DIVIDEND MAXIMIZER
APRIL 2018
DIVIDEND MAXIMIZER
APRIL 2018
April 04, 2018
2
Dividend Maximizer - April 2018
Dividend April 2018
Company Name Sector
Market Cap
(Rs. Bn)
CMP*
(Rs.)
Dividend per
share (Rs.)**
Dividend
Yield (%)**
Average 5 Yr
Yield (%)
Castrol India Ltd Chemicals 203 205 6.6 3.2 2.5
Greaves Cotton Ltd Machinery 293 120 5.2 4.4 3.6
Hero MotoCorp Ltd Automobiles 728 3645 102.2 2.8 3.1
Hindustan Petroleum Corp Ltd Oil, Gas & Consumable Fuels 539 354 16.7 4.7 4.9
Indiabulls Housing Finance Ltd Thrifts & Mortgage Finance 554 1299 52.8 4.1 5.5
Infosys Ltd IT Services 2491 1140 33.5 2.9 2.0
The Karnataka Bank Ltd Banks 447 119 4.5 3.8 3.7
Power Finance Corp Ltd Diversied Financial Services 232 88 7.4 8.4 6.3
PTC India Ltd Independent Power Trading 275 93 4.0 4.3 2.9
VST Industries Ltd Tobacco 472 3060 110.0 3.6 4.3
*As on Apr 03, 2018, **Bloomberg Estimates
DIVIDEND
MAXIMIZER
In a strong equity market, where stocks have delivered good capital
appreciation (Sensex rose at a 11.8% CAGR over the last 5 years), investors
may overlook dividends. Taking into re-invested dividends, total shareholder
returns over the same period were 13.3% CAGR. This adds up over time, an
investment of INR 100 made 20 years back is worth Rs. 822, with reinvested
dividends the value of the investment is Rs. 1152.
Investing in stocks with healthy dividend yields and high dividend payouts is
a quite stable format of investing.
In the current economy, where bank xed deposits oer interest rates to
the tune of 6-7%, investing in stocks with a good investment yield is a good
investment in our view. Further, the interest on bank xed deposits is taxable
whereas no tax is payable on dividends until Rs. 10 lakh, hence leading to
a ecient post-tax outcome. We recommend that investors consider adding
high dividend yield stocks to their portfolio to bring in regular inows.
We oer a list of 10 stocks with high yields. We have considered stability of
dividends as well while looking for stocks with high forecast dividend yield.
We have also taken care to remove sector bias by adjusting the sector
composition to be as close as possible to the sector composition of BSE 500.
Analyst Contact
Vivek Ranjan Misra
040 - 3321 6296
vivekr.misra@karvy.com
For private circulation only. For important information about Karvy’s rating system and other disclosures refer
to the end of this material. Karvy Stock Broking Research is available on Thomson Reuters & Bloomberg
(Code: KRVY<GO>)
Exhibit 1: Price returns Vs Total returns
Source: Bloomberg
0
200
400
600
800
1000
1200
1400
Mar-98
Mar-00
Mar-02
Mar-04
Mar-06
Mar-08
Mar-10
Mar-12
Mar-14
Mar-16
Mar-18
Price returns
Returns with reinvested dividends
3
Dividend Maximizer - April 2018
Castrol India Ltd
India Research - Stock Broking
Bloomberg Code: CSTRL IN
Stock Performance (%)
1M 3M 6M 12M
Absolute 2 7 15 (5)
Relative to Sensex 4 9 9 (15)
Source: Bloomberg
Relative Performance*
Source: Bloomberg; *Index 100
Exhibit 3: Key Financials
YE Dec - Consolidated (Rs. Mn) CY13 CY14 CY15 CY16 CY17
Net Sales 31796 33923 32980 33579 38515
EBITDA 6875 7167 8949 10049 10330
EBITDA Margin (%) 21.6 21.1 27.1 29.9 26.8
Net Prot 5086 4746 6153 6749 6918
EPS (Rs.) 5.1 4.8 6.2 6.8 7.0
RoE (%) 72.6 76.0 114.7 115.2 85.6
PE (x) 30.5 52.3 35.5 27.9 27.6
Source: Bloomberg
Exhibit 1: Dividend/Share & Yield
Source: Bloomberg
Exhibit 2: Dividend Payout (%)
Source: Bloomberg
Castrol is one of the leading manufacturers of engine lubricants in India. The
company has pan India presence with its 3 manufacturing plants located at
Silvassa, Patalganga and Paharpur and a strong distribution network reaching out
to over 150,000 customers through retail outlets, which are serviced through 420
distributors nationally. Their main brands include: Castrol Edge, Castrol Magnatec,
Castrol GTX, Castrol Power1, Castrol Activ and Castrol CRB. About 40-43% of
the volume contributed by personal mobility segment comprising of 2-wheelers
and passenger cars has grown at a CAGR of 8.0% and 10.0% respectively during
CY12-17, where there is a substantial scope for marketing premium lubricants and
the commercial vehicle segment (incl. agricultural equipment) constitutes ~47-50%
of volumes. During CY17, the company actively focused on distribution expansion
which led to ~1% market share gain to ~21.0% in the automotive segment. Castrol
has ended CY17 with highest ever sales volume, clocking 205 mn Litres, gaining
most of it in the last Q4CY17.
Dividend Information (Rs.)
CMP (as on Apr 03, 2018) 205
Dividend/share* 6.6
Dividend Yield (%)* 3.2
* Bloomberg Estimates
Stock Information
Mkt Cap (Rs.bn/US$ bn) 203 / 3.1
52-wk High/Low (Rs.) 227 / 172
3M Avg. daily value (Rs.mn)
400.5
Beta (x) 0.8
Sensex/Nifty 33371 / 10245
O/S Shares (mn) 988.1
Face Value (Rs.) 5.0
Shareholding Pattern (%)
Promoters 51.0
FIIs 10.3
DIIs 16.8
Others 21.9
80
90
100
110
120
130
Apr-17
May-17
Jun-17
Jul-17
Aug -17
Sep-17
Oct-17
Nov-17
Dec-17
Jan-18
Feb-18
Mar -18
Apr-18
Sensex
68.1
78.2
72.3
80.6
100.1
81.1
81.0
0
21
42
63
84
105
CY13
CY14
CY15
CY16
CY17
CY18E
CY19E
3.5
3.8
4.5
4.5
7.0
6.1
6.6
2.5%
2.6%
1.9%
2.6%
2.8%
3.0%
3.2%
0%
1%
2%
3%
4%
0
2
4
6
8
CY13
CY14
CY15
CY16
CY17
CY18E
CY19E
Dividend/Share (Rs.)
Dividend Yield (%)
5yrs avg. Yield (%)
2.5%
4
Dividend Maximizer - April 2018
Greaves Cotton Ltd
India Research - Stock Broking
Bloomberg Code: GRV IN
Stock Performance (%)
1M 3M 6M 12M
Absolute (3) (16) (11) (29)
Relative to Sensex (1) (14) (15) (37)
Source: Bloomberg
Relative Performance*
Source: Bloomberg; *Index 100
Exhibit 1: Dividend/Share & Yield
Source: Bloomberg
Exhibit 2: Dividend Payout (%)
Source: Bloomberg
Greaves Cotton Ltd. (GCL) is a leading diversied engineering company
manufacturing machinery and equipment. Greaves business is organised into Auto
engines, Auxiliary Power Solutions, Farm Equipment Business and After-Market
business. The company has 6 manufacturing facilities and 3,500+ customer touch
points spread across India. Over the years, Greaves has increased its investments
in R&D and the spending has averaged to the tune of ~1.5% of sales during FY08-
17 peaking in the scals before CPCB norms came into force. In future, Greaves
is committed to transform itself into fuel agnostic engineered solutions provider
encompassing both manufacturing and service business lines. Greaves has
manufactured 5 mn diesel engines over the years and has market share of ~78.0%
in the 3 Wheeler (3w) diesel engines market. Greavescost leadership enables it
to be a major source of 3w auto engines in India with partnerships over 35 auto
manufacturers. Greaves products for Agri and Auxiliary power segment crossed
3 mn pump sets and 1 mn generator sets mark recently.
Exhibit 3: Key Financials
YE Mar-Consolidated (Rs. Mn) FY13 FY14 FY15 FY16 FY17
Net Sales 19061 17359 16977 16102 16311
EBITDA 2406 1877 2850 2674 2434
EBITDA Margin (%) 12.6 10.8 16.8 16.6 14.9
Net Prot 1480 1234 836 2009 1807
EPS (Rs.) 6.1 5.1 3.4 8.2 7.4
RoE (%) 21.7 15.9 10.2 23.4 19.9
PE (x) 10.6 16.0 25.6 14.8 23.1
Source: Bloomberg
Dividend Information (Rs.)
CMP (as on Apr 03, 2018) 120
Dividend/share* 5.2
Dividend Yield (%)* 4.4
* Bloomberg Estimates
Stock Information
Mkt Cap (Rs.bn/US$ bn) 293 / 0.5
52-wk High/Low (Rs.) 179 / 112
3M Avg. daily value (Rs.mn)
147.0
Beta (x) 0.9
Sensex/Nifty 33371 / 10245
O/S Shares (mn) 244.2
Face Value (Rs.) 2.0
Shareholding Pattern (%)
Promoters 51.0
FIIs 7.3
DIIs 22.1
Others 19.6
50
70
90
110
130
Apr-17
May-17
Jun-17
Jul-17
Aug -17
Sep-17
Oct-17
Nov-17
Dec-17
Jan-18
Feb-18
Mar -18
Apr-18
GRV IN Equity
Sensex
26.4
25.7
43.9
66.3
66.3
99.7
85.1
0
20
40
60
80
100
FY13
FY14
FY15
FY16
FY17
FY18E
FY19E
1.6
1.3
2.5
5.5
5.5
5.3
5.2
3.8%
1.7%
1.5%
7.9%
3.0%
4.4%
4.4%
0%
2%
4%
6%
8%
10%
0
2
4
6
FY13
FY14
FY15
FY16
FY17
FY18E
FY19E
Dividend/Share (Rs.)
Dividend Yield (%)
5yrs avg. Yield (%)
3.6%
5
Dividend Maximizer - April 2018
Hero MotoCorp Ltd
India Research - Stock Broking
Bloomberg Code: HMCL IN
Stock Performance (%)
1M 3M 6M 12M
Absolute 2 (3) (4) 14
Relative to Sensex 4 (1) (9) 2
Source: Bloomberg
Relative Performance*
Source: Bloomberg; *Index 100
Exhibit 1: Dividend/Share & Yield
Source: Bloomberg
Exhibit 2: Dividend Payout (%)
Source: Bloomberg
Hero Moto Corp Ltd manufactures 2-wheelers predominantly catering to the
motorcycle segment with 51% domestic market share. Its product portfolio caters
to motorcycles ranging from 75cc-150cc and scooters in the 100cc-125cc range.
Hero recorded sales growth of 13.8% and total volume at 7.58 mn vehicles. Hero
is continually expanding its presence across various countries like Colombia,
Bangladesh and also across African, Middle East, Asian and American countries.
Hero sees a scalable opportunity in Bangladesh due to low penetration in the
2W segment and has setup new facility at Jessor, Bangladesh, as a joint venture
with ‘Nitol Niloy Group’ with an initial annual capacity of 1,50,000 units. Hero has
stabilised operations at their Colombia plant to ramp up capacity to 1,50,000 units,
whose location is logistically advantageous to export to Andean and Latin American
Countries. In addition to this, the company has indicated a capex of Rs. 25 bn to
be deployed over the next two years to ramp up existing facilities and also for a
new facility at Andhra Pradesh taking the capacity to 10 mn units from the current
capacity of ~9.0 mn units.
Exhibit 3: Key Financials
YE Mar-Consolidated (Rs. Mn) FY13 FY14 FY15 FY16 FY17
Net Sales 235827 251249 273033 282189 282814
EBITDA 32870 35392 35086 43977 45760
EBITDA Margin (%) 13.9 14.1 12.9 15.6 16.2
Net Prot 21182 21027 23647 31420 35843
EPS (Rs.) 106.1 105.3 118.4 157.3 179.5
RoE (%) - 39.6 38.9 40.9 37.4
PE (x) 14.5 21.6 22.3 18.7 18.0
Source: Bloomberg
Dividend Information (Rs.)
CMP (as on Apr 03, 2018) 3645
Dividend/share* 102.2
Dividend Yield (%)* 2.8
* Bloomberg Estimates
Stock Information
Mkt Cap (Rs.bn/US$ bn) 728 / 11.1
52-wk High/Low (Rs.) 4200 / 3175
3M Avg. daily value (Rs.mn)
1296.0
Beta (x) 0.9
Sensex/Nifty 33371 / 10245
O/S Shares (mn) 199.7
Face Value (Rs.) 2.0
Shareholding Pattern (%)
Promoters 34.6
FIIs 42.3
DIIs 11.5
Others 11.6
90
100
110
120
130
Apr-17
May-17
Jun-17
Jul-17
Aug -17
Sep-17
Oct-17
Nov-17
Dec-17
Jan-18
Feb-18
Mar -18
Apr-18
HMCL IN Equity
Sensex
56.6
61.8
50.7
45.8
47.4
50.4
50.3
0
16
32
48
64
FY13
FY14
FY15
FY16
FY17
FY18E
FY19E
60.0
65.0
60.0
72.0
85.0
93.5
102.2
3.4%
2.9%
3.9%
2.5%
2.8%
2.6%
2.8%
1.0%
2.0%
3.0%
4.0%
5.0%
0
22
44
66
88
110
FY13
FY14
FY15
FY16
FY17
FY18E
FY19E
Dividend/Share (Rs.)
Dividend Yield (%)
5yrs avg. Yield (%)
3.1%
6
Dividend Maximizer - April 2018
Hindustan Petroleum Corp Ltd
India Research - Stock Broking
Bloomberg Code: HPCL IN
Stock Performance (%)
1M 3M 6M 12M
Absolute (6) (16) (20) 2
Relative to Sensex (4) (14) (24) (8)
Source: Bloomberg
Relative Performance*
Source: Bloomberg; *Index 100
Exhibit 1: Dividend/Share & Yield
Source: Bloomberg
Exhibit 2: Dividend Payout (%)
Source: Bloomberg
Hindustan Petroleum Corporation Ltd, a Fortune 500 company, is one of the major
integrated oil rening and marketing companies in India. The company, a Mega
Public Sector Undertaking (PSU) with Navaratna status, renes crude oil and
manufactures petroleum and petroleum products. The company’s products, which
are sold via outlets throughout India, include lube products, lubricating oil, aviation
fuel, hydraulic brake uid, greases, liqueed petroleum gas and insecticides. The
Government of India is a majority shareholder of the company. The company
operates through two coastal reneries, one at Mumbai (West Coast) of 6.5 million
Metric Tonnes per annum (MMTPA) and the other at Vishakhapatnam (East Coast)
with a capacity of 8.3 MMTPA. In the decade ending FY17, earnings grew by 19.7%
CAGR and RoCE reached 21.2% by end of FY17. Government of India as a part of
scal management divested its 51.11% stake in HPCL to ONGC for Rs. 369 bn for
which ONGC raised debt from market.
Exhibit 3: Key Financials
YE Mar-Consolidated (Rs. Mn) FY13 FY14 FY15 FY16 FY17
Net Sales 2158936 2339494 2163903 1776017 1871084
EBITDA 35677 55467 54380 82786 108121
EBITDA Margin (%) 1.7 2.4 2.5 4.7 5.8
Net Prot 5013 10804 14986 46747 82358
EPS (Rs.) 3.3 7.1 9.8 10.2 54.0
RoE (%) 3.8 7.8 10.7 30.6 43.7
PE (x)* 19.3 9.7 14.7 17.1 6.5
Source: Bloomberg
Dividend Information (Rs.)
CMP (as on Apr 03, 2018) 354
Dividend/share* 16.7
Dividend Yield (%)* 4.7
* Bloomberg Estimates
Stock Information
Mkt Cap (Rs.bn/US$ bn) 539 / 8.3
52-wk High/Low (Rs.) 493 / 324
3M Avg. daily value (Rs.mn)
1707.0
Beta (x) 1.2
Sensex/Nifty 33371 / 10245
O/S Shares (mn) 1523.8
Face Value (Rs.) 10.0
Shareholding Pattern (%)
Promoters 51.1
FIIs 24.8
DIIs 12.0
Others 12.1
90
106
122
138
Apr-17
May-17
Jun-17
Jul-17
Aug -17
Sep-17
Oct-17
Nov-17
Dec-17
Jan-18
Feb-18
Mar -18
Apr-18
HPCL IN Equity
Sensex
57.4
48.6
55.4
24.9
37.0
38.2
36.6
0
20
40
60
FY13
FY14
FY15
FY16
FY17
FY18E
FY19E
1.9
3.4
5.4
7.7
20.0
17.1
16.7
3.8%
3.4%
2.8%
6.1%
8.6%
4.8%
4.7%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
0
6
12
18
FY13
FY14
FY15
FY16
FY17
FY18E
FY19E
Dividend/Share (Rs.)
Dividend Yield (%)
5yrs avg. Yield (%)
4.9%
7
Dividend Maximizer - April 2018
Indiabulls Housing Finance Ltd
India Research - Stock Broking
Bloomberg Code: IHFL IN
Stock Performance (%)
1M 3M 6M 12M
Absolute 3 10 3 30
Relative to Sensex 6 12 (2) 17
Source: Bloomberg
Relative Performance*
Source: Bloomberg; *Index 100
Exhibit 1: Dividend/Share & Yield
Source: Bloomberg
Exhibit 2: Dividend Payout (%)
Source: Bloomberg
Indiabulls Housing Finance Ltd (IBHF) is one of the leading housing nance
company in India. The company has launched e-home loans, one of its kind in the
home loan industry. It has credit rating of AAA from CARE and AA+ from CRISIL
and is among very few who enjoy such rating from the rating agencies. It has
pan India presence with a strong hold in tier 1 and tier 2 cities. IBHF is one of the
largest housing nance company with AUM of more than 1 tn. By Q3FY18, IBHF’s
borrowings were balanced between debentures & securities (53%), bank loans
(34%), sell downs (10%) and ECB’s (3%). Its Yield on Assets (11.14%), Cost of
funds (7.92%) and Interest Spreads (3.22%) are industry leading. In terms of loan
asset composition, Mortgage Loans account for 79% and Corporate Mortgage
Loans constitute the rest. Its FY17 Return on Assets (RoA) and Return on Equity
(RoE) to the tune of 3.6% and 26% respectively. Its FY17 Capital Adequacy Ratio
(CAR) stood at 20.91% splitting into Tier I of 17.25% and Tier II of 3.66%. Loan
asset quality measured as a per cent of loan assets reached 0.77% and 0.31% at
gross and net level respectively by Q3FY18.
Exhibit 3: Key Financials
YE Mar-Consolidated (Rs. Mn) FY13 FY14 FY15 FY16 FY17
Net Interest Income 18622 20572 22066 30848 43905
Net Prot 12584 15642 19011 23447 29064
EPS (Rs.) 40.3 48.0 55.0 59.8 68.8
BVPS (Rs.) 166 171 187 254 286
P/E (x) 7.0 5.0 10.2 10.9 14.5
P/BV (x) 1.7 1.4 3.0 2.6 3.5
RoE (%) 24.8 28.7 30.8 27.1 25.5
RoA (%) 3.2 3.7 3.7 3.5 3.2
Source: Bloomberg
Dividend Information (Rs.)
CMP (as on Apr 03, 2018) 1299
Dividend/share* 52.8
Dividend Yield (%)* 4.1
* Bloomberg Estimates
Stock Information
Mkt Cap (Rs.bn/US$ bn) 554 / 8.5
52-wk High/Low (Rs.) 1440 / 920
3M Avg. daily value (Rs.mn)
2436.8
Beta (x) 1.2
Sensex/Nifty 33371 / 10245
O/S Shares (mn) 426.5
Face Value (Rs.) 2.0
Shareholding Pattern (%)
Promoters 22.8
FIIs 55.3
DIIs 12.0
Others 9.9
90
110
130
150
Apr-17
May-17
Jun-17
Jul-17
Aug -17
Sep-17
Oct-17
Nov
-17
Dec-17
Jan-18
Feb-18
Mar
-
18
Apr-18
IHFL IN Equity
Sensex
49.7
61.9
48.6
80.9
39.4
50.3
47.5
0
21
42
63
84
FY13
FY14
FY15
FY16
FY17
FY18E
FY19E
20.0
29.0
26.0
45.0
27.0
45.8
52.8
0.0%
10.5%
7.2%
5.9%
3.7%
3.5%
4.1%
0.0%
3.0%
6.0%
9.0%
12.0%
0
18
36
54
FY13
FY14
FY15
FY16
FY17
FY18E
FY19E
Dividend/Share (Rs.)
Dividend Yield (%)
5yrs avg. Yield (%)
5.5%
8
Dividend Maximizer - April 2018
Infosys Ltd
India Research - Stock Broking
Bloomberg Code: INFO IN
Stock Performance (%)
1M 3M 6M 12M
Absolute (2) 12 27 13
Relative to Sensex 0 14 20 1
Source: Bloomberg
Relative Performance*
Source: Bloomberg; *Index 100
Exhibit 1: Dividend/Share & Yield
Source: Bloomberg
Exhibit 2: Dividend Payout (%)
Source: Bloomberg
Infosys is India’s second-largest software services company, with US$ 10.7 bn in
revenues in FY17. The company is an end-to- end IT and BPO services provider,
oering services ranging from software development, maintenance, technology and
management consulting, testing, systems integration, engineering services, BPO
and package implementation. INFY oers these services to a variety of industry
verticals, namely Banking, Financial Services and Insurance group (BFSI-33%),
Manufacturing & Hi-tech group (22%), Retail, Life Sciences, Transportation & CPG
group (23%) and Telecommunications, Energy & Utilities group (22%). INFY derives
a majority of its revenues from the North American market (60.7%). Beginning April
2015, INFY adopted new higher value oerings which are categorised into new
services (9.7% of revenue) and new products (1.7% of revenue). In the last decade,
INFY’s per employee revenue grew by 6.4% CAGR and prot per employee grew
by 3.4%. With net additions at 1,327 till Q3FY18, total employee count in INFY
stands at 2,01,691.
Exhibit 3: Key Financials
YE Mar-Consolidated (Rs. Mn) FY13 FY14 FY15 FY16 FY17
Net Sales 403520 501330 533190 624410 684840
EBITDA 113000 131850 144260 170790 186040
EBITDA Margin (%) 28.0 26.3 27.1 27.4 27.2
Net Prot 94210 106480 123290 134890 143530
EPS (Rs.) 41.2 46.6 53.9 59.0 62.8
RoE (%) 25.7 24.4 24.1 23.2 22.0
PE (x)* 17.5 17.6 20.6 20.6 16.3
Source: Bloomberg
Dividend Information (Rs.)
CMP (as on Apr 03, 2018) 1140
Dividend/share* 33.5
Dividend Yield (%)* 2.9
* Bloomberg Estimates
Stock Information
Mkt Cap (Rs.bn/US$ bn) 2491/38.3
52-wk High/Low (Rs.) 1221 / 860
3M Avg. daily value (Rs.mn)
6014.8
Beta (x) 0.7
Sensex/Nifty 33371 / 10245
O/S Shares (mn) 2184.1
Face Value (Rs.) 5.0
Shareholding Pattern (%)
Promoters 12.9
FIIs 34.9
DIIs 21.7
Others 30.5
85
95
105
115
125
Apr-17
May-17
Jun-17
Jul-17
Aug -17
Sep-17
Oct-17
Nov-17
Dec-17
Jan-18
Feb-18
Mar -18
Apr-18
INFO IN Equity
Sensex
25.6
34.0
41.5
41.1
41.0
46.0
47.6
0
10
20
30
40
50
FY13
FY14
FY15
FY16
FY17
FY18E
FY19E
10.5
15.8
29.8
24.3
25.8
31.1
33.5
1.8%
1.6%
1.8%
2.1%
2.5%
2.7%
2.9%
0%
1%
2%
3%
4%
0
9
18
27
36
FY13
FY14
FY15
FY16
FY17
FY18E
FY19E
Dividend/Share (Rs.)
Dividend Yield (%)
5yrs avg. Yield (%)
2.0%
9
Dividend Maximizer - April 2018
The Karnataka Bank Ltd
India Research - Stock Broking
Bloomberg Code: KBL IN
Stock Performance (%)
1M 3M 6M 12M
Absolute (11) (24) (18) (16)
Relative to Sensex (9) (22) (22) (25)
Source: Bloomberg
Relative Performance*
Source: Bloomberg; *Index 100
Exhibit 1: Dividend/Share & Yield
Source: Bloomberg
Exhibit 2: Dividend Payout (%)
Source: Bloomberg
Karnataka Bank is one of India’s region focused private sector bank. Major business
area for the bank is the state of Karnataka. The bank was originally incorporated
in year 1924 at Mangalore. Over the years, the bank has merged with Sringeri
Sharada Bank Ltd, Chitladurg Bank Ltd, and Bank of Karnataka. The bank has
crossed business turnover of Rs.1.02 trillion in Q3FY18. The bank heavily relies
on retail deposits (70.8%) and CASA standing at only 22.4% by Dec’17. The bank
generates Yield on Advances of 10.05% while incurring Cost of funds at a rate of
6.16% while maintaining spread at 3.89% and NII of 3.07%. The bank maintains
CAR of 12.26% with Tier I at 11.14% and Tier II at 1.12%. Bank’s asset quality in
terms of gross and net NPA stood at 3.97% and 2.98% by Q3FY18. It operates
781 branches of which ~45% are in rural and semi-urban areas. It has entered into
a joint venture agreement and holds equity investments to the extent of 15% in
Universal Sompo General Insurance.
Dividend Information (Rs.)
CMP (as on Apr 03, 2018) 119
Dividend/share* 4.5
Dividend Yield (%)* 3.8
* Bloomberg Estimates
Stock Information
Mkt Cap (Rs.bn/US$ bn) 447 / 6.9
52-wk High/Low (Rs.) 181 / 107
3M Avg. daily value (Rs.mn)
549.7
Beta (x) 1.3
Sensex/Nifty 33371 / 10245
O/S Shares (mn) 282.6
Face Value (Rs.) 10.0
Shareholding Pattern (%)
Promoters 0.0
FIIs 18.0
DIIs 11.8
Others 70.2
Exhibit 3: Key Financials
YE Mar-Consolidated (Rs. Mn) FY13 FY14 FY15 FY16 FY17
Net Interest Income 10181 10561 11688 13029 14906
Net Prot 3481 3110 4515 4153 4523
EPS (Rs.) 15.1 13.4 19.5 18.0 19.4
BVPS (Rs.) 124 132 146 160 182
P/E (x) 7.1 7.1 5.2 4.7 7.3
P/BV (x) 0.9 0.7 0.7 0.5 0.8
RoE (%) 12.8 10.5 14.0 11.7 10.2
RoA (%) 0.9 0.7 0.9 0.8 0.7
Source: Bloomberg
70
90
110
130
Apr-17
May-17
Jun-17
Jul-17
Aug -17
Sep-17
Oct-17
Nov-17
Dec-17
Jan-18
Feb-18
Mar -18
Apr-18
KBL IN Equity
Sensex
21.6
24.2
20.9
22.7
25.0
28.9
22.4
0
10
20
30
FY13
FY14
FY15
FY16
FY17
FY18E
FY19E
3.3
3.3
4.1
4.1
4.0
4.4
4.5
3.1%
3.8%
3.5%
5.2%
3.0%
3.7%
3.8%
0%
2%
4%
6%
0
1
2
3
4
5
FY13
FY14
FY15
FY16
FY17
FY18E
FY19E
Dividend/Share (Rs.)
Dividend Yield (%)
5yrs avg. Yield (%)
3.7%
10
Dividend Maximizer - April 2018
Power Finance Corp Ltd
India Research - Stock Broking
Bloomberg Code: POWF IN
Stock Performance (%)
1M 3M 6M 12M
Absolute (14) (30) (30) (41)
Relative to Sensex (13) (29) (33) (47)
Source: Bloomberg
Relative Performance*
Source: Bloomberg; *Index 100
Exhibit 1: Dividend/Share & Yield
Source: Bloomberg
Exhibit 2: Dividend Payout (%)
Source: Bloomberg
Power Finance Corporation Ltd (PFC) is a state-owned Navratna non-banking
nancial company engaged in business of nancing companies in power sector
related activities, particularly generation activities. PFC oers fund-based and
non fund-based nancial assistance apart from oering consultancy and capital
advisory services related to power sector nancing. By 9MFY18, PFC’s borrowings
distributed as bonds (89%), short term loans (6%) and term loans (5%) of which
94% is rupee denominated loans and rest is foreign currency loans. Yield on Assets
and Cost of funds averaged to 11.02 % and 8.21% respectively. The loan assets
composition in terms of sanctions to activities like generation (58%), transmission
(10%), distribution (16%) and others (16%) allowing for Interest Spreads and Net
Interest Margin averages to 2.81% and 3.84% respectively. PFC generates best
in class annualised Return on Assets (RoA) and Return on Equity (RoE) to the
tune of 2.47% and 17.22% respectively. The company remains well capitalised
with Capital Adequacy Ratio (CAR) at 20.75% splitting into Tier I of 17.66% and
Tier II of 3.09%. Loan asset quality measured as a per cent of loan assets reached
to 5.71% and 4.23% at gross and net level respectively by 9MFY18. The same
without considering Govt. loans stands at 3.32% and 1.16% respectively.
Dividend Information (Rs.)
CMP (as on Apr 03, 2018) 88
Dividend/share* 7.4
Dividend Yield (%)* 8.4
* Bloomberg Estimates
Stock Information
Mkt Cap (Rs.bn/US$ bn) 232 / 3.6
52-wk High/Low (Rs.) 169 / 83
3M Avg. daily value (Rs.mn)
690.8
Beta (x) 1.2
Sensex/Nifty 33371 / 10245
O/S Shares (mn) 2640.1
Face Value (Rs.) 10.0
Shareholding Pattern (%)
Promoters 65.9
FIIs 14.5
DIIs 13.0
Others 6.6
Exhibit 3: Key Financials
YE Mar-Consolidated (Rs. Mn) FY13 FY14 FY15 FY16 FY17
Net Interest Income 60807 81347 94836 109967 102789
Net Prot 44377 54618 60044 61840 22361
EPS (Rs.) 16.8 20.7 22.7 23.4 8.5
BVPS (Rs.) 74 82 101 121 140
P/E (x) 5 5 6 4 17
P/BV (x) 1.2 1.2 1.4 0.7 1.0
RoE (%) 22.7 26.5 24.8 21.1 6.5
RoA (%) 2.9 3.0 2.8 2.6 0.9
Source: Bloomberg
50
70
90
110
130
Apr-17
May
-
17
Jun-17
Jul-17
Aug -17
Sep-17
Oct-17
Nov-17
Dec-17
Jan-18
Feb-18
Mar -18
Apr-18
POWF IN Equity
Sensex
20.8
21.8
20.0
29.7
59.0
32.9
30.3
0
20
40
60
FY13
FY14
FY15
FY16
FY17
FY18E
FY19E
3.5
4.5
4.6
7.0
5.0
8.1
7.4
5.1%
6.2%
3.8%
9.0%
7.3%
9.2%
8.4%
0%
2%
4%
6%
8%
10%
0.0
3.0
6.0
9.0
FY13
FY14
FY15
FY16
FY17
FY18E
FY19E
Dividend/Share (Rs.)
Dividend Yield (%)
5yrs avg. Yield (%)
6.3%
11
Dividend Maximizer - April 2018
PTC India Ltd
India Research - Stock Broking
Bloomberg Code: PTCIN IN
Stock Performance (%)
1M 3M 6M 12M
Absolute (7) (23) (24) (0)
Relative to Sensex (6) (21) (28) (11)
Source: Bloomberg
Relative Performance*
Source: Bloomberg; *Index 100
Exhibit 1: Dividend/Share & Yield
Source: Bloomberg
Exhibit 2: Dividend Payout (%)
Source: Bloomberg
PTC India is India’s largest power trading company with over ~40% of market
share in the power trading market. PTC has traded 327 billion units of power
since inception and generated cumulative revenue of US$16.7 bn over the years.
PTC’s cross-border trade (7.9bu in FY17) is with countries like Nepal, Bhutan and
Bangladesh and domestic operations (17.9bu in FY17) include supply of power
to 22 state utilities and 500+ industrial & commercial clients. In FY17, PTC traded
short term contracts of 25.9bu and rest were traded under long term contracts.
These are back-to-back buy and sell contracts with suppliers and customers. PTC
thrives on spread (Rs.0.48/unit). PTC operates two subsidiaries; PTC Financial
Services which funds power projects predominantly renewable energy sector and
PTC Energy owns and operates a portfolio of renewable energy projects totalling
over 290MW.
Exhibit 3: Key Financials
YE Mar-Consolidated (Rs. Mn) FY13 FY14 FY15 FY16 FY17
Net Sales 91687 120991 139012 134474 153106
EBIDTA 4426 8262 9977 11493 13899
EBIDTA Margin (%) 4.8 6.8 7.2 8.5 9.1
Net Prot (Adj) 1983 3608 2563 3225 4147
EPS (Rs.) 6.7 12.2 8.7 10.9 14.0
RoE (%) 7.7 13.0 8.6 9.7 11.2
PE(x)* 8.9 5.6 9.3 5.9 6.7
Source: Bloomberg
Dividend Information (Rs.)
CMP (as on Apr 03, 2018) 93
Dividend/share* 4.0
Dividend Yield (%)* 4.3
* Bloomberg Estimates
Stock Information
Mkt Cap (Rs.bn/US$ bn) 275 / 4.2
52-wk High/Low (Rs.) 130 / 83
3M Avg. daily value (Rs.mn)
200.9
Beta (x) 1.2
Sensex/Nifty 33371 / 10245
O/S Shares (mn) 296.0
Face Value (Rs.) 10.0
Shareholding Pattern (%)
Promoters 16.2
FIIs 34.5
DIIs 26.3
Others 23.0
80
100
120
140
Apr-17
May-17
Jun-17
Jul-17
Aug -17
Sep-17
Oct-17
Nov-17
Dec-17
Jan-18
Feb-18
Mar -18
Apr-18
PTCIN IN Equity
Sensex
28.4
16.4
25.4
22.9
21.4
32.9
37.0
0
10
20
30
40
FY13
FY14
FY15
FY16
FY17
FY18E
FY19E
1.6
2.0
2.2
2.5
3.0
3.3
4.0
2.9%
2.6%
2.7%
3.6%
2.7%
3.5%
4.3%
0%
1%
2%
3%
4%
5%
0
1
2
3
4
FY13
FY14
FY15
FY16
FY17
FY18E
FY19E
Dividend/Share (Rs.)
Dividend Yield (%)
5yrs avg. Yield (%)
2.9%
12
Dividend Maximizer - April 2018
62.5
70.0
70.0
70.0
75.0
90
110
5.1%
4.4%
4.9%
4.5%
2.5%
2.9%
3.6%
0%
2%
4%
6%
0
55
110
FY13
FY14
FY15
FY16
FY17
FY18E
FY19E
Dividend/Share (Rs.)
Dividend Yield (%)
5yrs avg. Yield (%)
4.3%
VST Industries Ltd
India Research - Stock Broking
Bloomberg Code: VST IN
Stock Performance (%)
1M 3M 6M 12M
Absolute (3) (3) 8 7
Relative to Sensex (2) (1) 2 (4)
Source: Bloomberg
Relative Performance*
Source: Bloomberg; *Index 100
Exhibit 1: Dividend/Share & Yield
Source:
Bloomberg
Exhibit 2: Dividend Payout (%)
Source:
Bloomberg
VST Industries an associate arm of British American Tobacco Plc (32.16% stake in
the company) is a Hyderabad based cigarette manufacturing company incorporated
in the year 1930. Company’s principal activities involve manufacturing and sale of
cigarettes, unmanufactured and cut tobacco. Company is the 3rd largest player in
the Indian cigarette market with 8% market share in terms of volume. Major brands
include Charminar, Charminar Special Filter, Charms Mini Kings, Charms Virgina
Filter, XL Filter, Vijay, Shaan etc. VST’s products are targeted at lower income
segment where it has dominance. Large chunk of revenue (~87%) comes from
the sale of cigarettes while unmanufactured tobacco contributes to (~13%) of
total revenue. It enjoys strong presence in Southern and Eastern India and is also
increasing its presence in few northern states such as Uttar Pradesh and Bihar.
VST is cash rich and has zero debt. It enjoys high returns on equity (36.9%), on
asset (20.6%) and capital employed (54.4%).
Exhibit 3: Key Financials
YE Mar-Consolidated (Rs. Mn) FY13 FY14 FY15 FY16 FY17
Net Sales 6637 7847 8300 8789 9441
EBIDTA 1821 2222 2424 2570 2839
EBIDTA Margin (%) 27.4 28.3 29.2 29.2 30.1
Net Prot (Adj) 1262 1502 1464 1531 1672
EPS (Rs.) 81.8 97.2 98.6 99.2 108.3
RoE (%) 42.5 47.5 45.1 42.7 36.9
PE(x) 18.5 16.9 15.9 16.7 26.5
Source: Bloomberg
Dividend Information (Rs.)
CMP (as on Apr 03, 2018) 3060
Dividend/share* 110.0
Dividend Yield (%)* 3.6
* Bloomberg Estimates
Stock Information
Mkt Cap (Rs.bn/US$ bn) 472 / 7.3
52-wk High/Low (Rs.) 3875 3/ 2591
3M Avg. daily value (Rs.mn)
8.0
Beta (x) 0.7
Sensex/Nifty 33371 / 10245
O/S Shares (mn) 15.4
Face Value (Rs.) 10.0
Shareholding Pattern (%)
Promoters 32.2
FIIs 9.5
DIIs 14.7
Others 43.6
85
100
115
130
Apr-17
May-17
Jun-17
Jul-17
Aug -17
Sep-17
Oct-17
Nov-17
Dec-17
Jan-18
Feb-18
Mar -18
Apr-18
VST IN Equity
Sensex
76.4
72.0
71.0
70.6
69.3
72.5
75.2
0
20
40
60
80
FY13
FY14
FY15
FY16
FY17
FY18E
FY19E
13
Dividend Maximizer - April 2018
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