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Advantage India

Market Overview & Trends

Posters Five Forces Frameworks

Strategies Adopted

Growth Drivers & Opportunities

Companies for Investment

Executive Summary

High budgetary allocation for

infrastructure In the Union Budget 2018-19, the government of India has given a massive

push to the to the infrastructure sectors by allocating Rs 5.97 Lakh Crore.

Rising Infrastructure deals The Infrastructure sectors in India witnessed 33 deals in FY2016-17 involving

US$3.49 billion as against US$2.98 billion raised across 31 deals in FY2015-16.

Increasing private sector

involvement Private sector is emerging as a key player across various infrastructure

segments, ranging from roads and communications to power and airports

Involvement in logistics In 2016, India jumped 19 places in World Bank's Logistics Performance Index

(LPI) 2016, to rank 35th amongst 160 countries.

Rising foreign direct

investment (FDI) in the sector

FDI received in Construction Development sector (townships, housing, built

up infrastructure and construction development projects) from April 2000 to

December 2017 stood at US$ 24.67 billion ; and in Construction

(Infrastructure) activities stood at US$ 12.36 billion.

Executive Summary

Advantage India

Cumulative FDI inflows in the

Construction Activities sector, which

includes infrastructure, reached US$

12.36 billion between April 2000 –

December 2017.

Cumulative FDI inflows in the

Construction Development sector,

which includes townships, built-up

infrastructure and construction-

development projects, reached US$

24.67 billion between April 2000 –

December 2017.

In January 2018, the National

Investment and Infrastructure Fund

(NIIF) partnered with UAE-based DP

World to create a platform that will

mobilise investments worth US$ 3

billion into ports, terminals,

transportation, and logistics businesses

in India.

Squared Capital, a global infrastructure investment company, plans to raise up to US$ 4 billion through

its second infrastructure fund, which will be invested in infrastructure assets in India and across the

globe.

Increasing FDI Inflows

Recent PPP projects in Infrastructure

Strong Momentum in Expansion of Roadways

Value of total roads and bridges infrastructure in

India is estimated to have expanded at a CAGR of

13.6 per cent over FY09–17 to US$ 19.2 billion

All villages in India will be connected through a road

network by 2019 under Pradhan Mantri Gram Sadak

Yojana (PMGSY).

In December 2017, the National Highway Authority

of India (NHAI) created the National Highways

Investment Promotion Cell (NHIPC) to attract foreign

and domestic investments towards highway projects

in India.

An outlay of Rs 6.92 trillion (US$ 107.64 billion) was approved by the Government of India in October

2017 to build a road network of 83,677 km over the next five years. The outlay includes the Bharatmala

projects worth Rs 5.35 trillion (83.25 billion).

In Union Budget 2018-19, Rs 71,000 crore (US$ 10.97 billion) was allocated for national highways while

Rs 19,000 crore (US$ 2.94 billion) was allocated to Pradhan Mantri Gram Sadak Yojana (PMGSY) for

development of roads in rural and backward areas of the country.

Highway network in the country is expected to cover 50,0000 km by 2019. The National Highway

Authority of India has created a new highway operations division to focus on all non-commercial

highway operational activities like electronic toll collection, road safety, incident management, and

other modern amenities.

Strong revenue growth for Indian Railways

Revenue growth has been strong over the years;

during FY07–17, revenues increased at a CAGR of

11 per cent to US$ 24.60 billion in FY17. The sundry

earnings of Indian Railways reached Rs 1,775.78

crore (US$ 276.21 million) till September 2017.

Revenues from the sector are estimated to reach

to US$ 44.5 billion by the end of FY20.

The Ministry of Railways is working on a plan to

earn Rs 15,000 crore (US$ 1.56 billion) over the

next 10-20 years through a rail display network

(RDN), enabling real-time information to

passengers.

In March 2017, Railways started a new segment of

revenue generation channel through auctioning for

advertising and branding contracts.

Indian Railways will require investment of Rs 35.3 trillion (US$ 545.26 billion) by 2032 for capacity

addition and modernisation. The capital expenditure in the sector is expected to be increased 92 per

cent annually.

Performance of the eight core Infrastructure Industries

The eight core infrastructure industries

include coal, crude oil, natural gas, refinery

products, fertilisers, steel, cement and

electricity.

The growth in the index was led by Steel (6.4

per cent), electricity (5.4 per cent), refinery

products (4.7 per cent), cement (4.4 per cent)

and natural gas (3.5 per cent).

The cumulative growth of the index between

April 2017-January 2018 was 4.3 per cent.

The overall index grew by 4.8 per cent during

FY 2016-17.

Growth in Infrastructure Activities

Infrastructure related activities witnessed strong

growth between April-September 2016.

The activities that registered the highest growth

include export cargo (10 per cent), highway

construction/widening (9.8 per cent), power

generation (6.6 per cent), import cargo (5.8 per

cent) and cargo at major ports (5.3 per cent).

As per Union Budget 2018-19, capacity

constraints in the railways network will be

eliminated through doubling of 18,000 km of

tracks, third and fourth lines and conversion of

5,000 km of tracks into broad gauge

In 2017, government announced plans to

facilitate higher investment in affordable

housing.

Budget allocation for road sector increased to

US$ 10.07 billion in 2017-18 from US$ 8.99

billion in 2016-17.

Rs 10,000 crore (US$ 1.54 billion) allocated in

Union Budget 2018-19 for creation and

augmentation of telecom infrastructure in the

country

Major Players these are placing important role in success story for Infrastructure

sector

Growth Drivers Infrastructure

IBREALEST DLF

Stocks DHFL

LARSEN &

TOUBRO

Recommendation- Buy NSE Code-DLF Buy Band Levels- 219 BSE Code- 532868

TGT- 245/300

SL - 200

Company performance

The Company’s development business primarily focuses on the development and sale of residential real

estate which include plotted developments, houses, villas and apartments of varying sizes and integrated

townships, with a focus on the high-end, luxury residential developments. The development business also

consists of certain commercial and shopping complexes, including those that are integral to the residential

developments they are attached to. Your Company has primarily categorized its development business into

two broad categories viz. Gurgaon DevCo and National DevCo. Both these geographical segments are

independently responsible and accountable for all activities across the product value chain from acquisition

of land, obtaining approvals, project planning and execution, to launch, sales & marketing and final delivery

of the developed property to the customers.

Technical Observation The Recent Infrastructure & Real estate sector is looking appropriate for buying purpose the stocks which are

taking reversal from the bottom are looking an good opportunity in which DLF is one of them. The stock

pattern is keeping importance on daily chart where both the trend line are joining on symmetrical points that

drawn an symmetric triangle which breakout has seen on 17 Aprl 18with closing confirmation above than 214.

In addition the various indicator have given buying sign for an stock, where the RSI( Relative strength indictor)

showing 54.11 levels on daily chart means that an opportunity to buy in neutral mode. With crucial support

level 200 from where it has bounce back third times for expecting bullish rally.

Financial Rational

In FY’17, DLF reported consolidated income from operations of ` 8,941 crore, a decrease of 15.63% from `

10,597 crore in FY’16. Net profit stood at ` 708 crore, an increase of 132.13% from ` 305 crore in the previous

year. The EPS for FY’17 stood at ` 3.89 as compared to ` 1.86 for FY’16. The cost of revenues including land,

plots, development rights, constructed properties and others stood at ` 3,466 crore as against ` 4,558 crore in

FY’16. Staff cost increased to ` 328 crore versus ` 315 crore. Depreciation, amortization and impairment charges

were at ` 572 crore against ` 766 crore in FY’16. Finance cost increased to ` 2,980 crore from ` 2,680 crore in

FY’16.

The latest ROE (Return on Company) is 1.72% over 5 yrs, that prescribe us company has need to focus on its

earnings for its equity that helps to catch focus of public.

The company is increasing its Debt to Equity ratio over a year on year like FY17 is 0.95x . as compare to 0.80

FY16.

The Current ratio of the company is 2.16x FY17 as compare to previous yr 2.44x that means company is

improving its strength over liabilities which is an obligation.

The price to Book value of the company is 1.54x in latest FY17. Which means company have attractive

valuation.

The ROCE( Return on capital employed ) of the company is 5.16% which is latest for FY17. That means company

is not effective utilizing its both equity & debt value for generating its sales.

The highest EPS (Earning per share) of company is 22.93 in the last five quarters that increasing profitability ;

company has created higher earnings for shares holders.

The DLF LTD has consider high Beta stock which is 1.87 with Sensex.

The Financial leverage of the company has improved 2.61x FY17 as compare to its previous FY16 2.47x that

means company is maintaining its debt that helps to reduce the interest cost which improve its bottom line.

The company has maintained its dividend payout ratio which is 50.13% FY17 as compare to previous yr

117.01% FY16 of face value Rs.1.

Recommendation- Buy NSE Code-LT Buy Band Levels- 1365 BSE Code- 500510

TGT- 1500/1700

SL - 1265

Company performance

The performance in the current year 2017-18 lays reliance on significant pick-up in Government led

expenditure on development of rural and urban infrastructure, fast tracking of some defence orders and

revival of domestic manufacturing sector. Select international markets continue to hold importance for

business prospects of Hydrocarbon and Infrastructure segment. The Company has identified certain key

thrust areas and strategies to focus on the upcoming opportunities. Strengthening execution and operational

efficiency: The Company is focused on bringing about cost & operational efficiencies for achieving profitable

growth in the competitive business environment. Business value unlocking: The Company reviews its

portfolio and looks for opportunities to divest from non-core businesses for unlocking value.

Technical Observation The Recent Infrastructure & Real estate sector is looking appropriate for buying purpose the stocks which are

taking reversal from the bottom are looking an good opportunity in which LT is one of them. The stock pattern

is keeping importance on daily chart where the breakout of descending channel line has seen on daily chart

with 1320 levels along with Cup & handle pattern is flashing on daily chart that fill levels of 1470 & more than

that. While the strong resistance of stock is 1400 which can be break in upcoming days apart from that stock

has made double bottom pattern on daily chart also supporting for buying side. where the RSI( Relative

strength indictor) showing 58.86 levels on daily chart means that an opportunity to buy in neutral mode. With

crucial support level 1265 from where it has bounce back third times for expecting bullish rally.

Financial Rational

L&T achieved a moderate revenue growth of 3.9% at ` 66301 crore as compared to ` 63813 crore in the

previous year. Infrastructure segment was particularly affected in a backdrop of tight liquidity consequent to

currency demonetization event in India. Revenue was also impacted due to delay in customer clearances,

availability of workfront, right of way issues and generally delayed milestone payments. Power and Heavy

Engineering segment saw a revenue growth of 8.0% and 13.5% respectively led by pick up in project execution.

Electrical & Automation business and Others business segment grew merely by 2.3% and 3.5% respectively due

to continuing low industrial demand. Profit after Tax (PAT), including exceptional items, for the year 2016-17

grew by 9.1% to ` 5454 crore as compared to ` 5000 crore in the previous year, contributed by increase in

operating profit, higher treasury income and lower interest expenses.



The company is increasing its Debt to Equity ratio over a year on year like FY17 is 1.34x. as compare to 1.68

FY16.

The Current ratio of the company is 1.36x FY17 as compare to previous yr 1.18x that means company is fighting

for maintaining an ideal industrial ratio & cash rich to run its operations.

The Price to earning ration of the company is 25.96 according to industry it is maintaining healthy ratio.


valuation.

The ROCE( Return on capital employed ) of the company is 12.04% which is latest for FY17. That means

company is effective utilizing its both equity & debt value for generating its sales.

The Earnings per Share (EPS) for the year 2016-17 at ` 58.49 grew by 8.9% over the previous year.

The Larsen & Toubro has consider high Beta stock which is 1.27 with Sensex.



The company has maintained its dividend payout ratio which is 33.21% FY17 as compare to previous yr 39.71%

FY16 of face value Rs.2.

Recommendation- Buy NSE Code-IBREALEST Buy Band Levels- 200 BSE Code- 532832

TGT- 220/250

SL - 185

Company performance

The performance in the current year 2017-18 lays reliance on significant pick-up in Government led

expenditure on development of rural and urban infrastructure, fast tracking of some defence orders and

revival of domestic manufacturing sector. Select international markets continue to hold importance for

business prospects of Hydrocarbon and Infrastructure segment. The Company has identified certain key

thrust areas and strategies to focus on the upcoming opportunities. Strengthening execution and operational

efficiency: The Company is focused on bringing about cost & operational efficiencies for achieving profitable

growth in the competitive business environment. Business value unlocking: The Company reviews its

portfolio and looks for opportunities to divest from non-core businesses for unlocking value.

Technical Observation The recent three days of the stock we have seen that 10% movement in bullish side. The stock pattern is

keeping importance on daily chart where the breakout of descending channel line has seen on daily chart

with 195 levels. While the strong resistance of stock is 200 which can be break in upcoming days apart from

that stock has made double bottom pattern on daily chart also supporting for buying side. where the RSI(

Relative strength indictor) showing 51.79 levels on daily chart means that an opportunity to buy in neutral

mode. With crucial support level 170 from where it has bounce back two times for expecting bullish rally.

Financial Rational

The current economic environment is extremely challenging competitive intensity remains high & is likely to

increase. However, remains committed to drive the business towards delivering consistent, competitive,

profitable and responsible growth. Profit After Tax(PAT) 397 Cr. in FY 17 against 296 Cr in FY16. Maintained

Credit rating of AA, highest among its real estate developers peers. Gross development value ongoing and

planned project is 34916 Cr at the end of the FY17.



The company is increasing its Debt to Equity ratio over a year on year like FY17 is 1.85x. as compare to 0.64

FY16.

The Current ratio of the company is 2.50x FY17 as compare to previous yr 2.68x that means company is fighting

for maintaining an ideal industrial ratio & cash rich to run its operations.

The Price to earning ration of the company is 23.22 according to industry it is maintaining healthy ratio which is

2nd in its industry for healthy parameters.


valuation.

The ROCE( Return on capital employed ) of the company is 7.68% which is latest for FY17. That means company

is effective utilizing its both equity & debt value for generating its sales.

The Earnings per Share (EPS) for the year 2016-17 at ` 8.30 grew by 29% over the previous year.

The IBREALEST has consider high Beta stock which is 1.69 with Sensex.

The Financial leverage of the company has increased 4.59x FY17 as compare to its previous FY16 2.18x that

means company is require working capital for running its operation in an effective manners.

The company is not maintaining any dividend payout ratio.

Recommendation- Buy NSE Code-DHFL Buy Band Levels- 594 BSE Code- 511072

TGT- 650/700

SL - 564

Company performance

The Company continues to develop bespoke products that cater to all segments with a focus on the lower

and middle income (LMI) segment in various geographical territories of India primarily in Tier II and Tier III

cities and towns. Moreover, Company has recently created separate business verticals for housing loans and

non-housing loans to allow each vertical to focus on its core business and use its expertise in underwriting

loans. The high level of customer service, business ethics, and values in dealing with customers and the

corporate governance principles have significantly contributed towards making Company a leading financial

services provider. Focus on affordable housing with more reasonable pricing. In project lending, focus on

local and mid-size developers and sole lending to ensure these projects would not face cash crunch during

construction phase. Exposure to be restricted to projects which have started construction and launched sales

process.

Technical Observation Recently stock has up by 10% in three days due to the formation of Double bottom has seen on daily chart .

The stock pattern is keeping importance on daily chart where both the trend line are joining on symmetrical

points that drawn an symmetric triangle which breakout has seen on 8 Aprl 18with closing confirmation above

than 520. In addition the various indicator have given buying sign for an stock, where the RSI( Relative

strength indictor) showing 67 levels on daily chart means that an opportunity to buy. With crucial support

level 200 from where it has bounce back third times for expecting bullish rally.

Financial Rational

In the financial year ended March 31, 2017, the Company’s profits increased every sequential quarter, due to

focus on high quality under writing standards of loan portfolio and prudent resource management. The Assets

Under Management grew steadily retaining a strong asset quality. Following is the Company’s performance

snapshot during the financial year 2016-17: Assets Under Management increased by 20% to ` 83,559.92 crore

Total Revenue grew by 21.33% to ` 8,857.23 crore Profit before tax and exceptional item increased by 27.24%

to ` 1402.39 crore Gross NPA stood at 0.94% and Net NPA stood at 0.58%, substantially lower than industry

benchmarks Net worth increased by 59.37% to ` 7,995.80 crore Earnings per share (of ` 10 per share) increased

by 283.07% to ` 95.76 Capital Adequacy Ratio (CAR) as on March 31, 2017 was at 19.12%.



The company is increasing its Debt to Equity ratio over a year on year like FY17 is 8.67x.as compare to 8.37x

FY16.

The Current ratio of the company is 1.31x FY17 as compare to previous yr 0.42x that means company is

improving its strength over liabilities which is an obligation.


valuation.

The ROCE( Return on capital employed ) of the company is 12.28% which is latest for FY17. That means

company is not effective utilizing its both equity & debt value for generating its sales.

The highest EPS (Earning per share) of company is 92.29x in FY17 as compare to 23.36x in FY16; company has

created higher earnings for shares holders.

The DHFL has consider high Beta stock which is 1.73 with Sensex.



The company has maintained its dividend payout ratio which is 4.32% FY17 as compare to previous yr 32.01%

FY16 of face value Rs.10.

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