Result Update February 11, 216 Rating matrix Rating : Buy Target : 92 Target Period : 12 months Potential Upside : 2% What s Changed? Target Changed from 97 to 92 EPS FY16E Changed from 4.1 to 31. EPS FY17E Changed from 46.9 to 38.3 EPS FY18E Introduced at 52.7 Rating Unchanged Quarterly Performance ( Crore) Q3FY16 Q3FY15 YoY Q2FY16 QoQ Total Income 1,52. 1,197.8-12.2 1,116.8-5.8 EBITDA 317.3 362.3-12.4 321.5-1.3 EBITDA (%) 3.2 3.2-9 bps 28.8 137 bps Reported PAT 166.2 196.3-15.4 175.1-5.1 Key Financials Crore FY15 FY16E FY17E FY18E Net Sales 7,479 8,212 8,755 9,233 EBITDA 1,441 1,289 1,54 1,911 Net Profit 764 722 893 1,229 EPS ( ) 32.8 31. 38.3 52.7 Valuation summary FY15 FY16E FY17E FY18E Core P/E (x) 23.3 24.7 2. 14.5 Target P/E (x) 28.1 29.7 24. 17.4 EV/EBITDA (x) 13.2 14.2 11.6 9. P/BV (x) 5.2 4.9 4.3 3.5 RoNW (%) 22.2 19.8 21.3 24.2 RoCE (%) 18.6 17.1 21.6 23.3 Stock data Particular Amount Market Capitalization ( Crore) 238 Crore Total Debt (FY15) ( Crore) 2364.5 Crore Cash and Investments (FY15) ( Crore) 311 Crore EV ( Crore) 8756 Crore 52 week H/L ( ) 1363 /76 Equity capital ( crore) 46.6 Crore Face value ( ) 2 Price performance (%) 1M 3M 6M 12M Mahindra CIE Automotive Ltd -17.3-17.9-27.3-3.2 Motherson Sumi Systems Ltd -14.2-12.4-32.1-24.3 Bharat Forge Ltd -5.8-11.1-35.6-28.3 Research Analyst Nishit Zota nishit.zota@icicisecurities.com Vidrum Mehta vidrum.mehta@icicisecurities.com Bharat Forge (BHAFOR) 765 Margins continue to remain strong! Bharat Forge reported its Q3FY16 numbers, which missed our topline and bottomline estimates but reported strong margins beating our margin estimates. Net revenues came in at 1,52 crore (our estimate 1,165 crore), down 12.2% YoY, 5.8% QoQ, mainly due to a decline in revenues from industrial segment across both domestic & international markets. Export revenues declined 14.3% YoY, 1.4% QoQ to 629 crore (our estimate: 644.8 crore). Domestic revenues came in at 449.7 crore (our estimate: 494.8 crore) flat YoY, down 1.2% QoQ Reported EBITDA margins at 3.2% (post-adjustment for exchange loss: 31.4%) in Q3FY16 saw an improvement of 137 bps vs. Q2FY16. Favourable product mix coupled with cost control measures & low commodity prices resulted in EBITDA margin expansion Consequently, PAT came in at 166.2 crore (post adjustment for exceptional item, it was at 169 crore) vs. our expectation of 178.8 crore, down 15.4% YoY, 5.1% QoQ Export market diversification to support BFL in challenging times BFL is strongly leveraged to global CV growth, given the CV business contributes ~5-55% of the consolidated business. In FY15, export revenues grew ~47%, mainly driven by ~89% YoY growth in US exports (~4% of standalone revenues). This growth was due to strong growth in class 8 truck demand (~2% YoY) and growth in the oil & gas vertical. However, BFL witnessed a steep decline in the non auto business & moderation in demand in class 8 truck segment (~34% of exports) in the export market in FY16E. The class 8 truck net order has declined in excess of ~2% YoY in the last eight months, which will impact BFL with a lag of a quarter or two. The company has guided for subdued demand environment for class 8 trucks for CY16 (~27-275 units). We expect revenues from the oil & gas business to decline sharply given the prolonged weakness in crude oil prices. However, BFL has been diversifying its revenue mix, which is reflected in PV s share of exports to increase from 4% in FY15 end to 9% in Q3FY16. Their share is expected to touch 2% by FY18E. Make in India verticals to drive domestic growth Although BFL will face near term headwinds in export markets, we expect unabated growth in the domestic market to continue owing to the strong domestic CV growth & increasing focus on new verticals like railways, aerospace, defence, mining & renewables. In next two or three years, the company is aiming to generate revenues of $1 million from aerospace vertical (HAL alone imports ~1 crore worth forging). BFL is also focusing on defence opportunity where it is looking to use its engineering capabilities to develop indigenous products (e.g. 155 mm artillery gun). These new higher margin non-auto businesses will start contributing meaningfully in H2FY17E. Near term weakness priced in; long term growth story intact We believe BFL s business franchise is unique and provides investors a great opportunity to own one of the few India listed Global/Local Tier- 1.5 ancillary supplier. Although we have pruned down our earnings estimate based on the near term weakness in commodity linked end markets, we are upbeat about the long term growth potential of the company. We, thus, value BFL on an SOTP basis with standalone business at 2 FY18E EPS of 44.2 and other subsidiaries at 32/share to arrive at a target price of 92. We ascribe BUY rating to the stock. ICICI Securities Ltd Retail Equity Research
Variance analysis (Standalone) Q3FY16 Q3FY16E Q3FY15 YoY (Chg %) Q2FY16 QoQ (Chg %) Comments Total Operating Income 1,52 1,165 1,198-12.2 1,117-5.8 Revenues marginally below estimates due to decline in revenues across industrial segment-both domestic & export Raw Material Expenses 36 432 447-19.3 47-11.6 Gross margins declined sequentially on account an inventory one off in Q1 Employee Expenses 95 96 83 14.4 92 2.9 Manufacturing expenses 18 19 28-13.3 182-1. EBITDA 317 335 362-12.4 321-1.3 EBITDA Margin (%) 3.2 28.7 3.2-9 bps 28.8 137 bps Favourable product mix coupled with cost control measures & low commodity prices resulted in EBITDA margin expansion. Depreciation 67.4 65. 68.7-2. 65.3 3.1 Interest 22.6 22. 26.4-14.3 22.2 1.8 Other Income 23 17 19 2.9 25-9.2 PBT 246.1 36.7 286.3-14. 259.4-5.1 Tax 8. 86.1 89.9-11. 84.3-5.1 Reported PAT 166.2 178.8 196.3-15.4 175.1-5.1 Lower revenues resulted in PAT below estimates Key Metrics Total Tonnage (MT) 5,741 54,639 53,36-4.8 54,559-7. ASP ( /Kg) 23 29 214-5.3 2 1.4 ASP decline is on account of product mix Domestic revenues 4 446 49-2. 454-11.8 Domestic revenues declined on account of decline in non auto revenues Export revenues 629 645 733-14.2 638-1.4 Export revenues declined due to decline in non auto revenues Change in estimates (Standalone) FY16E FY17E FY18 ( Crore) Old New % Change Old New % Change Introduced Comments Revenue 4,778 4,45-6.9 5,559 4,812-13.4 5,755 Reduce revenue estimates for FY16E/FY17E due to expected steep decline in industrial business in export market & subdued demand outlook for class 8 trucks. FY18-'Make in India' businesses are expected to contribute meaningfully EBITDA 1,419 1,334-6. 1,64 1,419-13.5 1,771 EBITDA Margin (%) 3.5 3. -53 bps 29.5 29.5 bps 3.8 PAT 789 735-6.8 914 762-16.6 1,31 EPS ( ) 39.9 31.6-2.9 49.6 32.7-34. 44.2 Assumptions (Standalone) Current Earlier Comments ( crore) FY15 FY16E FY17E FY18E FY18 FY17E FY18E Domestic Reveues 1,457 1,69 1,751 2,25 2,655 1,939. 2,393. Domestic revenues to grow on the back of strong CV growth & growth in non-auto segment Export revenues Americas ($ mn) 152 284 259 253 284 366 479 America estimates have been reduced to reflect weak demand in commodity end market & class 8 truck segment Europe (Euro mn) 97 19 18 117 126 15 11 Asia Pac ($ mn) 24 22 2 19 21 34 38 USD/INR 6.6 61.3 65.3 67. 67. 64 64 INR expected to depreciate against USD EUR/USD 1.3 1.3 1.1 1.1 1.1 1 1 Tonnage sales (MT) 174,88 211,668 213,396 24,778 269,842 251,11 32,675 RM/Unit ( /MT) 78,589 82,199 73,84 7,564 74,45 76,61 85,2 ICICI Securities Ltd Retail Equity Research Page 2
Key conference call takeaways The passenger vehicle business grew 2% YoY and accounted for 9% market share in Q3FY16 against 7% in Q2FY16 The management has guided that the demand scenario in Q4FY16E is expected to be similar to Q3FY16 The class 8 truck production in CY16E is expected to be ~27,- 275, The company has reduced its capex guidance for FY17E to ~ 1 crore, which will be mainly towards R&D & technology development The capacity utilisation of the Pune Plant is ~7% while the Baramati plant utilisation is at ~5% Total non-auto exports for Q3FY16 was at 33 crore while the domestic non-auto exports was at 2 crore In Q3FY16, revenues from passenger vehicles (domestic) were at 38 crore while passenger vehicle (exports) were at 5 crore The management is confident of achieving 1 crore revenue from railways in FY18E The management expects the Union Budget & scrappage policy in CVs to be triggers for domestic auto segment ICICI Securities Ltd Retail Equity Research Page 3
Company Analysis Performance in sweet spot as domestic to improve Bharat Forge is one of the few listed Tier-1.5 manufacturers in India focusing on supplying high-end engineered forgings products. The company has a geographic presence across India & Europe with total tonnage capacity of ~58, MT. In terms of business segments, CV segment remains a major revenue driver at ~5-55% while other segments are PV, oil & gas, power, railways, etc. In terms of non-auto share, share of the business has risen to ~47% much ahead of the targeted ~4% We expect standalone revenues to grow at ~8.2% CAGR in FY15-18E and reach ~ 5755 crore in FY18E. On a consolidated basis, revenues are expected to grow in the same period at ~7.3% CAGR to 9,413 crore. Profitability has also been consistently improving on the back of a better product mix via non-auto share and increasing exports. Standalone PAT margins have risen to ~17% in FY15. Going ahead, we expect standalone PAT to grow at ~15.3% CAGR in FY15-17E to 914 crore. Consolidated PAT is also expected to rise at ~17.2% CAGR in FY15-18E to 1229 crore. Exhibit 1: Topline, bottomline trends (Standalone) 7 6 1,31 1,2 1, ( crore) 5 4 3 2 1 4 3,399 673 4,548 735 762 4,45 4,812 5,755 8 6 4 2 ( crore) FY14 FY15 FY16E FY17E FY18E Total Operating Income PAT - Source: Company press release, ICICIdirect.com Research ICICI Securities Ltd Retail Equity Research Page 4
Exhibit 2: Standalone tonnage, ASP trends 3 25 211,668 213,396 24,778 269,842 3 25 (MT) 2 15 174,88 189,86 28,376 23,872 194,866 27,952 2 15 ( /MT) 1 1 5 5 FY14 FY15 FY16E FY17E FY18E Tonnage ASP Exhibit 3: Trends of regional share of business 1 8 (%) 6 4 39 38 39 4 43 36 34 47 2 19 18 18 16 3 3 3 3 FY15 FY16E FY17E FY18E Americas Europe Asia Pac India Margins to remain strong as asset utilisation increases BFL is one of the best in terms of operating efficiency and value addition in the whole Indian forgings space. The content enrichment as well business mix change accounting for exports has led to sharp EBIDTA margins increase reflective in ASP jump from ~ 167,/MT in FY12 to ~ 28,/ MT in FY15. Going ahead, as demand increases and utilisation levels improve, we build in standalone EBITDA margins of 3%, 29.5%, 3.8% in FY16E, FY17E, FY18E, respectively. At the consolidated level, we expect EBITDA margins of ~15.4%, 17.3%, 2.3% for FY16E, FY17E, FY18E respectively. ICICI Securities Ltd Retail Equity Research Page 5
Exhibit 4: Standalone EBITDA margin trends ( crore) 2 18 16 14 12 1 8 6 4 2 29 3 31 29 25 864 1,33 1,334 1,419 1,771 FY14 FY15 FY16E FY17E FY18E EBITDA EBITDA margin 35 3 25 2 15 1 5 - (%) Source: Company press release, ICICIdirect.com Research *Estimates Exhibit 5: Standalone trends of cost analysis 85 25 2,271 ( /MT) 8 75 7 15,471 78,589 82,199 17,697 73,84 19,934 7,564 21,739 74,45 2 15 1 ( /MT) 65 5 6 FY14 FY15 FY16E FY17E FY18E Raw material / MT Other expenses/ MT Source: Company press release, ICICIdirect.com Research ICICI Securities Ltd Retail Equity Research Page 6
Return ratio profile to rise as margins/profitability improves The forgings business can be capital intensive business if the growth strategy is not managed in a specific manner. Achieving higher machining mix quickly would always require much higher capex compared to a refurbished pure forgings machine. A prudent strategy of managing capital allocation and working capital has led BFL to maintain and improve its return ratios. Going ahead, we believe the performance will improve from current levels and expect standalone RoE, RoCE to trend upwards and reach 24.2%, 23.3%, respectively, in FY18E. Exhibit 6: Standalone return ratio profile 3 26.5 (%) 25 2 15 1 14.9 14.8 2.1 21.4 21.3 19.2 19.9 18.5 21.5 5 - FY14 FY15 FY16E FY17E FY18E RoCE RoE Source: Company press release, ICICIdirect.com Research ICICI Securities Ltd Retail Equity Research Page 7
Outlook and valuation We remain positive on the long-term business franchise of BFL, which remains the largest forgings company in the world, with engineering capabilities as strong as the best in the world. The increased focus on the non-automotive segment since FY1 has led to significant benefits in both revenue quality as well as margins. The increasing contribution of the same has helped in de-risking the business from the vagaries of being just CV dependant. We believe BFL s business franchise is unique and provides investors a great opportunity to own one of the few India listed Global/Local Tier- 1.5 ancillary supplier. We believe that on the financials front, a strong EBITDA margin (~31% in FY18E) performance will be coupled with strong RoCEs (~23% in FY18E). We, thus, value BFL on SOTP basis with standalone business at 2x FY18E EPS of 44.2 and other subsidiaries at 32/share to arrive at a target price of 92. We ascribe BUY to the stock. Exhibit 7: Valuation SOTP Valuation Standalone FY18 EPS 44.2 P/E multiple 2 Per share value ( ) 888 Subsidiaries EBITDA ( crore) FY18E 14 EV/EBITDA multiple 6 Enterprise Value 839 Net debt (FY18E) 92 Target subsidiaries market cap ( crore) 747 Per share value 32 Total per share value ( ) 92 Exhibit 8: Key metrics (Consolidated) Sales Growth EPS Growth PE EV/EBITDA RoNW RoCE ( cr) (%) ( ) (%) (x) (x) (%) (%) FY15 7479 29.6 32.8 11.9 23.3 13.2 22.2 18.6 FY16E 8212 9.8 31. -5.5 24.7 14.2 19.8 17.1 FY17E 8755 6.6 38.3 23.7 2. 11.6 21.3 21.6 FY18E 9233 5.5 52.7 37.7 14.5 9. 24.2 23.3 ICICI Securities Ltd Retail Equity Research Page 8
Company snapshot 1,6 1,4 1,2 1, Target Price: 92 8 6 4 2 Dec-1 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 ( ) Source: Bloomberg, Company, ICICIdirect.com Research Key events Date Event Mar-1 Ramp up of locomotive crankshaft, marine and oil & gas facility Jul-1 Inaugurates its ring rolling facility in Baramati Jul-11 Domestic M&HCV business continues to grow to new highs in terms of volumes Apr-12 Bharat Forge Alstom bags orders for two 66 MW super critical turbine generators Oct-12 David Brown Bharat Forge JV opens its facility in India in Hosur Feb-13 Bharat Forge Alstom bags orders for three supercritical from NTPC, Forms JV with Elbit systems for artillery systems Jan-14 Bharat Forge divest stake in China JV Mar-14 Bharat Forge Aluminitechnik receives 25 mn contract Oct-14 Bharat Forge posts a stellar set of Q2 results on the back of strong growth in export markets Jan-15 BFL German subsidiary Bharat Forge GmbH, acquired 1% stake of Mecanique Generale Langroise (MGL) which would focus on Oil & Gas space Feb-15 BFL to supply titanium forgings to Boeing which would be used in the wings ofnext-generation 737 and 737 MAX Jul-15 BFL aims to double standalone revenue to 7 crore in four years Top 1 Shareholders Rank Name Latest Filing Date % O/S Position (m) Change (m) 1 Kalyani Group 3-Sep-15 16.95 39.5. 2 Sundaram Trading & Investment Pvt. Ltd. 3-Sep-15 12.85 29.9. 3 KSL Holding Pvt. Ltd. 3-Sep-15 9.94 23.1. 4 Ajinkya Investment & Trading Company Pvt. Ltd. 3-Sep-15 4.22 9.8. 5 Life Insurance Corporation of India 3-Sep-15 3.21 7.5.74 6 Reliance Capital Asset Management Ltd. 3-Sep-15 2.66 6.2.51 7 UTI Asset Management Co. Ltd. 31-Dec-15 1.84 4.3 -.1 8 ICICI Prudential Asset Management Co. Ltd. 3-Nov-15 1.41 3.3 -.12 9 J.P. Morgan Asset Management (Hong Kong) Ltd. 3-Sep-15 1.25 2.9.23 1 Amrit Petroleums Pvt. Ltd. 3-Sep-15 1.22 2.8 2.84 Source: Reuters, ICICIdirect.com Research Shareholding Pattern (in %) Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Promoter 46.7 46.7 46.7 46.7 46.7 FII 16.7 16.6 17.7 15.3 18. DII 15.2 15.1 14. 16.8 13.9 Others 21.4 21.6 21.6 21.2 21.4 Recent Activity Buys Sells Investor name Value Shares Investor name Value Shares Amrit Petroleums Pvt. Ltd. +39.35M +2.84M AGF Investments Inc. -4.35M -.32M William Blair Investment Management, LLC +2.49M +1.48M Vontobel Asset Management, Inc. -4.74M -.27M Life Insurance Corporation of India +1.27M +.74M DNB Asset Management (Asia) Limited -3.29M -.25M Reliance Capital Asset Management Ltd. +7.6M +.51M Birla Sun Life Asset Management Company Ltd. -3.5M -.23M Westwood International Advisors, Inc. +5.28M +.38M BlackRock Asset Management North Asia Limited -2.94M -.22M Source: Reuters, ICICIdirect.com Research ICICI Securities Ltd Retail Equity Research Page 9
Financial summary (Consolidated) Profit and loss statement Crore (Year-end March) FY15 FY16E FY17E FY18E Total operating Income 7625 8372 8926 9413 Growth (%) 13.5 9.8 6.6 5.5 Raw Material Expenses 3,381 3,778 3,897 3,833 Employee Expenses 95 95 1,35 1,147 Other expenses 1,898 2,4 2,454 2,521 Total Operating Expenditure 6,184 7,83 7,386 7,51 EBITDA 144.9 1289.4 154.2 1911.2 Growth (%) 4.3-1.5 19.4 24.1 Depreciation 362 362 332 343 Interest 136 Other Income 137 13 129 213 PBT 1,122 1,57 1,337 1,781 Others Total Tax 359 338 414 552 PAT 764 722 893 1229 Growth (%) 53.2-5.5 23.7 37.7 EPS ( ) 32.8 31. 38.3 52.7 Cash flow statement Crore (Year-end March) FY15 FY16E FY17E FY18E Profit after Tax 764 722 893 1,229 Add: Depreciation 362 362 332 343 (Inc)/dec in Current Assets -374 152-51 -785 Inc/(dec) in CL and Provisions -441 46-153 4 CF from operating activities 311 1,642 1,2 1,187 (Inc)/dec in Investments 316-1 -1-1 (Inc)/dec in Fixed Assets -688-362 -15-25 Others -35 37-131 38 CF from investing activities -48-425 -381-312 Issue/(Buy back) of Equity Inc/(dec) in loan funds 357-6 -4 25 Dividend paid & dividend tax -21-23 -352-352 Inc/(dec) in Sec. premium Others 28-31 CF from financing activities 355-1,113-752 -12 Net Cash flow 259 14-112 773 Opening Cash 422 681 785 672 Closing Cash 681 785 672 1,445 Balance sheet Crore (Year-end March) FY15 FY16E FY17E FY18E Liabilities Equity Capital 46.6 46.6 46.6 46.6 Reserve and Surplus 3,398 3,66 4,147 5,24 Total Shareholders funds 3,444 3,653 4,194 5,7 Total Debt 2,365 1,765 1,365 1,615 Deferred Tax Liability 164 164 164 164 Minority Interest / Others 6 6 9 9 Total Liabilities 632 5641 5811 6938 Assets Gross Block 5,645 5,645 5,795 6,45 Less: Acc Depreciation 3,7 3,7 3,41 3,745 Net Block 2,575 2,575 2,393 2,3 Capital WIP 862 862 862 862 Total Fixed Assets 3,436 3,436 3,255 3,161 Investments 549 659 759 859 Inventory 1,34 1,152 939 1,566 Debtors 853 867 924 1,62 Loans and Advances 561 516 545 666 Other Current Assets 857 619 797 696 Cash 681 785 672 1,445 Total Current Assets 3,986 3,939 3,877 5,435 Creditors 1,12 1,119 1,241 1,214 Provisions 299 243 276 276 Other Current Liabilities 84 1,247 939 1,366 Total Current Liabilities 2,24 2,61 2,457 2,857 Net Current Assets 1,783 1,329 1,421 2,579 Other non-current assets 263 216 377 339 Application of Funds 632 5641 5811 6938 Key ratios (Year-end March) FY15 FY16E FY17E FY18E Per share data ( ) EPS 32.8 31. 38.3 52.7 Cash EPS 48.3 46.5 52.5 67.5 BV 147.8 156.8 18. 217.6 DPS 7.5 7.5 13. 13. Cash Per Share 29.2 33.7 28.9 62. Operating Ratios EBITDA Margin (%) 19.3 15.7 17.6 2.7 PBT / Net sales (%) 15. 12.9 15.3 19.3 PAT Margin (%) 6.6 4.8 7.4 1. Inventory days 5.6 48.6 43.6 49.5 Debtor days 41.6 38.5 38.5 42. Creditor days 53.8 49.8 51.8 48. Return Ratios (%) RoE 22.2 19.8 21.3 24.2 RoCE 18.6 17.1 21.6 23.3 RoIC 26.7 27. 33.4 4.5 Valuation Ratios (x) P/E 23.3 24.7 2. 14.5 EV / EBITDA 13.2 14.2 11.6 9. EV / Net Sales 2.5 2.2 2. 1.9 Market Cap / Sales 2.4 2.2 2. 1.9 Price to Book Value 5.2 4.9 4.3 3.5 Solvency Ratios Debt/EBITDA 1.6 1.4.9.8 Debt / Equity.7.5.3.3 Current Ratio 1.8 1.5 1.6 1.9 Quick Ratio 1.5 1.2 1.3 1.4. ICICI Securities Ltd Retail Equity Research Page 1
ICICIdirect.com coverage universe (Auto & Auto Ancillary) CMP M Cap E P S ( ) P /E (x) E V /E BIT D A (x) R oc E (% ) RoE (%) Sector / Company ( ) T P ( )R ating ( Cr) FY 15E F Y16E F Y17EFY15EFY16EFY17EFY15EFY16EFY17EFY15EFY16E F Y17E F Y15EFY16E F Y17E Amara R aja (AMAR AJ) 868 925 Hold 14827 24.1 3.2 35. 36.1 24.8 2.6 2.8 16.9 14.4 34.3 32.9 31.3 25.6 24.4 23.2 Apollo Tyre (APO TY R ) 149 2 Buy 7486 19. 2.6 2.5 7.8 7.2 7.2 4.5 4.7 4.9 26. 23.1 18.9 18.9 17.9 15.5 Ashok Leyland (ASHLE Y ) 85 9 Hold 2413 1.2 3.5 5. 72.2 24.4 16.9 26.6 12.9 1.3 7.2 18.3 23. 6.5 17.2 21. Bajaj Auto (BAAUTO ) 2372 265 Buy 68636 97.2 123.9 141.1 24.4 19.2 16.8 16.6 14.1 12.5 35.6 36.6 35.9 26.3 3.1 3.7 Balkrishna Ind. (BALIND) 62 72 Hold 582 5.6 57.9 59.2 13.2 11.5 11.2 8. 7.3 6.3 17.8 18.1 19.1 21.3 17.8 18.1 Bharat Forge (BHAFO R ) 765 92 Buy 17814 32.8 31. 38.3 23.3 24.7 2. 14.8 15.9 13. 18.6 17.1 21.6 22.2 19.8 21.3 Bosch (MIC O ) 16313 2 Buy 51222 426. 388.6 5.8 38.3 42. 32.6 24.8 26.6 22. 18.2 14.8 16.7 19.4 17.2 18.3 E icher Motors (E IC MO T) 17665 257 Hold 47713 227.1 479.5 567.8 77.8 36.8 31.1 44.2 2.3 18.1 24.5 41.7 38.3 24.5 37.9 34.3 E xide Industries (E XIIND) 125 15 Buy 1646 6.4 6.9 8. 19.5 18. 15.6 11.5 1.1 9. 18.9 19.3 19.9 13.5 13.4 14.1 Hero Mototcorp 254 2625 Hold 55 119.5 155.9 175. 21. 16.1 14.3 14. 11.3 1. 45.9 48.5 45.3 36.5 39.1 36.9 JK Tyre & Ind (JK IND) 84 115 Buy 1914 14.5 21.1 22.7 5.8 4. 3.7 4.9 3.8 3.6 18.7 22.5 21.6 23.3 26.1 22.4 M&M (MAHMAH) 1157 147 Buy 68297 5.7 57.9 75.1 22.8 2. 15.4 18. 11.5 9. 14.5 16.1 19.1 17.1 15.7 17.7 Mahindra C IE (MAHAUT) 195 3 Buy 6284-2.4 8.8 13.1 NA 22. 14.8 22.7 13.5 1.8-4.1 12.3 16.9 5.9 11.5 15.9 Maruti Suzuki (MAR UTI) 358 494 Buy 18194 122.9 168.9 222.3 29.1 21.2 16.1 18.3 12.8 1.4 17.2 23. 23.7 15.6 18.4 2.4 Motherson (MO TSUM) 225 3 Hold 29814 6.5 1.6 19.6 34.6 21.2 11.5 12.3 1.2 6.5 24.7 27.6 39.5 25.9 34.3 47.1 Tata Motors (TE LC O ) 288 48 Buy 89282 41.2 3.4 49.3 9.7 13.2 8.1 3.7 3.9 3.1 22.8 13.6 15.9 24.9 1.7 14.8 Wabco India (WABTVS) 5371 625 Hold 124 63.6 16.3 146.2 84.4 5.5 36.7 52.1 35.4 26.2 14. 19.2 21.2 18.2 23.1 25.3 ICICI Securities Ltd Retail Equity Research Page 11
RATING RATIONALE ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns ratings to its stocks according to their notional target price vs. current market price and then categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional target price is defined as the analysts' valuation for a stock. Strong Buy: >15%/2% for large caps/midcaps, respectively, with high conviction; Buy: >1%/15% for large caps/midcaps, respectively; Hold: Up to +/-1%; Sell: -1% or more; Pankaj Pandey Head Research pankaj.pandey@icicisecurities.com ICICIdirect.com Research Desk, ICICI Securities Limited, 1st Floor, Akruti Trade Centre, Road No 7, MIDC, Andheri (East) Mumbai 4 93 research@icicidirect.com ICICI Securities Ltd Retail Equity Research Page 12
ANALYST CERTIFICATION We /I, Nishit Zota, MBA & Vidrum Mehta, MBA Research Analyst, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. Terms & conditions and other disclosures: ICICI Securities Limited is a Sebi registered Research Analyst having registration no. INH99.ICICI Securities Limited (ICICI Securities) is a full-service, integrated investment banking and is, inter alia, engaged in the business of stock brokering and distribution of financial products. 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