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Corporate News

The CBI has arrested CEO of LICHF and seven others including three top officials of PSBs in connection with an alleged housing finance racket. (BS)

NTPC has entered a pact with ADB and Japan’s Kyuden International Corp to jointly develop renewable energy projects of 500MW across India over the next three years. (BL)

Nestle India has earmarked over Rs 4.5bn to set up plants and expand existing facilities in the country during CY10. (Mint)

Sun Pharma has got the USFDA nod to market a generic version of 'Cymbalta' used for treatment of anxiety and depression, in the US. (BS)

Tata Power plans to invest Rs 8.5bn till FY 12 to beef up generation, transmission and distribution. (Mint)

Morning Buzz 25 November 2010

Indices Close % Chg % YTD

Indian Markets

Sensex 19,460 (1.2) 11.4 Nifty 5,866 (1.2) 12.8 CNX Midcap 9,085 (1.4) 22.2 Global Markets

DJIA 11,187 1.4 7.3 Nasdaq 2,543 1.9 12.1 FTSE 5,657 1.4 4.5 Emerging Markets

IBOV 69,629 2.5 1.5 Shanghai Composite 2,860 (0.8) (12.7)

KOSPI 1,926 (0.9) 14.5

Market Turnover US$ mn % Chg

BSE 968 14.4 NSE 3,464 (11.0)

Derivatives (NSE) 47,081 (14.1)

FII in F&O (US$ mn) Index Stocks

Net buying (95.5) 52.7 Open interest 17,182.5 8,938.6

Chg in open interest (%) (0.3) (1.6)

Fund Flows (US$ mn) Latest MTD YTD

FIIs (305.5) 6,830 28,343

MFs 75.4 (1,191) (6,056)

Forex Rates Latest % Chg % YTD

Rs/US$ 45.7 (0.3) 1.8 Euro/US$ 0.7 (0.01) (6.9)

Yen/US$ 83.6 (0.01) 11.3

Commodities Latest % Chg % YTD

Brent (US$/bbl) 85.7 4.0 11.0 Gold (US$/oz) 1,372.9 (0.0) 25.2

Silver (US$/oz) 27.6 0.0 63.6

Copper (US$/MT) 8,250.0 1.4 11.9 Alum (US$/MT) 2,327.5 0.7 (0.6)

Zinc (US$/MT) 2,122.0 1.7 (17.1)

LME Steel (US$/MT) 455.0 (2.2) 7.1

Bond Markets Latest bps Chg

10-yr GSec yield 8.0 13 Interbank call 6.9 73

ADR/GDR (US$) Latest % Chg Prem

HDFC Bank 175.8 (1.3) 15.9

ICICI Bank 50.9 0.2 3.3 Infosys 66.8 1.8 2.0 ITC 3.8 0.0 (0.5)

Ranbaxy Labs 12.5 0.0 2.0 Reliance Inds 44.1 1.1 1.3 Mahindra Satyam 2.9 (1.0) (2.0)

SBI 124.8 (2.2) 0.0 Tata Motors 36.0 10.8 35.0 Wipro 13.9 1.5 54.5

Top Gainers - BSE 100 Latest % Chg

RNRL 42 #N/A

M & M 785 3.0

Nestle India 3,793 2.8

Crompton Greaves 340 1.8

IVRCL Infra 136 1.2

Top Losers - BSE 100 Latest % Chg

Indiabulls Fin 181 (7.2)

Financial Tech 918 (6.1)

Bank of India 449 (5.3)

HDIL 207 (5.1)

Indiabulls R E 163 (4.4)

Top Research Picks

Macrosphere - cēterīs paribus – Re-emergence of geo-political, sovereign debt and China risks

NTPC – Gains in captive coal mining could provide upside

Other Research

Siemens – Encouraging order flows and margin profile

Banking – CBI investigation highlights individual cases of corruption

Coal India – Margins improve on lower overburden provisioning


2

Punj Lloyd has won ~Rs 16bn of domestic and overseas contracts, including a ~Rs 11bn order from IOC for the Paradip Refinery Project. (BL)

The PNGRB would be inviting bids for the Surat-Paradip and Asansol-Howrah gas pipeline projects next week. (BS)

Abbott India and Solvay India have jointly announced that they will merge at a swap ratio of 2:3. (ET)

The government said there is no proposal to ban public sector firm Bharat Aluminium Company’s bauxite mining projects in Chhattisgarh. (Mint)

Bangalore-based Kudremukh Iron Ore Company said it plans to set up an integrated steel plant in Karnataka at an investment of Rs 80bn-90bn. (BS)

Economic News

The FMCG market in rural India is tipped to touch US$ 100bn by 2025, according to a study by The Nielsen Company. (BS)

The two-way commerce between India and Arab Nations is expected to reach US$ 240bn by 2014. (BS)

Ministry of State for Petroleum and Natural Gas said that the decision to decontrol diesel prices has been put on hold owing to the increase in food inflation. (BS)

Global News

Ireland has unveiled a four-year plan to claw back US$ 20bn using spending cuts and extra taxes. (Mint)

General Motors Co plans to invest US$ 163mn at plants in Michigan and Ohio to add engine production for the Chevrolet Cruze, the Chevy Volt and an unnamed new small car. (ET)

Axiom Telecom has reached a distribution deal with BlackBerry maker Research In Motion. (ET)

Rolls-Royce Group PLC has won a US$ 1.2bn engine service contract from Emirates airline. (BL)

Source: BL: Business Line, BS: Business Standard, ET: Economic Times, FE: Financial Express

Volume Shockers - BSE 100 (‘000) Latest 2mth avg % Chg

Unitech 30,819 27,354 112.7

Power Grid 23,695 5,721 414.2

IDBI Bank 13,362 8,831 151.3

Suzlon Energy 10,286 18,093 56.8

Mahindra Satyam 8,087 18,711 43.2

Delivery Toppers - BSE 100 Del % Tot Vol Days up

Asian Paints 90.0 116,531 (1)

Grasim 82.7 111,153 (1)

Nestle India 82.1 39,079 (1)

Tata Power 78.1 425,271 (1)

HUL 76.0 4,763,503 2

BSE Sectoral Indices Latest % Chg % YTD

Midcap 8,004 (1.1) 19.2 Smallcap 10,153 (0.6) 21.5 Auto 10,116 0.1 36.1 Banks 13,478 (2.9) 34.4

Capital Goods 15,435 (1.2) 9.3 Comm & Tech 3,632 (0.9) 10.8 Con. Durables 6,521 (0.2) 72.3

FMCG 3,622 0.2 29.7

Healthcare 3,622 (0.3) 31.1

IT 5,937 (1.1) 14.5 Metals 16,211 (1.0) (6.8)

Oil & Gas 10,149 (0.6) (3.1)

Power 2,946 (0.9) (7.6)

Realty 3,042 (2.9) (21.1)

Market Breadth Adv Dec A/D

NSE 509 895 0.6 Sensex 5 25 0.2 BSE 100 14 85 0.2

BSE 200 32 167 0.2

BSE 500 95 402 0.2

Sensex Intraday

19,30019,40019,50019,60019,70019,80019,900

9:07

AM

9:57

AM

10:4

2 A

M

11:2

8 A

M

12:1

3 PM

1:00

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1:48

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2:37

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3:27

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Macrosphere – cēterīs paribus India Economics 25 November 2010

3

Jay Shankar

(91-22) 6766 34442

[email protected]

China hikes required reserve ratio

(4)(2)0 2 4 6 8 10

0

5

10

15

20

Mar

-06

Jul-

06

Nov

-06

Mar

-07

Jul-

07

Nov

-07

Mar

-08

Jul-

08

Nov

-08

Mar

-09

Jul-

09

Nov

-09

Mar

-10

Jul-

10

Nov

-10

Required Reserve Ratio(%) CPI Inflation (R) (% YoY)

Source: Bloomberg, RCML Research

The month that was

India’s industrial production grows by 4.4% YoY;

high volatility in monthly data raises concerns

WPI inflation increases marginally to 8.6% YoY;

expected to moderate in next few months on the

back of negative base effect

China hikes its reserve requirement ratio by

100bps in October along with a 50bps hike in

interest rates

US Fed releases its monetary easing program of

US$ 600bn; long-term rates to remain low at the

risk of higher inflation

North-South Korea exchange artillery fire; shell

hits markets

The month that will be

Chinese inflation, escalation of tensions in Asia,

sovereign debt crisis in Europe and further capital

controls among EMs

Besides surveys and leading indicators, the focus

will also remain on Q3 GDP numbers for the

Indian economy

Macro indicators

Indicator Latest Release

(% YoY)

Q1 GDP 8.8

WPI Inflation 8.6

Industrial Production 4.4

Bank Credit 22.0

Exports 21.3

Imports 6.8

PMI Manufacturing 57.2

PMI Services 56.2

Commercial Vehicles Production 21.4

Compiled by RCML Research

Macrosphere – cēterīs paribus Re-emergence of geo-political, sovereign debt and China risks

Just when the markets had begun to settle down and demonstrate some resilience, we received jolts from the Korean peninsula and a resurfacing of the European sovereign debt crisis. The debt crisis is likely to be a risk overhang for most of 2011, and may indeed turn uglier in Q2, when Spain may be ‘put on the block’ by the markets. In addition, we have the threat of inflation in emerging market economies, most importantly China. Central bank actions to tame inflation can slow the growth engines of EMs, which have so far been doubling up as the global growth engine in the post-crisis recovery.

India stands apart among the EMs because of earlier emergence of the inflation risk and the early effectiveness of RBI policy steps. However, the risk of flows drying out and even reversing is significant, as the vulnerability of India’s external accounts has increased manifold in the last few years. Domestic risks include the recent spate of corruption charges as well as the return of corporate governance issues.

North-South Korea exchange fire; markets singed: Asian markets crashed while gold prices shot up as a result of the flight to safety by investors on reports of an escalation in tension between North and South Korea. The standoff is believed to be the worst since the war on the peninsula during 1950–53, and poses a significant geo-political risk given the US stake in the region and the relationship between Washington and Pyongyang.

Sovereign debt crisis endangers EU: The sovereign debt crisis has intensified once again in the Eurozone, with the CDS over Ireland, Greece and Portugal reaching new highs. However, likely support from the IMF and EU calmed nerves towards the end of last week. As per estimates, Ireland might require foreign loans of over € 50bn to strengthen the country’s banks. This news flow led to a further weakening of the euro.

Too big to save? Greece and Portugal were the warm-up acts; Spain is the main threat, where stakes rise several fold. Greece and Ireland hold extraordinarily high levels of debt—totalling ~US$ 2tn—primarily carried by European banks, whose exposure is equivalent to 20% of the Eurozone GDP. Spain and Portugal are seen as the next vulnerable sovereign debt scares. So this adds a whole new dimension to the concept of ‘European contagion’. A wave of sovereign defaults in these peripheral countries would deal a serious blow to the European banking system at the very time when the region’s banks are yet to fully recover from their 2008–09 loan losses.

The primary challenge for US banks was exposure to bad mortgages. In June ’08, their total exposure to sub-prime mortgages was US$ 2.5tn. In this context, the US$ 2tn exposure of European banks to peripheral sovereign debt may at best hamper their ability to facilitate economic recovery and at worst trigger another economic downturn.

2nd hike in two weeks for Chinese RRR: The Chinese central bank increased the reserve requirement ratio (RRR) by 50bps for the second time in two weeks, in a bid to squeeze out excess cash from the economy and thus rein in inflation before it gets out of hand. This was the fifth such announcement this year, and takes the RRR to 18.5% for big banks, which is a record high. The move comes after the central bank increased interest rates in October for the first time in three years; we expect more rate increases before the end of the year. The announcement is likely to further incite US officials calling for an appreciation of the Chinese yuan against the dollar, in order to balance international trade.

For further refer to our detail report release on 24November10

NTPC Ltd Company Update 25 November 2010

4

Suhas Harinarayanan

Sumit Maniyar

(91-22) 6766 3404 (91-22) 6766 3461

[email protected] [email protected]

Financial highlights

(Rs mn) FY10 FY11E FY12E FY13E

Revenue 474,980 481,948 542,979 607,419

Growth (%) 9.3 1.5 12.7 11.9

Adj net income 87,282 95,362 100,799 117,034

Growth (%) 5.1 9.3 5.7 16.1

FDEPS (Rs) 11 12 12 14

Growth (%) 6.4 9.3 5.7 16.1

Profitability and return ratios

(%) FY10 FY11E FY12E FY13E

EBITDA margin 29 34 34 37

EBIT margin 23 27 26 28

Adj PAT margin 18 19 18 19

ROE 15 15 14 15

ROIC 12 12 11 13

ROCE 19 22 21 23

NTPC Ltd Gains in captive coal mining could provide upside

We upgrade NTPC from SELL to BUY. Stock has underperformed BSE sensex by 14% since last three months and 36%YTD, on the back of slower capacity addition and poor Q2FY11 results. The stock now trades at price-to-book ratio of 2x based on FY12 estimates; which is 11% discount to its peer group. We expect a near-term trigger in the form of potential value creation (Rs5/share) from efficiency gains in captive coal mining, and possible uptick in 2H revenues/earnings. We have increased PT marginally from Rs200 to Rs205 by rolling forward to FY12, and incorporating value creation from efficiency gains. Our PT excludes option value of Rs15/share on account of lower fuel costs (captive coal) in power segment.

Value accretion from captive coal blocks: If NTPC were to earn and retain efficiency gains on captive mining on similar lines as NLC, it could earn ROE~25% on captive mining. Currently, NTPC has eight captive coal mines (including JVs) with geological coal reserves of 3.65bn tonnes. We expect coal production from Pakri Barwadih in FY13 and from others after that to take production from 8mtpa in FY13 to 57mtpa in FY17, and remain constant thereafter. We think mine development could require capital expenditure of ~Rs 86bn with a debt to equity contribution of 70:30, respectively.

Captive coal could drive margins higher in power business: As per government instructions January 2011 remains deadline for shifting to a tariff-based competitive bidding regime, and would disallow future projects on cost plus basis model. Under such PPA NTPC would benefit from lower cost of coal. We estimate that the cost of production (~Rs0.45/kwh) of coal from these mines could be ~40% lower than the price at which NTPC buys coal from Coal India Limited (CIL) for a similar quality of coal. However, currently we have not taken lower cost of production in our price target as NTPC has 67GW under cost plus PPA (to be completed by FY17). If we consider benefit of lower cost of coal for power generation, fair value increases by Rs15/share.

Valuation and key risks: Our key DCF assumptions are: 1) Average cost of debt 8%; 2) cost of equity 12.3%; and 3) debt: equity 1:1. Our price target assumes five-year intermediate growth of 7.5%, and terminal growth of 5%.

Key risks to our price target are: 1) Government approval for transfer pricing mechanism to earn efficiency gains. 2) Timely execution of captive coal blocks, 3) delays to current expected completion of projects.

What’s New? Target Rating Estimates

CMP TARGET RATING RISK

Rs 179 Rs 205 BUY HIGH

BSE NSE BLOOMBERG

532555 NTPC NATP IN

Company data

Market cap (Rs mn / US$ mn) 1,468,930/32,140

Outstanding equity shares (mn) 8,245

Free float (%) 12.0

Dividend yield (%) 0.9

52-week high/low (Rs) 242 / 177

2-month average daily volume 4,083,670

Stock performance

Returns (%) CMP 1-mth 3-mth 6-mth

NTPC 178 (12.7) (8.0) (10.1)

BSEPOWR 2,946 (8.8) (4.7) (0.3)

Sensex 19,460 (3.5) 6.3 18.2

P/B vs ROE

2.22.0

1.914.7

14.4

15.4

2

2

2

2

FY11E FY12E FY13E13.60

14.40

15.20

16.00

P/B ROE (R)

(x) (%)

Valuation matrix

(x) FY10 FY11E FY12E FY13E

P/E @ CMP 15.4 14.6 12.6 16.8

P/E @ Target 17.3 16.4 14.1 18.9

EV/EBITDA @ CMP 10.3 9.3 7.7 12.5

In the interest of timeliness this report has not been edited.


5

Valuation

We use FCFF as the primary tool for valuation of the company. We have assumed five year intermediate growth of 7.5%, and terminal growth of 5%.

Fig 1 - Valuation assumptions

All figures in Rs mn Value

Present Value of Free Cash 1,863,653

Less: Net Debt (incl. Investments) 203,535

Add: Mkt premium of OTSS bonds

Efficiency gain from coal mining 39,218 Assumed DCF valuation

Equity Value 1,699,336

O/S no. of shares FY04 (mn) 8,245

Per share value (Rs) 205

WACC Calculation

Avg. cost of debt 8.0% Marginal tax rate 16.7%

Post tax cost of debt = 6.7% 10 yrs bond yield rate 8.0%

Target debt:equity = 1.00 Equity risk premium 5.0%

WACC = 9.5% Market rate of return 12.3%

Terminal Growth (wef FY2017) 5.0%

Medium Term Growth (FY13-17) 7.5%

Source: RCML research


6

Consolidated financials

Profit and Loss statement Balance sheet Y/E March (Rs mn) FY10 FY11E FY12E FY13E

Revenues 474,980 481,948 542,979 607,419

Growth (%) 9 1 13 12

EBITDA 135,958 164,657 183,951 222,320

Growth (%) 14 21 12 21

Depreciation & amortisation 26,501 36,174 41,044 50,020

EBIT 109,457 128,484 142,908 172,300

Growth (%) 115 17 11 21

Interest 10,856 17,008 20,199 24,720

Other income 10,253 24,232 22,238 20,570

EBT 108,855 135,708 144,946 168,150

Income taxes 21,573 40,346 44,148 51,116

Effective tax rate (%) 20 30 30 30

Extraordinary items - - - -

Min into / inc from associates n/a n/a n/a n/a

Reported net income 87,282 95,362 100,799 117,034

Adjustments - - - -

Adjusted net income 87,282 95,362 100,799 117,034

Growth (%) 5 9 6 16

Shares outstanding (mn) 8,245.5 8,245.5 8,245.5 8,245.5

FDEPS (Rs) (adj) 10.6 11.6 12.2 14.2

Growth (%) 6 9 6 16

DPS (Rs) 1.27 1.40 1.54 1.69

Y/E March (Rs mn) FY10 FY11E FY12E FY13E

Cash and cash eq 144,595 125,761 129,769 138,013

Accounts receivable 66,515 13,204 14,876 16,642

Inventories 33,477 46,214 52,066 58,246

Other current assets 63,572 69,517 75,505 81,787

Investments 148,071 135,982 115,834 84,434

Gross fixed assets 719,610 971,337 1,067,759 1,229,333

Net fixed assets 396,722 612,275 667,654 779,208

CWIP 271,935 161,750 259,545 348,264

Intangible assets n/a n/a n/a n/a

Deferred tax assets, net n/a n/a n/a n/a

Other assets - - - -

Total assets 1,124,885 1,164,703 1,315,249 1,506,593

Accounts payable

Other current liabilities 76,876 59,527 69,730 80,557

Provisions 30,706 26,996 29,191 31,581

Debt funds 377,970 403,392 488,920 603,010

Other liabilities 14,959 (1,150) (1,150) (1,150)

Equity capital 82,455 82,455 82,455 82,455

Reserves & surplus 541,920 593,483 646,103 710,141

Shareholder's funds 624,374 675,938 728,558 792,595

Total liabilities 1,124,885 1,164,703 1,315,249 1,506,593

BVPS (Rs) 75.7 82.0 88.4 96.1

Cash flow statement Financial ratios Y/E March (Rs mn) FY10 FY11E FY12E FY13E

Net income + Depreciation 113,783 131,536 141,842 167,053

Non-cash adjustments

Changes in working capital (16,332) 13,569 (1,114) (1,010)

Cash flow from operations 97,451 145,104 140,728 166,043

Capital expenditure (101,730) (141,543) (194,217) (250,293)

Change in investments (8,236) 12,089 20,148 31,400

Other investing cash flow (3,252) (16,108) - -

Cash flow from investing (113,218) (145,562) (174,069) (218,893)

Issue of equity - - - -

Issue/repay debt 32,293 25,422 85,528 114,090

Dividends paid (39,817) (43,799) (48,178) (52,996)

Other financing cash flow

Change in cash & cash eq (23,291) (18,834) 4,009 8,244

Closing cash & cash eq 139,425 125,761 129,769 138,013

Economic Value Added (EVA) analysis

Y/E March FY10 FY11E FY12E FY13E

WACC (%) 9.5 9.5 9.5 9.5

ROIC (%) 12.1 12.1 10.8 12.5

Invested capital (Rs mn) 723,445 745,369 916,430 956,783

EVA (Rs mn) 19,340 19,787 12,703 29,428

EVA spread (%) 2.7 2.7 1.4 3.1


Profitability & Return ratios (%)

EBITDA margin 29 34 34 37

EBIT margin 23 27 26 28

Net profit margin 18 19 18 19

ROE 15 15 14 15

ROCE 19 22 21 23

Working Capital & Liquidity ratios

Receivables (days) 51 10 10 10

Inventory (days) 26 35 35 35

Payables (days)

Current ratio (x) 2.9 2.9 2.8 2.6

Quick ratio (x) 2.0 1.6 1.5 1.4

Turnover & Leverage ratios (x)

Gross asset turnover 0.7 0.6 0.5 0.5

Total asset turnover 0.5 0.5 0.5 0.5

Interest coverage ratio 10.1 7.6 7.1 7.0

Adjusted debt/equity 0.5 0.5 0.5 0.6

Valuation ratios (x)

EV/Sales 3.6 3.5 3.1 2.8

EV/EBITDA 12.5 10.3 9.3 7.7

P/E 16.8 15.4 14.6 12.6

P/BV 2.4 2.2 2.0 1.9


7

DuPont analysis

(%) FY10 FY11E FY12E FY13E FY14E

Tax burden (Net income/PBT) 80.2 70.3 69.5 69.6 72.3

Interest burden (PBT/EBIT) 99.4 105.6 101.4 97.6 95.3

EBIT margin (EBIT/Revenues) 23.0 26.7 26.3 28.4 29.9

Asset turnover (Revenues/Avg TA) 48.6 46.0 47.3 46.5 45.4

Leverage (Avg TA/Avg equtiy) 163.0 161.2 163.4 171.6 177.1

Return on equity 14.6 14.7 14.4 15.4 16.6

Company profile

NTPC Ltd. owns and operates power generation plants that supply

power to state electricity boards throughout India. The Company is

a public sector undertaking of the Government of India and it also

undertakes turnkey consulting projects to set up power plants.

Shareholding pattern

(%) Mar-10 Jun-10 Sep-10

Promoters 84.5 84.5 84.5

FIIs 2.6 2.6 2.9

Banks & FIs 9.1 9.1 8.8

Public 3.8 3.8 3.8

Recommendation history

Date Event Reco price Tgt price Reco

31-May-10 Initiating Coverage 201 200 Sell

26-Jul-10 Results Review 202 200 Sell

27-Oct-10 Results Review 205 200 Sell

24-Nov-10 Company Update 179 205 Buy

Stock performance

170

180

190

200

210

220

May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10

● Sell ● Buy

Siemens Ltd Results Review 25 November 2010

8

Misal Singh

Abhishek Raj

(91-22) 6766 3466 (91-22) 6766 3485



(%) FY10E FY11E FY12E FY13E

EBITDA margin 13.5 12.8 12.6 12.6

EBIT margin 11.8 11.2 10.9 10.8

Adj PAT margin 7.8 8.0 7.8 7.7

ROE 24.6 24.9 24.5 22.6

ROIC 37.3 34.9 34.4 31.7

ROCE 37.3 34.9 34.4 31.7



Revenue 97,430 117,858 145,510 165,640

Growth (%) 4.2 21.0 23.5 13.8

Adj net income 7,578 9,388 11,287 12,733

Growth (%) 36.7 23.9 20.2 12.8

FDEPS (Rs) 22.5 27.8 33.5 37.8

Growth (%) 36.7 23.9 20.2 12.8

Siemens Ltd Encouraging order flows and margin profile

Siemens’ (SIEM) FY10 results were in line with our expectations at the consolidated level, even as they were significantly ahead of our estimates for the parent company (SA) driven by healthy growth in the industry and healthcare segments. Consolidated revenues/EBITDA/PAT for FY10 were up by 4.2%/25.5%/36.7% YoY to Rs 97.4bn/Rs 13.2bn/ Rs 7.6bn, while that for the parent by 11.1%/26.4%/26.5% YoY to Rs 94bn/Rs 12.9bn/ Rs 8.2bn. The implied sales and EBITDA for the parent company in Q4FY10 stood at Rs 30.6bn (up 21.6% YoY) and Rs 4bn (up 62.9% YoY) respectively. SIEM’s FY10 EBITDA margin expanded 170bps to 13.8%, propelled by sharp margin improvement in the industry segment. Order intake for the year was at Rs 124bn, a growth of 41% YoY, while order backlog at FY10-end came in at ~Rs 136bn, higher 32% YoY. We expect growth in order inflows and upgrades in earnings to drive up stock valuations, going ahead. Maintain BUY.

Broad-based growth encouraging: SIEM’s industry and energy segments reported a growth of 10.3% and 8.4% YoY for FY10 respectively, while the healthcare segment saw a commendable 38.8% growth for the year. On a sub-segment level, industry automation and power transmission businesses showed an impressive revenue expansion of 25% YoY and 18% YoY respectively.

EBITDA margin expands 170bps: The company’s FY10 EBITDA margin increased 170bps YoY to 13.8%, fuelled by sharp margin expansion in the industry segment. Within this segment, the EBIT margin for drive technology soared by >160bps YoY to 7.9%. EBIT margin for energy segment also went up by 137bps YoY to 15%, driven by higher margins in the fossil power generation business.

Order inflows pick up: Order inflows for the year were at Rs 124bn, higher 41% YoY. Order backlog at FY10-end came in at ~Rs 136bn, up 32% YoY; this, in our view, gives comfortable visibility on the company’s future revenue growth.

Set to develop India as a global sourcing hub: Earlier in Dec ’09, SIEM had emphasised that over the next three years, it intends to undertake capacity expansion across six product lines at an outlay of Rs 16bn in India. In our view, apart from its maintaining its leadership in certain high technology product lines, SIEM is also focusing on developing India as a global sourcing hub for value products. We believe this diversification can lend an additional growth lever to SIEM’s Indian operations.

Scope for further upside; maintain BUY: At our current estimates, the stock trades at a P/E of 28.3x/23.5x for FY11E/FY12E. We restate a BUY on the stock with a Sep ’11 target price of Rs 1,000.

What’s New? Target Rating Estimates

CMP TARGET RATING RISK

Rs 787 Rs 1,000 BUY LOW

BSE NSE BLOOMBERG

500550 SIEMENS SIEM IN

Company data

Market cap (Rs mn / US$ mn) 266,238/5,319

Outstanding equity shares (mn) 337

Free float (%) 31.3

Dividend yield (%) 0.6%

52-week high/low (Rs) 857 / 492

2-month average daily volume 468,615

Stock performance

Returns (%) CMP 1-mth 3-mth 6-mth

Siemens 787 (5.7) 10.5 17.2

BSE CG 15,435 (4.0) 3.8 14.1

Sensex 19,460 (3.5) 6.3 18.2

P/E comparison

35.128.4

23.625.921.1 17.9

0

10

20

30

40

FY10E FY11E FY12E

Siemens Industry(x)

Valuation matrix

(x) FY10E FY11E FY12E FY13E

P/E @ CMP 35.1 28.3 23.5 20.9

P/E @ Target 44.5 35.9 29.9 26.5

EV/EBITDA @ CMP 19.1 16.7 13.8 12.1


9

Result highlights

Fig 2 - Actual vs estimated performance

(Rs mn) Actual Estimate % Variance

Revenue 30,610 24,650 24.2

EBITDA 4,019 3,046 31.9

Adj net income 2,536 1,935 31.1

FDEPS (Rs) 7.5 5.7 31.1

Source: RCML Research

Fig 3 - Quarterly performance

(Rs mn) Q4FY10 Q4FY09 % Chg YoY Q3FY10 % Chg QoQ Q4FY10E Variance (%)

Net sales 30,610 25,180 21.6 22,464 36.3 24,650 24.2

Less: Direct Cost 24,053 19,828 21.3 16,057 49.8 19,113

Staff Cost 1,801 1,587 13.5 1,703 5.7 1,200

Other Expenses 737 1,298 (43.2) 2,284 (67.7) 1,291

Expenditure 26,591 22,712 17.1 20,044 32.7 21,603

Operating profit 4,019 2,468 62.9 2,420 66.1 3,046 31.9

Other income - (283) (100.0) - 3

Interest (215) (205) 5.1 (181) 19.2 26

Depreciation 316 213 48.3 249 26.8 244

PBT 3,918 2,177 80.0 2,351 66.7 2,780

Tax 1,382 814 69.8 790 75.0 845

Reported PAT 2,536 1,363 86.1 1,561 62.4 1,935

Adj. PAT 2,536 1,363 86.1 1,561 62.4 1,935 31.1

EBITDA margin (%) 13% 10% 333 11% 236 12% 77

EPS (Rs) 7.5 4.0 86.1 4.6 62.4 5.7 31.1


Above estimates due to higher growth

in the industry and healthcare segments


10

Fig 4 - Segmental Snapshot

Year to March Q4FY10 Q3FY10 Q2FY10 FY10 FY09

Revenue mix (%)

Industry

Industry Automation 6.4% 6.1% 6.9% 6.5% 5.8%

Drive Technologies 11.8% 12.6% 14.5% 13.3% 12.5%

Building Technologies 5.5% 5.7% 6.4% 5.6% 5.4%

Industry Solutions 10.7% 11.7% 12.5% 11.5% 12.3%

Mobility 7.6% 7.1% 11.4% 9.9% 11.0%

Energy

Fossil power Generation 1.4% 1.0% 1.1% 1.2% 4.5%

Oil & Gas 6.6% 6.7% 6.7% 6.8% 6.0%

Power Transmission 31.7% 32.8% 23.9% 28.2% 26.5%

Power Distribution 10.1% 7.9% 9.4% 9.2% 9.5%

Healthcare 8.0% 7.7% 6.8% 7.3% 5.8%

Real Estate 0.4% 0.5% 0.5% 0.5% 0.7%

Revenue growth (Y-o-Y %)

Industry

Industry Automation 168% 27% -23% 25% -45%

Drive Technologies -1% 34% 21% 18% 16%

Building Technologies -31% 25% 658% 15% 445%

Industry Solutions -21% 25% 23% 3% 1%

Mobility -15% -35% 20% -1% 48%

Energy

Fossil power Generation -73% -66% -66% -69% 225%

Oil & Gas 8% 30% 18% 25% 10%

Power Transmission 100% 39% -40% 18% -13%

Power Distribution 23% 4% 1% 8% 12%

Healthcare 37% 69% 37% 39% -10%

Real Estate -27% -18% -29% -18% 1%

EBIT Margin (%)

Industry

Industry Automation 11.9% 9.3% 4.1% 9.3% 8.6%

Drive Technologies 11.3% 2.2% 3.0% 7.9% 6.3%

Building Technologies 7.7% 0.8% 3.1% 4.0% 3.8%

Industry Solutions 8.7% 12.4% 8.2% 9.2% 9.3%

Mobility 8.3% 4.2% 11.1% 8.4% -0.7%

Energy

Fossil power Generation 21.5% 2.0% 58.2% 30.9% 10.4%

Oil & Gas 23.1% 1.2% 8.4% 13.3% 14.4%

Power Transmission 15.2% 13.7% 19.8% 17.8% 16.2%

Power Distribution 1.3% 6.8% 8.2% 5.6% 7.4%

Healthcare 10% 7% 4% 7% 8%

Real Estate -92% 80% 75% 81% 129%



11



Revenues 97,430 117,858 145,510 165,640

Growth (%) 4.2 21.0 23.5 13.8

EBITDA 13,200 15,086 18,272 20,800

Growth (%) 25.5 14.3 21.1 13.8


EBIT 11,513 13,160 15,889 17,900

Growth (%) 31.1 14.3 20.7 12.7

Interest

Other income 577 683 751 868

EBT 12,090 13,842 16,640 18,769

Income taxes 4,501 4,568 5,491 6,194

Effective tax rate (%) 37.2 33.0 33.0 33.0


Min into / inc from associates 12 (114) (139) (158)


Adjustments - - - -


Growth (%) 36.7 23.9 20.2 12.8

Shares outstanding (mn) 337.2 337.2 337.2 337.2

FDEPS (Rs) (adj) 22.5 27.8 33.5 37.8

Growth (%) 36.7 23.9 20.2 12.8

DPS (Rs) 5.0 5.0 5.0 5.0

Y/E March (Rs mn) FY10E FY11E FY12E FY13E

Cash and cash eq 25,816 28,307 32,680 41,066


Inventories 10,663 13,706 16,925 19,248


Investments 0 0 0 0

Gross fixed assets 16,721 20,778 25,832 30,882

Net fixed assets 9,919 12,371 15,424 18,027

CWIP - - - -

Intangible assets

Deferred tax assets, net - - - -

Other assets (0) (0) (0) (0)

Total assets 95,094 115,439 140,600 164,400

Accounts payable 50,982 60,867 73,481 84,180

Other current liabilities

Provisions 10,213 13,083 16,166 18,378

Debt funds 9 9 9 9

Other liabilities 55 57 58 59

Equity capital 674 674 674 674



Total liabilities 95,094 115,439 140,600 164,400

BVPS (Rs) 100.4 122.9 150.9 183.2

Cash flow statement Financial ratios Y/E March (Rs mn) FY10E FY11E FY12E FY13E


Non-cash adjustments 1,196 - - -

Changes in working capital 2,884 (2,646) (2,038) 100


Capital expenditure (722) (4,378) (5,436) (5,503)

Change in investments (0) - - -

Other investing cash flow - - - -

Cash flow from investing (722) (4,378) (5,436) (5,503)

Issue of equity - - - -

Issue/repay debt 2 - - -

Dividends paid (11,025) (12,170) (14,461) (12,360)

Other financing cash flow 9,468 10,372 12,638 10,517

Change in cash & cash eq 11,070 2,492 4,373 8,386


Economic Value Added (EVA) analysis Y/E March FY10E FY11E FY12E FY13E

WACC (%) 12.1 12.1 12.1 12.1

ROIC (%) 37.3 34.9 34.4 31.7


EVA (Rs mn) 853,494 946,524 1,135,107 1,214,688

EVA spread (%) 25.18 22.81 22.28 19.64

Y/E March FY10E FY11E FY12E FY13E


EBITDA margin 13.5 12.8 12.6 12.6

EBIT margin 11.8 11.2 10.9 10.8

Net profit margin 7.8 8.0 7.8 7.7

ROE 24.6 24.9 24.5 22.6

ROCE 37.3 34.9 34.4 31.7




Payables (days) 241 242 235 242

Current ratio (x) 1.4 1.4 1.4 1.4

Quick ratio (x) 1.2 1.2 1.2 1.2







EV/Sales 2.6 2.1 1.7 1.5

EV/EBITDA 19.0 16.6 13.7 12.1

P/E 35.0 28.3 23.5 20.8

P/BV 7.8 6.4 5.2 4.3


12

Quarterly trend

Particulars Q3FY09 Q4FY09 Q1FY10 Q2FY10 Q3FY10

Revenue (Rs mn) 19,177 25,180 18,666 22,261 22,464

YoY growth (%) 6.0 53.5 (21.7) 16.1 (10.8)

QoQ growth (%) (19.5) 31.3 (25.9) 19.3 0.9

EBITDA (Rs mn) 2,374 2,255 3,421 2,624 2,170

EBITDA margin (%) 12.4 9.0 18.3 11.8 9.7

Adj net income (Rs mn) 1,680 1,363 2,364 1,811 1,561

YoY growth (%) (0.8) (39.5) 90.5 (19.7) (7.1)

QoQ growth (%) (25.5) (18.9) 73.5 (23.4) (13.8)

DuPont analysis

(%) FY09 FY10E FY11E FY12E FY13E






Return on equity 21.9 24.6 24.9 24.5 22.6

Company profile

Siemens India Ltd. has its operations in various areas: in the

transportation sector it delivers high speed trains, in the lighting

sector it manufactures small light bulbs. In the healthcare sector

Siemens executes complete solutions for hospitals, for the industry

sector it builds airports as well as produces contracts & for the

communication segment it provides public network to mobiles.

Shareholding pattern

(%) Mar-10 Jun-10 Sep-10

Promoters 55.2 55.2 55.2

FIIs 4.0 4.0 4.5

Banks & FIs 23.2 23.4 23.1

Public 17.6 17.4 17.2

Recommendation history

Date Event Reco price Tgt price Reco

21-Jun-10 Initiating Coverage 731 925 Buy

29-Jul-10 Results Review 721 925 Buy

9-Sep-10 Company Update 707 925 Buy

31-Oct-10 Company Update 818 1,000 Buy

24-Nov-10 Results Review 787 1,000 Buy

Stock performance

640

690

740

790

840

890

May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10

● Buy

Banking Alert 25 November 2010

13

Siddharth Teli Ishank Kumar

(91-22) 6766 3463 (91-22) 6766 3467


Banking CBI investigation highlights individual cases of corruption

The Central Bureau of Investigation (CBI) has, under corruption charges, arrested a few senior employees of leading PSU banks and financial companies, namely Punjab National Bank (PNB), Bank of India (BOI), LIC Housing Finance (LICHF) and Life Insurance Corporation of India (LIC). As per CBI, these companies sanctioned loans to builders without following prudential lending norms and took bribes in the process. In case of LICHF, CBI has arrested Mr. R.R. Nair, Director and Chief Executive, who was instrumental in turning around the company over the last three years. Among others, the Chairman and MD of a private financial service company (name undisclosed by CBI) and a Director of the Central Bank of India have also been arrested for facilitating these transactions.

Details of loan developers under investigation (name or the quantum of their loan books) have not been disclosed by CBI. We believe that credit losses for these banks and LICHF are unlikely to be significant, as these loans generally have a good collateral cover. We also note that these sanctioned loans have been charged under bribery and not fraud (in a statement issued to the exchanges, LICHF has stated that it has followed all procedures and conducted due diligence in approving the loans). However, we believe LICHF could underperform its peers in the near term due to concerns over its future growth strategy (given that its current CEO has been arrested). For banks, stocks could react negatively despite the negligible earnings impact of this event. However, we remain structurally positive on the PSU banking space and believe that any knee-jerk reaction arising from this incident should be considered as a buying opportunity.

Our top picks in the sector are State Bank of India (SBIN), Axis Bank (AXSB) among large cap banks and Dena Bank (DBNK) among mid-cap banks.

LICHF could be impacted but further clarity awaited: As per media reports, LICHF’s total exposure (in the cases currently investigated by CBI) constituted ~0.6% of its balance sheet (amounting to loans of ~Rs 3bn; exposure to DB Realty is Rs 1.8bn). The total credit loss is unlikely to be significant as these loans are secured. However, the stock could remain under pressure in the near term due to uncertainty over the company’s future growth strategy. We note that Mr. R.R. Nair played a key role in turning around LICHF strongly over the last three years. Under his leadership, the company reported a 31% CAGR in both advances and PAT over FY08-FY10.

After today’s correction of ~19%, the stock is trading at 2x FY12 BV and 9.3x FY12 EPS, which is not expensive in our view. We maintain our earnings estimates and rating for LICHF as of now, and will review our call after interacting with the management and getting more clarity on this issue.

Coal India Ltd Alert 25 November 2010

14

Suhas Harinarayanan

Suman Memani Arun Aggarwal

(91-22) 6766 3404 (91-22) 6766 3439 (91-22) 6766 3440

[email protected] [email protected] [email protected]


(%) FY10 FY11E FY12E FY13E

EBITDA margin 22.1 26.6 27.9 30.0

EBIT margin 19.3 23.8 25.0 27.1

Adj PAT margin 20.8 21.9 23.3 24.8

ROE 43.8 38.2 34.5 31.5

ROIC 499.2 1,066.9 240.1 186.6

ROCE 38.6 34.7 32.0 29.6



Revenue 473,515 525,506 587,762 658,594

Growth (%) 15.6 11.0 11.8 12.1

Adj net income 98,293 114,948 137,076 163,069

Growth (%) 141.9 16.9 19.2 19.0

FDEPS (Rs) 15.6 18.2 21.7 25.8

Growth (%) 141.9 16.9 19.2 19.0

Coal India Ltd Margins improve on lower overburden provisioning

Despite a marginal 0.7% increase in production volumes, Coal India (CIL) saw its H1FY11 sales rise by 17% over last year to Rs 236bn. We believe this was due to (a) the company’s enhanced focus on increasing dispatches through inventory clearance, and (b) higher realisations generated from beneficiated coal. In our view, CIL is likely to miss its yearly production target of 461mt and may fall marginally short of our estimate of 447mt as well. In order to meet our assumption and its own target, the company has to increase production by 6% and 11.6% respectively in H2FY11. CIL’s operating margin expanded to 21.4% in H1FY11 as against 16.7% in H1FY10 due to lower provisions made towards overburden expenditure. ECL which turned profitable in FY10 has incurred a net loss in H1FY11, whereas BCCL is showing steady improvement. The stock is currently trading at 9x/7.6x EV/EBITDA on FY12E/FY13E versus 5–9x/5–8x for global peers on CY12E/CY13E.

Topline rises 17% in H1 despite marginally higher production: In H1FY11, CIL recorded a 17% increase in sales to Rs 236.1bn over the same year-ago period. This was despite a marginal 0.7% rise in production to 185.6mt in H1FY11. We believe the topline growth primarily stemmed from higher dispatches made through existing inventory (which lowered the coal inventory by Rs 2.2bn from March ’10 levels) and the company’s enhanced focus on beneficiated coal to generate better realisations. In our view, CIL is likely to miss its yearly production target of 461mt and may fall marginally short of our estimate of 447mt as well, since it would have to increase production by 6% and 11.6% respectively in H2FY11 to meet each of these targets. (Fig-2)

EBIDTA margin expands 465bps to 21.4%: CIL’s EBITDA margin for H1FY11 expanded 465bps to 21.4% as against 16.7% for H1FY10. Lower provisions for overburden expenditure (3.3% of sales in H1FY11 as against 6.7% in H1FY10) aided a 342bps increase in margins. Employee costs remained flattish and stood at 38.6% of sales as against our estimate of 32% for FY11.

Strong balance sheet to aid international acquisitions: CIL has cash of Rs 397bn in its books (Rs 6.4bn above March ’10 levels), which could be utilised to fund future expansion programmes. Moreover, its net worth of Rs 298bn would qualify it for international project bids. Considering the cash-rich balance sheet and strong operating cash flow generation, we believe CIL would comfortably finance its capex and overseas acquisition plans without recourse to external funding.

Valuation: Global coal companies are trading in the range of 5–9x and 5–8x EV/EBITDA on CY12E and CY13E respectively. At the CMP of Rs 320, CIL is trading at 9x and 7.6x EV/EBITDA on FY12E and FY13E respectively.

BSE NSE BLOOMBERG

533278 COALINDIA COAL IN

Company data

Market cap (Rs mn / US$ mn) 2,021,236/44,350

Outstanding equity shares (mn) 6,316

Free float (%) 10%

Dividend yield (%) NA

52-week high/low (Rs) 357/287

2-month average daily volume NA


15

BCCL turning around faster than ECL: ECL and BCCL, the two key direct subsidiaries of CIL, were making losses and had been referred to the Board for Industrial & Financial Reconstruction (BIFR). The BIFR has approved their revival plans and we noted that both companies had turned around at the PAT level in March ’10. In September ’10, BCCL reported a drop in accumulated losses. ECL, however, has seen an increase in these losses. BCCL’s faster turnaround is likely to add significantly to CIL’s margins and profitability, going ahead.

Fig 5 - Subsidiary financial snapshot

(Rs mn) Accumulated losses Net worth

Subsidiary Sept'10 March '10 March '09 Sept'10 March '10 March '09

ECL -84308.3 -82,340 -86,331.60 -62,123.80 -60,155.50 -64,147.10

BCCL -72074.6 -75,208.80 -83,560.70 -50,894.60 -54,028.80 -62,380.70

Source: Company; RCML Research

Fig 6 - Production summary

Our estimate CIL Estimate

FY10 FY11 FY11 %Change to RCML Assumption % Change to CIL estimate

First half Production 184 186A 186A 0.7% 0.7%

Second half Production 247 261 275 6.0% 11.6%

Total Production 431 447 461 3.7% 7.0%

Source: *A=Actual

Fig 7 - Result summary

(Rs mn) H1FY11 HFY10 % Chg YoY FY11 FY10 %Chg YoY

Revenue 236,081 202,068 17% 525,506 473,515 11%

Cost of revenue 44,615 41,391 8% 94,879 86,387 10%

Employees exp 91,175 77,768 17% 168,421 166,555 1%

Repair 3,231 3,144 3% 9,661 8,479 14%

Overburden exp 7,780 13,579 -43% 26,898 30,539 -12%

Contractual exp 20,672 15,933 30% 41,620 37,318 12%

Social Overhead 9,652 8,811 10% 22,597 20,175 12%

other operating 8,538 7,684 11% 21,441 19,336 11%

Total Expenditure 185,665 168,310 10% 385,516 368,790 5%

Operating profit 50,416 33,757 49% 139,990 104,724 34%

Other income 23,354 21,335 9% 47,726 52,408 -9%

Interest 744 259 187% 1,120 1,560 -28%

Exceptional item 1,457 574 154% -- (2,630) -100%

Depreciation 7,813 6,669 17% 15,030 13,295 13%

PBT 63,756 47,590 34% 171,565 139,648 23%

Tax 23,553 16,440 43% 56,616 43,425 30%

PAT 40,203 31,150 29% 114,949 96,223 19%

EBITDA margin (%) 21.4% 16.7% 465bps 26.6% 22.1% 452bps

FDEPS (Rs) 6.4 4.9 29% 18.2 15.2 19%



16



Revenues 473,515 525,506 587,762 658,594

Growth (%) 15.6 11.0 11.8 12.1

EBITDA 104,724 139,989 163,725 197,373

Growth (%) 297.1 33.7 17.0 20.6


EBIT 9,460 91,429 124,959 146,935

Growth (%) - 866.5 36.7 17.6

Interest 1,560 1,120 1,120 1,120

Other income 50,315 47,726 58,776 65,859

EBT 139,648 171,565 204,591 243,386

Income taxes 43,425 56,616 67,515 80,317

Effective tax rate (%) 31.1 33.0 33.0 33.0


Min into / inc from associates - - - -


Adjustments 2,070 - - -


Growth (%) 141.9 16.9 19.2 19.0

Shares outstanding (mn) 6,316.4 6,316.4 6,316.4 6,316.4

FDEPS (Rs) (adj) 15.6 18.2 21.7 25.8

Growth (%) 141.9 16.9 19.2 19.0

DPS (Rs) - 4 4 4

Y/E March (Rs mn) FY10 FY11E FY12E FY13E

Cash and cash eq 390,778 436,209 536,403 663,552


Inventories 44,018 43,192 41,868 36,087


Investments 12,821 10,821 9,821 8,821

Gross fixed assets 349,453 370,362 408,362 454,362

Net fixed assets 120,313 130,420 151,630 178,903

CWIP 22,107 38,000 46,000 49,882

Intangible assets - - - -

Deferred tax assets, net 9,658 - -

Other assets - - - -

Total assets 708,143 800,543 946,870 1,120,896

Accounts payable 7,725 8,000 8,000 8,000

Other current liabilities 323,704 331,561 357,996 384,302

Provisions 82,396 86,177 97,075 109,878

Debt funds 20,869 16,000 16,000 16,000

Other liabilities 14,997 14,962 16,441 17,850

Equity capital 63,164 63,164 63,164 63,164



Total liabilities 708,143 800,543 946,870 1,120,896

BVPS (Rs) 50.9 64.4 81.5 102.6

Cash flow statement Financial ratios Y/E March (Rs mn) FY10 FY11E FY12E FY13E


Non-cash adjustments (11,869) 22,901 (18,662) (16,758)

Changes in working capital 22,183 (61,316) 10,990 11,994


Capital expenditure (17,573) (36,802) (46,000) (49,882)

Change in investments - - - -

Other investing cash flow - - - -

Cash flow from investing (17,573) (36,802) (46,000) (49,882)

Issue of equity (616) (4,869) - -

Issue/repay debt 1,091 (1,120) (1,120) (1,120)

Dividends paid - 2 0 0

Other financing cash flow - (4,465) - -

Change in cash & cash eq 93,828 45,431 100,195 127,149


Economic Value Added (EVA) analysis Y/E March FY10 FY11E FY12E FY13E

WACC (%) 473,515 525,506 587,762 658,594

ROIC (%) 15.6 11.0 11.8 12.1


EVA (Rs mn) 141.9 16.9 19.2 19.0

EVA spread (%) 15.6 18.2 21.7 25.8



EBITDA margin 22.1 26.6 27.9 30.0

EBIT margin 19.3 23.8 25.0 27.1

Net profit margin 20.8 21.9 23.3 24.8

ROE 43.8 38.2 34.5 31.5

ROCE 38.6 34.7 32.0 29.6




Payables (days) 35 30 28 25

Current ratio (x) 1.6 1.8 2.0 2.3

Quick ratio (x) 1.2 0.1 0.1 0.1







EV/Sales 3.2 2.9 2.6 2.3

EV/EBITDA 14.3 10.7 9.2 7.6

P/E 20.6 17.6 14.7 12.4

P/BV 6.3 5.0 3.9 3.1


17

DuPont analysis

(%) FY09 FY10 FY11E FY12E FY13E






Return on equity 22.4 43.8 38.2 34.5 31.5


18

Events Calendar Nov 25 Nov 26 Nov 27

Economy

CH CPI (Sept)

US FOMC Meet

JN Foreign trade

JN CPI

GE CPI –

Quarterly Results MRF IOL Netcom, OK Play India Cethar Industries, Parekh Platinum, S & T Corporation

Nov 28 Nov 29 Nov 30

Economy – –

JN Industrial Production

UK Gfk Consumer confidence

US Consumer confidence

Quarterly Results Database Finance Escorts Bajaj Hindustan

IN – India; GE – Germany; CH – China; JN – Japan


19

Trade Data

Institutional bulk deals

Scrip Client Buy/Sell Quantity Avg Price (Rs)

Dhanus Tech UCO Bank S 220,000 15.5

Dhanus Technologies UCO Bank S 170,964 15.5

Gujarat Hotels Il&Fs Securities Services B 21,879 141.9

Shetron Copthall Mauritius Investment S 244,775 43.2

Talwalkar Fitness Credit Suisse (Singapore)A/C Credit Suisse (Singapore) B 161,711 282.2

Source: BSE, NSE

Disclosures under insider trading regulations

Shares transacted Post-transaction Scrip Acquirer/Seller Buy/Sell

Qty % Qty %

Aban Offshore Reji Abraham B 48,007 - 4,955,307 11.4

Agro Tech Foods Itc S 1,476,793 6.1 1,333,620 5.5

Anand Credit Jignesh L Shah S 10,000 - 202,886 3.4

Ashco Niulab Industries Ankush A Kotwani S 500,000 0.8 163,191 0.3

Dlf Gaurav Monga S 3,000 - 300 -

Dlf Gaurav Monga S 3,000 - 300 -

Hb Leasing & Finance Company Anju Bhasin B 1,651 0.0 291,413 2.6

Hitech Plast Ramesh S Gandhi S 1,086 - 3,914 0.0

Ipca Laboratories Ajit Kumar Jain B 15,000 - 66,000 0.1

Ipca Laboratories Ashok Kumar B 12,500 - 50,000 0.0

Ipca Laboratories Babulal Jain B 6,250 - 25,500 0.0

Ipca Laboratories Jeevan Lal Nagori B 12,500 - 65,760 0.1

Ipca Laboratories Murari Dutt Sharma B 12,500 - 25,000 0.0

Ipca Laboratories Prakash Narayan Shanware B 12,500 - 39,465 0.0

Ipca Laboratories R S Hugar B 6,250 - 12,500 0.0

Ipca Laboratories V V Subba Rao B 6,250 - 12,500 0.0

Ipca Laboratories Yalish Kumar Bansal B 12,500 - 50,000 0.0

Ismt A K Jain B 20,000 - 2,948,940 2.0

Lupin Dilip G Saoji S 1,000 - 900 -

Lupin Sakti P Chakraborty S 5,000 - 110,195 -

Lupin Sakti P Chakraborty S 5,000 - 110,195 0.0

National Aluminium Company S K Srivastava 0 - - - -

Networth Stock Broking Jupiter South Asia Investment Co -South Asia Access Fund

S 134,135 - 280,075 -

Networth Stock Broking The Royal Bank Of Scotland Plc As Trustee Of Jupiter India F

S 115,865 - 241,925 -

Sks Logistics Sarvesh Kumar Shahi B 15,249 - 575,625 4.0

Sonata Software Bhupati Investments & Finance S 12,262 0.0 20,933,984 19.9

Voltamp Transformers Nalanda India Fund B 290,246 2.9 885,392 8.8

White Diamond Industries Rameshchana P Kothari S 30,000 - 64,082 1.0

Zodiac Clothing Company Ismail M Nagaria S 1,520 - 4,630 0.0

Zodiac Clothing Company Kumar Subramanian S 1,581 - 1,819 0.0

Source: BSE

Sector Valuation Snapshot 25 November 2010

20

RCML universe: Sector Valuation Snapshot FDEPS (Rs)

FDEPS Growth (%)

EBITDA Margin (%)

PAT Margin (%)

ROE (%)

ROCE (%)

Adj. Debt/Equity Ratio (x)

P/E (x)

EV/EBITDA (x)

P/BV (x) Companies CMP (Rs) Target (Rs) Reco MCap

(Rs mn) FY11E FY12E FY11E FY12E FY11E FY12E FY11E FY12E FY11E FY12E FY11E FY12E FY11E FY12E FY11E FY12E FY11E FY12E FY11E FY12E

AUTOMOBILES

Ashok Leyland 75 90 Buy 99,709 4.6 6.0 64.0 29.7 10.8 11.2 5.8 6.3 15.9 18.6 12.0 13.4 0.7 0.7 16.3 12.6 10.9 8.9 2.5 2.2

Bajaj Auto 1,611 1,650 Hold 466,214 92.4 103.7 47.8 12.2 20.5 19.4 15.3 15.0 68.1 49.8 50.0 40.0 0.3 0.2 17.4 15.5 11.2 10.3 9.5 6.5

Hero Honda 1,931 1,900 Hold 385,677 109.1 121.5 (2.6) 11.3 14.0 13.7 11.8 11.6 53.2 44.7 44.0 44.2 0.0 0.0 17.7 15.9 13.0 11.8 8.2 6.3

M&M 785 820 Buy 468,112 43.0 47.8 27.4 11.3 15.0 14.5 11.1 10.6 28.6 25.8 22.1 21.0 0.3 0.3 18.3 16.4 13.9 12.3 4.8 3.9

Maruti Suzuki 1,416 1,600 Hold 409,111 79.1 95.1 (8.8) 20.1 10.1 10.5 6.2 6.3 17.8 18.2 17.2 17.9 0.0 0.0 17.9 14.9 9.1 7.4 2.9 2.5

Tata Motors 1,219 1,450 Buy 704,575 32.0 41.6 37.7 29.9 10.2 10.1 4.5 5.1 12.0 13.7 8.9 10.3 0.4 0.3 38.1 29.3 18.3 15.7 3.6 3.4

TVS Motor 84 75 Hold 39,860 4.6 5.6 82.6 20.5 8.0 8.1 3.5 3.8 23.1 22.9 13.9 14.4 1.0 0.9 18.1 15.0 9.9 8.7 3.8 3.1

Aggregate 2,573,257 - - - - 12.4 12.2 7.9 8.0 20.5 17.4 13.1 11.4 4.5 3.8

AUTO ANCILLARIES

Amara Raja 181 260 Buy 15,488 15.7 19.5 (19.6) 24.3 14.2 14.6 7.8 8.2 22.4 23.1 19.9 21.3 0.1 0.1 11.5 9.3 6.6 5.3 2.4 2.0

Exide 161 190 Buy 136,765 7.9 9.3 24.4 18.3 23.5 23.0 14.5 14.2 26.8 25.6 26.0 25.0 0.0 0.0 20.5 17.3 12.6 10.6 4.9 4.0

Mahindra Forgings 88 130 Buy 7,768 0.5 10.8 NM 2,157.1 10.5 12.2 0.2 4.0 0.5 11.2 4.2 10.0 0.8 0.6 184.3 8.2 4.0 2.7 1.0 0.9

Aggregate 160,021 - - - - 18.6 18.7 9.9 10.6 19.8 15.2 10.5 8.6 3.8 3.1

CAPITAL GOODS

ABB 842 750 Hold 178,342 22.4 26.3 33.8 17.2 7.9 9.2 4.9 5.6 16.2 16.4 24.5 24.8 - - 37.6 32.1 30.7 22.3 8.4 7.4

BGR Energy 700 750 Hold 50,465 37.3 46.5 33.3 24.7 11.2 11.2 6.5 6.5 33.0 31.6 25.5 27.8 1.0 0.8 18.8 15.0 11.1 8.9 7.1 5.5

BHEL 2,198 2,400 Hold 1,075,843 107.0 135.2 21.5 26.3 19.0 19.4 12.9 13.1 29.4 29.8 40.1 41.4 0.0 0.0 20.5 16.3 12.7 9.9 6.7 5.5

Bajaj Electricals 250 275 Hold 24,654 15.7 19.5 33.8 23.7 10.0 10.0 5.6 5.7 27.8 27.7 39.7 41.7 0.2 0.2 15.9 12.8 9.6 7.8 5.0 4.0

Crompton Greaves 340 370 Buy 217,979 13.8 15.5 58.3 12.4 14.0 13.8 9.0 8.8 31.9 29.4 35.2 31.7 0.3 0.2 24.6 21.9 17.2 15.8 16.7 11.9

Cummins India 760 950 Buy 150,530 31.1 39.0 48.3 25.6 18.8 19.3 15.8 15.3 35.5 36.0 35.4 35.9 0.0 0.0 24.5 19.5 28.4 19.3 13.6 10.8

Engineers India 332 400 Buy 111,762 15.5 22.1 49.9 42.2 24.9 23.8 22.1 18.7 38.8 42.6 38.8 42.6 NA NA 21.3 15.0 18.5 13.9 9.5 7.9

Jyoti Structures 131 165 Buy 10,783 13.1 15.2 16.5 16.1 11.5 11.5 4.5 4.6 19.6 19.0 27.6 28.1 0.6 0.6 10.0 8.6 4.9 4.3 2.2 1.8

Kalpataru Power Transmission 158 200 Hold 24,231 13.1 15.7 1.6 20.1 11.7 12.0 6.4 6.7 18.7 19.0 18.7 19.7 0.7 0.6 12.1 10.1 8.3 7.0 2.5 2.1

KEC International 467 625 Buy 23,590 42.6 51.3 15.5 20.3 10.1 10.2 4.5 4.4 23.1 21.6 22.6 22.1 1.0 0.9 11.0 9.1 5.8 4.7 3.0 2.1

Siemens 790 1,000 266,238 27.8 33.5 20.3 20.2 12.8 12.6 8.0 7.8 24.9 24.5 34.9 34.4 0.0 0.0 28.4 23.6 16.7 13.8 7.9 6.4

Suzlon Energy 50 45 Sell 87,967 (3.4) 1.7 NM NM 5.0 8.7 - 1.1 (7.2) 3.6 1.5 5.5 1.7 1.8 - 30.0 19.5 10.1 1.1 1.2

Thermax 893 900 Hold 106,371 29.7 39.3 36.8 32.1 11.5 11.5 7.3 7.5 28.3 28.6 57.1 55.3 0.0 0.0 30.0 22.7 18.4 14.2 9.9 7.8

Voltas 243 300 Buy 80,471 11.3 14.4 3.7 26.8 9.0 9.2 6.9 7.2 30.2 30.4 23.7 22.7 (0.6) (0.7) 21.5 16.9 15.9 12.8 7.4 5.8

Aggregate 2,409,225 - - - - 13.2 14.2 7.7 8.5 25.7 19.1 14.9 11.5 6.3 5.3


21

FDEPS (Rs)

FDEPS Growth (%)

EBITDA Margin (%)

PAT Margin (%)

ROE (%)

ROCE (%)


P/E (x)

EV/EBITDA (x)



CEMENT

ACC 996 1,180 Buy 186,947 59.5 70.5 (30.4) 18.4 24.8 26.8 15.1 15.8 29.4 17.7 27.8 17.0 0.1 0.1 16.7 14.1 9.8 8.0 3.1 2.8

Ambuja Cement 141 165 Buy 214,976 8.6 10.0 7.3 16.8 28.2 28.7 18.0 18.1 20.1 18.9 19.6 18.6 0.0 0.0 16.4 14.1 10.0 8.4 3.3 2.9

Birla Corp 389 525 Buy 29,970 58.4 70.2 (19.3) 20.2 25.3 27.4 19.6 19.9 36.3 22.7 28.4 17.7 0.4 0.2 6.7 5.5 4.8 3.7 1.7 1.4

Century Textiles 455 538 HOLD 42,308 34.9 41.3 (26.9) 18.3 16.3 18.0 7.1 7.7 17.0 17.3 9.1 9.2 1.3 1.3 13.0 11.0 5.7 4.7 2.1 1.8

Grasim Industries 2,209 2,900 Buy 202,527 222.2 263.3 (33.7) 18.5 23.8 25.5 10.5 11.0 26.6 14.7 18.6 11.7 0.5 0.4 9.9 8.4 5.6 4.6 1.6 1.4

India Cements 109 130 Hold 33,421 3.4 6.3 (69.4) 85.5 12.4 14.9 2.8 4.5 8.0 2.5 6.9 3.5 0.4 0.5 32.3 17.4 12.5 9.2 0.8 0.8

JK Lakshmi Cement 58 94 Buy 7,060 8.6 15.1 (56.6) 75.6 19.1 23.2 7.5 10.7 26.0 10.0 15.2 6.6 0.9 1.1 6.7 3.8 6.7 4.5 0.7 0.7

Mangalam Cement 139 190 Hold 3,720 29.5 34.2 (33.7) 15.9 22.7 26.0 12.8 12.6 34.9 18.9 33.9 17.0 0.0 0.4 4.7 4.1 2.5 1.8 0.4 0.3

Orient Paper & Industries 57 70 Buy 11,013 7.3 9.5 (12.8) 30.7 17.0 18.3 8.3 9.5 22.5 16.9 16.1 12.1 0.7 0.6 7.8 6.0 5.2 4.2 1.4 1.2

Shree Cement 2,060 2,550 Buy 71,764 124.5 159.4 (44.6) 28.1 29.1 30.7 11.7 10.7 51.4 21.3 25.0 11.9 1.1 1.0 16.5 12.9 7.2 4.9 3.9 3.2

UltraTech Cement 1,126 1,260 Buy 308,638 58.4 72.7 (39.6) 24.5 21.9 23.4 10.7 11.5 28.8 16.2 21.0 12.4 0.5 0.4 19.3 15.5 9.9 8.0 3.4 2.9

Aggregate 1,112,345 - - - - 22.9 24.6 11.5 12.1 14.4 11.8 7.9 6.3 2.4 2.1

CONSTRUCTION

Ahluwalia Contracts 161 252 Buy 10,130 16.0 19.3 23.0 20.7 11.0 10.9 5.0 4.9 33.5 29.9 25.6 24.1 0.5 0.4 10.1 8.3 4.4 3.6 2.9 2.2

Hindustan Construction Co 55 73 Hold 33,632 1.8 1.9 12.9 3.9 12.3 12.2 2.5 2.2 7.0 6.9 7.5 7.7 1.9 1.8 30.4 29.3 11.7 9.7 2.1 2.0

IRB Infrastructures Developers 223 287 Hold 74,084 15.0 17.5 29.2 17.1 39.6 33.1 18.2 13.7 20.2 19.6 11.7 10.7 1.9 2.1 14.9 12.7 9.0 7.0 3.0 2.5

IVRCL Infrastructures 136 178 Buy 36,206 7.6 9.6 20.9 25.4 9.4 9.3 3.4 3.4 10.6 12.0 9.9 10.4 1.1 1.1 17.8 14.2 9.8 7.9 1.8 1.6

Jaiprakash Associates 121 150 Buy 257,724 4.2 5.6 12.7 32.1 23.5 24.6 7.1 7.7 10.3 12.2 6.7 8.1 1.7 1.7 28.7 21.7 8.3 6.5 2.7 2.4

L&T 2,017 2,330 Buy 1,225,882 73.2 90.3 32.6 23.3 13.5 13.2 8.3 8.3 28.4 27.6 12.9 13.6 1.6 1.3 27.6 22.3 18.5 15.3 5.1 4.2

Nagarjuna Construction Co 134 212 Buy 34,408 9.3 10.0 17.8 7.1 10.2 10.2 4.1 3.6 10.2 10.1 8.8 8.7 1.0 1.3 14.4 13.4 9.2 7.5 1.4 1.3

Patel Engineering 345 469 Buy 24,101 19.9 27.2 4.6 36.4 14.8 14.8 5.4 5.6 10.3 12.6 7.9 8.9 1.3 1.4 17.3 12.7 10.2 7.8 1.7 1.5

Punj Lloyd 111 89 Sell 36,796 2.6 7.5 NM 189.0 7.2 9.5 1.0 2.2 2.8 7.8 5.1 7.5 1.2 1.4 42.8 14.8 11.6 7.1 1.2 1.1

Reliance Infrastructure 933 1,390 Buy 228,513 60.6 65.8 6.9 8.7 10.7 13.0 10.2 9.0 7.5 7.3 6.9 6.9 0.6 0.7 15.4 14.2 15.8 10.6 1.0 0.9

Simplex Infrastructure 421 513 Hold 20,830 28.6 34.8 11.4 21.5 10.0 10.0 2.8 2.8 13.7 14.8 7.1 7.4 1.4 1.4 14.7 12.1 6.8 5.7 1.9 1.7

Aggregate 1,982,306 - - - - 13.8 14.2 7.1 7.0 23.4 19.1 13.8 10.8 2.8 2.5

FMCG

Asian Paints 2,604 3,000 Buy 249,655 92.7 113.1 0.7 22.0 17.4 18.0 11.6 12.1 45.7 43.9 41.4 40.3 0.1 0.1 28.1 23.0 18.5 15.3 11.4 9.0

Britannia 398 450 Hold 47,571 11.0 19.8 (7.8) 79.7 4.6 6.4 2.9 4.5 43.5 66.1 16.5 25.9 2.0 1.7 36.1 20.1 26.4 15.9 14.8 12.1

Colgate 876 860 Sell 119,103 32.4 35.1 4.1 8.5 22.4 21.5 19.7 18.9 129.5 129.3 128.1 128.0 0.0 0.0 27.0 24.9 22.8 21.0 33.6 30.9

Dabur 94 110 Hold 164,237 3.2 4.0 13.0 24.0 18.9 19.6 14.2 15.1 50.7 47.0 42.5 40.2 0.3 0.1 29.4 23.7 22.3 18.5 12.9 9.8

Emami 450 450 Sell 68,015 15.7 18.4 31.0 16.6 22.9 22.5 18.8 18.4 33.9 31.9 26.2 25.7 0.3 0.3 28.6 24.5 23.5 20.1 8.7 7.1

GCPL 416 460 Hold 134,581 15.6 18.2 38.1 16.5 20.0 19.7 14.2 13.4 37.4 30.9 24.7 18.4 0.9 0.8 26.6 22.8 20.6 16.8 7.7 6.5

GSK Consumer 2,313 2,200 Sell 97,286 69.0 82.3 24.6 19.4 15.7 16.2 12.6 12.6 29.2 29.1 28.4 28.4 0.0 0.0 33.5 28.1 24.5 20.0 9.0 7.5

HUL 300 330 Hold 654,259 9.9 11.4 2.7 15.5 13.3 13.9 11.2 11.5 76.7 75.4 76.4 74.9 0.0 0.0 30.3 26.3 24.6 20.9 21.5 18.4

ITC 174 210 Buy 1,336,006 6.2 7.6 12.6 22.2 32.1 33.7 21.5 22.6 30.6 32.2 30.4 32.0 0.0 0.0 28.0 22.9 18.6 15.2 8.0 6.9

Jyothy Labs 260 305 Hold 20,980 12.3 14.2 20.3 15.2 15.7 14.7 13.5 12.7 18.6 16.1 18.4 15.9 0.0 0.0 21.2 18.4 14.9 13.0 3.1 2.8

Marico 136 150 Buy 83,278 4.8 5.7 19.4 20.7 13.8 14.2 9.5 10.0 38.5 35.8 27.1 28.7 0.3 0.3 28.5 23.6 19.9 16.8 9.7 7.5

Nestle 3,793 3,500 Hold 365,687 80.6 100.7 16.9 24.9 19.6 20.7 12.7 13.4 125.4 137.4 125.7 137.6 0.0 0.0 47.0 37.7 30.6 24.4 55.5 48.5

Aggregate 3,340,658 20.3 21.2 14.5 15.1 30.0 24.8 21.3 17.5 11.2 9.5


22

FDEPS (Rs)

FDEPS Growth (%)

EBITDA Margin (%)

PAT Margin (%)

ROE (%)

ROCE (%)


P/E (x)

EV/EBITDA (x)



METALS

JSW Steel 1,203 1,050 Sell 263,456 67.9 90.2 5.5 32.7 20.0 18.4 7.0 7.1 12.8 11.8 8.7 8.8 0.7 0.6 17.7 13.3 8.7 7.2 1.5 1.3

Jindal Steel & Power 644 670 Hold 601,086 56.2 68.2 44.0 21.3 34.4 17.0 37.7 38.3 40.3 34.1 23.3 20.9 0.4 0.3 11.5 9.4 7.6 6.5 3.9 2.8

SAIL 179 270 Buy 737,896 21.8 25.5 33.0 17.3 27.5 29.0 18.7 18.4 24.2 23.2 17.0 16.3 0.5 0.6 8.2 7.0 5.1 4.1 1.8 1.5

Tata Steel 617 780 Buy 556,305 70.9 72.4 NM 2.1 15.1 15.3 6.1 6.0 25.8 20.2 12.5 11.3 1.6 1.2 8.7 8.5 5.6 5.4 1.9 1.4

Jai Balaji 254 400 Buy 16,201 12.1 42.2 142.4 249.5 13.6 22.3 3.2 10.0 7.5 22.2 8.6 15.7 177.7 137.1 21.0 6.0 9.6 5.2 1.7 1.3

Aggregate 2,174,943 21.5 22.3 11.3 11.8 9.5 8.2 6.2 5.4 2.1 1.6

IT SERVICES

Educomp 590 700 Buy 56,326 36.6 41.8 29.9 14.2 41.0 48.3 26.8 25.1 24.6 22.7 14.2 13.8 0.8 0.6 16.1 14.1 10.5 7.3 3.5 2.9

FirstSource Solutions 23 40 Buy 9,700 3.6 4.6 14.5 26.7 14.5 14.8 7.2 8.0 10.4 11.8 6.9 7.5 0.9 0.8 6.2 4.9 2.0 1.7 0.6 0.5

HCL Infosystems 92 135 Hold 20,044 11.2 12.7 (18.3) 13.9 3.1 3.3 2.1 2.2 18.6 19.9 12.7 13.8 0.4 0.4 8.2 7.2 5.5 4.8 1.5 1.4

HCL Tech 391 525 Buy 266,739 22.6 31.2 25.1 38.2 16.3 17.7 9.9 11.3 20.3 22.9 15.8 17.2 0.3 0.3 17.3 12.5 9.6 7.3 3.2 2.6

Hexaware Technologies 87 90 Hold 12,691 8.1 9.9 (13.3) 22.8 9.4 11.1 7.3 10.4 12.3 13.9 8.3 9.9 0.1 0.1 10.8 8.8 5.4 3.9 1.0 0.9

Infosys 2,996 3,200 Hold 1,719,750 121.2 145.1 11.4 19.7 33.0 32.8 24.9 24.8 26.1 26.3 51.0 53.1 0.0 0.0 24.7 20.6 18.9 15.6 6.0 5.0

Infotech Enterprises 157 240 Buy 17,489 13.0 17.4 (15.7) 33.6 16.2 17.9 12.2 12.8 13.8 16.2 19.4 22.3 0.0 0.0 12.1 9.0 - - 1.6 1.4

MindTree 516 625 Buy 20,634 15.4 47.3 (71.9) 207.2 9.9 17.8 3.9 10.2 8.7 23.4 8.2 21.9 0.0 0.0 33.5 10.9 21.6 10.0 2.9 2.3

Mphasis 606 750 Hold 127,281 51.0 55.7 16.3 9.3 25.7 26.2 21.4 19.9 30.3 27.0 40.5 74.0 0.0 0.0 11.9 10.9 9.9 8.3 3.8 2.9

NIIT 57 85 Buy 9,419 6.3 8.1 47.2 29.7 15.3 16.9 8.5 9.9 18.4 20.4 10.1 12.2 0.7 0.6 9.1 7.0 2.8 2.3 1.6 1.3

NIIT Technologies 204 300 Buy 12,001 27.5 26.9 27.7 (2.1) 18.6 20.0 13.7 13.3 25.3 21.0 23.9 19.8 0.0 0.0 7.4 7.6 5.4 5.0 1.7 1.5

Oracle Financial Services 2,104 2,500 Buy 176,537 123.3 143.6 33.1 16.5 39.4 41.2 33.4 34.6 19.4 18.4 19.2 17.0 0.0 0.0 17.1 14.7 14.4 12.3 3.3 2.7

Patni Computers 462 600 Buy 60,533 43.9 45.7 (2.0) 4.1 19.4 20.6 17.8 15.1 12.8 13.5 20.8 21.8 0.0 0.0 10.5 10.1 8.3 7.0 1.5 1.4

Persistent Systems 391 500 Buy 15,634 39.7 39.5 27.4 (0.6) 21.1 22.0 20.5 16.6 22.1 18.0 34.5 33.5 0.0 0.0 9.8 9.9 11.7 9.1 2.0 1.6

Polaris Software 152 275 Buy 15,023 20.5 22.5 32.3 10.1 14.2 15.4 13.3 12.9 21.1 19.4 17.5 16.4 0.0 0.0 7.4 6.7 6.2 5.0 1.4 1.2

Satyam Computer Services 67 135 Buy 79,293 7.7 10.6 470.1 38.8 18.6 20.6 15.7 16.8 22.2 24.4 19.6 21.7 0.2 0.1 8.8 6.3 5.4 3.7 1.8 1.4

TCS 1,005 1,100 Hold 1,966,518 43.2 49.7 22.9 15.2 28.9 29.0 22.8 21.7 36.8 33.7 42.5 42.6 0.0 0.0 23.3 20.2 18.3 15.1 7.9 6.0

Tech Mahindra 667 850 Hold 83,828 82.5 92.5 41.3 12.2 21.3 20.4 22.1 23.4 28.4 30.7 30.0 31.6 0.4 0.3 8.1 7.2 8.1 8.0 2.4 2.1

Wipro 410 475 Hold 1,004,682 21.9 24.7 16.4 12.9 21.9 22.7 17.2 16.8 25.2 24.4 21.2 20.7 0.2 0.2 18.7 16.6 14.8 12.3 4.4 3.7

Aggregate 5,674,120 - - - - 23.6 24.3 18.2 18.2 19.9 16.9 15.2 12.4 4.9 4.0

LOGISTICS

Allcargo Global Logistics 158 200 Hold 20,674 14.1 16.1 16.0 14.0 11.8 12.1 6.9 7.1 14.3 13.9 13.6 13.7 0.0 0.0 11.2 9.8 6.5 5.7 1.5 1.3

Container Corp 1,277 1,500 Hold 165,943 65.5 77.1 9.3 17.8 29.1 31.1 23.0 24.4 19.2 18.4 19.2 18.4 - - 19.5 16.5 13.8 11.6 3.8 3.4

Gateway Distriparks 110 135 Buy 11,857 8.0 9.6 9.4 19.8 28.5 34.4 16.6 17.3 12.3 13.3 10.8 10.1 0.2 0.2 13.7 11.5 9.0 6.5 1.2 1.1

Aggregate 198,474 - - - - 22.4 24.0 16.3 17.1 17.7 15.1 11.8 9.9 3.0 2.6


23

FDEPS (Rs)

FDEPS Growth (%)

EBITDA Margin (%)

PAT Margin (%)

ROE (%)

ROCE (%)


P/E (x)

EV/EBITDA (x)



OIL & GAS

BPCL 701 910 BUY 253,274 (19.8) 38.3 (146.4) (293.7) 0.8 2.6 - 1.1 (5.8) 11.9 (0.8) 9.3 0.9 0.8 - 18.3 28.9 10.0 2.2 2.1

Cairn India 318 285 SELL 603,222 25.9 34.7 378.8 33.8 75.2 73.3 52.7 56.8 14.0 16.7 16.2 19.5 (0.1) (0.1) 12.3 9.2 8.1 6.7 1.6 1.4

GAIL India 485 540 BUY 615,656 27.7 36.3 11.7 31.4 21.3 26.3 12.6 15.4 19.5 22.3 22.2 23.8 0.5 0.5 17.5 13.4 10.2 7.7 3.2 2.8

GSPL 112 125 HOLD 63,176 7.1 7.2 (3.8) 2.4 94.0 94.0 37.4 36.1 27.3 21.6 26.5 22.8 0.6 0.6 15.9 15.5 7.4 7.0 4.8 4.8

HPCL 434 660 BUY 146,863 50.3 61.8 31.0 22.9 2.9 3.5 1.4 1.8 14.1 15.8 10.2 12.7 0.8 0.7 8.6 7.0 7.6 6.8 1.2 1.1

IGL 320 330 HOLD 44,793 18.2 21.3 18.1 17.4 28.9 27.1 15.6 13.9 27.8 26.9 37.5 33.9 14.8 20.9 17.6 15.0 9.6 7.7 4.5 3.7

IOC 362 550 BUY 879,283 35.3 39.8 (20.1) 12.8 4.7 5.6 3.2 3.7 15.0 15.4 13.7 15.8 0.6 0.5 10.3 9.1 9.4 8.1 1.5 1.4

Oil India 1,400 1,450 SELL 336,612 120.3 119.1 10.8 (1.0) 52.8 51.3 35.8 35.5 19.7 17.2 29.8 26.1 (0.6) (0.7) 11.6 11.8 6.5 6.7 2.1 1.9

ONGC 1,247 1,510 BUY 2,668,137 118.0 113.6 29.7 (3.7) 46.1 47.2 22.5 22.7 22.9 19.3 34.9 32.4 3.8 3.8 10.6 11.0 4.8 5.0 2.2 2.0

Petronet LNG 116 165 BUY 86,850 7.7 9.8 42.2 27.7 9.7 9.9 4.6 5.0 21.4 23.5 19.8 20.0 0.9 0.9 15.1 11.8 8.5 7.1 3.0 2.6

Reliance Industries 996 1,210 HOLD 3,259,455 65.1 74.9 33.9 15.1 16.0 19.2 8.2 10.3 14.1 14.4 14.4 15.8 0.2 0.0 15.3 13.3 9.1 8.3 2.1 1.8

Aggregate 8,957,321 - - - - 13.6 15.5 7.2 8.5 13.0 11.5 7.5 6.9 2.0 1.8

PHARMCEUTICALS

Biocon 393 550 Buy 78,660 18.3 20.3 22.5 10.7 20.0 20.2 13.2 13.0 18.3 19.3 14.6 16.1 0.3 0.2 21.5 19.4 15.0 13.3 4.5 3.9

Cadila Healthcare 780 770 Hold 159,673 30.9 38.5 20.8 24.9 20.5 21.0 14.4 15.2 36.5 33.6 22.8 24.6 0.7 0.4 25.3 20.2 19.0 15.6 9.8 7.5

Cipla 341 370 Hold 273,555 13.2 15.6 1.0 18.1 23.8 24.2 16.9 17.4 20.5 16.7 19.1 16.7 0.0 0.0 25.8 21.8 18.8 16.2 4.6 4.0

Dishman Pharmaceuticals 142 192 Hold 11,475 10.6 15.2 (6.4) 43.7 21.2 24.3 9.0 11.3 12.3 10.5 8.7 8.3 1.0 1.0 13.4 9.4 9.3 7.0 1.5 1.3

Dr Reddy's Labs 1,781 1,870 Buy 301,286 66.6 102.9 0.5 54.4 18.2 24.2 15.3 19.4 23.3 20.6 17.1 16.6 0.3 0.2 26.7 17.3 23.2 14.4 7.0 5.7

GlaxoSmithKline Pharmaceuticals 2,209 2,160 Hold 187,067 69.8 82.0 18.1 17.6 36.6 36.7 26.8 26.8 29.8 30.6 29.7 30.5 0.0 0.0 31.7 26.9 21.2 18.0 10.5 9.0

Glenmark Pharmaceuticals 352 390 Buy 94,972 18.0 23.4 37.2 30.1 27.6 27.7 16.2 17.6 16.7 17.7 12.9 14.2 0.7 0.5 19.6 15.0 13.4 11.1 4.0 3.3

Jubilant Organosys 303 330 Hold 48,150 21.5 26.9 7.9 25.1 17.3 18.3 9.2 10.2 11.2 10.9 8.8 9.0 0.7 0.6 14.1 11.3 11.5 9.5 2.1 1.9

Lupin 487 510 Buy 217,001 19.6 23.0 28.4 17.4 20.1 19.8 15.5 15.3 39.4 36.3 24.6 26.2 0.6 0.3 24.9 21.2 20.1 17.1 10.7 7.9

Piramal Healthcare 456 480 Sell 95,216 28.5 34.5 25.4 21.0 21.7 21.9 14.4 15.4 31.4 29.7 23.3 25.1 0.4 0.2 16.0 13.2 12.0 10.5 4.5 3.5

Sun Pharmaceutical Industries 2,273 2,210 Hold 468,256 97.7 109.2 41.1 11.8 37.3 35.0 34.3 31.8 19.7 24.1 19.2 22.9 0.0 0.1 23.3 20.8 20.6 18.2 6.2 5.1

Aggregate 1,935,312 - - - - 23.7 24.7 17.6 18.4 23.5 19.1 18.2 14.9 6.0 4.9

POWER

Adani Power 139 130 Sell 302,153 6.6 19.6 744.2 196.3 63.9 67.9 56.5 51.6 21.9 47.7 10.0 20.7 1.0 1.7 21.0 7.1 20.8 6.0 4.1 2.8

Lanco Infratech 65 85 Buy 156,387 3.6 2.8 94.4 (24.3) 26.4 25.9 6.2 3.6 23.6 14.8 (72.2) (156.9) 4.4 4.2 17.8 23.6 8.7 6.7 3.8 3.2

NTPC 178 200 Sell 1,468,930 12.4 13.4 17.3 7.9 35.1 35.0 20.9 20.0 15.7 15.5 22.4 15.5 0.5 0.5 14.3 13.3 9.9 8.8 2.2 2.0

Reliance Power 168 140 Sell 471,394 5.1 4.6 78.5 (8.8) 57.2 52.1 55.4 41.3 7.7 5.9 4.9 3.2 1.3 2.0 33.0 36.2 34.0 30.6 2.4 2.2

Tata Power 1,289 1,250 Hold 305,936 75.5 101.0 16.2 33.7 22.5 25.0 9.0 10.2 15.0 18.3 6.8 7.6 1.1 1.2 17.1 12.8 6.8 5.2 2.1 2.1

Jindal Steel & Power 644 670 Hold 601,086 56.2 68.2 44.0 21.3 34.4 17.0 37.7 38.3 40.3 34.1 23.3 20.9 0.4 0.3 11.5 9.4 7.6 6.5 3.9 2.8

Aggregate 3,305,886 - - - - 35.6 37.0 20.5 20.7 15.8 12.7 10.3 8.1 2.6 2.2


24

FDEPS (Rs)

FDEPS Growth (%)

EBITDA Margin (%)

PAT Margin (%)

ROE (%)

ROCE (%)


P/E (x)

EV/EBITDA (x)



REAL ESTATE

Anant Raj Industries 121 170 Buy 35,707 7.8 9.4 (3.3) 19.6 47.5 31.8 45.2 28.5 6.4 7.3 6.0 6.5 0.1 0.1 15.5 12.9 13.0 10.2 1.0 0.9

DLF 304 335 Hold 516,116 15.1 17.1 40.6 13.7 47.3 44.9 25.7 23.3 10.7 12.6 7.0 8.6 0.7 0.7 20.2 17.8 14.2 11.9 2.0 1.9

Godrej Properties 668 520 Hold 46,632 22.4 57.4 27.5 155.9 45.9 48.5 39.2 39.9 17.8 35.6 9.8 21.8 0.8 0.6 29.7 11.6 28.8 10.8 5.0 3.6

HDIL 207 270 Buy 85,740 17.9 38.3 19.3 113.3 43.9 52.3 31.6 38.2 9.2 15.9 6.9 12.7 0.4 0.3 11.5 5.4 12.0 5.6 0.9 0.7

Indiabulls Real Estate 163 230 Buy 65,371 10.3 10.5 NA 2.3 37.8 34.1 29.6 24.3 3.5 3.5 3.5 3.3 0.2 0.3 15.9 15.5 9.4 8.4 0.6 0.5

Orbit Corp 88 150 Hold 9,452 17.1 20.9 (16.0) 22.1 32.0 32.0 13.9 15.3 10.3 11.6 8.6 9.1 1.0 0.8 5.1 4.2 8.2 7.3 1.0 0.9

Peninsula Land 55 75 Sell 15,412 8.2 7.2 (18.4) (11.9) 44.4 50.8 33.5 38.7 16.2 12.7 12.5 9.8 0.3 0.3 6.7 7.6 5.7 6.6 1.0 0.9

Phoenix Mills 219 250 Buy 31,692 5.2 18.3 27.6 252.9 75.5 82.9 34.7 45.5 4.7 15.2 3.6 10.3 0.5 0.6 42.3 12.0 22.2 7.5 2.0 1.7

Puravankara Projects 107 130 Buy 22,772 7.1 7.2 4.0 1.5 30.3 23.3 25.1 21.8 9.8 9.2 6.2 5.9 0.6 0.6 15.1 14.8 16.8 18.7 1.4 1.3

Unitech 67 100 Buy 168,800 3.7 5.2 29.9 41.0 35.8 37.0 23.3 25.6 9.4 11.6 6.1 7.8 0.6 0.5 18.2 12.9 17.8 13.4 1.9 1.6

Aggregate 997,694 - - - - 43.3 43.7 26.9 27.3 17.9 13.0 14.3 10.4 1.5 1.4

SUGAR

Bajaj Hindusthan 116 107 Hold 22,207 15.7 5.3 400.2 (66.0) 18.8 15.4 6.7 3.0 12.1 3.6 8.3 4.2 0.8 0.4 7.4 21.7 5.7 9.1 0.8 0.8

Balrampur Chini 77 77 Hold 20,108 9.7 11.0 8.9 14.1 23.1 19.5 12.3 12.2 20.2 20.7 14.6 16.9 0.5 0.2 8.0 7.0 6.4 6.6 1.6 1.4

Dhampur Sugar 68 80 Hold 3,218 39.9 18.2 274.8 (54.5) 23.4 19.6 12.1 7.7 35.5 12.8 21.0 10.7 0.8 0.5 1.7 3.7 2.4 4.0 0.4 0.4

Aggregate 45,533 - - - - 20.8 17.5 9.3 6.9 6.0 9.4 5.1 7.1 1.0 0.9

TELECOM

Bharti Airtel 332 400 Buy 1,260,020 18.2 23.5 (22.9) 28.8 34.9 36.5 11.3 12.0 15.3 17.0 8.7 8.6 1.3 1.1 18.2 14.1 8.5 6.7 2.6 2.2

Idea Cellular 70 95 Buy 230,093 2.9 3.4 (6.6) 19.7 25.8 28.3 6.1 6.0 8.0 8.8 5.8 7.1 1.0 0.9 24.4 20.4 7.3 5.5 2.0 1.7

MTNL 56 50 Sell 35,060 (14.8) (14.4) NM NM - - - - (10.3) (11.1) (8.9) (9.5) 0.3 0.3 - - - - 0.4 0.5

Onmobile Global 265 450 Buy 15,559 12.1 18.2 61.5 50.6 22.5 27.4 13.0 15.6 9.2 12.4 7.7 11.2 0.0 0.0 22.0 14.6 10.7 7.0 1.9 1.7

Reliance Communications 144 190 Buy 296,498 7.4 11.1 (65.9) 50.6 31.9 34.1 7.3 9.7 4.0 5.8 3.5 4.5 0.8 0.7 19.5 13.0 7.2 5.9 0.7 0.7

Tata Communications 279 400 Buy 79,472 (26.1) (21.6) NM NM 11.0 12.5 - - (17.9) (17.6) 3.3 3.2 2.1 2.6 - - 11.6 9.1 2.1 2.5

Spice Mobility 138 130 Buy 10,311 13.1 24.0 39.1 82.8 9.9 10.4 7.0 9.6 53.5 55.7 47.1 42.1 0.0 0.0 10.5 5.8 6.5 4.7 4.4 2.5

Aggregate 1,927,013 - - - - 29.0 31.1 6.8 8.1 24.3 17.2 8.4 6.6 1.7 1.5

OTHERS

Sintex Industries 215 490 Buy 58,611 30.2 37.4 25.2 24.1 16.4 16.8 10.1 10.4 19.0 19.3 10.1 11.6 0.4 0.3 7.1 5.7 8.8 7.1 2.4 2.0


25

MCap FDEPS (Rs) FDEPS Growth (%) NIM (%) Cost to income (%) ROE (%) ROA (%) Credit/ Deposit Ratio (%)

CAR (%) P/E (x) P/BV (x) Company CMP (Rs) Target (Rs) Reco


BANKING

Axis Bank 1,385 1,800 Buy 566,890 78.9 101.5 27.1 28.7 3.3 3.3 42.8 43.3 18.5 20.3 1.6 1.7 74.7 76.0 15.2 14.6 17.6 13.6 3.0 2.6

Bank of Baroda 928 1,200 Buy 338,058 103.8 125.5 24.0 21.0 2.4 2.6 43.6 40.4 24.3 24.8 1.2 1.2 72.6 73.1 14.4 12.5 8.9 7.4 2.0 1.6

Bank of India 449 480 Buy 235,620 52.9 63.8 59.7 20.7 2.4 2.5 43.8 40.7 14.2 19.9 0.7 0.9 73.3 73.0 12.9 13.3 8.5 7.0 1.6 1.3

Canara Bank 717 650 Hold 293,827 89.6 101.3 21.5 13.0 2.4 2.6 40.7 39.7 26.8 26.1 1.3 1.3 72.2 73.6 13.4 12.6 8.0 7.1 1.9 1.5

Corporation Bank 702 775 Hold 100,652 98.6 115.6 20.8 17.3 2.3 2.5 37.1 37.2 21.9 22.3 1.2 1.1 68.2 67.9 13.3 12.6 7.1 6.1 1.5 1.2

HDFC Bank 2,311 2,500 Buy 1,070,607 83.8 108.7 30.1 29.7 4.3 4.5 47.3 46.6 16.3 16.8 1.5 1.6 75.2 75.2 17.4 16.5 27.6 21.3 4.3 3.7

ICICI Bank 1,125 1,060 Hold 1,291,964 45.9 58.9 27.2 28.3 2.4 2.4 37.6 41.6 8.0 9.6 1.1 1.3 89.7 88.4 19.4 17.4 24.5 19.1 2.4 2.2

Oriental Bank of Commerce 439 580 Buy 109,862 61.6 75.6 35.9 22.8 2.4 2.9 41.0 37.7 16.5 19.3 0.9 1.0 69.4 69.7 12.5 12.9 7.1 5.8 1.3 1.1

Punjab National Bank 1,266 1,550 Buy 399,111 146.9 183.7 18.6 25.0 3.3 3.5 39.4 39.2 26.6 25.6 1.4 1.4 74.8 76.1 14.2 14.1 8.6 6.9 2.0 1.6

State Bank of India 2,851 3,700 Buy 1,810,380 187.4 234.6 29.8 25.1 2.5 3.0 52.6 46.8 14.8 16.8 0.9 1.1 78.6 82.4 13.4 12.7 15.2 12.2 2.4 2.1

Union Bank of India 359 437 Buy 181,565 43.1 56.8 4.8 31.9 2.4 2.8 40.7 42.3 26.2 22.4 1.2 1.0 70.2 71.0 12.5 11.7 8.3 6.3 1.7 1.4

Yes Bank 317 350 Hold 109,507 19.9 25.2 41.2 26.8 2.8 2.7 36.7 37.6 20.3 20.2 1.6 1.5 82.8 78.3 20.6 16.8 15.9 12.6 3.0 2.5

SPECIALTY FINANCE

HDFC 688 750 HOLD 1,006,374 23.5 28.0 19.4 19.3 3.3 3.3 7.3 7.0 21.0 22.3 2.8 2.7 13.4 12.2 29.3 24.5 5.9 5.3

LIC Housing Finance 1,070 1,575 BUY 101,597 96.2 115.3 37.9 19.9 2.9 2.7 15.0 14.6 24.1 23.9 2.1 1.9 13.3 11.9 11.1 9.3 2.4 2.0

Dewan Housing Finance 300 370 BUY 31,193 21.8 30.1 18.6 38.2 3.0 3.0 29.9 27.2 19.2 19.3 1.9 1.9 18.3 15.2 13.7 10.0 2.1 1.8

Aggregate 7,647,206 - - - - 15.5 12.5 2.6 2.2

Source: RCML Research * Not Rated


26

RCML Research

Analyst Sector Email ID Office Telephone

Manoj Singla (Managing Director & Co-head Research)

IT, Telecom [email protected] (91-22) 6766 3401

Suhas Harinarayanan (Managing Director & Co-head Research)

Capital Goods, Real Estate, Power [email protected] (91-22) 6766 3404

Kaushal Maroo Automobiles [email protected] (91-22) 6766 3457

Keyur Vora Automobiles [email protected] (91-22) 6766 3456

Siddharth Teli Banking & Financial Services [email protected] (91-22) 6766 3463

Ishank Kumar Banking & Financial Services [email protected] (91-22) 6766 3467

Nikhil Rungta Banking & Financial Services [email protected] (91-22) 6766 3451

Misal Singh Capital Goods [email protected] (91-22) 6766 3466

Abhishek Raj Capital Goods [email protected] (91-22) 6766 3485

Mihir Jhaveri Cement [email protected] (91-22) 6766 3459

Vaibhav Jain Construction, Infrastructure [email protected] (91-22) 6766 3464

Hardik Shah Construction, Infrastructure [email protected] (91-22) 6766 3465

Jay Shankar Economy [email protected] (91-22) 6766 3442

Vallabh Kulkarni Economy [email protected] (91-22) 6766 3438

Varun Lohchab FMCG [email protected] (91-22) 6766 3458

Gaurang Kakkad FMCG [email protected] (91-22) 6766 3470

Bandish Mehta FMCG [email protected] (91-22) 6766 3471

Rumit Dugar IT, Telecom [email protected] (91-22) 6766 3444

Udit Garg IT, Telecom [email protected] (91-22) 6766 3445

Anuj Bagri IT, Telecom [email protected] (91-22) 6766 3443

Amit Agarwal Metals [email protected] (91-22) 6766 3449

Ballabh Modani Oil & Gas [email protected] (91-22) 6766 3436

Nitin Tiwari Oil & Gas [email protected] (91-22) 6766 3437

Vikas Sonawale Pharmaceuticals [email protected] (91-22) 6766 3447

Vineet Agrawal Pharmaceuticals [email protected] (91-22) 6766 3448

Sumit Maniyar Power [email protected] (91-22) 6766 3461

Suman Memani Real Estate [email protected] (91-22) 6766 3439

Arun Aggarwal Real Estate [email protected] (91-22) 6766 3440

Ankur Periwal Retail, Logistics, Sugar [email protected] (91-22) 6766 3469

Aseem Gupta Mid Caps [email protected] (91-22) 6766 3450

Dr Tirthankar Patnaik Strategy [email protected] (91-22) 6766 3446

Prasad Shahane Strategy [email protected] (91-22) 6766 3455

Coverage Profile

By recommendation By market cap (US$)

33

9

58

0

20

40

60

Buy Hold Sell

(%)

69

29

20

20

40

60

80

> $1bn $200mn - $1bn < $200mn

(%)

Recommendation interpretation

Recommendation Expected absolute returns (%) over 12 months

Buy More than 15%

Hold Between 15% and –5%

Sell Less than –5%

Recommendation structure changed with effect from March 1, 2009

Expected absolute returns are based on share price at market close unless otherwise stated. Stock recommendations are based on absolute upside (downside) and have a 12-month horizon. Our target price represents the fair value of the stock based upon the analyst’s discretion. We note that future price fluctuations could lead to a temporary

mismatch between upside/downside for a stock and our recommendation.

Religare Capital Markets Ltd

4th Floor, GYS Infinity, Paranjpe ‘B’ Scheme, Subhash Road, Vile Parle (E), Mumbai 400 057.

Disclaimer

This document is NOT addressed to or intended for distribution to retail clients (as defined by the FSA).

This document is issued by Religare Capital Markets plc (“RCM”) in the UK, which is authorised and regulated by the Financial Services Authority in connection with its UK distribution. RCM is a member of the London Stock Exchange.

This material should not be construed as an offer or recommendation to buy or sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action or any other matter. The material in this report is based on information that we consider reliable and accurate at, and share prices are given as at close of business on, the date of this report but we do not warrant or represent (expressly or impliedly) that it is accurate, complete, not misleading or as to its fitness for the purpose intended and it should not be relied upon as such. Any opinion expressed (including estimates and forecasts) is given as of the date of this report and may be subject to change without notice.

RCM, and any of its connected or affiliated companies or their directors or employees, may have a position in any of the securities or may have provided corporate finance advice, other investment services in relation to any of the securities or related investments referred to in this document. Our asset management area, our proprietary trading desks and investing businesses may make investment decisions that are inconsistent with the recommendations or views expressed in this briefing note.

RCM accepts no liability whatsoever for any direct, indirect or consequential loss or damage of any kind arising out of the use of or reliance upon all or any of this material howsoever arising. Investors should make their own investment decisions based upon their own financial objectives and financial resources and it should be noted that investment involves risk, including the risk of capital loss.

This document is confidential and is supplied to you for information purposes only. It may not (directly or indirectly) be reproduced, further distributed to any person or published, in whole or in part, for any purpose whatsoever. Neither this document, nor any copy of it, may be taken or transmitted into the United States, Canada, Australia, Ireland, South Africa or Japan or into any jurisdiction where it would be unlawful to do so. Any failure to comply with this restriction may constitute a violation of relevant local securities laws. If you have received this document in error please telephone Nicholas Malins-Smith on +44 (0) 20 7382 4479.

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