Stock Investment Tips Recommendation -- Nutral Bajaj auto, Axis bank to get benefit as well as buy HCLTECH and DCB stocks

1. IEA-Equity
Strategy
India Equity Analytics
17th Jan, 2014
Daliy Fundamental Report on Indian Equities
HCLTECH : "Retain confidence"
"BUY"
Edition : 186
17th Jan 2014
HCL tech beats expectations with a sustained momentum in volumes and proved its consistency to maintain its margin at 26% mark; Sales grew
by 2.8% (QoQ) in INR term and 4% (QoQ) in USD term led by 4.6% of growth from Infrastructure services and BPO services. Considering the
increasing discretionary spends across the geographies like US and Europe, we expect healthy earnings performance ahead. At a CMP of Rs
1392, stock trades at 17.5x of FY14E earnings, We retain BUY on the stock and revised our target price from Rs 1194 to Rs1560.
............................................... ( Page : 2-4)
BAJAJ-AUTO LTD: Inline Performance but Market Share lost.
"Neutral"
17th Jan 2014
Bajaj Auto posted its 3QFY14 results with net sales at Rs 5025 Cr down by 6 % YoY. The decline in the net sales came on the back of lower
volume in the quarter under review. The company during the 3QFY14 manage to sell 993,690 units of vehicles down by 11 % YoY.
...................................................................... ( Page : 5-6)
AXIS BANK :
"Neutral"
17th Jan 2014
Axis Bank’s profit was better than expectation largely due to lower provisions made by bank. At PBT level bank reported moderate growth of
10.7% YoY despite of healthy NII growth on account of flat other income and higher CI ratio. Margin at sequential basis was compressed by 8
bps due to higher growth in cost of fund than yield on loan. Exposure to risky sector remained high among peers. We revised our target price to
Rs.1217 from earlier of 1147. We remain have neutral view on the stock owing to uncomfortable profit, lower growth in deposits than loan,
sticky gross slippage ratio and impaired asset higher than peers. ............................... ( Page :7-11)
DCB :
"BUY"
17th Jan 2014
DCB reported healthy profit growth on the back of higher growth in NII and other income. Bank reported improvement in asset quality in
sequential basis despite of challenging macro environment. During quarter bank strengthen its balance sheet and witnessed improvement of
operating and financial metrics. We have revised our target price to Rs.65 from earlier of Rs.61 and according change our rating from neutral to
buy ............................................ ( page :12-16)
NIIT Tech :"Focused on growth story"
"BUY"
16th Jan 2014
For 3QFY14, NIITTECH reported marginally below numbers than street estimates, sales was unchanged at Rs587.3cr because of reduced
purchase for resale (PFR) in domestic Government business while revenues from services grew 4.3% sequentially. Company’s Order wins in the
recent quarters have been healthy, lending visibility on revenue growth. At a CMP of Rs 376, trades at 6.9x FY15E earnings. We retain “ buy”
view on the stock with a price target of Rs 440 (revised from Rs360) ........................... ( Page :17-19)
YES BANK :
"Neutral"
16th Jan 2014
Yes Bank profit growth was higher than expectation due to lower provisions made of bank despite of reporting higher delinquencies. Balance
sheet growth on sequential basis declined led by lower incremental deposits (other than CASA) whereas advance grew handsomely. Leverage
ratio (Total asset to Net worth) has been declining from past four quarters indicating no surplus liquidity in balance sheet. Moreover bank need
additional borrowings to fund its growth trajectory, this would result of higher cost of fund and margin compression. We remain have neutral
view on the stock and reduce our target price to Rs.388 from Rs.443.................... ( Page :20-23)
CMC : "Nothing for excitement"
"Neutral"
16th Jan 2014
we expect that its earning visibility and order from government side in coming 2 quarter could be impacted because of general election
schedule in India (earns 41% revenue from India). For a near to medium -term prospect, we are not much excited on the stock taking its earning
visibility in near term. We had already advised to book profit on 9th Jan 2014 at a target price of Rs 1690, now we have a “Neutral” view on the
stock. At a CMP of Rs 1527, stock trades at 16.5X FY15E earnings ................................... ( Page : 24-26)
Narnolia Securities Ltd,

2. HCLTECH
"BUY"
17th Jan' 14
"Retain confidence"
Result update
Buy
CMP
Target Price
Previous Target Price
Upside
Change from Previous
1392
1560
1194
12%
30.7%
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Crores)
Average Daily Volume
Nifty
532281
HCLTECH
1398/653
97287
1193062
6319
Stock Performance
1M
17.8
15.4
Absolute
Rel. to Nifty
1yr
109.4
105.1
YTD
149.1
131
Share Holding Pattern-%
Promoters
FII
DII
Others
Current
61.84
26.01
5.70
6.45
1 year forward P/E
4QFY13
61.92
24.45
6.49
7.14
3QFY13
61.99
24.32
6.56
7.13
HCL tech beats expectations with a sustained momentum in volumes and proved its
consistency to maintain its margin at 26% mark;
Following the successive 10th quarter, again company witnessed healthy growth in
2QFY14 than street expectation. Sales grew by 2.8% (QoQ) in INR term and 4% (QoQ)
in USD term led by 4.6% of growth from Infrastructure services and BPO services.
During the quarter, the company has crossed the landmark of USD5bn. PAT grew by
5.6 %(QoQ) in INR term and 7.1% (QoQ) in USD term.
The company continues to lead the industry in profitable growth, with 11 successive
quarters of net income margin expansion, having reported 55% growth in Net Income
on Yearly basis. Management is confident to focus on vendor consolidation and cost
control activities to maintain its growth story.
Stable Margin: During the quarter, its EBITDA Margin was almost flat at 26% and good
thing is, company has been able to maintain its range of 25-26% for its margin. PAT
margin improved by 50bps to 18.3%, sequentially.
Segmental Performance: Infrastructure Services (contributes 34% of sales) continued to
lead with growth at 4.6%, and BPO services (contributes 5% of sales) grew by
10%(QoQ)followed by Enterprise Application at 1.6%, Custom Application Services at
1.4% and Engineering/ R&D Services at 1%, respectively.
Mixed performance across verticals: The Company contributed strong growth in the
Retal and manufacturing verticals. Retail & CPG and Manufacturing’s revenue growth up
by 6.5% and 3.7% respectively and Financial Services up by 2.4%. While growth from
Healthcare and Other services declined by 5.2% and 16.1% respectively.
Healthy deal pipeline: During the quarter, HCL Tech reported an addition of 15
transformational deals in the US and Europe for the December quarter. These wins have
been in the momentum markets of manufacturing and Financial Services as well as the
emerging momentum markets of life sciences & Healthcare and Public Services. Across
the geographies, USA and Europe remain best to drive deal wins during the quarter
because of healthy scenario of demand environment.
View and Valuation: HCL tech’s decent level of utilization, focused on cost control and
utilization of new market opportunities through vendor’s consolidation would provide a
new shape to the company in near future. On performance front, it continues to be
bullish on the rebid market and bullish on short-term to medium term, momentum on
deals pipeline also looking robust. Considering the increasing discretionary spends
across the geographies like US and Europe, we expect healthy earnings performance
ahead. At a CMP of Rs 1392, stock trades at 17.5x of FY14E earnings, We retain BUY on
the stock and revised our target price from Rs 1194 to Rs1560.
Financials
Revenue
EBITDA
PAT
EBITDA Margin
PAT Margin
2QFY14
8184
2125
1495
26.0%
18.3%
1QFY14
7961
2093
1416
26.3%
17.8%
(QoQ)-%
2.8
1.5
5.6
(30bps)
50bps
1QFY13
6273.8
1417
965
22.6%
15.4%
Rs, Crore
(YoY)-%
30.4
50.0
54.9
340bps
290bps
(Source: Company/Eastwind)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
2

3. HCLTECH
Sales(USD term) and Sales growth-%(QoQ)
In dollar terms, the revenues grew by
4% QoQ (cc terms 3.1%) to USD 1321mn
and net profit grew by 7.1% QoQ to
USD 241.6mn.
(Source: Company/Eastwind)
Margin-%
Tha company expects to maintain EBIT
margin at 18.5-19.5% in FY14
(Source: Company/Eastwind)
Clients Metrics
Clients Contribution
.
Top 5 Clients
Top 10 Clients
Top 20 Clients
1QFY12 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13
15.3% 15.8% 16.0% 16.4% 16.2% 15.7% 15.4% 15.4%
24.1% 24.2% 24.3% 24.7% 24.5% 24.2% 24.0% 23.8%
34.2% 33.9% 33.9% 34.1% 33.6% 33.3% 32.8% 33.0%
1QFY14
15.1%
23.8%
33.2%
2QFY14
14.8%
23.8%
33.6%
Employee Metrics
.
No of Employee
Gross Addition
Attrition
1QFY12 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14
70321 72055 72474 74675 75621 75226 74226 74912 87196 88332
6927
4931
3303
5274
4479
3291
2933 4316
8061
7593
15.9% 15.7% 15.0% 14.0% 13.6% 13.6% 14.2% 14.9% 16.10% 16.6%
Utilization rate
Utilization down from 84.9% to 84.1%.
Further, it's Utilization are at decent
levels, indicated can still derive more
efficiency .
(Source: Company/Eastwind)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
3

4. HCLTECH
Key facts from Con-Call
The company is expecting to catch up more deal from US and Europe because of better
demand environment ahead. Clients are looking vendor’s consolidation, and company will
try to turn this opportunity into deal.
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.
The infrastructure business is largely under penetrated globally, less than 5% from an
Indian (vendor's) standpoint. They expect to see significant growth over there, in that
business and expect to raise infrastructure services margins by supporting customers
migrating to cloud computing.
Financials;
Rs, Cr
Net Sales-USD
Net Sales
Raw Materials Cost
Employee Cost
Operation and other expenses
Total Expenses
EBITDA
Depreciation
Other Income
Extra Ordinery Items
EBIT
Interest Cost
PBT
Tax
PAT
Growth-%
Sales-USD
Sales
EBITDA
PAT
Margin -%
EBITDA
EBIT
PAT
Expenses on Sales-%
Employee Cost
RM Cost
Operation and other expenses
Tax rate
Valuation
CMP
No of Share
NW
EPS
BVPS
RoE-%
Dividend Payout ratio
P/BV
P/E
FY10
2704.6
12136.3
443.6
6253.7
3498.5
10195.7
1940.6
418.1
154.1
0.0
1522.5
204.1
1472.4
213.4
1259.0
FY11
3545.3
15730.3
522.1
8589.6
4163.2
13274.9
2455.4
459.7
299.7
0.0
1995.7
142.6
2152.8
488.5
1664.3
FY12
4151.5
20830.6
612.0
11104.6
5418.8
17135.3
3695.2
549.2
206.5
0.0
3146.0
142.6
3209.8
782.7
2427.1
FY13
4686.5
25581.1
959.3
12574.2
6386.4
19919.9
5661.2
636.8
306.6
44.5
5024.4
105.6
5269.9
1225.3
4044.6
FY14E
5379.7
32278.2
968.3
16139.1
7101.2
24208.6
8069.5
748.6
511.6
-484.2
7320.9
79.2
7269.1
1744.6
5524.5
FY15E
6492.2
38628.3
1158.8
19507.3
8691.4
29357.5
9270.8
903.4
645.6
77.3
8367.3
59.4
9030.8
2212.5
6818.2
24.1%
18.6%
5.9%
-4.6%
31.1%
29.6%
26.5%
32.2%
17.1%
32.4%
50.5%
45.8%
12.9%
22.8%
53.2%
66.6%
14.8%
26.2%
42.5%
36.6%
20.7%
19.7%
14.9%
23.4%
16.0%
12.5%
10.4%
15.6%
12.7%
10.6%
17.7%
15.1%
11.7%
22.1%
19.6%
15.8%
25.0%
22.7%
17.1%
24.0%
21.7%
17.7%
51.5%
3.7%
28.8%
14.5%
54.6%
3.3%
26.5%
22.7%
53.3%
2.9%
26.0%
24.4%
49.2%
3.8%
25.0%
23.3%
50.0%
3.0%
22.0%
24.0%
50.5%
3.0%
22.5%
24.5%
364.9
67.9
6288.8
18.5
92.6
20.0%
25.0%
3.94
19.68
493.5
68.9
7653.0
24.2
111.1
21.7%
31.5%
4.44
20.43
490.0
69.3
9837.9
35.0
141.9
24.7%
33.1%
3.45
13.99
759.5
69.6
13164.0
58.1
189.1
30.7%
24.2%
4.02
13.07
1392.0
69.6
17548.4
79.4
252.1
31.5%
20.6%
5.52
17.54
1392.0
69.6
23226.5
97.9
333.7
29.4%
16.7%
4.17
14.21
(Source: Company/Eastwind)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
4

5. BAJAJ-AUTO LTD.
"NEUTRAL"
17th Jan' 14.
Inline Performance but Market Share lost.
Result Update
Neutral
CMP
Target Price
Previous Target Price
Upside
Change from Previous
1908
1870
-
Market Data
BSE Code
532977
NSE Symbol
52wk Range H/L
Mkt Capital (Rs, Cr)
Average Daily Volume
Nifty
BAJAJ-AUTO
2193/1657
55,208
197712
6318
1M
0.2
-1.8
1yr
-9.0
-14.0
YTD
13.0
-5.0
Share Holding Pattern-%
Promoters
FII
DII
Others
Current 2QFY14 1QFY1
4
50.0
50.0
50.0
18.7
17.8
17.4
6.9
7.8
7.7
24.4
24.4
24.8
One Yr Price Movement
Bajaj Auto posted its 3QFY14 results with net sales at Rs 5025 Cr down by 6 % YoY. The
decline in the net sales came on the back of lower volume in the quarter under review. The
company during the 3QFY14 manage to sell 993,690 units of vehicles down by 11 % YoY.
The total number of 2W sold during the quarter was 887,671 units down by 10 %YoY. The
company during the quarter sold 106,019 units of 3W down by 25 % YoY. The company
during 3QFY14 also have lost 3% market share.
The operating EBITDA during the quarter came at Rs 1135 Cr and OPM was 22.1 %
however the company have gained Rs 95 Cr towards time value of foreign exchange
contracts. Therefore adjusted OPM stands at 21 %.The company during the quarter
managed to hold its prices across its models which helps to maintain its OPM levels at early
twenties range. The realization of dollar for the quarter was at Rs 62.
The net profits of the company for 3QFY14 came at Rs 905 Cr and NPM at 17.6 %.The
other income for the quarter came at Rs 222 Cr and Tax Rate was 31 %.
Stock Performance-%
Absolute
Rel. to Nifty
Declined Sales Growth ; Loss in Market Share ; Maintained EBITDA Margin; Not so
Optimistic guidance..
The realization per vehicle for the quarter was at Rs 50567 and it was Rs 47060 for the
same time last fiscal.
Management Commentary
The management of the company after results said that they donot look significant change in
industry outlook going forward. The management stated that though they have lost nearly 3
% of market share during the quarter however are hopeful to regain it on the back of 125 cc
discover bike (Launched way back in Nov 2013) and another forthcoming launch in March
2014.The company further said that they donot see OPM to cross 21% levels in near term.
The company reiterated that they will not foray in scooter segments.
View & Valuation
The stock is trading at Rs 1908 and it has achieved our previous target price of Rs 2100, we
have turned to neutral for the stock post our target price achievement .The 3QFY14 results
are not much strong to make a convincing thought more over the management of company
has not hinted relatively stronger business outlook going forward. Post analysis of 3QFY14
results and management commentary does not make any strong conviction and maintain
our NEUTRAL view for the stock with Target Price of Rs 1870.
Financials
Revenue
EBITDA
PAT
EBITDA Margin
PAT Margin
3QFY14
5131
1135
905
22.1%
17.6%
2QFY14
5175
1132
837
21.9%
16.2%
(QoQ)-%
(0.9)
0.3
8.1
20bps
150bps
3QFY13
5413
1012
819
18.7%
15.1%
Rs, Crore
(YoY)-%
-5.2
12.2
10.5
340bps
250bps
(Source: Company/Eastwind)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
5

6. BAJAJ-AUTO LTD.
SALES & PAT TREND
The decline in the net sales in the quarter
came on the back of lower volume sales.
(Source: Company/Eastwind)
OPM & NPM TREND
The company during the quarter managed to
hold its prices across its models which helps
to maintain its OPM levels at early twenties
range
(Source: Company/Eastwind)
Volume Trend
The total number of 2W sold during the
quarter was 887,671 units down by 10 %YoY.
The company during the quarter
sold
106,019 units of 3W down by 25 % YoY.
(Source: Company/Eastwind)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
6

7. AXIS BANK
Result Updated
CMP
Target Price
Previous Target Price
Upside
Change from Previous
NEUTRAL
1173
1217
1147
4
6
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Cr)
Average Daily Volume
Nifty
532215
AXISBANK
1549/764
55229
5.19 lakh
6318
"NEUTRAL "
16th Jan, 2014
Bank’s profitability was better than expectation largely due to lower
provisions. At operating profit level bank registered moderate growth of 10.7%
YoY led higher Cost Income ratio and flat other income despite of healthy NII
growth. Bank’s exposure to risky sector (Power+ Infrastructure) remained at
12.87% higher among peers. However retail growth in advance would help
bank to keep NIM at high but lower growth in deposits especially in CA and
term deposits remain a cause of worry. We revised our target price to Rs.1217
from earlier of 1147. We remain have neutral view on the stock owing to
uncomfortable profit, lower growth in deposits than loan, sticky gross
slippage ratio and impaired asset higher than peers.
Healthy NII growth on the back of higher CD ratio and margin expansion on
YoY basis
Bank reported NII growth of 19.6% YoY to Rs.2984 cr versus expectation of Rs.3006
cr due to lower than expected loan growth and lower loan yield. NIM margin
Stock Performance
1M
Absolute
-6.3
Rel.to Nifty
-9.2
1yr
-15.1
-20.0
YTD
-15.1
-20.0
expansion on year to year basis along with higher credit deposits ratio helped bank
to report fairly stable interest income. Cost of deposits was by and large stable at
7.3% led by CASA deposits growth. Other income grew by 2% YoY taking revenue
growth of 12.6% YoY despite of healthy growth in NII.
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
CI ratio marginally increased but still comfortable
Cost Income ratio increased marginally to 43.5% from 42.5% in 3QFY13 but
remained comfortable as operating leverage stable at 0.55%. Employee cost and
other operating cost increased by 6.5% and 20% respectively. Higher growth in other
operating cost was on account of 96 branches and 532 ATMs added during the third
quarter. In the absence of healthy other income and higher CI ratio, operating profit
grew by 10.7% YoY to Rs.2615 cr.
Inch up deterioration in asset quality
During quarter bank reported inch up deterioration in asset quality with GNPA in
absolute term increased by 10% QoQ to Rs.3008 cr whereas as provisions (loan
loss) increased by 6% QoQ basis. As the result net NPA in absolute term increased
by 20% QoQ. In percentage term GNPA and net NPA stood at 0.47% and 0.9%
against 0.42% and 0.9% in 2QFY14. Gross slippage ratio for the quarter was 1.1%.
Bank reported recoveries were Rs.122 cr write-off were Rs.193 cr. Outstanding
restructure assets at the end of quarter was Rs.4900 cr which was 2.32% of net
advance, higher among peers.
Rs, Cr
Financials
2011
2012
2013
2014E
2015E
NII
6566
8026
9666
12224
14775
Total Income
11238
13513
16217
19146
21697
PPP
6377
7413
9303
11206
12367
Net Profit
3340
4224
5179
5826
6934
EPS
81.4
102.2
110.7
124.2
148.2
(Source: Company/Eastwind)
7
Narnolia Securities Ltd,

8. AXIS BANK
Loan growth higher than deposits growth; CASA remain healthy
On balance sheet front, bank’s advance grew by 18% YoY as against our expectation of
20% led retail advance growth of 44% YoY followed by SME (25% YoY) and agriculture
(15% YoY) growth. Deposits grew by 7% YoY versus expectation of 16%. Lower deposits
growth was primarily due to muted growth in current account and term deposits which
were reported 5% and 3% YoY growth respectively. Saving deposits grew by 23% YoY
taking overall deposits growth to 7%. CASA deposits registered growth of 250 bps YoY to
42.6%. A credit deposit for the quarter was high at 80.6% implying some dependency on
other than deposits. Borrowings as a percentage of NDTL (net demand time liability)
increased to 15.6% from 13.7% in 3QFY13 but still at comfortable level (above of HDFC
bank and below of ICICI bank). Bank is able to maintain its cost of fund under control
basically from high base of CASA deposits.
Margin compression on sequential basis due to declined loan yield as compare to
cost of fund
Sequentially NIM was declined by 8 bps to 3.71% from 3.79% due to declined of loan
yield as compare to cost of fund. Loan yield was 10.5% versus 10.7% in previous quarter
whereas cost of fund remains stable at 6.3%. Deposits cost (EW Calculation) other than
borrowing increased marginally to 6.18% from 6.16% on sequential basis. We do not
see margin compression >10 bps in next couple of quarters because of low cost
deposits (CASA) support and increasing share of high yield retail advance.
Valuation & View
Bank’s profitability was better than expectation largely due to lower provisions. At
operating profit level bank registered moderate growth of 10.7% YoY led higher Cost
Income ratio and flat other income despite of healthy NII growth. Bank’s exposure to risky
sector (Power+ Infrastructure) remained at 12.87% higher among peers. However retail
growth in advance would help bank to keep NIM at high but lower growth in deposits
especially in CA and term deposits remain a cause of worry. We revised our target price
to Rs.1217 from earlier of 1147. We remain have neutral view on the stock owing to
uncomfortable profit, lower growth in deposits than loan, sticky gross slippage ratio and
impaired asset higher than peers.
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
8

9. 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.
9

10. 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.
10

11. 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.
11

12. DCB
"BUY"
17th Jan,2014
Result Updated
CMP
Target Price
Previous Target Price
Upside
Change from Previous
BUY
59
65
62
10
5
DCB reported healthy profit growth with the support of robust NII along with
other income. We note that bank’s operating as well as financial metrics has
been improving continuously. Although on CASA front, we disappointed little
bit but continuous decreasing dependency on addition fund (borrowing as a
percentage of net demand time liability) would keep NIM at current level.
Improvement of asset quality along with comfortable PCR would provide
cushion to its earnings. We have revised our target price from Rs.61 to Rs.65
and recommend buy.
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Cr)
Average Daily Volume
Nifty
532772
DCB
60.55/38.05
1475
13.76 lakh
6318
Asset quality improved despite of tight macro environment
During this quarter, bank made total provision (includes loan loss, investment
depreciation, standard asset, restructure assets etc) of Rs.10 cr versus Rs.7 cr in
previous quarter and Rs.5 cr in last quarter. On sequential basis gross NPA
improved by 12% to 208 cr from Rs.235 cr. In percentage of gross advance GNPA
for the quarter improved to 2.8% from 3.5% in 2QFY14. Bank made lower loan loss
provision to the tune of Rs.151 cr versus Rs.178 cr in previous quarter. As the result
provision coverage ratio was declined from 76% to 72.6% sequentially. Net NPA in
absolute term stable with Rs.57 cr and improved to 0.8% from 0.9% of net advances
on quarter to quarter basis.
Stock Performance
1M
Absolute
17.1
Rel.to Nifty
14.2
1yr
15.9
11.0
YTD
-15.1
-20.0
Share Holding Pattern-%
Current 4QFY13 3QFY1
3
Promoters
18.5
18.5
18.5
FII
11.9
11.4
11.4
DII
15.0
14.1
12.5
Others
54.6
56.1
57.7
DCB Vs Nifty
Registered healthy loan and deposits growth, balance sheet consolidated
DCB reported higher than expected loan growth of 23.4% YoY to Rs.7362 cr against
our expectation of Rs.7125 cr. Deposits grew by 27% YoY led by term deposits
growth of 34% YoY. CASA reported growth of 9% YoY but in percentage term, it
stood at 24.8% as against 28.9% in 3QFY13. Credit deposits ratio stable at
sequential basis at 76.7% versus 76% in previous quarter and 78.9% in 3QFY14.
Higher CD ratio during the last quarter was on account of higher dependence on
borrowing rather than deposits. Borrowing as a percentage of NDTL (net demand
time liability) reduced to 24.8% in 3QFY14 from 28.9% in 3QFY13. Declining share
of CASA ratio little disappointed us but bank was able to keep cost of fund under
control. We do not see larger impact on NIM due to declined of CASA.
Financials
NII
Total Income
PPP
Net Profit
EPS
2011
189
301
86
21
1.1
2012
228
328
84
55
2.3
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
Rs, Cr
2013
2014E
2015E
284
369
364
401
509
505
126
188
192
102
153
157
4.1
6.1
6.3
(Source: Company/Eastwind)
12

13. DCB
Robust growth in NII on the back of healthy NII growth and supportive other
income
DCB in its quarter result reported revenue growth of 25.6% YoY to Rs.125 cr in line with
our expectation of Rs.127 cr. Growth in NII was come from sequentially improvement of
credit deposits ratio, margin expansion led by higher loan yield in compare to cost of
fund. During quarter bank reported NII growth of 30% YoY to Rs.94 against our
expectation of Rs.88 cr. Bank reported other income of Rs.328 cr versus Rs.289 cr in last
quarter in which commission income was 267 cr registered growth of 20% YoY. Bank has
been continuous strengthen its core earnings contribution to total earnings as the ratio of
other income to total income has been declining from 20% in 1QFY11 to 10% in 3QFY14.
Declining share of other income in total income
Rs. Cr
1QFY11 2QFY11 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12 1QFY13
Other Income(A)
30
27
26
29
23
23
26
28
28
Total Income(B)
150
155
166
177
185
202
210
221
241
%(A/B)
20
17
16
16
13
11
13
13
11
2QFY13
28
247
11
3QFY13 4QFY13 1QFY14 2QFY14 3QFY14
29
33
45
27
33
258
286
306
296
324
11
12
15
9
10
Cost to Income declined sequentially led operating profit growth of 46% YoY
Cost to Income ratio was declined to 63.4% from 68.5% in 3QFY13 and 66.2% in
2QFY14 which surprise us positively. We assumed 66% of CI ratio for the quarter but
looking at bank’s strategy to keep operating leverage under control we tweak our
assumption to 63.2% for FY14. Employee cost and other operating cost increased by
12.7% and 20% YoY respectively. Healthy core earnings, higher other income and lower
CI ratio led operating profit growth of 46% YoY.
Source: Company/Eastwind
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
13

14. DCB
Higher profit growth led by healthy revenue growth, sequential improvement of CI
ratio and improvement in asset quality
With the support of healthy core income, higher other income, sequentially improvement
of CI ratio and improving asset quality led net profit growth of 35% YoY to Rs.36 cr as
against our expectation of Rs.34. In our earlier note dated 13th Dec.2014 (Private sector
banking result preview), we highlighted that DCB, HDFC bank and ICICI bank would
report better result.
Compression of NIM on account of higher cost of fund rather than growth of loan
yield
NIM declined 13 bps QoQ to 3.55% from 3.68% largely due to higher growth came in
cost of fund than yield on loan. Sequentially cost of fund increased to 7.86% against
7.56% whereas yield on loan increased to 12.96% from 12.73%. Higher cost fund was
account of declining share of low cost CASA franchise in total deposits.
Valuation & View
DCB reported healthy profit growth with the support of robust NII along with other income.
We note that bank’s operating as well as financial metrics has been improving
continuously. Although on CASA front, we disappointed little bit but continuous
decreasing dependency on addition fund (borrowing as a percentage of net demand time
liability) would keep NIM at current level. Improvement of asset quality along with
comfortable PCR would provide cushion to its earnings. We have revised our target price
from Rs.61 to Rs.65 and rate buy from neutral.
Source: Eastwind/ Company
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
14

15. DCB
Quarterly Result( Rs Cr)
3QFY14 2QFY14 3QFY13 % YoY % QoQ 3QFY14E Variation
Interest/discount on advances / bills
222
205
181 23.0
8.3
214
-3.8
Income on investments
63
58
48
32.7
9.6
62
-2.8
Interest on balances with Reserve Bank of India
5
5
1
736.4 -11.7
4
-20.0
Others
0
0
0
-26.8 -5.9
0
Total Interest Income
291
269
229 26.8
8.2
279
-3.9
Others Income
33
27
29
13.6 20.4
36
10.2
Total Income
324
296
258 25.3
9.3
316
-2.5
Interest Expended
197
178
157 25.1 10.9
191
-3.0
NII
94
91
72
30.5
3.0
88
-5.9
Other Income
33
27
29
13.6 20.4
36
10.2
Total Income
127
119
101 25.6
7.0
125
-1.8
Employee
39
39
35
12.7
1.8
0
Other Expenses
41
40
34
20.0
3.4
0
Operating Expenses
80
78
69
16.3
2.6
82
2.2
PPP( Rs Cr)
46
40
32
45.9 15.6
42
-8.6
Provisions
10
7
5
105.5 42.2
9
-14.4
PBT
36
33
27
35.1
9.9
34
-7.0
Tax
0
0
0
0
Net Profit
36
33
27
35.1
9.9
34
-7.0
Balance Sheet (Rs Cr)
Net Worth
Deposits
Loan
1115
9592
7362
1079
8788
6677
969
7558
5964
15.1
26.9
23.4
3.4
9.1
10.3
1113
9203
7125
Asset quality (Rs Cr)
GNPA
NPA
% GNPA
% NPA
208
57
2.8
0.8
235
57
3.5
0.9
234
44
3.9
0.7
-11.1
31.1
-11.6
-0.2
-
-0.2
-4.1
-3.2
Source: Eastwind/ Company
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
15

16. DCB
Income Statement
2010
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 (%)
459
317
142
-28.2
107
249
-21.6
201
48
-36.5
121
-73
-79
-10.1
536
347
189
33.6
112
301
21.2
215
86
79.9
57
29
21
-127.2
717
489
228
20.4
100
328
8.9
244
84
-2.6
29
55
55
157.1
916
632
284
24.9
117
401
22.4
275
126
50.5
24
102
102
85.3
1121
753
369
29.6
140
509
26.8
322
188
48.7
35
153
153
49.7
1241
1088
153
-58.5
140
293
-42.4
182
111
-40.5
0
111
111
-27.0
4787
3
1693
17
504
2018
3460
6
5610
17
1975
17
861
2295
4271
23
6336
13
2035
3
1123
2518
5284
24
8364
32
2272
12
1526
3359
6586
25
9618
15
2710
19
814
3689
7640
16
11061
15
1904
-30
1282
3270
9168
20
Avg. Yield on loans
Avg. Yield on Investments
Avg. Cost of Deposit
Avg. Cost of Borrowimgs
10.4
4.7
5.9
6.8
9.4
5.8
5.2
6.4
10.1
6.9
6.4
7.2
10.8
5.8
6.4
6.4
9.7
6.8
5.9
6.0
9.7
6.8
5.9
6.0
Valuation
Book Value
CMP
P/BV
30
32.2
1.1
31
45.9
1.5
36
45
1.3
40
45
1.1
46
57
1.2
51
57
1.1
Balance Sheet
Deposits( Rs Cr)
Change (%)
of which CASA Dep
Change (%)
Borrowings( Rs Cr)
Investments( Rs Cr)
Loans( Rs Cr)
Change (%)
Ratio
Source: Eastwind/ Company
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
16

17. NIIT Tech
"BUY"
16th Jan' 14
"Focused on growth story"
Result update
Buy
Below than street expectations, but confident on future growth;
CMP
Target Price
Previous Target Price
Upside
Change from Previous
376
440
360
17%
22%
For 3QFY14, NIITTECH reported marginally below numbers than street estimates, sales
was unchanged at Rs587.3cr because of reduced purchase for resale (PFR) in domestic
Government business while revenues from services grew 4.3% sequentially. During the
quarter, company has been able to maintain healthy order book and eyeing on strong
order pipeline.
Post earning, management is gearing up for its paradigm shift in growth strategy for the
future and set an aspirational target to grow revenues to USD 1 bn in the next 5yrs. They
stated that, margins will start seeing improvement from Q4FY14, led by the
improvement in the margin from the Geographic Information Systems (GIS) business
and the Morris joint venture.
PAT declined by 12%(QoQ) impacted by a loss in other income as a result of revaluation
of foreign currency assets and liabilities due to period end exchange difference.
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Crores)
Average Daily Volume
Nifty
532541
NIITTECH
399/234
2281
20884
6321
Stock Performance
1M
12.7
10.2
Absolute
Rel. to Nifty
1yr
36.3
31.4
YTD
43.3
38.5
Share Holding Pattern-%
Promoters
FII
DII
Others
Current
31.08
32.35
17.34
19.23
1 year forward P/E
2QFY14
31.19
29.21
19.94
19.66
1QFY14
31.23
29.04
19.67
20.06
Steady margin: EBITDA Margin improved by 120bps (QoQ) to 16.2% on the back of
reduction Employee cost by 3.5%, sequentially.
Healthy growth traction from US and Europe: The contribution to the total revenues
from the U.S. increased to 44% from 41% (up 7%,QoQ) and EMEA stood at 38% from
36%( up 6%, QoQ). The revenue share from rest of the world declined from 23% to 18%
(down 22% QoQ). Post result management stated that the demand environment is
clearly showing positive signs in the US with the debt issue being the only overhang.
Slow deal execution in Government and Insurance projects: Among industry segments,
Travel and Transportation contributed to 37% (up by 3%, QoQ), BFS was 17% (up by
21%, QoQ), Government projects declined from 10% to 6% (down by 40%, QoQ) to the
revenue mix.
Healthy order addition: During the quarter, the company secured a USD 300 million
vendor consolidation deal from a top BFSI client for a period of 10 years. It has secured
fresh order of USD 377mn versus USD 84mn in 2QFY14. However, in 3Q FY14, order has
primarily been in the international market. During the quarter, NIIT Tech forayed into
Latin America through its partnership with GRU Aeroporto Internacional de São Paulo
(Sao Paolo International Airport), to implement and transform the cargo handling
system at the airport.
View and Valuation: We expect good growth from Travel & Tourism vertical in FY'14
and the BFSI expected to be softer. However, the MFG and Govt verticals expected to
improve going forward. Company’s Order wins in the recent quarters have been healthy,
lending visibility on revenue growth. At a CMP of Rs 376, trades at 6.9x FY15E earnings.
We retain “ buy” view on the stock with a price target of Rs 440 (revised from Rs360).
Financials
Revenue
EBITDA
PAT
EBITDA Margin
PAT Margin
3QFY14
587.3
95.1
52.5
16.2%
8.9%
2QFY14
587.3
88.6
60.4
15.1%
10.3%
(QoQ)-%
0.0
7.3
(13.1)
110bps
(120bps)
3QFY13
500.1
81.3
56.6
16.3%
11.3%
Rs, Crore
(YoY)-%
17.4
17.0
-7.2
(10bps)
(140bps)
(Source: Company/Eastwind)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
17

18. NIIT Tech
Sales and PAT growth-%(QoQ)
Company expects FY14 to be better
than FY13 with respect to both revenue
growth and EBIT margin. And also
expects stronger growth in the US and
Asian markets compared with Europe.
Management also expects to see
demand environmrnt ahead.
(Source: Company/Eastwind)
Margin-%
It expects the growth momentum will
sustain with holding the margins going
forward.
(Source: Company/Eastwind)
Clients Metrics
The 3QFY14 witnessed sustained hiring
and attrition improved from 12.44% to
13.40% on LTM basis. Managent is very
confident to maintain attrition at 12-13%
and utilization at 77-80%.
(Source: Company/Eastwind)
Clients Metrics: During the quarter, Company added 4 new clients, each in BFSI, travel
and transportation, manufacturing, and government segment.
Employee Metrics: Total headcount increased from 8017 from 8,160 at the end of the
quarter. Utilzation declined to 78.4% from 80.3%(2QFY14) because of weak quarter and
still, company is good to maintain attrition at a mark of 12-13%, which is better than its
peers.
Higher DSO: The DSO days were 98 (2QFY14 – 100) during the quarter.In general, the DSO
days are typically used to be at 80 days.
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
18

19. NIIT Tech
Operating Metrics;
.
Banking and Finacial Services
Insurance
Transport
Manufacturing
Government
Others
Sales Mix-Geography
Americas
EMEA
RoW
Revenue Concentration %
DSO-days
Top-5
Top-10
Headcounts
No of Headcounts
1QFY13
13%
21%
40%
7%
8%
11%
2QFY13
13%
20%
42%
6%
5%
14%
3QFY13
12%
19%
42%
6%
8%
13%
4QFY13
12%
19%
37%
6%
11%
15%
1QFY14
12%
18%
36%
7%
13%
14%
2QFY14
14%
19%
37%
6%
10%
14%
3QFY14
17%
18%
38%
7%
6%
14%
36%
39%
25%
38%
39%
23%
37%
40%
23%
38%
37%
25%
38%
37%
26%
41%
36%
23%
44%
38%
18%
84
30%
43%
75
32%
47%
76
34%
48%
82
32%
47%
98
31%
46%
100
36%
49%
96
37%
49%
7444
7617
7882
8158
8207
8017
8160
Financials;
Rs in Cr,
Sales
Employee Cost
Other expenses
Total expenses
EBITDA
Depreciation
Other Income
EBIT
Interest Cost
Profit (+)/Loss (-) Before Taxes
Provision for Taxes
Net Profit (+)/Loss (-)
Growth-% (YoY)
Sales
EBITDA
PAT
Expenses on Sales-%
Employee Cost
Other expenses
Tax rate
Margin-%
EBITDA
EBIT
PAT
Valuation:
CMP
No of Share
NW
EPS
BVPS
RoE-%
P/BV
P/E
FY10
913.7
503.71
239.75
743.46
170.24
35.81
7.64
134.43
0
142.07
14.42
127.65
FY11
1232.25
601.36
393.1
994.46
237.79
31.46
13.6
206.33
2.22
217.71
32.3
185.41
FY12
1576.48
891.12
415.26
1306.38
270.1
36.42
30.37
233.68
3.84
260.21
63.75
196.46
FY13
2021.36
1115.1
576.96
1692.06
329.3
56.69
22.75
272.61
1.91
293.45
75.05
218.4
FY14E
2341.54
1334.68
620.51
1955.19
386.35
65.73
46.83
320.62
2.59
364.86
103.99
260.88
FY15E
2814.74
1562.18
774.05
2336.24
478.51
73.49
56.29
405.02
1.94
459.37
133.22
326.15
-6.8%
2.3%
9.6%
34.9%
39.7%
45.2%
27.9%
13.6%
6.0%
28.2%
21.9%
11.2%
15.8%
17.3%
19.4%
20.2%
23.9%
25.0%
55.1%
26.2%
10.1%
48.8%
31.9%
14.8%
56.5%
26.3%
24.5%
55.2%
28.5%
25.6%
57.0%
26.5%
28.5%
55.5%
27.5%
29.0%
18.6%
14.7%
14.0%
19.3%
16.7%
15.0%
17.1%
14.8%
12.5%
16.3%
13.5%
10.8%
16.5%
13.7%
11.1%
17.0%
14.4%
11.6%
170.25
5.88
579.78
21.71
98.60
22.0%
1.73
7.84
184.65
5.93
752.11
31.27
126.83
24.7%
1.46
5.91
270.90
5.96
922.20
32.96
154.73
21.3%
1.75
8.22
262.35
6.02
1094.12
36.28
181.75
20.0%
1.44
7.23
376.00
6.02
1346.30
43.33
223.64
19.4%
1.68
8.68
376.00
6.02
1663.24
54.18
276.29
19.6%
1.36
6.94
(Source: Company/Eastwind)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
19

20. YES BANK
Result update
CMP
Target Price
Previous Target Price
Upside
Change from Previous
Market Data
BSE Code
NSE Symbol
Neutral
353
388
443
10
14
532648
YESBANK
52wk Range H/L
Mkt Capital (Rs Cr)
Average Daily Volume
Nifty
547/216
12729
18.04
6320
"NEUTRAL"
16th Jan, 2014
Yes bank reported better than expected profit largely due to lower provision
despite of reported higher delinquencies. This has resulted of lower provision
coverage ratio but still it is above of regulatory requirement. Incremental
deposits (other than CASA) were remained muted whereas advance reported
handsomely. Bank would face liquidity problem or would have to dependent
on additional borrowings to maintain its growth trajectory. This would result of
higher cost of fund and margin compression in our view. Leverage ratio (total
asset to net worth) has been declining from past four quarters indicated no
surplus liquidity in balance sheet. In the absence of comfortable earnings we
remain have neutral view. Also, we reduce our target price from Rs.443 to
Rs.388.
NII growth of 14% YoY led by advance growth and stable cost of fund
Bank’s NII grew by 14% YoY to Rs.665 cr largely due to stable margin and other
income. In 3QFY14, bank reported other income of Rs.388 cr up by 24% YoY
whereas margin was stable at 2.9% declined mere by 10 bps YoY. Credit deposits
Stock Performance
1M
Absolute
-2.7
1yr
-29.2
YTD
-29.2
deposits base. We observed that bank’s cost of deposits (Calculated) remain at
Rel.to Nifty
-35.4
-35.4
improved handsomely to 13.3% from 12.7% in 3QFY13.
-5.4
ratio was improved by 330 bps QOQ but was declined by 400 bps YoY due to lower
Share Holding Pattern-%
Current 4QFY13 3QFY1
3
Promoters
25.6
25.6
25.7
FII
35.1
46.0
49.0
DII
19.4
15.7
13.2
Others
20.0
12.7
12.1
1 Yr P/BV
elevated level despite of relatively have higher CASA base whereas yield on loan
Muted PPP growth due to higher CI ratio
Cost to Income ratio was highest ever to 41.6% because of bank’s strategy to
increase market share of CASA. During quarter bank hire 647 employee and opened
17branches and 36 ATMs. As the result employee cost and operating cost were
increased by 20% and 42% respectively. Due to higher operating cost, pre
provisioning profit increased by 9% YoY despite of healthy NII and other income.
Operating leverage increased to 0.41% from 0.39% in 3QFY14. We expect this ratio
to remain high because of bank would continue to increase its CASA franchise base
by opening new branches and hiring.
Stable margin on sequential basis despite of lower lending yield and marginal
increased of cost of fund
On sequential basis NIM of bank remained flat at 2.9% but declined 10 bps on YoY
basis. Lending yield declined sharply to 13.3% from 13.6% due to increased share of
low yield Corporate and Institutional banking. Cost of deposits increased to 10.9%
from 10.8% on QoQ basis. Despite of lower lending yield and higher cost of fund,
margin stable on sequential basis was probably due to lower earnings asset growth
as we get evidence from negative growth of balance sheet on QoQ basis.
Financials
NII
Total Income
PPP
Net Profit
EPS
2011
1247
1870
1190
727
20.9
2012
1616
2473
1540
977
27.7
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
Rs, Cr
2013
2014E
2015E
2219
2440
2374
3476
4217
4150
2142
2328
2614
1301
1778
1098
36.3
49.4
35.6
(Source: Company/Eastwind)
20

21. YES BANK
Deposits growth moderate sequentially but advance reported handsome growth
On balance sheet front, bank’s advance grew by 14.7% YoY led by retail banking growth
followed by corporate and institutional banking. Retail loan registered growth of 47% YoY
whereas corporate banking reported 18% YoY growth. Deposits grew by 20.7% YoY led
by CASA deposits growth of 38% YoY followed by term deposits (17% YoY). We
observed that bank’s incremental deposits (other than CASA) were remained muted at
Rs.24 cr as against Rs.1708 cr in second quarter. Bank would have to depend on
additional borrowings to maintain its growth trajectory if the present trend continued which
would be the result of higher cost of fund and margin compression. Sequentially credit
deposits ratio was higher at 73.9% from 70.6% on account of lower deposits base
especially of term deposits.
Valuation & View
Yes bank reported better than expected profit largely due to lower provision despite of
reported higher delinquencies. This has resulted of lower provision coverage but it is still
above of regulatory requirement. Incremental deposits (other than CASA) were remained
muted whereas advance increased handsomely. Bank would face liquidity problem or
would have to dependent on additional borrowings to maintain its growth trajectory. This
would result of higher cost of fund and margin compression in our view. Leverage ratio
(total asset to net worth) has been declining from past four quarters indicated no surplus
liquidity in balance sheet. In the absence of comfortable earnings we reduce our target
price to Rs.388 from Rs.443.
Valuation Band ( 1 yr forward P/BV)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
21

22. YES 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
Balance Sheet Data
Advances
Shareholders’ Funds
Deposits
Asset Quality
GNPA
NPA
% GNPA
% NPA
PCR(%)
3QFY14E
1666
840
8
0
2514
388
2902
1849
665
388
1053
194
245
439
615
13
601
186
416
2QFY14
1618
875
8
0
2501
446
2947
1829
672
446
1118
185
220
405
713
179
534
163
371
3QFY13 %YoY Gr %QoQ Gr
1394
19.5
3.0
726
15.8
-4.0
4
82.6
-7.5
10
-96.4
20.0
2134
17.8
0.5
313
23.8
-13.1
2447
18.6
-1.5
1549
19.3
1.1
584
13.9
-1.0
313
23.8
-13.1
898
17.4
-5.8
162
19.8
4.7
172
42.1
11.2
334
31.3
8.2
563
9.1
-13.8
57
-76.6
-92.6
507
18.7
12.7
164
13.0
14.2
342
21.4
12.0
50,293
6,610
68,060
47717
6610
67575
43,857
5,679
56,401
14.7
5.4
16.4
0.0
20.7
0.7
195.8
42.3
0.39
0.08
78.4
132.1
19.36
0.28
0.04
85.3
76.2
15.6
0.17
0.04
79.5
157.0
48.3
171.2
118.5
Source: Eastwind/Company
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
22

23. YES 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( Incl tax)
PAT
Change (%)
4042
2795
1247
6307
4692
1616
8294
6075
2219
11985
9544
2440
11213
8840
2374
58.2
29.6
37.3
10.0
-2.7
623
1870
857
2473
1257
3476
1776
4217
1776
4150
37.2
32.2
40.6
21.3
-1.6
680
1190
933
1540
1335
2142
1889
2328
1535
2614
37.9
29.4
39.1
8.7
12.3
463
727
563
977
841
1301
604
1778
1046
1098
52.2
34.4
33.1
36.7
-38.2
Balance Sheet
2011
2012
2013
2014E
2015E
Deposits( Rs Cr)
Change (%)
of which CASA Dep
Change (%)
Borrowings( Rs Cr)
Investments( Rs Cr)
Loans( Rs Cr)
Change (%)
45939
49152
66956
80347
96416
Ratio
71.4
7.0
36.2
20.0
20.0
4751
7392
12688
20087
28925
68.6
55.6
71.6
58.3
44.0
6691
18829
34364
14156
27757
37989
20922
42976
47000
21358
49835
54050
30447
62163
62157
54.8
10.5
23.7
15.0
15.0
2011
2012
2013
2014E
2015E
8.7
5.5
5.0
7.5
11.7
6.7
7.8
6.0
11.5
6.7
9.1
7.2
15.2
7.6
11.9
7.5
11.5
6.5
9.2
7.5
Valuation
2011
2012
2013
2014E
2015E
Book Value
CMP
P/BV
109.3
310
2.8
132.5
367
2.8
161.9
367.3
2.3
193.1
350.35
1.8
223.7
350.35
1.6
Avg. Yield on loans
Avg. Yield on Investments
Avg. Cost of Deposit
Avg. Cost of Borrowimgs
Souce: Eastwind/Company
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
23

24. CMC
"Neutral"
15th Jan' 14
"Nothing for excitement"
Results update
Neutral
CMP
Target Price
Previous Target Price
Upside
Change from Previous
1527
-
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Crores)
Average Daily Volume
Nifty
517326
CMC
1780/1107
4736
20884
6189.35
Stock Performance
Absolute
Rel. to Nifty
1M
17.12
15.93
1yr
15.4
10.52
YTD
27.37
22
Share Holding Pattern-%
Promoters
FII
DII
Others
Current
51.12
22.63
18.26
7.99
1 year forward P/E
1QFY14 4QFY13
51.12
51.12
23.32
21.84
17.83
19.05
7.73
7.99
Witnessed inline Sales and PAT numbers;
CMC Ltd Witnessed inline set of numbers with flat sales growth than previous quarter
led by 2% sales decline in System Integration (contributes 64% of Sales) and 14%
decline in IT enabled Services (contributes 13% of Sales). PAT grew by 4.9% on
sequential basis. Usually, third quarter is not a growth quarter in the international
markets.
We believe, CMC will continue with its efforts to enhance revenue contribution of high
margin System Integration and ITES segments. Further, its high focus on education
space will also add margin in near term.
Steady Margin: Steady Margin: During the quarter EBITDA Margin inched up by 40bps
(QoQ) to 16.1%. However, Management is still confident to maintain the margin in a
range of 15-16%.
Mix growth response from segmental front: Sales from System Integration (65% of total
sales) down by 2%, IT enabled Services (15% of total sales) down by 13.6%. While the
Customer services business (18.4% of total sales) and Education and Training seen
double digit growth by 15.9% and 17.6 %(QoQ)– SEZ Sales was flat sequentially. The
company expects to see good growth traction in ITeS and System Integration.
Deal pipeline: The deal pipeline is in line with the last year. It indicated that pursuing
good number of deals in the Developed and as well emerging markets. Considering
current sound demand environment across geographies (like US and Europe) and
verticals Company is more optimistic for clients acquisition and deal executions ahead.
Now, CMC is focusing on new emerging segments like IMS (Infrastructure
Management Services), Cloud, Big data, Mobility and Analytics. Considering its
impressive client as well as market response, company is expecting to quantify into
revenue. Its new and emerging projects like Mining Management System, GPS System
and Port & Cargo Management System would play a major role for generating
revenue.
View and Valuation: CMC expects the growth momentum to improve in the 2HFY14E
than 1HFY14. The Company remains a strong with excellent earning visibility led by joint
effort of market strategy by TCS (contributes 59% of sales) in its product and solutions.
However, we expect that its earning visibility and order from government side in
coming 2 quarter could be impacted because of general election schedule in India (earns
41% revenue from India). For a near to medium -term prospect, we are not much
excited on the stock taking its earning visibility in near term. We had already advised to
book profit on 9th Jan 2014 at a target price of Rs 1690, now we have a “Neutral” view
on the stock. At a CMP of Rs 1527, stock trades at 16.5X FY15E earnings.
Financials
Revenue
EBITDA
PAT
EBITDA Margin
PAT Margin
3QFY14
560.96
90.81
70.55
16.2%
12.6%
2QFY14
560.75
88.41
67.3
15.8%
12.0%
(QoQ)-%
0.0
2.7
4.8
40bps
60bps
3QFY13
492.97
83.2
61.07
16.9%
12.4%
Rs, Crore
(YoY)-%
13.8
9.1
15.5
(70bps)
20bps
(Source: Company/Eastwind)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
24

25. CMC
Sales and Sales growth-%(QoQ)
Second half of FY14 will be better than
the first half. And expects to sees
opportunities in the international
markets in FY15E
(Source: Company/Eastwind)
Margin-%
The management expects operating
Profit margin between 15 percent and
16 percent .
(Source: Company/Eastwind)
Clients Metrics
Despite salary hike during the quarter,
company's employee cost on sales
increased from 25.1% (2QFY14) to
25.6%.
(Source: Company/Eastwind)
Employee Metrics: The total headcount for the quarter stood at 10,890 employees out of
which 4,555were on company payrolls while the remaining 6,235 were subcontractors.
Clients Metrics: The Company added 14 clients during the quarter out of which 10 from
India and the 4 from the USA. In FY13, the company added 80 clients. During the quarter,
its DSO increased from 79days to 83days.
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
25

26. CMC
Key facts from Concall (attended on 16th Oct, 2013)
►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
► Notably, it targets revenues of Rs 250-300 crore from Education and Training business
in next two 3-4 years timeline.
Financials;
Rs, Cr
Net Sales
Purchases of stock-in-trade
Employee Cost
Subcontracting and outsourcing cost
Other expenses
Total Expenses
EBITDA
Depreciation
Other Income
EBIT
Interest Cost
PBT
Tax
PAT
Growth-%
Sales
EBITDA
PAT
Margin -%
EBITDA
EBIT
PAT
Expenses on Sales-%
Employee Cost
Subcontracting Cost
Tax rate
Valuation
CMP
No of Share
NW
EPS
BVPS
RoE-%
Dividen Payout ratio
P/BV
P/E
FY10
870.73
99.35
276.16
173.56
159.94
709.01
161.72
9.85
18.75
151.87
3.17
167.45
24.23
143.22
FY11
1084.40
99.28
345.13
262.35
170.17
876.93
207.47
10.46
11.80
197.01
0.22
208.59
32.42
176.17
FY12
1469.34
145.40
440.22
446.11
213.63
1245.36
223.98
21.37
17.46
202.61
0.02
220.05
68.59
151.46
FY13
1927.87
188.56
521.65
679.73
222.88
1612.82
315.05
23.20
13.17
291.85
0.18
304.84
76.76
228.08
FY14E
2155.00
193.95
560.30
818.90
215.50
1788.65
366.35
25.73
21.55
340.62
0.1
362.07
101.38
260.69
FY15E
2415.28
217.37
640.05
917.81
253.60
2028.83
386.44
37.23
24.15
349.21
0.25
373.11
93.28
279.84
-7.4%
27.7%
23.3%
24.5%
28.3%
23.0%
35.5%
8.0%
-14.0%
31.2%
40.7%
50.6%
11.8%
16.3%
14.3%
12.1%
5.5%
7.3%
18.6%
17.4%
16.4%
19.1%
18.2%
16.2%
15.2%
13.8%
10.3%
16.3%
15.1%
11.8%
17.0%
15.8%
12.1%
16.0%
14.5%
11.6%
31.7%
19.9%
14.5%
31.8%
24.2%
15.5%
30.0%
30.4%
31.2%
27.1%
35.3%
25.2%
26.0%
38.0%
28.0%
26.5%
38.0%
25.0%
1340.00
1.50
510.68
95.48
340.45
28.0%
18.6%
3.94
14.03
2079.55
1.50
654.02
117.45
436.01
26.9%
19.9%
4.77
17.71
994.80
3.00
772.19
50.49
257.40
19.6%
23.2%
3.86
19.70
1410.00
3.03
946.26
75.27
312.30
24.1%
19.4%
4.51
18.73
1527
3.03
1145.07
86.04
377.91
22.8%
23.7%
4.04
17.75
1527
3.03
1354.19
92.35
446.93
20.7%
25.3%
3.42
16.53
(Source: Company/Eastwind)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
26

27. 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
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and/or employees may have interests/ positions, financial or otherwise, individually or
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