Angel Platinum Portfolio

Introduction
We are pleased to present you Angel Platinum Portfolio report. We have analyzed your risk profile and
recommended the Moderate portfolio for your equity allocation.
You have to execute the portfolio either on your own or through your Equity Advisor.
This report contains:
1. Risk Profile
2. Portfolio Structure
3. Investment Rationale
4. Past Performance
 Risk Profile
• Risk profile is determined based on the information provided by you and your responses in the risk
profiling exercise.
• You have emerged as an investor with a “Moderate “ profile. Investor with his profile typically have
the following characteristics.

1. Your primary goal is capital appreciation with value and growth stocks

2. You are likely to make investments that have moderate level of risk and generates

moderate returns

3. Further benchmark for the portfolio will be BSE 100

 Moderate PortfolioStructure
Sr . No. Stock Name
1 Axis Bank

2 Bata India

3 Blue Star

4 ICICI Bank

5 KEI Industries

6 M&M

7 Maruti Suzuki

8 Parag Milk Foods

9 RBL Bank

10 Shriram Transport Finance

11 VIP Industries

*All stocks will carry equal weightages

THE STORY OF THE STOCKS…
 Axis Bank
M-Cap: Rs. 1,85,801 Cr CMP: Rs. 723
 Axis Bank's asset quality deteriorated in FY2017, while it peaked in Q4FY18
(GNPA-6.8%) largely owing to legacy corporate loans (Watchlist). As of Q2FY19,
60% of the bank's stressed asset pool has been recognised as NPAs, hence we
expect the pace of incremental slippages to decline. Further, shift towards high
rated corporate (FY2016 - 62% to Q2FY19 - 79%), reduction in slippages and
healthy coverage of 58% on NPLs (if we include technical write-offs - 73%),
would keep credit costs under control.
 We believe, with new leadership, improving credit cycle and strong CASA ratio
(47.7%), the bank would focus more on higher rated corporate and scale up its
retail assets, improve branch productivity.
 Axis Bank currently trades at 2.2x its FY2020E price to book value (after
adjusting value of subsidiaries). We expect the stock to re-rate owing to (1) new
leadership, (2) limited stressed loan pool, and (3) improvement in return ratio
(ROA/ROE – 1.1%/12.2% by FY20).
Y/E Op.Inc NIM PAT EPS ABV ROA ROE P/E P/ABV
March (Rs. Cr) (%) (Rs. Cr) (Rs.) (x) (%) (%) (x) (x)
FY2019E 21,771 3.2 4,331 17 247 0.6 6.6 36.8 2.5
FY2020E 26,195 3.4 8,769 34 284 1.1 12.2 18.2 2.2
*CMP as on 31st Jan’19
 Bata India
M-Cap: Rs.14,376 Cr CMP: Rs. 1,119

 The Indian footwear industry is valued at Rs.50,000-55,000 Cr, which is

expected to grow at a CAGR of ~15% going ahead. Two third of the industry is
mainly dominated by the unorganized sector which suggest huge untapped
opportunity.
 Strong retail stores expansion plan to boost growth (500 stores for next 5
years)
 Currently, women’s footwear segment accounts for ~30% of Bata sales, which
the company is targeting to increase to ~40% over the 3 years
 Currently, BIL’s 30-35% sales come from premium products like Hush Puppies,
Power, Marie Clarie, etc. BIL has plans to increase premium product sales from
current level of total revenue over next two years
Y/E Sales OPM PAT EPS ROE P/E P/BV EV/Sales
March (Rs. Cr) (%) (Rs. Cr) (Rs.) (%) (x) (x) (x)
FY2019E 3,005 14.5 280 22 16.3 51.7 8.4 4.6
FY2020E 3,494 14.7 329 26 16.6 44.0 7.3 3.9

*CMP as on 31st Jan’19

 Blue Star
M-Cap: Rs. 5,731 Cr CMP: Rs. 595

 Blue Star Limited is into the business of central air conditioning, commercial
refrigeration and water purifiers.
 As per Blue Star management, Indian room air-conditioner (AC) volumes to grow
from 15-20% CAGR over several years. This growth is expected to be driven by rising
penetration of ACs (4-5% currently vs. 30% global average), higher disposable income
and growing urbanization.
 Blue star is expect to continue to outperform the industry (sales growth in FY18,
industry vs. Blue Star – 11.5% vs. 15%) on the back of strong brand recall & wide
distribution network across India.
 Blue Star has maintained its leadership position in the electro mechanical space and
expects healthy ~10% CAGR over next two years with margin improvement (due high
margin order book).
Y/E Sales OPM PAT EPS ROE P/E P/BV EV/Sales

March (Rs. Cr) (%) (Rs. Cr) (Rs.) (%) (x) (x) (x)
FY2019E 5,122 6.1 154 16.0 17.6 39.0 6.8 1.2
FY2020E 5,854 6.3 201 20.9 21.0 29.9 6.3 1.1
*CMP as on 31st Jan’19
 ICICI Bank
M-Cap: Rs. 2,34,630 Cr CMP: Rs. 364
 ICICI bank has taken a slew of steps to strengthen its balance sheet. Measures such as
Incremental lending to higher rated corporate, reducing concentration in few stressed
sectors and building up the retail loan book. The share of retail loans in overall loans
increased to 57.3% (Q2FY19) from 38% in FY12.
 Asset quality likely to stabilize going ahead: ICICI bank’s slippages remained high during
FY18 and hence GNPA went up to 8.8% vs. 5.8% in FY16. We expect addition to stress
assets to reduce and credit costs to further decline owing to incremental lending to
higher rated corporate and faster resolution in Accounts referred to NCLT under IBC.
 The gradual improvement in recovery of bad loans would reduce credit costs, that
would help to improve return ratio. The strength of the liability franchise, shift in loan
mix towards retail assets and better rated companies, and improvement in bad loans
would be a key trigger for multiple expansion. We recommend a Buy rating on the
stock, with a price target of Rs. 410.

Y/E Op.Inc NIM PAT EPS ABV ROA ROE P/E P/ABV
March (Rs. Cr) (%) (Rs. Cr) (Rs.) (x) (%) (%) (x) (x)
FY2019E 26,797 3.2 5,795 9 147 0.6 5.4 40.4 2.5
FY2020E 31,339 3.3 13,264 21 164 1.3 11.6 17.7 2.2

*CMP as on 31st Jan’19

 KEI Industries
M-Cap: Rs. 2,854 Cr CMP: Rs. 362

 KEI Industries (KEI) is a cable manufacturing company and also engaged in

Engineering, Procurement and Construction (EPC) business.
 Currently, KEI has healthy order book of Rs.2,331 Cr (EPC is around Rs.1,290 Cr and
balance from cables, substation & EHV), which is 1.5x of FY18 EPS business
revenue.
 Currently, the retail segment contributes ~35% of sales, expected to touch 50% in
next two years, which would aid the operating margin.
 Currently, the company has 1,200 dealers, which it plans to increase by 10-15%
every year and is also involved in ad effective advertising campaigns for increasing
brand visibility like IPL sponsorship etc.
 KEI’s exports (14% of revenue in FY18) are expected to reach a level of 20-25% in
next two years on the back of higher order inflows and execution.
Y/E Sales OPM PAT EPS ROE P/E P/BV EV/Sales
March (Rs. Cr) (%) (Rs. Cr) (Rs.) (%) (x) (x) (x)
FY2019E 4,064 10.0 178 23 23.0 15.6 3.6 0.8
FY2020E 4,707 10.0 215 28 22.1 13.0 2.9 0.7

*CMP as on 31st Jan’19

 Mahindra & Mahindra
M-Cap: Rs. 84,637 Cr CMP: Rs. 681
Over the last 2-3 years, the stock of M&M has not delivered significant returns, however,
in the recent past, we have witnessed upward momentum in the stock due to various
triggers like:
 The monsoon scenario in India was good during the last 2 years and we expect
normal monsoon in this year too. Normal monsoon for third consecutive year would
be a strong trigger for tractor sales, which would benefit M&M due to its leadership
position with 40% market share and strong brand recall.
 The company’s second large business is Utility segment. In this segment, over the last
few years, M&M has been losing market share due to no new launches in SUV
segment like Maruti. Currently, M&M has come up with huge pipeline of 8 new
launches, of which 4 launches are completely new models which would compete with
Maruti & Hyundai. This, in our view would boost the growth in this segment, as
historically new launches capture the market share.

Y/E Sales OPM PAT EPS ROE P/E P/BV EV/Sales

March (Rs. Cr) (%) (Rs. Cr) (Rs.) (%) (x) (x) (x)
FY2019E 54,939 13.0 5,021 42 14.7 18.3 2.7 1.3
FY2020E 62,235 13.0 5,991 50 15.4 15.4 2.4 1.2

*CMP as on 31st Jan’19

 Maruti Suzuki
M-Cap: Rs. 2,00,220 Cr CMP: Rs. 6,628
 Maruti Suzuki India Limited (MSIL), is an automobile manufacturer in India. MSIL has
maintained its market leadership despite the increase in competitive intensity. MSIL
has managed to increase its market share from ~42% in FY14 to 49.9% in FY18.

 In the last two years, company has seen improvement in the business mix with the
pie of the utility vehicles growing from ~4% to current 15% due to successful
product launched like Baleno & Vitara Brezza.

 The 2-3 months of waiting period of new models, launch of Swift Hatchback in
January-2018 and headroom for more capacity utilization at Gujarat plant are the
near term earning triggers.

Y/E Sales OPM PAT EPS ROE P/E P/BV EV/Sales

March (Rs. Cr) (%) (Rs. Cr) (Rs.) (%) (x) (x) (x)
FY2019E 90,185 14.7 8,714 289 18.1 25.9 4.7 2.0
FY2020E 1,03,712 15.3 10,331 342 18.8 21.9 4.1 1.7

*CMP as on 31st Jan’19

 Parag Milk Foods
M-Cap: Rs. 1,743 Cr CMP: Rs. 207
 Leading dairy FMCG player
 Successful in creating strong brands and in launching innovative products faster
than cooperatives like Amul and Mother Dairy
 Second player in processed cheese with 20% larger capacity than Amul. Categories
like ghee also offers huge growth opportunities to gain market share
 Strong distribution expansion plan in North India
 Cheap valuations versus FMCG stocks.
 We expect PARAG to report net revenue/PAT CAGR of 17%/35% respectively over
FY2018-20E.

Y/E Sales OPM PAT EPS ROE P/E P/BV EV/Sales

March (Rs. Cr) (%) (Rs. Cr) (Rs.) (%) (x) (x) (x)

FY2019E 2,271 10.4 115 14 13.4 18.1 2.4 1.0

FY2020E 2,706 11.1 162 19 15.9 12.7 2.1 0.8

*CMP as on 31st Jan’19

 RBL Bank
M-Cap: Rs. 24,108 Cr CMP: Rs. 566

 RBL Bank (RBK) has grown its loan book at healthy CAGR of 56% over FY10-18. We
expect it to grow at 30% over FY18-20E. With adequately diversified, well capitalised
B/S, RBK is set to grab market share from corporate lenders (esp. PSUs)

 The retail loan portfolio grew 45% YoY to Rs.11,361 Cr and now constitutes 27% of
the loan book(18% share in 4QFY17).NIM has expanded to 4.04%, up 50bps YoY,
despite a challenging interest rate scenario on the back of a changing portfolio mix
and lower cost of deposits. The management stated that the bank is slated to breach
4% NIM early in FY19.

 RBL Bank currently trades at 2.9x its FY2020E price to book value, which we believe is
reasonable for a bank in a high growth phase with stable asset quality.

Y/E Op.Inc NIM PAT EPS ABV ROA ROE P/E P/ABV
March (Rs. Cr) (%) (Rs. Cr) (Rs.) (x) (%) (%) (x) (x)
FY2019E 2,478 3.6 914 22 173 1.3 12.9 26.4 3.3
FY2020E 3,219 3.6 1,195 28 196 1.3 15.0 20.2 2.9

*CMP as on 31st Jan’19

 Shriram Transport Finance
M-Cap: Rs. 23,153 Cr CMP: Rs. 1,020
 SHTF's primary focus is on financing pre-owned commercial vehicles. CV/LCV
sales grew by 20%/25% in FY18, respectively. We expect AUM to grow at healthy
CAGR of 20% over FY2018-20E led by pick up in infra/ construction before 2019
elections, macro revival and Ramping up in rural distribution.
 In last three year SHTF, GNPA and credit cost has been increased primarily due to
the transition of NPA recognition from 180DPD to 90DPD (Q4FY18). FY19 Onward
we expect asset quality to improve and credit cost to normalise, this would help
to improve return ratio.
 We expect loan book/PAT CAGR of 20%/45% respectively over FY2018-20E. At
1.8x FY20E ABV, Valuation appears reasonable.

Y/E Op.Inc NIM PAT EPS ABV ROA ROE P/E P/ABV
March (Rs. Cr) (%) (Rs. Cr) (Rs.) (x) (%) (%) (x) (x)
FY2019E 8,042 9.0 2,315 102 674.3 2.4 16.6 12.0 2.2
FY2020E 9,702 9.1 3,284 145 796.0 2.8 19.7 8.5 1.8

*CMP as on 31st Jan’19

 VIP Industries Ltd
M-Cap: Rs. 6,778 Cr CMP: Rs. 480
 VIP is the leading luggage company with a market share of over 50%. It offers
travel bags and luggage across mass to premium categories like Carlton, VIP
Bags, Skybags, Aristocrat, Alfa and Capresse. We feel that the company is going
to be major beneficiary of the shift from unorganised to the organised luggage
industry which is growing at 15%+ CAGR.
 The company has reported strong growth in recent quarters driven by strong air
travel growth, marriage season and a cut in GST rate. We expect the company to
report a CAGR of 24%/ 38% in revenue and earnings over FY2018-20.
 Hence, we believe that the recent correction offers a very attractive entry point
at 27.5x FY20E EPS estimate given its secular growth story.

Y/E Sales OPM PAT EPS ROE P/E P/BV EV/Sales

March (Rs. Cr) (%) (Rs. Cr) (Rs.) (%) (x) (x) (x)
FY2019E 1,804 15.0 179 16 31.7 42.0 10.8 3.3
FY2020E 2,225 15.0 247 21 32.4 33.4 8.7 2.7

*CMP as on 31st Jan’19

Past Performance
 Angel Recommended Top-Pick’s Performance
Top-Picks vs Mutual Fund vs BSE 100 (Oct 30, 2015 –Dec 31, 2018)

70.0%

60.0%

50.0%
21.5% 22.8%
40.0%

30.0% 59.0%
20.0%
37.5% 36.2%
10.0%

0.0%
Top Pick MF Schemes* BSE 100
While there are no fixed and guaranteed return in equity, it is an asset class that will
offer you the best wealth creation opportunity over the long term
Disclaimer: Top picks returns have been taken for comparison as it is predecessor to the platinum portfolios, has a reasonably long performance history of
over three years and is managed by the same team.
Equity: ‘Investments in securities market are subject to market risk, read all the related documents carefully before investing.’
Mutual Funds are subject to market risk. Read all scheme related documents carefully before investing.
Note: *Average returns of Top 10 Multi-Cap Funds (based on AUM)