>GOLDYNE TECHNOSERVE LIMITED (MERRILL LYNCH)

The company
Glodyne Technoserve is a fast growing company in the high potential IT infrastructure management space. The revenue of company has grown form Rs685mn in FY05 to Rs5010mn in FY09. The company has guided consolidated revenue of Rs6680-6880mn in FY10, a yoy growth of 33-37%. The company derives about 80% of its revenue from technology infrastructure management services (IMS), and rest comes from application development & other services. The company operates in India (75% of rev.) & USA (25% of rev.) geographies.

IMS – big untapped potential
As per various studies, while in general offshoring services have grown rapidly in past one decade, the services pertaining to remote management and maintenance of core IT infrastructure has been rather slow to gain popularity. As of now, only about 7 percent of the addressable market is being estimated to have been captured. Studies, e.g., by Mckinsey in 2008, have suggested that shifts in customer attitudes and economics could trigger rapid growth for these services.

E-governance and education– potential growth driver
The company traditionally has strong relations with government departments and public sector undertakings. With E-Shakti project, a five year Rs2840mn project under NREGS won by the company on BOOT basis from Bihar State government in FY09, the company has entered a high potential e-governance market. The company estimates it to be major growth driver in next few years. Through acquisition of Broadllyne Technologies – a managed application service
provider in the education sector, the company has also entered the fast growing education sector.

Product offerings
Glodyne’s main product offerings are Technology Infrastructure Management Services (Technology IMS) and Application Software Services (ASS). The company has a hybrid service delivery model including both onsite and remote delivery of services.

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>INDIAN AUTO (FIRST GLOBAL)

FOUR WHEELER MONTHLY UPDATE

Robust domestic growth & double digit export growth drive combined volumes of passenger & commercial vehicles in July 2009…

Maruti Suzuki’s total volumes rise 33.433.4% Y-o-Y & 3.9% sequentially, Tata Motors’ volumes increase by 18.2% Y-o-Y & 5.9% sequentially, and M&M’s volumes up 22.6% Y-o-Y, but down 1.9% sequentially…

In July 2009, the combined volumes of passenger vehicles and commercial vehicles grew 22.8% Yo-Y and 2.1% sequentially, due to a growth of 24.7% Y-o-Y in domestic volumes and an increase of 14% Y-o-Y in exports. The government’s stimulus package, lower interest rates on vehicle finance, and excise duty cut helped drive industry volumes to some extent. The demand in July 2009 was also aided by pre-festival purchases by dealers. Total volumes in the PV segment were up 27.5% Y-o-Y and 1.6% sequentially to 181,431 units, on the back of domestic growth of 29.2% Y-o-Y coupled with an export growth of 20.8% Y-o-Y. Industry volumes in the PC segment increased by 28.9% Y-o-Y to 148,573 units.

Volumes in the domestic PC industry were up 30.9% Y-o-Y, while exports recorded a growth of
22.4% Y-o-Y. Volumes in the Utility Vehicles (UV) segment increased significantly by 15.5% Y-o- Y, but down 6.2% sequentially to 20,987 units, while volumes in the Multi-Purpose Vehicles (MPV) segment rose 34.7% Y-o-Y and 12.9% sequentially to 11,871 units in July 2009.

In the CV segment, total industry volumes rose by 5.2% Y-o-Y and 4.1% sequentially to 40,827
units. Volumes in the M&HCV segment declined by 5.9% Y-o-Y, but rose 3.6% sequentially to
17,911 units, while volumes in the LCV segment grew 15.9% Y-o-Y and 4.4% sequentially to
22,916 units. Total 4 wheeler volumes increased by 22.8% Y-o-Y and 2.1% sequentially to 222,258
units.

Read in report on to find out how the major auto players fared in July 2009…

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>ABAN OFFSHORE(CITI)

Upgrade to Buy: Concerns Abating, Outlook Improving
 Upgrade to Buy — Despite the stock’s 27-29% outperformance in the last 2-3
months, we upgrade Aban to Buy (1M) from Sell (3S) with a Rs1,550 TP (was
Rs520), driven by a better outlook and yesterday’s positive announcements.
 Three key concerns abating — Our Sell rating was premised on 3 key concerns
— (i) idle assets, (ii) high leverage, and (iii) E&P capex cuts — which did play
out and have materially abated since then. The announcement yesterday of LT
contracts for 4 idle rigs at healthy day rates provides us the necessary evidence
to substantiate our earlier claim of improving times (see our note titled '1Q
Ahead of Estimates – Signs of Improving Times' dated 31 Jul’09) and drives
our TP, rating and risk rating upgrade. Debt restructuring (through moratorium
on principal) also appears likely, largely precluding bankruptcy. The jack-up
market appears to be showing signs of turning around, with crude at US$60+.
 Duration and pricing of new contracts +ve — Aban yesterday announced
deployment of 3 Deep Driller rigs in Middle East at day rates of cUS$165K for 3
years and 1 Deep Driller rig in Latam for US$120K/day for ~2 yrs. The day
rates, esp. on the Middle East contract, are a +ve surprise. While political risks
may have discouraged competition permitting Aban to command higher rates,
Aban's presence in the region (through Aban VIII and Aban VI) reduces risk.
 New TP of Rs1,550 — Key changes to our DCF assumptions: (i) improvement
in industry outlook driving higher medium-term cash flows and slight
improvement in mid-cycle earnings, (ii) terminal growth rate of 2% (vs. 0%),
(iii) roll forward to Mar-10E, and (iv) earnings changes: -50% in FY10E, +19%
in FY11E. Given the high debt, our equity value nearly trebles though our EV is
up a more modest 46%. Our new TP imputes a 5.3x P/E and 6.7x EV/Ebitda.

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>INDIAN STEEL(UBS)

􀂄 We believe the worst is over for the Indian steel industry
We believe the worst is over for the steel industry as: 1) steel prices should remain
firm globally (the global steel industry is operating at 55-60% capacity utilisation);
and 2) Chinese HRC prices increased in Q1 FY10 on robust demand, providing
support for domestic prices (import duty is 5%). We believe the Indian economy is
over the worst, based on the upturn in the UBS Lead Economic Indicator, Index of
Industrial Production, and strong cement and auto sales.
􀂄 Indian prices to remain firm; no significant overcapacity in next 2-3 years
We estimate Indian HRC prices at US$600/US$630 in FY10/FY11 (UBS China
steel analyst, Hubert Tang, estimates Chinese HRC prices at US$458/US$505 (ex-
17% VAT)) for FY10/11. The Indian steel industry is operating at 89% capacity
and we do not expect significant overcapacity between FY10-12. We estimate steel
demand will grow 7%/12% in FY10/11 (+5% YoY in Q1 FY10 versus -10% YoY
in Q4 FY09).
􀂄 Raw material costs have declined significantly from peak levels
Raw material prices have declined significantly. Coking coal has been renegotiated
to US$129 versus US$300/tonne previously (US$129/145/155 per tonne estimated
for FY10/11/12). In the current deflationary cost environment, JSW Steel (JSW)
and Tata Steel should benefit more than Steel Authority of India (SAIL) due to
their lower integration.
􀂄 Positive on JSW and Tata Steel
Our preferred picks are JSW (upgrade from Neutral to Buy) and Tata Steel. We
believe JSW is an attractive play on the domestic growth story. Tata Steel is
unlikely to have cash flow issues and the stock has priced in some pessimism, in
our view. We downgrade SAIL from Buy to Sell.

To read full report :- INDIAN STEEL(UBS)