ffiAMBIT

4i-urtr*l *t r.;:lk

Accounting quolity
investment retu rns

drives
hqve

flH';,.j:Jr33.t'"Xt",3ffo2.b,.opiror.o-

Along wilh everything else, occounting quoliry in lndiq s-eems to

stogiotedolqlowtevel.Ouronolysisofthelqslfoury:":":I coniolidoted occounts of the BsE500 (excl - Finonciolsl f"I]:,_-t" *o.nr. moniputorion checks : continuing divergence in qccounling quolity within the stock mqrkel. cosh pilferose checks The silver lining is rhqr rhe relotiorr"t ip between gooa o;;Jritiig "iJ Source; Compo nv. *For eoch cotegorv of to be tightening over lime. positive investment performorra" "e"-" As one woutd expect, occounting quoliryvories by seclor (see toble on the risht) z::1ii"iz:i;:i:xfl:?i:;";il,':'

our three sets of occounting checks*

with the usuol suspects like Reolty, Conglomerotes qnd Conslruciion bringing Sectorbysectorqcc.ountilg.scores. up the reor. More imporlontly, the chonge in o seclor's occounling ,.or., iu.-. (see exhibit 6 on. poge iime seem lo hove o beoring on inveslmenl returns .5). Sector ''!Llrtt,ff3illi;", lronicolly, this puls Reolfy componies in o nice position os, inspile of being the 2ot boltom of ihe closs on o blended bosis over FYOS-l'l , Reolty is one of the mosl Logistics .'li improved seclors when it comes lo chonge in occounting score ocross FYOS-I 1. C&nenf' .:" ,'ii ',t' it6 19,,2 .,:. Ferlilizers Medio componies ore olso in o similor posilion. T6lecom' :r .'' r:" 19o Similorly, occounling scores vory qcross morkel cop buckets (see toble below right 'l 85 & Section 3). Whilst the "top 5Oi'stocks hove the best blended scores ocross FY08- Shipping the greolest in Ayt9.A!t ,. I I , the improvemenl in qccounling scores over FY08-1 I hos been ]11 I8O' the midcop bucket (bucket 3: the 100 stocks with mkt cop between $0.2-0.6bn). ChCinicoli'r Most importonlly, from on inveslors' perspeclive occounling scores hqve q cleqr .lnfroslruclure ".: ' ' .. " '' 173 impoct on srock level returns. Whilst rhis is not oppor"nl when you look oi the Utilifiis 174 lnduslriols BS|5OO os o whole, when you drill down to the seclor level the reloiionship is ': ,' ' ' . 173 : Seclion 5). ln foct, if you drill down furlher inlo o FMtG cfeor (see Exhibits below ond 172 specific morket cop segmenl in o seclor (see Exhibit on lhe right), the link between Oil & Gos '171 :: good occounting ond fositive investmenl performonce becomes even cleorer. Medis

l: lT compqnies - lmpoct of Exhibif.2: Lorge cop lT componies - Textiles lmpocl of qccoJnting on shqre Prices ;1 ' prii." ii.orrrtirrg or,
Exhibif
4e/. 3w"

17O
t 69

"f,rr"
a ^

A 1:: B roor

r, -l.r'.3 E* _,or. q.?

EH -

.-a a . olt -

y = O.1215x + O.OO32 iy=o.12'r5x+o.oo32 -l A n' lo.ooas R'?1o.ooa3 ' (}----I -

)ao/^ R'?=oeol 2Ov.

25o/o

v=1.o662x+0.1322

i ,,r"
Eg E

-.5. .;# i ^^^. I i1Z:']^t*"WRero, .-g-so./"I'f-u*l'

n
-4oo/" -2tr/,

e*',o'," .:^ !
4tr/"
-lso/o

^ ,/ '"^ o,o,t"..

,/r., .{ ai:i *'5ffio,',J'"'n .a

1 -] ,.: 1 a

Copitol
Mer

Goods

167

Aulo
Mining

Metols

phormq rnqllrrq

166

l6s
163 163

on'o

ConsumeiDuroble
Miscellongous

]58
r53 152 152

e/"

2e

te/. -s% e

svo rory"
l)

Avg chonge in occour$ing score (Fyo8-t

t)

Avg chonge in occounting score {FY08-l

s"-.;r

I 4l Conglomerole .136 Whilsr our onolysis uses on on orroy of occounting rolios to detecl finonciol R.oli monipulolion by listed componies, the mosl powerful rolios ore: 169 Averoqe rcFo/EBlTDAorlhe,,coshconversionrolio,,flucluoieswidelyocrosStimeond profits Avg.occountingscoreby-cg!lrgtg] ocrosscomponies. ltoppeorsiholwheneverpromolerswonl-t1 -t:rr"-1 (onddooQlP),workingcopitoldeleriorotesqndcoshconversionsuffers' score r ,,olher Loons &'Advonces os q % of Networlh" seems to be the most BSE5o0 Buckel Avg' occounling 175 widely fovoured roule when il comes to pulling cosh oul of.the compony (lo Top50cos 174 hos cought lhe promoters' foncy ouiside the lisied entity). N61ct 'lOO fund whotever else

Arnbit copitol

reseorch

source: Ambif copifol

reseor,

flucluotes significontly ocross time ond widely ocross seclors ond componies.,

"Provisioning for doubifu! debtors os o

of gross deblors" olso Next'100 A Next 95 cos Y---'' "'- source: Ambif copifol reseorch lowscoreonthismelriccombinedwithpoorcoshconversionisorguoblythe defining signoture of o dodgy sel of occounls.
o/o
a^- t..*Lar ih^^ddh+ di<alaimar

162
161

*nlrter
CONTENTS
MgthOdO1ogy..................o.....................o..o..."'o"""""""""""""'3
ACCOunting SCOfeS by SeCiOf .....o....................o...o......o....""""""5

Accounling score by morket cop

bucket"""'o""""""""""""""8

Chonges in Accounting Quoliiy over Time

o"""""""""""""""'9
""""12

Accounli ng Quoliry qnd lnveslment PerformqflGG .................. I 0

Diving deeper inlo lhe'Botlom 50' Compqnies"""""""

SO

Whqi ShOUld lnVgSlOfS

DO?

..................o.......o""""""""""'14

AppendiX 1.........o.........................................."'o"""""""""""'I5

Appendiy.2..........................................................""o""""""""17

Ambit Copiiol hrt Ltd

*nmnr

1r*nrrr ;i xark

1: Methodology
,.u"i . .
Using consolidoted finonciols for FY08, FYO9, FYl0 ond FYI

'l we hove colculoted

finonciol rotios for the

BSESOO

componies (excluding Finonciol Services

componies).

Our doloset comprises 335 componies since we ore excluding:

7S Finonciol Services componies (on the grounds thot the forensic occounting rotios used below do not do iustice to these componies) ond

90 componies on the grounds thot they hove noi been listed for the durolion of the iorr-y.o, period thot our study focuses on or hove gone through corporole octions like chonge in yeor end, de-merger elc'

Appendix 'l gives o full list of the excluded componies under lhese ihree heodings. lpp"ndi* Z'gives the nomes of the componies included in ihe study olong with lheir secloro I clossificotion.
The occounting rolios thol we ore focusing on include:

CFO/EBITDA: This rotio is o check on o compony's obility lo converl EBIIDA (which con be relotively eosily monipuloted) into operoting cosh flow (which is

more difficult to monipulote). lf this rotio is delerioroting over time then ii roises concerns obout the compony's revenue recognition policy (os oggressive EBITDA growth olongside poor growth in cFo moy imply revenue monipuloi-ion vio-methods like chonnel stuffing). Whilsr on the foce of it the compulolion of the rotio might seem simple, in reol terms il is not os the computotion of the rotio hos gone lhrough four loyers of filtering. To give on exomple, if both CFO ond EBITDA ore negolive the resultont rotio is positive. However our filter ensures thot the rotio turns negotive ond in the process the
compony gets Penolized.

Miscellqneous expenditure os q percentoge of revenues: This rotio is o check on the compony's expendilure policy. lf this rotio is increosing consisiently then it roises concerns over the outhenticity of such expense (os consistent increose in miscelloneous expenses os o percentoge of revenues could imply cosh pilferoge by the promoter). Given thot miscelloneous expenses'oiso includes notionol items reloted to forex, we eliminoie them whilst computing the figure of miscelloneous expenses'

Olher loqns ond qdvqnces qs o percenloge of nel worlh: This roiio is o check on lhe compony's cosh monqgemenl policy' lf this rotio is increosing consislently then it roises concerns over the verocity of loqns given (os o consistent increose in loons could imply diversion of cosh to seemingly
unreloted comPonies).

provision for doubtful debts qs o percenloge of gross debtors: This rotio is q check on the compony's provisioning policy. lf this rotio is consistently folling then it roises the speclre of eornings being boosted through oggressive
provisioning proctices.

Contingeni liobilities os o percenloge of nel worlh: This is o check on the .o*pon-y,, off-bolonce sheet liobilities. lf this rotio is increosing consistently then it roises concerns regording the slrength of the compony's bolonce sheet in the event the conting.nt liobitities moieriolize. Given thot coniingent liobility olso includes genuine items like letler of credil, guorentees, bill discounting ond cloims nof ocknowledged os debt, we eliminote them whilst computing lhe figure of contingent liobilitY. These rolios con be broodly divided inlo three groups - revenue monipulotion checks, expense monipulolion checks ond cosh pilferoge checks - see exhibit 3'

Ambit Copitol Pvt Ltd

*AI$FJI
exhqustive lisi of the roiios
Exhibir

3:

qccounling checks (lhis is nol on Defining the three brood colegories of

Rolios
CFO/EBITDA

Cqlegol,
Revenue recognilion checks

&qryifryryse:':
Cosh pilferoge checks
Source; Ambil CoPilol reseorch

ond

os o %

of net worlh

1 we colculote on occounting score Then for eqch of the four yeors between FY08-1 gets-o-score,of

comPony for eoch compony bosed'on ihe obove rotios. The best worsl. o score of I i'e' the in rhe list) ond the. 335 (os ihere ore di;";ilni"t 'l point for every compony o, *" go down lhe occounting quolity score drops by speclrum.

ossign o '0' score if the Occosionqlly, in exceplionol circumsionces, we olso if the compony reporis compony reports on in"rpli.obly bod rotio. For exomple, score' negotive CFb ond negotive EBITDA, we ossign o '0' weightings to eoch of the Note thoi whilst colculoting scores we oscribe equol ony more iudgmentol thon whot rotios since we do n"i*onir" moke the method
it olreody is.

colculoled, we tqke lhe Once lhe scores for eoch yeor between FY08-11 ore 'oi."r, the four yeors io colculote the blended overoge occounting ;;;;.
occounting score ocross FY08-1 1' Bloomberg shore price doto, from All our finonciol doto ore sourced from Copitoline ond our

Copiiol

Ltd

#amnr

2: Accounting Scores by Seclor

Exhibir 4: Accounling score ocross seclors sorled by blended occounting score (the higher lhe score, the better the sector; so Logistics is the best sector here) No of Blended Avg onnuol o/o chonge Shore price Oulperformonce componies in Accounling Score in occounling score performonce relqlive lo Sensex (Fy08-rl) (FY08-11) (Fr08-ll) (OVER FY08-ll) lhe seclor
Logislics

Cemenl Ferlilizers
Telecom

4 8
8 6 6
13 14

201 198

4%o

11o/o

OYo

3%
6Yo

1ZYo

2a/o

192
'190

32Yo -12o/o
EO/ -J lO

21o/o

_5%
1o/o

-22o/o

Shipping Aulo Anc

Chemicols

't85

-16Yo
7o/o

t8I
r80
178 175 174 173 172
't71

a%
ao/ L/O
9o/o $Yo

17o/o

19"/o
14o/o 14o/o 14o/o 44%o 21o/o
8%6

9Yo
5a/o 3Yo 3o/o

lnfrostruc'lure Utilities lndustriols

IO
12

14
19

Oil&

FMCG Gos

5% o%
8o/o

l2
8

33% 1lYo
ao/ -a /o
3o/o

Medio
Textiles
IT

28o/o
7o/o
1o/o

9
29 23

170
169 107

14%
6Yo 5o/o

-5o/o -60/o
4o/o

Copitol Goods
Phormo

lo/o
4o/o 3o/o 2o/o 1Ao/o

26

166

'l5o/o
3Oo/o

Metols

l8
7 7
3

r65 r63

19Yo

Aulo
Agro Consumer Duroble
Retoil

'r63 158
153

21%
3AYo
87o/o 29o/o

lOYo

19%
77o/o 17o/o

5%
2Yo 4Yo
6o/c

I
4 30

Mining Miscelloneous Conslruclion Conglomerole

Reolty

l3
IO
14

152 152 148

141
136

37Vo
2OYo 7"/o 12o/o

26Yo
9o/o

1%
4o/n 1O"/o Sa/o

-3Yo

2/o
-'l
50/o

-8Yo

Averoqe
Source: Ambit Copitol reseorch

159

lSYo

8Y"

Exhibit

(FY08-l I )" for qll the seclors in the morkei

50Yo
@
ll0)

5: "Shqre prices vs Blended occounting scores

Exhibit
@

6: "Shqre pri(es vs ftg4qg in occouniing

)" for qll the seclors in the msrket
5OYo 40o/o
3Oo/o 2OYo

scores

(FY08- t I

y=

o
E"

4OYo

-0.0005x +O.2412 R2 = 0.0038

o
IL

o
I

y=0.6041x+0.1349 R2 = 0.0258
.,&

3OYo

o
E
L L-

c
o
U

20Yo

o) CL

(,
I

lOYo
Oo/o -1Oo/o1

'L-

o I

.t
-SYo

{b i'

{r it

rir

o(,

o.

o -c ,rt

o L -c tt

-2oo/o

Blended Accounling Score (FY08-1 1)

Source: Compony, Ambit Copito/ reseorch

Avg onnuol chg in occtng score (FYO8-1

Source: Compo ny, Ambit Copilol reseorch

1)

Ambit Cop;iol hrt Ltd

*A*,lF]I
As one would expecl, occounting scores different ocross sectors. Moreover, os shown in Exhibit 6, the chonqe in lhese scores ocross iime hos o beoring on lhe investment performonce of the sector. However, the obsolute level of o seclor's blended occounting score does nol seem to hove o beoring on the sector's
inveslment performonce (see exhibir 5)'

Bosed on lhe blended occounting score (ocross FY08-l'l) Construclion, Conglomerqles snd Reohy emerge os the worsi 3 seclors wilh overoge scores of 148, 141 ond 136 respectively (whereos lhe overoge sectorol score for the BSE$OO is 169). lnterestingly, the shore price performonce of the
15% respectivelY).

Construction ond Reolty sectors olso reflecls this (underperformonce of 3% ond

Logistics, Cemenl ond Fertilizers emerge os the sec'tors with the strongesl occounting quolity with scores of 201 , 198 ond 192 respectively which is -15o/o obove the BSE500 overoge score. Exhibif 7: Out qnd under performonce for the best 3 qnd bottom 3 seclors (figures in the loble qre obsolule rqlios/volues qnd nol scores)
EBITDA Depreciotion
rotio
Best 3 sectors by
Logistics

CFO/ (7o)

Chg in (bPs)

Misc Exps os
% of Rev

Other

Networth liobility os %

L&A/

Contingent

PDD
("/r)

(Yol

of nelworth

Growth in Audit fees/ growth in

revenues

iiiitorrtutperformoncri
780/,

125
133

101

o.401 o.ool
1 .40/<

101
8Yc

70/
7Y,
20/,

1.00 -o.17
1

Cemenl

9501 9001

2i
201

2'l

5o/.

.13

r,;t,. :.'{*i'li,*,,, 'il98r,":, 2%fl},li.lr

Worst 3 3eclors bt.566,96riderper{orm:tnce
Construciion Conglomerole
Reolty

l2%,,'.1,- a%}:,.,.:,. ,,.llt:l'z

r00
6

49o,:,

So*.., erb;t

Copifol reseorch Nofe; Cells with shoding denole outperformonce for fhe besf seclors ond u nderper{ormonce for lhe bofiom sectors.

Reolty compon:es cqn spring o shqre price surprise going forword given their iubstontiol shore price underperformonce (15o/o over FY08-'11) ond the significont improvement in the occounting score (10% improvement over FY08I I ).

. .

Medio compqnies could surprise on the positive side given lhe 28o/o improvement in this sector's occounling score over the FY08-.l1 (the highest
omidst peers) ond shore price underperformonce relotive to the Sensex.

On the other hond Consumer Durqbles ond FMCG mqy disqppoint given these sectors' huge shore price oulperformonce relolive to the Sensex (77% ond 33% respeclively) coupled with only modesl improvements in their occounting scores (57o ond 0% respectively). Exhibit 8 looks ot the experience (from on occounting perspective) of the five sectors whose scores hove improved the mosl over FY08-11 - Mediq, Reolfi Agro, tnfrostruclure qnd Utilities - ond five seciors whose scores hove deterioroted lhe mosl (or stognoted) over FY08-1,| - Telecom, IT, FMCG, Copitql Goods ond Construclion.

Ambit Copitol Pvt Ltd

*nlner
Exhibit 8: How the five besl qnd worsl performing seclors (from four veqrs perspeclive) hove evolved over the
Sectons

occounting

showing the biggesl improvement in occounling quolity

ffiimprovement|28%peronnum)initsoccountingscore
Medio

over the posl four yeors. This improvement hos been moinly driven by belter cosh generotion ond modest chonge in depreciotion roie ocross oll lhe {our yeors. [eohy hos olso shown improvemenl (I07o per onnum] in its occounling- score over

ln1{slruetrre -'-"--,,. .,

oenerotion, rising provision for doubtful debts, folling olher loons os % of neiworlh, ind modesr chonge in depreciotion rote ocross lwo yeors (FYl O ond FYI I )Agro hos olso shown improvement (10% per onnum) in iis occouniing score over th-e post four yeors. This improvemenl hos been moinly driven by betler cosh generoiion, modesl chonge in depreciotio,n role,. folling miscelloneous exPenses, iolling contingenl liobility, rising provision {or doubtful debts, folling olher loons os yeors % of networth ond lower growth in oudit fee relolive lo revenues ocross two (FY09 ond FYl0) infroslruclure hos olia. shir'\ilnliinprovemenl [9% ger onnum] in its occounling scor: .o*, the post foirr yeiirs. This improvemenl hos been moinly driven by betler cosh generolion, modSl changd'in {epreiotion roie, folling miscelloneous expenses, . ina lower growlh in oudit fee relolive lo revenues ocross two yecrs (FY09 ond FY]0)

the posf four yerlrs. This improvement hos been moinly driven by better

cosh

generolion, modesl chonge in depreciotion rote.,.folling miscelloneous exPenses, uriliries iower growih in oudit fee relotive lo revenues, folling contingent liobility ond rising provisions on doubtful debts ocross two yeors (FY l0 ond FY'l 1) showing lhe biggesf deleriorqlion (or smoltest improvement) in occounting quolity Sectors Telecom is lhe onlv secior whose occountinq scores fell over FY08-l I . This dromoiic d"t."i.r.ti." '" d.'r"" by rising olher loons os % of networth, rising miscelloneous Telecom expenses, rising conlingenr liobility oso/ool nelworlh ond folling provisions os % of doubtful debts ocross two yeors ((FY08 ond FY09). fMCG,s occounlin-g scores hove stog:roled over lhe posl four yeors olbeit ol'l on obove oversge level {the FYOS-I 1 blended overole score for FMCG is 173 vs 69 FlltCG
for the BSE500).
!T
'.'

the post four yeors. This improvemenl hos been. moinly driven by belier

Utilities hos olso shown improvement (8% per onnum) in ils occounting score over
cosh

with lT,s occountinj scores hove slognoied over lhe posl four yeors exoclly in-line o,rlrog. level (the FYoS-] 1 blended overoge score for lT is 169 vs I 69 lhe morket for the BSE500) Copirql,,Oqoa"i occlintittg siores, hove sfogryle.d over the prsl foui y.eors^BELOW is rh;ti;"tJ."*"ge'bvr'[th" FYoS-]1 blended overoge scoie for copitol Goods o/o iOZ ," f 69 for th-e BSE5Ob). This de,teriorotion is driven by rising olher loqns os o/o rising conJlnglnt liobility a? '\ of nelw-orih, folling provisions os. of "ii"f*"*ft, oni t igi;igr"rrih in oudit fees relotive lo revenues over o period of a.Ufr

Copircil Goods

ioritt

lhree yeors (FYO9, BELOW

fYt0 ond FYI 1). iin"tiu"tion,s occounling scores hove stognoled over ihe post four

yeors WELL

Conslruclion

blended overoge score for is 148 vs 169 for rhe BSE500). As highlighted in exhibil 7 on ihe construction

the morkel overoge level (the

FYoS-]

previous poge, this sector fores very poorly on CFO/EBITDA (cosh conversion rotio loons Z,f onty ZZ.ilor this sector vs 6l% for the BSE500 os o whole) ond on "other (omounting lo 67o of nelworlh vs 2olo for BSE500 os o whole) ond oivonces,,

Source: Compony, Ambit Copitol reseorch'

When we qnolyze lhe correlolion between the blended occounting score ond shore price performonce ocross sectors, we find thoi in more thon 5Oo/o of ihe sectors in qnd iLr" gieSOO, lhere is o direci correloiion between shore price performonce occounting quolity ond shore prices) is explored furlher on in this note.

blended occounting score (i... higher the score, higher the shore price performonce for thot porticulor seclor). This issue (regording the link between
ln light of this correlqlion between occounling scores ond shqre price performonce ocro;s sectors, exhibit 8 obove becomes podiculorly relevonl os:

. '

Some of the hottest seclors in terms of investmeni returns over ihe pqsl iwo yeors - lT, FMCG, etc -hove nol seen ony improvemeni in their occounting quolity over ihe Post four Yeors. Some of the hqmmered seclors in terms of investment relurns over the posl two yeors - Medio, Reoliy, lnfrostruclure, Utililies, etc - hove shown o strong improvement in occounting quolity over the posi four yeors'

Ambit Copiiol h/t Ltd

3: Accounting score bY mqrket GqP

bucket
Exhibit 9: EXntil :r!

gr.k"r
Bucket
1

^.."",t

score by mqrket coP bucket

N

'"..ro. .,, ,n
::tloo,.:,',1,
100

''="".*('iiia-t t')
175

-',t'

in score (rYoa-iu
,, ,
,l1

7o shore price perlormqnce (FY08-t 1-)

Bucket 2Buckel 3

.:r r|,,

1;

,,,' ,;1,.'{

I irf+t l,"l
162

tit'

l:'t 'l''

:*,.lo
60/o

r.

,.ll1

r. rtl

:lrl

'a l

::r, 2196

15%
8%

Source: Ambif CoPifol reseorch

on December 8th, 201 1' we hove Bosed on the morket copitolizotion of componies

iVlJ"a

rhe BSE500 into four morkel cop buckels:

morket cop Bucket 1 comprises the 50 lorgest componies by

Bucket 2 consisls of rhe next Bucket 3 consisls of the next

I00 lorgest componies I00 lorgest componies

by morket cop by morket cop

Bucket 4 comprises the bottom holf of the BSE500'

these four buckets in the monner The 335 componies in our study ore splii ocross shown in the toble below.
Exhibir
Buckel
tsUckgl Bucket 1I

l0:

buckets morket Defin Morkel cqP ronge

# ol componies in buckel
50 100 100 85

,Bu&ai*,
Bucket 3

9u*ei,+
Toiol

tl I 62bn - (2,550bn (US$3.2bn -US$SObn) \. ozurr -,\'rv .?!q} .' .t30h! {15et \ z.!u. - \47.evrr <rlz.J9Ir lvvY' -.zs ti" irs$0.2bn -uS$o.6bn) ;Us$0- 6!n| < *cbn,'-'t ?2,4urr iuslorzun

335

Source, Ambit CoPitol reseorch

shore-price performonce We find thqt there is o direct relotionship between score qrross FY08-'11 (i.e. higher ocross buckeis ond t-he biended occounring for thoi porticulor bucket)' the score, the betler the shore price perfo-rmonce occounling scores ocross FY08-11 ol 175' Buckets i,2,3 ond 4 with blenied .174,162 ond l6l respectir.ly ho* shown shlre price performonce (FY08-11 Cndnl of 22o/o,21o/o, 15Yo ond 8% respeclively' chonge. in the blended However, when we look of the overog,e onnuol -hqs performed the worst - it hos t occounting score we nlie thot buckel qnnuol occouniing score over FY08-11' the lowest improvement in iis overoge

Ambii Copiiol

Pvt Ltd

*nMar

4z Chqnges in Accounting Quqlity

over Time
!n this section we try to understond monogemenl's behovior with regords to
meeling onolysls' expectotions. Our onolysis suggests o high degree of correlotion between onolysl expeclotions (which is driven by morket irends i.e. bull ond beqr morket) ond occounting quolity.
Exhibit 1l

Chqnges in Accounting quolity over time for the BSE500

Frr0
Revenue iionipulolion
CFO/EBITDA rotio (%)
4OYo 860/o 58o/o

FTI

58o/o

beense Monipulolion
Conlingenl liobility os o % of networth
Proviiiiia:,for doubtful ai6,ro8.!&, q'X of illprg&brors Cosh Pilferoge
Misc expenses os % of revenue
9Yo
1Oq1o

'lSYo

13Yo

3.8% 2.8%
1.4o/o

3:9%

'4:loh

i.7,v,e

3.2o/o

2.5o/o
,1 .8lo/o

2.7%

Other Loons & Adronces os % of

Shore price performonce

45Yo

168Yo

5o/o

Eull
Source; ,Ambif Copito/ reseorch

B.o,

conditions prevolent from Morch 2OO9 lo Augusl 2OO9. This shorp drop in CFO/EBITDA in FY10 suggests thot to meei lhe streel's expectolion, componies might hove resorted to vorious types of oggressive revenue recognition (eg. chonnel stuffing) which whilst ensuring EBITDA grovrlh, odversely impocts working copilol hence lowers fhe CFO/EBITDA rotio.

Averoge CFO/EBITDA rotio of our universe (335 componies) increosed to 86% in FY09 lrom 4lo/o in FY08. However, it shorply delerioroted lo 58o/o in FY10 (o yeor choroclerized by heovy QIP ond IPO oction). Cleorly onolyst expectoiions in FYIO were significontly higher reloiive to FY09 given the bull morket

Coniingent liobilities (os o % of networth) increosed by 5Oo/o in FYl0. Agoin this might be o ploy to boosl profitobilily in q bull morket yeor. Given thot thot lhere is no requiremenl to show ony provisions in P&L on contingent liobilities, componies might hove preferred to clossify octuol liobilities os conlingent liobilities ond thereby shore up both their Bolonce Sheet ond P&1.
Miscelloneous expenses os % of revenues declined lrom 3.2o/o in FY09 in FYl0. Agoin this might be o ploy lo boosl up profitobility.

lo

2.5o/o

Olher loons qnd odvonces os % of networth increosed from I .4o/o in FY08 to 1.7o/o in FY09 ond hos since stoyed ot this level. Given thol since FY09, with the exception of the period from Morch-July 2OO9, roising fresh equity copitol hos been difficult, promoters might hove been motivoted to siphon out cosh from the listed entities to their own privoie componies using olher loon &
odvonces.

Ambit Copitol Arl Lld

#nmnr
,l:rtry:tr ll rvl.!

5: Accounting Quqlity qnd lnveslment Performqnce

So

for in this nole we hove discussed the link between occounting scores ond the investmenl performonce of seclors (Section 2) ond morkel cop buckets (Section 3). Obviously, the question orises "Do occounling scores drive inveslmenl performonce ol lhe stock level?"

scores (FY08-1 11" lor qll stocks in the

25Oo/o
2OOo/o @

Exhibir

12: "Shqre prices vs Chqnqe in occounling

BSE500

(FY08-1 11" tor 121

Exhibir 13: '"Vqluqtion vs Blended occounting scores qll stocks in the BSE500

y=-O.O298x+0.1239 R2 = 0.0003

r06
91

y=2.7128x+5.224 R2 = 0.0039

l5oo/o l00o/o
5Oo/o
Oo/o

5
EO g< EU o E
8_

q. IL

76

9, e.

=6146 r-L
3',r

-5OYo

'r6
,l

'tr
L

-r00%

-SOYo Oo/o
Source: Compo ny, Ambit Copifol

5oo/o

'l

007o l)

15OYo

r0

20

30
)

40

Avg chonge in occounling score (FY08-1

Blended dccounling Score (FY08- I I

Source: Compony, Ambit Copitol reseorch

reseorch

lf you look ot fhe BSE500 os o whole (see the Exhibits obove) there does nol oppeor to be ony link between occounting scores ond shore price relurns.
However, when you drill down to the level of the sector ond compore stocks within relotionship emerges (the comporison becomes more "opples vs opples" thereby ollowing the power of occounling to drive shore prices). to come through between shore price performonce ond chonge in occounling score. Interestingly, we olso find thot componies with higher blended occounting score commond higher voluotions (see exhibit 15).

o sector, o cleor positive

Exhibir 14: Shore prices vs S!g4g in qccounling scores (FY08-l I )" for the Mining seclor

Exhibir

l5: "Vsluqlions vs Blended

occounling scores

(FY08-l I )" for the Mining sector y = 2.3829x + 3.0825

R2

y=O.7972x+0.2993
50o/o

= 0.I'l

'l

45o/o
I

4Oo/o 35%o

oo

t!

30o/o 25o/o
2Oo/o 15o/o
1Oo/o

8e co 9<
E
.L

Eo o
o o

5Yo
Oo/o

U 'tr

-1

5o/o -10o/o

-5o/o Oo/o 5o/o 1 OYo

5Yo

1234
Blended Accounling Score (FY08-1
Source: Compony, Ambit Copilol reseorch
1)

Avg chonge in occounling score (FY08-l I )

Source: Compo ny, Ambit Copitol reseorch

Ambii Cop;tol h/t

Ltd

#nmnr
.{rL,-en o! sgrl.

ln fioct it you toke this o dep further ond you look ot o specific size bucket within o seclor, fhe rekrtirxrship becomes even more striking - see lhe Exhibits below for lorge op lT sfocks" Therefore, ltre more you isolote fsc'lors such os sector ond the size of o comPony, lhe more cleorly 1., .on see the role of occounling quolity in driving shore prices.
Exhibir 16: "Shqre prices scores (FY08-1f )" for lT
4Oo/o 3Oo/o 2oo/o
I

vs !!g4g

in

occounting

scores (FY08-f I )" lT (Lorge coPs)

25o/o
2Oo/o

Edibir 17: "Shqre prices vs Chqnqe in occounling

y=1.O662x+0.1322 R2 = 0.90I

y=0.1215x+O.0O32

R2

10.008:t

=
co
I

= 8 lL
p

loYo
OYo

15o/o
1Oo/o

lHCL 'Tech

5
o E o
I L
L

-ro,z"

8o'

76

-ror,
-3OYo
-4oo/o -soo/o

8e cu, 9< T(J

o-

5o/o

Oo/o

o
-5o/o

-4oo/o -2oo/o oo/o

2oo/o

4o"/,

o-

-15o/o -1Oo/o -SYo

Oo/o

5o/o

lOo/o

Avg chonge in occounling score (FY08-'l I )

Source: Compo ny, Ambit Copitol reseorch

Avg chonge in occounling score (FY08-1 1)

Source: Compo ny, Ambit Copilol reseorch

Ambit Copitol hrt Ltd

*nmnr
5z Diving deeper

inlo the 'Bottom 50'

Probobiliry of compony in thor sector being in rhe,,bomom so- 1i/ey
27o/o

Componies
Exhibif

I8:

Bottom 50 componies by sector

Seclors Miscelloneous
Reolty
IT

# in worst

(A)
8 '7 5

50

7o

of

worst -^---I:'^:l-"i# 50 t"-o"1i".rtJ,

16Yo

,",
30
14 29

14o/o
lOYo

lOo/o
17Yo

Meiols Conslruclion Conglomerole'

Phormo FMCG

4
4 4
3 2
2

tttg%
8o/o

't8
13

:22yo 31Yo

g%,.lr,:.:r:r.;1 60/o

rl

't0
26
19 23

{t%
12o/o 11Yo
9o/o

ls/s
4o/o ,'AYo

Copitol Goods

Agro
Retoil

' :l

2.:
2
1
1

7
8

29o/o 25o/o
t'17,o6 $Yo

4Yo
.2o/o

Telecom

6
12

Uiilities

2/o
204
ao/ 1/O
2o/o

Oil & Gqs

Medio

12,'
8 7
3

lYo
13Yo

I
,l

Aulo
Consumer Duroble Mining
Logislics

14%
330/,
25o/o
Oo/o

I I
0

2Yo

2Yo
O%o

4 4

Cement
Fertilizers

0
0

0o/o
OYo

I
8

Oo/o
Oo/o

Shipping Aulo Anc

Chemicols

0
0

o%
OYo

Oo/o
Oo/o

l3
14 10 14 9

0
0

o%"
O%o

Oo/o
Oo/o

lnfroslruclure lndusiriols
Texliles
Source; Ambit Copitol reseorch.

0
0

0%:
Oo/o

Oo/o
Oo/o

Exhibii

l9:

Botiom 50 by morkel cop bucket

Buckets
Buckel
I

# in worst

50

(A)
5 8
19

7o

of worsl 50
1Oo/o

Number of componies in lhqt size bucket (B)

50

Probobiliry of compony in thol buckel being in rhe

bollom 50 (A/B)
1O/o
8o/o

Bucket 2 Bucket 3 Bucket 4

Source: Ambit Copitol reseorch.

160/o

r00 r00
85

380/, 36'/o lOOo/"

199/o

18

21.% 15o/o

50

335

Amb;l Copitol Pvt Lid

*nllsF
Miscelloneqrs fincludes componies ocross sectors like sugor, poper, Horels, Avioiion ond TrudirB) ond Reohy ore the biggest contributors to the boftom 50 list of componies.
Thot being soid, since sectors which hove o lorge number of componies in lhe BSE500 ore more likely ro hove o greoter presence in the bottom 50, o better woy lo gouge the occounlirg quolity of o seclor is to look ot the 'probobility of o compony in thnt sector being the BsE500'. This probobility is colculoted by dividing the number of entronts (from the sector) in the bottom 50 by the number of componies from thot sector in the BSE500. From this perspective, the two worst ploced sectors ore Reolty (507o probobility of o compony in this seclor being ronked omongsl "lvorsl 50" componies in lndio) ond Gonglomero le (4oo/o probobilify).

fee is higher thon growth in

ln the cose of Reolry componies the weok occounting score seems ro be on occount of revenue monipulotion (CFO/EBITDA is low ond growth in oudit revenues) ond expense monipulotion
(contingent liobilities is high ond provision for doubtfu! debts is low).

of revenue monipulotion (cFo/EBlrDA is low ond growth in oudit fee is higher thon growth in revenues) ond expense monipulotion (chonge in
depreciotion rote ond provision for doubtful debts is low).
The weok occounting performonce of Reolty stocks (worst in the sector) is due to weok scores on the CFo/EBITDA metric. This is likely to be becouse of the following reosons:

conglomerole componies'weok occounting scores oppeor ro be on occount

. o

of lndion componies in the Reolty sector follow the 'percentoge of completion' method of recognizing revenues - o method which con be monipuloted by overstoting the percentoge of complelion.
9oo/o

These componies olso offer long credit periods. lf we onolyze ihe individuol rolios of componies we find thot Reolty componies seem to hove poor cosh

generotion due to high debtor doys.

Ambit Copilol Ad

Ltd

*nMer
7:SoWhstShouldlnvestorsDo?
I

nvestmerrl i mPlkuli olts

whilsrthekeyconcludirrgmessogefromouronolysisiscleor_occountingquolity f"nge for investors is twofold: impoct on irw"dment returns -it. lft"f
hos o cleor

.Thereisnometricokintoour,BlendedAccouniing.score,ovoilobleinthe of occounling scores

open morker. ,r"... ,r.ri.L their Portfolio comPonies ore'

.ight;;iffi

whot-the

'ond in"rid",, troding in porticulor)' which drive 'Thereoreotherospectsofcorporotegovernoncedistinctfromoccounting(eg. promoter i*"grt'ilg.i.i.f corporote governonce ore even more investment retu#s' These ospects of oPoque thol occounting'
clients, we offer two types of services: ln response io these chollenges focing our con their.portfolio composition with us, we For clients who ore willing to shore these componies. For scores of, shore with th.- trr" iizniJ o."orniing ihe underlying occounting scorls. we con highlight componies receiving weok for the BSE500 (exdo this only drivers of such scores. {Note: we .con we hove onolysed') iinoi"iol4 universe thot

Whilstinourongoingpublishedreseorchwewillfocusonthebrooderospecls ore interested in o deeper dive into of corporot. gor".nin[., io. .li.*s who service. our bespoke reseorch ot such issues, we provide o bespoke ,.r.o.ii onolysis of the the slock-specific level gives invesio"'i totp"h"nsive insider troding ond compelence promote/s integrity, b;oti "ornpo'ition ond potterns. should conioct our soles teom or the clients wishing to ovoil of these seryices
outhor of ihis note'

Ambit Copitol

PYt Lid

MBIT

Appendix I
Exhibit 20: list of componies excluded from our occounling themotic

SN Componies

Reoson for Exclusion Yeor erd chonge in beiween lhe periods

SN

Componies
JSW ISPAT

Reoson for Exclusion

I 2 3 4 5 6 7 8 9
10

3M lndio
A2Z Moinlenonce

Not lisled for eniire lenure

Yeor end chonge in between lhe periods

Abbott lndio
Adhunik Metol

Not listed for eniire ienure

BFSI

Allohobod Bonk Allcorgo Logisi.

A,rnlek Auto

Not lisied for enlire lenure

June ending compony, bolonce sheed nol yel

Amtek lndio Andhro Bonk Aptech

reody June ending compony, bolonce sheet not yet reody

BFSI

81 85 86 87 88 89 90 9l

Jyothy Lob.

Doio nol lhere for FY I 1 os onnuol report nol reody Not listed for enlire lenure
BFSI

is

Komoloko Bonk
Kemrock Inds.
KF

Yeor end chonge in between the periods

Airlines

Kiri lndus.
K S Oils

Not lisled for ealire lenure Noi listed for entire tenure
Yeor end chonge in belween lhe periods
BFSI

KotokMoh. Bonk

Yeor end chonge in belween lhe periods

l1 Aquo Logistics 'I 2 ARSS lnfro I3 Axis Bonk 14 Boioi Auto I5 Boioi Corp 16 Boioi Fin. I I Bolol Ftnserv 18 Boioi Holdings 19 Bolrompur Chini 20 Bonk of Borodo 2I Bonk of lndio 22 Bonk of Moho
23
24 Boyer Crop Sci.
BGR Energy Sys.
Bh.re

Not listed for enlire tenure Nol listed for enlire lenure
BFSI

Demerger

Not listed for entire lenure

BFSI
BFSI BFSI

Yeor end chonge in behrean'lhe pririods

BFSI

Cosh flow for FYI0 is nol ovoiloble. Also 92 Kirloskor Oil compony hos done demergining exercise 93 KSK EnergyVen. Noi listed for enlire lenure 94 L&T Fin.Holdings BFSI 95 LIC Housing Fin. BFSI 96 M&MFinonciol BFSI 97 Mogmo Fincorp BFSI 98 Mohindro Holidoy Not listed for enlire tenure 99 Monoppurom Fin. BFSI I00 Mox lndio BFSI 'l 0l Mindlree Not listed for entire tenure 'l 02 MOIL Not listed for entire tenure

BFSI
BFSI

103 Motil.Oswol.Fin. BFSI 104 MphosiS Yeor end chonge in between lhe periods

,l05
106
I

Muthoot Finonce
MVL

BFSI

Yeor end chongein belween the periods Not listed for entire tenure
BFSI

Dolo not there {or FY1 1 os onnuol ieporl is nol reody

BFSI
LTd

107 Netwrk.l S Mediq .l09

11

25 26 27 29

Circle Ser.

08

NHPC

Not listed ior enlire lenure Not listed for enlire lenure Not listed for enlire lenure

BOC lndio Brigode Enlerpr. Coirn lndio Cenlrol Sonk City Union Bonk

Yeor end chonge in beiween lhe periods

Oil lndio
Omoxe

28 C Mohendro Exp 30 Conoro Bonk

Nol lisled for entire ienure Noi listed for entire ienure Nol listed lor entire lenure
BFSI BFSI BFSI

110

1 OnMobile Globol Not lisled for enlire ienure 1 12 Orbit Corpn. Not listed for enlire lenure
I
1

3r
32

l3 l4

Orientol Bonk
Porsvnoth Devl. PersisienlSys Pfizer

BFSI

Not lisied for enlire lenure Not listed for enlire lenure
Yeor end chonge in belween the periods

115
1

Clorionl Chemico Yeor end chonge in between the periods 34 Cool lndio Noi listed for enlire lenure 35 Corporotion Bonk Brst
33 36 Crisil
BFSI

16 117 1 18
I

PipovovDefence

Nol listed for enlire lenure

They chonged lhe yeor end from 30ih June

Power Fin.Corpn. BFSI Prism Cemenl

l9

37 D B Corp
38 39 D B Reolty

Not lisied for enlire lenure

120 121 123

Prroneto Inds.
PTC

2008 lo 31st Morch 2009 Dolo nol there {or FYl 'l os onnuol report nol reody
BFSI BFSI
BFSI

is

Noi listed for enlire lenure Nol listed for enlire lenure
BFSI BFSI BFSI
BFSI

lndio Fin

Dolmio Bhor.Ent. Corporote oction in 2010

'122 Pvn. & Sind Bonk

Punlob Notl.Bonk
Roin

40 Den Nelworks
41

Deno Eonk Dev.Credii Bonk Dewon Housing Dhonloxmi Bonk

42 43 44 45 46

r, '- ' I25

,

Commodilies Relionce Copitol

Relionce Medio Relionce Power

Yeor end chonge in belween lhe periods

BFSI

26 I27
'I

Yeor end chonge in between the periods

Not listed for entire tenure

BFSI BFSI

eClea Services
Edelweiss.Fin.

Not listed for entire lenure

BFSI

128

,l29

Religore Enlerp.
Rurol Elec.Corp.

Ambit Copltol

P\.t Ltd

*-EA MBIT
5N
17
48

Componies
Eicher Molors
Ess Dee

Reoson for Exclusion Yeor end chonge in belween the periods Not listed for enlire tenure
BFSI

SN Componies
r30 SBT

Reoson for Exclusion

BFSI

Alumin.

r3l Sh.Ashiovinoyok
132 Sh.Gtobolrrod.

Not listed for enlire tenure

FYl

19
50

Federol Bonk
F

3:;:J:?'n*'for

os onnuol report is

irstsour.Solu.

5l
52 53

Fortis Heolth.

Not listed for eniire tenure Not listed for enlire ienure
BFSI

Future Copilol
Future Venluies

133 Sh.Renuko Sugor Yeor end chonge in belween the periods r34 Shiv-Voni OilGos Yeor end chonge in belween the periods r35 Shree Gon.Jew. Not listed for enlire ienure 136 Shrirom 137

BFSI

54 Greoves Cotton 55 GRUH Finonce

56
GTL GTL lnfro.

Yeor end chonge in beiween the periods

BFSI

Trons. SJVN

BFSI

Not listed {or entire tenure

BFSI BFSI BFSI BFSI BFSI BFSI

138 SKS Microfinonce

139 South lnd.Bonk

57
58

Yeor end chonge in belween lhe periods DolE not lhere {or FYl 1 os onnuol repori is

Gui Pipovov Port

nol reody Not listed for entire tenure

BFSI

140 SREI lnfro. Fin.

141 St Bk of Bikoner

59
60
61

HDFC
Hothwoy Coble
HDFC Bonk

112 St Bk of lndio
143 St Bk of Mysore

Not lisled for enlire tenure

BFSI

141 Stond.Chorl.PLC
145 Suiono Towers 146 Syndicote Bonk 147 Tolo lnv.Corpn. 148 Techno Etec.

BFSI

62

Hind. Unilever

Yeor end chonge in belween lhe periods Yeor end chonge from 31it Morch 09 to 30th

Yeor end chonge from 30th June 07 to 30th

Sept 08
BFSI
BFSI

63 HFCL Sept 10 BFSI 64 IDFC BFSt 65 roB BFSI 66 lClCl Bonk Not listed for enlire lenure 67 ICRA BFSI 68 lDBl Bqnk BFSI 69 lFCl 70 lL&FS Tronsporl Not listed for enlire lenure 71 lndiobulls Fin. BFSI 72 lndiosecurities BFSI 73 lndiobulls Power Not listed for enlire lenure 74 lndiolnfoline BFSI BFSI 75 lndion Bonk lnduslnd Bonk BFSI 76 77 ING Vysyo Bonk BFSI 78 IRB lnfro.Devl' Not listed for enlire lenure 79 IVRCL Assets Not listed for enlire lenure BFSI 80 J&KBonk lnfrolec. Not listed for enlire lenure 8-l Joypee 82 JM Finonciol BFSI 83 JSW Holdings BFSI
Source: Ambil Copitol reseorch

orporole oction in FYl 0 149 Time Technoplost Not listed for enlire lenure 150 Titogorh Wogons Not listed for enlire tenure
151

Torrenl Power

152 Triven.Engg.lnd.

r53 Wl

Broodcosl

Yeor end chonge in belween the periods Yeqr end chonge lrom 3lst Morch 06 to 30th Sept 07 Not lisied for entire tenure
BFSI BFSI BFSI
is

154 UCO Bonk

155 Union Bonk (l)

156 United Bonk (l)

'157

Doto not there for FYI I os onnuol reporl Uniled breweries not reody Yeor end chonge in belween the periods 158 Videocon Inds.
159 Viloyo Bonk
BFSI

160 Voll.Tronsform. 16r Wockhordl

162 Wyeth
163 Yes Bonk

Not lisled for enlire tenure Yeqr end chonge in between the periods Yeor end chonge in belween the periods
BFSI

164 Zylog Systems

165 SPARC

Not listed for entire tenure Demerger become effective from Feb'07

Ambit Cqp;i,rl h/t Ltd

*nMsr
Appendix 2
HrLil 2l:
Stl
Nome of the
ies included in our themcrtic
Ambit

Corqonies

Ambit Sector

SN

Componies

Sector

SN

Componies
Akzo Nobel

Ambit Seclor
Chemicols

2 DrRedd/s Lobs Phormo Oil & Gos 3 CPCt ,f Adrt),u 8ir. Nuv. Conglomerote Textiles 5 Roymond lT 6 Mcer Boer (l) Melols 7 Jindd Sroin. Chemicols 8 Finolex lnds. 9 Finolex Cobles lnduslriols 10 Ponoceo Eiolec Phormo 1l Roiesh Exporfs Retoil Retoil 12 Shoppers St. 13 Rd. lndl. lrrfio lnfroslructure 14 NoidoTollbridg. lnfrostruclure 15 Hexowore Tech. 1T I6 Alslom Proiects Copilol Goods Utilities 17 CESC ' Medio 18 HTMediq 19 Bhorol Eleclron lnduslriols

227 Ashok Leylond Aulo Melols I 15 Hind.Zinc .l16 Rollis lndio Oil & Gos 228 HPCL Agro Copilol Goods Conglomerole 229 Kirl. Brothers lnds 117 Grosim Melols Copitol Goods 23O Joi Boloii lnds. 118 BHEL lnduslriols 231 AIA Engg. FMCG I 19 Toto Coffee lnfroslruclure 232 Essor Ports 12O Zydus Wellness FMCG '121 Jindol Poly Film Miscelloneous 233 HEG Copitol Goods Copitol Goods 234 Arevo T&D Utiliti* 122 JSW Energy Telecom 123 Bolmer Lowrie Miscelloneous 235 Rel. Comm 236 Wolchon. lnds. Copitol Goods '124 Conloiner CorPn. Logisiics 237 Elecon Engg.Co Copilol Goods lT 125 Geodesic 238 Tulip Telecom lT Auio Anc lndio 126 Timken Consiruction Copitol Goods 239 Gommon lndio 127 ABB 24O Piromol Heolth Phormo 128 Toto Chemicols Chemicols 24'l Dredging Corpn. Shipping Mining 129 NMDC Copitol Goods 242 KEClnil. Reolry 130 DLF 243 Gulf Oil Corpn. Chemicols Cemenl l3l Birlo Corpn. 244 Neweli Lignite Utilities 132 HCL Technologies lT lnfroslructure 20 GMR lnfro. 'I Metols Goods 245 Bhushon Sleel 33 Cummins lndio Copilol Oil & Gos 21 0NGc 246 Holel Leelo Ven. Miscelloneous Medio 134 Jogron Prokoshon Feriilizers 22 GNFC Aulo 247 M&M Aulo Anc I35 MRF Metols 23 Usho Mortin Miscelloneous 248 Uflex Melols 136 Jindol Steel Telecom 24 Toto Comm Conglomerole Copitol Goods 249 Adoni EnlerP 137 Bhorot Biilee Oil & Gos MRPL 25 25O Aurobindo Phormo Phormo 138 Ambuio Cem. Cement 26 Engineers lndio Conslruclion Melols 251 Monnet lsPol Phormo 139 Biocon 27 Tech Mohindro lT Miscelloneous 252 Blue Slor 140 Gui Fluorochem Chemicols 28 Jubilonl Food. Retoil 253 Sodbhov Engg. Conslruclion Feriilizers Consumer Duroble '141 Deepok Fert. 29 VlPlnds. 254 Peninsulo Lond Reohy Aulo Anc 142 Bosch Ferlilizers 30 GSFC lndustriols 255 Eleclrosl.Cosi. Amoro Roio Bott, Aulo Anc Consumer Duroble 143 31 TTK Preslige Melols Miscelloneous 256 Hind.CoPPer 144 AP Poper Retoil 32 Tiion lnds. 257 Himodri Chemicol Chemicols 145 Dishmon Phormo. Phormo 33 DCHoldings Medio 258 Kolpotoru Power CoPitol Goods Melols 146 Ullom Golvo Melols 34 JSW Steel 259 Jyoli Slruclures Copitol Goods lT 147 Rollo lndio lT 35 3i lnfotech 260 Orchid Chemicols Phormo 148 Novortis lndio Phormo Chemicols 36 Coslrol lndio Phormo 149 Elgi Equipment Copitol Goods 261 Ronboxy Lobs Indusiriols 37 Hovells lndio 262 lngersoll-Rond Copitol Goods lT ]50 Tolo Elxsi Copitol Goods 38 Thermox .l51 Phoenix Mills Miscelloneous 263 Oplo Circuiis ReoltY FMCG 39 Nestle lndio 264 HCL lnfosyslems lT Melols 152 Sterlile lnds. Auio Anc 40 Fog Beorings 265 Modhucon Proi. Construction 153 Oberoi Reolty ReohY Fertilizers 41 RCF lnduslriols 266 Sinlex lnds. 154 Everesl Konlo lndustriols Telecom Bhorti Airlel 42 FMCG 267 Toto Globol 155 Mcleod Russel Agro 43 Heidelberg Cem. Cemenl Conglomerote 268 JP Associoles lT ]56 NllT Tech" 44 Torrent Phormo. Phormo Miscelloneous 269 Jei Airwoys Textiles 157 Arvind Ltd 45 Notl. Aluminium Melols Texliles 27O Alok lnds. 46 Whirlpool lndio consumer Duroble 158 Coromondel lnier Ferlilizers 'I 271 Vordhmon Textile Textiles lT 59 lnfosys Cemenl 47 ACC 272 Vokrongee Sofl. lT 160 Monsonlo lndio Agro Miscelloneous 48 EIH Aulo 273 Escorts l.obs. Phormo IT 161 Unichem 49 Poloris Finon 274 McNolly Bhorot Copilol Goods 162 Toto Power Co. Utilities 50 Century Textiles Conglomerole 275 Glodyne Techno. lT 1 63 lnfolech EnlerP. lT 5l Abon Offshore Shipping Fertilizers 276 Zuori lnds. 164 Sun Phormo.lnds. Phormo Hero MolocorP Aulo 52 277 Rodico Khoiton FMCG FMCG 165 Emomi Melols 53 Toto Steel Reolty 278 Unitech Chemicols 166 BASF lndio 54 Hind.Oil Explor. Oil & Gos 279 Gui NRE Coke Mining 167 Gloxosmit Phormo Phormo 55 lndroproslho Gos Utilities Conslruclion 280 Simplex lnfro 168 Lok. Moch. Works lndustriols Mining 56 GMDC

1'14 Mundro Porl

lnfroslructure 226

Ambit Copitol Pvt Ltd

*nmPp
SN 57

Componies
Gui.St.Petronet Shree Cement Power Grid Corpn
Exide lnds. GAIL (lndio)

Ambit Sector
Oil & Gos
Cement Utilities

SN

Componies
Jubilont

Ambit Sector
Phormo

SN

Gomponies
Dish

Ambit Seclor
Medio Utilities
FMCG

58 59 60

't69 170
17'l

281

BPCL
JP Power Ven.

Oil & Gos

Utilities Aulo Anc
Textiles Phormo Phormo

6l
62 63

Aulo Anc Oil & Gos

L

172
't73 174 175
't7 6

Asohi lndio Glos

JBF lnds.

64
65

66 67
68 69

GloxoSmith C H Gommon lnfro. Colgote-Polm. Notl.Ferlilizer lndio Cemenis ldeo Cellulor Bollorpur lnds.
FDC

FMCG

lnfroslruclu re
FMCG Fertilizers

Strides Arcolob Avenlis Phormo Berger Poinls

282 283 284 285 286

287

Relionce lnfro. Ruchi Soyo lnds.

Hind.Consiruct.
Everonn Educol.

Chemicols
Textiles
IT

288
289

't77
178 179

Bomboy Dyeing
NIIT

Join lrrigotion Lorsen & Toubro Sobho Developer Ero ln{ro Engg.
Cox & Kings CORE Educotion

Conslruclion Miscelloneous Agro Conslruclion

Reolty

Cemenl
Telecom

290
291

Conslruciion Miscelloneous
IT

Bolkrishno lnds
Divi's Lob.

Aulo Anc
Phormo
IT

Miscelloneous
Phormo FMCG

't80
r81 182
183

Wipro
Siemens Lupin

70
71

Britonnio lnds.
Petronet LNG

Copilol Goods
Phormo

Oil & Gos

Miscelloneous Shipping Chemicols Copitol Goods Cement Melols
Textiles

72 73 74 75

Orienl Poper
Mercoior Gui Alkolies

184

Novo Bhorol Vent

T N Newsprint Lonco lnfrolech

r85
186 187

Conglomerote Miscelloneous
I

nfrostruclu re

Alfo Lovol (l)

UltrqTech Cem. Tinplote Co.
SRF

SAIL
Codilo Heolth.
VST lnds.

Melols
Phormo FMCG

76 77
78 79

r88
't 'r

89

90

80
81

82

83 84 85 86 87
88

Supreme lnds. Hindolco lnds. Goiewoy Dislr. Greol Offshore Seso Goo GE Shipping Co Sterlite Tech. Gui Gos Compony

lndustriols Melols
Logistics

191

Voltos United Phosp.

KPIT lnfosys.

Miscelloneous Chemicols
IT

192
193

Bilcore

Miscelloneous
IT

Shippins Mining Shippins

lnd uslrio ls

194 195 196 197

'r

lnfo Edg.(lndio)

scl
Sundrom Foslen. Thomos Cook (l) Koruluri Globol Novneel Publicot WS Motor Co. Gillette lndio Zee Entertoinmen Godrei Consumer Glenmork Phormo Moiherson Sumi
Relionce lnds.

Utililies
IT IT

98

cMc
Potni Computer

199

Shipping Auto Anc Miscelloneous Miscelloneous Miscelloneous

200
201

Auio
FMCG

292 TVRCL 293 NCC 294 Prestige Eslotes 295 Bhoroti Shipyord 296 Redington lndio 297 Essor Oil 298 Bomboy Royon 299 Adoni Power 300 S Kumors Nolion 301 Gitonloli Gems 302 CCCL 303 Joi Corp 304 Boioi Hindusthon 305 Tube lnvestments 306 Purovonkor.Proi. 3O7 Anonl Roi lnds. 308 Poiel Engg. 309 Provogue (lndio) 3lO Puni Lloyd 3]1 Ponioloon Retoil 312 BEML LTd

Construclion Conslruction
Reoliy
I

nfrostruclu re

IT

Oil & Gos

Textiles

Utiliries
Textiles

Miscelloneous Conslruction Miscelloneous Agro Miscelloneous

Reolty Reolty

Conslruction
Retoil

Construclion
Retoil

89 90

9l
92 93 94 95 96

Konsoi Neroloc Pidilite lnds. Bhorol Forge Sun TV Network

Suzlon Energy
BF Utilities

Prokosh lnds.

Chemicols Chemicols Aulo Anc Medio Copitol Goods Utilities Metols

FMCG

313 rocL
31

Copitol Goods Oil & Gos

IT

202 203 204

205

Medio
FMCG Phormo

206
207

Aulo Anc Oil & Gos

Telecom Phormo Logistics
lnd uslrio ls

tTc

208
209

Toio Tele. Moh. lpco Lobs.

Blue Dorl Exp.

97 98 99 I00 l 0l

lndion Holels

Miscelloneous
FMCG

P&GHygiene

Crompion Greov Tolo Molors SKF lndio 1O2 Boto lndio

Copitol Goods

Aulo
Aulo Anc
Retoil

210 21'l 212 213 214

Boioi Electricol
MMTC GVK Power lnfro. Proi lnds. EID Porry Polyplex Corpn

Miscelloneous
lnfroslructu re

103 .l04
'I
1

ABG Shipyord

lnfroslructure
FMCG

2't5
216
217 218 219

Copitol Goods Agro Miscelloneous

Phormo FMCG Phormo

Dobur lndio

.l07

05 06

Moruti Suzuki
NTPC

Aulo
Uiilities
IT

Ciplo Morico

I08
109
1

Orocle Fin.Serv. Asion Poinis Modros Cemenl

TCS

Apollo Hospitols Grophite lndio

Chemicols Cemenl
IT

220

10 11 ll2

Apollo Tyres

Auto Anc

Kesorom lnds. 221 Corborundum Uni. 222 Arshiyo lntl. 223 Uniled Spirits

lnduslriols Conglomerote lnduslriols

Logistics FMCG

314 Finonciol Tech. 5 SpiceJet 316 ICSA (lndio) 317 Delto Corp 318 Trenl 319 STC 320 Godrei lnds. 32'l Mohindro Life. 322 HMT 323 Fres.Kobi Onco. 324 MTNL 325 REI Agro 326 U B Holdings 327 HDIL 328 PTC lndio 329 Kwolity Doiry 330 Ansol Properties 33] Subex 332 Godrei Propert. 333 KGN lndustries 334 335
UW Softwore
Sunteck Reohy

Miscelloneous
IT

'Conglomerole
Retoil

Miscelloneous Conglomeroie
Reolty
lnd ustrio ls

Phormo Telecom

Agro Conglomerole
Reolty

Miscelloneous
FMCG
Reohy
IT

Reolty

Miscelloneous Medio
Reoliy

JBChem&Phorm Phormo

224

Educomp Sol.

Miscelloneous

Source: Ambit Copitol reseorch

Ambit Copitol Pvt Lld