>V-Guard Industries

Comprehensive product portfolio and new products to drive growth
V-Guard Industries (VGI) has a wide array of products which cater the requirements of consumer durable industry (stabilizers, heaters, fans and UPS), agriculture (pumps) and construction (cables) sectors of the country. The Indian household appliance market has grown at CAGR of 11% between FY04-FY12. We expect the growth pattern to continue till FY14E on the back of a)power deficiency in India, b) strong GDP growth in India, c) growth in middle class population and rising urbansisation, d) rising income levels and e) Growth of consumer electronics led by low penetration levels. Give the fact that VGI's product portfolio caters to the mass market and meets the basic requirements, demand for these products is expected to remain strong.


The company has strategically introduced new products over the last two decades. This has
enabled the company to register a 37% CAGR in revenues from FY07-12. VGI also added new
products like a) switch gear and b) induction cooker in FY12 which are expected to gain traction in the current fiscal. As VGI has a good market share in the house wiring segment, domestic switch gears can be conveniently marketed and has been launched in the southern markets. Also with a view to offer more products in the home segment, Induction Cooker were launched with different models.


Growth aided by increasing geographical presence
VGI earlier focused mainly in the Southern parts of India where it has built a strong brand name
as well as distribution network. 97% of its sales (FY07) came from southern market concentrated in 4 Southern States of Andhra Pradesh, Karnataka, Kerala and Tamil Nadu.
However, over the past few years it has expanded its geographical area of operations pan-India.


Over the years, the company has made a strong distribution channel in the southern region. We
believe the traditional products like stabilizers, water heaters, and pump has reached a near
maturity level in the south. Hence, the company has rightly ventured into the non south market.
We hence expect a strong brand equity and extensive distribution network to help VGI roll out
its consumer durables products and gain strong foothold going forward in Rest of India (ROI)
market and expect the market share of ROI to rise to 40% by FY14E from 22% in FY12.


Mix of manufacturing and outsourcing to be beneficial in the long run
VGI adopts a manufacturing as well as outsourcing model for its product portfolio. In FY12, it
operated with ~41% of its products being manufactured while the remaining 59% being
outsourced. The company has tie-ups with various SSI/self-help group units in the southern
states to manufacture products to meet its needs. Depending on the purchase order, which is
normally given one month in advance, the products are manufactured in these units. This
enables to keep control over its cost and meet the increased demand without undertaking
significant capital expenditure. While VGI assists these units to purchase the raw material and
places its quality assurance team at the units.


Extensive investment in distribution network
VGI has created a wide distribution network with over 9,500 retailers, 208 distributors and 353
service centers spread across all states in India except North East and Jammu & Kashmir. In India, the dealer plays a vital role in the sales pitch of consumer products which is highly fragmented by nature. Of the total 28 branches owned by VGI, 18 are located in ROI which is expected to aid growth with greater brand visibility in the coming years.


Valuation
At CMP of `272, the stock is trading at a PE of 11.6x in FY13E and 8.4x in FY14E. We are
optimistic on VGI’s growth story and believe it can replicate its success story of southern market in other parts of India. We recommend a BUY rating on the stock with a target price of `329 per share (PE of 10.2x in FY14E), an upside of 21% for a long term view.

RISH TRADER

>Granules India Ltd.

Trebling of Finished dosage capacity from 6 bn to 18 bn doses will boost top line
Granules has added two new lines at the existing Gagillapur factory which will treble its finished dosage capacity from 6 bn doses to 18 bn doses in June’2012. Company expects production from Q2FY13 which will increase top line substantially going forward. Finished dosage division contributed `90 mn in FY09 to the company’s top line. This share has increased from 3.5% in FY09 to 25% in FY11 and now it stands at 33% (`185 mn) in FY12. With the newer capacities coming on stream we expect the share from this division to increase to more than 50% of the total revenues in next couple of years. Company has also received two abbreviated new drug applications (ANDA) approval which will help them to participate in the US formulation market.


Entered CRAMs business by forming JV with Ajinomoto OmniChem
Granules India entered the CRAMs business by forming a 50:50 JV with Ajinomoto OmniChem in July’2011.Company also set up a greenfield facility in the Pharmacity SEZ, Vishakhapatnam in November 2011 for this new initiative and commercial production commenced from Q4FY12. This will help company to enter new therapeutic sectors like cardiovascular, central nervous system and oncology. This new entity will boost company’s profitability in the coming years by delivering value through unique contract manufacturing platform by leveraging granules technological capabilities and efficient processes and OmniChem’s extensive product portfolio and existing customers.


Operational Excellence projects has enabled company to increase API capacities
Granules has completed operational excellence projects in last one year which has enabled them to increase the API capacities. Through this company has increased its Metformin API capacity by 35% and Guaifenesin API capacity by 55%. API division contributes 32% to its total revenues in FY12. These expanded capacities will boost company’s profitability going forward. Company has grown two times to that of the industry growth in last 5 years Granules India has grown its top line at a CAGR of 28% which is two times the industry growth rate of 14% in last five years. In FY12, company’s top line grew 38% to `6.53 bn. With new capacities coming on stream and a favorable product mix, top line will further accelerate in the years to come.


Valuations
Granules India is trading at a PE multiple of 7.5x its FY12 EPS of `14.87. On price to Book value, company is trading at 0.9x its FY12 book value of `122 per share. Company looks fairly attractive at this level due to 1. Strong growth in top line due to capacity expansion in various divisions, 2. Entry into CRAMs business will help company to enter therapeutic sectors like cardiovascular, central nervous system and oncology. We recommend a BUY rating on the stock with a target price of `133 which is 9x it FY12 EPS. The key risks for the company are 1.significantly lower capacity utilization in each of the divisions will impact company’s profitability and 2. Company has grown more than double the industry growth rate in last five years, any slowdown in the growth rate will re-rate the valuation multiple.


RISH TRADER

>Venky's (India) Ltd.: Q4FY12 RESULTS

First signs of turnaround visible



■ Q4FY12 –Margins witness stark sequential improvement
• Venky’s India Ltd. (Venky’s) saw its net sales rise by 18.9% Y-o-Y to `2.67 bn led by a 31% rise in the poultry segment and 21% rise in the Animal Health Product (AHP) segment.


• The raw material cost which had rose for the seventh consecutive quarter on a Y-o-Y basis to 69% of sales. However, on a sequential basis, the raw material cost declined by 20 bps. The other expenditure declined by 30bps and 380bps on a Y-o-Y and Q-o-Q basis respectively.


• EBITDA was `218 mn for Q4FY12 against `254 mn for Q4FY11. The EBITDA margin declined to 8.3% in Q4FY12 from 11.3% in Q4FY11 but bounced back strongly from the 3.5% margin seen in Q3FY12.


• The other income component stood at `101 mn, above our estimates, resulting in the profit after tax rising by 16.8% Y-o-Y and over 500% Q-o-Q to `181 mn.


Result Highlights
■ Segmental revenues in-line with our estimates
The poultry and poultry related segment grew by 31.4% Y-o-Y to `1.99 bn and contributed 69% to total revenues as compared to 62.7% in Q4FY11. Similarly the AHP division witnessed a 21.1% Y-o-Y growth in revenues to `244 mn and contributed 8.5% to the revenues in Q4FY12 as compared to 8.3% in Q4FY11. The oil seed division on the other hand de-grew by 8% Y-o-Y to `644 mn and contributed 22.4% to the total revenues.


■ Segmental margins decline annually but bounce back strongly on Q-o-Q basis
The higher raw material cost pressures have been visible across segments over the last four quarters. The EBIT margin of the poultry and poultry related segment was 10.4% in Q4FY12 much lower than 13.6% in Q4FY11 but significantly higher from the 4.8% margin reported in Q3FY12. Similarly, the oilseed segment also clocked EBIT margins 10.2% in Q4FY12 from 6.1% in Q3FY12. The strong bounce back in the EBIT margin re-iterrates the turnaround for the company.


■ Valuation & viewpoint
Given the turnaround in realisations after the last few slack quarters and the strong macro conditions; we expect the company to report a 21.6% CAGR in revenues over FY12-FY14E. We expect the lower raw material cost to help margins to expand and reflect in the PAT with a CAGR of 57.3% over FY12-FY14E in PAT.


Venky’s is currently trading at 5.4x FY13E EPS and 3.6x FY14E EPS, a significant discount to its historical one-year forward P/E band. We have valued the company based on the average historical P/E band (5.6x) over the last four years to capture the cyclicality of the industry and its profits. With an assumption of the worst behind the company as far as the raw material prices are concerned, we value the company based on its next two years average EPS of `90 per share. Consequently, we reiterate our BUY rating on the stock with a target price of `515 per share.


RISH TRADER

>RALLIS INDIA LIMITED: Rallis with the acquisition of seeds based research company, Metahelix (and its subsidiary, Dhaanya Seeds Ltd.)

■ New Dahej facility to spruce up international sales; reduce domestic market dependence
We expect Rallis India Ltd. (Rallis) international sales to get a boost due to commencement of operations at the company’s plant at Dahej catering mainly to Contract Research and Manufacturing Services (CRAMS). This would also reduce dependence of the company on domestic sales. We expect this plant to generate cumulative revenues of `5.5 bn over the next three years. Owing to the boost from this facility, we expect Rallis to register 22% CAGR growth in the pesticides business over FY12E – FY14E. However, PAT margin is expected to go down 110 bps to 10.7% in FY12E due to higher interest and depreciation cost of the plant. We expect Dahej plant to reach full capacity by mid FY13.


■ Metahelix acquisition to help company grab a bigger pie in the lucrative seeds market
Metahelix Life Sciences Ltd. (Metahelix), the research led seeds company recently acquired by Rallis is expected to clock revenues of `930 mn in FY12E. Management expects revenue from Metahelix to ramp up to `10 bn over the next five years. Currently, Metahelix is a loss making entity; however, we expect it to register a 35% CAGR growth in revenues over FY12E-FY14E. Metahelix produces Bt Cotton seeds in India which have a market size of `40 bn. Rallis expects Metahelix to occupy an 8%-10% market share in the Bt Cotton seeds market in India over the next three years, thereby leading to cumulative revenues of close to `4 bn. Seeds are a more profitable business than Rallis’ core business with margins close to 20%.


■ Consistent product launches and continued emphasis on R&D
Rallis has been consistently launching new products every year, maintaining a healthy rate of three launches per year. From FY06 to FY11, Rallis launched 19 products in all. In FY12, it has launched 13 products till date (9MFY12). The Innovation Turnover Index (revenues from products newly introduced in last four years to total turnover) has consistently been around 30% for Rallis. Rallis has one of the highest spends on R&D (almost 1% of sales) among its listed peers. We believe the rate of new product launches and proportion of R&D to further improve for Rallis with the acquisition of seeds based research company, Metahelix (and its subsidiary, Dhaanya Seeds Ltd.).


■ Numerous initiatives and customer engagement programs
Rallis has been continuously engaging with its customers via numerous programs such as Rallis Kisan Kutumb (farmer contact programme to understand farmer needs), More Pulses (increase yield and production of pulses), Rallis Poised (programme to drive sustained profitable growth), etc. The More Pulses (MoPu) initiative has caused yield to improve by up to 40% to 500 kg/acre from 300 kg/acre in Tamil Nadu which increased farmer income by `5,000 per acre. The Rallis Poised initiative has enabled company to deliver a CAGR of 15% in revenues and 26% in PAT over FY07 – FY11. Due to various customer engagement programmes, Rallis’ products have a high brand recall in the Indian crop protection market with seven of its products in the top 12 products by customer recall.


■ Valuation
At CMP of `123, Rallis is trading at 17x its FY12E EPS and 12x its FY13E EPS, which is close to its average historical one year forward P/E. As compared to its listed domestic peers, Rallis commands a rich premium of close to 30%. We expect Rallis to continue to command premium due to a) its consistent product launches, b) ramp up in capacity at Dahej facility, and c) improvement in performance of Metahelix. We initiate coverage on the stock with a BUY rating and a target price of `153 per share based on a P/E of 15x FY13E EPS of `10.20, implying a potential upside of 25%.
RISH TRADER

>BRITANNIA INDUSTRIES LIMITED: Q3FY12 – Sales growth driven by price and mix growth, Volume growth in single digit at 6.5%

• Britannia reported net sales at Rs12.4 bn, up 15.4% Y-o-Y led by mix volume and price/mix
growth.
• Gross margin expanded by 304bps Y-o-Y to 36.7%.
• EBIDTA stood at Rs833 mn, 43% up Y-o-Y. EBITDA margins expanded 130bps Y-o-Y to 6.7%.
• Other expenditure and ad spends increased by 25% Y-o-Y (up 164bps) and 14% Y-o-Y (up 12bps)
in Q3FY12.
• PAT grew 45% Y-o-Y to Rs541 mn. PAT margins expanded 88bps Y-o-Y to 4.3%.


Result Highlights
■ Performance boosted by international business, while domestic business grew by strong 20%
Britannia reported net sales at Rs12.4 bn, up 15.4% Y-o-Y as against 18% Y-o-Y growth in Q2FY12. Volume growth contributed 6.5% (10% in Q2FY12) of Y-o-Y sales growth, while rest was due to price increases and improved product mix. The new product launches on health platform like NutriChoice Multigrain Thins and NutriChoice Multigrain Roasty has helped to push up the momentum.


■ Margins expansion led by price increases and lower expenses
Gross margin expanded by 304bps Y-o-Y to 36.7% helped by price increases. Among key raw
materials, milk prices continue to remain high; wheat and sugar prices witnessed stable prices.
While ad spends increased 17% on Y-o-Y basis, it decreased 13% on Q-o-Q basis as a result of high base. Other expenditure increased by 25.5% (up 164bps) Y-o-Y and staff cost increased 14% Y-o-Y (Q-o-Q 30% down). As a result EBIDTA stood at Rs 833mn, 43% up Y-o-Y. EBITDA margins expanded 130bps Y-o-Y to 6.7%. Further PAT grew 45% Y-o-Y to Rs541 mn. PAT margins expanded 88bps Y-o-Y to 4.3%.


Valuation & Viewpoint
Current quarter witnessed single digit volume growth. Further competition from national players
like Parle and ITC along with recently entered United Biscuits, Unibic and Kraft Foods has further intensified. We have a cautious view on the company. The stock is trading at 25.6x multiple of FY13 consensus EPS of Rs. 19.3.

RISH TRADER

>EICHER MOTORS LIMITED: Q4CY11 – Another Quarter of stellar Performance; CY11 consolidated PAT up 63% to `3.1 bn

• Eicher Motors Ltd (EML’s ) consolidated revenues increased 26.8% Y-o-Y to `15.7 bn in Q4CY11 against `12.4 bn in Q4CY10 due to 25% Y-o-Y volume growth in the VE Commercial Vehicle (VECV) business and 28% Y-o-Y volume growth in the Royal Enfield business.


• EBITDA grew 27.7% Y-o-Y to `1.5 bn in Q4CY11 against `1.2 bn in Q4CY10 due to price increase and better product mix in both the businesses.


• PAT grew 55.7% Y-o-Y to `854 mn in Q4CY11 against `549 mn in Q4CY10. This was led by 80% Yo- Y increase in other income to `429 mn and lower tax rate which was at 22.6% in the current quarter as compared to 27.3% in Q4CY10.


Result Highlights
■ Best ever year(CY11) in terms of Revenues, EBITDA as well as PAT on consolidated basis
EML posted its highest yearly revenues, EBITDA and PAT in CY11. Consolidated revenues increased 29.3% Y-o-Y to `57.1 bn in CY11 against `44.2 bn in CY10 due to strong volume growth in both VECV as well as Royal Enfield businesses. For CY11 EBITDA grew 55.7% Y-o-Y to `5.9 bn against `3.8 bn in last year. EBITDA margins stood at robust 10.4% for CY11. PAT grew 63.4% Y-o-Y to `3.1 bn in CY11 against `1.9 bn in CY10. EPS stood at `114.0 in CY11 against `70.3 in CY10.


■ Stand alone business posted robust performance on back of strong Royal Enfield demand
For CY11 stand alone revenues grew 51.6% Y-o-Y to `6.7 bn against `4.4 bn in CY10 due to 33.9% Yo-Y growth in volumes to 72,835 units and 13.2% Y-o-Y increase in realizations to `92,119. EBITDA margins stood at 12.1% for CY11 against 10.3% in CY10. PAT grew 65.3% Y-o-Y to `1.2 bn in CY11 against `754 mn in CY10.


■ VECV’s Heavy duty segment grew over 61% in CY11 against industry growth of 12%
VECV posted strong volume growth of 61.4% Y-o-Y in the Heavy Duty segment against the industry growth of 12%. Market share has improved 110bps to 3.1% in CY11 against 2.0% in CY10. For the month of December 2011 the market share stood at 4.8% in the heavy duty segment.


Valuation & Viewpoint
Eicher Motors Ltd at CMP of `1,770 is trading at a P/E multiple of 12.2x its CY13 consensus earnings of `145. With new Royal Enfield plant slated to commence production from Q1CY13, robust growth from the heavy duty segment and the new engine project coming on stream in CY13, company looks fairly priced at this juncture.




RISH TRADER

>NATIONAL ALUMINIUM COMPANY LIMITED: Q3FY12 – Net sales declined owing to dismal performance from Aluminium division

• NALCO’s net sales for Q3FY12 showed a marginal growth of 0.4% on Y-o-Y basis, while on a sequential basis net sales de-grew by 10.2%.
• EBIDTA margin declined by 2,258bps, this was mainly on account of decline in realisation of Aluminium division and simultaneous increase in total expenditure.
• As a result of dismal performance from Aluminium division PAT for Q3FY12 declined by 80% on Y-o-Y basis.


Result Highlights


Positive Y-o-Y growth from Chemical and Electricity division, could not offset de-growth from Aluminium division
• The Y-o-Y decline in top-line was primarily on account of de-growth in revenue from Aluminium division. Aluminium division which accounted for 51.2% of the total revenue in Q3FY12 de-grew by 2.3% Y-o-Y. Owing to higher input costs and low LME prices 120 pots out of 960 pots were shut as a result of which the production of Aluminium metal was lower by 16.2% Y-o-Y and sales volume were lower by 4.9% Y-o-Y.
• Where as the other two divisions, Chemical and Electricity which accounted for the balance 48.8% of total revenue grew by 24.9% and 86.7% respectively on Y-o-Y basis.
• The EBIT for the Aluminium continued to report loss for both Q2FY12 and Q3FY12.


Valuation & Viewpoint
At current market price the stock is trading at 10.14x its EV/EBIDTA and 18.26x its P/E (trailing 12 months). The average P/E of the sector stands at 12.84x. Given the continued decline in revenue as well as continued loss from an Aluminium division, we believe that at current price the valuations are stretched and could result in the stock correcting in the future.

Concall highlights
• During the quarter company had shut 120 pots out of the total 960 pots; however company
expects to resume operation depending on the cost dynamics. Given the lower Y-o-Y LME
Aluminium prices and expected increase in use of imported coal on account of quality
issues relating to domestic coal, we believe company might not restart its 120 pots which
were shut in Q3FY12 at least in Q4FY12.
• NACLO has completed its 4th stream of Alumina production during Q3FY12 and company
expects to operate new unit at 80% utilization levels in Q4FY12 adding around 1lac MT to
sales volume of Alumina in Q4FY12.
• Q3FY12 results included an expense of `380mn pertaining to employee expenses which
were one time in nature.
• As a result of commissioning of its 4th stream of Alumina and also with employee expense
expected to decline by Rs 380mn sequentially in Q4FY12 as Q3FY12 included employee
expense which was one time in nature. Hence, we belive this would have a positive impact
on company’s margins by about 260bps sequentially.

>ZYDUS WELLNESS LIMITED: Q3FY12 – Sales decline continues, lower expenses expands margins

• Zydus Wellness reported net sales at `510 mn, down 43.8% Y-o-Y resulting from decline in
Everyouth brand due to intense competition.
• EBIDTA declined by 29.9% Y-o-Y at `199 mn. EBITDA margins expanded 808bps Y-o-Y to 39%.
• Ad Spends were `2 mn as against `6 mn in Q3FY11 and `132 mn in Q2FY12.
• Other expenditure and Staff cost declined by 52.6% (down 319bps) Y-o-Y and 29.9% (up 90bps) Y-o-Y respectively in Q3FY12.
• PAT decreased by 4.7% Y-o-Y to `186 mn as against `196 mn in Q3FY11. PAT margins expanded by 15% points Y-o-Y to 36.5% in Q3FY12 as against 12.5% in Q3FY11 resulting from lower expenditure.


Result Highlights


■ Sales decline continues
Sales growth reported decline of 44% Y-o-Y on the back of de-growth in Everyouth (face-washes and scrubs) brand. Sugarfree and Nutralite have recorded single digit growth during the quarter. High competitive intensity in the category has resulted in de-growth in Everyouth brand. Management is confident about double digit growth as company resumes its brand campaign again in Q4FY12.


■ Margins expand as expenses declines
EBIDTA declined by 29.9% Y-o-Y at `199 mn. EBITDA margins expanded 808bps Y-o-Y to 39%. The company has withdrawn its brand campaign / communication during the quarter due to very high competition resulting very low return on ad spends. Ad Spends were `2 mn as against `6 mn in Q3FY11 and `132 mn in Q2FY12. Other expenditure and Staff cost declined by 52.6 % (down 319bps) Y-o-Y and 29.9% (up 90bps) Y-o-Y respectively in Q3FY12. This resulted in EBITDA margin expansion of 808bps to 39% in Q3FY12.


■ High other income boosted PAT growth
PAT decreased by 4.7% Y-o-Y to `186 mn as against `196 mn in Q3FY11. PAT margins expanded by 15% points Y-o-Y to 36.5% in Q3FY12 as against 12.5% in Q3FY11. Low tax rate (13.3% vs 33.2% in Q3FY11) has helped to push up the PAT margins to 36.5%.


■ Valuation & Viewpoint
Though Zydus wellness has strong brands like Everyouth, Sugarfree and Nutralite in niche segments on health and wellness platform. The recent decline in earnings is concern even though management is confident of double digit growth rate with reintroduction of brand campaign in Q4FY12.


■ Quarterly Result Snapshot

RISH TRADER

>Ashoka Buildcon Limited: IPO NOTE

Ashoka Buildcon Ltd (ABL) is a Nashik based EPC contractor having pan India presence. Company owns 23 projects on BOT (Built Operate Transfer) basis covering 1100 kms and 6 foot
over bridges which are operational. Other business vertical of ABL would include sale of ready mix concrete for road construction and civil works. ABL can also provide toll collection services to third party BOT projects. ABL is also capable of providing EPC solutions for power sub stations.

In last 4 years ABL's EPC revenues have increased by a CAGR of 48%, Toll revenues have surged by 47%. Revenues from ready mix concrete business grew by CAGR of 33% in last 4 years. EBITDA profits of ABL saw a rise of 48% while profits after taxes witnessed growth of 130% in previous 4 financial years.

Investment Rationale:
Proven track record of order execution and O&M services across road industry ABL has a proven track record of constructing 2390 kms of road projects across the country. ABL is also capable of providing operational & maintenance (O&M) services as well as toll collection services to the existing toll projects for its customers.

Strong base of operational BOT projects
ABL currently has 23 projects on BOT basis, off which 11 road projects spanning across 1100 kms are operational. ABL also has 6 foot over bridges as a part of its BOT projects located in
Mumbai. BOT projects are valued at Rs.6.9 bn in which ABL has 93% stake worth Rs.6.5 bn.

To read the full report: ASHOKA BUILDICON

>GODREJ PROPERTIES LIMITED (GEPL)

COMPANY OVERVIEW: GPL is one of the leading real estate development companies in India (Source: Construction World – “India'sTop 10 Builders”) and are based in Mumbai, Maharashtra. GPL currently have real estate development projects in 10 cities in India, which are at various stages of development. Currently, GPL business focuses on residential, commercial and township developments. GPL is a fully integrated real estate development company involved in all activities associated with the development of residential and commercial real estate. GPL undertakes projects through inhouse team of professionals and by partnering with companies
with domestic and international operations

Rationale
■ Established brand name
GPL a part of the Godrej group of companies,a leading conglomerates in India. We believe the “Godrej” brand is instantly recognisable amongst the populace in India due to its long presence in the Indian market, the diversified businesses in which the Godrej group operates and the trust it has developed over 112 years of operations. The Godrej group was awarded the “Corporate Citizen of the Year” award by the Economic Times in 2003 and the Godrej brand was selected as the fourth best brand in India in The Week magazine's 'Mood of the Nation @ 60' survey published on August 19, 2007.

■ Land Reserves in strategic locations
As of October 15, 2009, GPL has Land Reserves comprising 391.04 acres aggregating approximately 82.74 million sq. ft. of Developable Area and 50.21 million sq. ft. of Saleable Area,
located in or near prominent and growing cities across India, such as Mumbai, Pune, Bengaluru and Ahmedabad. These include land parcels which company own directly, and land parcels over
which company have development rights through agreements or memoranda of understanding.

■ Business development model
Along with selective acquisition of land parcels in strategic locations, GPL entered into development agreements with land owners to acquire development rights to their land in exchange for a pre-determined portion of revenues, profits or developable area generated from the projects. GPL believe that the Godrej brand name and the reputation associated with it contribute in attracting potential joint development partners as well as existing partners. This business model enables to undertake more projects without having to invest large amounts of money towards purchasing land. Company thereby able to limit our risk through project diversification while maintaining significant management control over projects.

To read the full report: GPL

>CAMLIN FINE CHEMICALS LTD (GEPL)

OVERVIEW: Food shelf life is a primary concern for both food manufacturers and marketers. A food product’s ability to uphold standards of safety and quality for prolonged periods directly affects sales and customer satisfaction. Antioxidants are designed to reduce the development of oxidative rancidity which limits the shelf life of oils, margarine, snacks, dressings, meat products and other products. Apart from extending shelf life, antioxidants also ensure a consistent quality from batch to batch providing a minimum of variation in taste, odour, color and texture of the product. Consumer’s interest in and awareness of the health properties of antioxidants has been rising in recent years. Not only has this increased global sales of antioxidants (whether used as a food preservative or to provide a health enhancing or functional benefit), but demand for foods recognized as being naturally rich in antioxidants are also growing. One company which intensively understands the complex processes and interactions resulting from lipid oxidation in foodstuffs is Mumbai based Camlin Fine Chemicals Ltd (CFC) as it is engaged in manufacture of food antioxidants. Apart from manufacturing food antioxidants this company is also involved in manufacture of Industrial Antiocidram (used in industries like paints, polymers, resins and plastics), artificial sweetener (Sucralose), bio diesel additives, natural shelf life enhancers (used for fruits, flowers and vegetables).

INVESTMENT RATIONALE: In order to give an idea of the company’s plans going forward in the food antioxidants segment it shall be prudent to quote what the management has said in the annual report - “This business unit is the biggest contributor to the company in terms of volume and growth and the company is also the world’s largest manufacturer of Food grade antioxidants, TBHQ and BHA with market share of about 35% world wide and 70% in India. The company has laid out an aggressive plan for increasing world wide market share above 50% by making an entry into growing food processing markets like Asia, Middle East and South America”. Under the industrial antioocidarm, CFC has plans to launch three products which have already gone through trial runs and technology transfer at plant levels. Seeing the huge market potential for these products the company has already created adequate capacity for these products. The artificial sweetener business of the company also has a bright future because of the growing health awareness. Sucralose, the new age sweetener has begun business in South America, Europe, India and Central America. CFC has filed a process patent for this product.

The company is also involved in manufacture of products under bio diesel additives segment which enables stabilizing of the fuel from oxidation. The world wide demands for these products are in excess of 70 million metric tones. The natural products preservation has been the focus worldwide. CFC has also ventured into this segment and has developed products, though under initial trials. This product shall help in maintaining color, freshness, aroma and prevents spoilage when in transportation and storage. The company expects to file patents for this and many more new products also. Through its subsidiary the company is also engaged in Nutraceuticals like gluosamine and its salts which are used as a supplement in bone management in conditions like osteoarthritis. The company has in the last three years grown at an average growth of 23% and this was primarily due to enhancing its product basket in the food antioxidants product range. One can expect this growth to be maintained in the near future as CFC has ambitious products in the pipeline to be launched soon.

INVESTMENT CONCERNS: Delay in product development could affect future growth and Competition from China could be a major cause of concern.

VALUATION: At the current market price of Rs.65 CFC’s projected FY 10E EPS of Rs. 9.1 is
discounted 7x. Long term investors can add this to their portfolio.

To read the full report: CAMLIN FINE CHEMICALS

>Shipping Review for month ended September 2009 (GEPL)

“Ray of light seen in the dark tunnel; how far to travel remain a question “

■ Baltic Dry Index (BDI) decreased by 8% on month-on-month (m-o-m) basis as in September 2009
The negative momentum continued with the Baltic Dry Index, a measure of shipping costs for commodities, on signs of increase in tonnage supply, as many new buildings are hitting the water (while less dry bulk carriers are being sold for demolition). At the same time, China's appetite for commodities like iron ore, seems to be fading away at the moment, as steel prices have been steadily plunging in China, which in turn causes many steel companies to cut down their production. According to Fearnley Fond ASA, net growth of the dry-bulk fleet has quickened to between 8% and 9% in the past couple of months, compared with about 3% in the first quarter.

■ Outlook seems to be grim for capsize over next couple of years
The BCI decreased over 30% month on month, at 2,748 points, while the BHI and BSI increased by 17% and 13% to 974 and 1,740 respectively. According to N. Cotzias Shipping, the Capesize market today (end of September 2009) consists of 825 ships of a total of 149 million tonnes carrying capacity, out of that just 16 capes of 2.8 million tonnes dwt have been scrapped. At the same time, the projected contracted and already under construction vessels that will enter the market until 2016 are 736 units of a total 144 million dwt. Out of these new buildings 429 units, or 80 million dwt are to enter the market by the end of 2010. Until today there are 25 new buildings capes cancelled of which 9 were to be delivered in 2009 and 12 in 2010.This is a mere 5% of the total of new ship orders. Based on this assumption, the Capesize market is headon to be over-capacitated by 90-95% if all current trends prevail.

■ Tanker day rates remains sluggish, however signs of improvement visible
The tanker segment continued to decline in the month of September 2009, as crude imports have remained low for much of the month whilst demand for motor gasoline in US have just now starting to show signs of recovery. It is important to note that VLCC and Suezmax cargoes bound for the delivery in the United States this month (September 2009) were higher than those delivered in August 2009 as US crude inventories simultaneously continue to decline. Moreover, crude in storage at sea presently stands at around 36 million barrels - a drop of 64% from earlier highs around 100 million barrels during the April-June period. These should be taken as a positive signs that the disparity between oil supply and demand is starting to improve.

To see full report: SHIPPING SECTOR

>ECE INDUTRIES LIMITED (GEPL)

OVERVIEW

The Indian Transformer Industry – presently valued at around Rs 60 Billion, has been in the forefront, not only in terms of cost-effectiveness and technology, but also in terms of quality and design. It has grown to become a leading manufacturer of all types of transformers – distribution, power and other special types used for welding, traction, furnace and other applications. Owing to its ability of keeping pace with new developments, India exports almost 10-15% of its overall transformer production. About 60-70% of the production is absorbed by SEBs (State Electricity Boards) and the balance is bought by private sector companies. ECE Industries Ltd is a North based company engaged in manufacture of power transformers. The company is also engaged in manufacturing of switch gears and Elevators under technical collaboration with companies like Toshiba and Mitsubishi. It also has a Projects Division which is engaged in undertaking turnkey projects.

INVESTMENT RATIONALE
Looming power shortages have forced the government to focus very intently on power generation. Thus about 58,000 MW (megawatt) of fresh capacity (revised from 78,000 MW original target) is targeted by 2012.. Additionally, around 16,000 MW is expected to be added by ultra mega power projects. As a thumb rule, for every 1 MW of capacity added, 7 MVA (megavolt ampere) of transformers are required across the entire power system. Further the government through APD & RP (Accelerated Power Development & Reforms Program) scheme aims to make the power generation profitable to them through reduction of losses through transmission & distribution by up-gradation of the existing network. With the estimated life of a transformer at about 20-25 years, demand is also expected to come from the replacement market which could be in the region of 20000-30000 MVA p.a. ECE is engaged in manufacture of transformers upto 220KV class and upto 100MVA capacity. The company has taken steps to create facilities to manufacture higher range of transformers.

According to industry sources, the demand-supply scenario for transformers is expected to remain favorable for the next few years and this demand is expected to come more from SEBs as one expects a slowdown from private sector in the immediate future. ECE stands to benefit in this as its focus has always been towards SEBs which accounts for major of its production. ECE was also engaged in manufacture of Industrial meters however due to continuous bleeding and the activity becoming unprofitable it has suspended this activity and stopped production from the second half of FY ‘09.There has been a decline in revenues from the contracts business during the year as ECE intentionally did not take the new contracts for railway electrification, as they had pending orders. The company is reported to have taken a decision to discontinue this line of business after completion of pending orders. The switch gear business of the company is expected to have good growth in the near future primarily because of the major growth seen in the power sector.

The Elevator business of the company saw a good growth in the year under review with turnover registering a growth of 88% from Rs 76 Mn (Fy‘08) to Rs 144 Mn in the current year and this higher turnover enabled it to reduce the losses that this division was incurring earlier. The company has plans to spruce up and strengthen its marketing infrastructure seeing the increasing customer base and market for elevators. This division is expected to further improve its performance and thus contribute both to the turnover and profits of the company.

To see full report: ECE INDUSTRIES

>SHIPPING SECTOR UPDATE AUGUST 2009 (GEPL)

Baltic Dry Index (BDI) decreased by 28% on month-on-month (m-o-m) basis as in August 2009

■ The Baltic Dry Index, a measure of shipping costs for commodities, continued with negative momentum on signs of slowing Chinese raw-material demand, BDI fell 28% m-o-m. Port bottlenecks for ships have eased through reduced congestion in China, with about 7% of the fleet now held up outside ports, down from a peak of about 14% in early July, this coupled with fleet expansion were the major reason for significant decline in BDI. There remains much concern of course over commodity demand in the second half of the year, particularly from China. According to the Chinese State Council, China's economic growth may start to slow in the second quarter of next year. The Council is also studying curbs on overcapacity in industries including steel and cement.

The BPI decreased over 32% month on month, at 2,157 points, while the BCI and BSI decreased by 27% and 16% to 3,946 and 1,740 respectively. The major reason for this decrease is attributable to the market, which was suffering from too much tonnage and a lack of iron ore cargos out of India.

■ Expected production cuts from OPEC (Organization of Petroleum Exporting Countries) OPEC is expected to reduce shipments by 1.1% in the month to Sept. 19, according to consultant Oil Movements, amid speculation the group is expected to pledge adherence to record supply cuts announced last year. The Organization of Petroleum Exporting Countries is expected to export 22.34 million barrels a day by sea in the four week period, down from an average of 22.58 million barrels a day in the month to Aug. 22, 2009.

OUTLOOK

■ Dry Bulk
The main reason for decline in BDI in the month of July 2009 is slowdown of buying by China for a while as inventory is expected to gone up from previous levels. Though the (second hand) asset price momentum is high, which can be an indicator to increase in trade activities, we feel that higher tonnage in the sea may act as a catalyst for southward movement of day rates in near future. Looking at the current circumstances, we remain NEGATIVE on dry bulk segment.

■ Tankers
There is marginal activities for large sized vessels like VLCCs, however, the performance of other type of vessels (Suezmax and Aframax) was below expectations, which was result of lower activities and higher tonnage supply. The concerns of higher supplies are quite evident from this month as asset prices of second-hand tankers declined by more than 10% across the board, which implies that due to incremental addition in the tonnage, the business of second hand (older) vessels may be severely impacted. Because of over supply concerns, we are NEGATIVE (for short term) for the tanker markets.

To see full report: SHIPPING SECTOR

>APAR INDUSTRIES LIMITED (GEPL)

“To get powered from growth in power sector"

INVESTMENT RATIONALE
Largest Manufacturer of transformer oil with around 55% market share: Apar is the market leader in transformer oils with over 55% market share in India under the brand POWEROIL. The company's focus is more on the power transformer side (132 Kv – 800 Kv), where it has more than 60% market share. Apar's domestic customers include BHEL, Emco, Crompton Greaves, Bharat Bijlee and Alstom among others.

One of the largest player of conductors in domestic market with around 25% market share: Apar has a strong presence in conductors and is the second largest manufacturer in India with around 25% market share after Sterlite Technologies. Apar is the largest exporter of conductors from India. The export markets span Middle East, Japan, Europe, USA, South America and Africa.

Huge capex expected in power transmission sector, which will boost ancillary industries: For the 11th Plan Rs1,400 billion is planned to be spent on transmission schemes, against Rs744 billion in the 10 plan. Power transformers account for around 70% of the transformers market where as the distribution transformers constitute around 30%.

Export market: A lucrative advantage: Apar is the largest conductors exporting company in India. Its product goes in more than 43 countries with significant presence in Africa. It is expected that demand for transmission conductors is expected to grow by a CAGR of 8-9% till
CY 2011

KEY CONCERNS
Highly volatile raw material prices: Aluminum and base oils are the two major raw materials of the company and both of them are highly volatile.

Foreign exchange variation: As more than 35% of business of the company comes from international markets, it is inhered exposed to foreign currency.

VALUATION AND RECOMMENDATION
Since all the losses are already accounted and looking at the inelastic nature of demand for the company's products, we believe that thing will start moving up soon.

At CMP of Rs148, the stock is trading at 6.63x its FY2010 estimates and 5.50x its FY2011 estimates and an EV/EBITDA of 0.87x and 0.84x its FY2010 and FY2011 estimates respectively.

We INITIATE coverage on the company with a rating with of , implying a P/E multiple of 9.00x FY 2011 earnings, which is an upside of 36% from CMP. We value the company at EV/EBITDA
of 1.89x on FY2011(E) EBITDA of Rs1,598 million.

To see full report: APAR INDUSTRIES

>KSB PUMPS LIMITED (GEPL)

OVERVIEW

Success stories are always especially nice to hear when they start repeating themselves. KSB was first recommended (VOL No 27, Dt 24/11/08) at the then price of Rs 186 and was once again repeated (VOL No 40, Dt 09/03/09) with a price target of Rs 310 in a years time. The stock is trading far above the targeted price and in view of an expected good outlook ahead (as this is especially true of orders from countries that are continuing to push ahead with important
infrastructure projects despite financial constraints), we are taking the liberty this week to repeat the recommendation. Along with China, India is one of the mega markets of the future. The pumps & valve industry has grown in line with the economic growth of the country. This has not surprised many, since the pumps industry is only expected to grow, driven by the demand from the capital goods, energy, mining, gas & oil sector. Valves may be a small component in the
production process, but they perform a vital function and thus have to be extremely reliable. This is particularly true in diary, beverage, food, petrochemicals and gas industry. KSB Pumps Limited (KSB) is a well established player in the pump & valve manufacturing industry.

INVESTMENT RATIONALE
Along with energy, water is one vital variable in the complicated equation called "the world’s future”. The growth in the world’s population and the progressive industrialization of many emerging markets is leading to a rising demand for clean water. Thus the market for water engineering is growing in line with the demand for water. The waste water disposal also requires a enormous use of pumps. KSB provides a range of pumps & valves for obtaining, treating and supplying water. Municipal waste disposal facilities need to build new sewage treatment plants
and modernize the existing ones. The idea of desalination of sea water is expected to catch up very fast in the country and KSB as a group is well equipped and has a special product range to offer for this segment of the business. Transporting water over long distance is also catching up and this favors the large pipeline pumps & valves business of the company.

The focus of the Indian economy to increase the energy generation capacity is positive for KSB as it is the leading supplier of power plant pumps for the energy sector. Natural gas as an energy source is also gaining importance and this source of energy shall play a dominant role in the Indian economy in the future because of the abundant findings of gas. Transportation of liquefied gas in compressed form requires special valves and these are manufactured by the KSB group. The demand for industrial goods is likely to remain strong in the coming years too owing to capacity expansions across the board. The growth areas could be chemicals & process engineering and waste & clean water management industries, as their utilities will increasingly rely on large scale water treatment plant. Efficient waste water treatment is vital to the community and has the largest growth potential in the future and KSB is all set to capitalize on the anticipated huge demand from this industry.

To see full report: KSB PUMPS LIMITED

>MUNJAL SHOWA LIMITED (GEPL)

OVERVIEW
This stock was first recommended in (VOL 1 N 23) at the then price of Rs 26 and was projected to be priced at Rs 40 in a year’s time. The stock has not only achieved the targeted price but is also trading above it for some time now. The Auto Component Industry in the recent past prior to the rent turmoil was one of the fastest growing sectors in the world economy with a global turnover of US $185 billion. Over the past years, the industry has been increasingly striving to attain cost competitiveness globally. The growing demand for automobiles coupled with the outsourcing trend has spurred the growth of the auto component industry worldwide with Asian countries like Japan, China, South Korea and India emerging as the major automobile manufacturers in recent years. Low cost sourcing has given India an edge to nurture the fast-growing auto component industry, over its global competitors. Indian auto component industry is estimated to touch a turnover of US $40 billion by 2014. In a nutshell,
growing economy, strong domestic & global demand, adoption of and adapting to innovative technology will lead the Indian auto component industry to make a mark globally. Munjal Showa Ltd (MSL) promoted by Munjals of Hero Honda and Showa Corporation (Japan) is a leading manufacturer of shock absorbers, struts and window balancers from its two plants located at Gurgaon.

INVESTMENT RATIONALE
The financial year 2008 / 09 has proved to be a challenging one for the automobile industry and in turn for the auto component manufacturers in particular, because of a relentless rise in oil price, the erratic movement of thedollar, an all round increase in raw material prices particularly of steel and in addition, also because of the infrastructure growth in the country not keeping pace with the needs of the economy. Another contribution factor was the high interest rates that made purchase outlays higher than before thus impacting the growth of this industry particularly in the second half. Testing times they surely are for this industry but one gets a feeling that we may have seen the worst. Despite this MSLs performance during the year saw a healthy growth of 13% in value terms and 12% in volume terms. The company expects the growth in volumes terms to be around 10% in the current FY 10 to be supported by the new models to be launched by its customers both in the 2 wheeler and 4 wheeler segments. MSL is also taking active steps to reduce its dependenc on few customers.

MSL continues to dominate the OEM (Original Equipment Manufacturer) business in the organized sector as its range of products has expanded significantly as a result of the introduction of new models by its customers. The company has during the current year commissioned its third plant at Uttrakhand having a capacity to produce 5 Mn shock absorbers annually thus catering to the needs of Hero Honda. During the year the company developed products for new generation vehicles such as Stunner, New Activa and City-08 produced by Honda Motorcycles, Scooters India and Honda Siel Cars respectively. In addition to this Hero Honda also launched nine models across all segments like macho HUNK, CBZ X-treme, New Passion Pro, New look products in the already successful brands like Glamour and Splendor. MSL is a single source supplier for the complete range of products manufactured by Hero Honda, Honda Siel Cars, Honda Motorcycles and all the export vehicles of Maruti Suzuki.

INVESTMENT CONCERNS
Any major rise in input costs shall affect future performance. Dependency on the growth of the automobile industry.Concentration on few customers is negative

VALUATIONS
At the current market price of Rs. 53 MSL’s projected FY 09 EPS of Rs. 7.4 is discounted 7 x. Long term investors can add this to their portfolio.

To see full report: MUNJAL SHOWA

>USHA MARTIN LIMITED (GEPL)

BAD QUARTER BRIGHT FUTURE

UML came out with its 1QFY10 result which was dismal at operating level. However, the Company maintained its non-operating expenses (depreciation, interest cost) at lower levels during the quarter. Performance of domestic business was quite subdued primarily due to lower realization as well as high cost of raw materials. All the subsidiaries, however, performed well, despite lower sales volume, with significant improvement in margins. We are positive on the business outlook of UML and expect the Company to perform better from
2QFY10 onwards. Maintain 'Buy'

UML (standalone) 1QFY10 performance
UML reported 17% y-o-y fall in net sales primarily due to fall in realizations of steel products. EBITDA was down 46% y-o-y due to higher cost of raw materials. EBITDA margin fell from 27% in 1QFY09 to 18% in 1QFY10. Net profit fell even by a higher percentage of 76% mainly due to higher tax rate. EPS for the quarter stood at Rs.0.5 compared to Rs.2.3 in 1QFY09.

Subsidiaries performance
Subsidiaries performed well during 1QFY09 and compensated to the dismal performance of standalone business. Despite 2% y-o-y fall in net sales, EBITDA and net profit increased by 40% and 122% respectively during the quarter primarily due to higher realization of value added products and lower tax rate. The calculated EPS for the quarter stood at Rs.0.7 compared to Rs.0.3 in 1QFY09.

To see full report: USHA MARTIN

>GREAT OFFSHORE LIMITED (GEPL)

“ Profitability increases even though utilization declines “

QUARTER ENDED JUNE 2009 RESULTS Great Offshore recorded 22% increase in its revenue for QFY2010 to Rs2,470 million as compared to Rs2,027 million in Q1FY2009. For Q1FY2010, consolidating all the wholly owned subsidiaries viz. Deepwater Services (India) Ltd. (which has inchartered “Badrinath”, one of the two rigs), Great Offshore (International) Ltd. (which owns and operates a modern high end AHTSV) and KEI-RSOS Maritime Ltd & Rajamahendri Shipping & Oilfield Services Ltd. (on completion of all procedural formalities in November 2008) the company's revenue stood at Rs2,657 million, registering a net profit of Rs306 million. In Q1FY2010, revenue from EPC contract stood at Rs350 million.

In Q1FY2010, overall operating costs increased by 10% y-o-y to Rs1,307 million, which grew at lower rate than revenues, resulted in OPM rising by 550 basis points to 47% in Q1FY2010 as compared to 42% in Q1FY2009.

Interest expenses increased by 44% y-o-y to Rs251 million in Q1FY2010. Depreciation expenses increased by 16% y-o-y to Rs298 million in Q1FY2010. PAT increased by 244% y-o-y in Q1FY2010 to Rs413 million, as compared to Rs120 million in Q1FY2009. However, after giving effects of EO (invocation of Performance Bank Guarantee for non-delivery of new build Jack Up rig as per terms of the contract) for Q1FY2010, the reported PAT grew by 85% y-o-y to Rs222 million. PAT margin for Q4FY2009 increased by 1,080 basis points to 16.7% y-o-y.

KEY DEVELOPMENTS

■ Lower utilization rates : During Q1FY2010, drilling rigs were fully utilised y-o-y. Of the eligible revenue days, offshore supply vessels registered a utilisation of around 72% y-o-y (previous period 88%). The marine construction barge at a utilisation of 91 % ( corresponding period 58%) worked largely for in-house project execution work while the harbour tugs clocked a utilisation of 91% (corresponding period 72%).

■ Asset profile: As on July 30, 2009, the fleet comprises 41 vessels ( 2 drilling units, a construction barge and a heavy lift vessel , 26 offshore support vessels and 11 harbour tugs). The Company took delivery of a new build tug during June 2009 and would be deploying the same for Gangavaram port operations. More than 90% of its vessels are on long term charter.

■ Outstanding Debt: GOL's debt has increased to Rs17,000 million in Q1FY2010 as compared to around Rs12,000 million in Q1FY2009.

■ Revised open offer by ABG Shipyard: ABG Shipyard has raised its offer for control of Great Offshore by 20% to Rs 450 a share, bettering a bid by rival Bharati Shipyard. ABG bought 1,926,721 shares, or 5.2%, of Great Offshore from the open market at an average of Rs450 a share. With this the total shareholding of ABG shipyard is around 7.3%. Rival Bharati owns 19.5% of Great Offshore and is expected to increase its price from Rs405 to exceed ABG's offer. The two companies have time till August 24 to change their offer price.

To see full report: GREAT OFFSHORE LIMITED

>FEDERAL BANK LIMITED (GEPL)

COMPANY OVERVIEW
Incorporated in 1931, Federal Bank is an old private-sector bank with a dominant presence in the southern state of Kerala. It operates 617 branches and over 630 ATMs spread across 24 states. It has a customer base of over 5 mn, concentrated in Kerala and is a key player in servicing Kerala based middle-east NRI community. At present it is the fifth largest private sector bank in terms of assets (asset size of Rs 388.5 bn as on March 31, 09).

INVESTMENT RATIONALE

■ Highest CRAR to Enable Sustainable and Quality Asset Growth
Federal bank had the highest Capital to Risk Weighted Assets (CRAR) ratio in the industry at 20.14%, with tier I capital ratio at 17.5% as on March 31, 09. As a result of a high tier I capital ratio we do not see equity dilution in immediate future. Apart from this, in case of a faster than expected economic recovery the excess cash on the bank’s balance sheet can be
deployed to ramp up its business activities. As per our conservative estimates, the bank’s business is expected to grow at a CAGR of 22.6% over FY09-FY11 with advances and deposits estimated to grow at a CAGR of 22.2% and 22.9% respectively during the same period.

■ Asset Mix Tilted Towards High Yielding Retail and SME Advances
The advances mix of Federal Bank has traditionally been tilted towards high yielding retail and SME advances (constitute around 63% of its loan book) as a result of which it has had higher than industry average Net Interest Margins (NIM) of 3.4-4.3% over FY03-FY09. It had second
highest NIMs in the industry at 4.3% in FY 09.

■ Good Low Cost Deposit Base at 34% Another Key Driver of NIMs
The bank’s low cost deposit base including its CASA deposits and low cost NRI term deposits stood at 33.5% as on March 31, 09. In our view the bank’s expanding distribution network (bank expected to add over 170 branches and 220 ATMs during FY09-FY11) and a growing retail liability and low cost NRI deposit base will help the bank maintain a lower cost of funds at 5.8-5.9% and Net Interest margin (NIM) at 3.75- 8% during FY09-FY11.

To see full report: FEDERAL BANK