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Gaurav Mehta
Tel: +91 22 3043 3255 gauravmehta@ambitcapital.com
Bank of Baroda Banks/ Fin Serv Federal Bank Banks/ Fin Serv Kotak Mah. Bank Banks/ Fin Serv ICICI Bank Banks/ Fin Serv Shriram Trans. Banks/ Fin Serv GlaxoSmith C H L FMCG Nestle India FMCG ITC FMCG Dabur India FMCG Oracle Fin.Serv. IT TCS IT Tech Mahindra IT HCL Technologies IT Hero Motocorp Auto Eicher Motors Auto Tata Motors Auto Hind.Zinc Metals NMDC Metals MRPL Oil & Gas Petronet LNG Oil & Gas HPCL Oil & Gas Cadila Health. Pharma Lupin Pharma Glaxosmit Pharma Pharma Tata Power Co. Utilities Neyveli Lignite Utilities Idea Cellular Telecom Bharti Airtel Telecom Voltas Construction Engineers India Construction Larsen & Toubro Construction Bajaj Electrical Industrials Bharat Electron Industrials Cummins India Capital Goods Alstom Projects Capital Goods Shree Cement Cement ACC Cement Titan Inds. Retail Exide Inds. Auto Anc Apollo Tyres Auto Anc Castrol India Chemicals Asian Paints Chemicals Hathway Cable Media IL&FS Transport Infrastructure Oberoi Realty Realty Prestige Estates Realty Mcleod Russel Agro Gateway Distr. Logistics Coromandel Inter Fertilizers TTK Prestige Cons Durable Source: Ambit Capital research
4.1 4.1 4.1 4.1 4.1 3.7 3.7 3.7 3.7 3.5 3.5 3.5 3.5 3.4 3.4 3.4 2.3 2.3 1.8 1.8 1.8 1.8 1.8 1.8 1.7 1.7 1.6 1.6 1.3 1.3 1.3 1.3 1.3 1.2 1.2 1.0 1.0 1.0 0.9 0.9 0.7 0.7 0.7 0.7 0.4 0.4 0.2 0.2 0.2 0.1
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 consider this report as only a single factor in making their investment decision.
Please refer to disclaimer section on the last page for further important disclaimer.
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CONTENTS
Section 1: G&C: The journey so far..3 Section 2: Motivation and Methodology, G&C 4.0- The Great 50. 4 Section 3: Sector weights.... 5 Section 4: The greatness framework.......6 Section 5: The Great 50- Portfolio... 8 Appendix 1: Audit of G&C 3.0- Battleships.14
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The decline of politically connected companies; The lack of investor interest in firms with dodgy accounting quality and suspect corporate governance; and The structurally high cost of capital in India (and hence the adverse forces bearing down upon highly indebted and non-cash generative firms)
To date, we have had three iterations of these portfolios with the latest one being the G&C 3.0- Battleships portfolio published on Oct 19, 2011. These three portfolios have generated a cumulative outperformance, vis a vis BSE500 and BSE200, of over 19.6% points on a free float market cap basis. For details, please refer to Exhibit 1 below.
Exhibit 1: Good & Clean- Performance Highlights for the first two portfolios
Performance Highlights Run Period Free Float MCap Wtd Returns (%) BSE500 Returns (%) BSE200 Returns (%) Portfolio Alpha (Free Float MCap wt versus BSE500) (%) Portfolio Alpha (Eq Wtd versus BSE500) (%) Portfolio Alpha (Free Float MCap versus BSE200) (%) Source: Ambit Capital research G&C 1.0 17Mar201121Jun2011 0.9 (2.9) (3.5) 5.0 8.9 4.4 G&C 2.0 22Jun201118Oct2011 (1.0) (6.0) (5.9) 3.8 3.3 4.9 G&C 3.0 19Oct201102May2012 15.1 4.2 4.5 10.9 5.7 10.6 Cumulative 17Mar201102May2012 15.0 (4.7) (4.9) 19.7 17.9 19.9
The last iteration of G&C - the 'Battleships' portfolio from 19th Oct - has outperformed the BSE500 by over 10.8% points. Now, in this note we retire the Battleships portfolio and introduce G&C 4.0: the Great 50. For constituents and performance of the Battleships portfolio, please refer to Appendix 1 towards the end of this note. Before we delve into the Great 50, it is worth dwelling upon briefly why we are introducing this portfolio in the first place (rather than simply letting G&C 3.0: Battleships run). Between the broken Balance Sheets in Power, Infra, Real Estate, Construction, Aviation sectors plus between the large banks which have loaded up on toxic debt and the heavy engineering component of Capital Goods, up to 37% of the BSE100s market cap (i.e. $145bn of free float market cap) will be under fundamental pressure in FY13. Part of this $145bn will seek a new home. We believe that given the uncertainty in the world around us, this new home will be high quality companies well managed, cash generative and with competitive advantages other than political connectivity. Through this new G&C portfolio, our forensic accounting model and our Greatness model, we will seek to help you find such new homes.
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Cyclical sector BUT it faces major regulatory change (which will pull down returns) Heavily influenced by regulations on prices & subsidies; worth - Equal weight being cautious in the current climate 4.3 Overweight Aspirational consumption is an evergreen theme in India 0.2 Overweight Cyclical sector; however, Heavy Industrials will be held back by policy paralysis The weak INR and the recovery in the US should help the sector Cyclical sector Cyclical sector
- Equal weight Cyclical sector BUT will be held back by policy paralysis 4.0 Overweight 0.0 Overweight 0.2 Overweight (1.9) Underweight
Cyclical sector BUT prone to regular and adverse Govt and regulatory intervention (1.0) Underweight No logical rationale for investing in these companies The extent of Govt intervention in this sector makes it unattractive Robust pipeline and strong domestic demand are structural - Equal weight postives but valuations rich at current levels Cyclical sector Cyclical sector
(5.5) Underweight
Global trade continues to remain weak with no obvious global economic recovery in sight The cancelling of 122 licenses and the pro-M&A regulatory 0.8 Overweight stance should held the leading listed players Indian companies' competitive position slipping due to (0.0) Underweight competition from other South Asian countries Structural problems across the supply chain compounded by (0.8) Underweight policy paralysis
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In our 19th January note Tomorrows ten baggers, we had unveiled the greatness framework to study a firms structural strengths, based on which we had identified a set of 25 firms that exhibited the ingredients to be potential 10 baggers over the next 10 years. A basic sketch of the underlying process behind the making of a great firm is recaptured in Exhibit 1 below.
Exhibit 3: The greatness framework
We rank the BSE500 universe of firms (excluding Financial Services firms and excluding firms with insufficient data) on our greatness score which is comprised of six equally weighted headings: Investments, Conversion to sales, Pricing discipline, Balance Sheet discipline, Cash generation & EPS improvement and Return ratio improvement. Under each of these six headings, we further look at two kinds of improvements:
Percentage improvements in performance in FY09-11 versus FY06-08; and Consistency in performance i.e. improvements adjusted for standard deviations.
A complete list of factors that go into quantifying greatness can be found in Exhibit 4 on the next page.
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Source: Ambit Capital research. * Rather than comparing one annual end point to another annual end point (say, FY06 to FY11), we prefer to average the data out over FY06-FY08 and compare that to the averaged data from FY09-11. This gives a more consistent picture of performance (as opposed to simply comparing FY06 to FY11).
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Exhibit 5: The Great 50 portfolio
Sr. Ticker No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 BOB IN FB IN KMB IN Company Bank of Baroda Federal Bank Kotak Mah. Sector Banks/ Diversified Finan Serv Banks/ Diversified Finan Serv Banks/ Diversified Finan Serv Banks/ Diversified Finan Serv Banks/ Diversified Finan Serv FMCG FMCG FMCG FMCG IT IT IT IT Auto Auto Auto Metals Mining Oil & Gas Oil & Gas Oil & Gas Pharma Pharma Utilities Utilities Telecom Telecom Construction Construction Construction Industrials Industrials Capital Goods Capital Goods Cement Cement Retail Auto Anc Auto Anc Chemicals Chemicals Infrastructure Realty Realty Agro Logistics Fertilizers Consumer Durable Mcap 3M ADV Stock Stock 3 yr (US$ (US$ weight weight price mn) mn) (portfolio) (sector) CAGR 5,606 1,358 8,204 19,132 2,437 2,188 8,416 36,110 3,615 4,111 46,833 1,666 6,781 8,464 1,155 17,039 10,121 13,206 2,035 1,908 1,906 2,803 4,615 3,475 4,618 2,618 5,029 22,799 693 1,587 14,042 368 2,207 2,573 481 1,845 4,300 4,081 2,014 836 2,358 6,426 500 675 1,651 684 567 311 1,399 768 9.2 3.0 13.0 92.8 4.2 1.2 2.9 36.2 2.6 6.6 38.6 3.7 9.9 17.7 1.1 71.7 2.5 2.3 0.8 7.1 5.5 1.6 6.8 1.3 10.7 0.7 9.0 40.6 9.9 1.6 62.9 0.5 2.0 2.6 2.3 0.8 12.0 16.0 3.3 5.1 0.9 6.1 2.4 0.5 0.6 0.7 2.4 0.9 1.0 10.7 4.1 4.1 4.1 4.1 4.1 3.7 3.7 3.7 3.7 3.5 3.5 3.5 3.5 3.4 3.4 3.4 2.3 2.3 1.8 1.8 1.8 1.8 1.8 1.8 1.7 1.7 1.6 1.6 1.3 1.3 1.3 1.3 1.3 1.2 1.2 1.0 1.0 1.0 0.9 0.9 0.7 0.7 0.7 0.7 0.4 0.4 0.2 0.2 0.2 0.1 20% 20% 20% 20% 20% 25% 25% 25% 25% 25% 25% 25% 25% 33% 33% 50% 50% 33% 33% 33% 33% 33% 33% 50% 50% 50% 50% 33% 33% 33% 50% 50% 50% 50% 50% 50% 100% 50% 50% 50% 50% 32% 30% 40% 19% 35% 49% 38% 35% 28% 42% PBIT Asset RoE D/E EPS Latest FY13 Margin Turn. Chg* Chg* Chg* D/E P/E Chg* Chg* 7.6 (8.3) (5.8) (4.9) 1.7 4.4 26.2 1.6 (2.2) 3.8 NA NA NA NA NA 1.4 0.5 1.9 2.0 13.9 0.2 2.8 (3.0) 1.7 2.4 (4.9) (6.5) 4.0 0.6 (2.5) 0.7 3.1 2.0 6.2 3.6 1.7 (7.0) (1.5) 3.1 (3.2) 2.6 1.4 (4.8) 3.4 3.4 8.1 0.6 0.1 5.1 1.4 7.2 3.1 13.6 (22.1) 16.1 15.0 14.6 (29.0) 2.9 4.9 NA NA NA NA NA 1.3 0.5 (0.3) 0.1 (0.7) (1.8) (0.0) (1.1) (1.3) 0.7 (1.6) (1.0) 1.2 0.9 1.2 (0.6) 0.1 (0.2) 0.3 0.0 0.1 0.0 (0.1) 1.9 6.8 (0.8) 4.9 0.1 0.8 (0.1) 0.3 0.0 3.6 0.7 (0.6) 2.3 0.8 (0.1) (6.8) (5.0) (0.5) 0.2 0.0 3.0 2.3 NA 170% NA NA NA 26% 69% 45% NA NA NA NA NA (1.0) (0.3) (0.1) 0.6 (0.5) (0.3) 0.5 0.1 0.5 (0.9) 1.1 (0.2) (0.9) (0.1) 1.1 2.3 0.4 0.2 (1.0) 1.6 0.1 0.9 1.2 (0.3) (1.2) 1.3 0.1 (1.3) (0.0) (1.3) 0.8 (0.1) (1.0) 0.0 1.0 (1.1) 0.0 2.2 (0.4) 0.5 0.3 (0.1) 0.4 (0.3) 5.0 8.5 20.1 13.3 8.0 23.9 32.0 26.6 24.9 18.8 19.4 10.0 13.5 16.5 14.2 7.6 8.7 9.3 8.9 9.3 8.0 18.0 20.3 24.0 12.4 9.5 19.6 14.8 12.8 12.7 14.1 10.9 12.5 20.8 18.5 18.2 15.3 28.9 15.4 8.1 20.6 29.0 6.8 12.4 12.8 9.0 11.1 9.8 26.4 FY13 P/B 1.0 1.2 3.0 1.5 1.7 7.2 19.5 9.4 9.0 2.8 6.2 1.8 3.0 10.1 2.8 2.5 1.4 2.3 1.4 2.0 0.7 4.5 5.0 7.2 1.5 1.1 1.8 2.0 2.2 3.7 2.4 2.4 1.8 5.8 3.6 3.9 2.7 11.3 3.5 1.4 14.8 10.0 2.7 1.1 2.0 1.4 1.5 1.6 2.6 9.9
ICICIBC IN ICICI Bank SHTF IN SKB IN NEST IN ITC IN OFSS IN TCS IN HCLT IN HMCL IN EIM IN TTMT IN HZ IN MRPL IN PLNG IN HPCL IN CDH IN LPC IN GLXO IN TPWR IN NLC IN IDEA IN VOLT IN ENGR IN LT IN BJE IN BHE IN KKC IN ABBAP IN SRCM IN ACC IN TTAN IN EXID IN APTY IN CSTRL IN APNT IN HATH IN ILFT IN OBER IN PEPL IN MCLR IN GDPL IN CRIN IN TTKPT IN Shriram Trans Glaxo Cons Nestle India ITC Oracle Fin TCS HCL Tech Hero Moto Eicher Motors Tata Motors Hind.Zinc MRPL Petronet LNG HPCL Lupin Glaxo Pharma Tata Power Neyveli Lig. Idea Cellular Voltas Engineers Ind L&T Bajaj Elect. BEL Cummins Ind. Alstom Proj. Shree Cement ACC Titan Inds. Exide Inds. Apollo Tyres Castrol India Asian Paints IL&FS Trans. Oberoi Realty Prestige Est. Mcleod Russel Gateway Dist. Coromandel TTK Prestige
NA 225% (0.6) (0.2) (0.0) 0.1 (0.2) 0.3 (0.1) (1.4) 2.6 (0.2) (0.1) (0.9) 0.1 0.9 75% 94% 43% 75% 70% 39% 78% 48% 28% 13% 93% 62% 56% 12%
57% (14.7) 27% (16.6) 50% 25% 81% (2.0) 10.0 (1.3) (1.2)
33% 125%
34% (36.4) -4% (13.1) 7% 37% 3% 51% 55% 23% 4% -4% 9% 19% 36% 8% (2.3) (2.1) (1.9) 6.3 3.8 (0.3) 3.5 3.7 (7.7) (2.1) 17.8 (6.2)
NMDC IN NMDC
0.0 123% (0.2) 112% (0.8) 0.7 0.2 (1.9) 0.1 1% 95% 43% 24% 81%
-6% (14.6)
(0.1) 106% (0.5) 152% 0.5 129% (1.5) 126% (0.1) (0.0) 9% 89%
64% (11.2) 15% (11.0) 49% 4% 52% 23% 83% 34% 55% 44% 59% 6.7 10.2 6.8 (9.1) (0.6) 4.4 5.1 33.7 7.6 8.6 (0.9) (9.2) 21.1 (2.1) 17.9 20.9
(0.1) 108% (0.2) 224% (0.2) 9% (1.0) 156% (0.4) 306% 0.1 138% (0.6) 115% (0.2) 133% 0.2 (0.7) (0.8) 0.5 0% -39% -32% 19% 0.8 320%
100% -11% 100% -17% 50% 100% 100% 100% 1% 52% 30% 60% 50% -28%
0.3 226.6
100% 224%
Source: Bloomberg, Ambit Capital research. * Chg indicates change in FY09-FY11average over FY06-08 average
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Exhibit 6: Great 50- Valuation perspective
Sr. No. Ticker 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 SHTF IN HCLT IN NEST IN TTMT IN MRPL IN PLNG IN HPCL IN NMDC IN ENGR IN LT IN TPWR IN NLC IN BHE IN ABBAP IN SRCM IN CSTRL IN ILFT IN GDPL IN TTKPT IN BOB IN FB IN KMB IN OFSS IN TECHM IN ICICIBC IN HZ IN IDEA IN BHARTI IN BJE IN EXID IN TTAN IN PEPL IN MCLR IN TCS IN SKB IN HMCL IN EIM IN CDH IN LPC IN GLXO IN VOLT IN KKC IN ACC IN APTY IN APNT IN DABUR IN OBER IN HATH IN CRIN IN ITC IN Company Shriram Trans. HCL Technologies Nestle India Tata Motors MRPL Petronet LNG HPCL NMDC Engineers India Larsen & Toubro Tata Power Co. Neyveli Lignite Bharat Electron Alstom Projects Shree Cement Castrol India IL&FS Transport Gateway Distr. TTK Prestige Bank of Baroda Federal Bank Kotak Mah. Bank Oracle Fin.Serv. Tech Mahindra ICICI Bank Hind.Zinc Idea Cellular Bharti Airtel Bajaj Electrical Exide Inds. Titan Inds. Prestige Estates Mcleod Russel TCS GlaxoSmith C H L Hero Motocorp Eicher Motors Cadila Health. Lupin Glaxosmit Pharma Voltas Cummins India ACC Apollo Tyres Asian Paints Dabur India Oberoi Realty Hathway Cable Coromandel Inter ITC Current valuation FY12 EV/ FY12 P/E FY12 P/B Ebitda 9.2 2.1 DNA 16.0 38.9 8.9 20.9 9.3 11.3 9.6 13.1 15.7 13.9 11.3 14.8 28.8 39.2 23.2 7.7 12.5 34.9 6.1 9.9 24.3 20.6 10.6 14.8 9.3 36.7 24.5 14.8 22.8 36.4 21.5 10.6 23.3 27.9 18.9 17.1 21.7 25.2 26.8 23.3 24.3 18.1 11.3 35.1 29.7 18.7 DNA 10.7 31.6 3.5 25.4 3.5 1.6 2.4 0.7 2.8 4.5 2.8 1.7 1.2 2.1 4.1 4.6 16.8 1.3 1.8 14.3 1.2 1.3 3.4 3.4 2.1 1.7 1.7 2.0 2.3 2.8 4.0 15.1 1.6 1.7 7.9 8.6 12.4 3.4 5.6 6.2 8.1 2.5 6.6 3.1 1.6 12.2 11.3 2.3 2.7 3.1 10.4 10.0 23.0 5.5 9.0 6.6 11.4 5.5 8.7 11.1 8.7 9.7 6.3 11.1 8.9 15.4 7.5 7.9 23.5 DNA DNA DNA 16.1 10.9 DNA 7.0 7.4 8.0 8.6 13.9 25.8 13.2 8.0 16.9 19.7 13.7 7.8 15.6 18.0 18.1 14.3 19.4 10.4 3.8 22.6 22.6 14.5 16.0 9.0 20.8 Cheap wrt history? (1 for Yes) P/E 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 0 1 1 1 0 1 0 1 1 1 0 1 0 0 0 0 0 0 0 0 NA 0 0 P/B EV/Ebitda 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 1 0 0 0 1 0 1 1 1 1 0 1 1 1 1 1 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 NA NA NA 0 0 NA 0 1 1 0 0 0 1 1 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 Overall cheap on how many counts? 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 2 2 2 2 2 2 2 2 2 2 2 2 2 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0
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Exhibit 7: The Great 50- Forward looking data
Sr. No. Ticker 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 BOB IN FB IN KMB IN ICICIBC IN SHTF IN SKB IN NEST IN ITC IN DABUR IN OFSS IN TCS IN TECHM IN HCLT IN HMCL IN EIM IN TTMT IN HZ IN NMDC IN MRPL IN PLNG IN HPCL IN CDH IN LPC IN GLXO IN TPWR IN NLC IN IDEA IN BHARTI IN VOLT IN ENGR IN LT IN BJE IN BHE IN KKC IN ABBAP IN SRCM IN ACC IN TTAN IN EXID IN APTY IN CSTRL IN APNT IN HATH IN ILFT IN OBER IN PEPL IN MCLR IN GDPL IN CRIN IN TTKPT IN Company Bank of Baroda Federal Bank Kotak Mah. Bank ICICI Bank Shriram Trans. GlaxoSmith C H L Nestle India ITC Dabur India Oracle Fin.Serv. TCS Tech Mahindra HCL Technologies Hero Motocorp Eicher Motors Tata Motors Hind.Zinc NMDC MRPL Petronet LNG HPCL Cadila Health. Lupin Glaxosmit Pharma Tata Power Co. Neyveli Lignite Idea Cellular Bharti Airtel Voltas Engineers India Larsen & Toubro Bajaj Electrical Bharat Electron Cummins India Alstom Projects Shree Cement ACC Titan Inds. Exide Inds. Apollo Tyres Castrol India Asian Paints Hathway Cable IL&FS Transport Oberoi Realty Prestige Estates Mcleod Russel Gateway Distr. Coromandel Inter TTK Prestige Mcap (US$ mn) 5,606 1,358 8,204 19,132 2,437 2,188 8,416 36,110 3,615 4,111 46,833 1,666 6,781 8,464 1,155 17,039 10,121 13,206 2,035 1,908 1,906 2,803 4,615 3,475 4,618 2,618 5,029 22,799 693 1,587 14,042 368 2,207 2,573 481 1,845 4,300 4,081 2,014 836 2,358 6,426 500 675 1,651 684 567 311 1,399 768 3-month ADV (US$ mn) 9.2 3.0 13.0 92.8 4.2 1.2 2.9 36.2 2.6 6.6 38.6 3.7 9.9 17.7 1.1 71.7 2.5 2.3 0.8 7.1 5.5 1.6 6.8 1.3 10.7 0.7 9.0 40.6 9.9 1.6 62.9 0.5 2.0 2.6 2.3 0.8 12.0 16.0 3.3 5.1 0.9 6.1 2.4 0.5 0.6 0.7 2.4 0.9 1.0 10.7 Next 2 years estimated EPS CAGR (%) 8 21 16 17 11 28 32 19 19 2 16 16 26 19 38 14 11 8 2 4 (8) 8 18 17 (2) 3 67 55 (10) 12 9 11 14 5 DNA 51 11 23 29 12 11 17 DNA 11 48 21 17 24 15 35 Next 2 years estimated BVPS CAGR (%) 16 10 15 7 21 30 64 15 22 19 23 22 26 23 21 43 18 28 11 21 5 24 23 15 10 6 12 DNA 12 24 14 16 DNA 14 DNA 14 11 31 18 17 18 24 5 18 19 9 15 21 18 46
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Exhibit 8: The Great 50- Business activity description
Sr. No. Ticker 1 BOB IN Company Bank of Baroda Business activity description Bank of Baroda owns and operates commercial banks in India. The Group's banks provide the traditional forms of banking services, including CD's, Credit Card services and a variety of car loans, in addition to gold banking and a range of insurance services. Federal Bank Limited operates branches and regional offices throughout India. The Bank offers a wide range of financial services, including merchant banking, international banking and foreign exchange, leasing facilities, money markets and agricultural advances. Kotak Mahindra Bank Limited is a full service commercial bank. The Bank offers a wide range of products and services including personal, commercial, and corporate banking services, including deposit accounts, loans, and investments. ICICI Bank Limited operates a network of bank's located throughout India. The Group specializes in retail and corporate banking, in addition to Forex and treasury operations. ICICI Bank also provides a wide variety of investment banking, insurance and financial services to its clients.
2 3 4 5 6
Shriram Transport Shriram Transport Finance Co. Ltd. provides hire purchase finance for trucks. Glaxo SmithKline Consumer Healthcare Limited manufactures and sells malted milk food products. The Group's GlaxoSmith C H L products, which include energy & protein products, cereals, baby foods, ghee & butter, are sold under the "Horlicks", "Boost", "Viva", "Brylcream", "Eno", "Maltova" and "Gopika" brand names. Nestle India Ltd. manufactures brand name milk products and other food products. The Company's products include Everyday dairy whitener, milk powder and ghee, Milkmaid sweetened condensed milk and Cerelac weaning foods. Nestle India Nestle's beverages include Nescafe and Sunrise coffee and Nesfit enriched glucose powder. Nestle also manufactures Maggi noodles, soups and sauces. ITC Limited, a member of BAT Group of UK, is a holding company, which has a diversified presence in Cigarettes, ITC Hotels, Paperboards & Specialty Papers, Packaging, Agri Business, Packaged Foods & Confectionery, Branded Apparel, Greeting Cards and other FMCG products. Dabur India Ltd. manufactures soaps, detergents, hair oils, tooth powders, antacids and processed foods. The Company Dabur India sells its products worldwide. Oracle Financial Services Software Ltd. provides comprehensive information technology solutions to the financial services industry worldwide. The Company provides transaction processing and accounting software for banks, Oracle Fin.Serv. investment managers and mutual funds. Oracle Financial also provides internet delivery of financial services as well as business intelligence and analytical applications. Tata Consultancy Services, a division of Tata Sons Limited, is a global IT services organization that provides a comprehensive range of IT services to its clients in diverse industries. The Company, caters to finance and banking, TCS insurance, telecommunication, transportation, retail, manufacturing, pharmaceutical, and utility industries. Tech Mahindra Ltd. develops and markets computer software. The Company markets software for telecommunications Tech Mahindra equipment manufacturers, telecom service providers, software vendors, and systems integrators. HCL Technologies Limited provides software development and related engineering services. The Group's technologies utilize a variety of technologies, including Internet and e-commerce, networking, internet telephony, embedded HCL Technologies software, ASIC/VLSI design and testing, satellite and wireless communications, and component based object technologies, including COM, DCOM and COBRA. Hero Motocorp Ltd. designs, manufactures and distributes motorcycles. The Company's products also include motorcycle Hero Motocorp parts and accessories. Eicher Motors Ltd. manufactures light commercial vehicles which are sold domestically and are also exported to other Eicher Motors countries. Eicher Motors also manufactures tractors, two-wheelers and automotive gears. Tata Motors Limited manufactures cars and commercial automotive vehicles in India. The Company designs, Tata Motors manufactures and sells heavy commercial, medium commercial and small commercial vehicles including trucks, tankers, vans, buses, ambulances and minibuses. Tata also manufactures small cars and sports utility vehicles. Hindustan Zinc Limited specializes in the exploration, mining and smelting of zinc, lead and other non-ferrous metals. Hind.Zinc The Company's products include zinc ore, lead zinc concentrate, zinc metal, lead metal, cadmium metal, silver metal and sulfuric acid. NMDC Limited explores for minerals. The Company is exploring for iron ore, copper, rock phosphate, lime stone, NMDC dolomite, gypsum, bentonite, magnesite, diamond, tin, tungsten, graphite, and beach sands. Mangalore Refinery and Petrochemicals Limited refines oil and produces petroleum and petrochemicals. The Company MRPL is a subsidiary of ONGC. Mangalore Refinery operates a refinery in Mangalore city that produces premium diesel and unleaded petrol of high octane. Petronet LNG Ltd. was formed by the Government of India to import liquefied natural gas (LNG) into the country. The Petronet LNG Company is a joint venture between GAIL, ONGC, IOC and BPCL. Petronet LNG has also selected GAZ de France as a strategic partner. The Company has set up LNG receiving ports in Dahej (Gujarat) and Kochi (Kerala). Hindustan Petroleum Corporation Limited refines crude oil and manufactures petroleum and petroleum products. The Company's products, which are sold via outlets throughout India, include lube products, lubricating oil, aviation fuel, HPCL hydraulic brake fluid, greases, liquefied petroleum gas and insecticides. The Government of India is the majority shareholder in the company. Cadila Healthcare Ltd. manufactures, and markets healthcare solutions ranging from formulations, active Cadila Health. pharmaceutical ingredients, vaccines, diagnostics, health and dietetic foods, animal healthcare to cosmeceuticals. The Company's products are available in tablets, capsules, injections, liquids, dry syrups, powders, granules, and ointments. Lupin Limited manufactures bulk actives and formulations. The principal bulk actives manufactured by it include Rifampicin, Pyrazinamide, Ethambutol (anti-TB), Cephalosporins (anti-infectives) and cardiovasculars. The company also Lupin possesses competencies in phytomedicines, in which medicines are made out of plant and herbal resources supported by the discipline of modern medicine. Glaxosmithkline Pharmaceuticals Ltd. manufactures and distributes a wide variety of pharmaceutical drugs, veterinary products and laboratory chemicals. The Company's products include "Phexin" capsules, "Betnesol" tablets and injections, Glaxosmit Pharma "Becoride" asthma treatment, "Betnovate" ointment, "Cetzine" antihistamine, "Zucox" and "Rizap" anti-tuberculosis products. Tata Power Company Limited generates and supplies electricity in Mumbai and its suburbs. The Company also constructs and operates independent power plants as well as captive power plants for industrial concerns. Tata Power Tata Power Co. also provides various services related to electricity distribution, erects and commissions transmission lines, and is diversifying into the telecommunications market. Neyveli Lignite Corporation Limited generates and distributes power, mines and processes lignite, manufactures fertilizers & chemicals and processes and sells clay of all kinds. The Company's other activities include the briquetting Neyveli Lignite and carbonization of lignite and its main products include electric power, lignite, nekolin, pulverized nekolin, urea, coke fines and leco.
NEST IN
8 9
ITC IN DABUR IN
10
OFSS IN
11 12
TCS IN TECHM IN
13
HCLT IN
14 15 16
17 18 19
HZ IN NMDC IN MRPL IN
20
PLNG IN
21
HPCL IN
22
CDH IN
23
LPC IN
24
GLXO IN
25
TPWR IN
26
NLC IN
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Sr. No. Ticker 27 28 IDEA IN BHARTI IN Company Idea Cellular Bharti Airtel Business activity description Idea Cellular Limited offers cellular services, SMS services, and mobile communication devices. Bharti Airtel Limited, a part of Bharti Enterprises, provides telecommunications services throughout India. The Company provides GSM Mobile Services, broadband, fixed line telephone services, long distance services (international & national) and enterprise services. Voltas Limited offers engineering solutions for a wide spectrum of industries in areas such as heating, ventilation and air conditioning, refrigeration, electro-mechanical projects, textile machinery, machine tools, mining and construction equipment, materials handling, water management, building management systems, indoor air quality and chemicals. Engineers India Limited is a design and engineering company in the field of petroleum refineries, petrochemicals, oil and gas processing, offshore structures and platforms, fertilizers, metallurgy and power. EIL provides services such as design, engineering, procurement, construction management, commissioning assistance and project management. Larsen & Toubro Ltd manufactures engineering equipment, undertakes large scale engineering projects, and acts as the Indian representative for a number of overseas manufacturers of heavy machinery. The Company's products include bulldozers, road rollers, dairy machinery, chemical and pharmaceutical plants, switchgears, food processing machinery and feed milling plants. Bajaj Electricals Limited manufactures electric fans and general lighting items, such as lamps, special lamps, fluorescent tubes, and lighting fixtures. The Company also manufactures consumer durables like small electrical appliances. Bharat Electronics Ltd. manufactures electronic communication equipment, night vision equipment such as image converter tubes, night vision binoculars, and goggles, periscopes, gunsights and tank electronics. The Company's electronic communication products include HF/VHF transmitters, receivers, microwave radio relays, radars and other electronic components required by defense services. Cummins India Limited manufactures internal combustion engines, including diesel, reciprocating piston, gas turbine and gasoline engines. The Company also manufactures generating sets and public transport-type passenger motor vehicles, including luxury coaches and air-field buses. In addition, Cummins India Ltd. operates a computerized and fully-equipped research and development facility. Alstom Projects India Limited supplies power generation services and equipment. The Company provides energy generation through hydro power, gas turbine-based combined power plants, and steam power plants. The Company also designs, manufactures, and supplies large scale transportation systems, electricity transmission systems, and energy management systems. Shree Cement Ltd. manufactures cement and cement products. The Company sells its products primarily in Northern India under its own brand names. ACC Limited manufactures a range of cements and blended cements. The Company also manufactures gypsum and refractory products such as Brown Tabular Alumina. The Company provides turnkey and application consulting services for setting up and operating cement plants and refractories. The Company owns cement plants throughout India. Titan Industries Ltd. manufactures and retails jewelry and watches. The Company produces quartz analog electronic watches, watch movements, step motors and watch cases. Exide Industries Ltd. manufactures a wide range of lead and electric storage batteries. The Company's batteries find application in automobiles, railways, aircrafts, power stations, telephone exchanges, and other uses. Apollo Tyres Limited manufactures tires and tubes for cars, trucks, farm equipment and light commercial vehicles. The Company also manufactures automobile flaps and retreading materials. Castrol (India) Limited manufactures and markets automotive and industrial lubricants and specialty products. The Company's products include lubricating oils, greases and brake fluids. The Company also manufactures cable filling compounds, jellies, waxes and other items. Asian Paints Limited manufactures a wide range of decorative paints, varnishes, enamels, and black & synthetic resins. The Company, through its subsidiaries, also manufactures specialty industrial chemicals and vinyl pyridine latex products which are used in the manufacture of rubber tires. Hathway Cable and Datacom Limited is a cable television service provider. The Company offers analog and digital cable television services. Hathway also provides cable broadband services as well. IL&FS Transportation Networks Ltd. designs, develops, maintains and operates toll highways. The Company acquires projects either through competitive bidding or negotiated contracts. IL&FS also provides traffic inspection and emergency, rescue and search services on its highways. Oberoi Realty LTD., is a real estate development company operating in Mumbai, focused on premium developments. The Company's main focus is residential projects but they also have a diversified portfolio of projects covering segments of the real estate market, which target the upper end of the respective income or market segment. Prestige Estates Projects Ltd. develops real estate. The Company builds residential projects including apartments, villas, plotted developments and integrated townships; commercial projects including corporate office buildings and technology parks; hotels and resorts; and retail buildings. McLeod Russel India Ltd. cultivates, manufactures, and markets tea. The Group owns tea estates in Assam and Dooars.
29
VOLT IN
Voltas
30
ENGR IN
Engineers India
31
LT IN
32
BJE IN
Bajaj Electrical
33
BHE IN
Bharat Electron
34
KKC IN
Cummins India
35
ABBAP IN
Alstom Projects
36 37 38 39 40 41
Shree Cement ACC Titan Inds. Exide Inds. Apollo Tyres Castrol India
42 43 44
45
OBER IN
Oberoi Realty
46 47 48 49 50
Gateway Distriparks Limited provides integrated logistics services both in domestic and international areas. The Company offers cargo loading and unloading, transportation, and cargo storage management services to shipping lines, freight forwarders, and buying houses. Coromandel International Ltd. manufactures fertilizers and pesticides. The Company produces both chemical and Coromandel Inter organic fertilizers, insecticides, fungicides, herbcides, and plant biostimulant. TTK Prestige Limited manufactures a range of domestic appliances. The Group's products include pressure cookers and TTK Prestige non-stick cookware, stainless steel and glass vacuum flasks, and gas stoves.
Source: Bloomberg
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FF Mkt cap (US$ mn) (Intial) 6,229 239 120 325 576 157 628 1,234 103 190 72 19,429 1,093 485 2,527 1,919 688 184 153 396 1,401 323 7,217 1,563 119 788 2,098 1,156 1,246 514 233 160 310 547 64 284 189 967 420 616
TTMT IN Equity VST IN Equity SOBHA IN Equity EIM IN Equity JUBI IN Equity TTKPT IN Equity OFSS IN Equity BOS IN Equity BDE IN Equity FAG IN Equity PSYS IN Equity ITC IN Equity SKB IN Equity PIDI IN Equity PWGR IN Equity TTAN IN Equity CSTRL IN Equity VTEX IN Equity GDPL IN Equity GSFC IN Equity BPCL IN Equity CUBK IN Equity @ ONGC IN Equity RBXY IN Equity HCBA IN Equity CDH IN Equity BOB IN Equity # SIEM IN Equity FB IN Equity @ IH IN Equity AKZO IN Equity SJVN IN Equity GPPV IN Equity CRIN IN Equity ENIL IN Equity ARVND IN Equity SRF IN Equity NMDC IN Equity BIOS IN Equity MGFL IN Equity # G&C 3.0 Battleships Portfolio BSE500 G&C 3.0 Battleships Alpha G&C 2.0 Alpha G&C 1.0 Alpha
Tata Motors VST Inds. Sobha Developer. Eicher Motors Jubilant Food. TTK Prestige Oracle Fin.Serv. Bosch Blue Dart Exp. Fag Bearings Persistent Sys ITC GlaxoSmith C H L Pidilite Inds. Power Grid Corpn Titan Inds. Castrol India Vardhman Textile Gateway Distr. GSFC BPCL City Union Bank ONGC Ranbaxy Labs. Novartis India Cadila Health. Bank of Baroda Siemens Federal Bank Indian Hotels Akzo Nobel SJVN Guj Pipavav Port Coromandel Inter Ent.Network Arvind Ltd SRF NMDC Biocon Manappuram Finance Ltd Free float mkt cap weighted returns Returns Free float mkt cap weighted basis
Source: Ambit Capital research, Bloomberg. # indicates that the stock was added later, effective 24 Jan close; @ indicates that the stock was added later, effective 21st Feb close
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