EXIDE INDUSTRIES LTD - Q3 FY17 Exide Industries Ltd reported stable growth in December quarter FY17. Revenue or Income From Operations, PAT and EBDITA all exhibited positive growth of 12%, 9% and 7% respectively.  Revenue rose 12% YOY and stood at Rs. 19496 Mn compared to Rs. 17381 Mn in the current December quarter.  Sequentially growth rate was negative at 10% dented by demonetization & high competition. Net Profit grew by 9% yearly at Rs. 1515 Mn against Rs. 1385 Mn in the same period previous year but with a quarterly decline of 16% in the current December quarter. EBDITA stood at Rs. 2647 Mn compared to Rs. 2466 Mn in the same period previous year growing by 7% YOY whereas QOQ negative growth was 15% in the current December quarter. Expenditure jumped 15% YOY from Rs. 15389 Mn to Rs. 17721 Mn in the current December quarter. On quarterly basis there was decline of 8% to cope with low revenue growth.  As a result EBDITA margin declined 62 basis points YOY and was reported at 13.57% as operating expenditure growth outpaced revenue in the current December quarter. In addition to basic operating cost, higher interest or Finance costs increased about 700% YOY & depreciation rising by 30% took its toll on the company’s bottom-line in current quarter. Thus Net Profit Margin was reported at 7.79% falling 20 basis points compared to same period previous year. Other Income provided respite rising 84% QOQ and was reported at Rs. 350 Mn compared to Rs. 75 Mn corresponding quarter previous year growing 5 times YOY in current Q3 FY17 Exide’s quarterly numbers have been impacted by sluggish growth in OEM business especially motorcycles due to demonetization in the December quarter. The company is expected to perform well in the coming quarters as demonetization impact wears off and auto sales pick up. The company has witnessed growth in replacement sales of automotive & motorcycle batteries and solar & UPS batteries in the current quarter. We recommend BUY for the stock for medium & long term investment with PE multiple of 25.33 x FY17E & 22.68 x FY18E at CMP of 213.10. P/BV is seen at 3.48 x FY17E & 3.01   x FY18E with a target price of Rs. 295. Disclaimer                                                                               The information and opinions contained in the research reports have been compiled or arrived at from sources believed reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness. The research report does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Clients should consider whether any advice or recommendation in this research is suitable for their particular circumstances and, if appropriate, seek professional advice, including but not limited to tax advice. The reports do not take into account the particular investment objectives, financial situations, risk profile or needs of individual clients. The user assumes the entire risk of any use made of this information. This report is not to be relied upon in substitution for the exercise of independent judgment. The price and value of investments referred to in this research and the income from them may fluctuate. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Research data and reports published/ emailed/ text messaged via Short Messaging Services, Online Messengers, WhatsApp etc/transmitted through mobile application/s, including but not limited to FLIP™, Video Widget, telephony networks, print or electronic media and or those made available/uploaded on social networking sites (e.g. Facebook, Twitter, LinkedIn etc) is for informational purposes only. The reports are provided for assistance and are not intended to be and must not alone be taken as the basis for an investment decision. The user assumes the entire risk of any use made of this information. Though disseminated to clients simultaneously, not all clients may receive the reports at the same time. We will not treat recipients as clients by virtue of their receiving this report. The reports include projections, forecasts and other predictive statements which represent our assumptions and expectations in the light of currently available information. These projections and forecasts are based on industry trends, circumstances and factors which involve risks, variables and uncertainties. The actual performance of the companies represented in the report may vary from those projected. The opinions expressed in the reports are subject to change but we have no obligation to tell our clients when our opinions or recommendations change. The reports are non-inclusive and do not consider all the information that the recipients may consider material to investments. We shall not be in any way responsible for any indirect, special or consequential damages that may arise to any person from any inadvertent error in the information contained in the reports nor do they take guarantee or assume liability for any omissions of the information contained therein. Information contained therein cannot be the basis for any claim, demand or cause of action. These data, reports and information do not constitute scientific publication and do not carry any evidentiary value whatsoever. The user should consult their own advisors to determine the merits and risks of investment and also read the Risk Disclosure Documents for Capital Markets and Derivative Segments as prescribed by Securities and Exchange Board of India before investing in the Indian Markets. The securities discussed in this report may not be suitable for all investors. Investors must make their own investment decision based on their own investment objectives, goals and financial position and based on their own analysis. Prospective investors and others are cautioned that any forward-looking statements, if any, are not predictions and may be subject to change without notice. This report may provide the addresses of, or contain hyperlinks to websites. Except to the extent to which the report refers to material we take no responsibility whatsoever for the contents therein. Such addresses or hyperlinks are provided solely for your convenience and information and the content of the linked site does not in any way form part of this report. Accessing such website or following such link through this report shall be at your own risk. The author of this Research Report accepts no liability and will not in any way be responsible for the contents of this report or for any losses, costs, expenses, charges, including notional losses/lost opportunities incurred by a recipient as a result of acting or non-acting on any information/material contained in the report. This is not an offer to sell or a solicitation to buy any securities or an attempt to influence the opinion or behavior of investors or recipients or provide any investment/tax advice. 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.

CEAT LTD Q3 FY17 - RESEARCH REPORT

CEAT LTD - Q3 FY17 (Consolidated) 

CEAT Ltd reported subdued December quarter results PAT & EBDITA declining in double digits. Impacted by demonetization and rising rubber & crude prices, the company still managed to register volume growth of about 10.70% YOY. PAT stood at Rs. 838 Mn against Rs. 1122 Mn corresponding period previous year declining 25%. Revenue was seen at Rs. 15572 Mn rising 5% YOY, compared to Rs. 14838 Mn same quarter previous year. On sequential basis, sales/revenue fell 2.2% on account of marginal volume decline mainly due to demonetization. QOQ, exports grew by about 5% while domestic volume saw a decline of 4%.EBDITA was reported at Rs. 1592 Mn in Q3 FY17 against Rs. 1931 Mn in Q3 FY16. Other Income saved the show rising 55% sequentially and 10% YOY. Though operating cost is stagnant QOQ, yearly jump is around 9% with raw material cost & depreciation taking the biggest hit rising 10% & 33% YOY in the current December quarter. EBDITA Margin was shaved off 279 basis points whereas Net Profit Margin was lower by 218 basis points YOY. EBDITA & Net Profit Margin was reported at 10.22% & 5.38% in the current December quarter.  One basis point is 1/100^th of a percentage. The decline is largely due to demand drop in passenger and two wheeler segments on account of demonetization and mild increase in raw material cost in Q3 FY17. 

CEAT Ltd with market cap of Rs. 46702 Mn is a major player in two wheeler & passenger cars & utility vehicles segment. The company is focused on its capex plans of about Rs. 28000 Mn over the next five years which will increase its capacity by 1 million tyres in TBRs, 17 million in two-wheeler tyres and about 6 million in PCR tyres per annum. The company is expected to improve its margins after June quarter as demonetization & raw material pressure wears off and it undertakes price rise in the coming months.  We recommend BUY for the stock for medium & long term investment with PE multiple of 12.02 x FY17E & 10.71 x FY18E with a target price of Rs. 1350. Disclaimer                                                                               The information and opinions contained in the research reports have been compiled or arrived at from sources believed reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness. The research report does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Clients should consider whether any advice or recommendation in this research is suitable for their particular circumstances and, if appropriate, seek professional advice, including but not limited to tax advice. The reports do not take into account the particular investment objectives, financial situations, risk profile or needs of individual clients. The user assumes the entire risk of any use made of this information. This report is not to be relied upon in substitution for the exercise of independent judgment. The price and value of investments referred to in this research and the income from them may fluctuate. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Research data and reports published/ emailed/ text messaged via Short Messaging Services, Online Messengers, WhatsApp etc/transmitted through mobile application/s, including but not limited to FLIP™, Video Widget, telephony networks, print or electronic media and or those made available/uploaded on social networking sites (e.g. Facebook, Twitter, LinkedIn etc) is for informational purposes only. The reports are provided for assistance and are not intended to be and must not alone be taken as the basis for an investment decision. The user assumes the entire risk of any use made of this information. Though disseminated to clients simultaneously, not all clients may receive the reports at the same time. We will not treat recipients as clients by virtue of their receiving this report. The reports include projections, forecasts and other predictive statements which represent our assumptions and expectations in the light of currently available information. These projections and forecasts are based on industry trends, circumstances and factors which involve risks, variables and uncertainties. The actual performance of the companies represented in the report may vary from those projected. The opinions expressed in the reports are subject to change but we have no obligation to tell our clients when our opinions or recommendations change. The reports are non-inclusive and do not consider all the information that the recipients may consider material to investments. We shall not be in any way responsible for any indirect, special or consequential damages that may arise to any person from any inadvertent error in the information contained in the reports nor do they take guarantee or assume liability for any omissions of the information contained therein. Information contained therein cannot be the basis for any claim, demand or cause of action. These data, reports and information do not constitute scientific publication and do not carry any evidentiary value whatsoever. The user should consult their own advisors to determine the merits and risks of investment and also read the Risk Disclosure Documents for Capital Markets and Derivative Segments as prescribed by Securities and Exchange Board of India before investing in the Indian Markets. The securities discussed in this report may not be suitable for all investors. Investors must make their own investment decision based on their own investment objectives, goals and financial position and based on their own analysis. Prospective investors and others are cautioned that any forward-looking statements, if any, are not predictions and may be subject to change without notice. This report may provide the addresses of, or contain hyperlinks to websites. Except to the extent to which the report refers to material we take no responsibility whatsoever for the contents therein. Such addresses or hyperlinks are provided solely for your convenience and information and the content of the linked site does not in any way form part of this report. Accessing such website or following such link through this report shall be at your own risk. The author of this Research Report accepts no liability and will not in any way be responsible for the contents of this report or for any losses, costs, expenses, charges, including notional losses/lost opportunities incurred by a recipient as a result of acting or non-acting on any information/material contained in the report. This is not an offer to sell or a solicitation to buy any securities or an attempt to influence the opinion or behavior of investors or recipients or provide any investment/tax advice. 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.

BALKRISHNA INDUSTRIES LTD RESEARCH REPORT - Q3 FY17

BALKRISHNA INDUSTRIES LTD - Q3 FY17 BALKRISHNA Industries Ltd reported strong December quarter with PAT & EBDITA rising in double digits at 94% & 77% respectively YOY.  PAT stood at Rs. 1857 Mn against Rs.956 Mn corresponding period previous year. Revenue was seen at Rs. 8968 Mn rising 26% YOY and stood at Rs. 7114 Mn in Q3 FY16. EBDITA followed suit rising 1.7 times and was reported at Rs. 3064 Mn in Q3 FY17 against Rs. 1727 Mn corresponding quarter previous year. Profit Before tax at Rs. 2574 Mn almost doubled on yearly basis as forex gain of Rs.345 Mn was reported in the current December quarter. Other Income too played it’s part trebling YOY buttressing company’s bottom-line in the current quarter. Other Income was reported at Rs. 285 Mn compared to Rs. 102 Mn in same quarter previous year. Higher volume growth, controlled cost structure, reduced finance costs have led to phenomenal growth for both EBDITA & Net Profit Margins. EBDITA Margin jumped 989 bp whereas Net Profit Margin improved 726 basis points YOY. One basis point is 1/100th of a percentage. EBDIA & Net Profit Margin stood at 34.17% & 20.71% in the current December quarter. The company is also focused on deleveraging itself and interest costs have been declining over the previous 4-5 quarters. Last but not least, the company has reported 22% volume growth at 40415 MT in the current quarter compared to 33010 MT same period previous year. Balkrishna Industries Ltd (BKT) with market cap of Rs. 114047 Mn has more than 85% of its earnings dependent on exports.   The company has performed in the backdrop slow global growth and high currency fluctuations. In addition to that BKT is also focused on rationalizing its debt burden by utilizing its high cash holdings.  The company has current cash holdings of about Rs.11930 Mn in Q3 FY17. We recommend BUY for the stock for medium & long term investment with PE multiple of 14.89 x FY17E & 13.60 x FY18E with a target price of Rs. 1320. Disclaimer                                                                               The information and opinions contained in the research reports have been compiled or arrived at from sources believed reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness. The research report does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Clients should consider whether any advice or recommendation in this research is suitable for their particular circumstances and, if appropriate, seek professional advice, including but not limited to tax advice. The reports do not take into account the particular investment objectives, financial situations, risk profile or needs of individual clients. The user assumes the entire risk of any use made of this information. This report is not to be relied upon in substitution for the exercise of independent judgment. The price and value of investments referred to in this research and the income from them may fluctuate. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Research data and reports published/ emailed/ text messaged via Short Messaging Services, Online Messengers, WhatsApp etc/transmitted through mobile application/s, including but not limited to FLIP™, Video Widget, telephony networks, print or electronic media and or those made available/uploaded on social networking sites (e.g. Facebook, Twitter, LinkedIn etc) is for informational purposes only. The reports are provided for assistance and are not intended to be and must not alone be taken as the basis for an investment decision. The user assumes the entire risk of any use made of this information. Though disseminated to clients simultaneously, not all clients may receive the reports at the same time. We will not treat recipients as clients by virtue of their receiving this report. The reports include projections, forecasts and other predictive statements which represent our assumptions and expectations in the light of currently available information. These projections and forecasts are based on industry trends, circumstances and factors which involve risks, variables and uncertainties. The actual performance of the companies represented in the report may vary from those projected. The opinions expressed in the reports are subject to change but we have no obligation to tell our clients when our opinions or recommendations change. The reports are non-inclusive and do not consider all the information that the recipients may consider material to investments. We shall not be in any way responsible for any indirect, special or consequential damages that may arise to any person from any inadvertent error in the information contained in the reports nor do they take guarantee or assume liability for any omissions of the information contained therein. Information contained therein cannot be the basis for any claim, demand or cause of action. These data, reports and information do not constitute scientific publication and do not carry any evidentiary value whatsoever. The user should consult their own advisors to determine the merits and risks of investment and also read the Risk Disclosure Documents for Capital Markets and Derivative Segments as prescribed by Securities and Exchange Board of India before investing in the Indian Markets. The securities discussed in this report may not be suitable for all investors. Investors must make their own investment decision based on their own investment objectives, goals and financial position and based on their own analysis. Prospective investors and others are cautioned that any forward-looking statements, if any, are not predictions and may be subject to change without notice. This report may provide the addresses of, or contain hyperlinks to websites. Except to the extent to which the report refers to material we take no responsibility whatsoever for the contents therein. Such addresses or hyperlinks are provided solely for your convenience and information and the content of the linked site does not in any way form part of this report. Accessing such website or following such link through this report shall be at your own risk. The author of this Research Report accepts no liability and will not in any way be responsible for the contents of this report or for any losses, costs, expenses, charges, including notional losses/lost opportunities incurred by a recipient as a result of acting or non-acting on any information/material contained in the report. This is not an offer to sell or a solicitation to buy any securities or an attempt to influence the opinion or behavior of investors or recipients or provide any investment/tax advice. 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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