Morning Insight - 00130 29-05-2017

MAY 29, 2017
Economy News Equity

The Employees' Provident Fund Organisation (EPFO) will increase its % Chg
exposure to exchange traded funds (ETF) this financial year to Rs.200 bn. 26 May 17 1 Day 1 Mth 3 Mths
(BL)
Indian Indices
The Reserve Bank is expected to come out by June-July with guidelines to SENSEX Index 31,028 0.9 3.7 7.9
regulate the Indian peer-to-peer (P2P) lending market. The RBI had floated NIFTY Index 9,595 0.9 3.1 8.1
a consultation paper in April 2016 on the Indian P2P lending that has been BANKEX Index 26,495 0.8 4.6 12.8
taking roots in India. (Mint) SPBSITIP Index 10,399 0.3 8.1 0.2
BSETCG INDEX 17,896 1.5 0.2 16.7
The government is close to announcing the next big wave of liberalization
BSEOIL INDEX 14,201 2.1 (1.8) 4.9
in foreign direct investment (FDI) norms. This could include allowing FDI
CNXMcap Index 17,586 1.4 (2.8) 6.7
in multi-brand retail beyond only domestic food products, putting single-
SPBSSIP Index 15,086 1.6 (1.9) 10.2
brand retail FDI on automatic route in entirety and increasing the FDI
limit in print media from 26% to 49%. (BS) World Indices
Dow Jones 21,080 (0.0) 0.7 1.3
Finance Minister has favored disinvestment of the loss-making Air India, Nasdaq 6,210 0.1 2.7 6.6
saying the airlines market share is just around 14 percent whereas the FTSE 7,548 0.4 4.8 3.9
debt burden is Rs 500 bn.(FP) NIKKEI 19,687 (0.6) 2.7 3.1
India's sugar production may see a marginal increase to about 22 mn HANGSENG 25,639 0.0 4.0 7.9
tonnes next season. It belies expectation of a bumper crop, as farmers Value traded (Rs cr)
have not increased the areas while sugarcane sowing has come to an end. 26 May 17 % Chg - Day
(FC)
Cash BSE 3,634 12.5
Corporate News Cash NSE 26,557 (24.4)
Derivatives - -
Reliance Industries Ltd is targeting doubling its market share in fuel
retail in the next two-three years. RIL currently has a 5% share of India's Net inflows (Rs cr)
fuel retail market. (Mint) 25 May 17 % Chg MTD YTD
Mercator has been awarded a contract by the New Mangalore Port Trust FII 789 120.0 9,583 51,594
for maintenance dredging at the New Mangalore Port for a period of Mutual Fund 288 (60.4) 6,725 27,408
three years. The aggregate value of the contract is Rs. 980 mn. The order
FII open interest (Rs cr)
has been won against domestic and international bidders. (BL)
25 May 17 % Chg
Zydus Cadila has received approval from the US health regulator to
FII Index Futures 17,310 (4.9)
market Acamprosate calcium delayed-release tablets used for
FII Index Options 52,850 13.3
maintenance of abstinence from alcohol in the US market. Zydus Cadila
FII Stock Futures 68,214 3.8
has received the final approval from the United States Food and Drug FII Stock Options 2,657 2,616.4
Administration (USFDA) to market Acamprosate calcium delayed-release
tablets, 333 mg. The drug will be produced at the group's formulations Advances / Declines (BSE)
manufacturing facility at Baddi. (FE) 26 May 17 A B T Total % total
The Mumbai Metropolitan Regional Development Authority (MMRDA) Advances 237 830 94 430 25
selected Larsen and Tubro to develop a Rs 13.29 bn water supply scheme Declines 60 266 50 1135 65
in the megapolis. (ET) Unchanged 2 19 15 170 10
1735 100
Indian Hotels Co has approved the amalgamation of Tifco Holdings, a
wholly owned subsidiary of the Company, with the Company, by way of a Commodity % Chg
scheme of amalgamation. (BS)
26 May 17 1 Day 1 Mth 3 Mths
Bank of Baroda plans to raise Rs. 90 bn through various instruments,
including follow-on public offer (FPO), to fund growth during this fiscal. Crude (US$/BBL) 49.7 (0.2) 0.8 (7.9)
Gold (US$/OZ) 1,267.3 0.9 0.0 0.9
(BL)
Silver (US$/OZ) 17.3 0.7 0.5 (5.7)
Jindal Steel and Power Limited (JSPL), India's leading steel and power
major has commissioned its 6 MTPA Integrated Steel Plant at Angul. (ET) Debt / forex market
26 May 17 1 Day 1 Mth 3 Mths
10 yr G-Sec yield % 6.7 6.7 7.0 6.9

Re/US$ 64.4 64.6 64.1 66.7
Sensex
Source: ET = Economic Times, BS = Business Standard, FE = Financial Express,

BL = Business Line, ToI: Times of India, BSE = Bombay Stock Exchange
MORNING INSIGHT May 29, 2017
RESULT UPDATE CG POWER AND INDUSTRIAL SOLUTION LTD (CG)

Ruchir Khare
ruchir.khare@kotak.com
+91 22 6218 6431 PRICE: RS. 94 RECOMMENDATION: SELL
TARGET PRICE: RS.84 P/E FY19X: 18.9X
CG Power and Industrial Solution Ltd (CG) (formerly Crompton Greaves
Ltd) reported Q4FY17 result below our estimates due to severe margin
contraction in industrial division. CG has taken adequate pricing measure
to restore profitability going ahead.
CG has received an offer for acquisition of the company's US business
(comprised in its subsidiary, CG Power systems USA Inc). The proposed
divestment is a part of company's strategy of debt reduction and focusing
on its core operations and core market in India.
We roll forward our target price on FY19; ascribe a PER of 17x (20x FY18
earlier) and arrive at a target price of Rs 84 (Rs 76.5 earlier) on company's
stock. In view of downside to our target price (stock price appreciated
32% since our previous update post Q3FY17 result), we move
Consolidated Summary table recommendation to 'SELL' from 'ACCUMULATE' earlier. We however note
(Rs mn) FY17 FY18E FY19E that the stock movement would track successful divestment of
Sales 61197 57737 64930
international business (including US power business) in near/medium
Growth (%) 9.4 (5.7) 12.5 term.
EBITDA 4702 4658 5844
EBITDA margin (%) 7.7 8.1 9.0
PBT 2009 2866 4230 Consolidated Rs mn Q4FY17 Q4FY16 YoY% Q3FY17 QoQ%
Net profit 1115 2149 3173
EPS (Rs) 1.7 3.3 4.9 Net Sales 17101 18507 (7.6) 14280 19.8
Growth (%) (50.1) 92.7 47.6 RM costs 10300 12320 (16.4) 8836 16.6
CEPS (Rs) 4.1 5.7 7.1
Purchase of traded goods 1187 407 192.0 269 341.3
BV (Rs/share) 72.9 75.8 80.2
Dividend/share (Rs) 0.4 0.5 0.5 Staff costs 1258 1479 (14.9) 1317 (4.5)
ROE (%) 2.4 4.5 6.3 Other costs 3174 2753 15.3 2627 20.8
ROCE (%) 4.3 4.8 6.3
Total Expenditure 15919 16958 (6.1) 13049 22.0
Net cash (debt) (8974) (2286) 1507
NW Capital (Days) 94.8 94.9 95.8 EBITDA 1182 1549 (23.7) 1231 (4.0)
EV/Sales (x) 1.1 1.1 1.0 Interest 625 290 115.8 511 22.4
EV/EBITDA (x) 13.7 13.8 11.0 Other Income 232 335 (30.7) 62 277.3
P/E (x) 53.7 27.9 18.9
PBDT 789 1594 (50.5) 782 0.9
P/Cash Earnings 22.9 16.4 13.2
P/BV (x) 1.3 1.2 1.2 Depreciation 438 451 (3.0) 341 28.4
Exceptional Item -693 397 -34
Source: Company, Kotak Securities - Pri-
vate Client Research PBT (342) 1143 (129.9) 441 (177.6)
Tax (31) 83 (137.4) (80) (61.4)
PAT (311) 1060 521 (159.7)
Minority interest 0.0 0 0
Share of associates (6.3) (4) (3)
adj PAT (continued operations) 376 1056 518
Loss from discontinued operations (4173) (497) (735)
adj. EPS (continued business) 0.6 1.6 0.8
EPS (includind discontinued operation) (7.0) (0.1) (0.4)
RM costs to sale (%) 67.2 68.8 63.8
staff costs (%) 7.4 8.0 9.2
other costs (%) 18.6 14.9 18.4
EBITDA (%) 6.9 8.4 8.6
Source: Company, Kotak-PCG Research
Standalone Rs mn Q4FY17 Q4FY16 YoY% Q3FY17 QoQ%
Kotak Securities - Private Client Research Please see the Disclosure/Disclaimer on the last page For Private Circulation 2
Net Sales 12845 12053 6.6 11601 10.7

RM costs 7677 7467 2.8 7474 2.7
Purchase of traded goods 1074 447 140.4 269 299.3
Employee costs 857 944 (9.3) 881 (2.7)
Other costs 2423 2411 0.5 2216 9.4
Total Expenditure 12031 11269 6.8 10840 11.0
PBIDT 814 784 3.8 762 6.8
Interest 558.2 191 192.3 471
Other Income 350 710 (50.7) 585
PBDT 606 1303 (53.5) 876 (30.8)
Depreciation 217 214 1.7 236 (7.7)
Exceptional Item -579 -14260 -34
PBT -191 -13171 606 (131.4)
Tax -101 58 -112
Reported Profit After Tax -89 -13229 718 (112.5)
adj. PAT 489 1031 (52.5) 752 (35.0)
adj. EPS 0.8 1.6 (52.5) 1.2 (35.0)
RM costs to sale (%) 68.1 65.7 66.7
EBITDA (%) 6.3 6.5 6.6
Total tax rate (%) 53.0 -0.4 -18.5
Q4FY17 Result Highlights

Standalone revenues stood at Rs 12.8 Bn reported 6% YY growth driven by in-
dustrial segment. Standalone Power system division revenue remained muted YY
reported at Rs 7 Bn in Q4FY17. EBIT margin for the segment stood at 7.7% in
the quarter. Management highlighted that the company has strategized to bid
for only high margin orders and expect margins to rise further going ahead. Our
interaction with the industry indicates that volumes/prices have stabilized in
power systems.
Standalone Industrial systems division reported revenues at Rs 5.8 Bn
(+16.9%YoY). EBIT margins contracted to 6.4% in the quarter against 11.2% in
Q4FY16. Management highlighted that the margin contraction in explained by
increase in input prices. Company has taken adequate price hikes to offset the
impact of commodity prices and believes that margins would stabilized going
ahead. Management has reiterated positive outlook for the industrial division
going ahead, on back of pickup in demand from sectors like railways.
Standalone Segment revenue Rs Bn Q4FY17 Q4FY16 YoY% Q3FY17 QoQ%
Power 7042 7088 -0.7 6363 10.7

Industrial 5807 4968 16.9 5238 10.9
Segment PBIT Rs mn
Power 544 495 9.9 641 (15.2)
Industrial 369 557 -33.8 543 na
Segment PBIT%
Power 7.7 7.0 10.1
Industrial 6.4 11.2 10.4
Consolidated revenues, reported at Rs 17.1 Bn (de-grew 7.6% YoY). Industrial

division grew 11.6% YoY reported at Rs 6.4 Bn. Power systems division reported
revenue de-grew by 16.7% YY, reported at Rs 10.5 Bn in Q4FY17.
Consolidated Segment revenue Rs bn Q4FY17 Q4FY16 YoY% Q3FY17 QoQ%
Power 10578 12702 -16.7 8461 25.0

Industrial 6462 5790 11.6 5787 11.7
Segment PBIT Rs mn
Power 908 1214 -25.2 1096 (17.2)
Industrial 288 433 -33.4 430 (32.9)
Segment PBIT%
Power 8.6 9.6 13.0
Industrial 4.5 7.5 7.4
Increased debt in the standalone business (debt taken to retire overseas debt in
FY17) led to higher interest charge at Rs 558 mn vis--vis Rs 191 mn in Q4FY16.
CG has been accumulating debt at standalone level to fund losses in overseas
subsidiaries. This has led to PAT growth lower than the EBITDA growth of the
company. In FY17, CG sales grew by 12.7% YY with 32% YY EBITDA growth due
to margin expansion (low commodity cycle also aided to CG profitability). PBT,
however declined 18% due to sharp increase in debt.
Impairment of sizable amount of loans and advances and equity earlier has led
to write-offs which qualify for tax set-offs. This resulted in tax expense that
came down sharply in the standalone entity (reported negative figure).
Other Highlights
CG has been trying to divest its stake individually in various geographies.
Crompton has been exploring options for divesting units in Ireland, Belgium,
Hungary and Indonesia individually.
CG has received an offer for acquisition of the company's US business
(comprised in its subsidiary, CG Power systems USA Inc). The proposed di-
vestment is a part of company's strategy of debt reduction and focusing on
its core operations and core market in India.
Management stated that ZIV divestment (deal EV at Euro 120 mn) is on
track. As of now CG has received Rs 7 Bn as proceeds from the sale of ZIV.
Most of the low margins power systems orders in domestic business are
over. Management highlighted that the company would focus only on high
value added orders with better margin profile. Management believes that
operating margins should improve from Q1FY18 onwards.
Valuation & Recommendation
We roll forward out target price on FY19; ascribe a PER of 17x (20x FY18 earlier)
and arrive at a target price of Rs 84 (Rs 76.5 earlier) on company's stock. In view
of downside to our target price (stock price appreciated 32% since our previous
We recommend SELL on CG
Power and Industrial Solution Ltd
update post Q3FY17 result), we move recommendation to 'SELL' from 'ACCU-
with a price target of Rs.84 MULATE' earlier. We however note that the stock movement would track suc-
cessful divestment of international business (including US power business) in
near/medium term.
RESULT UPDATE INDRAPRASTHA GAS (IGL)

Sumit Pokharna
sumit.pokharna@kotak.com
TARGET PRICE: RS.931 FY19E P/E: 17X
IGL's result is lower than our estimates. Despite increase in gas sales
volume and price hikes undertaken in Q4FY17, IGL's PAT has declined 7%
qoq to Rs.1.34 bn (as against our estimate of Rs.1.43 bn) due to significant
increase in other expenses and higher raw material cost. During Q4FY17,
IGL sold 233 mn kg of CNG thereby registering a growth of 13% yoy and
2% on sequential basis. IGL sold 108 mmscm of PNG in Q4FY17 showing
growth of 26% yoy and 4% qoq. Combined gas sales volume has increased
2% qoq and 16% yoy to 433 mmscm. Blended average realization
increased 4% qoq to Rs.25.6/scm. Sequential increase in realization
reflects that the company has partly passed on the burden of higher RLNG
prices to end consumers. IGL has declared a final dividend of Rs.5/share in
addition to interim dividend of Rs.3.5/share declared earlier. In FY17, IGL
has incurred a capex of Rs. 3.5 bn to expand its network.
We are introducing FY19E earnings. We expect IGL to book CNG gas
Summary table
volume of ~967 mn Kgs and PNG volume of 422 mmscm in FY18E. We
(Rs mn) FY17 FY18E FY19E model CNG gas volume of ~1035 mn Kgs and PNG volume of 449 mmscm in
Sales 42,060 44,512 50,434 FY19E. We expect an EPS of Rs.50.6 & cash EPS of Rs.63.4 for FY18E and an
Growth (%) 3.8 5.8 13.3 EPS of Rs.60.3 & cash EPS of Rs.74.7 for FY19E. Based on our estimates, the
EBIDTA 9,637 10,860 12,963 stock at current market price of Rs.1026 is trading at 9.9x EV/EBIDTA and
EBIDTA margin (%) 22.9 24.4 25.7
17x P/E on FY19E earnings. We believe that stock is expensively valued at
PBT 8,414 9,708 11,751
Net profit 5,438 6,456 7,810
current price and hence we maintain SELL rating on IGL with DCF based
EPS (Rs) 43.3 50.6 60.3 revised price target of Rs.931 (earlier Rs.899).
Growth (%) 45.7 16.8 19.1
Result Table
CEPS (Rs) 55.2 63.4 74.7
BV/Share (Rs.) 215.1 251.3 296.0 In. Rs. Mn Q4FY17 Q4FY16 YoY (%) QoQ (%)
DPS (Rs) 8.5 8.5 9.5
ROE (%) 21.8 21.2 21.6 Net Sales 11,065 9,799 12.9 5.7
ROCE (%) 21.8 21.3 21.6 Add: Closing Stock 0.7 (6.1)
Net Cash/(Debt) 6,086 10,534 15,338
Less: Raw Material 5,536 5,243 5.6 6.8
NW Capital (days) -6.1 -8.5 -9.1
EV/Sales (x) 3.3 3.0 2.5 Less: Excise 1,046 943 10.9 4.1
EV/EBIDTA (x) 14.3 12.3 9.9 Gross Margin 4,484 3,607 24.3 4.6
P/E (x) 23.7 20.3 17.0 Gross Margin (%) 40.5 36.8 3.72 (0.41)
P/BV (x) 4.8 4.1 3.5
P/CEPS (X) 18.6 16.2 13.7
Less: Opex 2,362 1,828 29.2 30.1
Salaries, Wages & Bonus 184 205 (10.5) (29.1)
vate Client Research Other Mfg. Expenses Excl Excise 2,179 1,623 34.2 39.9
EBIDTA 2,122 1,779 19.3 (14.1)
EBIDTA Margin (%) 19.2 18.2 1.0 (4.4)
Add: Other Income 209 66 218.8 37.0
Less: Depreciation 244 177 37.6 (49.1)
EBIT 2,087 1,667 25 (3)
Less: Interest 12 19
PBT 2,075 1,648 25.9 (3.2)
Less: Tax 734 557 31.9 5.5
PAT 1341 1091 22.9 (7.4)
PAT (%) 12.1 11.1 1.0 (1.7)
EPS 9.58 7.79 22.9 (7.4)
Ratio's (%) Q4FY17 Q3FY16 YoY (%) QoQ (%)
RW/Net Sales (Excise) 50.0 53.5 (3.5) 0.6
Staff Cost 1.7 2.1 (0.4) (0.8)
Other Mfg Expenses Excl Excise 19.7 16.6 3.1 4.8
Cash EPS (Rs/share) 11.3 9.1 24.9 (17.8)
Other Income/Net Sales 10.1 4.0 6.1 3.0
Tax rate 35.4 33.8 1.6 2.9
Source: Company,
Key risks remain in terms of:

1). Cost and time run in project execution
2). Any major regulation by PNGRB on marketing margin
3). Weaker CNG demand growth as competition from falling diesel prices will
impact sales volume.
Result Analysis
Net Revenue: Net revenue for Q4FY17 stands at Rs. 11.1 bn, up 6% se-
quentially and 13% yoy basis. Combined gas sales volume has increased
2% qoq and 16% yoy to 433 mmscm. Blended average realization has
fallen by 3% yoy but increased 4% qoq to Rs.25.6/scm. Sequential increase
in realization reflects that the company has partly passed on the burden of
higher RLNG prices to end consumers.
Sales Volume: During Q4FY17, IGL sold 233 mn kg of CNG thereby regis-
tering a growth of 12% yoy and 1% (base effect) on sequential basis. IGL
sold 108 mmscm of PNG in Q4FY17 showing growth of 26% yoy and 4%
qoq.
Segment wise revenue analysis: In Q4FY17, CNG segment registered rev-
enue of Rs.8.4 bn, 4% qoq and 10% qoq supported by both volume and
realization growth. Similarly, PNG segment has registered revenue of Rs.
2.57 bn resulting in a revenue growth of 10% qoq and 22% yoy supported
by higher realization and higher volume growth.
Raw Material Cost: The raw material cost has increased 7% qoq to Rs.5.5
bn (6% yoy) mainly on account of rise in RLNG prices. The raw material cost
as a percentage of revenue is up 60 bps qoq to 50% (-350 bps yoy). In order
to meet the rising domestic demand of natural gas, IGL not only sources
KG-D6 gas and Administered price mechanism (APM) gas but also sources
higher priced long-term RLNG as well as spot RLNG. We would like to high-
light here that the price of gas supplied by RIL and ONGC is fixed by govern-
ment in US dollar terms. Hence any rupee depreciation increases the cost
for IGL and vice-a-versa.
Employee expenses: The staff cost (as a percentage of sales) has de-
creased 80 bps qoq basis and 40 bps qoq basis. In absolute terms, employee
cost has decreased 29% qoq and 11% sequentially to Rs.184 mn. We be-
lieve staff cost is within acceptable range.
Other expenses: Other expense has increased significantly by 40% qoq
(partly base effect) and 34% yoy to Rs.2.2 bn. Meaningful increase in other
expenses is mainly on account:
a) Increase in lease charges payable to land owning agencies
b) Impact due to increase in minimum wages by Delhi government w.e.f 5th
March'17
c) Increase in repairs and maintenance other related cost in view of increase
in infrastructure.
Operating profit: In absolute terms, EBIDTA stands at Rs.2.1 bn down 14%
qoq but up 19% yoy. Sequential decline in operating profit is mainly due to
higher other expenses. Another important factor to monitor is EBIDTA per
unit of sales. The same has decreased 16% qoq to Rs.4.9/scm (+3% yoy).
Operating Margins: In Q4FY17, the EBIDTA margin stood at 19.2%, which
is down 440 bps qoq and 100 bps yoy due to meaningful increase in lease
charges, wages and repairs and maintenance.
Other income of the company has increased significantly by 37% qoq
(partly base effect) and 219% yoy to Rs.209 mn. Other income consists of
interest income and tax-free dividend.
Non-cash charges: The depreciation cost has decreased 49% qoq but up
38% yoy to Rs.244 mn. In FY17, IGL has incurred a capex of Rs.3.5 bn for
expansion.
PBT for Q4FY17 is at Rs.2.1 bn down 3% qoq but up 26% on a sequential

basis mainly on account of lower operating profit. The decline in PBT is
partly restricted by higher other income and lower depreciation cost.
Bottom line for Q4FY17 is at Rs.1.3 bn down 7% qoq but up 23% yoy
thereby translating into Q4FY17 EPS of Rs.9.58 and CEPS of Rs.10.1.
We recommend SELL on
Indraprastha Gas with a price We are introducing FY19E earnings. We expect IGL to book CNG gas volume of
target of Rs.931 ~967 mn Kgs and PNG volume of 422 mmscm in FY18E. We model CNG gas
volume of ~1035 mn Kgs and PNG volume of 449 mmscm in FY19E. We expect
an EPS of Rs.50.6 & cash EPS of Rs.63.4 for FY18E and an EPS of Rs.60.3 & cash
EPS of Rs.74.7 for FY19E. Based on our estimates, the stock at current market
price of Rs.1026 is trading at 9.9x EV/EBIDTA and 17x P/E on FY19E earnings. We
believe that stock is expensively valued at current price and hence we maintain
SELL rating on IGL with DCF based revised price target of Rs.931 (earlier Rs.899).
RESULT UPDATE MAHANAGAR GAS LTD (MGL)

Sumit Pokharna
sumit.pokharna@kotak.com
TARGET PRICE: RS.827 FY19E P/E: 20.9X
MGL's Q4FY17 result is marginally lower than our expectation. PAT has
increased 18% yoy but flat sequentially to Rs.995 mn (vs. our expectation
of Rs.1015 mn). Sequential decline in profit is mainly on account of higher
raw material cost (rise in LNG prices), and higher operating cost. Gross
profit has marginally increased 1.3% qoq to Rs.2.65 bn (+16% yoy)
benefiting from higher realization. Another important factor to monitor is
EBIDTA per unit of sales. The same has decreased 2.6% qoq to Rs.6.91/scm.
In Q4FY17, MGL has declared a final dividend of Rs.11/share in addition to
an interim dividend of Rs.8/share declared earlier.
We expect MGL to book CNG gas volume of ~1.98 mmscmd and PNG
volume of 0.91 mmscmd in FY18E. Similarly, we model CNG gas volume of
~2.05 mmscmd and PNG volume of 0.99 mmscmd in FY19E. We have
introduced FY19E earnings. We expect an EPS of Rs.42.5 (earlier Rs.43.8) &
cash EPS of Rs.55.6 for FY18E and an EPS of Rs.45.8 & cash EPS of Rs.60 for
Summary table
FY19E. Based on our estimates, the stock at current market price of Rs.956
(Rs mn) 2017 2018E 2019E is trading at 11.1x EV/EBIDTA and 20.9x P/E on FY19E earnings. We
Sales 20,198 22,167 24,617 maintain SELL on MGL with a DCF based price target of Rs. 827
Growth (%) (2.2) 9.7 11.1 (unchanged).
EBITDA 6,441 6,703 7,125
Result Table
EBITDA margin (%) 31.9 30.2 28.9
PBT 6,006 6,357 6,859 In. Rs. Mn Q4FY17 Q4FY16 YoY (%) QoQ (%)
Net profit 3,934 4,196 4,528
EPS (Rs) 39.8 42.5 45.8 Sales 5,764 5,614 2.7 4.0
Growth (%) 15.3 6.7 7.9 Add: Closing Stock (0.1) (0.4)
CEPS (Rs) 51.3 55.6 60.0 Less: Excise duty 511 512 (0) 2
BV (Rs/share) 186 206 228
DPS (Rs) 19.0 19.0 20.0
Less: Raw Material 2,608 2,821 (8) 7
ROE (%) 23.4 21.7 21.1 Gross Margin 2,646 2,281 16.0 1.3
ROCE (%) 23.4 21.7 21.2 Gross Margin (%) 11.21 9.69 15.7 1.0
Net cash (debt) 1,454 4,636 6,545
Less: Opex 1,014 934 8.6 7.7
NW Capital (Days) (5.5) (6.2) (6.8)
EV/Sales (x) 4.2 3.6 3.2 Salaries, Wages & Bonus 160 157 2.0 11.9
EV/EBITDA (x) 13.0 12.1 11.1 Other Mfg. Expenses 854 777 9.9 7.0
P/E (x) 24.0 22.5 20.9
EBIDTA 1,631 1,347 21.1 (2.4)
P/Cash Earnings (x) 18.7 17.2 15.9
P/BV (x) 5.1 4.6 4.2 EBIDTA Margin (%) 28.3 24.0 4.3 1.9
Add: Other Income 130 145 (10.9) 4.4
vate Client Research Less: Depreciation 257 210 22.1 3.8
EBIT 1,504 1,282 17.3 (2.9)
Less: Interest (1) 5
PBT 1,505 1,277 17.8 (2.5)
Less: Tax 510 433 17.8 (7.9)
PAT 995 844 17.9 0.5
PAT (%) 17.3 15.0 2.2 (0.6)
EPS 10.1 8.5 17.9 0.5
Source: Company,
Key Risk and Concerns:

In CNG - majority of outlets are owned and operated by OMC's in which
company shares Rs.2.74/kg margins to OMC's
Any meaningful slowdown in CNG conversion can impact the earnings
In PNG - cheaper availability of alternative fuels in industrial/commercial
segment can affect the margin and volume growth.
Result Analysis
Revenue: Revenue for Q4FY17 stands at Rs. 5.76 bn, up 4% sequentially
and 2.7% yoy basis, reflecting marginal increase in gas sales volume and
higher net realization. Combined gas sales volume has decreased by 0.2%
qoq to 235.93 mmscm. Blended average realization has increased 3.8% qoq
to Rs.24.43/scm (+2.5% yoy) mainly due to increase in PNG prices.
Sales Volume: During Q4FY17, MGL sold ~127.74 mn kg of CNG thereby
registering a marginal growth of 0.2% on sequential basis. MGL sold 62.4
mmscm of PNG in Q4FY17 showing growth of 0.4% qoq.
Segment wise revenue analysis: In Q4FY17, CNG segment registered a
revenue of Rs.4.1 bn, up 1.8% qoq and 1.5% yoy due to both higher sales
volume and higher realization. Similarly, PNG segment has registered a rev-
enue of Rs.1.62 bn resulting in a revenue growth of 9.4% qoq and 9.4%
yoy supported by both volume growth (marginal) and significant realization
growth.
Raw Material Cost: The raw material cost has increased 7% qoq but down
8% yoy basis to Rs.2.6 bn. The raw material cost as a percentage of rev-
enue is up 140 bps qoq but down 500 bps yoy to 45.2%. In order to meet
the rising domestic demand of natural gas, MGL not only sources KG-D6
gas and Administered price mechanism (APM) gas but also sources higher
priced long-term RLNG as well as spot RLNG. Decline in RLNG and domestic
gas prices yoy basis led to decline in raw material cost. We would like to
highlight here that the gas supplied by RIL and ONGC is fixed by govern-
ment in US dollar terms. Hence, any rupee depreciation increases the cost
for MGL and vice-a-versa.
Employee expenses: In absolute terms, employee cost has increased
11.9% qoq to Rs.160 mn (+2% yoy). We believe staff cost is within accept-
able range.
Other expenses: Other expenses has increased 7% qoq and 9.9% yoy to
Rs.854 mn presumably due to higher maintenance activity and higher vol-
umes.
Operating profit: In absolute terms, EBIDTA stands at Rs.1.63 bn down
2.4% qoq but up 21.1% yoy mainly due to higher raw material cost, higher
employee cost and higher other expenses. Another important factor to
monitor is EBIDTA per unit of sales. The same has decreased 2.6% qoq
(partly base effect) to Rs.6.91/scm (+20.9% yoy).
Operating Margins: In Q4FY17, the EBIDTA margin stood at 28.3%, which
is down 190 bps qoq but up 430 bps sequentially.
Result Table
Ratio's (%) Q4FY17 Q4FY16 YoY (%) QoQ (%)
RW/Net Sales 45.2 50.2 (5.0) 1.4

Staff Cost 2.8 2.8 (0.02) 0.2
Other Mfg Expenses Excl Excise 14.8 13.8 1.0 0.4
Cash EPS (Rs/share) 12.7 10.7 18.7 1.1
Other Income/PBT 8.6 11.4 (2.8) 0.6
Tax rate 33.9 33.9 (0.0) (2.0)
Source: Company,
Other income of the company has increased 4.4% qoq (partly base effect)
but down 10.9% qoq to Rs.130 mn. Other income consist of interest income
and tax-free dividend.
Non-cash charges: The depreciation cost has gone up 22% yoy basis and
3.8% qoq to Rs.257 mn. Net fixed assets stands at Rs.13 bn as on 31st
March'17 as against Rs.11.6 bn as on 31st March16.
PBT for Q4FY17 is at Rs.1.51 bn up 17.8% yoy but down 2.5% on a sequen-
tial basis mainly on account of lower operating profit and higher deprecia-
tion.
Bottom line for Q4FY17 is at Rs. 995 mn up 17.9% yoy but flat sequentially
thereby translating into Q4FY17 EPS of Rs.10.1 and CEPS of Rs.12.7.

We expect MGL to book CNG gas volume of ~1.98 mmscmd and PNG volume of
0.91 mmscmd in FY18E. Similarly, we model CNG gas volume of ~2.05 mmscmd
and PNG volume of 0.99 mmscmd in FY19E. We have introduced FY19E earn-
ings. We expect an EPS of Rs.42.5 (earlier Rs.43.8) & cash EPS of Rs.55.6 for
We recommend SELL on FY18E and an EPS of Rs.45.8 & cash EPS of Rs.60 for FY19E. Based on our esti-
Mahanagar Gas Ltd with a price mates, the stock at current market price of Rs.956 is trading at 11.1x EV/EBIDTA
target of Rs.827 and 20.9x P/E on FY19E earnings. We maintain SELL on MGL with a DCF based
price target of Rs. 827 (unchanged). Key concerns are from GST, lower volume
growth and competition from alternative products.
RESULT UPDATE MPHASIS LTD

Nipun Gupta
nipun.gupta@kotak.com
TARGET PRICE: RS.544 FY19E P/E: 12.1X
Mphasis' 4QFY17 revenues came marginally below our estimates as both
HP and Direct business disappointed. HP Business declined by 1.4%
sequentially. Within Direct International, Direct core (76% of DI) declined
by 0.4% sequentially. The company is on the right path of focusing on
next gen deal win. Order wins in 4Q totaled $90mn. While the Direct Core
business may achieve industry leading growth by tapping Blackstone
portfolio, this is likely to happen only from H2FY18. On the other hand,
Digital Risk is expected to de-grow slightly or remain flat, due to
continued headwinds in the US market. HP business should also remain
stable or grow slightly in the near term. Consequently, overall revenue
growth may remain muted, at least in FY18. Margins improved
sequentially due restructuring of Direct core and cost optimization
efforts. Management maintained its margin guidance at current levels as
additional investments would be required to explore opportunities within
Summary table Blackstone portfolio companies. We build in flat margins for FY18E with
(Rs mn) 2017 2018E 2019E slight improvement in FY19E. We maintain SELL with TP of Rs.544 (Rs.524
Sales 60,763 63,905 69,436 earlier), and would wait for better overall growth rates before turning
Sales in USD 894 952 1,028 positive. Our FY18 and FY19 earnings stand at Rs.44.4 (Rs.40.8 earlier) and
Growth in USD(%) 6.5% 8.0% Rs.48.4 per share, respectively.
Growth (%) -0.2 5.2 8.7
HP de-grows, Digital Risk to remain muted
EBITDA 9,680 10,194 11,233
EBITDA margin (%) 15.9 16.0 16.2 Mphasis reported sequential de growth of about 3% to Rs.14732mn (excl
PBT 11,275 11,743 12,790 hedging gain). HP revenues de-grew by 1.4% sequentially after reporting
Net profit 8,121 8,572 9,336
EPS (Rs) 38.6 44.4 48.4
growth of 0.6% in previous quarter. Digital Risk continued to de-grow (10%
Growth (%) 21.2 15.1 8.9 fall QoQ).
CEPS (Rs) 41.4 47.3 51.2
Management expects Digital Risk to remain muted for FY18 too and this
B/V(Rs/share) 291.5 284.3 312.1
Dividend per share (Rs) 20.0 20.0 20.0
should be a drag on overall revenue growth.
ROE (%) 13.5 14.8 16.2 We believe that, the Direct Core business should do well with new deal
ROCE (%) 17.8 19.3 21.3
wins in the Next Gen focused areas and with increased penetration in
Net cash (debt) 26,244 21,713 25,273
nwc (Days) 73.7 73.2 74.0 Blackstone's portfolio companies.
P/E (x) 15.1 13.1 12.1
P/BV (x) 2.0 2.1 1.9
We also expect Mphasis to gain significantly from the recent collaboration
EV/Sales (x) 1.4 1.4 1.3 with DXC Technology. The collaboration is towards building strong portfolio
EV/EBITDA (x) 8.9 8.9 7.8 in next gen IT services which includes cloud, digital innovation. Both compa-
nies would work together to help clients accelerate the modernization of
vate Client Research their applications as they move to cloud.
Management expects the revenue trajectory from HP Business to continue
in the coming quarters too as there was no one time gain in the current
quarter. As per management there is no further investment required to be
made to maintain the current revenue rate from HP Business.
However, the business is expected to report muted growth for FY18, thus
impacting overall growth rates for the company.
Consolidated Quarterly performance

(Rs.mn) 3QFY17 4QFY17 QoQ (%) 4QFY16 YoY (%)
Turnover 15361 15059 -2.0 15174 -0.8

Expenditure 12973 12675 12829
EBIDTA 2388 2384 -0.2 2345 1.7
Depreciation 131 184 181
EBIT 2257 2200 -2.5 2164 1.7
ESOP/EO expns 0 0 316
Other Income 594 468 395
PBT 2851 2668 -6.4 2243 19.0
Tax 815 733 694
PAT 2036 1935 -5.0 1549 25.0
Shares (mns) 210 193 210
EPS (Rs) 9.7 10.0 7.4
Margin (%)
EBDITA 15.5 15.8 15.5
EBIT 14.7 14.6 14.3
PAT 13.3 12.9 10.2
Source: Company,
Direct Core to remain the growth driver

Direct international has about 75% contribution from Direct Core and about
21% from Digital Risk.
During 4Q, DI business saw dip in revenue which was mainly impacted due
to continued softness in Digital Risk. Mphasis has been focusing on the non-
HP business over the past few quarters and has been indicating additional
spends to garner more business from non-HP channels.
Mphasis now has an opportunity to penetrate into the Blackstone portfolio
of customers. However, we believe that, full benefits of the association will
accrue to Mphasis only from H2 of FY18.
Digital Risk business continues to be impacted to due to rise in interest rate.
The downward trend is expected to continue for few more quarters before
it stabilizes.
Mphasis won new contracts of $90mn v/s $96mn Total Contract Value
(TCV) in 3QFY17.Majority of the wins were predominately in Direct Core.
Key takeaways from Earning Call
Deal win continues to remain robust at USD90mn for Q4FY17. Majority of
the deals in focus areas of Digital, NextGen and GRC Services.
Focus would be on increasing wallet share by looking at Blackstone Portfo-
lio, this would be through extending the client base and expanding the pipe-
line.
Mphasis won one deal during the quarter from Blackstone's portfolio and
has also signed 3 deals there after taking the total number to 4. There are
about 80 companies in Blackstone's portfolio having IT spend of over
USD1.5bn.
Management focus would be on deal closure and growth for FY18.
H2 growth is expected to be better than H1, as first half would go through
a stabilization period.
Mphasis is witnessing fairly strong endorsement from Blackstone due to
which the closure of deals is quicker, though the bidding and competition
scenario remains unchanged.
Company expects growth to be followed by hiring though it won't be linear.
Company maintained margin guidance at current levels.
Future Prospects
We have tweaked our FY18 and FY19 estimates. We have assumed the ru-
pee to be at 66.5 / USD in FY18 and 67.5 / USD in FY19.
On an overall basis, we expect USD revenue to growth by 6.5% in FY18 and
grow by about 8% in FY19.
Consequently, PAT is expected to be at Rs.8.6bn in FY18 and Rs.9.3bn in
FY19. EPS works out to Rs.44.4 in FY18 and Rs.48.4 in FY19.
Valuations
Mphasis has been scaling up its core Direct International business over the
past several quarters. This has led to higher-than-industry growth in this
business.
However, DR revenues are expected to remain muted going forward. HP
business should also grow at a muted pace in FY18 atleast and these will
drag down the overall growth rates of Mphasis.
Demand generating efforts may bring in more business, going ahead. We
will watch out for further progress on these over the next few quarters.
At the CMP, our FY19 estimates are discounted by about 12.1 x, which, we
feel, are adequate, looking at the muted revenue growth.
We maintain SELL with a Target Price of Rs.544.
Risk and Concerns
A delayed recovery in the developed economies may impact our projections.
A sharp acceleration in rupee from the current levels may impact our earnings
estimates for the company.
RESULT UPDATE ITC LTD.

Ritwik Rai
ritwik.rai@kotak.com
+91 22 6218 6426 PRICE: RS. 309 RECOMMENDATION: ACCUMULATE
TARGET PRICE: RS.342 FY19E PE 27.9X
ITC's 4QFY17 earnings missed estimates by 4.5%, as cigarette revenues
came in below estimates, and higher raw material prices, weakness in
rural geographies, and disturbances in wholesale channels affected other
FMCG sales. On the positive side, hotels and paper segments of the
company continue to see improvement in margins. Cigarette volume
growth, although weaker than our estimates, continues to be on a stable
and improving path. We believe that the company shall begin to register
stronger volume growth in cigarettes, as also improving margins in the
years ahead. Our earnings expectations on the stock are fairly robust (15%
CAGR through FY17-FY19E), and we see a case for greater convergence of
valuation of ITC (currenly 29X FY19E PER) towards other (large) FMCG
plays. We value ITC at 31XFY19E PER, or Rs 342. We downgrade ITC a notch
to ACCUMULATE, following recent run-up and reduced upside.
Summary table Results Summary

(Rs mn) 2017 2018E 2019E Rs mn, FY Ends Mar 4QFY17 4QFY16 % chg y/y 3QFY17 % chg q/q
Sales 5,54,485 6,01,283 6,57,945 Revenue from Operations 150088 141388 6.2% 135700 10.6%
Growth (%) 7.5 8.4 9.4
Expenses
EBITDA 145780 166926 185577
EBITDA margin (%) 26.3 27.8 28.2
Raw Material Expenses 46828 35672 31.3% 33766 38.7%
PBT 155030 179583 203357 Excise Duty 38833 43821 -11.4% 43216 -10.1%
Net profit 102009 118525 134216 Employee Expenses 5714 5547 3.0% 5723 -0.2%
EPS (Rs) 8.4 9.8 11.05
Other Expenses 19960 20298 -1.7% 17531 13.9%
Growth (%) 10.3 16.2 13.24
CEPS (Rs) 9.3 10.7 12.0 EBITDA 38754 36051 7.5% 35464 9.3%
Book value (Rs/share) 26.2 30.9 36.2 Margin 25.8% 25.5% 26.1%
DPS (Rs) 4.8 4.8 5
Depreciation and Amortization 2418 2465 -1.9% 2665 -9.3%
ROE (%) 31.5 34.2 36.2
ROCE (%) 25.7 29.0 28.6 EBIT 36336 33586 8.2% 32799 10.8%
Net cash (debt) 95158 138354 198752 Other Operating Income
nwc(Days) 193 207 210
Other Income 4021 3712 8.3% 6879 -41.6%
P/E (x) 36.8 31.7 27.9
P/BV (x) 11.8 10.0 8.5
Interest Expenses -115 123 -193.4% 136 -184.3%
EV/Sales (x) 9.1 8.3 7.6 Profit before Tax 40471 37175 8.9% 39542 2.4%
EV/EBITDA (x) 25.1 21.7 19.5 Tax Expenses 13777 13369 3.1% 13075 5.4%
Source: Company, Kotak Securities - Pri- Profit from Ordinary Act. After Tax 26695 23807 12.1% 26467 0.9%
vate Client Research
Source: Company Reports
ITC's 4QFY17 revenues came in below estimates as cigarette revenues disap-

pointed. Cigarette gross sales grew 5% for the quarter, indicating that volume
growth was flattish. Revenues growth in other segments was also lacklustre; the
company registered 4-6% y/y growth in various segments. Revenues in the quar-
ter continued to be adversely impacted by weakness in wholesale channels and
rural markets. Within the other FMCG products segment, the company reported
relatively stronger growth in branded packaged foods and personal care, offset
by weakness in education and stationery products, and apparel.
Revenues (Rs MN) 4QFY17 4QFY16 % chg y/y 3QFY17 % chg q/q
Cigarettes 89549 85455 4.8% 82880 8.0%

Other FMCG 28858 27108 6.5% 25693 12.3%
Hotels 3865 3630 6.5% 3705 4.3%
Agri Business 19185 18068 6.2% 18719 2.5%
Paper, paperboards and Packaging 13727 13150 4.4% 13358 2.8%
Raw material expenses rose sharply during the quarter, for categories such as
juices, dairy, chocolates, and coffee, affecting margins of the other FMCG seg-
ment. Cigarette margins improved on expected lines. Hotels' registered im-

proved margins on better room rates. Agri-business margins came in below ex-
pectations, while paper and paperboards margins surprised positively.
Segment Profits (Rs mn) 4QFY17 4QFY16 % chg y/y 3QFY17 % chg q/q
Cigarettes 32588 30186 8.0% 30337 7.4%

Other FMCG 556 786 -29.3% -197 -382.6%
Hotels 669 427 56.9% 422 58.8%
Agri Business 1349 1703 -20.8% 2366 -43.0%
Paper, paperboards and Packaging 2402 2030 18.3% 2460 -2.4%
Segment Margins 4QFY17 4QFY16y/y chg. (ppt) 3QFY17q/q chg (ppt)
Cigarettes 36.4% 35.3% 1.1 36.6% -0.2
Other FMCG 1.9% 2.9% -1.0 -0.8% 2.7
Hotels 17.3% 11.7% 5.6 11.4% 5.9
Agri Business 7.0% 9.4% -2.4 12.6% -5.6
Paper, paperboards and Packaging 17.5% 15.4% 2.1 18.4% -0.9
On lower growth in cigarettes, EBITDA/ PAT missed estimates by 3%/4.5%.

Our key takeaways from 4QFY17 results of ITC are: a/ while cigarette growth is
fairly stable and improving, demand has not revived to the extent that we had
expected, b/ along with other FMCG companies, ITC continues to see significant
weakness in rural and in wholesale channels, c/ hotels and paper segments of
the company are witnessing a revival in profit growth.
Outlook and Investment View
Going forward, we expect that ITC shall continue to register stable and improv-
ing growth in cigarette volumes. We expect gross sales growth shall continue to
be in the high single digits in FY18/FY19. Profit growth in cigarettes shall likely
improve going forward, on stronger revenue growth as well as continued expan-
sion in margins. We expect Other FMCG/ Hotels/ Paper and Paperboards to reg-
ister higher margins in FY18 on improved demand on the weak base of demon-
etization.
We note that the government has declared the GST and cess rates for ciga-
rettes; rates shall, following the rise, be neutral/ rise marginally as compared
with prior FY18E (excise plus VAT) rates.
We bake in 8.5%/9.5% y/y growth in the company's gross sales and factor in
190 bps expansion in EBITDA margin for the company, leading to 15% CAGR in
profit growth for the company. In building FY19 estimates, we have assumed a
6% hike in FY19 taxes/ stick.
ITC's profit growth is broadly in line/ modestly lower than other FMCG compa-
nies in our coverage universe. However, ITC's valuation is significantly lower (c.
29X PER FY19E, versus 35-40X for most companies in our coverage universe).
ITC's weaker valuation is a function of percieved risks in tax hikes going for-
ward, as well as relatively lower earnings expectations.
While risks of higher and punitive taxation remains, we think that ITC shall, in
the coming quarters, register stronger earnings growth in a more stable environ-
ment, and the re-rating affected in the stock last week, following GST cess
rates declaration, shall sustain. We believe that the stock shall be able to sustain
We recommend ACCUMULATE valuations of 30-32X FY19E PER (modestly lower than domestic FMCG compa-
on ITC Ltd. with a price target of nies), depending on the ebbs and flows of risk perception about forthcoming
Rs.342 duty hikes.
Given that GST rates have been declared only recently, and that fears regarding
sharply higher taxes have been unfounded, we expect that the ITC stock shall
continue to see a re-rating, towards 31XFY19E PER. We value ITC stock at Rs
342 (up from Rs 310, as we roll-forward our valuation to FY19E), and maintain a
positive stance on ITC. We downgrade the stock to ACCUMULATE (BUY earlier),
given recent run-up in the stock and limited upside
RESULT UPDATE SUN TV NETWORK

Ritwik Rai
ritwik.rai@kotak.com
+91 22 6218 6426 PRICE: RS. 809 RECOMMENDATION: REDUCE PER
TARGET PRICE: RS.844 FY19 PE : 24.0X
Sun TV Network reported modest topline growth, in line with estimates,
while EBIT/ PAT underperformed estimates on higher cost of revenues/
other expenses. Going forward, earnings and outperformance therein is
likely to be dependent on the path of subscription revenues, particularly
from Tamil Nadu. We believe that while benefits from TN cable markets
are likely to be strong, it is unlikely that they shall not be substantially
offset by lower DTH revenues (from TN/ other states, also as a result of
tariff order). We forecast 12.5%/14% CAGR in revenues/ PAT for the
company (FY17-FY19E). Sun TV's recent re-rating helped by a belief that
the investigations/ legal action against the promoter in the Aircel-Maxis
case were over, may see reversal if the case is re-opened. Net-net, we
think that 25X FY19E PER values the stock adequately. We raise our price
target on the stock to Rs 844; on limited upside, we downgrade the stock
to REDUCE.
Summary table
Results Summary
(Rs mn) 2017 2018E 2019E
SA, Rs mn, FY Ends Mar 4QFY17 4QFY16 % chg y/y 3QFY17 % chg q/q
Sales 26,457 29,810 33,418
Growth (%) 3.0 12.7 12.1 Revenues 5825 5650 3.1% 5894 -1.2%
EBITDA 17,698 20,073 22,862
- Advertising and Slot Sales 2920 3130 -6.7%
EBITDA margin (%) 66.9 67.3 68.4
PBT 15,509 17,746 20,319 - Slot Sales
Net profit 10,306 11,636 13,308 -Pay TV(Cable) 710 600 18.3%
EPS (Rs) 26.2 29.5 33.8
- DTH 1710 1560 9.6%
Growth (%) 15.1 12.9 14.4
CEPS (Rs) 36.3 40.4 46.0 -International Revenues 370 360 2.8%
B/v (Rs/share) 76.6 70.1 70.1 -Other 115 56 106.1%
DPS(Rs) 5.0 15.5 15.5 Cost of Revenues 617 461 34.1% 538 14.8%
ROE (%) 31.5 40.3 48.2
ROCE (%) 31.3 39.9 47.7
Employee Expenses 643 631 1.9% 599 7.4%
Net cash (debt) 10,919 9,018 10,315 Other Expenses 628 347 81.1% 361 74.1%
nwc (Days) 137 141 144 Depreciation and Amortization 767 1025 -25.2% 1107 -30.8%
P/E (x) 30.9 27.4 24.0
EBIT 3170 3186 -0.5% 3290 -3.7%
P/BV (x) 10.6 11.5 11.5
EV/Sales (x) 11.6 10.3 9.2 EBIT Margin 54.4% 56.4% 55.8%
EV/EBITDA (x) 17.3 15.3 13.4 Interest Expenses 2 8 -74.7% 6 -66.7%
Source: Company, Kotak Securities - Pri- Other Income 374 288 29.6% 389 -4.0%
vate Client Research PBT 3541 3466 2.2% 3673 -3.6%
Provision for Tax 1182 1291 -8.5% 1272 -7.0%
Adj. PAT 2359 2175 8.5% 2401 -1.7%
Sun TV Network reported revenues Rs 5.82 Bn, in line with our estimates. For
the quarter, advertising and slot sales declined 7% y/y, as regional markets con-
tinued to witness pressure (likely to a greater extent than natinoal markets), on
account of demonetization. Advertising revenue growth came in below our ex-
pectations. Cable revenues witnessed stronger growth than expected, while
most other revenue lines were broadly in line with expectations.
Cost of programming registered 34% y/y growth, as the company has: a/ relied
more heavily on comissioned programming in non-Tamil markets, b/ comissioned
more expensive programming in order to compete well in several markets. Other
expenses too rose sharply as a result of CSR expenses during the quarter, and
on account of new show launches. The management said explicitly that other
expenses did not have any one-off components.
Depreciation and amortization expenses, which include (to a larger degree) the
expenses in movies telecast during the quarter, registered a sharp decline in the
quarter, as the company is making attempts to shift its focus to fiction/ non-fic-
tion programming from film-based programming. The management believes that
the decline witnessed in FY17 (in the amortization line) is sustainable.
Reported EBIT margin declined by 2 ppt, as advertising revenues were weak and
costs of programming escalated sharply. Reported PAT was flattish; adjusted
PAT registered 8.5% y/y growth (exceptional items in 4QFY16 amounting to Rs
180 mn).
As of now, for the year, the company has paid out dividend of Rs 5/ share. The
management has said that the company continues to evaluate whether paying
out dividend is the best method of returning cash to the shareholders.
On the prospect of digiitization in TN, the management highlighted that while

timing of DAS rollout could not be predicted for certain (may be a delay of a few
months), the company has a high likelihood of realizing far higher revenues from
cable users in Tamil Nadu, whether through Arasu or other MSOs. The company
realises Rs 42/ subscriber from its DTH subscribers and believes it has the con-
tent power to extract Rs 20/ sub/ month in its Tamil markets.
Outlook and Investment View
We believe revenue growth for the company is likely to remain subdued over the
coming few years, despite the regulatory changes underway in Tamil Nadu. We
think that advertising revenue growth for the company is highly dependent on
Tamil markets, where market growth has tended to stall in recent quarters, and
where competition is heating up. Competition in Tamil market is likely to rise
further as "Colors" launches in Tamil in 4QFY18. On subscription revenues, while
it is true that the company has a significant opportunity in cable, we think there
may be substantial risks to the company's DTH revenues from: a/ cannibalization
in cable, and b/ reduction in ARPU resulting from tarriff order of TRAI.
We forecast 12.5% CAGR in revenues and 14% CAGR in the company's EPS for
the period FY17-FY19E.
The rally in Sun TV stock over the past quarter has largely been on account of
the belief that the relief offered to the promoter in the Aircel/ Maxis case shall
not be challenged. There have been media reports in recent weeks that the
same order has been challenged by the CBI/ ED in higher courts. We believe a
re-opening of the case can result in substantial de-rating of the stock.
Net-net, we think that given growth expectations and potential for legal issues
We recommend REDUCE PER on arising against the promoter/ Sun TV Network, the stock would be adequately
Sun TV Network with a price (and perhaps, slightly generously) valued at 25XFY19E PER, or Rs 844 (revised
target of Rs.844 from Rs 770, as we roll-forward to FY19E).
Given limited upside from CMP, and significant risks of de-rating, we downgrade
the stock to REDUCE (ACCUMULATE earlier).
Key upside risks: a/ clean chit provision to the promoter, quick resolution of the
Aircel-Maxis issue, b/ sharp rise in cable revenues from TN before weakness in
DTH, if any, is visible.
RESULT UPDATE BODAL CHEMICALS

Jatin Damania
jatin.damania@kotak.com
PRICE: RS. 158 RECOMMENDATION: BUY
+91 22 6218 6440
TARGET PRICE: RS. 210 FY19PE 9.9X
Bodal Chemicals (BCL) reported a strong set of numbers, with net sales of
Rs2.91 bn (including other operating income) in Q4FY17, up 41.3% YoY
and PAT of Rs321 mn, up 42.3% YoY. The jump in revenue was on account
of higher volume and better realisation. Better realisation and
improvement in operating efficiency helped the company to report 390bps
YoY expansion in EBITDA margin to 18.7% (down 40 bps), the sequential
decline in margin is attributed to the lower Vinyl Sulphone (VS) and H-acid
prices, which is seasonal in nature. Prices of VS declined further from the
level of 4QFY17 of Rs255/kg to Rs225/kg at present. Post Chinese New
Year prices of both the products VS (low of Rs200/kg) and H-acid has
recovered back and we expect the prices to sustain in the near term, this
coupled with integration benefit, makes us believe that, the operating
performance of BCL should remain strong over the next two years. At
Summary table CMP, the stock is trading at attractive valuations of 9.9x FY19E earnings,
(Rs mn) FY17 FY18E FY19E given its integrated business model, diversification into speciality
Sales 12,363 14,492 16,875
chemicals and superior RoE. We maintain our BUY rating, with a target
Growth (%) 35.9 17.2 16.4 price of Rs210.
EBITDA 2,258 2,624 2,991
EBITDA margin (%) 18.3 18.1 17.7 Quarterly Financials
PBT 1,999 2,322 2,677
Y/E Mar (Rs Mn) Q4FY17 Q4FY16 % YoY Q3FY17 % QoQ
Net profit 1,286 1,510 1,740
Adj EPS (Rs) 11.3 13.8 15.9 Net Sales 2,905 2,056 41.3 2,757 5.4
Growth (%) 49.6 17.4 15.3
Expenses
CEPS (Rs) 14.0 16.5 19.2
BV (Rs/share) 31 44 59 Raw Materials 1,879 1,333 1,722
Dividend / share (Rs) 0.8 1.1 1.3 as% to sales 64.7 64.9 62.5
ROE (%) 34.4 31.1 27.1 Employee Costs 87 116 163
ROCE (%) 18.5 19.2 18.3
Net cash (debt) (2,139) (675) (346)
as% to sales 3.0 5.7 5.9
EV/EBITDA (x) 8.2 6.4 5.3 Total Expenditures 2,363 1,751 2,229
EV/Sales (x) 1.5 1.2 0.9 EBITDA 542 305 77.9 528 2.7
P/E (x) 14.0 11.4 9.9
EBITDA Margin 18.7 14.8 19.1
P/CEPS (x) 11.3 9.6 8.2
P/BV (x) 5.0 3.6 2.7 Depreciation 69 71 66
EBIT 473 234 462
vate Client Research Interest 13 24 16
Other Income 42 95 5
Exceptional Items 9 44 40
PBT 511 349 491
Tax 189 123 175
PAT 321 226 42.3 316 1.9
Source: Company
Lower realisation offset volume benefit QoQ: The 5.4% QoQ increase in net
sales is attributed to higher chemical sales volume (includes Dyes, Dye interme-
diates and Basic Chemicals) which grew 23% QoQ. But the benefit of the same,
was offset by a decline in realisation (seasonal in nature) In FY17, a major por-
tion of the revenue growth was contributed by higher realisation, as volume
grew by 8% YoY. Going ahead, we expect realisation to sustain in the near term
and volume will be the key earnings driver.
Volume to be key earnings driver: With the Dyestuff expansion, commission-
ing of LABSA and liquid dyestuff is on track, we expect volume growth trajectory
to continue for the next two years and with increasing dyestuff manufacturing
Kotak Securities Limited has two independent equity research groups: Institutional Equities and Private Client Group. This report has
been prepared by the Private Client Group. The views and opinions expressed in this document may or may not match or may be contrary
with the views, estimates, rating, target price of the Institutional Equities Research Group of Kotak Securities Limited.
capacities, the captive consumption of intermediates should increase to the level

of over 75% from 45% currently (over the next 2-3 years). Higher capacity
utilisation of H-acid and commissioning of VS plant at SPS should also support
the revenue growth in FY18.
We recommend BUY on Bodal Trion Chemicals - approval received: In addition to the increase in volume in
Chemicals with a price target of chemicals business, the growth in revenue should also be supported by contribu-
Rs.210 tions from Trion Chemicals, as the company has already received an approval
from end customers from the U.S market. The company stated exporting chemi-
cals in U.S during 1QFY18 and management expects the Trion Chemicals to
break even by end of 1HFY18 and shall start contributing to profit from 2HFY18
onwards.
Maintain Buy: With the recent capacity expansions in dyestuff, JV with Trion
and the introduction of LABSA & liquid dyestuff, we expect the growth momen-
tum to continue for BCL during FY17-FY19E as well. Given its integrated business
model, diversification into speciality chemicals, healthy balance sheet with
strong CFO of Rs1.7bn for the next 2 years and strong return ratios, we believe
that stock is available at attractive valuations of 9.9x FY19E earnings and con-
tinue to maintain BUY, with a target price of Rs210.
RESULT UPDATE NMDC

Jatin Damania
PRICE: RS. 117 RECOMMENDATION: SELL
+91 22 6218 6440
TARGET PRICE: RS.110 FY18 PE - 12.3X
NMDC numbers were below estimates, marred by higher other expenses
which offset the benefit of sequential increase in realisation. Net sales
during the quarter grew 87.7%/15% YoY/QoQ to Rs28.72bn. Volume
during the quarter grew 15% YoY to Rs9.74MT,while realisation during
the quarter stood at Rs2,907/tonne.Higher other expenses along with a
decline in other income, led to 14% QoQ fall in PAT to Rs5.12bn, as against
estimates of Rs10.25bn. We have revised our volume assumptions, higher
for FY18E, resulting into upward revision in estimates to Rs9.6 (earlier
Rs9) and introducing FY19E earnings of Rs9.7. Though, we expect volume
trajectory to remain strong, but expectations of weak prices due to sharp
fall in global iron ore prices and surplus production in domestic markets,
make us believe that, the current valuation of 7.8x/7.7x FY18E/FY19E
EBITDA, is expensive. Hence we continue to maintain our SELL rating on
Summary table NMDC, with anunchanged target price of Rs110. We have assigned value
(Rs mn) FY17 FY18E FY19E to the investment in steel plant at 50% discount.
Sales 88,279 96,407 101,219 Upside risks: The government has begun the process of strategic sale of assets in
Growth (%) 36.7 9.2 5.0
public sector undertakings. For NMDC, the Cabinet Committee on Economic Affairs
EBITDA 35,939 43,057 45,265
EBITDA margin (%) 40.7 44.7 44.7
(CCEA) had approved the divestment of the Nagarnar steel plant. Any development
PBT 42,866 45,185 45,452 on the same would augur well for NMDC.
Net profit 25,437 29,800 29,979
Adj EPS (Rs) 8.0 9.4 9.5 Quarterly Financials
Growth (%) (0.1) 17.2 0.6
Y/E March (Rsmn) Q4FY17 Q4FY16 YoY (%) Q3FY17 QoQ (%)
CEPS (Rs) 8.7 10.1 10.3
BV (Rs/share) 71 75 81 Net sales 28,717 15,300 87.7 24,979 15.0
Dividend / share (Rs) 5.50 5.00 5.00
Employee Cost 3,720 1,345 1,750
ROE (%) 11.3 12.5 11.7
ROCE (%) 9.9 11.2 10.5 % of sales 13.0 8.8 7.0
Net cash (debt) 47,005 31,350 17,465 Royalty Expenses 5,404 1,524 4,948
EV/EBITDA (x) 9.1 8.0 7.9 % of sales 18.8 10.0 19.8
EV/Sales (x) 3.7 3.6 3.5
P/E (x) 14.5 12.4 12.3
Total Expenditure 19,396 11,118 14,712
P/CEPS (x) 13.5 11.5 11.3 Operating profit 9,321 4,182 122.9 10,266 (9.2)
P/BV (x) 1.6 1.5 1.4 OPM (%) 32.5 27.3 41.1
Source: Company, Kotak Securities - Pri- Depreciation 307 662 551
Interest 59 655 53
EBT 8,956 2,865 9,662
Other income 1,343 4,442 1,559
PBT 10,299 7,307 40.9 11,221 (8.2)
Exceptional Item (2,013) 1,672 2,013
Provision for tax 7,193 1,045 3,257
ETR (%) 69.8 14.3
PAT (reported) 5,119 4,591 11.5 5,952 (14.0)
Minority/ Share of Profit 0 0 -
PAT (Adjusted) 5,119 4,591 11.5 5,952 (14.0)
NPM (%) 17.8 30.0 23.8
Source: Company
Realisation and volume boost revenue: NMDC has managed to register higher
sales volume over the last couple of quarters led by higher offtake Chhattisgarh,
Karnataka mines (JSW Steel) and higher export sales (increase in global iron ore
prices).Iron ore sales volume during the quarter stood at 9.74MT. In addition to the
volume, NMDC took the average price hike of Rs358/tonne during the quarter. This,
along with a e-auction premium in Karnataka, helped NMDC to garner average
realisation of Rs2,907/tonne, up 66%/18% YoY/QoQ. Both these factors led to
87.7%/15% YoY/QoQ jump in net sales to Rs28.72bn.
Operational Performance
4QFY17 4QFY16 % YoY 3QFY17 % QoQ
Sponge Iron
Sales Volume (Tonnes) 9.74 8.49 14.7 10.1 (3.1)
Realisation (Rs/T) 2,907 1,749 66.2 2,456 18.4
Source: Company
...however higher other expenses restricted benefit: EBITDA during the quar-
ter declined 9.2% QoQ to Rs9.32 bn, lower than our estimates for Rs14.4bn. This
was largely due to 42.5%/50.7%YoY/QoQ jump in other expenses to Rs10.28bn,
which offset the benefit of higher realisation. Other expenses during the quarter
included Rs2.5 bn towards mine closure obligation under MMDR Amendment
Act, Rs500 mntowards service tax liability and Rs600 mn towards expected
credit loss on trade receivables. As a result, EBITDA/t declinedto Rs 957/t vs
Rs1,021/tonne in Q3FY17. With the sharp fall in global iron prices in recent weak
backed by increasing supply and weak demand in China, we expect NMDC to
cut iron ore prices in the coming months, which should put pressure on margin.
Maintain SELL: After the run up all through FY16, global iron ore prices have de-
clined from highs of US$96/t in mid-February to US$60/t at present. Increase in iron
We recommend SELL on NMDC ore supply by big miners from Australia and Brazil would keep seaborne iron ore
with a price target of Rs.110 market oversupplied and keep prices under check. Besides this, increase in domestic
supply by merchant iron ore price would put domestic iron ore prices under pressure.
Hence, we think the pricing action is likely to be negative over the long term. We
continue to maintain our negative stance on the company, due to weak iron ore
prices. The company currently trades at 11.8x FY18E and FY19E earnings and on EV/
EBITDA, it trades at 7.6x/7.5x FY18E/FY19E EBITDA, which in our view is expen-
sive. Hence, we continue to maintain our SELL rating on NMDC, with a target
price of Rs110. We have assigned value to the investment in steel plant at 50%
discount.
RESULT UPDATE PNC INFRATECH

Pankaj Kumar
pankajr.kumar@kotak.com
PRICE: RS. 145 RECOMMENDATION: ACCUMULATE
+91 22 6218 6434
TARGET PRICE: RS.154 FY19E P/E:16.4X
PNC Infratech has reported weak Q4FY17 results on subdued execution led
by delay in appointed date of EPC projects. The standalone net revenue
(EPC Business) for the quarter declined by 40.5% yoy to Rs 3.5 bn on delay
in land acquisition of EPC projects bagged by the company in last 1.5
years. Out of 5 EPC projects of Rs 36 bn which were staying idle for long
time, PNC has got appointed date in 2 of them (value Rs 15.1 bn) in
Q4FY17 and expect others to move in next 3-4 months. The company has
robust total order book of Rs 90 bn (including HAM projects) which is over
5x its FY17 revenue and gives strong revenue growth visibility for the next
three years. Based on approval and execution timeline, we expect H1FY18
to remain subdued on a strong base of last year and expect sharp pickup
in revenue from H2FY18 onwards. The management has guided for Rs 40-
50 bn of new orders in FY18 and expect 30% yoy growth in revenue with
Summary table ~13% EBITDA margins. We have cut our earnings estimates factoring in
(Rs mn) FY17 FY18E FY19E delay in approval of projects. We roll forward our valuation multiple to
Revenue 16891 20984 30284
FY19 with revised target price of Rs 154 (Vs Rs 134). We downgrade the
Growth (%) -16.1 24.2 44.3 rating on the stock to Accumulate (buy on decline) (Vs Buy earlier)
EBITDA 2210 2738 3923 factoring in recent run-up in stock price and limited upside over CMP.
EBITDA margin (%) 13.1 13.0 13.0
PBT 1939 1893 2903
Q4FY17Result Table
Adj PAT 1519 1496 2264
Adj EPS 5.9 5.8 8.8
Year to March (Rs Mn.) Q4FY17 Q4FY16 %Change Q3FY17 %Change
EPS Growth (%) (6.1) (1.5) 51.4 Net Revenues 3,506 5,887 (40.5) 4,636 (24.4)
CEPS (Rs) 8 9 12
Book value (Rs/share) 61 68 76
Raw Materials Cost 2,332 4,176 (44.2) 3,228 (27.7)
Dividend per share (Rs)0.6 0.6 0.9 Gross Profit 1,173 1,711 (31.4) 1,409 (16.7)
ROE (%) 10.3 9.0 12.2 Employee Expenses 247 212 16.4 300 (17.5)
Core ROCE (%) 16.6 15.5 20.8
Other Expenses 452 694 (34.9) 507 (10.9)
Net cash (debt) (1119) (1970) (3033)
NW Capital (Days) 97 107 97 Operating Expenses 3,031 5,083 (40.4) 4,035 (24.9)
P/E (x) 24.5 24.9 16.4 EBITDA 474 804 (41.0) 602 (21.2)
P/BV (x) 2.4 2.1 1.9
EBITDA margin 13.5% 13.7% 13.0%
EV/EBITDA (x) 17.3 14.3 10.3
EV/Sales (x) 2.3 1.9 1.3 Depreciation 140 189 (25.8) 138 1.9
Other income 106 99 7.5 85 25.2
Source: Company, Kotak Securities - Private
Client Research Net finance expense 84 121 (30.9) 40 111.4
Profit before tax 356 593 (39.9) 509 (30.0)
Provision for taxes Incl tax write back 19 (863) (102.2) (258) (107.3)
Reported net profit 337 1,456 (76.8) 767 (56.0)
Prior Yr Tax write back/ MAT credit 81 810 347
Adjusted PAT 256 646 (60) 284 (9.9)
As % of net revenues
COGS 66.5 70.9 69.6
Employee cost 7.1 3.6 6.5
Other Expenses 12.9 11.8 10.9
Operating expenses 86.5 86.3 87.0
EBITDA 13.5 13.7 13.0
Reported net profit 9.6 24.7 16.5
Tax rate (% of PBT) 5.3 (145.6) (50.7)
Source: Company
Q4FY17 execution impacted by delay in appointed date in EPC projects

The standalone net revenue (EPC Business) for the quarter declined by 40% yoy to
Rs 3.5 bn (Vs our estimates of Rs 4.5 bn) on weak execution in the quarter led by
delay in appointed date of EPC projects. Out of 5 EPC projects of Rs 36 bn which
were staying idle for long time due to land acquisition issue, PNC has got ap-
pointed date in Aligarh-Moradabad and Varanasi Gorakhpur (of total value Rs
15.1 bn) in Q4FY17. The company further expects appointed date in one of the
Bihar projects (Koilwar Bhojpur of value Rs 4.5 bn) in next one month. While balance
two projects, Nagina Kashipur (Rs 11.56 bn) and Bhojpur Buxar (Rs 4.77 bn) will take
another 3-4 months to get appointed date. The delay in appointed date in these
projects are due to land acquisition related issues and still achieved 50-60% of land
acquisition. As per the management, the company would be claiming cost escala-
tion in these projects from the government due to delay in appointed date resulting
in cost overrun.
EBITDA margins better than estimates, Maintains 13% margin guidance
Standalone EBITDA for the quarter declined by 40% yoy to Rs 474 mn (Vs esti-
mates of 579 mn) with EBITDA margins at 13.5% (Vs estimates of 12.9%) on
decline in revenue. The company management has guided to maintain EBITDA
margins at ~13%. PBT for the quarter declined by 39.9% yoy to Rs 356 mn (Vs
estimates of Rs 572 mn) on account of lower revenue. Interest cost though de-
clined on yoy, but it has increased on qoq due to increase in debt seqentially.
Standalone APAT for the quarter stood at Rs 256 mn (declined by 60% yoy) on
lower tax provisioning in last year.The company has been claiming 80IA benefit
on orders where work began by 31st March 2017, based on favorable assess-
ment for prior years which would keep tax rate low for FY18 also. The manage-
ment has guided for 15%-18% tax rate in FY18 and 18-21% in FY19,as it would
be claiming 80IA benefits and MAT credit related to previous years.
Debt to increase on higher working capital and equity commitment
PNC has net debt of Rs 1.4 bn (Vs Rs 260 mn of net cash at the end of Q3FY17)
on its standalone balance sheet at the end of the quarterand has gross debt at
Rs 1.69bn. The rise in debt is on account of higher capex and increase in working
capital. The company's debtor at the end of the year increase to 136 days. The
management expect debtor to come down in next 1-2 months once debtor of Rs
2.75 bn on account of Agra Firozabad project would get adjusted against Rs 1.3
bn of advance related to the project. The company has incurred Rs 1.7 bn of
capex for adding equipment in the current financial year and would further incur
Rs 1.25 bn capex in FY18 for adding equipment to construct concrete
roads.Based on FY17 gross block of over Rs 6 bn, the company can execute Rs
32 bn of work in a year. Further, the consolidated net debt to equity also re-
mained at comfortable level of 1.3x at the end of the quarter. Further, the com-
pany would be meeting Rs 4.15 bn of equity commitment in 4 HAM projects in
next 2-3 years which would partially be met though borrowings. The manage-
ment expect debt to go up to Rs 2-3 bn by FY18 end.
Order book witnessed strong growth on qoq, targets to add Rs 40-50 bn
of new orders in FY18
In FY18, PNC added Rs 55 bn of new orders. In Q4FY17, the company added
3HAM projects of total value Rs 41.54 bn in state of UP/MP and Karnataka. The
order book at the end of the quarter stood at ~Rs 90 bn which includes Rs 53.79
bn of confirmed orders and ~Rs 36 bn of EPC component of 3 HAM projects
bagged in the quarter.The current order book is ~5x FY17 revenue and gives
very strong revenue growth visibility for the next three years. Further, the com-
pany targets to add Rs 40-50 bn of new orders in FY18 based on its robust pipe-
line of new orders from state and central government in road and railways
space.It currently has a pipeline of 6 HAM projects and 2 EPC projects. It is tar-
geting for new projects in Maharashtra state. We believe that, the present order
book and robust bid pipeline gives strong revenue growth visibility for the next 3
years.
Targets 30% revenue growth with 13% EBITDA margins in FY18

The company targets 30% revenue growth in FY18 on a low base of FY17 as
new projects would move in full swing in H2FY18. The management is confident
of maintaining EBITDA margins at 13%. Based on approval and execution
timeline, we expect H1FY18 to remain subdued on a strong base of last year and
expect sharp pickup in revenue from H2FY18 onwards.
Updates on HAM/BOT business
PNC would require Rs 4.15 bn of equity commitment in the 4 Hybrid annuity
projects. It has achieved financial closure of Rajasthan project and began construc-
tion on the same. Other three HAM project (one in Karnataka and 2 in UP/MP)are
expected to achieve financial closure by November 2017 and would contribute to
revenue from Q3FY18. In terms of BOT projects, the company witnessed 14%
growth in toll (excluding Ghaziabad Aligarh) which includes 4-5% toll rate hike and
balance is traffic growth. In Q4FY17in terms of average toll revenue per day, Bareilly
Almora project collected Rs 1.1 mn toll per day, Ghaziabad Aligarh expressway
project collected Rs 5.5-5.7 mn per day and Gwalior Bhind collected Rs 1.7 mn
per day. The company is collecting toll on full stretch in Ghaziabad Aligarh Ex-
pressway and expect further ramp up in toll collection in next 2-3 months once it
will start charging overloading.
Outlook and valuation
Based on decline in revenue in Q4FY17 and delay in appointed date 3 EPC projects,
we have revised our revenue estimates for FY18E. Based on current order book of
~Rs 90 bn and execution timeline, we expect PNC's revenueto grow at 34%
CAGR in FY17-19E assuming 24% and 44% yoy growth in FY18E and FY19E re-
spectively. Based on approval and execution timeline, we expect H1FY18 to re-
main subdued on a strong base of last year and expect sharp pickup in revenue
from H2FY18 onwards. Further, we have not considered revenue contribution
from two EPC projects Nagina Kashipur (Rs 11.56 bn) and Bhojpur Buxar (Rs 4.77
bn) in our estimates, as land acquisition in these projects are still low at 50-60%
and projects are staying idle for over year.
We have cut our earnings estimates for FY18E factoring in delay in approval of
projects. The stock is presently trading at FY18E/FY19E PE of 21x/13.9x(after adjust-
We recommend Accumulate on
PNC Infratech with a price target
ing for Rs 22 value of BOT assets).We roll forward our valuation multiple to FY19
of Rs.154 with revised target price of Rs 154 (Vs Rs 134 earlier). We downgrade the rating on
the stock to Accumulate (buy on decline) (Vs Buy) by factoring in recent run-up
in stock and limited upside over CMP.
Valuation Table (Rs mn)

Segment Parameter PAT/BV Multiple P/E, P/BV Value Rs Per Share
Construction Business PAT 2264 15 33965 132

Road BOT BV 4626 1.2 5551 22
Consol PNC Mcap 39516 154
Source: Kotak Private Client Research
Revision in estimates
Particulars Previous Actual Revised New % Change
(Rs Mn) FY17E FY18E FY17 FY18E FY19E FY17E FY18E
Revenue 18,546 23,869 16,891 20,984 30,284 -8.9 -12.1

EBITDA 2,418 3,122 2,210 2,738 3,923 -8.6 -12.3
EBITDA 13.0 13.1 13.1 13.0 13.0 8 -5
margin (%)
APAT 1,724 1,894 1,519 1,496 2,264 -11.9 -21.0
AEPS (Rs) 6.7 7.4 5.9 5.8 8.8 -11.7 -21.2
Source: Kotak Private Client Research
RESULT UPDATE VA TECH WABAG

Sanjeev Zarbade
sanjeev.zarbade@kotak.com
+91 22 6218 6424
TARGET PRICE: RS.711 FY19-18.0X,
VA Tech Wabag's(VAW) reported mixed set of number for the quarter on
an operational basis. While revenue growth was strong but EBITDA
margins were lower for the quarter.
For the fiscal, the company was able to meet its revenue guidance. However,
profits were impacted by share in loss from associates on account of the
liquidated damages related to Al Ghubrah desalination project.
VAW is trading at 20.3x and 18x, FY18 and FY19 earnings respectively. We
have been positive on the stock in view strong order book of the company
coupled with relative under-performance in stock price in H1FY17.
However, in CYTD 2017, the stock has rallied strongly by 40% and is
trading closer to revised target price of Rs 711, based on 21x FY18
earnings (earlier Rs 555, based on 20x FY18 earnings).
Summary table
We have a positive view on the water and sewage treatment sector in
(Rs mn) FY17 FY18E FY19E
view of long term drivers like urbanization, smart cities, water
Sales 32079.1 36180.0 40521.6 reclamation, industrial effluent treatment and Namami Gange. Hence, we
Growth % 26.1 12.8 12.0
retain our positive outlook on the company but revise rating to
EBITDA 2966.2 3359.2 3771.3
EBITDA margin % 9.2 9.3 9.3
"Accumulate" from "BUY" earlier in view of the modest upside. Investors
PBT 2,361.6 2,745.4 3,102.8 should consider buying the stock on declines.
PAT 1,024.0 1,807.0 2,042.8
EPS (Rs) 18.9 33.3 37.6
Growth % 16.7 76.5 13.1
Rs mn Q4FY17 Q4FY16 YoY (%)
CEPS 22.4 37.4 42.2
Book value (Rs/share)196.9 225.5 258.4 Net Sales 11317 8488 33.3
Dividend per share (Rs)4.0 4.0 4.0
Other operating income - - -
ROE % 9.9 15.8 15.6
ROCE % 16.0 16.3 17.7 Net Sales & Other Operating Income 11317 8488 33.3
Net cash (debt) -450.3 1619.7 1868.4 Total Expenditure 10001 7361 35.9
NWC (Days) 39.7 40.3 50.8 (Increase) / Decrease In Stocks 1217 -10
EV/Sales (x) 1.2 1.0 0.9
EV/EBITDA (x) 12.5 10.5 9.2
Cost of Services & Raw Materials 7841 6478 21.0
P/E (x) 35.9 20.3 18.0 Other Expenses 582 310 87.7
P/Cash Earnings 30.2 18.1 16.0 Employee Cost 361 583 -38.1
P/BV (x) 3.4 3.0 2.6
PBIDT 1317 1127 16.9
Source: Company, Kotak Securities - Pri- Other Income 3 38 -91.2
Operating Profit 1,320 1,164 13.4
Depreciation 52 51 1.2
EBIT 1,268 1,113 14.0
Interest 161 152 5.4
Exceptional Items - - -
Forex gain/(loss) - - -
PBT 1,108 961 15.3
Tax 326 305 6.7
Profit After Tax 782 655 19.3
Minority Interest (38) (3) -
Shares of Associates 13 (0) -
Consolidated Net Profit 758 651 16.3
EBITDA (%) 11.6 13.3
Material costs to sales (%) 80.0 76.2
Staff costs to sales (%) 3.2 6.9
Other expenditure to sales (%) 5.1 3.7
Tax rate (%) 29.4 31.8
EPS (Rs) 14.0 12.0
Source: Company
Rs mn Reported Estimated Comments
Revenue 11317 9298 Higher than expected revenue

EBITDA % 10.2 13.4 Missed out on EBITDA margin forecast
PAT 757 733 Higher revenue led to profit exceeding
our forecast
Source: Company
Consolidated Performance - Healthy revenue growth but margins were

lower in the quarter
Consolidated revenueat Rs 113 bn (+17% YoY) and in line with our esti-
mates due to robust execution of IIU (India International Units) projects like
Petronas, Malaysia and AMAS, Bahrain.
On a full year basis, revenue stood at Rs 320.8 bn, up 26% on a y-o-y basis
and in line with the management's revenue guidance of Rs 30-32 bn.
EBITDA for the quarter stood at Rs1317mn (16.9% YoY), which was higher
than estimates due to strong growth in revenues but partly offset by lower
EBITDA margins.
EBITDA margins for the quarter stood at 11.6% vs 13.3% on a y-o-y basis,
mainly due to lower gross margins which could be due to change in project mix
(some projects may not be reached profit recognition stage).
Share of profits from associates stood at Rs 13 mn vs nil on a y-o-y basis. How-
ever, for the fiscal, Share of profits from associates stood at (-)ve Rs 572.6
mn, reflecting impact of provisions towards Liquidated damages arising
out of delay in completion of desalination plant at Al ghubrah, Oman.
The company reported PAT of Rs 758 mn vs Rs 651 mn in corresponding
quarter of the previous fiscal.
On account of the outsized charge of liquidated damages (by and large of
one-off nature), the PAT stood at Rs 1024 mn vs Rs 877 mn in the corre-
sponding quarter of the previous fiscal. Adjusted for the loss on account of
associates, profits for the fiscal would have increased to Rs 1695 mn vs Rs
884 mn in FY16.
Standalone Performance -EBITDA margin contraction.
Standalone sales at Rs7.0bn, up 28% on a y-o-y basis due to commencement of
projects in Malaysia and India.
Gross margins contracted by 410 bps to 18.3% mainly due to write off of invest-
ments on liquidation of subsidiary in Spain (No effect on Consolidated profit).
EBITDA margins contracted to 640 bps y-o-y to 7.7%, mainly due to lower gross
margins.
Standalone profits declined to Rs 286 mn vs Rs 522 mn on a y-o-y basis.
Company continues to remain net cash positive at consolidated level
Consolidated gross debt stands at Rs 2.4 bn as compared to Rs 3.3 bn in FY16.
However, cash levels have also declined to Rs 2.6 bn vs Rs 3.6 in FY16.
The company reported total receivables (long term as well as short term) out-
standing at Rs 25 bn vs Rs 19.4 bn on a yoy basis. In terms of Days of Sales, re-
ceivables stood at 286 days vs 278 days on a y-o-y basis. The higher receivables
days (DSO) is mainly due to 60% of revenue booking happening in the second
half of the fiscal.
Order book provides adequate revenue visibility of 30 months of trailing
sales
The company reported group level order intake Rs 8.8 bn and Rs 36.2 bn (minor
miss in order intake guidance of Rs 40-42 bn) in the quarter and fiscal as
against Rs 17.8 bn and Rs 51.4 bn in the corresponding period of the previous
fiscal.
Consolidated Order backlog stands at Rs 80 bn, 10% on a yoy basis. The rev-
enue visibility provided by order book is adequate at 30 months of trailing four
quarter revenues.
Other highlights
The management indicated in Mumbai there are seven sewage treatment projects
that are to be tendered out. However, movement has been sluggish on these
projects.These should get tendered out in next fiscal.
On Namami Gange, the management indicated that the government is keen to
kickstart the project and it expects few of them of the size of Rs 3.0- 7.0 bn each to
be tendered out on a PPP model basis.
Earnings Revision
FY18 Estimates
Rs mn Earlier Revised
Revenue 33608 36180

EBITDA (%) 9.0 9.3
EPS 27.8 33.3
Change 19.7%
Source: Company
Management Guidance
Revenue guidance of Rs 38-40 bn
We recommend Accumulate on Order intake guidance of Rs 43-45 bn
VA Tech Wabag with a price
The company continue to remain positive on the EBITDA margins outlook.
target of Rs.731
Valuation -MaintainAccumulate
VAW is trading at 20.3x and 18.0x, FY18 and FY19 earnings respectively. We
have been positive on the stock in view strong order book of the company
coupled with relative under-performance in stock price in H1FY17. However, in
CYTD 2017, the stock has rallied strongly by 40% and is trading closer to revised
target price of Rs 711, based on 21x FY18 earnings (earlier Rs 555, based on 20x
FY18 earnings).
We have a positive view on the water and sewage treatment sector in view of
long term drivers like urbanization, smart cities, water reclamation, industrial
effluent treatment and Namami Gange. Hence, we retain our positive outlook
on the company but revise rating to "Accumulate" from "BUY" earlier in view of
the modest upside. Investors should consider buying the stock on declines.
COMPANY UPDATE HINDUSTAN ZINC

Jatin Damania
+91 22 6218 6440
TARGET PRICE: RS. 265 FY19PE 10.3X
Hindustan Zinc (HZ) is on track for achieving 1.2MT mined metal capacity
in the next three years from 0.91MT in FY17. Though mine transition is
progressing well, we expect volume growth to be constrained for the next
few quarters, as shaft sinking works will be mostly completed in FY19. HZ
expects FY18 mined metal volume to be higher than FY17 and refined
metal production will be around 0.95MT, evenly spread through the year.
We expect the mined metal volume of 0.93MT and 0.98MT in FY18E and
FY19E respectively. Zinc prices have softened from their peaks (US$2,900+)
and currently hover around US$2,600-2,650 tonne. As a result 1QFY18 may
see margins decline from 4QFY17 levels of 55.5%.
The strong fundamental of zinc compared to other base metals and
increase in silver volume from higher SK mine production will be the
Summary table
earnings driver for the company. Besides this, HZ's cost leadership will
ensure healthy free cash flow generation in the coming years as well. The
(Rs mn) FY17 FY18E FY19E
stock has corrected 13% since our last update in the month of April 2017.
Sales 187,980 224,600 235,422 At CMP, the stock is trading at 5.2x FY19E EV/EBITDA, which in our view
Growth (%) 32.1 19.5 4.8
offers 10% upside from current levels, as we foresee strength in zinc
EBITDA 97,384 121,360 128,286
EBITDA margin (%) 51.8 54.0 54.5
prices (expected deficit of 0.23 MT in CY17), strong balance sheet,
PBT 101,992 113,397 121,497 attractive dividend and healthy free cash flow generation. We upgrade the
Net profit 83,156 92,419 99,020 stock to Accumulate (earlier SELL) with an unchanged target price of
Adj EPS (Rs) 19.7 21.9 23.4 Rs265.
Growth (%) 1.8 11.1 7.1
CEPS (Rs) 24.0 26.6 28.3 Consecutive second year of deficit in zinc
BV (Rs/share) 72 82 94
Dividend / share (Rs) 29.4 10.0 10.0 As per ILZSG, zinc demand is expected to slow down marginally to 2.6% YoY to
ROE (%) 27.2 26.5 24.9 14.3mn tonnes in CY17 after increasing by 3.1% YoY in CY16. Supply is likely to
ROCE (%) 22.0 21.9 21.0 grow 6.7% YoY to 13.7mn tonnes mainly due to ramp up at HZL's Rampur
Net cash (debt) 321,630 288,208 332,561 Agucha mine. Production is expected to increase at Peru's Antamina mine and
EV/EBITDA (x) 8.0 5.8 5.2
Terrafame's Sotkamo operation in Finland, apart from a further rise in Chinese
EV/Sales (x) 4.3 3.1 2.8
P/E (x) 12.3 11.0 10.3 output and the first full year production at Nevsun Resources' BIsha mine in
P/CEPS (x) 10.1 9.1 8.5 Eritrea. As demand is expected to surpass supply, ILZSG has forecast a deficit of
P/BV (x) 3.3 2.9 2.6 0.226MT (~2% of global demand) in CY17 and the market is expected to be
balanced in CY18 with the commencement of Dugald River (0.21MT), Gamsberg
vate Client Research mine (0.25MT) and expected ~20% volume growth for Hindustan Zinc in India
over FY16-20. During Jan-Mar 2017, zinc market remained in deficit to the tune
of 6,000 tonnes, with the inventory declining by 18,000 tonnes. The recent cor-
rections in the zinc prices from the highest level of US$2,935/tonne in the month
of February 2017, is transitory, as miners are gradually increasing supply to gain
from higher prices, in our view and we expect zinc prices to remain strong due
to supply deficit and low inventories.
Zinc demand-supply
(MT) 1QCY16 1QCY17
Mine Production 2.964 3.298

Metal Production 3.318 3.406
Metal Usage 3.315 3.412
Surplus / (Deficit) 0.003 (0.006)
Source: ILZSG
Low global inventories to support prices

On account of continued deficit in last 3 out of 4 years (except 2015), inventory
levels at LME have dropped significantly. LME inventory of refined zinc metal
currently stands at 337,400 tonnes, which is at the lowest level since July 2009.
We believe that, the low inventory levels will worsen the supply situation and
keep LME prices firm in the coming months.
Expansion on track, guidance largely maintained
HZ has maintained guidance of 1.2MT of mined metal capacity by 2019. The
production from an open cast mine (Rampura Agucha) will decline to 20% in
FY18E from 48% in FY17 and the entire production will move to underground
from FY2019E. Mined metal production for FY18 is expected to be at higher lev-
els than FY17 levels of 907kt. The management, has guided for refined zinc-lead
output of ~950kt in FY18 from 811KT in FY17, banking on higher mined metal
production from underground mines and the carryover inventory of 80kt. Silver
production will increase to 500tonnes from 453tonnes in FY17. Zinc cost of pro-
duction is expected to be marginally higher in FY18E based on current input
costs.
Capex guidance has been reinstated back to US$350mn
HZ is investing Rs5.5 bn in the Fumer plant, which is expected to complete by
mid FY19E, with improved recovery of silver (25-30 tonnes), zinc (2,500 tonnes)
and lead (8,000 tonnes) from each of the three hydro smelters. SK mine will
reach 4.5MT of ore capacity in FY18E (ahead of schedule) and management has
applied for further extension of Environment Clearance (EC), which introduces
upside risks to 1.2MT of mined metal target. With the investment in Fumer plant
along with on-going mine expansion projects and smelter de-bottlenecking,
capex guidance has increased to US$350-360 mn (inclusive of US$250 mn allo-
cated for mining) for FY18.
Reserves and Resource supports mine life of over 25 years
HZ's priority is to increase resources, at a faster rate, through continuous focus
on drilling and exploration programme. The brownfield drilling activities in FY17
added 14.5MT (net) to reserve and resource (R&R). Total R&R at the end of FY17
stood at 404.4MT, containing 36.1 MT of zinc-lead metal and 1,032 million
ounces of silver, indicating the mine life of over 25 years. Additionally, the com-
pany is also exploring green field exploration to add new tenements.
Cash and Cash equivalents post dividend payout declined to Rs161bn
Cash and cash equivalents declined at the end of Q4FY17 to Rs161bn from
Rs253 bn in December 2016, due to the payment of a special dividend of Rs122
bn. The company earned cash profit of Rs36 bn in Q4FY17, and we expect given
its cost leadership and increase in volume, free cash flow generation to remain
strong in the coming years as well.
Recommend Accumulate: We like HZL for its strong fundamentals with struc-
turally positive pricing scenario for zinc and lead globally due to mining supply
cuts. Attractive dividend payouts and high free cash flow generation further but-
tress our positive stance. At CMP, the stock trades at 5.2x FY19E EV/EBITDA and
offers 10% upside from current levels. We recommend Accumulate (earlier
SELL) with an unchanged target price of Rs265.
Zinc market to remain in deficit

(MT) CY11 CY12 CY13 CY14 C15 CY16 CY17E
Mine Production 12.59 12.9 13.0 13.5 13.5 12.84 13.70

Metal Production 13.07 12.6 13.0 13.5 13.9 13.72 14.08
Metal Usage 12.73 12.4 13.2 13.8 13.8 13.91 14.30
Surplus / (Deficit) 0.34 0.22 (0.13) (0.24) 0.11 (0.20) (0.22)
Source: ILZSG
Zinc price trend (US$/Tonne) Inventory at multi-years low ('000 Tonne)
Source: Bloomberg Source: Bloomberg
Mined Metal production Cash and cash equivalents
Source: Bloomberg Source: Bloomberg
Zinc Volume trend (tonnes) Lead sales volume (tonnes)
Source: Company Source: Company
Bulk deals Trade details of bulk deals

Date Scrip name Name of client Buy/ Quantity Avg.
Sell of shares price
(Rs)
30-Dec ABIRLANUVO Turquoise Investments & Finance B 1,500,000 1,360.6

30-Dec ABIRLANUVO Igh Holdings Pvt Ltd B 4,200,000 1,358.7
30-Dec ABIRLANUVO Reliance Tax Saver Elss Fund S 724,000 1,366.0
30-Dec ABIRLANUVO Reliance Regular Saving Fund Eqt Optn S 700,000 1,366.0
30-Dec ABIRLANUVO Reliance Growth Fund S 1,659,200 1,366.0
30-Dec ACIASIA Abjayoni Trading Pvt Ltd S 11,018,400 0.1
30-Dec ARNAVCORP Bulltext Reality Pvt Ltd S 1,123,829 2.5
30-Dec DUNE Kunal Bawa S 30,157 6.4
30-Dec DUNE Kamleshkumar Deoraj Jain B 29,635 6.4
30-Dec GUJAUTO Venu Gupta S 10,000 176.8
30-Dec JUNCTION Sahil Gupta B 16,000 24.0
30-Dec JUNCTION Hem Sec Ltd S 16,000 23.5
30-Dec MACINTR Makesworth Projects & Developers B 21,000 22.3
30-Dec MARG Sapna Bagamar B 200,000 10.5
30-Dec RELICAB Aryaman Broking Limited B 30,000 25.7
30-Dec RIBATEX Rapid Credit & Holdings Pvt Ltd S 60,000 43.3
30-Dec RIBATEX Indra Pratap Singh (Huf) B 60,300 42.9
30-Dec SECHE Shriram Credit Company Ltd S 763,073 1.9
30-Dec SHAHFOOD Vijay Kantilal Sheth S 4,707 80.4
30-Dec SHAHFOOD Karan Pradip Shah B 6,100 80.4
30-Dec VAL Aryaman Broking Ltd B 44,000 26.8
30-Dec VAL Daisy Distributors Pvt Ltd S 44,000 26.8
30-Dec VISHAL Lts Investment Fund Ltd B 78,000 375.0
Source: BSE
Gainers & Losers Nifty Gainers & Losers

Price (Rs) chg (%) Index points Volume (mn)
Gainers
TATASTEEL 511.3 5.49 NA 27.4
GAIL India 242.25 4.15 NA 9.3
Sun Pharma 198.25 4.04 NA 4.1
Losers
Bajaj Auto 565.75 -4.36 NA 12.0
BPCL 425.9 -2.97 NA 3.1
Tata Steel 491.25 -2.53 NA 1.4
Source: Bloomberg
RATING SCALE
Definitions of ratings
BUY We expect the stock to deliver more than 12% returns over the next 9 months
ACCUMULATE We expect the stock to deliver 5% - 12% returns over the next 9 months
REDUCE We expect the stock to deliver 0% - 5% returns over the next 9 months
SELL We expect the stock to deliver negative returns over the next 9 months
NR Not Rated. Kotak Securities is not assigning any rating or price target to the stock. The report has been prepared for information purposes
only.
RS Rating Suspended. Kotak Securities has suspended the investment rating and price target for this stock, either because there is not a suffi-
cient fundamental basis for determining, or there are legal, regulatory or policy constraints around publishing, an investment rating or target.
The previous investment rating and price target, if any, are no longer in effect for this stock and should not be relied upon.
NA Not Available or Not Applicable. The information is not available for display or is not applicable
NM Not Meaningful. The information is not meaningful and is therefore excluded.
NOTE Our target prices are with a 9-month perspective. Returns stated in the rating scale are our internal benchmark.
Fundamental Research Team

Dipen Shah Ruchir Khare Meeta Shetty, CFA Jayesh Kumar
IT, Economy Capital Goods, Engineering Pharmaceuticals Economy
dipen.shah@kotak.com ruchir.khare@kotak.com meeta.shetty@kotak.com kumar.jayesh@kotak.com
+91 22 6218 5409 +91 22 6218 6431 +91 22 6218 6425 +91 22 6218 5373
Sanjeev Zarbade Ritwik Rai Jatin Damania K. Kathirvelu
Capital Goods, Engineering FMCG, Media Metals & Mining Production
sanjeev.zarbade@kotak.com ritwik.rai@kotak.com jatin.damania@kotak.com k.kathirvelu@kotak.com
+91 22 6218 6424 +91 22 6218 6426 +91 22 6218 6440 +91 22 6218 6427
Teena Virmani Sumit Pokharna Pankaj Kumar
Construction, Cement Oil and Gas Midcap
teena.virmani@kotak.com sumit.pokharna@kotak.com pankajr.kumar@kotak.com
+91 22 6218 6432 +91 22 6218 6438 +91 22 6218 6434
Arun Agarwal Amit Agarwal Nipun Gupta
Auto & Auto Ancillary Logistics, Paints, Transportation Information Technology
arun.agarwal@kotak.com agarwal.amit@kotak.com nipun.gupta@kotak.com
+91 22 6218 6443 +91 22 6218 6439 +91 22 6218 6433
Technical Research Team

Shrikant Chouhan Amol Athawale
shrikant.chouhan@kotak.com amol.athawale@kotak.com
91 22 6218 5408 +91 20 6620 3350
Derivatives Research Team

Sahaj Agrawal Malay Gandhi Prashanth Lalu Prasenjit Biswas
sahaj.agrawal@kotak.com malay.gandhi@kotak.com prashanth.lalu@kotak.com prasenjit.biswas@kotak.com
+91 79 6607 2231 +91 22 6218 6420 +91 22 6218 5497 +91 33 6625 9810
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MAY 29, 2017

Economy News Equity

10 yr G-Sec yield % 6.7 6.7 7.0 6.9

Source: ET = Economic Times, BS = Business Standard, FE = Financial Express,

RESULT UPDATE CG POWER AND INDUSTRIAL SOLUTION LTD (CG)

Source: Company, Kotak-PCG Research

Standalone Rs mn Q4FY17 Q4FY16 YoY% Q3FY17 QoQ%

Net Sales 12845 12053 6.6 11601 10.7

Source: Company, Kotak-PCG Research

Q4FY17 Result Highlights

Standalone Segment revenue Rs Bn Q4FY17 Q4FY16 YoY% Q3FY17 QoQ%

Power 7042 7088 -0.7 6363 10.7

Source: Company, Kotak-PCG Research

Consolidated revenues, reported at Rs 17.1 Bn (de-grew 7.6% YoY). Industrial

Consolidated Segment revenue Rs bn Q4FY17 Q4FY16 YoY% Q3FY17 QoQ%

Power 10578 12702 -16.7 8461 25.0

Source: Company, Kotak-PCG Research

RESULT UPDATE INDRAPRASTHA GAS (IGL)

Key risks remain in terms of:

PBT for Q4FY17 is at Rs.2.1 bn down 3% qoq but up 26% on a sequential

RESULT UPDATE MAHANAGAR GAS LTD (MGL)

Key Risk and Concerns:

RW/Net Sales 45.2 50.2 (5.0) 1.4

Valuation & Recommendation

RESULT UPDATE MPHASIS LTD

Consolidated Quarterly performance

Turnover 15361 15059 -2.0 15174 -0.8

Direct Core to remain the growth driver

RESULT UPDATE ITC LTD.

Summary table Results Summary

ITC's 4QFY17 revenues came in below estimates as cigarette revenues disap-

Cigarettes 89549 85455 4.8% 82880 8.0%

Source: Company Reports

ment. Cigarette margins improved on expected lines. Hotels' registered im-

Cigarettes 32588 30186 8.0% 30337 7.4%

Source: Company Reports

On lower growth in cigarettes, EBITDA/ PAT missed estimates by 3%/4.5%.

RESULT UPDATE SUN TV NETWORK

Source: Company Reports

On the prospect of digiitization in TN, the management highlighted that while

RESULT UPDATE BODAL CHEMICALS

capacities, the captive consumption of intermediates should increase to the level

RESULT UPDATE NMDC

RESULT UPDATE PNC INFRATECH

Q4FY17 execution impacted by delay in appointed date in EPC projects

Targets 30% revenue growth with 13% EBITDA margins in FY18

Valuation Table (Rs mn)

Construction Business PAT 2264 15 33965 132

Source: Kotak Private Client Research

Revenue 18,546 23,869 16,891 20,984 30,284 -8.9 -12.1

Source: Kotak Private Client Research

RESULT UPDATE VA TECH WABAG

Rs mn Reported Estimated Comments

Revenue 11317 9298 Higher than expected revenue

Consolidated Performance - Healthy revenue growth but margins were

Revenue 33608 36180

COMPANY UPDATE HINDUSTAN ZINC

Mine Production 2.964 3.298

Low global inventories to support prices

Zinc market to remain in deficit

Mine Production 12.59 12.9 13.0 13.5 13.5 12.84 13.70

Zinc price trend (US$/Tonne) Inventory at multi-years low ('000 Tonne)

Source: Bloomberg Source: Bloomberg

Mined Metal production Cash and cash equivalents