Persistent System advised to book profit despite growth visibility

21th Mar 2014
We cover Persistent System as one of the few companies in the tier-II with potential to grow revenue at a range of 18-20%, specially focused on
emerging business and relationship building with marquee clients. Despite better predictability of growth and attractive visibility of its expansion
in new emerging verticals, we advice to book profit on the stock because of its premium valuation. ...............................................................
(Page : 2-3)
AXIS BANK :
ICICI BANK : "HOLD" 18th Mar 2014
In our earlier note dated 31st Jan.2014 in which we have given the price target of Rs.1094 lower side of valuation band. Now the stock reached
to the level of Rs.1214 but still below of our upper side of valuation band. We value bank in the range of Rs. 836 to Rs.1287 depending upon the
fundamental and return ratios. Since our result updated report, the stock has given the return of 24%, now we advice our investor to hold the
stock as bank has potential to reached at upper side of valuation band. ........................ ( Page : 15-20)
"BOOK PROFIT" 14th Mar 2014
Recent rally in Axis Bank is fundamentally not justified but is the result of sentiment boost up lead by Modi effect. Opinion poll suggests BJP led
NDA would come to power after the general election. NDA prime ministerial candidate Narendra Modi is perceived by foreign investor as a
decisive and development making leader. Market participates have hope for revival in economy and business growth opportunity to start again.
This would be result of diminishing NPA buffer and profitability boost up. We advice our clients to book part profit.
....................................................................................... ( Page : 21- 23)
No doubt the stock's fundamentals are good and also available at a cheaper rate comparing to its early trade . In the previous one month the
stock performed well & recover 20-22% from its estimated low of CY2013. We didn't expected this rise to be so fast.The CMP was estimated for
a medium term target price looking at its earnings and fundamentals . How ever the target price got achieved few days back. we believe the
stock's fundamental is still good and price too cheap also , but for the earning up gradation and revised target price we would like to see the 1st
quarter earnings, hence we recommend Book Profit on the stock at a price range between Rs.1253 to Rs.1310.
......................................................................... ( Page : 12-14)
IEA-Equity
Strategy
21th Mar, 2014
Edition : 229
ACC Limited :
KPIT Tech: "On billion dollar journey" "BUY" 19th Mar 2014
Impressive organic growth despite inorganic thrust (acquired 10 companies in the last 10 yrs), Potential option value from success of its hybrid
engine venture Revolo (on trial). KPIT has targeted to reach $1bn sales by 2017. Its differentiated positioning and competitive edge in its focus
areas, imperatives to the success of smaller-sized IT vendors impress to investors. ........................................................................ ( Page : 10-
11)
HDFC Bank : "HOLD" 20th Mar 2014
Profitability of bank is likely to report better in next few quarters on the back of mobilization of FCNR deposits which would reflect better NII
growth for being a low cost carry, RBI allowed banks to use counter cycle buffer for making specific provisions against bad loans, declining share
of priority sector lending but still met regulatory requirement and exempted foreign deposits with tenure more than 3 years from SLR, CRR and
PSL. Now the economy is witnessing some sign of revival and market sentiment boost up on account of exit poll result. We raised our price
target to Rs.760/share which is upper side of our valuation band. .................... ( Page : 7-9)
Persistent System : "Persistently innovating.." "BOOK PROFIT"
TCS : " Strong Fundamentals" "BUY" 20th Mar 2014
On Mid Quarter Analyst Meet, TCS commented on weak revenue growth momentum for 4QFY14E due to weak seasonality. Growth in 4QFY14E
would be lower than the preceding quarter and margin would decline 40-50 basis points on cross currency movement and higher investments.
However, sigh of relief was seen on FY15E outlook and comments on overall demand environment. .................................................................. (
Page : 4-6 )
"BOOK PROFIT" 18th Mar 2014
Narnolia Securities Ltd,
India Equity Analytics
Daily Fundamental Report on Indian Equities

Persistent System.
Footing on Product Business, and working aggressively on new emerging services;
11%
Key facts from Management Interview to Media( on 20
th
March,2014)
1M 1yr YTD
Absolute 1.1 76.8 85.7
Rel. to Nifty 3.4 75.8 82.3
Current 2QFY14 1QFY14
Promoters 38.96 38.96 38.96
FII 18.26 15.28 14.84
DII 18.78 21.23 19.31
Others 24 24.53 26.89
3QFY14 2QFY14 (QoQ)-% 3QFY13 (YoY)-%
432.75 432.37 0.1 332.98 30.0
104.3 100.8 3.5 82.4 26.6
64.2 60.8 5.6 49.5 29.7
24.1% 23.3% 80bps 24.7% (60bps)
14.8% 14.1% 70bps 14.9% (10bps)
2
(5) Persistent system is expecting to see IP led growth at a range of 18-19% in FY14E and
20%+ in FY15E driven by HPCA without any addition of new IPs. At same point of time,
they are also looking to scale strong potential of rCloud after adding new capabilities.
EBITDA Margin
PAT Margin
Company update Book Profit
Persistent management suggests that deal pipeline are looking strong and seeing good
activity and traction in the market across the board. Its focus on some of newer
technologies like cloud, analytics and mobility, M2M, digital transformation are gaining
a lot of traction because of pickup in demand environment. Because of actively
investment in these themes, management is very confident to see healthy growth.
View and Valuation: The company’s focus is shifting greater proportion to IP led services
and company has marquee clientele in cutting-edge technologies around cloud, mobility,
digital and analytics; witnessing faster growth. Considering the company’s premium
valuation, we advice “Book Profit” on the stock. At a CMP of Rs 1059, stock trades at
13.4x FY15E earnings. Our view could be change with management guidance, higher
currency flactuations and post earnings of coming quarter.
Financials
Revenue
EBITDA
We cover Persistent System as one of the few companies in the tier-II with potential to
grow revenue at a range of 18-20%, specially focused on emerging business and
relationship building with marquee clients. Despite better predictability of growth and
attractive visibility of its expansion in new emerging verticals, we advice to book profit
on the stock because of its premium valuation.
Change from Previous
Previous Target Price 960
Upside 1%
PAT
(1) Persistent System is setting up a unit related to product and Product services, named it
“ Accelerite” to manage efficiently. They are taking some of its IP led products into this
Accelerite. We expect that company is able to compete as a product company, which
“Accelerite” will in the market.
(2) Management expects that the overall trends are looking good on Industry per se and
new emerging segment will play a major role for growth. Now, clients are moving into new
changes and focusing into new services and solution.
(3) For 4QFY14E, muted set of growth could be seen and expecting Intellectual Property
(IP) growth this quarter.
(4) The business outlook though is very positive in the sense, and they are seeing good
opportunities, good pipeline growth and many good interesting deals being signed.
Average Daily Volume 12139
Market Data
BSE Code 533179
NSE Symbol
Nifty
Share Holding Pattern-%
6483
Stock Performance
"Persistently innovating.."
CMP 1059
Target Price 1070
On recent management Interview, Persistent System announced its new footing of
dedicated product business unit “Accelerite” to align its business strategy combined with
Products and IP (Intellectual Property) based on SMAC (Social, Mobility, Analytics,
Cloud) platform.
PERSISTENT
1 year forward P/E-x
Rs, Crore
(Source: Company/Eastwind)
Mkt Capital (Rs Crores)
52wk Range H/L 1220/477
Please refer to the Disclaimers at the end of this Report.
4236
"Book Profit"
21st Mar' 14

3
Persistent System.
Operating Metrics
Financials
2QFY12 3QFY12 4QFY13 1QFY13 QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14
Top1 16.0% 15.9% 17.2% 17.8% 20.7% 21.1% 21.6% 21.2% 22.5% 19.8%
Top 5 38.6% 37.0% 36.6% 33.5% 36.3% 37.3% 36.7% 34.7% 36.4% 36.9%
Top 10 49.4% 48.3% 48.8% 45.3% 47.0% 49.4% 47.9% 46.0% 47.3% 46.9%
Onsite - Linear 12665 12387 12603 12789 12863 12772 14014 14567 14283 14510
Offshore - Linear 3803 3778 3895 3898 3978 4032 4143 4111 4109 4179
Yeild per Employee(excld- Trainee) 3208 3247 3350 3345 3746 3817 3769 3602 3919 3934
Total Employee 6900 6706 6628 6536 6370 6719 6970 7144 7457 7602
Attrition 17.7% 17.4% 18.3% 18.9% 16.9% 16.0% 14.4% 14.2% 14.0% 13.2%
Utilization rate %(xclude IP Led ) 73.8% 74.1% 71.7% 74.1% 75.2% 77.3% 72.5% 70.0% 71.7% 72.9%
Billing Rate-USD/ppm
Employee Metrics
Client Concentration
Rs in Cr, FY10 FY11 FY12 FY13 FY14E FY15E
Sales 601.16 775.84 1000.3 1294.5 1666.59 2061.72
Employee Cost 368.74 481.62 599.05 719 899.96 1123.64
Cost of technical professionals 0 30.67 41.68 54 91.66 113.39
Other expenses 86.05 105.24 135.2 218 291.65 366.99
Total expenses 454.79 617.53 775.93 990.78 1283.28 1604.02
EBITDA 146.37 158.31 224.37 303.72 383.32 457.70
Depreciation 33.52 42.39 61.1 78 100.55 93.54
Other Income 11.23 34.44 34.44 34.44 55.00 72.16
EBIT 112.85 115.92 163.27 225.44 282.76 364.16
Interest Cost 0 0 0.00 0.03 0.05 0.05
Profit (+)/Loss (-) Before Taxes 124.08 150.36 197.71 259.851 337.71 436.28
Provision for Taxes 9.05 10.62 55.09 75.37 92.03 119.98
Net Profit (+)/Loss (-) 115.03 139.74 142.62 184.481 245.69 316.30
Growth-% (YoY)
Sales 1.2% 29.1% 28.9% 29.4% 28.7% 23.7%
EBITDA 60.2% 8.2% 41.7% 35.4% 26.2% 19.4%
PAT 74.1% 21.5% 2.1% 29.4% 33.2% 28.7%
Expenses on Sales-%
Employee Cost 61.3% 62.1% 59.9% 55.5% 54.0% 54.5%
Other expenses 14.3% 13.6% 13.5% 16.9% 17.5% 17.8%
Tax rate 7.3% 7.1% 27.9% 29.0% 27.3% 27.5%
Margin-%
EBITDA 24.3% 20.4% 22.4% 23.5% 23.0% 22.2%
EBIT 18.8% 14.9% 16.3% 17.4% 17.0% 17.7%
PAT 19.1% 18.0% 14.3% 14.3% 14.7% 15.3%
Valuation:
CMP 310 366.7 409.2 541 1059 1059
No of Share 4 4 4 4 4 4
NW 639.0 747.1 840.5 1018.3 1212.5 1477.3
EPS 28.8 34.9 35.7 46.1 61.4 79.1
BVPS 159.7 186.8 210.1 254.6 303.1 369.3
RoE-% 18.0% 18.7% 17.0% 18.1% 20.3% 21.4%
P/BV 1.9 2.0 1.9 2.1 3.5 2.9
P/E 10.8 10.5 11.5 11.7 17.2 13.4

TCS
Key facts from Management Commentary:
1M 1yr YTD
Absolute -5.9 29.9 67.2
Rel. to Nifty -13.3 18.8 57.1
Promoters 73.9 73.96 73.96
FII 16.33 16.09 15.67
DII 5.26 5.58 5.90
Others 4.51 4.37 4.47
21294 20977.2 1.5 16069.93 32.5
6686.76 6633.0 0.8 4660.49 43.5
5333.43 4633.3 15.1 3549.61 50.3
31.4% 31.6% (20bps) 29.0% 240bps
25.0% 22.1% 290bps 22.1% 290bps
4
NSE Symbol TCS
Now, revenue in 4QFY14E could be a bit lighter than what we had expected post 3QFY14
earnings. We are not much surprise on comments on weak revenue as well as ramping
down on margin picture for current quarter. We believe that the 1QFY15E, the first
seasonally strong quarter of the year, is the stern litmus test of TCS’s confidence for
FY15E.
(1) For 4QFY14E, revenue would be lower than preceding quarter because of seasonal
impacts, and domestic revenue may clock negative growth largely impacted by upcoming
general election. However, no pressure would be seen on revenue for FY15E.
(2)Margin would decline by 40-50 basis points on cross currency movement and higher
investments. However, company is expecting no hiccups on margin for long- term
prospect.
(3) The company is very optimistic on Europe, US and UK growth could be inline. Latin
America will see good growth. Europe will continue to do well, and the US and the UK will
be close to industry average. Middle East and APAC could be seen on flattish node.
(4) Across vertical, Media and Entertainment has reported better, Telecom remains
challenged. While, there could be some ray of growth because of higher penetration in
Europe.
52wk Range H/L 2384/1300
Mkt Capital (Rs Crores) 433985
Previous Target Price 2360
Upside 23%
Change from Previous 6%
Market Data
BSE Code 532540
Mid Quarter's Analyst Meet: Lower than expected growth for 4QFY14E, but still better
outlook for FY15E than FY14E,
" Strong Fundamentals"
CMP 2041
Target Price 2510
Company update Buy
On Mid Quarter Analyst Meet, TCS also commented on weak revenue growth
momentum for 4QFY14E followed by Infosys due to weak seasonality. Growth in
4QFY14E would be lower than the preceding quarter and margin would decline 40-50
basis points on cross currency movement and higher investments. However, sigh of
relief was seen on FY15E outlook and comments on overall demand environment.
1 year forward P/E
Rs, Crore
(5) Currency will play a small role with marginal impact of cross currency movement and
average currency movement. There may be some accounting changes related to
recognition of forex gains or losses, but it is not likely to be material.
View and Valuation: We continue to remain positive on its demand outlook and margin
profile, the management expects for robust deal pipeline going forward and also expects
to materialize its emerging space like Digital as well as Cloud, Mobility, Analytics and Big
data. We expect, TCS will be star performer in growth sense than other peers. Hence, we
are maintaining 17% (revised from 18%) revenue growth in dollar term for FY14E
because of improved demand environment, while NASSCOM expects 12-14% for the
Industry. At a price of Rs 2041, it is trading at 18x FY15E earnings, We maintain" BUY"
view on the stock with a target price of Rs 2510.
Financials
Revenue
EBITDA
EBITDA Margin
PAT Margin
Nifty 6524
Stock Performance
PAT
"BUY"
20th Mar' 14

5
Considering above growth factors, we are not expecting any major concern with
company's growth. The company is also focussed to drive operational improvements in
the business and aims to expand reach in non-traditional markets and servicelines.
We expect 1% (QoQ) revenue growth in
USD term for 4QFY14E,
Unlike Infosys, TCS comments are based on potential impact from seasonally lower
demand in its biggest market (US and Europe) and weak domestic demand environment.
On previous comments, management had already quoted regarding demand volatility at
home because of upcoming poll.
Comparing with its nearest rival Infosys, TCS is not facing largely with any specific issue.
Despite a weak commentary on 4QFY14E, management is aggressively confident to report
better numbers in FY15E with healthy demand outlook. We are considering following
factors for its growth story in FY15E.
Healthy Demand Environment: TCS is much confident on healthy demand outlook and
expects that FY15E could be better year than FY14E propelled by better discretionary
spending in the US. Management suggests that except India, other emerging markets
(contributes 18-19% of revenue) continue to see healthy demand. Also, in its FY15
revenue growth models, India (contributes 7% of sales) is the only market which TCS
expects to be weak.
TCS.
Is there any setback?
No sign of any ramp down: Management suggests that Continental Europe will likely
grow ahead of overall company growth in FY15E. On vertical front, smaller verticals such
as Energy & Utilities, Transportation and Life sciences & Healthcare might grow ahead of
overall company average. While, its mature verticals like BFSI and Retails could grow
flattish, Telecom continues to face structural issue. Contracts wins from continental
Europe could change the shape of verticals. Still, we are not seeing any project ramp
down.
New emerging business on demand: A part of legacy business, the emerging
opportunities in helping large corporations tap areas such as social media and data
analytics are seen as increasingly contributing to the IT sector's next phase of growth. TCS
and its Indian competitors are winning a significant share of several 2nd and 3rd
generation renewal contracts as western companies look to both cut costs and modernise
their IT infrastructure.
Sales (USD) and Sales growth-%

6
Financials
TCS.
Rs, Cr FY10 FY11 FY12 FY13 FY14E FY15E
Net Sales-USD 6339.0 8187.0 10171.0 11569.0 13531.7 16012.2
Net Sales 30029.0 37325.1 48894.3 62989.5 81731.2 96073.3
Employee Cost 10879.6 13850.5 18571.9 24040.0 30060.7 35547.1
Overseas business expenses 4570.1 5497.7 6800.5 8701.9 11565.0 13930.6
Services rendered by business associates and others 1262.0 1743.7 2391.3 3763.7 4952.9 5764.4
Operation and other expenses 4622.8 5054.3 6694.8 8443.9 10044.8 12009.2
Total Expenses 21334.4 26146.2 34458.5 44949.6 56623.4 67251.3
EBITDA 8694.6 11178.9 14435.8 18040.0 25107.8 28822.0
Depreciation 601.8 686.2 860.9 1016.3 1279.2 1503.7
Amortisation 59.1 49.1 57.1 63.7 57.5 76.7
Other Income 272.0 604.0 428.2 1178.2 1348.6 1921.5
Extra Ordinery Items 0.0 0.0 0.0 0.0 0.0 0.0
EBIT 8033.7 10443.6 13517.9 16960.1 23828.6 27318.3
Interest Cost 16.1 26.5 22.2 48.5 35.9 33.8
PBT 8289.6 11021.2 13923.8 18089.8 25141.3 29206.0
Tax 1197.0 1830.8 3399.9 4014.0 5933.3 7009.4
PAT 7092.7 9190.3 10524.0 14075.7 19208.0 22196.5
PAT (Reported PAT) 7000.6 9068.6 10414.0 13917.4 19208.0 22196.5
Sales-USD 29.2% 24.2% 13.7% 17.0% 18.3%
Sales 8.0% 24.3% 31.0% 28.8% 29.8% 17.5%
EBITDA 21.3% 28.6% 29.1% 25.0% 39.2% 14.8%
PAT 31.8% 29.6% 14.5% 33.7% 36.5% 15.6%
EBITDA 29.0% 30.0% 29.5% 28.6% 30.7% 30.0%
EBIT 26.8% 28.0% 27.6% 26.9% 29.2% 28.4%
PAT 23.6% 24.6% 21.5% 22.3% 23.5% 23.1%
Employee Cost 36.2% 37.1% 38.0% 38.2% 36.8% 37.0%
Overseas business expenses 15.2% 14.7% 13.9% 13.8% 14.2% 14.5%
Services rendered by business associates and others 4.2% 4.7% 4.9% 6.0% 6.1% 6.0%
Operation and other expenses 15.4% 13.5% 13.7% 13.4% 12.3% 12.5%
Tax rate 14.4% 16.6% 24.4% 22.2% 23.6% 24.0%
CMP 780.8 1182.5 1322.0 1563.0 2041.0 2041.0
No of Share 195.7 195.7 195.7 196.0 196.0 196.0
NW 18466.7 24504.8 29579.2 38645.7 49940.0 62991.6
EPS 36.2 47.0 53.8 71.8 98.0 113.2
BVPS 94.4 125.2 151.1 197.2 254.8 321.4
RoE-% 38.4% 37.5% 35.6% 36.4% 38.5% 35.2%
Dividen Payout ratio 28.1% 50.8% 37.5% 41.2% 41.2% 41.2%
P/BV 8.3 9.4 8.7 7.9 8.0 6.4
P/E 21.5 25.2 24.6 21.8 20.8 18.0
Margin -%
Expenses on Sales-%
Valuation
Growth-%

HDFC Bank
741
760
720
3
6
1M 1yr YTD
Absolute 11.8 15.1 15.1
Rel.to Nifty 4.7 4.8 4.8
3Promoters 22.7 22.7 22.7
FII 34.9 33.6 34.9
DII 9.3 9.8 6.6
Others 33.1 33.8 34.2
Financials Rs, Cr
2011 2012 2013 2014E 2015E
NII 10543 12885 15811 18713 22944
Total Income 14878 18668 22664 26604 30835
PPP 7725 9391 11428 14516 15572
Net Profit 3926 5167 6726 8453 9119
EPS 84.4 22.0 28.7 36.0 38.9
7
HDFC Bank Vs Nifty
4.17 lakhs
Nifty 6524
Mkt Capital (Rs Cr)
Stock Performance
In last quarter, HDFC bank has raised FCNR deposits to the tune of $3.4 bn nearly
about Rs.21000 cr through RBI special window which carry interest rate of 3.5%
while normal deposits rate are in the range of 6.5% to 7%. HDFC Bank raised larger
chunk of monies in compare to other banks like SBI and ICICI bank. SBI and ICICI
bank raised monies through FCRN deposits to the tune of $2bn each. Further
incremental foreign deposits with tenure are more than 3 years are exempted from
SLR, CRR and PSL lending. This would help bank to lower cost of fund by 75 bps to
100 bps and hence margin expansion. Bank management guided margin would be in
the range of 4.1% to 4.5% going forward.
Mounting bad loans have major cause of worry; RBI allowed banks to use 33%
of counter cycle, floating provisions for specific provisions
Recently RBI allows banks to use 33% of counter cycle provisioning buffer, floating
provisions for making specific provisions against impaired accounts which would help
bank to make lower provisions and hence boost up earnings. HDFC bank reported
very strong asset quality with GNPA and net NPA stood at 1% and 0.3% at the end
of December quarter. Bank would use counter cycle buffer, floating provisions for
specific provisions and make lower fresh provisions. This would be the result of
boosting up profitability.
Average Daily Volume
Counter cycle provisions and floating provisions are represented as capital reserves
that bank need to build up in good times and can only use for contingencies under
extra circumstance. This is the first time when central bank allows to use since the
reserve were created starting 2010. At the end of quarter all banks reported Rs.1.71
trillion of GNPA, the rise of 39.4% YoY. In a very rough estimate, banking system
has nearly about Rs. 2 trillion in bad loans and another Rs.4 trillion loans are being
restructured pipeline out of total Rs.82 trillion.
Company update HOLD
CMP
Target Price
We have raised our price target to Rs.760/share on account of bank’s likely to
get benefit from FCNR deposits mobilization that it had recently raised. We
value bank in the range of Rs.660 to Rs.760 per share on the back of current
fundamental and prevailing economic scenario. Now the economy is
witnessing some sign of revival and market sentiment boost up on account of
exit poll result. HDFC bank is likely to see earnings boost-up in near term on
account of mobilization of FCNR deposits which would reflect better NII for
being a low cost carrying in nature, recently RBI allow banks to use 33% of
buffer/floating provisions for bad loan and declining of low yielding PSL share
in overall lending.
Previous Target Price
176874
Raised foreign deposits higher amount in comparison to peers; likely to report
better NII for being low cost in nature
Market Data
Upside
750/528
BSE Code 500180
NSE Symbol HDFCBANK
52wk Range H/L
"HOLD"
20th March.,2014

8
Source:Eastwind/Company
HDFC BANK
Share of PSL down sharply; release fund would be deployed in high yield sector
Recently share of PSL in HDFC bank came sharply but bank already met PSL target of
40% which means addition fund would be deployed in high yield segment which would
reflect in NII growth. According to RBI, bank’s need to spend 40% in net advance in
priority sector lending and HDFC bank are among those which have highest share in PSL
in private bank category. Additionally fund raised fund through FCNR deposits with
tenure more than 3 years are exempted from SLR, CRR and PSL means bank would
have higher fund for deploying in sector those are high yield in nature.
Valuation & View
HDFC bank is expected to report better earnings on the back of (a) likely to get benefit
from FCRN deposits mobilization, (b) recent RBI allow bank to use 33% of counter cycle
buffer provisions for specific provisions, this would help bank to make lower provisions
and hence profitability and (c) share of additional PSL lending would be deployed in high
yielding sector. We have raised our price target to Rs.760/share which is upper side of
our valuation band.
Valuation Band

9
HDFC BANK
Financials
Source: Eastwind/ Company
P/L 2011 2012 2013 2014E 2015E
Interest/discount on advances / bills 15085 21124 26822 32002 40213
Income on investments 4675 6505 7820 9311 10952
Interest on balances with Reserve Bank of India 148 137 282 373 373
Others 20 108 141 65 65
Total Interest Income 19928 27874 35065 41751 51603
Others Income 4335 5784 6853 7891 7891
Total Income 24263 33658 41917 49642 59494
Interest on deposits 8028 12690 16321 20281 24337
Interest on RBI/Inter bank borrowings 1336 2253 2889 4571 4278
Others 20 47 44 44 44
Interest Expended 9385 14990 19254 23038 28659
NII 10543 12885 15811 18713 22944
NII Growth(%) 25.7 22.2 22.7 18.4 22.6
Other Income 4335 5784 6853 7891 7891
Total Income 14878 18668 22664 26604 30835
Total Income Growth(%) 20.3 25.5 21.4 17.4 15.9
Employee 2836 3400 3965 4231 5342
Other Expenses 4317 5878 7271 7857 9921
Operating Expenses 7153 9278 11236 12087 15263
PPP( Rs Cr) 7725 9391 11428 14516 15572
Provisions( Incl tax provision) 3799 4224 4701 1751 6453
Net Profit 3926 5167 6726 8453 9119
Net Profit Growth(%) 33.2 31.6 30.2 25.7 7.9
Key Balance Sheet Data
Deposits 208586 246706 296247 355496 426596
Deposits Growth(%) 24.6 18.3 20.1 20 20
Borrowings 14394 23847 33007 50785 47529
Borrowings Growth(%) 11.4 65.7 38.4 54 -6
Loan 159983 195420 239721 299651 365574
Loan Growth(%) 27.1 22.2 22.7 25 22
Investment 70929 97483 111614 114580 156461
Investment Growth(%) 21.0 37.4 14.5 3 37
Eastwind Calculation
Yield on Advances 9.4 10.8 11.2 10.7 11.0
Yield on Investments 6.6 6.7 7.0 8.1 7.0
Yield on Funds 7.7 8.9 9.3 10.1 9.9
Cost of deposits 4.3 5.6 6.0 6.5 6.2
Cost of Borrowings 9.4 9.6 8.9 9.0 9.0
Cost of fund 4.2 5.5 5.8 5.7 6.0
Valuation
Book Value 545.5 127.5 154.3 189.4 222.3
P/BV 4.3 4.1 4.1 3.5 3.0
P/E 27.8 23.6 21.8 18.7 17.3

KPIT Tech.
Key Facts from recent Management Interview to media (on 12
th
March, 2014)
1M 1yr YTD
Absolute -4.7 52.9 -
Rel. to Nifty -12 41.9 -
Promoters 22.53 22.87 24.25
FII 41.96 36.42 32.79
DII 6.99 11.12 10.93
Others 28.52 29.59 32.03
677.93 702.76 (3.5) 567.02 19.6
103.5 108.1 (4.3) 94.1 10.0
66.7 66.7 0.0 48 39.0
15.3% 15.4% (10bps) 16.6% (130bps)
9.8% 9.5% 30bps 8.5% 130bps
10
EBITDA Margin
PAT Margin
We expect that the company would report better earnings with margin ramp up and
signing of larger deals in next couple of quarters. Now, we upgrade our view on the
stock from “Neutral” to “Buy” with a price target of Rs 185. At a CMP of Rs 160, stock
trades at 9.5x FY15E EPS.
Financials
Revenue
EBITDA
PAT
SAP revival and Auto Engineering Services shape; a growth driver in near term,
Upside
BSE Code 532400
Price Performance
Rs, Crore
Incremental revenue by REVOLO and Systime: As per the management comment, its
dream project “REVOLO Technology” REVOLO would play a key role to report an
incremental growth in FY15E. KPIT’s acquisition Systime from Integrated Enterprise
Services (IES) segment would report healthy growth prospects at least over the next
couple of years.
View and Valuation: Impressive organic growth despite inorganic thrust (acquired 10
companies in the last 10 yrs), Potential option value from success of its hybrid engine
venture Revolo (on trial). KPIT has targeted to reach $1bn sales by 2017. Its differentiated
positioning and competitive edge in its focus areas, imperatives to the success of smaller-
sized IT vendors impress to investors.
NSE Symbol KPIT
Stock Performance
3103
"On billion dollar journey"
CMP 160
Target Price 185 SAP business back to growth trajectory: KPIT’s revenue has been facing growth related
issues on account of deficit in SAP business (contributes 24% of sales). Profitability on SAP
business was also a challenge for the company. On 3QFY14 revenues from SAP was down
by 10% (QoQ). However, on the back of deal signings and visible deal pipeline, SAP should
return into growth path in 4QFY14E and FY15E. Considering healthy demand environment
in FY15E, We expect that USD revenue growth in SAP could be in double digits.
Previous Target Price -
Company update Buy
16%
Change from Previous -
Market Data
Expectation of margin improvement: The decline in SAP revenue has impacted the overall
margins, and margin was seen almost flat at 15.4% in 2QFY14 and 3QFY14. We expect that
profitability from SAP business would support to shape up its margin in next couple of
quarters. Even, Utilization rate in SAP has declined to below 90% at onsite and below 70%
mark at offshore. This is expected to improve in FY15E. Management expects to see PAT
margin at double digit by next couple of quarters.
Auto Engineering Services; a growth driver: The global Automotive Industry has
witnessed a strong revival. US industry sales in 2013 finished at 15.6 million vehicles, up
7.6% from 2012, and China became the first country in which more than 20-million
vehicles were sold in any given year. Considering healthy demand outlook in Auto
Industry, KPIT is seeing exports growth above the industry rates, driven by demand for
services around safety systems, intelligent driving, hybrid electric cars, fuel efficiency etc.
Management expects revenues from Auto Engineering to exceed 30% of the company’s
revenues, in the next 3 years, as KPIT expected to achieve the mark of USD1b in
revenues.
6517
Nifty
52wk Range H/L 189/92
"BUY"
19th Mar' 14

11
KPIT Tech
Operating Metrics
Financials
4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14
No. of Customers Added 4 3 4 2 5 6 3 3
No. of Active Customers 169 172 176 178 183 189 192 195
Customers with run rate of >$1Mn 59 65 69 72 78 78 78 78
Top Client – Cummins 19.5% 20.6% 19.7% 19.1% 16.6% 16.8% 16.5% 17.9%
Top 5 Clients 33.0% 36.3% 35.2% 36.8% 35.2% 38.6% 38.0% 38.2%
Top 10 Clients 42.2% 44.0% 43.7% 45.2% 44.0% 47.3% 46.3% 47.6%
DSO 90 75 75 70 75 77 75 76
Total Employee 7719 7873 8111 8286 8321 8456 8816 9136
Onsite Utilization 94.5% 94.7% 94.5% 92.8% 94.3% 94.2% 92.4% 88.1%
Offshore Utilization 74.3% 74.1% 74.7% 72.9% 74.1% 73.4% 72.9% 71.3%
Client Metrics
Client Concentration
Employee Metrics
Rs, Cr FY10 FY11 FY12 FY13 FY14E FY15E
Net Sales-USD 153.76 224.07 306.71 410.46 445.78 535.96
Net Sales 731.64 987.05 1500.00 2238.63 2692.54 3215.75
Employee Cost 265.92 529.95 771.78 1140.79 1378.58 1640.03
Other expenses 304.70 308.82 511.97 762.32 902.00 1061.20
Total Expenses 570.62 838.77 1283.75 1903.11 2280.58 2701.23
EBITDA 161.02 148.28 216.25 335.52 411.96 514.52
Depreciation 30.80 41.12 44.49 47.16 54.42 67.93
Other Income 1.20 6.74 13.82 11.74 12.12 24.12
Extra Ordinery Items -26.45 0.00 10.05 -1.30 -21.05 16.08
EBIT 130.22 107.16 171.76 288.36 357.54 446.59
Interest Cost 2.74 3.78 7.32 13.99 24.31 24.56
PBT 128.68 110.12 178.26 286.11 345.35 446.15
Tax 16.91 15.49 43.67 76.55 96.70 122.69
PAT 111.77 94.63 134.59 209.56 248.65 323.46
Sales-USD -11.7% 45.7% 36.9% 33.8% 8.6% 20.2%
Sales-INR -7.8% 34.9% 52.0% 49.2% 20.3% 19.4%
EBITDA -12.2% -7.9% 45.8% 55.2% 22.8% 24.9%
PAT 169.6% -15.3% 42.2% 55.7% 18.7% 30.1%
EBITDA 22.0% 15.0% 14.4% 15.0% 15.3% 16.0%
EBIT 17.8% 10.9% 11.5% 12.9% 13.3% 13.9%
PAT 15.3% 9.6% 9.0% 9.4% 9.2% 10.1%
Employee Cost 36.3% 53.7% 51.5% 51.0% 51.2% 51.0%
Other Exp 41.6% 31.3% 34.1% 34.1% 33.5% 33.0%
Tax rate 13.1% 14.1% 24.5% 26.8% 28.0% 27.5%
CMP 115.00 168.05 122.90 99.0 160.0 160.0
No of Share 7.90 8.70 17.80 19.28 19.28 19.28
NW 387.11 603.19 712.55 1036.23 1269.09 1570.00
EPS 14.15 10.88 7.56 10.87 12.90 16.78
BVPS 49.00 69.33 40.03 53.75 65.82 81.43
RoE-% 28.9% 15.7% 18.9% 20.2% 19.6% 20.6%
Dividen Payout ratio 6.4% 6.8% 4.9% 7.9% 6.3% 7.0%
P/BV 2.35 2.42 3.07 1.84 2.43 1.96
P/E 8.13 15.45 16.25 9.11 12.41 9.54
Valuation
Expenses on Sales-%
Margin -%
Growth-%

ACC Ltd.
1253
1257
1257
0%
0%
500410
19634
9817
6063
Holcim eyeing Jaypee Group's cement grinding plant in Panipat
1M 1yr YTD
Absolute -3.5 -22.3 -21.0
Rel. to Nifty -1.9 -24.4 -22.8
Cureent 3QCY13 2QCY13
Promoters 50.3 50.3 50.3 JP Associates looks to exit JV with SAIL
FII 20.0 20.9 19.5
DII 12.9 11.9 11.7
Others 16.8 16.9 18.6
Management Quotes :
Financials : Q4CY13 Y-o-Y % Q-o-Q % Q4CY12 Q3CY13
Net Revenue 2792 -12.2 8.6 3180 2570
EBITDA 361 -9.3 26.2 398 286
Depriciation 153 -3.2 6.3 158 144
Interest Cost 12 -55.6 9.1 27 11
Tax -36 -190.0 -170.6 40 51
PAT 278 16.3 129.8 239 121
(In Crs)
12
Stock Performance-%
1 yr Forward P/B
Holcim Cements has expressed interest in the grinding unit which has an annual capacity
of 1.5 million tonnes per annum and the talks are at a preliminary stage. Holcim wants to
expand its presence in North India through this strategic asset and will take a call if this
potential deal can be routed through ACC cements.ACC Cements has a cement plant
nearby in Himachal Pradesh and if JP's grinding unit is absorbed, it would be beneficial
logistically and even in terms of costs.
JP Associates,looking to sell its entire stake in its cement joint ventures with SAIL to cut
down its debt.The company is likely to part with its 74% stake in Bhilai and Bokaro
cement plants that together have an installed capacity of 4.3 mtpa. As per the story , the
company is eying around Rs. 2900 crore from the deal with cement major ACC.The deal
with ACC if it happens would imply enterprise value of USD 147 per MT as against USD
127 per MT it got for Gujarat plant sale.
52wk Range H/L 1355/912
CMP
Upside
Result Update Book Profit Nearly we saw a upward rally in stocks due to the forecasting of a stable government
after election by the market players. The sentimental effect on market is on positive side
,hence the low valued stock like ACC took very less time like one month to come to its
near fare value, which we had estimated for a medium term target.
No doubt the stock's fundamentals are good and also available at a cheaper rate
comparing to its early trade . In the previous one month the stock performed well &
recover 20-22% from its estimated low of CY2013. We didn't expected this rise to be so
fast.The CMP was estimated for a medium term target price looking at its earnings and
fundamentals . How ever the target price got achieved few days back. we believe the
stock's fundamental is still good and price too cheap also , but for the earning
upgradation and revised target price we would like to see the 1st quarter earnings, hence
we recommend Book Profit on the stock at a price range between Rs.1253 to Rs.1310.
NSE Symbol
Target Price
Nifty
Market Data
BSE Code
ACC
Source - Comapany/EastWind Research
According to Management the economic environment in the country was sluggish, thus
impacting the demand for cement and concrete. As a result, the company's cement
volumes remained almost flat. The company appears not enthusiastic for demand growth
going forward. Based on current demand indications, we do not foresee any significant
improvement in the cement.
Average Daily Volume (Nos.)
"Book
Profit"
18th March' 14

Outlook
Valuation And Recommendation
Company Description :
Margin Gap
Margin Gap
CY11 CY12 CY13 CY14E
10237 11358 11169 13027
191 263 219 219
10428 11621 11389 19723
2199 2384 2384 0
1940 2219 2299 0
8316 9162 9540 10942
1921 2197 1848 2084
510 569 584 639
97 115 52 50
215 391 132 323
1276 1050 1094 1292
17.7 18.8 13.8 15.3
13
ACC Limited (ACC) is engaged in manufacture of cement & ready mixed concrete. The
Company has grinding plants in Karnataka and clinkering line in Maharashtra. The
Company’s subsidiaries include ACC Mineral Resources Limited, Lucky Minmat Limited,
Bulk Cement Corporation (India) Limited, National Limestone Company Private Limited
and Encore Cement and Additives Private Limited. The Company is subsidiary of Ambuja
Cement India Private Limited.
Cement prices witnessed an increase during Oct-Nov,13 but also witnessed a sharp fall
during Dec,13 which has contributed towards lower average realizations for the year for
the company.Further,with a strong balance sheet with zero debt and better dividend
yield of 3%,we continue to remain positive despite near term challenges.We revise our
estimates downwards to factor in lower demand growth scenario. At current price of Rs
1253, stock is trading at 2.8x P/B and 2.8x P/B on CY14 estimates.Valuation looks good
for this company,but we would like to see the 1st quarter for earning upgrading hence
we recommend Book Profit on the stock at a price range between 1253 to 1310.
Company has made several capacity expansion plans in the region. ACC is replacing the
existing facilities at Jamul, Chhattisgarh with a clinker plant with an annual production
capacity of 2.8 MT and local grinding capacity of 1.1 MT of cement, while a new plant
with annual capacity of 2.7 MT is scheduled to be built in Kharagpur. The capacity
expansion plant will increase the company's total cement production capacity to 35 MT
from the existing 30 MT.On a QoQ basis, the EBITDA/tonne improved 10.4% due to an
improvement in realisations & comparatively lower increase in total expenditure/tonne,
it shows a positive view for the further quarters.onsidering the expansion plans we
expect 4% growth in sales volume and 10% growth in realization for CY14.
Interest Cost
Total Income
Depriciation
ACC Ltd.
P/L PERFORMANCE
Net Revenue from Operation
Other Income
Cement Sales Volume
Cement Realization
Cement Realization
Cement Realization
Per Ton Analysis
Per Ton Analysis
Cement Realization
Tax
PAT
ROE%
Power and fuel
Freight and forwarding
Expenditure
EBITDA

CY10 CY11 CY12 CY13
6281 6979 7372 7813
510 506 85 0
14 0 0 0
188 126 157 89
1581 816 661 642
1466 1051 1227 1081
11041 11921 11928 12101
77 48 39 40
5230 6359 5893 6040
1564 370 314 322
283 461 566 880
926 1113 1134 1122
249 266 303 397
1086 1660 681 506
162 279 325 340
11041 11921 11928 12101
CY10 CY11 CY12 CY13
3.2 3.1 3.6 2.7
57.4 68.7 73.8 57.6
3.0 2.6 2.7 3.6
19.1 8.0 5.8 5.7
19632 20180 26240 20296
18.7 16.5 19.4 19.2
12.7 10.5 11.9 12.5
2.8 2.5 2.1 2.7
14.6 15.2 16.3 12.3
0.1 0.1 0.0 0.0
1.0 1.3 1.4 1.4
Trading At :
14
Long-term provisions
Cash and bank balances
ACC Ltd.
Total equity
Long-term borrowings
Short-term borrowings
B/S PERFORMANCE
Trade receivables
Short-term loans and advances
RATIOS
Total Assets
Short-term provisions
Total liabilities
Inventories
Long-term loans and advances
Capital work-in-progress
Trade payables
EV
Creditors to Turnover%
P/E
EV/EBIDTA
P/B
EPS
Debtor to Turnover%
Intangibles
Tangible assets
Debt/Equity
Current Ratio
Dividend Yield%
ROCE%

1214
1287
1094
6
18
1M 1yr YTD
Absolute 23.7 7.4 7.4
Rel.to Nifty 15.3 -2.0 -2.0
3Promoters 66.7 64.1 64.1
FII 11.0 13.2 13.6
DII 15.4 15.3 15.6
Others 6.9 7.4 6.7
Financials Rs, Cr
2011 2012 2013 2014E 2015E
NII 10739 10734 13866 17734 21111
Total Income 42252 18237 22212 27035 30413
PPP 10950 10386 13199 16762 18856
Net Profit 6093 6465 8325 10658 11955
EPS 52.9 56.0 72.2 92.3 103.6
15
ICICI Bank Vs Nifty
3.58 lakh
Nifty
Stock Performance
52wk Range H/L
140141
Asset quality continued to be concern, impairment asset were higher at QoQ,
Management remained cautious on asset quality
On asset quality front, bank saw some deterioration as impaired assets (GNPA +
Restructure Asset) to loan increased from 5.3% to 5.7% sequentially. According to
bank’s management it would remain at elevated level going forward. However bank
has lower exposure towards corporate segment where slippage risk is relatively high
in current scenario. Total loan in corporate debt restructure was to tune of 30
bn(0.9% of loan). However GNPA showed some strength sequentially and was
improved slightly to 3.07% from 3.10% while net NPA stood at 0.94% versus 0.85%
due to lower loan loss provision made. But provision coverage ratio remained at 70%
level, so nothing to worry about.
Target Price
In our earlier note dated 31st Jan.2014 in which we have given the price target
of Rs.1094 lower side of valuation band. Now the stock reached to the level of
Rs.1214 but still below of our upper side of valuation band. We value bank in
the range of Rs. 836 to Rs.1287 depending upon the fundamental and return
ratios. Since our result updated report, the stock has given the return of 24%,
now we advice our investor to hold the stock as bank has potential to reached
at upper side of valuation band.
CMP
Mkt Capital (Rs Cr)
Strong operating performance led by healthy balance sheet growth
ICICI Bank reported revenue growth of 23.5% YoY led by strong operating
performance and healthy non interest income. Strong growth in NII was led by
margin expansion on year on year basis which further led by strong growth in loan
and higher deposits base. Bank’s loan grew by 16% YoY supported by retail and
oversea loan while deposits grew by 11%. Credit deposits for the quarter was 102%
largely liquidity came from borrowing fund but strong base of CASA kept cost of fund
under control. Operating cost increased by 15.7% YoY but CI ratio remained under
control. Operating leverage increased sequentially due to higher expansion towards
branch expansion. Overall it remained in the range of 0.40% to 0.45%.
ICICI BANK
Market Data
Upside
758
BSE Code 532174
NSE Symbol ICICIBANK
Company Update HOLD
"HOLD"
18th March 2014

16
ICICI BANK
Margin expansion led by stable NIM and healthy loan growth
ICICI bank NIM was stable at 3.32% sequentially led by stable NIM and retail loan.
Bank’s CASA was strong at 43%+ on which current account growth of 13.2% and saving
account growth of 17.5% ahead of private sector banks. Overall CASA reported 16%
YoY growth and in percentage to total deposits, it stood at 42.9% at the end of 3QFY14.
Bank’s loan grew by 16% YoY led by retail loan which grew by 22% YoY and share in
retail loan increased from 35% to 37% at the end of December quarter. Loan growth from
oversea branches was also supportive, registered growth of 24% YoY. Share of oversea
loan composition was 28% at the end of quarter, an increase of 200 bps YoY.
Growth of CASA trend

17
ICICI BANK
ICICI Bank NIM remain healthy
Healthy loan growth led by retail and oversea loan growth
Non Interest Income
ICICI Bank’s total income grew by 23.5% YoY was due to non interest income growth of
26.5% YoY in fee income registered growth of 12.8% YoY. Dividend and other income
growth was higher at 85% owing to higher dividend income from life insurance subsidiary
whereas treasury income grew by 78% YoY. Overall healthy growth in non interest
income was due to bank saw reversal of M2M provisions on bond and equity portfolio.
Composition of non interest income to total revenue
Source: Company/Eastwind
NIM was stable at sequnetial basis led by
strong loan growth and CASA base
Loan Composition (Rs Cr) 3QFY13 2QFY14 3QFY14 YoY Gr. QoQ Gr.
Domestic Corporate 98074 103598 104779 6.8 1.1
Retails Business 100081 115039 122076 22.0 6.1
Overseas Branches 73699 84531 91474 24.1 8.2
SME 14912 14618 14303 -4.1 -2.2
% of loan
Domestic Corporate 34.2 32.6 31.5
Retails Business 34.9 36.2 36.7
Overseas Branches 25.7 26.6 27.5
SME 5.2 4.6 4.3
Non Interest Income 3QFY13 2QFY14 3QFY14 YoY Gr. QoQ Gr.
Core fee income 17.71 19.94 19.97 12.8 0.2
Dividend & Other Income 1.93 2.51 3.57 85.0 42.2
Treasury Income 2.51 -0.79 4.47 78.1 -
Rs.Cr 1QFY11 2QFY11 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14
NII 1991 2204 2312 2510 2411 2506 2712 3105 3193 3371 3499 3803 3820 4044 4256
OtherIncome 1681 1578 1749 1641 1643 1740 1892 2228 1880 2043 2215 2208 2484 2166 2801
TotalIncome 3672 3782 4061 4150 4054 4246 4604 5333 5073 5414 5714 6011 6305 6210 7057
%ofOtherIncometoNII 84.4 71.6 75.6 65.4 68.1 69.4 69.8 71.8 58.9 60.6 63.3 58.1 65.0 53.6 65.8

18
ICICI BANK
Operating Expenses and Employee Cost
Total expenses increased by 15.7% YoY in which employee cost and other operating
cost were increased by 6% and 23% YoY respectively. Cost to income ratio was
remained flat at 37.1% sequentially while operating leverage (operating cost to total
asset) increased slightly from 0.41% to 0.46% but remained under control. This was due
to branch expansion.
Asset quality remain under pressure
Bank reported deterioration in asset quality (GNPA) in sequential basis by 3.7% in
absoluter term. In percentage to gross advance, GNPA stood at 3.07% versus 3.1% in
previous quarter (marginally improved).
Sequentailly cost to income ratio remained
satble. Management guided CI ratio would be
below of 40% in FY14.
Operating leverage remain ed stable but
sequentially up led by higher operating
expansion largely due to branch expansion
cost
Operating leverage increased sequentially but remained under control. The rise of
operating leverage was due to increased expansion towards branch expansion.

19
ICICI BANK
Provisions were declined by 0.6% QoQ taking net NPA increased by 15.3% QoQ. In
percentage to net advance, this ratio stood at 0.94% versus 0.85% in previous quarter.
Lower provisions made PCR to 70.1% versus 73.1% in previous quarter. Bank’s impair
asset (GNPA+ Restructure asset) were 5.7% of advance at the end of quarter from 5.3%
in previous quarter and 5% in last quarter. Bank management guided asset quality stress
would remain at elevated level. According to the company, corporate debt restructure
pipeline presently is Rs.30 bn which is 0.9% of loan.
Asset quality remained concern. Management
expects it to remained elevated level going
forward. Outstanding CDR at 0.9% of loan
Valuation & View
At the current price of Rs.1214, bank is trading at 1.8 times of FY14E book value. We
value bank in the range of Rs.836 to Rs.1287 depending upon fundamental and return
ratio. Our base case assumption was deposits growth of 12%, loan growth of 17% in
FY14 and margin at current level. Improvement and deterioration from base and bull case
would driven the price movement in either side. We advance our clients to hold the stock
as bank has potential to reach upper side of value band.
Valuation Band
1 Yr forward P/BV 1 Yr forward P/E

20
ICICI BANK
Financials & Assuption
Quarterly Result 2011 2012 2013 2014E 2015E
Interest/discount on advances / bills 19098 22130 27341 31646 34992
Income on investments 9181 9684 11009 11785 13220
Interest on balances with Reserve Bank of India 469 491 543 184 184
Others 1334 1238 1182 946 946
Total Interest Income 30081 33543 40076 44561 49342
Others Income 31513 7503 8346 9302 9302
Total Income 61595 41045 48421 53863 58644
Interest on deposits 11315 14304 16889 18217 20402
Interest on RBI/Inter bank borrowings 1683 1469 2087 0 0
Others 6345 7035 7234 10146 11364
Interest Expended 19343 22808 26209 27812 28840
NII 10739 10734 13866 16749 20502
Other Income 31513 7503 8346 9302 9302
Total Income 42252 18237 22212 26051 29804
Employee 4393 3515 3893 4451 5096
Other Expenses 26910 4335 5120 5441 6229
PPP( Rs Cr) 10950 10386 13199 16159 18478
Provisions 4631 1583 1803 2592 2853
PBT 0 8803 11397 13567 15626
Tax 0 2338 3071 4071 4688
Net Profit 6093 6465 8325 9496 10938
Balance Sheet
DEPOSITS 259106 255500 292,614 321,875 360,500
Deposits Growth 7.3 -1.4 14.5 10.0 12.0
Borrowings 125839 140165 145,341 158,535 177,560
Borrowings Growth(%) 8.8 11.4 3.7 9.1 12.0
Investment 209653 159560 171,394 187,360 209,843
Growth(%) 12.5 -23.9 7.4 9.3 12.0
Advances 256019 253728 290,249 339,592 380,343
Growth(%) 13.4 -0.9 14.4 17.0 12.0
Eastwind Calculation
Yield on Advances 7.5 8.7 9.4 9.3 9.2
Yield on Investments 4.7 6.4 6.7 6.3 6.3
Cost of deposits 4.4 5.6 5.8 5.7 8.0
Cost of Borrowings 6.4 6.1 6.4 6.4 6.4
Cost of fund 5.0 5.8 6.0 0.0 5.9
Valuation
Book Value 480 524 578 643 682
P/BV 2.3 1.7 1.5 1.6 1.5
P/E 5.5 7.3 9.4 9.2 10.6

AXIS BANK
1385
1340
1220
-3
10
1M 1yr YTD
Absolute 25.2 -1.9 -1.9
Rel.to Nifty 17.9 -11.1 -11.1
Promoters 33.9 33.9 33.9
FII 43.2 43.4 40.7
DII 9.7 4.9 8.8
Others 13.2 17.8 16.6
Financials Rs, Cr
2011 2012 2013 2014E 2015E
NII 6566 8026 9666 12224 14775
Total Income 11238 13513 16217 19146 21697
PPP 6377 7413 9303 11206 12367
Net Profit 3340 4224 5179 5826 6934
EPS 81.4 102.2 110.7 124.2 148.2
21
Stock Performance
Target Price
Upside
Nifty 6493
Mkt Capital (Rs Cr)
Axis Bank Vs Nifty
26.18 cr
532215
NSE Symbol
Axis bank’s low cost deposits CASA has grown faster than peers like ICICI bank
and is stable at 43% at the end of 3QFY14. Bank’s management expects it to reach
at 46% in FY15E which would help to keep cost of deposits under control and hence
margin expansion. In loan growth parameter, Axis bank expects loan growth higher
than industry growth by 2%. Incremental loan growth would come from SME and
retail sector while corporate loan book is expected to remain sluggish. Bank’s capital
adequacy ratio is close to 17% in which tier -1 capital of 12.5% much healthier than
peers indicating no need to raise money for long tenure in near term. ROA at pre
provisioning profit is at 3% indicating strong capability to delivered profit once asset
quality issue resolve.
Stress loan (GNPA+ Restructure asset) is remained at 3.7% of advances but it might
go up as bank has significant exposure in power (5.54%) and Infrastructure (7.33%)
where slippage risk is relatively high in present economy scenario. Provision
coverage ratio reported by bank is 78% with technical write off which would provides
some cushion on earnings. Axis bank still have 46% of loan exposure in large
corporate where profitability uncertain due to ongoing recession. Therefore on asset
quality front, bank would still have to face tough time as per our view.
We believe market sentiment in recent days are boosted up on the hope that BJP
led NDA would come to power after the general election and revive economy. The
domestic equity market is supported by opinion poll result which suggests BJP led
NDA coming to power after the forthcoming election. Over the last few months, the
estimated numbers of seat, the NDA may win has increased from 165-175 to 220-
230 seats. The prime ministerial candidate of NPA Narendra Modi is known for his
development in Gujarat. Domestic as well as foreign investors are in hope that Indian
economy would come at track and business opportunity would start again. Banking
stocks are rallied more than other sectors in hoping of reducing fresh NPA creation.
64823 Domestic equity market boost-up by economy revival sentiment
Key positive trigger
Key negative trigger
Company Updated BOOK PART
PROFIT
CMP
In last one month, Axis Bank has outperformed Bank Nifty and CNX Nifty by
6% and 18% respectively and is now trading at more than 1.7 times of FY14E
book value which is above of our upper side of valuation band. We value bank
in the range of 1.5 to 1.7 times of book lower than its peers group largely due
to some exposure in stress sector specially in infra and power companies
where slippage risk are relatively high. We value bank in the range of Rs.1220
to Rs.1340 per share that implying book value multiple of 1.5 to 1.7 based on
current fundamental and return ratios. The rise of stock price is supported by
opinion poll result which suggests BJP led NDA would come in power. NDA
prime ministry candidate Narendra Modi is perceived by foreign investor as a
decisive and development making leader and would rescue economy.AXISBANK
Market Data
BSE Code
"BOOK PART
PROFIT "
14th March, 2014

22
Quarterly Result
AXIS BANK
Source: Eastwind/Company
QuarterlyResult 3QFY14 2QFY14 3QFY13 %YoYGr %QoQGr 3QFY14E Variation
Interest/discountonadvances/bills 5557 5394 4907 13.3 3.0 5748 3.4
Incomeoninvestments 2110 2143 2014 4.8 -1.5 2235 5.9
InterestonbalanceswithReserveBankofIndia 49 35 25 97.7 39.4 35 -29.2
Others 73 37 19 277.1 95.6 38 -47.4
TotalInterestIncome 7789 7609 6965 11.8 2.4 8056 3.4
OthersIncome 1644 1766 1615 1.8 -6.9 1774 7.9
TotalIncome 4628 4703 4110 12.6 -1.6 4780 3.3
InterestExpended 4805 4672 4470 7.5 2.8 5049 5.1
NII 2984 2937 2495 19.6 1.6 3006 0.8
OtherIncome 1644 1766 1615 1.8 -6.9 1774 7.9
TotalIncome 4628 4703 4110 12.6 -1.6 4780 3.3
Employee 655 644 615 6.5 1.7 0
OtherExpenses 1358 1309 1134 19.8 3.8 0
OperatingExpenses 2013 1953 1749 15.1 3.1 2008 -0.3
PPP(RsCr) 2615 2750 2362 10.7 -4.9 2772 6.0
Provisions 202 687 387 -47.7 -70.5 752 271.4
PBT 2413 2062 1975 22.2 17.0 2020 -16.3
Tax 808 700 628 28.8 15.5 687 -15.0
NetProfit 1604 1362 1347 19.1 17.7 1333 -16.9
BalanceSheetDate
NetWorth 37649 36224 27027 39.3 3.9 37558 -0.2
Deposits 262398 255365 244501 7.3 2.8 272935 4.0
Loan 211467 201303 179504 17.8 5.0 214892 1.6
Assetqualtiy(RsCr)
GNPA 3008 2734 2275 32.2 10.0 -
NPA 1003 838 679 47.8 19.7 -
%GNPA 1.4 1.4 1.3 -
%NPA 0.5 0.4 0.4 -

23
AXIS BANK
FINANCIALS & ASSUPTION
Source: Eastwind/Company
Income Statement 2011 2012 2013 2014E 2015E
Interest Income 15155 21995 27183 31198 38490
Interest Expense 8589 13969 17516 18974 23716
NII 6566 8026 9666 12224 14775
Change (%) 31.2 22.2 20.4 26.5 20.9
Non Interest Income 4671 5487 6551 6922 6922
Total Income 11238 13513 16217 19146 21697
Change (%) 25.3 20.2 20.0 18.1 13.3
Pre Provision Profits 6377 7413 9303 11206 12367
Change (%) 22.4 16.2 25.5 20.5 10.4
Provisions 3033 3189 4124 2402 2461
PBT 3345 4224 5179 8804 9906
PAT 3340 4224 5179 5826 6934
Change (%) 34.8 26.5 22.6 12.5 19.0
Balance Sheet
Deposits( Rs Cr) 189166 219988 252614 290506 334081
Change (%) 34 16 15 15 15
of which CASA Dep 77758 91412 112100 124917 143655
Change (%) 18 18 23 11 15
Borrowings( Rs Cr) 26268 34072 43951 51266 58956
Investments( Rs Cr) 71788 92921 113738 129873 149354
Loans( Rs Cr) 142408 169760 196966 228481 265037
Change (%) 36 19 16 16 16
Valuation
Book Value 460 549 708 813 942
CMP 1404 1146 1304 1174 1174
P/BV 3.1 2.1 1.8 1.4 1.2

Narnolia Securities Ltd
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email: research@narnolia.com,
website : www.narnolia.com
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Persistent System advised to book profit despite growth visibility

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