sciences, Kitex Garments, Aurobindo Pharma, Idea Cellular,
Welspun India, Gillette India, Alembic Pharma, CCL Products, UPL, Vakrangee, Hindustan Media, Dr Reddy’s Labs, Divi’s Lab, Interglobe Aviation, Abbott India,
Bombay Burmah, Natco Pharma, Trident, Granules India and L&T Infotech. Of these, we have a bottom-up SELL on Mindtree, Idea Cellular, Dr. Reddy’s Labs and
Interglobe Aviation.
(2) Given our ten-baggers portfolio comprises 30 stocks, the following stocks (with greatness scores between 71%-79%) could not be considered for inclusion in the
portfolio even though they cleared both the greatness and accounting filters: United Breweries, GSK Consumer, Symphony, Indo Count Industries, Himatsingka
Seide, TV Today Network, 3M India, JSW Energy, Maruti Suzuki, Dabur India, HPCL, Zensar Technologies, KPR Mill, Dhanuka Agritech, Wipro, Kansai Nerolac, Dr
Lal Pathlabs, Arvind, PVR, Greenply Industries, Marksans Pharma, Siti Networks, Essel Propack, Inox Leisure, Bharat Forge, Hexaware Technologies, Finolex
Industries, CEAT, Persistent Systems, Timken India, Caplin Point Lab and Tamil Nadu Newsprint & Papers. Of these, we have a bottom-up BUY on Arvind and PVR
and SELL on GSK Consumer, JSW Energy, Maruti Suzuki, Dabur India, Wipro and Persistent Systems.
For the ‘greatness’ and accounting scores for the entire listed companies universe (ex-financials), clients can now use our HAWK platform.

Strategy
Exhibit 11: January 2017 ten baggers’ financial snapshot

3-yr 3-yr
3-yr 3-yr 3-yr avg 3-yr 3-yr FY16 Net
Mcap 6M ADV share Net FY17 FY17
Ticker Company adj. PAT CFO PBIT avg avg Debt /
US$ mn) (US$ mn) price Sales P/E P/B
CAGR CAGR margins RoE RoCE Equity
CAGR CAGR
TCS IN TCS 67,681 44.1 2% 20% 20% 18% 26% 41% 52% (0.5) 17.7 5.4
ITC IN ITC 44,009 37.4 6% 10% 9% 14% 34% 32% 49% (0.5) 28.1 7.7
HCLT IN HCL Technologies 17,538 21.4 10% 17% 22% 4% 22% 34% 40% (0.3) 14.6 3.7
GPPV IN Guj Pipavav Port 941 1.8 27% 17% 47% 14% 42% 16% 17% (0.2) 24.1 3.2
BRIT IN Britannia Industries 5,060 8.7 46% 12% 49% 44% 10% 55% 68% (0.4) 37.8 14.9
PIDI IN Pidilite Industries 4,614 5.5 29% 13% 22% 22% 16% 26% 36% (0.2) 36.1 9.1
TRP IN Torrent Pharma. 3,380 4.5 42% 28% 58% 161% 25% 45% 34% 0.3 22.5 5.6
MACA IN Mahindra CIE 1,044 0.6 57% 32% N/A 106% 3% 2% 6% 0.5 29.2 2.3
TELX IN Tata Elxsi 657 9.1 51% 20% 70% 47% 16% 40% 59% (0.5) 24.4 9.1
HUVR IN Hind. Unilever 26,532 16.5 14% 7% 8% 5% 16% 104% 148% (1.4) 40.6 45.7
PAG IN Page Industries 2,262 2.5 38% 27% 27% 35% 20% 57% 63% 0.2 54.6 24.1
VTEX IN Vardhman Textile 1,039 0.9 44% 10% 18% 46% 14% 17% 14% 0.3 9.5 1.5
Rich valuations***
EIM IN Eicher Motors 8,936 18.9 65% 25% 49% 54% 11% 26% 31% (0.6) 35.9 13.4
MRCO IN Marico 4,947 5.4 34% 10% 24% 24% 15% 33% 38% (0.2) 40.5 13.9
MRF IN MRF 3,227 11.6 39% 4% 24% 11% 15% 22% 27% (0.1) 12.3 2.5
BRGR IN Berger Paints 3,057 2.4 39% 11% 18% 71% 10% 24% 27% (0.0) 45.9 11.9
AJP IN Ajanta Pharma 2,317 4.1 68% 23% 54% 12% 30% 44% 54% (0.0) 30.5 9.8
AIAE IN AIA Engineering 1,796 1.1 41% 6% 25% 50% 24% 21% 27% (0.4) 27.3 4.6
PI IN P I Industries 1,692 1.3 50% 22% 48% 51% 16% 31% 36% 0.1 28.7 7.6
KJC IN Kajaria Ceramics 1,158 1.6 50% 15% 30% 41% 14% 28% 33% 0.3 29.8 7.0
FNXC IN Finolex Cables 936 0.5 66% 4% 25% 38% 9% 18% 23% (0.3) 21.0 3.7
ATLP IN Atul 894 1.7 65% 8% 33% 27% 13% 24% 28% 0.2 19.6 3.9
ARTO IN Aarti Industries 847 0.6 94% 10% 24% 36% 14% 21% 20% 1.1 17.8 4.3
HTSMF IN Hatsun AgroProd. 819 0.1 36% 17% 11% 15% 5% 32% 19% 2.8 61.2 19.2
RLXF IN Relaxo Footwear 707 0.1 48% 19% 38% 43% 11% 29% 28% 0.5 38.0 8.0
JCHAC IN Johnson Con. Hit 553 0.4 108% 21% 49% -3% 4% 15% 16% 0.4 45.3 8.5
VO IN Vinati Organics 476 0.4 48% 5% 24% 22% 24% 30% 35% (0.1) 22.6 4.9
LOG IN La Opala RG 377 0.3 57% 17% 33% 25% 27% 31% 38% (0.4) 40.3 9.1
SRTY IN TVS Srichakra 369 0.7 130% 12% 138% 27% 9% 41% 35% 0.2 14.3 4.7
AVNT IN Avanti Feeds 340 0.3 113% 46% 73% N/A 10% 48% 60% (0.2) N/A N/A
Source: Bloomberg, Ambit Capital research

Strategy
Exhibit 12: January 2017 ten baggers - Forward-looking data using consensus estimates
Mcap 6M ADV FY16-FY19E FY16-FY19E
Ticker Company
US$ mn) (US$ mn) EPS CAGR BPS CAGR
TCS IN TCS 67,681 44.1 9% 16%
ITC IN ITC 44,009 37.4 12% 15%
HCLT IN HCL Technologies 17,538 21.4 10% 14%
GPPV IN Guj Pipavav Port 941 1.8 18% 6%
BRIT IN Britannia Industries 5,060 8.7 17% 26%
PIDI IN Pidilite Industries 4,614 5.5 14% 19%
TRP IN Torrent Pharma. 3,380 4.5 20%^ 22%
MACA IN Mahindra CIE 1,044 0.6 19% 20%
TELX IN Tata Elxsi 657 9.1 18% 25%
HUVR IN Hind. Unilever 26,532 16.5 12% 2%
PAG IN Page Industries 2,262 2.5 23% 27%
VTEX IN Vardhman Textile 1,039 0.9 13% 14%
Rich valuations***
EIM IN Eicher Motors 8,936 18.9 35% 33%
MRCO IN Marico 4,947 5.4 15% 14%
MRF IN MRF 3,227 11.6 12% 24%
BRGR IN Berger Paints 3,057 2.4 22% 17%
AJP IN Ajanta Pharma 2,317 4.1 23% 33%
AIAE IN AIA Engineering 1,796 1.1 13% 16%
PI IN P I Industries 1,692 1.3 21% 25%
KJC IN Kajaria Ceramics 1,158 1.6 17% 21%
FNXC IN Finolex Cables 936 0.5 13% 12%
ATLP IN Atul# 894 1.7 16% 21%
ARTO IN Aarti Industries# 847 0.6 23% 24%
HTSMF IN Hatsun AgroProd.# 819 0.1 38% 24%
RLXF IN Relaxo Footwear# 707 0.1 28% 24%
JCHAC IN Johnson Con. Hit 553 0.4 43% 25%
VO IN Vinati Organics 476 0.4 14% 21%
LOG IN La Opala RG 377 0.3 17% 22%
SRTY IN TVS Srichakra# 369 0.7 1% 28%
AVNT IN Avanti Feeds# 340 0.3 N/A N/A
Source: Bloomberg, Ambit Capital research; Note: # indicates FY16-18E CAGR. ^ Torrent Pharma reported limited competition one-off revenues from sale of
generic Abilify in FY16. Hence EPS CAGR has been calculated over FY17E-19E.

Strategy
Greatness framework on sub-BSE500 firms

In our January 2013 ten baggers 2.0 note, based on client feedback, we had inserted
a list of sub-BSE500 firms that did well on our framework primarily in the hope that
given the inefficient price discovery in the smaller-cap names, running the screen on
lesser-known names should work even better. The results have been very
encouraging. The sub-BSE500 list from our ten baggers 2.0 portfolio delivered ~25%
in absolute terms and ~42% points of alpha relative to the BSE Small-cap Index from
January 2013 to November 2013. Likewise, the sub-BSE500 list from our ten baggers
3.0 and ten baggers 4.0 portfolios delivered a staggering ~140% and ~29% returns
respectively in absolute terms and ~62% and ~24% points of alpha respectively
relative to the BSE Small-cap Index. The most recent sub-BSE500 list from our last
iteration – ten baggers 5.0 has delivered ~13% return on an absolute basis and ~7%
alpha relative to the BSE Small-cap Index (please see page 17 for performance
details).
Continuing with this initiative, we present below a list of select small-caps from The framework should work
outside the BSE500 but above a market cap of Rs1,000mn that fare well on this better in the less-discovered sub-
year’s iteration of our greatness framework (after updating FY16 numbers). Based on BSE500 universe
client feedback, we have extended our forensic accounting model to all firms with a
market cap of Rs1,000mn and above. Whilst these stocks have cleared our
accounting screen, we may not have sufficient information on the quality of their
corporate governance.
Exhibit 13: January 2017 greatness framework on smaller caps outside BSE500
Mcap 6M ADV FY16 FY16
Ticker Company
US$ mn) (US$ mn) P/E P/B
IGM IN Igarashi Motors# 332 0.6 35.4 7.7
KALE IN Accelya Kale# 321 0.1 26.2 19.3
EXCC IN Excel Crop Care# 282 0.2 31.2 4.9
WMP IN Wim Plast# 265 0.3 39.9 8.4
FIEM IN Fiem Inds. 224 0.5 24.2 5.1
RJS IN RSWM Ltd# 152 0.2 9.7 2.0
ATA IN Atul Auto 142 0.3 20.8 6.4
GMM IN GMM Pfaudler# 123 0.1 41.6 5.0
AACL IN Alkyl Amines# 95 0.1 12.9 3.1
TCPL IN TCPL Packaging 74 0.0 13.2 3.5
MUIL IN Multibase India 54 0.0 37.0 7.2
Source: Bloomberg, Ambit Capital research; # denotes new entrant to the portfolio
Note: (1) Stocks that passed the two models but were omitted are: Centum Electronics, Nandan Denim, Bhargeria
Industries, Aksharchem (India), Heritage Foods, Chaman Lal Setia Exports, Saksoft, Flex Foods, Srikalahasthi
Pipes, Paushak, Axiscades Engg., Nahar Industrial Enterprises, Cupid, Kesar Petroproducts, Morepen Labs., Steel
Strips Wheels, S P Apparels, GM Breweries, Plastiblends (India), Mold-Tek Packaging, IFGL Refractories, Shree
Pushkar Chemicals & Fertilisers, Shaily Engg., Sreeleathers, Vidhi Dyestuffs, Coral Labs., Emmbi Industries,
National Fittings, KSE, Mindteck (India), Premco Global, SVP Global, SKM Egg Products and Indian Toners.
For the ‘greatness’ and accounting scores for the entire listed companies universe (ex-financials), clients can now
use our HAWK platform.
Note that unlike the ten-baggers list for the BSE500 universe (where we only consider
firms that meet the greatness score cut-off of 67% whilst being in the top 7 deciles of
our forensic accounting model), the criteria used to screen for ten baggers from the
sub-BSE500 universe has been made much more stringent. Only firms with a
greatness score above 80% that also fall in the top three deciles on accounting
quality in the sub-BSE500 universe have been included in this list.
On a separate note, in the wake of several clients requesting access to both our
‘forensic’ and ‘greatness’ models, in July last year, we launched our ‘HAWK’ platform
giving clients access to Ambit’s proprietary ‘forensic’ and ‘greatness’ models in an
easy to use and intuitive format (click here for the User Guide). Our ‘HAWK’ platform
allows clients to screen the entire universe ex-financials (~1,300 listed Indian
companies) on the basis of their accounting quality (quantified using our ‘forensic’

Strategy
model) and capital allocation track record (quantified using our ‘greatness’
framework’) over the last 10 years. Whilst the platform currently has the accounting
scores for all the companies updated until FY15, in a couple of weeks from now, we
will refresh our platform to incorporate FY16 financials as well.
Please contact your relevant sales representatives at Ambit if you have not yet
received the login credentials for ‘HAWK’ or if you would like a demo on how to use
the product.

Strategy
Performance check: Jan 2016 ten-bagger list

Exhibit 14: The ten-bagger list published on 05 January 2016 (click here for the 05
January 2016 note, ‘Ten baggers 5.0’)
Value at Value at
Mcap start (Rs) end (Rs) Total
Ticker Company
(US$ mn) returns (%)
4-Jan-16 5-Jan-17
Attractive valuations
ITC IN ITC Ltd. 44,009 100 117 16.6
IDEA IN Idea Cellular 3,964 100 56 (44.4)
HCLT IN HCL Tech. 17,538 100 103 2.9
TCS IN TCS 67,681 100 100 0.3
GPPV IN Gujarat Pipavav 941 100 86 (13.8)
MRF IN MRF 3,227 100 128 28.0
TTMT IN Tata Motors 23,749 100 133 33.2
Average for this bucket 3.3
Moderate valuations
TRP IN Torrent Pharma 3,380 100 96 (3.6)
Average for this bucket (3.6)
Rich valuations
LPC IN Lupin Ltd. 10,043 100 85 (15.4)
PSYS IN Persistent Systems 760 100 101 0.9
KJC IN Kajaria 1,158 100 101 0.9
BRIT IN Britannia 5,060 100 97 (2.9)
SKB IN GSKConsumer 3,184 100 80 (19.9)
PI IN PI Industries Ltd. 1,692 100 128 28.1
MTCL IN Mindtree 1,295 100 73 (26.6)
PAG IN Page Industries 2,262 100 102 2.4
FNXC IN Finolex Cables 936 100 167 66.9
SI IN Supreme Industries 1,703 100 134 34.0
BRGR IN Berger Paints 3,057 100 114 14.5
EIM IN Eicher Motors 8,936 100 128 28.3
TVSL IN TVS Motor 2,690 100 136 35.7
SF IN Sundaram Fasteners 960 100 191 91.2
AJP IN Ajanta Pharma 2,317 100 136 36.0
HTSMF IN Hatsun Agro Products 819 100 125 24.6
LOG IN La Opala 377 100 75 (24.9)
HUVR IN Hindustan Unilever 26,532 100 99 (1.1)
VO IN Vinati Organics 476 100 136 36.4
MRCO IN Marico Ltd. 4,947 100 118 17.6
AIAE IN AIA Engineering 1,796 100 149 48.9
ATLP IN Atul Ltd. 894 100 121 21.2
Average for this bucket 18.0
Overall average 3,000 3,416 13.9
BSE500 index 100 109 8.5
Outperformance 5.4

Strategy
Whilst the broader markets (read BSE500 index) have delivered 8.5% total returns last
year, the last year’s iteration of ten baggers portfolio published on 05 January 2016
managed to clock 13.9% returns in absolute terms (thus implying 5.4% points alpha
relative to the BSE500). This compares with cumulative absolute returns of 121% and
relative returns (to BSE500) of 52% points delivered by the first four iterations
(click here for the 19 January 2012 note on ten baggers 1.0; click here for the 14
January 2013 note on ten baggers 2.0; click here for the 26 November 2013 note on
ten bagger 3.0 and click here for the 05 January 2015 note on ten bagger 4.0).
Moreover, the above exhibit also highlights that beginning-of-the-period valuations
have not made much difference to investment returns, with the stocks categorised as
attractively valued, based on initial valuations, underperforming those classified as
richly valued on average. This finding also emerged from earlier ten bagger
iterations. In effect, what our models have shown time and again is that once you
screen rigorously for high quality, there is little value-add in further
screening through a demanding valuation filter.

Strategy
Performance check: Jan 2016’s sub-BSE500 ten

baggers
Exhibit 15: Superior firms on ‘greatness’ from sub-BSE500 published on 05 January
2016 (click here for the 05 January 2016 note, ‘Ten baggers 5.0’)
Value at Value at
Mcap start (Rs) end (Rs) Total
Ticker Company
(US$ mn) returns (%)
4-Jan-16 5-Jan-17
TCPL IN TCPL Packaging 74 100 88 (12.4)
PLM IN Poly Medicure 256 100 102 2.3
ATA IN Atul Auto 142 100 81 (19.3)
AVNT IN Avanti Feeds 340 100 125 24.6
KPR IN K P R Mill Ltd 624 100 130 30.4
FIEM IN Fiem Inds. 224 100 153 53.4
HSS IN Himatsing. Seide 434 100 143 43.3
FDM IN Fluidomat 13 100 82 (17.8)
MUIL IN Multibase India Ltd 54 100 113 12.6
NCS IN Nucleus Software 139 100 117 17.5
Overall average 1,000 1,135 13.5
BSE Small cap index 100 107 6.8
Outperformance 6.7
The sub-BSE500 list of firms published on 05 January 2016 has also shown strength
and done reasonably well over the year. These stocks are up ~13.5% on average
over the year (vs 6.8% for the BSE Small-cap Index), resulting in 6.7% points of
outperformance since publication. Absolute returns of 25% (and relative returns of
42%) for the first iteration of the sub-BSE500 ten baggers (published on 14 January
2013), a whopping 62% outperformance for the November 2013 iteration; 24%
outperformance for the January 2015 iteration and 6% outperformance of the last
iteration suggest that the framework indeed does a reasonably good job in the sub-
BSE500 universe as well.

Strategy
Valuations: A long-term perspective!

Over long periods, it is how the underlying fundamentals evolve for the firm that
plays a more important role in determining returns rather than the beginning period
valuation itself. Put another way, over long periods how a business fundamentally
performs is overwhelmingly the most important driver of investment returns (so much
so that the price at the time of entering the stock becomes almost irrelevant). This
point can be understood better with the following exhibits that plot ten-year returns
over FY06-16 vs FY06 valuations as measured by P/B and P/E at the beginning of the
period (in 2006).
Exhibit 16: Valuation impact on long-term returns - P/B
40% R² = 0.0536
FY06-FY16 share price CAGR
30%
20%
(rel. to sensex)
10%
0%
-10% - 10.0 20.0 30.0 40.0 50.0 60.0
-20%
-30%
-40%
-50%
FY06 Price to Book ratio
Source: Ambit Capital research; Note: FY06-16 returns here are stock returns relative to Sensex
The value of the R-squared makes the story self-explanatory. A low value for this
parameter indicates that the beginning-period valuations do not play any meaningful
role in explaining stock returns over the next ten years. This holds true for both P/B
and P/E as measures of valuation.
Exhibit 17: Valuation impact on long-term returns - P/E
40% R² = 0.0228
FY06-FY16 share price CAGR
30%
20%
(rel. to sensex)
10%
0%
-10% - 20.0 40.0 60.0 80.0 100.0 120.0
-20%
-30%
-40%
-50%
FY06 Price to Earnings ratio
Source: Ambit Capital research; Note: FY06-16 returns here are stock returns relative to Sensex. Trailing P/E has
been restricted to 100.
Further, that valuations do not play an overwhelming role in shaping investment

returns is also evidenced by the performance of the latest iteration of our ten-bagger
portfolio.
The following exhibits plot the returns since publication for the 30 stocks published as
a part of the ten-bagger portfolio on 05 January 2016 vs their trailing valuations as
measured by P/B and P/E at the beginning of the period.

Strategy
Exhibit 18: Ten baggers 5.0 - Beginning-period P/B and stock returns
100%
Share price performance
80% R² = 0.0416
60%
40%
20%
0%
-20% - 10.0 20.0 30.0 40.0 50.0
-40%
-60%
Trailing Price to Book ratio
Here again, a low R-squared value indicates that the beginning-period P/B does not
influence stock returns to a significant extent. This holds true for P/E as a measure of
valuation as well.
Exhibit 19: Ten baggers 5.0: beginning-period P/E and stock returns
100%
Share price performance
80%
R² = 0.019
60%
40%
20%
0%
- 20.0 40.0 60.0 80.0 100.0 120.0
-20%
-40%
-60%
Trailing Price to Earnings

Strategy
Appendix - January 2017 ten baggers’

business activity description
BSE500 ten baggers’ business description
Sr.
Ticker Company Business description
No.
Tata Consultancy Services, a division of Tata Sons Limited, is a global IT services organisation that provides a comprehensive range of
1 TCS IN TCS IT services to its clients in diverse industries. The company caters to finance and banking, insurance, telecommunication,
transportation, retail, manufacturing, pharmaceutical, and utility industries.
ITC Limited, a member of BAT Group of UK, is a holding company which has a diversified presence in Cigarettes, Hotels, Paperboards
2 ITC IN ITC & Specialty Papers, Packaging, Agri Business, Packaged Foods & Confectionery, Branded Apparel, Greeting Cards and other FMCG
products.
HCL Technologies Limited provides software development and related engineering services. The Group's technologies utilise a variety
3 HCLT IN HCL Technologies of technologies, including Internet and e-commerce, networking, internet telephony, embedded software, ASIC/VLSI design and
testing, satellite and wireless communications, and component based object technologies, including COM, DCOM and COBRA.
4 GPPV IN Guj Pipavav Port Gujarat Pipavav Port Ltd. operates a marine shipping port. The port loads and unloads container, bulk, and liquid cargo.
Britannia Industries Limited manufactures bakery products such as biscuits, bread, cakes and rusks. The company also manufactures
5 BRIT IN Britannia Industries#
and exports soybean products, cashew kernels, marine products, and general merchandise items.
Pidilite Industries Ltd. manufactures products which can be segmented into consumer products: art materials & stationary,
6 PIDI IN Pidilite Industries publications, food & fabric care, car products and adhesives & sealants, and specialty industrial products: industrial adhesives,
industrial pigments, industrial & textile resins and leather chemicals.
Torrent Pharmaceuticals Ltd. manufactures bulk drugs and pharmaceutical formulations. The company's formulations include cardio-
7 TRP IN Torrent Pharma. vascular, psychotropic and anti-biotic drugs while its bulk drugs include atenolol, ciprofloxacin and norfloxacin. Torrent
Pharmaceuticals has wholly owned subsidiaries in several regulated and less regulated international markets.
Mahindra CIE Automotive Limited designs, manufactures, installs, and repairs automotive components. The Company manufactures
8 MACA IN Mahindra CIE
automotive components including engine and steering components as well as various other forged metal products.
Tata Elxsi Limited manufactures computers and workstations besides providing system design, software development and integration
9 TELX IN Tata Elxsi services. The Group supplies its products to a number of industries, including the automotive, metals, consumer products, finance, IT
& Communications, energy, chemicals, engineering, pharmaceuticals, entertainment and agro industries.
Hindustan Unilever Limited manufactures branded and packaged consumer products including soap, detergent, personal care
10 HUVR IN Hind. Unilever
products and processed food. The Company also manufactures ice creams, cooking oils, fertilisers and hybrid seeds.
11 PAG IN Page Industries Page Industries Limited develops, produces, and distributes branded underwear for men, women, and children in India and Sri Lanka.
Vardhman Textiles Limited is an integrated textile facility. The company produces and spins yarns as well as provides other related
12 VTEX IN Vardhman Textile
services.
Eicher Motors Ltd. manufactures light commercial vehicles which are sold domestically and are also exported to other countries. Eicher
13 EIM IN Eicher Motors#
Motors also manufactures tractors, two-wheelers and automotive gears.
Marico Limited manufactures consumer products and services in the beauty and wellness space. The company is known for its
14 MRCO IN Marico# presence in the following categories: Coconut Oil, Hair Oils, Anti-lice Treatment, Premium Refined Edible Oils and Fabric Care.
Marico Limited is present in the Skin Care Services segment through Kaya Skin Clinics.
MRF Limited manufactures and distributes tyres and tubes for automobiles, aircrafts, motorcycles and cycles. The company also
15 MRF IN MRF manufactures conveyor belts, paint and coats, and hoses. Every MRF tyre designed is the result of a special acid test on the race and
rally tracks.
Berger Paints India Limited manufactures and distributes paints, enamels, varnishes, and synthetic resins. The company's products are
16 BRGR IN Berger Paints#
used in home, office, factory, interiors, exteriors, metal, wood, plastic, and others.
Ajanta Pharma Limited is a pharmaceutical company involved in the areas of product research, manufacturing, and marketing. The
17 AJP IN Ajanta Pharma company's manufacturing capabilities include segments such as antiretrovirals, antimalarials, cardiovascular, dermatology, and
ophthalmology. The company also markets over the counter products that include some nature-based remedies.
AIA Engineering Ltd. manufactures high chromium wear, corrosion, and abrasion resistant parts used by the cement, mining, and
18 AIAE IN AIA Engineering
thermal power generation industries.
PI Industries Limited manufactures agricultural and fine chemicals, and polymers. The company produces fine chemicals, crop
19 PI IN P I Industries
protection, plant nutrients, and seeds, and engineering plastics for use in the automobile, electrical, and home appliances industries.
Kajaria Ceramics Limited manufactures glazed and unglazed ceramic tiles. The company sells its products in India and it also exports
20 KJC IN Kajaria Ceramics
them to other countries.
Finolex Cables Ltd. manufactures a wide range of telecommunication and electrical cables. The company's products include flexible
21 FNXC IN Finolex Cables cables for appliances and industrial use electrification, winding wires, automobile cables, welding cables, and cables for submersible
pumps. The Company also manufactures jelly filled phone cables, high frequency/radio frequency cables and PVC Sheets.
Atul Limited is a diversified manufacturer of chemicals. The Company's products include agrochemicals, aromatics, cresol & its
22 ATLP IN Atul derivatives, pharmaceutical intermediates, bulk drugs and bulk chemicals. Atul also manufactures dyestuffs and colors for the textile
industry.
Aarti Industries Limited develops and manufactures basic bulk chemicals, dyes and pigment intermediates, pharmaceuticals and
23 ARTO IN Aarti Industries agrochemicals, rubber chemicals, surfactant intermediates, and specialty chemicals. The company sells its products in India and
elsewhere throughout the world.
Hatsun Agro Products Limited manufactures skimmed milk powder, skimmed milk powder blends, instant skimmed milk powder,
24 HTSMF IN Hatsun AgroProd.
whole milk powder, and full cream milk powder.
25 RLXF IN Relaxo Footwear Relaxo Footwears Ltd. is the marketing company for Relaxo Group. The Group manufactures Hawai and lightweight chappals.
Johnson Controls-Hitachi Air Conditioning India Limited manufactures air conditioning products. The Company offers commercial air
26 JCHAC IN Johnson Con. Hit conditioning and refrigeration, absorption and centrifugal chillers, compressors, and environmental testing products. Johnson
Controls-Hitachi Air Conditioning operates worldwide.
27 VO IN Vinati Organics Vinati Organics Limited produces organic intermediates and monomers.
28 LOG IN La Opala RG La Opala RG Limited manufactures glass and glass products.
29 SRTY IN TVS Srichakra TVS Srichakra Limited manufactures tires, tubes and rubber products.
Avanti Feeds Ltd. manufactures and distributes shrimp feed. The company also processes, packages, and exports shrimp throughout
30 AVNT IN Avanti Feeds
the world.
Source: Bloomberg. Note: # denotes that the relevant Ambit sector lead has a bottom-up SELL in the name

Strategy
Sub-BSE500 ten baggers’ business description

Sr.
Ticker Company Business description
No.
Igarashi Motors India Ltd. manufactures automobile parts. The company produces direct current electrical motors
1 IGM IN Igarashi Motors
for power windows and seats.
Accelya Kale Solutions Ltd. provides software products for the banking, education, hotels, airlines and healthcare
2 KALE IN Accelya Kale
sectors. The company operates both in the local and international markets.
Excel Crop Care Ltd. manufactures a wide variety of agricultural chemicals. The company's products include
3 EXCC IN Excel Crop Care
pesticide intermediates, aluminum phosphide and zinc phosphide
Wim Plast Ltd. manufactures and distributes plastic moulded furniture. The company markets these goods
4 WMP IN Wim Plast
worldwide.
5 FIEM IN Fiem Inds. FIEM Industries Limited manufactures automotive lighting and signaling equipment and rear view mirrors.
RSWM Ltd. manufactures and exports yarn and cloth. The group's products are made from cotton, staple fiber,
6 RJS IN RSWM Ltd
viscose, polyester and blended fibers.
7 ATA IN Atul Auto Atul Auto Ltd. manufactures three-wheeled commercial diesel vehicles.
GMM Pfaudler Ltd. manufactures glass-lined reactors. The company's products are used by the pharmaceutical, fine
8 GMM IN GMM Pfaudler
chemicals, dyes, and agricultural chemicals industries.
Alkyl Amines Chemicals Limited manufactures and supplies amines and amine-based chemicals to the
pharmaceutical, agrochemical, rubber chemical, and water treatment industries. The company's products include
9 AACL IN Alkyl Amines
aliphatic amines, amine derivatives, and fine chemicals. The company also has a bioprocess technology division
which conducts research in the field of industrial biotechnology.
TCPL Packaging Limited manufactures printed cartons, primarily for cigarettes. The company also manufactures
10 TCPL IN TCPL Packaging
cartons and shells in other segments such as liquor, soaps, blades, chocolate, and photo films.
Multibase India Limited is a polymer compounding company. The company provides customised compound
11 MUIL IN Multibase India solutions, tolling service and product development, with global customers in the automotive, household appliances,
packaging, construction, and the sports and leisure markets.
Source: Bloomberg

Strategy
Institutional Equities Team

Saurabh Mukherjea, CFA CEO, Institutional Equities (022) 30433174 saurabh.mukherjea@ambit.co
Pramod Gubbi, CFA Head of Equities (022) 30433124 pramod.gubbi@ambit.co
Research Analysts
Name Industry Sectors Desk-Phone E-mail
Nitin Bhasin - Head of Research E&C / Infra / Cement / Industrials (022) 30433241 nitin.bhasin@ambit.co
Aadesh Mehta, CFA Banking / Financial Services (022) 30433239 aadesh.mehta@ambit.co
Abhishek Ranganathan, CFA Retail (022) 30433085 abhishek.r@ambit.co
Anuj Bansal Mid-caps (022) 30433122 anuj.bansal@ambit.co
Aditi Singh Economy / Strategy (022) 30433284 aditi.singh@ambit.co
Ashvin Shetty, CFA Automobile (022) 30433285 ashvin.shetty@ambit.co
Bhargav Buddhadev Power Utilities / Capital Goods (022) 30433252 bhargav.buddhadev@ambit.co
Deepesh Agarwal, CFA Power Utilities / Capital Goods (022) 30433275 deepesh.agarwal@ambit.co
Dhiraj Mistry, CFA Consumer (022) 30433264 dhiraj.mistry@ambit.co
Gaurav Khandelwal, CFA Automobile (022) 30433132 gaurav.khandelwal@ambit.co
Girisha Saraf Mid-caps / Small-caps (022) 30433211 girisha.saraf@ambit.co
Karan Khanna, CFA Strategy (022) 30433251 karan.khanna@ambit.co
Mayank Porwal Retail (022) 30433214 mayank.porwal@ambit.co
Pankaj Agarwal, CFA Banking / Financial Services (022) 30433206 pankaj.agarwal@ambit.co
Paresh Dave, CFA Healthcare (022) 30433212 paresh.dave@ambit.co
Parita Ashar, CFA Metals & Mining / Aviation (022) 30433223 parita.ashar@ambit.co
Prashant Mittal, CFA Strategy / Derivatives (022) 30433218 prashant.mittal@ambit.co
Rahil Shah Banking / Financial Services (022) 30433217 rahil.shah@ambit.co
Ravi Singh Banking / Financial Services (022) 30433181 ravi.singh@ambit.co
Ritesh Gupta, CFA Oil & Gas / Chemicals / Agri Inputs (022) 30433242 ritesh.gupta@ambit.co
Ritesh Vaidya, CFA Consumer (022) 30433246 ritesh.vaidya@ambit.co
Ritika Mankar Mukherjee, CFA Economy / Strategy (022) 30433175 ritika.mankar@ambit.co
Ritu Modi Automobile (022) 30433292 ritu.modi@ambit.co
Sagar Rastogi Technology (022) 30433291 sagar.rastogi@ambit.co
Sudheer Guntupalli Technology (022) 30433203 sudheer.guntupalli@ambit.co
Sumit Shekhar Economy / Strategy (022) 30433229 sumit.shekhar@ambit.co
Utsav Mehta, CFA E&C / Industrials (022) 30433209 utsav.mehta@ambit.co
Vivekanand Subbaraman, CFA Media (022) 30433261 vivekanand.s@ambit.co
Sales
Name Regions Desk-Phone E-mail
Sarojini Ramachandran - Head of Sales UK +44 (0) 20 7886 2740 sarojini.r@ambit.co
Dharmen Shah India / Asia (022) 30433289 dharmen.shah@ambit.co
Dipti Mehta India (022) 30433053 dipti.mehta@ambit.co
Krishnan V India / Asia (022) 30433295 krishnanv@ambit.co
Nityam Shah, CFA Europe (022) 30433259 nityam.shah@ambit.co
Punitraj Mehra, CFA India / Asia (022) 30433198 punitraj.mehra@ambit.co
Shaleen Silori India (022) 30433256 shaleen.silori@ambit.co
Singapore
Praveena Pattabiraman Singapore +65 6536 0481 praveena.pattabiraman@ambit.co
Shashank Abhisheik Singapore +65 6536 1935 shashankabhisheik@ambitpte.com
USA / Canada
Ravilochan Pola – CEO Americas +1(646) 793 6001 ravi.pola@ambitamerica.co
Hitakshi Mehra Americas +1(646) 793 6002 hitakshi.mehra@ambitamerica.co
Achint Bhagat, CFA Americas +1(646) 793 6752 achint.bhagat@ambitamerica.co
Production
Sajid Merchant Production (022) 30433247 sajid.merchant@ambit.co
Sharoz G Hussain Production (022) 30433183 sharoz.hussain@ambit.co
Jestin George Editor (022) 30433272 jestin.george@ambit.co
Richard Mugutmal Editor (022) 30433273 richard.mugutmal@ambit.co
Nikhil Pillai Database (022) 30433265 nikhil.pillai@ambit.co

Strategy
Tata Consultancy Svcs Ltd (TCS IN, BUY) ITC Ltd (ITC IN, BUY)
3,000 280
2,500 260
2,000 240
220
1,500
200
1,000 180
500 160
0 140
Sep-14
Sep-15
Sep-16
Dec-13
Mar-14
Jun-14
Dec-14
Mar-15
Jun-15
Dec-15
Mar-16
Jun-16
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Jun-14
Jun-15
Jun-16
Tata Consultancy Services Ltd ITC Ltd
Source: Bloomberg, Ambit Capital research Source: Bloomberg, Ambit Capital research
HCL Technologies Ltd (HCLT IN, BUY) Gujarat Pipavav Port Ltd (GPPV IN, NOT RATED)
1,200 300
1,000 250
800 200
600 150
400 100
200 50
0 0
Dec-13
Sep-14
Dec-14
Sep-15
Dec-15
Sep-16
Dec-13
Sep-14
Dec-14
Sep-15
Dec-15
Sep-16
Mar-14
Jun-14
Mar-15
Jun-15
Mar-16
Jun-16
Mar-14
Jun-14
Mar-15
Jun-15
Mar-16
Jun-16
HCL Technologies Ltd Gujarat Pipavav Port Ltd
Britannia Industries Ltd (BRIT IN, SELL) Pidilite Industries Ltd (PIDI IN, BUY)
4,000 800
3,500 700
3,000 600
2,500 500
2,000 400
1,500 300
1,000 200
500 100
0 0
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Jun-14
Jun-15
Jun-16
Jun-14
Jun-15
Jun-16
Britannia Industries Ltd Pidilite Industries Ltd

Strategy
Torrent Pharmaceuticals Ltd (TRP IN, BUY) Mahindra CIE Automotive (MACA IN, BUY)
1,800 350
1,600 300
1,400
1,200 250
1,000 200
800 150
600 100
400
200 50
0 0
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Dec-13
Sep-14
Dec-14
Sep-15
Dec-15
Sep-16
Jun-14
Jun-15
Jun-16
Mar-14
Jun-14
Mar-15
Jun-15
Mar-16
Jun-16
Torrent Pharmaceuticals Ltd Mahindra CIE Automotive Ltd
Hindustan Unilever Ltd (HUVR IN, BUY) Page Industries Ltd (PAG IN, NOT RATED)
1,200 18,000
16,000
1,000
14,000
800 12,000
10,000
600
8,000
400 6,000
4,000
200
2,000
0 0
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Jun-14
Jun-15
Jun-16
Jun-14
Jun-15
Jun-16
Hindustan Unilever Ltd Page Industries Ltd
Eicher Motors Ltd (EIM IN, SELL) Marico Ltd (MRCO IN, SELL)
30,000 350
25,000 300
250
20,000
200
15,000
150
10,000
100
5,000 50
0 0
Dec-13
Sep-14
Dec-14
Sep-15
Dec-15
Sep-16
Dec-13
Sep-14
Dec-14
Sep-15
Dec-15
Sep-16
Mar-14
Jun-14
Mar-15
Jun-15
Mar-16
Jun-16
Mar-14
Jun-14
Mar-15
Jun-15
Mar-16
Jun-16
Eicher Motors Ltd Marico Ltd

Strategy
MRF Ltd (MRF IN, NOT RATED) Berger Paints India Ltd (BRGR IN, SELL)
60,000 300
50,000 250
40,000 200
30,000 150
20,000 100
10,000 50
0 0
Dec-13
Sep-14
Dec-14
Sep-15
Dec-15
Sep-16
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Mar-14
Jun-14
Mar-15
Jun-15
Mar-16
Jun-16
Jun-14
Jun-15
Jun-16
MRF Ltd Berger Paints India Ltd
PI Industries Ltd (PI IN, BUY) AIA Engineering Ltd (AIAE IN, BUY)
1,000 1,600
1,400
800
1,200
600 1,000
800
400 600
400
200
200
0 0
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Jun-14
Jun-15
Jun-16
Jun-14
Jun-15
Jun-16
PI Industries Ltd AIA Engineering Ltd
Kajaria Ceramics Ltd (KJC IN, NOT RATED) Finolex Cables Ltd (FNXC IN, BUY)
800 500
700
400
600
500 300
400
300 200
200
100
100
0 0
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Jun-14
Jun-15
Jun-16
Jun-14
Jun-15
Jun-16
Kajaria Ceramics Ltd Finolex Cables Ltd

Strategy
Tata Elxsi Ltd (TELX IN, NOT RATED) Vardhman Textiles Ltd (VTEX IN, NOT RATED)
2,500 1,400
1,200
2,000
1,000
1,500 800
1,000 600
400
500
200
0 0
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
Jan-16
Apr-16
Jul-16
Oct-16
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
Jan-16
Apr-16
Jul-16
Oct-16
Tata Elxsi Ltd Vardhman Textiles Ltd
Ajanta Pharma Ltd (AJP IN, NOT RATED) Atul Ltd (ATLP IN IN, NOT RATED)
2,500 3,000
2,000 2,500
2,000
1,500
1,500
1,000
1,000
500 500
0 0
Apr-14
Apr-15
Apr-16
Apr-14
Apr-15
Apr-16
Jan-14
Jul-14
Oct-14
Jan-15
Jul-15
Oct-15
Jan-16
Jul-16
Oct-16
Jan-14
Jul-14
Oct-14
Jan-15
Jul-15
Oct-15
Jan-16
Jul-16
Oct-16
Ajanta Pharma Ltd Atul Ltd
Aarti Industries (ARTO IN, NOT RATED) Relaxo Footwears Ltd (RLXF IN, NOT RATED)
800 700
700 600
600 500
500
400
400
300
300
200 200
100 100
0 0
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
Jan-16
Apr-16
Jul-16
Oct-16
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
Jan-16
Apr-16
Jul-16
Oct-16
Aarti Industries Relaxo Footwears Ltd

Strategy
Johnson Controls-Hitachi Air Conditioning India Ltd LA Opala RG Ltd (LOG IN, NOT RATED)
(JCHAC IN, NOT RATED)
2,000 700
600
1,500
500
1,000 400
300
500 200
0 100
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
Jan-16
Apr-16
Jul-16
Oct-16
0
Jan-14
Apr-14
Jul-14
Jan-15
Apr-15
Jul-15
Jan-16
Apr-16
Jul-16
Oct-14
Oct-15
Oct-16
Johnson Controls-Hitachi Air Conditioning India
Ltd LA Opala RG Ltd
TVS Srichakra Ltd (SRTY IN, NOT RATED) Avanti Feeds Ltd (AVNT IN, NOT RATED)
4,500 800
4,000 700
3,500 600
3,000 500
2,500
400
2,000
1,500 300
1,000 200
500 100
0 0
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
Jan-16
Apr-16
Jul-16
Oct-16
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
Jan-16
Apr-16
Jul-16
Oct-16
TVS Srichakra Ltd Avanti Feeds Ltd
Igarashi Motors India Ltd (IGM IN, NOT RATED) Accelya Kale Solutions Ltd (KALE IN, NOT RATED)
900 1,600
800 1,400
700 1,200
600 1,000
500
800
400
300 600
200 400
100 200
0 0
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
Jan-16
Apr-16
Jul-16
Oct-16
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
Jan-16
Apr-16
Jul-16
Oct-16
Igarashi Motors India Ltd Accelya Kale Solutions Ltd

Strategy
FIEM Industries Ltd (FIEM IN, NOT RATED) RSWM Ltd (RJS IN, NOT RATED)
1,600 600
1,400 500
1,200
1,000 400
800 300
600 200
400
200 100
0 0
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
Jan-16
Apr-16
Jul-16
Oct-16
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
Jan-16
Apr-16
Jul-16
Oct-16
FIEM Industries Ltd RSWM Ltd
Atul Auto Ltd (ATA IN, NOT RATED) Alkyl Amines Chemicals (AACL IN, NOT RATED)
800 450
700 400
600 350
500 300
250
400
200
300 150
200 100
100 50
0 0
Apr-14
Apr-15
Apr-16
Apr-14
Apr-15
Apr-16
Jan-14
Jul-14
Oct-14
Jan-15
Jul-15
Oct-15
Jan-16
Jul-16
Oct-16
Jan-14
Jul-14
Oct-14
Jan-15
Jul-15
Oct-15
Jan-16
Jul-16
Oct-16
Atul Auto Ltd Alkyl Amines Chemicals
TCPL Packaging Ltd (TCPL IN, NOT RATED) Multibase India Ltd (MUIL IN, NOT RATED)
900 350
800 300
700
600 250
500 200
400 150
300
100
200
100 50
0 0
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
Jan-16
Apr-16
Jul-16
Oct-16
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
Jan-16
Apr-16
Jul-16
Oct-16
TCPL Packaging Ltd Multibase India Ltd

Strategy
Excel Crop Care Ltd (EXCC IN, NOT RATED) WIM Plast Ltd (WMP IN, NOT RATED)
2,500 1,800
1,600
2,000 1,400
1,200
1,500 1,000
1,000 800
600
500 400
200
0 0
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
Jan-16
Apr-16
Jul-16
Oct-16
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
Jan-16
Apr-16
Jul-16
Oct-16
Excel Crop Care Ltd WIM Plast Ltd
GMM Pfaudler Ltd (GMM IN, NOT RATED) Hatsun Agro Products Ltd (HTSMF IN, BUY)
700 400
600 350
500 300
250
400
200
300
150
200 100
100 50
0 0
Apr-14
Apr-15
Apr-16
Jan-14
Jul-14
Oct-14
Jan-15
Jul-15
Oct-15
Jan-16
Jul-16
Oct-16
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
Jan-16
Apr-16
Jul-16
Oct-16
GMM Pfaudler Ltd Hatsun Agro Products Ltd
Vinati Organics Ltd (VO IN, BUY)
700
600
500
400
300
200
100
0
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
Jan-16
Apr-16
Jul-16
Oct-16
Vinati Organics Ltd

Strategy
Explanation of Investment Rating

Investment Rating Expected return (over 12-month)
BUY >10%
SELL <10%
NO STANCE We have forward looking estimates for the stock but we refrain from assigning valuation and recommendation
UNDER REVIEW We will revisit our recommendation, valuation and estimates on the stock following recent events
NOT RATED We do not have any forward looking estimates, valuation or recommendation for the stock
POSITIVE We have a positive view on the sector and most of stocks under our coverage in the sector are BUYs
NEGATIVE We have a negative view on the sector and most of stocks under our coverage in the sector are SELLs
Disclaimer
This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Ambit Capital. AMBIT Capital Research is disseminated and available primarily electronically,
and, in some cases, in printed form.
Additional information on recommended securities is available on request.
Disclaimer
1. AMBIT Capital Private Limited (“AMBIT Capital”) and its affiliates are a full service, integrated investment banking, investment advisory and brokerage group. AMBIT Capital is a Stock Broker, Portfolio
Manager and Depository Participant registered with Securities and Exchange Board of India Limited (SEBI) and is regulated by SEBI.
2. AMBIT Capital makes best endeavours to ensure that the research analyst(s) use current, reliable, comprehensive information and obtain such information from sources which the analyst(s) believes
to be reliable. However, such information has not been independently verified by AMBIT Capital and/or the analyst(s) and no representation or warranty, express or implied, is made as to the
accuracy or completeness of any information obtained from third parties. The information, opinions, views expressed in this Research Report are those of the research analyst as at the date of this
Research Report which are subject to change and do not represent to be an authority on the subject. AMBIT Capital may or may not subscribe to any and/ or all the views expressed herein.
3. This Research Report should be read and relied upon at the sole discretion and risk of the recipient. If you are dissatisfied with the contents of this complimentary Research Report or with the terms of
this Disclaimer, your sole and exclusive remedy is to stop using this Research Report and AMBIT Capital or its affiliates shall not be responsible and/ or liable for any direct/consequential loss
howsoever directly or indirectly, from any use of this Research Report.
4. If this Research Report is received by any client of AMBIT Capital or its affiliate, the relationship of AMBIT Capital/its affiliate with such client will continue to be governed by the terms and conditions
in place between AMBIT Capital/ such affiliate and the client.
5. This Research Report is issued for information only and the 'Buy', 'Sell', or ‘Other Recommendation’ made in this Research Report such should not be construed as an investment advice to any
recipient to acquire, subscribe, purchase, sell, dispose of, retain any securities and should not be intended or treated as a substitute for necessary review or validation or any professional advice.
Recipients should consider this Research Report as only a single factor in making any investment decisions. This Research Report is not an offer to sell or the solicitation of an offer to purchase or
subscribe for any investment or as an official endorsement of any investment.
6. This Research Report is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, copied in
whole or in part, for any purpose. Neither this Research Report nor any copy of it may be taken or transmitted or distributed, directly or indirectly within India or into any other country including
United States (to US Persons), Canada or Japan or to any resident thereof. The distribution of this Research Report in other jurisdictions may be strictly restricted and/ or prohibited by law or contract,
and persons into whose possession this Research Report comes should inform themselves about such restriction and/ or prohibition, and observe any such restrictions and/ or prohibition.
7. Ambit Capital Private Limited is registered as a Research Entity under the SEBI (Research Analysts) Regulations, 2014. SEBI Reg.No.- INH000000313.
Conflict of Interests
8. In the normal course of AMBIT Capital’s business circumstances may arise that could result in the interests of AMBIT Capital conflicting with the interests of clients or one client’s interests conflicting
with the interest of another client. AMBIT Capital makes best efforts to ensure that conflicts are identified and managed and that clients’ interests are protected. AMBIT Capital has policies and
procedures in place to control the flow and use of non-public, price sensitive information and employees’ personal account trading. Where appropriate and reasonably achievable, AMBIT Capital
segregates the activities of staff working in areas where conflicts of interest may arise. However, clients/potential clients of AMBIT Capital should be aware of these possible conflicts of interests and
should make informed decisions in relation to AMBIT Capital’s services.
9. AMBIT Capital and/or its affiliates may from time to time have or solicit investment banking, investment advisory and other business relationships with companies covered in this Research Report and
may receive compensation for the same.
Additional Disclaimer for Canadian Persons

10. AMBIT Capital is not registered in the Province of Ontario and /or Province of Québec to trade in securities and/or to provide advice with respect to securities.
11. AMBIT Capital's head office or principal place of business is located in India.
12. All or substantially all of AMBIT Capital's assets may be situated outside of Canada.
13. It may be difficult for enforcing legal rights against AMBIT Capital because of the above.
14. Name and address of AMBIT Capital's agent for service of process in the Province of Ontario is: Torys LLP, 79 Wellington St. W., 30th Floor, Box 270, TD South Tower, Toronto, Ontario M5K 1N2
Canada.
15. Name and address of AMBIT Capital's agent for service of process in the Province of Montréal is Torys Law Firm LLP, 1 Place Ville Marie, Suite 1919 Montréal, Québec H3B 2C3 Canada.
Additional Disclaimer for Singapore Persons

16. This Report is prepared and distributed by Ambit Capital Private Limited and distributed as per the approved arrangement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP
289) and Paragraph 11 of the First Schedule to the Financial Advisors Act (CAP 110) provided to Ambit Singapore Pte. Limited by Monetary Authority of Singapore.
17. This Report is only available to persons in Singapore who are institutional investors (as defined in section 4A of the Securities and Futures Act (Cap. 289) of Singapore (the “SFA”).” Accordingly, if a
Singapore Person is not or ceases to be such an institutional investor, such Singapore Person must immediately discontinue any use of this Report and inform Ambit Singapore Pte. Limited.
Additional Disclaimer for UK Persons

18. All of the recommendations and views about the securities and companies in this report accurately reflect the personal views of the research analyst named on the cover. No part of this research
analyst’s compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst in this research report. This report may not be
reproduced, redistributed or copied in whole or in part for any purpose.
19. This report is a marketing communication and has been prepared by Ambit Capital Pvt Ltd of Mumbai, India (“Ambit”) and has been approved in the UK by Ambit Capital (UK) Limited (“ACUK”)
solely for the purposes of section 21 of the Financial Services and Markets Act 2000. Ambit is regulated by the Securities and Exchange Board of India and is registered as a Research Entity under the
SEBI (Research Analysts) Regulations, 2014. ACUK is regulated by the UK Financial Services Authority and has registered office at C/o Panmure Gordon & Co PL, One New Change, London,
EC4M9AF.
20. In the UK, this report is directed at and is for distribution only to persons who (i) fall within Article 19(1) (persons who have professional experience in matters relating to investments) or Article
49(2)(a) to (d) (high net worth companies, unincorporated associations etc) of the Financial Services and Markets Act 2000 (Financial Promotions) Order 2005 (as amended) or (ii) are professional
customers or eligible counterparties of ACUK (all such persons together being referred to as "relevant persons"). This report must not be acted on or relied upon by persons in the UK who are not
relevant persons.
21. Neither Ambit nor ACUK is a US registered broker-dealer. Transactions undertaken in the US in any security mentioned herein must be effected through a US-registered broker-dealer, in conformity
with SEC Rule 15a-6.
22. Neither this report nor any copy or part thereof may be distributed in any other jurisdictions where its distribution may be restricted by law and persons into whose possession this report comes
should inform themselves about, and observe, any such restrictions. Distribution of this report in any such other jurisdictions may constitute a violation of UK or US securities laws, or the law of any
such other jurisdictions.
23. This report does not constitute an offer or solicitation to buy or sell any securities referred to herein. It should not be so construed, nor should it or any part of it form the basis of, or be relied on in
connection with, any contract or commitment whatsoever. The information in this report, or on which this report is based, has been obtained from publicly available sources that Ambit believes to be
reliable and accurate. However, it has not been prepared in accordance with legal requirements designed to promote the independence of investment research. It has also not been independently
verified and no representation or warranty, express or implied, is made as to the accuracy or completeness of any information obtained from third parties.
24. The information or opinions are provided as at the date of this report and are subject to change without notice. The information and opinions provided in this report take no account of the investors’
individual circumstances and should not be taken as specific advice on the merits of any investment decision. Investors should consider this report as only a single factor in making any investment
decisions. Further information is available upon request. No member or employee of Ambit or ACUK accepts any liability whatsoever for any direct or consequential loss howsoever arising, directly or
indirectly, from any use of this report or its contents.

Strategy
25. The value of any investment made at your discretion based on this Report, or income therefrom, maybe affected by changes in economic, financial and/or political factors and may go down as well
as go up and you may not get back the original amount invested. Some securities and/or investments involve substantial risk and are not suitable for all investors.
26. Ambit and its affiliates and their respective officers directors and employees may hold positions in any securities mentioned in this Report (or in any related investment) and may from time to time add
to or dispose of any such securities (or investment). Ambit and ACUK may from time to time render advisory and other services to companies referred to in this Report and may receive compensation
for the same.
27. Ambit and its affiliates may act as a market maker or risk arbitrator or liquidity provider or may have assumed an underwriting commitment in the securities of companies discussed in this Report (or
in related investments) or may sell them or buy them from clients on a principal to principal basis or may be involved in proprietary trading and may also perform or seek to perform investment
banking or underwriting services for or relating to those companies.
28. Ambit and ACUK may sell or buy any securities or make any investment which may be contrary to or inconsistent with this Report and are not subject to any prohibition on dealing. By accepting this
report you agree to be bound by the foregoing limitations. In the normal course of Ambit and its affiliates’ business, circumstances may arise that could result in the interests of Ambit conflicting with
the interests of clients or one client’s interests conflicting with the interest of another client. Ambit makes best efforts to ensure that conflicts are identified, managed and clients’ interests are
protected. However, clients/potential clients of Ambit should be aware of these possible conflicts of interests and should make informed decisions in relation to Ambit services.
Disclosures
29. The analyst (s) has/have not served as an officer, director or employee of the subject company.
30. There is no material disciplinary action that has been taken by any regulatory authority impacting equity research analysis activities.
31. All market data included in this report are dated as at the previous stock market closing day from the date of this report.
Analyst Certification
Each of the analysts identified in this report certifies, with respect to the companies or securities that the individual analyses, that (1) the views expressed in this report reflect his or her personal views
about all of the subject companies and securities and (2) no part of his or her compensation was, is or will be directly or indirectly dependent on the specific recommendations or views expressed in this
report.
© Copyright 2016 AMBIT Capital Private Limited. All rights reserved.

Ambit Capital Pvt. Ltd.
Ambit House, 3rd Floor. 449, Senapati Bapat Marg,
Lower Parel, Mumbai 400 013, India.
Phone: +91-22-3043 3000 | Fax: +91-22-3043 3100
CIN: U74140MH1997PTC107598
www.ambitcapital.com

Ten Baggers 6.0: Strategy

Hochgeladen von

Dokumentinformationen

Originaltitel

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

Ten Baggers 6.0: Strategy

Hochgeladen von

Copyright:

Verfügbare Formate

Strategy

THEMATIC January 06, 2017

Ten Baggers 6.0 Exhibit A: Ten baggers 6.0

400 ATLP IN Atul 894

BSE500 JCHAC IN Johnson Con. Hit 553

Philosophy and framework…………………………………………………………………… 3

Quantifying greatness …………………………………………………………………………5

Does this approach work? …………………………………………………………………….6

Ten baggers 6.0 ………………………………………………………………………………..8

Greatness framework on sub-BSE500 firms……………………………………………….13

Performance check: Jan 2016 ten-bagger list…………………………………………....15

Performance check: Jan 2016’s sub-BSE500 firms………………………………….……17

Valuations - A long-term perspective! …………………………………………………….18

Appendix – January 2017 ten-baggers’ business activity description .………………..20

January 06, 2017 Ambit Capital Pvt. Ltd. Page 2

Philosophy and framework

January 06, 2017 Ambit Capital Pvt. Ltd. Page 3

Exhibit 2: Factors used for quantifying greatness

January 06, 2017 Ambit Capital Pvt. Ltd. Page 4

70.0 < 50% (between 50% >67%

January 06, 2017 Ambit Capital Pvt. Ltd. Page 5

Does this approach work?

January 06, 2017 Ambit Capital Pvt. Ltd. Page 6

Tenbagger iteration return index return cumulative alpha

Exhibit 8: Performance of sub-BSE500 ten-bagger portfolios (since 14 January 2013)

150.0 127.2 133.9

January 06, 2017 Ambit Capital Pvt. Ltd. Page 7

Ten baggers 6.0

 Entrants: Relaxo Footwears, Pidilite Industries, Johnson Controls – Hitachi, Avanti

January 06, 2017 Ambit Capital Pvt. Ltd. Page 8

January 06, 2017 Ambit Capital Pvt. Ltd. Page 9

Exhibit 10: January 2017 ten baggers - Valuation perspective

January 06, 2017 Ambit Capital Pvt. Ltd. Page 10

Exhibit 11: January 2017 ten baggers’ financial snapshot

January 06, 2017 Ambit Capital Pvt. Ltd. Page 11

January 06, 2017 Ambit Capital Pvt. Ltd. Page 12

Greatness framework on sub-BSE500 firms

January 06, 2017 Ambit Capital Pvt. Ltd. Page 13

January 06, 2017 Ambit Capital Pvt. Ltd. Page 14

Performance check: Jan 2016 ten-bagger list

January 06, 2017 Ambit Capital Pvt. Ltd. Page 15

January 06, 2017 Ambit Capital Pvt. Ltd. Page 16

Performance check: Jan 2016’s sub-BSE500 ten

January 06, 2017 Ambit Capital Pvt. Ltd. Page 17

Valuations: A long-term perspective!

Further, that valuations do not play an overwhelming role in shaping investment

January 06, 2017 Ambit Capital Pvt. Ltd. Page 18

Trailing Price to Book ratio

Source: Bloomberg, Ambit Capital research

Trailing Price to Earnings

Source: Bloomberg, Ambit Capital research

January 06, 2017 Ambit Capital Pvt. Ltd. Page 19

Appendix - January 2017 ten baggers’

January 06, 2017 Ambit Capital Pvt. Ltd. Page 20

Sub-BSE500 ten baggers’ business description

January 06, 2017 Ambit Capital Pvt. Ltd. Page 21

Institutional Equities Team

January 06, 2017 Ambit Capital Pvt. Ltd. Page 22

Britannia Industries Ltd Pidilite Industries Ltd

January 06, 2017 Ambit Capital Pvt. Ltd. Page 23

Eicher Motors Ltd Marico Ltd

January 06, 2017 Ambit Capital Pvt. Ltd. Page 24

Kajaria Ceramics Ltd Finolex Cables Ltd