BP Equities_Weekly Wealth_13th December,2013

8/13/2019 BP Equities_Weekly Wealth_13th December,2013

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2nd Feb , 2011

Weekly Wealth

Week Gone By .

Key benchmark indices dropped as a sharp uptick in consumer price inflation in November 2013. The market breadth, indicating the

overall health of the market, was weak. The rupee fell and bonds yields rose after retail inflation spiked, raising bets of a rate hike atthe RBI's policy meeting next week. The market edged lower in early trade after weak macroeconomic data announced after tradinghours on Thursday, 12 December 2013. The Sensex and the 50-unit CNX Nifty, both, hit their lowest level in more than a week.

In the foreign exchange market, the rupee edged lower against the dollar and fell below 62 level after two sets of economic data re-leased after market hours on Thursday, 12 December 2013, which showed a spike in consumer price inflation in November and aworse-than-expected contraction in industrial production in October.

Index of industrial production (IIP) declined 1.8% in October 2013, against 2% growth in the previous month September 2013.

European stocks rose on Friday, 13 December 2013, after a report showed US retail sales in November 2013 beat market expecta-tions and after US House of Representatives on Thursday, 12 December 2013, passed a federal budget plan.

Week Ahead Corporate advance tax payment for Q3 December 2013, data on inflation based on the wholesale price index, outcome of the ongoing

Winter Session of the Parliament, outcome of the Reserve Bank of India's mid-quarter monetary policy review and outcome of the two-day policy meeting of the Federal Open Market Committee will dictate near term trend on the domestic bourses. Trend in investmentby foreign institutional investors, trend in other global emerging markets and the movement of rupee against the dollar hold key.

The government will unveil data on inflation based on the wholesale price index (WPI) for November 2013 on 16 December 2013.WPI is seen easing a bit at 6.9% in November 2013, from 7% in October 2013, as per the median estimate of a poll of economistscarried out by Capital Market.

The Federal Open Market Committee (FOMC) holds a two-day policy meeting on interest rates in the United States on 17-18 Decem-ber 2013. The US central bank currently buys bonds worth $85 billion a month in a bid to hold interest rates low and encourage eco-nomic growth in the world's biggest economy. Minutes of the Fed's October meeting released on 20 November 2013 showed officialsmay reduce their $85 billion a month of bond buying if the economy improves as anticipated

Technical View Nifty future closed lower with a loss of 1.70% at 6198. Index started the week with a gap up opening and made new all time highs but gaveup all the gains in the later part of the week. Index has formed Bearish Engulfing candlestick pattern which requires confirmation in theform of a lower close in the following week. Index is trading in an upsloping channel and is currently placed around the upper trendline, forindex to continue its medium term upmove it needs to sustain above the upper trendline of the channel, a failure to surpass this trendlinewill be a bearish signal for medium term trend. Going ahead index now has support in the range of 6170-6090-5980 while resistancecomes at 6240-6320-6390.

13 th December , 2013

B P W E A L T H

1

Source: Falcon, BP Equities Research


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Weekly Wealth

In s t i t u t i o na l Resea rch BP Equ i t i e s Pv t . L imi t ed (www.bpwea l th . com) 13 /12 /2013 2

B P E q u i t i e s r e p o r t s a r e a l s o a v a i l ab l e o n B l o o m b e rg [ B P E P < GO > ]

B P W E A L T H

DOMESTIC INDICES

13-Dec-13 6-Dec-13WeeklyChg (%)

Nifty 6,168.4 6,259.9 -1.5%

CNX Nifty Junior 12,158.3 12,440.2 -2.3%

CNX 100 6,054.1 6,151.6 -1.6%

CNX 500 4,756.1 4,830.8 -1.5%

CNX Midcap Index -NSE 7,605.0 7,766.5 -2.1%

Sensex 20,715.6 20,996.5 -1.3%

BSE 100 Index 6,157.7 6,258.0 -1.6%

BSE 200 Index 2,454.9 2,494.6 -1.6%

BSE 500 Index 7,573.0 7,694.7 -1.6%

BSE Mid-Cap 6,302.5 6,389.0 -1.4%

BSE Small Cap 6,131.1 6,225.8 -1.5%

WORLD INDICES

13-Dec-13 6-Dec-13Weekly

Chg (%)Nikkei index 15,403.1 15,299.9 0.7%

Hang Sang Index 23,246.0 23,743.1 -2.1%

Kospi Index 1,962.9 1,980.4 -0.9%

Shanghai SE Comp 2,196.1 2,237.1 -1.8%

Strait Times Index 3,063.8 3,114.2 -1.6%

Dow Jones 15,739.4 16,023.0 -1.8%

NASDAQ 3,998.4 4,062.5 -1.6%

FTSE 6,439.7 6,552.0 -1.7%

FOREX

13-Dec-13 6-Dec-13WeeklyChg (%)

USD/INR 62.1 61.4 1.2%

GBP/INR 101.2 100.4 0.8%

Euro/INR 85.3 84.2 1.4%

100 JPY/INR 59.9 59.7 0.4%

FII - ACTIVITY ( Rs. Cr.)

Date Purch ases Sales Net

12/9/2013 3111.4 2247.6 863.8

12/10/2013 4,863.1 2,389.9 2,473.2

12/11/2013 4,574.9 4,179.3 395.7

12/12/2013 2,983.8 2,009.6 962.7

MTD 29,218.4 21,255.2 7,951.7

DII - ACTIVTY ( Rs. Cr.)

Date Purchase Sales Net

12/9/2013 946.6 1690.5 -743.9

12/10/2013 1,236.3 2,442.2 -1,205.8

12/11/2013 1,165.9 1,794.0 -628.2

12/12/2013 712.7 1,554.6 -842

MTD 8,852.3 14,355.4 -5,503.3

13-Dec-13 6-Dec-13 WeeklyChg (%)

Sesa Sterlite 191.9 182.3 5.3%

Wipro 518.8 493.8 5.1%

HCL Tech 1,181.2 1,126.6 4.8%

Infosys 3,373.9 3,325.8 1.4%

Lupin 869.7 857.9 1.4%


BHEL 154.6 171.4 -9.8%

Jindal Steel 259.8 283.5 -8.4%

IDFC 103.4 112.7 -8.3%

NTPC 137.3 149.0 -7.8%

Jaiprakash Asso 51.1 55.3 -7.5%

NIFTY TOP GAINERS (WEEKLY)

NIFTY TOP LOSERS (WEEKLY)

* Data for month of December till date

* Closing of Europe and US Indices as per 12th December 2013


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Weekly Wealth



B P W E A L T H

Source: BSE, BP Equities Research

BSE Weekly Sector al Performance

TOP OPEN INTEREST GAINERS (WEEKLY)



Share Price Open Interest

GODREJIND 285.5 260.8 -8.7% 710,000 1,372,000 93.2%

MRF 17824.9 19127.4 7.3% 34,500 56,875 64.9%

SIEMENS 632.5 624.0 -1.3% 900,500 1,217,000 35.1%

NTPC 149.9 137.9 -8.0% 14,840,000 19,868,000 33.9%

COALINDIA 288.6 284.4 -1.5% 6,722,000 8,962,000 33.3%

TOP OPEN INTEREST LOSERS (WEEKLY)



Share Price Open Interest

PTC 63.5 61.5 -3.1% 2,892,000 2,348,000 -18.8%

SSLT 183.7 192.7 4.9% 29,860,000 25,464,000 -14.7%

ADANIPORTS 164.5 152.7 -7.2% 5,562,000 4,796,000 -13.8%

DABUR 164.7 166.3 0.9% 3,898,000 3,374,000 -13.4%

CROMPGREAV 130.6 125.3 -4.1% 8,348,000 7,532,000 -9.8%

1.6%

0.3%

-1.0% -1.0%

-1.9% -1.9%-2.1%

-3.0%-3.2%

-4.2%-4.6%-5%

-4%

-3%

-2%

-1%

0%

1%

2%

IT FMCG Metals Healthc ar e Realt y Oil & Gas Aut o B ank ex Con Dur ables Capital Goods Pow er


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Weekly Wealth



B P W E A L T H

Bulk Deals

Date Scrip Name Client Name ExchangeDeal

TypeQuantity

Trade

Price

11-Dec-13 SKF India Limited HDFC EQUITY FUND NSE BUY 5,10,000 664

11-Dec-13 Strides Arcolab Limited GOLDMAN SACHS INVESTMENTS MAURI-TIUS NSE SELL 4,20,034 876.6

11-Dec-13 United Breweries Limited CITICORP FINANCE (INDIA) LTD. NSE SELL 35,58,030 772.9


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2nd Feb , 2011

PVR Ltd.

Share Holding Pattern (%)

Sector Outlook Positive

CMP (Rs) 578

Target Price (Rs) 661

BSE code 532689

NSE Symbol PVR

Bloomberg PVRL IN

Reuters PVRL.BO

Key Data

Nifty 6168

52WeekH/L(Rs) 650/229

O/s Shares (mn) 40

Market Cap (Rs bn) 23

Average volume

3 months 100,131

6 months 78,029

1 year 112,760

Stock

Face Value (Rs) 10

Relative Price Chart

Research Team

[email protected]

022-61596464

Company Background

PVR is a leading premium multiplex cinema exhibition company. The company pioneered the multi-

plex revolution in India by establishing the countrys first multiplex cinema. In January 2013 the com-pany acquired 93.19% of controlling stake in Cinemax India Ltd. Post acquisition the company nowoperates 402 screens spread across 93 cinemas covering 38 cities in India. PVR is a dominant leaderwith a box office collection share of ~30-35% for Hollywood movies and ~20-25% for Bollywood mov-ies in India.

Investment Rationale

Enhanced bargaining power and increasing Average Ticket Price (ATP) cushion the companysfinancials

The consolidation in the film exhibition industry has enabled film exhibitors like PVR to strike betterdeals with movie producers/distributors thereby leading to higher revenue contributions. PVR has con-

stantly been adding new screens at an rampant pace and is expected to set a benchmark in thisspace by adding 70-80 screens per year. In FY 14 the firm is expected to entertain about 70 millionviewers through its cinemas. Alongside, the premium positing of the PVR brand has allowed the com-pany to comfortably pass on price hikes to customers with a constantly increasing ATP that was Rs~160 last fiscal and is expected to reach Rs ~170 at the end of this fiscal. These factors cumulativelywill aid PVR in increasing revenues, improving margins and effectively reducing debt in the comingyears.

Adverti sing to cont ribu te signi fi cantly to t he companys revenues

Advertisement revenues are expected to increase by about 25% on yearly basis. This has mainlybeen supported by various innovative incentives that have been introduced by PVR offering an attrac-tive avenue for advertisers. This strategy has helped the company sign up big names like HUL andKotak Mahindra bank. Cinema advertising is a Rs 4.5 Bn market of which PVR has a ~60% marketshare. We believe that going forward, constant screen additions, increasing penetration into smallertowns and cities coupled with versatile advertising schemes will help the company to increase its con-tribution from this segment.

PVR is poised to benefit from a transitionin g film landscape

The foray of foreign studios into Bollywood has enriched the prospects of viewers on account of alarge amount of investments being made into quality content. This in turn will lead to higher footfallsfor exhibitors and PVR being a leader in this space with a 35% box office share collection for Holly-wood and 25% share for Bollywood. With a daily footfall of 450,000 we feel that a slew of new re-leases in the coming years bolstered by an increasing appetite for movie consumption due to the ris-

ing adaption of unconventional content by the youth will help in increasing the footfalls further.PVRhas also tied up with cinema format leaders like Imax that further helps the chain to appeal to a muchmore diverse demographic base. The proliferation of Rs 1 Bn plus movies in the recent years hashelped exhibitors like PVR make valuable additions to its top line.

Outlook and Valuation

PVR is a leader in the Indian cinema exhibition space and we are optimistic about the companys fu-ture revenue prospects on account of 1)Strong bargaining power with producers/distributors leading toa higher share of revenue collections .2)Increasing ATP helps in improving margin performance.3)High screen additions and strong presence across metros and smaller cities keeps footfalls high,thereby leading to an ever increasing revenue contribution from advertising. The company is also ven-turing into other entertainment avenues like Blu-O that has healthy EBITDA margin in range of 20%.

An ever evolving cinema landscape in India further helps in supporting the companys future reve-nues. Considering these factors we have given a given a BUY rating on the stock with a target price ofRs 661(10 x FY15 EV/EBITDA) taking into account an investment horizon of 12-15 months.

Specialty retail | Weekly Pick

Buy

BUY HOLD SELL

> 15% -5% to 15% < -5%

Stock Rating

B P W E A L T H

200

250

300

350

400

450

500

550

600

650

Dec-12 Apr-13 Aug-13 Dec-13

PVR Relative Nifty

31.0%

15.2%

18.8%

35.1%

Promoter FII DII Others


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Weekly Wealth



B P W E A L T H

Source : BP Equities research, Bloomberg

Key Financials

YE March (Rs. mn) FY11 FY12 FY13 FY14E FY15E

Net Sales 4,593 5,177 8,053 14,377 17,358

Growth% 37.5% 12.7% 55.5% 78.5% 20.7%

Operating Profi t 904 774 1,195 2,593 3,208

Growth% 128.8% -14.3% 54.4% 117.0% 23.7%

Net Pro fit 82 254 445 772 1,064

Growth% 504.6% 210.8% 75.1% 73.6% 37.8%

Diluted EPS 3.0 9.5 14.9 19.8 26.3

Growth% 427.5% 214.9% 57.4% 32.2% 33.3%

Key Ratios

OPM(%) 19.7% 15.0% 14.8% 18.0% 18.5%

NPM (%) 1.8% 4.9% 5.5% 5.4% 6.1%

RoE (%) 2.5% 8.1% 9.6% 11.0% 13.4%

BV/Per Share Rs. 125.7 109.3 162.2 181.0 203.1

Valuation Ratios

P/E (x) 29.4x 29.4x 21.5x

EV/EBITDA (x) 15.7x 10.9x 8.8x

P/BV (x) 1.9x 3.2x 2.8x

Market Cap./ Sales (x) 1.5x 0.8x 0.7x


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Research Desk Tel: +91 22 61596406

Disclaimer Appendix

Corpo ra t e Off i ce :4 th Flo or, Rus to m Bld g, 29 , Veer Nar iman Road, For t , Mumbai 400001

Phone- +91 22 6159 6464 Web- www.bpw eal th .com

Inst ituti onal Sales Desk Tel: +91 22 61596403/04/05

Analyst (s) holding in the Stock : Nil

Analyst (s) Cert if icati on:

We analysts and the authors of this report, hereby certify that all of the views expressed in this research report accurately reflect ourpersonal views about any and all of the subject issuer (s) or securities. We also certify that no part of our compensation was, is, or willbe directly or indirectly related to the specific recommendation (s) or view (s) in this report. Analysts aren't registered as research ana-lysts by FINRA and might not be an associated person of the BP Equities Pvt. Ltd. (Institutional Equities).

General Discl aimer

This report has been prepared by the research department of BP WEALTH MANAGEMENT Pvt. Ltd. and BP EQUITIES Pvt. Ltd, is forinformation purposes only. This report is not construed as an offer to sell or the solicitation of an offer to buy or sell any security in any

jurisdiction where such an offer or solicitation would be illegal.

BP WEALTH MANAGEMENT Pvt. Ltd. and BP EQUITIES Pvt. Ltd have exercised due diligence in checking the correctness and au-thenticity of the information contained herein, so far as it relates to current and historical information, but do not guarantee its accuracyor completeness. The opinions expressed are our current opinions as of the date appearing in the material and may be subject tochange from time to time. Prospective investors are cautioned that any forward looking statement are not predictions and are subject tochange without prior notice.

Recipients of this material should rely on their own investigations and take their own professional advice. BP WEALTH MANAGEMENTPvt. Ltd. any of its affiliates or employees shall not be in any way responsible for any loss or damage that may arise to any person fromany inadvertent error in the information contained in this report. BP WEALTH MANAGEMENT Pvt. Ltd. or any of its affiliates or employ-ees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, includingwithout limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement. The recipients of thisreport should rely on their own investigations.

BP WEALTH MANAGEMENT Pvt. Ltd. and/or its affiliates and/or employees may have interests/ positions, financial or otherwise in thesecurities mentioned in this report. Opinions expressed are our current opinions as of the date appearing on this material only. While weendeavor to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other rea-sons that prevent us from doing so.

This report is not directed to or intended for display, downloading, printing, reproducing or for distribution to or use by any person in anylocality, state and country or other jurisdiction where such distribution, publication or use would be contrary to the law or regulation orwould subject to BP WEALTH Management Pvt. Ltd. or any of its affiliates to any registration or licensing requirement within such juris-diction.

B P W E A L T H

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BP Equities_Weekly Wealth_13th December,2013