india daily, october 10, 2014 - kotak securities · consumer products: month in review - september...
TRANSCRIPT
For Private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES’ RATING SYSTEM AND OTHER DISCLOSURES. REFER TO THE END OF THIS MATERIAL.
Contents
Special Reports
Strategy
Strategy: Smart beta - growth and profitability overshadow value in September
Daily Alerts
Sector alerts
Automobiles, NBFCs: Errata: Takeaways on Daimler Financial Services session at RUSH conference
Consumer Products: Month in review - September 2014: sector outperformance continues
INDIA DAILY October 10, 2014
India 9-Oct 1-day 1-mo 3-mo
Sensex 26,637 1.5 (1.6) 5.0
Nifty 7,961 1.5 (1.6) 5.2
Global/Regional indices
Dow Jones 16,659 (2.0) (2.4) (1.5)
Nasdaq Composite 4,378 (2.0) (4.5) (0.4)
FTSE 6,432 (0.8) (5.8) (3.6)
Nikkei 15,305 (1.1) (3.1) 0.6
Hang Seng 23,199 (1.4) (6.1) (0.2)
KOSPI 1,942 (1.2) (5.3) (2.9)
Value traded – India
Cash (NSE+BSE) 170 204 199
Derivatives (NSE) 1,937 1,307 2,108
Deri. open interest 1,922 1,956 1,834
Forex/money market
Change, basis points
9-Oct 1-day 1-mo 3-mo
Rs/US$ 61.1 (1) 31 101
10yr govt bond, % 8.7 3 (7) (11)
Net investment (US$ mn)
8-Oct MTD CYTD
FIIs (194) (105) 13,708
MFs 76 155 1,630
Top movers
Change, %
Best performers 9-Oct 1-day 1-mo 3-mo
AL IN Equity 45.4 3.4 8.9 39.1
CIPLA IN Equity 591.7 1.0 2.5 35.7
HPCL IN Equity 511.7 (0.0) 5.5 29.2
LPC IN Equity 1338.3 0.5 (0.4) 28.8
BHFC IN Equity 806.4 0.3 (7.5) 27.6
Worst performers
JPA IN Equity 30.0 6.6 (16.8) (53.8)
JSP IN Equity 165.7 (0.3) (30.4) (44.9)
IDBI IN Equity 62.2 3.2 (19.4) (35.0)
RECL IN Equity 250.0 4.7 (6.7) (32.0)
DLFU IN Equity 152.9 2.7 (13.6) (31.3)
For Private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES’ RATING SYSTEM AND OTHER DISCLOSURES, REFER TO THE END OF THIS MATERIAL.
eXtractor, KIE’s proprietary data-analytics tool
KIE’s proprietary data-analytics tool, eXtractor, mines a universe of Indian stocks based on nine
factors: value, relative value, growth, profitability, momentum, leverage, size, sentiment and our
proprietary factor iQ, or investment quotient. The data-mining is comprehensive in nature with
iQ deriving higher concepts from basic financial parameters by unifying various traditional
investment parameters under a single factor. This bridges the gap between data and inference.
eXtractor is part of our Quantools offerings and is available on our website
(http://kie.kotak.com). Here, clients can screen and test various investment styles, using their
own parameters for universe, investment horizons, churn periods, portfolio size and more.
Investment style guide—growth and profitability supersede other styles
Growth and profitability were the best-performing investment styles in September with
information coefficients for these factors suggesting strong predictability (see Exhibit 1). The
growth portfolio has outperformed the CNX Nifty 50 in six out the nine months of CY2014 (see
Exhibit 2). Value, on the other hand, posted losses during the period. Exhibit 3 showcases the
September 2014 portfolios based on various investment styles. While TCS (+8.5%), IIB (+6.2%)
and HCLT (+5.2%) propped up the growth portfolio during the month, profitability gained on
the back of HMCL (+9%). For October, the portfolio based on the composite factor (iQ) saw
new additions with information technology (TCS and HCLT) replacing healthcare (SUNP and
LPC) as can be seen in Exhibit 4. Sentiments for CIPLA improved on a mom basis with
consensus target prices being upgraded by 13.6% during the period.
Smart beta—shifting investment patterns negatively affect portfolio performance
Exhibit 5 highlights the recommended factor exposure to various investment styles considered
by our optimized CNX Nifty portfolio strategy. As can be seen, the portfolio focusses on value
investments with positive sentiments. Performance of all the portfolio constituents is showcased
in Exhibit 6 with JSPL (-26%) and TATA (-11%) recording the worst performance. In fact, JSPL
alone contributed most of the underperformance seen during the month. The portfolio lost
1.2% even as the CNX Nifty 50 remained quite flat during the month. The shifting investment
trends over the past few months have negatively impacted portfolio performance (see Exhibit
7). The focus on value and sentiments paid dividend in 1HCY14 as cyclical stocks saw re-rating
and their valuation discounts to defensives converged. In recent times, these factors have been
superseded by growth and profitability. Exhibit 8 showcases the positive and negative
contributors in the portfolio. LPC was the biggest positive contributor in the portfolio while JSPL
and AXSB were the biggest drags on the performance.
Optimized CNX Nifty 50 portfolio for October 2014—increased exposure to energy
Exhibit 9 shows the sector-wise classification of the optimized portfolio. Energy has been
favored over healthcare for October with ONGC and RIL being the biggest additions. On the
other hand, LPC, ICICI and JSLP were biggest reductions in the portfolio (see Exhibit 10). Exhibit
11 shows the optimized CNX Nifty 50 portfolio for October 2014. TTMT, ONGC, AXSB and
INFO are the biggest constituents in the portfolio.
Strategy India Quantitative
Smart beta—growth and profitability overshadow value in September. A shifting
preference to investment factors like growth and profitability has resulted in our
optimized CNX Nifty 50 portfolio underperforming in September. The biggest additions
to the optimized portfolio for October were ONGC and RIL while JSPL and LPC have
been removed from the portfolio.
INDIA
OCTOBER 10, 2014
UPDATE
BSE-30: 26,637
QUICK NUMBERS
Growth and
profitability were
the best-performing
investment styles in
September
JSPL and AXSB were
the biggest drag on
the optimized CNX
Nifty 50 portfolio
performance during
the month
Exposure to
healthcare has been
reduced in favor of
energy
Strategy India
KOTAK INSTITUTIONAL EQUITIES RESEARCH 3
Exhibit 1: Growth and profitability were the key performing styles in September; value lags other
factors Performance of the portfolios based on different investment styles, September 2014
Source: eXtractor, Factset estimates, Kotak Institutional Equities
Exhibit 2: The growth portfolio continues to outperform the CNX Nifty 50 Performance of various investment styles compared to CNX Nifty 50 (%), CYTD14
Source: eXtractor, Factset estimates, Kotak Institutional Equities
Portfolio returns
Minimum Maximum Average
Investment style Company Returns (%) Company Returns (%) (%)
iQ ONGC (6.1) Lupin 8.6 (0.8)
Growth Tata Motors (4.4) TCS 8.5 3.1
Value Punjab National Bank (6.4) Bank of Baroda 3.5 (2.8)
Relative value Jindal Steel & Power (25.8) NMDC (2.4) (1.6)
Profitability NMDC (2.4) Hero MotoCorp 9.0 3.9
Size ONGC (6.1) Tata Motors (4.4) (1.6)
Momentum BPCL (5.6) Maruti Suzuki India 10.0 2.0
Sentiments Hindalco Industries (7.8) Lupin 8.6 1.3
Leverage BHEL (16.8) Infosys 4.1 (1.8)
(10)
(5)
0
5
10
15
Jan-1
4
Feb-1
4
Mar-
14
Apr-
14
May-
14
Jun-1
4
Jul-14
Aug-1
4
Sep-1
4
CNX Nifty 50 (%) Growth portfolio (%)
India Strategy
4 KOTAK INSTITUTIONAL EQUITIES RESEARCH
Exhibit 3: TCS, IIB and HCLT propped up the growth portfolio; profitability gained on the back of HMCL and TCS The portfolios based on different investment strategies within the CNX Nifty 50 universe for September 2014
Source: Factset estimates, eXtractor, Kotak Institutional Equities
eXtractor factor ranks Price change MoM
Current Portfolio Growth Value Relative value Profitability Size Momentum Sentiments Leverage iQ (%)
iQ
Tata Motors 3 11 10 22 5 8 2 26 1 (4.4)
Lupin 6 43 36 12 40 4 1 19 2 8.6
NMDC 37 2 2 2 34 38 12 2 3 (2.4)
Sun Pharmaceutical Industries 1 47 43 7 22 5 3 10 4 0.2
Oil & Natural Gas Corp 34 6 29 17 2 9 31 21 5 (6.1)
Growth
Sun Pharmaceutical Industries 1 47 43 7 22 5 3 10 4 0.2
HCL Technologies 2 29 34 10 25 33 9 7 6 5.2
Tata Motors 3 11 10 22 5 8 2 26 1 (4.4)
IndusInd Bank 4 33 21 36 43 16 29 38 21 6.2
Tata Consultancy Services 5 41 31 4 4 39 24 14 8 8.5
Value
Cairn India 40 1 3 6 31 45 44 9 19 (4.4)
NMDC 37 2 2 2 34 38 12 2 3 (2.4)
Bank of Baroda 20 3 9 42 15 15 14 48 9 3.5
Punjab National Bank 29 4 19 44 19 10 23 37 16 (6.4)
Coal India 47 5 17 8 10 35 30 1 17 (4.1)
Relative value
Jindal Steel & Power 11 17 1 28 42 49 19 41 30 (25.8)
NMDC 37 2 2 2 34 38 12 2 3 (2.4)
Cairn India 40 1 3 6 31 45 44 9 19 (4.4)
Tata Power Co 33 14 4 35 35 48 47 46 46 (4.1)
Power Grid Corp of India 15 35 5 11 29 37 33 45 32 4.7
Profitability
Hindustan Unilever 19 49 49 1 23 14 11 16 36 0.5
NMDC 37 2 2 2 34 38 12 2 3 (2.4)
ITC 24 45 18 3 9 43 25 17 28 4.2
Tata Consultancy Services 5 41 31 4 4 39 24 14 8 8.5
Hero MotoCorp 28 20 33 5 36 29 32 13 22 9.0
Size
Reliance Industries 41 19 8 39 1 42 43 29 31 (5.3)
Oil & Natural Gas Corp 34 6 29 17 2 9 31 21 5 (6.1)
State Bank of India 27 18 13 47 3 25 21 35 12 (0.6)
Tata Consultancy Services 5 41 31 4 4 39 24 14 8 8.5
Tata Motors 3 11 10 22 5 8 2 26 1 (4.4)
Momentum
Bharat Petroleum Corp 48 13 47 48 7 1 6 36 18 (5.6)
Maruti Suzuki India 22 32 44 24 26 2 5 12 11 10.0
Mahindra & Mahindra 35 36 45 20 28 3 28 27 35 (3.3)
Lupin 6 43 36 12 40 4 1 19 2 8.6
Sun Pharmaceutical Industries 1 47 43 7 22 5 3 10 4 0.2
Sentiments
Lupin 6 43 36 12 40 4 1 19 3 8.6
Tata Motors 3 11 10 22 5 8 2 26 1 (4.4)
Sun Pharmaceutical Industries 1 47 42 7 22 5 3 10 4 0.2
Hindalco Industries 35 16 25 48 24 23 4 42 24 (7.8)
Maruti Suzuki India 21 33 43 24 26 2 5 12 11 10.0
Leverage
Coal India 36 2 11 7 11 26 21 1 8 (4.1)
Bharat Heavy Electricals 38 20 30 35 24 10 37 2 37 (16.8)
Infosys 18 18 9 12 13 28 19 3 10 4.1
Bajaj Auto 19 17 21 8 30 20 15 4 13 4.1
Ambuja Cements 32 19 23 18 37 30 16 5 30 3.6
Notes:
(a) The ranks for a company may vary depending on the permissible universe used for analyzing a particular investment style.
Strategy India
KOTAK INSTITUTIONAL EQUITIES RESEARCH 5
Exhibit 4: TCS and HCLT replace SUNP and LPC in the iQ portfolio; CIPLA and APNT see improvement in sentiments The portfolios based on different investment strategies within the CNX Nifty 50 universe for October 2014
Source: Factset estimates, eXtractor, Kotak Institutional Equities
eXtractor factor ranks
Current Portfolio Growth Value Relative value Profitability Size Momentum Sentiments Leverage iQ
iQ
Tata Motors 5 12 8 22 4 17 5 26 1
Oil & Natural Gas Corp 29 6 20 17 2 30 12 21 2
NMDC 38 2 3 2 35 36 14 4 3
Tata Consultancy Services 4 42 37 4 5 9 28 14 4
HCL Technologies 2 29 36 10 25 13 22 7 5
Growth
Sun Pharmaceutical Industries 1 47 38 7 22 5 7 10 6
HCL Technologies 2 29 36 10 25 13 22 7 5
IndusInd Bank 3 34 26 36 42 10 17 37 14
Tata Consultancy Services 4 42 37 4 5 9 28 14 4
Tata Motors 5 12 8 22 4 17 5 26 1
Value
Cairn India 39 1 5 6 31 46 41 9 22
NMDC 38 2 3 2 35 36 14 4 3
Bank of Baroda 19 3 17 42 15 12 29 48 18
Coal India 47 4 16 8 10 40 35 1 17
Punjab National Bank 25 5 14 43 19 25 10 35 20
Relative value
Jindal Steel & Power 16 16 1 33 43 49 49 42 47
DLF 46 39 2 29 45 48 42 38 46
NMDC 38 2 3 2 35 36 14 4 3
Tata Power Co 33 14 4 35 36 47 47 45 45
Cairn India 39 1 5 6 31 46 41 9 22
Profitability
Hindustan Unilever 28 48 46 1 23 18 15 15 38
NMDC 38 2 3 2 35 36 14 4 3
ITC 23 45 25 3 9 34 32 17 27
Tata Consultancy Services 4 42 37 4 5 9 28 14 4
Hero MotoCorp 26 24 39 5 34 14 24 13 15
Size
Reliance Industries 40 17 7 40 1 43 16 29 21
Oil & Natural Gas Corp 29 6 20 17 2 30 12 21 2
State Bank of India 24 19 15 48 3 26 20 34 12
Tata Motors 5 12 8 22 4 17 5 26 1
Tata Consultancy Services 4 42 37 4 5 9 28 14 4
Momentum
Maruti Suzuki India 18 33 45 23 26 1 2 12 7
Cipla /India 10 44 47 20 44 2 1 20 13
Lupin 6 43 43 12 39 3 18 19 11
Tech Mahindra 7 30 48 15 37 4 33 11 19
Sun Pharmaceutical Industries 1 47 38 7 22 5 7 10 6
Sentiments
Cipla /India 10 44 47 20 44 2 1 20 13
Maruti Suzuki India 18 33 45 23 26 1 2 12 7
Bharat Petroleum Corp 44 10 33 44 6 6 3 36 23
Asian Paints 9 46 41 13 40 24 4 18 32
Tata Motors 5 12 8 22 4 17 5 26 1
Leverage
Coal India 38 3 11 8 9 31 27 1 11
Bharat Heavy Electricals 40 16 17 37 21 36 36 2 37
Infosys 13 22 15 14 13 19 21 3 8
NMDC 30 1 3 2 29 27 12 4 3
Bajaj Auto 19 20 25 9 31 25 16 5 20
Notes:
(a) The ranks for a company may vary depending on the permissible universe used for analyzing a particular investment style.
India Strategy
6 KOTAK INSTITUTIONAL EQUITIES RESEARCH
Exhibit 5: Strategy showcases consistent outperformance Optimized portfolio performance and factor exposure
Source: eXtractor, Kotak Institutional Equities
Exhibit 6: JSPL and TATA were the worst performers in the portfolio Optimized CNX Nifty 50 portfolio performance for September 2014
Source: eXtractor, Kotak Institutional Equities
Security-wise constraints
Upper bound stock ownership (%) 8
Stockwise deviation (%) 5
Composite factor style exposure (%)
Growth 15
Value 15
Relative value 25
Profitability 15
Size —
Mometum 10
Sentiments 20
Leverage —
Performance statistics
Average returns (%) 0.6
Avg. +ve returns (%) 1.9
Avg. -ve returns (%) (1.0)
Annualized outperformance (%) 6.9
Hit ratio (%) 54
Maximum drawdown (%) 10
Profit factor (X) 1.9
Avg. number of securities owned 26
CNX Nifty 50 Optimized Difference Performance
Company GICS Sectors (%) (%) (+/-) (%)
Tata Motors Consumer Discretionary 3.5 8.0 4.5 (4)
Axis Bank Financials 2.5 7.5 5.0 (5)
Sun Pharmaceutical Health Care 2.4 7.4 5.0 0
ICICI Bank Financials 6.7 6.7 (0.0) (8)
HCL Technologies Information Technology 1.6 6.6 5.0 5
Infosys Information Technology 6.5 6.5 (0.0) 4
Lupin Health Care 1.1 6.1 5.0 9
Power Grid Corp. of India Utilities 1.1 6.1 5.0 5
HDFC Bank Financials 5.9 5.9 (0.0) 3
Cairn India Energy 0.7 5.7 5.0 (4)
Bank of Baroda Financials 0.6 5.6 5.0 4
NMDC Materials 0.5 5.5 5.0 (2)
Jindal Steel & Power Materials 0.3 5.3 5.0 (26)
Tata Consultancy Services Information Technology 4.8 4.8 0.0 8
ITC Consumer Staples 7.4 2.4 (5.0) 4
Oil & Natural Gas Corp. Energy 2.9 1.9 (1.0) (6)
Tata Steel Materials 1.3 1.8 0.5 (11)
HDFC Financials 6.3 1.3 (5.0) (2)
Reliance Industries Energy 6.1 1.1 (5.0) (5)
IndusInd Bank Financials 0.9 0.9 (0.0) 6
Coal India Energy 0.9 0.9 (0.0) (4)
Hindalco Industries Materials 0.8 0.8 0.0 (8)
IDFC Financials 0.7 0.7 (0.0) (5)
Punjab National Bank Financials 0.5 0.5 (0.0) (6)
Performance (%) 0.13 (1.16)
eXtractor-based
Strategy India
KOTAK INSTITUTIONAL EQUITIES RESEARCH 7
Exhibit 7: Focus on value and sentiments has not paid dividend in the past few months Mom performance of the optimized CNX Nifty 50 portfolio based on eXtractor's scoring model (%)
Source: eXtractor, Kotak Institutional Equities
Exhibit 8: LPC was the biggest positive contributor; JSPL and AXSB were the biggest drags on the portfolio Positive and negative contributors to portfolio alpha, September 2014
Source: eXtractor, KIE Quantools
Exhibit 9: Energy favored over healthcare for October Portfolio sector-wise comparison of exposure as compared to previous month (%)
Source: eXtractor, Kotak Institutional Equities
(6)
(4)
(2)
0
2
4
6
8
10
12
Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14
CNX Nifty 50 (%) Optimized CNX Nifty 50 portfolio (%)
Weight (+/-) Performance Weight (+/-) Performance
Company (%) (%) Company (%) (%)
Case VII (c ) (1.2)
Lupin 6.1 8.6 Jindal Steel & Power 5.3 (25.8)
Reliance Industries 1.1 (5.3) Axis Bank 7.5 (4.9)
HCL Technologies 6.6 5.2 Cairn India 5.7 (4.4)
Power Grid Corp of India 6.1 4.7 Cipla /India (0.0) 21.9
Larsen & Toubro 0.0 (4.5) ITC 2.4 4.2
Negative contributorsPositive contributors
CNX Nifty 50 Weights Difference Weights Difference
GICS Sectors Original Optimized (+/-) Optimized (+/-)
Consumer Discretionary 10 8 (2.3) 8 (1.6)
Consumer Staples 10 3 (7.0) 2 (7.4)
Energy 11 20 9.4 10 (1.7)
Financials 29 29 0.7 29 0.2
Health Care 6 2 (3.9) 14 7.6
Industrials 5 0 (5.2) 0 (5.5)
Information Technology 16 21 4.0 18 2.3
Materials 8 12 3.8 13 5.4
Telecommunication Services 2 0 (2.1) 0 (1.9)
Utilities 3 6 2.6 6 2.6
Performance (%) (1.5) (1.4) (1.2)
Alpha (%) 0.17 (1.3)
Portfolio 23 24
Current month Previous month
India Strategy
8 KOTAK INSTITUTIONAL EQUITIES RESEARCH
Exhibit 10: LPC, ICICI and JSPL were the biggest reductions in the portfolio Optimized CNX Nifty 50 portfolio mom change in weights, October 2014
Source: eXtractor, Kotak Institutional Equities
Exhibit 11: TTMT, ONGC, AXSB and INFO are heavyweights in the optimized portfolio Optimized CNX Nifty 50 portfolio constituents and weights, October 2014
Source: eXtractor, Kotak Institutional Equities
Optimized
CNX Nifty 50 weights MoM change
Company GICS Sectors (%) (%) (%)
MoM weight increase (%)
ONGC Energy 2.7 7.7 5.8
Punjab National Bank Financials 0.5 5.5 5.0
Reliance Industries Energy 5.7 5.7 4.6
Tata Steel Materials 1.2 6.2 4.4
MoM weight reduction (%)
Lupin Health Care 1.2 0.0 (6.1)
ICICI Bank Financials 6.3 1.3 (5.4)
Jindal Steel & Power Materials 0.2 0.0 (5.3)
Sun Pharmaceutical Health Care 2.3 2.3 (5.1)
CNX Nifty 50 Optimized Difference
Company GICS Sectors (%) (%) (+/-)
Tata Motors Consumer Discretionary 3.4 8.0 4.6
Oil & Natural Gas Corp Energy 2.7 7.7 5.0
Axis Bank Financials 2.4 7.4 5.0
Infosys Information Technology 6.7 7.2 0.4
HCL Technologies Information Technology 1.7 6.7 5.0
Tata Steel Materials 1.2 6.2 5.0
Power Grid Corp of India Utilities 1.1 6.1 5.0
HDFC Bank Financials 6.0 6.0 (0.0)
Reliance Industries Energy 5.7 5.7 (0.0)
Cairn India Energy 0.6 5.6 5.0
Bank of Baroda Financials 0.6 5.6 5.0
Punjab National Bank Financials 0.5 5.5 5.0
NMDC Materials 0.5 5.5 5.0
Tata Consultancy Services Information Technology 5.3 5.3 (0.0)
ITC Consumer Staples 7.6 2.6 (5.0)
Sun Pharmaceutical Industries Health Care 2.3 2.3 0.0
Wipro Information Technology 1.4 1.4 (0.0)
ICICI Bank Financials 6.3 1.3 (5.0)
Housing Development Finance Co Financials 6.0 1.0 (5.0)
IndusInd Bank Financials 1.0 1.0 0.0
Coal India Energy 0.8 0.8 (0.0)
IDFC Financials 0.7 0.7 0.0
State Bank of India Financials 2.8 0.3 (2.5)
Performance (%) (1.53) 0.17
Portfolio 23
eXtractor-based
For Private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES’ RATING SYSTEM AND OTHER DISCLOSURES, REFER TO THE END OF THIS MATERIAL.
Takeaways from Daimler Financial Services session at RUSH conference
Daimler Financial Services operated in 42 countries with an estimated global book size of
Euro84 bn as of year-ending December 2013. Americas accounted for Euro34 bn, Europe
Euro37 bn and Asia Euro12 bn. About 69% of the loan book was cars and 12% each was
vans and trucks. Four out of every 10 Daimler vehicles are financed/leased by DFS globally.
DFS globally offers the following products: Loans – primarily for CVs, vans and cars. Leases –
mainly operating lease. Dealer finance – inventory funding, real estate finance (for
construction of dealership). Insurance facilities and fleet management service – this primarily
includes fleet mobility service in Europe and Americas.
The company started its India operations in the form of an NBFC in April 2011. It has a loan
book of `32 bn across loans (car and CV loans), dealer finance, etc. It has tied up with Bajaj
Allianz for general insurance for both cars and trucks.
Daimler Financial Services finances estimated 35% of total vehicles sold by Daimler in India.
The company takes pride in superior servicing as compared to other large banks. Like its
products, its service offering is superior due to prompt servicing, customized and innovative
financial products, comprehensive insurance facilities, etc. The ecosystem of parentage and
dealership helps the NBFC.
Bharat Benz offers high-end trucks in India. It has sold 15,000 trucks since 2012 and currently
operates from 81 locations. According to the feedback received from DFSI customers, the
cost of ownership of their vehicle is about 10% lower than peers. This is possible despite 5-
7% higher price as compared to peers due to lower maintenance and fuel costs. For some
customers, fuel efficiency is better than the nearest competitor by 20%. The products
appealed to large fleet operators initially, but now small operators are also catching on.
Bharat Benz has a double-digit market share in the addressable segments they are present in.
The company has a double-digit market share in some of the southern states.
The company has seen more enquiries in the past 45 days. Loan approvals have gradually
improved to 900/month in September from 700/month in June and 500/month early this
year.
Automobiles India
Errata: Takeaways on Daimler Financial Services session at RUSH conference. We
had misquoted certain facts in our note published yesterday on the key takeaways from
Daimler Financial Services session at our RUSH conference. We present the correct facts
in this note with highlighted corrections below.
ATTRACTIVE
OCTOBER 10, 2014
UPDATE
BSE-30: 26,637
For Private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES’ RATING SYSTEM AND OTHER DISCLOSURES, REFER TO THE END OF THIS MATERIAL.
Pricing action—pricing activity picks up in select categories like shampoos, tea and soaps
See Exhibit 2 for the complete pricing monitor and Exhibit 3 for ongoing promotional offers.
Soaps & detergents. (1) Soaps. Select SKUs in popular brands like Hamam, Lifebuoy Total,
Fiama Di Wills and Cinthol Original registered price hikes of 3-5%. (2) Detergents. Hindustan
Unilever continues to run promotional price-offs in all SKUs of Surf Excel Easywash and has
hiked prices of Wheel detergent powder 1kg SKU by 2% from `47 to `48.
Other personal-care items. (1) Oral care. Colgate raised the price of its Maxfresh Blue
toothpaste by 2% and Sensitive Pro Relief by 6% and Hindustan Unilever increased prices of
Pepsodent 2-in-1 by 8%. (2) Shampoos. Most promotions on shampoos in the form of
freebies were withdrawn and we noticed minor price hikes of 1-2% across key brands like
Dove, Sunsilk, TRESemme, Head & Shoulders and Pantene and of 8% in Clinic Plus 80 ml SKU.
(3) Body lotions. Marico introduced price-offs in Parachute body lotion; Pond’s offered
freebies on moisturizing lotion.
Home care. Promotional intensity in household insecticides continues. We noticed higher
intensity from Mortein (Reckitt Benckiser) and reduced promotional activity from Godrej
Consumer Products (Good Knight; but HIT continues to run promotions).
Food items. (1) Biscuits. We noticed modest reduction in promotional intensity; new launches
picked up from Parle and Britannia. (2) Edible oils. Saffola raised prices of select variants like
Gold and Active by 3-4% and reintroduced a one-liter-free offer on its five-liter SKU of Saffola
Gold. Sundrop continues to run a promotional offer on select variants/SKUs. (3) Horlicks is
offering 100 gm Kesar Badam sachet, worth `58, free with Horlicks Classic, one-kg SKU.
Tea. Hindustan Unilever raised prices across its tea brands like Red Label, Taaza and Taj
Mahal by 2-15%% and withdrew promotional offers across brands.
Raw material inflation—moderation visible in pockets
See Exhibit 4 for a detailed impact of RM inflation.
Agri-inputs. Several domestic agri-inputs corrected mom – tea prices by 3%, sugar by 3% and
milk powder by 1%; barley was the only inflationary agri-input, up 5% mom. International agri-
commodities like maize (used for Sorbitol) dropped 9% mom and cocoa dipped 1% mom.
Oil commodities basket. In the oil basket, crude corrected for the second successive
month, by 4% mom, palm oil dipped by 4% mom and PFAD dropped 11% mom. Vegetable
oils declined by 1-2% and copra dipped 7% mom after peaking at `115/kg in August.
Consumer Products India
Month in review—September 2014: sector outperformance continues. The KIE
consumer universe outperformed the broader market by 2% in September, led by
Colgate, Britannia, Marico, GSK Consumer, ITC and Titan. The industry sustained its
new launch momentum, pricing activity picked up in select categories like shampoos,
tea and some soaps and a decline in RM inflation picked up pace. Sector valuation at
33X FY2016E earnings (ex-ITC) is on the expensive side. We retain our ‘tread selectively’
view. Our preferred picks are ITC, Dabur, Britannia, Colgate, Marico and Bajaj Corp.
ATTRACTIVE
OCTOBER 10, 2014
UPDATE
BSE-30: 26,637
Consumer Products India
KOTAK INSTITUTIONAL EQUITIES RESEARCH 11
Other commodities. Paint inputs were mixed—Tio2, turpentine oil and most inputs were
benign but penta spiked by 15% mom and styrene (monomer) inched up by 5% mom.
Caustic soda and soda ash prices dipped 1% and LAB and HDPE inched up by 1% mom.
Who benefits? Soap players like Godrej Consumer, Hindustan Unilever and Jyothy
Laboratories (crude and PFAD prices dropped); biscuit players like Britannia and ITC (sugar
and palm oil corrected); oral care players like Colgate, Hindustan Unilever and Dabur
(maize and mentha/peppermint oil remain deflationary); Emami (mentha oil is
deflationary) and paint majors (crude, Tio2 and several monomers corrected).
Who is impacted? GSK Consumer (barley prices inched up though some benefit is likely
from a drop in milk-powder prices) and Marico (copra prices corrected in September, but
yoy inflation remains high at over 90%).
Sector (KIE consumer universe) outperforms in an overall weak market
Our coverage universe delivered flattish returns in September, outperforming the weak
broader market by 2%. SRL (up 12%), Colgate (up 10%), Britannia (up 6%), Marico (up
4%), GSK Consumer (up 4%), ITC (up 2%) and Titan (up 1%) were the main
outperforming stocks and Godrej Consumer, Bajaj Corp., Jubilant Foodworks, Jyothy Labs,
Nestle and Dabur underperformed.
The sector’s forward P/E multiple moved up to 30X FY2016E (33X ex-ITC). Sector premium
(relative to the Sensex) was high at around 80%. We find sector valuations rich and retain
our ‘tread selectively’ stance. Our preferred picks are ITC, Dabur, Britannia, Marico, Colgate
and Bajaj Corp.
Key industry/stock developments
New launches—home and personal care
Dabur re-launched its flagship hair oil brand Dabur Amla hair oil with a sleek,
consumer friendly flip-top packing. The new PET bottle is sleek and has a flip top with
a nozzle for easy application. Dabur roped in Bollywood actress Sonakshi Sinha besides
Priyanka Chopra as its brand ambassador.
Dabur launched wearable mosquito repellent products under Odomos, which include
wristbands and patches. It has also entered into an agreement with Pogo under which
Odomos will use the image of Pogo’s character Chhota Bheem on these products. The
company priced the mosquito repellent wristband at `199 and it can last up to 15
days. The Odomos Patches protect against mosquitoes for 12 hours and are available
in packs of 10 and 24 and priced at `120 and `265, respectively. Prior to the offline
launch, the company launched the products on Amazon.
Colgate launched its international range of Palmolive Aromatherapy shower gels, hand
washes and bar soaps in India. The premium range of Palmolive Aromatherapy
products is being brought from Colgate subsidiaries overseas and is available in two
variants, Anti-Stress and Energy, and is priced at `90 for a 250 ml shower gel bottle,
`90 for a 300 ml liquid hand wash pump bottle and `22 for a 100-gm bar of soap. It
will initially be launched in select metros in India.
Jyothy Laboratories extended its Margo soap brand to face wash and launched two
new variants—Margo Original Neem and Margo Neem & Saffron. The products are
priced at `55 for a 50-ml SKU, similar pricing to competitive products like Himalaya
Neem face wash and Bajaj Nomarks Neem face wash.
India Consumer Products
12 KOTAK INSTITUTIONAL EQUITIES RESEARCH
Pantene launched new light hair oil, Pantene Pro-V Pro-Vitamin oil in plastic-bottle
packaging. The product is priced at `68 for a 95 ml SKU at a modest premium to other
light hair oil offerings like Bajaj ADHO and Dabur Almond, which are priced at `58 for
a 100-ml SKU.
Garnier Fructis launched a shampoo range, Triple Nutrition, along with its first
ambassador, Alia Bhatt. The product is available in multiple SKUs – 80 ml for `69, 175
ml for `135 and 340 ml for `230.
New launches—food and beverages
Britannia launched Maska Rusk, a fusion of sweet and spicy flavours with a dollop of
butter and a dash of savoury herbs. The product is available in Tamil Nadu, Karnataka,
Andhra Pradesh and Kerala in two SKUs, (1) 58-gm packs priced at `10 and (2) 200-
gm packs, priced at `30.
Britannia has launched a new variant under Tiger biscuits called Tiger Butter Krunch,
marking the entry of Britannia Tiger into the mainstream cookies segment. Britannia
Tiger is available in 45 gm and 200 gm packs, priced at `5-20.
Parle Products launched healthy biscuit variants under a brand, Simply Good. Simply
Good digestive cookies are available in three varieties, Classic Digestive, Honey and
Oats and Apple and Cinnamon in 250-gm packs (`50 and 100-gm packs (`20).
Tata Tea re-launched its Kanan Devan brand in Kerala and is eyeing 30% market
share in the state over the next two years, against the current share of 25%.
Coca-Cola India launched Coca-Cola Zero, adding another product to its suite of
sparkling and still products, which includes Minute Maid juice, Kinley packaged water,
Schweppes sodas and mixers, Georgia tea and coffee, Burn energy drink and a range
of sparkling beverages. It offers the taste of Coke with zero sugar, and will be initially
available in India’s top-100 towns, in traditional and modern trade outlets. Coca-Cola
Zero will be available in 300-ml slim cans, 400-ml and 600-ml PET bottles at the same
price points as regular Coca-Cola. Coca-Cola Zero is one of 17 billion-dollar brands of
The Coca-Cola Company and has been the fastest to reach that revenue milestone.
Launched in 2005, it is available in 149 countries, including India.
Bisleri International entered the energy-drink segment with the launch of Urzza.
Positioned as a liquid charger, Bisleri Urzza is the first energy drink to be available in
PET bottles in India. The non-caffeinated energy drink had a pan-India roll out in mid-
September and is available in 250-ml cans and 300-ml PET bottles, priced at `50 each.
Consumer Products India
KOTAK INSTITUTIONAL EQUITIES RESEARCH 13
Exhibit 1: Key new launches in September 2014
Source: Company, Kotak Institutional Equities
CEO speaks
Sunil Duggal, CEO, Dabur India.
a) The latest Nielsen numbers for August suggest a fair degree of softness in terms of
overall demand, especially in the HPC category. Other categories are performing a
tad better, but overall, there hasn’t been any revival on the demand side over the
past 3-4 months.
b) 2QFY15 doesn’t look good but demand is expected to revive from 3Q and improve
from 4QFY15, led by revival in GDP growth, lower inflation and pick-up in urban
demand.
c) Dabur took price hikes of 5% in 1HFY15 to mitigate the impact of inflation but not
as a tool to enhance margins. Margins are likely to improve in 2HFY15, aided by
moderation in inflation of key inputs, including agri-inputs.
d) Dabur is confident of maintaining its 8-10% volume band, but there is a fair
amount of imbalance in terms of category growth rates—beverages continue to do
well on a long, hot summer, healthcare has done well but personal care, especially
oral care, shampoos and hair oils remain under pressure.
India Consumer Products
14 KOTAK INSTITUTIONAL EQUITIES RESEARCH
Harsh Mariwala, Chairman, Marico Kaya
a) Marico Kaya has adopted an asset-light strategy to sustain margins and
profitability. Thus focus will remain on opening more low-cost standalone kiosks,
called Kaya Skin Bars, and on selling more products.
b) While the skin bars offer skincare products, skin clinics provide technology-led
cosmetic dermatological services.
c) Kaya Skin Bar is a product-only format and will enable the company to engage with
customers at multiple touch points. Marico Kaya also hopes to scale up this model
much faster and will look at franchises as an option to grow. It plans to open up at
least 20 skin bars by the end of FY2015 and is running four pilot skin bars in
Bangalore. The skin bars will compete with The Body Shop, Kiehl's and L'Occitane,
among others.
d) To boost product sales, the company has tied up with a few e-commerce portals
like Jabong, Snapdeal and Flipkart.
e) Marico Kaya plans to spend `1 bn in capex over the next 2-3 years with an annual
spend of `250-300 mn. Along with expansion of skin bars, it will expand skin
clinics and is targeting 10-15 new clinics in India and 2-3 clinics overseas.
Other news
Hindustan Unilever has kicked off a new operating framework, WIMI or 'winning in
many Indias', which deals in distinct consumer clusters that are expected to make the
organization future ready. The new structure will transform Hindustan Unilever from a
four-branch structure at the front end to 14 distinct consumer clusters that will roll up
into five sales branches, based in seven locations. The WIMI operating framework is a
planning and execution framework with which all the company’s functions of sales,
marketing, supply chain and finance will operate. With WIMI in place, there will be
cluster heads, who will report into the branch manager, who in turn will report to the
head of customer development. The premise behind WIMI is that India is not a
homogeneous entity and all categories are in different stages of evolution in different
parts of India, besides the fact that the company’s strength varies across the landscape
of the country. The new framework went live on September 21. With WIMI, Hindustan
Unilever aims to get a more granular understanding of changing consumer profiles,
competition across geographies and develop an intense go-to-market strategy.
Media reports indicate an expert panel has proposed several amendments to the
Cigarettes & Other Tobacco Products Act, 2003 (COTPA) and the government is
preparing a Cabinet Note on recommendations of the panel, which is likely to be
introduced in the winter session of parliament. Some of the key regulatory changes
recommended include (1) a ban on the sale of loose cigarettes, (2) raising the age limit
for tobacco consumption from 18 to 25, (3) increasing fines for smoking in public from
`200 to `20,000, (4) banning advertisements at points of sale, (5) harsher penalties for
manufacturers for violating the provision on carrying pictorial warning signs and (6)
increasing the size of health warnings to cover almost 80% of the packaging from the
current 40%.
Asian Paints plans to invest `24 bn to set up a manufacturing unit in Nanjangud in
Mysore district. It will reportedly set up a new production unit with manufacturing
capacity of 500,000KL (in two phases) boosting its existing capacity by nearly ~50%.
The 175-acre project was cleared by the State High Level Clearance Committee
(SHLCC) recently.
Consumer Products India
KOTAK INSTITUTIONAL EQUITIES RESEARCH 15
Godrej Consumer Products (GCPL) has entered into an agreement with Darling Group
Holdings to acquire 100% stake in its hair-extension business in Ghana. GCPL had
completed the acquisition of 100% stake in Darling Nigeria in February and in March it
entered into an agreement to hike its stake in Darling Group Holdings' entities in
South Africa and Mozambique by 4.63% to 55.6% in each. The latest acquisition is in
line with its intention to gradually scale up ownership of the Darling businesses across
geographies.
Tata Starbucks has identified more than 50 tier-2 and tier-3 Indian cities for the next
phase of expansion and is looking to open outlets that are half the average size of its
existing stores for faster expansion. It will try out different formats that it has
introduced globally, including smaller Express stores and drive-through outlets, which
account for more than 40% of the US company-operated stores, and have higher
average sales. Tata Starbucks recently opened its first store in Hyderabad and operates
58 stores in Mumbai, Delhi NCR, Pune, Bangalore, Chennai and Hyderabad. Since
starting its first India outlet in October 2012, Starbucks has opened stores at an
average of one every two weeks, making India its fastest-expanding market.
Dunkin’ Donuts (DD) opened its first store in South India in Bangalore and its thirty-
sixth store in India. Jubilant Foodworks is looking to open 25 new DD stores in India in
FY2015 with total investment of `400 mn. In 8-12 months, DD will open stores in
Pune, Chennai, Hyderabad and Ahmedabad. In terms of the product mix at the stores,
one-third is made up of donuts, another one-third by food items such as burgers and
wraps, and the rest by beverages. Jubilant Foodworks plans to operate 500 DD
locations in India in the long term.
Over the past few months, five of the top burger chains in the world, including Burger
King, Fatburger, Carl's Jr, Johnny Rockets and Wendy's have announced plans to enter
India. Carl's Jr will start operations this year and plans to open 100+ outlets in Delhi,
Gurgaon, Chandigarh, Ludhiana, Mumbai, Pune and Ahmedabad in the first
phase. Wendy's, the third-largest hamburger chain in the US, plans to make its India
debut in the 1QCY15. Johnny Rockets, which positions itself as a 'better burger' chain
with prices of ~`300 a burger has opened in Delhi and will soon open in Mumbai.
Burger King plans to start operations in 4QCY14, initially in Mumbai and Delhi, and it
plans to cover cities like Ahmedabad and Surat by 1QCY15. Fatburger, the all-
American burger chain began operations in August with its first outlet at Cyber Hub,
Gurgaon and it plans to open over 25 outlets over the next 12-18 months.
Emami Biotech, the edible oil and bio-diesel arm of the Emami Group, recently inked
an agreement with Kolkata-based Rasoi, the edible-oil arm of the Rasoi Group, to
acquire Rasoi, a brand with a rich legacy of 50 years, which continues to be one of the
most trusted brands of vanaspati and edible oil in India. The acquisition would be an
addition to the company’s portfolio of leading edible-oil brands, such as Emami
Healthy and Tasty and Himani Best Choice. With a sales turnover of about `1.5 bn, the
production of vanaspati accounts for about 90% of Rasoi’s portfolio, the rest being
other varieties of cooking oil such as mustard oil, soya refined oil and palm oil. Rasoi,
as a major player in the vanaspati market, has a strong base in East India.
India Consumer Products
16 KOTAK INSTITUTIONAL EQUITIES RESEARCH
Exhibit 2: KIE Consumer Pricing Monitor
Source: Kotak Institutional Equities
MRP (Rs)
Category/Brand/SKU Sep-14 Norm Wt Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 1M 3M 6M 1Y
Soaps
Dove Moisturising Cream 3*100gm 174 100g 55 55 55 55 57 57 57 57 57 58 58 58 — 2 2 10
Dove Moisturising Cream 75gm 48 100g 59 59 59 59 60 60 60 61 61 64 64 64 — 4 7 9
Breeze Lemon Splash (3+1)*75gm 30 100g 10 10 10 10 10 10 10 10 10 10 10 10 — — — —
Hamam 100gm 27 100g 24 24 24 24 25 25 25 26 26 26 26 27 4 4 8 13
Lifebuoy Clini Care 10 Complete125gm 50 100g 38 38 38 38 38 38 38 40 40 40 40 40 — — 6 6
Lifebuoy Total 125gm 25 100g 18 18 18 18 18 18 18 19 19 19 19 20 4 4 9 14
Lifebuoy Total 3*100gm 58 100g 17 17 17 17 17 17 17 18 18 18 18 19 5 5 12 16
Liril 2000 Soft Aloevera Lemon 125gm 50 100g 36 36 36 36 37 37 37 38 38 38 40 40 — 4 9 11
Lux Creamy White 125gm 48 100g 34 34 34 34 35 35 35 37 37 37 38 38 — 4 9 14
Lux Sandal & Cream 150gm 36 100g 23 23 23 23 23 23 23 23 24 24 24 24 — — 3 3
Pears Pure Gentle 3*125gm 168 100g 42 42 42 42 42 42 43 43 43 43 45 45 — 4 8 12
Vivel Satin Soft 3*100gm 67 100g 20 20 20 20 20 21 21 21 21 22 22 22 — 6 6 10
Vivel s Luxury Olive Butter 4*100gm 100 100g 28 28 28 28 28 25 25 25 25 25 25 25 — — — (9)
Fiama Di Wills Clear Spring 125gm 58 100g 42 42 36 36 42 42 43 43 43 43 45 46 4 7 12 12
Fiama Di Wills Soft Green 3*100gm 162 100g 53 53 53 53 53 53 53 54 54 54 54 54 — — 3 3
Fiama Di Wills Mild Dew (3+1)*115gm 162 100g 34 34 33 33 33 33 33 34 34 34 35 35 — 4 8 4
Cinthol Original 100gm 33 100g 32 32 32 32 32 32 32 32 32 32 32 33 3 3 3 3
Cinthol Original 4*100gm 125 100g 30 32 32 32 32 32 32 32 30 30 31 31 — 3 (2) 3
Godrej No 1 Lime & Aloevera (3+1) *75gm 40 100g 13 13 13 13 13 13 13 13 13 13 13 13 — — — —
Godrej No 1 Saffron & Milk Cream (3+1) *100gm 68 100g 15 16 16 16 16 16 16 16 17 17 17 17 — — 6 13
Shower Gels/Facewash/Handwash/Bodywash
Facewashes
Pears Pure & Gentle Cleansing 60gm 70 100g 117 117 117 117 117 117 117 117 117 117 117 117 — — — 17
Lakme Strawberry 50ml 90 100ml 160 160 160 160 160 160 160 160 180 180 180 180 — — 13 13
Dove Beauty Moisture 50gm 99 100g 180 180 180 180 180 180 180 180 180 198 198 198 — 10 10 10
Ponds Daily Act Cleansing System 50gm 65 100g 110 110 110 120 120 120 130 130 130 130 130 130 — — 8 30
Fair & Lovely Multivitamin 50gm 50 100g 98 98 98 100 100 100 100 100 100 100 100 100 — — — 2
Olay Cleanser Total Effect Foaming 100gm 245 100g 245 245 245 245 245 245 245 245 245 245 245 245 — — — —
Fiama Di Wills Aqua Pluse Men 100gm 150 100g 100 100 100 100 100 100 100 100 100 100 100 100 — — — —
Handwash
Lifebuoy Total 215ml 64 100ml 28 28 28 28 28 29 29 29 30 30 30 30 — — 3 7
Lifebuoy Activfresh Pouch 185ml 37 100ml 20 20 20 20 20 20 20 20 20 20 20 20 — — — —
Lifebuoy Colour Changing Pump 200ml 80 100ml 38 38 38 38 38 38 38 38 40 40 40 40 — — 7 7
Bodywash/ Shower Gels
Fiama Di Wills Shower Gel Clear Spring 200ml 145 100ml 68 68 68 68 68 73 73 73 73 73 73 73 — — — 7
Lux Bodywash Soft Luxury Strawberry & Cream 240ml 145 100ml 52 52 52 52 52 52 52 52 56 56 56 60 7 7 16 16
Cinthol Shower Gel Energy Deodorize 200ml 150 100ml 60 60 60 60 60 60 60 60 60 60 60 60 — — — —
Detergents
Detergent Bars
Wheel Active Blue 140gm 5 100g 4 4 4 4 4 4 4 4 4 4 4 4 — — — —
Rin Advance 85gm 5 100g 6 6 6 6 6 6 6 6 6 6 6 6 — — — —
Rin Advance 160gm 10 100g 6 6 6 6 6 6 6 6 6 6 6 6 — — — —
Rin Advance 250gm 17 100g 6 6 6 6 7 7 7 7 7 7 7 7 — — — 6
Surf Excel Bar 100gm 10 100g 11 11 11 11 11 11 11 11 11 11 11 11 — — — —
Surf Excel 250gm 29 100g 11 12 12 12 12 12 12 12 12 12 12 12 — — — 4
Surf Excel 4*200gm 88 100g 11 11 11 11 11 11 11 11 11 11 11 11 — — — 4
Tide 140gm 10 100g 7 7 7 6 6 6 6 6 6 6 6 6 — — — (10)
Tide 85gm 6 100g 7 7 7 7 7 7 7 7 7 7 7 7 — — — —
Tide 4*250gm 69 100g 7 7 7 7 7 7 7 7 7 7 7 7 — — — —
Normalised price in Rs (adjusted for grammage changes) Change (%)
Consumer Products India
KOTAK INSTITUTIONAL EQUITIES RESEARCH 17
Exhibit 2: KIE Consumer Pricing Monitor (continued)
Source: Kotak Institutional Equities
MRP (Rs)
Category/Brand/SKU Sep-14 Norm Wt Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 1M 3M 6M 1Y
Detergent Powders
Wheel Active Lemon & Jasmine 1kg 48 100g 4 4 4 5 5 5 5 5 5 5 5 5 2 4 7 20
Wheel Act Gold 1.5kg 86 100g 5 5 6 6 6 6 6 6 6 6 6 6 — — — 15
Rin Advance 1kg 80 100g 8 8 8 8 8 8 8 8 8 8 8 8 — — 3 —
Rin Matic 1kg 115 100g 12 12 12 12 12 12 12 12 12 12 12 12 — — — —
Surf Excel Easy Wash 1.5kg 187 100g 13 14 14 14 14 14 14 14 12 12 12 12 — — (10) (6)
Surf Excel Matic 1kg 210 100g 20 21 21 21 21 21 21 21 21 21 21 21 — 2 2 7
Surf Excel Matic Front Load 1kg 230 100g 22 22 22 22 22 22 22 22 22 22 23 23 — 3 3 6
Surf Excel Quickwash 1kg 185 100g 18 18 18 18 18 18 18 18 18 18 19 19 — 2 2 4
Ariel Complete Pp 1kg 182 100g 18 18 18 18 18 18 18 18 18 18 18 18 — — — 4
Ariel 24Hour Fresh Complete 1kg 199 100g 19 19 19 19 20 20 20 20 20 20 20 20 — — — 3
Ariel Matic Complete Box 1kg 224 100g 22 19 19 19 19 19 19 19 19 19 22 22 — 16 21 4
Tide Natural Lemon & Chandan 170gm 10 100g 5 6 6 6 6 6 6 6 6 6 6 6 — — — 12
Tide Plus 1kg 96 100g 9 9 10 10 10 10 10 10 10 10 10 10 — 1 1 4
Henko 1kg 135 100g 14 14 14 14 14 14 14 14 14 14 14 14 — — — —
Fabric Conditioners/ Dishwash/ Floor Cleaners
Fabric Conditioners/Liquids
Rin Liquid Fabric Blue Perfect Shine 250ml 49 100ml 20 20 20 20 20 20 20 20 20 20 20 20 — — — —
Comfort Fabric Conditioner Anti Bacterial 200ml 46 100ml 18 18 18 22 22 22 22 23 23 23 23 23 — — 5 10
Ezee Detergent Liquid 500gm 90 100g 17 17 17 17 17 18 18 18 18 18 18 18 — — — 6
Dishwashing Bar/Gels/Powder
Vim Drop Dishwash Active Gel Green Lime 250ml 56 100g 22 21 21 21 22 22 22 22 22 22 22 22 2 2 2 4
Vim Drop Dw Active Gel Green Lime 500ml 104 100g 20 20 20 20 20 20 21 21 21 21 21 21 — — 5 6
Vim Utensil Bar 130gm 10 100g 7 8 8 8 8 8 8 7 7 7 7 7 — — (7) —
Vim Utensil Bar 200gm 17 100g 7 8 8 8 8 8 8 8 8 8 9 9 — 6 6 21
Floor Cleaners/Other Cleaners
Cif All Puprose Cleaner White 120ml 29 100ml 24 24 24 24 24 24 24 24 24 24 24 24 — — — —
Domex Floor Cleaner Thick 500ml 65 100ml 13 13 13 13 13 13 13 13 13 13 13 13 — — 2 7
Sanifresh Toilet Cleaner Shine 1L 96 100ml 9 9 9 9 9 9 9 9 9 10 10 10 — 2 2 2
Oral Care
Toothpaste
Colgate Cdc 150gm 57 100g 35 35 35 37 37 37 37 37 37 37 38 38 — 4 4 10
Colgate Cibaca 175gm 42 100g 23 23 23 23 23 23 23 24 24 24 24 24 — — 5 5
Colgate Active Salt 100gm 46 100g 44 44 44 44 44 45 45 45 45 45 46 46 — 2 2 5
Colgate Maxfresh Blue 150gm 84 100g 52 52 52 52 52 52 55 55 55 55 55 56 2 2 8 8
Colgate Sensitive Pro Relief 70gm 105 100g 136 136 136 136 136 136 141 141 141 141 141 150 6 6 11 11
Colgate Sensitive 80gm 95 100g 113 113 113 113 113 113 113 113 119 119 119 119 — — 6 6
Colgate Total Adv Health 140gm 96 100g 66 66 66 66 66 69 69 69 69 69 69 69 — — — 4
Pepsodent 2 In 1 150gm 84 100g 52 52 52 52 52 52 52 52 52 52 52 56 8 8 8 8
Pepsodent Centre Fresh 150gm 82 100g 55 55 55 55 55 55 55 55 55 55 55 55 — — — —
Pepsodent Whitening 150gm 84 100g 55 55 55 55 55 55 55 56 56 56 56 56 — — 2 2
Pepsodent Exp Prot Complete 150gm 105 100g 63 63 63 63 66 66 66 66 70 70 70 70 — — 6 11
Pepsodent Expert Prot Sensitive 80gm 80 100g 100 100 100 100 100 100 100 100 100 100 100 100 — — — —
Pepsodent Expert Prot Pro Sensitive 80gm 99 100g 124 124 124 124 124 124 124 124 124 124 124 124 — — — —
Close Up Fire Freeze 150gm 100 100g 63 67 67 67 67 67 67 67 67 67 67 67 — — — 6
Close Up Red 150gm 80 100g 51 53 53 53 53 53 53 53 53 53 53 53 — — — 5
Babool 180gm 42 100g 19 22 22 22 22 22 22 22 22 23 23 23 — 5 5 23
Dabur Red 200gm 82 100g 38 38 38 38 38 38 38 38 38 41 41 41 — 9 9 9
Meswak 200gm 82 100g 38 39 39 39 39 39 39 39 39 41 41 41 — 5 5 9
Sensodyne Fresh Gel 80gm 100 100g 113 113 125 125 125 125 125 125 125 125 125 125 — — — 11
Toothpowders
Colgate 200gm 62 100g 30 30 30 31 31 31 31 31 31 31 31 31 — — — 5
Dabur Lal Dant Manjan 100gm 34 100g 32 32 32 32 32 32 32 32 34 34 34 34 — — 6 13
Mouthwashes
Colgate Plax Complete Care 250ml 115 100ml 46 46 46 46 46 46 46 46 46 46 46 46 — — — —
Colgate Plax Freshmint 250ml 105 100ml 34 34 34 34 34 34 42 42 42 42 42 42 — — 24 6
Normalised price in Rs (adjusted for grammage changes) Change (%)
India Consumer Products
18 KOTAK INSTITUTIONAL EQUITIES RESEARCH
Exhibit 2: KIE Consumer Pricing Monitor (continued)
Source: Kotak Institutional Equities
MRP (Rs)
Category/Brand/SKU Sep-14 Norm Wt Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 1M 3M 6M 1Y
Shampoo bottles
Clear Active Care Antidandruff 80ml 69 100ml 78 78 78 78 78 78 78 78 86 86 86 86 — — 11 11
Clinic Plus Anti Dandruff 80ml 53 100ml 49 49 49 51 51 51 51 51 61 61 49 53 8 (13) 4 8
Dove Dandruff Care 80ml 69 100ml 86 86 86 86 86 86 86 86 86 86 86 86 — — — —
Sunsilk Anti Dandruff 80ml 59 100ml 70 70 70 73 73 73 73 73 73 73 73 74 2 2 2 5
Tresemme Hair Fall Defense 100ml 72 100ml 68 68 68 68 68 68 68 68 79 79 79 80 1 1 18 18
Head & Shoulders Anti Hair Fall 170ml 163 100ml 85 74 74 74 94 94 94 94 94 94 94 96 2 2 2 12
Pantene Hair Fall Control 180ml 155 100ml 77 66 66 66 84 84 84 84 84 84 84 86 2 2 2 12
Dove Daily Shine 80ml 69 100ml 85 85 85 85 85 85 85 85 85 85 85 86 1 1 1 1
Sunsilk Black Shine 80ml 59 100ml 70 70 70 73 73 73 73 73 73 73 73 74 2 2 2 5
Head & Shoulders Smooth & Silky 170ml 163 100ml 85 74 74 74 94 94 94 94 94 94 94 96 2 2 2 12
Pantene Long Black 180ml 155 100ml 77 66 66 66 84 84 84 84 84 84 84 86 2 2 2 12
Dabur Vatika Black Shine Amla 90ml 56 100ml 62 62 62 62 62 62 62 62 62 62 62 62 — — — —
Skin Creams/Lotions/Talcs
Face Creams/Fairness Creams/Facial Cleansers
Fair & Lovely Skin Cream Multi Vitamin 50gm 85 100g 170 170 170 170 170 170 170 170 170 170 170 170 — — — —
Fair And Lovely Foreever Glow 25gm 59 100g 236 236 236 236 236 236 236 236 236 236 236 236 — — — —
Ponds Face Cream Oil Control Skn Mattifying 100gm 130 100g 130 130 130 130 130 130 130 130 130 130 130 130 — — — —
Olay Cleanser Total Effect Foaming 100gm 245 100g 245 245 245 245 245 245 245 245 245 245 245 245 — — — —
Anti-Ageing/Special Creams
Ponds Skin Cream White Beauty Naturals 50gm 249 100g 498 498 498 498 498 498 498 498 498 498 498 498 — — — —
Ponds Skin Cream Age Miracle Daily 50ml 549 100ml 998 998 998 998 998 1,050 1,050 1,050 1,050 1,098 1,098 1,098 — 5 5 10
Olay Age Protect Anti Ageing Cream 40gm 275 100g 688 688 688 688 688 688 688 688 688 688 688 688 — — — —
Olay Skin Cream Total Effect Normal 50gm 775 100g 1,498 1,498 1,498 1,498 1,498 1,498 1,498 1,498 1,498 1,498 1,498 1,550 3 3 3 3
Body Lotions
Dove Go Fresh Normal Skin 400ml 299 100ml 75 75 75 75 75 75 75 75 75 75 75 75 — — — —
Ponds Drm Flower 100ml 65 100ml 55 55 55 55 55 60 60 60 60 62 62 65 5 8 8 18
Vaseline Healthy White 100ml 85 100ml 75 75 75 80 80 80 80 85 85 85 85 85 — — 6 13
Parachute Normal 100ml 59 100ml 59 59 59 59 59 59 59 59 59 59 59 59 — — — —
Talcs
Ponds Talc Dream Flower Pink 100gm 60 100g 49 55 55 55 55 55 60 60 60 60 60 60 — — 9 22
Cinthol Talc Original 100gm 45 100g 45 45 45 45 45 45 45 45 45 45 45 45 — — — —
Deodorants
Deodorants
Axe Dark Temptation 150ml 180 100ml 110 110 110 110 120 120 120 120 120 120 120 120 — — — 9
Dove Original Anti Perspirant 169ml 185 100ml 101 101 101 101 109 109 109 109 109 109 109 109 — — — 9
Cinthol Spray Dive 150ml 175 100ml 117 117 117 117 117 117 117 117 117 117 117 117 — — — —
Zatak Avenger 150ml 150 100ml 100 100 100 100 100 100 100 100 100 100 100 100 — — — —
Set Wet Rave 150ml 165 100ml 110 110 110 110 110 110 110 110 110 110 110 110 — — — —
Home Insecticides
Coils/Machine/Mats
Good Knight Mosquto Coil Low Smoke 12Hr 31 30 30 30 30 30 30 30 30 30 30 30 31 3 3 3 3
Goodknight Coil Maha Jumbo 10P 31 30 30 30 30 30 30 30 31 31 31 31 31 — — 3 3
Goodknight Machine Activ Combi 99 99 99 99 99 99 99 99 99 99 99 99 99 — — — —
Hair Oils
Coconut Oils
Parachute coconut oil 100ml 34 100ml 25 25 27 29 29 29 31 31 34 34 34 34 — — 17 48
Parachute coconut oil 250ml 87 100ml 25 25 26 28 28 28 32 32 29 35 35 35 — 20 26 45
Dabur Vatika hair oil 75ml 33 100ml 40 40 40 40 40 40 44 44 44 44 44 44 — — 10 10
Perfmued Hair Oils
Parachute Advansed hot oil 190ml 115 100ml 50 50 50 50 50 50 50 50 55 55 55 61 10 10 21 21
Parachute Advansed 80ml 45 100ml 49 49 49 49 49 49 49 49 56 56 56 56 — — 15 29
Parachute Jasmine 200ml 75 100ml 34 34 36 36 36 36 36 36 38 38 38 38 — — 6 10
Hair & Care 100ml 50 100ml 48 48 48 48 48 48 48 48 50 50 50 50 — — 4 11
Shanti Badam Amla 200ml 47 100ml 23 23 25 25 25 25 25 27 27 27 27 27 — — 7 18
Dabur Amla hair oil 100ml 42 100ml 39 39 39 39 39 39 42 42 42 42 42 42 — — 8 8
Dabur Hair Oil Almond Damage Free100ml 58 100ml 50 50 55 55 55 55 55 55 55 58 58 58 — 5 5 16
Dabur Vatika Enriched Almond hair oil 100ml 55 100ml 55 55 55 55 55 55 55 55 55 55 55 55 — — — —
Bajaj Almond hair oil 100ml 58 100ml 55 55 55 55 55 55 58 58 58 58 58 58 — — 5 5
Navratna Cooling oil 100ml 62 100ml 60 60 60 60 60 60 62 62 62 62 62 62 — — 3 3
Normalised price in Rs (adjusted for grammage changes) Change (%)
Consumer Products India
KOTAK INSTITUTIONAL EQUITIES RESEARCH 19
Exhibit 2: KIE Consumer Pricing Monitor (continued)
Source: Kotak Institutional Equities
MRP (Rs)
Category/Brand/SKU Sep-14 Norm Wt Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 1M 3M 6M 1Y
Edible Oils
Saffola Kardi Oil - 1L 185 100ml 18 18 18 19 19 19 19 19 19 19 19 19 — — — 3
Saffola Gold - 1L 150 100ml 14 14 14 15 15 15 15 15 15 15 15 15 3 3 3 7
Saffola Active - 1L 130 100ml 12 12 12 13 13 13 13 13 13 13 13 13 4 4 4 13
Sundrop Heart - 1L 185 100ml 17 17 18 18 18 18 18 18 18 18 18 15 (14) (14) (14) (7)
Sundrop Nutrilite - 1L 135 100ml 14 14 14 14 14 14 14 14 14 14 14 14 — — — —
Sundrop Superlite Advanced -1L 170 100ml 17 17 17 17 17 17 17 17 17 17 17 17 — — — 10
Tea/ Coffee
Tea
Red Label Ctc 1kg 390 100g 33 33 33 33 33 33 33 33 33 38 34 39 15 19 19 6
Red Label Ctc Pp 500gm 193 100g 38 38 38 38 34 34 34 34 34 34 34 39 14 14 14 2
Red Label Natural Care Box 500gm 210 100g 44 44 40 40 44 44 44 44 44 40 40 42 5 (5) (5) (5)
Taaza Ctc 1kg 280 100g 28 28 28 28 28 28 28 28 28 28 28 28 2 2 2 2
Tajmahal Ctc Box 250gm 118 100g 46 43 43 43 43 43 43 43 43 43 43 47 9 9 9 3
Agni Ctc Leaves 1kg 232 100g 23 23 23 23 23 23 23 23 23 23 23 23 — — 2 2
Tata Ctc Gold 1kg 400 100g 388 388 396 396 396 396 396 396 400 400 400 400 — — 1 3
Coffee
Bru Gold Jar 100gm 217 100g 199 179 179 179 179 199 199 199 217 217 217 217 — — 9 9
Bru Instant Jar 100gm 174 100g 174 154 154 154 174 174 174 174 174 174 174 174 — — — —
Nescafe Classic Box 200gm 415 100g 195 195 200 200 200 200 200 200 200 208 208 208 — 4 4 6
Nescafe Classic 50gm 108 100g 212 212 212 212 214 214 214 214 216 216 216 216 — — 1 (6)
Sunrise Premium Jar 50gm 90 100g 164 176 176 176 180 180 180 180 180 180 180 180 — — — 10
Dairy
Milk/Condensed Milk/ Milk Powder
Nestle Milk Slim 1L 80 100ml 7 7 7 7 7 7 7 7 8 8 8 8 — — 8 23
Nestle Milk Toned A+ 1L 75 100ml 6 7 7 7 7 7 7 7 8 8 8 8 — — 9 21
Britannia Milk 1L 75 100ml 6 6 6 7 7 7 7 7 7 7 8 8 — 15 15 21
Britannia Milk Slimz 1L 69 100ml 7 7 7 7 7 7 7 7 7 7 7 7 — 6 6 6
Amul Taaza 1L 56 100ml 5 5 5 5 5 5 5 6 6 6 6 6 — — 4 17
Amul Gold 1L 60 100ml 5 5 5 6 6 6 6 6 6 6 6 6 — — 7 15
Amul Lite 1L 58 100ml 6 6 6 6 6 6 6 6 6 6 6 6 — — — 5
Everyday Milkpow Dairy Whitner Pouch 400gm 174 100g 36 37 39 41 41 44 44 44 44 44 44 44 — — — 20
Butter/Cheese
Britannia Cheese Spread Classic 180gm 81 100g 47 47 47 43 43 43 43 43 43 44 44 45 1 4 4 (5)
Britannia Processed Cream Cheese 180gm 199 100g 83 83 83 111 111 111 111 111 111 111 111 111 — — — 33
Amul Butter 500gm 182 100g 32 32 34 34 34 35 35 35 35 35 35 36 3 3 3 20
Health Drinks/ Juices/ Health Supplements/ OTCs
Health Drinks
Horlicks Chocolate Jar 500gm 202 100g 37 37 37 37 38 38 38 38 40 40 40 40 — — 5 9
Horlicks Junior Jar 500gm 226 100g 41 41 41 41 43 43 43 43 45 45 45 45 — — 5 10
Horlicks Standard Jar 500gm 202 100g 37 37 37 37 39 39 39 39 40 40 40 40 — — 4 8
Horlicks Lite Malt Jar 500gm 240 100g 43 43 43 43 46 46 46 46 48 48 48 48 — — 4 11
Horlicks Womens Chocolate Jar 330gm 240 100g 67 67 67 67 73 73 73 73 73 73 73 73 — — — 9
Boost Jar 500gm 204 100g 37 37 37 37 39 39 39 39 41 41 41 41 — — 5 10
Actilife Malt Jar 250gm 160 100g 64 64 64 64 64 64 64 64 64 64 64 64 — — — —
Juices
Real Juice Active Orange 1L 105 100ml 10 10 10 10 10 10 10 10 10 10 11 11 — 6 6 6
Real Juice Orange 1L 92 100ml 9 9 9 9 9 9 9 9 9 9 9 9 — 2 2 8
Real Juice Apple 1L 92 100ml 9 9 9 9 9 9 9 9 9 9 9 9 — 2 2 8
Health Supplements/OTCs
Dabur Chyawanprash 1kg 280 100g 26 26 26 26 26 26 26 26 28 28 28 28 — — 8 8
Dabur Digestive Hajmola Regular 120 P 25 22 22 22 22 22 22 22 22 25 25 25 25 — — 14 14
Dabur Glucose-D Jar 1kg 153 100g 14 14 14 14 14 15 15 15 15 15 15 15 — 3 3 6
Dabur Honey 500gm 190 100g 33 33 33 33 33 33 33 35 35 35 38 38 — 9 15 15
Normalised price in Rs (adjusted for grammage changes) Change (%)
India Consumer Products
20 KOTAK INSTITUTIONAL EQUITIES RESEARCH
Exhibit 2: KIE Consumer Pricing Monitor (continued)
Source: Kotak Institutional Equities
MRP (Rs)
Category/Brand/SKU Sep-14 Norm Wt Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 1M 3M 6M 1Y
Biscuits/Atta
CreamBiscuits
Sunfeast Dark Fantasy Chocolate 100gm 25 100g 25 25 25 25 25 25 25 25 25 25 25 25 — — — —
Britannia Cream Jim Jam 150gm 25 100g 17 17 17 17 17 17 17 17 17 17 17 17 — — — —
Britannia Cream Treat Bourbon 150gm 26 100g 17 17 17 17 17 17 17 17 17 13 13 13 — (25) (25) (22)
Sunfeast Cream Bourbon 150gm 25 100g 17 17 17 17 17 17 17 17 17 17 17 17 — — — —
Parle Cream Hide & Seek Bourbon 150gm 24 100g 13 13 13 13 13 13 13 13 16 16 16 16 — — 20 20
Cookies/Healthy biscuits
Sunfeast Cookie Butter 100gm 10 100g 10 10 10 10 10 10 10 10 10 10 10 10 — — — —
Britannia Good Day Butter 150gm 20 100g 13 13 13 13 13 13 13 13 13 13 13 13 — — — —
Britannia Cookies Good Day Cashew 100gm 15 100g 15 15 15 15 15 15 15 15 15 15 15 15 — — — —
Britannia NutriChoice Digestive 75gm 15 100g 16 16 16 16 16 16 16 16 16 16 20 20 — 25 25 25
Britannia Cookies NutriChoice Oats 150gm 55 100g 33 33 33 33 33 37 37 37 37 37 37 37 — — — 10
Marie/Glucose/Salted/Nice Biscuits
Sunfeast Marie Light 100gm 10 100g 10 10 10 10 10 10 9 9 9 9 9 9 — — (9) (9)
Britannia Vita Marie Gold 150gm 20 100g 12 12 12 12 12 12 12 12 13 13 13 13 — — 11 11
Parle Digestive Marie 100gm 10 100g 10 10 10 10 10 10 10 10 10 10 10 10 — — — —
Sunfeast Bisccuits Glucose 80gm 5 100g 6 6 6 6 6 6 6 6 6 6 6 6 — — — —
Britannia Tiger 133gm 10 100g 8 8 8 8 8 8 8 8 8 8 8 8 — — — —
Parle Glucose 144gm 10 100g 7 7 7 7 7 7 7 7 7 7 7 7 — — 3 7
Horlicks 100gm 10 100g 11 11 11 11 11 11 11 11 11 11 11 11 — — — —
Sunfeast Snacky Salted 80gm 10 100g 16 16 16 16 16 16 16 16 16 16 16 16 — — — —
Parle Salted Krackjack 80gm 10 100g 10 10 10 13 13 13 13 13 11 11 11 13 19 19 — 26
Parle Salted Monaco Classic 80gm 10 100g 10 10 10 13 13 13 13 13 13 13 13 13 — — — 20
Sunfeast Plain Nice 150gm 20 100g 13 13 13 13 13 13 13 13 13 13 13 13 — — — —
Britannia Nice Time 150gm 22 100g 15 15 15 15 15 15 15 15 15 15 15 15 — — — —
Atta
Aashirvaad Atta Multigrain 5kg 255 100g 5 5 5 5 5 5 5 5 5 5 5 5 6 6 6 6
Aashirvaad Atta Whole Wheat 5kg 215 100g 4 4 4 4 4 4 4 4 4 4 4 4 2 2 2 2
Soups/Sauces/Spreads
Ketchup/Sauces
Maggi Ketchup Tomato 1kg 130 100g 12 12 13 13 13 13 13 13 13 13 13 13 3 3 3 20
Kissan Ketchup Fresh Tomato Bt 1kg 125 100g 12 12 11 11 11 13 13 13 13 13 13 13 — — — 4
Spreads/Jams
Kissan Cheesy Garlic Creamy Spread 100gm 34 100g 34 34 34 34 34 34 34 34 34 34 34 34 — — — —
Kissan Jam Mixed Fruit 200gm 48 100g 24 24 24 24 24 24 24 24 24 24 24 24 — — — —
Soups
Maggi Rich Tomato 54gm 45 100g 74 74 74 74 74 74 74 74 74 83 83 83 — 13 13 13
Knorr Classic Thick Tomato 55gm 45 100g 62 62 62 62 62 73 73 73 73 82 82 82 — 13 13 32
Maggi Sweet Corn Vegetable 36gm 45 100g 111 111 111 111 111 111 111 111 111 125 125 125 — 13 13 13
Knorr Sweet Corn Vegetable 47gm 45 100g 72 72 72 72 72 85 85 85 85 96 96 96 — 13 13 32
Chocolate bars
Nestle Kit Kat 108gm 75 100g 56 56 56 56 56 56 56 56 60 83 83 83 — 38 50 50
Nestle Munch Home Pk 69gm 35 100g 51 51 51 51 51 51 51 51 51 51 51 51 — — — —
Nestle Milk 18gm 10 100g 56 56 56 56 56 56 56 56 56 56 56 56 — — — —
Nestle Bar One 26gm 10 100g 36 38 38 38 38 38 38 38 45 45 45 45 — — 18 27
Nestle Alpino Bar 22gm 30 100g 114 114 114 114 114 114 114 136 136 136 136 136 — — 20 20
Noodles
Maggi Masala 70gm 10 100g 13 14 14 14 14 14 14 14 14 14 14 14 — — — 7
Maggi Masala 140gm 20 100g 13 14 14 14 14 14 14 14 14 14 14 14 — — — 7
Maggi Masala 280gm 40 100g 13 14 14 14 14 14 14 14 14 14 14 14 — — — 7
Maggi Masala 560gm 80 100g 13 14 14 14 14 14 14 14 14 14 14 14 — — — 7
Maggi Chicken 304gm 59 100g 18 18 18 18 19 19 19 19 19 19 19 19 — — 4 7
Maggi Veg Atta 320gm 85 100g 24 24 24 24 24 24 24 24 24 27 27 27 — 9 9 9
Sunfeast Yippee Magic Masala 75gm 10 100g 13 13 13 13 13 13 13 13 13 13 13 13 — — — —
Sunfeast Yippe Chinese Masala Pp 75gm 15 100g 20 20 20 20 20 20 20 20 20 20 20 20 — — — —
Knorr Soupy Mast Masala Pp 70gm 12 100g 17 17 17 17 17 17 17 17 17 17 17 17 — — — —
Horlicks Foodle Multigrain Ala Masala 320gm 78 100g 22 22 22 22 22 22 22 22 22 23 23 24 5 11 11 11
Baby Food
Cerelac Babycereal Rice S1 300gm 156 100g 46 46 47 47 47 47 50 50 50 52 52 52 — 4 10 13
Cerelac Babycereal Wheat S1 300gm 152 100g 46 46 47 47 47 47 49 49 49 51 51 51 — 4 9 10
Cerelac Babycereal Multigrain Dal Veg 300gm 198 100g 58 58 61 61 61 61 63 63 63 66 66 66 — 4 9 13
Lactogen Babycereal Nan 1 Frml 400gm 470 100g 98 98 103 103 103 103 109 109 109 118 118 118 — 8 15 21
Nestum Babycereal Rice Dal S2 300gm 122 100g 35 35 37 37 37 37 39 39 39 41 41 41 — 5 11 16
Normalised price in Rs (adjusted for grammage changes) Change (%)
Consumer Products India
KOTAK INSTITUTIONAL EQUITIES RESEARCH 21
Exhibit 3: Promotional activity across consumer products categories in September 2014
Source: Kotak Institutional Equities
SKU Original Offer Eff change (%) Promotional offers
Detergents
Henko Stain Champion bar 250gm 25 25 (9.1) Free 25g extra
Surf Excel Easywash 500gm 68 55 (19.1) Price off of Rs13 #
Surf Excel Easywash 700gm 96 77 (19.8) Price off of Rs19 #
Surf Excel Easywash 1.5Kg 207 187 (9.7) Price off of Rs20 #
Surf Excel Easywash 4Kg 544 479 (11.9) Price off of Rs65 #
Surf Excel Quickwash 1Kg 182 182 Free - Comfort blue bottle 200ml worth Rs46 #
Tide detergent bar 140gm 10 10 (9.7) Free 15g extra #
Other personal care items
Parachute Advansed body lotion 250ml 132 99 (25.0) Price off of Rs33
Parachute Advansed body lotion 100ml 66 49 (25.8) Price off of Rs33
Pond's moisturising lotion 300ml 170 170 Free - Pond's White Beauty facial foam
Pond's White Beauty face wash 100gm 280 280 Free - Buy 2 get 1 free #
Clinic Plus Strong & Long shampoo 80ml 53 53 (20.0) 25% extra grammage free #
Pond's dreamflower talc 400gm 150 150 Free - Vaseline health white 40ml #
Home care items
All out Insect Killer aerosol 320ml 159 159 (24.7) 33% extra grammage free
Mortein NaturGard aerosol 625ml 249 249 Free - Colin clearner worth Rs64
Mortein PowerGard aerosol 425ml 160 160 Free - Dettol soap 3x75gm worth Rs60
Mortein PowerGard aerosol 225ml 84 74 (11.9) Free - Dettol soap 75gm worth Rs23
Mortein PowerGard refill 35ml 60 60 Offer - Buy 2 get 1 Free #
Good Knight aerosol 225ml 84 74 (11.9) Price off of Rs10 #
Hit Spray Mosquitoes 625ml 267 237 (11.2) Price off of Rs30 + Free Godrej Dishwash worth Rs36 #
Hit Spray Mosquitoes 400ml 189 159 (15.9) Price off of Rs30 #
Biscuits
Britannia Marie Gold 89gm 10 10 (11.0) 12% extra grammage free
Sunfeast Bourbon bliss 70gm 10 10 (14.3) 16% extra grammage free
Britannia Milk Shakti 100gm 10 10 (20.6) 26% extra grammage free #
Britannia Tiger cream 43gm 5 5 (14.0) 16% extra grammage free #
Britannia 50 50 80gm 10 10 (20.0) 20% extra grammage free #
Britannia Bourbon 150gm 26 26 (25.0) 33% extra grammage free #
Britannia Pure Magic 100gm 25 20 (20.0) Price off of Rs5 #
Parle Happy Happy Choco 75gm 10 10 (16.7) 20% extra grammage free #
Parle Hide & Seek Bourbon 150gm 24 20 (16.7) Free - Happy Happy cookies worth Rs5 #
Parle Hide & Seek Bourbon 75gm 12 10 (16.7) Price off of Rs2 #
Parle Jam-in 150gm 23 20 (13.0) Price off of Rs3 #
Other food items
Foodles Horlicks 320gm 78 78 Free - 10 Topps cricket attax cards
Saffola Gold 5L 750 750 Free - 1Litre pouch
Sundrop Superlite Advanced 2L 346 346 Free - Sundrop Heart bottle 500 ml worth Rs99
Sundrop Heart pouch 1L 185 185 (16.7) 20% extra grammage free
Maggi Pazzta 65gm 23 23 Offer - Assured voucher of Rs500 from Myntra.com #
Knorr instant soups 40 45 12.5 Buy 2 get 1 free #
Fortune rice bran oil 5L 615 615 Free - 1Litre pouch #
Sundrop Superlite Advanced bottle 1L 175 175 Free - Sundrop Heart bottle 200 ml worth Rs40 #
Beverages
Red Label Tea 250gm 97 92 (5.2) Price off of Rs5 #
Horlicks Classic 1Kg 372 372 Free - Horlicks Kesar Badam sachet worth Rs58
Complan Strawberry 500gm 225 225 Free - Complan cup #
Women's Horlicks jar 400gm 240 240 Free - Kellogg's Special K cereal worth Rs56 #
Notes:
(1) # offer was available in August, as well.
MRP (Rs)
India Consumer Products
22 KOTAK INSTITUTIONAL EQUITIES RESEARCH
Exhibit 4: Monthly raw material trends
Source: Bloomberg, Kotak Institutional Equities
Inflationary = +3%
Deflationary = -3%
No Commodity Unit Current MoM 3M 6M YoY MoM 3M 6M YoY Companies impacted
Agri Commodities
1 Tea - India Avg Rs/Kg 131 (3) (2) 44 (1) (3) (2) 44 (1) HUL, TGBL
2 Tea - World Avg USD/MT 2,800 — (2) 12 2 0 0 12 (3) HUL, TGBL
3 Tea - Mombassa/Nairobi USD/MT 2,030 — 6 (3) (4) 0 8 (3) (9) HUL, TGBL
4 Coffee Arabica - Int USD/MT 3,395 — (0) (12) 45 0 2 (12) 38 HUL, Nestle, TGBL
5 Coffee Robusta - Int USD/MT 2,364 — 2 (4) 15 0 5 (4) 9 HUL, Nestle, TGBL
6 Sugar - Domestic Rs/Quintal 3,198 (3) (3) 3 1 (3) (3) 3 1 HUL, Nestle, GSKCHL, ITC, Dabur, Britannia
7 Wheat Rs/Quintal 1,591 1 6 (4) (1) 1 6 (4) (1) ITC, Nestle, GSKCHL, Britannia
8 Barley Rs/Quintal 1,537 5 17 7 18 5 17 7 18 GSKCHL
9 Maize (Corn) USD/MT 160 (9) (21) (21) (23) (9) (19) (28) (26) Colgate, HUL, Dabur (Sorbitol)
10 Liquid Milk - Domestic Rs/Ltr 38 — (3) (5) — — (3) (5) — Nestle, GSKCHL, Jubilant Foodworks, Britannia
11 Milk Powder - Domestic Rs/Kg 274 (1) (11) (4) 16 (1) (11) (4) 16 Nestle, GSKCHL, Britannia
12 Cocoa Bean USD/MT 3,542 (1) 2 8 23 (1) 4 6 17 Nestle
Oil Commodities
13 Crude Oil - Brent USD/Barrel 97 (4) (13) (5) (13) (4) (11) (9) (17) HUL, GCPL, Jyothy Labs, Asian Paints
14 Palm Oil MYR/Ton 2,089 (3) (15) (24) (11) (4) (13) (25) (14) HUL, GCPL, Jyothy Labs
15 PFAD USD/MT 611 (11) (20) (13) (7) (11) (18) (23) (11) HUL, GCPL, Jyothy Labs
16 Light Liquid Paraffin (LLP) Rs/Ltr 72 — 1 1 (5) — 1 1 (5) Marico, Dabur, Bajaj Corp
17 Copra Rs/Quintal 10,690 (7) 9 30 91 (7) 9 30 91 Marico, Dabur
18 Coconut Oil Rs/Quintal 15,770 (5) 10 33 95 (5) 10 33 95 Marico, Dabur
19 Rice Bran Oil Rs/10Kg 577 — 2 6 1 — 2 6 1 Marico
20 Kardi Oil/ Safflower Oil Rs/MT 87,500 (2) (3) (6) (13) (2) (3) (6) (13) Marico
21 Sunflower Oil Rs/MT 55,675 (1) (5) (14) (26) (1) (5) (14) (26) Marico
22 Groundnut Oil Rs/MT 78,750 1 5 1 (8) 1 5 1 (8) Marico, Dabur
23 Linseed Oil Rs/MT 75,150 (1) 4 (10) (1) (1) 4 (10) (1) Marico, Dabur, Bajaj Corp, Asian Paints
24 Castor Oil Rs/MT 84,325 (1) 1 3 13 (1) 1 3 13 Marico, Dabur, Bajaj Corp, Asian Paints
25 Mentha Oil Rs/Kg 819 (1) (9) (18) (21) (1) (9) (18) (21) Colgate, HUL, Dabur, Emami
26 Peppermint Oil Rs/Kg 672 — (8) (20) (19) — (8) (20) (19) Colgate, HUL, Dabur
Chemicals/Paints/Other Commodities
27 Caustic Soda Rs/ 50Kg 1,675 (1) (3) (14) (4) (1) (3) (14) (4) HUL, GCPL, Jyothy Labs
28 Soda Ash Rs/ 50Kg 1,339 (1) 7 12 23 (1) 7 12 23 HUL, GCPL, Jyothy Labs
29 LAB Rs/Kg 127 1 3 (3) (8) 1 3 (3) (8) HUL, Jyothy Labs
30 HDPE Domestic Rs/Kg 128 1 5 3 8 1 5 3 8 All companies
31 PAN Rs/Kg 87 — (9) (11) (15) — (9) (11) (15) Asian Paints
32 PENTA Rs/Kg 115 15 15 — 34 15 15 — 34 Asian Paints
33 Tio2 Anatese Rs/Kg 150 — (12) (29) (5) — (12) (29) (5) Asian Paints
34 Tio2 Rutile Rs/Kg 190 — — (7) (3) — — (7) (3) Asian Paints
35 Tio2 Dupont Rs/Kg 238 — (5) (5) (12) — (5) (5) (12) Asian Paints
36 Turpentine Oil Rs/Ltr 90 — 2 1 8 — 2 1 8 Asian Paints
37 Formaldehyde Rs/Kg 27 — (23) (25) 8 — (23) (25) 8 Asian Paints
38 Acrylic Acid Rs/Kg 141 — (5) (18) (7) — (5) (18) (7) Asian Paints
39 Vinyl Acetate - Domestic Rs/Kg 95 (1) (4) 3 40 (1) (4) 3 40 Asian Paints
40 Styrene - Domestic Rs/Kg 114 3 11 1 (10) 3 11 1 (10) Asian Paints
41 Gold Rs/10gm 26,994 (4) (1) (6) (11) (4) (1) (6) (11) Titan, Jewellery companies
42 Diamond Price Index USD/Carrat 144 (2) (2) 0 2 (1) 0 (1) (3) Titan, Jewellery companies
% chg - local currency % chg - currency Adj.
Consumer Products India
KOTAK INSTITUTIONAL EQUITIES RESEARCH 23
Exhibit 5: KIE consumer products universe valuation summary
Source: Bloomberg, Companies, Kotak Institutional Equities estimates
TP 9-Oct-14 EPS Sales
Company Rating (Rs) Price (Rs) (Rs bn) (US$ m) 2014 2015E 2016E 2014 2015E 2016E 2014 2015E 2016E
Consumer Products
Asian Paints SELL 575 655 (12) 628 10,299 12.8 15.3 17.7 10.3 19.7 15.2 51.1 42.7 37.1 17.4 15.8
Bajaj Corp ADD 300 269 12 40 649 12.0 13.9 15.9 6.8 15.1 14.5 22.3 19.4 16.9 14.8 16.1
Britannia Industries BUY 1,460 1,352 8 162 2,658 33.0 40.2 49.9 52.4 21.9 24.2 41.0 33.7 27.1 23.1 14.4
Colgate-Palmolive (India) ADD 1,730 1,729 0 235 3,853 36.1 40.9 48.0 (1.2) 13.5 17.3 47.9 42.2 36.0 15.4 12.9
Dabur India ADD 245 217 13 378 6,200 5.2 6.2 7.3 19.0 17.8 18.6 41.4 35.1 29.6 18.2 14.7
GlaxoSmithKline Consumer REDUCE 5,300 5,357 (1) 225 3,692 123.3 140.3 163.4 12.4 13.8 16.5 43.5 38.2 32.8 15.1 13.8
Godrej Consumer Products REDUCE 880 994 (11) 338 5,546 22.1 25.6 31.0 9.3 15.5 21.2 44.9 38.9 32.1 18.3 15.7
Hindustan Unilever REDUCE 715 737 (3) 1,593 26,104 16.4 18.9 21.1 8.4 14.8 12.0 44.8 39.0 34.8 13.4 13.1
ITC ADD 390 366 7 2,959 48,495 10.8 12.0 13.9 15.7 11.2 15.6 33.9 30.5 26.3 13.4 14.1
Jubilant Foodworks SELL 1,080 1,251 (14) 83 1,360 18.0 21.8 30.6 (9.9) 21.2 40.4 69.6 57.4 40.9 30.5 27.1
Jyothy Laboratories REDUCE 220 256 (14) 46 759 3.9 8.1 9.2 0.8 107.0 14.0 65.3 31.6 27.7 53.6 17.8
Marico BUY 330 302 9 195 3,189 8.1 9.3 11.4 43.3 15.4 22.1 37.4 32.4 26.6 18.7 17.5
Nestle India SELL 5,300 6,023 (12) 581 9,518 114.4 122.4 146.2 3.3 7.0 19.4 52.6 49.2 41.2 13.0 11.5
Speciality Restaurants BUY 160 155 3 7 119 4.0 3.2 5.3 (19.3) (19.3) 63.1 38.6 47.8 29.3 14.7 19.3
Tata Global Beverages REDUCE 155 161 (4) 102 1,668 6.0 6.5 7.5 (1.0) 8.0 15.9 26.8 24.8 21.4 11.9 5.8
Titan Industries REDUCE 340 401 (15) 356 5,837 8.4 9.7 10.7 3.1 15.4 9.7 47.6 41.3 37.6 12.5 9.4
KIE universe 7,929 129,947 13.1 14.3 16.3 40.4 35.3 30.4 13.7 13.5
KIE universe (ex-ITC) 4,970 81,452 10.5 15.8 16.0 45.2 39.0 33.6 13.1 15.9
ADVT-3mo
Company 1-mo 3-mo 6-mo 1-year US$ mn 2014 2015E 2016E 2014 2015E 2016E 2014 2015E 2016E 2015E 2016E
Asian Paints (2) 10 20 39 11.2 30.8 26.0 22.4 4.8 4.2 3.6 1.9 1.8 2.4 1.0 1.2
Bajaj Corp (9) 13 23 3 0.5 19.9 17.0 14.2 5.5 4.5 3.8 (0.6) 5.7 6.5 2.4 2.8
Britannia Industries 6 36 58 55 3.0 25.4 20.8 17.1 2.3 2.0 1.7 3.6 3.4 3.2 1.1 1.4
Colgate-Palmolive (India) 10 10 24 35 4.9 35.0 28.0 23.3 6.5 5.7 5.1 0.6 2.3 2.7 1.9 2.2
Dabur India (5) 11 19 27 7.4 33.1 28.0 23.3 5.3 4.6 3.9 2.4 2.3 2.6 1.1 1.3
GlaxoSmithKline Consumer 4 14 24 26 1.0 31.6 27.4 22.9 5.4 4.8 4.1 2.3 0.9 2.4 0.9 1.1
Godrej Consumer Products (10) 24 16 19 2.2 36.7 30.9 26.3 5.5 4.6 4.0 1.4 2.3 2.7 0.6 0.8
Hindustan Unilever (2) 17 21 21 13.5 34.5 29.0 25.1 5.5 4.8 4.3 2.1 2.4 2.7 1.9 2.0
ITC 2 7 5 5 35.7 24.0 20.8 17.5 8.7 7.5 6.6 1.5 2.6 3.2 2.1 2.3
Jubilant Foodworks (6) (2) 20 10 5.3 35.2 30.3 22.3 5.1 4.1 3.2 (0.3) (0.2) 0.5 - 0.2
Jyothy Laboratories (5) 38 23 43 1.5 33.1 23.8 18.5 3.8 3.1 2.6 2.1 4.0 3.5 1.2 1.4
Marico 4 25 42 42 2.7 26.4 21.7 17.4 4.2 3.3 2.9 3.0 2.2 3.1 0.8 1.1
Nestle India (6) 20 22 19 2.6 29.2 27.3 23.3 6.4 5.7 5.0 2.6 2.2 2.8 0.8 1.0
Speciality Restaurants 12 14 6 25 0.2 17.8 19.1 12.3 2.3 2.0 1.7 (2.8) (1.8) (1.2) 0.8 1.0
Tata Global Beverages (2) 4 4 4 8.0 14.5 13.3 11.6 1.4 1.3 1.2 2.4 3.4 3.9 1.4 1.6
Titan Industries 1 15 52 67 6.4 34.0 27.9 24.2 3.3 3.0 2.7 (2.2) (0.3) 3.4 0.6 1.0
KIE FMCG universe (0) 13 16 18 28.2 24.2 20.5 5.6 4.9 4.3 1.7 2.3 2.9 1.4 1.7
KIE universe (ex-ITC) (2) 16 24 28 31.4 26.7 22.7 4.7 4.1 3.6 1.7 2.1 2.8 1.4 1.7
Sensex (2) 5 17 32
Dividend yield (%)
CAGR - (2014-16E), %
Mkt cap. EPS (Rs) EPS Growth, % PER (X)
EV/Sales (X) FCF yield (%)Price performance (%)
Upside /
(downside)
(%)
EV/EBITDA (X)
India Consumer Products
24 KOTAK INSTITUTIONAL EQUITIES RESEARCH
Exhibit 6: Consumer sector P/E rich at 30X despite a correction One-year forward P/ E based on consensus estimates (X)
Source: Bloomberg, Company, Kotak Institutional Equities
Exhibit 7: The consumer sector trades at an 80% premium to
the Sensex One-year forward relative premium based on consensus estimates (X)
Source: Bloomberg, Company, Kotak Institutional Equities
Exhibit 8: P/E multiples are fairly high for the earnings profile One-year forward PE (based on consensus estimates)
Source: Bloomberg, Company, Kotak Institutional Equities
Exhibit 9: P/E multiples are fairly high for the earnings profile On- year forward PE (based on consensus estimates)
Source: Bloomberg, Company, Kotak Institutional Equities
5
10
15
20
25
30
35
Oct
-96
Oct
-97
Oct
-98
Oct
-99
Oct
-00
Oct
-01
Oct
-02
Oct
-03
Oct
-04
Oct
-05
Oct
-06
Oct
-07
Oct
-08
Oct
-09
Oct
-10
Oct
-11
Oct
-12
Oct
-13
Oct
-14 -
0.5
1.0
1.5
2.0
2.5
3.0
Oct
-96
Oct
-97
Oct
-98
Oct
-99
Oct
-00
Oct
-01
Oct
-02
Oct
-03
Oct
-04
Oct
-05
Oct
-06
Oct
-07
Oct
-08
Oct
-09
Oct
-10
Oct
-11
Oct
-12
Oct
-13
Oct
-14
10
20
30
40
50
Oct
-06
Apr-
07
Oct
-07
Apr-
08
Oct
-08
Apr-
09
Oct
-09
Apr-
10
Oct
-10
Apr-
11
Oct
-11
Apr-
12
Oct
-12
Apr-
13
Oct
-13
Apr-
14
Oct
-14
Nestle Dabur Asian Paints
ITC HUL GCPL
-
10
20
30
40
50
Oct
-06
Apr-
07
Oct
-07
Apr-
08
Oct
-08
Apr-
09
Oct
-09
Apr-
10
Oct
-10
Apr-
11
Oct
-11
Apr-
12
Oct
-12
Apr-
13
Oct
-13
Apr-
14
Oct
-14
Marico TitanColgate GSK Consumer
Consumer Products India
KOTAK INSTITUTIONAL EQUITIES RESEARCH 25
Exhibit 10: Consumer products sector - several stocks trade at 10-30% premium to the five-year average, except ITC and TGBL One year forward PE based on consensus estimates (X)
Source: Bloomberg, Companies, Kotak Institutional Equities
HUL ITC Nestle Colgate GSKCHL APNT GCPL Marico Dabur Titan TGBL Britannia Sector
Average P/E
3-Yr 31.6 27.0 41.2 34.4 30.7 32.8 30.8 27.6 27.6 29.1 21.7 21.9 28.5
5-Yr 28.9 25.4 39.2 31.1 28.1 30.1 27.6 26.9 27.6 27.6 21.7 24.1 26.8
10-Yr 27.0 23.2 32.3 26.0 21.6 24.5 26.8 24.1 24.5 26.1 17.9 23.5 24.1
Current P/E 36.8 26.4 43.5 38.6 35.9 36.4 34.0 31.4 33.1 37.5 20.5 31.8 30.0
Current Prem/Disct to Avg
Prem/Disc to 3-Yr Avg 16 (2) 6 12 17 11 11 14 20 29 (6) 45 5
Prem/Disc to 5-Yr Avg 27 4 11 24 28 21 23 17 20 36 (6) 32 12
Prem/Disc to 10-Yr Avg 36 14 35 49 66 49 27 30 35 43 15 35 24
5 Year Variables
Median 27.7 25.3 40.1 31.2 26.8 30.3 27.0 26.8 27.4 27.7 21.9 23.8 26.9
Average 28.9 25.4 39.2 31.1 28.1 30.1 27.6 26.9 27.6 27.6 21.7 24.1 26.8
STD 4.4 2.7 3.8 5.1 4.9 4.8 5.5 2.5 2.5 4.7 3.4 4.6 2.9
Max 37.8 31.6 45.8 42.1 42.8 37.8 37.5 31.4 34.1 37.5 28.0 32.4 32.7
+1 STD 33.3 28.1 43.0 36.2 33.0 34.9 33.1 29.4 30.1 32.3 25.2 28.6 29 .7
Min 22.9 20.1 31.4 22.4 19.8 19.8 18.6 22.0 22.9 16.0 15.0 15.6 21.4
-1 STD 24.5 22.7 35.4 26.0 23.2 25.3 22.1 24.4 25.1 22.8 18.3 19.5 24.0
Vs . Cur ren t P /E
Median 33 4 9 24 34 20 26 17 20 35 (6) 34 11
Average P/E 27 4 11 24 28 21 23 17 20 36 (6) 32 12
Max (3) (16) (5) (8) (16) (4) (9) - (3) - (27) (2) (8 )
+1 STD 11 (6) 1 7 9 4 3 7 10 16 (19) 11 1
Min 61 31 39 73 81 84 83 43 44 134 36 104 40
-1 STD 50 17 23 48 55 44 54 28 32 64 12 63 25
India Consumer Products
26 KOTAK INSTITUTIONAL EQUITIES RESEARCH
Exhibit 11: Relative valuation (to Sensex) – premium has declined over the past few months due to a rally in the benchmark One-year forward premium to the Sensex, based on consensus estimates (X)
Source: Bloomberg, Companies, Kotak Institutional Equities
HUL ITC Nestle Colgate GSKCHL APAINTS GCPL Marico Dabur Titan TGBL Britannia Sector
Average Relative P/E
3-Yr 2.1 1.8 2.8 2.3 2.1 2.2 2.1 1.9 1.9 2.0 1.5 1.5 1.9
5-Yr 1.9 1.6 2.5 2.0 1.8 2.0 1.8 1.7 1.8 1.8 1.4 1.5 1.7
10-Yr 1.8 1.5 2.1 1.7 1.4 1.6 1.7 1.6 1.6 1.7 1.1 1.5 1.6
Current Relative P/E 2.2 1.6 2.6 2.3 2.2 2.2 2.1 1.9 2.0 2.3 1.2 1.9 1.8
Current Prem/Disct to Avg
Prem/Disc to 3-Yr Avg 4 (12) (5) 1 5 (0) (1) 2 8 16 (15) 31 (6)
Prem/Disc to 5-Yr Avg 19 (3) 4 16 19 13 15 10 13 28 (11) 26 5
Prem/Disc to 10-Yr Avg 27 7 26 39 56 41 19 22 28 37 9 28 17
5 Year Variables
Median 1.9 1.7 2.7 2.1 1.8 2.0 1.7 1.8 1.7 1.8 1.4 1.6 1.8
Average 1.9 1.6 2.5 2.0 1.8 2.0 1.8 1.7 1.8 1.8 1.4 1.5 1.7
STD 0.4 0.3 0.4 0.4 0.4 0.4 0.4 0.2 0.2 0.3 0.2 0.2 0.3
Max 2.6 2.2 3.2 2.8 3.0 2.6 2.6 2.2 2.1 2.4 1.9 1.9 2.3
+1 STD 2.3 1.9 3.0 2.5 2.2 2.4 2.2 2.0 2.0 2.1 1.6 1.8 2.0
Min 1.3 1.2 1.8 1.3 1.1 1.1 1.1 1.3 1.4 0.9 1.0 1.0 1.2
-1 STD 1.5 1.4 2.1 1.6 1.4 1.5 1.3 1.5 1.6 1.4 1.2 1.3 1.5
Vs. Current Relative P/E
Median 17 (3) (2) 12 21 9 19 9 15 23 (9) 20 3
Average P/E 19 (3) 4 16 19 13 15 10 13 28 (11) 26 5
Max (15) (27) (17) (17) (28) (14) (22) (13) (6) (5) (34) — (20)
+1 STD (1) (17) (10) (5) (2) (6) (8) (4) 2 7 (23) 10 (10)
Min 68 36 49 87 93 97 85 49 39 153 19 86 47
-1 STD 50 18 24 48 54 43 53 28 26 58 6 47 25
KOTAK INSTITUTIONAL EQUITIES RESEARCH 27
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September 2014: Results calendar
Mon Tue Wed Thu Fri Sat Sun
6-Oct 7-Oct 8-Oct 9-Oct 10-Oct 11-Oct 12-Oct
ALPHA INFY INFOMEDIA
RELIANCE INDUSTRIAL INFRA NETWORK18
TV18BRDCST
13-Oct 14-Oct 15-Oct 16-Oct 17-Oct 18-Oct 19-Oct
INDUSINDBK BAJAJ-AUTO BAJAJHLDNG BAJAJCORP AXISBANK GHCL
MAHSCOOTER BAJAJFINSV GSFC CMC CRISIL LICHSGFIN
RELIANCE IND BAJFINANCE HMVL CROMPGREAV EVERESTIND ULTRACEMCO
SINTEX STERLINH MINDTREE DBCORP HCLTECH UNICHEMLAB
TTKPRESTIG NIITTECH FEDERALBNK HTMEDIA
TATASPONGE HEROMOTOCO MAHLIFE
KIRLOSIND PERSISTENT
RALLIS RSSOFTWARE
TCS ZEEL
20-Oct 21-Oct 22-Oct 23-Oct 24-Oct 25-Oct 26-Oct
APLLTD BIOCON ASIANPAINT
EXIDEIND CAIRN HDFC
HINDUSTAN ZINC GNFC KOTAKBANK
JUSTDIAL HDFCBANK L&T FINANCE
MAHINDUGIN JSWSTEEL M&MFIN
SKSMICRO SOUTHBANK WIPRO
SRTRANSFIN
SWARAJENG
WABCOINDIA
ZEEMEDIA
27-Oct 28-Oct 29-Oct 30-Oct 31-Oct 1-Nov 2-Nov
LAXMIMACH ABB DRREDDY AMBUJACEM M&M GODREJCP
INGVYSYABK GRASIM CHOLAFIN
NESTLEIND MPHASIS ICICIBANK
RANBAXY IDFC
NHPC
OILCOUNTUB
3-Nov 4-Nov 5-Nov 6-Nov 7-Nov 8-Nov 9-Nov
DABUR THERMAX BATAINDIA GLAXOSMITHKLINE PHARMA RELIGARE
10-Nov 11-Nov 12-Nov 13-Nov 14-Nov 15-Nov 16-Nov
SHREECEM TIMEX-$
Source: BSE, Kotak Institutional Equities
28 KOTAK INSTITUTIONAL EQUITIES RESEARCH
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Kotak Institutional Equities: Valuation summary of KIE Universe stocks
Price (Rs)
Target
price Upside Mkt cap.
O/S
shares EPS (Rs) EPS growth (%) PER (X) EV/EBITDA (X) RoE (%)
ADVT-
3mo
Company Rating 9-Oct-14 (Rs) (%) (Rs mn) (US$ mn) (mn) 2014 2015E 2016E 2014 2015E 2016E 2014 2015E 2016E 2014 2015E 2016E 2014 2015E 2016E 2014 2015E 2016E 2014 2015E 2016E (US$ mn)
Automobiles
Amara Raja Batteries SELL 588 550 (6.4) 100,404 1,644 171 21.5 24.4 29.9 28.2 13.6 22.5 27.3 24.1 19.6 17.5 14.6 12.1 7.4 6.0 4.8 0.5 0.8 1.0 30.3 27.4 27.2 3.1
Apollo Tyres BUY 215 200 (7.2) 108,606 1,778 504 19.9 21.2 22.0 63.7 6.8 3.7 10.8 10.1 9.8 6.3 6.0 6.0 2.1 1.8 1.5 0.3 0.4 0.4 26.4 21.1 18.1 19.9
Ashok Leyland SELL 45 34 (25.0) 129,151 2,114 2,848 (1.8) (0.5) 1.2 (430.4) 72.8 350.2 (25.3) (93.1) 37.2 #### 26.1 14.1 2.7 2.4 2.3 - - 1.2 0.8 (3.7) 8.5 10.7
Bajaj Auto ADD 2,376 2,550 7.3 687,643 11,257 289 112.1 120.8 139.9 6.6 7.8 15.8 21.2 19.7 17.0 15.3 15.2 13.3 7.1 5.9 5.0 2.1 2.0 2.4 36.5 32.7 31.9 13.5
Bharat Forge SELL 806 620 (23.1) 191,347 3,132 237 22.0 27.7 34.8 110.7 26.1 25.6 36.7 29.1 23.2 20.6 14.9 12.3 7.1 6.0 5.0 0.4 0.6 0.8 21.0 22.4 23.4 13.5
Eicher Motors SELL 11,610 8,300 (28.5) 313,925 5,139 27 145.7 265.7 396.7 21.3 82.4 49.3 79.7 43.7 29.3 42.0 24.5 16.2 15.3 11.6 8.5 0.3 0.2 0.3 19.2 28.1 31.9 9.1
Exide Industries REDUCE 171 160 (6.5) 145,435 2,381 850 5.7 7.2 8.7 (6.8) 25.3 21.6 29.9 23.8 19.6 17.7 14.8 12.5 3.9 3.6 3.2 1.4 1.5 1.5 13.6 15.6 17.1 8.9
Hero Motocorp ADD 2,819 3,200 13.5 562,944 9,216 200 105.6 134.8 189.5 (0.4) 27.7 40.5 26.7 20.9 14.9 19.2 14.7 10.1 10.2 8.5 6.9 2.3 2.4 3.4 39.7 44.6 51.6 20.1
Mahindra & Mahindra REDUCE 1,367 1,310 (4.2) 768,475 12,580 562 68.5 58.9 65.6 8.7 (14.1) 11.4 19.9 23.2 20.9 14.9 15.4 14.0 4.3 4.1 3.8 1.4 0.6 0.9 23.2 9.4 12.6 28.8
Maruti Suzuki BUY 3,006 3,400 13.1 908,113 14,866 302 92.8 114.4 183.2 17.1 23.4 60.1 32.4 26.3 16.4 19.5 15.9 9.9 4.2 3.7 3.1 0.4 0.4 0.7 13.8 15.0 20.5 16.1
Motherson Sumi Systems ADD 384 375 (2.4) 338,732 5,545 882 8.7 11.2 18.0 72.1 29.6 60.5 44.3 34.2 21.3 14.0 11.5 7.2 11.4 8.3 5.6 0.7 0.9 1.4 34.2 27.0 30.3 14.3
Tata Motors BUY 521 590 13.3 1,675,211 27,424 3,218 46.5 48.1 62.0 51.4 3.4 28.8 11.2 10.8 8.4 5.7 5.1 4.3 2.5 2.1 1.7 0.4 - - 28.7 21.1 21.9 51.3
WABCO India ADD 3,861 4,000 3.6 73,232 1,199 19 61.9 77.7 133.0 (10.2) 25.4 71.2 62.3 49.7 29.0 43.1 31.3 18.6 9.7 8.4 6.9 0.1 0.3 0.9 16.7 18.1 26.1 0.5
Automobiles Attractive 6,003,219 98,276 24.4 9.0 32.0 19.9 18.2 13.8 10.6 9.2 7.3 4.2 3.5 2.9 0.9 0.7 1.0 21.0 19.2 21.0 209.4
Banks/Financial Institutions
Axis Bank ADD 387 430 11.0 910,089 14,899 2,349 26.5 29.7 34.5 19.6 12.3 16.1 14.6 13.0 11.2 — — — 2.4 2.1 1.8 1.0 1.3 1.5 17.4 17.0 17.2 28.1
Bajaj Finserv BUY 1,113 1,175 5.6 177,037 2,898 159 96.4 102.3 111.1 (6.6) 6.1 8.6 11.5 10.9 10.0 — — — 1.9 1.8 1.5 1.2 1.2 1.2 17.9 17.0 16.3 1.6
Bank of Baroda ADD 871 1,050 20.5 375,162 6,142 431 105.4 118.2 138.3 (0.6) 12.1 17.0 8.3 7.4 6.3 — — — 1.2 1.1 1.0 2.5 2.8 3.2 13.8 13.8 14.5 21.4
Bank of India ADD 243 320 31.9 155,992 2,554 643 42.4 61.9 66.7 (7.9) 45.7 7.8 5.7 3.9 3.6 — — — 0.7 0.7 0.6 2.1 3.0 3.2 11.2 14.3 13.6 18.2
Cholamandalam ADD 470 420 (10.6) 67,311 1,102 143 25.6 29.8 36.5 19.7 16.2 22.8 18.4 15.8 12.9 — — — 3.2 2.7 2.0 0.8 1.0 1.3 17.3 17.5 18.3 0.3
City Union Bank ADD 85 90 6.3 49,917 817 589 6.4 7.0 8.1 (5.8) 9.2 16.4 13.2 12.1 10.4 — — — 2.6 1.9 1.6 1.1 1.3 1.5 18.9 17.4 16.5 1.1
DCB Bank BUY 83 100 20.0 20,865 342 250 6.0 6.9 7.9 48.2 13.5 15.1 13.8 12.1 10.6 — — — 2.0 1.7 1.5 — — — 14.8 14.5 14.4 1.5
Federal Bank BUY 132 145 9.9 112,815 1,847 855 9.8 12.2 14.7 0.1 24.6 19.9 13.4 10.8 9.0 — — — 1.7 1.5 1.3 1.5 1.9 2.3 12.6 14.2 15.2 9.6
HDFC ADD 1,043 1,060 1.7 1,627,055 26,636 1,561 34.9 40.8 47.4 11.3 16.8 16.3 29.9 25.6 22.0 — — — 5.8 5.2 4.6 1.3 1.6 1.9 20.6 21.0 22.8 48.7
HDFC Bank REDUCE 888 800 (9.9) 2,129,397 34,860 2,399 35.3 42.9 51.1 25.0 21.5 18.9 25.1 20.7 17.4 — — — 5.0 4.2 3.6 0.8 0.9 1.1 21.3 21.7 21.8 27.7
ICICI Bank BUY 1,488 1,660 11.5 1,719,168 28,144 1,155 84.9 92.5 107.0 17.7 8.9 15.7 17.5 16.1 13.9 — — — 2.4 2.2 2.0 1.5 1.9 2.2 14.0 13.9 14.7 66.5
IIFL Holdings BUY 149 175 17.8 44,015 721 296 9.4 13.0 16.1 1.6 38.4 24.2 15.9 11.5 9.2 — — — 2.0 1.8 1.6 2.1 2.2 2.8 14.0 17.2 18.8 0.7
IndusInd Bank ADD 626 650 3.8 329,129 5,388 526 26.8 32.2 38.7 32.0 20.1 20.3 23.4 19.5 16.2 — — — 3.9 3.3 2.8 0.6 0.7 0.8 18.0 18.3 18.6 8.1
ING Vysya Bank BUY 611 720 17.9 115,355 1,888 189 34.8 42.3 51.6 (12.0) 21.4 22.1 17.5 14.4 11.8 — — — 1.7 1.6 1.4 1.0 1.2 1.5 11.4 11.0 12.2 1.5
J&K Bank REDUCE 138 140 1.5 66,871 1,095 485 24.4 21.0 21.7 12.1 (13.7) 3.3 5.7 6.6 6.3 — — — 1.2 1.1 1.0 3.6 3.1 3.2 22.3 16.7 15.3 2.9
Karur Vysya Bank BUY 527 580 10.0 63,564 1,041 121 40.1 54.0 66.7 (21.9) 34.8 23.5 13.2 9.8 7.9 — — — 2.0 1.5 1.3 2.2 2.6 3.2 13.4 16.8 17.1 1.3
LIC Housing Finance BUY 318 375 18.0 160,498 2,627 505 26.1 30.5 35.2 28.8 16.7 15.7 12.2 10.4 9.0 — — — 2.2 1.9 1.6 1.4 1.7 1.9 18.8 18.9 18.8 15.6
L&T Finance Holdings SELL 66 60 (9.5) 113,933 1,865 1,718 3.5 5.8 5.4 (18.5) 68.9 (8.3) 19.2 11.3 12.4 — — — 2.0 2.0 1.8 1.1 2.4 1.3 10.5 18.3 15.2 5.1
Magma Fincorp BUY 121 150 23.6 23,057 377 190 7.2 9.4 10.9 15.6 30.9 16.6 16.9 12.9 11.1 — — — 1.5 1.4 1.3 1.0 1.2 1.4 9.7 11.1 12.2 0.5
Mahindra & Mahindra Financial SELL 283 240 (15.3) 159,647 2,614 564 15.7 16.9 20.7 0.4 7.3 22.7 18.0 16.8 13.7 — — — 3.3 2.9 2.5 1.4 1.4 1.7 18.6 17.5 18.8 7.5
Muthoot Finance BUY 193 250 29.6 76,613 1,254 397 21.0 20.3 23.7 (22.3) (3.1) 16.4 9.2 9.5 8.1 — — — 1.8 1.5 1.3 2.9 3.2 3.7 19.0 17.1 17.1 1.4
Oriental Bank of Commerce ADD 235 330 40.3 70,524 1,155 300 38.0 48.9 56.4 (16.5) 28.7 15.3 6.2 4.8 4.2 — — — 0.7 0.6 0.6 3.2 4.2 4.8 8.7 10.5 11.2 8.6
PFC ADD 238 330 38.5 314,330 5,146 1,319 41.1 43.7 43.5 22.6 6.4 (0.4) 5.8 5.5 5.5 — — — 1.2 1.2 1.1 3.8 4.0 4.0 21.1 19.5 17.0 19.3
Punjab National Bank REDUCE 905 960 6.1 327,619 5,363 362 92.3 145.5 166.1 (31.3) 57.6 14.1 9.8 6.2 5.4 — — — 1.2 1.1 0.9 1.1 1.7 2.0 10.2 14.3 14.4 16.6
Rural Electrification Corp. ADD 250 365 46.0 246,848 4,041 987 47.4 50.5 50.9 22.7 6.4 0.8 5.3 5.0 4.9 — — — 1.2 1.1 1.0 3.8 4.0 4.4 24.6 21.9 18.8 12.8
Shriram City Union Finance REDUCE 1,698 1,550 (8.7) 111,636 1,828 66 86.2 91.4 115.8 6.2 6.1 26.7 19.7 18.6 14.7 — — — 3.9 2.7 2.3 0.5 0.6 0.8 19.8 16.9 16.8 0.6
Shriram Transport REDUCE 901 840 (6.8) 201,150 3,293 223 56.7 69.2 85.8 (7.1) 22.1 24.1 15.9 13.0 10.5 — — — 2.5 2.2 1.9 0.8 1.1 1.3 16.3 17.3 18.5 9.2
SKS Microfinance ADD 304 305 0.3 38,262 626 126 6.5 13.0 19.8 123.6 101.5 52.1 47.0 23.3 15.3 — — — 6.4 3.8 3.0 — — — 16.5 22.2 21.8 8.8
State Bank of India ADD 2,480 2,800 12.9 1,851,158 30,305 747 145.9 195.0 227.4 (29.3) 33.7 16.6 17.0 12.7 10.9 — — — 2.0 1.8 1.6 1.2 1.3 1.3 10.0 11.7 12.4 81.7
Union Bank ADD 204 220 8.1 128,330 2,101 630 26.7 40.5 46.1 (25.7) 51.6 13.6 7.6 5.0 4.4 — — — 0.9 0.8 0.7 2.0 3.0 3.4 10.3 14.1 14.2 17.6
Yes Bank ADD 578 575 (0.6) 239,551 3,922 414 44.9 42.2 45.5 23.7 (5.9) 7.9 12.9 13.7 12.7 — — — 3.4 2.1 1.9 1.2 1.3 1.4 25.0 18.8 15.4 31.2
Banks/Financial Institutions Attractive 12,410,038 203,160 2.1 19.4 14.5 14.8 12.4 10.9 — — — 2.3 2.0 1.8 1.4 1.6 1.9 15.3 16.4 16.5 521.0
Price/BV (X) Dividend yield (%)
Source: Company, Bloomberg, Kotak Institutional Equities estimates
KOTAK INSTITUTIONAL EQUITIES RESEARCH 29
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Kotak Institutional Equities: Valuation summary of KIE Universe stocks
Price (Rs)
Target
price Upside Mkt cap.
O/S
shares EPS (Rs) EPS growth (%) PER (X) EV/EBITDA (X) Price/BV (X) RoE (%)
ADVT-
3mo
Company Rating 9-Oct-14 (Rs) (%) (Rs mn) (US$ mn) (mn) 2014 2015E 2016E 2014 2015E 2016E 2014 2015E 2016E 2014 2015E 2016E 2014 2015E 2016E 2014 2015E 2016E 2014 2015E 2016E (US$ mn)
Cement
ACC SELL 1,429 1,250 (12.5) 268,490 4,395 188 46.0 48.7 64.7 (37.6) 5.8 33.0 31.0 29.3 22.1 17.8 16.1 11.6 3.2 3.1 2.8 2.5 1.6 1.6 11.6 11.3 13.8 8.5
Ambuja Cements SELL 216 195 (9.6) 328,529 5,378 1,522 6.8 9.7 11.2 (34.6) 44.0 15.6 31.9 22.2 19.2 18.3 13.0 10.9 3.3 3.0 2.9 1.3 1.4 1.6 10.5 14.2 15.2 8.2
Grasim Industries ADD 3,497 3,500 0.1 321,146 5,257 92 214.4 209.2 244.3 (21.3) (2.4) 16.8 16.3 16.7 14.3 8.9 8.5 6.6 1.5 1.4 1.3 1.0 1.0 1.0 9.6 8.7 9.4 5.2
India Cements REDUCE 112 100 (10.6) 34,358 562 307 (2.3) 3.7 7.0 (133.4) 265.4 86.1 (49.5) 29.9 16.1 10.1 7.4 6.2 0.8 0.8 0.8 2.4 2.4 2.4 (1.8) 3.0 5.5 5.1
Shree Cement SELL 8,326 5,800 (30.3) 290,060 4,748 35 235.9 324.9 393.1 (18.2) 37.7 21.0 35.3 25.6 21.2 20.7 15.8 12.4 6.6 5.3 4.3 0.2 0.2 0.2 20.1 23.0 22.5 2.4
UltraTech Cement SELL 2,571 2,000 (22.2) 705,299 11,546 274 74.8 78.4 98.9 (26.2) 4.8 26.2 34.4 32.8 26.0 19.4 17.4 12.8 3.6 3.2 2.9 0.4 0.4 0.4 12.7 11.9 13.4 11.8
Cement Cautious 1,947,882 31,888 (29.5) 15.7 22.7 29.2 25.3 20.6 15.1 13.0 10.1 2.9 2.6 2.4 0.9 0.9 0.9 9.9 10.4 11.7 41.3
Consumer products
Asian Paints SELL 655 575 (12.2) 628,420 10,288 959 12.8 15.3 17.7 10.3 19.7 15.2 51.1 42.7 37.1 30.8 26.0 22.4 14.7 12.5 10.7 0.8 1.0 1.2 33.1 33.5 33.0 11.3
Bajaj Corp. ADD 269 300 11.7 39,611 648 148 12.0 13.9 15.9 6.8 15.1 14.5 22.3 19.4 16.9 20.7 17.7 14.9 7.6 6.5 5.5 2.4 2.4 2.8 33.2 31.4 30.8 0.5
Britannia Industries BUY 1,352 1,460 8.0 162,154 2,655 120 33.0 40.2 49.9 51.8 21.9 24.2 41.0 33.7 27.1 25.7 20.6 16.7 20.3 13.7 10.7 0.9 1.1 1.4 58.3 48.6 44.4 3.0
Colgate-Palmolive (India) ADD 1,729 1,730 0.1 235,125 3,849 136 36.1 40.9 48.0 (1.2) 13.5 17.3 47.9 42.2 36.0 35.0 28.0 23.3 40.4 38.1 35.7 1.6 1.9 2.2 90.1 90.2 99.7 4.9
Dabur India ADD 217 245 12.9 378,317 6,193 1,744 5.2 6.2 7.3 19.0 17.8 18.6 41.4 35.1 29.6 33.8 28.5 23.8 14.2 11.4 9.4 0.8 1.1 1.3 38.5 36.1 34.9 7.3
GlaxoSmithKline Consumer REDUCE 5,357 5,300 (1.1) 225,291 3,688 42 160.4 140.3 163.4 54.5 (12.6) 16.5 33.4 38.2 32.8 30.1 35.6 29.2 13.1 10.9 9.2 0.8 0.9 1.1 42.5 29.8 29.3 1.0
Godrej Consumer Products REDUCE 994 880 (11.5) 338,409 5,540 340 22.1 25.6 31.0 9.3 15.5 21.2 44.9 38.9 32.1 31.4 26.8 22.1 8.4 7.2 6.2 0.5 0.6 0.8 21.3 21.3 22.2 2.2
Hindustan Unilever REDUCE 739 715 (3.3) 1,598,452 26,168 2,163 16.4 18.8 21.0 8.4 14.1 12.1 45.0 39.4 35.1 35.2 29.8 25.7 51.3 45.2 38.1 1.8 1.9 2.0 119.5 116.3 112.9 13.4
ITC ADD 366 390 6.7 2,959,037 48,441 8,096 10.8 12.0 13.9 15.7 11.2 15.6 33.9 30.5 26.3 24.5 21.2 17.9 10.7 9.8 8.8 1.6 2.0 2.3 35.6 35.1 36.9 35.1
Jubilant Foodworks SELL 1,251 1,080 (13.7) 82,957 1,358 66 18.0 21.8 30.6 (9.9) 21.2 40.4 69.6 57.4 40.9 33.1 28.1 20.2 15.1 11.9 9.5 — — 0.2 24.1 23.2 26.0 5.4
Jyothy Laboratories REDUCE 256 220 (14.0) 46,306 758 181 4.7 10.5 11.7 21.4 123.4 10.8 54.2 24.3 21.9 33.5 24.1 18.8 6.3 5.4 4.6 1.2 1.2 1.4 12.4 23.9 22.7 1.5
Marico BUY 302 330 9.4 194,599 3,186 645 8.1 9.3 11.4 43.3 15.4 22.1 37.4 32.4 26.6 26.8 22.0 17.7 13.9 10.7 8.4 1.3 0.8 1.1 38.2 33.9 32.6 2.8
Nestle India SELL 6,023 5,300 (12.0) 580,781 9,508 96 114.4 122.4 146.2 3.3 7.0 19.4 52.6 49.2 41.2 29.2 27.3 23.3 22.5 18.1 14.8 0.8 0.8 1.0 56.4 46.5 44.2 2.6
Page Industries SELL 8,716 6,600 (24.3) 97,221 1,592 11 137.3 180.6 223.2 36.1 31.5 23.6 63.5 48.3 39.1 39.3 30.3 24.6 32.6 24.2 18.0 0.7 0.9 1.0 61.2 59.2 54.0 1.1
Speciality Restaurants BUY 155 160 3.1 7,288 119 47 4.0 3.2 5.3 (19.3) (19.3) 63.1 38.6 47.8 29.3 21.1 21.9 13.7 2.5 2.3 2.2 0.6 0.8 1.0 6.4 4.9 7.5 0.2
Tata Global Beverages REDUCE 161 155 (3.9) 101,770 1,666 631 6.0 6.5 7.5 (1.0) 8.0 15.9 26.8 24.8 21.4 14.5 13.3 11.6 1.5 1.4 1.4 1.4 1.4 1.6 7.0 6.9 7.6 7.9
Titan Company REDUCE 401 340 (15.2) 356,135 5,830 888 8.4 9.7 10.7 3.1 15.4 9.7 47.6 41.3 37.6 34.0 27.9 24.2 14.1 11.5 9.8 0.5 0.6 1.0 33.3 30.7 28.1 6.3
United Breweries SELL 715 650 (9.1) 189,103 3,096 264 8.5 9.5 12.8 31.3 11.1 34.9 83.7 75.3 55.8 34.0 30.3 25.2 11.1 10.3 8.9 0.1 0.2 0.3 13.8 13.8 16.7 1.6
United Spirits BUY 2,338 3,200 36.8 339,827 5,563 145 (8.9) 34.0 69.1 (197.5) 480.9 103.0 (261.6) 68.7 33.8 42.2 28.2 19.2 11.2 11.5 8.8 - 0.2 0.3 (3.3) 16.5 29.5 22.8
Consumer products Neutral 8,560,803 140,146 13.2 16.5 18.4 42.3 36.3 30.7 29.0 24.8 20.8 13.1 11.6 10.1 1.2 1.4 1.7 31.1 32.0 32.9 130.9
Energy
Aban Offshore RS 569 — — 32,042 525 56 83.9 91.2 98.3 117.2 8.7 7.8 6.8 6.2 5.8 8.0 6.8 6.5 0.8 0.6 0.5 0.7 0.9 1.0 10.0 10.0 9.4 18.4
Bharat Petroleum ADD 672 770 14.6 485,693 7,951 723 56.2 50.7 52.3 53.7 (9.8) 3.2 12.0 13.3 12.8 7.9 8.7 7.7 2.4 2.1 1.9 2.5 2.3 2.3 19.9 15.9 14.8 17.0
Cairn india REDUCE 299 340 13.9 559,542 9,160 1,874 65.2 56.4 52.0 4.4 (13.4) (7.8) 4.6 5.3 5.7 3.5 3.9 4.0 1.0 0.9 0.8 4.3 4.1 4.0 23.4 14.7 14.6 12.6
Castrol India SELL 434 260 (40.1) 214,787 3,516 495 10.0 9.6 10.2 10.3 (3.9) 6.7 43.5 45.3 42.5 30.4 30.1 28.1 30.8 45.3 42.9 1.6 1.7 1.8 76.9 80.8 103.7 2.4
GAIL (India) BUY 447 520 16.4 566,757 9,278 1,268 32.6 34.7 41.3 (9.4) 6.2 19.2 13.7 12.9 10.8 9.1 8.5 6.7 1.9 1.7 1.6 2.3 2.4 3.0 13.9 13.3 14.2 9.6
GSPL ADD 89 95 6.6 50,140 821 563 7.4 7.5 8.5 (22.1) 1.0 13.6 12.0 11.8 10.4 6.3 6.2 5.5 1.4 1.2 1.1 1.1 1.7 2.9 11.9 10.8 11.2 1.8
Hindustan Petroleum REDUCE 512 500 (2.3) 173,471 2,840 339 51.1 44.5 51.7 106.4 (13.0) 16.3 10.0 11.5 9.9 8.7 7.4 6.1 0.9 0.9 0.8 3.0 2.6 3.1 9.1 7.2 7.9 15.9
Indian Oil Corporation ADD 378 430 13.6 918,858 15,042 2,428 23.2 33.4 37.6 38.1 43.8 12.6 16.3 11.3 10.1 10.1 7.2 5.3 1.4 1.3 1.2 2.3 3.0 3.4 8.1 10.8 11.1 6.9
Oil India BUY 613 720 17.5 368,469 6,032 601 49.6 58.4 73.1 (16.9) 17.8 25.1 12.4 10.5 8.4 5.9 4.3 3.3 1.7 1.6 1.4 3.5 4.2 5.4 12.5 13.5 15.5 4.5
Oil & Natural Gas Corporation ADD 411 465 13.0 3,520,169 57,627 8,556 31.2 37.1 45.6 6.2 18.9 23.2 13.2 11.1 9.0 6.0 4.6 3.7 1.7 1.5 1.4 2.3 3.0 3.9 12.7 13.4 14.9 35.1
Petronet LNG REDUCE 184 180 (2.1) 137,963 2,259 750 9.5 8.8 11.1 (38.1) (7.1) 25.7 19.4 20.9 16.6 10.7 11.2 9.6 2.5 2.3 2.0 1.1 1.2 1.8 13.2 10.8 12.1 7.5
Reliance Industries ADD 955 1,130 18.4 2,803,807 45,900 2,937 68.0 74.9 79.7 4.6 10.1 6.5 14.0 12.7 12.0 10.5 9.7 8.6 1.3 1.2 1.1 1.0 1.1 1.2 11.0 11.0 10.7 54.2
Energy Attractive 9,831,698 160,951 7.4 9.9 12.8 12.0 11.0 9.7 7.7 6.5 5.4 1.5 1.4 1.2 2.1 2.4 2.9 12.6 12.6 12.9 186.0
Dividend yield (%)
Source: Company, Bloomberg, Kotak Institutional Equities estimates
30 KOTAK INSTITUTIONAL EQUITIES RESEARCH
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Kotak Institutional Equities: Valuation summary of KIE Universe stocks
Price (Rs)
Target
price Upside Mkt cap.
O/S
shares EPS (Rs) EPS growth (%) PER (X) EV/EBITDA (X) Price/BV (X) RoE (%)
ADVT-
3mo
Company Rating 9-Oct-14 (Rs) (%) (Rs mn) (US$ mn) (mn) 2014 2015E 2016E 2014 2015E 2016E 2014 2015E 2016E 2014 2015E 2016E 2014 2015E 2016E 2014 2015E 2016E 2014 2015E 2016E (US$ mn)
Industrials
ABB SELL 1,080 750 (30.6) 228,894 3,747 212 8.3 15.6 25.1 25.5 86.6 61.1 129.4 69.3 43.0 61.1 40.9 28.1 8.5 7.8 6.8 0.3 0.3 0.3 6.7 11.8 16.9 1.8
Bharat Heavy Electricals SELL 219 160 (27.0) 536,147 8,777 2,448 14.1 11.0 13.9 (47.7) (22.0) 25.9 15.5 19.9 15.8 11.6 12.3 8.7 1.6 1.5 1.4 1.3 1.1 1.4 10.9 7.9 9.3 22.2
Crompton Greaves BUY 210 220 5.0 131,367 2,151 627 4.1 6.1 10.9 215.8 46.7 80.4 50.8 34.6 19.2 20.8 15.6 10.7 3.6 3.4 2.9 0.6 0.7 1.0 7.2 10.0 16.3 18.7
Cummins India REDUCE 684 640 (6.4) 189,480 3,102 277 21.3 27.5 31.8 (23.6) 28.9 15.7 32.1 24.9 21.5 30.0 23.8 17.8 7.4 6.5 5.8 1.5 1.8 2.1 24.2 27.2 27.7 3.0
Kalpataru Power Transmission ADD 158 200 27.0 24,168 396 153 8.1 11.0 11.0 (7.9) 35.9 (0.1) 19.5 14.3 14.4 8.5 7.2 6.0 1.1 1.1 1.0 1.0 1.0 1.0 6.0 6.8 6.8 0.7
KEC International ADD 106 125 18.0 27,234 446 257 3.3 6.7 10.4 30.4 102.5 54.9 32.0 15.8 10.2 9.5 7.6 6.1 2.2 1.8 1.6 0.6 1.5 2.3 6.9 12.4 16.4 0.9
Larsen & Toubro ADD 1,487 1,675 12.7 1,378,208 22,562 927 49.2 47.7 71.2 (6.1) (3.1) 49.2 30.2 31.2 20.9 19.9 17.9 14.0 3.6 3.3 2.9 1.0 0.9 1.2 12.6 11.0 14.7 52.8
Siemens SELL 838 550 (34.4) 298,310 4,884 356 8.7 19.9 24.8 91.7 128.7 24.5 96.4 42.1 33.8 45.2 23.9 19.7 6.4 6.1 5.4 1.0 0.6 0.7 7.2 14.9 17.1 5.1
Thermax REDUCE 862 800 (7.1) 102,654 1,681 119 20.6 22.2 34.0 (23.2) 7.6 53.0 41.7 38.8 25.4 27.0 28.2 17.6 5.0 4.7 4.2 0.7 0.9 1.3 12.6 12.5 17.4 1.2
Voltas REDUCE 238 220 (7.4) 78,558 1,286 331 6.8 9.2 11.6 15.0 35.6 25.7 35.0 25.8 20.5 28.9 18.7 14.1 4.3 3.9 3.4 0.9 1.2 1.5 12.9 15.7 17.7 13.5
Industrials Neutral 2,995,020 49,030 (24.7) 1.2 39.2 29.9 29.5 21.2 19.9 17.6 13.5 3.3 3.0 2.7 1.0 0.9 1.2 10.9 10.2 12.8 119.9
Infrastructure
Adani Port and SEZ ADD 270 280 3.8 562,290 9,205 2,084 8.3 11.1 15.1 3.7 32.5 36.4 32.3 24.4 17.9 21.9 14.8 11.5 6.3 4.7 3.9 0.7 0.7 0.8 22.5 22.1 23.7 21.6
Container Corporation ADD 1,334 1,325 (0.7) 260,080 4,258 195 49.5 58.7 70.5 2.6 18.7 20.1 27.0 22.7 18.9 21.3 17.5 14.1 3.7 3.3 2.9 0.9 1.0 1.2 14.5 15.5 16.5 1.8
Gujarat Pipavav Port REDUCE 167 140 (16.2) 80,734 1,322 483 3.6 6.5 8.8 137.1 80.1 34.0 46.0 25.6 19.1 29.8 19.5 15.1 5.8 4.6 3.6 — — — 18.1 23.3 25.6 3.3
IRB Infrastructure REDUCE 232 210 (9.3) 76,976 1,260 332 13.8 14.3 17.1 (17.4) 3.2 20.2 16.7 16.2 13.5 9.4 8.3 7.1 2.1 1.7 1.6 1.7 1.7 1.7 13.1 11.6 12.0 26.7
Infrastructure Attractive 1,013,341 16,589 6.7 25.7 29.8 29.0 23.1 17.8 18.4 13.7 10.9 4.6 3.7 3.2 0.7 0.8 0.9 15.9 16.2 17.9 54.5
Media
DB Corp ADD 342 350 2.5 62,670 1,026 183 16.7 18.6 23.0 40.5 11.0 23.7 20.4 18.4 14.9 12.5 10.6 8.6 5.5 4.8 4.2 2.0 2.6 3.2 28.2 27.9 30.3 0.4
DishTV ADD 55 60 9.3 58,469 957 1,065 (0.4) 0.0 1.5 68.2 105.0 7,286.5 (139.4) 2,781.0 37.6 10.8 9.8 7.9 (18.7) (18.8) (38) — — — 17.9 (0.7) (67) 4.7
Jagran Prakashan ADD 124 135 8.7 38,644 633 311 7.6 7.7 9.7 50.2 1.5 26.1 16.4 16.1 12.8 10.4 8.4 7.0 4.0 3.7 3.3 2.5 3.2 4.0 25.0 23.8 27.1 0.4
Sun TV Network ADD 340 455 33.8 134,027 2,194 394 19.0 21.0 24.0 5.4 10.9 13.9 17.9 16.2 14.2 11.2 9.9 8.7 4.1 3.8 4 2.9 3.8 4.7 25.2 25.6 27 6.3
Zee Entertainment Enterprises ADD 325 315 (3.0) 312,052 5,108 960 9.2 9.7 11.9 21.7 5.3 23.6 35.4 33.6 27.2 25.4 22.5 19.2 6.6 5.8 5.2 0.9 1.2 1.5 20.6 21.3 22.7 11.5
Media Neutral 605,860 9,918 27.8 16.0 25.4 28.4 24.5 19.5 15.7 13.7 11.6 6.2 5.6 4.9 1.5 2.0 2.4 21.8 22.8 25.4 23.3
Metals & Mining
Coal India ADD 343 392 14.2 2,168,724 35,503 6,316 23.9 26.3 31.6 (12.9) 9.8 20.5 14.4 13.1 10.8 9.1 7.4 6.3 4.8 4.2 3.6 8.4 3.9 4.7 31.6 34.5 36.0 22.4
Hindalco Industries REDUCE 158 165 4.5 325,897 5,335 2,065 12.5 16.3 16.6 (15.1) 30.9 2.1 12.7 9.7 9.5 10.5 8.2 6.6 0.8 0.8 0.7 0.9 0.9 0.9 6.8 8.0 7.7 32.3
Hindustan Zinc ADD 162 190 17.6 682,549 11,174 4,225 16.5 16.9 18.3 0.7 2.5 8.1 9.8 9.6 8.8 6.1 5.6 4.3 1.8 1.6 1.4 2.2 2.2 2.2 20.1 17.8 16.9 3.7
Jindal Steel and Power REDUCE 166 170 2.6 151,599 2,482 915 20.9 20.3 21.3 (44.0) (2.6) 5.0 7.9 8.1 7.8 8.9 7.3 6.3 0.7 0.7 0.6 0.9 1.1 1.1 8.9 8.6 8.9 21.7
JSW Steel BUY 1,213 1,450 19.5 293,303 4,802 242 66.2 102.1 137.4 22.0 54.3 34.6 18.3 11.9 8.8 6.9 6.4 5.5 1.3 1.2 1.1 0.9 0.9 0.9 8.1 10.7 13.0 12.8
National Aluminium Co. SELL 60 45 (24.7) 153,990 2,521 2,577 2.7 3.9 3.7 16.7 44.2 (3.9) 22.3 15.4 16.1 10.8 7.1 7.3 1.3 1.2 1.2 2.5 2.5 2.5 5.8 8.0 7.4 3.1
NMDC ADD 161 185 15.2 636,731 10,424 3,965 16.1 18.5 18.4 (1.8) 14.8 (0.6) 10.0 8.7 8.8 5.8 4.9 5.1 2.1 1.9 1.7 5.3 5.3 5.3 22.3 23.1 20.8 7.4
Sesa Sterlite REDUCE 262 290 10.8 776,387 12,710 2,965 16.9 28.2 24.6 (32.2) 66.5 (12.9) 15.5 9.3 10.7 5.5 5.0 4.7 1.1 1.0 0.9 1.2 1.2 1.2 7.1 9.6 8.9 28.3
Tata Steel REDUCE 468 505 8.0 454,183 7,435 971 37.1 47.9 48.3 986.0 29.0 0.8 12.6 9.8 9.7 7.3 6.5 6.4 1.1 1.0 0.9 2.1 1.7 1.7 9.7 10.9 10.0 50.8
Metals & Mining Cautious 5,643,362 92,385 (6.3) 20.3 7.3 12.9 10.7 10.0 7.3 6.3 5.7 1.7 1.6 1.5 4.6 2.9 3.2 13.6 15.0 14.6 182.4
Pharmaceutical
Biocon SELL 490 360 (26.6) 98,197 1,608 200 20.9 20.7 23.5 34.8 (1.3) 13.9 23.4 23.7 20.8 13.9 13.9 11.7 3.2 3.1 2.8 1.0 1.3 1.4 14.5 13.2 14.2 9.5
Cipla BUY 592 610 3.1 475,089 7,777 803 16.0 19.0 25.1 (17.4) 18.6 32.2 37.0 31.2 23.6 27.0 21.0 15.2 4.7 4.2 3.7 0.4 0.7 0.9 13.4 14.3 16.7 18.4
Dr Reddy's Laboratories ADD 2,987 2,930 (1.9) 506,566 8,293 170 126.8 131.7 147.8 23.2 3.8 12.2 23.5 22.7 20.2 19.9 18.0 15.3 5.6 4.6 3.9 0.6 0.7 0.7 23.7 20.3 19.1 17.1
Lupin BUY 1,338 1,370 2.4 602,235 9,859 450 40.8 46.4 56.2 39.0 13.7 21.1 32.8 28.8 23.8 20.2 17.8 14.5 8.6 6.9 5.5 0.4 0.5 0.6 28.1 30.0 28.0 11.8
Sun Pharmaceuticals SELL 815 720 (11.6) 1,688,162 27,636 2,072 27.6 31.3 34.6 56.8 13.3 10.7 29.5 26.0 23.5 22.4 16.9 14.7 9.1 6.9 5.5 0.4 0.9 1.1 34.1 30.1 25.9 32.8
Pharmaceuticals Neutral 3,370,249 55,173 33.1 11.7 15.3 29.5 26.5 22.9 21.7 17.6 14.7 7.1 5.7 4.7 0.4 0.8 0.9 23.9 21.7 20.6 123.3
Real Estate
DLF BUY 153 210 37.4 272,300 4,458 1,781 5.6 4.0 5.7 24.8 (27.8) 41.4 27.3 37.8 26.7 19.0 17.7 15.0 0.9 0.9 0.9 1.3 1.3 1.3 3.5 2.5 3.4 32.2
Godrej Properties REDUCE 241 225 (6.5) 47,698 781 198 8.0 10.2 12.4 (8.8) 27.0 20.9 29.9 23.5 19.5 22.9 16.4 11.6 2.7 2.4 2.2 0.8 0.8 1.0 9.9 10.8 12.0 1.1
Oberoi Realty BUY 219 325 48.7 71,719 1,174 328 9.5 16.7 26.0 (38.4) 76.0 56.1 23.1 13.1 8.4 15.5 10.5 5.7 1.6 1.5 1.3 0.9 0.9 0.9 7.3 11.8 16.3 1.2
Prestige Estates Projects REDUCE 233 240 3.1 87,281 1,429 375 10.4 11.2 15.8 24.2 8.5 40.3 22.5 20.7 14.8 15.0 12.4 9.6 2.9 2.2 1.9 0.6 0.5 0.5 12.7 12.1 14.0 1.9
Sobha Developers ADD 399 520 30.3 39,142 641 98 24.0 26.7 41.1 8.2 11.4 53.7 16.7 14.9 9.7 8.7 7.9 6.2 1.7 1.6 1.4 1.8 1.8 1.8 10.6 11.0 15.3 1.7
Sunteck Realty ADD 306 410 34.0 18,350 300 60 25.2 10.7 81.2 3,653.8 (57.4) 656.9 12.2 28.5 3.8 8.6 25.5 3.1 2.9 2.7 1.6 0.7 0.7 0.7 26.8 9.7 52.7 0.4
Real Estate Attractive 536,491 8,783 17.1 (1.0) 63.5 23.9 24.1 14.7 16.4 14.7 10.3 1.3 1.2 1.2 1.1 1.1 1.1 5.4 5.1 7.9 38.5
Dividend yield (%)
Source: Company, Bloomberg, Kotak Institutional Equities estimates
KOTAK INSTITUTIONAL EQUITIES RESEARCH 31
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Kotak Institutional Equities: Valuation summary of KIE Universe stocks
Price (Rs)
Target
price Upside Mkt cap.
O/S
shares EPS (Rs) EPS growth (%) PER (X) EV/EBITDA (X) Price/BV (X) RoE (%)
ADVT-
3mo
Company Rating 9-Oct-14 (Rs) (%) (Rs mn) (US$ mn) (mn) 2014 2015E 2016E 2014 2015E 2016E 2014 2015E 2016E 2014 2015E 2016E 2014 2015E 2016E 2014 2015E 2016E 2014 2015E 2016E (US$ mn)
Technology
HCL Technologies REDUCE 1,696 1,600 (5.6) 1,200,414 19,652 708 89.8 102.3 110.0 57.8 13.9 7.6 18.9 16.6 15.4 12.8 11.4 10.2 5.9 4.7 3.8 1.3 1.3 1.3 36.0 31.5 27.2 25.0
Hexaware Technologies SELL 191 145 (24.1) 57,665 944 302 12.6 10.6 12.3 14.5 (16.4) 16.5 15.1 18.1 15.5 10.0 12.1 10.4 4.8 5.8 5.0 5.8 3.9 3.2 31.6 29.0 34.4 7.6
Infosys ADD 3,647 4,100 12.4 2,083,782 34,113 571 186.3 211.4 242.2 13.0 13.5 14.5 19.6 17.2 15.1 13.4 11.9 9.9 4.7 4.0 3.5 1.7 2.0 2.2 26.3 25.1 24.7 62.8
Mindtree ADD 1,038 1,180 13.7 87,155 1,427 84 53.7 63.3 73.8 31.4 18.0 16.5 19.3 16.4 14.1 14.1 11.8 9.8 5.3 4.3 3.5 1.2 1.5 1.8 30.5 29.1 27.7 3.5
Mphasis SELL 412 400 (2.9) 86,561 1,417 210 14.7 35.0 36.8 (58.4) 138.0 5.2 28.0 11.8 11.2 19.9 8.3 7.8 1.7 1.6 1.5 1.7 4.2 4.5 6.1 13.9 13.8 1.4
TCS ADD 2,706 2,800 3.5 5,300,340 86,770 1,959 97.6 113.0 129.9 37.4 15.7 15.0 27.7 24.0 20.8 20.3 17.9 15.1 9.6 8.4 7.0 1.2 2.3 1.9 39.7 37.4 36.6 42.4
Tech Mahindra ADD 2,336 2,650 13.4 557,173 9,121 238 128.0 142.1 166.9 25.6 11.0 17.4 18.2 16.4 14.0 12.5 11.6 9.6 6.1 4.8 3.9 1.0 1.2 0.8 33.5 29.3 27.5 22.0
Wipro ADD 587 650 10.7 1,446,397 23,678 2,463 31.7 35.8 40.8 27.1 13.1 13.9 18.6 16.4 14.4 12.9 10.8 9.1 4.2 3.5 3.0 1.4 1.5 1.7 24.9 23.5 22.5 17.4
Technology Cautious 10,819,487 177,122 29.6 14.5 13.9 22.6 19.7 17.3 15.9 14.0 11.9 6.3 5.4 4.5 1.3 2.0 1.8 27.9 27.3 26.0 182.1
Telecom
Bharti Airtel ADD 405 415 2.5 1,618,747 26,500 3,997 8.3 14.1 16.7 39.0 69.8 18.0 48.6 28.6 24.3 8.4 7.5 6.4 2.7 2.5 2.3 0.4 0.5 0.8 6.0 9.1 9.9 28.7
Bharti Infratel REDUCE 288 250 (13.3) 544,531 8,914 1,889 8.0 10.7 11.8 51.4 33.1 10.4 35.9 26.9 24.4 12.1 11.0 10.0 3.0 3.0 3.0 1.5 3.3 3.0 8.6 11.2 12.3 —
IDEA BUY 160 185 15.3 576,694 9,441 3,595 5.9 7.8 8.9 94.4 30.9 14.3 27.1 20.7 18.1 9.6 8.3 7.0 3.5 2.5 2.3 0.2 0.4 0.5 12.8 14.2 13.2 24.9
Reliance Communications SELL 105 95 (9.4) 258,660 4,234 2,467 3.2 3.4 5.3 (0.4) 5.7 53.6 32.3 30.6 19.9 9.1 7.0 6.6 1.0 0.8 0.7 — — — 2.4 2.8 3.7 14.5
Tata Communications ADD 373 390 4.5 106,391 1,742 285 1.2 3.0 5.7 104.2 140.8 93.1 302.2 125.5 65.0 7.0 7.1 6.5 13.2 11.8 9.8 — — — 3.1 9.9 16.5 4.3
Telecom Neutral 3,105,023 50,831 107.4 51.7 18.9 41.3 27.2 22.9 8.9 7.8 6.8 2.5 2.2 2.1 0.5 0.9 1.0 6.1 8.1 9.0 72.4
Utilities
Adani Power SELL 44 40 (9.5) 126,939 2,078 2,872 (1.0) (3.8) (2.1) 88.8 (279.5) 45.5 (43.7) (11.5) (21.1) 12.0 9.5 9.1 1.9 2.3 2.6 — — — (5.4) (18.4) (11.7) 6.0
CESC ADD 749 695 (7.2) 93,558 1,532 125 39.3 56.2 69.9 14.9 42.8 24.4 19.0 13.3 10.7 13.8 9.3 7.3 1.2 1.1 1.0 1.0 1.0 1.0 6.8 8.8 10.1 7.0
JSW Energy SELL 74 62 (15.8) 120,704 1,976 1,640 6.9 8.6 7.6 2.9 24.0 (11.7) 10.7 8.6 9.7 6.7 5.8 5.6 1.8 1.5 1.3 — — — 17.7 19.3 14.4 3.4
NHPC REDUCE 20 24 22.4 216,985 3,552 11,071 1.7 1.9 2.4 (12.6) 12.3 24.9 11.6 10.3 8.3 10.6 9.1 8.0 0.8 0.8 0.7 2.1 2.5 3.3 6.5 7.5 8.9 2.6
NTPC REDUCE 143 135 (5.5) 1,178,277 19,289 8,245 13.3 11.2 12.4 6.8 (15.5) 10.0 10.7 12.7 11.6 9.5 10.1 8.7 1.4 1.3 1.2 4.0 2.4 2.6 13.2 10.4 10.7 16.2
Power Grid BUY 138 145 5.0 722,222 11,823 5,232 8.6 9.5 13.0 (5.0) 9.8 37.5 16.0 14.6 10.6 11.9 9.7 7.8 2.1 1.9 1.7 1.9 2.1 2.8 14.9 13.8 17.1 12.1
Reliance Power SELL 73 62 (15) 203,792 3,336 2,805 3.7 4.0 4.1 1.5 9.4 2.3 19.8 18.1 17.7 24.5 24.2 12.1 1.0 1.0 0.9 — — — 5.4 5.6 5.4 10.1
Tata Power ADD 85 102 20.7 236,591 3,873 2,800 2.1 3.1 6.4 (46.6) 43.2 109.5 39.4 27.5 13.1 7.8 7.7 6.2 1.9 1.6 1.4 1.3 1.4 1.4 4.1 6.2 11.3 8.0
Utilities Cautious 3,053,125 49,982 10.2 (4.6) 24.6 13.8 14.4 11.6 10.7 9.9 8.2 1.3 1.2 1.2 2.3 1.8 2.1 9.7 8.6 10.0 65.4
Others
Carborundum Universal BUY 199 200 0.7 37,307 611 188 4.9 8.2 12.4 1.7 69.0 50.3 40.8 24.1 16.0 16.3 11.6 8.9 3.0 2.8 2.5 0.6 1.1 1.6 7.2 12.9 17.5 0.8
Coromandel International SELL 293 210 (28.3) 82,972 1,358 283 12.6 18.1 20.2 (17.5) 43.4 11.8 23.3 16.2 14.5 12.1 9.6 8.7 3.6 3.1 2.7 1.5 1.6 1.6 15.0 19.8 19.0 1.4
Godrej Industries REDUCE 299 330 10.3 100,242 1,641 335 7.7 11.9 15.3 13.8 55.5 28.3 39.0 25.1 19.5 29.9 18.0 12.9 3.7 3.2 2.7 0.6 0.6 0.6 8.8 13.6 15.0 3.2
Havells India ADD 274 280 2.2 170,973 2,799 624 8.0 9.5 11.4 19.9 18.3 21.0 34.3 29.0 23.9 21.2 17.8 15.0 10.0 8.5 7.2 1.1 1.3 1.6 31.2 31.7 32.5 7.4
Info Edge BUY 898 750 (16.5) 98,051 1,605 109 8.4 11.7 17.0 (20.1) 39.4 45.7 107.0 76.7 52.7 92.7 74.8 44.6 12.1 11.2 10.1 0.3 0.5 0.7 12.8 15.2 20.2 2.6
Jaiprakash Associates REDUCE 30 54 80.0 72,963 1,194 2,432 (5.4) 3.8 5.3 (373.8) 170.7 40.2 (5.6) 7.9 5.6 10.2 7.5 6.3 0.6 0.5 0.5 0.0 0.0 0.0 (9.9) 7.3 9.1 39.9
Just Dial ADD 1,740 1,650 (5.2) 121,776 1,994 70 17.1 20.6 32.6 69.2 20.4 57.8 101.5 84.3 53.4 81.0 66.0 38.9 22.8 19.6 16.1 0.3 0.4 0.7 25.0 25.0 33.1 8.7
Rallis India BUY 248 230 (7.3) 48,268 790 194 7.8 10.5 12.6 27.6 34.4 20.4 31.8 23.6 19.6 18.6 14.0 11.4 6.7 5.6 4.6 1.0 1.0 1.0 22.1 25.4 25.2 1.8
Tata Chemicals BUY 392 450 14.8 99,915 1,636 255 (40.5) 30.3 38.5 (357.7) 174.9 27.0 (9.7) 12.9 10.2 8.9 6.5 5.5 1.5 1.4 1.2 2.5 2.5 2.5 (15.9) 11.3 12.7 5.4
UPL ADD 342 370 8.2 146,583 2,400 429 21.8 27.7 31.8 27.3 27.0 14.8 15.7 12.4 10.8 8.0 7.0 6.1 2.8 2.4 2.0 1.2 1.3 1.5 19.8 21.3 20.7 10.2
Others 979,049 16,028 (87.8) 1,239.7 26.9 253.7 18.9 14.9 12.9 9.9 8.3 2.8 2.4 2.2 1.0 1.1 1.3 1.1 12.9 14.5 81.5
KIE universe 67,475,556 1,104,617 6.4 15.5 16.8 18.6 16.1 13.8 11.4 9.8 8.3 2.7 2.4 2.1 1.6 1.7 1.9 14.4 14.9 15.6
KIE universe ex-energy 57,643,858 943,666 6.1 17.2 17.8 20.6 17.5 14.9 12.7 11.0 9.3 3.1 2.8 2.4 1.6 1.6 1.7 15.0 15.7 16.4
KIE universe ex-energy & ex-commodities 50,052,614 819,393 10.5 16.6 19.8 21.8 18.7 15.6 14.3 12.4 10.3 3.4 3.0 2.7 1.3 1.5 1.6 15.6 16.2 17.0
Notes:
(a) We have used adjusted book values for banking companies.
(b) 2014 means calendar year 2013, similarly for 2015 and 2016 for these particular companies.
(c) EV/EBITDA excludes banking Sector.
(d) Exchange rate (Rs/US$)= 61.09
Dividend yield (%)
Source: Company, Bloomberg, Kotak Institutional Equities estimates
Disclo
sure
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Disclosures
KOTAK INSTITUTIONAL EQUITIES RESEARCH 32
Ratings and other definitions/identifiers
Definitions of ratings
BUY. We expect this stock to deliver more than 15% returns over the next 12 months.
ADD. We expect this stock to deliver 5-15% returns over the next 12 months.
REDUCE. We expect this stock to deliver -5-+5% returns over the next 12 months.
SELL. We expect this stock to deliver <-5% returns over the next 12 months.
Our target prices are also on a 12-month horizon basis.
Other definitions
Coverage view. The coverage view represents each analyst’s overall fundamental outlook on the Sector. The coverage view will consist of one of the following
designations: Attractive, Neutral, Cautious.
Other ratings/identifiers
NR = Not Rated. The investment rating and target price, if any, have been suspended temporarily. Such suspension is in compliance with applicable regulation(s)
and/or Kotak Securities policies in circumstances when Kotak Securities or its affiliates is acting in an advisory capacity in a merger or strategic transaction
involving this company and in certain other circumstances.
CS = Coverage Suspended. Kotak Securities has suspended coverage of this company.
NC = Not Covered. Kotak Securities does not cover this company.
RS = Rating Suspended. Kotak Securities Research has suspended the investment rating and price target, if any, for this stock, because there is not a sufficient
fundamental basis for determining an investment rating or target. The previous investment rating and price target, if any, are no longer in effect for this stock
and should not be relied upon.
NA = Not Available or Not Applicable. The information is not available for display or is not applicable.
NM = Not Meaningful. The information is not meaningful and is therefore excluded.
Kotak Institutional Equities Research coverage universe
Distribution of ratings/investment banking relationships
Source: Kotak Institutional Equit ies As of June 30, 2014
Percentage of companies covered by Kotak Institutional
Equit ies, within the specif ied category.
Percentage of companies within each category for which
Kotak Institutional Equit ies and or its aff iliates has provided
investment banking services within the previous 12 months.
* The above categories are defined as follows: Buy = We
expect this stock to deliver more than 15% returns over the
next 12 months; Add = We expect this stock to deliver
5-15% returns over the next 12 months; Reduce = We
expect this stock to deliver -5-+5% returns over the next
12 months; Sell = We expect this stock to deliver less than -
5% returns over the next 12 months. Our target prices are
also on a 12-month horizon basis. These ratings are used
illustratively to comply with applicable regulations. As of
30/06/2014 Kotak Institutional Equit ies Investment Research
had investment ratings on 149 equity securit ies.
15.4%
23.5%
35.6%
25.5%
2.0% 0.7% 2.0% 0.7%
0%
10%
20%
30%
40%
50%
60%
70%
BUY ADD REDUCE SELL
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