Angel Top Picks - February 2017

Top Picks

The FY2018 budget maintains a path of fiscal prudence and envisages higher

Company

CMP (`)

TP (`)

infrastructure investments. The government’s focus on rural and housing sector is

expected to be positive for multiple sectors. We view this as a positive event for the

Banking/NBFC

capital markets.

Dewan Housing

297

350

Equitas Holdings

183

235

Budget focuses on fiscal prudence and reforms: The FY2018 budget has set an

Consumption

achievable fiscal deficit target of 3.2%. The government also remains on course to

Amara Raja

909

1,009

achieve the FY2017 fiscal deficit target of

3.5%. Post-demonetisation, the

Asian Granito

271

351

government was under pressure to take the populist measures; however, by aiming

Bajaj Electricals

250

274

for further fiscal prudence, government has taken the right decision for the

Blue Star

538

634

economy. The government estimates recovery in the demand from Q1FY18E,

Mirza International

107

which should bring the economy back to the growth path. The focus on fiscal

Siyaram Silk Mills

1,548

1,720

prudence, along with no change in the long term capital gains tax, is expected to

send strong signals to the foreign investors and rating agencies about the

HCL Tech

829

1,000

credibility and predictability of the government policies. The abolishment of the

Infosys

935

1,249

FIPB is also expected to bring more FDIs, which is structurally positive for the

Media

government’s ‘Make in India’ initiative.

Jagran Prakashan

187

225

Capital expenditure gets a boost: For FY2017, the government’s capital

TV Today

270

385

expenditure exceeds the budget estimates by 13%, indicating higher spending by

Real Estate/Infra/Logistics/Power

the government. Further, the FM has announced 10.7% increase in the capital

KEI Industries

168

207

expenditure for FY2018. This will be spend on infrastructure development (road

Larsen & Toubro

1,479

1,634

and metros), which in our opinion will lead to a multiplier effect on the economy.

Mahindra Lifespace

356

522

The government has also indicated slower spending on the revenue accounts such

Navkar Corp.

174

265

as subsidies and grants, indicating more efficiency in the government operations

Powr Grid Corporation

202

223

and additional funds for capital expenditure.

Pharma

Alkem Lab.

1,812

1,989

Rural economy in focus: In view of negative impact of demonetisation on the

rural and MSME sector, government has increased their focus on these sectors by

Lupin

1,491

1,809

Source: Angel Research;

allocating `10,00,000cr in farm credit as well as by reducing the income tax rate

Note: CMP as of Feb. 3, 2017

for small business with turnover less than `50cr. This is in line with the market

expectations and expected to boost the rural consumption demand.

Consumption and housing to remain in focus: The interest rates have already

fallen and we believe that there is some scope to further ease the rates with lower

fiscal deficit and net borrowings. The rural focus, coupled with halving the entry

level personal income tax rates and lower interest rates, is expected to revive the

consumption demand. Further, new measures taken by the government for

affordable housing sector are positive for real estate, cement, building material

and NBFC sectors. This is a good sign for the market as demand has taken severe

hit in these sectors after demonetisation.

The increase in capital expenditure by government is expected to benefit the

companies like L&T, POWERGRID Corporation, KEI Industries, etc. The focus on

affordable housing will be positive for Asian Granito, Dewan Housing and

Mahindra Lifespace. We also see boost in the consumption sector, which is

expected to be positive for Blue Star and Bajaj Electricals. Besides, we also

maintain positive stance on Lupin and Alkem, given their strong fundamentals and

lower valuations.

Please refer to important disclosures at the end of this report

Top Picks Report | February 2017

Stock Info

Dewan Housing

CMP

297



3^rd largest private sector housing finance company: We expect DHFL’s AUM to

350

grow at a CAGR of 21% over FY2016-18, as demand for housing in the middle

Upside

18.0%

and low income group picks up, while PAT CAGR is expected to be 23%.

Sector

Financials

 Seasoned and granular loan book with stable asset quality: Individual

borrowers account for 72%, while the high yielding loan against property (LAP)

Market Cap (` cr)

9,287

+SME and projects loans account for 19% and 9% of advances respectively. Despite

Beta

1.6

strong loan growth, the GNPAs and NNPAs are likely to be at ~1.17% and 0.82%,

52 Week High / Low

337 / 141

respectively, for FY2017. We don’t expect any major deterioration in the asset

quality going ahead.

3 year-Chart

 Lower cost of funds will help maintain NIM: Nearly

70% of the bank

400

borrowings are due for maturity over the next three years and recently DHFL

350

was able to raise large sum ~ Rs14, 000 cr via NCDs at a competitive rates

300

and this should help maintain its NIM at ~2.9%.

250

200

 Outlook: We expect the company to post a healthy loan book CAGR of 21%

150

over FY2015-18E, which is likely to translate in earnings CAGR of 23%, over

100

the same period. The stock currently trades at 1.1x FY2018E ABV. We have a

Buy stand on the stock, with a target price of `350.

Key Financials

Y/E

Op. Inc NIM

PAT

EPS

ABV ROA ROE P/E P/ABV

Source: Company, Angel Research

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

FY2017E

2,050

2.9

923

29.5

189

1.2

16.3

1.6

FY2018E

2,500

2.9

1,145

36.6

218.5

1.2

16.9

8.1

1.4

Source: Company, Angel Research

Stock Info

Equitas Holdings

CMP

183

 Early mover advantage in the SFB category: Equitas was one of the ten NBFCs

235

to get the license to start a small finance bank (SFB). As the entire book of

Upside

28.4%

Equitas qualifies for PSL, meeting the 75% PSL target will not be a challenge.

Sizeable and diversified loan book will keep it ahead of other upcoming SFBs.

Sector

Financials

 Asset quality and return ratios are likely to remain stable: Equitas will have to

Market Cap (` cr)

6,168

maintain CRR & SLR going ahead; hence yield on total assets is likely to come

Beta

0.9

down. However, as a bank it will be able to raise deposits and hence there will

52 Week High / Low

206 / 134

be reduction in cost of funds. As a result, spreads may not decline much which

in turn will help in maintaining the ROE & ROA which although could undergo

3 year-Chart

a marginal decline. Also we don’t expect any major deterioration in the asset

250

quality going ahead.

200

 NIM likely to remain healthy: After conversion to SFB the company has started

raising deposits at a lower cost vs borrowings leading to better cost of funds.

150

Hence we expect the NIM to remain strong at ~10-11%, going ahead.

100

 Outlook: We expect the company to post a strong loan book & earnings

CAGR of 38% & 37% over FY2016-18E. The stock currently trades at 1.9x

FY2018E ABV. We maintain Buy on the stock, with a target price of `235.

Key Financials

Y/E

Op. Inc NIM

PAT

EPS

ABV ROA ROE P/E P/ABV

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

Source: Company, Angel Research

FY2017E

9,39

11.7

224

5.8

68.2

2.8

10.9

31.5

2.7

FY2018E

1,281

11.5

315

8.2

77.6

2.8

11.5

22.3

2.4

Source: Company, Angel Research

February 4, 2017

Top Picks Report | February 2017

Stock Info

Amara Raja Batteries

CMP

899

 Amara Raja Batteries Ltd (ARBL) is the second largest lead acid storage battery

1,167

manufacturer in the country. It has been outpacing market leader Exide (ARBL

Upside

29.8%

grew at a 21% CAGR over FY2010-16 as compared to standalone Exide's

growth of 7%), leading to its market share improving from 25% in FY10 to

Sector

Auto Ancillary

about 35% currently. ARBL's outperformance has been mainly on back of its

Market Cap (` cr)

15,348

association with global battery leader Johnson Controls Inc (which also holds

Beta

0.8

26% stake in ARBL) for manufacturing ducts.

52 Week High / Low

1,077 / 773

 With the automotive OEMs following a policy of having multiple vendors and

with ARBL’s products enjoying a strong brand recall in the replacement

3 year-Chart

segment, the company is well poised to gain further market share. Given the

1,200

economic recovery and market share gains, the company is expected to grow at

a CAGR of 18% over the next two years as against industry growth of 10-12%.

1,000

800

 ARBL is a well diversified auto ancillary player having presence across the

automotive and the industrial segment. It has a broad OEM as well as

600

replacement customer base. We believe ARBL is a high quality stock to play

400

the auto sector revival. We maintain our Buy rating on the stock.

200

Key Financials

Y/E

Sales

OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

FY2017E

5,504

17.6

571

33.4

22.1

26.9

5.9

16.0

4.6

Source: Company, Angel Research

FY2018E

6,605

17.5

699

40.9

22.0

4.8

13.3

3.7

Source: Company, Angel Research

Stock Info

Asian Granito

CMP

271

 AGIL’s current, vitrified sales (35%) are lower as compared to its peers like

351

Somany Ceramics (47%) and Kajaria Ceramics (61%). Recently, AGIL has

Upside

29.5%

launched various products in premium segment. Going forward, we expect

AGIL’s profit margin to improve due to increase in focus for higher vitrified

Sector

Ceramics

product sales, which is a high margin business.

Market Cap (` cr)

713

 AGIL is continuously putting efforts to increase the B2C sales from the current

Beta

1.4

level (35% in FY16). It is expected to reach up to 50% in next 2-3 years on the

52 Week High / Low

304 / 109

back of various initiatives taken by AGIL to increase direct interaction with customers

like strengthening distribution network, participation in key trade exhibition, etc.

3 year-Chart

 In July FY2016, AGIL acquired Artistique Ceramic which has a better margin

350

profile. Going forward, we expect the company to improve its operating

300

margin from 7.5% in FY16 (excluding merger) to 12-12.5% in coming

250

financial year. Artisique Ceramics has a contract with RAS GAS to supply

200

quality natural gas at a discounted rate of 50% to current market rate, which

150

would reduce the overall power & fuel cost of the company.

100

 We expect AGIL to report a net revenue CAGR of ~8.5% to ~`1,169cr and

net profit CAGR of ~39% to `48cr over FY2016-18E. We have a Buy rating

on the stock and target price of `351.

Key Financials

Y/E

Sales OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales

Source: Company, Angel Research

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

FY2017E

1,060

12.2

12.7

9.5

21.4

2.0

8.8

1.1

FY2018E

1,169

12.5

15.9

10.6

17.1

1.8

7.4

0.9

Source: Company, Angel Research

February 4, 2017

Top Picks Report | February 2017

Stock Info

Bajaj Electricals

CMP

250

 The company is among the top 4 players in the consumer durables space

274

across all its product categories (leader in small appliances; number-4 in fans

and lighting). It has a strong distribution reach with 4,000 distributors

Upside

9.6%

reaching out to 400,000 retailers.

Sector

Cons. Durable

 In the 3 years preceding FY2016, the company’s E&P segment had been

Market Cap (` cr)

2,530

underperforming owing to cost overruns and delays in project executions.

Beta

0.9

However, the segment has turned around in FY2016 on the profitability front

52 Week High / Low

280 / 155

and delivered a healthy EBIT margin of ~6% for the year. Currently the

segment’s order book stands at `2,480cr.

3 year-Chart

 With expectation of timely execution of new projects in the E&P segment and

400

with the Lighting and Consumer Durables segments expected to benefit from

350

an improvement in consumer sentiments going forward, we expect the

300

company’s top-line to grow at a CAGR of ~8% to `5,351cr and bottom-line to

250

grow at a CAGR of 20% to `138cr over FY2016-FY2018E. We recommend an

200

Accumulate rating on the stock.

150

100

Key Financials

Y/E

Sales OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

FY2017E

4,801

5.7

105

10.4

12.4

24.0

3.0

9.5

0.5

FY2018E

5,351

6.2

138

13.7

14.5

18.3

2.6

7.8

0.5

Source: Company, Angel Research

Stock Info

Blue Star

CMP

538

 BSL is one of the largest air-conditioning companies in India. With a mere

634

3% penetration level of ACs vs 25% in China, the overall outlook for the room

Upside

17.8%

air-conditioner (RAC) market in India is favourable.

Sector

Cons. Durable

 BSL’s RAC business has been outgrowing the industry by ~10% points over the

Market Cap (` cr)

5,138

last few quarters, resulting in the company consistently increasing its market

share (~7% in FY2014 to 10.5% at present). This has resulted in the Cooling

Beta

0.6

Products Division (CPD)'s share in overall revenues increasing from~23% in

52 Week High / Low

581 / 306

FY2010 to ~42% in FY2016 (expected to improve to ~47% in FY2018E). With

strong brand equity and higher share in split ACs, we expect the CPD to

3 year-Chart

continue to drive growth.

700

 Aided by increasing contribution from the CPD, we expect the overall top-line

600

to post a revenue CAGR of ~16% over FY2016-18E and margins to improve

500

from 5.3% in FY2015 to 7.3% in FY2018E. Moreover, the merger of Blue Star

400

Infotech has infused cash and strengthened the balance sheet. We have a Buy

300

recommendation on the stock.

200

100

Key Financials

Y/E

Sales OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

FY2017E

4,283

5.9

141

14.9

20.4

36.1

7.0

18.7

1.2

Source: Company, Angel Research

FY2018E

5,077

7.3

211

22.1

26.4

24. 3

5.9

13.2

1.0

Source: Company, Angel Research

February 4, 2017

Top Picks Report | February 2017

Stock Info

Mirza International

CMP

 In the branded domestic segment, we expect the company to report a ~21%

107

CAGR over FY2016-18E to `258cr. We anticipate strong growth for the

Upside

15.1%

company on the back of (a) the company’s wide distribution reach through its

1,000+ outlets including 120 exclusive brand outlets (EBOs) in 35+ cities and

Sector

Footwear

the same are expected to reach 200 over the next 2-3 years and (b) strong

Market Cap (` cr)

1,118

branding (Red Tape) in the shoes segment.

Beta

1.5

 MIL’s major export revenue comes from the UK (73%), followed by the US

52 Week High / Low

138 /69

(14%) and the balance from ROW. Export constitutes ~75% of the company’s

total revenue. We expect the company to report healthy growth over the next

2-3 years on back of recovery in the UK market, strong growth in the US market

3 year-Chart

and with it tapping newer international geographies like the Middle East countries.

160

140

 In FY2016, the company acquired Genesis Footwear which has a better

120

margin profile than it. The deal resulted in MIL’s EPS increasing by ~4% and

100

ROE improving from 15.9% to 17.5%. Further, due to this merger, the

company’s capacity has increased from 5.4mn to 6.4mn units.

 We expect MIL to report a net revenue CAGR of ~11.3% to ~`1,124cr and

net profit CAGR of ~11.3% to `97cr over FY2016-18E. We have a Buy rating

on the stock and target price of `107.

Key Financials

Y/E

Sales OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales

Source: Company, Angel Research

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

FY2017E

1024

18.0

6.9

16.6

13.5

2.3

7.2

1.3

FY2018E

1,148

18.0

8.0

16.3

11.6

1.9

6.3

1.1

Source: Company, Angel Research

Stock Info

Siyaram Silk Mills

CMP

1,548

 SSML has strong brands which cater to premium as well as popular mass

1,720

segments of the market. Further, SSML entered the ladies' salwar kameez and

Upside

11.1%

ethnic wear segment. Going forward, we believe that the company would be able to

Sector

Textile

leverage its brand equity and continue to post strong performance.

Market Cap (` cr)

1,451

 The company has a nationwide network of about 1,600 dealers and business

partners. It has a retail network of 160 stores and plans to add another

Beta

0.8

300-350 stores going forward. Further, the company's brands are sold across

52 Week High / Low

1,690/925

3,00,000 multi brand outlets in the country.

 Going forward, we expect SSML to report a net sales CAGR of ~10% to

3 year-Chart

~`1,948cr and adj.net profit CAGR of ~11% to `107cr over FY2016-18E on

1,800

back of market leadership in blended fabrics, strong brand building, wide

1,600

distribution channel, strong presence in tier II and tier III cities and emphasis

1,400

1,200

on latest designs and affordable pricing points. At the current market price,

1,000

SSML trades at an inexpensive valuation. We have an Accumulate

800

recommendation on the stock and target price of `1,720.

600

400

Key Financials

200

Y/E

Sales

OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

FY2017E

1,652

11.6

92.4

14.7

16.7

2.5

9.3

1.1

Source: Company, Angel Research

FY2018E

1,857

11.7

103

110.1

15.2

14.1

2.1

8.2

1.0

Source: Company, Angel Research

February 4, 2017

Top Picks Report | February 2017

Stock Info

HCL Technologies

CMP

829

 Healthy pipeline: Company’s engineering services has been seeing lumpy

1,000

growth over the last few quarters. This is however largely a function of the

Upside

20.6%

timing of large transformational deals. 6-8 of the large deals signed a few

Sector

quarters ago will aid the company to continue to post industry leading growth.

Market Cap (` cr)

1,17,052

We expect HCL Tech to post a USD and INR revenue CAGR of 16.3% and

Beta

0.6

18.0%, respectively, over FY2016-18E (inclusive of the acquisition of

52 Week High / Low

890 / 707

Geometric Software and the Volvo deal).

 Robust outlook: For FY2017 revenues are expected to grow between 12.0-

3 year-Chart

14.0% in CC. Revenue guidance is based on FY2016 (April to March’2016)

1,200

average exchange rates. The above constant currency guidance translates to

1,000

11.2% to 13.2% growth in US$ terms.

800

 Outlook and Valuations: The stock is attractively valued at the current market

600

price and hence we maintain our Buy with a price target of `1,000.

400

200

Key Financials

Y/E

Sales

OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales

June

(`cr)

(%)

(`cr)

(`)

(%)

(x)

FY2017E

49,242

20.5

7,862

55.7

20.3

14.9

3.0

10.2

2.2

Source: Company, Angel Research

FY2018E

57,168

20.5

9,037

64.1

17.9

12.9

2.3

7.8

1.8

Source: Company, Angel Research

Stock Info

Infosys

CMP

935

 Revenue guidance for FY17: The Management has lowered its guidance for

1,249

FY2017, to 8-9% in CC terms and 9.2-10.2% in INR terms (exchange rate as

Upside

33.6%

on March 31, 2016). For FY2016, the company posted a 13.3% growth in CC

Sector

terms V/s a guidance of 12.8-13.2% growth (in CC). We expect the company

Market Cap (` cr)

2,14,753

to post ~9.0% USD revenue growth in FY2017.

Beta

0.8

 Aims to be US$20bn company by FY20: Company expects its revenue to rise

52 Week High / Low

1,278 / 900

to US$20bn by FY2020, up from US$8.7bn in FY2015, as it focuses on

acquisitions and winning more new technology services, implying a

3 year-Chart

14% CAGR over the period. Over the near term, we expect Infosys to post a

1,400

9.0% USD revenue growth in FY2017. Over FY2016-18E, we expect

1,200

USD and INR revenue to grow at a CAGR of 9.0% and 9.5%, respectively.

1,000

 Outlook and Valuations: The stock trades at a valuation of 18x FY2018E

800

earnings. We recommend Buy on the stock with a price target of `1,249.

600

400

Key Financials

200

Y/E

Sales

OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

FY2017E

68,350

27.0

14,354

62.5

21.3

15.0

3.2

11.0

2.6

FY2018E

77,236

27.0

15,928

69.4

21.6

13.5

2.9

9.8

2.2

Source: Company, Angel Research

February 4, 2017

Top Picks Report | February 2017

Stock Info

Jagran Prakashan

CMP

187

 We expect JPL to register a net sales CAGR of ~12% over FY2016-18E, on

225

back of (a) strong growth in advertising revenue due to improvement in GDP

Upside

20.3%

growth, and (b) improvement in circulation revenue owing to combination of

Sector

Media

increase in cover price and volume growth.

Market Cap (` cr)

6,118

 Further the acquisition of Radio City would also boost the company's revenue

going ahead. Radio City has ~20 stations across 7 states in the country and is

Beta

0.6

second only to ENIL in all its operating circles, ie Delhi, Mumbai, Bengaluru,

52 Week High / Low

213/144

Chennai, Ahmedabad, Hyderabad, Pune and Lucknow. The company covers

~51% (~66mn people) of the total radio population.

3 year-Chart

 Raw material prices have been in a declining trend. Thus, considering lower

250

news print costs, healthy sales, and higher margins in the radio business, we

200

expect an adj. net profit CAGR of ~12% over FY2016-18E to `409cr.

150

 Considering Dainik Jagran's strong presence in the rapidly growing Hindi

markets, we expect JPL to benefit from an eventual recovery in the Indian

100

economy. Hence, we maintain a Buy rating on the stock with a target price of

`225.

Key Financials

Y/E

Sales

OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

Source: Company, Angel Research

FY2017E

2,355

28.0

353

10.8

21.7

17.3

3.8

9.1

2.6

FY2018E

2,635

28.0

409

12.5

21.7

15.0

3.3

7.9

2.3

Source: Company, Angel Research

Stock Info

TV Today Network

CMP

270

 TTNL enjoys a strong viewership ranking in the Hindi and English news

385

channel categories. The company’s Hindi news channel - Aaj Tak has

Upside

42.6%

maintained its market leadership position occupying the No.1 rank for several

Sector

Media

consecutive years in terms of viewership. Its English news channel - India

Today too has been continuously gaining viewership; it has now captured the

Market Cap (` cr)

1,609

No. 2 ranking from No. 4 earlier. Its other channels like Dilli Aaj Tak and Tez

Beta

1.3

are also popular among viewers.

52 Week High / Low

360 /250

 Out of the 7 radio stations, TTNL has sold off 4 (Jodhpur, Amritsar, Patiala

and Shimla) for `4cr. The remaining 3 stations are in the process of getting

3 year-Chart

sold off to ENIL but the sale will have to wait until concerns raised by the MIB

400

are resolved. Going forward, we expect them to be sold off and this would

350

prop up the company’s profitability.

300

250

 We expect TTNL to report a net revenue CAGR of ~16% to ~`743cr and net

200

profit CAGR of

~16% to

`128cr over FY2016-18E. We have a Buy

150

recommendation on the stock and target price of `385

100

Key Financials

Y/E

Sales

OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

FY2017E

637

27.5

110

18.4

17.4

14.7

2.6

8.0

2.1

Source: Company, Angel Research

FY2018E

743

27.5

128

21.4

17.2

12.6

2.2

6.5

1.7

Source: Company, Angel Research

February 4, 2017

Top Picks Report | February 2017

Stock Info

KEI Industries

CMP

168

 Healthy order book indicates strong revenue visibility: KEI’s current order book

207

(OB) stands at `3,233cr (segmental break-up: `2,154cr in EPC, `667cr in

Upside

23.2%

Cable, `200cr in EHV, `49cr in Substation, rest in EPC L1 business). Its OB

Sector

Cable

grew by ~28% in the last 3 years due to strong order inflows from State

Electricity Boards, Power grid, etc.

Market Cap (` cr)

1308

 Strengthening distribution network and higher ad Spend to increase B2C

Beta

1.2

business: KEI’s consistent effort to increase its retail business from 30% of

52 Week High / Low

581 / 306

revenue in FY16 to 40-45% of revenue in the next 2-3 years on the back of

strengthening distribution network (currently 926 which is expect to increase

3 year-Chart

`1,500 by FY19) and higher ad spend (increased from `2cr in FY13 to `7cr in

180

FY16 and expected to spend).

160

140

 Exports to continue its growth momentum: KEI’s export (FY16 - 8% of revenue)

120

is expected to reach a level of ~14-15% in next two years with higher order

100

execution from current OB of

~`180cr and participation in various

international tenders worth `500cr. We expect a strong ~26% growth CAGR

over FY2016-19 in exports. We expect KEI to report net revenue CAGR of

~13% to ~`3,335cr and net profit CAGR of ~24% to `118cr over FY2016-

19E. Hence we have a Buy rating on the stock and target price of `207.

Key Financials

Source: Company, Angel Research

Y/E

Sales

OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

FY2017E

2,682

10.4

11.7

20.1

14.3

2.9

6.5

0.7

FY2018E

3,058

10.0

123

12.8

18.2

13.1

2.4

6.0

0.6

Source: Company, Angel Research

Stock Info

Larsen & Toubro

CMP

1,479

 L&T’s, order backlog remains robust at `2.5trn (2.5x of FY16 revenues) of

1,634

which 29.0% is international order backlog. It’s consolidated order inflow

Upside

10.5%

increased by 8.7% yoy to `311bn due to higher domestic order inflows in

Sector

Infrastructure

2QFY17. Domestic and international orders accounted for 76.3% and 23.7%

respectively in the inflows. Order growth was mainly from domestic

Market Cap (` cr)

1,37,985

infrastructure and international hydrocarbon segment.

Beta

1.4

 L&T has maintained its guidance of (a) 15% growth in consolidated order

52 Week High / Low

1,615 / 1,017

inflows; (b) a 12-15% rise in consolidated revenues; and (c) up to a 50bps

improvement in EBITDA margins in core engineering. However, management

3 year-Chart

acknowledged is uncertain of the impact of currency de-monetization at

2,000

present. L&T’s order book has ~6% exposure to the high-end realty space.

1,800

 Going forward we expect the company to report healthy top-line and bottom-

1,600

line growth on the back of execution of domestic orders. L&T’s order prospects

1,400

continue to remain strong. We are of the view that L&T is a proxy play for

1,200

investors wanting to ride on Indian infrastructure growth story. We recommend

1,000

an Accumulate on the stock with Target Price of `1,634.

800

Key Financials

Y/E

Sales

OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

Source: Company, Angel Research

FY2017E

1,11,017

11.0

5,691

61.1

13.1

24.2

2.9

7.5

2.3

FY2018E

1,24,908

11.0

6,216

66.7

13.0

22.2

2.7

6.8

2.1

Source: Company, Angel Research

February 4, 2017

Top Picks Report | February 2017

Stock Info

Mahindra Lifespace

CMP

356

 MLF has 13 projects under implementation across cities. MLF has exhibited

522

fast completion of projects compared to others. Sales cycle in ~65% of

Upside

46.6%

projects is faster than execution cycle, contrary to industry trends. This fast

Sector

Real Estate

execution and sales is optimal, as it helps MLF in revenue recognition,

inventory cycle (better than Oberoi, DLF), cash flows and profitability.

Market Cap (` cr)

1,461

 MLF as of 4QFY2016 is pursuing ~4.0mn sq. ft. of sale of the total ~15.0mn

Beta

0.4

sq. ft. of saleable area. Having sold ~60% of ongoing projects, we expect MLF

52 Week High / Low

500 / 343

to launch ~2.8mn sq.ft. of saleable area in rational way during 4QFY2016-

2QFY2018E, across 6 cities. Maturity at existing projects, new launches give better

3 year-Chart

revenue visibility for medium-term. Further, MLF is sitting on land bank of 11.0mn

700

sq.ft across 4 cities, which allay any concern over long-term revenue growth.

600

500

 With Real Estate Regulatory Bill closer to reality, MLF should be minimally

400

impacted, given their strong parentage and ethically implemented processes.

300

In the longer-term organized, professionally run, well funded players would

200

enjoy strong trust due to their reliable and fast execution strategies. With

100

improvement in company’s fundamentals, strong earnings growth visibility

and long-term growth outlook, at current valuations of 1.1x FY2017E P/BV,

MLF looks attractive. We maintain BUY on MLF with target price of `522.

Key Financials

Source: Company, Angel Research

Y/E

Sales

OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

FY2017E

1,152

22.7

29.9

7.6

11.9

0.9

14.2

2.0

FY2018E

1,300

24.6

138

35.8

8.6

9.9

0.8

8.5

1.7

Source: Company, Angel Research

Stock Info

Navkar

CMP

174

 NCL is one of the largest and one of the three CFS at JNPT with rail

265

connectivity, helping it garner high market share at the port. NCL is in a massive

Upside

52.3%

expansion mode where it is increasing its capacity by 234% to 1,036,889 TEUs

Sector

Logistics

at JNPT and coming up with an ICD at Vapi (with Logistics Park).

Market Cap (` cr)

2,481

 The ICD with rail link should benefit from first mover advantage in a region

Beta

0.6

that has huge market potential and accounts for ~27% of volumes at JNPT.

52 Week High / Low

224 / 151

The ICD should be able to capture the EXIM volumes from the region through

rail link that till now was being custom cleared at JNPT (Import) or being

transported via road and consolidated at JNPT (Export). South Gujarat

3 year-Chart

250

volumes will now head straight to the Vapi ICD; thus the company can now

cater to bulk commodities and domestic traffic that it had been rejecting owing

200

to capacity constraints at CFS.

150

 We expect NCL to successfully use its rail advantage and scale up its

100

utilizations at both JNPT and Vapi ICD. We have a Buy rating on the stock.

Key Financials

Y/E

Sales

OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

FY2017E

369

42.9

103

7.2

7.4

24.1

1.8

17.4

7.7

Source: Company, Angel Research

FY2018E

561

42.3

164

11.5

10.5

15.1

1.6

11.1

5.1

Source: Company, Angel Research

February 4, 2017

Top Picks Report | February 2017

Stock Info

Power Grid Corporation

CMP

202

 During the 1HFY2017, the company has already capitalized assets worth

223

`120bn and is on track to achieve the capitalization guidance of `280bn-

Upside

10.4%

300bn for the full year. During the year, PGCIL has already commissioned

Sector

Power

pole-2 of the Assam-Agra HVDC line and is likely to commission its poles - 3

& 4, in addition to the `65bn Champa - Kurukshetra HVDC project, `19bn

Market Cap (` cr)

105,521

Srikakulam - Angul line and `36bn Wardha - Nizamabad line. Based on

Beta

0.7

status of pipeline of projects, we expect commissioning to be strong in rest of

52 Week High / Low

194 / 127

the year.

 During the 1HFY2017, the total order awarded was `181bn. Total order size to be

3 year-Chart

awarded over next 18 months is ~ `330bn which indicates its healthy prospects.

250

 Going forward, we expect the company to report strong top-line CAGR of

200

~16% and bottom-line CAGR of ~19% on back of strong capitalization

150

guidance. We recommend an Accumulate on the stock with Target Price of

100

`223.

Key Financials

Y/E

Sales

OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

FY2017E

25,315

88.2

7,405

14.2

15.2

14.3

2.2

9.8

8.8

Source: Company, Angel Research

FY2018E

29,193

88.7

8,979

17.2

16.1

11.3

1.9

8.7

7.9

Source: Company, Angel Research

Stock Info

Alkem Leboratories

CMP

1,812

 Alkem is 5^th largest pharma company is the domestic market. It has presence

1,989

in India, US and a few other countries. The 73% of its revenues come from the

Upside

9.8%

Indian markets while 20% come from the US and rest from the other countries.

The company has leadership position in the anti infective segment in India and

Sector

Pharma

it is ranked as no. 3 in Gastro-Intestinal and Pain/Analgesics segments.

Market Cap (` cr)

21,662

Overall it holds 3.6% market share in the domestic formulations business and

Beta

0.25

7.9% share in in overall prescriptions in country.

52 Week High / Low

1,853/ 1,175

 In the domestic market, company operates in acute and chronic segments. It is

a prominent player in acute segment but still an entrant in chronic segment. It

3 year-Chart

has aggressively hired sales force in last three years to increase its sales from

1,900

chronic segment. Alkem has a strong track record of growth in the domestic

1,800

market which is likely to continue. In the US, company is focusing on

1,700

1,600

monetization of its ANDA pipeline. As of September 2016, company has a

1,500

pipeline of 76 ANDAs of which 34 are approved. Company expects to launch

1,400

~7-8 ANDAs each year and expects to improve the filing rate as well. Overall

1,300

1,200

US revenues are expected to grow at ~25% growth rate.

1,100

 Overall outlook remains strong with 17.6% CAGR in the topline and 22.3%

1,000

CAGR in the bottom-line. We have an Accumulate rating on the stock.

Key Financials

Source: Company, Angel Research

Y/E

Sales

OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

FY2017E

6,043

18.7

973

80.5

22.3

22.5

5.0

14.7

3.5

FY2018E

6,893

19.3

1,062

88.8

20.3

20.4

4.2

12.4

3.0

Source: Company, Angel Research

February 4, 2017

Top Picks Report | February 2017

Stock Info

Lupin

CMP

1,491

 Lupin is the fastest growing company among the top 5 companies in domestic

1,809

formulation space, registering a CAGR of 20.0% vs. market growth of ~13-

Upside

21.3%

14%. Six of Lupin's products are among the top 300 brands in the country.

Sector

Pharma

 In US market, Lupin is currently the 5^th largest generic player with 5.3% market

Market Cap (` cr)

67,289

share in prescriptions. Lupin has total 338 ANDA filings, of which 196 have

been approved, with 45 FTFs valued at more than US$13bn. Lupin plans to

Beta

0.77

launch 25-30 products in the US in FY2017. We expect a CAGR of 22.9% in

52 Week High / Low

1,912 / 1,294

US market during FY2016-18E on back of new product launches.

 Lupin figures among the few Indian companies with a formidable presence in

3 year-Chart

2,500

Japan, the world’s second largest pharma market. Management believes that

there will be patent expiries of ~US$14-16bn in next two years in the

2,000

Japanese market, which along with increased generic penetration would drive

1,500

growth in the market. The Management expects improvement in growth in the

next 3-4 years. We recommend to buy this stock with target price of `1,809.

1,000

500

Key Financials

Y/E

Sales

OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

FY2017E

15,912

26.4

2,611

58.1

21.4

25.7

5.0

16.3

4.3

FY2018E

18,644

26.7

3,117

69.3

20.9

21.5

4.1

13.1

3.5

Source: Company, Angel Research

February 4, 2017

Top Picks Report | February 2017

Macro watch

Exhibit 1: Quarterly GDP trends

Exhibit 2: IIP trends

(%)

9.0

7.0

8.3

5.7

7.9

6.0

8.0

7.5

7.6

7.2

7.3

5.0

7.1

6.6

6.7

4.0

7.0

6.4

3.0

2.2

5.8

1.9

6.0

2.0

1.3

0.7

1.0

0.3

5.0

4.0

(1.0)

(0.7)

(2.0)

(1.3)

3.0

(1.6)

(1.8)

(3.0)

(2.5)

Source: CSO, Angel Research

Source: MOSPI, Angel Research

Exhibit 3: Monthly CPI inflation trends

Exhibit 4: Manufacturing and services PMI

56.0

Mfg. PMI

Services PMI

(%)

7.0

54.0

6.1

5.7

5.8

6.0

5.3

5.5

5.1

52.0

4.8

5.0

4.4

4.2

50.0

3.6

4.0

3.4

48.0

3.0

46.0

2.0

1.0

44.0

42.0

Source: MOSPI, Angel Research

Source: Market, Angel Research; Note: Level above 50 indicates expansion

Exhibit 5: Exports and imports growth trends

Exhibit 6: Key policy rates

(%)

Exports yoy growth

Imports yoy growth

(%)

Repo rate

Reverse Repo rate

CRR

15.0

7.00

10.0

6.50

5.0

6.00

0.0

5.50

(5.0)

5.00

(10.0)

4.50

(15.0)

(20.0)

4.00

(25.0)

3.50

(30.0)

3.00

Source: Bloomberg, Angel Research

Source: RBI, Angel Research

February 4, 2017

Stock Watch | February 2017

Company Name

Reco

CMP

Target

Mkt Cap

Sales (` cr)

OPM (%)

EPS (`)

PER (x)

P/BV (x)

RoE (%)

EV/Sales (x)

(`)

Price (`)

(` cr)

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

Agri / Agri Chemical

Rallis

Neutral

250

4,859

1,937

2,164

13.3

14.3

9.0

11.0

27.8

22.7

4.8

4.2

18.4

19.8

2.5

2.2

United Phosphorus

Neutral

738

37,423

15,176

17,604

18.5

37.4

44.6

19.7

16.6

3.9

3.2

21.4

21.2

2.6

2.2

Auto & Auto Ancillary

Amara Raja Batteries

Accumulate

909

1,009

15,534

5,305

6,100

16.0

16.3

28.4

34.0

32.0

26.7

6.2

5.2

19.3

2.9

2.5

Apollo Tyres

Buy

183

235

9,330

12,877

14,504

14.3

13.9

21.4

23.0

8.6

8.0

1.3

1.2

16.4

15.2

0.9

0.8

Ashok Leyland

Buy

111

26,894

22,407

26,022

10.6

5.2

6.4

18.1

14.7

4.1

3.5

23.6

24.7

1.3

1.1

Bajaj Auto

Neutral

2,810

81,311

25,093

27,891

19.5

19.2

143.9

162.5

19.5

17.3

5.5

4.7

30.3

29.3

3.0

2.6

Bharat Forge

Neutral

948

22,060

7,726

8,713

20.5

21.2

35.3

42.7

26.8

22.2

5.0

4.5

18.9

20.1

2.9

2.5

Ceat

Buy

1,193

1,450

4,827

7,524

8,624

13.0

12.7

131.1

144.3

9.1

8.3

1.7

1.4

19.8

18.6

0.7

0.6

Eicher Motors

Neutral

23,386

63,618

16,583

20,447

17.5

18.0

598.0

745.2

39.1

31.4

13.4

10.2

41.2

38.3

3.7

2.9

Exide Industries

Neutral

209

17,752

7,439

8,307

15.0

8.1

9.3

25.8

22.5

3.6

3.2

14.3

16.7

2.0

1.8

Gabriel India

Buy

112

130

1,610

1,544

1,715

9.0

9.3

5.4

6.3

20.8

17.8

3.9

3.5

18.9

19.5

1.0

0.9

Hero Motocorp

Accumulate

3,216

3,541

64,215

30,958

34,139

15.7

193.6

208.3

16.6

15.4

6.5

5.4

34.2

30.5

1.9

1.7

Indag Rubber

Neutral

180

474

286

326

19.8

16.8

11.7

13.3

15.4

13.5

2.6

2.4

17.8

17.1

1.3

1.2

Jamna Auto Industries

Neutral

194

1,541

1,486

1,620

9.8

9.9

15.0

17.2

12.9

11.3

2.8

2.4

21.8

21.3

1.1

1.0

JK Tyres

Neutral

121

2,754

7,455

8,056

15.0

21.8

24.5

5.6

5.0

1.2

0.9

22.8

21.3

0.5

0.4

L G Balakrishnan & Bros Neutral

588

923

1,302

1,432

11.6

11.9

43.7

53.0

13.5

11.1

1.9

1.7

13.8

14.2

0.8

0.7

Mahindra and Mahindra Neutral

1,263

78,447

46,534

53,077

11.6

11.7

67.3

78.1

18.8

16.2

3.0

2.7

15.4

15.8

1.7

1.4

Maruti

Accumulate

6,118

6,560

1,84,813

67,822

83,288

16.0

16.4

253.8

312.4

24.1

19.6

5.5

4.5

23.0

22.9

2.4

1.9

Minda Industries

Neutral

383

3,042

2,728

3,042

9.0

9.1

68.2

86.2

5.6

4.4

1.3

1.0

23.8

24.3

1.2

1.0

Motherson Sumi

Neutral

340

47,744

45,896

53,687

7.8

8.2

13.0

16.1

26.1

21.1

8.4

6.7

34.7

35.4

1.1

0.9

Rane Brake Lining

Neutral

975

771

511

562

11.3

11.5

28.1

30.9

34.7

31.5

5.3

4.8

15.3

15.0

1.6

1.5

Setco Automotive

Neutral

494

741

837

13.0

15.2

17.0

2.4

2.2

0.4

15.8

16.3

1.0

Subros

Neutral

188

1,125

1,488

1,681

11.7

11.9

6.4

7.2

29.3

26.2

3.1

2.8

10.8

11.4

1.0

0.8

Swaraj Engines

Neutral

1,437

1,784

660

810

15.2

16.4

54.5

72.8

26.4

19.7

8.2

7.5

31.5

39.2

2.5

2.0

Tata Motors

Neutral

523

1,50,856

3,00,209

3,38,549

8.9

8.4

42.7

54.2

12.2

9.6

2.0

1.7

15.6

17.2

0.6

0.5

TVS Motor

Neutral

392

18,612

13,390

15,948

6.9

7.1

12.8

16.5

30.7

23.7

7.6

6.0

26.3

27.2

1.4

1.2

Banking

Axis Bank

Buy

490

580

1,17,099

46,932

53,575

3.5

3.4

32.3

44.6

15.1

11.0

1.9

1.69

13.6

16.5

Bank of Baroda

Neutral

186

42,927

19,980

23,178

1.8

11.5

17.3

16.2

10.8

1.9

1.5

8.3

10.1

Canara Bank

Neutral

311

16,865

15,225

16,836

1.8

14.5

28.0

21.4

11.1

1.5

1.2

5.8

8.5

Can Fin Homes

Accumulate

2,001

2,128

5,328

420

526

3.5

86.5

107.8

23.1

18.6

5.0

4.1

23.6

24.1

Cholamandalam Inv.

Buy

1,044

1,230

16,313

2,012

2,317

6.3

42.7

53.6

24.4

19.5

3.9

3.3

16.9

18.3

Dewan Housing Finance Buy

297

350

9,290

2,225

2,688

2.9

29.7

34.6

10.0

8.6

1.6

1.4

16.1

16.8

Equitas Holdings

Buy

183

235

6,149

939

1,281

11.7

11.5

5.8

8.2

31.6

22.4

2.7

2.4

10.9

11.5

Federal Bank

Neutral

14,548

8,259

8,995

3.0

4.3

5.6

19.7

15.1

1.7

1.5

8.5

10.1

HDFC

Neutral

1,396

2,21,244

11,475

13,450

3.4

45.3

52.5

30.8

26.6

5.9

5.2

20.2

20.5

HDFC Bank

Neutral

1,311

3,34,774

46,097

55,433

4.5

58.4

68.0

22.5

19.3

3.9

3.29

18.8

18.6

ICICI Bank

Accumulate

281

315

1,63,796

42,800

44,686

3.1

3.3

18.0

21.9

15.6

12.8

2.1

2.0

11.1

12.3

February 4, 2017

Stock Watch | February 2017

Company Name

Reco

CMP

Target

Mkt Cap

Sales (` cr)

OPM (%)

EPS (`)

PER (x)

P/BV (x)

RoE (%)

EV/Sales (x)

(`)

Price (`)

(` cr)

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

Lakshmi Vilas Bank

Buy

140

174

2,679

3,339

3,799

2.7

2.8

11.0

14.0

12.7

10.0

1.3

1.2

11.2

12.7

LIC Housing Finance

Accumulate

559

630

28,201

3,712

4,293

2.6

2.5

39.0

46.0

14.3

12.1

2.7

2.3

19.9

20.1

Punjab Natl.Bank

Neutral

150

31,920

23,532

23,595

2.3

2.4

6.8

12.6

22.1

11.9

3.4

2.4

3.3

6.5

RBL Bank

Neutral

390

14,428

1,783

2,309

2.6

12.7

16.4

30.7

23.8

3.3

3.0

12.8

13.3

South Ind.Bank

Neutral

3,021

6,435

7,578

2.5

2.7

3.1

8.3

7.2

1.1

0.9

10.1

11.2

St Bk of India

Neutral

277

2,21,185

88,650

98,335

2.6

13.5

18.8

20.5

14.8

2.0

1.7

7.0

8.5

Union Bank

Neutral

167

11,497

13,450

14,925

2.3

25.5

34.5

6.6

4.8

1.0

0.8

7.5

10.2

Yes Bank

Neutral

1,397

59,101

8,978

11,281

3.3

3.4

74.0

90.0

18.9

15.5

3.6

3.0

17.0

17.2

Capital Goods

ACE

Neutral

523

709

814

4.1

4.6

1.4

2.1

37.8

25.2

1.6

1.5

4.4

6.0

0.9

0.8

BEML

Neutral

1,256

5,232

3,451

4,055

6.3

9.2

31.4

57.9

40.0

21.7

2.4

2.2

6.3

10.9

1.6

1.4

BGR Energy

Neutral

135

977

16,567

33,848

6.0

5.6

7.8

5.9

17.4

22.9

1.0

4.7

4.2

0.2

0.1

Bharat Electronics

Neutral

1,544

34,495

8,137

9,169

16.8

17.2

58.7

62.5

26.3

24.7

4.1

3.6

44.6

46.3

3.2

2.9

BHEL

Neutral

143

34,939

28,797

34,742

2.8

2.3

6.9

62.1

20.7

1.1

1.0

1.3

4.8

0.9

0.6

Blue Star

Buy

538

634

5,138

4,283

5,077

5.9

7.3

14.9

22.1

36.1

24.3

7.0

5.9

20.4

26.4

1.2

1.0

Crompton Greaves

Neutral

4,249

5,777

6,120

5.9

7.0

3.3

4.5

20.5

15.1

0.9

4.4

5.9

0.7

0.6

Greaves Cotton

Neutral

140

3,415

1,755

1,881

16.8

16.9

7.8

8.5

17.9

16.5

3.6

3.3

20.6

20.9

1.6

1.5

Inox Wind

Neutral

184

4,079

5,605

6,267

15.7

16.4

24.8

30.0

7.4

6.1

2.1

1.5

25.9

24.4

0.8

0.6

KEC International

Neutral

152

3,896

9,294

10,186

7.9

8.1

9.9

11.9

15.3

12.7

2.2

1.9

15.6

16.3

0.7

0.6

KEI Industries

Buy

168

207

1,308

2,682

3,058

10.4

10.0

11.7

12.8

14.3

13.1

2.9

2.4

20.1

18.2

0.7

0.6

Thermax

Neutral

830

9,886

5,421

5,940

7.3

25.7

30.2

32.3

27.5

3.9

3.6

12.2

13.1

1.7

1.6

VATech Wabag

Buy

490

681

2,671

3,136

3,845

8.9

9.1

26.0

35.9

18.8

13.6

2.4

2.0

13.4

15.9

0.8

0.6

Voltas

Buy

331

407

10,954

6,511

7,514

7.9

8.7

12.9

16.3

25.7

20.3

4.6

4.0

16.7

18.5

1.4

1.2

Cement

ACC

Neutral

1,426

26,787

11,225

13,172

13.2

16.9

44.5

75.5

32.1

18.9

3.0

2.8

11.2

14.2

2.4

2.0

Ambuja Cements

Neutral

229

45,521

9,350

10,979

18.2

22.5

5.8

9.5

39.5

24.1

3.3

3.0

10.2

12.5

4.9

4.1

India Cements

Neutral

162

4,970

4,364

4,997

18.5

19.2

7.9

11.3

20.5

14.3

1.5

1.4

8.0

8.5

1.9

1.7

JK Cement

Neutral

755

5,275

4,398

5,173

15.5

17.5

31.2

55.5

24.2

13.6

2.9

2.5

12.0

15.5

1.7

1.4

J K Lakshmi Cement

Buy

393

565

4,629

2,913

3,412

14.5

19.5

7.5

22.5

52.4

17.5

3.2

2.7

12.5

18.0

2.2

1.8

Orient Cement

Buy

143

215

2,920

2,114

2,558

18.5

20.5

8.1

11.3

17.6

12.6

2.6

2.2

9.0

14.0

2.0

1.6

UltraTech Cement

Neutral

3,738

1,02,583

25,768

30,385

21.0

23.5

111.0

160.0

33.7

23.4

4.3

3.8

13.5

15.8

4.1

3.4

Construction

Engineers India

Neutral

150

10,118

1,725

1,935

16.0

19.1

11.4

13.9

13.2

10.8

1.8

13.4

15.3

4.8

4.3

Gujarat Pipavav Port

Neutral

150

7,269

705

788

52.2

51.7

5.0

5.6

30.1

26.8

3.0

2.7

11.2

10.0

8.4

ITNL

Neutral

110

3,627

8,946

10,017

31.0

31.6

8.1

9.1

13.6

12.1

0.5

4.2

5.0

3.7

3.5

KNR Constructions

Neutral

185

2,608

1,385

1,673

14.7

14.0

41.2

48.5

4.5

3.8

0.8

0.7

14.9

15.2

2.0

1.6

Larsen & Toubro

Accumulate

1,479

1,634

1,37,985

1,11,017

1,24,908

11.0

61.1

66.7

24.2

22.2

2.9

2.7

13.1

12.9

2.3

2.1

MEP Infra

Neutral

674

1,877

1,943

30.6

29.8

3.0

4.2

13.8

9.9

6.7

4.5

0.6

1.7

1.6

Nagarjuna Const.

Neutral

4,731

8,842

9,775

9.1

8.8

5.3

6.4

16.1

13.3

1.3

1.2

8.2

9.1

0.7

0.6

NBCC

Neutral

276

16,542

7,428

9,549

7.9

8.6

8.2

11.0

33.6

25.1

1.7

1.3

28.2

28.7

1.9

1.4

February 4, 2017

Stock Watch | February 2017

Company Name

Reco

CMP

Target

Mkt Cap

Sales (` cr)

OPM (%)

EPS (`)

PER (x)

P/BV (x)

RoE (%)

EV/Sales (x)

(`)

Price (`)

(` cr)

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

PNC Infratech

Buy

106

143

2,710

2,350

2,904

13.1

13.2

9.0

8.8

11.7

12.0

0.4

15.9

13.9

1.3

1.0

Power Mech Projects

Neutral

451

663

1,801

2,219

12.7

14.6

72.1

113.9

6.3

4.0

1.1

1.0

16.8

11.9

0.4

0.3

Sadbhav Engineering

Accumulate

283

298

4,859

3,598

4,140

10.3

10.6

9.0

11.9

31.5

23.8

3.3

2.9

9.9

11.9

1.6

1.4

Simplex Infra

Neutral

312

1,543

6,829

7,954

10.5

31.4

37.4

9.9

8.3

1.0

0.9

9.9

13.4

0.6

0.5

SIPL

Neutral

100

3,526

1,036

1,252

65.5

66.2

(8.4)

(5.6)

3.7

4.3

(22.8)

(15.9)

11.6

9.7

FMCG

Asian Paints

Neutral

985

94,515

17,128

18,978

16.8

16.4

19.1

20.7

51.6

47.6

17.9

16.9

34.8

35.5

5.4

4.9

Britannia

Accumulate

3,230

3,626

38,757

9,594

11,011

14.6

14.9

80.3

94.0

40.2

34.4

16.5

12.8

41.2

3.9

3.3

Colgate

Accumulate

901

995

24,509

4,605

5,149

23.4

23.8

26.9

37.9

33.5

21.0

16.4

64.8

66.8

5.2

4.7

Dabur India

Accumulate

269

304

47,438

8,315

9,405

19.8

20.7

8.1

9.2

33.2

29.3

9.3

7.7

31.6

31.0

5.4

4.7

GlaxoSmith Con*

Neutral

5,076

21,345

4,350

4,823

21.2

21.4

179.2

196.5

28.3

25.8

7.5

6.4

27.1

26.8

4.3

3.8

Godrej Consumer

Neutral

1,582

53,871

10,235

11,428

18.4

18.6

41.1

44.2

38.5

35.8

8.5

7.2

24.9

24.8

5.3

4.7

HUL

Neutral

848

1,83,595

35,252

38,495

17.8

20.6

22.4

41.1

37.9

39.3

33.7

95.6

88.9

5.0

4.6

ITC

Neutral

272

3,30,246

40,059

44,439

38.3

39.2

9.0

10.1

30.3

26.9

8.5

7.4

27.8

27.5

7.7

7.0

Marico

Buy

256

300

33,014

6,430

7,349

18.8

19.5

6.4

7.7

40.0

33.2

12.1

10.2

33.2

32.5

4.9

4.3

Nestle*

Neutral

6,079

58,607

10,073

11,807

20.7

21.5

124.8

154.2

48.7

39.4

20.0

18.0

34.8

36.7

5.6

4.8

Procter & Gamble

Accumulate

7,000

7,369

22,724

2,939

3,342

23.2

23.0

146.2

163.7

47.9

42.8

107.2

102.8

25.3

23.5

7.3

6.3

Tata Global

Neutral

142

8,953

8,675

9,088

9.8

7.4

8.2

19.2

17.3

2.2

2.1

7.9

8.1

0.9

HCL Tech^

Buy

829

1,000

1,17,052

49,242

57,168

20.5

55.7

64.1

14.9

12.9

3.0

2.3

20.3

17.9

2.2

1.8

Infosys

Buy

935

1,249

2,14,753

68,350

77,326

27.0

62.5

69.4

15.0

13.5

3.2

2.9

21.3

21.6

2.6

2.2

TCS

Buy

2,234

2,620

4,40,144

1,19,025

1,33,308

27.6

131.2

145.5

17.0

15.4

5.5

5.1

32.4

33.1

3.5

3.1

Tech Mahindra

Buy

481

600

46,759

29,673

32,937

15.5

17.0

32.8

39.9

14.6

12.0

2.9

2.5

19.6

20.7

1.3

1.1

Wipro

Buy

457

583

1,11,018

55,440

60,430

18.1

36.1

38.9

12.7

11.7

2.3

2.1

19.0

17.6

1.7

1.5

Media

D B Corp

Neutral

379

6,971

2,297

2,590

27.4

28.2

21.0

23.4

18.1

16.2

4.2

3.6

23.7

23.1

2.8

2.4

Hindustan Media Ven.

Neutral

276

2,029

1,016

1,138

24.3

25.2

27.3

30.1

10.1

9.2

1.9

1.7

16.2

15.8

1.3

1.1

HT Media

Neutral

1,929

2,693

2,991

12.6

12.9

7.9

9.0

10.5

9.2

0.9

0.8

7.8

8.3

0.3

0.2

Jagran Prakashan

Buy

187

225

6,118

2,355

2,635

28.0

10.8

12.5

17.3

15.0

3.8

3.2

21.7

2.6

2.3

Sun TV Network

Neutral

684

26,949

2,850

3,265

70.1

71.0

26.2

30.4

26.1

22.5

6.7

5.9

24.3

25.6

9.0

7.8

TV Today Network

Buy

270

385

1,609

637

743

27.5

18.4

21.4

14.7

12.6

2.6

2.2

17.4

17.2

2.1

1.7

Metal

Coal India

Neutral

326

2,02,393

84,638

94,297

21.4

22.3

24.5

27.1

13.3

12.0

5.5

5.3

42.6

46.0

1.9

1.7

Hind. Zinc

Neutral

322

1,35,907

14,252

18,465

55.9

48.3

15.8

21.5

20.4

15.0

3.3

2.9

17.0

20.7

9.5

7.4

Hindalco

Neutral

192

39,587

1,07,899

1,12,095

7.4

8.2

9.2

13.0

20.8

14.7

1.0

0.9

4.8

6.6

0.9

0.8

JSW Steel

Neutral

191

46,169

53,201

58,779

16.1

16.2

130.6

153.7

1.5

1.2

0.2

14.0

14.4

1.6

1.4

NMDC

Neutral

148

46,920

6,643

7,284

44.4

47.7

7.1

7.7

20.9

19.3

1.8

8.8

9.2

4.8

4.4

SAIL

Neutral

27,073

47,528

53,738

(0.7)

2.1

(1.9)

2.6

25.2

0.7

(1.6)

3.9

1.4

1.3

Vedanta

Neutral

251

74,340

71,744

81,944

19.2

21.7

13.4

20.1

18.7

12.5

1.6

1.4

8.4

11.3

1.4

1.1

Tata Steel

Neutral

472

45,837

1,21,374

1,21,856

7.2

8.4

18.6

34.3

25.4

13.8

1.6

1.4

6.1

10.1

1.0

February 4, 2017

Stock Watch | February 2017

Company Name

Reco

CMP

Target

Mkt Cap

Sales (` cr)

OPM (%)

EPS (`)

PER (x)

P/BV (x)

RoE (%)

EV/Sales (x)

(`)

Price (`)

(` cr)

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

Oil & Gas

Cairn India

Neutral

276

51,755

9,127

10,632

4.3

20.6

8.8

11.7

31.4

23.6

1.0

3.3

4.2

7.1

5.9

GAIL

Neutral

478

60,601

56,220

65,198

9.3

10.1

27.1

33.3

17.6

14.3

1.6

1.5

9.3

10.7

1.3

1.1

Indian Oil Corp

Neutral

387

1,88,093

3,73,359

4,28,656

5.9

5.5

54.0

59.3

7.2

6.5

1.1

1.0

16.0

15.6

0.7

0.6

ONGC

Neutral

201

2,57,884

1,37,222

1,52,563

15.0

21.8

19.5

24.1

10.3

8.3

0.9

0.8

8.5

10.1

2.2

1.9

Reliance Industries

Neutral

1,034

3,35,290

3,01,963

3,58,039

12.1

12.6

87.7

101.7

11.8

10.2

1.2

1.1

10.7

11.3

1.6

1.3

Pharmaceuticals

Alembic Pharma

Neutral

557

10,506

3,483

4,083

20.2

21.4

24.3

30.4

22.9

18.3

5.2

4.2

25.5

25.3

3.0

2.4

Alkem Laboratories Ltd

Accumulate

1,812

1,989

21,662

6,043

6,893

18.7

19.3

80.5

88.8

22.5

20.4

5.0

4.1

22.3

20.3

3.5

3.0

Aurobindo Pharma

Buy

685

877

40,105

15,720

18,078

23.7

41.4

47.3

16.6

14.5

4.3

3.4

29.6

26.1

2.8

2.4

Aventis*

Neutral

4,080

9,396

2,277

2,597

17.3

18.3

149.4

172.0

27.3

23.7

4.5

3.6

25.1

28.8

3.8

3.1

Cadila Healthcare

Accumulate

365

400

37,331

10,429

12,318

22.6

22.0

16.9

19.2

21.6

19.0

5.5

4.4

28.5

25.7

3.6

2.9

Cipla

Sell

608

490

48,936

15,378

18,089

17.4

18.4

21.6

27.2

28.2

22.4

3.6

3.2

13.7

15.2

3.4

2.8

Dr Reddy's

Neutral

3,142

52,043

16,043

18,119

20.8

22.4

112.4

142.9

28.0

22.0

3.7

3.3

14.1

15.9

3.2

2.8

Dishman Pharma

Neutral

237

3,827

1,718

1,890

22.7

22.8

9.5

11.3

25.0

21.0

2.4

2.2

10.1

10.9

2.7

2.3

GSK Pharma*

Neutral

2,699

22,864

3,000

3,312

15.4

20.6

46.5

60.8

58.1

44.4

13.9

26.3

30.6

7.4

6.7

Indoco Remedies

Reduce

273

240

2,518

1,112

1,289

16.2

18.2

11.6

16.0

23.6

17.1

3.8

3.2

17.0

20.1

2.4

2.0

Ipca labs

Buy

531

613

6,703

3,303

3,799

15.3

17.3

19.7

30.7

27.0

2.7

2.4

9.1

9.4

2.2

1.9

Lupin

Buy

1,491

1,809

67,289

15,912

18,644

26.4

26.7

58.1

69.3

25.7

21.5

5.0

4.1

21.4

20.9

4.3

3.5

Sun Pharma

Buy

647

847

1,55,265

31,129

35,258

32.0

32.9

30.2

35.3

21.4

18.3

3.5

2.9

20.0

20.1

4.6

3.8

Power

NTPC

Neutral

172

1,41,781

86,605

95,545

17.5

20.8

11.8

13.4

14.6

12.8

1.5

1.4

10.5

11.1

3.0

Power Grid

Accumulate

202

223

1,05,521

25,315

29,193

88.2

88.7

14.2

17.2

14.2

11.8

2.2

1.9

15.2

16.1

8.8

7.9

Tata Power

Neutral

21,814

36,916

39,557

17.4

27.1

5.1

6.3

15.8

12.8

1.4

1.3

9.0

10.3

1.6

1.4

Real Estate

MLIFE

Buy

356

522

1,461

1,152

1,300

22.7

24.6

29.9

35.8

11.9

9.9

0.9

0.8

7.6

8.6

2.0

1.6

Prestige Estate

Buy

168

210

6,291

4,707

5,105

25.2

26.0

10.3

13.0

16.3

12.9

1.3

1.2

10.3

10.2

2.5

2.2

Telecom

Bharti Airtel

Neutral

354

1,41,368

1,05,086

1,14,808

34.5

34.7

12.2

16.4

29.0

21.6

2.0

1.8

6.8

8.4

2.3

2.0

Idea Cellular

Neutral

109

39,326

40,133

43,731

37.2

37.1

6.4

6.5

17.1

16.8

1.4

1.3

8.2

7.6

2.0

1.7

Others

Abbott India

Neutral

4,440

9,434

3,153

3,583

14.1

14.4

152.2

182.7

29.2

24.3

143.2

122.3

25.6

26.1

2.7

2.3

Asian Granito

Buy

271

351

815

1,060

1,169

12.2

12.5

12.7

15.9

21.4

17.0

2.0

1.8

9.5

10.6

1.1

0.9

Bajaj Electricals

Accumulate

250

274

2,530

4,801

5,351

5.7

6.2

10.4

13.7

24.0

18.3

3.0

2.6

12.4

14.5

0.5

Banco Products (India)

Neutral

214

1,529

1,353

1,471

12.3

12.4

14.5

16.3

14.7

13.1

20.4

18.3

14.5

14.6

1.1

114.9

Coffee Day Enterprises

Neutral

200

4,117

2,964

3,260

20.5

21.2

4.7

8.0

25.0

2.3

2.1

5.5

8.5

1.8

1.6

Competent Automobiles Neutral

170

104

1,137

1,256

3.1

2.7

28.0

23.6

6.1

7.2

32.7

29.5

14.3

11.5

0.1

Elecon Engineering

Neutral

642

1,482

1,660

13.7

14.5

3.9

5.8

14.7

9.9

3.4

3.2

7.8

10.9

0.7

Finolex Cables

Neutral

446

6,828

2,883

3,115

12.0

12.1

14.2

18.6

31.4

24.0

16.7

14.6

15.8

14.6

2.1

1.9

February 4, 2017

Stock Watch | February 2017

Company Name

Reco

CMP

Target

Mkt Cap

Sales (` cr)

OPM (%)

EPS (`)

PER (x)

P/BV (x)

RoE (%)

EV/Sales (x)

(`)

Price (`)

(` cr)

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

Garware Wall Ropes

Neutral

615

1,345

873

938

14.3

35.1

37.5

17.5

16.4

3.1

2.6

17.5

15.9

1.4

1.3

Goodyear India*

Neutral

728

1,679

1,598

1,704

10.4

10.2

49.4

52.6

14.7

13.8

68.0

59.7

18.2

17.0

0.7

102.4

Hitachi

Neutral

1,429

3,884

2,081

2,433

8.8

8.9

33.4

39.9

42.8

35.8

34.5

28.8

22.1

21.4

1.9

1.6

HSIL

Neutral

284

2,056

2,384

2,515

15.8

16.3

15.3

19.4

18.6

14.7

18.5

15.9

7.8

9.3

1.0

0.9

Interglobe Aviation

Neutral

859

31,036

21,122

26,005

14.5

27.6

110.7

132.1

7.8

6.5

46.4

33.2

168.5

201.1

1.4

1.1

Jyothy Laboratories

Neutral

351

6,368

1,440

2,052

11.5

13.0

8.5

10.0

41.3

35.1

10.0

9.3

18.6

19.3

4.7

3.3

Kirloskar Engines India

Neutral

343

4,959

2,554

2,800

9.9

10.0

10.5

12.1

32.7

28.3

13.7

12.9

10.7

11.7

1.6

1.4

Linc Pen & Plastics

Neutral

267

395

382

420

9.3

9.5

13.5

15.7

19.8

17.0

3.4

2.9

17.1

17.3

1.1

1.0

M M Forgings

Neutral

495

597

546

608

20.4

20.7

41.3

48.7

12.0

10.2

67.7

60.0

16.6

17.0

0.9

0.8

Manpasand Bever.

Neutral

660

3,776

836

1,087

19.6

19.4

16.9

23.8

39.1

27.7

4.7

4.1

12.0

14.8

4.3

3.2

Mirza International

Buy

107

1,118

1,024

1,148

18.0

6.9

8.0

13.5

11.6

2.3

1.9

16.6

16.3

1.3

1.1

MT Educare

Neutral

127

507

366

417

17.7

18.2

9.4

10.8

13.6

11.8

3.0

2.6

22.2

22.3

1.3

1.1

Narayana Hrudaya

Neutral

334

6,827

1,873

2,166

11.5

11.7

2.6

4.0

126.3

84.3

7.7

7.0

6.1

8.3

3.7

3.2

Navkar Corporation

Buy

174

265

2,481

369

561

42.9

42.3

7.2

11.5

24.1

15.1

1.8

1.6

7.3

10.5

7.7

5.1

Navneet Education

Neutral

133

3,107

1,062

1,147

24.0

6.1

6.6

21.8

20.1

4.5

4.0

20.5

19.8

3.0

2.8

Nilkamal

Neutral

1,672

2,495

1,995

2,165

10.7

10.4

69.8

80.6

24.0

20.7

95.5

83.0

16.6

16.5

1.2

1.1

Page Industries

Neutral

14,238

15,880

2,450

3,124

20.1

17.6

299.0

310.0

47.6

45.9

317.1

242.1

47.1

87.5

6.5

5.1

Parag Milk Foods

Neutral

270

2,272

1,919

2,231

9.3

9.6

9.4

12.9

28.6

20.9

4.4

3.7

15.5

17.5

1.3

1.1

Quick Heal

Neutral

278

1,949

408

495

27.3

27.0

7.7

8.8

35.9

31.6

3.3

9.3

10.6

3.9

3.2

Radico Khaitan

Buy

122

147

1,629

1,667

1,824

13.0

13.2

6.6

8.2

18.4

15.0

1.7

1.5

9.0

10.2

1.4

1.2

Relaxo Footwears

Neutral

438

5,259

2,085

2,469

9.2

8.2

7.6

7.9

57.9

55.1

22.5

19.2

17.9

18.8

2.6

2.2

S H Kelkar & Co.

Neutral

312

4,517

1,036

1,160

15.1

15.0

6.1

7.2

51.2

43.5

5.5

5.0

10.7

11.5

4.2

3.7

Siyaram Silk Mills

Accumulate

1,548

1,720

1,451

1,652

1,857

11.6

11.7

92.4

110.1

16.7

14.1

2.5

2.1

14.7

15.2

1.1

1.0

Styrolution ABS India*

Neutral

637

1,119

1,440

1,537

9.2

9.0

40.6

42.6

15.7

14.9

40.0

36.4

12.3

11.6

0.7

0.6

Surya Roshni

Neutral

191

837

3,342

3,625

7.8

7.5

17.3

19.8

11.1

9.7

21.0

16.8

10.5

10.8

0.5

Team Lease Serv.

Neutral

941

1,608

3,229

4,001

1.5

1.8

22.8

32.8

41.3

28.6

4.4

3.8

10.7

13.4

0.4

0.3

The Byke Hospitality

Neutral

164

656

287

384

20.5

7.6

10.7

21.5

15.3

4.5

3.6

20.7

23.5

2.3

1.7

Transport Corp. of India

Neutral

183

1,404

2,671

2,911

8.5

8.8

13.9

15.7

13.2

11.7

1.8

1.6

13.7

13.8

0.6

TVS Srichakra

Neutral

3,306

2,531

2,304

2,614

13.7

13.8

231.1

266.6

14.3

12.4

371.4

292.5

33.9

29.3

1.1

0.9

UFO Moviez

Neutral

422

1,166

619

685

33.2

33.4

30.0

34.9

14.1

12.1

1.9

1.7

13.8

13.9

1.6

1.3

Visaka Industries

Neutral

207

329

1,051

1,138

10.3

10.4

21.0

23.1

9.9

9.0

26.6

24.9

9.0

9.2

0.6

0.5

VRL Logistics

Neutral

302

2,752

1,902

2,119

16.7

16.6

14.6

16.8

20.7

17.9

4.5

4.0

21.9

22.2

1.6

1.4

Wonderla Holidays

Neutral

377

2,129

287

355

38.0

40.0

11.3

14.2

33.3

26.5

4.8

4.2

21.4

23.9

7.1

5.8

Source: Company, Angel Research, Note: *December year end; ^#September year end;

^&October year end; ^June year end; Price as of February 3, 2017

February 4, 2017

Top Picks Report | February 2017

Research Team Tel: 022 - 39357800

E-mail: [email protected]

Website: www.angelbroking.com

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Ratings (Based on expected returns

Buy (> 15%)

Accumulate (5% to 15%)

Neutral (-5 to 5%)

over 12 months investment period):

Reduce (-5% to -15%)

Sell (< -15)