Professional Documents
Culture Documents
Result Update
Results in-line; with stable EBITDA margin
CMP 3264
Target Price 3830 Hero Motocorp posted 3QFY17 results in-line with our expectation. Net
Previous Target Price 3179 revenue de-grew by 12%YoY to Rs. 6365 crore in 3QFY17. Volumes
Upside 17% declined by 13%YoY because of demonetization issue during the quarter.
Rural areas have witnessed severe hit due to currency crunch which
Change from Previous 20%
accounts for 60% of the Hero Motocorp volumes. Motorcycle sales were
down by 15% in the month of November and December. Realization stood
Market Data flat because the company took price hike during the quarter. In the month of
BSE Code 500182 January, Hero sold 487000 vehicles with a growth of 48% MoM which
NSE Symbol shows a sharp recovery in the demand. Management expects high single
HEROMOTOCO digit growth for the first half and better second half of next financial year in
52wk Range H/L 3740/2440 volume terms. LEAP, the cost cutting initiative, has supported the company
Mkt Capital (Rs Cr) 65,185 to post EBITDA margin over 16% despite rising commodity prices.
Av. Volume 37142
3QFY17 Results Update
Nifty 8778
>>Revenue declined by 12% YoY to Rs.6365 crore in 3QFY17 because of
Stock Performance 13%YoY decline in volumes.
1Month 3Month 1Year >>Gross margin improved by 270 bps YoY to 35.1% driven by cost cutting
Absolute 6.6 3.8 26.5 initiative LEAP and lower commodity price benefit.
Rel.to Nifty 0.7 0.8 6.3 >>EBITDA margin expanded by 130 bps YoY by lower advertising and
promotional expenses.
Share Holding Pattern-% >>PAT margin improved by 115 bps YoY due to higher other income during
3QFY17 2QFY17 1QFY17 the quarter.
Promoter 34.6 34.6 34.6
Outlook and Valuation
Public 65.4 65.4 65.4
Others -- -- -- We expect improvement in demand scenario in the domestic market after
Total 100.0 100.0 100.0 the demonetization, upcoming marriage season, increasing finance
penetration in rural & semi-urban areas and seventh pay commission payout
will drive the volumes and implementation of cost cutting initiative LEAP to
Company Vs NIFTY
boost margins further by 100 bps going ahead. It has a healthy dividend
150
HEROMOTOCO NIFTY payout of 54%, which provides a cushion to the investors to invest in the
140 company for long term. The company is trading at 7 times of FY17 expected
130 book value with a RoE of 36%. We maintain "BUY" rating on this stock with
a target price of Rs.3830.
120
110
Rs. In crore
100
Financials 3QFY17 2QFY17 3QFY16 QoQ YoY
90
Sales 6365 7796 7224 -18.4% -11.9%
EBITDA 1080 1369 1131 -21.1% -4.5%
80
Net Profit 772 1004 793 -23.1% -2.7%
Jul-16
Feb-16
Sep-16
Feb-17
Jan-17
Dec-16
Jun-16
Aug-16
May-16
Oct-16
Nov-16
Apr-16
Mar-16
Healthy dividend payout- Hero Motocorp is a debt free and cash rich company. It has a healthy dividend payout of 54%, which
provides cushion to the investors to invest in the company for long term.
Seventh Pay commission to boost demand- We expect approx.4.7mn government employees will be benefited in this
seventh pay commission pay-out. This will improve the living standard and will drive urban and rural demand for two wheelers
going forward. We expect as a market leader Hero can be bigger beneficiary after the implementation of 7th pay commission.
Concall Highlights
Management expects good single digit growth for first half and better second half for next financial.
Capex guidance for FY17: Rs 1200-1500 crore and Rs.1000-1100 crore for FY18.
Rs.350-400 crore of capex for Andhra Pradesh plant in FY18.
Rs.2000 crore of capex in FY18 for phase-II & III of Halol Plant, If the robust demand comes in.
Price hike in Janauary 2017 in the range of Rs.500-1500 covering rising commodity prices and BS-IV compliance.
EBITDA margin guidance above 15% in FY17.
Target of Rs.255 crore benefit from cost cutting program LEAP in FY17.
Other income for FY17 would be higher by 8-9 percent on an average.
The tax benefit for plants in Rajasthan and Gujarat will last for 7 years; and the benefit is restricted to the extent of investment
Scooters to continue outpace motorcycle growth going forward in FY17. Market share is 14%.
Dealer Inventory remained at 6-7 weeks.
Effective tax rate for FY17 will be slightly higher than FY16
Advertising and Promotion expenses stood 2.4-2.5% of total sales.
Plant Details
Plant Location Capacity
Haridwar 3060000
Gurgaon 2340000
Dharuhera 2340000
Neemrana 450000
Halol 1800000
Gujarat Plant- capacity expansion will include an initial capacity of 1.2 million (mn) units (phase 1: 0.75 mn units by Q3FY17;
phase 2: 0.45 mn units by FY17 end) & a final addition of 0.6 mn (phase 3) by FY18 beginning.
The Haridwar operations currently contribute towards 38% of HMCLs volumes. Once the excise benefits expire in FY18 end,
there will be a 100 bps impact on the EBITDA margins.
Narnolia Securities Ltd 3
BALANCE SHEET
FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17
Share Capital 40 40 40 40 OP/(Loss) before Tax 2864 3329 4312 4806
Reserves 5,583 6,500 7,913 9,477 Depreciation 1107 540 447 571
Net Worth 5,623 6,540 7,953 9,517 Direct Taxes Paid (649) (1000) (1104) (1377)
Long term Debt 24 12 146 146 Op before WC 3557 3586 4508 5330
Short term Debt - 88 84 85 CF from Op. Activity 2963 2250 3796 3981
Deferred Tax - - 228 228 Purchase of investment (9) 1354 26973 (142)
Total Capital Employed 5,647 6,552 8,099 9,663 Capex (941) (1156) (1708) (1151)
Net Fixed Assets 3,102 3,671 4,689 5,270 CF from Inv. Activity (1618) 12 (2286) (1780)
Capital WIP 855 719 653 653 Repayment of Borrowings
Debtors 921 1,372 1,282 1,291 Interest Paid (12) (11) (11) (6)
Cash & Bank Balances 120 216 179 510 Divd Paid (incl Tax) (1403) (2219) (1682) (1864)
Trade payables 2,291 2,855 2,792 2,811 CF from Fin. Activity (1414) (2231) (1561) (1870)
Total Provisions 1,594 801 884 890 Inc/(Dec) in Cash (69) 32 (50) 330
Net Current Assets 1,135 1,481 1,999 2,790 Add: Opening Balance 135 66 155 179
Total Assets 10,122 10,654 12,672 14,212 Closing Balance 69 98 104 510
Market Data IRB has collected Rs. 2880 Cr till November 2016 against the projection of
BSE Code 532947 Rs. 2869 Cr on Mumbai-Pune Expressway. But as per the concession
NSE Symbol IRB agreement, IRB has right to collect toll till August 2019. There is no such
clause in concession agreement to terminate the contract. Hence, it will not
52wk Range H/L 266/177
change our revenue estimate.
Mkt Capital (Rs Cr) 8,208
Av. Volume 287591
Nifty 8769
Strong Performance, nullify Demonetization Impact :-
Stock Performance IRB has reported better number than our expectation in Q3FY17. Net sales
1Month 3 Month 1Year grew by 5.8% YoY to Rs. 1411 Cr as compared to Rs.1333 Cr in the
Absolute 8.9 10.1 -0.5 corresponding quarter previous year despite of demonetization which led to
suspension of toll collection for 23 days. But on the contrary, average daily
Rel.to Nifty 2.4 6.1 -17.6
toll collection for December month (from 3rd Dec to 31st Dec) has grown by
3% to 7.79 Cr compare to 7.53 in October month. Total income from toll
Share Holding Pattern-% collection grew by 16% YoY (including 150 Cr of claim against toll loss during
3QFY17 2QFY17 1QFY17 the suspension of 23 days) compared to Q3FY16. While EPC revenue has
Promoters 57% 57% 57% grown by 3% YoY to Rs. 834 Cr. Things are improving faster post the
Public 43% 43% 43% demonetization and management has envisaged 5-6% traffic growth in next 3-
6 months which provides strong recovery in toll collection. We expect robust
revenue growth in EPC segment based on healthy order book (3.45x of TTM
construction revenue).
Company Vs NIFTY Actual toll collection for the Q3FY17 was Rs. 517 Cr and company has raised
130 a claim of Rs. 150 Cr for the revenue loss during the suspension period.
IRB NIFTY
120 Revenue and profitability loss on the state highways will compensate in cash
110 by the respective state authorities but NHAI compensates only for interest
100 and O&M expenses incurred during the period in cash for national highways.
90 Principal and profitability on national highways will compensate by way of
80 extension of the concession period.
70 In Rs. Cr
60 Financials Q3FY16 Q2FY17 Q3FY17 YoY (+/-) QoQ (+/-)
50 Sales 1333 1291 1411 6% 9%
40
EBITDA 688 709 743 8% 5%
PAT 170 142 184 8% 30%
EBIDTA% 51.6% 54.9% 52.7% 110 bps (220) bps
Sandip Jabuani PAT 12.7% 11.0% 13.1% 40 bps 210 bps
sandip.jabuani@narnolia.com
Narnolia Securities Ltd 5
Please refer to the Disclaimers at the end of this Report
Investment Argument:-
Robust construction revenue visibility:-
Currently, 5 projects are under construction and in next 8-10 months time period another 3 projects in Rajasthan namely
Gujarat/Rajasthan, Kishangarh - Udaipur and Kishangarh - Gulabpura will come under execution. Order book stands at Rs. 12011
Cr i.e. 3.45x of TTM EPC revenue. All the projects are well on track and management confident to complete projects on time.
Current on-going projects will drive the revenue growth and we expect revenue growth of 40-45% in FY18E.
Concall Highlights :-
Traffic growth is encouraging despite demonization.
December toll collection is up by 3% compare to October month.And management expect 5-6% traffic growth in next 3-6 months
Suspension of toll collection led to low depreciation and amortization as the company follows revenue pattern based policy.
One of the road projects reported 10% reduction in traffic growth due to demonization.
IRB is pre- qualified for the 11738 Cr worth of projects.
Q4FY17 will be much more promising than Q3FY17 in terms of traffic growth.
IRB has raised claim of Rs.150 Cr as toll collection was suspended for the 23 days.
Sufficient cash surplus for funding equity requirement of on-going and up-coming projects
Equity requirement is Rs.1700 Cr including 3 new projects over period of 4 years. ( Rs.170 cr in FY17, 500 cr each in
FY18,FY19 and FY20)
No major impact of demonization on EPC segment.
Work on Udaipur to Rajsthan/Gujarat border project will start from April, on Kishangarh Udaipur- Ahemdabad from June and
recently won project Kishangarh Gulabpura by October
Current average toll collection of 30lakh/day on Agra- Ethwah
IRB has received 139 Cr grant in Yedeshi Aurngabad during the quarter and it will complete before monsoon.
Waiting for SEBI approval for InvIT and expect to launch it before March 2017.
20,000 17,321 20
5,000 5
- -
2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Yedeshi Aurangabad
6% 4%
9%
2% Kaithal Rajasthan Border
12% 2%
Solapur Yedeshi
Sindhudurg Airport
Agra Etawah
15% 17%
Gulabpura -Chittorgarh
Udaipur -Gj Border
O & M Contracts
17% 16% Kishangarh Gulabpura
Goa Kundapur
Revenue Mix
Company Update Dr. Reddy has reported revenue of Rs. 3707 Cr (decline by 7% YoY) in
CMP 3066 Q3FY17 from Rs. 3967 Cr in Q3FY16. Revenue from Global generics
Target Price 3325 segment declined by 9% YoY led by the lower contribution from North
Previous Target Price 3815 America and Venezuela. Revenue from US business has come down by
15% YoY on account of increased competition and pricing pressure. Delay
Upside 8%
in new launches and erosion in base business is a major area of concern
Change from Previous -13% in US business. During the quarter, company launched 5 new relatively
small products in the US market and management expects meaningful
Market Data launches in US market in coming fiscal.
BSE Code 500124 Business Highlights
NSE Symbol DRREDDY
52wk Range H/L 3689/2813 Sales from US business stood at ~Rs. 1659 Cr. in Q3FY17 vs Rs. 1942
Mkt Capital (Rs Cr) 50762 Cr. in Q3FY16. Limited meaningful launches in 9M FY17 coupled with
pricing pressure in 1HFY17 in key products has led to muted growth in US
Av. Volume(,000) 26.83
business in FY17.
Nifty 8768
Revenue from the Europe Business declines by 10% to Rs. 215 Cr in
Stock Performance Q3FY17 vs Rs. 193 Cr in Q3FY16.
1M 3M 12M In this quarter Domestic business grew to Rs. 595 Cr. from Rs. 580 Cr.
Absolute 3.6 5.6 5.0 Revenue from the Emerging Business declines by 7% to Rs. 595 Cr in
Rel.to Nifty -3.3 -14.0 -8.6 Q3FY17 vs Rs. 640 Cr in Q3FY16.
During the quarter, 16 DMFs were filed globally of which 1 was filed in
Share Holding Pattern-% US.Cumulative number of filings as on 31 Dec. 2016 was 782.
3QFY17 2QFY17 1QFY17 Net Debt/Equity is 0.31 as on 31 dec 2016.
Promoters 26.8 26.7 25.6
Public 73.2 73.3 74.4 Business Highlights
Others
Total 100.0 100.0 100.0 Management expects that global business to gain traction from FY18 on
the back of currency stabilization in emerging markets geographies, stable
Company Vs NIFTY macro economics and institutional business launches. In Q3FY17,
125
company commercialized 2 In-licensed products from the strategic
DRREDDY NIFTY
120
collaboration with Amazon. Remediation process at Srikakulam,
115
Mriyalguda and Duvvada facilities are over and the management expects
110 inspection at these facilities are expected in Feb/ Mar-17. Considering near
105 term uncertainties we recommend NEUTRAL rating in this stock with a
100 target price of Rs 3325.
95 in(Rs Cr) 2012 2013 2014 2015 2016
90
85
Sales 9815 11896 13415 15023 15698
80 EBITDA 2431 2720 3251 3494 3921
Jul-16
Feb-16
Sep-16
Jan-16
Jan-17
Dec-16
Jun-16
Aug-16
May-16
Oct-16
Nov-16
Apr-16
Mar-16
During this quarter 5 relatively small products were launched. Management does not expect any benefit from meaningful launch
in Q4 but expects to launch 15+ launches in FY18.
Working Capital increases by ~Rs. 400 Cr due to new product inventory build-up and increase in receivables in some
geographies
R&D expenditure for the quarter is ~Rs. 498 Cr representing 13.4% of revenues.
Management expects 15 new launches in FY18 (including 4-5 meaningful launches).
Substantially ramped up R&D productivity and filed 9 ANDAs in this quarter and with this cumulative filing at the end of FY17
will be 25.
Business Overview
The Company is organized into the following businesses which are reportable segments:
Pharmaceutical Services and Active Ingredients: This segment includes active pharmaceutical ingredients and intermediates, also
known as active pharmaceutical products or bulk drugs, which are the principal ingredients for finished pharmaceutical products.
Active pharmaceutical ingredients and intermediates become finished pharmaceutical products when the dosages are fixed in a form
ready for human consumption such as a tablet, capsule or liquid using additional inactive ingredients. This segment also includes
contract research services and the manufacture and sale of active pharmaceutical ingredients and steroids in accordance with the
specific customer requirements.
Global Generics: This segment consists of finished pharmaceutical products ready for consumption/ use by the patient, marketed
under a brand name (Branded formulations) or as generic finished dosages with therapeutic equivalence to branded formulations
(generics). This segment includes the operations of the Companys biologics business.
Proprietary Products: This segment consists of the Companys differentiated formulations business, New Chemical Entities (NCEs)
business, and the dermatology focused specialty business operated through Promius Pharma.
Others: This includes the operations of the Companys wholly-owned subsidiary, Aurigene Discovery Technologies Limited, a
discovery stage biotechnology company developing novel and best-in-class therapies in the fields of oncology and inflammation and
which works with established pharmaceutical and biotechnology companies in early-stage collaborations, bringing drug candidates
from hit generation through Investigational New Drug (IND) filing.
3%
DRReddy remains committed to investing
14%
aggressively in R&D, to help build a robust
pipeline of complex generics and products
with significant entry barriers lending
83% competitive advantage over the long run.
Company Update
Oil and Natural Gas Corporation has posted revenue growth of 9% YoY to
CMP 198
Rs. 20014 in 3QFY17. Profit after tax has grown to Rs. 4352 Cr from Rs.
Target Price 243 1466 Cr. (an increment of 197% YoY). In this quarter revenue from the
Previous Target Price 243 crude oil has increased by 21% YoY to Rs. 14768 Cr. The crude realization
Upside 23% rate went up to USD 52.64 per barrel from USD 44.34 per barrel. Revenue
Change from Previous - from the gas has declined by 19% YoY to Rs. 3455 Cr. on account of lower
gas realization of USD 2.5 per MMBTU from USD 3.82 per MMBTU.
Market Data
Q3FY17_Result Update
BSE Code 500312
NSE Symbol ONGC 16 Oil and gas discoveries notified till date in FY17.
52wk Range H/L 211/125
Crude oil production has slightly declined to 6.405 MMT from 6.527 MMT.
Mkt Capital (Rs Cr) 256985
Av. Volume(,000) 734
Gas production has increased from 5.771 BCM to 6.025 BCM in 3QFY17.
Nifty 8801
Gross realization in crude oil has increased from USD 44.34 per BBL to
Stock Performance USD 51.8 per BBl.
1M 3M 12M Subsidy burden for FY17 is NIL.
Absolute 2.3 42.6 47.1 In this quarter revenue from the LPG is Rs. 914 Cr vs Rs. 949 Cr in
Rel.to Nifty -4.6 23.1 33.5 3QFY16.
Royalty has increased to Rs. 2392 Cr in 3QFY17 from Rs. 1984 Cr in
3QFY16.
Share Holding Pattern-%
3QFY17 2QFY17 1QFY17 Effective tax rate in 3QFY17 is 30.4%
Promoters 69 69 69
Outlook
Public 31 31 31
Others Gas production in ONGC is expected to increase further on completion of
Total 100 100 100 development projects. Management has guided for Oil production of 26.2
MMT and 25.63 BCM Gas in FY18. Management is optimistic about spurt
in oil and gas prices in FY18. The company is on track to achieve
Company Vs NIFTY production volumes of 25.73 MT for FY17. Since no subsidy has been
150 ONGC NIFTY decided by the government for FY17, the benefits of higher crude would
140 flow into the company. Considering above arguments, we are optimistic on
130
long-term growth in this stock, hence we recommend HOLD rating in this
stock while maintaining our previous target price of Rs. 243.
120
110 Rs,Cr
100
Financials 2012 2013 2014 2015 2016
90 Sales 147285 162403 174477 160890 131517
80 EBITDA 48491 43499 49725 42301 41261
Net Profit 28144 24220 26507 18334 14123
Jul-16
Feb-16
Sep-16
Jan-16
Jan-17
Dec-16
Jun-16
Aug-16
May-16
Oct-16
Nov-16
Apr-16
Mar-16
EPS 33 28 31 21 17
Aditya Gupta P/E 8.2 11.0 10.3 14.3 13.2
aditya.gupta@narnolia.com
Narnolia Securities Ltd 14
Please refer to the Disclaimers at the end of this Report
Management Speak/ Key take aways From Management Interview
OVL production is estimated at ~14mmt in FY18 v/s 8.9mmt in FY16, led by addition from recent acquisitions.
Management has maintained capex guidance of Rs. 29000 Cr in FY17
Management has guided for debt guidance of 400 Cr increment from FY16 level.
Royalty paid on crude oil in 9 months of FY17 is Rs. 6720 Cr and Rs. 439 Cr in Natural gas
Management is optimistic about spurt in oil and gas prices in FY18
Subsidy
Subsidy Burden
16202
Government has decided
13641
12622
1379613764 13200 no subsidy for FY17, and
9458 benefits will flow to the
company
1096
0 0 0 0 0 0 0
Operational Highlights
Volume Trend
Oil production (incl. JV)(MMT) Gas production (incl. JV)(BCM)
7.0 6.5 6.5 6.4 6.4 6.6 6.5 6.5 6.6 6.5 6.3 6.3 6.4 6.4
6.0
6.3 6.2 6.0 6.0 6.0
5.0 5.7 5.8 5.8 5.7 5.8 5.5 5.8
5.2
4.0
3.0
2.0
1.0
0.0
Company Update Glenmark has posted revenue growth of 43% YoY to Rs. 2535 Cr
CMP 946 in Q3FY17 vs Rs.1778 Cr in the corresponding period of FY16 led
Target Price 1096 by growth in the revenue from US business by 102% to Rs. 1231
Previous Target Price 1096 Cr on account of new product launch of Zetia which contributes
Rs. 225 Cr in the US sales. The company has launched this
Upside 16%
product on 12 Dec 2016 and it has already received 180 days
Change from Previous 0%
exclusivity on this product. As per the management the company,
it will generate Rs. 1300-1700 Cr revenue post 50% profit sharing
Market Data with Par pharmaceuticals. In the last quarter company has filed 5
BSE Code 532296 ANDAs, and planned to file 10 ANDAs in Q4FY17.
NSE Symbol GLENMARK
Result Highlights of Q3FY17
52wk Range H/L 994/671
Mkt Capital (Rs Cr) 26729 India Business grew by 5.91 % to Rs. 517 Cr in 3QFY17.
Av. Volume(,000) 57 Revenue from sale of API to regulated and semi-regulated markets
Nifty 8740 globally was Rs. 192 Cr (an increment of 32% YoY). The good growth of
the business was due to the successful launch of Olmesartan with Mylan
under 180 days market exclusivity.
Stock Performance
1M 3M 12M The good growth was contributed by sale of Perindopril, Adapalene,
Absolute 5.8 25.7 10.1 Amiodarone.
Rel.to Nifty -0.2 8.5 -2.9 The effective tax rate for 3QFY17 is 27% and the company pays total tax
of Rs. 178 Cr.
Share Holding Pattern-% Europe Formulations Business grew by 10.98% to Rs. 1,95 Cr in
3QFY17 2QFY17 1QFY17 Q3FY17.
Promoters 46.5 46.5 46.5
Outlook
Public 53.5 53.5 53.5
Others Management expects that post re-monetization, revenue from India
Total 100 100 100 business to improve further and benefits from the launch of Zetia in US will
boost the revenue from US business in next 2 quarters. Good demand in
API business and management focus on Oncology, Respiratory and
Company Vs NIFTY
Dermatology segments will help the company to diversify its portfolio in API
140 GLENMARK NIFTY segment. The management plans to reduce debt up to some extent by
130 Q1FY18 on the back of growth in US business. Considering the long-term
120
opportunities, we recommend Hold rating in this stock while maintaining
our previous target price of Rs. 1096
110
Rs,Cr
100
Financials 2012 2013 2014 2015 2016
90 Sales 4021 5012 6005 6630 7650
80 EBITDA 714 1015 1091 1210 1433
Jul-16
Feb-16
Sep-16
Jan-16
Jan-17
Dec-16
Jun-16
Aug-16
May-16
Oct-16
Nov-16
Apr-16
Mar-16
Company has maintained higher level of cash of ~ Rs. 1600 Cr in order to do re-financing in next 3-4 months.
Management has guided for lowering debt level in March 2017, but refrains from providing any specific number.
Capex guidance for FY17 is Rs. 600-700 Cr.
Tax rate guidance for 4QFY17 will be range of 28%.
Management expects that effect of demonetization will be normalized in April 2017.
Company has maintained higher level of cash of ~ Rs. 1600 Cr in order to do re-financing in next 3-4 months.
1463
1602
1704
1487
1681
1701
1776
1655
1909
1778
2307
1655
1909
2214
50 11
0 0
About Company
Glenmark Pharmaceuticals is one of the most successful research focused pharmaceutical companies, with a business model
spanning drug discovery research, APIs and formulations in the domestic and international markets. Glenmark's R&D efforts
have been extremely productive.GPL almost has a leadership position in the Indian drug discovery space (both NCEs and
biologics). GPL has a presence in over 85 countries across the world including India, Europe, Brazil, Latin America (excluding
Argentina), Russia/CIS, Africa and Asia through branded generic formulations. In regulated markets such as US, Europe,
Argentina, etc it has a presence via its non-branded generics. GPLs formulation business is diversified over several therapeutic
segments such as dermatology, internal medicine, respiratory, diabetes, paediatrics, gynaecology, ENT and oncology. Its
manufacturing plants are located in Baddi (India), Nashik (India), Sao Paolo (Brazil) and Vysoke Myto (Czech Republic). In India,
GPL markets over 100 molecules and combinations in various therapy areas such as dermatology, respiratory, gynaecology,
pain management, diabetes, cardio-vascular, internal medicine, etc.Glenmark has reclassified it operations into 6 categories-
India, US, Europe, Latin America, ROW markets and APIs. Earlier the classification was on the basis of - 1) Specialty
businesses and 2) Generics businesses.
Narnolia Securities Ltd 18
Please refer to the Disclaimers at the end of this Report
Financials Snap Shot
INCOME STATEMENT RATIOS
FY13 FY14 FY15 FY16 FY13 FY14 FY15 FY16
Revenue (Net of Excise Duty)5012 6005 6630 7650 EPS 23.2 20.1 17.5 25.9
Other Income 6 5 20 20 Book Value 102.9 110.5 110.6 157.4
Total Revenue 5019 6010 6650 7670 DPS 2.4 2.3 2.3 2.3
COGS 1654 1873 1934 2361 Payout (incl. Div. Tax.) 10% 12% 13% 9%
GPM 33.0% 31.2% 29.2% 30.9% Valuation(x)
Other Expenses 1561 2015 2283 2477 P/E 20.0 28.1 45.0 30.7
EBITDA 1015 1091 1210 1433 Price / Book Value 4.5 5.1 7.1 5.1
EBITDA Margin (%) 20% 18% 18% 19% Dividend Yield (%) 1% 0% 0% 0%
Depreciation 127 217 260 269 Profitability Ratios
EBIT 888 874 950 1164 RoE 23% 18% 16% 16%
Interest 160 189 190 179 RoCE 19% 16% 17% 17%
PBT 739 697 780 1005 Turnover Ratios
Tax 111 151 119 303 Asset Turnover (x) 0.7 0.7 0.7 0.7
Tax Rate (%) 15% 22% 15% 30% Debtors (No. of Days) 119 131 138 100
Reported PAT 628 546 474 702 Inventory (No. of Days) 61 57 70 75
Dividend Paid 64 63 63 63 Creditors (No. of Days) 76 83 113 96
No. of Shares 27 27 27 27 Net Debt/Equity (x) 0.7 0.8 0.9 0.6
1431
1452
1226
1750
1454
1530
1307
1754
1443
1417
200
0 0
1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
5.0%
0.0%
1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Result Update Profitability Bouyants on the back of retail banking. Assets Quality improves.
CMP 67 Once again Vijaya Bank posted the healthy set of performance as per our
Target Price 81 expectation. The PAT grew by more than 4 times YoY was backed by
overall improvement in profitability parameters. NII grew by a robust rate of
Previous Target Price 61
23% YoY backed by NIM expansion. Other income grew by 177% YoY due
Upside 22% heavy trading gains in this quarter. However Fee income remained healthy
Change from Previous 33% and registered 40% YoY growth. Cost to income ratio largely remained flat
YoY at 53.6%.Overall operating profit of the bank grew by 55% YoY.
Market Data Provisions increased by 31% YoY. NIM of the bank improved by 41 bps YoY
to 2.85% backed healthy decline in cost of deposits by 84 bps YoY.
BSE Code 532401
NSE Symbol Assets quality has further improved on sequential basis with GNPA at
VIJAYABANK
52wk Range H/L 70/29 6.98% against 7.07% and NNPA at 4.74% against 5.10%. On absolute term
also GNPA declined by 3% QoQ. The improvement in assets quality was
Mkt Capital (Rs Cr) 6657
backed by lower slippage which declined by 73% QoQ to Rs 200 Cr.
Av. Volume (,000) 499 Management highlighted the slippage was mostly composed from retail,
Nifty 8741 agriculture and MSME sector and expect the slippages at this level going
forward. However current slippage includes the dispensation provided by
Stock Performance RBI due to currency ban which has resulted in lower slippage.PCR
1Month 3 Month 1Year increased to 55% against 51% QoQ. Restructured assets declined to Rs
1969 Cr against Rs 2285 Cr sequentially.
Absolute 36.3 117.5 41.8
Rel.to Nifty 6.0 17.2 6.9 Demonetization has significantly impacted the balance sheet of the bank on
both the sides. Gross Advances was flat YoY but retail advances grew by
Share Holding Pattern-% 23% YoY backed by strong growth of 31% YoY in housing loan. Agriculture
3QFY17 2QFY17 1QFY17 grew by 17% YoY while MSME advances were flat led by strong
repayments. Corporate advances declined by 29% YoY as per the strategy
Promoters 70.3 70.3 70.3 of management. Retail advances now constitute30% of the total advances.
Public 29.7 29.7 29.7
Others Deposits grew by 2% YoY while the CASA saw a healthy growth of 42%
Total 100.0 100.0 100.0 YoY led by demonetization. Saving deposits increased by 44% and Current
deposits increased by 32% YoY. Bulk deposits declined by 14% YoY. While
the retail term deposits increased by 11% YoY.
Company Vs NIFTY
200 VIJAYABANK NIFTY View and Valuation
180
160
Focus of management on retail banking has helped the operating
profitability to improve significantly. The balance sheet has tilted towards
140
more on retail banking both on assets side as well as liability side. Focus on
120 CASA deposits and shedding the bulk deposits has helped the cost of fund
100
to decline significantly. We expect the NIM to touch 3% mark in FY18
backed by retail banking strategy of management. However due to
80
demonetization we expect the overall retail loan growth to remain muted in
Dec-16
Jun-16
Oct-16
Nov-16
Jul-16
Apr-16
Feb-16
Sep-16
Mar-16
Jan-16
Jan-17
Aug-16
May-16
FY17 with the growth of sub 5% YoY but going forward in FY18 we expect
the loan growth of 8%. We expect the further improvement in assets quality
DEEPAK KUMAR as the slippages will remain range-bound at current level. At the (P/B of 0.8
Deepak.kumar@narnolia.com in FY19), we recommend BUY with the target price of Rs 81.
Narnolia Securities Ltd 23
Please refer to the Disclaimers at the end of this Report
VIJAYABANK
Profitability Metrix
Ratios 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 YoY(bps) QoQ(bps
Yield On Advances 11.3 11.2 10.9 10.8 10.6 10.5 9.8 10.1 10.0 -0.6 )
-0.1
Cost of Deposits 8.1 8.0 7.6 7.5 7.3 7.3 6.8 6.7 6.4 -0.8 -0.3
NIM 1.9 2.0 2.1 2.3 2.4 2.3 2.5 2.6 2.9 0.4 0.2
NII Growth % 12.1 18.8 23.7 19.7 33.0 6.9 18.2 19.5 22.9
C/I Ratio 57.5 65.0 54.4 55.0 53.2 66.6 54.9 53.1 53.6 0.4 0.5
Other Inc./Net Inc. % 32.7 30.5 23.1 21.9 22.1 29.0 23.1 31.9 38.9 16.9 7.0
Tax % 11.2 (1,016) 42 8.2 58.1 121.2 15.3 14.6 15.2 -42.9 0.6
PAT Growth % 228.4 (27.3) (11.7) (19.8) 40.7 (27.3) 13.4 34.1 337.7
RoE 2.5 6.5 9.5 7.5 3.4 6.1 9.8 9.1 13.2 9.8 4.1
RoA 0.1 0.3 0.4 0.3 0.2 0.3 0.5 0.4 0.6 0.4 0.2
Assets Quality 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 YoY % QoQ%
GNPA (Rs) 2311 2443 2871 3460 3871 6027 6589 6491 6305 88% -1%
GNPA % 2.92 2.78 3.39 3.98 4.32 6.64 7.31 7.07 6.98 3.1 -0.2
NNPA (Rs) 1476 1660 2058 2442 2636 4277 4793 4587 4182 88% -4%
NNPA % 1.89 1.92 2.45 2.84 2.98 4.81 5.42 5.1 4.7 2.3 -0.3
PCR % 65.77 64.01 60.59 58.28 58.07 50.08 48.55 51.29 55.44 -7.0 2.7
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