India Strategy: Nifty Gold

India Strategy July 2020

Nifty Sensex

Gold

Not out of the woods as yet Amnish Aggarwal [email protected]

July 15, 2020

91-22-6632 2214

1

India Strategy Sector Update July 15, 2020

Not out of the woods as yet NIFTY EPS cut by 14.4% and 12.1% for FY21 and FY22: FY20 turned out to be a year with flat NIFTY EPS at 444. We have cut our FY21 and FY22 Nifty EPS by 14.4% and 12.1% and introduced FY23 EPS nos. we now estimate 3% decline in NIFTY EPS for FY21, 34% growth in FY22 and 18% growth in FY23. As FY22 will be a year over a covid-29 base FY23 will be first year of normal growth. While our FY21 EPS estimates are higher than consensus by 2.1%, they are lower than consensus by 3.2% and 7.1% for FY22 and FY23 respectively. Auto, Telecom, BFSI and Metals will be key driver of earnings in FY23 while FY22 will show broad based recovery. We have cut 12-month NIFTY target to 11919 based on 19.7xJune22 EPS (10-year average). Although markets have seen a sharp post bottom of March2020 and the near term outlook is uncertain, we see little probability of similar correction in coming months, sans covid-19 pandemic going out of control. Headwind overweighing tailwinds Headwinds

Tailwinds

Rising number of Covid-19 cases City/State based lockdowns might disrupt supply chains again Employment generation to suffer given tepid consumer demand Fiscal slippage likely: 1) poor tax collection, 2) huge disinvestment unlikely given low price for PSU stocks and 3) Increase in spending. Poor credit growth (Jun’20 by 6.2% vs 12.2 in Jul’19)

Monsoons and Crop sowing trends Free Ration, MNREGA and Gold prices positive for rural sentiments. Lower crude oil price benefitting Rs24-41bn Lower inflation amid COVID-19 led demand slowdown Hopes of another round of stimulus over coming few months

Source: PL COVID- 19 Hits Business

Covid-19 remains a stumbling block

centers State

% of National Cases

Maharashtra

29.0%

Tamil Nadu

15.8%

Delhi

12.8%

Gujarat

4.8%

Karnataka

4.4%

Major City % of state total Mumbai (37%), Thane (24%), Pune (15%) Chennai (49%)

Covid-19 still remains the biggest stumbling block despite India facing a lockdown and restrictions for nearly 4 months now. India has seen close to 940 thousand infected patients, 24 thousand deceased and recovery rate of 63%.



Testing has been at a very low level in India (12.5mn/1.25bn), indicating large number of asymptomatic cases and the battle might be still a long drawn one.

Ahmedabad (52%), Surat (18%) Bangalore (48%)

Source: GoI, PL



Covid-19 patients are still rising at an increasing pace (29900 new patients on July14th as against 11400 on Jun14) with cumulative no 3x in one month.



Large cities like Mumbai (MMR), Delhi (NCR), Chennai, Hyderabad, Pune, Bangalore, Ahmedabad etc. are facing the brunt of covid-19 pandemic.

Amnish Aggarwal [email protected] | 91-22-66322233



Covid-19 has started to spread in states less impacted thus resulted in reimposition of city/state based local lockdowns. We note that Pune, Thane, UP, Bihar, Assam and west Bengal are witnessing more stringent lockdowns

July 15, 2020

2

India Strategy Rural demand leading the charge Rural India is leading the way for recovery post lockdown. This is in line with the Bumper Harvest, good water levels, high gold prices and MNREGA benefits are driving rural sentiments and demand

expectations which we cited in our thematic strategy report dated January 20, 2020 (Click on the Link for Detailed Report)



Rural sentiment is robust driven by bumper harvest, high crop prices, high water reservoir levels and wealth effect due to life time high gold prices.



Rural India is relatively immune to impact of covid-19 pandemic, which is working to their advantage.



MNREGA allocations have been increased to Rs1000bn and applications under MNREGA have increased from 12.8mn in April to 43.8mn in June2020. More than 40% of FY21 MNREGA allocation has been spent by June2020 thus injecting Rs400bn at the bottom end of pyramid.

Atamnirbhar Initiative targeting structural reforms Some of the structural reforms in Agri, Dairy and MSME sector will go a long way in industrial revival in post covid-19 world

GOI has initiated relief package, which is hardly 1% of GDP in incremental terms, but it has set the ball rolling to undertake reforms for 1) MSME sector 2) farm to fork initiative in agriculture 3) development of cold chain and farm gate infra 4) dairy infrastructure 5) concessional loans 6) change in limits of MSME and 7) funding for poorest of poor like street vendors, workers and landless. GOI has tried to use this opportunity to remove restrictions of direct sale of produce by farmers and providing credit for development of SME and MSME enterprises, dairy, poultry, fisheries and cottage industries. Although these initiatives will show their impact only over a period of time, they have been instrumental in initial hand holding during lockdown.

Capex cycle revival hinges on Govt. spending Capex cycle recovery looks bleak given that capacity utilization during pre COVID CPSE have been asked to spend 50% of planned Rs1650bn capex by 2Q. Private sector capex to suffer given low utilization levels

had declined to 60-65% and is yet to recover post lockdown. We expect private sector capex in digitization, automation of packing lines and steps to ensure social distancing, pharma API etc. FY21 capex intensity would be determined by award and execution of Govt projects. CPSE units had undertaken capex of Rs1660bn in FY20, GOI has target of Rs1650bn in FY21. CPSE have been instructed to spend 50% of this capex by the end of 2Q21 which will go a long way in reviving jobs and demand in the economy post Covid-19. We believe availability of labor will continue to impact industrial production, construction activity and real estate in the near term, however expect higher ordering of highways, ports, railways and other infra projects by GOI as the situation of covid-19 stabilizes.

Employment suffers, purchasing power to be hit Retail trade led by organized retail has suffered a major blow due to lockdown and closure of markets. Although markets have started opening gradually, most malls and big shopping centers are still closed, which is hurting sales. We believe this will impact millions of jobs at bottom end mainly of shop workers, sales men and people involved in transport, loading and unloading of goods.

July 15, 2020

3

India Strategy 

As per latest survey of RAI (Retailer Association of India), retail sales declined by 67% YoY during 15-30th June, 2020.



Although several Mall owners have given concessions in rentals and stores have started opening, sustainability for want of footfalls looks doubtful.



A number of PE funded retailers, food service restaurants cloud kitchens will be forced to down shutters permanently,



Online retail (Ecom) seems to be the biggest beneficiary of covid-19. The number of orders of major food and grocery retailers like Big Basket/ Grofers have grown by 50-80% since start of covid-19. Some of these players have significantly increased hiring and its delivery handling capability.

Ample liquidity, Moratorium impact Holds key 

Liquidity remains in abundance as RBI has also cut Repo and reverse repo rates and loan disbursements under various schemes of GOI have been accelerated. Banks have disbursed Rs350bn to MSME under ECLGS, SIDBI and NHB have disbursed Rs102 and 100bn to MFI, NBFC and HFC. Bank credit to NBFC is showing a growth of 25-26%



Lockdown and slowdown in business activity has seen just 6% credit growth even as deposit growth has accelerated to 11%



GOI has extended bank moratorium for another 3 months to August. Bank defaults and recognition of NPA remains single biggest risk as of now, in addition to slow growth in fresh disbursements on both wholesale and retail side. Although morat numbers in few retail segments like credit cards have shown reduction, we believe 2Q and 3Q numbers will show full impact of bank NPA and defaults.

Bank Moratorium book: 2Q/3Q disclosures hold key By Cust.

By Value

Bank

Effective Date

HDFC Bank ICICI Bank Axis Bank

25-Apr

KMB

30-Apr

26%

> corp

IndusInd

n/a

5%

SBI

st

May 1 week

22%

24%

PNB

15-Jun

30%

21%-22%

5% 21% (by borr) 23%

24%

13%

BOB

May End

55%

67%

67%

67%

Overall

Overall

Retail

SME

Corporate

31-Mar

<10%

<10%

Low

Low

30-Apr

30%

>30%

10%-12%

25-28%

>25% < retail Low

Low 7%-8%

Source: Company, PL

POST COVID-19 Markets: New leaders yet to emerge We believe that post COVID19 scenario will change forever the way people live, spend and enjoy thus changing the psychology of generation. While every major shakeout like this in the past has seen new leaders (Nineties was consumption, followed by dotcom, then Infra and then BFSI and Consumption), current rally has same old legs of BFSI and consumption so far. Technology led by Reliance and Insurance seem to be leading the rally, Pharma, Chemicals and Utilities continue July 15, 2020

4

India Strategy to languish. We have added Hero MotoCorp, Voltas and Lupin Labs to model portfolio and removed Inox Leisure and VIP Inds besides tinkering with weights. We have added IGL, Bajaj Electricals and Lupin Labs in top picks while removing Kalpataru, IPCA and Chola Finance. NIFTY target cut by 6% to 11919 on 14.4% and 12.1% EPS cut for FY21/22: NIFTY after making a high of 12544 has seen a low of 7625. We had indicated in our earlier strategy report that markets have seen the bottom in March and are unlikely to revisit those lows. Consequently, we are removing the bear case and now we indicate only the base case and bull case. We arrive at following scenarios: Bull case: we take last 10-year average PE of 19.7 and based on our June 22 EPS of Rs605, we arrive at 12-month NIFTY target of 11919 (12659 earlier based on 19.2x FY22 NIFTY EPS of 659). Although NIFTY on rebound conditions has traded at 20-22 times in the recent past. Base Case: Applying a base case PE of 13.5xJune22 EPS of 605 (12.8xFY22 earlier), 10 year low PE, we arrive at a NIFTY target of 8167 (8439 earlier). We believe markets are driven by liquidity even as FY21 and FY22 EPS has been cut by 14.4% and 12.1% respectively. Markets have already discounted a washout FY21 and have started looking beyond FY22. However, the pace of liquidity led rally suggests markets running ahead of fundamentals on hopes of recovery. Although resilient consumer demand and rural upsurge is positive, markets are ignoring the impact of re-imposition of local lockdowns, deterioration in fiscal conditions and purchasing power of large sections of population. Nifty 1-year forward PE 33.0 24.4

28.0

10 year Avg. 19.7x

23.0

22.4

18.0 13.0

Jul-20

Apr-20

Oct-19

Jan-20

Jul-19

Apr-19

Oct-18

Jan-19

Jul-18

Apr-18

Jan-18

Jul-17

Oct-17

Apr-17

Jan-17

Jul-16

Oct-16

Apr-16

Jan-16

Jul-15

Oct-15

Apr-15

Oct-14

Jan-15

Jul-14

Apr-14

Oct-13

Jan-14

Jul-13

Apr-13

Jan-13

Jul-12

Oct-12

Apr-12

Jul-11

Oct-11

8.0

Jan-12

13.5

Source: Bloomberg, PL

July 15, 2020

5

15-May-17 12-Jun-17 14-Sep-17 08-Oct-17 17-Nov-17 13-Dec-17 10-Jan-18 12-Feb-18 15-Mar-18 13-Apr-18 23-May-18 21-Jun-18 10-Jul-18 05-Oct-18 21-Nov-18 07-Jan-19 19-Feb-19 05-Apr-19 06-Jun-19 06-Jul-19 20-Aug-19 03-Oct-19 20-Nov-19 03-Jan-20 19-Feb-20 17-Apr-20 14-Jul-20

Jul-11

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

July 15, 2020 800 750 700 650 603 600 550 500 450 400 FY19

598 658

574

FY20

635 FY21E

647

476

FY22E

624

699

Jul-20

Apr-20

Jan-20

Oct-19

Jul-19

Apr-19

Jan-19

Oct-18

Jul-18

Apr-18

Jan-18

Oct-17

Jul-17

Apr-17

Jan-17

Oct-16

Jul-16

Apr-16

Jan-16

Oct-15

Jul-15

Apr-15

Jan-15

Oct-14

Jul-14

Apr-14

Jan-14

Oct-13

Jul-13

Apr-13

Jan-13

Oct-12

Jul-12

Apr-12

Jan-12

Oct-11

India Strategy

MSCI India Premium to MSCI Asia (Ex-Japan)

10 year Avg. 52%

19%

Source: Bloomberg, PL FY21 and FY22 EPS cut by 14.4% and 12.1% respectively FY23E

762 643 683

554 579

504 431

Source: Bloomberg, PL

6

India Strategy Model Portfolio Model Portfolio

Sectors

Performance v/s Nifty Model Portfolio

Nifty

Perf.

Since Nov'18

3.89%

-1.45%

5.34%

Since Last Report

16.36%

14.47%

1.90%

Returns

Source: PL

Automobiles Maruti Suzuki Eicher Motors Hero Motors

Nifty PL Mcap Weightage Weightage Weights (Rs bn) (%) (%) 5.6 5.5 Underweight 1,744 1.7 2.5 515 0.6 2.0 522 0.8 1.0

Banks Axis Bank HDFC Bank ICICI Bank Kotak Mahindra Bank

1,179 5,813 2,238 2,569

24.0 2.1 10.3 5.0 4.3

23.3 Underweight 1.0 11.0 7.0 4.3

Cement UltraTech Cement

1,088

1.7 1.0

2.0 Overweight 2.0

Construction & Engineering Larsen & Toubro Siemens

1,281 403

4.4 2.5

4.4 Equalweight 3.0 1.4

Consumer Asian Paints Britannia Industries Crompton Consumer Electricals Hindustan Unilever Jubilant FoodWorks Titan Company Voltas

1,620 899 153 5,247 218 865 181

13.3 1.7 1.0

14.7 Overweight 1.7 4.0 1.5 4.0 1.0 1.5 1.0

Healthcare Dr. Reddy's Laboratories HDFC Life Insurance SBI Life Insurance Co. Lupin Labs

662 1,208 860 396

IT HCL Tech Infosys TCS

1,605 3,336 8,150

Metals Jindal Steel & Power Hindalco Industries NBFC Bajaj Finance HDFC

0.9

3.0 1.1

8.0 Overweight 2.0 2.5 1.5 2.0

14.5 1.4 6.4 5.1

12.0 Underweight 1.0 6.0 5.0

2.5 169 368

0.5

2.0 Underweight 1.0 1.0

1,920 3,108

9.8 1.9 7.0

9.0 Underweight 3.0 6.0

Oil & Gas Indraprastha Gas Petronet LNG Reliance Industries

290 399 12,593

Others Bayer CropScience

251

Telecom

4.5

15.8

13.6

18.1 Overweight 3.0 1.0 14.1

1.8

1.0 Underweight 1.0

3.6

-

NA

PL Model Portfolio outperforms NIFTY by 5.3% since Nov 2018 even as it has outperformed NIFTY by 190bps since last report. July 15, 2020

7

India Strategy 

Banks and NBFC: Underweight: We believe that the full impact of lockdown and its effects on bank NPA and balance sheets will get reflected in 2Q and 3Q results. Similarly pressure on consumer purchasing power can impact NBFC’s and HFC, although initial reduction in outstanding during moratorium period is encouraging. we focus on strong franchisees with primarily in HDFC Bank, ICICI Bank and Kotak Mahindra Bank. We retain underweight stance on NBFC with focus on mainly HDFC Ltd and Bajaj Finance.



Healthcare: Overweight: We believe that Post Covid 19 scenario will renew focus on healthcare. We divide healthcare into four pillars like Pharma, Diagnostics, Insurance and Hospitals. We reduce weightage on Insurance companies like HDFC Life and SBI Life post sharp run up recently. We retain Dr. Reddy and include Lupin in model portfolio on improved visibility in US business on hopes of FDA resolution in its key plaints.



Underweight on IT: we retain underweight stance on IT as current valuations factor in higher growth and defensive nature of business despite uncertainty related to order flow given cash flows of corporates and US elections later this year. We have small underweight on Infosys and TCS.



Automobiles: Equalweight: we believe consumer focus on personal mobility post Covid-19 remains a key theme in the medium term. We retain strong overweight on Maruti as a play on demand revival in mass segment. We retain positive stance on Eicher as it is a niche player in the premium segment with strong brand, product positioning, distribution and growth visibility. We are also including Hero MotoCorp in model portfolio as a play on rural demand recovery.



Consumer: Overweight: We retain over weight stance on consumer, although we cut our weight by 300bps. We reduce weightage in Britannia by 100bps post 32% return in past 2 months. We remove Inox Leisure and VIP as being too small caps in model portfolio and near term pressures. We are making Asian Paints an equal weight given recent underperformance and Titan Inds an overweight on improving long term outlook, although both stocks have near term challenges. We are introducing VOLTAS in our model portfolio given strong position in RAC segment and strong balance sheet. We retain HUL as equal weight given strong positioning in HPC segment, despite rich valuations.



Capital Goods – Equalweight: Near term focus on welfare, decline in capacity utilization and cash flow issues of corporates can delay capex. We retain equal weight with focus on L&T and Siemens in our model portfolio as play on broader Infra and Digitization and Automation segments.



Metals/cement: Although near term demand issues remain, we retain Hindalco and JSPL in the model portfolio. We retain over weight on cement given faster than expected recovery and prices in the post Covid scenario with Ultratech cement as key stock.



Oil and Gas: we increase overweight on Oil and Gas to 230bps. We retain overweight on Reliance as a broader play on Telecom, Retail and Oil and Gas with significant scope to scale up and unlock value. We retain our positive stance on Gas companies and increase weight on IGL post recent correction in stock price on fears on decline in volumes post open access.

July 15, 2020

8

India Strategy 

We retain Bayer India in model portfolio given expected benefits from normal monsoons, higher sowing and robust Agri sentiment. We reduce weightage by 50bps post 43% rally in past 2 months.

Nifty Valuation Weightage (%) Banking & Fin. PER (x) PAT Grow th (%)

33.7%

Technology PER (x) PAT Grow th (%)

14.6%

Oil & Gas PER (x) PAT Grow th (%)

15.8%

Consumer PER (x) PAT Grow th (%)

13.3%

Eng. & Pow er PER (x) PAT Grow th (%)

4.4%

Auto PER (x) PAT Grow th (%)

5.5%

Pharma PER (x) PAT Grow th (%)

3.0%

Telecom PER (x) PAT Grow th (%)

3.6%

Metals PER (x) PAT Grow th (%)

2.6%

Weightage (%)

FY20

FY21E

FY22E

FY23E

24.2 (8.1)

16.2 49.3

13.0 24.7

Cement PER (x) PAT Grow th (%)

1.6%

22.2 63.3

21.6 (6.4)

18.9 14.2

17.2 9.7

Others PER (x) PAT Grow th (%)

0.5%

20.2 4.5

26.4 (18.5)

17.3 52.9

15.9 8.5

Media PER (x) PAT Grow th (%)

0.3%

21.5 (27.4)

42.0 0.8

35.9 17.1

31.8 12.8

Ports & Logistics PER (x) PAT Grow th (%)

0.5%

42.3 18.9

9.8 (4.3)

8.0 22.8

7.6 5.5

Agro Chemicals PER (x) PAT Grow th (%)

0.5%

9.4 1.5

50.9 (56.6)

20.2 151.7

14.2 42.1

12.6 13.2

Nifty as on Jul 14 EPS (Rs) - Free Float Growth (%) PER (x)

33.4 8.8

25.8 29.1

22.5 14.8

19.8 13.5

EPS (Rs) - Free Float - Nifty Cons. Var. (PLe v/s Cons.) (%)

(12.5) (1,094.9)

69.5 (117.9)

31.8 118.6

21.6 47.1

Sensex as on Jul 14 EPS (Rs) - Free Float Growth (%) PER (x)

12.1 (58.3)

15.1 (19.8)

8.1 86.1

6.2 31.2

FY20

FY21E

FY22E

FY23E

36.6 44.3

38.6 (5.0)

28.7 34.5

24.1 18.9

2.4 276.8

7.2 (66.8)

5.6 29.5

2.4 127.4

9.1 12.1

9.4 (3.5)

8.2 14.6

#DIV/0! (100.0)

4.2 (5.7)

4.0 7.2

3.2 22.5

2.9 10.7

6.7 23.5

5.5 21.6

4.7 17.6

4.1 14.8

444.2 (9.0) 25.7

431.4 4.4 24.6

579.2 34.2 18.3

683.4 18.0 15.5

444.2 -

422.7 2.1

598.5 (3.2)

735.3 (7.1)

1,330.7 1.2 27.1

1,373.1 (1.5) 26.2

1,860.2 35.5 19.4

2,198.5 18.2 16.4

EPS (Rs) - Free Float - Sensex Cons. 1,330.7 Var. (PLe v/s Cons.) (%) -

1,460.2 (6.0)

1,967.1 (5.4)

2,428.1 (9.5)

10,607

36,033

Source: Company Data, Bloomberg, PL Research Note: Telecom Nos. is Bloomberg Consensus / Sector Weightages are updated as on July 14, 2020

July 15, 2020

9

India Strategy Top Picks CMP (Rs.)

TP (Rs)

Upside

1,053

1,105

4.9%

Mcap Revenue Gr. (%) Earnings Gr. (%) (US$ m) 2022E 2023E 2022E 2023E

2022E

2023E

2022E

2023E

2022E

2023E

2022E

2023E

5,774.7

75,487

17.2

17.8

23.4

22.7

17.1

18.1

1.9

1.9

16.0

13.0

2.7

2.3

Mcap (Rs bn)

RoE (%)

RoCE (%)*

PER (x)

P/BV (x)*

Large Cap HDFCB IN

HDFC Bank

INFO IN

Infosys

831

788

-5.2%

3,523.4

46,057

6.4

16.2

16.3

19.2

22.0

24.2

24.4

25.5

19.7

16.5

4.1

3.9

ICICIBC IN

ICICI Bank

346

436

26.1%

2,238.6

29,263

16.3

16.8

40.0

35.0

11.4

13.7

1.2

1.4

14.7

10.9

1.9

1.6

BAF IN

Bajaj Finance

3,149

3,806

20.9%

1,889.4

24,698

32.4

32.3

90.7

27.7

20.2

21.2

3.7

3.8

23.0

18.0

4.2

3.5

MSIL IN

Maruti Suzuki

5,801

6,442

11.0%

1,752.5

22,908

11.9

8.2

36.9

18.1

14.6

16.2

11.1

13.7

23.5

19.9

3.4

3.1

LT IN

Larsen & Toubro

912

1,192

30.7%

1,280.6

16,740

14.1

9.9

42.6

9.5

12.1

12.0

6.1

6.4

13.9

12.7

1.6

1.5

UTCEM IN

Ultratech Cement

3,821

4,300

12.6%

1,102.6

14,414

13.9

7.4

29.0

16.5

10.7

11.3

10.9

12.0

23.9

20.5

2.4

2.2

BRIT IN

Britannia Industries

3,723

4,046

8.7%

895.4

11,705

11.5

12.0

15.3

16.1

33.1

32.0

36.7

37.9

47.7

41.1

14.5

12.1

DRRD IN

Dr. Reddy's Laboratories

4,036

4,326

7.2%

670.9

8,769

10.3

1.0

17.4

(1.3)

15.4

13.3

16.3

14.2

22.4

22.7

3.2

2.8

PLNG IN

Petronet LNG

256

384

49.9%

384.2

5,023

16.7

2.9

25.1

13.7

26.9

27.4

32.9

31.6

12.2

10.7

3.1

2.8

LPC IN

Lupin

857

1,001

16.7%

388.3

5,076

13.5

13.7

31.9

15.4

12.9

13.3

14.0

15.7

20.6

17.8

2.5

2.2

IGL IN

Indraprastha Gas

404

597

47.7%

282.9

3,698

53.6

12.8

57.6

7.8

21.6

19.7

26.6

24.2

20.9

19.3

4.1

3.5

5,597

6,010

7.4%

251.5

3,288

9.0

9.0

10.9

13.9

20.2

18.9

22.5

20.3

32.6

28.6

6.0

4.9

445

529

19.1%

239.6

3,132

20.6

14.4

30.8

16.9

16.0

16.8

20.8

21.9

34.7

29.7

5.3

4.7

287

18.3%

152.0

1,986

17.9

11.9

35.3

14.6

26.9

25.8

32.9

32.7

27.2

23.8

6.7

5.6

Mid Caps BYRCS IN

Bayer Cropscience

KNPL IN

Kansai Nerolac Paints

CROMPTON IN Crompton Greaves Consumer Electricals 242 Small Caps BJE IN

Bajaj Electricals

387

500

29.2%

44.0

576

18.8

12.4

129.9

29.8

14.0

16.0

18.5

21.1

20.0

15.4

2.6

2.3

JKLC IN

JK Lakshmi Cement

284

350

23.1%

33.5

437

13.8

5.4

22.8

13.7

13.6

13.6

15.1

16.3

11.8

10.3

1.5

1.3

KNRC IN

KNR Constructions

205

305

49.0%

28.8

376

50.0

16.0

105.5

19.5

15.3

15.7

16.2

16.6

9.8

8.2

1.4

1.2

INOL IN

Inox Leisure

224

256

14.4%

23.0

301

137.9

24.6

(208.4)

45.3

25.8

27.6

10.1

12.8

14.6

10.0

3.8

2.8

* For Banks P/BV = P/ABV & RoCE = RoAA

Added: Lupin, Indraprastha Gas, Bajaj Electrical | Removed: Kalpataru Power, Ipca Labs, Cholamandalam Finance

July 15, 2020

10

India Strategy 1QFY21 washed out by Covid-19 led Lockdown We estimate 31.4% YoY decline in sales, 22.4% decline in EBIDTA and 45.9% decline in 1Q PBT. Ex BFSI PBT decline is 51.9% as moratorium has provided temporary relief to banks and NBFC’s in recognizing NPA’s. Ex Oil and Gas PBT decline is 54.9% showing the benefit of inventory gains made by oil marketing companies during the current quarter.



April was a washout for most industries except consumer essentials. Even consumer discretionary segments like organized retail, paints, QSR, multiplexes, apparel and footwear reported a sharp decline in sales. However, all non- essential segments have been hit hard with sales of Auto, Capital Goods, Infra, Cement, Media and Oil and gas declining in high double digits.



Despite favorable input costs, most of these industries have seen sharp decline in margins due to negative operating leverage and will be reporting deep losses during 1Q21. We estimate that Auto, Aviation, Capital Goods, Infra, Media and Education will report a PBT loss while cement, metals and consumer durables will report a deep cut in profitability.



Overall demand scenario remains uncertain. Although economic activity post relaxation in lockdown is improving, localized lockdowns in specific cities, deteriorating situation in major business centers and impact of job losses and salary cuts on purchasing power are yet to play out fully. Agri seems to be saving grace as benefit of number crop, lower covid impact in rural India, expectations of normal monsoons are resulting in higher demand and agricultural activity.

PL Universe – Q1Y21E Revenue (%)

EBITDA Growth (%)

EBITDA Margin (bps)

PBT (%)

PAT (%)

YoY

QoQ

YoY

QoQ

YoY

QoQ

YoY

QoQ

YoY

QoQ

10.7

(7.4)

11.1

(9.2)

5

(30)

27.1

(20.9)

31.4

(16.6)

Automobiles

(63.9)

(60.4)

(115.4)

(119.8)

(1,250)

(1,123)

(257.8)

2,406.8

(440.5)

221.1

Aviation

(92.3)

(91.5)

(167.6)

2,858.1

(26,347)

(23,593)

(358.3)

108.9

(416.5)

162.7

12.3

3.3

(10.5)

1,134.9

6.3

79.1

Capital Goods

(39.4)

(55.2)

(61.1)

(67.8)

(762)

(532)

(115.8)

(112.5)

(139.1)

(128.5)

Cement

(30.3)

(26.5)

(37.3)

(28.7)

(233)

(63)

(49.4)

(40.0)

(47.0)

(66.6)

Consumer Durables

(50.6)

(40.2)

(67.3)

(55.2)

(352)

(231)

(72.7)

(61.5)

(69.5)

(64.4)

Consumer

(26.9)

(20.9)

(38.3)

(27.3)

(375)

(179)

(39.2)

(28.3)

(32.6)

(31.8)

Education

(52.4)

(24.3)

(98.6)

(98.5)

(2,284)

(3,406)

(113.4)

(115.2)

(116.6)

(123.8)

Financial Services

(6.3)

(20.5)

(67.3)

(53.4)

(66.4)

(53.6)

Infrastructure

(68.6)

(70.8)

(95.6)

(95.5)

(1,748)

(1,548)

(178.5)

(189.6)

(215.7)

(205.7)

Agri Chemicals

Banks

Information Tech.

4.2

(3.4)

3.2

(9.1)

(18)

(124)

(3.4)

(7.9)

(3.4)

(7.9)

Media

(97.1)

(96.3)

(156.2)

(190.7)

(63,421)

(62,821)

(416.3)

449.9

(566.3)

60.8

Metals

(30.0)

(28.7)

(59.6)

(55.3)

(838)

(682)

(97.0)

(96.8)

(108.3)

(107.7)

Oil & Gas

(39.9)

(32.5)

(11.7)

89.1

506

1,019

(15.8)

260.5

(2.6)

(763.0)

5.3

0.2

(4.1)

3.8

(177)

63

(14.2)

1.6

(15.5)

5.7

PL Universe

(31.4)

(29.7)

(22.4)

(13.7)

257

410

(45.9)

5.1

(44.2)

(10.1)

PL Universe (Ex-BFS)

(34.1)

(32.9)

(33.3)

(26.5)

18

126

(51.9)

(21.6)

(56.8)

(6.8)

PL Universe (Ex-Oil)

(26.2)

(28.3)

(25.2)

(26.4)

31

64

(54.9)

(33.6)

(56.9)

(49.4)

Pharma

Source: Company, PL

July 15, 2020

11

July 15, 2020

Source: Company, PL

Q1FY21

Q4FY20

Q1FY20

Q4FY19

Q3FY19

-20.5%

20.5%

All Sector PAT - (Ex-Oil & Gas)

68.3%

35.6%

12.8%

20.6%

Q1FY21

Q4FY20

Q1FY20

Q4FY19

Q3FY19

Q2FY19

Q1FY19

-25.2%

17.4%

17.0%

-4.8%

9.4%

All Sector EBTIDA - (Ex-Oil & Gas) 31.0%

14.8%

10.8%

16.6%

Q1FY21

Q4FY20

Q1FY20

Q4FY19

Q3FY19

Q2FY19

-6.9%

4.7%

11.4%

25.2%

30.5%

28.8%

19.2%

Q4FY18 Q1FY19

16.7%

-31.4%

-26.2%

-6.6%

6.6%

Q3FY18

Q1FY21

Q4FY20

Q1FY20

13.4%

22.6%

Q3FY19 Q4FY19

24.2%

28.5%

20.8%

16.8%

Q2FY19

Q1FY19

Q4FY18

Q3FY18

All Sector Sales - (Ex-Oil & Gas)

Q2FY19

Q1FY19

Financials, Aviation and Metals impact PAT Q4FY18

-22.4%

-16.3%

3.1%

15.8%

8.4%

All Sector EBITDA

-19.2%

Source: Company, PL Q3FY18

Q1FY21

Q4FY20

Q1FY20

Q4FY19

Q3FY19

14.8%

Metals, Oil &Gas, Aviation drag EBIDTA

Q4FY18

14.7%

8.5%

All Sector PAT

46.8%

18.3%

Q2FY19

35.4%

18.0%

Q4FY18 Q1FY19

19.9%

Q3FY18

BFSI, Agri drive sales; Metals, Aviation, Infra drag

-56.9%

-44.2%

Q1FY21

25.9%

12.0%

-9.0%

18.1%

Source: Company, PL

Q3FY18

-44.2%

Q4FY20

Q1FY20

Q4FY19

Q3FY19

Q2FY19

Q1FY19

Q4FY18

Q3FY18

India Strategy

Sales and EBIDTA growth suffer due to March lockdown Sales growth impacted due to lockdown

All Sector Sales

Source: Company, PL

EBIDTA growth suffers led by lockdown

Source: Company, PL

PAT growth suffers due to lockdown

Source: Company, PL

12

India Strategy 1QFY21 Results – Trading BUY & SELL Ideas

Infosys Britannia Inds Nestle India JSPL Ambuja Cement Cropmton Consumer CEAT Bayer L&T Siemens Lupin SBI Cards ICICI Bank

Jubilant Foods Titan Inds Havells India Asian Paints Tata Steel GAIL ONGC Interglobe Aviation Spicejet TVS Motors Glenmark HDFC Life LTFH Tech Mahindra Mindtree

These are purely for tactical trades and do not reflect our long term fundamental calls.

July 15, 2020

13

India Strategy 4QFY20 – Initial Shadow of Covid-19 

Aggregate sales were higher than estimates by 9.3%, EBIDTA was higher by 14.7% (led by IND AS 116), PBT (comparable) was higher by 15.9%.



Consumer staples and durables along with Education were below estimate in topline whereas Auto, Infra, Oil and Gas and Pharma grew faster. Prices drove Oil and Gas sales, higher stocking in exports increased generic pharma sales while Infra projects impact due to Covid was far less.



Aviation, Capital Goods and Media reported sharp decline in EBIDTA.



Banks, Aviation, Education and Media suffered big hit on PAT



Banks profitability was impacted as banks made higher provisions for expected NPA from Covid-19.



SBI, Thyrocare, GAIL, Aarti, JSPL, PVR and BHEL have seen major downgrade in EPS. M&M, MSS, Lupin, Glenmark and Oil India have seen meaningful EPS upgrades.



We have upgraded IPCA and Lupin to Buy and NMDC and HZL to Accumulate. We have downgraded Dr Lal and Thyrocare to sell, Axis Bank to Hold, Aarti, PVE/INOX, Chola and STFC from Buy to Accumulate.

Q4FY20 Result Snapshot Revenue (Rs mn)

EBITDA (Rs mn)

PBT (Rs mn)

PAT (Rs mn)

Estimate

Actual

% Chng.

Estimate

Actual

% Chng.

Estimate

Actual

% Chng.

Estimate

Actual

1,51,203

1,62,164

7.2%

23,820

25,136

5.5%

13,501

16,265

20.5%

10,243

12,300

20.1%

11,60,701

13,20,864

13.8%

59,109

98,875

67.3%

1,448

-3,332

-330.1%

-6,909

-26,950

290.1%

Aviation

1,10,481

1,12,319

1.7%

-4,578

-734

-84.0%

-22,316

-20,473

-8.3%

Banks

7,14,260

7,53,474

5.5%

4,81,016

5,85,609

21.7%

Capital Goods

7,84,100

7,93,940

1.3%

1,69,342

1,50,451

-11.2%

1,05,906

91,316

Cement

2,27,351

2,25,998

-0.6%

45,821

48,687

6.3%

30,654

Agri Chemicals Automobiles

Consumer Durables

% Chng.

-22,316

-16,273

-27.1%

1,38,824

92,177

-33.6%

-13.8%

71,908

65,434

-9.0%

35,318

15.2%

21,799

45,298

107.8% -3.4%

55,974

53,238

-4.9%

6,436

6,357

-1.2%

6,290

5,699

-9.4%

4,530

4,377

5,30,816

4,92,981

-7.1%

1,19,282

1,09,184

-8.5%

1,05,296

1,05,768

0.4%

86,001

83,310

-3.1%

6,696

5,391

-19.5%

2,509

1,874

-25.3%

2,344

1,598

-31.8%

1,771

769

-56.6%

Financial Services

1,66,086

1,62,067

-2.4%

1,25,897

1,36,704

8.6%

65,250

49,556

-24.1%

Information Tech.

13,79,359

13,64,538

-1.1%

2,83,363

2,86,005

0.9%

2,66,405

2,64,951

-0.5%

2,09,709

2,07,267

-1.2%

78,615

1,03,331

31.4%

11,415

18,598

62.9%

395

8,643

2089.7%

265

6,730

2435.6%

Consumer Staples Education

Infrastructure Media

12,936

12,120

-6.3%

3,924

2,999

-23.6%

350

-1,066

-404.4%

244

-1,677

-788.6%

Metals

10,14,474

10,56,062

4.1%

2,14,565

2,11,675

-1.3%

1,22,425

1,43,507

17.2%

1,03,768

1,08,139

4.2%

Oil & Gas

31,84,701

38,44,222

20.7%

1,19,042

2,17,577

82.8%

2,826

79,008

2695.6%

-34,382

-34,598

0.6%

3,39,009

3,74,529

10.5%

52,077

65,984

26.7%

34,071

49,003

43.8%

24,949

35,898

43.9%

99,16,761 1,08,37,238

9.3%

17,13,043

19,64,980

14.7%

6,69,595

7,76,205

15.9%

6,75,653

6,31,757

-6.5%

Pharmaceuticals PL Universe

Source: Company, PL

July 15, 2020

14

India Strategy Market Rally: Setting new trends Our analysis suggests that the market takes around 15-27 months to cross previous highs after a major sell-off, however current recovery has seen 40% jump in Sensex in less than 4 months.



Although there have been 3 cases when Indian market has fallen by over 50%, steepest decline was during the time of Sub-prime crisis in 2008 when Sensex fell by 59%. It took approximately 2 years to bounce back to same level. During this period INR depreciated the most by 27% and market volatility (VIX) peaked out at 85.1.



While, recent Sensex fall before COVID-19 outbreak due to global sell-off caused 23% decline and took 1 year 2 month to bounce back.



On an average it took 1 year 5 months to recover to its peak after crash. Longest time market took time to recover was during Dot-com bubble burst when Sensex crashed by 56% and it took 2 years and 3 months to recover.



Due to Coronavirus outbreak, market fell by 38% and volatility reached highest since 2008, However as against earlier trends, liquidity rush has enabled much sharper recovery, with Sensex rising by nearly 40.6% from the bottom and is just 15% below all-time level reached in Jan2020.

Liquidity Rush enables much sharper market recovery than earlier cycles Sensex

Sub-prime Crisis

Global Sell-off

European Crisis

COVID-19 Outbreak

01-Feb-20

01-Feb-19

01-Feb-18

01-Feb-17

01-Feb-16

01-Feb-15

01-Feb-14

01-Feb-13

01-Feb-12

01-Feb-11

01-Feb-10

01-Feb-09

01-Feb-08

01-Feb-07

01-Feb-06

01-Feb-05

01-Feb-04

01-Feb-03

01-Feb-02

01-Feb-01

Dot-com Bubble 01-Feb-00

01-Feb-99

01-Feb-98

01-Feb-97

01-Feb-96

Asian Financial Crisis 01-Feb-95

01-Feb-94

01-Feb-93

01-Feb-92

01-Feb-91

01-Feb-90

45000.00 40000.00 35000.00 30000.00 25000.00 20000.00 15000.00 Harshad 10000.00 BOP Scam 5000.00 Crisis 0.00

Source: PL Average time for market recovery is around 1 year 5 months Event

Trough Date

BOP Crisis

Jan-91

Recovery Rupee time Decline Depreciation (Days) 956.1 182 -39% 2%

Sensex level

VIX NA

Harshad Mehta Scam Apr-93

2036.8

473

-54%

10%

NA

Asian Financial Crisis Oct-98

2764.2

265

-39%

18%

NA

Dot-com Bubble

Sep-01

2600.1

833

-56%

10%

NA

Sub-prime Crisis

Oct-08

8509.6

738

-59%

27%

85.1

European Crisis

Dec-11

15175.1

680

-28%

20%

37.2

Global sell-off

Feb-16

22951.8

417

-23%

10%

28.7

COVID-19 outbreak

Mar-20

25981.2

-

-38%

8%

83.6

15-07-2020

Mar-20

36051.8

110

+40%

-1.6%

26.3

Source: PL July 15, 2020

15

Source: PL

July 15, 2020

19

20

21

22

34

Cipla /Indi a

Britann ia Indu stries

Tata Consultancy Ser vices

Dr Red dy's Lab oratories

9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0

4.2

3.9

Jun-20

6.6

Apr-20

6.4

Feb-20

Dec-19

Earning Yield

Oct-19

Aug-19

4.0 Dr Reddy's…

Tata Consultancy…

Britannia Indust ries Ltd

Cipla Ltd/India

Nestle India Ltd

Sun Pharmaceut ical…

HCL Technologies Lt d

Hero MotoCorp Ltd

Shree Cement Ltd

Yes Bank Ltd

Wipro Ltd

Mahindra & Mahindra Ltd

Bajaj Auto Ltd

UltraTech Cement Ltd

GAIL India Ltd

Adani Ports & Special…

Bharti Infratel Ltd

Power Grid Corp of…

Asian Paints Ltd

Eicher Motors Ltd

Grasim Industries Ltd

Vedanta Ltd

JSW St eel Ltd

Hindalco Industries Ltd

UPL Ltd

5 5 7 8 9 12 17 19 20 21 22 34

Jul-12

23.5

Jul-20

Apr-20

Jan-20

Oct-19

Jul-19

Jan-19 Apr-19

Oct-18

Jul-18

Jan-18 Apr-18

Oct-17

Jul-17

Apr-17

Jan-17

Oct-16

Jul-16

Apr-16

Jan-16

Oct-15

Jul-15

Apr-15

Jan-15

Oct-14

Jul-14

Jan-14 Apr-14

Oct-13

Jul-13

Jan-13 Apr-13

Oct-12

22.3

Jun-19

Apr-19

Feb-19

337

Dec-18

Positive contributors to Nifty 50 CY20

Oct-18

Aug-18

90 Tech Mahindra Ltd

Bharat Petroleum Corp…

Indian Oil Corp Ltd

Titan Co Ltd

Zee Entertainment…

Tata Steel Ltd

NTPC Ltd

Coal India Ltd

Tata Motors Ltd

Oil & Natural Gas Corp…

Bajaj Finserv Ltd

Maruti Suzuki India Ltd

Bajaj Finance Ltd

ITC Ltd

Larsen & Toubro Ltd

Kotak Mahindra Bank Ltd

10 yea r Avg. 19.7x

Jun-18

Index points

Reliance Industri es

67

Info sys

58

Hindustan Un ilever

IndusInd Bank Ltd

15.0

St ate Bank of India

Apr-12

Jan-12

Oct-11

Jul-11

20.0

Axis Bank Ltd

HDFC Bank Lt d

Housing Development…

-298 -247 -224 -172 -146 -137 -131 -111 -64 -63 -51 -45 -38 -35 -33 -32 -24 -24 -22 -22 -20 -20 -19 -18 -18 -17 -14 -13 -12 -10 -9 -8 -8 -6 -4

25.0

Bha rti Airtel

17

Nestle India

400 350 300 250 200 150 100 50 ICICI Bank Ltd

100 50 -50 -100 -150 -200 -250 -300 -350

Sun Ph armaceutical Industr ies

India Strategy

10-year average of Nifty PE stood at 19.7, recovered from recent low

30.0

22.4

14.6

10.0

5.0

-

Source: PL Negative contributors to Nifty50 CY20 Index points

Source: PL

Nifty/ G-sec yield gap narrowed down sharply

G-sec Yield

8.0

6.1

5.2

Source: PL

16

India Strategy Consumption, BFSI and Technology names are still at significant premium to trough valuations of 2008

Nifty Index Eicher Motors Ltd

2008

2009-11

2011-13

2013-16

15.1

16.3

14.7

18.5

21.0

21.3

Current Valuations 16.5

2016-19 FY16 onwards

2020 22.9

5.3

7.0

12.0

28.4

34.6

32.6

30.8

31.5

Axis Bank Ltd

10.6

13.1

9.9

14.0

69.1

58.0

12.0

53.3

Bajaj Finserv Ltd

14.7

5.5

6.6

9.9

23.3

23.8

23.4

37.3

Reliance Industries Ltd

13.7

14.8

11.5

10.3

12.8

13.9

22.7

20.0

9.9

13.0

10.9

18.6

12.8

12.3

10.6

8.4

18.8

20.5

24.2

32.3

27.0

25.2

17.1

21.0

6.9

10.5

11.4

18.6

14.7

14.8

13.3

67.6 14.8

GAIL India Ltd ITC Ltd Mahindra & Mahindra Ltd State Bank of India

7.4

11.9

8.9

25.7

263.0

200.2

8.4

12.5

9.9

9.0

17.2

9.0

9.3

13.6

13.6

5.9

-6.6

NA

-13.9

7.0

10.3

NA

136.3

Sun Pharmaceutical Industries Ltd

16.4

18.1

20.6

37.2

45.0

39.0

22.5

23.7

Zee Entertainment Enterprises Ltd

13.1

18.8

19.9

30.2

29.3

26.2

13.4

17.3

Titan Co Ltd

22.2

21.2

29.4

38.8

46.4

50.1

63.8

77.0

HDFC Bank Ltd

18.5

20.7

18.5

18.0

21.2

20.9

22.7

25.2

Bharat Petroleum Corp Ltd

11.7

15.7

13.7

8.6

10.2

10.7

9.9

18.6

Cipla Ltd/India

17.6

23.5

19.3

34.4

32.5

29.9

24.7

23.0

Asian Paints Ltd

17.4

21.5

30.1

39.7

50.9

51.3

56.7

58.4

9.2

10.8

9.2

17.1

8.5

8.3

8.6

16.5

17.7

16.3

25.2

55.9

10.4

11.8

28.8

25.0

Hindalco Industries Ltd Tata Steel Ltd

Oil & Natural Gas Corp Ltd JSW Steel Ltd Vedanta Ltd Wipro Ltd Dr Reddy's Laboratories Ltd Hero MotoCorp Ltd

4.5

7.6

7.9

1.4

11.1

11.2

7.8

10.9

10.6

15.6

13.2

15.1

15.1

15.2

16.0

15.5

-1,213.4

27.6

16.8

26.8

32.1

29.2

23.9

20.8

9.4

16.0

17.5

17.4

19.3

18.4

21.0

16.1

Hindustan Unilever Ltd

24.2

24.3

25.2

37.1

46.5

48.3

58.3

57.3

Infosys Ltd

13.8

20.5

16.0

16.5

16.0

16.7

21.2

19.3

Housing Development Finance Corp Ltd

20.5

18.4

16.2

17.1

18.7

19.3

19.0

20.1

Kotak Mahindra Bank Ltd

18.7

17.6

18.6

25.9

27.8

28.7

31.0

36.2

Larsen & Toubro Ltd

13.8

20.9

18.0

26.2

20.3

20.1

11.6

19.2

Maruti Suzuki India Ltd

10.4

17.2

15.9

17.5

28.9

30.0

35.7

39.7

Nestle India Ltd

20.6

27.6

38.0

61.6

43.0

45.6

83.8

53.0

NTPC Ltd

16.9

17.9

11.9

10.8

10.8

10.4

6.2

9.7

8.9

12.3

14.4

17.6

25.8

23.9

9.3

23.7

IndusInd Bank Ltd HCL Technologies Ltd Power Grid Corp of India Ltd Bajaj Finance Ltd

9.8

13.5

8.9

NA

13.0

13.1

14.7

13.5

20.1

17.6

12.5

11.5

11.1

10.6

7.3

9.2 44.4

9.9

5.9

6.7

13.3

27.5

29.1

32.3

Coal India Ltd

-

3.0

13.7

15.9

16.0

13.8

6.3

9.2

ICICI Bank Ltd

15.6

16.5

11.8

14.1

26.5

24.7

15.7

29.4

Bharti Airtel Ltd

16.6

20.9

45.4

29.3

-82.5

-86.2

25.3

-48.8

Adani Ports & Special Economic Zone Ltd

36.3

28.8

18.5

18.3

17.6

17.3

14.6

19.7

Tata Consultancy Services Ltd

11.3

16.4

16.9

20.2

19.4

20.5

26.2

25.1

Tata Motors Ltd

-6.0

5.3

6.5

11.6

-1.2

117.1

-18.4

-6.2

UltraTech Cement Ltd

6.2

13.7

16.1

28.4

41.7

38.9

42.0

29.0

11.7

13.1

8.1

13.5

19.8

18.9

10.1

19.7

Shree Cement Ltd

3.4

17.2

11.8

42.8

47.2

47.3

60.7

52.6

Tech Mahindra Ltd

7.3

12.8

7.2

15.6

12.6

13.2

14.4

16.7

UPL Ltd

Bajaj Auto Ltd

5.7

9.7

15.1

17.5

18.1

17.7

20.0

18.0

Britannia Industries Ltd

21.5

28.8

23.3

28.3

48.5

47.5

50.9

44.6

Grasim Industries Ltd

3.8

6.0

8.2

19.1

24.0

22.2

35.6

12.8

Indian Oil Corp Ltd

8.7

11.3

14.2

12.1

9.6

9.8

5.1

55.7

-

-

3.3

24.8

23.9

21.5

12.2

14.4

Bharti Infratel Ltd

Source: PL July 15, 2020

17

India Strategy FII inflows positive, defensives outperform 

NIFTY was 5th (3rd in April) worst performing market in last one year, down by 8.2% (21.2% in April 2020) last one year thus catching up with rest of the world led by global liquidity even as Covid-19 led pressures continue unabated. We believe markets are already discounting a bad 2021 and are looking at FY22 and FY23 in a post Covid scenario.



Healthcare sector leads with 28.9% return in past 12 months even as IT and consumer are also positive. Outperformance by defensives shows market preference for free cash flow oriented business given low growth and covid-19 led uncertainty. Banks, Realty and Metals are biggest losers over past 1 year.



Although Mid cap and large cap indices returns are not very different, small caps are outperforming by ~500bps. There seems to be some catch up happening post underperformance, but some bubble can’t be ruled out.



DII net cash inflows have increased by Rs153bn in past 3 months whereas the inflow from FII has been to the tune of Rs300bn although it remains in negative with 199bn YTD. Positive FII flows and steady DII inflows have provided support to the market in this rally.

16.5

4.6

4.2

2.7

(1.6)

(3.9) (4.9) (8.2)

(10.5) (11.3)

FTSE

Australia

Hong Kong

India

Brazil

USA

Russia

Germany

Japan

S.Korea

(17.9)

(20.3) Indonesia

4.8

S&P

20.0 15.0 10.0 5.0 (5.0) (10.0) (15.0) (20.0) (25.0)

China

(%)

India 3rd worst performing market in last one year

Source: Bloomberg, PL Defensives led by Healthcare, IT and Consumer in positive CHG_PCT_1YR

(33.7) (29.6)

(35.1) (27.4)

(30.9) (29.4)

(31.4)

(26.3)

(23.6) (24.9)

(18.3) (11.4)

(9.3)

(15.8)

(13.0) (8.9)

(3.4)

1.8

4.2

21.5 28.9

40.0 30.0 20.0 10.0 (10.0) (20.0) (30.0) (40.0)

(2.6)

(%)

CHG_PCT_6M

Source: Bloomberg, PL July 15, 2020

18

India Strategy Small caps outperform in past 3 months

17.9

17.4

(8.2)

Nifty

(7.0)

(14.2)

(14.1) Sen sex

(8.4)

BSE -100

(8.0)

(14.1)

(13.9)

BSE -500

(8.8)

(13.8)

BSE Mid-Cap

(8.1)

CHG_PCT_1YR

17.4

18.0

CHG_PCT_6M

17.8

23.6 (11.9)

30.0 20.0 10.0 (10.0) (20.0)

BSE S mal l-Ca p

(%)

CHG_PCT_3M

Source: Bloomberg, PL

1,485 -465

-443

-1,059

241

362 2012

469

415 2011

-537

489 2010

(Rs bn) -198

-1,000

Source: Bloomberg, PL

YTD2020

2019

2018

2017

2016

2015

2014

2013

2009

-1,500

YTD2020

2019

2018

2017

2016

2015

2013

2012

2011

2014 -303

-37

-219

2010

-500

-1,000

2009

500

48

1,002 422

-342

849

1,094

908

1,500

1,000

-500

1,592

2,000

529

371 188

184

974

676

1,113

FII Debt outflows continue to increase

FII Net Cash

-735

-569

278

500

262

(Rs bn)

1,000

843

1,500

DII Net Cash 1,293

1,339

FII inflows at Rs300bn in past 3 months

Source: Bloomberg, PL

NIFTY movement has strong correlation with FII inflows FII Net Cash 1,600 1,400 1,200 1,000 800 600 400 200 -200 -400 -600

% Nifty Chng.

71.5%

80.0%

60.0% 31.4%

27.4%

28.1%

40.0%

17.2% 5.9%

-4.1%

2.8%

4.1%

11.5%

20.0%

-12.9% 0.0%

-20.0% -24.9%

-40.0%

Source: Company, PL

July 15, 2020

19

India Strategy Covid-19 remains a stumbling block COVID-19 Hits Business

Covid-19 still remains the biggest stumbling block despite India facing a lockdown

centers

and restrictions for nearly 4 months now. India has seen close to 941 thousand % of National Cases

State Maharashtra

29.0%

Tamil Nadu

15.8%

Delhi

12.8%

Gujarat

4.8%

Karnataka

4.4%

infected patients, 24 thousand deceased and recovery rate of 63%. India scores

Major City % of state total

favorably on these parameters globally with 2.6% death rate, there remains a big

Mumbai (37%), Thane (24%), Pune (15%) Chennai (49%)

uncertainty regarding COVID- 19 recovery and its impact in India.



Testing has been at a very low level in India (relative to population), thus there could be large number of asymptomatic cases and the battle might be still a long drawn one. Number of Covid-19 patients is still rising at an increasing

Ahmedabad (52%), Surat (18%) Bangalore (48%)

pace, we are on an uphill climb and not where close to flattening the curve.



Source: GOI/ PL

Some of the large cities like Mumbai (MMR), Delhi (NCR), Chennai, Hyderabad, Pune, Bangalore, Ahmedabad etc. are facing the brunt of covid19 pandemic. As most of these cities are biggest business centers of India and have much higher than average per capita income and consumption levels, recovery in these cities is critical for business sentiment and demand revival.



Covid-19 has started to spread in states less impacted thus resulted in reimposition of city/state based local lockdowns. We note that Pune, Thane, UP, Bihar, Assam and west Bengal are witnessing more stringent lockdowns.



Corporate India has been indicating 40-90% utilization across various factories, depending upon the nature of industry. However local lockdowns have the potential to disrupt the supply chain and output as supply chains might get impacted due to reducing attendance levels and closure of factories and plants near production centers.

35000

India Cases

28701

COVID-19 cases momentum rising, no flattening in sight Addition 19185

30000

12375

25000 20000

09-07-2020

13-07-2020

07-07-2020

01-07-2020

03-07-2020

29-06-2020

23-06-2020

25-06-2020

17-06-2020

19-06-2020

15-06-2020

09-06-2020

11-06-2020

05-06-2020

01-06-2020

03-06-2020

26-05-2020

28-05-2020

22-05-2020

18-05-2020

20-05-2020

14-05-2020

08-05-2020

12-05-2020

30-04-2020

24-04-2020

28-04-2020

22-04-2020

0

20-04-2020

5000

06-05-2020

10000

04-05-2020

3932

15000

1000000 900000 800000 700000 600000 500000 400000 300000 200000 100000 0

Source: Online Sources/ PL Research

Ecom/GT gain as organized retail suffers big time Retail trade led by organized retail has suffered a major blow due to lockdown and closure of markets. Although markets have started opening gradually, most malls and big shopping centers are still closed, which is hurting sales.

July 15, 2020

20

India Strategy 

As per latest survey of RAI (Retailer Association of India), retail sales declined by 67% YoY during 15-30th June, 2020. The impact is more in west and North India with a decline of 72% and 71% even as decline in East and South India is to the tune of 62%



Entire organized retail economics has been hurt badly. Although several Mall owners have given concessions in rentals and stores have started opening, sustainability for want of footfalls looks doubtful.



A number of PE funded retailers and food service restaurants are unlikely to open given losses of past 3 months, poor visibility and lack of funds. We believe a fair proportion of cloud kitchens will be forced to down shutters permanently, if the Covid -19 does not come under control and a viable vaccine is introduced.



General trade which is under pressure from rising clout of MT, has found its feet again as local grocer has emerged as a preferred choice for buying and home delivery in an environment shrouded in uncertainty.



Online retail (Ecom) seems to be the biggest beneficiary of covid-19. The number of orders of major food and grocery retailers like Big Basket/ Grofers have grown by 50-80% since start of covid-19. Some of these players have significantly increased hiring and its delivery handling capability.

Agriculture – In the pink of its health Since the Rabi season of 2019 agriculture activity and farm income has seen significant increase, not seen in last few years led by Normal monsoon, remunerative crop prices, adequate soil moisture and best water reservoir levels in last 5 years. Similar to Rabi 2019, by the end of Kharif 2020 we can likely see acreage expansion in sowing along with increase in farming income. In addition reforms introduced in May 2020 (Watershed moment for Agriculture Sector) will go a long way in bringing certainty and fulfilling aim to double farm income. Kharif 2020 sowing up 88% YoY: YTD Kharif sowing is up 88% YoY @ 433 lakh Ha. Rice/Pulses/Coarse Cereals sown area up 38%/288%/101% YoY @ 68/37/71 lakh Hectare (Ha). Cotton/Sugarcane area up 100%/2% to 91/51 Lakh Ha. Oil Seeds area up 225% @ 109 lakh Ha. Massive surge in rate of growth for sowing is due to (1) favorable macro-economic environment for agriculture (2) low base of last year due to 30day delay in monsoon in 2019 leading to delayed sowing. In 2020, season might end on time and by the end of season, rate of sowing growth may normalize to 5-10%.

July 15, 2020

21

India Strategy Sowing up 88% YoY, 41% of Normal area sown Total normal kharif area

Area sown in FY21

As a % of total normal kharif area

Area sown in FY20

Rice

396

68.1

17.2%

49.2

38.3%

Pulses

120

36.8

30.7%

9.5

288.4%

Coarse Cereals

188

70.7

37.5%

35.2

100.8%

Oilseeds

182

109.2

60.0%

33.6

224.7%

48

50.6

104.8%

49.9

1.5%

8

5.9

74.8%

6.8

-13.4%

121

91.7

75.8%

45.9

99.9%

1,064

433

40.7%

230

88.2%

Crop (In lakh Ha)

Sugarcane Jute & Mesta Cotton TOTAL

YoY (%)

Source: GoI Highest Water reservoir levels since 2016: The current water reservoir levels, whether pan India or in a particular region, are at its best in since 2016 and better than the average of last 10 years. Reservoir level as a % of Full Reservoir Level (FRL) 2016

Avg. of Last 10 Yr 39

2017

25

25

12 10

9

13

20

20 20

21 22

18

25

27

34

15

11 14

27 15 17 17 17 19

24 17

25

17 20 21 15 21

30 20

2018

31

30

35

32

45

40

2019

39 35

2020

10 5

All India

Northern Region

Eastern Region

Western region

Central Region

Southern Region

Source: GoI, PL

Prevailing Crop prices have started to build in bumper arrivals: Food grain prices, factoring in bumper Kharif 2020 crop arrivals, have started to show weakness. YoY rate of growth in Pulse prices has reduced significantly in June. Coarse Cereals have been on a declining trend since 2-3 months. Paddy and Wheat prices are holding firm due to procurement support while Soybean prices are firm due to export opportunities. Cotton prices are down +20% for the last 3 months due to demand collapse. In vegetables- prices of Onion, Tomato and Cucumber are down while only Potato is holding up at elevated levels. In spices, turmeric prices have been lower while red chilli prices have been higher on YoY basis. Vegetable prices have improved on MoM basis in June.

July 15, 2020

22

India Strategy Crop prices indicate bumper arrivals for Kharif in 2020 YoY Change (%)

Crop

MoM Change (%)

April

May

June

April

May

June

Pulses

52.9%

45.0%

-9.7%

14.8%

-0.7%

-35.3%

Cotton

-6.3%

1.9%

1.8%

-4.2%

8.0%

-0.8%

-25.8%

-28.7%

-30.4%

-5.8%

-7.1%

-3.6%

3.0%

2.0%

0.7%

-1.1%

0.6%

-1.4%

Soybean Coarse Cereals Paddy Wheat Vegetables Spices Turmeric

38.4%

-18.6%

-22.9%

-31.0%

-32.7%

21.3%

-16.7%

-23.9%

-12.4%

-17.0%

-14.6%

0.6%

-3.1%

3.4%

19.1%

-17.3%

23.3%

-1.7%

Source: GoI

Monsoon @ 15% above normal till date: 2020 monsoon has been 15% above normal till date @ 202 mm. 72% of total districts in India have received normal or above normal rainfall (21% large excess, 22% excess, 29% deficit) while 28% of districts are in deficit or below (23% deficit, 5% large deficit), best in last 6 years. Monsoon is 15% above normal till date

Source: GoI

July 15, 2020

23

India Strategy Ample liquidity, Moratorium impact Holds key 

Liquidity remains in abundance as RBI has also cut Repo and reverse repo rates and loan disbursements under various schemes of GOI have been accelerated. Banks have disbursed Rs350bn to MSME under ECLGS, SIDBI and NHB have disbursed Rs102 and 100bn to MFI, NBFC and HFC. Bank credit to NBFC is showing a growth of 25-26%



Lockdown and slowdown in business activity has seen just 6% credit growth even as deposit growth has accelerated to 11%



GOI has extended bank moratorium for another 3 months to August. Bank defaults and recognition of NPA remains single biggest risk as of now, in addition to slow growth in fresh disbursements on both wholesale and retail side. Although morat numbers in few retail segments like credit cards have shown reduction, we believe 2Q and 3Q numbers will show full impact of bank NPA and defaults.

Moratorium book details for various segments By Cust.

By Value

Bank

Effective Date

HDFC Bank ICICI Bank Axis Bank

25-Apr

KMB

30-Apr

26%

> corp

IndusInd

n/a

5%

5%

Low

Low

YES

n/a

35%-40%

35%-40%

40%-45%

SBI

May 1st week

22%

24%

PNB

15-Jun

30%

21%-22%

40%-45% 21% (by borr) 23%

24%

13%

BOB

May End

55%

67%

67%

67%

Federal

25-May

35%

38%

65%

20%

IDFCB

May 1st week

35%

High

High

Low

Overall

Overall

Retail

SME

Corporate

31-Mar

<10%

<10%

Low

Low

30-Apr

30%

>30%

10%-12%

25-28%

>25% < retail

7%-8%

Source: Company, PL

Deposit growth intact, credit growth slow Credit growth

YoY Growth (%)

50.0%

40.0% 30.0%

Source: xx, Company, PL

July 15, 2020

10.0%

25.4%

4.4% -1.2%

May'20

Mar'20

Dec'19

-10.0%

Sep'19

0.0%

Jun'17

Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 Jun-20

6.0%

6.2%

Mar'17

5%

30.5%

14.3%

20.0% 10.8%

Jun'19

10%

Jun'18

11.0%

Sep'17

15%

41.5% 37.6% 35.4% 29.2% 27.6% 25.9% 27.0%

Mar'18

14.4%

Dec'17

20%

0%

55.1%

60.0%

Mar'19

25%

Dec'18

Deposit growth

Sep'18

30%

Bank Credit to NBFC has been intact

Source: xx, Company, PL

24

India Strategy

Banks reduced MCLR by 40-45bps across tenors

SBI

(9,000) (8,000) (7,000) (6,000) (5,000) (4,000) (3,000) (2,000) (1,000) 1,000

Quarterly Change in MCLRs

Source: Company, PL

Net Liquidity (Rs Bn)

Jun-17 Aug-17 Oct-17 Dec-17 Feb-18 Apr-18 Jun-18 Aug-18 Oct-18 Dec-18 Feb-19 Apr-19 Jun-19 Aug-19 Oct-19 Dec-19 Feb-20 Apr-20 Jun-20

1Y

BOI

6M

PNB

3M

IIB

ICICIBC

Source: RBI, PL

Key large banks have lowered deposit rates

Significant Deposit cuts across buckets for most

5.10%

5.10%

9-15 Months

110 90 80

9-15 Months

BOB

SBI

RBL

Ban dhan

KMB

IIB

ICICIBC 3-9 Months

Source: Company, PL

15-3 6 Mon ths

Source: Company, PL

Repo Rate cut of 185bps from Jan’19

RBI heavy lifting aids G-sec Yields

10Yr G-Sec Yield

Movement in Repo Rate 7.0 6.5

8.03

6.0 (%)

5.5

5.0

6.80

4.5

July 15, 2020

Jun-20

Mar-20

Dec-19

Sep-19

Jun-19

Mar-19

Dec-18

Sep-18

Jun-18

Mar-18

Dec-17

Sep-17

Mar-17

Jun-20

Mar-20

Dec-19

Sep-19

Jun-19

Mar-19

Dec-18

Sep-18

Jun-18

Mar-18

Dec-17

Sep-17

Source: Bloomberg, PL

3.5

Jun-17

4.0

5.85

Jun-17

9.5 9.0 8.5 8.0 7.5 7.0 6.5 6.0 5.5

HDFCB

Axis

RBL

Ban dhan

KMB

IIB

Axis

(35) (25) ICICIBC

5.40%

BOB

5.15%

SBI

5.25%

HDFCB

-

5.70%

25 50 60

6.25%

100 80 120

80 75

7.20%

7.00%

110 80 80

Quarterly reduction in Deposit Rates (bps)

Deposit Rates 1 Year Bucket

115 90 90 125 115 105

Axis

HDFCB

0.00% -0.15% -0.30% -0.45% -0.60% -0.75% -0.90%

1M

KMB

ON

System Liquidity Intact

Source: Company, PL

25

India Strategy Capex cycle hinges on Govt Initiatives We believe recovery of capex cycle has become significantly more dependent on GOI than has been in recent times.



Lockdown has resulted in significant decline in rates of capacity utilization which was already reeling at sub 70% levels past 3 quarters. we believe that sub optimal capacity utilizations and lockdowns will delay private sector capex to increase industry capacity across most sectors.



We note that current scenario will result in increased emphasis on automation and digitization and increase in demand for automation products. This will include factory and shop floor automation, packaging lines and material handling. In addition, residential and commercial premises will look to add more automated security systems.



Although 4Q does not fully reflect the impact of lockdown, order inflow was tepid for capital projects on YoY basis. Order inflow has seen sharp decline to Rs0.6trillion from Rs3.4trillion in 4Q.

Ordering deferment lead to 5% YoY decline in OI

Utilization stands at 58-60% for most companies

771

76.1 73.6

73.8

75.0

633

555

769

814 642

768 554

669

437

427

Capacity Utilisation 80.0 71.2

69.1

70.0 65.0

60.0

Source: Company, PL

Q4FY20

Q3FY20

Q1FY20

Q2FY20

Q3FY19

Q4FY19

Q2FY19

Q4FY18

Q1FY19

Q2FY18

Q3FY18

Q1FY18

IIP impacted the due to Covid-19 Pandemic

Jun-19

Sep-19

Dec-19

Mar-20

Jun-20

1.0

2.3

5.2

3.4

0.6

-70%

14%

66%

22%

-45%

0.8

0.9

1.7

1.7

0.2

0

Source: CMIE, Company, PL

-60

0.3

0.4

0.8

0.4

0.5

-80

-6%

-14%

-6%

223%

83%

-100

1.0

0.9

0.2

9.2

0.1

870%

53%

-56%

490%

-94%

Apr-20

-23%

Mar-20

-72%

Feb-20

-81%

Jan-20

-40

-11%

Dec-19

0.1

-65%

Nov-19

YoY gr.

-81%

0.8

Oct-19

Implementation stalled projects

-35%

0.6

Sep-19

YoY gr.

20%

0.4

Aug-19

Revived projects

-17%

0.1

Jul-19

YoY gr.

-39%

Jun-19

YoY gr. Stalled projects

-20

May-19

Completed projects

Capital Goods (%)

20

Apr-19

YoY gr.

IIP growth (%)

Mar-19

New projects

July 15, 2020

Q3FY17

Source: RBI, Company, PL

Pandemic leads to lower ordering for 4Q/1Q Rs trillion

Q4FY17

Q1FY17

60.0 Q2FY17

4QFY20

3QFY20

2QFY20

1QFY20

4QFY19

3QFY19

2QFY19

1QFY19

4QFY18

2QFY18

3QFY18

55.0 1QFY18

900 800 700 600 500 400 300 200 100 -

652

Quarterly Order Inflows (Rs bn)

Source: MOSPI, Company, PL

26

India Strategy 

IIP contracted 34.7% in May’20 as compared to sharpest ever decline of 55.5% in Apr’20 due to gradual resumption of activities as nationwide lockdown began to ease in May. Manufacturing, mining and electricity de-grew by 39.3%, 21% and 15.4% respectively YoY.



All industries showed negative growth in May’20 as compared May’19 barring the pharmaceutical sector for the third consecutive month. Manufacturing motor vehicles, trailers and other transport equipment saw contraction off over 80% in May-20.



Use-base classification: Intermediate goods & basic good recorded a negative growth of 44.1% and 20% respectively. Capital good saw major fall of -64.3%. Consumer Durables decelerated to -68.5% due to de-growth vehicles, trailers and semi-trailer, electrical products etc. YoY.

IIP shows broad based improvement in May led by consumer non-durables and basic goods May-19 Jun-19

Jul-19 Aug-19 Sep-19

Oct-19 Nov-19 Dec-19

Jan’20 Feb’20 Mar’20 Apr’20 May’20

General

4.5

1.3

4.9

-1.4

-4.6

-6.6

2.1

0.4

2.1

4.5

-16.7

-57.6

-34.7

Mining

2.3

1.5

4.9

0.0

-8.6

-8.0

1.9

5.7

4.3

10.0

0.0

-27.0

-21.0

Manufacturing

4.4

0.3

4.8

-1.7

-4.3

-5.7

3.0

-0.3

1.6

3.2

-20.6

-67.1

-39.3

Electricity

7.4

8.6

5.2

-0.9

-2.6

-12.2

-5.0

-0.1

3.1

8.1

-6.8

-23.0

-15.4

2.2

0.6

3.6

1.0

-5.1

-5.9

-0.2

2.4

1.8

8.3

-4.1

-26.6

-20.0

Intermediate goods

12.5

12.1

15.7

7.3

6.8

8.7

17.2

13.1

15.9

19.4

-18.5

-65.4

-44.1

Capital goods

-2.1

-6.9

-7.0

-20.9

-20.5

-22.4

-8.9

-18.3

-4.3

-9.5

-38.3

-92.6

-64.3

Infra/Construction Goods

3.0

-1.3

2.9

-5.7

-7.0

-9.7

-0.7

0.2

-2.3

-0.1

-25.2

-84.7

-42.0

Consumer Durables

0.2

-10.2

-2.4

-9.7

-10.5

-18.9

-1.4

-5.6

-4.0

-5.8

-36.5

-96.0

-68.5

Consumer Non-durables

8.1

7.4

8.5

3.1

-1.1

-3.3

1.1

-3.2

-0.3

1.5

-20.2

-48.7

-11.7

Use-Based Basic goods

Source: MOSPI, PL



Recovery in the capex cycle hinges on GOI ability to start various projects. While GOI has earmarked more than 1000bn under MNREGA for small rural projects, we expect significant increase in ordering and capex plans for Highways, railways, Ports, urban Infra and defense projects.



We expect GOI plans also slightly back ended as lockdown has resulted in financial crunch impairing the ability to undertake pump priming economy beyond a point.

PMI shows sharp improvement in June Composite PMI index rose to 37.8 in June’20 up from 14.8 in May’20. PMI Service rose to 33.7 in June’20 but despite the rise service sector activity contracted for the fourth consecutive month due to COVID- 19 pandemic. PMI manufacturing activity moved towards stabilization to 47.2 in June’20 from 30.8 in May’20 as output is contracting but at a much softer rate. Consumer sentiments collapsed in May to the all-time low. current situation index (CSI) fell by 21.9 pps (from the last round) While the future expectation index (FEI) fell by 17.3pps (from last round). Sentiments on the general economic situation, employment scenario and household income plunged deeper into contraction zone also, expectation for the year ahead were pessimistic.

July 15, 2020

27

India Strategy Business sentiment improved- As per RBI’s industrial outlook survey, business sentiment in Q4FY20 (102.2) moved into the zone of optimism after two quarters of prevailing pessimism supported by an uptick in production, order inflows, external demand and overall financial situation. BEI suggests improvement in Q1FY21 (108.8 vs 105 in Q4FY20). Manufacturing PMI rebounds faster, services follow PMI Manufacturing

PMI Services

70 60 50

52.1 53.8

53.3

48.7

49.3

47.2

52.7

40

27.4

30.8

33.7

30 12.6

20

0

Jun-19 Jun-19 Jul-19 Jul-19 Aug-19 Aug-19 Sep-19 Sep-19 Oct-19 Oct-19 Nov-19 Nov-19 Dec-19 Dec-19 Dec-19 Jan-20 Jan-20 Feb-20 Feb-20 Mar-20 Mar-20 Apr-20 Apr-20 May-20 May-20 May-20 Jun-20

10

Source: PL CSI and FEI continue to slide Current Situation Index 128.4

124.8

118.0 97.3

115.2

115.1

114.5

97.9

95.7

89.4

85.7

85.6

83.7

May-20

Apr-20

Mar-20

Feb-20

Jan-20

Dec-19

Nov-19

Oct-19

Sep-19

Aug-19

Jul-19

Jun-19

May-19

63.7

Apr-19

Mar-19

140.0 133.4 130.0 120.0 104.6 110.0 100.0 90.0 80.0 70.0 60.0 50.0

Future Expectation Index

Source: RBI, PL

CPI – Core inflation rises 100bps 

CPI (Consumer Price Index) inflation stood at 6.09% in June’20 (beyond the RBI upper target limit of 6%), up 2.9% from June’19 on YoY basis. Inflation for rural areas was to 6.2% and urban inflation was 5.9% in June’20 on YoY basis



Food inflation (45.9% of weight) was 7.5% in June’20 mainly due to rise in pulses and products prices (16.68% increase in June’20 Y-o-Y), meat and fish (16.22% increase in June’20 Y-o-Y), oils and fats (up 12.27% in June’20 Y-oY) and spices (gained 11.74% in June’20)



Core inflation increased to 5.1%in June’20, and increase by 1pps as compared to 4.1% in June’19 due to moderate inflation clothing and footwear (3.5% vs 1.5% in June’19) and pan tobacco and Intoxicant (9.7% vs 4.2% in June’19).

July 15, 2020

28

India Strategy CPI has firmed up due to higher inflation in Tobacco, Footwear and Pulses Consumer Price Index (CPI)

May-19 Jun-19

Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec’19 Jan’20 Feb’20 Mar’20 Apr’20 May’20 Jun’20

Weight

3.0

3.2

3.1

3.3

4.0

4.6

5.5

2.3

2.1

6.6

5.9

-

-

6.1

Food, Beverages and Tobacco

45.9

2.0

2.4

2.3

3.0

4.7

6.9

8.7

12.2

11.8

9.5

7.8

8.6

7.4

7.3

Pan Tobacco and Intoxicants

2.4

3.9

4.2

4.9

5.0

4.6

3.9

3.3

3.4

3.6

4.1

4.7

-

-

9.7

Clothing and Footwear

6.5

1.8

1.5

1.4

1.2

1.0

1.6

1.3

1.5

1.9

2.0

2.1

-

-

3.5

Housing

10.1

4.8

4.8

4.9

4.8

4.7

4.6

4.5

4.3

4.2

4.2

4.2

3.9

3.7

3.5

Fuel and Light

6.8

2.5

2.2

-0.3

-1.7

-2.2

-2.0

-1.9

0.7

3.7

6.4

6.6

2.9

1.4

2.7

Miscellaneous

28.3

4.6

4.5

4.7

4.7

4.5

3.4

3.7

4.2

4.7

4.5

4.4

-

-

5.7

1.8

2.2

2.4

3.0

5.1

7.9

10.0

14.2

13.6

10.8

8.8

10.5

9.3

7.9

Consumer Food Price Index

Source: MOSPI, PL Food Inflation softened since Dec19 peak, although still high 14.00

CPI

Core Inflation

Food Inflation

12.2

12.00 10.00

7.8

7.4

8.00 6.00 4.00

6.1

5.9

4.14 3.18 2.37

7.3

5.1 4.1

2.00 Jun-20

May-20

Apr-20

Mar-20

Feb-20

Jan-20

Dec-19

Nov-19

Oct-19

Sep-19

Aug-19

Jul-19

Jun-19

0.00

Source: MOSPI, PL

July 15, 2020

29

India Strategy Trade deficit declines 68% in AM20 on lower oil and Gold imports Trade Deficit shrank by 80% YoY to USD 3.1 bn in May’20 (lowest trade deficit since May 2016) from USD15.4 bn in May’19. While service trade balance grew by 7% to USD7.2 bn in May’20 YoY, trade balance declined by 80% to USD3.1bn due to 51% decline in imports.



Exports: Merchandise exports declined by 36% to USD 19.1 bn in May’20 from USD 30 bn in May’19 on YoY basis mainly due to de-growth in leather and leather products by -75.07%, handicrafts by -72.77%, gem & jewellery by 68.83%, and petroleum products de growth by -68.46%. Only iron ore, pharmaceutical recorded and spices and rice a positive growth of 103.04%, 17.32%, 10.55% and 7.64% respectively in May’20 on YoY basis. The fall in exports is mainly due to drop in shipments of key sectors such as petroleum, textiles, engineering goods, gems and jewellery.



Imports: Merchandise imports de-grew by -51% in May’20 mainly due to reduced oil and gold imports. 28 key import sector posted negative growth during May’20 with oil imports falling by 72% and gold imports by 98%.

Merchandise: 72% decline in oil imports and 98% in Gold imports enables 80% lower trade deficit Merchandise Trade (USD bn) Exports YoY % Imports YoY % - Oil YoY % - Gold YoY % - Non Oil Non Gold YoY % Trade Deficit YoY %

Apr'19

May'19

Jun'19

Jul'19

Aug'19

Sep'19

Oct'19

Nov’19

Dec’19

Jan’20

Feb’20

26.1 1% 41.4

Mar’20

Apr’20

May’20

30.0

25.0

26.3

26.1

26.0

26.4

26.0

27.4

26.0

27.6

21.4

10.4

19.1

4%

-10%

2%

-6%

-7%

-1%

0%

-2%

-2%

3%

-35%

-60%

-36%

45.4

40.3

39.8

39.6

36.9

37.4

38.1

38.6

41.1

37.5

31.2

17.1

22.2 -51%

4%

4%

-9%

-10%

-13%

-14%

-16%

-13%

-9%

-1%

2%

-29%

-59%

11.4

12.4

11.0

9.6

10.9

9.0

9.6

11.1

10.7

13.0

10.8

10.0

4.7

3.5

9%

8%

-13%

-22%

-9%

-18%

-32%

-18%

-1%

15%

14%

-15%

-59%

-72%

4.0

4.8

2.7

1.7

1.4

1.3

1.8

2.9

2.5

1.6

2.4

1.2

0.0

0.1

54%

37%

13%

-42%

-62%

-51%

5%

7%

-4%

-32%

-9%

-63%

-100%

-98%

26.1

28.1

26.6

28.4

27.3

26.6

25.9

24.1

25.4

26.6

24.4

19.9

12.5

18.6

-2%

-1%

-9%

-2%

-9%

-9%

-10%

-12%

-12%

-5%

-1%

-30%

-52%

-34%

(15.3)

(15.4)

(15.3)

(13.4)

(13.5)

(10.9)

(11.0)

(12.1)

(11.3)

(15.2)

(9.9)

(9.8)

(6.8)

(3.1)

12%

5%

-8%

-28%

-25%

-27%

-39%

-31%

-22%

1%

1%

-11%

-56%

-80%

Source: Ministry of Commerce, PL Relatively stable service exports enable 7% higher services balance Services Exports (Receipts) YoY % Imports (Payments) YoY % Services balance YoY %

Mar'19

Apr'19

May'19

Jun'19

Jul'19

Aug'19

Sep’19

Oct’19

Nov’19

Dec’19

Jan’20

Feb’20

Mar’20

Apr20

17.9

18.1

18.7

18.6

19.1

18.2

17.5

17.7

18.0

20.0

19.0

17.7

18.2

18.5 -9%

7%

3%

15%

15%

9%

10%

7%

5%

8%

12%

7%

7%

1%

11.4

11.4

12.5

11.8

12.8

12.0

11.1

10.9

11.5

12.6

12.0

11.1

11.1

9.3

11%

4%

22%

15%

18%

16%

12%

8%

13%

10%

9%

13%

-2%

-18%

6.6

6.7

6.2

6.8

6.3

6.2

6.4

6.8

6.5

7.4

7.0

6.7

7.1

7.2

0%

0%

4%

3%

-7%

1%

0%

2%

-1%

14%

4%

-2%

7%

7%

Source: Ministry of Commerce, PL

July 15, 2020

30

India Strategy 1Q GST collections decline 41% 

Overall GST collections were only Rs323bn in April which gradually picked upto Rs620bn and Rs909bn in May and June,2020. We note that the cumulative GST collections for 1Q have shown a decline of 41% given the economic slowdown and lockdown.



Given the impact of slowdown and lockdown on the economic activity we believe that the GDP in FY21 might decline in low single digits and fiscal deficit will increase to ~5.5-6% of GDP. However, it all depends upon the recovery in economy and control of covid-19 pandemic.



Fiscal deficit (FD) for May’20 stood at Rs4.66 tn which is 59% of budgeted target of 7.96 tn, 27% up from May’19 because of poor tax collection. Revenue Deficit stood at Rs 4.12tn in May’20 (68% of the budget estimate)



Total revenue receipt at Rs4.47 tn (2% of BE) in first 2 months as tax collection fell by 71% vis-à-vis May’19. Cumulative Gross tax collection de-grew by 41% on Y-o-Y due to de growth across streams except corporate tax. GST collection fell by 51% and custom collection declined by 66 % Y-o-Y.

GST collections recovering post sharp decline in April, 1Q collections decline 41% 1,200 1,100 1,000 800 700

944

1,007

976

947

1,025

972

1,066

1,139

1,003

999

1,021

982

919

954

1,035

1,032

1,108

1,054

976

Sep-18

Oct-18

Nov-18

Dec-18

Jan-19

Feb-19

Mar-19

Apr-19

May-19

Jun-19

Jul-19

Aug-19

Sep-19

Oct-19

Nov-19

Dec-19

Jan-20

Feb-20

Mar-20

909

940 Aug-18

Jun-20

965 Jul-18

620

956 Jun-18

200

May-20

940 May-18

300

1,035

400

Apr-18

500

323

600

Apr-20

(Rs bn)

900

Source: GOI, PL Research

July 15, 2020

31

India Strategy Sectoral Snapshots Agri Inputs Domestic agri-inputs industry is witnessing robust demand driven by vibrant agriculture activity, expectation of good monsoon, shortage of farm labour, anticipation of better farm income, etc. Q1FY21 is expected to be one of the best quarters in last 5 years despite lockdown resulting into production, labour availability & logistics issues. We expect industry growth of +20% for Q1 driven by massive surge in herbicide sales, pre-buying led by robust demand expectation and ~5% price increase in generic molecules. With sharp run up in stock price without material improvement in underlying earnings, we downgrade GOAGRO to SELL (from Buy). (Click on the Link for Detailed Report)

Automobiles 2Ws/PVs/tractors witnessing strong recovery led by resilient rural sentiments even during the challenging time and shift towards personal mobility. However, we expect supply chain normalcy to come through by Aug/Sep. For our coverage universe, OEMs (ex-JLR) to see revenue decline of ~73% YoY while negative EBITDA margins of 1.7% (v/s +11.5%/ +8.6% in 1Q/4Q FY20) for Q1FY21. We believe OEM with large rural presence, dominant presence in lower end segment are in a sweet spot. MSIL and EIM are our preferred picks among OEMs while among ancillaries we like CEAT and EXIDE for replacement led business model. (Click on the Link for Detailed Report)

Aviation With domestic air travel resuming only from May 25th at 1/3rd of approved 2020 summer schedule (nearly 2 months after being grounded), we expect 1Q performance to be adversely impacted due to 1) loss of peak summer travel days 2) truncated size of operations 3) little to no ancillary revenues (except for cargo operations) and 4) travel restrictions by state governments adding to confusion, thereby further denting consumer confidence. With ~723/769 daily flights in June/July the industry is operating at only 25- 30% of pre-Covid capacity. We expect demand for air travel to remain suppressed in FY21 and expect the path to recovery to be long and bumpy (Click on the Link for Detailed Report)

July 15, 2020

32

India Strategy Banks & Life Insurance Banks: Amidst uncertainty of lockdown in Q1FY21E, bank earnings & asset quality will be quite distorted as moratorium & standstill on overdue loans will mask the real picture, thereby lowering slippages/recoveries and displaying better PCR. Focus will be more on the level of loans under moratorium (incl 2.0) which seems to be coming off as repayments materialize with Unlock of the lockdown. Additional things to watch out will be trends in deposits accretion, cost of funding and unsecured loans especially for private banks. Life Insurance- Likely to see pick-up in growth as unlock happens across India as trends suggest June should be much better than May and the same over April. Channel checks have suggested that protection continues to be in demand for increase in existing cover or buying a new coverage, while savings has been slow. We look for washout quarter for insurance though it has been gradually improving month over month post imposition of lockdown (Click on the Link for Detailed Report)

Capital Goods We expect 1QFY21E to be a painful quarter both for product and project companies led by nationwide lockdown till April end, impact of pandemic felt across segments, concerns on supply side plus migrant labour issues and deferment of ordering activity. The ordering momentum is expected to pick up from 2HFY21E driven by spending from government (Pvt capex will be muted) in sectors such as Railways, Metro, drinking water/sanitation, Oil & Gas, Roads, Power T&D and Healthcare. We believe government’s announcement of vital stimulus packages and its continuous thrust on infrastructure spending (target of ~Rs102trn over 5 years) would bring much needed boost in the sector. Key Stocks: L&T, KEC, Siemens and Voltamp. (Click on the Link for Detailed Report)

Cement We remain positive on the sector in wake of improving demand outlook, sustainable price discipline and reasonable valuations. Ultratech cement (UTCEM), Ambuja cement (ACEM) and JK Lakshmi cement (JKLC) remain our top picks in the sector. (Click on the Link for Detailed Report)

July 15, 2020

33

India Strategy Consumer Durables Although post lockdown economic activity resumed from May 4th, we expect 1Q performance to be adversely impacted as 1) activity in key urban centres remained subdued due to high incidence of Covid-19 cases and 2) complete washout in critical days of sale for seasonal products like RAC, Air coolers and fans etc. Although the immediate recovery in demand remains encouraging (maybe pent up demand), we shall closely watch sustainability in secondary demand trends in the coming months. (Click on the Link for Detailed Report)

Consumer Staples 1QFY21 Sales and PBT is expected to decline by 26.9% and 39.2% respectively. EBITDA margins will decline 350bps due to negative operating leverage. Rural demand remains strong led by bumper crop and labor migration. Britannia and Nestle will be only players showing double digit sales growth and profits, most other companies will report decline in profits. Due to high overhead and loss of business, we estimate JUBI will report a loss of Rs510mn during 1QFY21. We expect sharp decline in profits of companies with discretionary spends like Asian Paints, Kansai Nerolac, Pidilite with profits declining upwards of 80%. Similarly, Titan Inds, Emami, D’Mart will report sharp decline in profits. ITC will show profit pressure due to lockdown impact on Cigarette and Hotels business even as FMCG led by foods and Hygiene is expected to do well. HUL will report flattish profits, including GSK and 15% volume de-growth excluding GSK Nos. Dabur, Marico and Colgate will report double digit decline in sales and profits due to lower sales due to lockdown. (Click on the Link for Detailed Report)

Financial Services NBFC stocks witnessed avg. 20% upward price momentum over past three months. While markets have factored low moratorium percentage in Round 2 and rightly so, the slippages from this very moratorium book will be key towards performance appraisal of NBFCs. We prefer players with high capital and liquidity sufficiency, robust collection models and ability to bounce back faster. Therefore, reiterate BUY on BAF and SBICARD. Accumulate HDFC. (Click on the Link for Detailed Report)

July 15, 2020

34

India Strategy Infrastructure We expect 1QFY21 to be a wash-out quarter for our infra coverage universe with an average revenue fall of ~65-70% YoY attributed by a) nationwide lockdown and Covid-19 pandemic halting construction activities across the country, b) concerns on availability of labour force (average availability of 15-25% pre-Covid levels) and c) stoppage of toll collection in Apr’20 followed by sluggish pick-up in operations thereafter. With partial up-liftment of lockdown and gradual recovery in economy, we expect ordering activity to pick up from 2HFY21E in Roads, Urban Infra, Railways and Water/Irrigation segments. However, order book is not a major concern as order book-to-sales of ~3.3x, continue to provide revenue visibility for major companies for next 2-3 years. We continue to prefer companies with low debt, good corporate governance, lean working capital cycle and high book to bill ratio as they are better placed to wither the storm in such unprecedented scenario as well as emerge stronger amongst their peers. Our top picks in the sector are KNR Constructions, PNC Infratech and HG Infra. (Click on the Link for Detailed Report)

Information Technology Q1FY21E is a washout quarter that captures full impact of uncertainty in business from COVID-19 led by lockdown, supply side compression & demand pullback. We expect retail, travel & transport, hospitality and oil & Gas verticals to be severely impacted and do not expect recovery in Q2 also. We expect revenue trajectory to show resilience in Q2FY21 before starting growth (<+1 QoQ USD growth) from H2FY21. Despite INR depreciation, saving on travelling cost, variable pay and G&A expenses, operating margin to erode due to sharp decline in revenues. We believe a 7-8% revenue decline can easily lead to ~130bps decline in margins led by drop in utilization. Major global currencies have depreciated vs US Dollar (EURO: -0.2%, GBP: -3.1%, and AUD: -0.2% on daily average basis), implying cross-currency headwind of 50-120 bps for Q1FY21. TCS is currently trading at ~23X FY22E earnings (near pre-COVID levels) & we suggest investors to wait for better entry point. We continue to remain negative on Tech M & Wipro as demand compression will be significant for them & portfolio issues will cause further delay in recovery. Among mid cap IT, our top picks LTI/NIIT Tech & Mpahsis rallied 35%/37% & 34% in past 3 months & have a very limited upside now. We continue to remain positive on the fundamentals of Indian IT services & suggest investors to wait for a better entry point. We have introduced FY23E estimates & now valuing all companies on Sep-22 EPS (earlier March-22). (Click on the Link for Detailed Report)

July 15, 2020

35

India Strategy Media, Education & Others Radio: For our coverage universe we expect a ~75-80% fall in top-line for 1QFY21, as in April 2020 industry volumes/revenues for top 15 markets were ~15%/~15-20% of normal volumes/revenues respectively. We expect April and May to be suboptimally low on utilization front with gradual recovery in June. Cut back in government ad spends is expected to put added pressure on inventory utilization. Thus, we expect 1QFY21 to be extremely challenging for the radio industry. Multiplex: With multiplexes being shut in 1QFY21, NBOC for the industry is expected to be NIL. We thus expect 1QFY21 to be a period of cost rationalization & liquidity management. Both PVR/Inox have taken cost cutting initiatives to bring down the monthly opex burn during lockdown and have also shored up liquidity via debt/equity infusion. While we do not rule out near term challenges we continue to maintain our positive stance on the multiplex space given the rising content diversity and unviable single screen economics (fight for survival will be harder post COVID). Education: COVID-19 has realigned the academic cycle in the education space. Even the working capital requirements have stretched due to inventory/receivable pile up. Navneet’s performance is expected to be weak in a seasonally strong quarter as reopening timelines of schools have been delayed. However, in case of S Chand, revenue spill-over from the preceding quarter is expected to result in strong performance in a seasonally weak quarter. Luggage: We expect discretionary spending post-COVID to be weak resulting in a prolonged demand slump for luggage companies. Further, aggressive discounting by players can’t be ruled out in the initial few months which can result in heightened competitive intensity. Given that travel & tourism is worst hit by COVID-19 pandemic we expect 1QFY21 to be a challenging quarter for luggage companies. (Click on the Link for Detailed Report)

Metals We continue to maintain Underweight outlook given weak earnings outlook and over leveraged B/S. While, we maintain BUY on Hindalco (HNDL) in Non-ferrous space on the back of attractive valuations, revival of auto demand in North America/Asia and comfortable B/S. In Ferrous space, we like JSP given the better profitability in both steel and power biz, attractive valuations, lean capex and comfortable debt gearing. (Click on the Link for Detailed Report)

Oil & Gas Q1 oil sector performance will be hit due to reduced run rate given the lockdown. However, the OMCs due to inventory gains, higher marketing margins (albeit lower volumes), and improvement in refining margins due to crude discounts is likely to outperform the rest. (Click on the Link for Detailed Report) July 15, 2020

36

India Strategy Pharma Stocking aided pharma profitability with Revenue/EBITDA/PAT growth of 8%/ 9%/8% YoY for our pharma coverage universe in 4QFY20 but buying patterns and greater volume could reverse in 1QFY21E due to lockdown led restrictions. The worst-affected business in 1QFY21E would be acute therapeutic products in India formulations and Emerging markets, while chronic business would be largely unaffected. Although Risk to pharma is manageable, the resurgence of infections in the US and India can dampen the return to normal practice of doctors’ visits and hospital procedures till 3QFY21E, which is a risk to our estimates. While pharma is currently in the limelight with its efforts to develop vaccines and treatments for Covid-19, companies like Cipla, Glenmark, Cadila, and Jubilant has moved ahead of its fundamentals. (Click on the Link for Detailed Report)

July 15, 2020

37

India Strategy PL Valuation Sector / Com pany Nam e

Rating

Agri Chem icals Bayer Cropscience Dhanuka Agritech Godrej Agrovet Insecticides India P.I. Industries Rallis India Sharda Cropchem Sumitomo Chemicals UPL

BUY BUY SELL BUY UR BUY Acc Acc BUY

Autom obiles Ashok Leyland Bajaj Auto Eicher Motors Hero Motocorp Mahindra & Mahindra Maruti Suzuki Tata Motors TVS Motors

Acc HOLD BUY Acc HOLD BUY HOLD Sell

Price (Rs)

TP (Rs)

Upside (%)

Mcap (Rs bn)

5,597 808 437 426 1,702 286 265 268 438

6,010 656 461 612 NA 246 254 267 498

7.4 (18.9) 5.6 43.8 NA (14.1) (4.3) (0.5) 13.8

49 59 2,942 2,664 18,563 20,852 2,648 2,855 550 531 5,801 6,442 103 100 390 347

Revenues (Rs bn)

PAT (Rs bn)

EBITDA (Rs bn)

EPS (Rs)

BVPS (Rs)

RoE (%)

RoCE (%)

PER (x)

P/BV (x)

EV/EBITDA (x)

21E

22E

23E

21E

22E

23E

21E

22E

23E

21E

22E

23E

21E

22E

23E

21E

22E

23E

21E

22E

23E

21E

22E

23E

21E

22E

23E

21E

22E

23E

251.5 38.5 83.9 8.8 234.7 55.7 23.9 133.9 334.3

40.1 13.2 65.0 13.6 41.7 25.6 21.7 27.9 386.2

43.7 14.4 72.6 15.2 52.8 28.6 23.9 31.5 417.1

47.6 15.6 79.2 16.4 62.3 31.5 26.0 34.7 450.4

7.0 1.8 2.5 1.0 5.3 2.2 1.5 3.2 29.2

7.7 2.0 3.5 1.3 7.1 2.7 1.8 3.5 34.3

8.8 2.1 3.4 1.4 8.6 3.3 2.5 3.9 39.4

8.9 2.3 4.8 1.6 8.8 3.4 3.0 4.4 76.1

9.4 2.5 6.0 2.0 11.6 4.0 3.5 5.1 83.0

10.3 154.9 2.7 36.9 6.5 13.1 2.2 48.1 14.0 38.3 4.4 11.6 4.7 16.8 5.6 6.4 89.6 38.2

171.7 41.0 18.0 61.2 51.4 13.7 19.5 7.0 44.9

195.7 44.7 17.7 66.5 62.7 16.8 28.2 7.7 51.6

763.9 176.2 108.0 388.2 225.2 82.2 164.3 29.0 270.0

939.4 208.9 121.1 448.9 269.9 91.8 179.5 34.2 292.4

1,136.3 244.4 134.7 514.3 324.1 104.4 202.6 40.1 319.2

23.2 22.7 12.8 13.0 18.4 14.9 10.5 23.8 14.6

20.2 21.3 15.7 14.6 20.8 15.7 11.3 22.2 16.0

18.9 19.7 13.8 13.8 21.1 17.1 14.7 20.8 16.9

27.1 26.6 12.4 14.9 20.9 17.1 10.4 29.9 11.5

22.5 24.9 15.9 18.1 23.8 18.3 11.2 29.6 13.1

20.3 23.0 16.3 17.5 24.8 20.2 14.9 27.7 14.6

36.1 21.9 33.4 8.8 44.5 24.8 15.8 42.1 11.5

32.6 19.7 24.3 7.0 33.1 21.0 13.6 38.2 9.7

28.6 18.1 24.7 6.4 27.2 17.1 9.4 34.7 8.5

7.3 4.6 4.0 1.1 7.6 3.5 1.6 9.3 1.6

6.0 3.9 3.6 0.9 6.3 3.1 1.5 7.8 1.5

4.9 3.3 3.2 0.8 5.3 2.7 1.3 6.7 1.4

26.5 16.4 18.6 5.6 27.0 15.7 6.7 30.0 7.0

24.1 14.3 14.5 4.3 20.7 13.0 5.5 25.4 6.1

21.3 12.7 13.0 3.6 16.9 11.6 3.9 22.7 5.4

19.6 (9.4) 12.3 7.8 (3.5) 11.0 (3.3) (11.0)

144.7 851.3 506.4 530.1 656.4 1,752.5 371.3 185.2

170.8 243.7 92.1 276.8 438.7 765.8 2,633.1 158.1

203.7 282.0 108.2 317.3 497.0 856.9 2,869.0 179.2

220.2 299.0 121.4 342.7 563.3 927.3 3,108.2 193.6

5.8 43.4 16.6 27.1 32.0 54.4 55.9 5.5

8.9 51.4 21.8 35.1 37.2 74.5 105.9 8.1

8.5 52.9 24.0 38.2 42.2 88.0 123.7 9.0

12.5 37.7 21.2 36.8 51.0 74.4 244.7 13.0

17.7 45.9 27.7 45.3 60.4 95.1 315.1 16.7

18.6 49.6 31.7 49.9 68.3 114.4 354.8 18.0

2.0 150.0 608.7 135.4 26.8 180.1 15.5 11.6

3.0 177.6 798.7 175.5 31.2 246.5 29.4 17.0

2.9 182.9 878.7 190.9 35.3 291.2 34.4 19.0

26.0 730.0 4,132.4 746.5 305.8 1,643.5 190.9 83.8

28.4 786.8 4,791.1 817.0 327.0 1,730.0 220.3 96.7

30.6 829.2 5,529.8 903.0 352.3 1,861.2 254.7 111.8

7.8 21.1 15.6 18.6 9.0 11.1 8.5 14.5

11.1 23.4 17.9 22.5 9.9 14.6 14.3 18.8

9.9 22.6 17.0 22.2 10.4 16.2 14.5 18.3

4.4 16.8 16.2 14.8 6.9 8.0 4.4 12.8

6.1 19.5 19.4 17.8 7.9 11.1 7.0 17.6

5.9 19.4 19.2 18.0 8.6 13.7 7.7 18.3

24.8 19.6 30.5 19.6 20.5 32.2 6.6 33.6

16.3 16.6 23.2 15.1 17.6 23.5 3.5 23.0

17.0 16.1 21.1 13.9 15.6 19.9 3.0 20.5

1.9 4.0 4.5 3.5 1.8 3.5 0.5 4.7

1.7 3.7 3.9 3.2 1.7 3.4 0.5 4.0

1.6 3.5 3.4 2.9 1.6 3.1 0.4 3.5

12.6 22.5 20.9 11.9 12.3 23.3 4.7 15.6

8.4 18.3 15.4 9.3 10.3 18.1 3.9 11.8

7.6 16.8 12.9 8.0 8.9 14.6 3.5 10.4

Auto Ancillary Bharat Forge HOLD CEAT Acc Exide Industries Acc Motherson Sumi Systems BUY

367 868 155 94

347 958 177 116

(5.4) 10.4 13.9 23.2

170.7 35.1 132.0 297.2

86.5 64.4 102.1 662.2

95.6 75.3 112.7 765.1

106.1 88.2 124.0 831.3

6.2 1.6 8.9 13.2

9.0 2.4 9.3 20.3

10.9 3.4 11.0 24.8

13.6 6.1 15.4 52.8

17.6 7.8 16.0 72.4

20.2 9.9 17.7 79.1

13.3 38.7 10.5 4.2

19.4 59.1 10.9 6.4

23.4 83.8 12.9 7.9

122.9 745.6 80.0 39.6

139.3 792.7 85.9 44.0

159.7 864.5 93.8 49.4

11.3 5.3 13.6 11.0

14.8 7.7 13.1 15.4

15.6 10.1 14.3 16.8

8.6 6.0 16.9 12.7

11.8 7.6 16.4 19.4

13.5 9.3 18.0 23.2

27.6 22.4 14.8 22.5

18.9 14.7 14.2 14.6

15.7 10.4 12.0 12.0

3.0 1.2 1.9 2.4

2.6 1.1 1.8 2.1

2.3 1.0 1.7 1.9

14.7 8.4 8.2 6.6

11.0 6.6 7.6 4.7

9.1 5.2 6.6 3.9

Airlines InterGlobe Aviation SpiceJet

Acc HOLD

952 48

995 48

4.5 0.0

366.4 28.7

161.2 85.3

316.0 135.3

352.7 143.6

-30.2 -17.0

20.9 2.8

26.8 3.5

17.9 10.2

81.1 29.6

94.0 32.4

-78.5 -28.3

54.3 4.7

69.8 5.9

73.8 -45.4

128.1 -40.8

197.9 -34.9

-69.5 90.5

53.8 -10.8

42.8 -15.6

-11.7 -12.8

12.7 7.2

13.9 7.6

(12.1) (1.7)

17.5 10.3

13.6 8.1

12.9 (1.1)

7.4 (1.2)

4.8 (1.4)

24.2 14.8

5.2 5.1

4.4 5.0

Banks Axis Bank Bank of Baroda Federal Bank HDFC Bank ICICI Bank IDFC First Bank IndusInd Bank Kotak Mahindra Bank Punjab National Bank State Bank of India South Indian Bank

HOLD BUY BUY BUY BUY sell BUY Acc BUY BUY BUY

427 48 50 1,053 346 25 504 1,290 33 184 8

475 83 67 1,105 436 21 720 1,343 40 254 11

11.3 74.6 34.5 4.9 26.1 (16.8) 43.0 4.1 21.2 38.2 49.2

1,203.9 220.0 99.2 5,774.7 2,238.6 121.5 349.8 2,551.7 222.3 1,640.3 13.6

268.0 305.8 50.8 648.7 371.1 65.9 127.9 176.1 194.4 1,028.8 24.9

297.3 349.7 56.3 760.4 431.4 72.8 139.1 210.4 200.0 1,145.0 26.6

341.1 401.9 64.1 896.0 503.8 81.6 154.6 250.0 220.8 1,246.1 29.1

57.9 36.7 14.6 292.8 108.9 1.4 44.7 87.1 -6.0 80.4 2.8

100.6 73.1 17.9 361.3 152.5 3.5 48.7 112.7 59.1 181.7 3.7

145.3 90.3 21.2 443.4 205.8 7.8 57.8 138.9 63.6 219.2 4.2

236.6 201.8 33.5 547.9 276.7 20.1 102.1 145.0 161.3 630.2 15.2

257.0 228.4 36.6 632.4 319.2 21.5 102.1 172.0 157.5 707.6 15.0

295.2 260.4 41.2 749.4 373.0 25.0 106.1 205.5 167.9 738.6 15.6

20.5 7.9 7.4 53.4 16.8 0.3 64.4 43.9 -0.9 9.0 1.5

35.7 15.8 9.0 65.9 23.6 0.7 70.1 56.9 8.8 20.4 2.0

51.5 19.5 10.6 80.9 31.8 1.6 83.1 70.1 9.4 24.6 2.3

321.6 152.5 78.8 359.7 192.1 34.6 588.3 406.8 86.1 239.8 30.5

351.2 165.9 86.0 412.6 213.2 35.3 645.4 463.5 93.7 256.2 32.2

392.9 182.6 94.6 478.5 241.8 36.9 713.5 533.3 101.9 276.3 34.1

6.6 5.0 9.7 15.9 8.9 0.9 11.8 12.0 -1.0 3.4 5.0

10.6 9.4 10.9 17.1 11.4 2.1 11.3 13.0 9.2 7.4 6.3

13.8 10.6 11.8 18.1 13.7 4.5 12.2 14.0 9.2 8.4 6.7

0.6 0.3 0.8 1.8 0.9 0.1 1.4 2.0 -0.1 0.2 0.3

0.9 0.6 0.8 1.9 1.2 0.2 1.4 2.3 0.7 0.4 0.4

1.2 0.6 0.9 1.9 1.4 0.4 1.5 2.4 0.7 0.4 0.4

20.8 6.0 6.8 19.7 20.6 85.8 7.8 29.4 (37.0) 20.4 4.9

12.0 3.0 5.5 16.0 14.7 34.3 7.2 22.7 3.8 9.0 3.7

8.3 2.4 4.7 13.0 10.9 15.6 6.1 18.4 3.5 7.5 3.2

1.3 0.3 0.6 2.9 1.8 0.7 0.9 3.2 0.4 0.8 0.2

1.2 0.3 0.6 2.6 1.6 0.7 0.8 2.8 0.4 0.7 0.2

1.1 0.3 0.5 2.2 1.4 0.7 0.7 2.4 0.3 0.7 0.2

-

-

-

Financial Services Bajaj Finance BUY 3,149 3,806 Cholamandalam Investment Acc and Finance 202 Company239 HDFC Acc 1,790 2,177 L&T Finance HOLDings SELL 61 58 LIC Housing Finance Reduce 260 260 Mahindra & Mahindra Financial Reduce Services 193 191 Manappuram Finance Acc 154 182 SBI Card & Pyament Services BUY 692 782 Shriram Transport FinanceAcc 655 793

20.9 18.4 21.6 (4.6) 0.2 (1.2) 18.3 12.9 21.2

1,889.4 168.3 3,100.2 122.0 196.9 118.8 130.2 649.9 148.5

156.7 35.9 120.1 49.5 30.1 46.6 36.5 28.2 67.1

207.5 45.3 143.1 56.3 43.0 52.2 42.5 33.3 74.3

274.5 51.6 167.2 65.4 52.9 61.1 50.9 39.8 90.1

43.1 4.9 69.0 6.1 5.5 2.8 12.4 4.6 13.4

82.1 16.0 127.0 12.0 17.5 11.2 18.0 15.2 27.7

104.9 18.8 144.7 15.6 23.5 15.5 22.7 19.7 35.9

101.6 18.9 130.1 24.6 19.5 25.9 21.0 14.9 44.9

139.7 26.8 184.8 28.2 31.5 29.0 26.5 25.3 50.6

183.7 31.4 207.2 35.0 38.8 37.9 33.2 31.4 63.3

71.8 5.8 39.9 3.0 11.0 4.6 14.7 5.0 59.3

136.9 18.9 73.3 6.0 34.7 18.2 21.3 16.2 122.3

174.9 22.3 83.5 7.8 46.5 25.1 26.9 21.0 158.1

610.6 108.5 448.5 77.4 360.5 207.9 72.4 61.2 852.9

742.0 125.5 499.8 83.4 384.4 209.2 88.9 75.3 975.0

911.1 145.8 561.3 91.2 420.0 226.4 84.1 93.6 1,132.6

12.5 5.6 14.2 4.4 3.1 2.3 20.9 8.4 7.2

20.2 16.2 20.0 7.6 9.3 8.7 26.4 23.7 13.4

21.2 16.4 19.7 9.0 11.6 11.5 31.1 24.9 15.0

2.4 0.7 1.2 0.5 0.2 0.4 3.9 1.7 1.1

3.7 2.2 2.0 0.9 0.7 1.2 4.7 4.7 2.1

3.8 2.3 2.0 1.1 0.8 1.5 5.0 5.0 2.5

43.9 35.1 44.9 20.0 23.7 42.3 10.5 139.8 11.0

23.0 10.7 24.4 10.1 7.5 10.6 7.2 42.8 5.4

18.0 9.1 21.4 7.8 5.6 7.7 5.7 32.9 4.1

5.2 1.9 4.0 0.8 0.7 0.9 2.1 11.3 0.8

4.2 1.6 3.6 0.7 0.7 0.9 1.7 9.2 0.7

3.5 1.4 3.2 0.7 0.6 0.9 1.8 7.4 0.6

-

-

-

July 15, 2020

38

India Strategy

Sector / Com pany Nam e

Price (Rs)

TP (Rs)

Upside (%)

Mcap (Rs bn)

906 96 37 380 72 79 274 246 912 164 1,157 770 67 1,051

874 90 34 472 104 71 296 261 1,192 205 1,402 798 83 1,244

(3.5) (6.0) (6.9) 24.1 43.0 (10.1) 8.0 6.1 30.7 25.2 21.1 3.7 24.2 18.4

Consum er Durables Bajaj Electricals BUY 387 Crompton Greaves Consumer BUY Electricals242 Havells India Reduce 575 Voltas Acc 544

500 287 521 600

Rating

Capital Goods ABB HOLD Bharat Electronics HOLD BHEL HOLD Cummins India BUY Engineers India BUY GE T&D India HOLD KEC International BUY Kalpataru Pow er Transmission BUY Larsen & Toubro BUY Pow er Grid Corporation ofBUY India Siemens BUY Thermax Acc Triveni Turbine BUY Voltamp Transformers BUY

Revenues (Rs bn)

PAT (Rs bn)

EBITDA (Rs bn)

EPS (Rs)

BVPS (Rs)

RoE (%)

RoCE (%)

PER (x)

P/BV (x)

EV/EBITDA (x)

21E

22E

23E

21E

22E

23E

21E

22E

23E

21E

22E

23E

21E

22E

23E

21E

22E

23E

21E

22E

23E

21E

22E

23E

21E

22E

23E

21E

22E

23E

191.9 234.2 128.1 105.4 45.8 20.3 70.4 38.1 1,280.6 855.6 411.9 86.7 21.7 10.6

70.8 124.6 219.6 49.5 27.1 31.0 115.8 78.5 1,356.1 392.9 116.7 52.0 7.2 8.1

79.3 131.3 292.3 53.0 31.1 37.2 132.9 91.7 1,547.6 434.4 130.1 60.7 9.1 9.5

88.9 149.7 375.1 56.7 36.5 42.3 150.3 109.2 1,701.0 461.8 152.4 70.0 10.3 11.2

2.2 14.5 0.9 5.3 4.0 0.1 5.1 4.5 64.5 109.8 8.0 2.5 0.7 0.8

4.1 16.9 9.9 5.9 5.5 0.8 6.3 5.6 91.9 128.4 10.3 3.7 1.1 1.0

4.8 19.8 40.0 6.3 7.4 1.2 7.4 7.0 100.7 138.8 12.5 4.4 1.3 1.2

3.0 21.8 4.1 5.2 2.9 1.6 11.9 8.3 123.4 342.6 10.5 3.6 1.1 0.9

5.9 25.2 16.5 6.0 4.5 2.5 13.9 9.8 163.3 378.8 13.5 5.1 1.6 1.1

6.7 29.5 55.9 6.5 6.6 2.9 15.7 11.6 179.2 402.7 15.9 5.9 1.8 1.2

10.3 6.0 0.3 19.1 6.3 0.3 19.9 29.1 45.9 21.0 22.3 22.6 2.3 83.3

19.4 7.0 2.9 21.4 8.6 3.2 24.7 36.2 65.5 24.5 29.0 33.3 3.5 103.6

22.5 8.1 11.5 22.8 11.7 4.5 28.9 45.4 71.7 26.5 35.0 39.2 4.0 119.6

202.6 44.5 83.9 157.1 41.2 41.3 125.8 254.1 514.4 132.8 270.6 286.1 18.1 802.0

213.2 49.2 85.2 164.4 46.0 43.8 146.7 286.3 568.7 144.1 293.3 311.3 20.8 879.7

225.5 54.8 90.6 172.2 52.4 47.3 171.3 326.7 628.2 156.3 320.6 341.0 23.8 969.5

5.2 14.0 0.3 12.4 15.9 0.7 17.0 12.1 9.3 16.4 8.5 8.2 13.2 10.8

9.3 14.8 3.4 13.3 19.8 7.6 18.1 13.4 12.1 17.7 10.3 11.1 17.9 12.3

10.3 15.7 13.1 13.6 23.7 9.9 18.2 14.8 12.0 17.7 11.4 12.0 18.0 12.9

4.8 17.5 -0.3 8.3 10.4 2.5 19.7 14.6 4.6 11.1 8.5 7.1 15.6 9.8

11.1 18.3 3.2 9.4 15.2 7.9 20.6 16.0 6.1 11.9 10.7 10.6 21.2 11.2

12.0 19.4 13.6 9.5 19.9 9.6 20.9 17.5 6.4 12.1 11.8 11.5 21.3 11.7

88.0 16.1 140.7 19.9 11.5 271.9 13.7 8.4 19.9 7.8 51.8 34.0 29.6 12.6

46.6 13.8 12.9 17.7 8.4 24.5 11.1 6.8 13.9 6.7 39.9 23.2 19.3 10.1

40.3 11.8 3.2 16.6 6.2 17.6 9.5 5.4 12.7 6.2 33.0 19.6 16.8 8.8

4.5 2.2 0.4 2.4 1.8 1.9 2.2 1.0 1.8 1.2 4.3 2.7 3.7 1.3

4.2 2.0 0.4 2.3 1.6 1.8 1.9 0.9 1.6 1.1 3.9 2.5 3.2 1.2

4.0 1.8 0.4 2.2 1.4 1.7 1.6 0.8 1.5 1.0 3.6 2.3 2.8 1.1

57.6 9.8 11.4 18.9 5.4 14.0 7.6 5.6 20.1 6.4 34.4 20.6 17.9 11.8

28.9 8.4 4.9 16.5 2.4 8.3 6.5 4.5 14.9 5.8 26.7 14.4 12.5 9.4

25.1 7.8 (0.6) 15.7 0.6 7.4 5.8 4.1 14.0 5.5 22.7 12.5 10.7 8.6

29.2 18.3 (9.5) 10.2

44.0 152.0 360.1 180.0

45.6 43.7 93.1 74.3

54.1 51.5 110.6 88.2

60.9 57.6 124.5 97.1

1.0 4.1 6.6 5.0

2.2 5.6 9.2 7.1

2.9 6.4 10.6 8.2

2.4 5.7 10.4 6.5

3.6 7.5 13.6 8.8

4.4 8.5 15.3 9.7

8.4 6.6 10.5 15.2

19.4 8.9 14.7 21.5

25.2 10.2 17.0 24.7

129.7 30.0 79.3 139.8

147.1 36.2 89.0 157.0

167.2 42.9 99.5 175.8

6.7 24.6 14.2 11.3

14.0 26.9 17.4 14.5

16.0 25.8 18.0 14.9

11.4 31.1 19.6 17.2

18.5 32.9 23.8 20.5

21.1 32.7 24.6 20.2

45.9 36.8 54.7 35.8

20.0 27.2 39.2 25.3

15.4 23.8 33.9 22.0

3.0 8.1 7.3 3.9

2.6 6.7 6.5 3.5

2.3 5.6 5.8 3.1

19.7 25.3 32.8 26.2

12.5 19.1 24.7 19.2

9.9 16.4 21.5 17.1

Cem ent ACC Ambuja Cement Heidelberg Cement India JK Lakshmi Cement Shree Cement The Ramco Cements Ultratech Cement

BUY BUY Acc BUY HOLD HOLD BUY

1,287 1,430 189 210 175 190 284 350 21,843 19,000 657 600 3,821 4,300

11.1 11.4 8.6 23.1 (13.0) (8.6) 12.6

241.9 374.6 39.6 33.5 788.1 154.7 1,102.6

130.0 233.0 19.9 36.7 114.1 49.3 382.1

153.2 273.7 22.6 41.8 132.4 56.4 435.1

157.5 287.4 24.2 44.0 143.7 64.3 467.2

10.6 15.5 2.6 2.3 13.2 6.8 35.7

13.7 19.1 3.0 2.8 19.6 6.3 46.1

14.3 20.6 3.1 3.2 24.4 6.9 53.7

16.7 38.2 4.9 6.3 34.0 12.4 82.5

21.2 46.7 5.3 6.8 38.6 12.8 92.7

22.1 56.4 49.7 7.8 5.6 11.5 7.0 19.7 41.5 364.7 13.8 28.8 98.7 123.7

73.0 9.6 13.2 24.1 544.6 26.6 159.7

76.3 10.4 13.8 27.5 677.3 29.2 186.1

656.5 127.6 62.1 165.6 3,946.4 237.0 1,412.6

718.2 135.2 68.3 188.7 4,373.6 260.6 1,560.7

779.9 143.2 75.1 215.2 4,933.6 286.8 1,735.3

8.9 6.3 19.2 12.6 9.6 12.9 8.9

10.6 7.3 20.2 13.6 13.1 10.7 10.7

10.2 7.5 19.3 13.6 14.6 10.7 11.3

8.8 10.7 23.2 13.8 10.0 11.0 9.1

11.4 12.8 24.7 15.1 13.2 9.8 10.9

10.8 12.7 25.8 16.3 15.0 10.5 12.0

22.8 24.2 15.1 14.4 59.9 22.8 30.9

17.6 19.6 13.3 11.8 40.1 24.7 23.9

16.9 18.2 12.6 10.3 32.2 22.4 20.5

2.0 1.5 2.8 1.7 5.5 2.8 2.7

1.8 1.4 2.6 1.5 5.0 2.5 2.4

1.7 1.3 2.3 1.3 4.4 2.3 2.2

11.5 7.3 7.5 6.6 22.7 14.7 14.9

8.8 5.6 6.4 5.3 19.8 14.1 12.7

8.4 4.9 5.5 4.3 18.2 12.5 11.2

Consum er Staples Asian Paints Avenue Supermarts Britannia Industries Colgate Palmolive Dabur India Emami Hindustan Unilever ITC Jubilant FoodWorks Kansai Nerolac Paints Marico Nestle India Pidilite Industries Titan Company

Acc Reduce BUY Reduce HOLD HOLD HOLD BUY UR BUY HOLD Reduce HOLD HOLD

1,672 1,857 2,146 1,695 3,723 4,046 1,414 1,277 480 451 242 287 2,275 2,098 199 262 1,721 NA 445 529 344 337 16,909 14,609 1,370 1,418 968 1,025

11.1 (21.0) 8.7 (9.6) (6.0) 18.8 (7.8) 32.1 NA 19.1 (2.0) (13.6) 3.5 5.9

1,603.4 1,390.3 895.4 384.5 847.6 108.0 4,937.1 2,454.4 227.1 239.6 444.4 1,630.3 695.9 859.3

197.3 265.8 127.2 46.7 89.1 27.8 402.0 485.4 34.1 48.0 78.9 140.7 62.2 167.0

240.2 336.6 141.8 50.8 100.0 30.9 447.4 537.1 44.0 57.9 87.4 155.5 73.4 226.2

273.6 424.5 158.8 55.2 112.4 34.4 496.8 587.4 51.2 66.2 98.1 171.4 83.7 257.1

27.5 13.0 16.3 8.1 15.6 5.4 75.2 147.7 2.6 5.3 10.5 23.6 11.6 11.2

36.7 18.9 18.8 9.0 18.7 6.4 84.9 168.4 4.3 6.9 11.7 25.6 14.2 18.5

42.5 23.9 21.8 9.7 21.6 7.1 96.3 186.5 5.2 8.1 13.1 29.0 16.3 22.0

41.7 20.1 21.7 12.6 18.3 7.5 108.4 186.1 8.5 8.2 15.3 34.1 15.3 18.6

52.9 30.0 25.3 14.0 21.1 8.8 119.3 211.8 11.8 10.4 16.8 37.2 18.3 27.9

59.6 28.7 38.4 20.0 28.9 67.6 15.1 29.7 24.0 8.8 9.7 12.0 133.2 34.7 233.3 12.0 13.9 19.7 12.1 9.8 18.6 8.2 41.1 244.4 21.0 22.8 31.7 12.6

38.3 29.2 78.0 33.1 10.6 14.4 39.1 13.6 32.4 12.8 9.1 265.9 27.9 20.8

44.3 36.8 90.5 35.8 12.2 16.0 44.4 15.0 39.2 15.0 10.2 301.0 32.2 24.8

131.7 189.6 214.4 53.9 42.1 43.3 45.2 56.0 133.4 76.1 24.4 260.7 110.4 91.4

155.9 217.3 257.4 58.1 47.9 51.5 52.7 60.2 159.8 84.3 26.5 318.1 129.3 107.8

184.2 252.3 307.9 63.9 54.7 58.8 61.4 64.8 188.9 93.9 28.7 395.3 303.0 127.5

24.2 11.1 34.5 52.7 22.2 28.5 84.4 22.2 17.7 13.4 34.2 106.0 23.0 15.0

26.6 14.4 33.1 59.1 23.5 30.3 80.0 23.4 22.1 16.0 35.8 91.9 23.3 20.9

26.0 15.7 32.0 58.7 23.8 29.1 77.8 24.0 22.5 16.8 36.9 84.4 22.9 21.0

28.9 13.2 34.2 66.2 21.3 19.4 109.7 25.5 32.6 17.3 40.9 135.1 27.3 19.7

31.4 17.9 36.7 72.1 22.2 22.4 101.9 27.0 37.9 20.8 43.1 117.6 27.2 27.5

30.2 20.1 37.9 72.8 22.6 26.6 98.1 27.6 38.0 21.9 45.1 107.0 26.6 26.6

58.3 107.2 55.1 47.7 54.4 20.1 65.6 16.6 87.4 45.4 42.1 69.2 60.2 76.7

43.7 73.4 47.7 42.7 45.4 16.8 58.1 14.6 53.2 34.7 37.8 63.6 49.0 46.5

37.7 58.3 41.1 39.5 39.2 15.1 51.3 13.3 43.9 29.7 33.8 56.2 42.6 39.1

12.7 11.3 17.4 26.2 11.4 5.6 50.3 3.6 12.9 5.8 14.1 64.9 12.4 10.6

10.7 9.9 14.5 24.3 10.0 4.7 43.2 3.3 10.8 5.3 13.0 53.2 10.6 9.0

9.1 8.5 12.1 22.1 8.8 4.1 37.1 3.1 9.1 4.7 12.0 42.8 4.5 7.6

37.6 68.1 40.6 30.2 45.4 13.7 44.9 12.2 25.7 28.4 28.4 47.0 44.3 45.4

29.3 45.9 34.5 27.1 39.2 11.0 40.5 10.6 18.4 21.9 25.9 42.9 36.6 29.7

25.7 36.0 29.8 25.0 34.1 9.5 36.1 9.5 15.4 18.6 23.3 38.5 31.6 25.6

Education Navneet Education S Chand and Company

Acc Acc

17.1 1.8

13.9 6.4

16.5 7.2

18.6 8.4

1.5 0.4

2.0 0.6

2.4 0.9

2.5 1.3

3.2 1.4

8.9 16.1

10.3 24.8

42.0 246.7

47.8 262.9

58.1 287.7

16.9 5.3

19.8 6.3

19.5 9.0

19.4 6.4

22.2 7.2

22.0 8.5

11.1 4.1

8.4 3.2

7.3 2.1

1.8 0.2

1.6 0.2

1.3 0.2

7.7 2.6

6.0 2.2

5.1 1.7

July 15, 2020

75 52

89 57

18.7 8.2

3.7 1.7

6.7 12.7

39

India Strategy

Sector / Com pany Nam e

Price (Rs)

TP (Rs)

Upside (%)

Mcap (Rs bn)

269 615 365 831 2,191 1,460 976 994 1,688 765 93 234 2,234 1,822 615 263 132

306 591 282 788 1,894 1,169 888 943 1,533 600 113 249 2,116 1,908 493 257 160

13.7 (3.9) (22.8) (5.2) (13.6) (19.9) (8.9) (5.1) (9.2) (21.5) 21.2 6.1 (5.3) 4.7 (19.8) (2.1) 21.5

Infrastructure Ahluw alia Contracts (India) BUY Ashoka Buildcon BUY Capacite's Infraprojects BUY H.G. Infra Engineering BUY IRB Infrastructure Developers BUY ITD Cementation India BUY J.Kumar Infraprojects BUY KNR Constructions BUY NCC BUY PNC Infratech BUY Sadbhav Engineering BUY

208 57 105 200 119 49 93 205 31 137 56

264 147 162 259 139 67 176 305 83 205 87

Logistics & Ports Container Corporation of India Acc

431

Rating

Inform ation Technology Cyient Acc HCL Technologies HOLD Hexaw are Technologies Reduce Infosys HOLD Larsen & Toubro InfotechHOLD L&T Technology ServicesHOLD Mindtree Reduce Mphasis Acc NIIT Technologies BUY Persistent Systems HOLD Redington (India) HOLD Sonata Softw are Acc Tata Consultancy Services HOLD TeamLease Services BUY Tech Mahindra Reduce Wipro BUY Zensar Technologies BUY

Media Entertainment Netw ork (India) HOLD Inox Leisure Acc PVR Acc Music Broadcast HOLD Metals Coal India Hindalco Industries Hindustan Zinc Jindal Steel & Pow er JSW Steel NMDC Steel Authority of India Tata Steel

July 15, 2020

HOLD BUY Acc BUY Reduce Acc Reduce Reduce

Revenues (Rs bn)

PAT (Rs bn)

EBITDA (Rs bn)

EPS (Rs)

BVPS (Rs)

RoE (%)

RoCE (%)

PER (x)

P/BV (x)

EV/EBITDA (x)

21E

22E

23E

21E

22E

23E

21E

22E

23E

21E

22E

23E

21E

22E

23E

21E

22E

23E

21E

22E

23E

21E

22E

23E

21E

22E

23E

21E

22E

23E

29.6 1,669.1 108.6 3,523.4 381.2 151.9 160.5 185.0 104.3 58.4 36.1 24.3 8,465.9 31.1 536.9 1,559.8 29.7

37.0 705.6 58.6 864.3 116.0 51.1 85.8 90.4 43.5 37.1 554.7 36.7 1,568.9 52.3 354.2 598.1 40.6

45.6 772.4 60.9 919.8 133.2 54.7 92.9 100.2 48.6 41.0 565.1 31.3 1,727.4 52.6 379.4 626.6 44.3

52.8 844.1 70.9 1,068.9 151.5 60.3 103.3 109.9 54.5 45.9 622.0 27.0 1,886.6 54.2 407.9 658.3 48.6

3.0 107.8 5.7 154.2 16.3 7.1 9.4 11.1 4.6 3.5 4.9 2.5 310.4 1.1 33.6 93.2 2.5

3.6 119.6 6.4 179.2 18.2 8.4 10.0 13.3 6.0 4.2 5.7 2.5 368.5 1.4 38.0 96.4 3.2

4.4 127.2 7.6 213.6 21.3 9.1 10.8 14.8 6.6 4.5 5.2 2.6 395.4 1.4 40.8 98.8 3.6

4.9 165.8 8.6 204.5 20.6 9.1 14.0 14.8 7.2 5.0 10.2 3.6 407.2 1.2 45.1 123.9 4.5

6.0 181.6 9.1 222.0 24.0 10.8 14.8 17.3 8.7 6.2 11.2 3.4 468.8 1.4 52.5 125.4 5.5

7.4 194.2 10.6 248.6 27.3 11.9 15.6 18.9 9.8 6.9 10.1 3.5 509.2 1.4 57.0 125.7 6.3

27.0 39.7 19.0 36.4 93.8 68.4 57.0 59.8 74.6 46.2 12.6 23.9 81.9 65.3 38.5 15.7 11.3

33.1 44.1 21.6 42.3 104.5 80.4 61.1 71.4 96.3 54.7 14.7 24.6 97.2 79.0 43.6 16.9 14.4

40.4 46.9 25.6 50.4 122.6 87.5 65.9 79.4 117.5 59.5 13.4 25.2 104.3 81.3 46.8 17.3 15.9

248.5 221.9 103.9 179.6 368.2 327.0 242.4 350.9 424.2 344.5 120.0 92.9 258.0 399.9 290.1 109.4 101.4

267.6 254.2 116.4 205.1 432.4 375.5 291.9 400.1 482.1 382.7 130.8 102.7 301.2 479.0 321.9 127.6 112.5

291.0 289.2 131.2 211.0 507.8 428.2 346.2 457.3 600.9 424.3 140.7 112.8 351.5 560.3 356.9 141.5 124.8

11.2 19.3 19.3 21.7 27.6 22.3 26.3 18.0 18.6 14.1 10.9 27.2 33.7 17.8 13.9 15.4 11.6

12.8 18.5 19.6 22.0 26.1 22.9 22.9 19.0 21.3 15.0 11.7 25.1 34.8 18.0 14.2 14.0 13.4

14.5 17.3 20.7 24.2 26.1 21.8 20.6 18.5 20.8 14.7 9.9 23.4 32.0 15.6 13.8 12.9 13.4

10.9 22.0 25.4 24.7 31.9 24.4 31.6 21.8 21.6 12.9 12.2 35.8 41.1 7.6 13.6 14.6 11.6

12.3 21.4 25.1 24.4 31.6 25.8 27.0 22.8 25.0 15.1 13.1 31.9 41.7 8.7 14.8 13.3 13.6

14.5 20.1 26.3 25.5 30.6 24.9 23.8 21.9 24.8 15.2 10.9 29.8 38.8 8.3 14.7 12.1 14.2

9.9 15.5 19.2 22.9 23.4 21.3 17.1 16.6 22.6 16.5 7.4 9.8 27.3 27.9 16.0 16.7 11.7

8.1 14.0 16.9 19.7 21.0 18.2 16.0 13.9 17.5 14.0 6.3 9.5 23.0 23.0 14.1 15.5 9.2

6.7 13.1 14.3 16.5 17.9 16.7 14.8 12.5 14.4 12.9 6.9 9.3 21.4 22.4 13.1 15.1 8.3

1.1 2.8 3.5 4.6 5.9 4.5 4.0 2.8 4.0 2.2 0.8 2.5 8.7 4.6 2.1 2.4 1.3

1.0 2.4 3.1 4.1 5.1 3.9 3.3 2.5 3.5 2.0 0.7 2.3 7.4 3.8 1.9 2.1 1.2

0.9 2.1 2.8 3.9 4.3 3.4 2.8 2.2 2.8 1.8 0.7 2.1 6.4 3.3 1.7 1.9 1.1

4.5 9.7 10.6 15.5 16.6 15.2 10.4 10.7 12.5 9.2 3.9 4.5 19.9 24.7 9.9 9.6 6.5

3.7 8.5 9.5 13.6 14.0 12.0 9.4 8.7 9.9 6.9 3.1 4.5 17.0 21.1 8.2 8.9 5.1

2.9 7.5 7.7 12.0 12.0 10.5 8.4 7.5 8.5 5.7 3.5 4.1 15.4 19.6 7.2 8.2 4.2

27.2 156.5 53.8 29.1 17.1 37.2 90.1 49.0 164.7 50.1 55.0

13.9 16.1 7.1 13.1 41.7 8.4 7.0 28.8 19.1 35.0 9.6

14.8 44.3 12.1 19.5 54.9 28.3 22.1 22.8 84.6 42.5 21.6

25.8 55.5 22.4 31.3 59.8 36.3 33.0 34.2 102.8 59.8 26.6

29.5 59.0 26.6 34.9 66.2 41.3 38.7 39.7 114.6 68.3 NA

0.5 -0.8 0.1 0.7 2.9 0.4 0.4 1.4 2.6 3.0 0.4

1.7 0.8 1.4 2.1 7.7 1.1 2.2 2.9 4.6 4.9 1.0

1.9 0.7 1.6 2.4 9.6 1.7 2.8 3.5 5.5 5.4 NA

1.3 12.8 1.8 2.4 22.2 2.6 2.5 3.9 9.6 5.8 2.2

3.0 16.0 3.5 4.5 24.8 3.6 5.1 5.8 12.7 8.5 3.2

3.4 17.0 4.0 5.0 27.5 4.5 5.9 6.7 14.2 9.7 NA

7.1 -3.0 2.2 10.4 8.1 2.3 4.7 10.1 4.2 11.6 2.0

25.1 2.7 20.2 32.3 21.9 6.7 29.4 20.8 7.6 19.1 5.9

28.4 2.6 24.1 36.6 27.4 9.9 37.1 24.8 9.1 21.2 NA

127.0 10.8 138.3 137.2 194.3 63.6 245.4 125.3 86.4 110.3 123.9

151.6 12.5 156.2 169.5 212.2 70.3 273.5 145.6 92.5 128.4 129.1

179.4 14.1 177.4 206.1 235.6 80.2 309.4 169.8 100.1 148.5 NA

5.8 -23.3 1.6 7.9 4.2 3.7 1.9 8.4 4.9 11.1 1.7

18.0 23.4 13.7 21.1 10.8 10.0 11.3 15.3 8.5 16.0 4.7

17.1 19.4 14.5 19.5 12.2 13.2 12.7 15.7 9.4 15.3 NA

9.9 14.6 4.3 11.2 5.9 9.8 4.7 9.5 11.0 14.9 3.3

24.5 17.9 14.8 23.0 6.6 15.0 13.5 16.2 14.1 19.8 5.8

23.7 17.7 15.2 21.8 7.3 17.7 14.7 16.6 14.8 19.1 NA

29.2 (19.3) 48.1 19.3 14.6 21.1 19.8 20.2 7.5 11.8 27.4

8.3 21.0 5.2 6.2 5.4 7.3 3.2 9.8 4.1 7.2 9.5

7.3 22.3 4.4 5.5 4.3 4.9 2.5 8.2 3.5 6.4 NA

1.6 5.3 0.8 1.5 0.6 0.8 0.4 1.6 0.4 1.2 0.5

1.4 4.6 0.7 1.2 0.6 0.7 0.3 1.4 0.3 1.1 0.4

1.2 4.1 0.6 1.0 0.5 0.6 0.3 1.2 0.3 0.9 NA

9.6 5.9 4.7 6.7 11.0 4.2 2.7 7.9 4.1 5.8 9.1

4.1 5.0 2.9 3.9 9.6 3.5 1.9 5.3 3.0 3.9 6.4

2.9 5.0 2.4 3.4 8.4 2.8 1.6 4.4 2.9 3.3 NA

468

8.6

262.6

51.7

68.5

NA

6.8

11.4

NA

11.9

17.1

NA

11.2

18.7

NA

171.9

183.1

NA

6.6

10.5

NA

6.7

10.9

NA

38.5

23.0

NA

2.5

2.4

NA

19.9

13.8

NA

128 224 1,046 16

157 256 1,107 17

22.0 14.4 5.8 7.6

6.1 23.0 53.6 5.4

3.9 8.1 14.7 1.7

5.8 19.2 33.8 2.6

6.7 23.9 40.5 3.2

-0.5 -1.5 -3.0 -0.1

0.2 1.6 1.2 0.3

0.6 2.3 2.3 0.6

0.4 0.7 1.4 0.1

1.4 5.9 10.4 0.8

2.0 7.4 12.2 1.1

-11.4 -14.2 -58.0 -0.4

4.7 15.4 24.1 0.9

12.6 22.4 45.0 1.6

180.2 45.4 284.3 17.9

183.9 59.8 304.1 18.8

195.5 81.1 344.9 20.4

-6.3 -31.3 -20.4 -2.2

2.5 25.8 7.9 4.8

6.5 27.6 13.1 8.0

-7.8 -3.5 -3.7 -4.0

4.1 10.1 8.5 5.5

9.1 12.8 10.3 9.9

(11.3) (15.8) (18.0) (40.1)

27.4 14.6 43.4 17.4

10.2 10.0 23.2 9.6

0.7 4.9 3.7 0.9

0.7 3.8 3.4 0.8

0.7 2.8 3.0 0.8

10.8 68.7 67.1 20.5

2.4 8.4 9.3 3.6

1.3 6.5 7.6 2.1

128 165 187 166 195 82 33 339

155 180 195 180 140 87 25 250

21.2 9.1 4.3 8.3 (28.1) 6.4 (24.6) (26.2)

788.8 367.8 790.9 169.0 471.1 250.6 137.5 388.5

865.1 1,180.1 163.8 355.7 679.9 101.1 564.2 1,344.4

979.3 1,326.3 206.0 396.6 908.2 105.5 704.1 1,493.4

1,145.8 1,374.0 223.5 405.6 871.6 116.9 738.2 1,517.3

103.8 38.4 49.1 -5.9 10.0 36.4 -29.1 -5.9

132.0 51.2 66.4 1.0 37.5 37.1 5.5 29.9

180.3 50.4 70.2 6.4 73.3 41.7 11.1 26.3

179.8 133.3 72.3 76.9 103.9 48.9 27.3 164.4

228.1 155.5 91.7 84.4 163.9 49.8 81.8 217.3

305.9 155.9 92.1 88.0 168.1 56.4 89.9 213.6

16.8 17.3 11.6 -5.8 4.1 11.9 -7.1 -5.2

21.4 23.0 15.7 1.0 15.5 12.1 1.3 26.1

29.3 22.7 16.6 6.3 30.3 13.6 2.7 22.9

58.1 295.4 80.6 312.8 157.6 96.6 81.8 621.7

64.4 316.9 82.2 313.8 171.1 102.7 83.1 637.6

73.0 338.0 83.9 320.1 197.4 110.3 85.8 650.3

30.5 6.2 13.2 -1.8 2.7 12.7 -8.3 -0.8

35.0 7.5 19.3 0.3 9.4 12.2 1.6 4.1

42.6 6.9 20.0 2.0 16.5 12.8 3.2 3.6

23.9 6.4 12.6 5.3 5.8 15.7 -1.4 4.2

32.3 7.6 18.9 6.5 9.9 14.9 4.6 6.9

43.1 7.2 18.2 7.4 9.4 15.9 5.1 6.5

7.6 6.0 9.6 7.2 16.1 11.9 (28.7) 170.3 47.2 12.6 6.9 6.8 (4.7) 25.0 (65.4) 13.0

4.4 7.3 11.3 26.4 6.4 6.0 12.4 14.8

2.2 0.6 2.3 0.5 1.2 0.8 0.4 0.5

2.0 0.5 2.3 0.5 1.1 0.8 0.4 0.5

1.8 0.5 2.2 0.5 1.0 0.7 0.4 0.5

2.7 5.5 7.1 6.5 9.7 4.6 23.7 8.8

2.1 4.5 4.8 5.6 6.3 4.7 8.2 6.7

1.4 4.1 3.7 4.9 5.7 4.1 7.3 6.8

40

India Strategy

Sector / Com pany Nam e

Price (Rs)

TP (Rs)

Oil & Gas Aarti Industries Acc Bharat Petroleum Corporation BUY GAIL (India) Acc Hindustan Petroleum Corporation BUY Indian Oil Corporation BUY Indraprastha Gas BUY Mahanagar Gas BUY NOCIL BUY Oil & Natural Gas Corporation BUY Oil India Acc Petronet LNG BUY Reliance Industries BUY

914 370 97 203 86 404 980 104 76 96 256 1,844

1,024 515 108 280 114 597 1,279 96 96 117 384 1,828

Pharm a Aurobindo Pharma Acc Cadila Healthcare Reduce Cipla Reduce Dr. Reddy's Laboratories Acc Dr. Lal PathLabs Sell Eris Lifesciences BUY Glenmark PharmaceuticalsSell Indoco Remedies HOLD Ipca Laboratories BUY Jubilant Life Sciences Sell Lupin BUY Sun Pharmaceutical Industries HOLD Thyrocare Technologies Sell

840 355 638 4,036 1,915 442 416 201 1,649 689 857 495 570

838 329 542 4,326 895 576 365 219 1,839 414 1,001 479 307

(0.3) (7.1) (15.0) 7.2 (53.2) 30.3 (12.3) 9.3 11.5 (39.9) 16.7 (3.3) (46.2)

Mid Caps IRCTC V.I.P. Industries

1,352 258

1,495 255

10.6 (1.0)

July 15, 2020

Rating

Acc HOLD

Upside (%)

Mcap (Rs bn)

Revenues (Rs bn)

PAT (Rs bn)

EBITDA (Rs bn)

EPS (Rs)

BVPS (Rs)

RoE (%)

RoCE (%)

PER (x)

P/BV (x)

EV/EBITDA (x)

21E

22E

23E

21E

22E

23E

21E

22E

23E

21E

22E

23E

21E

22E

23E

21E

22E

23E

21E

22E

23E

21E

22E

23E

21E

22E

23E

21E

22E

23E

36.5 2,087.5 518.1 1,994.4 4,104.5 45.4 25.5 6.9 3,430.5 94.0 381.7 2,708.8

52.2 2,742.2 598.2 2,483.5 5,105.7 69.7 33.8 8.9 4,187.0 118.6 445.4 3,456.6

71.8 3,189.7 878.4 2,771.0 5,634.7 78.5 36.0 11.1 4,607.0 135.5 458.2 3,946.3

5.1 52.9 44.2 51.7 106.1 8.6 5.9 0.6 79.1 14.0 25.2 309.7

7.4 81.7 49.7 63.9 152.0 13.6 8.9 1.1 212.9 24.0 31.5 409.1

14.1 89.2 61.1 62.3 152.8 14.6 9.5 1.4 204.6 30.5 35.8 474.9

9.5 112.6 69.4 96.7 282.0 13.1 8.3 1.2 435.4 24.2 41.5 450.6

13.0 156.3 74.9 127.2 354.3 20.7 12.2 1.9 602.3 40.5 48.7 587.8

21.7 164.6 100.4 132.8 364.2 22.8 12.8 2.3 646.3 50.9 52.4 665.2

29.1 26.9 9.8 33.9 11.6 12.3 60.2 3.9 6.3 12.9 16.8 45.8

42.7 41.5 11.0 41.9 16.6 19.4 89.6 6.5 16.9 22.1 21.0 60.5

80.7 45.4 13.6 40.9 16.6 20.9 96.2 8.5 16.3 28.1 23.9 70.2

194.7 223.8 104.3 212.8 113.2 82.2 341.0 73.8 218.3 232.1 73.9 687.3

233.1 246.9 112.1 241.0 125.4 97.7 403.8 78.8 227.9 244.4 82.3 796.9

305.8 275.2 121.5 268.5 137.5 114.4 471.1 85.4 237.1 260.0 91.9 855.6

16.1 12.4 9.7 16.8 10.6 15.9 18.8 5.3 3.3 5.7 23.8 7.0

20.0 17.7 10.2 18.5 13.9 21.6 24.1 8.5 7.6 9.3 26.9 8.2

30.0 17.4 11.6 16.0 12.7 19.7 22.0 10.4 7.0 11.1 27.4 8.5

15.0 9.0 9.8 8.1 8.3 18.4 20.5 7.1 4.5 3.3 31.0 5.3

18.5 14.1 9.9 8.0 10.5 26.6 27.4 11.3 5.8 6.8 32.9 7.1

28.0 14.1 13.6 6.6 9.8 24.2 24.1 13.9 5.2 8.9 31.6 7.6

31.4 13.7 9.9 6.0 7.4 32.9 16.3 26.9 12.1 7.4 15.3 40.3

21.4 8.9 8.8 4.8 5.2 20.9 10.9 16.1 4.5 4.3 12.2 30.5

11.3 8.1 7.2 5.0 5.1 19.3 10.2 12.2 4.7 3.4 10.7 26.3

4.7 1.7 0.9 1.0 0.8 4.9 2.9 1.4 0.3 0.4 3.5 2.7

3.9 1.5 0.9 0.8 0.7 4.1 2.4 1.3 0.3 0.4 3.1 2.3

3.0 1.3 0.8 0.8 0.6 3.5 2.1 1.2 0.3 0.4 2.8 2.2

18.7 7.9 6.0 7.7 6.0 20.0 9.6 13.7 4.4 6.5 8.0 27.7

14.0 5.7 5.5 7.4 5.2 12.3 6.2 8.9 4.1 3.9 6.3 20.0

8.4 5.1 4.1 6.6 5.1 10.8 5.5 6.9 4.2 3.0 5.3 17.2

492.2 363.1 514.5 670.9 159.6 60.0 117.3 18.5 208.3 109.8 388.3 1,187.9 30.1

256.3 151.8 178.7 179.8 10.9 11.7 110.7 13.4 51.3 103.7 162.3 342.1 3.5

279.2 161.7 192.8 198.3 12.2 13.3 119.2 15.8 58.4 111.3 184.1 376.1 3.9

304.4 172.2 208.7 200.3 13.7 15.1 128.5 17.5 66.7 119.4 209.4 413.7 4.5

33.6 15.9 18.3 25.5 0.9 3.2 7.6 0.9 7.3 10.9 14.3 47.2 0.6

37.8 18.7 19.8 30.0 1.9 3.8 8.6 1.2 9.0 12.3 18.9 54.7 0.9

41.0 20.9 25.0 29.6 2.2 4.7 11.7 1.7 12.0 13.7 21.8 64.1 1.1

53.2 30.4 31.5 42.3 1.7 3.8 15.5 1.7 10.5 20.5 31.2 75.1 1.1

60.4 34.4 33.9 48.6 3.0 4.4 17.2 2.2 12.7 22.7 36.9 82.6 1.5

65.9 57.3 36.7 15.5 36.7 22.7 49.1 153.5 3.3 11.0 5.0 23.6 18.6 26.8 2.5 9.6 14.5 57.7 24.4 68.7 42.0 31.6 90.8 19.7 1.8 11.2

64.4 18.3 24.6 180.2 22.2 27.9 30.4 13.5 71.3 77.4 41.6 22.8 17.0

70.0 20.4 31.0 177.9 26.8 34.9 41.4 18.4 94.7 86.3 48.1 26.7 20.1

337.4 100.2 215.9 1,082.0 136.8 116.2 239.0 81.9 344.8 415.0 306.4 158.8 80.6

398.4 113.7 240.5 1,252.3 153.6 141.1 267.1 95.0 416.0 486.9 340.5 179.2 85.5

464.9 129.3 271.5 1,420.2 173.9 173.1 306.2 113.0 510.8 567.7 381.1 203.4 93.6

18.3 15.4 11.0 15.2 8.4 22.4 11.8 12.3 18.6 17.9 10.8 11.3 15.0

17.5 17.1 10.8 15.4 15.3 21.7 12.0 15.3 18.7 17.2 12.9 13.5 20.5

16.2 16.8 12.1 13.3 16.4 22.2 14.4 17.7 20.4 16.4 13.3 14.0 22.5

17.7 13.1 13.4 15.4 8.5 22.6 10.2 10.6 19.2 15.8 11.8 10.6 18.8

17.7 14.6 13.5 16.3 18.0 22.1 11.2 14.2 20.2 17.0 14.0 12.4 26.1

17.4 15.1 15.6 14.2 19.6 22.8 14.0 17.5 22.7 17.2 15.7 13.6 28.5

14.7 22.9 28.1 26.3 174.7 18.7 15.5 20.9 28.6 10.0 27.1 25.2 50.8

13.0 19.4 25.9 22.4 86.2 15.8 13.7 14.9 23.1 8.9 20.6 21.7 33.5

12.0 17.4 20.6 22.7 71.5 12.7 10.0 10.9 17.4 8.0 17.8 18.5 28.3

2.5 3.5 3.0 3.7 14.0 3.8 1.7 2.4 4.8 1.7 2.8 3.1 7.1

2.1 3.1 2.7 3.2 12.5 3.1 1.6 2.1 4.0 1.4 2.5 2.8 6.7

1.8 2.7 2.4 2.8 11.0 2.6 1.4 1.8 3.2 1.2 2.2 2.4 6.1

9.7 14.2 16.3 15.2 89.4 14.8 9.4 11.5 19.4 6.5 12.3 15.8 26.6

8.2 12.2 14.8 12.9 50.7 12.2 8.2 8.7 15.8 5.6 10.1 13.8 18.9

7.3 11.1 13.4 12.4 45.0 10.5 7.4 7.7 13.6 4.9 8.5 12.2 16.5

216.3 36.5

13.2 10.4

30.0 16.6

NA 19.4

2.9 0.0

8.4 1.3

NA 1.6

3.4 1.1

10.7 2.8

52.4 8.9

NA 11.5

93.9 41.7

122.7 47.6

NA 56.1

20.5 0.0

48.4 18.8

NA 20.5

20.7 3.4

58.2 28.3

NA 29.8

74.6 NA

25.8 28.9

NA 22.4

14.4 6.2

11.0 5.4

NA 4.6

59.7 32.2

18.9 12.7

NA 10.4

12.1 159.2 39.3 727.0 11.4 437.3 38.2 308.9 33.1 786.4 47.7 282.9 30.5 96.8 (7.8) 17.2 25.9 959.2 22.3 103.8 49.9 384.2 (0.9) 12,468.4

NA 3.3

18.1 0.0

41

India Strategy Notes

July 15, 2020

42

India Strategy PL’s Recommendation Nomenclature Buy Accumulate Hold Reduce Sell Not Rated (NR) Under Review (UR)

July 15, 2020

: : : : : : :

> 15% 5% to 15% +5% to -5% -5% to -15% < -15% No specific call on the stock Rating likely to change shortly

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July 15, 2020

AMNISH AGGARWAL

Digitally signed by AMNISH AGGARWAL DN: c=IN, o=Prabhudas Lilladher Private Limited, ou=organisation, cn=AMNISH AGGARWAL, serialNumber=7a6f13691881d5a8af6353865a61b48b7040e72f4a1bf53182e368b3ca14a5e4, postalCode=400015, 2.5.4.20=c9b37ca6a8c78a11d6c42a4b6014e984fdf135dc1449611df0dc682d08443fc6, st=Maharashtra Date: 2020.07.16 09:54:14 +05'30'

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