Gladiator Stocks MNC Thematic

Gladiator Stocks MNC Thematic Quality stocks with favourable risk-reward Scrip I-Direct Code Action Target Stoploss KSB Pumps KSBPUM Buy in the range of 650-670 784 595 Ingersoll-Rand India INGRAN Buy in the range of 740-765 920 685 Time Frame: 6 Months Research Analysts Dharmesh Shah dharmesh.shah@icicisecurities.com Pabitro Mukherjee pabitro.mukherjee@icicisecurities.com Nitin Kunte, CMT nitin.kunte@icicisecurities.com Vinayak Parmar vinayak.parmar@icicisecurities.com Dipesh Dagha dipesh.dagha@icicisecurities.com March 30, 2017

Nifty MNC Index: Charting new territories... The domestic stock indices are trading at life-time highs while many midcap and small cap stocks have delivered above normal returns over past quarter. Going forward, one has to remain more selective while picking the stocks as Quality companies with favourable risk reward will be difficult to find under given scenario The NSE MNC Index has scaled a new life-time high surpassing the yearly peaks of 2015 and 2016. Structurally, the current up move has triggered a bullish turnaround as the index has overhauled the four month decline between August to December 2016 in just two months. While the strong rally since the start of CY17 was led by heavyweights in the MNC space, we believe that quality names like Ingersoll Rand and KSB Pumps that are currently emerging out of major base formation, provide good risk/reward set-up for medium term investment Although MNC players in the industrial space have been trading at premium valuations with the strong parentage, healthy balance sheets and market share that these groups command across the globe as well as Indian markets. We expect the valuation premium of MNCs to sustain given their quality management, access to niche technologies, globally reputed brands and cheap finance Breakout from two year trading range augurs well for long term trend 2015 highsh 2016 high Weekly MACD diverging from its 9 period average within positive terrain indicating bullish momentum over medium term Source: Bloomberg, ICICIdirect.com Research 2

KSB Pumps (KSBPUM): Breakout from seven month basing pattern... CMP: 667.00 Buying Range: 650-670670 Target: 784.00 Stop loss: 595.00 Upside: 19% Stock Data 52 Week High / Low 774/542.10 50 days EMA 625 200 days EMA 620 52 Week EMA 621 Face Value ( ) 10 Market Capitallisation ( Cr.) 2384 *Recommendation given on i-click to gain on March 30 2017 at 11:16 hrs Stock price vs. BSE Small cap 750 700 650 600 550 500 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Price performance in last five years 140% 40% KSB Pump 54% 21% 145% BSE Smallcap -6% 1% -60% 2012 2013 2014 2015 2016 Year Source: Bloomberg, BSE, ICICIdirect.com Research 15,000 14,000 13,000 12,000 11,000 10,000 Key technical observations KSB Pumps, is a leading player in the pumps & valves industry, with a strong German parentage. The secondary corrective phase in the stock over past two years has created a fresh opportunity for investors to ride the next up leg within larger structural up trend. Breakout from seven month basing pattern augurs well... The share price surged to seven month highs in the current week after forming a basing pattern around 600, further augmenting bullish price structure. The basing pattern is likely to act as a launch pad for next leg of rally. The seven month consolidation highlights steady participation from value buyers near key support. The value area around 600 is placed at 61.8% retracement of the February July 2016 rally ( 503-774). Price structure remains robust... Longer time duration charts provide an interesting insight about the primary trend in the stock price. After a stupendous 12 month rally during March 2014 February 2015 ( 245-780) the share price has already spent 24 months in consolidation phase while the rally was corrected only by 50% price wise. An elongated time correction and shallower price correction underpins the basic tent of Dow Theory that secondary corrections are time consuming and forms part of primary trends. Momentum oscillators indicate build-up of positive momentum Among oscillators, the weekly MACD (E-12,26,9) is seen diverging from its nine-period average indicating strong momentum building in the share price and augurs well for continuance of the up move, going forward. Conclusion Based on the aforementioned technical observations, we believe the stock is well placed to continue its upward trend over the coming months and, therefore, offers an opportunity to ride the same with favourable risk-reward setup. As the share price has concluded healthy base building process, we expect it to continue trending up towards target of 784 as the share price is expected to challenge the life highs registered in February 2015. 3

KSB Pumps (KSBPUM): Weekly Bar Chart Breakout from seven month consolidation indicates major shift in price structure 780 774 Target @ 784 503 50% retracement of March 2014 February 2015 rally Breakout from 7 month range & higher bottom formation 245 Weekly MACD diverging from its 9 period average within positive terrain indicating bullish momentum over medium term Source: Bloomberg, ICICIdirect.com Research 4

KSB PUMPS: Fundamental view Stock Data Fundamental View Particular Amount Farmer friendly Union Budget 2017-18 provides irrigation thrust, KSB set to benefit Market Capitalization 2349.7 crore Union Budget 2017-18 delivered on its expectations with a clear focus on achieving its vision to double farm income Total Debt (CY16) 5.2 crore by 2022. Total allocation towards agriculture & farmer welfare was increased 16% YoY to 41,855 crore in FY18E. Cash and Investments (CY16) 202.1 crore Notably, the government also proposed to increase the corpus under Nabard for long term irrigation projects to EV 2152.7 crore 40,000 crore from the earlier limit of 20,000 crore. Apart from this a dedicated micro irrigation fund is proposed 52 week H/L Equity capital Face value 774 / 503 34.8 crore 10 to be setupwith an initiali i corpus of 5000 crore. Allocation towards the flagship Pradhan Mantri Krishi Sinchayee Yojana was also increased 28% YoY to 7377 crore. Higher budgetary spends and implementation of these mega projects bodes well for domestic pump industry and set to benefit KSB going forward Key Metrics Pumps segment to be key driver for growth, going forward! CY15 CY16 CY17E CY18E On a full year basis in CY16, pump sales came in at 684 crore, up 2% YoY. However, KSB is in the middle of executing an impressive capex programme with increasing supplies to the domestic high engineered pump market P/E 34.2 36.0 28.9 25.1 and development of KSB India as a global export hub/sourcing agent for the parent group i.e. KSB AG. On the Target P/E 35.5 37.3 30.0 26.1 macro side, the thrust of the central government on increasing the penetration of irrigation, promotion of energy EV / EBITDA 20.0 21.7 17.3 14.9 efficient pumps, wider penetration of solar water pumps and incremental capex execution by the domestic oil & gas refining sector for modernisation and upgradation bode well for KSB. In the pump segment, we expect sales to P/BV 3.9 3.6 3.4 3.1 grow at 12.5% CAGR in CY16-18E to 858 core in CY18E ( 684 crore in CY16). RoNW (%) 11.4 10.1 11.6 12.2 RoCE (%) 12.8 10.6 12.6 13.5 Strong parentage, leader in technological intensive pumps market Financial Highlights Crore CY15 CY16 CY17E CY18E Net Sales 820.7 817.6 912.0 1,014.6 EBITDA 106.0 99.1 122.6 141.7 Net Profit 68.7 65.3 81.3 93.5 EPS ( ) 19.7 18.8 23.4 26.9 KSB Pumps, promoted by KSB AG (Germany), was established in 1960 and set up a pump manufacturing facility at Pimpri, Pune (Maharashtra). The company has been at the forefront of importing technology from its parent for delivering cutting edge, high quality products in the domestic market. Globally, KSB AG is one of the largest pump manufacturers with sales in excess of 2.2 billion (~US$2.8 billion) out of the total pump market, which is pegged at US$47 billion as of 2014. In India, it commands a market share of ~8% (pump sales of 664 crore in CY14) out of the total industry size of 8500 crore as of FY14. KSB supplies ~35% of its pumps in the standard pumps segment (used for irrigation & building services) while supplying the rest 65% of its pumps to the industrial segment, which is technology intensive in nature. Source: Company, ICICIdriect.com Research Healthy balance sheet; strength to grow!! KSB has a healthy balance sheet with surplus cash of 200 crore (CY16). Being present only in the product business (not EPC) it witnessed an efficient working capital cycle of ~50 days (best in industry). With reasonable growth drivers in place and the company executing an impressive capex programme we expect growth to return, going forward. On a consolidated basis, we model sales, PAT CAGR of 11.4%, 19.7%, respectively, in CY16-18E. 5

Ingersoll-Rand (INGRAN): Symmetrical triangular breakout augurs well... CMP: 760.00 00 Buying Range: 740-765 765 Target: 920.0000 Stop loss: 685.00 Upside: 22% Stock Data 52 Week High / Low 790/621 50 days EMA 698 200 days EMA 700 52 Week EMA 705 Face Value ( ) 10 Market Capitallisation ( Cr.) 2410 *Recommendation given on i-click to gain on March 30 2017 at 11:13 hrs Stock price vs. BSE 500 780 730 680 630 580 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Ingersol Rand BSE500 Price performance in last five years 140% 40% -60% 32% -15% 113% -11% -7% 2012 2013 2014 2015 2016 Year Source: Bloomberg, BSE, ICICIdirect.com Research 13,000 12,500 12,000 11,500 11,000 10,500 10,000 Key technical observations Ingersoll-Rand India is a leading innovation and solutions provider with powerful brands and leading positions within their market. The company focuses on the air solution segment. The stock witnessed a multi-fold rally in 2014-15 rallying from a low of 336 in February 2014 to an all time high of 1105 in April 2015. After the three-fold rally the stock entered into a corrective phase to work off the excessesdeveloped d during the 2014-15 dream run. The recent developments on price front indicate conclusion of the 24 month corrective phase and signal resumption of the primary uptrend thereby providing fresh entry opportunity to ride the next up move. Breakout from Triangular consolidation pattern signals resumption of uptrend... The entire price correction since December 2015 till date has occurred in a well defined Symmetrical Triangle pattern as highlighted in the adjoining weekly time interval chart. A triangular base formation pattern formed at the end of the corrective trend signals accumulation by stronger hands ahead of the impending reversal. Thestrong up move in current weeks trade has resulted in a decisive breakout from the symmetrical triangle pattern. The price breakout is also accompanied with strong volumes of more than double of the 50 weeks average volume of 0.7 lakh shares per week highlighting larger participation at the breakout level signalling a structural turnaround in favour of the bulls. The price wise correction since all time high of 1105 got arrested near the 61.8% Fibonacci retracement of the entire 2014-15 bull run at 590 levels. Thereafter, the stock has been witnessing a base formation above its long term 200 weeks EMA which was then placed around 600 levels. The sideways consolidation above the key support of 200 weeks average highlights positive price structure. The lower band of the current triangular consolidation is placed around 685 levels, which will act as a major support base for the stock, going forward. Long term time wise behaviour quantifies overall bullish price structure... The major rally in 2014-15 ( 336 to 1105 ) occurred in 14 months. The corrective decline off the April 2015 highs of 1105 has already completed 24 months while retracing just 61.8% of its preceding rally. Extended time wise correction and limited price correction highlights the robust price structure Momentum oscillators indicate build-up of positive momentum Among oscillators, the weekly MACD (E-12,26,9) is seen sustaining above its nine period and has recently venturing into the positive territory above its trigger line signalling build-up of positive momentum and augurs well for continuance of the up move, going forward. Conclusion Based on the above observations, we believe the stock is attractively poised and offers good entry opportunity from a medium term horizon. We expect the stock to resolve higher from here on and retrace at least 61.8% of the entire decline of 2015-2016 ( 1105 to 577) there by projecting upside towards 920 levels in the medium term. 6

Ingersoll-Rand (INGRAN): Weekly Bar Chart 1105 Breakout above Symmetrical Triangle pattern signals resumption of primary uptrend 61.8% retracement of entire decline at 920 832 786 645 577 336 Base formation at the major support area around 600 being confluence of : -The long term 200 weeks EMA - The 61.8% retracement of the preceding rally ( 336-1105) Rise in volumes at the breakout level highlight accumulation by stronger hands Weekly MACD giving buy signal indicating bullish bias for the medium term Source: Bloomberg, ICICIdirect.com Research 7

Strategy Follow up Open Recommendations: Date Scrip Name Rec Price Target Stoploss CMP Return till date (%) 28-Feb-17 Kajaria Ceramics 578 679 523 564-2.4% 14-Mar-17 Titan 453 548 398 455 0.4% 15-Mar-17 Kansai Nerolac 360 425 326 375 4.2% 17-Mar-17 Dabur 273 318 248 275 0.7% 20-Mar-17 IDBI 75 98 66 75 0.0% 23-Mar-17 GMDC 121 154 102 125 3.3% 28-Mar-17 Sun TV Network 780 920 715 787 0.9% Summary Performance - Recommendations till date Open Recommendations 7 Total Recommendations 131 Yield on Positive recommendations 19.0% Closed Recommendations 124 Yield on Negative recommendations -8.0% Positive Recommendations 89 Strike Rate 72% 8

Notes It is recommended to enter in a staggered manner within the prescribed range provided in the report Once the recommendation is executed, it is advisable to keep strict stop loss as provided in the report on closing basis. The recommendations are valid for six months and in case we intend to carry forward the position, it will be communicated through separate mail. Trading portfolio allocation It is recommended to spread out the trading corpus in a proportionate manner between the various technical research products Please avoid allocating the entire e trading corpus to a single stock or a single product segment Within each product segment it is advisable to allocate equal amount to each recommendation For example: The Daily Dil Calls Cll product carries 3 to 4 intraday recommendations. It is advisable to allocate equal amount to each recommendation 9

Recommended product wise trading portfolio allocation Product Allocations Product wise Max allocation in allocation 1 Stock Number of Calls Return Objective Frontline Stocks Mid Cap Stocks Duration Daily Calls 8% 2-3% 3-4 Stocks 0.5-1% 2-3% Intraday Stocks on the Move 6% 3-5% 7-10 Per Months 7-10% 10-15% 3 Months Weekly Calls 8% 3-5% 1-2 Stocks 5-7% 7-10% 1 Week Weekly Technicals 8% 3-5% 1-2 Stocks 5-7% 7-10% 1 Week Monthly Call 15% 5% 2-3 Stocks 7-10% 10-15% 1 Month Monthly Technical 15% 2-4% 5-8 Stocks 7-10% 10-15% 1 Month Techno Funda 15% 5-10% 1-2 Stocks 10% and above 15% and above 6 Months Gladiator Stocks 15% 5-10% 1-2 Stocks 15% and above 20% and above 6 Months Cash 10% - 100% 10

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 400 093 research@icicidirect.com 11

Disclaimer ANALYST CERTIFICATION We /I, Dharmesh Shah, Dipesh Dagha, Nitin Kunte, Pabitro Mukherjee, Vinayak Parmar Research Analysts, 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 (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. ICICI Securities Limited is a SEBI registered Research Analyst with SEBI Registration Number INH000000990.ICICI Securities is a wholly-owned subsidiary of ICICI Bank which is India s largest private sector bank and has its various subsidiaries engaged in businesses of housing finance, asset management, life insurance, general insurance, venture capital fund management, etc. ( associates ), the details in respect of which are available on www.icicibank.com ICICI Securities is one of the leading merchant bankers/ underwriters of securities and participate in virtually all securities trading markets in India. We and our associates might have investment banking and other business relationship with a significant percentage of companies covered by our Investment Research Department. ICICI Securities generally prohibits its analysts, persons reporting to analysts and their relatives from maintaining i i a financiali interest in the securities ii or derivatives i of any companies that the analysts cover. The information and opinions in this section have been prepared by ICICI Securities and are subject to change without any notice. The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of ICICI Securities. While we would endeavour to update the information herein on reasonable basis, ICICI Securities is under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent ICICI Securities from doing so. Non- rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities policies, in circumstances where ICICI Securities might be acting in an advisory capacity to this company, or in certain other circumstances. The research recommendations are based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. These research recommendations and information herein is solely for informational purpose and shall not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. ICICI Securities will not treat recipients as customers by virtue of their receiving these recommendations. Nothing in this section constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed herein may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. The recipient should independently evaluate the investment risks. The value and return on investment may vary because of changes in interest rates, foreign exchange rates or any other reason. ICICI Securities accepts no liabilities whatsoever for any loss or damage of any kind arising out of the use of these recommendations. Past performance is not necessarily a guide to future performance. 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. 12

Disclaimer 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 ed any compensation from the companies mentioned ed hereinei during the period preceding twelve months from the date of these recommendations 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 forproductsorservicesotherthaninvestmentbankingormerchant banking or brokerage services from the companies mentioned herein 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 reports. It is confirmed that Dharmesh Shah, Dipesh Dagha, Nitin Kunte, Pabitro Mukherjee and Vinayak Parmar, Research Analysts giving these recommendations have not received any compensation from the companies mentioned herein 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/companies mentioned herein asof the last day of the month preceding the publication i of these research recommendations. Since Associates (ICICI group companies) 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 herein. It is confirmed that Research Analysts do not serve as an officer, director or employee or advisory board member of the companies mentioned herein. ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented herein. Neither the Research Analysts nor ICICI Securities have been engaged in market making activity for the companies mentioned herein. We submit that no material disciplinary action has been taken on ICICI Securities by any Regulatory Authority impacting Equity Research Analysis activities. This report or recommendations are 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. 13