Morning Insight › pdf › dmb › MorningInsight... · 2018-11-30 · NOVEMBER 30, 2018 Morning Insight. Kotak Securities Limited has two independent equity research groups: Institutional

NOVEMBER 30, 2018

Morning Insight

Kotak Securities Limited has two independent equity research groups: Institutional Equities and Private Client Group. This report has been prepared by the Private Client Group. The views and opinions expressed in this document may or may not match or may be contrary with the views, estimates, rating, target price of the Institutional Equities Research Group of Kotak Securities Limited.

News Highlights The telecom tower industry’s operating margins are likely to shrink by

as much as 750 basis points (bps) through FY19-20, to 37% from over 44% now, amid plunging rentals and a sharp fall in co-location of telecom sites amid rapid industry consolidation. (ET)

Reserve Bank of India (RBI) relaxed rules for non-banking financial companies (NBFCs) to sell or securitise their loan books, in a bid to ease persistent stress in the sector. NBFCs can now securitise loans of more than five-year maturity after holding those for six months on their books. (ET)

The Reserve Bank of India (RBI) and Yes Bank Ltd exchanged at least eight letters related to persistent governance and compliance failures and violations of statutory and regulatory rules at Yes Bank before the regulator decided to reject a request to extend Rana Kapoor’s tenure as managing director and chief executive for three years. (mint)

Tata Motors’ JLR to lay off staff temporarily at UK plant. About 500 of the JLR’s 1,600-strong workforce at Solihull plant could be affected at any one time through a two-week period. (mint)

The National Company Law Appellate Tribunal (NCLAT) asked all the financial creditors and the resolution professional (RP) for Jaypee Infratech to submit a summarized document on their financial claims by 20 December after which it’ll decide on the matter. (mint)

Maruti Suzuki said its premium hatchback Baleno has crossed cumulative sales milestone of 5 lakh within 38 months of its launch. The model, which was launched in October 2015, posted a 20.4 per cent growth in sales in the April-October period this fiscal. (ET)

Billionaire Sajjan Jindal’s JSW Energy has submitted a bid for Monnet Power, which was referred to the National Company Law Tribunal (NCLT) after it defaulted on Rs 55 billion debt. Adani Power, which submitted an expression of interest earlier, has decided to stay out of the race. (BS)

Essar Steel insolvency case lands in legal ambiguity. Standard Chartered bank has alleged bias in the process as top banks held 'illegal' meetings' but all other banks approved. (BS)

JSW Steel would integrate the recently acquired Aferpi mill with its Indian facilities, including the newly purchased Monnet Ispat and Energy, as part of the Italian steelmaker’s phased turnaround plans. (ET)

Inox Leisure Ltd Committee of the Board of Directors for Operations of the Company (Committee) at its meeting held today approved the issuance of 6.4mn Equity Shares at a price of Rs. 250 each, aggregating to Rs. 1.60 bn to Gujarat Fluorochemicals Limited, the Promoter of the Company. (BL)

What’s Inside Sector Update: Natural Gas

Result Update: Moil Ltd

Source: ET = Economic Times, BS = Business Standard, FE = Financial Express, IE = Indian Express, BL = Business Line, ToI: Times of India, BSE = Bombay Stock Exchange, MC = Moneycontrol

29-Nov 1 Day 1 Mth 3 Mths

Indian Indices SENSEX Index 36,170 1.3 6.2 (6.6) NIFTY Index 10,859 1.2 5.9 (7.1) NSEBANK Index 26,940 1.8 7.9 (4.6) NIFTY 500 Index 9,082 1.0 5.5 (8.9) CNXMcap Index 17,394 0.5 3.8 (12.3) BSESMCAP Index 14,353 0.2 3.4 (15.8) World IndicesDow Jones 25,339 (0.1) 0.9 (2.4) Nasdaq 7,273 (0.3) (0.4) (10.3) FTSE 7,039 0.5 (1.3) (5.3) NIKKEI 22,263 0.4 1.6 (2.6) Hangseng 22,263 0.4 1.6 (2.6) Shanghai 26,451 (0.9) 6.6 (4.5)

Value traded (Rs cr)Cash BSE 56.2 Cash NSE 29.9 Derivatives 92.1

Net inflows (Rs cr) 28-Nov MTD YTD

FII 1,142 5,186 (37,499)Mutual Fund 87 2,501 114,803

Nifty Gainers & Losers Price Chg Vol29-Nov (Rs) (%) (mn)

GainersBajaj Auto 2,724 4.6 0.8 Kotak Mahindra Bank 1,213 4.5 6.6 Hindalco Ind 225 3.9 12.4 LosersHCL Tech Ltd 1,013 (2.8) 1.6 Power Grid Corp 181 (2.1) 9.2 ONGC 141 (1.5) 29.0

Advances / Declines (BSE)29-Nov A B T Total % total

Advances 251 512 47 810 100 Declines 174 507 65 746 92 Unchanged 4 28 11 43 5

Commodity29-Nov 1 Day 1 Mth 3 Mths

Crude (US$/BBL) 59.6 0.1 (21.0) (23.0) Gold (US$/OZ) 1,224.2 0.2 0.8 2.0 Silver (US$/OZ) 14.3 (0.1) 0.6 (1.4)

Debt / forex market 29-Nov 1 Day 1 Mth 3 Mths

10 yr G-Sec yield % 7.6 7.6 7.8 7.9 Re/US$ 69.9 70.6 73.4 70.6

Nifty

Source: Bloomberg

% Chg

1,884,936

% Chg

% Chg Day29-Nov

4,170 43,142

9,900

10,400

10,900

11,400

11,900

Nov-17 Feb-18 May-18 Aug-18 Nov-18

Kotak Securities – Private Client Research Please see the Disclosure/Disclaimer on the last page For Private Circulation 2

NOVEMBER 30, 2018

NATURAL GAS SECTOR UPDATE India’s gas usage expected to rise 2.5 times by 2030 India’s total gas consumption increased to 172 mmscmd (million metric standard cubic meter per day) in October 2018 supported by higher domestic gas demand.

Domestic gas consumption increased 2.3% yoy to 92 mmscmd mainly due to higher gas demand from city gas distribution segment (contributes 15% of the total gas consumption mix). Recently, the government has indicated to expand CNG stations from current 1470 to 10,000 by 2020. Similarly, 400 districts will be covered under the CGD by 2021. Currently, work is going on in 174 districts. The government also believes this will help India to become gas based economy and India’s gas consumption will increase 2.5 times by 2030. India aims to increase use of gas mix from the current 6.2% to 15% of the total energy consumption by 2030.

However, RLNG’s gas consumption mix declined 83 bps yoy to 46.6% in Oct’18. LNG consumption reduced by 1.1% yoy in Oct’18 due to lesser gas off-take by fertilizer and petrochemical sector.

Monthly readings on natural gas production, availability and consumption in India

India’s total gas consumption: In Oct’18, India’s gas consumption increased marginally by 0.7% yoy to 172 mmscmd supported mainly by CGD, power, and refinery sector but decline in gas consumption growth continued in fertilizer and petrochemical sector.

RLNG consumption: Surprisingly, RLNG consumption growth declined for second continued month. In Oct’18, RLNG demand decreased by 1.1% yoy to 80 mmscmd due to decline in gas demand from both fertilizer (7% yoy) and petrochemical (39% yoy) sector. Notably, CGD sector imported gas demand increased meaningfully by 5% yoy and Power sector RLNG consumption rose 16% yoy.

The contribution of RLNG in India’s total gas consumption mix declined to 46.6% in Oct’18 vs 47.4% in Oct’17, reflecting seasonally lower demand for imported gas. However, we expect this declining trend to reverse in the medium term due to better cost economics relative to liquid fuel, continuously rising RLNG supply and rising demand from industrial/ commercial segment.

RLNG import: India’s LNG import declined by 6% yoy in Oct’18 with the rise in international RLNG prices.

Domestic gas supply: India’s gas production was marginally down by 0.4% yoy to 90 mmscmd in Oct’18 led by lower gas production by OIL India and Private/JVs. ONGC gas production rose by 4.6% yoy to 68 mmscmd. Oil India’s production declined to 7.6 mmscmd (–3.2% yoy) and production from private players/JVs continued to decline and stands at 15 mmscmd (–17.5% yoy).

India’s total Gas consumption mix: Major gas consuming sectors are fertilizer (25%), power (18%), CGD (15%), refinery (12%), petrochemicals (6%) sector and balance by others.

Sector Update

Sector Details BSE Oil Ind Mkt cap (Rs bn) : 5,483 52-wk Hi/Lo (Rs) : 16664 / 12040 No.of members : 10 BSE OIL Index Value : 13,403 O&G weightage in Sensex : 11.49

Source: Bloomberg

Price performance (%) Period 3M 6M 1Y

RIL -9 29 25 GSPL 3 9 (8) PLNG (4) 5 (12) CPCL (10) 4 (31) SENSEX (6) 4 8 NIFTY (7) 3 6 GAIL (7) (1) (0) IGL (8) (1) (18) MAHGL (1) (2) (25) BSEOIL (11) (6) (14) OINL (3) (10) (14) BPCL (7) (17) (32) ONGC (20) (20) (22) MRPL (8) (20) (38) IOCL (14) (21) (27) HPCL (4) (21) (38) GGAS (17) (26) (26) ABAN (35) (52) (63)

Source: Company, Kotak Securities - PCG

BSE Oil and Gas Index chart

Source: Bloomberg

Sumit Pokharna [email protected] +91 22 6218 6443

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NOVEMBER 30, 2018

India’s total gas consumption – Industry wise (mmscmd)

Source: PPAC and Kotak Securities – Private Client Research

India’s domestic gas consumption – Industry wise (mmscmd)

Source: PPAC and Kotak Securities – Private Client Research. Note: Upstream companies use some gas as internal consumption while some quantity of gas is flared as a part of technical requirement.

Imported RLNG consumption in India – Industry wise (mmscmd)


39 41 42 41 41 42 42 39 40 42 41 41 39 37

36 39 35 32 31 30 32 35 34 34 32 30.5 32.4 39.8

23 23 24 24 24 25 24 24 25 25 25 25 24 25 18 20 18 20 20 19 20 20 20 20 20 20 18

21 22 20

9 10 11 10 11 9 9 9 10 10 9 10

14 10 11 20 19 19 21 19 20 21 20 22 23

21 18 18

18 18 18 19 19 18 18 19 18 18 18

19

171 171 157 165 165 164 168 165 167 170 166 166 164 172

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50

100

150

Fertilizer Power City GasRefinery Petrochemical Others

18 18 19 18 17 19 18 17 16 19 17 18 17 17

25 28 28 25 25 25 26 27 25 23 25 25 24 27

13 13 13 13 13 14 13 14 13 13 14 14 14 14 3 3 3 3 3 6 3 3 3 3 3 3 3 3 9 8 2 2 2

2 2 3 2 2 2 2 2 2 5 2

2 7 8 9 8 8

8 8 8 8 8 10

18 18 18 18 18

19 19 18

18 19 18 18 18 19

90 90 85 87 86

93 89 90

86 88 86

89 86 92

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Fertilizer Power City Gas Refinery Petrochemical Others Flare

21 22 22 24 24 23 24 22 24 23 24 23 22 21

11 11 7 6 6 5 6 8 9 11 8 6 8 13 10 10 11 11 11 11 11 11 11 11 11 11 10

11

15 17 15 17 17 13 17 17 17 18 17 17 16 18

13 12 7 8 9

8 9 7 7 6 8 8 7

7 10 8

9 12 12

10 12 11

12 13 12 13 14 11

80 81 72 78 79 71 79 75 81 82 80 78 77 80

- 10 20 30 40 50 60 70 80 90

Fertilizer Power City Gas Refinery Petrochemical Others

India’s total gas consumption and sectoral mix.

India’s gas consumption increased by merely 0.7% yoy supported by all

the industries except Petrochemical/Fertilizer sector.

India’s gas story in charts

Domestic gas consumption rose by 2.3% yoy (yoy declining from

last 5 months) due to rise in gas consumption in CGD segment.

RLNG consumption declined by 1.1% yoy due to lower

demand from Fertilizer and petrochemical sectors.


NOVEMBER 30, 2018

India’s LNG imports (mmscmd)

Source: PPAC and Kotak Securities – Private Client Research.

Note: RLNG is imported by PLNG, GAIL, GSPC, HLPL, RIL, IOCL, Torrent Power & BPCL

Imported vs Domestic natural gas consumption mix (%)

Source: PPAC and Kotak Securities – Private Client Research. Note: Gas flared and internally consumed.

India’s total natural gas consumption mix (%)


75 78 86 66 78 75 83 76 73 81 80 74 75 74

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53 53

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Oct'17

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Oct'18

Domestic gas consumption (%) R-LNG consumption (%)

Fertilizer, 22

Power, 23

City Gas, 15

Refinery, 12

Petrochemical, 6

Others, 12 Flare/Internal consumption, 11

India’s RLNG consumption mix stood lower at 46.6% in Oct’18 v/s

47.3% in Oct’17.

New regasification capacity is boosting India’s consumption of

imported gas. In long term, we expect meaningful jump in RLNG

consumption in India.

India’s LNG import declined by 5.8% yoy in Oct’18 partly due to

higher base and higher spot prices

India’s RLNG demand is expected to remain robust in the medium to

long term


NOVEMBER 30, 2018

India’s total gas production – (mmscmd)


ONGC’s gas production from domestic fields (mmscmd)


Oil India monthly gas production (MMSCMD)


65 65 65 65 63 64 65 66 64 65 66 67 65 68

8 8 8 8 8 7 8 7 7 7 7.5 7.6 7.4 7.6

18 18 17 17 16 17 17 16 17 17 14 16 15 15

91 91 91 89 87 89 90 89 88 89 88 90 87 90

- 10 20 30 40 50 60 70 80 90

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scm

d

ONGC Oil India Limited Private/Joint Ventures (JVs)

65 65 65

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63

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66 67

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68

62

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8.2

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7.4 7.3 7.37.5

7.6

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7.6

7.0

7.5

8.0

8.5

Despite 4.6% yoy increase in ONGC’s gas production, overall domestic gas supply yoy basis

decreased marginally 0.4% yoy due to lower supply from OIL India and

Private/Joint Ventures (JVs)

ONGC is the biggest domestic gas producer.

ONGC’s gas supply stands higher by 4.6% yoy


NOVEMBER 30, 2018

Henry Hub Natural Gas Futures Price (US$/mmbtu)

Source: Bloomberg and Kotak Securities – Private Client Research

Singapore SGX LNG and Oil price

Source: Bloomberg and Kotak Securities – Private Client Research

Oil and Gas Index and Sensex performance

Source: Bloomberg

During the last six months, Nifty has given a return of 3% however, BSE Oil and Gas Index has given a return of -6%. In the oil and gas sector, RIL has given highest return (29%) during the last six months followed by GSPL 9% and PLNG 5%.

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Oil ($/bbl) - LHS LNG ($/mmbtu) -RHS

95

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115

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BSE OIL Sensex

Singapore SGX LNG Index Group (SLInG) is a

spot price index for Asian LNG.

Lower gas inventories in US coupled with cold

weather forecast led to major spike in gas

prices


NOVEMBER 30, 2018

6M Price performance of oil and gas companies (%)

Source: Bloomberg

-60.0-50.0-40.0-30.0-20.0-10.0

0.010.020.030.040.0


NOVEMBER 30, 2018

MOIL LTD PRICE RS.165 TARGET RS.260 BUY MOIL Q2FY19 revenue was higher than estimates, driven by better than expected sales volume. Blended ore realizations stood at Rs10,560/tonne were 12.7% below our estimates, which partly offset the benefit of higher volumes. The company had taken 5% price hike in the month of Sep’18 and 10% in Oct’18, the benefit of the same will reflect in 3QFY19.

Key Highlights

Manganese ore shipments grew 17.7% YoY and 28.4% QoQ to 312kt (production volume stood at 275kt). Blended realisation during the quarter declined by Rs1,698/tonne sequentially to Rs10,560/tonne.

PAT during the quarter stood at Rs1.05 bn, marginally lower than our estimate of Rs1.09bn, due to higher tax rate of 40.2%.

Management had guided for a 10% increase in FY19 sales volumes with expansion of underground mining capacity and higher production of domestic steel.

Valuation & outlook Manganese ore outlook remains positive with the firm domestic demand led by higher steel production. Cash and cash equivalents at the end of 2QFY19 stood at Rs23.3 bn (~50% of market cap). Given its strong business model, robust balance sheet with strong liquidity positions and its dominant position in the domestic, supports our positive stance on the stock. At CMP, the stock trades at 9.6x/8.5x FY19E/FY20E earnings and on EV/EBITDA, it trades at 3.7x/2.8x FY19E/FY20E EBITDA. We reiterate our BUY rating on the stock with an unchanged target price of Rs260.

Quarterly performance table

Particulars (Rs Mn) 2QFY19 2QFY18 % YoY 1QFY19 % QoQ

Sales 3,578 2,867 24.8 3,135 14.1 Raw Materials 279 135 (199) % of Sales 7.8 4.7 (6.4) Employee expenses 962 873 996 % of Sales 26.9 30.4 31.8 Other Expenses 873 695 970 % of Sales 24.4 24.2 30.9 EBITDA 1,463 1,165 25.6 1,368 7.0 EBITDA margin (%) 40.9 40.6 43.6 Depreciation 156 152 146 Interest 0 0 0 EBT 1,307 1,013 1,221 Other Income 451 424 475 Extraordinary 0 0 0 PBT 1,758 1,437 22.3 1,696 3.6 Tax 707 510 562 PAT 1,051 927 13.4 1,134 (7.4) NPM (%) 29.4 32.3 36.2

Source: Company, Kotak Securities – Private Client Research

Result Update

Stock Details Market cap (Rs mn) : 42609 52-wk Hi/Lo (Rs) : 262 / 154 Face Value (Rs) : 10 3M Avg. daily vol (Nos) : 361,552 Shares o/s (mn) : 258

Source: Bloomberg

Financial Summary Y/E Mar (Rs mn) FY18 FY19E FY20E

Revenue 13,235 13,379 14,737 Growth (%) 34.8 1.1 10.1 EBITDA 5,327 5,694 6,624 EBITDA margin (%) 40.2 42.6 44.9

PAT 4,220 4,430 4,993 EPS 16.4 17.2 19.4 EPS Growth (%) 37.3 5.0 12.7

BV (Rs/share) 109 119 132 Dividend/share (Rs) 5.5 5.5 5.5 ROE (%) 15.1 14.4 14.7 ROCE (%) 13.0 12.3 12.5

P/E (x) 10.1 9.6 8.5 EV/EBITDA (x) 4.0 3.7 2.8 P/BV (x) 1.5 1.4 1.3

Source: Company, Kotak Securities - PCG

Shareholding Pattern (%) (%) Sep-18 Jun-18 Mar-18

Promoters 65.7 65.7 65.6 FII 4.1 3.7 3.6 DII 13.4 13.7 10.2 Others 16.8 16.9 20.6

Source: Company

Price Performance (%) (%) 1M 3M 6M

MOIL Ltd (3.1) (10.0) (14.3) Nifty 5.9 (7.1) 2.1

Source: Bloomberg

Price chart (Rs)

Source: Bloomberg

Jatin Damania [email protected] +91 22 6218 6440

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NOVEMBER 30, 2018

Lower realisation partly offset volume benefit Sales volume during the quarter stood at 312kt, up 17.7%/28.4% YoY/QoQ, higher than estimates and also higher than the production volume of 275kt, resulting in liquidation of inventory, which was build up in previous quarter. Decline in blended ore realisation, partly offset the benefit of the higher volume. Realisation during the quarter declined by 13.9% QoQ to Rs10,560/tonne (up 1.5% YoY), as the company had cut prices in the month of June 2018. MoIL had taken price hike in the month of September and October 2018, the benefit of the same will reflect in 3QFY19 operating performance.

EBITDA during the quarter grew 25.6% YoY and 7% QoQ to Rs1.46bn, with an EBITDA margin of 40.9% (down 270 bps QoQ). We expect margin to remain in the range of 42-45%. The outlook for volumes remains positive with higher production of domestic steel. We have modeled 1.24MT and 1.34MT of volume in FY19E and FY20E, respectively. The company focus on improving its product mix with a focus on hydrate non-fines, can also be an upside risk to our estimates.

Mn ore production and sales volume (‘000 T) Mn ore realisation and EBITDA trend

Source: Company Source: Company

Robust balance sheet with healthy liquidity position MOIL is a debt free company with a robust balance sheet and a healthy liquidity position. The strong balance sheet, makes the company better placed to expand its mining capacity and to acquire other mines. The company is well placed to fund its capex, backed by its strong cash flow. It has a healthy operating cash flow of ~Rs4bn every year, which would further add up to the cash balance. We expect cash and cash equivalents to rise up to Rs24.2bn at the end of FY20E. Besides this, dividend yield is likely to remain in the range of 2-3% in the coming years. Higher liquidity and attractive dividend yield provide a high margin of safety.

Recommend BUY At current valuation of 2.8x FY20E EV/EBITDA, the stock is attractive compared to other mining companies. Given its strong business model backed by low cost operations, robust balance sheet and improvement in demand backed by rising steel production, we believe MOIL is well poised to capitalize on the opportunity. Besides this, visibility of improvement in domestic demand of high grade manganese ore, we believe manganese ore prices in the domestic market is likely to remain firm, which should support the earnings. We reiterate BUY, with a target price of Rs260.

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227 24

2

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272 28

4

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275

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136

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Production Sales

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(Rs/T)(Rs Mn) EBITDA (Rs Mn)

Realisation (Rs/T)


NOVEMBER 30, 2018

Company Background MoIL has ~81.47MT of reserves & resources (R&R) of manganese ore out of which ~44% are proven reserves. Currently, MOIL operates 10 mines: six in Maharashtra and four in Madhya Pradesh. These include 3 open cast mines and 7 underground mines. The company’s annual production of manganese ore is over 1MT. MOIL also has a ferro manganese plant with an installed capacity of 10000 tonnes, an electrolytic manganese dioxide (EMD) plant with a capacity of 1000 tonnes and two wind power plants with an aggregate capacity of 20 MW.


NOVEMBER 30, 2018

Financials: Standalone

Profit and Loss Statement (Rs mn) (Year-end Mar) FY17 FY18 FY19E FY20E

Net sales 9,819 13,235 13,379 14,737 growth (%) 56.2 34.8 1.1 10.1 Operating expenses 6,847 7,908 7,685 8,113 EBITDA 2,972 5,327 5,694 6,624 growth (%) 225.4 79.2 6.9 16.3 Depreciation &amortisation 549 624 704 812 EBIT 2,423 4,702 4,990 5,812 Other income 2,212 1,777 1,622 1,640 Interest paid 0 0 0 0 PBT 4,635 6,479 6,612 7,453 Tax 1,561 2,259 2,182 2,459 Effective tax rate (%) 33.7 34.9 33.0 33.0 Net profit 3,074 4,220 4,430 4,993 Minority interest 0 0 0 0 Reported Net profit 3,074 4,220 4,430 4,993 Adjusted Net profit 3,074 4,220 4,430 4,993 growth (%) 77.9 37.3 5.0 12.7 Source: Company, Kotak Securities – Private Client Research

Cash flow Statement (Rs mn) (Year-end Mar) FY17 FY18 FY19E FY20E

Pre-tax profit 4,635 6,479 6,612 7,453 Depreciation 549 624 704 812 Chg in working capital (573) 1,608 430 (211) Total tax paid 1,605 2,259 2,182 2,459 Operating CF 3,005 6,452 5,564 5,594 Capital expenditure (1,063) (1,935) (3,611) (1,350) Chg in investments (2) (235) 0 0 Other investing activities 1,729 0 0 0 Investing CF 664 (2,170) (3,611) (1,350) Equity (8,734) (2,104) 0 0 Debt raised/(repaid) 0 0 0 0 Dividend (incl. tax) 802 1,707 1,707 1,707 Other financing activities 0 0 0 0 Financing CF (9,536) (3,811) (1,707) (1,707) Net chg in cash & bank bal. (5,866) 471 245 2,537 Closing cash & bank bal 20,920 21,391 21,636 24,174 Source: Company, Kotak Securities – Private Client Research

Balance Sheet (Rs mn) (Year-end Mar) FY17 FY18 FY19E FY20E

Cash & Bank balances 20,920 21,391 21,636 24,174 Other Current assets 4,940 4,437 5,012 5,609 Investments 2 235 235 235 Net fixed assets 4,486 5,863 8,770 9,309 Other non-current assets 436 480 480 480 Total assets 30,784 32,405 36,134 39,805 Current liabilities 2,668 4,390 5,396 5,782 Borrowings 0 0 0 0 Other non-current liabilities 60 23 23 23 Total liabilities 2,728 4,413 5,419 5,805 Share capital 1,332 2,576 2,576 2,576 Reserves & surplus 26,721 25,416 28,139 31,425 Shareholders' funds 28,053 27,992 30,715 34,001 Minority interest 0 0 0 0 Total equity & liabilities 30,782 32,405 36,134 39,805 Source: Company, Kotak Securities – Private Client Research

Ratio Analysis (Year-end Mar) FY17 FY18 FY19E FY20E

Profitability and return ratios (%) EBITDAM 30.3 40.2 42.6 44.9 EBITM 24.7 35.5 37.3 39.4 NPM 31.3 31.9 33.1 33.9 RoE 11.0 15.1 14.4 14.7 RoCE 10.0 13.0 12.3 12.5 Per share data (Rs) EPS 23.1 16.4 17.2 19.4 CEPS 27.2 18.8 19.9 22.5 BV 210.6 108.7 119.2 132.0 DPS 11.0 5.5 5.5 5.5 Valuation ratios (x) PE 7.1 10.1 9.6 8.5 P/BV 0.8 1.5 1.4 1.3 EV/EBITDA 0.4 4.0 3.7 2.8 EV/Sales 0.1 1.6 1.6 1.2 Other key ratios D/E (x) 0.0 0.0 0.0 0.0 DSO (days) 90 52 52 52 Source: Company, Kotak Securities – Private Client Research


NOVEMBER 30, 2018


NOVEMBER 30, 2018

RATING SCALE

Definitions of ratings

BUY – We expect the stock to deliver more than 12% returns over the next 12 months ACCUMULATE – We expect the stock to deliver 5% - 12% returns over the next 12 months REDUCE – We expect the stock to deliver 0% - 5% returns over the next 12 months SELL – We expect the stock to deliver negative returns over the next 12 months

NR – Not Rated. Kotak Securities is not assigning any rating or price target to the stock. The report has been prepared for information purposes only.

SUBSCRIBE – We advise investor to subscribe to the IPO.

RS – Rating Suspended. Kotak Securities has suspended the investment rating and price target for this stock, either because there is not a Sufficient fundamental basis for determining, or there are legal, regulatory or policy constraints around publishing, an investment rating or target. The previous investment rating and price target, if any, are no longer in effect for this stock and should not be relied upon. NA – Not Available or Not Applicable. The information is not available for display or is not applicable

NM – Not Meaningful. The information is not meaningful and is therefore excluded.

NOTE – Our target prices are with a 12-month perspective. Returns stated in the rating scale are our internal benchmark.

FUNDAMENTAL RESEARCH TEAM Rusmik Oza Arun Agarwal Amit Agarwal Nipun Gupta Deval Shah Head of Research Auto & Auto Ancillary Transportation, Paints, FMCG Information Tech, Midcap Research Associate [email protected] [email protected] [email protected] [email protected] [email protected] +91 22 6218 6441 +91 22 6218 6443 +91 22 6218 6439 +91 22 6218 6433 +91 22 6218 6423

Sanjeev Zarbade Ruchir Khare Jatin Damania Cyndrella Carvalho Ledo Padinjarathala Cap. Goods & Cons. Durables Cap. Goods & Cons. Durables Metals & Mining, Midcap Pharmaceuticals Research Associate [email protected] [email protected] [email protected] [email protected] [email protected] +91 22 6218 6424 +91 22 6218 6431 +91 22 6218 6440 +91 22 6218 6426 +91 22 6218 7021

Teena Virmani Sumit Pokharna Pankaj Kumar Krishna Nain K. Kathirvelu Construction, Cement, Buildg Mat Oil and Gas, Information Tech Midcap M&A, Corporate actions Support Executive [email protected] [email protected] [email protected] [email protected] [email protected] +91 22 6218 6432 +91 22 6218 6438 +91 22 6218 6434 +91 22 6218 7907 +91 22 6218 6427

TECHNICAL RESEARCH TEAM Shrikant Chouhan Amol Athawale [email protected] [email protected] +91 22 6218 5408 +91 20 6620 3350

DERIVATIVES RESEARCH TEAM Sahaj Agrawal Malay Gandhi Prashanth Lalu Prasenjit Biswas, CMT, CFTe [email protected] [email protected] [email protected] [email protected] +91 79 6607 2231 +91 22 6218 6420 +91 22 6218 5497 +91 33 6625 9810

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NOVEMBER 30, 2018

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Morning Insight › pdf › dmb › MorningInsight... · 2018-11-30 · NOVEMBER 30, 2018 Morning Insight. Kotak Securities Limited has two independent equity research groups: Institutional