top research picks other research - the smart...

RCML: Winner of LIPPER-STARMINE broker award for “Earnings Estimates in Midcap Research 2008”

“Honourable Mention” in Institutional Investor 2009 | Voted amongst Top 5 most improved brokerages by ASIA MONEY POLL 2009

RCML Research is also available on Bloomberg FTIS <GO> and Thomson First Call

Corporate News

Kalanithi Maran and his firm, KAL Airways, have raised their direct holding in SpiceJet to 38.66% through the purchase of an additional 7.68% stake. (BS)

Chinese utility Huaneng Power emerged the highest bidder for the purchase of 50% stake in GMR’s InterGen. (BS)

Parsvnath Developers has won a bid for a 38.3-acre land auctioned by Rail Land Development Authority in New Delhi. (BL)

Morning Buzz 12 November 2010

Indices Close % Chg % YTD

Indian Markets

Sensex 20,589 (1.4) 17.9 Nifty 6,194 (1.3) 19.1 CNX Midcap 9,662 (1.2) 30.0 Global Markets

DJIA 11,280 (0.7) 8.2 Nasdaq 2,555 (0.9) 12.6 FTSE 5,815 (0.0) 7.4 Emerging Markets

IBOV 71,198 (0.6) 3.8 Shanghai Composite 3,148 0.4 (3.9)

KOSPI 1,915 (1.7) 13.8

Market Turnover US$ mn % Chg

BSE 1,380 4.5 NSE 4,081 7.7 Derivatives (NSE) 28,233 46.6

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

Net buying (43.2) (78.9)

Open interest 16,665.8 10,097.1

Chg in open interest (%) (0.5) (0.7)

Fund Flows (US$ mn) Latest MTD YTD

FIIs 24.3 7,045 29,169

MFs (22.4) (1,229) (6,290)

Forex Rates Latest % Chg % YTD

Rs/US$ 44.3 0.0 5.0 Euro/US$ 0.7 (0.94) (4.7)

Yen/US$ 82.5 (0.21) 12.8

Commodities Latest % Chg % YTD

Brent (US$/bbl) 88.4 (0.3) 14.6 Gold (US$/oz) 1,407.3 0.2 28.3

Silver (US$/oz) 27.6 1.3 63.6

Copper (US$/MT) 8,830.0 0.8 19.7 Alum (US$/MT) 2,524.5 0.8 7.8 Zinc (US$/MT) 2,542.0 0.7 (0.7)

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

Bond Markets Latest bps Chg

10-yr GSec yield 8.1 40 Interbank call 7.0 (128)

ADR/GDR (US$) Latest % Chg Prem

HDFC Bank 184.5 (0.7) 15.8

ICICI Bank 56.0 (1.4) 0.3 Infosys 67.7 (1.0) (1.9)

ITC 4.0 0.0 0.8 Ranbaxy Labs 13.6 0.0 3.2 Reliance Inds 48.8 (1.1) 0.2 Mahindra Satyam 3.8 (2.3) (2.0)

SBI 141.8 (1.7) (1.1)

Tata Motors 32.2 (6.2) 11.8 Wipro 14.7 (2.1) 51.5

Top Gainers - BSE 100 Latest % Chg

Reliance Power 191 10.0 Hindalco 234 2.6 Financial Tech 1,124 2.2

Tata Power 1,398 1.5 Reliance Infra 1,062 1.1

Top Losers - BSE 100 Latest % Chg

DLF 346 (4.5)

HDIL 254 (4.2)

HPCL 455 (4.0)

Unitech 86 (3.8)

Asian Paints 2,651 (3.5)

Top Research Picks

Century Textiles - Rich real estate assets but fairly valued; HOLD

Cipla - Concerns priced in, outlook strong; upgrade to HOLD

Other Research

Anant Raj Industries - Residential revenues steal the show, rentals set to pick up

DLF - Cash Flow disappoints again

Ranbaxy Laboratories - PAT below estimate but catalysts in place

Shree Cement - Power revenues take a hit

Techno Electric & Engineering - Wind power, EPC businesses drive performance

Automobiles - Q2FY11 results review: Another eventful quarter

Jai Balaji Industries - Lower volumes off-set benefits of higher realizations

Lanco Infratech - Operating results lower than expectations


2

Plans by ICICI Bank and Axis Bank to set up NBFCs with the status of an IFC may have hit a regulatory hurdle. (BS)

UBI expects the government to hike its stake in the company to up to 60% in the near future through a Rs 15bn capital infusion. (Mint)

HDIL plans to develop 3-5 five-star hotels in next five years and intends to focus on affordable housing. (BS)

Mahindra Satyam said it has received an order from IRDA to implement a software solution in the organisation to manage accounts and payroll related services. (ET)

Kamaz Vectra Motors, a JV auto firm between Russia’s Kamaz and Vectra Group, is planning to invest US$ 60mn in India in the next five years. (BS)

Upset over delay in renovation of power generation units by BHEL, the UP government has warned its officers of 'stern action' if they failed to complete the work as per schedule. (FE)

Economic News

Food price index rose 12.30%, while the fuel price index climbed 10.67% in the year to October 30. (BL)

CAG has asked the Telecom Ministry to amend mobile service licence agreements so that the exercise can be carried out despite the objections. (BS)

The bill seeking to amend land acquisition laws is unlikely to be tabled in the ongoing winter session of Parliament. (BS)

As per FICCI, RBI’s policy rate hike will only moderately impact the manufacturing sector’s growth in October-December. (ET)

India and Japan are set to ink a free trade pact in January ’11. (BL)

Global News

Boeing has halted test flights of its 787 Dreamliner, a day after an electrical fire aboard one of its test planes forced an emergency landing in Texas. (BS)

The Federal Reserve's plan to buy more Treasury bonds has incited critics in the US to complain of high inflation and financial turmoil. (ET)

US chipmaker Qualcomm plans to sell its wireless broadband business in India. (Mint)

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

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

Reliance Power 54,654 3,848 1,420.3

Hindalco 15,795 8,297 190.4

Unitech 13,984 25,623 54.6

JP Asso 13,290 11,037 120.4

RNRL 13,177 5,365 245.6

BSE Sectoral Indices Latest % Chg % YTD

Midcap 8,632 (1.1) 28.5 Smallcap 11,192 (0.5) 33.9 Auto 10,337 (0.8) 39.0 Banks 14,588 (1.3) 45.4

Capital Goods 16,352 (1.3) 15.8 Comm & Tech 3,745 (1.6) 14.3 Con. Durables 7,227 (0.2) 90.9

FMCG 3,706 (1.3) 32.8

Healthcare 3,706 (1.0) 32.5

IT 6,132 (1.3) 18.2 Metals 17,596 (0.3) 1.1 Oil & Gas 10,900 (1.8) 4.1 Power 3,158 (0.6) (1.0)

Realty 3,674 (3.2) (4.7)

Market Breadth Adv Dec A/D

NSE 459 955 0.5 Sensex 5 25 0.2 BSE 100 15 85 0.2

BSE 200 28 172 0.2

BSE 500 118 378 0.3

Sensex Intraday

20,500

20,600

20,700

20,800

20,900

21,000

9:07

AM

9:51

AM

10:2

8 A

M

11:0

7 A

M

11:4

8 A

M

12:3

0 PM

1:10

PM

1:52

PM

2:34

PM

3:16

PM

Century Textiles & Industries Ltd Initiating Coverage 12 November 2010

3

Mihir Jhaveri

Suhas Harinarayanan

(91-22) 6766 3401 (91-22) 6766 3404

[email protected] [email protected]

Profitability and return ratios

(%) FY10 FY11E FY12E FY13E

EBITDA margin 19.1 16.3 18.0 19.0

EBIT margin 13.8 10.7 11.6 12.9

Adj PAT margin 10.0 7.1 7.7 8.6

ROE 27.2 17.0 17.3 19.3

ROIC 11.2 7.3 7.9 9.2

ROCE 13.8 9.1 9.2 10.5

Financial highlights

(Rs mn) FY10 FY11E FY12E FY13E

Revenue 44,529 45,608 50,216 58,566

Growth (%) 16.7 2.4 10.1 16.6

Adj net income 4,444 3,250 3,846 5,048

Growth (%) 47.5 (26.9) 18.3 31.2

FDEPS (Rs) 47.8 34.9 41.3 54.2

Growth (%) 47.5 (26.9) 18.3 31.2

Century Textiles & Industries Ltd Rich real estate assets but fairly valued; HOLD

We initiate coverage on Century Textiles (CENT) with a HOLD rating and a December ’11 SOTP-based target price of Rs 590. CENT is a conglomerate with business interests in cement, textiles, paper and real estate. While cement expansion would aid volume growth from FY13 onwards and real estate development in the next two years could unlock value, we believe the current share price leaves limited room for upside. We expect CENT to deliver a revenue and earnings CAGR of 13% and 26% respectively over FY11-FY13, and recommend buying the stock only on declines.

Cement expansion to deliver growth only in FY13: CENT derives 55–60% of its revenues from cement and has a total installed capacity of 7.8mn tonnes (mt). This will rise to 8mt by the end of FY11 due to de-bottlenecking initiatives. In addition, the company is establishing a 1.5mt grinding unit in West Bengal at a total outlay of Rs 4.25bn, expected to be operational by Q4FY12. It is also setting up a 2.5mt cement unit in Manikgarh (Maharashtra) with a 40MW captive power plant, at a capex of Rs 16bn, to be commissioned by end-Q3FY13. Based on the expansion schedule, a major chunk of the growth in cement volumes will be seen only in FY13 (when we estimate a 20% YoY uptick).

Substantial value from real estate: CENT has a 40-acre land bank in the prime business district of Worli, Mumbai. Of this, 10 acres is under dispute and a further 10 acres has been used for development of a residential colony for employees. Out of the residual 20 acres, 6 acres (0.18mn sq ft) is under development as commercial property which the company intends to lease out. CENT also has 0.23msf under leasable land bank adjoining its office premises in Worli. We value both properties (totalling 0.4msf) on a DCF basis at Rs 62/sh. The residual 14 acres has been valued at Rs 850mn per acre (15% discount to the recent Indiabulls deal value) or Rs 128/sh.

Textile and paper businesses a drag on profits: CENT’s paper and textile businesses contribute 40–45% of revenues, though textile business is incurring EBIT losses. While we expect a marginal recovery in these divisions, any substantial turnaround could be a positive trigger for the stock.

Initiate with HOLD: We have valued the company on an SOTP basis as follows: (1) cement and other businesses at Rs 397/sh based on 6.5x EV/EBITDA one-year forward; (2) real estate business at Rs 190/sh based on DCF plus value per acre. This gives us a December ’11 target price of Rs 590 for the stock. We believe the current price leaves limited room for upside (9%) and hence initiate coverage with a HOLD rating.

For further details, refer to our report released on 11 November 2010.

CMP TARGET RATING RISK

Rs 538 Rs 590 HOLD MEDIUM

BSE NSE BLOOMBERG

500040 CENTURYTEX CENT IN

Company data

Market cap (Rs mn / US$ mn) 50,904/1,148

Outstanding equity shares (mn) 93

Free float (%) 59.6

Dividend yield (%) 1.0

52-week high/low (Rs) 601/419

2-month average daily volume 631,710

Stock performance

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

CENT 538 4.2 15.6 10.9

Sensex 20,913 3.3 14.8 20.7

P/E comparison

10.7

15.412.413.211.5

15.7

0

5

10

15

20

FY10 FY11E FY12E

Century Textiles Industry(x)

Valuation matrix

(x) FY10E FY11E FY12E FY13E

P/E @ CMP 11.5 15.7 13.2 9.8

P/E @ Target 12.3 16.8 14.2 10.5

EV/EBITDA @ CMP 8.7 10.0 8.2 6.6


4

Standalone financials

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

Revenues 44,529 45,608 50,216 58,566

Growth (%) 16.7 2.4 10.1 16.6

EBITDA 8,509 7,434 9,053 11,134

Growth (%) 38.0 (12.6) 21.8 23.0

Depreciation & amortisation 2,345 2,562 3,203 3,594

EBIT 6,164 4,873 5,850 7,541

Growth (%) 49.8 (20.9) 20.1 28.9

Interest 1,005 1,107 1,247 1,309

Other income 947 770 811 868

EBT 6,105 4,536 5,414 7,100

Income taxes 1,662 1,285 1,568 2,052

Effective tax rate (%) 27.2 28.3 29.0 28.9

Extraordinary items (882) - - -

Min into / inc from associates - - - -

Reported net income 3,562 3,250 3,846 5,048

Adjustments (882) - - -

Adjusted net income 4,444 3,250 3,846 5,048

Growth (%) 47.5 (26.9) 18.3 31.2

Shares outstanding (mn) 93.1 93.1 93.1 93.1

FDEPS (Rs) (adj) 47.8 34.9 41.3 54.2

Growth (%) 47.5 (26.9) 18.3 31.2

DPS (Rs) 5.3 5.3 5.3 5.3

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

Cash and cash eq 574 1,127 1,923 1,747

Accounts receivable 2,251 2,249 2,752 3,209

Inventories 8,685 8,367 9,473 11,176

Other current assets 7,830 7,830 7,830 7,830

Investments 584 584 1,084 2,084

Gross fixed assets 46,748 64,622 74,622 81,622

Net fixed assets 24,844 40,156 46,953 50,360

CWIP 12,874 2,000 - -

Intangible assets - - - -

Deferred tax assets, net (2,513) (2,613) (2,713) (2,913)

Other assets 62 62 62 62

Total assets 55,191 59,762 67,365 73,555

Accounts payable 8,074 8,122 8,255 8,825

Other current liabilities 172 172 172 172

Provisions 5,525 3,287 3,901 4,963

Debt funds 23,669 27,669 31,169 31,169

Other liabilities - - - -

Equity capital 931 931 931 931

Reserves & surplus 16,822 19,582 22,938 27,496

Shareholder's funds 17,752 20,513 23,869 28,427

Total liabilities 55,191 59,762 67,365 73,555

BVPS (Rs) 190.8 220.4 266.5 315.5

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

Net income + Depreciation 5,920 5,812 7,049 8,642

Non-cash adjustments 328 (2,568) 223 772

Changes in working capital (1,433) 368 (1,476) (1,590)

Cash flow from operations 4,815 3,612 5,796 7,824

Capital expenditure (10,922) (7,000) (8,000) (7,000)

Change in investments (120) - (500) (1,000)

Other investing cash flow 50 - - -

Cash flow from investing (10,991) (7,000) (8,500) (8,000)

Issue of equity - - - -

Issue/repay debt 6,085 4,000 3,500 -

Dividends paid - - - -

Other financing cash flow - - - -

Change in cash & cash eq (92) 612 796 (176)

Closing cash & cash eq 574 1,127 1,923 1,747

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

WACC (%) 12.6 12.6 12.6 12.6

ROIC (%) 11.2 7.3 7.9 9.2

Invested capital (Rs mn) 45,787 49,757 55,931 60,727

EVA (Rs mn) (659) (2,627) (2,643) (2,063)

EVA spread (%) (1.4) (5.3) (4.7) (3.4)

Y/E March FY10 FY11E FY12E FY13E

Profitability & Return ratios (%)

EBITDA margin 19.1 16.3 18.0 19.0

EBIT margin 13.8 10.7 11.6 12.9

Net profit margin 10.0 7.1 7.7 8.6

ROE 27.2 17.0 17.3 19.3

ROCE 13.8 9.1 9.2 10.5

Working Capital & Liquidity ratios

Receivables (days) 15 18 18 19

Inventory (days) 78 82 79 79

Payables (days) 75 77 73 66

Current ratio (x) 2.3 2.4 2.6 2.7

Quick ratio (x) 0.3 0.4 0.6 0.6

Turnover & Leverage ratios (x)

Gross asset turnover 1.0 0.8 0.7 0.7

Total asset turnover 0.9 0.8 0.8 0.8

Interest coverage ratio 6.1 4.4 4.7 5.8

Adjusted debt/equity 1.3 1.3 1.3 1.1

Valuation ratios (x)

EV/Sales 1.6 1.6 1.5 1.2

EV/EBITDA 8.6 9.8 8.1 6.6

P/E 11.3 15.4 13.0 9.9

P/BV 2.8 2.4 2.0 1.7


5

Quarterly trend

Particulars Q2FY10 Q3FY10 Q4FY10 Q1FY11 Q2FY11

Revenue (Rs mn) 10,140 10,681 12,491 11,154 10,979

YoY growth (%) 18.6 21.4 10.6 (0.6) 8.3

QoQ growth (%) (9.6) 5.3 16.9 (10.7) (1.6)

EBITDA (Rs mn) 2,104 1,571 2,012 2,085 1,413

EBITDA margin (%) 20.7 14.7 16.1 18.7 12.9

Adj net income (Rs mn) 1,051 822 792 1,015 108

YoY growth (%) 234.3 89.9 (29.2) (37.5) (89.8)

QoQ growth (%) (35.3) (21.8) (3.7) 28.2 (89.4)

DuPont analysis

(%) FY09 FY10E FY11E FY12E FY13E

Tax burden (Net income/PBT) 78.6 72.8 71.7 71.0 71.1

Interest burden (PBT/EBIT) 93.2 99.0 93.1 92.5 94.2

EBIT margin (EBIT/Revenues) 10.8 13.8 10.7 11.6 12.9

Asset turnover (Revenues/Avg TA) 97.3 91.0 79.3 79.0 83.1

Leverage (Avg TA/Avg equtiy) 280.2 299.1 300.4 286.4 269.5

Return on equity 21.5 27.2 17.0 17.3 19.3

Company profile

CENT, a part of the BK Birla Group, is a well diversified

conglomerate engaged primarily in the cement, textiles and pulp &

paper businesses. Revenue contribution from these three divisions

stood at 57%, 20% and 21% in FY10. The company sells cement

under the brand Birla Gold and has a manufacturing capacity of

7.8mtpa, which is expected to reach 12.5mtpa in 2012.

Shareholding pattern

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

Promoters 40.4 40.4 40.4

FIIs 9.1 9.4 10.3

Banks & FIs 16.8 16.3 17.3

Public 33.7 33.9 32.1

Recommendation history

Date Event Reco price Tgt price Reco

11-Nov-10 Initiating Coverage 538 590 Hold

Stock performance

460

480

500

520

540

560

Aug-10 Sep-10 Oct-10 Nov-10

● Hold

Cipla Ltd Results Review 12 November 2010

6

Vikas Sonawale

Vineet Agrawal

(91-22) 6766 3447 (91-22) 6766 3448




EBITDA margin 25.3 23.8 24.2 24.7

EBIT margin 21.9 19.9 20.6 21.6

Adj PAT margin 18.7 16.9 17.4 18.2

ROE 20.5 16.7 17.1 18.1

ROIC 17.6 15.4 15.9 17.1

ROCE 19.1 16.7 17.1 18.1



Revenue 56,300 62,932 71,864 85,209

Growth (%) 6.8 11.8 14.2 18.6

Adj net income 10,505 10,613 12,537 15,468

Growth (%) 2.6 1.0 18.1 23.4

FDEPS (Rs) 13.1 13.2 15.6 19.3

Growth (%) (0.7) 1.0 18.1 23.4

Cipla Ltd Concerns priced in, outlook strong; upgrade to HOLD

Cipla’s Q2FY11 results were in line with our estimates. The company saw a strong recovery in its domestic operations with a 20% YoY growth during the quarter. Its operating margins, however, remained under pressure and are expected to recover only gradually.

We upgrade our rating on the stock from SELL to HOLD to consider: a) the stock’s underperformance to the BSE Sensex and HC Index on a 1/3/6 month basis and b) the introduction of FY13E estimates. Our revised target price (rolled forward by six months to Sep ’11) stands at Rs 370 and offers an 11% upside from the current levels.

Net sales increase 12%YoY: Cipla’s net sales grew 12% YoY during Q2FY11. The company’s domestic operations posted a strong recovery with a 20% YoY growth while the export formulations business saw 14% YoY higher revenues for the quarter. Cipla’s other operating income (OOI), however, declined by 51% YoY, excluding which the base business clocked a growth of 15% YoY.

EBITDA margin contacts 210bps YoY: Cipla’s EBITDA margin contracted 210bps YoY to 23.8%, mainly on account of a lower OOI. Adjusted for this, the company’s core EBITDA margin was flat YoY at 22.1%. Core EBITDA increased by 16%YoY during the quarter.

Adj. PAT rises 5%YoY: Cipla’s adj. PAT increased by 5% YoY while core PAT, adjusted for OOI, grew 20% YoY on an improved operating performance and higher other income.

Concall highlights: The management expects stronger numbers for H2FY11 compared to the first half of the year. However, it has maintained its FY11E revenue guidance at 10%.

Upgrade to HOLD: The stock is currently trading at a PER of 21.3x its FY12E earnings. Cipla has underperformed the BSE Sensex and HC Index on 1/3/6 month basis. We roll forward our target price by six months to Sep ’11, to get a revised target price of Rs 370 (an 11% upside from current levels). Upgrade to HOLD.

What’s New? Target Rating Estimates


Rs 333 Rs 370 HOLD LOW

BSE NSE BLOOMBERG

500087 CIPLA CIPLA IN

Company data

Market cap (Rs mn / US$ mn) 267,252 / 6,031


Free float (%) 63.2


52-week high/low (Rs) 364 / 299

2-month average daily volume 1,923,074

Stock performance


Cipla 333 1.0 9.7 9.5

BSE HC 6,649 6.2 22.2 28.8

Sensex 20,589 2.6 15.5 21.8

P/E comparison

25.4 25.221.3

25.521.2

18.2

0

10

20

30

FY10 FY11E FY12E

Cipla Industry(x)

Valuation matrix

(x) FY10 FY11E FY12E FY13E

P/E @ CMP 25.4 25.2 21.3 17.3

P/E @ Target 28.3 28.0 23.7 19.2

EV/EBITDA @ CMP 19.4 18.4 15.9 13.1


7

Result highlights

Fig 1 - Actual vs estimated performance

(Rs mn) Actual Estimate % Variance

Revenue 16,154 15,693 2.9

EBITDA 3,841 3,844 (0.1)

Adj net income 2,805 2,765 1.5

FDEPS (Rs) 3.5 3.4 1.5

Source: RCML Research

Fig 2 - Quarterly performance

(Rs mn) Q2FY11 Q2FY10 % Chg YoY Q1FY11 % Chg QoQ

Revenue 16,154 14,429 12 14,798 9

Expenditure 12,313 10,695 15 11,152 10

Operating profit 3,841 3,733 3 3,646 5

Other income 166 128 30 168 (1)

Interest 3 84 (97) 1 155

Depreciation 639 478 34 548 17

PBT 3,190 3,375 (5) 3,124 2

Tax 560 618 (9) 550 2

PAT 2,805 2,682 5 2,714 3

EBITDA margin (%) 23.8 25.9 (210bps) 24.6 (86bps)

FDEPS (Rs) 3.5 3.3 5 3.4 3

Source: Company, RCML Research

Fig 3 - Revenue Mix


Domestic 7,564 6,314 20 6,752 12

Exports 8,322 7,525 11 7,659 9

(a) Formulations 6,639 5,819 14 6,257 6

(b) APIs 1,683 1,706 (1) 1,402 20

Total Sales (gross) 15,886 13,839 15 14,410 10

Other income from operations 355 717 (51) 524 (32)

(a) Technology fees 120 508 (76) 159 (25)

(b) Export incentive 235 209 12 365 (36)

Total income 16,241 14,556 12 14,934 9


Results were in line with estimates

Topline grew 12% YoY mainly on

account of a strong recovery in

domestic operations

EBITDA margin contracted 210bps due

to lower other income


8

Fig 4 - Revenue growth trend

7,0008,500

10,00011,50013,00014,50016,000

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

FY07 FY08 FY09 FY10 FY11

0

10

20

30

40Revenues YoY Growth (R)(Rs mn) (%)


Fig 5 - EBITDA growth trend

0

1,000

2,000

3,000

4,000

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2


(40)(20)020406080

EBITDA YoY Growth (R)(Rs mn) (%)


Fig 6 - Adjusted PAT growth trend

0

750

1,500

2,250

3,000

3,750

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2


(50)(25)0255075100

Adj. PAT YoY Growth (R)(Rs mn) (%)


Fig 7 - Margin Performance

10

15

20

25

30

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2


EBITDA margin - Core EBITDA margin - Incl. OOIAdj. PAT margin

(%)


Fig 8 - Domestic business performance

0

2,000

4,000

6,000

8,000

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2


0

5

10

15

20

25Domestic YoY Growth (R)(Rs mn) (%)


Fig 9 - Export formulations business performance

2,000

3,000

4,000

5,000

6,000

7,000

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2


(15)01530456075

Exports - Formulations YoY Growth (R)(Rs mn) (%)


Fig 10 - Export API business’ performance

0

400

800

1,200

1,600

2,000

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2


(40)

0

40

80

120Exports - APIs YoY Growth (R)(Rs mn) (%)


Fig 11 - Other operating income

0200400600800

1,0001,2001,400

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2


(Rs mn)



9

Valuation band

Fig 12 - P/E band

0

10

20

30

40

Apr

-02

Apr

-03

May

-04

Jun-

05

Jul-

06

Aug

-07

Sep-

08

Oct

-09

Nov

-10

P/E 5x 13x 21x 29x (x)

Source: Bloomberg, RCML Research

Fig 13 - P/BV band

0

2

4

6

8

Apr

-02

Apr

-03

May

-04

Jun-

05

Jul-

06

Aug

-07

Sep-

08

Oct

-09

Nov

-10

P/B 1x 3x 5x 7x (x)


Fig 14 - EV/EBITDA band

0

5

10

15

20

25

30

Apr

-02

Apr

-03

May

-04

Jun-

05

Jul-

06

Aug

-07

Sep-

08

Oct

-09

Nov

-10

EV/EBITDA 5x 12x 19x 26x (x)


Fig 15 - EV/Sales band

0

2

4

6

8

Apr

-02

Apr

-03

May

-04

Jun-

05

Jul-

06

Aug

-07

Sep-

08

Oct

-09

Nov

-10

EV/Sales 1x 3x 5x 7x (x)


Fig 16 - Premium/Discount to BSE 30 P/E

(40)

0

40

80

120

Apr

-02

Apr

-03

May

-04

Jun-

05

Jul-

06

Aug

-07

Sep-

08

Oct

-09

Nov

-10

(%)


Fig 17 - Market Cap/Sales band

0

2

4

6

8

Apr

-02

Apr

-03

May

-04

Jun-

05

Jul-

06

Aug

-07

Sep-

08

Oct

-09

Nov

-10

MC/Sales 1x 3x 5x 7x (x)



10

Fig 18 - Pharma stocks’ performance over the past month

Stock performance - 1 month (%)

(15)

(10)

(5)

0

5

10

15

20

Sens

ex

BSE

HC

Ran

baxy

DR

L

Cip

la

Sun

Phar

ma

Gle

nmar

k

Cad

ila

Lupi

n

Aur

obin

do

Woc

khar

dt

Ipca

Pira

mal

H

Div

is

Dis

hman

Jubl

ant

Bio

con

GSK

Phar

ma

Ave

ntis

Pfiz

er

Opt

o

Apo

llo

Fort

is

Pira

mal

Life

SPA

RC

(%)


Fig 19 - Pharma stocks’ performance over the past three months

Stock performance - 3 months (%)

(15)

0

15

30

45

60

Sens

ex

BSE

HC

Ran

baxy

DR

L

Cip

la

Sun

Phar

ma

Gle

nmar

k

Cad

ila

Lupi

n

Aur

obin

do

Woc

khar

dt

Ipca

Pira

mal

H

Div

is

Dis

hman

Jubl

ant

Bio

con

GSK

Phar

ma

Ave

ntis

Pfiz

er

Opt

o

Apo

llo

Fort

is

Pira

mal

Life

SPA

RC

(%)


Fig 20 - Pharma stocks’ performance over the past year

Stock performance - 1 yr (%)

0

20

40

60

80

100

Sens

ex

BSE

HC

Ran

baxy

DR

L

Cip

la

Sun

Phar

ma

Gle

nmar

k

Cad

ila

Lupi

n

Aur

obin

do

Woc

khar

dt

Ipca

Pira

mal

H

Div

is

Dis

hman

Jubl

ant

Bio

con

GSK

Phar

ma

Ave

ntis

Pfiz

er

Opt

o

Apo

llo

Fort

is

Pira

mal

Life

SPA

RC

(%)



11

Consolidated financials


Revenues 56,300 62,932 71,864 85,209

Growth (%) 6.8 11.8 14.2 18.6

EBITDA 14,237 14,988 17,380 21,071

Growth (%) 11.0 5.3 16.0 21.2


EBIT 12,350 12,512 14,769 18,408

Growth (%) 11.0 1.3 18.0 24.6

Interest 237 - - -

Other income 877 754 708 688

EBT 12,990 13,266 15,477 19,097

Income taxes 2,485 2,653 2,941 3,628


Extraordinary items 315 - - -



Adjustments 315 - - -


Growth (%) 2.6 1.0 18.1 23.4


FDEPS (Rs) (adj) 13.1 13.2 15.6 19.3

Growth (%) (0.7) 1.0 18.1 23.4

DPS (Rs) 2.0 2.0 2.0 2.0


Cash and cash eq 900 192 343 430


Inventories 14,643 17,697 19,146 22,286


Investments 801 801 3,201 6,401


Net fixed assets 24,953 28,477 30,866 33,316

CWIP 3,148 3,148 3,148 3,148


Deferred tax assets, net (2,304) (3,100) (3,982) (5,071)

Other assets - - - -

Total assets 72,121 82,710 89,516 104,767


Other current liabilities 5,832 6,818 2,146 2,541

Provisions 2,182 2,213 2,233 2,281

Debt funds - - - -


Equity capital 1,606 1,606 1,606 1,606




BVPS (Rs) 73.7 84.5 97.8 114.7



Non-cash adjustments (1,171) 827 902 1,137

Changes in working capital (311) (6,746) (6,621) (8,989)



Change in investments - - (2,400) (3,200)

Other investing cash flow - - - -


Issue of equity 6,760 - - -

Issue/repay debt (9,402) - - -

Dividends paid (1,819) (1,879) (1,879) (1,879)

Other financing cash flow (16) - - -

Change in cash & cash eq 348 (708) 150 87

Closing cash & cash eq 900 192 343 430


WACC (%) 11.0 11.0 11.0 11.0

ROIC (%) 17.6 15.4 15.9 17.1


EVA (Rs mn) 3,963 3,042 3,946 5,722

EVA spread (%) 6.6 4.4 4.9 6.1



EBITDA margin 25.3 23.8 24.2 24.7

EBIT margin 21.9 19.9 20.6 21.6


ROE 20.5 16.7 17.1 18.1

ROCE 19.1 16.7 17.1 18.1





Current ratio (x) 4.2 4.2 6.4 6.5

Quick ratio (x) 1.5 1.7 2.5 2.8




Interest coverage ratio 52.2 - - -

Adjusted debt/equity - - - -


EV/Sales 4.9 4.4 3.8 3.2

EV/EBITDA 19.4 18.4 15.9 13.1

P/E 25.4 25.2 21.3 17.3

P/BV 4.5 3.9 3.4 2.9


12

Quarterly trend


Revenue (Rs mn) 14,429 14,385 13,747 14,798 16,154

YoY growth (%) 7 7 1 8 12

QoQ growth (%) 5 (0) (4) 8 9

EBITDA (Rs mn) 3,733 4,039 2,780 3,646 3,841

EBITDA margin (%) 26 28 20 25 24

Adj net income (Rs mn) 2,682 3,130 2,320 2,714 2,805

YoY growth (%) 5 18 (12) 1 5

QoQ growth (%) (0) 17 (26) 17 3

DuPont analysis

(%) FY09 FY10 FY11E FY12E FY13E






Return on equity 25.3 20.5 16.7 17.1 18.1

Company profile

Cipla is the second largest Indian pharmaceuticals company in

terms of market capitalization and one of the largest players in

terms of domestic market share. It is amongst the first few generics

to adopt a partnership model for the regulated markets. The

company has a wide geographical presence in over 170 countries

globally, and derived 56% of its FY10 revenues from exports to

regions including US, Europe, Middle East, Africa and Australia.


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

Promoters 36.8 36.8 36.8

FIIs 16.8 16.2 15.2

Banks & FIs 16.6 17.5 18.3

Public 29.8 29.6 29.8



21-Aug-08 RHH Compendium 235 231 Sell

6-Oct-08 Quarterly Preview 224 231 Sell

27-Oct-08 Results Review 150 185 Buy

23-Jan-09 Results Review 173 212 Buy

25-Apr-09 Results Review 240 229 Hold

2-Jul-09 Quarterly Preview 253 250 Hold

29-Jul-09 Results Review 274 269 Sell

26-Aug-09 Company Update 262 269 Sell

28-Oct-09 Results Review 301 302 Hold

6-Jan-10 Quarterly Preview 339 347 Hold

29-Jan-10 Results Review 318 352 Hold

5-Jul-10 Company Update 339 330 Sell

13-Aug-10 Results Review 315 330 Sell

11-Nov-10 Results Review 333 370 Hold

Stock performance

150

200

250

300

350

Jul-

08

Sep-

08

Dec

-08

Feb-

09

Apr

-09

Jun-

09

Aug

-09

Oct

-09

Dec

-09

Feb-

10

Apr

-10

Jun-

10

Sep-

10

Nov

-10

● Buy ● Sell ● Hold

Anant Raj Industries Ltd Results Review 12 November 2010

13

RCML: Winner of LIPPER-STARMINE broker award for “Earnings Estimates in Midcap Research 2008” |

“Honourable Mention” in Institutional Investor 2009 | Voted amongst Top 5 most improved brokerages

by Asia Money Poll 2009 | RCML Research is also available on Bloomberg FTIS <GO> and Thomson First Call

Suman Memani

Suhas Harinarayanan Arun Aggarwal

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

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



EBITDA margin 90.3 45.3 31.5 46.5

EBIT margin 86.5 40.4 27.9 44.5

Adj PAT margin 83.2 44.1 28.2 31.9

ROE 6.9 5.6 6.9 16.3

ROIC 6.3 4.0 5.0 13.3

ROCE 6.7 5.3 6.2 13.8



Revenue 2,863 4,655 9,619 22,128

Growth (%) 14.2 62.6 106.6 130.0

Adj net income 2,383 2,053 2,715 7,068

Growth (%) 14 (14) 32 160

FDEPS (Rs) 8.1 7.0 8.9 22.5

Growth (%) 14.3 (13.8) 28.0 152.1

Anant Raj Industries Ltd Residential revenues steal the show, rentals set to pick up

During Q2FY11, Anant Raj Industries’ (ARCP) net sales increased by 29% QoQ to Rs 1.3bn, driven by revenues from Kapashera and Manesar projects (launched in H1FY11) and a marginal 3% QoQ increase in rental income to Rs 187mn. We maintain our positive stance on the company based on the following: 1) Rental revenues are likely to jump by 85-90% to Rs 850mn-900mn in FY11 over FY10. 2) The company has started generating revenues from Kapashera and Manesar projects and is soon likely to recognise revenues from residential launches in the pipeline. Moreover, the Hauz Khas launch may surprise the market positively. 3) The first phase of ARCP’s Rai project is expected to be completed in June ’11 (after a three-month delay) and is likely to boost rental revenues further. We reiterate a BUY on the stock with our NAV-based target price of Rs 185.

Income from operations rises 29% QoQ: During Q2FY11, ARCP clocked a robust 29% QoQ growth in sales to Rs 13.3bn, 32% ahead of our estimates on account of Rs 240mn generated from a stake sale in one of its SPVs (real estate investment, not factored in our estimates). During the quarter, revenues were largely contributed by two residential projects: Kapashera (Rs 210mn, 65% of the project cumulatively recognised in H1FY11) and Manesar (Rs 620mn, 35%). Besides, rental revenues also increased marginally by 3% QoQ to Rs 187.1mn (in line with our estimates).

EBIDTA margin lower 47% QoQ: EBIDTA margin slumped 800bps QoQ to 47.2% on account lower margins generated from the SPV stake sale and a ~40% margin clocked by the Manesar project. We expect a contraction in margins, going ahead, on account of residential launches on recently acquired land parcels and range-bound margins (34-45%) of other residential launches.

Rental income set to grow in H2FY11: We expect certain key projects to augment ARCP’s rental revenues in H2FY11: 1) Kirtinagar Mall—likely to be operational from H2FY11 onwards with more then 300,000sq ft pre-leased to clients such as MORE, Westside, Lilliput, Fastrack and Beverly Hills; 2) Hilton Hotel in Manesar—under fit-outs and likely to be operational from Q3FY11; 3) Tricolour Hotel in NH-8—tied-up with Maple and expected to earn rentals in H2FY11.

Residential launches likely on recently acquired land parcels: ARCP is expected to launch residential projects in Sec-91, Gurgaon (1.2msf) and Neemrana, Rajasthan (2msf). The company had acquired land parcels for these projects 6-9 months back. Moreover, it also acquired few land parcels in the last one year, leading to a D/E ratio of 0.1x(Sept’10) for an otherwise net cash positive company.

Valuation: We maintain our BUY recommendation on the stock with a target price of Rs 185.



Rs 139 Rs 185 BUY MEDIUM

BSE NSE BLOOMBERG

515055 ANANTRAJ ARCP IN

Company data

Market cap (Rs mn / US$ mn) 40,955/877


Free float (%) 35.4




Stock performance


Anant Raj Ind 139 (9.3) 5.0 13.8

BSE Realty 3,673.6 (6.0) 3.3 12.3

Sensex 20,589 1.2 13.9 20.1

P/E comparison

17.2 2015.6

26.521.1

13.6

0

10

20

30

FY10 FY11E FY12E

Anant Raj Ind Industry(x)

Valuation matrix


P/E @ CMP 17.2 20.0 15.6 6.2

P/E @ Target 22.9 26.6 20.8 8.2

EV/EBITDA @ CMP 14.3 17.5 12.2 3.6


14

Result highlights



Revenue 1,329 1,005 32.2

EBITDA 627 535 17.3

Adj net income 481 476 0.9

FDEPS (Rs) 1.5 1.5 0.9




Revenue 1,329 868 53.0 1,034 28.5

Expenditure 701 64 1,000.4 465 50.8

Operating profit 627 805 (22.0) 569 10.2

Other income 64 117 (44.9) 94 (31.5)

Interest 9 0 4,050.9 15 (40.0)

Depreciation 38 39 (1.7) 36 6.9

PBT 645 882 (26.9) 612 5.4

Tax 166 172 (3.4) 154 7.9

PAT 481 711 (32.4) 459 4.8


FDEPS (Rs) 1.5 2.4 (36.7) 1.5 4.8


Results beat estimates mainly on

account of a SPV stake sale

Net sales increased 29% QoQ as

revenues started flowing in from

Kapashera and Manesar projects

The EBITDA margin nosedived 800bps

primarily due to lower margins

generated from the SPV stake sale


15



Revenues 2,863 4,655 9,619 22,128

Growth (%) 14.2 62.6 106.6 130.0

EBITDA 2,584 2,110 3,031 10,288

Growth (%) 17.1 (18.4) 43.7 239.4

Depreciation & amortisation 107 230 350 450

EBIT 2,478 1,880 2,681 9,838

Growth (%) 16.8 (24.1) 42.7 266.9

Interest 49 95 105 150

Other income 534 750 775 800

EBT 2,963 2,535 3,351 10,488

Income taxes 581 482 637 3,420


Extraordinary items - - - -

Min into / inc from associates 1 - - -


Adjustments (1) - - -


Growth (%) 14.4 (13.8) 32.2 160.4


FDEPS (Rs) (adj) 8.1 7.0 8.9 22.5

Growth (%) 14.3 (13.8) 28.0 152.1

DPS (Rs) 0.6 1.5 1.5 2.5


Cash and cash eq 4,898 4,036 3,689 8,554


Inventories 117 4,165 1,718 4,500


Investments 2,949 3,049 3,149 3,249


Net fixed assets 18,050 20,844 23,933 35,556

CWIP 7,457 8,747 11,218 2,000

Intangible assets 1,472 1,472 1,472 1,472

Deferred tax assets, net 17 - - -

Other assets 17 24

Total assets 40,100 46,356 50,957 65,600

Accounts payable 688 200 200 200

Other current liabilities 385 705 1,670 2,300

Provisions 816 897 1,055 4,707

Debt funds 1,399 5,883 5,883 10,883

Other liabilities 866 1,000 1,100 1,250





BVPS (Rs) 123.3 128.7 131.7 148.7



Non-cash adjustments (126) (190) 133 2,480

Changes in working capital 2,540 (3,115) 1,667 (6,626)

Cash flow from operations 4,902 (1,022) 4,864 3,373


Change in investments 140 (100) (100) (100)

Other investing cash flow 169 144 - -


Issue of equity 601 (1) 1,315 -

Issue/repay debt (712) 4,494 - 5,000

Dividends paid (208) (206) (517) (552)

Other financing cash flow - 144 - -

Change in cash & cash eq (1,359) (861) (348) 4,865

Closing cash & cash eq 4,898 4,036 3,689 8,554

Economic Value Added (EVA) analysis Y/E March FY07 FY08 FY09E FY10E

WACC (%) 15.2 14.9 14.9 14.9

ROIC (%) 6.3 4.0 5.0 13.3


EVA (Rs mn) (3,015) (4,501) (4,497) (895)

EVA spread (%) (8.9) (10.9) (9.9) (1.6)



EBITDA margin 90.3 45.3 31.5 46.5

EBIT margin 86.5 40.4 27.9 44.5


ROE 6.9 5.6 6.9 16.3

ROCE 6.7 5.3 6.2 13.8




Payables (days) 1,909 67 12 7

Current ratio (x) 9.5 13.5 6.0 9.3

Quick ratio (x) 2.2 2.6 1.2 0.9







EV/Sales 12.9 7.9 3.8 1.7

EV/EBITDA 14.3 17.5 12.2 3.6

P/E 17.2 20.0 15.6 6.2

P/BV 1.1 1.1 1.1 0.9


16

Quarterly trend


Revenue (Rs mn) 868 826 341 1,034 1,329

YoY growth (%) (44.5) 17.0 159.3 (1.4) 53.0

QoQ growth (%) (17.3) (4.9) (58.7) 203.4 28.5

EBITDA (Rs mn) 805 764 262 569 627

EBITDA margin (%) 92.7 92.4 76.9 55.0 -

Adj net income (Rs mn) 711 670 306 459 481

YoY growth (%) (44.2) (47.3) 346.3 (33.4) (32.4)

QoQ growth (%) 3.1 (2.7) (54.3) 49.9 4.8

DuPont analysis







Return on equity 6.7 6.9 5.6 6.9 16.2

Company profile

ARCP has acquired prime land in Delhi and other parts of the

national capital region (NCR) over the past two decades, with a

very low cost of acquisition vis-à-vis peers. So far, the company has

developed and sold 11.5msf of land and has 77msf under

construction, which is to be completed by FY16.


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

Promoters 61.4 61.4 61.4

FIIs 28.6 29.0 26.8

Banks & FIs 1.2 0.7 2.8

Public 8.8 8.9 9.0



10-May-10 Company Update 120 170 Buy

31-May-10 Results Review 113 170 Buy

6-Aug-10 Results Review 120 170 Buy

6-Oct-10 Sector Update 148 185 Buy

11-Nov-10 Results Review 139 185 Buy

Stock performance

90100110120130140150160

Mar

-10

Apr

-10

May

-10

Jun-

10

Jul-

10

Aug

-10

Sep-

10

Oct

-10

Nov

-10

● Buy

DLF Ltd Results Review 12 November 2010

17

Suhas Harinarayanan

Arun Aggarwal Suman Memani

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

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



EBITDA margin 47.2 49.7 48.4 46.5

EBIT margin 42.8 46.4 46.0 44.2

Adj PAT margin 24.5 27.2 27.5 23.6

ROE 8.0 12.0 13.6 13.6

ROIC 7.9 10.9 12.9 13.5

ROCE 5.8 7.8 9.3 9.6



Revenue 74,209 106,353 125,355 142,973

Growth (%) (26.1) 43.3 17.9 14.1

Adj net income 18,171 28,977 34,506 33,772

Growth (%) (60.7) 59.5 19.1 (2.1)

FDEPS (Rs) 10.7 17.0 20.2 19.8

Growth (%) (60.7) 59.5 19.1 (2.1)

DLF Ltd Q2FY11 Results – Cash Flow disappoints again

Q2FY11 PAT was 26% lower than our estimates on account of lower margin (39% in Q2FY11 vs 49% in Q1FY11) and higher interest cost (up 14% QoQ) during the quarter. Margins were lower possibly because of unfavourable mix and higher commodity costs. Leasing momentum sustained at 1.56msf during Q2FY11 (0.98msf in Q1FY11), sales remained low at 2.1msf and company lowered its FY11 sales guidance from 15msf to 12msf. Cash flow from operations was Rs.8.3bn (including non core assets sales of Rs.4.1bn) as against interest outflow of Rs.6.3bn. As a result, Net debt (including Preference shares) remained at Rs.205bn (same as in Q1FY11) with Net D/E of 0.77x (0.72x in Q1FY11). DLF plans a number of new launches in H2FY11, which in our view, is important to facilitate debt reduction and meet its new target of 12msf sales during FY11. We believe weak results, lower sales guidance and disappointing operating cash flow may keep the stock under pressure. Maintain Hold

Operational cash flow disappoints again: Operational cash flow continued to disappoint with operating cash flow of Rs.8.3bn (including receipts from non-core assets sales of Rs.4.1bn) against interest outflow of Rs.6.3bn. Net debt remained high at Rs.205bn with Net D/E of 0.77x (0.72x in Q1FY11).

Lease momentum remained good, lower launches kept sales limited: Lease momentum kept pace with 1.56msf of new leasing during the quarter as against 0.98msf in Q1FY11. In Development business, DLF reported 2.08msf of new sales during the quarter as against 1.9msf in Q1FY11, lower sale could be because of limited launches during the quarter. Having touched only 3.98msf of sales in H1FY11 as against it target of >15msf of sales, company reduced its FY11 sales target to 12msf in Q2FY11.

Higher launches in H2FY11 is a must now: Company suggested a strong launch pipeline during H2FY11 including 4-5msf of plotted development and some high end launches. With a total sales of ~4msf in the first half of FY11, a strong acceleration in launch momentum is required to ensure a) strong positive cash inflow to facilitate debt reduction, and b) to meet its new target of >12msf of sales during the year.

Lower margins, higher interest dragged the results: Q2FY11 revenues were up 17% QoQ at Rs.23.7bn while margins were lower at 39% (48% Q1Fy11). This (lower margin) along with higher interest cost ( Rs.4.3bn up 12% QoQ), largely offset by lower tax incidence (at 15% in Q1FY11 as against 29% in Q2FY11) resulted in 3% sequential increase in PAT. In our view, the decline in margins was mainly on account of unfavourable mix and higher commodity costs.

Valuation: Weak results, lower sales and disappointing cash flow performance may keep the stock under pressure. Maintain Hold with Price target of Rs.380/-



Rs 363 Rs 380 HOLD HIGH

BSE NSE BLOOMBERG

532868 DLF DLFU IN

Company data


Outstanding equity shares (mn) 1,697

Free float (%) 21.4




Stock performance


DLF Ltd 363 (5.2) 13.2 19.1

BSE REALTY 3,793 (2.5) 4.7 13.1

Sensex 20,876 3.1 14.6 20.5

P/E comparison

26.521.1

13.621.3

34.0

17.9

0

10

20

30

40

FY10 FY11E FY12E

DLF Industry(x)

Valuation matrix


P/E @ CMP 34.0 21.3 17.9 18.3

P/E @ Target 35.7 22.4 18.8 19.2

EV/EBITDA @ CMP 21.9 14.5 12.6 11.5

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


18

Result highlights



Revenue 23,690 21,710 9.1

EBITDA 9,289 10,703 (13.2)

Adj net income 4,186 5,644 (25.8)

FDEPS (Rs) 2.5 3.3 (25.8)




Revenue 23,690 17,509 35.3 20,290 16.8

Expenditure 14,401 8,371 72.0 10,490 37.3

Operating profit 9,289 9,138 1.7 9,800 (5.2)

Other income 1,509 594 153.8 1,320 14.3

Interest 4,338 2,486 74.5 3,880 11.8

Depreciation 1,540 766 101.1 1,500 2.6

PBT 4,920 6,481 (24.1) 5,740 (14.3)

Tax 734 1,918 (61.7) 1,680 (56.3)

PAT 4,186 4,563 (8.3) 4,060 3.1

EBITDA margin (%) 4,186 4,563 (8.3) 4,060 3.1

FDEPS (Rs) 39% 52% (1,298) 48% (909)


Fig 25 - Net Debt Calculations

(Rs mn) Q2FY11 Q1FY11 QoQ

Gross Debt 232,380 233,740 (1,360)

CCPS and Preference Shares 4,859 14,234 (9,375)

Less: Cash and Investments (32,380) (43,030) 10,650

Net Debt (incl Preference shares) 204,859 204,944 (85)

Net Debt (excl Preference shares) (A) 200,000 190,710 9,290

Total Net Worth (incl Preference shares) 272,580 277,500 (4,920)

Less: Goodwill (12,770) (12,580) (190)

Total Equity (B) 259,810 264,920 (5,110)

Net Debt/Equity 0.77 0.72 0.05


Lower Margin and higher interest cost

dragged the results

Unfavorable mix possibly resulted in

low margins

Unfavorable mix possibly resulted in

low margins


19

Fig 26 - Balance Sheet

(Rs mn) Q2FY11 Q1FY11 Q4FY10

Net block 168,720 167,250 165,580

Capital WIP 93,510 110,790 111,290

Fixed Assets 262,230 278,040 276,870

Investments 16,820 30,060 55,050

Stocks 143,965 130,960 125,280

Sundry debtors 19,175 14,390 16,190

Cash and balances 15,560 12,970 9,280

Other Current Assets 47,340 47,680 46,370

L & As 75,480 73,640 75,940

Current Assets, L&As 301,520 279,640 273,060

Current liabilities and provisions 89,150 86,110 87,770

Net Current Assets 212,370 193,530 185,290

Goodwill 12,770 12,580 12,680

Total Assets 504,190 514,210 529,890

Liabilities/Provisions

Debt Fund 232,380 233,740 216,770

Deferred tax liability (770) 2,970 2,510

Share capital 8,250 17,625 62,590

Reserves 242,325 237,360 225,755

Minority Interest 22,005 22,515 22,265

Net worth 272,580 277,500 310,610

Total Liabilities 504,190 514,210 529,890

Net debt 200,000 190,710 152,440

Net debt to equity 0.77 0.72 0.51



20



Revenues 74,209 106,353 125,355 142,973

Growth (%) (26.1) 43.3 17.9 14.1

EBITDA 35,012 52,848 60,691 66,413

Growth (%) (36.2) 50.9 14.8 9.4


EBIT 31,766 49,332 57,660 63,247

Growth (%) (39.5) 55.3 16.9 9.7

Interest 11,075 12,199 10,565 10,372

Other income 4,333 3,228 3,643 3,873

EBT 25,024 40,361 50,738 56,748

Income taxes 6,957 10,494 13,192 14,754


Extraordinary items 870 - - -

Min into / inc from associates (103) (5) (5) (5)


Adjustments (870) 895 3,046 8,227


Growth (%) (60.7) 59.5 19.1 (2.1)

Shares outstanding (mn) 1,704.8 1,704.8 1,704.8 1,704.8

FDEPS (Rs) (adj) 10.7 17.0 20.2 19.8

Growth (%) (60.7) 59.5 19.1 (2.1)

DPS (Rs) 4.0 4.0 4.0 4.0


Cash and cash eq 9,282 15,081 25,451 28,559


Inventories 124,806 132,374 149,492 163,077


Investments 55,052 19,636 19,636 19,636


Net fixed assets 165,580 172,277 182,722 192,623

CWIP 111,288 111,288 111,288 111,288


Deferred tax assets, net - - - -

Other assets

Total assets 604,978 581,699 629,708 686,658


Other current liabilities - - - -

Provisions 43,916 48,308 53,139 58,453

Debt funds 216,766 186,766 181,766 176,766

Other liabilities 45,259 15,989 15,989 15,989

Equity capital 107,984 107,984 107,984 107,984




BVPS (Rs) 140.0 153.2 170.8 191.0



Non-cash adjustments 3,153 1,163 1,188 1,441

Changes in working capital 45,464 9,587 (9,066) (21,802)



Change in investments - 5,416 - -

Other investing cash flow (36,699) 33,228 3,643 3,873

Cash flow from investing (185,081) 28,431 (9,834) (9,194)

Issue of equity 136 - - -

Issue/repay debt 53,566 (30,000) (5,000) (5,000)

Dividends paid (7,501) (7,501) (7,501) (7,501)

Other financing cash flow 62,761 (29,270) 0 (0)

Change in cash & cash eq (2,678) 5,799 10,369 3,108



WACC (%) 12.9 12.9 12.9 12.9

ROIC (%) 7.9 10.9 12.9 13.5


EVA (Rs mn) (2,506,670) (917,220) 5,519 321,188

EVA spread (%) -4.96 -1.98 0.01 0.64



EBITDA margin 47.2 49.7 48.4 46.5

EBIT margin 42.8 46.4 46.0 44.2


ROE 8.0 12.0 13.6 13.6

ROCE 5.8 7.8 9.3 9.6



Inventory (days) 2,098 1,653 1,387 1,287

Payables (days) - - - -

Current ratio (x) 1.7 1.6 1.6 1.5

Quick ratio (x) 0.0 0.0 0.1 0.1







EV/Sales 10.3 7.2 6.1 5.4

EV/EBITDA 21.9 14.5 12.6 11.5

P/E 34.0 21.3 17.9 18.3

P/BV 2.6 2.4 2.1 1.9


21

Quarterly trend


Revenue (Rs mn) 17,509 20,258 19,944 20,290 23,690

YoY growth (%) (53.2) 48.2 77.7 23.0 35.3

QoQ growth (%) 6.1 15.7 (1.6) 1.7 16.8

EBITDA (Rs mn) 8,373 7,633 9,053 8,300 7,749

EBITDA margin (%) 47.8 37.7 45.4 40.9 32.7


YoY growth (%) (76) (32) 198 7 (8)

QoQ growth (%) 20 2 9 (20) 3

DuPont analysis







Return on equity 24.5 8.0 12.0 13.6 13.6

Company profile

DLF is India’s largest real estate developer with a credible track

record of over six decades in developing residential, commercial,

retail and township projects. It has a land bank of 425mn sq ft

spread across 33 cities comprising super metros, metros, tier I and

tier II cities. About 40% of the company’s land bank is located in

the National Capital Region (NCR).


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

Promoters 78.6 78.6 78.6

FIIs 14.8 15.1 15.8

Banks & FIs 2.3 2.0 1.8

Public 4.3 4.3 3.8



10-May-10 Company Update 285 335 Hold

17-May-10 Company Update 299 335 Hold

29-Jul-10 Results Review 312 335 Hold

6-Oct-10 Sector Update 390 380 Hold

12-Oct-10 Company Update 387 380 Hold

11-Nov-10 Results Review 363 380 Hold

Stock performance

250

300

350

400

Apr

-10

May

-10

Jun-

10

Jul-

10

Aug

-10

Sep-

10

Oct

-10

Nov

-10

● Hold

Ranbaxy Laboratories Ltd Results Review 12 November 2010

22

Vikas Sonawale

Vineet Agrawal

(91-22) 6766 3447 (91-22) 6766 3448



(%) CY09 CY10E CY11E CY12E

EBITDA margin 6.1 20.2 29.3 27.5

EBIT margin 2.4 16.7 25.9 24.1

Adj PAT margin (0.6) 17.1 23.3 21.5

ROE (1.1) 27.2 31.8 25.0

ROIC 2.0 14.4 23.4 20.2

ROCE 1.7 12.7 20.4 18.6


(Rs mn) CY09 CY10E CY11E CY12E

Revenue 73,294 84,536 96,451 103,051

Growth (%) 1.5 15.3 14.1 6.8

Adj net income (459) 14,434 22,477 22,167

Growth (%) NA NA 55.7 (1.4)

FDEPS (Rs) (1.1) 34.3 53.5 52.7

Growth (%) NA NA 55.7 (1.4)

Ranbaxy Laboratories Ltd PAT below estimate but catalysts in place

Ranbaxy’s (RBXY) Q3CY10 results were below our/street estimates. The reported numbers were impacted by many one-offs, adjusted for which the profitability was lower than our expectations. The stock’s negative reaction today, in our view, stemmed from the absence of any guidance on the expected timeline for resolution of USFDA issues. However, we remain positive on the stock as we believe that the company will be able to its monetise its strong para-IV FTF opportunities. The recent, tentative approval of Aricept partially reaffirms our view. We maintain our BUY rating on the stock with a Sep’11 (six-month rolled forward) target price of Rs 720.

US and India support 10% revenue growth: RBXY reported a 10% YoY revenue growth during Q3CY10. The company’s US generics business grew by a staggering 95% YoY, supported by better pricing and a higher market share (~35%) for the generic Valtrex, even after expiry of 180-days exclusivity on 24 May ’10. Adjusted for the estimated sales of Valtrex, the company reported a ~60% growth in the US generics base business. The domestic formulations business continued to reap the benefits of project Viraat with an 18% YoY growth during Q3CY10. Europe and A-Pac markets reported lower revenues during the quarter.

EBITDA margin expands 545bps: RBXY reported a 545bps expansion in the EBITDA margin to 8% on a low base of last year and increased contribution of the high-margin Valtrex. Even after adjusting for Valtrex revenues, the underlying base business margins improved by 378bps to 6.3%.

Concall takeaways: 1) USFDA manufacturing issues: no clarity on the timelines for resolution of USFDA issues. 2) Aricept: while the management indicated that it will monetise the opportunity, it did not confirm the launch. 3) Nexium API supply: Expected to improve from Q4CY10 onwards. 4) Valcyte: RBXY will launch its generic version with 180-days exclusivity in Mar ’13. 5) Domestic formulations: the improved growth trajectory is expected to sustain in the future. 6. South Africa: RBXY has started a new manufacturing plant in the country.

Multiple one-offs: 1) Forex gains of Rs 2.6bn 2) Provision write-back of Rs 315mn 3) Provision of Rs 450mn for Simvastatin; 4) Provision of Rs 180mn for inventory related to the generic Valcyte. 5) Provision of Rs 180mn for discontinuation of development of in-licensed products 6) Provision of Rs 250mn for diminution in value of assets.

Maintain BUY: Given the current restructuring exercise and incremental costs, we prefer to value RBXY on EV/sales (vs. PE for other companies). We value the base business at Rs 630, at 3.4x (15% premium to mean, 55% discount to the sector lead). The NPV of FTF opportunities is at Rs 90. Our revised target price stands at Rs 720 (from Rs 670 earlier).



Rs 585 Rs 720 BUY HIGH

BSE NSE BLOOMBERG

500539 RANBAXY RBXY IN

Company data

Market cap (Rs mn / US$ mn) 246,098 / 5,554


Free float (%) 36.1




Stock performance


Ranbaxy 585 0.6 34.9 31.8

BSE HC 6,649 6.2 22.2 28.8

Sensex 20,589 2.6 15.5 21.8

Valuation matrix

(x) CY09 CY10E CY11E CY12E

EV/EBITDA @ CMP 60.7 15.8 9.6 9.5

EV/Sales @ CMP 3.7 3.2 2.8 2.6


23

Result highlights



Revenue 18,838 18,240 3.3

EBITDA 1,508 2,140 (29.5)

Adj net income 1,220 1,579 (22.8)

FDEPS (Rs) 2.9 3.8 (22.8)



(Rs mn) Q3CY10 Q3CY09 % Chg YoY Q2CY10 % Chg QoQ

Revenue 18,838 17,163 10 20,988 (10)

Expenditure 17,330 16,725 4 17,336 (0)

Operating profit 1,508 438 244 3,652 (59)

Other income 509 1,695 (70) 517 (2)

Interest 110 121 (9) 111 (1)

Depreciation 807 654 23 695 16

PBT 1,716 1,521 13 4,635 (63)

Tax 448 435 3 (2) (18,164)

PAT 1,220 1,066 14 4,575 (73)

EBITDA margin (%) 8.0 2.6 545bps 17.4 (939bps)

FDEPS (Rs) 2.9 2.5 14 10.9 (73)


Net profits disappoint due to several

one-offs

Revenues increase 10% YoY supported

by domestic and US operations

EBITDA margin expands 545bps on a

low base of last year and higher

contribution from Valtrex


24


Profit and Loss statement Balance sheet Y/E Dec (Rs mn) CY09 CY10E CY11E CY12E

Revenues 73,294 84,536 96,451 103,051

Growth (%) 1.5 15.3 14.1 6.8

EBITDA 4,448 17,113 28,236 28,339

Growth (%) 12.8 284.7 65.0 0.4


EBIT 1,772 14,153 25,005 24,839

Growth (%) 58.4 698.7 76.7 (0.7)

Interest 710 633 683 733

Other income 5,612 5,961 3,988 3,839

EBT 6,673 19,481 28,311 27,945

Income taxes 6,991 4,891 5,662 5,589


Extraordinary items (3,424) (4,974) - -

Min into / inc from associates 109 120 132 146


Adjustments (3,424) (4,974) - -

Adjusted net income (459) 14,434 22,477 22,167

Growth (%) NA NA 55.7 (1.4)


FDEPS (Rs) (adj) (1.1) 34.3 53.5 52.7

Growth (%) NA NA 55.7 (1.4)

DPS (Rs) - 5.0 5.0 5.0

Y/E Dec (Rs mn) CY09 CY10E CY11E CY12E

Cash and cash eq 12,416 29,553 18,808 21,417


Inventories 18,407 18,031 19,410 23,998


Investments 5,407 5,407 5,407 5,407


Net fixed assets 44,905 47,945 50,714 53,214

CWIP 6,231 6,231 6,231 6,231


Deferred tax assets, net 4,906 4,906 4,906 4,906


Total assets 121,535 141,194 138,745 160,415



Provisions 8,602 10,998 10,998 10,998

Debt funds 36,295 36,295 18,320 18,320

Other liabilities 2,452 2,452 2,452 2,452

Equity capital 2,102 2,102 2,102 2,102




BVPS (Rs) 103.3 149.5 187.2 234.1

Cash flow statement Financial ratios Y/E Dec (Rs mn) CY09 CY10E CY11E CY12E


Non-cash adjustments (7,533) 2,580 132 146

Changes in working capital 271 (1,628) (5,868) (14,599)

Cash flow from operations (1,621) 23,321 19,971 11,214


Change in investments 523 - - -

Other investing cash flow 5,349 - - -

Cash flow from investing 652 (6,000) (6,000) (6,000)


Issue/repay debt (4,460) - (22,125) -

Dividends paid - - (2,102) (2,102)

Other financing cash flow (776) - (357) (357)

Change in cash & cash eq (6,192) 17,321 (10,613) 2,755


Economic Value Added (EVA) analysis Y/E Dec CY09 CY10E CY11E CY12E

WACC (%) 9.2 9.2 9.2 9.2

ROIC (%) 2.0 14.4 23.4 20.2


EVA (Rs mn) (5,509) 4,228 12,795 11,813

EVA spread (%) (7.2) 5.2 14.2 11.0

Y/E Dec CY09 CY10E CY11E CY12E


EBITDA margin 6.1 20.2 29.3 27.5

EBIT margin 2.4 16.7 25.9 24.1

Net profit margin (0.6) 17.1 23.3 21.5

ROE (1.1) 27.2 31.8 25.0

ROCE 1.7 12.7 20.4 18.6




Payables (days) 147 179 168 155

Current ratio (x) 1.8 2.5 2.4 2.8

Quick ratio (x) 0.9 1.6 1.3 1.7







EV/Sales 3.7 3.2 2.8 2.6

EV/EBITDA 60.7 15.8 9.6 9.5

P/E - 17.0 10.9 11.1

P/BV 5.7 3.9 3.1 2.5


25

Quarterly trend

Particulars Q3CY09 Q4CY09 Q1CY10 Q2CY10 Q3CY10

Revenue (Rs mn) 17,163 22,664 24,867 20,988 18,838

YoY growth (%) (9) 19 60 17 10

QoQ growth (%) (4) 32 10 (16) (10)

EBITDA (Rs mn) 438 5,717 7,714 3,652 1,508

EBITDA margin (%) 3 25 31 17 8


YoY growth (%) - - 41 (222) 14

QoQ growth (%) - - (5) (11) (73)

DuPont analysis

(%) CY08 CY09 CY10E CY11E CY12E

Tax burden (Net income/PBT) 2.5 (0.1) 0.7 0.8 0.8





Return on equity 25.5 (1.1) 27.2 31.8 25.0

Company profile

RBXY is one of India’s leading pharma companies. The company

manufactures generic formulations and APIs and has presence in

several countries. In 2008, Japan based Daiichi Sankyo acquired

Ranbaxy from the promoter group. The company has a very strong

product pipeline, particularly for the US market.


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

Promoters 63.9 63.9 63.9

FIIs 7.6 6.9 7.7

Banks & FIs 11.6 11.6 12.1

Public 16.9 17.6 16.3



5-Jul-10 Company Update 460 520 Buy

12-Aug-10 Results Review 445 520 Buy

21-Sep-10 Company Update 564 670 Buy

11-Nov-10 Results Review 585 720 Buy

Stock performance

400

450

500

550

600

650

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

● Buy

Shree Cement Ltd Results Review 12 November 2010

26

Mihir Jhaveri

Suhas Harinarayanan

(91-22) 6766 3459 (91-22) 6766 3404




EBITDA margin 42.1 29.1 30.7 31.7

EBIT margin 26.4 15.0 13.3 15.2

Adj PAT margin 21.6 11.7 10.7 12.4

ROE 51.4 21.3 22.3 23.4

ROIC 23.2 10.0 12.1 15.9

ROCE 25.0 11.9 13.2 15.2



Revenue 36,321 37,089 51,665 58,656

Growth (%) 36.3 2.1 39.3 13.5

Adj net income 7,828 4,337 5,554 7,272

Growth (%) 28.6 (44.6) 28.1 30.9

FDEPS (Rs) 224.7 124.5 159.4 208.7

Growth (%) 28.6 (44.6) 28.1 30.9

Shree Cement Ltd Power revenues take a hit

Shree Cement’s (SRCM) Q2FY11 performance fell short of our and street estimates at the net profit level, as lower power revenues and higher input costs dented profitability during the quarter. The company clocked an EBITDA/tonne of Rs 590 (excluding profits from the power business). We have trimmed our EBITDA estimates by 8%/14% for FY11E/FY12E to factor in the higher costs and lower-than-expected power volumes. While the company is likely to report better cement volumes and realisations sequentially in the coming quarters, revenues from the power segment will be a key trigger, going forward. Rolling forward to Sep’11, we have a revised price target of Rs 2,560 (a 15% upside from current levels). Maintain BUY.

Power revenues, lower cement realisations hit topline: SRCM’s Q2FY11 net sales declined by 20% YoY to Rs 7.2bn, mainly due to a subdued performance of the cement division where volumes dropped 11% to 2.79mt and realisations fell 13% to Rs 3010/tonne. The company’s power volumes were also lower 21% YoY at 50mn units, while realisations stood at Rs 4.15/unit for the quarter. The company also booked power trading revenues of Rs 110mn during the quarter.

We believe SRCM will have a better H2FY11 due to a pick-up in cement and power volumes as the busy construction season sets in. The company has already shown a 20%+ dispatch growth for the month of Oct ’10.

EBITDA margins plunge 2559bps to 19.9%: SRCM’s EBITDA margins plummeted 2559bps to 19.9% mainly on account of lower cement realisations and higher power and fuel costs. Excluding profits of Rs 80mn from the power business, the company’s EBITDA/t stood at Rs 590 for the quarter. We expect the EBITDA/t to improve in the coming quarters on higher cement realisations and volumes.

To factor in the lower power volumes and higher costs, we trim our EBITDA estimates by 8%/14% for FY11/FY12.

Maintain BUY: We have introduced FY13E earnings estimates. Assigning an EV/EBITDA multiple of 5x on FY12E, we arrive at a revised Sep ’11 target price of Rs 2,560 (from Rs 2,300 earlier). We expect the company’s performance to improve in the coming quarters. Maintain BUY.



Rs 2,242 Rs 2,560 BUY HIGH

BSE NSE BLOOMBERG

500387 SHREECEM SRCM IN

Company data



Free float (%) 35.2


52-week high/low (Rs) 2,542/1,617


Stock performance


Shree Cement 2,242 9.2 16.7 5.7

Sensex 20,589 1.2 13.9 20.1

P/E comparison

10

1814.1

10.815.5

12.6

0

5

10

15

20

FY10 FY11E FY12E

Shree Cement Industry(x)

Valuation matrix


P/E @ CMP 10.0 18.0 14.1 10.7

P/E @ Target 11.3 20.5 16.0 12.2

EV/EBITDA @ CMP 5.5 7.8 5.3 4.5


27

Result highlights



Revenue 7,176 6,914 3.8

EBITDA 1,425 1,480 (3.7)

Adj net income 178 249 (28.5)

FDEPS (Rs) 5.1 7.2 (28.6)




Revenue 7,176 8,996 (20.2) 9,445 (24.0)

Expenditure 5,751 4,908 17.2 6,550 (12.2)

Operating profit 1,425 4,088 (65.1) 2,895 (50.8)

Other income 255 316 (19.2) 168 51.5

Interest 137 155 (11.5) 302 (54.6)

Depreciation 1,285 998 28.8 1,506 (14.6)

PBT 258 3,251 (92.1) 1,255 (79.5)

Tax 80 326 (75.6) 185 (56.9)

PAT 178 2,895 (93.9) 1,070 (83.2)


FDEPS (Rs) 5.1 83.2 (93.9) 30.5 (83.2)


Fig 31 - Revised estimates

FY10E FY11E Key parameters (Rs mn) Old New % Chg Old New % Chg

Revenue 39,139 37,089 (5.2) 55,340 51,665 (6.6)

EBITDA 11,718 10,781 (8.0) 18,590 15,867 (14.6)

EBITDA margin (%) 29.9 29.1 (87bps) 33.6 30.7 (288bps)


Lower power revenues and higher input

costs lead to below-expected profits

Revenues slump 20% YoY mainly due

to poor performance of the cement

business

EBITDA margin nosedives 2559bps on

lower cement realisations and higher

overheads

Estimates pruned to factor in lower

power volumes and higher costs


28

Standalone financials


Revenues 36,321 37,089 51,665 58,656

Growth (%) 36.3 2.1 39.3 13.5

EBITDA 15,291 10,781 15,867 18,611

Growth (%) 60.9 (29.5) 47.2 17.3


EBIT 9,586 5,553 6,879 8,890

Growth (%) 28.7 (42.1) 23.9 29.2

Interest 599 922 842 722

Other income 758 1,077 1,177 1,277

EBT 9,746 5,707 7,213 9,444

Income taxes 1,918 1,370 1,659 2,172


Extraordinary items (1,067) - - -



Adjustments (1,067) - - -


Growth (%) 28.6 (44.6) 28.1 30.9


FDEPS (Rs) (adj) 225 124 159 209

Growth (%) 28.6 (44.6) 28.1 30.9

DPS (Rs) 8.0 8.0 8.0 8.0


Cash and cash eq 4,163 2,912 7,538 14,118

Accounts receivable 824 1,016 1,699 2,250

Inventories 3,581 4,325 6,375 7,680


Investments 15,922 13,922 14,922 16,922


Net fixed assets 7,520 17,965 18,477 13,756

CWIP 9,674 4,500 - -


Deferred tax assets, net 124 124 124 124


Total assets 49,061 52,017 56,533 62,395



Provisions 4,999 1,808 2,098 2,611

Debt funds 21,062 23,062 21,062 19,791






BVPS (Rs) 526.2 641.3 801.4 1,002.7



Non-cash adjustments 623 (3,176) 289 513

Changes in working capital (61) (814) (1,880) (2,329)



Change in investments (5,663) 2,000 (1,000) (2,000)



Issue of equity - (0) - -

Issue/repay debt 5,729 2,000 (2,000) (1,272)

Dividends paid (1,944) (325) (326) (326)

Other financing cash flow - - - -

Change in cash & cash eq (560) (1,250) 4,625 6,580



WACC (%) 10.0 10.0 10.0 10.0

ROIC (%) 23.2 10.0 12.1 15.9


EVA (Rs mn) 5,282 (27) 890 2,514

EVA spread (%) 13.1 (0.1) 2.1 5.9



EBITDA margin 42.1 29.1 30.7 31.7

EBIT margin 26.4 15.0 13.3 15.2


ROE 51.4 21.3 22.3 23.4

ROCE 25.0 11.9 13.2 15.2





Current ratio (x) 3.4 3.2 4.0 5.8

Quick ratio (x) 1.1 0.8 1.6 3.0







EV/Sales 2.3 2.3 1.6 1.4

EV/EBITDA 5.5 7.8 5.3 4.5

P/E 10.0 18.0 14.1 10.7

P/BV 4.3 3.5 2.8 2.2


29

Quarterly trend


Revenue (Rs mn) 8,996 8,660 9,440 9,445 7,176

YoY growth (%) 43.0 30.2 17.1 2.3 (20.2)

QoQ growth (%) (2.5) (3.7) 9.0 0.0 (24.0)

EBITDA (Rs mn) 4,088 3,353 3,347 2,895 1,425

EBITDA margin (%) 45.4 38.7 35.5 30.6 19.9

Adj net income (Rs mn) 2,895 1,674 267 1,070 178

YoY growth (%) 169.3 29.6 (89.0) (63.3) (93.9)

QoQ growth (%) (0.7) (42.2) (84.0) 300.4 (83.4)

DuPont analysis







Return on equity 64.7 51.4 21.3 22.3 23.4

Company profile

Promoted by BG Bangur, Shree Cement is among the top 10

cement producers in India with an installed capacity of 13.5mt. Its

plants are located in Beawar and Ras (Rajasthan). The company

continues to maintain its leadership position in northern India. It

has a total captive power capacity of 266MW, meeting more than

95% of its total power requirement.


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

Promoters 65.6 65.5 64.8

FIIs 15.8 16.0 16.7

Banks & FIs 8.8 8.3 7.0

Public 9.8 10.2 11.5



16-Dec-08 Company Update 460 485 Hold

29-Jan-09 Results Review 498 525 Hold

29-Apr-09 Results Review 775 893 Buy

22-Jun-09 Sector Update 1,156 1,340 Buy

27-Jul-09 Results Review 1,539 1,967 Buy

29-Oct-09 Results Review 1,574 1,967 Buy

9-Nov-09 Company Update 1,645 1,967 Buy

6-Jan-10 Quarterly Preview 2,025 2,165 Buy

22-Jan-10 Results Review 2,087 2,428 Buy

21-May-10 Results Review 1,990 2,300 Buy

4-Aug-10 Company Update 1,798 2,400 Buy

16-Aug-10 Results Review 1,785 2,300 Buy

11-Nov-10 Results Review 2,242 2,560 Buy

Stock performance

300

800

1,300

1,800

2,300

Dec

-08

Feb-

09

Apr

-09

Jun-

09

Aug

-09

Oct

-09

Dec

-09

Feb-

10

Apr

-10

Jun-

10

Sep-

10

Nov

-10

● Buy ● Hold

Techno Electric & Engineering Company Ltd Results Review 12 November 2010

30

Misal Singh

Abhishek Raj

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




EBITDA margin 20.3 21.3 27.5 37.6

EBIT margin 16.0 17.4 21.9 29.8

Adj PAT margin 16.9 15.4 16.0 19.7

ROE 25.6 24.6 26.1 33.9

ROIC 15.8 17.7 18.1 22.1

ROCE 13.2 14.3 14.5 16.8



Revenue 7,021 8,206 10,621 14,678

Growth (%) - 16.9 29.4 38.2

Adj net income 1,183 1,260 1,699 2,893

Growth (%) - 6.5 34.8 70.3

FDEPS (Rs) 20.7 22.1 29.8 50.7

Growth (%) - 6.5 34.8 70.3

Techno Electric & Engineering Company Ltd Wind power, EPC businesses drive performance

Techno Electric and Engineering (TEE) posted a strong set of numbers for Q2FY11, with revenues/EBITDA/PAT of Rs 2.1bn/ Rs 609mn/ Rs 443mn, implying a growth of 18.4%/40.5%/23.7% YoY for the quarter. Topline growth was driven by a) a 110.6% YoY increase in revenues for the wind power subsidiary, Simran Wind Energy Projects (Simran) b) 15.3% higher revenues reported by the EPC business YoY. EBITDA margins for the EPC business expanded 160bps YoY to 14.9% due to lower other expenses in the quarter. With the restructuring exercise behind us, we believe that the inherent strengths of TEE’s EPC and wind energy businesses would become more apparent in the subsequent quarters. Upside risks to our estimates can stem from higher-than-expected order inflows for the EPC business. Maintain BUY.

Successful ramp-up in the wind energy business: Topline growth for the quarter primarily came in from the wind energy subsidiary, Simran, wherein revenues leapfrogged 110.6% YoY to Rs 197mn. Accordingly, the implied unit billed in the quarter would have been at ~62.2mn, suggesting a sharp pick-up in the load factor for the company. Earlier the management had indicated that the company had undertaken certain engineering activities to improve the load factor for Simran. TEE’s EPC business clocked a revenue growth of 15.3% YoY for the quarter, driven by the execution profile of the existing order book.

Margin expansion across segments: EBITDA margins were at 29.5%, higher 462bps YoY at the consolidated level. Margin expansion was driven by both the EPC and wind energy businesses. EBIT margins for the EPC business expanded 160bps YoY to 14.9% driven by lower direct costs and other expenses (as a percentage of sales). Margin expansion for the wind energy business, by 1660bps YoY to 78.4%, may have been possibly driven by a drop in operational and maintenance expenses for Simran (EBIT margins of 79.8% compared to 35.8% in Q2FY10).

Maintain BUY: We value the company’s EPC business on a P/E basis at 14.5x one-year forward earnings, implying a value of Rs 285/sh. The wind power business is valued at Rs 145/sh (FCFE/FCFF for Super Wind/Simran), which takes our March ’12 SOTP target price for the stock to Rs 430. Higher-than-expected order inflows in the EPC space and successful diversification in the utility business are likely to be key drivers for the stock in the medium to long term. Maintain BUY.



Rs 417 Rs 430 BUY MEDIUM

BSE NSE BLOOMBERG

533281 TECHNO TEE IN

Company data

Market cap (Rs mn / US$ mn) 23,781 / 539


Free float (%) 34.6



2-month average daily volume -

Stock performance


TEE 417 - - -

BSECG 16,573 2.0 12.0 22.5

Sensex 20,876 3.1 14.6 20.5

P/E comparison

20.1 18.914.0

26.521.7

18.8

05

1015202530

FY10 FY11E FY12E

TEE Industry(x)

Valuation matrix


P/E @ CMP 20.1 18.9 14.0 8.2

P/E @ Target 20.7 19.5 14.4 8.5

EV/EBITDA @ CMP 18.3 14.9 8.9 4.7


31

Result highlights

Fig 32 - Quarterly performance - Consolidated


Net sales 2,068 1,746 18.4 1,593 29.8

Less: Direct Cost 1,277 1,114 14.6 1,077 18.6

Staff Cost 53 47 11.3 45 16.4

Other Expenses 129 151 (14.6) 106 22.2

Expenditure 1,459 1,312 11.2 1,228 18.8

Operating profit 609 434 40.5 365 66.8

Other income 63 122 (48.3) 71 (11.2)

Interest 42 54 (21.6) 51 (18.0)

Depreciation 77 75 1.4 76 0.1

PBT , before exceptionals 554 426 29.9 308 79.6

Exceptional items(income)/expense (3) - (1)

PBT, after exceptions 556 426 309

Tax 111 68 62.1 62 78.4

Reported PAT 446 358 24.5 247 80.4

Adj. PAT 443 358 23.7 246 79.8

EBITDA margin (%) 29.5% 24.8% 462 bps 22.9% 654 bps

EPS (Rs) 7.81 6.27 24.5 4.3 80.4

Source: Company; RCML Research

Fig 33 - Quarterly performance - Stand alone


Net sales 1,871 1,653 13.2 1,516 23.4

Less: Direct Cost 1,277 1,114 14.6 1,077 18.6

Staff Cost 53 47 11.3 45 16.4

Other Expenses 128 131 (1.8) 86 48.9

Expenditure 1,458 1,292 12.9 1,209 20.6

Operating profit 413 361 14.4 308 34.2

Other income 63 121 (48.2) 71 (11.1)

Interest 29 29 1.2 37 (21.7)

Depreciation 37 36 4.2 37 0.2

PBT , before exceptionals 409 418 (2.0) 304 34.6

Exceptional items(income)/expense (3) - (1)

PBT, after exceptions 412 418 305

Tax 82 68 19.9 61 33.7

Reported PAT 330 349 (5.4) 244 35.6

Adj. PAT 328 349 (6.2) 243 34.8

EBITDA margin (%) 22.1% 21.8% 24 bps 20.3% 177 bps

EPS (Rs) 5.79 6.12 (5.4) 4.3 35.6



32

Fig 34 - Segmental Snapshot Consolidated

Revenue Q2FY11 Q2FY10 Q1FY11 FY10

EPC 1,714 1,487 1,432 6,318

Energy 354 259 161 703

Corporate 66 122 72 503

Total 2,134 1,868 1,665 7,525

Results

EPC 255 198 222 764

Energy 278 160 66 359

Corporate 66 122 72 501

Total 598 480 360 1,624

Margin

EPC 14.9% 13.3% 15.5% 12.1%

Energy 78.4% 61.7% 41.2% 51.0%

Corporate 100.0% 100.0% 100.0% 99.5%

Total 28.0% 25.7% 21.6% 21.6%


Fig 35 - Segmental Snapshot Standalone

Revenue Q2FY11 Q2FY10 Q1FY11 FY10

EPC 1,714 1,487 1,432 6,318

Energy 157 166 84 362

Corporate 66 121 71 525

Total 1,937 1,774 1,588 7,205

Results

EPC 255 198 222 764

Energy 120 127 48 209

Corporate 66 121 71 524

Total 441 446 342 1,497

Margin

EPC 14.9% 13.3% 15.5% 12.1%

Energy 76.6% 76.4% 57.1% 57.7%

Corporate 100.0% 100.0% 100.0% 99.8%

Total 22.8% 25.2% 21.5% 20.8%



33



Revenues 7,021 8,206 10,621 14,678

Growth (%) 16.9 29.4 38.2

EBITDA 1,423 1,746 2,920 5,522

Growth (%) 22.7 67.2 89.1

Depreciation & amortisation 303 318 596 1,148

EBIT 1,120 1,428 2,324 4,374

Growth (%) 27.5 62.7 88.2

Interest 210 173 477 848

Other income 503 310 277 277

EBT 1,414 1,566 2,124 3,803

Income taxes 231 306 425 910


Extraordinary items - - - -



Adjustments - - -


Growth (%) 6.5 34.8 70.3


FDEPS (Rs) (adj) 20.7 22.1 29.8 50.7

Growth (%) 6.5 34.8 70.3

DPS (Rs) 2.0 2.0 2.0 2.0


Cash and cash eq 146 1,567 1,482 2,191


Inventories 70 81 96 113

Other current assets 1,720 809 684 731

Investments 500 11 11 8


Net fixed assets 5,530 5,080 14,619 23,496

CWIP - 3,539 3,500 1,750


Deferred tax assets, net (7) (7) (7) (7)

Other assets

Total assets 9,312 12,451 22,388 31,305

Accounts payable 638 960 1,181 1,481


Provisions 139 139 139 139

Debt funds 2,467 3,369 9,318 13,288

Other liabilities





BVPS (Rs) 81.0 98.7 129.2 169.5



Non-cash adjustments 7 - - -

Changes in working capital (2,365) 1,203 (301) (784)

Cash flow from operations (872) 2,781 1,994 3,257


Change in investments (500) 489 - 3




Issue/repay debt 2,467 902 5,950 3,970

Dividends paid 114 114 114 114

Other financing cash flow 3,215 (365) (74) (705)

Change in cash & cash eq (1,295) 514 (2,113) (1,636)

Closing cash & cash eq 146 1,567 1,482 2,191


WACC (%) 12.0 12.0 12.0 12.0

ROIC (%) 15.8 17.7 18.1 22.1


EVA (Rs mn) 27,008 51,812 101,769 231,269

EVA spread (%) 3.81 5.75 6.10 10.07



EBITDA margin 20.3 21.3 27.5 37.6

EBIT margin 16.0 17.4 21.9 29.8


ROE 25.6 24.6 26.1 33.9

ROCE 13.2 14.3 14.5 16.8





Current ratio (x) 1.5 1.5 1.4 1.7

Quick ratio (x) 1.4 0.8 0.9 1.1







EV/Sales 3.7 3.2 2.5 1.8

EV/EBITDA 18.3 14.9 8.9 4.7

P/E 20.1 18.9 14.0 8.2

P/BV 5.1 4.2 3.2 2.5


34

DuPont analysis


Tax burden (Net income/PBT) 83.7 80.5 80.0 76.1

Interest burden (PBT/EBIT) 126.2 109.6 91.4 86.9

EBIT margin (EBIT/Revenues) 16.0 17.4 21.9 29.8

Asset turnover (Revenues/Avg TA) 0.8 0.8 0.6 0.5

Leverage (Avg TA/Avg equtiy) 2.0 2.1 2.7 3.1

Return on equity 25.6 24.6 26.1 33.9

Company profile

TEE was incorporated in 1963 by the Mohankas of Jamshedpur to

provide EPC services to core sector industries in India. The

company went public in 1973. In 1995, Mr. P.P. Gupta became the

sole promoter. Broadly, TEE addresses the power generation, power

transmission and distribution and industrial sectors. TEE addresses

roughly ~17–20% of the total project requirements of power

generation plants. TEE has been involved in mechanical and

electrical auxiliary systems for utilities and upto ~67MW captive

power plants on turnkey basis.


(%) Sep-09 Dec-09 Mar-10

Promoters 55.0 55.0 55.0

FIIs 1.2 0.8 0.7

Banks & FIs 6.3 6.3 6.6

Public 37.5 37.9 37.7



21-Jun-10 Initiating Coverage 289 400 Buy

9-Nov-10 Company Update 276 430 Buy

10-Nov-10 Company Update 417 430 Buy

Stock performance

200

250

300

350

400

450

Mar

-10

Apr

-10

May

-10

Jun-

10

Jul-

10

Aug

-10

Sep-

10

Oct

-10

Nov

-10

● Buy

Automobiles Sector Update 12 November 2010

35

Kaushal Maroo

Keyur Vora, CFA

(91-22) 6766 3457 (91-22) 6766 3456


Recommendation snapshot Company CMP Target Rating

Ashok Leyland (AL) 79 90 Buy

Bajaj Auto (BJAUT) 1,575 1,650 Hold

Hero Honda (HH) 1,804 1,900 Hold

M&M (MM) 804 820 Buy

Maruti Suzuki (MSIL) 1,476 1,600 Hold

Tata Motors (TTMT) 1,303 1,450 Buy

TVS Motors (TVSL) 83 75 Hold

Quarter’s event snapshot

Month Event

Jun '10 Rs 3.5/ltr petrol price increase

2-wheeler makers hike prices by 1-2%

CV players hike prices by 1.5-3%

Jul-Aug '10 PV players hikes prices across models by 1-1.5%

Major banks hike lending rates by 0.5%

FY12 RCML estimates revision post Q2FY11 Oct '10 Nov ‘10 Revision (%)

AL 6.0 6.0 -

Upgrades

TTMT * 122.2 152.3 24.6

MM 46.4 47.8 3.0

BJAUT 93.9 103.7 10.4

Downgrades

MSIL 108.2 95.1 (12.1)

TVSL 5.8 5.6 (3.4)

HH 126.8 121.5 (4.2)

*Consolidated estimates

FY12 consensus estimates revision post Q2FY11 Oct '10 Nov ‘10 Revision (%)

Upgrades

TVSL 5.5 5.7 4.8

AL 5.7 5.9 4.4

TTMT * 122.9 136.1 10.7

BJAUT 88.7 96.4 8.7

MM 46.3 49.0 5.9

MSIL 98.1 99.0 0.9

Downgrades

HH 131.8 125.7 (4.6)

Source: Bloomberg | *Consolidated estimates

Automobiles

Q2FY11 results review: Another eventful quarter

Q2FY11 results for the automobile sector were below expectations on the profitability front. Aggregate margins for the sector dipped 30bps QoQ to 12.4% (as against the estimated 13.2%). Based on the quarter’s performance and management guidance, we have downgraded our estimates for Hero Honda Motors (HH), Maruti Suzuki (MSIL) and TVS Motors (TVSL), but have upgraded our forecasts for Bajaj Auto (BJAUT), M&M (MM) and Tata Motors (TTMT). While most companies have, yet again, increased vehicle prices in October, this is unlikely to have a significant positive impact on margins as raw material prices have started firming up again. We expect the strong volume momentum to continue but maintain a slight negative bias on margins for H2FY11, which we already factor in our numbers. While we maintain our positive stance on the sector as a whole, we increasingly believe that valuations are factoring in the positives for most of the stocks.

Q2FY11 RCML automobile universe (aggregate) performance summary:

Revenues increased 34% YoY and 9.8% QoQ — in-line with estimates

EBITDA margins were lower-than-anticipated at 12.4%, a dip of 30bps QoQ as against our estimate of a 50bps expansion that stemmed from the expected benefits flowing in from softer commodity prices.

Net profits grew 18.6% YoY and 14.2% QoQ.

Key surprises to our/street estimates

HH’s EBITDA margin of 13.4% came in as a negative surprise. Unlike other players who benefited from softer commodity prices, HH reported a QoQ increase of 150bps in its RM/sales ratio. We have downgraded our FY11/FY12 earnings estimates for the company by ~5% each.

TTMT’s consolidated earnings were 30% above our and consensus estimates, largely due to a 6.6% QoQ improvement in realisations and a surprise 16.6% EBITDA margin reported by JLR. Factoring in the higher realisations/margins of JLR, we increase our FY11/FY12 earnings by ~25%.

Despite higher volumes and a better product mix, TVSL’s margins refused to budge, inching up only by 20bps QoQ to 7.6%. We have downgraded our margin estimates as the company, contrary to our expectations, is seeing little benefits of operating leverage.

Volume outlook remains buoyant; valuations increasingly look pricey Most of the production constraints in the system, arising from limited capacities at OEMs or ancillaries, have started easing up, as seen in the volume run-rate for the festive month of October. We believe that the volume outlook for the sector remains buoyant due to higher discretionary spending, easy availability of finance (interest rates have not moved up that significantly to impact demand) and strong freight availability for commercial vehicles. Nonetheless, we build in lower margins for H2FY11 to factor in the firming up of input costs and the currency headwinds faced by some players. Overall, we maintain our positive stance on the sector but increasingly believe that valuations are pricing in the positives for most of the stocks.

Note: Sector aggregates include standalone financials of MM and TTMT

For further details, refer to our report released on 11 November 2010.

Lanco Infratech Ltd Alert 12 November 2010

36

Suhas Harinarayanan Sumit Maniyar

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


Lanco Infratech Ltd Operating results lower than expectations

Lanco Infratech’s (Lanco) reported EPS declined 44% on a YoY basis and 64% on a QoQ basis to Rs0.30/sh (Rs0.51/sh on an adjusted basis) for Q2FY11. Revenues from EPC business declined 26% YoY to Rs10.95bn. Overall profitability remained low due to decline in EBITDA margin ~600bps (10% in Q2FY11 against 16% in Q2FY10). Power business continued to perform well, average realisations remained at Rs3.18/kwh which was broadly inline with our expectations of Rs3.13/kwh. However, realisation declined ~25% on a sequential basis reflecting seasonally lower merchant tariffs (As per CERC, the average tariff for bilateral contracts dipped from Rs 5.8/kwh in Q1FY11 to Rs5.03/kwh in Q2FY11). We will review our estimates after getting further details from the management.

Lower profitability in EPC business partially offset by power segment: EBITDA margin for EPC business came down from 16% in Q2FY10 to 10% in Q2FY11. Current order book for construction and EPC order book stands at Rs254bn, out of which in-house power projects accounts for 89% of the orders. EPC segments’ share in overall EBITDA declined from 70% to 22% on a YoY basis. EBITDA for power business increased ~2.8x (YoY) on the back of increased capacity and better realsations (25% higher to Rs3.18/kwh). However, on a sequential basis realisations were lower ~25% due to seasonally weaker demand.

Kondapalli II and Amarkantak I recorded lower PLFs: Lanco’s 133MW Kondapalli and 300MW Amarkantak I power plants recorded lower PLFs during the quarter due to synchronization activities and maintenance downtime, respectively. Kondapalli has 100% of capacity as merchant power, is now fully synchronized. We should see full contribution from Kondapalli II in Q3FY11E. We expect that rates for bilateral contracts for the next two months (~Rs 4.6/Kwh) could be seasonally lower than the last quarter (~Rs 5/Kwh).

Quarterly performance (Rs mn) 2QFY11 1QFY11 % QoQ 2QFY10 %YoY

Sales 24,545 25,508 (3.8) 21,943 11.9

Power 13,373 14,251 (6.2) 7,134 87.5

EPC 10,833 10,375 4.4 14,616 (25.9)

Real estate 308 345 (10.7) 109 182.6

Unallocated 31 537 (94.2) 25 24.0

Intersegmental 4,177 4,252 2,677

Net Sales 20,417 21,256 (3.9) 19,266 6.0

Less: sales on power trading 5,804 5,931 (2.1) 4,739 22.5

Adjusted sales 14,614 15,325 (4.6) 14,527 0.6

EBITDA 4,891 5,954 (17.9) 3,140 55.8

Adjusted EBITDA 4,761 5,868 (18.9) 3,077 54.7

Depreciation 1,703 1,551 9.8 332 412.5

Interest Expense 1,754 1,567 11.9 519 238.0

Other income 725 251 188.4 187 286.9

PBT 2,159 3,087 (30.1) 2,476 (12.8)

Tax 378 353 7.1 769 (50.8)

PAT 1,781 2,734 (34.9) 1,707 4.3

Minority interest 259 278 257

Adjustement (299) 359 18

Recurring PAT 1,223 2,815 (56.6) 1,725 (29.1)



Jai Balaji Industries Ltd Alert 12 November 2010

37

Amit Agarwal Sumit Maniyar

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


Jai Balaji Industries Ltd Lower volumes off-set benefits of higher realizations

Jai Balaji’s (JBIL) 2QFY11 EBITDA at 662 mn declined 2.3% yoy but gained 7% qoq. YoY performance was impacted by 30% decline in metallic volumes even as average realizations increased by 27%. Sequentially, JBIL benefitted from higher pig iron production and improved realizations. However, sponge iron production was lower on a qoq basis as iron ore shortage in Chattisgarh led to production cuts. JBIL’s operating performance was also impacted by (1) higher wage costs on account of wage settlements made by the company resulting in higher expenditure to the extent of Rs37mn and (2) one-settlement costs of Rs24 mn with suppliers. EBITDA/ton declined marginally to Rs4,613/ton during the quarter from Rs4,894/ton in 1QFY11. Reported net profit at Rs116 mn declined 8% yoy while sequentially, it was higher by 12%. According to the management, the Ductile Iron pipe mill has begun trial operations and it has an order book of 35,000 tons—we expect capacity utilizations levels at the DI pipe mill to increase to 50-60% levels resulting in higher contribution to the EBITDA from 3QFY11. Meanwhile on the projects front, JBIL has received environmental clearance for its Dumri coal block while the forest clearance is under progress. Overall, results were in line with our annual estimates. We maintain our BUY rating with TP of Rs400/share

Quarterly performance

2QFY11 1QFY11 QoQ (%) 2Q FY10 YoY (%)

Net sales 4,789 3,983 20.2 4,623 3.6

Other operating income 164 161 2.0 125 31.0

(Inc)/Dec in stock 13 14 (7.1) 22 (42.6)

Raw material consumed 2,815 2,537 11.0 2,999 (6.1)

Purchase of traded goods 351 48 0

Employee cost 131 114 15.2 106 23.1

Power and fuel 288 291 (1.2) 362 (20.4)

Other expenditure 694 521 33.0 582 19.2

Total expenditure 4,292 3,525 21.8 4,072 5.4

EBITDA 662 619 (5.2) 677 (2.3)

Depreciation 187 178 4.7 172 8.5

EBIT 475 441 7.8 505 (5.9)

Other income 3 15 (82.4) 10 (74.2)

Net interest 341 299 13.9 338 0.9

Extraordinaries - - -

PBT 137 156 (12.5) 177 (22.8)

Tax 21 52 (60.7) 51 (60.0)

Net profit 116 104 11.8 126 (7.7)

Adjusted net profit 116 104 11.8 126 (7.7)

EBITDA margin (%) 13.8 15.5 14.6

Effective tax rate (%) 15.0 33.4 28.9

EPS (Rs/share) 1.8 1.6 11.8 2.0 (7.7)

Source: Company, RCML research



38

Events Calendar Nov 12 Nov 13 Nov 14

Economy

IN - Industrial Production (Sep)

EU – Industrial Production

GE – 3Q GDP

US – Univ. of Michigan Confidence

– –

Quarterly Results

Gammon India, Hindustan Petroleum Corporation, India

Cements, J K Lakshmi Cement, Lakshmi Energy & Foods,

Oil India, Simplex Infrastructures, Spice Mobility, Sterling

Biotech, Tata Power, Tata Steel, Wockhardt

Cox & Kings, Ganesh Housing Corporation, Indian Oil

Corporation, Orient Paper & Industries, Unitech, Pantaloon Retail

Nov 15 Nov 16 Nov 17

Economy JN – 3Q GDP

JN – BoJ Monetary Policy meet

UK – CPI

EU/GE – ZEW Survey

US – Industrial Production

UK – BoE minutes

US – CPI

Quarterly Results – – –


39

Trade Data

Institutional bulk deals

Scrip Client Buy/Sell Quantity Avg Price (Rs)

3I Infotech Bnp Paribas Arbitrage B 1,500,000 71.3

Autolite India Standard Chartered Bank (Mauritius)A/C Emerging Ind S 75,000 29.8

Avon Corp Credit Suisse First Boston (Singapore) B 1,641,799 9.3

Gujarat Hotels Orange Mauritius Investments B 65,000 120.9

Gyscoal Alloys Regent Finance Corporation S 125,000 75.8

Gyscoal Alloys Regent Finance Corporation S 125,000 75.8

Koutons Retail India Unti Trust Of India Invesadvisory Services -Ascent I S 220,000 100.0

Shree Ganesh Jewel Macquarie Bank B 1,000,000 207.0

Silverline Anim The Royal Bank Of Scotland NV S 500,000 22.0

Vikas Granaries Ifci S 200,000 25.2

Source: BSE, NSE

Disclosures under insider trading regulations

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

Qty % Qty %

Aarti ugs Hetal Gogri Gala B 4,581 - 320,962 2.7

Aarti ugs Hetal Gogri Gala B 4,581 - 320,962 2.7

Ankur ugs And Pharma Purnandu Jain Huf B 37,225 0.2 1,363,872 7.1

Aptech Pramod Khera S 10,000 - 141,115 0.3

Arshiya International Eapen Matthew 0 - - - -

Ashco Niulab Industries Kanchan A Kotwani S 250,000 - 2,541,926 3.9

Autoline Industries Duke Advisors S 20,084 - 451,273 -













Autoline Industries Ts India Holding Llc S 50,756 - 194,360 -





Coromandel International Kapil Mehan 0 - - - -

Dabur India Sunil Duggal S 10,000 - 2,984,000 0.2

Reddys Laboratories Sanjay Surena Bhanushali S 100 - 5,300 -




40


Qty % Qty %

Reddys Laboratories V V Parsuram S 100 - 1,200 -

Reddys Laboratories V V Parsuram S 400 - 800 -

Essel Propack Ashok Kumar Goel B 30,000 - 30,625 0.0








Everest Industries Y Srinivasa Rao S 2,400 - 46,138 0.3

Everlon Synthetics Prachi Jitena Vakhaira B 48,118 1.0 295,355 5.9

Gateway Distriparks R Kumar S 20,000 - 110,000 0.1

Gayatri Projects T V Sandeep Kumar Reddy S 100,000 - 1,495,162 13.1

Granules India C Krishna Prasad B 75,000 - 5,033,445 25.1

Gravity India Dakshaben R Thakkar B 1,800 - 350,654 3.9

Hindoostan Spinning Weaving Mills Jagdish U Thackersey B 886,815 6.0 1,032,834 -

Hindoostan Spinning Weaving Mills Sirdar Carbonic Gas Co B 4,770,744 32.3 4,770,744 32.3

Hindoostan Spinning Weaving Mills Sirdar Carbonic Gas Co S 1,970,700 13.3 2,800,044 19.0

Housing Development And Infra Copthall Mauritius Investment B 165,408 - - -

Housing Development And Infra Copthall Mauritius Investment S 650,000 - 16,625,874 4.0

India Infoline Donald D'Souza S 10,000 - - -

Indusind Bank Romesh Sobti B 600,000 - 600,000 -

Itc Pillappakkam Bahukutumbi B 15,000 - 35,000 -

Jain Irrigation Syste Janus Investment Funds B 60,000 0.1 4,442,803 5.0

Kcp Sugar & Industries Corporation Durgamba Investment B 30,000 0.0 41,281,447 -

Kcp Sugar & Industries Corporation Durgamba Investment B 30,000 0.0 41,311,447 -

Lotus Chocolate Company Gottemukkala Venkatapathi Raju B 44,634 0.4 44,634 0.4

Lupin S 2,000 - 9,000 -

Lupin Abir Choudhury B 4,000 - 4,000 -

Lupin Amit Kumar Jain B 1,500 - 1,500 -

Lupin Anil Kumar Mathur S 400 - 2,100 -

Lupin Makarand Avachat B 17,500 - 17,500 -

Lupin Makarand Avachat B 17,500 - 17,500 -

Lupin Shashi Narula S 3,000 - - -

Mazda Croll Reynolds International Inc S 210,000 4.9 289,500 6.8

Mazda Sheila S Mody B 70,000 - 75,700 1.8

Mazda Shanaya S Mody B 3,000 - 355,027 8.3

Mazda Shanaya S Mody S 1,000 - 349,000 8.2

Mazda Shanaya S Mody B 595 - 355,622 8.4




Mazda Shanaya S Mody S 4,196 - 350,000 8.2


Mazda Sorab R Mody B 70,000 - 920,226 21.6


41


Qty % Qty %

Nectar Lifesciences Sanjiv Goyal B 65,000 - 75,665,000 33.7

Orchid Chemicals & Pharmaceuticals M R Girinath S 10,000 - 290,934 0.4




Oricon Enterprises Adarsh Somani B 659,784 - 932,954 5.1

Oricon Enterprises Anushree Somani B 121,182 - 171,286 0.9

Oricon Enterprises Himalaya Builders B 227,586 - 257,736 1.4

Oricon Enterprises Jaya Somani B 153,216 - 314,571 1.7

Oricon Enterprises Kumkum Somani B 229,083 - 361,653 2.0

Oricon Enterprises idula Somani B 438,216 - 688,343 3.8

Oricon Enterprises Naata Somani B 398,373 - 398,373 2.2

Oricon Enterprises Nupur Somani B 252,510 - 515,610 2.8

Oricon Enterprises Rajena Somani B 1,522,665 - 1,923,183 10.5

Oricon Enterprises Ridhi Sidhi Equifin B 172,740 - 176,240 1.0

Oricon Enterprises Shantanu Somani B 219,351 - 394,116 2.2

Oricon Enterprises Skyland Securities B 111,120 - 114,620 0.6

Oricon Enterprises Suhrid Somani B 322,668 - 470,873 2.6

Oricon Enterprises Sujata Parekh B 604,485 - 1,088,245 5.9

Oricon Enterprises Surena Somani B 23,190 - 586,982 3.2

Oricon Enterprises Susheel G Somani B 1,007,985 - 1,227,106 6.7

Oricon Enterprises Vandana Somani B 419,862 - 661,327 3.6

Oricon Enterprises Varun Somani B 500,745 - 866,620 4.7

Oricon Enterprises Vrinda Somani B 121,182 - 143,802 0.8

Oriental Hotels D Varada Reddy B 1,474 - 598,627 3.4




Oriental Hotels D Varada Reddy B 235 - 600,004 3.4

Oriental Hotels D Varada Reddy B 235 - 600,004 3.4

Patel Engineering Silloo Patel S 2,500 - 550,379 0.8

Piramal Healthcare N Santhanam B 37,500 - 156,250 0.1

Raj Packaging Industries Kankaria Leasing & Finance S 500 - 126,000 3.2

Raj Packaging Industries Rajena Kankaria S 14,000 - 96,760 2.4

Raj Packaging Industries Ramesh Chana Singhi S 5,000 - 208,000 5.2

Raj Packaging Industries Ruchi Singhi S 4,000 0.1 204,000 5.1

Raj Packaging Industries Shyama Kankaria S 5,000 0.1 251,103 6.3

Raj Packaging Industries Singhvi Finvest S 5,000 - 45,000 1.1

Shirpur Gold Refinery Jayneer Capital B 13,574,700 46.6 21,185,703 72.7

Sintex Industries Matthews International Fund S 2,767,645 2.0 4,388,907 3.2

Sonata Software Bhupati Investments & Finance S 100,000 0.1 21,318,362 20.3

Sterling Holiday Resorts India M Balasubramaniyam B 176,000 - 178,010 0.4

Sukhjit Starch & Chemicals Dhiraj Sardana B 3,500 - 378,968 5.1

Sukhjit Starch & Chemicals Dipti Sardana B 1,116 - 2,116 0.0

Sukhjit Starch & Chemicals I K Sardana B 1,650 - 494,601 6.7

Sukhjit Starch & Chemicals Rohni Sardana B 1,400 - 31,148 0.4


42


Qty % Qty %

Sukhjit Starch & Chemicals Sona Sardana B 1,100 - 2,105 0.0

Sukhjit Starch & Chemicals Suman Sardana B 6,766 - - -

Sukhjit Starch & Chemicals Uday Pratap Sardana U/G Pankaj Sardana

B 3,400 - 4,240 0.1

Sukhjit Starch & Chemicals Veer Pratap Sardana U/G Dhiraj Sardana

B 932 0.0 932 0.0

Technofab Engineering Avinash C Gupta B 7,300 - 1,772,348 16.9

Transchem Grandeur Corporation B 40,261 0.3 137,638 1.1

Trinethra Infra Ventures P V V R R L N Prasad B 26,349 - 3,699,828 11.5

Tulsi Extrusions Chitra S Taparia & Pacs B 13,990 0.1 470,546 -

Tulsi Extrusions Nandini S Taparia & Pacs B 12,386 0.1 1,405,637 -

Tulsi Extrusions Nandini S Taparia & Pacs B 100,000 0.4 1,505,637 -

Tulsi Extrusions Nandini S Taparia & Pacs S 101,600 0.4 1,404,037 5.6

Tulsi Extrusions Pradip Jasraj Mundhra & Pacs B 4,700 0.0 2,097,478 -

Tulsi Extrusions Pradip Jasraj Mundhra & Pacs S 68,802 0.3 2,028,676 8.1

Tulsi Extrusions Shrikanta D Rathi S 272,323 1.1 387,602 1.6

Virtualsoft Syste Mohini Tandan S 4,000 - 837,342 11.1

Virtualsoft Syste Mohini Tandan S 6,110 - 831,232 11.0

Vision Technology India B Ranga Vasanth B 5,000 - 3,209,887 9.1

White Diamond Industries Rameshchana P Kothari S 50,000 - 134,082 2.1

Source: BSE

Sector Valuation Snapshot 12 November 2010

43

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 79 90 Buy 105,695 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 17.3 13.4 11.4 9.3 2.6 2.4

Bajaj Auto 1,568 1,650 Hold 453,670 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 17.0 15.1 10.9 10.0 9.2 6.4

Hero Honda 1,820 1,900 Hold 363,412 109.1 121.5 (2.6) 11.3 14.0 13.7 11.8 11.6 53.2 44.7 44.0 44.2 0.0 0.0 16.7 15.0 12.1 11.0 7.7 5.9

M&M 814 820 Buy 485,413 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 18.9 17.0 14.4 12.8 5.0 4.1

Maruti Suzuki 1,470 1,600 Hold 424,813 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 18.6 15.5 9.5 7.8 3.1 2.6

Tata Motors 1,276 1,450 Buy 743,019 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 39.9 30.7 19.1 16.4 3.8 3.5

TVS Motor 79 75 Hold 37,342 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 16.9 14.1 9.4 8.3 3.6 2.9

Aggregate 2,613,365 - - - - 12.4 12.2 7.9 8.0 20.8 17.7 13.3 11.6 4.5 3.8

AUTO ANCILLARIES

Amara Raja 186 260 Buy 15,881 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 11.8 9.5 6.7 5.5 2.4 2.0

Exide 164 190 Buy 139,528 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 20.9 17.6 12.8 10.8 5.0 4.1

Mahindra Forgings 101 130 Buy 8,910 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 0.6 211.4 9.4 4.6 3.1 1.1 1.0

Aggregate 155,409 - - - - 21.0 20.7 12.7 12.6 19.4 16.2 11.7 9.8 4.5 3.7

CAPITAL GOODS

ABB 858 750 Hold 181,711 22.4 26.3 33.8 17.2 7.9 9.2 4.9 5.6 16.2 16.4 24.5 24.8 - - 38.3 32.7 31.3 22.8 8.6 7.5

BGR Energy 792 750 Hold 57,101 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 21.2 17.0 12.6 10.1 8.1 6.2

BHEL 2,416 2,400 Hold 1,182,901 107.0 135.2 21.5 26.3 19.0 19.4 12.9 13.1 29.4 29.8 40.1 41.4 0.0 0.0 22.6 17.9 14.0 11.0 7.4 6.0

Bajaj Electricals 275 275 Hold 27,014 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 17.5 14.1 10.5 8.5 5.5 4.4

Crompton Greaves 327 370 Buy 209,928 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 23.7 21.1 16.6 15.2 16.1 11.5

Cummins India 790 950 Buy 156,371 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 25.4 20.3 29.6 20.0 14.2 11.2

Engineers India 354 400 Buy 119,292 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 22.8 16.0 20.0 15.0 10.1 8.5

Jyoti Structures 143 165 Buy 11,717 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 10.9 9.4 5.3 4.6 2.3 2.0

Kalpataru Power Transmission 170 200 Hold 26,111 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 13.0 10.8 8.9 7.4 2.7 2.2

KEC International 488 625 Buy 24,676 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 11.5 9.5 6.0 4.9 3.1 2.2

Siemens 832 1,000 280,652 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 29.9 24.9 17.6 14.6 8.3 6.8

Suzlon Energy 57 45 Sell 99,661 (3.4) 1.7 NM NM 5.0 8.7 - 1.1 (7.2) 3.6 1.5 5.5 1.7 1.8 - 34.0 20.6 10.7 1.3 1.4

Thermax 876 900 Hold 104,369 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 29.4 22.3 18.1 13.9 9.7 7.7

Voltas 253 300 Buy 83,565 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) 22.3 17.6 16.5 13.3 7.7 6.0

Aggregate - - - 2,565,070 - - - - 13.2 14.2 7.7 8.5 27.3 20.4 15.9 12.2 6.7 5.7


44

FDEPS (Rs)

FDEPS Growth (%)

EBITDA Margin (%)

PAT Margin (%)

ROE (%)

ROCE (%)


P/E (x)

EV/EBITDA (x)



CEMENT

ACC 1,090 1,180 Buy 204,595 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 18.3 15.5 10.8 8.8 3.4 3.1

Ambuja Cement 161 165 Buy 246,364 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 18.8 16.1 11.5 9.7 3.8 3.4

Birla Corp 412 525 Buy 31,753 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 7.1 5.9 5.1 4.0 1.8 1.5

Grasim Industries 2,425 2,900 Buy 222,351 222.2 263.3 (33.7) 18.5 23.8 25.5 10.5 11.0 26.6 14.7 18.6 11.7 0.5 0.4 10.9 9.2 6.0 5.0 1.8 1.5

India Cements 120 100 Sell 36,815 2.6 5.7 (76.6) 119.4 12.1 13.4 2.2 4.1 8.0 1.9 6.9 3.3 0.4 0.5 46.5 21.2 13.9 10.8 0.9 0.9

JK Lakshmi Cement 66 94 Buy 8,021 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 7.6 4.4 7.0 4.7 0.8 0.8

Mangalam Cement 153 190 Hold 4,085 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 5.2 4.5 2.7 2.0 0.4 0.4

Orient Paper & Industries 64 70 Buy 12,335 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 8.8 6.7 5.7 4.6 1.6 1.4

Shree Cement 2,243 2,300 Buy 78,125 152.1 226.1 (32.3) 48.6 29.9 33.5 13.5 14.2 51.4 25.5 25.0 15.1 1.1 0.9 14.7 9.9 7.1 4.5 4.3 3.4

UltraTech Cement 1,134 1,260 Buy 310,770 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 19.4 15.6 10.0 8.0 3.4 2.9

Aggregate - - - 1,155,215 - - - - 23.5 25.3 11.9 12.6 15.5 12.5 8.6 6.8 2.6 2.3

CONSTRUCTION

Ahluwalia Contracts 185 252 Buy 11,633 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 11.6 9.6 5.0 4.2 3.3 2.5

Hindustan Construction Co 64 73 Hold 38,909 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 35.2 33.9 12.6 10.6 2.4 2.3

IRB Infrastructures Developers 259 287 Hold 85,966 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 17.3 14.7 10.1 7.8 3.5 2.9

IVRCL Infrastructures 145 209 Buy 38,756 8.5 10.5 34.9 23.2 9.5 9.4 3.6 3.6 11.8 13.0 10.4 10.8 1.0 1.1 17.0 13.8 9.8 7.9 1.9 1.7

Jaiprakash Associates 134 150 Buy 285,686 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 31.8 24.1 9.2 7.2 3.0 2.7

L&T 2,128 2,330 Buy 1,293,652 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 29.1 23.6 19.5 16.1 5.3 4.5

Nagarjuna Construction Co 153 206 Buy 39,180 9.2 10.1 15.9 10.2 10.2 10.2 4.0 3.7 10.1 10.2 8.8 8.9 1.0 1.2 16.6 15.1 9.7 7.9 1.6 1.5

Patel Engineering 372 469 Buy 25,951 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 18.6 13.7 10.7 8.2 1.8 1.6

Punj Lloyd 129 89 Sell 42,774 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 49.7 17.2 12.6 7.6 1.4 1.3

Reliance Infrastructure 1,062 1,390 Buy 260,126 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 17.5 16.1 17.6 11.8 1.1 1.0

Simplex Infrastructure 465 486 Sell 23,027 29.9 37.4 16.5 24.8 10.0 10.0 2.8 2.9 14.3 15.7 7.3 7.7 1.3 1.3 15.5 12.5 6.9 5.8 2.1 1.8

Aggregate - - - 2,145,660 - - - - 13.8 14.2 7.1 7.0 25.2 20.6 14.8 11.6 1.6 1.4

FMCG

Asian Paints 2,651 3,000 Buy 254,137 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 28.6 23.4 18.9 15.6 11.6 9.2

Britannia 432 450 Sell 51,561 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 39.1 21.8 28.5 17.2 16.0 13.1

Colgate 878 860 Sell 119,348 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 27.1 25.0 22.8 21.0 33.7 31.0

Dabur 97 110 Hold 168,937 3.3 4.0 15.6 22.4 18.9 19.6 14.5 15.2 51.7 47.1 45.7 43.7 0.1 0.1 29.6 24.1 22.2 18.4 13.2 10.0

Emami 488 450 Sell 73,908 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 31.0 26.6 25.5 21.8 9.5 7.7

GCPL 436 460 Hold 140,924 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 27.8 23.9 21.4 17.6 8.0 6.8

GSK Consumer 2,341 2,200 Sell 98,457 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 33.9 28.4 24.9 20.2 9.1 7.6

HUL 309 330 Hold 674,773 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 31.3 27.1 25.4 21.6 22.2 18.9

ITC 175 210 Buy 1,349 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 28.2 23.1 - - 0.0 0.0

Jyothy Labs 277 305 Hold 22,339 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 22.6 19.6 16.1 14.0 3.3 3.0

Marico 138 150 Buy 84,905 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 29.1 24.1 20.3 17.1 9.9 7.6

Nestle 3,800 3,500 Hold 366,400 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 47.1 37.7 30.6 24.4 55.7 48.6

Aggregate 2,057,038 20.3 21.2 14.5 15.1 18.4 15.3 13.0 10.7 3.9 3.3


45

FDEPS (Rs)

FDEPS Growth (%)

EBITDA Margin (%)

PAT Margin (%)

ROE (%)

ROCE (%)


P/E (x)

EV/EBITDA (x)



METALS

JSW Steel 1,331 1,050 Sell 291,462 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 19.6 14.8 9.3 7.7 1.6 1.4

Jindal Steel & Power 711 670 Hold 663,660 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 12.6 10.4 8.4 7.2 4.3 3.1

SAIL 197 270 Buy 813,895 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 9.1 7.7 5.7 4.5 2.0 1.6

Tata Steel 631 780 Buy 569,342 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 8.9 8.7 5.7 5.4 1.9 1.5

Jai Balaji 297 400 Buy 18,921 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 24.5 7.0 10.4 5.6 1.9 1.5

Aggregate - - - 2,357,280 - - - - 30.1 30.0 18.5 18.2 1.4 1.1 1.2 1.0 0.3 0.2

IT SERVICES

Educomp 560 700 Buy 53,498 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 15.3 13.4 9.9 6.9 3.4 2.7

FirstSource Solutions 27 40 Buy 11,655 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 7.5 5.9 2.6 2.2 0.7 0.7

HCL Infosystems 110 135 Hold 23,917 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 9.8 8.6 6.6 5.7 1.8 1.7

HCL Tech 403 525 Buy 274,721 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 17.9 12.9 9.9 7.5 3.3 2.7

Hexaware Technologies 92 90 Hold 13,308 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 11.3 9.2 6.1 4.4 1.1 1.0

Infosys 3,055 3,200 Hold 1,753,475 121.2 145.1 11.4 19.7 33.0 32.8 24.9 24.8 26.1 26.3 51.0 53.1 0.0 0.0 25.2 21.1 19.3 15.9 6.2 5.1

Infotech Enterprises 159 240 Buy 17,728 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 12.2 9.2 - - 1.7 1.4

MindTree 519 625 Buy 20,758 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 33.7 11.0 21.7 10.0 2.9 2.3

Mphasis 582 750 Hold 122,085 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 11.4 10.4 9.5 8.0 3.7 2.8

NIIT 64 85 Buy 10,607 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 10.2 7.9 3.5 2.8 1.8 1.5

NIIT Technologies 219 300 Buy 12,919 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 8.0 8.2 5.9 5.4 1.9 1.6

Oracle Financial Services 2,291 2,500 Buy 192,147 123.3 143.6 33.1 16.5 39.4 41.2 33.4 34.6 19.4 18.4 19.2 17.0 0.0 0.0 18.6 15.9 15.7 13.4 3.6 2.9

Patni Computers 472 600 Buy 61,857 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 10.7 10.3 8.5 7.2 1.6 1.4

Persistent Systems 414 500 Buy 16,562 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 10.4 10.5 12.3 9.5 2.1 1.7

Polaris Software 164 275 Buy 16,287 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 8.0 7.3 6.7 5.5 1.6 1.3

Satyam Computer Services 87 135 Buy 102,175 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 11.3 8.2 7.5 5.2 2.3 1.8

TCS 1,065 1,100 Hold 2,083,951 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 24.7 21.4 19.4 16.0 8.4 6.4

Tech Mahindra 739 850 Hold 92,970 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 9.0 8.0 9.1 8.9 2.7 2.4

Wipro 429 475 Hold 1,051,152 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 19.6 17.4 15.5 12.9 4.6 3.9

Aggregate - - - 5,931,774 - - - - 23.6 24.3 18.2 18.2 20.8 17.6 15.9 13.0 5.1 4.2

LOGISTICS

Allcargo Global Logistics 166 200 Hold 21,659 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 11.7 10.3 6.8 6.0 1.5 1.3

Container Corp 1,319 1,500 Hold 171,448 65.5 77.1 9.3 17.8 29.1 31.1 23.0 24.4 19.2 18.4 19.2 18.4 - - 20.1 17.1 14.3 12.0 4.0 3.5

Gateway Distriparks 114 135 Buy 12,289 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 14.2 11.9 9.3 6.7 1.3 1.2

Aggregate - - - 205,396 - - - - 22.4 24.0 16.3 17.1 18.3 15.6 12.3 10.2 3.1 2.7


46

FDEPS (Rs)

FDEPS Growth (%)

EBITDA Margin (%)

PAT Margin (%)

ROE (%)

ROCE (%)


P/E (x)

EV/EBITDA (x)



OIL & GAS

BPCL 747 910 BUY 270,103 (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 - 19.5 30.3 10.5 2.4 2.3

Cairn India 331 285 SELL 628,716 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) 12.8 9.6 8.5 7.0 1.7 1.5

GAIL India 490 540 BUY 622,125 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 17.7 13.5 10.3 7.8 3.3 2.8

GSPL 117 125 HOLD 66,046 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 16.6 16.2 7.7 7.2 5.0 5.0

HPCL 455 660 BUY 153,906 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 9.0 7.4 7.8 7.0 1.2 1.1

IGL 322 330 HOLD 45,101 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 17.7 15.1 9.6 7.8 4.5 3.7

IOC 408 550 BUY 990,119 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 11.6 10.2 10.3 8.9 1.7 1.6

Oil India 1,421 1,450 SELL 341,590 120.3 119.1 10.8 (1.0) 52.8 51.3 35.8 35.5 19.7 17.2 29.8 26.1 (0.6) (0.7) 11.8 11.9 6.6 6.8 2.2 1.9

ONGC 1,318 1,510 BUY 2,818,393 118.0 113.6 29.7 (3.7) 46.1 47.2 22.5 22.7 22.9 19.3 34.9 32.4 3.8 3.8 11.2 11.6 5.1 5.2 2.4 2.1

Petronet LNG 120 165 BUY 90,338 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 15.7 12.3 8.8 7.4 3.1 2.7

Reliance Industries 1,080 1,210 HOLD 3,533,844 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 16.6 14.4 9.7 8.9 2.2 2.0

Aggregate - - - 9,560,280 - - - - 13.6 15.5 7.2 8.5 13.9 12.3 7.9 7.3 2.2 1.9

PHARMCEUTICALS

Biocon 422 550 Buy 84,470 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 23.0 20.8 16.1 14.3 4.8 4.1

Cadila Healthcare 753 770 Hold 154,155 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 24.4 19.5 18.4 15.1 9.5 7.2

Cipla 332 330 Sell 266,450 13.6 16.0 4.3 17.0 24.3 24.9 17.6 18.5 17.2 17.4 17.2 17.4 0.0 0.0 24.3 20.8 18.2 16.0 3.9 3.4

Dishman Pharmaceuticals 174 192 Hold 14,013 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 16.4 11.4 10.5 8.0 1.8 1.6

Dr Reddy's Labs 1,736 1,870 Buy 293,639 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 26.1 16.9 22.6 14.0 6.8 5.5

GlaxoSmithKline Pharmaceuticals 2,255 2,160 Hold 190,963 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 32.3 27.5 21.7 18.4 10.7 9.2

Glenmark Pharmaceuticals 362 390 Buy 97,673 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 20.1 15.5 13.7 11.4 4.1 3.4

Jubilant Organosys 314 460 Buy 49,825 29.2 34.6 46.3 18.8 20.1 20.2 11.5 12.2 14.8 16.0 11.6 13.0 0.5 0.4 10.8 9.1 9.3 8.3 1.9 1.5

Lupin 478 510 Buy 212,923 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 24.4 20.8 19.7 16.8 10.5 7.7

Piramal Healthcare 466 480 Sell 97,400 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 16.4 13.5 12.2 10.7 4.6 3.6

Sun Pharmaceutical Industries 2,328 2,210 Hold 479,513 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 23.8 21.3 21.1 18.6 6.4 5.2

Aggregate - - - 1,941,022 - - - - 24.0 24.9 17.8 18.7 23.1 18.9 18.0 14.8 5.7 4.7

POWER

Adani Power 137 130 Sell 299,646 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 20.8 7.0 20.7 6.0 4.1 2.8

Lanco Infratech 64 85 Buy 154,340 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 17.6 23.3 8.7 6.7 3.7 3.2

NTPC 192 200 Sell 1,586,840 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 15.5 14.4 10.6 9.4 2.3 2.1

Reliance Power 191 140 Sell 457,190 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 37.4 41.0 33.0 29.6 2.3 2.2

Tata Power 1,398 1,250 Hold 331,696 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 18.5 13.8 7.4 5.6 2.3 2.3

Jindal Steel & Power 711 670 Hold 663,660 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 12.6 10.4 8.4 7.2 4.3 3.1

Aggregate - - - 2,498,016 - - - - 35.2 36.8 20.4 20.2 18.0 14.5 12.3 9.4 2.5 2.3


47

FDEPS (Rs)

FDEPS Growth (%)

EBITDA Margin (%)

PAT Margin (%)

ROE (%)

ROCE (%)


P/E (x)

EV/EBITDA (x)



REAL ESTATE

Anant Raj Industries 139 170 Buy 40,945 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 17.7 14.8 15.2 11.9 1.1 1.0

DLF 346 335 Hold 588,088 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 23.0 20.2 15.7 13.2 2.3 2.1

Godrej Properties 730 520 Hold 51,015 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 32.5 12.7 31.2 11.7 5.4 3.9

HDIL 254 270 Buy 105,536 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 14.2 6.6 13.9 6.5 1.1 0.9

Indiabulls Real Estate 206 230 Buy 82,869 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 20.1 19.7 12.8 11.3 0.7 0.7

Orbit Corp 118 150 Hold 12,788 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 6.9 5.7 9.8 8.6 1.3 1.2

Peninsula Land 63 75 Sell 17,659 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 7.7 8.8 6.5 7.4 1.2 1.1

Phoenix Mills 232 250 Buy 33,633 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 44.9 12.7 23.4 7.9 2.1 1.8

Puravankara Projects 120 130 Buy 25,536 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 16.9 16.6 18.3 20.4 1.6 1.5

Unitech 86 100 Buy 217,352 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 23.5 16.6 21.2 15.9 2.4 2.0

Aggregate - - - 1,175,421 - - - - 43.3 43.7 26.9 27.3 21.0 15.3 16.2 11.9 1.8 1.6

SUGAR

Bajaj Hindusthan 137 107 Hold 26,283 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 8.7 25.7 6.2 9.8 1.0 0.9

Balrampur Chini 94 77 Hold 24,301 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 9.7 8.5 7.3 7.5 1.9 1.7

Dhampur Sugar 80 80 Hold 3,800 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 2.0 4.4 2.5 4.2 0.5 0.5

Aggregate 54,385 - - - - 20.8 17.5 9.3 6.9 7.1 11.3 5.6 7.8 1.1 1.0

TELECOM

Bharti Airtel 317 400 Buy 1,202,868 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 17.4 13.5 8.2 6.4 2.5 2.1

Idea Cellular 69 95 Buy 227,287 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 24.1 20.1 7.3 5.5 2.0 1.7

MTNL 65 50 Sell 40,950 (14.8) (14.4) NM NM - - - - (10.3) (11.1) (8.9) (9.5) 0.3 0.3 - - - - 0.4 0.5

Onmobile Global 318 450 Buy 18,615 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 26.3 17.5 13.2 8.7 2.3 2.0

Reliance Communications 176 190 Buy 363,475 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 24.0 15.9 8.2 6.7 0.9 0.9

Tata Communications 308 400 Buy 87,880 (26.1) (21.6) NM NM 11.0 12.5 - - (17.9) (17.6) 3.3 3.2 2.1 2.6 - - 12.2 9.6 2.3 2.8

Spice Mobility 145 130 Buy 10,793 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 11.0 6.0 6.8 4.9 4.6 2.6

Aggregate - - - 1,951,868 - - - - 29.0 31.1 6.8 8.1 24.6 17.4 8.4 6.6 1.7 1.6

OTHERS

Sintex Industries 228 490 Buy 62,337 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 7.56 6.10 9.34 7.55 2.60 2.16


48

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 1,522 1,800 Buy 623,219 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 19.3 15.0 3.4 2.8

Bank of Baroda 1,007 1,200 Buy 366,744 103.8 125.5 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 9.7 8.0 2.2 1.8

Bank of India 503 480 Buy 264,058 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 9.5 7.9 1.7 1.5

Canara Bank 804 650 Hold 329,681 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 9.0 7.9 2.1 1.7

Corporation Bank 773 775 Hold 110,879 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 7.8 6.7 1.6 1.3

HDFC Bank 2,353 2,500 Buy 1,090,015 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 28.1 21.7 4.4 3.8

ICICI Bank 1,237 1,060 Hold 1,420,451 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 26.9 21.0 2.6 2.4

Oriental Bank of Commerce 517 580 Buy 129,454 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 8.4 6.8 1.5 1.3

Punjab National Bank 1,349 1,550 Buy 425,470 146.9 183.7 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 9.2 7.3 2.1 1.7

State Bank of India 3,176 3,700 Buy 2,016,722 187.4 234.6 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 16.9 13.5 2.7 2.3

Union Bank of India 391 437 Buy 197,451 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 9.1 6.9 1.9 1.5

Yes Bank 356 350 Hold 123,291 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 17.9 14.1 3.3 2.8

SPECIALTY FINANCE

HDFC 712 750 HOLD 1,040,582 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 30.3 25.4 6.1 5.4

LIC Housing Finance 1,388 1,575 BUY 131,781 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 14.4 12.0 3.2 2.6

Dewan Housing Finance 313 370 BUY 32,558 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 14.4 10.4 2.2 1.9

Aggregate - - - 8,302,355 - - - - 16.9 13.6 2.8 2.4

Source: RCML Research * Not Rated


49

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

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

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

Coverage Profile

By recommendation By market cap (US$)

30

11

59

0

20

40

60

Buy Hold Sell

(%)

70

28

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.

top research picks other research - the smart...

Documents