Narnolia Securities Limited natural view on the KPIT stock could be change after favorable update on stock and healthy earning guidance for FY15E. At a CMP of Rs 151, stock trades at 9x FY15E EPS. Also today buy UCO bank stock due to net profit growth of 207% YoY

1. IEA-Equity
Strategy
India Equity Analytics
27th Jan, 2014
Daily Fundamental Report on Indian Equities
UCO BANK :
"BUY"
Edition : 192
27th Jan 2014
UCO bank reported net profit growth of 207% YoY largely due to robust growth in NII along with higher than industry average loan growth.
Bank’s asset quality improved sequentially despite of challenging macro environment. However bank’s CASA growth has declined marginally in
sequential basis but still at comfortable level. UCO Bank’s operating as well as financials metrics has been improving continuously. We value
bank at Rs.84/share which is 0.5 times of one year forward book and 3.5 times FY14E’s earning.
............................................................ (
Page :2-6)
KPIT Tech: "On billion dollar journey"
"NEUTRAL"
27th Jan 2014
KPIT Technologies Ltd revealed its 3QFY14 earnings with below than expectation, sales declined by 3.5%(QoQ) in INR term and 2.3%(QoQ) in
USD term due to the delay in project kick-off and additional loss of billing days in Q3FY14. Considering delay executions of some projects for
next 2 quarters and ongoing change in organization structure, we have a “Neutral” view on the stock. .............................................................. (
Page :7-9)
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 to
capture the EBITDA movement every quarter. Though we agree with the management’s comment, we still believe that there would be some
amount of pressure on the margins on a yearly basis due to risks related to competition, inflation, adverse mix and a slowdown. As regards the
results we are of the opinion that, despite the gloomy scenario the results have been good. Consistent order inflow is a major positive factor.
We expect the sector to witness revival in coming quarters, whereas we see a near term earnings growth muted and look for a better entry
point. Currently we have a neutral view on a stock ......................... ( Page :10)
V-Guard: "Lower FY14 Sales growth guidence to 11-12%"
"HOLD"
24th Jan 2014
We believe that during the election period, the power supply could remain better (with political interest), consequently lowering the UPS
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 revenues
estimates by 9% in FY2014 and 13% in FY2015. Consequently, we have revised down our EPS estimates by 21% in FY2014 and 16% in FY2015
......................................................... ( Page : 11-13)
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 of
discretionary demand ramp up in rural area and price hikes by around 4-5% . PAT grew by 16%(YoY).Post earning, company’s management
stated that they would focus on pursuing aggressive and profitable growth strategy with brand building by judicious mix of price hike and
product launch in near future. ............................................( Page :14-16)
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 of
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 cut
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 current
level the upside is very limited(7%), we recommend “Hold” Ultratech and Buy at Dips to get handsome return.
............................................................ ( Page : 17-19)
Public Sector Banks Result Preview 3QFY14E
24th Jan 2014
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. High inflation would be risk for the economy going forward. Any rise in inflation
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 banking
industry. Most of banking stocks are expected to report moderate revenue and profit growth owing to multiple headwinds. In PSBs universe we
like Canara Bank, UCO Bank, Union Bank. .............................................. ( Page : 20-23)
Narnolia Securities Ltd,

2. UCO BANK
Company Update
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
BUY
84
82
#####
532205
UCOBANK
86.65/46
5561
2960821
6154
Stock Performance
Absolute
Rel.to Nifty
1M
-0.7
-0.6
1yr
-5.4
-9.0
YTD
-5.4
-9.0
Share Holding Pattern-%
Current 1QFY14 4QFY1
3
Promoters
69.3
69.3
69.3
FII
4.2
3.9
3.2
DII
12.4
12.5
13.0
Others
14.2
14.3
14.6
"BUY"
27h Jan, 2014
UCO bank reported net profit growth of 207% YoY largely due to robust
growth in NII along with higher than industry average loan growth. Bank’s
asset quality improved sequentially despite of challenging macro
environment. However bank’s CASA growth has declined marginally in
sequential basis but still at comfortable level. UCO Bank’s operating as well
as financials metrics has been improving continuously. We value bank at
Rs.84/share which is 0.5 times of one year forward book and 3.5 times
FY14E’s earning.
NII growth of 33% YoY led by higher than industry loan growth and high CD
ratio
During quarter, bank reported NII growth of 33% YoY to Rs.1566 cr below of our
expectation of Rs. 1642 cr largely due to higher cost of fund than anticipated which
led by sequentially declined of low cost deposits(CASA). NII growth of 33% YoY was
much higher than its peers which have delivered result so far. Other income was
Rs.190 cr versus Rs.209 cr in 2QFY14 and Rs.190 cr in 3QFY14. With the lower
support from other income, total revenue growth was 28.5% YoY to Rs.1756 cr.
Healthy NII growth and controlled cost income ratio led operating profit growth
Operating expenses increased by 15.5% YoY in which employee cost and other
operating expenses increased by 12.7% and 21% YoY respectively. Cost income
ratio declined from 39.2% in 3QFY13 to 35.3% inn3QFY14. With the support from
healthy NII growth and lower cost income ratio, bank’s operating profit grew by 37%
YoY to Rs.1137 cr.
Stable asset quality in sequential basis despite of challenging environment
On delinquencies front, bank reported very stable asset quality in sequential basis
UCO Bank Vs Nifty
with GNPA deteriorated by 0.3% to Rs.7353 cr versus Rs.7376 cr in challenging
macro environment. In percentage term GPA improved by 25 bps to 5.2% versus
5.5% in previous quarter. Provisions in absolute term declined by 0.7% in sequential
basis which led net NPA improve to 0.3%. In percentage of gross NPA to gross
advance, it stood at 5.2% versus 5.5% in 2QFY14 while net NPA in percentage term
was improved to 3% from 3.1% in previous quarter. Provisions coverage ratio
(without technical write-off), was 46.4% as against 46.6% in previous quarter.
Rs, Cr
Financials
2011
2012
2013
2014E
2015E
NII
3845
3902
4582
6186
6289
Total Income
4770
4868
5534
7335
7438
PPP
2695
2811
3357
4850
5132
Net Profit
907
1109
618
1585
2101
EPS
16.5
17.7
9.3
23.8
31.6
(Source: Company/Eastwind)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
2

3. UCO BANK
Loan and deposits reported higher growth than industry average
On balance sheet growth front, bank’s advance grew by 16.5% YoY while deposits grew
by 13.4% YoY led by CASA growth of 23% YoY in absolute term. CASA in percentage of
total deposits improved to 30.5% versus 19.2% in 3QFY13. Saving deposits and current
deposits increased by 13% and 38% YoY respectively. But in sequential basis, CASA
deposits declined to 30.5% from 31.8% and 32.1% in 1QFY14. Credit deposits ratio for
quarter stood at 73.5% as against 71.6% in 3QFY14 and 71.4% in previous quarter. Total
business (Deposits +Advance) grew by 14.7% YoY to Rs.3.34 lakh Cr versus Rs.2.91
lakh Cr.
Marginal expansion of NIM on account of declined loan yield than cost of fund
NIM improved by 60 bps YoY to 3.06% from 2.42% largely due to lower cost of deposits
which was lead by low cost franchise network. Cost of deposits stood at 6.27% versus
6.92% in 3QFY14. Yield on advance (EW calculation) declined from 10.5% to 10% which
has restricted limited NIM growth.
Profit tripled on account of healthy NII growth, lower CI ratio and stable asset
quality
UCO Bank reported net profit growth of 207% YoY to Rs.315 cr as against our
expectation of Rs.338 cr largely due to robust growth in NII, lower cost income ratio,
improving asset quality which led lower provisions and high credit deposits ratio.
Valuation & View
UCO bank reported net profit growth of 207% YoY largely due to robust growth in NII
along with higher than industry average loan growth. Bank’s asset quality improved
sequentially despite of challenging macro environment. However bank’s CASA growth
has declined marginally in sequential basis but still at comfortable level. UCO Bank’s
operating as well as financials metrics has been improving continuously. We value bank
at Rs.84/share which is 0.5 times of one year forward book and 3.5 times FY14E’s
earning.
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
3

4. UCO BANK
Fundamental Through Graph
NII growth of 33% YoY led by higher than
industry loan growth and high CD ratio
Healthy NII growth and controlled cost
income ratio led operating profit growth
Profit tripled on account of healthy NII
growth, lower CI ratio and stable asset
quality
Source:Eastwind/Company
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
4

5. UCO BANK
Quarterly Performance
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
3543
1138
29
19
4729
190
4919
3163
1566
190
1756
395
225
620
1137
812
325
10
315
2QFY14
3396
1026
8
14
4444
209
4653
2875
1569
209
1779
382
230
612
1166
759
408
7
400
3QFY13
3197
923
30
21
4171
190
4361
2994
1177
190
1367
351
186
536
831
728
103
1
102
% YoY
% QoQ
10.8
4.3
23.3
11.0
-2.7
243.2
-13.7
31.7
13.4
6.4
0.4
-9.0
12.8
5.7
5.6
10.0
33.0
-0.2
0.4
-9.0
28.5
-1.3
12.7
3.3
20.9
-2.4
15.5
1.2
36.8
-2.5
11.5
7.0
215.1
-20.3
1536.5
40.7
206.9
-21.4
Balance Sheet
Net Worth
Deposits
Total Liabilities
Advances
Total Assets
11085
192406
203491
141457
141457
10770
188779
212416
135233
212416
9399
169711
179110
121455
121455
17.9
2.9
13.4
1.9
13.6
-4.2
16.5
4.6
16.5
-33.4
7,353
4217
5.2
3.0
46.4
7,376
4228
5.5
3.1
46.6
6,711
3927
5.5
3.2
41.5
9.6
-0.3
7.4
-0.3
Asset Quality
GNPA
NPA
% GNPA
% NPA
% PCR(Without technical writeoff)
Source: Eastwind/Company
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
5

6. UCO BANK
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 (%)
11371
7526
3845
65.4
925
4770
45.0
2075
2695
58.0
1788
907
907
-10.4
14632
10730
3902
1.5
966
4868
2.0
2056
2811
4.3
1661
1150
1109
22.3
16752
12170
4582
17.4
952
5534
13.7
2177
3357
19.4
2710
647
618
-44.2
18346
12160
6186
35.0
1149
7335
32.5
2485
4850
44.5
3217
1634
1585
156.4
22476
16186
6289
1.7
1149
7438
1.4
2306
5132
5.8
2798
2334
2101
32.5
99071
32031
6
5475
42927
99071
20
115540
17
34403
7
12901
45771
115540
17
128283
11
55733
62
9492
52245
128283
11
153939
20
67707
21
12315
62692
153939
20
184727
20
81249
20
14777
75231
184727
20
Avg. Yield on loans
Avg. Yield on Investments
Avg. Cost of Deposit
Avg. Cost of Borrowimgs
8.6
6.6
4.7
12.5
9.9
7.1
6.5
6.1
10.0
7.1
6.6
7.0
9.0
6.8
7.0
6.0
9.0
7.5
6.4
6.0
Valuation
Book Value
CMP
P/BV
135
107
0.8
137
79
0.6
146
50.1
0.3
173
75.25
0.4
185
75.25
0.4
Balance Sheet
Deposits( Rs Cr)
Change (%)
of which CASA Dep
Change (%)
Borrowings( Rs Cr)
Investments( Rs Cr)
Loans( Rs Cr)
Change (%)
Ratio
Source: Company/Eastwind
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
6

7. KPIT Tech.
"NEUTRAL"
27th Jan' 14
"On billion dollar journey"
Result update
Neutral
CMP
Target Price
Previous Target Price
151
-
Upside
Change from Previous
-
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Crores)
Average Daily Volume
Nifty
532400
KPIT
189/92
2910
144511
6267
Stock Performance
Absolute
Rel. to Nifty
1M
-7.95
-7.65
1yr
32.66
29.16
YTD
-17.1
-18.32
Share Holding Pattern-%
Promoters
FII
DII
Others
Current
22.53
41.96
6.99
28.52
Price Performance
2QFY14 1QFY14
22.87
24.25
36.42
32.79
11.12
10.93
29.59
32.03
KPIT Tech witnessed weak numbers, now..they will miss its earning guidance;
KPIT Technologies Ltd revealed its 3QFY14 earnings with below than expectation, sales
declined by 3.5%(QoQ) in INR term and 2.3%(QoQ) in USD term due to the delay in
project kick-off and additional loss of billing days in Q3FY14. Despite cost optimization
strategy by company, PAT dip by 9% (QoQ).
Now, Company will be in the position of short with its annual revenue guidance. The
shortfall in the revenue is entirely because of deficit in SAP SBU revenue for FY14.
However, on profit they are confident to exceed the higher end of the guidance
despite the challenges faced on SAP SBU profitability.
The company expects better earnings, confident of generating a positive cash flow for
FY14E, after considering the balance payments for existing M&A deals.
Steady set of margin: EBITDA margin almost flat at 15.3% and PAT margin declined by
50bps to 9%, sequentially. Commenting on margin, management stated that the higher
margin growth business coming up apart from revenue growth would improve the
margins going ahead. By next couple of quarter margin from SAP business would inch
up.
Growth inside the Europe: Europe region has been the leading growth market with
9.1%. During the quarter, USA had a marginal de-growth in USD terms and APAC
declined by 18%(QoQ) because of seasonality and furloughs impact. In INR terms,
Europe grew by 7.7%, US down by 2.5% and APAC 19.4%, on QoQ.
Mix growth across verticals: On INR basis, KPIT reported 8% of growth from Energy &
Utilities (15% contribution on sales), while Manufacturing (39% contribution on sales)
down by 4%(QoQ) and Automotive & Transport-(36% contribution on sales) down by
1.5%, sequentially.
Deal Momentum: There has been good momentum during Q3 across the business lines
in terms of deal closure and pipeline building. Though in 3 large deals there has been
almost a quarter’s delay in closure, two in SAP and one in A&E, that got closed during
Q3. Company closed large deals in excess of USD 70 million during the quarter, which
provides a sound platform, going into FY15E.
View and Valuation: Impressive organic growth despite inorganic thrust (acquired 10
companies in the last 10 yrs), Potential option value from success of its hybrid engine
venture Revolo (on trial). KPIT has targeted to reach $1bn sales by 2017. Its
differentiated positioning and competitive edge in its focus areas, imperatives to the
success of smaller-sized IT vendors impress to investors.
Considering delay executions of some projects for next 2 quarters and ongoing change
in organization structure, we have a “Neutral” view on the stock. Already we had
advised to book profit on 8th Jan 2014 at a target price of Rs177(Initiated at Rs115). Our
view on the stock could be change after favorable update on stock and healthy earning
guidance for FY15E. At a CMP of Rs151, stock trades at 9x FY15E EPS.
Financials
Revenue
EBITDA
PAT
EBITDA Margin
PAT Margin
3QFY14
677.93
103.5
66.7
15.3%
9.8%
2QFY14
702.76
108.1
66.7
15.4%
9.5%
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
(QoQ)-%
(3.5)
(4.3)
0.0
(10bps)
30bps
3QFY13
567.02
94.1
48
16.6%
8.5%
Rs, Crore
(YoY)-%
19.6
10.0
39.0
(130bps)
130bps
7

8. KPIT Tech
Sales and Sales growth-%(QoQ)
(Source: Company/Eastwind)
Sales Mix
4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14
Sales Mix (% of Sales) - Geography
USA
UK & Europe
RoW
Sales Mix (% of Sales) - Verticles
Automotive & Transportation
Manufacturing
Energy & Utilities
Others
73.3%
14.4%
12.3%
76.2%
14.6%
9.2%
76.4%
12.1%
11.6%
74.7%
13.9%
11.4%
76.3%
11.3%
12.3%
75.0%
13.1%
11.9%
71.9%
13.8%
14.4%
72.6%
15.4%
12.0%
37.1%
35.0%
11.6%
16.4%
39.6%
32.9%
13.7%
13.8%
38.8%
32.4%
15.3%
13.5%
40.3%
34.0%
14.2%
11.5%
38.5%
35.4%
13.5%
12.7%
35.5%
39.6%
14.1%
10.8%
36.1%
39.7%
13.6%
10.7%
36.4%
38.9%
15.1%
9.7%
Margin-%
(Source: Company/Eastwind)
Revolo: The unit has been in the process of conducting trials in 40 vehicles, which has
been yielding encouraging results, with fuel savings between 30-40%. KPIT is working to
bring the costs down further and attaining regulatory approvals.As per the management,
by next year it could be a part of revenue.
Client Metrics: Amongst the top customer accounts, Cummins has grown by 4.7% on a Qo-Q basis with revenue share at 17.9% during the quarter. The top 5 and top 10
customers had Q-o-Q decline of 3.2% and 1% respectively.
Headcounts Metrics: During the quarter, Considering the ramp up of deals, this quarter
was good for hiring prospect, adding around 300+ people during the quarter.Over the
next few quarters, we expect, company will introduce multiple initiatives to develop
individuals to take on more responsibilities in future. During the quarter, Attrition at 18%
(LTM).
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
8

9. KPIT Tech
Operating Metrics
4QFY12
Client Metrics
No. of Customers Added
No. of Active Customers
Customers with run rate of >$1Mn
Client Concentration
Top Client – Cummins
Top 5 Clients
Top 10 Clients
DSO
Employee Metrics
Total Employee
Onsite Utilization
Offshore Utilization
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4
169
59
3
172
65
4
176
69
2
178
72
5
183
78
6
189
78
3
192
78
3
195
78
19.5%
33.0%
42.2%
90
20.6%
36.3%
44.0%
75
19.7%
35.2%
43.7%
75
19.1%
36.8%
45.2%
70
16.6%
35.2%
44.0%
75
16.8%
38.6%
47.3%
77
16.5%
38.0%
46.3%
75
17.9%
38.2%
47.6%
76
7719
94.5%
74.3%
7873
94.7%
74.1%
8111
94.5%
74.7%
8286
92.8%
72.9%
8321
94.3%
74.1%
8456
94.2%
73.4%
8816
92.4%
72.9%
9136
88.1%
71.3%
Financials
Rs, Cr
Net Sales-USD
Net Sales
Employee Cost
Other expenses
Total Expenses
EBITDA
Depreciation
Other Income
Extra Ordinery Items
EBIT
Interest Cost
PBT
Tax
PAT
PAT (excluding EO Items)
Growth-%
Sales
EBITDA
PAT
Margin -%
EBITDA
EBIT
PAT
Expenses on Sales-%
Employee Cost
Other Exp
Tax rate
Valuation
CMP
No of Share
NW
EPS
BVPS
RoE-%
Dividen Payout ratio
P/BV
P/E
FY10
153.76
731.64
265.92
280.65
570.62
161.02
30.80
1.20
-26.45
130.22
2.74
102.23
16.91
85.32
111.77
FY11
224.07
987.05
529.95
254.81
838.77
148.28
41.12
6.74
0.00
107.16
3.78
110.12
15.49
94.63
94.63
FY12
306.71
1500.00
771.78
430.30
1283.75
216.25
44.49
13.82
10.05
171.76
7.32
188.31
43.67
144.64
134.59
FY13
410.46
2238.63
1140.79
762.32
1903.11
335.52
47.16
11.74
-1.30
288.36
13.99
284.81
76.55
208.26
209.56
FY14E
449.39
2696.33
1367.04
903.27
2270.31
426.02
58.32
13.48
-18.61
367.70
24.31
338.26
94.71
243.55
262.16
FY15E
543.42
3233.33
1649.00
1067.00
2715.99
517.33
77.73
16.17
16.17
439.60
24.59
447.35
123.02
324.33
308.16
-7.8%
-12.2%
129.4%
34.9%
-7.9%
10.9%
52.0%
45.8%
52.8%
49.2%
55.2%
44.0%
20.4%
27.0%
16.9%
19.9%
21.4%
33.2%
22.0%
17.8%
11.7%
15.0%
10.9%
9.6%
14.4%
11.5%
9.6%
15.0%
12.9%
9.3%
15.8%
13.6%
9.0%
16.0%
13.6%
10.0%
36.3%
38.4%
16.5%
53.7%
25.8%
14.1%
51.5%
28.7%
23.2%
51.0%
34.1%
26.9%
50.7%
33.5%
28.0%
51.0%
33.0%
27.5%
115.00
7.90
387.11
10.80
49.00
22.0%
6.4%
2.35
10.65
168.05
8.70
603.19
10.88
69.33
15.7%
6.8%
2.42
15.45
122.90
17.80
712.55
8.13
40.03
20.3%
4.9%
3.07
15.12
99.00
19.28
1036.23
10.80
53.75
20.1%
7.9%
1.84
9.17
151.00
19.28
1263.99
12.63
65.56
19.3%
6.5%
2.30
11.95
151.00
19.28
1565.76
16.82
81.21
20.7%
7.0%
1.86
8.98
(Source: Company/Eastwind)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
9

10. Larsen & Toubro Ltd.
V-
"Neutral"
24th Jan' 14
"On Track of Revival………"
Result update
Neutral
CMP
Target Price
Previous
Target Price
Upside
Change from
Previous
1033
NA
NA
NA
NA
Market Data
BSE Code
NSE Symbol
52wk Range
H/L Capital
Mkt
(Rs Crores)
Average Daily
Volume
Nifty
500510
LT
861/114
6
80,145
95,662
6,346
Stock Performance-%
Absolute
Rel. to Nifty
1M
(2.7)
1yr
0.8
YTD
13.5
1.1
4.6
11.6
Share Holding Pattern-%
Promoters
FII
DII
Others
3QFY14
0.0
17.9
36.6
45.5
2QFY14 1QFY14
0.0
0.0
15.3
16.1
37.4
36.9
47.4
47.2
Price Performance V/s NIFTY
Construction & engineering major, L&T posted a surprisingly set of numbers for the quarter
ended Dec, 13. The company's net sales grew by a mere 11.8% on a yearly basis to Rs
14387.5crore. The company recurring bottom line witnessing a upstik of 12.15% , and came in
at Rs. 1136.3 crore. the results have been adjusted for the quarter as it transferred
hydrocarbon business to its subsidiary L&T Hydrocarbon Engineering with effect from April 1,
2013. Accordingly, the company restated suitably its earnings for the previous quarter ended
September 2013 and numbers relating to previous periods. However, if we If we consider the
exceptional gains on dilution of part stake in a subsidiary company, the overall PAT grew by
22.1 % during the quarter. While the operational performance has been good, the company
has witnessed good traction in its order book also. Order inflow for the quarter stood at Rs
21722 crore showing a growth of 21% on Y-o-Y basis. The total order book as on December
31st 2013 stood at Rs 171184 crore showing an increase of 13 % on Y-o-Y basis. EBITDA
margins for the Dec 2013 quarter expanded by 180 bps to 11.6% against 9.8% last year.
However, as per the management, the quarterly margins differ for every quarter as the project
completion cycle is different and hence it is difficult to capture the EBITDA movement every
quarter. Though we agree with the management’s comment, we still believe that there would
be some amount of pressure on the margins on a yearly basis due to risks related to
competition, inflation, adverse mix and a slowdown. As regards the results we are of the
opinion that, despite the gloomy scenario the results have been good. Consistent order inflow
is a major positive factor. We expect the sector to witness revival in coming quarters, whereas
we see a near term earnings growth muted and look for a better entry point. Currently we
have a neutral view on a stock.
Why neutral…???
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 build
slightly higher margins for FY2014E at 10.9% (versus 10% earlier). However, we believe margins
face downward trajectory over FY2014-16E (build EBITDA margin of 10.5% in FY2015E and 10.3%
in FY2016E) due to risks related to competition, inflation, adverse mix and a slowdown. L&T
maintained its revenue growth guidance of 15% yoy for FY2014 (9% posted in 9MFY14). We build
lower revenue growth of 12% in FY2014 implying 16% growth requirement in 4QFY14. L&T also
maintained its inflow guidance of 15-20% in FY2014 (strong 23% growth in 9MFY14; but is a bit
wary about maintaining this traction on delayed decision making by customers).
Outlook
We have a Neutral on L&T as we think it will be difficult rate L&T from today’s level without
earnings upgrade and/or uncertanity across sector. Downside risks are project delays, weaker
margins and stronger Rupee. Upside risks are higher than expected order inflow and higher
operating margins a head.
Financials
Revenue
EBITDA
PAT
EBITDA Margin
PAT Margin
3QFY14
14387.5
1674.8
1240.7
11.6%
8.4%
2QFY14
12308.4
1185.7
864.6
9.6%
6.8%
(Source: Company/ Eastwind Research)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
(QoQ)-%
16.9%
41.3%
43.5%
200 bps
160 bps
3QFY13
12869.3
1258.3
1013.2
9.8%
7.5%
Rs, Crore
(YoY)-%
11.8%
33.1%
22.4%
180 bps
90 bps
(Standalone)
10

11. V-Guard Industries Ltd.
V-
"Hold"
24th Jan' 14
"Lower FY14 Sales growth guidence to 11-12%……..."
Result update
Hold
CMP
Target Price
Previous
Target Price
Upside
450
475
525
5%
-11%
Change from
Previous
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Crores)
Average Daily Volume
Nifty
532953
V-GUARD
390/570
1,374
59,460
6,344
Stock Performance-%
Absolute
Rel. to Nifty
1M
(4.5)
(5.6)
1yr
(9.0)
(13.6)
YTD
5.0
(6.7)
2QFY14
65.5
17.4
2.5
14.5
1QFY14
65.5
14.5
3.5
16.4
For the quarter ended Dec 2013, V-Guard reported a top line of Rs. 352.9 crore, compared to
Rs. 349.0 crore in 3QFY13, marking a marginal YoY growth of 1.1%. EBITDA margins for the
quarter were significantly improved to 8.2% (up 89 bps YoY) due to lower ad spends. Interest
expense for the quarter were up by 10.0% YoY to Rs. 5.4 crore and after giving effect
depreciation and taxes, the company’s PAT stood at Rs. 17.5 crore (up 14.2% YoY). On
conference call, the management of V-Guard lowered their top-line guidance to 11-12% from
the earlier 18-20% in FY2014. However, they expect to achieve EBITDA margin of around 8.5%
for FY2014. We believe that during the election period, the power supply could remain better
(with political interest), consequently lowering the UPS 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
revenues estimates by 9% in FY2014 and 13% in FY2015. Consequently, we have revised down
our EPS estimates by 21% in FY2014 and 16% in FY2015.
Strong Balance Sheet
•Total Debt has been reduced significantly as on 3Q FY14 to Rs. 117.7 crore, compared to Rs. 157
crore as on 3Q FY13. Working capital loan reduced to Rs. 77.1 vrore from 134.0 crore and
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 days
reduction in debtors. Management has also guided for improvement in net working capital cycle
by 5- 10 days every year going forward. This will further improve its ROCE and ROE going
forward.
• Strong cash generation in 9M. FY14 Cash from operations at Rs. 90 crore in 9M FY14 as
compared to Rs. 14.5 crore for full year FY13
Share Holding Pattern-%
Promoters
FII
DII
Others
3QFY14
65.5
18.5
2.2
13.8
1 yr Forward P/B
Outlook
As expected, the company’s contribution to revenue has improved from its non south market as
compared to its incumbent southern market. All in all we observe this result as significantly
below our estimates. Although company has reported increase in EBITDA margin in 3QFY14 by 80
bps, but it still below our full year expectaion of 9%. We believe that during the election period,
the power supply could remain better (with political interest), consequently lowering the UPS
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 revenues estimates by 9% in FY2014 and 13% in FY2015.
Consequently, we have revised down our EPS estimates by 21% in FY2014 and 16% in FY2015.
However we belive company strong balance sheet, a wide range of products and a strong hold
over its existing market, all of which give it an edge over its rivals. At the current CMP of Rs.
457, the stock is trading at a PE of 18.3x and 13.8x of FY14E and FY15E. The company can post
RoE of 23.2% and 24.1% & EPS of Rs. 25.2 and Rs. 33.2 FY14E and FY15E. We belive that the
current level is not attractive to make position in this stock, one should wait further correction
from current level, however one who already own the stock can hold it with the revised price
target of Rs. 475.
Financials
Consolidated
Revenue
EBITDA
PAT
EBITDA Margin
PAT Margin
3QFY14
352.9
29.1
17.5
8.1%
4.9%
2QFY14
334.0
27.1
14.5
8.1%
4.3%
(Source: Company/ Eastwind Research)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
(QoQ)-%
5.7%
7.7%
-21.0%
0 bps
60 bps
3QFY13
349.0
25.7
15.4
7.3%
4.4%
Rs, Crore
(YoY)-%
1.1%
13.3%
14.2%
80 bps
50 bps
Standalone
11

12. V-Guard Industries Ltd.
Confrence Call Highlights
• Non South market sales in Q3 FY'14 stood about 30% of total sales and grew by about 30% as
well. The South market which constitutes about 70% degrew by about 8-9% in value terms and by
about 13-15% in volume terms. Overall, thus company ended up with flattish kind of sales growth
in Q3 FY'14. For Q4 FY'14, management expects about 10-12% sales growth.
• In Q3 FY'14, the company was able to improve its gross margin by 100 bps which was largely due
to lower Advertisement expenditure YoY. Going forward Ad expenditure will be around 3.5-4% of
sales.
• The Electronics segment, which constitute stabilizers and UPS, which contribute about 24% of
total sales in Q3 FY'14, degrew by 18% YoY, Electrical which includes pumps, house wiring cable,
electric water heater, fans and others, and contribute about 72% of total sales, grew by about 8%,
with electric water heater and house wiring cables delivered a healthy growth, while the solar
water heater which constitute about 4% of total sales, grew by about 30%. The premium variant of
the 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
together with lower sale of consumer durable products due to weak consumer sentiment, affected
the growth of the company. Also due to sand mining ban in many parts of the country,
construction 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
largely due to elections. Also extended monsoon also delayed some of the product sale and
affected the demand.
• Total market of electric wires will be about Rs 7500 crore of which company has share of about
6%. By year end the company should be able to report about Rs 450-475 crore of electric wires.
Polycab 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.
Management expects raw material prices to slightly inch up from March'14 onwards which is
general seasonally trend.
• The new products introduced last year namely Induction Cooker, Mixer Grinder and Switchgears
did 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
capital expenditure which the company received the approval from this year and going forward
also the deduction will continue.
• Overall, management expects about 11-12% growth in FY'14 with Ebidta margin of about 8.5-9%.
The management lowered its earlier guidance of about 20% growth in FY'14 largely due to current
economic and environmental challenges.
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
12

13. V-Guard Industries Ltd.
Key financials
PARTICULAR
2010A
2011A
2012A
2013A
2014E
2015E
454
1
456
50
43
7
5
40
14
NA
25
10
3.5
8.5
727
2
728
73
65
8
11
55
16
NA
39
12
4.1
13.1
994
2
996
94
84
10
17
69
18
NA
51
12
4.1
17.0
1360
4
1364
110
99
11
20
82
19
NA
63
12
4.1
21.1
1510
5
1515
131
119
12
21
102
27
NA
75
12
4.1
25.2
1736
6
1742
156
141
15
15
132
33
NA
99
12
4.0
33.2
11.1%
5.6%
9.6%
4.0%
18.0%
13.8%
10.1%
5.4%
7.8%
2.4%
22.7%
16.2%
9.4%
5.1%
9.2%
2.2%
24.1%
21.2%
8.1%
4.6%
4.8%
0.9%
24.1%
19.4%
8.7%
5.0%
5.5%
0.9%
23.2%
21.4%
9.0%
5.7%
7.2%
0.9%
24.1%
21.7%
141
81
222
3
89
172
139
311
3
168
211
109
320
3
186
261
165
427
3
435
324
125
449
3
460
412
115
527
3
460
47.4
1.9
8.4
10.4
57.6
2.9
5.7
12.9
70.6
2.6
4.9
10.9
87.6
5.0
4.9
20.7
108.7
4.2
5.6
18.3
137.9
3.3
9.4
13.8
Performance
Revenue
Other Income
Total Income
EBITDA
EBIT
DEPRICIATION
INTREST COST
PBT
TAX
Extra Oridiniary Items
Reported PAT
Dividend (INR)
DPS
EPS
Yeild %
EBITDA %
NPM %
Earning Yeild %
Dividend Yeild %
ROE %
ROCE%
Position
Net Worth
Total Debt
Capital Employed
No of Share (Adj)
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.
13

14. Dabur India Ltd.
"BUY"
24th Jan' 14
"Confident tone for growth"
Result update
CMP
Target Price
Previous Target Price
Upside
Change from Previous
BUY
162
206
27%
-
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Cr)
Average Daily Volume
Nifty
500096
DABUR
185/125
28197
908049
6346
Stock Performance
1M
Absolute
3.3%
Rel. to Nifty
2.20%
1yr
25%
20%
YTD
24.0%
12.8%
Share Holding Pattern-%
Current
Promoters
FII
DII
Others
68.64
19.94
4.47
6.95
P/BV(x)-1year forward
2QFY14 1QFY14
68.66
20.71
3.96
6.7
68.66
20.4
3.97
7
Dabur delivered inline set of numbers ;
During 3QFY14, Dabur reported 16.7% (YoY) sales growth led by 9% overall volume
growth because of discretionary demand ramp up in rural area and price hikes by
around 4-5% . PAT grew by 16%(YoY).
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 Nigeria.
The GCC business reported a 21% growth, while sales in Egypt and Nigeria both grew
by 16%. Domestic FMCG business grew by 14%.
Post earning, company’s management stated that they would focus on pursuing
aggressive and profitable growth strategy with brand building by judicious mix of price
hike and product launch in near future.
Margin ramp down: During the quarter, 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. PAT margin flat at 12.8% on YoY basis.
Volume growth in single digit: Because better discretionary demand environment in
rural area and judicious pricing strategy overall volume growth increased by 9% (YoY) in
3QFY14 with 4-5% (YoY) pricing growth.For FY15E, management stated to hike its
product prices by 4-5% to maintain its margin.
Growth on all Categories: The Health Supplements business was a key driver of growth
during the quarter, reporting a strong 19.5% surge. The Air Freshener business under
the brand Odonil, continued to surge ahead with an over 27% growth. The Foods
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 an
over 13% growth.
Recent updates: (a)Introduced a host of new products and variants, including the new
Fem Fairness Naturals facial bleach range and Vatika Hibiscus hair care range.(b)Dabur
Tunisie, a wholly owned subsidiary, incorporated in Tunisia on Dec. 2013 with the object
of buying, selling and manufacturing consumer care products, having meagre asset base
at present.
View and Valuation: Despite signs of weak discretionary demand and increased
competitive intensity in the market, Dabur India has reported comparatively better
volume growth in its key categories. On all operating parameters, its performance was
satisfactory. Still, management is cautious for margin ramp up due to high inflation in
India.
The strong momentum in relatively low competition in the core categories with
diversified portfolio, Dabur gets a better place than other peers and its rural
distribution expansion should boost sales volumes. We retain our “Buy” view on the
stock with a target price of Rs206. At a CMP of Rs 162 stock trades at 8.5x FY15E P/BV.
Financials
Revenue
EBITDA
PAT
EBITDA Margin
PAT Margin
3QFY14
1904.28
297.59
243.5
15.6%
12.8%
2QFY14
1748.81
329.24
249.83
18.8%
14.3%
(QoQ)-%
8.9
(9.6)
(2.5)
220bps
150bps
3QFY13
1635.98
274.51
209.87
16.8%
12.8%
Rs, Crore
(YoY)-%
16.4
8.4
16.0
120bps
-
(Source: Company/Eastwind)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
14

15. Dabur India Ltd.
Sales and Sales Growth(%) -
(Source: Company/Eastwind)
Consolidated Volume Growth-%
The company has been looking to maintain 812% volume growth in the near term.
(Source: Company/Eastwind)
Margin-%
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.
(Source: Company/Eastwind)
Expenses on sales-%
RM cost (on sales) decreased from 37.6% to
36.3% and AD spend down from 14.4% to
12%, historicaly low ad spend.
(Source: Company/Eastwind)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
15

16. Dabur India Ltd.
Key facts from Management Commentary:
■ The company may hike prices by 4-5% in FY15E and focus will be on pursuing an
aggressive and profitable growth strategy.
■ Ad expenses to be within the range of 13-15 percent at the consolidated level for
FY15E.
■ Expanding rural distribution networks as a part of project double and new products as
hair serums and professional hair care products were launched.
■ There has been a softening of demand generally speaking in urban India. Overall much
higher level of growth is coming from rural as compared to urban.
Financials
Rs in Cr,
Sales
RM Cost
Purchases of stock-in-trade
WIP
Employee Cost
Ad Spend
Other expenses
Total expenses
EBITDA
Depreciation and Amortisation
Other Income
EBIT
Interest
PBT
Tax Exp
PAT
Growth-% (YoY)
Volume
Pricing
Sales
EBITDA
PAT
Expenses on Sales-%
RM Cost
Ad Spend
Employee Cost
Other expenses
Tax rate
Margin-%
EBITDA
EBIT
PAT
Valuation:
CMP
No of Share
NW
EPS
BVPS
RoE-%
P/BV
P/E
FY10
3391.4
811.0
750
(10)
285
493.5
438.4
2767.3
624.1
50.0
39.4
613.5
12.3
601.2
100.5
500.7
FY11
4104.5
1806.8
252
(122)
309
534.6
524.1
3304.8
799.7
95.2
32.2
736.6
29.1
707.5
139.0
568.5
FY12
5305.4
2278.8
509
(103)
387
659.5
683.1
4415.2
890.2
103.4
57.4
844.2
53.8
790.4
146.4
644.0
FY13E
6178.9
2422.1
599
(2)
471
837.0
819.10
5146.6
1032.2
112.7
92.0
1011.5
58.9
952.6
182.62
770.0
FY14E
7070.30
2757.42
742.38
(71)
608.05
996.91
908.53
5942.59
1127.71
111.09
141.41
1158.03
54.69
1103.34
212.39
890.95
FY15E
8203.32
3240.31
820.33
(41)
738.30
1132.06
1066.43
6956.42
1246.90
133.15
164.07
1277.82
51.95
1225.87
232.91
992.95
10.5%
5.0%
16.0%
10.6%
11.4%
20.9%
33.9%
28.1%
21.0%
28.1%
13.5%
29.3%
11.3%
13.3%
16.5%
16.0%
19.6%
9.5%
4.5%
14.4%
9.3%
15.7%
23.9%
14.6%
8.4%
12.9%
16.7%
44.0%
13.0%
7.5%
12.8%
19.6%
43.0%
12.4%
7.3%
12.9%
18.5%
39.2%
13.5%
7.6%
13.3%
19.2%
39.0%
14.1%
8.6%
12.9%
19.3%
39.5%
13.8%
9.0%
13.0%
19.0%
18.4%
18.1%
14.8%
19.5%
17.9%
13.9%
16.8%
15.9%
12.1%
16.7%
16.4%
12.5%
16.0%
16.4%
12.6%
15.2%
15.6%
12.1%
158.6
86.8
935.4
5.8
10.8
53.5%
14.7
27.5
96.1
174.1
1391.1
3.3
8.0
40.9%
12.0
29.4
103.2
174.2
1716.9
3.7
9.9
37.5%
10.5
27.9
131.0
174.3
2124.4
4.4
12.2
36.2%
10.7
29.7
162.0
174.3
2689.1
5.1
15.4
33.1%
10.5
31.7
162.0
174.3
3335.4
5.7
19.1
29.8%
8.5
28.4
(Source: Company/Eastwind)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
16

17. Ultratech Cement.
"Hold"
24th Jan' 14
Moderated but Not outdated
Result Update
Hold
CMP
Target Price
Previous Target Price
Upside
Change from Previous
1719
1846
1846
7%
0%
Market Data
BSE Code
NSE Symbol
532538
ULTRACEMCO
52wk Range H/L
Mkt Capital (Rs Crores)
Average Daily Volume (Nos.)
Nifty
1405/2067
46885
18754
6346
Lower Realization and higher Operating Cost Impact PAT: UltraTech’s 3QFY14 Sales,
EBITDA & PAT declined 1%, 24% and 39% YoY respectively to Rs4818Cr, Rs796Cr and
Rs370Cr respectively. On QoQ basis, Sales, EBITDA & PAT rose 7%, 17% and 40%. While
EBITDA margin contracted ~499 bps YoY it expanded 149 bps QoQ to 16.5%. EBITDA per
MT at Rs788 down 24% YoY and up 10% QoQ.
At Rs.788 /Ton Average Realization Down 1% YOY : The benefit of lower coal prices (net
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 a
37.8% yoy fall in PAT.
Despite of Weak Realization Ultratech has delivered QOQ margin Expansion :Despite
24%,7%,8% YOY increase in Rawmaterial cost, freight cost and other expenses
respectively, Ultratech’s variable input cost increased 6%YOY and -2%QOQ . Through
better cost efficiency which has been one of the key factors resulting in UltraTech’s
results outperforming its large cap peer group over the last 4‐5 quarters. Thus We believe
UItraTech will deliver QoQ margin expansion despite marginally weak realization .
Stock Performance-%
1M
-7.3
-9.0
Absolute
Rel. to Nifty
1yr
-14.8
-19.9
YTD
-10.2
-14.3
Share Holding Pattern-%
3QFY14
Promoters
FII
DII
Others
2QFY14 1QFY14
62.0
21.0
4.6
12.4
62.0
20.7
4.8
12.6
62.0
20.7
4.6
12.7
1 yr Forward P/B
5000
Price
2x
4x
6x
8x
4500
4000
3500
1x
3x
5x
7x
3000
2500
2000
1500
1000
500
Aug-13
Feb-12
Nov-12
Aug-10
May-11
Feb-09
Nov-09
Aug-07
May-08
Feb-06
Nov-06
May-05
Aug-04
0
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’13
it commissioned a 1.6m-ton grinding unit in Jharsuguda, Orissa, adding to its earlier
commissioning (Mar’13) of similar capacity in Hotgi, Maharashtra. The balance five
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 its
capacity to 59m tons, while ongoing expansions would further that to 70m tons by
Mar’15. The transaction, at an EV of 38bn (US$125 a ton) is expected to be completed
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 fell,
18% yoy, leading to a further crunch in PAT.
Investment concerns :Key drivers of long-term growth would continue to be housing and
infrastructure development.Revival in cement demand would be key catalyst for the
stock performance.cement prices and demand are expected to pick-up post election.High
operating leverage, especially post commissioning of new capacities in 1QFY14, could
result in volatile earnings.Cement Makers may rise cement prices due to increase in
variable input costs.
Financials :
Q3FY14
Y-o-Y %
Q-o-Q %
Q3FY13
Q2FY13
Net Revenue
4818
-1.3
6.5
4883
4522
EBITDA
796
-24.2
17.1
1050
679
Depriciation
264
10.7
0.0
239
264
Interest Cost
90
73.6
1.9
52
89
Tax
139
-45.2
30.0
254
107
PAT
370
-38.5
41.6
601
261
(In Crs)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
17

18. Ultratech Cement.
OUTLOOK :
We are expecting Demand Growth for the rest FY14 will be 4% - 5% and for FY15 it will
be in the range of 8% - 12%.Demand already revived after the monsoon ,hence it
reported a 4% realization growth in Q3FY14.The Ultratech's expansion plans are ramp
up to become 70 mnTon cement producer in India by FY15 . Its waste heat recovery
plants and efficient fuel mix (usage of petcock for energy instead of coal) moderates the
Cost pressure, so to make Ultratech cost efficient among large cap peers. Govt
initiatives to expedite large infrastructure projects have yielded little so far and this is
putting pressure in the cement makers, especially those with debt that has become
expensive to service due to high interest rates. We expect lower other income to revive
after the settlement of volatile interest rates by Govt in coming quarters. At present
ultratech is running at 79% of its capacity utilization. The utilization level may decline
due to stabilization of supply from new capacities, owing to insufficient demand in
Domestic Market. Ultratech is planning to strengthen its logistic infrastructures and
increase its captive power plants capacity, which will help to reduce its Operational
cost.
Vew & Valuation :
Ultratech's Q3FY14 was in line to our estimates.The white cement Volume Growth and
capacity expansions are positive in terms of 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 cut 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 current level the upside is
very limited(7%), we recommend “Hold” Ultratech and Buy at Dips to get handsome
return.
P/L PERFORMANCE
Net Revenue from Operation
Other Income
Total Income
Power and fuel
Freight and forwarding
Expenditure
EBITDA
Depriciation
Interest Cost
Net Tax
PAT
ROE%
FY11
13798
154
13952
3280
2881
11102
2696
813
292
384
1367
12.8
FY12
19232
371
19603
4639
3741
15039
4194
963
256
948
2403
18.7
FY13
21319
304
21623
4646
4243
16480
4839
1023
252
1179
2678
17.6
Narnolia Securities Ltd,
FY14E
20797
346
21143
4315
4461
16957
3840
1110
325
759
1982
11.7
Source - Comapany/EastWind Research
Source - Comapany/EastWind Research
Source - Comapany/EastWind Research
18

19. Ultratech 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%
EV
P/E
EV/EBIDTA
Dividend Yield%
ROCE%
Debt/Equity
Current Ratio
Cash from Operation
Cash From Investment
Cash from Finance
FY10
124
4495
4620
857
750
32
683
133
8375
6
4953
260
146
827
210
112
219
8375
FY10
3.1
88.1
2.9
9.5
1.2
15890
13.1
7.9
0.5
15.4
0.3
2.3
1673
(843)
(740)
FY11
274
10373
10647
3295
727
113
1830
473
21630
39
12265
760
583
2094
825
190
873
21630
FY11
2.9
49.9
6.0
13.3
1.5
34903
22.7
12.9
0.5
8.2
0.4
1.5
2195
(2240)
248
FY12
274
12550
12824
4843
705
121
2207
709
24904
40
12729
1940
1544
2198
1089
214
1041
24904
FY12
3.2
87.7
5.7
11.5
1.1
46634
17.2
11.1
0.5
11.8
0.4
1.6
3482
(3050)
(353)
FY13
274
14955
15230
5169
1227
135
2338
949
29590
62
14254
3601
1066
2541
1376
185
1048
29590
FY13
3.4
97.7
6.5
11.0
1.2
57428
19.1
11.9
0.5
11.3
0.4
1.4
4122
(4407)
715
Source - Comapany/EastWind Research
Source - Comapany/EastWind Research
Narnolia Securities Ltd,
19

20. Public Sector Banks Result Preview
3QFY14E
Stock Performance During Quarter
Revenue growth tepid on account of moderate loan growth and high cost of
fund
We expect performance of Public Sector Banks (PSBs) to remain muted on the back
of slower pace of loan growth and deteriorating asset quality led by ongoing
restructure assets and stress in economy. We expect PSBs in our coverage universe
to report NII growth of 17.2% YoY led by moderate loan growth of 18% YoY by the
system and restructure assets which would likely to remain at elevated level as per
most of bank management. Provision for loan loss would be elevated level owing to
deteriorating asset quality and larger sum of restructure assets are in pipeline. Most
of PSBs are expected to reported higher slippage of restructure asset as per
management.
Muted loan growth reported by system
During quarter the banking system experience loan growth of 15% YoY as on 13th
Dec.2013 (as per RBI data) as against 18% YoY loan growth in 2QFY14. Second
quarter witnessed higher loan growth because of transfer of CD/CP borrowings to
loan but during this quarter revival of bond yield and lower demand of corporate loan
led slowdown in economy restricted moderate loan growth in the system. We expect
loan growth of 10-15% in our coverage universe. Bank of Baroda, Canara Bank,
Nifty Vs Bank Nifty during Quarter
UCO bank and Union bank are expected to reported loan growth of >15% while PNB
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 according
to RBI data preliminary due to flow of FCRN deposits through RBI’s special
concession window to the tune of Rs. $14 bn. Union Bank is likely to get more
benefit from this route as per management. According to bank’s top official, bank
raised more FCNR deposits than repo borrowing. Bond yield during this quarter
soften to 7.5% as against 9.5% in second quarter and FCNR deposits are generally
low cost of deposits. This would lead the margin expansion of more than 1%. Margin
expansion would be seen in case of Union Bank. Cost of deposits of most of banks
is expected to remain same but we expect actual benefit would come from 4QFY14E
and onwards.
Loan (Rs tn) and YoY Gr(%)
Asset quality pressure likely to remain at elevated level
Asset quality pressure is likely to persist due to ongoing slowdown in economy, high
interest rate and continuous rising inflation. Gross slippages of banks are expected
to remain at elevated level and most of bankers are guided higher amount of
restructure assets in pipeline. We expect Andhra bank would hit more as their
impairment of asset would be more than 18% of asset means 100% of liability has to
service 82% of asset which would be tough itself for bank. We expect GNPA and net
NPA for PSBs would be in the range of 3.5%-4% and 2 to 2.5% respectively in
3QFY14.
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
20

21. Public Sector Banks Result Preview 3QFY14E
Profitability likely to declined due to absence of core earnings, high operating
leverage and deteriorating asset quality
Profitability of PSBs are expected to declined by 19.5% in our coverage universe in
absence of core earnings, higher operating leverage due to wage revisions and high
provision against loan loss due to deteriorating asset quality. Union Bank, Canara Bank
and UCO Bank are expected to report healthy profit in our coverage because of healthy
loan growth and margin expansion. Although these banks would not be free from
impairment of asset and high operating leverage but would have comfortable profit due to
healthy core earnings as per our view.
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. High inflation would be risk for the economy going forward.
Any rise in inflation 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 banking industry. Most of
banking stocks are expected to report moderate revenue and profit growth owing to
multiple headwinds. In PSBs universe we like Canara Bank, UCO Bank, Union Bank.
ALBK
ALBK
Rs Cr
NII
PPP
Net Profit
3QFY14E
1169
750
182
2QFY14
1309
1154
276
3QFY13 % YoY Growth % QoQ Growth
1330
-12.1
-10.7
860
-12.7
-34.9
311
-41.4
-34.0
We expect bank to report profit growth of 4.2% YoY on the back of high operating
leverage and high provisions. Higher operating leverage is expected due to higher
employee provision and higher provisions on account of deteriorating asset quality as
bank witnessed sequentially increased of gross NPA.
Andhra Bank
ANDHRABANK
Rs Cr
3QFY14E
NII
1169
PPP
750
Net Profit
166
2QFY14
1045
643
71
3QFY13
971
712
257
% YoY Growth
20.4
5.4
-35.4
% QoQ Growth
11.9
16.7
135.0
We expect bank to report loan growth and deposits growth of 14% and 18% respectively.
Profit is expected to report negative growth on YoY basis largely due to high base and
expected muted performance during the quarter. Asset quality during quarter is expected
to report high deteriorating due to large chunk of restructure assets.
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
21

22. Public Sector Banks Result Preview 3QFY14E
Bank of Baroda
BANKBARODA
Rs Cr
3QFY14E
NII
3515
PPP
2539
Net Profit
1067
2QFY14
2895
2125
1168
3QFY13
2841
2256
1012
% YoY Growth
23.7
12.6
5.5
% QoQ Growth
21.4
19.5
-8.7
We expect profit growth of 5.5% YoY largely due to tax rate of 30% versus 6.3% in
2QFY14 and 17.5% YoY in 1QFY14. As per our expectation NII would be grew by 24%
largely due loan growth of 20% YoY. Asset quality of bank is expected to remain high as
management guided restructure pipeline is Rs.20bn.
Bank of India
BANKINDIA
Rs Cr
NII
PPP
Net Profit
3QFY14E
2683
2218
602
2QFY14
2527
2102
622
3QFY13 % YoY Growth % QoQ Growth
2308
16.2
6.2
1856
19.5
5.5
803
-25.1
-3.3
We expect loan and deposits growth of 23% and 29% YoY respectively. Profit is lower by
25% YoY largely due to higher provisions. Bank is expected to report higher slippage as
management guided restructure pipeline of Rs.10-15 bn. NIM is expected to improve by
20 bps YoY due to international NIM.
Canara Bank
CANBK
Rs Cr
NII
PPP
Net Profit
3QFY14E
2606
1734
775
2QFY14
2191
1425
626
3QFY13 % YoY Growth
1988
31.1
1516
14.4
714
8.5
% QoQ Growth
18.9
21.7
23.8
Canara Bank is expected to report 30%+loan growth largely due to lower base. We
expect loan to grow by 34% YoY and flat deposits growth. Asset quality of bank is
expected to improve on sequential basis largely due to expected lower slippage. AT PBT
level , we expect bank to grow by 12.5% but we assume tax rate of 25% versus 16% in
2QFY14 and 19% in 1QFY14 which lead profit growth of 8.5% YoY. Gross slippage and
tax rate will be monitor able.
Punjab National Bank
PNB
Rs Cr
NII
PPP
Net Profit
3QFY14E
4201
2874
607
2QFY14
4016
2535
505
3QFY13
3733
2682
1306
% YoY Growth
12.5
7.2
-53.5
% QoQ Growth
4.6
13.4
20.2
PNB is expected to report loan growth of less than 10% as bank is more focus on
consolidating its balance sheet than growth. Asset quality is expected to remain at
elevated level as bank’s slippage not concentrated in particular industry. NIM is expected
to report in the range of 3.5-3.7%. Profit is expected to be dented on account of higher
provisions.
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
22

23. Public Sector Banks Result Preview 3QFY14E
State Bank of India
SBIN
Rs Cr
3QFY14E
NII
12959
PPP
6734
Net Profit
2535
2QFY14
12251
6312
2375
3QFY13
11154
7791
3396
% YoY Growth
16.2
-13.6
-25.4
% QoQ Growth
5.8
6.7
6.7
We expect SBIN loan and deposits growth of 17% and 16% YoY respectively. NIN is
expected to report in the range of 3.5-4% as bank has increased base rate during the
quarter. Operating leverage and asset quality is expected to dent profit by 25% YoY. We
remain have concern about bank’s deteriorating asset quality and continuous fall of PCR.
Gross slippage and provisions make by bank is key monitor able as per our view.
UCO Bank
UCOBANK
Rs Cr
3QFY14E
2QFY14
3QFY13 % YoY Growth % QoQ Growth
NII
1642
1569
1177
39.5
4.7
PPP
1285
1166
831
54.6
10.2
Net Profit
338
400
102
231.4
-15.5
UCO bank is expected to report profit growth of 200%+ largely due to robust expected NII
growth which is lead by low of fund. UCO Bank’s CASA grew exponential in past few
quarter but after sanction of western countries in Iran, low cost deposits are likely to be
stagnant. But bank is expected to get benefit of same in FY14. Key monitor able would
be CASA trend and asset quality.
Union Bank
UNIONBANK
Rs Cr
NII
PPP
Net Profit
3QFY14E
2015
1484
400
2QFY14
1954
1225
208
3QFY13
1891
1358
302
% YoY Growth
6.6
9.3
32.5
% QoQ Growth
3.1
21.1
92.3
We expect Union bank’s profit to grow by 32% YoY largely due to margin expansion and
flow of FCNR deposits. Cost of fund is likely to soften this quarter as bank borrowed
more money on repo and less MSF. Bond yield settled at 8.75% during quarter as
against 9.5% in previous quarter. We expect loan and deposits growth of 17% and 18%
YoY. Asset quality is likely to persist. Improvement in CASA and margin expansion would
be key monitor able.
Result Preview ; at a glance
PSU BANKS
ALBK
ANDHRABANK
BANKBARODA
BANKINDIA
CANBK
DENABANK
IOB
ORIENTBANK
PNB
SBIN
SYNDIBANK
UCOBANK
UNIONBANK
VIJAYABANK
Total
NII
1382
1169
3515
2683
2606
684
1467
1395
4201
12959
1480
1642
2015
660
36476
3QFY14E
PPP Net Profit
1139
324
750
182
2539
1067
2218
602
1734
775
458
107.4
972
120
965
269
2874
607
6734
2535
847
319
1285
338
1484
400
385
127
23245
7448
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
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
NII
3.9
20.4
23.7
16.2
31.1
11.2
6.2
15.9
12.5
16.2
5.7
39.5
6.6
44.7
17.2
YoY Growth
PPP Net Profit
32.4
4.2
5.4
-29.2
12.6
5.5
19.5
-25.1
14.4
8.5
3.4
-47.9
-4.4
3.4
4.2
-17.5
7.2
-53.5
-13.6
-25.4
-2.0
-37.2
54.6
231.4
9.3
32.5
47.5
0.0
3.3
-18.8
QoQ Growth
NII
PPP Net Profit
5.6
-1.3
17.5
11.9
16.7
157.6
21.4
19.5
-8.7
6.2
5.5
-3.3
18.9
21.7
23.8
539.3
24.1
-82.8
1.0
22.9
-9.8
8.9
17.0
7.2
4.6
13.4
20.2
5.8
6.7
6.7
4.9
4.4
-32.1
4.7
10.2
-15.5
3.1
21.1
92.3
-6.4
41.0
-6.6
9.2
12.8
-1.9
23

24. 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
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