IEA Report

18th May 2017

SHEELA FOAM LTD NOT RATED 18th May 2017
The main cause for this decline in gross margin was sharp increase seen in T.D.I., a major raw material for Sheela Foam, in FY17. Average T.D.I.
prices for Q4 was 251/-, whereas full year average was 160/-, hence Q4 saw the maximum deterioration in overall margins. T.D.I. prices came
lower from 275/- to 250/- from April 2017, in two declines of 15/- and 10/- each. As per management commentary in Q4 concall, mgmt is
confident of gaining back most of the decline in gross margin through better product mix which was the second reason for lower realisations in Q4
and expected decline in T.D.I. prices going forward in FY18. ...................... (Page : 2-4)

HCLTECH "BUY" 17th May 2017

After studying Wipro's (Direct Industry Peer) Buy-back Tendering pattern of last years, and on the basis of our analysis of various other buy backs
done in past, We have a positive view on this particular Buy-back.. We recommend retail shareholders "BUY" the stock around in the range of 840-
850/- for tendering in Buy-Back. As per our fundamental analysis, near term downside risk is capped at 5-6% from current market price..Our
analysis suggest potential return of upto 5.5% safer arbitrage return (after adjusting 30% tax on offline transfer of shares) in this Buy-back.. The
holding period would be approx 40-45 days from now. .............................. ( Page : 5-7)

BANKS 17th May 2017

We maintain our positive stance on private banks as they will continue to acquire market share from public banks thus loan growth will remain
healthy going forward. Private Banks have comparatively much less stress assets against public banks. Healthy capitalization ratio also helps to
increase the business going forward. However for many banks valuation has run ahead of their fundamentals. But decline in prices will give an
opportunity. Our top picks are HDFC Bank, Federal Bank, Yes Bank and Axis Bank. Apart from this under public sector banks Indian bank and Vijaya
bank were our top picks based on retail business focus, adequate capital, relatively low stress assets and higher recovery than slippages. First we
recommended Indian Bank at Rs 100 and got neutral near Rs 330 and recommended Vijaya Bank at Rs 48 and now we have changed our rating to
neutral for Vijaya Bank at Rs 98. Both Indian Bank and Vijaya Bank are trading at P/B of 1.0 and do not leave much on table in context of current
fundamental. At this point, we recommend Buy only on SBI among PSU Banks as it has relatively better quality of book and capital ratio than its
peers. Merger will be key monitorable for the bank. ......................................................... ( Page : 8-11)

NESTLE "BUY" 16th May 2017

After Maggie fiasco, companys new management has become more aggressive in launching new products. The company has launched more than
25 products in last few quarters. Going forward, it has plans to launch more new products from its parents global product portfolio. New product
launches will improve companys volume going ahead. Secondly, NESTLE has strong pricing power so we expect strong pricing led growth for
NESTLE going ahead. As companys most of the sales come from urban areas, approx. 75%, hence any recovery in urban demand will be huge
positive for the company. Presently, Maggies market share has reached to 60% versus peak market share of 75% which is commendable. Our buy
recommendation on NESTLE is based on Maggies market share gain, new product launches and expectation of urban demand recovery going
forward. We have positive view on this stock and maintain `BUY with a target price of Rs 7920. ........................................................... ( Page : 12-
15)

GLENMARK "NEUTRAL" 15th May 2017

Due to drug price regulation by US government, US business of company is severely impacted in Q4FY17. Drug price corrected by 15% and it is
expected to correct more going forward considering US government drug price regulation policies. Mgt. has indicated Zetia sales improvement
going forward but we expect that it would not be easy considering current scenario. Management has guided for new products launch in the US
market in FY18E but we need to wait to get clear visibility on it. We expect ROE to maintain at the level of 22% in FY18E. Currently, the stock is
trading at 4x FY19E P/BV. Considering the near-term un-certainties, we maintain Neutral rating in this stock while revising our previous target
price to Rs. 830. ................................................ ( Page : 16-19)

HEROMOTOCO "NEUTRAL" 12th May 2017

Hero Motocorp is the market leader in the entry segment motorcycle and commands over 50% market share in that segment. The company has
lost 4-5 percent market share in FY17 to Honda Motorcycle, which has grown fiercely in the Indian two wheeler market. Rising commodity prices
and transition from BS-III to BS-IV restricted the company to expand its profitability. The management has stated that the margins will be under
pressure as the full impact of increased commodity prices has not been factored yet. Higher depreciation on Halol plant will lead to further
contraction in profitability as the plants will take at least 6-8 months to ramp up. The uncertainty regarding tax structure under GST will also keep
automobile industry outlook hazy. We expect 320bps deterioration in FY19E RoE. Considering the margin contraction and uncertainty regarding
GST we reduce our target from Rs.3800 to Rs.3575 and change our rating from BUY to NEUTRAL. ................................................................ (
Page : 20-24)
Narnolia Securities Ltd IEA Edition No.- 1017
 INDUSTRY - Mattress
BSE Code - 540203
NSE Code - SFL
17-May-17 NIFTY - 9525

Company Data
Q4FY17 earnings a miss.. Margins deteriorated sharply
CMP 1330
Target Price - Sheela Foam reported its Q4FY17 earnings with high 20% YoY, and 9%
Previous Target Price - QoQ sales growth in its net sales at 468 cr.
Upside - Company's gross margin Declined sigficantly in the March ended quarter
52wk Range H/L 1429/850 to 39.9%, a sequential decline of 440 bps.
Mkt Capital (Rs Cr) 6,492 Following the declining trend in gross margin,EBITDA came much lower
35% at 25 cr vs 65 cr in Q3.
33%
30% 31%
32%
EBIT came at 17 cr much lower than previous quarter of 57 quarter, with
27% operating margin of 3.5%, a sequential sharp decline from 11.7% in Q3.
25%
PAT to shown the same trend which came at 17 cr from 42 cr in Q3. PAT
20%
18% 17% ROE
margins declined from 8.6% in Q3 to 3.6% in Q4, declined 500 bps QoQ.
17%
15% 15%
14%
13% ROCE
10% Financials/Valu FY13 FY14 FY15 FY16 FY17
5% ation
Net Sales 1,149 1,271 1,418 1,550 1,750
EBITDA 82 85 91 176 195
0%
FY13 FY14 FY15 FY16 FY17E EBIT 50 55 63 147 165
PAT 31 28 43 105 125
Shareholding pattern % EPS (Rs) 6.3 5.7 8.8 21.5 25.6
3QFY17 2QFY17 1QFY17 EPS growth (%) 336% -10% 53% 145% 19%
Promoters 85.7 85.7 - ROE (%) 18% 14% 17% 31% 27%
Public 14.3 14.3 - ROCE (%) 13% 15% 17% 33% 32%
Total 100.0 100.0 100.0 BV 35 40 50 69 95
P/B (X) - - - - 11.8
Stock Performance % P/E (x) - - - - 44
1Mn 3Mn 6Mn
Absolute 16.0% 27.0% 30.0%
Sharp increase in T.D.I. Prices led to Gross Margins Decline
Rel.to Nifty 4.0% 7.9% 15.3%

100
Sheela Foam's Q4FY17 earnings was a miss on overall margin front.
90 Instead of growing 20% YoY on Net Sales front, company saw significant
80 pressure on the margins with gross margins led the deterioration with
70 sequential decline of 440bps.
60
50
The main cause for this decline in gross margin was sharp increase seen
Book value
in T.D.I., a major raw material for Sheela Foam, in FY17. Average T.D.I.
40 ROA %
prices for Q4 was 251/-, whereas full year average was 160/-, hence Q4
30
saw the maximum deterioration in overall margins. T.D.I. prices came
20
16 14
lower from 275/- to 250/- from April 2017, in two declines of 15/- and 10/-
10 8 each. As per management commentary in Q4 concall, mgmt is confident
7 6
- of gaining back most of the decline in gross margin through better product
FY13 FY14 FY15 FY16 FY17 mix which was the second reason for lower realisations in Q4 and
expected decline in T.D.I. prices going forward in FY18.
ANURAG ARORA
Anurag.arora09@gmail.com
Please refer to the Disclaimers at the end of this Report
Narnolia Securities Ltd
 Quarterly Performance
Financials 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 YoY % QoQ% FY16 FY17 YoY %
Net Sales 391 381 415 486 468 20% -4% 1,550 1,750 13%
Other Income 7 5 3 4 9 27% 107% 17 22 30%
COGS 202 181 221 271 282 39% 4% 828 955 15%
Employee Cost 37 39 39 39 36 -2% -7% 139 154 10%
Other Expenses 106 107 102 111 126 19% 13% 333 446 34%
EBITDA 46 53 53 65 25 -46% -62% 176 195 11%
Depreciation 7 7 7 8 8 9% 0% 29 30 4%
Interest 2 3 3 2 2 -9% -22% 12 10 -15%
PBT 43 48 46 59 24 -45% -60% 152 177 16%
Tax 12 14 14 17 7 -44% -59% 47 52 10%
PAT 31 34 32 42 17 -45% -60% 105 125 19%

50.0% 160
45.0% 140
40.0% Capacity
120
35.0% (000mt)

30.0% 100
Gross Margin % Production(0
25.0% 80 00 mt)
EBIDTA %
20.0% EBIT % 60 utilisation(%)
15.0% PAT %
40 38 41
10.0% 32 36

5.0% 20

0.0% 0
FY13 FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17

60.0% 50
45 44
50.0% 42
40

40.0% 35
Gross Margin % 30 31 Debtor Days
30.0% EBIT % 25 26 Inventory Days
PAT % 20 Payable Days
20.0%
EBIDTA % 15 Cash Conversion Cycle
13.9% 13.9% 12.7% 13.3%
11.6% 10
10.0%
5.2% 5
0.0% -
3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 FY13 FY14 FY15 FY16

Please refer to the Disclaimers at the end of this Report

Narnolia Securities Ltd
 Concall Highlights:
Q4 was also a challenging after challenging Q3 post demonetisation, however market lifted up post
demonetisation
Q4FY17 was focused on growing sales to meet the annual sales target set by company for FY17, which
has met almost 97% of setted target.
T.D.I. prices being high at the moment.. Average price for the quarter was 251/-and for the full year was
160/-. T.D.I. prices dropped from 275/- to 260 and then 250 in April.
In our reading inventories are large with local suppliers at the moment and the biggest change is going to
happen in SADARA unit, which company is checking regularly.
We decided not to increase prices in March quarter.. Last hiked prices in November 2016
Taken price hike of 7% from 20th April 2017.
Price hike is taken mainly in mattress(B2C) segment.
Australian business is stable as far as budget and delivery is concerned.
Company is loooking for 2 M&A opportunities.
Acquisitions will be in different product categaries, which would be complementary to existing product
line. Enhancing products in stores is the biggest purpose for the acquisitions.
Acquisitions will be EPS accretive from the starting.
1st acquisition wil be done through internal accruals, whereas for second one, company may be
needing some debt..
With a view to use the cash on balance sheet for growth opportunities, company is skipping dividend
for FY17.
Change in Product mix and TDI price fluctuations were the only reason for Gross margin decline.
Maintianed EBITDA margins in FY17 despite of lower gross margins in FY17 YoY, due to operating
efficiencies..
Focused on EBITDA margin expansion.. will not let it down, however have to a wait longer time for
seeing EBITDA margins expansion..
Pricing Policy: Take price hike generally in April and Nov of each year.. However if need arise, also take
price hike in between..
Dont want to be outpriced..Balance has to be maintained in pricing.. Quantun of price hike is such so
that we dont have to scale back the hike after increased once..
We are price setters and othter follow us..
When TDI price are much higher like this time, unorganised players has an option to shut down..this is
how the behave when RM prices are higher..
Target of opening 400 exclusive showrooms in FY18..
Marginal movement here or there in Polyol Prices in FY17 (50% of total RM)
In Technical foam (B2B), volume was 12000 tones in FY17..dont see much volume growth in B2B in
FY18..
Major volume growth will come from Mattresse segment..
Sales growth Guidance for FY18- 20-21%
Gross margins should be in the range oif 42-43% for FY18, if TDI prices remain at same level
Gross margin decline of 440 bps QoQ was mainly due to TDI (3.8% impact due to TDI prices)
Demand for High end Mattress is inelastic, whereas demand for entry level mattresses is elastic..

Please refer to the Disclaimers at the end of this Report

Narnolia Securities Ltd
 INDUSTRY - IT
BSE Code - 532281
NSE Code - HCLTECH
17-May-17 NIFTY - 9512
Company Data
BUYBACK OF EQUITY SHARES
CMP 850
Target Price Attractive to
Retail Investor
DETAILS OF BUY-BACK
Previous Target Price
Upside - Boad Meeting Date 20-Mar-17
52wk Range H/L 890/710 Buy Back Size 35000000 equity shares
Mkt Capital (Rs Cr) 1,21,405 2.48% of total paid up capital
Av. Volume (,000) 99 Buy Back Size (Amount) 3500 cr
Buy Back Price/Share 1000/-
Buy Back Route Tender Offer
Share Holding patterns % Promoters Tendering their shares YES
4QFY17 3QFY17 2QFY17 Dispatch of Notice of Postal Ballot 10-Apr-17
Promoters 59.7 60.3 60.4 to Shareholders
Public 40.32 39.66 39.64 Result of Postal Ballot -
Total 100.0 100.0 100.0 Record Date for Buy-Back 25-May-17
Ex-Date for Buy-Back 24-May-17
Stock Performance % 15%
Reservation for Retail Shareholders
1Mn 3Mn 1Yr
Absolute 1.3 3.4 17.6 No of shares reserved for Retail 5250000
Rel.to Nifty -0.9 -3.9 -1.4 Shareholders
Opening Date for Buy-Back To be announced later
125 HCLTECH NIFTY Closing Date for Buy-Back To be announced later
120
115
110 BUY-BACK ANALYSIS FOR RETAIL SHAREHOLDERS ( HOLDING
105 SHARES WORTH UPTO 2 LAC)
100 Retail Shareholding upto 2 lac as on 31 Dec 2017 36269495
95 Retail Shareholding upto 2 lac as on 31 Mar 2017 37376029
90 Change in Mar quarter (Post Buy-back announcement) 1106534
85
80
The retail investor who wants to participate in the aforesaid Buy-Back ,
Jul-16

Sep-16

Feb-17
Jan-17
Dec-16
Jun-16

Aug-16
May-16

May-17
Oct-16
Nov-16

Apr-17
Mar-17

should buy shares worth 1.85-1.9 Lac ( below 2 Lac),on or before 23rd May
2017; keeping in mind possible upside till the date of 'Record Date'.

Our Target Case Scenario

No of shares 9344007 Reserved for Retail 5250000
tendered 25% of total retail shares Acceptance Ratio 56%
CMP 850 Returned from Buy-Back 44%
Buy-Back Price 1000 Max Upside 18% 1000/- Buy-back Price
Upside 18% Max. Expected Downside 5% Share Price post Buy Back @ 810
Anurag Arora Net Return in % 5.5% After adjusting Tax of 30%
Anurag.arora@narnolia.com Approx Holding Period 40-45 Days
Please refer to the Disclaimers at the end of this Report
Narnolia Securities Ltd
 TABLE SHOWING EXPECTED RETURN POTENTIAL IN DIFFERENT
SCENARIOS
Shares tendered
Calculated Acceptance Expected Market Expected Return to
Scenario as a % to total
Ratio Price post Buy-Back Investors (Tax Adjusted)
retail shareholders
800 7.5%
1 20% 70%
800 5.1%
2 25% 56%
800 2.5%
3 35% 40%
800 0.5%
4 50% 28%
810 7.7%
5 20% 70%
810 5.5%
6 25% 56%
810 3%
7 30% 40%
810 1%
8 50% 28%
820 7.9%
9 20% 70%
820 5.9%
10 25% 56%
820 3.5%
11 30% 40%
820 1.7%
12 50% 28%

Wipro buy-back case study

We have observed from the Buy-Back done by Wipro which was completed in July 2016, where 5.5 crore
shares were held by retail shareholders ( holding shares worth upto 2 Lac as on record Date). Total shares
reserved for retail categary were 60 lac, however only 22.09 Lac shares were tendered by retail
shareholders, constituting only 4% tendering by total retail shareolders. Shares tendered were 37% of total
reserved portion for retail constituting 100% acceptance.

Please refer to the Disclaimers at the end of this Report

Narnolia Securities Ltd
View & Recommendation

After studying Wipro's (Direct Industry Peer) Buy-back Tendering pattern of last years, and on the basis of our analysis
of various other buy backs done in past, We have a positive view on this particular Buy-back.. We recommend retail
shareholders "BUY" the stock around in the range of 840-850/- for tendering in Buy-Back . As per our
fundamental analysis, near term downside risk is capped at 5-6% from current market price..Our analysis suggest
potential return of upto 5.5% safer arbitrage return (after adjusting 30% tax on offline transfer of shares) in this Buy-
back.. The holding period would be approx 40-45 days from now.

Key Points to be noted:

Investor who wants to buy shares for tendering in Buy-Back will have to buy shares on or before 2 days prior to
Record Date( 23th May 2017), in this particular Buy-back
Record Date means the date to decide the name of the investors eligible for Buy-Back..
Ex-Date means the day 1 working days prior to Record Date ( Last Date for Buying shares for Buy-Back)
According to terms of aforesaid Buy-Back, Last date for buying shares is 23th May 2017.. Anyone who will buy
shares after 23th May will not be eligible for the Buy-back..
Retail shareholder means shareholder holding shares worth upto 2 Lac as on market closing on Record Date..
Investors should keep this point in mind while buying share in Buy-back..Investors should keep in mind that worth
of the shares bought in the buyback should not be above 2 Lac mark as on closing market hours on record
date, hence one should keep space for any potential upside upto the day of Record Date.
Research Note
17-May-17

BANKS RATING TARGET India at its decades of lowest credit growth, as per data by RBI. How long this
YESBANK BUY 1936 weakness in credit appetite is going to last?
Capital raised creates attractive valuation. Recent Non-performing assets has increased by 5 times in just 5 years. Are stressed assets at
weakness -an opportunity
peak level or how much more are still left to be recognized?
HDFCBANK BUY 1725 Transferring power from bankers to RBI- Will lead to fast resolution of stress assets.
Despite consistent healthy profitability and growth Will this hurt banks autonomy in lending and borrowing?
track record, best is yet to come.

INDUSINDBK NEUTRAL 1480 Credit Growth at its decades of low !

With strong fundamentals and higher valuation, any Fortnightly data by RBI on advances for Indian Banking shows the credit growth at
dips in price will give an opportunity. low of 5.1% in FY17.
AXISBANK BUY 560 Why the credit growth was in its low of decade?
Near-term pressure on profitability but strong retail Does it mean that there is lack of credit appetite in Indian Economy and growth may
liability franchise give us confidence for mid-long term. decline further?
SCB Credit Growth %
35.0%
DCBBANK BUY 205
30.0%
31.7% 30.8%
Fastest growing bank in small market cap. Aggressive
expansion will lead to better RoA in mid to long term. 25.0% 28.1%

20.0% 23.2% 22.3% 21.5%

19.4%
15.0% 17.7% 17.5% 16.9%
VIJAYABANK NEUTRAL 98
10.0% 14.3% 14.1% 14.3%
Lowest stress assets among peers with improving 10.8% 10.3%
recovery and slippages but higher on valuation. 5.0%
5.1%
0.0%
INDIANB NEUTRAL 360
Healthy capitalization with focus on retail banking. Low
on stress assets but high on valuation.

SBIN BUY 340 Source: RBI Fortnightly bank credit

Relatively good quality of book among large players. Answer to this question lies in some fact which can compel us to think seriously
Merger with associates will give strong liability about it. Data by RBI had not incorporated the reasons for lowest credit growth this
franchise and better network coverage.
year.
Loans which were given to SEBs have been converted into bonds under UDAY
scheme to the tune of Rs 1.7 lakh crore. This alone had impacted the loan book by
more than 2%.
Apart from this there was repayment of loans linked to FCNR deposits which got
Credit growth was
redeemed during December quarter which has impacted the book to decline by
impacted by
around 75 bps.
conversion of loan to
bonds under Demonetization has also certainly impacted the credit growth during second half of
UDAYscheme, FY17.
repayment of loans Grappling with huge stressed assets in balance sheet, majority of public sector
against FCNR deposits lenders and some corporate private lenders have applied conservative approached
and demonetization. towards corporate lending. Due to this some of corporate borrowers has resorted to
alternative channel of banking i,e bonds which is growing with a healthy rate of
15%.
Adjusting for some of facts our calculation state the credit growth will be more than
9% for FY17.
DEEPAK KUMAR
Deepak.kumar@narnolia.com
Please refer to the Disclaimers at the end of this Report
Narnolia Securities Ltd
 Nevertheless if we ignore these facts and go by RBI data, then the main question which comes to our
mind is that- has the credit growth bottomed out for system?
Recently we interacted with management of various banks under large, mid and small market
capital during latest result via concall and interviews. Their views on credit growth in respective
of their banks and industry were in fact signals for strong growth going forward.
Management of HDFC Bank, the largest private lenders, indicated that the best is yet to come
in terms of loan growth despite growing more than 19% in FY17. Yes bank and Indusind bank
is target growth of 25% each in FY18.Public Sector- Indian Bank and Vijaya bank recently
declared its March result are also targeting for double digit growth in FY18. Secondly there
was huge capital raised by some of the private banks and some has pipeline for it to
strengthen their core capital ratio to support the loan growth. HDFC Bank despite strong
capitalization position plans to raise Rs 50000 Cr of perpetual debt instrument to provide
further strength to its Tier I ratio. Raising fund at this point of time shows that management is
confident most
However of strong loan growth
of public banks going forward. with huge stress assets in their balance sheet
are struggling
due to which they will be unable to use their full capacity, hence we are of the opinion that the
credit growth in FY18 will be supported by private banks and to some extent few public banks.
But which are the sectors or area that will drive the credit growth?
Going by the recent interviews, results and Government initiatives we analyze that credit
growth will be supported by both Capex and working capital loan demand. Under capital
expenditure we analyze credit demand to be supported by areas like roads, cement, railways,
Roads, cement, rail renewable energy, housing, commercial vehicles, consumer durables, and rural demand.
ways, renewable Commodity prices has also picked up which will boost the working capital demand.
energy, housing, CV
, CE, CD, and Despite low credit growth in system, listed private banks has grown by 12.3% YoY in
increasing December quarter which shows the continuation of gaining market share from public banks,
commodity price while credit growth of public banks has declined by 2.2% for the same period. As on
will support the December 2016 private banks has gained the market share by 3% in a year to 28%. With the
incremental credit weak capitalization and mounted NPA issue in public banks, we analyze muted credit growth
growth. for most of the public banks. Whereas relatively strong capitalization and less stressed assets,
most of the private sector banks are at sweet spot to cash the opportunity for healthy loan
growth.
Advances Market Share %

Public Bank Private Banks

90%
78% 77% 76%
80% 75% 74% 73% 72% 72%
70%
60%
50%
40%
25% 26% 27% 28% 28%
30% 22% 23% 24%

20%
10%
0%

Rs in Crore
Date 25-Mar-11 30-Mar-12 31-May-13 28-Mar-14 3-Apr-15 1-Apr-16 31-Mar-17
Food Credit 64,282 79,788 1,18,042 97,552 69,227 1,01,205 53,927
Non Food Credit 38,77,801 46,27,145 52,50,736 60,41,493 67,33,294 73,99,292 78,27,601
Bank Credit 39,42,083 47,06,933 53,68,778 61,39,045 68,02,521 75,00,497 78,81,528
Source: RBI Fortnightly bank credit

Please refer to the Disclaimers at the end of this Report

Narnolia Securities Ltd
 Are the Non-performing assets at peak level?
Gross Non-performing assets of listed commercial banks has mounted to the level of Rs 7.14
Lakh Cr in December quarter FY17 from Rs 4, Cr a year back as per our estimates, whereas
Net non-performing assets has increased to 3.95 Lakh Cr from Rs 2.55 Lakh Cr during the
same period. Net NPA ratio increased to 5.5% against 3.6% a year ago.
Stressed Assets
were mainly Now the question arises are non-performing assets at peak level?
from steel, If not then much more stress assets is still to be recognized?
power, cement To answer this, first we will have to know the genesis of such mounted stress assets in Indian
and mining. Economy. Our analysis shows that the bulky of stress assets were generated mainly from Iron
& steel, cement, power and mining. NPA generated from these sectors were structural and
operational in nature while some more NPAs were recognized due to willful default in few
accounts. Our analysis shows that banks have recognized most of the bulky stress assets
during last 5 quarters as directed by RBI in its AQR list. While assets quality issues continued
to persist in FY17 but the pace for incremental slippages has slowed down significantly for
majority of banks. Gross slippages during 3Q FY17 were Rs 69,800 Cr against Rs 1,84,900 Cr
in 4Q FY16. Gross slippage ratio has moderated to 96 bps in 3Q FY17 against high of 2.59%
in 4Q FY16. In the latest result of Indian Bank, its management has indicated the GNPA ratio
target of below 5% in FY18 against current 7.5%.Most of the results by private sector banks
has indicated towards normal level of NPA going forward. However lately RBI found
divergence in recognition of stress assets among banks from the list provided under
AQR which may impact slippages to rise in some of banks in coming 1 or 2 quarters.
However on the back of our analysis we found that most of the bulky stress assets have been
Divergence recognized in the system and slippages in FY18 would be significantly lower than that of FY17.
from RBI's list (Rs in Crore)
could be GNPA FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 3Q FY17
potential
Private Banks 17,905 18,210 20,382 24,184 33,690 55,853 84,409
source of
>> GNPA % 2.5% 2.1% 1.8% 1.8% 2.1% 2.8% 4.1%
slippages.
Public Banks 71,047 1,12,489 1,64,462 2,27,264 2,78,468 5,39,956 6,29,871
>> GNPA % 2.3% 3.2% 3.6% 4.4% 5.0% 9.3% 11.5%
Total GNPA 88,952 1,30,699 1,84,843 2,51,447 3,12,158 5,95,809 7,14,280
>> GNPA % 2.3% 3.0% 3.2% 3.8% 4.3% 7.6% 9.2%
Source: RBI reported excluding foreign banks (3Q FY17 data -Narnolia research)
GNPA %
10.0% 9.2%
9.0% 7.6%
8.0%
7.0%
6.0%
4.3%
5.0% 3.8%
4.0% 3.0% 3.2%
2.6% 2.3% 2.4% 2.3%
3.0% 2.2%
2.0%
1.0%
0.0%

Slippage Trend 1Q FY16 2Q FY16 3Q FY16 4Q FY16 1Q FY17 2Q FY17 3Q FY17

Public Banks 41030 45362 111529 170534 79735 61528 54218
Private Banks 5969 7884 12647 14396 16847 21400 15550
Total Slippages 47000 53247 124176 184930 96582 82927 69768
Slippage Ratio % 0.7% 0.8% 1.8% 2.6% 1.3% 1.2% 1.0%
Source: Narnolia research (included listed banks)

Please refer to the Disclaimers at the end of this Report

Narnolia Securities Ltd
 Slippage Ratio %
3.0%
2.6%

2.5%

2.0% 1.8%

Bulky of stress 1.5% 1.3%

1.2%
assets has been 1.0%
1.0% 0.8%
recognized. 0.7%

Pace of 0.5%

incremental 0.0%
slippages has 1Q FY16 2Q FY16 3Q FY16 4Q FY16 1Q FY17 2Q FY17 3Q FY17

reduced.
Is latest ordinance to empower RBI is the key for fast resolution?
Going forward profit after tax of most of PSU banks and large corporate private lenders
depends on fast resolution of stress assets otherwise it will be most hit by provisions due to
ageing related NPA till FY18. Now fast resolution of stress assets is the key for most of
banks. To speed up resolution process Government and RBI have introduced a series of
reforms in banking sector like JLF, SDR and S4A but the result were not as per the
expectations as banks were unable to find the buyers for the ownership. Apart from these
reforms Government passed Insolvency and Bankruptcy code 2016.

Government has also taken certain steps within steel sector to improve its efficiency like
intervention in terms of minimum import price and anti-dumping duty on imports, National steel
policy that favors Indian Steelmakers. We think this type of initiative will be more favorable for
economy and needs more sector specific decision to combat stress assets.

However in the latest development, Government has passed an ordinance which will empower
RBI to issue borrower specific direction to banks for tackling NPA problem. Now RBI can issue
instructions to banks to initiate the resolution under the Insolvency and Bankruptcy Code
Empowering 2016. We see this ordinance as welcome step to fasten the resolutions of stress assets as
RBI is welcome earlier to this, slow decision-making process under PSU banks were hindering the resolution
step for fast of large stress assets. But the basic question remains the same that how this new ordinance
decision making will help to get banks money back from stressed corporate borrower? How and when
process but oversight committee will be formed by RBI? Is there chance of conflict of interest between RBI
uncertainty and management of bank? How much the haircuts would be taken? Answer to these
rises. questions is uncertain as of now and will take much time for clearance and we analyze that if
resolution is delayed than ageing related NPA will badly hit the PAT in FY18 for big corporate
lenders. Also one basic problem for PSU bank will even persist in terms of low capitalization
and any delay or huge haircuts under resolution process will again impact the capitalization.

We maintain our positive stance on private banks as they will continue to acquire market
share from public banks thus loan growth will remain healthy going forward. This value
migration from PSU to Private has more legs to go. Continuation of investment in digitization
has resulted in controlled and declining operating expenses hence cost to income ratio is
improving. Private Banks have comparatively much less stress assets against public banks.
Healthy capitalization ratio also helps to increase the business going forward. However for
many banks valuation has run ahead of their fundamentals. But decline in prices will give an
opportunity. Our top picks are HDFC Bank, Federal Bank, Yes Bank and Axis Bank. Apart
from this under public sector banks Indian bank and Vijaya bank were our top picks based on
retail business focus, adequate capital, relatively low stress assets and higher recovery than
slippages. This tactical stance of ours helped us ride the PSU banking rallies over last nine
months. First we recommended Indian Bank at Rs 100 and got neutral near Rs 330 and
recommended Vijaya Bank at Rs 48 and now we have changed our rating to neutral for Vijaya
Bank at Rs 98. Both Indian Bank and Vijaya Bank are trading at P/B of 1.0 and do not leave
much on table in context of current fundamental. At this point, we recommend Buy only on SBI
among PSU Banks as it has relatively better quality of book and capital ratio than its peers.
Merger will be key monitorable for the bank.
Please refer to the Disclaimers at the end of this Report
Narnolia Securities Ltd
 INDUSTRY - Con. Staples
BSE Code - 500790
NSE Code - NESTLEIND
16-May-17 NIFTY - 9445

Company Data Key Highlights of the Report:

CMP 6611 Sales for the quarter grew by 9.5% YoY to Rs 2592cr, second best in our
Target Price 7920
FMCG universe after GODREJCP.
Previous Target Price 7920 Domestic revenue grew by 9.7% led by volume improvement across
Upside 20% section. Exports remained flat due to lower sales from Nepal and Bhutan.
52wk Range H/L 7390/5701 Gross margin declined by 51 bps YoY to 57.8% led by higher input prices.
Mkt Capital (Rs Cr) 63,744 EBITDA margin declined by 169 bps YoY to 20% from 21.7% led by
Av. Volume (,000) 33 higher COGS,employee cost and Other expenses.

RoE & ROCE

Our buy recommendation on NESTLE is based on Maggis market share
gain, new product launches and expectation of urban demand recovery
going forward. We Maintain `BUY with target price of Rs 7920.
ROE ROCE

70.0%
60.2%
60.0%
46.0% 47.7%
50.0% 42.6%
40.0% 46.8%
41.6%
30.0%
32.3% 31.2%
Financials/Valu CY15 CY16 CY17E CY18E FY19E
20.0%
ation
Net Sales 8,175 9,224 10,847 12,038 13,351
10.0%

0.0%
EBITDA 1,555 1,807 1,969 1,976 2,236
CY13 CY14 CY15 CY16 EBIT esv 1,535 1,772 1,954 2,131
Shareholding patterns % PAT 1,208 1,453 1,613 1,621 1,883
1QCY17 4QCY16 3QCY16 EPS (Rs) 58 96 121 124 145
Promoters 62.8 62.8 62.8 EPS growth (%) -52% 63% 27% 2% 16%
Public 37.2 37.2 37.2 ROE (%) 32% 31% 34% 32% 34%
Total 100.0 100.0 100.0 ROCE (%) 43% 48% 47% 43% 45%
BV 292 313 344 377 415
Stock Performance % P/B (X) 16.9 19.8 21.0 19.8 18.1
1Mn 3Mn 1Yr P/E (x) 99.3 68.6 56.3 54.9 47.2
Absolute 2.6 6.5 15.9
Rel.to Nifty (0.6) (0.9) (3.7) Recent development and launches:

130
Nestle India has launched new range of Noodles Maggi Masala in India.
NESTLEIND NIFTY The new range of MAGGI noodles includes four new flavors - Amritsari
125 Achari, Mumbaiya Chatak, Super Chennai and Bengali Jhaal.
120
115 In this quarter, Nestle India tied up with Google and Paytm for promotion
110
to create strong bonding with consumers which may boost volumes going
105 forward.
100
95 The Company has introduced Milo Ready to drink the sports partner for
90 kids in 1QCY17.
85
NESTLE India extends NESTLE a+ GREKYO range with the launches of
80
Blueberry Greek Yoghurt and Greek Style Curd.

RAJEEV ANAND
rajeev.anand@narnolia.com
Please refer to the Disclaimers at the end of this Report
Narnolia Securities Ltd
 Quarterly Performance
Financials 1QCY16 2QCY16 3QCY16 4QCY16 1QCY17 1QCY16 QoQ% CY15 CY16 YoY %
Net Sales 2,368 2,272 2,363 2,286 2,592 9% 13% 8,175 9,224 13%
Other Income 35 37 37 41 42 18% 3% 110 149 36%
COGS 987 950 986 959 1,094 11% 14% 3,469 3,880 12%
Net Provi. For Contin. 12 22 10 9 10 -17% 7%
Employee Cost 213 263 270 294 246 16% -16% 913 1,073 18%
Other Expenses 560 608 650 617 625 12% 1% 2,147 2,410 12%
EBITDA 513 429 447 403 517 1% 28% 1,555 1,807 16%
Depreciation 89 89 88 87 87 -3% -1% 347 354 2%
Interest (26) 0 0 0 (23) -12% -5158% 3 4 34%
PBT 433 377 397 276 450 4% 63% 814 1,440 77%
Tax 166 114 127 113 143 -14% 27% 250 519 107%
PAT 287 231 269 164 307 7% 87% 563 921 63%

Sales grew by
9.5% YoY
Better revenue growth led by better domestic business performance
second best in
our FMCG
universe after The company has reported sales Rs 2592 cr(Vs Rs 2561 cr of our expectation), grew by 9.5% YoY,
second best in our FMCG universe after GODREJCP.
GODREJCP.
Gross margin declined by 51 bps YoY to 57.8% led by higher input prices(Milk derivatives).

Domestic revenue grew by 9.7% led by volume improvement across section. Exports remained flat
due to lower sales from Nepal and Bhutan.
EBITDA margin declined by 169 bps YoY to 20% from 21.7% led by higher COGS (up 51
bps),employee cost(up by 52 bps) and Other expenses(up by 47 bps).
PAT margin declined by 30 bps YoY 11.8% YoY from 12.1%.

PAT for this quarter grew by 7% YoY to Rs 307 cr from Rs 287 cr. PAT margin deteriorated by 30
bps YoY to 11.8% from 12.1% in Q1CY17.

OPM NPM
Sales(in cr) PAT(in cr)
25.0% 21.8% 21.7%
3000 350 20.0%
309 307300 19.2% 18.9% 18.9%
287 20.0% 18.0% 17.6%
2500 269
250 15.3%
231
2000 200 15.0% 12.3% 12.1% 11.8%
183 11.4%
164 150 10.2%
1500 124 9.3%
100 10.0% 7.1% 7.2%
1000 50
0 5.0%
500
2516

1957

1742

1959

2368

2272

2363

2286

2592

-64
-50
0 -100 0.0% -3.3%

-5.0%

Please refer to the Disclaimers at the end of this Report

Narnolia Securities Ltd
 Investment Arguments:
New product launches, the key of future growth: After Maggie fiasco, companys new
management has become more aggressive in launching new products. The company has
launched more than 25 products in last few quarters. NESTLE has strong backing of its parent
with more than 2000 products globally .Going forward, it has plans to launch more new
products from its parents global product portfolio. New product launches will improve
companys volume going forward.

Historically NESTLE has strong pricing power: As in most the FMCG categories input
prices have bottomed out and have started moving up. Hence going forward we expect growth
for FMCG will be pricing led. NESTLE has strong premium product portfolio and strong pricing
power.

Urban demand recovery led growth going forward: For last four years urban demand is
struggling due to higher inflation and lower economic activities which is one of the causes of
companys dismal performance. As NESTLEs most of the sales comes from urban areas,
approx. 75%, hence any recovery in urban demand will be huge positive for the company. We
expect better demand scenario for urban market going ahead led by declining inflation and
interest rate scenario. Hence we have positive view on NESTLE.

Smart bounce back by Maggie shows strong brand value: Nestle re-launched Maggie on
9 Nov., 2015 and within 53 days of re-launch, it regained market share of 33% which shows
strong brand power. Presently, Maggies market share has reached to 60% versus peak
market share of 75% which is commendable. It shows new managements aggression and
focus towards NESTLEs future growth. Going forward we expect brand Maggie to consolidate
further with more market share gain.

NESTLE didnt take price hike in CY16, so expect hike in CY17 Prepared Dishes(includes Maggie) Volume and growth
Overall Realization growth YoY Prepared Dishes Vol.(in MT) Vol. Growth YoY
73%
35% 31% 300000 80%
30% 60%
250000
25% 30%
25% 22% 40%
20% 200000 13%
8% 4% 4% 20%
13%
15% 11%
8%
7%
9% 150000 0%
10% 5%
-20%
5% 2% 100000
-59% -40%
122208

158993

193494

219041

236554

245443

254553

103138

178467

0%
50000
-5% -60%
-11%
-10% 0 -80%
-15%

View & Valuation

After Maggie fiasco, companys new management has become more aggressive in launching new
products. The company has launched more than 25 products in last few quarters. Going forward, it has
plans to launch more new products from its parents global product portfolio. New product launches
will improve companys volume going ahead. Secondly, NESTLE has strong pricing power so we
expect strong pricing led growth for NESTLE going ahead. As companys most of the sales come from
urban areas, approx. 75%, hence any recovery in urban demand will be huge positive for the
company. Presently, Maggies market share has reached to 60% versus peak market share of 75%
which is commendable. Our buy recommendation on NESTLE is based on Maggies market share
gain, new product launches and expectation of urban demand recovery going forward. We have
positive view on this stock and maintain `BUY with a target price of Rs 7920.

Please refer to the Disclaimers at the end of this Report

Narnolia Securities Ltd
 Financials Snap Shot
Income Statement Rs in Crores Key Ratios
Y/E March CY16 CY17E CY18E CY19E Y/E March CY16 CY17E CY18E CY19E
Revenue from Operation 9,224 10,847 12,038 13,351 ROE 31% 34% 32% 34%
Change (%) 13% 18% 11% 11% ROCE 48% 47% 43% 45%
Other Operating Income Asset Turnover 1.4 1.4 1.4 1.4
EBITDA 1,807 1,969 1,976 2,236 Debtor Days 4 4 4 4
Change (%) 16% 9% 0% 13% Inventory Days 37 37 37 37
Margin (%) 20% 18% 16% 17% Payable Days 32 32 32 32
Dep & Amortization 354 356 354 353 Interest Coverage 330 366 368 427
EBIT 1,453 1,613 1,621 1,883 P/E 69 56 55 47
Interest & other finance cost 4 4 4 4 Price / Book Value 20 21 20 18
Other Income 149 190 226 265 EV/EBITDA 35 33 33 29
EBT 1,440 1,798 1,843 2,144 FCF per Share 105 125 127 147
Exceptional Item (31) - - - Dividend Yield 0.9% 1.1% 1.1% 1.3%
Tax 519 629 645 750
Minority Int & P/L share of Ass. - - - - Assumptions
Reported PAT 921 1,169 1,198 1,393 Y/E March CY16 CY17E CY18E FY19E
Adjusted PAT 941 1,169 1,198 1,393 Volume Growth(domestic) 36% 9% 6% 5%
Change (%) 3% 24% 2% 16% Capex 416 300 300 300
Margin(%) 10% 11% 10% 10%

Balance Sheet Rs in Crores Cash Flow Statement Rs in Crores

Y/E March CY16 CY17E CY18E CY19E Y/E March CY16 CY17E CY18E CY19E
Share Capital 96 96 96 96 PBT 1,409 1,798 1,843 2,144
Reserves 2,917 3,323 3,641 4,010 (inc)/Dec in Working Capital (29) 90 66 72
Networth 3,014 3,420 3,737 4,107 Non Cash Op Exp 354 356 354 353
Debt 33 33 33 33 Interest Paid (+) 4 4 4 4
Other Non Current Liab - - - - Tax Paid (519) (629) (645) (750)
Total Capital Employed 3,047 3,453 3,770 4,140 others - - - -
Net Fixed Assets (incl CWIP) 2,918 2,904 2,892 2,881 CF from Op. Activities 1,157 1,543 1,567 1,762
Non Current Investments 474 607 757 907 (inc)/Dec in FA & CWIP (143) (342) (342) (342)
Other Non Current Assets 135 135 135 135 Free Cashflow 1,014 1,201 1,225 1,420
Non Current Assets 3,527 3,646 3,784 3,924 (Pur)/Sale of Investment (424) (433) (450) (450)
Inventory 943 1,109 1,231 1,365 others (19) - - -
Debtors 98 115 128 142 CF from Inv. Activities (586) (775) (792) (792)
Cash & Bank 880 1,207 1,401 1,654 inc/(dec) in NW - - - -
Other Current Assets 26 30 34 37 inc/(dec) in Debt (0) - - -
Current Assets 3,279 4,103 4,743 5,456 Interest Paid (4) (4) (4) (4)
Creditors 799 940 1,043 1,157 Dividend Paid (inc tax) (677) (758) (780) (923)
Provisions 321 377 419 464 others 430 250 250 250
Other Current Liabilities 513 603 669 742 CF from Fin. Activities (235) (513) (534) (678)
Curr Liabilities 1,633 1,920 2,131 2,363 Inc(Dec) in Cash 336 255 240 292
Net Current Assets 1,646 2,183 2,612 3,092 Add: Opening Balance 500 880 1,207 1,401
Total Assets 6,806 7,750 8,527 9,379 Closing Balance 835 1,135 1,447 1,693

Please refer to the Disclaimers at the end of this Report

Narnolia Securities Ltd
 INDUSTRY - Pharmaceuticals
BSE Code - 532296
NSE Code - GLENMARK
15-May-17 NIFTY - 9400

Company Data Key Highlights of the Report:

CMP 759 US price regulation imposed by the US government has impacted the US
Target Price 830
base business of the company upto the extent of 18%. We expect this
Previous Target Price 1096 regulation to be continued for next 12-18 months.
Upside 9% Rupee appreciation against dollar has impacted the earnings form the US
52wk Range H/L 994/730 business in Q4FY17.
Mkt Capital (Rs Cr) 21,426 Higher finance cost has impacted the margins due to higher level of debt
Av. Volume (,000) 189 in FY17.

RoE to maintain at 25% in FY17

Company is expected to launch 10 new products and file 3 new ANDA's
but no timeline yet.
30%
Currently, the stock is trading at 4x FY19E P/BV
25% 25%
23% 22%
20% 20%
19%
18% 18%
15% 16%

10% Financials/Valu FY15 FY16 FY17 FY18E FY19E

5% ation
Net Sales 6,630 7,650 9,186 10,019 9,456
0% EBITDA 1,210 1,437 2,037 2,068 1,959
FY12 FY13 FY14 FY15 FY16 FY17 FY18E FY19E
EBIT 950 1,203 1,772 1,842 1,693
Shareholding patterns % PAT 474 743 1,109 1,259 1,178
4QFY17 3QFY17 2QFY17 EPS (Rs) 17 26 39 45 42
Promoters 46.5 46.5 46.5 EPS growth (%) -13% 51% 49% 13% -6%
Public 53.5 53.5 53.5 ROE (%) 16% 20% 25% 22% 18%
Total 100.0 100.0 100.0 ROCE (%) 17% 20% 20% 20% 18%
BV 2,973 3,601 4,464 5,611 6,685
Stock Performance % P/B (X) 7.1 6.2 5.4 4.3 3.6
1Mn 3Mn 1Yr P/E (x) 45.0 30.2 21.7 19.1 20.4
Absolute (14.5) (11.4) (11.4)
Rel.to Nifty (17.2) (31.2) (20.1) RECENT DEVELOPMENT:
Glenmark gets tentative USFDA nod for anti-coagulant drug. IMS Health
sales data for the 12 months to February 2017, the approved product has
125 GLENMARK NIFTY
120 achieved annual sales of around USD 913 million
115 Glenmark has been granted final approval by U.S. FDA for Fenofibrate
110 Capsules (Generic version of Tricor Micronized Capsules).According to
105 IMS Health sales data for the 12 month period ending February 2017, the
100 Tricor Micronized Capsules achieved annual sales of approximately $97.5
95 million.
90
Glenmark Pharmaceuticals receives ANDA approval for Clobetasol
85 Propionate Ointment USP, 0.05%.According to IMS Health sales data for
80
the 12 month period ending January 2017, the Temovate Ointment,
Jul-16

Sep-16

Feb-17
Jan-17
Dec-16
Jun-16

Aug-16
May-16

May-17
Oct-16
Nov-16

Apr-17
Mar-17

0.05% market1 achieved annual sales of approximately $175.3 million*

Glenmark Pharmaceuticals Reports Positive Results from a Phase 3 Trial

of GSP 301, Mometasone/Olopatadine FixedDose Combination Nasal
ADITYA GUPTA
Spray, in Seasonal Allergic Rhinitis
aditya.gupta@narnolia.com
Please refer to the Disclaimers at the end of this Report
Narnolia Securities Ltd
 Quarterly Performance
Financials 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 YoY % QoQ% FY16 FY17 YoY %
Net Sales 2,281 1,969 2,224 2,535 2,457 8% -3% 7,650 9,186 20%
Other Income 11.7 75.9 -1.8 14.6 -51.3 -539% -452% 20 37.365 87%
COGS 744 624 615 599 777 4% 30% 2,303 2,614 14%
Employee Cost 348 372 482 402 385 11% -4% 1,378 1,641 19%
Other Expenses 887 595 678 769 852 -4% 11% 2,532 2,894 14%
EBITDA 302 379 449 765 444 47% -42% 1,437 2,037 42%
Depreciation 58 64 69 63 69 18% 10% 234 264 13%
Interest 48 43 63 62 70 47% 13% 179 237 33%
PBT 208 348 315 655 254 22% -61% 1,044 1,572 51%
Tax 59 121 92 178 (11) -118% -106% 301 383 27%
PAT 149 227 224 477 184 23% -61% 743 1,109 49%

Lower than expceted sales from Zetia drug

India Formulations- Sales for the formulation business in India for Q4FY17 was at Rs. 576 Cr.
(Growth of 6.88% YoY). India business is improved in Cardiac, Respiratory, Anti-diabetic and
Derma segment.
USA Formulations- Sale of finished dosage formulations was Rs. 1000 Cr. for the Q4FY17.
(Growth of 53.45% YoY), but reported a decline in growth of 18% QoQ on account of US pricing
pressure and increased competition. Sales from the newly launched drug Zetia is also impacted
due to price erosion.

Africa, Asia and CIS Region (ROW)- In Q4FY17, revenue from Africa, Asia and CIS region was
Rs. 288 Cr. as against Rs. 298 Cr.(de-growth of 3.06% YoY) due to Russian subsidiary recorded
moderate sales growth.
Europe Formulations- Glenmark Europes operations revenue for Q4FY17 was at Rs.229 Cr. as
compared to Rs. 270 Cr. YoY recording a decrease of 15.06% YoY. The growth was impacted due
to the currency depreciation of the British Pound.
Latin America- Revenue from its Latin American and Caribbean operations was at Rs. 133 Cr. for
the Q4FY17 as compared to Rs. 241 Cr. in the corresponding quarter of FY16(Decrease of 44%
YoY).The Latam region performance continues to be impacted on account of the lower sales from
Venezuela in the fourth quarter of the FY17.

Active Pharmaceutical Ingredients (API)- Revenue from sale of API was Rs. 199 Cr. during the
last quarter, Glenmark filed 3 US DMF, one Canada and one in Europe and has also received an
EIR from the U.S. FDA for its Ankleshwar facility.
Other Income- Company has reported other income of Rs. -51 Cr. in Q4FY17 as compared to Rs.
12 Cr. in the same quarter of FY16. This loss is on account of higher forex losses.
Finance Cost- Glenmark has reported finance cost of Rs. 70 Cr. in the last quarter of FY17 as
compared to the Rs.47 Cr. in the same quarter of FY16. Finance cost has increased on account of
higher debt level. Debt level has increased to Rs. 4724 Cr. in FY17 vs Rs. 3275 Cr in FY16.
Tax- Company has received tax benefit of Rs. 11 Cr. in Q4FY17 which is one-time benefit.
Management has guided that from Q1FY18, company will be in normal tax braket and effective tax
rate would be around 25%.
PAT- Glenmark has reported PAT of Rs. 184 Cr. in the last quarter of FY17 registering growth of
23% YoY and de-growth of 61% QoQ . This decline is on account of lower earnings and margins in
the last quarter of FY17.

Please refer to the Disclaimers at the end of this Report

Narnolia Securities Ltd
 Higher forex loss and R&D expenses impacted margins
Margin % 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 YoY(+/-) QoQ(+/-) FY16 FY17 YoY(+/-)
Gross Margin 67% 68% 72% 76% 68% 0.01 -0.08 70% 72% 0.02
EBITDA Margin 13% 19% 20% 30% 18% 0.05 -0.12 19% 22% 0.03
PAT Margin 6.5% 11.5% 10.1% 18.8% 7.5% 0.01 -0.11 10% 12% 0.02

Gross Margin improved by 100bps YoY but contracted by 799bps QoQ on account of higher
purchases of stock in trade.
EBITDA improved by 500bps YoY but degrew by 1200bps due to foreign currency loss of Rs. 65 Cr in
Q4FY17 and higher R&D expenses.
PAT grew by 23.5%YoY to Rs.184 crore on account of higher revenue which resulted in 100bps
improvement in PAT Margin in 4QFY17.

EBITDA(Cr.) EBITDA margins PAT(Cr.) PAT margins

900 35% 600 19% 20%
30%
800 18%
30% 500
700 16%
22% 21% 21% 25% 14%
600 20% 20% 400 11% 11% 11% 12%
19%
18% 10% 10% 12%
500 16% 20%
16% 300 10%
13% 7%
765

400 7%

477
15% 7% 8%
300 200
6%
10%
449

444
404

379

227
371

224
359

216
200 4%
335

196

184
183
302

100
165
281
266

149
115

5% 1% 2%
11

100
0 0% 0 0%

Concall Highlights:
Price erosion in US base business has reached to 15% in Q4, including Zetia(which has exclusive
rights for 180 days). Management is expecting price erosion to continue for next 10-18 months
Company has received 4 observations for Goa facility for which remediation process is completed and
company has responded to USFDA.
Management is expecting 10-15 launches in FY18,and plans to file 3 ANDAs in Q1FY18.
Revenue guidance of 12-15% in FY18E. And margin guidance of 23% going forward.
Management expects Zetia sales to revamp in Q1FY18, and looks for few meaningful launches in
FY18E.
Generic anti-cholesterol drug Zetia sales to be lower than company's guidance of USD 200 million.
Generic Zetia to be key contributor in Q1 FY18, as two months exclusivity remain.
R&D expenditure to be in the range 11-12 percent in FY18
Glenmark took a write-off Rs 325 crore of its Venezuela business in Q4FY17.
Management expects Goa facility to be inspected in 2017.

Increased competition in US market due to entry of new players.
Targeting to file 20 25 ANDAs and launch ~20 products annually. Leverage expertise in the
dermatology segment 15+ ANDAs pending for approval and 20+ products in development
Management expects EBITDA margins to touch 25 percent over the next 10 years.

Please refer to the Disclaimers at the end of this Report

Narnolia Securities Ltd
 Investment Arguments:
US price regulation- In the last quarter US government has capped price of certain drugs and also
plans to review regulations imposed on the Pharmaceutical sector. US business contributes about
41% of the total revenue. This price regulation is imposed on the existing as well as on the newly
launched drug Zetia. We expect that this regulation will tapper the earnings as well as the margins of
the company going forward.
Currency fluctuations- From the beginning of this year rupee is continuously appreciating against
dollar which puts pressure on the earnings of the company. The US business contributes about 41%
of total revenue which comes in the form of Dollars.
On-going US FDA observations- The Ankleshwar manufacturing facility received 4 observations to
which company has responded to the U.S. FDA and waiting for the re-inspection. The company has
received for 483 on this facility in 21 Feb 2017. This facility is under the US import ban and till the time
this ban is not lifted, this facility cannot export any drug to the US market.

Higher Research & Development- The company has a pipeline of 7 new molecular entities, which
includes 2 new chemical entities and 5 new biological entities, in various stages of clinical
development. This involves higher R&D expense of 12% going forward and we expect this will impact
margin in FY18E.
Debt repayment- In the last quarter management has guided to repay debt on the back of Zetia sales,
but it was unable to repay its debt in FY17. Now debt repayment is the key concern to track for the
company in this current fiscal. Debt/Equity ratio is 1.05 in FY17 and we expect to come down in FY18
based on the management guidance to repay debt.

Geographical contribution in Revenue(%)

FY16 FY17
9% 9%

12% 32% 11%

41%

9% 8%

6%
10%

28% 25%

US INDIA LATAM Europe ROW ( Africa, CIS, Asia) API

View & Valuation

Due to drug price regulation by US government, US business of company is severely impacted in
Q4FY17. Drug price corrected by 15% and it is expected to correct more going forward considering US
government drug price regulation policies. Mgt. has indicated Zetia sales improvement going forward
but we expect that it would not be easy considering current scenario. Management has guided for new
products launch in the US market in FY18E but we need to wait to get clear visibility on it. We expect
ROE to maintain at the level of 22% in FY18E. Currently, the stock is trading at 4x FY19E P/BV.
Considering the near-term un-certainties, we maintain Neutral rating in this stock while revising our
previous target price to Rs. 830

Please refer to the Disclaimers at the end of this Report

Narnolia Securities Ltd
 Financials Snap Shot
Income Statement Rs in Crores Key Ratios
Y/E March FY16 FY17 FY18E FY19E Y/E March FY16 FY17 FY18E FY19E
Revenue from Operation 7,650 9,186 10,019 9,456 ROE 20% 25% 22% 18%
Change (%) 15% 20% 9% -6% ROCE 20% 20% 20% 18%
Other Operating Income - - - - Asset Turnover 0.8 0.8 0.8 0.8
EBITDA 1,437 2,037 2,068 1,959 Debtor Days 119 96 96 96
Change (%) 19% 42% 2% -5% Inventory Days 75 85 85 85
Margin (%) 19% 22% 21% 21% Payable Days 93 76 76 76
Dep & Amortization 234 264 227 266 Interest Coverage 6.72 7.47 9.24 10.78
EBIT 1,203 1,772 1,842 1,693 P/E 30 22 19 20
Interest & other finance cost 179 237 199 157 Price / Book Value 6.2 5.4 4.3 3.6
Other Income 20 37 36 35 EV/EBITDA 16 13 12 13
EBT 1,044 1,572 1,678 1,571 FCF per Share (19) (22) 36 38
Exceptional Item - 81 - - Dividend Yield 0.3% 0.2% 0.2% 0.2%
Tax 301 383 420 393
Minority Int & P/L share of Ass. (0) (0) - - Segment Revenue(%)
Reported PAT 743 1,109 1,259 1,178 Revenue FY16 FY17 FY18E FY19E
Adjusted PAT 743 1,048 1,259 1,178 US 32% 41% 41% 32%
Change (%) 57% 49% 13% -6% INDIA 28% 25% 24% 26%
Margin(%) 10% 12% 13% 12% LATAM 10% 6% 6% 7%
Europe 9% 8% 7% 9%
ROW ( Africa, CIS, Asia) 12% 11% 13% 16%
API 9% 9% 9% 9%
Balance Sheet Rs in Crores Cash Flow Statement Rs in Crores
Y/E March FY16 FY17 FY18E FY19E Y/E March FY16 FY17E FY18E FY19E
Share Capital 28 28 28 28 PBT 1,005 1,572 1,678 1,571
Reserves 3,601 4,464 5,611 6,685 (inc)/Dec in Working Capital 1,431 2,053 2,241 1,955
Networth 3,630 4,493 5,639 6,713 Non Cash Op Exp 269 234 264 227
Debt 3275 4724 3968 3125 Interest Paid (+) 179 237 199 157
Other Non Current Liab 72 30 30 30 Tax Paid (478) (383) (420) (393)
Total Capital Employed 6,904 9,216 9,607 9,838 others (22) - - -
Net Fixed Assets (incl CWIP) 3,079 3,415 3,659 4,109 CF from Op. Activities 345 (43) 1,534 1,756
Non Current Investments 17 16 16 16 (inc)/Dec in FA & CWIP (890) (571) (508) (677)
Other Non Current Assets 42 63 - - Free Cashflow (545) (614) 1,026 1,079
Non Current Assets 4,289 4,889 5,034 5,484 (Pur)/Sale of Investment - 10 - -
Inventory 1,568 2,139 2,333 2,202 others 3 10 - -
Debtors 2,493 2,404 2,622 2,475 CF from Inv. Activities (880) (561) (508) (677)
Cash & Bank 857 1,056 1,016 990 inc/(dec) in NW 935 - - -
Other Current Assets 971 1,074 1,171 1,105 inc/(dec) in Debt 11 1,449 (755) (843)
Current Assets 5,904 6,875 7,344 6,974 Interest Paid 179 237 199 157
Creditors 1,941 1,904 2,076 1,960 Dividend Paid (inc tax) (68) (66) (112) (105)
Provisions 63 77 84 79 others - - - -
Other Current Liabilities 392 469 512 483 CF from Fin. Activities 699 1,145 (1,067) (1,104)
Curr Liabilities 3,212 2,515 2,738 2,588 Inc(Dec) in Cash 163 541 (40) (25)
Net Current Assets 2,692 4,359 4,606 4,386 Add: Opening Balance 764 857 1,056 1,016
Total Assets 10,193 11,764 12,377 12,458 Closing Balance 857 1,398 1,016 991

Please refer to the Disclaimers at the end of this Report

Narnolia Securities Ltd
 INDUSTRY - AUTOMOBILE
BSE Code - 500182
NSE Code - HEROMOTOCO
12-May-17 NIFTY - 9422

Company Data Key Highlights of the Report:

CMP 3463 Rising commodity prices and transition from BS-III to BS-IV restricted the
Target Price 3575 company to expand its profitability and the company reported weakest
Previous Target Price 3800 EBITDA margin in last 8 quarters.
Upside 3% Higher depreciation on Halol plant will lead to further contraction in
52wk Range H/L 3740/2844 profitability as the plants will take at least 6-8 months to ramp up.
Mkt Capital (Rs Cr) 69,171 Hero Motocorp is the market leader in the entry segment motorcyle and
Av. Volume ('000) 22 commands over 50% market share in that segment.The company has lost
4-5 percent market share in FY17 to Honda Motorcycle, which has grown
RoE to drop sharply by 320 bps in FY19 fiercely in the indian two wheeler market.

ROE We expect 320bps deterioration in FY19E RoE. Considering the margin

37% 36% contraction and uncertainty regarding GST we reduce our target from
36% 35%

35% 34% Rs.3800 to Rs.3575 and change our rating from BUY to NEUTRAL.
34%
33% 32%
32% 31%
31%
30%
Financials/Valu FY15 FY16 FY17 FY18E FY19E
29% ation
Net Sales 27,538 28,457 28,585 30,971 33,473
28%
EBITDA 3,497 4,398 4,576 5,206 5,926
EBIT 2,956 3,954 4,074 4,618 5,279
Shareholding patterns % PAT 2,365 3,112 3,546 3,793 4,309
4QFY17 3QFY17 2QFY17 EPS (Rs) 118 156 178 190 216
Promoters 34.6 34.6 34.6 EPS growth (%) 12% 32% 14% 7% 14%
Public 65.4 65.4 65.4 ROE (%) 36% 35% 34% 32% 31%
Total 100.0 100.0 100.0 ROCE (%) 45% 44% 39% 38% 38%
BV 328 442 517 599 692
Stock Performance % P/B (X) 8 7 6 6 5
1Mn 3Mn 1Yr P/E (x) 22 19 19 17 15
Absolute 8.2 7.4 16.9
Rel.to Nifty 6.2 0.3 (2.5) RECENT DEVELOPMENTS:
130
The Halol Plant at Gujarat has started commercial production in 4QFY17.
HEROMOTOCO NIFTY The first phase capacity of Halol plant is 12 lakh units per annum, while
125
120
overall production capacity planned is 18 lakh units. This plant will take
115
care exports also.
110
The company has planned Rs. 2500 crores of capital expenditure to be
105
spent over next two years. This will be towards new product development,
100
phase wise capacity installation & expansion at existing facilities.
95
90 The company expanded its footprint in the international markets by
85 commencing operations in two significant global markets like Argentina
80 and Nigeria.
Jul-16

Sep-16

Feb-17
Jan-17
Dec-16
Jun-16

Aug-16
May-16

May-17
Oct-16

Nov-16

Apr-17
Mar-17

The company has robust pipe line of new products in Scooter and
Premium segment motorcycles. These products will be launched in FY18
& FY19.
NAVEEN KUMAR DUBEY
Naveen.dubey@narnolia.com
Please refer to the Disclaimers at the end of this Report
Narnolia Securities Ltd
 Quarterly Performance
Financials 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 YoY % QoQ% FY16 FY17 YoY %
Total Volumes ('000) 1,721 1,745 1,823 1,473 1,622 -6% 10% 6,631 6,664 0%
Realization(Rs./ bike) 43,644 42,391 42,755 43,202 42,639 -2% -1% 42,912 42,895 0%
Net Sales 7,505 7,399 7,796 6,365 6,915 -8% 9% 28,457 28,585 0%
Other Income 117 120 152 132 118 1% -10% 413 522 26%
COGS 4,964 4,965 5,183 4,128 4,736 -5% 15% 19,308 19,091 -1%
Employee Cost 351 336 357 374 328 -7% -12% 1,339 1,432 7%
Other Expenses 1,001 867 887 783 893 -11% 14% 3,412 3,486 2%
EBITDA 1,189 1,230 1,369 1,080 958 -19% -11% 4,398 4,576 4%
Depreciation 115 115 119 125 135 18% 8% 443 502 13%
Interest 1 2 2 2 1 21% -3% 15 27 87%
PBT 1,190 1,234 1,400 1,085 939 -21% -13% 4,353 4,568 5%
Tax 357 351 396 313 221 -38% -29% 1,275 1,339 5%
PAT 833 883 1,004 772 718 -14% -7% 3,112 3,546 14%

Volume de-growth of 6% YoY, realisations declined by 2% YoY

Hero Motocorp reported 8%YoY decline in the net sales in 4QFY17. Total sales volumes contracted
by 6%YoY and Realization also declined by 2%YoY.
Reduction in the total sales volumes was the after effect of demonetization during the 3QFY17. 2
Wheeler sector was one of the most affected sectors due to currency ban. The company witnessed
slow recovery during January and February months in the rural segment, where Hero has more
than 50% exposure. 2 Wheeler sales increased in March on account of destocking of BS-III
inventory.
Heavy discounts of up to Rs.10000 per vehicle because of higher BS-III inventory resulted in lower
realization for the quarter.
EBITDA declined by 19% YoY to Rs.958 crore in 4QFY17 due to increased commodity prices and
higher other expenses.
Depreciation for the quarter stood at Rs.135 crore, higher 18%YoY because of the production at
Halol Plant has started in 4QFY17.
Profit after tax also declined by 14% YoY to Rs.718 crore during the quarter.

Volume trend Realisation trend

Two wheeler YoY Growth Realisation (Rs./vehicle) YoY Growth

2,000,000 16% 20% 44,000 7%

1,800,000 6%
15% 43,500
6%
4% 5%
1,600,000 9%
1,400,000 6% 10% 3% 4%
1,200,000 3% 43,000 3%
5% 1%
1,000,000 2%
-4% 0% 0% 0%
800,000 -13% 42,500 -2% 1%
1,473,211

-6% -2%
1,645,867

-7%
1,574,861

1,690,354

1,721,240

1,745,389

1,823,498

1,621,805

600,000 -5% 0%
43,414

43,155

43,644

42,391

43,202

42,639
42,259

42,755

400,000 42,000 -1%

200,000 -10% -2%
- -15% 41,500 -3%

Please refer to the Disclaimers at the end of this Report

Narnolia Securities Ltd
 EBITDA Margins at 13.8% weakest in last 8 quarters
Margin % 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 YoY(+/-) QoQ(+/-) FY16 FY17 YoY(+/-)
Gross Margin 34% 33% 34% 35% 32% (0.02) -0.04 32% 33% 0.01
EBITDA Margin 16% 17% 18% 17% 14% (0.02) -0.03 15% 16% 0.01
PAT Margin 11% 12% 13% 12% 10% (0.01) -0.02 11% 12% 0.01

Gross Margin contracted by 230 bps YoY to 32% due to higher commodity prices. Transition from BS-
III to BS-IV has also put the margins under pressure. Full impact of increased commodity prices have
not yet factored in 4QFY17 results and thus margins will also be under pressure in 1QFY18.
EBITDA Margin declined by 200 bps YoY to 13.8% in 4QFY17 impacted by higher other expenses.
Lower tax expenses during the quarter supported PAT and restricted the further decline in the PAT
Margins.

EBITDA and EBITDA Margin trend PAT and PAT Margin trend

EBITDA (Rs. Crore) EBITDA Margin PAT (Rs. Crore) PAT Margin

1,200 13% 14%

1,600 18% 17%
20% 12% 12%
17% 11% 11% 11%
16% 16% 18% 11% 12%
1,400 15% 16% 1,000 10%
14% 16%
1,200 10%
14% 800
1,000 12% 8%
800 10% 600
6%
600 8% 400
6% 4%
400

1,004
4%
1,048

1,083

1,131

1,189

1,080
1,230

1,369

200
750

772

793

833

883

772

718
2%
958

200 2%
- 0% - 0%

Concall Highlights:
High single digit growth for industry in FY18.
Double digit growth for Hero in FY18.
EBITDA Margin would be in the range of 14-15%.
There will be cost pressure in 1QFY18 also.
Advertising & Promotion expenses will be 2.5% of sales in FY18.
Depreciation will be high because of commencement of production in Halol Plant.
Scooter segment growth will be higher than industry.
Rural market is expected to post good growth backed by good monsoon and marriage season.
Capex guidance of Rs.2500 crore to be spent on R&D (new product development) and Andhra plant.
Inventory level stood at 5-6 weeks.
The tax benefit for plants in Rajasthan and Gujarat will last for 7 years; and the benefit is restricted to
the extent of investment
Management expects benefit from LEAP program to be around 50-60 bps and additional 25-30 bps
from other initiatives.
Export market outlook remain sluggisg for next couple of months.
The management is also focusing on developing electric vehicles considering the government focus
towards Mission Electric by 2020.

Please refer to the Disclaimers at the end of this Report

Narnolia Securities Ltd
 Investment Arguments:
Margins to remain under pressure- The management has explained that the company has not yet fully
factored the increased RM cost. Hero Motocorp took the price hike in the range of Rs.500-2000 which was
not sufficient to net off the impact of higher commodity prices. So we expect that 1QFY18 will also be under
pressure on margin front.

Higher Depreciation may affect the bottom-line- The commercial production at Halol plant has started in
4QFY17. Considering the demand scenario we expect that it will take at least 6-8 months to ramp up and till
then the company has to incur higher other expenses and depreciation on the plant.
Uncertainty regarding tax regime- GST will come in effect from 1st July 2017 and the tax rates are still not
certain which keeps the auto industry to on its toes. All the auto manufacturers will refrain from keeping
higher inventory with them. The meeting has been scheduled on 19th May to decide the tax rates.

Rural Demand to drive growth- Hero Motocorp has more than 55% exposure in rural segment.
Expectation of good monsoon in the current fiscal may drive the demand going ahead. Marriage season in
the North region will be key growth driver for the company in FY18.
New product launch in the scooter and premium segment- The company has huge capex plan of
Rs.2500 crore over next two years. The launches will be in the fast growing scooter segment and premium
segment motorcycles. Hero Motorcorp has very minimal presence in the premium segment where peers like
Bajaj Auto, TVS Motors and Yamaha has captured more than 80% market share.

Trend in Segment Mix Share of Scooters & 125 cc segment increasing gardually

Economy Executive 100 Executive 125

Motorcycles Scooters
Premium Scooters
100% 90% 89% 88% 88%
84% 86% 86%
90% 84% 120%
80% 100% 9% 10% 15% 16% 12% 13% 12% 12%
70% 2% 2% 2% 2% 2% 1%
80% 11% 12% 3% 1% 13% 11% 13%
60% 10% 11% 13%
50% 60%
40% 61% 58% 54% 52% 53% 51% 52% 51%
40%
30%
16% 16% 14% 14%
20% 10% 11% 13% 12% 20%
17% 18% 18% 20% 20% 21% 23% 23%
10% 0%
0%

View & Valuation

Hero Motocorp is the market leader in the entry segment motorcycle and commands over 50% market
share in that segment. The company has lost 4-5 percent market share in FY17 to Honda Motorcycle,
which has grown fiercely in the Indian two wheeler market. Rising commodity prices and transition
from BS-III to BS-IV restricted the company to expand its profitability. The management has stated that
the margins will be under pressure as the full impact of increased commodity prices has not been
factored yet. Higher depreciation on Halol plant will lead to further contraction in profitability as the
plants will take at least 6-8 months to ramp up. The uncertainty regarding tax structure under GST will
also keep automobile industry outlook hazy. We expect 320bps deterioration in FY19E RoE.
Considering the margin contraction and uncertainty regarding GST we reduce our target from Rs.3800
to Rs.3575 and change our rating from BUY to NEUTRAL.

Please refer to the Disclaimers at the end of this Report

Narnolia Securities Ltd
 Financials Snap Shot
Income Statement Rs in Crores Key Ratios
Y/E March FY16 FY17 FY18E FY19E Y/E March FY16 FY17 FY18E FY19E
Revenue from Operation 28,457 28,585 30,971 33,473 ROE 35% 34% 32% 31%
Change (%) 3% 0% 8% 8% ROCE 44% 39% 38% 38%
Other Operating Income Asset Turnover 2.2 1.9 1.8 1.7
EBITDA 4,398 4,576 5,206 5,926 Debtor Days 16.4 19.8 19.8 19.8
Change (%) 26% 4% 14% 14% Inventory Days 9.8 9.0 9.0 9.0
Margin (%) 15% 16% 17% 18% Payable Days 34.3 41.7 41.7 41.7
Dep & Amortization 443 502 588 647 Interest Coverage 270.7 149.3 171.1 197.8
EBIT 3,954 4,074 4,618 5,279 P/E 18.9 18.6 17.3 15.3
Interest & other finance cost 15 27 27 27 Price / Book Value 6.7 6.4 5.5 4.8
Other Income 413 522 697 825 EV/EBITDA 13.4 14.4 12.7 11.1
EBT 4,353 4,568 5,288 6,078 FCF per Share 5,504 6,095 5,749 6,203
Exceptional Item - (262) - - Dividend Yield 2.4% 2.6% 2.8% 3.1%
Tax 1,275 1,339 1,550 1,823
Minority Int & P/L share of Ass. 34 55 55 55 Assumptions
Reported PAT 3,112 3,546 3,793 4,309 Y/E March FY16 FY17 FY18E FY19E
Adjusted PAT 3,112 3,546 3,793 4,309 Volume ('000) 6,631 6,664 7,174 7,773
Change (%) 32% 14% 7% 14% Volume Growth 0% 0% 8% 8%
Margin(%) 11% 12% 12% 13% Realization(Rs./vehicle) 42,912 42,895 43,169 43,061
Realization Growth 3% 0% 1% 0%
Capex(Rs crore) 1,476 1,432 1,250 1,250

Balance Sheet Rs in Crores Cash Flow Statement Rs in Crores

Y/E March FY16 FY17 FY18E FY19E Y/E March FY16 FY17E FY18E FY19E
Share Capital 40 40 40 40 PBT 4,312 4,568 5,288 6,078
Reserves 8,794 10,276 11,914 13,776 (inc)/Dec in Working Capital 4,508 5,570 6,290 6,806
Networth 8,834 10,316 11,954 13,816 Non Cash Op Exp 447 502 588 647
Debt 230.04 248.0 245.3 242.6 Interest Paid (+) 12 27 27 27
Other Non Current Liab Tax Paid (1,104) (1,339) (1,550) (1,823)
Total Capital Employed 9,064 10,563 12,199 14,058 others (260) - - -
Net Fixed Assets (incl CWIP) 4,437 5,180 5,529 6,013 CF from Op. Activities 3,796 4,850 4,813 5,072
Non Current Investments 1,030 1,522 2,730 2,804 (inc)/Dec in FA & CWIP (1,708) (1,245) (936) (1,131)
Other Non Current Assets 848 658 658 658 Free Cashflow 2,088 3,605 3,876 3,941
Non Current Assets 6,592 7,741 8,966 9,524 (Pur)/Sale of Investment (549) - - -
Inventory 762 709 768 830 others 169 (1,565) (1,813) (1,469)
Debtors 1,282 1,552 1,681 1,817 CF from Inv. Activities (2,286) (2,810) (2,749) (2,600)
Cash & Bank 75 74 75 70 inc/(dec) in NW
Other Current Assets 562 524 568 613 inc/(dec) in Debt 132 18 (3) (3)
Current Assets 6,303 7,571 8,290 9,925 Interest Paid (11) (27) (27) (27)
Creditors 2,675 3,266 3,539 3,825 Dividend Paid (inc tax) (1,682) (2,014) (2,155) (2,448)
Provisions 98 118 114 124 others 133 18 (3) (3)
Other Current Liabilities 506 457 495 535 CF from Fin. Activities (1,561) (2,024) (2,184) (2,477)
Curr Liabilities 3,487 4,137 4,437 4,766 Inc(Dec) in Cash (50) 16 (121) (5)
Net Current Assets 2,816 3,434 3,852 5,160 Add: Opening Balance 155 75 74 75
Total Assets 12,896 15,312 17,255 19,449 Closing Balance 104 74 75 70

Please refer to the Disclaimers at the end of this Report

Narnolia Securities Ltd
 N arnolia Securities Ltd
201 | 2nd Floor | Marble Arch Build ing | 236B-AJC Bose
Road | Kolkata-700 020 , Ph : 033-40501500
em ail: narnolia@narnolia.com ,
w ebsite : w w w .narnolia.com

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