Coal India LTD expect modest increase in sales volumes growth during FY2013-15 on account of poor offtake capabilities of CIL. We are positive to buy stocks with Target Price Rs.334.

1. IEA-Equity
Strategy
India Equity Analytics
15th Jan, 2014
Daliy Fundamental Report on Indian Equities
Coal India LTD :
"BUY"
Edition : 184
15th Jan 2014
A Rs 1800-crore fine could possibly mean less profits for the company and less dividend income for its owners. But as the main owner, the
government, will pocket this amount in the form of a fine, it will not be poorer in any way.Recently Coalindia after a long discussion with govt
declared Rs29/share intrim dividend .which recovers our ROE estimate for FY14 to 40% from 33%.which is up 4% YOY.we revised our EPS
estimate for FY14 to 28.4 which is 3.4% YOY (including 2100 CR realization Gain).Hence we Upgrade coal india to a target price of RS.334/(previously 310)................................................ ( Page : 2-4)
UltraTech Cement Ltd :
"BUY"
14th Jan 2014
We are expecting 8%-15% Sales growth with ~19% ROE in FY15E.We expect cement demand to pick up from 2HFY14 onwards driven by
governments pre-election spending as well as on account of rural demand pick post the good monsoon witnessed this year. UTCL is a largest
cement player in India and we expect it to maintain or increase the same through timely commissioning of capacities, which are expect to come
on stream by FY15E.We value the stock and arrive at the target price of Rs 1846. As from the current level the upside is very limited (10%), so we
recommend investors to "Buy" the stock at lower level dips to get a decent returns over a time horizon of 12-18 months
................................................. ( Page :5-7)
DB Corp :"On strong footing"
"BUY"
14th Jan 2014
In view of upcoming general election, we expect government ad spending to go up substantially. Being one of the biggest player, company will
benefit from this. Considering its long-term growth story with favorable earning scenario and leadership position in key market, we are positive
on the stock. We initiate “BUY” view on the stock with the target price of Rs 340. At a CMP of Rs 305, stock trades at 4.3x of FY15E P/BV
............................................... ( Page : 8-9)
Zensar Tech :"Better growth trajectory"
"BUY"
14th Jan 2014
The deal booking and pipeline is good and expects to perform well going forward. It expects double digit growth in the Enterprise Services
business for the FY15E on the back of healthy pipeline. Also, it anticipates good growth from the IMS for the FY'15E. Considering healthy order
pipeline and its earning visibility in near future, we maintain “BUY” view on the stock and we revise our target price from Rs 400 to Rs 440. At a
CMP of Rs 412, stock trades at 7.2x FY14E EPS .............................................. ( Page : 10-11)
Infosys : "On the way of excitement"
"BUY"
13th Jan 2014
Infosys largely reported inline set of sales numbers and beats the street on margin front, In USD term, Sales grew by 1.65%(QoQ) and 0.5%(QoQ)
in INR term, led by 0.7% (QoQ) volume growth and 0.7%(QoQ) pricing growth. At a CMP of Rs 3549, it trades at 16.3x FY15E At a CMP of Rs
3549, it trades at 16.3x FY15E earnings. We retain our “BUY” view on the stock with a target price of target price of Rs 3910 (revised from 3620).
....................................... ( Page : 12 -15)
INDUSIND BANK
"Neutral"
13th Jan 2014
Despite of reported higher than expected profit we have neutral view on the stock owing to shifting of loan mix from consumer finance to
corporate loan which will lead to margin compression and deterioration in asset quality as per our view. Corporate loans generally are big ticket
size in nature and with slowing of economy there are higher chances of these loan slip into NPA than other loan. Moreover retail loans are high
yield in nature than corporate loan. At current price, we have neutral view on the stock due to trading almost near to our valuation multiple and
anticipating margin compression and higher slippage. ........................ ( Page : 16-21)
Private Bank Result Preview 3QFY14 :
13th Jan 2014
Broadly banking indices outperform Nifty by 6% in third quarter and most of banking stocks are trading at attractive valuation. Despite of, we
have caution view on account of slowdown in economy, high interest rate and inflationary pressure. High inflation would be risk for the
economy going forward. Any rise in inflation would result of rise in interest rate by RBI in its third quarter monetary policy review on 28th
Jan.2014 which would be negative for banking industry. Most of banking stocks are expected to report moderate revenue and profit growth
owing to multiple headwinds. In private sector banking universe we like HDFC Bank, ICICI bank and DCB.............................................. ( Page :
22-24)
Narnolia Securities Ltd,

2. Coal India LTD.
Company Update
CMP
Target Price
Previous Target Price
Upside
Change from Previous
289
334
310
16%
NA
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Crores)
Average Daily Volume (Nos.)
Nifty
533278
COALINDIA
372/238
176226
17622
6308
Stock Performance-%
1M
-1.3
2.8
Absolute
Rel. to Nifty
1yr
-21.2
8.8
YTD
-21.4
8.6
"Buy"
15th Jan' 14
Cash Deployment : Dividend at Rs 29/- per share
Competition Appellate Tribunal stays Rs 1,773 crore fine on CIL , and will decide on the
matter on next hearing feb 11 2014. We believe , A Rs 1800-crore fine could possibly
mean less profits for the company and less dividend income for its owners. But as the
main owner, the government, will pocket this amount in the form of a fine, it will not be
poorer in any way.Recently Coalindia after a long discussion with govt declared
Rs29/share intrim dividend .which recovers our ROE estimate for FY14 to 40% from
33%.which is up 4% YOY.we revised our EPS estimate for FY14 to 28.4 which is 3.4%
YOY (including 2100 CR realization Gain).Hence we Upgrade coal india to a target price
of RS.334/- (previously 310).
Coal India to get Rs 2,119 cr extra on coal price revision :
Coal India Ltd is likely to get additional revenue of Rs 2,119 cr in this fiscal on account of
revision in dry fuel prices.CIL (Coal India Ltd) has revised and rationalized the basic
notified prices of all the grades of non-coking coal except GI, G2 and G5.The estimated
additional revenue due to revision of basic notified price for the current financial year is
Rs 2,119 cr.CIL had revised the prices of all grades of coal, barring three, for all its eight
producing subsidiaries with effect from May 28 this year. Mahanadi Coalfields which is
expected to contribute Rs 686 crore, followed by Rs 664 crore from Northern Coalfields
and Rs 495 crore from South Eastern Coalfields.
Share Holding Pattern-%
Promoters
FII
DII
Others
2QFY14
90.0
5.5
5.3
2.2
1QFY14 4QFY13
90.0
90.0
5.4
5.4
2.3
2.0
2.4
2.6
1 yr Forward P/B
Source - Comapany/EastWind Research
Q2FY14 :
The company’s net sales grew 5.8% yoy to 15,411cr (above our estimate of 15,083cr).
Sales volumes stood at 109mn ton in 2QFY2014 compared to 102mn ton in 2QFY2013.
The blended realizations declined by 1.4% yoy to 1,414/ton (despite price hike) due to
lower realization on FSA coal.Despite 5.8% yoy growth in top-line, EBITDA decreased by
8.2% yoy to 3,176cr due to higher raw material costs (18.1% yoy to 2,251cr) and
contractual expenses (27.6% yoy to 1,394cr). The depreciation expenses increased by
27.8% yoy to 495cr; hence, adjusted net profit was flat yoy at 3,043cr .
Management Corner : Management is confident about their coal production target and
coal off take target for FY2014E, which is 482 mmt and 492 mmt respectively. Till now in
the H1FY14 the company cpmpleted 400 mmt production and 424 mmt offtake. The
company is not sure about the production target but very sure abot the offtake .
Financials :
Q2FY14
Y-o-Y %
Q-o-Q %
Q2FY13
Q1FY14
Net Revenue
15411
5.8
-6.4
14573
16472
EBITDA
2794
-2.4
-29.4
2862
3958
Depriciation
495
27.8
4.1
387
476
Interest Cost
8
-22.2
7.0
10
7
Tax
1412
-4.2
-27.9
1475
1958
PAT
3052
-0.8
-18.2
3078
3731
(In Crs)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
2

3. Coal India LTD.
E-auction prices remain under pressure: E-auction prices for Nov’13 were at Rs 2,117/t
(-15% YoY/-8% MoM). YTD, weighted average e-auction prices were at Rs 2,238/t, lower
16% YoY. Weakness in sponge iron and cement industry, the two key end-users of eauction coal, has impacted E-auction realisations.
CIL’s e-auction realizations have declined over the past one year on account of decline
in international coal price coupled with weak domestic demand. Going forward, we
expect CIL’s profitability to be affected due to lower e-auction realizations, sticky staff
costs and other expenses. Moreover, given the price hike taken during 4QFY2013, we
do not expect CIL to undertake any further price hikes in the near-term.
OUTLOOK:
We expect modest increase in sales volumes growth during FY2013-15 on account of
poor offtake capabilities of CIL. Also, we expect CIL’s margins to decline during FY2014
due to lower e-auction realizations and higher staff costs/other expenses.Recently
Coalindia after a long discussion with govt declared Rs29/share intrim dividend .which
recovers our ROE estimate for FY14 to 40% from 33%.which is up 4% YOY.we revised
our EPS estimate for FY14 to 28.4 which is 3.4% YOY (including 2100 CR realization
Gain).Hence we Upgrade coal india to a target price of RS.334/- (previously 310).From
the CMP the target price is up by ~15% .
OPERATING MATRIX
Coal Production in MT
Coal Offtake in MT
Revenue Generation From unit Ton
Avg Man Power (in numbers)
Productivity Per Man
FY10
431
416
1073
404744
1066
FY11
431
425
1183
390243
1105
FY12
436
433
1441
377447
1155
Source - Comapany/EastWind Research
FY13
452
465
1468
364736
1240
Source - Comapany/EastWind Research
P/L PERFORMANCE
Net Revenue from Operation
Cost Of Projects & Contractual
Power and fuel
contractual expenses
Employee benefit Expence
Expenditure
EBITDA
Depriciation
Interest Cost
Tax
PAT
ROE %
FY11
50234
7573
1755
4580
20481
40390
9843
1673
79
5595
10868
33
FY12
62415
5123
2013
4901
26705
40857
21558
1969
54
6484
20588
51
FY13
68303
6556
2333
5802
27943
50219
18084
1813
45
7623
17356
36
Narnolia Securities Ltd,
FY14E
69960
8372
2591
6049
28943
53705
16255
1860
34
7310
17921
40
3

4. Coal India LTD.
B/S PERFORMANCE
Share capital
Reserve & Surplus
Total equity
Long-term borrowings
Short-term borrowings
Long-term provisions
Trade payables
Short-term provisions
Total liabilities
Intangibles
Tangible assets
Capital work-in-progress
Long-term loans and advances
Inventories
Trade receivables
Cash and bank balances
Short-term loans and advances
Total Assets
RATIOS
P/B
EPS
Debtor to Turnover%
Creditors to Turnover%
Inventories to Turnover%
CASH FLOWS
Cash from Operation
Changes In Working Capital
Net Cash From Operation
Cash From Investment
Cash from Finance
Net Cash Flow during year
Trading At :
FY10
6316
20956
27273
343
1620
2545
772
1404
5443
0
12035
2211
610
4402
2169
39078
8066
17921
FY10
0.0
0.0
4.9
1.7
1.0
FY11
6316
26998
33314
1334
33
22461
645
12387
8490
779
12065
2057
845
5586
3419
45806
11180
21646
FY11
5.7
17.3
22.8
4.3
3.7
FY12
6316
34137
40453
1305
0
28271
829
15595
9785
759
12681
1848
1017
6071
5663
58203
13478
24688
FY12
5.5
32.6
29.2
4.3
3.1
FY13
6316
42156
48472
1078
0
31144
837
20447
12385
712
12754
3496
1181
5618
10480
62236
16189
25479
FY13
4.0
27.5
52.7
4.2
2.8
FY10
FY11
FY12
10727
12819
16323
-131
-3822
3565
10596
8997
19888
950
697
-10410
2163
2911
-7382
13708
12606
2095
Down 21% from its 52week High
Up 14% from its 52 week Low
FY13
15948
-6839
9109
-1833
-7852
-575
Narnolia Securities Ltd,
Source - Comapany/EastWind Research
4

5. UltraTech Cement Ltd.
Company Update
Buy
CMP
Target Price
Previous Target Price
Upside
Change from Previous
1675
1846
1875
10%
-2%
Market Data
BSE Code
NSE Symbol
532538
ULTRACEMCO
52wk Range H/L
Mkt Capital (Rs Crores)
Average Daily Volume (Nos.)
Nifty
2066/1404
45942
18377
6272
Stock Performance-%
1M
-7.3
-9.0
Absolute
Rel. to Nifty
1yr
-14.8
-19.9
YTD
-10.2
-14.3
Share Holding Pattern-%
Promoters
FII
DII
Others
2QFY14
62.0
20.7
4.8
12.6
1QFY14 4QFY13
62.0
62.0
20.7
20.6
4.6
4.6
12.7
12.7
1 yr Forward P/B
1x
3x
5x
7x
Aug-04
Mar-05
Oct-05
May-06
Dec-06
Jul-07
Feb-08
Sep-08
Apr-09
Nov-09
Jun-10
Jan-11
Aug-11
Mar-12
Oct-12
May-13
Price
2x
4x
6x
Source - Comapany/EastWind Research
"BUY"
14th Jan' 14
The outlook continues to remain challenging. Demand growth in FY14 is likely to be around 5 %,
though in the long term growth is likely to be over 8 % - 15% . Government initiatives to
expedite large infrastructure projects have yielded little so far and this is putting pressure on
cement makers, especially those with debt that has become expensive to service due to high
interest rates.We believe that UltraTech will maintain its healthy debt protection metrics ,
supported by its earnings and cash flows.At present Ultratech is running at 79% of its capacity
utilization.The utilization levels will decline due to stabilization of supply from new capacities,
owing to insufficient demand in the domestic market. UltraTech plans to strengthen its logistics
infrastructure and increase its captive power plant capacity, which will help to reduce its
operational cost.We value the stock at the target price of Rs 1846. From the current level the
upside is very limited (10%), so we recommend investors to "Buy" the stock at dips to get a
decent returns. : Ultratech Cement reported a 52 per cent dip in net profit for the July-September
Q2FY14 Update
quarter at Rs 264. Net sales were down 4 per cent at Rs 4,502 crore .Cement and clinker sales
remained unchanged compared with last year at 9.1 million tonnes while white cement and wallcare putty sales were up 15 per cent at 2.75 lakh tonnes (2.39 lakh tonnes). Despite flat cement
sales, overall cost increased 4 per cent to Rs 4,100 crore (Rs 3,927 crore) on the back of high
logistics cost.Overal realisation during the quarter was down 5 per cent at Rs 239 per 50 kg bag
compared with Rs 252 in last year.The company’s long-term borrowings stood lower at Rs 3,841
crore (Rs 3,893 crore), while deferred tax liabilities increased 9 per cent to Rs 2,073 crore (Rs
1,906 crore). EBITDA slipped 34.3 percent on yearly basis to Rs 660 crore and operating profit
margin declined 670 basis points Y-o-Y to 14.7 percent in the quarter.
Struggle for beter Manufacturing : Financial performance impacted by lower selling price and
subdued demand. The demand remained sluggish due to prolonged monsoon across the country,
resulted in reduced offtake by infrastructure and real estate companies. During the quarter
,benefit of lower imported coal prices was get cancelled due to sharp depreciation of the rupee
against the dollar. Logistics and raw material costs continued to rise given the high diesel prices.
However, optimisation of fuel mix i.e use of pet coke helped to lower power and fuel costs to an
extent.
Capacity Addition : Meanwhile, UltraTech Cement agreed to purchase debt-laden Jaiprakash
Associates' Gujarat cement unit having a capacity of 4.8 million tonnes for Rs 3,800 crore. Gujarat
cement unit comprises of an integrated cement unit at Sewagram and grinding unit at Wankbori.
With this acquisition of 4.8 million tonnes per annum, the company's current capacity increases to
59 million tonnes per annum. The transaction implies a valuation of $124 per tonne of cement,
which is lower than the existing benchmark of around $140 per tonne, and is a positive for
UltraTech.Currently, UltraTech’s debt is around Rs.4,500 crore. After the transaction is completed,
the company’s net debt-to-equity ratio will increase to around 0.45 from 0.27. Debt will increase
to 2 times EBIDTA. With projects underway it will stand raised to 70 million tonnes by 2015.
Financials :
Net Revenue
EBITDA
Depriciation
Interest Cost
Tax
PAT
Q2FY14
4522
679
257
89
107
264
Y-o-Y %
-4.3
-34.4
10.8
48.3
-54.1
-52.0
Q-o-Q %
-9.2
-36.7
2.0
34.8
-56.7
-60.8
Q2FY13
4727
1035
232
60
233
550
Q1FY14
4980
1072
252
66
247
673
(In Crs)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
5

6. UltraTech Cement Ltd.
On The Expansion Front : Setting up a cement plant with 5.5 MMTPA cement and a 75 mega
watt (MW) captive power plant, with an investment of Rs 2,500 crore. The company has
received approval from Expert Appraisal Committee (EAC), under the Ministry of Environment,
for the proposed facility. The cement plant will be based on the dry process technology for
cement manufacturing with pre-heater and pre-calciner technology and the coal requirement for
the project will be met by importing it from Indonesia and South Africa, as an interim basis.
Petcoke will be procured from Reliance Industries Limited, Jamnagar.
Company Description :
UltraTech had an estimated market share of around 18 per cent, with presence across regions north being the largest, contributing 33 per cent to its sales, followed by west (31 per cent),
south (20 per cent), and east (16 per cent) - thereby insulating it from downtrends in any single
region. The company has a strong focus on improving operating efficiencies; it has 529
megawatts (MW) of captive power generation capacity, which meets 80 per cent of its power
requirement and also maintains power consumption norms in line with the other players in the
industry.
P/L PERFORMANCE
Net Revenue from Operation
Other Income
Total Income
Power and fuel
Freight and forwarding
EBITDA
Depriciation
Interest Cost
Tax
PAT
ROE%
P/B
FY11
13798
154
13952
3280
2881
2696
813
292
384
1367
13
2.9
FY12
19232
371
19603
4639
3741
4194
963
256
948
2403
19
3.2
FY13
21319
304
21623
4646
4243
4839
1023
252
1179
2678
18
3.4
Narnolia Securities Ltd,
FY14E
21267
363
21630
4607
4586
3791
1110
325
775
1934
11
2.9
Net Revenue from Operation
6,000
Sales Growth
160.0
140.0
5,000
120.0
4,000
100.0
80.0
3,000
60.0
2,000
40.0
20.0
1,000
(20.0)
Q4FY14E
Q2FY14
Q3FY14E
Q1FY14
Q4FY13
Q3FY13
Q2FY13
Q1FY13
Q4FY12
Q3FY12
Q2FY12
Q1FY12
Q4FY11
Q3FY11
-
Q2FY11
Q1FY11
OUT LOOK :
Ultratech's EBIDTA growth has been consistently beats the industry average as well as its peers
ACC and Abuja cements. In last few years it also led the industry and its peers on PAT growth .It
beats its peers on account of cement realization and volume sales. Additionally Ultratech has
also been increasing the usage of low cost pet coke in its fuel mix there by moderating its cost
pressure. Strong Brand premium and operational efficiency drives its industry leading
profitability . With the overall slow down in demand, Ultratech will continue to loose its market
share in FY14E on capacity delay. Hence, We are expecting 8%-15% Sales growth with ~19% ROE
in FY15E.We expect cement demand to pick up from 2HFY14 onwards driven by governments
pre-election spending as well as on account of rural demand pick post the good monsoon
witnessed this year. UTCL is a largest cement player in India and we expect it to maintain or
increase the same through timely commissioning of capacities, which are expect to come on
stream by FY15E.We value the stock and arrive at the target price of Rs 1846. As from the
current level the upside is very limited (10%), so we recommend investors to "Buy" the stock
at lower level dips to get a decent returns over a time horizon of 12-18 months.
Source - Comapany/EastWind Research
60
50
Capacity Of Cement Production (in MT) 85
Cement Production
Cement Capacity Utilisation in %
80
40
75
30
70
20
65
10
0
60
FY09
FY10
FY11
FY12
FY13
Source - Comapany/EastWind Research
30
NPM %
OPM %
EBITDA %
27
25
24
22
20
21
19
19
15
16
15
14
13
10
12
22
18
12
10
5
FY09
FY10
FY11
FY12
FY13
6

7. UltraTech Cement Ltd.
B/S PERFORMANCE
Share capital
Reserve & Surplus
Total equity
Long-term borrowings
Short-term borrowings
Long-term provisions
Trade payables
Short-term provisions
Total liabilities
Intangibles
Tangible assets
Capital work-in-progress
Long-term loans and advances
Inventories
Trade receivables
Cash and bank balances
Short-term loans and advances
Total Assets
RATIOS
P/B
EPS
Debtor to Turnover%
Creditors to Turnover%
Inventories to Turnover%
CASH FLOWS
Cash from Operation
Changes In Working Capital
Net Cash From Operation
Cash From Investment
Cash from Finance
Net Cash Flow during year
FY10
124
4495
4620
857
750
32
683
133
8375
6
4953
260
146
827
210
112
219
8375
FY10
3.1
88.1
2.9
9.5
1.2
FY10
1673
-79
1593
-843
-740
10
FY11
274
10373
10647
3295
727
113
1830
473
21630
39
12265
760
583
2094
825
190
873
21630
FY11
2.9
49.9
6.0
13.3
1.5
FY11
2195
-197
1998
-2240
248
6
FY12
274
12550
12824
4843
705
121
2207
709
24904
40
12729
1940
1544
2198
1089
214
1041
24904
FY12
3.2
87.7
5.7
11.5
1.1
FY12
3482
-96
3385
-3050
-353
-18
FY13
274
14955
15230
5169
1227
135
2338
949
29590
62
14254
3601
1066
2541
1376
185
1048
29590
FY13
3.4
97.7
6.5
11.0
1.2
FY13
4122
-481
3641
-4407
715
-51
Trading At :
7000
6000
5000
4000
3000
2000
1000
0
2500
2000
1500
1000
NIFTY
ULTRACEMCO
500
0
Narnolia Securities Ltd,
Source - Comapany/EastWind Research
7

8. DB Corp
"BUY"
14th Jan' 14
"On strong footing"
Company update
CMP
Target Price
Previous Target Price
Upside
Change from Previous
BUY
302
340
13%
-
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Cr)
Average Daily Volume
Nifty
533151
DBCORP
318.65/210
5502
25750
6273
Stock Performance
1M
Absolute
11.5
Rel. to Nift
14.0
1yr
25.0
21.6
YTD
-
Share Holding Pattern-%
Current
Promoters
FII
DII
Others
74.96
17.7
2.95
4.36
2QFY14 1QFY14
74.97
16.5
4.00
4.57
Stock Performace with Nifty
75.0
14.7
5.34
5.02
Festive season coupled with the recently held state assembly elections in 4 states
(Rajasthan, M.P, Chhattisgarh, and Delhi) will likely drive revenue growth for print
media companies. Across the print media players, DB Corp will be one of the strong
beneficiaries for prospect of revenue generation. These 4 states contribute almost 60%
of its revenue.
Recently, Print media companies decided to hike its cover prices selectively in its
mature market to maintain its margin due to increase in news print cost. Going
forward, improving ad revenue, cost control measures and expanding into new area
would energize its revenue visibility in near future.
About the Company: DB Corp, the publisher of Dainik Bhaskar, is a leading publishing
house with its highest readership in the country. It publishes 8 newspapers, 65
newspaper editions and around 200 sub-editions in 4 languages (Hindi, Gujarati, English
and most recently Marathi) in 13 Indian states.
Earning Preview (3QFY14E): DB Corp is like to report 19% (YoY) revenue growth to Rs
366cr led by 18% of revenue growth and 15% of subscription revenue. PAT is expected
to grow by 17% (YoY) to Rs 85Cr. We expect to see EBITDA margin up by 100-150bps
(YoY) to 28-28.5% because of benign RM cost.
Key facts to watch out: Commentary on response of new editions (Patna, Akola and
Amravati), new expansion plan, trend of ad revenue from 4 states poll and from
governments.
Fit well on strong footing: Management is very confident of achieving 17% to 20%
growth rate in upcoming quarter. The Company is following principle of launching at
least 2 editions in a year and enter into at least one 1 market in every 2 years. Company
launched Akola edition in July and Amravati edition in August. Recently company has
launched its Patna edition. According to the company, the initial response in Bihar is
quite encouraging and as per booking, record of new subscription makes it no.1 in the
first day of its launch.
Expanding into new exposure: The company has interest in radio under the MY FM
brand (94.3), operating in 17 FM radio stations across mini metros and small towns. The
company also has exposure to new media with internet and short messaging service
(SMS) portals.
View and Valuation: In view of upcoming general election, we expect government ad
spending to go up substantially. Being one of the biggest player, company will benefit
from this. Considering its long-term growth story with favorable earning scenario and
leadership position in key market, we are positive on the stock. We initiate “BUY” view
on the stock with the target price of Rs 340. At a CMP of Rs 305, stock trades at 4.3x of
FY15E P/BV.
Financials
Revenue
EBITDA
PAT
EBITDA Margin
PAT Margin
2QFY14
437.98
112.45
63.24
25.7%
14.4%
1QFY14
449.4
135.38
77.71
30.1%
17.3%
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
Rs, Cr
(QoQ)-%
2QFY13
(YoY)-%
-2.5%
378.37
15.8%
-17%
81.36
38%
-19%
45.41
39%
(440 bps)
21.5%
420 bps
(290 bps)
12.00%
220 bps
(Source: Company/Eastwind)
8

9. DB Corp
Revenue Segments
Revenue Geography-wise
Financials
Rs,cr
Sales
RM Cost
WIP
Employee Cost
Ad Spend
Event Expenses
consumption of store & spare
Distribution expenses
Other expenses
Total expenses
EBITDA
Depreciation and Amortisation
Other Income
EBIT
Interest
PBT
Tax Exp
PAT
Growth-% (YoY)
Sales
EBITDA
PAT
Expenses on Sales-%
RM Cost
Employee Cost
Other expenses
Tax rate
Margin-%
EBITDA
EBIT
PAT
Valuation:
CMP
No of Share
NW
EPS
BVPS
RoE-%
P/BV
P/E
FY10
1062.1
327.87
-0.0016
131.81
12.98
11.83
51.49
22.81
161.24
720.0284
342.0716
37.83
11.15
304.2416
35.69
279.7016
105.72
173.9816
FY11
1265.18
383.91
-0.06
184.56
12.52
16.02
58.7
21.28
185.2
862.13
403.05
43.28
14.18
359.77
15.3
358.65
99.97
258.68
FY12
1451.51
508.04
-0.04
242.93
15.04
15.04
83.62
24.34
216.06
1105.03
346.48
50.57
24.02
295.91
9.23
310.7
98.32
212.38
FY13
1592.32
544.54
0.03
279.5
17.21
12.08
94.81
28.01
234.07
1210.25
382.07
58.06
21.34
324.01
7.99
337.36
113.18
224.18
FY14E
1865.97
653.09
0.04
335.88
22.39
18.66
115.69
33.59
279.90
1459.2
406.7
64.6
24.3
342.1
8.0
358.4
120.2
238.2
FY15E
2182.15
763.75
0.04
403.70
28.37
21.82
150.57
41.46
329.51
1739.2
442.9
75.6
28.4
367.4
5.1
390.7
131.1
259.6
10.5%
132.2%
265.4%
19.1%
17.8%
48.7%
14.7%
-14.0%
-17.9%
9.7%
10.3%
5.6%
17.2%
6.5%
6.2%
16.9%
8.9%
9.0%
30.9%
12.4%
15.2%
10.0%
30.3%
14.6%
14.6%
7.9%
35.0%
16.7%
14.9%
6.8%
34.2%
17.6%
14.7%
7.1%
32.0%
16.6%
15.0%
6.4%
34.3%
17.0%
15.1%
6.0%
32.2%
28.6%
16.4%
31.9%
28.4%
20.4%
23.9%
20.4%
14.6%
24.0%
20.3%
14.1%
21.8%
18.3%
12.8%
20.3%
16.8%
11.9%
239.15
18.15
648.7
9.59
35.74
26.8%
6.7
24.9
246.25
18.3
828.87
14.14
45.29
31.2%
5.4
17.4
219.45
18.3
927.08
11.61
50.66
22.9%
4.3
18.9
212.1
18.33
1029.15
12.23
56.15
21.8%
3.8
17.3
302.0
18.3
1160.1
12.99
63.29
20.5%
4.8
23.2
302.0
18.3
1301.7
14.16
71.02
19.9%
4.3
21.3
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
(Source: Company/Eastwind)
9

10. Zensar Tech
Company update
Buy
CMP
Target Price
Previous Target Price
Upside
Change from Previous
412
440
400
7%
10%
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Crores)
Average Daily Volume
Nifty
504067
ZENSARTECH
424/181
1800
20884
6273
Stock Performance
1M
29.1
28.5
Absolute
Rel. to Nifty
1yr
49
43.6
YTD
23.99
21.42
Share Holding Pattern-%
Current
Promoters
FII
DII
Others
1QFY14
48.27
11.99
0.96
38.78
48.35
11.68
1.26
38.71
1 year forward P/E
4QFY13
48.36
10.75
1.28
39.61
"BUY"
14th Jan' 14
Management expects good growth starting from 4QFY14E with its Infrastructure
Management (IM) business gaining momentum. The deal booking and pipeline is good
and expects to perform well going forward. It expects double-digit growth in the
Enterprise Services business for the FY15 on the back of healthy pipeline. In addition, it
anticipates good growth from the IMS for the FY'15.
Zensar is on the way to shut down few if its data centre in on site business, and
entering into new emerging space in Social networking, Mobility, Analytics and Cloud
because of good demand. We expect that order pipeline could be healthier on the
back of good demand seen in these emerging areas.
3QFY14E earnings preview: Zensar Tech is likely to report 5-6% (QoQ) sales growth led
by healthy growth across all geographies and PAT growth could be seen at 4-5% (QoQ).
We expect that EBITDA margin could be down by 100-150bps (QoQ) to 16%.
Key things to watch: Updates on new deal win, revenue traction from all geographies &
inorganic initiatives.
Key Facts
Strong geographical footing: Given the order book Enterprise, business expects to grow
robustly going forward. It consciously slowed down in the Japan market as it is not
profitable and closed one account in Singapore as well. The Chosen markets to perform
are the Middle East, China and Africa going forward.
Healthy order Pipeline: We are positive on the future prospects on back of the order
bookings and pipeline. The recent measures like lean execution, improved efficiencies,
and best practices are targeted at improving the profitability profile of the company in
FY14E. Recent Management comments also revealed favourable scenario of order
booking.
Inspirational revenue level of $1bn by FY16: The management has detailed the 4 focus
areas, which are expected to take Zensar to an inspirational revenue level of $1bn by
FY16. They will expect to grow its existing US relationships and growing the RIMS
business in European nation like UK, Germany and Benelux.
View and Valuation: The deal booking and pipeline is good and expects to perform well
going forward. It expects double digit growth in the Enterprise Services business for the
FY15E on the back of healthy pipeline. Also, it anticipates good growth from the IMS for
the FY'15E.
Order pipeline continues to be stable at $ 200 mn mainly on the back of good demand
seen in Mobility, Cloud Computing and social networking side. Considering healthy
order pipeline and its earning visibility in near future, we maintain “BUY” view on the
stock and we revise our target price from Rs 400 to Rs 440. At a CMP of Rs 412, stock
trades at 7.2x FY14E EPS.
Rs, Crore
Financials
2QFY14
1QFY13
(QoQ)-%
2QFY13
(YoY)-%
Revenue
599.7
533.5
12.4
545.05
10.0
EBITDA
102.54
74.1
38.4
81.05
26.5
PAT
70.6
60.9
15.9
32.17
119.5
EBITDA Margin
17.1%
13.9%
320bps
14.9%
220bps
PAT Margin
11.8%
11.4%
40bps
5.9%
590bps
(Source: Company/Eastwind)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
10

11. Zensar Tech
Clients/Headcounts Metrics;
Number of million dollar
$1mn+
$5mn+
$10mn+
$20mn+
47
6
1
1
43
7
2
1
41
7
2
1
40
8
2
1
49
6
1
1
47
6
1
1
35%
40%
69
35%
42%
59
35%
42%
56
35%
43%
55
37%
43%
66
39%
46%
61
69%
31%
81%
7286
72%
28%
82%
6825
70%
30%
83%
6504
69%
31%
82%
6508
68%
32%
81%
6519
67%
33%
80%
6657
FY10
497.08
0.00
497.08
0.00
393.17
0.00
393.17
103.91
24.92
8.15
0.00
78.99
0.55
86.59
2.43
84.16
FY11
562.56
15.03
577.59
0.00
343.12
135.71
478.83
98.76
25.88
14.20
0.00
72.88
0.85
86.23
-2.24
88.47
FY12
700.15
12.57
712.72
0.00
411.36
165.98
577.34
135.38
25.05
27.91
0.00
110.33
1.03
137.21
42.67
94.54
FY13
2114.52
13.95
2128.47
236.86
1177.83
418.73
1833.42
295.05
33.16
8.66
0.00
261.89
9.95
260.60
86.07
174.53
FY14E
2403.19
16.82
2420.01
269.30
1258.40
532.40
2060.11
359.90
38.59
72.60
0.00
321.31
9.61
384.30
134.50
249.79
FY15E
3205.99
22.44
3228.44
359.27
1678.79
710.26
2748.31
480.13
51.48
80.71
0.00
428.65
7.69
501.67
175.58
326.08
17.8%
28.7%
38.9%
13.2%
-5.0%
5.1%
24.5%
37.1%
6.9%
202.0%
117.9%
84.6%
13.7%
22.0%
43.1%
33.4%
33.4%
30.5%
20.9%
15.9%
16.9%
17.6%
13.0%
15.7%
19.3%
15.8%
13.5%
14.0%
12.4%
8.3%
15.0%
13.4%
10.4%
15.0%
13.4%
10.2%
79.1%
0.0%
2.8%
59.4%
23.5%
-2.6%
57.7%
23.3%
31.1%
55.3%
19.7%
33.0%
52.4%
11.2%
35.0%
52.4%
11.2%
35.0%
272.10
2.16
293.93
38.96
136.08
28.6%
16.4%
2.00
6.98
157.85
4.34
366.96
20.38
84.55
24.1%
19.9%
1.87
7.74
180.00
4.34
417.42
21.78
96.18
22.6%
37.3%
1.87
8.26
248.58
4.36
751.69
40.03
172.41
23.2%
21.9%
1.44
6.21
412.00
4.37
958.03
57.16
219.23
26.1%
17.4%
1.88
7.21
412.00
4.37
1238.10
74.62
283.32
26.3%
14.1%
1.45
5.52
Client Contribution to Business
top 5 clients
top 10 clients
DSO
Effort & Utilization
Onsite
Offshore
Utilization (Including Trainees)
Headcount
Financials;
Rs, Cr
Net Sales
Other Operating Income
Total income from operations (net)
Purchases of stock-in-trade
Employee Cost
Other expenses
Total Expenses
EBITDA
Depreciation
Other Income
Extra Ordinery Items
EBIT
Interest Cost
PBT
Tax
PAT
Growth-%
Sales
EBITDA
PAT
Margin -%
EBITDA
EBIT
PAT
Expenses on Sales-%
Employee Cost
Other expenses
Tax rate
Valuation
CMP
No of Share
NW
EPS
BVPS
RoE-%
Dividen Payout ratio
P/BV
P/E
(Source: Company/Eastwind)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
11

12. Infosys
"BUY"
13th Jan' 14
"On the way of excitement"
Result update
BUY
Inline sales and beats the street on margin front, upgraded earning guidance;
CMP
Target Price
Previous Target Price
Upside
Change from Previous
3549
3910
3620
10%
8%
Infosys largely reported inline set of sales numbers and beats the street on margin
front, In USD term, Sales grew by 1.65%(QoQ) and 0.5%(QoQ) in INR term, led by 0.7%
(QoQ) volume growth and 0.7%(QoQ) pricing growth. However, the good news is that
the PAT grew by 21% because of cost rationalization, sequentially.
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Crores)
Average Daily Volume
Nifty
500209
INFY
35810/2190
203790
1240448
6171
Stock Performance
Absolute
Rel. to Nifty
1M
6.3
3.3
1yr
52.4
49.1
YTD
53.1
49.4
Share Holding Pattern-%
Promoters
FII
DII
Others
Current
15.94
39.93
16.16
27.97
1 year forward P/E
1QFY14 4QFY13
16.04
16.04
39.55
40.52
18.28
17.51
26.13
25.93
On an ongoing basis, Infosys will retain its revenue acceleration and margin expansion,
also operating metrics will turn into greenery from hay. Upgradation of earning
guidance by management hinted to join the party to enjoy with 12-14% earnings
growth for FY14E like its bellwether.
Considering the strategy to build clients relation, execution of growth oriented policy
and combination of reduced onsite costs and higher utilization would be an optimistic
growth story despite recent hiccups of top management exit.
Healthy Margin growth: During the quarter, its EBIT margin expanded by 310 bps (QoQ)
to 25%. The company's cost cutting measures are yielding the expected gains. This again
is in line with what the market was expecting. During the December quarter, Infosys
selling and marketing expenses declined by 13.3% compared to the second quarter.
Administrative expenses too have declined by 18.4% in dollar terms. Both these have
helped improve operating margins.
Steady volume growth: The volume growth in the quarter was weak, 0.7% (QoQ)
growth with stable pricing growth of 0.7%(QoQ), but it is also weak for the group and for
Infosys. we expect it to be improve in the coming quarters.
Healthy deal pipeline: Overall, the company continues to show signs of recovery at the
operational level. The company has added 54 new clients in the quarter and added 15
clients where the deal size is over $100 million. This implies that client confidence is
returning.
Earning Guidance: Infosys upgrades its earning guidance from 6-10% to 9-10% to 11.512% for FY14E, now nearest to NASSCOM guidance (12-14%). Management is very
confident to achieve the guidance figure and stated much focused on creating superior
financial performance ahead.
View and Valuation: Infosys seems to be on its way to rediscovering its past mojo with
revenue momentum kicking, and the NRN invisible hand in play. Further
announcement of strategic acquisitions, better utilization of cash balances, better deal
win, consistent client traction and revenue momentum would help the company to
bridge the gap with rivals such as TCS.
Considering the revised guidance by management and its growth priority than margin
inching up strategy, we upgraded our EPS from Rs 181/208 to Rs 188/218 for
FY14E/15E. At a CMP of Rs 3549, it trades at 16.3x FY15E At a CMP of Rs 3549, it trades
at 16.3x FY15E earnings. We retain our “BUY” view on the stock with a target price of
target price of Rs 3910 (revised from 3620).
Rs, Crore
Financials
3QFY14
2QFY14
3QFY13
(YoY)-%
(QoQ)-%
Revenue
13026
12965
10424
25.0
0.47
EBITDA
3258.9
2836.9
2677
21.7
14.88
PAT
2874.9
2406.9
2369
21.4
19.44
EBITDA Margin
25.0%
21.9%
310bps
25.7%
(70bps)
PAT Margin
22.1%
18.6%
350bps
22.7%
(60bps)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
12

13. Infosys.
Revenue growth in USD term-(QoQ)
In USD term, Sales grew by 1.65%(QoQ)
in USD term and 0.5%(QoQ) in INR term,
led by 0.7% volume growth and
0.7%(QoQ) pricing growth. Mgt revised
revenue growth to 11.5%-12% for FY14E.
(Source: Company/Eastwind)
Margin-%
EBIT margin expanded by 310 bps (QoQ)
to 25%. Mgt expects to see margin
growth in near term.
(Source: Company/Eastwind)
Segmental Performance:
On segmental front: Infosys has reported teen set of growth in all segments;
Sales Growth-%
Margin-%
Segments
Sales contribution-%
Margin-%
QoQ
YoY
QoQ
YoY
BFSI
33.5%
0.8%
24.2% 29.9%
340bps
80bps
Manufacturing
22.8%
-1.3%
31.3% 24.2%
340bps (50bps)
Energy&Utilities
19.1%
-0.1%
16.4% 28.8%
30bps (130bps)
Retail, Logis-&Life sc24.6%
2.1%
27.6% 27.52% 560bps (230bps)
On QoQ, Company’s margin improved in
entire segments .
(Source: Company/Eastwind)
Volume and Pricing Growth (QoQ)-%
With 0.7% pricing growth, volume
growth was reported by 0.7%
growth(QoQ), impacted by seasonal
wave.
(Source: Company/Eastwind)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
13

14. Infosys.
Geography wise revenue contribution-
we expect that growth from Euro as well
as Europe would prove a milestone for
the company ahead because of healthy
demand environment and optimistic
tempo of clients expanding.
(Source: Company/Eastwind)
On geographical front: During the quarter, company has reported 4% revenue growth
from Euro and RoW each, which contributes 25% and 13% of sales. While revenue from
US declined by 2%, it contributes 60% of Sales.
Clients Metrics
Clients Concentration:
Clients Category
1QFY13 2QFY13 3QFY13
Top clients
4.1%
4%
3.60%
Top 5 clients
16.2%
16%
15%
Top 10 clients
25.3%
25.40% 23.90%
Total Clients and Clients Addition:
4QFY13
3.6%
14.7%
24.0%
1QFY14 2QFY14
3.9%
4%
14.9%
15%
24.0%
24.5%
3QFY14
3.70%
14%
23.5%
The company has added 54 new clients in
the quarter and added 15 clients where
the deal size is over $100 million. This
implies that client confidence is
returning.
Clients, number 3QFY13 4QFY13 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14
Active clients,nos
665
694
711
715
776
798
836
873
888
New clients
49
52
51
39
89
56
66
68
54
(Source: Company/Eastwind)
Headcount Metrics:
Employee's
Total Employees (Cons-)
Net additions
Laterals hired
LTM Attrition (Stand-)
1QFY13
151,151
1,157
5,233
14.9%
2QFY13
153,761
2,610
3,656
15.0%
3QFY13
155,629
1,868
4,351
15.1%
4QFY13 1QFY14
156,688 157,263
1,059
575
3,545
3,008
16%
16.9%
2QFY14 3QFY14
160,227 158404
2,964 -1823
3,806 3,333
17.3% 18.10%
Its attrition increased to 18% from
17.3%(2QFY14) on LTM basis, however
on sequentially basis they have been able
to control its attrition. we hope that the
further salary hikes across the board will
bring down the attrition levels going
forward.
Utilization:
We expect that Infy’s improving
utilization despite higher attrition
compare to its nearest bellwethers is
good sign for its future growth story.
(Source: Company/Eastwind)
The Company's Utilization is likely to keep inching up, which could lead to margin
expansion for a couple of quarters and that is going to be a huge positive for Infosys as a
company.
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
14

15. Infosys.
Key facts from Management Interview;
■ Management upgraded its earning guidance for FY14E from 9-10% to 11.5-12%. This
guidnace means the company only has to achieve flat growth in the fourth quarter to
meet the projection.
■ With 85% of the company’s revenues coming from clients based in US and Europe, the
company should hope the current economic recovery in developed countries would help
its revenues.
■They are seeing confidence coming back from client’s metrics. However, they expect
[their] budgets only remain stable from last year. Clients are still focused on cost.
■ The Company is looking to bring in about maximum 6,000 off-campus offers starting
late January early February, so there is a lot of activity going on that is bringing people in,
engaging and developing.
Financials
Rs in Cr,
Sales, INR
Employee Cost
Other expenses
Total Expenses
EBITDA
Depreciation
Other Income
EBIT
Interest Cost
PBT
Tax
PAT
Growth-%
Sales
EBITDA
PAT
Margin -%
EBITDA
EBIT
PAT
Expenses on Sales-%
Employee Cost
Other expenses
Tax rate
Valuation
CMP
No of Share
NW
EPS
BVPS
RoE-%
Dividen Payout ratio
P/BV
P/E
FY10
22742
12085
2792
14877
7865
905
982
7942
0
7942
1681
6261
FY11
27501
14856
3677
18533
8968
854
1211
9325
0
9325
2490
6835
FY12
33734
18340
4671
23011
10723
928
1904
11699
0
11699
3367
8332
FY13
40352
22565
6254
28819
11533
1099
2365
12799
0
12799
3370
9429
FY14E
50330
28185
8556
36741
13589
1371
2567
14785
0
14785
3992
10793
FY15E
59631
33691
10734
44425
15206
1624
3578
17160
0
17160
4633
12527
4.8%
9.3%
4.6%
20.9%
14.0%
9.2%
22.7%
19.6%
21.9%
19.6%
7.6%
13.2%
24.7%
17.8%
14.5%
18.5%
11.9%
16.1%
34.6%
34.9%
27.5%
32.6%
33.9%
24.9%
31.8%
34.7%
24.7%
28.6%
31.7%
23.4%
27.0%
29.4%
21.4%
25.5%
28.8%
21.0%
53.1%
12.3%
21.2%
54.0%
13.4%
26.7%
54.4%
13.8%
28.8%
55.9%
15.5%
26.3%
56.0%
17.0%
27.0%
56.5%
18.0%
27.0%
2615
57.4
23049.0
109.1
401.7
27.2%
25.1%
6.5
24.0
2765
57.4
25976.0
119.0
452.4
26.3%
45.9%
6.1
23.2
2865
57.4
31332.0
145.1
545.6
26.6%
24.0%
5.3
19.7
2400
57.4
37994.0
164.2
661.7
24.8%
45.1%
3.6
14.6
3549
57.4
45629.8
188.0
794.7
23.7%
23.0%
4.5
18.9
3549
57.4
54797.5
218.2
954.3
22.9%
19.8%
3.7
16.3
(Source: Company/Eastwind)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
15

16. INDUSIND BANK
Result update
NEUTRAL
CMP
402
Target Price
428
Previous Target Price
Upside
6
Change from Previous( Rs)
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Cr)
Average Daily Volume
Nifty
532187
INDUSINDBK
561/318
22400
7.88
6171
Stock Performance
Absolute
Rel.to Nifty
1M
-9.2
-7.0
1yr
-6.9
-9.7
YTD
-6.9
-9.7
Share Holding Pattern-%
Current 24QFY1 3QFY1
4
3
Promoters
15.2
15.2
15.3
FII
41.1
39.9
42.3
DII
7.2
7.4
7.0
Others
36.4
37.5
35.4
INDUSIND Bank Vs Nifty
"NEUTRAL"
13th Jan, 2014
Despite of higher profit we remain have neutral view on the stock owing to
shifting of loan mix from retail loan to corporate banking. We anticipate two
things-(a) margin compression, (b) higher slippage. Retail loan generally have
higher yield in nature than corporate loans. Corporate loan has big ticket size
loans and in slowdown of economy, corporate loan emerges as biggest
slippage risk than other loans. At the current price of Rs.405, stock is trading
at 2.4 times of one year forward book. We value bank at Rs.428/share which
would be 2.5 times of FY14E’s book value.
Better than expected earnings led by higher loan growth and margin
During quarter Indusind bank reported better than expected earnings largely due to
higher loan growth and margin expansion. In 3QF14, bank reported NII growth of
26.4% YoY supported higher yield on asset to 13.7% and margin expansion of 20
bps YoY. Other income grew by 35% YoY to Rs. 480 cr in which fee income
registered growth of 30% and trading, forex and other reported 101% growth in YoY
due to low base.
Declined cost to income ratio boost PPP growth
Operating leverage (Operating expenses to total asset) remained at elevated level
but cost to income ratio declined on both front i.e. on sequential and yearly basis as
well. During quarter bank reported employee cost growth of 22% and operating cost
growth of 22% YoY to Rs.206 cr and Rs.563 cr respectively. Cost to income ratio
improved by 80 bps sequentially and 280 bps yearly to 46.5%. This led pre
provisioning profit growth of 37% YoY.
Asset quality witnessed deterioration in sequential basis
During quarter bank witnessed deterioration in asset quality with GNPA and net NPA
in absolute term deteriorated by 14.7% QoQ and 51% QoQ respectively. Fresh
slippages were 1.4% (annualized) as against 1.1% in last quarter. Bank made lower
provisions against loan loss, as the result net NPA as the percentage of net loan
reached to 0.3% as against 0.2% in 2QFY14. Provision coverage ratio (without
technical write off) declined to 73.6% from 80% in 2QFY14 but still above of
regulatory requirement of 70%.
Financials
NII
Total Income
PPP
Net Profit
EPS
2011
1376
2090
1082
577
12.4
2012
1704
2716
1373
803
17.2
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
Rs, Cr
2013
2014E
2015E
2233
2787
4053
3596
4562
5827
1839
2452
2972
1061
1320
1633
20.3
25.3
31.1
(Source: Company/Eastwind)
16

17. INDUSIND BANK
Better than expected profit on the back of healthy core earnings, lower CI ratio and
lower provision
With the support of healthy core earnings, improvement in cost income ratio and lower
provisions, net profit grew by 30% YoY to Rs. 347 cr as against our expectation of
Rs.303 cr largely due to higher than expected loan growth and operating leverage.
Healthy profit led ROA and ROE to 1.74% and 16.8% respectively.
Margin expansion of 10 bps YoY to 3.7%
Bank reported NIM expansion of 20 bps YoY to 3.7% largely due to improvement in loan
yield whereas cost of deposits remained flat. Going forward margin would be
compressed due to bank’s strategy to shift loan mix from consumer to corporate. Loan on
yield during quarter was 13.7% versus 13.5% in last quarter while cost of fund by and
large stable at 10%.
Moderate deposits growth due to muted current and term deposits growth
In balance sheet front, bank reported moderate growth 10% YoY in deposits largely due
to stagnant growth in current account and term deposits. Demand deposits grew by 4%
YoY whereas saving deposits grew by 50% YoY. As a percentage of total deposits
demand deposits and saving deport were 15.7% and 16.5% versus 16.6% and 12.1% in
3QFY13 respectively. CASA ratio was remained flat at 29.6% from 31.4% in 2QFY14 and
28.7% in 3QFY13. Term deposited reported growth of 4.7% YoY to Rs.382 bn.
Loan growth higher than industry average and shifting of loan mix
Loan reported 27.4% YoY growth above industry average of 20% despite of slowdown in
economy. During quarter bank witnessed shifting of loan composition from consumer
finance division to corporate finance which would be result of margin compression and
deterioration asset quality. Consumer loan (which is generally high yielding in nature)
composition has changed to 47% of loan advance from 52% in 3QFY13 whereas
corporate banking division constitute 53% of loan. Corporate loans are generally in high
ticket size and in slowdown of economy; there is high chances of such loan slip into NPA.
But this quarter we note that bank is able to improve it yield in both front. Corporate yield
improved to 11.9% from 11.5% and retail loan improved to 15.6% from 15.5% in
sequential basis.
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
17

18. INDUSIND BANK
Fundamenatl Through Graph
NII profit led by higher loan growth and
margin expansion
Sequentail and yearly improvement of CI
ratio boosted PPP
Higher core earnings, improvement in CI ratio
and lower provisions support profit growth
higher than expecattion
Source: Eastwind/Company
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
18

19. INDUSIND BANK
Fundamenatl Through Graph
Loan growth higher than industry average
and moderate growth in deposits led by
muted current deposits and term deposits
Margin expansion of 10 bps on account of
increased in loan yiled and stable cost of fund
Valuation Band (1yr forward book value)
Trading at 1.5 times of one year forward
book which we believe fair looking at indsury
headwinds and economy
Source: Eastwind/Company
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
19

20. INDUSIND BANK
Quarterly Performance
Quarterly Result( Rs. Cr)
Interest/discount on advances / bills
Income on investments
Interest on balances with Reserve Bank of India
Others
Total Interest Income
Others Income
Total Income
Interest Expended
NII
Other Income
Total Income
Employee
Other Expenses
Operating Expenses
PPP( Rs Cr)
Provisions
PBT
Tax
Net Profit
Balance Sheet data( Rs. Bn)
Net Worth
Deposits
Borrowings
Total Liabilities
Investments
Advances
Total Assets
Asset Quality
GNPA
NPA
% GNPA
% NPA
3QFY14
1739
368
36
0
2143
480
2624
1413
730
480
1210
206
357
563
647
126
521
174
347
2QFY14
1611
365
42
0
2019
417
2435
1319
700
417
1117
202
327
529
588
89
499
169
330
3QFY13
1455
325
21
0
1800
356
2156
1223
578
356
934
168
293
461
472
79
393
126
267
% YoY
% QoQ
19.5
7.9
13.5
0.8
8664
56247
14771
81799
20134
52469
81799
8313
53058
13995
77422
19413
48968
77422
7495
51098
6567
67896
17594
42426
67896
626
165
1.2
0.3
546
109
1.1
0.2
422
125
1.0
0.3
71.9
-12.9
333.3
-13.3
19.1
6.2
35.0
15.2
21.7
7.7
15.6
7.2
26.4
4.3
35.0
15.2
29.6
8.4
22.1
1.9
21.9
9.3
22.0
6.5
37.1
10.1
60.3
42.0
32.5
4.4
38.1
3.2
29.8
5.0
15.6
4.2
10.1
6.0
124.9
5.5
20.5
5.7
14.4
3.7
23.7
7.1
20.5
5.7
48.3
14.7
32.0
51.0
Source: Eastwind/Company
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
20

21. INDUSIND BANK
Financials & Assuptions
Income Statement
2011
2012
2013
2014E
2015
Interest Income
Interest Expense
NII
Change (%)
Non Interest Income
Total Income
Change (%)
Operating Expenses
Pre Provision Profits
Change (%)
Provisions
PBT
PAT
Change (%)
3589
2213
1376
5359
3655
1704
6983
4750
2233
8308
5521
2787
10419
6367
4053
714
2090
1012
2716
1363
3596
1775
4562
1775
5827
1008
1082
1343
1373
1756
1839
2110
2452
2855
2972
504
577
577
180
1193
803
263
1576
1061
455
1997
1320
535
2437
1633
Balance Sheet
2011
2012
2013
2014E
2015E
Deposits( Rs Cr)
Change (%)
of which CASA Dep
Change (%)
Borrowings( Rs Cr)
Investments( Rs Cr)
Loans( Rs Cr)
Change (%)
34365
42362
23
11563
24
8682
14572
35064
34
54117
28
15867
37
9460
19654
44321
26
62234
15
20537
29
15559
23338
54071
22
74681
20
22404
9
18670
28005
67589
25
Ratio
2011
2012
2013
2014E
2015E
10.8
5.4
5.3
7.0
12.0
7.4
7.3
6.7
12.7
6.5
8.8
7.6
0.0
6.6
8.9
7.5
12.5
6.5
8.5
7.5
Valuation
2011
2012
2013
2014E
2015E
Book Value
CMP
P/BV
87
264
3.0
101
321
3.2
146
405
2.8
171
405
2.4
195
405
2.1
Avg. Yield on loans
Avg. Yield on Investments
Avg. Cost of Deposit
Avg. Cost of Borrowimgs
9331
5525
13551
26166
Source: Eastwind/Company
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
21

22. Private Bank Result Preview 3QFY14
Stock Performance During Quarter
Revenue growth would be moderate owing to tepid loan growth
Performance of banking sector is likely to remain modest in 3QFY14E as most of
private sector banks in our coverage are expected to reported muted net interest
income owing to tepid loan growth and stress in asset quality. However private sector
banks are expected to report stable asset quality on sequential basis as compare to
PSBs. Loan loss provision are expected to remain high due to higher restructure
assets are in pipeline as per some of key bank management. We expect impairment
of asset in private sector banks are less and slippages are expected to remain same
as in 2QFY14. We expect NII to grow by 23.6% YoY in our private banking
coverage universe. HDFC Bank and DCB are expected to report 34% and 22% YoY
in 3QFY14E led by higher than industry loan growth and stable NIM.
Operating leverage high provision dent net profit
Profitability of private sector banks are expected to report 11% YoY on the back of
loan loss provisions, MTM provisions, cost income ratio and lower core earnings.
HDFC bank and DCB are expected to report 23% YoY and 26% YoY growth in their
3QFY14E while most of large and mid cap banks are expected to report muted profit
growth. With the flow of FCNR deposits, we expect deposits cost to come down from
present level but most likely the bank get benefit from 4QFY14 and onwards.
Nifty Vs Bank Nifty during Quarter
Muted loan growth reported by system
In 2QFY14 banking industry experience loan growth of 18% YoY led by transfer of
CP/CD borrowings to bank loans while in 3QFY14 loan growth has moderated to
15% YoY (as on 13th Dec.2013) due to revival of bond and lower demand of
corporate loan led by slowdown in economy. We expect loan growth of 15-20% YoY
growth in private sector while DCB and HDFC bank are expected to grow by
20%+YoY loan growth.
Loan (Rs tn) and YoY Gr(%)
Deposits growth lead by flow of FCNR deposits
Deposits growth in the system registered 17% YoY growth as per RBI date (as on
13th Dec.2013) due to flow of FCNR deposits through RBI’s special concession
window. As per RBI data total fund inflow through FCNR is the tune of US$ 26 bn
which would help bank to keep cost of deposits low. But we expect bank would get
benefit from 4QFY14 and onwards. We expect lower cost of deposits of deposits in
private sector banks largely due to strong franchise base network. HDFC bank and
ICICI bank which have CASA of 40%+ would be benefited more than other banks in
term of low cost of fund. Through FCNR deposits we expect Yes Bank would be
leader but actual benefit would come from next quarter.
Asset quality pressure continue to persist
Asset quality pressure is likely to remain in 3QFY14E due to rising interest rate, high
inflation and slower pace of economic growth. Gross slippages are expected to be
elevated as per most of banker. We expect restructure asset in private sector bank
would be less as compare to PSBs. With the implementation of FRP (route through
which loans lead to investment book), banks are expected to report lower less
restructure asset as against previous queerer. In worsen macroeconomic
environment, we expect asset quality to remain at the level of 2QFY14.
22
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.

23. Private Bank Result Preview 3QFY14
Outlook
Broadly banking indices outperform Nifty by 6% in third quarter and most of banking
stocks are trading at attractive valuation. Despite of, we have caution view on account of
slowdown in economy, high interest rate and inflationary pressure. High inflation would be
risk for the economy going forward. Any rise in inflation would result of rise in interest
rate by RBI in its third quarter monetary policy review on 28th Jan.2014 which would be
negative for banking industry. Most of banking stocks are expected to report moderate
revenue and profit growth owing to multiple headwinds. In private sector banking
universe we like HDFC Bank, ICICI bank and DCB.
Axis Bank
Axis Bank
Rs Cr
NII
PPP
Net Profit
3QFY14E
3006
2772
1333
2QFY14
2937
2750
1362
3QFY13
2495
2311
1296
% YoY Growth
20.5
19.9
2.9
% QoQ Growth
2.3
0.8
-2.1
We expect Axis Bank to report 20% YoY loan growth and 12% YoY deposits growth.
Cost Income ratio is expected to be 42% while loan loss provision was remain same at
sequential basis. Profitability of bank would be muted on account of non improvement of
loan yield.
DCB
DCB
Rs Cr
NII
PPP
Net Profit
3QFY14E
88
42
34
2QFY14
91
40
33
3QFY13
72
32
27
% YoY Growth
22.2
31.3
25.9
% QoQ Growth
-3.3
5.0
3.0
We expect loan and deposits growth of DCB would be higher than industry average.
Profitability would be grown on account of stable asset quality. We expect Cost to Income
ratio at 66% and NIM are expected to compression by >10 bps on sequential basis. Key
monitor able would be CI ratio.
HDFC Bank
HDFC Bank
Rs Cr
3QFY14E
NII
5087
PPP
3695
Net Profit
2289
2QFY14
4477
3387
1982
3QFY13
3799
3024
1859
% YoY Growth
33.9
22.2
23.1
% QoQ Growth
13.6
9.1
15.5
We expect bank to report loan and deposits growth of 21% and 14% respectively. Asset
quality would be remained under control and profitability are expected to grow on account
of comfortable core earnings and stable asset quality. Operating leverage is expected to
be in better position.
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
23

24. Private Bank Result Preview 3QFY14
ICICI BANK
ICICI BANK
Rs Cr
3QFY14E
NII
4505
PPP
4235
Net Profit
2504
2QFY14
4044
3888
2352
3QFY13
3499
3452
2250
% YoY Growth
28.8
22.7
11.3
% QoQ Growth
11.4
8.9
6.5
We expect loan and deposits growth of 15% and 11% YoY for 3QFY14E respectively.
Revenue growth was due to hike of lending rate and asset quality is expected to be
stable on sequential basis. Operating leverage and cost of fund would be key
monitorable.
J&K BANK
J&K BANK
Rs Cr
3QFY14E
2QFY14
3QFY13
% YoY Growth
% QoQ Growth
NII
679
682
594
14.3
-0.4
PPP
496
496
435
14.0
0.0
Net Profit
339
303
289
17.5
12.0
J&K bank is expected to report 17.5% YoY profit growth on account of 20%+loan growth
and stable asset quality. We expect little bit higher of gross slippage during the quarter as
bank reported higher slippage in previous quarter. NIM would be expanded <10 bps
QoQ due to high loan yield and lower cost of fund likely to get benefit from CASA
deposits.
YES Bank
YES Bank
Rs Cr
3QFY14E
2QFY14
3QFY13
% YoY Growth
% QoQ Growth
NII
578
672
584
-1.0
-14.0
PPP
664
713
563
17.9
-6.9
Net Profit
358
371
342
4.7
-3.5
We expect Yes bank to report muted earnings on account of high credit cost and
restructure assets. Loan growth and deposits growth are expected to be line with industry
average. We expect NIM compression on account higher cost of fund and lower loan
yield. NIM is key monitorable for the quarter.
Result Preview ; at a glance
PRIVATE BANK
AXISBANK
CUB
DCB
DHANBANK
FEDERALBNK
HDFCBANK
ICICIBANK
INDUSINDBK
INGVYSYABANK
J&KBANK
KARURVYSYA
SOUTHBANK
YESBANK
Total
NII
3006
207
88
96
609
5087
4505
657
397
679
308
374
578
16591
3QFY14E
PPP Net Profit
2772
1333
152
71
42
34
22
0.72
418
230
3695
2289
4235
2504
561
303
275
173
496
339
186
41.5
255
131
664
358
13773
7808
NII
2937
190
91
82
548
4477
4044
700
440
682
298
364
672
15525
2QFY14
PPP Net Profit
2750
1362
141
84
40
33
18
-1.85
354
226
3387
1982
3888
2352
588
330
276
176
496
303
157
83
212
127
713
371
13020
7427
NII
2495
163
72
74
497
3799
3499
578
403
594
308
353
584
13419
3QFY13
PPP Net Profit
2311
1296
131
85
32
27
14
4
394
211
3024
1859
3452
2250
472
267
263
162
435
289
212
113
235
128
563
342
11538
7033
YoY Growth
NII
PPP Net Profit
QoQ Growth
NII
PPP Net Profit
20.5
27.0
19.9
16.0
2.9
-16.5
2.3
8.9
0.8
7.8
-2.1
-15.5
22.2
31.3
25.9
-3.3
5.0
3.0
29.7
57.1
82.0
17.1
22.2
-138.9
22.5
6.1
9.0
11.1
18.1
1.8
33.9
28.8
22.2
22.7
23.1
11.3
13.6
11.4
9.1
8.9
15.5
6.5
13.7
18.9
13.5
-6.1
-4.6
-8.2
-1.5
4.6
6.8
-9.8
-0.4
-1.7
14.3
14.0
17.5
-0.4
0.0
12.0
0.0
-12.3
-63.3
3.4
18.5
-50.0
5.9
-1.0
23.6
8.5
17.9
19.4
2.3
4.7
11.0
2.7
-14.0
6.9
20.3
-6.9
5.8
3.1
-3.5
5.1
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
24

25. N arnolia Securities Ltd
402, 4th floor 7/ 1, Lord s Sinha Road Kolkata 700071, Ph
033-32011233 Toll Free no : 1-800-345-4000
em ail: research@narnolia.com ,
w ebsite : w w w .narnolia.com
Risk Disclosure & Disclaimer: This report/message is for the personal information of
the authorized recipient and does not construe to be any investment, legal or taxation
advice to you. Narnolia Securities Ltd. (Hereinafter referred as NSL) is not soliciting any
action based upon it. This report/message is not for public distribution and has been
furnished to you solely for your information and should not be reproduced or
redistributed to any other person in any from. The report/message is based upon publicly
available information, findings of our research wing “East wind” & information that we
consider reliable, but we do not represent that it is accurate or complete and we do not
provide any express or implied warranty of any kind, and also these are subject to change
without notice. The recipients of this report should rely on their own investigations,
should use their own judgment for taking any investment decisions keeping in mind that
past performance is not necessarily a guide to future performance & that the the value of
any investment or income are subject to market and other risks. Further it will be safe to
assume that NSL and /or its Group or associate Companies, their Directors, affiliates
and/or employees may have interests/ positions, financial or otherwise, individually or
otherwise in the recommended/mentioned securities/mutual funds/ model funds and
other investment products which may be added or disposed including & other mentioned
in this report/message.