Retail Research

26th November, 2019

Invest Now with our ready

SMART BASKET
Series-I

SBICAP Securities Limited 1

Know what SMART Basket is
SMART BASKET is a portfolio comprising of a few equity stocks not more than 10 in number making them very easy and handy to invest as well as track.
SMART BASKET provides a small investor an avenue to participate in equity markets with a backing of a certain degree of professional expertise. SMART
BASKET is a portfolio for short-term investment that is not be held with oneself for more than 3 months. These stocks are carefully selected by the equity
research team of SBICAP Securities with the objective of helping investors generate healthy returns with certain risks of investing in stock markets eased
out.

How is that done?

Well, we use mathematical portfolio analytical tools to compute the portfolio’s Beta (a measure of risk), it’s Co-Variance (a measure of volatility) and it’s
Sharpe Ratio (a measure of risk-adjusted returns). These mathematical tools help us balance the risks associated with individual stock investing by
bunching a few stocks together in the right proportion.
A typical SMART BASKET comes with investment options of approximate values Rs50,000, Rs20,000 and Rs10,000 comprising fewer and fewer stocks as
the composite value becomes lesser and lesser. An investor is expected to choose the SMART BASKET he/she desires to invest in and buy all the stocks in
the recommended quantities as suggested by a SMART BASKET at the available prices on the exchanges. One should hold on to them until the research
team calls out a closure. Such a closure would usually be to book gains that appear adequate. In the absence of such a closure call, the investor should
exit from the portfolio (all the stocks of a series have to be sold) when 3 months are over at whatever levels of gains or losses it may be at. An exit is a
prudent strategy that extinguishes risks that may accumulate under unforeseen conditions.

Key Features

Tiny investments possible Low complexity

Small in Size Investments in sizes of Rs20,000 and Comprises of stocks less than
Value of approximately Rs50,000.
Rs10,000 approximate are possible. 10 in number.

Short duration Mathematically pruned

Holding period of not more than 3 months. Use of portfolio mathematical analytics to
balance the risks of equity investments.

SBICAP Securities Limited 2

Markets scaling new high
The market has hit an all-time high buoyed by recent government measures to boost investor confidence via tax sops. The corporate tax rate (base rate)
cut from 30% to 22% is set to put Rs1.5 trillion in the hands of companies that will be used most likely for capex purposes. Moreover, an aggressive repo
rate cut to 5.15% (135 bps reductions for 2019) is also expected to lower operating costs helping companies boost their net incomes even as operating
leverage will slowly begin to kick in. We have already seen a partial impact in the ongoing results season and the residual impact will be seen flowing in
during the current financial year over the next quarters.

FIIs have resumed buying in the domestic market and have poured over USD 3.5 billion in the last two months (Oct-Nov) versus nearly USD 4 billion net
selling in Jul-Aug 2019 period. DIIs on the other hand have been relatively less active in recent times after steadily reaching a net buy figure of USD 7
billion during Jan-Oct period.

Global liquidity has improved lately given the recent Fed rate cuts and benign inflation which remained below 0.5% in USA. We expect flow of liquidity in
the emerging markets to remain accommodative and with higher MSCI weights assigned to it, Indian equity markets can do well. Favourable conditions
towards possible trade deals can tone down the possibility of tariff war and also play its part in helping commodity prices, especially metal, soothe to
create conducive environment for Industrial intermediates an particularly for Autos.

On the macro front India’s GDP growth is now threating to go down below 5% with a series of downward revisions already published. However, that only
means that the economy is now building a low base for positive surprises to set in. One may note that on the consumption side non-discretionary
segment has continued to do well while discretionary segment is perhaps bottoming out, especially in Autos. That will soon help operating leverage to set
in as alluded in the first para.

Indian market P/E valuations are at a premium to certain global peers due to growth fears engulfing them more than that in India. However, a different
valuation metric such as Mcap/GDP, India is in a more comfort zone. In summary, corporate earnings’ growth is bottoming out and we expect recent
government measures to provide much needed tailwind for earnings growth to be propelled into the double digits. Classically said, inflation is now
showing signs of revival thereby aiding formation of the next cycle of earnings growth.

SBICAP Securities Limited 3

Accommodative policy rates- Lowering finance cost
Exhibit 1: Repo rate at a low Exhibit 2: GDP bottoming-out

8 9.0

7 6.8

6 4.5
(%)

(%)
5 2.3

4 0.0

Aug/19

Aug/18
May/19

May/19

Aug/19
Nov/18

Jan/19

Mar/19

Jan/19

Mar/19
Dec/18

Nov/18
Jun/19

Jun/18

Dec/18

Jun/19
Jul/19

Jul/18
Oct/19

Oct/18

Jul/19
Feb/19

Sep/19

Sep/18
Apr/19

Feb/19

Apr/19

Sep/19
RBI Repo Rate India Govt Bond Yield GDP (QoQ) WPI (MoM) CPI (MoM)

Source: SSL Research, Bloomberg Source: SSL Research, Bloomberg

Exhibit 3: Loosening of Interest rate by Fed Exhibit 4: Increasing FII inflows in India

3.50 120

2.88 114

2.25
(%)

108

1.63 101

1.00 95
May/19

May/19

Aug/19
Nov/18

Jan/19

Mar/19
Dec/18

Dec/18

Jun/19

Nov/19
Jul/19

Jul/19

Oct/19
Feb/19

Feb/19

Apr/19

Sep/19

Sep/19

Nov-18
Nov-18
Dec-18
Dec-18

Jun-19
Jun-19
Jul-19
Jul-19
Jul-19

Oct-19
Oct-19
Feb-19
Feb-19

Apr-19
Apr-19

Sep-19
Sep-19
May-19
May-19

Aug-19
Aug-19
Jan-19
Jan-19
Jan-19

Mar-19
Mar-19
US bond yield US Fed Rate US Banking Liquidity Index FII net Equity inflow index

Source: SSL Research, Bloomberg Source: SSL Research, Bloomberg

SBICAP Securities Limited 4

FIIs back with a bang
Exhibit 5: India’s increasing weight in MSCI EM Index Exhibit 6: FIIs making a comeback

9.2
9.20 70,000

9.0
8.98 45,000
8.8
8.8

(Rs crore)
8.75
(%)

20,000
8.6

8.53 -5,000

Jun-19

Nov-19
Jul-19

Oct-19
Feb-19

Apr-19

Sep-19
May-19

Aug-19
Jan-19

Mar-19
8.30
-30,000
May-17 Jun-17 Mar-19 Jun-19 Oct-19
India's weight in MSCI EM Index FII DII

Source: MSCI Source: SSL Research, ACE MF

Exhibit 7: Indian market trading at premium, while economic environment Exhibit 8: Mcap/ GDP(x) still remains low as compared to most of its
continued to remain subdued global peers

25 1.8 1.6
21.0
20 18.8
17.5 17.2 1.4 1.2
15.8 16.1 16.1 1.2
15 13.4 13.3 0.9
12.4 1.0

(x)
11.5 0.8
10 8.4 0.5 0.5
6.9 0.6

5 3.6
0.2

Germany

UK
China

France
Japan
India
USA
0
India US China Japan Germany UK France
Current year Fwd P/E (x) 1 Yr Fwd P/E (x) 1 Yr Returns (%) Mcap/GDP (x)

Source: SSL Research, Bloomberg Source: SSL Research, Bloomberg

SBICAP Securities Limited 5

Allocation of stocks in Portfolios
With an objective of catering to small investors, we have created portfolios of three sizes with small values of Rs50,000, Rs20,000 and Rs10,000
comprising of eight, six and four stocks respectively. We believe there exists a value buying opportunity in Mid/Smallcap stocks given the recent valuation
breakdown and hence we have given more weightage to Mid/Smallcap stocks. We have selected stocks with due focus on growth visibility, management
quality, strong financials, upcoming industry drivers, regulatory environment and valuations.
We have strategically designed the portfolios, working out the best possible mix of stocks, by taking into consideration the relationship and behaviour of
the stocks with each other, i.e. whether a stock behaves positively or negatively with each other as well as the degree of that relationship. The portfolios
aims at reducing the overall portfolio standard deviation to its minimum (<=1%) while keeping the Sharpe ratio as high as possible and maintaining
expected returns on the stocks within a tighter range. Following is the brief summary of the portfolios along with its key measurements:

` 50,000/- ` 20,000/- ` 10,000/-

Portfolio of 8 different stocks Portfolio of 6 different stocks Portfolio of 4 different stocks

Know More Know More Know More

SBICAP Securities Limited 6

Allocation of stocks in Portfolios
Eight Stocks Portfolio
Allocation of ~ `50,000 across different stocks

Company Portfolio Weight (%) CMP* (Rs) Qty (No.) Value (Rs)
Advanced Enzyme Technologies Ltd 9.1 168.9 27 4,559.0
Mold-Tek Packaging Ltd 24.3 283.1 43 12,171.2
Can Fin Homes Ltd 7.9 394.4 10 3,943.5
ITC Ltd 22.3 247.8 45 11,148.8
Jyothy Laboratories Ltd 8.6 178.8 24 4,291.2
HeidelbergCement Ltd 8.5 185.8 23 4,272.3
HCL Technologies Ltd 11.2 1124.8 5 5,623.8
Gujarat Pipavav Port Ltd 8.0 86.7 46 3,988.2
Total 100.0 49,997.8

Portfolio Characteristic Value

Portfolio Variance 0.01%
Standard Deviation of Portfolio 0.99%
Sharpe Ratio 18.70

Source: SSL Research, NSE

Note: * CMP as on 25th Nov 2019

SBICAP Securities Limited 7

Allocation of stocks in Portfolios
Six Stocks Portfolio
Allocation of ~ `20,000 across different stocks
Company Portfolio Weight (%) CMP* (Rs) Qty (No.) Value (Rs)
Advanced Enzyme Technologies Ltd 10.2 168.9 12 2,026.2
Mold-Tek Packaging Ltd 18.4 283.1 13 3,679.7
Can Fin Homes Ltd 9.9 394.4 5 1,971.8
ITC Ltd 42.2 247.8 34 8,423.5
Jyothy Laboratories Ltd 8.1 178.8 9 1,609.2
HCL Technologies Ltd 11.3 1124.8 2 2,249.5
Total 100.0 19,959.8

Portfolio Characteristic Value

Portfolio Variance 0.01%
Standard Deviation of Portfolio 0.98%
Sharpe Ratio 19.70

Source: SSL Research, NSE

Note: * CMP as on 25th Nov 2019

SBICAP Securities Limited 8

Allocation of stocks in Portfolios
Four Stocks Portfolio
Allocation of ~ `10,000 across different stocks
Company Portfolio Weight (%) CMP* (Rs) Qty (No.) Value (Rs)
Advanced Enzyme Technologies Ltd 13.5 168.9 8 1,350.8
Mold-Tek Packaging Ltd 25.5 283.1 9 2,547.5
ITC Ltd 49.7 247.8 20 4,955.0
HCL Technologies Ltd 11.3 1124.8 1 1,124.8
Total 100.0 9,978.0

Portfolio Characteristic Value

Portfolio Variance 0.01%
Standard Deviation of Portfolio 1.02%
Sharpe Ratio 21.8

Source: SSL Research, NSE

Note: * CMP as on 25th Nov 2019

SBICAP Securities Limited 9

Advanced Enzyme Technologies Ltd.

CMP ` 168.9 Advanced Enzyme Technologies Ltd. is India’s largest enzyme company engaged in the research driven
manufacturing and marketing of 400+ proprietary products developed from over 65 indigenous enzymes &
probiotics. Enzymes are proteins that act as catalysts within living cells.
STOCK DATA Key Investment Rationale:
Company Name ADVANCED ENZYME TECHNOLOGIES • India’s largest and amongst world’s 15th biggest enzyme company with 400+ proprietary products
Bloomberg Code ADVENZY IN Equity
• Global footprints backed by R&D, 700+ customers worldwide with presence in 45+ countries with 7
NSE Code ADVENZYMES registered patents
BSE Code 540025
• Large growing market- USD 9.5 Billion by 2024. Animal feed market and Global probiotics ingredients market
Mcap (Rs. Crore) 1,888.4 to grow at 7% CAGR for next five years
Close Price (Rs) 168.9 • The company has sound financials. It has debt free balance sheet with +44% margin and +24% RoE. At current
price, the stock is trading at 14.1x/12.1x of its FY20e/21e Bloomberg consensus forward earnings.
Financial Snapshot (Fig. Rs Cr.)

Particulars FY18 FY19 FY20E FY21E Key Risks: a) Foreign Exchange fluctuations b) Susceptibility to regulatory and compliance issues
Revenue 388 418 468 529

EBITDA 164 182 211 241

PAT 90 111 133 155

EPS (Rs) 8.1 9.9 11.9 13.9

ROE (%) 17.6 17.9 18.2 18.7

PE (x) 20.8 16.9 14.1 12.1

Source: Bloomberg & SSL Research

SBICAP Securities Limited 10

Mold-Tek Packaging Ltd.

CMP ` 283.1 Mold-Tek Packaging Ltd. is the leader in manufacturing of injection molded rigid plastic packaging containers.
During the last three decades, Mold-Tek has been the leader, innovator and torch bearer in introducing many
world class packaging products in India such as high quality airtight and pilfer-proof pails for the Paint, Lubricant,
STOCK DATA Food, Pharmacy and Cosmetic industries. The company has seven manufacturing units and three stock points
Company Name MOLD-TEK PACKAGING LTD across India to cater to rising demand.
Bloomberg Code MTEP IN Equity Key Investment Rationale:
NSE Code MOLDTKPAC • New plants (Mysuru & Vizag) & new orders (from major FMCG companies) to fuel revenue growth
BSE Code 533080
• Favourable industrial outlook as the total plastic consumption in India currently stands at 15 mn tonnes and is
Mcap (Rs. Crore) 782.6 expected to go up to 25 mn tonnes in the next seven years
Close Price (Rs) 283.1 • During Q2FY20, Revenue, EBITDA & PAT have shown growth of 13.8%, 22.5% and 44.4% YoY respectively.
At current price, the stock is trading at 19.1x/15.4x of its FY20e/21e Bloomberg consensus forward earnings
Financial Snapshot (Fig. Rs Cr.) which looks attractive given many strategic decisions on capacity building, capacity relocation, launching new
Particulars FY18 FY19 FY20E FY21E products, building of new marketing division and expanding internal design studio which are likely to propel the
Revenue 347 406 468 539 growth in future.
EBITDA 62 71 82 97 Key Risks: a) Lower order inflow b) Absurd rise in crude prices.
PAT 28 32 41 51

EPS (Rs) 10.1 11.5 14.9 18.5

ROE (%) 17.1 17.5 19.4 20.5

PE (x) 28.3 24.7 19.1 15.4

Source: Bloomberg & SSL Research

SBICAP Securities Limited 11

Can Fin Homes Limited

CMP ` 394.4 Can Fin Homes Ltd is a mid-size housing finance company primarily operates in southern market which forms
nearly 70% of business. Company has grown from strength to strength clocking five years growth of 17% and 26%
CAGR in disbursement and loan book respectively.
STOCK DATA
Key Investment Rationale:
Company Name CAN FIN HOMES Ltd
• Company enjoys one of the best asset quality in the industry <0.5% due to high exposure to the salaried
Bloomberg Code CANF IN Equity segment >70% and low LAP portfolio < 5%
NSE Code CANFINHOME
• Can Fin is adequately capitalised with CAR >18.5% and has comfortable liquidity to focus on growth for next
BSE Code 511196 18-24 months. Management vision is to achieve Rs40K crores loan book by FY20.
Mcap (Rs. Crore) 5,254.2 • Margins and return ratios to expand given the rest of annual interest rate at higher rates. We expect spread
Close Price (Rs) 394.4 and NIM to go beyond 2.4% and 3.2% respectively while RoA to expand beyond 2%.
• Improved financials in spite of difficult market: Recent quarter numbers are continues to remain upbeat with
Financial Snapshot (Fig. Rs Cr.)
19% NII and net profit growth on YoY basis during Q2. At current price, the stock is trading at 2.5/2.1x of its
FY20e/21e book.
Particulars FY18 FY19 FY20E FY21E

NII (Rs Cr) 507.4 528.2 665.9 767.7 Key Risks: a) NPA as 30% borrowers are in self-employed category b) Prepayment risks as lowering rates makes
PAT (Rs Cr) 286.6 296.8 381.0 449.6 bank loans more attractive c) Liquidity due to high dependence on Bank and NHB for refinancing
EPS (Rs) 21.5 22.3 28.6 33.8
BVPS (Rs) 111.7 133.8 159.6 190.4
P/BV (x) 3.5 2.9 2.5 2.1
PE (x) 18.3 17.6 13.7 11.6
ROE (%) 21.3 18.2 19.5 19.3
ROA (%) 2.0 1.7 1.9 1.9
NIM (%) 3.5 3.1 3.3 3.2
Spread (%) 2.7 2.4 2.7 2.6

Source: SSL Research

SBICAP Securities Limited 12

ITC Ltd.

CMP ` 247.8 ITC is one of India's foremost private sector companies and a diversified conglomerate with businesses spanning
Fast Moving Consumer Goods, Hotels, Paperboards and Packaging, Agri Business and Information Technology.
Over the last decade, ITC's new Consumer Goods Businesses have established a vibrant portfolio of 25 world-
STOCK DATA class Indian brands that create and retain value in India.
Company Name ITC LTD Key Investment Rationale:
Bloomberg Code ITC IN Equity • ITC enjoys dominant market share in cigarette segment with volume share of ~75% in India.
NSE Code ITC • One of the cheapest stocks in FMCG sector trading at P/E of 19.9x of its FY20 est. earnings.
BSE Code 500875
• Healthy financial profile with high profits and return ratios along with minimal debt.
Mcap (Rs. Crore) 304,488.4
• Increasing diversity in revenue mix shielding company from sectoral headwinds.
Close Price (Rs) 247.8
• Decent second quarter performance with its major segment cigarette’s revenue growing by 6% led by volume
growth of 3% while its non-cigarette business continued to fare well growing 11% YoY and profit growth of
Financial Snapshot (Fig. Rs Cr.) ~15%. At current price, the stock is trading at 19.9x/18.0x of its FY20e/21e Bloomberg consensus foward
Particulars FY18 FY19 FY20E FY21E earnings.
Revenue 43,123 47,839 52,287 57,430 Key Risks: a) Ongoing economic slowdown b) Stringent government policies and high taxes impacting Cigarettes
EBITDA 16,483 18,406 19,920 22,154
business
PAT 11,271 12,592 15,327 16,974

EPS (Rs) 9.2 10.2 12.5 13.8

ROE (%) 22.8 22.6 24.3 24.5

PE (x) 26.9 24.2 19.9 18.0

Source: Bloomberg & SSL Research

SBICAP Securities Limited 13

Jyothy Laboratories Limited

CMP ` 178.8 Jyothy Laboratories Limited is amongst leading FMCG companies in the country with products in fabric care,
dishwash, household insecticide, personal care, and laundry services.
Key Investment Rationale:
STOCK DATA
• Company has diversified product offerings with robust brand backing. It has created various power brands like
Company Name JYOTHY LABS LTD Ujala, Exo, Maxo, Henko, Margo, Pril in different market segments with high recall value.
Bloomberg Code JYL IN Equity
• Jyothy has pan India presence with 26 manufacturing units and reach to over 2.8 million outlets. The
NSE Code JYOTHYLAB products are highly research driven which is supported by two advanced in-house R&D facilities.
BSE Code 532926
• Strong industrial outlooks for the products which is driven by rising urbanisation, upbeat household
Mcap (Rs. Crore) 6,536.3 disposable income, E-commerce, penetration in rural areas and premiumisation.
Close Price (Rs) 178.8 • Company has debt free balance sheet on net basis. It generates healthy EBITDA margin of +17% and return
ratios of +16%. At current price, the stock is trading at 29.2x/25.3x of its FY20e/21e Bloomberg consensus
forward earnings.
Financial Snapshot (Fig. Rs Cr.)

Particulars FY18 FY19 FY20E FY21E Key Risks: a) Intense competition in domestic FMCG industry b) Fluctuations in raw material prices
Revenue 1,671 1,814 1,962 2,198

EBITDA 257 281 320 365

PAT 186 205 226 262

EPS (Rs) 2.5 5.6 6.2 7.1

ROE (%) 16.7 16.6 16.5 17.9

PE (x) 71.1 32.1 29.2 25.3

Source: Bloomberg & SSL Research

SBICAP Securities Limited 14

Heidelberg Cement India Limited

CMP ` 185.8 Heidelberg Cement India (HCIL), a subsidiary of global major Heidelberg Cement AG (HCAG), operates majorly in
Central India, mainly in Madhya Pradesh & Uttar Pradesh and in southern region in Karnataka. The company
manufactures and sells cement under the brand "Mycem Cement". The capacity of its manufacturing facilities in
STOCK DATA Madhya Pradesh and Uttar Pradesh is 4.8 MTPA and Karnataka is 0.6 MTPA.
Company Name HEIDELBERGCEMENT INDIA LTD Key Investment Rationale:
Bloomberg Code HEIM IN Equity • Company enjoys strong parentage deriving significant benefits through its parent, Heidelberg Cement AG.
NSE Code HEIDELBERG • Infra and Housing projects in North gives potential to generate growth with key metro projects in Bhopal and
BSE Code 500292 Indore, infrastructure related projects in Bhopal, Indore and Lucknow and several highway projects will lead
to increased cement demand in the Northern region.
Mcap (Rs. Crore) 4,212.7

Close Price (Rs) 185.8

• Significant reduction in debt levels as long term borrowings has reduced from Rs469 crore to Rs392 crore in
FY19 versus FY18.
• Decent quarterly performance with revenue and profits growing by 8.3% and 16.1% YoY respectively. At
Financial Snapshot (Fig. Rs Cr.)
current price, the stock is trading at 15.3x/13.2x of its FY20e/21e Bloomberg consensus forward earnings.
Particulars FY18 FY19 FY20E FY21E
Key Risks: a) Exposure to cyclicity b) High geographic concentration in North region
Revenue 1,861 2,109 2,293 2,434

EBITDA 363 483 538 576

PAT 133 221 276 320

EPS (Rs) 5.9 9.7 12.2 14.1

ROE (%) 13.2 19.9 22.0 22.3

PE (x) 31.6 19.1 15.3 13.2

Source: Bloomberg & SSL Research

SBICAP Securities Limited 15

HCL Technologies Ltd.

CMP ` 1124.8 HCL Technologies Ltd is a leading global IT services company that is engaged in providing a range of software
services, business process outsourcing, and infrastructure services.
Key Investment Rationale:
STOCK DATA
• Management has designed a strategic framework to drive growth which involves a) Expanding product
Company Name HCL TECHNOLOGIES LTD
portfolio to capture diversified client spread, b) creating ecosystems in collaboration with partners to scale up
Bloomberg Code HCLT IN Equity
growth opportunities, c) cost management through automation, d) balanced investing in organic and
NSE Code HCLTECH inorganic opportunities and e) Mode 1-2-3 strategy to sustain core growth and focus on new growth areas.
BSE Code 532281 • The management reiterated its FY20e CC revenue growth guidance of 15-17% on the back of robust deal
Mcap (Rs. Crore) 152,602.9 wins, order book, and contribution from the software business as it is expected to gather momentum in the
Close Price (Rs) 1124.8 coming quarters. It remains confident of meeting its EBITM guidance of 18.5-19.5% in FY20e considering H1
performance, recovery in ER&D margin, operating efficiencies, and contribution from the high-margin IBM
product portfolio
Financial Snapshot (Fig. Rs Cr.)
• HCL tech has delivered a strong performance in Q2FY20 with topline & bottomline growth of 15% & 7% YoY
Particulars FY18 FY19 FY20E FY21E coupled with better guidance. At current price stock is trading at a P/E of 14.6x/13.0x of its FY20e/21e
Revenue 50,569 60,399 70,236 77,771 Bloomberg consensus forward earnings.
EBITDA 11,246 13,923 16,004 18,013 Key Risks: a) Currency depreciation b) Pressure on margins in the core business
PAT 8,721 10,081 10,392 11,626

EPS (Rs) 62.2 73.3 76.5 85.5

ROE (%) 25.2 24.8 22.8 22.1

PE (x) 17.9 15.2 14.6 13.0

Source: Bloomberg & SSL Research

SBICAP Securities Limited 16

Gujarat Pipavav Port Ltd.

CMP Rs 86.7 Gujarat Pipavav Port is India’s first private sector port which is located on the Southwest coast of Gujarat with a
total port container handling capacity of 1.35 Million TEUs.
Key Investment Rationale:
STOCK DATA
• Company enjoys strong parentage due to its ultimate parent – Maersk Line. It leverages on network,
Company Name GUJARAT PIPAVAV PORT LTD
operational knowhow and access to modern technology due to its ultimate parent.
Bloomberg Code GPPV IN Equity
• Indian ports sector is at a cusp of turnaround led by continuous implementation of structural reforms, easing
NSE Code GPPL
of infrastructure bottlenecks and impetus from fiscal policy. In India, west-coast accounts for two-third of
BSE Code 533248 India’s container volume which has grown at 11% in FY19. This presents an ample opportunity for waterfront
Mcap (Rs. Crore) 4,174.5 capacity in the west coast.
Close Price (Rs) 86.7 • Company has a healthy balance sheet with zero debt and Cash & Cash Equivalent of Rs 533.7 crore as of
FY19. The company has better return ratio, ROCE of 12.1% as of FY19. At current price stock is trading at
15.8x/14.4x of its FY20e/21e earnings.
Financial Snapshot (Fig. Rs Cr.)

Particulars FY18 FY19 FY20E FY21E

Key Risks: a) Loss in market share on the west coast b) Slowdown in economy leading to low business demand
Revenue 595.3 702.0 772.2 849.4

EBITDA 374.1 388.9 427.8 470.5

PAT 221.0 236.7 260.3 286.4

EPS (Rs) 4.6 4.9 5.4 5.9

ROE (%) 10.3 10.9 11.6 12.2

PE (x) 18.6 17.4 15.8 14.4

Source: SSL Research

SBICAP Securities Limited 17

FAQs
1. What is SMART BASKET-1?
Ans.: SMART BASKET-1 stands for SMART BASKET series 1. SMART BASKET-1 is a set (basket) of 8 equity stocks that are collectively worth approximately
Rs50,000/-. SMART BASKET-1 also comes in sizes of Rs20,000 and Rs10,000 which comprise of lesser number of stocks from the same universe of 8 stocks.
2. Why should I invest in SMART BASKET-1?
Ans.: One of the principles of successful investing is to achieve a delicate balance between swings in risks and returns that a typical equity market goes through
in its normal course. This balance is best achieved by appropriate diversification and with careful selection of stocks whose risk-reward is favourable.
SBICAP Securities’ Research team, through its expertise and experience, does exactly that and comes up periodically with a selection of stocks that are
bunched together as an investible portfolio called as SMART BASKET. 1 refers to the first of the portfolio of the series. There is an intent to come up with a
new series every month which will assume the next serial number.
3. When should I invest in SMART BASKET-1?
Ans.: One needs to invest in the portfolio now. The portfolio has a limited time window available for investment dictated by the composite (overall) value which
fluctuates with the movement in stock prices daily. Any value in excess of 4% (+/-1%) over the suggested starting value is not conducive for investment.
Nonetheless, an investment in any SMART BASKET series is not advisable after it’s closure.
4. How long does one hold the SMART BASKET-1?
Ans.: The SMART BASKET-1 is meant to be held for 3 months or until a closure is suggested by SBICAP Securities’ research team, whichever is earlier. A closure
means all the stocks of a series have to be sold in one go. One may note that such short duration of holding and sale will attract short-term capital gains
tax to be paid by the investor. It is only under exceptional circumstances peculiar to oneself that the portfolio should be sold before the call of closure or 3
months.
5. Can I choose the stocks I want to buy from the list?
Ans.: It is recommended that all the stocks are bought in the quantities mentioned. Else, the risk-return profile will get altered unfavourably. Therefore, all-or-
none is our recommendation on the portfolio.
6. I already own some of the stocks. Can I buy only the rest?
Ans.: The risk-return profile gets altered unfavourably in such an event. We reiterate, it is all-or-none investment advice. All stocks have to be bought to achieve
a balance in terms of risk-reward. One may continue to hold the other or excess stocks in one’s account till such time as the original investment objective
of buying those stocks is achieved.

SBICAP Securities Limited 18

FAQs
7. I want to buy 10 shares of all the 8 stocks. Should I do so?
Ans.: Not advisable at all. Please buy in the recommend quantity only.
8. Can I invest in stages?
Ans.: The portfolio has a limited time window available for investment dictated by the composite (overall) value which fluctuates with the movement in stock
prices daily. Therefore, it is advisable to complete the entire investment in one go.
9. Current stock prices are different from that mentioned in the SMART BASKET-1. Do I wait till the price is seen on the screen?
Ans.: We recommend investment at whatever price is available in the market at the time of investment. There is no need to wait for the price to appear on the
screen. What is important is to buy in the recommended quantity. However, any composite value in excess of 4% (+/-1%) over the suggested starting
value is not conducive for investment.
10. I do not like ITC. Can I avoid buying it?
Ans.: Our portfolio construct is well thought out and researched. Avoiding or skipping any stock is not advised. We reiterate that it is all-or-none investment
advice.
11. How much returns are expected in SMART BASKET-1?
Ans.: There are no promised returns of SMART BASKET. SBICAP Securities’ research team will call for a closure (exit) when adequate gains are made or when
unavoidable losses occur. An exit is a prudent strategy that extinguishes risks that may accumulate under unforeseen conditions.
12. What is the maximum investment that I can make?
Ans.: There is no maximum investment limit set by us. However, we advocate 3 different sizes (approximate values) of portfolios; Rs50,000, Rs20,000 and
Rs10,000. Minimum investment is therefore approximately Rs10,000 and any excess investment to be made is in multiples of Rs10,000, Rs20,000 or
Rs50,000 as may so be desired.
13. What are charges for investment in SMART BASKET-1?
Ans.: Apart from standard transaction charges like brokerage, STT, GST, exchange fees, stamp duty, demat charges etc on regular stock purchases, there is no
extra charge levied by us for investing in SMART BASKET-1.

SBICAP Securities Limited 19

Disclosures & Disclaimers
SBICAP Securities Limited
SEBI Registration No.: Stock Broker: INZ000200032 | DP Registration No.: IN-DP-314-2017| Research Analyst : INH000000602 | Portfolio Manager: INP000004912 | IRDA : CA0103
Registered & Corporate Office: Marathon Futurex, A & B Wing, 12th Floor, N. M. Joshi Marg, Lower Parel, Mumbai-400013. | (CIN): U65999MH2005PLC155485
For any information contact us: Toll Free: 1800-22-33-45 I 1800-209-93-45 | E-mail: helpdesk@SBICAPsec.com I Web: www.sbismart.com

Analyst Certification: The views expressed in this research report ("Report") accurately reflect the personal views of the research analysts ("Analysts") employed by SBICAP Securities Limited (SSL) about any and all of the subject issuer(s) or company(ies) or
securities. This report has been prepared based upon information available to the public and sources, believed to be reliable. I/We also certify that no part of my/our compensation was, is, or will be directly or indirectly related to the specific recommendation(s)
or view(s) in this report.
The Analysts engaged in preparation of this Report or his/her relative:-
(a) do not have any financial interests in the subject company mentioned in this Report; (b) do not own 1% or more of the equity securities of the subject company mentioned in the report as of the last day of the month preceding the publication of the research
report; (c) do not have any material conflict of interest at the time of publication of the Report.
The Analysts engaged in preparation of this Report:-
(a) have not received any compensation from the subject company in the past twelve months; (b) have not managed or co-managed public offering of securities for the subject company in the past twelve months; (c)have not received any compensation for
investment banking or merchant banking or brokerage services from the subject company in the past twelve months; (d) have not received any compensation for products or services other than investment banking or merchant banking or brokerage services from
the subject company in the past twelve months; (e) has not received any compensation or other benefits from the subject company or third party in connection with the Report; (f) has not served as an officer, director or employee of the subject company; (g) is
not engaged in market making activity for the subject company.
Name Qualification Designation
Mahantesh Sabarad B. E. MMS Head - Retail Research
Rajesh Gupta PGDBM (Finance), MA (Bus. Eco) AVP - Research
Monica Chauhan C.A. Research Analyst - Equity Fundamentals
Nilesh Patil B.Sc IT, PGDBM Associate Analyst - Equity Fundamentals
Tanay Rasal B.E. M.Sc (Finance) Associate Analyst - Equity Fundamentals

Other Disclosures :
SBICAP Securities Limited ("SSL") a is a company engaged in diversified financial services business including securities broking, DP services,, distribution of Mutual Fund, insurance products and other financial products. SSL is a member of Stock Exchange(s). SSL is
also a Depository Participant registered with NSDL & CDSL. SSL is a large broking house catering to retail, HNI and institutional clients. It operates through its branches and authorized persons spread across the country and the clients are provided online trading
through internet and offline trading through branches and call & trade facility. SSL is a wholly owned subsidiary of SBI Capital Markets Limited ("SBICAP"), which is engaged into investment banking, project advisory and financial services activities and is registered
with the Securities and Exchange Board of India as a "Category I" Merchant Banker. SBICAP is a wholly owned subsidiary of State Bank of India. Hence, State Bank of India and all its subsidiaries, including, SBICAP and banking subsidiaries are treated and referred to
as Associates of SSL.

SBICAP Securities Limited 20

Disclosures & Disclaimers
We hereby declare that our activities were neither suspended nor we have materially defaulted with any stock exchange authority with whom we are registered in last five years. However SEBI, Exchanges and Depositories have conducted the routine inspection
and based on their observations have issued advice letters or levied minor penalty for certain procedural lapses. We have not been debarred from doing business by any Stock Exchange / SEBI or any other authorities; nor has our certificate of registration been
cancelled by SEBI at any point of time.
SSL or its Associates, may: (a) from time to time, have long or short position in, and buy or sell the securities of the company mentioned in the Report or (b) be engaged in any other in any other transaction involving such securities and earn brokerage or other
compensation or act as a market maker in the financial instruments of the company discussed herein or act as an advisor or lender/borrower to such company or may have any other potential conflict of interests with respect to any recommendation and other
related information and opinions.
SSL does not have actual / beneficial ownership of one per cent or more securities of the subject company, at the end of the month immediately preceding the date of publication of the Report. However, since Associates of SSL are engaged in the financial
services business, they might have in their normal course of business financial interests or actual / beneficial ownership of one per cent or more in various companies including the subject company mentioned herein this Report.
SSL or its Associates might have managed or co-managed public offering of securities for the subject company in the past twelve months and might have received compensation from the companies mentioned in the Report during the period preceding twelve
months from the date of this Report for services in respect of managing or co-managing public offerings/corporate finance, investment banking or merchant banking, brokerage services or other advisory services in a merger or specific transaction.
Compensation paid to Analysts of SSL is not based on any specific merchant banking, investment banking or brokerage service transaction.
SSL or its Associate did not receive any compensation or any benefit from the subject company or third party in connection with preparation of this Report.
This Report is for the personal information of the authorized recipient(s) and is not for public distribution and should not be reproduced, transmitted or redistributed to any other person or in any form without SSL's prior permission. The information provided in
the Report is from publicly available data, which we believe, are reliable. While reasonable endeavors have been made to present reliable data in the Report so far as it relates to current and historical information, but SSL does not guarantee the accuracy or
completeness of the data in the Report. Accordingly, SSL or any of its Associates including directors and employees thereof shall not be in any way responsible or liable for any loss or damage that may arise to any person from any inadvertent error in the
information contained, views and opinions expressed in this Report or in connection with the use of this Report.
Please ensure that you have read "Risk Disclosure Document for Capital Market and Derivatives Segments" as prescribed by Securities and Exchange Board of India before investing in Indian securities market.
The projections and forecasts described in this Report should be carefully evaluated as these :
1. Are based upon a number of estimates and assumptions and are inherently subject to significant uncertainties and contingencies.
2. Can be expected that some of the estimates on which these were based, will not materialize or will vary significantly from actual results, and such variances may increase over time.
3. Are not prepared with a view towards compliance with published guidelines or generally accepted accounting principles. No independent accountants have expressed an opinion or any other form of assurance on these.
4. Should not be regarded, by mere inclusion in this report, as a representation or warranty by or on behalf of SSL the authors of this report, or any other person, that these or their underlying assumptions will be achieved.
This Report is for information purposes only and SSL or its Associates accept no liabilities for any loss or damage of any kind arising out of the use of this report. Though disseminated to recipients simultaneously, not all recipients may receive this report at the
same time. SSL will not treat recipients as clients by virtue of their receiving this report. It should not be construed as an offer to sell or solicitation of an offer to buy, purchase or subscribe to any securities this report shall not form the basis of or be relied upon
in connection with any contract or commitment, whatsoever. This report does not solicit any action based on the material contained herein.
It does not constitute a personal recommendation and does not take into account the specific investment objectives, financial situation/circumstances and the particular needs of any specific person who may receive this document. The securities discussed in this
Report may not be suitable for all the investors. SSL does not provide legal, accounting or tax advice to its clients and you should independently evaluate the suitability of this Report and all investors are strongly advised to seek professional consultation regarding
any potential investment.
Certain transactions including those involving futures, options, and other derivatives as well as non-investment grade securities give rise to substantial risk and are not suitable for all investors. Foreign currency denominated securities are subject to fluctuations in
exchange rates that could have an adverse effect on the value or price of or income derived from the investment.
The price, value and income of the investments referred to in this Report may fluctuate and investors may realize losses on any investments. Past performance is not a guide for future performance. Actual results may differ materially from those set forth in
projections. SSL has reviewed the Report and, the current or historical information included here is believed to be reliable, the accuracy and completeness of which is not guaranteed. SSL does not have any obligationto update the information discussed in this
Report.
The opinions expressed in this report are subject to change without notice and SSL or its Associates have no obligation to tell the clients when opinions or information in this report change. This Report has not been approved and will not or may not be reviewed
or approved by any statutory or regulatory authority in India, United Kingdom or Singapore or by any Stock Exchange in India, United Kingdom or Singapore. This report may not be all inclusive and may not contain all the information that the recipient may
consider material.
The securities described herein may not be eligible for sale in all jurisdictions or to all categories of investors. The countries in which the companies mentioned in this Report are organized may have restrictions on investments, voting rights or dealings in
securities by nationals of other countries. Distributing /taking/sending/dispatching/transmitting this document in certain foreign jurisdictions may be restricted by law, and persons into whose possession this document comes should inform themselves about, and
observe, any such restrictions. Failure to comply with this restriction may constitute a violation of laws in that jurisdiction.
______________________________________________________________________________________________________________________________________________________________________________________________________________________
Legal Entity Disclosure
Singapore: This Report is distributed in Singapore by SBICAP (Singapore) Limited (Registration No. 201026168R), an Associate of SSL incorporated in Singapore. SBICAP (Singapore) Limited is regulated by the Monetary Authority of Singapore as a holder of a Capital
Markets Services License and an Exempt Financial Adviser in Singapore. SBICAP (Singapore) Limited's services are available solely to persons who qualify as Institutional Investors or Accredited Investors (other than individuals) as defined in section 4A(1) of the
Securities and Futures Act, Chapter 289 of Singapore (the "SFA") and this Report is not intended to be distributed directly or indirectly to any other class of persons. Persons in Singapore should contact SBICAP (Singapore) Limited in respect of any matters arising
from, or in connection with this report via email at singapore.sales@SBICAP.sgor by call at +65 6709 8651..
United Kingdom: SBICAP (UK) Limited, a fellow subsidiary of SSL, incorporated in United Kingdom is authorised and regulated by the Financial Conduct Authority. This marketing communication is being solely issued to and directed at persons (i) fall within one of
the categories of "Investment Professionals" as defined in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Financial Promotion Order"), (ii) fall within any of the categories of persons described in
Article 49 of the Financial Promotion Order ("High net worth companies, unincorporated associations etc.") or (iii) any other person to whom it may otherwise lawfully be made available (together "Relevant Persons") by SSL. The materials are exempt from the
general restriction on the communication of invitations or inducements to enter into investment activity on the basis that they are only being made to Relevant Persons and have therefore not been approved by an authorised person as would otherwise be
required by section 21 of the Financial Services and Markets Act 2000 ("FSMA").

SBICAP Securities Limited 21