public sector banks result preview 3qfy14e in india equity analytics today | narnolia securities...

7/27/2019 Public Sector Banks Result Preview 3QFY14E in India Equity Analytics Today | Narnolia Securities Limited

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Larsen & Toubro Ltd: "On Track of Revival………" "NEUTRAL" 24th Jan 2014

As per the management, the quarterly margins differ for every quarter as the project completion cycle is different and hence it is difficult t

capture the EBITDA movement every quarter. Though we agree with the management’s comment, we still believe that there would be som

amount of pressure on the margins on a yearly basis due to risks related to competition, inflation, adverse mix and a slowdown. As regards th

results we are of the opinion that, despite the gloomy scenario the results have been good. Consistent order inflow is a major positive facto

We expect the sector to witness revival in coming quarters, whereas we see a near term earnings growth muted and look for a better entr

point. Currently we have a neutral view on a stock ......................... ( Page :2)

"HOLD" 24th Jan 2014

We believe that during the election period, the power supply could remain better (with political interest), consequently lowering the UP

demand. Hence, it could take a couple of quarters to witness a reversal in the trend, if any. On this backdrop, we have lowered our revenue

estimates by 9% in FY2014 and 13% in FY2015. Consequently, we have revised down our EPS estimates by 21% in FY2014 and 16% in FY201

......................................................... ( Page : 3-5)

24th Jan, 201

Edition : 191

IEA-Equity

Strategy

Public Sector Banks Result Preview 3QFY14E 24th Jan 2014

Ultratech Cement : Moderated but Not outdated "HOLD" 24th Jan 2014

Ultratech's Q3FY14 was in line to our estimates.The white cement Volume Growth and capacity expansions are positive in terms o

fundamentals. We see the uptick of EBIDTA margin and volume growth for FY15. Currently the stock valuing at 3x in 1yr forward P/B, and we cu

our stance for FY15 to 2.7x. Hence we maintain our positive stance on Ultratech Cement with Target price of Rs.1846/- . As from the curre

level the upside is very limited(7%), we recommend “Hold” Ultratech and Buy at Dips to get handsome retur

............................................................ Pa e : 9-11

Dabur India Ltd : "Confident tone for growth" "BUY" 24th Jan 2014

Dabur delivered inline set of numbers;During 3QFY14, Dabur reported 16.7% (YoY) sales growth led by 9% overall volume growth because

discretionary demand ramp up in rural area and price hikes by around 4-5% . PAT grew by 16%(YoY).Post earning, company’s managemen

stated that they would focus on pursuing aggressive and profitable growth strategy with brand building by judicious mix of price hike an

product launch in near future. ............................................( Page :6-8)

V-Guard: "Lower FY14 Sales growth guidence to 11-12%"

Zensar Tech : "Better growth trajectory ahead" "BUY" 23th Jan 2014

Earning numbers below expectation, management confident for growth ahead:For 3QFY14, Zensar Tech reported lower growth tha

expectations, Sales declined by 1%(QoQ) because of seasonal and furloughs impacts.Considering healthy order pipeline and its earning visibilit

in near future, we maintain “BUY” view on the stock with a target price of Rs 440. At a CMP of Rs 386, stock trades at 5.6x FY15E EP

................................................................... ( Page : 19-21)

HDFC LTD : "NEUTRAL" 23th Jan 2014

HDFC profit growth of 12.1% YoY was inline with street expectation. NBFC reported stable asset quality on sequential basis as well as registere

healthy loan growth. HDFC ltd has well above CAR which would support growth going forward. At the current price of Rs.840, stock is trading a

4.3 tines one year forward book and 26 times of FY14E’s earnings. We value HDFC at Rs.875/ share which is 4.5 times of FY14E’s book and P/

multiple of 27 times of full year EPS. .......................................................... ( Page : 16-18)

Most of PSBs are trading at lower range of valuation multiple owing to absence of core earnings, operating leverage, deteriorating asset qualit

and higher amount of restructure assets that are in pipeline. High inflation would be risk for the economy going forward. Any rise in inflatio

would result of rise in interest rate by RBI in its third quarter monetary policy review on 28th Jan.2014 which would be negative for bankin

industry. Most of banking stocks are expected to report moderate revenue and profit growth owing to multiple headwinds. In PSBs universe w

like Canara Bank, UCO Bank, Union Bank. .............................................. ( Page : 12-15)

Narnolia Securities Ltd,

India Equity Analytics aily Fundamental Report on Indian Equities



V- Larsen & Toubro Ltd.

MP 1033

rget Price NA

evious NA

side NA

ange from NA

E Code 500510

E Symbol LT

wk Range 861/114

kt Capital 80,145

erage Daily

fty 6,346

1M 1yr YTD

solute (2.7) 0.8 13.5

l. to Nifty 1.1 4.6 11.6

3QFY14 2QFY14 1QFY14

omoters 0.0 0.0 0.0

17.9 15.3 16.1

36.6 37.4 36.9hers 45.5 47.4 47.2

Financials Rs, Crore

3QFY14 2QFY14 (QoQ)-% 3QFY13 (YoY)-%

Revenue 14387.5 12308.4 16.9% 12869.3 11.8%

EBITDA 1674.8 1185.7 41.3% 1258.3 33.1%

PAT 1240.7 864.6 43.5% 1013.2 22.4%

EBITDA Margin 11.6% 9.6% 200 bps 9.8% 180 bp

PAT Margin 8.4% 6.8% 160 bps 7.5% 90 bp

(Standalo

Please refer to the Disclaimers at the end of this Report.

(Source: Company/ Eastwind Research)

ice Performance V/s NIFTY

Outlook

We have a Neutral on L&T as we think it will be difficult rate L&T from today’s level with

earnings upgrade and/or uncertanity across sector. Downside risks are project delays, wea

margins and stronger Rupee. Upside risks are higher than expected order inflow and hig

operating margins a head.

Contribution margin expansion came as a surprise and in our recent meeting the management

attributed it to quarterly skews rather than improvement in project-level profitability. We bu

slightly higher margins for FY2014E at 10.9% (versus 10% earlier). However, we believe marg

face downward trajectory over FY2014-16E (build EBITDA margin of 10.5% in FY2015E and 10

in FY2016E) due to risks related to competition, inflation, adverse mix and a slowdown. L

maintained its revenue growth guidance of 15% yoy for FY2014 (9% posted in 9MFY14). We bu

lower revenue growth of 12% in FY2014 implying 16% growth requirement in 4QFY14. L&T a

maintained its inflow guidance of 15-20% in FY2014 (strong 23% growth in 9MFY14; but is a

wary about maintaining this traction on delayed decision making by customers).

are Holding Pattern-%

"On Track of Revival………"

95,662

Neutralesult update

arket Data

ock Performance-%

Construction & engineering major, L&T posted a surprisingly set of numbers for the qua

ended Dec, 13. The company's net sales grew by a mere 11.8% on a yearly basis to

14387.5crore. The company recurring bottom line witnessing a upstik of 12.15% , and cam

at Rs. 1136.3 crore. the results have been adjusted for the quarter as it transfer

hydrocarbon business to its subsidiary L&T Hydrocarbon Engineering with effect from Apri

2013. Accordingly, the company restated suitably its earnings for the previous quarter end

September 2013 and numbers relating to previous periods. However, if we If we consider

exceptional gains on dilution of part stake in a subsidiary company, the overall PAT grew

22.1 % during the quarter. While the operational performance has been good, the compa

has witnessed good traction in its order book also. Order inflow for the quarter stood at

21722 crore showing a growth of 21% on Y-o-Y basis. The total order book as on Decem

31st 2013 stood at Rs 171184 crore showing an increase of 13 % on Y-o-Y basis. EBIT

margins for the Dec 2013 quarter expanded by 180 bps to 11.6% against 9.8% last ye

However, as per the management, the quarterly margins differ for every quarter as the proj

completion cycle is different and hence it is difficult to capture the EBITDA movement evquarter. Though we agree with the management’s comment, we still believe that there wo

be some amount of pressure on the margins on a yearly basis due to risks related

competition, inflation, adverse mix and a slowdown. As regards the results we are of

opinion that, despite the gloomy scenario the results have been good. Consistent order inf

is a major positive factor. We expect the sector to witness revival in coming quarters, wher

we see a near term earnin s rowth muted and look for a better entr oint. Currentl we

Why neutral…???

"Neutral"24th Jan' 14




- V-Guard Industries Ltd.

MP 450

rget Price 475evious 525

side 5%

ange from -11%

E Code 532953

E Symbol

1,374

59,460

fty 6,344

1M 1yr YTD

solute (4.5) (9.0) 5.0

l. to Nifty (5.6) (13.6) (6.7)


omoters 65.5 65.5 65.5

18.5 17.4 14.5

2.2 2.5 3.5

hers 13.8 14.5 16.4

Financials Rs, CroreConsolidated 3QFY14 2QFY14 (QoQ)-% 3QFY13 (YoY)-%

Revenue 352.9 334.0 5.7% 349.0 1.1%

EBITDA 29.1 27.1 7.7% 25.7 13.3%

PAT 17.5 14.5 -21.0% 15.4 14.2%

EBITDA Margin 8.1% 8.1% 0 bps 7.3% 80 bp

PAT Margin 4.9% 4.3% 60 bps 4.4% 50 bp

arket Data


For the quarter ended Dec 2013, V-Guard reported a top line of Rs. 352.9 crore, compared

Rs. 349.0 crore in 3QFY13, marking a marginal YoY growth of 1.1%. EBITDA margins for

quarter were significantly improved to 8.2% (up 89 bps YoY) due to lower ad spends. Interexpense for the quarter were up by 10.0% YoY to Rs. 5.4 crore and after giving eff

depreciation and taxes, the company’s PAT stood at Rs. 17.5 crore (up 14.2% YoY).

conference call, the management of V-Guard lowered their top-line guidance to 11-12% fr

the earlier 18-20% in FY2014. However, they expect to achieve EBITDA margin of around 8

for FY2014. We believe that during the election period, the power supply could remain bet

(with political interest), consequently lowering the UPS demand. Hence, it could take a cou

of quarters to witness a reversal in the trend, if any. On this backdrop, we have lowered

revenues estimates by 9% in FY2014 and 13% in FY2015. Consequently, we have revised do

our EPS estimates by 21% in FY2014 and 16% in FY2015.

Strong Balance Sheet

As expected, the company’s contribution to revenue has improved from its non south market a

compared to its incumbent southern market. All in all we observe this result as significan

below our estimates. Although company has reported increase in EBITDA margin in 3QFY14 by

bps, but it still below our full year expectaion of 9%. We believe that during the election perithe power supply could remain better (with political interest), consequently lowering the U

demand. Hence, it could take a couple of quarters to witness a reversal in the trend, if any.

this backdrop, we have lowered our revenues estimates by 9% in FY2014 and 13% in FY20

Consequently, we have revised down our EPS estimates by 21% in FY2014 and 16% in FY20

However we belive company strong balance sheet, a wide range of products and a strong h

over its existing market, all of which give it an edge over its rivals. At the current CMP of

457, the stock is trading at a PE of 18.3x and 13.8x of FY14E and FY15E. The company can p

RoE of 23.2% and 24.1% & EPS of Rs. 25.2 and Rs. 33.2 FY14E and FY15E. We belive that

current level is not attractive to make position in this stock, one should wait further correct

from current level, however one who already own the stock can hold it with the revised p

target of Rs. 475.

"Lower FY14 Sales growth guidence to 11-12%……..."

Holdesult update

kt Capital (Rs Crores)

wk Range H/L 390/570

•Total Debt has been reduced significantly as on 3Q FY14 to Rs. 117.7 crore, compared to Rs.

crore as on 3Q FY13. Working capital loan reduced to Rs. 77.1 vrore from 134.0 crore a

whereas term loan icreased to Rs. 40.6 crore from 22.9 crore.

• Working capital cycle on a TTM basis improves by 9 days to 76 days. Mainly Led by 15 da

reduction in debtors. Management has also guided for improvement in net working capital cy

by 5- 10 days every year going forward. This will further improve its ROCE and ROE go

forward.

• Strong cash generation in 9M. FY14 Cash from operations at Rs. 90 crore in 9M FY14

com ared to Rs. 14.5 crore for full ear FY13

Outlook

yr Forward P/B

V-GUARD

Standa


(Source: Company/ Eastwind Research)

erage Daily Volume

ock Performance-%

"Hold"24th Jan' 14




V-Guard Industries Ltd.

onfrence Call Highlights


Non South market sales in Q3 FY'14 stood about 30% of total sales and grew by about 30% as

ell. The South market which constitutes about 70% degrew by about 8-9% in value terms and by

out 13-15% in volume terms. Overall, thus company ended up with flattish kind of sales growth

Q3 FY'14. For Q4 FY'14, management expects about 10-12% sales growth.

n Q3 FY'14, the company was able to improve its gross margin by 100 bps which was largely due

lower Advertisement expenditure YoY. Going forward Ad expenditure will be around 3.5-4% of

es.

The Electronics segment, which constitute stabilizers and UPS, which contribute about 24% of

tal sales in Q3 FY'14, degrew by 18% YoY, Electrical which includes pumps, house wiring cable,

ectric water heater, fans and others, and contribute about 72% of total sales, grew by about 8%,

th electric water heater and house wiring cables delivered a healthy growth, while the solar

ter heater which constitute about 4% of total sales, grew by about 30%. The premium variant of

e electric water heater segment launched in FY'14 continues to get good response.

As per the management, better power supply in States of Tamil Nadu and Andhra Pradesh

gether with lower sale of consumer durable products due to weak consumer sentiment, affected

e growth of the company. Also due to sand mining ban in many parts of the country,

nstruction activities were also slow leading to lower sale of wire business.

As per the management, the power situation in South India should be temporary phenomena

gely due to elections. Also extended monsoon also delayed some of the product sale and

ected the demand.

Total market of electric wires will be about Rs 7500 crore of which company has share of about

%. By year end the company should be able to report about Rs 450-475 crore of electric wires.

lycab has highest market share of 20% followed by Finolex cables of about 12%.

Raw material prices of cooper and other metals were steady and more on downward side.

anagement expects raw material prices to slightly inch up from March'14 onwards which is

neral seasonally trend.

The new products introduced last year namely Induction Cooker, Mixer Grinder and Switchgears

d well and are expected to post revenue of about Rs 50 crore totally in FY'14.

Lower tax rate during the quarter was as a result of a 200% weightage deduction on R&D and on

pital expenditure which the company received the approval from this year and going forward

o the deduction will continue.

Overall, management expects about 11-12% growth in FY'14 with Ebidta margin of about 8.5-9%.

e management lowered its earlier guidance of about 20% growth in FY'14 largely due to current

onomic and environmental challenges.





ey financials

V-Guard Industries Ltd.

urce: Company/ Eastwind Research)


ARTICULAR 2010A 2011A 2012A 2013A 2014E 2015E

erformance

evenue 454 727 994 1360 1510 1736

ther Income 1 2 2 4 5 6

otal Income 456 728 996 1364 1515 1742

BITDA 50 73 94 110 131 156

BIT 43 65 84 99 119 141

EPRICIATION 7 8 10 11 12 15

NTREST COST 5 11 17 20 21 15

BT 40 55 69 82 102 132

AX 14 16 18 19 27 33

xtra Oridiniary Items NA NA NA NA NA NA

eported PAT 25 39 51 63 75 99

ividend (INR) 10 12 12 12 12 12PS 3.5 4.1 4.1 4.1 4.1 4.0

PS 8.5 13.1 17.0 21.1 25.2 33.2

eild %

BITDA % 11.1% 10.1% 9.4% 8.1% 8.7% 9.0%

PM % 5.6% 5.4% 5.1% 4.6% 5.0% 5.7%

arning Yeild % 9.6% 7.8% 9.2% 4.8% 5.5% 7.2%

ividend Yeild % 4.0% 2.4% 2.2% 0.9% 0.9% 0.9%

OE % 18.0% 22.7% 24.1% 24.1% 23.2% 24.1%

OCE% 13.8% 16.2% 21.2% 19.4% 21.4% 21.7%

osition

et Worth 141 172 211 261 324 412

otal Debt 81 139 109 165 125 115

apital Employed 222 311 320 427 449 527

o of Share (Adj) 3 3 3 3 3 3

MP 89 168 186 435 460 460

aluation

ook Value 47.4 57.6 70.6 87.6 108.7 137.9

/B 1.9 2.9 2.6 5.0 4.2 3.3

t/Coverage 8.4 5.7 4.9 4.9 5.6 9.4

/E 10.4 12.9 10.9 20.7 18.3 13.8



Dabur India Ltd.

BUY

1M 1yr YTD

bsolute 3.3% 25% 24.0%

l. to Nifty 2.20% 20% 12.8%

Current 2QFY14 1QFY14

omoters 68.64 68.66 68.66

19.94 20.71 20.4

I 4.47 3.96 3.97

hers 6.95 6.7 7

Financials

3QFY14 2QFY14 (QoQ)-% 3QFY13 (YoY)-%

Revenue 1904.28 1748.81 8.9 1635.98 16.4

EBITDA 297.59 329.24 (9.6) 274.51 8.4

PAT 243.5 249.83 (2.5) 209.87 16.0

EBITDA Margin 15.6% 18.8% 220bps 16.8% 120bp

PAT Margin 12.8% 14.3% 150bps 12.8% -

Margin ramp down: During the quarter, EBITDA margin declined by 120 bps to 15.

due to rise in A&P cost by 130 bps to 15.72% and employee cost by 60 bps to 8.58%

adjusted net sales. PAT margin flat at 12.8% on YoY basis.

Volume growth in single digit: Because better discretionary demand environmentrural area and judicious pricing strategy overall volume growth increased by 9% (YoY)

3QFY14 with 4-5% (YoY) pricing growth.For FY15E, management stated to hike

product prices by 4-5% to maintain its margin.

View and Valuation: Despite signs of weak discretionary demand and increas

competitive intensity in the market, Dabur India has reported comparatively bet

volume growth in its key categories. On all operating parameters, its performance w

satisfactory. Still, management is cautious for margin ramp up due to high inflation

India.

The strong momentum in relatively low competition in the core categories w

diversified portfolio, Dabur gets a better place than other peers and its ru

distribution expansion should boost sales volumes. We retain our “Buy” view on t

stock with a target price of Rs206. At a CMP of Rs 162 stock trades at 8.5x FY15E P/B

Recent updates: (a)Introduced a host of new products and variants, including the ne

Fem Fairness Naturals facial bleach range and Vatika Hibiscus hair care range.(b)Dab

Tunisie, a wholly owned subsidiary, incorporated in Tunisia on Dec. 2013 with the obje

of buying, selling and manufacturing consumer care products, having meagre asset ba

at present.

Growth on all Categories: The Health Supplements business was a key driver of grow

during the quarter, reporting a strong 19.5% surge. The Air Freshener business und

the brand Odonil, continued to surge ahead with an over 27% growth. The Foo

business also reported a robust near 18% growth. The Shampoo business grew by 25

The Toothpaste business grew by over 14% while the Skin Care category reported

over 13% growth.

During 3QFY14, Dabur reported 16.7% (YoY) sales growth led by 9% overall volum

growth because of discretionary demand ramp up in rural area and price hikes

around 4-5% . PAT grew by 16%(YoY).

Dabur delivered inline set of numbers ;

The International Business grew by 26%. Organic business grew by 29% with 14

constant currency growth rate led by strong performance in GCC, Egypt and Niger

The GCC business reported a 21% growth, while sales in Egypt and Nigeria both gre

by 16%. Domestic FMCG business grew by 14%.

Post earning, company’s management stated that they would focus on pursui

aggressive and profitable growth strategy with brand building by judicious mix of pr

hike and product launch in near future.

evious Target Price -

pside 27%

ange from Previous -

"Confident tone for growth"

esult update

MP 162

rget Price 206


SE Symbol DABUR

28197

erage Daily Volume 908049

wk Range H/L 185/125

kt Capital (Rs Cr)

arket Data

E Code 500096

BV(x)-1year forward

Rs, Cro

(Source: Company/Eastwi


ock Performance

fty 6346

"BUY"24th Jan' 14




argin-%

(Source: Company/Eastwind)


penses on sales-%


RM cost (on sales) decreased from 37.6% 36.3% and AD spend down from 14.4% t

12%, historicaly low ad spend.

EBITDA margin declined by 120 bps to 15.6

due to rise in A&P cost by 130 bps to 15.72

and employee cost by 60 bps to 8.58% of

adjusted net sales.

The company has been looking to maintain

12% volume growth in the near term.



Dabur India Ltd.

les and Sales Growth(%) -

onsolidated Volume Growth-%




nancials

The company may hike prices by 4-5% in FY15E and focus will be on pursuing an

gressive and profitable growth strategy.

Ad expenses to be within the range of 13-15 percent at the consolidated level for15E.

Expanding rural distribution networks as a part of project double and new products as

ir serums and professional hair care products were launched.

There has been a softening of demand generally speaking in urban India. Overall much

gher level of growth is coming from rural as compared to urban.



ey facts from Management Commentary:

Dabur India Ltd.


s in Cr, FY10 FY11 FY12 FY13E FY14E FY15E

ales 3391.4 4104.5 5305.4 6178.9 7070.30 8203.32

M Cost 811.0 1806.8 2278.8 2422.1 2757.42 3240.31

urchases of stock-in-trade 750 252 509 599 742.38 820.33

WIP (10) (122) (103) (2) (71) (41)

mployee Cost 285 309 387 471 608.05 738.30

d Spend 493.5 534.6 659.5 837.0 996.91 1132.06

ther expenses 438.4 524.1 683.1 819.10 908.53 1066.43

otal expenses 2767.3 3304.8 4415.2 5146.6 5942.59 6956.42

BITDA 624.1 799.7 890.2 1032.2 1127.71 1246.90

epreciation and Amortisation 50.0 95.2 103.4 112.7 111.09 133.15

ther Income 39.4 32.2 57.4 92.0 141.41 164.07

BIT 613.5 736.6 844.2 1011.5 1158.03 1277.82

nterest 12.3 29.1 53.8 58.9 54.69 51.95

BT 601.2 707.5 790.4 952.6 1103.34 1225.87

ax Exp 100.5 139.0 146.4 182.62 212.39 232.91

AT 500.7 568.5 644.0 770.0 890.95 992.95

rowth-% (YoY)

olume 9.5% 10.5%

ricing 4.5% 5.0%

ales 20.9% 21.0% 29.3% 16.5% 14.4% 16.0%

BITDA 33.9% 28.1% 11.3% 16.0% 9.3% 10.6%

AT 28.1% 13.5% 13.3% 19.6% 15.7% 11.4%

xpenses on Sales-%

M Cost 23.9% 44.0% 43.0% 39.2% 39.0% 39.5%

d Spend 14.6% 13.0% 12.4% 13.5% 14.1% 13.8%

mployee Cost 8.4% 7.5% 7.3% 7.6% 8.6% 9.0%

ther expenses 12.9% 12.8% 12.9% 13.3% 12.9% 13.0%

ax rate 16.7% 19.6% 18.5% 19.2% 19.3% 19.0%

Margin-%

BITDA 18.4% 19.5% 16.8% 16.7% 16.0% 15.2%

BIT 18.1% 17.9% 15.9% 16.4% 16.4% 15.6%

AT 14.8% 13.9% 12.1% 12.5% 12.6% 12.1%aluation:

MP 158.6 96.1 103.2 131.0 162.0 162.0

o of Share 86.8 174.1 174.2 174.3 174.3 174.3

W 935.4 1391.1 1716.9 2124.4 2689.1 3335.4

PS 5.8 3.3 3.7 4.4 5.1 5.7

VPS 10.8 8.0 9.9 12.2 15.4 19.1

oE-% 53.5% 40.9% 37.5% 36.2% 33.1% 29.8%

/BV 14.7 12.0 10.5 10.7 10.5 8.5

/E 27.5 29.4 27.9 29.7 31.7 28.4



Ultratech Cement.

1719

1846

18467%

0%

532538

46885

18754

6346

1M 1yr YTD

solute -7.3 -14.8 -10.2

l. to Nifty -9.0 -19.9 -14.3


omoters 62.0 62.0 62.0

21.0 20.7 20.7

4.6 4.8 4.6

hers 12.4 12.6 12.7

Financials : Q3FY14 Y-o-Y % Q-o-Q % Q3FY13 Q2FY1

Net Revenue 4818 -1.3 6.5 4883 452

EBITDA 796 -24.2 17.1 1050 67Depriciation 264 10.7 0.0 239 26

Interest Cost 90 73.6 1.9 52 8

Tax 139 -45.2 30.0 254 10

PAT 370 -38.5 41.6 601 26(In Cr

Moderated but Not outdated

arket Data

erage Daily Volume (Nos.)

E Code

ULTRACEMCOE Symbol

wk Range H/L


1405/2067

Source - Comapany/EastWind Research

Expansion Updates :In Jul’13 it commissioned a 3.3m-ton clinker plant in Karnataka

adding to its earlier commissioning (Mar’13) of similar capacity in Chhattisgarh. In Oct’1

it commissioned a 1.6m-ton grinding unit in Jharsuguda, Orissa, adding to its earlie

commissioning (Mar’13) of similar capacity in Hotgi, Maharashtra. The balance fiv

associated grinding units will be set up in 4QFY14 and FY15.

Acquisition. During 2Q , Ultratech acquired JPA’s 4.8m-ton unit in Gujarat, lifting it

capacity to 59m tons, while ongoing expansions would further that to 70m tons b

Mar’15. The transaction, at an EV of 38bn (US$125 a ton) is expected to be complete

only by 1QFY15 given multiple approvals required.

Depreciation rose 11% yoy due to the commissioning of clinker capacity in Chhattisgarh

Karnataka, and grinding units in Maharashtra, Gujarat and Orissa. Other income too fe

18% yoy, leading to a further crunch in PAT.

Investment concerns :Key drivers of long-term growth would continue to be housing an

infrastructure development.Revival in cement demand would be key catalyst for th

stock performance.cement prices and demand are expected to pick-up post election.Hig

operating leverage, especially post commissioning of new capacities in 1QFY14, coul

result in volatile earnings.Cement Makers may rise cement prices due to increase i

variable input costs.

MP

rget Price

evious Target Price

esult Update Hold


ock Performance-%


yr Forward P/B

fty

Lower Realization and higher Operating Cost Impact PAT: UltraTech’s 3QFY14 Sale

EBITDA & PAT declined 1%, 24% and 39% YoY respectively to Rs4818Cr, Rs796Cr an

Rs370Cr respectively. On QoQ basis, Sales, EBITDA & PAT rose 7%, 17% and 40%. Whil

EBITDA margin contracted ~499 bps YoY it expanded 149 bps QoQ to 16.5%. EBITDA peMT at Rs788 down 24% YoY and up 10% QoQ.

At Rs.788 /Ton Average Realization Down 1% YOY : The benefit of lower coal prices (ne

of rupee devaluation) and optimization of the fuel mix led to an 6.5% yoy dip in power &

fuel costs a ton. A 23.5% yoy drop in EBITDA and a 75.4% yoy rise in interest led to

37.8% yoy fall in PAT.

Despite of Weak Realization Ultratech has delivered QOQ margin Expansion :Despit

24%,7%,8% YOY increase in Rawmaterial cost, freight cost and other expense

respectively, Ultratech’s variable input cost increased 6%YOY and -2%QOQ . Throug

better cost efficiency which has been one of the key factors resulting in UltraTech

results outperforming its large cap peer group over the last 4‐5 quarters. Thus We believ

UItraTech will deliver QoQ margin expansion despite marginally weak realization .

side

ange from Previous

"Hold"24th Jan' 14


0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

A u g - 0 4

M a y - 0 5

F e b - 0 6

N o v - 0 6

A u g - 0 7

M a y - 0 8

F e b - 0 9

N o v - 0 9

A u g - 1 0

M a y - 1 1

F e b - 1 2

N o v - 1 2

A u g - 1 3

Price 1x

2x 3x

4x 5x

6x 7x

8x



UTLOOK :

ew & Valuation :

FY11 FY12 FY13 FY14E

13798 19232 21319 20797

154 371 304 346

13952 19603 21623 21143

3280 4639 4646 4315

2881 3741 4243 4461

11102 15039 16480 16957

2696 4194 4839 3840

813 963 1023 1110

292 256 252 325384 948 1179 759

1367 2403 2678 1982

12.8 18.7 17.6 11.7

epriciation

terest Costet Tax

AT

OE%

wer and fuel

eight and forwarding

penditure

ITDA

Ultratech Cement.

L PERFORMANCE

et Revenue from Operation

her Income

tal Income

e are expecting Demand Growth for the rest FY14 will be 4% - 5% and for FY15 it will

in the range of 8% - 12%.Demand already revived after the monsoon ,hence it

ported a 4% realization growth in Q3FY14.The Ultratech's expansion plans are ramp

p to become 70 mnTon cement producer in India by FY15 . Its waste heat recoveryants and efficient fuel mix (usage of petcock for energy instead of coal) moderates the

ost pressure, so to make Ultratech cost efficient among large cap peers. Govt

tiatives to expedite large infrastructure projects have yielded little so far and this is

tting pressure in the cement makers, especially those with debt that has become

pensive to service due to high interest rates. We expect lower other income to revive

ter the settlement of volatile interest rates by Govt in coming quarters. At present

tratech is running at 79% of its capacity utilization. The utilization level may decline

e to stabilization of supply from new capacities, owing to insufficient demand in

omestic Market. Ultratech is planning to strengthen its logistic infrastructures and

crease its captive power plants capacity, which will help to reduce its Operational

st.

tratech's Q3FY14 was in line to our estimates.The white cement Volume Growth and

pacity expansions are positive in terms of fundamentals. We see the uptick of EBIDTA

argin and volume growth for FY15. Currently the stock valuing at 3x in 1yr forward

B, and we cut our stance for FY15 to 2.7x. Hence we maintain our positive stance on

tratech Cement with Target price of Rs.1846/- . As from the current level the upside is

ry limited(7%), we recommend “Hold” Ultratech and Buy at Dips to get handsome

turn.







FY10 FY11 FY12 FY13

124 274 274 274

4495 10373 12550 14955

4620 10647 12824 15230

857 3295 4843 5169750 727 705 1227

32 113 121 135

683 1830 2207 2338

133 473 709 949

8375 21630 24904 29590

6 39 40 62

4953 12265 12729 14254

260 760 1940 3601

146 583 1544 1066

827 2094 2198 2541

210 825 1089 1376

112 190 214 185

219 873 1041 1048

8375 21630 24904 29590

FY10 FY11 FY12 FY13

3.1 2.9 3.2 3.4

88.1 49.9 87.7 97.7

2.9 6.0 5.7 6.5

9.5 13.3 11.5 11.0

1.2 1.5 1.1 1.2

15890 34903 46634 57428

13.1 22.7 17.2 19.1

7.9 12.9 11.1 11.90.5 0.5 0.5 0.5

15.4 8.2 11.8 11.3

0.3 0.4 0.4 0.4

2.3 1.5 1.6 1.4

1673 2195 3482 4122

(843) (2240) (3050) (4407)

(740) 248 (353) 715

11

ebt/Equity

rrent Ratio

sh from Operation

sh From Investment

sh from Finance

ventories to Turnover%

ort-term loans and advances

tal Assets

B

S

ebtor to Turnover%

S PERFORMANCE

E

V/EBIDTAvidend Yield%

OCE%

sh and bank balances

ade receivables

ventories

ng-term loans and advances

pital work-in-progress

ng-term provisions

ade payables

ort-term provisions

tal liabilities

tangibles

ngible assets

Ultratech Cement.

are capital

serve & Surplus

tal equity

ng-term borrowingsort-term borrowings



ATIOS

V

editors to Turnover%




We expect performance of Public Sector Banks (PSBs) to remain muted on the baof slower pace of loan growth and deteriorating asset quality led by ongoi

restructure assets and stress in economy. We expect PSBs in our coverage univer

to report NII growth of 17.2% YoY led by moderate loan growth of 18% YoY by t

system and restructure assets which would likely to remain at elevated level as p

most of bank management. Provision for loan loss would be elevated level owing

deteriorating asset quality and larger sum of restructure assets are in pipeline. Mo

of PSBs are expected to reported higher slippage of restructure asset as p

management.

During quarter the banking system experience loan growth of 15% YoY as on 13

Dec.2013 (as per RBI data) as against 18% YoY loan growth in 2QFY14. Seco

quarter witnessed higher loan growth because of transfer of CD/CP borrowings

loan but during this quarter revival of bond yield and lower demand of corporate lo

led slowdown in economy restricted moderate loan growth in the system. We expe

loan growth of 10-15% in our coverage universe. Bank of Baroda, Canara Ban

UCO bank and Union bank are expected to reported loan growth of >15% while PN

and SBIN would report <10% of loan growth.

Deposits growth lead by flow of FCNR deposits

Indian banks registered deposits growth of 17% YoY as on 13th Dec2014 accordi

to RBI data preliminary due to flow of FCRN deposits through RBI’s spec

concession window to the tune of Rs. $14 bn. Union Bank is likely to get mo

benefit from this route as per management. According to bank’s top official, ba

raised more FCNR deposits than repo borrowing. Bond yield during this quar

soften to 7.5% as against 9.5% in second quarter and FCNR deposits are genera

low cost of deposits. This would lead the margin expansion of more than 1%. Marg

expansion would be seen in case of Union Bank. Cost of deposits of most of ban

is expected to remain same but we expect actual benefit would come from 4QFY14

and onwards.

Asset quality pressure likely to remain at elevated level

Asset quality pressure is likely to persist due to ongoing slowdown in economy, hi

interest rate and continuous rising inflation. Gross slippages of banks are expecteto remain at elevated level and most of bankers are guided higher amount restructure assets in pipeline. We expect Andhra bank would hit more as theimpairment of asset would be more than 18% of asset means 100% of liability has

service 82% of asset which would be tough itself for bank. We expect GNPA and nNPA for PSBs would be in the range of 3.5%-4% and 2 to 2.5% respectively 3QFY14.

ock Performance During Quarter

fty Vs Bank Nifty during Quarter

oan (Rs tn) and YoY Gr(%)

Revenue growth tepid on account of moderate loan growth and high cost of

fund


Public Sector Banks Result Preview

3QFY14E

Muted loan growth reported by system




Public Sector Banks Result Preview 3QFY14E

ofitability of PSBs are expected to declined by 19.5% in our coverage universe in

bsence of core earnings, higher operating leverage due to wage revisions and high

ovision against loan loss due to deteriorating asset quality. Union Bank, Canara Bankd UCO Bank are expected to report healthy profit in our coverage because of healthy

an growth and margin expansion. Although these banks would not be free from

pairment of asset and high operating leverage but would have comfortable profit due to

ealthy core earnings as per our view.

ost of PSBs are trading at lower range of valuation multiple owing to absence of core

arnings, operating leverage, deteriorating asset quality and higher amount of restructure

sets that are in pipeline. High inflation would be risk for the economy going forward.

ny rise in inf lation would result of rise in interest rate by RBI in its third quarter monetary

olicy review on 28th Jan.2014 which would be negative for banking industry. Most of anking stocks are expected to report moderate revenue and profit growth owing to

ultiple headwinds. In PSBs universe we like Canara Bank, UCO Bank, Union Bank.

LBK


utlook

rofitability likely to declined due to absence of core earnings, high operating

verage and deteriorating asset quality

e expect bank to report profit growth of 4.2% YoY on the back of high operating

verage and high provisions. Higher operating leverage is expected due to higher

mployee provision and higher provisions on account of deteriorating asset quality as

ank witnessed sequentially increased of gross NPA.

ndhra Bank

e expect bank to report loan growth and deposits growth of 14% and 18% respectively.

ofit is expected to report negative growth on YoY basis largely due to high base and

xpected muted performance during the quarter. Asset quality during quarter is expected

report high deteriorating due to large chunk of restructure assets.


s Cr 3QFY14E 2QFY14 3QFY13 % YoY Growth % QoQ Growth

II 1169 1309 1330 -12.1 -10.7

PP 750 1154 860 -12.7 -34.9

et Profit 182 276 311 -41.4 -34.0

LBK


II 1169 1045 971 20.4 11.9

PP 750 643 712 5.4 16.7

et Profit 166 71 257 -35.4 135.0

NDHRABANK



ank of India

e expect loan and deposits growth of 23% and 29% YoY respectively. Profit is lower by

5% YoY largely due to higher provisions. Bank is expected to report higher slippage as

anagement guided restructure pipeline of Rs.10-15 bn. NIM is expected to improve by

0 bps YoY due to international NIM.

anara Bank

anara Bank is expected to report 30%+loan growth largely due to lower base. We

xpect loan to grow by 34% YoY and flat deposits growth. Asset quality of bank is

xpected to improve on sequential basis largely due to expected lower slippage. AT PBT

vel , we expect bank to grow by 12.5% but we assume tax rate of 25% versus 16% in

QFY14 and 19% in 1QFY14 which lead profit growth of 8.5% YoY. Gross slippage and

x rate will be monitor able.

unjab National Bank

NB is expected to report loan growth of less than 10% as bank is more focus on

nsolidating its balance sheet than growth. Asset quality is expected to remain at

evated level as bank’s slippage not concentrated in particular industry. NIM is expected

report in the range of 3.5-3.7%. Profit is expected to be dented on account of higher

ovisions.



ank of Baroda

e expect profit growth of 5.5% YoY largely due to tax rate of 30% versus 6.3% in

QFY14 and 17.5% YoY in 1QFY14. As per our expectation NII would be grew by 24%

rgely due loan growth of 20% YoY. Asset quality of bank is expected to remain high as

anagement guided restructure pipeline is Rs.20bn.



II 3515 2895 2841 23.7 21.4

PP 2539 2125 2256 12.6 19.5

et Profit 1067 1168 1012 5.5 -8.7

ANKBARODA


II 2683 2527 2308 16.2 6.2

PP 2218 2102 1856 19.5 5.5

et Profit 602 622 803 -25.1 -3.3

ANKINDIA


II 2606 2191 1988 31.1 18.9

PP 1734 1425 1516 14.4 21.7et Profit 775 626 714 8.5 23.8

ANBK


II 4201 4016 3733 12.5 4.6

PP 2874 2535 2682 7.2 13.4

et Profit 607 505 1306 -53.5 20.2

NB



esult Preview ; at a glance


ate Bank of India


e expect SBIN loan and deposits growth of 17% and 16% YoY respectively. NIN is

xpected to report in the range of 3.5-4% as bank has increased base rate during the

arter. Operating leverage and asset quality is expected to dent profit by 25% YoY. We

main have concern about bank’s deteriorating asset quality and continuous fall of PCR.

ross slippage and provisions make by bank is key monitor able as per our view.

CO Bank

CO bank is expected to report profit growth of 200%+ largely due to robust expected NII

owth which is lead by low of fund. UCO Bank’s CASA grew exponential in past few

arter but after sanction of western countries in Iran, low cost deposits are likely to be

agnant. But bank is expected to get benefit of same in FY14. Key monitor able would

e CASA trend and asset quality.

nion Bank

e expect Union bank’s profit to grow by 32% YoY largely due to margin expansion and

ow of FCNR deposits. Cost of fund is likely to soften this quarter as bank borrowed

ore money on repo and less MSF. Bond yield settled at 8.75% during quarter as

ainst 9.5% in previous quarter. We expect loan and deposits growth of 17% and 18%

oY. Asset quality is likely to persist. Improvement in CASA and margin expansion would

e key monitor able.


II 12959 12251 11154 16.2 5.8

PP 6734 6312 7791 -13.6 6.7

et Profit 2535 2375 3396 -25.4 6.7

BIN


II 1642 1569 1177 39.5 4.7

PP 1285 1166 831 54.6 10.2et Profit 338 400 102 231.4 -15.5

COBANK


II 2015 1954 1891 6.6 3.1

PP 1484 1225 1358 9.3 21.1

et Profit 400 208 302 32.5 92.3

NIONBANK

SU BANKS NII PPP Net Profit NII PPP Net Profit NII PPP Net Profit NII PPP Net Profit NII PPP Net P

LBK 1382 1139 324 1309 1154 276 1330 860 311 3.9 32.4 4.2 5.6 -1.3

NDHRABANK 1169 750 182 1045 643 71 971 712 257 20.4 5.4 -29.2 11.9 16.7 1

ANKBARODA 3515 2539 1067 2895 2125 1168 2841 2256 1012 23.7 12.6 5.5 21.4 19.5 ANKINDIA 2683 2218 602 2527 2102 622 2308 1856 803 16.2 19.5 -25.1 6.2 5.5

ANBK 2606 1734 775 2191 1425 626 1988 1516 714 31.1 14.4 8.5 18.9 21.7

ENABANK 684 458 107.4 107 369 625 615 443 206 11.2 3.4 -47.9 539.3 24.1 -

OB 1467 972 120 1452 791 133 1382 1017 116 6.2 -4.4 3.4 1.0 22.9

RIENTBANK 1395 965 269 1281 825 251 1204 926 326 15.9 4.2 -17.5 8.9 17.0

NB 4201 2874 607 4016 2535 505 3733 2682 1306 12.5 7.2 -53.5 4.6 13.4

BIN 12959 6734 2535 12251 6312 2375 11154 7791 3396 16.2 -13.6 -25.4 5.8 6.7

YNDIBANK 1480 847 319 1411 811 470 1400 864 508 5.7 -2.0 -37.2 4.9 4.4 -

COBANK 1642 1285 338 1569 1166 400 1177 831 102 39.5 54.6 231.4 4.7 10.2 -

NIONBANK 2015 1484 400 1954 1225 208 1891 1358 302 6.6 9.3 32.5 3.1 21.1

JAYABANK 660 385 127 705 273 136 456 261 127 44.7 47.5 0.0 -6.4 41.0

otal 36476 23245 7448 33404 20601 7590 31120 22513 9175 17.2 3.3 -18.8 9.2 12.8

YoY Growth QoQ Growth3QFY14E 3QFY132QFY14




HDFC LTD

840.5

875-

4

-

1M 1yr YTD

bsolute 6.6 2.4 2.4

el.to Nifty 5.7 -2.1 -2.1


omoters - - -

I 74.3 73.1 73.6

I 12.9 13.8 13.0

hers 12.9 13.1 13.3

Financials Rs, Cr

2011 2012 2013 2014E 2015E

NII 4483 5212 6179 7053 8193

Total Income 5558 6198 7257 8131 9271

PPP 3890 5746 6718 7562 8530

Net Profit 3535 4123 4848 5438 6194

EPS 24.1 27.9 31.4 35.2 40.1

Margin compression, spread would declined going forward

Net interest margin for the quarter stood at 4% despite of 25 bps reduced home lo

for retail customers during the quarter as against 4.06% in 2QFY14. Spread which

the difference of interest income and interest expenses, maintained at 2.25%. Goi

forward, there would be some pressure in spread as NBFC’s balance sheet kee

increasing with the support of borrow fund. In rising interest rate and inflationa

pressure era, we expect to come down to 2% in next couple of quarters.

Stable operating cost led operating growth at 12.5% YoY

Other income was Rs.46 cr versus Rs.105 cr in last quarter and Rs.95 cr in previo

quarter. Due to lower support from other income, total revenue grew by 13% YoY

Rs.1951 cr. Operating expenses increased to Rs.168 cr ( Up by 17% YoY) l

operating profit growth of 12.5% YoY to Rs.1783 cr.

Stable asset quality and balance sheet keep growing

On asset quality side, NBFC’s gross non performing asset stood at 0.77% of loan

loan portfolio versus 0.79% in previous quarter and in absolute term in amounted

Rs.1478 cr. Loan book of the company corpus increased by 19.2% YoY

Rs.192266 cr as on December 2013. The total assets increased to Rs 218286 cr

against Rs 183770 cr as at December, 2012 registering an increase of 19 per cent

MP

arget Price

HDFC's profit gro wt h of 12.1% YoY was inlin e wi th street expec tation . NBF

repo rted stable ass et qu ality on seq uen tial bas is as wel l as registered health

loan grow th. HDFC ltd has well abov e CAR against requiremen t which wo usup port grow th going forw ard. At the current pr ice of Rs.840, stoc k is tradin

at 4.3 tines o ne year forw ard boo k and 26 tim es of FY14E’s earnings . We valu

HDFC at Rs.875/ sh are whic h is 4.5 tim es of FY14E’s book and P/E mult iple

27 times of ful l year EPS.

evious Target Price

pside

HDFC Ltd’s 3QFY14 result was in line with street expectation as profit grew by 12

YoY to Rs.1278 cr on standalone basis. Profit of the NBFC grew by 13.4% YoY

consolidated basis to Rs.1935 cr versus Rs.1706 cr in last quarter. NII grew

12.8% YoY to Rs.1940 with inclusion of investment sale. Adjusted the same, N

grew by 17% YoY to Rs.1905 cr versus Rs.1624 cr last quarter corresponding year

131340

esult Updated NEUTRAL

arket Data

931/632

SE Code 500010

SE Symbol HDFC

wk Range H/L

Profit growth in line with street expectation

hange from Previous

DFC Vs Nifty

hare Holding Pattern-%

1.16

fty 6338

kt Capital (Rs Cr)


ock Performance

verage Daily Volume

"NEUTRAL "23th Jan, 2014




uarterly Result

HDFC LTD

Source: Eastwind/Company


NII grew on the back of healthy loan growthand stable spread

Operating cost stable led PPP growth at 12.5

YoY

Net profit of Rs.1278 cr was in line with

expectation.




HDFC LTD

DFC Performance vs Nifty with base re-adjustment

Source: Eastwind/Company


uarterly Performance


Cr 3QFY14 2QFY14 3QFY13 % YoY Gr % QoQ Gr

come from Operations 5985 5859 5146 16.3 2.2

ofit on Sale of Investments 35 87 96 -64.1 -60.1

tal Income 6020 5946 5242 14.8 1.2

erest and Other Charges 4080 4046 3521 15.9 0.8

aff Expenses 71 67 64 10.3 5.4

ovision for Contingencies 25 15 40 -37.5 66.7

her Expenses 89 95 74 21.1 -6.3

preciation 8 9 6 41.8 -12.0

tal Expenditure 4273 4233 3705 15.3 1.0

ofit from Operations before Other Income 1747 1713 1537 13.7 1.9

her Income 11 8 8 32.8 38.4

ofit Before Tax 1758 1721 1545 13.8 2.1

x Expense 480 455 405 18.5 5.5

et Profit After Tax 1278 1266 1140 12.1 0.9



Zensar Tech

1M 1yr YTD

solute 13 32.6 16.5

l. to Nifty 12 28.4 12.8


omoters 48.27 48.35 48.36

11.99 11.68 10.75

0.96 1.26 1.28

hers 38.78 38.71 39.61

Financials3QFY14 2QFY14 (QoQ)-% 3QFY13 (YoY)-%

Revenue 592.01 599.7 (1.3) 525.5 12.7

EBITDA 87.26 102.54 (14.9) 70.1 24.5

PAT 50.8 70.6 (28.0) 48.7 4.3

EBITDA Margin 14.7% 17.1% (240bps) 13.3% 140bp

PAT Margin 8.6% 11.8% (320bps) 9.3% (70bps

Mix geographical footing: During the quarter, revenue growth from Europe region w

impressive with 10%(QoQ), while USA and ROW, both were down by 1% impacted

seasonal impact.Given the order book Enterprise, business expects to grow robus

going forward.

504067

E Symbol ZENSARTECH

E Code


"Better growth trajectory ahead"

MP 386

rget Price 440

esult update Buy Earning numbers below expectation, management confident for growth ahead:

For 3QFY14, Zensar Tech reported lower growth than expectations, Sales declined

1%(QoQ) because of seasonal and furloughs impacts. PAT was down by 28%(Qo

the profit growth has been impacted due to currency fluctuations during the period

the extent of Rs 19.06 Cr on a YoY basis and Rs 23.02 Cr on a QoQ basis.side 14%

400

ock Performance


erage Daily Volume 20884

evious Target Price

arket Data

ange from Previous

fty 6339

1691

430/181

year forward P/E

Rs, Cro


10%

wk Range H/L


Healthy order Pipeline: The Quarter has been upbeat with several new client additio

with the company’s focus on cloud, security and multi-vendor services reaping resu

Recent Management comments also revealed favourable scenario of order booking.

Management expects good growth starting from 4QFY14E with its Infrastructu

Management (IM) business gaining momentum. The deal booking and pipeline is go

and expects to perform well going forward. It expects double-digit growth in t

Enterprise Services business for the FY15 on the back of healthy pipeline. In addition

anticipates good growth from the IMS for the FY'15.

On Margin front; During the Quarter, its EBITDA margin declined by 240bps

14.7%and PAT margin down by 320bps to 8.6%. Post earning, management h

expressed its margin at a range of 16-17% and PAT margin could be seen at a doub

figure for only organic business.

View and Valuation: The deal booking and pipeline is good and expects to perform w

going forward. It expects double digit growth in the Enterprise Services business for t

FY15E on the back of healthy pipeline. Also, it anticipates good growth from the IMS f

the FY'15E.

Order pipeline continues to be stable at $ 200 mn mainly on the back of good dema

seen in Mobility, Cloud Computing and social networking side. Considering healt

order pipeline and its earning visibility in near future, we maintain “BUY” view on t

stock with a target price of Rs 440. At a CMP of Rs 386, stock trades at 5.6x FY15E EP

On segmental growth; The Infrastructure Management(IM) business of the compa

which has been restructured over the last few quarters, has shown a sharp increase

dollar revenues of over 12% on a sequential quarter basis. The company reported

new customer wins in the quarter including over USD27 mn of new business in IM.

INR term, Application Management Services (contributes 65% of Sales) declined

4.5%(QoQ) and IM grew by 0.5% (QoQ). While, Products and License business jump

from Rs50cr (2QFY14) to 70cr.

"BUY"23rd Jan' 14




Zensar Tech


les and Sales Growth-%

argin-%




les and Sales Growth-%



evenue Mix-Geographies 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14

SA 72% 71% 72% 74% 76% 75% 75%

urope 9% 9% 9% 9% 8% 9% 10%

frica 8% 9% 9% 9% 9% 10% 9%

ow 11% 11% 10% 8% 7% 6% 6%

pplication Management Services 64% 66% 68% 64% 65% 68% 65%

frastructure Magt Services 21% 22% 21% 24% 23% 23% 23%

roducts and License 15% 12% 11% 12% 12% 9% 12%

xed Price 33% 30% 31% 34% 37% 37% 35%

me & Materials 35% 40% 40% 36% 33% 36% 36%

upport Services 17% 18% 17% 18% 18% 18% 17%

roduct Sales 15% 12% 12% 12% 12% 9% 12%

Manufacturing , Retail & Distribution 52% 53% 54% 54% 61% 63% 61%

surance, Banking & Finance 20% 21% 20% 19% 20% 20% 21%

ovt , healthcare & Utilities * 7% 11% 11% 10% 2% 2% 2%

liance & Others 21% 15% 15% 17% 15% 17% 16%

evenue Mix-Service Type

evenue Mix-Project Type

evenue Mix-Vertical





Zensar Tech

ients/Headcounts Metrics;

nancials;


evenue Mix-Geographies 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY1

1mn+ 47 43 41 40 49 47 49

5mn+ 6 7 7 8 6 6 6

10mn+ 1 2 2 2 1 1 220mn+ 1 1 1 1 1 1 1

op 5 clients 35% 35% 35% 35% 37% 39% 36%

op 10 clients 40% 42% 42% 43% 43% 46% 43%

SO 69 59 56 55 66 61 59

nsite 69% 72% 70% 69% 68% 67% 69%

ffshore 31% 28% 30% 31% 32% 33% 31%

tilization (Including Trainees) 81% 82% 83% 82% 81% 80% 79%

eadcount 7286 6825 6504 6508 6519 6657 6741

umber of million dollar

fort & Utilization

ient Contribution to Business

s, Cr FY10 FY11 FY12 FY13 FY14E FY15E

et Sales 497.08 562.56 700.15 2114.52 2330.91 3014.78ther Operating Income 0.00 15.03 12.57 13.95 18.65 24.12

otal income from operations (net) 497.08 577.59 712.72 2128.47 2349.56 3038.90

urchases of stock-in-trade 0.00 0.00 0.00 236.86 223.21 303.89

mployee Cost 393.17 343.12 411.36 1177.83 1268.76 1641.01

ther expenses 0.00 135.71 165.98 418.73 505.16 653.36

otal Expenses 393.17 478.83 577.34 1833.42 1997.13 2598.26

BITDA 103.91 98.76 135.38 295.05 352.43 440.64

epreciation 24.92 25.88 25.05 33.16 39.67 51.31

ther Income 8.15 14.20 27.91 8.66 46.99 75.97

xtra Ordinery Items 0.00 0.00 0.00 0.00 0.00 0.00

BIT 78.99 72.88 110.33 261.89 312.76 389.33

nterest Cost 0.55 0.85 1.03 9.95 10.81 8.65

BT 86.59 86.23 137.21 260.60 348.94 456.65

ax 2.43 -2.24 42.67 86.07 118.64 155.26

AT 84.16 88.47 94.54 174.53 230.30 301.39

rowth-%

ales 17.8% 13.2% 24.5% 202.0% 10.2% 29.3%

BITDA 28.7% -5.0% 37.1% 117.9% 19.4% 25.0%

AT 38.9% 5.1% 6.9% 84.6% 32.0% 30.9%

Margin -%

BITDA 20.9% 17.6% 19.3% 14.0% 15.1% 14.6%

BIT 15.9% 13.0% 15.8% 12.4% 13.4% 12.9%

AT 16.9% 15.7% 13.5% 8.3% 9.9% 10.0%

xpenses on Sales-%

mployee Cost 79.1% 59.4% 57.7% 55.3% 54.4% 54.4%

ther expenses 0.0% 23.5% 23.3% 19.7% 9.6% 10.1%

ax rate 2.8% -2.6% 31.1% 33.0% 34.0% 34.0%

aluation

MP 272.10 157.85 180.00 248.58 386.00 386.00

o of Share 2.16 4.34 4.34 4.36 4.37 4.37

W 293.93 366.96 417.42 751.69 938.54 1193.91

PS 38.96 20.38 21.78 40.03 52.70 68.97

VPS 136.08 84.55 96.18 172.41 214.77 273.21

oE-% 28.6% 24.1% 22.6% 23.2% 24.5% 25.2%

ividen Payout ratio 16.4% 19.9% 37.3% 21.9% 18.9% 15.3%

/BV 2.00 1.87 1.87 1.44 1.80 1.41

/E 6.98 7.74 8.26 6.21 7.32 5.60



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