*
* Sectors in order of premium /
discount to historical averages
BEST PERFORMERS MoM (%)
WORST PERFORMERS MoM (%)
Highlights of July edition
Nifty up 5.8% in July – highest MoM
rise in 16 months
PSU Banks, Telecom, Metals, and
Cement top outperformers
Consumer only sector to deliver
negative returns in July
Midcaps underperform large caps by
1.4% in July
Research & Quant Team (Deven@MotilalOswal.com); +91 223982 5440
August 2017

Contents
Strategy:
Markets continue upward momentum
Valuation deep dive for the month:
Metals
Indian equities:
Nifty, sector performance and key valuation metrics
Global equities:
Performance and valuation snapshot
Valuations:
Nifty/Midcap companies
Sector highlights:
Overview and sector valuations
NOTES:
Prices as on July 31, 2017
BULL icon:
Sectors trading
at a premium to
historical averages
BEAR icon:
Sectors trading
at a discount to historical
averages
AUTO
BANKS / FINANCIALS
CAPITAL GOODS
CEMENT
CONSUMER
HEALTHCARE
MEDIA
METALS
OIL & GAS
RETAIL
TECHNOLOGY
TELECOM
UTILITIES
Valuations are on
12-month forward basis
unless otherwise
mentioned
Sector valuations are
based on MOSL coverage
companies
Global equities data
sourced from Bloomberg.
Sensex valuations based
on MOSL estimates
Investors are advised to refer to important disclosures made at the end of this report.
BULLS & BEARS | August 2017
2

Strategy:
Markets continue upward momentum
Highest monthly rise in 16 months:
The Nifty rallied 5.8% in July, the highest monthly return in 16 months. The key drivers were: good progress of the
monsoon, smooth GST implementation, and continued liquidity inflow. Midcaps (+4.4% in July) underperformed the Nifty, but the valuation premium
v/s large caps remained stable at 14% (7% in May). July witnessed inflow of USD0.4b from FIIs and USD1.8b from domestic MFs. In YTDCY17, India has
received MF inflows of USD8.1b, more than full year inflows of CY16 (USD7.1b). FII inflows for YTDCY17 stand at USD8.7b, more than the cumulative
CY15 and CY16 inflows of USD6.3b. Currency remains stable at INR63-65/USD, benefiting from strong flows and stronger macros. RBI has announced a
25bp repo rate cut in its meeting yesterday (August 02, 2017), acknowledging the muted inflation trends and normal monsoons. Politically, NDA got a
major boost in July, with Bihar Chief Minister, Mr Nitish Kumar breaking alliance with RJD and forming a new government in alliance with BJP. This
augurs well from the Rajya Sabha arithmetic perspective, as it bolsters the government’s numbers in the Upper House.
No big surprises in 1QFY18 results yet; GST implementation creates some volatility:
The government has implemented GST from July 01, 2017, and
so far, it has been a smooth exercise, barring minor hiccups. The de-stocking ahead of GST has impacted volumes in sectors like Consumer
Staples/Durables/Autos/NBFCs, but this was anticipated. The 1QFY18 earnings season has been in line so far, with 101 MOSL coverage companies
having declared their results. Sales, EBITDA and PAT have grown at 8.7%, 4.7% and 0.7% against expectations of 7.5%, 6.2% and 4.3%, respectively.
However, earnings downgrades continue, with 11/33 companies seeing earnings upgrade/downgrade of 5%+, so far. Nonetheless, our Nifty FY18 EPS
forecast remains unchanged at INR496.
India among the best-performing markets in YTDCY17:
For CY17 YTD, MSCI EM (+24%), India-Sensex (+22%), Korea (+19%), Taiwan (+13%) and US
(+10%) were the best performers among the key global markets in local currency terms. On the other hand, Russia (-15%) delivered negative returns.
Over the last 12 months, MSCI EM (+22%) has outperformed MSCI India (+13%). However, in the last five years, MSCI India has outperformed MSCI
EM by 93%.
Sectoral performance trends; Consumer underperforms:
PSU Banks (+13%), Telecom (+10%), Metals (+9%) and Cement (+9%) were the top
outperformers. Consumer (-3%) is the only sector to deliver negative returns for July. In this edition of ‘Bulls & Bears’, we take a deep dive into
valuation metrics of the Metals sector.
Waiting for micros to converge with macros:
The Nifty has delivered 23% returns in YTDCY17 and is among the best performers. GST implementation
has been smooth and RBI has delivered another rate cut, adding to the overall buoyant sentiment. While India’s macros are as strong as ever, these
have not yet converted into healthy micros (consistent and sustainable earnings growth). Meanwhile, valuations have re-rated, thanks to strong
macros and consistent decline in cost of equity, coupled with incessant inflows from DIIs and FIIs. At the current trailing P/E of 23x and forward P/E of
19x, we see limited triggers for further re-rating, unless accompanied by earnings revival. Management commentaries in 1QFY18 so far have been
mixed, with B2C companies talking about pick-up, as the trade re-stocks. Meanwhile, provisions remain elevated in BFSI, with no meaningful
improvement in asset quality . Our
Contrarian Investing Thematic Study
highlights a few frameworks on stock selection in a market characterized by
rich valuations and deluge of liquidity, and offers several Contrarian Buy ideas across sectors.
BULLS & BEARS | August 2017
3

Valuation deep dive for the month: Metals
Metal prices and the earnings of metal producers are highly cyclical
and volatile. Superimpose the capex cycle of producers, and the
equity value gyrates even more. Hence, valuations based on P/E(x)
have always been unreliable.
A lot of investors have been relying on P/B for valuation. As Indian
companies started acquiring overseas entities in 2016, the
translation losses/gains and impairments started eroding the
reliability of P/B. Now, book value (BV) has completely lost its
historical meaning because of fair valuation under Ind-AS.
Despite volatility in earnings, EV/EBITDA is the only reliable way of
valuing metal businesses, in our view.
Before 2016, metal stocks used to trade at 3-5x one-year forward
EV/EBITDA, as the memory of a long recession (1997-2002) was
fresh in the minds of investors.
Aggressively growing Chinese appetite for commodities and ensuing
consolidation among large names led to re-rating of the sector.
Though EV/EBITDA has touched the extremes of 10x and 4x even
after 2016, it has usually ranged from 6x to 7x on estimated EBITDA.
Indian metal companies invested heavily on growth capex between
2009 and 2015, which bloated debt/EBITDA in 2015, which is
reflected in individual companies’ EV/EBITDA ratios as well.
We are again seeing re-rating of metal stocks on recovery in earnings
since 2016 and deleveraging in 2017 on end of capex cycle.
The metals sector still trades at significant discount to the Sensex as
reflected in P/B. P/B can still be trusted for comparison because of
similar errors in the BV for both the Sensex and the metals sector.
Metals: Trend in Net Debt/EBITDA – one-year forward
6.0
4.5
3.0
1.5
0.0
Net Debt/ EBIDTA (x)
5 Yr Avg (x)
10 Yr Avg (x)
15 Yr Avg (x)
2.2
1.7
3.1
2.4
Metals : Trend in EV/EBITDA – one-year forward
13.5
10.5
7.5
4.5
1.5
Metal EV/EBDITA (x)
5 Yr Avg (x)
10 Yr Avg (x)
15 Yr Avg (x)
7.3
7.2
6.1
6.8
Valuation trend v/s Sensex
6.0
4.5
3.0
1.5
0.0
Metals P/B (x)
Sensex PB (x)
2.8
1.5
BULLS & BEARS | August 2017
4

Key highlights
July 2017 saw the Nifty hitting record-high levels before closing at 10,077, delivering a return of 5.8% MoM.
The index is up 23% in CY17 so far. We note that the macro backdrop remains best in recent times, with inflation
under control, twin deficits in check, stable currency, and policy momentum intact (evident from the smooth and
timely GST implementation).
Nine sectors outperformed the benchmark in July. PSU Banks (+13%), Telecom (+10%), Metals (+9%) and Cement
(+9%) were the top outperformers. Consumer (-3%) is the only sector to deliver negative returns for July.
Indian equities:
Nifty up 5.8% in July – highest MoM rise in 16 months
Stock performance:
Breadth positive in July; 44 Nifty stocks end higher
Yes Bank (+24%), Reliance Inds (+17%), Hindalco (+15%), SBI (+14%) and Vedanta (+12%) were the top performers
on MoM basis. ITC (-12%), Dr Reddy’s (-11%), IOC (-5%), Sun Pharma (-4%), Lupin (-3%) and Hero Moto (-1%) are
the only negative performers.
For CY17 YTD, MSCI EM (+24%), India-Sensex (+22%), Korea (+19%), Taiwan (+13%) and US (+10%) were the best
performers among the key global markets in local currency terms. On the other hand, Russia (-15%) has delivered
negative returns.
About the product
As the tagline suggests,
BULLS & BEARS
is a
handbook on valuations in
India. Every month, it will
cover:
Valuations of Indian
markets vis-à-vis global
markets
Current valuation of
companies in various
sectors
Sectors that are
currently valued at
premium/discount to
their historical long-
period averages
Global equities:
India among best-performing markets for CY17 YTD
PSU Banks are trading at 10% discount to historical average P/B. The sector was best-performing in July (+13%
MoM). Stress additions are expected to come down significantly in the ensuing quarters; recoveries in large
accounts could be significant trigger points. Trading gains are expected to moderate significantly in FY18 v/s FY17.
Telecom, on EV/EBITDA basis, trades at 7.5x (7% discount to historical average). Over the last one month, the
sector witnessed few major developments that have resurrected the outlook for the sector. We expect the sector
to bottom out by the end of FY18 both in terms of competitive and capex intensity. This should drive ARPU-led
value accretion and healthy FCF generation for the sector.
Sector valuations:
PSU Banks, Telecom, Metals and Cement top outperformers
Nifty-50 highlights:
Consumer trades at premium to LPA; only negative-performing sector in July
Consumer trades above its historical average valuations. At a P/E of 39.8x, it is at a 34% premium to its historical
average, and at a P/B of 11.5x, it is at a 22% premium. In 1QFY18, most companies saw GST-led destocking. A
recovery is likely by the end of 2QFY18. We continue to like rural recovery plays, given their robust earnings
prospects, and also companies that have demonstrated strong resilience in difficult times and offer higher power
of compounding earnings.
BULLS & BEARS | August 2017
5

Indian equities:
Nifty up 5.8% in July – highest MoM rise in last 16 months
July 2017 saw the Nifty hitting record-high levels
before closing at 10,077, delivering a return of
5.8% MoM.
For the first time in its history, the Nifty has
crossed and closed above the psychological 10K
mark. With this, the Nifty has now become the
second Indian benchmark index to trade in five
digits.
The index is up 23% in CY17 so far. We note that
the macro backdrop remains best in recent times,
with inflation under control, twin deficits in check,
stable currency, and policy momentum intact
(evident from the smooth and timely GST
implementation).
The market also saw 12 consecutive months of
domestic mutual fund inflows (USD1.8b in July). FII
inflows were USD0.4b.
While traversing its journey from 1k to 10k, the
Nifty has delivered 11% CAGR. Meanwhile, the
market capitalization of the index has expanded
48x from INR1.5t to INR70.6t, implying 20% CAGR.
The journey of the Nifty from 1k to 2k was most
excruciating, and took a total 2,282 trading days
(almost nine years). The move from 6k to 7k also
took some time (1,589 trading days; 6.5 years),
with the markets being stranded in a long phase of
correction in the aftermath of the Global Financial
Crisis (GFC) in 2008.
Nifty MoM change (%) — highest MoM rise in last 16 months
Nifty MoM Change (%)
10.8
4.0
1.5
0.3
6.6
1.6
4.8
7.6
0.1
1.4
1.6
4.2
4.6
0.2
2.0
4.7
0.5
3.7 3.3
1.4
5.8
3.4
1.0
2.0
1.7
The journey of Nifty from 1K to 10K… (up 10x in ~22 years)
Number of trading days taken
to achieve key milestones
1,589
52
203
212
2,282
284
77
92
623
5,415 days to achieve 10k milestone
1,000
Nov 1995
2,000
Dec 2004
3,000
Jan 2006
4,000
Dec 2006
5,000
Sep 2007
6,000
Dec 2007
7,000
May 2014
8,000
Sep 2014
9,000
Mar 2017
10,000
July 2017
BULLS & BEARS | August 2017
6

Indian equities:
PSU Banks, Telecom, Metals and Cement top performers for July
Nine sectors outperformed the benchmark in July. PSU Banks (+13%), Telecom (+10%), Metals (+9%) and Cement (+9%) were the top outperformers.
Consumer (-3%) is the only sector to deliver negative returns for July.
Private Banks and Real Estate are the only sectors to deliver seven consecutive months of positive returns on an MoM basis.
Midcaps underperformed large caps in July, with Nifty Midcap 100 delivering 4.4% return MoM.
For CY17 YTD, Real Estate (+73%), Private Banks (+40%), Cement (+38%), PSU Banks (+37%) and NBFCs (+35%) are the top outperformers.
Healthcare (-4%) is the only sector to deliver negative returns in CY17 YTD.
Sectoral performance – absolute and relative to Nifty (%): Consumer the only sector to deliver negative return in July
MoM Abs. Performance (%)
Sector
Banks-PSU
Telecom
Metal
Cement
Oil
NBFC
Real Estate
Technology
Banks-Pvt
Cap. Goods
Auto
Nifty Midcap100
Utilities
Media
Healthcare
Consumer
Nifty-50
Jan-17
8
19
15
11
6
7
8
-6
6
8
8
7
9
7
0
5
5
Feb-17
4
5
2
3
5
1
9
8
6
4
-1
7
1
12
4
3
4
Mar-17
8
-9
-1
5
0
11
7
0
3
7
2
4
4
7
0
5
3
Apr-17
5
0
-4
8
7
4
20
-7
5
9
3
5
2
4
-2
2
1
May-17
-3
1
0
-1
-1
0
0
6
8
-2
6
-3
-5
-7
-10
7
3
Jun-17
-2
3
1
-1
-7
0
6
-4
0
-3
-3
1
0
-2
5
3
-1
Jul-17
13
10
9
9
7
7
7
6
6
5
5
4
4
4
0
-3
6
CY17 YTD
Chg (%)
37
32
23
38
17
35
73
3
40
32
21
29
17
29
-4
24
23
Jan-17
4
15
11
6
1
3
4
-10
2
4
3
3
4
3
-4
1
MoM Relative Performance (%)
Feb-17
0
2
-2
-1
2
-2
5
5
2
0
-5
3
-2
9
0
-1
Mar-17
4
-12
-4
1
-3
7
4
-3
0
4
-1
1
0
4
-4
2
Apr-17
4
-1
-6
6
5
3
19
-9
3
7
2
4
1
3
-3
0
May-17
-7
-3
-4
-4
-5
-3
-3
3
5
-5
3
-7
-8
-10
-13
4
Jun-17
-1
4
2
0
-6
1
7
-3
1
-2
-2
2
1
-1
6
4
Jul-17
7
4
3
3
2
1
1
0
0
-1
-1
-1
-1
-2
-6
-9
CY17 YTD
Chg (%)
14
9
0
14
-6
11
50
-21
16
8
-2
6
-6
5
-27
1
BULLS & BEARS | August 2017
7

Indian equities:
Breadth positive in July; 44 Nifty stocks end higher
Nifty – best and worst performers in July:
Yes Bank (+24%), Reliance Inds (+17%), Hindalco (+15%), SBI (+14%) and Vedanta (+12%) were the top
performers on MoM basis. ITC (-12%), Dr Reddy’s (-11%), IOC (-5%), Sun Pharma (-4%), Lupin (-3%) and Hero (-1%) are the only negative performers.
Nifty – best and worst performers in CY17 YTD:
Indiabulls Hsg (+81%), Yes Bank (+57%), Reliance Inds (+49%), Indusind (+48%) and HDFC Bank (+48%)
were the top performers. Lupin (-30%), Dr Reddy’s (-22%), Tech M (-21%), Coal India (-17%) and Sun Pharma (-16%) were the worst performers.
Best and worst Nifty performers (MoM) in July 2017 (%) – Breadth positive in July; 88% of Nifty stocks trade higher
24
17 15
14 12
12 11 11 11 11 11 10 10 9
9 8 8 8 7 7 7
7 7 6 6
6
5 5 5 4 4 4 4 4 4
3 3 3 2 2 2 1 1
1 1
-1 -3
-4 -5
-11 -12
Best and worst Nifty performers (YoY) in CY17 YTD (%) – 41 companies in Nifty have delivered positive returns
81
57
49 48 48 48 45
45 42 42 41 40
38 37 33 30 30 30
29 28 25 25
23
22
22
20
20
18 18
17 15 15 14 13 11
8
8
8
7
7
6
0
0 -2
-6 -12
-16 -17
-21 -22
-30
BULLS & BEARS | August 2017
8

Indian equities:
Midcaps continue to outperform; premium to Nifty P/E inches up
Over the last 12 months, midcaps have delivered 25% return, as against 17% by the Nifty. Also, over the last five years, midcaps have outperformed
the Nifty by 65%.
Midcaps now trade at a 14% premium to the Nifty on a P/E basis.
Midcaps outperformed large-caps by 65% in last five years
275
Nifty Rebased
5 Year CAGR:
Nifty: 14%
Midcap: 20.9%
Nifty Midcap 100 Rebased
Midcaps significantly outperformed large-caps in last 12 months
138
126
114
102
90
Nifty Rebased
Nifty Midcap 100 Rebased
125
117
225
175
125
75
258
193
12-month forward P/E (x)
27.0
22.5
18.0
13.5
9.0
Midcap PE (x)
Nifty Avg: 17.6x
Midcap Avg: 17.3x
Nifty PE (x)
Midcaps trading at 14% premium to Nifty
45
Midcap Vs Nifty PE Prem/(Disc) (%)
21.7
19.0
25
5
-15
-35
Average: -2%
14
Source: MOSL, Bloomberg for Midcap valuation.
BULLS & BEARS | August 2017
9

Indian equities:
Valuations above long-period averages
Valuations of Indian equities remain rich. The Sensex trades at a 12-month forward P/E of 19.7x, at a 14% premium to long-period average of 17.3x.
Sensex P/B of 2.8x is at 7% premium to its historical average.
At the current trailing P/E of 23x and forward P/E of 19.7x, we see limited triggers for further re-rating, unless accompanied by earnings revival.
12-month forward Sensex P/B (x)
4.3
12-month forward Sensex P/E (x)
25
21
10 Year Avg: 17.3x
17
13
9
24.6
19.7
4.2
2.8
3.5
2.8
2.0
10 Year Avg: 2.6x
10.7
1.3
1.6
Trailing Sensex P/E (x)
28
23
10 Year Avg: 18.5x
18
13
8
Trailing Sensex P/B (x)
5.0
25.2
4.9
23.0
4.0
3.0
2.0
10 Year Avg: 2.9x
3.1
10.8
1.0
1.8
BULLS & BEARS | August 2017
10

Indian equities:
Market cap-to-GDP at its long-term average
The Sensex trades at a 12-month forward RoE of 14.3%, below its long-term average.
Market cap-to-GDP ratio is 78% (FY18E GDP), at its long-term average.
Trend in Sensex RoE (%)
23.8
21.7
18.5
17.5
15.0
12.5
10 Year Avg: 15.8%
Average of 17%
16.9 16.6
16.1
15.4 14.9
15.3
14.1
12-month forward Sensex RoE (%)
22.5
20.0
21.0
15.8
14.3
13.0
13.9
15.2
Trend in India’s market-cap-to-GDP (%)
103
83
55
95
88
71
Average of 78% for the period
64
66
81
69
80
78
BULLS & BEARS | August 2017
11

Global equities:
India among best-performing markets for CY17 YTD
For CY17 YTD, MSCI EM (+24%), India-Sensex (+22%), Korea (+19%), Taiwan (+13%) and US (+10%) were the best performers among the key global
markets in local currency terms. On the other hand, Russia (-15%) has delivered negative returns.
Indian equities are trading at 21.2x FY18E earnings.
All key markets continue to trade at a discount to India. However, India’s RoE remains superior to most EMs, an important differentiator for valuation
premium.
India (Sensex) v/s other markets
CY17 YTD Chg (%)
Index
Value
India
US
Japan
Indonesia
UK
Taiwan
China
MSCI EM
Brazil
Korea
Russia
32,515
2,470
19,925
5,841
7,372
10,427
3,273
1,066
65,920
2,403
4,197
Mkt Cap Local
In USD
(USD T) Currency
2.1
27.5
5.7
0.5
3.6
1.2
7.1
9.4
0.8
1.5
0.5
22
10
4
10
3
13
5
24
9
19
-15
29
10
10
12
10
21
9
24
14
27
-13
PE (x)
CY16 /
FY17
24.1
22.7
23.6
25.6
39.4
17.0
18.1
17.4
198.9
19.2
7.4
CY17 /
FY18
21.2
18.9
17.1
16.8
15.3
14.9
14.4
13.5
12.6
10.2
6.3
-6
-2
6
64
-29
-25
-28
726
-20
-69
-11
-19
-21
-28
-30
-32
-36
-40
-52
-70
Prem / Disc to
India PE (%)
CY16 /
FY17
CY17 /
FY18
PB (x)
CY16 /
FY17
3.1
3.2
1.8
2.6
1.9
1.8
1.8
1.8
1.7
1.1
0.6
CY17 /
FY18
2.9
3.0
1.7
2.6
1.9
1.8
1.6
1.6
1.5
1.1
0.6
RoE (%)
CY16 /
FY17
13.0
13.1
8.5
11.0
5.6
10.6
10.2
10.9
0.9
6.0
8.9
CY17 /
FY18
13.9
16.3
9.6
18.7
8.5
14.4
11.6
9.5
11.5
11.2
7.8
Source: Bloomberg/MOSL
CY17 YTD Chg (%)
MSCI EM
India
Korea
Taiwan
US
Indonesia
Brazil
China
Japan
UK
Russia
-15
24
22
19
13
10
10
9
5
4
3
BULLS & BEARS | August 2017
12

Global equities:
MSCI EM outperforms MSCI India in last 12 months
Over the last 12 months, MSCI EM (+22%) has outperformed MSCI India (+13%). However, over the last five years, MSCI India has outperformed
MSCI EM by 93%.
MSCI India P/E is at a premium of 40% to MSCI EM P/E, marginally below its historical average premium.
MSCI India outperformed MSCI EM by 93% in last five years
122
113
225
180
135
90
45
MSCI India Rebased
10 Year CAGR:
MSCI India: 6.6%
MSCI EM: -0.4%
5 Year CAGR:
MSCI India: 12.3%
MSCI EM: 2.3%
MSCI EM Rebased
MSCI EM performance at par with MSCI India over 12 months
125
115
105
95
85
MSCI India Rebased
MSCI EM Rebased
189
96
MSCI India v/s MSCI EM trailing P/E (x)
33.0
26.0
19.0
12.0
5.0
MSCI EM Avg: 13.6x
MSCI India Avg: 19.3x
MSCI India v/s MSCI EM P/E premium (%)
MSCI EM PE (x)
100
MSCI India Vs EM PE Premium (%)
MSCI India PE (x)
22.5
16.1
75
50
25
0
Average of 43%
40
Source: Bloomberg
BULLS & BEARS | August 2017
13

Global equities:
India’s share in world market cap above historical average
India’s share in the world market cap is at 2.7%, above its long-term average of 2.4%.
Over the last 12 months, world market cap has increased 19.6% (USD12.8t), while India’s market cap is up 27%.
Market cap change in last 12 months (%)
Mkt cap chg 12M (%)
India
Average of 2.4%
Curr Mcap (USD Tr)
Trend in India's contribution to world market cap (%)
3.5
3.0
2.5
2.0
1.5
India's Contribution to World Mcap (%)
3.3
2.7
27
21
17
16
16
13
13
12
10
10
2.1
1.2
1.5
0.8
7.1
27.5
5.7
0.5
0.5
3.6
Taiwan
Korea
Brazil
China
1.6
Global market-cap-to-GDP (%)
148
136
Current mkt cap to GDP (%)
116
109
US
Japan
92
63
51
46
41
Indonesia
Russia
UK
* Based on GDP for Dec 2016
Source: Bloomberg
BULLS & BEARS | August 2017
14

Nifty:
Consumer trades at premium to LPA; only sector to deliver negative returns in July
Consumer trades above its historical average valuations. At a P/E of 39.8x, it is at a 34% premium to its historical average, and at a P/B of 11.5x, it is
at a 22% premium.
In 1QFY18, most companies saw GST-led destocking. A recovery is likely by the end of 2QFY18. We continue to like rural recovery plays, given their
robust earnings prospects, and also companies that have demonstrated strong resilience in difficult times and offer higher power of compounding
earnings.
Snapshot: Nifty companies valuations
Name
Bajaj Auto
Bosch
Eicher Motors
Hero MotoCorp
Mahindra & Mahindra
Maruti Suzuki
Tata Motors
Axis Bank
HDFC Bank
ICICI Bank
IndusInd Bank
Kotak Mahindra Bank
Yes Bank
Bank of Baroda
State Bank
HDFC
Indiabulls Housing
Larsen & Toubro
ACC
Ambuja Cements
Ultratech Cement
Asian Paints
Hind. Unilever
ITC
Sector
Auto
Auto
Auto
Auto
Auto
Auto
Auto
Banks - Private
Banks - Private
Banks - Private
Banks - Private
Banks - Private
Banks - Private
Banks - PSU
Banks - PSU
Banks - NBFC
Banks - NBFC
Capital Goods
Cement
Cement
Cement
Consumer
Consumer
Consumer
Current
19.2
34.9
31.9
19.0
19.7
24.7
10.6
19.0
24.5
19.4
24.6
28.9
18.2
8.4
15.9
32.5
12.5
25.3
31.4
36.3
38.3
49.1
47.2
29.6
PE (x)
Relative to Sensex P/E (%)
10 Yr Avg Prem/Disc (%)
Current
10 Yr Avg
15.3
25
-2
-12
27.9
25
77
61
19.7
62
62
14
15.9
19
-4
-8
15.7
25
0
-9
16.9
46
25
-3
9.9
7
-46
-43
14.8
28
-3
-14
20.6
19
24
19
17.1
13
-2
-1
16.5
49
25
-5
23.3
24
47
35
12.0
52
-8
-31
7.5
11
-58
-57
12.7
25
-20
-27
24.9
31
65
43
8.8
42
-36
-49
24.3
4
28
40
23.5
34
60
36
23.9
52
84
38
21.5
78
94
24
31.6
55
149
82
32.1
47
140
85
25.0
18
50
44
Current
4.2
7.0
10.9
5.9
2.8
5.3
2.0
2.0
4.4
2.0
4.1
4.2
3.2
1.0
1.3
6.0
3.5
3.0
3.5
2.6
4.2
12.6
35.3
7.4
PB (x)
10 Yr Avg Prem/Disc (%)
5.3
-21
5.0
41
5.1
115
6.9
-14
3.0
-7
2.8
88
2.4
-16
2.1
-1
3.4
28
2.1
-6
2.4
69
3.0
41
2.2
43
1.1
-7
1.3
3
4.8
25
2.2
57
3.6
-16
2.9
21
2.7
-5
2.9
46
9.9
27
27.5
28
7.1
4
Relative to Sensex P/B (%)
Current
10 Yr Avg
48
99
148
89
285
91
109
160
0
15
87
7
-30
-11
-28
-22
54
28
-29
-19
43
-9
47
11
12
-16
-65
-60
-53
-52
111
80
23
-17
7
36
24
10
-9
2
49
9
346
275
1146
939
160
167
BULLS & BEARS | August 2017
15

Nifty:
Healthcare trades at discount to historical average P/E
Companies trading at a significant premium to their historical averages:
Bharti Airtel (+136%), Ultra Tech (+78%), Eicher Motors (+62%), Asian Paints
(+55%), Ambuja Cement (+52%) and HUL (+47%).
Companies trading at a significant discount to their historical averages:
Tata Power (-41%), Tata Steel (-35%), Sun Pharma (-24%), NTPC (-19%), Lupin
(-16%) and Power Grid (-16%).
Sector
Healthcare
Healthcare
Healthcare
Healthcare
Healthcare
Media
Metals
Metals
Metals
Oil & Gas
Oil & Gas
Oil & Gas
Oil & Gas
Oil & Gas
Technology
Technology
Technology
Technology
Technology
Telecom
Telecom
Utilities
Utilities
Utilities
Utilities
Current
15.3
25.8
24.2
16.5
19.6
33.6
9.4
10.3
10.1
12.1
13.7
9.8
9.6
13.5
14.2
15.1
18.6
12.0
15.7
81.8
21.4
13.9
11.5
12.0
12.6
19.7
PE (x)
Relative to Sensex P/E (%)
10 Yr Avg Prem/Disc (%)
Current
10 Yr Avg
12.3
24
-23
-29
25.8
0
31
49
25.2
-4
23
45
19.8
-16
-16
14
25.8
-24
0
49
23.4
43
70
35
9.1
3
-52
-47
15.8
-35
-48
-9
8.9
14
-49
-49
10.6
14
-39
-39
13.8
-1
-30
-20
10.2
-3
-50
-41
11.3
-15
-51
-35
13.8
-3
-32
-20
13.4
5
-28
-23
17.1
-11
-23
-1
17.5
6
-6
1
13.0
-8
-39
-25
14.7
7
-20
-15
34.6
136
315
99
23.6
-9
9
36
15.3
-9
-30
-12
14.1
-19
-42
-18
14.2
-16
-39
-18
21.4
-41
-36
23
17.3
14
Current
3.3
3.1
2.9
2.9
3.2
7.2
1.3
1.5
1.6
2.5
1.5
1.5
0.9
1.4
3.2
2.9
5.8
1.8
2.5
2.4
3.9
6.3
1.3
2.0
1.5
2.8
PB (x)
10 Yr Avg Prem/Disc (%)
2.6
26
3.5
-11
3.8
-24
4.5
-37
4.9
-35
5.4
35
1.6
-16
2.3
-34
2.2
-29
1.4
71
1.9
-21
1.1
29
1.7
-43
1.6
-9
3.1
4
4.1
-30
5.9
0
3.1
-42
3.0
-17
2.9
-16
3.3
19
6.0
5
1.8
-32
2.0
0
2.2
-29
2.6
7
Relative to Sensex P/B (%)
Current
10 Yr Avg
17
-1
9
31
2
43
1
71
12
84
155
102
-53
-41
-47
-14
-44
-17
-13
-46
-46
-28
-48
-57
-67
-38
-49
-40
13
16
2
55
106
121
-35
19
-11
14
-15
8
39
25
122
126
-55
-30
-30
-26
-45
-18
Name
Aurobindo Pharma
Cipla
Dr Reddy’ s Labs
Lupin
Sun Pharma
Zee Ent.
Hindalco
Tata Steel
Vedanta
BPCL
GAIL
IOCL
ONGC
Reliance Inds.
HCL Technologies
Infosys
TCS
Tech Mahindra
Wipro
Bharti Airtel
Bharti Infratel
Coal India
NTPC
Power Grid Corp.
Tata Power
Sensex
BULLS & BEARS | August 2017
16

Midcaps underperform Nifty by 1.4% in July
In July 2017, Nifty Midcap100 was up 4.4%, as against the Nifty’s rise of 5.8%.
Best midcap performers in July: Bharat Financial (+17%), Blue Star (+16%), GE T&D (+15%), Tata Elxsi (+10%) and Delta Corp (+10%).
Worst midcap performers in July: Va Tech Wabag (-11%), Ajanta Pharma (-10%), PI Inds (-8%), Thermax (-7%) and PVR (-5%).
PE (x)
Current 10 Yr Avg Prem/Disc (%)
19.2
20.3
-6
33.7
23.5
43
51.9
64.0
-19
11.5
9.1
27
26.3
36.9
-29
22.4
15.7
43
16.5
13.0
27
20.4
11.1
83
5.7
7.4
-23
20.7
13.5
54
23.4
17.6
33
23.9
16.7
44
17.4
7.3
139
38.6
31.3
23
14.2
13.1
8
11.2
7.0
59
34.4
33.7
2
30.1
26.0
16
22.7
20.5
11
55.6
41.4
34
16.2
7.9
104
21.6
15.7
37
20.2
23.3
-13
37.1
41.6
-11
26.4
25.0
5
21.9
12.4
77
19.8
11.1
79
16.7
20.8
-20
Relative to Sensex P/E (%)
Current
10 Yr Avg
-3
17
71
36
163
269
-42
-48
34
113
14
-9
-16
-25
3
-36
-71
-57
5
-22
19
1
21
-4
-12
-58
96
80
-28
-24
-43
-60
74
94
53
50
15
18
182
139
-18
-54
9
-9
2
34
88
140
34
44
11
-29
0
-36
-15
20
PB (x)
Relative to Sensex P/B (%)
Current 10 Yr Avg Prem/Disc (%)
Current
10 Yr Avg
3.6
3.7
-3
26
40
8.0
8.0
1
183
202
8.5
7.6
12
199
186
3.5
2.6
34
22
-3
2.8
2.2
24
-2
-15
1.1
1.6
-34
-62
-38
2.1
1.9
12
-25
-29
2.0
1.1
76
-29
-57
0.5
0.9
-44
-83
-67
4.9
3.2
52
72
21
2.2
1.8
26
-21
-33
4.3
4.7
-7
53
76
2.6
1.1
147
-8
-60
6.3
3.3
89
122
25
2.5
1.7
50
-10
-36
1.5
1.1
42
-45
-59
3.9
3.8
2
38
44
5.1
4.2
22
82
59
1.2
0.8
42
-58
-68
4.6
4.0
13
61
52
2.4
1.2
93
-16
-53
2.3
1.6
42
-20
-40
2.2
3.0
-28
-23
13
5.4
2.8
91
89
6
3.4
4.5
-26
19
71
4.9
3.1
57
74
19
5.5
3.6
54
93
34
2.7
2.7
3
-3
0
Price Chg (%)
MoM
CY17YTD
17
44
16
46
15
32
10
25
10
55
10
16
10
39
9
50
7
28
6
69
6
11
5
-11
4
61
4
10
4
13
4
87
3
-11
3
0
3
74
0
11
-1
-1
-2
81
-2
-10
-5
17
-7
17
-8
-8
-10
-22
-11
30
Company
Bharat Financial
Blue Star
GE T&D India
Tata Elxsi
Delta Corp
JSW Energy
Guj.St.Petronet
Birla Corpn.
Union Bank (I)
Kaveri Seed
Gateway Distriparks
Alembic Pharma
CEAT
Jyothy Lab.
Jubilant Life
Dewan Housing
Multi Comm. Exc.
Sanofi India
India Cements
Ent.Network
SRF
DCB Bank
Ipca Labs.
PVR
Thermax
P I Inds.
Ajanta Pharma
Va Tech Wabag
BULLS & BEARS | August 2017
17

Sector valuations:
PSU Banks, Telecom top outperformers; Consumer underperforms
PSU Banks are trading at 10% discount to historical average P/B. The sector was best-performing in July (+13% return MoM). Stress additions are
expected to come down significantly in the ensuing quarters, while recoveries in large accounts could be significant trigger points. Trading gains are
expected to moderate significantly in FY18 v/s FY17.
Telecom, on EV/EBITDA basis, trades at 7.5x (7% discount to historical average). Over the last one month, the sector witnessed few major
developments that have resurrected the outlook of the sector. We believe the sector is likely to bottom out by the end of FY18 in terms of both
competitive and capex intensity. This should drive ARPU-led value accretion and healthy FCF generation for the sector.
Technology trades at a P/E of 16.2x, 2% above its historical average of 15.9x. The sector has started on a soft note, with 1QFY18 results failing to
surprise. Revenue growth has been in line with already subdued expectations, led by slower pick-up in BFS, and weakness in verticals like Retail and
Communication.
Consumer trades above its historical average valuations. At a P/E of 39.8x, it is at a 34% premium to its historical average, and at a P/B of 11.5x, it is
at a 22% premium. In 1QFY18, most companies saw GST-led destocking. A recovery is likely by the end of 2QFY18. We continue to like rural recovery
plays owing to their robust earnings prospects, and also companies that have demonstrated strong resilience in difficult times and offer higher power
of compounding earnings.
Snapshot: Sector valuations
Sector
Auto
Banks - Private
Banks - PSU
NBFC
Capital Goods
Cement
Consumer
Healthcare
Media
Metals
Oil & Gas
Retail
Technology
Telecom
Utilities
Current
19.5
22.6
12.7
23.9
31.9
29.7
39.8
21.0
28.0
13.2
12.1
52.8
16.2
Loss
11.9
PE (x)
Relative to Sensex
P/E (%)
Current
4.0
3.0
0.9
4.2
3.3
3.2
11.5
3.5
5.5
1.5
1.5
9.9
3.6
2.4
1.6
PB (x)
Relative to Sensex
P/B (%)
10 Yr Avg Prem/Disc (%) Current 10 Yr Avg
15.0
30.0
-1
-15
16.7
35.3
15
-5
2.7
375.9
-36
-77
17.4
37.1
21
0
26.7
19.5
62
50
18.1
63.9
51
3
29.7
34.1
102
73
22.1
-5.1
6
27
23.0
21.7
42
32
12.3
7.0
-33
-29
11.9
2.1
-38
-31
33.7
56.7
168
93
15.9
1.5
-18
-8
-
-
-
-
15.2
-21.9
-40
-10
10 Yr Avg Prem/Disc (%) Current 10 Yr Avg
3.1
27.6
40
18
2.2
36.8
8
-16
1.0
-9.6
-67
-62
3.0
40.7
49
13
4.0
-18.2
15
46
2.3
41.4
15
-13
9.4
22.4
307
264
4.0
-13.3
22
52
4.3
28.2
94
62
1.6
-4.2
-47
-42
1.6
-6.3
-47
-39
9.2
7.3
248
250
4.2
-12.9
28
58
2.6
-8.6
-15
0
2.0
-21.9
-45
-24
BULLS & BEARS | August 2017
18

Autos:
Inventory build-up to lift wholesales in July
Auto sector is trading at a P/E of 19.5x, at a 30% premium
to its historical average of 15x.
Auto volumes across 2W segments were broadly in line
with our expectations. HMCL outpaced industry growth,
with 17% YoY growth in dispatches while Royal Enfiled
volumes of 64.5k units were at record level. Volumes from
the CV segment were in-line.
In August 2017, the momentum is expected to continue, led
by inventory build-up to meet festive demand.
Neutral GST rate on auto companies, coupled with gradual
volume recovery (especially from rural markets), is likely to
positively impact rural-focused companies like HMCL, MM
and MSIL.
Sector Performance
MoM: +5%
PE (x)
10 Yr Avg
15.1
16.4
15.3
29.1
27.9
7.3
19.7
9.4
19.9
15.9
15.7
16.9
9.9
14.8
Relative to Sensex P/E (%)
Current
10 Yr Avg
13
-13
-4
-6
-2
-12
40
68
77
61
-12
-58
62
14
-15
-46
12
15
-4
-8
0
-9
25
-3
-46
-43
52
-15
PB (x)
10 Yr Avg
3.4
2.6
5.3
3.8
5.0
1.1
5.1
0.9
3.3
6.9
3.0
2.8
2.4
3.0
Relative to Sensex P/B (%)
Current
10 Yr Avg
53
28
54
-1
48
99
87
44
148
89
-8
-60
285
91
-3
-67
13
23
109
160
0
15
87
7
-30
-11
193
13
Company
Amara Raja Batt.
Ashok Leyland
Bajaj Auto
Bharat Forge
Bosch
CEAT
Eicher Motors
Escorts
Exide Inds.
Hero Motocorp
M&M
Maruti Suzuki
Tata Motors
TVS Motor Co.
Current
22.2
19.0
19.2
27.5
34.9
17.4
31.9
16.7
22.2
19.0
19.7
24.7
10.6
29.9
Prem/Disc (%)
47
16
25
-5
25
139
62
78
11
19
25
46
7
102
Current
4.3
4.4
4.2
5.3
7.0
2.6
10.9
2.7
3.2
5.9
2.8
5.3
2.0
8.3
Prem/Disc (%)
28
66
-21
39
41
147
115
217
-2
-14
-7
88
-16
178
BULLS & BEARS | August 2017
19

Private Banks:
Retail lenders remain preferred picks
Private banks are trading at 3x P/B, above their long-period
average valuations (37% premium), driven by the continued
outperformance of retail lenders and an improvement in
return ratios.
Loan growth at 25%+ for mid-sized banks and 15%+ for
larger banks is significantly ahead of system loan growth of
~6%. Strong CASA base built up over FY17 will yield rich
dividends on the cost of funds side, retail asset growth and
fee income. Operating costs are moderating, led by strong
digital initiatives.
Asset quality trends for corporate lenders – ICICI, AXSB and
YES – will remain a key monitorable in FY18.
1QFY18 saw banks’ asset quality and credit costs affected by
RBI norms on provisioning for NCLT-related bulky non-
performing accounts. However, progress on steps taken by
the RBI to address bulky accounts has been encouraging on
the legal front; we await further developments.
Sector Performance
MoM: +6%
Company
Axis Bank
DCB Bank
Federal Bank
HDFC Bank
ICICI Bank
IndusInd Bank
J & K Bank
Kotak Mah. Bank
South Ind.Bank
Yes Bank
Current
19.0
21.6
19.7
24.5
19.4
24.6
15.8
28.9
9.6
18.2
PE (x)
10 Yr Avg
14.8
15.7
10.8
20.6
17.1
16.5
7.6
23.3
6.7
12.0
Prem/Disc (%)
28
37
82
19
13
49
107
24
44
52
Relative to Sensex P/E (%)
Current
10 Yr Avg
-3
-14
9
-9
0
-38
24
19
-2
-1
25
-5
-20
-56
47
35
-51
-61
-8
-31
Current
2.0
2.3
1.8
4.4
2.0
4.1
0.7
4.2
1.1
3.2
PB (x)
10 Yr Avg
2.1
1.6
1.1
3.4
2.1
2.4
0.9
3.0
0.9
2.2
Prem/Disc (%)
-1
42
62
28
-6
69
-20
41
21
43
Relative to Sensex P/B (%)
Current
10 Yr Avg
-28
-22
-20
-40
-37
-58
54
28
-29
-19
43
-9
-74
-65
47
11
-63
-67
12
-16
BULLS & BEARS | August 2017
20

PSU Banks:
Reversal of asset quality trends key to performance
PSU banks trade at 10% discount to historical average P/B.
The sector was best-performing in July (+13% return MoM).
Stress additions are expected to decline significantly in the
ensuing quarters, while recoveries in large accounts could
be significant trigger points. Trading gains are expected to
moderate significantly in FY18 v/s FY17.
FY17 witnessed large-scale CASA inflows, which should
benefit cost of funds. Furthermore, most PSU banks have
incurred high interest income reversals in the last few
quarters, and NIMs may inch upward on a low base.
Moreover, SA rate cut on retail deposits by SBI is likely to
cause other PSU banks to follow suit, further helping
margins. Core revenue is expected to improve marginally,
but remain weak owing to muted loan growth/fee income.
We expect the impact of the RBI’s specific provisioning
directive (for accounts which are being resolved by NCLT) to
be minimal for larger PSU banks. However, the impact on
mid-sized PSU banks is expected to be more. Progress on
steps taken by the RBI towards bulky accounts resolution
has been encouraging on the legal front so far, and we await
further developments in this regard.
Company
Bank of Baroda
Bank of India
Canara Bank
IDBI Bank
Indian Bank
Punjab Natl.Bank
St Bk of India
Union Bank (I)
Current
8.4
10.1
10.3
8.3
8.8
13.9
15.9
5.7
PE (x)
10 Yr Avg
7.5
7.9
6.6
9.8
5.9
8.1
12.7
7.4
Prem/Disc (%)
11
28
56
-15
48
71
25
-23
Sector Performance
MoM: +13%
Relative to Sensex P/E (%)
Current
10 Yr Avg
-58
-57
-49
-55
-48
-62
-58
-44
-56
-66
-29
-53
-20
-27
-71
-57
PB (x)
10 Yr Avg
1.1
0.9
0.8
0.8
0.8
1.0
1.3
0.9
Relative to Sensex P/B (%)
Current
10 Yr Avg
-65
-60
-76
-64
-75
-70
-82
-71
-67
-70
-70
-61
-53
-52
-83
-67
Current
1.0
0.7
0.7
0.5
0.9
0.8
1.3
0.5
Prem/Disc (%)
-7
-27
-9
-33
15
-17
3
-44
BULLS & BEARS | August 2017
21

NBFCs:
MFI situation improving; strong growth in car and tractor financing
NBFCs trade at a P/B of 4.2x, above their historical average
(41% premium).
Vehicle financiers have witnessed strong growth in the car
as well as the tractor segments. There has been a decline in
M&HCV disbursements due to lower industry-wide sales in
1QFY18. Also, with strong demand for securitized assets, the
off-balance sheet book has remained stable sequentially,
giving support to margins.
Housing finance companies have witnessed strong loan
growth in both retail as well as corporate segment. LRD
continues to be the key driver for corporate growth. Retail
yields are under pressure; however, some HFCs have been
able to maintain spreads.
MFIs are witnessing a turnaround in terms of disbursements
and collections. Business has returned to normalcy in most
areas. We believe credit cost will be elevated in 1HFY18,
post which it should decline.
Sector Performance
MoM: +7%
Company
Bajaj Finance
Bharat Financial
Chola. Invst. & Fin.
Dewan Housing
GRUH Finance
HDFC
Indiabulls Housing
L&T Fin.Holdings
LIC Housing Fin.
M & M Financial
Muthoot Finance
Shri.City Union.
Shriram Trans.
Current
32.3
19.2
20.0
11.2
46.0
32.5
12.5
20.8
12.5
26.4
11.3
15.8
12.0
PE (x)
10 Yr Avg
12.4
20.3
15.1
7.0
21.0
24.9
8.8
16.0
9.8
15.9
8.0
13.2
12.5
Prem/Disc (%)
160
-6
32
59
119
31
42
30
29
67
41
20
-4
Relative to Sensex P/E (%)
Current
10 Yr Avg
64
-28
-3
17
2
-13
-43
-60
133
21
65
43
-36
-49
5
-8
-36
-44
34
-8
-43
-54
-20
-24
-39
-28
Current
7.3
3.6
3.5
1.5
13.8
6.0
3.5
3.2
2.5
3.2
2.4
2.5
1.7
PB (x)
10 Yr Avg
1.7
3.7
1.8
1.1
6.1
4.8
2.2
1.8
1.8
2.1
1.5
2.0
2.1
Prem/Disc (%)
327
-3
90
42
127
25
57
77
37
51
60
22
-18
Relative to Sensex P/B (%)
Current
10 Yr Avg
157
-36
26
40
23
-31
-45
-59
386
129
111
80
23
-17
14
-31
-12
-31
15
-19
-16
-44
-12
-23
-39
-21
BULLS & BEARS | August 2017
22

Capital Goods:
New project announcements remain weak
The Capital Goods sector trades at 18% discount to its
historical P/B average, but at 20% premium to its historical
P/E average (20% premium).
New projects announced in 1QFY18 declined 8% YoY to
INR1.4t, marking the scond quarter of decline (down 15%
YoY in 4QFY17 following demonetization). This is much
lower than the average quarterly investment
announcement of INR2.2t in the last three years. Key
segments that witnessed declines were Metals (-42% YoY),
Chemicals (-75% YoY), and Electricity (primarily coal-fired
plants; -78% YoY).
Stocks trading at a discount to their historical average on
P/B basis are BHEL (68% discount), L&T (16% discount),
Thermax (26% discount), Siemens (6% discount), and Solar
Industries (25% discount).
Havells, Voltas, KEC Intl, Cummins, ABB and GE T&D are
trading at a premium to their historical averages.
Sector Performance
MoM: +5%
Company
ABB
BHEL
Blue Star
CG Power & Indl.
Cummins India
GE T&D India
Havells India
K E C Intl.
Larsen & Toubro
Siemens
Solar Inds.
Thermax
Voltas
Current
56.0
36.9
33.7
28.1
31.4
51.9
39.7
21.7
25.3
53.2
36.5
26.4
31.0
PE (x)
10 Yr Avg
62.3
21.4
23.5
10.6
22.6
64.0
25.3
15.9
24.3
46.8
18.5
25.0
21.2
Prem/Disc (%)
-10
73
43
166
39
-19
57
36
4
14
98
5
46
Relative to Sensex P/E (%)
Current
10 Yr Avg
184
259
87
23
71
36
43
-39
59
30
163
269
102
46
10
-8
28
40
170
170
85
6
34
44
57
22
Current
7.7
1.1
8.0
1.2
6.5
8.5
7.7
4.0
3.0
6.4
2.6
3.4
4.4
PB (x)
10 Yr Avg
7.2
3.3
8.0
1.2
5.6
7.6
5.2
2.3
3.6
6.7
3.5
4.5
3.5
Prem/Disc (%)
6
-68
1
3
17
12
47
72
-16
-6
-25
-26
23
Relative to Sensex P/B (%)
Current
10 Yr Avg
172
173
-62
24
183
202
-57
-56
131
111
199
186
172
98
41
-13
7
36
124
154
-8
32
19
71
54
33
BULLS & BEARS | August 2017
23

Cement:
Muted demand in most regions
Cement trades at EV/EBITDA of 13.5x, a 52% premium
to historical average.
Heavy volume base from June 2016, demand
uncertainty due to GST implementation and RERA
implementation have kept demand muted.
Volumes in the North were affected by sand shortage,
while those in the South were affected by drought and
political instability.
Demand in the East has been stable due to
improvement in rural markets and the infrastructure
segment. Demand in the West has slowed down.
However, rural housing, good monsoon and push to
affordable housing are likely to revive demand.
Sector Performance
MoM: +9%
PE (x)
Company
Current
ACC
31.4
Ambuja Cem.
36.3
Birla Corpn.
20.4
Grasim Inds
13.2
India Cements 22.7
Shree Cement 35.5
UltraTech Cem 38.3
10 Yr
Avg
23.5
23.9
11.1
8.5
20.5
20.4
21.5
Prem/Disc
(%)
34
52
83
55
11
74
78
Relative to Sensex
P/E (%)
10 Yr
Current
Avg
60
36
84
38
3
-36
-33
-51
15
18
80
17
94
24
PB (x)
Current
3.5
2.6
2.0
1.5
1.2
6.7
4.2
10 Yr
Avg
2.9
2.7
1.1
1.1
0.8
3.9
2.9
Prem/Disc
(%)
21
-5
76
39
42
73
46
Relative to Sensex
P/B (%)
Current 10 Yr Avg
24
10
-9
2
-29
-57
-47
-59
-58
-68
138
47
49
9
BULLS & BEARS | August 2017
24

Consumer:
Only negative performing sector in July; trades at 34% premium to LPA
Consumer sector P/E remains above its historical average
(34% premium). In 1QFY18, most companies saw GST-led
de-stocking. A recovery is expected by the end of 2QFY18.
We believe that given the likely normal monsoon,
government schemes to boost growth, favorably weak base
for the past three years and low food inflation, volume
growth prospects for FY18 (particularly 2HFY18) are brighter
than they have been for many years.
Another factor likely to boost sales growth is the end of
commodity cost deflation, which brings back the price-led
part of sales growth for consumer companies.
We continue to like rural recovery plays owing to their
robust earnings prospects, and also companies that have
demonstrated strong resilience in difficult times and offer
higher power of compounding earnings.
Sector Performance
MoM: -3%
Company
Asian Paints
Britannia Inds.
Colgate-Palm.
Dabur India
Emami
GlaxoSmith C H L
Godrej Consumer
Hind. Unilever
ITC
Jyothy Lab.
Marico
Nestle India
P & G Hygiene
Page Industries
Pidilite Inds.
United Breweries
United Spirits
Current
49.1
42.6
39.3
37.8
36.7
31.8
45.3
47.2
29.6
38.6
44.9
55.7
49.1
47.5
42.0
72.0
63.2
PE (x)
10 Yr Avg
31.6
27.6
30.8
28.6
25.7
26.6
27.6
32.1
25.0
31.3
27.8
39.4
32.8
31.1
26.9
79.0
91.8
Prem/Disc (%)
55
54
27
32
42
19
64
47
18
23
61
41
50
53
56
-9
-31
Relative to Sensex P/E (%)
Current
10 Yr Avg
149
82
116
59
99
78
92
65
86
49
61
54
130
59
140
85
50
44
96
80
128
60
182
127
149
89
141
79
113
55
265
355
221
429
Current
12.6
13.4
21.2
9.2
11.4
6.9
9.8
35.3
7.4
6.3
15.3
19.5
34.0
20.1
9.4
8.3
12.0
PB (x)
10 Yr Avg
9.9
10.6
25.0
8.9
9.1
7.2
6.4
27.5
7.1
3.3
8.8
24.2
13.0
14.1
6.6
8.3
9.9
Prem/Disc (%)
27
27
-15
3
26
-5
52
28
4
89
73
-19
162
42
41
-1
21
Relative to Sensex P/B (%)
Current
10 Yr Avg
346
275
372
299
649
845
223
237
302
242
142
173
245
143
1146
939
160
167
122
25
441
234
589
813
1100
390
609
433
231
150
192
215
322
273
BULLS & BEARS | August 2017
25

Healthcare:
Pricing pressure in US and GST impact in India are key concerns
Healthcare sector trades at a P/E of 21x – 5% discount
to historical average.
Glenmark and Sun Pharma trade at a 50% and 24%
discount to historical average P/E, while Ajanta
Pharma, Biocon, Cadila, Granules, Torrent Pharma and
Aurobindo are trading at a premium to their averages.
Outlook for FY18 remains negative due to structural
changes in the US market and pricing pressure.
As the market prepares for implementation of GST,
pharma companies may face negative impact in the
short term (till 1HFY18E).
Pricing pressure in the US and GST impact in India are
the key concerns in the medium term for the Indian
pharma companies.
Sector Performance
MoM: 0%
Company
Aurobindo Pharma
Ajanta Pharma
Biocon
Cadila Health.
Cipla
Divi's Lab.
Dr Reddy's Labs
Glaxosmit Pharma
Glenmark Pharma.
Granules India
Ipca Labs.
Jubilant Life
Lupin
Sanofi India
Sun Pharma.Inds.
Torrent Pharma.
Current
15.3
19.8
34.3
27.7
25.8
18.8
24.2
48.4
15.2
14.6
20.2
14.2
16.5
30.1
19.6
21.4
PE (x)
10 Yr Avg
12.3
11.1
20.9
19.4
25.8
21.4
25.2
42.0
30.6
11.6
23.3
13.1
19.8
26.0
25.8
14.8
Prem/Disc (%)
24
79
64
43
0
-12
-4
15
-50
26
-13
8
-16
16
-24
44
Relative to Sensex P/E (%)
Current
10 Yr Avg
-23
-29
0
-36
74
20
41
12
31
49
-5
23
23
45
146
142
-23
77
-26
-33
2
34
-28
-24
-16
14
53
50
0
49
8
-15
Current
3.3
5.5
4.2
6.6
3.1
3.3
2.9
12.3
3.3
2.3
2.2
2.5
2.9
5.1
3.2
4.6
PB (x)
10 Yr Avg
2.6
3.6
2.6
4.9
3.5
5.3
3.8
10.2
4.7
1.5
3.0
1.7
4.5
4.2
4.9
4.0
Prem/Disc (%)
26
54
63
35
-11
-37
-24
21
-31
56
-28
50
-37
22
-35
16
Relative to Sensex P/B (%)
Current
10 Yr Avg
17
-1
93
34
49
-2
133
85
9
31
17
100
2
43
334
284
15
77
-20
-45
-23
13
-10
-36
1
71
82
59
12
84
62
49
BULLS & BEARS | August 2017
26

Media:
Regulatory uncertainty persists; ad rebound a quarter away
The Media sector trades at a one-year forward P/E of
28x, at a 22% premium to historical average of 23x.
Digitization and ad growth revival remain the key
themes in the sector. Broadcasters’ superior bargaining
power holds them in good stead to capture the upside.
Impact of non-discriminatory content pricing regulation
on the media value chain remains a key monitorable.
2QFY18 ad spends yet to revive from the GST jolt. Pain
is expected to be short-lived.
Subscriber-level ARPU improvement in Phase I/II
markets and uptick in Phase III/IV digitization seem on
track and are the key triggers on the subscription front.
Sector Performance
MoM: +4%
Company
Ent.Network
H T Media
Jagran Prakashan
PVR
Sun TV Network
Zee Entertainmen
Current
55.6
11.5
13.7
37.1
25.3
33.6
PE (x)
10 Yr Avg
41.4
23.2
17.8
41.6
20.7
23.4
Prem/Disc (%)
34
-50
-23
-11
22
43
Relative to Sensex P/E (%)
Current
10 Yr Avg
182
139
-41
34
-30
2
88
140
28
19
70
35
Current
4.6
0.7
2.3
5.4
7.0
7.2
PB (x)
10 Yr Avg
4.0
1.9
3.6
2.8
5.2
5.4
Prem/Disc (%)
13
-60
-38
91
34
35
Relative to Sensex P/B (%)
Current
10 Yr Avg
61
52
-74
-30
-21
37
89
6
147
96
155
102
BULLS & BEARS | August 2017
27

Metals:
Chinese steel prices continue to increase; coking coal higher
Metals trade at a P/B of 1.5x, 4% discount to historical
average. EV/EBITDA is at 6.8x, 6% discount to historical
average.
Chinese steel prices continued to recover on steady
demand and declining inventories.
Domestic steel prices are supportive on the back of
higher global prices, despite seasonally weak demand.
Iron ore prices are now trending close to USD70/t.
Aluminum and zinc prices were unchanged. Market is
positive on supply cut measures and growing demand
in China.
Sector Performance
MoM: +9%
PE (x)
Company
Hind.Zinc
Hindalco Inds.
Jindal Steel
JSW Steel
Natl. Alum
NMDC
SAIL
Tata Steel
Vedanta
Prem/Disc
Current 10 Yr Avg
(%)
11.7
8.4
39
9.4
9.1
3
NA
14.1
11.0
13.6
-19
17.9
18.3
-2
10.4
15.9
-35
NA
13.6
10.3
15.8
-35
10.1
8.9
14
Relative to Sensex P/E
(%)
Current
-40
-52
-44
-9
-47
-48
-49
10 Yr Avg
-51
-47
-19
-22
5
-8
-22
-9
-49
PB (x)
Prem/Disc
Current 10 Yr Avg
(%)
3.8
2.0
95
1.3
1.6
-16
0.5
2.2
-77
1.9
1.3
46
1.3
1.5
-13
1.6
4.2
-61
0.8
1.3
-36
1.5
2.3
-34
1.6
2.2
-29
Relative to Sensex P/B
(%)
Current
35
-53
-83
-32
-55
-43
-71
-47
-44
10 Yr Avg
-26
-41
-18
-51
-45
59
-51
-14
-17
BULLS & BEARS | August 2017
28

Oil & Gas:
Oil price inches up
Oil & Gas trades below its historical average P/B of 1.6x
at 1.5x and P/E of 12.1x v/s 10-year average of 11.9x.
OMCs’ stock performance continued to be volatile due
to uncertainties of integration.
Disruption in Nigeria, increased focus from OPEC/non-
OPEC towards compliance and slowing of rig count
addition resulted in rise in oil prices.
Rise in oil price has helped stock performance of both
ONGC and GAIL.
Petronet has declined due to poor offtake of LNG in the
country in May and June 2017.
We expect crude oil price to rise as the global market
rebalances.
Sector Performance
MoM: +7%
PE (x)
10 Yr Avg
10.6
13.8
13.0
8.8
10.2
12.6
11.0
11.3
10.9
13.8
Relative to Sensex P/E (%)
Current
10 Yr Avg
-39
-39
-30
-20
-16
-25
-36
-49
-50
-41
23
-27
-38
-37
-51
-35
-11
-37
-32
-20
PB (x)
10 Yr Avg
1.4
1.9
1.9
1.1
1.1
2.8
1.8
1.7
2.0
1.6
Relative to Sensex P/B (%)
Current
10 Yr Avg
-13
-46
-46
-28
-25
-29
-15
-60
-48
-57
61
6
-35
-32
-67
-38
12
-23
-49
-40
Company
BPCL
GAIL (India)
Guj.St.Petronet
HPCL
IOCL
Indraprastha Gas
MRPL
ONGC
Petronet LNG
Reliance Inds.
Current
12.1
13.7
16.5
12.6
9.8
24.3
12.2
9.6
17.6
13.5
Prem/Disc (%)
14
-1
27
43
-3
93
11
-15
62
-3
Current
2.5
1.5
2.1
2.4
1.5
4.6
1.8
0.9
3.2
1.4
Prem/Disc (%)
71
-21
12
128
29
63
3
-43
56
-9
BULLS & BEARS | August 2017
29

Retail:
Rich valuations of 53x do not factor in downside risk
The retail sector trades at a P/E of 52.8x, at a 57%
premium to historical average.
1QFY18 was a good quarter for all retail formats,
particularly for Titan’s jewelry division. The division
recorded exceptional revenue growth in 1QFY18,
according to management. It witnessed 50% growth
YoY during the Akshaya Tritiya period.
JUBI is facing challenge to stay relevant amid
competition from online and offline players. Every
quarter of delay in SSSG recovery leads to further sharp
cut in EPS because of high fixed cost intensity.
GST implementation, if done well, can be a longer-term
positive, particularly for TTAN.
Company
Jubilant Food
Titan Inds.
Current
78.5
49.8
PE (x)
10 Yr Avg
71.4
31.0
Prem/Disc (%)
10
61
Relative to Sensex P/E (%)
Current
10 Yr Avg
298
312
153
79
Current
9.5
9.9
PB (x)
10 Yr Avg
12.5
9.0
Prem/Disc (%)
-24
11
Relative to Sensex P/B (%)
Current
10 Yr Avg
237
372
250
238
BULLS & BEARS | August 2017
30

Technology:
Soft start to the year
Technology trades at a P/E of 16.2x, 2% above its
historical average of 15.9x.
1QFY18 results announced so far have failed to
surprise. Revenue growth has been in line with already
subdued expectations, led by slower pick-up in BFS,
and weakness in verticals like Retail and
Communication.
Several factors impacted profitability, including wage
hikes, INR appreciation and visa expenses, leading to
compounding of pressures.
While Infosys and Tech Mahindra trade at discount to
their 10-year historical average P/E, all other
companies are trading at par or at a premium to their
averages.
Sector Performance
MoM: +6%
Company
Cyient
HCL Technologies
Hexaware Tech.
Infosys
KPIT Tech.
MphasiS
NIIT Tech.
TCS
Tech Mahindra
Wipro
Zensar Tech.
Current
14.2
14.2
15.6
15.1
10.8
14.0
11.9
18.6
12.0
15.7
13.9
PE (x)
10 Yr Avg
11.6
13.4
13.8
17.1
10.2
10.8
8.8
17.5
13.0
14.7
7.3
Prem/Disc (%)
23
5
13
-11
6
29
36
6
-8
7
90
Relative to Sensex P/E (%)
Current
10 Yr Avg
-28
-33
-28
-23
-21
-20
-23
-1
-45
-41
-29
-37
-40
-49
-6
1
-39
-25
-20
-15
-29
-58
Current
2.4
3.2
3.6
2.9
1.4
2.1
1.7
5.8
1.8
2.5
2.1
PB (x)
10 Yr Avg
1.9
3.1
2.6
4.1
2.0
2.1
1.6
5.9
3.1
3.0
1.6
Prem/Disc (%)
29
4
37
-30
-32
0
10
0
-42
-17
35
Relative to Sensex P/B (%)
Current
10 Yr Avg
-15
-30
13
16
27
-1
2
55
-51
-24
-27
-22
-40
-41
106
121
-35
19
-11
14
-26
-41
BULLS & BEARS | August 2017
31

Telecom:
Witnessing early signs of sector revival
Over the last one month, the Telecom sector witnessed
few major developments that have resurrected the
outlook of the sector.
1) RJIo cut down freebies by ~35%, as its
Dhan Dhana
Dhan
plans expired in July. It is gradually easing
subscribers into paid subscription, which should reduce
competitive intensity.
2) Rjio’s device and price plan launch for VoLTE feature
phones hints at low disruption.
3) Telecom results stabilised, with QoQ flat revenue.
We believe the sector is likely to bottom out by the end
of FY18 in terms of both competitive and capex
intensity. This should drive ARPU-led value accretion
and healthy FCF generation. We believe EV/EBITDA of
7.5x does not fully capture the EBITDA growth
potential beyond FY18.
PE (x)
10 Yr Avg
34.6
28.7
43.9
Relative to Sensex P/E (%)
Current
10 Yr Avg
315
99
-
65
135
153
PB (x)
10 Yr Avg
2.9
2.2
6.0
Sector Performance
MoM: +10%
Current
2.4
1.7
9.1
Prem/Disc (%)
-16
-23
52
Relative to Sensex P/B (%)
Current
10 Yr Avg
-15
8
-39
-16
223
126
Company
Bharti Airtel
Idea Cellular
Tata Comm
Current
81.8
NA
46.2
Prem/Disc (%)
136
-
5
BULLS & BEARS | August 2017
32

Utilities:
Exchange prices decline MoM; power demand weak
Utilities trade at a P/B of 1.6x, at a 22% discount to
historical average.
Coal India, Power Grid and CESC trade near historical
average P/B, while NTPC, Tata Power and JSW Energy
trade at a discount to historical average P/B.
Short-term power prices averaged INR2.49/kWh in July,
down 4% MoM on weak demand and over-supply.
Conventional electricity generation was flat YoY in June
2017, after increasing 7% YoY in May 2017. Hydro
generation growth was strong at +10% YoY.
Sector Performance
MoM: +4%
Company
CESC
Coal India
JSW Energy
NTPC
Power Grid Corpn
Tata Power
Current
10.2
13.9
22.4
11.5
12.0
12.6
PE (x)
10 Yr Avg
19.2
15.3
15.7
14.1
14.2
21.4
Prem/Disc (%)
-47
-9
43
-19
-16
-41
Relative to Sensex P/E (%)
Current
10 Yr Avg
-48
10
-30
-12
14
-9
-42
-18
-39
-18
-36
23
Current
1.0
6.3
1.1
1.3
2.0
1.5
PB (x)
10 Yr Avg
1.0
6.0
1.6
1.8
2.0
2.2
Prem/Disc (%)
4
5
-34
-32
0
-29
Relative to Sensex P/B (%)
Current
10 Yr Avg
-63
-62
122
126
-62
-38
-55
-30
-30
-26
-45
-18
BULLS & BEARS | August 2017
33

Motilal Oswal Securities Limited
MEMBER OF BSE AND NSE
Disclosures
Motilal Oswal Tower, Sayani Road, Prabhadevi, Mumbai 400 025, INDIA
BOARD: +91 22 3982 5500 | WEBSITE:
www.motilaloswal.com
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Securities Ltd. (MOSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOSL, the Research Entity (RE) as defined in the Regulations, is engaged in the business
of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial products. MOSL is a subsidiary company of Motilal Oswal Financial Service
Ltd. (MOFSL). MOFSL is a listed public company, the details in respect of which are available on www.motilaloswal.com. MOSL is registered with the Securities & Exchange Board of India (SEBI) and is a
registered Trading Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Metropolitan Stock Exchange Of India Ltd. (MSE) for its stock broking activities & is
Depository participant with Central Depository Services Limited (CDSL) & National Securities Depository Limited (NSDL) and is member of Association of Mutual Funds of India (AMFI) for distribution of
financial products. Details of associate entities of Motilal Oswal Securities Limited are available on the website at http://onlinereports.motilaloswal.com/Dormant/documents/Associate%20Details.pdf
Pending Regulatory Enquiries against Motilal Oswal Securities Limited by SEBI:
SEBI pursuant to a complaint from client Shri C.R. Mohanraj alleging unauthorized trading, issued a letter dated 29th April 2014 to MOSL notifying appointment of an Adjudicating Officer as per SEBI
regulations to hold inquiry and adjudge violation of SEBI Regulations; MOSL requested SEBI to provide all documents, records, investigation report relied upon by SEBI which were referred in Show Cause
Notice and also sought personal hearing. The matter is currently pending.
MOSL, it’s associates, Research Analyst or their relative may have any financial interest in the subject company. MOSL and/or its associates and/or Research Analyst may have beneficial ownership of 1% or
more securities in the subject company at the end of the month immediately preceding the date of publication of the Research Report. MOSL and its associate company(ies), their directors and Research
Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in
any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or
lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no
bearing whatsoever on the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOSL even though
there might exist an inherent conflict of interest in some of the stocks mentioned in the research report. Research Analyst may have served as director/officer, etc. in the subject company in the last 12 month
period. MOSL and/or its associates may have received any compensation from the subject company in the past 12 months.
In the last 12 months period ending on the last day of the month immediately preceding the date of publication of this research report, MOSL or any of its associates may have:
a)managed or co-managed public offering of securities from subject company of this research report,
b)received compensation for investment banking or merchant banking or brokerage services from subject company of this research report,
c)received compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company of this research report.
d)Subject Company may have been a client of MOSL or its associates during twelve months preceding the date of distribution of the research report.
MOSL and it’s associates have not received any compensation or other benefits from the subject company or third party in connection with the research report. To enhance transparency, MOSL has
incorporated a Disclosure of Interest Statement in this document. This should, however, not be treated as endorsement of the views expressed in the report. MOSL and / or its affiliates do and seek to do
business including investment banking with companies covered in its research reports. As a result, the recipients of this report should be aware that MOSL may have a potential conflict of interest that may
affect the objectivity of this report. Compensation of Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions.
BULLS & BEARS | August 2017

Terms & Conditions:
This report has been prepared by MOSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and may not be altered in any way,
transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of MOSL. The report is based on the facts, figures and
information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in nature. The information is obtained from publicly available media or other sources believed to
be reliable. Such information has not been independently verified and no guaranty, representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information
and opinions are subject to change without notice. The report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities
or other financial instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOSL will not treat recipients as customers by
virtue of their receiving this report.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will
be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
Disclosure of Interest Statement
Companies where there is interest
Analyst ownership of the stock
No
A graph of daily closing prices of securities is available at www.nseindia.com, www.bseindia.com. Research Analyst views on Subject Company may vary based on Fundamental research and Technical
Research. Proprietary trading desk of MOSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated from MOSL research activity and therefore it can have an
independent view with regards to subject company for which Research Team have expressed their views.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary to
law, regulation or which would subject MOSL & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong Securities and Futures
Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst Regulations) 2014 Motilal Oswal Securities (SEBI Reg No.
INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of research report in Hong Kong. This report is intended for distribution only to “Professional
Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity to which this document relates is only available to professional investor and will be engaged only with professional
investors.” Nothing here is an offer or solicitation of these securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who
compile this report is/are not located in Hong Kong & are not conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Securities Limited (MOSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state laws in the United States. In
addition MOSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the "Acts), and under applicable state laws
in the United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by MOSL, including the products and services described herein are not
available to or intended for U.S. persons. This report is intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC
(henceforth referred to as "major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this
document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S.
Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors
based in the U.S., MOSL has entered into a chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to
this report will have to be executed within the provisions of this chaperoning agreement. The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such
research analyst may not be associated persons of the U.S. registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a
subject company, public appearances and trading securities held by a research analyst account.
BULLS & BEARS | August 2017

For Singapore
Motilal Oswal Capital Markets Singapore Pte Limited is acting as an exempt financial advisor under section 23(1)(f) of the Financial Advisers Act(FAA) read with regulation 17(1)(d) of the Financial Advisors
Regulations and is a subsidiary of Motilal Oswal Securities Limited in India. This research is distributed in Singapore by Motilal Oswal Capital Markets Singapore Pte Limited and it is only directed in Singapore to
accredited investors, as defined in the Financial Advisers Regulations and the Securities and Futures Act (Chapter 289), as amended from time to time. In respect of any matter arising from or in connection with
the research you could contact the following representatives of Motilal Oswal Capital Markets Singapore Pte Limited:
Disclaimer:
The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any
other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for informational purpose and may not be used or considered as an offer
document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any
investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own
investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient.
Each recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document
(including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views expressed may not be suitable for all
investors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade securities - involve substantial risk and are not suitable for all investors. No
representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of the information and opinions contained in this document. The Disclosures of Interest Statement
incorporated in this document is provided solely to enhance the transparency and should not be treated as endorsement of the views expressed in the report. This information is subject to change without any
prior notice. The Company reserves the right to make modifications and alternations to this statement as may be required from time to time without any prior approval. MOSL, its associates, their directors and
the employees may from time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to perform
investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a separate, distinct and independent of
each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of information that is already available in publicly accessible media or
developed through analysis of MOSL. The views expressed are those of the analyst, and the Company may or may not subscribe to all the views expressed therein. This document is being supplied to you solely
for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. This report is not directed or
intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would
be contrary to law, regulation or which would subject MOSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all
jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction. Neither the Firm, not its directors,
employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with
the use of the information. The person accessing this information specifically agrees to exempt MOSL or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and
agrees not to hold MOSL or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOSL or any of its affiliates or employees free and harmless from all losses, costs,
damages, expenses that may be suffered by the person accessing this information due to any errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022-3980 4263; www.motilaloswal.com. Correspondence Address:
Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad (West), Mumbai- 400 064. Tel No: 022 3080 1000. Compliance Officer: Neeraj Agarwal, Email Id: na@motilaloswal.com, Contact
No.:022-30801085.
Registration details of group entities.: MOSL: NSE (Cash): INB231041238; NSE (F&O): INF231041238; NSE (CD): INE231041238; BSE (Cash): INB011041257; BSE(F&O): INF011041257; BSE(CD);
MSE(Cash): INB261041231; MSE(F&O): INF261041231; MSE(CD): INE261041231; CDSL: IN-DP-16-2015; NSDL: IN-DP-NSDL-152-2000; Research Analyst: INH000000412. AMFI: ARN 17397. Investment
Adviser: INA000007100. Motilal Oswal Asset Management Company Ltd. (MOAMC): PMS (Registration No.: INP000000670) offers PMS and Mutual Funds products. Motilal Oswal Wealth Management Ltd.
(MOWML): PMS (Registration No.: INP000004409) offers wealth management solutions. *Motilal Oswal Securities Ltd. is a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs, Insurance and IPO
products. * Motilal Oswal Commodities Broker Pvt. Ltd. offers Commodities Products. * Motilal Oswal Real Estate Investment Advisors II Pvt. Ltd. offers Real Estate products. * Motilal Oswal Private Equity
Investment Advisors Pvt. Ltd. offers Private Equity products
BULLS & BEARS | August 2017

Quant Research & India Strategy Gallery
BULLS & BEARS | August 2017