Result Update Rating matrix Rating : Buy Target : 162 Target Period : 12 months Potential Upside : 12% What s changed? Target Changed from 15 to 162 EPS FY17E Changed from 1.7 to 1.9 EPS FY18E Chnaged from 11.5 to 12.4 Rating Unchanged Quarterly performance Q1FY17 Q1FY16 YoY (%) Q4FY16 QoQ (%) Revenue 1,748.7 1,878. -6.9 2,558.6-31.7 EBITDA 149.6 14.7 6.3 222.9-32.9 EBITDA (%) 8.6 7.5 16 bps 8.7-16 bps PAT 3.9 3.4 1.8 79.8-61.2 Key financials Crore FY15 FY16 FY17E FY18E Net Sales 8,346.3 8,421.6 9,281.1 1,426. EBITDA 511.8 679.3 84.4 886.5 Net Profit 192.4 231.1 281.4 319.4 EPS ( ) 7.5 9. 1.9 12.4 Valuation summary FY15 FY16 FY17E FY18E P/E 19 16.1 13.2 11.7 Target P/E 21.9 18.3 15. 13.2 EV / EBITDA 11. 8.8 7.5 7. P/BV 2.6 2.3 2. 1.7 RoNW (%) 13.6 14.3 15.1 14.9 RoCE (%) 12.8 15.3 15.9 16.3 Stock data Particular Amount Market Capitalization 3728 Crore Total Debt (FY16) 252.7 Crore Cash and Investments (FY16) 271.3 Crore EV 5977.4 Crore 52 week H/L 155/ 5 Equity capital 51.4 Crore Face value 2 Price performance 1M 3M 6M 12M KEC International Ltd 17.3 56.7 69.9 2.3 Jyoti Structure 5.2 (3.5) (27.9) (5.1) Kalpataru Power 3.8 17.4 13. 63.6 Research Analyst Chirag Shah shah.chirag@icicisecurities.com August 2, 216 KEC International (KECIN) 146 Execution miss but margin recovery on track KEC International reported disappointing Q1FY17 results, which were below our estimates on all counts. The key disappointment came in from the falter in execution rate, which led to a revenue decline vs. estimated growth during Q1FY17 As per the new Ind AS, revenues declined 7.2% YoY to ~ 1784.7 crore vs. 1922.9 crore in Q1FY16 (vs. I-direct estimate: 227 crore) largely on account of execution miss, lower commodity prices impacting the absolute revenues of domestic revenues (commodity prices are pass through in domestic markets) The company witnessed strong order inflows to the tune of 2885 crore and is also L1 in orders to the tune of 36 crore. The consolidated order backlog as of Q1FY17 was at 143 crore. This ensures reasonable revenue growth visibility for FY17E-18E Owing to execution miss, absolute EBITDA was at 149.6 crore vs. 14.7 crore but was below our estimate of 16.1 crore. However, the silver lining was the positive surprise at 8.4% vs. expectation of 7.9% Finance costs were muted indicating better working capital cycle as it was muted at 72 crore in Q1FY17. However, lower revenues led PAT to come in at 31 crore vs. our estimate of 44 crore Order inflows pipeline strong to support 1% revenue CAGR KEC witnessed strong order inflows in FY16 to the tune of 8714 crore and the beginning to FY17 has been equally strong as it managed to bag orders to the tune of 2885 crore in Q1FY17 itself and is L1 in orders to the tune of 36 crore. The management commentary also suggests that in next two or three months there are business opportunities to the tune of 25 crore. Out of these, tenders worth 15 crore will be quoted in the region while tenders worth 5 crore each will be up for bidding in East Asia/MENA and India, respectively. In India, SEBs are offering good business opportunities that will compensate the moderation of ordering from Power Grid. Consolidated order book was at 143 crore, which will ensure 1% revenue CAGR in FY16-18E. SAE Towers makes strong comeback coupled with better visibility After a dismal performance in FY15-16, SAE Tower made a strong comeback as revenues for Q1FY17 grew 4% YoY. EBITDA margins improved dramatically to 9.5% and made a positive PAT. Going ahead, both plants in Brazil and Mexico have strong revenue visibility of 18-24 months and 12 months, respectively. Railways, Solar business gaining traction Strong focus on railways and solar business will lead further diversification for KEC. FY16 was a testimony to it as both the business has grown 58% and 938% (low base). Also, the management is expecting reasonable margins for railways and solar (8-1%). The company is eyeing inflows of 1 crore in the railways segment and wants to reach revenues of 2 crore in the next three to four years. Maintain BUY on reasonable visibility With strong order inflows and business prospect, we expect KEC to report 1% revenue CAGR over FY16-18E. Also, continued traction in SAE Tower and strong scalability in the railways business will help KEC to achieve and sustain margins of 8.5% over the next two years. Hence, we expect RoE and RoCE to improve 6 bps and 1 bps to 14.9% and 16.3%, respectively. We believe KEC posses strong visibility in the midcap capital goods space. We value the stock at 13x FY18E EPS to arrive at a fair value of 162/share and continue to rate the stock as BUY. ICICI Securities Ltd Retail Equity Research
Variance analysis Q1FY17 Q1FY17E Q1FY16oY (Chg %) Q4FY16oQ (Chg %) Comments Revenue 1,748.7 2,27.1 1,878. -6.9 2,558.6-31.7 Revenue miss on account of lower commodity and translation loss. The adoption of Ins AS also impacted revneues as subsidairy in Saudi were treated as JV's, resulting in addition of share in profir of JV's only Other Income 5. 5. 3.2 56.6 1.1 355.5 Employee Expenses 173.5 17.4 157.8 9.9 168.1 3.2 Raw Material Expenses 82.8 946.4 883.3-7.1 1,356.2-39.5 Other Operating Expenses 215.1 21.5 197.3 9. 278.9-22.9 Erecting and Contracting Expenses 389.9 541.4 498.8. -21.8 532.6-26.8 EBITDA 149.6 158.3 14.7 6.3 222.9-32.9 EBITDA Margin (%) 8.6 7.8 7.5 16 bps 8.7-16 bps Margins were above estimates as SAE reported company level EBITDA margins Depreciation 29.1. 22.6 28.8 21.7 33.9 Interest 72. 74.7 71. 1.5 7.5 2.1 Less: Exceptional Items.... PBT 53.5 75. 5.4 6.3 131.7-59.4 Total Tax 22.6 31. 2. 13.1 51.9 NM PAT 3.9 57.6 3.4 1.8 79.8-61.2 Margin beat and muted finance costs lead to PAT beat Key Metrics Order inflows 2,855. 2,. 3,85. -7.5 2,2. 29.8 Order inflows were higher than estimates Order backlog 143 98 1537-1 1716-2.9 Backlog and execution cycle ensures reasonable visibility, going ahead Change in estimates FY17E FY18E ( Crore) Old New % Change Old New % Change Comments Revenue 8,421.6 8,421.6. 9,825.2 1,426. 6.1 Strong order ins in FY16-Q1FY17 and lower execution cycle will elad to 1% revenue CAGR for KEC over FY16-FY18E EBITDA 679.3 679.3. 845. 886.5 4.9 We have revised our margin estiamtes for FY17E and FY18E EBITDA Margin (%) 8.5 8.3-21 bps 8.6 8.4-19 bps PAT 187.5 231.1 23.3 294.8 319.4 8.4 EPS ( ) 1.7 1.3-3.6 11.5 12.4 8. Assumptions Current Earlier FY15 FY16 FY17E FY18E FY17E FY18E Order Inflow growth -3.3 6.2 2.3 1.1 1.2 1.4 Order Backlog growth 1. -8.3 1.6 1.7 3.8 7.9 Revenue growth 7.2.6 9. 12.3 8.5 6.4 EBITDA Margins 6. 8. 8.6 8.4 8.5 8.5 ICICI Securities Ltd Retail Equity Research Page 2
Company Analysis Order inflows, pipeline strong to support 11% revenue CAGR KEC has witnessed strong order inflows in FY16 to the tune of 8714 crore and the beginning to FY17 has been equally strong as it has managed to bag orders to the tune of 2885 crore in Q1FY17 itself. It is L1 in orders to the tune of 36 crore. The management commentary also suggests that in the next two or three months there are business opportunities to the tune of 25 crore. Out of these, tenders worth 15 crore will be quoted in the region while tenders worth 5 crore each will be up for bidding in East Asia/MENA and India, respectively. In India, SEBs are offering good business opportunities, which will compensate the moderation of ordering from Power Grid. Consolidated order book was at 143 crore, which will ensure 11.3% revenue CAGR in FY16-18E. Exhibit 1: KEC exhibits strong order inflow trends Exhibit 2: thereby adding to order backlog and visibility ( crore) 12 148516 1 6716586.22 7484 8482 824 8714 8 6 4 35.653234 2 12 1 8 6 4 2 ( crore) 12 1 8 6 4 2 4 3 2 1-1 (%) -2-2 FY9 FY1 FY11 FY12 FY13 FY14 FY15 FY16 FY17EFY18E FY1 FY11 FY12 FY13 FY14 FY15 FY16 FY17EFY18E Order Inflow YoY growth (%) Order backlog YoY growth (%) Source: Company, ICICIdirect.com, Research Source: Company, ICICIdirect.com, Research Exhibit 3: Trend in revenues for KEC over FY9-18E ( crore) 12 1 8 6 4 2 3427 396 4474 5814 6979 792 8468 8516 9281 1426 35 3 25 2 15 1 5 FY9 FY1 FY11 FY12 FY13 FY14 FY15 FY16 FY17E FY18E Revenues YoY growth (%) ICICI Securities Ltd Retail Equity Research Page 3
Railways, solar business gaining traction Strong focus on railways and solar business will lead further diversification for KEC. FY16 was testimony to it as both businesses have grown 58% and 938% (low base), respectively. Also, the management is expecting reasonable margins for railways and solar (8-1%). The company is eyeing inflows of 1 crore in the railways segment and wants to reach revenues of 2 crore in the next three to four years. The management has reiterated that these two new verticals are expected to witness multifold growth in the next couple of years. Margin recovery on track as improvement at SAE, scalability in Railways segment to help it sustain The entry level strategy in new business segments coupled with cost over-runs in some projects resulted in margins falling to historical low of 4.1% in Q4FY13. Overall, FY13 recorded lowest ever margins of 5.5%. Post that as per management s guidance, margins have been on the mend as Q4FY14 saw margins improving by 29 bps to 7%. So FY14 on a whole witnessed margin gains of 7 bps to 6.2%. Going ahead, management commentary suggests further margin gains in FY15E. In Q2FY15 & Q3FY15, KEC reported EBITDA margins of 5.6% & 5.1%, respectively, on the back of booking of losses in legacy orders. The same has shown improvement as Q1FY16 and Q2FY16 recorded margins of 7.5% and 7.7%, respectively. However, the management maintains it will attain higher end of its EBIDTA margin guidance of 8.5% in FY17E-18E, in line with the company s guidance. Hence, we expect KEC to report margins of 8.5% and 8.5% in FY17E and FY18E, respectively, on an individual basis. We expect the transmission business to produce margins in the range of 8%-1% while that of SAE Towers will also scale up to company level margins by FY17E as it reported margins of 8.4% in Q1FY17 and strong visibility there will help sustain these margins in FY17E. Also, strong scalability in the railways business will also help it ear margins in the range of 8-1%. The management mentioned that at revenues of 5-6 crore will help KEC record margins of 8-1% in the railways business, which it is possible will happen by FY18E Exhibit 4: Trend in segmental EBITDA margins (%) 12 1 8 6 4 8.8 1.4 1.4 8.1 7.6 5.1 5.8 4.1 6.3 6.4 7. 6.2 5.5 5.9 5.9 5. 5.1 7.3 6. 7.5 7.7 7.8 8. 8.4 8.6 8.4 2 FY9 FY1 FY11 FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13 FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14 FY14 Q1FY15 Q2FY15 Q3FY15 Q4FY15 FY15 Q1FY16 Q2FY16 Q3FY16 FY16 Q1FY17 FY17E FY18E ICICI Securities Ltd Retail Equity Research Page 4
Strong execution to drive robust PAT CAGR of 18% (FY16-FY18E) Going ahead, we expect KEC to exhibit 18% CAGR in profitability over FY16E-FY18E, which will be contributed by 11% CAGR in EBITDA whereas revenue CAGR is expected at 11.3% over the same period. We expect the EBITDA to grow to 886.5 crore by FY18E from 679.3 crore in FY16. This we believe, coupled with lower tax rates (35% for FY17E & FY18E vs. 41% in FY16, would to lead to PAT of 265 crore and 319 crore in FY17E and FY18E respectively.. Exhibit 5: PAT to rise sharply on the back of strong margins recovery 35 3 25 ( crore) 2 15 1 5 319 281 231 189 25 29 192 117 73 17 FY9 FY1 FY11 FY12 FY13 FY14 FY15 FY16 FY17E FY18E RoE profile to improve materially on margin recovery/decline in leverage Given erosion of EBITDA margins from 1.4% and 8.1% in FY11 and FY12, respectively to 5.5% in FY13 coupled with 34% CAGR rise in interest costs negatively impacted RoE of KEC. As a result, RoE declined from 21.7% and 18.7% in FY11 and FY12, respectively, to 6.4% and 5.5% in FY13 and FY14, respectively. However, with recovery in margins and resultant 18% CAGR in PAT over FY16-FY18E will help KEC to improve its RoE to 14.9% and 14.3% in FY17E and FY18E, respectively. The RoCE is also expected to improve from 15.3% in FY16 to 16.3% in FY18E. Exhibit 6: Return ratios to bounce back strongly 3 (%) 25 2 15 1 5 23.6 21.7 18.7 6.4 7.2 13.6 14.3 15.1 14.9 FY1 FY11 FY12 FY13 FY14 FY15 FY16 FY17E FY18E ROE ROCE ICICI Securities Ltd Retail Equity Research Page 5
Outlook and Valuation With strong order inflows and business prospect, we expect KEC to report 1% revenue CAGR over FY16-FY18E. Also, continued traction in SAE Tower and strong scalability in the railways business will help KEC achieve and sustain margins of 8.5% over the next two years. Hence, we expect RoE and RoCE to improve 6 bps and 1 bps to 14.9% and 16.3%, respectively. We believe KEC possesses strong visibility in the midcap capital goods space. We value the stock at 13x FY18E EPS to arrive at a fair value of 162/share and continue to rate the stock as BUY. Exhibit 7: Interest/EBITDA ratio to improve going ahead 7 6 5 4 (%) 3 2 53.4 6.3 4.8 36.6 35.7 1 FY13 FY14 FY15 FY16 FY17E ICICI Securities Ltd Retail Equity Research Page 6
Company snapshot ( ) 2 18 16 14 12 1 8 6 4 2 May-14 Jul-14 Sep-14 Dec-14 Feb-15 May-15 Jul-15 Oct-15 Dec-15 Mar-16 May-16 12. 1. 8. 6. 4. 2.. Jul-16 (%) Source: Bloomberg, Company, ICICIdirect.com Research Series1 Idirect target Consensus Target Mean % Consensus with Buy Key events Date Mar-12 Dec-12 Mar-13 Mar-13 Sep-13 Nov-13 Apr-14 Dec-14 Apr-15 Event KEC revenue crosses 5 crore for the first time with higehest ever PAT of 29 crore in its operating history KEC's order backlog crosses 1 crore mark in its operating history Market share in PGCIL ordering at 31% in FY13. Number of contracts won stood at 1 worth 2152 crore With execution of low margin orders of new SBUs, KEC's EBITDA margins fall to record lows to 4.1% in Q4FY13 Margins do recover to 6.3% in Q2FY14 after dismal perfomance of Q4FY13. However, going ahead, consistency is the key Market share in PGCIL ordering at 16% in YTDFY14. Number of contracts won stood at 1 worth 2152 crore Overall market share in PGCIL orders at 2% while for the whole of FY14, KEC reported 14% YoY growth in order flows. The key highlight was the recovery of EBITDA margins to 6.2% in FY14 from 5.5% in FY13. The company has guided for further improvement in margins and reduction in leverage Q3FY15 perfromance disappointing owing to higher-than-expected margins on the back of execution of low margins legacy orders Improvement in Q4FY15 performance across all parameters and mangament sets out strong guidance for FY16E Apr-16 Company reported strong set of results for FY16 as margins recovered to 8% mark and all the loss making legacy orders were executed. Jul-16 Company reported strong order inflows for Q1FY17 at 2885 crore and order backlog at 143 crore. The company reported strong turnaround at SAE towers and expects strong scalability in railways revenues. Top 1 Shareholders Shareholding Pattern Rank Name Latest Filing Date % O/S Position (m) Change (m) (in %) Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 1 RPG Enterprises 31-Mar-16 46.6 119.7 92.1 Promoter 5.1 5.54 5.54 5.86 5.86 2 HDFC Asset Management Co., Ltd. 31-Mar-16 6.8 17.5-4.4 FII 4.78 5.72 6.27 6.27 6.8 3 Goenka (Harsh Vardhan) 31-Mar-16 3. 7.8. DII 29.88 26.14 25.49 23.6 25.5 4 Reliance Nippon Life Asset Management Limited 31-Mar-16 3. 7.6-3.4 Others 15.33 17.6 17.7 19.27 16.84 5 FIL Investment Management (Hong Kong) Limited 31-Mar-16 2.6 6.6. 6 SBI Funds Management Pvt. Ltd. 31-Mar-16 2.5 6.4. 7 Life Insurance Corporation of India 31-Mar-16 2.5 6.4. 8 UTI Asset Management Co. Ltd. 3-Jun-16 2.3 5.8. 9 Dimensional Fund Advisors, L.P. 3-Apr-16 1.5 4.. 1 Birla Sun Life Asset Management Company Ltd. 3-Jun-16 1.4 3.5.3 Source: Reuters, ICICIdirect.com Research Recent Activity Buys Sells Investor name Value Shares Investor name Value Shares RPG Enterprises +169.99M +92.9MS HDFC Asset Management Co., Ltd. -8.8M -4.38M Carniwal Investments, Ltd. +5.48M +2.97M Reliance Nippon Life Asset Management Limited -6.2M -3.36M IDFC Asset Management Company Private Limited +.73M +.39M Acadian Asset Management LLC -.22M -.15M Principal PNB Asset Management Company Ltd. +.68M +.32M Robeco Hong Kong Limited -.18M -.9M Birla Sun Life Asset Management Company Ltd. +.54M +.25M UTI Asset Management Co. Ltd. -.8M -.4M Source: Reuters, ICICIdirect.com Research ICICI Securities Ltd Retail Equity Research Page 7
Financial summary Profit and loss statement Crore (Year-end March) FY15 FY16 FY17E FY18E Total operating Income 8,346.3 8,421.6 9,281.1 1,426. Growth (%) 7.2.9 1.2 12.3 Raw Material Expenses 4,566.4 4,148. 4,463.4 5,46.8 Employee Expenses 586.5 642.4 742.2 81.4 Erecting and Contracting Expenses 1,886.3 2,71.8 2,289.1 2,615.1 Administrative Expenses 916.8 974.9 1,99.7 1,194.3 Total Operating Expenditure 7,956. 7,837. 8,594.4 9,657.5 EBITDA 511.8 679.3 84.4 886.5 Growth (%) 3.8 32.7 18.4 1.2 Depreciation 47.9 47.9 9.9 94.8 Interest 38.9 277.4 294.8 316.3 Other Income 11.6 1.3 2. 16. Exceptional Item -134.7... PBT 31.3 364.2 438.8 491.4 Total Tax 18.8 133.1 157.4 172. PAT 192.4 231.1 281.4 319.4 Adjusted PAT 192.4 249.1 281.4 319.4 Growth (%) 115.4 29.5 12.9 13.5 EPS ( ) 7.5 9. 1.9 12.4 Cash flow statement Crore (Year-end March) FY15 FY16 FY17E FY18E Profit after Tax 192.4 231.1 281.4 319.4 Add: Depreciation 47.9 47.9 9.9 94.8 (Inc)/dec in Current Assets -369.8-478.9-81.3-1,38. Inc/(dec) in CL and Provisions 12.3-11.8 459. 636.5 Others 3.3 3. 5. 5. CF from operating activities -9.2-31.6 29.9 12.8 (Inc)/dec in Investments.... (Inc)/dec in Fixed Assets -17. -34.9-75. -1. Others.... CF from investing activities -17. -34.9-75. -1. Issue/(Buy back) of Equity.... Inc/(dec) in loan funds 77.7 36.6 1. 1. Dividend paid & dividend tax -27.2-3.9-37.1-4.1 Inc/(dec) in Sec. premium.... Others. 7.6.. CF from financing activities 5.4 275.7 62.9 59.9 Net Cash flow -65.8-6.8 17.9-27.4 Opening Cash 397.8 332. 271.3 289.1 Closing Cash 332. 271.3 289.1 261.8 Balance sheet Crore (Year-end March) FY15 FY16 FY17E FY18E Liabilities Equity Capital 51.4 51.4 51.4 51.4 Reserve and Surplus 1,363.2 1,563.4 1,87.7 2,87. Total Shareholders funds 1,414.6 1,614.8 1,859.2 2,138.5 Total Debt 2,214.1 2,52.7 2,62.7 2,72.7 Deferred Tax Liability.... Minority Interest / Others.... Total Liabilities 3,628.7 4,135.5 4,479.8 4,859.1 Assets Gross Block 1,336.8 1,383. 1,424.5 1,54.5 Less: Acc Depreciation 337.5 396.7 487.6 582.4 Net Block 999.4 986.3 936.9 922.1 Capital WIP 16.4 16.4 5. 7. Total Fixed Assets 1,15.8 1,2.8 986.9 992.1 Investments.... Inventory 476.4 429.8 587.3 669.5 Debtors 3,852.9 4,494.8 4,933. 5,541.5 Loans and Advances 95.7 873.7 982.5 1,165.3 Other Current Assets 965.5 926.1 1,22.9 1,187.4 Cash 332. 271.3 289.1 261.8 Total Current Assets 6,577.5 6,995.7 7,814.9 8,825.4 Creditors 3,324.8 2,939.1 3,35.6 3,713.4 Provisions 121.9 97.8 132.2 167.1 Total Current Liabilities 4,13.6 4,28.8 4,487.8 5,124.3 Net Current Assets 2,447. 2,966.9 3,327.1 3,71.2 Others Assets.... Application of Funds 3,628.7 4,135.5 4,479.8 4,859.1 Key ratios (Year-end March) FY15 FY16 FY17E FY18E Per share data ( ) EPS 7.5 9. 1.9 12.4 Cash EPS 9.3 1.9 14.5 16.1 BV 55. 62.8 72.3 83.2 DPS.9 1. 1.2 1.3 Cash Per Share 12.9 1.6 11.2 1.2 Operating Ratios (%) EBITDA Margin 6. 8. 8.6 8.4 PBT / Total Operating income 3.6 4.3 4.7 4.7 PAT Margin 2.3 2.7 3. 3. Inventory days 21.5 19.6 2. 22. Debtor days 168.5 194.8 194. 194. Creditor days 145.4 127.4 13. 13. Return Ratios (%) RoE 13.6 14.3 15.1 14.9 RoCE 12.8 15.3 15.9 16.3 RoIC 14.1 16.4 17.2 17.5 Valuation Ratios (x) P/E 19.4 16.1 13.2 11.7 EV / EBITDA 11. 8.8 7.5 7. EV / Net Sales.7.7.7.6 Market Cap / Sales.4.4.4.4 Price to Book Value 2.6 2.3 2. 1.7 Solvency Ratios Debt/EBITDA 4.3 3.7 3.3 3.1 Debt / Equity 1.6 1.6 1.4 1.3 Current Ratio 1.6 1.7 1.7 1.7 Quick Ratio 1.5 1.7 1.7 1.7. ICICI Securities Ltd Retail Equity Research Page 8
ICICIdirect.com coverage universe (Capital Goods) CMP M Cap ( ) TP( ) Rating ( Cr) FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E AIA Engineering 127 917 Hold 9448 44.3 42.9 45.9 23.2 23.9 22.4 23.3 2.3 19.4 17.5 15.1 14.4 Thermax (THERMA) 885 781 Hold 1576 25.6 25.3 28.5 34.6 34.9 31. 16.8 15.9 16.7 11.8 1.9 11.5 KEC International (KECIN) 145 162 Buy 3881 7.3 1.7 11.5 19.9 13.5 12.6 14.6 16.2 16.1 11.9 15.2 14.2 Kalpataru Power(KPP) 268 315 Buy 4114 12.5 17.8 2.5 21.4 15.1 13.1 14.8 16.1 16.6 8.4 1.8 11.2 Greaves Cotton (GREAVE) 145 177 Buy 3538 6.6 8.4 9.9 22. 17.2 14.6 31.7 31.2 33. 2.4 22.2 23.3 SKF (SKFIND) 138 1575 Buy 7435 48.8 48.2 52.5 28.9 29.3 26.9 2.2 22. 21.9 13.1 14.6 14.4 VaTech Wabag (VATWAB) 59 76 Buy 324 16.9 33.3 4. 34.9 17.7 14.7 17. 23. 24.2 9.7 17. 17.6 NRB Bearing (NRBBEA) 119 124 Hold 1153 4.3 5.8 7.3 27.5 2.4 16.4 14.1 16.3 18. 15.1 18.2 19.7 Timken India (TATTIM) 59 588 Buy 3773 13.5 16.5 19.3 41.1 33.7 28.7 27.6 28.1 28.7 18.1 18.3 18.7 Grindwell Norton (GRINOR) 34 39 Buy 3787 9.3 9.2 11.2 36.5 36.8 3.3 24.1 22. 24. 16.8 15.1 16.4 EPS ( ) P/E (x) RoCE (%) RoE (%) ICICI Securities Ltd Retail Equity Research Page 9
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 1
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