latin manharlal securities pvt ltd weekenderdownload.lmspl.com/research/latin/weekender/weekender...

Latin Manharlal Securities Pvt Ltd

Weekender December 26, 2014

Index Closing Chg Chg %

Sensex 27241.78

(130.06) -0.48%

Nifty 8200.7

(24.50) -0.30%

Auto 18455.13

94.25 0.51%

Bankex 21253.3

107.52 0.51%

Cap Goods 15113.05

(275.52) -1.79%

Cons Durables 9359.5

(130.57) -1.38%

FMCG 7686.06

(23.74) -0.31%

Healthcare 14409.51

10.49 0.07%

IT 10422.16

(138.10) -1.31%

Metal 10562.54

(54.79) -0.52%

Oil & Gas 9878.81

(109.38) -1.10%

PSU 8121.33

37.43 0.46%

World Indices Closing Chg Chg %

Dow Jones 18030.21

252.06 1.42%

Nasdaq 4773.47

25.07 0.53%

Mexico Bolspa 43002.87

527.20 1.24%

Brazil Bovespa 50889.81

2,394.11 4.94%

FTSE 100 6609.93

99.93 1.54%

Nikkei 225 17818.96

197.56 1.12%

Hang Seng 23349.34

232.71 1.01%

* As on Friday

4:00 pm

TOP GAINERS Closing Chg Chg %

Jindal Steel &

Power 149.3

10.70 7.72%

Ultratech

Cement 2602.95

156.40 6.39%

Power Grid 137.1

5.50 4.18%

NMDC 144.5

5.10 3.66%

M&M 1255.3

43.05 3.55%

TOP LOSERS Closing Chg Chg %

Asian Paints 727.05

(17.90) -2.40%

BHEL 251.55

(5.80) -2.25%

HUL 750.35

(15.60) -2.04%

ITC 367.95

(6.90) -1.84%

PNB 222.25

(3.75) -1.66%

Outlook This Week: )ndias economy is expected to grow at around . .% in this fiscal, finance ministry said in Parliament. The Winter session of Parliament, that saw a mix of storm and business, came to a close on Dec 23, after passing a number of legislations but some key reform bills, including those on insurance and coal block allocations, remained pending. During the month-long session, the Lok Sabha passed a "record" number of 18 legislations, including amendment bills on coal mines allocation and labour laws, in 22 sittings. Government this week approved 100 percent foreign direct investment (FDI) in medical devices via the automatic route.The 100 percent FDI, will be permitted under the automatic route, meaning a foreign investor will not have to seek the permission of Foreign Investment Promotion Board (FIPB) to acquire an existing company or set up a new manufacturing unit in the medical devices sector. Saudi Arabia's oil minister, Ali al-Naimi, has said oil producers' cartel Opec will not cut production even if the price falls to $20 a barrel. Oil fell after Saudi Arabis minister indicated to could increase its output, however far prices may fall.

Date Nifty Sensex

22-Dec 8324 27709.47

23-Dec 8267 27506.3

24-Dec 8171.5 27179.43

25-Dec 8171.5 27179.43

26-Dec 8200.7 27241.78

Research Desk Latin Manharlal Securities Pvt Ltd

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Commodity Closing * Chg Chg %

Gold ($/oz) 1173.5

(20.80) -1.74%

Silver ($/oz) 15.673

(0.22) -1.37%

Crude oil

(/Barrel) 57.12

0.65 1.15%

Copper

($/MT) 6337.18

(28.66) -0.45%

Aluminum

($/MT) 2208.75

(51.25) -2.27%

Lead ($/MT) 2000.77

(14.60) -0.72%

Zinc ($/MT) 2651.6

19.59 0.74%

Date

FII 's Net

Purchase

/ Sales

(Crs.)

DII 's Net

Purchase

/ Sales

(Crs.)

19-Dec -668.85 622.77

22-Dec -335.24 389.12

23-Dec -444.93 516.34

24-Dec -2808.27 509.09

ADR's Closing * Chg Chg %

Infosys 31.74

(0.81) -2.49%

ICICI Bank 11.65

(0.02) -0.17%

HDFC Bank 50.86

(1.20) -2.31%

Tata Motors 41.13

(0.87) -2.07%

Wipro 11.81

(0.07) -0.59%

GDRs Closing * Chg Chg %

RIL 27.75

(0.10) -0.36%

SBI 48

(0.55) -1.13%

LNT 22.95

(0.85) -3.57%

Economic Data

Date Event Forecast Previous

02-Jan Fri USD ISM

Manufacturing (DEC)

58.7

Stock Specific news:

The Foreign Investment Promotion Board has cleared HDFC Bank proposal to raise Rs 10,000 crore, ending months of struggle by India's most valuable bank by market cap to enhance its capital base. Tata Chemicals said it is aiming a topline of Rs 30,000 crore over the next five years from around Rs 16,000 crore now. UFO Moviez India, India's largest digital cinema distribution network and in-cinema advertising platform in terms of numbers of screens, plans to raise around Rs 750 crore through an Offer for Sale. Can Fin Homes has received market regulator Sebi's approval for raising up to Rs 300 crore through a 'rights issue'.

IVRCL informed that the irrigation and water divisions of the company has bagged orders worth Rs 1,255.67 crore with majority of the works from Karnataka government and the state-run BHEL. CCI has approved a multi-billion dollar deal between global pharma giants GlaxoSmithKline Plc and Novartis. The multi-layered deal involves UK-based GlaxoSmithKline (GSK) acquiring the Swiss major's vaccine business, while the latter would purchase GSK's cancer drugs portfolio. In one of the biggest deals in the cement sector, Aditya Birla Group firmUltratech Cement will acquire two cement plants from Jaiprakash Associates (JAL) and associated power plants in

Madhya Pradesh for an enterprise value of Rs 5,400 crore. An affiliate of Singapore sovereign wealth fund GIC plans to take control of India's Nirlon Ltd in a deal estimated to be worth up to $197 million. Reco Berry Private Ltd has agreed to purchase up to 30.8 million shares, or a 34.2 percent stake, from some shareholders of Nirlon at 222 rupees a share. Reco Berry will also make a tender offer for public shareholders of Nirlon, which owns an information technology office park in Mumbai, to buy a 28.4 percent stake at the same price.

Fulford India, a Merck & Co Inc subsidiary, has transferred its consumer care business to Bayer Pharmaceuticals Private Ltd.

Sumitomo Mitsui buys 2.77% in Reliance Capital for $58.4 mln.

Sumitomo Mitsui will buy the stake at 530 rupees per share through preferential allotment.

Outlook Next Week :

As expected, Indian markets likely to remain volatile owing to the global factors. The sharp depreciation of Russian currency, Ruble vs. the USD and the unanticipated increase in interest rates from 10.50% to 17.00% in Russia led to sell offs in Global Markets. The continued deadlock in policy implementation in India also led to market slide. However, as reiterated earlier, decline in Indian market should be used to build long term portfolios as decline in crude oil prices and subsequently inflation may aid domestic GDP growth.

http://economictimes.indiatimes.com/topic/UFO%20Moviezhttp://economictimes.indiatimes.com/topic/IVRCLhttp://economictimes.indiatimes.com/topic/irrigationhttp://economictimes.indiatimes.com/topic/Karnatakahttp://economictimes.indiatimes.com/topic/Aditya-Birla-Grouphttp://economictimes.indiatimes.com/topic/Aditya-Birla-Grouphttp://economictimes.indiatimes.com/ultratech-cement-ltd/stocks/companyid-3027.cmshttp://economictimes.indiatimes.com/jaiprakash-associates-ltd/stocks/companyid-1481.cmshttp://economictimes.indiatimes.com/topic/Bayer-Pharmaceuticals-Private-Ltd.


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CREDIT ANALYSIS & RESEARCH (C.A.R.E) ..Growing strong on ratings independently

Current

Price

1435

Target

Price

1900

Upside 32.40% Duration 15 months

Sensex 27242 Nifty 8201

STOCK DATA

BSE Code 534804

NSE Code INE752H01013

Market Cap (Crores) 4175.15

Face value 10

Sector Rating Agency

52 week H/L 680 / 1589

Company Overview

Credit Analysis and Research Ltd (CARE) is a leading credit rating company in India offering rating and grading services. It also provides research services and risk management solutions through its Subsidiary. Its clientele includes banks and other financial institutions, private sector corporates, PSUs, sub-sovereign entities, small and medium enterprises and micro-finance institutions. Incorporated in 1993, CARE has steadily gained pace in the past six years to become the second largest rating player in India after Crisil. Currently, among top three rating agencies (CARE, CRISIL & ICRA), , CARE is a pure play on the rating business as almost its entire revenues are earned from rating functions. The company is promoted by domestic financial institutions including IDBI, Canara Bank and SBI unlike Crisil and ICRA, which have foreign parents in S&P and Moodys, respectively.

CARE now has the highest share of clients in ETs Economic Times Top and BS Business Standard) Top 1000 list for FY13. The performance is further validated by expanding clientele which, increased in FY14 by 2,491 taking total number of clients up to 7,754.

Expanding Products and Services

CARE is continuously evolving its products portfolio with new services to suit the changing business requirements and demands. This has enabled it to establish stronger relationships with existing clients and also tap new client segments. It has launched products in the SME, Education and Real Estate sectors.


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Tapping foreign markets CARE has received recognition from the Capital Markets Development Authority,

Republic of Maldives to carry out ratings of debt instruments, bank loans and facilities in respect of Maldivian companies and also indirect recognition as an external credit assessment institution by the Hong Kong Monetary Authority. It is also exploring opportunities in many countries through Joint Ventures and Memorandum of Understanding (MoU) with other rating agencies.

2 Major developments in 2014

1st ARC Ratings, a joint venture of five domestic credit rating agencies in five countries of which CARE is one of the partners, was launched in January 2014. This is the first of its kind in the world and is observing a lot of interest. 2nd CARE Kalypto started its advisory practices.

Far Superior Margin than its Competitors

CARE higher focus on large and medium sized entities while Crisil and ICRA have a relatively significant presence in the SME segment. The margins in the SME business are low, since the ticket size is small and higher manpower is required. Besides, CARE has an internal centre in Ahmedabad wherein the data entry job is done by lower cost employees. It has a relatively lean management at the top and the pay scale is on the slightly lower side. Also, offices of CARE are mainly equity financed, which saves lease costs. Going ahead, with the SME business expected to pick up pace and higher competition, margins may decline slightly. Relative to peers, a higher proportion (>95%) of its total revenue is generated from the rating business. The company earns far better Operating Margin 70% in the rating business vs.35% for its peers.

Management discussion

Rating will continue to be the companys core area of business for the next few years wherein international expansion is expected to be seen.

They can look for good acquisitions in the research space as they have adequate resources

Will be focusing on the SME business, apart from its active segments of bond market & bank loan rating

Will strengthen its employee strength for it SME business from current 600 employees Infrastructure bonds could be a good business opportunity Will strive to maintain its market share of 25% going ahead

Shareholding Pattern (30/09/2014)

Category % of equity

Mutual Funds 12.10%

Financial institutions/ Banks 36.08% F))s 25.69% Directors and their friends 0.32%

Others 25.81%


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Sr.

No. Name of the shareholder Number of

shares

held

Shares as a

percentage

of total

number of

shares

1 IDBI BANK LIMITED 4818292 16.62%

2 CANARA BANK 2172430 7.49%

3 STATE BANK OF INDIA 1505344 5.19%

4 CANARA BANK 1291975 4.46%

5 FRANKLIN TEMPLETON INVESTMENT FUNDS 1232559 4.25%

6 BAJAJ HOLDINGS AND INVESTMENT LTD 1002615 3.46%

7 SERUM INSTITUTE OF INDIA LTD 706700 2.44%

8 THE WELLINGTON TRUST COMPANY NATIONAL ASSOCIATIONMULTIPLE COMMON TRUST FUNDS TRUST EMERGING MARKETSLOCAL EQUITY PORTFOLIO

543884 1.88%

9 RUSSELL INVESTMENTS LIMITED 531000 1.83%

10 GMO EMERGING DOMESTIC OPPORTUNITIES FUND 519860 1.79%

11 THE FEDERAL BANK LTD 515469 1.78%

12 GOVERNMENT PENSION FUND GLOBAL 450000 1.55%

13 UNIT TRUST OF INDIA INVESTMENT ADVISORY SERVICES LIMITED

446310 1.54%

14 TATA STEEL LIMITED 354000 1.22%

15 FRANKLIN TEMPLETON MUTUAL FUND A/C FRANKLIN INDIAPRIMA PLUS

320000 1.10%

16 MACQUARIE FUND SOLUTIONS A/C MACQUARIE FUND SOLUTIONS - MACQUARIE ASIA NEW STARS FUND

311727 1.07%

17 TATA INVESTMENT CORPORATION LTD 308000 1.06%

18 ADITYA BIRLA PRIVATE EQUITY TRUST 300000 1.03%

19 RELIANCE CAPITAL TRUSTEE CO LTD- RELIANCE LONGTERMEQUITY FUND

295250 1.02%

TOTAL : 17625415 60.78%

Opportunity

Pickup in debt placements : Growth opportunities for the credit rating sector because it is best placed to benefit from the cyclical recovery in corporate capex and bank credit

growth. The sector is already doing well because of the pickup in debt issuances in

the recent past. According to Prime Database, debt placements during the first half of

2014-15 went up by 22% compared to the corresponding period last year

Improvement in credit environment. For example, Care's modified credit ratio (MCR) has improved from 1.05 times to 1.25 times in the second quarter, yoy.

MCR is calculated by dividing the number of rating upgrades with downgrades. An increase in MCR means that the financials of the rated companies are stable and improving. With a turnaround in the economy, MCR is expected to improve further in the second half of 2014-15. With the revival in market sentiments, debt issuances are expected to rise manifold, increasing business opportunities for rating agencies like Care. Since the company provides 'grading' for equity public offerings, revival in stock market sentiments also bodes well for it.

Strong foothold in rating of debt instruments and bank loans and facilities: CARE has over 19 years of experience in this area and a significant rating coverage of Indian banks and financial institutions. Its experience and knowledge has enabled it


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to rate a wide range of instruments and create strong customer base of 7754 clients as on 31st March 2014.

Domain expertise across various industries: CARE has rated debt instruments of entities in various sectors like manufacturing, services, banks and infrastructure. It also has provided debt and issuer ratings to corporates, banks, financial institutions, public sector undertakings, state government undertakings, sub-sovereign entities, NBFCs, SMEs and micro-finance institutions. It has rating relationships with 7754 clients.

Strong brand image and Quality certification: Over the years, CARE has developed a strong brand recognition and credibility in the ratings market. This is also reflected in the certifications and accreditations which it has received from various regulatory bodies. For instance, CARE is a recipient of the ISO 9001:2008 quality management certification for research services at its head office in Mumbai, data processing services at the CARE Knowledge Centre in Ahmedabad and six branch offices & head office for the credit rating of debt instruments and facilities.

Backed by Large Institutions/Banks: IDBI Bank, Canara Bank, SBI, IL &FS Financial Services Ltd, Federal Bank Limited, Bajaj Holding & Investment Limited, Aditya Birla PE Trust etc are the majority shareholders of CARE.

Concerns and Risks

Majority of revenues are derived from Debt Rating Services: CARE derived majority of its consolidated total income from rating services, which is dependent on the number of debt issues and the provision of bank loans in the Indian debt market. Weakness in the economy and consequently the Debt market may significantly impact revenues for CARE.

Unfavorable changes in Interest rates: Issuance of debt instruments or demand for bank loans or facilities are significantly impacted by interest rates and credit spreads. A period of continued high interest rate may negatively impact the overall investment cycle in the economy and the demand for funds. As a result revenues from credit rating might be impacted due to lack of sufficient debt instruments issues.

Weakness in the global economy: Overall weakness in the global financial markets leads to a decrease in investor confidence, reduces market valuations and causes widespread reduction of business activity. Events like these have a significant impact on the availability of credit and credit demand in the financial markets

Financials

For quarter ended September , net sales of the company was up % approx at Rs crores from Rs 65 crores same period last year. For half year ended September , net sales of the company up 17% at Rs 117 crores approx from Rs 100 crores same period last year. PAT for September quarter stood at Rs . crores, up by . %% YoY and For half year ended September ,PAT stood at Rs crores up . % YOY.

VALUATION

For FY 2015, we expect the company to register net sales and PAT of Rs 274 crore and Rs 148 crore. This gives

an EPS of Rs 50.68. Current market price of Rs 1435 discounts FY 2015 projected earnings by 28.31 times.

Buy with 15 months target price of Rs 1900 which discounts our FY 2015 projected EPS around 37.49

times.


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BALANCE SHEET (Crores.)

201403 201303 201203 201103 201003

SOURCES OF FUNDS :

Share Capital 29 28.55 28.55 9.52 9.52

Reserves Total 455.32 395.34 348.56 293.24 203.98

Equity Share Warrants 0 0 0 0 0

Equity Application Money 0 0 0 0 0

Total Shareholders Funds 484.32 423.89 377.11 302.76 213.5

Secured Loans 0 0 0 0 0

Unsecured Loans 0 0 0 0 0

Total Debt 0 0 0 0 0

Other Liabilities 3.91 4.25 2.28 1.88 1.16

Total Liabilities 488.23 428.14 379.39 304.64 214.66

APPLICATION OF FUNDS :

Gross Block 64.56 61.49 56.23 48.05 31.8

Less : Accumulated Depreciation 12.83 10.11 7.66 5.78 3.75

Less: Impairment of Assets 0.23 0.23 0.23 0.22 0.23

Net Block 51.5 51.15 48.34 42.05 27.82

Lease Adjustment 0 0 0 0 0

Capital Work in Progress 0 0.04 0 0 0

Producing Properties 0 0 0 0 0

Investments 467.7 390.06 279.13 254.09 186.03

Current Assets, Loans & Advances

Inventories 0 0 0 0 0

Sundry Debtors 14.17 21.89 15.63 12.33 6.76

Cash and Bank 26.72 27.17 68.6 18.07 9.45

Loans and Advances 6 4.25 4.75 1.72 1.01

Total Current Assets 46.89 53.31 88.98 32.12 17.22

Less : Current Liabilities and Provisions

Current Liabilities 42.2 39.32 38.41 12.55 17.64

Provisions 43.81 34.02 7.1 12.13 9.88

Total Current Liabilities 86 73.35 45.51 24.68 27.52

Net Current Assets -39.11 -20.04 43.47 7.44 -10.3

Miscellaneous Expenses not written off 0 0 0 0 0

Deferred Tax Assets 2.46 1.67 1.19 0.89 0.57

Deferred Tax Liability 6.39 5.58 4.46 3.49 2.72

Net Deferred Tax -3.93 -3.91 -3.27 -2.6 -2.15

Other Assets 12.06 10.84 11.72 3.66 13.26

Total Assets 488.22 428.14 379.39 304.64 214.66

Contingent Liabilities 1.14 2.29 2.66 1.26 0


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PROFIT AND LOSS (Crores.)

201403 (12) 201303 (12) 201203 (12) 201103 (12) 201003 (12)

INCOME :

Sales Turnover 229.46 198.77 178.08 170.87 136.2

Excise Duty 0 0 0 0 0

Net Sales 229.46 198.77 178.08 170.87 136.2

Other Income 35.66 28.63 28.21 5.85 15.83

Stock Adjustments 0 0 0 0 0

Total Income 265.12 227.4 206.29 176.72 152.03

EXPENDITURE :

Raw Materials 0 0 0 0 0

Power & Fuel Cost 1.29 1.05 0.81 0.63 0.45

Employee Cost 60.6 50.79 42.24 30.51 21.25

Other Manufacturing Expenses 2.05 1.58 1.24 0.65 0.41

Selling and Administration Expenses 11.55 8.66 8.91 7.47 4.25

Miscellaneous Expenses 7.34 2.81 1.7 1.15 2.01

Less: Pre-operative Expenses Capitalised 0 0 0 0 0

Total Expenditure 82.83 64.89 54.9 40.41 28.37

Operating Profit 182.3 162.51 151.39 136.31 123.66

Interest 0 0 0 0 0

Gross Profit 182.3 162.51 151.39 136.31 123.66

Depreciation 2.89 2.63 1.88 2.21 1.4

Profit Before Tax 179.41 159.88 149.51 134.1 122.26

Tax 50.71 45.92 41.3 42.49 36.32

Fringe Benefit tax 0 0 0 0 0

Deferred Tax 0.02 0.63 0.67 0.65 0.25

Reported Net Profit 128.67 113.33 107.54 90.96 85.69

Extraordinary Items 13.18 9.15 14.54 1.35 7.45

Adjusted Net Profit 115.49 104.18 93 89.61 78.24

Dividend 80.93 57.11 28.55 6.19 4.76

Preference Dividend 0 0 0 0 0

Equity Dividend % 280 200 100 65 50

Dividend Per Share(Rs) 28 20 10 6.5 5

Earnings Per Share(Adj)-Unit Curr 39.63 36.39 36.05 31.5 29.72

Book Value(Adj)-Unit Curr 167.01 148.46 132.09 106.01 74.75

Dividend Per Share Adj.(Rs) 28 20 10 2.17 1.67


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CASH FLOW (Crores.)

201403 201303 201203 201103 201003

Cash Flow Summary

Cash and Cash Equivalents at Beginning of the year 24.36 68.6 18.07 14.44 5.89

Net Cash from Operating Activities 108.7 82.32 97.95 88.89 74.78

Net Cash Used in Investing Activities -47.16 -86.74 -7.05 -79.7 -67.46

Net Cash Used in Financing Activities -62.48 -39.82 -40.37 -5.56 -3.76

Net Inc/(Dec) in Cash and Cash Equivalent -0.94 -44.24 50.53 3.63 3.56

Cash and Cash Equivalents at End of the year 23.42 24.36 68.6 18.07 9.45


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PEER COMPARISON:-

All figures in Crores CARE CRISIL ICRA

Market Price 1435 1948 2866

Net Sales 'Mar 2014 235.59 1110.64 282.96

Debt (secured + unsecured + other) 4.08 18.03 26.59

Equity 29 7.07 10

Reserves 456.37 667.43 377.94

Total Equity 485.37 674.5 387.94

Debt/Equity 0.01 0.03 0.07

Market Cap 4175.15 13985.98 2897.00

Book Value per share 167.37 95.47 387.94

Price / BV per share 8.69 20.01 7.25

Operating Cash Flows 'Mar 2014 108.70 146.37 45.49

Capital Expenditure 3.12 14.19 28.20

Free cash Flows 'Mar 2014 105.58 132.18 17.29

FCF per share 36.41 18.70 17.29

Price / FCF per share 39.94 102.16 162.70

FCF/Net Sales 0.45 0.12 0.06

5 years avg OP margin % (lesser of avg n current) 70.18% 32.24% 29.88%

5 years avg Adjusted NP margin % (lesser of avg n current) 50.33% 22.65% 20.85%

TTM EPS 50.96 29.99 61.72

Company P/E 28.15 65.14 47.06

Industry P/E 44.45 44.45 44.45

Face Value 10 1 10

Stock runup since last 3 months 2.04% -1.04% 9.54%

Stock runup since last 6 months 50.05% 15.90% 19.96%

Stock runup since last 12 months 101.66% 76.69% 81.25%

52 week low 680 1056 1499

52 week high 1589.00 2258.00 3199.00

Interest Coverage ratio 0.00 0.00 103.12 5 years avg ROE (lesser of avg n current) 25.43% 39.44% 14.29%

5 years avg RONW (lesser of avg n current) 25.43% 41.80% 16.13% 5 years avg ROCE (lesser of avg n current) 35.14% 57.78% 22.04%

5 years avg EV/EBIDTA (higher of avg n current) 13.9 18.02 17.55

Dividend Yield 0.69% 0.21% 0.82%


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CARE CHART :

Terms used : FCF : Free cash flow TTM : Trailing twelve months RONW : Return on net worth ROE : Return on Equity ROCE : Return on Capital Employed EV/EBIDTA = Enterprise value / Earnings before interest, depreciation, tax and amortization P/E = Price to earnings ratio EPS = Earnings per share BV = Book value PBT = Profit before tax PAT = Profit after tax OPM = Operating profit margin


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Disclosures:

(a) The research analyst or research entity or his/their associates or his/their relatives do not have actual/beneficial ownership of one per cent or more securities of the subject company or any financial interest in the subject company

(b) The research analyst or research entity or his/their associates or his/their relatives do not have any other material conflict of interest at the time of publication of the research report or at the time of public appearance

(c) The research analyst or research entity or its associates have not received any compensation for investment banking or merchant banking or brokerage services nor received any compensation for products or services from the subject company in the past twelve months

(d) The research analyst or research entity or its associates have not received any other benefits from the subject company or third party in connection with the research report

(e) The subject company is not or was not a client during twelve months preceding the date of distribution of the research report and the types of services provided by the research analyst or research entity or his/their associates or his/their relatives

(f) The research analyst has not served as an officer, director or employee of the subject company

(g) The research analyst or research entity has not been engaged in market making activity for the subject company


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THANK YOU

This document is for information only and is meant for the use of the recipient & not for circulation. The information contained in this document has been taken from publicly available information, trade and statistical services & other sources. While the information contained herein is from sources believed to be reliable, we do not hold ourselves responsible for its completeness and accuracy. All opinions and estimates included in this report constitute our judgement as of this date and are subject to change without notice. Investors are expected to use the information contained in this report at their own risk. This report is not and should not be construed as an offer or the solicitation of an offer to buy or sell any securities. M/s Latin Manharlal Securities Pvt. Ltd. and its affiliates may act as market maker or have assumed an underwriting position in the secure-ties of companies discussed herein and may sell them to or buy them from customers on a principal basis.

Registered Office: 124 Viraj, S,V.Road, Khar (W), Mumbai 400 052. Tel. (022) 4082 4082, Fax (022) 2649 7997. [email protected] www.latinmanharlal.com, LMSPL Network: Fort, Mahalaxmi, Parel, Bandra, Santacruz, Vile Parle, Andheri, Malad, Kandivili, Borivali,

Bhayender, Ghatkopar, Mulund, Chunabhatti, Jacob Circle, Masjid Bunder, Cotton Green, Thane, Bhiwandi, Panvel, Pune, Sholapur, Nasik, Malegoan, Ahmednagar, Aurangabad, Akola, Mahekar, Nagpur, Surat, Karjan(Baroda), Khambat, Ahmedabad, Rajkot, Surendranagar, Porbandar, Amreli, Bharuch, Anand, Chennai, Vishakhapatnam, Vizianagaram, Palasa, Kakinada, Karnal, Kolkatta, Bhubhaneshwar, Hyderabad, Bangalore, Jafrabad, Chital, Kodinar, Keshod, Gondal, Haryana, Srikakulam, Mehkar (Buldhana, Jamnagar, Bangalore, Jodhpur, Jalgaon, Malkangiri (Orissa), Karimnagar Dist. (Andhra Pradesh).

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Company OverviewCredit Analysis and Research Ltd (CARE) is a leading credit rating company in India offering rating and grading services.It also provides research services and risk management solutions through its Subsidiary. Its clientele includes banks and other financial institutions, private sector corporates, PSUs, sub-sovereign entities, small and medium enterprises and mic...Tapping foreign marketsCARE has received recognition from the Capital Markets Development Authority,Republic of Maldives to carry out ratings of debt instruments, bank loans and facilities in respect of Maldivian companies and also indirect recognition as an external credit assessment institution by the Hong Kong Monetary Authority. It is als...2 Major developments in 2014Management discussionOpportunity Strong foothold in rating of debt instruments and bank loans and facilities: CARE has over 19 years of experience in this area and a significant rating coverage of Indian banks and financial institutions. Its experience and knowledge ha...to rate a wide range of instruments and create strong customer base of 7754 clients as on 31st March 2014. Domain expertise across various industries: CARE has rated debt instruments of entities in various sectors like manufacturing, services, banks and infrastructure. It also has provided debt and issuer ratings to corporates, banks, financial in... Strong brand image and Quality certification: Over the years, CARE has developed a strong brand recognition and credibility in the ratings market. This is also reflected in the certifications and accreditations which it has received from various reg... Backed by Large Institutions/Banks: IDBI Bank, Canara Bank, SBI, IL &FS Financial Services Ltd, Federal Bank Limited, Bajaj Holding & Investment Limited, Aditya Birla PE Trust etc are the majority shareholders of CARE.Concerns and Risks Majority of revenues are derived from Debt Rating Services: CARE derived majority of its consolidated total income from rating services, which is dependent on the number of debt issues and the provision of bank loans in the Indian debt mar... Unfavorable changes in Interest rates: Issuance of debt instruments or demand for bank loans or facilities are significantly impacted by interest rates and credit spreads. A period of continued high interest rate may negatively impact th... Weakness in the global economy: Overall weakness in the global financial markets leads to a decrease in investor confidence, reduces market valuations and causes widespread reduction of business activity. Events like these have a significant impact ...FinancialsVALUATION

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