Axis Capital - Essence of The Week - 14 Feb 2014

14 FEB 2014
Sensex: 20367 Nifty: 6048
ESSENCE OF THE WEEK

MARKET OUTLOOK
The govt is all set to present the Vote on Account on Monday, 17th Feb 2014. This would be the last available opportunity for the government before the election commission notifies election dates, when a ban on further Govt announcements kicks in. In an interim budget changes in direct taxes cannot be attempted, as it would require the Finance Bill to be passed. That is the reason why a slew of populist measures have already been announced. Expectations Our expectations remain muted as: 1) In a Vote on Account an outgoing govt obtains the vote of Parliament for monies sufficient to incur expenditure on various items till a new govt takes over. Normally, no significant tax proposals or economic policy decisions are announced in the interim budget 2) Moreover, the government has already announced a slew of populist measures outside the budget and 3) The fiscal deficit target of 4.8% of GDP for FY14 leaves the govt with little room for any major populist measures. Key expectations The FM may likely outline a vision for the future and present his perspective on the future course of action on taxation and fiscal consolidation path, if the UPA is voted back to power. Fiscal deficit & gross borrowing: The government may report a Fiscal deficit number of 4.5-4.7% of GDP (vs target of 4.8%) given; 1) success of spectrum auctions (revenues may be ~Rs 180 bn vs Rs 110 bn budgeted enabling the govt to just about meet its Rs 400bn overall revenue target from telecom sector), 2) higher special dividends from PSUs, 3) residual stake sales, direct disinvestments, & SUUTI stake sale and 4) Plan expenditure cuts of ~400-500 bn. The gross borrowing number for FY15 may be projected at ~Rs 6.2-6.4 trillion. (Continued on page 2)
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I n de x EP S Sensex EPS gwth % Nifty EPS gwth %
FY 1 3 1,217 380
FY 1 4 E 1,374 13 415 9
FY 1 5 E 1,652 20 500 21
Headline inflation has cooled off significantly

8 7 6 5 4 WPI
(YoY %)
CPI (RHS)
12 11 10 9 8
Oct-13
Nov-13
May-13
Dec-13
Aug-13
Apr-13
Source: Bloomberg
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1. Market outlook A. Axis Capital Model portfolio. ........... 4-5 B. Earnings Review Q3FY14................ 6-9 C. EPS changes during the week ........... 10 2. Summaries of reports this week A. Eco: Headline inflation cools off but core uptick disconcerting ......................... 11 A. Eco: Trade data .............................. 11 B. Eco: Vote-on account: Muted expectations ................................... 12 C. Highways: Muddling throughrecovery still some time away ........................ 13 D. Indian Logistics: Improving volume mix to aid margins .................................... 13 3. Ear to the ground ................................ 14 4. Macro overview: Debt & Money Mkt ..... 15 5. Market snapshot: Equity valns & perf/ Derivatives/ Commodity ................. 16-25 6. Valuation guide ............................. 26-32
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Axis Capital is available on Bloomberg (AXCP<GO>), Reuters.com, Firstcall.com and Factset.com 01
Sep-13
Jan-14
Jun-13
Jul-13
14 FEB 2014
Strategy
ESSENCE OF THE WEEK

(Continued from page 1)
Indirect taxes: The govt may tinker around with duties in segments that could ease inflation or specific sectors where certain exemptions are expiring. Changes in indirect taxes are executive decisions that can be changed through notifications parliamentary approval is not required. Gold import norms: Expectations are ripe over the easing of gold import curbs. The import duty on gold was hiked to a record 10%, and import quantity was tied to exports under the 80/20 rule. These moves helped lower Indias CAD in the current fiscal year. However, given that the Fed tapering is still wreaking havoc on EM currencies and the fact that structural measures are still required to contain CAD, it will be a tricky decision to relax these norms, and if announced, may weigh on the INR in the short term. Service tax: Certain end-use specific exemptions in service tax for services rendered to specific infrastructure businesses could get relief. However, the current rate of tax of 12% is unlikely to be changed. Extension of the excise duty exemption: For hill states such as Himachal Pradesh and Jammu and Kashmir the government may extend excise duty exemption by either five years or until the GST comes into force as the exemption expires in May 2014.
Axis Capital is available on Bloomberg (AXCP<Go>), Reuters.com, Firstcall.com and Factset.com
14 FEB 2014
Strategy
ESSENCE OF THE WEEK

Key Indices: Fwd P/E
30 25 20 15 10 5 0 Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13
Current Top Quartile Median Low Quartile
Sensex
CNX Midcap 100
BSE Smallcap
F wd PE range - Ap r'07 to date
Se n se x * 13 17 16 14 CNX M id 11 15 13 11 B SE Sm al l 7 14 11 9
Source: Axis Capital, Bloomberg
Note: * based on Axis Capital estimates. Midcap & Small cap estimates are from Bloomberg
Sensex sectoral long term valuation snapshot: Fwd PE*

34 30 26 22
18 14 10 6 Auto BFSI Engg FMCG IT Services Metals Oil & Gas Pharma Power Telecom Sensex
Current
Top
Low
Median
Note: * Since April -2005
Sensex: Sector valuation based on Axis Capital numbers

We igh t s Se ct or Auto BFSI Engg FMCG IT Services Metals Oil & Gas Pharma Power Telecom Se n se x (% ) 11.0 24.6 5.4 12.4 19.5 4.5 12.6 5.8 2.2 2.1 1 0 0 .0 Ear n in gs gwt h (% ) FY 1 4 E 33 9 (15) 8 22 9 13 31 (16) (3) 14 FY 1 5 E 21 14 2 15 25 17 26 16 11 174 20 P ER (x) FY 1 4 E 11 12 17 30 21 10 10 21 14 49 15 FY 1 5 E 9 11 16 26 17 8 8 19 13 18 12 P B R (x) FY 1 4 E 2.9 1.9 2.1 11.2 5.5 1.6 1.4 5.1 1.3 2.0 2 .5 FY 1 5 E 2.3 1.7 1.9 9.7 4.6 1.4 1.2 4.1 1.2 1.8 2 .2 ROE (% ) FY 1 4 E 26 15 13 38 27 16 13 24 9 4 17 FY 1 5 E 25 16 12 38 28 17 15 22 9 10 18
Source: Bloomberg, Axis Capital
Note: Valuations based on current prices; PE not adjusted for value of investments
*Definition of Quartile: One of the three numbers (values) that divide a range of data into four equal parts. The first quartile (also called 'lower quartile') is the number below which lies the 25% of the bottom Data. The second quartile (the 'median') divides the
14 FEB 2014
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ESSENCE OF THE WEEK

range in the middle and has 50% of the data below it. The third quartile (also called 'upper quartile') has 75 percent of the data below it and the top 25% of the data above it.
A. Nifty-benchmarked Axis Capital Model Portfolio

Portfolio monthly update as of 6-December-13: Allocations UNCHANGED, while CMP and resultant Upside as of date. Notes: a) Nil-cash portfolio b) Non-Nifty stocks highlighted in blue, usually > USD 1 bn mcap (unless exceptional & LT returns) & capped at 2% c) Allocations capped at 10% (eg RIL, ICICI) d) TP upsides are based on 1-yr analyst-outlook while Model portfolio may be at variance to reflect nearer term concerns/ triggers, allocative imperatives, impending changes in multiples for factors not yet quantifiable into forecasts e) Highlighted wtgs are those that are changed from previous wtgs, underlined = major OW vs. Nifty
Note: Sector totals include that of Nifty stocks where we have Nil wtg
We igh t age s (% ) Se ct or / Com p an y Mcap (U SD m n ) 18,376 8,571 7,991 6,226 18,373 19,372 24,756 8,331 3,185 2,327 3,131 1,615 3,102 3,768 14,814 4,899 3,808 40,877 19,496 4,037 2,092 1,399 1,743 4,862 784 5,468 33,700 68,305 22,387 16,854 CMP Nift y (Rs) Cu r r e n t 388 1,840 1,643 1,937 988 772 642 1,103 377 95 537 199 146 151 993 147 215 320 560 261 330 141 903 173 46 2,337 3,646 2,166 564 1,497 9 .3 3.8 1.2 1.1 1.2 2 5 .1 5.7 6.0 6.0 1.7 0.8 0.6 0.4 2 .7 0.6 4 .9 4.1 1 1 .9 8.9 2.0 1 8 .2 8.8 5.5 1.8 2.0 A xis Cap 6 - De c- 1 3 1 0 .5 4 .0 2.0 3 .0 1 .5 2 6 .0 1 0 .0 4 .0 5 .0 2 .0 1 .0 1 .0 2 .0 0 .0 1 .0 1 .0 1 .0 9 .0 5 .0 2.0 2 .0 9 .0 6 .0 0 .0 0 .0 0 .0 0 .0 0 .0 0 .0 2 .0 1 .0 1 6 .0 9.0 4 .0 1 .5 1 .5 TP U p side (Rs) (% ) 446 2,119 1,670 1,786 1,185 860 735 NR 465 98 695 261 175 1,213 180 290 371 565 285 465 153 UR 200 75 2,997 4,200 2,350 585 1,800 15 15 2 (8) 20 11 15 23 3 29 31 20 22 22 35 16 1 9 41 9 15 64 28 15 8 4 20 0 6 - De c- 1 3 2 7 - A u g- 1 3 P r ice (Rs) 391 1,951 1,698 2,099 1,143 814 682 1,281 446 113 597 203 162 185 1,097 163 274 312 561 272 373 146 869 164 61 2,555 3,327 2,000 493 1,127 We igh t s (% ) 7 .0 5.0 2.0 0.0 0.0 2 3 .5 5.5 5.5 8.0 1.5 2.0 0.0 0.0 1.0 0.0 0 .0 0.0 5 .5 3.5 2.0 0.0 1 8 .0 10.0 1.0 1.0 2.0 1.0 1.0 2.0 0.0 0.0 1 7 .5 9.0 5.5 1.0 2.0 OW/ U W wr t Nift y
4
Auto Tata Motors Bajaj Auto Maruti Suzuki Hero Motocorp B an ks & Fin an cial Se r vice s ICICI Bank HDFC HDFC Bank Axis Bank Indusind Bank IDFC PNB LI C Hsg Fin P owe r Fin an ce Ce m e n t Ambuja Cement En gin e e r in g & I n fr a Larsen & Toubro A dan i P or t s A dan i En t e r p r ise s FMCG, Me dia, Re t ail , e t c ITC Hindustan Unilever Ze e Su n TV Tat a Gl ob al B e ve r age s B r it an n ia I n ds Dab u r Dish TV U n it e d Sp ir it I T - Se r vice s Infosys Tech Tata Consultancy Wipro HCL Tech
14 FEB 2014
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ESSENCE OF THE WEEK

Continued
We igh t age s (% ) Se ct or / Com p an y Mcap (U SD m n ) CMP Nift y (Rs) Cu r r e n t A xis Cap 6 - De c- 1 3 TP U p side (Rs) (% ) 178 160 148 1,100 UR 385 UR 700 3,000 971 417 1,516 171 84 60 264 177 UR 1 4 .9 2 4 .3 (6) 10 19 34 19 15 16 8 (3) 11 29 14 34 43 32 0 6 - De c- 1 3 2 7 - A u g- 1 3 P r ice (Rs) 182 143 126 867 295 325 364 582 2,422 858 403 1,139 149 88 55 186 153 332 176 We igh t s (% ) 2 .0 0.0 1.0 1.0 1 4 .0 10.0 2.0 2.0 0.0 7 .0 2.5 2.5 2.0 0.0 0.0 3 .0 2.0 1.0 0.0 1 .0 1.0 0.0 1 .5 1.5 0.0 1 0 0 .0 OW/ U W wr t Nift y -
Re sou r ce s 4 .5 3 .0 Sesa Sterlite 9,053 190 1.2 1 .0 NMDC 9,274 145 0.6 0 .0 H in du st an Zin c 8,451 124 2 .0 Oil & Gas 1 1 .5 1 2 .0 Reliance Inds 42,737 822 6.8 10.0 ONGC 37,985 276 2.5 0 .0 Cairn 9,911 322 1.0 1 .0 BPCL 4,138 356 0.5 1 .0 P h ar m ace u t ical s 6 .2 8 .0 Sun Pharma 20,303 609 2.3 2 .0 Dr Reddy 7,062 2,580 1.6 3 .0 Lupin 6,504 901 1.1 1 .0 Biocon 1,377 428 1 .0 Divi's Lab 2,920 1,366 1 .0 P owe r U t il it ie s 3 .5 2 .0 NTPC 17,547 132 1.4 1 .0 Tata Power 2,821 74 0.6 0 .0 JSW En e r gy 1,181 45 1 .0 Re al Est at e 0 .3 1 .0 Ob e r oi Re al t y 977 185 0 .0 P r e st ige Est at e 758 134 1 .0 Te l e com m u n icat ion s 1 .8 2 .5 Bharti Airtel 19,640 305 1.8 1.5 I de a Ce l l u l ar 7,079 133 1 .0 Nift y I n de x 6 ,0 4 8 1 0 0 .0 1 0 0 .0 Nift y I n de x p e r for m an ce Fr om I n ce p t ion 7 - Jan - 1 0 A xis Cap Mode l P or t fol io p e r for m an ce Fr om I n ce p t ion 7 - Jan - 1 0
Source: Bloomberg; Axis Capital
Note: Sector totals include that of Nifty stocks where we have Nil wtg
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ESSENCE OF THE WEEK
B. Axis Capital: Earnings Review Q3FY14

Re ve n u e s (Rs m n ) Com p an y A p ol l o H osp i t al s De c'1 3 A 9 ,9 3 3 Y oY (% ) 16 E B I TDA (Rs m n ) De c'1 3 A 1 ,5 7 8 Y oY (% ) 8 A dj P A T (Rs m n ) De c'1 3 A 834 Y oY (% ) 3 Re su l t s e xp e ct at i on s : In-line EPS up/dngrade : PE up/dngrade : TP up/dngrade :
While Apollo reported 16% YoY increase in revenue to Rs 9.9 bn, PAT growth was muted at 3% YoY to Rs 834 mn (in line with our estimates), due to higher initial operating costs for new clinics and hospitals. Apollo is on course to add (1) ~2,300 beds over FY14-17E (1,000 beds to be added in FY15), and (2) 150200 pharmacies p.a. Margin expansion likely post FY15, as hospitals and pharmacies mature. B at a I n di a 4 ,8 4 4 (5 ) 633 (2 1 ) 376 (2 6 ) Gross margin expansion compensated for topline weakness. We rolled over our valuation to FY16E.
Re su l t s e xp e ct at i on s : In-line EPS up/dngrade : PE up/dngrade :
B P CL
6 4 7 ,6 7 6
(9 ,1 5 8 )
NA
(1 0 ,8 8 9 )
NA
TP up/dngrade : Re su l t s e xp e ct at i on s : In-line EPS up/dngrade : PE up/dngrade : ---
Q3 loss is in line with our estimate after adjusting for timely (but insufficient) subsidy support (Rs 25 bn) by the government. Refining margin at US$ 1.7/bl was lower than HPCL (US$ 2.3/bl) due to partial closure of Mumbai and Kochi refineries. Place all oil PSUs Under Review. Cadi l a H e al t h car e 1 8 ,7 1 7 17 2 ,9 5 3 20 1 ,8 9 4 105
TP up/dngrade : -Re su l t s e xp e ct at i on s : Above EPS up/dngrade : PE up/dngrade :
Q3 surprised with: (i) Strong sequential growth in US , (ii) EBITDA margin improvement led by better product-mix, and (iii) 31 ANDA filings (including 30% non-oral). We expect, Cadila would now show a steady recovery from here. Ci p l a 2 5 ,8 0 8 25 4 ,6 7 3 (5 ) 2 ,8 4 3 (1 6 )
TP up/dngrade : Re su l t s e xp e ct at i on s : Below EPS up/dngrade : PE up/dngrade :
Higher expenses towards R&D and front-end set impacted margins.
Coal I n di a
1 7 7 ,2 8 0
(2 )
4 9 ,0 3 6
(4 )
3 9 ,0 5 1
(1 1 )
TP up/dngrade : Re su l t s e xp e ct at i on s : In-line EPS up/dngrade : PE up/dngrade : TP up/dngrade :
Volumes declined 3% YoY to 117 mnt mainly due to cyclone and flooding in key states. Avg. realization improved 2% QoQ to Rs 1,445/ton led by (a) Average FSA realization improving 1% QoQ as grade normalized during the quarter (Q2 was impacted by grade slippage) and (b) higher proportion of e-auction volumes (13% vs 12% in Q2). Dal m i a B h ar at 7 ,0 0 2 2 1 ,2 0 9 (1 5 ) (1 2 4 ) NA Consolidated EBITDA improved 33% QoQ mainly led by recovery in South profitability. South EBITDA/T improved 46% QoQ to Rs 868 led by cement price increases in South during the quarter and cost saving efforts. Dr Re ddys 3 5 ,3 3 8 23 8 ,7 3 1 70 5 ,6 8 6 50
TP up/dngrade : Re su l t s e xp e ct at i on s : Above EPS up/dngrade : PE up/dngrade :
EBITDA margin were ahead of expectations led by better sales-mix. PSAI continued to laggard. Though current margins are difficult to sustain, we believe focus on complex generic products is now yielding . E i ch e r M ot or s 1 6 ,7 9 5 2 1 ,6 6 6 41 962 32
TP up/dngrade : Re su l t s e xp e ct at i on s : Above EPS up/dngrade : PE up/dngrade : TP up/dngrade : Re su l t s e xp e ct at i on s : EPS up/dngrade : PE up/dngrade : TP up/dngrade : -
Eicher Motors Q4CY13 performance was driven by better realization across segments. We raise our CY14/CY15 2W volume estimates by ~10% each to 300K/374K. This drives upgrade in consolidated EBIDTA by ~2% in CY14/CY15. However, we lower CY14/ CY15 EPS by 4% / 5% to Rs 237/ Rs 320 due to higher depreciation in 2W and VECV businesses, lower other income, and higher tax rate. For t i s H e al t h car e 1 0 ,1 8 7 (3 4 ) 466 (6 9 ) (3 5 1 ) NA
Fortis Healthcare (FHL) reported PAT of Rs 3.9 bn in Q3FY14 led by exceptional gain of Rs 4.2 bn due to stake sale of Quality Healthcare Hong Kong. Adjusted for one-time gain, Fortis reported a net loss of Rs 352 mn due to higher initial operating costs for new hospitals. Lower interest outgo coupled with higher number of maturing beds and improving margin profile at SRL Diagnostics to drive turnaround in FY15E. Fu t u r e Re t ai l 2 3 ,2 3 3 (2 7 ) 2 ,2 6 9 (1 8 ) (9 1 ) NA Interest cost increase is eating into margin gains. Debt remains elevated and is a concern.
Re su l t s e xp e ct at i on s : Below EPS up/dngrade : PE up/dngrade : TP up/dngrade :

continued..
14 FEB 2014
Strategy
ESSENCE OF THE WEEK

Re ve n u e s (Rs m n ) C om p an y Godr e j I n d De c'1 3 A 2 0 ,0 7 4 Y oY (% ) 17 E B I TDA (Rs m n ) De c'1 3 A 1 ,2 3 7 Y oY (% ) 34 A dj P A T (Rs m n ) De c'1 3 A 652 Y oY (% ) 36 Re su l t s e xp e ct at i on s : EPS up/dngrade : PE up/dngrade : TP up/dngrade : -
Godrej Industries (GIL) Adj. PAT rose 27% YoY to Rs 652 mn due to strong performance from Agrovet division (58% increase in EBIT to Rs 470 mn). We expect growth momentum in Agrovet to continue led by (1) Continuous R&D in animal feed and increasing volumes in aqua feed, (2) Launch of new agri-products, and (3) Yearly addition of ~8,000 hectares of palm oil and higher yield from maturing plantations. Gu j ar at Gas 7 ,8 0 2 2 1 ,3 3 9 22 906 29 Volumes declined 7% QoQ to 230 mscm due to seasonality and higher gas price. Gross margin expectedly declined 15% QoQ to Rs 8.2/scm due to higher spot-LNG sourcing costs and limited price hikes. GGAS is focusing on increasing Liquid Fuel Replacement users in its customer mix, which augurs well for margins as they can absorb higher prices. H at h way C ab l e 2 ,3 4 8 52 367 4 (3 9 3 ) NA
Re su l t s e xp e ct at i on s : In-line EPS up/dngrade : PE up/dngrade : TP up/dngrade :
HATH started gross billing in Delhi from Dec 13. However, there may be some delays in implementing gross billing in Kolkata (expected in Q4FY14), Mumbai and phase II cities (expected in Q1FY15). Given these delays, we revise our FY14E EBITDA downwards by 17% , but maintain FY15E estimates (gross billing across phase I & II cities from Q1FY15 H i n dal co I n ds 7 2 ,7 3 1 6 6 ,2 9 5 8 3 ,3 4 0 15 Standalone EBITDA was marginally better than our estimate of Rs 5.8 bn due to better than expected copper profitability. Copper EBIT improved 26% QoQ to Rs 3 bn led by (a) higher volumes (89 kt, up 6% QoQ), (b) improving Tc/Rc charges and (c) improved by-product realizations. HP CL 5 5 4 ,5 5 0 4 (9 ,3 0 7 ) NA (1 7 ,3 3 9 ) NA
Re su l t s e xp e ct at i on s : Above EPS up/dngrade : PE up/dngrade :
TP up/dngrade : Re su l t s e xp e ct at i on s : In-line EPS up/dngrade : PE up/dngrade : ---
Q3 loss in line with our estimate after adjusting for timely (though insufficient) subsidy support (Rs 23 bn) by the government. Refining margin declined 40% QoQ to US$ 2.3/bl due to lower gasoline spreads. Place all oil PSUs Under Review. H T M e di a 5 ,8 1 3 6 948 8 670 25
TP up/dngrade : -Re su l t s e xp e ct at i on s : Above EPS up/dngrade : PE up/dngrade : TP up/dngrade :
Lower pagination and calibrated circulation helped HTML limit the adverse impact of higher newsprint prices (up 14% YoY). We revise upwards our FY14/15E EPS to Rs 7.3/8.6 to factor in better margin and lower tax outgo. Given the recent stock correction, we upgrade the stock to BUY with a TP of Rs 86 (10x FY15E EPS of Rs 8.6) I n di a C e m e n t 1 0 ,3 2 7 (5 ) 1 ,4 0 5 (2 8 ) (7 3 ) NA Results were in line with estimates. YoY decline in profitability reflects industry concerns on (a) overcapacity situation in South resulting in volatile cement prices and (b) cost pressures, particularly energy and freight costs. Cement volumes declined 5% YoY to 2.3 mnt. I n di an Oi l 1 ,1 7 6 ,7 2 0 2 (3 ,4 1 6 ) NA (1 2 ,3 4 4 ) NA
TP up/dngrade : Re su l t s e xp e ct at i on s : Above EPS up/dngrade : PE up/dngrade : TP up/dngrade : ----
Q3 loss was significantly better than our/ Street estimates (adjusted for subsidy) due to higher refining margin and other income. IOCs GRM at US$ 4.2/bl was best among peers (BPCL: US$ 1.7/bl, HPCL: US$ 2.3/bl) due to better inventory management and partial closures of BPCL/ HPCLs refineries. Place all oil PSUs Under Review. I n dr ap r ast h a Gas 1 0 ,4 1 4 20 1 ,9 5 2 4 895 4 Volumes expectedly declined 2% QoQ to 347 mscm. CNG prices have been cut by 30% in Q4 (Rs 35/kg from Rs 50/kg) on allocation of 100% domestic gas. However, prices are likely to go up to earlier levels once domestic gas prices are hiked from Apr 14. I TNL 1 9 ,6 5 9 11 4 ,8 7 7 8 1 ,0 9 8 6
TP up/dngrade : Re su l t s e xp e ct at i on s : Below EPS up/dngrade : PE up/dngrade : TP up/dngrade :
EBITDA at Rs 4.9 bn (up 8% YoY) was driven by steady performance of BOT vertical (EBITDA excl. standalone at Rs 4 bn; up 27% YoY). Margin decline of 577 bps YoY in standalone business was due to (a) lower proportion of high margin fee income vs. Q2 and (b) one time technical fee of Rs 0.5 bn. However, this was offset to some extent by strong execution. Jai n I r r i gat i on 9 ,6 2 5 25 1 ,4 3 5 13 158 (3 8 ) Domestic MIS growth turned positive after 6 quarters on the back of higher farm income and better monsoon. Moreover, working capital continues to fall alongside revenue improvement which is a big positive.
Re su l t s e xp e ct at i on s : Above EPS up/dngrade : PE up/dngrade : TP up/dngrade :

continued..
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Re ve n u e s (Rs m n ) C om p an y JP A ssoci at e s De c'1 3 A 3 1 ,6 3 5 Y oY (% ) (8 ) E B I TDA (Rs m n ) De c'1 3 A 7 ,4 4 7 Y oY (% ) (6 ) A dj P A T (Rs m n ) De c'1 3 A (8 8 7 ) Y oY (% ) NA Re su l t s e xp e ct at i on s : Below EPS up/dngrade : PE up/dngrade : TP up/dngrade :
JPA reported loss of Rs 0.9 bn (vs profit of Rs 0.6 bn estimated), mainly due to high interest (Rs 7.5 bn vs. Rs 6.5 bn expected). Management clarified that there is no significant increase in debt vs. Q2, however interest was high due to Rs 0.26 bn of forex loss and Rs 0.8 bn of one time finance charge. Adjusted for oneoffs, interest is in line with Q2. EBITDA was below our estimates on account of weak results in cement (due to weak demand) and realty. NM DC 2 8 ,2 3 2 38 1 9 ,0 2 8 37 1 5 ,6 7 3 21 EBITDA was in line with our estimate, however was higher than Bloomberg consensus estimate of Rs 18.2 bn. Volumes were at 7.5 mnt (up 42% YoY). Sharp improvement in volumes YoY was led by a) higher volumes in Karnataka due to shortage in the state and b) base effect, where volumes in Q3FY13 were impacted by poor demand for lumps due to higher prices. Oi l I n di a 2 7 ,3 0 4 8 1 3 ,1 1 2 7 9 ,2 3 0 (2 ) PAT higher than our estimate due to 53% QoQ decline in depreciation. Depreciation was lower on account of 87% decline in dry well write-off to Rs 0.4 bn. Place all PSUs Under Review. ONGC 2 3 8 ,7 0 2 13 1 3 9 ,0 3 4 23 7 1 ,2 5 9 28
Re su l t s e xp e ct at i on s : Above EPS up/dngrade : PE up/dngrade : ---
TP up/dngrade : -Re su l t s e xp e ct at i on s : Above EPS up/dngrade : PE up/dngrade : TP up/dngrade : ----
Adjusted PAT at Rs 71.3 bn was significantly higher than our/Street estimates (Rs 60/57 bn) due to higher crude sales and higher income from LPG/naphtha (Rs 36 bn vs. our estimate of Rs 30 bn). ONGC has written back provision of Rs 30 bn made towards deductions taken by OMCs after calculating VAT/CST on net crude oil realization (vs. gross oil realization earlier). Or acl e Fi n an ci al 9 ,8 1 7 15 3 ,5 9 7 27 3 ,2 2 8 20 H1CY14 should see a pick up in license sales driven by year-end closure of parent co. (Oracle Y/E May). We are given to understand that pipeline is healthy (esp. for Tier 1 banks) and hence we build in USD 83 mn license fees in FY15 (USD 63 mn in FY14). Our TP stands at Rs 2,951 (16x FY15E EPS of Rs 184) vs. Rs 3,232 earlier, which implies 4% downside from CMP. Maintain HOLD. P age I n du st r i e s 3 ,0 2 5 40 551 50 347 36 Leisure wear volume growth was significantly above expectation. Jockey is competing with the likes of Nike and Adidas at much lower price points enabling market share gains. P u r avan kar a P r oj e ct s 2 ,6 8 1 (1 4 ) 861 (4 5 ) 201 (6 9 )
TP up/dngrade : Re su l t s e xp e ct at i on s : In-line EPS up/dngrade : PE up/dngrade : TP up/dngrade :
Q3 sales of 0.9 msf largely from its new launches (~0.77 msf). Was unable to sign sale agreements for new launches in Q3, resulting in lower revenues and collections. Slower off-take at its ready/ near ready inventory (~25% of Q3 sales). One-time cost escalations and reallocation (Rs 220 mn) impact margins (32% in Q3 vs 40% in Q2). Net debt remained steady at Rs 14.8 bn. Ram co C e m e n t 8 ,6 8 2 (4 ) 1 ,5 4 9 (3 4 ) 256 (7 0 ) Blended realization improved 10% QoQ to Rs 4,430 (vs. our estimate of Rs 4,250) led by price increases in South during the quarter. EBITDA/ton was Rs 750 on an estimated volume of 1.95 mnt (up 2% YoY) vs Rs 450 in Q2FY14 and Rs 1,200 in Q3FY13. Re l i an ce C ap i t al 1 2 ,6 1 0 13 1 2 ,2 7 0 10 1 ,6 6 0 64
Re su l t s e xp e ct at i on s : Above EPS up/dngrade : PB up/dngrade : TP up/dngrade : Re su l t s e xp e ct at i on s : EPS up/dngrade : PB up/dngrade : --
Q3 performance was led by commercial finance and AMC businesses. Premium growth in life insurance and general insurance remained high. Su n P h ar m a 4 2 ,8 6 6 50 1 9 ,7 5 1 53 1 5 ,3 1 1 68
TP up/dngrade : Re su l t s e xp e ct at i on s : Above EPS up/dngrade : PE up/dngrade : TP up/dngrade :

continued..
Taro performance was better-than-expectation led by further price hikes. Ex-Taro performance in line. gCymbalta, gDepo-Testestrone inj, gTemodar and ramp-up in gDoxil to lead growth in near term.
14 FEB 2014
Strategy
ESSENCE OF THE WEEK

Re ve n u e s (Rs m n ) C om p an y Su n t e ck Re al t y De c'1 3 A 157 Y oY (% ) 276 E B I TDA (Rs m n ) De c'1 3 A 70 Y oY (% ) 9 ,8 8 6 A dj P A T (Rs m n ) De c'1 3 A 25 Y oY (% ) NA Re su l t s e xp e ct at i on s : EPS up/dngrade : PE up/dngrade : TP up/dngrade : -
Higher sales of Rs 1.27 bn (vs. Rs 0.9 bn in Q2). Sold only 3 units in its BKC projects in Q3. Pre-launched its Goregaon Phase-2 (sold 35 units out of 100 units launched) in Q3. Collections improved to Rs 1.24 bn due to improved collections at its Goregaon Ph-1. Signature Island to contribute to revenue from Q4FY14. We revise our project timelines (slow demand/ approval delays) and cost estimates (increase in Ready Reckoner rates in Mumbai). Su n TV 5 ,0 8 3 5 3 ,7 2 0 (1 ) 1 ,8 5 8 (2 ) SunTV's ad revenue continued to be under pressure (down 7% YoY but up 17% QoQ) due to continued impact of ad inventory cut (to adhere to TRAIs mandate of 12 min ad cap by Oct 13). However, we expect the companys ad growth to rebound Q4 onwards as (a) most of the ad rate hike (corresponding to inventory cut) has been passed through and (b) reduction in content providers ad inventory share Tat a M ot or s 6 3 8 ,7 6 8 39 9 9 ,4 8 5 76 4 9 ,0 5 8 182 Consolidated APAT at Rs 49 bn (est. of Rs 30 bn) was driven by revenue surprise at JLR (GBP 5.3 bn vs est. of GBP 4.9 bn). JLR margin came in at 17.9% (above our est. of 15.3% ) despite 220 bps adverse currency impact (est. 200 bps) due to richer product mix. Lower other expenses and tax rate also aided net profit. Capacity ramp-up remains critical for FY15 volume upgrade (our est. at 500K). Upgrade FY15E EPS by 14% to Rs 56.2. Tat a P owe r 8 5 ,1 5 0 (5 ) 1 8 ,6 1 9 2 661 (7 9 ) Adj. PAT at ~Rs 0.7 bn was below our estimate of Rs 2.3 bn mainly on higher interest cost and tax rate (67% vs. 35% exp.) though operational result was in line with expectations. Tat a St e e l 3 6 7 ,3 5 8 14 3 7 ,7 1 9 52 2 ,6 8 2 NA
Re su l t s e xp e ct at i on s : Above EPS up/dngrade : PE up/dngrade : TP up/dngrade :
Re su l t s e xp e ct at i on s : Below EPS up/dngrade : PE up/dngrade :
TP up/dngrade : Re su l t s e xp e ct at i on s : In-line EPS up/dngrade : PE up/dngrade : TP up/dngrade : Re su l t s e xp e ct at i on s : EPS up/dngrade : PE up/dngrade : ----
International operations EBITDA /ton was flat QoQ at USD 30/ton. Domestic volumes improved 9% YoY to 2.1 mnt led by ramp up at its 3 mnt Jamshedpur expansion. Avg. steel realization was flat QoQ at Rs 45,000/t. TD P owe r Syst e m s 1 ,2 2 3 28 41 (5 4 ) 1 (9 8 )
Despite revenue growth, EBITDA margin slumped to ~3% , led by poor performance in the EPC/Projects business. As a result, adjusted PAT significantly declined to Rs 1 mn (vs. Rs 57 mn in Q3FY13). Tu b e I n ve st m e n t s 8 ,3 3 7 9 763 26 154 36
TP up/dngrade : -Re su l t s e xp e ct at i on s : In-line EPS up/dngrade : PE up/dngrade : TP up/dngrade :
Tube Investments (TI) Q3FY14 standalone revenue increased 9% YoY to Rs 8.3 bn, while EBIDTA margin improved 120 bps to 9.1% . Despite sluggish automotive and industrial demand, the engineering and metal formed division each showed ~12% YoY increase in revenue along with improvement in margins. This was largely due to the companys ability to pass on costs and improve efficiencies . V A Te ch Wab ag 5 ,8 9 3 66 443 95 241 132 Q3 was robust with revenue growth of 66% YoY, EBITDA margin of 8% (up 170 bps YoY), and 132% growth in adjusted net profit. Order inflow was at Rs 10 bn vs. Rs 6 bn YoY. Working capital reduced to 51 days as of Dec 13 from 76 days as of Sep 13. Net cash increased to Rs 1.9 bn (Rs 1.6 bn as of Sep 13). We st l i fe De vl p 1 ,7 9 5 4 151 (1 ) 40 (5 7 )
Re su l t s e xp e ct at i on s : Above EPS up/dngrade : PE up/dngrade :
TP up/dngrade : Re su l t s e xp e ct at i on s : Below EPS up/dngrade : PE up/dngrade : TP up/dngrade : --
Macro headwinds sustain with the company reporting like to like de-growth of 10% . However, 300 bps improvement in gross margin softened profit impact.
Source: Axis Capital
14 FEB 2014
Strategy
ESSENCE OF THE WEEK
C. EPS changes during the week

Shaded cells highlight changes in TP/ EPS made during the past two week
Mcap (U SD m n ) A u t os Eicher Motors Mah & Mah* Tata Motors* B an kin g & Fin an ce Rural Electrification State Bank* En gin e e r in g Alstom T&D VA Tech Wabag I n fr ast r u ct u r e ITNL Jaiprakash Associates I T Se r vice s Oracle Financial Me dia HT Media Misce l l an e ou s Apollo Hospitals Godrej Industries Jain Irrigation Tube Invst P h ar m ace u t ical s Cipla* Dr Reddys* Sun Pharma* Re al Est at e s Sunteck Realty Re t ail Page Industries Westlife Development
CMP (Rs) 4,848 903 388 191 1,475 179 599 107 39 3,086 72 912 270 59 178 373 2,580 609 241 5,631 351
Cu r r Rat in g Buy Hold Buy Buy Hold Hold Hold Buy Buy Hold Buy Hold Buy Buy Buy Hold Buy Buy Buy Buy Buy Prev
TP (Rs) Cu r r % Ch g 2 (5) 3 (4) 2 7 (7) (13) (9) (7) (2) 4 10 0 (9) 7 6 (10) 14 (0)
EP S FY 1 4 E (Rs) Prev 128 59 41 45 184 4 38 18 0 155 7 25 12 3 6 20 119 26 55 130 2 Cu r r % Ch g 128 58 45 47 141 5 40 14 (1) 163 7 24 10 3 6 18 130 27 49 136 1 10 4 (23) 21 4 (26) PL 5 11 (4) (16) (3) (5) (9) 9 5 (10) 4 (44) (0)
EP S FY 1 5 E (Rs) Prev 248 62 49 53 220 8 42 20 5 202 8 31 18 6 9 24 141 29 64 173 3 Cu r r % Ch g 237 62 56 53 178 8 46 17 2 184 9 29 15 6 8 22 150 30 54 173 3 (4) 0 14 (19) 3 10 (14) (56) (9) 12 (5) (20) (5) (3) (9) 7 6 (16) (0) (16)
2,110 8,949 18,376 3,043 17,728 738 256 335 1,397 4,180 271 2,044 1,456 422 534 4,826 7,062 20,303 244 1,011 879
5,421 5,529 937 431 218 894 446 218
1,492 1,425 193 567 162 52 197 608 150 45
3,232 2,951 92 982 336 71 216 480 661 434 86 960 350 78 217 436 700 391
2,811 3,000
5,430 6,200 406 405
Note: *Sensex cos
For Axis Capital Universe Rating/ valuation, refer Section 6
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2. SUMMARIES OF REPORTS RELEASED THIS WEEK

A. Eco: Headline inflation cools off but core uptick disconcerting B. Eco: Trade data C. Eco: Vote-on account: Muted expectations D. Highways: Muddling throughrecovery still some time away E. Indian Logistics: Improving volume mix to aid margins
A. Eco: Headline inflation cools off but core uptick disconcerting (14th Feb)
(sachchidanand.shukla@axiscap.in; 91 22 4325 1108)
Click for detailed report
WPI inflation moderated to a lower than expected 5.05% YoY in Jan (6.16% in Dec, 7.5% in Nov) an 8 month low. CPI Inflation eased sharply to 8.8% YoY - 24 mth low in Jan (9.8% in Dec). However, core inflation inched up above 3% (higher by ~20 bps) - the 1st time since April 13 even as Core CPI remained sticky at 8.1% (8.09 in Dec). Data takeaways Primary articles inflation fell ~4% (MoM) after falling ~5% MoM in Dec. Fuel segment saw an uptick of 95 bps whereas Manufacturing inflation saw marginal moderation (13 bps). Vege-deflation continues: Fall in WPI inflation owed to sharply lower Primary article inflation (shaving off ~1% from the overall number). Food prices softened to 8.9% YoY (14% in Dec & 20% in Nov) with vegetable prices crashing further to 16% YoY (54% in Dec & 95% YoY in Nov) though milk prices continued to edge up. However, vegetables, eggs, meat and fish price inflation continues to be in double digits despite the cool off. In fact, protein inflation has inched by 30 bps since Nov. Fuel Inflation: Was higher by 95 bps MoM due to diesel and petrol price hikes (up by 50 paise & 75 paise respectively in Jan) along that of unsubsidized LPG cylinders (prices raised to ~Rs 1200) by oil retailers. We expect the LPG component to subside from here. Weaker growth conditions and subdued global commodity prices continue to limit the pass through from imported prices. Input price inflation remains stable and prevents an increase in output inflation in the near term. Policy implications: The uptick in core WPI along with a sticky core CPI will prevent RBI from lowering its guard as vegetable prices have a tendency to rise especially during summer, which can push headline inflation higher. However, as headline inflation has fallen sharply along the expected lines, we expect the RBI to maintain status quo in April.
B. Eco: Trade data (11th Feb)

Import contraction keeps trade deficit in check

Indias merchandise trade deficit in Jan remained in check at USD 9.9 bn (vs 10.1 bn in Dec) with imports shrinking 18% (YoY) to USD 36.6 bn while exports rose 3.8% (YoY) to USD 26.8 bn. We expect trade deficit to remain the range of USD 10-11 bn pm through the year. Export growth remained anemic though it improved a tad to 3.8% YoY (3.5% YoY in Dec). Indian exports grew in double digits during Jul-Oct13. However, base effect and a sharp drop in transport equipment exports and moderation in textile and machinery and instruments exports contributed to slower export growth thereafter. Non-Oil imports declined 22% YoY owing largely to the curbs on gold. The import duty on gold was hiked to a record 10%, and import quantity was tied to exports under the 80/20 rule which dictated that 20% of all gold imports have to
11
14 FEB 2014
Strategy
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be re-exported. These have resulted in Gold & Silver imports being restricted to USD 27 bn (down 31% YoY) during Apr-Dec 2013. Gold imports are likely to remain ~ USD 35 bn in FY14 as compared to USD 55 bn in FY13. Oil imports fell 10% YoY owing to moderation in domestic demand. Diesel consumption (~44% of the total oil consumption) has declined by 1% YoY during Apr-Dec. However, Consumption of Oil (incl products) during the same period was higher by 1.7% YoY (vs 5.4% in the corresponding period last year). In view of these data points and the fact that service export growth is likely to be in line with that in Q2, Indias current account deficit is expected to remain modest in the near term (1.2% of GDP). While the INR has largely been stable ~62 level, in REER terms it has risen to 88 (36-country) and 96 (6-country) in Jan14.However, evidence suggests that in the longer term, global demand is relatively more important for export growth than INR depreciation.
C. Eco: Vote-on account: Muted expectations (12th Feb)

The govt is all set to present the Vote on Account on 17 th Feb 2014. This would be the last available opportunity for the government before the election commission notifies election dates, when a ban on further Govt announcements kicks in. In an interim budget changes in direct taxes cannot be attempted, as it would require the Finance Bill to be passed. That is the reason why a slew of populist measures have already been announced. Expectations Our expectations remain muted as: 1) In a Vote on Account an outgoing govt obtains the vote of Parliament for monies sufficient to incur expenditure on various items till a new govt takes over. Normally, no significant tax proposals or economic policy decisions are announced in the interim budget 2) Moreover, the government has already announced a slew of populist measures outside the budget and 3) The fiscal deficit target of 4.8% of GDP for FY14 leaves the govt with little room for any major populist measures. Key expectations The FM may likely outline a vision for the future and present his perspective on the future course of action on taxation (to answer the BJPs promise of a simpler tax regime) and fiscal consolidation path, if the UPA is voted back to power. Fiscal deficit & gross borrowing: The government may report a Fiscal deficit number of 4.5-4.7% of GDP (vs target of 4.8%) given; 1) success of spectrum auctions (revenues may be ~Rs 170 bn vs Rs 110 bn budgeted enabling the govt to meet its Rs 400bn overall revenue target from telecom sector), 2) higher special dividends from PSUs, 3) the possibility of residual stake sales in Hindustan Zinc and BALCO, 4) direct disinvestments, & SUUTI stake sale and 4) Plan expenditure cuts of ~400-500 bn. The gross borrowing number for FY15 may be projected at ~Rs 6.2-6.4 trillion. Indirect taxes: The govt may tinker around with duties in segments that could ease inflation or specific sectors where certain exemptions are expiring. Changes in indirect taxes are executive decisions that can be changed through notifications parliamentary approval is not required. Gold import norms: Expectations are ripe over the easing of gold import curbs. The import duty on gold was hiked to a record 10%, and import quantity was tied to exports under the 80/20 rule which dictated that 20% of all gold imports have to be re-exported. These moves helped lower Indias CAD in the current fiscal year. However, given that the Fed tapering is still wreaking havoc on EM currencies and the fact that structural measures are required to contain CAD, it will be a tricky decision to relax these norms, and if announced, may weigh on the INR in the short term. Service tax: Certain end-use specific exemptions in service tax for services rendered to specific infrastructure businesses could get relief. However, the current rate of tax of 12% is unlikely to be changed.
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Extension of the excise duty exemption: For hill states such as Himachal Pradesh and Jammu and Kashmir the government may extend excise duty exemption by either five years or until the GST comes into force as the exemption expires in May 2014.
D. Highways: Muddling throughrecovery still some time away (10th Feb)

(nitin.idnani@axiscap.in; 91 22 4325 1149)
Our interaction with National Highway Authority of India (NHAI) suggests that a recovery is still some time away with not much traction in FY14 (ordering and execution was slow). We believe ordering will continue to be muted till elections are over. Key takeaways: A sense of dj vu most new awards expected on EPC basis as low traffic and inordinate delays have stretched private sector finances. Further, 2/3rd of balance awards are at remote locations with low traffic viable only on EPC basis or with support from NHAI

Funding EPC contracts not a concern: Even if all balance National Highways Development Programme orders (15,000 kms) are executed on EPC, NHAI will be able to fund it NHAI wishes to take sympathetic approach to private sector's woes - reflected in policy initiative on premium restructuring. Note: NHAI maintains this is not an new concept and is permitted under the existing Model
Concession Agreement (MCA) in form of a Revenue shortfall Loan
Developers have inflated project costs, and have been running projects on wafer thin equity detrimental for sector as it encourages aggressive bidding. It has created a situation of Heads I win, tails you lose for developers. We believe that banks need to ensure that developers have their own skin in the game Frenetic policy action witnessed recently (exit policy/ premium restructuring/ forest clearance divorced from environmental/ etc), albeit late in the day, does augur well for future awards
We prefer players with strong operational risk mitigation via diversified portfolio and cash flow visibility. Maintain BUY on ITNL with TP of Rs 162, which implies 42% upside from CMP of Rs 114.
E. Indian Logistics: Improving volume mix to aid margins (12th Feb)

(ankur.periwal@axiscap.in; 91 22 4325 1118)
Following a sharp bounce in Dec (pent up volumes due to labor strike), JNPTs container volumes maintained growth momentum in Jan 2014. While both export and import volume at JNPT grew ~4% YoY, an overall improved traction in export volumes vs. imports (YTDFY14) aided steady improvement in exportimport volume mix (as visible in last 4-5 months). This reduction in exportimport mismatch will continue to aid margin improvement for container train operators like Container Corporation (Bloomberg: CCRI IN) and Gateway Distriparks (Bloomberg: GDPL IN). January 2014 data released by Indian Ports Association (IPA) shows ~2% YoY decline (vs. 4% YoY fall during Apr-Dec 2013) in container volumes (teu) across major ports. Tonnage volumes decline was sharper at 7% YoY (vs. ~5% decline in Apr-Dec 2013) across major ports. Outlook While macro headwinds may continue to keep a check on container volume growth across major ports, we expect steady uptick in export volumes to continue to benefit both CCRI and GDPL through lower empty running losses. We maintain (a) HOLD rating on CCRI with TP Rs 750 (13x FY15E EPS of Rs 58), implying limited room for upside from CMP of Rs 722 and (b) BUY rating on GDPL with SoTP-based TP of Rs 155 (implied P/E of 10.3x FY15E EPS of Rs 15), implying 19% upside from CMP of Rs 130.
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3. EAR TO THE GROUND

Analyst buzz/ Important Developments & Articles
Godrej Consumer (GCPL) - Xpress launch for instant result
(hemant.patel@axiscap.in; 91 22 4325 1105) Premiumising - a la GCPLs portfolio After launching the Cinthols premium soaps & grooming range and successfully introducing the cream based hair colour Expert Rich crme last year, GCPL today announced roll out of its premium Good Knight Xpress liquid vaporizer. Touted as most powerful liquid vaporiser with 4x faster effectiveness vs. regular Liquid vaporizer, it will primarily target consumers seeking quick relief, greater potency and making anti mosquito regime simpler (removing dual product usage). Good Knight Xpress to be available at Rs 108 for a combi pack (machine+ refill), a ~10% premium to Good Knight Activ+ system and 50% premium to original Good Knight system. Newly Launched GK Xpress liquid vaporizer system
Source: Company
Innovation driving Indian household insecticide market Innovations such as low smoke coil, anti-cockroach gel and multi-mode liquid vaporiser has been driving faster growth of household insecticide in India. GCPL has been forefront of these innovations, and thereby gaining market share (at 51% in 2013 vs. 35% in 2008, as per Euromonitor). Thus while market growth has been 10-15% over the last 3 years, GCPL has reported 25%+ growth in household insecticide segment (~45% of domestic revenues and ~55% of domestic EBITDA). Will GCPLs domestic HI segment growth get a Xpress boost? Liquid vaporizer (LV) that had been 35% of Household Insecticide (HI) category in 2007 has grown to 49% today. This has been driven by new multi-mode LVs such as Activ+ that has helped reduce the efficacy gap. The new Good Knight Express roll out is to further enhance this role and re-establish differentiation in the LV category. Thus, the muted 8% growth in GCPL domestic HI segment in Q3FY14 (largely due to seasonal impact) is likely to reverse in Q4FY14. We expect the roll out to aid double digit growth for HI segment for next few quarters. Recommend BUY with TP of Rs 835, 16% upside GCPLs Q3FY14 result disappointment notwithstanding, we remain optimistic of GCPL delivering a 23% earnings CAGR over FY14-16E helped by sustained market share gain in key categories and geographies and improved margin performance in its international business. GCPL has corrected 16% over the last 6 months and underperformed Sensex by 24%. It trades at 1-yr rolling forward PE of 26x vs. its 3-yr average PE of 27x. We maintain our BUY call on GCPL with Mar15 TP of Rs 835. At CMP of Rs 722, the stock trades at 25x FY15E EPS of Rs 28.7.
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4. MACRO OVERVIEW
Debt & Money market
10-yr bond yield
9.5 9.0 8.5 8.0 7.5 7.0 8.8 8.4 8.0 13-Feb-14 week-ago month-ago 1 2 3 4 5 6 7 8 9 10 11 12 13 14 17 19
G-Sec yield curve

9.6 9.2
(%)
(%)
Jul-13
May-13
Jul-13
Sep-13
Sep-13
Oct-13
Jan-14
Nov-13
Nov-13
Aug-13
Dec-13
Jan-14
Jun-13
M aturity (Years)
Source: RBI
Interest Rate Indicator

Money Market Call Money Notice Money Term Money CBLOs MIBOR Overnight 14 Day 1 Month 3 Month
Source: RBI, NSE, Reuters
CP / CD - Primary Market
(%) MIFOR 1 Month 3 Month 6 Month 1 Year Forward Prem. 1 Month 3 Month 6 Month 12 Month (%) 9.16 9.26 8.85 8.71 (%) 8.90 9.00 8.53 8.14 CP 35 Days 2 Months 1 Year CD 2 Months 3 Months 1 Year Issuer SIDBI ABFL HDFC Ltd Issuer Allahabad Bank IOB OBC Rating A1+ A1+ A1+ Rating A1+ A1+ A1+ Rate (%) 8.43 10.15 9.70 Rate (%) 9.65 9.70 9.70
6.60-9.20 7.15-9.15 8.40-9.75 8.95-9.10 (%) 9.12 8.81 9.08 9.63
Note: The above table shows rates at which leading Companies and Banks are raising short-term debt for different tenor
US Yields Data
US Yield 2 Year 5 Year 10 Year 30 Year
Source: Bloomberg
13th Feb 0.31 1.49 2.71 3.67
12th Feb 0.34 1.54 2.74 3.71
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5. MARKET SNAPSHOT
A. Major Nifty stock moves this week
Price and volume performance grid
10
Up, but on low volumes Up, on
HCL Tech, Tata Motors,
high volumes
P rice Cha ng e 5d (%)
GAIL, Ranbaxy,
M&M, Wipro, NMDC,
DLF, ICICI Bk, Infosys, L&T, Reliance Inds,
BPCL, ONGC, Sun Pharma
TCS
(5 )
ACC, BHEL, Kotak Bk, HDFC Bk, ITC, PNB, BOB, Coal India, Lupin, Ultratech, Tata Power, IndusInd Bk
Cairn, HUL, NTPC, JSPL, Grasim, JP Associates, Sesa Sterlite, Axis Bk
Bajaj Auto, Hero Motocorp, Maruti, Power Grid, Tata Steel
Asian Paints, HDFC
Bharti Airtel, IDFC, SBI
Dr Reddy's
Down, but on low volumes
Down, on high
Ambuja Cem, Hindalco
Cipla
volumes
(10) < (30) (15) 0 25 50 >
Avera g e 5d Volum e Cha ng e (% )

Comments
Cipla: Q3 disappointed Street led by higher R&D and front-end cost which was followed by 6-10% EPS cut and
downgrade across the board
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14 FEB 2014
Strategy
ESSENCE OF THE WEEK Major Indices: 3 - Best/ worst performing stocks in each index/sector this week
Note: Green and red bars indicate number of stocks that closed in the positive/ negative
Se ct or Nifty 16 34 P r ice B e st p e r for m in g st ocks 5d % (0) Tata Motors Ltd HCL Technologies Ltd DLF Ltd CNX Midcap 100 28 72 (1) Eicher Motors Ltd Motherson Sumi Systems Ltd Amara Raja Batteries Ltd (1) Piramal Glass Ltd Banas Finance Ltd Amtek Auto Ltd 1 5 Motherson Sumi Systems Ltd Tata Motors Ltd Exide Industries Ltd (1) ICICI Bank Ltd HDFC Bank Ltd Kotak Mahindra Bank Ltd 0 VA Tech Wabag Ltd AIA Engineering Ltd Bharat Electronics Ltd (1) Colgate-Palmolive India Ltd Godrej Consumer Products Ltd Nestle India Ltd (2) Cadila Healthcare Ltd Ranbaxy Laboratories Ltd GlaxoSmithKline Pharmaceuticals Ltd 2 Mindtree Ltd eClerx Services Ltd Rolta India Ltd (3) NMDC Ltd Sesa Sterlite Ltd Bhushan Steel Ltd 1 5 Oil & Natural Gas Corp Ltd Oil India Ltd GAIL India Ltd (3) Crompton Greaves Ltd Thermax Ltd JSW Energy Ltd (1) Bharat Electronics Ltd Oil & Natural Gas Corp Ltd MOIL Ltd 0 10 DLF Ltd OMAXE Ltd Oberoi Realty Ltd P r ice A vg 5 d Wor st p e r for m in g st ocks 5 d % vol ch g % 8 7 5 10 9 8 34 22 20 9 8 1 3 (1) (2) 7 6 6 2 2 1 5 2 1 16 8 7 0 (0) (0) 3 2 1 3 (0) (1) 6 3 2 5 1 0 10 17 374 63 4,257 464 10 Cipla Ltd/India Ambuja Cements Ltd India Cements Ltd/The Torrent Power Ltd Ravinay Trading Co Ltd P r ice A vg 5 d 5 d % vol ch g % (10) (7) (6) (10) (9) (9) (23) (22) (5) (3) (2) (5) (5) (4) (13) (5) (5) (6) (3) (3) (10) (6) (5) (3) (2) (6) (4) (4) (4) (2) (2) (9) (7) (6) (14) (7) (7) (6) 269 (52) (40) 11 16 (24) (34) 1,471 224 (5) (14) (73) (31) (5) (32) 20 82 (32) (4) (22) 3 269 (42) (13) 57 105 (3) (40) (31) (4) (22) 24 (22) (24) (48) (23) 215 (45) (38) 1 (11) (24)
(3) Hindalco Industries Ltd (28) Sun TV Network Ltd
BSE-Smallcap 163 BSE Auto 5 BSE Bankex 1 11 276
(91) KDJ Holidayscapes and Resorts Ltd (28) Bajaj Auto Ltd Hero MotoCorp Ltd (56) Bosch Ltd (13) Bank of India (33) Federal Bank Ltd (31) Bank of Baroda (35) Punj Lloyd Ltd (70) IL&FS Transportation Networks Ltd (75) Bharat Heavy Electricals Ltd (44) United Spirits Ltd 1 27 Hindustan Unilever Ltd United Breweries Ltd
Infinite Computer Solutions India Ltd (17)
BSE Cap Goods
9
BSE FMCG
12
BSE Healthcare
(36) Cipla Ltd/India (49) Glenmark Pharmaceuticals Ltd (34) Piramal Enterprises Ltd 402 151 Core Education & Technologies Ltd Polaris Financial Technology Ltd
5
CNX IT
11
16
BSE Metal
(14) Oracle Financial Services Software Ltd (2) (27) Hindalco Industries Ltd (18) JSW Steel Ltd 0 15 64 2 50 Steel Authority of India Ltd Cairn India Ltd Indian Oil Corp Ltd Torrent Power Ltd Adani Power Ltd
BSE Oil & Gas 5 BSE Power
(51) Hindustan Petroleum Corp Ltd
1
BSE PSU
17
(28) CESC Ltd (75) United Bank of India 15 187 7 Bank Of Maharashtra DB Realty Ltd
13
BSE Realty 3
46
Mangalore Refinery & Petrochemicals Ltd (8)
(3) Indiabulls Real Estate Ltd
(72) Housing Development & Infrastructure Ltd (5)
Source: Bloomberg
Note: Average 5d volume change = current 5d average vs. previous 5d average
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B. Indian markets
FII net flows in Asian equities
Cou n t r y (U SD m n ) I n dia - FI I I n dia - DI I Indonesia Philippines Korea Taiwan Thailand Last U p dat e 1 3 - Fe b 1 4 - Fe b 14-Feb 14-Feb 14-Feb 14-Feb 13-Feb WTD (1 5 ) (1 0 ) 163 32 (143) 198 (72) M TD (2 2 8 ) 446 186 (26) (1,292) (2,054) (488) CY TD (2 4 1 ) 206 383 (133) (2,434) (1,249) (904)
Nifty: 50 & 200 DMA

Nifty Index 6,400
5,400 4,400 3,400 2,400
200DMA
50DMA
Jul-08
Jul-09
Jul-10
Jul-11
Jul-12
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
Jan-13
Jul-13
Source: Bloomberg, BSE, NSE, SEBI
Volumes: 90 DMA
5 4 3 2 1
Market delivery: 90 DMA

Derivatives (RHS) 35 (USD bn) 30 25 20 15 10
5 0 45 (%)
NSE: Adv /Dec ratio

1.0
0.8
Cash
42
0.6 0.4
0.2
39
36
Dec-10
Jan-14
Jul-10
Jan-10
Jan-12
Jan-13
Jun-11
Jun-12
Jul-13
0.0
10-Feb 11-Feb 12-Feb 13-Feb 14-Feb
Dec-10
Jan-10
Jan-13
Jan-12
Source: Bloomberg, BSE, NSE, Axis Capital
Sectoral indices: 5-day performance

CNX IT (%) BSE Auto BSE Oil & Gas BSE Realty BSE Cap Goods Sensex Nifty BSE Bankex BSE Smallcap CNX Midcap 100 BSE PSU BSE FMCG BSE Healthcare BSE Metal BSE Power (3)
Source: Bloomberg
Jan-14
Jul-10
Jun-11
Jun-12
Jul-13
ADR/GDR prices*
C om p an y n am e Dr Reddys Lab HDFC Bank ICICI Bank Infosys ITC L&T MTNL Reliance Industries State Bank of India Tata Motors Wipro CMP (Rs) 42.0 32.7 33.3 58.4 5.1 15.9 0.4 26.4 47.8 31.0 12.9 5 d ch g (% ) (0.6) 1.7 4.1 1.5 (2.3) 1.7 (12.3) 1.2 (2.5) 7.7 1.7 Prem / (Disc) % 0.8 5.3 4.3 (0.8) (1.7) (0.6) (6.9) (0.7) 0.2 (1.1) 41.6
(2)
(1)
* Data as on Thursday
Jan-14
18
Note: WTD/ MTD/ YTD represents the cumulative net flows since the 1st business day of the week, month & year
14 FEB 2014
Strategy
ESSENCE OF THE WEEK

Bulk deals (> Rs 100 mn traded value)
Dat e BUY 10-Feb-14 13-Feb-14 13-Feb-14 SELL 10-Feb-14 10-Feb-14 13-Feb-14 13-Feb-14 Sterling Holiday Resort Sterling Holiday Resort Greaves Cotton Greaves Cotton Bright Star Investments Pvt Leena Investments Consultancy LLP Amansa Holdings Pvt Amansa Holdings Pvt 1,700 1,883 2,987 4,698 167 184 173 273 98 98 58 58 Sterling Holiday Resort Greaves Cotton Greaves Cotton Thomas Cook Ins Services India IDFC Mutual Fund IDFC Mutual Fund 8,667 4,650 6,550 848 270 380 98 58 58 Com p an y Cl ie n t Tr ade d Vol ('0 0 0 ) Tr ade d Val u e A vg. P r ice (Rs m n ) (Rs)
Buybacks (up to Thursday, 13th Feb)

Scr i p Tot al B u yb ack V al u e (Rs m n ) 57,250 405 110 165 2,790 250 300 10,000 650 1,000 149 179 100 600 B ou gh t Qt y (Nos) 2,886,740 37,623 468,518 223,012 1,528,016 1,135,678 2,062,315 19,959,584 7,069,737 1,935,655 1,074,538 553,522 1,560,390 10,221,003 I n cr b ou gh t qt y ove r l ast we e k (Nos) 0 0 28,125 222,057 1,430 0 16,786 25,000 18,765 30,000 13,096 203,143 0 200 B u yb ack A vg Rat e 323 813 52 103 266 91 107 251 79 189 57 141 21 34 V al u e (Rs m n ) 931 31 24 23 407 103 221 5,002 562 366 61 78 33 351 M ax B u y CM P b ack 1 3 /0 2 p r i ce 335 825 65 125 279 110 120 261 90 300 67 160 40 75 324 1,193 55 103 288 72 120 234 84 159 57 160 20 31 B al Qt y B al V al u e (n os m n ) (Rs m n ) 168.1 0.5 1.3 1.1 8.5 1.3 0.7 19.1 1.0 2.1 1.3 0.6 1.7 3.3 56,319 374 86 142 2,383 147 79 4,998 88 634 88 101 67 249
Cairn Eclerx Garware Wall Guj Apollo G E Shiping H T Media Infinite Computer Jindal Steel & Pow Motilal Oswal Fin Mah Seamless Nitin Fire Panama Petrochem Pennar Inds S Mobilty
Note: The balance quantity has been arrived at by taking previous closing rate for remaining buyback amount. Stocks > Rs 100 mn only
19
14 FEB 2014
Strategy
ESSENCE OF THE WEEK
C. Deciphering Derivatives
Stocks with highest open interest (value-wise)
C o . Name
MCDOWELL-N SBIN INFY RELIANCE TCS ICICIBANK TATAMOTORS HDFCBANK LT NI FTY
Op en Interet (mn shrs) 8

10 3 14 4 8 21 12 7 18
OI C hg %
6% 5% 2% 0% 13% -20% -4% -6% 4% 7%
% of F l o at
9.1 5.3 0.7 0.9 1.0 1.3 1.4 0.7 1.7
OI Val ue (R s b n)
20 14 12 12 9 8 8 8 7 110
CMP (R s)
2,349 1,481 3,647 822 2,169 992 389 644 994 6 ,0 5 8
Pric e C hg (% )
-5% -3% 2% 1% 1% 3% 8% -1% 1% - 0 .3 %
T rend
Fresh Short Fresh Short Fresh Long Short Covering Fresh Long Short Covering Short Covering Long Liquidation Fresh Long -
Nifty FII Flow vs. Nifty OI

1.6 1.2
6 0 75 6065 6073 6058
FII flows
8 6
6100
(Rs b n ) - Buy - Sell Net
1 4 /Fe b 1 3 /Fe b 1 2 /Fe b 1 1 /Fe b 1 0 /Fe b 12.6 13.8 (1.1) 19.0 18.0 1.0 11.4 13.4 (2.0) 17.1 15.5 1.6 (0 .4 0 ) 10.7 9.8 0.9 18.8 13.9 4.9 5 .8 0 7.2 12.5 (5.3) 13.1 10.5 2.6 (2 .7 ) 8.0 7.5 0.5 14.3 14.2 0.1 0 .6
Wkl y 49.9 57.0 (7.0) 82.3 72.1 1.0 3 .1
I n de x Fu t u r e s
Nifty OI Shrs (mn)
0.4
0.0 (0.4) (0.8)
6005
2
0 (2) (4)
FI I FLOW (INR bn)
0.8
St ock Fu t u r e s - Buy - Sell Net
(1.2) 10-Feb 11-Feb 12-Feb
(6) 14-Feb
13-Feb
Ne t Fu t u r e s (0 .2 )
Nifty OI Shrs (LHS)
FII FLOW (RHS)
NIFTY
Increase in OI (wow)
Cu r r OI Co Nam e HINDALCO DLF BHEL CMP 100 144 148 (m n sh r s) 24.0 38.5 39.6 OI Ch n g 5.3 4.1 2.9 Ch n g (% ) (m n sh r s) OI V al u e P r ice 21 16 4 (6) 4 (4)
Decrease in OI (wow)
Cu r r e n t OIOI Ch an ge Co oi chg Nam %e APOLLOTYRE 28% TATASTEEL 12% ONGC 8% CMP 118 372 276 (m n sh r s) 28.1 12.9 11.3 (3.1) (2.6) (0.9) Ch an ge (% ) (8) (19) (5) 3 (3) 2 (m n sh r s) OI Val u e P r ice
oi chg
OI value breakup
(Rs b n ) I n st r u m e n t Future Index Future stocks Option Index Options Stocks Tot al Local - Other than FIIs FII OI - single side positions have been considered. 1 4 Fe b - Op e n I n t V al u e . Tot al 105 340 765 117 1 ,3 2 7 FI I * 58 149 239 9 454 Local 47 191 527 108 872 FI I % 55 44 31 8 34
Sector watch PSU Banks

Scr ip t PNB SBIN UNIONBANK BANKBARODA BANKINDIA Cu r r . OI m n sh r s 4.77 9.65 12.50 3.93 10.46 OI Ch g -9% 5% 3% 1% 10% CMP 539 1,481 103 539 174 P r ice Ch g -2% -3% -3% -4% -6%
20
14 FEB 2014
Strategy
ESSENCE OF THE WEEK

Nifty Fifty
Vote-on-Account or Interim budget will set tone for the markets next week. Global cues & FII flows will play a major role in determining trend for the near term. Nifty holds on to its strong support of 200 DMA. Nifty Futures lost 13 points during the week. Major losers were CIPLA, HNDL & ACEM, whereas gainers were TTMT, HCLT & DLFU Nifty futures witnessed fresh short - intra week high of 6126 and low of 5992, Open Interest wow up by 1.15 mn shares (6.7%) closing at 6058 (-0.28%) During the week, in Nifty constituents, 2 stocks made new 52 week high (HCLT & DRRD) Turnover was down wow. Equity Segment average turnover was Rs 112 bn, 11% lower than wow average, while F&O turnover stood at Rs 1,108 bn, 2% lower than wow average Open interest in 6000 put of 4.34 mn shares added 0.61 mn shares. Put writers were active in 5800 strike as well 6300 call open Interest of 6.34 mn shares added 0.89 mn shares. Call writers were also active in 6000 strike
Nifty Fut. vs. Smart Money (SMR= IV/PCR)

SMR
200 150 100 4,000 50 0 3,000 2,000
Nifty Fut. vs. Implied Volatility

Implied Volatility
7,000 6,000 5,000
Nifty Future (RHS)

100
Nifty Future (RHS)

7,000
80
60 40
6,000
5,000 4,000
20 0
May-09 May-10 May-11 May-12 May-13 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Jan-14
3,000 2,000
May-09
May-10
May-11
May-12
May-13
Jan-09
Jan-10
Jan-11
Jan-12
Jan-13
Sep-09
Sep-10
Sep-11
Sep-12
Nifty Fut. vs. Put-Call ratio

Put call ratio (LHS)
2.5 2.0
Sep-13
Jan-14
Option distribution
Nifty Future (RHS)
7,000
12
Change OI
10
(m n of shares)
OPEN_INT
6,000
1.5 1.0
0.5 0.0
5,000 4,000
3,000 2,000
6
4 2
0
(2)
Jan-09 May-09
Jan-10 May-10
Jan-11 May-11
May-12
Jan-13 May-13
Jan-12
Sep-09
Sep-10
Sep-11
Sep-12
Sep-13
Jan-14
CE PE CE PE CE PE CE PE CE PE CE PE CE PE
5800 5900 6000 6100 6200 6300 6400
21
14 FEB 2014
Strategy
ESSENCE OF THE WEEK
D. Global sector equity performance

5-day: Best / Worst performing sectors*
Note: Best sector = shaded green; Worst sector = shaded red; Sector classification as per GICS
M ark ets C o untry Index
I n de x Val u e I n de x P e r for m an ce Automobiles & Components Banks Capital Goods Diversified Financials Energy Food Beverage & Tobacco Household & Personal Products Materials Pharmaceuticals, Biotechnology Software & Services Telecommunication Services Utilities
Dev el o p ed BR IC US UK J ap an Brazil R ussia India C hina Do w F T S E Nik k ei Bo v es M ic ex S ense H S C EI

16,028 2.6 3 3 2 2 1 2 3 4 3 6,659 1.5 2 0 (3) (1) 2 1 2 4 4 (0) (1) 2 14,313 47,813 1.1 0.2 2 0 2 1 5 3 6 2 2 5 3 2 (1) 7 (4) 2 0 (3) (0) 2 1 (0) 1,479 0.8 (0) 1 (1) (1) (2) 20,367 (0.0) 1 (1) (1) 0 (1) (3) (2) (1) 1 (3) (2) 9,934 3.0 4 3 2 1 3 4 2 1 (2)
HK H S I
22,298 3.1 3 5 3 3 7 (3) 5 1 3
Asian Ko rea S 'Po re T aiwan Ko sp i S traits T aiex

1,940 0.9 1 (1) 1 1 2 2 1 3 0 1 (3) 1 3,039 0.8 1 2 0 (1) 2 8,514 1.5 0 1 2 2 1 1 2 2 3 1 1 1
Note: *US, UK, and Brazil performance are with 1-day lag
E. Global equity valuations

Global indices *
PER (x) Indic es Dev el o p ed US (Dow Jones) US (S&P 500) UK (FTSE 100) Germany (DAX) France (CAC) Japan (Nikkei 225) BR IC Brazil (IBOV) Russia (Micex) India (Sensex) China (HSCEI) Asian HK (H S I) Korea (Kospi) Singapore (Straits) Taiwan (Taiex)
Source: Bloomberg
PBR (x) C Y13 2.6 2.4 1.8 1.6 1.3 1.5 1.0 0.2 2.5 1.0 1.2 1.0 1.2 1.7 C Y14 2.4 2.2 1.6 1.5 1.3 1.4 1.0 0.2 2.1 0.9 1.1 0.9 1.2 1.6 18 15 13 12 10 8 11 6 16 15 12 10 9 11
R OE (% ) C Y13 19 16 13 13 11 9 11 5 16 15 13 11 10 12 C Y14
Div Yiel d (% ) C Y13 2.4 2.1 3.8 2.9 3.6 1.7 4.3 9.2 1.7 4.8 3.9 1.4 3.5 3.3
C o untry M c ap 22,112 4,012 2,029 2,156 4,394 882 707 1,071 3,478 3,431 1,152 558 901
Index v al ue 16,028 14 1,830 16 6,672 13 9,677 13 4,340 13 14,313 19 48,044 10 1,495 3 20,367 15 9,934 7 22,298 10 1,940 9 3,039 13 8,514 14
C Y13 13 14 12 12 12 16 9 3 13 6 9 8 12 13
C Y14
*Western market data as on Thursday
22
14 FEB 2014
Strategy
ESSENCE OF THE WEEK
F. Global asset class performance*

Equity
P e r for m an ce (% ) V al u e De ve l op e d US (Dow Jones) UK (FTSE 100) Germany (DAX) France (CAC) Japan (Nikkei 225) B RI C Brazil (IBOV) Russia (Micex) India (Sensex) China (HSCEI) A sian HK (H S I) Korea (Kospi) Singapore (Straits) Taiwan (Taiex) 22,298 1,940 3,039 8,514 (2) 0 (3) 0 (5) (2) (8) 8 (4) (4) (4) (1) 47,813 1,479 20,367 9,934 (3) 2 (3) (2) (17) (2) 4 (16) (7) (1) (4) (8) 16,028 6,659 9,597 4,313 14,313 (2) (1) 1 2 (7) 15 5 27 18 27 (3) (1) 1 1 (12) 1m 12m CY TD
5-day performance (%)

Germany 3.7
HK
China France US
3.1
3.0 3.0 2.6
UK Taiwan
Japan Korea Singapore
1.5
1.5 1.1 0.9
0.8 0.8
0.2 (0.0) 0.0 2.0 4.0
Russia
Brazil India (2.0)
Equity USD terms

P e r for m an ce (% ) Val u e De ve l op e d US (Dow Jones) UK (FTSE 100) Germany (DAX) France (CAC) Japan (Nikkei 225) B RI C Brazil (IBOV) Russia (Micex) India (Sensex) China (HSCEI) A sian HK (H S I) Korea (Kospi) Singapore (Straits) Taiwan (Taiex) 2,875 2 2,410 281 (2) 0 (2) (1) (5) 0 (10) 5 (4) (4) (4) (3) 19,892 42 329 1,281 (5) (5) (4) (2) (33) (18) (9) (16) (9) (8) (4) (8) 16,028 11,085 13,119 5,896 141 (1) 0 1 1 (5) 15 12 26 18 16 (3) (1) 0 0 (9) 1m 12m CY TD
5-day performance USD terms (%)
Germany France UK HK China 3.5 3.4 3.1 3.0
US Korea
Taiwan Singapore Japan India Russia (0.5) (0.6) (2.0) 0.0 2.0 0.5 1.4 1.2 1.6
2.6 2.3
Brazil
(4.0)
4.0
USD INR Futures: 1m = 62.46; 3m = 63.32; 5m = 63.71

Note: *Western markets, Commodity & Currency data as on Thursday; # Indicates the general international value of the USD by averaging exchange rates between USD and 6 major world currencies
23
14 FEB 2014
Strategy
ESSENCE OF THE WEEK

Commodity
1 yr fwd V al u e M e t al s Aluminium ($/ton) Copper ($/ton) Zinc ($/ton) Lead ($/ton) China HR Steel ($/ton) IronOre-Qingdao ($/ton) Gold ($/t oz) Silver ($/t oz) Platinum ($/t oz) E n e r gy Coal ($/ton) Crude Oil ($/bbl) Naptha ($/bbl) Natural Gas ($/MMBtu) Food Wheat ($/bu) Corn ($/bu) Cotton (c/lb) Soybean ($/bu) Sugar (c/lb) 632 468 79 1,146 17 594 441 89 1,331 16 2 3 5 4 2 (23) (36) 6 5 (17) (2) 5 5 5 (3) 104 80 109 101 5 (2) 2 (2) 27 (8) (9) (10) 62 (4) (2) (6) 23 1,303 21 1,424 1,902 7,051 2,039 2,126 1,700 7,143 2,024 2,103 564 143 1,303 20 1,419 (2) (3) (2) (2) (1) (6) 6 4 (0) (19) (13) (7) (12) (18) (18) (19) (31) (17) (3) (3) (1) (4) (2) (6) 9 8 4 V al u e P e r for m an ce (% ) 1m 12m C Y TD
Gold Platinum Silver Wheat Crude Oil Cotton Aluminium Soybean Zinc Lead Naptha Copper Sugar Corn Steel IronOre Nat Gas (33.7) (45) (30) (15) 0 (0.4) (0.5) (0.5) (0.6) (1.1) (4.0)
3.6 3.0 2.6 2.0 2.0 1.9 1.7 1.4 0.6 0.2
15
Currency
P e r for m an ce (% ) V al u e Dollar Index# De ve l op e d Europe UK Japan B RI C Brazil Russia India China A sian HK Korea Singapore 7.8 1,066 1.3 (0) (0) 1 (0) 2 (2) (0) (1) 0 2.4 35.2 61.9 6.1 (2) (5) (1) (0) (18) (14) (13) 3 (1) (6) (0) (0) 1.4 1.7 102.2 0 2 2 3 8 (9) (0) 1 3 80.3 1m (1) 12m (0) CY TD 0

UK Korea Europe India Singapore 0.7 0.6 0.3 0.0 1.2
HK China Japan Brazil

$ Index# Russia (1.4) (0.7)
(0.0) (0.1) (0.5)
(2.0)
(1.0)
0.0
1.0
2.0
USD INR Futures: 1m = 62.46; 3m = 63.32; 5m = 63.71

Note: *Western markets, Commodity & Currency data as on Thursday; # Indicates the general international value of the USD by averaging exchange rates between USD and 6 major world currencies
24
14 FEB 2014
Strategy
ESSENCE OF THE WEEK
G. Commodity Snapshot
Oil & Gas
Crude price remained flat at US$ 109/ bl as weak US economic data (high jobless claims) outweighed supply disruptions in Libya and Angola Singapore refining margin remained flat at US$ 6.3/bl as weakness in naphtha cracks was offset by a recovery in gasoline margins. Naphtha margins weakened as demand for the fuel declined in Asia due to cracker maintenance. (Source: Plastmart) PE/PP margin rose as Asiapac naphtha prices weakened on cracker maintenance, while PE/PP prices remained stable
Dated Brent Prices

Brent - WTI Spread (RHS) Dated Brent
120 115 110
Singapore Refining Margin
PE & PP Differential to Naphtha

PP-Naphtha PE-Naphtha
(USD/bbl)
20 15 10
8 6
4
(USD/bbl)
630
(USD/t)
600 570 540 Nov-13
105 100 Dec-13

Source: Bloomberg
5 0
Jan-14 Feb-14
2 Dec-13
Jan-14
Feb-14
Dec-13
Jan-14
Metals & Others

Non-ferrous metal prices were flat during the week Gold and silver prices rose 3-4% post comments from the Fed Chairman that work is needed to restore the labor market. Also, US jobless claims unexpectedly rose last week Palm oil price has been on uptrend due to seasonally lower output of the tropical oil as well as a dry spell in soy-growing Brazil that would potentially squeeze global edible oil supplies Aluminum, Zinc and Copper
Aluminum Copper (RHS) (USD/t) Zinc 7,500 7,300
7,100 1,275
Gold, Silver Spot price

Gold ($/troy ounce) Silver (RHS)
20.6
Baltic Dry Index

2,500
2,200 2,000
1,800
(Index)
1,250 1,225 1,200 1,175
20.2 19.8 19.4
2,000
1,500
1,600
6,900
Dec-13
Source: Bloomberg
Jan-14
Feb-14
Dec-13
Jan-14
Feb-14
19.0 1,000 Dec-13
Jan-14
Feb-14
25
14 FEB 2014
Strategy
ESSENCE OF THE WEEK
SUMMARY OF MAJOR TARGET PRICE UPSIDES

Mcap > USD 2 bn & upsides > 20%
C o mp any Sun TV Adani Enterprises Reliance Inds PNB NTPC United Spirits Bank of Baroda IndusInd Bank Adani Ports & SEZ L&T HCL Tech M c ap (US D mn) 2,092 3,808 42,737 3,131 17,547 5,468 3,706 3,185 4,899 14,814 16,854 C M P (R s) 330 215 822 537 132 2,337 536 377 147 993 1,497 T arget Pric e (R s) 465 290 1,100 695 171 2,997 670 465 180 1,213 1,800 % Up side 41 35 34 29 29 28 25 23 22 22 20
Mcap > USD 2 b n & downside > 10%

C o mp any GlaxoSmithKline Pharma BHEL Siemens Colgate Palmolive
M c ap (US D mn) 4,102 5,847 3,038 2,895
C M P (R s) 3,009 148 530 1,322
T arget Pric e (R s) 1,773 89 434 1,175
% Up side (41) (40) (18) (11)
26
14 FEB 2014
Strategy
ESSENCE OF THE WEEK
6. AXIS CAPITAL: VALUATION & RECOMMENDATION

Mcap Se ct or / Com p an y A u t os Amara Raja Batteries Ashok Leyland Bajaj Auto Bharat Forge Eicher Motors Exide Inds Hero MotoCorp Mah & Mah Maruti Suzuki Motherson Sumi Tata Motors TVS Motor B an kin g & Fin Se r v Axis Bank Bajaj Finance Bajaj Finserv Bank of Baroda Bank of India Canara Bank Cholamandalam Invst HDFC Bank HDFC ICICI Bank IDFC IndusInd Bank ING Vysya Kotak Mahindra Bank LIC Housing 8,331 1,186 1,740 3,706 1,796 1,581 543 24,756 19,372 18,373 2,327 3,185 1,690 8,002 1,615 1,103 1,469 679 536 174 213 236 642 772 988 95 377 557 646 199 0 0 0 0 0 0 0 296 18 0 0 112 0 NR 797 670 190 250 281 735 860 98 465 640 646 261 19 17 25 9 17 19 15 11 20 3 23 15 0 31 0 1,750 1,045 668 8,571 1,328 2,110 1,453 6,226 8,949 7,991 3,202 18,376 613 380 16 1,840 354 4,848 106 1,937 903 1,643 226 388 80 0 0 0 0 127 0 22 0 402 12 327 104 894 227 446 71 6 (23) 15 (8) 14 (2) (8) (1) 2 1 15 (11) (U SD m n ) CMP VoI (Rs)* (Rs) FY 1 4 TP U p side (Rs) 18 1 106 9 120 6 109 50 95 8 29 4 698 670 463 665 311 436 136 151 108 453 76 137 290 114 125 FDEP S (Rs) 23 (2) 117 19 127 5 108 58 99 9 45 5 799 700 331 441 149 178 126 500 82 159 368 143 142 27 1 138 27 237 6 135 62 123 15 56 7 953 767 367 501 176 214 147 560 89 185 402 162 163 18 21 29 17 40 40 17 18 16 17 28 13 21 13 10 12 7 5 4 3 11 23 15 10 7 19 14 31 10 P E (x) 15 17 16 18 38 20 18 13 17 25 8 15 12 10 5 4 4 9 18 14 8 6 15 15 29 8 12 14 21 13 13 20 17 14 13 13 15 7 11 10 8 4 3 2 7 14 12 7 6 12 12 25 7 4 .6 6.1 1.3 6.7 3.7 7.5 2.6 7.7 3.3 2.7 8.7 3.3 3.1 2 .6 1.6 2.2 1.5 0.8 0.6 0.5 1.7 4.3 4.4 1.5 1.0 2.7 1.9 4.7 1.6 P B (x) 3 .8 4.7 1.5 5.5 3.5 6.3 2.4 6.9 2.7 2.3 6.8 2.4 2.7 2 .2 1.8 0.8 0.5 0.5 1.6 3.6 3.8 1.4 0.9 2.4 1.5 3.7 1.4 3 .1 3.6 1.5 4.5 2.9 5.1 2.2 5.8 2.4 2.0 5.0 1.8 2.3 1 .9 1.5 0.7 0.5 0.4 1.3 3.0 3.2 1.2 0.9 2.0 1.4 3.3 1.2 EV/EB I TDA (x) 10 14 10 13 14 23 11 10 10 9 15 6 10 8 10 38 10 9 18 11 9 9 8 9 4 8 6 9 9 8 7 11 10 8 8 6 6 3 6 29 32 5 44 9 20 16 47 23 17 34 27 15 18 19 22 24 16 13 13 18 20 22 13 14 18 15 16 17 RoE (% ) 28 31 (14) 39 20 18 13 41 22 15 31 32 19 16 20 14 12 10 17 22 20 14 14 17 12 14 18 29 29 7 37 24 28 14 44 20 16 40 30 23 17 20 15 13 15 19 22 21 15 13 18 12 13 19 Div Y ie l d (% ) 1 .3 0.5 3.8 2.4 1.0 0.4 1.5 3.1 1.4 0.4 0.6 0.5 1.6 2 .1 1.6 1.0 0.2 4.0 5.8 6.1 1.4 0.9 1.6 2.0 2.7 0.8 1.0 0.1 1.9 1 .3 0.7 1.5 2.7 1.0 0.6 1.3 3.5 1.6 0.5 0.8 0.4 1.8 2 .3 1.2 4.8 6.3 6.6 1.6 1.0 1.8 2.2 3.1 0.9 1.1 0.1 2.2 1 .5 0.9 2.0 3.0 1.1 0.9 1.6 3.6 1.7 0.6 1.4 0.3 2.3 2 .6 1.4 5.6 7.5 8.0 2.1 1.2 2.1 2.6 3.6 1.0 1.3 0.1 2.8 (% ) FY 1 3 FY 1 4 E FY 1 5 E FY 1 3 FY 1 4 E FY 1 5 E FY 1 3 FY 1 4 E FY 1 5 E FY 1 3 FY 1 4 E FY 1 5 E FY 1 3 FY 1 4 E FY 1 5 E FY 1 3 FY 1 4 E FY 1 5 E
0 2,119 0 5,529 0 1,786 0 1,670
A dj B V (I NR)
289 1,185
continued
27
14 FEB 2014
Strategy
ESSENCE OF THE WEEK

Mcap Se ct or / Com p an y B an kin g & Fin Se r v L&T Finance Holdings Magma Fincorp Oriental Bank Power Finance PNB Reliance Capital Rural Electrification SBI Shriram City Union Fin Shriram Transport South India Bank Union Bank Yes Bank Ce m e n t Dalmia Bharat Grasim Inds India Cement Ramco Cement Shree Cement UltraTech Cem En gin e e r in g ABB AIA Engg Alstom T&D Bharat Electronics BHEL Carborundum Universal Crompton Greaves Cummins L&T Siemens TD Power Systems Thermax VA Tech Wabag Voltas 1,973 853 738 1,239 5,847 393 1,232 1,956 14,814 3,038 129 1,195 256 633 578 562 179 962 148 130 122 438 993 530 241 623 599 119 0 0 0 0 0 0 0 28 0 0 0 87 0 346 479 197 995 89 119 82 521 434 167 596 608 119 (40) (15) 10 3 (40) (9) (33) 19 22 (18) (31) (4) 1 0 211 3,646 243 643 2,384 7,351 161 2,467 49 168 4,251 1,665 0 0 0 208 63 192 29 7 28 14 (8) (3) 417 2,641 1,935 202 792 3,102 3,131 1,245 3,043 17,728 926 2,031 431 1,041 1,744 70 66 164 146 537 315 191 1,475 970 556 20 103 300 0 0 0 0 0 0 0 66 79 150 175 695 427 218 (6) 20 (9) 20 29 36 14 11 4 15 24 19 (U SD m n ) CMP VoI (Rs)* (Rs) FY 1 4 TP U p side (Rs) FDEP S (Rs) A dj B V (I NR) 30 67 349 164 753 480 164 384 306 20 227 162 24 284 7 18 286 100 8 22 4 111 27 5 3 23 49 24 13 27 34 3 32 67 345 197 731 492 196 1,113 461 346 22 229 198 (5) 210 4 10 208 68 8 30 5 85 15 5 4 21 50 4 10 27 40 6 36 72 367 226 868 511 225 1,218 540 392 25 254 239 12 226 7 16 252 81 14 34 8 83 9 9 7 25 58 11 14 33 46 9 13 24 9 4 4 4 10 5 6 12 9 5 3 8 13 7 7 7 10 15 17 21 73 25 50 9 5 27 46 18 16 22 19 23 14 39 P E (x) 12 22 8 5 3 6 11 4 8 11 10 5 4 7 19 10 12 16 20 25 29 71 18 38 11 10 25 32 19 15 125 24 23 13 18 10 14 7 4 3 4 10 4 6 10 9 5 3 6 16 14 9 7 11 17 21 19 42 16 23 12 17 14 18 17 13 47 17 19 11 14 2 .6 2.3 1.0 0.5 0.9 0.7 0.7 1.2 1.0 2.5 1.8 1.0 0.5 1.9 2 .5 0.4 1.2 0.4 1.7 3.9 3.0 3 .1 4.7 3.7 4.7 1.2 1.3 2.3 2.2 5.1 3.1 4.6 1.6 4.0 2.2 2.4 P B (x) 2 .2 2.2 1.0 0.5 0.7 0.7 0.6 1.0 1.0 2.1 1.6 0.9 0.4 1.5 2 .3 0.4 1.1 0.4 1.6 3.3 2.7 2 .8 4.5 3.2 3.5 1.1 1.2 2.3 2.1 4.6 2.8 4.7 1.5 3.5 2.0 2.2 1 .9 2.0 0.9 0.4 0.6 0.6 0.6 0.8 0.9 1.8 1.4 0.8 0.4 1.3 2 .0 0.4 1.0 0.4 1.4 2.9 2.4 2 .6 4.2 2.7 3.3 1.1 1.1 2.1 2.0 4.1 2.5 4.5 1.4 3.1 1.8 2.0 EV/EB I TDA (x) 9 5 7 5 6 9 10 13 31 17 17 4 3 12 17 13 14 16 11 14 9 16 11 7 9 6 8 11 12 16 27 12 14 5 7 11 14 16 13 46 14 16 8 14 9 5 7 5 6 8 10 12 19 10 11 6 10 7 10 13 11 23 9 12 7 10 18 10 11 11 22 16 7 26 15 23 21 21 15 25 20 7 14 6 19 30 20 18 7 16 10 15 25 9 5 28 17 21 9 18 13 6 RoE (% ) 16 10 10 8 23 11 6 26 10 20 17 17 9 25 12 (1) 10 3 10 17 12 13 7 19 11 10 12 9 7 23 15 4 6 16 14 13 17 14 11 10 21 13 6 24 11 19 16 17 12 22 13 3 10 6 14 18 12 13 10 18 15 9 7 15 11 24 15 10 9 18 15 15 Div Y ie l d (% ) 2 .1 1.1 1.2 5.6 4.8 5.0 4.1 4.3 2.8 1.0 1.5 3.4 7.8 2.0 0 .8 1.1 0.9 4.9 1.8 0.5 0.5 1 .8 0.5 0.7 1.2 2.7 4.0 1.0 1.0 2.9 1.2 1.3 0.8 1.1 1.9 1.3 2 .3 1.3 1.2 6.1 8.2 5.0 4.1 5.5 2.8 0.9 1.4 3.4 7.8 2.0 0 .8 1.4 0.9 4.9 2.3 0.7 0.5 1 .7 0.5 0.7 1.1 2.8 3.6 1.5 1.0 2.7 1.3 1.3 0.8 1.1 2.0 1.3 2 .6 1.4 1.2 7.3 8.2 5.0 4.1 6.5 3.1 1.0 1.6 3.7 9.8 2.3 0 .9 1.5 1.0 5.4 2.5 0.8 0.6 1 .7 0.5 0.7 1.1 2.8 2.8 1.5 1.0 2.9 1.4 1.3 0.8 1.4 2.0 1.3
(% ) FY 1 3 FY 1 4 E FY 1 5 E FY 1 3 FY 1 4 E FY 1 5 E FY 1 3 FY 1 4 E FY 1 5 E FY 1 3 FY 1 4 E FY 1 5 E FY 1 3 FY 1 4 E FY 1 5 E FY 1 3 FY 1 4 E FY 1 5 E
330 1,425 0 1,079 0 0 0 0 576 23 127 359
(3) 1,112
0 3,890 0 1,616
255 1,213
continued
28
14 FEB 2014
Strategy
ESSENCE OF THE WEEK

M cap Se ct or / C om p an y FM C G Asian Paints Britannia Inds Colgate Palmolive Dabur Emami Godrej Consumer Hindustan Unilever ITC Marico Jyothy Lab Nestle Tata Global Beverages United Breweries United Spirits I n fr ast r u ct u r e Adani Enterprises Adani Ports & SEZ Essar Ports ITNL JP Associates I T Se r vi ce s CMC HCL Tech Info Edge Infosys Tech Just Dial Mindtree Mphasis Oracle Financials Persistent Systems Redington TCS Tech Mahindra Wipro 698 16,854 958 33,700 1,663 1,127 1,304 4,180 636 436 68,305 6,881 22,387 1,431 1,497 545 3,646 1,479 1,682 385 3,086 988 68 2,166 1,833 564 0 1,355 0 1,800 0 585 0 4,200 0 1,220 0 1,484 0 413 0 2,951 0 1,140 0 95 0 2,350 0 2,000 0 585 (5) 20 7 15 (17) (12) 7 (4) 15 40 8 9 4 3,808 4,899 361 335 1,397 215 147 52 107 39 0 0 0 0 3 290 180 96 150 45 35 22 83 40 15 7,293 1,743 2,895 4,862 1,590 4,048 19,496 40,877 2,233 591 7,877 1,399 3,405 5,468 472 903 1,322 173 435 739 560 320 215 203 5,075 141 800 2,337 0 0 0 0 0 0 0 0 0 0 0 0 450 UR 200 535 835 565 371 250 260 UR 153 861 (5) (11) 15 23 13 1 16 16 28 9 8 28 (U SD m n ) C M P V oI (Rs)* (Rs) FY 1 4 TP U p si de (Rs) 12 36 4 14 20 15 9 6 4 6 7 (8) 10 7 7 27 2 76 57 12 165 10 82 38 128 47 8 71 99 25 FDE P S (Rs) 12 36 5 17 23 17 11 7 6 7 8 24 12 9 8 14 (1) 88 86 12 185 16 110 38 163 63 8 93 124 31 14 42 6 20 29 18 13 8 9 8 11 61 26 9 9 17 2 113 100 14 233 22 148 38 184 81 10 118 143 37 36 41 36 39 31 37 37 33 38 53 22 123 20 22 20 7 4 20 27 19 26 45 22 149 21 10 24 21 8 30 18 23 P E (x) 38 38 36 33 25 32 33 29 29 36 21 105 96 14 18 17 7 8 21 16 17 45 20 90 15 10 19 16 8 23 15 18 30 33 32 28 22 26 31 25 26 24 18 71 38 12 8 16 6 6 16 17 13 15 38 16 66 11 10 17 12 7 18 13 15 1 8 .8 13.4 36.7 14.2 12.7 7.6 45.3 11.3 7.0 5.1 1.8 14.0 6.1 2 .6 1.1 4.6 0.8 0.6 0.7 8 .1 4.6 7.4 8.9 5.5 24.5 5.3 1.8 3.5 3.9 1.7 11.0 5.7 5.2 P B (x) 1 5 .2 11.5 36.8 11.5 11.1 6.5 33.8 9.7 5.9 3.9 1.7 13.0 4.3 2 .2 1.1 3.7 0.7 0.6 0.7 6 .4 3.9 5.5 7.7 4.6 19.2 4.2 1.6 3.0 3.3 1.4 8.5 4.0 4.4 1 3 .0 9.9 36.2 9.4 9.1 5.6 27.9 8.5 5.0 3.6 1.6 11.5 3.9 2 .0 1.0 3.3 0.7 0.5 0.6 5 .1 3.2 4.2 6.6 3.9 14.9 3.2 1.5 2.5 2.8 1.2 6.7 3.1 3.6 E V /E B I TDA (x) 27 25 26 29 27 26 29 23 23 33 13 47 39 15 15 17 7 9 11 20 13 17 38 16 97 14 9 17 12 7 23 13 19 23 22 26 25 21 22 26 20 19 23 14 39 29 12 10 14 7 10 10 15 12 11 33 13 69 11 9 14 9 7 16 9 15 19 19 23 20 18 18 22 16 16 19 12 32 20 9 7 11 5 9 6 12 9 9 26 10 47 8 8 11 7 6 13 8 12 49 36 107 40 43 22 106 36 23 10 9 12 (2) 15 5 26 13 16 3 33 27 32 21 27 26 30 19 16 20 22 41 36 23 RoE (% ) 51 32 101 38 47 22 119 36 22 13 9 13 6 14 6 25 11 8 (2) 33 26 36 18 25 24 31 16 17 23 19 41 32 26 48 32 115 37 45 23 99 36 21 16 9 17 11 16 13 22 12 9 4 33 27 32 19 27 25 32 15 16 25 18 41 27 26 Di v Y i e l d (% ) 1 .6 1.0 2.1 0.9 1.2 0.7 2.9 1.6 0.5 0.8 1.5 0.1 0.1 1 .0 0.8 0.8 0.9 3.7 1.5 1 .1 1.2 0.8 0.2 1.2 0.7 4.4 0.9 0.6 1.2 0.1 1.2 1 .6 1.2 2.3 1.2 2.0 0.9 2.0 1.9 0.6 0.8 1.7 0.1 0.1 2 .0 1.1 2.4 4.4 4.7 1.5 1 .5 1.5 0.9 0.4 1.5 1.1 4.5 1.4 0.7 1.8 0.1 1.4 1 .9 1.4 2.6 1.4 2.2 1.1 2.2 2.3 0.7 1.1 1.8 0.1 0.1 2 .7 1.6 3.2 5.0 5.1 3.0 1 .8 2.0 1.1 0.4 1.9 1.2 4.5 1.8 0.8 2.2 0.1 1.6
0 1,175
0 2,997
continued
29
14 FEB 2014
Strategy
ESSENCE OF THE WEEK

M cap Se ct or / Com p an y Logi st i cs Container Corp Gateway Distriparks M e di a DB Corp Dish TV Hathway Cable HT Media Jagran Prakashan Sun TV Zee Ent M e t al s / M i n i n g Coal India Hindalco Inds Hindustan Zinc JSW Steel NMDC Sesa Sterlite Tata Steel Oi l & Gas BPCL Cairn GAIL GSPL Gujarat Gas HPCL Indian Oil Indraprastha Gas Oil India ONGC Petronet LNG Reliance Inds 4,138 9,911 7,353 500 475 1,287 9,392 577 4,419 37,985 1,394 42,737 356 322 360 55 230 236 240 256 457 276 116 822 0 0 0 0 0 0 0 0 0 0 0 UR 385 360 69 270 UR UR 330 UR UR 140 19 (0) 25 17 29 21 34 26,493 3,324 8,451 3,247 9,274 9,053 5,801 261 100 124 834 145 190 371 0 26 0 0 0 0 0 278 115 148 850 160 178 360 7 15 19 2 10 (6) (3) 896 784 623 271 467 2,092 4,037 303 46 255 72 87 330 261 0 0 0 0 0 0 16 345 75 275 86 116 465 285 14 64 8 20 33 41 9 2,258 231 719 132 0 0 750 155 4 17 (U SD m n ) CM P V oI (Rs)* (Rs) FY 1 4 TP U p si de (Rs) 50 12 12 (1) 2 7 8 18 7 27 16 16 82 16 24 7 63 34 10 22 25 15 65 FDEP S (Rs) 51 12 16 (1) 1 7 7 18 9 27 12 17 89 16 22 29 57 35 8 29 26 9 71 58 15 19 1 11 9 8 21 10 29 13 20 112 17 28 34 66 35 7 30 29 10 93 14 14 11 33 26 155 10 11 18 34 12 10 5 8 10 9 8 52 11 5 10 6 10 10 8 13 P E (x) 14 14 11 49 19 444 10 12 18 28 9 10 6 7 9 9 9 13 10 6 10 7 8 10 12 12 12 12 9 22 16 38 23 8 11 16 25 8 9 6 6 7 9 7 11 8 5 10 8 8 9 11 9 2 .2 2.2 1.8 4 .9 5.4 4.4 1.1 3.0 4.7 6.4 2 .4 3.2 1.2 1.6 1.0 2.1 2.3 1.6 1 .5 1.3 1.9 1.1 3.1 2.4 1.9 1.5 P B (x) 2 .0 2.0 1.7 6 .0 4.8 3.5 0.9 2.6 4.3 9.5 2 .1 2.8 1.0 1.4 1.0 1.9 1.8 1.5 1 .4 1.1 1.7 0.9 2.2 2.0 1.7 1.3 1 .8 1.8 1.5 4 .6 4.2 3.0 0.8 2.3 3.9 6.7 1 .8 2.5 0.9 1.2 0.9 1.7 1.4 1.4 1 .2 0.9 1.5 0.9 1.8 1.7 1.6 1.2 EV /EB I TDA (x) 10 11 7 18 15 11 17 5 11 9 27 5 5 9 5 8 5 5 7 8 4 7 3 8 5 5 9 10 10 6 15 11 10 15 4 9 8 21 5 5 8 4 7 5 5 6 7 4 8 5 4 5 7 8 8 8 5 11 9 7 8 3 7 7 16 4 4 6 3 6 5 4 6 6 3 7 5 5 4 6 6 16 16 17 27 22 101 3 11 30 27 19 28 37 18 23 10 25 32 3 16 25 19 20 33 26 29 12 RoE (% ) 15 15 16 26 27 57 1 10 23 25 26 24 32 14 21 11 22 23 12 14 21 17 14 32 22 15 12 15 15 18 19 28 (59) 14 10 23 26 30 23 30 13 20 13 21 24 13 16 20 16 12 26 21 15 14 Di v Y i e l d (% ) 2 .0 1.6 5.3 1 .3 1.8 0.6 2.3 2.9 0.8 3 .8 5.3 1.4 2.5 1.4 4.8 1.5 3.2 1 .7 3.6 2.7 1.8 3.0 2.1 2.2 1.0 2 .0 1.7 5.3 1 .5 2.4 0.6 3.4 3.0 0.8 3 .7 5.1 1.3 2.8 1.4 4.8 1.3 2.7 1 .5 3.0 2.8 1.8 2.4 2.0 1.2 0.9 2 .2 1.9 5.3 1 .3 2.8 0.6 3.4 3.5 3 .9 5.3 1.3 3.2 1.4 4.8 1.7 3.2 1 .6 3.5 2.8 1.8 3.0 2.0 2.3 0.9
0 1,100
continued
30
14 FEB 2014
Strategy
ESSENCE OF THE WEEK

Mcap Se ct or / Com p an y P h ar m ace u t ical s Aurobindo Pharma Biocon Cadila Healthcare Cipla Divi's Lab Dr Reddys Lab GlaxoSmithKline Pharma Glenmark Pharma Jubilant Life Sciences Lupin Ranbaxy Lab Sun Pharma P owe r U t il it ie s Adani Power JSW Energy JP Power Ventures Jindal Steel & Power NHPC NTPC Power Grid Tata Power Re al Est at e DLF Godrej Properties Jaypee Infratech Oberoi Realty Phoenix Mills Prestige Estates Puravankara Projects Sobha Developers Sunteck Realty 4,142 501 416 977 494 758 223 428 244 144 156 19 185 212 134 58 271 241 0 0 0 0 0 0 0 0 0 168 204 27 264 286 177 109 330 391 16 31 45 43 35 32 86 22 62 1,521 1,181 641 3,543 3,584 17,547 8,013 2,821 33 45 14 235 18 132 95 74 0 0 0 0 0 0 0 16 21 60 16 UR 19 171 96 84 (36) 34 18 5 29 1 14 2,300 1,377 3,122 4,826 2,920 7,062 4,102 2,314 302 6,504 2,367 20,303 490 428 947 373 1,366 2,580 3,009 530 118 901 347 609 0 0 0 0 470 417 995 436 (4) (3) 5 17 11 16 (41) 18 39 8 1 15 (U SD m n ) CMP VoI (Rs)* (Rs) FY 1 4 TP U p side (Rs) 15 15 32 19 46 96 78 26 24 31 33 18 (9) 7 1 37 2 13 8 4 4 7 5 15 6 8 11 22 1 FDEP S (Rs) 39 21 40 18 63 130 75 29 21 40 6 27 (9) 7 0 28 2 12 8 2 4 8 3 9 12 10 8 21 49 43 26 50 22 76 150 89 39 27 49 70 30 (1) 5 3 27 2 12 10 4 8 10 4 23 27 12 13 31 54 30 33 28 30 20 30 27 39 20 5 29 10 35 11 7 10 6 11 10 12 15 32 34 22 4 12 36 16 5 12 243 P E (x) 24 12 21 24 21 22 20 40 18 6 22 61 23 13 6 68 8 10 11 12 25 27 38 21 6 21 18 13 8 13 5 19 11 16 19 17 18 17 34 14 4 19 5 20 10 9 4 9 10 11 10 16 13 17 15 5 8 8 11 5 9 4 7 .4 5.5 3.2 6.4 3.3 7.1 6.0 12.7 5.2 0.8 7.8 3.6 9.1 1 .4 1.8 1.2 0.6 1.0 0.8 1.4 1.7 1.6 1 .2 0.9 2.2 0.4 1.5 1.7 1.7 0.7 1.2 3.1 P B (x) 6 .2 3.9 2.9 5.3 2.9 6.0 4.6 11.9 4.1 0.7 5.9 4.2 7.8 1 .3 2.2 1.1 0.6 0.9 0.8 1.3 1.4 1.3 1 .1 0.8 1.4 0.4 1.4 1.6 1.6 0.6 1.2 2.1 4 .9 2.7 2.5 4.3 2.6 5.1 3.8 10.6 3.2 0.6 4.6 2.3 5.8 1 .2 2.3 1.0 0.5 0.8 0.8 1.2 1.3 1.3 1 .0 0.8 1.3 0.4 1.2 1.4 1.4 0.6 1.0 1.4 EV/EB I TDA (x) 20 20 16 19 14 22 17 29 15 5 18 8 24 11 47 6 13 7 9 9 11 9 26 19 16 7 8 21 12 5 7 366 16 10 13 17 14 17 12 32 12 6 14 21 17 9 15 5 14 8 8 9 10 8 13 14 16 6 14 9 11 5 7 4 13 9 11 13 12 14 10 26 9 5 12 4 14 9 8 5 6 6 8 10 10 7 9 12 12 5 6 5 8 4 6 4 27 17 12 23 18 26 25 34 28 16 30 40 29 11 (43) 19 7 18 7 14 15 8 6 3 10 12 13 5 12 14 11 1 RoE (% ) 29 36 15 24 15 30 26 30 25 12 30 6 37 8 (60) 18 1 12 8 11 14 5 7 2 8 7 7 9 12 9 9 52 30 28 16 25 16 31 24 33 26 15 28 61 33 11 (5) 12 14 10 8 11 14 6 10 5 9 8 16 19 14 13 12 39 Div Y ie l d (% ) 0 .7 0.3 1.8 0.8 0.6 1.1 0.6 1.7 0.4 2.6 0.4 0.7 0.4 3 .5 4.5 0.7 3.9 4.3 3.0 1.6 1 .8 2.0 5.4 0.7 1.0 0.8 5.9 1.3 0.1 0 .7 0.3 1.2 0.8 0.6 1.8 0.3 1.7 0.4 2.6 0.4 0.7 0.5 3 .1 4.7 0.5 3.7 3.8 2.6 1.0 1 .3 1.1 5.4 0.4 1.8 1.2 4.2 1.2 0.1 0 .8 0.4 1.2 0.8 0.7 2.2 1.0 1.7 0.4 2.6 0.4 0.7 0.5 3 .3 3.5 0.5 3.9 4.0 3.1 1.5 2 .2 2.3 5.4 1.0 2.6 1.5 7.6 1.8 0.1
0 1,516 0 3,000 0 1,773 0 0 0 0 0 625 164 971 350 700
continued
31
14 FEB 2014
Strategy
ESSENCE OF THE WEEK

Mcap Se ct or / Com p an y Re t ail Bata India Future Retail Page Industries Shopper's Stop Titan Inds Westlife Devlp Te l e com ** Bharti Airtel Bharti Infratel OnMobile Global Misce l l an e ou s Apollo Hospitals Coromandel Intl Cox & Kings EID Parry Finolex Industries Fortis Healthcare Godrej Industries Havells India Jain Irrigation MCX Ltd Supreme Ind Tube Invst UPL Whirlpool of India 2,044 914 306 337 348 725 1,456 1,548 422 402 878 534 1,278 371 912 200 139 119 174 97 270 770 59 490 429 178 185 182 0 0 0 0 0 0 0 0 0 0 0 0 0 0 960 250 UR 210 204 94 350 805 78 UR 419 217 231 203 5 25 76 17 (3) 30 5 32 (2) 22 25 12 19,640 5,230 59 305 172 32 0 0 0 UR 200 39 16 22 1,054 297 1,011 506 3,310 879 1,019 83 5,631 378 232 351 0 1,218 0 0 0 0 107 368 217 405 0 6,200 20 30 10 (3) (6) 15 (U SD m n ) CMP VoI (Rs)* (Rs) FY 1 4 TP U p side (Rs) 27 101 (1) 8 2 5 4 21 15 4 11 (12) 7 31 2 23 6 18 10 FDEP S (Rs) 31 (1) 136 0 8 1 8 0 24 14 (2) 13 (4) 10 38 3 24 6 20 9 37 0 173 4 8 3 9 5 29 22 6 16 1 15 49 5 30 8 26 13 47 38 56 28 158 32 32 9 43 13 32 16 40 25 24 19 31 10 18 P E (x) 313 33 41 3,350 29 387 27 23 393 38 14 13 26 20 20 18 30 9 19 53 28 178 33 105 27 130 19 19 7 31 9 19 11 81 19 16 11 14 21 7 14 1 3 .6 9.3 29.4 6.3 10.5 20.8 1 .9 1.9 0.4 4.6 2.6 1.6 3.0 0.9 2.9 6.7 1.2 6.2 2.8 1.8 3.8 P B (x) 9 .9 7.8 0.6 21.6 6.2 8.6 8.9 1 .8 1.8 0.4 4.2 1.8 1.7 2.7 1.0 2.7 5.3 1.2 5.2 2.7 1.5 3.2 8 .2 6.6 0.6 16.2 6.0 7.2 8.4 1 .7 1.7 0.4 3.8 1.6 1.7 2.5 1.0 2.4 4.2 1.1 4.2 2.5 1.3 2.6 EV/EB I TDA (x) 31 23 36 36 19 84 8 8 1 22 10 16 11 33 32 15 9 11 16 6 9 30 20 7 26 31 21 93 7 7 2 19 8 122 8 21 24 13 8 10 14 5 9 22 16 8 21 21 18 53 6 6 1 16 6 19 7 21 18 10 7 8 11 4 7 35 27 59 (2) 42 24 6 6 5 11 19 5 20 (12) 8 32 6 37 9 18 24 RoE (% ) 28 26 60 0 32 3 8 8 0 12 15 (3) 21 (4) 11 29 6 32 9 18 18 27 26 0 57 6 29 7 9 9 6 13 19 9 24 1 14 30 10 32 12 20 20 Div Y ie l d (% ) 0 .2 0.6 0.9 2 .0 2.0 4.5 0.6 2.2 4.8 3.2 0.6 1.0 1.6 1.1 1.3 0 .2 0.6 1.0 2 .7 2.6 5.4 0.6 1.9 2.4 3.7 0.7 1.1 2.0 1.1 1.6 0 .4 1.2 1.3 3 .2 3.2 6.0 0.6 2.8 4.8 4.6 0.9 1.3 2.2 1.7 1.9 -
Note 1) * EPS & BV are for core business while target price includes value of investments 2) ** Telecom company valuations include tower valuations Source: Axis Capital, Bloomberg
32
14 FEB 2014
Strategy
ESSENCE OF THE WEEK
Notes
33
14 FEB 2014
Strategy
ESSENCE OF THE WEEK
This document is provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. Nothing in this document should be construed as investment or financial advice, and nothing in this document should be construed as an advice to buy or sell or solicitation to buy or sell the securities of companies referred to in this document. The intent of this document is not in recommendary nature Each recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views expressed may not be suitable for all investors Axis Capital Limited has not independently verified all the information given in this document. Accordingly, no representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of the information and opinions contained in this document The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make modifications and alternations to this statement as may be required from time to time without any prior approval Axis Capital Limited, its affiliates, their directors and the employees may from time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a separate, distinct and independent of each other. The recipient should take this into account before interpreting the document This report has been prepared on the basis of information, which is already available in publicly accessible media or developed through analysis of Axis Capital Limited. The views expressed are those of analyst and the Company may or may not subscribe to all the views expressed therein This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. Neither this document nor any copy of it may be taken or transmitted into the United State (to U.S.Persons), Canada, or Japan or distributed, directly or indirectly, in the United States or Canada or distributed or redistributed in Japan or to any resident thereof. The distribution of this document in other jurisdictions may be restricted by law, and persons into whose possession this document comes should inform themselves about, and observe, any such restrictions Neither the Firm, not its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information. Copyright in this document vests exclusively with Axis Capital Limited.
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Axis Capital - Essence of The Week - 14 Feb 2014

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14 FEB 2014

Sensex: 20367 Nifty: 6048

ESSENCE OF THE WEEK

I n de x EP S Sensex EPS gwth % Nifty EPS gwth %

Headline inflation has cooled off significantly

WHAT'S IN IT FOR YOU?

Axis Capital Sales

Axis Capital SCREENER: An investment enabler just for you!!!

Click here to open file

ESSENCE OF THE WEEK

Axis Capital is available on Bloomberg (AXCP<Go>), Reuters.com, Firstcall.com and Factset.com

ESSENCE OF THE WEEK

CNX Midcap 100

Source: Axis Capital, Bloomberg

Sensex sectoral long term valuation snapshot: Fwd PE*

Source: Axis Capital, Bloomberg

Note: * Since April -2005

Sensex: Sector valuation based on Axis Capital numbers

Source: Bloomberg, Axis Capital

ESSENCE OF THE WEEK

A. Nifty-benchmarked Axis Capital Model Portfolio

Axis Capital is available on Bloomberg (AXCP<Go>), Reuters.com, Firstcall.com and Factset.com

ESSENCE OF THE WEEK

Axis Capital is available on Bloomberg (AXCP<Go>), Reuters.com, Firstcall.com and Factset.com

ESSENCE OF THE WEEK

B. Axis Capital: Earnings Review Q3FY14

Re su l t s e xp e ct at i on s : In-line EPS up/dngrade : PE up/dngrade :

TP up/dngrade : Re su l t s e xp e ct at i on s : In-line EPS up/dngrade : PE up/dngrade : ---

TP up/dngrade : -Re su l t s e xp e ct at i on s : Above EPS up/dngrade : PE up/dngrade :

TP up/dngrade : Re su l t s e xp e ct at i on s : Below EPS up/dngrade : PE up/dngrade :

Higher expenses towards R&D and front-end set impacted margins.

TP up/dngrade : Re su l t s e xp e ct at i on s : In-line EPS up/dngrade : PE up/dngrade : TP up/dngrade :

Re su l t s e xp e ct at i on s : In-line EPS up/dngrade : PE up/dngrade :

TP up/dngrade : Re su l t s e xp e ct at i on s : Above EPS up/dngrade : PE up/dngrade :

Re su l t s e xp e ct at i on s : Below EPS up/dngrade : PE up/dngrade : TP up/dngrade :

Axis Capital is available on Bloomberg (AXCP<Go>), Reuters.com, Firstcall.com and Factset.com

ESSENCE OF THE WEEK

Re su l t s e xp e ct at i on s : In-line EPS up/dngrade : PE up/dngrade : TP up/dngrade :

Re su l t s e xp e ct at i on s : In-line EPS up/dngrade : PE up/dngrade : TP up/dngrade :

Re su l t s e xp e ct at i on s : Above EPS up/dngrade : PE up/dngrade :

TP up/dngrade : Re su l t s e xp e ct at i on s : In-line EPS up/dngrade : PE up/dngrade : ---

TP up/dngrade : -Re su l t s e xp e ct at i on s : Above EPS up/dngrade : PE up/dngrade : TP up/dngrade :

Re su l t s e xp e ct at i on s : In-line EPS up/dngrade : PE up/dngrade :

TP up/dngrade : Re su l t s e xp e ct at i on s : Above EPS up/dngrade : PE up/dngrade : TP up/dngrade : ----

Re su l t s e xp e ct at i on s : In-line EPS up/dngrade : PE up/dngrade :

TP up/dngrade : Re su l t s e xp e ct at i on s : Below EPS up/dngrade : PE up/dngrade : TP up/dngrade :

Re su l t s e xp e ct at i on s : Above EPS up/dngrade : PE up/dngrade : TP up/dngrade :

Axis Capital is available on Bloomberg (AXCP<Go>), Reuters.com, Firstcall.com and Factset.com

ESSENCE OF THE WEEK

Re su l t s e xp e ct at i on s : In-line EPS up/dngrade : PE up/dngrade : TP up/dngrade :

Re su l t s e xp e ct at i on s : Above EPS up/dngrade : PE up/dngrade : ---

TP up/dngrade : -Re su l t s e xp e ct at i on s : Above EPS up/dngrade : PE up/dngrade : TP up/dngrade : ----

Re su l t s e xp e ct at i on s : In-line EPS up/dngrade : PE up/dngrade : TP up/dngrade :

Re su l t s e xp e ct at i on s : In-line EPS up/dngrade : PE up/dngrade :

TP up/dngrade : Re su l t s e xp e ct at i on s : In-line EPS up/dngrade : PE up/dngrade : TP up/dngrade :

Re su l t s e xp e ct at i on s : Above EPS up/dngrade : PB up/dngrade : TP up/dngrade : Re su l t s e xp e ct at i on s : EPS up/dngrade : PB up/dngrade : --

TP up/dngrade : Re su l t s e xp e ct at i on s : Above EPS up/dngrade : PE up/dngrade : TP up/dngrade :

Axis Capital is available on Bloomberg (AXCP<Go>), Reuters.com, Firstcall.com and Factset.com

ESSENCE OF THE WEEK

Re su l t s e xp e ct at i on s : In-line EPS up/dngrade : PE up/dngrade : TP up/dngrade :

Re su l t s e xp e ct at i on s : Above EPS up/dngrade : PE up/dngrade : TP up/dngrade :

Re su l t s e xp e ct at i on s : Below EPS up/dngrade : PE up/dngrade :

TP up/dngrade : -Re su l t s e xp e ct at i on s : In-line EPS up/dngrade : PE up/dngrade : TP up/dngrade :