Sunday, November 30, 2008

>Gwalior Chemical(LKP SHARES)

Gwalior Chemical Industries Ltd. (GCIL) is a producer of toluene - based (derivative of crude oil) specialty
chemicals. Toluene being sensitive to crude oil prices, GCIL enters into price fixing contracts with suppliers
on a monthly/quarterly basis for requirements for upto 3 months to hedge its position against rising prices.
What once was beneficial to the company in the face of ever increasing crude oil prices has turned
detrimental due to steep fall in prices.

Read full report here Gwalior Chemical(LKP SHARES)


Triveni Engineering and Industries Ltd. (TEIL) reported a YoY
growth of 41% in net sales to Rs4.3bn for Q4FY08, led by
healthy performance across its divisions. The company changed
the accounting policy relating to recognition of carbon credit
income, thus impacting profits to the extent of Rs90mn. OPM
expanded by 330bps to 18.6%, led by turnaround of sugar
operations coupled with improved margins in distillery division.
Net profits surged by 5.4x to Rs270mn.
! Sugar sales higher by 35%
Sugar despatches rose 35% to 143.8k mt whereas realisations improved
by 21% to Rs16.2k/mt. As on Sep’08, TEIL is carrying ~256k mt of
sugar inventory against 186.5k mt as on Sep’07. This should help the
company capitalise on firm sugar prices.
! Margins expand by 330bps to 18.6%
OPM expanded 330 bps to 18.6% on back of turnaround in sugar division
and improved contribution from distillery segments. Accordingly,
operating profits surged 71% to Rs796mn.
! SAP for SS 08-09 at Rs140/quintal
In Oct’08, UP government announced SAP of Rs140/quintal for
SS 08-09 against Rs125/quintal in SS 07-08 and Rs110/quintal paid by
sugar mills as per the Supreme Court order. The UPSMA has contested
the SAP announcement in the Allahabad High Court questioning the
methodology in arriving at the SAP.



Triveni Engineering and Industries Ltd. (TEIL) reported a YoY
growth of 41% in net sales to Rs4.3bn for Q4FY08, led by
healthy performance across its divisions. The company changed
the accounting policy relating to recognition of carbon credit
income, thus impacting profits to the extent of Rs90mn. OPM
expanded by 330bps to 18.6%, led by turnaround of sugar
operations coupled with improved margins in distillery division.
Net profits surged by 5.4x to Rs270mn.
! Sugar sales higher by 35%
Sugar despatches rose 35% to 143.8k mt whereas realisations improved
by 21% to Rs16.2k/mt. As on Sep’08, TEIL is carrying ~256k mt of
sugar inventory against 186.5k mt as on Sep’07. This should help the
company capitalise on firm sugar prices.
! Margins expand by 330bps to 18.6%
OPM expanded 330 bps to 18.6% on back of turnaround in sugar division
and improved contribution from distillery segments. Accordingly,
operating profits surged 71% to Rs796mn.
! SAP for SS 08-09 at Rs140/quintal
In Oct’08, UP government announced SAP of Rs140/quintal for
SS 08-09 against Rs125/quintal in SS 07-08 and Rs110/quintal paid by
sugar mills as per the Supreme Court order. The UPSMA has contested
the SAP announcement in the Allahabad High Court questioning the
methodology in arriving at the SAP.


>Balrampur chinni (ICICI Direct)

Balrampur Chini’s results were below our estimates. The company reported
its Q4SY08 (sugar year 2008) results with a topline growth of 40.0% to Rs
416.7 crore from Rs 297.8 crore in Q4SY07, supported by volume growth
and improvement in price realisations. The quarter has also witnessed a 15.2% increase in raw material costs to Rs 287.3 crore from Rs 249.5 crore in Q4SY07. The company is currently holding a large sugar inventory, in anticipation of higher sugar prices, going forward. The rise in sugar prices resulted in a significant improvement in EBITDA margins this quarter to 17.3% from 0.8% in Q4SY07. Interest costs rose drastically by 115.3% to Rs 28.3 crore in Q4SY08 on account of higher interest rates. The company reported a net profit of Rs 14.6 crore in Q4SY08 as against
a net loss of Rs 33.7 crore in the corresponding quarter of last year.

To read full report Balrampur chinni (ICICI Direct)

Saturday, November 29, 2008

>Sun pharma , Shoppers stop(BRICS)

Major Setback for Sun as USFDA grants Osmotica's citizen petition
In a major setback to the prospects of Sun Pharma’s launch of generic tablet
version of EffexorXR (Venlafaxine extended release tablets), USFDA has granted
Osmotica's citizen petition. The USFDA has advised Sun to submit a new ANDA
if it wishes to pursue approval of the aforesaid tablets. However, our prima
facie analysis suggests that even if the company re-submits the ANDA application
with Osmotica's venlafaxine extended release tablet being the reference drug, it
would take at least one - one and half years before it gets the approval. On the
flip side, as per the settlement with Wyeth, Teva is expected to launch the
aforesaid generic capsules in July 2010. In this scenario, there may be very little
incentive for Sun Pharma to resubmit the ANDA application.

To read to full report Sun pharma , Shoppers stop(BRICS)


Petrochemical margins have corrected due to the huge fall in demand on account of
the ongoing global slowdown and demand destruction. Reliance Industries (RIL),
however, is better off than its peers because of its focus on the domestic market and
high level of integration, which shields it from offtake risks. We consider negative-tozero
cracker margins unsustainable and expect them to improve as crackers cut
operating rates. Margins are, however, likely to remain below FY07 and FY08
averages, as cracker operating rates are expected to reach 85% only by FY12.

Read full report here Reliance(Edelweiss)

Friday, November 28, 2008

>Steel sector (Edelweiss)

Globally, with the financial crisis spilling into the real economy, demand outlook for steel has
taken a severe beating. We expect Chinese steel demand to decline 10% in Q4CY08E, and
virtually stall at 0.8% in CY09E, led by slowdown in construction, appliances, and auto
sectors. With recession/recession-like conditions in the developed world (the US, Japan, and
a few European countries), we see their steel consumption declining 5-20% over CY09-10E;
past recessions have seen US steel consumption drop 10%, on an average. Though growth in
developing nations is likely to mitigate this impact to some extent, global steel consumption
is slated to decline 5.0% in CY09E, contrary to earlier assumption of 6% growth. This will be
first decline since CY98. Recovery in CY10E is likely, but there will still be a decline of 1.0%.

Read full report here Steel sector (Edelweiss)


�� We believe investors should take the open offer as an
opportunity to exit
�� Stretched balance sheet and expensive transition to GSM
model pose challenges; cut FY10e EPS by 8%
�� Retain negative outlook; trim target price from INR19 to INR12

To read full report TATA TELE (HSBC)

Thursday, November 27, 2008

>Reliance capital(ICICI Direct)

The consolidated PAT was in line with expectations at Rs.2.3bn a jump of
15% y-o-y. Reliance capital (Rcap) with its recent past exorbitant rate of
growth in all streams of businesses got itself a position in top 5 in Life and
General Insurance too, apart from asset management business

To read full report Reliance capital(ICICI Direct)

>INDIA Strategy (Merrill Lynch)

Still bearish; expect index of 7000 in early 2009
We felt comfortable with our bearish views on the market last year when it was anti-consensus. We are concerned about the current
consensus bearishness but think it is too early to turn bullish and expect markets to fall to 7000 in 1st quarter of 2009 led by:

To read full report INDIA Strategy (Merrill Lynch)

>Two wheeler(First Global)

Data released by the Society of Indian Automobile Manufacturers (SIAM) for
the month of October 2008 shows that the combined two wheeler and three
wheeler industry volumes declined significantly by 10% Y-o-Y for the first
time in FY09
􀂉 Despite the festival period falling in the month of October 2008, sales at the
companies’ end plunged sharply due to a huge pile up of inventory of the
previous month at the dealer network, though retail sales recorded an

To read full report Two wheeler(First Global)

Wednesday, November 26, 2008

>Sensex 16000(Feb 2009) Financial Astrologer

The sensex will start rising from December 10, 2008 onwards
and will reach 16000 points by the end of February 2009.
India will outperform the American economy.

Read full report here >Sensex 16000(Feb 2009) Financial Astrologer


Q209 results: NTPC posted Q2 revenue growth of 20%, driven by higher fuel cost (which is a
pass-through cost to the consumer). Generation declined by c7% (qoq) to 47bn units owing to
lower plant load factor (PLF), of c83% as compared to 86% in FY08 achieved by its coal fired
thermal power plants. The wage revision provision continued in Q209, resulting in a 47%
jump in employee cost and a 27% rise in other expenditures. Employee costs include
INR3,170mn in provisions for pending employee pay revisions and other employee benefits.

Read full report here NTPC (HSBC)

>Onmobile (Citi)

New Rs337 target price — We are reducing FY09-11E EPS by 5-16% with 1)
delays in new product deployments particularly outside India; and 2) higher
cost pressures as OnMobile continues to invest heavily on projects/new product
development, whose revenue streams have yet to start flowing. Our target price
is based on 16x Mar-10 P/E (25x earlier), and is in-line with multiples of
comparable peers. Target P/E while appearing high in this environment, is
justified given its strong growth prospects (37% EPS CAGR over FY08-11E).

To read full report Onmobile (Citi)

>United phosphorus(GS)

We reiterate Buy on United Phosphorus (Uphos) with a new 12-month TP
of Rs120 (earlier Rs220) implying potential upside of 33% from the current
level. Our calculations indicate that Uphos share price implies a 25%/18%
decline in revenues and net income over FY10E-12E which we view as
unjustified. We believe Uphos to have a steady earnings profile as 1)
Unlike fertilizers, agchem is relatively well positioned to withstand the
agriculture downcycle; 2) Demand for agchem is less elastic to economic
cycles; 3) Industry is consolidated with strong entry barriers; and 4)
Benefits of Cerexagri integration would start reflecting from FY2010E.

To read full report United phosphorus(GS)

Tuesday, November 25, 2008

>McNally Bharat(ANAND RATHI)

Re-iterate Buy. McNally Bharat reported strong revenue and
earnings growth for 2Q. Faster execution of projects helped
revenue beat our estimates, while earnings were in line. We reduce
earnings estimates (mainly to account for higher interest costs)
and cut our target price to Rs85 from Rs168. Maintain Buy.

Read full report here McNally Bharat(ANAND RATHI)

>Infosys ADR (FSA)

Fundamental research indicates a 14% upside in the common stock over the next 6-12 months. We
have calculated the target price based on fundamental factors, using a weighted average of target
prices obtained using DCF and comparative valuation methodologies.
We reiterate the common stock a BUY, with a 6-12 month target price of INR1,400.

To read full report Infosys ADR (FSA)

>Vikasha ind(Sunidhi)

Andhra Pradesh-based VIL was incorporated in the name of Visaka
Asbestos Cement Products in Jun 81 and acquired its present name in
Aug 1990. It came out with a rights issue in 1992 aggregating Rs.5 crore
(29.85 lakh equity shares at a premium of Rs 7) to part-finance the
Rs.23 crore expansion project at it's synthetic yarn facility at Nagpur.
During FY2006-07, it made preferential issue of shares, which raised its
equity capital to Rs 15.9 crore.
It manufactures asbestos cement sheet and synthetic blended yarn.
The cement sheet division contributes 80% of the total revenue with
20% coming from yarn division.

To read full report Vikasha ind(Sunidhi)

Monday, November 24, 2008

>NTPC(Hem Securities)

NTPC, the largest power generation company in India has announced its Q2FY09 results and has surprised the investors again. NTPC has an installed capacity of 29394 MW which equals nearly 19% of total capacity in the coun-try. Apart from core business of power generation, the company has also ven-tures into various other verticals, it also provides consultancy in the area of power plant constructions and power generation to companies in India and abroad. The company is presently operating 15 coal based plants, 7 gas based and 4 joint venture power projects with nation wide presence.

To read full report NTPC(Hem Securities)

>Monthly economic Review(SHAREKHAN)

For the period November 1–14, 2008, the BSE Bankex has seen a rise of 2.9% compared with a decline of 4.1% in the Sensex in the same period. However, against the backdrop of the ongoing global credit crisis, domestic liquidity crunch and a likely strain on the quality of domestic banking assets, the fundamental outlook for the banking sector remains bleak. The credit demand is likely to remain strong in the near term due to the drying up of the alternate sources of funds; however, the credit demand may decline going forward due to the anticipated slowdown in the economic activity. Besides, deceleration in the economic growth poses the risk of higher delinquencies and further deterioration in banks’ asset quality. Hence, we believe that though most of the banking stocks are trading at attractive valuations currently, further downside risks persist in the near to medium term.

To read full report Monthly economic Review(SHAREKHAN)

Sunday, November 23, 2008


Company updates
Larsen & Toubro (LT IN; Rs790; Buy) – announced large order wins
L&T announced three large order wins totaling Rs16bn yesterday.
1) Rs7bn order from HPCL-Mittal refinery in Bhatinda – Follow-up order for hydrogen
generating units.
2) Rs3.6bn order for urban water supply project from Delhi Jal Board.
3) Rs5.8bn order for urban water supply project from Hyderabad.

Read full reports L&T(ABN.AMRO)

>VST Tillers Tractors(Sunidhi)

VST Tillers Tractors (VSTTL) is a Bangalore-based farm equipment manufacturer
of power tillers and low horse power (HP) (sub 20 HP) tractors with three
factories in Karnataka: Bangalore, Mysore and Hosur.
Tractors and tillers offered by VSTTL find application in dry tilling, cultivating,
deweding, water pumping, ploughing, riddging, wet pudlling and transportation
of goods. The Diesel engines find application in the manufacture of tractors and
Power tiller is the two-wheeled version of the tractor is meant for farmers with
smaller land holdings and for those who cannot afford expensive tractors (cost of
the tiller is almost one-third of the tractor cost).

To read full report VST Tillers Tractors(Sunidhi)


Market opened on a positive note, with the Sensex higher
by 200 points and Nifty up by 60 points. The market was
volatile all through the day with a low of 8,442 and closed
at the day’s high of 8,970. Bulls filled the bearish gap,
which was a crucial resistance at 8,726 and gave a close
above this level. Nifty has given a close above 20-hourly
moving average, ie 2,640, which is a positive sign going
forward. The momentum indicator on the daily chart is
on the verge of giving a positive crossover, but is trading
below the zero line. The 20- and 40-day moving average
is at 9,466 and 10,621 respectively for the Sensex, which
are strong resistances on the upside. Further, good support
levels are around 8,600 and 8,400. The market breadth
was positive with 6,42 advances and 47 declines on the
NSE and with 1,186 advances and 1,311 declines on the
BSE. Our short-term bias is up with support at 8,700 and
target at 9,175.
To read full report Eagleeye(SHAREKHAN)

>Equity weekly watch(ANAGRAM)

To read full report Equity weekly watch(ANAGRAM)

Friday, November 21, 2008

>Punj lloyd(BNP PARIBAS)

Oil & gas projects delayed – growth estimates at risk
We initiate coverage on Punj Lloyd, a global firm specializing in
Engineering, Procurement and Construction (EPC) projects for the oil &
gas industry, with a REDUCE rating and TP of INR146. The mid-anddownstream
oil & gas industry contributes approximately 70% of the
company’s revenue. The sudden sharp decline in crude oil and natural
gas prices, demand, and the global credit crunch has resulted in delays
and cancellations of several new projects across the Middle East and
Southeast Asia. We expect the slowdown to gather momentum over the
near term; so, new projects may be deferred until the prevailing
conditions improve.

Read full report Punj lloyd(BNP PARIBAS)

>Textile sector outlook(CLSA)

Our meetings with textile and apparel majors and outsourcing arms of US
retailers indicates that outsourcing out of India is still on the increase
even as US retailers are brutally hurt. India is seeing incremental benefit
as growth in China slows, cost pressures in China increase and Pakistan
remains embroiled in social strife and tension. However, over the last 12
months, vendor consolidation has accelerated and even as larger vendors
gain market share, smaller ones are losing out. The outlook for 2009 is
very challenging given cost pressures and lower growth than the last five
years. We expect both prices and volumes to be under pressure in 2009.
While textile sector has underperformed, there is no reason to merit
investment given the medium term outlook.

To read full report Textile sector outlook(CLSA)

>India Telecom(BNP PARIBAS)

GSM net adds at new high, cross 8m in October
Indian GSM operators continued to exhibit healthy subscriber growth in
October, taking the GSM subscriber base to 242m. GSM subscriber
additions in August came in at 8.08m, compared with 7.69m in
September 2008 assuming steady net additions for RCOM GSM. Aircel
and BPL maintained their run rate. BSNL continued to lose market
share, adding 669,551 subscribers.
Bharti maintains lead; under pressure in Bihar circle
Bharti maintained its run rate adding 2.72m subscribers but remains well
ahead of the competition in terms of subscriber additions. Bharti
witnessed pressure in net additions in Bihar circle with the launch of
operations by Idea and Vodafone. Bharti’s marketshare of GSM net
additions has declined to 33.7% from 40.4% in August 2008. Decline in
marketshare for Bharti due to expansion of operations by regional
players is already built into our estimates.

To read full report India Telecom(BNP PARIBAS)

Thursday, November 20, 2008


Aban Offshore’s (Aban) standalone PAT was at INR 1.6 bn vis-à-vis INR 1.2 bn for
consolidated entity. High financing expenses and losses in a few subsidiaries subdued
�� Losses reported in a few subsidiaries were significantly higher than their respective
revenues (please refer subsidiary analysis section for details).
High leverage: Future incremental cash flows will be key to deleveraging BS
�� The debt-equity (DE) ratio as at end-FY08 was 16x; however, on considering nonconvertible
redeemable preference shares as debt, D/E would stood at 26.3x. D/E for
the standalone entity as at the end of FY08 was at 1.4x and on considering nonconvertible
redeemable preference share as debt , D/E was at 2.5x. Preference shares
are redeemable at par during 2011 & 2012
�� Loan book has increased from INR 11 bn in FY06 to INR 130 bn in FY08, primarily due
to the USD 2.2 bn Sinvest acquisition.
�� Loan repayable in FY09 is INR 17.02 bn, which is ~8 times net cash from FY08
operations. However, with delivery and full-year contributions of many new-build rigs,
future cash flows may be significantly higher, facilitating debt repayment. Also, the
company had significant cash and cash equivalents of INR 8.4 bn.

Read full report here ABAN(EDELWEISS)

>INFOSYS (William Blair & company)

Dominant Provider of Offshore IT Services. Infosys is the leading provider of
offshore IT services, with what we believe is the strongest brand and one of the
largest talent pools, and arguably the best technology resources. The company’s
customers include 99 of the U.S. Fortune 500 and 47 Fortune 100 companies.
Existing customers accounted for 97% of fi scal 2008 revenue—important in the
technology space, since IT buyers often make vendor selections based on which
company is the market leader and has a strong referenceable customer base.

Read full report here INFOSYS (William Blair & company)

Wednesday, November 19, 2008


Leverage remains uncomfortably high
Unitech has one of the highest debt-equity ratio among Indian real
estate developers. Even adjusting telecom-related debt, gross debt of
property business is approximately INR80b. The company’s interest
coverage ratio (EBITDA/Gross interest) remains dangerously high at
2.2x declining to 1.9x by FY10. We believe that weak pricing and slow
execution are likely to stretch Unitech’s balance sheet. The company
has launched only about five new projects (6m sqft) this year. We are
still skeptical about the company’s ability to drive volumes in the
residential segment in FY09 due to weak market sentiment.

To read full report UNITECH(BNP Paribas)

>Daring derivatives(Sharekhan)

To read full report

Daring Derivatives

Monday, November 17, 2008


With the introduction of VAT, an increase in excise duty for
non-filtered cigarettes and a recent smoking ban in public
places (2 October), the tobacco sector is getting hit hard and
fast. These measures are part of an overall global plan to
reduce tobacco consumption, spearheaded by the WHO.
While it is true that, in India, the vigour of implementation
may change depending on political or other factors, we
believe the tobacco sector is in for a tough time in the long
term. The halcyon days of FY05-07 averaging 7.5% volume
growth pa may be over.

To read full report ITC(HSBC)

>Dr Reddy (JP Morgan)

We recently hosted the management of Dr Reddy’s as part of our India
Conference 2008. Key takeaways from the various investor meetings are
as follows:
• Generics pipeline remains strong; CIS business robust: Dr Reddy’s
reiterated a strong growth pipeline in the US as demonstrated by the
ANDA pipeline. The company had 66 ANDAs waiting approval from
the US FDA as of October 2008. The company maintained that the CIS
business remains robust with receivables under control from that
particular region.
• AOK tender results expected some time in November end; market
to become more competitive: The company expects the AOK tender
results to come out some time in November end. The AOK tender
addresses around 60 molecules and approximately 40% of the German
market. While management remains hopeful of some wins in the AOK
tender, the company expects price competition to remain severe in
Germany. The company did not give any guidance for Betapharm
profitability for next year.

Read the full report here Dr Reddy (JP Morgan)


Our brief inquiries with key Indian retailers about sales during the
Diwali festive season indicate that consumer spending was satisfactory.
Categories that saw some weakness include Furniture and Watches,
whereas sales in Apparel and Jewelry were encouraging.
• Although it is difficult to gauge consumer sentiment accurately we
believe sales for Dec’08 quarter should be satisfactory if interest rates
and inflation trends continue to show improvement from current levels.
• We maintain our Overweight rating on key retailers Titan Industries,
Pantaloon Retail, and Gitanjali Gems, and believe that the current credit
crisis should accelerate the shift towards organized retail.
Here are some direct quotes on Diwali sales made by various retailers:

Read full report here INDIA RETAIL(JP Morgan)

>Reliance Infra(EDELWEISS)

Reliance Infrastructure’s (Rel Infra) return on average equity (ROAE) was 9.0% and
return on net operating assets (RNOA) was 9.2% in FY08 (ROE analyser analyses the

Investment in associate companies stands at INR 61.1 bn as at end-FY08 (INR 1.2 bn
as at end-FY07), generating a meager return of 1.3%. This is primarily on account of
investment made in Reliance Power (RPL; INR 60.8 bn), which is currently under
gestation and not fully operational.

Investments made by the company increased 124.0% from INR 52.2 bn in FY07 to INR
117.0 bn in FY08. The additional investment of INR 59.8 bn was primarily due to
investment in RPL’s initial public offer (IPO). Return on investment, other than
investment in RPL, comes to 6.5% for FY08.

Read full report here Reliance Infra(EDELWEISS)

Sunday, November 16, 2008

>Equity Weekly Watch (ANAGRAM)

To read full report

Equity Weekly Watch (ANAGRAM)

>BHEL(Angel Broking)

Bharat Heavy Electricals Ltd (BHEL), one of the largest Engineering and Manufacturing
Enterprise in India, dominates the Power Generation Equipment market of the country with
about 64% share of the Total Installed Capacity. The company is in the midst of a rapid
capacity expansion plan. It has already ramped up its capacity from 6,000 MW p.a. to
10,000 MW p.a. in December 2007 and is further scaling it up to 20,000 MW p.a. by
FY2012. However, going forward the company faces diverse set of challenges both from the
weak economic environment as well as the structural changes in the Sector, which could
limit further upside on the stock. At the price of Rs1,405, the stock is commanding
valuations of 15.2x FY2010E EPS and 9.4x FY2010E EBITDA. Given the overall
concerns, we Initiate Coverage on the stock with a Neutral View.

Read full report here BHEL(Angel Broking)

>IT Sector update(MOTILAL OSWAL)

Downgrading estimates to factor ~13% cross currency movement in 3Q
Cross currency woes — worsening: Adverse impact of cross currency, has continued
into 3Q as well. We expect the impact of this phenomenon to hit 3Q US$ revenues if the
exchange rate for the GBP and Euro do not reverse in the latter half of 3Q.
While average depreciation of the GBP and Euro against the US$ was ~4% during
2QFY09, the depreciation has been sharper at ~13% in 3Q (until date). With nearly 50%
of working days already concluded in 3Q, we note that IT companies would not have
anticipated such sharp currency movements when they provided guidance in mid-October.
We believe this sharp cross currency movement will put pressure on 3QFY09 US$
revenue guidance of Infosys and Satyam, unless a sharp reversal occurs in the remaining
part of the quarter. The substantial volatility in key currencies across the globe versus
the US$ would mean IT companies effectively have to contend with an additional challenge
— cross currency — besides the existing ones such as global slowdown, hedging, pricing
pressure, outsourcing backlash, MNC competition etc. Infosys had guided for 3Q revenue
growth of 0.3% (upper end) QoQ at an assumption of 1.86USD/GBP and 1.36USD/
EUR. At the current rates, we believe 3QFY09 US$ revenues will be negatively impacted
by ~3%.

Read full report here IT Sector update(MOTILAL OSWAL)

Saturday, November 15, 2008


What's new? — Press reports (ET, Mint) indicate Jet is negotiating to sell a 10%
equity stake to Temasek Holdings for consideration of Rs2.5bn. The company
is also reportedly raising debt funds of Rs10bn from Abu Dhabi-based
Mubadala Development Corporation to help fund working capital requirements.

Management denies this development — Management has indicated these talks
are speculative, and that the company has no plans to infuse equity or debt
(from Mubadala). However, management has said that Jet plans to raise fresh
debt funds to meet its working capital requirements.

What are Jet's funding requirements? — We forecast Jet's cash losses at
Rs31.3bn (over FY09E-10E) (after interest payments, but before principal
repayments of c.US$280m). The company is trying to curb operational losses
through various initiatives – cutting loss-making flights, reducing ticket
commissions, etc. The biggest positive is the sharp fall in crude oil prices
(<$60 vs. our FY10/11 estimates of $75/bbl). If crude prices continue to
decline, there could be a substantial positive upside to our current numbers.

Read full report here JET(CITI)

>Hindlever(Merrill Lynch)

Rising concern on demand but relative safe haven; Buy
Our mgmt meeting revalidated our view that margin outlook is improving but we
were surprised by mgmt's rather sombre outlook for demand. Our 2009 forecast
of margin expansion of 150bp remains intact. However our sales forecast of 11%
could be at risk should macro environment continue to deteriorate. Nonetheless
overall, we believe HUVR is well placed to grow earnings in mid teens, way ahead
of average Sensex growth. Hence we reiterate our Buy rating.
Margin outlook is improving
We estimate lower input cost benefits will begin to flow in partly from March Q and
fully from June Q. The benefits will differ category to category - Soaps will witness
benefits being passed on, detergents will see benefits being retained.
Key issue #1: Is there risk to volumes?
HUVR’s volume growth has been slowing down from 10% in March Q to 7% in
Sept Q in response to rising prices. Despite stabilizing retail prices, the macro
environment is not favourable enough to suggest that volume acceleration is likely
near term. Key concern is falling employment in 2nd tier cities and uncertain
economic outlook. Yes, HUVR’s products are non discretionary but down-trading
is likely as was the case during the drought years of 2002/2003.
Key issue #2: Will low price competition be rekindled?
Lower commodity prices invariably come in with the negative of reenergizing low
price competitors. This is most likely the case in soaps as margins here will
expand the maximum. We expect HUVR to withstand higher competitive activity
through its diversified portfolio which gives it the flexibility to cut prices and retain
margins more effectively versus competitors.

Read full report here Hindlever(Merrill Lynch)

Friday, November 14, 2008

>Technical & Derivative strategy(EMKAY)

Read full report here

Technical & Derivative strategy(EMKAY)

>Daily call(ANAGRAM)

Global markets are going through turmoil of enormous proportions. Large amount of shares are changing hands everyday with extreme price volatility. On one side we have Mutual fund and Hedge fund as sellers who face redemption and needs to get out of markets soon and on the other side are the traders who earlier went short and want to lock in their profits by reversing their positions or long term investors who appear on the scene when they perceive a bargain.

Take an example of US markets. While we were closed on Thursday, US markets fell shapely on their Wednesday session and for most part of Thursday's markets, albeit to recover all its losses in the last few hours of trading. From Tuesday's close to Thursday's low Nasdaq was down almost 10% and Dow almost 8%. In two hours of the trade yesterday, they surged back 12% and 10% respectively. To put these numbers in perspective, US market first lost as much market cap as India's size of Economy and recovered more than that by the closing.

The reverse is likely to happen in our markets, we may open higher with the world markets, but sustaining opening gains looks daunting. 10300 is the resistance now, on our way up and 9300 and 9000 are the supports for the Sensex.

Read full report here Daily call(ANAGRAM)


For Q2FY09, ZSL reported 1.4% growth in the consolidated revenues to Rs
1800.5 mn, In USD term revenues were lowered by 6.1% sequentially to $42
mn. EBITDA margins for the quarter expanded by 160bps to 16.9%. Net profit
for the quarter was up by 4% sequentially and 26% yoy to Rs 264.8 mn.
During the quarter, ZSL has announced two new acquisitions namely PEQ
consulting (IMS space) and FAIRFAX (Content Processing) and completed
the acquisition of Dubai based Ducont FZ LLC, Ducont is a leading
application provider in internet and wireless applications.

Read full report here ZYLOG(RelianceMoney)

Thursday, November 13, 2008

>India Equity Strategy(CITI)

Easy foreign money (part of the India story so far) no more — India has been a big
beneficiary of freely flowing foreign capital. In FY08 the flow was equivalent to
26% of domestic savings and almost 25% of gross capital formation – accelerating
India’s economic growth. The capital inflow scenario has changed for now, and
probably the medium-term, which will have implications for growth, interest rates,
corporate balance sheet risks, and leverage.

1 Debt rather than equity flows could be the bigger issue — Debt inflows have
exceeded equity inflows (1.2x), growing more rapidly (2.1x, over 2 years) and
accessed by more sectors. We believe debt flows, and the outlook, would have
greater implications for the economy than would equity flows (US–$12b YTD, the
market’s focus). Debt inflow-outflow cycles are usually longer than equity ones,
and could have more meaningful medium-term implications.

2 Foreign debt skewed toward long end; chunky trade credits near-term pressure —
Corporate India’s FX loans are predominantly long-term (by regulation), so
medium-term global (rather than short-term) credit trends will determine
availability and price. However, chunky short-term trade credits ($40b+) appear to
be facing some refinancing, and significant pricing, pressures. This is straining
corporates, banks and the currency, and is a near-term issue.

3 Overall corporate leverage OK, FX share less so, and there are skews and risks —
India’s corporate sector leverage is fairly modest (24%). Its foreign debt share,
however, is 34%. With incremental FX debt rising (46%), credit spreads hurting
(400-800bps, from 50-150bps in Jan), and sectors and companies differently
exposed, we detail corporate macro and micro FX and leverage issues.

Read full Report here India Equity Strategy(CITI)

>Sharekhan Special(November)

Q2FY2009 earnings review

Key points

The Sensex’ earnings (adjusted for the one-time items) grew by nearly 10.1% in Q2FY2009 on the back of the strong performance of the financial service companies (earnings up 30% year on year [yoy]), telecommunications (telecom) companies (earnings up 28% yoy) and capital goods companies (earnings up 18% yoy). However, the Sensex (excluding the oil companies) saw an earnings growth of 13.4% yoy during the quarter and the same is ahead of our estimate of a 10.1% earnings growth for the quarter.
Notably, the revenue growth for the Sensex companies (ex-oil and banking companies) was healthy at 28.3% yoy. However, the same could not translate into an equally good operating performance largely due to a 228-basis-point contraction in the operating profit margin (OPM) and a higher capital cost. The margins in most sectors were affected by the rising input cost, employee cost (especially provisions for wage hikes by the public sector undertakings [PSUs] as per the Sixth Pay Commission’s recommendations) and a steep spike in the cost of power & fuel (both coal and oil). The margin contraction was more pronounced in case of automobile, cement, real estate (read DLF), pharmaceutical, cement and oil & gas sectors. On the other hand, metal and information technology (IT) companies registered an expansion in their EBITDA (earnings before interest, tax, depreciation and amortization) margin on an annual comparison basis.

Read full Report Sharekhan Special

Wednesday, November 12, 2008

>Bharti Airtel(ANAGRAM)

At CMP of Rs690, the stock is trading at 20 x its Q2FY09 annualized EPS of Rs34. We think that Bharti is well placed to capitalize on the opportunities offered by telecom sector going forward. However, with new players entering sector, competition will be intense & margins will come under pressure. Bharti has a strong balance sheet as compare to its peers – Low leverage and all its capex plans is adequately funded. We have a “Neutral” rating on the stock.

Read full report Bharti Airtel(ANAGRAM)

>Time Technoplast(PINC Research)

PINC Research has maintained its buy rating on Time Technoplast with a price target of Rs 100 in its November 5, 2008 research report. "Time Technoplast Ltd. (TTL) reported a 26% YoY jump in net sales to Rs 2 billion in Q2FY09 on back of steady performance from the polymers and composites businesses, as well as increased inflows from NED Energy. We maintain our view that TTL’s business model offers huge scalability potential, strong visibility of earnings and stability of margins."

"The enormous growth potential of its core packaging business coupled with the ramp up in other verticals viz. auto, and infrastructure (i.e. batteries, HDPE pipes & Prefab structures) inspire confidence in the outlook for the stock. Hence, we maintain our ‘BUY’ recommendation but marginally reduce our price target to Rs 100 on an 18-month investment perspective on back of revised earnings estimates," says PINC's research report.

To read full report Time Technoplast(PINC Research)

>Gujarat NRE Coke(MF Global)

As expected Gujarat NRE Coke came out with another strong quarter for Q2FY09.

v Net sales increased by 386% to Rs.4,961 mn driven by higher coke prices, which were up by 187% in Q2FY09 and volume growth of 108%. The company produced 165,127 ton of coke up by 108%. Coke business contributed 83.6%, against 60.3% last year to the top line.

v Standalone numbers don't include sales from Australian subsidiary, which grew by 7.4x in Q2FY09 to Aus $53.8 mn. Australian subsidiary mined and dispatched 213,000 ton of coal in Q2FY09 as compared to 127,000 ton last year. It sold coal at average realization of Aus $253 per ton as compared to Aus $58 per ton last year.

v Standalone EBIDTA increased by 739.2% to Rs.1,464 mn in Q2FY09 and by 256% to Rs.2,728 mn in H1FY09.

v EBIDTA margin increased by 1,242bps to 29.5% in Q2FY09 and by 69bps to 31.2% in H1FY09 on account of higher coke price and low price coal inventory. Since the price of raw material i.e. coking coal is fixed for entire year while sells of coke happen in spot, we expect the company to face margin pressure here onwards.

Read full report here Gujarat NRE Coke(MF Global)

Tuesday, November 11, 2008


Markets snapped two days of rally and saw sharp cuts in today’s trade. Sensex plunged 696 points to close at 9839, while Nifty shut shop at 2938, losing 209 points. Indian markets lost the most among all the Asian markets. Rupee closed at 48.12 against the dollar as against yesterday’s close of 47.38. September Index of Industrial Production (IIP) data will be announced tomorrow and is expected to show a growth of 3.6% as against 1.3% for the previous month.

All the sectoral indices finished in red. BSE Realty and Metal indices were down the most, losing 10.2% and 8.4% respectively. ITC was the sole gainer among the sensex stocks, up merely 0.06%, while JP Associate and Sterlite lost 12.2% and 11% respectively. BSE advance-decline ratio stood at 1:2.3.

To read full report 11112008(ANAGRAM)

>BHEL Q2(anagram)

Stock has corrected 50% from its peak and trading at 16x FY10E earnings provides long term investors an attractive entry point. We are keeping our estimates unchanged and are quite confident about its FY09E and FY10E earnings.
At CMP, stock trades at 21x FY09E and 17x FY10E earnings with an EPS of Rs.72 and Rs.89 Respectively. We recommended Accumulate rating on the stock

Read full report here BHEL Q2(anagram)

>Technical & Derivative Recommendations(EMKAY)

Read full report here

Technical & Derivative Recommendations(EMKAY)

>Currency corner(ANAGRAM)

Read the full report here

Currency corner(ANAGRAM)

Monday, November 10, 2008

>Weekly Technical Report (Religare)

The Nifty closed 3% higher in a volatile week of trading. It began on
a strong note but soon gave away all its gains in the next two days.
On the last day the Bulls held on closing at the days high. Realty
stocks were the flavour of the market (up 18%). Among the Sectoral
Indices, Banking, CGS and FMCG closed 8% higher while Reliance,
IT-Teck pack remained subdued. After last week of curtailed
trading, volumes picked up with selective action seen in the Midcap

Read full report here Weekly Technical Report (Religare)

>Morning report (Reliance Money)

Bharat Heavy Electricals Ltd will pick up 10% equity in
power projects abroad that would buy its equipment -
• Ranbaxy Laboratories has completed the deal with the
Japanese pharma company Daiichi Sankyo. Daiichi
has now acquired 63.92% of the equity share capital of
Ranbaxy - BS
• Elgi Equipments (EEL) has formed a joint venture with
J P Sauer and Sohn, Germany, with the manufacturing
facility being set up here - BS
• Blue Dart Express has earmarked Rs.100cr as capital
expenditure for the financial year 2009-2010, a majority
of which would be used for infrastructure up gradation –
• Hindustan Syringes & Medical Devices Ltd will invest
Rs.100cr over the next three years in capacity
expansion and for launching its products in new
markets - ET

Read full report here Morning report (Reliance Money)

>Market outlook(ICICI PRUDENTIAL)

A nice ppt presentation about the Indian stock market outlook.

Read full report here Market outlook(ICICI PRUDENTIAL)

Sunday, November 9, 2008

>Development Credit Bank Ltd(SKP Securities)

Company Profile: Development Credit Bank (DCB) promoted by
AKFED (Aga Khan Fund For Economic Development) was established
in Maharahtra in 1930 as a Co-operative bank and got converted into
private bank in 1995. Currently AKFED have 25% holdings in the
bank. DCB is a mid sized private sector bank with a total Balance
Sheet size of Rs. 7577 crs. At present it has total network of 76
branches and 4 extention counters all over India.

Read full report here Development Credit Bank Ltd(SKP Securities)

>Punjab National Bank(Anagram)

Read the full report here

Punjab National Bank(Anagram)

Saturday, November 8, 2008

>Asia Pacific(citi)

 Black October – The MSCI Asia Pacific ex-Japan benchmark closed down 18.8%
(in local currency terms) in October, making it the worst performing month in the
Index’s entire history.

Read full report here Asia Pacific(citi)


Upgrade to Buy (1M), target price Rs185 — Post a strong Q2FY09 and price
correction of ~65% YTD, we upgrade Sun TV Network (Sun) to Buy/Medium
Risk. Sun TV offers a strong play on regional advertising with leverage to DTH.

 Why we like Sun TV — (a) Dominance in the South Indian market; (b) High
profitability– ~69% EBITDA margins and ~27% RoE; (c) Leverage to DTH – we
expect DTH revenues of Rs1.3b (which have very high margins) in FY10E; (d)
Healthy balance sheet (net cash of ~Rs4b+); and (e) 18% EPS CAGR over
FY08-FY11E trading at ~11.8x FY10E.

 Strong 2Q, but moderate estimates to factor in slowing economy — Ad revenues
grew at a healthy 30% yoy. EBITDA margins were stable at ~75%; net profit
increased 35% yoy. Cable subscription rebounded 20% qoq while DTH revenues
should witness a sharp ramp-up 3Q onwards as billing to new operators starts.
However, we lower our FY10/11 EPS est. by 7/12% to factor in the impact of a
slowing economy on advertising spends. We model 18%, 15% & 12% advertising
revenue growth in the rest of FY09, FY10 & FY11 respectively.

 Value in-line with ZEEL — Sun is better leveraged to ad-revenue growth due to its
strong leadership position in Southern markets vis-à-vis ZEEL – the third most
viewed GEC in its highly fragmented Hindi space. Sun and ZEEL are equally
leveraged to pay-revenue from DTH penetration. We forecast similar EPS CAGRs
over the next 3 years for ZEEL and Sun and value both at 15x FY10E EPS.

 Risks — Increasing competition may affect viewership ratings; impact of rising
costs, which we expect should be compensated by DTH revenues.

Read full report here SUNTV(CITI)

Friday, November 7, 2008

>Dividend Yield

Download the file to see dividend yield stocks
Dividend yield

>Hotel Industry update

Indian Tourism Industry witnessed over 5 millions of Foreign tourist arrivals in FY08 reporting an impressive growth of 11% over previous year under the Incredible India, the highly successful promotional campaign by Government of India. The high growth in FTA resulted into the economy earning a whopping Rs 50723 crore or US$ 5.83 billion in foreign exchange. Forex earnings grew by 19% in INR terms and by 34% in US Dollar terms.Forthcoming quarters are expected to be a mixed one for the hospitality industry. Factors like weaking global scenario, poor industrial growth witnessed in the recent months, rising inflation, growing competition, rising crude oil prices and liquidity crunch, it will derive benefit from the recent weakening of rupee against all major currencies. In April 08-May 08, rupee has already declined by around 6.5% against US Dollar and by 6% against Euro. As forex constitutes more than 50% of the Hospitality Industry revenue, this is a positive factor for the industry.

For full report Hotel Industry update


Monthly view on Sensex
We have looked at Indian equities from the point of view of the Sensex only. This is because Sensex data is available for the last 30 years as compared to the CNX Nifty for which data is comparable for only 14 years.

A grand bull market has unfolded in India in the past 30 years, with intermittent bear markets
commencing after every 8 years. Indian markets have experienced significant bear
markets/consolidation after peaking out higher every 8 years; that is, after forming a high in the
years 1985, 1992, 2000 and 2008, markets have given in to significant corrections.
The Sensex has breached an important 5-year support trendline in the early part of 2008. This breach of trendline, coupled with an 8-year cyclical top, has brought in the current fall.
On the previous occasion when the Sensex breached a similar 5-6 year trendline, in 1992, the Sensex fell/consolidated for the next 3 years upto 1995.

Read full report here SENSEX VIEW (ENAM)


Earning drivers rebound. State Bank of India (SBI) reported a 2Q FY09 net profit of
INR22.6bn, up 40% y-o-y and better than our estimate of a net profit of INR20.5bn.
Strong growth in both revenue drivers, i.e. net interest income (up 45% y-o-y) and noninterest
income (up 15% y-o-y), helped shore up the bottom line this quarter. It is
interesting to note that each of these revenue drivers grew at a single-digit rate in the
preceding quarters of FY08. In that context, revenue drivers are seeing some rebound, but
sustaining them would be crucial to maintaining profitability.

Signs of aggression visible, but with a cost. SBI showed aggressiveness as it continued
to grow its business well above the sector average. Loan growth of 38% y-o-y and deposit
growth of 28% at September-end defied signs of a slowdown. However, the timing of
SBI’s growth drive during the business downcycle may be less than ideal. This was
reflected in loan loss provisions, which increased markedly in 2Q following a writeback in
the preceding quarter. Because SBI’s loan loss coverage ratio stands at a mere 47% at
September-end, much lower than that of its peers BOB (at 77%) and PNB (at 75%), we
believe risks due to rapid loan growth may not be adequately covered.

Assume higher cost of equity, credit costs. We have raised our FY09-FY11 credit cost
estimates in view of the strong loan growth and deteriorating asset quality. We have also
raised our cost of equity assumption to 15.5% from the 13.5% we assumed earlier, in view
of the deteriorating macroeconomic environment. Increase in credit costs is the key risk.

Read full report here SBI(HSBC)

Thursday, November 6, 2008


 EBITDA in-line, forex/deferred taxes distort headline profits — 2QFY09 EBITDA
at Rs37bn (+5%qoq/+37% yoy) was broadly in-line as non-mobile businesses
chipped in to cover slightly slower growth in mobile (5%qoq vs. 8-10% in the
past). Higher forex losses (Rs5.9bn vs. Rs1.5bn in 1Q) and deferred tax
recognitions distorted headline profits. We note PBT ex-forex adjustments were
up 42% yoy (vs. headline 13% growth). Bharti stays our top sector pick.

 Mobile margins increase despite seasonally weak quarter — The seasonal 1.5%
QoQ MoU decline was slightly higher than we thought; decline in rev/min was
sharper as well (4%qoq). Headline margins (30.2%) were lower. Adjusted for
the incremental 140bps on account of full quarter impact of higher NLD
carriage charge (2 months in 1Q) and diesel price hike (est. 25bps), EBITDA
margins would have been 31.9%.

Read full report here BHARTI(CITI)

 Other businesses steady — Fixed line had another strong quarter as a result of
scale economies and higher ARPUs. Long distance volumes have remained
strong and enterprise revenues jumped 25% qoq albeit with lower margins.
Towerco margins compression of 400bps was primarily on account of higher
energy costs, which though passed through, are included in gross rentals.

 We are maintaining estimates — Our subscriber net addition rate (2.3m/month)
for FY09 is well within Bharti’s YTD 2.6m rate and provides some cushion from
higher than forecast declines in rev/min and margin pressures. Sustained INR
weakness will mean forex impacts continue to distort headline profits though.

>BHARTI Q2 Result review(RELIGARE)

Read full report here

BHARTI Q2 Result review(RELIGARE)

Wednesday, November 5, 2008

>Reliance(Morgan Stanley)

Conclusion: We reiterate our Overweight rating on
Reliance but lower our target price to Rs1,619 and
reduce our F2009e and F2010e consolidated earnings
by 15% and 13%, respectively, based on the following:

1) delayed assumptions of commercial production of
RPL to April 2009;

2) delay in peak production
assumption of oil and gas from KGD6;

3) lower GRM
estimates and net backs on global GDP cuts; and

4) a stronger dollar forecast based on our revised view on
the INR/USD exchange rate; since we believe the
currency remains over-valued on a real effective
exchange rate.

For F2011 and F2012,
we have actually raised our earnings estimates.
Our target price of Rs 1,619, based on trough historical
multiples of global comps, implies 59% potential upside.
Reliance is net long the dollar: We estimate Reliance
will have a gross profit exposure of US$12 bn to the
dollar in F2010, and for every 1% chg. in the USD vs. the
rupee, its profitability would vary 3.7%. Reliance’s
domestic gas business is also pegged to the dollar, so
the net exposure to the dollar increases in the longer
term. Our global economist believes the Indian currency
remains over-valued on a real effective exchange rate.
The India rupee has depreciated 27% YTD and our team
expects another 10% softening in the next few years.
Valuations look attractive. Reliance has fallen 50% in
the last one month in absolute terms, underperforming
the market by 22%. It trades at 5.4x F2010e earnings, a
33% discount to the market multiple, making valuation
attractive on an absolute and relative basis, compared to
global comps. Key risks: Removal of tax holiday for the
E&P business; a slowdown in global economic growth

To read full Report Reliance(Morgan Stanley)

>Reliance(Goldman Sach)

Reliance Industries (RIL) reported 2QFY09 PAT of Rs.41.2bn, up 7% YoY, ahead of our estimate of Rs37.5bn primarily on the back of: 1) better than expected operating performance in petchem divison, and 2) refinery inventory gain of US$0.5/bbl against our estimate of US$2.0/bbl inventory loss. Refining margins of US$13.4/bbl was consequently ahead of our estimate of US$10.5/bbl. Petchem EBIT margin stood at 12.2%, up 160bp QoQ, reflecting robust product prices and low naphtha costs.
We expect the petchem margins to remain stable in the near term due to further delays in the new Middle Eastern capacities to 1Q2009, although we have a cautious outlook on refining margins. With oil production having started in 3QFY09 and gas production expected in 4QFY09, we believe that the E&P division will drive RIL earnings growth going forward.

What to do with the stock

We retain Buy rating on RIL with SOTP-based 12-month TP of Rs1,980,
implying upside potential of 63% from current levels. RIL is our top pick in the Indian energy space. We estimate RIL to report EPS CAGR of 32% during FY08-11E and to generate operating cash flow of US$6.5bn in FY10E. RIL currently has net debt/equity of about 0.36x. Risks: Execution risk/production delay in D-6.

To read full report Reliance(Goldman Sach)


Maintain Overweight rating while adding a (V) indicator;
cut target price from INR 2,945 to INR 2,160

Although on track vis-à-vis its own guidance, the schedule
for two key projects is short of our expectations

Cut our FY09e and FY10e EPS by 28.7% and 15%, respectively,
to account for dilution of equity base; it still translates into 82%
absolute growth in EPS over FY08-11e

Reiterate Overweight rating and add a (V) indicator, cut
target price to INR2,160 from INR2,945 due to the market
derating, softer margins and equity dilution

Read full report here Reliance(HSBC)

Tuesday, November 4, 2008

>Punj Llyod(ANAND RATHI)

* Maintain Buy. Punj Lloyd has reported strong revenue and
earnings growth for 2QFY09. On the higher execution of
projects, it beat our as well as the street’s estimates. We maintain
our Buy rating.

* Robust revenue growth. Sales grew 54.5% yoy on the back of
higher execution of projects, mainly in the infrastructure (39% of
revenue) and process plants (34% of revenue) segments.

* Margin expansion. EBITDA margin for the quarter expanded
52bps yoy. Though the margin expansion came 41bps under our
estimate, the higher-than-estimated ‘other income’ more than
made up for the lower reported EBITDA margin.

* growth beats estimates. Punj reported a 61.1% yoy
increase in earnings growth, 17.3% more than estimated. The
growth was driven by higher revenues and margin expansion.

* Order backlog and valuations. Its order backlog stands at
Rs216.75bn; order inflows for the quarter were Rs56bn (a 170%
rise yoy). The company is not seeing any slowdown in order
inflows or project executions. We maintain our estimates. Our
revised target price of Rs217 implies a target PE of 11x our Sep’09
earnings estimate. It stands at a 35% discount to the market target
multiple for market leader L&T. The target price of Rs217 is well
supported by our sum-of-parts valuation of Rs237.

For full Report Punj Llyod(ANAND RATHI)

>NTPC(Merrill Lynch)

2Q: Higher Fuel Price Drive Rec. PAT +12%YoY, EBITDA+17% Greater value of efficiency incentives from higher fuel costs (gas / LNG +100%YoY & Naphtha +66%) drove NTPC’s Rec. PAT to rise by 12% YoY,despite just 3.5% volume growth . 2Q09 income climbed +26.4% YoY, and EBITDA reached Rs32.5bn, +17% YoY. Coal PLF fell (83.1% v/s 83.4%) on coalshortages. We lower our Price Objective to Rs165 from Rs202 to factor in higher equity risk premium (6% v/s 5.7%) and 5% discount to DCF. We maintain our Buy
rating, however, given that the stock offers defensive growth, NTPC is cashBold-rich (US$3.4bn), and it has pipeline of +20% RoE projects.

Key drivers of NTPC’s growth ahead are:

1 Secure ~3.71mmscmd of gas from 1st tranch of Reliance KG gas for existing plants to boost RoE of its gas based projects operating at sub-optimal utilization

2 Potential hike in regulated return from April 1, 2009 by ~100bps on higher rates

3 Capacity expansion to 50GW by FY12E v/s 28GW – FY09 mark the peak in
NTPC’s efficiency, then on it will have to depend on capex to drive its growth.Monitize low cost fuel sources – captive coal mines (reserves 4.4bt) & LNG (~US$3-4/mmbtu from Nigeria)

4 PLF & Heat rate linked incentives to compensate for cap on spot market rates Value accretive FY08-10E capex CAGR +46%YoY; 3GW p.a.
NTPC plans capex of Rs126bn in FY09E +47%YoY and in FY10E of Rs186bn
+48%YoY. It has accelerated order placements of additional 2.5GW of projects (likely on BHEL) to compensate for delay in some projects and achieve 22GW add in XI Plan. It plans to commission 3GW in FY09E v/s 1GW (own) in FY08.

Concerns: a) 4GW or 18% of NTPC’s XI plan capacity ordered on Russian
suppliers / Doosan could get delayed by ~2 years; and

b) delay of over 1 year in production (FY10E) at its 1st captive mine due to land acquisition issues.

For full Report NTPC(Merrill Lynch)


Lupin’s 2QFY09 results were above our estimates. Key highlights:
? Net sales grew by 42% to Rs9.3b (vs estimates of Rs8.3b) while adjusted PAT grew by 53% to Rs1.15b (vs estimates of Rs956m). Organic top-line growth (excluding Kyowa & Rubamin acquisitions) was 18%. EBITDA margins expanded by 200bp to 19% (vs estimate of 18%) led by better product-mix and currency depreciation.

Niche/IPR opportunities gaining visibility – Lupin has a track record of launching low-competition IPR driven products in the US for the past few years. We expect this trend to continue in the future also with the company targeting to launch oral contraceptive products in the coming years.

Expect 30% EPS CAGR – We expect Lupin’s core operations (excluding one-off upsides) to record 25% sales and 30% earnings CAGR for FY08-10 led by traction in regulated markets, strong growth in domestic formulations and incremental savings from tax-exempt zones. The growth will be led by 23% CAGR for the regulated dosage form business and 21% CAGR for the domestic formulations business. Lupin is likely to witness a gradual improvement in the underlying fundamentals led by an expanding US generics pipeline niche / Para-IV opportunities in the US, strong performance from Suprax (branded product in US) and ramp-up in formulation revenues from its European initiative. Incremental benefits are likely to be visible from the Jammu facility which enjoys fiscal benefits. We expect the company to record EPS of Rs49.7 and Rs63.8 for FY09 and FY10 respectively. Given the strong earnings growth, valuations at 12.7x FY09E and 9.9x FY10E consolidated earnings are attractive.
Reiterate Buy.


Monday, November 3, 2008


Strong performance: IDFC’s consolidated earnings grew 19% YoY in 2QFY09 to Rs2.3b. Despite slower NII growth due to losses on treasury investments, sustained high capital gains and stronger traction in fees led to earnings growth.

1 Balance sheet grew 28% to Rs290b (QoQ flat), driven by 25% growth in loans to Rs214b (QoQ flat). Gross disbursements decreased 26% YoY and 30% QoQ to Rs19b in 2QFY09. Disbursements are down 7% YoY in
1HFY09 to Rs47b. Approvals decreased by 30% YoY to Rs29b in 2QFY09 and 12% YoY to Rs74b in 1HFY09.

2 Management maintained its conscious risk aversion attitude towards asset book growth considering the increasing macro risks and liquidity uncertainties. The management highlighted that its priorities would be (1) liquidity, (2) profitability, and (3) balance sheet growth. Non-interest income increased significantly by 72% YoY to Rs2.2b in
2QFY09 due to 60% growth in fees and 93% growth in capital gains. Asset management fees grew 4.6x to Rs600m in 2QFY09. We expect alternative asset management fees to grow 2.5x in FY09 to Rs1.42b.

3 IDFC’s capital adequacy is strong at 22.2% and Tier I at 18.9%. It said that it has no plans to raise capital in the foreseeable future. Management maintained that it would like to sustain leverage at current level of ~5x.
Upgrade to Buy: We are upgrading FY09 earnings estimates by 2% and cutting FY10 earnings estimates by 3%. The stock trades at 1.1x FY09E BV and 8.3x FY09E EPS and 1x FY10E BV and 6.9x FY10E EPS. The current valuations are attractive and offer favorable risk reward ratio. Upgrade to Buy with a target price of Rs76; an upside of 41%.

For full report IDFC(MOTILAL OSWAL)

>ICICI Bank (GS)

ICICI reported net profit of Rs10 bn, slightly ahead of Reuters consensus and 10% above our expectations. Improved cost-to-income ratio of 43%, NIM of 2.4% and CASA of 30% boosted the reported performance. Cautious lending caused a slowdown in loan growth to 7%, which was 4% lower than our estimate. Net NPA increased by 9 bp to 1.83%. 1HFY09 accounted for 46% of our full-year NPAT estimates. There was a significant slowdown in the life insurance business, which reported growth of only 4% yoy in NBP compared with consistent above-40% growth in the previous three quarters.
We expect slower loan growth in the short term till the market stabilizes
due to funding constraints as well as a sustained high level of credit costs, which will likely remain challenging. Deterioration in credit quality would likely cause the bank loan loss reserve ratio to rise going forward. In our view, improved productivity/efficiency in its operations, as well as targeted measures for cost control could partly offset these concerns. We believe that the life insurance business faces growth headwinds in the near term due to tougher capital market conditions. Given the recent sell-off, value appears to be emerging but the stock lacks catalysts, in our view. We note that monetizing strategic investments is likely going to be difficult given
the current market conditions.
At the current price, the stock appears to be largely pricing in downside to medium-term growth expectations, as the stock is trading at 0.71X FY09E P/B vs. 1.71X for its Indian bank peer group. Given the headwinds to revenue and profit from a material slowdown we anticipate in the short term, we are placing our estimates, target price and rating under review.

To read full Report ICICI Bank (GS)

>Great Offshore(Citi)

Buy: 2Q Affected by One-offs; New Target Price Rs403
Disappointing 2Q, marred by one-off low utilisation — 2Q standalone PAT of Rs169m (-66% yoy, -74% qoq) was well below estimates, driven primarily by 4 vessels (2 PSVs, 1 MSV, and the construction barge) not functioning at all during the quarter due to a combination of technical downtime, operational difficulties and surveys, combined with expenses related to repairs and dry docking of these vessels. The 3 OSVs have since been pressed back into service and will contribute to 3Q earnings, while the construction barge is likely to be operational by Dec. We view the 2Q performance as one-off and estimate
~Rs0.35-0.40bn of incremental revenues in 3Q .

Increasing revenue forecasts but lowering earnings — We have reduced our FY09-11E reported earnings by 12-15%, despite revenue and EBITDA estimates increasing by 2-10% and -1% to 7% respectively. While our revenue/EBITDA forecasts have risen due to a combination of (i) acquisition of the new AHTSV in Aug (US$47K day rate) and (ii) incorporation of new rupee forecasts, our earnings estimates have been decreased primarily to factor in higher funding cost (+200 bps) given tight credit conditions and higher debt to
finance the new vessel acquisition.

Maintain Buy on stable business profile, good earnings visibility — We maintain our Buy/Medium Risk rating on the stock with a revised TP of Rs403. Despite the earnings cuts and lower TP, we remain positive on the company at current valuations given a relatively stable business profile (nearly 75% of revenues are from ONGC) and good earnings visibility (avg. contract durations are 2-2.5 yrs) which make it less exposed to a cyclical downturn in the offshore capex cycle.

For full report Great Offshore(Citi)

Sunday, November 2, 2008

>Welspun Gujarat (MF Global)

Welspun Gujarat Stahl Rohren (WGS IN)
Good Performance during the quarter

The results of Welspun Gujarat (Welspun), for Q2FY09
have been better than our estimates at the top line and lower
at the bottom line due to the MTM forex loss.
· Top line growth of 60.9% YoY
· EBIDTA marred by the forex re-alignment
· Reported PAT lower, but the Adjusted PAT shows good growth
· Robust Order Backlog of Rs 90bn

Read full report here Welspun Gujarat

>Exide Industries(BNP Paribas)

Immune to slowdown, unlike auto-component peers
We initiate coverage of Exide, the leader of the Indian automotive and
industrial storage batteries markets, with a BUY rating. Exide’s earnings
should be immune to an auto slowdown as it depends on replacement
demand from the existing vehicle base and not on sales to originalequipment
manufacturers (OEMs). Our thesis is supported by a similar
demand pattern observed in auto tyre sales. Exide’s auto replacement
volumes (with 70% market share in branded batteries) should expand
15-20% in FY08-10 due to a higher vehicle base following the auto boom
in FY03-07 (our checks confirm average battery life of three years).

Lead recycling to boost market share, help margins
We expect branded batteries’ share in the auto replacement market to
improve from the current 50% to 58-60% by FY10 due to Exide’s
strategy of procuring exhausted batteries, thereby cutting supply of
recyclable lead to unbranded players. Exide’s recent acquisition of two
smelters for recycling lead from exhausted batteries will meet 25% of its
requirements. Use of cheaper recycled lead, combined with the recent
44% drop in lead prices, presents strong margin-expansion potential.

Don’t ignore the industrial batteries segment
Sales of high-margin industrial batteries (40% of revenue; 45% market
share) should post 18-20% growth in FY08-10 driven by the telecom and
export segments. Exide’s telecom segment should expand at least at a
conservative 40% CAGR in FY08-10, with telecom base stations
expected to expand at a 50% CAGR and battery replacement adding to
demand. We also expect exports to expand to about 8% of sales by
FY10 from 5% as the recent expansion eases capacity constraints.

Initiate with BUY; TP of INR82 implies 19.2% upside
We estimate EPS growth at a 27% CAGR in FY08-10 on 15% volume
growth and 150bp margin expansion in FY09. Our TP of INR86 is a sum
of INR71/share for the standalone business, based on 14x FY10E EPS,
and INR15/share for the 50% stake in ING Vysya Life Insurance. We
believe Exide deserves a premium to auto-component peers given that
its medium-term profitability appears immune to the current slowdown

Read full report here Exide Industries(BNP Paribas)

>Cairn(ICICI Securities)

Cairn India’s Q3CY08 recurring net income was at Rs3.1bn (I-Sec: Rs1.6bn, Street:
Rs1.4bn) on the back of higher-than-expected other income from investments
(Rs1.2bn) and forex fluctuation gain of Rs873mn. The company’s production
declined 9% YoY to 17.1mboepd due to 22% YoY fall in Ravva crude production
(owing to natural decline in the field), though partially offset by 54% YoY rise in
Cambay crude production. The stock has corrected 44.6% and underperformed
the Sensex 16.2% in the past one month on the back of worries over global
recession, impact on crude demand and huge correction in commodity prices.
This is an excellent opportunity for long-term investors to buy the stock at cheap
valuations. The stock offers an attractive 42% upside to our bear-case valuation of
Rs163/share and 127% upside to our fair value of Rs261/share. Maintain BUY.

Net sales increased 20.6% YoY to Rs3.2bn on the back of 49.5% YoY rise in
average price realisation to US$87.3/boe. This was despite 9% YoY dip in net
production to 17.1mboepd in Q3CY08, primarily due to 22.5% YoY dip in Ravva oil

EBITDA increased 33.1% YoY to Rs2.5bn due to higher sales and decline in staff
expenses that were partially offset by higher other administrative expenses. Staff
expenses fell 32.9% YoY to Rs160mn and operating expenses rose 268.8% YoY to
Rs172mn. EBITDA margin also improved 727bps YoY to 77.4%.

Recurring net incomes rose 150.9% YoY to Rs3.1bn due to higher EBITDA and
sharp 499.2% YoY rise in other income to Rs2.1bn on the back of higher income
from investments and forex fluctuation gain. DD&A rose 26.9% YoY to Rs650mn.

present, Cairn offers 42% upside to our bear-case valuations. Under bearcase
valuation of Rs163/share, we have assumed long-term crude price at US$60/bl,
cess liability for Rajasthan crude at Rs2,575/te, Rajasthan’s crude discount to Brent
at 15% and three months delay in commencement of production from Rajasthan to
January ’10.

Cheap valuations. Cairn is currently trading at long-term implied crude price of
US$35.4/bl. The stock offers an attractive 42% upside to our bear-case valuation of
Rs163/share and 127% upside to our fair value of Rs261/share. This is an attractive
entry point for long-term investors.

Read full report here Cairn(ICICI Securities)

>Divident yeild stocks


Divident yeild

>Deep Value Stocks

Global indices witnessed the steepest ever weekly fall of 16-20%, reflecting the
ongoing turbulence in financial markets. This has significantly shaken investor
confidence and depleted risk appetite. Consequently, valuations have taken a
severe beating. While predicting the bottom is not feasible, we believe that such
an event offers many excellent businesses on ‘sale’. Assuming a challenging
business scenario over the next year as well as conservative historic valuations
benchmarks, we have mined few potential winners based on our bottoms-up
analysis. We have focused on risks first (given the current environment) and then
estimated the potential conservative RoI in the next 3-4 quarters. Such deepvalue
stocks could generate 30-55% RoI in the coming year.

Globally, equities undergoing unprecedented meltdown. After a four-year bull
run, the sub-prime related financial crisis has taken toll on global equities, with the
Dow Industrial Average, MSCI World, MSCI Asia (ex-Japan) and Sensex
plummeting 28%, 34%, 45% and 43% respectively YTD. With rapid erosion in
equities’ risk premium, we have factored in conservative historical valuation
benchmarks to account for economic headwinds that India is likely to face.

Deep value BUYs with lower attendant risks. Based on highly conservative
historic valuations benchmarks and potential risks, we have screened all companies
in the I-Sec universe and handpicked deep-value stocks. We expect these stocks to
deliver potential RoI of 30-55% over the next 3-4 quarters.

Read more here Deep_Value_Stocks


Bharat Heavy Electricals Ltd. (BHEL.IN/BHEL.BO) recorded a robust revenue growth in Q2 FY09 and continued to exhibit a strong order book position, though it faltered on the margins front. Total sales grew 30.6% Y-o-Y to Rs.57.98 bn with the Power segment contributing Rs.44.08 bn (up 33.4%Y-o-Y), while the Industry segment contributed Rs.15 bn (up 20.4% Y-o-Y). However the EBIDTA margin for the quarter declined 420 basis points Y-o-Y to 13.3%, due to an increase of 500 bps Y-o-Y in material costs, as a percentage of sales, to 59.54%. Total provision for wage revisions stood at Rs.19.07 bn for the period January 1, 2007 to March 31, 2009 and the overall amount provided up to
March 31, 2008, was Rs.5940 mn. Out of the balance Rs.13.13 bn to be provided in 2008-09, Rs.5.47 bn was provided in the first two quarters, while remaining Rs 7.66 bn will be provided in H2 FY09. The proforma PAT improved by 18.1% Y-o-Y to Rs.6.16 bn in Q2 FY09, as against an EBIDTA growth of 2.2% Y-o-Y, driven by an increase of 31.6% Y-o-Y in Other income to Rs.3.07 bn. Read full here BHEL_FG