India Equity Analytics for Today - Buy Stocks of CMC with Target Price from Rs 1490 to Rs 1690

8/13/2019 India Equity Analytics for Today - Buy Stocks of CMC with Target Price from Rs 1490 to Rs 1690.

1/23

email: [email protected], website : www.narnolia.com

Narnolia Securities Ltd,

402, 4th floor 7/1, Lords Sinha Road Kolkata 700071, Ph 033-32011233 Toll Free no : 1-800-345-4000

We have the reduce the target price of UCO bank from Rs.94 to Rs. 84 on account of banksunlikely to get benefit of western sanction agains

Iran. Late last month US and six other major powers have imposed sanction against Iran for its nuclear deal. In order to quality for waive

sanction against Iran, India has cut back sharply on purchase of oil from Iran. UCO was the major beneficiary of current account deposits o

India-Iran oil facilities. In our banking sector coverage universe, UCO banks cost of deposits were lowest at 6.1% whereas yield on loan was

10.1% at the end of 2QFY14. After this development, banksmargin would be impacted and accordingly UCO bank loses the valuation premium

Although banks management is focusing on other area of growth like branch expansion and customer acquisition. We slightly tweak ou

earnings and reduce our book value estimate from Rs.175.5 to Rs.168.8. Now our revised price target for the stock would be Rs.84 which is 0.5

-

TCS :"Positive commentary" "BUY" 18th Dec 2013

TCS on its management Interview to Media highlighted that; For earning and demand prospect, FY15 will be better than the ongoing fiscal on

account of uptick in client spending in the US and Europe and growth in demand for technologies like cloud, mobility and Big Data.We maintain"

BUY" view on the stock with a target price of Rs 2550. Taking the INR/USD (average value) at Rs60 for FY14E and Rs59.5 for FY15E, We upgrade

EPS from Rs87.4 to Rs90.7 for FY14E and from Rs99.3 to Rs 102.4 for FY15E........................ ( Page : 16-17)

Godrej Consumer Product : " Strategy Shining" "BUY" 19th Dec 2013

Its strong 20%+ growth in the domestic household insecticides business is the key growth driver. We expect strong momentum to continue in

its international business led by Megasari and consolidation of Darling business. Despite some concerns related to higher leverage, lost

domestic focus and currency risk, we remain confident of achieving the 20%+ sales growth with strong PAT growth for FY14E & beyond

...........................................( Page : 11-12)

BANK OF INDIA : "BUY" 18th Dec 2013

Bank of India is trading at 0.5 times of one year forward book which is the lowest in valuation band despite of performing better than

expectation largely due to lower CAR and slower economic growth. With the capital infusion to the tune of Rs.1000 cr and improving sign oasset quality would re-rate the stock as it did previously in our view. The management guided fresh slippage in line with 2QFY and inch up

higher restructure asset for December quarter. We believe that current level is attractive entry point for the investor with time horizon mor

than one year with price target of Rs.235.................................... ( Page : 13- 15)

DIVISLAB :Good Growth Ahead "BUY" 19th Dec 2013

The company posted strong 2QFY4 results with net sales growing to Rs 566 Cr up by 19.7% YoY on the back of good growth coming from a

business segments. The generic API grew by 18% YoY to Rs 261 Cr for the quarter and CRAMS business segment grew by 20% YoY to Rs 271

Cr............................................. ( Page : 4-6)

IEA-Equity

Strategy

20th Dec, 2013

UCO BANK : "BUY" 17th Dec 2013

AXIS BANK : "Neutral" 19th Dec 2013

Axis bank is trading at 1.6 times of one year forward book which is almost upper side of bear case valuation band. We are not seeing bank

earnings better than expectation as banks has significant exposure in riskier sector like infrastructure and power as compare to its peers. We

have taken banks valuation multiple in bear case scenario on account of non visibility of ROE improvement and expected muted earning

growth. We assume loan and deposits growth of 16% and 15% along with margin at 3.5%. Better than expected performance will lead pric

erformance and valuation multi le............................... Pa e : 7-10

CMC :"On track to deliver" "BUY" 20th Dec 2013

Considering recent healthy demand environment across the IT space with favorable supply side scenario, we remain confident on the stock fo

better earning visibility and stable margin picture. Still, we reiterate our positive stance on the long-term story of CMC due to its focus on high

margin SI and ITES businesses.At a CMP of Rs 1510, stock trades at 14.9X FY14E earnings. We have "BUY" view on the stock and we revise ou

target price from Rs1490 to Rs1690.............................. (Page : 2-3)

India Equity Analytics


2/23

CMC

1M 1yr YTD

solute 15.0 29.2 54.5

l. to Nifty 15.4 24.6 37.1

Current 4QFY13 3QFY13

omoters 51.12 51.12 51.12

23.32 21.84 19.87

17.83 19.05 20.46

hers 7.73 7.99 8.55

Financials

2QFY14 1QFY14 (QoQ)-% 2QFY13 (YoY)-%

Revenue 560.75 486.61 15.2 458.64 22.3

EBITDA 88.41 77.04 14.8 76.59 15.4

PAT 67.3 53.12 26.7 49.4 36.2

EBITDA Margin 15.8% 15.8% - 16.7% (90bps)

PAT Margin 12.0% 10.9% 110bps 10.8% (120bps

fty 6167

4575

We believe, CMC will continue with its efforts to enhance revenue contribution of hig

margin System Integration and ITES segments. Further, its high focus on educatio

space will also add margin in near term.

Considering recent healthy demand environment across the IT space with favorab

supply side scenario, we remain confident on the stock for better earning visibility an

stable margin picture. Still, we reiterate our positive stance on the long-term story

CMC due to its focus on high margin SI and ITES businesses.

For 2QFY14E earnings, CMC witnessed better Sales and PAT growth with 15% sa

growth driven by the strong growth from the System Integration (29%) coupled with t

good growth from the System Integration (24%) and ITES business (16%) sequential

PAT grew by 27%(QoQ) because lower effective tax rate (from 34%, 1QFY14) to 20%

earning before tax) .

E Code 517326

E Symbol CMC

ange from Previous 13.4%

arket Data

ock Performance

year forward P/E

Rs, Cro

(Source: Company/Eastwi

Please refer to the Disclaimers at the end of this Report.

wk Range H/L 1560/1107

ompany update Buy

evious Target Price 1490

side 12%

kt Capital (Rs Crores)

are Holding Pattern-%

"On track to deliver"

MP 1510

rget Price 1690

Deal pipeline: The deal pipeline is in line with the last year. It indicated that pursu

good number of deals in the Developed and as well emerging markets. Consideri

current sound demand environment across geographies (like US and Europe) a

verticals Company is more optimistic for clients acquisition and deal executions ahead

Now, CMC is focusing on new emerging segments like IMS (Infrastructu

Management Services), Cloud, Big data, Mobility and Analytics. Considering

impressive client as well as market response, company is expecting to quantify inrevenue. Its new and emerging projects like Mining Management System, GPS Syste

and Port & Cargo Management System would play a major role for generati

revenue.

View and Valuation:CMC expects the growth momentum to improve in the quarte

ahead and the revenue growth to be higher than the NASSCOM guidance in FY14. T

Company remains a strong with excellent earning visibility led by joint effort of mark

strategy by TCS (contributes 59% of sales) in its product and solutions. For a long-ter

prospect, we remain positive on the stock, taking its earning visibility and healt

earnings among the mid-cap IT space (over 25% CAGR in earnings over FY2013-15E).

a CMP of Rs 1510, stock trades at 14.9X FY14E earnings. We have "BUY" view on t

stock and we revise our target price from Rs1490 to Rs1690.

Steady Margin:During the quarter, EBITDA margin was almost unchanged at 15.8% dto wage hikes (70 bps), but also has positive impact from currency gain (170 bps) whi

were reinvested into the business. However, Management is still confident to mainta

the margin in a range of 15-16%.

erage Daily Volume 20884

"BUY"20th Dec' 13



3/23

CMC continues to target growth ahead of the overall IT industry; the company expects

grow faster than that in the current financial year

Expects operating Profit margin between 15 percent and 16 percent for FY14E,

The Capex expected to be Rs 190 crore (planned is around Rs 230 crore) for FY'14.Thepex will be financed by internal accruals.

Companys hiring Plan; a net addition of 400-500 this year

Notably, it targets revenues of Rs 250-300 crore from Education and Training business

next two 3-4 years timeline.



nancials;

CMC

ey facts from recent Concall


s, Cr FY10 FY11 FY12 FY13 FY14E FY15E

et Sales 870.73 1084.40 1469.34 1927.87 2239.31 2600.4

urchases of stock-in-trade 99.35 99.28 145.40 188.56 201.54 234.04

mployee Cost 276.16 345.13 440.22 521.65 593.42 702.11

ubcontracting and outsourcing cost 173.56 262.35 446.11 679.73 794.96 923.15ther expenses 159.94 170.17 213.63 222.88 235.13 273.04

otal Expenses 709.01 876.93 1245.36 1612.82 1825.04 2132.3

BITDA 161.72 207.47 223.98 315.05 414.27 468.07

epreciation 9.85 10.46 21.37 23.20 41.95 60.69

ther Income 18.75 11.80 17.46 13.17 22.39 26.00

BIT 151.87 197.01 202.61 291.85 372.33 407.38

nterest Cost 3.17 0.22 0.02 0.18 0.2 0.25

BT 167.45 208.59 220.05 304.84 394.52 433.14

ax 24.23 32.42 68.59 76.76 86.79 99.62

AT 143.22 176.17 151.46 228.08 307.73 333.52

rowth-%

ales -7.4% 24.5% 35.5% 31.2% 16.2% 16.1%

BITDA 27.7% 28.3% 8.0% 40.7% 31.5% 13.0%

AT 23.3% 23.0% -14.0% 50.6% 34.9% 8.4%

Margin -%

BITDA 18.6% 19.1% 15.2% 16.3% 18.5% 18.0%

BIT 17.4% 18.2% 13.8% 15.1% 16.6% 15.7%

AT 16.4% 16.2% 10.3% 11.8% 13.7% 12.8%

xpenses on Sales-%

mployee Cost 31.7% 31.8% 30.0% 27.1% 26.5% 27.0%

ubcontracting Cost 19.9% 24.2% 30.4% 35.3% 35.5% 35.5%

ax rate 14.5% 15.5% 31.2% 25.2% 22.0% 23.0%

aluation

MP 1340.0 2079.6 994.8 1410.0 1510 1510

o of Share 1.50 1.50 3.00 3.03 3.03 3.03W 510.68 654.02 772.19 946.26 1192.11 1454.9

PS 95.48 117.45 50.49 75.27 101.56 110.07

VPS 340.45 436.01 257.40 312.30 393.44 480.17

oE-% 28.0% 26.9% 19.6% 24.1% 25.8% 22.9%

ividen Payout ratio 18.6% 19.9% 23.2% 19.4% 20.1% 21.2%

/BV 3.94 4.77 3.86 4.51 3.84 2.78

/E 14.03 17.71 19.70 18.73 14.87 13.72


4/23

BUY

1M 1yr YTD

bsolute 2.8 4.4 1.4

el. to Nifty 0.1 -1.3 -14.6


omoters 52.1 52.2 52.2

15.8 14.9 14.0

I 12.5 12.5 13.3

hers 19.5 20.5 20.5

Financials Rs, Cro


Revenue 567 517 9.7 474 19.6

EBITDA 249 197 26.4 165 50.9

PAT 205 174 17.8 117 75.2

EBITDA Margin 43.9% 38.1% 580bps 34.8% 910bps

PAT Margin 36.2% 33.7% 250bps 24.7% 1150bp

wk Range H/L 1189/905

DIVISLAB

arket DataSE Code 532488

14%pside

DIVISLABGood Growth Ahead

arget Price 1350

evious Target Price -

esult UpdateMP 1186

ne Year Price vs Nifty


15631

verage Daily Volume 5.43

About The Company :

Divis Laboratories Limited is an India-based manufacturer of Active Pharmaceuti

Ingredients (APIs) and Intermediates. Divi is engaged in manufacture of generic AP

custom synthesis of active ingredients for innovator companies and other specia

chemicals like peptides and nutraceuticals.

Investment Rationale :hange from Previous -

SE Symbol


ock Performance-%

hare Holding Pattern-%

kt Capital (Rs, Cr)

fty 6217

The company have one more business segment Nutraceuticals relatively smaller a

newer as compared to other business segment can act as growth driver going forward. T

management of the company is quite optimistic for this business segment and has guid

that this business at 40-50% CAGR (albeit on a low base) over the next 2-3 years.

2QFY14 Results Update.

The company posted strong 2QFY4 results with net sales growing to Rs 566 Cr up

19.7% YoY on the back of good growth coming from all business segments. The geneAPI grew by 18% YoY to Rs 261 Cr for the quarter and CRAMS business segment grew

20% YoY to Rs 271 Cr. The company derives almost 45-50% of revenues each fro

CRAMS and generic API business while rest comes from Nutraceuticals.

The operating EBITDA for the quarter came at Rs 250 Cr and OPM at 43.9 %.Compan

2QFY14 EBITDA margins were higher than 34.8% reported in Q2FY13 on account

higher gross margins, lower power cost and forex loss in Q2FY13.The RM cost as % of n

sales stands at 50% for the 2QFY14 while employee cost as % of net sales was 10 %.

Company is one of the few CRAMS (Contract Research and Manufacturing Service

players with a superior business mix comprising high-margin custom synthesis of AP

(Active Pharma Ingredients) and intermediates for innovator companies. The compa

collaborates with innovators throughout the product development cycle. P

commercialization, company is usually the key supplier of APIs and intermediates for the

products to the innovators. In 2012-13, the company added six products to its custo

synthesis portfolio.The CRAMS business which contributes nearly 45%- 50% of the total revenues have fro

Rs 560 Cr in 2009 to Rs 1000 Cr translating CAGR of 15 %.The Generic API busine

which contributes another 45-50 % to the total revenues is also well track after witnesome pressure in FY10.As on FY13 this segment contributed Rs 1029 Cr to the to

revenues and this segment to more revenues to the company in the light of upcom

patent cliff of US and new launches .

"BUY"19th Dec' 13



5/23


DIVISLAB

ontinued

e net profits for the 2QFY14 came at Rs 205 Cr and NPM came at 36.2%.The net profits

so include forex gain of Rs 31 Cr. The company reports its forex gain under other

come headings and forex loss under its other expenditure head. The tax rate for the

arter stands at 22%.

aphical Depiction

evenue Break Up: 2QFY14

(Source: Company/Eastwind)

ompany has capitalized Fixed assets to the tune of Rs120 Cr for H1 FY14. The company

l commercialize DSN SEZ by the end of the year and the FDA inspection post that. The

w DSN SEZ contribution will start in Q1 FY15E and full benefits will fructify only from Q2

Y15E.The existing DSN blocks contributed Rs125 Cr revenues in Q2 FY14 as against

s70.8 Cr in Q1 FY14.

anagement Guidance

e management of the company after strong 2QFY14results expects that revenue to

ow by 15-20 % (15% guided earlier), with FY15E growth expected above 20%. The

anagement further indicated that this high level of OPM is not sustainable but reiterated

at 38% levels OPM is quite reachable . On Power shortage ,which declined the OPM in

QFY14 has been solved and will aid margin expansion going forward. The capex

idance stands at INR500-600m (apart from INR2b addition from CWIP) and tax rateidance remains between 23-24%.

ew & Valuation

he company is not only the most profitable company in the CRAMS space, but also

atures among the most profitable companies in the Indian healthcare sector with EBIDTA

argin of 35-40% backed by its strong chemistry skills and custom synthesis presence.The

ock is currently trading at CMP of Rs 1186, strong 2QFY14 results ,optimistic

anagement guidance and better business model in comparison to its peers makes us

nfident for the stock. We are positive for the stock and recommend BUY with

rget price of Rs 1350.



6/23

Net sales growing to Rs 566 Cr up by 19.YoY on the back of good growth coming fr

all business segments.

2QFY14 EBITDA margins were higher th

34.8% reported in Q2FY13 on account

higher gross margins, lower power cost a

forex loss in Q2FY13.

PM %


PM %

The 2QFY14 PAT also include forex gain of

31 Cr. The company reports its forex g

under other income headings and forex l

under its other expenditure head.



DIVISLAB

les and PAT Trend (Rs)




7/23

AXIS BANK

1286

13251247

3

6.3

1M 1yr YTD

bsolute 12.9 -5.2 -5.2

el.to Nifty 12.6 -10.9 -10.9


omoters 33.9 33.9 33.5

I 40.7 4094.0 39.6I 8.8 8.5 10.0

hers 16.6 16.6 17.0

Financials Rs, Cr

2011 2012 2013 2014E 2015E

NII 6566 8026 9666 12620 14710

Total Income 11238 13513 16217 19715 21804

PPP 6377 7413 9303 11238 12429

Net Profit 3340 4224 5179 6343 6977

EPS 81.4 102.2 110.7 135.2 149.1

ompany Update NEUTRAL

MP

arget Price

Ax is bank is tradi ng at 1.6 tim es of one year forw ard boo k whic h we believ

that it is high er sid e of our bear cas e valu ation ban d. We hav e neith er see

valuat ion band expansion nor did earnings lead price performanc e. Axi s ban

has sig nif ican t expos ure in infrastru cture and po wer (12.64% in 2QFY14) a

com pare to its peer group. Ass et qual ity pressure may persists in com in

quar ters which rest r ic t banksvaluat ion m ult iple in th e range of 1.4 to 1

tim es of bo ok in our view. We adv ice our inves tor s to bo ok part profit at th

curren t level. Our valuat ion mult iples are based upon bankspresent grow

pa rameter s , be tt er than expec ted pe rf o rmance and v i s ib i li ty o f RO

improv ement wi l l expand valuat ion and mult ip les.

evious Target Price

arket Data

pside

SE Code 532215

hange from Previous

xis Bank Vs Nifty


2066127

fty 6217

39764

1549/763

SE Symbol AXISBANK

2wk Range H/L

Healthy NII growth o n the back of m argin improvem ent and loan growth

kt Capital (Rs Cr)


ock Performance

verage Daily Volume

Sequentially stable asset quality help to make lower provision

On asset quality front, Axis bank reported 10 bps deterioration in GNPA

sequential basis to 1.4%. In absolute term GNPA increased by 10% QoQ a

provision increased by 12% QoQ. This led net NPA increased by 6% sequentially.

percentage term NPA stood at 0.4%, flat on QoQ basis. Provision coverage ra

(without technical write off) was improved by 100 bps to 69.3% and PCR at technic

write off was 89%. During quarter bank made loan loss provision of Rs.687 cr vers

Rs.712 cr in 1QFY14 and Rs.509 cr in 2QFY13. On sequential basis risky seclike power and infrastructure exposure remain flat at 12.64% from 12.67%

1QFY14.

Declined in cost income ratio led robust growth in operating profit

Operating expenses increased by 12.1% YoY to Rs.1953 cr in which employee co

and other operating cost increased by 11.4% and 12.5% respectively. Cost incom

ratio declined by 440 bps to 41.5% from 44.9% in 2QFY13. Employee cost and oth

operating cost as a percentage of total assets remain flat at 0.2% and 0.4

respectively. With the support of healthy NII, fee income and improvement of coincome, operating profit grew by 29% YoY and -3.3% in QoQ to Rs.2750

Sequential declined of operating profit was due to gain of treasury income

1QFY14 which was absent in 2QFY14.

During 2QFY14, Axis bank reported NII growth of 26.2% YoY largely due to 50 b

YoY improvement of margin and 577 bps YoY increased of credit deposits ratio a

17% increased in loan growth. Axis banks interest earnings assets increased

20% YoY whereas interest bearing liabilities increased by 13% YoY. Total reven

of the bank grew by 21.3% YoY to Rs.4703 cr. Non- interest income register

growth of 14% YoY to Rs.1766 cr.

"NEUTRAL "19th Dec, 2013



8/23


uring quarter bank reported 7 bps QoQ declined in NIM to 3.79% led by 500 bps

quentially declined of credit deposits ratio and almost flat of loan yield on QoQ basis.

oan yield during the quarter was 10.5% and cost of deposits declined from 7.4% to

1% sequentially.

aluation & View

ealthy NII growth and controlled CI ratio along with stable margin help to boost

p profit

ith the support of healthy NII growth and controlled operating expenses led net profit of

6% YoY to Rs.1362 cr from Rs.1081 cr. Consequently ROA improved by 12 bps to 1.6%

nd ROE declined to 15.3% from 17.5% in 2QFY13 largely due to operating leveraging.

odest deposits growth and strong traction in loan growth

n business growth parameters,bankstotal business grew by 12% YoY to Rs.4567 bn

against Rs.4077 bn. Deposits grew by moderate pace with 8% YoY while current

eposits and saving deposits grew by 9% and 18% respectively taking overall CASA ratio

42.9%.Banksstrategy to focus on retail deposits seem well is shaping as share of

tail deposits in term deposits increased continuously to 45.2% from 40.3% in21QFY13.

oan grew by 17% YoY to Rs.20130 bn. Incremental loan growth came from retail

vance and SME segment. Share of retail loan increased to 30.2% of overall loan from

5.7% in 2QFY13.Bankshas decreased in share of risky sector (Power & Infrastructure)

xposure to 12.64% from 13.63% in 2QFY13. Credit deposits ratio improved by 577 bps

oY to 78.8% implying best utilization of excess liquidity in balance sheet.

equential declined of margin owing to flat loan yield

xis bank delivered good set of numbers during quarter but exposure to stress sector

main at 12%+ level. Moreover Axis bank has higher exposure in small, medium

nterprises and infra segment in comparison to peers. In challenging macro environment

nd tight liquidity situation, Axis bank is more vulnerable among peers. At the current

ce of Rs.1286, stock is trading at 1.6 times of one year forward book which is upper

de of bear case valuation band. We advice book part profit at current level. We value

ank at multiple of 1.4 to 1.6 times of one year forward book which implies Rs. price

nge of Rs.1247 to Rs.1325.

AXIS BANK



9/23

AXIS BANK

Source: Eastwind/Company



uarterly Result 2QFY14 1QFY14 2QFY13 % YoY Gr % QoQ Gr

erest/discount on advances / bills 5394 5189 4736 13.9 4.0

come on investments 2143 2015 1897 13.0 6.3

erest on balances with Reserve Bank of India 35 34 22 58.9 2.6

hers 37 39 32 14.9 -5.5

tal Interest Income 7609 7278 6687 13.8 4.6

e Income 1432 1317 1343 6.6 8.7

ading Income 5 440 207 -97.6 -98.9

scellaneous Income 329 24 0 - 1270.2

hers Income 1766 1781 1551 13.9 -0.9

tal Income 9375 9059 8238 13.8 3.5

erest Expended 4672 4413 4360 7.2 5.9

2937 2865 2327 26.2 2.5

her Income 1766 1781 1551 13.9 -0.9

tal Income 4703 4647 3877 21.3 1.2

mployee 644 643 578 11.4 0.1

her Expenses 1309 1160 1164 12.5 12.9

perating Expenses 1953 1803 1742 12.1 8.3

P( Rs Cr) 2750 2844 2136 28.8 -3.3

ovisions 687 712 509 35.0 -3.5

T 2062 2131 1626 26.8 -3.2

x 700 722 545 28.4 -3.1

t Profit 1362 1409 1081 26.0 -3.3

lance Sheet Date ( Rs Bn)

t Worth 362 349 252 43.6 3.7

posits 2554 2384 2356 8.4 7.1

an 2013 1982 1721 16.9 1.6

set qualtiy( Rs Cr)

NPA 2734 2490 2191 24.8 9.8

A 838 790 654 28.1 6.1

GNPA 1.4 1.3 1.3

NPA 0.4 0.4 0.4


10/23

NANCIALS & ASSUPTION

AXIS BANK




ncome Statement 2011 2012 2013 2014E 2015E

terest Income 15155 21995 27183 33243 38426

terest Expense 8589 13969 17516 20622 23716II 6566 8026 9666 12620 14710

hange (%) 31.2 22.2 20.4 30.6 16.6

on Interest Income 4671 5487 6551 7095 7095

otal Income 11238 13513 16217 19715 21804

hange (%) 25.3 20.2 20.0 21.6 10.6

perating Expenses 4860 6100 6914 8478 9376

re Provision Profits 6377 7413 9303 11238 12429

hange (%) 22.4 16.2 25.5 20.8 10.6

rovisions 3033 3189 4124 2176 2461

BT 3345 4224 5179 9062 9967AT 3340 4224 5179 6343 6977

hange (%) 34.8 26.5 22.6 22.5 10.0

alance Sheet

eposits( Rs Cr) 189166 219988 252614 290506 334081

hange (%) 34 16 15 15 15

f which CASA Dep 77758 91412 112100 124917 143655

hange (%) 18 18 23 11 15

orrowings( Rs Cr) 26268 34072 43951 51266 58956

vestments( Rs Cr) 71788 92921 113738 129873 149354

oans( Rs Cr) 142408 169760 196966 228481 265037

hange (%) 36 19 16 16 16

aluation

ook Value 460 549 708 828 957

MP 1404 1146 1304 1288 1288

/BV 3.1 2.1 1.8 1.6 1.3


11/23

Godrej Consumer Product

840

960725

14%

32%

Godrej Consumer aims to grow 10 times in the next 10 years.

Key updates;

1M 1yr YTD

solute -2.1 17.6 27.0

l. to Nifty -4.8 11.5 8.8


omoters 63.3 63.3 63.5

28.7 28.3 28.2

1.2 1.2 1.2

hers 6.8 7.2 7.1

Financials Rs,


Revenue 1961.7 1724.9 13.7% 1600.32 22.6%

EBITDA 299.8 225.4 33.0% 248.96 20.4%

PAT 195 133 46.6% 159.31 22.4%

EBITDA Margin 15.3% 13.1% 210bps 15.6% (30bps

PAT Margin 9.9% 7.7% 220bps 10.0% (10bps

GODREJCP

arket Data

wk Range H/L

View and Valuations:Its strong 20%+ growth in the domestic household insecticid

business is the key growth driver. We expect strong momentum to continue in

international business led by Megasari and consolidation of Darling business. Desp

some concerns related to higher leverage, lost domestic focus and currency risk, w

remain confident of achieving the 20%+ sales growth with strong PAT growth for FY1

& beyond. At a CMP of Rs840, stock trades at 5.7x FY15E P/BV. We retain BUY with

price target of Rs 960.

On International revenue front, Godrej Consumer could see some threads in cert

areas especially Indonesia (18% of sales) and Nigeria (13% of sales), Indonesia is goi

into election next year and in Nigeria, there have been wage hikes.

Demand Pickup scenario: On demand side scenario, we expect that the stro

agricultural season leading to strong rural GDP growth would support to impro

demand environment very soon. Considering recent GDP growth and Current Accou

Deficit (CAD) numbers, we are expecting that the economy is moving to track and urb

demand will see some picking up.

Strong focus on driving growth with 10x10 strategy:Its strong focus on driving grow

in the domestic and international market by expansion of products and distribut

reach, we expect strong earning in near future. With launching new products

domestic as well as international mkt, Godrej CP will explore organic & inorganic grow

Along with its 3x3 strategy, it has 10x10 strategy also, which refers to 10x growth in

yrs.

Products strategy:The company continues to gain and enjoy market leader ship positi

across all three formats. The company is driving increase in penetration with launch

"Goodknight Advanced colour play". The company has launched Goodknight aerosol acoil in Nigeria.

Recent developments:The Company has entered into an agreement on Oct 7, 2013,

acquire a 30% stake in Bhabani Blunt Hair Dressing Pvt Ltd, a premier hair sa

company with one of the strongest consumer franchises in this space.

Godrej Consumer's management is hopeful of seeing an uptick in the urban dema

and the rural demand is expected to be strong due to good harvest. We expect 20-22(YoY) sales growth for 3QFY14.

" Strategy Shining"

MP

pside

Key fac ts f rom recent Management Comments :

rget Price

ompany update BUY

evious Target Price

The company does not seecompanys margins coming under pressure going ahea

due to heavy investments it has made in advertisements. We expect 15-15.5% EBIT

margin for FY14E and 15.5-16% for FY15E.

ange from Previous

yr Forward P/B


120012

fty 6217

erage Daily Volume

28593

977/693

E Code 532424

SE Symbol

kt Capital (Rs Cr)


(Source: Company/Eastwin

ock Performance

"BUY"19th Dec' 13



12/23


nancials and Valuation


Godrej Consumer Product

egionwise margin:

uaterly snapshot:


trly, 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY1

ales Gr(YoY) 23% 36% 31% 39% 35% 26% 30% 23.9% 22.6%

AT Gr(YoY) -2.6% 68.3% 36.0% -45.5% 24.7% 3.1% 58.7% 1.8% 22.4%

BITDA Margin 18.0% 20.1% 18.9% 14.5% 15.6% 16.8% 16.2% 13.1% 15.3%

AT Margin 12.0% 13.9% 13.5% 12.1% 10.8% 11.3% 13.3% 9.0% 10.9%

egions 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY1

dia 18.9% 20.4% 20.2% 15.1% 17.6% 18% 16.7% 15.8% 18.9%

donesia 19.4% 20.6% 20.7% 18% 19% 20% 19% 15% 17%

frica 26.0% 31% 19.3% 19% 16% 20% 7% 13% 14%

tin America 7.4% 9% 16.3% 3% 4% 8% 9% 3% 7%

urope 11% 5% 10.5% 13% 9% 5% 13% 9% 10%

s, in Cr FY10 FY11 FY12 FY13 FY14E FY15E

ales 2041.2 3693.6 4866.16 6390.79 7823.32 9198.58

ther Operating Income 2.5 28.11 45.93 16.58 20.30 23.86

otal income from operations 2043.7 3721.71 4912.09 6407.37 7843.62 9222.44

M Cost 619.59 1458.28 2174.67 2640.31 3176.67 3781.20

urchases of stock-in-trade 367.16 294.12 356.11 451.03 552.13 649.19

WIP -40.45 -45.22 -212.26 -118.06 -183.50 -224.07

mployee Cost 151.81 284.51 391.91 590.68 723.08 850.19

d Spend 132.8 352.85 449.86 660.35 902.02 1014.47

ther expenses 402.98 695.96 850.47 1196.46 1459.0 1689.7

otal expenses 1633.89 3040.5 4010.76 5420.77 6629.4 7760.7

BITDA 409.81 681.21 901.33 986.6 1214.2 1461.7

epreciation and Amortisation 23.6 49.92 64.44 77 94.3 102.1

ther Income 44.81 24.13 6.07 67.78 47.8 56.2

xceptional Item 0 41.14 200.17 96.12 78.4 92.2

BIT 386.21 631.29 836.89 909.6 1119.9 1359.6

nterest 11.1 43.64 65.84 77.45 61.1 53.2

BT 419.92 652.92 977.29 996.05 1185.1 1454.9

ax Exp 80.33 138.21 226.05 179.18 225.17 290.98

AT 339.59 514.71 751.24 816.87 959.9 1163.9

rowth-% (YoY)

ales 46.3% 81.0% 31.7% 31.3% 22.4% 17.6%

BITDA 95.2% 66.2% 32.3% 9.5% 23.1% 20.4%

AT 97.0% 51.6% 46.0% 8.7% 17.5% 21.3%

xpenses on Sales-%

M Cost 30.3% 39.2% 44.3% 41.2% 40.5% 41.0%

d Spend 6.5% 9.5% 9.2% 10.3% 11.5% 11.0%

mployee Cost 7.4% 7.6% 8.0% 9.2% 9.2% 9.2%

ther expenses 19.7% 18.7% 17.3% 18.7% 18.6% 18.3%

ax rate 19.1% 21.2% 23.1% 18.0% 19.0% 20.0%

Margin-%

BITDA 20.1% 18.3% 18.3% 15.4% 15.5% 15.8%

BIT 18.9% 17.0% 17.0% 14.2% 14.3% 14.7%

AT 16.6% 13.8% 15.3% 12.7% 12.2% 12.6%

aluation:MP 261.0 365.0 559.0 836.0 840.0 840.0

o of Share 30.8 32.4 34.0 34.0 34.0 34.0

W 954.7 1725.2 2815.2 3313.0 4073.9 5038.8

PS 11.0 15.9 22.1 24.0 28.2 34.2

VPS 31.0 53.2 82.8 97.4 119.7 148.1

oE-% 35.6% 29.8% 26.7% 24.7% 23.6% 23.1%

iv- Payout-% 30.6% 38.3% 22.6% 23.0% 20.7% 17.1%

/BV 8.4 6.9 6.8 8.6 7.0 5.7

/E 23.7 23.0 25.3 34.8 29.8 24.6


13/23

BANK OF INDIA

206

235-

14

-

1M 1yr YTD

bsolute -14.5 -32.2 -32.2

el.to Nifty -13.7 -37.1 -37.1


omoters 64.1 64.1 64.1

I 13.2 13.6 13.5

I 15.3 15.6 16.3

hers 7.4 6.7 6.0

Financials Rs, Cr

2011 2012 2013 2014E 2015E

NII 7878 8313 9024 12110 11804

Total Income 10519 11635 12790 16672 16366

PPP 5398 6694 7458 9670 9492

Net Profit 2542 2678 2749 3533 3269

EPS 46.5 46.7 47.9 61.6 57.0

6139

kt Capital (Rs Cr)



ock Performance

arget Price

Despite of improv ing fund amental from past two quarters, Bank of India

tradi ng at 0.5 tim es of on e year forw ard boo k whi ch is the lowes t level in o

valuat ion param eters. We believe that current level is attract ive entry poi nt fthe investor wi th t ime horizon more than one year. With the capital infusion

Rs.1000 cr by GoI and imp rov ing sig n of asset quality wo uld re-rate the sto c

in our view as i t p reviously w itnessed i .e. 0.8 to 1.2 t imes of book. Th

manag ement has guid ed fresh slippage of about Rs.1500 cr and restructu re

to the tun e of Rs.1000-1200 cr in 3QFY14 wh ich i s in line wit h 2QFY14. W

recomm end buy with pr ice target of Rs. 235

ompany Update BUY

393/126

SE Code 532149

2wk Range H/L

Capital infusion by GoI raise CAR ratio to 8.1% from 7.75%

Bank has lower CAR to 7.75% at the end of 2QFY14 according to Basel 3 nor

Now Bank of India has approved to initiate process to raise further capital for iss

of 4.63cr Equity Shares to GoI on Preferential basis at a price of Rs. 215.70 p

share. This capital infusion is taking CAR ratio to 8.1% and government holding ri

to 66.7% from 64.1%. Capital infusion to the tune of Rs.1000 cr diluting ourFY14E

book value by 40 bps.

As far as restructure loan are concern,bankstotal restructure loan was about 5%

total loan asset andbanksmanagement expects Rs.1000-1200 cr of restructure

December quarter. In 2QFY14, bank sold about Rs.370 cr of bad loan to Ass

Reconstruction Company (ARC) for recovery and during quarters its plan to s

about Rs.500 cr of bad loan to ARC.

Sequentially improving PCR provide cushion on stress asset

Despite of stable asset quality and lower slippage, Bank of India provided 24% mo

provision in sequential basis which improved its provision coverage ratio(Witho

technical write off) to 63.3% from 61% in preceding quarter same year. High

provision would provide cushion on stress asset without hurting profit going further.

hange from Previous

ANKINDIA Vs Nifty


2271804

fty

SE Symbol BANKINDIA

Most of banks especially PSUs are beaten down by the market on account of slow

economic growth and stress in asset quality. But Bank of India has witness

improvement in asset quality in 2QFY14 as fresh slippages were down by 26sequentially and 46% Year-on-year basis. Moreover bank reported reduction to t

tune of Rs.1009 cr versus Rs.1338 cr in 1QFY14. Most of reduction was due

higher recovery and up-gradation rather than write-off. Write-off came down sharp

from Rs.598 cr 1QFY14 to Rs.120 cr in 2QFY14.

Inch up restructure guidance in 3QFY14

Shown Improving sign of asset quality with higher recovery and up-gradati

rather than write-off

verage Daily Volume

12260

arket Data

MP

evious Target Price

pside

"BUY"18th Dec, 2013



14/23

BANK OF INDIA



arterly Result 2QFY14 1QFY14 2QFY13 % YoY Gr % QoQ Gr


ome on investments 2129 1885 1835 16.0 12.9

erest on balances with Reserve Bank of India 479 465 289 65.6 2.9

hers 0 0 0 42.9 36.4tal Interest Income 9239 8541 8005 15.4 8.2

hers Income 1100 1181 894 23.1 -6.8

tal Income 10340 9722 8900 16.2 6.4

erest on deposits 5966 5401 5154 15.8 10.5

erest on RBI/Inter bank borrowings 414 296 536 -22.8 40.0

hers 333 308 119 179.8 8.2

erest Expended 6712 6004 5810 15.5 11.8

2527 2537 2196 15.1 -0.4

her Income 1100 1181 894 23.1 -6.8

tal Income 3627 3718 3090 17.4 -2.4

ployee 897 963 700 28.2 -6.8

her Expenses 628 575 536 17.1 9.3

erating Expenses 1525 1537 1236 23.4 -0.8

P( Rs Cr) 2102 2180 1854 13.4 -3.6

ovisions 1232 695 1552 -20.6 77.4

t Profit 622 964 302 106.0 -35.5

ance Sheet Data

uity Capital 597 575 575 3.9 3.9

serve & Surplus 25,686 21,774 21,774 18.0 18.0

posits 432,282 332,695 332,695 29.9 29.9

rrowings 41,751 29,434 29,434 41.8 41.8

her liabilities and provisions 12,727 11,262 11,262 13.0 13.0

tal Liability 513,042 395,739 395,739 29.6 29.6

sh in hand 24,621 17,080 17,080 44.2 44.2

sh and balances with reserve bank of india 34,658 19,198 19,198 80.5 80.5

estment 107,413 90,147 90,147 19.2 19.2

vance 332,190 256,148 256,148 29.7 29.7

ed Assets 2,957 2,839 2,839 4.2 4.2

hers Assets 11,203 10,327 10,327 8.5 8.5

tal Assets 513,042 395,739 395,739 29.6 29.6

set Quality

PA 9873 8765 8898 11.0 12.6

A 6156 5947.3 5,228 17.7 3.5

PA(%) 3.0 3.0 3.4A(%) 1.9 2.0 2.0

R(%) Without technical write off 37.6 32.1 41.2


15/23

BANK OF INDIA




nancials & Assuption 2011 2012 2013 2014E 2015E

erest/discount on advances / bills 15570 20241 23139 29515 31171

come on investments 5195 7142 7261 8828 10152

erest on balances with Reserve Bank of India 798 834 1257 1889 1889

hers 295 264 251 1 1tal Interest Income 21858 28481 31909 40233 43213

hers Income 2642 3321 3766 4562 4562

tal Income 24500 31802 35675 44795 47775

erest on deposits 12218 17957 20238 25422 28709

erest on RBI/Inter bank borrowings 813 1145 1489 1419 1419

hers 950 1065 1158 1281 1281

erest Expended 13981 20167 22885 28123 31410

7878 8313 9024 12110 11804

her Income 2642 3321 3766 4562 4562

tal Income 10519 11635 12790 16672 16366

mployee 3492 3069 3131 4131 4055

her Expenses 1629 1871 2201 3965 3892erating Expenses 5121 4941 5332 7002 6874

P( Rs Cr) 5398 6694 7458 9670 9492

ovisions 2909 4016 4709 5254 5406

t Profit 2542 2678 2749 3533 3269

46.0 5.3 2.7 28.5 -7.5

y Balance Sheet Data

posits 299559 318216 381840 434075 503527

posits Growth(%) 30 6 20 14 16

rrowings 22021 32114 35368 36854 37953

rrowings Growth(%) -2 46 10 4 3

an 213708 248833 289367 347241 366720

an Growth(%) 26 16 16 20 6

vestment 86677 86754 94613 110351 126904

vestment Growth(%) 27 0 9 17 15

stwind Calculation

eld on Advances 7.3 8.1 8.0 8.5 8.5

eld on Investments 6.3 8.7 7.1 8.0 8.0

eld on Funds 6.5 7.8 7.7 8.4 8.4

st of deposits 4.1 5.6 5.2 5.7 5.6

st of Borrowings 8.0 6.9 6.8 7.5 7.5

st of fund 4.3 5.8 5.3 6.5 6.2

aluation

ok Value 322.7 365.3 416.9 469.4 510.4

BV 1.5 1.0 0.7 0.4 0.4

E 10.3 7.7 6.3 3.8 4.1


16/23

TCS

1M 1yr YTD

solute 16.6 71.8 72

l. to Nifty 12.3 64.7 64.3


omoters 73.96 73.96 73.96

16.14 16.14 14.96

5.44 5.44 6.45

hers 4.46 4.46 4.63

Financials


Revenue 20977.24 17987.07 16.6 15621.03 34.3

EBITDA 6632.95 5144.12 28.9 4438.39 49.4

PAT 4633.33 3839.5 20.7 3434.65 34.9

EBITDA Margin 31.6% 28.6% 300bps 28.4% 320bp

PAT Margin 22.1% 21.3% 80bps 22.0% 10bps

fty 6139

ock Performance

year forward P/E

Rs, Cro


View and Valuation:We continue to remain positive on demand outlook and marg

profile. We continue to be positive on demand environment and companysstrength

efficient deal execution. We advise that TCS now seem to be trading ahead

fundamentals; At a price of Rs 2047, it is trading at 22.6x FY14E earnings, We maintai

BUY" view on the stock with a target price of Rs 2550. Taking the INR/USD (avera

value) at Rs60 for FY14E and Rs59.5 for FY15E, We upgrade EPS from Rs87.4 to Rs90

for FY14E and from Rs99.3 to Rs 102.4 for FY15E. For FY14E and FY15E, we expect 17

and 20% revenue growth in USD term and retain positive stance as outperforman

continues.


ompany update Buy TCS on i ts managem ent Interview to Media high l ighted that

evious Target Price 2160

side 25%

For earning and demand prospect, FY15 will be better than the ongoing fiscal

account of uptick in client spending in the US and Europe and growth in demand f

technologies like cloud, mobility and Big Data.

For next 3-5 years, momentum picking for social, mobile, analytics and cloud (SMA

technologies could offer a "multi-billion dollar opportunity" in revenues for t

company.

2258/1198

kt Capital (Rs Crores) 400775 TCS Q3 analyst br ief ing key takeaways; Adv ersely imp acted by seasonal i ty b

noth ing u nexpected,

Persistent Margin picture: The Company expects margins could be broadly stable. T

company would take a decision on reinvestment only after the Rupee stabilizes. W

expect that company could maintain EBITDA margin at 30-31% during the 3rd quarter.

erage Daily Volume

Confident on IT spending:Despite furloughs impact, it remains confident of growth

the medium term as clients were heading into their CY2014E budgeting cycle in a mo

confident position than in the past 2-3 yrs. Broadly US and Europe region will play a k

role for better demand enviromnment ahead, however domestic market could be outrace due to upcoming election.

We continue to believe that TCS will be star performer in growth sense than oth

peers. Hence, we are maintaining 17% revenue growth in dollar term for FY1

because of improved demand environment, while NASSCOM expects 12-14% for t

Industry. We continue to be positive on demand prospect for TCS.

"Positive commentary"

MP 2047

rget Price 2550

ange from Previous 18%

arket Data

E Code 532540

On the hiring front, TCS will hire about 25,000 college graduates who will join t

firm in the next fiscal. Besides, the firm will also be hiring across geographies like t

US and Europe to keep up with demand for services. During current fiscal year, TCS h

recruited 45000 head counts so far.

Marginal Revenue growth impacted by seasonality:TCS management has indicat

that 3rd quarter, FY14E will be slightly impacted by broad bases furloughs acroIndustries and thin project based services. Revenue will be impacted mainly

developed market like US and Europe region. We expect that revenue growth could

seen at 3-3.5% for 3QFY14E.

1011877

E Symbol TCS

wk Range H/L

"BUY"18th Dec' 13



17/23

uarterly snapshot

TCS.


nancials



s, Cr FY10 FY11 FY12 FY13 FY14E FY15

et Sales-USD 6339 8187 10171 11569 13507.44 16202.

et Sales 30029.0 37325.1 48894.3 62989.5 81044.64 96404.

mployee Cost 10879.6 13850.5 18571.9 24040.0 30796.96 37115.

verseas business expenses 4570.1 5497.7 6800.5 8701.9 10941.03 13978.

ervices rendered by business associates and others 1262.0 1743.7 2391.3 3763.7 4862.68 6748.3

peration and other expenses 4622.8 5054.3 6694.8 8443.9 10130.58 12532.

otal Expenses 21334.4 26146.2 34458.5 44949.6 56731.25 70375.

BITDA 8694.6 11178.9 14435.8 18040.0 24313.39 26029.epreciation 601.8 686.2 860.9 1016.3 1268.47 1508.8

mortisation 59.1 49.1 57.1 63.7 57.54 76.73

ther Income 272.0 604.0 428.2 1178.2 405.22 1928.0

BIT 8033.7 10443.6 13517.9 16960.1 23044.92 24520.

terest Cost 16.1 26.5 22.2 48.5 48.53 48.53

BT 8289.6 11021.2 13923.8 18089.8 23401.61 26399.

ax 1197.0 1830.8 3399.9 4014.0 5616.4 6336.

AT 7092.7 9190.3 10524.0 14075.7 17785.2 20063

AT ((Reported PAT)) 7000.6 9068.6 10414.0 13917.4 17785.2 20063

rowth-%

ales-USD 29.2% 24.2% 13.7% 16.8% 20.0%

ales 8.0% 24.3% 31.0% 28.8% 28.7% 19.0%

BITDA 21.3% 28.6% 29.1% 25.0% 34.8% 7.1%

AT 31.8% 29.6% 14.5% 33.7% 26.4% 12.8%

argin -%

BITDA 29.0% 30.0% 29.5% 28.6% 30.0% 27.0%

BIT 26.8% 28.0% 27.6% 26.9% 28.4% 25.4%

AT 23.6% 24.6% 21.5% 22.3% 21.9% 20.8%

xpenses on Sales-%

mployee Cost 36.2% 37.1% 38.0% 38.2% 38.0% 38.5%

verseas business expenses 15.2% 14.7% 13.9% 13.8% 13.5% 14.5%

ervices rendered by business associates and others 4.2% 4.7% 4.9% 6.0% 6.0% 7.0%

peration and other expenses 15.4% 13.5% 13.7% 13.4% 12.5% 13.0%

ax rate 14.4% 16.6% 24.4% 22.2% 24.0% 24.0%

aluation

MP 780.8 1182.5 1322.0 1563.0 2047.0 2047.

o of Share 195.7 195.7 195.7 196.0 196.0 196.0

W 18466.7 24504.8 29579.2 38645.7 49103.5 60901

PS 36.2 47.0 53.8 71.8 90.7 102.4

VPS 94.4 125.2 151.1 197.2 250.5 310.7

oE-% 38.4% 37.5% 35.6% 36.4% 36.2% 32.9%

viden Payout ratio 28.1% 50.8% 37.5% 41.2% 41.2% 41.2%

/BV 8.3 9.4 8.7 7.9 8.2 6.6

/E 21.5 25.2 24.6 21.8 22.6 20.0

trly, 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY1

olume Growth 6.3% 3.2% 3.3% 5.3% 5.0% 1.3% 4.4% 6.1% 7.30%

ales Growth, USD Term 4.7% 2.4% 2.4% 3.0% 4.6% 3.3% 3.1% 4.1% 5.4%

ales Growth, INR Term 7.7% 13.5% 0.4% 12.1% 5.1% 2.9% 2.2% 9.5% 16.6%

AT Growth, INR Term -5% 36% -7% 14% 4% 3% 2% 6% 21%

BITDA Margin 29.1% 31.0% 29.6% 29.1% 28.4% 29.0% 28.1% 28.6% 31.6%

AT Margin 19.8% 23.8% 22.0% 22.3% 22.0% 22.1% 22.0% 21.3% 22.1%


18/23

74

84-

14

1M 1yr YTD

bsolute 16.3 0.6 0.6

el.to Nifty 14.1 -7.0 -7.0


omoters 69.3 69.3 69.3

I 4.2 3.9 3.2

I 12.4 12.5 13.0

hers 14.2 14.3 14.6

Financials Rs, Cr

2011 2012 2013 2014E 2015ENII 3845 3902 4582 4721 5533

Total Income 4770 4868 5534 6063 6875

PPP 2695 2811 3357 4184 4744

Net Profit 907 1109 618 1573 1977

EPS 16.5 17.7 9.3 23.7 29.7

UCO BANK

ompany Update BUY We hav e the reduce the target pric e of UCO ban k from Rs.94 to Rs. 84 o

account of banksun lik ely to get benefit of wes tern sanc tion again st Iran. La

last month US and six other major powers have imp osed sanc tion against Irafor its nuc lear deal. In ord er to qualit y for waiver sanc tion again st Iran, Ind

has cut back s harply on pu rchase of oi l f rom Iran. UCO was the maj

benef ic iary o f current acco unt d eposi ts of India-I ran oi l faci l i t ies. In o

bank ing sector cov erage univ erse, UCO bankscost of depo sits were lowe

at 6.1% whereas y ield on l oan w as 10.1% at the end of 2QFY14. Aft er th

development , banksmargin would be impacted and accord ingly UCO ban

loses the valuation premium . Although banksmanagement is focus ing o

other area of growth l ike branch expansion and c ustom er acquis i t ion. W

slig ht ly tweak our earnings and reduc e our book value estimate from Rs.175

to Rs.168.8. Now ou r revised pri ce target for the stoc k wou ld be Rs.84 whic h

0.5 times o f FY14E boo k valu e.

MP

arget Priceevious Target Price

pside

hange from Previous

arket Data

SE Code 532205

SE Symbol UCOBANK

2wk Range H/L 86.65/46

kt Capital (Rs Cr) 5561

verage Daily Volume 2960821

fty 6154Strong performance in NII on account of lower cost of deposits

ock Performance During quarter UCObanksperformance was better than expectation asbanksN

grew by 55% YoY to Rs.1569 Cr aided by interest income growth of 5.92% a

interest expenses de-growth of 9.68%. On yearly basis credit deposits ratio declin

to 71.6% from 72.6% but loan and deposits growth of 15% and 16% support

overall business growth and hence margin expansion. Other income de-grew

1.6% YoY to Rs.209 cr largely due to lower treasury gain. Total income register

growth of 45.1% YoY to 1779 cr.


Stable asset quality on sequentially

In absolute term GNPA was flat on QoQ basis and registered mere deterioration

3% largely due to asset quality. During quarterbanksreported fresh slippages we

Rs.725 cr as against Rs.629 cr in 1QFY14. Out of Rs.725 cr, over Rs.400

slippages came from infra segment alone. In percentage term GNPA stood at 5.3

from 5.7% in 1QFY14. In absolute term provision increased by 6% QoQ taking n

NPA increased to 7% QoQ. In absolute term NPA was 3.1% flat on sequential bas

Provision coverage ratio without technical write off stood at 46.6% as against 45.1

in 1QFY14 and 41.1% in 2QFY13.

CO Bank Vs Nifty



"BUY"17th Dec, 2013



19/23

urrent deposits grew almost double led CASA improvement

UCO BANK

gher earnings on account of robust growth in NII, lower CI ratio and flat

ovisions

et profit during the quarter registered growth of 286% YoY to Rs.400 cr largely due to

gher NII growth, lower cost income ratio and lower provision on account of stable asset

uality. Consequentially ROE and ROA improved to 17.4% and 0.88% from 4.5% and4% in 2QFY13 respectively.

n balance sheet growth front, banks deposits grew by 16% YoY to Rs.1888 bn

pported by current account deposits growth of 173% YoY and 12% rise in saving

eposits. CASA deposits registered the growth of 56% YoY to Rs.60096 cr. In

ercentage of total advances, CASA stood at 31.8% from 23.7% in 2QFY13. Growth in

rrent deposits was on account of providing facilities to Indo Iran trade payments which

presently covering 45% of oil imports from Iran and India export. Going forward 100%

oil import from Iran is to be covered and further fertilizer import from Iran is also being

nsidered by Government. This facilities will generated almost about 17000-18000 cr aser management. Loan grew by 15% YoY to Rs.1352 bn.

argin improved due to higher declined of cost of deposits than loan yield

et interest margin of the bank improved by 11 bps YoY to 2.84% from 2.73% in 1QFY14

ue to 22% YoY declined cost of deposits to 6.09% from 7.44% in 2QFY13. Lower cost

as account of higher growth in low cost current deposits. Yield on loan (EW calculated)

r the quarter stood at 10.1% from 10.1% in 1QFY14 and 10.9% in 2QFY13.

anagement expects NIM of 3% at the end of year end on the back of current deposits

pport.

aluation & View

e have the reduce the target price of UCO bank from Rs.94 to Rs. 84 on account of

anksunlikely to get benefit of western sanction against Iran. Late last month US and six

her major powers have imposed sanction against Iran for its nuclear deal. In order to

uality for waiver sanction against Iran, India has cut back sharply on purchase of oil from

an. UCO was the major beneficiary of current account deposits of India-Iran oil facilities.

our banking sector coverage universe, UCO bankscost of deposits were lowest at

1% whereas yield on loan was 10.1% at the end of 2QFY14. After this development,

anks margin would be impacted and accordingly UCO bank loses the valuation

emium. Althoughbanksmanagement is focusing on other area of growth like branch

xpansion and customer acquisition. We slightly tweak our earnings and reduce our book

lue estimate from Rs.175.5 to Rs.168.8. Now our revised price target for the stock

ould be Rs.84 which is 0.5 times of FY14E book value.




20/23

UCO BANK

undamental through graph

Source:Eastwind/Company




21/23

UCO BANK



uarterly Result 2QFY14 1QFY14 2QFY13 % YoY % QoQ


come on investments 1026 968 897 14.4 5.9

erest on balances with Reserve Bank of India 8 37 32 -73.7 -77.3

hers 14 49 37 -61.9 -71.6tal Interest Income 4444 4207 4196 5.9 5.6

hers Income 209 462 213 - 1.6 -54.7

tal Income 4653 4669 4409 5.6 -0.3

erest Expended 2875 2843 3183 -9.7 1.1

1569 1364 1013 54.9 15.1

her Income 209 462 213 - 1.6 -54.7

tal Income 1779 1826 1226 45.1 -2.6

mployee 382 376 332 15.2 1.6

her Expenses 230 185 180 27.7 24.2

perating Expenses 612 562 512 19.6 9.1

P( Rs Cr) 1166 1264 714 63.4 -7.8

ovisions 759 741 597 27.1 2.3

T 408 523 116 249.9 -22.1

x 7 12 13 -42.5 -39.0

t Profit 400 511 104 285.9 -21.7

lance Sheet

uity Capital 2576 2576 2488 3.5 0.0

serve & Surplus 8195 7719 6644 23.3 6.2

t Worth 10770 10295 9132 17.9 4.6

posits 188779 177050 162567 16.1 6.6

rrowings 6605 6462 6601 0.1 2.2

her Liabilities & Provisions 6262 6566 4773 31.2 -4.6

tal Liabilities 212416 200373 183073 16.0 6.0

sh & Balance with Bank 7081 7600 7585 -6.6 -6.8

lance with bank & money at call 8045 8218 1957 311.1 -2.1

vestments 55193 52999 49589 11.3 4.1

vances 135233 125141 118045 14.6 8.1

ed Assets 977 926 815 19.9 5.5

her Assets 5887 5489 5082 15.8 7.2

tal Assets 212416 200373 183073 16.0 6.0

set Quality

NPA 7,376 7,178 5,888 25.3 2.8

A 4228 3939 3468 21.9 7.3

GNPA 5.3 5.7 5.0

NPA 3.1 3.1 2.9PCR(Without technical writeoff) 46.6 45.1 41.1


22/23

UCO BANK

Source: Company/Eastwind



ncome Statement 2011 2012 2013 2014E 2015E

terest Income 11371 14632 16752 20313 24333

terest Expense 7526 10730 12170 15592 18800

II 3845 3902 4582 4721 5533

hange (%) 65.4 1.5 17.4 3.0 17.2

on Interest Income 925 966 952 1342 1342

otal Income 4770 4868 5534 6063 6875

hange (%) 45.0 2.0 13.7 9.6 13.4

perating Expenses 2075 2056 2177 1880 2131

re Provision Profits 2695 2811 3357 4184 4744

hange (%) 58.0 4.3 19.4 24.6 13.4

rovisions 1788 1661 2710 2596 2548

BT 907 1150 647 1588 2196

AT 907 1109 618 1573 1977

hange (%) -10.4 22.3 -44.2 154.5 25.6

alance Sheet

eposits( Rs Cr) 99071 115540 128283 153939 184727

hange (%) 17 11 20 20

f which CASA Dep 32031 34403 55733 67707 81249

hange (%) 6 7 62 21 20

orrowings( Rs Cr) 5475 12901 9492 12315 14777

vestments( Rs Cr) 42927 45771 52245 62692 75231

oans( Rs Cr) 99071 115540 128283 153939 184727

hange (%) 20 17 11 20 20

atio

vg. Yield on loans 8.6 9.9 10.0 10.0 10.0

vg. Yield on Investments 6.6 7.1 7.1 7.5 7.5

vg. Cost of Deposit 4.7 6.5 6.6 7.0 7.1

vg. Cost of Borrowimgs 12.5 6.1 7.0 6.0 6.0

aluation

ook Value 135 137 146 169 183

MP 107 79 50.1 74.55 74.55/BV 0.8 0.6 0.3 0.4 0.4


23/23

23

k Disclosure & Disclaimer: This report/message is for the personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to

rnolia Securities Ltd. (Hereinafter referred as NSL) is not soliciting any action based upon it. This report/message is not for public distribution and has been furnished to you solely fo

ormation and should not be reproduced or redistributed to any other person in any from. The report/message is based upon publicly available information, findings of our research

st wind& information that we consider reliable, but we do not represent that it is accurate or complete and we do not provide any express or implied warranty of any kind, an

se are subject to change without notice. The recipients of this report should rely on their own investigations, should use their own judgment for taking any investment decisions ke

mind that past performance is not necessarily a guide to future performance & that the the value of any investment or income are subject to market and other risks. Further it will be

assume that NSL and /or its Group or associate Companies, their Directors, affiliates and/or employees may have interests/ positions, financial or otherwise, individually or otherw

recommended/mentioned securities/mutual funds/ model funds and other investment products which may be added or disposed including & other mentioned in this report/messa

Documents

India Equity Analytics for Today - Buy Stocks of CMC with Target Price from Rs 1490 to Rs 1690