DOMESTIC:

Camlin Fine Sciences receives environmental clearance for Dahej plant

Suuti stake in ITC may go to insurance firms JSW Energy to buy Jaiprakash Power's Bina unit for

Rs2,700cr Ashoka Buildcon bags Rs2,086cr projects from NHAI Essar Projects bags Rs300cr order from IFFCO Lupin launches generic oral contraceptive tablets in US Dr Reddy's and NPPA battle at Delhi High Court over

blood pressure drug's price Suven Life receives Establishment Inspection Report

from USFDA Suzlon bags 58.8 MW project in Madhya Pradesh CCEA approves proposal for Rs17,000cr power plant in

UP. HPCL board approves 2:1 bonus issue PowerGrid approves investment proposals of Rs2,731cr ECONOMY:

Fitch affirms India’s BBB- rating, upbeat on fiscal credibility

India receives $5.34 billion FDI in April-May Adi Godrej is considering an initial public offering

inspired by India's milk addiciton

INDUSTRY:

Government working to double generation target from solar parks

India's crop protection industry to be worth USD6.3bn by 2020

Shipping sector attracts USD636mn under Make in India

TM

THE WEEKLY WRAP-UP 22nd July 2016

One Year Sensex Performance

*Castrol India– December Ending | ** Supreme Petrochem—June Ending

Coverage Universe Valuations

Company CMP Reco. Tgt price Upside Mcap EV/Sales (x) EV/EBITDA (x) PE(x)

(Rs) (Rs) (%) (Rs bn) FY16E FY17E FY16E FY17E FY16E FY17E

Supreme Petrochem Ltd 195 BUY 200 2.7 18.8 26.3 17.8 0.5 0.5 12.7 8.8

Indian Hume Pipe Co. Ltd 394 BUY 475 20.6 9.5 18.2 12.8 9.9 8.8 9.1 7.4

Shanthi Gears Ltd 120 BUY 150 25.5 9.8 86.0 67.7 5.3 5.3 35.8 31.8

Hind Rectifiers Ltd 78 BUY 110 41.0 1.2 64.9 14.8 1.2 0.9 24.0 10.2

KCP Ltd 100 BUY 105 4.9 12.9 32.5 23.1 2.3 2.0 13.5 11.3

Navneet Education Ltd 94 BUY 130 38.4 22.4 15.1 13.2 2.2 2.0 9.1 8.1

Harita Seating Systems Ltd 588 BUY 600 2.0 4.6 46.5 34.2 1.6 1.5 29.0 22.6

Camlin Fine Sciences Ltd 95 BUY 140 47.4 9.1 11.7 8.9 1.6 1.4 8.8 7.1

GEE Ltd 43 BUY 70 62.8 1.0 18.6 13.4 0.7 0.6 7.0 6.2

Hester Biosciences Ltd 740 BUY 875 18.2 6.3 34.5 28.8 6.6 5.2 20.4 16.6

West Coast Paper Mills Ltd 82 BUY 110 33.7 5.4 15.5 4.2 0.7 0.6 4.1 3.4

Rallis India Ltd 208 BUY 260 25.0 40.4 26.5 20.8 2.4 2.1 14.8 12.2

The Hi-Tech Gears Ltd 287 BUY 450 56.6 5.4 20.1 15.4 1.1 0.9 8.5 7.2

Bharat Bijlee Ltd 825 BUY 1500 33.3 4.7 82.4 38.1 0.8 0.7 28.2 24.1

Castrol India Ltd 412 BUY 650 57.8 203.8 31.1 29.1 5.2 5.0 19.9 18.5

Engineers India Ltd 226 BUY 325 44.1 76.0 21.5 20.6 2.8 3.7 18.6 24.7

TamilNadu Newsprint & Papers Ltd 265 BUY 350 32.2 18.4 8.5 7.3 1.5 1.5 1.5 5.5

Triveni Turbines Ltd 121 BUY 135 11.5 0.4 39.2 32.9 0.5 0.5 2.6 2.2

Rajoo Engineers Ltd 21 BUY 24 17.1 0.1 16.1 11.5 1.0 0.8 8.4 6.4

Siemens Ltd 1330 BUY 1500 12.8 473.5 50.6 43.5 4.0 3.6 29.6 25.2

Hikal Ltd 172 BUY 200 16.1 14.2 40.4 28.5 2.2 2.1 10.8 9.5

Transformers and Rectifiers (India) Ltd 344 BUY 450 31.0 4.6 -15.6 25.4 1.2 0.9 52.9 10.1

KEC International Ltd 141 BUY 200 41.9 36.2 17.6 12.3 0.7 0.6 8.5 6.8

Aksh Optifibre Ltd 16 BUY 24 48.1 2.6 7.9 4.8 0.6 0.5 3.5 2.6

GMM Pfaudler Ltd 352 BUY 500 42.0 5.1 28.0 27.0 0.6 1.9 14.5 13.4

Price Performance (%)

Company 1M 3M 12M

Supreme Petrochem Ltd 5% 35% 71%

Indian Hume Pipe Co. Ltd 12% 16% 6%

Shanthi Gears Ltd 3% 25% 9%

Hind Rectifiers Ltd 24% 13% -8%

KCP Ltd 12% 21% 45%

Navneet Education Ltd 0% 6% -10%

Harita Seating Systems Ltd 7% 15% 213%

Camlin Fine Sciences Ltd 6% -10% -11%

GEE Ltd 14% 15% 72%

Hester Biosciences Ltd 8% 39% -8%

West Coast Paper Mills Ltd 3% 6% 27%

Rallis India Ltd -5% 7% -18%

The Hi-Tech Gears Ltd 9% 6% -3%

Bharat Bijlee Ltd -11% -13% 19%

Castrol India Ltd 10% 5% -17%

Engineers India Ltd 13% 24% -3%

TNPL -2% 15% 40%

Triveni Turbines Ltd 10% 25% -2%

Rajoo Engineers Ltd 26% 19% 32%

Siemens Ltd 5% 13% -10%

Hikal Ltd 12% 21% 29%

TRIL -2% 9% 27%

KEC International Ltd 5% 10% -7%

Aksh Optifibre Ltd 3% 14% -4%

GMM Pfaudler Ltd 7% 28% 19%

The week that went by: After opening on a decent note, the initial gains of the market were wiped off. The markets were trading on a flat note amid mixed global clues and hopes of passage of the GST bill in Rajya Sabha. Some dampening of sentiments was seen due to weakness in the European counters. The mid week witnessed rally in the markets despite the mixed global cues.

COVERAGE NEWS Revision of target price: Hester Biosciences Limited. Backed by positive triggers which indicate consistent growth; the commissioning of the Nepal plant in near future which will further boost the sales revenue of the company and after having achieved the initial target, we further revise the target price from Rs750 to Rs875 which is trading at 35XFY17EPS of Rs25.2

Camlin Fine Sciences receives environmental clearance for Dahej plant Camlin Fine Sciences Ltd, which offers shelf-life solutions (antioxidants and intermediates), performance chemicals and aroma chemicals, has received environmental clearance from the State Level Environment Impact Assessment Authority of Gujarat for setting up a manufacturing facility for hydroquinone (HQ) & catechol and their down-stream products at Dahej SEZ. The Dahej plant will expand capacities and provide the company with a base to manufacture hydroquinone and catechol in India. The plant will also help it add capacity for manufacturing of vanillin, for which catechol is a key raw material.

Our Comments: The company expects to commission the Dahej plant in FY18. The plant will have capacity to produce 9,000 metric tonne per annum (MTPA) and 6,000 MTPA of HQ and catechol, respectively.

Bharat Bijlee Results: The company reported net sales of Rs1,303mn in quarter ending June 2016 as compared to Rs1,318mn in the same quarter last year. The net loss reported by the company has reduced for the quarter under review. Net loss reported stood at (Rs33.7mn) as compared to a loss of (Rs48.3mn) in the comparative quarter. Ebidta margins were seen at negative (1.16%) as against negative (0.81%) in the same quarter last year. There has been considerable increase in the other income reported by the company. Other income for the quarter ending June 2016 stood at Rs47mn as compared to Rs37mn in the corresponding quarter last year. Moreover, the interest burden on the company is reducing. Interest burden has reduced from Rs49mn in quarter ending June 2015 to Rs 42mn in June 2016.

Outlook and recommendations: One certainly cannot analyse this company based on one quarterly result, as it is the second half of the financial year which is generally very strong for the company. In the current quarter, on an almost flat turnover the loss at net level is lower when compared to that of the previous year. The company is reported to be having a strong order back log and it is also expected to get good order flow from some State governments in the second and third quarter. We expect a very strong performance in the current financial year. Any correction in stock price must be capitalized on. With the conviction continuing in the growth expected, we maintain our target price of Rs1500 with a 12 months perspective.

TM

Environmental clearance for Camlin

fine

Bharat Bijlee: good yet to unfold

Hester Biosciences Ltd: Target Price Revision

Infosys Limited: Total income was up 16.9% at Rs1,67,820mn as against Rs1,43,540mn in the same quarter last year. It grew 1.4% as against Rs1,65,500mn in quarter ended March 2016. Net profit rose from Rs30,280mn in the period last year to Rs34,360mn in the period under review indicating a growth of 13.5%. It fell 4.5% on q-o-q from Rs35,970mn in Q4FY16. In Dollar terms: Dollar revenues for the quarter increased 10.9% to USD2,501mn from USD2,256mn on y-o-y basis. It grew Net profit posted a growth of 7.4% at USD511mn as compared to USD476mn in the same period last year. The dollar revenue growth guidance has been scaled down to 10.5-12% in constant currency terms from 11.5-13.5% earlier. Other income stayed flat at Rs7,530mn as compared to Rs7,560mn in the period last year. It fell 2.5% from Rs7,720mn in Q4FY16. 2.2% from USD2,446mn on sequential basis. It de grew 4.1% from USD533mn on q-o-q basis.

Outlook and recommendations: Company has performed lower than market expectation and the guidance for the current year has also been revised downward. The impact of Brexit if any shall be visible in the time to come. So one can stay away from the sector in near term. Reliance Industries Limited: Income from operations fell by 15.2% y-o-y to Rs649.9bn as against Rs766.2bn in the same quarter last year. It jumped 8.9% from Rs596.7bn on sequential basis. Net profit rose to Rs70.9bn as compared to Rs59.2bn in the comparable period last year, gaining nearly 20% (Post Minority interest and share in profit/(loss) of associate and joint venture it improved 18.1% at Rs71.1bn as against Rs60.2bn in Q1FY16). It was 2.4% above Q4FY16 at Rs69.3bn (Post Minority interest and share in profit/ (loss) of associate and joint venture, growth was 2.6% over Q4FY16).Operating margins improved by nearly 430bps from 13% in Q1FY16 to 17.3% in the period under review. It dropped slightly by 150bps from 18.8% in q-o-q basis. EPS came in at Rs24.1 as against Rs20.4 in the previous period. It was reported at Rs23.5 in Q1FY16.

Outlook and recommendations: Inventory profits are reported to have helped the company to report better than street expectations. The best strategy would be to sip into the stock on monthly basis as long term prospects are bright and 4G launch could act as good trig-ger. Other results covered during the week:

SKF Limited Kitex Garments Limited Biocon DB Corp

TM

Infosys: lower than expected results

RIL: better than street expectations

ECONOMY:

Fitch affirms India’s BBB- rating, upbeat on fiscal credibility Fitch Ratings has affirmed India's 'BBB-' rating citing strong medium-term growth outlook and favourable external balances. It has a stable outlook on India's rating that is constrained by a weak fiscal position and still-difficult business environment. The ratings agency expects India's business environment to improve with implementation and continued broadening of the government's structural reform agenda.

Our Comments: Fitch anticipates real GDP growth to slightly accelerate to 7.7% in FY17 and 7.9% in FY18 due to an expected pick-up in consumption in both urban and rural areas from pay commission increase in salaries and better monsoon.

INDUSTRY:

Government working to double generation target from solar parks Government is working on doubling the power generation target from solar energy parks to 40,000 MW in the backdrop of slow offtake of rooftop solar and problems being faced by some project developers. The Ministry of New & Renewable Energy is keen to set up solar park projects with a cumulative capacity of 20,000 MW, in addition to the already launched such programme of 20,000 MW in 2014.

Our Comments: The government has set an ambitious target of generating 175 GW power by 2022 from renewable sources, including 100 GW from solar, 60 GW from the

wind, 10 GW from biomass and 5 GW from small hydroelectric projects.

India's crop protection industry to be worth USD6.3bn by 2020 Indian crop protection industry is estimated to grow by 7.5% per annum to reach USD6.3bn by 2020, according to a report by Tata Strategic Management Group. As per the report, Indian crop protection Industry is estimated at USD4.4bn in FY 2014-15 of which 47% are exports. The crop protection industry is expected to grow further at 7.5% per annum to reach USD6.3bn by FY2019-20. The industry is dominated by insecticides which contribute to 60% of the overall demand, followed by fungicides and herbicides which account for 18% and 16% of the demand respectively.

Our Comments: Agrochemicals play a critical role in ensuring food and nutrition security of the

nation.

CCEA approves proposal for Rs17,000cr power plant in UP The Cabinet Committee on Economic Affairs (CCEA) approved a plan to set up a 1,980 mw thermal power plant at Ghatampur in Uttar Pradesh. The project is estimated to cost Rs17,238cr. The power project, with three 660 mw units, will be set up by a joint venture of Neyveli Lignite and Uttar Pradesh Rajya Vidyut Utpadan Nigam. It will supply the electricity generated at the plant mainly to the host state.

Our Comments: The decision comes ahead of the assembly election in the state polls are scheduled for early next year.

TM

Fitch on India’s ratings

Government on generation target

Crop protection industry on growth

trajectory

Approvals for power plant in UP

COMPANY: Suuti stake in ITC may go to insurance firms The government might sell the 11.72% stake held by the Specified Undertaking of Unit Trust of India (Suuti) in ITC to state-run insurance firms, which already have shares in the company. This is because the board of directors of the tobacco-to-FMCG firm is likely to oppose any new institutional investor buying a significant stake.

Our Comments: The board needs to pass an enabling resolution before a block deal concerning

the stake is finalised.

JSW Energy to buy Jaiprakash Power's Bina unit for Rs2,700cr JSW Energy acquired the 500-megawatt (Mw) power plant of debt-laden Jaiprakash Power Ventures at Bina in Madhya Pradesh for Rs2,700cr, 10 months after the two firms got into a binding agreement. In September 2015, JSW Energy had acquired two hydropower assets of Manoj Gaur’s company for Rs9,700cr in a deal that was the largest ever in the power sector. Following the deal, both companies signed a binding agreement for the Bina deal.

Our Comments: The acquisition will enable the diversification of geographical foot print and fuel source, thereby strengthening the existing business model.

Ashoka Buildcon bags Rs2,086cr projects from NHAI Ashoka Buildcon said it has bagged two contracts valued at Rs2,086cr from the National Highways Authority of India (NHAI) in Punjab and Jharkhand. The company has emerged as the lowest bidder for the Rs1,600cr 4/6 laning of Kharar to Ludhiana section of NH-95 project in Punjab. The project will be developed on the hybrid annuity model. It has also received Letter of Award from NHAI for 2/4 laning with paved shoulders of Govindpur (Rajgunj) - Chas -West Bengal Border section of NH-32 in Jharkhand on NHDP Phase-IV on EPC mode. The accepted bid value of the project is Rs486cr.

Our Comments: The company currently has a portfolio of 25 BOT projects of which 20 are

revenue generating as of date.

Essar Projects bags Rs300cr order from IFFCO Essar Projects has won Rs300cr contract from Indian Farmers Fertilizer Cooperative (Iffco). The contract entails construction of a new phospho gypsum stack at Iffco's Paradip unit in Odisha, which is the country's largest

phosphatic fertiliser complex. The project will be implemented in two phases.

The first phase, valued at about Rs190cr, will involve completion of about 60% of the total construction in 20 months while the second phase will involve

construction of the remaining 40% in 10 months.

Our Comments: This is the fourth big contract secured by Essar Projects from Iffco. The company has completed three projects for Iffco's Paradip unit.

Lupin launches generic oral contraceptive tablets in US Lupin has launched its generic oral contraceptive Norgestimate and ethinyl estradiol tablets in the American market after receiving nod from the US health regulator. The USFDA had earlier given approval to market a generic version of Janssen Pharmaceuticals, Inc.'s Ortho Tri-Cyclen tablets in the same strengths. The tablets are indicated to prevent pregnancy.

Our Comments: Ortho Tri-Cyclen had US sales of USD177.6mn as per (IMS MAT March 2016).

TM

KEY NEWS ANALYSIS

Suuti stake in ITC

JSW energy on the Bina unit

Ashoka buildcon bags order

Essar gets order from IFFCO

Oral contraceptive by Lupin

COMPANY: Dr Reddy's and NPPA battle at Delhi High Court over blood pressure drug's price The National Pharmaceutical Pricing Authority (NPPA) wrongfully revised the ceiling price of amlodipine, a tablet to treat high blood pressure and chest pains (angina), alleged Indian drug maker Dr Reddy's at the Delhi High Court on July 19. On its part, NPPA said that its decision was correct according to

the provisions of the country's Drugs Price Control Order (DPCO) 2013. The

drug pricing watchdog's revision is unwarranted as the government is only supposed to take such action every five years.

Our Comments: Dr Reddy's did not comment on the development, stating that the matter was subjudice.

Suven Life receives Establishment Inspection Report from USFDA Suven Life Sciences said it has received the Establishment Inspection Report (EIR) from the US health regulator for its manufacturing plant near Hyderabad. Based on the inspection and the review thereafter US-FDA has concluded that the inspection is 'closed' under 21CFR20.64 (d) (3) and the agency has issued an Establishment Inspection Report (EIR) for Suven facility at Pashamylaram dated July 15, 2016.

Our Comments: Suven Life Sciences said so far it has filed 19 DMF's (Drug Master File) and 4 ANDA's (Abbreviated New Drug Application) from this facility which is FDA

complaint under cGMP and continued after renewal inspection.

Suzlon bags 58.8 MW project in Madhya Pradesh Suzlon Group has bagged an order for 58.80 MW wind power project to be set

up in Dewas district of Madhya Pradesh. According to the statement, the

project comprises 28 units of S97-120 m hybrid towers with rated capacity of

2.1 MW each and is scheduled for completion by March 2017. Suzlon will be

responsible for the entire project lifecycle which includes wind turbine supply, construction and commissioning as well as operations, maintenance and

services of the project for a period of 12 years. The project is capable of

powering 32,000 households and reducing 0.12 million tonnes of CO2 emissions per annum.

Our Comments: The company’s over two decades of experience, pan-India presence, robust technology, innovative and reliable products and massive service capabilities

give it the confidence to further enhance our market share in India.

HPCL board approves 2:1 bonus issue The board of directors of the company at its meeting held on July 20, 2016, have recommended capitalisation of reserves and issue of fully paid bonus shares in the ratio of 2 (two) bonus equity share of Rs 10 each for every 1 (one) existing equity share of Rs 10 each.

Our Comments: The proposed issue of bonus shares is subject to approval of the shareholders at the ensuing Annual General Meeting (AGM) of the company scheduled on September 08, 2016.

TM

KEY NEWS ANALYSIS

DRL and NPPA battle at Delhi High Court

EIR for Suven Life

Order bagged by Suzlon

Bonus issue by HPCL

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TM