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Areva T&D

Result Update

Retail Advisory Team

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April 30, 2012

Contents
Result Updates Kajaria Ceramics
Hexaware Technologies
Idea Cellular
ICICI Bank
Axis Bank
Maruti Suzuki India Ltd.

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Emkay Global Financial Services Ltd.

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January 06, 2010 | 1

Result Update

Kajaria Ceramics
Growth momentum continues, results in line
Q4 FY12 results were in line with our est. Revenues grew by

April 27, 2012

Reco

Previous Reco

Buy

Buy

CMP

Target Price

Rs 186

Rs 225

EPS change FY13E/14E (%)

NA

Target Price change (%)

NA
5,191

Nifty

17,134

Sensex

(%)

1M

3M

6M 12M

Absolute

17

68

57

109

Rel. to Nifty

17

67

62

133

Source: Bloomberg

Relative Price Chart


Rs

% 140

176

110

152

80

128

50

104

20

80
Apr-11

Jun-11

Aug-11

Oct-11

Kajaria Ceramics (LHS)

Ceramics, an Andhra Pradesh based player. Acquisition will


strengthen presence in southern region

Inorganic growth is likely to remain the thrust area for the

company since it is highly RoE accretive & gives company


access to readily available capacities

Dec-11

Feb-12

-10
Apr-12

Rel to Nifty (RHS)

Stock Details
Sector

Ceramics

Bloomberg

KJC@IN

Equity Capital (Rs mn)

147

Face Value(Rs)

No of shares o/s (mn)

74

52 Week H/L

growth of 31% & RoE expansion, re-rating is likely. Maintain


Buy, target of Rs 225

Revenue growth of 32% yoy driven by strong demand


Kajarias consol net revenues increased by 32% yoy to Rs 3.7 bn which was in line with
our est of Rs 3.9bn. Strong demand coupled with improving product profile towards
value added products helped the company to sustain its healthy growth momentum
during the quarter. For FY12, Kajaria reported consol revenues of Rs 13bn, with a
growth of 38% yoy.

Improved product mix helped Kajaria to sustain margins

Source: Bloomberg

188/80

Market Cap (Rs bn/USD mn)

14/266

Daily Avg Volume (No of sh)

168132

Daily Avg Turnover (US$mn)

0.5

Shareholding Pattern (%)


Mar-12 Dec-11 Sep-11
Promoters

Recently Kajaria Ceramics acquired 51% stake in Vennar

With sustainable revenue growth of 22% (FY11-14E), PAT

Price Performance

200

32% yoy to Rs 3.7bn while EBITDA grew by 37% yoy to


Rs 585mn. Company reported PAT of Rs 236mn, 28% yoy

53.5

53.5

52.0

FII/NRI

9.6

7.8

6.1

Institutions

6.8

8.6

9.6

Private Corp

10.8

12.1

12.7

Public

19.3

18.0

19.6

Source: Capitaline

Kajaria reported EBITDA of Rs 585mn, +37% yoy, in line with our est. EBITDA margins
at 15.7% (56bps yoy/-30bps qoq) were marginally above est of 15.5%. PAT for the
quarter stood at Rs 236mn, 28% yoy in line with est. Company reported EPS of Rs 3.2
for Q4FY12. For FY12, Kajaria reported PAT of Rs 810mn, 34% yoy. EPS for FY12
stood at Rs 11.

Inorganic opportunities to drive growth ahead


Recently, Kajaria Ceramics acquired 51% stake in Vennar Ceramics, an Andhra
Pradesh based player, which is in advanced stages of putting up a plant to produce
2.3mn sqm of high end ceramic tiles. This acquisition marked Kajarias first acquisition
in the southern region and companys third acquisition within a span of 1 year. Kajarias
latest acquisition has enhanced its regional strength and enables the company to cater
directly to southern markets. We believe inorganic growth continues to remain the thrust
area for Kajaria since it is highly RoE accretive and gives the company overnight access
to readily available capacity.

Maintain BUY with target price of Rs 225


Kajaria is likely to emerge as the largest player in the domestic tiles industry taking over
the leader H & R Johnson within the next couple of quarters. We believe that the new
growth model adopted by the company of acquiring small players & branding their
products under its own umbrella will ultimately strengthen Kajarias regional presence
and help it to meet its requirements locally. Kajarias improving product profile towards
high margin value added products combined with lucrative joint venture arrangements
would also help the company to improve profitability. We maintain Buy with target price
of Rs 225.
Financial Snapshot
YE-Mar

Emkay Global Financial Services Ltd

Net

Rs Mn
EBITDA

EPS

EPS

RoE

EV/

(Rs)

% chg

(%)

P/E

EBITDA

P/BV

Sales

(Core)

(%)

APAT

FY11

9,523

1,475

15.5

607

8.2

69.2

29.5

22.6

11.1

6.1

FY12

13,130

2,062

15.7

810

11.0

33.5

32.1

16.9

7.6

4.9

FY13E

15,437

2,432

15.8

1,095

14.9

35.3

33.7

12.5

6.3

3.7

FY14E

17,401

2,798

16.1

1,373

18.7

25.3

32.4

10.0

5.3

2.9

Kajaria Ceramics

Result Update

Key Financials Quarterly


Rs mn

Rs Mn
Q4FY11

Q1FY12

Q2FY12

Q3FY12

Q4FY12

YoY (%)

QoQ (%)

FY12

FY11

YoY (%)

Revenue

2,819

2,718

3,179

3,507

3,727

32.2

6.2

13,130

9,534

37.7

Expenditure

2,392

2,285

2,695

2,947

3,142

31.3

6.6

11,068

8,049

37.5

84.3

84.4

9.2

5.3

6,508

5,399

49.6

56.6

2,107

927

16.0

9.7

1,072

758

8.2

8.0
965

as % of sales

84.9

84.1

84.8

84.0

84.3

1,742

1,232

1,566

1,807

1,903

as % of sales

61.8

45.3

49.3

51.5

51.1

Power & Fuel

242

476

540

529

562

as % of sales

8.6

17.5

17.0

15.1

15.1

169

256

288

265

263

6.0

9.4

9.1

7.5

7.0

239

320

300

346

415

8.5

11.8

9.5

9.9

11.1

427

433

484

561

Consumption of RM

Employee Cost
as % of sales
Other expenditure
as % of sales
EBITDA
Depreciation
EBIT
Other Income
Interest

132.2

55.2

6.2

(0.8)

20.6

127.4

41.4

73.6

20.0

1,381

43.1

10.5

10.1

585

37.1

4.3

2,062

1,485

38.8

72

90

91

103

108

51.3

5.2

393

295

33.1

355

343

393

458

477

34.2

4.1

1,669

1,190

40.2

15

15

67

91

109

154

132

98.5

(14.1)

485

299

62.5

PBT

289

252

284

304

359

24.5

18.2

1,199

892

34.4

Total Tax

104

78

88

91

123

18.4

35.8

381

285

33.4

Adjusted PAT

184

174

196

213

236

27.9

10.7

819

607

34.9

2.9

3.4

2.5

0.9

9.7

184

171

193

211

235

809

607

Reported PAT

184

171

193

211

235

27.5

11.5

809

607

33.3

Reported EPS

2.5

2.3

2.6

2.9

3.2

27.5

11.5

11.0

8.2

33.3

(bps)

(bps)

(Profit)/loss from JV's/Ass/MI


APAT after MI
Extra ordinary items

Margins (%)

27.5

11.5

33.3

(bps)

EBIDTA

15.1

15.9

15.2

16.0

15.7

56

(29)

15.7

15.6

12

EBIT

12.6

12.6

12.4

13.0

12.8

19

(26)

12.7

12.5

23

EBT

10.2

9.3

8.9

8.7

9.2

(99)

58

9.0

9.4

(33)

PAT

6.5

6.3

6.1

6.0

6.3

(24)

30

6.2

6.4

(20)

36.1

31.1

31.0

29.9

34.4

(176)

445

31.7

32.0

(25)

Effective Tax rate

Emkay Research

27 April 2012

Kajaria Ceramics

Result Update

Key Financials
Income Statement

Balance Sheet

Y/E, Mar (Rs. mn)

FY11

FY12

FY13E

FY14E

Y/E, Mar (Rs. mn)

FY11

FY12P

FY13E

FY14E

Net Sales

9,523

13,130

15,437

17,401

Equity share capital

147

147

147

147

Reserves & surplus

2,078

2,674

3,529

4,645

Net worth

2,226

2,821

3,676

4,792

72

28

55

2,757

917

767

267

29.5

37.9

17.6

12.7

Expenditure

Growth (%)

8,049

11,068

13,005

14,602

Materials Consumed

5,399

6,508

8,131

9,018

Minority Interest

758

1,072

1,127

1,270

Secured Loans

Employee Cost
Other Exp

1,892

3,488

3,747

4,314

Unsecured Loans

EBITDA

1,475

2,062

2,432

2,798

Loan Funds

Growth (%)

28.4

39.8

18.0

15.1

Net deferred tax liability

EBITDA margin (%)

15.5

15.7

15.8

16.1

Total Liabilities

Depreciation

295

393

429

451

1,180

1,669

2,003

2,347

12.4

12.7

13.0

13.5

11

15

10

10

EBIT
EBIT margin (%)
Other Income
Interest expenses

299

485

409

357

PBT

892

1,199

1,604

2,000

40

1,143

1,143

1,143

2,797

2,060

1,910

1,410

602

644

694

744

5,624

5,596

6,308

7,002
8,235

Gross Block

7,000

7,001

7,835

Less: Depreciation

2,209

2,602

3,031

3,482

Net block

4,790

4,399

4,804

4,753

834

400

300

90

90

90

90
5,127

Capital work in progress


Investment

Tax

285

381

481

600

Current Assets

3,263

3,900

4,211

Effective tax rate (%)

32.0

31.7

30.0

30.0

Inventories

1,515

1,865

2,229

2,860

Adjusted PAT

607

819

1,123

1,400

909

1,442

1,368

1,526

Growth (%)

69.2

34.9

37.2

24.7

6.4

6.2

7.3

8.0

9.7

27.7

27.7

607

809

1,095

1,373

Net Margin (%)


(Profit)/loss from JVs/Ass/MI
Adjusted PAT After JVs/Ass/MI
E/O items

Sundry debtors
Cash & bank balance
Loans & advances
Other current assets

30

43

65

191

808

152

152

152

398

398

398

Current lia & Prov

2,519

3,628

3,197

3,268

Current liabilities

2,130

3,209

2,806

2,860

Reported PAT

607

809

1,095

1,373

Provisions

389

419

391

408

PAT after MI

607

809

1,095

1,373

Net current assets

743

273

1,014

1,859

Growth (%)

69.2

33.3

35.4

25.3

Misc. exp
Total Assets

Cash Flow

5,624

5,596

6,308

7,002

FY11

FY12P

FY13E

FY14E

15.5

15.7

15.8

16.1

Key Ratios

Y/E, Mar (Rs. mn)

FY11

FY12P

FY13E

FY14E

PBT (Ex-Other income)

881

1,184

1,594

1,990

Profitability (%)

Depreciation

295

393

429

451

EBITDA Margin

Interest Provided

288

485

409

357

16

(701)

(133)

Other Non-Cash items


Chg in working cap
Tax paid
Operating Cashflow
Capital expenditure
Free Cash Flow
Other income
Investments
Investing Cashflow
Equity Capital Raised
Loans Taken / (Repaid)
Interest Paid
Dividend paid (incl tax)
Income from investments

Y/E, Mar

6.4

6.2

7.1

7.9

ROCE

Net Margin

22.3

30.2

34.1

35.6

698

853

(692)

(735)

ROE

29.5

32.1

33.7

32.4

-210

-381

-431

-550

RoIC

22.5

33.2

39.0

38.8

1,968

1,833

1,176

1,513

Per Share Data (Rs)

(1,629)

(442)

(400)

(300)

EPS

8.2

11.0

14.9

18.7

340

1,392

776

1,213

CEPS

12.3

16.3

20.7

24.8

11

15

10

10

BVPS

30.2

38.3

50.0

65.1

(56)

2.0

2.5

2.8

3.0

-45

15

10

10

DPS
Valuations (x)

PER

22.6

16.9

12.5

10.0

169

(737)

(150)

(500)

P/CEPS

15.2

11.4

9.0

7.5

(288)

(485)

(409)

(357)

P/BV

6.1

4.9

3.7

2.9

(86)

(171)

(205)

(240)

EV / Sales
EV / EBITDA

Others

-103

Dividend Yield (%)

Financing Cashflow

-309

-1,393

-764

-1,097

Gearing Ratio (x)

Net chg in cash

1.7

1.2

1.0

0.9

11.1

7.6

6.3

5.3

1.1

1.3

1.7

1.9

-15

14

22

126

Net Debt/ Equity

1.2

0.7

0.5

0.2

Opening cash position

45

30

43

65

Net Debt/EBIDTA

1.8

0.9

0.7

0.4

Closing cash position

30

43

65

191

Working Cap Cycle (days)

11

19

32

Emkay Research

27 April 2012

Company Update

Hexaware Technologies
Focus delivers consistency, retain ACCUMULATE
Hexawares Mar12 performance vindicate positive thesis.

April 27, 2012

Reco

Previous Reco

Accumulate

Accumulate

CMP

Target Price

Rs127

Rs140

EPS change FY12E/13E (%)

10/16

Target Price change (%)

27
5,189

Nifty

17,134

Sensex

(%)

1M

3M

6M 12M

Absolute

14

53

42

79

Rel. to Nifty

16

52

43

102

Relative Price Chart


Rs

% 110

132

86

114

62

96

38

78

14

Jun-11

Aug-11

Oct-11

growth (top 1/5/10 clients +11%/4.6%/4.8% QoQ). US and


Europe report +3.7%/7.9% sequential growth

June12 qtr guidance of US$ 91-92 mn (+3.4-4.5%QoQ) implies

a 2.1-3.2% CQGR through H2CY12 for company to achieve its


annual guidance of US$ 370 mn.

Dec-11

Hexaware Technology (LHS)

Feb-12

22.6/22.3% drive 9/16% raise in CY12/13E EPS to Rs 11.5/12.8.


ACCUM stays, revise TP to Rs 140, based on 11x CY13 P/E

Another consistent performance

Source: Bloomberg

60
Apr-11

Op metrics performance good. Top clients continue to drive

Tweak CY12/13E rev higher and build in better mgns at

Price Performance

150

Rev at US$ 88 mn (+4.6% QoQ) were in line with pfts at Rs


884 mn beat est aided by better margins and forex gains

-10
Apr-12

Rel to Nifty (RHS)

Source: Bloomberg

Hexaware reported rev at US$ 88 mn (+4.6% QoQ), seq vol growth of 6.6%) in line with
est and higher than co guidance of ~4% QoQ growth .EBITDA mgns at 22.4% (down
~60 bps QoQ) were better than est despite ~3% currency appreciation and strong hiring
(co had a net HC addition of ~307 during the qtr) aided by offshore shift ( offshore % of
rev increased by ~170 bps QoQ with offshore rev increasing by ~9% QoQ). Profits at Rs
884 mn were flat QoQ, beat expectations aided by better margin show and forex gains
(V/s est of forex losses). Top clients continued to drive growth with top 1/5/10 clients
growing by 11%/4.6%/4.8% sequentially and US and Europe growing impressively by
3.7%/8% QoQ respectively. Amongst service lines, BI/ Analytics (+25% QoQ) and
IMS(+15% QoQ) drove growth. Emp addition was in line with co adding ~307 people
during the qtr to take the HC to 8,624 with attrition declining to nearly lowest in the
industry at 11%.

Stock Details
Sector

IT Services

Bloomberg

HEXW@IN

Equity Capital (Rs mn)

591

Face Value(Rs)

No of shares o/s (mn)

295

52 Week H/L

134/61

Market Cap (Rs bn/USD mn)

38/723

Daily Avg Volume (No of sh)

2727168

Daily Avg Turnover (US$mn)

5.8

Shareholding Pattern (%)


Mar-12 Dec-11 Sep-11
Promoters

28.0

28.2

28.2

FII/NRI

51.4

50.3

51.8

Institutions

9.6

9.4

7.4

Private Corp

1.4

1.1

1.5

Public

9.8

11.0

11.2

Source: Capitaline

June12 qtr rev guidance of 3.4-4.5% QoQ growth, See raise in CY12
revenue outlook ahead
Hexaware has guided for rev of US$ 91-92 mn (3.4-4.5% seq rev growth) which implies
a 2.1-3.2% CQGR through H2CY12 for company to achieve its annual rev guidance of
~US$ 370 mn (+20% growth). We raise our est further and now build in 22.4% YoY
growth for CY12 and expect the company to raise its annual guidance going forward.
Hexaware has announced 2 US$ 10 mn+ TCV deals in Q1CY12 and is currently
pursuing 6 large deals (TCV of US$ 25 mn+) currently with 2 in advanced stages of
negotiation. We highlight that Hexaware intends to give low double digit wage hikes in
Q2CY12 ahead of Tier I peers showing confidence on growth over the next few quarters

CY12/13E EPS raised by 9/16% each, ACCUMULATE, TP raised to Rs 140


We tweak our US$ revenue estimates higher and build in EBITDA margins at
22.6%/22.3% (V/s 20.9%/18.5% earlier) driven by higher confidence in op margins
ahead which drive 9%/16% raise in our CY12/13E earnings to Rs 11.5/12.8 (V/s Rs
10.5/11 earlier). Although valuations at ~11x/10x CY12/13E earnings capture some of
the upside, we remain positive on Hexaware given continuous streak of earnings beat
and consistent performance. Worth highlighting is that we have raised earnings for
the past 5 quarters in a row. Valuations remain reasonable in that context with 5%
dividend yield another positive. Retain ACCUMULATE, TP Rs 140(V/s Rs 110
earlier), based on 11x CY13earnings (V/s 10x earlier)
Financials
Y/E Dec

Emkay Global Financial Services Ltd

Net

EBITDA
(Core)

PAT
%

EPS

ROE

P/E

EV/

P/B

(Rs)

(x)

EBITDA

(x)

9.4

44.2

35.7

3.9

26.9

14.1

12.6

3.7

31.5

11.3

8.1

3.3

30.4

10.1

7.0

2.9

(in Rs mn)

Sales

FY11

10,545

938

8.9

853

2.9

FY12

14,505

2,646

18.2

2,670

9.2

FY13E

18,830

4,254

22.6

3,452

11.5

FY14E

21,354

4,764

22.3

3,857

12.8

Hexaware Technologies

Result Update

Quarterly performance
Rs mn

Q4CY10

Revenue (US $ Mn)

Q1CY11

Q2CY11

Q3CY11

Q4CY11

Q1CY12

YoY (%)

QoQ (%) CY12YTD CY11YTD

YoY (%)

66.6

70.4

74.8

78.8

84.1

88.0

25.0

4.6

88.0

70.4

25.0

2,996

3,185

3,341

3,660

4,319

4,383

37.6

1.5

4,382.9

3,185

37.6

Operating Expenditure

2,651

2,730

2,830

2,974

3,325

3,401

24.6

2.3

3,401

2,730

24.6

Cost of revenues

1,962

1,998

2,117

2,262

2,562

2,574

28.8

0.5

2,574

1,998

28.8

65.5

62.7

63.4

61.8

59.3

58.7

58.7

62.7

Revenue Rs. Mn

as % of sales
SG&A expenses

689

732

713

712

763

827

as % of sales

23.0

23.0

21.3

19.5

17.7

18.9

EBITDA

345

455

511

686

994

982

66

62

59

64

63

71

EBIT

279

394

452

622

931

911

Other Income

172

188

267

160

62

138

PBT

451

582

719

782

993

Depreciation

Total Tax

13.0

8.4

115.6

-1.2

827

732

18.9

23.0

13.0

982

455

115.6

71

62

14.7
131.4

131.4

-2.1

911

394

138

188

1,049

80.3

5.6

1,049

582

80.3

55

44

116

136

111

165

276.5

48.6

165

44

276.5

396

538

603

646

882

884

64.3

0.2

884

538

64.3

396

538

603

646

882

884

884

538

Reported PAT

396

538

603

646

882

884

64.3

0.2

884

538

64.3

Reported EPS

1.4

1.9

2.1

2.2

3.0

2.9

58.7

-3.2

2.9

1.9

58.7

(bps)

(bps)

Adjusted PAT
(Profit)/loss from JV's/Ass/MI
APAT after MI
Extra ordinary items

64.3

Margins (%)
EBIDTA

0.2

64.3

(bps)

11.5

14.3

15.3

18.7

23.0

22.4

811

(61)

22.4

14.3

811

EBIT

9.3

12.4

13.5

17.0

21.6

20.8

843

(77)

20.8

12.4

843

EBT

15.1

18.3

21.5

21.4

23.0

23.9

566

94

23.9

18.3

566

PAT

13.2

16.9

18.1

17.7

20.4

20.2

328

(25)

20.2

16.9

328

Effective Tax rate

12.2

7.5

16.1

17.3

11.2

15.7

819

454

15.7

7.5

819

Source: Company, Emkay Research

All fig in Rs mn
except (EPS and %)

Raise our CY12/13E earnings by


9.5%/16% to Rs 11.5/12.8 now. Note
that we have raised our earnings for
the past 5 quarters in a row

Revenues (US$ mn)


Revenues
EBITDA
EBITDA mgns, %
Net profits
EPS

Emkay Research

27 April 2012

CY12E
Old

New

CY13 E
% change

Old

New % change

372.4

377.1

1.3%

432

445

3.0%

18,788

18,830

0.2%

20,755

21,354

2.9%

3,928

4,254

8.3%

3,830

4,764

24.4%

20.9

22.6

169

18.5

22.3

385

3,039

3,452

13.6%

3,204

3,857

20.4%

10.5

11.5

9.5%

11.0

12.8

16.1%

Hexaware Technologies

Result Update

Operating metrics at a glance


Growth %
Q1CY12

% QoQ

% YoY

Vertical wise split

Growth continues to be led by


mining of top clients.
US and Europe saw good growth
during the qtr

BFSI

27.3%

0.2%

19.3%

TTHL

22.0%

11.2%

10.9%

Emerging Segment

33.4%

1.6%

20.7%

Healthcare and Insurance

17.3%

10.4%

80.2%

Service Line Split


ADM

38.9%

2.5%

25.0%

EAS

28.9%

1.5%

14.3%

Testing/BTO

10.5%

1.7%

41.1%

Business Intelligence & Analytics

12.5%

24.6%

57.8%

BPO

4.7%

-3.6%

3.1%

Others

4.5%

14.8%

22.3%

US

63.8%

3.7%

20.8%

Europe

29.6%

7.9%

32.6%

6.6%

0.1%

35.2%

Onsite

53.4%

1.8%

13.9%

Offshore

46.6%

9.1%

44.3%

Top client

14.8%

11.4%

59.5%

Top 5 clients

38.9%

4.6%

29.0%

Top 10 clients

52.7%

4.8%

33.1%

Non Top 10 client revenues

49.5%

4.4%

17.1%

8,624

6%

29%

Geographical Split

ROW
Onsite Offshore Revenue Mix

Client Concentration

TOTAL HEADCOUNT

Emkay Research

27 April 2012

Hexaware Technologies

Result Update

Financials
Income Statement

Balance Sheet

Y/E, Dec. (Rs. m)


Net Sales

FY11

FY12

FY13E

FY14E

Y/E, Dec. (Rs. m)

FY11

FY12

FY13E

FY14E

10,545

14,505

18,830

21,354

Equity share capital

581

586

586

586

37.6

29.8

13.4

Reserves & surplus

9,074

9,575

11,172

12,998

(9,607)

(11,859)

(14,576)

(16,590)

23.4

22.9

13.8

9,655

10,162

11,758

13,585

(8,939)

(11,170)

(13,030)

112

29.3

25.0

16.7

Unsecured Loans

65.6

61.6

59.3

61.0

Loan Funds

112

(2,692)

(2,920)

(3,406)

(3,560)

8.5

16.6

4.5

20.1

18.1

16.7

Growth (%)
Total Expenditure
Growth (%)
Cost Of Revenues

(6,915)

Growth (%)
COR, as % of Revenues
SG&A expenses
Growth (%)
SG&A exp. as % of Revenues

25.5

EBIDTA

938

Minority Interest
Networth
Secured Loans

Deferred Tax Liabiltiies

13

32

Total Liabilities

9,780

10,194

11,758

13,585

Goodwill

1,160

1,377

1,377

1,377

2,646

4,254

4,764

182.1

60.8

12.0

Less: Depreciation

8.9

18.2

22.6

22.3

Net block

Other Income

249

677

347

463

Depreciation

242

247

302

345

EBIT

945

3,076

4,299

4,882

Growth (%)
EBIDTA %

Interest

Gross Block

3,469

4,292

5,038

5,998

(1,519)

(1,697)

(1,999)

(2,344)

3,109

3,972

4,417

5,032

Capital WIP

969

813

813

813

Investment

397

229

229

229

7,907

9,317

10,748

12,560

Current Assets

EBT

945

3,076

4,299

4,882

Sundry debtors

1,919

2,993

3,611

4,095

Tax

92

406

847

1,025

Cash & bank balance

4,356

4,377

4,506

5,481

EAT

853

2,984

Growth (%)
EAT (%)

8.1

Inventories

2,670

3,452

3,857

Loans & advances

976

1,946

2,631

212.9

29.3

11.7

Other current assets

657

18.4

18.3

18.1

Current Liab & Prov

2,785

4,331

4,643

5,265

Current liabilities

1,475

2,891

4,643

5,265

Provisions

1,309

1,440

Net current assets

5,122

4,986

6,105

7,295

Misc exps
Deferred Tax Assets
Total Assets

Cash Flow

182

195

195

195

9,780

10,194

11,759

13,563

Key Ratios

Y/E, Dec. (Rs. m)

FY11

FY12

FY13E

FY14E

Y/E, Dec.

FY11

FY12

FY13E

FY14E

Net Profit after Tax

853

2,670

3,452

3,857

EPS (Rs)

2.9

9.2

11.5

12.8

Add : Depreciation

242

247

302

345

CEPS (Rs)

3.8

10.0

12.5

14.0

33.2

35.0

39.1

45.2

1.5

4.0

5.2

5.8

66.4

75.3

70.0

70.0

Add : Misc exp w/off

Net changes in WC

(1,683)

276

393

(142)

Dividend Per Share (Rs)

122

3,082

2,730

3,988

DSO
Valuations Ratios (x)

Operational Cash Flows


Capital expenditure

Book Value Per Share (Rs)

37

(954)

(747)

(960)

Investments

1,047

(1,275)

PER

44.2

14.1

11.3

10.1

Investing Cash Flows

1,084

(954)

(747)

(2,235)

P/CEPS

34.4

12.9

10.4

9.3

Borrowings

(51)

(112)

(510)

(1,359)

(1,817)

(2,030)

342

(246)

Financing Cash Flows

(219)

(1,717)

(1,817)

(2,030)

changes in cash

1,363

411

166

(278)

Profitability Ratios (%)

Opening balance

2,992

4,356

4,377

4,506

Closing balance

4,356

4,377

4,506

5,481

dividend paid
Issue of shares
Share Premium

Emkay Research

27 April 2012

P/BV

3.9

3.7

3.3

2.9

35.7

12.6

8.1

7.0

EV/Sales

3.2

2.3

1.8

1.6

M-Cap/sales

3.6

2.6

2.0

1.8

RoCE

7.5

24.0

36.0

34.9

RoNW

9.4

26.9

31.5

30.4

EBITDA Margin

8.9

18.2

22.6

22.3

EBIT Margins

6.6

16.5

21.0

20.7

Net Profit Margin

8.1

18.4

18.3

18.1

EV/EBIDTA

Result Update

Idea Cellular
Another strong quarter, Maintain ACCUMULATE
Q4FY12 results were better than expected Revenues at

April 27, 2012

Reco

Previous Reco

Accumulate

Accumulate

CMP

Target Price

Rs82

Rs101

EPS change FY13E/14E (%)

+13.6/ -

Target Price change (%)

-3.8
5,191

Sensex

17,134

Nifty

Rs53.7bn (up 6.7% QoQ), EBITDA (adj. for one-off provisions)


at Rs15.1bn (up 12.1% QoQ) & APAT at Rs3.3bn (up 41% QoQ)

Strong rev. growth was driven by robust subscriber addition

& slight uptick in ARPU. Both established & new circles


reported strong rev. growth of 5.8% and 13.5% QoQ, resp.

Total minutes recorded robust growth of 9% QoQ led by 5.9%

QoQ growth in subscribers and 2.7% QoQ growth in MOU (379


v/s 369 in Q3FY12). ARPM declined 2.5% QoQ to Rs0.42

On back of strong operational performance, we raise our

Price Performance
(%)

1M

3M

6M 12M

Absolute

(17) (13) (12)

20

Rel. to Nifty

(17) (14)

33

(9)

FY13E EPS by 13.6% to Rs4.4. Retain ACCUMULATE with


revised TP of Rs101 (adj. for ve Rs17 for regulatory issues)

Strong set of results

Strong revenue growth was led by 5.8% and 13.5% qoq revenue growth in

Source: Bloomberg

established and new circles, respectively. Adjusted EBITDA (excluding one-off


provisions to the tune of Rs1.5bn pertaining to license fees) at Rs15.1bn grew
12.1% sequentially (6.2% ahead of our estimate).

Relative Price Chart


125

Rs

80

110

60

95

40

80

20

65

50
Jan-11

Mar-11

May-11

Jul-11

Idea Cellular (LHS)

Sep-11

Nov-11

Reported EBITDA from established circles was flat qoq, however EBITDA losses
from new circles reduced to Rs1.6bn v/s Rs1.7bn in last quarter.

APAT at Rs3.3bn (our est. of Rs2.2bn) grew 41% qoq. Higher APAT is primarily
attributed to solid EBITDA (adj.). Tax rate for Q4FY12 was at 30.8% v/s 32.8% in
Q3FY12. Forex gain at Rs135mn v/s loss of Rs311mn in Q3FY12.

-20
Jan-12

Rel to Nifty (RHS)

Robust traffic growth & VAS share improvement continues

Source: Bloomberg

Idea reported subscriber addition of 6.2mn (+5.9% qoq). ARPU stood at Rs160 v/s

Stock Details
Sector

Rs159 in Q3FY12. It reported robust 9.1% qoq growth in minutes on network to


124bn. MoU during the quarter improved to 379 v/s 369 in Q3FY12, subsequently
ARPM declined 2.5% to Rs0.42. Voice ARPM at Rs0.37 decline by 3.0% QoQ to
due to intense competition.

Telecom

Bloomberg

IDEA@IN

Equity Capital (Rs mn)

33088

Face Value(Rs)
No of shares o/s (mn)
52 Week H/L

10

Share of VAS improved to 14.3% as compared 13.7% in Q3FY12, leading to 11.1%

3309

QoQ revenue growth in non-voice segment. It reported 2.6mn active 3G


subscribers v/s 2.25mn in Q3FY12.

104/63

Market Cap (Rs bn/USD mn)

270/5,134

Daily Avg Volume (No of sh)

5188251

Daily Avg Turnover (US$mn)

9.1

EBITDA impacted by one-offs, losses from new circles witness reduction

Reported EBIDTA from established circles remained flat sequentially with EBITDA
margin of 28.6% v/s 30.4% in Q3FY12. Losses in new circles declined to Rs1.6bn
v/s Rs1.7bn in Q3FY12.

Shareholding Pattern (%)


Mar-12 Dec-11 Sep-11
Promoters

46.0

46.0

46.0

FII/NRI

45.2

43.5

42.2

Institutions

6.2

7.6

8.7

Private Corp

0.5

0.7

0.8

Public

2.1

2.3

2.3

Source: Capitaline

Revision in estimates
Given the strong performance in Q4FY12, we are raising our FY13E revenue and
EBITDA estimates by 2.3% and 4.5% respectively. Our revised EPS for FY13E stands
at Rs4.3 v/s Rs3.9 earlier. We have introduced FY14E EPS at Rs5.8.

Maintain ACCUMULATE with revised TP of Rs101 (earlier Rs105)


At CMP of Rs82, Idea trades at 6.0x and 5.3x EV/EBIDTA and 18.4x and 14.2x
estimated EPS of Rs4.4 and Rs5.8 for FY13E and FY14E, respectively. We remain
positive on the stock and reiterate ACCUMULATE rating with TP of Rs101.
Financial Snapshot

Emkay Global Financial Services Ltd

Rs Mn

Y/E-

Net

PAT

EPS

EPS

ROE

Mar

Sales

(Core)

EBITDA
(%)

(Rs)

(Rs)

%chg

(%)

FY11

155034

37908

24.5

8989

2.7

-2.5

7.3

FY12

195412

50923

26.1

7230

2.2

-19.6

5.6

FY13E

236570

65092

27.5

14620

4.4

102.2

FY14E

269156

73895

27.5

19016

5.8

30.1

EV/
P/E

EBITDA

P/BV

30.0

9.6

2.2

37.2

7.8

2.1

10.1

18.4

6.0

1.9

11.6

14.2

5.3

1.6

Idea Cellular

Result Update

Quarterly financials
Rs mn

Q4FY11

Q1FY12

Q2FY12

Q3FY12

Q4FY12

YoY (%)

QoQ (%)

FY12

YTD11

Mobile

41,751

44,843

45,817

49,924

53,146

27.3

6.5

193,730

153,480

26.2

478

646

615

637

692

44.8

8.6

2,591

1,759

47.3

3,210

3,345

3,352

3,488

3,575

11.4

2.5

13,760

12,031

14.4

360

49

121

105

250

(30.5)

139.5

525

648

(19.0)

45,799

48,882

49,906

54,154

57,664

25.9

6.5

210,605

167,918

25.4

NLD
Others
Other operating revenue
Total gross Sales

YoY (%)

Inter-segmental elimination

3451.3

3675.2

3706.4

3845.3

3966.8

15193.7

12,884

17.9

Net Sales

42,347

45,207

46,199

50,308

53,697

26.8

6.7

195,412

155,034

26.0

Roaming & Access charge

6812.4

7321.4

7877.2

8456.6

9143.6

34.2

8.1

32,799

24,755

32.5

16.8

16.0

22.5

3.3

47,340

40,456

24.2

26.1

9,499

8,056

4.9

5.2
19,743

as % of sales
Network Operating
as % of sales
Employee Expenses
as % of sales
Marketing Expenses
as % of sales
License Fee
as % of sales
Administrative expenses
as % of sales
Total operating expenditure
EBITDA

16.1

16.2

17.1

16.8

17.0

10269.7

11155.8

11422.6

12182.4

12579.2

24.3

24.7

24.7

24.2

23.4

2113.6

2110.4

2416.9

2424.0

2547.9

5.0

4.7

5.2

4.8

4.7

6160.2

5492.0

5421.5

6431.5

6805.2

5.1

20.5

17.0
17.9

10.5

5.8

24,150
12.4

12.7

54.3

31.4

23,232

17,728

11.9

11.4

7,468

6,389

3.8

4.1

144488

117126

23.4

14.5

12.1

11.7

12.8

12.7

4779.5

5116.1

5132.4

5610.7

7372.6

11.3

11.3

11.1

11.2

13.7

1459.8

1971.5

2062.3

1757.1

1677.3

3.4

4.4

4.5

3.5

3.1

31595

33167

34333

36862

40126

27.0

8.9

14.9

(4.5)

22.3
31.0
16.9

10752.0

12040.0

11866.3

13445.9

13571.1

26.2

0.9

50,923

37,908

34.3

Depreciation

6572.1

7026.1

7368.7

7574.8

7843.8

19.3

3.6

29813.4

23973.4

24.4

EBIT

4179.9

5013.9

4497.6

5871.1

5727.3

37.0

(2.4)

21110

13935

51.5

Other Income
Interest
PBT

0.0

0.0

0.0

0.0

0.0

0.0

0.0

854.1

2463.4

2938.9

2880.3

2274.7

166.3

(21.0)

10557.3

3964.6

166.3

3325.8

2550.5

1558.7

2990.8

3452.6

3.8

15.4

10552.6

9970.4

5.8

Tax

580.6

777.9

501.1

981.0

1062.8

83.1

8.3

3322.8

981.5

238.5

PAT

2745.2

1772.6

1057.6

2009.8

2389.8

(12.9)

18.9

7229.8

8988.9

(19.6)

(bps)

(bps)

25.4

26.6

25.7

26.7

25.3

130

-145

26.1

24.5

EBIT

9.9

11.1

9.7

11.7

10.7

167

-100

10.8

9.0

181

EBT

7.9

5.6

3.4

5.9

6.4

(18)

48

5.4

6.4

(103)

PAT

6.5

3.9

2.3

4.0

4.5

(169)

46

3.7

5.8

(210)

17.5

30.5

32.1

32.8

30.8

2,369

-202

31.5

9.8

2,164

Margins (%)
EBIDTA

Effective Tax rate

(bps)
161

KPIs
KPIs

Q410

Q111

Q211

Q311

Q411

Q112

Q212

Q312

Q412

Subscribers ('000)

63,824

68,886

74,213

81,778

89,503

95,108

1,00,180

1,06,400

1,12,722

QoQ %

10.8%

7.9%

7.7%

10.2%

9.4%

6.3%

5.3%

6.2%

5.9%

ARPU (Rs)

185

182

167

168

161

160

155

159

160

(% QoQ)

-7.5

-1.6

-8.2

0.6

-4.2

-0.6

-3.1

2.6

0.6

MOU (mins)

398

415

394

401

397

391

364

369

379

(% QoQ)

2.3

4.3

-5.1

1.8

-1.0

-1.5

-7.8

1.4

2.7

RPM (Rs)

0.46

0.44

0.42

0.42

0.41

0.41

0.43

0.43

0.42

(% QoQ)
Total traffic (mn)
(% QoQ)

Emkay Research

-9.6

-5.7

-3.3

0.0

-2.9

1.0

4.1

1.4

-2.5

68,275

82,274

84,828

93,503

1,01,960

1,08,275

1,06,627

1,13,964

1,24,305

18.0

20.5

3.1

10.2

8.7

6.5

-2.2

7.3

9.1

27 April 2012

Idea Cellular

Result Update

Other highlights of the result

Wireless churn came down to 9.9% from 10.4% in 3QFY12 and 10.7% in 4QFY11.

Idea added 2,553 2G cell-sites taking total count to 83,190 at the end of FY12. 3G
Node B count increased 1,923 to 12,825 at the end of Q4FY12.

Standalone capex for the quarter was Rs9.5 bn, Idea ended FY12 with total capex
of Rs42bn which stands in line with managements guidance. Capex guidance for
FY2013E stands at Rs35 bn, in line with our assumption.

Indus revenues grew 2.6% sequentially with flat EBITDA margin at 45.3%.

Circle-wise financial performance


Q3FY11

Q4FY11

Q1FY12

Q2FY12

Q3FY12

Q4FY12

QoQ %

YoY %

35,941.0

38,298.0

40,746.0

41,579.0

45,144.0

47,784.0

5.8%

24.8%

EBITDA (Rs mn)

9597

10667

12066.4

12212

13708

13671

-0.3%

28.2%

EBITDA margin (%)

26.7

27.9

29.6

29.4

30.4

28.6

(176)bps

76bps

Established circles (13)


Revenues (Rs mn)

New circles (9)


Revenues (Rs mn)

3960

4393

4814

4975

5508

6251

13.5%

42.3%

-1384

-1173

-1397

-1776

-1722

-1601

-7.0%

36.5%

-34.95

-26.70

-29.02

-35.70

-31.26

-25.61

565bps

109bps

Rsm

Q3FY11

Q4FY11

Q1FY12

Q2FY12

Q3FY12

Q4FY12

QoQ %

YoY %

Voice revenue (Rs mn)

5.7%

24.1%

11.1%

50.4%

EBITDA (Rs mn)


EBITDA margin (%)

Wireless revenue break-up

34174.4

36698.9

39417.1

39768.9

43084.4

45546.3

qoq growth (%)

8.6%

7.4%

7.4%

0.9%

8.3%

5.7%

Non-voice revenue (Rs mn)

5107

5052

5426

6048

6840

7600

qoq growth (%)

9.6%

-1.1%

7.4%

11.5%

13.1%

11.1%

Outlook
Idea continues to impress with its strong execution ability to manage the volume/pricing
balance in highly competitive environment. Idea managed strong show on both volume and
margin front (adjusting for one-off items). Voice ARPM declined 3.0% QoQ was offset by
the strong volume growth of 9% QoQ. We believe decline in voice ARPM is the indicative of
pricing pressure due to intense competition. We remain positive on the execution ability and
strong operational performance in medium term. However, regulatory uncertainties would
limit the share price movement in short term.

Upward revision in estimates


On the back of strong performance in Q4FY12, we are raising our FY13E revenue and
EBITDA estimates by 2.3% and 5.5% respectively. Our revised EPS for FY13E stands at
Rs4.4 v/s Rs3.9 earlier. We have introduced FY14E EPS at Rs5.8.
FY13E
Old

New

Chg %

Revenue

231255

236570

2.3%

EBIDTA

61723

65092

5.5%

26.7

27.5

82 bps

PAT

12875

14620

13.6%

EPS

3.9

4.4

13.6%

EBIDTA %

Emkay Research

27 April 2012

Idea Cellular

Result Update

Financials
Profit & Loss

Balance Sheet

Y/E, Mar (Rs m)


Net Sales

FY11

FY12

FY13E

FY14E

155,034

195,412

236,570

269,156

25.0

26.0

21.1

13.8

Growth (%)
Employee cost

Y/E, Mar (Rs m)

FY11

FY12

FY13E

FY14E

Equity share capital

33,033

33,033

33,033

33,033

Reserves & surplus

89,461

96,691

111,311

130,327

8,056

9,499

11,792

14,340

Net worth

122,494

129,724

144,344

163,360

Roaming & Access Charges

24,754

32,799

40,453

46,026

Loan Funds

120,705

135,705

122,205

112,205

Network Operating cost

40,131

47,340

55,505

63,196

Net deferred tax liability

3,099

3,099

3,099

3,099

Licence fees

17,728

23,232

26,496

30,146

Other liabilities

497

497

497

497

SG&A

19,743

24,150

29,571

32,837

Others

6,714

7,468

7,661

8,717

117,126

144,488

171,478

195,261

37,908

50,923

65,092

73,895

12.9

34.3

27.8

13.5

Depreciation

23,973

29,813

34,106

EBIT

13,935

21,110

30,986

9.0

10.8

13.1

13.8

Interest expenses

3,965

10,557

9,165

8,752

PBT

9,970

10,553

21,821

28,382

Tax

982

3,323

7,201

9,366

Total operating expenditure


EBITDA
Growth (%)

EBIT margin (%)


Other Income

Effective tax rate (%)


PAT

Total Liabilities

246,795

269,025

270,145

279,161

Gross Block

265,320

313,305

346,289

375,204

89,316

115,175

144,731

176,742

Less: Depreciation

176,005

198,130

201,558

198,462

Capital work in progress

36,467

26,467

24,467

24,467

36,761

Net Intangible assets

48,851

46,917

44,387

41,657

37,134

Investment

10,200

10,200

10,200

10,200

9.8

31.5

33.0

33.0

8,989

7,230

14,620

19,016

Net block

Goodwill on consolidation
Current Assets
Inventories

Y/E, Mar (Rs m)


PBT
Depreciation
Interest

Tax paid

61

61

56,206

72,992

659

832

1,008

1,148

4,789

5,890

7,051

7,675

Cash & bank balance

4,562

20,126

25,476

41,058

19,756

21,041

21,483

21,760

776

980

1,187

1,351
68,678

Loans & advances


Other current assets

55,331

61,618

66,735

Net current assets

-24,789

-12,750

-10,528

4,314

Total Assets

246,795

269,025

270,145

279,161

FY11

FY12

FY13E

FY14E

Ratios
FY11

FY12

FY13E

FY14E

Y/E, Mar

9,970

10,553

21,821

28,382

Profitability (%)

23,973

29,813

34,106

36,761

Core EBITDA Margin

3,965

10,557

9,165

8,752

Other Non-Cash items


Chg in working cap

61
48,868

Sundry debtors

Net Current liabilities

Cash Flow Statement

61
30,543

24.5

26.1

27.5

27.5

Net Margin

8.1

7.4

8.8

9.2

ROCE

5.7

7.9

11.6

13.5

22,401

3,525

3,129

739

ROE

7.3

5.6

10.1

11.6

8.3

12.1

16.9

20.7

-982

-3,323

-7,201

-9,366

RoIC

59,328

51,125

61,020

65,268

Per Share Data (Rs)

Capital expenditure

-98,153

-40,004

-33,004

-30,934

2.7

2.2

4.4

5.8

Free Cash Flow

-38,824

11,121

28,016

34,334

CEPS

10.0

11.2

14.8

16.9

BVPS

37.2

39.4

43.8

49.6

0.0

0.0

0.0

0.0

30.0

37.2

18.4

14.2

8.2

7.3

5.5

4.8

Operating Cashflow

Other income
Investments
Investing Cashflow

1,104

-97,049

-40,004

-33,004

-30,934

Equity Capital Raised

EPS (adjusted)

DPS
Valuations (x)

69

Loans Taken / (Repaid)

42,112

15,000

-13,500

-10,000

Interest Paid

-3,965

-10,557

-9,165

-8,752

P/BV

2.2

2.1

1.9

1.6

EV / Sales

2.4

2.0

1.6

1.5

1,178

-4

EV / EBITDA

9.6

7.8

6.0

5.3

39,394

4,439

-22,665

-18,752

Dividend Yield (%)

0.0

0.0

0.0

0.0

1,673

15,559

5,351

15,582

Gearing Ratio (x)

Dividend paid (incl tax)


Other financing activities
Financing Cashflow
Net chg in cash

PER
P/CEPS

Opening cash position

2,889

4,562

20,126

25,476

Net Debt/ Equity

0.7

0.7

0.5

0.3

Closing cash position

4,562

20,122

25,476

41,058

Net Debt/EBIDTA

1.8

1.3

0.8

0.4

Emkay Research

27 April 2012

Result Update

ICICI Bank
Surprised positively; Upgrade to BUY
ICICI Bank Q4FY12 NII at Rs31bn / PAT Rs19bn ahead of

April 27, 2012

Reco
Buy
CMP
Rs861

Target Price
Rs1,200

EPS change FY13E/14E (%)

Domestic loan growth led by SME + corporate. NIM at 3.01%

surprisingly expand 30bps qoq led by foreign business NIMs,


lower domestic term deposits and some re-pricing impact

6.7/-

Target Price change (%)

NA

Nifty

5,191

Sensex

Concerns on asset quality continue to ease. Gross slippages

at Rs6.3bn lowest in four quarters. FY12-14E slippages /


credit cost at 1.4%/ 70bps respectively

17,134

Price Performance
1M

3M

6M 12M

Absolute

(2)

(8)

(23)

Rel. to Nifty

(3)

(5)

(14)

(%)

Source: Bloomberg

1125 Rs

% 10

1030

935

-6

840

-14

745

-22

Jun-11

Upgrade to BUY. Key +ves : strong capital base, stable credit

cost, RoA / core RoE inching upwards (avg 1.6% /16% FY1214E). Valuations seem reasonable post recent correction

Results above estimates; reported NIM at 3% was highest in near past

Relative Price Chart

650
Apr-11

estimates. 35% growth in non-int income compensated for


higher credit cost (18bps for Q4) and taxes (tax rate @28%)

Previous Reco
Accumulate

Aug-11

Oct-11

ICICI Bank (LHS)

Dec-11

Feb-12

-30
Apr-12

Rel to Nifty (RHS)

ICICI Bank Q4FY12 NII at Rs31bn (+24% yoy / 15% qoq) and net profit at Rs19bn
(+31% yoy / 10% qoq) was significantly ahead of our / street estimates. The NII growth
was aided by 17% yoy growth in loan portfolio and 30bps sequential improvement in
reported NIM to 3.01% (highest in near past). Growth in non-interest income came in
healthy at 36% yoy (18% qoq) and compensated for higher provisioning (+22% yoy /
38% qoq) and taxes (tax rate @28%). The bank has added 200 branches in Q4. Asset
quality continues to report second quarter of sequential improvement with GNPA /
NNPA down 4%/11% qoq respectively. Restructured loan portfolio increased to
Rs42.6bn (+39% qoq). This increase however was largely anticipated.

Source: Bloomberg

Stock Details
Sector

Banks

Bloomberg

ICICIBC@IN

Equity Capital (Rs mn)

On the balance sheet front: Domestic loan portfolio grew 14% yoy (4% qoq) largely
led by healthy growth in SME and domestic corporate front. Growth in international book
adjusted for INR depreciation was at 10%yoy. Deposits were up 13% yoy (-2% qoq);
CASA ratio continues to remain at healthy 40+% levels for consecutive ninth quarter.

11492

Face Value(Rs)

10

No of shares o/s (mn)


52 Week H/L

1149

Yield analysis

1,129/641

Market Cap (Rs bn/USD mn)

989/18,806

Daily Avg Volume (No of sh)

5521697

Daily Avg Turnover (US$mn)

94.7

Shareholding Pattern (%)


Mar-12 Dec-11 Sep-11

Q4FY12

Yield on advances*

8.6

9.0

9.5

9.5

9.8

123

33

Yield on investments*

6.6

6.6

6.5

6.6

6.8

18

11

Yield on assets*

7.2

7.4

7.6

7.6

7.9

70

23

Cost of funds*

4.7

5.1

5.3

5.2

5.2

55

-2

NIM*

2.5

2.3

2.3

2.4

2.7

15

25

2.6

2.6

2.6

2.7

3.0

37

31

0.0

0.0

61.8

65.0

NIM (Reported)

Institutions

Source: Company, Emkay Research

27.8

25.1

4.0

4.4

4.2

Public

6.2

6.0

5.7

(bps)

Q3FY12

0.0
26.6

(bps)

Q2FY12

63.2

Private Corp

QoQ

Q1FY12

FII/NRI

Promoters

YoY

Q4FY11

Note:* Calculated on basis of average quarterly balances

Source: Capitaline

Valuation table
Y/E March 31

Net

Net

EPS

ABV

RoA

RoE

PE

P/ABV

income

profit

(Rs)

(Rs)

(%)

(%)

(x)

(x)

FY11

156,648

51,514

44.7

457.4

1.3

9.7

19.3

1.9

FY12A

182,364

64,648

56.1

506.7

1.5

11.2

15.4

1.7

FY13E

212,451

76,026

66.0

548.4

1.6

12.1

13.1

1.6

FY14E

248,713

90,265

78.3

601.7

1.6

13.1

11.0

1.4

Source: Company, Emkay Research

Emkay Global Financial Services Ltd

ICICI Bank

Result Update

Key financials Quarterly


Rs mn

Q4FY11

Q1FY12

Q2FY12

Q3FY12

Q4FY12

YoY (%)

QoQ (%)

YTD' 12

YTD' 11

YoY (%)

Net Interest Income

25,097

24,109

25,064

27,120

31,048

23.7

14.5

107,342

90,169

19.0

Other Income

16,410

16,429

17,396

18,918

22,280

35.8

17.8

75,023

66,478

12.9

Fee Income

17,910

15,780

17,000

17,010

17,280

-3.5

1.6

67,070

64,190

4.5

Net Income

41,507

40,538

42,460

46,038

53,328

28.5

15.8

182,364

156,647

16.4

Total Operating Expenses

18,455

18,198

18,922

19,168

22,216

20.4

15.9

78,504

66,168

18.6

As % Of Net Income

44.5

44.9

44.6

41.6

41.7

43.0

42.2

Employee Expenses

8,566

7,329

8,427

8,366

11,031

35,153

28,169

As % Of Net Income

20.6

18.1

19.8

18.2

20.7

19.3

18.0

9,436

10,533

10,133

10,429

10,652

41,747

36,433

22.7

26.0

23.9

22.7

20.0

22.9

23.3

23,053

22,340

23,538

26,870

31,111

90,479

Other Expenses
As % Of Net Income
Operating Profit
As % Of Net Income
Provisions
PBT
Total Tax
Adjusted PAT
Extra Ordinary Items

28.8

12.9

31.9

2.1

35.0

15.8

103,860

24.8

14.6

14.8

55.5

55.1

55.4

58.4

58.3

57.0

57.8

3,836

4,539

3,188

3,411

4,693

22.3

37.6

15,831

22,867

-30.8

19,217

17,802

20,350

23,459

26,418

37.5

12.6

88,030

67,612

30.2

4,692

4,480

5,318

6,179

7,405

57.8

19.8

23,382

16,093

45.3

14,524

13,322

15,032

17,280

19,013

30.9

10.0

64,648

51,519

25.5

Reported PAT

14,524

13,322

15,032

17,280

19,013

30.9

10.0

64,648

51,519

25.5

Reported EPS

12.6

11.6

13.0

15.0

16.5

30.8

10.0

56.1

45.0

24.6

Source: Company, Emkay Research

Almost everything helped NIMs expansion


Q4FY12 NIM at 3.01% (+31bps qoq) was aided by +33bps qoq improvement in domestic
NIM to 3.3% and +12bps qoq increase in international NIM to 1.52%.
Domestic NIM was aided by
a)

Full impact of base rate hike this came as a surprise as we believed that repricing impact was over

b)

Higher investment income as there was no securitization loss

c)

Lower domestic deposits during the quarter the domestic CDR was higher by
500bps qoq as the domestic term deposits declined by ~2.7% qoq

d)

Change in domestic portfolio mix in favor of SME and retail deposits

Strong traction in SME + Corporate book drives domestic loan growth


As against 17.3% yoy (3.1% qoq) growth in overall loan portfolio, growth in domestic loans
came in at 14.3% yoy (4.4% qoq). This growth was led by strong traction in segments of a)
SME (+30% yoy / 16% qoq) and domestic corporates (+27% yoy / 10% qoq). Rural portfolio
at Rs223bn (+28% qoq) was largely due to year end phenomenon. Growth in retail portfolio
came in lower at 7.6% yoy (9% qoq). Unlike its peers HDFC Bank / Yes Bank which
reported muted growth in credit towards large corporate loans, ICICI Bank reported healthy
26% yoy growth in domestic corporates. The mgmt attributed the reason for growth towards
increasing credit demand in the nature of working capital / term loans. Growth in the
international book came in healthy at 26% yoy. Adjusted for INR dep., book was +10% yoy.

Emkay Research

27 April 2012

ICICI Bank

Result Update

Advances mix SME + domestic corporate book reported healthy traction


Rs bn

Q4FY11

Q1FY12

Q2FY12

Q3FY12

Q4FY12

Retail

837

828

819

825

901

YoY (%)

QoQ (%)

% of total

7.6

9.2

35.5

26.0

-0.2

27.4

International

552

558

669

697

695

Rural

210

188

175

175

223

6.4

27.8

8.8

16.2

5.3

SME
Others
Total

104

110

110

116

134

29.5

461
2,164

523
2,207

566
2,340

650
2,462

584
2,537

26.6

-10.2

23.0

17.3

3.1

100.0

Source: Company, Emkay Research

High yielding retail loans gain traction


While growth in retail loan portfolio at 7.6% yoy qoq seems muted, on qoq basis, the high
yielding loans like cars and CVs has gained traction sequentially. Amongst retail loans
growth was witnessed in segments Cars (+13% yoy / 9% qoq), CVs (+20% yoy / 27% qoq).
Retail advances mix Increasing share of secured loans
Rs bn

Q4FY11

Cars
CV

Q1FY12

Q2FY12

Q3FY12

Q4FY12

YoY (%)

QoQ (%)

% of total

77

78

75

80

87

13.4

9.2

9.7

148

137

131

141

178

20.3

26.5

19.8

Personal loans

23

20

12

10

10

-57.7

0.1

1.1

Credit cards

28

26

25

25

25

-8.7

1.9

2.8

539

554

551

548

576

6.9

5.3

64.0

Mortgages
Others
Total

22

12

24

21

23

7.6

9.2

2.6

837

828

819

825

901

7.6

9.2

100.0

Source: Company, Emkay Research

Guides towards 20% growth in dom. advances at 15bps expansion in NIMs


Going forward, the management has guided towards 20% growth in domestic advances
with strong growth in both retail and corporate segments. International book is likely to
remain flat as H2FY12 has created unfavorable base effect due to strong growth driven by
INR depreciation.
On NIMs front, the management has guided towards a moderate 15bps to improvement to
~2.9%, contrary to sharp jump in Q4FY12 to 3%+. We believe that couple of things which
could cap margins expansions are a) some moderation in the CDR from peak of Q4FY12,
and b) Q1FY13 will also see full impact of PSL lending and borrowings done in Q4FY12

CASA continues to remain healthy


An increasing branch network with focus at garnering CASA deposits has enabled ICICI
Bank retain its CASA ratio at 40+ levels for past several quarters. Q4FY12 CASA ratio
came in at 43.5% (avg 39%), with growth in CASA deposits at 9.2% yoy. Growth in SA
deposits came in higher at 14% yoy (4% qoq). The CA was down 13% qoq due to one-offs
in CA account in Q3FY12 (float due to NHAI bonds).
CASA Mix
Rs bn

Q4FY11

Q1FY12

Q2FY12

Q3FY12

Q4FY12

YoY (%)

QoQ (%)

Current Deposits

348

298

330

400

350

0.6

-12.7

Savings Deposits

669

669

701

735

760

13.7

3.5

CASA

1,016

966

1,031

1,135

1,110

9.2

-2.2

Term deposits

1,240

1,340

1,419

1,471

1,445

16.6

-1.7

Total Deposits

2,256

2,307

2,451

2,606

2,555

13.3

-2.0

45.1

41.9

42.1

43.6

43.5

-160

-12

CASA (%)
Source: Company, Emkay Research

Emkay Research

27 April 2012

ICICI Bank

Result Update

Fee inc. continues to disappoint; dividend from subs. came in as a rescue


As against 36% yoy (18% qoq) growth in non-interest income, growth in core fee income
continues to remain fragile at -3.5% yoy / +1.6% qoq. The management attributed lower fee
income to limited M&A activities and syndication business. It has also guided for low double
digit growth in fee income for FY13 and expects healthy traction in segments like
transaction banking and remittances business. Treasury income came in at +Rs1.6bn vs
loss of Rs2bn in Q4FY11. Other income included dividend income from UK subs. (Rs1bn)
and life insurance (~Rs1bn). Adjusted for the same, growth in non-inc int was at 24% yoy
(7% qoq).
Other income
Rs mn

Q4FY11

Q1FY12

Q2FY12

Q3FY12

Q4FY12

Fee/Commission income

17,910

15,780

17,000

17,010

17,280

Trading gains/(losses)

-1,960

-250

-804

-650

1,580

460

899

1,200

2,558

3,420

16,410

16,429

17,396

18,918

22,280

Others
Total

YoY (%)

QoQ (%)

YTD' 12

YTD' 11

YoY (%)

-3.5

1.6

67,070

64,190

4.5

-180.6

-343.1

-124

-2,150

-94.2

643.5

33.7

8,077

4,438

82.0

35.8

17.8

75,023

66,478

12.9

Source: Company, Emkay Research

QoQ improvement in NPA; restructured loans / credit cost to remain high


ICICI Bank reported another quarter of qoq improvement in its asset quality. GNPA / NNPA
at Rs94.7bn / Rs18.6bn declined 4% / 11% qoq respectively. Gross slippages at Rs6.3bn
(Rs8.8bn in Q3FY12) remained broad based across various segments. However, with
strong recoveries / up-gradation, net slippages came in far too lower at Rs0.6bn.
Restructuring assets (+39% qoq) at Rs42.6bn was largely towards exposure to GTL + 3i
infotech (Rs13bn). The bank has booked NPV loss on the same. PCR came in at 80.4%
with credit cost for Q4 at relatively higher 18bps.
While the mgmt has guided for minimal restructuring, we believe with increasing stress in
segments of construction, shipping, power, iron & steel, restructured book is expected to
remain higher. We have factored in higher slippages at 1.4% (avg assets) and have
correspondingly plugged in credit cost estimates to 70bps average for FY13-14E.
Asset quality
Rs mn

Q4FY11

Q1FY12

Q2FY12

Q3FY12

Q4FY12

Gross NPAs

100,343

99,828

101,070

98,200

94,753

-5.6

-3.5

24,074

23,025

22,360

20,820

18,608

-22.7

-10.6

Gross NPAs (%)

4.5

4.4

4.1

3.8

3.6

Net NPAs (%)

1.1

1.3

0.8

0.7

0.7

Net NPAs/Net worth (%)

4.4

4.1

3.8

3.4

3.1

76.0

76.9

77.9

78.8

80.4

Net NPAs

Provision cover (%)

YoY (%)

QoQ (%)

Source: Company, Emkay Research

Aging of NPAs to ensure provisions do not cross 70bps even if there are
higher slippages
An analysis of the profile of ICICI Banks NPAs suggests that the aging of NPAs for ICICI
Bank is almost over. Amongst most of the private and PSU banks, ICICI Bank is one of the
few banks where migration of NPAs from sub-standard and D1 category to the lower
categories has already happened.
Hence, going forward there will be very minimal requirement of provisions for D2/3 and loss
category and the provision costs will largely go towards fresh slippages only. For the same,
we are anyways building in 70bps of credit costs over next two years.

Emkay Research

27 April 2012

ICICI Bank

Result Update

International subs report dismal growth but improved chances of getting


capital back
With tough operating environment, ICICI bank continues with its balance sheet
consolidation at its UK subsidiary. For FY12, balance sheet stood at US$4.1bn (US$4.8bn
in Q3FY12 and US$6.4bn in FY11). CAR remains healthy 32.4% PAT was down 31% yoy
to US$25.4mn (US$36.6mn in FY11). FY12 Canadian balance sheet stood at CAD 5.2bn
with PAT under IFRS at CAD 34.4mn and CAR at 31.7%.
However, there visibility of repatriating the capital in those subsidiaries to the parent has
improved significantly. UK sub has already paid dividend of Rs1bn during the quarter. The
Canada sub is in talks with the regulator to explore ways to repatriate capital back to the
parent.
UK subsidiary asset book
USD bn

Q4FY11

Q1FY12

Q2FY12

Q3FY12

Q4FY12

YoY (%)

QoQ (%)

Cash & liquid securities

1.3

1.2

1.2

1.2

1.0

-28.0

-16.4

Loans & advances

3.6

3.4

3.0

2.8

2.4

-32.6

-13.9

India linked investments

0.3

0.2

0.2

0.2

0.2

-21.5

4.6

Bonds/notes of fin inst

0.7

0.6

0.3

0.2

0.2

-74.0

-23.5

Asset backed securities

0.1

0.1

0.1

0.1

0.1

-15.7

18.6

Other assets & investments

0.4

0.4

0.4

0.3

0.2

-43.3

-29.0

Total

6.4

6.0

5.1

4.8

4.1

-35.9

-14.6

QoQ (%)

Source: Company, Emkay Research

Canada subsidiary asset book


CAD bn

Q4FY11

Q1FY12

Q2FY12

Q3FY12

Q4FY12

YoY (%)

Cash & liquid securities

0.5

0.6

0.5

0.6

0.7

22.4

1.3

India linked investments

0.1

0.0

0.0

0.0

0.0

-74.3

-1.9

Federally insured mortgage

0.3

1.1

1.3

1.6

1.4

340.5

-13.1

Loans to customers

3.0

2.8

2.6

2.5

2.6

-13.7

3.4

Asset backed securi ties

0.1

0.1

0.1

0.1

0.1

-18.4

-1.9

Other assets & investments

0.5

0.5

0.5

0.5

0.5

0.7

4.2

Total

4.5

5.1

5.1

5.3

5.2

15.6

-1.9

Source: Company, Emkay Research

Mixed performance on domestic subsidiaries front


Domestic subsidiaries reported mixed performance viz a) ICICI securities FY12 PAT at
Rs770mn (-32% yoy) b) ICICI Securities PD FY12 PAT at Rs860mn (+62% yoy) c) ICICI
Venture FY12 PAT at Rs680mn (-8% yoy) d) AMC FY12 PAT at Rs880mn (+22% yoy) e)
Home Finance FY12 PAT at Rs2.6bn (+12% yoy) f) Pru life FY12 PAT at Rs13.8bn (+71%
yoy) and g) General insurance FY12 loss at 416mn (vs loss of Rs800mn in FY11)
ICICI Pru life reported FY12 PAT at Rs13.8bn (+72% yoy). It continues to enjoy healthy
5.9% market share in insurance space. The bank reported FY12 APE business of Rs31.2bn
with NBAP margin at 16% and AuM of Rs707bn (Rs682bn in FY11).
Profit after tax
PAT

FY12

FY11

FY10

YoY (%)

ICICI Securities Ltd.

770

1,130

1,230

-31.9

ICICI Securities PD

860

530

850

62.3

ICICI Venture

680

740

510

-8.1

ICICI Prudential Asset Management

880

720

1,280

22.2

ICICI Home Finance Company

2,600

2,330

1,610

11.6

ICICI Prudential Life Insurance

13,840

8,080

2,580

71.3

-416

-800

1,440

-48.0

19,214

12,730

9,500

50.9

ICICI Lombard General Insurance


Total
Source: Company, Emkay Research

Emkay Research

27 April 2012

ICICI Bank

Result Update

Capital remains healthy; factoring 12% CAGR in balance sheet for FY12-14E
ICICI Bank continues to enjoy healthy capital base CAR at 18.5% including Tier I CAR at
12.7%. Improved loan mix (more in favor of secured loans) and enhanced asset quality has
enabled the bank to conserve capital and in-turn suffice balance sheet growth. However,
given tough environment and intense competition, we are now factoring 12% CAGR in
balance sheet for FY12-14E.

Valuations and view


ICICI Bank Q4FY12 results reflected material improvement in its operating matrix viz a)
stable loan growth, b) NIM expansion (both domestic and international), c) CASA retention
d) sequential improvement in asset quality and e) lower credit cost. The bank has
capitalized the current phase of growth moderation towards branch expansion and
moderation in growth. However, as economic activities revive, we expect ICICI Bank to gain
market share. A well diversified loan mix with stable cost will ensure NIM improvement over
FY12-14E. We have raised our NII assumption for FY13 by 7% following higher than
expected improvement in Q4FY12 NIM. We are now factoring NIM at average 2.6% over
FY12-14E. Even after factoring 70bps of credit cost, we expect RoA to move upwards of
1.6-1.7% over FY12-14E and resultant core RoE to improve to 16-18%. We expect bank to
report 18% / 17% CAGR in net profit / customer assets over FY12-14E. Upgrade to BUY
with price target of Rs1200. Higher than expected increase in restructured loan portfolio /
slippages from the same and lower credit growth remain key risks to our estimates.

Emkay Research

27 April 2012

ICICI Bank

Result Update

Key Financials
Income Statement (Rs. Mn)
(Year Ending Mar 31)
Net interest income
Other income
Net income
Operating expenses

Balance Sheet (Rs. Mn)


FY11

FY12A

FY13E

FY14E

(Year Ending Mar 31)

90,169

107,342

126,545

148,023

Liabilities

FY11

FY12A

FY13E

FY14E

66,479

75,023

85,907

100,689

Equity

11,518

11,528

11,528

11,528

156,648

182,364

212,451

248,713

Reserves

539,391

592,525

643,147

708,008

66,173

78,504

87,891

100,563

Net worth

550,909

604,052

654,674

719,535

Pre provision profit

90,476

103,860

124,561

148,150

Deposits

2,256,021

2,555,000

2,754,444

3,568,592

PPP excl treasury

88,299

103,984

123,461

147,050

Borrowings

1,255,406

1,577,419

1,625,954

1,683,839

Total liabilities

4,062,337

4,736,471

5,035,072

5,971,966

340,901

362,293

330,763

428,529

Provisions

22,898

15,831

21,823

26,170

Profit before tax

67,577

88,030

102,738

121,980

Tax

16,063

23,382

26,712

31,715

Cash and bank

Tax rate

23.8%

26.6%

26.0%

26.0%

Investments

1,185,397

1,384,137

1,285,666

1,510,274

Profit after tax

51,514

64,648

76,026

90,265

Customer assets

2,325,122

2,748,740

3,175,986

3,787,897

Assets

Others
Total assets

Key Ratios (%)


(Year Ending Mar 31)

210,917

241,301

242,658

245,267

4,062,337

4,736,471

5,035,072

5,971,966

Valuations Table
FY11

FY12A

FY13E

FY14E

(Year Ending Mar 31)

FY11

FY12A

FY13E

FY14E

51,514

64,648

76,026

90,265

1,152

1,153

1,153

1,153

NIM

2.3

2.4

2.6

2.7

Net profit (Rs mn)

Non-II/avg assets

1.7

1.7

1.8

1.8

Shares in issue (mn)

Fee income/avg assets

1.4

1.3

1.3

1.4

EPS (Rs)

44.7

56.1

66.0

78.3

Opex/avg assets

1.7

1.8

1.8

1.8

PER (x)

19.3

15.4

13.1

11.0

Provisions/avg assets

1.0

0.7

0.7

0.7

FDEPS(Rs)

44.7

56.1

66.0

78.3

PBT/avg assets

1.8

2.0

2.1

2.2

FDPER (x)

Tax/avg assets

0.4

0.5

0.5

0.6

Book value (Rs)

RoA

1.3

1.5

1.6

1.6

P/BV (x)

RoAE

19.3

15.4

13.1

11.0

478.3

524.0

567.9

624.2

1.8

1.6

1.5

1.4

9.7

11.2

12.1

13.1

Adj book value (Rs)

457.4

506.7

548.4

601.7

Core RoAE

11.9

14.5

16.2

17.8

P/ABV (x)

1.9

1.7

1.6

1.4

GNPA (%)

5.0

4.0

3.9

3.9

P/PPP (x)

11.0

9.6

8.0

6.7

NNPA (%)

1.1

0.8

0.8

0.7

Dividend yield (%)

1.8

1.9

2.6

2.6

Emkay Research

27 April 2012

Result Update

Axis Bank
Results inline; slippages/recoveries surprise positively
April 27, 2012

Reco

Previous Reco

Accumulate

Axis Bank (AXSB) Q4FY12 NII at Rs21.5bn inline with

consensus. However led by sharply lower provisions, net


profit at Rs12.8bn was ahead of expectations

Accumulate

CMP

Target Price

Rs1,103

Rs1,380

EPS change FY13E/14E (%)

4.7/ -

Target Price change (%)

NA
5,191

Nifty

Sharp increase in LDR to 77% (71% in Q3FY12) and stable

CASA at 41.5% restricted NIMs compression to 20bps to


3.6%, inline with our estimates

Stable slippages at Rs5.1bn and higher recoveries/upgrades

at Rs5.9bn (30% of op GNPAs) drive asset quality even as


rest. assets at Rs5.9bn was slightly on the higher side

17,134

Sensex

Price Performance
(%)

1M

3M

6M 12M

Absolute

(1)

(4)

(17)

Rel. to Nifty

(1)

(1)

(8)

Continues to surprise on asset quality but rating profile of

corporates witnesses major shift towards lower side (AA to


BBB). Maintain ACCUMULATE with TP of Rs1,380

Source: Bloomberg

Strong performance; Recoveries surprises positively

Relative Price Chart


1375 Rs

% 10

1250

1125

-6

1000

-14

875

-22

750
Apr-11

Jun-11

Aug-11

Oct-11

Axis Bank (LHS)

Dec-11

Feb-12

-30
Apr-12

Rel to Nifty (RHS)

Source: Bloomberg

Stock Details
Sector

Banks

Bloomberg

AXSB@IN

Equity Capital (Rs mn)

4132

Face Value(Rs)

Axis Banks Q4FY12 NII grew by 26.2%yoy to Rs21.5bn, inline with consensus
expectations. However driven by lower provisions, net profit at Rs12.8bn was ahead of
consensus/our expectations. While advances grew by a strong 19.2% yoy (14.1%qoq),
deposit growth was relatively lower at 16.3% yoy (5.5% qoq). Resultantly CD ratio
increased significantly from 71.3% in Q3FY12 to 77.1% in Q4FY12helping the
contraction in NIMs remain limited to 20bps qoq to 3.1%, inline with our expectations.
The bank surprised positively on the balance sheet front as GNPA declined by
5.7%qoq. Stable slippages at Rs5.1bn and substantially higher recoveries at Rs5.9bn
(Rs1.3bn avg rec/upgradation in earlier two quarters) led to the improvement in asset
quality. Resultantly the provision cover also improved to 80.2% from 75.3% (incl tech
write off) in previous quarter. However the restructuring during the quarter was slightly
on the higher side at Rs5.9bn, as against the run rate of Rs3bn in last two quarters.
Yield analysis

10

No of shares o/s (mn)

413

52 Week H/L

1,370/785

Market Cap (Rs bn/USD mn)

456/8,671

Daily Avg Volume (No of sh)

2494053

Daily Avg Turnover (US$mn)

55.3

Shareholding Pattern (%)


Mar-12 Dec-11 Sep-11

YoY

QoQ

(bps)

(bps)

Q4FY11

Q1FY12

Q2FY12

Q3FY12

Q4FY12

Yield on advances*

9.2

10.1

10.8

11.0

10.7

148

-28

Yield on investments*

7.4

7.2

7.7

8.1

7.6

20

-53

Yield on assets*

7.8

8.2

8.7

8.9

8.7

96

-15

Cost of funds*

4.7

5.3

5.4

5.6

5.6

90

NIM*

3.0

2.9

3.3

3.3

3.1

-20

Cost of funds #

5.6

6.1

6.2

6.3

6.5

89

11

3.4

3.3

3.8

3.8

3.6

11

-20

Promoters

37.4

37.6

37.2

NIM #

FII/NRI

41.7

40.6

42.9

Source: Company, Emkay Research

Institutions

13.4

6.7

7.0

Private Corp

1.3

8.7

7.0

Public

6.2

6.4

6.0

Note:* Calculated on basis of average quarterly balances # Reported

Source: Capitaline

Valuation table
Y/E March 31

Net

Net

EPS

ABV

RoA

RoE

PE

income

profit

(Rs)

(Rs)

(%)

(%)

(x)

P/ABV
(x)

FY2011

111,951

33,885

82.5

440.8

1.6

19.3

14.0

2.5

FY2012A

134,379

42,682

103.3

528.7

1.6

20.4

11.1

2.1

FY2013E

154,333

48,777

113.7

633.1

1.6

19.1

9.7

1.7

FY2014E

181,699

58,840

136.1

736.8

1.7

19.2

8.0

1.5

Source: Company, Emkay Research

Emkay Global Financial Services Ltd

Axis Bank

Result Update

Key financials Quarterly


Rs mn

Q4FY11

Q1FY12

Q2FY12

Q3FY12

Q4FY12

YoY (%)

QoQ (%)

YTD' 12

YTD' 11

YoY (%)

Net Interest Income

17,010

17,241

20,073

21,403

21,461

26.2

0.3

80,178

65,630

22.2

Other Income

14,504

11,679

12,349

14,298

15,876

9.5

11.0

54,202

46,321

17.0

Fee Income

12,311

10,570

11,207

12,210

13,270

7.8

8.7

47,256

37,904

24.7

Net Income

31,514

28,920

32,422

35,701

37,337

18.5

4.6

134,380

111,951

20.0

Total Operating Expenses

13,306

13,335

14,665

15,109

16,962

27.5

12.3

60,071

47,794

25.7

As % Of Net Income

42.2

46.1

45.2

42.3

45.4

44.7

42.7

Employee Expenses

3,960

5,100

4,986

5,420

5,296

20,802

16,139

As % Of Net Income

12.6

17.6

15.4

15.2

14.2

15.5

14.4

9,346

8,235

9,679

9,689

11,666

39,269

31,655

29.7

28.5

29.9

27.1

31.2

29.2

28.3

18,208

15,585

17,756

20,592

20,376

64,157

Other Expenses
As % Of Net Income
Operating Profit
As % Of Net Income

33.7
24.8

-2.3
20.4

11.9

-1.1

74,309

28.9
24.1
15.8

57.8

53.9

54.8

57.7

54.6

55.3

57.3

Provisions

2,544

1,758

4,056

4,223

1,393

-45.2

-67.0

11,430

11,497

-0.6

Prov for NPA

1,760

1,530

2,470

3,340

1,393

-20.9

-58.3

8,733

9,021

-3.2

15,664

13,827

13,701

16,369

18,983

21.2

16.0

62,879

52,660

19.4

PBT
Total Tax
Adjusted PAT

5,463

4,403

4,497

5,346

6,210

13.7

16.2

20,456

17,472

17.1

10,201

9,424

9,203

11,023

12,773

25.2

15.9

42,422

35,188

20.6

Extra Ordinary Items

Reported PAT

10,201

9,424

9,203

11,023

12,773

25.2

15.9

42,422

35,188

20.6

Reported EPS

24.8

22.9

22.3

26.7

30.9

24.4

15.7

102.8

86.0

19.6

Source: Company, Emkay Research

Large corp/ Retail drive advances growth; PSL targets may still be way off
The banks advances grew by a strong 19.2%yoy to Rs1.7tn led by strong growth in Retail
and large corporate book. While retail book grew by a stellar 35.3%yoy to Rs376bn, large
corporate book grew by a healthy 19.9%yoy to Rs911bn. The growth in retail book was
driven by strong growth in all the segments (ex personal loans); mortgages which constitute
75% of the total retail book grew by 49.3%yoy to Rs282bn.
The large spike in the agriculture loans was more seasonal in nature for meeting year end
PSL targets. However, since as % of last years loan book the agricultural loans stood at
12.2% vs 16% last year, we believe that PSL targets are still way off the norm and may
continue to put pressure on NIMs next year.
Advances mix
Rs bn

Q4FY11

Q1FY12

Q2FY12

Q3FY12

Q4FY12

YoY (%)

Large corporates

759

703

794

841

911

Mid-corporate/SME

214

198

208

207

238

Agriculture

173

147

106

107

Retail

278

270

293

333

39

11

12

Mortgages

189

203

Car Loans

31

35

Personal loans

Credit cards
Others
Total

QoQ (%)

% of total

19.9

8.3

53.6

11.2

15.0

14.0

173

0.1

62.1

10.2

376

35.3

12.9

22.1

20

23

-42.0

12.9

1.3

223

249

282

49.3

12.9

16.6

38

43

49

60.0

12.9

2.9

35.3

125.9

0.4

14

16

15

17

15

8.3

-9.6

0.9

1,424

1,319

1,401

1,487

1,698

19.2

14.1

100.0

Source: Company, Emkay Research

Emkay Research

27 April 2012

Axis Bank

Result Update

CASA mix stable despite strong advance growth


The banks CASA mix remain stable at 41.5% despite strong growth in advances, as CASA
deposit grew by a strong 5.4%qoq, inline with growth in term deposits. The entire growth in
CASA deposit was driven by saving deposit which grew by 9.2%qoq.
CASA Mix
Rs bn

Q4FY11

Q1FY12

Q2FY12

Q3FY12

Q4FY12

Current Deposits

369

315

354

395

Savings Deposits

409

429

468

473

CASA

778

744

821

Term deposits

1,115

1,092

Total Deposits

1,892

1,836

41.1

40.5

CASA

YoY (%)

QoQ (%)

398

7.7

0.7

517

26.5

9.2

868

914

17.6

5.4

1,123

1,219

1,287

15.4

5.5

1,945

2,087

2,201

16.3

5.5

42.2

41.6

41.5

44

-4

Source: Company, Emkay Research

Strong fee income/ trading gains drive other income


The bank continued to report strong traction in fee income, as it grew by 8.6%qoq to
Rs13.3bn, helped by business/ retail banking. Higher third party product business and
government business drove retail and business banking Moreover with robust trading gains
at Rs1.5bn, total non interest income grew by even higher 11%qoq to Rs15.9bn.
Fee income
Rs mn

Q4FY11

Q1FY12

Q2FY12

Q3FY12

Q4FY12

YoY (%)

QoQ (%)

YTD' 12

YTD' 11

YoY (%)

Corporate banking

5,381

4,560

4,430

5,390

5,590

3.9

3.7

19,970

15,591

28.1

Business banking

1,070

990

970

1,090

1,280

19.6

17.4

4,330

3,880

11.6

190

160

150

130

130

-31.6

0.0

570

700

-18.6

3,120

2,760

2,910

3,280

3,770

20.8

14.9

12,720

10,010

27.1

Capital markets
Retail banking
Treasury
Total fee income

2,550

2,100

2,740

2,320

2,490

-2.4

7.3

9,650

7,710

25.2

12,311

10,570

11,200

12,210

13,260

7.7

8.6

47,240

37,891

24.7

Trading gains/(losses)
Others
Total

581

702

277

1,180

1,460

151.2

23.7

3,619

4,970

-27.2

1,612

407

866

908

1,146

-28.9

26.2

3,327

3,448

-3.5

14,504

11,679

12,349

14,298

15,876

9.5

11.0

54,202

46,321

17.0

Source: Company, Emkay Research

Note: The growth in fee income on yoy basis adjusted for change in accounting policy at 39%

Asset quality improves further; recovery surprises positively


The banks asset quality improved during the quarter as GNPA/ NNPA declined by
5.7%qoq/ 30.8%qoq. While slippages remain stable at 5.2bn, significantly higher
recoveries/ upgradation at Rs5.9bn surprised positively. Moreover provision cover also
improved to 74% in Q4FY12 from 64% in Q3FY12. However restructured assets during the
quarter were slightly higher at Rs5.9bn as against Rs3bn run rate for previous two quarters.
Cumulative restructured book stood at Rs30.6bn, which is 1.8% of the overall advances.
NPA profile
Rs mn
Gross NPAs
Net NPAs

Q4FY11

Q1FY12

Q2FY12

Q3FY12

Q4FY12

YoY (%)

QoQ (%)

15,994

15,731

17,438

19,145

18,063

12.9

-5.7

15.2

-30.8

4,104

4,625

5,488

6,829

4,726

Gross NPAs (%)

1.0

1.1

1.1

1.1

0.9

Net NPAs (%)

0.3

0.3

0.3

0.4

0.3

Net NPAs/Net worth (%)

2.2

2.3

2.6

3.1

2.1

74.3

70.6

68.5

64.3

73.8

Provision cover (%)


Source: Company, Emkay Research

Emkay Research

27 April 2012

Axis Bank

Result Update

However there is a sharp change in the rating profile


Even as the asset quality continued to surprise, there was a sharp shift in the rating profiles
of the large/mid corporate book. There was ~4% shift of in the distribution of ratings from
AA category in favor of lower category of BBB. We believe that this could be due to
lowering of rating of some of the existing loans of the bank.
In fact over past five quarters, there has been 700bps migration from A/AA rated to BBB
rated portfolio.

Axis bank approves the valuation; Merger likely in three months


Axis Bank board approved the valuation of financial services business proposed to be
acquired from Enam Securities Private Limited (ESPL). Pursuant to the Revised Scheme,
Enam Shareholders would receive Axis Bank shares in the ratio of 5:1, translating into
approximately 2.9% shareholding in Axis Bank, which is valued at Rs13.4bn at CMP of
Rs1,103. The proposed transaction is subject to requisite regulatory approvals including
High Courts of Gujarat and Maharashtra and from the shareholders and creditors of the
respective companies. We believe it will take around three months for taking the required
approvals, post which both the entities will merge.

Valuation and view


While Axis Banks performance for Q4FY12 was robust and also positively surprised on
NPLs, we are still factoring in lower 13.4% growth in earnings next year for few reasons (1)
NIMs may continue to remain under pressure due to shortfall on PSL requirements which
may be substituted with RIDF bonds and (2) the downgrading in the loan rating profiles may
spike up restructuring and consequently provisions. We believe that these two can pose
further risks to our earnings estimates. But still valuations at 1.7x/1.4x FY13E/FY14E are
not unreasonable. Maintain accumulate with TP of Rs1,380.

Emkay Research

27 April 2012

Axis Bank

Result Update

Key Financials
Profit and loss (Rs mn)
(Year Ending Mar 31)

Balance sheet (Rs mn)


FY11

FY12A

FY13E

FY14E

Net interest income

65,630

80,178

91,592

108,463

Other income

46,321

54,202

62,741

73,236

Net income

(Year Ending Mar 31)

FY11

FY12A

FY13E

FY14E

4,106

4,132

4,288

4,324
325,714

Liabilities
Equity

111,951

134,379

154,333

181,699

Reserves

185,883

223,953

278,025

Operating expenses

47,794

59,811

68,917

80,571

Net worth

189,988

228,085

282,314

330,037

Pre provision profit

64,157

74,568

85,417

101,128

Deposits

1,892,378

2,201,043

2,553,941

3,062,319

PPP excl treasury

67,820

78,187

89,036

105,108

Borrowings

344,767

427,150

440,412

454,499

2,427,134

2,856,278

3,276,667

3,846,854

Provisions

12,793

11,430

13,262

14,087

Total liabilities

Profit before tax

51,364

63,138

72,154

87,041

Assets

Tax

17,479

20,456

23,377

28,201

Cash and bank

214,087

139,339

186,588

223,729

34%

32%

32%

32%

Investments

539,211

658,928

744,720

870,742

33,885

42,682

48,777

58,840

1,604,783

1,970,589

2,259,180

2,667,688

68,999

87,422

86,179

84,695

2,427,134

2,856,278

3,276,667

3,846,854

Tax rate
Profit after tax

Customer assets
Others
Total assets

Key Ratios

Valuations

(Year Ending Mar 31)

FY11

FY12A

FY13E

FY14E

(Year Ending Mar 31)

FY11

FY12A

FY13E

FY14E

NIM

3.1

3.0

3.0

3.0

Net profit (Rs mn)

Non-II/avg assets

2.2

2.1

2.0

2.1

Shares in issue (mn)

33,885

42,682

48,777

58,840

411

413

429

Fee income/avg assets

2.8

2.8

2.9

2.8

432

EPS (Rs)

82.5

103.3

113.7

136.1

Opex/avg assets

2.3

2.3

2.2

2.3

PER (x)

13.4

10.7

9.7

8.1
137.2

Provisions/avg assets

1.0

0.7

0.7

0.7

FDEPS(Rs)

79.0

99.5

113.7

PBT/avg assets

2.4

2.4

2.4

2.4

FDPER (x)

14.0

11.1

9.7

8.0

Tax/avg assets

0.8

0.8

0.8

0.8

Book value (Rs)

450.8

540.1

646.9

752.0

P/BV (x)

RoA

1.6

1.6

1.6

1.7

19.3

20.4

19.1

19.2

GNPA (%)

1.0

0.9

1.0

1.0

NNPA (%)

0.3

0.3

0.3

0.3

RoAE

Emkay Research

27 April 2012

2.4

2.0

1.7

1.5

440.8

528.7

633.1

736.8

P/ABV (x)

2.5

2.1

1.7

1.5

P/PPP (x)

7.1

6.1

5.5

4.7

Dividend yield (%)

1.3

1.5

1.6

2.1

Adj book value (Rs)

Result Update

Maruti Suzuki India Ltd.


Disappointment continues, Maintain REDUCE
Sales/EBIDTA at Rs 117 bn/8 bn was ~4%/19% below est. due

April 30, 2012

Reco

Previous Reco

Reduce

Reduce

CMP

Target Price

Rs1,397

Rs 1,270

EPS change FY13E (%)

(12.2)

Target Price change (%)

Nifty

5,191

Sensex

Demand polarity continues towards diesel vehicles. Diesel

engine capacity restricted to 400,000 units for FY13. New


diesel engine capacity to come in 1HFY14 (150,000 units)

USD/JPY net exposure hedged 100%/67% for Q1/Q2 FY13

17,134

Higher discounts, additional promotions required to drive


petrol sales to restrict margins recovery

12M

Introduce FY14 estimates with volumes of 1.5mn units and

Price Performance
1M

3M

6M

Absolute

16

22

Rel. to Nifty

16

26

18

(%)

to 12% QoQ rise in discounts (petrol car). PAT at Rs 6.4bn


(7% above est.) was due to higher other income/lower tax

EPS of Rs 104.6. Retain REDUCE with a TP of Rs 1,270. Key


upside risk arises from favorable currency movement

Source: Bloomberg

Relative Price Chart

Net Sales ~4% below est., sharp increase in discounts in petrol cars

1400 Rs

% 20

1300

12

1200

1100

-4

1000

-12

900
Apr-11

Jun-11

Aug-11

Oct-11

Dec-11

Maruti Suzuki India (LHS)

Feb-12

-20
Apr-12

Net sales disappointed at Rs 117bn (est. of Rs 123bn) despite favorable product mix
and price hikes. Average selling prices (ASP) declined 0.4% QoQ (11% YoY) to Rs
318,779 vs our est. of Rs 333,886. Management commentary indicated sequential
increase of domestic ASPs by Rs 12,000. However, lower share of spare and other
parts led to lower overall revenues. Also, we were surprised by a 12% QoQ jump in
discounts on petrol cars.

Rel to Nifty (RHS)

Product mix %

Source: Bloomberg

Stock Details
Sector

Automobiles

Bloomberg

MSIL@IN

Equity Capital (Rs mn)

1445

Face Value(Rs)

No of shares o/s (mn)

289

52 Week H/L

1,428/906

Market Cap (Rs bn/USD mn)

398/7,568

Daily Avg Volume (No of sh)

755380

Daily Avg Turnover (US$mn)

18.8

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

M800, A-Star,Alto, WagonR

53.0

48.7

50.7

48.4

47.9

Vans (Omni, Eeco)

13.4

16.3

16.9

13.0

11.9

Swift, Estilo, Ritz

20.8

22.2

20.2

25.3

25.4

Dzire

9.5

10.0

9.1

11.6

12.5

SX4

3.0

2.2

2.0

1.2

1.7

Gypsy, Vitara

0.3

3.2

4.3

2.1

1.2

Exports
Units sold (nos)
YoY change

9.0

11.0

11.9

11.6

10.8

343,420

281,526

252,299

239,528

360,324

19.5

(0.6)

(19.6)

(27.6)

4.9

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

10,600

9,300

13,500

12,200

13,493

14.8

58.8

14.0

27.3

Source: SIAM, Emkay research

Shareholding Pattern (%)


Mar-12 Dec-11 Sep-11
Promoters

54.2

54.2

54.2

Avg. Discount (Rs per unit)


Per vehicle

FII/NRI

21.5

19.5

19.3

% YoY

Institutions

15.8

17.4

17.7

Per diesel unit

Private Corp

5.8

6.1

6.2

Per petrol unit

12,815

12,037

16,999

16,531

18,518

Public

2.6

2.9

2.6

% YoY

25.3

67.5

27.9

44.5

Source: Capitaline

Source: Company, Emkay research

Financial Snapshot
YE-

Net

Mar

Sales

(Core)

(%)

APAT

365,747

31,990

8.7

22,886

FY11

EBITDA

EPS

EPS

RoE

(Rs)

%chg

(%)

P/E

EBITDA

EV/
P/BV

79.2

(8.8)

17.8

17.6

10.3

2.9

FY12E

354,451

24,575

6.9

16,321

56.5

(28.7)

11.2

24.7

13.4

2.7

FY13E

429,021

37,937

8.8

24,823

85.9

52.1

15.1

16.3

8.7

2.3

FY14E

506,261

46,873

9.3

30,226

104.6

21.8

15.9

13.4

6.7

2.0

Source: Company. Emkay Research

Emkay Global Financial Services Ltd

Maruti Suzuki India Ltd.

Result Update

Quarterly Summary
Rs mn

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

YoY(%)

QoQ(%)

FY12

FY11

YoY(%)

Revenue

100,922

85,293

78,316

78,824

117,270

16.2

48.8

359,703

369,654

(2.7)

90,825

77,149

73,104

74,652

108,685

19.7

45.6

320,794

332,359

(3.5)

89.2

89.9

18.7

49.5

284,244

287,943

79.0

77.9

8,438

7,036

2.3

1.9

28,112

37,381

7.8

10.1

Expenditure
as % of sales
Consumption of RM

90.0

90.5

93.3

94.7

92.7

78,629

66,917

61,566

62,433

93,328

77.9

78.5

78.6

79.2

79.6

1,534

1,794

1,995

2,090

2,560

1.5

2.1

2.5

2.7

2.2

10,662

8,438

9,544

10,129

12,797

10.6

9.9

12.2

12.9

10.9

as % of sales
Employee Cost
as % of sales
Other expenditure
as % of sales
EBITDA

66.9

20.0

22.5

26.3

(1.3)

19.9

(24.8)

10,097

8,144

5,212

4,172

8,585

(15.0)

105.8

38,910

37,295

4.3

Depreciation

2,967

2,425

2,664

2,989

3,306

11.4

10.6

11,383

10,135

12.3

EBIT

7,131

5,719

2,548

1,183

5,279

(26.0)

346.3

27,526

27,160

1.3

Other Income

1,199

1,801

1,177

1,604

2,969

147.6

85.1

7,550

4,823

56.5

64

58

109

174

208

548

244

124.5

PBT

8,266

7,463

3,617

2,613

8,040

(2.7)

207.7

34,529

31,739

8.8

Total Tax

1,667

1,970

1,018

557

1,642

(1.5)

194.8

5,187

8,489

(38.9)

Adjusted PAT

6,599

5,492

2,598

2,056

6,398

(3.0)

211.2

29,342

23,250

26.2

(3.0)

211.2

29,342

22,573

30.0

Interest

(Profit)/loss from JV's/Ass/MI


Adj. PAT after MI
Extra ordinary items

6,599

5,492

2,598

2,056

6,398

(194)

(194)

(676)

(71.3)

Reported PAT

6,599

5,492

2,405

2,056

6,398

(3.0)

211.2

29,148

22,573

29.1

Reported EPS

22.8

19.0

8.3

7.1

22.1

(3.0)

211.2

56.6

78.1

(27.6)

(bps)

(bps)

Margins (%)
EBIDTA

(bps)

10.0

9.5

6.7

5.3

7.3

(268)

203

10.8

10.1

EBIT

7.1

6.7

3.3

1.5

4.5

(256)

300

7.7

7.3

31

EBT

8.2

8.7

4.6

3.3

6.9

(133)

354

9.6

8.6

101

PAT
Effective Tax rate

73

6.5

6.4

3.3

2.6

5.5

(108)

285

8.2

6.3

187

20.2

26.4

28.1

21.3

20.4

25

(89)

15.0

26.7

(1,173)

YoY(%)

QoQ(%)

Per Vehicle (Rs)

YoY(%)

Revenue

293,941

302,967

310,400

329,081

325,457

10.7

(1.1)

317,287

290,836

9.1

Raw Material

229,012

237,695

244,010

260,648

259,012

13.1

(0.6)

250,725

226,547

10.7

Staff Cost

4,468

6,371

7,905

8,726

7,104

59.0

(18.6)

7,443

5,536

34.4

Other Expense

31,053

29,973

37,828

42,288

35,516

14.4

(16.0)

24,797

29,410

(15.7)

EBITDA

29,409

28,928

20,657

17,418

23,826

(19.0)

36.8

34,322

29,343

17.0

PAT

19,219

19,509

10,299

8,584

17,757

(7.6)

106.9

25,882

18,292

41.5

Source: Company. Emkay Research

Emkay Research

30 April 2012

Maruti Suzuki India Ltd.

Result Update

Adj EBIDTA disappoints significantly at Rs 8 bn vs est. of Rs 9.9bn


Adj EBIDTA (after MTM reversal of Rs 500mn) disappointed significantly. We attribute this
largely to lower than expected sales. It should be noted that RM to sales at 81.3% was lower
than our est. of 81.6%.

Sharp jump in other income and lower tax rate drives net profits
Net profits at Rs 6.4bn was 7% above estimates due to sharp jump in higher other income
(Rs 2.9bn vs est. of Rs 1.3bn) and lower tax rates (20% vs est of 26%). Other income was
higher due to maturity of several fixed maturity plans. Depreciation expense at Rs 3.3bn was
higher than our est. of Rs 3bn. Tax rates at ~20.4% were significantly lower than our est.
largely due to higher R&D spend (benefit of 200% weighted deduction for taxes) and higher
share of other income. Absolute tax amount at Rs 1.6bn was 35% lower than our estimate.

Revision in Estimates and Introduction of FY14


We expect demand for petrol vehicles to remain subdued in FY13 thus leading to higher
overall discounts vs last year and additional promotional/incentive schemes to drive sales.
Hence, we lower our margin estimates by 90 bps in FY13 to 8.8%. We also factor in adverse
forex rates (Yen/INR at 1.62 vs 1.64 earlier). Our forex rates imply USD/JPY of 83 and
USD/INR of 51 for FY13. We also introduce FY14 estimates with volumes/EBITDA/profits at
1.5mn/Rs 46.9 bn/Rs 30bn.
FY13E
Rs mn
Volumes
Sales
EBIDTA
EBIDTA margins(%)
Net Profits
EPS

Earlier

Revised

1,296,754
429,109

FY14E
% Change

Our est.

% YoY

1,330,183

2.6

1,526,609

14.8

429,021

(0.0)

506,261

18.0

41,615

37,937

(8.8)

46,873

23.6

9.7

8.8

28,284

24,823

(12.2)

30,226

21.8

97.9

85.9

(12.2)

104.6

21.8

9.3

Source: Emkay Research

Valuations and View


At CMP of Rs 1,397 the stock trades at PER of 16.3x and 13.4x, EV/EBIDTA of 8.7x and 6.7x
our FY13 and FY14 estimates respectively. We maintain our REDUCE rating and target price
of Rs 1,270. At our TP, the stock trades at 14.8x/12.1x PER and 7.7x/5.9x EV/EBITDA on our
FY13/14 estimates. We continue to have concerns with unhedged currency exposure beyond
1HFY13 and demand polarity towards diesel vehicles. Key upside risk arises from favorable
currency movement as the stock has shown a ~90% correlation with cross currency
movement.

Emkay Research

30 April 2012

Maruti Suzuki India Ltd.

Result Update

Key extracts from the con call

Emkay Research

30 April 2012

Demand outlook: Strong polarity in demand witnessed in FY12 with petrol sales
declining 14% while diesel sales increasing 37%. Outlook for FY13 continues to remain
subdued for petrol vehicles driven by rising cost of ownership and increase in fuel
prices. Company is taking steps to lower cost of ownership by offering exchange
bonuses, targeting customers with lower usage and considering interest subventions.

Diesel demand continues to remain strong with waiting periods at 4-5 months for Dzire
and 6 months for Swift.

Current capacity is for production of 1.6 mn units annually. Addition of Manesar C


assembly line would increase the capacity by 250,000 units.

Current diesel engine capacity stands at 400,000 units. New diesel engine plant in
Gurgaon is expected to come on stream in 1HFY14 with a capacity of 150,000 units
and rest 150,000 units by FY15. Total proposed capex for this is Rs 17 bn

Average discount levels have increased to Rs 13,493 per vehicle vs Rs 12,200 in Q3.

Compensation to vendors for indirect imports in Yen (payment with a lag of 1 quarter)
impacted EBITDA by Rs 2bn during this quarter

Company has hedged ~40% of its FY13 USD/Yen net exposure at favorable rates. It
has fully hedged Q1 exposure and 67% of Q2 exposure. It targets to hedge ~50% of
net exposure each year.

It also has natural hedges for Euro exposure and ~25% of USD exposure. USD/Re has
been partially covered for Q1 and rest is unhedged.

Company has received 22,000 bookings for Ertiga with diesel share at more that 80%.
It is expected to commence exports to Indonesia in the coming months in CKD form
followed with roll out in other geographies.

Management expects capex (excluding land in Gujarat) of Rs 30 bn in FY13 (Rs 27 bn


in FY12). Of this, amount proposed for R&D is Rs 5 bn in FY13 (Rs 2bn in FY12).

Benefits from localization are not expected to filter in before 2- 3 years.

Maruti Suzuki India Ltd.

Result Update

Financials
Income Statement
Y/E, Mar (Rs. mn)

Balance Sheet
FY11

FY12

FY13E

FY14E

Y/E, Mar (Rs. Mn)

365,747

354,451

429,021

506,261

Equity share capital

1,445

1,445

1,445

1,445

24.7

(3.1)

21.0

18.0

Reserves & surplus

137,230

150,429

174,549

201,966

Expenditure

333,757

329,877

391,083

459,388

Net worth

Materials Consumed

284,902

281,294

335,685

395,126

Minority Interest

Net Sales
Growth (%)

Employee Cost

FY11

FY12

FY13E

FY14E

138,675

151,874

175,994

203,411

7,036

8,438

9,844

11,444

Secured Loans

312

10,784

312

312

Other Exp

41,819

40,144

45,554

52,818

Unsecured Loans

2,781

966

2,781

2,781

EBITDA

31,990

24,575

37,937

46,873

Loan Funds

3,093

11,749

3,093

3,093

(12.8)

(23.2)

54.4

23.6

8.7

6.9

8.8

9.3

Depreciation

10,135

10,802

12,657

14,724

EBIT

21,855

13,773

25,280

32,150

6.0

3.9

5.9

6.4

9,477

8,884

9,023

9,556

244

300

300

300

PBT

31,088

22,357

34,004

Tax

8,202

6,036

9,181

Growth (%)
EBITDA margin (%)

EBIT margin (%)


Other Income
Interest expenses

Effective tax rate (%)


Adjusted PAT

Adj. PAT After JVs/Ass/MI


Reported PAT

Gross Block

164,377

186,377

72,885

85,542

100,266

Net block

55,294

66,492

78,835

86,111

Capital work in progress

14,286

14,829

15,000

15,000

41,406

Investment

51,067

61,473

72,567

76,067

11,180

Current Assets

63,563

80,228

75,242

102,521

Inventories

14,150

17,965

18,127

21,414

8,933

9,377

18,127

21,414

Cash & bank balance

25,085

24,362

3,761

18,379

Loans & advances

13,722

24,498

33,554

39,640

27.0

27.0

24,823

30,226

(8.8)

(28.7)

52.1

21.8

6.3

4.6

5.8

6.0

22,886

16,321

24,823

30,226

22,886

16,321

24,823

30,226

(8.8)

(28.7)

52.1

21.8

Growth (%)

208,148

139,377

27.0

E/O items

1,644

180,731

62,083

16,321

(Profit)/loss from JV's/Ass/MI

1,644

166,646

117,377

26.4

Net Margin (%)

3,023

143,412

Less: Depreciation

22,886

Growth (%)

1,644

Total Liabilities

Net deferred tax liability

Sundry debtors

Other current assets

1,673

4,027

1,673

1,673

Current lia & Prov

40,798

56,376

60,913

71,552

Current liabilities

35,540

49,391

54,752

64,314

5,258

6,985

6,161

7,237

22,765

23,852

14,329

30,969

143,412

166,646

180,731

208,148

FY11

FY12

FY13E

FY14E
9.3

Provisions
Net current assets
Misc. exp
Total Assets

Cash Flow

Key Ratios

Y/E, Mar (Rs. mn)

FY11

FY12E

FY13E

FY14E

Y/E, Mar

PBT (Ex-Other income)

21,611

13,473

24,980

31,850

Profitability (%)

Depreciation

10,135

10,802

12,657

14,724

244

300

300

300

Other Non-Cash items

3,331

Chg in working cap

3,384

(1,810)

(11,077)

Tax paid

(8,202)

(6,036)

Operating Cashflow

30,503

16,728

Interest Provided

Capital expenditure

EBITDA Margin

8.7

6.9

8.8

Net Margin

6.3

4.6

5.8

6.0

ROCE

23.1

14.6

19.8

21.4

(2,023)

ROE

17.8

11.2

15.1

15.9

(9,181)

(11,180)

RoIC

41.9

23.2

32.5

34.2

17,679

33,671

Per Share Data (Rs)

(23,720)

(22,543)

(25,171)

(22,000)

79.2

56.5

85.9

104.6

Free Cash Flow

6,783

(5,814)

(7,492)

11,671

CEPS

114.3

93.8

129.7

155.5

Other income

9,477

8,884

9,023

9,556

BVPS

479.8

525.5

609.0

703.8

Investments

14,977

(10,406)

(11,094)

(3,500)

7.5

4.5

6.9

8.4

Investing Cashflow

24,454

(1,522)

(2,071)

6,056

Equity Capital Raised


Loans Taken / (Repaid)
Interest Paid
Dividend paid (incl tax)

EPS

DPS
Valuations (x)

PER

17.6

24.7

16.3

13.4

(5,121)

8,656

(8,656)

P/CEPS

12.2

14.9

10.8

9.0

(244)

(300)

(300)

(300)

P/BV

2.9

2.7

2.3

2.0

(2,518)

(1,517)

(2,307)

(2,810)

EV / Sales

0.9

0.9

0.8

0.6

EV / EBITDA

10.3

13.4

8.7

6.7

(226)

226

Dividend Yield (%)

0.5

0.3

0.5

0.6

6,613

(11,038)

(3,110)

Gearing Ratio (x)


(0.4)

Income from investments


Others
Financing Cashflow

(7,134)

Net chg in cash

24,103

(723)

(20,600)

14,618

Net Debt/ Equity

(0.5)

(0.5)

(0.4)

982

25,085

24,362

3,761

Net Debt/EBIDTA

(2.2)

(3.0)

(1.8)

(1.9)

25,085

24,362

3,761

18,379

(12.4)

(29.9)

(21.0)

(20.7)

Opening cash position


Closing cash position

Emkay Research

30 April 2012

Working Cap Cycle (days)

Maruti Suzuki India Ltd

Result Update

Emkay Global Financial Services Ltd.


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Emkay Research

30 April 2012

www.emkayglobal.com
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