Angel Top Picks - July 2016

The Indian equity market has shown good strength, with it having recovered from

The strength in the recovery post

the recent correction which was in the wake of global sell-off caused by Britain’s

BREXIT clearly indicates that India is in

surprise vote to exit the EU in the referendum election a.k.a. the BREXIT. The

a far favorable situation vis-a-vis other

strength in the recovery clearly indicates that India is in a favorable situation vis-a-

global markets, especially emerging

markets.

vis other countries, especially other emerging markets.

Positive sentiments in favor of India’s prospects stem from an expected

Positive sentiments in favour of India’s

improvement in corporate earnings over FY2016-17. The improvement is

prospects

stem

from

expected

expected to be driven by higher consumption as well as higher government

improvement in corporate earnings over

spends on infrastructure and rural economy, with the latter expected to further

FY2016-17.

benefit from an above-normal monsoon this year which is widely anticipated.

The monsoon which started late this year was lagging initially but has caught up

pace in the last few weeks. The turnaround seen in the last few weeks has resulted

in cumulative rainfall till date turning into surplus of 1.3% over long period

average and in comparison to 11.1% deficit witnessed initially. The predicted

above normal monsoon will ensure adequate crop production and hence food

inflation will remain under check which will provide relief to the already stressed

rural economy. Two consecutive years of drought like situation had resulted in

depressed rural consumption which should bounce back this year.

In addition to this, implementation of the Seventh Pay Commission will result in

higher disposable incomes in the hands of consumers which backs our

constructive opinion about the consumption theme of India.

Implementation of the Seventh Pay

Our top-picks are focused on companies that will benefit from this trend of strong

Commission will result in higher

consumption and government spending on infrastructure. Our consumption

disposable incomes in the hands of

based plays include Blue Star, Voltas, Bajaj Electricals, Siyaram Silk Mills and

consumers and hence we remain

Radico Khaitan. We have added Goodyear India in our top picks as it is a likely

constructive about the consumption

beneficiary of a good monsoon due to its large presence in the tractor tyre

theme of India.

segment. Our picks that will benefit from higher government focus to lower

borrowing costs include LIC Housing Finance, Equitas Holdings, Dewan Housing

Finance, Mahindra Lifespace, NBCC and IL&FS Transportation Networks.

Large Cap

EPS

PER

EV/Sales

ROE

Company

Sector

Rating

CMP (`) Target (`) Upside (%) FY17E FY18E FY17E FY18E FY17E FY18E FY17E FY18E

Amara Raja

Auto Ancill.

Buy

837

1,076

28.6

35.3

43.5

23.7

19.3

2.6

2.1

25.9

26.0

BEL

Capital Goods

Buy

1,171

1,414

20.8

58.7

62.4

19.9

18.8

2.5

2.3

*44.6

*46.3

HCL Tech

Buy

717

1,000

39.5

55.7

64.1

12.9

11.2

1.6

1.1

20.3

17.9

HDFC Bank

Financials

Accumulate

1,185

1,262

6.5

61.4

78.3

19.3

15.1

18.5

21.7

Infosys

Buy

1,157

1,374

18.6

65.3

72.5

17.7

15.9

3.2

2.8

22.2

22.4

LIC Housing Fin.Financials

Buy

498

592

18.8

40.6

47.8

12.3

10.4

20.7

20.5

NBCC

Construction

Accumulate

215

242

12.6

8.2

11.0

26.2

19.5

1.4

1.0

28.2

28.7

Voltas

Capital Goods

Buy

315

407

29.2

12.9

16.3

24.4

19.3

1.7

1.5

16.7

18.5

Source: Angel Research; *Note- Adj. RoEs

Please refer to important disclosures at the end of this report

Top Picks Report | July 2016

Mid Cap

EPS

PER

EV/Sales

ROE

Company

Sector

Rating

CMP (`) Target (`) Upside (%) FY17E FY18E FY17E FY18E FY17E FY18E FY17E FY18E

Bajaj Electricals

Cons. Durable Accumulate

248

268

7.9

12.4

15.7

20.1

15.8

0.5

0.4

14.4

16.1

Blue Star

Cons. Durable Accumulate

435

495

13.7

17.2

20.6

25.4

21.1

0.9

0.8

23.1

24.1

Dewan Housing Financials

Buy

212

270

27.4

29.7

34.6

7.1

6.1

16.1

16.8

Equitas Holdings Financials

Buy

185

235

27.0

6.7

9.4

27.6

19.7

12.4

12.9

Goodyear India Tyre

Buy

526

631

20.1

49.4

52.6

10.6

10.0

0.4

18.2

17.0

IL&FS Transport. Infra

Accumulate

14.1

8.6

5.6

9.5

14.6

3.5

3.4

2.5

2.2

Jagran Prakashan Media

Accumulate

183

205

12.0

10.8

12.5

16.9

14.6

2.6

2.2

21.7

Mahindra LifespaceReal Estate

Buy

466

554

18.9

30.7

36.3

15.2

12.8

3.1

2.1

7.4

8.5

Navkar Corp.

Logistics

Buy

214

265

23.6

6.8

11.5

31.6

18.6

8.4

5.6

6.9

10.5

Radico Khaitan

Breweries & Dist.

Buy

125

32.0

6.3

7.4

15.0

12.9

1.2

1.1

8.6

9.3

Siyaram Silk Mills Textile

Buy

1,080

1,347

24.7

104.9

122.4

10.3

8.8

0.8

0.7

16.4

Source: Angel Research

July 8, 2016

Top Picks Report | July 2016

Stock Info

Amara Raja Batteries

CMP

837

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

1,076

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

Upside

28.6%

(ARBL grew at a 24% CAGR over FY2010-15 as compared to Exide's growth of

13%), leading to its market share improving from 25% in FY10 to about 35%

Sector

Auto Ancillary

currently. ARBL's outperformance has been mainly on back of its association

Market Cap (` cr)

14,293

with global battery leader Johnson Controls Inc (which also holds 26% stake in

Beta

0.831

ARBL) for manufacturing ducts.

52 Week High / Low

1,132 / 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

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

3 year-Chart

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%.

1,200

1,000

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

automotive and the industrial segment and a broad OEM as well as

800

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

600

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

400

200

Key Financials

Y/E

Sales

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

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

FY2017E

5,429

17.5

604

35.3

25.9

23.7

5.6

14.8

2.6

Source: Company, Angel Research

FY2018E

6,471

17.6

742

43.5

26.0

19.3

4.6

12.1

2.1

Source: Company, Angel Research

Stock Info

Bharat Electronics (BEL)

CMP

1,171

 High priority to the defense sector in the government’s ‘Make in India’

1,414

campaign, with (1) emphasis on indigenization, (2) increase in FDI limits from

26% to 49%, and (3) Over $50bn worth of projects cleared by Defense

Upside

20.8%

Acquisition Council (DAC) in the last 25 months, indicate at the sector being at

Sector

Capital Goods

an inflexion point where Indian defense capex cycle is entering a new era of

Market Cap (` cr)

30,241

growth. The current bid pipeline could lead to strong award activity for the

next few years and BEL could emerge as a beneficiary.

Beta

1.1

 BEL in FY2016 had ~35% market share in the defense electronics space.

52 Week High / Low

1,417 / 983

Considering (1) bid-pipeline of Indian Air Force and Navy’s platform projects,

which have high defense electronic component, (2) BEL’s in-house R&D

capabilities, and (3) its zero debt status, we believe that BEL would maintain its

3 year-Chart

strong market positioning in the defense electronics space.

1,600

1,400

 We expect BEL to trade at a premium to its historical valuations on account of

1,200

uptick in investment cycle. Current low competitive intensity which should

1,000

enable BEL to justifiably command scarcity premium, coupled with the fact that

800

the company is the largest listed defense player, makes the stock more

600

attractive. We maintain BUY rating on the stock with price target of `1,414.

400

200

Key Financials

Y/E

Sales

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

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

FY2017E

8,137

16.8

1,410

58.7

44.6

20.0

2.7

16.4

2.5

Source: Company, Angel Research

FY2018E

9,169

17.2

1,499

62.4

46.3

18.8

2.6

14.8

2.3

Source: Company, Angel Research

July 8, 2016

Top Picks Report | July 2016

Stock Info

HCL Technologies

CMP

717

 Healthy pipeline: The 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

39.5%

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.

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

Market Cap (` cr)

1,01,151

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

Beta

0.8

Geometric Software and the Volvo deal).

52 Week High / Low

1,005 / 707

 Robust outlook: HCL Tech signed 7 transformational deals during the quarter

with TCV of more than US$2bn, taking the number of transformational

engagements during the nine month financial year to 25 with TCV of more

3 year-Chart

than US$4bn. These wins were broad-based across service lines and industry

1200

verticals, led by the company’s Next-generation offerings - BEYONDigital, IoT

1000

WoRKS and Next-Gen ITO.

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

Key Financials

200

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

12.9

2.6

7.6

1.6

FY2018E

57,168

20.5

9,037

64.1

17.9

11.2

2.0

5.6

1.1

Source: Company, Angel Research

Stock Info

HDFC Bank

CMP

1,185

 Strong capital adequacy will enable continued growth going ahead: HDFC

1,262

Bank continued to report strong loan growth of 27% yoy and with capital

Upside

6.5%

adequacy ratio of 15.5% at the end of 4QFY2016, the bank has enough

Sector

Financials

scope to continue to grow its loan book and increase its market share.

Market Cap (` cr)

3,00,074

 Asset quality rock-solid: The bank has been able to maintain its asset quality

Beta

0.8

consistently. Asset quality continued to remain healthy with the Gross NPA

52 Week High / Low

1,195 / 929

ratio and the Net NPA ratio at 0.94% and 0.28%, respectively, as of

4QFY2016, in a challenging macro environment.

 Outlook: Credit and deposit growth beat the industry growth rate, driven by

3 year-Chart

strong retail business, healthy CASA and continued network expansion. This

1,400

1,200

provides strong visibility for a robust 20% earnings trajectory, coupled with

1,000

high quality of earnings. This in our view justifies a premium valuation

800

multiple. At the current market price, the bank is trading at 3.0x its FY2018E

600

ABV. We recommend an Accumulate rating on the stock, with a target price of

400

`1,262.

200

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

47,696

4.5

15,514

61.4

330.3

2.0

18.5

19.3

3.6

FY2018E

58,038

4.5

19,790

78.3

391.5

2.0

21.7

15.1

3.0

Source: Company, Angel Research

July 8, 2016

Top Picks Report | July 2016

Stock Info

Infosys

CMP

1,157

 Strong revenue guidance for FY2017: The Management has guided towards

1,374

higher revenue growth for FY2017, ie of 11.5-13.5% in CC terms and 12.7-

Upside

18.8%

14.7% in INR terms (exchange rate as on March 31, 2016). For FY2016, the

Sector

company posted a 13.3% growth in CC terms V/s a guidance of 12.8-13.2%

growth (in CC). We expect the company to post ~13.0% USD revenue growth

Market Cap (` cr)

2,65,802

in FY2017.

Beta

0.8

 Aims to be US$20bn company by FY2020: The company expects its revenue

52 Week High / Low

1,278 / 933

to rise 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

14%

CAGR over the period. Over the near term, we expect Infosys to post a 13.0%

3 year-Chart

USD revenue growth in FY2017. Over FY2016-18E, we expect USD and INR

1400

revenue to grow at a CAGR of 13.0% and 13.0%, respectively.

1200

 Outlook and Valuations: The stock trades at a valuation of 15.9x FY2018E

1000

earnings. We recommend Buy on the stock with a price target of `1,374.

800

Key Financials

600

Y/E

Sales

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

400

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

FY2017E

70,558

27.5

14,999

65.3

22.2

17.7

3.9

11.7

3.2

FY2018E

79,731

27.5

16,657

72.5

22.4

15.9

3.6

10.2

2.8

Source: Company, Angel Research

Stock Info

LIC Housing Finance

CMP

498

 Significant under penetration of mortgages in India: India is expected to

592

witness a robust housing finance growth going forward as the mortgage

Upside

18.8%

penetration in India remains at very low levels at 9% to GDP as compared to

Sector

Financials

the developed countries where it is in the range of 60-100%.

Market Cap (` cr)

25,117

 NIM expansion visible: LICHF is able to raise funds from low-cost NCDs due

Beta

1.4

to its strong AAA credit rating and backing by strong promoters like LIC. In a

declining interest rate environment, NBFC's like LICHF are well-placed to

52 Week High / Low

526 / 389

witness margin improvement in our view.

 Outlook: For companies like LICHF, the funding environment has eased; thus

3 year-Chart

it will lead to lower cost of borrowing, while outlook for growth in retail

600

housing loans remains positive, going forward. We expect the company to

500

post a healthy loan book CAGR of 19% over FY2016-18E, which is likely to

400

reflect in earnings CAGR of 21.0%, over the same period. The stock currently

300

trades at 2.3x FY2018E ABV. We maintain our Buy rating on the stock, with a

target price of `592.

200

100

Key Financials

Y/E

Op. Inc NIM

PAT

EPS

ABV ROA ROE P/E P/ABV

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

FY2017E

3,758

2.6

2,052

40.6

209.9

1.5

20.7

12.3

2.2

Source: Company, Angel Research

FY2018E

4,448

2.6

2,415

47.8

247.0

1.5

20.5

1.9

Source: Company, Angel Research

July 8, 2016

Top Picks Report | July 2016

Stock Info

National Buildings Construction Corporation (NBCC)

CMP

215

 NBCC reported an order book of over

`37,000cr at 4QFY2016-end.

242

Considering the bid pipeline for re-development works from Delhi and other

Upside

12.6%

state governments, and with ‘Smart City’ projects to take-off shortly, we expect

NBCC’s order-book to grow 1.6x during FY2016-18E to `59,710cr.

Sector

Construction

 We expect NBCC to report 27.9% revenue CAGR during FY2016-18E (to

Market Cap (` cr)

13,242

`9,549cr), mainly driven by 30.9% revenue CAGR from PMC segment, where

Beta

1.1

re-development projects would contribute the maximum. We expect NBCC to

52 Week High / Low

243/ 162

report 53.2% EBITDA CAGR during the same period, led by increased

contribution from PMC segment, which is likely to experience margin

expansion. Owing to lower other income growth assumption, we expect NBCC

3 year-Chart

to report 45.5% PAT CAGR during FY2016-18E to `659cr.

250

 We have a strong positive view on NBCC, given its growth prospects as

200

reflected by its strong order book of `37,000cr (6.3x OB to LTM revenues).

Also, emerging opportunities in re-development space, government’s initiative of

150

developing ‘Smart Cities’, and the company’s cash rich status, should aid its growth.

100

On assigning 22.0x P/E multiple to our FY2018E EPS of `11.0/share, we arrive at a

price target of `242. Given the upside, we recommend Accumulate on the stock.

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

7,428

7.9

490

8.2

28.2

23.9

6.0

17.1

1.3

FY2018E

9,549

8.6

659

11.0

28.7

17.8

5.1

11.7

0.9

Source: Company, Angel Research

Stock Info

Voltas

CMP

315

 Growth in UCP segment to continue: Voltas has maintained 20%+ market

407

share in domestic air-conditioning market despite stiff competition from MNC

Upside

29.2%

players. With economic indicators turning favorable, the company’s

competitive positioning should help its UCP segment to report a 19.5% top-

Sector

Construction & Eng.

line and 16.6% EBIT CAGR, respectively, during FY2016-18E.

Market Cap (` cr)

11,058

 Gradual recovery in EMP business: In the run-up to the Qatar World Cup

Beta

1.4

2022 and Dubai Expo 2020, we expect international awarding activity to

52 Week High / Low

349/ 211

catch-up from FY2017E onwards. Surge in order book should translate to

uptick in execution (10.7% top-line CAGR during FY2016-18E). With legacy

projects completed and contribution of high margin projects kicking-in, we

3 year-Chart

expect segment margins to expand from 1.4% in FY2016 to 5.0% in FY2018E.

400

 Strong growth Outlook: On the back of strong 13.3% top-line and 18.1%

350

bottom-line CAGR during FY2016-18E, we expect Voltas to report strong

300

16.7%/18.5% RoE for FY2017/18E, respectively. Considering the positive cues,

250

200

case for improvement in business segments’ performances and growth potential, we

150

expect improved profitability and better investment return ratios, going forward. We

100

assign 25.0x PE multiple to our FY2018E EPS estimate of `16.3/share and arrive at

a price target of `407. Given the upside, we recommend Buy on the stock.

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

6,511

7.9

427

12.9

16.7

24.4

4.0

21.4

1.7

FY2018E

7,514

8.7

538

16.3

18.5

19.3

3.5

16.8

1.5

Source: Company, Angel Research

July 8, 2016

Top Picks Report | July 2016

Stock Info

Bajaj Electricals

CMP

248

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

268

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

Upside

7.9`%

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

Sector

Cons. Durable

reaching out to 400,000 retailers.

Market Cap (` cr)

2,504

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

Beta

0.9

underperforming owing to cost overruns and delays in project executions.

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

52 Week High / Low

300 / 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

350

with the Lighting and Consumer Durables segments expected to benefit from

300

an improvement in consumer sentiments going forward, we expect the

250

company’s top-line to grow at a CAGR of ~15% to `6,098cr and bottom-line

200

to grow at a CAGR of 29% to `159cr over FY2016-FY2018E. We recommend

150

a Buy rating on the stock.

100

Key Financials

Y/E

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

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

FY2017E

5,351

5.6

125

12.4

14.4

20.1

2.9

8.5

0.5

Source: Company, Angel Research

FY2018E

6,098

5.9

159

15.7

16.1

15.8

2.5

7.2

0.4

Source: Company, Angel Research

Stock Info

Blue Star

CMP

435

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

495

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

Upside

13.7%

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)

3,918

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

449 / 306

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

180

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

3 year-Chart

continue to drive growth.

500

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

400

to post a revenue CAGR of ~15% over FY2016-18E and margins to improve

from 5.7% in FY2015 to 7.1% in FY2018E. Moreover, the merger with Blue

300

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

200

an Accumulate recommendation on the stock.

100

Key Financials

Y/E

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

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

FY2017E

4,351

6.4

164

17.2

23.1

25.4

5.5

14.7

0.9

Source: Company, Angel Research

FY2018E

5,024

7.1

197

20.6

24.1

21.1

4.7

11.5

0.8

Source: Company, Angel Research

July 8, 2016

Top Picks Report | July 2016

Stock Info

Dewan Housing Finance

CMP

212



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

270

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

Upside

27.4%

middle & low income group picks up, while PAT CAGR is expected to be 22%

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

Sector

Financials

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

Market Cap (` cr)

6,200

(LAP+SME) and projects loans account for 19% and 9% of advances respectively.

Beta

1.6

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

52 Week High / Low

268 / 141

0.82%, respectively, for FY2017. We don’t expect any major deterioration in the

asset quality going ahead.

 Lower cost of funds will help maintain NIM: Nearly 70% of the bank

3 year-Chart

borrowings are due for maturity over the next three years and swapping a part

300

of that with non-convertible debentures (NCDs), where it has ~100bp cost

250

benefit, will help DHFL in maintaining its NIM at ~2.9%.

200

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

over FY2015-18E, which is likely to translate in an earnings CAGR of 22%,

150

over the same period. The stock currently trades at 0.9x FY2018E ABV. We

100

recommend a Buy on the stock, with a target price of `270.

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

2,225

2.9

866

29.7

184.0

1.1

16.1

7.1

1.2

FY2018E

2,688

2.9

1,084

34.6

215.3

1.2

16.8

6.1

1.0

Source: Company, Angel Research

Stock Info

Equitas Holdings

CMP

185

 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

27.0%

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)

6,221

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

194 / 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

220

quality going ahead.

200

 NIM likely to remain healthy : Equitas will be able to take deposits after it

formally starts banking operations leading to ~250bp reduction in cost of

180

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

160

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

140

CAGR of 38% & 37% over FY2016-18E. The stock currently trades at 2.2x

120

FY2018E BV. We recommend a Buy on the stock, with a target price of `235.

100

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

1,076

11.7

224

6.7

68.2

2.8

12.4

27.6

2.7

FY2018E

1,465

11.4

315

9.4

77.6

2.8

12.9

19.7

2.3

Source: Company, Angel Research

July 8, 2016

Top Picks Report | July 2016

Stock Info

IL&FS Transportation Networks

CMP

 ITNL reported Commercial Operations Date (CoD) for JSEL and PSRDCL. Also,

Completion certificate was issued for BKEL. TRDCL P-III and CNTL are

Upside

14.1%

expected to commence in the next few months. Further, RIDCRO P-III, KSEL,

Sector

Construction

KNEL, and BAEL are expected to commence operations in the next 9-12

months. Accordingly, we expect revenue from these projects to increase by

Market Cap (` cr)

2,755

~`4cr/day (unadj. for stake).

Beta

1.0

 Strategic initiatives like stake sale at SPV level, listing of operational BOT

52 Week High / Low

152/64

projects under InvITs, and re-financing of BOT projects should help the

company unlock value. Money raised from these initiatives could be used to

3 year-Chart

lower debt and improve the profitability.

300

 With 7 projects expected to commence in the next 12 months, we expect the

250

debt repayment cycle at SPV level to commence, resulting in the overall consol.

200

D/E levels peaking out at ~4.0x. With concerns over higher D/E levels allayed

150

to a certain extent, coupled with the attractive valuations of 0.3x FY2017E

100

P/BV multiple that the ITNL stock is trading at, we maintain our Buy on the

stock with price target of `93.

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

8,682

32.2

285

8.6

2.5

9.5

0.3

11.6

3.5

FY2018E

10,135

33.3

185

5.6

2.2

14.6

0.3

11.2

3.4

Source: Company, Angel Research

Stock Info

Goodyear India

CMP

526

 Normal monsoon to energize stagnant tractor demand: Goodyear India (GIL)

631

is a leader in the tractor tyre segment in India with tractor tyres accounting for

Upside

20.1%

~50% of its overall revenues. GIL’s performance on the top-line front has

been under pressure on account of below par monsoon over the past two

Sector

Tyres

years. As tractor sales have strong correlation with monsoons, the normal

Market Cap (` cr)

1,213

monsoon this year should translate into a higher demand for tractor tyres.

Beta

0.6

 Strong finances and Balance Sheet: GIL is a debt free-cash rich company with

52 Week High / Low

662 / 443

RoIC estimated at ~84% for FY2018. The company’s cash and equivalents

are `334cr for FY2016, which amount to ~28% of the current market cap.

3 year-Chart

 Outlook and valuation: On an adjusted basis (for FY end March), we expect

800

the top-line to post a CAGR of 7.5% over FY2016-18E to `1,704cr mainly on

700

account of rebound in tractor tyre volumes and expect net profit to improve to

600

500

`121cr in FY2018E. At the current market price, the stock is trading at a PE of

400

10.0x its FY2018E earnings. We have a Buy rating on the stock and assign a

300

target price of `631 based on a target PE of 12.0x for FY2018E.

200

100

Key Financials

Y/E

Sales

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

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

FY2017E

1,598

10.4

114

49.4

18.2

10.6

1.8

4.2

0.4

Source: Company, Angel Research

FY2018E

1,704

10.2

121

52.6

17.0

10.0

1.6

3.5

0.4

Source: Company, Angel Research

July 8, 2016

Top Picks Report | July 2016

Stock Info

Jagran Prakashan

CMP

183

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

205

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

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

Upside

12.0%

increase in cover price and volume growth.

Sector

Media

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

Market Cap (` cr)

5,973

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

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

Beta

0.6

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

52 Week High / Low

189/110

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

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

3 year-Chart

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

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

200

180

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

160

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

140

economy. Hence, we maintain an Accumulate rating on the stock with a target

120

100

price of stock with a target price of `205.

Key Financials

Y/E

Sales

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

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

FY2017E

2,355

28.0

353

10.8

21.7

16.9

3.7

9.1

2.6

FY2018E

2,635

28.0

409

12.5

21.7

14.6

3.2

8.0

2.2

Source: Company, Angel Research

Stock Info

Mahindra Lifespace

CMP

466

 Speedy execution & speedier sales: MLF has 13 projects under implementation

554

across cities. MLF has exhibited fast completion of projects (4-4.5 years in

Mumbai, other-wise 3-3.5 years across other cities), compared to others. Sales

Upside

18.9%

cycle in ~65% of projects is faster than execution cycle, contrary to industry

Sector

Real Estate

trends. This fast execution and sales is optimal, as it helps MLF in revenue

Market Cap (` cr)

1,792

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

profitability. This translates in creating a virtuous cycle of continuous fast growth.

Beta

0.4

 Strong revenue growth visibility in short-to-long run: MLF as of 4QFY2016 is

52 Week High / Low

559 / 401

pursuing ~4.0mn sq. ft. of sale of the total ~15.0mn sq. ft. of saleable area.

Having sold ~60% of ongoing projects, we expect MLF to launch ~2.8mn

3 year-Chart

sq.ft. of saleable area in rational way during 4QFY2016-2QFY2018E, across

700

6 cities. Maturity at existing projects, new launches give better revenue visibility

600

for medium-term. Further, MLF is sitting on land bank of 11.0mn sq.ft across

500

4 cities, which allays any concern over long-term revenue growth.

400

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

300

impacted, given their strong parentage and ethically implemented processes.

200

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

100

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

improvement in company’s fundamentals, strong earnings growth visibility

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

MLF stock looks attractive. We maintain BUY on MLF with target price of `554.

Source: Company, Angel Research

Key Financials

Y/E

Sales

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

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

FY2017E

1,011

21.9

125

30.7

7.4

15.2

1.2

12.5

3.1

FY2018E

1,303

22.5

149

36.3

8.5

12.8

1.1

10.0

2.1

Source: Company, Angel Research

July 8, 2016

Top Picks Report | July 2016

Stock Info

Navkar

CMP

214

 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

23.6%

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

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

Sector

Logistics

Market Cap (` cr)

3,051

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

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

Beta

0.6

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

52 Week High / Low

224 / 151

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

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

250

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

to capacity constraints at CFS.

200

150

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

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

100

Key Financials

Y/E

Sales

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

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

FY2017E

408

42.9

6.8

6.9

31.6

2.2

19.5

8.4

FY2018E

612

42.3

164

11.5

10.5

18.6

2.0

13.2

5.6

Source: Company, Angel Research

Stock Info

Radico Khaitan

CMP

 The IMFL segment is under penetrated. Going forward, increase in income

125

levels would lead to higher growth in IMFL brands. RKL has strong brands in

Upside

32.0%

the premium liquor category which reported a CAGR of ~26% over the last

Sector

Breweries & Distilleries

seven-year period. We expect the growth momentum to continue.

Market Cap (` cr)

1,264

 We expect the price of ENA, a key raw material, to remain stable and

Beta

0.8

potentially even decline going forward due to higher sugar production and

lower demand for ethanol from Indian oil marketing companies

52 Week High / Low

131/81

 We expect a significant hike in liquor prices in the coming financial year as

3 year-Chart

there haven't been any significant ones in recent times. Also, we believe that

180

industry leader - United Spirits would shift focus on profitability over volume

160

growth considering the debt on its balance sheet, which in turn, would lead to

140

increased scope for other liquor companies to hike prices.

120

100

 On valuation basis, Radico is trading at huge discount to its close peer United

Spirits. We have a Buy rating on the stock and target price of `125

(18x FY2018E EPS)

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

1,659

13.0

6.3

8.6

15.0

1.3

9.2

1.2

FY2018E

1,802

13.2

7.4

9.3

12.9

1.2

8.2

1.1

Source: Company, Angel Research

July 8, 2016

Top Picks Report | July 2016

Stock Info

Siyaram Silk Mills

CMP

1,080

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

1,347

segments of the market. Further, in FY2014, SSML entered the ladies' salwar

Upside

24.7%

kameez and ethnic wear segment. Going forward, we believe that the company

Sector

Textile

would be able to leverage its brand equity and continue to post strong performance.

Market Cap (` cr)

1,013

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

Beta

0.8

partners. It has a retail network of 160 stores and plans to add another 300-

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

52 Week High / Low

1,400/896

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

 Going forward, we expect SSML to report a net sales CAGR of ~12% to

3 year-Chart

~`2,040cr and adj.net profit CAGR of ~14% to `115cr over FY2016-18E on

1600

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

1400

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

1200

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

1000

SSML trades at an inexpensive valuation. We have a Buy rating on the stock

800

and target price of `1,347.

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

1,799

11.6

104.9

16.4

10.3

1.7

6.5

0.8

FY2018E

2,040

11.7

115

122.4

16.4

8.8

1.4

5.7

0.7

Source: Company, Angel Research

July 8, 2016

Top Picks Report | July 2016

Macro watch

Exhibit 1: Quarterly GDP trends

Exhibit 2: IIP trends

(%)

9.0

12.0

8.3

9.9

7.8

7.7

7.9

10.0

8.0

7.5

7.6

7.2

8.0

6.3

6.7

6.6

6.7

7.0

6.4

6.0

4.2

4.3

3.7

5.8

4.0

6.0

2.0

0.3

5.0

4.0

(2.0)

(0.9)

(0.8)

(1.6)

(4.0)

3.0

(3.4)

(6.0)

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

5.7

5.8

5.4

5.6

5.5

6.0

5.3

5.0

4.8

52.0

5.0

4.4

3.7

4.0

50.0

3.0

48.0

2.0

46.0

1.0

44.0

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

0.0

7.50

(5.0)

7.00

6.50

(10.0)

6.00

(15.0)

5.50

(20.0)

5.00

4.50

(25.0)

4.00

(30.0)

3.50

(35.0)

3.00

Source: Bloomberg, Angel Research

Source: RBI, Angel Research

July 8, 2016

Stock Watch | July 2016

Company Name

Reco

CMP

Target

Mkt Cap

Sales (` cr)

OPM (%)

EPS (`)

PER (x)

P/BV (x)

RoE (%)

EV/Sales (x)

(`)

Price (`)

(` cr)

FY16E

FY17E

FY16E

FY17E

FY16E

FY17E

FY16E

FY17E

FY16E

FY17E

FY16E

FY17E

FY16E

FY17E

Agri / Agri Chemical

Rallis

Neutral

214

4,162

1,612

1,911

13.3

7.4

9.5

28.9

22.5

4.6

4.1

16.7

18.4

2.6

2.2

United Phosphorus

Buy

555

684

23,766

13,083

15,176

18.5

31.5

37.4

17.6

14.8

3.5

2.9

21.4

2.0

1.7

Auto & Auto Ancillary

Ashok Leyland

Buy

111

26,495

17,995

21,544

11.4

11.6

3.4

4.7

27.4

19.8

4.8

4.4

17.7

22.2

1.4

1.2

Bajaj Auto

Neutral

2,610

75,536

22,709

25,860

20.9

20.1

129.0

143.6

20.2

18.2

6.2

5.3

30.7

29.4

2.9

2.5

Bharat Forge

Buy

742

875

17,283

7,351

8,318

19.9

19.7

31.2

36.5

23.8

20.3

4.3

3.6

19.3

19.2

2.5

2.2

Eicher Motors

Neutral

19,593

53,217

15,556

16,747

15.5

17.3

464.8

597.5

42.2

32.8

15.4

11.3

36.2

34.3

3.3

3.1

Gabriel India

Neutral

100

1,441

1,415

1,544

8.7

9.0

4.6

5.4

21.8

18.6

4.0

3.5

18.1

18.9

1.0

0.9

Hero Motocorp

Neutral

3,101

61,929

28,244

30,532

15.5

15.9

156.7

168.5

19.8

18.4

7.9

6.7

39.9

36.4

2.0

1.8

Jamna Auto Industries

Neutral

168

1,345

1,281

1,473

11.2

11.5

7.6

9.2

22.2

18.3

5.6

4.6

25.4

25.2

1.1

1.0

L G Balakrishnan & Bros Neutral

479

752

1,254

1,394

11.6

11.8

35.9

41.7

13.4

11.5

1.8

1.6

13.5

13.8

0.7

0.6

Mahindra and Mahindra Neutral

1,456

90,437

38,416

42,904

13.7

13.9

54.8

63.4

26.6

23.0

4.1

3.6

15.4

15.8

2.0

1.7

Maruti

Neutral

4,141

125,090

57,865

68,104

16.4

16.7

176.3

225.5

23.5

18.4

4.6

3.9

19.4

21.2

1.9

1.6

Minda Industries

Neutral

1,150

1,825

2,523

2,890

8.7

9.0

55.0

65.4

20.9

17.6

4.0

3.3

19.3

18.7

0.8

0.7

Motherson Sumi

Accumulate

278

313

36,746

39,343

45,100

8.8

9.1

10.1

12.5

27.5

22.2

8.7

6.8

35.3

34.4

1.0

0.9

Rane Brake Lining

Accumulate

414

465

328

454

511

11.5

12.0

25.2

31.0

16.4

13.4

2.5

2.2

14.9

16.6

0.8

Setco Automotive

Neutral

651

594

741

12.7

13.7

1.7

3.2

28.7

15.2

3.0

2.6

10.4

16.9

1.5

1.3

Tata Motors

Neutral

455

131,440

259,686

273,957

13.0

13.4

25.9

29.5

17.6

15.4

2.3

2.0

8.0

9.0

0.7

TVS Motor

Accumulate

300

330

14,243

11,263

13,122

6.9

8.5

9.2

15.0

32.6

20.0

7.4

5.9

22.7

29.6

1.2

1.0

Amara Raja Batteries

Buy

837

1,076

14,293

4,690

5,429

17.5

28.4

35.3

29.4

23.7

6.8

5.6

23.1

25.9

3.0

2.6

Exide Industries

Neutral

176

14,981

6,950

7,784

14.4

14.8

6.6

7.3

26.7

24.1

3.4

3.1

12.6

12.8

1.9

1.7

Apollo Tyres

Buy

151

183

7,663

12,056

12,714

17.2

16.4

23.0

20.3

6.5

7.4

1.2

1.0

17.7

13.6

0.7

Ceat

Buy

854

1,119

3,455

6,041

6,597

14.1

13.7

99.5

111.9

8.6

7.6

1.7

1.4

19.6

18.5

0.7

0.6

JK Tyres

Neutral

2,103

7,446

7,669

15.2

14.0

19.6

18.4

4.7

5.0

1.2

1.0

25.2

19.5

0.7

0.6

Swaraj Engines

Neutral

1,180

1,466

552

630

14.2

14.7

44.6

54.1

26.5

21.8

6.2

5.6

23.2

25.6

2.5

2.1

Subros

Neutral

547

1,293

1,527

11.8

11.9

4.2

6.7

21.7

13.6

1.6

1.5

7.7

11.5

0.7

0.6

Indag Rubber

Neutral

189

496

283

329

17.0

17.2

13.0

15.4

14.6

12.2

3.2

2.6

21.8

21.6

1.5

1.2

Banking

Allahabad Bank

Neutral

5,524

8,569

9,392

2.8

2.9

16.3

27.5

4.7

2.8

0.4

0.34

7.6

11.9

Axis Bank

Neutral

542

129,470

26,204

29,738

3.6

3.5

34.5

35.4

15.7

15.3

2.5

2.20

16.8

14.9

Bank of Baroda

Neutral

158

36,417

18,802

21,088

2.0

2.2

(7.4)

13.0

12.1

1.3

1.0

(4.2)

7.3

Bank of India

Neutral

109

10,218

15,972

17,271

1.9

2.0

15.3

33.3

7.1

3.3

0.3

3.6

7.6

Canara Bank

Neutral

230

12,489

15,441

16,945

2.0

2.1

46.6

70.4

4.9

3.3

0.4

8.0

11.2

Dena Bank

Neutral

2,834

3,440

3,840

2.1

2.3

7.2

10.0

5.9

4.2

0.4

6.1

7.9

Dewan Housing Finance Buy

213

270

6,201

1,828

2,225

2.9

24.9

29.7

8.5

7.2

1.3

1.2

15.0

16.1

Equitas Holdings

Buy

185

235

6,198

679

1,076

12.4

11.7

6.2

6.7

29.8

27.6

3.7

2.7

13.3

12.5

Federal Bank

Neutral

10,318

3,279

3,787

2.8

2.9

3.9

5.5

15.2

10.9

1.2

1.1

8.4

10.8

HDFC

Neutral

1,291

204,095

10,358

11,852

3.3

41.1

47.0

31.4

27.4

6.0

5.4

24.7

24.9

HDFC Bank

Accumulate

1,184

1,262

299,682

38,606

47,696

4.4

4.5

48.8

61.4

24.3

19.3

4.1

3.58

18.7

20.0

ICICI Bank

Neutral

244

142,195

34,279

39,262

3.3

21.0

24.4

11.6

10.0

2.0

1.7

14.4

14.7

July 8, 2016

Stock Watch | July 2016

Company Name

Reco

CMP

Target

Mkt Cap

Sales (` cr)

OPM (%)

EPS (`)

PER (x)

P/BV (x)

RoE (%)

EV/Sales (x)

(`)

Price (`)

(` cr)

FY16E

FY17E

FY16E

FY17E

FY16E

FY17E

FY16E

FY17E

FY16E

FY17E

FY16E

FY17E

FY16E

FY17E

IDBI Bank

Neutral

15,431

9,625

10,455

1.8

8.5

14.2

8.8

5.3

0.5

5.9

9.3

Indian Bank

Neutral

151

7,252

6,160

6,858

2.4

2.5

24.5

29.8

6.2

5.1

0.5

0.4

7.7

8.6

LIC Housing Finance

Buy

498

592

25,117

3,179

3,758

2.6

32.9

40.6

15.1

12.3

2.8

2.4

19.6

20.7

Oriental Bank

Neutral

121

4,187

7,643

8,373

2.4

37.2

45.4

3.2

2.7

0.3

8.2

9.4

Punjab Natl.Bank

Neutral

117

22,964

23,122

26,022

2.8

7.0

21.6

16.7

5.4

0.8

3.4

10.0

South Ind.Bank

Neutral

3,004

1,965

2,185

2.5

3.3

8.9

6.7

0.9

0.8

9.5

11.6

St Bk of India

Neutral

221

171,169

79,958

86,060

2.6

13.4

20.7

16.5

10.7

1.3

11.5

12.8

Union Bank

Neutral

133

9,140

12,646

14,129

2.3

2.4

31.0

39.1

4.3

3.4

0.5

0.4

9.8

11.4

Vijaya Bank

Neutral

4,270

3,536

3,827

1.8

1.9

5.5

6.7

7.7

6.4

0.6

7.8

8.8

Yes Bank

Neutral

1,112

46,823

7,190

9,011

3.2

3.3

58.2

69.7

19.1

16.0

3.4

2.9

19.2

19.6

Capital Goods

ACE

Neutral

462

660

839

4.7

8.2

1.0

3.9

46.7

12.0

1.5

1.3

3.2

11.3

0.8

0.7

BEML

Buy

894

1,157

3,722

3,277

4,006

6.0

8.9

36.2

64.3

24.7

13.9

1.7

1.6

5.7

11.7

1.2

0.9

Bharat Electronics

Accumulate

1,270

1,414

30,478

7,295

8,137

20.0

16.8

56.5

58.7

22.5

21.6

3.4

3.0

42.1

44.6

3.4

2.9

Voltas

Buy

315

407

10,425

5,857

6,511

7.5

7.9

11.7

12.9

26.9

24.4

4.4

3.9

17.1

16.7

1.8

1.6

BGR Energy

Neutral

127

919

3,615

3,181

9.5

9.4

16.7

12.4

7.6

10.3

0.7

10.0

7.0

0.7

0.8

BHEL

Neutral

140

34,279

33,722

35,272

10.8

11.7

10.5

14.2

13.3

9.9

1.0

0.9

7.0

9.0

1.1

1.0

Blue Star

Accumulate

435

495

3,918

3,770

4,351

5.7

6.4

11.4

17.2

38.1

25.4

5.9

5.5

18.4

23.1

1.1

0.9

Crompton Greaves

Neutral

4,591

13,484

14,687

4.9

6.2

4.5

7.1

16.3

10.3

1.1

7.2

10.8

0.5

0.4

Greaves Cotton

Neutral

138

3,371

1,655

1,755

16.6

16.8

7.4

7.8

18.7

17.7

3.7

3.5

21.1

20.6

2.0

1.9

Inox Wind

Buy

234

286

5,193

4,406

5,605

15.5

15.7

20.4

24.8

11.5

9.4

2.6

1.9

27.9

25.9

1.4

1.1

KEC International

Neutral

144

3,698

8,791

9,716

6.1

6.8

5.4

8.2

26.6

17.5

2.7

2.4

10.0

14.0

0.6

Thermax

Neutral

893

10,639

6,413

7,525

7.4

8.5

30.5

39.3

29.3

22.7

4.5

3.9

15.0

17.0

1.6

1.3

VATech Wabag

Accumulate

598

681

3,259

2,722

3,336

7.9

8.1

19.5

24.6

30.7

24.3

3.2

2.8

11.1

12.4

1.3

1.0

Cement

ACC

Neutral

1,603

30,110

13,151

14,757

16.4

18.3

63.9

83.4

25.1

19.2

3.2

3.0

13.3

16.1

2.1

1.8

Ambuja Cements

Neutral

257

39,884

11,564

12,556

19.4

20.7

8.9

10.1

28.9

25.4

3.6

3.4

12.8

13.8

3.1

2.8

HeidelbergCement

Neutral

115

2,602

1,772

1,926

13.3

15.4

1.0

3.0

114.8

38.3

2.9

2.7

2.6

7.9

2.0

1.8

India Cements

Neutral

117

3,588

4,216

4,840

18.0

19.5

4.0

9.9

29.2

11.8

1.2

1.1

4.0

9.5

1.2

1.0

JK Cement

Neutral

712

4,982

3,661

4,742

10.1

15.8

7.5

28.5

95.0

25.0

2.9

2.5

7.5

22.9

1.8

1.4

J K Lakshmi Cement

Neutral

403

4,746

2,947

3,616

16.7

19.9

11.5

27.2

35.1

14.8

3.3

2.9

9.8

20.8

2.0

1.6

Mangalam Cements

Neutral

303

809

1,053

1,347

10.5

13.3

8.4

26.0

36.1

11.7

1.5

1.4

4.3

12.5

1.1

0.9

Orient Cement

Neutral

179

3,664

1,854

2,524

21.2

22.2

7.7

11.1

23.2

16.1

3.3

2.9

13.3

15.7

2.7

1.9

Ramco Cements

Neutral

575

13,699

4,036

4,545

20.8

21.3

15.1

18.8

38.1

30.6

4.7

4.1

12.9

14.3

3.9

3.4

Shree Cement^

Neutral

15,542

54,143

7,150

8,742

26.7

28.6

228.0

345.5

68.2

45.0

10.0

8.4

15.7

20.3

7.3

5.9

UltraTech Cement

Neutral

3,379

92,742

24,669

29,265

18.2

20.6

82.0

120.0

41.2

28.2

4.4

3.9

11.3

14.7

3.8

3.2

Construction

ITNL

Accumulate

2,681

7,360

8,682

34.0

32.2

7.0

8.6

11.6

9.5

0.4

3.2

2.5

3.7

3.6

KNR Constructions

Accumulate

570

603

1,603

937

1,470

14.3

14.0

44.2

38.6

12.9

14.8

2.6

2.2

15.4

1.8

1.2

Larsen & Toubro

Accumulate

1,554

1,700

144,839

58,870

65,708

8.3

10.3

42.0

53.0

37.0

29.3

2.6

2.3

8.8

11.2

2.7

2.4

Gujarat Pipavav Port

Neutral

170

8,214

629

684

51.0

52.2

6.4

5.9

26.5

28.8

3.5

3.2

15.9

12.7

11.5

MBL Infrastructures

Buy

139

285

576

2,313

2,797

12.2

14.6

19.0

20.0

7.3

7.0

0.8

0.7

11.3

10.6

1.0

0.9

Nagarjuna Const.

Neutral

4,242

7,892

8,842

8.8

9.1

3.0

5.3

25.4

14.4

1.3

1.2

5.0

8.5

0.8

0.6

PNC Infratech

Accumulate

571

647

2,930

1,873

2,288

13.2

13.5

24.0

32.0

23.8

17.8

2.3

2.1

12.1

12.3

1.7

1.4

July 8, 2016

Stock Watch | July 2016

Company Name

Reco

CMP

Target

Mkt Cap

Sales (` cr)

OPM (%)

EPS (`)

PER (x)

P/BV (x)

RoE (%)

EV/Sales (x)

(`)

Price (`)

(` cr)

FY16E

FY17E

FY16E

FY17E

FY16E

FY17E

FY16E

FY17E

FY16E

FY17E

FY16E

FY17E

FY16E

FY17E

Simplex Infra

Neutral

310

1,531

5,955

6,829

10.3

10.5

16.0

31.0

19.3

10.0

1.0

0.9

5.3

9.9

0.8

0.6

Power Mech Projects

Neutral

571

841

1,539

1,801

12.8

12.7

59.0

72.1

9.7

7.9

1.5

1.2

18.6

16.8

0.5

Sadbhav Engineering

Neutral

291

4,986

3,186

3,598

10.2

10.3

8.0

9.0

36.3

32.3

3.4

3.0

9.4

9.9

1.9

1.7

NBCC

Neutral

216

12,933

5,838

7,428

6.0

7.9

5.2

8.2

41.5

26.3

1.3

1.0

21.9

28.2

2.0

1.5

MEP Infra

Neutral

702

1,956

1,876

28.1

30.5

1.3

3.0

33.2

14.4

7.0

4.7

21.2

32.8

1.8

SIPL

Neutral

102

3,605

675

1,042

62.4

64.7

3.8

4.4

17.0

11.5

Engineers India

Neutral

209

7,052

1,667

1,725

13.5

16.0

9.7

11.4

21.6

18.4

2.5

11.7

13.4

3.0

FMCG

Asian Paints

Neutral

987

94,711

15,534

17,445

17.7

16.8

18.4

19.6

53.8

50.4

19.0

17.9

34.6

35.6

6.0

5.3

Britannia

Neutral

2,812

33,738

8,481

9,795

14.0

14.1

65.5

78.3

42.9

35.9

20.3

16.7

38.3

41.2

3.9

3.4

Colgate

Neutral

945

25,708

4,136

4,632

22.5

23.3

22.2

25.3

42.6

37.4

25.9

23.1

68.6

67.5

6.1

5.4

Dabur India

Neutral

315

55,343

9,370

10,265

17.6

17.3

7.3

8.1

42.9

38.8

11.1

10.2

31.7

30.6

5.7

5.2

GlaxoSmith Con*

Neutral

6,164

25,922

4,519

5,142

19.6

19.8

164.3

191.2

37.5

32.2

10.4

8.8

30.8

29.9

5.1

4.5

Godrej Consumer

Neutral

1,631

55,555

9,003

10,335

18.1

18.7

34.1

41.8

47.9

39.0

10.3

8.9

23.9

24.8

6.3

5.5

HUL

Neutral

917

198,537

33,299

35,497

17.1

18.9

20.0

48.6

45.9

42.5

37.0

87.6

80.8

5.8

5.4

ITC

Neutral

247

297,545

36,837

39,726

38.8

38.7

8.1

9.0

30.2

27.5

8.4

7.4

27.8

26.9

7.6

7.0

Marico

Neutral

269

34,667

6,151

6,966

17.2

17.3

5.4

6.4

49.8

42.0

15.6

12.3

33.2

32.4

5.5

4.9

Nestle*

Neutral

6,509

62,754

9,393

10,507

22.2

22.3

106.8

121.8

60.9

53.4

21.4

19.3

34.8

36.7

6.5

5.8

Tata Global

Neutral

134

8,486

8,635

9,072

9.8

9.9

5.8

7.2

23.2

18.7

2.1

2.0

6.8

7.4

1.0

Procter & Gamble

Buy

6,280

7,369

20,385

2,588

2,939

23.3

23.2

130.2

146.2

48.2

43.0

96.2

92.2

27.6

25.3

7.5

6.5

HCL Tech^

Buy

717

1,000

101,151

37,061

30,781

21.5

20.5

51.4

40.0

13.9

17.9

3.6

2.6

20.1

20.3

2.5

2.6

Infosys

Buy

1,157

1,374

265,802

62,441

70,558

27.5

59.0

65.3

19.6

17.7

3.9

3.6

22.2

22.4

3.7

3.2

TCS

Buy

2,429

3,004

478,627

108,646

122,770

28.3

123.7

141.0

19.6

17.2

6.5

6.0

33.1

34.6

3.9

3.4

Tech Mahindra

Buy

504

700

48,919

26,494

30,347

16.3

17.0

32.2

37.5

15.6

13.4

3.4

2.9

21.7

21.8

1.6

1.3

Wipro

Buy

559

680

138,088

50,808

56,189

23.7

23.8

37.3

40.7

15.0

13.7

2.9

2.6

19.2

17.7

2.2

1.8

Media

D B Corp

Neutral

383

7,042

2,025

2,187

27.4

17.4

18.9

22.0

20.3

5.0

4.5

22.9

23.7

3.5

3.2

HT Media

Neutral

1,926

2,495

2,673

12.9

13.2

6.8

7.2

12.2

11.5

0.9

7.5

7.8

0.4

0.3

Jagran Prakashan

Accumulate

183

205

5,973

2,107

2,355

33.5

28.0

10.0

10.8

18.2

16.9

4.2

3.7

23.3

21.7

2.9

2.5

Sun TV Network

Neutral

382

15,038

2,510

2,763

71.8

71.5

21.9

24.8

17.4

15.4

4.1

3.7

22.8

24.3

5.4

4.9

Hindustan Media

Neutral

272

1,993

914

1,016

21.7

21.5

21.9

23.2

12.4

11.7

2.2

1.9

18.0

16.2

1.6

1.4

Metal

Coal India

Buy

315

380

199,250

76,167

84,130

19.9

22.3

22.4

25.8

14.1

12.2

5.1

4.9

35.5

41.0

1.9

1.7

Hind. Zinc

Neutral

187

78,887

14,641

14,026

50.4

17.7

16.0

10.6

11.7

1.6

1.5

16.2

13.2

3.0

2.9

Hindalco

Neutral

128

26,380

104,356

111,186

8.7

9.5

6.7

11.1

19.0

11.6

0.7

3.5

5.9

0.8

0.7

JSW Steel

Neutral

1,463

35,364

42,308

45,147

16.4

20.7

(10.3)

49.5

29.6

1.6

(1.0)

5.6

1.9

1.8

NMDC

Neutral

37,942

8,237

10,893

46.6

44.5

9.9

11.7

9.6

8.2

1.1

0.9

12.4

13.0

4.4

3.3

SAIL

Neutral

19,453

45,915

53,954

7.2

10.5

1.5

4.4

31.3

10.8

0.5

0.4

2.3

4.1

1.1

0.9

Vedanta

Neutral

143

42,529

71,445

81,910

26.2

12.9

19.2

11.1

7.5

0.8

0.7

7.2

8.9

1.0

0.8

Tata Steel

Neutral

318

30,851

126,760

137,307

8.9

11.3

6.4

23.1

49.9

13.8

1.0

2.0

7.1

0.8

July 8, 2016

Stock Watch | July 2016

Company Name

Reco

CMP

Target

Mkt Cap

Sales (` cr)

OPM (%)

EPS (`)

PER (x)

P/BV (x)

RoE (%)

EV/Sales (x)

(`)

Price (`)

(` cr)

FY16E

FY17E

FY16E

FY17E

FY16E

FY17E

FY16E

FY17E

FY16E

FY17E

FY16E

FY17E

FY16E

FY17E

Oil & Gas

Cairn India

Neutral

150

28,189

11,323

12,490

49.4

51.0

20.7

20.6

7.3

0.5

0.4

6.4

6.1

1.6

0.9

GAIL

Neutral

385

48,779

64,856

70,933

9.1

9.6

24.0

28.9

16.0

13.3

1.4

1.3

8.8

9.6

0.9

0.8

ONGC

Neutral

227

193,910

154,564

145,998

36.8

37.4

20.8

22.6

10.9

10.0

1.0

10.1

9.7

1.5

1.6

Petronet LNG

Neutral

294

22,061

29,691

31,188

5.8

6.2

12.8

13.4

23.0

21.9

3.4

3.1

15.8

14.8

0.8

Indian Oil Corp

Neutral

473

114,927

359,607

402,760

5.9

6.1

42.5

48.7

11.1

9.7

1.5

1.3

14.1

14.3

0.4

Reliance Industries

Neutral

988

320,321

304,775

344,392

12.6

13.4

91.3

102.6

10.8

9.6

1.2

1.1

11.8

12.0

1.0

0.8

Pharmaceuticals

Alembic Pharma

Neutral

580

10,936

3,145

3,483

31.9

16.2

38.2

18.7

15.2

31.0

6.8

5.8

57.9

20.1

3.4

3.1

Aurobindo Pharma

Neutral

763

44,654

13,651

15,702

21.7

33.9

38.4

22.5

19.9

6.3

4.9

32.5

27.7

3.5

3.1

Aventis*

Neutral

4,570

10,525

2,049

2,375

15.4

17.3

115.4

153.5

39.6

29.8

6.5

5.0

19.3

25.8

4.9

4.1

Cadila Healthcare

Buy

343

400

35,094

9,469

11,246

21.2

22.0

14.9

17.1

23.0

20.0

6.6

5.1

28.8

26.6

3.7

3.1

Cipla

Neutral

513

41,243

13,372

15,378

16.4

17.4

18.8

21.6

27.3

23.8

3.5

3.1

13.3

13.7

3.1

3.0

Dr Reddy's

Neutral

3,525

60,118

15,471

17,479

24.6

138.2

152.4

25.5

23.1

4.7

4.0

19.7

18.7

3.8

3.4

Dishman Pharma

Neutral

135

2,183

1,733

1,906

21.5

10.1

10.0

13.4

13.5

1.6

1.4

10.5

11.2

1.8

1.5

GSK Pharma*

Neutral

3,512

29,746

2,741

3,528

16.5

18.9

44.2

60.1

79.5

58.4

17.5

17.4

21.2

29.9

10.5

8.2

Indoco Remedies

Neutral

285

2,623

977

1,112

14.9

18.2

9.0

13.2

31.6

21.6

4.5

3.8

15.1

19.2

2.8

2.5

Ipca labs

Buy

474

613

5,977

2,844

3,799

10.6

15.3

10.6

17.3

44.7

27.4

2.6

2.4

5.9

9.1

2.2

1.7

Lupin

Accumulate

1,657

1,809

74,718

13,702

15,912

23.7

26.4

50.5

58.1

32.8

28.5

6.8

5.5

22.9

21.4

5.9

4.7

Sun Pharma

Buy

777

944

187,108

27,744

31,129

26.0

30.0

22.0

28.0

35.3

27.8

5.1

4.3

18.3

18.7

6.6

5.7

Power

Tata Power

Neutral

19,893

35,923

37,402

22.6

22.8

4.1

5.2

18.1

14.3

1.4

1.3

7.5

9.3

1.5

1.4

NTPC

Neutral

153

125,991

87,271

99,297

23.4

23.5

11.7

13.3

13.0

11.5

1.5

1.4

11.5

12.2

2.5

2.2

Power Grid

Neutral

163

85,432

20,702

23,361

86.7

86.4

12.1

13.2

13.5

12.4

2.0

1.8

15.6

15.1

9.0

8.4

Real Estate

MLIFE

Buy

467

554

1,916

826

1,011

20.1

21.9

22.7

30.7

20.6

15.2

1.2

1.1

6.0

7.4

4.2

3.2

Telecom

Bharti Airtel

Neutral

363

145,226

101,748

109,191

32.1

31.7

12.0

12.5

30.3

29.1

2.1

2.0

6.9

6.7

2.1

1.9

Idea Cellular

Neutral

105

37,772

34,282

36,941

32.0

31.5

5.9

6.2

17.8

16.9

1.6

1.5

9.9

9.3

1.7

1.6

Others

Abbott India

Neutral

4,760

10,115

2,715

3,153

14.5

14.1

134.3

152.2

35.5

31.3

8.8

7.3

27.4

25.6

3.4

2.9

Bajaj Electricals

Accumulate

248

268

2,505

4,612

5,351

5.6

5.7

9.5

12.4

26.2

20.1

3.3

2.9

12.5

14.4

0.5

Banco Products (India)

Neutral

154

1,102

1,208

1,353

10.9

12.3

10.8

14.5

14.3

10.6

1.6

1.5

11.9

14.5

0.9

0.8

Coffee Day Enterprises

Neutral

253

5,210

2,692

2,964

17.0

18.6

4.7

53.4

3.1

2.9

0.1

5.5

2.3

2.2

Competent Automobiles Neutral

147

1,040

1,137

3.2

3.1

25.7

28.0

5.7

5.3

0.9

0.8

15.0

14.3

0.1

Elecon Engineering

Neutral

705

1,359

1,482

10.3

13.6

0.8

3.9

80.6

16.6

1.3

1.6

7.8

0.9

0.8

Finolex Cables

Neutral

373

5,699

2,520

2,883

12.2

12.0

12.7

14.2

29.4

26.2

4.0

3.6

13.6

13.5

2.0

1.7

Garware Wall Ropes

Buy

390

460

854

828

898

11.2

10.3

28.3

29.0

13.8

13.4

2.3

2.0

16.8

14.9

1.0

0.9

Goodyear India*

Buy

526

631

1,213

1,750

1,598

11.3

10.4

53.7

49.4

9.8

10.6

2.1

1.8

23.0

18.2

0.5

0.4

July 8, 2016

Stock Watch | July 2016

Company Name

Reco

CMP

Target

Mkt Cap

Sales (` cr)

OPM (%)

EPS (`)

PER (x)

P/BV (x)

RoE (%)

EV/Sales (x)

(`)

Price (`)

(` cr)

FY16E

FY17E

FY16E

FY17E FY16E

FY17E

FY16E

FY17E

FY16E

FY17E

FY16E

FY17E

FY16E

FY17E

Hitachi

Neutral

1,346

3,659

1,779

2,081

7.8

8.8

21.8

33.4

61.7

40.2

10.0

8.1

17.4

22.1

2.1

1.8

HSIL

Accumulate

280

310

2,024

2,123

2,384

16.1

16.5

15.0

18.9

18.6

14.8

1.4

1.3

8.0

9.4

1.3

1.1

Interglobe Aviation

Neutral

1,013

36,504

17,022

21,122

20.7

14.5

63.9

53.7

15.9

18.9

23.8

19.5

149.9

103.2

2.2

1.7

Jyothy Laboratories

Neutral

301

5,448

1,620

1,847

11.5

7.3

8.5

41.3

35.5

5.3

4.9

13.3

14.4

3.2

2.7

Kirloskar Engines India

Neutral

267

3,855

2,403

2,554

8.6

9.9

9.2

10.5

29.0

25.4

2.8

2.7

9.7

10.7

1.2

1.1

Linc Pen & Plastics

Neutral

242

358

344

382

9.1

12.4

13.1

19.5

18.5

3.5

3.1

18.0

16.7

1.1

1.0

M M Forgings

Buy

431

546

520

511

615

21.7

21.6

43.1

55.8

10.0

7.7

1.8

1.5

19.9

21.2

1.2

0.9

Manpasand Bever.

Neutral

590

2,953

540

836

19.9

19.6

10.2

16.9

57.6

34.9

4.7

4.2

8.1

12.0

5.1

3.3

MRF

Buy

35,109

45,575

14,890

20,316

14,488

21.4

21.1

5,488.0

3,797.9

6.4

9.2

2.2

1.8

41.1

21.2

0.7

0.9

MT Educare

Neutral

165

657

286

366

18.3

17.7

7.7

9.4

21.4

17.6

4.5

3.9

20.2

21.1

2.2

1.7

Narayana Hrudaya

Neutral

311

6,352

1,603

1,873

10.9

11.5

1.0

2.6

326.3

117.5

7.9

7.2

2.4

6.1

4.1

3.5

Navkar Corporation

Buy

213

265

3,037

347

408

43.2

42.9

6.7

6.8

31.9

31.4

2.3

2.2

7.3

6.9

9.2

8.3

Navneet Education

Neutral

101

2,399

998

1,062

24.1

24.0

5.8

6.1

17.5

16.5

3.9

3.4

22.0

20.5

2.5

2.3

Nilkamal

Neutral

1,222

1,824

1,871

2,031

10.7

10.5

63.2

69.8

19.3

17.5

3.2

2.7

17.6

16.6

1.0

0.9

Page Industries

Neutral

13,492

15,049

1,929

2,450

19.8

20.1

229.9

299.0

58.7

45.1

25.9

18.0

52.1

47.0

7.8

6.1

Parag Milk Foods

Accumulate

311

336

2,618

1,645

1,919

9.0

9.3

6.7

9.4

46.3

33.0

6.1

5.1

13.1

15.5

1.8

1.5

Quick Heal

Neutral

293

2,049

339

408

27.8

27.3

7.1

7.7

41.4

37.8

3.5

8.5

9.3

5.0

4.2

Radico Khaitan

Buy

125

1,264

1,543

1,659

12.6

13.0

5.8

6.3

16.4

15.0

1.4

1.3

8.5

8.6

1.3

1.2

Relaxo Footwears

Neutral

478

5,735

1,767

2,152

12.3

12.5

19.2

25.1

24.8

19.1

6.1

4.7

27.7

27.8

3.3

2.7

S H Kelkar & Co.

Neutral

221

3,192

928

1,036

15.3

15.1

4.9

6.1

44.7

36.1

4.2

3.9

9.4

10.7

3.3

2.9

Siyaram Silk Mills

Buy

1,080

1,347

1,013

1,619

1,799

11.6

93.5

104.9

11.6

10.3

2.0

1.7

17.1

16.4

0.9

0.8

Styrolution ABS India*

Neutral

644

1,132

1,271

1,440

8.6

9.2

32.0

41.1

20.1

15.7

2.1

1.8

10.7

12.4

0.9

0.7

Surya Roshni

Buy

166

201

728

2,992

3,223

8.1

8.4

14.7

18.3

11.3

9.1

1.1

1.0

9.7

11.0

0.5

Team Lease Serv.

Neutral

1,101

1,883

2,565

3,229

1.3

1.5

15.2

22.8

72.6

48.4

5.8

5.2

8.0

10.7

0.6

0.5

The Byke Hospitality

Neutral

159

639

222

287

20.5

5.6

7.6

28.3

21.1

5.3

4.4

18.8

20.7

2.9

2.2

Transport Corporation

Neutral

329

2,520

2,830

3,350

8.8

9.0

14.4

18.3

22.9

18.0

3.5

3.1

15.4

17.1

1.0

0.9

TVS Srichakra

Buy

2,407

2,932

1,843

2,035

2,252

15.9

15.3

248.6

268.1

9.7

9.0

4.2

3.0

43.6

33.9

0.9

0.8

UFO Moviez

Neutral

546

1,506

558

619

32.0

33.2

22.5

30.0

24.2

18.2

2.9

2.5

12.0

13.8

2.6

2.1

Visaka Industries

Neutral

159

252

1,020

1,120

8.7

9.1

13.9

20.1

11.4

7.9

0.7

6.4

8.7

0.5

0.4

VRL Logistics

Neutral

312

2,844

1,725

1,902

16.5

16.7

12.2

14.6

25.6

21.4

5.3

4.7

20.8

21.9

1.8

1.6

Wonderla Holidays

Neutral

398

2,250

206

308

44.0

43.6

9.0

12.9

44.3

30.9

6.0

5.5

13.7

17.8

10.8

7.2

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

^&October year end; ^June year end; Price as of July 7, 2016

July 8, 2016

Top Picks Report | July 2016

Research Team Tel: 022 - 39357800

E-mail: [email protected]

Website: www.angelbroking.com

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July 8, 2016