IEA Report 6th January

IEA Report
6th Jan 2017

KEC
"Hold"
6th Jan 2017
In short run, companys revenue growth will remain lackluster but medium to long-term growth remains intact. Efficient working capital
management strengthened balance sheet position and we expect it to continue going forward. We expect to ramp up in an execution of substation
(T&D) projects and railway projects. Robust opportunity in railway segment with improving margin will help KEC to post healthy numbers going
forward. But considering the short-term uncertainty, we maintain HOLD on the stock with unchanged target price of Rs. 164.
......................................................... ( Page : 2-5)
M&M
"BUY"
5th Jan 2017
Management believes that the demonetization issue may have short term negative impact on Farm Equipment segment. They expect this concern
will last for next 4 months but sticks with previous growth guidance of 20% for tractor industry in FY17. We believe that the tractor industry may
not see much slow-down because the monsoon was good during the year and almost 90% of the tractors are financed. New launches in 2HFY18 in
Tractor and SUV segments will make the Mahindras presence further stronger in the domestic market. Ssangyong have also seen recovery on nine
month basis and it may post positive results in the current fiscal after three consecutive years of losses. Considering the strong volume growth and
recovery in the non- performing business we recommend 'BUY' with a target price of Rs.1600. ............................................... ( Page : 6-8)
MARUTI
"BUY"
3rd Jan 2017
We expect current demonetization issue may not be impacting much in the long run to the passenger vehicle segment because more than 75%
vehicles are financed. But this issue may be hampering sales in near future due to cash crunch in the economy. We assume volumes in the second
half may be down by 10% in comparison to the first half 2017. Higher sales of premium segment cars will further increase the realization per car,
which will in turn maintain the margins going ahead despite the rising commodity prices. Hence we have positive view on this stock and we
recommend "BUY" with a target price of Rs.6100. .................................... ( Page : 9-11)
IRB
2nd Jan 2017
"ACCUMULATE"
Firstly EPC revenue was impacted due to heavy monsoon during Q2FY17 and secondly suspension of toll collection for the period of 24 days
because of demonetization will affect the top line of the company in FY17. We expect top line of Rs. 5627 Cr (Growth of 10% YoY) with healthy
52.7% EBITDA margin in FY17E. Significant reduction in debt post the InvIT IPO and an arbitral award will boost the bottom line of the company. At
a current price of Rs. 191 stock trades at 7.3x to FY17 expected EV/EBITDA and 1.3x to P/B. The stock has corrected nearly 18% post demonetization
announcement which makes this stock attractive at this price with present fundamentals. Hence, we revised our rating from HOLD to ACCUMULATE
with target price of Rs.235 . ............................................ ( Page : 12-14 )
BIOCON
"Neutral"
30th Dec 2016
As per the management, exports have not been impacted due to demonetization, Indian business saw lower sales in the month of November. The
dependence of the company on domestic business is ~ 31% in total revenue. Recently Biocon has Submitted Trastuzumab dossier to the United
States Food & Drug Association (USFDA) which is an important milestone for Biocon and its review process is expected to take 18-24 months. The
market size of Trastuzumab injection is valued at about $6.5 billion, according to IMS data. Crestor Generic has been approved by USFDA and
Biocon is on track to launch the product in near future. This will be a huge opportunity for Biocon to take first mover advantage with its bio-similar
products. On the contrary ongoing price control pressure in India and US and discontinuance of key products may put some uncertainties in near
term. Hence we maintain Neutral rating in this stock. . (Page : 15-17)
BEL
"BUY"
29th Dec 2016
The company is having robust order intake during H1FY17 which gives decent revenue growth visibility going forward and this is expected to remain
in the range of Rs 10000cr-15000cr over the next two-three years. Currently, the defence sector is in the limelight due to the governments strong
focus on making defence procurements central to the Make in India campaign. The company has ~35% market share in Indias defence
electronics segment and is likely to be one of the biggest beneficiaries of the offset clause. Based on above mentioned reasons we see strong
medium-term earnings visibility for the company, hence we recommend BUY at a target price of Rs 1670 (Potential upside 22%).
..................................................... ( Page : 17-20)
Narnolia Securities Ltd
IEA Edition No.-
922
HOLD
KEC International
6-Jan-17
Result Update
CMP
Target Price
Previous Target Price
Upside
Change from Previous
146
165
13%
-
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Cr)
Av. Volume
Nifty
532714
KEC
153/97
3,744
30699
8191
Stock Performance
Absolute
Rel.to Nifty
1Month
3 Month
1Year
4.2
3.5
15.4
21.4
-8.0
-10.9
Share Holding Pattern-%

2QFY17
Promoters
Public
51%
49%
1QFY17 4QFY16
51%
49%
51%
49%
KECs Management, in its recent interview, has said that the Q3 will not be
great in terms of revenue growth. The companys domestic business was
impacted due to non availability of labour and trucks. Management is not
sure enough to achieve its revenue guidance of 10% growth in FY17. But
management is confident to maintain 8.5% of EBITDA margin in current
fiscal year. According to our view, in short run, companys revenue growth will
remain lackluster but medium to long run growth remains intact.
Robust Revenu visibility in Railway:Railway Ministry has set target to award 2000 Km, 4000 Km and 6000 km of
overhead electrification orders in FY17, FY18 and FY19 respectively. In
railways, KEC commands 20% market share, which may translate into
approx.2400 Cr of expected new orders in FY18E. Order Intake in Railway
segment is up by 158% in H1FY17 and it is the lowest bidder in 400 Cr of
orders. Railway ministrys focus on execution helps contractor to execute
project smoothly and timely. We expect improvement in EBITDA margin
based on increase volume and speedy execution.
Reduction in Debt through efficient working capital management:KEC has reduced gross debt by Rs. 300 cr with the help of better AR
management (reduction of Rs 485 Cr). Working capital days improved to
229 days from 246 days. Management expects to release retention money
from project in Saudi as project gets completed in next 2-3 months. Hence, it
will lead to further reduction in working capital days. Company aims to bring it
down to 180 days by the year end.
Outlook and Valuation
Company Vs NIFTY
120
KEC
NIFTY
110
100
90
80
In short run, companys revenue growth will remain lackluster but medium to
long-term growth remains intact. Efficient working capital management
strengthened balance sheet position and we expect it to continue going
forward. We expect to ramp up in an execution of substation (T&D) projects
and railway projects. Robust opportunity in railway segment with improving
margin will help KEC to post healthy numbers going forward. But considering
the short-term uncertainty, we maintain HOLD on the stock with unchanged
target price of Rs. 164
70
In Rs. Cr
60
50
40
Sandip Jabuani
sandip.jabuani@narnolia.com
Financials
Sales
EBITDA
Net Profit
EBIDTA%
PAT
Q2FY16
2021
155
44
7.7%
2.2%
Q1FY17
1785
150
31
8.4%
1.7%

Please refer to the Disclaimers at the end of this Report
Q2FY17
2121
185
65
8.7%
3.1%
YoY %
5%
20%
47%
QoQ %
19%
24%
110%
Result Highlights Q2FY17 & H2FY17

Revenue grew by 5% YoY and de-grew by 1% YoY in Q2FY1 and H1FY17 respectively. Delay in conversation of L1 order into
firm orders, back ended execution project and weak execution led to muted revenue growth in Q2FY17 and H1FY17.
EBITDA grew by 49% YoY and 13% to Rs. 185 cr and Rs. 335 Cr in Q2FY17 and H1FY17 respectively. Strong double digit and
increased EBITDA margin of SEA and railway business respectively support the EBITDA margin.
PAT margin reported robust growth of 47% YoY and 96% YoY to 72 Cr , 119 Cr in Q2FY17 and H1FY17 respectively. Lower
interest out go, strong performance at revenue and EBITDA level helped to grew higher.
SAE revenue grew by 30% YoY to Rs. 261 cr as compared to Rs. 201 Cr in same period last year with strong double digit
EBITDA marin. SAE business current order book stands at Rs. 1510 Cr (1.8x of FY16 revenue) and expect huge demand going
forward.
Railway business reported robust revenue growth of 94% YoY to Rs. 66 Cr as against Rs. 34 Cr in same period last year.
Railways current order book stands at Rs. 1186 Cr (7x of FY16 Revenue) and management expects to close order book around
Rs. 1200 Cr by year end.
Managment / Concall Update

Management is not sure to achieve 10% revenue growth in FY17. If things pick up immediately than KEC might able to achieve
revenue growth
Maintain 8.5% EBITDA margin
KEC managed to collect Rs.1000 Cr of debtors from Saudi Arabia in Q2FY17 and it overall reduced debtors by Rs. 500 Cr and
gross debt by Rs. 150 Cr. Expect to complete 3-4 projects in Saudi in coming quarter.
Working capital days reduce to 229 days from 246 days and it will further reduce to 180 days by year end. Expect to release
retention money from Saudi project. This will reduce working capital requirement.
SAE reported double digit EBITDA margin. Current order stands at Rs. 1500 Cr executable over next 2 years.
Cable Business: - Positive on EBITDA level but still negative on PBT level due to high depreciation. Management expects to turn
positive on PBT level by year and EBITDA margin will be accretive from next year. EHV and Solar cable is key driver for the future
growth.
International Orders:- Rs. 2500 Cr out of 3800 cr of L1 orders belongs to international market.
T &D:- Management see huge opportunity in domestic T&D market. Growth will driven by Karnataka, Tamilnadu, Rajasthan, West
Bengal and Telengana SEBs.
Normal tax rate in FY17 (35%-36%)
Interest cost will be 3% of sales in FY17 and 2.7% of sales in FY18
Order Book
Order Intake
Book to bill
10785
10,403
9,487
9,351
9,872
10,537
9,508
8,770
9,320
10,325
37%
2000
1500
1000
500
-5%
-13%
-37%
-7%
-8%
-33%

3103
4,000
42%
2825
63%
2500
1877
6,000
3000
2246
1506
106%
3085
Growth YoY%
3500
2423
8,000
1100
10,000
2,000
Order Intake
1892
12,000
2808
Order Book
120%
100%
80%
60%
40%
20%
0%
-20%
-40%
-60%
Segmental Revenue
Maintain 10% revenue

growth and 8.5%
EBITDA margin for the
FY17
EBITDA margin
10.0%
9.0%
8.0%
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
8.7%
7.3%
5.9%
5.6%
7.5%
7.7%
7.8%
8.4%
8.7%
Managment guided
8.5% EBIDTA margin
for the FY17
5.1%
1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17
Finance Cost As % of Sales

5%
4%
4%
4%
4%
4%
4%
3%
4%
3%
3%
3%
2.8%
3%
3%
Finance cost will be 3%

and 2.7% of sales in
Fy17 & FY18
respectively.
2%
2%
1%
1%
0%
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
About the Company

KEC International Limited is an India-based company, engaged in infrastructure engineering,
procurement and construction (EPC). The Company is also a manufacturer of power cables and
telecom cables in India. The Company operates in four business verticals, which include power
transmission and distribution, cables, railways and water. The Company is also a provider of turnkey
solution in the railway infrastructure EPC space. The Company has powered infrastructure development
across 50 countries in developed, developing and emerging economies of South Asia, the Middle East,
Africa, Central Asia, the United States and South East Asia. The Company has eight manufacturing
facilities for lattice towers, monopoles, hardware and cables. The Companys manufacturing facilities
located at Vadodara (Gujarat), Mysore (Karnataka) and Silvassa (Union Territory) in India.
Financials Snap Shot

INCOME STATEMENT
Revenue
Other Income
Total Revenue
COGS
GPM
Other Expenses
EBITDA
EBITDA Margin (%)
Depreciation
EBIT
Interest
PBT
Tax
Tax Rate (%)
Reported PAT
Dividend Paid
No. of Shares
FY14
7902
14
7916
4099
48%
883
493
6%
71
423
263
173
88
51%
67
15
26
Share Capital
Reserves
Net Worth
Long term Debt
Short term Debt
Deferred Tax
Total Capital Employed
Net Fixed Assets
Capital WIP
Debtors
Cash & Bank Balances
Trade payables
Total Provisions
Net Current Assets
Total Assets
FY14
51
1140
1192
603
1207
73
1794
992
18
3808
144
3213
125
1374
7411
FY15
8468
146
8614
4566
46%
917
512
6%
88
424
309
261
100
38%
161
18
26
FY16
8516
10
8527
4148
51%
975
679
8%
88
592
277
325
133
41%
192
57
26
FY17E
8943
10
8954
4561
51%
1020
760
9%
84
676
274
412
144
35%
268
80
26
EPS
Book Value
DPS
Payout (incl. Div. Tax.)
Valuation(x)
P/E
Price / Book Value
Dividend Yield (%)
Profitability Ratios
RoE
RoCE
Turnover Ratios
Asset Turnover (x)
Debtors (No. of Days)
Inventory (No. of Days)
Creditors (No. of Days)
Net Debt/Equity (x)
RATIOS
FY14
2.6
46.3
0.6
23%
FY15
6.3
51.7
0.7
11%
FY16
7.4
58.8
2.2
30%
FY17E
10.4
66.1
3.1
30%
26.0
1.5
0.87%
12.8
1.5
0.88%
16.4
2.1
1.82%
15.8
2.5
1.88%
6%
24%
12%
20%
13%
28%
16%
29%
1.1
175.9
45.0
148.4
0.51
1.1
166.1
38.1
143.3
0.55
1.0
192.6
37.8
126.0
0.40
1.1
193.0
38.0
126.0
0.35
FY14
155
71
113
499
(9)
161
(136)
305
263
15
132
(14)
146
132
CASH FLOW
FY15
FY16
261
325
88
88
122
135
596
853
153
(51)
90
78
125
18
640
264
309
277
17
58
(216)
(63)
62
(96)
132
194
194
98
FY17E
412
84
144
770
478
0
0
0
274
80
(354)
124
111
235
BALANCE SHEET
FY15
51
1278
1330
737
1308
70
2067
881
16
3853
206
3325
122
1668
7745
FY16
51
1460
1512
602
1723
66
2114
860
12
4495
111
2939
114
2151
8138
FY17E
51
1648
1700
602
1723
66
2302
860
0
4729
0
3087
114
2187
8322
OP/(Loss) before Tax

Depreciation
Direct Taxes Paid
Op. before WC Change
CF from Op. Activity
Capex
CF from Inv. Activity
Repayment of LTB
Interest Paid
Divd Paid (incl Tax)
CF from Fin. Activity
Inc/(Dec) in Cash
Add: Opening Balance
Closing Balance

BUY
MAHINDRA & MAHINDRA LIMITED
Result Update
CMP
1221
Target Price
1600

Upside
31%
Market Data
BSE Code
500520
NSE Symbol
M&M
52wk Range H/L
1509/1092
Mkt Capital (Rs Cr)
75,845
Av. Volume
90339
Nifty
8,191
1Month
1Year
YTD
Absolute
3.9
-12.7
-1.9
Rel.to Nifty
3.3
-6.4
-7.0
2QFY17 1QFY17
PAT Margin was increased by 230 bps YoY to 11% because of higher other
income which came in the form of special dividend received from Tech M,
Mahindra holidays and Swaraj Engines.
4QFY16
26.8
26.8
26.9
73.2
-100.0
73.2
-100.0
73.1
-100.0
Company Vs NIFTY
125
2QFY17 Result Highlights
EBITDA Margin improved by 70 bps YoY to 11.6% due to higher sales of

tractors during the quarter.
Public
Others
Total
M&M posted strong volume growth in the Farm Equipment segment with a
growth of 22% YoY during the 3QFY17. Good Monsoon and recovery in the
rural areas helped the company to garner strong growth in this quarter. M&M
commands 43% market share in the tractor segment putting Mahindra and
Swaraj brands together. Management expects rural demand to remain robust
on good monsoon. Growing competitiveness in the utility vehicle segment is a
concern for Mahindra because earlier launches by Maruti & Hyundai have taken
the large share from the market leader. The market share has reduced to 29%
from 35% in the UV segment. We assume that M&M will further respond to the
changing dynamics in the utility vehicle segment going ahead. Recovery in the
Ssangyong is a good sign for UV segment. Going forward, the management
has guided for 15-20% growth in the UV segment, 20% growth for tractor
industry and single digit for the commercial vehicle space in FY17.
M&M have reported 14% YoY growth in net revenue in 2QFY17 due to 12%
growth in Automotive and 36% growth in Farm Equipment segment.
Stock Performance
Promoter
5-Jan-17
M&M
NIFTY
120
115
110
105
Outlook
Management believes that the demonetization issue may have short term
negative impact on Farm Equipment segment. They expect this concern will
last for next 4 months but sticks with previous growth guidance of 20% for
tractor industry in FY17. We believe that the tractor industry may not see much
slow-down because the monsoon was good during the year and almost 90% of
the tractors are financed. New launches in 2HFY18 in Tractor and SUV
segments will make the Mahindras presence further stronger in the domestic
market. Ssangyong have also seen recovery on nine month basis and it may
post positive results in the current fiscal after three consecutive years of losses.
Considering the strong volume growth and recovery in the non- performing
business we recommend 'BUY' with a target price of Rs.1600.
100
Rs. In crore
95
90
85
Jan-17
Dec-16
Nov-16
Oct-16
Sep-16
Jul-16
Aug-16
Jun-16
Apr-16
May-16
Jan-16
Mar-16
Dec-15
80
Naveen Kumar Dubey
Financials
2QFY17
1QFY17
2QFY16
QoQ
YoY
Sales
EBITDA
Net Profit
EBIDTA%
PAT %
10609
1233
1163
11.6%
11.0%
11041
1286
955
11.6%
8.7%
9276
1008
915
10.9%
9.9%
-4%
-4%
22%
14%
22%
27%
naveen.dubey@narnolia.com
M&M
Investment Arguments
Monsoon has played a significant role in shaping the rural demand in favour of M&M, because about 90% of the tractors and
more than 40% of the utility vehicles have been sold in rural areas by the company. So M&M remains the big beneficiary of
improving rural demand in long run.
Recently launched "Yuvo" brand tractors have made the Farm Equipment segment portfolio stronger and M&M is all set to take
advantage of growing demand of 41-50 HP tractors. This category contributes more than 45% of total tractor sales.
The Company has built adequate manufacturing capacity for the immediate future and is planning to invest in additional capacity
in preparation for the mid to long term.
The company is strengthening its presence in neighbouring markets of Sri Lanka and Bangladesh.
Ssangyong have also seen recovery on nine month basis and it may post positive results in the current fiscal after three
consecutive years of losses. It can be a new growth driver for M&M in utility vehicles segment and this could lead further expansion
in margins of the company going ahead.
Management Highlights
There will be short term negative impact of demonetization on the farm equipment segment and the management expects that
this concern may last for next 4 months.
Rural economy looks positive for Q3 & Q4 on good monsoon. 20% industry volume growth in Tractor segment for FY17.
80-85 percent UVs and 90% Tractors are financed through Banks & NBFCs.
15-20 percent growth in UV segment in next 6 months.
CV segment will end up high single digit for the rest of the year.
There will not be significant price change in the truck segment due to GST.
Other income was higher due to special dividend received from Tech M, Mahindra holidays and Swaraj Engines,
The company will be llaunching 2 new vehicles in UV segment in Q2FY18.
Ssangyong has a capital expenditure plan of more than $700 million for the next three-four years to bring out one new product
every year.
Mahindra and the Ssangyong version of the SUV will drive the Korean brands ambitious entry into the North American market by
2020.
Sustainable growth in Farm Equipment Segment

Farm Equipment Segment
36%
40%
22%
20%
0%
5%
3%
30%
20%
12%
10%
0%
76486
61658
74595
43321
-10%
62666
45246
-16% -26%
62358
38604
59714
61152
-24% -30%
74555
90000
80000
70000
60000
50000
40000
30000
20000
10000
0
Growth
-20%
-30%
-40%

M&M
Net Revenue
Other Income
Total Revenue
COGS
GPM
Other Expenses
EBITDA
EBITDA Margin (%)
Depreciation
EBIT
Interest
PBT
Tax
Tax Rate (%)
Reported PAT
Dividend Paid
No. of Shares
FY13
68,693
389
69,082
41,892
39%
11,132
9,116
13%
2,080
7,036
2,297
5,128
1,935
38%
4,099
934
61
INCOME STATEMENT
FY14
FY15
74,001
71,949
505
525
74,506
72,474
44,893
42,850
39%
40%
12,342
13,444
10,120
8,793
14%
12%
2,170
2,124
7,951
6,669
2,954
3,157
5,502
4,038
1,496
1,720
27%
43%
4,667
3,137
1,009
872
62
62
Share Capital
Reserves
Net Worth
Long term Debt
Short term Debt
Deferred Tax
Net Fixed Assets
Capital WIP
Debtors
Trade payables
Total Provisions
Net Current Assets
Total Assets
FY13
295
19,666
19,961
19,860
3,368
894
39,821
17,941
1,120
5,177
4,937
11,911
4,286
11,462
76,470
BALANCE SHEET
FY14
FY15
295
296
23,012
25,561
23,307
25,856
25,492
22,327
2,781
7,177
1,202
1,287
48,799
48,183
19,228
21,315
1,244
1,273
5,725
5,476
6,523
4,912
11,800
11,355
5,089
5,654
14,817
13,195
88,270
94,844
FY16
78,016
541
78,557
45,340
42%
15,036
9,647
12%
2,582
7,066
3,373
4,234
1,864
44%
3,211
872
62
FY16
296
28,323
28,620
25,096
8,251
1,552
53,716
24,186
806
6,419
4,906
13,628
5,901
14,739
108,223
EPS
Book Value
DPS
Valuation(x)
P/E
Price / Book Value
Dividend Yield (%)
RoE
RoCE
Turnover Ratios
Asset Turnover (x)
Net Debt/Equity (x)
FY13
67
325
15.2
23%
FY16
52
461
14.0
27%
4.0
0.8
5.63%
6.3
1.3
3.43%
12.8
1.6
2.16%
23.4
2.6
1.16%
21%
18%
20%
16%
12%
14%
11%
13%
0.9
27.5
73.3
63.3
1.0
FY13
5,128
Depreciation
2,085
Direct Taxes Paid
(1,781)
OP before WC changes
7,663
(922)
(45,661)
Capex
(3,291)
(2,788)
Repayment of Long Term Borrowings
(54,392)
Interest Paid
(638)
(997)
4,508
Inc/(Dec) in Cash
799
3,139
Closing Balance
3,823
RATIOS
FY14
FY15
76
51
378
416
16.4
14.0
22%
28%
0.8
28.2
67.9
58.2
1.1
0.8
27.8
72.0
57.6
0.9
30.0
85.6
63.8
0.9
CASH FLOW STATEMENT

FY14
FY15
FY16
5,502
4,038
4,234
2,175
2,128
2,612
(1,275)
(1,701)
(2,044)
8,086
6,454
7,252
(244)
1,055
971
(66,102) (80,047) (88,000)
(3,665)
(4,759)
(4,334)
(4,490)
(4,444)
(5,238)
(53,265) (45,084) (94,098)
(583)
(489)
(541)
(1,094)
(1,200)
(1,068)
5,577
1,669
3,971
844
(1,720)
(296)
3,823
4,633
3,000
4,633
2,720
2,792
BUY
MARUTI SUZUKI INDIA LIMITED
3-Jan-17
Result Update
CMP
5466
Target Price
6100

Upside
12%
Market Data
BSE Code
532500
NSE Symbol
MARUTI
52wk Range H/L
5972/3202
Mkt Capital (Rs Cr)
165120
Av. Volume
52910
Nifty
8,180
Stock Performance
1Month
1Year
YTD
Absolute
7.8
-3.8
18.4
Rel.to Nifty
6.7
2.6
15.5
Royalty stood at Rs.1088 crore (6.1% of sales) during the quarter due to
appreciation in Yen.
4QFY16
56.2
56.2
56.2
43.8
-100.0
43.8
-100.0
43.8
-100.0
Company Vs NIFTY
140
Maruti reported Rs.17843 crore of net sales in 2QFY17 a growth of 29% over
previous year. This was driven by 18% volume growth and 9% realization
growth YoY.
Maruti reported a PAT of Rs.2398 crore a growth of 60.2% YoY on account

of higher other income in the quarter.
2QFY17 1QFY17
Public
Others
Total
2QFY17 Result Highlights
EBITDA margin improved to 17% by 150bps YoY higher steel prices and
employee cost.

Promoter
Maruti reported 3% growth in sales volume in the 3QFY17, despite the

current demonetisation issue. Domestic volumes grew by 4% on account of
higher sales of premium segment cars (Baleno and Brezza). Exports have
shown 1% of de-growth YoY primarily led by currency issue in various
countries and higher import duty imposition by Sri-Lankan government on
800-1000 cc cars. Realization improved on account of better product mix and
price increase during the quarter. Management has stated that the first phase
of the Gujarat plant will begin its commercial production in 4QFY17 and this
plant will take care of new models and the exports. There will be some cost
pressure going ahead due to higher depreciation and fixed cost on new
plant. The management is also exploring new geogarphies to expand it reach
in Latin American and Europen market.
MARUTI
NIFTY
130
120
Outlook
We expect current demonetization issue may not be impacting much in the
long run to the passenger vehicle segment because more than 75% vehicles
are financed. But this issue may be hampering sales in near future due to
cash crunch in the economy. We assume volumes in the second half may be
down by 10% in comparison to the first half 2017. Higher sales of premium
segment cars will further increase the realization per car, which will in turn
maintain the margins going ahead despite the rising commodity prices.
Hence we have positive view on this stock and we recommend "BUY" with a
target price of Rs.6100.
110
Rs. In crore
100
90
Dec-16
Nov-16
Oct-16
Sep-16
Jul-16
Aug-16
Jun-16
May-16
Apr-16
Mar-16
Jan-16
Feb-16
Dec-15
80
Naveen Kumar Dubey
Financials
2QFY17
1QFY17
2QFY16
QoQ
YoY
Sales
EBITDA
Net Profit
EBIDTA%
PAT %
17843
3037
2398
17.0%
13.4%
14927
2216
1486
14.8%
10.0%
13851
2245
1497
16.2%
10.8%
20%
37%
61%
29%
35%
60%
naveen.dubey@narnolia.com
Narnolia Securities Ltd,
MARUTI
Investment Arguments
In the recent past a series of new product launches have been successful for the company. It was a strategic decision to enter in
those segments where it has very few or no products. The same way the company is planning to launch 15 new products till 2020.
Maruti is onset to unleash the potential in the international business by targeting European and Latin American markets. Recently
launched and upcoming new products are technologically sound and competent to the export markets.
Gujarat plant will begin its commercial production in 4QFY17 and this plant will take care of new models and the exports. It will
take 6 months to ramp up the production and there will be some cost pressure going ahead due to higher depreciation and fixed
cost on new plant.
Maruti is also aggressively working towards bringing down the import content in its cars from an average 16% at the end of FY16
to 10% as part of its vision 2.0 plan. Currently about 14 percent of imports are yen denominated. Management expects to bring it
down to 5 percent. Typically, 1% movement in yen leads to around 1% change in the operating profit of Maruti.
Management Highlights
Lower double digit growth guidance for FY17 due to current demonetisation issue. 25% decline in retail sales in rural areas and
25% enquiries have been impacted in urban areas.
Maximum impact on taxi part, specially Ola and Uber. They contributes to 30% of the volumes.
Export may remain flat in FY17
Management expects 50000 Baleno's to be exported to Japan. Apart from Japan, the vehicle is being exported to Europe,
Australia, New Zealand and Latin America.
Maruti's newly launched light commercial vehicle, Super Carry, is also exported to South Africa and Tanzania and will be exported
to SAARC countries in the future.
Gujarat plant is likely to be commissioned in Q4FY17. Management expects it will take 6 months to ramp up.
Steel prices have started going up and its impact may be seen in second half of the year.
Margins can come under pressure once the Gujarat plant becomes operational due to higher fixed cost and depreciation.
Capex- Rs.4500 crore,(Rs.2000 crore for maintenace and R&D, Rs.1000 crore on marketing expenses and Rs.1500 crore on
product development.
The waiting period for Brezza is 27 weeks and for Baleno 33 weeks. Maruti has increased the production for Baleno by 25% to
meet customer requirements.
The company has 15 new models in the pipeline, which will come out by 2020.
Volumes Trend
Volume
Volume Growth
18%
17%
16%
2%

387251
4%
418,470
374182
353335
341329
7%
346712
323,911
321,898
10%
348443
13%
360402
14%
12%
299,894
450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
-
3%
20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
10
MARUTI
FY14
Revenue (Net of Excise Duty)44,451
Other Income
831
Total Revenue
45,281
COGS
31,853
GPM
28%
Other Expenses
5,970
EBITDA
5,204
EBITDA Margin (%)
12%
Depreciation
2,116
EBIT
3,088
Interest
185
PBT
3,734
Tax
902
Tax Rate (%)
24%
Reported PAT
2,855
Dividend Paid
424
No. of Shares
30
Share Capital
Reserves
Net Worth
Long term Debt
Short term Debt
Deferred Tax
Net Fixed Assets
Capital WIP
Debtors
Trade payables
Total Provisions
Net Current Assets
Total Assets
FY14
151
21,345
21,496
627
1,238
596
22,124
13,673
2,640
1,489
649
5,000
873
7,561
31,411
INCOME STATEMENT
FY15
FY16
50,801
58,612
865
472
51,666
59,084
35,615
39,318
30%
33%
6,741
8,115
6,844
9,119
13%
16%
2,515
2,867
4,329
6,252
218
94
4,976
6,630
1,185
1,999
24%
30%
3,807
4,699
884
1,237
30
30
FY17E
65,460
134
65,594
44,348
32%
8,709
10,068
15%
2,425
7,643
67
7,710
2,513
33%
5,266
1,386
30
EPS
Book Value
DPS
Valuation(x)
P/E
Price / Book Value
Dividend Yield (%)
RoE
RoCE
Turnover Ratios
Asset Turnover (x)
Net Debt/Equity (x)
BALANCE SHEET
FY15
FY16
151
151
24,167
27,598
24,318
27,749
278
147
53
91
484
475
24,597
27,896
14,380
13,989
1,890
1,013
1,144
1,387
43
77
5,657
7,127
1,652
2,137
(234)
(3,965)
34,479
40,270
FY17E
151
31,477
31,628
147
101
475
31,775
15,178
1,549
551
7,960
2,391
(3,850)
45,529
FY14
3,734
Depreciation
2,116
Direct Taxes Paid
(858)
5,111
4,995
(13,100)
Capex
(3,545)
(4,997)
Repayment of Long Term Borrowings
(22)
Interest Paid
(170)
(283)
(74)
Inc/(Dec) in Cash
(76)
165
Closing Balance
89

FY14
94
712
14.0
15%
RATIOS
FY15
FY16
126
156
805
919
29.3
41.0
23%
26%
FY17E
174
1,047
45.9
26%
24.0
3.2
0.62%
29.3
4.6
0.79%
23.9
4.0
1.10%
28.1
4.7
0.94%
13%
14%
16%
18%
17%
22%
17%
24%
1.4
12.2
20.2
41.1
0.0
1.5
8.2
27.4
40.6
0.0
1.5
8.6
29.7
44.4
0.0
1.4
8.6
32.0
44.4
0.0
CASH FLOW STATEMENT

FY15
FY16
FY17E
4,976
6,630
7,710
2,515
2,867
2,425
(1,075)
(1,948)
(2,513)
6,779
9,089
10,271
6,539
8,584
8,246
(17,354) (12,189)
(87)
(3,279)
(2,443)
(3,614)
(4,581)
(7,319)
(6,328)
(211)
(292)
(222)
(104)
(67)
(424)
(909)
(1,386)
(2,004)
(1,239)
(1,443)
(45)
26
474
89
43
77
43
69
551
11
ACCUMULATE
IRB Infrastructure Developers Ltd.
Result Update
CMP
Target Price
Upside
196
235
20%
-
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Cr)
Av. Volume
Nifty
532947
IRB
269/177
6,888
159708
8104
Stock Performance
Absolute
Rel.to Nifty
1Month
3 Month
1Year
3.8
5.3
-24.4
-17.1
-20.0
-22.2

2QFY17
Promoters
Public
57%
43%
1QFY17 4QFY16
57%
43%
58%
42%
Company Vs NIFTY
120
IRB
NIFTY
2-Jan-17
Robust construction revenue visibility:IRB has reported strong construction revenue growth of 28% YoY in H1FY17
despite heavy monsoon. Current order book stands at Rs.11061Cr (including
Kishangarh-Glubpura project) i.e. 4x of FY16 construction revenue. Healthy
order book provides robust construction revenue visibility going forward.
Execution during the Q2FY17 was impacted due to heavy and extended
monsoon but we expect to ramp up in execution in the 2nd half of the year.
Ramp up in the execution of ongoing projects and Agra Etawah will drive the
EPC revenue growth in FY17 and 3 projects in Rajasthan will drive the growth
in FY18.
Arbitration awards:Recently, IRB Goa Tollway Pvt. Ltd. and IRB Ahmadabad-Vadodara super
express tollway Pvt. Ltd, wholly owned subsidiaries of the company, has won
an arbitral award of Rs. 241Cr and Rs. 20 Cr respectively. It will help the
company to reduce its debt.
InvIT will unlock Value:IRB has filed DRHP (Draft Red Hiring Prospectus) for its InvIT with SEBI and
company is in an advanced stage to get approval. IRB is in the process to
raise Rs. 4300 Cr through InvIT IPO. These proceed will be utilized for the
debt reduction and for the future projects.
Demonetization Impact: Toll collection on all national highways remains to suspend for 24 days due to
demonetization. As per our calculation, IRB lost around Rs. 150 Cr of toll
collection across all the projects. Revenue loss will be compensated by NHAI
in two parts (i) some portion in cash and (ii) balance portion will be
compensated by way of extension of the concession period. The company
does not witness any big dip in traffic post the commencement of tolling. we
expect little stretch in working capital on a consolidated level as toll collection
has impacted. Executions of projects remain stable as we do not see any
major challenges on that front.
110
100
In Rs. Cr
90
80
70
60
50
40
Sandip Jabuani
sandip.jabuani@narnolia.com
Financials
Sales
EBITDA
Depreciation
Interest
Net Profit
EBIDTA%
PAT %
TaX % of PBT
Q2FY16
1,149
605
203
240
149
53%
13%
22%
Q1FY17
1,517
774
221
328
182
51%
12%
29%

Q2FY17
1,291
709
227
340
142
55%
11%
19%
YoY%
12%
17%
12%
42%
-5%
QoQ%
-15%
-8%
3%
3%
-22%
12
Concall Highlights :-
No big dip in traffic post the tolling resume on all toll plaza
IRB has secured Kishangarh Udaipur project in December, after winning this project
company has completed its target of acquiring new projects of 330 km in FY17.
IRR of 16-18% on Kishangarh Udaipur project after premium payment to NHAI
IRB is pre-qualified in project worth Rs. 16600 Cr.
The company aims to win 300 km project (including 230 km already won)
NHAI and related State authority will compensate revenue loss by way of adjusting
premium and revenue share payment.
Current Toll collection at Agra-Etwah project is 35lakh/day and likely to go up by 4550% post full completion of the project
IRB has filed DRHP of InvIT and waiting for the Sebis replay and expect to lunch in
January
The Company will have to infuse equity of Rs. 1600-1800 Cr over period of two years.
Tax reversal of Rs.15-18 Cr in Q2FY17
Solapur- Yedeshi and Kaithal Rajasthan project will gets complete by H1FY18
Company has received appointment date for the 1)Gulabpura- Chittorgarh and
Udaipur- Gujarat Border project and work will start from 1 st april 2017
Outlook and Valuation :Firstly EPC revenue was impacted due to heavy monsoon during Q2FY17 and secondly
suspension of toll collection for the period of 24 days because of demonetization will
affect the top line of the company in FY17. We expect top line of Rs. 5627 Cr (Growth of
10% YoY) with healthy 52.7% EBITDA margin in FY17E. Significant reduction in debt post
the InvIT IPO and an arbitral award will boost the bottom line of the company. At a current
price of Rs. 191 stock trades at 7.3x to FY17 expected EV/EBITDA and 1.3x to P/B. The
stock has corrected nearly 18% post demonetization announcement which makes this
stock attractive at this price with present fundamentals. Hence, we revised our rating
from HOLD to ACCUMULATE with target price of Rs.235
About the Comapny :IRB Infrastructure Developers Limited is a road buildoperatetransfer (BOT) operator.
The Company's principal activity is the construction and maintenance of roads. Its
business segments include Road Infrastructure Projects, which includes development and
operation of roadways; Real Estate, which includes real estate development, and Others,
which includes windmill (sale of electricity generated by windmill), hospitality and airport
infrastructure. Its construction business complements its BOT vertical by executing
engineering, procurement and construction, and operation and management (O&M)
aspects of BOT concessions. It has a portfolio of over 20 Road BOT projects. It has inhouse integrated project execution capabilities in both its business verticals, including
construction, and operation and maintenance of highways.
13
Order Book
Order book
Book to bill
17
15
12
10
9,746
17,321
11,468
12,116
12,631
12,954
11,587
11,348
11,974
7,795
8,739
11
10
14
12
11,394
12
7,030
20,000
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
-
20
18
16
15
14
12
10
8
6
4
2
-
Comapny has received

appointment date and start work
from 1st April 2017
As % of Order Book
8%
Work on Agra Ethawah project

(Rs.2133 Cr) has started from
August 2016 onwards and we
expect ramp up in H2FY17
13%
Yedeshi Aurangabad
Kaithal Rajasthan Border
6%
16%
2%
2%
Solapur Yedeshi
Sindhudurg Airport
Agra Etawah
Gulabpura -Chittorgarh
18%
18%
Udaipur -Gj Border

O & M Contracts
Goa Kundapur
17%
Revenue Mix
1,200
Construction
BOT Toll
70%
EBITDA M
60%
1,000
56%
800
600
45%
50%
59%
58%
58%
57%
50%
53%
52%
48%
51%
56%
40%
30%
400
755
569
913
601
978
593
808
524
703
476
613
524
516
503
510
483
477
435
606
431
598
320
591
315
20%
690
277
200
50%
10%
0%

14

INCOME STATEMENT
Net Revenue
Other Income
Total Revenue
COGS
GPM
Other Expenses
EBITDA
EBITDA Margin (%)
Depreciation
EBIT
Interest
PBT
Tax
Tax Rate (%)
Reported PAT
Dividend Paid
No. of Shares
FY14
3732
121
3853
1650
0
148
1754
47%
477
1277
756
642
182
28%
459
194
33
FY15
3847
113
3960
1306
0
140
2212
57%
707
1505
931
686
144
21%
543
164
35
FY16
5130
124
5254
2054
0
170
2661
52%
853
1807
1063
868
232
27%
636
164
35
RATIOS
FY17E
5627
128
5755
0
0
0
2965
53%
903
2062
1347
843
194
23%
647
164
35
EPS
Book Value
DPS
Valuation(x)
P/E
Price / Book Value
Dividend Yield (%)
RoE
RoCE
Turnover Ratios
Asset Turnover (x)
Net Debt/Equity (x)
FY14
14
107
6
42%
FY15
15
124
5
30%
FY16
18
137
5
26%
FY17E
18
151
5
25%
7
1
5.66%
15
2
2.00%
13
2
2.01%
10
1
2.45%
13%
9%
12%
10%
13%
10%
12%
10%
0.2
0.5
59.4
39.9
2.64
0.1
0.5
72.6
22.2
2.48
0.1
7.4
54.9
21.7
2.62
0.1
7.4
54.9
21.7
2.85
BALANCE SHEET
Share Capital
Reserves
Net Worth
Long term Debt
Short term Debt
Deferred Tax
Net Fixed Assets
Capital WIP
Debtors
Trade payables
Total Provisions
Net Current Assets
Total Assets
FY14
332
3228
3561
9398
897
22
12959
13041
48
6
1501
408
289
879
15712
FY15
351
4009
4361
10804
631
19
15165
36599
80
5
1580
234
219
477
39393
FY16
351
4476
4827
12652
1189
16
17479
39169
78
104
1559
305
169
510
42181
CASH FLOW
FY17E
351
4958
5309
15117
1189
16
20427
40594
78
114
0
335
322
-1378
42088

Depreciation
Direct Taxes Paid
Op. before WC change
Non Current Investment
Capex
Repayment of LTB
Interest Paid
Inc/(Dec) in Cash
Closing Balance

FY14
642
477
232
1749
1656
0
3002
(2743)
888
740
194
1274
186
257
443
FY15
686
707
216
2216
1823
1
2311
(2295)
794
1317
78
474
2
443
445
FY16
868
853
312
2719
2342
0
3161
(3175)
1140
1435
254
667
(165)
445
279
15
FY17E
841
903
194
3091
2116
0
2328
(2328)
0
1347
164
954
742
1559
2301
Neutral
BIOCON LTD
30-Dec-16
Company Update
CMP
930
Target Price
880
Upside
Market Data
BSE Code
532523
NSE Symbol
BIOCON
1020/431
18,604
73
8,693
52wk Range H/L

Mkt Capital (Rs Cr)
Av. Volume(,000)
Nifty
3M
12M
Absolute
0.5
82.8
67.4
Rel.to Nifty
2.5
80.6
63.1
Small Molecules business has reported revenue of Rs 389 Cr, a growth of

15% led by a better product-mix of differentiated APIs and a higher
contribution from statins.
Net R&D expenditure during the quarter stood at Rs. 65 Cr, an increase of
14% YOY. At a Gross level, R&D spends in Q2 were Rs 113 Cr.

Promoters
1QFY17 4QFY16
60.7
37.5
1.8
100.0
Public
Others
Total
60.7
60.7
37.4
1.9
100.0
37.4
Novel Biologics and Biosimilars reported a growth of 26% at Rs 96 Cr on

account of good performance in key emerging markets.
Branded Formulations business includes our finished dosages business in
India and overseas including UAE. Q2 FY17 sales at Rs 137 Cr reported a
growth of 15%.
-100.0
Licensing Income this quarter stood at Rs 32 Cr while Other Income

reported was Rs 52 Cr.
Company Vs NIFTY
200
Q2FY17_Result Update
EBITDA rose 45% to Rs 277 Cr; Net Profit stood at Rs 147 Cr a growth of
52% over last year.
Stock Performance
1M
2QFY17
As per the management, exports have not been impacted due to

demonetization, Indian business saw lower sales in the month of November.
The dependence of the company on domestic business is ~ 31% in total
revenue. Recently Biocon has Submitted Trastuzumab dossier to the United
States Food & Drug Association (USFDA) which is an important milestone
for Biocon and its review process is expected to take 18-24 months. The
market size of Trastuzumab injection is valued at about $6.5 billion,
according to IMS data. Crestor Generic has been approved by USFDA and
Biocon is on track to launch the product in near future. This will be a huge
opportunity for Biocon to take first mover advantage with its bio-similar
products. On the contrary ongoing price control pressure in India and US
and discontinuance of key products may put some uncertainties in near
term. Hence we maintain Neutral rating in this stock.
BIOCON
Research business through Syngene reported revenue of Rs. 286 Cr (

up by 14% ) as compared to the revenue of Rs.250 Cr in the corresponding
quarter of FY16.
NIFTY
180
160
140
120
Financials
2012
2013
2014
2015
Rs,Cr
2016
100
Sales
EBITDA
Net Profit
EPS
P/E
2148
517
338
17
14.1
2538
475
509
25
10.8
2933
518
414
21
20.5
3143
617
497
25
18.9
3570
784
896
30
19.0
Dec-16
Oct-16
Nov-16
Sep-16
Aug-16
Jul-16
Jun-16
Apr-16
May-16
Mar-16
Jan-16
Feb-16
Dec-15
80
Aditya Gupta
aditya.gupta@narnolia.com

16
Segment Revenue
286
638
263
270
526
602
250
576
316
225
581
632
238
587
220
172
527
531
188
535
192
183
513
548
188
166
457
CRAMS(Rs in Cr)
542
140
486
155
129
463
533
122
440
BIOPHARMA(Rs in Cr)
Management Speak/ Key take aways From Conference call

Recently Biocon and its partner Mylan announced that the results of the clinical trial study of its biosimilar trastuzumab have been
published in the Journal of the American Medical Association (JAMA).
The company has also filed for 3 biosimilars with European Union regulator and is likely to file those with the USFDA too
Stopping sale of Abraxane has also impacted Indian business. Some decline in branded formulation business is expected to be
reflected in books.
Going ahead the management is expects to sustain revenue and margins at second quarter levels.
Biocon will file insulin largine in the US in FY18.
The company has gained traction in many emerging markets with its biosimilars.
Going ahead management expects that speciality is the way to go and Biocon believes that there will be better returns if a company
focuses on specialty.
BUSINESS MODEL
For reporting purpose, Biocon classifies its
operations into four segments i.e. Small
Molecules, Biologics, Branded Formulations
and Research Services.
Small Molecules includes API's

,immunosuppressants & Generic formulations
business
Biologics vertical comprises Novel biologics
and Biosimilars,recombinant proteinsi ncluding
rh-insulin,insulin analogs, monoclonal
antibodies
Branded Formulations includes finished
dosages
Research Services business through Syngene
17

INCOME STATEMENT
FY13 FY14 FY15 FY16
Rev. (Net of Excise Duty)
Other Income
Total Revenue
COGS
GPM
Other Expenses
EBITDA
EBITDA Margin (%)
Depreciation
EBIT
Interest
PBT
Tax
Tax Rate (%)
Reported PAT
Dividend Paid
No. of Shares
2,485
53
2,538
1,045
42%
576
475
19%
179
296
8
408
98
24%
509
116
20
FY13
Share Capital
Reserves and surplus
Shareholders' funds
Long term Debt
Total Borrowings
Non Current liabilities
Long term provisions
Short term Provisions
Current liabilities
Total liabilities
Net Fixed Assets
Non Current Investments
Other non Current assets
Current assets
Total Assets
100
2,595
2,695
164
249
502
4
247
905
4,416
1,823
65
41
2,240
4,416
2,877
56
2,933
1,186
41%
707
518
18%
204
315
2
538
107
20%
414
175
20
3,090
53
3,143
1,256
41%
737
564
18%
221
343
9
519
96
18%
497
119
20
3,485
85
3,570
1,330
38%
831
688
20%
242
446
10
652
257
39%
896
119
20
EPS
Book Value
DPS
Valuation(x)
P/E
Price / Book Value
Dividend Yield (%)
RoE
RoCE
Turnover Ratios
Asset Turnover (x)
Net Debt/Equity (x)
BALANCE SHEET
FY14 FY15 FY16
100
2,927
3,027
606
850
656
8
177
1,136
5,751
2,731
65
47
2,639
5,751
100
3,171
3,271
770
1,031
608
15
158
1,294
6,375
3,307
137
2,563
6,375
100
3,956
4,056
2,072
2,467
415
30
88
1,233
8,482
3,910
166
3,993
8,482
FY13
25
135
6
0.23
RATIOS
FY14 FY15
21
151
9
0.42
25
164
6
0.24
FY16
45
203
6
0.13
11
2
2%
21
3
2%
19
3
1%
11
2
1%
19%
10%
14%
9%
15%
8%
22%
7%
0.56
75
59
51
0
0.50
76
48
44
0
0.48
91
53
51
0
0.41
86
54
57
1
CASH FLOW STATEMENT

FY13 FY14 FY15 FY16
Depreciation
Direct Taxes Paid
Proceeds from sale of Crr.Inv
Capex
Repay. of Long Term Borr.
Interest Paid
Inc/(Dec) in Cash
Closing Balance

610
179
(94)
758
471
1,904
(359)
(376)
(21)
(8)
(100)
(9)
87
387
474
538
204
(149)
672
561
1,642
(789)
(938)
(19)
(1)
(150)
426
49
508
557
624
221
(133)
698
211
2,943
(838)
(509)
(15)
(1)
(100)
186
(112)
574
463
1,227
242
(247)
818
526
2,784
(811)
(954)
(54)
(11)
(200)
1,087
659
468
1,127
18
BUY
BHARAT ELECTRONICS LTD.
29-Dec-16
Result Update
CMP
Target Price
Upside
1374
1670
22%
-
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Cr)
Av. Volume
Nifty
500049
BEL
1540/1009
30,880
41373
8044
Stock Performance
Absolute
Rel.to Nifty
1Month
1Year
YTD
13.2
10.6
22.0
17.1
15.0
17.2
1QFY17
Promoter
74.41
75.02
75.02
Public
25.59
24.98
24.98
--
--
--
100
100
100
Others
Total
Company Vs NIFTY
130
125
120
115
110
105
100
95
90
85
80
BEL
Order inflow grew 108% YoY to Rs 41300cr, led by finalization of orders like
electronic warfare suite, advanced composite communication system, ship
data network, and annual maintenance contract for Rohini radar. For FY17
Key orders like Akash missile system, mobile cellular communication system,
Commander TI Sights, Samyukta upgrade, Long range surface to air missile
and L-band tropo upgrade are supposed to be finalized.
Key Highlights:
Company has entered into strategic alliance with defence laboratories,
ordinance factory board and other global OEMs to develop products like
Surface to air sytems, air defence radars, Battlefield management system,
sonar systems, next generation night vision devices, gun upgrades/ new gun
programmes, inertial navigation systems, medium altitude long endurance
unmanned aerial vehicles (UAVs) and maintenance of aerostat surveillance
and communication systems.
Company plans to set up Rs 500cr Greenfield weapon systems facility in
Andhra Pradesh which will focus on the design, development and production
of weapon systems like fire control, missile systems and other weapon
upgrade systems. Company expects the facility to be ready over the next two
years.

4-Nov-16 2QFY17
Strong order book visibility
NIFTY
Outlook and Valuation

The company is having robust order intake during H1FY17 which gives
decent revenue growth visibility going forward and this is expected to remain
in the range of Rs 10000cr-15000cr over the next two-three years. Currently,
the defence sector is in the limelight due to the governments strong focus on
making defence procurements central to the Make in India campaign. The
company has ~35% market share in Indias defence electronics segment and
is likely to be one of the biggest beneficiaries of the offset clause. Based on
above mentioned reasons we see strong medium-term earnings visibility for
the company, hence we recommend BUY at a target price of Rs 1670
(Potential upside 22%).
Rs in Cr
Bibha Kashyap
Financials
Sales
EBITDA
Net Profit
EBIDTA%
P/E
FY12
5847
636
847
10.9%
0.1
FY13
6173
663
912
10.7%
0.1
FY14
6388
922
952
14.4%
0.1
FY15
6915
1175
1197
17.0%
0.2
FY16
7759
1538
1387
19.8%
0.2
bibha.kashyap@narnolia.com
19
Domestic Order book

32333 32022 32139
35000
34675
30000
22884 22077 21617
21053 21648
25000
Order inflow is expected to

remain in the range of Rs
10000cr-15000cr over the
next two-three years.
20000
12776
15000
10000
5000
827
2780
763
4127
2824
1980
541
1003
Domestic Orders Intake (Rs/Cr)
Domestic Orders Book (Rs/Cr)
Export Order book
1,400
1,195
1,287 1,244
1,197
1,200
1,094 1,065
1,000
794
800
701
691
600
400
200
-
Export order book (Rs/Cr)
Trend of Net Sales and PAT
Trend of Gross Margin & EBITDA Margin
Net Sales (Rs/Cr)

3,500
3,056
663
2,000
1,500
1,582
1,009
1,000
1,172
997
192
500
-
3,135
795
2,831
723
3,000
2,500
PAT (Rs/Cr)
59
1,266
1,071
272
147
26
1,5251,500
296
206
77
900
800
700
600
1,756 500
400
346
300
847
200
100
36
-
Gross Margin %
EBIDTA Margin %
60%
50%
48%
42%
41%
53%
52%
46%
31%
19%
17%
19%
12%
9%
0.2%
50%
27%
15%
20%
45%
37%
25%
30%
0%
49%
36%
40%
10%
43% 45%
1%
-4%
-5%
-10%

20
Investment arguments:
Company has a strong balance sheet with zero debt and cash balance of Rs. 7553 cr (~25% of market capitalization). It is also
paying dividends consistently since 1990. Accelerated order inflow and steady performance makes it a preferred defense play.
The government notified increase in Foreign Direct Investment (FDI) limit to 49% through approval route in the defense sector,
aimed to cut imports by indigenizing defence production.
Segments like Radar and Missile systems, Communication and Network Centric Systems, Tank Electronics, Gun upgrades & EO
systems and Electronic Warfare & Avionics systems will continue to drive the Companys growth in the coming 4 to 5 years.
The Defence Sector is increasingly being opened up for private sector participation with evolutions of Defence Procurement
Procedure.
Company is working on new strategic areas like Electronic Ammunition Fuzes, Homeland Security Solutions, Navigational
Complex Systems and Inertial Navigation Systems in line with the emerging needs of the Customers.
BEL is also taking collaborative R&D initiatives for joint developments with reputed foreign companies and Indian MSMEs to
quickly harness specialized technologies into the new products.
Order status at the end of Q2FY17
Acquired
Electronic warfare suite (Shakti & Nayan)

Advance composite communication system
Ship data network
Ground based ELINT
Annual maintenance contract of Rohini
radar
Supply
3D technical control radar

Akash weapon system (Army)
L 70 Gun upgrade
Weapon locating radar
Hand Held thermal- imager with laser
range finder
Expected order
Akash missile system (7 Sqdn)

Mobile cellular communication system
Commander TI sights
Long range surface to Air missile
L-Band tropo upgrade
Samyukta upgrade
About the Company:

Bharat Electronics Limited is engaged in design, manufacture and supply of electronics products/systems for the defense
requirements, as well as for nondefense markets. The Company's principal products/services include weapon systems, radar and
fire control systems, and communication. Its defense products include defense communication; radars; naval systems; command,
control, communications, computers, and intelligence systems; weapon systems; telecom and broadcast systems; electronic
warfare; electro optics, and solar photovoltaic systems. Its nondefense products include turnkey system solutions; civilian radars; egovernance systems, and homeland security. Its other range of products include electronic voting machines, communication
equipment, radar warning receiver and casings. It offers electronic manufacturing services in areas of printed circuit board
assembly and testing; precision machining and fabrication; opto electronics components and assemblies, and offsets, among
others.

21

INCOME STATEMENT
Revenue
Other Income
Total Revenue
COGS
GPM
Other Expenses
EBITDA
EBITDA Margin (%)
Depreciation
EBIT
Interest
PBT
Tax
Tax Rate (%)
Reported PAT
Dividend Paid
No. of Shares
FY13
6273
625
6898
3917
1
569
663
11%
136
526
1
1151
236
21%
912
178
8
FY14
6518
437
6955
3788
1
762
922
14%
150
772
4
1205
254
21%
952
186
8
Share Capital
Reserves
Net Worth
Long term Debt
Short term Debt
Deferred Tax
Net Fixed Assets
Capital WIP
Debtors
Trade payables
Total Provisions
Net Current Assets
Total Assets
FY13
80
6407
6487
0
0
0
6488
928
237
3364
5331
1174
720
5594
14851
FY14
80
7140
7220
0
0
0
7221
1153
269
4156
4605
1234
605
6192
14976
FY15
7093
507
7599
3935
1
702
1175
17%
166
1008
3
1513
316
21%
1197
239
8
RATIOS
FY16
7549
533
8082
3916
1
772
1538
20%
200
1338
6
1865
471
25%
1387
277
8
EPS
Book Value
DPS
Valuation(x)
P/E
Price / Book Value
Dividend Yield (%)
RoE
RoCE
Turnover Ratios
Asset Turnover (x)
Net Debt/Equity (x)
FY13
114
811
22
20%
FY14
119
903
23
20%
FY15
150
1015
30
20%
FY16
173
1123
35
20%
10
1
1.9%
10
1
2.0%
7
1
2.8%
8
1
2.6%
14%
8%
13%
11%
15%
12%
15%
15%
0.4
196
303
68
0.0
0.4
233
322
69
0.0
0.5
196
318
61
0.0
0.4
181
393
58
0.0
BALANCE SHEET
FY15
80
8037
8117
0
25
0
8117
1213
140
3805
6038
1184
786
7064
15726
CASH FLOW STATEMENT
FY16
240
8746
8986
0
28
0
8986
1664
224
3741
7553
1194
666
7242
18525

Depreciation
Direct Taxes Paid
FY13
1147
136
245
753
(1540)
FY14
1206
150
206
777
(570)
FY15
1513
166
356
1343
1434
FY16
1869
200
438
1714
2268
CAPEX
Repayment of LTB
Interest Paid
Inc/(Dec) in Cash
Closing Balance
388
1753
0
1
157
(157)
56
1752
1809
375
759
(0)
4
209
(213)
(23)
1809
1786
227
(839)
0
3
220
(209)
386
1786
2171
657
(1424)
(0)
6
296
(320)
525
2171
2696

18

201 | 2nd Floor | Marble Arch Building | 236B-AJC Bose Road |
Kolkata-700 020 , Ph : 033-40501500
email: narnolia@narnolia.com, website
: www.narnolia.com
Risk Disclosure & Disclaimer: This report/message is for the personal information of
the authorized recipient and does not construe to be any investment, legal or taxation
advice to you. Narnolia Securities Ltd. (Hereinafter referred as NSL) is not soliciting any
action based upon it. This report/message is not for public distribution and has been
furnished to you solely for your information and should not be reproduced or
redistributed to any other person in any from. The report/message is based upon publicly
available information, findings of our research wing East wind & information that we
consider reliable, but we do not represent that it is accurate or complete and we do not
provide any express or implied warranty of any kind, and also these are subject to change
without notice. The recipients of this report should rely on their own investigations,
should use their own judgment for taking any investment decisions keeping in mind that
past performance is not necessarily a guide to future performance & that the the value of
any investment or income are subject to market and other risks. Further it will be safe to
assume that NSL and /or its Group or associate Companies, their Directors, affiliates
and/or employees may have interests/ positions, financial or otherwise, individually or
otherwise in the recommended/mentioned securities/mutual funds/ model funds and
other investment products which may be added or disposed including & other
mentioned in this report/message.

IEA Report 6th January

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

IEA Report 6th January

Uploaded by

Copyright:

Available Formats

IEA Report

6th Jan 2017

6th Jan 2017

5th Jan 2017

3rd Jan 2017

2nd Jan 2017

30th Dec 2016

29th Dec 2016

IEA Edition No.-

Share Holding Pattern-%

Outlook and Valuation

Narnolia Securities Ltd

Result Highlights Q2FY17 & H2FY17

Managment / Concall Update

Narnolia Securities Ltd

Maintain 10% revenue

Finance Cost As % of Sales

Finance cost will be 3%

About the Company

Financials Snap Shot

OP/(Loss) before Tax

Narnolia Securities Ltd

Previous Target Price

Change from Previous

52wk Range H/L

Mkt Capital (Rs Cr)

2QFY17 Result Highlights

EBITDA Margin improved by 70 bps YoY to 11.6% due to higher sales of

Share Holding Pattern-%

Naveen Kumar Dubey

Sustainable growth in Farm Equipment Segment

Narnolia Securities Ltd

Please refer to the Disclaimers at the end of this Report

Narnolia Securities Ltd

CASH FLOW STATEMENT

Previous Target Price

Change from Previous

52wk Range H/L

Mkt Capital (Rs Cr)

Maruti reported a PAT of Rs.2398 crore a growth of 60.2% YoY on account

2QFY17 Result Highlights

Share Holding Pattern-%

Maruti reported 3% growth in sales volume in the 3QFY17, despite the

Naveen Kumar Dubey

Narnolia Securities Ltd

Narnolia Securities Ltd

CASH FLOW STATEMENT

Share Holding Pattern-%

Narnolia Securities Ltd

Comapny has received

Work on Agra Ethawah project

Udaipur -Gj Border

Narnolia Securities Ltd

Financials Snap Shot

OP/(Loss) before Tax

Narnolia Securities Ltd

52wk Range H/L

Small Molecules business has reported revenue of Rs 389 Cr, a growth of

Share Holding Pattern-%

Novel Biologics and Biosimilars reported a growth of 26% at Rs 96 Cr on

Licensing Income this quarter stood at Rs 32 Cr while Other Income

As per the management, exports have not been impacted due to

Research business through Syngene reported revenue of Rs. 286 Cr (

Narnolia Securities Ltd