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As Slower Economic Growth Narnolia Securities Limited Recommended Buy Stock of Bank of India

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Information about As Slower Economic Growth Narnolia Securities Limited Recommended Buy...
Finance

Published on December 18, 2013

Author: narnolialtd

Source: slideshare.net

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Narnolia Securities Limited believe current level is attractive entry point for the investor to buy stock of Bank of India. Also buy view on TCS stock due to client spending in the US and Europe and growth in demand for technologies
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IEA-Equity Strategy India Equity Analytics BANK OF INDIA : 18th Dec, 2013 "BUY" 18th Dec 2013 Bank of India is trading at 0.5 times of one year forward book which is the lowest in valuation band despite of performing better than expectation largely due to lower CAR and slower economic growth. With the capital infusion to the tune of Rs.1000 cr and improving sign of asset quality would re-rate the stock as it did previously in our view. The management guided fresh slippage in line with 2QFY and inch up higher restructure asset for December quarter. We believe that current level is attractive entry point for the investor with time horizon more than one year with price target of Rs.235.................................... ( Page : 2- 4) TCS : "Positive commentary" "BUY" 18th Dec 2013 TCS on its management Interview to Media highlighted that; For earning and demand prospect, FY15 will be better than the ongoing fiscal on account of uptick in client spending in the US and Europe and growth in demand for technologies like cloud, mobility and Big Data.We maintain" BUY" view on the stock with a target price of Rs 2550. Taking the INR/USD (average value) at Rs60 for FY14E and Rs59.5 for FY15E, We upgrade EPS from Rs87.4 to Rs90.7 for FY14E and from Rs99.3 to Rs 102.4 for FY15E........................ ( Page : 5-6) UCO BANK : "BUY" 17th Dec 2013 We have the reduce the target price of UCO bank from Rs.94 to Rs. 84 on account of bank’s unlikely to get benefit of western sanction against Iran. Late last month US and six other major powers have imposed sanction against Iran for its nuclear deal. In order to quality for waiver sanction against Iran, India has cut back sharply on purchase of oil from Iran. UCO was the major beneficiary of current account deposits of India-Iran oil facilities. In our banking sector coverage universe, UCO bank’s cost of deposits were lowest at 6.1% whereas yield on loan was 10.1% at the end of 2QFY14. After this development, bank’s margin would be impacted and accordingly UCO bank loses the valuation premium. Although bank’s management is focusing on other area of growth like branch expansion and customer acquisition. We slightly tweak our earnings and reduce our book value estimate from Rs.175.5 to Rs.168.8. Now our revised price target for the stock would be Rs.84 which is 0.5 times of FY14E book value................ ( Page : 7-11) JLR VOLUME UPDATE : NOVEMBER 2013 16th Dec 2013 JLR wholly owned subsidiary of Tata Motors come up with November 2013 volume, the company for the month sold 37403 units up by 25% YoY. This total volume of JLR includes 6244 units of Jaguar and 31159 units of Land Rover. This month’s performance in particular is marked by stellar performance by Jaguar .................................................... ( Page : 12) Persistent System : "Persistently innovating.." "BUY" 13th Dec 2013 With the potential revenue growth, strong deal pipeline and multi-year relationships with marquee clientele in the Infrastructure vertical, we upgrade this stock and expect for better earning visibility across niche IT players.we rate “BUY” on the stock and we revise our target price from Rs 890to Rs 960. At a CMP of Rs 876, stock trades at 13.8x FY14E earnings........................ ( Page : 13-14) COAL INDIA : "BUY" 12th Dec 2013 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.News flows related to further divestment in CIL by the government is likely to keep the stock price under pressure in our view. we recommend Buy rating on the stock with our previous target price Rs.350............................................ ( Page : 15-17) LUPIN : "Optimistic Guidance " "BUY" 11th Dec 2013 The management of the company in its latest interaction said that company is confident of logging 15-20 % CAGR in US and India in the days to come on the back of rich pipeline as well as acquisition based strategy . ……………………………………… ( Page : 18-19) Narnolia Securities Ltd, 402, 4th floor 7/1, Lords Sinha Road Kolkata 700071, Ph 033-32011233 Toll Free no : 1-800-345-4000 email: research@narnolia.com, website : www.narnolia.com

BANK OF INDIA Company Update CMP Target Price Previous Target Price Upside Change from Previous BUY 206 235 14 - Market Data BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs Cr) Average Daily Volume Nifty 532149 BANKINDIA 393/126 12260 2271804 6139 Stock Performance 1M Absolute -14.5 Rel.to Nifty -13.7 1yr -32.2 -37.1 YTD -32.2 -37.1 Share Holding Pattern-% Current 1QFY14 4QFY1 3 Promoters 64.1 64.1 64.1 FII 13.2 13.6 13.5 DII 15.3 15.6 16.3 Others 7.4 6.7 6.0 BANKINDIA Vs Nifty "BUY" 18th Dec, 2013 Despite of improving fundamental from past two quarters, Bank of India is trading at 0.5 times of one year forward book which is the lowest level in our valuation parameters. We believe that current level is attractive entry point for the investor with time horizon more than one year. With the capital infusion of Rs.1000 cr by GoI and improving sign of asset quality would re-rate the stock in our view as it previously witnessed i.e. 0.8 to 1.2 times of book. The management has guided fresh slippage of about Rs.1500 cr and restructures to the tune of Rs.1000-1200 cr in 3QFY14 which is in line with 2QFY14. We recommend buy with price target of Rs. 235 Shown Improving sign of asset quality with higher recovery and up-gradation rather than write-off Most of banks especially PSUs are beaten down by the market on account of slower economic growth and stress in asset quality. But Bank of India has witnessed improvement in asset quality in 2QFY14 as fresh slippages were down by 26% sequentially and 46% Year-on-year basis. Moreover bank reported reduction to the tune of Rs.1009 cr versus Rs.1338 cr in 1QFY14. Most of reduction was due to higher recovery and up-gradation rather than write-off. Write-off came down sharply from Rs.598 cr 1QFY14 to Rs.120 cr in 2QFY14. Inch up restructure guidance in 3QFY14 As far as restructure loan are concern, bank’s total restructure loan was about 5% of total loan asset and bank’s management expects Rs.1000-1200 cr of restructure in December quarter. In 2QFY14, bank sold about Rs.370 cr of bad loan to Asset Reconstruction Company (ARC) for recovery and during quarters its plan to sell about Rs.500 cr of bad loan to ARC. Sequentially improving PCR provide cushion on stress asset Despite of stable asset quality and lower slippage, Bank of India provided 24% more provision in sequential basis which improved its provision coverage ratio(Without technical write off) to 63.3% from 61% in preceding quarter same year. Higher provision would provide cushion on stress asset without hurting profit going further. Capital infusion by GoI raise CAR ratio to 8.1% from 7.75% Bank has lower CAR to 7.75% at the end of 2QFY14 according to Basel 3 norm. Now Bank of India has approved to initiate process to raise further capital for issue of 4.63cr Equity Shares to GoI on Preferential basis at a price of Rs. 215.70 per share. This capital infusion is taking CAR ratio to 8.1% and government holding rise to 66.7% from 64.1%. Capital infusion to the tune of Rs.1000 cr diluting our FY14E’s book value by 40 bps. Rs, Cr Financials 2011 2012 2013 2014E 2015E NII 7878 8313 9024 12110 11804 Total Income 10519 11635 12790 16672 16366 PPP 5398 6694 7458 9670 9492 Net Profit 2542 2678 2749 3533 3269 EPS 46.5 46.7 47.9 61.6 57.0 (Source: Company/Eastwind) 2 Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report.

BANK OF INDIA Quarterly Result Interest/discount on advances / bills Income on investments Interest on balances with Reserve Bank of India Others Total Interest Income Others Income Total Income Interest on deposits Interest on RBI/Inter bank borrowings Others Interest Expended NII Other Income Total Income Employee Other Expenses Operating Expenses PPP( Rs Cr) Provisions Net Profit 2QFY14 6631 2129 479 0 9239 1100 10340 5966 414 333 6712 2527 1100 3627 897 628 1525 2102 1232 622 1QFY14 6190 1885 465 0 8541 1181 9722 5401 296 308 6004 2537 1181 3718 963 575 1537 2180 695 964 2QFY13 % YoY Gr % QoQ Gr 5881 12.8 7.1 1835 16.0 12.9 289 65.6 2.9 0 42.9 36.4 8005 15.4 8.2 894 23.1 -6.8 8900 16.2 6.4 5154 15.8 10.5 536 -22.8 40.0 119 179.8 8.2 5810 15.5 11.8 2196 15.1 -0.4 894 23.1 -6.8 3090 17.4 -2.4 700 28.2 -6.8 536 17.1 9.3 1236 23.4 -0.8 1854 13.4 -3.6 1552 -20.6 77.4 302 106.0 -35.5 Balance Sheet Data Equity Capital Reserve & Surplus Deposits Borrowings Other liabilities and provisions Total Liability Cash in hand Cash and balances with reserve bank of india Investment Advance Fixed Assets Others Assets Total Assets 597 25,686 432,282 41,751 12,727 513,042 24,621 34,658 107,413 332,190 2,957 11,203 513,042 575 21,774 332,695 29,434 11,262 395,739 17,080 19,198 90,147 256,148 2,839 10,327 395,739 575 21,774 332,695 29,434 11,262 395,739 17,080 19,198 90,147 256,148 2,839 10,327 395,739 9873 6156 3.0 1.9 37.6 8765 5947.3 3.0 2.0 32.1 8898 5,228 3.4 2.0 41.2 Asset Quality GNPA NPA GNPA(%) NPA(%) PCR(%) Without technical write off 3.9 3.9 18.0 18.0 29.9 29.9 41.8 41.8 13.0 13.0 29.6 29.6 44.2 44.2 80.5 80.5 19.2 19.2 29.7 29.7 4.2 4.2 8.5 8.5 29.6 29.6 11.0 12.6 17.7 3.5 Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. 3

BANK OF INDIA Financials & Assuption Interest/discount on advances / bills Income on investments Interest on balances with Reserve Bank of India Others Total Interest Income Others Income Total Income Interest on deposits Interest on RBI/Inter bank borrowings Others Interest Expended NII Other Income Total Income Employee Other Expenses Operating Expenses PPP( Rs Cr) Provisions Net Profit 2011 2012 2013 2014E 2015E 15570 5195 798 295 21858 2642 24500 12218 813 950 13981 7878 2642 10519 3492 1629 5121 5398 2909 2542 46.0 20241 7142 834 264 28481 3321 31802 17957 1145 1065 20167 8313 3321 11635 3069 1871 4941 6694 4016 2678 5.3 23139 7261 1257 251 31909 3766 35675 20238 1489 1158 22885 9024 3766 12790 3131 2201 5332 7458 4709 2749 2.7 29515 8828 1889 1 40233 4562 44795 25422 1419 1281 28123 12110 4562 16672 4131 3965 7002 9670 5254 3533 28.5 31171 10152 1889 1 43213 4562 47775 28709 1419 1281 31410 11804 4562 16366 4055 3892 6874 9492 5406 3269 -7.5 299559 30 22021 -2 213708 26 86677 27 318216 6 32114 46 248833 16 86754 0 381840 20 35368 10 289367 16 94613 9 434075 14 36854 4 347241 20 110351 17 503527 16 37953 3 366720 6 126904 15 7.3 6.3 6.5 4.1 8.0 4.3 8.1 8.7 7.8 5.6 6.9 5.8 8.0 7.1 7.7 5.2 6.8 5.3 8.5 8.0 8.4 5.7 7.5 6.5 8.5 8.0 8.4 5.6 7.5 6.2 322.7 1.5 10.3 365.3 1.0 7.7 416.9 0.7 6.3 469.4 0.4 3.8 510.4 0.4 4.1 Key Balance Sheet Data Deposits Deposits Growth(%) Borrowings Borrowings Growth(%) Loan Loan Growth(%) Investment Investment Growth(%) Eastwind Calculation Yield on Advances Yield on Investments Yield on Funds Cost of deposits Cost of Borrowings Cost of fund Valuation Book Value P/BV P/E Source: Eastwind/Company Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. 4

TCS "BUY" 18th Dec' 13 "Positive commentary" Company update Buy CMP Target Price Previous Target Price Upside Change from Previous 2047 2550 2160 25% 18% Market Data BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs Crores) Average Daily Volume Nifty 532540 TCS 2258/1198 400775 1011877 6139 Stock Performance 1M 16.6 12.3 Absolute Rel. to Nifty 1yr 71.8 64.7 YTD 72 64.3 Share Holding Pattern-% Promoters FII DII Others Current 73.96 16.14 5.44 4.46 1 year forward P/E 1QFY14 4QFY13 73.96 73.96 16.14 14.96 5.44 6.45 4.46 4.63 TCS on its management Interview to Media highlighted that ▪ For earning and demand prospect, FY15 will be better than the ongoing fiscal on account of uptick in client spending in the US and Europe and growth in demand for technologies like cloud, mobility and Big Data. ▪ For next 3-5 years, momentum picking for social, mobile, analytics and cloud (SMAC) technologies could offer a "multi-billion dollar opportunity" in revenues for the company. ▪ On the hiring front, TCS will hire about 25,000 college graduates who will join the firm in the next fiscal. Besides, the firm will also be hiring across geographies like the US and Europe to keep up with demand for services. During current fiscal year, TCS has recruited 45000 head counts so far. TCS Q3 analyst briefing key takeaways; Adversely impacted by seasonality but nothing unexpected, Marginal Revenue growth impacted by seasonality: TCS management has indicated rd that 3 quarter, FY14E will be slightly impacted by broad bases furloughs across Industries and thin project based services. Revenue will be impacted mainly in developed market like US and Europe region. We expect that revenue growth could be seen at 3-3.5% for 3QFY14E. Persistent Margin picture: The Company expects margins could be broadly stable. The company would take a decision on reinvestment only after the Rupee stabilizes. We expect that company could maintain EBITDA margin at 30-31% during the 3rd quarter. Confident on IT spending: Despite furloughs impact, it remains confident of growth in the medium term as clients were heading into their CY2014E budgeting cycle in a more confident position than in the past 2-3 yrs. Broadly US and Europe region will play a key role for better demand enviromnment ahead, however domestic market could be out of race due to upcoming election. We continue to believe that TCS will be star performer in growth sense than other peers. Hence, we are maintaining 17% revenue growth in dollar term for FY14E because of improved demand environment, while NASSCOM expects 12-14% for the Industry. We continue to be positive on demand prospect for TCS. View and Valuation: We continue to remain positive on demand outlook and margin profile. We continue to be positive on demand environment and company’s strength of efficient deal execution. We advise that TCS now seem to be trading ahead of fundamentals; At a price of Rs 2047, it is trading at 22.6x FY14E earnings, We maintain" BUY" view on the stock with a target price of Rs 2550. Taking the INR/USD (average value) at Rs60 for FY14E and Rs59.5 for FY15E, We upgrade EPS from Rs87.4 to Rs90.7 for FY14E and from Rs99.3 to Rs 102.4 for FY15E. For FY14E and FY15E, we expect 17% and 20% revenue growth in USD term and retain positive stance as outperformance continues. Financials Revenue EBITDA PAT EBITDA Margin PAT Margin 2QFY14 20977.24 6632.95 4633.33 31.6% 22.1% 1QFY14 17987.07 5144.12 3839.5 28.6% 21.3% Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. (QoQ)-% 16.6 28.9 20.7 300bps 80bps 2QFY13 15621.03 4438.39 3434.65 28.4% 22.0% Rs, Crore (YoY)-% 34.3 49.4 34.9 320bps 10bps 5

TCS. Quarterly snapshot Qtrly, Volume Growth Sales Growth, USD Term Sales Growth, INR Term PAT Growth, INR Term EBITDA Margin PAT Margin 2QFY12 6.3% 4.7% 7.7% -5% 29.1% 19.8% 3QFY12 3.2% 2.4% 13.5% 36% 31.0% 23.8% 4QFY12 3.3% 2.4% 0.4% -7% 29.6% 22.0% 1QFY13 5.3% 3.0% 12.1% 14% 29.1% 22.3% 2QFY13 5.0% 4.6% 5.1% 4% 28.4% 22.0% 3QFY13 1.3% 3.3% 2.9% 3% 29.0% 22.1% 4QFY13 4.4% 3.1% 2.2% 2% 28.1% 22.0% 1QFY14 6.1% 4.1% 9.5% 6% 28.6% 21.3% 2QFY14 7.30% 5.4% 16.6% 21% 31.6% 22.1% FY10 6339 30029.0 10879.6 4570.1 1262.0 4622.8 21334.4 8694.6 601.8 59.1 272.0 8033.7 16.1 8289.6 1197.0 7092.7 7000.6 FY11 8187 37325.1 13850.5 5497.7 1743.7 5054.3 26146.2 11178.9 686.2 49.1 604.0 10443.6 26.5 11021.2 1830.8 9190.3 9068.6 FY12 10171 48894.3 18571.9 6800.5 2391.3 6694.8 34458.5 14435.8 860.9 57.1 428.2 13517.9 22.2 13923.8 3399.9 10524.0 10414.0 FY13 11569 62989.5 24040.0 8701.9 3763.7 8443.9 44949.6 18040.0 1016.3 63.7 1178.2 16960.1 48.5 18089.8 4014.0 14075.7 13917.4 FY14E 13507.44 81044.64 30796.96 10941.03 4862.68 10130.58 56731.25 24313.39 1268.47 57.54 405.22 23044.92 48.53 23401.61 5616.4 17785.2 17785.2 FY15E 16202.45 96404.56 37115.76 13978.66 6748.32 12532.59 70375.33 26029.23 1508.88 76.73 1928.09 24520.35 48.53 26399.91 6336.0 20063.9 20063.9 8.0% 21.3% 31.8% 29.2% 24.3% 28.6% 29.6% 24.2% 31.0% 29.1% 14.5% 13.7% 28.8% 25.0% 33.7% 16.8% 28.7% 34.8% 26.4% 20.0% 19.0% 7.1% 12.8% 29.0% 26.8% 23.6% 30.0% 28.0% 24.6% 29.5% 27.6% 21.5% 28.6% 26.9% 22.3% 30.0% 28.4% 21.9% 27.0% 25.4% 20.8% 36.2% 15.2% 4.2% 15.4% 14.4% 37.1% 14.7% 4.7% 13.5% 16.6% 38.0% 13.9% 4.9% 13.7% 24.4% 38.2% 13.8% 6.0% 13.4% 22.2% 38.0% 13.5% 6.0% 12.5% 24.0% 38.5% 14.5% 7.0% 13.0% 24.0% 780.8 195.7 18466.7 36.2 94.4 38.4% 28.1% 8.3 21.5 1182.5 195.7 24504.8 47.0 125.2 37.5% 50.8% 9.4 25.2 1322.0 195.7 29579.2 53.8 151.1 35.6% 37.5% 8.7 24.6 1563.0 196.0 38645.7 71.8 197.2 36.4% 41.2% 7.9 21.8 2047.0 196.0 49103.5 90.7 250.5 36.2% 41.2% 8.2 22.6 2047.0 196.0 60901.0 102.4 310.7 32.9% 41.2% 6.6 20.0 Financials Rs, Cr Net Sales-USD Net Sales Employee Cost Overseas business expenses Services rendered by business associates and others Operation and other expenses Total Expenses EBITDA Depreciation Amortisation Other Income EBIT Interest Cost PBT Tax PAT PAT ((Reported PAT)) Growth-% Sales-USD Sales EBITDA PAT Margin -% EBITDA EBIT PAT Expenses on Sales-% Employee Cost Overseas business expenses Services rendered by business associates and others Operation and 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. 6

UCO BANK Company Update CMP Target Price Previous Target Price Upside Change from Previous Market Data BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs Cr) Average Daily Volume Nifty Stock Performance 1M Absolute 16.3 Rel.to Nifty 14.1 BUY 74 84 14 532205 UCOBANK 86.65/46 5561 2960821 6154 1yr 0.6 -7.0 YTD 0.6 -7.0 Share Holding Pattern-% Current 1QFY14 4QFY1 3 Promoters 69.3 69.3 69.3 FII 4.2 3.9 3.2 DII 12.4 12.5 13.0 Others 14.2 14.3 14.6 UCO Bank Vs Nifty "BUY" 17th Dec, 2013 We have the reduce the target price of UCO bank from Rs.94 to Rs. 84 on account of bank’s unlikely to get benefit of western sanction against Iran. Late last month US and six other major powers have imposed sanction against Iran for its nuclear deal. In order to quality for waiver sanction against Iran, India has cut back sharply on purchase of oil from Iran. UCO was the major beneficiary of current account deposits of India-Iran oil facilities. In our banking sector coverage universe, UCO bank’s cost of deposits were lowest at 6.1% whereas yield on loan was 10.1% at the end of 2QFY14. After this development, bank’s margin would be impacted and accordingly UCO bank loses the valuation premium. Although bank’s management is focusing on other area of growth like branch expansion and customer acquisition. We slightly tweak our earnings and reduce our book value estimate from Rs.175.5 to Rs.168.8. Now our revised price target for the stock would be Rs.84 which is 0.5 times of FY14E book value. Strong performance in NII on account of lower cost of deposits During quarter UCO bank’s performance was better than expectation as bank’s NII grew by 55% YoY to Rs.1569 Cr aided by interest income growth of 5.92% and interest expenses de-growth of 9.68%. On yearly basis credit deposits ratio declined to 71.6% from 72.6% but loan and deposits growth of 15% and 16% supported overall business growth and hence margin expansion. Other income de-grew by 1.6% YoY to Rs.209 cr largely due to lower treasury gain. Total income registered growth of 45.1% YoY to 1779 cr. Stable asset quality on sequentially In absolute term GNPA was flat on QoQ basis and registered mere deterioration of 3% largely due to asset quality. During quarter bank’s reported fresh slippages were Rs.725 cr as against Rs.629 cr in 1QFY14. Out of Rs.725 cr, over Rs.400 cr slippages came from infra segment alone. In percentage term GNPA stood at 5.3% from 5.7% in 1QFY14. In absolute term provision increased by 6% QoQ taking net NPA increased to 7% QoQ. In absolute term NPA was 3.1% flat on sequential basis. Provision coverage ratio without technical write off stood at 46.6% as against 45.1% in 1QFY14 and 41.1% in 2QFY13. Financials NII Total Income PPP Net Profit EPS 2011 3845 4770 2695 907 16.5 2012 3902 4868 2811 1109 17.7 Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. Rs, Cr 2013 2014E 2015E 4582 4721 5533 5534 6063 6875 3357 4184 4744 618 1573 1977 9.3 23.7 29.7 (Source: Company/Eastwind) 7

UCO BANK Higher earnings on account of robust growth in NII, lower CI ratio and flat provisions Net profit during the quarter registered growth of 286% YoY to Rs.400 cr largely due to higher NII growth, lower cost income ratio and lower provision on account of stable asset quality. Consequentially ROE and ROA improved to 17.4% and 0.88% from 4.5% and 0.4% in 2QFY13 respectively. Current deposits grew almost double led CASA improvement On balance sheet growth front, bank’s deposits grew by 16% YoY to Rs.1888 bn supported by current account deposits growth of 173% YoY and 12% rise in saving deposits. CASA deposits registered the growth of 56% YoY to Rs.60096 cr. In percentage of total advances, CASA stood at 31.8% from 23.7% in 2QFY13. Growth in current deposits was on account of providing facilities to Indo Iran trade payments which is presently covering 45% of oil imports from Iran and India export. Going forward 100% of oil import from Iran is to be covered and further fertilizer import from Iran is also being considered by Government. This facilities will generated almost about 17000-18000 cr as per management. Loan grew by 15% YoY to Rs.1352 bn. Margin improved due to higher declined of cost of deposits than loan yield Net interest margin of the bank improved by 11 bps YoY to 2.84% from 2.73% in 1QFY14 due to 22% YoY declined cost of deposits to 6.09% from 7.44% in 2QFY13. Lower cost was account of higher growth in low cost current deposits. Yield on loan (EW calculated) for the quarter stood at 10.1% from 10.1% in 1QFY14 and 10.9% in 2QFY13. Management expects NIM of 3% at the end of year end on the back of current deposits support. Valuation & View We have the reduce the target price of UCO bank from Rs.94 to Rs. 84 on account of bank’s unlikely to get benefit of western sanction against Iran. Late last month US and six other major powers have imposed sanction against Iran for its nuclear deal. In order to quality for waiver sanction against Iran, India has cut back sharply on purchase of oil from Iran. UCO was the major beneficiary of current account deposits of India-Iran oil facilities. In our banking sector coverage universe, UCO bank’s cost of deposits were lowest at 6.1% whereas yield on loan was 10.1% at the end of 2QFY14. After this development, bank’s margin would be impacted and accordingly UCO bank loses the valuation premium. Although bank’s management is focusing on other area of growth like branch expansion and customer acquisition. We slightly tweak our earnings and reduce our book value estimate from Rs.175.5 to Rs.168.8. Now our revised price target for the stock would be Rs.84 which is 0.5 times of FY14E book value. Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. 8

UCO BANK Fundamental through graph Source:Eastwind/Company Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. 9

UCO BANK Quarterly Result Interest/discount on advances / bills Income on investments Interest on balances with Reserve Bank of India Others Total Interest Income Others Income Total Income Interest Expended NII Other Income Total Income Employee Other Expenses Operating Expenses PPP( Rs Cr) Provisions PBT Tax Net Profit 2QFY14 3396 1026 8 14 4444 209 4653 2875 1569 209 1779 382 230 612 1166 759 408 7 400 1QFY14 3152 968 37 49 4207 462 4669 2843 1364 462 1826 376 185 562 1264 741 523 12 511 2QFY13 3230 897 32 37 4196 213 4409 3183 1013 213 1226 332 180 512 714 597 116 13 104 Balance Sheet Equity Capital Reserve & Surplus Net Worth Deposits Borrowings Other Liabilities & Provisions Total Liabilities Cash & Balance with Bank Balance with bank & money at call Investments Advances Fixed Assets Other Assets Total Assets 2576 8195 10770 188779 6605 6262 212416 7081 8045 55193 135233 977 5887 212416 2576 7719 10295 177050 6462 6566 200373 7600 8218 52999 125141 926 5489 200373 2488 6644 9132 162567 6601 4773 183073 7585 1957 49589 118045 815 5082 183073 Asset Quality GNPA NPA % GNPA % NPA % PCR(Without technical writeoff) 7,376 4228 5.3 3.1 46.6 7,178 3939 5.7 3.1 45.1 % YoY % QoQ 5.1 7.7 5,888 3468 5.0 2.9 41.1 14.4 5.9 -73.7 -77.3 -61.9 -71.6 5.9 5.6 -1.6 -54.7 5.6 -0.3 -9.7 1.1 54.9 15.1 -1.6 -54.7 45.1 -2.6 15.2 1.6 27.7 24.2 19.6 9.1 63.4 -7.8 27.1 2.3 249.9 -22.1 -42.5 -39.0 285.9 -21.7 3.5 0.0 23.3 6.2 17.9 4.6 16.1 6.6 0.1 2.2 31.2 -4.6 16.0 6.0 -6.6 -6.8 311.1 -2.1 11.3 4.1 14.6 8.1 19.9 5.5 15.8 7.2 16.0 6.0 25.3 2.8 21.9 7.3 Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. 10

UCO BANK Income Statement 2011 2012 2013 2014E 2015E Interest Income Interest Expense NII Change (%) Non Interest Income Total Income Change (%) Operating Expenses Pre Provision Profits Change (%) Provisions PBT PAT Change (%) 11371 7526 3845 65.4 925 4770 45.0 2075 2695 58.0 1788 907 907 -10.4 14632 10730 3902 1.5 966 4868 2.0 2056 2811 4.3 1661 1150 1109 22.3 16752 12170 4582 17.4 952 5534 13.7 2177 3357 19.4 2710 647 618 -44.2 20313 15592 4721 3.0 1342 6063 9.6 1880 4184 24.6 2596 1588 1573 154.5 24333 18800 5533 17.2 1342 6875 13.4 2131 4744 13.4 2548 2196 1977 25.6 99071 32031 6 5475 42927 99071 20 115540 17 34403 7 12901 45771 115540 17 128283 11 55733 62 9492 52245 128283 11 153939 20 67707 21 12315 62692 153939 20 184727 20 81249 20 14777 75231 184727 20 Avg. Yield on loans Avg. Yield on Investments Avg. Cost of Deposit Avg. Cost of Borrowimgs 8.6 6.6 4.7 12.5 9.9 7.1 6.5 6.1 10.0 7.1 6.6 7.0 10.0 7.5 7.0 6.0 10.0 7.5 7.1 6.0 Valuation Book Value CMP P/BV 135 107 0.8 137 79 0.6 146 50.1 0.3 169 74.55 0.4 183 74.55 0.4 Balance Sheet Deposits( Rs Cr) Change (%) of which CASA Dep Change (%) Borrowings( Rs Cr) Investments( Rs Cr) Loans( Rs Cr) Change (%) Ratio Source: Company/Eastwind Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. 11

JLR VOLUME UPDATE : NOVEMBER 2013 Strong Performance For The Month. JLR wholly owned subsidiary of Tata Motors come up with November 2013 volume, the company for the month sold 37403 units up by 25% YoY. This total volume of JLR includes 6244 units of Jaguar and 31159 units of Land Rover. This month’s performance in particular is marked by stellar performance by Jaguar with volume growth of almost 55 % YoY while the Land Rover portfolio has grown by 20 % YoY.The new F type Jaguar is getting good response.Company manage to sell 557 units of F-Type this month. The volumes for JLR across geographies came relatively, good all the geographies have done well except for UK where volume de grew by 1%YoY. The markets of china continues to do well for the company. The Chinese market have grown over 40% YoY for the JLR followed by ROW markets. The performance of JLR on Geography Wise has been Tabulated as under : Monthly Performance of JLR : Geography Wise Model Nov-13 Nov-12 Change % (YoY) UK 5231 5276 -1% North America 6657 4843 37% Europe 7300 6829 7% China 9751 6879 42% Asia Pacific 1882 1428 32% All other markets 6582 4638 42% (Source: Company/Eastwind) The various models under JLR portfolio have grown well for the company however Jaguar XJmodel has done exceptionally well .The company has sold 6244 units of Jaguar for the Nov2013.The Land Rover is also growing good for the company. The Range Rover Evoque has grown by 10% YoY to 10953 units for the month. The Table shows the Performance of Jaguar Portfolio : Model Wise. Monthly Performance of Jaguar : Model Wise Model Nov-13 Nov-12 Change % (YoY) XF 3825 2743 39% XJ 1628 1004 62% XK 234 284 -18% F-TYPE 557 NA (Source: Company/Eastwind) The Table shows the Performance of Land Rover Portfolio : Model Wise. Monthly Performance of Land Rover: Model Wise Model Nov-13 Nov-12 Change % (YoY) Defender 1615 1274 27% Freelander 4124 4517 -9% Discovery 3424 3683 -7% New Range Rover Sport 6833 0 NA Range Rover Sport 106 4909 NA Range Rover 2 1417 NA Range Rover Evoque 10953 9919 10% New Range Rover 4102 143 NA (Source: Company/Eastwind) Earlier management said that company would invest 1.5 billion pounds for new technicallyadvanced aluminum vehicle architecture in forthcoming models. The first new model to utilize this innovative architecture will be an all-new mid-sized sports sedan from Jaguar. The product will be launched by 2015. We continue to like Tata Motors, led by strong volume traction at JLR to continue over the coming months as new Range Rover Sport get rolled out across more geographies, in addition to continued traction from RR and F-Type, which in turn will boost realisation and margin. Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report.

Persistent System. "BUY" 13th Dec' 13 "Persistently innovating.." Company update CMP Target Price Previous Target Price Upside Change from Previous Market Data BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs Crores) Average Daily Volume Nifty BUY 876 960 890 10% 8% 533179 PERSISTENT 906/477 3505 12139 6237 Stock Performance Absolute Rel. to Nifty 1M 7.5 4.9 1yr 83.5 77.8 YTD 126.6 107.9 Share Holding Pattern-% Current Promoters FII DII Others 38.96 15.28 21.23 24.53 1 year forward P/E-x 1QFY14 4QFY13 38.96 14.84 19.31 26.89 38.96 12.39 21.59 27.06 Persistent Sytem’s management remains confident of FY14 with deal pipeline being strong and remains focused on increasing the share of IP-led revenues in its portfolio. The management expects to see more than 15% dollar revenue growth, more than NASSCOM guidance of 12-14 % for FY14E. With the potential revenue growth, strong deal pipeline and multi-year relationships with marquee clientele in the Infrastructure vertical, we upgrade this stock and expect for better earning visibility across niche IT players. Recently , Persistent System reported superlative set of numbers during the 2QFY14 with 21%(QoQ) sales growth in INR term and 8.6%(QoQ) growth in USD term led by 38%(QOQ) growth on the intellectual property (IP) revenues. PAT growth was at 6.5% (QoQ). Margin ramp up: During the quarter, Its EBITDA margin improved by 180bps to 23.3%, positively impacted by currency gain(270bps), while during the quarter company wage hike to its off shore employee at a range of 8-9% was impacted margin by 310 bps adversely. However, management expects to maintain margin at a range of 24-25% for FY14E. On segmental front: The Company’s cash cow segment Infrastructure and System, which contributes 69% on sales, grew by 21% and life science (13% contribution on sales) was up by 57% sequentially. While, Telecom space (17.6% contribution on sales) increased marginally by 3% (QoQ). Clients Metrics: During the quarter, company added 2 clients at 32 under medium category( >$1mn to $3mn) and 1 client at 16 from large ( > $ 3Mn) . Revenue from top-1 client was improved from 21.2% (1QFY14) to 22.5% . DSO at 62days, almost 12 quarters low. Persistent's management suggests that deal pipeline are looking strong and seeing good activity and traction in the market across the board. Its focus on some of newer technologies like cloud, analytics and mobility are gaining a lot of traction because of pickup in demand environment. The emerging themes, (CAMB) Cloud, Analytics, Mobility, and Big data could also see strong demand traction ahead. Because of actively investment in these themes, management is very confident to see healthy growth and also they expressed their confidence to beat the NASSCOM guidance (1214% revenue growth for FY14E). View and Valuation: The company’s focus is shifting greater proportion to IP led services and company has marquee clientele in cutting-edge technologies around cloud, mobility, collaboration and analytics; witnessing faster growth. Considering the company’s ability to achieve scale and growth, we rate “BUY” on the stock and we revise our target price from Rs 890 to Rs 960. At a CMP of Rs 876, stock trades at 13.8x FY14E earnings. Financials Rs, Crore 2QFY14 1QFY14 (QoQ)-% 2QFY13 (YoY)-% Revenue 432.37 357.29 21.0 326.86 32.3 EBITDA 100.8 76.8 31.3 89.06 13.2 PAT 60.8 57.1 6.5 44.71 36.0 EBITDA Margin 23.3% 21.5% 180bps 27.2% (390bps) PAT Margin 14.1% 16.0% (190bps) 13.7% 40bps (Source: Company/Eastwind) Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. 13

Persistent System. Operating Metrics 2QFY12 Client Concentration Top1 Top 5 Top 10 Billing Rate-USD/ppm Onsite - Linear Offshore - Linear Yeild per Employee(excld- Trainee) Employee Metrics Total Employee Attrition Utilization rate %(xclude IP Led ) 3QFY12 4QFY13 1QFY13 QFY13 3QFY13 4QFY13 16.0% 38.6% 49.4% 15.9% 37.0% 48.3% 17.2% 36.6% 48.8% 17.8% 33.5% 45.3% 20.7% 36.3% 47.0% 21.1% 37.3% 49.4% 12665 3803 3208 12387 3778 3247 12603 3895 3350 12789 3898 3345 12863 3978 3746 12772 4032 3817 6900 17.7% 73.8% 6706 17.4% 74.1% 6628 18.3% 71.7% 6536 18.9% 74.1% 6370 16.9% 75.2% 6719 16.0% 77.3% 1QFY14 2QFY14 21.2% 34.7% 46.0% 22.5% 36.4% 47.3% 14014 4143 3769 14567 4111 3602 14283 4109 3919 6970 14.4% 72.5% 7144 14.2% 70.0% 7457 14.0% 71.7% 21.6% 36.7% 47.9% Financials Rs in Cr, Sales Employee Cost Cost of technical professionals Other expenses Total expenses EBITDA Depreciation Other Income EBIT Interest Cost Profit (+)/Loss (-) Before Taxes Provision for Taxes Net Profit (+)/Loss (-) Growth-% (YoY) Sales EBITDA PAT Expenses on Sales-% Employee Cost Other expenses Tax rate Margin-% EBITDA EBIT PAT Valuation: CMP No of Share NW EPS BVPS RoE-% P/BV P/E FY10 601.16 368.74 0 86.05 454.79 146.37 33.52 11.23 112.85 0 124.08 9.05 115.03 FY11 775.84 481.62 30.67 105.24 617.53 158.31 42.39 34.44 115.92 0 150.36 10.62 139.74 FY12 1000.3 599.05 41.68 135.2 775.93 224.37 61.1 34.44 163.27 0.00 197.71 55.09 142.62 FY13 1294.5 719 54 218 990.78 303.72 78 34.44 225.44 0.03 259.851 75.37 184.481 FY14E 1657.54 895.07 82.88 290.07 1268.02 389.52 93.54 66.30 295.98 0.00 362.29 108.69 253.60 FY15E 2053.93 1119.39 102.70 379.98 1602.06 451.86 84.18 71.89 367.68 0.00 439.57 131.87 307.70 1.2% 60.2% 74.1% 29.1% 8.2% 21.5% 28.9% 41.7% 2.1% 29.4% 35.4% 29.4% 28.0% 28.3% 37.5% 23.9% 16.0% 21.3% 61.3% 14.3% 7.3% 62.1% 13.6% 7.1% 59.9% 13.5% 27.9% 55.5% 16.9% 29.0% 54.0% 17.5% 30.0% 54.5% 18.5% 30.0% 24.3% 18.8% 19.1% 20.4% 14.9% 18.0% 22.4% 16.3% 14.3% 23.5% 17.4% 14.3% 23.5% 17.9% 15.3% 22.0% 17.9% 15.0% 310.0 4.0 639.0 28.8 159.7 18.0% 1.9 10.8 366.7 4.0 747.1 34.9 186.8 18.7% 2.0 10.5 409.2 4.0 840.5 35.7 210.1 17.0% 1.9 11.5 541.0 4.0 1018.3 46.1 254.6 18.1% 2.1 11.7 876.0 4.0 1234.4 63.4 308.6 20.5% 2.8 13.8 876.0 4.0 1504.7 76.9 376.2 20.4% 2.3 11.4 (Source: Company/Eastwind) Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. 14

Coal India LTD. Company Update CMP Target Price Previous Target Price Upside Change from Previous 289 350 350 21% 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" 12nd Dec' 13 CCI’s Rs 1,773-crore penalty: The Competition Commission of India (CCI) imposed a Rs 1,773 cr fine on Coal India, the country' monopoly commercial coal miner, based on a complaint filed by two power companies that India's monopoly producer of coal abused its dominance. The government owns 90% stake in Coal India, and has traditionally drawn hefty dividend income from the cash rich coal company. In 2012-13, the company paid a total dividend of Rs 8,843 cr out of which the government's share was Rs 7,959 cr. 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. 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 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 . Coal India 2QFY2014 top-line was above our estimate. The company’s net sales grew 5.8% yoy to 15,411cr. 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 hikes. Its FSA coal’s realizations were lower than expected due to lower grade coal. The company liquidated 11mn ton of old stock. Source - Comapany/EastWind Research Financials : Net Revenue EBITDA Depriciation Interest Cost Tax PAT Q2FY14 15411 2794 495 8 1412 3052 Y-o-Y % 5.8 -2.4 27.8 -22.2 -4.2 -0.8 Q-o-Q % -6.4 -29.4 4.1 7.0 -27.9 -18.2 Q2FY13 14573 2862 387 10 1475 3078 Q1FY14 16472 3958 476 7 1958 3731 (In Crs) Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. 15

Coal India LTD. Coal India 2QFY2014 top-line was above our estimate. The company’s net sales grew 5.8% yoy to 15,411cr. 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 hikes. Its FSA coal’s realizations were lower than expected due to lower grade coal. The company liquidated 11mn ton of old stock. 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.News flows related to further divestment in CIL by the government is likely to keep the stock price under pressure in our view. we recommend Buy rating on the stock with our previous target price Rs.350. 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 FY13 452 465 1468 364736 1240 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 FY14E 69864 8383 2595 6057 28943 53738 16126 1860 34 7332 15870 33.1 Narnolia Securities Ltd, 16

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, 17

LUPIN "BUY" 11th Dec' 13 "Optimistic Guidance " Result Update BUY CMP Target Price Previous Target Price Upside Change from Previous 873 1006 15% - Market Data BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs, Cr) Average Daily Volume Nifty 500257 LUPIN 946/569 39101 395892 6332 Stock Performance-% 1M Absolute Rel. to Nifty 1yr -1 -4 46 39 YTD 41 23 Share Holding Pattern-% Promoters FII DII Others Current 1QFY14 4QFY1 3 46.8 46.8 46.8 31.5 30.7 28.8 12.1 12.4 14.3 9.7 10.1 10.0 One Year Forward P/E The management of the company in its latest media interaction stated that the company is confident of logging 15-20 % CAGR in US and India in the days to come on the back of rich pipeline as well as acquisition based strategy. Management further said that company is expecting to launch about 100 new drugs in next three years. This new launch will include an entire range of oral contraceptives and opthal products. Lupin earlier posted slightly better than expected 2QFY14 results ,the company reported its net sales at Rs 2631 Cr up by 18 % YoY on the back of‐ strong business performance from US and Europe formulation segment. The segment grew by 31% YoY to Rs. 1108.9 Cr during 2Q FY14, against Rs. 844.4 Cr for Q2, FY 2012 13.This segment contributes 42% to overall Company sales.US brands business contributed 10% of total US sales, whereas the generics business contributed 90% for the quarter under review. The Indian formulation business contributed ‐ 25% of the Company’s  overall revenues for the quarter.Company’s India formulation business grew by 9% ‐ recording revenues of Rs. 6,635 m. during Q2, FY 2013 14, as compared to Rs. 6,064 m. for Q2, FY 2012 13. The company’s rest other business geographies to have performed relatively good for the company. The operating EBITDA for the 2QFY14 came at Rs 660 Cr and OPM stands at 24.7%.The RM cost decreased by 7.7% to 32.0% of net sales at Rs. 841.3 Cr during 2QFY14 as compared to Rs. 889.8 Cr for 2Q FY 13.Manufacturing & other expenses increased by to 30.4% of net sales at Rs. 798.8 Cr during 2Q FY14 as compared to Rs. 591.7 Cr for the same period last fiscal.Revenue expenditure on R&D stood at 8.3% of net sales at Rs. 217.2 Cr. The Net profits for 2QFY14 came at Rs 417 Cr. The higher incidence of tax during the quarter is due to tax provision of Rs 51 Cr made on dividends received from subsidiaries The company has filed 7 ANDAs and received 6 ANDA approvals in the quarter. Cumulative ANDA filings with the US FDA now stand at 183 with the company having received 92 approvals to date. We have slightly raise our TP to Rs 1006 on the back management guidance post the results. The management is quite optimistic for its business outlook going forward and believes that the company will achieve its set target going forward. Financials Revenue EBITDA PAT EBITDA Margin PAT Margin 2QFY14 2668 660 417 24.7% 15.6% 1QFY14 2476 590 405 23.8% 16.4% (QoQ)-% 7.8 11.9 3.0 90bps (70bps) 2QFY13 2301 515 297 22.4% 12.9% Rs, Crore (YoY)-% 15.9 28.2 40.4 240bps 270bps (Source: Company/Eastwind) Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. 18

LUPIN Sales and PAT Trend (Rs) company reported its net sales at Rs 2631 Cr up by 18 % YoY on the back of strong business performance from US and Europe formulation segment. (Source: Company/Eastwind) OPM % (Source: Company/Eastwind) NPM % The higher incidence of tax during the quarter is due to tax provision of Rs 51 Cr made on dividends received from subsidiaries (Source: Company/Eastwind) Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. 19

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. 20

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