IEA Report 21st February

IEA Report
21th Feb 2017

LUPIN "HOLD" 21th Feb 2017
Management has guided for US$250mn of sales in FY18 from the Gavis portfolio. Management expects to launch 25 new products in FY18, which
will be the major growth trigger for the company. Customer consolidation and High single-digit Price erosion in US is the major ongoing pressure in
the US market. Considering strong growth from North America on the back of new launches in FY18, we recommend HOLD rating in this stock
while maintaining our target price of Rs. 1690. ........................................... ( Page : 2-5)
JKIL "Under
20th Feb 2017
Review"
JKIL is the one of the best EPC Company with lower Debt to equity. Commencement work on Mumbai metro projects has led to strong revenue
growth in Q3FY17 and we expect to continue it but we need certain clarification regarding execution time line of JNPT road projects and debtors to
make clear cut view on JKIL. Presently we are waiting for further clarification; hence this stock is under our review. As the clarity emerges we will
rate the stock as per its fundamental. ........................................ ( Page : 6-11)
BANKBARODA "NEUTRAL" 17th Feb 2017

Following the RBI notification on cleanup exercise of balance sheet, Bankbaroda has recognised huge stress in its balance sheet. Following this the
Gross NPA and credit cost have shoot up denting the profitability of banks. The focus of new management is on consolidation of balance sheet
towards profitable growth and recovery in stressed accounts. However with no sign of meaningful recovery in large accounts in near terms and
continued current pace of slippages will keep the credit cost at elevated level, thus impacting the bottom-line of the bank. Also we expect the
sluggish advances growth in near terms. The stock has achieved our previous target price of Rs 188 few days before the results announced. Now on
the back of delayed recovery in stress accounts and higher slippages we estimate the credit cost at higher levels, and downgrade BANKBARODA to
Neutral from BUY. We estimate the fair price of the stock at Rs 156. .............................................................. ( Page : 12-16)
KNRCON "NEUTRAL" 16th Feb 2017

KNR is the one of the best and fastest growing company in infra space. Revenue growth in last 3 quarters was 70% above with strong balance sheet
position. Current debt to equity position is 1.06 times. But considering the near-term headwinds of an unstable political condition in a state of
Tamil Nadu, where KNR having a significant share of its current order book. Hence, we are NEUTRAL on the stock.
............................................................ ( Page : 17-20)
BRITANNIA "BUY" 15th Feb 2017

BRITANNIA will keep investing in its direct distribution reach with the plan to add 200000 outlets every year. Management expects volume to be
normal in next 3-6 months going forward and guided mid single digit volume growth after normalization . For the protection of margins, the
company is planning to increase prices by 6-7% in FY18. Considering managements proactive approach towards maintaining margin, thrust on
expansion of direct distribution reach and improving general market conditions we maintain `BUY rating on BRITANNIA with a target price of Rs
3700. ............................................................ ( Page : 21-23)
GODREJCP "BUY" 14th Feb 2017

Going forward, managements initiatives for expanding direct reach will not only strengthen the brand further but also improve Market share in
less penetrated market. Management indicated that there is more headroom for margin improvement from international business in medium to
long term . Considering strong innovation pipeline, companys thrust on EBITDA growth better than sales growth and expectation of improvement
in international business, we still hold positive view on GODREJCP and recommend BUY with a target price of Rs 1760.
...................................................... ( Page : 24-26)
ASHOKLEY "BUY" 13th Feb 2017

Going forward, We assume that the upcoming emission norms BS-IV to BS-VI, improvement in demand from infrastructure segment and
government's initiative to develop defense products in the country can be volume boosters for the company in FY17. Ashok Leyland is also working
towards a renewed thrust in the international markets, with network expansion and dedicated products. We expect that the company will maintain
a healthy ROE of over 20% going ahead. We maintain 'BUY' on Ashok Leyland considering the huge growth potential going ahead for a target price
of Rs.110. ...................................................... ( Page : 27-29)
Narnolia Securities Ltd IEA Edition No.- 960

Hold
LUPIN LTD 21st Feb 2017
Company Update Lupin Ltd. has reported Revenue of Rs. 4483 Cr in Q3 FY17(up by 26%
CMP 1461 YoY basis) led by the growth in the North America. Revenue from North
America has increased to Rs. 2176 Cr (up by 57% YoY basis). The
Target Price 1690
Company launched 4 new products in the US market during last quarter
Previous Target Price 1690 and has received approval for 11 products. The company now has 128
Upside 16% products in the US market. Recently Lupin has launched morphine sulfate
Change from Previous 0% ER Tablets in US. The tablets are indicated for the management of severe
pain. As per the IMS MAT September 2016 data, sales of morphine sulfate
was USD 282.9 million. Lupin filed 6 ANDAs and received 11 approvals
Market Data from the USFDA during the last quarter. Cumulative ANDA filings stood at
BSE Code 500257 344 as on 31st Dec 2016.
NSE Symbol LUPIN Result Highlights
52wk Range H/L 1874/1280
Mkt Capital (Rs Cr) 65997 EBITDA margin has improved by 330bps to 27.1% in Q3 FY17.
Av. Volume(,000) 129 India formulation sales grew by 11.9% to Rs. 991 Cr. during Q3 FY2017
Nifty 8879 as compared to Rs. 886 Cr. during Q3 FY2016.
Lupins LATAM sales increased by 32.8% to Rs. 117 Cr during Q3
Stock Performance FY2017 as compared to Rs. 88 Cr. during Q3 FY2016.
1M 3M 12M R&D expenditure for Q3 FY17 was Rs. 568 Cr , 12.9% of sales.
Absolute -0.3 -16.9 2.8 Effective tax rate in the last quarter is Rs. 39%.
Rel.to Nifty -5.9 -42.1 -4.8 Lupin filed 6 ANDAs and received 11 approvals from the US FDA during
last quarter.
Share Holding Pattern-% The Company filed 2 MAA with the European authority during last
3QFY17 2QFY17 1QFY16 quarter.
Promoters 46.71 46.76 46.76
Public 53.29 53.24 53.24 Outlook:
Others
Total 100 100.0 100.0 Management has guided for US$250mn of sales in FY18 from the Gavis
portfolio. Management expects to launch 25 new products in FY18, which
will be the major growth trigger for the company. Customer consolidation
Company Vs NIFTY
and High single-digit Price erosion in US is the major ongoing pressure in
125 LUPIN NIFTY the US market. Considering strong growth from North America on the back
120
of new launches in FY18, we recommend HOLD rating in this stock while
115
maintaining our target price of Rs. 1690.
110
105 Rs,Cr
100 Financials 2012 2013 2014 2015 2016
95 Sales 7097 9669 11403 13010 14396
90
85
EBITDA 1445 2270 3003 3620 3753
80 Net Profit 888 1340 1870 2444 2271
Jul-16
Feb-16
Sep-16
Feb-17
Jan-17
Dec-16
Jun-16
Aug-16
EPS 19 29 41 53 51
May-16
Oct-16
Nov-16
Apr-16
Mar-16
P/E 27.3 21.4 22.8 37.6 39.8

Aditya Gupta
aditya.gupta@narnolia.com
Narnolia Securities Ltd 2
Please refer to the Disclaimers at the end of this Report
Company Revenue driver
2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 QoQ Growth YoY Growth
Formulations
North America 1,154 1,381 2,191 2,189 1,998 2,176 9% 58%
India 888 886 756 931 996 991 0% 12%
APAC 446 463 453 542 552 560 1% 21%
EMEA 222 219 245 219 236 256 8% 17%
LATAM 108 89 92 109 99 118 19% 33%
ROW 41 30 61 37 40 37 -7% 24%
API 333 284 284 287 292 268 -8% -5%
Net Sales 3,193 3,350 4,082 4,314 4,211 4,405 5% 31%
Recent Management Speak
Management has maintained its capex guidance for FY17 is Rs. 1800-2000 Cr and Rs. 1500 Cr for FY18
Forex gain , lower cost & R&D exp. Help the company to improve margins.
Foray into Branded / Specialty segment with the acquisition of Temmler portfolio in Germany in Europe.
Over 25 new launches lined up for FY18,14 products have already been approved.
25+ ANDA launches in FY18E, Plans to file 30 ANDAs in US
Management has guided that higher debt is on account of acquisition and it will be re-paid in longer time frame.
Company is on the track to file 20-25 ANDAs in FY17
EBITDA guidance for FY17 is 16-18%
Tax guidance for FY17 is 19-20%
Quarterly Performance
40%
EBITDA33% PAT
35% 31%
28% 28% 29%
30% 26% 27%
25% 26% 26% 25% 24%
24% 24% 25% 25%
25% 22%
20% 20% 19% 20%
20% 18% 19% 18% 18% 18%
16% 16% 15% 16% 15% 16% 15%
14%
15% 12% 13% 13% 12%
10%
5%
0%

Going Further
400
ANDA filings ANDA Pending
343
350
306 Lupin has 343 including 163
300
pending approvals. The
250 company has 45 FTF
products, which includes 17
192
200 173 176 exclusive opportunities. In
148 FY16, it filed 42 ANDAs and
150 127
received 39 approvals from the
90 USFDA..
100
50
58 87 100 109 98 93 161 163
0
2009 2010 2011 2012 2013 2014 2015 2016
Recent News and Events

Lupin receives USFDA approval for Hydrocodone Bitartrate and Homatropine Methylbromide oral solution.
Lupin receives final USFDA approval for Moxifloxacin Hydrochloride tablets.Lupin has received final USFDA approval for ANDA
Moxifloxacin Hydrochloride Tablets, 400 mg. Generic of Avlox Tablets of Bayer Healthcare Pharmaceuticals, Inc.
Lupin receives FDA approval for Triamcinolone Acetonide cream. Estimated US sales of USD 55.7 million (IMS MAT Sep 16).
Lupin launches Ortho-Cyclen tablets in US.IMS MAT September 2016 data, Lupin said, Ortho-Cyclen 28 tablets had the US
sales of USD 204 million
Key Risks
Regulatory delays affecting key US launches.
Ongoing pricing pressure in the US market
About the Company

Specialty and Complex Generics Areas - Timelines
Lupin over the last decade has established itself as a leading generic
player from India. US and India are its largest markets and contribute
almost 60% of its revenues and boasts of significant presence in Japan
(unlike most other generic players).Lupin is bearing the fruits of
geographical diversification for broad based growth. It has established a
significant presence in the US by 1) focusing on limited competition/FTF
opportunities, 2) concentration on niche therapies such as oral
contraceptives, dermatology, ophthalmology, respiratory, etc, and 3)
acquiring small but profitable brands at the right price. In domestic
formulations, it is improving its presence in lucrative chronic therapies. It is
slowly but surely establishing itself in other geographies such as Japan
and Australia. Higher growth on a fairly consistent basis, a strong balance
sheet with debt-free status and high return ratios are some of the
differentiators for Lupin.
Financials Snap Shot
INCOME STATEMENT RATIOS
FY13 FY14 FY15 FY16 FY13 FY14 FY15 FY16
Revenue 9,641 11,287 12,770 44,817 EPS 29 41 53 50
Other Income 28 116 240 654 Book Value 118 156 198 245
Total Revenue 9,669 11,403 13,010 45,471 DPS 3.8 7.2 7.9 8.8
COGS 3,549 3,817 4,157 16,578 Payout (incl. Div. Tax.) 0.13 0.18 0.15 0.17
GPM 37% 34% 33% 37% Valuation(x)
Other Expenses 2,556 3,002 3,246 12,784 P/E 21.4 22.8 37.6 39.8
EBITDA 2,270 3,003 3,620 6,974 Price / Book Value 5.4 6.0 10.2 8.2
EBITDA Margin (%) 24% 27% 28% 16% Dividend Yield (%) 0.6% 0.8% 0.4% 0.4%
Depreciation 332 261 435 464 Profitability Ratios
EBIT 1,938 2,742 3,185 6,511 RoE 25% 26% 27% 21%
Interest 41 27 10 37 RoCE 36% 39% 35% 20%
PBT 1,925 2,832 3,415 7,128 Turnover Ratios
Tax 584 962 970 1,154 Asset Turnover (x) 1.1 1.1 1.0 0.6
Tax Rate (%) 30% 34% 28% 16% Debtors (No. of Days) 83 80 76 117
Reported PAT 1,314 1,836 2,403 2,271 Inventory (No. of Days) 74 69 72 82
Dividend Paid 169 323 355 395 Creditors (No. of Days) 58 52 56 56
No. of Shares 45 45 45 45 Net Debt/Equity (x) 0.0 0.0 0.0 0.5
BALANCE SHEET CASH FLOW STATEMENT

Share Capital 90 90 90 90 OP/(Loss) before Tax 1,925 2,832 3,415 3,433
Reserves and surplus 5,174 6,909 8,808 10,926 Depreciation 332 261 435 464
Shareholders' funds 5,264 6,999 8,898 11,016 Direct Taxes Paid (544) (772) (944) (1,166)
Long term Debt 247 151 102 5,374 OP before Wc 2,344 3,242 3,772 3,951
Total Borrowings 974 553 471 7,119 CF from Op. Activity 1,251 2,004 2,733 (369)
Non Current liabilities 396 427 409 660 Current investments (551) (529) (871) (5,816)
Long term provisions 112 132 162 190 Capex (10) (89) (629) (1,228)
Short term Provisions 356 345 574 676 CF from Inv. Activity (522) (859) (1,055) (6,943)
Current liabilities 2,280 2,227 3,360 3,642 Repayment of Debt (147) (198) (69) 5,293
Total liabilities 8,914 10,206 13,138 22,438 Interest Paid (42) (28) (11) (44)
Net Fixed Assets 2,804 3,002 3,296 6,514 Divd Paid (incl Tax) (169) (323) (157) (406)
Non Current Investments 2 2 3 3 CF from Fin. Activity (663) (857) (197) 5,813
Other non Current assets 965 1,102 2,007 2,507 Inc/(Dec) in Cash 66 288 1,482 (1,500)
Current assets 5,143 6,100 7,832 9,779 Add: Opening Balance 245 318 627 2,301
Total Assets 8,914 10,206 13,138 22,438 Closing Balance 311 607 2,108 802

Under Review
J.Kumar Infraprojects Limited 20-Feb-17
Result Update JKIL has reported Q3FY17 numbers largely in line with our estimate. Top
CMP 223 line has clocked ~19% YoY growth to Rs. 369 Cr on back of work
Target Price NA commencement on Mumbai metro projects. Rs.120 Cr of revenue has
Previous Target Price booked in Q3FY17 from 3 Mumbai metro projects. EBITDA during the
quarter has come down by 120 bps to 17.1% due to higher employee cost.
Upside
Employee cost was higher on account of start of new metro projects and it
Change from Previous -
will be normalize as the work start in full swing. Preliminary work on Mumbai
metro projects has completed and we expect to generate healthy revenue in
Market Data Q4FY17 and going forward.
BSE Code 532940
NSE Symbol JKIL Growth Driver:- Mumbai Metro projects
52wk Range H/L 328/105 Mumbai metro projects are the key growth driver for JKIL revenue growth
Mkt Capital (Rs Cr) 1,693 for next 3-4 years. As on 31st December 2016 JKIL order book stands at
Av. Volume 40210 9700 Cr, out this Mumbai metro contributes nearly ~68%. Preliminary work
Nifty 8822 on all 3 metro projects (line 2A, 3 and 7) has completed and execution is on
full swing. According to management Mumbai metro will generate revenue
Stock Performance around Rs. 200-250 Cr in Q4FY17E, Rs.1300-1400 Cr in FY18E and around
1Month 3 Month 1Year
Rs.1700-1800 Cr in FY19E. This will not only support the better revenue
growth but also strengthen the operating margin.
Absolute -7.8 23.6 -23.3
Rel.to Nifty -12.9 14.4 -48.4
No Clarity on JNPT road project, higher level of Debtors is the concern :-
Share Holding Pattern-% JNPT road projects contribute ~11% to current order book. Earlier
3QFY17 2QFY17 1QFY17 management had guided for Rs. 250 Cr of execution in H2FY17 but no
Promoters 44% 44% 43% significant revenue booked during the quarter. Project was already delayed
Public 56% 56% 57% due to land acquisition and still we dont have any clarity about the
execution timeline, which is the concern for JKIL. Management had guided
Others 0% 0% 0%
for normalize level of debtors days based on better payment cycle of
Total 100% 100% 100%
Mumbai metro projects but that was not reflected in the numbers at the end
of Q3FY17. This is the second concern for us regarding JKIL. At the end of
Company Vs NIFTY the Q3FY17 debtors are higher (Rs.563 Cr) compare to what management
140 JKIL NIFTY had guided earlier.
120
100
Q3FY17 Result Highlights:-
80
JKIL reported robust revenue growth of ~19% YoY to Rs.369 Cr as
60
against Rs.310 Cr on account of work commencement on Mumbai metro
40 projects.
20 EBITDA has clocked 10.8% of growth to Rs.63 Cr as against Rs.57 Cr in
0 corresponding period last year led by higher revenue growth.
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
Profit after Tax has grew by 10.8% to Rs. 27 Cr as against Rs. 24 Cr in

Q3FY16.
Sandip Jabuani Order book as on 31st Dec 2017 stands at Rs. 9700 Cr out of this 6850 Cr
sandip.jabuani@narnolia.com in metro ( including Delhi metro project).
Mangment/ Concall Highlights:-
Will Maintain top line of 1600 Cr in FY17 and Rs. 2000 Cr in FY18
Employee expense has gone during the quarter as the JKIL has started metro project in big way and full fledge revenue yet to
come
Preliminary work has completed on Mumbai metro project and work is in full swing
Debtors of 563 Cr at the end of the Q3FY17, but has come down to 440 Cr in Feb
Inventory at the end of Q3FY17: - 106 Cr of RM, 280 Cr of WIP
Protest by localized people against tree cutting but its awarding authority concern and it will not hamper execution.
Advances of 125 Cr has taken from line 3 & 7 and in month time advances will receive from line 2A
Payment cycle for Mumbai metro project is 45 days from date of bill raised
No significant revenue during the Q3FY17 from JNPT project due to utility work is going on
Mgt. expects 200-250 Cr of revenue from Mumbai metro, 200 Cr from other road and flyover projects
Pending work on Delhi metro is tune of 250 Cr at the end of the Q3FY17
Unexecuted portion of JNPT road project is 1050 Cr
Utility revenue of 30 Cr was booked from JNPT road project in Q3FY17
480 Cr of Debt as on 31st Dec 2016
FY18 Top line :- 1300-1400 Cr from Mumbai metro, 400 Cr from JNPT, 200 cr from others
Will maintain 17-18% EBITDA margin going forward
Debt FY17:- 350-400 Cr, FY18 :- 500-550 Cr
Current Working capital days is 174 and expect to bring down to 160 days
1000 Cr of revenue from Line 3, 700-800 Cr of revenue from line 2A &7 in FY19
View and Valuation::-
JKIL is the one of the best EPC Company with lower Debt to equity. Commencement work on Mumbai metro projects has led to
strong revenue growth in Q3FY17 and we expect to continue it but we need certain clarification regarding execution time line of
JNPT road projects and debtors to make clear cut view on JKIL. Presently we are waiting for further clarification; hence this stock
is under our review. As the clarity emerges we will rate the stock as per its fundamental.
Mumbai Metro Projects Details

Metro projects Lenghts(Km) Value Strech Execution Period Type Agency Agency
Line 2A 18.6 1350 Dahisar to DN Nagar 30 Months Elevated DMRC
Line 3 9.2 5001 Dharavi - International Airport 54 Months Underground MMRD
Line 7 5.9 360 Andheri (E) - Dahisar (E) 30 Months Elevated MMRD

About the Company :-
J. Kumar Infraprojects Limited is engaged in construction activities. The Company designs and constructs roads, bridges,
flyovers, subways, over bridges, skywalks and railway terminus/stations, among others. The Company's offerings in civil
construction segment include office/commercial buildings, sports complexes and swimming pools. In Irrigation Projects segment,
the Company builds dams, canals, aqueducts and irrigation tanks, and spillways. The Company has approximately 20 hydraulic
piling rigs, which are used to build pile foundations for buildings and flyovers, marine structures and offshore platforms. Its Piling
segment caters to various real estate and infrastructure companies. The Company's projects include Underground Metro CC-24,
Delhi Metro Tunnel, Ahmedabad Metro, Balewadi Bridge and Dhankawadi Flyover. Its other projects include Kapurbawadi
Flyover, Kherwadi Flyover, Amarmahal Flyover, Amarmahal Flyover, Thakur Flyover, Bhivandi Flyover and Aurangabad Flyover.
JKIL
Transporation Eng. Civil Construction Irrigation Others
Roads Terminus/Stations Earthen Dams Micro Pillings

Flyover Buildings Minor Irrigation Tank Micro Tunneling
Bridges Sports Complexes Spillways Ready Mix Concrete
Skywalk Swiming Pools Canals
GradeSeparator Aqueducts
Pedstrain Subways
ROBs/RUBs
Strom water drainage
Key Clinets
Vidharbh Irrigation
DMRC,MEGA, UPRNN, MCX, Development,
PWDs, Indian Pimpari Irrigation HCC,HDIL, Punj
MSRDC, MMRD, M
railway Division, Bambla Lloyd, JSW, LANCO
CMG
Canal Division

Quartely Performance 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 YoY% QoQ%
Net Sales 296 297 393 355 322 299 390 391 303 363 21% 20%
Other Operating Income 5 7 10 9 9 11 13 13 7 6 -41% -2%
Net Sales 300 303 403 364 331 310 404 403 310 369 19% 19%
Change in Invenotry 5 17 7 26 18 12 (1) 32 6 23 1 3
RM Cost 169 156 240 218 196 171 247 246 190 220 28% 16%
COGS 173 173 246 244 215 183 247 279 195 243 33% 24%
Employee Expenses 17 18 23 17 18 21 24 19 22 31 49% 38%
Other Expenses 26 27 40 20 21 33 44 21 23 20 -39% -13%
Labour Exp 22 26 26 16 17 16 26 17 13 12 -25% -6%
Total Expenditure 238 244 335 296 271 253 341 335 253 306 21% 21%
EBITDA 62 60 68 67 60 57 63 68 56 63 11% 12%
Depreciation 12 12 13 12 13 13 13 13 13 14 12% 8%
EBIT 50 47 55 55 47 44 50 55 43 49 11% 13%
Intreset 18 18 23 19 16 13 14 18 17 15 21% -11%
PBT 35 31 38 38 34 34 45 43 32 40 15% 25%
Tax 15 7 10 12 12 11 16 13 9 13 24% 49%
PAT 20 24 27 26 22 24 29 30 23 27 11% 15%
Margin Profile 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 YoY (+/-) QoQ (+/-)
Gross Margin 42.3% 43.0% 38.8% 33.0% 35.1% 40.9% 38.9% 30.9% 37.0% 34.2% (670 bps) (280 bps)
EBIDTA 20.8% 19.7% 16.9% 18.5% 18.1% 18.3% 15.7% 16.9% 18.2% 17.1% (120 bps) (110 bps)
EBIT 16.7% 15.6% 13.7% 15.1% 14.3% 14.2% 12.4% 13.6% 13.9% 13.2% (100 bps) (70 bps)
PAT 6.7% 7.9% 6.8% 7.1% 6.6% 7.7% 7.1% 7.3% 7.4% 7.2% (50 bps) (20 bps)
Growth YoY
Sales Growth 27% 11% -11% 8% 10% 2% 0% 11% -6% 19%
EBIDTA Growth 45% 19% -7% 11% -4% -5% -7% 1% -6% 11%
EBIT Growth 44% 14% -10% 9% -6% -7% -9% 0% -9% 11%
PAT Growth 15% 21% -13% 13% 8% 0% 5% 14% 5% 11%
Operating Matrix FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 YoY% Q3FY16 Q3FY17 YoY%
Opening Order Book 737 1219 1480 1266 2512 3661 3122 3024 -3% 3658 10000 173%
Revenue Booking 365 723 878 879 955 1146 1285 1328 3% 310 369 19%
Order Intake 847 984 664 2125 2104 607 1187 1518 28% 32 0 -100%
Closing Order Book 1219 1480 1266 2512 3661 3122 3024 3214 6% 3380 9700 187%
Strong revenue growth of 19% in Q3FY17 was on account of work commencement on Mumbai metro projects.
JKIL will slow and selective in terms of new order intake in order to focus on execution. Management has guided for Rs.2000 Cr
of new order inflow for the next year to maintain 10000 Cr + order book.
We anticipate healthy operating margin in range of 16-18%, margin depend on revenue mix (tunnel work has better margin comparatively)

Robust Order book :-
Order Book Growth %

JKIL will go slow in terms of
10,000
9,700
12000 2.5
new order intake to focus
8,646
10000 2
8000 1.5
more on execution. Avg.
order intake will be in range
3658.3
6000 1
3,380
2915.4
3,214
of Rs.2000 Cr in order to
3198
3100
3024
4000 0.5
2000 0
maintain 10000 Cr plus
0 -0.5
Order book
Quarterly Sales Trend :-
Sales Growth %
450 30%
393 390 391
400 355 369 25%
350 322 20%
296 297 299 303 Mumbai metro projects
300 15%
250 10% will drive the revenue
200 5% growth going ahead
150 0%
100 -5%
50 -10%
- -15%
Strong Operating Margin :-

EBITDA Margin PAT Margin
25%
21%
20%
20% 19% 18% 18% 18%
17% 17% 17%
16%
15%
10% 8% 7% 8% 7% 7% 7% 7%
7% 7% 7%
5%
0%
Healthy Debt to Equity position with strong Intreset covarge ratio:-

D/E Intreset Coverage Ratio
4.00
3.58 3.52
3.50 3.23
2.97
3.00 2.65
2.50 D/E will remain strong in
2.00 range of 0.25 to 0.38
1.50
1.00 0.80
0.55
0.33 0.42
0.50 0.25
-
FY12 FY13 FY14 FY15 FY16
10
Narnolia Securities Ltd
Revenue 1001 1187 1343 1409 EPS 27 30 29 14
Other Income 9 11 13 18 Book Value 181 207 245 170
Total Revenue 1010 1198 1356 1426 DPS 3.5 3.8 4.0 2.0
EBITDA 167 206 251 248 Payout (incl. Div. Tax.) 13% 12% 14% 15%
EBITDA Margin (%) 17% 17% 19% 18% Valuation(x)
Depreciation 24 35 47 51 P/E 3.6 2.9 11.7 20.2
EBIT 143 171 203 197 Price / Book Value 0.5 0.4 1.4 1.6
Interest 41 58 77 61 Dividend Yield 3% 4% 1% 1%
PBT 111 124 139 154 Profitability Ratios
Tax 35 40 45 51 RoE 15% 15% 12% 8%
Tax Rate (%) 32% 32% 32% 33% RoCE 20% 17% 17% 12%
Reported PAT 76 84 94 103 Turnover Ratios
Dividend Paid 10 10 13 15 Asset Turnover (x) 0.9 0.7 0.8 0.7
No. of Shares 3 3 3 8 Debtors (No. of Days) 42 41 55 77
Inventory (No. of Days) 144 174 148 126
Creditors (No. of Days) 33 56 37 30
Net Debt/Equity (x) 0.42 0.80 0.55 0.25
BALANCE SHEET CASH FLOW

Share Capital 28 28 32 38 OP/(Loss) before Tax 111 124 139 154
Reserves 476 547 757 1245 Depreciation 24 35 47 51
Net Worth 503 575 789 1283 Direct Taxes Paid 42 33 39 43
Long term Debt 86 135 53 29 Op. befor WC Change 168 208 253 249
Short term Debt 124 322 380 294 CF from Op. Activity 127 (25) 59 64
Deferred Tax 5 7 13 17 Non Current investments 0 2 0 0
Total Capital Employed 589 710 842 1312 Capex 86 225 43 55
Net Fixed Assets 310 501 493 497 CF from Inv. Activity (120) (238) (53) (226)
Capital WIP 101 175 63 68 Repayment of LTB 39 123 (101) (75)
Debtors 115 132 201 296 Interest Paid 41 58 77 61
Cash & Bank Balances 112 121 155 174 Divd Paid (incl Tax) 7 11 14 16
Trade payables 91 182 135 114 CF from Fin. Activity (9) 252 3 171
Total Provisions 11 17 20 25 Inc/(Dec) in Cash (2) (12) 8 9
Net Current Assets 290 396 557 762 Add: Opening Balance 114 23 12 20
Total Assets 1158 1653 1692 1965 Closing Balance 112 12 20 29

NEUTRAL
BANK OF BARODA 17-Feb-17
Result Update Elevated credit cost impacted the profitability.

CMP 166
Target Price 156 Bank of Baroda posted muted PAT of Rs 253 Cr below our expectations
Previous Target Price 188 largely on account of lower NII growth and higher provisionING for the
quarter. NII grew by 16% YoY but declined by 9%QoQ on account of income
Upside -6%
reversal of Rs 256 Cr. Other income grew by 60% YoY supported by healthy
Change from Previous trading gains. Fee income grew by 11% YoY. Operating expenses grew by
9% YoY. Pre-provisioning profit of the bank declined by 4% QoQ. Provisions
Market Data increased by 16%QoQ.
BSE Code 532134
NIM of the bank declined by 23 bps QoQ . Domestic NIM was down by 36
NSE Symbol
BANKBARODA bps on account of income reversal of Rs 256 Cr due to change in income
52wk Range H/L 191/126 recognition norm in S4A accounts.
Mkt Capital (Rs Cr) 38168
Domestic CASA of the bank improved to 40% from 30% a year ago. Overall
Av. Volume (,000) 1461
deposit base was flat YoY but increased by 4% QoQ.
Nifty 8774
Advances of the bank remain in consolidation phase with a decline of 9%
Stock Performance YoY. FCNR deposits linked loan was also got repaid which impacted the
1Month 3 Month 1Year overall loan growth.
Absolute 2.9 42.7 9.5
Assets Quality of the bank now seems to stabilize with the marginal
Rel.to Nifty (0.8) 17.7 2.8
increase of 5 bps QoQ in its GNPA at 11.40%. Net NPA was at 5.43%
against 5.46% sequentially.
Share Holding Pattern-%
3QFY17 2QFY17 1QFY17
Consolidation of Advances Continues, CASA Spikes
Promoters 59.2 59.2 59.2
Public 40.8 40.8 40.8 Advances of the bank declined by 9% YoY due to focus of management on
Others consolidation of balance sheet. The FCNR deposits linked loan got repaid to
Total 100.0 100.0 100.0 the tune of Rs 10000 Cr which also impacted the advances to shrink further.
Overseas portfolio contracted by 20% YoY mainly on account of FCNR Loan
repayment and strategy of management to reduce the buyers, credit
Company Vs NIFTY portfolio. Domestic loan book also declined by 4% YoY, however on
160 BANKBARODA NIFTY sequential basis it increased by 1% which seems to be relief for the bank.
150
140 Demonetization has led the CASA to increase by 39% YoY, however overall
130 deposits remained flat YoY due to decline in term deposits on account of
120 FCNR deposits redemption of nearly Rs 11000 Cr. Saving deposits
110 increased by 42% YoY while current deposits register an increase of 28%
100 YoY. Overall CASA ratio improved to 33% against 28% QoQ. Domestic
90 CASA ratio was at 40% against 34% sequentially.
80
Dec-16
Jun-16
Oct-16
Nov-16
Jul-16
Apr-16
Feb-16
Sep-16
Feb-17
Mar-16
Jan-17
Aug-16
May-16
DEEPAK KUMAR
Deepak.kumar@narnolia.com
BANKBARODA
Assets Quality stabilize but delayed recovery to keep credit cost at higher levels.
Assets Quality of BankBaroda seems to stabilize now. GNPA and NNPA were at 11.40% and 5.43% against 11.35% and
5.43% QoQ respectively. Slippages increased by 45% QoQ and remained at elevated level. However management
maintained its slippage and recovery guidance in FY17 of Rs 15000 Cr and Rs 10000 Cr respectively. On 9 month
slippages and recovery were at Rs 13000 Cr and Rs 7800 Cr respectively. Standard restructured assets stand at Rs
14000 Cr. Sequentially the Stressed assets increased to 15.16% against 15.02%. Credit cost remained high at 2.4%
(annualised).
Going forward we expect the slippages and stress assets to decline, but the recovery of large stressed accounts seems to
take more time which will keep the credit cost at elevated level.
Quarterly Performance (Rs in Crore)

Financials 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 YoY % QoQ%
Interest Inc. 10718 10762 11276 11156 10614 11014 10434 10485 10406 -2.0% -0.8%
Interest Exp. 7432 7590 7817 7912 7909 7684 7062 7059 7272 -8.1% 3.0%
NII 3286 3172 3460 3244 2705 3330 3371 3426 3134 15.9% -8.5%
Other Income 1090 1295 967 1144 1113 1775 1444 1561 1775 59.5% 13.7%
Total Income 4376 4467 4427 4389 3818 5105 4815 4988 4909 28.6% -1.6%
Ope Exp. 2037 1774 2225 2051 2114 2533 2146 2297 2314 9.5% 0.7%
PPP 2339 2694 2202 2337 1704 2572 2669 2690 2595 52.3% -3.5%
Provisions 1262 1818 600 1892 6165 6858 2004 1796 2080 -66.3% 15.8%
PBT 1077 876 1602 445 -4460 -4285 665 894 516 111.6% -42.3%
Tax 743 278 550 321 -1118 -1055 242 342 263 123.5% -23.1%
Net Profit 334 598 1052 124 -3342 -3230 424 552 253 107.6% -54.2%
Profitability Metrix
Ratios 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 YoY(+/-) QoQ(+/-)
Yield On Advances 8.1 7.7 7.9 7.6 7.0 6.9 7.2 7.3 7.2 0.19 -0.03
Cost of Deposits 5.2 5.2 5.1 5.1 5.0 5.0 4.7 4.8 4.8 -0.26 -0.03
NIM% (Overall) 2.2 2.2 2.3 2.1 1.7 2.2 2.2 2.3 2.1 0.34 -0.23
NIM% (Domestic) 2.9 2.8 2.9 2.7 2.1 2.7 2.8 2.9 2.5 0.38 -0.36
NIM% (Overseas) 0.9 1.0 0.9 0.9 0.9 0.9 1.0 1.0 1.0 0.11 0.00
NII Growth % 7.5 1.5 3.9 (4.6) (17.7) 5.0 (2.6) 5.6 15.9 33.53 10.26
C/I Ratio 46.6 39.7 50.3 46.7 55.4 49.6 44.6 46.1 47.1 -8.23 1.08
Other Inc./Net Inc. % 24.9 29.0 21.8 26.1 29.1 34.8 30.0 31.3 36.2 7.01 4.85
Tax % 69.0 31.7 34.3 72.0 25.1 24.6 36.3 38.3 51.0 25.93 12.74
PAT to Total Income% 7.6 13.4 23.8 2.8 (87.5) (63.3) 8.8 11.1 5.1 92.67 -5.92
Concall Highlights:
>> FCNR Deposits that redeem during the quarter was Rs 11000 Cr and loans linked to this that matured was
Rs 10000 Cr.
>> Slippage has no concentration. The slippage accounts has the range of Rs 10 Cr to 100 Cr mostly.
>> Slippage from watchlist was Rs 2700 Cr. Management has maintained the slippage guidance of Rs 15000 Cr
in FY17 and recovery of Rs 10000 Cr. Expects slippages to improve in FY18.
>> CET 1 ratio declined due to some statutory reclassification of number. (Which was earlier included in CET 1
was not allowed from this quarter.)

BANKBARODA
>> See promising credit growth going forward in corporate portfolio.

>> Income reversed was Rs 256 Cr on SDR account. It has impacted the margins.
>> There was restructuring of Rs 537 Cr in this qtr, out of this Rs 533 Cr belongs to one account from Power (Shripur).
>> Bank has reasonable assets to monetized if in need for capital going forward.Bank may also approach for QIP.
>> SMA 2 is Rs 7900 Cr excluding restructuring. Management thinks the major source of slippages are restructured book
and SMA 2 accounts.
Outlook & Valuation:

Following the RBI notification on cleanup exercise of balance sheet, Bankbaroda has recognised huge stress in its balance
sheet. Following this the Gross NPA and credit cost have shoot up denting the profitability of banks. The focus of new
management is on consolidation of balance sheet towards profitable growth and recovery in stressed accounts. However
with no sign of meaningful recovery in large accounts in near terms and continued current pace of slippages will keep the
credit cost at elevated level, thus impacting the bottom-line of the bank. Also we expect the sluggish advances growth in
near terms. The stock has achieved our previous target price of Rs 188 few days before the results announced. Now on the
back of delayed recovery in stress accounts and higher slippages we estimate the credit cost at higher levels, and
downgrade BANKBARODA to Neutral from BUY. We estimate the fair price of the stock at Rs 156.
Other income Break Up (Rs in Crore)

3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 YoY% QoQ%
>>Commission, Exchange, 373 429 346 361 339 454 339 372 370 9% -1%
Brokerage Charges
>>Incidental 79 100 79 95 91 116 106 148 129 42% -13%
>>Other Miscellaneous Income 106 101 94 131 128 111 139 155 133 4% -14%
>>FX Profits (Treasury) 253 244 278 253 241 481 264 273 255 6% -7%
Total Fee-Based Income 811 874 797 841 799 1162 848 948 887 11% -6%
Trading Gains 244 360 157 224 289 509 557 546 839 190% 54%
Recovery from PWO 36 61 13 79 24 104 39 68 49 104% -28%
Total Other Income 1090 1295 967 1144 1112 1775 1444 1562 1775 60% 14%
Yield On Advances Cost of Deposits NIM

NII Growth % YoY C/I Ratio
10.0 20.0 60.0
8.0 15.0
50.0
10.0
6.0 40.0
5.0
4.0
- 30.0
2.0 (5.0)
20.0
- (10.0)
10.0
(15.0)
(20.0) -

60.0
50.0
40.0
30.0
20.0
10.0
14
BANKBARODA
Assets Quality Performance

3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 YoY% QoQ%
GNPA (Rs) 15492 16261 17274 23710 38934 40521 42992 42949 42642 10% -1%
GNPA % 3.85 3.72 4.13 5.56 9.68 9.99 11.15 11.35 11.40 0.18 0.00
NNPA (Rs) 8291 8069 8470 12798 21806 19406 20783 19342 19006 -13% -2%
NNPA % 2.11 1.89 2.07 3.08 5.67 5.06 5.73 5.46 5.43 -0.04 -0.01
Slippages (Rs) 2852 1789 1908 6962 15785 5932 6096 2861 4135 -74% 45%
Recovery & Upgradation 380 354 827 414 325 3200 2482 2687 2667 721% -1%
Gross Restr. Assets (Rs) 23100 31572 31257 30170 30716 29004 29809 28464 29019 -6% 2%
PCR % 62 65 65 58 53 60 60 63 65 0.22 0.02
GNPA % NNPA % PCR %
12.00 70
10.00 60
8.00 50
6.00 40
30
4.00
20
2.00
10
- -
Advances 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Net Advances (Rs in Cr) 393630 428065 408388 414900 384272 383770 362766 354150 349960
Advances Growth YoY % 11.69 7.82 6.97 7.55 -2.38 -10.35 -11.17 -14.64 -8.93
>> Growth QoQ % 2.04 8.75 -4.60 1.59 -7.38 -0.13 -5.47 -2.38 -1.18
Advances Break Up % 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
>>Domestic 66.28 68.18 67.54 66.92 67.45 68.60 69.09 69.60 71.45
>>International 33.72 31.82 32.46 33.08 32.55 31.40 30.91 30.40 28.55
Deposits 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Deposits (Rs in Cr) 564600 617560 593087 612458 589687 574038 562174 567531 589859
>> Growth YoY % 12.07 8.55 7.51 8.03 4.44 -7.05 -5.21 -7.34 0.03
>> Growth QoQ % -0.41 9.38 -3.96 3.27 -3.72 -2.65 -2.07 0.95 3.93
CASA % (Domestic) 32.42 33.01 31.89 31.95 29.97 33.57 33.83 34.23 40.46
CASA Growth YoY % 12.93 11.25 10.76 4.11 -5.11 -7.14 -1.16 1.72 38.70
>> Growth QoQ % 0.75 9.27 -5.78 0.37 -8.17 6.93 0.29 3.29 25.18
Credit Deposit Ratio 69.72 69.32 68.86 67.74 65.17 66.85 64.53 62.40 59.33

15
BANKBARODA

INCOME STATEMENT (Consolidated) (Rs in Crore) RATIOS
FY13 FY14 FY15 FY16 Business Ratios FY13 FY14 FY15
Interest / discount on advances / bills 26,611 28,657 31,669 30,700 Credit-Deposit(%) 69.3 69.8 69.3
Income on Investments 7,888 9,294 10,604 11,334 CASA % (Domestic) 30.4 31.8 33.0
Intt. on bal.with RBI & other inter-bank 1,538 1,671 1,718 1,470 Efficiency Ratios
Others 404 841 924 2,295 Employ. Cost/Total Inco. (%) 22.0 23.5 22.6
Total Interest Income 36,442 40,463 44,915 45,799 Other Exp./Total Inco. (%) 16.3 17.7 20.8
Total Interest expended 24,486 27,604 30,547 32,107 Cost Income Ratio (%) 38.3 41.2 43.4
Net Interest Income 11,956 12,858 14,368 13,692 Spread Analysis As Calculated
Other Income 4,511 5,555 5,449 5,992 Yield on Advances (%) 8.4 7.7 7.5
Total Income 16,466 18,414 19,818 19,684 Yield on Investments (%) 7.3 7.3 8.1
Total Operating Expenses 6,306 7,592 8,604 9,962 Yield on Earning Assets (%) 7.5 6.8 6.6
Pre Provisioning Profit 10,160 10,821 11,213 9,721 Cost of Deposits (%) 5.2 4.8 4.7
Provisions (other than tax) and Conting. 4,965 4,825 5,230 15,954 Cost of Fund (%) 5.3 4.9 4.7
Profit Before Tax 5,195 5,996 5,983 (6,233) Interest Spread (%) 2.3 1.9 1.9
Tax 444 1,065 2,151 (1,180) NIM (%) 2.4 2.1 2.0
PAT 4,804 5,001 3,912 (5,068) Profitability Ratio
RoE % 16.1 14.4 9.7
RoA % 0.9 0.8 0.5
BALANCE SHEET (Consolidated) (Rs in Crore) Interest Exp. / Interest Earned (%) 67.2 68.2 68.0
FY13 FY14 FY15 FY16 Provisions/PPP (%) 95.6 80.5 87.4
Capital 423 431 444 462 Other Income/Net Income (%) 27.4 30.2 27.5
Reserves & Surplus 32859 37416 41574 42041 Tax Rate (%) 8.6 17.8 35.9
Deposits 482639 579997 629981 586690 Asset Quality Ratio
Borrowings 26553 36976 35502 33845 GNPA (%) 2.40 2.94 3.72
Other Liabilities & Provisions 16805 21136 26290 27947 GNPA(Rs) 7,983 11,876 16,261
Total Capital & Liabilities 559388 676114 733977 691179 NNPA (%) 1.28 1.52 1.89
NNPA (Rs) 4,192 6,035 8,069
Cash & Balances with RBI 14151 19445 23557 22811 PCR (%) 68.24 65.45 64.99
Balances with Banks and Money at Call73551 114911 128074 114188 Gross Restr. Assets (Rs) 22,553 31,572
Investments 125617 122113 130246 128894
Advances 333625 403715 435415 391486 Capital Adequacy Ratio
Fixed Assets 2550 2849 2978 6359 Capital Adequacy Ratio (%) 13.3 12.3 12.6
Other Assets 9894 13081 13706 27441 Tier I Capital (%) 10.1 9.3 9.9
Total Assets 559388 676114 733977 691179 Tier II Capital (%) 3.2 3.0 2.7
FY16
66.9
33.6
26.4
24.2
50.6
7.3
9.0
6.8
4.9
5.0
1.9
2.0
-15.3
-0.8
70.1
-256.0
30.4
18.9
9.99
40,521
5.06
19,406
60.06
29,004
13.2
10.8
2.4
16
NEUTRAL
KNR Construction 16-Feb-17
Result Update KNR has reported healthy revenue growth of 75% YoY to Rs. 382 Cr
CMP 177 compared to Rs. 218 Cr but lower than our expectation. Lower executions
Target Price NA on Madurai road project due to delay in some approval hurt the revenue
growth. EBITDA for the quarter has clocked 23.8% growth YoY to Rs. 58 Cr
Previous Target Price
as against Rs. 47 Cr in Q3FY16. During the quarter KNR has signed share
Upside NA purchase agreement for sale of the equity stake in two annuity BOT project
Change from Previous and correspondingly impaired Rs. 11 Cr as impairment in value of an
investment. Hence, it resulted in negative growth in bottom line.
Market Data
Delay in approval will hurt Revenue Growth:-
BSE Code 532942
NSE Symbol KNRCON Currently, KNR executes 2 major projects in state of Tamil Nadu namely (i)
52wk Range H/L 201/85 Madurai -Ramanathpuram and (ii) Dindigul-Bangalore. Tamil Nadu
Mkt Capital (Rs Cr) 2414 government has kept some approval for the project due to current instable
political situation. In Q3FY17 execution on Mudurai project has come down
Av. Volume 46337
by 9% QoQ due to delay in approval and management expect it to continue
Nifty 8725 for one and half month going ahead. Dindigul Bangalore project was
delayed due to tree cutting permission. However the project has started, but
Stock Performance considering the current situation we expect slow execution going forward.
1Month 3 Month 1 Year Management has guided to close year with 1300 Cr top line, which implies
Absolute 2.3 17.0 93.8 subdued revenue growth in Q4FY17.
Rel.to Nifty -2.4 8.6 67.7
Eyeing on HAM Model:-
Share Holding Pattern%
3QFY17 2QFY17 1QFY17 Initially, KNR was not interested in HAM model but considering the higher
Promoters 58% 58% 61% competitive intensity and decreasing opportunity in EPC space, now
Public 42% 42% 39% management is willing to take up HAM projects. This decision will open up
new opportunity in infra space but subsequently it will increase burden on
Other 0% 0% 0%
the balance sheet. Current net debt is Rs. 149 Cr and 624 Cr on Standalone
Total 100% 100% 100% and consolidated books respectively
Company Vs NIFTY
Outlook and Valuation
180 KNRCON NIFTY
160 KNR is the one of the best and fastest growing company in infra space.
140
Revenue growth in last 3 quarters was 70% above with strong balance
sheet position. Current debt to equity position is 1.06 times. But considering
120
the near-term headwinds of an unstable political condition in a state of Tamil
100 Nadu, where KNR having a significant share of its current order book.
80 Hence, we are NEUTRAL on the stock.
60
Financials Q3FY17 Q2FY17 Q3FY16 YoY %
40
Sales 382 373 218 75%
EBITDA 58 56 47 23%
Net Profit 31 44 34 -9%
Sandip Jabuani EBIDTA% 15.1% 15.0% 21.3% (620) bps
sandip.jabuani@narnolia.com PAT % 8.0% 11.7% 15.6% (760) bps
NEUTRAL
16-Feb-17
to Rs. 382 Cr
ower executions
hurt the revenue
YoY to Rs. 58 Cr
as signed share
uity BOT project
in value of an
ne.
Nadu namely (i)

e. Tamil Nadu
current instable
has come down
ect it to continue
ore project was
has started, but
n going forward.
e, which implies
ering the higher

PC space, now
ion will open up
ease burden on
Cr on Standalone
y in infra space.
strong balance
But considering
a state of Tamil
ent order book.
QoQ %
2%
4%
-30%
1 bps
(370)bps
17
Q3FY17 Result Update :-
KNR reported robust revenue growth of 75% YoY to Rs.382 cr as against Rs.219 Cr. This was the straight 3rd quarter
where KNR has achieved 70% plus revenue growth
EBITDA has clocked 23.8% of growth to Rs.58 cr as against Rs.47Cr in corresponding period last year led by higher
revenue growth. However EBITDA margin decline by 620 bps YoY to 15.1% on account 14.80 Cr of higher other operating
income reported in Q3FY16.
Profit after tax has down by the 9.8% YoY to Rs. 31 Cr as compared to Rs. 34 Cr in Q3FY16 due to 11 cr of impairment in
investment.
Order book as on 31st Dec 2017 stands at Rs. 4238 Cr (Rs. 3607 Cr in Roads & Highways and Rs.632 Cr in Irrigation).
Concall/ Managment Intreviwe Update :-

Strong Order pipeline:- bidding 2 HAM projects tune of Rs1000 Cr in Karnataka and EPC projects in Maharashtra
Management expect top line of 1300 Cr and 1500 Cr in FY17 and FY18 respectively.
Hubli hospet project facing land related issue. NHAI has acquired 70% land till date but in dilemma to give appointment date or
not. Management is keen to take project at current status to avail 80 IA benefit.
Tamil Nadu government has kept some approval for Madurai project due to unstable political situation.
Tax rate :- 10-11% in FY17 and FY18
Toll Collection:- 8.5 9 lakh/day at Muzaffarpur Barauni and 10.5 11 lakh/day at Walayar BOT project
Capex requirement of 100 Cr in FY18
50% of the Tamil Nadu projects is from State authority
Planning to securities to ongoing BOT projects (Walayar & Muzaffarpur Barauni)
About the Company:-

KNR constructions Limited ( from know written as "KNRCL" ) is an ISO 9001:2000 Certified company and listed in Bombay
StockExchange Limited (BSE) and National Stock Exchange of India Limited (NSE). KNRCL is a multidomain infrastructure
project development company providing (EPC) engineering, procurement and construction services across various fast growing
sectors namely roads & highways, irrigation and urban water infrastructure management. Our project execution strength primarily
is in road transportation engineering projects namely construction and maintenance of roads, highways, flyovers and bridges
wherever integral to the projects undertaken.
Significant experience and Strong track record in timely execution of Projects:-
Timely completion
capabilities will help
KNR construction to
grow higher in
competitive
scenario, comapny
earn bonus of 6Cr on
early completation of
Penchalakona
Yerpedu project

ht 3rd quarter
ed by higher
her operating
mpairment in
rigation).
tment date or
d in Bombay
infrastructure
fast growing
ngth primarily
s and bridges
mpletion
s will help
ruction to
gher in
etitive
comapny
of 6Cr on
letation of
lakona
project.
18
Strong order book provides good Revenue visibility (In Rs. Cr)
Roads & Highways Irrigation
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
-
Strong Operating Margin
EBITDA % PAT %
30%
25%
20%
15%
10%
5%
0%
Walayar BOT peoject

Provisional Completion Certificate for 100% of Project length has been issued for KNR infuse Rs.90 cr and Rs. 130 Cr
the project on 31st in walayar project respectively in
October
Caters 2015
to commercial traffic towards Kochi Port and Kochi International Q2FY17 and H1FY17. Out of this
Container Transshipment Terminal. The project road serves as an arterial link to promoter put Rs. 40 Cr and
balance part was funded by parent
most of the important southern cities such as Salem, Erode, Coimbatore, Trissur,
company. Current toll Collection is
Palakkad, Kochi, Alappuzha, Kollam, Thiruvananthapuram and Nagercoil 10.5-11 lakh/day
Current Debt is Rs.213 Cr and Toll collection for 9 months is Rs.28.97 Cr
Muzaffarpur - Barauni BOT peoject

Provisional Completion Certificate for 75% of Project length has been issued for the
project on 3rd June
2016
Muzaffarpur is an important place for wholesale cloth trade and the largest city of
Current Toll collection is 8.5
northern Bihar while Barauni city is situated on holy river Ganga and also an
9lakh/day.
important industrial city of Bihar having major industrial units such as IOC refinery,
Barauni Thermal Power Plant, Hindustan Fertilizers Corporation and Barauni Dairy

Rs. 130 Cr
ctively in
t of this
r and
by parent
lection is
is 8.5-
19
FY14 FY15 FY16 FY17E FY14 FY15 FY16
Net Revenue 895 931 995 1358 EPS 21 25 45
Other Income 17 13 42 29 Book Value 217 280 248
Total Revenue 912 944 1038 1387 DPS 1.2 1.2 1.2
EBITDA 131 127 174 226 Payout (incl. Div. Tax.) 5% 5% 3%
EBITDA Margin (%) 15% 14% 18% 17% Valuation(x)
Depreciation 59 55 48 98 P/E 0.8 3.4 2.3
EBIT 73 72 126 128 Price / Book Value 0.1 0.3 0.4
Interest 18 13 56 79 Dividend Yield (%) 6.88% 1.38% 1.16%
PBT 72 71 112 78 Profitability Ratios
Tax 7 0 -21 8 RoE 10% 9% 18%
Tax Rate (%) 9% 0% -19% 11% RoCE 7% 5% 9%
Reported PAT 60 70 126 70 Turnover Ratios
Dividend Paid 3 3 3 2 Asset Turnover (x) 0.6 0.5 0.5
No. of Shares (In Cr) 3 3 3 3 Debtors (No. of Days) 31 43 49
Inventory (No. of Days) 27 28 30
Creditors (No. of Days) 32 30 44
Net Debt/Equity (x) 0.85 0.91 0.66
BALANCE SHEET CASH FLOW

Share Capital 28 28 28 28 OP/(Loss) before Tax 72 71 112
Reserves 583 760 669 728 Depreciation 59 55 48
Net Worth 611 788 697 756 Direct Taxes Paid 24 33 5
Long term Debt 343 672 631 502 Op. before WC Change 147 145 214
Short term Debt 50 88 106 173 CF from Op. Activity 239 66 256
Deferred Tax 0 0 0 0 Non Current Investment 0 0 0
Total Capital Employed 954 1460 1328 1268 Capex 512 548 258
Net Fixed Assets 858 1343 1263 1333 CF from Inv. Activity (485) (549) (254)
Capital WIP 2 4 7 0 Repayment of LTB 278 342 12
Debtors 75 110 135 194 Interest Paid 18 14 57
Cash & Bank Balances 57 44 45 102 Divd Paid (incl Tax) 3 3 3
Trade payables 78 75 119 173 CF from Fin. Activity 276 462 2
Total Provisions 57 42 71 87 Inc/(Dec) in Cash 31 (21) 3
Net Current Assets 117 174 260 306 Add: Opening Balance 19 50 29
Total Assets 1454 2012 2051 2367 Closing Balance 50 29 33

FY17E
25
272
0.6
3%
6.9
0.6
0.38%
9%
9%
0.6
49
21
44
0.66
FY17E
78
98
9
255
258
0
167
(167)
(129)
79
2
(142)
(52)
45
-7
20
BUY
BRITANNIA 15th Feb. 2017
Company Update Improvement in general business after demonetization

CMP 3220 BRITANNIAs number for Q3FY17 is largely in line to our estimates. Sales
Target Price 3700 for this quarter grew by 6%in spite of headwinds of demonetization.
EBITDA remained flat to Rs 313. Cr. Gross margin declined by 193 bps
Previous Target Price 3700
YoY but management has restricted decline of EBITA margin to 74 bps
Upside 15% YoY which is commendable considering inflationary environment. The
Change from Previous NA company clocked approx. 2% of volume growth in the core business on the
back of larger direct distribution coverage. It has also strengthened its
Market Data market share in Q3FY17. BRITANNIA will keep investing in its direct
distribution reach with the plan to add 200000 outlets every year.
BSE Code 500825 Management expects volume to be normal in next 3-6 months going
NSE Symbol BRITANNIA forward and guided mid single digit volume growth after normalization . For
52wk Range H/L 3575/2523 the protection of margins, the company is planning to increase prices by 6-
Mkt Capital (Rs Cr) 38,643 7% in FY18. Considering managements proactive approach towards
maintaining margin, thrust on expansion of direct distribution reach and
Av. Volume(,000) 166
improving general market conditions we maintain `BUY rating on
Nifty 8,792 BRITANNIA with a target price of Rs3700.
Result Update(Q3FY17)
Stock Performance
1M 3M 12M Sales grew by 6% YoY to Rs 2355 cr led by pricing growth of 5.5-6% in
Absolute 9.6 4.7 22.0 Q3FY17.EBITDA remained flat in this quarter to Rs 313 cr. Gross margin
declined by 193 bps YoY to 39.8% led by inflation in flour (12%),Sugar
Rel.to Nifty 4.9 -1.3 -4.0
(40%), palm oil (20%) and milk(19%) in Q3FY17.EBITDA margin declined
by 74 bps YoY to 13.3%. PAT margin declined by 13 bps YoY to 9.4%.PAT
Share Holding Pattern-% for this quarter grew by 5% YoY to Rs 220 cr.
3QFY17 2QFY17 1QFY17
Promoters 50.7 50.7 50.7 Concall Highlights(Q3FY17)
Public 49.3 49.3 49.3
Market will be back to normal in 3 to 6 months.
Others -- -- -- In next to 2-3 months the company will restart pricing action in different
Total 100 100 100 SKU. The company is planning to 6 to 7% price hike in FY18.
Capex: Rs 350-400 cr Capex in next 18 months which includes plants,
company is putting up in Maharashtra and other places but excluding dairy
Company Vs NIFTY
business.
130 BRITANNIA NIFTY Management expects similar type of volume growth in Q4FY17.Expects to
125
clock mid single digit volume growth after demonetization effect ease off.
120
115
Tax rate: 31% for next quarters than it will resume to normal levels.
110 The company is looking to launch a new category of product.
105
100
Rs,Cr
95 Financials 3QFY17 2QFY17 (QoQ)-% 3QFY16
90
85
Sales 2355 2456 -4% 2220
80 EBITDA 313 339 -8% 311
Net Profit 220 234 -6% 211
EBITDA% 13% 14% (53 Bps) 14%
Rajeev Anand PAT% 9% 10% (17 Bps) 9%
85
80
rajeev.anand@narnolia.com

BUY
5th Feb. 2017
on
stimates. Sales
demonetization.
ed by 193 bps
argin to 74 bps
vironment. The
business on the
trengthened its
ng in its direct
s every year.
months going
malization . For
ase prices by 6-
roach towards
tion reach and
UY rating on
th of 5.5-6% in
. Gross margin
ur (12%),Sugar
margin declined
oY to 9.4%.PAT
n different
es plants,
cluding dairy
17.Expects to
ct ease off.
levels.
.
Rs,Cr
(YoY)-%
6%
0%
5%
(74 Bps)
(13 Bps)
21
Concall Highlights(Q3FY17)
Wholesale and rural was impacted.

The companys effort of expansion of direct reach is paid off. BRITANNIA has lower dependency on whole sale among other
FMCG players.
Volume growth in the core business remained approx. 2% and company gained market share in Q3FY17.
The company witnessed inflation in Flour (12%), Sugar (40%), Palm oil (20%) and Milk (19%) in Q3FY17.
Pricing action has been limited due to impact of demonetization in Q3FY17.
Dairy subsidiary businesss Bottom line impacted negatively due to high milk prices and normal tax rate.
International business is facing headwinds.
Middle East business is showing serious down trend.
The company is focusing on Rusk and Cake business. The company has put up one line in Tamil nadu factory for value added
Rusk manufacturing.
BRITANNIA is looking to set up factory in Nepal in 2017. The company is also assessing opportunities in Africa. The company is
fully concentrating on international business in Next 2years.
BRITANNIA is setting up manufacturing hub in Maharashtra which will house some of Innovation and new product lines other
than serving the demand requirement of base business. It will also serve as hub for dairy business.
Other expenses: company will maintain other expenses at level of 19.62%(Q3FY17 level).
Net Sales and PAT(in cr.)
3000 300
Sales(in cr) PAT(in cr)
270
2500 250
234
219 219 220
211
2000 200
190 190
167
1500 150
137
108 114
1000 98 101 100
89
500 50
1552
1756
1793
1812
1787
1975
2033
2064
2019
2209
2220
2211
2197
2456
2355
0 0
EBITDA and PAT(%)

18.0%
16.0%
14.3% 14.7% 14.0% 14.4%
13.7% 13.8%
13.2% 13.3%
14.0% 12.3%
12.0% 11.1% 10.8%
9.9% 10.0% 9.5%
9.2% 9.3% 9.5% 9.4% 9.5% 9.4%
10.0% 8.9% 8.9% 8.6%
8.1%
8.0% 6.4% 6.8%
5.8% 5.6% 5.6% 5.9%
6.0%
4.0% EBITDA margin PAT margin

2.0%
0.0%
1QFY142QFY143QFY144QFY141QFY152QFY153QFY154QFY151QFY162QFY163QFY164QFY161QFY172QFY173QFY17
4.0% EBITDA margin PAT margin
2.0%
0.0%
1QFY142QFY143QFY144QFY141QFY152QFY153QFY154QFY151QFY162QFY163QFY164QFY161QFY172QFY173QFY17

among other
r value added
he company is
uct lines other

22
FY16 FY17E FY18E FY19E FY16 FY17E FY18E
Revenue 8679 9352 10448 11681 EPS 67 71 69
Total Revenue 8779 9469 10575 11851 DPS 20 24 23
COGS 4999 5609 6426 7149 Payout (incl. Div. Tax.) 30% 33% 33%
GPM 42.4% 40.0% 38.5% 38.8% Valuation(x)
Other Expenses 2117 2113 2375 2656 P/E 40 45 46
EBITDA 1227 1279 1256 1439 Price / Book Value 18.1 16.9 13.9
EBITDA Margin (%) 14.1% 13.7% 12.0% 12.3% Dividend Yield (%) 0.8% 0.7% 0.7%
EBIT 1113 1153 1107 1195 RoE 45.6% 37.5% 29.9%
Interest 5 5 4 4 RoCE 61.6% 49.8% 39.4%
PBT 1208 1266 1230 1361 Turnover Ratios
Tax 392 411 399 442 Asset Turnover (x) 3 2 2
Tax Rate (%) 32.4% 32.4% 32.4% 32.4% Debtors (No. of Days) 7 9 7
Reported PAT 806 855 831 920 Inventory (No. of Days) 32 35 32
Dividend Paid(including dividend
231 tax) 339 329 364 Creditors (No. of Days) 31 30 30
No. of Shares 12 12 12 12 Net Debt/Equity (x) 0 0 0

FY16 FY17E FY18E FY19E FY16 FY17E FY18E
Share Capital 24 24 24 24 OP/(Loss) before Tax 1,198 1,266 1,230
Net Worth 1766 2283 2782 3337 Direct Taxes Paid 403 411 399
Long term Debt 41 33 26 18 Oper. Prof. bef. WC change 1,229 1,396 1,379
Short term Debt 86 86 86 86 CF from Op. Activity 961 823 1,027
Deferred Tax 0 0 0 0 Non Current investments (211) - -
Capital Employed 1807 2316 2807 3356 Capex (251) (269) (572)
Net Fixed Assets 924 1068 1491 1517 CF from Inv. Activity (705) (446) (747)
Capital WIP 90 90 90 90 Repayment of LT Borrowings (1) - -
Debtors 171 231 212 234 Interest Paid (5) (5) (4)
Cash & Bank Balances 88 113 53 55 Divd Paid (incl Tax) (231) (339) (329)
Trade payables 742 769 859 960 CF from Fin. Activity (248) (351) (341)
Total Provisions 509 595 716 858 Inc/(Dec) in Cash 8 25 (60)

FY19E
77
278
25
33%
42
11.6
0.8%
27.6%
35.6%
2
7
32
30
0
MENT
FY19E
1,361
244
442
1,609
1,142
-
(270)
(765)
-
(4)
(364)
(376)
2
53
55
23
BUY
GODREJ CONSUMER PRODUCTS LTD 14th Feb. 2017
Company Update
Recent Update
CMP 1553
Target Price 1760 GODREJCPs management is hopeful of better FMCG industry growth in
Previous Target Price 1760 FY18. Implementation of GST will lead to improvement in GDP by 1.50 to
2% considering every things being equal. After the headwinds of
Upside 13% demonetization, management is expecting better industrys performance in
Change from Previous NA FY18 supported by a pro-growth budget with adequate government
initiatives. For GODREJCP, management expects strong performance in
Market Data Q4FY17. Management has indicated that recovery after demonetization is
better than expected with approx. 2% of secondary sales growth.
BSE Code 532424 Management is looking for investment in market of Myanmar to expand its
NSE Symbol GODREJCP international footprints.
52wk Range H/L 1710/1138
Mkt Capital (Rs Cr) 52,895 International Business
Av. Volume(,000) 199
Nifty 8,805 Indonesian business posted flat YoY constant currency (CC) growth for
Q3FY17. HI growth impacted due to seasonality and relatively higher
Stock Performance competitive intensity. Africa business (including Strength of Nature)
delivered a strong CC growth of 54% with temporary decline of 160 bps
1M 3M 12M
margin driven by currency depreciation. For Latin American business, CC
Absolute -1.6 7.3 30.8 growth remained robust 24%. Europe business delivered strong CC growth
Rel.to Nifty -6.3 1.2 4.6 of 16% in Q3FY17.
Outlook and Valuation
Share Holding Pattern-%
3QFY17 2QFY17 1QFY17 Company's resilient performance in spite of tough demand scenario and
company's thrust on innovation gives us confidence about better growth
Promoters 63.3 63.3 63.3
going forward. Although Indonesian business was subdued in this quarter but
Public 36.7 36.7 36.7 company has improved Market share in home insecticide (HI) segment and
Others -- -- -- grew double digit in non HI. Management sees better traction from
Total 100 100 100 Indonesian business next year. Going forward, managements initiatives for
expanding direct reach will not only strengthen the brand further but also
improve Market share in less penetrated market. Management indicated that
Company Vs NIFTY there is more headroom for margin improvement from international business
140 GODREJCP NIFTY in medium to long term. Considering strong innovation pipeline, companys
thrust on EBITDA growth better than sales growth and expectation of
130
improvement in international business, we still hold positive view on
120 GODREJCP and recommend BUY with a target price of Rs 1760.
110
Rs,Cr
100 Financials 3QFY17 2QFY17 (QoQ)-% 3QFY16
90 Sales 2486 2439 2% 2286
80 EBITDA 517 466 11% 455
Net Profit 352 318 11% 368
EBITDA% 21% 19% 169 Bps 20%
Rajeev Anand PAT% 14% 13% 111 Bps 16%
80
rajeev.anand@narnolia.com
BUY
4th Feb. 2017
ustry growth in
GDP by 1.50 to
headwinds of
performance in
te government
performance in
monetization is
sales growth.
ar to expand its
CC) growth for

elatively higher
gth of Nature)
ine of 160 bps
n business, CC
ong CC growth
d scenario and
t better growth
this quarter but
I) segment and
traction from
ts initiatives for
urther but also
nt indicated that
ational business
line, companys
expectation of
sitive view on
760.
Rs,Cr
(YoY)-%
9%
14%
-4%
91 Bps
(194 Bps)
24
Concall Highlights(Q3FY17)
Positive growth in Dec and build momentum from here. Confident to outpace industry growth going forward.
Indonesian business: Management is hopeful for better growth from Indonesia next year.
African business grew by double digit. Facing headwind in terms of currency devaluation in Nigeria. Management is planning to
localize production facility in CY17.
Management is confident of EBITDA growth ahead of the sales growth.
After demonetization, recovery is much faster than what was expected. It will be back to normal in couple of months.
A&P Expenses will be in the range of 11% of the sales.
Modern Trade (MT) grew by 33% in this quarter.
Going forward, the company will maintain innovation, launch new products, intensify introduction on LUP(Lower Unit Pack),
expand direct reach and work for brand building.
Soap volume growth will be better in Q4FY17 than Q3FY17.
Major Margin Drivers GCPL: Product portfolio, Launch of premium products and cost cutting measure.
International Business( Volume growth): Indonesia(3.5%), Africa( early double digit),Latin America (dip ),Europe( early double
digit). Approx. 66% of growth from International business came by volume.
Gained market share in Cinthol.
Net Sales and PAT(in cr.)

3000 400
Sales(in cr) 368 PAT(in cr)
352350
2500
310 318
290 300
2000 277
252 244 250
222
1500 200
157 150
1000
117
100
500
1889
2060
2236
2092
1988
2197
2286
2269
2123
2439
2486
50
0 0
EBITDA and NPM (%)

25% EBITDA Margin% PAT Margin%
20.8%
19.9% 19.8%
19% 19% 19.1%
20% 18% 17.9%
16% 16% 16%
14% 14%
15% 13% 13% 13% 13%
12%
12%
10%
10% 8%
6%
5%
0%
1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17

5%
0%

planning to
nit Pack),
arly double
25
Revenue 7602 8276 8968 9610 EPS 22.3 26.6 32.9
Other Income 63 92 67 66 Book Value 110.9 126.6 149.7
Total Revenue 7665 8368 9035 9675 DPS 5.8 6.2 6.9
COGS 3555 3842 3846 4194 Payout (incl. Div. Tax.) 26% 23% 21%
GPM 53.2% 53.6% 57.1% 56.4% Valuation(x)
Other Expenses 2149 2293 2523 2520 P/E 38 30 44
EBITDA 1150 1365 1639 1894 Price / Book Value 7.7 6.4 9.7
EBITDA Margin (%) 15.1% 16.5% 18.3% 19.7% Dividend Yield (%) 0.7% 0.8% 0.5%
EBIT 1068 1275 1536 1755 RoE 20.1% 21.0% 22.0%
Interest 107 100 100 141 RoCE 19.9% 20.1% 20.4%
PBT 1024 1266 1503 1679 Turnover Ratios
Tax 210 272 317 370 Asset Turnover (x) 0.9 0.9 0.9
Tax Rate (%) 20.5% 21.5% 21.1% 22.0% Debtors (No. of Days) 34 35 46
Reported PAT 760 907 1119 1311 Inventory (No. of Days) 111 102 124
Dividend Paid 199 211 235 245 Creditors (No. of Days) 59 48 42
No. of Shares 34 34 34 34 Net Debt/Equity (x) 0.4 0.5 0.5

Share Capital 34 34 34 34 OP/(Loss) before Tax 1,024 1,266 1,503
Net Worth 3775 4311 5098 6117 Direct Taxes Paid (238) (257) (336)
Long term Debt 1590 2023 2449 4227 O.Profit. befor WC changes 1,162 1,400 1,678
Short term Debt 111 147 182 207 CF from Op. Activity 1,129 1,005 839
Deferred Tax 5 3 2 2 Non Current investments 34 34 34
Total Capital Employed 5366 6334 7547 10344 Capex (133) (190) (208)
Net Fixed Assets 1736 1732 1780 3750 CF from Inv. Activity (495) (1,214) (495)
Capital WIP 167 225 41 0 Repaym. of LT Borrowings
Debtors 711 805 1118 1356 Interest Paid (113) (119) (119)
Cash & Bank Balances 705 894 746 931 Divd Paid (incl Tax) (199) (211) (225)
Trade payables 1234 1087 1037 1106 CF from Fin. Activity (633) (12) (187)
Total Provisions 80 124 100 115 Inc/(Dec) in Cash 1 (221) 157

FY17E
38.5
179.7
7.2
19%
38
8.1
0.5%
21.4%
17.0%
0.7
52
130
42
0.7
MENT
FY17E
1,680
139
(370)
1,960
1,179
34
(2,109)
(2,410)
(141)
(245)
1,416
185
746
931
26
BUY
ASHOK LEYLAND LTD. 13-Feb-17
Result Update
CMP 93 The commercial vehicle giant has posted Rs.4431 crore of net revenue with
Target Price 110 a growth of 7.7% YoY in the 3QFY17. M&HCV volumes grew by 9%YoY on
account of increased infra activity in the country. LCV volumes declined by
Previous Target Price
3% due to the vast presence in rural areas, which were affected most by
Upside 18% demonetization. Realization also declined by 2%QoQ to Rs.1349300
Change from Previous - because of higher discounts in the industry. Discounts have gone up to
Rs.300000 per unit from Rs.225000-250000 per unit but further price
Market Data increases will net off this effect. M&HCV segment market share stood at
33.7% (+370bps YoY) during the quarter despite the demonetization issue.
BSE Code 500477 Exports revenue grew by 11%QoQ to Rs.388 crore for the quarter. The
NSE Symbol ASHOKLEY company has a healthy order book of export orders. Hinduja Foundries
52wk Range H/L 113/74 Limited (HFL), which fulfills casting requirements of Ashok Leyland, has also
shown EBITDA positive for consecutive second quarters. Management
Mkt Capital (Rs Cr) 26,452
anticipates that in two years time the HFL will be accretive to Ashok Leyland.
Av. Volume 1201241 Recently, Ashok Leyland opened a new assembly plant in Bangladesh as it
Nifty 8,794 aims to make further inroads into the neighboring countries.
Stock Performance
1Month 3Month 1Year
3QFY17 Result Highlights
Absolute 9.9 6.4 14.6 Revenue stood Rs.4431 crore with a groowth of 8%YoY on account of
Rel.to Nifty 5.2 0.4 -11.4 6%YoY growth in Volumes and 2%YoY growth in realization in 3QFY17.
EBITDA margin contracted by 60 bps YoY due to 80bps rise in commodity
Share Holding Pattern-% prices during the quarter.
3QFY17 2QFY17 1QFY17 PAT margin declined by 120 bps to 4.1% due to forex loss of Rs.64 crore
Promoter 50.4 50.4 50.4 during the quarter.
Public 49.6 49.6 49.6
Outlook
Others -- -- --
Total 100.0 100.0 100.0
Going forward, We assume that the upcoming emission norms BS-IV to BS-
VI, improvement in demand from infrastructure segment and government's
Company Vs NIFTY initiative to develop defense products in the country can be volume boosters
130
ASHOKLEY NIFTY for the company in FY17. Ashok Leyland is also working towards a renewed
125 thrust in the international markets, with network expansion and dedicated
120 products. We expect that the company will maintain a healthy ROE of over
115 20% going ahead. We maintain 'BUY' on Ashok Leyland considering the
110 huge growth potential going ahead for a target price of Rs.110.
105
100 Rs. In crore
95
90
Financials 3QFY17 2QFY17 3QFY16 QoQ YoY
85 Sales 4431 4622 4114 -4% 8%
80 EBITDA 454 536 449 -15% 1%
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
Net Profit 180 294 217 -39% -17%

EBIDTA% 10.3% 11.6% 10.9%
Naveen Kumar Dubey PAT % 4.1% 6.4% 5.3%
naveen.dubey@narnolia.com
ASHOKLEY
Investment Arguments
The country would be moving to BS-IV norms in April, 2017 and a significant amount of pre-buying expected, especially in the
fourth quarter of FY17. Ashok Leyland's subsidiary, Albonair, holds a significant potential moving forward because Albonair does
exhaust emission systems, selective catalytic reduction emission systems which are necessary for being BS-IV compliant.
Export is only 12% of total volumes, therefore the company is targeting the African and Middle East countries to expand its
export contribution by setting up own assembly plants in these countries under the company's global expansion project. The
exports is an important part of Ashok Leyland's strategic intent to globalise its product portfolio and derisk itself from supplying
only into India.
The management expects its defence business to log four-fold jump in revenues at over Rs 2,000 crore in next five years as it
gears up to provide an entire range of mobility solutions, including missile carrying vehicles to the armed forces. Ashok Leyland is
the largest supplier of logistics vehicles to the Indian Army.
The management has focused approach towards its core commercial vehicle business. We expect that the company will be
benefitting from recovery in the M&HCV demand and its EBITDA margin will expand on account of operating leverage. The
company is also working on to reduce its debt and generate more cash to fulfill its future expansion requirements.
Concall Highlights
Management expects Q4 to be promising due to the implementation of BS-IV norms.

Capex for FY17 is Rs.500 crore and for FY18 in the range of Rs.500-750 crore.
If there is economic growth in the country CV industry will move ahead. Going ahead we see CV industry to grow about 12-15%
annually.
33.7% market share in M&HCV space and in south region overall market share is 51%.
Domestic truck business contributes 50-55 percent of total revenue.
Some cost pressure would be in 4QFY17 becasue of rising commodity prices.
Net debt stood at Rs.1520 crore.
Price increase of 4% in truck and bus segment in 4QFY17..
Ashok Leyland have acquired 100% ownership of the JVs, we will continue to be associated with Nissan for the technology of
the existing Dost, Partner, and Mitr models.
The management is focusing on to improve profitability and ROCE of the company going ahead.
Defence Revenue to be close to around Rs 1,500 crore by FY18.
M&HCV volume and growth trend
M&HCV Growth YoY
40000 71% 80%

35246
35000 29840 70%
60%
30000 26262 44% 25346 25,284 50%
64% 23232 24025
25000 21489 34% 40%
18207 18279 40% 27%
20000 30%
14908 14%
15000 12% 9% 20%
0% 10%
10000
0%
5000 -15%
-10%
0 -20%

0%
5000 -15%
-10%
0 -20%

EY
pecially in the
Albonair does
pliant.
to expand its
project. The
om supplying
ve years as it
ok Leyland is
mpany will be
everage. The
about 12-15%
technology of
80%
70%
60%
50%
40%
30%
20%
10%
0%
-10%
-20%
28
0%
-10%
-20%
ASHOKLEY

Net Revenue 11,487 15,341 20,659 21,850 EPS (1) 0 4
Total Revenue 11,579 15,530 20,811 22,021 DPS - 0.5 1.1
COGS 8,138 10,443 13,558 14,312 Payout (incl. Div. Tax.) 0% 112% 30%
GPM 71% 68% 66% 66% Valuation(x)
Other Expenses 1,581 1,845 2,396 2,513 P/E -38.4 73.2 9.2
EBITDA 422 1,517 2,932 3,151 Price / Book Value 1.6 2.2 2.0
EBITDA Margin (%) 4% 10% 14% 14% Dividend Yield (%) 0.00% 1.53% 3.23%
EBIT (108) 937 2,408 2,633 RoE -4% 3% 21%
Interest 805 872 968 1,194 RoCE -1% 9% 19%
PBT (821) 254 1,592 1,610 Turnover Ratios
Tax (68) 172 528 534 Asset Turnover (x) 0.7 0.8 0.9
Tax Rate (%) 8% 68% 33% 33% Debtors (No. of Days) 43.9 32.2 26.8
Reported PAT (164) 134 1,071 1,077 Inventory (No. of Days) 69.2 54.8 55.5
Dividend Paid - 150 316 318 Creditors (No. of Days) 82.4 73.3 52.4
No. of Shares 266 285 285 285 Net Debt/Equity (x) 1.4 1.4 1.5

Share Capital 266 285 285 285 OP/(Loss) before Tax (300) (42) 1,627
Reserves 3,723 4,227 4,708 5,466 Depreciation 530 580 524
Net Worth 3,989 4,511 4,992 5,751 Direct Taxes Paid (97) (112) (545)
Long term Debt 5,491 6,219 7,597 7,217 OP before WC changes 195 1,725 2,431
Short term Debt 1,264 827 1,093 874 CF from Op. Activity (104) 496 (952)
Deferred Tax 411 510 536 536 - - -
Total Capital Employed 9,480 10,731 12,589 12,968 Capex (408) (251) (212)
Net Fixed Assets 7,087 6,060 5,894 5,871 CF from Inv. Activity (377) (126) 552
Capital WIP 270 166 162 162 Repayment of Long Term Borrowings
(1,586) (1,996) (2,362)
Debtors 1,381 1,354 1,515 1,603 Interest Paid (499) (803) (316)
Cash & Bank Balances 113 905 1,758 1,600 Divd Paid (incl Tax) (187) - (154)
Trade payables 2,592 3,082 2,966 2,993 CF from Fin. Activity 461 381 1,246
Total Provisions 256 599 1,081 1,069 Inc/(Dec) in Cash (20) 751 846
Net Current Assets 400 522 1,016 1,035 Add: Opening Balance 127 106 858
Total Assets 17,534 19,525 22,963 23,157 Closing Balance 106 858 1,718

FY17E
4
20
1.1
30%
9.1
1.7
3.24%
19%
20%
0.9
26.8
55.5
50.0
1.3
MENT
FY17E
1,610
519
(534)
3,322
2,605
-
-
(652)
(380)
(1,194)
(318)
(2,111)
(158)
1,758
1,600
29
N arnolia Securities Ltd
201 | 2nd Floor | Marble Arch Bu ild ing | 236B-AJC Bose
Road | Kolkata-700 020 , Ph : 033-40501500
email: narnolia@narnolia.com,
w ebsite : w w w .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 21st February

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IEA Report 21st February

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IEA Report

21th Feb 2017

BANKBARODA "NEUTRAL" 17th Feb 2017

KNRCON "NEUTRAL" 16th Feb 2017

BRITANNIA "BUY" 15th Feb 2017

GODREJCP "BUY" 14th Feb 2017

ASHOKLEY "BUY" 13th Feb 2017

Narnolia Securities Ltd IEA Edition No.- 960

P/E 27.3 21.4 22.8 37.6 39.8

Recent Management Speak

Narnolia Securities Ltd 3

Recent News and Events

Ongoing pricing pressure in the US market

About the Company

BALANCE SHEET CASH FLOW STATEMENT

Narnolia Securities Ltd 5

Please refer to the Disclaimers at the end of this Report

Profit after Tax has grew by 10.8% to Rs. 27 Cr as against Rs. 24 Cr in

View and Valuation::-

Mumbai Metro Projects Details

Narnolia Securities Ltd 7

Please refer to the Disclaimers at the end of this Report

Transporation Eng. Civil Construction Irrigation Others

Roads Terminus/Stations Earthen Dams Micro Pillings

Narnolia Securities Ltd 8

Please refer to the Disclaimers at the end of this Report

Narnolia Securities Ltd 9

Please refer to the Disclaimers at the end of this Report

Order Book Growth %

Quarterly Sales Trend :-

Strong Operating Margin :-

Healthy Debt to Equity position with strong Intreset covarge ratio:-

BALANCE SHEET CASH FLOW

Narnolia Securities Ltd 11

Please refer to the Disclaimers at the end of this Report

Result Update Elevated credit cost impacted the profitability.

Quarterly Performance (Rs in Crore)

Narnolia Securities Ltd 13

>> See promising credit growth going forward in corporate portfolio.

Outlook & Valuation:

Other income Break Up (Rs in Crore)

Yield On Advances Cost of Deposits NIM

10.0 20.0 60.0

Narnolia Securities Ltd

Assets Quality Performance

GNPA % NNPA % PCR %

Narnolia Securities Ltd

Financials Snap Shot

Nadu namely (i)

ering the higher

Concall/ Managment Intreviwe Update :-

About the Company:-

Significant experience and Strong track record in timely execution of Projects:-

Narnolia Securities Ltd

Roads & Highways Irrigation

Strong Operating Margin

Walayar BOT peoject

Muzaffarpur - Barauni BOT peoject

Narnolia Securities Ltd

BALANCE SHEET CASH FLOW

Narnolia Securities Ltd

Company Update Improvement in general business after demonetization

Narnolia Securities Ltd

Wholesale and rural was impacted.