India Equity Analytics Today - Buy Stock of Oriental Bank and Finolex Cables LTD

India Equity Analytics
Daily Fundamental Report on Indian Equities
IEA-Equity Strategy 13th Feb, 2014 Edition : 205

13th Feb 2014
Finolex Cables Ltd: "Reasonable prospects..."
"BUY"
Finolex Cables (FCL) Q3FY14 PAT of Rs. 24.5 crore was below ourestimate owing to lower sales and EBITDA margin. Decline in communication cable segment segments as well as high raw material prices resulted in flat EBITDA growth of 3.2% yoy. Sales rose 5.58% to Rs. 557.55 crore in the quarter ended December 2013 as against Rs. 528.07 crore during the previous quarter ended December 2012. Third Quarter result were marginally below our expectaton which led us to revise our estimate on stock, we cut our EPS forecast for FY14E-15E by 8.6%/4.1%. Even after posting marginally below result the stock is quite attractive at current market price of Rs. 81 and left a limited upside of 11%, however we advised our reader to book a part profit on stock . ......................................... ( Page : 2-3)
IT Industry;NASSCOM Guidance :"FY15E; a year of growth opportunity"
13th Feb 2014
For FY15E, NASSCOM expects IT exports to grow by 13-15% and domestic market to grow by 9-12% based on broad feedback loop from companies and captives. Overall, Indian IT Industry is expected to reach the mark of USD130billion. For FY14, Indian IT industry is expected to report 13% growth, in line with NASSCOM guidance at 12-14%. ....................................................... ( Page : 4-6)
ORIENTAL BANK :
"BUY"
13th Feb 2014
Orient Banks profitability declined by 31% YoY on the back of subdues growth at NII level led by margin compression. Higher operating expenses and tax rate caused muted return ratios. Asset quality pressure remained persist and asset impaired (GNPA + Restructure advance) remained at elevated level. We have buy rating on the stock due to inexpensive valuation. We value bank at Rs.216/share which is 0.4 times of FY14Es book. ................................................. ( Page : 7- 11)
UNION BANK :
"BUY"
12th Feb 2014
Union Banks profit growth was due to lower provisions led by lower slippage and restructure assets. Operating profit was negative due to muted NII growth and higher operating expenses. Banks loan and deposits both are grown by 20% along with improvement in CD ratio. This would help to expand margin and hence profitability. Like other PSBs, Union bank is trading at attractive valuation and we value Rs.152/share which is 0.5 times of FY14Es book ...................................................... ( Page : 12- 16)
TATAMOTORS :Strong Results
"BUY"
11th Feb 2014
Tata Motors has posted 3QFY14 revenues at Rs 63877 Cr up by 38.59% YoY on the back of strong demand ,Growth in volume and favourable product mix and geography mix of Jaguar and land Rover. The growth in the volume of JLR is largely driven by launch of new Range Rover Sport, New Range Rover and Jaguar F-Type . ........................................................... ( Page :17- 18)
ACC Ltd:
"BUY"
10th Feb 2014
ACC's EBIDTA declined by 16% to Rs 1848 crore, While y-o-y sales turnover of ACC declined a mere 2% to Rs 10,908.41 crore, as the sales relaisations remained low and Cost remained stable. Cement sales volumes remained flat for ACC .At current price of Rs 1046, stock is trading at 2.6x P/B and 2.8x P/B on CY14 estimates. The valuation looks good from current level, hence we recommend Buy on the stock at CMP Rs.1046 for a target price Rs.1257. ..................................................... ( Page : 19-21)
Ambuja Cements Ltd:
"Neutral"
10th Feb 2014
For the full year,net profit declined 1% to Rs 1278 crore as against Rs 1293 crore during CY12. Sales declined 6% to Rs 9192 crore as against Rs 9795 crore in CY12.Flat realisations (Rs 4,177/t,3.5% QoQ) and sluggish volumes spoiled the show(5.3mT, -1.9% YoY) . At current price of Rs 163, stock is trading at 3x P/B on CY14 estimates. We are Neutral on the stock at CMP Rs.163 for a target price Rs.165. ........................................................... ( Page : 22-24)
Narnolia Securities Ltd,
VResult update
CMP Target Price Previous Target Price Upside Change from Previous
Finolex Cables Ltd.

"Reasonable prospects..."
Book Partial Profit 81 90 73 11% 0%
"Book Partial Profit"

13th Feb' 14
Market Data
BSE Code NSE Symbol 52wk Range H/L Capital Mkt (Rs Crores) Average Daily Volume Nifty 500144 FINCABLES 41/92 1,238 94,300 6,084
Finolex Cables (FCL) Q3FY14 PAT of Rs. 24.5 crore was below ourestimate owing to lower sales and EBITDA margin. Decline in communication cable segment segments as well as high raw material prices resulted in flat EBITDA growth of 3.2% yoy. Sales rose 5.58% to Rs. 557.55 crore in the quarter ended December 2013 as against Rs. 528.07 crore during the previous quarter ended December 2012. Third Quarter result were marginally below our expectaton which led us to revise our estimate on stock, we cut our EPS forecast for FY14E-15E by 8.6%/4.1%. Even after posting marginally below result the stock is quite attractive at current market price of Rs. 81 and left a limited upside of 11%, however we advised our reader to book a part profit on stock The copper rods segment was initially set up as backward integration for the cables segment. The excess production after captive consumption is sold off to third parties at market price. However, owing to thin and declining margins from third party transactions, FCL is gradually reducing its exposure to the segment. The contribution of the segment to the top-line has decreased from 21% in FY2010 to ~5% currently. This trend is expected to continue, thereby improving the overall EBIT margin of the company.
Stock Performance-%
Absolute Rel. to Nifty 1M (4.1) (2.7) 1yr 46.7 43.7 YTD 78.0 71.0
Share Holding Pattern-%

Promoters FII DII Others 3QFY14 35.8 1.8 9.8 52.5 2QFY14 1QFY14 35.8 35.8 1.1 1.0 10.2 10.5 52.9 52.8
Outlook : FCL being one of the leading players in the cable industry seems well placed to capture huge opportunities considering the strengths & the industry in which the Company is operating. Derivative losses coupled with bleak performance by communication cable segment were the major reasons for de-rating of the stock in past which in our view seems to have been overdone. The companys LT division is doing very well, they have recently entered into HT and Extra High Voltage (EHV) cable verticals. The company has market share of around 15-16 percent in both electrical and telecommunication verticals. Further the company has approved setting up a captive 5 MW solar power plant at its manufacturing facilities at Urse, Pune at an estimated cost of Rs 40 crore. Valuation : We cut our earnings estimates to factor volume decline in electrical & communication cable segment, margin decline in copper rod segment and losses in the others segment. Consequently, we cut our earnings estimates by 8.6% for FY14E (Rs. 11.6/Share) and 4.1% for FY15E (Rs. 12.6/Share). At the CMP of Rs. 81 stock is trading at PE of 7.0/6.4 of FY14E/15E. We revised our rating on stock from "Buy" to "Hold". However owing to slower pace of economic growth further we advised our readers to book part profit on stock and hold the balance with a target price of Rs. 90
1 yr Forward P/B
Financials Revenue EBITDA PAT EBITDA Margin PAT Margin 3QFY14 563.1 44.3 24.5 7.9% 4.3% 2QFY14 593.1 76.4 80.0 9.3% 12.8% (QoQ)-% -5.1% -42.0% -69.4% (140) bps (850) bps 3QFY13 534.3 42.9 24.0 8.0% 4.5%
Rs, Crore (YoY)-% 5.4% 3.2% 2.1% (10) bps (20) bps
(Standalone)
(Source: Company/ Eastwind Research)

Please refer to the Disclaimers at the end of this Report.
Finolex Cables Ltd.

Key financials :
PARTICULAR Performance Revenue Other Income Total Income EBITDA EBIT Depriciation Intrest Cost PBT TAX Derrivative Loss Reported PAT Dividend EPS DPS Yeild % EBITDA % NPM % Earning Yeild % Dividend Yeild % ROE % ROCE% Position Net Worth Total Debt Capital Employed No of Share CMP Valuation Book Value P/B Int/Coverage P/E 39.0 0.5 1.9 -8.3 42.0 1.2 8.4 13.4 46.9 1.0 7.0 8.5 52.3 0.6 5.2 4.9 60.4 0.8 14.6 4.8 70.6 1.1 13.6 7.0 81.7 1.0 14.6 6.4 596 296 892 15 19 643 275 918 15 51 717 260 978 15 47 800 172 972 15 31 924 184 1109 15 46 1079 160 1239 15 81 1249 160 1409 15 81 7.4% -2.5% -12.0% 1.0% -6.0% -4.0% 12.0% 3.5% 7.4% 1.2% 9.0% 6.3% 8.5% 4.1% 11.7% 1.5% 11.9% 8.7% 8.5% 4.7% 20.6% 2.6% 12.3% 10.1% 10.1% 6.3% 20.9% 2.6% 15.7% 13.1% 10.4% 7.5% 14.3% 1.9% 16.5% 14.3% 10.8% 7.3% 16.2% 1.9% 15.4% 13.7% 1342 51 1392 100 61 39 32 -30 5 -109 -35 3 -2.3 0.2 1619 24 1643 195 157 37 19 89 32 -74 58 9 3.8 0.6 2036 26 2062 174 135 39 19 107 22 -34 85 11 5.6 0.7 2064 36 2100 175 135 39 26 109 11 -36 98 12 6.4 0.8 2271 24 2295 229 182 47 12 171 26 -23 145 18 9.5 1.2 2315 47 2362 241 191 50 14 234 56 10 178 23 11.6 1.5 2500 42 2542 258 205 53 14 233 56 0 185 23 13.1 1.5 2009A 2010A 2011A 2012A 2013A 2014E 2015E
(Source: Company/ Eastwind Research)

IT Industry;NASSCOM Guidance
"FY15E; a year of growth opportunity"
Performance of Our Coverage NASSCOM Guidance and IT Industry Growth-USD term Year NASSCOM Guidance-% Actual Growth-% FY03 30 25 FY04 26-28 34 FY05 30-35 37 FY06 30-32 33 FY07 25-27 32 FY08 24-27 30 FY09 21-24 17 FY10 4-7 5 FY11 13-15 19 FY12 16-18 16 FY13 11-14 10 FY14E 12-14 13 FY15E 13-15 (Source: Company/Eastwind) Optimistic guidance by NASSCOM (FY15E), IT Industry is fit-well for all grounds; After 3 consecutive conservative guidance, NASSCOM (National Association of Software and Services Companies) revealed earning guidance for FY15E with positive outlook led by favorable demand discretionary environment. Overall, Industry is cheering with NASSCOMs fair guidance and they are confident to catch up the growth target. For FY15E, NASSCOM expects IT exports to grow by 13-15% and domestic market to grow by 9-12% based on broad feedback loop from companies and captives. Overall, Indian IT Industry is expected to reach the mark of USD130billion. Considering the better economic data, healthy growth pattern of US economy, and the increase in global IT spending & global sourcing models, Indian IT players are confident to see 3.9% of global IT spending and 5.9% growth in Business Process Management space in 2014.
FY14E and NASSCOM Guidance;

For FY14, Indian IT industry is expected to report 13% growth, in line with NASSCOM guidance at 12-14%. While, domestic revenue could be seen below expectation because of delay in decision-making and policy paralysis by government. Despite various challenges across the Industry, overall ecosystem is changing and they are transforming into dynamic era by adapting new verticals like SMAC (Social, Mobility, Analytics, and Cloud), Big data and Digital etc. Even, IT players are making its healthy existence in US and Europe regions. They are also running for new geographies like Africa, APAC and MEA.
INR/USD&CNX IT Performance(2013); Export Revenue (USD, mn) Year Tier-1 IT Exports FY04 3670 12900 FY05 5300 17700 FY06 7163 23605 FY07 10142 31206 FY08 14399 40418 FY09 16200 47103 FY10 17100 49690 FY11 21342 59035 FY12 25475 68687 FY13 28165 75800 FY14E 31000-32000 84000-87000 FY15E (Tier-1: TCS, INFY, HCLTECH, and WIPRO)
Interesting analytical facts behind NASSCOM Guidance :

(a) Growth rate for the Big 4 (Infosys, Wipro, TCS and HCLT) has been better than industry growth from FY02-08. However, that trend started changing from FY09 with at least two players underperforming the industry growth every year (with the exception of FY11). For FY14E, a street expectation also indicates that still 2 players could be underperformer. (b) Profitability growth is also equally important than revenue growth. While this may be nitpicking, even in a healthy year of growth of 16% for the Indian IT industry in FY12, and EBITDA margins of Tier-1 IT (ex-HCLT) declined 50-180 bps. This was even after 6% depreciation of the Rupee against the US$ and favorable cross-currency trends. (c) This is fact; the tempo of market share gain by top players is reducing combined because of faster growth by global players, faster focus on captives, and dogfight over bidding and vendors consolidation. For FY15E, Tier-1 players are sanguine on beating guidance by on an average 1-2% as record of accomplishment of previous 5 years. Despite above facts, our optimism on Indian IT is based on possibility of accelerated growth in 2014, on: (1) Improved business sentiment in the US and Europe; (2) signs of discretionary spending coming back; (3) continued market share gains for Indian companies; and (4) increased spending due to adoption of new technologies.
4
2013 has been a year of innovation and transformation and 2014 could be an execution year.

Underlying strengths to dictate FY15E growth;
Favorable demand discretionary environment: US is witnessing better GDP growth combined with improving business sentiment, higher consumer spend, lower Government spending cuts and improving job data. These facts are playing key role to uptick in discretionary spending in North America. At a same time, revival in Euro zone has taken place and offshore services from Europe is compounding to revenue traction. We expect to see potential uptick in IT budget. No pressure on billing rate: Considering healthy economic scenario across US and Europe, we are not expecting to see any pressure on billing term. If INR depreciates to the mark of Rs65 against the USD, then client can go with marginal bargaining. Post earning of 3QFY14E, most of management quoted for stable billing rate and clients confident on billing front. Active participations of new emerging verticals: SMAC is throwing up huge opportunities as firms want to optimize investments in current technology and drive growth by using digital technologies and platforms. The digital forces of social, mobile, analytics and cloud (SMAC), Bigdata and digital will reach mainstream status in 2014 and create requirements, drive new purchasing and establish new competitive realities. Favorable supply side scenario: Though attrition remained higher than last year, especially among the bellwethers, campus hiring and fresh offers declined during the year. However, utilization rate especially on onsite and offshore are on increasing mode, it indicates favorable supply side scenario for the industry. Cost rationalization still a part of agenda: Across the Industry, most of players are focusing on cost control by improving volume, reducing expenses, and improving attrition rate to maintain stability on margin front. Considering flat range of currency exchange rate (INR against USD), we expect to see 50-150bps ups and down in IT industry in FY15E. (Source: Company/Eastwind)
Performance of Our IT Coverage
Quote on NASSCOM Guidance

"The guidance is a clear reflection that the market is strengthening, so 13-15% overall growth seems like a fair number, (CMD, Persistent System)
Concerns:
However, hardening of regulatory related to visa approval in USA, Canada and Australia could spoil the party. Even, the approval of Immigration Bill attached with higher visa fee, wage requirements and enhanced audit by US agencies could turn the growth story of Indian IT players adversely. If passed in its current form, the Bill could hurt the margins of the Indian IT export sector, which derives almost 55-60% of its revenues from USA.
Tier-1 Revenue Growth and Margin

Year FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14E FY15E TCS 41.7 36.4 44.3 36.6 7.5 4.4 28.4 25.1 15.2 18.1 18 Revenue Growth-% INFY WIPRO HCL TECH 51.6 41.6 41.4 35.4 35.9 29.6 43.8 36.5 37.6 35.5 61.3 40.4 11.7 17.8 18.9 3 0.5 25.3 24.6 18.3 27.6 15.8 13 22.4 6.7 6 12.9 12 6.7 14.8 17.5 18.5 18.7 TCS 32.8 32.5 31.6 31.4 33.2 34.6 32.6 31.8 29.1 29.75 28.5 EBITDA Margin-% INFY WIPRO 29.3 29.9 27.7 27.8 27.2 27.4 26 24.6 25.8 24.3 28.9 26.7 30 25.7 29.5 23.9 29 23.7 27 22.7 25.5 21.8 HCL TECH 22.9 21.7 21.1 21.2 21.4 19.7 16.6 18.7 21.6 25 24
13-15% (estimate) for exports looks like a good number, (CEO, outsourcing advisory Offshore Insights)
Revenue in USD-(mn) term-FY14E
(Source: Company/Eastwind)

Our view on Industry Per se:
We have seen a significant increase in global technology spending this year, creating opportunities for the Indian software services sector to post double-digit growth again in export as well as in the domestic markets. FY15 promises to be bigger and stronger than the last 3 years, which were marked by bloodbath in global markets due to Eurozone crisis and falling consumer confidence in the US. Demand is set to pick up in sectors like BFSI, healthcare, retail and transportation globally in the year ahead. For FY15E, We expect that strong fundamentals should help to sustain earning momentum in FY15E. Foray into niche verticals and executions of large deal would play an important factor for better earning visibility in near future. There is a window of opportunity for competent large caps and midcaps to displace incumbents and gain some incremental business. In the past 4 quarters, large caps (four companies) have grown at 3.4% CQGR, while midcaps (five companies) at 3.2%which is comparable to larger peers. On Tier-1 IT players, we are positive on INFY, TCS and HCL Tech. While, across the Mid cap and niche players we are optimistic view on TECHM, PERSISTENT, ZENSARTECH, ECLERX and KPIT .
NIFTY and CNX IT performance
43.9%
3.1%
View and Valuation; CMP Company (12.02.14) TCS 2103.8 INFOSYS 3599.6 HCLTECH 1491.6 WIPRO 562.15 TECHM 1875.55 CMC 1424.45 NIITTECH 421.55 KPIT 167.15 HEXAWARE 144.55 PERSISTENT 1021.8 eCLERX 1203.15 TATAELXSI 392.1 ZENSARTECH 365.65 MINDTREE 1644.45
View BUY BUY BUY NEUTRAL BUY NEUTRAL BUY BUY NEUTRAL BUY BUY NEUTRAL BUY NEUTRAL
Target 2510 3910 1560 2130 443 177 1065 1358 440 -
Upside % FY13 19.3% 71.82 8.6% 164.2 4.6% 58.10 25.0 13.6% 123.97 75.27 5.1% 36.28 5.9% 10.80 13.9 4.2% 46.12 12.9% 64.25 10.63 20.3% 40.03 89.72
EPS-Rs FY14E
95.00
FY15E
109.31
188.0 79.36 31.07 155.37 86.04 43.33 12.63 15.0 61.42 71.61 24.02 52.70 100.94
218.2 98.11 33.5 175.50 92.35 54.18 16.82 16.0 79.08 83.65 28.36 68.97 114.93
FY13 29.29 21.92 25.67 22.44 15.13 18.92 11.62 15.47 10.40 22.16 18.72 36.89 9.13 18.33
P/E-x FY14E 22.15 19.15 18.79 18.10 12.07 16.56 9.73 13.23 9.61 16.64 16.80 16.32 6.94 16.29
FY15E 19.25 16.50 15.20 16.78 10.69 15.42 7.78 9.94 9.03 12.92 14.38 13.83 5.30 14.31
FY13 36.4% 24.8% 30.7% 21.7% 34.8% 24.1% 20.0% 20.1% 27.4% 18.1% 43.8% 16.9% 23.2% 28.4%
RoE-% FY14E 37.5% 23.7% 31.5% 22.7% 30.7% 22.8% 19.4% 19.3% 24.9% 20.3% 37.9% 29.7% 24.5% 25.6%
FY15E 34.4% 22.9% 29.4% 20.8% 26.0% 20.7% 19.6% 20.7% 22.5% 21.4% 34.4% 27.4% 25.2% 23.6%

ORIENTAL BANK
Result 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"
13h Feb2014
BUY 172 216 222 26 -2.703
Orient bank reported weak set of quarterly numbers with net profit declined by 31% YoY due to muted growth in NII and higher operating expenses. Asset quality pressure remain persist with total impaired asset (GNPA+ Restructure advances) remain high at 11.1% of loan. Bank made lower provisions against bad loan despite of deterioration in asset. We have buy rating on the stock due to inexpensive valuation. We Value bank at Rs.216/share which is 0.5 times of FY14Es book value. Muted NII growth on the back of margin compression During quarter banks NII grew by 2% YoY lower than expectation largely due to margin compression and lower growth in loan and deposits. Margin compression was on account of lower loan yield as compare to cost of deposits. Total interest income grew by 6% YoY while interest expenses increased by 18% YoY which drag lower growth in NII. Other income was lower by 10% YoY to Rs.341 cr versus Rs.378 cr in last year led by 48% declined in treasury gain. Overall revenue de-grew by 1% YoY to Rs.1571 cr. Subdue NII growth and higher operating expenses led negative growth in PPP
500315 ORIENTBANK 310/121 4920 2.21 cr 6084
Stock Performance 1M Absolute -16.8 Rel.to Nifty -13.8
1yr -44.4 -47.4
YTD -44.4 -47.4
Share Holding Pattern-% Current 1QFY14 4QFY1 3 Promoters 59.1 58.0 58.0 FII 9.6 10.0 10.1 DII 24.9 24.0 24.6 Others 6.4 8.1 7.3 ORIENT BANK Vs Nifty
Operating expenses increased by 9% YoY in which employee cost and other operating cost increased by 1% and 20% respectively. Flat employee cost was due to lower wage settlement provisions made by bank. Consequently CI ratio declined to 45.4% from 41.5% in last quarter and 48.2% in previous quarter. Muted NII growth, lower other income and higher operating cost led pre provisioning profit declined to 7% YoY. Asset quality stress persists During quarter bank made provisions and contingencies to tune of Rs.561 cr as against Rs.551 cr in previous quarter and Rs.604 cr in last quarter. During quarter bank reported fresh slippage of Rs. 1043 cr (3.1% annualized) as against Rs.1015 cr (3.2% annualized) in previous quarter. In absolute term GNPA increased by 6% YoY to Rs.5184 cr while provision decreased by 8% YoY to Rs.1351 cr. Consequently net NPA increased by 12% QoQ to Rs.3833 cr. In percentage term, gross GNPA and net NPA stood at 3.87% and 2.9% from 3.81% and 2.7% respectively sequentially. Due to lower provisions PCR (without technical write off) declined from 30% to 26%. Fresh restructure sharply surged to Rs.1365 cr during quarter and outstanding restructure book stood at Rs. 9687 cr Rs, Cr Financials 2011 2012 2013 2014E 2015E NII 4178 4216 4701 5136 6970 Total Income 5138 5456 6356 6724 8558 PPP 3245 3141 3691 3680 4707 Net Profit 1503 1142 1328 1046 1812 EPS 51.5 39.1 45.5 34.9 60.4 (Source: Company/Eastwind) 7 Narnolia Securities Ltd,
ORIENTAL BANK
Subdue loan and deposits growth On balance sheet front, bank reported very sluggish growth rate with deposits grew by 4% YoY in which current account and saving account deposits grew by 3% and 12% YoY. CASA deposits in absolute term grew by 10% YoY and in percentage to total deposits it stood at 24.2% as against 23.9% in last quarter. Loan grew by 8.4% YoY to Rs.1340 bn led by 16% YoY growth in retail loan followed by mid corporate and large corporate. Credit deposits ratio for the quarter remained same and it stood at 73.4%. Margin compression on account of higher cost of fund than loan yield Bank reported 15 bps QoQ margin compressions on account of higher cost of fund than loan yield. During quarter banks cost of fund declined by 10 bps QoQ while yield on loan declined by 38% QoQ to 10.8% from 11.2%. Yield in investment also declined from 7.4% to 6.9% which also cause margin compression. Profitability declined on account of muted NII growth, higher operating expenses and tax rate Orient banks profitability declined by 31% YoY to Rs.224 cr lower than our expectation of Rs. 269 cr largely due to weak performance all around. During quarter bank reported muted NII growth, lower other income, higher operating cost and higher tax rate. Valuation & View Orient bank reported weak set of quarterly numbers with net profit declined by 31% YoY due to muted growth in NII and higher operating expenses. Asset quality pressure remain persist with total impaired asset (GNPA+ Restructure advances) remain high at 11.1% of loan. Bank made lower provisions against bad loan despite of stress in asset. We have buy rating on the stock due to inexpensive valuation. We Value bank at Rs.216/share which is 0.5 times of FY14Es book value.

ORIENTAL BANK
Chart Focus
Muted NII growth on the back of margin compression
Subdue NII growth and higher operating expenses led negative growth in PPP
Profitability declined on account of muted NII growth, higher operating expenses and tax rate
Source : Eastwind/ Company

ORIENTAL BANK
Quarterly Result ( Rs Cr) 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 on deposits Interest on RBI/Inter bank borrowings Others Interest Expended NII Other Income Total Income Employee Other Expenses Operating Expenses PPP( Rs Cr) Provisions PBT Tax Net Profit Balance Sheet ( Rs Cr) Deposits Loan Asset Qiality GNPA NPA % GNPA % NPA 3QFY14 2QFY14 3QFY13 3622 3591 3507 1075 1076 954 21 9 8 6 0 0 4723 4676 4469 341 312 378 5064 4988 4847 3322 3234 3150 93 93 79 78 68 35 3493 3395 3264 1230 1281 1204 341 312 378 1571 1593 1582 394 446 391 319 322 265 713 768 656 858 825 926 561 551 604 297 275 323 73 23 -4 224 251 326 % YoY Gr 3.3
12.7 167.2 2868.4 5.7 -9.8 4.5 5.5 17.9 119.1 7.0 2.2 -9.8 -0.7 0.8 20.3 8.7 -7.3 -7.1 -7.8 -1996.1 -31.3
% QoQ Gr 3QFY14E 0.9 3783 -0.1 1137 135.4 20 5027.3 4 1.0 4943 9.3 425 1.5 5368 2.7 0 0.0 0 14.9 0 2.9 3548 -3.9 1395 9.3 425 -1.4 1820 -11.7 496 -0.8 359 -7.1 856 4.0 965 1.9 581 8.3 384 215.3 115 -10.8 269
182470 175153 164174 133962 128353 123623
11.1 8.4
184299 4.4 135102

4.2
5184 3833 3.9 2.9
4887 3423 3.8 2.7
3690 2610 3.0 2.1
40.5 46.9
6.1 12.0
Source: Company/Eastwind
10
ORIENTAL BANK
P/L
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 on deposits Interest on RBI/Inter bank borrowings Others Interest Expended NII NII Growth(%) Other Income Total Income Employee Other Expenses Operating Expenses PPP( Rs Cr) Provisions Net Profit Net Profit Growth(%)
2011
8954 2774 335 25 12088 960 13048 7474 23 413 7910 4178 43.7 960 5138 1048 844 1892 3245 1742 1503 32.4
2012
12075 3671 34 35 15815 1240 17055 11213 38 348 11599 4216 0.9 1240 5456 1357 959 2315 3141 1999 1142 -24.0
2013
13758 3854 31 61 17705 1655 19359 12553 111 340 13004 4701 11.5 1655 6356 1576 1089 2665 3691 2363 1328 16.3
2014E
14677 4316 80 17 19090 1588 20678 11765 175 525 13954 5136 9.3 1588 6724 1796 1248 3043 3680 2243 1046 -21.2
2015E
16545 4491 80 17 21134 1588 22721 13408 189 567 14164 6970 35.7 1588 8558 2272 1579 3851 4707 2118 1812 73.3
Key Balance sheet data

Deposits Deposits Growth(%) Borrowings Borrowings Growth(%) Loan Loan Growth(%) Investments Investments Growth(%) 139024 15.6 5639 15.4 95908 14.9 42075 17.6 155965 12.2 5259 -6.7 111978 16.8 52101 23.8 175898 12.8 7679 46.0 128955 15.2 58555 12.4 189928 8.0 9996 30.2 139271 8.0 63976 9.3 205123 8.0 10796 8.0 150413 8.0 69094 8.0
Eastwind Calculation
Yield on Advances Yield on Investments Yield on Funds Cost of deposits Cost of Borrowings Cost of fund 9.3 6.6 7.8 5.4 7.7 5.5 10.8 7.0 9.2 7.2 7.3 7.2 10.7 6.6 9.0 7.4 5.9 7.1 10.5 6.7 9.4 6.2 5.9 7.0 11.0 6.5 9.6 6.5 7.0 6.6
Valuation
Book Value P/BV P/E 380 1.0 7.5 409 0.6 6.4 403 0.6 5.5 433 0.4 5.0 483 0.4 2.9
11
UNION 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 Stock Performance 1M Absolute -15.3 Rel.to Nifty -11.9 BUY 105.2 152 163 45 -7
"BUY"
12h Feb, 2014
Union bank reported profit growth of 15.4% largely due to lower provisions and contingencies led by lower slippage and restructure assets. At operating profit level bank reported negative growth of 7.1% YoY due to margin compression and higher operating expenses. Banks loan and deposits both are grown by 20% along with improvement in CD ratio. Like other PBS, Union Bank also trading at 0.4 times of one year forward book which is impressive. We value bank at Rs.152/share which is 0.5 times of FY14Es book value. Muted NII growth due to margin compression During quarter, banks NII grew by 3.8% YoY despite of loan and deposits growth of 20%. Lower NII was driven by higher cost of fund than yield on fund (Loan+ Investment). Total interest earned by bank was grown by 19.5% whereas interest expenses increased by 26.2% which took muted NII growth. Other income was Rs.680 cr versus Rs.611 cr in previous year and Rs.640 cr in last year. With the little support from other income, revenue during quarter was grown by 4.4% YoY to Rs.2643 cr. Higher operating expenses drag operating profit in negative zone Operating expenses during quarter was higher at 17.8% YoY which drag operating profit growth in negative direction to 7.1% YoY to Rs.1262 cr. Employee cost and other operating expenses increased by 12.4% and 27% YoY respectively. Operating leverage (opex to total asset) remained stable at 0.4%. Provisions lower because of lower slippage and restructure assets Provisions and contingencies were lower by 29% YoY and 35% QoQ on the back of lower slippage and restructure assets. During quarter bank witness fresh slippage of Rs, 1154 cr versus Rs.1657 cr in previous quarter and thereby taking slippage ratio to 2.1% from 3.1% in previous quarter. Fresh restructure advance was come down to Rs.1004 cr as compare to Rs.1534 cr in previous quarter and Rs.1205 cr in last quarter. Sequentially lower recovery (Rs.265 cr Vs Rs.419 cr) and lower write off (Rs. 174 cr Vs Rs.270 cr) caused spike in gross NPA. GNPA as a percentage to gross advances was increased by 22.5 bps QoQ to 3.9% from 3.7%. Loan loss provisions was increased by 10% QoQ taking slightly improvement in PCR to 42.5% (without technical write off) from 42.1% in previous quarter. Net NPA stood at 2.3% as against 2.1% in previous quarter.
532477 UNIONBANK 255/97 6281 2.37 cr 6063
1yr -54.8 -56.8
YTD -54.8 -56.8
Share Holding Pattern-% Current 1QFY14 4QFY1 3 Promoters 60.1 57.9 57.9 FII 8.8 10.2 11.9 DII 17.0 17.8 17.7 Others 14.1 14.2 12.8 UNION Bank Vs Nifty
Financials
NII Total Income PPP Net Profit EPS 2011 6216 8255 4305 2082 39.7 2012 6793 9241 5254 1787 29.9

Rs, Cr 2013 2014E 2015E 7543 7974 8953 10095 10704 11683 5583 5256 5724 2158 1427 1431 36.2 22.6 22.7 (Source: Company/Eastwind) 12
UNION BANK
Loan and deposits grew by 20% YoY but CASA declined On balance sheet front, deposits grew by 19% YoY in which current account and saving account deposits grew by 3.3% and 12.2% YoY respectively. Overall CASA increased by 10% YoY and in percentage to total deposits CASA ratio declined by 245 bps YoY to 28.8% due to higher growth in wholesale deposits. Term deposits grew by 23.4% YoY taking overall deposits growth. Due to higher share in bulk deposits, cost of fund spike from 7.4% to 7.8%. In loan growth perspective, it grew by 20% YoY to Rs.2230 bn. Incremental loan growth came from MMSE (29.5% YoY) followed by retail (28% YoY) and agriculture (18.7% YoY). Credit deposits ratio improved by 56 bps to 78.2%. Margin narrowed due to higher cost of fund and asset yield Margin narrowed by 50 bps on account of higher cost of fund than yield on assets. Overall cost of fund increased from 7.8% to 7.4% largely due to higher share of bulk deposits and lower CASA ratio. Yield on loan declined by 30 bps to 10% from 10.3% in last quarter. Investment yield improved by 28 bps YoY to 8.2% from 7.9% in 3QFY13. Higher profit on account of lower provisions led by lower slippage and restructure assets Union Bank reported net profit growth of 15.4% YoY largely driven by lower provisions and contingencies. Tax rate was higher at 46.4% versus 28% in previous quarter mainly due to Rs.44 cr created for deferred tax liabilities on special reverse as per suggestion of RBI. Bank has also normalized tax rate of 30% in 9MFY14. Valuation & View Union bank reported profit growth of 15.4% largely due to lower provisions and contingencies led by lower slippage and restructure assets. At operating profit level bank reported negative growth of 7.1% YoY due to margin compression and higher operating expenses. Banks loan and deposits both are grown by 20% along with improvement in CD ratio. Like other PBS, Union Bank also trading at 0.4 times of one year forward book which is impressive. We value bank at Rs.152/share which is 0.5 times of FY14Es book value.

13
UNION BANK
Chart Focus
Muted NII growth due to margin compression
Higher operating expenses drag operating profit in negative zone
Higher profit on account of lower provisions led by lower slippage and restructure assets
14
UNION BANK
Quarterly Performance 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 ( Rs Cr) Net Worth Deposits Borrowings Investment Advances Asset Quality GNPA( Rs Cr) NPA ( Rs Cr) % GNPA % NPA PCR(w/o technical write-off) (%) 3QFY14 5565 1911 36 38 7550 680 8230 5587 1964 680 2643 823 559 1382 1262 610 651 302 349 2QFY14 5288 1890 51 43 7271 611 7882 5317 1954 611 2566 807 534 1341 1225 937 288 80 208 3QFY13 4775 1478 41 26 6320 640 6959 4428 1891 640 2531 733 440 1173 1358 857 501 199 302 % YoY Gr
16.6 29.3 -11.7 46.3 19.5 6.3 18.3 26.2 3.8 6.3 4.4 12.4 27.0 17.8 -7.1 -28.8 30.0 52.2 15.4
% QoQ Gr 3QFY14E Variation(%) 5.3 5422 2.6 1.1 1839 3.9 -28.6 51 -28.8 -12.1 44 -14.7 3.8 7356 2.6 11.2 684 -0.6 4.4 8040 2.4 5.1 5313 5.1 0.5 2043 -3.9 11.2 684 -0.6 3.0 2727 -3.1 2.0 757 8.8 4.6 484 15.4 3.1 1241 11.4 3.0 1486 -15.1 -34.8 913 -33.2 126.0 573 13.7 277.6 172 75.9 67.7 401 -13.0
18165 18046 15973 285125 287029 239355 31730 27664 22883 93778 95600 75117 223024 217295 185885
13.7 19.1 38.7 24.8 20.0
0.7 -0.7 14.7 -1.9 2.6
17847 271558 23945 91294 198543
1.8 5.0 32.5 2.7 12.3
8776 5048 3.9 2.3 42.5
8061 4670 3.7 2.1 42.1
6384 3168 3.4 1.7 50.4
37.5 59.3
8.9 8.1
15
UNION BANK
P/L
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 on deposits Interest on RBI/Inter bank borrowings Others Interest Expended NII NII Growth(%) Other Income Total Income Employee Other Expenses Operating Expenses PPP( Rs Cr) Provisions Net Profit
2011
12031 4003 161 258 16453 2039 18491 9538 113 585 10236 6216 48.3 2039 8255 2600 1350 3950 4305 2223 2082 0.3
2012
16027 4570 331 101 21028 2448 23477 13406 141 689 14235 6793 9.3 2448 9241 2479 1508 3988 5254 3467 1787 -14.2
2013
19140 5671 199 115 25125 2552 27677 16551 274 756 17582 7543 11.0 2552 10095 2755 1757 4512 5583 3425 2158 20.7
2014E
21702 7428 185 169 29483 2730 32213 18844 379 1309 21509 7974 5.7 2730 10704 3323 2124 5447 5256 3144 1427 -33.9
2015E
23074 8313 185 169 31741 2730 34471 21106 378 1305 22788 8953 12.3 2730 11683 3634 2324 5958 5724 3680 1431 0.3
Key Balance sheet data

Deposits Deposits Growth(%) Borrowings Borrowings Growth(%) Loan Loan Growth(%) Investments Investments Growth(%) 202461 19.1 13316 44.5 150986 26.5 58399 7.3 222869 10.1 17909 34.5 177882 17.8 62364 6.8 263762 18.3 23797 32.9 208102 17.0 80830 29.6 290138 10.0 32238 35.5 228912 10.0 93811 16.1 324954 12.0 32138 -0.3 256382 12.0 103914 10.8
Eastwind Calculation
Yield on Advances Yield on Investments Yield on Funds Cost of deposits Cost of Borrowings Cost of fund 8.0 6.9 7.2 4.7 5.2 4.7 9.0 7.3 8.3 6.0 4.6 5.9 9.2 7.0 8.3 6.3 4.3 6.1 9.5 7.9 9.1 6.5 4.3 6.7 9.0 8.0 8.8 6.5 4.5 6.4
Valuation
Book Value P/BV P/E 243 1.4 8.7 245 1.0 7.8 290 0.7 5.8 293 0.4 4.7 307 0.3 4.7
16
TATAMOTORS
Strong Results
Result Update
"BUY"
11th Feb' 14
BUY
364 425 17%
Market Data
BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs, Cr) Average Daily Volume Nifty 500570 TATAMOTORS 405/252 98,064 4681598 6053
Tata Motors has posted 3QFY14 revenues at Rs 63877 Cr up by 38.59% YoY on the back of strong demand ,Growth in volume and favorable product mix and geography mix of Jaguar and land Rover. The growth in the volume of JLR is largely driven by launch of new Range Rover Sport, New Range Rover and Jaguar F-Type, along side higher volume of the newer XF and XJ derivatives. JLR whole sales volume for the 3QFY14 grew by 22.7 % YoY to 116357 units while its retail volume grew by 26.5 5 to 112172 units. The revenues for JLR for the 3QFY14 came at GBP 5328 Mn representing growth of 40 %YoY. Amidst of splendid performance by British subsidiary, the domestic operations still acting as dragger to the consolidated performance. The domestic business once again for the quarter under review posted declining performance. The sales (including exports ) of the commercial and passenger vehicles for the 3QFY14 stood at 132087 units translating a decline of 35.7% YoY. The revenues for the quarter from domestic business came at Rs 7770 Cr as compared to Rs 10630 Cr for the same time last fiscal. This weak performance in the quarter came on the back of prolonged slowdown in economic activities, weak consumer segment, tight financing norms with high interest rates, weak operating economics for the transporters due to lower fleet utilization and stagnant fright rates combined with fuel price hikes. The consolidated operating EBITDA for the quarter came at Rs 9948 Cr and OPM at 15.5 %.The OPM surges by 330 bps due to improvement in operational metrics. The RM cost as percentage of sales stands 59% in comparison to 62 % for 3QFY13.The company spends nearly 1% of sales for its R&D. There is improvement of almost 100bps in other expenses as percentage of sales on yearly basis. The consolidated adjusted net profits surged almost by 200 % YoY to Rs 4863 Cr. The sharp rise in the profits came in due to an exceptional income of Rs 1,948 Cr accruing to the local business, which came from a sale of stake in its Korean subsidiary to its Singapore subsidiary. The management of the company after the results said that it expects capital expenditure of about 3.5 billion pounds to 3.7 billion pounds in fiscal 2015 from an estimated 2.75 billion pounds in fiscal 2014, raising worries that the increased spend would hurt free cash flow. The company lost his Managing Director Karl Slym last week in an accident, and company has set up a panel, headed by Tata Sons chairman Cyrus P. Mistry, to oversee its operations and strategy as an interim measure after Slym's death.
Stock Performance-%
Absolute Rel. to Nifty 1M -1.1 0.8 1yr 27.5 25 YTD 48.6 35.6

Promoters FII DII Others Current 2QFY14 1QFY1 4 34.3 34.3 34.3 28.0 26.7 26.6 9.6 11.7 11.4 28.1 27.3 27.7
One Year Price vs Nifty
View And Valuation

The stock at its CMP of Rs 364 is trading at 7.34 x of one year forward FY14E EPS of Rs 50.The robust 3QFY14 results, Strong cash flows by JLR and better demand outlook, new product mix of JLR with brand positioning makes us positive for the company .We Maintain BUY for the stock with Target Price Rs 425.
Financials
Revenue EBITDA PAT EBITDA Margin PAT Margin 3QFY14 63877 9948 4863 15.6% 7.6% 2QFY14 56882 8635 3559 15.2% 6.3% (QoQ)-% 12.3 15.2 36.6 40bps 140bps 3QFY13 46090 5657 1636 12.3% 3.5%
Rs, Crore (YoY)-% 38.6 75.9 197.2 330bps 410bps

17

TATAMOTORS
Sales and PAT Trend (Rs)
The revenue jumps by 38.59% YoY on the back of strong demand ,Growth in volume and favorable product mix and geography mix of Jaguar and land Rover.
OPM % & NPM %
The OPM surges by 330 bps due to improvement in operational metrics.The sharp rise in the profits came in due to an exceptional income of Rs 1,948 Cr accruing to the local business
JLR Whole Sales Vol. Trend
The growth in the sales volume come from all geographies including Brazil, China, India and the United States.

18
ACC Ltd.
Result Update
"BUY"
10th Feb' 14
BUY
1046 1257 1122 20% 12%
Market Data
BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs Crores) Average Daily Volume (Nos.) Nifty 500410 ACC 1355/912 19634 9817 6063
ACC's sales turnover slipped to Rs 11169 crore in 2013 against Rs 11358 crore in the previous year. At first glance, consolidated net profit growth of 9% from the year-ago period looked impressive, given the dull market. But a closer look shows that net profit for the quarter included a tax write-back. PAT was Rs.1094Cr. As this pat is incomparable with previous year pat due to additional depreciation charge as extra-ordinary item in previous year, we adjusted the pat and it reported Rs.1081Cr for Cy13 Down by -19% from Rs 1339Cr in CY12. ACC's EBIDTA declined by 16% to Rs 1848 crore, While y-o-y sales turnover of ACC declined a mere 2% to Rs 10,908.41 crore, as the sales relaisations remained low and Cost remained stable. Cement sales volumes remained flat for ACC . Lower Cement Volume Impacted the Bottomline Growth What is more worrying for the company is that it sold less cement in 2013 than what it did in 2012. This comes as a major jolt for the cement giant which saw its cement sales volume dropping to 23.93 million tonne compared with 24.11 million tonne. It not only impacted its bottom-line growth but also hit its revenues. Poor Operational Performance : At the operating level, poor volumes down by 1.5% from the year-ago period and weak realizations pulled down revenue during the quarter. Net consolidated sales fell by 13% to Rs.2,693.1 crore. Profitability was further hit as costs during the quarter, mainly on freight and power, rose compared with the year-ago period and the September quarter as well. During the CY13 Acc suffered through sluggish demand and at the same time with increasing cost. Company unable to pass on the cost to the consumer due to lower sales volume. Sales Volume come to 23.93 Mmt form 24.11 Mmt(down by ~1%). Rising Input Cost mainly due to Raw Material and Freight Cost.Raw material cost increased 5% to Rs.778/ton from Rs.740/ton and freight cost increased ~5% Rs.961/ton from Rs.920/ton. Other expenses increased ~9% to Rs.975/ton from Rs.894/ton. Management Quotes : According to Management the economic environment in the country was sluggish, thus impacting the demand for cement and concrete. As a result, the company's cement volumes remained almost flat. The company appears not enthusiastic for demand growth going forward. Based on current demand indications, we do not foresee any significant improvement in the cement. Financials : Q4CY13 Y-o-Y % Q-o-Q % Q4CY12 Q3CY13 Net Revenue 2792 -12.2 8.6 3180 2570 EBITDA 361 -9.3 26.2 398 286 Depriciation 153 -3.2 6.3 158 144 Interest Cost 12 -55.6 9.1 27 11 Tax -36 -190.0 -170.6 40 51 PAT 278 16.3 129.8 239 121
(In Crs)
Stock Performance-%
Absolute Rel. to Nifty 1M -3.5 -1.9 1yr -22.3 -24.4 YTD -21.0 -22.8

Cureent Promoters FII DII Others 50.3 20.0 12.9 16.8 3QCY13 2QCY13 50.3 20.9 11.9 16.9 50.3 19.5 11.7 18.6
1 yr Forward P/B
Source - Comapany/EastWind Research

19
ACC Ltd.
Outlook Company has made several capacity expansion plans in the region. ACC is replacing the existing facilities at Jamul, Chhattisgarh with a clinker plant with an annual production capacity of 2.8 MT and local grinding capacity of 1.1 MT of cement, while a new plant with annual capacity of 2.7 MT is scheduled to be built in Kharagpur. The capacity expansion plant will increase the company's total cement production capacity to 35 MT from the existing 30 MT.On a QoQ basis, the EBITDA/tonne improved 10.4% due to an improvement in realisations & comparatively lower increase in total expenditure/tonne, it shows a positive view for the further quarters.onsidering the expansion plans we expect 4% growth in sales volume and 10% growth in realization for CY14. Valuation And Recommendation Cement prices witnessed an increase during Oct-Nov,13 but also witnessed a sharp fall during Dec,13 which has contributed towards lower average realizations for the year for the company. Further, with a strong balance sheet with zero debt and better dividend yield of 3%, we continue to remain positive despite near term challenges. We revise our estimates downwards to factor in lower demand growth scenario. At current price of Rs 1046, stock is trading at 2.6x P/B and 2.8x P/B on CY14 estimates. The valuation looks good from current level, hence we recommend Buy on the stock at CMP Rs.1046 for a target price Rs.1257. Company Description : ACC Limited (ACC) is engaged in manufacture of cement & ready mixed concrete. The Company has grinding plants in Karnataka and clinkering line in Maharashtra. The Companys subsidiaries include ACC Mineral Resources Limited, Lucky Minmat Limited, Bulk Cement Corporation (India) Limited, National Limestone Company Private Limited and Encore Cement and Additives Private Limited. The Company is subsidiary of Ambuja Cement India Private Limited. P/L PERFORMANCE CY11 CY12 CY13 CY14E Net Revenue from Operation 10237 11358 11169 13027 Other Income 191 263 219 219 Total Income 10428 11621 11389 19723 Power and fuel 2199 2384 2384 0 Freight and forwarding 1940 2219 2299 0 Expenditure 8316 9162 9540 10942 EBITDA 1921 2197 1848 2084 Depriciation 510 569 584 639 Interest Cost 97 115 52 50 Tax 215 391 132 323 PAT 1276 1050 1094 1292 ROE% 17.7 18.8 13.8 15.3
Cement Sales Volume
Cement Realization Cement Realization

20
ACC Ltd.
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 Trading At : CY10 188 6093 6281 510 14 188 1581 1466 11041 77 5230 1564 283 926 249 1086 162 11041 CY10 3.2 57.4 3.0 19.1 1.1 19632 18.7 12.7 2.8 14.6 0.1 1.0 1823 (785) (641) CY11 188 6791 6979 506 0 126 816 1051 11921 48 6359 370 461 1113 266 1660 279 11921 CY11 3.1 68.7 2.6 8.0 1.1 20180 16.5 10.5 2.5 15.2 0.1 1.3 1506 (258) (768) CY12 188 7184 7372 85 0 157 661 1227 11928 39 5893 314 566 1134 303 681 325 11928 CY12 3.6 73.8 2.7 5.8 1.0 26240 19.4 11.9 2.1 16.3 0.0 1.4 2027 (308) (1066) CY13 188 7625 7813 0 0 89 642 1081 12101 40 6040 322 880 1122 397 506 340 12101 CY13 2.7 57.6 3.6 5.7 1.0 20296 19.2 12.5 2.7 12.3 0.0 1.4 2027 (308) (1066)

21
Ambuja Cements Ltd.

Result Update
"Neutral"
10th Feb' 14
Neutral
163 165 NA 1% NA
Market Data
BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs Crores) Average Daily Volume (Nos.) Nifty 500425 AMBUJACEM 212/148 25166 12583 6063
Net profit of Ambuja Cements decline 49% to Rs 317 crore in Q4CY13 as against Rs 212 crore during Q4CY12. Sales declined 5% to Rs 2191 crore Q4CY13 as against Rs 2313 crore during Q4CY12. For the full year,net profit declined 1% to Rs 1278 crore as against Rs 1293 crore during CY12. Sales declined 6% to Rs 9192 crore as against Rs 9795 crore in CY12. Flat realisations (Rs 4,177/t,3.5% QoQ) and sluggish volumes spoiled the show(5.3mT, 1.9% YoY) . During the CY13 Ambuja Cement suffered through sluggish demand and at the same time with increasing cost. Company unable to pass on the cost to the consumer due to lower sales volume. Sales Volume come to 21.6 Mmt form 21.99 Mmt(down by ~2%). Rising Input Cost mainly due to Raw Material and Freight Cost.Raw material cost increased 63% to Rs.358/ton from Rs.219/ton and freight cost increased ~5% Rs.1097/ton from Rs.1046/ton. Other expenses increased 8% to Rs.847/ton from Rs.742/ton. The company is undertaking expansion at Rabriyawas (Rajasthan 0.8 mTPA) and Sankrail (WB, 0.8 mTPA) to be completed by CY14 and CY15 respectively.
Stock Performance-%
Absolute Rel. to Nifty 1M -7.1 -5.4 1yr -18.6 -20.7 YTD -19.2 -21.0

Cureent Promoters FII DII Others 50.5 30.5 9.4 9.6 3QCY13 2QCY13 50.5 30.1 9.6 9.8 50.6 28.7 10.2 10.5
1 yr Forward P/B
Decline in EBITDA margin Key concerns for EBITDA margins to decline in CY13 are Lower realizations, Cost push and no seasonal benefits from operating leverage, Weak rupee push fuel costs higher as rupee depreciation likely to outweigh lower coal prices (more than 35 percent of total requirement comes by import), Higher freight costs and impact of diesel price hike Inched up power fuel and Freight cost. Challenging Outlook Management views the company was able to keep its production cost flat year-on-year and would continue to work on improving operational efficiencies, cost optimization and continued focus on customer and commercial excellence. Board has recommended a final dividend of Rs 2.20 per share and together with the Rs 1.40 per share of interim dividend, the total dividend for the year is Rs 3.60 per share. Key issues to watch out for
1 Volume growth recovery and outlook 2 Cement pricing outlook and sustainability, considering recent downtrend in November 3 and December
Progress in ongoing mining land acquisition and capex in Nagaur plant of 4.5mt Financials : Q4CY13 Y-o-Y % Q-o-Q % Q4CY12 Q3CY13 Net Revenue 2209 -5.4 9.5 2335 2017 EBITDA 307 -31.8 14.6 450 268 Depriciation 123 -33.9 -1.6 186 125 Interest Cost 17 -29.2 -5.6 24 18 Tax -61 -152.6 -192.4 116 66 PAT 317 49.5 91.0 212 166
(In Crs)

22
Ambuja Cements Ltd.

PER Ton Analysis 4QCY13 4QCY12 YOY% 3QCY13 QOQ% Volumes mT 5 5 -2 5 8 Realization(Rs/T) 4177 4332 -4 4126 1 R&M Cost(Rs/T) 406 266 53 415 -2 P&F Cost(Rs/T) 946 1015 -7 934 1 Freight Cost(Rs/T) 1093 1079 1 1073 2 Employee(Rs/T) 226 254 -11 266 -15 Others(Rs/T) 924 884 5 890 4 Valuation and Recommendation India average cement price is still down 0.5 percent Y-o-Y, making Q3CY13 the third consecutive quarter of Y-o-Y decline. On a QoQ basis, the EBITDA/tonne improved 6% due to an improvement in realisations & comparatively lower increase in total expenditure/tonne. The outlook continues to remain challenging due to difficult macroeconomic condition and resultant subdued cement demand. At current price of Rs 163, stock is trading at 3x P/B on CY14 estimates. We are Neutral on the stock at CMP Rs.163 for a target price Rs.165. Company Description : Ambuja Cements Ltd. (ACL) is a cement manufacturing company in India. The Company has five integrated cement manufacturing plants and eight cement grinding units. The Company is engaged in manufacturing of Portland cement. The Company manufactures Portland Pozollana cement and ordinary Portland cement. The Company operates in Cementitious Materials segment . Trading At :
P/L PERFORMANCE Net Revenue from Operation Other Income Total Income Power and fuel Freight and forwarding Expenditure EBITDA Depriciation Interest Cost Tax PAT ROE%
CY10 7390 248 7638 1697 352 5568 1822 387 49 398 1262 16.9
CY11 8571 248 8819 2003 1939 6594 1977 446 53 474 1228 15.5
CY12 9795 349 10144 2334 2300 7322 2473 569 78 604 1293 17.9
CY13 9192 391 9583 2066 2370 7549 1643 494 67 220 1278 13.2

23
Ambuja Cements Ltd.

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 CY10 306 7021 7327 65 0 17 1109 1079 10320 16 5616 931 299 902 128 1648 142 10320 CY10 3.0 8.1 1.7 15.0 1.2 20301 17.7 11.1 1.8 15.6 0.0 1.4 1896 (527) (474) CY11 307 7758 8065 51 8 19 961 1173 11577 42 6223 488 504 928 248 2073 238 11577 CY11 3.0 8.2 2.9 11.2 1.1 21829 19.0 11.0 2.1 14.2 0.0 1.5 1554 (445) (473) CY12 308 8489 8797 39 10 22 949 1421 12457 47 5904 524 641 987 221 2260 251 12457 CY12 3.5 10.2 2.3 9.7 1.0 28780 19.7 11.6 1.8 16.7 0.0 1.7 1900 (388) (509) CY13 309 9153 9462 33 1 26 980 1076 12957 6798 0 0 307 936 235 2345 271 12957 CY13 3.0 8.1 2.6 10.7 1.0 25865 22.5 15.7 2.0 12.4 0.0 1.9 0 0 0

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 other investment products which may be added or disposed including & other mentioned in this report/message.

India Equity Analytics Today - Buy Stock of Oriental Bank and Finolex Cables LTD

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India Equity Analytics Today - Buy Stock of Oriental Bank and Finolex Cables LTD

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India Equity Analytics

Daily Fundamental Report on Indian Equities

IEA-Equity Strategy 13th Feb, 2014 Edition : 205

Finolex Cables Ltd: "Reasonable prospects..."

IT Industry;NASSCOM Guidance :"FY15E; a year of growth opportunity"

13th Feb 2014

13th Feb 2014

12th Feb 2014

TATAMOTORS :Strong Results

11th Feb 2014

10th Feb 2014

Ambuja Cements Ltd:

10th Feb 2014

Finolex Cables Ltd.

"Book Partial Profit"

Share Holding Pattern-%

(Source: Company/ Eastwind Research)

Narnolia Securities Ltd,

Finolex Cables Ltd.

(Source: Company/ Eastwind Research)

Narnolia Securities Ltd,

FY14E and NASSCOM Guidance;

Interesting analytical facts behind NASSCOM Guidance :

Narnolia Securities Ltd,

Performance of Our IT Coverage

Quote on NASSCOM Guidance

Tier-1 Revenue Growth and Margin

Revenue in USD-(mn) term-FY14E

Narnolia Securities Ltd,

NIFTY and CNX IT performance

Narnolia Securities Ltd,

BUY 172 216 222 26 -2.703

500315 ORIENTBANK 310/121 4920 2.21 cr 6084

Stock Performance 1M Absolute -16.8 Rel.to Nifty -13.8

1yr -44.4 -47.4

YTD -44.4 -47.4

Narnolia Securities Ltd,

Muted NII growth on the back of margin compression

Source : Eastwind/ Company

182470 175153 164174 133962 128353 123623

184299 4.4 135102

5184 3833 3.9 2.9

4887 3423 3.8 2.7

3690 2610 3.0 2.1

Key Balance sheet data

532477 UNIONBANK 255/97 6281 2.37 cr 6063

1yr -54.8 -56.8

YTD -54.8 -56.8

Narnolia Securities Ltd,

Narnolia Securities Ltd,

Muted NII growth due to margin compression

Higher operating expenses drag operating profit in negative zone

13.7 19.1 38.7 24.8 20.0

0.7 -0.7 14.7 -1.9 2.6

17847 271558 23945 91294 198543

1.8 5.0 32.5 2.7 12.3

8776 5048 3.9 2.3 42.5

8061 4670 3.7 2.1 42.1

6384 3168 3.4 1.7 50.4

Key Balance sheet data

Share Holding Pattern-%

One Year Price vs Nifty

View And Valuation