India Equity Analytics Today:Buy Stock of Tata Steel Ltd, V-Guard Industries Ltd and Infosys

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Information about India Equity Analytics Today:Buy Stock of Tata Steel Ltd, V-Guard...
Finance

Published on March 14, 2014

Author: narnolialtd

Source: slideshare.net

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Narnolia Securities Limited are positive to buy stock of Tata Steel Ltd, V-Guard Industries Ltd and Infosys with target prize Rs.401, Rs.525, Rs 3760 respectively. Also Book profit on Axis bank Stock

"BOOK PROFIT" 14th Mar 2014 Recent rally in Axis Bank is fundamentally not justified but is the result of sentiment boost up lead by Modi effect. Opinion poll suggests BJP led NDA would come to power after the general election. NDA prime ministerial candidate Narendra Modi is perceived by foreign investor as a decisive and development making leader. Market participates have hope for revival in economy and business growth opportunity to start again. This would be result of diminishing NPA buffer and profitability boost up. We advice our clients to book part profit. ....................................................................................... ( Page : 2- 4) "BUY" 14th Mar 2014 HCLTECH :"Retain confidence" "BUY" 12th Mar 2014 On performance front, it continues to be bullish on the rebid market and bullish on short-term to medium term, momentum on deals pipeline also looking robust. Considering the increasing discretionary spends across the geographies like US and Europe, we expect healthy earnings performance ahead. ...................................................................... ( Page : 16- 17 ) On fundamental wise, we are not very impressed with bank but in recent market rally, PSB as well as private banks participated more than any sector likely due to outcome of exit poll for the coming election. We believe bank would rally more because of trading at lower side despite of index is running at all time high. But with this fundamental Bank of Baroda would trade in range of Rs.635 to Rs.700 depending upon sentiment as per our view. .................................................................... ( Page : 18-20) TATA STEEL Ltd : At current market capitalization of Rs. 23444 Crores, the stock is trading at a forward P/B of just 0.9. Tata Steel is a blue chip stock and is available at a very cheap valuation. But if we look at its historical stock performance, in the past three years it had continued to trade between 0.6 to 1.9 P/B range.With the European crisis behind us, US economy getting stronger and better outlook for Indian economy on the expectation of stable government at the Center, We feel Tata Steel share price may have some more price appreciation left given the improvement in financial performance and Outlook. We recommend Buy on the stock at a medium term target price of Rs.401. ............................................................................ ( Page : 10-12) Addressing an Investor Con Call, Infosys management has expressed its cautious view on earnings outlook as well as clients spending for near term. They indicated that FY14E would be a year of lower earnings than NASSCOM guidance followed by FY13 and FY12. The company’s knee jerk has not associated with single factor; these are partly company specific and partly external factors. .......................................................................................................... ( Page : 5 - 6) BANKBARODA "BUY" 11th Mar 2014 Shakti Pumps (India) Ltd : "Turnarround Counter" "BUY" 13th Mar 2014 The company was the first to get 5 star rating for energy efficiency for its products from BEE. In addition to submersible pumps, company also producing Vertical Multistage Centrifugal pumps, Pressure booster pumps, Open well pumps, End suction pumps etc. Recently company introduced pumps working with solar power. In next three years company incline to achieve sale revenue of Rs. 600 crore with the net margin of 9-10%. Company is planning to increase the Branch Network to 30 and Dealer network to 3 fold in coming few year. Further, Company have plans to register our presence in all BRICS, G20 and European Union and in other growing countries in coming years. On valuation front shakti pump is available at a single digit PE and EV/EBIDTA of 5.6x/4.1x and 4.7x/3.8x of its FY14E/15E estimates. In a volatile market, a company available at single digit valuations certainly looks up for grabs .................................................................... ( Page : 13-15) IEA-Equity Strategy 14th Mar, 2014 Edition : 225 V-Guard Industries Ltd: "Colling Gun……..." "BUY" 14th Mar 2014 On recent interview management expect a sales growth of around 10% in 4QFY14 on back of strong sales growth of 12-12.5% in January and February month of 2014. Last financial year for Q4 company had very low margins because of two reasons, higher ad spend and one-off items. As Vguard product portfolio consist of 65-70% summer facing in nature and we believe that the strong summer expectation in 2014 and low base of FY14 would lead a revenue growth of at least 18% in FY14E. ....................................................................... ( Page : 7-9) Infosys: "Recovery delayed, but not denied" "BUY" 14th Mar 2014 AXIS BANK : Narnolia Securities Ltd, India Equity Analytics Daily Fundamental Report on Indian Equities

AXIS BANK 1385 1340 1220 -3 10 1M 1yr YTD Absolute 25.2 -1.9 -1.9 Rel.to Nifty 17.9 -11.1 -11.1 Promoters 33.9 33.9 33.9 FII 43.2 43.4 40.7 DII 9.7 4.9 8.8 Others 13.2 17.8 16.6 Financials Rs, Cr 2011 2012 2013 2014E 2015E NII 6566 8026 9666 12224 14775 Total Income 11238 13513 16217 19146 21697 PPP 6377 7413 9303 11206 12367 Net Profit 3340 4224 5179 5826 6934 EPS 81.4 102.2 110.7 124.2 148.2 2 Nifty 6493 Mkt Capital (Rs Cr) (Source: Company/Eastwind) Stock Performance Average Daily Volume Target Price Previous Target Price Upside Change from Previous Axis Bank Vs Nifty Share Holding Pattern-% 26.18 cr 532215 NSE Symbol Axis bank’s low cost deposits CASA has grown faster than peers like ICICI bank and is stable at 43% at the end of 3QFY14. Bank’s management expects it to reach at 46% in FY15E which would help to keep cost of deposits under control and hence margin expansion. In loan growth parameter, Axis bank expects loan growth higher than industry growth by 2%. Incremental loan growth would come from SME and retail sector while corporate loan book is expected to remain sluggish. Bank’s capital adequacy ratio is close to 17% in which tier -1 capital of 12.5% much healthier than peers indicating no need to raise money for long tenure in near term. ROA at pre provisioning profit is at 3% indicating strong capability to delivered profit once asset quality issue resolve. Company Updated BOOK PART PROFIT CMP Stress loan (GNPA+ Restructure asset) is remained at 3.7% of advances but it might go up as bank has significant exposure in power (5.54%) and Infrastructure (7.33%) where slippage risk is relatively high in present economy scenario. Provision coverage ratio reported by bank is 78% with technical write off which would provides some cushion on earnings. Axis bank still have 46% of loan exposure in large corporate where profitability uncertain due to ongoing recession. Therefore on asset quality front, bank would still have to face tough time as per our view. We believe market sentiment in recent days are boosted up on the hope that BJP led NDA would come to power after the general election and revive economy. The domestic equity market is supported by opinion poll result which suggests BJP led NDA coming to power after the forthcoming election. Over the last few months, the estimated numbers of seat, the NDA may win has increased from 165-175 to 220- 230 seats. The prime ministerial candidate of NPA Narendra Modi is known for his development in Gujarat. Domestic as well as foreign investors are in hope that Indian economy would come at track and business opportunity would start again. Banking stocks are rallied more than other sectors in hoping of reducing fresh NPA creation. 64823 In last one month, Axis Bank has outperformed Bank Nifty and CNX Nifty by 6% and 18% respectively and is now trading at more than 1.7 times of FY14E book value which is above of our upper side of valuation band. We value bank in the range of 1.5 to 1.7 times of book lower than its peers group largely due to some exposure in stress sector specially in infra and power companies where slippage risk are relatively high. We value bank in the range of Rs.1220 to Rs.1340 per share that implying book value multiple of 1.5 to 1.7 based on current fundamental and return ratios. The rise of stock price is supported by opinion poll result which suggests BJP led NDA would come in power. NDA prime ministry candidate Narendra Modi is perceived by foreign investor as a decisive and development making leader and would rescue economy. Domestic equity market boost-up by economy revival sentiment Key positive trigger Key negative trigger AXISBANK Market Data BSE Code "BOOK PART PROFIT " 14th March, 2014 Narnolia Securities Ltd,

3 Quarterly Result AXIS BANK Source: Eastwind/Company Please refer to the Disclaimers at the end of this Report. Narnolia Securities Ltd, QuarterlyResult 3QFY14 2QFY14 3QFY13 %YoYGr %QoQGr 3QFY14E Variation Interest/discountonadvances/bills 5557 5394 4907 13.3 3.0 5748 3.4 Incomeoninvestments 2110 2143 2014 4.8 -1.5 2235 5.9 InterestonbalanceswithReserveBankofIndia 49 35 25 97.7 39.4 35 -29.2 Others 73 37 19 277.1 95.6 38 -47.4 TotalInterestIncome 7789 7609 6965 11.8 2.4 8056 3.4 OthersIncome 1644 1766 1615 1.8 -6.9 1774 7.9 TotalIncome 4628 4703 4110 12.6 -1.6 4780 3.3 InterestExpended 4805 4672 4470 7.5 2.8 5049 5.1 NII 2984 2937 2495 19.6 1.6 3006 0.8 OtherIncome 1644 1766 1615 1.8 -6.9 1774 7.9 TotalIncome 4628 4703 4110 12.6 -1.6 4780 3.3 Employee 655 644 615 6.5 1.7 0 OtherExpenses 1358 1309 1134 19.8 3.8 0 OperatingExpenses 2013 1953 1749 15.1 3.1 2008 -0.3 PPP(RsCr) 2615 2750 2362 10.7 -4.9 2772 6.0 Provisions 202 687 387 -47.7 -70.5 752 271.4 PBT 2413 2062 1975 22.2 17.0 2020 -16.3 Tax 808 700 628 28.8 15.5 687 -15.0 NetProfit 1604 1362 1347 19.1 17.7 1333 -16.9 BalanceSheetDate NetWorth 37649 36224 27027 39.3 3.9 37558 -0.2 Deposits 262398 255365 244501 7.3 2.8 272935 4.0 Loan 211467 201303 179504 17.8 5.0 214892 1.6 Assetqualtiy(RsCr) GNPA 3008 2734 2275 32.2 10.0 - NPA 1003 838 679 47.8 19.7 - %GNPA 1.4 1.4 1.3 - %NPA 0.5 0.4 0.4 -

4 AXIS BANK FINANCIALS & ASSUPTION Source: Eastwind/Company Please refer to the Disclaimers at the end of this Report. Narnolia Securities Ltd, Income Statement 2011 2012 2013 2014E 2015E Interest Income 15155 21995 27183 31198 38490 Interest Expense 8589 13969 17516 18974 23716 NII 6566 8026 9666 12224 14775 Change (%) 31.2 22.2 20.4 26.5 20.9 Non Interest Income 4671 5487 6551 6922 6922 Total Income 11238 13513 16217 19146 21697 Change (%) 25.3 20.2 20.0 18.1 13.3 Operating Expenses 4860 6100 6914 7940 9330 Pre Provision Profits 6377 7413 9303 11206 12367 Change (%) 22.4 16.2 25.5 20.5 10.4 Provisions 3033 3189 4124 2402 2461 PBT 3345 4224 5179 8804 9906 PAT 3340 4224 5179 5826 6934 Change (%) 34.8 26.5 22.6 12.5 19.0 Balance Sheet Deposits( Rs Cr) 189166 219988 252614 290506 334081 Change (%) 34 16 15 15 15 of which CASA Dep 77758 91412 112100 124917 143655 Change (%) 18 18 23 11 15 Borrowings( Rs Cr) 26268 34072 43951 51266 58956 Investments( Rs Cr) 71788 92921 113738 129873 149354 Loans( Rs Cr) 142408 169760 196966 228481 265037 Change (%) 36 19 16 16 16 Valuation Book Value 460 549 708 813 942 CMP 1404 1146 1304 1174 1174 P/BV 3.1 2.1 1.8 1.4 1.2

Infosys Reasons behind the weak outlooks: 1M 1yr YTD Absolute 4.5 30.4 53.1 Rel. to Nifty 0.8 21.6 49.4 Current 2QFY14 1QFY14 Promoters 15.94 15.94 16.04 FII 40.65 39.93 39.55 DII 15.35 16.16 18.28 Others 28.06 27.97 26.13 Financials 3QFY14 2QFY14 (QoQ)-% 3QFY13 (YoY)-% Revenue 13026 12965 0.47 10424 25.0 EBITDA 3258.9 2836.9 14.88 2677 21.7 PAT 2874.9 2406.9 19.44 2369 21.4 EBITDA Margin 25.0% 21.9% 310bps 25.7% (70bps) PAT Margin 22.1% 18.6% 350bps 22.7% (60bps) 5 Key facts from Investors Con Call Previous Target Price 3910 Upside 12% Change from Previous -4% Market Data Average Daily Volume "Recovery delayed, but not denied" CMP 3358 Target Price 3760 Company update BUY A gloomy outlook by Infosys; however, the best is yet to come. Addressing an Investor Con Call, Infosys management has expressed its cautious view on earnings outlook as well as clients spending for near term. They indicated that FY14E would be a year of lower earnings than NASSCOM guidance followed by FY13 and FY12. The company’s knee jerk has not associated with single factor; these are partly company specific and partly external factors. We expect, this adverse scenario would impact its earnings growth for next couple of quarters. BSE Code 500209 NSE Symbol INFY Share Holding Pattern-% 52wk Range H/L 3847/2190 Mkt Capital (Rs Crores) Nifty 6493 1 year forward P/E Rs, Crore Please refer to the Disclaimers at the end of this Report. Stock Performance 192799 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. At a CMP of Rs 3358, it trades at 16x FY15E earnings. We retain our “BUY” view on the stock with a target price of target price of Rs 3760 (revised from 3910). Impact on Estimates: We expect that the recent developments of Infosys could adversely impact our sales guidance by 2-3% and earnings growth guidance by 3-4% for FY15E. We downgrade our revenue growth guidance from 16.5% to 13.7%. (3) Challenges with skill mis-matches: Infosys CEO anticipated order cancellation from some of its clients because of its skill mis-match issue. Infosys has also seen some challenges with skill mis-matches between client’s needs and what company could have provided; this has led to slowdown in ramp-ups. ■ The company might only be able to meet the lower end of its annual revenue growth guidance of 11.5-12% for FY14E, and they are expecting weakness in client spending throughout the current quarter (4QFY14E). ■ Slowdown in client sentiment in 4QFY14E could be remain continue in the next couple of the quarters of the next financial year. We expect that 1HFY15E could be a part of worrisome. (1) Poor response from Retail and CPG verticals: In the retail segment (contributes 25% of sales) a sluggish sales over the last 2 months, severe winter, and aggressive discounts by retailers have led to lesser profitability. In addition, this has led to capping of additional spending in CY14. Some retail clients have specific issues leading to categorization of spends. We expect this is not specific for Infosys, it could be viral for the Industry growth. (2) Portfolio related concern in Manufacturing: Recently, Manufacturing segment (contributes 22% of sales) has adversely impacted by the reduced PC sales and capex spending in networking and this will have an impact on revenue growth in this segment. Revenue contribution from manufacturing segments stands larger than other peers. 1240448 "BUY" 14th March' 14 Narnolia Securities Ltd,

6 Please refer to the Disclaimers at the end of this Report. We believe that strong demand environment across the industry would offer Infosys breathing space to tide over reorganization-related challenges. Its strategies on sales effectiveness and cost optimization initiative could turn the growth story as before. Now, we are waiting for next earning outlook and guidance by management for FY15E. Financials (Source: Company/Eastwind) Why the best is yet to come? Recent weak guidance given by Infosys management is not an episode of close out. The company is working on various strategies to rediscovering its past sparkle days with revenue momentum kicking. Already, company has initiated to work closely with clients and focused on building relationship for deal intake. To maintain margin stability and increase productivity, company is working efficiently on cost optimization initiative. However, the management indicated that early signs of sales effectiveness initiative would start showing from 1HFY15E. Infosys. Narnolia Securities Ltd, Rs in Cr, FY10 FY11 FY12 FY13 FY14E FY15E Sales, INR 22742 27501 33734 40352 50217.7 57222.3 Employee Cost 12085 14856 18340 22565 28373.0 32330.6 Other expenses 2792 3677 4671 6254 8034.8 9441.7 Total Expenses 14877 18533 23011 28819 36407.8 41772.3 EBITDA 7865 8968 10723 11533 13809.9 15450.0 Depreciation 905 854 928 1099 1367.7 1558.5 Other Income 982 1211 1904 2365 2566.1 2861.1 EBIT 7942 9325 11699 12799 15008.3 16752.7 Interest Cost 0 0 0 0 0.0 0.0 PBT 7942 9325 11699 12799 15008.3 16752.7 Tax 1681 2490 3367 3370 4202.3 4690.7 PAT 6261 6835 8332 9429 10806.0 12061.9 Growth-% Sales 4.8% 20.9% 22.7% 19.6% 24.4% 13.9% EBITDA 9.3% 14.0% 19.6% 7.6% 19.7% 11.9% PAT 4.6% 9.2% 21.9% 13.2% 14.6% 11.6% Margin -% EBITDA 34.6% 32.6% 31.8% 28.6% 27.5% 27.0% EBIT 34.9% 33.9% 34.7% 31.7% 29.9% 29.3% PAT 27.5% 24.9% 24.7% 23.4% 21.5% 21.1% Expenses on Sales-% Employee Cost 53.1% 54.0% 54.4% 55.9% 56.5% 56.5% Other expenses 12.3% 13.4% 13.8% 15.5% 16.0% 16.5% Tax rate 21.2% 26.7% 28.8% 26.3% 28.0% 28.0% Valuation CMP 2615.1 2765.1 2865.0 2400.0 3358.0 3358.0 No of Share 57.4 57.4 57.4 57.4 57.4 57.4 NW 23049.0 25976.0 31332.0 37994.0 45642.7 54345.7 EPS 109.1 119.0 145.1 164.2 188.2 210.1 BVPS 401.7 452.4 545.6 661.7 794.9 946.5 RoE-% 27.2% 26.3% 26.6% 24.8% 23.7% 22.2% Dividen Payout ratio 25.1% 45.9% 24.0% 45.1% 22.9% 20.6% P/BV 6.5 6.1 5.3 3.6 4.2 3.5 P/E 24.0 23.2 19.7 14.6 17.8 16.0

V- V-Guard Industries Ltd. Key Points : CMP 453 Target Price 525 Previous Target Price 475 Upside 14% 10% BSE Code 532953 NSE Symbol 1,349 59,460 Nifty 6,493 1M 1yr YTD Absolute (4.5) (9.0) 5.0 Rel. to Nifty (5.6) (13.6) (6.7) 3QFY14 2QFY14 1QFY14 Promoters 65.5 65.5 65.5 FII 18.5 17.4 14.5 DII 2.2 2.5 3.5 Others 13.8 14.5 16.4 About El Nino 7 • In its update on Thursday, the Australian Bureau of Meteorology said factors that lead to an El Nino were now increasingly visible. "The tropical Pacific Ocean subsurface has warmed substantially over the past few weeks • Indian Met officials are treating the reports with caution, saying that though chances of an El Nino developing around mid-2014 are growing, predictions made at this stage suffer from low accuracy. • US agency NOAA's Climate Prediction Center, which updated its forecast on Wednesday, said temperature anomalies associated with El Nino had strongly increased since the end of January. Further, NOAA said there was a 50% chance of El Nino developing during the summer or autumn this year. (Source: Times of India/ Eastwind Research) El Nino — 'the boy' in Spanish — is an unusual warming of sea surface waters in eastern and central equatorial Pacific associated with changes in wind patterns that impact weather in many parts of the world. It generally has an adverse effect on the Indian monsoon. "Colling Gun……..." Buy • On recent interview management expect a sales growth of around 10% in 4QFY14 on back of strong sales growth of 12-12.5% in January and February month of 2014. • Last financial year for Q4 company had very low margins because of two reasons, higher ad spend and one-off items. From that level, we expect there would been improvement this quarter and margin would be somewhere around 8.51%. • Company expect the ad spends in the current quarter are likely to be Rs. 11-12 crore (2.85% of expected revenue in 4QFY14E), compared to 14 crore (3.7% of 4QFY13 revenue) which should in our view aid in the margin expansion in current quarter. • The El Niño visibility in 2014 would be the another factor for the revenue growth of companies like Vgaurd. As Vguard product portfolio consist of 65-70% summer facing in nature and we believe that the strong summer expectation in 2014 and low base of FY14 would lead a revenue growth of at least 18% in FY14E. Company update Mkt Capital (Rs Crores) 52wk Range H/L 390/570 Market Data Change from Previous 1 yr Forward P/B V-GUARD Please refer to the Disclaimers at the end of this Report. Average Daily Volume Stock Performance-% Share Holding Pattern-% Forecast updates strengthen El Nino fears "Buy" 4th Mar' 14 Narnolia Securities Ltd,

8 EBITDA % and PAT % Q-o-Q • We expect margin to expand in 4QFY14E on back of lowered ad spends and non hoping of one- off items which hit the p/l in past year of same quarter. However we restrict our EBITDA expectation for FY14E to 8.9% against management guidance of 9-9.5% due to significant reduction in copper prices both in dollar terms as well as in rupee terms as company value its inventory on mark-to-market basis but apart from that there are no other issues we could see. • The El Niño visibility in 2014 would be the another factor for the revenue growth of companies like Vgaurd. As Vguard product portfolio consist of 65-70% summer facing in nature and we believe that the strong summer expectation in 2014 and low base of FY14 would lead a revenue growth of at least 18% in FY14E. • At the current CMP of Rs. 452, the stock is trading at a PE of 17.0x and 13.4x of FY14E and FY15E. The company can post RoE of 24.0% and 24.1% & EPS of Rs. 26.4 and Rs. 33.6 FY14E and FY15E. We believe that from current level the growth would pick pace expected acceleration of growth momentum, given the strong outlook of summer going forward. We revised our rating to “Buy” from “Hold” with a revised price target of Rs. 525. Revenue Q-o-Q (Source: Company/ Eastwind Research) Business segments, market size and existing competition in segment (Source: Company/ Eastwind Research) V-Guard Industries Ltd. Strong Balance Sheet •Total Debt has been reduced significantly as on 3Q FY14 to Rs. 117.7 crore, compared to Rs. 157 crore as on 3Q FY13. Working capital loan reduced to Rs. 77.1 vrore from 134.0 crore and whereas term loan icreased to Rs. 40.6 crore from 22.9 crore. • Working capital cycle on a TTM basis improves by 9 days to 76 days. Mainly Led by 15 days reduction in debtors. Management has also guided for improvement in net working capital cycle by 5- 10 days every year going forward. This will further improve its ROCE and ROE going forward. • Strong cash generation in 9M. FY14 Cash from operations at Rs. 90 crore in 9M FY14 as compared to Rs. 14.5 crore for full year FY13 Please refer to the Disclaimers at the end of this Report. Outlook / Valuation (Source: Company/ Eastwind Research) Narnolia Securities Ltd, Industry Size (crore) V-Guard (Share FY13) Production Model Key Players Stabilisers 2100 201 100% Outsourced Bluebird, Capri, Logicstat, Premium, everest PVC Cables 7000 289 100% In-House Havells, Finolex LT Power Cables 6000 64 100% In-House Havells, Finolex Motor Pumps 2000 152 90% Outsourced Crompton Greaves, Kirloskar, CRI, Texmo Water Heaters 800 72 90% Outsourced A.O.Smith,Racold,Bajaj,Venus,Crompton Fans 5000 57 90% Outsourced Crompton,Bajaj Electricals,Havells, Orient UPS 3500 42 100% Outsourced Numeric,APC,Emerson Digital UPS 5500 73 100% Outsourced Microtek, Luminous, Su-Kam Solar Water Heater 300 26 100% In-House Tata BP-Solar

9 Please refer to the Disclaimers at the end of this Report. Key financials V-Guard Industries Ltd. (Source: Company/ Eastwind Research) Narnolia Securities Ltd, PARTICULAR 2010A 2011A 2012A 2013A 2014E 2015E Performance Revenue 454 727 994 1360 1523 1752 Other Income 1 2 2 4 5 6 Total Income 456 728 996 1364 1528 1758 EBITDA 50 73 94 110 136 158 EBIT 43 65 84 99 119 141 DEPRICIATION 7 8 10 11 12 15 INTREST COST 5 11 17 20 21 15 PBT 40 55 69 82 102 132 TAX 14 16 18 19 27 33 Extra Oridiniary Items NA NA NA NA NA NA Reported PAT 25 39 51 63 79 100 Dividend (INR) 10 12 12 12 12 12 DPS 3.5 4.1 4.1 4.1 4.1 4.0 EPS 8.5 13.1 17.0 21.1 26.4 33.6 Yeild % EBITDA % 11.1% 10.1% 9.4% 8.1% 8.9% 9.0% NPM % 5.6% 5.4% 5.1% 4.6% 5.2% 5.7% Earning Yeild % 9.6% 7.8% 9.2% 4.8% 5.8% 7.4% Dividend Yeild % 4.0% 2.4% 2.2% 0.9% 0.9% 0.9% ROE % 18.0% 22.7% 24.1% 24.1% 24.0% 24.1% ROCE% 13.8% 16.2% 21.2% 19.4% 22.1% 21.7% Position Net Worth 141 172 211 261 328 416 Total Debt 81 139 109 165 125 115 Capital Employed 222 311 320 427 453 531 No of Share (Adj) 3 3 3 3 3 3 CMP 89 168 186 435 452 452 Valuation Book Value 47.4 57.6 70.6 87.6 109.9 139.5 P/B 1.9 2.9 2.6 5.0 4.1 3.2 Int/Coverage 8.4 5.7 4.9 4.9 5.6 9.4 P/E 10.4 12.9 10.9 20.7 17.1 13.5

TATA STEEL Ltd. 336 401 440 19% -9% 500470 32710 22897 6493 1M 1yr YTD Absolute -9.3 -4.5 -3.0 Rel. to Nifty -16.4 -14.7 -14.2 3QFY14 2QFY14 1QFY14 Critical Debt Level Promoters 31.4 31.4 31.4 FII 16.1 13.6 13.2 DII 25.4 26.1 26.3 Others 27.2 29.0 29.2 Financials : Q3FY14 Y-o-Y % Q-o-Q % Q3FY13 Q2FY14 Net Revenue 36736 14.4 0.2 32107 36645 Depriciation 1522 4.0 5.4 1463 1444 Interest Cost 1108 7.3 3.9 1032 1067 EBIDTA% 10.9 290bps 80bps 7.0 10.1 OPM% 6.8 430bps 70bps 2.4 6.1 NPM% 1.4 370bps (110bps) -2.3 2.5 (In Crs) 10 Change from Previous Tata Steel is a blue chip stock and is available at a very cheap valuation. With the European crisis behind us, US economy getting stronger and better outlook for Indian economy on the expectation of stable government at the Center, We feel Tata Steel may have price appreciation. valuing the financial performance We recommend Buy on the stock at a medium term target price of Rs.401. The consolidated EBITDA of Tata Steel came in at Rs. 4006.5 crore (EBITDA margin of 10.9%) , primarily on the back of operational efficiencies realized at its European division while the ensuing consolidated PAT came in at Rs. 503.2 crore. The company incurred capex to the tune of Rs.3900 crore in Q3FY14 and Rs.12300 crore in 9MFY14 wherein majority of capex has been incurred for Kalinganagar project. Market Data Tata Steel reported a good set of Q3FY14 numbers, and positively surprised by the EBITDA/tonne of Tata Steel Europe (TSE). The company reported a consolidated net income from operations of Rs. 36735.8 crore for the quarter, higher by 0.2% QoQ and 14.4% YoY.In Q3FY14, Tata Steel India’s Steel deliveries stood at 2.1 MT while TSE deliveries stood at 3.2 MT and South East Asia at 1.09MT. In Q3FY14, TSI reported EBITDA of Rs.2936 crore while TSE reported an EBITDA of Rs.860 crore. On a consolidated basis, consolidated steel sales stood at 6.4 MT. EBITDA/tonne of Indian operations came in at Rs. 14183/tonne while that of European operations came in at US$ 43/tonne Mkt Capital (Rs Crores) Result Update BUY CMP Target Price Previous Target Price Upside Source - Comapany/EastWind Research Please refer to the Disclaimers at the end of this Report. Odisha Project could provide further upside in long-term: The Company aims to make value added steel products at the new facility in Odisha (3mtpa) where the blended realizations could be potentially higher than existing products by 2015. We believe timely clearance for expansion of iron ore mine is critical for the plant. The company's Odisha plant is highly automated and will require fewer employees/ton compared to its Jamshedpur facility. Share Holding Pattern-% NSE Symbol TATASTEEL On the back of a consistent operational improvement at the company’s European operations We are positive on the stock in long run .However, on the back of ongoing capacity expansion, the gross debt is expected to increase from 66074 crore (FY13) to 76919 crore (FY14E) and 77543 crore (FY15E). In our view, unlike Karnataka and Goa, Odisha is very critical for the Indian steel industry. We estimate Odisha iron ore production in FY13 stood at 62MT (accounting for ~45% of India’s production). 1 yr Forward P/B Average Daily Volume (Nos.) Stock Performance-% BSE Code 52wk Range H/L 435/195 Nifty "BUY" 14th March' 14 Narnolia Securities Ltd,

Business Outlook TATA Steel India Rupee depreciation is helping to restore balance in the market Tata Steel Europe Recommendation 11 Europe Turnover and Realization At current market capitalization of Rs. 23444 Crores, the stock is trading at a forward P/B of just 0.9. Tata Steel is a blue chip stock and is available at a very cheap valuation. But if we look at its historical stock performance, in the past three years it had continued to trade between 0.6 to 1.9 P/B range. After bottoming out in August 2013 at a stock price of just under Rs. 200, Tata Steel stock have more than doubled in the past few months. Since January 2014, the stock had corrected slightly but still it is available at a low P/B (very much closer to the lower end of its P/B range). With the European crisis behind us, US economy getting stronger and better outlook for Indian economy on the expectation of stable government at the Center, We feel Tata Steel share price may have some more price appreciation left given the improvement in financial performance and Outlook. We recommend Buy on the stock at a medium term target price of Rs.401. The political uncertainty still continues in Thailand with no clear solution at sight. However, the business is focusing on customer relationships and service levels to drive performance. Europian Steel Deliveries Southeast Asia Steel Deliveries The ministry of coal deallocated two of TATA coal blocks at pachmo and Kotre Basantpur. Tata steel appealed in the high court for this concern and waiting for the hearing of high courts hearing on 26th march. Sentiment has improved; though sectors like construction and auto continue to be under pressure. Liquid steel production improved further 1% QoQ to 3.91m tons. Sales volumes however declined 8% QoQ (+5.6% YoY) to 3.19m tons due to seasonal factors leading to increase in inventories by 300kt to 2.6m tons. Operating leverage helping EBIDTA margin to improve.(EBIDTA /ton increased 72% to Rs.273.) EU steel demand expected to show signs of gradual recovery in Q4 (+3.3%) from a low base and could translate into a recovery in end user sectors in 2014. TSE will ramp up production from currently operating facilities. TSE expects to liquidate inventories in 4QFY14 leading to sales volumes surpassing production. Southeast Asia Turnover and Realization TATA STEEL Indian Turnover and Realization South East Asia Operation Construction sector outlook remains positive in the region, hence showing a positive signal for steel. Indian Turnover and Realization Indian Steel Deliveries Indian Turnover and Realization Indian Steel Deliveries Narnolia Securities Ltd,

Global Up & Downs 12 TATA STEEL One year Stock Performance One year LME Steel Price Financials China's industrial output rose 8.6% in the first two months of 2014 from a year earlier, the National Bureau of Statistics said on Thursday, missing market expectations for a 9.5% rise. Narnolia Securities Ltd,

V- Shakti Pumps (India) Ltd. Key Points : CMP 76 Target Price 105 NA Upside 38% 0% BSE Code 531431 NSE Symbol 116 13,645 Nifty 6,518 1M 1yr YTD Absolute 1.5 44.2 72.4 Rel. to Nifty (6.0) 31.5 57.8 3QFY14 2QFY14 1QFY14 Promoters 45.0 44.9 44.9 FII 0.0 0.0 0.0 DII 9.9 10.5 10.5 Others 45.2 44.7 44.7 13 "Turnarround Counter………..." Buy 38/88 Company update SHAKTIPUMP • The company was the first to get 5 star rating for energy efficiency for its products from BEE. In addition to submersible pumps, company also producing Vertical Multistage Centrifugal pumps, Pressure booster pumps, Open well pumps, End suction pumps etc. Recently company introduced pumps working with solar power. • In next three years company incline to achieve sale revenue of Rs. 600 crore with the net margin of 9-10%. • Company is planning to increase the Branch Network to 30 and Dealer network to 3 fold in coming few year. Further, Company have plans to register our presence in all BRICS, G20 and European Union and in other growing countries in coming years. • On valuation front shakti pump is available at a single digit PE and EV/EBIDTA of 5.6x/4.1x and 4.7x/3.8x of its FY14E/15E estimates. In a volatile market, a company available at single digit valuations certainly looks up for grabs. • Pledging of shares by promoters is the only reason for some concern.But ,since its financial performance is improving quarter over quarter ,I don’t expect much issues from this angle.Moreover pledge is not with any NBFC but with one of its bankers - Axis Bank. 52wk Range H/L Please refer to the Disclaimers at the end of this Report. Change from Previous Previous Target Price 1 yr Forward P/B Share Holding Pattern-% Stock Performance-% Market Data Average Daily Volume Mkt Capital (Rs Crores) Company Profile Shakti is a manufacturer of stainless steel submersible pumps and motors ranging from 0.5 HP to 255 HP used in domestic, industrial, irrigation, and fire-fighting and located at Pithampur Madhya Pradesh. Company is the first five star rated pump manufacturer in India. In addition to submersible pumps ,company also producing Vertical Multistage Centrifugal pumps, Pressure booster pumps, Open well pumps, End suction pumps. The company is mainly focused on the export market and sup-plies its products to around 50 countries, such as US, UK, Turkey, Spain, Netherlands, Germany, France, Italy, Australia, Sri Lanka, etc. Nearly 58 per cent of its revenues are from exports. Of the balance 42 per cent of domestic revenues, 60 per cent come from supply to farmers, 20 per cent from domestic demand, 12 per cent from government institutions, and the balance 8 per cent from various industrial sectors. Industry Structure and Development The Indian pump industry is estimated to be Rs. 8000 crores in 2012-13. It is likely to grow at 8% and expected to reach Rs. 18000 crores by 2017-18. The market demand is driven by infrastructure based spending, urbanisation, growth in manufacturing activity, refurbishment & upgradation and overall increase in the population, insufficient rains and falling water tables have led to demand for improvement in hydraulics and pump efficiency. The rising cost of oil has positively influenced the demand for energy conservative pumps and pumps driven by renewable energy sources. There will be strong demand for pumps from developing countries like China and India due to industrialisation and investment in water and power segments. The developed nations propose to repair and upgrade their old water infrastructure. This will lead to good replacement demand for pumps in developed countries. "Buy" 13th Mar' 14 Narnolia Securities Ltd,

14 Shakti Pumps (India) Ltd. Reasons of laggard performance : At current price of Rs. 75, the stock is trading at P/E of 5.5 x for FY14E and 5.0 x the FY15E. Escorts could post EPS of Rs. 13.6 for FY14E and Rs. 18.7 for FY15E. Considering management’s aggressive expansion in production capacity and marketing network, I believe company can deliver good growth in coming years. Further, we expect the company to benefit immensely from the subdued steel prices currently. We expect the benefit to flow in for the next coming quarters as well. We recommend a "Buyrating on stock with price target of Rs. 105 Having said that, there are reasons we believe this scrip may not perform as per the expectations on the bourses. First and foremost, one should note that Shakti is in a business domain that has low entry barriers and the products can be easily manufactured. Currently, Shakti manufactures only steel sub-mersible pumps and though it posi- tions itself as an energy-efficient pump manufacturer, there are other players too who manufacture such energy-effi-cient pumps. However, the company is increas-ing its product line by adding boost-er pumps, mono-block, and open well pumps to its portfolio. “Shakti is installing a new 65,000 unit per annum capacity for booster pumps at a cost of Rs 35 crore, which is being funded through a combination of debt (Rs 25 crore) and internal accruals (Rs 10 crore). This expansion is expected to come on stream and start generat-ing revenues in coming periods Outlook : It is one of the fastest growing companies from this sector .From Rs.41 Cr sales in 2006 it reached a top line of Rs.210 Cr in 2013. Its export thrust and improvement in India’s rural economy is expected to drive further growth .Company is targeting a turnover of Rs.600 Cr in next three years. Please refer to the Disclaimers at the end of this Report. Revenue Q-Q (In Crores) (Source: Eastwind Research) (Source: Eastwind Research) Operating Profit Q-Q (In Crores) To drive its domestic growth, Shakti has already strength-ened its marketing team and domestic dealer network to 650 from 192 just two years back. Though this renewed focus should help generate revenues for Shakti, the new product portfolio isn’t a unique one and is already manufactured across the country. Thus Shakti seems to be a late entrant in these products and therefore one will have to wait and watch the kind of growth it posts in these segments. Besides, there is a huge unorganised market on the domestic front which firstly eats into the market share (according to the management, Shakti’s market share is 3 per cent in the overall pump industry i.e. includ-ing the unorganised market) and sec-ondly, it reduces the pricing power of the organised players, thus impacting realisations and margins. However, Most Governments are insisting on the use of Star-rated pumps wherever it is subsidising their purchase on account of higher energy efficiency. With labour getting scare and expensive, there is a greater preference among agriculturist to work with branded models that promise a higher uptime, circumventing the need to invest in submersible pump extraction, repair or replacement. The result is that the market share of the country’s unorganised sector has steadily declined from 95% to 80%; the performance of the organised sector growth over the unorganised provides the industry optimism. Valuation : Narnolia Securities Ltd,

15 (Source: Eastwind Research) (Figures in crore) Please refer to the Disclaimers at the end of this Report. Shakti Pumps (India) Ltd. Key financials : Narnolia Securities Ltd, PARTICULAR 2011A 9M 2012A 2013A 2014E 2015E 2016E Performance Revenue 135 192 209 270 338 422 Other Income 1 1 7 7 7 7 Total Income 136 193 215 277 344 429 EBITDA 25 31 30 41 51 63 EBIT 22 27 25 34 43 55 DEPRICIATION 3 4 5 7 7 8 INTREST COST 6 9 12 14 14 15 PBT 17 18 20 26 36 47 TAX 3 4 3 6 8 10 Reported PAT 13 14 17 21 28 37 Dividend 2 2 2 2 2 2 EPS 10.8 9.1 11.0 13.6 18.7 24.1 DPS 1.4 1.1 1.2 1.3 1.3 1.3 Yeild % EBITDA % 18.4% 16.0% 14.4% 15.0% 15.0% 15.0% NPM % 9.9% 7.2% 7.8% 7.5% 8.3% 8.6% Earning Yeild % 20.6% 19.5% 25.5% 18.0% 24.6% 31.8% Dividend Yeild % 2.6% 2.4% 2.7% 1.7% 1.7% 1.7% ROE % 20.5% 15.9% 15.5% 16.3% 18.5% 19.5% ROCE% 9.2% 8.2% 8.8% 10.0% 12.2% 13.7% Position Net Worth 65 87 109 128 154 189 Total Debt 81 83 82 80 80 80 Capital Employed 147 170 191 208 234 269 No of Share 1 2 2 2 2 2 CMP 52 47 43 76 76 76 Valuation Book Value 52.6 57.3 71.3 83.7 101.1 123.9 P/B 1.0 0.8 0.6 0.9 0.8 0.6 Int/Coverage 3.6 2.9 2.1 2.4 3.1 3.6 P/E 4.9 5.1 3.9 5.6 4.1 3.1

HCLTECH 1M 1yr YTD Absolute 2.6 85.5 135 Rel. to Nifty -5 75.9 122.9 Current 1QFY14 4QFY13 Promoters 61.75 61.84 61.92 FII 28.05 26.01 24.45 DII 4.20 5.70 6.49 Others 6 6.45 7.14 2QFY14 1QFY14 (QoQ)-% 1QFY13 (YoY)-% 8184 7961 2.8 6273.8 30.4 2125 2093 1.5 1417 50.0 1495 1416 5.6 965 54.9 26.0% 26.3% (30bps) 22.6% 340bps 18.3% 17.8% 50bps 15.4% 290bps 16 (2) Software-as-a-Service (SaaS): software that is owned, delivered and managed remotely by one or more providers. (3) Social Technologies: Technology that facilitates social interactions and is enabled by a communications capability, such as the Internet or mobile device. 101643 (1) Smart Computing: Consulting Solution for next-generation IT infrastructure to maximize workforce. The aggregation and management of Cloud services is executed through HCL's proprietary MyCloud platform. Mkt Capital (Rs Crores) Market Data BSE Code 532281 NSE Symbol HCLTECH Key takeaways from recent Investors Conference in Mumbai: Trump Card on rebid Market: HCL Tech Management expressed its optimistic tone for rebid opportunity with a deal of $45bn for negotiation in CY14E. Most of rebid would be come from Infrastructures and traditional IT segments. Across the tier-1 IT space, HCL Tech will be most beneficiary because of large exposures in Infrastructures space (36% of sales).Change from Previous 5.8% 52wk Range H/L 1589/674 5 major technological changes are expected to open up new opportunities for service providers: EBITDA Margin PAT Margin "Retain confidence" CMP 1454 Target Price 1650 Company update Visionary approach to changing market dynamics: Forward looking statement from the desk of BoD (Given on annual report 12-13) reveals 5 major strategies to compete market dynamics and company is focused for the same. Previous Target Price 1560 Upside 13% Buy Financials Stock Performance 1 year forward P/E Rs, Crore (Source: Company/Eastwind) Please refer to the Disclaimers at the end of this Report. Looking for strategic partnership with CSC: HCLTech is looking an opportunity of strategic partnership to transform client’s services from legacy to cloud based technologies. As per IT based Gartner survey, clients are looking to retire, replace, and revise 80-85% of their applications over the next 2 years. The company expects to acquire and quantify of this opportunity with CSC (Nasdaq-listed IT services firm Computer Sciences Corporation, CSC). View and Valuation: HCL tech’s decent level of utilization, focused on cost control and utilization of new market opportunities through vendor’s consolidation would provide a new shape to the company in near future. On performance front, it continues to be bullish on the rebid market and bullish on short-term to medium term, momentum on deals pipeline also looking robust. Considering the increasing discretionary spends across the geographies like US and Europe, we expect healthy earnings performance ahead. At a CMP of Rs 1454, stock trades at 17.4x of FY14E earnings, We retain BUY on the stock and revised our target price from Rs 1560 to Rs1650. (4) Mobility: Mobility offering services from mobile application development and integration to mobile application services, to fully managed mobility including provisioning, hosting, and end-user support. (5) Analytics: End-to-end life cycle of services including management and hosting of customer assets, consolidation and migration services, virtualization and design and management of green data centers. Revenue EBITDA PAT Average Daily Volume 1193062 Share Holding Pattern-% Nifty 6512 "BUY" 12th Mar' 14 Narnolia Securities Ltd,

17 Please refer to the Disclaimers at the end of this Report. (Source: Company/Eastwind) Financials; HCLTECH Healthy deal pipeline: During the quarter, HCL Tech reported an addition of 15 transformational deals in the US and Europe for the December quarter. These wins have been in the momentum markets of manufacturing and Financial Services as well as the emerging momentum markets of life sciences & Healthcare and Public Services. Across the geographies, USA and Europe remain best to drive deal wins during the quarter because of healthy scenario of demand environment. Narnolia Securities Ltd, Rs, Cr FY10 FY11 FY12 FY13 FY14E FY15E Net Sales-USD 2704.6 3545.3 4151.5 4686.5 5464.6 6484.1 Net Sales 12136.3 15730.3 20830.6 25581.1 32787.8 39229.0 Raw Materials Cost 443.6 522.1 612.0 959.3 983.6 1176.9 Employee Cost 6253.7 8589.6 11104.6 12574.2 16066.0 19418.3 Operation and other expenses 3498.5 4163.2 5418.8 6386.4 7213.3 8826.5 Total Expenses 10195.7 13274.9 17135.3 19919.9 24262.9 29421.7 EBITDA 1940.6 2455.4 3695.2 5661.2 8524.8 9807.2 Depreciation 418.1 459.7 549.2 636.8 742.5 881.0 Other Income 154.1 299.7 206.5 306.6 460.5 590.2 Extra Ordinery Items 0.0 0.0 0.0 44.5 -491.8 78.5 EBIT 1522.5 1995.7 3146.0 5024.4 7782.3 8926.2 Interest Cost 204.1 142.6 142.6 105.6 79.2 59.4 PBT 1472.4 2152.8 3209.8 5269.9 7671.8 9535.5 Tax 213.4 488.5 782.7 1225.3 1841.2 2336.2 PAT 1259.0 1664.3 2427.1 4044.6 5830.5 7199.3 Growth-% Sales-USD 24.1% 31.1% 17.1% 12.9% 16.6% 18.7% Sales 18.6% 29.6% 32.4% 22.8% 28.2% 19.6% EBITDA 5.9% 26.5% 50.5% 53.2% 50.6% 15.0% PAT -4.6% 32.2% 45.8% 66.6% 44.2% 23.5% Margin -% EBITDA 16.0% 15.6% 17.7% 22.1% 26.0% 25.0% EBIT 12.5% 12.7% 15.1% 19.6% 23.7% 22.8% PAT 10.4% 10.6% 11.7% 15.8% 17.8% 18.4% Expenses on Sales-% Employee Cost 51.5% 54.6% 53.3% 49.2% 49.0% 49.5% RM Cost 3.7% 3.3% 2.9% 3.8% 3.0% 3.0% Operation and other expenses 28.8% 26.5% 26.0% 25.0% 22.0% 22.5% Tax rate 14.5% 22.7% 24.4% 23.3% 24.0% 24.5% Valuation CMP 364.9 493.5 490.0 759.5 1454.0 1454.0 No of Share 67.9 68.9 69.3 69.6 69.6 69.6 NW 6288.8 7653.0 9837.9 13164.0 17854.4 23913.5 EPS 18.5 24.2 35.0 58.1 83.8 103.4 BVPS 92.6 111.1 141.9 189.1 256.5 343.5 RoE-% 20.0% 21.7% 24.7% 30.7% 32.7% 30.1% Dividend Payout ratio 25.0% 31.5% 33.1% 20.0% 19.6% 15.8% P/BV 3.9 4.4 3.5 4.0 5.7 4.2 P/E 19.7 20.4 14.0 13.1 17.4 14.1

BANKBARODA 651 700 624 8 12 1M 1yr YTD Absolute 16.6 -8.3 -8.3 Rel.to Nifty 8.7 -21.4 -21.4 Current 4QFY13 3QFY1 3Promoters 55.4 55.4 55.4 FII 15.5 15.5 15.3 DII 19.6 19.6 19.0 Others 9.5 9.5 10.3 Financials Rs, Cr 2011 2012 2013 2014E 2015E NII 8802 10317 11315 12218 14122 Total Income 11611 13739 14946 16400 18304 PPP 6982 8581 8999 9206 10067 Net Profit 4242 5007 4481 4444 4819 EPS 108.3 121.8 106.4 105.5 114.4 18 Change from Previous BANKBARODA Vs Nifty Share Holding Pattern-% 18.25 Cr Nifty 6537 52wk Range H/L 21627 Provisions were lower by 11.5% YoY on account of reversal of investment depreciation to the tune of Rs.120 cr offset additional provision towards non- performing assets. But bank’s stress loan (slippage + Restructure) loans were Rs.1275 cr which was almost in previous quarter. Lower provisions made 17% up PBT but at operating profit level, it was down by 2.6% YoY. Tax rate was higher due to creation of DTL as per advice by RBI. View & Valuation On fundamental wise, we are not very impressed with bank but in recent market rally, PSB as well as private banks participated more than any sector likely due to outcome of exit poll for the coming election. We believe bank would rally more because of trading at lower side despite of index is running at all time high. But with this fundamental Bank of Baroda would trade in range of Rs.625 to Rs.700 depending upon sentiment as per our view. Mkt Capital (Rs Cr) Please refer to the Disclaimers at the end of this Report. (Source: Company/Eastwind) Stock Performance CMP ANNUAL REPORT UPDATE Target Price Previous Target Price Profit inflated due to lower provisions led by reversal of investment depreciation Advance growth led by SME and retail Average Daily Volume At the current price of Rs.651/share stock is trading at 0.77 times of FY14E book value which is now premium over its peer group. We value bank at the range of Rs.634 to Rs.790 implying valuation multiple of 0.75 to 0.9 times of one year forward book. But upper side of book value multiple would be possible only if the improvement of asset quality along with improving sign of fundamentals. But in its quarterly result, bank’s performance was muted all around except healthy loan and deposits growth. CASA growth was remained muted in compare to SBI and PNB. So cost of deposits is unlikely to soften in near term while asset quality was deteriorated higher in percentage as compare to PNB and SBI. In the following section we will discuss the fundamental improvement of bank during quarter. NII growth on the back of loan growth and margin expansion Result update ADD Bank’s NII grew by 7.6% YoY largely due to healthy loan growth and sequentially margin improvement of 5 bps. Margin improve came from domestic push from 2.85% to 2.95 while international NIM remained stable at 1.18%. Cost of fund declined by 14 bps quarterly due to lower borrowings as a percentage of percentage of NDTL. Advances grew by 18% YoY largely came from SME and retail sector which grew by 39% and 21% YoY respectively. Bank continued to be cautions while expanding its exposure towards large corporate owing to economy recession. Deposits grew by 21.5% YoY, added by foreign currency non- resident deposits but CASA franchise remained flat at 26%. So in CASA front we are not impressed and going forward cost of fund is unlike to be soften in our view. Market Data Upside 773/429 BSE Code 532134 NSE Symbol BANKBARODA "ADD" 11h March. 2014 Narnolia Securities Ltd,

19 BANKBARODA Source: Eastwind/Company Please refer to the Disclaimers at the end of this Report. Narnolia Securities Ltd, Quarterly Result (Rs Cr) 3QFY14 2QFY14 3QFY13 % YoY Gr % QoQ Gr 3QFY14E Interest/discount on advances / bills 7061 6832 6485 8.9 3.3 7173 Income on investments 2175 2220 1898 14.6 -2.0 2350 Interest on balances with Reserve Bank of India 245 281 403 -39.2 -12.8 397 Others 209 140 58 258.2 50.1 173 Total Interest Income 9691 9473 8845 9.6 2.3 10092 Others Income 932 974 841 10.9 -4.3 1102 Total Income 10623 10447 9686 9.7 1.7 11194 Interest Expended 6634 6579 6004 10.5 0.8 6792 NII 3057 2895 2841 7.6 5.6 3300 Other Income 932 974 841 10.9 -4.3 1102 Total Income 3989 3869 3681 8.4 3.1 4402 Employee 1056 1030 798 32.3 2.5 1189 Other Expenses 736 714 627 17.3 3.1 792 Operating Expenses 1792 1744 1426 25.7 2.7 1981 PPP( Rs Cr) 2197 2125 2256 -2.6 3.4 2421 Provisions 762 861 1029 -26.0 -11.5 897 Exceptional Items 16 16 12 25.0 0.0 0 PBT 1436 1264 1227 17.0 13.6 1524 Tax 372 80 203 83.7 364.7 457 Net Profit 1048 1168 1012 3.6 -10.3 1067 Balance Sheet Date( Rs Cr) Equity Capital 423 423 412 2.5 0.0 Reserve & Surplus 35232 35127 30966 13.8 0.3 Net Worth 35654 35549 31379 13.6 0.3 Total Deposits 503772 484931 414733 21.5 3.9 Borrowings 29304 28558 27899 5.0 2.6 Other liabilities and provisions 18638 13995 14552 28.1 33.2 Total Liability 587368 563033 488563 20.2 4.3 Cash in hand 16742 15681 17147 -2.4 6.8 Cash and balances with RBI 87599 79980 58295 50.3 9.5 Total Investment 115210 111840 101848 13.1 3.0 Advances 352446 339855 299318 17.7 3.7 Fixed Assets 2562 2498 2399 6.8 2.6 Others Assets 12809 13179 9557 34.0 -2.8 Total Assets 587368 563033 488563 20.2 4.3 Asset Quality GNPA( Rs Cr) 11926 10888 7321 NPA(Rs Cr) 6624 6316 3363 % GNPA 3.4 3.2 2.4 % NPA 1.9 1.9 1.1 % PCR (without technical writeoff) 44.5 42.0 54.1

20 BANKBARODA Source: Eastwind/Company Please refer to the Disclaimers at the end of this Report. Narnolia Securities Ltd, Income Statement 2011 2012 2013 2014E 2015E Interest Income 21886 29674 35197 39065 45206 Interest Expense 13084 19357 23881 26847 31084 NII 8802 10317 11315 12218 14122 Change (%) 48.2 17.2 9.7 8.0 15.6 Non Interest Income 2809 3422 3631 4182 4182 Total Income 11611 13739 14946 16400 18304 Change (%) 32.8 18.3 8.8 9.7 11.6 Operating Expenses 4630 5159 5947 7194 8237 Pre Provision Profits 6982 8581 8999 9206 10067 Change (%) 41.5 22.9 4.9 2.3 9.4 Provisions 1331 2555 4168 3559 4043 PBT 5650 6026 4831 5647 6024 PAT 4242 5007 4481 4444 4819 Change (%) 38.7 18.0 -10.5 -0.8 8.4 Balance Sheet Deposits( Rs Cr) 305439 384871 473883 521272 573399 Change (%) 27 26 23 10 10 of which CASA Dep 87589 103524 119981 135531 149084 Change (%) 23 18 16 13 10 Borrowings( Rs Cr) 22308 23573 26579 33273 36600 Investments( Rs Cr) 71261 83209 121394 122000 134200 Loans( Rs Cr) 228676 287377 328186 367568 404325 Change (%) 31 26 14 12 10 Ratio Avg. Yield on loans 8.0 8.7 8.4 8.6 9.3 Avg. Yield on Investments 7.0 7.8 6.4 7.3 8 Avg. Cost of Deposit 4.3 5.1 5.2 5.2 5.4 Avg. Cost of Borrowings 5.5 6.7 5.4 5.5 5.5 Valuation Book Value 536 668 759 846 929 CMP 963 794 652 513 513 P/BV 1.8 1.2 0.9 0.61 0.6

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 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.

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