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Happy, Colourful & Prosperous Diwali... Karvy wishes you a very Market Strategy: Value Invest - Midcap Muhurat Special: October - 2014

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Page 1: Karvy wishes you a very Happy, Colourful Prosperouscontent.karvyonline.com/contents/Content_20141018135844.pdf · Happy, Colourful & Prosperous Diwali... Karvy wishes you a very

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Sept 17, 2014IFGL Refractories Ltd

Happy, Colourful & Prosperous

Diwali. . .

Karvy wishes you a very

Market Strategy:

Value Invest - Midcap

Muhurat Special:

October - 2014

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Sept 17, 2014IFGL Refractories Ltd

Exhibit 3: Sensex EPS (Rs) Estimates

Source: Bloomberg, Karvy Research

Exhibit 2: Sensex P/B (1Yr Forward)

Source: Bloomberg, Karvy Research

Exhibit 1: Sensex P/E (1Yr Forward)

Source: Bloomberg, Karvy Research

Value Picking in Midcap Stocks

Value Invest - MidcapIndia Research – Stock Broking

India Equities: The best performing asset classEquities had outperformed other asset classes by a wide margin during Samvat 2070. Overall, Nifty had generated around 30% return in the last one year outperforming the other asset classes like MCX Gold that had generated a negative return of 5% and MCX Silver which lost close to 18% during the period. Over the same time frame, S&P 500 had generated over 12%, while Gold in USD terms had generated a negative return of 3.5% and Brent crude oil had fallen by 15%.

What drove Market SentimentsExpectations over recovery in the global economy coupled with continuation of the near zero interest rate policy by US Federal Reserve has led to steady inflow of funds into equities. Improving economic conditions in the Euro zone and Japan had buoyed the sentiments for the equity markets. The positive sentiments in the global equity markets had led to steady inflow of foreign funds into the emerging markets, especially India on expectations over the formation of a stable government and the markets rallied sharply after the BJP formed the government under the leadership of Mr. Modi.

What will drive market sentiments from here on: Positive economic data emanating that seems to be setting an initial trend

� Robustness seen in the economic data with the GDP reviving to a nine quarter high in Q1FY15.

� Softening crude oil prices that could cushion current account and fiscal account.

� Decking crude oil prices will have multiplier effect to soften inflation from the elevated levels of the recent past.

� Expectations of soft global commodity prices to augur well for correcting the structural imbalance in our economy.

� CMIE Sep’14 quarterly data reflects uptick in new capex after 4 years of decline. Both Govt. / Private capex have shown increasing trend in this quarter, reflecting a recovery in capex cycle. The momentum is not broad but a trend is establishing.

Our take on the marketWe expect Sensex to trade in the band of 27160 - 34920. There could be short-term volatility as markets have priced in growth post the elections and multiples are at the middle of the trading band. The Sensex consensus EPS for FY15E is Rs.1635 and for FY16E is Rs.1940, implying a P/E band of 14 - 18x for FY16EPS. The Sensex currently trades at 14x FY16E EPS.

Value Invest - Midcap Picks Oct 2014

NSE Symbol RCMP (Rs.)

TP (Rs.)

US (%)

CCL B 113 150 33ENGINERSIN B 232 307 32EXCELCROP B 1028 1848 80FINPIPE B 318 390 23GATI B 176 244 39GRUH B 185 250 35IFGLREFRAC B 170 260 53KSCL B 822 1250 52RAYMOND B 446 561 26TUBEINVEST B 308 376 22R: Rating, (CMP as on Oct 17, 2014), US: Upside, B: Buy, TP: Target Price (Time Frame: 9-12 Months)

For private circulation only. For important information about Karvy’s rating system and other disclosures refer to the end of this material. Karvy Stock Broking is also available on Bloomberg, KRVY<GO>, Thomson Publishers & Reuters

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Sept 17, 2014IFGL Refractories Ltd

We expect: � Earnings upgrades and in a more conducive environment for the business, corporate earnings are expected to grow over 18% in the next one year

� Investment spending / capex cycle to pick up

� Improved government finances along with a decline in inflation likely to present the case for lower interest rates

� Stable currency and growing income levels especially urban incomes on better job data/hiring prospects

Overall, this will reflect well on cyclicals, manufacturing and export oriented sectors. With the expected growth in corporate earnings, continued inflow of funds from FII’s who pumped in over Rs 1,00,000 cr in the last one year and renewed interest from the domestic investors we expect equities to outperform other asset classes in the next one year and recommend to stay invested in equities.

We believe mid-cap stocks are expected to outperform the broader indices and recommend investing in good quality mid-cap stocks from diverse sectors that are likely to benefit from higher domestic consumption, which is presented in our product Value Invest – Midcap

Value Invest - Midcap (VI) is an investment product of Karvy Stock Broking Ltd formulated by our Equity Research team. It enlists 10 stocks from the Karvy Mid-cap stock list.

� The objective of ‘Value Invest’ is to deliver superior returns over an extended time frame. The investment philosophy works on simple but superior fundamental research.

� The 10 mid cap companies in this product in our opinion reflect superior businesses with consistent future cash flows, run competently and have potential for exponential stock price growth.

� We also track short-term price distortions that have long-term value, driven by sound economic fundamentals of the company. This reflects stocks that have margin of safety so that it will converge to its intrinsic value over a period of time and will reflect superior returns.

� This is also a part of managing the overall risk, the objective is to attain higher risk adjusted returns and deliver consistent out performance.

� The stock’s performance will be assessed on an ongoing basis and the composition of the stocks in the product will be altered based on target achievement, changes in the fundamentals of the stocks, industry position, market performance and broad macro-economic factors.

� The product is being given to the clients in the form of non-binding investment recommendations so that they can decide to capitalize on the robust fundamentals and future plans of the company, which is being discussed in detail in the report.

Our top ten picks in the Value Invest – Midcap (for a time frame of 9-12 months) are CCL Products, Engineers India, Excel Crop Care, Finolex Industries, GATI, Gruh Finance, IFGL Refractories, Kaveri Seed, Raymond and Tube Investments.

Risk to our call: In our view the predominant risk is valuations, unwinding of global markets and paper supply. Any moderation in global economic growth on the back of slowdown in Germany, the heart of Euro zone, that reflects concerns for the recovery of the Euro zone and its impact on EMs given their trade and financial exposure to the region. Geopolitical crisis in Ukraine, the MENA region as well as escalating tensions at the international borders for India.

Value Invest - Oct 2014

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Exhibit 4: SummerySymbol Key Growth Drivers Risks to Our Call Investment ArgumentCCL Higher capacity utilization in Vietnam and export potential to SEA

Countries. Increasing market share in domestic instant coffeeVolatility in prices of Coffee Beans Sustenance in top line growth & operating margins due to cost

saving in logistics, tax benefit in Vietnam ENGINERSIN Expansion of international business and resurgence in domestic order

intake to drive growthDelay in capex plans of PSUs will adversely affect domestic order book which could hit the revenue and margins.

Overall revival in Industrial capex cycle. Focus on high margin consultancy & engineering segment as against low margin turnkey business augurs well in the long term. Overseas expansion to drive growth & insulate domestic capex volatility

EXCELCROP Switching of production from Endosulfan to other Crop protection technicals is complete and is expected to improve margins and return ratios

Erratic monsoons in FY16 PE Multiples are expected to tag higher RoE’s going forward. The present PE multiple of 13.1 to FY16E EPS looks attractive

FINPIPE Shift in business focus towards Pipes & Fittings segment along with backward integration could act as a platform for accelerated future growth

PVC/EDC Spread volatility Incremental capacity in Pipes and Fitting business, healthy cash flow from operations and subsequent reduction in debt to sustain the improvement in ROE and ROCE

GATI Multi-fold growth in E-commerce logistics, steady growth in KWE and value unlocking for Gati Kausar post Snowman listing

Delay in the setup of cold chain warehouses and e-fulfillment centers and any regulatory changes that could affect E-commerce business growth

The expected buoyancy in Gati KWE; growth possibilities in E-commerce logistics and value unlocking in Gati Kausar in the medium term to boost top-line growth and help in the margin improvement

GRUH Significant loan growth in high-yielding individual home loan segment. Superior asset quality. Strong parentage support from HDFC

Slowdown in realty sector, weak rural demand and rising urban migration

Robust loan book growth, scope for geographic expansion and Govt’s policy push on affordable housing to aid earnings growth

IFGLREFRAC Doubling of capacity in the shaped refractory segment at Gujarat and Ohio plants. Gujarat plant to capitalize on European demand and freed-up capacity at Orissa plant could cater to domestic steel sector demand

Alumina, zirconium and resins price rise could adversely affect profitability

Growth in high margin shaped refractory volume along with lower distribution expenses and fiscal benefits to improve RoE to 21.4% by FY16E. We expect re-rating in the P/E multiple as the stock is currently trading at 6.6xFY16E EPS which is 22.2% discount to 13x FY16E industry average P/E

KSCL Strong pipeline of cotton and rice hybrids to clock the volume growth of 10% and 30% respectively on a YoY basis for the next 2 years (FY15E & 16E). Expected revival in Maize seed volumes in FY16E

Lower than expected penetration in Maharashtra in the next 2 years

We expect the re-rating of Kaveri Seeds to continue in a staggered manner. This is to factor in any less than desired growth in top seed segments of Cotton, Rice and Maize, in that order.

RAYMOND Garment Capex; foray into E-commerce & strong distribution network Volatility in raw material prices Expansion in the garment/apparel segment by 10% to boost top-line growth; Foray into E-commerce to help capture demand and expected improvement in RoE

TUBEINVEST Diversified business model, strong standalone performance from bicycles and engineering division. Expected robust growth from financing and insurance business

Slow down in the auto industry Large diameter tube capacity to come on stream in engineering. Financing and insurance business to contribute for growth and higher return ratios

Source: Karvy Research

Value Invest - Oct 2014

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Sept 17, 2014IFGL Refractories Ltd

Exhibit 5: Valuation Summary of Value Invest - Midcap Picks

Symbol SectorCMP (Rs.)

Mcap (Rs.mn)

6M ADV# (Rs.mn)

FY16E P/E (x)

FY16E P/BV (x)

FY16E EPS (Rs.)

CCL FMCG 113 15032 65 13.0 3.1 8.7ENGINERSIN Infrastructure 232 78169 166 13.5 13.5 17.2EXCELCROP Agri-inputs 1028 11314 12 12.2 2.6 84.4FINPIPE Consumer Goods 318 39462 34 13.7 3.7 23.2GATI Logistics 176 15358 140 21.8 1.7 8.1GRUH NBFC 185 67166 53 13.9 3.7* 13.3IFGLREFRAC Capital Goods 170 5884 8 6.6 1.3 25.7KSCL Agri-inputs 822 56633 160 16.4 6.5 50.1RAYMOND Textiles 446 27376 116 9.2 1.5 48.6TUBEINVEST^ Diversified 308 57597 35 28.6 4.0 10.8

Source: Company, Karvy Research, Bloomberg; # ADV: Average Daily Turnover; * Based on Adjusted Book Value; ^: Standalone figures

Exhibit 6: Comparative Valuation of Value Invest - Midcap Picks

SymbolCMP (Rs.)

Mcap (Rs. mn)

PE (x) EV/EBIDTA (x) EPS CAGR (%) FY14-16EFY14 FY15E FY16E FY14 FY15E FY16E

CCL 113 15032 10.5 16.8 13.0 1.9 3.6 3.1 33.3ENGINERSIN 232 78169 15.7 15.6 13.5 15.0 14.3 10.8 9.6EXCELCROP 1028 11314 8.2 13.5 12.2 5.5 8.8 7.7 18.6FINPIPE 318 39462 13.9 17.5 13.7 8.1 9.9 8.1 30.1GATI 176 15358 22.6 31.0 21.8 9.6 13.6 10.8 50.1GRUH 185 67166 15.0 16.3 13.9 NA NA NA 16.4IFGLREFRAC 170 5884 3.4 8.1 6.6 2.3 4.8 3.6 18.6KSCL 822 56633 21.0 20.1 16.4 19.8 19.4 16.7 28.4RAYMOND 446 27376 13.0 12.8 9.2 6.8 6.7 5.6 44.4TUBEINVEST^ 308 57597 35.9 41.6 28.6 14.2 18.6 14.5 46.4Source: Company, Karvy Research, Bloomberg; NA: Not Applicable; ^: Standalone figures

Exhibit 7: Price Performance of Value Invest - Midcap Picks

SymbolCMP (Rs.)

Mcap (Rs. Mn)

Absolute Performance (%) Relative Performance (%)1M 3M 6M 12M YTD 1M 3M 6M 12M YTD

CCL 113 15032 -0.3 55.8 107.1 312.6 170.1 1.7 52.6 79.5 222.6 119.0ENGINERSIN 232 78169 -1.5 -23.6 0.3 36.5 39.8 0.5 -25.2 -13.1 6.8 13.4EXCELCROP 1028 11314 -3.3 37.3 101.7 324.7 136.5 -1.4 34.4 74.9 232.1 91.7FINPIPE 318 39462 0.6 11.6 50.4 182.1 89.6 2.6 9.3 30.3 120.6 53.7GATI 176 15358 3.1 65.3 105.4 613.4 278.2 5.2 61.8 78.1 457.8 206.6GRUH 185 67166 -5.9 -15.3 12.1 73.3 45.1 -4.0 -17.1 -2.8 35.5 17.7IFGLREFRAC 170 5884 -9.3 6.2 132.3 397.2 176.1 -7.5 4.0 101.3 288.8 123.8KSCL 822 56633 -9.4 7.6 32.5 174.7 123.0 -7.6 5.3 14.8 114.8 80.8RAYMOND 446 27376 -3.7 3.4 34.7 79.9 58.1 -1.8 1.2 16.8 40.6 28.2TUBEINVEST 308 57597 -4.0 8.0 60.8 108.5 95.9 -2.1 5.7 39.4 63.0 58.8Source: Company, Karvy Research, Bloomberg

Value Invest - Oct 2014

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Sept 17, 2014IFGL Refractories LtdFMCG

CCL Products (India) Ltd India Research – Stock Broking

Bloomberg Code: CCLP IN BUY

Valuation Summary (Rs. Mn)YE Mar FY12 FY13 FY14 FY15E FY16ENet Sales 5022 6507 7168 9069 11792EBIDTA 871 1213 1431 1767 2183EBIDTA Margin (%) 17.3 18.6 20.0 20.0 19.0Adj. Net Profit 362 474 644 894 1160

EPS (Rs.) 2.7* 3.6* 4.8 6.7 8.7RoE (%) 15.1 18.3 20.4 23.4 25.6PE (x) 5.0 7.2 10.5 16.8 13.0 Source: Company, Karvy Research, *EPS adjusted based on current number of Shares

Higher Revenue growth & Robust Margin � Increase in capacity utilization and domestic market share: We expect CCL

to deliver Sales CAGR of 28% in FY14-16E as against 19% during FY12-14 and PAT CAGR at 33% during FY14-16E on increased sales growth in Vietnam business. This is on account of increase in capacity utilization at its 10000 MT Vietnam plant from 10% in FY14 to around 50-55% in FY15E to cater the demand needs of South East Asian countries in the coming years along with the company’s focus to increase the domestic retail market share during FY15-FY16E.

� Expansion in other international markets: As part of the global market expansion drive, CCL plans to set up a facility in Africa in near future to penetrate in the African markets along with improving the global market share.

� Higher Cash Flows and Stable Working Capital: On the back of the expected robust revenue growth in the coming years, company’s operating cash flows and free cash flows to increase significantly on account of higher margins and stable working capital.

� Global business model protected from forex & price volatility: CCL with its protective business model could be least affected either due to the volatility in coffee bean prices which constitutes for more than 60% of the cost component or due to forex volatility.

ValuationAt CMP of Rs.113, CCL Products trades at 13xFY16E earnings. Based on the cross cycle valuation for the past 3 years the stock has traded at an average PE of 8x. Given the expectations over robust profit growth in the next two years, valuations appear to be reasonable and we assign a ‘BUY’ rating for a price target of Rs.150 which represents 17xFY16E.

Key Risks 1. Additional capacities in several countries resulting in unhealthy competition

and stress on prices.

2. Increase in raw material costs (Being 60% of total costs).

3. Change in tax structure.

Recommendation (Rs.)

CMP 113

Target Price 150Upside (%) 33

Stock InformationMkt Cap Rs.mn/US$ 15032 / 244

52-wk H/L 131 / 263M Avg. Daily Volume (mn) 0.9

Beta (x) 0.8Sensex/Nifty 26108 / 7780O/S Shares (mn) 133.0

Shareholding Pattern (%)

Promoter 44.5FII’s 0.0DII’s 9.2Others 46.3

Stock Performance (%)

1M 3M 6M 12M

Absolute -0.3 56 107 313

Relative to Sensex 1.7 53 79 223

Performance

Source: Bloomberg

Company BackgroundCCL Products India Ltd (CCL) is one of the largest processor and exporter of soluble Instant Spray Dried Coffee Powder, Spray Dried Agglomerated/Granulated Coffee, Freeze Dried Coffee, as well as Freeze Concentrated Liquid Coffee. CCL uses global technology in processing low grade green coffee beans to produce high quality instant coffee at Guntur (A.P., India), Vietnam and Switzerland. European and ASEAN demand is catered by its wholly owned subsidiaries Grandsaugreen, Switzerland and Ngon Coffee, Vietnam. CCL brands include Continental Speciale, Continental Premium & Continental Supreme.

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Value Invest - Oct 2014

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Sept 17, 2014IFGL Refractories LtdInfrastructure

Engineers India Ltd India Research – Stock Broking

Bloomberg Code: ENGR IN BUY

Valuation Summary (Rs. Mn)YE Mar FY12 FY13 FY14 FY15E FY16ENet Operating Sales 37234 25290 18465 19357 21516EBIDTA 7165 5973 3859 4030 4931EBIDTA Margin (%) 19.2 23.6 20.9 20.8 22.9Adj. Net Profit 6439 6322 4827 5003 5806

EPS (Rs.) 19.1 18.8 14.3 14.8 17.2RoE (%) 33.9 27.5 19.1 18.2 19.1PE (x) 11.5 8.2 15.7 15.6 13.5Source: Company, Karvy Research

Expansion of International Business and Resurgence in Domestic Order Intake to Drive GrowthWe expect EBITDA and Net Profit to increase at a CAGR of 13% & 9.6% respectively over FY14-16E. EIL’s performance could spurt with the clearance of HPCL’s Rajasthan refinery project.

� Robust Balance Sheet with Zero Debt: EIL is a debt-free company with net worth of Rs.25217mn at the end of FY14. EIL has huge cash balance representing 23% of its total market capitalization and we expect it to increase to 30% of market capitalization by FY16E which could boost other income.

� Expansion in International Business: EIL’s increased focus on international business could revive order book and act as a catalyst to maintain healthy top line.

� Foray into New Segments: EIL is entering into metals & mining, power, infrastructure sectors which are likely to witness higher capex in the medium to long term.

� High growth visibility on the back of Next Level Emission Norms: To control the pollution in the country, GOI has plans to introduce high grade burning fuels (BS-V). EIL’s order book is likely to surge on up gradation and modernization of PSU refineries for producing higher grade fuel.

� PSU Refining Capacity to Grow by 9% in 12th Five Year Plan: During 12th

Five Year Plan, PSU refining capacity is expected to grow at a CAGR of 9%. EIL being a PSU company is likely to strengthen its order book in PMC business.

ValuationWe expect revival in industrial capex cycle and in particular, order flow from Oil & Gas, Metals & Mining, Power and Infrastructure. EIL’s effort to focus on consultancy & engineering segment which has 35% EBIT margins as against low margin turnkey business with an EBIT margin of 6% augurs well in the long term. At CMP Rs.232, the stock is trading at 13.5x FY16E EPS. We recommend a ‘BUY’ for a price target of Rs. 307, implying an upside of 32% from current levels

Key Risks 1. Delay in capex plans of PSUs can adversely affect domestic order book which

could hit the revenue and margins.2. Subdued order flow might hit the margins adversely.

Recommendation (Rs.)

CMP 232

Target Price 307Upside (%) 32

Stock InformationMkt Cap Rs.mn/US$ 78169 / 1269

52-wk H/L 332/1423M Avg. Daily Volume (mn) 0.5

Beta (x) 1.3Sensex/Nifty 26108 / 7780O/S Shares (mn) 336.9

Shareholding Pattern (%)

Promoter 69.4FII’s 9.0DII’s 11.7Others 9.9

Stock Performance (%)

1M 3M 6M 12M

Absolute -1.5 -24 0.3 37

Relative to Sensex 0.5 -25 -13 7

Performance

Source: Bloomberg

Company BackgroundEngineers India Limited, a PSU Navratna is a provider of engineering consultancy including design, engineering, procurement, construction and integrated project management services. It also provides specialist services such as environmental engineering, heat and mass transfer equipment design, specialist materials and maintenance and plant operations and safety services. In addition, the company undertakes consultancy & engineering contracts like Front End Engineering Design (FEED), Procurement and Construction Management (EPCM), Project Management Consultant (PMC) and Turnkey projects (lump-sum turnkey (LSTK).

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Value Invest - Oct 2014

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Sept 17, 2014IFGL Refractories LtdAgri-inputs

Excel Crop Care Ltd India Research – Stock Broking

Bloomberg Code: EXCC IN BUY

Valuation Summary (Rs. Mn)YE Mar FY12 FY13 FY14 FY15E FY16ENet Sales 6950 7791 9841 11665 13415EBIDTA 499 510 1010 1283 1476EBIDTA Margin (%) 7.2 6.5 10.3 11.0 11.0Adj. Net Profit 145 211 661 836 929

EPS (Rs.) 13.2 19.2 60.0 75.9 84.4RoE (%) 6.5 8.8 24.1 25.0 22.9PE (x) 8.6 8.0 8.2 13.5 12.2Source: Company, Karvy Research,

Significant shift in capacities from Endosulfan to other insecticides & herbicides leading to improvement in margins and return ratios

� Prior to Endosulfan ban, Excel Crop Care (ECC) was deriving close to 20% of its revenue from Endosulfan and its derivatives with highest percentage of capacity locked in them. Excel has now completed the conversion of this capacity to other insecticides like Profenofos, Chlorpyriphos, Imidacloprid etc. and also fungicides like Tebuconazole.

� Excel crop care is the market leader in Profenofos and the only manufacturer of technical grade Tebuconazole (fungicide).

� Improving margins, amid higher capacity utilization and decline in percentage of traded goods in cost of sales. EBITDA margins for the company are expected to sustain around 11% for FY15E and FY16E

� Recovery of insecticides revenue to the pre Endosulfan ban level indicates the fundamental revival in performance and sustainability of the same. This, along with 1 to 3 new product launches every year is expected to help the company sustain its top line growth. Revenue is expected to grow by 18% and 15% in FY15E and FY16E.

� ROE and RoCE are expected to stabilize above 20% in FY15E and FY16E.

ValuationBased on a stronger product mix and higher operating efficiencies, ECC is expected to clock 18% CAGR in EPS from FY14 to FY16E. Post the successful completion of transition of capacities from Endosulfan to other pesticides, the company has been very successfully able to scale back to ROE and ROCE levels of above 20%. These return ratios even going forward are sustainable thus, becoming a candidate for re-rating. At CMP of Rs.1028, Excel crop care is trading at 12.2x FY16E EPS. We expect a re-rating of PE and thus recommend a “BUY” with a target price of Rs.1848.

Key Risks 1. Lower than expected market penetration of new product launches

2. Less than desirable levels of hikes in MSPs of various food crops

Recommendation (Rs.)

CMP 1028

Target Price 1848Upside (%) 80

Stock InformationMkt Cap Rs.mn/US$ 11314 / 184

52-wk H/L 1235 / 2343M Avg. Daily Volume (mn) 0.01

Beta (x) 0.8Sensex/Nifty 26108 / 7780O/S Shares (mn) 11.0

Shareholding Pattern (%)

Promoter 24.72FII’s 0.01DII’s 10.18Others 65.09

Stock Performance (%)

1M 3M 6M 12M

Absolute -3.3 37 102 325

Relative to Sensex -1.4 34 75 232

Performance

Source: Bloomberg

Company BackgroundExcel Crop Care is into manufacturing of Crop Protection Chemicals and growth enhancers. Its manufacturing facilities are located at Bhavnagar and Gajod, Gujarat (manufactures both technicals and formulations at this location) and Silvasa (manufactures only formulations). It has five wholly owned subsidiaries namely; Excel Crop Care (Australia) Pty Ltd; Excel Crop Care (Europe) N.V., ECCL Investments & Finance, Excel Crop Care (Africa) and Excel Brasil Agronegocious.

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Value Invest - Oct 2014

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Sept 17, 2014IFGL Refractories LtdConsumer Goods

Finolex Industries LtdIndia Research – Stock Broking

Bloomberg Code: FNXP IN BUY

Valuation Summary (Rs. Mn)YE Mar FY12 FY13 FY14 FY15E FY16ENet Sales 21302 21782 24967 28423 32641EBIDTA 2472 2960 3705 4531 5367EBIDTA Margin (%) 11.6 13.6 14.8 15.9 16.4Adj. Net Profit 752 1361 1701 2259 2880

EPS (Rs.) 6.1 11.0 13.7 18.2 23.2RoE (%) 11.7 19.7 22.5 26.7 29.4PE (x) 8.3 8.7 13.9 17.5 13.7Source: Company, Karvy Research,

Shift in Business focus & backward integration – platform for accelerated future growth

� Finolex Industries’ (FIL) EPS grew at a CAGR of 6.4% during FY10-14. We expect the company to deliver EPS CAGR of 13.8% over FY10-16E; on the back of better product mix.

� Finolex Industries has been generating healthy cash flow from operations and we expect the same to improve further, which can be used for repayment of debt as CAPEX going forward is expected to be lower.

� FIL has a strong market presence especially in western and southern India. As of now there are 500 dealers and 15,000 retail touch points. FIL is planning to cut the inventory days from 12 to 2 days reducing inventory cost for dealers. We expect the company to benefit from rising demand backed by its fully integrated in-house manufacturing facilities.

Shift in Business focus – FIL has moved its focus from Resin Segment to pipes and Fittings segment. Increase in the production capacity of EDC is likely to yield higher EBIDTA margins of 16.44% in FY16E.

Robust Volume – FIL volume grew at a CAGR of 8.3% during FY12-14 and with the capacity expansion in the pipes and fittings segment from current 230000 MT to 290000 MT by FY16, we expect the volume to grow by 13.4% CAGR over FY14-16E.

Backward integration – FIL is the market leader in PVC pipes & fittings segment due to its backward integration model. FIL manufactures resin which is used for production of pipes & fittings. FIL has a 43MW power plant , 2 water reservoirs and 2 jetties for smooth operations.

ValuationWe have used SOTP based valuation for FIL, valuing its core business at 13x FY16E EPS arriving at Rs.302 per share, investment in Finolex Cables & land holdings at Rs.88 per share. We arrive at a target price of Rs.390 per share having an upside potential of 23%.

Key Risks 1. PVC/EDC spread volatility2. Volatility in forex and raw material prices

Recommendation (Rs.)

CMP 318

Target Price 390Upside (%) 23

Stock InformationMkt Cap Rs.mn/US$ 39462 / 640

52-wk H/L 344 / 1123M Avg. Daily Volume (mn) 0.1

Beta (x) 0.8Sensex/Nifty 26108 / 7780O/S Shares (mn) 124.1

Shareholding Pattern (%)

Promoter 52.5FII’s 5.1DII’s 3.0Others 39.4

Stock Performance (%)

1M 3M 6M 12M

Absolute 0.6 12 50 182

Relative to Sensex 2.6 9 30 121

Performance

Source: Bloomberg

Company BackgroundFinolex industries is the largest manufacturer of rigid PVC Pipes and Fittings. Company has three manufacturing plants at Pune, Ratnagiri and Masar. As of now the total production capacity of the PVC pipes & Fittings business is 2,30,000 MT and total production capacity for PVC Resin Stood at 2,72,000 MT. Major Raw Materials used in the production of PVC Resins are being imported and company has a captive jetty used to import Raw Material, another captive jetty is used for importing Coal for the Power Plant.

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Sept 17, 2014IFGL Refractories LtdLogistics

GATI Ltd India Research – Stock Broking

Bloomberg Code:GTIC IN BUY

Valuation Summary (Rs. Mn)YE Mar FY13* FY14# FY15E FY16ENet Sales 12729 14888 17894 21588EBIDTA 822 1122 1440 1836EBIDTA Margin (%) 6.5 7.5 8.0 8.5Adj. Net Profit 96 312 496 705

EPS (Rs.) 1.1 3.6 5.7 8.1RoE (%) 1.6 4.0 6.2 8.3PE (x) 23.4 22.6 31.0 21.8Source: Company, Karvy Research, *Y/E June for FY13 & #FY14 Figures are annualized

Gati on a fast-lane: Multifold growth in E-Commerce logistics, steady growth in KWE and value unlocking for Kausar post Snowman listingGati has remarkable growth in profitability across the verticals. Consolidated revenues and EPS (Adj.) are expected to grow at a CAGR of 20% and 50.1% in the next two years.

� Stable growth from Gati KWE: We expect Gati KWE, an Express distribution & Supply chain business that accounts for 70% of Gati’s revenue to maintain a growth rate of 16-20% and EBITDA margins of 11-12% in the next two years.

� Multifold growth from E-Commerce Logistics: Gati’s E-Com. logistics division is expected to record multifold growth in the coming years, with its plans to setup e-fulfillment centers and to increase the delivery capabilities, it is well positioned to maintain the growth rate of over 100% in the next 2-3 yrs.

� Strong express distribution network: Gati has a large express distribution network with a fleet of 4500 trucks, 200+ reefer trucks and 2.6mn sft. of warehouse. It has presence in 667 of 671 districts. Company’s flexible model provides scope for scalability based on the demand.

� Value unlocking in Gati Kausar: The cold chain logistics division is planning to induct a strategic partner by selling a minority stake amid plans to build 10 cold chain warehouses and expand the reefer fleet. With the expected ramp-up in the business and EBITDA margin expansion to 23% in the next 3 years, it is likely to get rich valuations tracking the listed peer Snowman.

� Focus on high growth businesses: Gati’s decision to bring down its stake in the loss making unit Gati ship to 48% enables it to utilize the resources to develop the high growth businesses.

ValuationWe have a “BUY” recommendation on Gati with a target price of Rs.244 per share based on SOTP valuation. Gati’s standalone business is valued at Rs.58 per share. While Gati Kausar is valued at Rs.41 per share and Gati KWE is valued at Rs.145 per share. We expect the core business to pick up on E-commerce initiatives where we are seeing high growth trajectory.

Key Risks 1. Less than expected economic recovery to affect GATI KWE margins.2. Any regulatory changes that could affect E-Commerce business growth.3. Delay in the setup of cold chain warehouses and e-fulfillment centers.

Recommendation (Rs.)

CMP 176

Target Price 244Upside (%) 39

Stock InformationMkt Cap Rs.mn/US$ 15358 / 249

52-wk H/L 206 / 243M Avg. Daily Volume (mn) 0.6

Beta (x) 0.8Sensex/Nifty 26108 / 7780O/S Shares (mn) 87.3

Shareholding Pattern (%)

Promoter 34.9FII’s 6.5DII’s 0.3Others 58.3

Stock Performance (%)

1M 3M 6M 12M

Absolute 3.1 65 105 613

Relative to Sensex 5.2 62 78 458

Performance

Source: Bloomberg

Company BackgroundGati is among the leading logistics service providers in India. It offers customized supply chain solutions, integrated express distribution, cold chain solutions and E-Commerce logistics services to companies across various verticals. Through its strong network and infrastructure, it delivers around 50 lakh commercial parcels by air, road, sea and rail every month. It covers 667 of 671 districts and has largest express network across India. It has a fleet strength of 4500, over 200 reefer trucks, 2.6mn sft of warehouse capacity and 600+ offices including 16 distribution hubs.

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Sept 17, 2014IFGL Refractories LtdNBFC

Gruh Finance Ltd India Research – Stock Broking

Bloomberg Code: GRHF IN BUY

Valuation Summary (Rs. Mn)YE Mar FY12 FY13 FY14 FY15E FY16ENet Interest Income 1790 2180 2710 3306 4034Operating Profit 1590 1980 2460 2955 3601PAT 1200 1460 1770 2044 2396EPS 6.8 8.2 9.8 11.3 13.3ABV/Share 21.9 27.4 33.7 40 49.9

P/ABVPS (x) 2.9 3.8 4.4 4.6 3.7P/E (x) 9.4 12.9 15.0 16.3 13.9Source: Company, Karvy Research

Robust growth in loan book, superior asset quality and scope for geographic expansionDespite high interest rates and weak demand in realty sector, the loan portfolio growth in the high-yielding individual home loan segment has been robust driven by small-ticket size and low default rates in rural and semi-urban areas. We expect the loan book and earnings to grow at a CAGR of 26% and 16% respectively during FY14-16E.

� Robust growth in loan book; expected to grow at a CAGR of 26%: We expect Gruh’s loan portfolio to clock a CAGR of 26% during FY14-16E driven by its strong focus on high-yielding ‘small ticket’ home loans with low default rates in rural and semi-urban areas with significant concentration in western India. The company’s loan book grew at a robust five-year CAGR of 27% for the period FY09-FY14.

� Superior asset quality reflected in lowest NPA’s: Gruh Finance has consistently maintained superior asset quality which is well reflected in its modest gross NPA levels which stood at 0.38% of the loan assets during Q2 FY15. The company’s net NPA levels continue to be nil. We expect the company to maintain healthy asset quality in the medium term mainly due to its strong risk management systems and efficient recovery mechanisms.

� Scope for geographic expansion: With strong parent support in HDFC, we believe the company has a significant opportunity in geographic expansion outside western India supported by housing shortage in rural and urban areas, low mortgage penetration in India and Govt’s policy push on affordable housing to economically weaker sections and low-income groups which happens to be the company’s target market

ValuationAt CMP of Rs.185, Gruh Finance trades at 3.7xFY16E ABVPS which appears to be attractive given the expectations over higher growth in disbursements in the next two years. We initiate coverage on Gruh Finance with “BUY” recommendation and a target price of Rs.250 per share, which represents an upside potential of 35%.

Key Risks 1. Significant slowdown in realty sector2. Weak rural demand; rising urban migration3. Geographic concentration in western India

Recommendation (Rs.)

CMP 185

Target Price 250Upside (%) 35

Stock InformationMkt Cap Rs.mn/US$ 67166 / 1090

52-wk H/L 230 /1073M Avg. Daily Volume (mn) 0.3

Beta (x) 0.7Sensex/Nifty 26108 / 7780O/S Shares (mn) 363.1

Shareholding Pattern (%)

Promoter 58.7FII’s 15.0DII’s 1.8Others 24.5

Stock Performance (%)

1M 3M 6M 12M

Absolute -5.9 -15 12 73

Relative to Sensex -4.0 -17 -3 35

Performance

Source: Bloomberg

Company Background

Gruh Finance Limited set up in 1986, is a subsidiary of HDFC which is into the business of providing housing loans to the individuals in rural and semi-urban areas. The company also offers loans to professionals for purchase of office premises and developer loans. Gruh operates through 148 retail offices spread across seven states in India with significant concentration in Western India especially in the states of Gujarat and Maharashtra. The company’s target market segment comprises individuals in economically weaker sections (EWS) and low-income group (LIG).

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Sept 17, 2014IFGL Refractories LtdCapital Goods - Refractories

IFGL Refractories LtdIndia Research – Stock Broking

Bloomberg Code: IFGL IN BUY

Valuation Summary (Rs. Mn)YE Mar FY12 FY13 FY14 FY15E FY16ENet Sales 6046 6719 7784 8687 10179EBIDTA 792 671 1213 1273 1485EBIDTA Margin (%) 13.1 10 15.6 14.7 14.6Adj. Net Profit 382 244 655 725 889

EPS (Rs.) 11.3 7.9 18.3 20.9 25.7RoE (%) 14.9 14.3 18.4 20.6 21.4P/E (x) 3.4 4.0 3.4 8.1 6.6Source: Company, Karvy Research

Higher Profitability & Strong Return Ratios � Doubling of capacity at Kandla - Gujarat and Ohio - USA, New capacities to

commence production by FY15-16E taking the total capacity to 6.65 lakh pieces in shaped refractory segment. Kandla plant to serve the European markets freeing up capacity at Odisha plant to capitalize on growth in domestic steel industry.

� We expect Sales, EBIDTA and PAT to grow at a CAGR of 14.4%, 10.6% and 16.5% to reach to Rs.10,179mn, Rs.1,485mn and Rs.889mn respectively by FY16E. EBDITA and PAT margins to reach to over 14.6% and 8.7% by FY16E due to lower distribution expenses and fiscal benefits.

� We expect EPS to grow at a CAGR of 18.6% during FY14-16E to reach to Rs.25.7 and RoE and RoCE to reach 21.4% and 26% respectively by FY16E.

� Operating cash flows and free cash flows to reach Rs.1,016mn and Rs.816mn respectively while yield on free cash flows to improve to 12% by FY16E. Cash on book and lower debt levels to support inorganic growth to access newer markets and technologies.

ValuationAt CMP of Rs.170, IFGL trades at 6.6x FY16E earnings per share, which appears to be attractive given the expectations over higher profitability and strong return ratios in the next two years. The capacity expansion program at Kandla and Ohio are for continuous casting products which could yield higher profits and large cash flows. We recommend a ‘BUY’ for a target price of Rs.260, implying 10.2x FY16E EPS which is 22.2% discount to13x FY16E Industry average P/E.

Key Risks 1. Fortunes of refractory industry depend on the steel industry and slowdown in

the steel sector will directly affect refractory industry

2. Global alumina, zirconium and resins price rise could adversely affect profitability of the company

3. Volatility in currency market will adversely affect the company

4. Competition from cheaper Chinese supplies

Recommendation (Rs.)

CMP 170

Target Price 260Upside (%) 53

Stock InformationMkt Cap Rs.mn/US$ 5884 / 95

52-wk H/L 220 / 333M Avg. Daily Volume (mn) 0.05

Beta (x) 1.0Sensex/Nifty 26108 /7780O/S Shares (mn) 34.6

Shareholding Pattern (%)

Promoter 71.3FII’s 1.2DII’s 1.2Others 26.3

Stock Performance (%)

1M 3M 6M 12M

Absolute -9.3 6 132 397

Relative to Sensex -7.5 4 101 289

Performance

Source: Bloomberg

Company BackgroundIFGL Refractories Ltd. (IFGL) is a manufacturer of specialised refractories and operating systems for the steel industry. Product portfolio includes high margin continuous casting of steel and integrated solutions in the flow control systems. On a consolidated basis, India sales accounts for close to 20% and International Sales account for 80% during FY14. IFGL has acquired several companies over the decade including Monocon group, U.K in 2005, Hofmann Group-Germany in 2008, El Ceramics-USA in 2010. Globally, IFGL has eight manufacturing facilities and nurtured long standing relationship with large integrated steel producers like Arcelor Mittal, SAIL, TATA group, Jindal group.

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Sept 17, 2014IFGL Refractories LtdAgri-inputs

Kaveri Seed Co. Ltd India Research – Stock Broking

Bloomberg Code: KSCL IN BUY

Valuation Summary (Rs. Mn)YE Mar FY12 FY13 FY14 FY15E FY16ENet Sales 3724 7120 10111 11797 13381EBIDTA 769 1392 2212 2890 3344EBIDTA Margin (%) 21 20 22 24 25Adj. Net Profit 580 1280 2091 2823 3495

EPS (Rs.) 8.5 18.7 30.4 40.8 50.1RoE (%) 26.9 43.7 48.6 44.8 39.4PE (x) 13.3 12.7 21.0 20.1 16.4Source: Company, Karvy Research

Strong Hybrids pipeline and penetration into newer geographies to help top-line growth

� Strong pipeline of hybrids in Cotton provides KSCL with the opportunity to penetrate deeper into Maharashtra market. The present market share in Maharashtra stands at around 9%. Kaveri has a window of 2 to 3 years to penetrate deeper through newer hybrids.

� Cotton seeds sales are expected to grow by 10% in volume terms in FY 16 & 17E from the present levels of 8.5 million packets.

� Kaveri has a strong pipeline of hybrids in Paddy which is at least a Rs.20,000 cr. potential market with even a conversion of 25% of acreage to hybrids. Kaveri is expected to grow its revenues by 30% YoY for the next few years in this segment.

� Maize seed volumes are expected to remain stagnant in FY15 but likely to pick up significantly in FY16E. Any breakthrough in terms of hybrid seeds which is more suitable for Northern markets will help the company to increase the sales at a faster pace.

ValuationKaveri Seed has been gaining the market share for the last three years. This is expected to continue in the coming year. Continued traction in Rice/Paddy seeds and expected growth revival in Maize seeds in FY16 are all expected to help the company clock growth in the region of 13% to 16% in FY15E and FY16E. These business characteristics along with a strong balance sheet and return ratios make it an attractive stock to own. We recommend a “BUY” on KSCL with a target price of Rs.1250.

Key Risks 1. Lower than expected penetration in Maharashtra in the next two years

2. Lower than expected Rabi acreage and thus yield

3. Lower than expected revival in monsoons in FY16E

4. Weak price environment for Agri-output, especially Cotton, Rice and Maize

Recommendation (Rs.)

CMP 822

Target Price 1250Upside (%) 52

Stock InformationMkt Cap Rs.mn/US$ 56633 / 919

52-wk H/L 1025 / 2943M Avg. Daily Volume (mn) 0.2

Beta (x) 0.6Sensex/Nifty 26108 / 7780O/S Shares (mn) 68.9

Shareholding Pattern (%)

Promoter 62.3FII’s 12.1DII’s 9.8Others 15.8

Stock Performance (%)

1M 3M 6M 12M

Absolute -9.4 8 32 175

Relative to Sensex -7.6 5 15 115

Performance

Source: Bloomberg

Company BackgroundKSCL is engaged in the production & distribution of high quality hybrid seeds of field and vegetable crops and also micro nutrients and bio-products. Over the years, the company has created a portfolio of products encompassing commercial crops – cotton and sunflower; food crops – corn, rice, bajra and jowar and vegetables – tomato, okra and chilly. KSCL’s premier cotton hybrids – Jadoo, Jackpot, ATM and Singha are its well known brands. Out of these, Jadoo and ATM are its top two selling brands. KSCL has four subsidiaries namely: Aditya Agritech, Genome Agritech, Kexveg India Pvt. Ltd. & Kaveri Micortek.

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Sept 17, 2014IFGL Refractories LtdTextiles

Raymond LtdIndia Research – Stock Broking

Bloomberg Code: RW IN BUY

Valuation Summary (Rs. Mn)YE Mar FY12 FY13 FY14 FY15E FY16ESales 36,424 40,692 45,480 52,142 61,701EBITDA 4,536 3,714 4,800 6,309 7,589EBIDTA Margin (%) 12.5 9.1 10.6 12.1 12.3Adj Net Profit 1,558 577 1,430 2,142 2,981

EPS 25.4 9.4 23.3 34.9 48.6ROE (%) 12.0 4.2 9.8 13.3 16.3P/E (x) 16.7 30.4 13.0 12.8 9.2Source: Company, Karvy Research

Capacity Expansion to Drive GrowthRaymond is a market leader in worsted fabric which has a diverse and premium product portfolio in worsted suiting segment. It enjoys ~60% market share in this segment that contributes nearly half to the company’s total revenues. Going forward, we expect the sales to grow at a CAGR of 16% during FY14-16E on the back of improved realizations and better operational efficiency.

� Robust growth in Garments/Apparel: The garmenting segment grew at 33% during FY14 due to strong exports and higher realizations. It is currently running at near full capacity and the management plans to increase the current capacity by 10% from 5.37 lakh meters to 5.91 lakh meters which is set to be completed by Q3FY15(Dec-14). The capex incurred for the same is around Rs.120mn-140mn. With the recent supply chain restructuring and capacity expansion to cater to the top-line, we believe the garment segment to grow at a CAGR of 28% during FY14-16E due to improved export and domestic markets and also with increased investments in brand building activities.

� Foray into E-commerce: Raymond has recently launched its online store “RaymondNext.com” where various brands like Park Avenue, Parx, Colorplus & Raymond are to be sold online under one common platform. According to industry estimates, the E-commerce market is set to reach ~$32bn by 2020 and this could help Raymond capture the growing demand.

� Extensive Distribution Reach to Drive Growth: Raymond has a strong distribution network, comprising of 954 retail stores spanning a retail space of 1.8 mn sq ft and over 30,000 retailers across India. It plans to add over 100 stores per year to ensure higher penetration across Tier-IV and Tier-V towns in order to leverage the growing potential in branded retail segment.

ValuationRaymond’s revenue and earnings grew by 12% & 148%, respectively in FY14. We expect the revenue and net income to grow at a CAGR of 16% and 43%, respectively in FY14-16E. At CMP Rs.446, the stock is attractively valued at 6.7x and 5.6x FY15E and FY16E EV/EBITDA respectively. We reiterate a “BUY” recommendation with a target price of Rs.561 per share (valued at 6.5x FY16E EV/EBITDA), with an upside potential of 26%.

Key Risks 1. Volatility in forex and raw material prices

Recommendation (Rs.)

CMP 446

Target Price 561Upside (%) 26

Stock InformationMkt Cap Rs.mn/US$ 27376 / 444

52-wk H/L 505 / 2453M Avg. Daily Volume (mn) 0.2

Beta (x) 1.3Sensex/Nifty 26108 / 7780O/S Shares (mn) 61.4

Shareholding Pattern (%)

Promoter 40.2FII’s 8.9DII’s 13.3Others 37.6

Stock Performance (%)

1M 3M 6M 12M

Absolute -3.7 3 35 80

Relative to Sensex -1.8 1 17 41

Performance

Source: Bloomberg

Company BackgroundRaymond is one of the largest textile and apparel companies in India having 13 plants spread across Maharashtra, WB, Gujarat, MP and Karnataka. It owns brands like “Raymond”, “Color Plus”, “Park Avenue”, “Parx” & “Makers”. It has two business divisions: textiles (Fabric, Apparel & Denim) and Engineering (Files, Tools & Auto Components).The distribution network comprises of 954 retail stores - 767 TRS (Raymond shops) & 187 EBO with a retail space of 1.8mn sq ft.

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Sept 17, 2014IFGL Refractories LtdDiversified

Tube Investments of India LtdIndia Research – Stock Broking

Bloomberg Code: TI IN BUY

Valuation Summary (Rs. Mn)*YE Mar FY12 FY13 FY14 FY15E FY16ENet Sales 34644 33904 33517 38714 45236EBIDTA 3668 2983 3015 3741 4608EBIDTA Margin (%) 10.1 8.4 8.6 9.2 9.7Net Profit 1801 1040 941 1385 2017

EPS (Rs.) 9.7 5.6 5.0 7.4 10.8RoE (%) 17.1 9.1 7.8 10.8 14.5P/E (x) 14.6 29.5 35.9 41.6 28.6Source: Company, Karvy Research; * Standalone figures

Diversified business to drive growth � Notable Player in Auto parts with higher Presence in Financial Services: TIL

is the market leader across segments with 62% market share in precision tubes manufacturing, 76% in car doorframes, 35% in automotive chains and 34% in bicycles market.

� Buoyancy in Auto sector to drive manufacturing business: Company’s manufacturing business comprising of Bicycles, Engineering and Metal Forming divisions is expected to register sales CAGR of over 16% during FY14-FY16E. This is to come on its successful launch of Montra in premium category bicycles and expected new product launches in kids and premium segments. Its large diameter tube capacity addition is expected to be commissioned during FY15 which is likely to contribute for incremental revenue of over Rs.3600mn p.a. for company’s automotive chains, car doorframes and fine blanked components in Engineering & Metal Forming divisions. We expect EBITDA to register CAGR of over 23.6% during FY14-FY16E while maintaining EBITDA margins at over 9.2% in FY15E and 9.7% in FY16E on account of increase in overall capacity utilization levels. PAT is expected to register a CAGR of over 46.4% during FY14-FY16E due to overall improvement in operations and reduction in borrowing cost on account of decrease in fixed long term borrowings.

� Financial services business to aid higher growth: Company’s financial services business comprises of financing and insurance. We expect company’s increasing penetration in tier-II and tier –III cities amid improving industrial and consumer sentiments. Insurance business is likely to register 15% CAGR in its gross written premium during FY14-FY16E to Rs.24534 mn in FY16E and its book value per share to increase from Rs.19.5 in FY14 to Rs.25.3 in FY16E. Financing business is expected to register PAT CAGR of over 15.7% during FY14-FY16E.

ValuationWe value Tube Investments based on SOTP valuation. We have valued its standalone business with an adjusted P/E multiple of 15.7x, its listed subsidiaries with the market capitalization along with the holding company discount of 30% and 1.5x adjusted P/B for its unlisted insurance business to arrive at a target price of Rs.376 per share, which implies an upside potential of 22% from current levels.

Key Risks • Slowdown in the auto sector will have a negative impact on its sales in

Engineering and Metal forming divisions and on its vehicle financing business.

Recommendation (Rs.)

CMP 308

Target Price 376Upside (%) 22

Stock InformationMkt Cap Rs.mn/US$ 57597 / 935

52-wk H/L 357/1443M Avg. Daily Volume (mn) 0.1

Beta (x) 0.9Sensex/Nifty 26108 / 7780O/S Shares (mn) 187.0

Shareholding Pattern (%)

Promoter 48.2FII’s 16.4DII’s 10.1Others 25.3

Stock Performance (%)

1M 3M 6M 12M

Absolute -4.0 8 61 108

Relative to Sensex -2.1 6 39 63

Performance

Source: Bloomberg

Company BackgroundTube Investments of India Ltd (TI) is engaged in manufacture of bicycles, precision steel tubes and strips, car doorframes, automotive & industrial chains and sections for railways. TI caters to the requirements of OEMs and Tier–1 supplier in auto and non-auto space. TI is present in insurance and financing business through its subsidiaries. Company’s subsidiaries contribute for 60% to the top-line and 70% to the bottom line. TI’s major subsidiaries are Cholamandalam Investment and Finance Co Ltd, Cholamandalam MS General Insurance Co Ltd, Shanthi Gears Ltd and SEDIS SAS in France.

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Sept 17, 2014IFGL Refractories Ltd

KARVY STOCK BROKING – EQUITY RESEARCH DESK

Name Role Phone Number E-mail Id

JK Jain Head of Research 040 - 4467 7482 [email protected]

M Rajendra Prasad Research Analyst 040 - 4485 7902 [email protected]

Joyjit Sinha Research Analyst 040 - 4485 7906 [email protected]

De Arul Kaarthick Research Analyst 040 - 4485 7902 [email protected]

Kaushal Kumar Jaitliya Research Analyst 040 - 4467 7494 [email protected]

Prashant Kanuru Research Analyst 040 - 4485 7894 [email protected]

B Sai Prabhakar Research Analyst 040 - 4467 7489 [email protected]

Varun Chakri Research Analyst 040 - 4485 7891 [email protected]

Deepak Ranjan Sahu Research Analyst 040 - 4485 7904 [email protected]

Vivek Agarwal Research Analyst 040 - 4485 7892 [email protected]

Y Sai Prabhakar Research Analyst 040 - 4485 7892 [email protected]

Pranay Veer Research Analyst 040 - 4485 7891 [email protected]

Deepak Semwal Research Analyst 040 - 4485 7904 [email protected]

Neha Majithia Agarwal Research Analyst 040 - 4485 7907 [email protected]

Value Invest - Oct 2014

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Sept 17, 2014IFGL Refractories Ltd

Stock Ratings Absolute ReturnsBuy : > 15%Hold : 5-15%Sell : <5%

For further enquiries please contact:[email protected]

Toll Free: 1800 425 8283

Disclosures AppendixAnalyst certificationThe following analyst(s), who is (are) primarily responsible for this report, certify (ies) that the views expressed herein accurately reflect his (their) personal view(s) about the subject security (ies) and issuer(s) and that no part of his (their) compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report.

DisclaimerThe information and views presented in this report are prepared by Karvy Stock Broking Limited. The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither Karvy nor Karvy Stock Broking nor any person connected with any associate companies of Karvy accepts any liability arising from the use of this information and views mentioned in this document.

The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above mentioned companies from time to time. Every employee of Karvy and its associate companies are required to disclose their individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to place orders only through Karvy Stock Broking Ltd. This report is intended for a restricted audience and we are not soliciting any action based on it. Neither the information nor any opinion expressed herein constitutes an offer or an invitation to make an offer, to buy or sell any securities, or any options, futures nor other derivatives related to such securities.

Karvy Stock Broking Limited“Karvy Centre”, Avenue-4, 2nd Floor, Road No: 10, Banjara Hills, Hyderabad – 500 034. India.

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Value Invest - Oct 2014