See Private Sector Banks Result Review 3QFY14. Powergrid strong growth visibility and minimal operational risks. We valued stock for a 12 month period at a target price of Rs.118 also We rate a BUY rating on the stock with an 12 months price target price of Rs 80.0 at 4.1x FY15E earnings of IFGL Refractories Ltd stock.

1. IEA-Equity
Strategy
India Equity Analytics
3th March, 2014
Daily Fundamental Report on Indian Equities
Powergrid :
"BUY"
Edition : 216
3th Mar 2014
The stock is trading at 1.7x FY15E BVPS. We estimate to Power grid stock to trade at 1.8x BVPS. Valuation is very reasonable for a business
model with RoE (16%), strong growth visibility and minimal operational risks. We valued stock for a 12 month period at a target price of
Rs.118.With equity dilution overhang on the stock is removed, so we expect the stock price will drive by purely on its fundamentals, on our
estimates we maintain a positive fundamental outlook for Power grid. Also, govt. stake coming down to 58% is a positive, as risk of further
equity dilution is reduced . ............................................................ (Page : 2)
IFGL Refractories Ltd :"Strong Fundamentals…..."
"BUY"
3th Mar 2014
IFGL refractories is the flagship company of SK Bajoria group.Company manufacturing Continuous Casting Refractories and Special grade
Refractories which find applications in steel industry. IFGL has grown as an Indian multinational with manufacturing facilities located in Brazil,
China, Czech Republic, Germany, India, UK and USA. Krosaki HarimaCorporation Japan ,a subsidiary of world’s second largest steel maker
NipponSteel Corporation holding about 15 % stake in IFGL. We expect IFGL will report its best ever performance in this full year. Considering
industry’s improving prospects, stabilization of production from its newly built plant at Kandla SEZ and out performance of company in its
financials, We don’t expect any scope for deep correction, hence recommending a BUY. ................................................................................... (
Page : 3-4)
Private Sector Banks Result Review 3QFY14
3th Mar 2014
Private Banks are trading at significantly lower or reasonable valuation when compare to their historical trend due to possible deterioration in
asset quality earnings pressure and political un-clarity. We prefer private banks over PSBs largely due to their capability to report healthy
earnings, higher capital adequacy ratio and lower or stable asset quality. Our top picks in sector are HDFC Bank, ICICI Bank, Indusind Bank and
DCB. ............................................................................ ( Page : 5-6)
IT Industry: 3QFY14 results review : "Clear acceleration in growth"
28th Feb 2014
For IT Industry, 3QFY14 has carried out a quarter of mix set of numbers largely impacted by seasonality and furloughs impact. However, most of
companies expressed its sanguine view for industry outlook and demand discretionary environment ahead. Post earnings, almost all companies
management have expressed for better earnings outlook in near term . .................................................. ( Page : 7-12)
Public Sector Banks Result Review 3QFY14
26th Feb 2014
Most of PSBs profitability were declined due to higher operating cost, surge in provisions and contingencies and creation of DTL special reserve.
But declining profitability and deteriorating asset quality is not a concern but structure damage of balance sheet. Going forward banks with
higher CASA base and healthy growth in deposits would able to protect margin and hence profitability. Post result we like SBI, Union Bank and
UCO
Bank
due
to
their
structural
improvement
in
balance
sheet,
operating
and
financial
metrics.
............................................................................ ( Page : 13-14)
SHREE CEMENT.
"BOOK PROFIT "
25th Feb 2014
The stock is trading at 4x in 1 yr forward P/B chart.we believe for the current market scenario the price is fare enough to trade.But looking at
future capex plans and sluggish demand we belive the earnings and profitability of Shree cement may fall for the next two consecutive
quarters.The profitability may fall due to incrising depriciation.Till now the company's depriciation level is stable but it may surprise further.so
we recommend its a better pic to book profit. ................................................................. ( Page : 15-17)
"BOOK PART
PROFIT "
AXIS BANK :
25th Feb 2014
We advice our investor to book part profit in Axis Bank as bank has achieve our target price level of Rs.1217. We still stick to our valuation on
account of bank’s uncomfortable earnings and asset quality stress. Bank’s profitability was up by 19% YoY on the back of right back of
investment depreciation provisions. Exposure to risky sector remained high which would keep asset quality under stress. These factors compel
us to value bank at 1.5 times of FY14E’s book value......................................................... ( Page : 18-22)
Narnolia Securities Ltd,

2. Powergrid..
Update
BUY
CMP
Target Price
Previous Target Price
Upside
Change from Previous
95
118
NA
25%
NA
Market Data
BSE Code
NSE Symbol
532898
POWERGRID
1yr
9.5
3.8
YTD
8.1
4.0
Strong Capitalization : Power Grid’s adjusted PAT increased 4.3% YoY to Rs. 1,043 crore
in Q3FY14 While asset capitalisation was below estimate Rs. 3050 crore, PGCIL
commissioned another Rs. 3450 crore in January 2014 taking overall capitalisation to Rs.
13000 crore YTDFY14.
Share Holding Pattern-%
Promoters
FII
DII
Others
3QFY14
57.9
25.4
8.6
8.2
Overall revenues increased 9.6% YoY to Rs.3685 crore due to lower than anticipated
capitalisation (Rs.3050 crore) in Q3FY14 . Income increased 6.5%, 10.0% and 121.9% YoY
in transmission, telecom and consultancy income, respectively. Other income declined
9.7% YoY to Rs.116 crore as cash was deployed across various upcoming projects.
Margins declined 336 bps YoY to 87.4% due to 55.7% YoY rise in transmission & other
expenses to Rs.333 crore. Tax expenses increased 7.5% YoY to Rs. 399 crore. Q3FY13
included a one-time income of Rs.167 crore as wage revision benefit. Adjusting the same,
PAT increased 4.3% YoY to Rs.1,043 crore.
The Central Electricity Regulatory Commission (CERC) issued the final tariff regulations for
the period FY15-19 – these regulations form the basis of Power Grid’s earnings (regulated
returns) from its core transmission business over the next five years.The Key take aways
of these Regulations are Normative TAF (NATAF) for incentives lowered; no incentive for
TAF >99.75% .Normative O&M charges raised (vs. draft), but still below FY14 levels.
Stock Performance-%
Absolute
Rel. to Nifty
3rd march' 14
116/87
49490
22270
6277
52wk Range H/L
Mkt Capital (Rs Crores)
Average Daily Volume (Nos.)
Nifty
1M
8.2
9.5
"Buy"
2QFY14 1QFY14
57.9
69.4
19.4
14.7
8.8
7.6
13.9
8.3
1 yr Forward P/B
Capitalisation of assets remains on track. Till Jan end the company has capitalised Rs
118bn of assets which is 70% of our full year estimate. Since last two months of the year
usually account for the bulk of yearly commissioning we are confident that the co. will meet
our estimate of Rs 170bn for FY14.
Power Grid's Raichur-Solapur line has been connected to national grid. Management Says
there were four trippings in the first week. Two were to increase reliability and were
done intentionally, and the other two were because of a few glitches. For the last month
there has been no tripping.
View & Recommendation
With equity dilution overhang on the stock is removed, so we expect the stock price will
drive by purely on its fundamentals, on our estimates we maintain a positive fundamental
outlook for Power grid. Also, govt. stake coming down to 58% is a positive, as risk of
further equity dilution is reduced
The stock is trading at 1.7x FY15E BVPS. We estimate to Power grid stock to trade at 1.8x
BVPS. Valuation is very reasonable for a business model with RoE (16%), strong growth
visibility and minimal operational risks. We valued stock for a 12 month period at a target
price of Rs.118.
Source - Comapany/EastWind Research
Financials :
Revenue
EBIDTA
Net Profit
EBIDTA%
NPM%
Q3FY14
3685
3105
988
84
27
Y-o-Y %
9.4
6.0
-8.5
-3.1
-16.3
Q-o-Q %
-7.9
-8.4
-16.9
-0.6
-9.8
Q3FY13
3369
2930
1080
87
32
Q2FY14
3999
3389
1189
85
30
(In Crs)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
2

3. IFGL Refractories Ltd.
V-
"Buy"
3rd Mar' 14
"Strong Fundamentals…..."
Buy
62
80
NA
29%
0%
Result update
CMP
Target Price
Previous
Target Price
Upside
Change from
Previous
Market Data
BSE Code
NSE Symbol
52wk Range
H/L Capital
Mkt
(Rs Crores)
Average Daily
Volume
Nifty
532133
IFGLREFRAC
24/68
214
6,366
6,277
Stock Performance-%
1M
(0.5)
(3.6)
Absolute
Rel. to Nifty
1yr
75.7
68.5
YTD
100.2
89.7
Share Holding Pattern-%
Promoters
FII
DII
Others
3QFY14
71.3
0.0
2.2
26.5
1 yr Forward P/B
2QFY14 1QFY14
71.3
71.3
0.0
0.0
2.2
2.2
26.5
26.5
IFGL refractories is the flagship company of SK Bajoria group.Company manufacturing
Continuous Casting Refractories and Special grade Refractories which find applications in steel
industry. IFGL has grown as an Indian multinational with manufacturing facilities located in
Brazil, China, Czech Republic, Germany, India, UK and USA. Krosaki HarimaCorporation Japan ,a
subsidiary of world’s second largest steel maker NipponSteel Corporation holding about 15 %
stake in IFGL. The company has a lot of subsidiaries with the ones in US and Germany
seemingly doing well. For the latest December quarter,on a consolidated basis company
reported a Sales of Rs. 195.7 Cr v/s Rs. 168.9 Cr. Net profit improved sharply from Rs. 9.5 Cr to
Rs. 14.3 Cr. For 9 Month period EPS is Rs. 13.9 which is more than the full year figure of Rs. 7.3
of last year. We expect IFGL will report its best ever performance in this full year. Considering
industry’s improving prospects, stabilization of production from its newly built plant at Kandla
SEZ and out performance of company in its financials, We don’t expect any scope for deep
correction, hence recommending a BUY.
Industry revival to spur growth :
Fate of refractory companies closely related with the growth of steel industry. Now steel industry
world around showing some earlier signs of revival.As a global player ,IFGL is expected to get
immense benefit from this revival.Its technical collaboration and equity participation with one of
the world leaders also helping the company to adopt latest technology in manufacturing process.
A major portion of company’s income is from exports and the currency valuation of currency is
also positive for it. Steel industry in the US and in Europe is coming out of pro-longed recession
and demand in India is also expected to pick up on account of major projects getting started.
Increase in capital expenditure for capacity expansion by major steel producers both within India
and internationally augurs well for the refractory industry
Low leverage balance sheet and attractive valuations augurs well :
IFGL reported debt equity ratio of 0.35x in Sep FY13, even after the series of acquisitions, and we
expect it to gradually reduce over time to 0.28x in FY15E.Company having an uninterrupted
dividend paying record for the past four years. Promoters holding more than 70 % stake (NIL
pledged) in the company and another 7 % is held by large investors. At a time the steel industry
is showing revival, We expect IFGL will report its best ever performance in this full year.
Considering industry’s improving prospects, stabilization of production from its newly built plant
at Kandla SEZ and out performance of company in its financials, We don’t expect any scope for
deep correction, hence recommending a BUY.
Valuation :
At CMP of INR 62, IFGL is trading at P/E of 3.7x and 3.2x its FY14E and FY15E earnings. Company
can post the EPS of Rs 16.8/18.6 in FY14/15E and RoE% of 20.3%/19.2% in FY14/15E . We rate a
BUY rating on the stock with an 12 months price target price of Rs 80.0 at 4.1x FY15E earnings.
Financials
Revenue
EBITDA
PAT
EBITDA Margin
PAT Margin
3QFY14
194.7
27.2
14.3
14.0%
7.4%
2QFY14
201.4
29.9
19.1
14.8%
9.7%
(Source: Company/ Eastwind Research)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
(QoQ)-%
-3.3%
-8.8%
-25.2%
(80) bps
(230) bps
3QFY13
169.0
18.3
9.5
10.9%
5.1%
Rs, Crore
(YoY)-%
15.3%
48.5%
50.3%
310 bps
230 bps
(Standalone)
3

4. Finolex Cables Ltd.
Key financials :
PARTICULAR
2009A
2010A
2011A
2012A
2013A
2014E
2015E
398
2
401
27
20
7
10
13
7
0
6
2
1.8
0.7
415
3
419
58
50
8
5
49
15
0
34
2
9.7
0.6
471
5
476
43
34
9
6
33
8
0
24
0
7.0
0.0
604
3
607
75
62
13
7
58
18
0
40
1
11.5
0.2
671
4
676
58
45
13
8
41
16
0
25
2
7.3
0.6
772
3
776
106
89
17
7
85
27
0
58
2
16.8
0.6
888
3
891
120
103
17
7
99
31
0
68
2
19.6
0.6
6.9%
1.5%
9.7%
3.7%
5.3%
2.8%
13.9%
8.0%
17.6%
1.1%
24.6%
15.6%
9.1%
5.1%
22.9%
0.0%
15.0%
8.3%
12.3%
6.6%
29.2%
0.5%
19.2%
11.9%
8.7%
3.8%
23.7%
1.9%
11.0%
7.1%
13.7%
7.5%
27.2%
1.0%
20.3%
14.6%
13.5%
7.6%
31.6%
1.0%
19.2%
15.0%
114
100
214
3
18
137
79
216
3
55
161
129
290
3
31
207
127
335
3
39
231
129
360
3
31
287
110
397
3
62
353
100
453
3
62
32.8
0.5
2.1
10.3
39.6
1.4
11.1
5.7
46.6
0.7
5.7
4.4
59.9
0.7
9.1
3.4
66.7
0.5
5.6
4.2
83.0
0.7
12.2
3.7
101.9
0.6
14.1
3.2
Performance
Revenue
Other Income
Total Income
EBITDA
EBIT
Depriciation
Intrest Cost
PBT
TAX
Derrivative Loss
Reported PAT
Dividend
EPS
DPS
Yeild %
EBITDA %
NPM %
Earning Yeild %
Dividend Yeild %
ROE %
ROCE%
Position
Net Worth
Total Debt
Capital Employed
No of Share
CMP
Valuation
Book Value
P/B
Int/Coverage
P/E
(Source: Company/ Eastwind Research)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
4

5. Private Sector Banks Result Review 3QFY14
Better than expected NII on the back of margin expansion and loan growth
In our coverage universe, banks NII grew by 15.7% YoY largely due to stable margin
and loan growth. Private sector banks are getting benefit from their high base CASA
franchise and low share of high cost wholesale bulk deposit. HDFC Bank, ICICI
Bank, Indusind Bank and DCB were continued to report 20%+ NII growth whereas
Federal Bank, INGVYSYA Bank, J&K Bank saw some stress in their earnings.
Well structure balance sheet led healthy growth at operating profit level
Operating expenses in our coverage universe remained stable on sequential basis
and on very positive note; they delivered on an average basis growth of 19.8% YoY
at operating profit level. This was due to healthy NII growth, stable fee income and
controlled operating leverage. We have highlighted above that banks with healthy
operating profit would do better going forward as strong performance at operating
profit level would be possible only in case of well structure balance sheet growth.
Economic growth and stress in asset quality issue would be resolve with the passage
of time. Although we have not seen any revival in economy nor improvement in asset
quality in near term but private sector banks are trading significant discount as
against their historical valuation due to possible fear of deterioration in assets.
Profitability increased due to healthy NII growth, controlled CI ratio and stable
asset quality
Most of banking stocks are trading at lower side of valuation band due to earnings
pressure, higher operating leverage and asset quality. In our coverage universe,
bank reported profit growth of 16.6% YoY higher than our expectation led by margin
Nifty Vs Bank Nifty during Year
expansion, controlled operating leverage and stable asset quality. Although we saw
some earnings pressure in many large and mid cap banks on which Axis bank’s
profitability was boost up by right back of investment depreciation and Yes Bank’s
provisions and contingencies was almost down by 100% which inflated profit growth
by 21.4% YoY.
Asset quality continues to persist and would take time despite of uptick in
economy
Private sector banks delivered better when compare to PSBs in term of asset quality
at sequential basis. Sequentially banks reported stable asset quality with high
coverage ratio which provided cushion to their earnings. But in our sense, asset
quality pressure continues to persist because economy growth is likely to be tepid
and it will take some time for recovery in domestic industrial activity and corporate
balance sheet’s leverage to decline. According to S&P, with the uptick in economy,
bank will have take some time for revival as banks have to struggle for capital base
too for further growth but private banks have adequate capital base and healthy tier1 capital. Outlook of asset quality in system is not positive and it would remain
challenge for banks in FY14.
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
5

6. Private Sector Banks Result Review 3QFY14
Well structure balance sheet growth and high CASA base would help to keep
profitability up
We like those banks which did well at operating profit level, keeping in mind that with
slower pace of economy growth and rising interest rate scenario, asset quality pressure
would persist. Provision and contingencies are already expected to remain high. Most of
bank’s profitability was down owing to higher provisions against loan loss. With the
recovery in economy loan growth and asset quality would improve with the passage of
time but operating leverage and margin expansion are permanent structure of balance
sheet. Banks with strong CASA base and adequate deposits growth that could support
loan growth easily without depending upon external fund would do better in going
forward.
Outlook
Private Banks are trading at significantly lower to their historical valuation or reasonable
valuation due to their possible earnings pressure and asset quality issue. This is on
account of sluggish economic growth and political un-clarity. Some banks in our universe
are capable to generate high level of profit, have high capital adequacy ratio and lower
level of stress. In our sense these banks would do better in current economy macro
situation. Out top picks are HDFC Bank, ICICI Bank, Indusind Bank and DCB.
Result Snapshot
PRIVATE BANK
AXISBANK
CUB
DCB
DHANBANK
FEDERALBNK
HDFCBANK
ICICIBANK
INDUSINDBK
INGVYSYABANK
J&KBANK
KARURVYSYA
SOUTHBANK
YESBANK
Total
NII
2984
198
94
57
546
4635
4256
730
416
647
305
350
665
15882
3QFY14E
PPP Net Profit
2615 1604
135
89
46
36
-8
-119
356
230
3888 2326
4440 2533
647
347
274
167
441
321
153
107
216
141
615
416
13818 8198
NII
2937
190
91
82
548
4477
4044
700
440
682
298
364
672
15525
2QFY14
PPP Net Profit
2750 1362
141
84
40
33
18 -1.85
354
226
3387 1982
3888 2352
588
330
276
176
496
303
157
83
212
127
713
371
13020 7427
NII
2495
163
72
74
497
3799
3499
578
403
594
308
353
584
13419
3QFY13
PPP Net Profit
2311 1296
131
85
32
27
14
4
394
211
3024 1859
3452 2250
472
267
263
162
435
289
212
113
235
128
563
342
11538 7033
YoY Growth
NII
PPP Net Profit
QoQ Growth
NII
PPP Net Profit
19.6
21.2
13.2
2.8
23.8
4.8
1.6
4.0
-4.9
-4.5
17.8
6.1
30.5
44.9
34.7
3.3
15.9
10.2
-23.6
9.8
-154.4
-9.7
-3084.3
9.1
-31.1
-0.4
-142.3
0.5
6352.4
1.8
22.0
21.6
28.6
28.6
25.1
12.6
3.5
5.2
14.8
14.2
17.3
7.7
26.3
37.2
29.9
4.3
10.1
5.1
3.3
8.9
4.3
1.3
3.3
11.2
-5.4
-5.2
-0.6
-11.1
-4.9
6.0
-0.9
-27.8
-5.5
2.4
-2.6
28.7
-0.7
13.9
18.4
-8.1
9.2
19.8
10.4
21.5
16.6
-3.7
-1.0
2.3
1.8
-13.8
6.1
11.3
12.0
10.4
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
6

7. IT Industry: 3QFY14 results review
"Clear acceleration in growth"
Price performance of our coverage:
Mix performance and margin sustainability, future outlook appears positive;
For IT Industry, 3QFY14 has carried out a quarter of mix set of numbers largely impacted
by seasonality and furloughs impact. However, most of companies expressed its
sanguine view for industry outlook and demand discretionary environment ahead. The
Top-4 companies responded a decent set of performance despite seasonally weak
quarter with aggregate revenue of 2.8% in USD term (QoQ).
Comparing with street expectation, Infosys and HCL Tech beat the street, while TCS and
Wipro reported inline set of numbers. On margin front, they surprised positively with
back-to-back quarters of margin improvement led by operational efficiencies and cost
rationalization.
Post earnings, almost all companies management have expressed for better earnings
outlook in near term and they were confident to see stronger FY15E than FY14E on
healthy growth prospect and a secular improvement in demand trend.
(Source: Eastwind)
Index Performance:
▲ 43%
(Source: Eastwind)
▲ 9.4%
(Source: Eastwind)
Key takeaways from 3QFY14 earnings:
USD revenue was marginally inline and Positive FY15E outlook: Reported USD revenues
were in line or very marginally below our estimate during the seasonally weak quarter
across the top tier. A part of this, companies management have given better outlook with
margin expansion for FY15E, even NASSCOM aired the earning guidance of 13-15% for
FY15E, better than FY14E and FY13.
Margin ramped up across the Tier-1 and most of mid cap space: Despite flattish currency
benefit, companies have been efficient to maintain its margin because of reinvested
higher growth and efficient strategy to improve utilization. With macro improving and
positive growth outlook, the operating advantage from investment is likely beginning to
play out.
SMAC and Digital were subject to discussion: Emerging verticals SMAC (Social, Mobility,
Analytics and Cloud) and Digital transformation are expected to bring next generation of
growth in IT Industry. A number of IT companies, especially tier-1 IT companies have
expressed its priority area and strategy to pan-out growth opportunities on these
emerging verticals. Current uptrend in discretionary spend is being driven by the same.
Deal Pipeline remains healthy: During the quarter, weak seasonality marginally impacted
order inflow. For near term, deal pipeline remains healthy and somehow, Pricing will be
marginally under pressure in the traditional IT segment, Application Development and
Management segment. While, we do not see any pressure on new emerging segments like
SMAC, Digital, Infra, etc.
Earning Performance v/s Estimates;
INFY
HCLTECH
TECHM
ZENSARTECH
TATA ELXSI
Outperform
TCS
WIPRO
CMC
MINDTREE
HEXAWARE
NIITTECH
PERSISTENT
ECLERX
Inline
KPIT
Underperform
(Source: Eastwind)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
7

8. IT Industry: 3QFY14 results review
Companies Specific Earnings Review
Company
TCS
INFY*
WIPRO
HCLTECH#
TECHM
CMC
MINDTREE
HEXAWARE$
NIITTECH
KPIT
PERSISTENT
ZENSARTECH
ECLERX
TATA ELXSI
3QFY13
16069.9
10424.0
9587.5
6273.8
3523.7
493.0
590.1
507.5
514.4
563.3
333.0
525.5
170.8
156.7
Sales,cr
2QFY14 3QFY14E
20977.2 21606.6
12965.0 13069.1
10990.7 11342.4
7961.0 8160.0
4771.5 4819.2
560.8
566.4
769.5
792.2
621.1
629.2
587.3
593.5
702.8
722.0
432.4
436.1
599.7
590.6
214.6
218.5
190.0
195.5
EBITDA,cr
3QFY14 3QFY13 2QFY14 3QFY14E 3QFY14
21294.0 4660.5 6633.0 6300.3
6686.8
13026.0 2677.0 2837.0 3424.1
3258.9
11327.4 2050.2 2503.8 2552.0
2652.7
8184.0 1416.6 2093.0 2080.8
2125.0
4898.6
756.9
1110.9 1084.3
1136.3
561.0
83.2
88.4
87.8
90.8
790.6
120.4
159.8
153.9
154.1
620.0
109.0
147.7
147.9
139.4
587.3
81.3
88.6
86.1
95.1
677.9
87.9
108.1
115.5
103.5
432.8
82.4
100.8
104.7
104.3
594.1
70.1
102.5
87.5
87.3
219.5
66.8
92.8
90.5
88.8
200.1
16.5
32.4
40.4
43.6
*Infosys (net profit for 2QFY14 includes the one-time visa charge of Rs219 crore).
3QFY13
3549.6
2369.0
1598.1
974.3
455.9
61.1
87.7
66.2
56.6
59.9
49.5
48.7
49.8
8.8
PAT,cr
2QFY14 3QFY14E 3QFY14
4633.3
5096.7
5333.4
2407.0
2695.8
2874.9
1932.0
1984.2
2014.7
1416.0
1472.6
1495.0
718.2
754.1
1009.8
67.3
65.6
70.6
113.0
98.6
114.0
98.7
103.6
103.3
60.4
57.4
52.5
66.7
69.4
60.8
60.8
66.9
64.2
70.6
50.4
50.8
67.2
61.4
62.3
19.9
20.5
21.6
(Source: Company/Eastwind)
# HCL Technologies (June year ending). $ Hexaware (Follow Callendar year)
Growth and Margin Performance-%
Company
TCS
INFY
WIPRO
HCLTECH
TECHM
CMC
MINDTREE
HEXAWARE
NIITTECH
KPIT
PERSISTENT
ZENSARTECH
ECLERX
TATA ELXSI
Growth (QoQ)-%
Sales
EBITDA
PAT
1.5%
0.8%
15.1%
0.5%
14.9%
19.4%
3.1%
5.9%
4.3%
2.8%
1.5%
5.6%
2.7%
2.3%
40.6%
0.0%
2.7%
4.8%
2.7%
-3.6%
0.9%
-0.2%
-5.7%
4.7%
0.0%
7.3%
-13.1%
-3.5%
-4.3%
-8.8%
0.1%
3.5%
5.6%
-0.9%
-14.9%
-28.0%
2.3%
-4.3%
-7.2%
5.3%
34.6%
8.5%
Growth (YoY)-%
Sales
EBITDA
PAT
32.5%
43.5%
50.3%
25.0%
21.7%
21.4%
18.1%
29.4%
26.1%
30.4%
50.0%
53.4%
39.0%
50.1%
121.5%
13.8%
9.1%
15.5%
34.0%
28.0%
30.0%
22.2%
27.9%
56.0%
14.2%
17.0%
-7.2%
20.3%
17.7%
1.5%
30.0%
26.6%
29.7%
13.1%
24.5%
4.3%
28.5%
32.9%
25.2%
27.7%
164.4%
146.9%
Margin-%
EBITDA
PAT
31.4%
25.0%
25.0%
22.1%
23.4%
17.8%
26.0%
18.3%
23.2%
20.6%
16.2%
12.6%
19.5%
14.4%
22.5%
16.7%
16.2%
8.9%
15.3%
9.0%
24.1%
14.8%
14.7%
8.6%
40.5%
28.4%
21.8%
10.8%
Margin Change,(QoQ)
EBITDA
PAT
(20bps)
290bps
310bps
350bps
60bps
20bps
(30bps)
50bps
(10bps)
560bps
40bps
60bps%
(130bps)
(30bps)
(130bps)
80bps
110bps
(130bps)
(10bps)
(50bps)
80bps
80bps
(240bps)
(320bps)
(280bps)
(290bps)
470bps
30bps
(Source: Company/Eastwind)
Tier-1 ; The top four IT companies delivered a decent performance in a seasonally soft quarter with an aggregate revenue growth of
2.8% QoQ. INFY and HCL Tech beat the street on growth and margin front, while TCS and Wipro reported inline set of numbers.
Mid cap/Niche (Tier-2)-TECHM and Persistent outmatch peers; TECHM’s broad based revenue growth and deal signing was robust.
Persistent system surprised positively on margin front for the second consecutive quarter led by higher utilization. Apart of this,
Zensar Tech also reported good margin ramp up during the quarter. As a backbencher, KPIT, NIITTECH and Hexaware reported flat to
below expected numbers.
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
8

9. IT Industry: 3QFY14 results review
Operating Metrics across Tier-1 IT space
Sales mix- Geogrpahy wise
Discretionary spends continue to gain
momentum in America and in specific
pockets in Europe.
(Source: Company/Eastwind)
Sales mix- Segment wise
During the quarter, manufacturing
segment reported attractive growth.
Whilea
mong
service
offerings,
Infrastructure Management Services
(IMS) will be a key growth driver.
(Source: Company/Eastwind)
Utilization Rate-%
Employee Addition;
TCS
INFY WIPRO HCLTECH
Total Employee 290713 158404 146402 88332
Gross Addition 14663 6,682 -814 7593
(Source: Company/Eastwind)
Attirition rate-%
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
(Source: Company/Eastwind)
9

10. IT Industry: 3QFY14 results review
Key Takeaways from Conference Call;
(1) TCS
- Confident of beating NASSCOM's FY15 growth guidance of 13-15%,
-FY15E will be better than the current fiscal,
-Expect Europe to perform better than the US,
-Chasing 20-25 large transformational deals,
-Seeing an uptick in discretionary spends,
- Lateral hiring 50000-55000 in FY15E,
(2) INFOSYS
-Management upgraded its earning guidance for FY14E from 9-10% to 11.5-12%.
-They are seeing confidence coming back from client’s metrics.
-The Company is looking to bring in about maximum 6,000 off-campus offers.
(3) WIPRO
-4QFY14: Revenues from IT Services business to be in the range of $ 1,712 million to
$1,745 million* including the revenues from acquisition.
-Expect better FY15E than FY14.
-Hiring target for FY15E would be like FY14, will focus on onsite hiring.
-Wage hike by 1st June ,2014.
(4) HCLTECH:
-The company is expecting to catch up more deal from US and Europe because of better
demand environment ahead.
-The company expects to see margin at a range of 21-22% in near term.
-The wage hike is spread over two quarters or rather more than two quarters. Q3 and Q4
margin could be impact be 30bps.
(5) TECHM
-The Company aspires revenues of USD 5 billion by 2015. This expects to be through
organic and inorganic initiatives (looking for USD 0.5 billion to 0.8 billion as acquisition
targets) going forward.
-Year 2014 would be better year than FY13, demand environment and Order pipeline is
looking good.
-Despite salary hike in 4Q, margin would be on place. Wage hike in 4Q could impact
200bps in margin front, but management is confident to mitigate.
-Expecting utilisation rate to 77% from 75%(3QFY14) in near term.
-The tax rate expected to be 26% for the FY'14.
(6) CMC
-CMC continues to target growth ahead of the overall IT industry; the company expects to
grow faster than that in the current financial year.
-Expects operating Profit margin at 16 percent for FY14E,
-The company expects to maintatin its tax regime at 20-20.5% for coming quarter. For
next year tax rate could be stand at a range of 20-21%.
-Company’s hiring Plan; a net addition of 400-500 this year.
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
10

11. IT Industry: 3QFY14 results review
(7) PERSISTENT SYS
- Persistent is confident of doing more than 15% revenue ($) growth forFY14E.
-They expect to maintain margin at 24-25% for FY14E.
-Expects 20-21% growth in the next year from IP led business, which in turn will help
improve margins going forward.
-The Company’s focus on newer technologies like cloud, analytics, mobility and digital
transformation are gaining traction.
-The company is optimistic to see more deals on SMACS and IP led business.
(8) NIITTECH
-Company expects FY14 to be better than FY13 with respect to both revenue growth and
EBIT margin.
-Managent is very confident to maintain attrition at 12-13% and utilization at 77-80% in
near to medium term.
-It expects the growth momentum will sustain with holding the margins going forward.
(9) ZENSARTECH
- It expects double-digit growth in the Enterprise Services business for the FY15 on the
back of healthy pipeline.
- It anticipates good growth from the IMS for the FY'15.
-Management has expressed its margin at a range of 16-17%
(10) ECLERX
-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.
-On margins, it indicated that it will continue to operate in the mid 30% (30-31%) going
forward.
-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.
(11) MINDTREE
-Management expects the strong traction in top 10/20 clients to continue.
-Expects 4QFY14E revenue performance to be better than both 4QFY13 revenue
performance (+2.8% QoQ) as well as 3QFY14 revenue growth (+2.5% QoQ).
-Company expects to maintain operating margins at current levels in the near/medium
term
(12) KPIT
-Management expects to see better revenue growth in 4QFY14E than 3QFY14.
-The company is making significant changes in organization structure.
-Margins are expected to improve going forward as the one off during the quarter will be
absent.
-Utilization will also go up as revenue growth is realized on the back two deals won this
quarter which have a duration of 12 months.
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
11

12. IT Industry: 3QFY14 results review
Industry Outlook:
For FY15E, NASSCOM expects IT exports
to grow by 13-15% and domestic market
to grow by 9-12% based on broad
feedback loop from companies and
captives.
We have seen a significant increase in global technology spending this year, creating
opportunities for the Indian software services sector to post double-digit growth again in
export as well as in the domestic markets. FY15E promises to be bigger and stronger than
the last 3 years, which were marked by bloodbath in global markets due to Euro-zone
crisis and falling consumer confidence in the US. Demand is set to pick up in sectors like
BFSI, healthcare, retail and transportation globally in the year ahead.
For FY15E, We expect that strong fundamentals should help to sustain earning
momentum in FY15E. Foray into niche verticals and executions of large deal would play an
important factor for better earning visibility in near future. There is a window of
opportunity for competent large caps and midcaps to displace incumbents and gain some
incremental business. In the past 4 quarters, large caps (four companies) have grown at
3.4% CQGR, while midcaps (five companies) at 3.2%which is comparable to larger peers.
Concerns:
US Immigration Bill to remain an
overhang in short-to-medium term,
However, hardening of regulatory related to visa approval in USA, Canada and Australia
could spoil the party. Even, the approval of Immigration Bill attached with higher visa fee,
wage requirements and enhanced audit by US agencies could turn the growth story of
Indian IT players adversely. If passed in its current form, the Bill could hurt the margins of
the Indian IT export sector, which derives almost 55-60% of its revenues from USA.
Our top picks:
TCS and HCLT are growing the fastest
and
with
tremendous
margin
performance. Infy is accelerating growth
…
While all companies are accelerating its revenue growth and shaping up its margin
because of favorable demand and supply environment. Across the tier-1 IT space, TCS,
INFY and HCL TECH remain our best picks in order of our preference. These companies
are very much optimistic to improve margin as well as operational efficiencies with
healthy deal pipeline across emerging verticals as well as traditional IT Space under
positive demand scenario.
Hence, with strong medium term earnings visibility, better demand environment and
optimistic management comments, we maintain our positive stance on (In order of
preference) TECHM, PERSISTENT, ZENSARTECH, ECLERX and KPIT under mid cap space.
View and valuation:
Company
TCS
INFOSYS
HCLTECH
WIPRO
TECHM
CMC
NIITTECH
KPIT
HEXAWARE
PERSISTENT
eCLERX
TATAELXSI
ZENSARTECH
MINDTREE
CMP
(26.02.14)
2182.4
3803.85
1572.9
603.35
1821.65
1450.4
446.4
174.9
165.85
1119.25
1341.05
518.65
387.2
1632.7
View
Target
BUY
BUY
HOLD
NEUTRAL
BUY
NEUTRAL
HOLD
BUY
NEUTRAL
HOLD
BUY
NEUTRAL
BUY
NEUTRAL
2510
3910
1560
2130
443
177
1065
1358
440
-
Upside
%
15.0%
2.8%
-0.8%
16.9%
-0.8%
1.2%
-4.8%
1.3%
13.6%
-
FY13
71.82
164.2
58.10
25.0
123.97
75.3
36.28
10.8
13.90
46.1
64.25
10.6
40.03
89.7
EPS-Rs
FY14E
95.00
188.0
79.36
31.1
155.37
86.0
43.33
12.6
15.04
61.4
71.61
24.0
52.70
100.9
FY15E
109.31
218.2
98.11
33.5
175.50
92.4
54.18
16.8
16.01
79.1
83.65
28.4
68.97
114.9
FY13
30.39
23.16
27.07
24.09
14.69
19.27
12.30
16.19
11.93
24.27
20.87
48.79
9.67
18.20
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
P/E-x
FY14E
22.97
20.24
19.82
19.42
11.72
16.86
10.30
13.85
11.02
18.22
18.73
21.59
7.35
16.18
FY15E
19.97
17.44
16.03
18.01
10.38
15.70
8.24
10.40
10.36
14.15
16.03
18.29
5.61
14.21
FY13
36.4%
24.8%
30.7%
21.7%
34.8%
24.1%
20.0%
20.1%
27.4%
18.1%
43.8%
16.9%
23.2%
28.4%
RoE-%
FY14E
37.5%
23.7%
31.5%
22.7%
30.7%
22.8%
19.4%
19.3%
24.9%
20.3%
37.9%
29.7%
24.5%
25.6%
FY15E
34.4%
22.9%
29.4%
20.8%
26.0%
20.7%
19.6%
20.7%
22.5%
21.4%
34.4%
27.4%
25.2%
23.6%
12

13. Public Sector Banks Result Review 3QFY14
Moderate NII growth in the system due to muted loan growth
Net interest income of our universe grew by 10.4% YoY on the back of margin
expansion on YoY basis along with moderate to healthy loan growth. In our coverage
universe, Bank of India and UCO Bank were reported healthy NII growth whereas
Andhra Bank reported 10.6% YoY declined in NII. SBI reported NII growth of 13 YoY
largely due to loan growth of 17% while margin was declined by 12 bps and flat at
QoQ basis.
Lower operating profit on account of higher wage settlement provisions and
cost related to branch expenses
Operating profit of our universe was declined by 1.5% YoY on the back of higher
cost against employee provisions, operating cost and non supportive other income.
Most of PSBs were reported negative growth in their other income led by lower
corporate fee income. In our universe ALBK, Bank of India and UCO bank reported
healthy operating profit. But we have not seen improvement of operating metrics in
these banks. Operating leverage of PSBs bank has been increasing led higher wage
provisions and branch expansion.
Profitability declined led by higher operating expenses, higher provisions and
Nifty Vs Bank Nifty during Year
Loan (Rs tn) and YoY Gr(%)
creation of DTL special reserve
Earnings growth of Public Sector Banks (PSBs) are remained weak largely due to
higher operating expenses led by employee provisions and surged in provisions and
contingencies and higher tax provision for DTL special reserve as per RBI’s
suggestion. In our banking coverage universe, profitability declined by 27% YoY and
11.5% QoQ. UCO Bank reported 208% YoY growth while Andhra Bank de-grew by
82% YoY.
Asset quality deterioration sequentially on account of tight liquidity condition
and rising interest rate
Most of PSBs reported 10 to 20% deterioration in asset quality sequentially while
United Bank’s GNPA and net NPA were 11% and 7.5% of gross advance and net
advance respectively and fresh slippages were 16% (annualized). On slippage front
some banks like PNB, Bank of Baroda, Union Bank and UCO bank showed some
strength. But in tight economy condition and rising interest rate scenario, asset
quality pressure would continue. Banks with higher coverage ratio would be
protected. PNB and Bank of Baroda are in better place and their management
commentaries reflect some confidence on asset quality issue.
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
13

14. Public Sector Banks Result Review 3QFY14
Worry about the structure damage of balance sheet, declined profit is not matter
We are not worried about the declining trend of PSBs profitability but to worry about the
structural damage of balance sheet. Most of PSBs were reported moderate to healthy
loan growth but their deposits and CASA growth were absent. In rising interest rate
scenario, banks with higher low cost deposits would be able to report healthy NII growth
on the back of margin expansion and would absorb operating cost. In our sense, PSBs
would either have to improve their cost structure or improve deposits franchise to report
growth at operating profit level. On cost structure front, we are pessimist as PSBs have
higher numbers of unproductive employee than private banks and their salary at lower to
middle level management are no means less than private sector banks. So banks with
higher deposits growth and strong CASA would be able to report healthy growth going
forward. We have buy rating on SBI on the back of its high CASA base and reasonable
valuation despite of bank’s profitability was declined by 34% YoY.
Outlook
Most of PSBs are trading at lower range of valuation multiple owing to absence of core
earnings, operating leverage, deteriorating asset quality and higher amount of restructure
assets that are in pipeline. Most of banking stocks reported moderate revenue and profit
growth owing to multiple headwinds. In near term we are not seeing improvement in
economic condition and asset quality pressure are expected to remain in the system due
to tight liquidity situation and rising interest rate. Post result we like SBI, Union Bank and
UCO Bank due to their structural improvement in balance sheet, operating and financial
metrics.
Result Snapshot
PSU BANKS
ALBK
ANDHRABANK
BANKBARODA
BANKINDIA
CANBK
DENABANK
IOB
ORIENTBANK
PNB
SBIN
SYNDIBANK
UCOBANK
UNIONBANK
VIJAYABANK
Total
NII
1336
868
3057
2719
2191
661
1398
1230
4221
12641
1359
1566
1964
495
34369
3QFY14
PPP Net Profit
1008
325
522
46
2197
1048
2144
586
1425
626
371
68
961
75
858
224
2702
755
7618
2235
806
380
1137
315
1262
349
168
11
22170
6717
NII
1309
1045
2895
2527
2191
107
1452
1281
4016
12251
1411
1569
1954
705
33404
2QFY14
PPP Net Profit
1154
276
643
71
2125
1168
2102
622
1425
626
369
625
791
133
825
251
2535
505
6312
2375
811
470
1166
400
1225
208
273
136
20601
7590
NII
1330
971
2841
2308
1988
615
1382
1204
3733
11154
1400
1177
1891
456
31120
3QFY13
PPP Net Profit
860
311
712
257
2256
1012
1856
803
1516
714
443
206
1017
116
926
326
2682
1306
7791
3396
864
508
831
102
1358
302
261
127
22513
9175
YoY Growth
NII
PPP Net Profit
0.4
17.2
4.7
-10.6
-26.8
-82.3
7.6
-2.6
3.6
17.8
15.5
-27.0
10.2
-6.0
-12.3
7.5
-16.3
-67.1
1.2
-5.5
-35.3
2.2
-7.3
-31.2
13.1
0.8
-42.2
13.3
-2.2
-34.2
-3.0
-6.8
-25.2
33.0
36.8
208.4
3.8
-7.1
15.5
8.5
-35.7
-91.0
10.4
-1.5
-26.8
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
QoQ Growth
NII
PPP Net Profit
2.0
-12.6
18.0
-16.9
-18.9
-35.5
5.6
3.4
-10.3
7.6
2.0
-5.8
0.0
0.0
0.0
517.7
0.5
-89.2
-3.7
21.5
-43.6
-3.9
4.0
-10.6
5.1
6.6
49.6
3.2
20.7
-5.9
-3.7
-0.7
-19.2
-0.2
-2.5
-21.4
0.5
3.0
67.8
-29.8
-38.6
-91.6
2.9
7.6
-11.5
14

15. SHREE CEMENT.
Update
Book Profit
CMP
Target Price
Previous Target Price
Upside
Change from Previous
4772
4791
4791
0%
NA
Market Data
BSE Code
NSE Symbol
500387
SHREECEM
52wk Range H/L
Mkt Capital (Rs Crores)
Average Daily Volume (Nos.)
Nifty
5210/3413
16572
4143
6186
Stock Performance-%
1M
8.2
9.5
Absolute
Rel. to Nifty
1yr
9.5
3.8
YTD
8.1
4.0
Share Holding Pattern-%
2QFY14
64.8
8.2
5.9
21.2
Promoters
FII
DII
Others
1QFY14 4QFY13
64.8
64.8
8.2
8.1
5.7
5.9
21.3
21.2
1 yr Forward P/B
6000
PRICE
2x
3x
4x
5000
1.5x
2.5x
3.5x
4.5x
4000
3000
2000
1000
Apr-13
Nov-13
Sep-12
Jul-11
Feb-12
Dec-10
Oct-09
May-10
Mar-09
Jan-08
Aug-08
Jun-07
Apr-06
Nov-06
Sep-05
Jul-04
Feb-05
Dec-03
Oct-02
May-03
Mar-02
0
Source - Comapany/EastWind Research
"Book Profit"
25th Feb' 14
Profitability and Earning drag may surprise for the next cosecutive quarters.
The stock is trading at 4x in 1 yr forward P/B chart.we believe for the current market
scenario the price is fare enough to trade.But looking at future capex plans and sluggish
demand we belive the earnings and profitability of Shree cement may fall for the next
two consecutive quarters.The profitability may fall due to incrising depriciation.Till now
the company's depriciation level is stable but it may surprise further.so we recommend
its a better pic to book profit.
Volumes grew by18 % but prices came down by 5%. So the EBITDA margin has hit
badly:Shree Cement Ltd has reported a 47% fall in its December quarter net profit on
lower sales as well as 5% degrowth in realization. PAT impacted due to lower other
income (down by 70% YOY), Depriciation burden on EBIDTA (Depriciation increased 41%
YOY). Volumes grew by18 % to3.8mn ton from 3.3mn ton QOQ. Net profit decreased by
47% yoy from Rs.217.44 crore (Rs.62.42 per share) in 2Q13 to Rs.115.49 crore (Rs.33.15
per share) in 2Q14.Total net income from operations stood at Rs.1318.13 crore in 2Q14,
a 6% fall yoy from Rs.1401.23 crore in 2Q13.Other income decreased from Rs.30.2 crore
in 2Q13 to Rs.9.9 crore in 2Q14.In the mean time company declares a Rs.10 as interim
dividend/share.
Power Segment: Realization Down By 15% : For power generation the net realization has
come down from Rs 383 to Rs 334 compared to last year same quarter and in the first
quarter it was still better at Rs 397.So the power realization is down by 13 percent and
hence sales also have come down by 35 percent to Rs.290 Cr. At the same time 14%
increase in its profitability from power segment to Rs112.56 crore while its cement
segment reported 79% fall in its profitability to Rs37.65 crore.
MAT Credit support the buttom line :
During the Quarter Company got MAT (minimum alternative tax) credit entitlement of
Rs9.25 crore and deferred tax of Rs1.79 crore. This reduced total tax payable amount to
Rs15.27 crore from Rs26.31 crore.
On the expansion front :
The 2m-ton Line-IX clinker unit at Ras, Rajasthan, was commissioned in Jun’13.Line X of
similar capacity along with 25MW of WHRS (at the same location) is expected by
Jun’14.Two grinding units of 2m tons each, at Ras and in Bihar,are being constructed and
expected by Jun’14.We expect Shree to be a 21.5m-tpa company by Jun’15.It plans to
foray into high demanding eastern.Total capex for these expansion is Rs.3,000 crore
which is spread over next 2 years.
Financials :
Q2FY14
Y-o-Y %
Q-o-Q %
Q2FY13
Q1FY14
Revenue
1318
-7.7
5.6
1428
1248
EBIDTA
271
-24.7
8.8
360
249
Net Profit
115
-46.9
-32.9
217
172
EPS
33
-46.9
-32.9
62
49
EBIDTA%
21
-18.4
3.1
25
20
NPM%
9
-42.5
-36.5
15
14
(In Crs)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
15

16. SHREE CEMENT.
Management Corner : From mid-January there is a big change in demand scenario
because of the Indian calendar, the prices have improved, the demand has also
improved and they think that January to June some impact of elections will be there pre-election demand and other things. So margins should be better than 21 percent.
1500
60
Revenue
1450
50
Growth
1400
40
1350
Outlook :
From the view company Operations in the high utilisation North and Central markets,
capacity expansions underway, low gearing and strong RoE are fundamental positives.
We believe although, near term challenges in terms of a slowdown in demand for
cement would remain, strong balance sheet and better efficiency in terms of cost
remains a key positive for this company to overcome challenges.Company Management
is bull for the rest two quarters of FY2014 as according to them demand has already
buttom out.We are positive on the stock as it always beats its peers group with lower
operational cost.
The stock is trading at 4x in 1 yr forward P/B chart.we believe for the current market
scenario the price is fare enough to trade.But looking at future capex plans and
sluggish demand we belive the earnings and profitability of Shree cement may fall for
the next two consecutive quarters.The profitability may fall due to incrising
depriciation.Till now the company's depriciation level is stable but it may surprise
further.so we recommend its a better pic to book profit.
we recommend book profit at a 11% high,and stay out from the stock for medium
term,till the triggers hit.
Company Description : Shree Cement (SCL) is a cement producer operating in the two
segments cement and power. As of June 30, 2012, the company had a cement capacity
of 13.5 million tonnes per annum (MTPA) and power capacity of 560 MW. The
company’s brands include Shree Ultra,Bangur Cement and Rockstrong Cement. It has
manufacturing facilities at Beawar and Ras in Ajmer and Pali district and grinding units
at Khushkhera, Suratgarh and Jaipur, respectively, in Rajasthan and Roorkee in
Uttarakhand.
P/L PERFORMANCE
FY11
FY12
FY13
FY14E
Net Revenue from Operation
3454
5898
5590
5409
Other Income
203
163
188
197
Total Income
3656
6061
5779
5550
Power and fuel
905
1500
1513
1409
Freight and forwarding
602
1006
915
1090
Expenditure
2569
4252
4029
4318
EBITDA
885
1646
1561
1091
Depriciation
676
873
436
562
Interest Cost
98
235
193
138
Net tax expense / (benefit)
-99
69
115
54
PAT
365
619
1004
478
ROE%
20.8
23.1
26.1
11.0
Narnolia Securities Ltd,
30
1300
20
1250
10
1200
0
1150
-10
1100
-20
Source - Comapany/EastWind Research
EBIDTA
450
400
INTEREST SERVICE COVERAGE
RATIO
10
350
300
8
250
6
200
150
4
100
2
50
0
0
Source - Comapany/EastWind Research
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
-
12
NPM %
OPM %
EBITDA %
16

17. SHREE CEMENT.
B/S PERFORMANCE
Share capital
Reserve & Surplus
Total equity
Long-term borrowings
Short-term borrowings
Long-term provisions
Trade payables
Short-term provisions
Total liabilities
Intangibles
Tangible assets
Capital work-in-progress
Long-term loans and advances
Inventories
Trade receivables
Cash and bank balances
Short-term loans and advances
Total Assets
RATIOS
P/B
EPS
Debtor to Turnover%
Creditors to Turnover%
Inventories to Turnover%
FY10
FY11
FY12
FY13
35
1798
1833
1789
318
28
171
472
4906
0
752
967
299
358
82
416
415
4906
FY10
4.4
212.3
2.3
4.7
1.0
35
1951
1986
1472
217
16
185
267
4940
0
1167
729
308
404
108
499
429
4940
FY11
3.6
118.6
3.1
5.3
1.2
35
2699
2734
818
143
17
584
178
5973
0
1521
97
205
503
181
459
363
5973
FY12
3.8
177.5
3.1
9.9
0.9
35
3809
3844
443
534
18
81
87
6160
0
1782
133
378
530
315
369
326
6160
FY13
4.2
288.2
5.6
1.4
0.9
Trading At :
Source - Comapany/EastWind Research
Narnolia Securities Ltd,
17

18. "BOOK PART
PROFIT "
AXIS BANK
25th Feb, 2014
Company Updated
CMP
Target Price
Previous Target Price
Upside
Change from Previous
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Cr)
Average Daily Volume
Nifty
Stock Performance
1M
Absolute
-2.2
Rel.to Nifty
0.8
BOOK PART
PROFIT
1237
1217
1147
-2
6
532215
AXISBANK
1549/764
55229
3.14 lakh
6186
1yr
-17.4
-21.0
YTD
-17.4
-21.0
Share Holding Pattern-%
Current 4QFY13 3QFY1
3
Promoters
33.9
33.9
33.9
FII
43.2
43.4
40.7
DII
9.7
4.9
8.8
Others
13.2
17.8
16.6
Axis Bank Vs Nifty
Axis Bank is now trading at Rs.1237/share which met our target price of
Rs.1217. This price implies P/BV multiple of 1.5 times which is quite
reasonable as per our view. We advice our investor to book part profit from
this stock as we neither see improvement of asset quality nor revival in
economy in near term. In 3QFY14’s result, bank’s profitability was up by 19%
largely due to reversal of investment depreciation otherwise operating profit
was just up by 10.7% YoY. Bank’s exposure to risky sector (Power +
Infrastructure) remained high at 12.87% as against 12.64% in previous quarter.
However, fresh slippage was marginally softened to Rs.589 cr versus Rs.618
on sequential basis. Impairment of assets (GNPA+ Restructure Assets)
remained stable at 3.7% of net advance which was higher among peers.
Lower multiple on account of uncomfortable earnings and lower corporate
loan demand
We have lower valuation multiple of bank in compare to its peers on account of
uncomfortable earnings and asset quality stress. Operating performance of bank
was remained under pressure as bank’s core operating revenue (NII + Other
Income) grew by 12.6 YoY owing to lower fee income led by muted corporate and
retail fee income. Corporate loan segment which constituted 46% of total loan grew
by 3% YoY while retail segment loan grew by 44% YoY which constituted 33% of
total loan. Incremental loan growth came from retail segment implying that bank has
to maintain retail growth trajectory for industry average loan growth of 15%. Demand
of corporate loan remained weak due to prevailing economy scenario. So loan
growth for FY14 is likely to be line with system credit growth due to weakness in
corporate loan demand and moderation in retail loan.
Asset quality pressure persist; exposure to risky sector remained high
Asset quality pressure remained persist during the quarter with GNPA and net NPA
increased by 10% and 20% YoY respectively in absolute term. Fresh slippage inch
up improved to Rs.589 cr as against Rs.618 cr in previous quarter. In percentage
term GNPA and net NPA stood at 1.42% and 0.47% as against 1.36% and 0.42%
respectively in previous quarter. Provision coverage ratio without technical write off
declined by 270 bps QoQ led by lower provisions made on sequential basis.
Impairment of assets (GNPA + Restructure Assets) for the quarter remained stable
at 3.7% which was higher among peers. Moreover bank’s exposure to risky sector
(Power + Infrastructure) was remained high at 12.87% of net advance where
slippage risks are relatively high.
Financials
NII
Total Income
PPP
Net Profit
EPS
2011
6566
11238
6377
3340
81.4
Narnolia Securities Ltd,
2012
8026
13513
7413
4224
102.2
Rs, Cr
2013
2014E
2015E
9666
12224
14775
16217
19146
21697
9303
11206
12367
5179
5826
6934
110.7
124.2
148.2
(Source: Company/Eastwind)
18

19. AXIS BANK
Moderate growth in profit & loss
Bank’s profitability was up by 19% due to reversal of investment depreciation. Overall
provisions and contingencies were lower by 71% QoQ which led PBT growth of 22%
YoY. At operating profit level, bank grew by 10.7% YoY which was lower among peers
(HDFC Bank 29 YoY, ICICI bank 28.6%). Bank’s NII grew by 19.6% YoY largely due to
margin expansion of 14 bps YoY which was supported by low cost deposits franchise.
Core operating revenue (NII+ other income) grew 12.6% owing to muted other income
growth of 1.8% YoY.
Valuation & View
We value bank at Rs.1217/share implying 1.5 times of FY14E’s book value which is quite
reasonable as per our view. We have given this multiple on account of uncomfortable
earning and asset quality stress. Bank’s profitability was up due to reversal of investment
depreciation otherwise growth at operating profit level was remained lower as compare to
its peers. Asset quality increased at moderate pace with high exposure in risky sector
where fresh slippage risks are remaining high.
Valuation Band
1 Yr forward P/BV
1 Yr forward P/E
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
19

20. AXIS BANK
Fundamenatl throught graph
NII growth led by healthy CD ratio and
margin expansion on YoY basis
Lower other income and higher CI ratio led
muted PPP growth
Profit growth was higher than expectation on
the back of lower provisions
Source: Eastwind/Company
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
20

21. AXIS BANK
Quarterly Result
Quarterly Result
Interest/discount on advances / bills
Income on investments
Interest on balances with Reserve Bank of India
Others
Total Interest Income
Others Income
Total Income
Interest Expended
NII
Other Income
Total Income
Employee
Other Expenses
Operating Expenses
PPP( Rs Cr)
Provisions
PBT
Tax
Net Profit
3QFY14
5557
2110
49
73
7789
1644
4628
4805
2984
1644
4628
655
1358
2013
2615
202
2413
808
1604
2QFY14
5394
2143
35
37
7609
1766
4703
4672
2937
1766
4703
644
1309
1953
2750
687
2062
700
1362
Balance Sheet Date
Net Worth
Deposits
Loan
37649 36224 27027
262398 255365 244501
211467 201303 179504
Asset qualtiy( Rs Cr)
GNPA
NPA
%GNPA
%NPA
3008
1003
1.4
0.5
2734
838
1.4
0.4
3QFY13 % YoY Gr % QoQ Gr 3QFY14E Variation
4907
13.3
3.0
5748
3.4
2014
4.8
-1.5
2235
5.9
25
97.7
39.4
35
-29.2
19
277.1
95.6
38
-47.4
6965
11.8
2.4
8056
3.4
1615
1.8
-6.9
1774
7.9
4110
12.6
-1.6
4780
3.3
4470
7.5
2.8
5049
5.1
2495
19.6
1.6
3006
0.8
1615
1.8
-6.9
1774
7.9
4110
12.6
-1.6
4780
3.3
615
6.5
1.7
0
1134
19.8
3.8
0
1749
15.1
3.1
2008
-0.3
2362
10.7
-4.9
2772
6.0
387
-47.7
-70.5
752
271.4
1975
22.2
17.0
2020 -16.3
628
28.8
15.5
687
-15.0
1347
19.1
17.7
1333 -16.9
2275
679
1.3
0.4
39.3
3.9
7.3
2.8
17.8
5.0
32.2
10.0
47.8
19.7
37558
272935
214892
-0.2
4.0
1.6
-
Source: Eastwind/Company
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
21

22. AXIS BANK
FINANCIALS & ASSUPTION
Income Statement
2011
2012
2013
2014E
2015E
Interest Income
Interest Expense
NII
Change (%)
Non Interest Income
Total Income
Change (%)
Operating Expenses
Pre Provision Profits
Change (%)
Provisions
PBT
PAT
Change (%)
15155
8589
6566
31.2
4671
11238
25.3
4860
6377
22.4
3033
3345
3340
34.8
21995
13969
8026
22.2
5487
13513
20.2
6100
7413
16.2
3189
4224
4224
26.5
27183
17516
9666
20.4
6551
16217
20.0
6914
9303
25.5
4124
5179
5179
22.6
31198
18974
12224
26.5
6922
19146
18.1
7940
11206
20.5
2402
8804
5826
12.5
38490
23716
14775
20.9
6922
21697
13.3
9330
12367
10.4
2461
9906
6934
19.0
189166
34
77758
18
26268
71788
142408
36
219988
16
91412
18
34072
92921
169760
19
252614
15
112100
23
43951
113738
196966
16
290506
15
124917
11
51266
129873
228481
16
334081
15
143655
15
58956
149354
265037
16
460
1404
3.1
549
1146
2.1
708
1304
1.8
813
1174
1.4
942
1174
1.2
Balance Sheet
Deposits( Rs Cr)
Change (%)
of which CASA Dep
Change (%)
Borrowings( Rs Cr)
Investments( Rs Cr)
Loans( Rs Cr)
Change (%)
Valuation
Book Value
CMP
P/BV
Source: Eastwind/Company
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
22

23. N arnolia Securities Ltd
402, 4th floor 7/ 1, Lord s Sinha Road Kolkata 700071, Ph
033-32011233 Toll Free no : 1-800-345-4000
em ail: research@narnolia.com ,
w ebsite : w w w .narnolia.com
Risk Disclosure & Disclaimer: This report/message is for the personal information of
the authorized recipient and does not construe to be any investment, legal or taxation
advice to you. Narnolia Securities Ltd. (Hereinafter referred as NSL) is not soliciting any
action based upon it. This report/message is not for public distribution and has been
furnished to you solely for your information and should not be reproduced or
redistributed to any other person in any from. The report/message is based upon publicly
available information, findings of our research wing “East wind” & information that we
consider reliable, but we do not represent that it is accurate or complete and we do not
provide any express or implied warranty of any kind, and also these are subject to change
without notice. The recipients of this report should rely on their own investigations,
should use their own judgment for taking any investment decisions keeping in mind that
past performance is not necessarily a guide to future performance & that the the value of
any investment or income are subject to market and other risks. Further it will be safe to
assume that NSL and /or its Group or associate Companies, their Directors, affiliates
and/or employees may have interests/ positions, financial or otherwise, individually or
otherwise in the recommended/mentioned securities/mutual funds/ model funds and
other investment products which may be added or disposed including & other mentioned
in this report/message.