Result Update Rating matrix Rating : Buy Target : 79 Target Period : 12 months Potential Upside : 13% What s Changed? Target Changed from 675 to 79 EPS FY18E Changed from 19.9 to 17.8 EPS FY19E Changed from 23.8 to 24.7 Rating Unchanged Quarterly Performance ( Crore) Q2FY18 Q2FY17 YoY (%) Q1FY18 QoQ (%) Total Income 1,258. 89.9 41.2 1,22.4 4.6 EBITDA 369.5 247.7 49.2 335. 1.3 EBITDA (%) 29.4 27.8 157bps 27.9 151 bps Reported PAT 23.7 126.9 6.5 176.7 15.3 Key Financials Crore FY16 FY17E FY18E FY19E Net Sales 7,647 6,396 8,161 9,215 EBITDA 1,421 1,251 1,741 2,268 Net Profit 652 698 828 1,15 EPS ( ) 14. 15. 17.8 24.7 Valuation summary FY16 FY17E FY18E FY19E Core P/E (x) 49.7 54. 39.3 28.3 Target P/E (x) 56.4 52.7 44.4 32. EV/EBITDA (x) 23.9 26.1 18.7 14.3 P/BV (x) 9.1 8.3 7. 6.1 RoNW (%) 18.4 15.4 17.8 21.7 RoCE (%) 17.6 16.7 21.7 27.5 Stock data Particular Amount Market Capitalization ( Crore) 3259 Crore Total Debt (FY17) ( Crore) 159.7Crore Cash and Investments (FY17) ( Crore) 949.3Crore EV ( Crore) 3342.7crore 52 week H/L ( ) 739 / 382 Equity capital ( crore) 46.6 Crore Face value ( ) 2 Price performance (%) 1M 3M 6M 12M Mahindra CIE Automotive Ltd 1.6.5 -.7 25.4 Motherson Sumi Systems Ltd 5.8 7.4 32.7 73.8 Bharat Forge Ltd 12.9 23. 32.9 72. Research Analyst Nishit Zota nishit.zota@icicisecurities.com Vidrum Mehta vidrum.mehta@icicisecurities.com Operational out-performance... November 1, 217 Bharat Forge (BHAFOR) 7 Bharat Forge reported its Q2FY18 numbers, which are above our estimates on the operational front. Revenues came in at 1258 crore, up 41.2% YoY/4.6% QoQ against our estimate of 1294 crore. The domestic revenues came in at 528.5 crore (up 25.6% YoY/5% QoQ), against our estimate of 553.5 crore. Export revenues increased by 55.9% YoY/ 4.8% QoQ to 73.9 crore against our estimate of 711.8 crore. Topline growth was driven by growth across segments in both domestic & international business. The domestic auto business grew by ~37% YoY to 286.5 crore & the industrial business grew by ~19% YoY to 198.8 crore. In the international business, the auto business grew by ~15% to 367.4 crore, while the industrial business by 2.5x to 336.6 crore. Reported EBITDA margins came in at 29.4%, up 157 bps YoY/151 bps QoQ, against our est. 28.1%. The margins are above estimates on account of improved product mix, increased operational efficiencies & favourable exchange realisation. Consequently, Reported PAT came in at 23.7 crore (up 6.4% YoY/ 15.3 % QoQ) vs. our expectation of 212.5 crore. The PAT is lower than estimates on account of higher than estimated tax outgo. The Board has approved an interim dividend of 2 per share Favourable CV cycle to aid growth The sharp decline in America s revenues from 1741 crore in FY15 to 19 crore in FY17E (share in standalone revenues reducing from ~39% to 29%) had led to overall decline in standalone revenues. However, in North America class 8 truck (a key segment for the America business) net order volumes (leading indicator of the truck build) has significantly improved from January 217 & is up 42.6% YoY to 185,855 units on a 9MCY17 basis. The management has guided for 15-2% growth in Class 8 build for both CY17E & CY18E. The European CV volumes are expected to grow 3%-5%. The CV space contributes ~4-45% in the international revenues. The Indian CV industry can grow by 5-1% in FY18E, as suggested by a leading CV player. Post FY18E, the CV volumes will grow in tandem with the infrastructure led growth. The domestic CV revenue growth of BFL will be linked to the CV industry volume growth & also the introduction of new products in the space. We expect standalone revenue/pat growth at ~24%/38% in FY17-FY19E. Oil & Gas segment is rebounding The North America oil & gas industry has shown a revival with oil & gas revenues more than ~ 3 crore in H2FY18 vs. ~ 65 crore in H1FY17. The rise in crude oil price & BFL introducing high technology products in oil & gas space will lead to growth in the segment. Even in Q2FY18, the 2.5x increase in industrial revenue was majorly contributed by the oil & gas segment. Preparing for future BFL is setting up centre for Light Weighting technology to address the product demand emerging from transition to BSVI & evolving electric vehicle segment. We remain upbeat on the long term growth potential of the company given the strong engineering capabilities the company has to cater to various high growth potential industries. Thus, we value BFL on an SOTP basis with standalone business at 31x FY19E EPS of 23.8 and other subsidiaries at 51/share to arrive at a target price of 79. We ascribe a Buy recommendation to the stock. ICICI Securities Ltd Retail Equity Research
Variance analysis (Standalone) Q2FY18 Q2FY18E Q2FY17 YoY (%) Q1FY18 QoQ (%) Comments Total Operating Income 1,258 1,294 891 41.2 1,22 4.6 Topline below estimates on account of lower than estimated domestic & international revenues Raw Material Expenses 441 459 37 43.7 421 4.8 Employee Expenses 17 111 9 18.4 16.6 Manufacturing expenses 341 36 153 123.3 221 54. EBITDA 369 363 248 49.2 335 1.3 EBITDA Margin (%) 29.4 28.1 27.8 157bps 27.9 151 bps Margins were above estimates on account of improved product mix, increased operational efficiencies & favourable exchange realisation Depreciation 78.1 77.4 72.6 7.6 77.4.9 Interest 21.7 17.3 18.9 14.4 18.5 16.9 Other Income 37 35 31 18.5 26 41.2 PBT 36.3 33.6 187. 63.8 264.9 15.6 Tax 12.6 91.1 6.1 7.6 88.2 16.2 Reported PAT 23.7 212.5 126.9 6.5 176.7 15.3 Lower than estimates on account of higher than estimated tax outgo Key Metrics Total Tonnage (MT) 58,659 57,754 46,23 27. 55,1 6.5 ASP ( /Kg) 214 219 189 13.6 213.6 Domestic revenues 529 554 466 13.5 56-5.7 Growth in domestic revenues was driven predominantly by growth in CV business Export revenues 74 712 452 55.9 671 4.8 Beat on export revenues is attributable to mainly the industrial segment which was driven by oil & gas & construction segment Change in estimates (Standalone) FY18E ( Crore) Old New % Change Old New % Change Comments Revenue 4,966 5,32 1.3 5,77 5,927 2.7 We have raised the domestic revenue guidance to reflect the better outlook of the CV industry EBITDA 1,59 1,483-1.7 1,819 1,867 2.6 EBITDA Margin (%) 3.4 29.5-92 bps 31.5 31.5-1 bps Reduce FY18E estimates after Q2FY18 results PAT 832 782-6. 1,57 1,19 5. EPS ( ) 17.9 16.8-5.9 22.7 23.8 5.2 FY19E Assumptions (Standalone) Current New Earlier Comments ( crore) FY16 FY17E FY18E FY19E FY18E FY19E Domestic Reveues 1,752 1,84 2,137 2,615 2,67. 2,456. Domestic revenues estimates increased due to better outlook on the CV business Export revenues Americas ($ mn) 237 161 274 32 28 328 America has led the growth in the export markets on both the automotive side as well as non-auto. Europe (Euro mn) 11 98 111 12 113 124 Management has maintained a stable growth outlook of ~3-5% on Europe CV market Asia Pac ($ mn) 19 18 29 32 29 32 USD/INR 65.2 67.8 66. 65.2 64.5 65 EUR/USD 1.1 1.1 1.1 1.2 1.1 1 ICICI Securities Ltd Retail Equity Research Page 2
Key conference call takeaways In the international business, revenues from America almost doubled (97% YoY) to 476 crore, while European revenues grew 8% YoY to 192.2 crore. In the export revenue, CV (~45% of export revenue) revenues grew by 24.5% YoY to 315 crore. This was led by strong growth in US truck business. The growing truck market indicates that the demand scenario will remain positive in the remaining year as well. In the export revenue, the industrial revenues grew sharply by ~2.5 times to 198.8 crore which was contributed by oil & gas & construction segment. The domestic revenues of 554 crore (including other operating income) grew by 26% YoY with the growth driven predominantly by the CV business. The management expects CV growth to be flat in FY18E. Currently the company is gaining market share in CV space & going ahead growth will be on the back of new products BFL is setting up Centre for Light Weighting technology (LWT), a fully automated state of the art manufacturing facility in Andhra Pradesh focused on Aluminium & Magnesium components & products. This facility will enable BFL to address the need for light weighting solutions driven by the shift from BSIV to BSVI in India & also evolving EV segment. The phase 1 of the new plant will come up in 18 months with an initial capex of 2 crore. The company has secured orders worth more than $ 4 million YTD FY18 across geographies & business applications Revenues of overseas subsidiaries increased by ~25% YoY due to commissioning of aluminium forging facility. The company realized USD-INR exchange rate of 7 for exports in Q2FY18. The company expects the Class 8 build to be in the range of 27-275 in CY17 & 32 in CY18. In CY16, the class 8 build was 228347 units ICICI Securities Ltd Retail Equity Research Page 3
Company Analysis Performance in sweet spot as export growth revives 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 ~61875 MT. In terms of business segments, CV segment remains a major revenue driver at ~45% while other segments are PV, oil & gas, power, railways, etc. In terms of non-auto share, share of the business has risen to ~45% much ahead of the targeted ~4%. We expect standalone revenues to grow at ~23.8% CAGR in FY17-19E and reach ~ 5927 crore in FY19E. On a consolidated basis, revenues are expected to grow in the same period at ~2% CAGR to 9215 crore. Going ahead, we expect standalone PAT to grow at ~37.7% CAGR in FY17-19E to 119 crore. Consolidated PAT is also expected to rise at ~28.4% CAGR in FY17-19E to 115 crore. Exhibit 1: Topline, bottomline trends 1 1,4 9 8 1,15 1,2 ( crore) 7 6 5 4 3 764 7,625 652 7,647 698 6,396 828 8,161 9,215 1, 8 6 4 ( crore) 2 1 2 - FY15 FY16 FY17E FY18E FY19E Total Operating Income PAT Source: Company press release, ICICIdirect.com Research Exhibit 2: Standalone tonnage, ASP trends (MT) 3 25 2 15 174,88 189,86 211,668 29,697 28,376 2,854 197,558 191,428 227,954 217,32 251,314 231,222 3 25 2 15 ( /MT) 1 1 5 5 FY14 FY15 FY16 FY17E FY18E FY19E Tonnage ASP ICICI Securities Ltd Retail Equity Research Page 4
Exhibit 3: Trends of regional share of business 1 8 (%) 6 4 2 39 49 42 43 45 38 37 37 36 29 19 19 19 16 16 3 3 3 4 4 FY15 FY16 FY17E FY18E FY19E Americas Europe Asia Pac India Margins to remain strong with value addition 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 have led to a sharp EBIDTA margin increase reflective in ASP jump from ~ 167,/MT in FY12 to ~ 191,428/MT in FY16. Going ahead, as demand increases and utilisation levels improve, we build in standalone EBITDA margins of 3.6% for FY19E. ICICI Securities Ltd Retail Equity Research Page 5
Exhibit 4: Consolidated EBITDA margin trends ( crore) 2 18 16 14 12 1 8 6 4 2 25 21 19 2 19 1,441 1,421 1,251 1,741 2,268 FY15 FY16 FY17E FY18E FY19E EBITDA EBITDA margin 3 25 2 15 1 5 - (%) Source: Company press release, ICICIdirect.com Research *Estimates Exhibit 5: Standalone trends of cost analysis ( /MT) 1 95 9 85 8 75 7 65 6 55 5 2,63 22,22 15,471 2,587 17,697 76,584 82,199 15,941 78,589 79,83 72,816 66,844 FY14 FY15 FY16 FY17E FY18E FY19E Raw material / MT Other expenses/ MT 25 2 15 1 5 ( /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 a capital intensive one 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 21.7, 27.5%, respectively, in FY19E. Exhibit 6: Standalone return ratio profile 3 27.5 (%) 25 2 15 1 19.8 21.3 17.6 18.4 16.7 15.4 21.7 17.8 21.7 5 - FY15 FY16 FY17E FY18E FY19E RoCE RoE Source: Company press release, ICICIdirect.com Research ICICI Securities Ltd Retail Equity Research Page 7
Outlook and valuation 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 de-risk the business from the vagaries of being just CV dependant. We remain upbeat on the long term growth potential of the company given the strong engineering capabilities the company has to cater to various high growth potential industries. Thus, we value BFL on an SOTP basis with standalone business at 31x FY19E EPS of 23.8 and other subsidiaries at 51/share to arrive at a target price of 79. We ascribe a Buy recommendation to the stock. Exhibit 7: Valuation SOTP Valuation Standalone FY19 EPS 23.8 P/E multiple 31 Per share value ( ) 739 Subsidiaries EBITDA ( crore) FY19E 41 EV/EBITDA multiple 7 Enterprise Value 2,767 Net debt (FY19E) 374 Target subsidiaries market cap ( crore) 2,393 Per share value 51 Total per share value ( ) 79 Exhibit 8: Key metrics (Consolidated) Sales Growth EPS Growth PE EV/EBITDA RoNW RoCE ( cr) (%) ( ) (%) (x) (x) (%) (%) FY16 7,647.3 14. -14.6 49.9 23.9 18.4 17.6 FY17E 6,396-16.4 15. 6.9 46.7 26.1 15.4 16.7 FY18E 8,161 27.6 17.8 18.7 39.3 18.7 17.8 21.7 FY19E 9,215 12.9 24.7 38.9 28.3 14.3 21.7 27.5 ICICI Securities Ltd Retail Equity Research Page 8
Recommended history versus consensus ( ) 8 7 6 5 4 3 2 1 Jan-16 Mar-16 Jun-16 Aug-16 Nov-16 Jan-17 Apr-17 Jun-17 Aug-17 1. 9. 8. 7. 6. 5. 4. 3. 2. Nov-17 1.. (%) Price Idirect target Consensus Target Mean % Consensus with BUY 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-17.2 78.9. 2 Sundaram Trading & Investment Pvt. Ltd. 3-Sep-17.1185 55.2. 3 KSL Holding Pvt. Ltd. 3-Sep-17.994 46.3. 4 Ajinkya Investment & Trading Co., Pvt. Ltd. 3-Sep-17.422 19.6. 5 Life Insurance Corporation of India 3-Sep-17.296 13.8-14.42 6 Reliance Nippon Life Asset Management Limited 3-Sep-17.213 9.9-6.61 7 Norges Bank Investment Management (NBIM) 3-Sep-17.26 9.6.71 8 The Vanguard Group, Inc. 3-Sep-17.141 6.6 -.12 9 UTI Asset Management Co. Ltd. 3-Sep-17.14 6.5 -.29 1 BlackRock Institutional Trust Company, N.A. 31-Oct-17.126 5.9.12 Shareholding Pattern (in %) Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Promoter 46.7 46.7 46.7 45.8 45.8 FII.4 6.8 8.2 12.1 15.6 DII 39.5 33.1 32. 29.3 25.1 Others 13.4 13.4 13. 12.8 13.5 Source: Reuters, ICICIdirect.com Research Recent Activity Buys Sells Investor name Value Shares Investor name Value Shares DSP BlackRock Investment Managers Pvt. Ltd. +15.36M +1.7M Life Insurance Corporation of India -13.3M -14.42M Norges Bank Investment Management (NBIM) +6.36M +.71M Reliance Nippon Life Asset Management Limited -59.57M -6.61M Canara Robeco Asset Management Company Ltd. +3.1M +.34M Kotak Mahindra Asset Management Company Ltd. -1.23M -1.13M Invesco Hong Kong Limited +2.34M +.26M Lyxor Asset Management -6.73M -.74M Tredje AP Fonden +1.63M +.19M ICICI Prudential Asset Management Co. Ltd. -4.27M -.47M Source: Reuters, ICICIdirect.com Research ICICI Securities Ltd Retail Equity Research Page 9
Financial summary (Consolidated) Profit and loss statement Crore (Year-end March) FY16 FY17E FY18E FY19E Total operating Income 7647 6396 8161 9215 Growth (%).3-16.4 27.6 12.9 Raw Material Expenses 3,352 2,438 3,59 3,963 Employee Expenses 946 931 1,183 1,29 Other expenses 1,927 1,776 1,727 1,695 Total Operating Expenditure 6,225 5,145 6,419 6,948 EBITDA 1421.3 1251.1 1741.4 2267.7 Growth (%) -1.4-12. 39.2 3.2 Depreciation 419 452 577 651 Interest 14 1 5 37 Other Income 134 119 86 88 PBT 996 818 1,2 1,667 Others Total Tax 341 249 372 517 PAT 652 698 828 115 Growth (%) -14.6 6.9 18.7 38.9 EPS ( ) 14.1 15. 17.8 24.7 Cash flow statement Crore (Year-end March) FY16 FY17E FY18E FY19E Profit after Tax 652 698 828 1,15 Add: Depreciation 419 452 577 651 (Inc)/dec in Current Assets 67 178-198 -299 Inc/(dec) in CL and Provisions 347-67 743 439 CF from operating activities 1,485 721 1,95 1,942 (Inc)/dec in Investments -265-11 (Inc)/dec in Fixed Assets -21-42 -54-54 Others -841 22 91 25 CF from investing activities -1,316-31 -413-299 Issue/(Buy back) of Equity Inc/(dec) in loan funds 8-1,2-15 -15 Dividend paid & dividend tax -515-868 -1,675-1,661 Inc/(dec) in Sec. premium Others -8 1,2 15 15 CF from financing activities -515-868 -1,675-1,661 Net Cash flow -26-349 -88 19 Opening Cash 681 475 126 39 Closing Cash 475 126 39 57 Balance sheet Crore (Year-end March) FY16 FY17E FY18E FY19E Liabilities Equity Capital 46.6 46.6 93.1 93.1 Reserve and Surplus 3,522 3,87 4,57 5,216 Total Shareholders funds 3,568 3,916 4,663 5,39 Total Debt 2,518 1,6 84 62 Deferred Tax Liability 183 261 261 261 Minority Interest / Others 128 188 56 56 Total Liabilities 6397 5425 582 6246 Assets Gross Block 7,17 7,277 7,348 7,598 Less: Acc Depreciation 3,537 3,989 4,565 5,217 Net Block 3,48 3,288 2,783 2,382 Capital WIP 583 4 528 528 Total Fixed Assets 4,63 3,688 3,311 2,91 Investments 859 1,234 1,234 2,94 Inventory 1,183 1,75 1,23 1,313 Debtors 1,146 1,341 1,27 1,363 Loans and Advances 437 39 5 57 Other Current Assets 472 65 772 825 Cash 475 126 39 57 Total Current Assets 3,714 3,187 3,298 3,616 Creditors 1,158 846 1,274 1,439 Provisions 213 54 81 92 Other Current Liabilities 1,18 2,36 1,332 1,596 Total Current Liabilities 2,551 3,26 2,687 3,127 Net Current Assets 1,163-19 61 489 Other non-current assets 312 522 664 753 Application of Funds 6397 5425 582 6246 Key ratios (Year-end March) FY16 FY17E FY18E FY19E Per share data ( ) EPS 14. 15. 17.8 24.7 Cash EPS 23. 24.7 3.2 38.7 BV 76.6 84.1 1.2 114. DPS 4.5 9. 1.8 1.8 Cash Per Share 1.2 2.7.8 1.2 Operating Ratios EBITDA Margin (%) 18.6 19.6 21.3 24.6 PBT / Net sales (%) 13.1 12.5 14.3 17.5 PAT Margin (%) 8.5 1.9 1.1 12.5 Inventory days 56.4 61.4 55. 52. Debtor days 54.7 76.5 54. 54. Creditor days 55.3 48.3 57. 57. Return Ratios (%) RoE 17.6 16.7 21.7 27.5 RoCE 18.4 15.4 17.8 21.7 RoIC 23.6 16.7 31.3 5.8 Valuation Ratios (x) P/E 49.7 54. 39.3 28.3 EV / EBITDA 23.9 26.1 18.7 14.3 EV / Net Sales 4.4 5.1 4. 3.5 Market Cap / Sales 4.3 5.1 4. 3.5 Price to Book Value 9.1 8.3 7. 6.1 Solvency Ratios Debt/EBITDA 1.8.8.5.3 Debt / Equity.7.3.2.1 Current Ratio 1.3 1.6 1.2 1.1 Quick Ratio.8 1..8.7. ICICI Securities Ltd Retail Equity Research Page 1
ICICIdirect.com coverage universe (Auto & Auto Ancillary) CMP M Cap EPS ( ) P/E (x) EV/EBITDA (x) RoCE (%) RoE (%) Sector / Company ( ) TP( ) Rating ( Cr) FY17 FY18E FY19E FY17 FY18E FY19E FY17 FY18E FY19E FY17 FY18E FY19E FY17 FY18E FY19E Amara Raja (AMARAJ) 748 87 Hold 12778 28. 27.5 37.6 26.7 27.2 19.9 16.1 15.6 11.9 25.8 22.9 26.4 18.5 15.8 18.3 Apollo Tyre (APOTYR) 231 275 Buy 13223 19.2 12.2 19.6 12. 19. 11.8 1.5 1.5 7.7 13.6 8.4 11.8 15.1 7.5 11. Ashok Leyland (ASHLEY) 114 12 Buy 3229 4.3 4.4 6.3 26.6 26. 18. 13.3 12.3 9.4 23.9 25.1 29.7 25. 18.8 22.7 Bajaj Auto (BAAUTO) 3185 317 Hold 92163 132.3 146.8 178.2 22. 19.8 16.3 17.6 16. 12.6 3.3 3.4 32.5 22.5 22.3 23.3 Balkrishna Ind. (BALIND) 1815 25 Buy 17542 84.3 17.7 127.8 21.7 17. 14.3 14.7 11.1 8.7 23.6 26.1 26.6 19.1 26.1 26.6 Bharat Forge (BHAFOR) 79 79 Hold 3259 15. 17.8 24.7 46.7 39.3 28.3 26.1 18.7 14.3 16.7 21.7 27.5 15.4 17.8 21.7 Bosch (MICO) 2958 233 Hold 6587 57.5 488.1 613.2 38.9 45.5 36.2 33.5 31.7 25.6 16.4 15.6 17.6 24.1 23.5 26.3 Eicher Motors (EICMOT) 295 3346 Buy 83167 655.9 828.5 126. 46.9 37.2 3. 27.2 21.3 17.1 39.2 38.8 36.8 36. 33.5 31.1 Exide Industries (EXIIND) 22 25 Buy 17166 8.2 8.1 1. 24.7 25. 2.2 15.4 14.1 11.7 18.5 17.9 19.7 14. 12.8 14.4 Hero Moto (HERHON) 3571 4475 Buy 71316 156.9 169.1 198.3 22.8 21.1 18. 16.4 15.5 13.1 48.7 44. 46. 35.8 33.4 33.9 JK Tyre & Ind (JKIND) 147 155 Hold 3334 16.6.7 22.1 8.9 26.7 6.6 7.5 11.2 5.4 11.2 5.4 13.9 16.6.8 21.1 Mahindra CIE (MAHAUT) 245 28 Buy 9262 9.6 11.9 13.9 25.5 2.7 17.7 12.9 11.3 1. 1.1 11.1 11.6 11.5 12.9 13.8 Maruti Suzuki (MARUTI) 8198 915 Buy 247744 242.9 289.1 365.4 33.7 28.4 22.4 24. 19.3 15.8 26.3 28.5 3.3 2.3 2.9 22.3 Motherson (MOTSUM) 358 335 Hold 75412 7.4 1.7 13.6 48.5 33.4 26.3 17.1 12.6 9.8 16. 22.3 27.7 19.6 24.7 25.2 Tata Motors (TELCO) 379 49 Buy 115557 22.3 31.3 44.4 17. 12.1 8.5 5.6 5.2 3.8 11.6 11.5 15.7 15. 14.7 2.2 Wabco India (WABTVS) 6795 72 Hold 12911 146.4 18.8 218.7 46.4 37.6 31.1 32.4 26. 21.1 18.4 18.7 18.6 24.6 25.2 25.1 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
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Investors are advised to see Risk Disclosure Document to understand the risks associated before investing in the securities markets. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to change without notice. ICICI Securities or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment in the past twelve months. ICICI Securities or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for services in respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction. ICICI Securities or its associates might have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the companies mentioned in the report in the past twelve months. ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its associates or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ICICI Securities nor Research Analysts and their relatives have any material conflict of interest at the time of publication of this report. It is confirmed that Nishit Zota, MBA & Vidrum Mehta, MBA Research Analyst, of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months. Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions. ICICI Securities or its subsidiaries collectively or Research Analysts or their relatives do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the publication of the research report. Since associates of ICICI Securities are engaged in various financial service businesses, they might have financial interests or beneficial ownership in various companies including the subject company/companies mentioned in this report. It is confirmed that Nishit Zota, MBA & Vidrum Mehta, MBA Research Analyst, do not serve as an officer, director or employee of the companies mentioned in the report. ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. Neither the Research Analysts nor ICICI Securities have been engaged in market making activity for the companies mentioned in the report. We submit that no material disciplinary action has been taken on ICICI Securities by any Regulatory Authority impacting Equity Research Analysis activities. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject ICICI Securities and affiliates to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction. 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