Value Guide

Value
Guide
April 2015
For Private Circulation only
www.sharekhan.com
Just a breather
Intelligent Investing
Regular Features
Products & Services
Traders Edge
Stock Ideas
Stock Updates
Sector Updates
Viewpoints
Report Card
Earnings Guide
PMS
Top Equity Picks
Wealth Creator
MF Picks
Advisory
Technical view
Commodities and Currencies
F&O Insights
April 2015
Sharekhan ValueGuide
CONTENTS
EQUITY
From Sharekhans Desk

Just a breather
The Indian equity
market seems to
have
hit
a
roadblock after a
strong 18-month
rally. Growing
concerns related to
a slower than
expected revival in
corporate earnings and rising global uncertainty have resulted in
the benchmark indices losing close to 5% of the huge gains
amassed since the low of August 2013.
07
11
ProPrime - Top Equity

35
ProPrime - Diversified Equity 36
ProTech - Index
Futures Fund
37
ProTech - Trailing Stops
38
41
Top SIP Fund Picks
42
DERIVATIVES
26 View
27
ADVISORY DESK
MID Trades
39 Derivative Ideas
39
Crude Oil
Gold
Silver
Copper
28 Lead
29 Zinc
29
Nickel
29
29
TECHNICALS
Gold
Silver
Crude Oil
31 Copper
31 Zinc
31 Dhaanya Index
32
32
32
FUNDAMENTALS
USD-INR
EUR-INR
33
33
GBP-INR
JPY-INR
33
33
TECHNICALS
USD-INR
EUR-INR
34 GBP-INR
34 JPY-INR
34
34
4
I
29
30
CURRENCY
MUTUAL FUNDS DESK

Top MF Picks (equity)
TECHNICALS
Nifty
24
FUNDAMENTALS
RESEARCH BASED EQUITY PRODUCTS
PMS DESK
12 REGULAR FEATURES
13 Report Card
24 Earnings Guide
Viewpoint
COMMODITY
06
Top Picks Basket

Wealth Creator Portfolio
FUNDAMENTALS
Stock Ideas
Stock Updates
Sector Updates
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necessarily reflect those of SHAREKHAN. Further, no part of the analysts compensation was, is or will be, directly or indirectly related to specific recommendations or views expressed in this document.
disclaimer
Compliance Officer: Ms. Namita Amod Godbole; Tel: 022-6115000; e-mail: compliance@sharekhan.com Contact: myaccount@sharekhan.com
April 2015
REPORT CARD
EQUITY
FUNDAMENTALS
STOCK IDEAS STANDING (AS ON APRIL 01, 2015)

COMPANY
CURRENT PRICE AS ON PRICE

RECO
01-APR-15
TARGET
52 WEEK
HIGH
LOW
ABSOLUTE PERFORMANCE
1M
3M
6M
12M
1M
RELATIVE TO SENSEX
3M
6M
12M
AUTOMOBILES
Apollo Tyres
Ashok Leyland
Bajaj Auto
Gabriel Industries
Hero MotoCorp NEW
M&M
Maruti Suzuki
Rico Auto Industries
TVS Motor NEW
BSE Auto Index
BANKS & FINANCE
Allahabad Bank
Andhra Bank
Axis (UTI) Bank
Bajaj Finance
Bajaj Finserv
Bank of Baroda
Bank of India
Capital First
Corp Bank
Federal Bank
HDFC
HDFC Bank
ICICI Bank
IDBI Bank
LIC Housing Finance
PTC India Financial Services
Punjab National Bank
SBI
Union Bank of India
Yes Bank
BSE Bank Index
CONSUMER GOODS
GSK Consumers
Godrej Consumer Products
Hindustan Unilever
ITC
Jyothy Laboratories
Marico
Zydus Wellness
BSE FMCG Index
IT / IT SERVICES
CMC
Firstsource Solutions
HCL Technologies
Infosys
Persistent Systems
Tata Consultancy Services
Wipro
BSE IT Index
CAPITAL GOODS / POWER
Bharat Heavy Electricals
CESC
Crompton Greaves
Finolex Cables
Greaves Cotton
Kalpataru Power Transmission
PTC India
Skipper NEW
Thermax
W
NE
Va Tech Wabag
V-Guard Industries
April 2015
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Hold
174.6
73.7
2020.9
89.5
2653.0
1197.2
3646.0
44.3
253.5
19383.7
260.0
76.0
2400.0
110.0
3400.0
1425.0
4250.0
55.0
270.0
249.8
150.9
76.1
21.7
2695.0 1840.1
106.8
29.4
3271.8 2110.0
1433.7
964.3
3789.7 1866.0
51.5
10.4
322.3
84.0
20386.4 13146.7
-3.9
4.9
-6.4
0.2
-1.7
-8.1
2.1
9.7
-5.2
-3.6
-24.6
42.6
-17.1
-3.7
-15.0
-3.8
11.0
-2.8
-1.5
3.4
-17.4
78.1
-14.2
8.2
-7.0
-12.7
20.7
27.6
16.0
8.5
5.8
209.9
-1.1
194.8
20.3
22.6
88.3
309.9
174.4
46.7
0.8
10.0
-1.8
5.1
3.1
-3.6
7.1
15.1
-0.6
1.1
-26.0
40.0
-18.6
-5.5
-16.6
-5.5
9.0
-4.6
-3.3
1.5
-21.6
69.1
-18.6
2.8
-11.7
-17.1
14.6
21.2
10.2
3.1
-16.5
144.4
-22.0
132.5
-5.1
-3.4
48.5
223.2
116.4
15.7
Buy
Hold
Buy
Buy
Buy
Buy
Buy
Buy
Hold
Buy
Hold
Buy
Buy
Hold
Buy
Buy
Hold
Buy
Buy
Buy
101.3
80.4
566.4
4123.0
1430.9
167.5
203.8
418.0
53.6
132.7
1325.1
1027.9
320.5
72.4
442.2
57.4
150.4
270.8
160.9
838.8
21200.0
135.0
104.0
610.0
4305.3
1544.0
212.0
275.0
484.7
78.0
170.1
1359.6
1260.0
424.0
82.5
558.1
89.6
203.0
378.0
268.0
930.0
150.0
87.8
110.0
60.5
655.4
270.7
4492.4 1661.6
1575.0
735.0
228.9
142.8
357.0
191.5
440.0
162.7
83.6
51.6
154.4
86.8
1402.3
810.0
1109.3
707.3
393.4
238.4
116.5
58.5
509.4
229.8
73.2
14.0
231.5
142.5
336.0
186.7
259.7
132.3
910.0
404.0
23903.8 14221.9
-8.2
-7.5
-8.6
-6.3
0.5
-11.7
-16.4
-5.1
-15.8
-7.5
-1.3
-4.5
-8.9
-4.0
-8.6
-8.8
-12.8
-11.5
-8.7
-5.4
-7.6
-24.5
-16.5
11.5
17.9
8.2
-24.6
-35.1
8.8
-21.6
-13.0
16.0
7.5
-10.6
-2.9
0.4
-20.7
-34.1
-14.4
-34.6
5.7
-2.8
0.9
21.3
48.3
51.0
25.2
-9.4
-15.6
24.5
-16.4
4.9
24.9
17.2
10.0
16.7
34.4
22.8
-18.6
9.2
-17.1
46.0
18.4
10.2
23.5
93.8
131.1
79.8
14.8
-14.3
125.3
-4.5
40.0
51.1
37.7
28.7
9.0
88.2
298.6
-2.9
40.1
14.5
99.9
44.6
-3.7
-3.1
-4.1
-1.8
5.4
-7.4
-12.3
-0.5
-11.7
-3.0
3.5
0.1
-4.4
0.7
-4.2
-4.3
-8.5
-7.2
-4.3
-0.8
-3.1
-25.9
-18.0
9.5
15.8
6.2
-26.0
-36.3
6.8
-23.0
-14.5
13.9
5.5
-12.3
-4.7
-1.5
-22.1
-35.3
-15.9
-35.8
3.7
-4.5
-4.3
15.1
40.8
43.3
18.9
-14.0
-19.9
18.2
-20.6
-0.4
18.5
11.3
4.5
10.8
27.6
16.6
-22.7
3.7
-21.3
38.6
12.5
-13.1
-2.6
52.8
82.2
41.8
-9.5
-32.4
77.7
-24.7
10.4
19.2
8.6
1.5
-14.0
48.4
214.4
-23.5
10.4
-9.7
57.7
14.0
Hold
Hold
Hold
Hold
Buy
Buy
Hold
6248.4
1072.0
882.0
330.7
270.2
386.5
1016.9
7850.6
**
1175.0
925.0
380.0
320.0
430.0
1025.0
6415.0
1227.2
981.0
410.0
314.9
408.9
1130.3
8812.2
4105.0
740.0
550.3
312.4
171.3
200.1
485.0
6539.0
8.6
-8.3
-4.0
-9.8
-2.4
8.4
20.1
-5.5
7.4
7.1
14.9
-11.6
2.8
19.1
24.7
0.1
11.8
5.5
18.0
-12.0
11.4
25.3
58.8
2.0
47.9
21.9
47.2
-6.0
30.4
85.8
107.1
13.2
13.9
-3.8
0.7
-5.4
2.4
13.7
26.0
-0.9
5.5
5.1
12.8
-13.2
0.9
17.0
22.4
-1.7
6.1
0.2
12.1
-16.4
5.8
19.0
50.7
-3.1
16.6
-3.9
16.1
-25.9
2.8
46.5
63.3
-10.7
Hold
Buy
Buy
Buy
Buy
Buy
Hold
1905.0
31.3
938.9
2164.1
750.8
2540.2
635.6
11258.4
1925.0
43.0
1025.0
2540.0
940.0
3100.0
715.0
2407.0
44.4
1058.5
2336.0
960.8
2839.7
677.6
12196.1
1352.0
25.3
623.2
1440.0
440.0
1968.8
474.7
8155.2
-5.3
-3.3
-3.0
-3.4
-21.2
-4.5
-4.6
-4.7
-1.1
-11.1
23.3
12.5
-13.6
0.0
14.2
7.9
-13.9
-23.4
15.3
19.3
2.3
-6.3
6.3
7.3
39.7
22.2
43.7
38.2
37.4
23.5
17.8
33.0
-0.7
1.4
1.8
1.3
-17.4
0.1
0.0
-0.1
-2.9
-12.7
21.1
10.4
-15.2
-1.8
12.1
6.0
-18.2
-27.2
9.5
13.3
-2.9
-11.0
0.9
1.9
10.1
-3.7
13.3
9.0
8.3
-2.6
-7.1
4.9
Hold
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Hold
Buy
Hold
230.8
611.4
165.1
290.1
144.1
227.0
79.4
162.3
1085.0
828.5
915.9
270.0
730.0
230.0
335.0
165.0
280.0
120.0
185.0
1300.0
950.0
1160.0
300.0
828.1
231.0
306.5
159.4
254.9
104.9
200.0
1318.0
972.5
1198.0
172.7
440.6
145.3
107.3
75.2
95.9
65.4
32.0
710.1
365.2
457.0
-10.2
1.7
-6.1
6.4
-2.1
-7.0
-7.0
-18.3
-7.7
-6.3
-2.9
-11.1
-9.9
-11.5
8.5
-3.4
1.7
-14.4
36.9
0.0
11.2
-21.8
17.7
-19.5
-17.1
33.4
9.7
42.2
-5.2
55.8
16.4
-2.9
3.5
21.1
22.0
4.2
159.1
83.3
132.1
21.9
43.8
110.6
96.9
-5.9
6.6
-1.6
11.6
2.7
-2.5
-2.4
-14.3
-3.2
-1.8
1.8
-12.7
-11.6
-13.1
6.5
-5.1
-0.1
-15.9
34.4
-1.8
9.2
-23.2
11.7
-23.6
-21.3
26.7
4.1
35.0
-10.0
47.9
10.5
-7.8
-1.8
-4.5
-3.8
-17.8
104.3
44.6
83.0
-3.9
13.4
66.1
55.2
EQUITY
REPORT CARD
FUNDAMENTALS
STOCK IDEAS STANDING (AS ON APRIL 01, 2015)

COMPANY
Triveni Turbines NEW
BSE Power Index
BSE Capital Goods Index
INFRASTRUCTURE / REAL ESTATE
Gayatri Projects
ITNL
IRB Infra
Jaiprakash Associates
Larsen & Toubro
Pratibha Industries
Punj Lloyd
CNX Infra Index
BSE Real estate Index
OIL & GAS
Oil India
Reliance Ind
Selan Exploration Technology
BSE Oil and Gas Index
PHARMACEUTICALS
Aurobindo Pharma
Cipla
Cadila Healthcare
Divi's Labs
Glenmark Pharmaceuticals
JB Chemicals
Ipca Laboratories
Lupin
Sun Pharmaceutical Industries
Torrent Pharma
BSE Health Care Index
BUILDING MATERIALS
Grasim
The Ramco Cements
Shree Cement
UltraTech Cement
DISCRETIONARY CONSUMPTION
Century Plyboards (India) NEW
Cox and Kings NEW
Eros International Media
KDDL NEW
KKCL
Raymond
Relaxo Footwear
Speciality Restaurants
Sun TV Network NEW
Thomas Cook India
Zee Entertainment
DIVERSIFIED / MISCELLANEOUS
Aditya Birla Nuvo
Bajaj Holdings
Bharti Airtel
Bharat Electronics
Gateway Distriparks
Max India
Ratnamani Metals and Tubes
Supreme Industries
Technocraft Industries
W
UPL
NE
BSE500 Index
CNX500 INDEX
CNXMCAP INDEX
CURRENT PRICE AS ON PRICE

52 WEEK
RECO
01-APR-15
TARGET
HIGH
LOW
Hold
134.9
145.0
151.8
67.3
2132.6
2408.1 1664.7
17401.4
18796.8 11782.8
RELATIVE TO SENSEX
1M
3M
6M
12M
12.6
12.6
34.8
43.4
-1.6
0.1
2.4
-1.6
2.0
10.0
15.1
14.5
Hold
Buy
Buy
Hold
Buy
Buy
Reduce
152.0
197.5
244.9
25.0
1731.0
42.6
30.3
3275.6
1680.9
180.0
284.0
320.0
26.0
1840.0
65.0
30.0
192.0
257.5
289.7
89.9
1893.8
66.7
60.9
3524.1
2272.7
56.2
116.4
101.7
23.1
1242.0
26.0
27.8
2564.3
1357.5
-2.9
-8.7
-4.9
-2.2
-2.7
-4.6
-21.2
-1.7
-8.6
-6.2
3.4
-7.5
-1.2
15.1
-4.5
-20.5
7.0
7.0
-13.0
10.7
5.7
-6.2
17.9
-15.6
-16.2
7.7
5.3
174.2
70.8
138.3
-53.8
36.5
59.1
4.8
25.5
14.3
1.8
-4.2
-0.3
2.6
2.0
0.1
-17.4
3.1
-4.2
-7.9
1.5
-9.2
-3.0
13.0
-6.2
-22.0
5.1
5.1
-17.4
5.1
0.3
-11.0
12.0
-19.9
-20.5
2.2
-0.1
116.2
34.7
87.9
-63.6
7.7
25.5
-17.4
-1.1
-9.9
Buy
Buy
Buy
459.8
832.6
237.0
9342.7
625.0
1045.0
550.0
670.0
1145.3
677.4
12132.0
450.0
796.5
215.0
9043.6
-6.6
-4.5
-17.3
-3.5
-19.4
-7.3
-34.9
-5.6
-23.7
-12.7
-55.4
-12.6
-3.9
-10.5
-55.9
-0.1
-2.1
0.1
-13.3
1.2
-20.9
-9.0
-36.0
-7.3
-27.5
-17.1
-57.6
-17.0
-24.3
-29.4
-65.2
-21.2
Buy
Buy
Buy
Hold
Buy
Hold
Hold
Buy
Buy
Buy
1240.5
707.2
1787.0
1803.2
786.9
206.5
645.0
2032.7
1062.8
1197.7
17568.5
1272.0
843.0
2060.0
1860.0
915.0
220.0
**
2300.0
**
1500.0
1279.8
752.9
1794.0
1888.1
879.7
257.9
899.3
2045.0
1075.0
1231.7
17651.1
509.0
367.5
872.1
1210.0
507.1
128.3
591.3
902.6
570.1
520.3
9881.4
12.8
4.5
12.6
3.7
-0.5
5.9
-3.2
15.0
12.4
7.8
9.0
7.8
13.7
8.9
3.6
2.1
-0.8
-13.1
40.6
23.9
3.0
17.7
26.4
13.7
31.7
-0.8
8.9
-11.2
-19.7
43.9
19.4
33.5
20.7
140.3
87.0
71.4
32.5
39.6
57.8
-24.5
115.8
78.5
123.6
73.0
18.2
9.5
18.1
8.8
4.4
11.0
1.5
20.6
17.9
13.1
14.3
5.8
11.7
6.9
1.7
0.2
-2.6
-14.6
38.1
21.6
1.1
15.5
20.0
7.9
25.1
-5.8
3.4
-15.7
-23.8
36.6
13.4
26.8
14.6
89.5
47.4
35.1
4.5
10.1
24.4
-40.5
70.2
40.7
76.3
36.4
Buy
Buy
Hold
Buy
3659.0
309.7
10930.0
2879.6
4475.0
420.0
11500.0
3440.0
4024.9
380.0
11786.0
3399.0
2583.1
202.1
5450.0
1950.5
-3.5
-8.9
2.5
-8.2
7.0
-11.5
14.8
7.5
2.1
-5.2
28.5
9.4
26.2
42.2
90.9
32.1
1.2
-4.5
7.5
-3.8
5.1
-13.1
12.7
5.6
-3.1
-10.0
22.0
3.8
-0.5
12.2
50.5
4.1
Buy
Buy
Hold
Buy
Hold
Hold
Buy
Hold
Hold
Buy
Buy
243.7
317.7
420.9
321.0
2125.0
451.5
663.9
178.0
451.3
210.1
341.5
290.0
395.0
452.0
350.0
**
560.0
745.0
205.0
467.0
250.0
400.0
262.0
368.0
484.0
379.5
2180.0
579.5
764.0
215.1
488.0
223.3
402.4
26.2
145.0
158.0
69.0
1085.0
290.6
285.2
127.2
298.6
87.2
259.0
-0.1
1.2
1.9
-4.6
16.5
-12.1
-9.7
-2.4
7.9
5.2
-1.4
47.7
9.7
8.6
24.4
9.6
-12.0
16.0
-5.8
17.8
29.7
-10.2
101.9
2.6
51.9
85.3
16.2
1.4
36.4
20.9
33.6
44.6
8.8
768.8
103.2
137.0
325.0
87.1
47.3
121.7
24.8
13.9
134.2
26.8
4.7
6.2
6.9
0.0
22.2
-7.9
-5.3
2.4
13.1
10.3
3.4
45.0
7.8
6.6
22.1
7.6
-13.6
13.9
-7.5
15.6
27.3
-11.9
91.7
-2.6
44.2
75.9
10.3
-3.7
29.5
14.8
26.9
37.3
3.3
585.1
60.2
86.9
235.1
47.5
16.1
74.9
-1.6
-10.2
84.7
0.0
Buy
Buy
Hold
Buy
Buy
Buy
Buy
Hold
Buy
Buy
1667.7
1300.0
402.7
3512.5
422.6
446.4
695.5
720.7
225.0
439.8
11138.3
7027.8
13109.1
2000.0
1815.0
450.0
4020.0
465.0
518.0
815.0
750.0
270.0
500.0
1916.2
1638.0
420.0
4144.9
459.4
522.0
806.3
742.0
253.0
458.0
11764.8
7428.1
13521.7
1060.0
988.6
304.0
1035.1
156.6
198.0
225.0
425.0
85.1
184.0
8259.0
5198.5
8541.6
-3.3
-7.4
10.4
-10.2
-0.8
-6.3
-6.8
7.9
-7.5
6.3
-3.4
-3.5
-0.8
-1.5
-7.7
11.5
13.9
16.8
8.9
-1.0
19.7
30.3
27.6
3.2
3.2
3.5
2.7
-6.9
-2.9
68.7
60.2
36.2
61.1
9.5
27.0
30.0
8.9
9.1
14.1
53.2
29.3
24.9
194.8
156.5
110.5
186.2
43.6
159.4
142.7
35.1
35.4
53.1
1.4
-2.9
15.8
-5.8
4.0
-1.8
-2.3
13.2
-3.0
11.5
1.3
1.2
4.0
-3.3
-9.3
9.5
11.8
14.6
6.9
-2.8
17.5
27.9
25.3
1.4
1.3
1.7
-2.5
-11.6
-7.9
60.1
52.1
29.3
52.9
4.0
20.6
23.4
3.4
3.6
8.4
20.8
2.0
-1.5
132.5
102.2
66.0
125.7
13.3
104.6
91.4
6.5
6.7
20.8
In Top Picks basket
ABSOLUTE PERFORMANCE
1M
3M
6M
12M
7.4
14.7
42.0
81.8
-6.2
1.9
7.8
24.8
-2.7
12.1
21.3
45.2
** Price target under review
April 2015
from sharekhans desk
FROM SHAREKHANS DESK
April 2015
Just a breather
The Indian equity market seems to have hit a roadblock after a strong 18-month rally.
Growing concerns related to a slower than expected revival in corporate earnings and
rising global uncertainty have resulted in the benchmark indices losing close to 5% of the
huge gains amassed since the low of August 2013.
Apart from fundamental factors, the pull-back can be partially attributed to the March
effect as liquidity tightens up and market participants tend to unwind leveraged positions
in the last month of a financial year. The loss of the ready-to-reap Rabi crop caused by
unseasonal rains in several regions added to already weak market sentiment. Fortunately,
we see most of the factors as temporary and the situation seems to be more of a pause in the
multi-year rally in the Indian stock market.
The meltdown in the commodity complex, especially crude oil and energy, is a quite
favourable development from the perspective of an import-dependent India. It has reduced
the pressure on fiscal health and left enough legroom for the government to increase allocation
for public spending on infrastructure development in the next fiscal. Unfortunately, in the
near term the commodity prices (weak crude oil and base metal prices) and unexpectedly
high volatility in currency movements would adversely affect the financial performance of
some of the index heavyweights, such as Reliance Industries, Oil and Natural Gas
Corporation, GAIL, Sesa Sterlite and Hindalco Industries as well as information technology
stocks among others. The corporate earnings shall be further depressed by expectations of
higher provisioning in banks (essentially public sector banks) as the provisioning norms for
restructured assets get tighter from April 1, 2015. Consequently, weakness in corporate
earnings could persist in Q4FY2015 also.
On the brighter side, the macros bode well for corporates in terms of easing interest rates,
lower raw material cost and initial signs of revival in urban discretionary consumption.
The increased public spending by the central and state governments should also add to
growth in labour intensive and core sectors like cement and construction. Thus, the corporate
earnings are likely to grow at mid double digits in FY2016.
Globally, the Yemen conflict has again highlighted the fragile situation in the Middle East.
However, the uncertainty related to a hike of interest rates in the USA remains a key drag
for equities globally. The event whenever it takes place would mark a change in the monetary
stance of the USA after close to six years of a nearly zero interest rate regime. Given the size
and importance of the US economy and the dollar-based currency status, the run-up to the
event would cause volatility in currencies, equities and liquidity flows globally. But going
by the experience of tapering off of the USAs quantitative easing, stock markets tend to
adjust sooner than later to a known and anticipated event.
From a retail investors perspective, a possible sideways movement or consolidation would
provide the much awaited window to increase the exposure to equities or for that matter to
enter the equity market (for those who are still sitting on the sidelines and have completely
missed the bus). You could choose your picks from our basket of over 150 well-researched
quality stocks (under our active and soft coverage) or follow some of our model portfolios
like Top Picks (which is revised on a monthly basis with the aim of consistently beating the
Sensex, Nifty and CNX Mid-cap Index) and Wealth Creator (for investors willing to take
a view of two to three years and looking at meaningful wealth creation).
6
EQUITY
SHAREKHAN TOP PICKS
FUNDAMENTALS
SHAREKHAN TOP PICKS
Sharekhan Top Picks

After a strong rally, the Indian equity market shaved off some of
the gains in March this year. The correction was largely led by
global volatility along with some domestic concerns like unseasonal
rains spoiling ready-to-reap Rabi crop, strong opposition to
amendments to the land acquisition bill and expectations of another
quarter of weak corporate results ahead.
a number of issues limiting the possible upside in the near term. On

the other hand, we are enthused by the successful launch of a new
general entertainment channel by the Zee group and thus see the
recent correction in the Zee Entertainment Enterprises stock as a
buying opportunity.
In terms of performance, we continue to beat the benchmark indices,
Sensex and Nifty (which have declined by 5.5% each since the last
revision in the Top Picks basket) with a relatively lower decline of
3.5% in the Top Picks in the same period. The CNX Mid-cap Index
also performed better than the Sensex and the Nifty with a decline
of 3.2% since our last revision in the Top Picks basket.
Consequently, Top Picks has consistently and comprehensively
outperformed the benchmark indices across various time periods
with revisions and changes carried out just once at the beginning of
the month.
However, we continue to believe that most of the issues are

temporary and the long-term uptrend in the market stays intact,
though there could be a consolidation phase in the immediate term.
Accordingly, we are realigning our Top Picks portfolio to increase
its exposure to the pharmaceutical sector by introducing Cadila
Healthcare in place of Bharat Electronics.
Another change includes Zee Entertainment Enterprises, which is
replacing Reliance Industries. Though Reliance Industries has
corrected significantly and is attractive at the current levels, we see
CONSISTENT OUTPERFORMANCE (ABSOLUTE RETURNS; NOT ANNUALISED)
1 month
3 months
Top Picks
Sensex
Nifty
CNX Mid-cap
-3.5
-5.5
-5.6
-3.2
11.8
1.7
2.6
3.3
ABSOLUTE RETURNS (TOP PICKS VS BENCHMARK INDICES)

Sharekhan
(Top Picks)
(%)
Sensex
Nifty
11.8
1.7
2.6
3.3
CY2014
63.6
29.9
30.9
55.1
CY2013
12.4
8.5
6.4
-5.6
CY2012
35.1
26.2
29.0
36.0
CY2011
-20.5
-21.2
-21.7
-25.0
CY2010
16.8
11.5
12.9
11.5
CY2009
116.1
76.1
72.0
114.0
Since inception
(Jan 2009)
413.5
178.7
178.5
258.9
NAME
Apollo Tyres
Ashok Leyland
Cadila Healthcare
Gateway Distriparks
CMP*
(RS)
FY14
PER
FY15E
168
8.1
73
NA
1,740
44.4
36.1
1 year
3 years
5 years
27.9
4.9
6.6
13.9
66.8
24.7
26.2
51.0
151.8
60.8
61.3
70.3
134.1
57.1
59.7
68.5
CONSTANTLY BEATING NIFTY AND SENSEX (CUMULATIVE RETURNS) SINCE

APRIL 2009
CNX
MIDCAP
CY2015
6 months
FY16E
FY14
ROE (%)
FY15E
FY16E
PRICE
TARGET (RS)#
UPSIDE
(%)
7.6
7.1
26.4
98.9
24.2
NA
21.9
19.4
260
55
4.3
15.1
**
21.8
21.9
21.4
26.7
2,060
18
412
31.5
24.1
21.6
17.5
21.3
22.1
465
13
HDFC Bank
1,023
28.9
24.9
20.4
21.3
19.8
19.2
1,260
23
Lupin
2,000
48.8
37.7
31.4
26.5
26.4
24.4
2,300
15
Maruti Suzuki
3,699
40.2
31.5
22.6
14.1
15.8
18.0
4,250
15
55
10.9
10.6
7.3
16.1
14.8
19.3
90
63
2,543
26.0
23.2
20.5
35.2
31.6
29.3
3,100
22
209
83.6
46.7
41.8
12.2
13.3
16.3
250
20
Yes Bank
814
18.1
17.1
14.2
25.0
21.0
18.9
930
14
Zee Entertainment
342
36.7
32.9
30.0
20.6
19.8
19.5
400
17
PTC India Financial Services

TCS
Thomas Cook
*CMP as on March 31, 2015 # Price target for next 6-12 months ** Under review
April 2015
EQUITY
NAME
FUNDAMENTALS
CMP
(RS)
APOLLO TYRES
168
FY14
8.1
SHAREKHAN TOP PICKS

PER
FY15E
7.6
FY16E
FY14
ROE (%)
FY15E
FY16E
7.1
26.4
21.9
19.4
PRICE
TARGET (RS)
260
UPSIDE
(%)
55
Remarks: Apollo Tyres is a leading player in the domestic passenger car and truck tyre segments. The tyre industrys volume has been subdued,
given the weak macro environment. We expect the demand to improve in FY2016 with a pick-up in the economy and higher utilisation
of commercial vehicles (CV).
The profitability of the tyre companies has improved, given the soft natural rubber prices. Additionally, a slide in crude oil prices and its
impact on crude derivatives, such as synthetic rubber and carbon black, have led to expansion of the gross profit margin (GPM). This
benefit is expected to continue in FY2016 and margins are expected to remain elevated.
The European operations too have reported a strong performance with a strong volume growth and high profitability. The company will
be investing EUR200 million for setting up a greenfield facility in Eastern Europe which will start production in Q4FY2017 and cater to
the long-term growth in Europe. Additionally, it will invest Rs2,000 crore in its Indian operations for capacity expansion.
We like the stock for its consistent performance and long-term growth prospects (expansion in Europe and Chennai) and have a Buy
recommendation on it.
ASHOK LEYLAND
73
NA
98.9
24.2
NA
4.3
15.1
**
Remarks: Ashok Leyland Ltd (ALL) is the second largest CV manufacturer in India with a market share of 25% in the heavy truck segment and
an even higher share of about 40% in the bus segment. Given the scale of economic slowdown, the segment had halved over FY201214. With the pick-up in the economy a sharp recovery is expected in the segment.
ALL entered the light CV (LCV) segment with the launch of the Dost in joint venture (JV) with Nissan. The JV has additionally launched
the Partner LCV and Stile van. Going forward, we expect ALL to gain a foothold in the LCV segment and expand its market share.
The company is also concentrating on verticals other than CVs to de-risk its business model. It has a strong presence in exports and
continues to expand in newer geographies. The diesel genset business is also showing signs of a recovery after a tepid performance
in FY2013-14. Additionally, ALLs defence business is expected to get a leg-up due to the governments focus on indigenous manufacture
of defence products and FDI in the sector.
ALLs operating profit margin (OPM) has recovered from the lows on the back of a reduction in discounts and price hikes taken by the
company. Its margins are expected to expand further, given the operating leverage. ALL has raised Rs660 crore via a qualified
institutional placement and sold non-core assets to pare its debts. With no significant capital expenditure (capex) planned, we expect
the balance sheet to get de-leveraged and return ratios to improve.
CADILA HEALTHCARE
1,740
44.4
36.1
21.8
21.9
21.4
26.7
2,060
18
Remarks: Cadila Healthcare is set to enter a high-growth trajectory, thanks to its aggressive product filings in the USA and Latin America, a
recovery in its joint venture business and the launch of niche products in the Indian market including the generic version of Gilead
Sciences' Hepatitis C drug, Sofosbuvir, in India under the brand name SoviHep.
The US market is witnessing a surge in demand for generic products since ObamaCare was implemented to expand the insurance
coverage on US citizens without inflating the healthcare costs. Cadila Healthcare, which generates close to 36% of its total revenues
from the US market, is likely to be among the key beneficiaries of a favourable business environment in the generic space. The
company has over 145 abbreviated new drug applications (ANDAs) pending approval out of 230 ANDAs filed with the US Food and
Drug Administration (USFDA) that will unfold over the next two to three years. We expect the company to see a revenue compounded
annual growth rate (CAGR) of 34% over FY2014-17 in the US market.
We expect the company to record a overall revenue CAGR of 20% over FY2014-17 from the base business and the OPM of the
company will see a sustained expansion over the next two to three years, mainly on the back of stronger traction in the branded
business in India and Latin America, a better generic pricing scenario in the USA and optimisation of capabilities in the joint venture
business. We expect the OPM to expand from 16.6% in FY2014 to 23% in FY2017. In view of better traction in the generic business in
the US market, the potential from the launch of Hepatitis-C drug in India and the product ramp-up in the other key markets including
business from joint ventures. We recommend a Buy with a price target of Rs2,060.
GATEWAY DISTRIPARKS
412
31.5
24.1
21.6
17.5
21.3
22.1
465
13
Remarks: An improvement in exim trade along with a rise in port traffic at the major ports signals an improving business environment for the
logistic companies. Gateway Distriparks being a major player in the container freight station (CFS) and rail logistic segments is
expected to witness an improvement in the volumes of its CFS and rail divisions going ahead.
The improving trend in the rail freight and cold chain subsidiaries would sustain on account of the recent efforts to control costs and
improve utilisation.
We continue to have faith in the companys long-term growth story based on the expansion of each of its three business segments, ie
CFS, rail transportation and cold storage infrastructure segments. The coming on stream of the Faridabad facility and the strong
operational performance will further enhance the performance of the rail operations. Also, the expected turnaround in the global trade
should have a positive impact on the CFS operations.
Given the improvement in the profitability led by lower non-performing asset (NPA) provisions, a healthy growth in the core income and
improved operating metrics, we recommend a Buy with a price target of Rs465.
April 2015
EQUITY
SHAREKHAN TOP PICKS

NAME
CMP
(RS)
HDFC BANK
1,023
FY14
28.9
PER
FY15E
24.9
FUNDAMENTALS
FY16E
FY14
ROE (%)
FY15E
FY16E
20.4
21.3
19.8
19.2
PRICE
TARGET (RS)
UPSIDE
(%)
1,260
23
Remarks: HDFC Bank has a strong presence in the retail segment (~50% of the book) and therefore has been able to maintain a strong growth
in loans even in tough times. Going ahead, with a recovery in the economy and improving sentiment in consumer sectors, the loan
growth will improve further which will drive the profitability.
With a current account and savings account (CASA) ratio of 41% and a high proportion of retail deposits, the cost of funds remains
among the lowest in the system and helps to maintain a higher net interest margin (NIM). In addition, the banks loan growth is led by
high yielding products such as personal loans, vehicle loans, credit card, mortgages etc which has a positive impact on the NIM.
The bank maintains impeccable asset quality and its NPA ratios are among the lowest in the system. Given the banks stringent credit
appraisal procedures and insignificant exposure to troubled sectors, it is expected to maintain robust asset quality.
HDFC Bank is adequately capitalised and further capital raising of Rs10,000 crore will boost its capital ratios and help to tap the growth
opportunities going ahead. The bank is likely to maintain healthy return on equity (RoE) of 19-20% and return on asset (RoA) of 1.8%
on a sustainable basis. Therefore, we expect the valuation premium that it enjoys compared with the other private banks to expand
further.
LUPIN
2,000
48.8
37.7
31.4
26.5
26.4
24.4
2,300
15
Remarks: A vast geographical presence, focus on niche segments like oral contraceptives, ophthalmic products, para-IV filings and branded
business in the USA are the key elements of growth for Lupin. The company has remarkably improved its brand equity in the domestic
and international generic markets to occupy a significant position in the branded formulation business. Its inorganic growth strategy
has seen a stupendous success in the past. The company is now debt-free and that enhances the scope for inorganic initiatives.
The management has given a guidance to sustain the OPM at 27% to 28% in FY2015 (vs 25% in FY2014) which especially impress
us. Lupin has recently forged an alliance with Merck Serono to out-licence select drugs and signed an agreement with Salix Pharma
to in-licence products for the Canadian market. These initiatives will support growth in the long term.
Lupin is expected to see stronger traction in the US business on the back of the key generic launches in recent months and a strong
pipeline in the US generic business (over 95 ANDAs pending approvals including 86 first-to-file drugs) to ensure the future growth. The
key products that are going to provide a lucrative generic opportunity for the company include Nexium (market size of $2.2 billion),
Lunesta (market size of $800 million) and Namenda (market size of $1.75 billion) that will be going out of patent protection in CY2015.
The company has recently got the Foreign Investment Promotion Boards clearance to raise the investment limit for foreign institutional
investors to 49% from 32% currently.
MARUTI SUZUKI
3,699
40.2
31.5
22.6
14.1
15.8
18.0
4,250
15
Remarks: Maruti Suzuki India Ltd (MSIL) is the market leader in the domestic passenger vehicle (PV) industry. In M9FY2015, as against an industry
growth of a modest 3.7% MSIL has grown its volumes by 13% and in the process expanded its market share by 373BPS to 45%.
The company has further strengthened its sales and service network. Additionally, the drive undertaken by its management to tap the
potential in rural areas paid rich dividends in difficult times for the industry and in times of rising competitive intensity; this reaffirms the
resilience of MSILs positioning and business model.
The recent launches of Celerio and Alto K10 with the new automatic manual transmission have enthused the market and the company
plans to offer the same in other models too. MSIL has a pipeline of new launches over the next few years with the most important being
the entry into the compact utility vehicle and LCV segments.
We expect customer sentiment to improve on the back of a strong government at the centre. Additionally the PV segment is expected
to benefit from the pent-up demand over the past two years; this will benefit MSIL the most due to its high market share in the entry
level segment. The recent depreciation of the Japanese Yen is expected to boost profitability.
PTC INDIA FIN. SER.
55
10.9
10.6
7.3
16.1
14.8
19.3
90
63
Remarks: PTC India Financial Services (PFS) stands to benefit from the governments strong thrust on the renewable energy sector (mainly solar
and wind) which should result in a robust growth in the loan book (at a 40% CAGR over FY2014-17). About 70% of the incremental
disbursement will be from the renewable segments (loan sanction pipeline of ~Rs7,000 crore or 1.2x of the existing loan book) which has
lesser quality issues due to a low gestation period and fuel supply risk, thanks to fiscal support from the government.
Given the favourable interest rate scenario, the interest spreads may sustain at healthy levels (~4.3%). Any likely downward movement in
the hedging cost will further reduce the funding cost. The company also has ~Rs300 crore of equity investments in power projects; these
have appreciated significantly and will result in substantial gains going ahead.
We expect PFS to register a strong growth in earnings (~40% CAGR over FY2014-17 excluding the one-off gains of FY2014) without
factoring in the gains on its equity investments. The asset quality is likely to remain robust and the company is likely to deliver high RoAs
(~3.5%) which leaves scope for more upside.
April 2015
EQUITY
NAME
FUNDAMENTALS
CMP
(RS)
TCS
2,543
FY14
26.0
SHAREKHAN TOP PICKS

PER
FY15E
23.2
FY16E
FY14
ROE (%)
FY15E
FY16E
20.5
35.2
31.6
29.3
PRICE
TARGET (RS)
3,100
UPSIDE
(%)
22
Remarks: TCS pioneered the IT services outsourcing business from India and is the largest IT service firm in the country. It is a leader in most
service offerings and has further consolidated its position as a full-service provider by delivering a robust financial and operational
performance consistently over the years.
The consistency and predictability of the earnings performance has put the company on the top of its league. Moreover, the quality of
its performance has also been quite impressive, ie it has been able to report a broad-based growth in all its service lines, geographies
and verticals consistently.
Though cross-currency headwinds and softness in some verticals will affect the earnings in the near term, we believe the overall
improvement in the USA will drive the growth in the coming years. Also, the companys increasing capabilities in the digital space,
which is a high-growth area, consolidates its position among the top-tier global IT companies. We maintain TCS as our top pick in the
IT sector and have a Buy rating on the stock.
THOMAS COOK
209
83.6
46.7
41.8
12.2
13.3
16.3
250
20
Remarks: Thomas Cook India Ltd (TCIL) is an integrated leisure travel company with offerings across the value chain including travel services,
holiday packages and foreign exchange services. The improvement in the foreign tourist arrivals in India and improving sentiments of
the domestic travelers would help TCILs travel and financial services businesses to post a better performance in the coming years.
Quess Corp (a human resource management business acquired in early 2013) has exponentially grown its consolidated revenues to
Rs1,401 crore in FY2014 from merely Rs49 crore in FY2009. The business is well poised to grow at a CAGR of 30% in the coming
years.
An improving financial performance of Sterling and value unlocking potential in Quess Corp are re-rating triggers. We maintain our Buy
rating with a price target of Rs250.
YES BANK
814
18.1
17.1
14.2
25.0
21.0
18.9
930
14
Remarks: Given a decline in inflation and the possibility of further reduction in the policy rates by the Reserve Bank of India, the cost of funds will
reduce and benefit Yes Bank. In addition, the banks investment book stands to benefit from a fall in bond yields due to surplus
statutory liquidity ratio securities and substantial corporate bond book (~Rs10,000 crore). The bank will also be included in the Nifty
index which will be positive for the stock.
The bank is well capitalised (tier-I capital adequacy ratio of 12.2%) and is likely to benefit from the revival in the economy which will
result in a strong growth in advances. Apart from the decline in the funding cost, there are other structural drivers of margins: (a) a
rising CASA ratio, and (b) focus on retail, and small and medium enterprise lending. Hence, we expect an uptick of 15-20 basis points
in the margins over FY2017.
We expect Yes Banks earnings to grow at healthy rates (about 22% CAGR over FY2014-17) driven by an expansion in the NIM and
an uptick in the non-interest income. The asset quality remains robust and the quality is likely to sustain going ahead. The return ratios
are expected to improve further (RoA of 1.7% and RoE of 20%) resulting in better valuations. We have rolled over our valuations to
FY2017 estimates resulting in a fresh price target of Rs930 (2.4x FY2017E book value). We maintain our Buy rating on the stock.
ZEE ENTERTAINMENT
342
36.7
32.9
30.0
20.6
19.8
19.5
400
17
Remarks: Among the key stakeholders of the domestic TV industry, we expect the broadcasters to be the prime beneficiary of the mandatory
digitisation process initiated by the government. The broadcasters would benefit from higher subscription revenues at the least incremental
capex as the subscriber declaration improves in the cable industry.
The management maintains that the advertisement spending will continue to grow in double digits going ahead and ZEEL will be able
to outperform the same. The growth in the advertisement spending will be driven by an improvement in the macro-economic factors
and the fact the ZEEL is well placed to capture the emerging opportunities being a leader in terms of market share.
ZEEL is well placed to benefit from the digitisation theme and the overall recovery in the macro economy. Also, the success of the
newly launched channel, &TV, would augur well and improve the companys position in the general entertainment channel space.
We have a Buy rating on the stock with a price target of Rs400.
April 2015
10
EQUITY
FUNDAMENTALS
WEALTH CREATOR PORTFOLIO
WEALTH CREATOR PORTFOLIO
APRIL 01 2015
Wealth Creator portfolio

Portfolio performance review
Objective: To build a balanced and actively managed portfolio of

quality companies that will help create meaningful wealth for
investors in the multi-year rally expected in the Indian equity market.
In addition to some bottom-up picks, the portfolio contains stocks
identified based on three key themes:
Policy push: Stocks from sectors benefiting from improvement

in the policy environment
Early gainers: Beneficiaries of an economic recovery (stocks from

auto, banking & financial services, logistic sectors)
Evergreen: Steady performers that provide stable and consistent

returns including urban consumption plays
Wealth Creator folio has appreciated by 17.7% (weighted

average returns) since its inception comprehensively beating
the returns from the benchmark indices.
Since last revision (considering closing prices of April 1), the

portfolio declined by 3.4% compared to over 5% decline in
Sensex/Nifty. Surprisingly, the midcaps performed better than
benchmark indices with CNX Midcap index declining at
relatively lower rate of 2% and our midcap picks in the folio
largely remaining stable (down by just 0.5%).
No changes/revisions suggested in the folio.
COMPARATIVE RETURNS
Particulars
Returns (on April 01, 2015)

Since inception (Aug 21, 2014)
Wealth Creator folio (weighted average retruns)
17.7%
- Large-cap (64%)
11.8%
- Mid-cap (36%)
28.1%
Sensex
7.2%
Nifty
8.8%
CNX Mid-cap
UPDATE ON WEALTH CREATOR PORTFOLIO
Sr No
Scrip
17.7%
Weights
Reco price (Rs)

01-Mar-15
Target price (Rs)

Dec-17
Potential upside
112.3%
Large-caps (64% weightage)

1
Axis Bank
8%
570
1210
Larsen & Toubro
8%
1735
3800
119.0%
Maruti Suzuki
8%
3640
7450
104.7%
Cummins
8%
886
1708
92.8%
State Bank of India
8%
274
580
111.8%
Sun Pharmaceuticals
8%
1075
1650
53.5%
Tata Consultancy Services
8%
2544
5100
100.5%
Tata Motors DVR
8%
338
850
151.5%
Mid-caps (36% weightage; 4% each)

9
PTC India Financials
4%
57
144
151.7%
10
Finolex Cables
4%
288
650
126.0%
11
Gateway Distripark
4%
422
810
91.9%
12
IRB Infra
4%
249
680
173.4%
13
Network 18 Media
4%
51
150
195.0%
14
Gabriel India
4%
91
200
120.6%
15
Century Plyboard
4%
243
440
81.1%
16
Triveni Turbine
4%
135
265
96.6%
17
Dhanuka Agritech
4%
660
1260
90.9%
* Please note we see scope for an upward revision in the price target (3-year) of some of the stocks depending on the extent of economic recovery and will keep updating you on the same
11
April 2015
STOCK IDEA
EQUITY
HERO MOTOCORP
BUY
CMP: RS2,643
FUNDAMENTALS
MARCH 13, 2015
Revving up
KEY POINTS
COMPANY DETAILS
Price target:
Rs3,400
Market cap:
Rs52,774 cr
52-week high/low:
Rs3,271/2,056
NSE volume (No of shares):
7.0 lakh
BSE code:
500182
NSE code:
HEROMOTOCO
Sharekhan code:
HEROMOTOCO
Free float (No of shares):
12.0 cr
Poised to defend market share: Hero MotoCorp Ltd (HMCL) is the market leader in
the domestic two-wheeler industry with a market share of 41.6%. Two-wheelers are
expected to remain the preferred mode of transportation in India, given the low cost
of ownership and lower penetration levels especially in rural India. We expect the
two-wheeler industry to grow at a 10% CAGR over the medium term. HMCL, with
strong brands, a relatively larger presence in rural India and increasing contribution
from the scooter segment, is poised to defend its market share in the motorcycle
segment and is targeting to increase its market share in the scooter segment.
Strengthening presence in the scooter segment: With the scooter market consistently
outpacing the motorcycle market, HMCL has enhanced its focus on scooters. In
H1FY2015 the companys volume sales from scooters were hampered by capacity
constraints. However, the company is increasing the manufacturing capacity for
scooters. At the same time it is on schedule to launch two new products which will
enable it to strengthen its market share in the fast-growing scooter segment.
Opening of new vistas with exports: The agreement with erstwhile partner Honda
was the biggest impediment to reaching out to the overseas markets. Now with the
opening up of opportunities after the split with Honda, the management has drawn
an ambitious plan to establish presence in 50 countries by 2020 as well as set up
assembly operations in Bangladesh, Columbia and Kenya. HMCL plans to increase
the export contribution from 2% in FY2014 to 10% by FY2020.
LEAP programme to boost bottom line: HMCL has embarked upon an ambitious
programme, LEAP, to improve its profitability by improving efficiency across the
value chain. On a like-to-like basis, the management expects to expand the OPM
by 150-200BPS through LEAP. We expect a margin expansion of about 50BPS in
each of the next two years largely driven by the benefits of the programme.
Valuations: The steady growth in volumes and revenues, expectations of a margin

expansion and the ending of amortised lump sum royalty payments to Honda are
expected to boost the bottom line of HMCL. We expect a 23.6% earnings CAGR
over FY2014-17 with RoE of over 45% and a high dividend pay-out ratio.
Consequently, we initiate coverage on the stock with a Buy rating and a price target
of Rs3,400, giving a 17x P/E multiple based on the FY2017E earnings.
Risk: Weakening of consumer sentiment translating in a lower than expected growth

for the industry and competitive pressures affecting the margins and bottom line of
HMCL.
SHAREHOLDING PATTERN
Public & Others
11.5%
Corporate Bodies
1.8%
Promoters
39.9%
FIIs
39.3%
Institutions
7.4%
PRICE CHART
VALUATIONS
PRICE PERFORMANCE
(%)
1m
3m
6m
12m
Absolute
-5.9
-15.4
-4.2
32.9
Relative
to Sensex
-6.4
-20.2
-10.7
-1.1
Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding

or having a postition in the companies mentioned in the article.
April 2015
Particulars
Net sales (Rs cr)
Growth (%)
EBITDA (Rs cr)
EBITDA margin (%)
PAT (Rs cr)
Growth (%)
FD EPS (Rs)
P/E (x)
P/B (x)
EV/EBITDA (x)
RoE (%)
RoCE (%)
Y2013
26,691.5
0.9
3,294.1
13.9
2,118.2
-10.9
106.1
24.9
10.5
15.0
45.6
46.4
FY2014
28,528.5
6.5
3,554.1
14.1
2,109.1
-0.4
105.6
25.0
9.4
13.7
39.8
52.0
FY2015E
30,994.6
9.6
3,622.9
13.1
2,574.7
22.1
128.9
20.5
8.2
13.6
42.8
59.5
FY2016E
35,133.6
12.5
4,342.5
13.9
3,255.0
26.4
163.0
16.2
7.0
11.1
46.4
64.5
FY2017E
40,393.1
14.1
5,252.6
14.8
3,986.8
22.5
199.6
13.2
5.6
9.0
46.7
64.7
For detailed report, please visit the Research section of our website, sharekhan.com.
12
EQUITY
STOCK UPDATE
FUNDAMENTALS
BAJAJ AUTO
BUY
CMP: RS2,129
MARCH 10, 2015
Expected to get back on track; upgraded to Buy
with a revised PT of Rs2,400
COMPANY DETAILS
Price target:
Rs2,400
Market cap:
Rs61,605 cr
52 week high/low:
Rs2,690/1,844
NSE volume (no. of shares):
2.9 lakh
BSE code:
532977
NSE code:
BAJAJ-AUTO
Sharekhan code:
BAJAJ-AUTO
Free float (no. of shares):
14.5 cr
KEY POINTS
PRICE PERFORMANCE
(%)
1m
3m
6m
Absolute
-7.0
-19.1
-9.1
12m
10.3
Relative to Sensex
-9.1
-22.2
-14.3
-17.5
Sharekhan Limited, its analyst or dependant(s) of the analyst might be

holding or having a postition in the companies mentioned in the article.
An unexpectedly sharp dip in exports: The stock of Bajaj Auto (Bajaj) has suffered due to a
sharp slowdown in the companys exports and a political turmoil in its key overseas markets.
For Bajaj, exports contribute around 45% of the total volume sales. However, a lot of negatives
are already factored in the stock price, which has corrected by around 17-18% and
underperformed the market.
Exports to normalise in a few months: We expect the exports to Nigeria to normalise after
the general election in the country which are now scheduled for this March end. The change
of government in Sri Lanka led to a freeze on an order for 1.25 lakh Discover motorcycles;
the management expects the order to be back on track in due course. With a market share of
80% and 43% in Sri Lanka and Nigeria respectively, Bajaj is the leader in these markets.
New launches to aid growth: Efforts are being made to regain the lost market share in the domestic
motorcycle segment. The company has just launched the new Platina and is expected to launch the
new generation of Pulsar and a new commuter motorcycle over the next few months. Additionally,
a favourable decision from the Supreme Court regarding quadricycles would pave the way for the
introduction of Bajajs RE60, giving the company a first mover advantage.
Correction offers an opportunity: Bajaj maintains strong margins and a depreciation of the
rupee against the dollar would boost its profitability. We upgrade the stock to a Buy from
Hold with a revised price target of Rs2,400. We value the core business at 9.5x FY2017E
EBITDA and the 47.9% stake in the premium motorcycle manufacturer, KTM AG, at Rs120
per share.
BHARAT ELECTRONICS
BUY
CMP: RS3,105
MARCH 27, 2015
Risk-reward ratio favourable, Buy
COMPANY DETAILS
Price target:
Rs4,020
Market cap:
Rs24,840 cr
KEY POINTS
52-week high/low:
Rs3,082/1,040
2.3 lakh
BSE code:
500049
NSE code:
BEL
Sharekhan code:
BEL
1.9 cr
Bharat Electronics Ltd (BEL), the flag bearer of Indias defence play and Make in
India initiative, has recently corrected by close to 22% from its high of close to Rs4,000.
The underperformance could be attributed to a lower than expected increase in the
defence allocation in the Union Budget for FY2016 (a 10% increase YoY), lower order
accretion by the company (down 10% YoY to Rs22,500 crore) and strong re-rating in
the stock price in the last one year (BEL touched a peak multiple of 22x one-year
forward earnings in February 2015, gaining around 200% in one year). Nevertheless,
we view the correction in the stock as a short-term aberration and opportunity to buy
the stock with an investment perspective for the next 12 months.
Recently, the consortium of BEL and Rolta India (Rolta) has been selected as the
development agency for a Battlefield Management System project by the defence
ministry. The order is valued at Rs50,000 crore (around 70% of the work is for the
BEL-Rolta consortium) to be implemented over the next five to seven years.
We continue to prefer BEL, which is a pure proxy play on the fast-growing defence
sector, more on the Make in India theme. We see BEL as a long-term growth-cumvalue play on the defence sector and advise investors to use the recent weakness to
build position in the stock. At the current market price of Rs3,105 the stock trades at
15.5x FY2017E earnings. That is a 30% discount to its peak valuation of 22x. We
reiterate our Buy rating on the stock with an unchanged price target of Rs4,020 (20x
FY2017E).
PRICE PERFORMANCE
(%)
Absolute
Relative to Sensex
1m
3m
6m
12m
-13.3
16.1
57.4
195.5
-9.4
15.0
52.1
134.1

13
April 2015
STOCK UPDATE
EQUITY
FUNDAMENTALS
CADILA HEALTHCARE
BUY
CMP: RS1,639
MARCH 23, 2015
PT revised to Rs2,060; upgraded to Buy
COMPANY DETAILS
Price target:
Rs2,060
Market cap:
Rs33,373 cr
52 week high/low:
Rs1,760/873
1.3 lakh
BSE code:
532321
NSE code:
CADILAHC
Sharekhan code:
CADILAHC
7.2 cr
KEY POINTS
PRICE PERFORMANCE
(%)
1m
3m
6m
12m
Absolute
0.4
6.4
24.9
63.3
Relative to Sensex
3.7
2.9
19.4
23.7

Set to enter a high-growth trajectory: Cadila Healthcare is set to enter a high-growth

trajectory, thanks to its aggressive product filings in the USA and Latin America, a
recovery in its JV business and the launch of niche products in the Indian market
including the generic version of Gilead Sciences' Hepatitis C drug, Sofosbuvir, under
the brand SoviHep. It is expected to record a revenue CAGR of 20% over FY2014-17
from the base business.
US market witnessing healthy trend; to favour Cadila: The US market is witnessing a
surge in demand for generic products since ObamaCare was implemented to expand
the insurance coverage on US citizens without inflating the healthcare costs. Cadila
Healthcare, which generates about 36% of its total revenues from the US market, may
be among the key beneficiaries of a favourable business environment in the generic
space. It has over 145 ANDAs pending approval out of 230 ANDAs filed with the
USFDA that will unfold over the next two to three years. We expect it to see a revenue
CAGR of 34% over FY2014-17 in the US market.
Expect a sustained expansion in OPM: We expect the OPM to expand from 16.6% in
FY2014 to 23% in FY2017 mainly due to stronger traction in the branded business in
India and Latin America, a better generic pricing scenario in the USA and optimisation
of capabilities in the JV business.
Estimates revised, PT raised to Rs2,060 and upgraded to Buy: We have revised our
earnings estimates up by 6% and 7% for FY2016 and FY2017 respectively, in view of
better traction in the generic business in the US market, the potential from the launch
of Hepatitis-C drug in India and the product ramp-up in the other key markets including
the business from the JVs. A better growth outlook also comforts us to increase the
valuation multiple. Accordingly, we revise our price target to Rs2,060, which implies
20x FY2017R EPS. We upgrade our rating on the stock to Buy.
CAPITAL FIRST
BUY
CMP: RS432
COMPANY DETAILS
MARCH 3, 2015
In a sweet spot
Price target:
Rs485
Market cap:
Rs3,597 cr
KEY POINTS
52 week high/low:
Rs438/143
2.4 lakh
BSE code:
532938
NSE code:
CAPF
Sharekhan code:
CAPF
2.4 cr
Capital First is likely to benefit from an announcement in the Union Budget 2015-16
allowing non-banking finance companies of above Rs500 crore asset size to be considered
for the SARFAESI Act (which is presently available to banks and housing finance
companies). The act empowers banks and financial institutions to recover their nonperforming assets (NPAs) without the intervention of the court. The company expects
to get the benefit on its small and medium enterprises mortgage book (which accounts
for about 70% of the assets under management) which will help it to improve the
collection performance and further reduce the NPAs (gross NPAs at 0.63% in
Q3FY2015).
In addition, the reduction in the corporate tax rates from 30% to 25% in a phased
manner as announced in the budget (more clarity awaited though) will improve its
profitability. The current tax rate is about 34% and hence any easing of the tax benefits
post-FY2016 will improve the earnings and expedite the improvement in the return
ratios. However, we have not factored this in our estimates.
Capital First had invested in building high-yielding retail products (two-wheeler loans,
consumer durables etc) which have shown strong traction and are margin accretive.
Additionally, the company is likely to benefit from a drop in interest rates and revival
in consumption. Given the strong management bandwidth and stringent risk
management procedures, the companys asset quality may remain healthy. We expect
the earnings to grow at a CAGR of 57% over FY2014-17 and the return ratios to
improve significantly from FY2017 onwards. We reiterate our Buy rating on the stock
with a price target of Rs485.
PRICE PERFORMANCE
(%)
1m
3m
6m
12m
Absolute
7.2
20.8
49.5
194.1
Relative to Sensex
6.0
16.5
36.8
107.8

April 2015
14
EQUITY
STOCK UPDATE
FUNDAMENTALS
CENTURY PLYBOARDS (INDIA)

BUY
CMP: RS240
MARCH 4, 2015
Improving demand and GST roll-out make us
positive; PT revised to Rs290
COMPANY DETAILS
Price target:
Rs290
Market cap:
Rs5,322 cr
52-week high/low:
Rs262/22
6.5 lakh
BSE code:
532548
NSE code:
CENTURYPLY
Sharekhan code:
CENTURYPLY
5.7 cr
KEY POINTS
Infrastructure and housing thrust in Union Budget:The Union Budget 2015-16 has
provided the much required thrust on the infrastructure and housing fronts, which are
the starting point of demand for the companys products. The governments thrust on
housing for all, would pave the way for growth in the plyboard industry. This will
benefit players like Century Plyboards (Century), as it also caters to mid- and lowerend segments via its various sub brands like Sainik.
PRICE PERFORMANCE
(%)
1m
3m
Absolute
33.6
51.7
164.9 1019.1
6m
12m
Relative to Sensex
30.8
45.5
142.2
679.9

Despite sharp run-up, strong growth and attractive valuations in the peer set, we are
positive on the stock: Over the last three months, since our initiation report on November
28, 2014, the stock of Century has given a 62% return, outperforming the benchmark
indices (BSE Sensex and CNX Nifty) along with the mid-cap index. This was on account
of the strength of its brand equity, superior execution capabilities, access to key raw
materials, operating leverage and the benefit of lower raw material prices that got
reflected in the financials (M9FY2015, the revenues and the earnings grew by 22%
and 196% YoY respectively). Despite the outperformance, the outlook remains positive.
We envisage a growth (CAGR) of 22% and 50% in the revenues and earnings
respectively over FY2014-17. The valuations remain attractive (trading at 21x FY2017E
earnings vs average of 26x for the other building material players like Greenply, Cera
Sanitaryware and Kajaria Ceramics). Hence, we believe that there is still scope for rerating. We value the company at 25x FY2017E earnings to arrive at our revised price
target of Rs290 and maintain our Buy rating on the stock.
CESC
BUY
CMP: RS585
MARCH 2, 2015
Aggressive coal auction throws new challenge;
PT revised down to Rs730
COMPANY DETAILS
Price target:
Rs730
Market cap:
Rs7,793 cr
52-week high/low:
Rs828/441
4.9 lakh
BSE code:
500084
NSE code:
CESC
Sharekhan code:
CESC
6.7 cr
KEY POINTS
PRICE PERFORMANCE
(%)
1m
3m
6m
12m
Absolute
-15.3
-13.4
-13.4
30.0
Relative to Sensex
-14.3
-15.8
-21.5
-8.0

CESC managed to retain the Sarisatolli coal mine in West Bengal during the first round
of coal block auction in mid February 2015. However, the asset comes at a price, given
the aggressive bid price of Rs470/tonne and the limited ability of the company to cover
the expected rise in the fuel cost as only Rs100/tonne is recoverable through tariff. We
believe the irrecoverable burden would be Rs820/tonne which would translate into an
irrecoverable cost of Rs200 crore annually. However, the company is allowed to use
15% of the output for merchant power which could cover partially at Rs125 crore
(assuming a variable profit of Rs1.75/unit). On a net basis, CESC is likely to take a hit
of around Rs75 crore annually (around 10-12% of the bottom line).
On the positive side, soon in Haldia regulated plants of 600MW are expected to come
on stream and we expect clarity on the fuel linkage for the Chandrapur plant, given the
priority of the government to improve coal availability for the ready-to-operate plants.
Given the likely hit from the aggressive coal block bidding, we have revised down our
earnings estimate and cut down the estimated value of the regulated power business by
Rs56/share in the SOTP valuation. Further, to factor in the recent revision of the price
target for FSL from Rs51 to Rs43, we have cut down the price target for CESC by
Rs14/share to arrive at a revised price target of Rs730. However, we retain our Buy
rating on CESC as the negatives are already factored in the current price and the stock
is available at below its FY2016E book value.
15
April 2015
STOCK UPDATE
EQUITY
FUNDAMENTALS
CIPLA
BUY
CMP: RS725
MARCH 4, 2015
PT revised up to Rs843; upgraded to Buy
COMPANY DETAILS
Price target:
Rs843
Market cap:
Rs58,186 cr
KEY POINTS
52-week high/low:
Rs747/369
18.0 lakh
BSE code:
500087
NSE code:
CIPLA
Sharekhan code:
CIPLA
50.8 cr
Building strong foundation to grow faster: Cipla is in the process of transforming its
business which is affecting its performance in the short term but will lead to a solid
foundation for a long-term growth and profitability. During the last 12 months, the
company has entered into several collaborative and joint venture deals (17 deals during
the year) to expand its presence in the key markets and sharpen its focus on niche
segments. Although most of these deals are focused on Europe and emerging markets,
the market is buzzing about the possible inorganic initiatives in the US market.
Expect margin profile to improve: Most of the recent deals are focused on sharpening
its focus on niche segments, where competition is low and margins are better. A selective
business approach and focus on technology-intensive products are set to strengthen its
margin profile over time. We expect an improvement of over 350BPS in the OPM over
FY2015-17.
The managements guidance seems to be conservative: The management has guided
for a 9-10% growth in the revenues and an OPM of over 20% in FY2015 while FY2016
will see a growth in mid teens with an improvement in the OPM. The guidance seems
to be conservative in our opinion, given a decent upside from the supply of generic
Nexium to Teva and new tenders rolling out in the emerging markets.
We revise our price target on roll-over; upgrade to Buy: Owing to a better visibility of
growth, we have rolled over our valuations to the earnings of FY2017E. Accordingly,
our price target stands revised to Rs843, which includes Rs720 (21x FY2017E EPS) for
the base business and Rs123 for the inhaler opportunity in Europe. We upgrade our
rating on the stock to Buy.
PRICE PERFORMANCE
(%)
1m
3m
6m
12m
Absolute
8.0
12.6
32.3
95.2
Relative to Sensex
5.8
8.0
21.0
36.0

FINOLEX CABLES
BUY
CMP: RS284
MARCH 31, 2015
Wired for sustained growth; PT revised to Rs335
COMPANY DETAILS
Price target:
Rs335
Market cap:
Rs4,344 cr
KEY POINTS
52-week high/low:
Rs306/107
2.8 lakh
BSE code:
500144
NSE code:
FINCABLES
Sharekhan code:
FINCABLES
9.8 cr
Finolex Cables Ltd (FCL) is expected to sustain a healthy, high double-digit earnings
growth in the next two to three years, given its efforts taken to strengthen the distribution
network and enhance the product portfolio. In the near term, we expect a strong
performance in Q4FY2015 with an expectation of a 25% growth on its adjusted
earnings.
Structurally, organised players with a strong brand equity and a wide product portfolio
are likely to gain from the implementation of the GST from 2016 onwards. Moreover,
to capitalise on the opportunities the company has commissioned its new manufacturing
facility at Roorkee (for switchgear and electrical cables; business to consumer products)
on time.
Given the superior growth outlook, strong free cash-flows and healthy return ratios,
FCL has emerged as a quality stock and our preferred pick within the sector. Whats
more, we see further scope for re-rating as improving capacity utilisation would boost
the margins and return ratios. Hence, we reiterate our Buy call with a revised price
target of Rs335 (target multiple of 16x on FY2017 estimates).
Risk: Weaker than expected demand environment and increased competition could
affect the financial performance.
PRICE PERFORMANCE
(%)
1m
3m
6m
12m
Absolute
-0.1
6.4
30.7
146.9
Relative to Sensex
6.1
5.4
26.3
96.7

April 2015
16
EQUITY
STOCK UPDATE
FUNDAMENTALS
IPCA LABORATORIES
HOLD
CMP: RS665
MARCH 25, 2015
Concerns grow on import alert; downgraded to
Hold, PT under review
COMPANY DETAILS
Price target:
Under review
Market cap:
Rs8,380 cr
52 week high/low:
Rs899/591
2.6 lakh
BSE code:
524494
NSE code:
IPCALAB
Sharekhan code:
IPCALAB
6.8 cr
KEY POINTS
The latest import alerts on two facilities to linger on the resolution: The USFDA has
issued import alerts on two of Ipcas manufacturing facilities located at Pithampur
(Indore, Madhya Pradesh) and Piparia (Silvassa), which were earlier served an adverse
inspection report by the agencys inspectors. The companys Ratlam API facility is
already under import alert. However, as the USFDA is yet to issue warning letters, the
gravity of the impact cannot be ascertained at this moment. Nonetheless, the latest
import alerts are set to linger on the resolution process, thereby affecting the resumption
of sales in the US and Canadian markets.
PRICE PERFORMANCE
(%)
1m
3m
6m
Absolute
15.2
7.0
2.6
12m
-8.2
Relative to Sensex
18.5
3.2
-2.9
-29.2

Downgrade recommendation to Hold but keep PT under review till more clarity emerges
from warning letters: We have considered the impact of blockage of supplies of two
products, hitherto exempted from the first round of import alert, delay in resolution of
the USFDA issues (may take more than 12 months) and uncertainty over WHO-GMP
clearance, which would help resume 80% of the tender business. Accordingly, we have
reduced our earnings estimates by 16% and 8% for FY2016 and FY2017 respectively.
We have downgraded our rating to Hold. However, we keep the price target under
review until more details emerge from the USFDAs warning letters to understand the
gravity of the issues. Also, the management is likely to give annual growth guidance for
FY2016 after the Q4FY2015 results, which will give more visibility.
IRB INFRASTRUCTURE DEVELOPERS

BUY
CMP: RS231
MARCH 17, 2015
Outlook positive; use dips to buy
COMPANY DETAILS
Price target:
Rs320
Market cap:
Rs7,671 cr
KEY POINTS
52 week high/low:
Rs289/92
33.2 lakh
BSE code:
532947
NSE code:
IRB
Sharekhan code:
IRB
12.9 cr
IRB Infrastructure Developers (IRB) showed an impressive surge in its toll revenues in
Q3FY2015 on the back of increased traffic movement on its BOT road projects. We believe
that the growth in the construction revenues would also pick up meaningfully with the financial
closure of two large projects (the Solapur-Yedeshi and Yedeshi-Aurangabad projects worth
over Rs1,956 crore). Two more projects are also expected to commence construction soon.
Project awarding by the NHAI almost doubled to 2,132km in M10FY2015 as against 1,041km
in M10FY2014. As was expected, the EPC segment maintained its dominance in the projects
being awarded but the BOT segment still comprised 31% of the total projects awarded in the
quarter in value terms. Further, our interaction with industry players suggests an increase in
project awards during the next two to three months. We expect EPC road project awards to
benefit players like Ashoka Buildcon, Sadbhav Engineering and Gayatri Projects. However, a
few large project awards through the BOT route would be beneficial to players like Larsen
and Toubro, IL&FS Transportation Networks and IRB.
IRB is well funded to meet the Rs2,600-crore equity requirement for the next three years
from internal accruals. An improving macro environment (better visibility of the tendering
business, potential easing of interest rates etc) and a potential upside from a better than
expected growth in traffic on the back of an economic revival are the key re-rating triggers for
the stock. IRB has corrected by around 10% during the current month which provides an
opportunity to enter the stock with a medium- to long-term horizon to benefit from the
structurally positive scenario building up in the road construction sector. We maintain our
Buy rating on the stock with a price target of Rs320.
PRICE PERFORMANCE
(%)
1m
3m
6m
12m
Absolute
-9.3
-4.4
-8.2
135.0
Relative to Sensex
-7.2
-10.1
-14.7
77.5

17
April 2015
STOCK UPDATE
EQUITY
FUNDAMENTALS
JYOTHY LABORATORIES
BUY
CMP: RS267
MARCH 30, 2015
Recent correction presents opportunity,
upgraded to Buy
COMPANY DETAILS
Price target:
Rs320
Market cap:
Rs4,833 cr
52-week high/low:
Rs314/172
2.2 lakh
BSE code:
532926
NSE code:
JYOTHYLAB
Sharekhan code:
JYOTHYLAB
6.0 cr
KEY POINTS
PRICE PERFORMANCE
(%)
1m
3m
6m
12m
Absolute
-4.8
6.0
9.9
32.7
Relative to Sensex
1.2
4.9
6.2
5.7

The stock price of Jyothy Laboratories Ltd (JLL) has corrected by close to 10% (from about
Rs300) and the stock is currently trading at 22x FY2017E earnings, which makes it one of
the discounted stocks in the FMCG space. The correction provides an upside of 20% (from
our price target of Rs320) which gives investors an opportunity to add a quality mid-cap
FMCG stock to their kitty.
JLL has a strong presence in the fast-growing domestic categories such as household insecticides
and dishwashing detergents while it is the market leader in the fabric whitener space. The
company is well poised to achieve about 15% revenue growth in FY2016. Most of this
growth will be led by a growth in the volumes. On the other hand, the correction in the prices
of crude oil and crude derivatives would help JLLs gross profit margin to improve by 300400 basis points aiding a strong improvement in the profitability.
JLL has maintained its focus on introducing new products under the existing brands and shall
continue to revamp some of the existing products with new formulations or marketing strategies
in the coming months. The company is also keen to strengthen its balance sheet by reducing
the debt on books by improving the cash flows and hiving off some of the non-core assets.
Thus, strong earnings visibility and potential upside of 20% from the current levels make it
one of the better picks in the FMCG space over the medium to long term. Hence, we upgrade
our rating on the stock from Hold to Buy and maintain the price target at Rs320.
Key risk: A slowdown in any of the key categories and increased competition from the new
entrants would act as key risks to the earnings estimates.
LUPIN
BUY
CMP: RS2,001
MARCH 30, 2015
Maintain Buy with a revised PT of Rs2,300
COMPANY DETAILS
Price target:
Rs2,300
Market cap:
Rs89,934 cr
52 week high/low:
Rs2,037/904
KEY POINTS
6.7 lakh
BSE code:
500257
NSE code:
LUPIN
Sharekhan code:
LUPIN
24.7 cr
Well positioned to take on long strides: Having built a strong foundation in the business
of generic drugs, Lupin is now positioning itself to play longer innings with focus on
niche segments like respiratory, oral contraceptives and biosimilars. Strong products
built in niche space in the key markets, various in-licencing deals and collaborations
are set to give the company an edge over peers over a longer period.
A revenue goal of $5 billion in FY2018 implies 30% CAGR over 2014-18: The company
aims to achieve a revenue goal of $5 billion in FY2018 through organic and inorganic
means ($1 billion may come from inorganic initiatives) and that implies a revenue
CAGR of 30% over FY2014-18 (organic CAGR of 23%). The focus on niche segments
and cost rationalisation process that it regularly undertakes will help the company to
improve its profitability profile as well.
Public and
others
8%
Non-promoter
corporate
2%
Institutions
11%
Foreign
32%
Promoters
47%
PRICE PERFORMANCE
(%)
1m
3m
6m
12m
Absolute
12.5
38.9
41.7
109.9
Relative to Sensex
19.5
37.6
36.9
67.2

April 2015
Strong case for re-rating; we revise PT up to Rs2,300, maintain Buy: If compared with
large-cap companies, Lupin is expected to grow faster in terms of earnings and generate
a better return on equity. The company is sufficiently equipped with multiple growth
elements to sustain the growth over a longer period. The stock is currently trading at
24.5x FY2017E earnings. Given a better growth visibility over a long period, we believe
Lupin is a fit case for re-rating in the near future. We assign a valuation multiple of 28x
to the EPS of FY2017E to set a fresh price target of Rs2,300 and maintain our Buy
rating on the stock.
18
EQUITY
STOCK UPDATE
FUNDAMENTALS
MARICO
BUY
CMP: RS369
MARCH 18, 2015
Ahead of the pack; maintain Buy with
revised PT of Rs430
COMPANY DETAILS
Price target:
Rs430
Market cap:
Rs23,783 cr
52 week high/low:
Rs408/200
10.0 lakh
BSE code:
531642
NSE code:
MARICO
Sharekhan code:
MARICO
26.0 cr
KEY POINTS
PRICE PERFORMANCE
(%)
1m
3m
6m
12m
Absolute
3.3
14.2
26.9
83.8
Relative to Sensex
5.7
7.4
17.9
38.8

With close to 70% of its revenues coming from urban India, Marico is expected to be one of
the key beneficiaries of an improving demand environment in the urban India. Its key brands
like Saffola (edible oil) and Parachute (coconut oil) are expected to achieve sales volume
growth of 13% and 8% respectively over the next two years. Its international business is
likely to benefit from cross-pollination and entry in new categories under the existing brands
(the focus areas are the Middle-East and South-East Asia). Consequently, we are estimating a
healthy growth of close to 16% CAGR in revenues over the next two years.
Copra prices continue to witness a downward trend and currently stand at Rs95 per kg,
which is 4% lower than the average copra price in Q3FY2015. Further, deceleration
would add on to gross profit margins in the coming quarters along with the softness in
the other key raw materials, such as liquid paraffin and high-density polyethylene. Even
after reinvesting some part of the margin gains in higher advertisement and promotional
activities, the company is likely to show an improvement of 100-120BPS (to 16.5%) in
the operating profit margins in FY2016.
With a strong portfolio of brands (largely catering to urban India) and focus on expanding
the urban-centric youth and wellness portfolio, Marico remains one of the better picks in the
FMCG space. Hence, with a better earnings visibility of above 20% earnings growth it would
command a premium over its peers. We maintain our Buy recommendation on the stock
with a revised price target of Rs430 (valuing the stock at 31x its FY2017E EPS).
Risk: Any sudden spike in the copra prices from the current levels remains key risk to
our earnings estimates.
MAX INDIA
BUY
CMP: RS463
MARCH 11, 2015
Fundamentals remain strong, upgraded to Buy
COMPANY DETAILS
Price target:
Rs518
Market cap:
Rs12,333 cr
KEY POINTS
52 week high/low:
Rs522/178
5.2 lakh
BSE code:
500271
NSE code:
MAX
Sharekhan code:
MAX
15.9 cr
Max India has corrected by around 13% from the 52-week high and offers a decent
upside at our sum-of-the-parts-based price target of Rs518. The company continues to
report a healthy performance and the long-term structural drivers (low insurance
penetration, pick-up in savings rate and revival in economy) for the life insurance sector
are intact. We, therefore, upgrade the rating on the stock from Hold to Buy, keeping
the price target unchanged.
In the life insurance business the company continues to grow ahead of its peers and has
expanded its market share (10.2% among private players). The operating metrics
(conservation ratio, expense ratio, etc) of Max Life Insurance are among the best in the
industry and rejig of the portfolio of the non-par unit-linked insurance plans will improve
the profitability. The healthcare segment, including new hospitals, has shown a strong
growth in revenues while the health insurance business (Max Bupa Health Insurance
Company) has seen an uptick in premium due to focus on the business-to-consumer
strategy.
Going ahead, the demerger of the businesses into three separate entities will enhance
the focus on individual businesses and thus be positive over the long term. In addition,
a revival in the insurance sector and an expansion in the healthcare business will boost
revenues. An increase in foreign direct investment limits from 26% to 49% will result
in value unlocking from the life insurance and health insurance businesses. In view of
Max Indias strong fundamentals and the recent correction in the stock price we
recommend investors to accumulate the stock.
PRICE PERFORMANCE
(%)
1m
3m
6m
12m
Absolute
-0.9
11.9
27.7
142.8
Relative to Sensex
-2.2
8.3
20.0
82.7

19
April 2015
STOCK UPDATE
EQUITY
FUNDAMENTALS
PERSISTENT SYSTEMS
BUY
CMP: RS770
MARCH 16, 2015
Buy into weakness for long-term gain,
PT revised to Rs940
COMPANY DETAILS
Price target:
Rs940
Market cap:
Rs6,160 cr
52 week high/low:
Rs961/444
70,025
BSE code:
533179
NSE code:
PERSISTENT
Sharekhan code:
PERSISTENT
4.9 cr
KEY POINTS
PRICE PERFORMANCE
(%)
1m
3m
6m
12m
Absolute
0.2
10.0
26.4
49.7
Relative to Sensex
-0.3
3.8
17.9
11.4

The management expects the revenue growth of Persistent Systems Ltd (PSL) to remain
muted in Q4FY2015 owing to softness in the product engineering space and a negative
cross-currency impact of around 30BPS. PSLs top account IBM, which had a ramp-down
earlier, has stabilised and is expected to show an improvement. Earlier, PSL had indicated
a 15% Y-o-Y growth for FY2015 which required it to deliver a 10% sequential growth in
Q4FY2015. However, the management has acknowledged that Q4 may be muted, and
PSL may miss the growth guidance and settle for a 12.5% Y-o-Y growth in the fiscal.
The management continued to emphasise on the long-term value proposition in the
enterprise digital transformation business and indicated PSL is making an initial
breakthrough in the space. Recently, the company has closed a couple of deals in the
range of $1.0-2.5 million and expects to grow 50-60% in the enterprise space in the
next two to three years. On the overall demand environment, the management maintains
its positive outlook and expects to deliver strong numbers in FY2016. On the intellectual
property (IP) front, both Radia and HP are witnessing strong traction.
We have tweaked our earnings estimates primarily on account of a lower revenue
growth assumption. We now expect its earnings to grow at 12.5%, 16.8% and 19.1%
over FY2015, FY2016 and FY2017 respectively. PSL remains a good investment bet
for the long-term investors, given it is a pure play on corporate digital spending, has a
strong balance sheet and follows good corporate governance practices. In the past two
weeks, the stock has corrected by close to 18% from its recent high of Rs940. We see
this as an opportunity to re-enter the stock with a time horizon of the next 12 months.
We upgrade the stock from Hold to Buy with a revised price target of Rs940.
SUPREME INDUSTRIES
HOLD
CMP: RS716
MARCH 17, 2015
Early signs of recovery, OPM to improve;
PT revised to Rs750
COMPANY DETAILS
Price target:
Rs750
Market cap:
Rs9,101 cr
52-week high/low:
Rs725/425
KEY POINTS
0.8 lakh
BSE code:
509930
NSE code:
SUPREMEIND
Sharekhan code:
SUPREMEIND
6.4 cr
Supreme Industries (Supreme) is witnessing an improvement in the demand for PVC

pipes on the back of an uptrend in PVC prices and the seasonality factor. The rebuilding
of stock inventory by distributors along with a price hike of 10-15% would help to
improve the volume growth and mitigate the risk of inventory loss ahead.
The company had witnessed a muted volume growth and a sharp decline in the operating
profit margin (OPM; of 300-400 basis points) in Q2FY2015 led by inventory losses.
At the same time, PVC prices had also declined by 25-30% which had worsened the
operating performance significantly. However, during March 2015 PVC prices recovered
sharply by 16% from their bottom owing to demand recovery.
We expect the company to report an improvement in the margins and earnings (at
18% compounded annual growth rate in FY2014-17) driven by better operating
leverage, focus on innovative product-mix and increasing share of value-added products.
It also expects to book real estate transaction revenues of Rs93.3 crore during Q3
while the pending export order of 38,000 cylinders would be accounted for in FY2015.
It got approval for 10kg cylinder from the regulatory authority and is in an advanced
stage of getting the product approval for the 5kg cylinder. Its bathroom fitting business
continues to witness an accelerated pace of growth.
We believe the recent sharp run-up of 20% in the stock price factored in all these
positives. Though we revise our earnings estimates upward for FY2016 and FY2017
(up 7% each) to reflect the better growth visibility (margin expansion and earnings),
we retain our Hold rating on the stock with a revised price target of Rs750 (price/
earnings of 21x on FY2017E earnings).
PRICE PERFORMANCE
(%)
1m
3m
6m
12m
Absolute
3.3
19.9
3.5
53.0
Relative to Sensex
5.7
12.7
-3.8
15.6

April 2015
20
EQUITY
STOCK UPDATE
FUNDAMENTALS
TATA CONSULTANCY SERVICES

BUY
CMP: RS2,696
MARCH 5, 2015
Another soft quarter in offing, owing to
cross-currency headwinds
COMPANY DETAILS
Price target:
Rs3,100
Market cap:
Rs528,073 cr
52-week high/low:
Rs2,834/2,001
11.5 lakh
BSE code:
532540
NSE code:
TCS
Sharekhan code:
TCS
51.1 cr
KEY POINTS
PRICE PERFORMANCE
(%)
1m
3m
6m
Absolute
9.2
4.3
6.7
12m
26.4
Relative to Sensex
7.2
1.2
-2.0
-10.2

The management of Tata Consultancy Services (TCS) stated that Q4FY2015 would
remain soft, in line with the trend seen in Q4FY2014. However on a reported basis,
owing to a cross-currency negative impact of 200BPS, the reported revenues in dollar
terms would remain flat. The overall net currency impact for the quarter including the
rupee would be of minus 275BPS. Overall, the revenue growth is expected to be ~15.3%
in FY2015 which is lower than the 16.2% growth in FY2014. In FY2015, the revenue
loss owing to cross-currency headwinds will be close to 4.8%.
As per the management, the EBIT margin is expected to decline by 40BPS sequentially
largely because of currency headwind of negative 275BPS. The management has stated
that despite the currency impact, there has been no decline in the budgets for spending
in newer geographies and on the building-up of digital capabilities. We maintain the
overall margin band of 26-28%. The hedging gain for Q4FY2015 is expected to be
Rs150-200 crore.
The weakness in the Q4FY2015 earnings performance owing to cross-currency
headwinds and softness in the BFSI vertical are mostly factored in the growth outlook
for TCS. However, the absence of any hint of the FY2016 outlook could be seen as a
negative for the stock performance in the near term. The stock has gained around 8%
in the last one month, so we could see some weakness in trades in the near term. At the
current market price of Rs2,696, the stock trades at 20x and 17.4x FY2016E and
FY2017E earnings. We maintain our Buy rating on the stock with a price target of
Rs3,100.
ULTRATECH CEMENT
BUY
CMP: RS3,065
MARCH 9, 2015
Structural demand drivers intact; reiterate Buy
COMPANY DETAILS
Price target:
Rs3,440
Market cap:
Rs84,102 cr
52-week high/low:
Rs3,399/1,885
2.3 lakh
BSE code:
532538
NSE code:
ULTRACEMCO
Sharekhan code:
ULTRACEMCO
10.5 cr
KEY POINTS
PRICE PERFORMANCE
(%)
1m
3m
6m
12m
Absolute
4.1
28.3
19.4
68.7
Relative to Sensex
1.9
23.8
9.3
20.0

In the Union Budget for 2015-16 the government reiterated its stance on increased
spending on infrastructure through incremental allocation (Rs70,000 crore) for the
infrastructure sector as a whole. We see this thrust on infrastructure as a major demand
driver for the cement sector with increased investments in building roads, smart cities,
bridges, houses, airports etc. UltraTech Cement being the largest pan-India cement
player is expected to be the biggest beneficiary of this initiative (through higher capacity
utilisation from a little over 70% currently).
Our channel checks across the country suggest an uneven cement pricing scenario on a
month-on-month basis. This time around we saw a correction in the northern, central
and eastern regions whereas the pricing improved in the western and southern regions.
On an average, the price of cement decreased by 3% whereas the same increased by 25%. However, we believe that in the near term cement prices are likely to remain
volatile but over the long term cement prices are likely to remain strong on the back of
a demand revival as stated above and limited capacity addition.
UltraTech Cement is planning to increase its capacity from 63MT to 75MT over the
next two years. Although in the near term the demand looks unfavourable, we foresee
the revival in demand coinciding with limited capacity addition going forward. As a
pan-India leader UltraTech Cement will be best placed to benefit from the opportunity
as operating leverage kicks in. We reiterate UltraTech Cement as our preferred pick in
the cement space and recommend investors to accumulate the stock in the prevailing
corrective phase. We maintain our Buy rating on the stock with a price target of
Rs3,440.
21
April 2015
STOCK UPDATE
EQUITY
FUNDAMENTALS
UPL
BUY
CMP: RS417
MARCH 20, 2015
Valuation gap offers an opportunity; reiterate Buy
COMPANY DETAILS
Price target:
Rs500
Market cap:
Rs17,873 cr
KEY POINTS
52 week high/low:
Rs448/180
16.6 lakh
BSE code:
512070
NSE code:
UPL
Sharekhan code:
UPL
30.1 cr
UPL continues to show a strong performance across parameters ahead of the other
domestic agro-chemical companies. The growth of the company was largely supported
by a strong performance of the business in the North American market and the domestic
market (it has a well-diversified product portfolio). However, on the valuation front
the company continues to trade at a discount as compared with the domestic agrochemical companies. We believe that over time this discount will narrow on account of
strong products in the pipeline and a considerable change in the companys focus on
branded and unique products.
Along with the agro-chemical business UPL has been looking at strengthening its focus
on the seed business to better leverage its distribution network. It aims to introduce
seeds for various crops like sorghum, sunflower and corn across geographies including
Brazil and Argentina. Thus, as part of its strategy UPL has recently hiked its stake in
Advanta India (which deals primarily in seeds) by 1.2% to 51.8% through open market
purchases of equity shares.
UPL also plans to acquire a 40% stake in Brazilian farm input distributor, Sinagro
Produtos Agropecuarios SA (Sinagro), for an undisclosed amount. Sinagro, based in
Mato Grosso, is into distribution of farm inputs in Cerrado region of Brazil.
UPL is among our preferred picks in the agro-chemical space due to its strong product
profile, geographical reach (overseas presence includes Europe, Latin America and North
America) and ability to introduce new products on a regular basis. Moreover, the
company has improved its balance sheet through efficient working capital management
lately. Thus, we reiterate our Buy call on the stock with a price target of Rs500.
PRICE PERFORMANCE
(%)
1m
3m
6m
12m
Absolute
-4.2
34.9
19.3
120.6
Relative to Sensex
-2.0
26.9
10.8
66.6

WIPRO
HOLD
CMP: RS646
MARCH 16, 2015
Downgraded to Hold, PT revised to Rs715
COMPANY DETAILS
Price target:
Rs715
Market cap:
Rs159,478 cr
KEY POINTS
52 week high/low:
Rs677/475
18.7 lakh
BSE code:
507685
NSE code:
WIPRO
Sharekhan code:
WIPRO
65.7 cr
In an anticipated move, Wipro has appointed Abid Ali Neemuchwala as the group
president and chief operating officer (COO) of the company, effective from April 1,
2015. In his role as Wipros COO, he will head the service lines of the global
infrastructure services, business application services, business process services, and
advanced technology solutions. He will also head the companys business operations
in continental Europe, Africa and Latin America; as well as its strategic engagement,
advisor relationship and marketing functions.
In a recent analyst meet, the management hinted at accelerating the growth trajectory
by focusing on the digital technologies space in the areas of: (1) Internet of things, (2)
open source and (3) artificial intelligence.
In Q4FY2015, the revenues will bear an impact of 200-250BPS on account of crosscurrency headwinds. Earlier Wipro had guided to a 1-3% sequential growth at constant
currency. Nevertheless, the management remains optimistic about the demand environment
with improving traction in the USA and continues to see strong deal momentum and
increasing win rates in the recent quarters. However, given the decline in the crude oil
prices, the oil & gas sector is likely to remain weak for the next two quarters at least.
We view the appointment of the new COO as a positive development for the company
which will bring more agility to and improve the delivery processes in the organisation.
Driven by the companys revenue outperformance in the last three months the stock
has delivered 18% returns and the valuation discount between it and its peers has
narrowed. Currently at Rs646 the stock trades at 15x FY2017E earnings. We now
value Wipro at 16.5x FY2017E and arrive at a price target of Rs715. Given the limited
upside from the current level, we downgrade the stock to Hold from Buy and advise
investors to wait for better entry levels.
PRICE PERFORMANCE
(%)
1m
3m
6m
Absolute
1.3
21.7
14.9
12m
17.7
Relative to Sensex
0.8
14.8
7.2
-12.5

April 2015
22
EQUITY
STOCK UPDATE
FUNDAMENTALS
ZEE ENTERTAINMENT ENTERPRISES

BUY
CMP: RS353
MARCH 12, 2015
&TV makes a grand entry into the Hindi
GEC space, upgraded to Buy
COMPANY DETAILS
Price target:
Rs400
Market cap:
Rs34,000 cr
52 week high/low:
Rs326/243
26.0 lakh
BSE code:
505537
NSE code:
ZEEL
Sharekhan code:
ZEEL
54.7 cr
KEY POINTS
PRICE PERFORMANCE
(%)
1m
3m
6m
12m
Absolute
0.9
-5.7
22.5
25.3
Relative to Sensex
0.4
-9.4
15.1
-6.0

Zee Entertainment Enterprises Ltd (ZEEL) launched a new general entertainment channel
(GEC), &TV, in the first week of March 2015 and based on the latest TAM rating, &TV has
opened with 90,612 gross viewership in thousands and received a thumbs up from both
critics and viewers for its overall contents.
For the nine months ended, ZEEL has delivered a blended operating profit margin (OPM) of
27.8%, excluding a sports margin of 34%. The new GEC, &TV, was launched with original
programming time of 21 hours per week. The management has stated that the content cost
for FY2016 is expected to increase by 15-16% and the total operating cost including the
programming cost of the new channel is expected to be around Rs400-420 crore for FY2016.
As per the management, the comfortable range of margin decline from the current levels
could be in the range of 5-7%. We believe the OPM in Q4FY2015 will not be affected by the
launch of the new channel as the launch took place in early March. However, still there will
be some pressure on the margins from the Q3FY2015 exit margins of 25.9%, which also
includes some one-off cost items.
We had downgraded the stock to Hold at Rs382 and the price has corrected by around 10%
since then. We continue to have a positive stance on ZEEL, which is a strong media play
being a prime beneficiary of the overall macro recovery and acceleration in the digitisation
theme. We believe the recent correction in the stock of ZEEL offers an opportunity to reenter. We now upgrade our rating on ZEEL to Buy from Hold with an unchanged price
target of Rs400.
ZYDUS WELLNESS
HOLD
CMP: RS940
MARCH 13, 2015
Downgraded to Hold with revised PT of Rs1,025
COMPANY DETAILS
Price target:
Rs1,025
Market cap:
Rs3,673 cr
52 week high/low:
Rs1,004/481
55,706
BSE code:
531335
NSE code:
ZYDUSWELL
Sharekhan code:
ZYDUSWELL
1.1 cr
KEY POINTS
Since our last update on Zydus Wellness, dated February 9, 2015, its stock price has
seen a decent run-up of close to 12% in just one month. The stock is now trading at
almost 31x FY2016E earnings, which is ahead of its average historical trading multiple.
The recent run-up in the stock price can be attributed to the managements focus on
improving the penetration of some of the niche products such as Sugarfree and the
Everyuth skincare products by revamping its distribution system. The benefits of the
same would start flowing in from Q1FY2016. Also, a decline in the raw material prices
would aid the gross profit margin to improve in the coming quarters.
The redefined distribution strategy, improving demand environment in the urban market
and decline in the raw material prices will help Zydus Wellness to post a better operating
performance in FY2016 and FY2017. Also, the company has one of the strong balance
sheets with cash balance of about Rs250 crore and negative working capital.
PRICE PERFORMANCE
(%)
1m
3m
6m
12m
Absolute
16.8
21.2
52.2
102.1
Relative to Sensex
16.1
14.4
41.9
50.4

However, all these near-term positives are factored in the stock price following the
recent run-up. Hence, we advise investors to take home some profits and wait for a
better opportunity to re-enter the stock. We downgrade our rating on the stock from
Buy to Hold with a revised price target of Rs1,025 (valuing the stock at 28x FY2017E
earnings).
23
April 2015
SECTOR UPDATE
EQUITY
IT
FUNDAMENTALS
MARCH 31, 2015

Q4FY2015 IT earnings preview
KEY POINTS
Sikka, who is expected to unveil the companys cash

deployment strategy in April 2015 (which will serve as a rerating trigger for Infosys in the near term).
Unfavourable cross-currency movements to dampen growth:

The recent appreciation of the dollar by 10.4%, 4.1% and
8.3% against the euro, the pound and the Australian Dollar
respectively would negatively affect the revenue growth of
the top four IT companies by 200-250BPS in Q4FY2015.
On a constant-currency basis, the sequential growth is
expected to be in the range of 2.3-4.0% in Q4FY2015 with
HCL Technologies leading among the front-line companies.
Owing to unfavourable cross-currency movements, the OPM
of the top four IT companies is likely to decline by 27-57BPS
sequentially.
Key issues to watch out for would be: (1) management

commentary on IT budget for CY2015 and the overall
demand environment; (2) outlook for energy & utilities and
manufacturing verticals owing to a steep fall in crude oil
prices; (3) the commentary on the deal flow and the trends
in the digital space; (4) wage hikes for FY2016 (which could
be higher than the last years average); (5) hedging policy,
given the volatile cross-currency movements; and (6) Infosys
is expected to deploy cash to the tune of $5 billion in carrying
out acquisitions and buy-backs, as indicated by Dr Vishal
Valuation: In the last one month the CNX IT Index has

corrected by close to 5% owing to the fear of growth tapering
off in FY2016 and negative impact of unfavourable crosscurrency movements. However, the demand environment is
strong with improving discretionary IT spending in the USA
and evolving opportunities in digital technologies. Thus, we
believe that the adverse impact of a possible downgrade in
the earnings estimates due to cross-currency movements is
already being reflected in the valuations. Consequently, we
remain constructive on the IT sector for an investment
horizon of 12 months and the IT stocks that we prefer are
Infosys, Tata Consultancy Services (TCS), HCL
Technologies, Tech Mahindra (unrated) and Persistent
Systems (in the mid-cap space).
Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or
having a position in the companies mentioned in the article.
GREENPLY INDUSTRIES
VIEWPOINT
CMP: RS985
POSITIVE
MARCH 19, 2015
Discretionary play available at discount; re-rating on cards
Key points
Leading player in organised plywood market: Greenply

Industries (Greenply) is a leading player in the organised
plywood segment (market size of Rs5,000 crore) with a market
share of 25%, competing neck and neck with Century
Plyboards (Century). Over the years, Greenply has created a
brand-equity strength in the market which enables it to
command a 15-20% premium over the unorganised players
and a 5-8% premium over the other regional brands. A strong
growth is expected in the home improvement segment which
would enable Greenply to post a 15-18% growth over the next
three years without any capacity expansion.
GST roll-out a game changer; to provide big opportunity to

organised players: Starting FY2016, the transition towards the
Goods and Services Tax (GST) and the determination of the
government to adhere to the GST implementation timeline
would benefit organised plyboard players like Greenply. As
April 2015
for procuring wood, the plywood industry doesnt pay any

excise duty or VAT. Therefore, there is no CENVAT credit
available to the plywood manufacturers. As a result, the scope
for savings is huge if the excise duty is evaded (that is why the
plywood segment has more unorganised players, who form
70% of the segment). However, once the GST comes into force,
the tax advantage currently enjoyed by the unorganised players
would diminish sharply and the market share of the organised
players would surge. This would expedite the shift from the
unorganised segment to the organised segment, thereby
leading to a strong growth in volumes. After the roll-out of
GST, the market share of the organised players is expected
to double from 30% currently to over 50% in the next two
to three years.
24
Market leader in MDF segment; set to grow manifold: Apart

from being present in the plywood segment, Greenply is present
EQUITY
VIEWPOINT
FUNDAMENTALS
in the new and fast emerging MDF business. This segment in

the furniture industry is expected to grow at a faster pace of
20-25% on an average over the next three years. Greenply is
a market leader with a 30% market share and thus is largely
expected to lead the industry growth in the segment. We expect
this segment of Greenply to grow at a much brisker pace of
21.3% CAGR over FY2014-17, trending the expected uptick
in the commercial and the retail real estate segment.
Greenply to report RoCE and RoE of 20% and 25% for

FY2017 respectively.
Margins set to improve by 170BPS and returns to improve

significantly: Led by healthy revenues in the plywood and MDF
segments, the OPM is expected to improve (the margin of the
MDF business is expected to improve from 23.6% currently
to 26% in FY2017 owing to better absorption of overheads
as a result of an improvement in capacity utilisation. The
margin of the plywood business is expected to improve from
9.3% currently to 11% in FY2017, led by a lower freight cost
and the benefits of raw material joint venture flowing to the
financials). Thus, on a consolidated basis, we expect a 170BPS improvement in the overall margin. A strong margin
improvement coupled with no enhanced capex is likely to result
in a healthy improvement in the return ratios. We expect
Discretionary play with undemanding valuations; re-rating

eminent: At the current market price the stock is trading at
17.6x our FY2016 EPS estimate of Rs56. We believe that a
strong player with healthy financials, strong free cash
generation capability (we expect the company to generate free
cash averaging Rs150 crore annually over FY2015-17) and
healthy return ratios is trading at undemanding valuations.
Moreover, its robust growth potential and improving industry
dynamics are not being adequately factored in by the market
in terms of valuations. Hence, we expect the stock to get rerated, hence we hold a positive view on the stock and expect
the company to trade at 17-18x (which is a 25-30% discount
to its competitor, Century) its FY2017 earnings estimate of
Rs70. This provides an upside of around 25% from the current
levels.
having a postition in the companies mentioned in the article.
SALZER ELECTRONICS
BOOK PROFIT
CMP: RS257
Book profit for hefty gains
VIEWPOINT
MARCH 11, 2015
Key points
improvement already visible (the companys earnings were better

in M9FY2015 compared with the earnings of FY2014). The
price/earnings (PE) multiple of the company has almost doubled
since then. Based on our quick earnings estimate for FY2016,
the PE has expanded from 7x to 15x in the last six months.
Since we initiated our positive view on Salzer Electronics in a

Viewpoint note dated September 1, 2014 at a price of Rs136
the stock has appreciated by close to 90%. It has outperformed
the BSE Small-cap Index by a long margin as the comparable
small-cap benchmark index grew by 9% during this period. The
performance of the stock could be attributed to an improvement
in the earnings visibility leading to a re-rating.
Our positive stance on the stock was based on the following:

(1) a strong earnings growth trajectory during FY2014-16 which
would lead to potential re-rating of the valuation; and (2) a
strong pedigree (Larsen and Toubro holds a 26% stake in the
company) along with a marquee clientele. We believe our
expectations have played out well, with the earnings
Though we believe the above mentioned positives, ie strong

pedigree and earnings trajectory, are intact for Salzer Electronics,
but the same are factored in the current valuations of the stock,
which has already appreciated by almost 90% in the last six
months. Currently, the stock is trading at 21x and 15x our quick
earnings estimates for FY2015 and FY2016 respectively. Hence,
we advise investors to book profit at the current level and take
home the goodies.
having a postition in the companies mentioned in the article.
25
April 2015
EQUITY
TREND & VIEW
TECHNICALS
Back into a larger channel

Daily view on Nifty
The Nifty has provided a fresh break-out from a downward

sloping parallel channel which indicates that the short-term
trend is up.
9300
9200
9100
9000
8900
8800
8700
Currently, the index has started its wave X up, which has a
target of 8800 levels, ie 61.8% retracement level of the entire
fall from 9119 to 8269 levels.
The daily momentum indicator has given a positive cross-over.
Crucial supports for the index will be around 8550 and 8464
while crucial resistance will be near 8800 and 8950.
8600
8500
8400
8300
8200
8100
8000
7900
7800
7700
7600
7500
7400
7300
7200
7100
6
5
4
3
2
1
0
-1
-2
-3
-4
KST (-0.14164)
June
July
August
September
October
November
December
2015
February
March
April
Weekly view on Nifty

The Nifty had broken the medium-term upward sloping channel

on the downside. However, it managed to get back into it which
is a positive sign for the bulls.
According to the Elliott wave theory, the fall was a clear threewave fall, hence this indicates that the bull market is intact and
dips should be utilised as buying opportunities for the medium
to long term, ie from an investment point of view. However,
from a trading perspective, there is a resistance near 8800, which
is also our short-term target. So if that level is taken off on a
weekly basis, then the medium-term trend will shift from down
to up for a target of 9500.
9500
9400
9300
9200
9100
9000
8900
8800
8700
8600
8500
8400
8300
8200
8100
8000
7900
7800
7700
7600
7500
7400
7300
7200
7100
7000
6900
6800
6700
6600
6500
6400
KST (0.22023)
10
On the weekly chart the momentum indicator has a negative

cross-over.
A crucial support would be around 8269 and resistance would

be around 8800.
0
ov
Dec
2014
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
2015
Feb
Mar
Apr
May
Jun
Monthly view on Nifty

The Nifty has closed in negative territory which signals a

completion of wave V of iii of 1 up. This means that the index
is poised for a retracement of the entire move from 5118 level
to 9119 level.
10500
10000
9500
0.0%
9000
8500
23.6%
8000
38.2%
The Nifty has already retraced 23.6% of its previous move, ie

till 8269 level. Now if it breaks 8269 then it will trigger further
downside till 7650 level, ie the 38.2% retracement level.
7500
50.0%
7000
61.8%
6500
6000
5500
On the contrary, if 8269 is held then the bulls will take the
Nifty to the upper end of the rising channel, ie till 9500.
A crucial support will be around 8269 and a crucial resistance

will be around 8950.
100.0%
5000
4500
30
25
KST (22.6633)
20
15
10
5
0
-5
-10
J J A S O N
Medium term
Trend
Trend reversal
Support
Resistance
Target
Down
8800
8180
8789
8180
April 2015
26
2011
A MJ J A S O
D 2012
A MJ J A S O
D 2013
A M
J A S O
D 2014
A M
J A S O
D 2015
A M
J A S O
D 2016
EQUITY
MONTHLY VIEW
DERIVATIVES
Derivative View: Fall around the corner

The last month of financial year 2014-15 was disappointing for
bulls. Despite a favourable Union Budget 2015-16 and rate cut by
the Reserve Bank of India, the Indian stock market traded with a
negative bias in March this year. It was observed that market
participants were busy unwinding their long positions mainly for
accounting adjustments as FY2015 ended. The unwinding of the
longs and a sell-off by the foreign institutional investors led to a
correction of close to 4% on the benchmark indices with Nifty
closing at 8342 and Bank Nifty closing at 17700 for the month.
Further, a lack of positive trigger coupled with expectations of
subdued quarterly results might lead to further consolidation in
the Indian market in April.
Top 5 stock futures with highest OI in current series

STOCK FUTURES (SHAREKHAN SCRIP CODE)
OPEN INTEREST (RS CR)
HDFCBANK
4856.05
RELIANCE
2977.75
SBIN
2093.54
ICICIBANK
2031.63
INFY
1754.42
Top 5 stock options with highest OI in current series

STOCK OPTIONS (SHAREKHAN SCRIP CODE)
ROLL-OVER: MARKET-WIDE VS NIFTY
OPEN INTEREST (RS CR)
RELIANCE
511.07
SBIN
475.43
ICICIBANK
391.17
INFY
317.21
AXISBANK
291.10
View
On the options front, in the April series currently the 9000 call
option has the highest number of shares in open interest (OI)
followed by the 8800 call option. On the put side, the build-up was
seen in the 8400 strike price, which has the highest number of shares
in OI, followed by the 8300 strike price. However, the difference
between these strike prices is quite less. Further, after the important
event of the Union Budget the Volatility Index cooled off and reached
the lowest level of around 13.00%. However, it settled at around
15% on the last day of the series which is also on the lower side.
After the put/call ratio (PCR) took support near 0.83 level the market
and PCR both saw a sharp bounce. The PCR currently stands at
0.96. The above data set suggests that going forward we can expect
more upside in the market. The monthly straddle break-even point
at 8737 is on the higher side. Hence, if the Nifty sustains above this
level, we can expect a target of 8800-8850 in the coming trading
sessions.
The benchmark index, Nifty, started the March series at a life-time

high. The new series started the month with Rs19,242 crore in
Nifty futures vs Rs21,248 crore in the previous series; Rs63,046
crore in stock futures vs Rs65,137 crore in the previous series;
Rs70,459 crore in index options vs Rs65,122 crore in the previous
series; and Rs4,475 crore in stock options vs Rs4,483 crore in the
previous series. The roll-over in Nifty stood at 76.97%, which is
marginally lower than the previous months roll-over of 80.54%.
It is also marginally higher than the three-month and six-month
average roll-overs of 74.37% and 72.52% respectively. The marketwide roll-over stood at 84.64%, which is marginally lower than
the previous months roll-over of 84.94% and slightly lower than
the three-month and the six-month average roll-over of 85.06%
and 85.11% respectively. The roll-over in Nifty to the next series
was more or less in line with expectations at around 77%, indicating
that despite a huge sell-off at every rise most of these longs were
again rolled over to the April series as the roll-over cost increased
significantly by approximately Rs114.
27
April 2015
MONTHLY VIEW
COMMODITY
FUNDAMENTALS
Commodities: Bullion complex likely to recover as the US and other global economies slow down
Macro-economy
Key points

US NFP results much weaker, downward revision of last two months

data
US March pay-roll figure of 126,000 is substantially lower than the
245,000 predicted
Saudi Arabia launched a bombing campaign against the rebels inside
Yemen
US economy grew 2.2% in the fourth quarter, down from an initial
estimate of 2.6%
The Fed expects real GDP to grow between 2.1% and 3.1% for the
remainder of 2015
US housing starts fall while existing home sales increase
US core durable goods orders inched down 0.4% in February 2015
US UoM consumer sentiment rose to 93, beating estimates of 92.5
The PBoC cut the benchmark one-year lending rate by 25BPS to
5.35%
China pledges readiness to bolster sagging economic growth: Premier
Li Keqiang
Chinas Zhou says PBoC has room to act on growth slowdown
China lowered the nation's economic growth target for the year to
7% from 7.3%
Chinas exports surged 48.3% YoY in February while imports
tumbled 20.5% YoY
Chinese inflation for February 2015 rose to 1.4%, above expectations
of 0.9%
Chinese investment growth was up 15% while industrial output rose
by 7.8% in February 2015
China's factory sector growth falls to an 11-month low
Euro zone unemployment rate in February this year stood at 11.30%;
above expectations of 11.2%
Germanys March unemployment rate of 6.4% is below forecast of 6.5%
Japan nears deflation as core CPI hits 0%
London property price rises slow down
COMMODITY PRICES IN MARCH 2015 (IN $)

Commodity
High
Low
Close
MoM chg %
Copper
6,294.5
5,621.5
6,041.0
2.5%
Zinc
2,128.5
1,981.0
2,081.0
0.8%
Lead
1,882.0
1,676.5
1,820.0
5.3%
Nickel
14,675.0
12,340.0
12,395.0
-12.1%
Gold
-2.6%
1,223.0
1,141.6
1,182.1
Silver
17.3
15.3
16.6
0.5%
Crude oil
52.5
42.0
47.6
-4.3%
MONTHLY CHANGE IN DOE PETROLEUM STOCKS (FEB-MAR 2015)

Crude oil
Change in (000' bbls)
March 27, 2015
Change in (%)
Dist.
Gasoline
22304
2873
-6674
466678
125849
233386
0.05
0.02
-0.03
Refinary utlisation rate was at 89% in the last week of March
MONTHLY CHANGE IN SHFE STOCKS (FEB-MAR 2015)

Copper
Change (in Tonne)
March 26, 2015
Change (in %)
Lead
Zinc
38446
-798
18839
243592
48185
139991
18.74
-1.63
15.55
MONTHLY CHANGE IN LME STOCKS (FEB-MAR 2015)
Change (in tonne)

March 31, 2015
Change (in %)
Copper
Lead
Zinc
Nickel
35925
19375
-54225
5130
332300
234125
513125
433806
12.12
9.02
-9.56
1.20
NoteLME: London Metal Exchange , SHFE: Shanghai Futures Exchange, DOE: Department of Energy (US)
Crude oil: Range-trade to continue with downside risk

Key points
Global powers agree to key parameters of Iran nuclear deal
Iran nuclear deal to add excess oil to the market but impact limited in short term
Iran reportedly has 30 million barrels of stored oil ready for export once the sanctions are lifted
US oil drillers laid down the most rigs in the fourth quarter since 2009; crude stock at 80-year high
Saudi Arabia raised its official selling price for oil for Asian buyers for second straight month
WTI NYMEX crude oil
CMP: $51.80
Crude oil remained under pressure in March 2015 on an excess supply story. Crude oil prices got some support from air strikes in Yemen
by Saudi Arabia and its Gulf Arab allies as these strikes sparked fears that escalation of the Middle East battle could disrupt world crude
supplies. But the prices retreated as there is a possibility that the tankers could be diverted to travel around Africa if the strategic pathway
is unavailable. In the meanwhile, world powers and Iran reached a nuclear deal on April 3, 2015 which would restrict Irans nuclear
programme for at least a decade. In turn, the world powers would be partially lifting the economic sanctions against Iran. Under the deal,
Iran will reduce its centrifuges to one-third to 6,104 units and not enrich Uranium above 3.67% for 15 years. Although the deal has been
hailed as a major success on technical aspects, its political success is still debatable. Israel continues to protest against the deal as the
country sees a stronger threat to its interests. Similarly, Saudi Arabia and the other major countries in the Middle-East might construe
this deal to be a loss of influence in the region and conservatives in the USA are would be a tough customer. The so-called P5+1 nations,
ie the USA, Britain, France, Germany, Russia and China, have until June 30 to agree on all the details of a final deal with Iran. Lifting of
sanctions against Iran would have a limited impact on the oil markets in the near term due to underinvestment, the June 30 deadline and
inspection by the International Atomic Energy Agency, which could last for six months. The counter is likely to trade in the $47-55 range
in the near term with a downward bias.
April 2015
28
COMMODITY
FUNDAMENTALS
MONTHLY VIEW
Bullions: To rise on slowing global economy, weaker dollar and geo-political risks
Key points
India imported 70 tonne of gold in March 2015; total imports in FY2015 were of 638 tonne
All India Gems & Jewellery Trade Federation expects imports of 800-825 tonne in FY2016
Shanghai Gold Exchange withdrawal volume could exceed last years volume
US Mint American Eagle gold coin sales in March were up 151.40% from February this year
China is likely to allow more companies to import gold into the country from next month: WGC
New mined gold supply to rise by 4.6% this year: CPM
Silver ETFs outperforming other precious metals so far this year
The Silver Institute to release its World Silver Survey 2015 in New York City on May 6
Gold
CMP: $1,213 (spot)
Gold witnessed significant volatility in March this year as the euro depreciated sharply against the dollar after the launch of a 60-billion-a-month
quantitative easing programme by the European Central Bank (ECB) earlier in the month. During the last week of March, the markets woke up to a geopolitical risk in a long time after the Saudi Arabia-led coalition's attack on Houthi rebels in Yemen. Saudi Arabia launched a bombing campaign against
the rebels inside Yemen after an advance by the Houthi militants toward the city of Aden forced Yemens president, Abed Rabbo Mansour Hadi, to flee
the port city on boat. Gold cut its losses on a weaker dollar too as the Dollar Index fell by nearly 4% since hitting a 12-year high of 100.78 on March
13 amid expectations that the US interest rates will rise at a slower pace than previously thought. The bullion complex is likely to gain further upward
traction in the wake of the disappointing March non-farm payroll report out of the USA and the yet to be concluded Greece deal. Weakness is expected
in the broader markets which would support the metal. We expect a range of $1,185-1,270 with an upward bias.
Silver
CMP:$16.91 (spot)
Perus silver output rose by 12% in January on a year-on-year basis. As per the latest statistics released by the Gems and Jewellery Export
Promotion Council (GJEPC), Indias silver bar imports during February dropped sharply by 11.1% upon comparison with the imports
during the same month in the year before in rupee terms. We expect a range of $16-18 with an upward bias.
Base metals: Seen trading sideways

Key points

Major themes: Chinas stimulus, US rate hike timing, actual demand in Chinas peak season
Metals trade mixed as China manufacturing slumps to 11-month low
China Jan.-Feb. refined copper output was 1,197,368 tonne, up 15.81%
China Jan.-Feb. refined zinc output was 967,099 tonne, up 16.81%
China Jan.-Feb. refined lead output was 654,977 tonne, down 5.35%
China Jan.-Feb. refined nickel output was 53,652, up 31.46%
Inbound Chinese shipments of copper and products are at the lowest in more than three years
China refined nickel imports at seven-month high as ore falls
Union at BHP Colombia nickel mine likely to vote to strike
Healthy automobile sales a positive factor for the base metals
Copper
CMP: Rs378 (April contact)
Copper prices rose around 2.5% in March after falling continuously in prior months. The recovery came on the back of speculation over further
easing from China and a tentative recovery in the euro from a six-year low against the dollar. Copper got further support from the trend in
copper inventories. The pace of stocks build-up at the Shanghai Futures Exchange monitored warehouses slowed down and London Metal
Exchange stocks slid lower towards the end of the month. In the last month, BHP Billiton had reported that copper production from its Olympic
Dam mine in Australia would be reduced by 60,000 to 70,000 tonne due to problems at its mill. Also, some of the copper mines in Chile were
forced to shut down temporarily as torrential rain in the Atacama Desert of northern Chile closed roads and flooded towns. The rising production
in China and a lack of a meaningful production cut in Chilean production dont bode well for the red metal. Peru's production of copper fell by
11.7% to 99,718 metric tonne (MT) from 112,915MT a year ago. The metal is likely to trade in the Rs363-393 range.
Lead
CMP: Rs118 (April contract)
China's imports of lead concentrate surged by 44% in February. Peru's production of lead rose by 24.4% to 24,191MT from 19,442MT in a year
earlier in February. The latest ILZSG report states that the global market faced a modest deficit of 8,600 tonne in January following a 5,000tonne deficit for all of 2014. The rally in lead has got more to do with stock shuffling as cancelled warrants jumped by over 1 lakh tonne, thereby
leading to tightness in the cash-to-three-month spread. We expect a range of Rs112-122.
Zinc
Japan's biggest zinc smelter, Mitsui Mining and Smelting Co Ltd, has slashed its annual premiums to overseas buyers for 2015 by around 10%,
marking the first cut in six years, on concerns of rising zinc exports by top user, China. Peru's production of zinc rose by 19% to 113,100MT
from 95,202MT a year earlier in February. The International Lead and Zinc Study Group (ILZSG) said that the refined zinc market was virtually
balanced during the first month of the year, with a deficit of 2,000 tonne. We expect a range of Rs127-135.
29
April 2015
COMMODITY
MONTHLY VIEW
Nickel
FUNDAMENTALS
Nickel prices remained under pressure as surplus persisted and inventories continued to swell. Data showed there was still a global nickel surplus
of 5,200 tonne in January, although the same was narrower than December 2014's 17,200 tonne, according to the International Nickel Study
Group (INSG). From a longer-term perspective, INSG forecasts that nickel is expected to be in a deficit of about 40,000MT in 2015 after a
45,000-tonne surplus in 2014. Weak domestic demand and low prices have prompted producers of nickel pig iron in China to stop or curb
production this month and sell their stocks for cash. Nickel maybe supported by the concerns over supply squeeze in the near term as union
workers at BHP Colombia Nickel Mine are voting to strike, opposing an increase in work shift to 12 hours. All workers at Cerro Matoso mine,
the worlds second largest nickel mine, may participate. The strike can start by April 15. We expect a range of Rs780-860.
CMP as on April 07, 2015
Events watch: Major economic events in April 2015

Region
Event
Survey
Actual
Prior
1/4/2015
Date
China
Manufacturing PMI
49.7
50.1
49.9
1/4/2015
USA
ISM Manufacturing PMI
52.5
51.5
52.9
1/4/2015
USA
Total vehicle sales
16.7M
17.2M
16.2M
2/4/2015
3/4/2015
USA
USA
Factory orders MoM

Change in non-farm pay-roll
-0.40%
247K
0.20%
126K
-0.20%
295K
6/4/2015
USA
ISM Non-manufacturing PMI
56.6
56.9
10/4/2015
China
CPI YoY
1.30%
1.40%
13/4/2015
China
Trade balance
39.0B
60.6B
14/4/2015
USA
Core retail sales MoM
0.70%
-0.10%
14/4/2015
15/4/2015
USA
Euro zone
PPI MoM
ECB press conference
0.20%
-0.50%
15/4/2015
USA
Industrial production MoM
-0.20%
0.10%
16/4/2015
China
GDP QoQ
7.10%
7.30%
16/4/2015
USA
Philadelphia Fed Manufacturing Index
17/4/2015
USA
CPI MoM
0.30%
0.20%
21/4/2015
Euro zone
German ZEW Economic Sentiment
23/4/2015
Euro zone
German Ifo Business Climate
24/4/2015
USA
Core Durable Goods Orders MoM
-0.40%
29/4/2015
USA
Advance GDP QoQ
2.20%
29/4/2015
USA
FOMC statement
April 2015
55.1
Impact
Chinese manufacturing gauge rebounds slightly in March, so slightly bullish for industrial
commodities as the nation is the biggest consumer of metals
Manufacturing activity declined slightly further in the USA; bearish for industrial commodities
and bullish for the bullions
March US auto sales climbed; the number is bullish for the base metals; it is the annualised
number of cars and trucks sold domestically during the previous month
Improving factory order numbers supportive for the dollar and industrial commodities
The US NFP data turned out to be a severe disappointment as the previous two months' data
was also revised lower; signs of improvement seen in a slight drop in unempoyment rate and
marginal improvement in average hourly earnings; the rate hike expectations are being pushed
farther; the data is bearish for the dollar and supportive for the bullion complex; base metals
and crude oil expected to head lower though a weaker dollar may cause volatility in near term
The data is crucial as services sector constitutes nearly 70% of the US economy; better than
expected data bullish for the dollar and industrials but bearish for precious metals
Falling inflation expectations around the world are stoking the fear of deflation; if the data
trails the forecast, it would lead to concerns that the economy is not able to move ahead in the
desired fashion; thus, data below forecast would weigh on both industrial and bullion complex,
though epxcetations of further stimulus would keep the downside limited
Widening trade surplus is an indication of more exports in comparison to imports; however,
we need to look at both import and export figures so as to gauge the health of both the
Chinese economy and the world economies; the data has been disappointing for past several
months of late
An indicator of consumer spending behaviour on retail basis, crucial for industrial metals;
better than expected data would be bullish for industrial commodities and bearish for bullion;
stronger data would be dollar supportive
Topping the estimate would be bullish for the dollar and industrial commodities
It's the primary method the ECB uses to communicate with investors regarding monetary
policy; it covers in detail the factors that affected the most recent interest rate and other policy
decisions, such as the overall economic outlook and inflation; the event is important for all the
financial markets broadly; dovish ECB would lead to a spike in risk appetite which would
weigh on bullions and euro as risk assets would rally
Lower than estimated would be bearish for industrial commodities as it is a key indicator of
the demand for industrial commodities
A key indicator of economic growth, a fall in GDP will lead to bearishness in metal and energy
counters but bullions could rise; it is to be noted that expectations of more stimulus could lead
to volatility
This is a crucial manufacturing indicator; better than expected data would buoy the dollar
while bullions would fall; industrial commodities would initially fall on stronger dollar but
eventually rise on the increased demand prospects
Higher than expected reading would be bullish for the dollar and somewhat bearish for industrial
commodities as rate hike expectations would rise
It's a leading indicator of economic health as it is a economic survey of Germany for the next
six months; improving data would support base metals and the euro
This survey is highly respected due to its large sample size and historic correlation with
German and wider euro zone economic conditions; better than expected data would be
supportive for the euro and industrial commodities
It's a leading indicator of production; higher orders will lead to higher prices of industrial
metals
A key indicator of economic growth, a rise in GDP will lead to bullishness in metal and energy
counters but bullions would fall; the dollar would rally; the GDP data is likely to surprise on the
downside
This report includes the FOMC's projection for inflation and economic growth over the next
two years; this is a key market-moving report as it influences all the financial markets
30
COMMODITY
TREND & VIEW
TECHNICALS
Gold shining bright

Gold seems to be forming a multi-week inverted head-andshoulders pattern which is bullish.
It is about to give a bullish break-out from the neckline.
In terms of wave structure, it is forming the third leg on the

upside.
The daily momentum indicator is in bullish mode.
The levels $1,257 and $1,300 will be the conservative and the
aggressive pattern targets respectively.
On the other hand, the swing low of $1,178 will act as a major
support.
KST (1.81091)
5
-5
1345
1340
1335
1330
1325
1320
1315
1310
1305
1300
1295
1290
1285
1280
1275
1270
1265
1260
1255
1250
1245
1240
1235
1230
1225
1220
1215
1210
1205
1200
1195
1190
1185
1180
1175
1170
1165
1160
1155
1150
1145
1140
1135
1130
1125
1120
1115
1110
1105
0.0%
23.6%
38.2%
50.0%
61.8%
100.0%
Trend
Up
Trend
reversal
Supports
Resistances
Target
$1,178
$1,195/1,180
$1,223/1,250
$1,257/
$1,300
8
15
ptem ber
22
29
6
13
October
20
27
3
10 17
Novem ber
24
1
8
15
Decem ber
22
5
2015
12
19
26
2
9
16
February
23
2
9
March
16
23
30 6
April
13
20
27
4
May
11
18
25
1
J
Silver is sought after

Silver found support near the 78.6% retracement mark and

formed an impulse on the upside in March 2015.
This means that the white metal is poised for a larger upside.
From the key daily moving averages (DMAs) silver seems to

have started the next leg on the upside.
KST (3.27492)
10
5
0
-5
SILVER [CASH] (16.7300, 17.0000, 16.6400, 17.0000, +0.29000)
20.5
20.0
19.5
19.0

On the higher side, silver is expected to test the high of $18.48

whereas the equality target is at $18.66.
18.5
0.0%
18.0
23.6%
A reversal of the bullish view can be placed below the swing

low, ie $16.41.
17.5
0.0%
17.0
38.2%
23.6%
38.2%
16.5
50.0%
50.0%
61.8%
16.0
61.8%
Trend
Up
Trend
reversal
Supports
$16.41
$16.64/16.53
Resistances
15.5
Target
78.6%
100.0%
15.0
$17.38/18.04
14.5
100.0%
$18.48 /
$18.66
Septem ber
October
Novem ber
Decem ber
2015
February
14.0
161.8%
March
April
May
Crude oil about to boil

NYMEX crude oil had formed a distribution triangle in February

2015.
KST (2.76880)
5
0
-5
-10
It broke out on the downside from the bearish pattern in March

2015. After the break-out the oil cracked the low of $43.58
and made a new low of $42.03.
-15
70
LIGHT CRUDE CONTINUOUS 1000 BARRELS [NYMEX] (49.5900, 50.2700, 48.1100, 49.1400, -0.95000)
69
68
67
66
65
64
63
From there the oil has entered the pull-back mode, which is
subdividing into waves of lower degrees.
62
61
60
59
58
57
56
The daily and weekly momentum indicators are in sync with

the pull-back.
55
54
53
52
51
50
49
Unless the swing low of $47.05 breaks on a closing basis the oil
can be expected to move up till $57.50.
48
47
46
45
44
43
42
Trend
Up
Trend
reversal
$47.03
Supports
Resistances
Target
41
40
39
38
37
$49.20/47.60
$52.48 /55
3
10
Novem ber
$57.50
31
17
24
1
8
Decem ber
15
22
29
5
2015
12
20
26
2
9
February
17
23
2
9
March
16
23
30
6
April
13
20
27
4
May
April 2015
TREND & VIEW
COMMODITY
TECHNICALS
Copper near key support

COMEX copper formed a triangular pattern and broke out on

the upside in February 2015.
MACD (0.03526)
0.00
-0.05
Since then the red metal has been heading higher. The upmove
is breaking up into waves of lower degrees.
-0.10
HG COPPER CONTINUOUS 25000 LBS [COMEX] (2.74400, 2.76550, 2.71650, 2.73400, -0.01450)
3.15
3.10
3.05
Currently it is trading near the key DMA, where it is likely to

take support.
The daily and weekly momentum indicators are in bullish mode.
Thus, unless the key DMA ($2.689) breaks on a closing basis

the bias would remain positive.
3.00
2.95
2.90
2.85
2.80
2.75
2.70
2.65
2.60
The key levels on the upside will be $2.91 and $3.02.
2.55
2.50
2.45
Trend
Up
Trend
reversal
Supports
Resistances
Target
$2.689
$2.71/2.695
$2.85/2.88
$2.91/3.02
2.40
2.35
17
24
1
8
Decem ber
15
22
29
5
2015
12
20
26
2
9
February
17
23
2
March
16
23
30
6
April
13
20
27
4
May
Zinc controlled by bulls

MCX zinc recently found support near the previous low of

Rs124.50. From there it has moved up sharply.
KST (2.81260)
On the way up the base metal has crossed a falling trend line
and the key DMAs, which will now act as crucial supports.
-5
ZINC - 1KG - 1 MONTH (130.900, 132.800, 130.800, 132.450, +1.80000)
150
149
148
The daily momentum indicator is in favour of the bulls and the

weekly momentum indicator has triggered a fresh bullish crossover.
147
146
145
144
143
142
141
140
139
Thus, zinc is expected to move up to test the medium-term falling

trend line, which is near Rs138. A reversal can be pegged at the
swing low of Rs128.8.
138
137
136
135
134
133
132
131
130
129
128
127
126
Trend
Trend
reversal
Supports
Resistances
125
Target
124
123
122
Augus t
Up
Rs128.8
Rs130.80/
Rs129.80
Rs134.90/
Rs137
Septem ber
October
Novem ber
Decem ber
2015
February
March
April
Ma
Rs138
Dhaanya Index near key retracement

From the low of 2378 the Dhaanya Index has entered the pullback mode, which is unfolding in a channelised manner.
Relative Strength Index (69.7361)
80
70
60
50
40
Currently the index has reached the upper end of the channel.
30
20
* DHAANYA - NCDEX FUTURE INDEX (2,514.75, 2,526.42, 2,514.45, 2,521.51, +6.97998)
In terms of Fibonacci retracement, it has retraced nearly 38.2%

of the previous fall.
The daily momentum indicator has reached the overbought

zone.
Thus, from hereon the index may start to slide and test the low
of 2378.
2850
2800
100.0%
2750
2700
2650
61.8%
2600
50.0%
2550
38.2%
On the higher side, the 50% retracement mark, ie 2582, will

act as a major hurdle on a closing basis.
2500
23.6%
2450
2400
Trend
Down
April 2015
Trend
reversal
Supports
2582
2456/2412
Resistances
0.0%
Target
2350
29 6
13
October
2534 /2555
20
27
3
10
17
Novem ber
24
1
8
15
Decem ber
22
29
5
2015
12
19
27
2
9
February
16
23
2
9
March
16
23
30
6
April
13
20
27
4
May
2378
32
CURRENCY
FUNDAMENTALS
MONTHLY VIEW
Currencies: Euro plunged on QE and made new low of 1.0452

Key points
RBI cuts its repo rate by 25BPS to 7.5% in March 2015
Indias CPI edges up to 5.37% in February, IIP slowed down to
2.6% in January this year
ECB said it will buy 60bn of assets each month until at least
September 2016
Fed eliminated a near-term rate hike
March 2015 contract price movement
CURRENCY LEVELS IN MARCH 2015 (IN RS)

Currency
High
Low
Close
Monthly chg (%)
USD-INR
63.00
61.66
62.42
0.72
EUR-INR
70.48
65.77
67.74
-3.69
GBP-INR
96.37
91.91
93.06
-3.12
JPY-INR
53.00
51.39
52.40
0.44
March 2015 contract price movement

7 0 .8
5 2 .9
63
9 5 .8
6 9 .8
6 2 .5
5 2 .4
62
5 1 .9
9 4 .8
6 8 .8
9 3 .8
6 7 .8
US DINR
USD-INR
26-Mar-15
24-Mar-15
22-Mar-15
20-Mar-15
18-Mar-15
16-Mar-15
14-Mar-15
12-Mar-15
8-Mar-15
EURINR
JPY INR
10-Mar-15
6-Mar-15
4-Mar-15
2-Mar-15
9 1 .8
28-Feb-15
9 2 .8
6 5 .8
26-Feb-15
26-Mar-15
24-Mar-15
22-Mar-15
20-Mar-15
18-Mar-15
16-Mar-15
14-Mar-15
12-Mar-15
10-Mar-15
8-Mar-15
6-Mar-15
4-Mar-15
2-Mar-15
28-Feb-15
5 1 .4
26-Feb-15
6 1 .5
6 6 .8
G B PINR
CMP: Rs62.20 (SPOT)
The Indian Rupee (INR) depreciated by 0.72% in March this year on the back of a strong dollar globally. The dollar gained strength against
the other major currencies on expectations of an interest rate hike sooner than later. The US central bank, Federal Reserve (Fed), dropped the
usage of the word patience from its policy statement. After the policy meeting the rupee corrected from 63.0 levels to 62.14 as the Fed
eliminated a near-term rate hike, signalling its monetary policy will remain loose for longer. The Fed lowered the growth estimates for the
USA as well as its forecast for interest rates and inflation for the longer term. It said it would keep a close eye on economic data. At the lower
levels buying was witnessed and the rupee depreciated back to 62.8 on month-end dollar demand. Retail inflation accelerated for three
consecutive months. Indias Consumer Price Index (CPI) edged up to 5.37% in February from 5.19% in January and Index of Industrial
Production (IIP) slowed down to 2.6% in January from 3.2% in the preceding month. However, a sharp decline in the rupee was prevented
as the Reserve Bank of India (RBI) cut its repo rate by 25 basis points (BPS) to 7.5% on March 4 to support the government, which is pushing
to revive economic growth as inflation cools. The International Monetary Fund (IMF) raised its FY2015 and FY2016 growth forecasts for
India to 7.2% and 7.5% respectively. The expected range in the near term is Rs61.80-62.85.
GBP-INR
CMP: Rs92.92 (SPOT)
The pound depreciated by 2.4% in March. In the early part of the month, it traded with a positive bias on the back of strong economic data
from the country. The Bank of England (BoE) governor, Mark Carney, said a gentle rise in interest rates is likely and consistent with the
mandate. However, in the middle of the month, the pound gave up its strength as investors anticipated that the Fed might hike rates sooner
as the latter dropped the usage of the word patience from its policy statement. The pound bounced back on an overall dovish stance of the
Fed. In the last few sessions of the month, the pound remained under pressure as the BoE governor said that interest rates in the UK might
rise at a slower pace than expected. Uncertainty over the UK general elections added downside pressure. The general elections are scheduled
to take place on May 7 this year and most of the polls show no clear majority with the result of a hung parliament. The UKs CPI slowed to
the lowest level fuelling concerns of deflationary pressures. The pair is likely to trade between Rs92 and Rs94.20 with an upward bias.
EUR-INR
CMP: Rs68.34 (SPOT)
The euro fell by 3.98% against the dollar in March. It made a 12-year low of 1.0452 as the European Central Bank (ECB)s President
Mario Draghi confirmed that the ECB would begin purchasing euro-zone government bonds under its new quantitative easing (QE)
programme and as Greece headlines continued to keep the markets edgy. Greeces new government and international creditors failed to
reach an agreement. After the meeting of the Federal Open Market Committee the euro bounced back from its 12-year low to 1.1052 as
the dollar weakened on delayed rate hike expectations. On April 8, Greece owes the IMF more than 460 million on a loan from its 2010
bail-out. Greece put forward new reform plans for approval to secure added bail-out funds needed to prevent the debt-ridden country
from going bankrupt. Officials from the European Union, IMF and ECB will examine the measures. The pair is likely to trade between
Rs67.80 and Rs69.85 with an upward bias.
JPY-INR
CMP: Rs52.24 (SPOT)
The JPY-USD pair depreciated by 0.4% in March and made a new low of 122.023 on the back of a strong dollar globally. However, a
sharp fall was then prevented as escalating conflicts in the Middle-East and worries over Greeces bail-out led to a rise in demand for safe
haven. The pair is likely to trade in the range of Rs51.80-53.30 with an upward bias.
CMP as on April 06, 2015
33
April 2015
TREND & VIEW
CURRENCY
EUR-INR: Momentum turns bullish
USD-INR: Tumbling down

The USD-INR had fallen sharply in January this year. However,

it had found support near the key weekly as well as monthly
moving averages (MAs).
From these supports the currency pair formed a short-term pullback. It retraced more than 61.8% of the previous fall. From
the level of 63.13 the currency pair has started tumbling once
again.
The daily momentum indicator is in bearish mode. The price
has fallen below the key daily moving averages (DMAs). On
the downside, the currency pair can test the low of 61.25 whereas
the equality target is 60.55. A reversal can be placed above the
swing high of 62.84.
KST (-0.63885)
78.6%
61.8%
50.0%
38.2%
23.6%
0.0%
29
6
13
October
20
27
3
10
17
Novem ber
24
1
8
15
Decem ber
22
29
5
2015
12
19
26

2
9
16
February
23
2
9
March
KST (-6.62231)
10
5
0
-5
64.6
64.5
64.4
64.3
64.2
64.1
64.0
63.9
63.8
63.7
63.6
63.5
63.4
63.3
63.2
63.1
63.0
62.9
62.8
62.7
62.6
62.5
62.4
62.3
62.2
62.1
62.0
61.9
61.8
61.7
61.6
61.5
61.4
61.3
61.2
61.1
61.0
60.9
60.8
60.7
60.6
60.5
60.4
60.3
60.2
60.1
60.0
59.9
59.8
100.0%
22
16
23
30
6
April
13
20
27
4
May
11
18

96
95
94
93
92
91
90
89
88
87
86
85
84
83
82
81
80
79
78
77
76
75
74
EURINR (68.0580, 68.3510, 66.7410, 67.9960, -0.06200)
0.0%
23.6%
38.2%
50.0%
73
72
71
70
61.8%
69
68
66.0%
67
66
65
64
78.6%
63
62
61
60
59
58
57
56
100.0%
55
54
2
N
2010
A S O N
2011
A S
2012
A M
J A
S O
D 2013
A M J J A
S O
D 2014
A M J J A
S O N
2015
A M J J
A S O N
JPY-INR: Scope for a bounce
GBP-INR: Bounce on the cards

The EUR-INR had been falling for the past several months. It
has formed a deep retracement of the previous rise.
However, the currency pair is consolidating near the 61.8%
and 66% retracement marks. The daily and weekly momentum
indicators have triggered a fresh buy signal.
Thus, the recent low of 65.75 will act as a crucial support over
the short to medium term.
Till the time the low holds the currency pair can go for a bounce.
The key levels on the upside will be 71.18 and 72.
2.0
1.5
1.0
0.5
0.0
-0.5
-1.0
-1.5
-2.0
USDINR - INDIAN RUPEE (62.0675, 62.1300, 61.9258, 61.9500, -0.10700)
15
m ber
TECHNICALS
The GBP-INR has been trading in a medium-term falling

channel. For the last few weeks it has been consolidating near
the junction of the lower end of the medium-term falling channel
and the weekly lower Bollinger Band.
In terms of price pattern it seems to have formed an
accumulation triangle.
The daily and weekly momentum indicators are showing a
positive divergence which is a bullish sign.
Thus, unless the level of 90.50 breaks the currency pair can test
the levels of 95.17-96.37.

The JPY-INR had reached near the lower end of the multi-month
falling channel as well as near the extended Fibonacci target.
Near those levels bulls had rushed in to provide support.
Consequently, the currency pair had formed a bullish outside
bar on the weekly chart.
Thus, the low of 0.5079 will act as a crucial support. From there
the currency pair has entered a pull-back mode.
An overlapping structure in the recent fall suggests that the pullback can still be in formation. On the upside, 0.5384 and 0.5507
will be the key levels to watch out for.
Relative Strength Index (39.2644)
KST (-2.61586)
70
65
60
55
50
45
40
35
30
25
20
10
JPYINR (0.52460, 0.52570, 0.51780, 0.52060, -0.00400)
0.725
0.720
0.715
0.710
0.705
0.700
0.695
0.690
0.685
0.680
0.675
0.670
0.665
0.660
0.655
0.650
0.645
0.640
0.635
0.630
0.625
0.620
0.615
0.610
0.605
0.600
0.595
0.590
0.585
0.580
0.575
0.570
0.565
0.560
0.555
0.550
-5
GBPINR (93.0000, 93.1810, 91.8480, 92.4230, -0.56500)
109
108
0.0%
107
106
105
104
103
102
101
23.6%
100
99
98
97
38.2%
96
95
94
50.0%
93
0.0%
92
91
61.8%
23.6%
90
38.2%
89
50.0%
88
61.8%
87
0.545
0.540
0.535
0.530
86
100.0%
85
84
0.525
0.520
83
0.515
82
0.510
81
161.8%
100.0%
0.505
80
0.500
0.495
79
0.490
78
Dec 2013
Mar
Apr
May
Jun Jul
Aug
Sep
Nov
Dec 2014
Mar Apr
May
Jun Jul
Aug
Sep
Nov Dec 2015
Mar Apr
May
Jun Jul
Aug Sep
0.485
2013
2014
2015
Currency
View
Reversal
Supports
Resistances
Target
USD-INR
Down
62.84
61.64/61.00
62.30/62.50
61.25-60.55
GBP-INR
Up
90.50
91.71/91
93.18/94.95
95.17-96.37
EUR-INR
Up
65.75
66.74/65.94
69.26/70
71.18-72
JPY-INR
Up
0.5079
0.5137/0.5100
0.5300/0.5356
0.5384-0.5507
April 2015
34
201
PMS
DESK
PMS FUNDS
Portfolio Management Service

We are pleased to introduce you to Sharekhans Portfolio
Management Service (PMS) in which we completely manage
your investment portfolio so that you stop worrying about
the market volatility and focus your energy on things that
you like to do!
We have the following strategies on offer:
We have a wide range of strategies that you can choose from.

Our strategies are based on fundamental research and technical analysis.
ProPrime
(based on fundamental research)
Top Equity
Diversified Equity
ProTech (based on technical analysis)

Index Futures Fund
Trailing Stoploss
PROPRIME - TOP EQUITY

Product performance
as on March 31, 2015
OVERVIEW
The ProPrimeTop Equity PMS strategy is suitable for the long-term investors looking
to create an equity portfolio through disciplined investments that will lead to a growth
in the portfolios value with low to medium risk.
INVESTMENT STRATEGY
(In %)
Scheme
Sensex
Nifty
1 month
-6.7
-4.8
-4.6
3 month
-3.6
1.7
2.5
6 month
2.8
5.0
6.6
24.4
24.9
26.7
1 year
Disciplined investment decisions are taken in specific stocks based on thorough

fundamental research.
Best month
12.9
11.2
12.4
Worst month
-10.6
-8.9
-9.3
Investments are made primarily in the Nifty Fifty or the BSE 100 scrips.
Best quarter
21.7
13.5
14.5
Attempts to have an exposure of minimum of 70% in the Nifty Fifty stocks and
that of minimum of 90% in the BSE 100 stocks.
Worst quarter
-13.1
-6.1
-10.4
Endeavours to create a core portfolio of blue-chip companies with a proven track

record and have partial exposure to quality companies in the mid-cap space.
*26-Sep-11
Disclaimer: Returns are based on a clients

returns since inception and may be different from
those depicted in the risk disclosure document.
Top 10 stocks
PRICING
Minimum investment of Rs25 lakh
Axis Bank
Charges
Bharti Airtel
Gateway Distriparks
2% per annum; AMC fee charged every quarter
Hero MotoCorp
0.5% brokerage
ICICI Bank
20% profit sharing after the 12% hurdle is crossed at the end of
every fiscal
Larsen & Toubro

Reliance Industries
State Bank of India
Tata Motors
Fund Manager: Gaurav Dua
Wipro
FUND OBJECTIVE
A good return on money through long-term investing in quality companies
35
April 2015
PMS
PMS FUNDS
DESK
PROPRIME - DIVERSIFIED EQUITY

OVERVIEW
The ProPrimeDiversified Equity PMS strategy is suitable for long-term investors
looking to create an equity portfolio through disciplined investments that will lead to a
growth in the portfolios value with medium to high risk.
Product performance
(In %)
INVESTMENT STRATEGY
Disciplined investment decisions are taken in specific stocks based on thorough

fundamental research.
A balanced mix of value and growth stocks (mid-cap and small-cap) is created
that represents investment opportunities across sectors and market capitalisation.
Invests in quality value and growth stocks with good earnings visibility and healthy
balance sheet.
The fund manager, with the help of extensive, in-house, superior research,
identifies fundamentally sound companies to invest in.
The fund manager strives to capture the short-term trading opportunities to

maximise the potential of the swings in specific stocks.
Scheme
S&P CNX 500
1 month
-4.0
-3.6
3 month
-5.1
3.0
6 month
1.9
8.8
1 year
37.3
33.6
Best month
38.4
34.4
Worst month
-28.2
-27.2
Best quarter
66.9
51.2
Worst quarter
-30.9
-28.6

Top 10 stocks
Apollo Tyres
PRICING
Charges
Ashok Leyland
Axis Bank
Federal Bank
2% per annum; AMC fee charged every quarter
Gateway Distriparks.
0.5% brokerage
Hero MotoCorp
20% profit sharing after the 12% hurdle is crossed at the end of every
fiscal
ICICI Bank
Il&Fs Transport Networks
Reliance Industries
Sun Pharmaceuticals Industries
FUND OBJECTIVE
A good return on money through long-term investing regardless of short-term volatility
April 2015
36
PMS
DESK
PMS FUNDS
PROTECH - INDEX FUTURES FUND

OVERVIEW
The ProTechIndex Futures Fund PMS strategy is suitable for long-term investors
who desire to profit from both bullish and bearish market conditions. The strategy
involves going long (buying) or going short (selling without holding) on Nifty futures
by predicting the market direction based on a back-tested automated model.
Product performance
(In %)
INVESTMENT STRATEGY
The strategy has the potential to generate profits irrespective of the market
direction by going long or short on Nifty futures.
An automated basic back-testing model is used to predict the market direction

for the Nifty which then decides the strategy to be deployed in terms of going
long or short.
The portfolio is not leveraged, ie its exposure never exceeds its value.
Scheme
Sensex
Nifty
1 month
2.3
-4.8
-4.6
3 months
-5.0
1.7
2.5
FY14-15
-3.4
24.9
26.7
FY13-14
8.8
18.9
18.0
FY12-13
3.7
8.2
7.3
FY11-12
13.1
-10.5
-9.2
FY10-11
9.2
10.9
11.1
FY09-10
14.7
80.5
73.8
166.4
176.1
181.0
Since inception*
PRICING
Best month
28.9
-23.9
-26.4
Worst month
-17.1
0.0
0.6
Charges
Best quarter
33.3
49.3
42.0
Worst quarter
-11.7
17.3
22.3
AMC fees:
0%
Brokerage:
0.05%
Profit sharing:
Flat 20% charged on a quarterly basis
*01-Feb-2006

Investments in
FUND MANAGERS VIEW
Nifty Index
March of 2015 was again a good month but we are not yet out of the woods. That
means that returns are lower than our own expectations. The automated model has
been under pressure this year due to a lack of one-sided movements or trends. The
Nifty has been moving in small bursts of 5-6% in either direction making this the
narrowest trading range in a long time. The returns of Index Futures Fund will
automatically expand once the trading range expands.
This months returns came in at 2.27% but we ended the financial year with a negative
return of 3.41%. This is our first negative annual return since we launched the Index
Futures Fund in 2006. On a back-testing basis, the last time we had a negative year
was in CY1999. The reasons were the same. The following year we had seen
significantly higher returns. So we dont expect the current phase of low volatility to
last forever and, as explained earlier, a windfall usually follows a period of low
volatility.
Fund Manager: Rohit Srivastava
FUND OBJECTIVE
Absolute returns irrespective of market conditions.
37
April 2015
PMS FUNDS
PMS
DESK
PROTECH - TRAILING STOPS

OVERVIEW
Our ProTechTrailing Stops PMS strategy is ideal for Traders and Investors looking for Regular Income from trading and desire to make profits in both bullish and
bearish market conditions. It is designed to payout book profits on monthly basis.*
It is also for those investors who are looking for better income than Fixed Income
or Deposits. This strategy involves going Long (buying) or Short (selling without
holding) on stock futures.
Product performance
(In %)
* Terms and conditions apply
INVESTMENT STRATEGY
Scheme
Sensex
Nifty
1 month
0.6
-4.8
-4.6
3 months
-2.3
1.7
2.5
This strategy spots the winning trades based on technical analysis vs time framebased portfolios, basically the momentum calls.
FY14-15
-3.7
24.9
26.7
FY13-14
-1.1
18.9
18.0
A risk model has been developed for stock portfolio allocation that reduces the
risk and portfolio volatility through staggered building of positions.
FY12-13
14.9
8.2
7.3
It is non-leveragedthe exposure will never exceed the value of the portfolio.
FY11-12
29.0
-6.1
-4.6
FY10-11
FY09-10
41.2
50.9
53.0
Best month
9.1
11.3
12.4
Worst month
-4.4
-2.0
-1.7
PRICING
Since inception*
Charges
AMC fees:
0%
Best quarter
9.9
-12.7
-12.5
Brokerage:
0.05%
Worst quarter
-8.2
9.2
9.9
Profit sharing:
Flat 20% charged on a quarterly basis
*09th May 2011

FUND MANAGERS VIEW

In March 2015, a marginal gain of 0.56% was recorded by Trailing Stops as stocks
and indices had diverged strongly in this period. We still await a market with a
strong breadth and wide participation to enhance our returns. The financial year
2014-15 ended on a low note. Our posture remained conservative for most of the
year and only now we are slowly becoming more aggressive on the fund. This caused
Investments in
Nifty Index
Stock futures
a small drawdown of 3.69% for FY2015. Our first negative annual return. But this
phase should pass soon too.
We expect the market to continue to see higher volatility and eventually turn more
trending. It has been a long time since we made that call but the market behaviour
remains narrower than we have seen in years.
Fund Manager: Rohit Srivastava
FUND OBJECTIVE
Absolute returns irrespective of market conditions.
April 2015
38
ADVISORY
MONTHLY PERFORMANCE
DESK
Advisory Products and Services

The Advisory Desk is a central desk consisting of a Mumbai-based
expert team that runs various sample model portfolios (for illustrative
purposes only) for clients of all profiles, be they traders or investors.
These products are different from Sharekhans research-based
technical and fundamental offerings as these essentially try to capture
the trading opportunities in stocks where momentum is expected
before or after some event including the announcement of results or
where some news/event is probable.
Advisory products are ideal for those who do not have time to either
monitor the market tick by tick or shift through pages of research for
data or pour over complex charts to catch a trend. However, all
these products require perfect discipline and money management.
For investors
PORTFOLIO DOCTOR
It is a service under which the Portfolio Doctor reviews an existing portfolio based on various parameters and suggests
changes to improve its performance. To avail of this service please write to the Portfolio Doctor at
portfoliodoctor@sharekhan.com.
ALPHA DELIVERY PICKS

This is a long only, cash market delivery product where stock ideas are rolled out based on short-term triggers with
proper fundamental rationales. The buying price range, stop loss and probable target are clearly defined at the time of
initiation. These ideas are for a maximum period of one to two months for the medium-term investor. For more details
of this product please write to us at alphapicks@sharekhan.com.
For traders
SHAREKHANS PRE-MARKET ACTION
These ideas are put out in Sharekhans Pre-market Action report along with stop loss and targets valid for a day. There
is a market watch list of stocks with positive and negative bias for intra-day traders. For more details please write to us
at premarket@sharekhan.com.
MID DERIVATIVE CALLS

These calls are based on the analysis of open interest, implied volatility and put-call ratio in the derivative market. It is
a leveraged product and ideal for aggressive traders. These calls have pre-defined stop loss, targets, time frame and
quantity to execute. For details of the product please write to us at derivative@sharekhan.com.
Report Card
MID performance*
Product
Month
No. of calls
Profit booked
Stop loss hit
Strike rate (%)
MID Derivative Calls performance*

Ticket size (Rs)
Alpha Delivery Picks

Mar 2015
YTD FY2015
7
117
4
88
3
29
57
75
Month
100,000
Mar 2015
YTD FY2015
No. of calls
30
354
Profit booked
19
224
Stop loss hit

Strike rate (%)
11
63
130
63
Note: We have discontinued Alpha Swing *Based on closed calls
39
April 2015
April 2015
40
MUTUAL FUNDS
DESK
MF PICKS
SHAREKHANS TOP MUTUAL FUND PICKS (EQUITY)
MARCH 12, 2015

Data as on March 9, 2015
Scheme name
Large-cap funds
SBI Bluechip Fund
Reliance Top 200 Fund
Birla Sun Life Frontline Equity Fund - Reg
Birla Sun Life Top 100 Fund
Reliance Focused Large Cap Fund
Indices
BSE Sensex
Mid-cap funds
UTI Mid Cap Fund
Mirae Asset Emerging Bluechip Fund
Franklin India Prima Fund
Sundaram SMILE Fund - Reg
ICICI Prudential MidCap Fund
Indices
BSE Mid-cap
Multi-cap funds
Franklin India High Growth Companies Fund
ICICI Prudential Value Discovery Fund
Birla Sun Life Pure Value Fund
SBI Magnum Global Fund 94
Principal Growth Fund
Indices
BSE 500
Tax saving funds
Axis Long Term Equity Fund
Reliance Tax Saver (ELSS) Fund
Birla Sun Life Tax Relief 96
Birla Sun Life Tax Plan
Principal Tax Savings Fund
Indices
CNX500
Thematic funds
ICICI Prudential Exports and Other Services Fund
Franklin Build India Fund
Religare Invesco Infrastructure Fund
L&T India Special Situations Fund
Birla Sun Life Infrastructure Fund - Plan A
Indices
S&P Nifty (CNX Nifty)
Balanced funds
Star
rating

NAV (Rs)
Absolute
6 months
Returns (%)
Compounded annualised
1 year
3 years
5 years
Since inception
28.8
25.0
167.9
44.2
24.3
15.9
15.9
13.3
12.3
10.9
54.3
59.3
49.6
50.2
42.9
27.8
26.6
26.5
26.3
23.2
15.8
17.0
16.3
17.1
10.5
12.4
12.8
25.2
17.2
10.4
28,844.8
5.8
31.4
18.1
11.1
16.9
79.3
30.0
674.3
70.9
72.1
15.8
20.6
21.8
23.5
17.4
88.7
83.4
83.1
124.3
87.2
38.5
37.8
36.4
35.8
33.9
22.6
22.1
18.1
17.9
21.9
26.5
21.9
21.5
21.0
10,901.2
10.7
62.5
19.9
10.1
23.2
30.0
117.0
38.7
135.9
97.9
19.9
15.9
12.7
21.2
9.3
81.9
80.4
92.0
76.8
53.6
35.6
34.9
34.3
33.7
27.0
20.2
22.7
21.2
22.4
14.5
15.5
26.2
21.5
16.1
17.2
11,361.2
8.8
41.9
18.7
10.9
16.3
31.8
50.0
22.1
28.0
144.4
21.3
16.2
23.3
22.5
9.3
73.5
90.9
67.1
65.1
53.6
36.6
34.0
30.1
29.2
27.4
25.1
22.2
15.6
17.4
14.9
24.9
18.6
12.0
13.0
17.7
7,171.5
9.0
42.2
19.2
11.0
10.0
44.8
29.1
14.7
36.6
27.3
15.0
21.0
17.5
15.8
14.2
54.0
94.8
91.4
57.4
71.0
38.2
36.9
26.9
26.5
23.6
22.8
20.5
13.1
17.6
10.6
17.5
21.4
5.4
15.9
11.8
8,756.8
7.4
34.0
18.0
11.4
15.0
Tata Balanced Fund - Plan A
172.9
18.8
58.8
26.9
18.0
17.7
SBI Magnum Balanced Fund
96.2
15.4
51.1
26.7
15.2
17.3
L&T India Prudence Fund
19.6
16.2
52.3
25.3
17.8
ICICI Prudential Balanced
93.5
12.1
46.1
24.5
18.2
15.7
Birla Sun Life 95
572.0
15.6
50.6
23.3
16.0
22.3
--
9.3
29.3
15.7
10.9
13.
Indices
Crisil Balanced Fund Index
Every individual has a different investment requirement, which depends on his financial goals and risk-taking capacities. We at Sharekhan
first understand the individuals investment objectives and risk-taking capacity, and then recommend a suitable portfolio. So, we suggest
that you get in touch with our Mutual Fund Advisor before investing in the best funds.
Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a postition in the mutual funds mentioned in the article.
41
April 2015
MUTUAL FUNDS
MF PICKS
SHAREKHANS TOP SIP FUND PICKS
DESK
MARCH 12, 2015

Data as on March 9, 2015
Investment period
Total amount invested (Rs)
Funds would have grown to (Rs)
NAV
1 year
12,000
Present
Avg. annual
value (Rs)
return (%)
Present
value (Rs)
3 years
36,000
Avg. annual
return (%)
5 years
60,000
Present Avg. annual
value (Rs)
return (%)
Large-cap funds
Reliance Top 200 Fund
25.0
14,498.9
23.0
58,733.2
18.3
107,442.6
12.6
SBI Bluechip Fund
28.8
14,513.6
23.1
58,009.4
17.8
107,231.0
12.5
Birla Sun Life Top 100 Fund

Birla Sun Life Frontline Equity Fund - Reg
Reliance Focused Large Cap Fund
BSE Sensex
44.2
13,929.1
17.7
56,836.5
17.0
105,588.8
12.2
167.9
14,051.4
18.8
56,493.3
16.7
104,259.6
11.9
24.3
13,860.6
17.1
54,591.2
15.4
97,405.4
10.4
28,844.8
13,248.4
11.1
49,780.3
11.7
88,432.3
8.2
38.7
14,184.4
20.1
68,597.4
24.8
125,447.0
16.2
Multi-cap funds
Birla Sun Life Pure Value Fund
Franklin India High Growth Companies Fund
30.0
15,281.9
30.2
67,593.6
24.1
126,328.9
16.3
ICICI Prudential Value Discovery Fund
117.0
14,876.5
26.5
66,918.5
23.7
127,113.1
16.5
SBI Magnum Global Fund 94
135.9
15,335.3
30.7
65,893.3
23.0
125,303.0
16.2
Principal Growth Fund
97.9
13,820.2
16.7
57,556.5
17.5
105,179.2
12.1
11,361.2
13,684.5
15.00
51,935.3
13.30
90,933.6
8.78
Sundaram SMILE Fund - Reg
70.9
15,890.8
35.9
73,423.8
27.7
128,964.9
16.8
UTI Mid Cap Fund
79.3
15,228.5
29.7
72,257.0
27.0
134,163.2
17.8
SBI Magnum Midcap Fund
57.5
15,262.9
30.1
70,089.8
25.7
132,085.5
17.4
BSE 500
Mid-cap funds
ICICI Prudential MidCap Fund

Franklin India Prima Fund
BSE Midcap
72.1
15,018.2
27.8
69,705.3
25.4
124,519.4
16.0
674.3
15,443.8
30.8
69,040.1
24.8
130,226.2
17.0
10,901.2
14,219.6
19.79
56,228.6
16.41
95,044.6
9.75
Tax saving funds

Reliance Tax Saver (ELSS) Fund
50.0
15,289.5
29.4
69,236.7
25.0
128,854.6
16.7
Axis Long Term Equity Fund
31.8
15,304.6
30.5
67,588.0
24.1
130,937.7
17.2
Birla Sun Life Tax Relief 96
22.1
15,229.2
29.7
62,662.5
20.9
111,827.7
13.5
Birla Sun Life Tax Plan
28.0
15,135.5
28.9
61,751.0
20.3
112,683.0
13.7
144.4
13,815.3
16.6
57,637.9
17.5
105,891.1
12.2
8,756.8
13,418.0
12.62
50,267.2
12.05
89,343.4
8.39
Principal Tax Savings Fund

CNX Nifty
Every individual has a different investment requirement, which depends on his financial goals and risk-taking capacities. We at Sharekhan
first understand the individuals investment objectives and risk-taking capacity, and then recommend a suitable portfolio. So, we suggest
that you get in touch with our Mutual Fund Advisor before investing in the best funds.
Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a postition in the mutual funds mentioned in the article.
April 2015
42
EQUITY
EARNINGS GUIDE
FUNDAMENTALS
Sharekhan Earnings Guide

Company
CMP
(Rs)
Prices as on April 01, 2015

Sales
Net profit
EPS
(%) EPS
growth
FY16E FY16/FY14
PE (x)
RoCE (%)
RoNW (%)
FY14 FY15E FY16E FY15E FY16E FY15E
FY16E
DPS
Div
yield
(Rs) (%)
FY14
FY15E
FY16E
FY14
FY15E
FY16E
FY14
FY15E
174.6
13,412.0
13,347.0
14,382.3
1,051.8
1,123.6
1,211.8
20.7
22.1
23.8
10%
8.4
7.9
7.3
23.4
20.9
21.9
19.4
0.8
0.4
73.7
9,943.4
13,550.3
17,732.2
-476.3
210.9
862.5
-1.8
0.7
3.0
-41.1
99.4
24.3
8.1
16.1
4.3
15.1
0.0
0.0
2,020.9
20,149.5
22,705.8
24,445.6
3,297.1
3,337.1
3,541.3
113.9
115.3
122.4
9%
17.7
17.5
16.5
45.3
42.5
32.6
30.5
50.0
2.5
89.5
1,286.6
1,489.8
1,784.7
46.8
72.0
101.0
3.3
5.0
7.0
52%
27.5
17.9
12.7
25.2
31.1
23.0
26.6
0.9
0.9
Hero MotoCorp
2,653.0
25,275.5
27,694.0
31,137.3
2,109.1
2,574.7
3,255.0
105.6
128.9
163.0
52%
25.1
20.6
16.3
59.5
64.5
42.8
46.4
65.0
2.5
M&M
1,197.2
38,817.1
38,233.7
44,320.7
3,852.3
3,303.4
3,980.1
65.3
56.0
67.4
10%
18.3
21.4
17.8
15.8
17.5
17.8
18.7
14.0
1.2
Maruti Suzuki
3,646.0
43,700.6
49,137.3
57,947.5
2,783.0
3,550.0
4,954.8
92.1
117.5
164.0
29%
39.6
31.0
22.2
19.2
22.2
15.8
18.0
12.0
0.3
44.3
1,480.1
1,343.1
1,055.4
2.7
-1.9
44.6
0.2
-0.1
3.3
29%
221.7 -308.3
13.4
7.0
9.3
-0.4
6.7
0.1
0.2
253.5
7,857.7
10,207.2
12,475.3
260.4
357.4
559.8
5.5
7.5
11.8
29%
30.1
1.4
0.6
101.3
7,477.1
8,383.1
9,195.6
1,172.0
682.5
1,258.1
21.5
12.5
23.1
80.4
5,070.2
5,718.7
6,457.5
435.6
710.0
1,013.5
7.4
12.0
17.2
AUTOMOBILES
Apollo Tyres
Ashok Leyland
Bajaj Auto
Gabriel Industries
Rico Auto Industries

TVS Motor
46.2
33.7
21.5
23.2
31.9
23.2
4%
4.7
8.1
4.4
5.7
9.8
2.5
2.5
53%
10.9
6.7
4.7
7.9
10.5
1.1
1.4
BANKS & FINANCE

Allahabad Bank
Andhra Bank
Axis (UTI) Bank
566.4
19,356.9
22,461.9
26,199.0
6,217.7
7,125.6
8,525.7
26.5
30.3
36.3
17%
21.4
18.7
15.6
17.3
17.9
4.0
0.7
Bajaj Finance
4,123.0
2,215.3
2,757.8
3,575.3
719.0
909.6
1,172.1
144.5
182.8
235.6
28%
28.5
22.6
17.5
20.8
22.3
16.0
0.4
Bajaj Finserv
1,430.9
6,021.0
1,544.1
97.0
14.8
0.0
0.0
1.8
0.1
Bank of Baroda
167.5
16,428.1
18,137.8
21,048.6
4,541.1
3,819.9
5,211.2
21.1
17.7
24.2
7%
7.9
9.4
6.9
10.2
12.7
4.3
2.6
Bank of India
203.8
15,122.4
16,345.8
19,691.6
2,729.3
2,337.1
3,260.9
42.4
36.3
50.7
9%
4.8
5.6
4.0
7.6
9.9
5.0
2.5
Capital First
418.0
328.2
461.5
597.2
58.4
110.0
160.5
7.1
13.4
19.6
66%
58.8
31.2
21.4
9.1
12.2
2.0
0.5
53.6
5,431.4
5,655.2
6,650.2
561.7
753.6
1,006.8
6.7
9.0
12.0
34%
8.0
6.0
4.5
7.3
9.1
0.4
0.8
132.7
2,922.5
3,431.7
4,042.9
838.9
974.8
1,180.1
9.8
11.4
13.8
19%
13.5
11.6
9.6
13.3
14.5
2.0
1.5
6,029.7
Corp Bank
Federal Bank
HDFC
1,325.1
6,803.0
8,122.0
9,765.9
5,440.2
7,219.9
34.8
38.6
46.2
15%
38.0
34.3
28.7
19.1
20.2
14.0
1.1
HDFC Bank
1,027.9
26,402.3
31,130.9
36,898.4
8,478.4
10,284.4 12,577.7
35.3
41.1
50.2
19%
29.1
25.0
20.5
19.8
19.2
6.8
0.7
ICICI Bank
320.5
26,903.4
30,556.1
35,687.7
9,810.5
10,997.8 13,052.2
17.0
19.0
22.6
15%
18.9
16.8
14.2
14.5
15.7
4.6
1.4
IDBI Bank
72.4
9,000.2
8,437.8
9,696.6
1,121.4
612.8
1,055.3
7.0
3.8
6.6
-3%
10.4
19.0
11.0
2.6
4.3
1.0
1.4
442.2
1,898.9
2,243.1
2,766.0
1,317.2
1,482.4
1,797.9
26.1
29.4
35.6
17%
17.0
15.1
12.4
18.3
19.2
4.5
1.0
57.4
211.6
322.8
452.3
207.7
210.1
306.8
5.1
5.2
7.6
22%
11.3
11.0
7.6
14.8
19.3
1.0
1.7
PNB
150.4
20,722.7
22,656.8
26,301.4
3,342.6
3,820.0
5,194.5
18.5
21.1
28.7
25%
8.1
7.1
5.2
10.2
12.6
2.0
1.3
SBI
270.8
67,835.1
76,173.7
88,887.8 10,891.5
14,055.7 18,316.6
14.6
18.8
24.5
30%
18.6
14.4
11.0
11.4
13.5
3.0
1.1
Union Bank of India
160.9
10,700.9
12,009.6
13,691.5
1,696.2
1,952.9
2,249.8
26.9
31.0
35.7
15%
6.0
5.2
4.5
10.2
10.9
4.0
2.5
Yes Bank
838.8
4,437.8
5,524.3
6,752.2
1,617.8
1,966.1
2,375.3
44.9
47.5
57.4
13%
18.7
17.7
14.6
21.0
18.9
8.0
1.0
0.7
LIC Housing Finance

PTC India Fin. Ser.
CONSUMER GOODS
GSK Consumers*
6,248.4
4,682.9
4,213.1
4,815.0
674.8
579.3
675.2
160.4
137.7
160.5
0%
39.0
45.4
38.9
44.3
43.5
29.2
28.7
45.0
Godrej Consumer
1,072.0
7,582.6
8,381.0
9,954.9
753.7
917.4
1,157.7
22.1
27.0
34.0
24%
48.5
39.7
31.5
20.6
23.5
23.9
25.1
5.3
0.5
Hindustan Unilever
882.0
28,539.0
32,145.7
26,393.4
3,717.0
3,958.3
4,745.2
17.2
18.3
21.9
13%
51.3
48.2
40.3
127.7
107.6
93.1
78.1
13.0
1.5
ITC
330.7
33,238.6
36,686.9
42,447.6
8,785.2
9,641.5
11,078.5
11.0
12.1
13.9
12%
30.1
27.3
23.8
42.0
41.8
34.1
33.5
6.0
1.8
Jyothy Laboratories
270.2
1,323.9
1,527.1
1,758.9
85.2
145.9
209.9
4.7
8.0
11.4
56%
57.5
33.8
23.7
11.6
16.0
19.3
24.8
3.0
1.1
386.5
4,686.5
5,807.3
6,730.6
485.4
567.6
725.0
7.5
8.8
11.2
22%
51.5
43.9
34.5
39.9
40.9
35.2
33.0
3.5
0.9
1,016.9
403.6
424.9
491.0
98.3
94.2
120.8
25.2
24.1
30.9
11%
40.4
42.2
32.9
28.6
30.3
26.3
27.7
6.0
0.6
Marico
Zydus Wellness
IT / IT SERVICES
CMC
1,905.0
2,212.6
2,492.3
2,877.4
266.0
306.8
353.6
87.8
101.2
116.7
15%
21.7
18.8
16.3
28.5
28.7
24.3
23.6
22.5
1.2
31.3
3,105.9
3,082.8
3,336.3
193.0
244.2
307.1
2.9
3.6
4.6
26%
10.9
8.6
6.8
10.2
12.0
11.0
12.3
0.0
0.0
6,370.1
7,769.4
8,543.1
45.2
55.0
60.5
16%
20.8
17.1
15.5
44.6
38.3
37.3
31.7
22.0
2.3
12,494.0 14,259.0
94.6
108.8
124.2
15%
22.9
19.9
17.4
35.8
34.8
26.0
25.7
31.5
1.5
31.2
35.1
43.3
18%
24.1
21.4
17.3
28.3
30.0
21.1
22.1
12.0
1.6
97.7
109.5
124.0
13%
26.0
23.2
20.5
40.8
37.8
31.6
29.3
32.0
1.3
31.8
35.0
40.3
13%
20.0
18.2
15.8
19.5
19.9
21.5
21.3
8.0
1.3
Firstsource Solution
HCL Technologies**
Infosys
938.9
32,918.0
37,297.8
41,808.2
2,164.1
50,133.0
53,901.0
60,699.0 10,861.0
750.8
1,669.2
1,888.3
Persistent Systems
TCS
2,196.8
249.3
346.3
2,540.2
81,809.4
95,301.7
635.6
43,426.9
46,903.7
50,796.7
7,796.7
8,581.1
9,896.4
BHEL
230.8
38,388.8
33,808.0
33,143.0
3,461.0
2,864.6
3,868.0
14.1
11.7
15.8
6%
16.3
19.7
14.6
12.1
15.1
8.2
10.3
2.8
1.2
CESC
611.4
5,510.0
5,864.4
6,417.2
652.0
643.1
701.2
48.9
48.3
52.6
4%
12.5
12.7
11.6
7.7
7.9
8.6
8.5
7.0
1.1
Crompton Greaves
165.1
13,480.6
14,457.0
16,085.0
244.3
218.0
544.0
3.9
3.5
8.7
49%
42.3
47.2
19.0
9.7
13.9
12.2
12.4
1.2
0.7
Finolex Cable
290.1
2,359.0
2,604.0
2,986.5
189.9
222.4
257.4
12.4
14.5
16.8
16%
23.4
20.0
17.3
21.6
23.0
18.6
18.4
1.6
0.6
Greaves Cotton^
144.1
1,721.5
1,737.6
1,929.7
121.1
135.0
189.4
5.0
5.5
7.8
25%
29.1
26.1
18.6
20.5
26.2
15.7
20.1
1.3
0.9
Kalpataru Power
227.0
4,055.0
4,560.0
5,264.0
146.0
175.0
220.0
9.5
11.4
14.4
23%
23.9
19.9
15.8
15.3
17.2
8.6
10.1
1.5
0.7
79.4
11,510.6
12,350.7
14,288.6
164.7
215.4
241.3
5.6
7.3
8.2
21%
14.3
10.9
9.7
10.5
12.9
14.0
16.9
2.0
2.5
162.3
1,073.1
1,307.7
1,602.5
26.9
53.3
83.8
2.6
5.2
8.2
78%
62.4
31.2
19.8
26.4
25.2
19.8
23.9
0.2
0.1
Wipro
107,643.3 19,116.9
280.6
21,421.6 24,425.3
CAPITAL GOODS / POWER
PTC India
Skipper
Note: For Grasim and Apollo Tyres we have shifted our estimates to consolidated
43
April 2015
EQUITY
FUNDAMENTALS
EARNINGS GUIDE
Company
CMP
(Rs)
Sales
Net profit
Thermax
1,085.0
FY14
4,302.2
FY15E
4,721.9
FY16E
5,364.0
FY14
220.4
FY15E
314.0
FY16E
391.0
Va Tech Wabag
828.5
2,239.0
2,580.8
3,008.2
108.7
111.7
151.0
20.5
21.1
28.5
18%
40.5
39.4
29.1
19.5
22.3
12.6
15.3
4.0
V-Guard Industries
915.9
1,517.6
1,774.0
2,077.0
70.1
78.1
99.1
23.5
26.2
33.2
19%
39.0
35.0
27.6
28.9
30.7
22.4
23.7
4.5
0.5
Triven Turbine
134.9
515.4
706.3
972.3
68.0
95.3
136.2
2.1
2.9
4.1
42%
65.5
46.7
32.7
55.7
58.2
42.9
40.3
0.8
0.6
FY14
18.5
EPS
(%) EPS
growth
FY15E
26.3
FY16E FY16/FY14
32.8
33%
PE (x)
RoCE (%)
RoNW (%)
FY14 FY15E FY16E FY15E FY16E FY15E

58.6 41.3 33.0 21.1 23.8 14.8
DPS
FY16E
16.4
Div
yield
(Rs) (%)
6.0 0.6
0.5
INFRASTRUCTURE / REAL ESTATE

Gayatri Projects
152.0
1,812.5
1,447.5
2,068.9
64.8
30.0
71.5
21.4
9.9
23.7
5%
7.1
15.3
6.4
7.6
9.4
4.4
9.9
2.0
1.3
ITNL
197.5
6,587.0
7,004.3
7,794.2
391.7
435.7
635.6
15.9
17.7
25.8
27%
12.4
11.2
7.7
8.9
9.9
8.0
10.4
4.0
2.0
IRB Infra
244.9
3,731.9
3,859.0
4,576.2
459.1
545.8
692.0
13.8
16.4
20.8
23%
17.7
14.9
11.8
10.8
13.1
14.5
16.4
4.0
1.6
25.0
13,327.0
11,642.7
13,905.8
455.5
-827.1
-93.2
2.1
-3.9
-0.4
11.7
-6.4
-57.1
5.7
6.6
-2.6
-0.7
0.0
0.0
Jaiprakash Associates
Larsen & Toubro
1,731.0
56,598.9
64,365.0
74,986.0
4,904.6
5,575.0
6,549.0
52.9
60.1
70.7
16%
32.7
28.8
24.5
16.7
18.7
15.6
16.3
14.3
0.8
Pratibha Industries
42.6
2,283.6
2,876.1
3,100.2
39.0
46.0
69.0
3.9
4.6
6.8
33%
11.0
9.4
6.2
14.2
14.9
6.9
9.7
0.2
0.5
Punj Lloyd
30.3
10,845.3
11,208.3
NA
-702.2
-298.9
NA
-21.1
-9.0
NA
0%
-1.4
-3.4
2.5
NA
-15.1
NA
0.0
0.0
Oil India
459.8
9,609.0
9,207.0
10,612.0
2,977.0
2,425.0
2,894.0
49.6
40.3
48.1
-2%
9.3
11.4
9.6
12.1
13.9
11.4
12.7
21.5
4.7
Reliance Ind
832.6 434,460.0
402,844.0
22,076.0 21,953.0
69.6
68.3
67.9
-1%
12.0
12.2
12.3
8.5
7.8
10.1
9.3
9.5
1.1
Selan Exploration
237.0
OIL & GAS
101.3
394,066.0 22,493.0
89.0
121.0
44.5
35.6
48.2
27.2
21.7
29.4
4%
8.7
10.9
8.1
16.0
19.4
12.9
15.7
5.0
2.1
PHARMACEUTICALS
Aurobindo Pharma
1,240.5
8,099.8
11,703.5
13,061.7
1,375.9
1,651.1
1,893.6
47.2
56.6
65.0
17%
26.3
21.9
19.1
28.6
28.5
36.5
30.4
3.0
0.2
707.2
10,100.4
11,142.6
13,111.5
1,388.4
1,392.1
2,041.9
17.3
17.3
25.4
21%
40.9
40.8
27.8
16.0
19.9
13.0
16.7
2.0
0.3
Cadila Healthcare
1,787.0
7,224.0
8,579.8
10,636.7
803.5
986.1
1,631.7
39.2
48.2
79.7
43%
45.5
37.1
22.4
20.3
27.1
21.4
26.7
9.0
0.5
Divi's Labs
1,803.2
2,532.1
3,057.9
3,691.8
810.5
842.8
1,037.4
61.1
63.5
78.2
13%
29.5
28.4
23.1
31.8
32.2
26.0
26.1
20.0
1.1
Cipla
Glenmark Pharma
786.9
5,983.9
7,062.8
8,361.9
759.8
883.1
1,138.0
28.0
32.6
42.0
22%
28.1
24.2
18.8
18.8
20.7
23.3
23.4
4.0
0.5
JB Chemicals
206.5
1,000.6
1,096.6
1,269.9
108.3
137.9
156.7
12.8
16.3
18.5
20%
16.2
12.7
11.2
15.4
15.9
12.5
12.8
3.0
1.5
Ipca Laboratories
645.0
3,181.8
3,172.0
3,632.0
477.4
385.0
516.0
37.8
30.5
40.9
4%
17.0
21.1
15.8
18.7
20.4
17.8
20.1
2.5
0.4
Lupin
2,032.7
11,086.6
13,085.0
15,678.0
1,836.3
2,377.0
2,854.0
41.0
53.0
63.7
25%
49.6
38.3
31.9
36.6
35.1
26.4
24.4
6.0
0.3
Sun Pharma
1,062.8
16,004.4
18,008.1
20,598.7
5,721.8
6,367.6
7,051.1
27.6
30.7
34.0
11%
38.5
34.6
31.2
31.5
28.1
27.6
24.1
0.0
0.0
Torrent Pharma
1,197.7
4,036.0
4,721.2
6,088.4
664.0
803.5
1,056.9
39.2
47.5
62.5
26%
30.5
25.2
19.2
29.1
26.0
35.0
33.4
5.0
0.4
3,659.0
29,004.2
32,519.0
37,047.0
1,946.8
1,799.0
1,980.0
212.0
195.9
215.6
1%
17.3
18.7
17.0
12.3
13.7
7.5
7.4
22.5
0.6
309.7
3,761.2
3,847.0
4,515.0
123.0
214.0
367.0
5.2
9.0
15.4
73%
59.9
34.4
20.1
5.7
7.6
8.4
13.1
1.0
0.3
10,930.0
5,887.0
7,262.0
8,053.0
809.0
795.0
1,096.0
248.3
228.3
314.5
13%
44.0
47.9
34.8
16.0
18.0
16.0
18.0
22.0
0.2
2,879.6
20,080.0
23,813.0
27,427.0
2,048.9
2,210.0
2,630.0
74.8
80.7
96.0
13%
38.5
35.7
30.0
12.7
14.6
11.6
12.2
9.0
0.3
0.4
BUILDING MATERIALS
Grasim
The Ramco Cements
Shree Cement**
UltraTech Cement
DISCRETIONARY CONSUMPTION
Century Plyboards (I)
243.7
1,348.0
1,681.0
2,033.0
77.0
139.0
196.0
3.5
6.2
8.8
59%
69.6
39.3
27.7
22.0
26.1
39.1
37.6
1.0
Cox and Kings
317.7
2,307.6
2,640.1
2,550.3
266.0
401.7
363.1
15.7
23.7
21.4
17%
20.2
13.4
14.8
11.2
9.7
20.0
13.3
1.0
0.3
Eros Intnl Media
420.9
1,134.6
1,315.1
1,561.4
199.7
261.5
293.5
21.7
28.4
31.9
21%
19.4
14.8
13.2
20.1
20.6
19.5
18.1
0.0
0.0
KDDL
321.0
334.7
410.2
497.8
8.5
9.4
12.9
9.9
10.3
14.1
19%
32.4
31.2
22.8
13.5
14.4
17.5
19.1
1.5
0.5
KKCL
2,125.0
367.2
405.3
459.0
67.0
63.0
77.5
54.4
51.1
62.9
8%
39.1
41.6
33.8
27.6
27.8
20.5
22.5
21.0
1.0
Raymond
451.5
4,548.0
5,122.0
5,776.0
130.2
110.2
154.2
21.2
18.0
25.1
9%
21.3
25.1
18.0
11.1
12.6
7.3
9.4
2.0
0.4
Relaxo Footwear
663.9
1,205.8
1,467.1
1,791.3
65.6
91.2
125.1
10.9
15.2
20.9
38%
60.9
43.7
31.8
33.7
35.9
21.7
22.5
0.5
0.1
Speciality Restaurants 178.0
263.9
301.4
370.3
18.9
10.8
23.5
4.0
2.3
5.0
12%
44.5
77.4
35.6
4.8
10.0
3.5
7.4
1.0
0.6
Sun TV Network
451.3
2,223.6
2,428.4
2,734.7
748.0
804.7
932.2
19.0
20.4
23.7
12%
23.8
22.1
19.1
34.6
35.7
24.5
25.3
9.5
2.1
Thomas Cook India
210.1
1,295.6
3,130.8
3,558.3
68.7
166.7
229.5
2.5
5.6
5.0
41%
84.0
37.5
42.0
#19.8
22.1
#13.3
16.3
0.4
0.2
Zee Entertainment
341.5
4,421.7
4,746.7
5,275.9
893.1
999.9
1,098.2
9.3
10.4
11.4
11%
36.7
32.8
30.0
29.1
28.9
19.8
19.5
2.0
0.6
0.4
DIVERSIFIED / MISCELLANEOUS
Aditya Birla Nuvo
1,667.7
8,338.4
9,237.3
10,260.1
484.7
538.3
584.2
37.3
41.4
44.9
10%
44.7
40.3
37.1
8.7
8.8
7.0
7.1
7.0
Bajaj Holdings
1,300.0
385.2
1,987.6
178.6
3.0
30.0
2.3
402.7
85,746.0
92,860.0
100,903.0
3,935.0
5,414.0
5,772.0
9.8
13.5
14.4
21%
41.1
29.8
28.0
11.5
12.6
8.4
8.1
3.4
0.8
Bharti Airtel
Bharat Electronics
3,512.5
6,275.5
7,505.7
8,202.6
931.6
1,183.4
1,375.0
116.5
147.9
171.9
21%
30.2
23.7
20.4
17.0
16.9
12.9
12.8
22.3
0.6
Gateway Distriparks
422.6
1,008.1
1,091.6
1,103.4
142.0
185.5
207.9
13.1
17.1
19.1
21%
32.3
24.7
22.1
15.9
17.9
21.3
22.1
7.0
1.7
Max India
446.4
11,683.0
139.5
5.2
85.7
1.8
0.4
Ratnamani Metals
695.5
1,326.1
1,780.0
2,145.0
142.8
195.1
244.5
30.6
41.4
52.4
31%
22.7
16.8
13.3
30.9
32.7
23.1
23.8
4.0
0.6
Supreme Industries**
720.7
3,962.0
4,366.0
5,041.0
274.0
240.0
342.0
21.6
18.9
26.9
12%
33.4
38.1
26.8
23.2
28.7
20.2
24.3
8.0
1.1
Technocraft Industries 225.0
1,045.0
1,039.0
1,183.0
104.0
89.0
111.0
32.9
28.3
35.0
3%
6.8
8.0
6.4
17.6
19.5
14.8
16.2
5.0
2.2
10,770.9
11,910.0
13,377.2
1,028.6
1,083.1
1,177.2
24.0
25.3
27.5
7%
18.3
17.4
16.0
14.7
15.0
17.9
17.0
2.5
0.6
UPL
439.8
^Marico estimates excluding Kayas financials

*GSK Consumer FY2014 financial numbers are estimated for 15 months as the company changed its accounting year end to March 2014, hence not comparable
44
** June year ended

#We have annualised these ratios to make them comparable
April 2015
EQUITY
EARNINGS GUIDE
FUNDAMENTALS
Remarks
Automobiles
Apollo Tyres
Apollo Tyres is the market leader in truck and bus tyre segments with a 28% market share. The management is
expecting strong demand traction in the European operations (particularly the summer tyre segment) and is
gaining market share in Europe. Further, the domestic operations would see a pick-up in demand in H2FY15. The
margins may sustain at higher levels due to subdued raw material prices. The company will be investing $560mn
over the next three years to set up a greenfield facility in Hungary and Rs2,000 crore to expand capacity at
Chennai facility. We maintain our Buy recommendation on the stock with a price target of Rs260.
Ashok Leyland
Ashok Leyland, the second largest CV manufacturer in India, is a pure CV play. It has ventured into LCV space
with the launch of Dost in collaboration with Nissan. The MHCV volumes have been under pressure over the past
two years due to a subdued economic environment. The discounts in the system have come down and the company
has managed to take price hikes which propped up margins. A strong government at the centre is expected to
focus on growth led by manufacturing and infrastructure sectors which will improve CV segments volumes. The
company has raised Rs660 crore via QIP and has sold non-core assets to pare its debt. We have a Buy
recommendation on the stock with a price target of Rs76.
Bajaj Auto
Bajaj Auto, a leading two-wheeler maker, is moving up the value chain by concentrating on the executive and
premium motorcycle segments. It has focused on its Pulsar and Discover brands to establish a strong presence
especially in the premium segment. Additionally, it derives a third of its volumes from exports and has a strong
presence in the SAARC region and Africa. After a loss of market share in FY14-15, we expect it to claw back
market share in FY16 with the launch of the new Discover and another commuter segment motorcycle. Exports
will continue to drive its overall volumes. Profitability remains strong with industry leading EBITDA margin.
Gabriel India
Gabriel is one of Indias leading manufacturers of shock absorbers and front forks with a diversified customer
base. A pick-up in the volumes post-election in the PV and CV segments as well as higher growth in the twowheeler segment, increase in market share with HMSI and continued growth in the aftermarket sales are expected
to drive the revenue growth going forward. Moreover, with increasing utilisation levels and higher proportion of
revenues from the profitable CV segment, the OPM is expected to expand from 6.6% in FY13 to 7.9% in FY16.
Further, a reduction in debt level would lead to higher return ratios, going forward. Therefore, we recommend a
Buy with a price target of Rs110.
Hero MotoCorp
HMCL is the largest two-wheeler manufacturer in the world with sales of over 6.2mn vehicles in FY14 and a
domestic market share of 41.3%. We expect the two-wheeler industry to grow at 10-12% CAGR over the next
five years driven by increased penetration levels in rural areas and replacement demand. HMCL is expected to
maintain its leadership position in the industry. It has presence in the fast growing scooter segment with two
models. It will launch a couple of new scooters and double the scooter capacity which would boost its volumes.
HMCL has aggressive plans to increase export contribution to 10% (currently 2%) by 2017. Also, with the Leap
program, which is being implemented currently, the management targets an OPM expansion of 200BPS in the
next couple of years through cost rationalisation. We recommend a Buy with a price target of Rs3,400.
M&M
M&M is a leading maker of tractors and UVs in India. We expect demand for the automobile segment to pick up
with an improvement in customer sentiment. Additionally, new launches especially in the compact UV space will
drive volume growth. After growing in strong double digits, the tractor demand was under pressure in FY15 due
to weak monsoon rainfall. However, with the expectation of normal rainfall we expect the tractor segment to
recover and grow at 6-8% in FY16. The value of its subsidiaries adds to its sum-of-the-parts valuation. Higher
farm income, strong rural positioning and lower vulnerability to interest rates make it a proxy play on food
inflation.
Maruti Suzuki
Rico Auto Inds.
Maruti Suzuki is Indias largest small car manufacturer. Though the demand for diesel cars is witnessing pressure,
the petrol segment is witnessing a recovery due to the narrowing differential between petrol and diesel prices. The
company plans to launch 14 new models over the next five years (including some in the high-value UV space)
which would boost its volumes and realisation. The recent launch of Celerio and Ciaz have been well received.
The company has also launched the new Alto K10 with automatic transmission which will be the cheapest automatic
available in the country. We expect customer sentiment to improve on the back of a strong government at the
centre. Additionally, the PV segment is expected to benefit from the pent-up demand over the past two years and
will benefit Maruti Suzuki most due to its high market share in the entry level segment. We remain positive on the
stock with a price target of Rs4,250.
Rico is one of the largest producers of high-pressure non-ferrous die castings for the auto sector. It has recently
divested its 50% stake in a joint venture with FCC Co., Japan for Rs495 crore. The significant cash flow (nearly
equivalent to current market cap) is expected to be a game changer for the company and enable it to deleverage its
balance sheet and fund future capex. Additionally, a lower interest burden will result in an exponential growth in
the earnings and free cash flow. The company will be commissioning three new plants in the next 12 months and
is poised to benefit from an auto demand revival. We have a Buy recommendation on the stock with a price target
of Rs55.
45
April 2015
EQUITY
FUNDAMENTALS
EARNINGS GUIDE
Remarks
TVS Motor is the fourth largest two-wheeler manufacturer in the country with a strong presence in the scooter
segment. The scooter segment has grown at a CAGR of 25% over the past five years as opposed to 12% CAGR in
motorcycles and currently contributes 25% of the total two-wheeler volumes. With the launch of the Jupiter in
October 2013, the company has balanced its scooter portfolio and witnessed incremental volumes. Additionally,
new launches such as Star City+, refreshed Wego and new Scooty Zest have helped maintain the growth momentum.
The company will launch two new motorcycles in H2FY15. Exports, especially of three-wheelers, are doing
extremely well. We expect a margin expansion of 40-50BPS over FY14-16. We have a Hold on the stock with a
price target of Rs295.
Banks & Finance
With a wide network of over 3,000 branches spread across India, Allahabad Bank enjoys a stronghold in north and east
India. But it has reported a rise in slippages resulting in deterioration of its asset quality. Relatively higher proportion of
stressed assets and low tier-I CAR remain concerns, though the low valuation partly factors the same.
Andhra Bank, with a wide network of over 2,200 branches across the country, has a strong presence in south
India especially in Andhra Pradesh. Though it is trading at an attractive valuation, but the concerns on asset
quality front and the political situation within the state could affect its operations. Valuation factors the same.
TVS Motor
Allahabad Bank
Andhra Bank
Axis Bank
Axis Bank continues to grow faster than the industry and is diversifying its book in favour of retail segment. The
banks liability profile has improved significantly which would help to sustain margins at healthy levels. We
expect the earnings growth to remain reasonably strong driven by a healthy operating performance while asset
quality pressures will be manageable.
Bajaj Finance
Bajaj Finance, owned by Bajaj Finserv, is one of the most diversified NBFCs in the country and biggest bank
assurance partner for Bajaj Allianz Insurance. It has assets spread across products, viz loans for consumer durables,
two- and three-wheelers, loans to small and medium enterprises (SMEs), mortgage loans, commercial loans etc.
The asset quality and provisioning remain among best in system.
Bajaj Finserv
Bajaj Finserv is a financial conglomerate having presence in financing business (vehicle finance, consumer finance
and distribution) and is among the top players in life insurance and general insurance. Its consumer finance
business (Bajaj Finance) and general insurance business report a robust performance. The life insurance business
is showing signs of a pick-up after being affected by a change in regulations.
Bank of Baroda
Bank of Baroda is among the top public sector banks (PSBs) having a sizeable overseas presence (102 offices in 24
countries) and a strong network of over 5,000 branches across the country. It has a stronghold in western and
eastern India. Its performance metrics remain superior to that of the other PSBs, though the asset quality trends
will be the key monitorable.
Bank of India
Bank of India has a network of over 4,800 branches, spread across the country and abroad, along with a diversified
product and services portfolio, and steadily growing assets. The operating performance has weakened due to
margin deterioration. Further, the rising stress on the asset quality and relatively weaker capital position constrain
balance sheet growth.
Capital First
Capital First (erstwhile Future Capital Holdings) has been acquired by global private equity firm, Warburg Pincus
(a 72% stake). The present management has taken several initiatives to tap the high-growth retail product segments,
like gold loans, loan against property and loan against shares. It has a strong CAR and sound asset quality. Its
loan book is expected to sustain a 25-30% growth in the next three years. As a result of several initiatives taken,
the operating leverage will play out and may lead to significant pick-up in profitability over medium term.
Corp Bank
Corporation Bank is a mid-sized PSB having a relatively higher presence in south India. It is predominantly
exposed to the corporate segment, which constitutes about 44% of its book. Due to a higher dependence on the
wholesale business and a low CASA ratio, it lags its peers in terms of operational performance. Also, the rise in
NPAs could keep provisioning high and weaken earnings performance.
Federal Bank
Federal Bank is among the better performing old private sector banks in India with a strong presence in south
India, especially Kerala. Under the new management, the bank has taken several initiatives, which would improve
the quality of its earnings and asset book. The asset quality has consistently improved in the past several quarters
and the operating performance is picking up gradually.
HDFC
HDFC is among the top mortgage lenders providing housing loans to individuals, corporates and developers. It
has interests in banking, asset management and insurance through its key subsidiaries. As these subsidiaries are
growing faster than HDFC, the value contributed by them would be significantly higher going forward. Due to
dominant market share and consistent return ratios, it trades at a premium to the other NBFCs.
HDFC Bank
HDFC Bank was established in 1994 as part of the liberalisation of the Indian banking industry by the RBI. The
bank continues to report a strong growth in advances with focus on the retail segment. Its relatively high margins
(compared with its peers), strong branch network and better asset quality make HDFC Bank a safe bet. However,
delay in FIPB approval for increase in foreign investment limit remains a near-term concern.
ICICI Bank
ICICI Bank is Indias largest private sector bank with a network of over 3,800 branches in India and a presence in
around 18 countries. The bank has once again entered an expansionary mode after making a conscious effort to
contract its advances book due to asset quality concerns. The operating profit improved significantly and is the
key driver of the earnings growth. The bank offers substantial value unlocking opportunities from the insurance
and securities businesses.
46
April 2015
EQUITY
EARNINGS GUIDE
FUNDAMENTALS
Remarks
IDBI Bank
IDBI Bank is one of leading PSBs of India. It is gradually working towards improving its liability base and expanding
the retail book which is likely to reflect in the form of better margins and return ratios. However, due to rising
asset quality risks, low tier-I CAR and slower business growth, the stock is likely to underperform in the near term.
LIC Housing
LICHFL is the third largest mortgage financier (including banks) in India with a market share of 11% and loan
book of over Rs1,00,000 crore. It is promoted by Life Insurance Corporation of India, which is the largest insurance
provider in India. With over 200 branches, 1,241 direct sales agents, 6,535 home loan agents and 782 customer
relationship associates, the company has among the strongest distribution structures in India to support business
expansion. Going ahead, a revival in the economy and moderation in the borrowing rates could be the key triggers
for the stock. Therefore, considering stable RoE of ~20%, sound asset quality and healthy growth outlook, the
companys fundamentals are strong.
PNB
Punjab National Bank has one of the best liability mixes in the banking space, with low-cost deposits constituting
around 40% of its total deposits. This helps it to maintain one of the highest margins among PSBs. A strong
liability franchise and technology focus will help the bank to increase its core lending operations and fee income
related-businesses. In view of the weakness in the economy and relatively higher exposure to troubled sectors, the
asset quality stress may remain in the near term.
PFS
PTC India Financial Services, owned by PTC India, is focused on providing financial solutions to projects in the
energy value chain. Given the robust lending opportunities in the renewable energy segment and likely reforms in
thermal power segment, the company expects to double its loan book over next 12-15 months. With nil net NPAs,
its asset quality remains among the best in the system.
SBI
State Bank of India is the largest bank of India with loan assets of over Rs12 lakh crore. The loan growth for FY14
was in line with the industry average while the core operating performance was relatively strong. The successful
merger of the associate banks and value unlocking from insurance business could provide further upside for the
bank. While the bank is favourably placed in terms of liability base and the operating profit is also improving, the
asset quality would remain a key monitorable in the near term.
Union Bank
Union Bank of India has a strong branch network and an all-India presence. The bank aspires to become the
largest retail bank. Hence, it has ramped up its manpower and infrastructure to ramp up retail, SME lending.
However, rising stressed loans and weak capital ratios remain concerns with the bank.
Yes Bank
Yes Bank, a new generation private bank, started its operations in November 2004 and is the only greenfield bank
approved by the RBI in the last decade. The bank is promoted by Rana Kapoor and Ashok Kapur. It follows a
unique business model based on knowledge banking, which offers product depth and a sustainable competitive
edge over established banking players. While the operating performance remains healthy, recent capital raising
will increase the balance sheet growth over the next couple of years.
GSK Consumers
GCPL
Godrej Consumer Products is a major player in personal wash, hair colour and household insecticide market
segments in India. The recent acquisitions of Darling Group, Tura, Megasari and Latin American companies have
helped the company to expand its geographic footprint. We believe the decent sales volume growth in the domestic
business coupled with a strong growth in the Indonesian, African and Argentine businesses would help it to
achieve 18% CAGR top line growth and 20% bottom line growth over FY14-17.
HUL
Hindustan Unilever is Indias largest FMCG Company. With declining inflation and improving sentiment, HULs
volume growth in the domestic business is expected to improve in the coming years. Also it would be one of the
key beneficiaries of reducing input prices. Though business fundamentals have improved, the valuation remains at
premium levels. Hence we recommend Hold on the stock. In the long term, it will be one of the key beneficiaries
of the Indian consumerism story.
ITC
ITC has a strategy of effectively utilising the excess cash generated from its cash cow, the cigarette business, to
strengthen and enhance its other non-cigarette businesses. This would nurture the growth of these businesses some
of which are at a nascent stage. However, above 15% hike in excise duty on cigarettes for four consecutive years
has put pressure on the cigarette sales volume, thereby affecting the overall profitability of the business.
Jyothy Labs
Jyothy Laboratories is the market leader in the fabric whitener segment in India. With the successful integration of
Henkel and the induction of a new management team led by S Raghunanadan, it is transforming itself from a onebrand wonder to an aggressive FMCG player. We expect its top line to grow at a CAGR of 16%. A stable OPM
and lower interest cost would aid the PAT to grow strongly in the near term.
Consumer goods
GSK Consumer Healthcare is a leading player in the MFD segment with a close to 70% share in the domestic market.
Judicious new launches and brand extensions, and the expansion of its distribution reach have helped it to stay ahead
of the competition and maintain its pricing power over the years. In a bid to de-risk its business model, it has expanded
its product portfolio by entering into new categories such as biscuits, noodles, energy bars, sports drinks and oats in
the recent years. With cash balance of close to Rs1,700 crore the company can invest in growth initiatives as well as
reward its investors with a healthy dividend payment.
47
April 2015
EQUITY
FUNDAMENTALS
EARNINGS GUIDE
Remarks
Marico
Marico is among Indias leading FMCG companies. Its core brands, Parachute and Saffola, have a strong footing
in the market. It follows a three-pronged strategy which hinges on expansion of its existing brands, launch of new
product categories (especially in the beauty and wellness space) and growth through acquisitions. While the domestic
product portfolio is likely to achieve a steady growth in volumes, the international business is now gaining
momentum on the back of an increase in distribution and strong performance by the core brands.
Zydus Wellness
CMC
Zydus Wellness is bearing the brunt of a limited product portfolio of three brands (Nutralite, Sugar Free and
Everyuth) that cater to a niche category. The company would benefit from improving urban consumer sentiment
and a new distribution system in FY2016. Thus, we expect a better operating performance from it in FY2016.
IT/IT services
As per the scheme of amalgamation, CMC as an entity will cease to exist in the next six months as it will get fully
integrated into TCS. Thus, by the record date of the swap ratio, the stock price of CMC will eventually trade at a
discount of around 21% to that of TCS as per the swap ratio of 79 shares of TCS for every 100 shares of CMC. We
retain our Hold rating on the stock for the existing shareholders, in line with our positive view on TCS (for which we
have a price target of Rs3,100). But for fresh investment it would be more prudent to buy into TCS rather than
CMC, as the latter will cease to exist as an entity in the next few quarters.
Firstsource
Firstsource Solutions is a specialized BPO service provider. It has scripted a remarkable turn-around from being
on the brink of a financial burn-out to being an operationally sound company with a large scope for further
improvement. The health of its balance sheet (which was one of the prime concerns) is improving gradually as the
company is gradually reducing its debt burden through internal accruals. The company has seen strong deal wins
of $89mn in the last nine months and expects to see a 7-8% growth in FY16 with an upward bias. On the margin
front, the management sees margin expansion of 100-120BPS for FY15 (from 150-200BPS earlier) and an
improvement of 100-150BPS in FY16.
HCL Tech
HCL Technologies is one of the leading Indian IT service vendors. It has reported consistent financial performance
in the past several quarters on the back of a ramp-up in business from the large deals bagged earlier and strong
momentum in the IMS space. It continues to demonstrate a strong growth visibility with a robust backlog of deals
and successful execution with market share gain strategy through vendor churns/consolidation. We remain positive
on the company in view of its order wins and superior earnings visibility.
Infosys
Infosys is India's premier IT and IT-enabled services company. We believe that top level exits and lower predictability
of growth (currently lagging peers) is weighing on the companys performance. With the new CEO, Vishal Sikka, at
the helm, the investors will now keenly focus on the companys roadmap for future under the completely new
leadership bench. Nevertheless, the valuations seem reasonable at the moment and a much better operating
environment in the USA and Europe give us confidence of an improved growth momentum after the completion of
transition period.
Persistent
Persistent Systems has proven expertise and strong presence in newer technologies, strength to improve its IP base
and the best-in-the-class margin profile which sets it apart from the other mid-cap IT companies. We maintain our
confidence due to an optimistic management outlook driven by acceleration in the product engineering services
business, new technologies and increased momentum in the IP space after consolidating the HP Client Automation
revenues.
TCS
Tata Consultancy Services pioneered the IT services outsourcing business in India and is the largest IT service firm
in the country. It is a leader in most service offerings and has further consolidated its leadership through the
inorganic route. With a strong base it is well placed to garner incremental deals across sectors. Its consistent
quarterly performance (better than peers) coupled with the higher predictability of its earnings would keep it the
Streets favourite counter in the IT space.
Wipro
BHEL
Wipro is one of the leading Indian IT service companies. It has lagged the other IT biggies in terms of performance
for several quarters. The leadership and organisational changes that the company had adopted a couple of years
ago have just started to show tangible results which is reflected in the positive management commentary.
Additionally, the overall improvement in the demand environment bodes well for the companys revenue visibility.
Capital goods/Power
Bharat Heavy Electricals, Indias biggest power equipment manufacturer, has been the prime beneficiary of the multifold increase in the investments made in the domestic power sector over the last few years. However, the order inflow
has been showing signs of slowing down which would remain a major concern for the company. The key challenge
before the company now would be to maintain a robust order inflow and margin amid rising competition and lower
order inflow. The current order book of Rs103,900 crore stands at around 2.7x FY14 sales.
CESC
CESC is the power distributor in Kolkata and Howrah (backed by 1,225MW of power generation capacity) which
is a strong cash generating business. Further, 600MW of regulated generation capacity (to serve Kolkata distribution)
would come on stream next year in Haldia. However, another 600MW is ready in Chandrapur which is looking
for coal and power purchase linkage. The losses in the retail business have reduced in the last two years and the
company is expected to break even at the operating level in FY15. The newly acquired subsidiary, FirstSource, is
performing well in line with expectations. We retain our Buy recommendation on CESC.
48
April 2015
EQUITY
EARNINGS GUIDE
FUNDAMENTALS
Remarks
Crompton Greaves Crompton Greaves key businessesindustrial and power systemshold high potential in view of the investment
opportunities in the power transmission and distribution sector. Its consumer products segment is expected to
witness a high growth. Though the domestic operations remain relatively stable, but the international operations
went through a restructuring. While the European subsidiaries are on recovery path post-restructuring, the
subsidiaries in Canada and the USA are yet to turn positive. However, the management expects a turn-around
soon. Demerger of consumer business would unlock substantial value in the stock. Hence, we remain positive on
this stock.
Finolex Cables
Finolex Cables, a leading manufacturer of power and communications cables, is set to benefit from an improving
demand environment in its core business of cables and leveraging its brand strength to build a high-margin consumer
product business (of switchgears, lamps etc). However, due to its derivative exposure in the past, it suffered losses
followed by valuation de-rating. More importantly, there is no more exposure hence the overhang of the derivative
should fade away. We see healthy earnings growth, return ratios in high teens and high cash flow boding well for
the stock; hence, we remain positive on the stock.
Greaves Cotton
Greaves Cotton is a mid-sized and well-diversified engineering company. Its core competencies are in diesel/petrol
engines, power gensets, agro engines, pump sets (engine segment) and construction equipment (infrastructure
equipment segment). The foray in the mini tractor segment and international markets would open new growth
avenues. The management has taken a strategic call to close and hive off the loss-making divisions. The steps
taken include (1) the closure of the legacy casting unit in Pune; (2) the hive-off of the engineering unit in Germany;
and (3) the closure of operations at the infrastructure division. With the closure of the infrastructure business and
an expected improvement in the engine business, we expect the company to return to its 15%-plus OPM level by
FY16 and hence recommend a Buy with a price target of Rs165.
Kalpataru
Kalpataru Power Transmission is a leading EPC player in the transmission & distribution space in India.
Opportunities in this space are likely to grow significantly, thereby providing healthy growth visibility (also current
consol order book is 1.4x its FY14 sales). The OPM of the stand-alone business is likely to remain around 9-10%;
however the OPM of JMC Projects (a subsidiary) is showing signs of improvement after a significant drop in the
last two years. Subham Logistic is also expected to contribute meaningfully to the bottom line and add value. We
retain our Buy rating.
PTC India
PTC India is a leading power trading company in India with a market share of 35-40% in the short-term trading
market. In the last few years, the company has made substantial investments in areas like power generation
projects and power project financing which will start contributing to its earnings. Long pending receivables was
one of the drags on the companys balance sheet and return ratios; however, the concern has receded after receiving
payment from UPSEB. We retain Buy due to expectations of a healthy volume uptick with an increasing share of
long-term contract business.
Skipper
Skipper is uniquely placed to exploit the growing opportunities in two lucrative segments: power (transmission
tower manufacturing and EPC projects) and water (PVC pipes). It has a comfortable order book of Rs2,200 crore
in the transmission business, which looks promising given the huge investments proposal by the government in the
power T&D segment in the next five years. It plans to expand the PVC capacity manifold 4x) and aspires to turn
a national player from a regional player. After the revamp of its low-margin steel tube business and due to
operating leverage the overall margin may improve substantially in the next two years and boost its earnings and
return ratios. The earnings are poised to surge; hence we are positive on the stock.
Thermax
The energy and environment businesses of Thermax are direct beneficiaries of the continuous rise in India Incs
capex. Thermax group book stands at Rs6,217 crore, which is around 1.4x its FY14 consolidated revenues.
However, the company has shown its ability to maintain a double-digit margin in a tough environment. The
management sounded positive with a likely recovery in industrial capex cycle. We retain Hold on the stock due to
its rich valuation.
Triveni Turbines
Triveni Turbines Ltd (TTL) is a market leader in the up to 30MW steam turbine segment. TTL is at an inflexion
point with a strong ramp-up in the after-market segment and overseas business while the domestic market is
showing distinct signs of a pick-up. The company has also formed a JV with GE for steam turbines of 30-100MW
range which is likely to grow multifold in the next 4-5 years. TTL is virtually a debt-free company with a limited
capex requirement and an efficient working capital cycle, reflected in very healthy return ratios. Further, boosted
by the expected uptick in the domestic capex cycle, the companys earnings are likely to grow by 25%+ per annum
over the next 3-4 years.
V Guard Ind
V-Guard Industries is an established brand in the electrical and household goods space, particularly in south
India. Over the years, it has successfully ramped up its operation and network to become a multi-product company.
It has recently also forayed into regions other than the south and is particularly focusing on the tier-II and III cities
where there is a lot of pent-up demand for its products. We expect a CAGR of 21% in its earnings over FY14-17
and RoE of 22-24% during this period.
Va Tech Wabag
Chennai based VA Tech Wabag (VTW) is one of the worlds leading companies in the water treatment field with
eight decades of plant building experience. Given the rising scarcity of fresh water availability, we expect flow of
huge investments in water segment both globally and domestically. With rising urbanisation and industrialisation
in India, we expect substantial investments in this space. Moreover, we expect the water segment to get substantial
focus and budgetary allocation, with the pro-reform BJP-led government at the centre. Given the large opportunity
ahead and inherent strengths of VTW, like professional management, niche technical expertise and global presence,
we expect the earnings to grow by 23% (CAGR) during FY2014-17, and generate RoE in the range of 16-17%.
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Infrastructure/Real estate
Gayatri Projects is a Hyderabad-based infrastructure company with a very strong presence in irrigation, road and
industrial construction businesses. The order book stands at Rs7,206 crore, which is 3.6x its FY13 revenues. It is
also expanding its power and road BOT portfolio and plans to unlock value by offloading stake to private equity.
The company has potential to transform itself into a bigger entity.
Gayatri Proj
IL&FS Trans
IL&FS Transportation Networks is Indias largest player in the BOT road segment with a pan-India presence and
a diverse project portfolio. The fair mix of annuity and toll projects, and state and NHAI projects along with the
geographical diversification across 12 states reduce the risk to a large extent and provide comfort. Further, a
strong pedigree along with the outsourcing of civil construction activity helps it to scale up its portfolio faster.
Thus, it is well equipped to capitalise on the huge and growing opportunity in the road infrastructure sector.
IRB Infra
IRB Infrastructure Developers is the largest toll road BOT player in India and the second largest BOT operator in
the country with all its projects being toll based. It has an integrated business model with an in-house construction
arm which provides a competitive advantage in bidding for the larger projects and captures the entire value from
the BOT asset. Further, it has a profitable portfolio as majority of its operational projects have become debt-free
and it has presence in high-growth corridors which provides healthy cash flow. Thus, it is well poised to benefit
from the huge opportunity in the road development projects on the back of its proven execution capability and the
scale of its operations.
Jaiprakash Asso
Jaiprakash Associates, Indias leading cement and construction company, is all set to reap the benefits of Indias
infrastructure spending. The company has also monetised very well the real estate properties of Yamuna Expressway.
The marked improvement in the macro environment has improved accessibility to capital and thus eased the
concerns of liquidity to some extent. However, higher leverage could act as drag on the valuation.
L&T
Larsen & Toubro, being the largest engineering and construction company in India, is a direct beneficiary of the
domestic infrastructure capex cycle. The strong potential of its international business, its sound execution track record
and bulging order book, and the strong performance of subsidiaries further reinforce our faith in it. Recent measures
planned by the company to improve its return ratios augur well. Hence, we remain positive on the stock.
Pratibha Ind
Pratibha Industries is a dominant player in water & irrigation and urban infrastructure segments. It has also diversified
into other high-margin areas like road BOT, power and oil & gas. The current order book stands at Rs8,000 crore,
which is 3.7x its FY13 revenues. The company is facing margin pressure and higher interest expenditure on account
of the rising debt to finance working capital needs. We currently remain cautious and await positive developments
in terms of debt and working capital requirements.
Punj Lloyd
Punj Lloyd is the second largest EPC player in the country with a global presence. However, since FY09 the
profitability has come under severe pressure due to cost overruns/liquidated damages in some of Simon Carves (a
subsidiary) projects. Thus, it has put Simon Carves under administration. Further, Libyan projects will take another
few quarters to begin execution. Therefore, the successful execution of its projects along with debt reduction and
working capital management will drive its growth as it enjoys a robust order book.
Oil India
Reliance Ind
Selan Exploration
Oil & gas

Oil India has several hydrocarbon discoveries across reserves in Rajasthan and the north-eastern region of India.
The total proven and proven and probable reserves of the company stand at 473 million barrels (mmbbls) and
941mmbbls respectively. In addition to the huge oil reserves, the companys reserve-replacement ratio is quite
healthy at 1.6x, which implies a comfortable level of accretion of oil reserves through new discoveries. Further, it
offers healthy dividend yield, which provides comfort to investors. The full benefit of the recent policy reforms
like deregulation of diesel and gas price revision are expected to reflect in the FY16 numbers and augur well for
the company, though weak global oil prices are likely to be an overhang on the stock for some time.
Reliance Industries holds a great promise in E&P business with gas production from the KG basin. Further, a likely
revision in the natural gas prices will be a positive trigger. In the refining space, we expect its GRM to pick up with
a likely improvement in the light-heavy crude oil price differential. The company is likely to fetch a premium over
Singapore Complex GRM due to its superior refinery complexity and captive use of KG-D6 gas. We expect the
petrochem margins to be maintained in the medium term on an uptick in the domestic demand. Currently, the decline
in gas output from the KG-D6 basin is weighing on the stock price; however, incremental capacity in the petchem
business would be the earnings driver in the coming years.
Selan Exploration Technology is an oil E&P company with five oil fields in the oil-rich Cambay Basin of Gujarat.
The initiatives taken to monetise the oil reserves in its Bakrol and Lohar oil fields are likely to improve production.
Further, it intends to explore its next field, Indrora, which is the most prolific one with significant reserves. Based
on this, we expect it to ramp up production significantly, subject to approval for the new wells. We expect
production ramp-up in FY16 and hence we expect the earnings to grow significantly in the next two to three years.
However, weak global oil prices are likely to be an overhang on the stock in the medium term.
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Pharmaceuticals
Aurobindo Pharma Aurobindo Pharma is set to post a healthy growth on the back of a ramp-up in the US and European markets,
thanks to a strong product pipeline built over a period and focus on niche segments like injectibles, hormones,
penems and sterile products. The expected increase in the export-led business and a favourable tilt in the revenue
mix are likely to boost the margin, resulting in a faster growth in the earnings as compared with the revenues. It
has recently acquired the commercial operations (revenue size EUR320mn) of Actavis Plc in seven western European
countries and of Natrol in the USA to take on the nutraceutical business, which is a strategic fit.
Cadila
Cadila Healthcares performance in the US generic vertical is likely to improve on the back of new product
approvals. Besides, its consumer business and exports to the emerging markets will help it to achieve its target of
generating revenues of $3bn by FY16. It got DCGI approval for its first NCE called Lipaglyn to treat type-II
diabetes; this will add value to its R&D pipeline. However, recently it received an adverse observation report
(Form-483) on one of its products filed with the US regulator from its Moraiya plant; this will be a key overhang
on the stock.
Cipla
Cipla has brought about a paradigm shift in its business strategy. To revive growth, it has (1) enhanced focus on
technology-intensive products in the inhalation and nasal spray segments; (2) established front-end presence in the
key markets like South Africa and Europe; (3) developed an appetite for inorganic expansions; and (4) invested in
future growth areas like biosimilars. Though the rationalisation of products and creation of front-end presence in
the key markets would hurt earnings in the short term, but the base business would continue to grow steadily. The
growth would be fast-tracked on the back of the launch of combination inhalers in Europe, ramp-up in generics in
the USA and synergy from consolidation.
Divis Labs
The new DSN SEZ facility at Vishakhapatnam that started in June 2011 augurs well for Divis Laboratories. The
company is likely to see an improvement in economies of scale which will also lead to tax benefits after USFDA
approvals for three additional production blocks. A near debt-free balance sheet and strong cash flow are likely to
help build a war chest for pursuing strategic investments (biosimilars) and exploit the growth opportunities in
niche segments, like oncology and steroids for contraceptives. The company has planned to set up a new facility at
Vishakhapatnam with an initial investment of Rs500 crore; it will start contributing revenues from H2FY17.
Glenmark Pharma
Glenmark Pharmaceuticals exhibited an impressive operating performance during FY14 in the core business on
key generic launches, though, higher R&D expenses and tax payments restricted the profit growth. Through
successful development and out-licencing of six molecules in a short span of eight years, it has become Indias best
play on research-led innovation. It has built a pipeline of 14 molecules and clinched 6 out-licencing deals worth
$1,672 million (active deals worth $938). It has received over $200 million as initial milestone payment. Its core
business has seen stupendous success due to its focus on niche specialties. It has recently announced a plan to set
up a new facility in the USA to de-risk the business. We are confident of its long-term growth prospects.
Ipca Lab
Ipca Laboratories has successfully capitalised on its inherent strength of producing low-cost drugs to tap the
export markets. Its ongoing efforts in the branded formulations business in the emerging economies, the revival in
the UK operations, the pan-European initiatives, the likely approval of one additional product under institutional
business and a significant scale-up in the US business will drive its formulation exports. But it has recently got an
import alert by USFDA on its Ratlam API facility while the formulation facility at Indore SEZ has already been
served adverse inspection report (Form-483). The USFDA action is likely to hamper the US business for nearly 12
to 18 months.
J B Chemicals
Two years after selling the OTC business in Russia and CIS, JB Chemicals and Pharmaceuticals has re-established
itself in the export market while retaining leadership in the domestic branded formulation market. A major chunk
of the proceeds from the sale of the OTC business has stayed in its balance sheet while the operating performance
of the company has improved in recent quarters. We expect the company to fast forward growth rates on the back
of focus on regulated markets like the USA. The utlisation of surplus cash of over Rs500 crore would provide the
key trigger to the stock.
Lupin
The expected ramp-up in the launch of oral contraceptives, ophthalmic products, branded franchise (with addition
of in-licenced product-Alinia and Locoid lotion) in the USA and a robust pipeline of new launches in the domestic
and overseas markets provide strong growth visibility for Lupin. Further, with an expanded field force and therapy
focused marketing division, its formulation business in the domestic market has been performing better than the
industry. The deal with Eli-Lilly to distribute human insulin would open an incremental revenue stream for Lupin
in the Indian market.
Sun Pharma
The combination of Sun Pharmaceuticals, Taro, Dusa Pharma and the generic business of URL Pharma offers an
excellent business model, as has been reflected in the 42% Y-o-Y revenue growth and 59% profit growth in FY14.
It has recently announced plans to acquire Ranbaxy Laboratories for $4 billion through a share swapping deal.
The acquisition augurs well for the company as it will help establish a leadership position in key markets including
India, apart from leading to synergy of $250 million in next two years. With a strong cash balance, it is well
positioned to capitalise on the growth opportunities and inorganic initiatives. The company has recently got
Form-483 from USFDA for its Halol facility, though the observations are not serious and we expect the resolution
to come in 3-4 months.
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A well-known name in the domestic formulation market, Torrent Pharmaceuticals has been investing in expanding
its international presence. With the investment phase now over, it should start gaining from its international
operations in the USA, Russia and Brazil. Better field force productivity, focus on developed market and stronger
balance sheet would result in a sustainable earnings growth. It has recently acquired 30 key brands of Elder
Pharma for Rs2,000 crore which is a strategic fit in long run. The company has proposed to raise funds up to
Rs10,000 crore through a mix of equity and debt instruments, part of which may be used for inorganic initiatives.
Building materials
Grasim is better placed compared with the other large players in the cement space due to its strong balance sheet, comfortable
debt/equity ratio, attractive valuation and diversified business. The demand for VSF products remains strong in the global
market and Grasim being a leading domestic player is well placed to capture the incremental demand.
The Ramco Cements, one of the most cost-efficient cement producers in India, will benefit from the capacity addition
carried out ahead of its peers in the southern region. The 3mtpa expansion will provide the much-needed volume
growth in the future. The regional demand remains lacklustre but on account of the improvement in the realisation
due to supply discipline and a likely change in the market mix its profitability will improve (marginally) in FY15.
Torrent Pharma
Grasim
The Ramco Cements
Shree Cement
Shree Cements cement grinding capacity has grown to 18.2mtpa which will support its volume growth in the
coming years. It has set up 300MW power plant entirely for merchant sale which is expected to support its
revenue growth going ahead. Thus, a volume growth of the cement division and the additional revenue accruing
from the sale of surplus power will drive the earnings of the company.
UltraTech Cement
UltraTech Cement is Indias largest cement company with approximately 52mtpa cement capacity. It has benefited
from an improvement in its market mix. Further, the ramping-up of the new capacity and savings accruing from
the new captive power plants will improve its cost efficiency.
Discretionary consumption
Century Plyboard Century Plyboard is a leading player in the organised plywood industry with a market share of 25%. A strong growth
in the sector, Centurys premium positioning and brand equity strength, and the impending GST roll-out would enable
it to post a revenue growth (CAGR) of 22% over FY14-17. On the back of a revenue growth and better absorption
of fixed costs, the earnings are likely to grow at a much stronger rate of 49% CAGR over FY14-17. It is a quality
consumer play in a niche growing segment. Its robust return ratios and strong growth potential make us positive on
the stock. We have a Buy rating on it with a price target of Rs290.
Cox & Kings:
Cox & Kings is an integrated player with a strong presence in the global leisure travel segment and the education
tourism segment in Europe. It has 30% market share in the global outbound tourism market and a market leader
in education tourism in the UK. An improving global macro environment (conducive to travel & tourism industry)
and the companys focus on de-leveraging its balance sheet will help it to achieve a double-digit earnings growth
in the medium term. The stock is currently trading at a discount to some of its domestic and international peers.
Hence, we recommend a Buy on it with a price target of Rs395.
Eros Intl Media
Eros International Media is one of the largest integrated film studios in India with multi-platform revenue streams
and a well-established distribution network across the globe. With its proven track record, an impressive movie
slate and alliance with HBO coming into foray, it is well poised to gain from the rising discretionary spending on
film entertainment driven by the countrys favourable demographics. Thus, it is a compelling value play on the
Indian media and entertainment industry.
KKCL
Kewal Kiran Clothing is a branded apparel play with four brands in its kitty. Killer, its flagship denim brand, has
created a niche space in the minds of consumers. With a gross market turnover of over Rs300 crore, Killer is ahead
of its rival, Spykar. A strong brand profile, a disciplined management and a consistent track record coupled with
a robust balance sheet make us positive on the company.
KKDL
KKDL Ltd (erstwhile Kamala Dials and Devices) is present in the watch manufacturing business and has a strong
presence in the luxury watches retail business through subsidiary, Ethos. The watch business generates steady revenues
and cash flow with minimal capex, as no capacity is likely to come on stream and the utilisation levels are expected
to improve. The high-end retail watch business Ethos provides a strong growth opportunity in terms of revenue
growth via its online venture wherein it generates leads that translate into lower customer acquisition cost and better
fixed cost management that would result in robust margin improvement and strong profit growth. This unique highgrowth potential business along with the steady manufacturing business that generates free cash is attractively priced
currently and offers significant returns over the medium to long term. We put a Buy rating on the stock, valuing it
using the SOTP method (the manufacturing vertical is valued at 6x FY2016E earnings + the high-end Ethos is valued
at 1.2x FY2016E sales) to arrive at a price target of Rs350.
Raymond
Raymond is present in the fast-growing discretionary & lifestyle category of branded textiles and apparels. With
growing incomes, rise in aspirations to lead a luxurious life, greater discretionary spending and favourable
demographics, the segment of branded apparels & fabrics presents a good growth opportunity and Raymond with
its brands and superior distribution set-up is very well geared to encash the same. Any development with regard to
the Thane land in the form of either joint development or disposal would lead to value unlocking and provide
significant cash to the company.
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Relaxo Footwear Relaxo Footwear is present in the fast-growing footwear category, wherein it caters to customers with its four topof-the-mind-recall brands, viz, Hawaii, Sparx, Flite and Schoolmate. It has emerged as an attractive investment
opportunity due to its growing scale, strong brand positioning and healthy financial performance.
Speciality Rest.
Speciality Restaurants is a leading player in the fine-dining space with a portfolio of well-established brands such
as Mainland China and Sigree. It is a good proxy on the Indian consumption story as several factors such as
demographics, increasing disposable income and the trend of nuclear families are playing in its favour. Given the
strong brand franchisee, an improving outlook on the margin and a broadening of the valuation gap with comparable
listed peers, we maintain our Hold rating on the stock.
Sun TV Network Sun TV is the undisputed leader in the south Indian TV entertainment market. The broadcasters are one of key
beneficiaries of the mandatory digitisation process initiated by the government as its implementation is expected
to lead to a six-fold increase in ARPU of cable subscribers from Rs4 currently to Rs15-20 post-DAS regime.
However, on account of a delay in the implementation of DAS in phases 3 and 4 the revenue accretion is expected
to be delayed. Though it is a dominant player in the south Indian advertising market (where it enjoys a 30%
market share), but its ad revenue growth has been soft in recent quarters. We believe that the delay DAS process,
muted ad revenue growth and ongoing CBI enquiries will remain an overhang in the near term.
Thomas Cook (I) Thomas Cook India Ltd (TCIL), owned by the legendary value investor Prem Watsa, is an integrated leisure travel
and human service management company in India. The improvement in the domestic and global macro environments
provides a huge growth opportunity in the Indian leisure and travel industry. Quess Corp (its human resource
management business) provides exposure to the fast growing HR, office management and technology solutions
business. Moreover, we see an improving financial performance of Sterling and the value unlocking potential in
Quess Corp as re-rating triggers. We recommend Buy with a price target of Rs250.
Zee Entertainment
Zee Entertainment Enterprises, part of the Essel group, is one of India's leading TV media and entertainment
companies. It has a bouquet of 34 channels across Hindi, regional, sports and lifestyle genres. It is best placed to benefit
from the digital addressable system regime rolled out by the government. The company has consistently outgrown
the industry in terms of advertising growth and is a leader in terms of market share. Anticipating an overall
improvement in the domestic macro environment the management expects this trend to continue going ahead.
Diversified/Miscellaneous
Aditya Birla Nuvo
We like the strong positioning that Aditya Birla Nuvos businesses enjoy in their respective fields. It is amongst the
top five players in the insurance, asset management and telecom segments (Idea Cellular is the fastest growing telecom
company, third in ranking). Madura Garments, with its marquee brands, and consistent and resilient growth, is a
profitable set-up. In an improving macro-economic environment the company would be well placed to grow.
Bajaj Holdings
Bajaj Holdings & Investment Ltd (BHIL, erstwhile Bajaj Auto) was demerged in December 2007, whereby its
manufacturing business was transferred to the new Bajaj Auto Ltd (BAL) and its strategic business consisting of the
wind farm and financial services businesses was vested with Bajaj FinServ (BFS). All the businesses and properties,
assets, investments and liabilities of erstwhile Bajaj Auto, other than the manufacturing and strategic ones, now remain
with BHIL. BHIL is a primary investment company focused on new business opportunities. It holds more than 30%
stake each in BAL and BFS. We have a Buy recommendation on the stock with a price target of Rs1,815.
Bharti Airtel
Bharti Airtel is the leader in the Indian mobile telephony space. With the regulatory overhang receding and the industry
as well as the company focusing on the quality of revenues rather than volume, better times can be expected ahead
for the sector and hence the company. We remain optimistic about the company.
BEL
Bharat Electronics, a PSU manufacturing electronic, communication and defence equipment, is benefiting from the
enhanced budgetary outlay for strengthening and modernising the countrys security. The growth in revenues is also
expected to be aided by the civilian and export orders. The companys current order book of around Rs23,500 crore
provides revenue visibility for the next three to four years. The huge cash reserve would also support the stock.
GDL
Max India
With its dominant presence in the container freight station segment and recent forays into the rail freight and cold
chain businesses, Gateway Distriparks has evolved as an integrated logistic player. Its CFS business is a cash cow
while its investments in the rail and cold storage businesses have started bearing fruits. It is one of the largest
players in the CFS business and has also evolved as the largest player in the rail freight business as well as the cold
storage business. The proposed capex for all the three segments will strengthen its presence in each of the segments
and increase its pan-India presence. We expect its revenues and net profit to grow at 20% and 16% CAGR
respectively over FY13-15.
Max India is a unique investment opportunity providing direct exposure to two sunrise industries of insurance
and healthcare services. Max New York Life, its life insurance subsidiary, is among the leading private sector
players, has gained the critical mass and enjoys some of the best operating parameters in the industry. As the
insurance sector is showing signs of stablisation, the companys favourable product mix and a strong distribution
channel will result in a healthy growth in the annual premium equivalent. The company has turned profitable on
a consolidated basis and has announced dividend in past couple of years.
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Ratnamani Metals Ratnamani Metals & Tubes is the largest stainless steel tube and pipe maker in India. In spite of the challenging business
environment due to increasing competition, the stock is attractively valued. The management has maintained a strong
outlook on the potential opportunities in the oil & gas sector and inter-connection of the rivers across the country.
Supreme Ind
Supreme Industries is a leading manufacturer of plastic products with a significant presence across piping, packaging,
industrial and consumer segments. After a subdued H1FY15 performance, the company is witnessing traction in
PVC pipe volumes with an uptrend in the PVC prices and the seasonality factor. It recently hiked prices by 1015% and expects better H2FY15. The composite cylinder and bathroom fitting businesses along with a gradual
pick-up in pipes and other CPVC products. Though we revise our earnings estimate upward for FY16 and FY17
(up 7% each) to reflect the better growth visibility (margin expansion and earnings), we retain Hold rating with
a revised price target of Rs750 (we roll over our valuation to FY17 estimates).
Technocraft Ind
Technocraft Industries India Ltd (TIIL; a diversified player with interests in drum closures, scaffoldings, yarn and
garments) is the second largest player globally in the drum closure manufacturing space (market share of 35%).
While drum closure business (the cash cow with high margin and return ratios) is expected to grow steadily, the
scaffolding & formwork business is set to grow above 20% annually for the next couple of years. The financial
health is expected to improve steadily with a leaner balance sheet, healthy return ratios and cash flow; however,
the stock is attractively trading at 5x FY16E earnings and 2x FY16E EBITDA. We remain positive on the stock.
United Phos
A leading global producer of crop protection products, intermediates, specialty chemicals and other industrial
chemicals, United Phosphorus has presence across value-added agricultural inputs ranging from seeds to crop
protection products and post-harvest activities. A diversified geography and the recent acquisition of DVA Agro
Brazil will help the company to have a strong presence in the Brazilian market and aid in inorganic growth. Its
revenues are likely to grow at 12-15% and EBIDTA margin is expected to remain at 18-20% in FY15. It has also
started to focus on premium products in agro-chemicals and will slowly stop selling commodities and low-margin
products.
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a number of issues limiting the possible upside in the near term. On

However, we continue to believe that most of the issues are

ABSOLUTE RETURNS (TOP PICKS VS BENCHMARK INDICES)

CONSTANTLY BEATING NIFTY AND SENSEX (CUMULATIVE RETURNS) SINCE

PTC India Financial Services

SHAREKHAN TOP PICKS

improved operating metrics, we recommend a Buy with a price target of Rs465.

SHAREKHAN TOP PICKS

PTC INDIA FIN. SER.

SHAREKHAN TOP PICKS

rating with a price target of Rs250.

WEALTH CREATOR PORTFOLIO

WEALTH CREATOR PORTFOLIO

Wealth Creator portfolio

Objective: To build a balanced and actively managed portfolio of

Policy push: Stocks from sectors benefiting from improvement

Early gainers: Beneficiaries of an economic recovery (stocks from

Evergreen: Steady performers that provide stable and consistent

Wealth Creator folio has appreciated by 17.7% (weighted

Since last revision (considering closing prices of April 1), the

No changes/revisions suggested in the folio.

Returns (on April 01, 2015)

Wealth Creator folio (weighted average retruns)

Reco price (Rs)

Target price (Rs)

Large-caps (64% weightage)

Larsen & Toubro

State Bank of India

Tata Consultancy Services

Tata Motors DVR

Mid-caps (36% weightage; 4% each)

PTC India Financials

MARCH 13, 2015

NSE volume (No of shares):

Free float (No of shares):

Valuations: The steady growth in volumes and revenues, expectations of a margin

Risk: Weakening of consumer sentiment translating in a lower than expected growth

Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding

NSE volume (no. of shares):

Free float (no. of shares):

Sharekhan Limited, its analyst or dependant(s) of the analyst might be

NSE volume (No of shares):

Free float (No of shares):

Sharekhan Limited, its analyst or dependant(s) of the analyst might be

NSE volume (no. of shares):