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J&K BANK : "BUY" 20th Feb 2014
J&KBanksprofitability increased by 11% YoY on account of reversal of provisions against NPA and investments, further on account of lower ta
rate profits inflated. Operating profit was flat at 1.4% YoY led by moderate NII growth which further led to margin compression. We lower ou
price target to Rs.1525 from earlier of Rs.1578 which implies 1.3 times of FY14E book and 6 times of price earnin
.................................................................................... ( Page : 18- 22)
Britannia Inds :"Decent quarter" "BUY" 19th Feb 2014
Once again, Britannia Industries revealed better earning performance than street expectation. Its consolidated revenue grew by 10.7% (YoY) le
by 4-5% volume growth during the quarter.The company's margins are also likely to expand due to higher proportion of premium products andeasing input costs. We have "BUY" view on the stock with a target price of Rs 1065. At a CMP of Rs915, stock trades at 9.3x FY15E P/BV
................................................. ( Page : 23-25)
DENA BANK : "Neutral" 24th Feb 2014
Banksperformance was lower than our expectation in all fronts and reported very weak set of numbers. Operating as well as financials metric
were remained muted. Profitability was declined by 67% YoY despite of tax reversal owing to muted growth in NII and higher operatin
expenses. We are pessimist about the growth parameters. We have neutral view on the stock. .............................................................. ( Page
8- 12 )
Considering the favourable export scenario and completion of capacity expansions, we remain positive on FY14. We, hereby, initiate ou
coverage with Vardhman Textiles to BUY with a target price of Rs.412 . Currently the stock is trading at 0.8x p/b , we cut our Earning paramete
for FY15 and cut p/b to 0.7x for FY15 . Looking at the current earning growth and environment the stock is looking very good but due to lack o
trigeers in FY15 we are really conservative for FY15 .................................................. ( Page : 5-7)
IEA-Equity
Strategy
eClerx Services :"Consistent Performer" "BUY" 18th Feb 2014
eClerx Services witnessed inline set of growth with 2.3 %(QoQ) sales growth in INR term and 4.7%(QoQ) in USD term (4% in CC term) led b
some preponement of volume of work from Q4 into Q3 which has resulted into the slightly higher sequential growth. Companyshigh RoE an
dividend payout ratio make attractive to invest on the stock. ........................................................ ( Page : 26-28)
Bank ofBarodasprofitability was up by 3.6% YoY due to right back of depreciation provisions. Banksoperating and financials metrics wer
remained muted except healthy loan growth. Margin compressed sequentially but management guided domestic NIM of 3% from present o
2.95% which seems achievable if we look at balance sheet structure. We value bank at Rs.634/share which implies 0.75 times ofFY14Esboo
value.......................................................................... ( Page : 13- 17)
24th Feb, 201
Edition : 212
BANKBARODA : "BUY" 21th Feb 2014
Vardhman Textiles : "BUY" 24th Feb 2014
Nestle India :"The nest becomes weaker" "Neutral" 24th Feb 2014
For 4QCY13, Nestle Ind reported below numbers than street expectations in all counts, sales grew by 4.7%(YoY) led by 3.7% domestic growt
and 20.9% export growth. Its domestic sales contribute 94% and exports 6% of sales. While, PAT marginally declined by 0.7% on YoY basis. At CMP of Rs 5043, stock trades at 15.9x P/BV of CY14E. We have a Neutralview on stock. .................................................................. ( Page : 2
4)
Narnolia Securities Ltd,
India Equity Analytics aily Fundamental Report on Indian Equities
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Nestle India
5043
-
--
-
1M 1yr YTD
bsolute -3.7 10.7 3.4
l. to Nifty -1.0 7.4 1.8
Current 3QCY13 2QCY13
omoters 62.8 62.8 62.8
13.1 12.6 12.6
I 5.9 6.3 6.2
hers 18.2 18.3 18.5
Financials Rs,
4QCY13 3QCY13 (QoQ)-% 4QCY12 (YoY)-%
Revenue 2262.97 2360 -4.1% 2161.1 4.7%
EBITDA 478.3 503.9 -5.1% 504.1 -5.1%
PAT 287.1 289.6 -0.9% 289.2 -0.7%
EBITDA Margin 21.1% 21.4% (30bps) 23.3% (210bp
PAT Margin 12.7% 12.3% 40bps 13.4% (70bps
Please refer to the Disclaimers at the end of this Report.
(Source: Company/Eastwind)
ock Performance
For 4QCY13, Nestle Ind reported below numbers than street expectations in all coun
sales grew by 4.7%(YoY) led by 3.7% domestic growth and 20.9% export growth.
domestic sales contribute 94% and exports 6% of sales. While, PAT marginally declinby 0.7% on YoY basis. The company does not share volume growth numbers, but
statement did mention that sales rose mainly because of higher prices and produ
mix.
verage Daily Volume
ange from Previous
View and Valuation: Companys less aggression on volume growth and the excess
focus on Margin expansion make us cautious on the stock. At same time, compa
believes on expansion of new plant set up by ignoring the dividend payout
investors. Consistently, its RoE is on downward direction. At a CMP of Rs 5043, sto
trades at 15.9x P/BV of CY14E. We have a Neutral view on stock.
yr Forward P/B
are Holding Pattern-%
21590
fty 6091
"The nest becomes weaker"
MP
arket Data
pside
Weak numbers and showing up magin as well,
rget Price
evious Target Price
For CY13, Company posted 9.2% sales growth, hugely impacted by weak consum
demand and high competitive intensity environment, PAT up by 6%.
NESTLEIND Management will continue to focus on reinforcing the fundamentals of growth drive
Further, improve operational efficiencies, and keep rationalizing its SKUs. They a
very confident of strategy to deliver long-term sustainable profitable growth, desp
the short-term challenges.
Margin dip:During the quarter, company has been efficient to maintain its mark
margin above than 20%. However, Margin ramp down by 210bps(YOY) to 21.1% becau
of inflationary pressure on raw material. There was improvement in raw material cost
110 bps to 46.1% of adjusted net sales. PAT margin inched down by 70bps(YOY)
12.7%. For CY13, EBITDA Margin and PAT margin were flat at 22.2% and 13%.
Mix impact on RM Cost:Its top 3 inputs by value are milk and milk products, flour, a
palm oil, which together account for two-thirds of its material cost. Milk and wheat flo
have both seen prices increase, while a weak rupee has affected palm oil pric
However, other inputs such as green coffee and sugar have seen softer price trends.
Jerk on Potential Market share:Nestle has been enjoying its leadership position (No
in all categories except soups and its positioning in Chocolates, noodles, Coffee h
dominantly been unchallenged. Despite all facts, company has been facing ma
challenges over the past one and half years from Cadbury's and Ferrero Rocher
Chocolate, from HUL and ITC in noodles and from HUL in Coffee (Bru).
Nestlsmore focus on margin stability could sacrifice its volume. Companyscash co
portfolio baby foods becoming weaker because of low ad spend. Now, Mead Jhons
and Danone are dominating in same segment.
esult update NEUTRAL
48593kt Capital (Rs Cr)
wk Range H/L 5865/4410
E Code 500790
SE Symbol
"NEUTRAL"24th Feb' 14
Narnolia Securities Ltd,
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oncerns:(1)Continued input cost pressure could impacts its margin, (2) Competitive
tensity impacting its market share adversely, (3) Any adverse impact of inflation on
nsumer demand would significantly impact sales and earnings growth assumptions.
Please refer to the Disclaimers at the end of this Report.
les and Sales Growth(%)
(Source: Company/Eastwind)
(Source: Company/Eastwind)
(Source: Company/Eastwind)
omestic and Export sales-(% of Sales)
atalysts and Concerns;
talysts: Nestle plays on Urbanconsumptionthemeand now urban consumption and
mand are stagnant. Thus, we see steady growth in near term, while we maintain that
estle is a great long-term story with excellent quality management, strong leadership
ross several categories in the food segment and with brand portfolio, there are severaladwinds, which will keep volume growth muted.
Nestle India
RM inflation outlook appears adversand that could impact margins to ho
out.
Domestic revenue growth continues be very weak
Sales growth led by 4.7% (YoY) India
growth, contributed by net realizatioand volume growth in certain produc
categories
argin-%
Narnolia Securities Ltd,
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Please refer to the Disclaimers at the end of this Report.
(Source: Company/Eastwi
Nestle India
nancials
Narnolia Securities Ltd,
s in Cr, CY10 CY11 CY12 CY13 CY13E CY14E CY15E
ales 6284.7 7526.6 8334.5 9101.1 9218.0 9904.9 10942.2
M Cost 2560.1 2933.4 3756.9 3907.0 3871.6 4308.6 4814.6
urchases of stock-in-trade 578.4 704.2 111.5 110.0 110.62 118.86 142.25
WIP (83) (48) (92) 105 175 99 131
mployee Cost 433.4 546.5 663.4 741.5 760 792.39 875.38
d Spend 302.6 327.6 355.9 391.3 488.6 435.8 492.4
ther expenses 1213.0 1474.2 1680.9 1826.3 1797.51 1931.45 2133.73
otal expenses 5004.7 5937.6 6476.5 7081.5 7203.9 7686.19 8589.64
BITDA 1280.1 1589.0 1858.0 2019.6 2014.1 2218.69 2352.58
epreciation and Amortisation 127.8 153.3 277.2 330.0 342.9 402.0 474.0
ther Income 12.7 15.1 31.0 83.1 73.7 49.5 87.5
BIT 1165.0 1450.8 1611.9 1772.7 1744.9 1866.23 1966.08
nterest 1.1 5.1 26.6 36.5 36.0 59.7 83.7
BT 1163.9 1445.7 1585.3 1736.2 1708.9 1806.5 1882.4
ax Exp 326.5 426.4 484.7 560.9 564.0 578.1 611.8
AT 837.5 1019.3 1100.6 1175.3 1145.0 1228.45 1270.62
rowth-% (YoY)
ales 21.9% 19.8% 10.7% 9.2% 10.6% 8.8% 10.5%
BITDA 20.5% 24.1% 16.9% 8.7% 8.4% 9.9% 6.0%
AT 27.9% 21.7% 8.0% 6.8% 4.0% 4.5% 3.4%
xpenses on Sales-%
M Cost 40.7% 39.0% 45.1% 42.9% 42.0% 43.5% 44.0%
d Spend 4.8% 4.4% 4.3% 4.3% 5.3% 4.4% 4.5%
mployee Cost 6.9% 7.3% 8.0% 8.1% 8.3% 8.0% 8.0%
ther expenses 19.3% 19.6% 20.2% 24.4% 19.5% 19.5% 19.5%
ax rate 28.0% 29.5% 30.6% 32.3% 33.0% 32.0% 32.5%Margin-%
BITDA 20.4% 21.1% 22.3% 22.2% 21.9% 22.4% 21.5%
BIT 18.5% 19.3% 19.3% 19.5% 18.9% 18.8% 18.0%
AT 13.3% 13.5% 13.2% 12.9% 12.4% 12.4% 11.6%
aluation:
MP 3795.2 4569.3 4592.0 5189.0 5189.0 5043.0 5043.0
o of Share 9.6 9.6 9.6 9.6 9.6 9.64 9.64
W 855.4 1274.0 1798.4 2368.8 2369.6 3050.2 3773.9
PS 86.9 105.7 114.2 121.9 119.3 127.43 131.81
VPS 88.7 132.2 186.6 245.7 246.8 316.4 391.5
oE-% 97.9% 80.0% 61.2% 49.6% 48.3% 40.3% 33.7%
/BV 42.8 34.6 24.6 21.1 21.0 15.9 12.9
/E 43.7 43.2 40.2 42.6 43.5 39.57 38.26
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Vardhman Textiles
341
412
NA21%
NA
502986
Profitability at the pick to serve
2170
868
6155
1M 1yr YTD
solute -3.8 22.6 29.5
l. to Nifty -0.5 20.1 26.2
3QFY14 2QFY14 1QFY14
omoters 61.9 61.7 61.6
6.6 5.7 5.3
17.2 18.2 18.9
hers 14.4 14.4 14.2
Financials : Q3FY14 Y-o-Y % Q-o-Q % Q3FY13 Q2FY1
Net Revenue 1431 30.9 10.9 1093 129
EBITDA 346 53.1 0.0 226 34Depriciation 72 10.8 1.4 65 7
Interest Cost 31 -22.5 -11.4 40 3
Tax 68 83.8 9.7 37 6
PAT 175 108.3 -1.7 84 17(In Cr
Company operates at EBITDA and net margin of 24.9% and 12.2% respectively, whic
provides sufficient financial cushion against operating cost and financial expenses. Wit
liquidity being excellent and cash flows positive, current ratio at 2.58 and cash ratio a
0.47 offer no worries.
On a Strong earning foot..
VTL with its largest domestic capacity in terms of spindles, drives a significant por-tion o
its revenue from spinning segment. Company is one of the largest cotton yarn exporter
from India. Significant presence in Indian market and has emerged as a well know
supplier of the global market. Past few quarters were the turnaround for the companyCompany has strategic tie-ups with Japanese and Korean companies. Consisten
expansion and technological up-gradation has given a global status to the company. VT
is the supplier of fabrics to the worlds leading brands such as Tommy Hil-figer, Espri
Gap, Louis Philippe, Arrow, etc
Vardhman Textiles Ltd (VTL), Indiasleading textile player, reported a significant revenu
growth of 30.7% to Rs. 1431 Cr during Q3-FY14 over corresponding period previous yea
on the back of 45.8% YoY increase in fabric business to Rs.522 Cr, which constitutes 35
40% of the overall revenue. While yarn segment, which is the highest contributor of th
revenue, reported YoY growth of 30.5% to Rs.1182 Cr.
fty
side
ange from Previous
tial Coverage
MP
rget Price
evious Target Price
arket Data
E Code
VTL
erage Daily Volume (Nos.)
E Symbol
wk Range H/L
kt Capital (Rs Crores)
410/241
Please refer to the Disclaimers at the end of this Report.
ock Performance-%
are Holding Pattern-%
yr Forward P/B
Source - Comapany/EastWind Research
Operating profit of the company recorded substantial growth of 70.9% to Rs.274 C
during Q3FY14 yoy and outpaced the revenue growth due to significant control ove
material cost, employee expenses and fuel charges. Material cost, which constitutes 60%
of the total expenses, grew at YoY rate of 22.9% to Rs.660 Cr. As a result, EBITDA an
operating profit margin re-ported a considerable improvement of 358bps and 455bp
during Q3FY14 yoy respectively. PAT reported the YoY growth of 109.6%, while PAT ma
gin improved by 466bps.
VTL reported consistent and strong YoY growth in past several quarters with the averag
growth rate of more than 20%. Company reported compounded quarterly growth of 3.5%
in past 10 quarters
Despite expansion and heavy CAPEX for capacity enhancement, VTL managed to reduc
its debt to equity on the back of significant expansion in reserves & surplus due t
phenomenal improvement in profit-ability in past several quarters.
"Buy"24th Feb' 14
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dvantage India remains for most of FY14E
usiness and its strategies
ews and Valuation
FY12 FY13 FY14E FY15E
4641 4972 6245 6682
2651 2316 2741 3007
460 559 647 702
386 486 887 1002
292 349 433 520
4025 3997 4709 5231
616 975 1536 1451
274 295 343 397
174 177 160 16066 168 336 296
141 356 720 628
6 14 23 17
6
her expences
Vardhman Textiles
TL with its largest domestic capacity in terms of spindles drives a significant portion of
revenue from spinning segment. Company is one of the largest cotton yarn exporters
om India. Significant presence in Indian market and has emerged as a well-known
pplier of the global market. Past few quarters were the turnaround for the company.
ompany has strategic tie-ups with Japanese and Korean companies. Consistent
pansion and technological up-gradation has given a global status to the company. VTL
the supplier of fabrics to the worldsleading brands such as Tommy Hilfiger, Esprit,
ap, Louis Philippe, Arrow, etc
inese players imported yarn from India owing to the high cotton prices. This led to
e strong performance of Vardhman over the last three quarters. There is no clarity yet
the policy to be followed by China. If the current scenario continues, Indian spinners
ll continue to gain. However, if Chinese players are able to procure cotton at lowerices, it will have a negative impact on the demand for Indian yarn. We, thereby,
main conservative about our FY15 estimates.
mployee benefit Expence
penditure
ITDA
rdhman is geared to report a record profit in FY14. Despite weak macro-economic
enario and recent expansion, VTL managed to report significant improvement in its
y metrics.Considering the favourable export scenario and completion of capacity
pansions, we remain positive on FY14. We, hereby, initiate our coverage with
rdhman Textiles to BUY with a target price of Rs.412 . Currently the stock is trading at
8x p/b , we cut our Earning parameter for FY15 and cut p/b to 0.7x for FY15 . Looking
the current earning growth and environment the stock is looking very good but due
lack of trigeers in FY15 we are really conservative for FY15 .
L PERFORMANCE
et Revenue from Operation
ost Of Projects & Contractual
wer and fuel
Source - Comapany/EastWind Research
epriciation
terest Costx
AT
OE%
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FY10 FY11 FY12 FY13
57 63 63 63
1548 2202 2144 2444
1604 2264 2207 2506
2346 2925 2044 2100297 20 505 778
3 3 5 6
87 123 116 84
26 30 48 64
5077 6103 5967 6789
0 0 18 22
2553 2534 2557 2679
45 156 185 213
77 111 92 147
1297 1933 1535 1784
476 667 630 746
262 71 84 65
272 395 326 475
5077 6103 5967 6789
FY10 FY11 FY12 FY13
1.0 0.7 0.6 0.7
45.3 82.5 22.2 56.0
14.2 15.1 13.6 15.0
2.6 2.8 2.5 1.7
3.9 4.4 3.3 3.6
FY10 FY11 FY12 FY13
640 933 576 843-629 -902 444 -510
11 31 1020 333
-132 -456 -647 -517
10 234 -355 165
-111 -192 18 -19
7
tal liabilities
tangibles
sh and bank balances
Source - Comapany/EastWind Research
Source - Comapany/EastWind Research
Vardhman Textiles
ade payables
ort-term provisions
ngible assets
pital work-in-progress
ng-term loans and advances
ventories
ade receivables
ASH FLOWS
S PERFORMANCE
are capital
serve & Surplus
tal equity
ng-term borrowingsort-term borrowings
ng-term provisions
sh from Operation
ort-term loans and advances
tal Assets
ATIOS
B
S
ebtor to Turnover%
editors to Turnover%
ventories to Turnover%
rading At :
anges In Working Capital
et Cash From Operation
sh From Investment
sh from Finance
et Cash Flow during year
Narnolia Securities Ltd,
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51.55
5755
11
-
1M 1yr YTD
bsolute -13.6 -50.3 -50.3
el.to Nifty -10.7 -53.9 -53.9
Current 4QFY13 3QFY1
omoters 66.6 55.2 55.2
I 7.9 8.6 16.5
I 4.9 7.3 8.1hers 20.7 28.9 20.2
Financials Rs, Cr
2011 2012 2013 2014E 2015E
NII 1763 2101 2383 2551 3538Total Income 2297 2683 3039 3410 4397
PPP 1224 1528 1739 1808 1627
Net Profit 612 803 810 445 502
EPS 18.3 22.9 23.2 9.5 10.7
kt Capital (Rs Cr)
Please refer to the Disclaimers at the end of this Report.
(Source: Company/Eastwind)
ock Performance
2wk Range H/L
hange from Previous
ENA Bank Vs Nifty
hare Holding Pattern-%
1.16 lakh
fty 6155
esult update NEUTRAL
MP
NNUAL REPORT UPDATE
arget Price
Banksperformanc e was low er than street expectat io n and disappo inted
mo st of operat ing m etr ics. GNPA remain high at 2.96% while net NPA we
1.97%. Provis ion co verage rat io (withou t techn ical write off) imp roved slig hton sequ ential basi s. Valuati on wi se, sto ck is tradin g at 0.4 tim es of on e ye
forw ard book whic h is quite reason able. Bu t look ing at grow th and operat in
met ric s, we beli eve bank wo uld be trade in the range of 0.3 to 0.4 tim es of on
year forward boo k. We have neutral view on the stock w ith pr ice target
Rs.57.
verage Daily Volume
1809
evious Target Price
arket Data
pside
103/42
SE Code 532121
SE Symbol DENABANK
DENA BANK
Provision and contingencies were up on the back of deteriorating asset quali
Higher operating expenses led negative growth in PPP
Operating expenses during quarter was higher at 32.5% YoY which escalated co
income ratio to 63.4% versus 51.4% in last year. Banksemployee cost and oth
operating expenses both surged to 33% and 32% YoY respectively. This had ma
down operating profit to Rs.371 cr (down by 16.3% YoY) versus Rs.443 cr in la
quarter and Rs.371 cr in previous quarter.
Provisions and contingencies were up by 44% QoQ on the back of deterioratiasset quality. In absolute term gross NPA and net NPA both increased by 5% Yo
each. In percentage term GNPA and net NPA stood at 2.96% and 1.97 vers
3.04% and 2.02% in previous quarter. Cumulative provision was up by 4.7% whi
slightly improved provisions coverage ratio without technical write off to 33.4% fro
33.5% in 2QFY14. Dena Bank's Capital Adequacy Ratio as per Basel III norms sto
at 10.61% as against 10.21% in previous quarter.
NII grew at moderate pace owing to margin compression on Y-o-Y
Dena bank reported very weak set of numbers during quarter with NII grew by 7.5
YoY to Rs.661 cr largely due to margin compression in year on year basis led
higher cost of fund than fund yield. Higher cost of fund was due to 208 bps decline
in low cost franchise deposits. Other income was lower at 10.7% YoY to Rs.129
versus Rs.144 cr in previous quarter. Total income was moderate at 4% YoY growt
"NEUTRAL"24th Feb, 2014
Narnolia Securities Ltd,
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rofitability declined despite of tax reversal
ofitability declined by 67% YoY due to reversal of tax to the tune of Rs. 79 cr as against
versal of Rs.73 cr in previous quarter. At PBT level, bank was negative at Rs.12 cr
hich was highly discouraging. This was basically due to moderate NII growth, higher
perating expenses and higher provisions.
equentially margin improved on the back of stable loan yield and slightly
creased of cost of deposits
M improved by 10 bps sequentially on the back of higher yield on advance than cost of
eposits. During quarter, banksyield on advances remained flat at 11.6% while yield on
vestment improved by 4 bps QoQ to 7.6%. Cost of deposits increased by 5 bps QoQ to
6%. Going forward, management guided NIM at the range of 2.75% to 3%.
eposits growth faster than loan growth
n balance sheet growth front, banksdeposits grew by 13.2% YoY led by term deposits
hich grew by 17% YoY. Current account deposits de-grew by 5% YoY while savingccount deposits grew by 9% YoY. Overall CASA ratio de-grew by 208 bps to 29%.
anksloan grew by 11% YoY aided by agriculture and MSME segment which was grown
y 30.7% and 25.4% YoY respectively. Retail advance grew by moderate at 14.4% YoY.
anagement guided loan growth of 15-17% for FY14. We model 15% loan growth and
% deposits growth for FY14.
DENA BANK
Please refer to the Disclaimers at the end of this Report.
aluation & View
anks performance was lower than street expectation and disappointed in most of
perating metrics. GNPA remain high at 2.96% while net NPA were 1.97%. Provision
overage ratio (without technical write off) improved slightly on sequential basis.
aluation wise, stock is trading at 0.4 times of one year forward book which is quiteasonable. But looking at growth and operating metrics, we believe bank would be trade
the range of 0.3 to 0.4 times of one year forward book. We have neutral view on the
ock with price target of Rs.57.
Narnolia Securities Ltd,
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DENA BANK
Source: Eastwind/Company
Please refer to the Disclaimers at the end of this Report.
NII grew by 7.5% YoY to Rs.661 cr largely du
to margin compression in year on year basis
led by higher cost of fund than fund yield.
Higher operating expenses led negative
growth in PPP
Profitability declined by 67% YoY due to
reversal of tax to the tune of Rs. 79 cr as
against reversal of Rs.73 cr in previous
quarter.
Narnolia Securities Ltd,
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DENA BANK
Source: Eastwind/Company
Please refer to the Disclaimers at the end of this Report.
Narnolia Securities Ltd,
arterly Result ( Rs Cr) 3QFY14 2QFY14 3QFY13 % YoY Gr % QoQ Gr 3QFY14E ariation(%)
erest/discount on advances / bills 1848 1790 1742 6.1 3.2 1931 -4.3
ome on investments 654 644 519 26.0 1.4 666 -1.9
erest on balances with Reserve Bank of India 3 9 3 -1.5 -70.1
9 -72.2
ers 30 7 0 7541.0 303.8 4 707.6
al Interest Income 2534 2450 2264 11.9 3.4 2610 -2.9
ers Income 129 150 144 -10.7 -13.9 150 -14.0
al Income 2663 2600 2408 10.6 2.4 2760 -3.5
erest Expended 1873 1825 1649 13.6 2.6 1926 -2.8
661 625 615 7.5 5.7 684 -3.3
er Income 129 150 144 -10.7 -13.9 150 -14.0
al Income 790 775 759 4.0 1.9 834 -5.3
ployee 255 251 192 32.8 1.6 225 13.4
er Expenses 164 154 124 32.1 6.1 150 9.2erating Expenses 419 406 316 32.5 3.3 375 11.7
P( Rs Cr) 371 369 443 -16.3 0.4 458 -19.1
visions( Incl. tax provision) 382 335 157 144.2 14.1 351 8.9
T -12 34 286 - 104.1 -134.2 107 -110.9
-79 -73 80 -199.3 8.6 21 -470.0
t Profit 68 107 206 -67.2 -36.9 86 -21.1
ance Sheet Data (Rs Cr)
posits 96081 93669 84882
ing Accounts 21983 21476 20216rent Accounts 5786 5695 6083
n 69895 64785 63040
et Quality
PA (Rs Cr) 2066 1968 1317
A (Rs Cr) 1375 1309 817
PA(%) 2.96 3.04 2.09
A(%) 1.97 2.02 1.30
R(%) (Without technical writeoff) 33 34 38
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DENA BANK
Source: Eastwind/Company
Please refer to the Disclaimers at the end of this Report.
Narnolia Securities Ltd,
L 2011 2012 2013 2014E 2015Eerest/discount on advances / bills 3820 5161 6819 7421 8737
come on investments 1193 1544 2019 2536 2307
erest on balances with Reserve Bank of India 16 38 31 28 28
hers 4 51 30 50 50
tal Interest Income 5034 6794 8899 10035 11122
hers Income 534 582 655 859 859
tal Income 5567 7376 9555 10894 11981
erest on deposits 3117 4528 6234 6583 7242
erest on RBI/Inter bank borrowings 8 18 59 0 0
hers 145 147 223 228 342
erest Expended 3270 4693 6516 7484 7583
1763 2101 2383 2551 3538
Growth(%) 60.3 19.1 13.4 7.1 38.7
her Income 534 582 655 859 859
tal Income 2297 2683 3039 3410 4397
mployee 688 715 792 978 1690
her Expenses 385 440 508 625 1080
erating Expenses 1073 1155 1300 1603 2770
P( Rs Cr) 1224 1528 1739 1808 1627
ovisions 612 725 706 1308 1000
t Profit 612 803 810 445 502
ey Balance sheet data
posits 64210 77167 97207 102068 112274
posits Growth(%) 25.1 20.2 26.0 5.0 10.0
rrowings 1692 3881 8414 6515 9763
rrowings Growth(%) 8.3 129.4 116.8 -22.6 49.9an 44828 56693 65781 72359 83213
an Growth(%) 26.4 26.5 16.0 10.0 15.0
vestments 18769 23028 34343 34203 38442
vestments Growth(%) 19.6 22.7 49.1 -0.4 12.4
stwind Calculation
eld on Advances 8.5 9.1 10.4 10.5 10.5
eld on Investments 6.4 6.7 5.9 7.4 6.0
eld on Funds 7.4 8.0 8.1 9.4 9.1
st of deposits 4.9 5.9 6.4 6.5 6.5
st of Borrowings 9.0 4.2 3.4 3.4 3.5
st of fund 5.0 5.8 6.2 6.9 6.2
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BANKBARODA
513
624-
22
1M 1yr YTD
bsolute -18.8 -32.4 -32.4
el.to Nifty -15.3 -35.7 -35.7
Current 4QFY13 3QFY1
omoters 55.4 55.4 55.4
I 15.5 15.5 15.3
I 19.6 19.6 19.0
hers 9.5 9.5 10.3
Financials Rs, Cr
2011 2012 2013 2014E 2015E
NII 8802 10317 11315 12218 14122
Total Income 11611 13739 14946 16400 18304
PPP 6982 8581 8999 9206 10067
Net Profit 4242 5007 4481 4444 4819
EPS 108.3 121.8 106.4 105.5 114.4
arket Data
pside
773/429
SE Code 532134
MP
NNUAL REPORT UPDATE
arget Priceevious Target Price
Dur ing q uar terbanksmost o f operat ing as wel l as f inancia ls was mu te
exc ept loan gro wt h of 18% YoY. As set qualit y was better among peers but
t ight l iquidity situat io n it wou ld remain challeng ing. Margin was com press e
sl ight ly in sequent ia l basis but management cont inued to guided dom est
NIM at 3% level from pr esen t of 2.95%. We valu e bank at Rs.634/share wh ich
0.75 times of FY14Es book value.hange from Previous
ANKBARODA Vs Nifty
hare Holding Pattern-%
18.25 Cr
fty 6091
SE Symbol BANKBARODA
esult update BUY
Moderate NII growth despite of healthy loan growth and stable CD ratio
Banks NII growth moderate at 7.8% YoY to Rs. 3057 cr despite of healthy lo
growth and stable CD ratio. This was due to margin compression of 28 bps YoY l
by lower loan yield than cost of fund. However bank has taken several steps
reduce the cost as share of bulk deposits declined to 73.8% from 79.3% in last ye
and liability franchise increased by increased by 556 bps YoY. Other income (11YoY) was supportively help to growth revenue by 8.4% YoY to Rs.3989 cr.
2wk Range H/L
kt Capital (Rs Cr)
Please refer to the Disclaimers at the end of this Report.
(Source: Company/Eastwind)
ock Performance
verage Daily Volume
21627
Profitability increased by 3.6% YoY to Rs.1048 cr on account of higher tax provisio
made by bank led by DTL special reserve as per suggestion by RBI. In 9MFY1
total effective tax rate altogether came to 17%. Management guided tax rate for f
year would be 20-22%.
Higher operating expenses led de-growth in operating profit
Operating expenses increased by 25.7% in which employee cost increased higher
32.3% YoY followed by 17.3% other operating expenses. This was result
escalating cost to income ratio to 45% from 39% in last year. Higher cost incom
ratio and moderate income growth led operating profit de-growth by 2.6% YoY
Rs.2197 cr.
Provisions lower on account of right back of investment depreciation
Provisions and contingencies declined by 12% QoQ largely due to reversal
provisions against investment depreciation to the tune of Rs.120 cr as against Rs.
cr in previous quarter. Loan loss provision was by and large same as in previo
quarter and stood at Rs.819 cr versus Rs. 838 cr. With the reversal of provision
PBT increased by 17% YoY and 14% QoQ to Rs.1436 cr.
Profitability increased due to lower provisions
"BUY"21h Feb. 2014
Narnolia Securities Ltd,
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8/21/2019 Stock Advisory for Today - Natural View on the Stock Dena Bank, Nestle India and Buy Vardhman Textiles
14/29
Please refer to the Disclaimers at the end of this Report.
sset quality by and large stable, PCR increased
n asset quality front, banks gross NPA increased by 10% YoY and net NPA
eteriorated by 5% in absolute term led by higher provision in balance sheet. In
ercentage term, GNPA and net NPA stood at 3.4% and 1.9% versus 3.2% and 1.9% in
evious quarter. Provisions coverage ratio without technical write off was improved by46 bps QoQ to 44.5%. Banksasset quality was better than among peers under our
verage universe.
argin compression on account of higher cost of fund than fund yield
aluation & View
uring quarter banks most of operating as well as financials was muted except loan
owth of 18% YoY. Asset quality was better among peers but in tight liquidity situation it
ould remain challenging. Margin was compressed slightly in sequential basis but
anagement continued to guided domestic NIM at 3% level from present of 2.95%. We
lue bank at Rs.634/share which is 0.75 times of FY14Es book value.
M compressed by 5 bps QoQ to 2.37% due to stable loan yield while cost of fund
creased marginally by 10 bps to 5.4%. Bank has taken several steps to curtail cost by
ducing share of bulk deposits and increasing CASA ratio. Domestic NIM improved to
95% versus 2.85% in previous quarter whereas oversea NIM remained flat at 1.18% as
gainst 1.19%. Domestic NIM improvement was on account of higher investment yield to
98% from 7.9% on sequential basis.
oan growth healthy led by SME and retail
verall deposits de-grew by 4% YoY led by 10% declined of term deposits on year on
ar basis. Current account and saving account deposits registered growth of 19% and
3% YoY respectively. This was the result of CASA ratio increased by 556 bps YoY to
6.2%. Loan grew by 18% YoY led by SME growth of 39.2% YoY followed by 21% YoY
owth retail. Corporate loan growth remained intact as banks has caution outlook
wards corporate exposure in tight economy scenario.
BANKBARODA
Narnolia Securities Ltd,
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BANKBARODA
Source: eastwind/Company
Please refer to the Disclaimers at the end of this Report.
BanksNII growth moderate at 7.8% YoY to
3057 cr despite of healthy loan growth astable CD ratio. This was due to mar
compression of 28 bps YoY led by lower lo
yield than cost of fund
Higher operating expenses led de-growth in
operating profit
Profitability increased due to lower provisio
Narnolia Securities Ltd,
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16/29
BANKBARODA
Source: Eastwind/Company
Please refer to the Disclaimers at the end of this Report.
Narnolia Securities Ltd,
arterly Result (Rs Cr) 3QFY14 2QFY14 3QFY13 % YoY Gr % QoQ Gr 3QFY14E
erest/discount on advances / bills 7061 6832 6485 8.9 3.3 7173
ome on investments 2175 2220 1898 14.6 -2.0 2350
erest on balances with Reserve Bank of India 245 281 403 -39.2 -12.8 397
hers 209 140 58 258.2 50.1 173
tal Interest Income 9691 9473 8845 9.6 2.3 10092
hers Income 932 974 841 10.9 -4.3 1102
tal Income 10623 10447 9686 9.7 1.7 11194
erest Expended 6634 6579 6004 10.5 0.8 6792
3057 2895 2841 7.6 5.6 3300
her Income 932 974 841 10.9 -4.3 1102
tal Income 3989 3869 3681 8.4 3.1 4402
ployee 1056 1030 798 32.3 2.5 1189
her Expenses 736 714 627 17.3 3.1 792
erating Expenses 1792 1744 1426 25.7 2.7 1981
P( Rs Cr) 2197 2125 2256 -2.6 3.4 2421
ovisions 762 861 1029 -26.0 -11.5 897
ceptional Items 16 16 12 25.0 0.0 0
T 1436 1264 1227 17.0 13.6 1524x 372 80 203 83.7 364.7 457
t Profit 1048 1168 1012 3.6 -10.3 1067
ance Sheet Date( Rs Cr)
uity Capital 423 423 412 2.5 0.0
serve & Surplus 35232 35127 30966 13.8 0.3
t Worth 35654 35549 31379 13.6 0.3
tal Deposits 503772 484931 414733 21.5 3.9
rrowings 29304 28558 27899 5.0 2.6
her liabilities and provisions 18638 13995 14552 28.1 33.2
tal Liability 587368 563033 488563 20.2 4.3
sh in hand 16742 15681 17147 -2.4 6.8
sh and balances with RBI 87599 79980 58295 50.3 9.5
tal Investment 115210 111840 101848 13.1 3.0
vances 352446 339855 299318 17.7 3.7
ed Assets 2562 2498 2399 6.8 2.6
hers Assets 12809 13179 9557 34.0 -2.8
tal Assets 587368 563033 488563 20.2 4.3
set Quality
PA( Rs Cr) 11926 10888 7321
A(Rs Cr) 6624 6316 3363
GNPA 3.4 3.2 2.4
NPA 1.9 1.9 1.1
PCR (without technical writeoff) 44.5 42.0 54.1
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BANKBARODA
Source: Eastwind/Company
Please refer to the Disclaimers at the end of this Report.
Narnolia Securities Ltd,
ncome Statement 2011 2012 2013 2014E 2015E
terest Income 21886 29674 35197 39065 45206
terest Expense 13084 19357 23881 26847 31084
II 8802 10317 11315 12218 14122
hange (%) 48.2 17.2 9.7 8.0 15.6
on Interest Income 2809 3422 3631 4182 4182
otal Income 11611 13739 14946 16400 18304
hange (%) 32.8 18.3 8.8 9.7 11.6
perating Expenses 4630 5159 5947 7194 8237
re Provision Profits 6982 8581 8999 9206 10067
hange (%) 41.5 22.9 4.9 2.3 9.4
rovisions 1331 2555 4168 3559 4043
BT 5650 6026 4831 5647 6024
AT 4242 5007 4481 4444 4819
hange (%) 38.7 18.0 -10.5 -0.8 8.4
alance Sheet
eposits( Rs Cr) 305439 384871 473883 521272 573399
hange (%) 27 26 23 10 10
f which CASA Dep 87589 103524 119981 135531 149084
hange (%) 23 18 16 13 10
orrowings( Rs Cr) 22308 23573 26579 33273 36600
vestments( Rs Cr) 71261 83209 121394 122000 134200
oans( Rs Cr) 228676 287377 328186 367568 404325
hange (%) 31 26 14 12 10
atio
vg. Yield on loans 8.0 8.7 8.4 8.6 9.3
vg. Yield on Investments 7.0 7.8 6.4 7.3 8
vg. Cost of Deposit 4.3 5.1 5.2 5.2 5.4
vg. Cost of Borrowings 5.5 6.7 5.4 5.5 5.5
aluation
ook Value 536 668 759 846 929
MP 963 794 652 513 513/BV 1.8 1.2 0.9 0.61 0.6
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J&K BANK
1329
15251578
15
-3
1M 1yr YTD
bsolute -4.6 2.1 2.1
el.to Nifty -1.8 -1.8 -1.8
Current 4QFY13 3QFY1
omoters 53.2 53.2 53.2
I 28.2 27.1 24.8
I 4.5 4.3 5.0hers 14.1 15.4 17.1
Financials Rs, Cr
2011 2012 2013 2014E 2015E
NII 1544 1838 2316 2724 3356Total Income 1908 2172 2800 3097 3728
PPP 1149 1370 1811 1952 2349
Net Profit 615 803 1055 1271 1535
EPS 105.7 126.9 165.7 217.6 262.2
532209
SE Symbol J&KBANK
Loan grew by 21.5% YoY led by loan growth in J&K state by 25% YoY and 19% Y
growth in outside state. Incremental loan came from corporate loan book which gre
by 23.4% YoY followed by agriculture (21.2% YoY) and SME (21% YoY). Corpora
loan constituted 83% in outside J&K sate, mostly infrastructure segment which h
high risk of restructure. Banksmanagement guided loan growth of 20% in FY
which means bank has to achieve 9% QoQ growth in loan as against quarterly r
rate of 5%.We lower our loan growth assumption from 20% to 15% in FY14E. Credeposits ratio improved by 611 bps YoY largely due to lower deposits growth
against loan.
Margin compression on account of higher cost of fund than deposits
SE Code
Moderate growth in deposits; CASA remained flat
Banksdeposits grew by 11% YoY in which 12% growth within state of J&K wh
deposits grew by 7% YoY in outside of state. CASA in absolute term reported grow
of 9% YoY while share to total deposits declined by 65 bps YoY 38.8%. Sav
deposits and current deposits registered growth of 5% and 10% YoY respectivewhereas term deposits reported growth of 12% YoY. Despite of lower growth
CASA bankscost of deposits remain stable at 6.6% while cost of fund increased
16 bps YoY.
Loan grew handsomely led by corporate loan growth
1496/995
kt Capital (Rs Cr)
MP
arget Price
We are disappointed w ith the growth p arameters of bank and acc ording
reduce our target pr ice from Rs.1578 to Rs.1525 due to lower g rowth
balance sheet espec ial ly within state of Jammu & Kashmir.Bank
p rof i tabi l iwas up by 11% due to reversal of provis ions tow ards NPA and inves tme
depreciat io n wh ile tax rate reduce to 28% versus 30% in last year. Bank
manag ement con tinued to guid e loan grow th of 20% in FY14 but we lower o
loan gro wth ass um ption to 15% for FY14. We value bank at Rs.1525/sha
which impl ies that 1.3 t imes of FY14E book value and 6 t imes of p r i
earn ings.
hange from Previous
ompany Update BUY
evious Target Price
arket Data
pside
Please refer to the Disclaimers at the end of this Report.
(Source: Company/Eastwind)
ock Performance
2wk Range H/L
&k Bank Vs Nifty
hare Holding Pattern-%
22.54lakh
fty 6153
Banksmargin compressed by 36 bps QoQ to 3.97% due to 41 bps QoQ declined
loan yield to 11.7% while deposits cost increased by 47 bps to 6.6%. Investme
yield improved by 55 bps to 7.7%. Overall cost of fund increased to 6.6% from 6.2
in previous quarter whereas yield on fund improved slightly from 9.8% to 9.9% whi
compressed margin by 36 bps sequentially.
verage Daily Volume
6419
"BUY"20th Feb, 2014
Narnolia Securities Ltd,
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8/21/2019 Stock Advisory for Today - Natural View on the Stock Dena Bank, Nestle India and Buy Vardhman Textiles
19/29
e are disappointed with the growth parameters of bank and accordingly reduce our
rget price from Rs.1578 to Rs.1525 due to lower growth in balance sheet especially
thin state of Jammu & Kashmir. Bankprofitability was up by 11% due to reversal of
ovisions towards NPA and investment depreciation while tax rate reduce to 28% versus
0% in last year. Banksmanagement continued to guide loan growth of 20% in FY14 but
e lower our loan growth assumption to 15% for FY14. We value bank at Rs.1525/share
hich implies that 1.3 times of FY14E book value and 6 times of price earnings.
J&K BANK
Source: Eastwind/Company
Please refer to the Disclaimers at the end of this Report.
able asset quality; PCR highest in industry
n asset quality front, banksGNPA increased by 2% QoQ in absolute basis while in
ercentage to gross advance, it slightly improved from 1.72% to 1.67% sequentially.
uring quarter, bank lowered its provisions by 1% which was the result of increased of
et NPA by 25% QoQ in absolute term. However in percentage to net advance, it stood0.22% as against 0.19% in previous quarter. Fresh slippage ratio was at 1.4 %(
nnualized) during quarter which was lower from previous quarter of 1.9%. Provisions
verage ratio remained high at 86.6% (without technical write off) which was best in
dustry in our coverage universe.
oderate growth in NII despite of healthy loan growth
anksNII grew by 8.8% to Rs.647 cr despite of healthy loan growth and improvement in
D ratio led by margin compression. Other income was also lower to Rs.87 cr versus
s.91 cr in last quarter and Rs.99 cr in previous quarter. With the lower support from
her income, total revenue grew by 7.2% YoY to Rs.734 cr.
gher operating expenses led flat growth in operating profit
perating expenses increased by 17% YoY in which employee cost and other operating
st increased by 15% and 22% YoY respectively. Consequently CI ratio increased by
40 bps to 40%. Moderate loan growth, lower other income and higher operating cost led
e provisioning growth of 1.4% YoY.
rofitability increased on account of reversal of provisions and lower tax rate
ofitability increased by 11% YoY to Rs.321 cr despite of flat operating profit growth was
ue to reversal of provisions towards NPA and depreciation. Banks provisions and
ntingencies declined by 121% YoY due to Rs. 13 cr reverse from NPA provision and
s.5 cr reverse from investment depreciation provision. Tax rate was also lower to 28%
rsus 31% in previous quarter and 30% in last quarter. We are disappointed with growth
arameters of profit and loss account. Banksbalance sheet within J&K state especially
deposits growth sense remained muted while credit growth grew handsomely. Overall
e found mixed growth trend which discourage us to reduce price target.
aluation & View
Narnolia Securities Ltd,
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20/29
J&K BANK
Source: eastwind/Company
Please refer to the Disclaimers at the end of this Report.
Moderate growth in NII despite of healloan growth
Higher operating expenses led flat growth
operating profit
Profitability increased on account of rever
of provisions and lower tax rate
Narnolia Securities Ltd,
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J&K BANK
Source: eastwind/Company
Please refer to the Disclaimers at the end of this Report.
Narnolia Securities Ltd,
aterly Result (Rs. Cr) 3QFY14 2QFY14 3QFY13 % YoY Gr % QoQ Gr 3QFY14E Variation(%)
erest/discount on advances / bills 1266 1244 1090 16.2 1.7 1322 -4.3
ome on investments 434 396 421 3.2 9.7 423 2.6
erest on balances with Reserve Bank of India 16 10 23 -31.4 60.2 13 16.6
ers 0 0 0 0
al Interest Income 1716 1650 1533 11.9 4.0 1759 -2.5
ers Income 87 99 91 -3.4 -12.1 96 -8.8
al Income 1803 1749 1624 11.0 3.1 1855 -2.8
erest Expended 1069 968 939 13.8 10.4 1022 4.6
647 682 594 8.8 -5.2 738 -12.3
er Income 87 99 91 -3.4 -12.1 96 -8.8
al Income 734 781 685 7.2 -6.0 834 -11.9
ployee 188 177 164 14.7 6.3 180 4.3
er Expenses 105 108 86 22.3 -2.5 120 -12.2
erating Expenses 293 285 250 17.3 2.9 300 -2.3
P( Rs Cr) 441 496 435 1.4 -11.2 533 -17.4
visions -5 56 22 -120.6 -108.3 48 -109.5
T 445 441 412 8.0 1.1 485 -8.2
124 138 123 0.9 -10.1 145 -14.7
t Profit 321 303 289 11.0 6.2 339 -5.4
ance Sheet Data ( Rs Cr)
t Worth 5797 5475 4898 18.3 5.9 5815 -0.3
posits 63157 61171 57075 10.7 3.2 65907 -4.2
rowings 1150 1346 801 43.6 -14.6 1579 -27.2
vances 43318 41121 35658 21.5 5.3 44081 -1.7
estment 22714 22316 22681 0.1 1.8 24200 -6.1
et Qaulity ( Rs Cr)
PA 725 709 582 24.7 2.3
PA 97 78 50 95.7 24.9
PA(%) 1.67 1.72 1.63
PA(%) 0.22 0.19 0.14
R(%) 87 89 91
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J&K BANK
Source: eastwind/Company
Please refer to the Disclaimers at the end of this Report.
Narnolia Securities Ltd,
L 2010 2011 2012 2013 2014E 2015Eerest/discount on advances / bills 2342 2630 3394 4318 5046 5703
ome on investments 705 1066 1403 1723 1713 1983
erest on balances with Reserve Bank of India 11 17 39 97 56 56
tal Interest Income 3057 3713 4836 6137 6816 7742hers Income 416 365 334 484 372 372
tal Income 3473 4078 5170 6621 7188 8114
erest on deposits 1841 2069 2902 3741 3987 4386
erest on RBI/Inter bank borrowings 83 46 41 26 101 139
hers 14 54 54 54 0 0
erest Expended 1938 2169 2997 3821 4092 4386
1119 1544 1838 2316 2724 3356
Growth(%) 37.9 19.1 26.0 17.6 23.2
her Income 416 365 334 484 372 372
tal Income 1536 1908 2172 2800 3097 3728
ployee 366 524 521 652 675 814
her Expenses 211 235 281 337 469 566
erating Expenses 577 759 802 989 1144 1379
P( Rs Cr) 958 1149 1370 1811 1952 2349
ovisions 446 534 567 756 137 156
t Profit 512 615 803 1055 1271 1535
t Profit Grwoth(%) 20.1 30.6 31.4 20.5 20.8
y Balance sheet data
posits 37237 44676 53347 64221 66789 73468
posits Growth(%) 20.0 19.4 20.4 4.0 10.0
rrowings 1100 1105 1241 1075 1363 1884
rrowings Growth(%) 0.4 12.3 -13.4 26.8 38.2
an 23057 26194 33077 39200 45080 51843
an Growth(%) 13.6 26.3 18.5 15.0 15.0
estments 13956 19696 21624 25741 24535 21099
estments Growth(%) 41.1 9.8 19.0 -4.7 -14.0
stwind Calculation
ld on Advances 10.2 10.0 10.3 11.0 11.2 11.0
ld on Investments 5.0 5.4 6.5 9.4 7.0 9.4
ld on Funds 7.7 7.5 8.3 8.9 9.8 10.6
st of deposits 4.9 4.6 5.4 5.8 6.1 6.0
st of Borrowings 8.8 9.1 7.7 7.4 7.4 7.4
st of fund 5.1 4.7 5.5 5.9 6.0 5.8
luation
ok Value 621 718 844 1003 1146 1412
BV 1.1 1.2 1.1 1.3 1.2 0.9
E 6.4 6.9 5.5 5.9 5.1 4.2
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Britannia Inds
1M 1yr YTD
solute 1.7 86.9 34.57
l. to Nifty 3.8 82.8 18.27
Current 2QFY14 1QFY14
omoters 50.75 50.8 50.85
20.11 19.11 19.48
8.77 9.59 9.89
hers 20.38 20.5 19.78
Financials3QFY14 2QFY14 (QoQ)-% 3QFY13 (YoY)-%
Revenue 1771.94 1755.27 0.9 1620.4 9.4
EBITDA 159.7 160.4 (0.4) 103.5 54.3
PAT 99.8 97.1 2.8 62 61.0
EBITDA Margin 9.0% 9.1% (10bps) 6.4% 260bp
PAT Margin 5.6% 5.5% 10bps 3.8% 180bp
side 16%
ange from Previous -
year forward P/BV
Rs, Cro
(Source: Company/Eastwi
Please refer to the Disclaimers at the end of this Report.
View and Valuation: Management also believes that volume growth will recov
gradually over the next few quarters, driven by higher brand spends and portfo
expansion. The company's margins are also likely to expand due to higher proportion
premium products and easing input costs. We have "BUY" on the stock with a targ
price of Rs 1065. At a CMP of Rs915, stock trades at 9.3x FY15E P/BV.
Healthy distribution reach:The Company is also taking initiative to increase its ru
distribution reach for benefitting the opportunity of increasing consumption of fo
products in rural markets. The company plans to increase its overall distributi
coverage by around 7-8% every year and rural coverage by around 10% every year.
"Decent quarter"
MP 915
rget Price 1065
Consis tency on wi tness ing b et ter num bers wi th Margin expans ion:esult update BUY
Once again, Britannia Industries revealed better earning performance than stre
expectation. Its consolidated revenue grew by 10.7% (YoY) led by 4-5% volume grow
during the quarter. Even, company has hiked the prices of some of its brands dur
the quarter. PAT grew by 61% (YoY) because of its effective cost rationalization effor
The management expects the biscuit business to grow by 10-11% in FY14E, where
the non-biscuit business to grow at a faster rate by 20-25% in FY14E. Over the last f
quarter, company has more focused on its product portfolio expansion. We expe
that new products expansion is likely to increase going forward. By judicious mix
cost rationalization and high value added biscuits, we expect its margin expansi
gradually over next couple of quarters.
No pressure on RM cost:High food price inflation remains a concern for the compan
Thankfully, Britannia doesnt import much raw materials from abroad and is thus n
affected by rupee fluctuations. Its strategy of focusing on premium brands has not o
allowed the company to hike prices but also improve its product mix as well.
arket Data
E Code 500825
E Symbol
wk Range H/L 973/478
10967
erage Daily Volume 248428
evious Target Price -
Pricing and Promotion: During the quarter, company initiated its price hike of some
its brand. The full benefit of these prices hikes will be seen in the March quarter.
strategy of focusing on premium brands has not only allowed the company to hike pric
but also improve its product mix as well.
BRITANNIA
are Holding Pattern-%
fty 6127
kt Capital (Rs Crores)
ock Performance
Margin Pickup:EBITDA Margin improved by 250 bps to 8.9%. The operating profit h
increased by 54% mainly due to decline in raw material cost by 420 bps to 54.7% a
purchase of stock in trade by 100 bps to 7.3% of adjusted net sales. The company aexpects to track margin expansion ahead by judicious mix of cost rationalization a
increasing supply chain efficiency.
"BUY"19th Feb' 14
Narnolia Securities Ltd,
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Britannia Inds.
les and Sales growth-%(YoY)
Entry into new categories like cereals w
also help drive growth. Consequently, t
company's earnings are expected to gr
20% over the next 2 years.
(Source: Company/Eastwind)
le of Land in Chennai and Banglore could result in Value unlocking: The company
ans to sell off its 8.60 acres industrial land in Chennai,which is located at Madrasiruvallur High (MTH) Road, Padi, Chennai. We expect the company to realize around
120 crores to Rs150 crores from this land sale when it happens. Further the company
s another 5.0 acres prime real estate land in Bangalore at old airport road which can
tch around Rs 350 crores.
volatility on key input (wheat, sugar, pa
oil) would prices directly impact
margin picture,
The company's margins are also likely
expand due to higher proportion
premium products and easing input cos
(Source: Company/Eastwind)
penses on Sales-%
Please refer to the Disclaimers at the end of this Report.
(Source: Company/Eastwind)
argin-%
Narnolia Securities Ltd,
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Please refer to the Disclaimers at the end of this Report.
Britannia Inds.
inancials
(Source: Company/Eastwi
(Source: Company/Eastwind)
Narnolia Securities Ltd,
s in Cr, FY10 FY11 FY12 FY13 FY14E FY15E
et Sales 3770.84 4589.73 5460.75 6135.91 6869.15 7693.45
Other Operating Income 63.53 19.65 24.62 49.5 68.69 76.93
otal income from operations (ne 3834.37 4609.38 5485.37 6185.41 6937.84 7770.38aw Materials Cost 2416.78 2714.38 3109.12 3350.51 3722.15 4196.01
urchases of stock-in-trade 0 328.91 437.68 518.51 520.34 543.93
WIP 0 -15.68 -14.03 -7.57 -76.32 -77.70
mployee Cost 157.9 177.49 211.15 226.75 270.58 310.82
dvertisement and Publicity 300.96 332.84 419.6 534.28 610.53 660.48
Other expenses 728.57 834.76 1010.98 1142.39 1255.75 1398.67
otal expenses 3604.21 4372.7 5174.5 5764.87 6303.03 7032.20
BITDA 230.16 236.68 310.87 420.54 634.81 738.19
epreciation 58.23 64.91 61.83 73.15 84.12 100.50
Other Income 0 59.01 59.14 52.24 27.75 38.85
BIT 171.93 230.78 308.18 399.63 578.44 676.54
nterest Cost 23.46 43.63 41.6 41.3 8.88 4.10rofit (+)/Loss (-) Before Taxes 148.47 187.15 266.58 358.33 569.57 672.45
rovision for Taxes 5.58 52.94 66.85 98.55 176.57 208.46
et Profit (+)/Loss (-) 142.89 134.21 199.73 259.78 393.00 463.99
ales 10.2% 21.7% 19.0% 12.4% 12.0% 12.0%
BITDA -16.8% 2.8% 31.3% 35.3% 51.0% 16.3%
AT -0.3% -6.1% 48.8% 30.1% 51.3% 18.1%
M Cost 63.0% 58.9% 56.7% 54.2% 53.7% 54.0%
d Spend 8.0% 7.3% 7.7% 8.7% 8.9% 8.6%mployee Cost 4.1% 3.9% 3.8% 3.7% 3.9% 4.0%
Other expenses 19.3% 18.2% 18.5% 18.6% 18.3% 18.2%
ax rate 3.8% 28.3% 25.1% 27.5% 31.0% 31.0%
BITDA 6.0% 5.1% 5.7% 6.8% 9.2% 9.5%
BIT 4.5% 5.0% 5.6% 6.5% 8.3% 8.7%
AT 3.7% 2.9% 3.6% 4.2% 5.7% 6.0%
MP 1599.5 382.6 459.9 504.7 915.0 915.0
o of Share 2.39 11.95 11.95 11.95258 11.97 11.97W 282.8 326.04 409.17 555.58 829.55 1174.50
PS 59.79 11.23 16.71 21.73 32.83 38.76
VPS 118.33 27.28 34.24 46.48 69.30 98.12
oE-% 50.5% 41.2% 48.8% 46.8% 47.4% 39.5%
ividend payout-% 126.4% 51.8% 45.1% 45.5% 30.3% 25.7%
/BV 13.5 14.0 13.4 10.9 13.2 9.3
/E 26.8 34.1 27.5 23.2 27.9 23.6
rowth-% (YoY)
aluation:
Margin-%
xpenses on Sales-%
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eClerx Services
1M 1yr YTD
solute 20.4 26.3 30.6
l. to Nifty 14.6 20.5 16.3
Current 2QFY14 1QFY14
omoters 52.95 52.88 53.13
26.21 22.37 21.38
11.27 14.72 14.80
hers 9.57 10.03 10.69
Financials3QFY14 2QFY14 (QoQ)-% 3QFY13 (YoY)-%
Revenue 219.5 214.6 2.3 170.8 28.5
EBITDA 88.81 92.8 (4.3) 66.8 32.9
PAT 62.33 67.91 (8.2) 49 27.2
EBITDA Margin 40.5% 43.2% (270bps) 39.1% 140bps
PAT Margin 28.4% 31.6% (320bps) 28.7% (30bps)
erage Daily Volume 18894
View and Valuation:We expect thatcompanysorganic revenue growth remains soft
near term, and company is very focussed on inorganic growth and expect to see grow
from cable business . Furthermore, stable billing rate will support to maintain marg
Companys high RoE and dividend payout ratio make attractive to invest on the sto
At a CMP of Rs 1212, stock trades at 12.5x FY15E earnings, we recommend BU
view on the stock with a target price of Rs 1410 (revised from Rs 1350) .
On demand environment, it indicated that there is no significant change and expe
to grow same pace of 10-15% in USD terms in the medium term. On margins,
indicated that it will continue to operate in the mid 30% going forward. It continues
look at inorganic opportunities.
Margin declined and expects to maintain stablity on demand:The OPM fell by 310 b
QoQ to 37% on the back of rise in Selling and Distribution costs due to increase in ons
headcount, bonus and commission and travel. Accordingly, PAT margin down by 270b
to 28.6%, sequentially. Management is very confident to maintain its PAT margin at 3
31% in near term.Good growth from Financial Services:The Cable business grew faster on the low ba
Financial Services also grew fast during the quarter. In the Cable business, there is lot
demand for its services. The digital and digital market has lot of demand and is anoth
key area.
Growth from Emerging revenue:It added 2 clients during the quarter. The Reven
growth from Top 5 grew by 8% YoY and Emerging grew by 35% QoQ respectively duri
the quarter. The Emerging revenue has continued to outpace growth in strategic clien
in line with firm strategy.
Approval on SEZ:The SEZ approval received for new floor in Airoli and planned go li
on April 2014 (600 Seats). It is discussing additional floors in Airoli to consolida
Mumbai facilities, subject to regulatory approval. During the quarter, the Final paymeis done for Agilyst acquisition (for the total acquisition cost ~ $21 million) during t
quarter.
fty 6048
arket Data
E Code 532755
E Symbol ECLERX
ock Performance
year forward P/E
Rs, Cro
(Source: Company/Eastwi
Please refer to the Disclaimers at the end of this Report.
are Holding Pattern-%
kt Capital (Rs Crores) 3701
wk Range H/L 1255/599
"Consistent Performer"
MP 1212
rget Price 1074
esult update Inline numbers , and expects to report better than NASSCOM guidance(FY14E);
eClerx Services witnessed inline set of growth with 2.3 %(QoQ) sales growth in I
term and 4.7%(QoQ) in USD term (4% in CC term) led by some preponement of volum
of work from Q4 into Q3 which has resulted into the slightly higher sequential growt
It expects some impact of this on Q4 growth. While, PAT decline by 7.2%, sequentia
ange from Previous 22%
Buy
evious Target Price 881
side -11%
"BUY"18th Feb' 14
Narnolia Securities Ltd,
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) The billing rates expected to be flat to slight uptick for the FY15E.
) Expect to see similar set of environment in FY 15E than FY14.
) Tax rate is expected to see at 23% mark in FY15E.
) It continues to look at inorganic opportunities.
) Expects to maintain 51% of payout ratio.
Please refer to the Disclaimers at the end of this Report.
) On margins, it indicated that it will continue to operate in the mid 30% (30-31%) going
rward.
ey Facts from Cnference Call
argin-%
(Source: Company/Eastwind)
mployee Metrics-%
Attrition decreased from 36% (2QFY14)
31.8% .
(Source: Company/Eastwind)
(Source: Company/Eastwind)
eClerx Services.
les (USD) and Sales growth-%(QoQ)
On $term, Sales growth was up by 4.
(QoQ) and 2.3% on INR term,
Narnolia Securities Ltd,
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Please refer to the Disclaimers at the end of this Report.
(Source: Company/Eastwi
nancials;
eClerx Services.
perating Metrics;
Narnolia Securities Ltd,
ales Mix-Geography 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY1
orth America 70% 70% 71% 75% 75% 74% 74% 74% 74%
urope 24% 23% 20% 19% 18% 21% 21% 21% 21%
oW 6% 7% 9% 6% 7% 5% 5% 5% 5%
ient Concentration 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY1
op-5 86% 87% 80% 79% 78% 78% 76% 75% 74%
ient addition 8 10 8 4 7 6 5 5 2
otal Clients 53 55 54 54 60 73 61 65 65
SO,days 52 29 30 41 31 33 35 41 33
lling Mix 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY1
TE 94% 95% 93% 93% 92% 91% 94% 95% 95%
EZ Revenue 67% 72% 62% 58% 59% 60% 60% 60% 60%
mployee Metrics 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY1
mployee Utilization 72% 72% 68% 68% 69% 69% 66% 65.0% 66%
ttrition - 30.9% 23.2% 30.2% 26.5% 27.3% 25.2% 36.4% 31.8%
otal Employee - 4405 5545 5760 5837 5954 6389 6543 6620
mployee Cost 39% 45.1% 42.4% 46.0% 45.0% 45.2% 44.1% 42.2% 43.6%
Rs, Cr FY11 FY12 FY13A FY14E FY15E
ales 366.12 495.19 660.58 852.54 1020.8
mpolyee Cost 147.65 203.87 295.28 370.00 449.18
Other expenses 59.87 79.28 108.47 130.44 158.24
BITDA 158.6 212.04 256.83 352.10 413.45
Dep 9.13 12.89 25.53 33.10 43.10
BIT 149.47 199.15 231.3 319.00 370.35
NT 0 0 0 0.00 0.00
Other Income 0 0 0 28.99 10.21
BT 149.47 199.15 231.3 347.98 380.56
ax 16.76 39.47 39.34 83.52 91.33
AT 132.71 159.68 191.96 264.47 289.22
Growth-%
ales-% 39.5% 35.3% 33.4% 29.1% 19.7%
AT-% 80.5% 20.3% 20.2% 37.8% 9.4%
Margin-%
BITDA 43.3% 42.8% 38.9% 41.3% 40.5%
BIT 40.8% 40.2% 35.0% 37.4% 36.3%
AT 36.2% 32.2% 29.1% 31.0% 28.3%
xpense on Sales-%
mployee cost-% 40.3% 41.2% 44.7% 43.4% 44.0%
Other expenses-% 16.4% 16.0% 16.4% 15.3% 15.5%
ax Rate% 11.2% 19.8% 17.0% 24.0% 24.0%Valuations
CMP 783.95 625 650 1212 1212
OS.Cr 2.9 2.958 2.9875 2.99 2.99
PS 45.76207 53.9824 64.2544 88.52 96.81
NW 238.32 342.92 438.32 615.20 816.84
VPS 82.17931 115.93 146.718 205.93 273.42
/E (x) 17.131 11.5778 10.116 13.69 12.52
/BV (x) 9.54 5.39 4.43 5.89 4.43
RoE-% 55.7% 46.6% 43.8% 43.0% 35.4%
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Narnolia Securities Ltd
402, 4th floor 7/ 1, Lord s Sinha Road Kolkata 700071, Ph
033-32011233 Toll Free no : 1-800-345-4000
email: [email protected],website : www.narnolia.com
Risk Disclosure & Disclaimer: This report/message is for the personal information of
the authorized recipient and does not construe to be any investment, legal or taxation
advice to you. Narnolia Securities Ltd. (Hereinafter referred as NSL) is not soliciting any
action based upon it. This report/message is not for public distribution and has been
furnished to you solely for your information and should not be reproduced or
redistributed to any other person in any from. The report/message is based upon publicly
available information, findings of our research wing East wind& information that we
consider reliable, but we do not represent that it is accurate or complete and we do not
provide any express or implied warranty of any kind, and also these are subject to changewithout 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.