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Please refer to important disclosures at the end of this report

WWWWWeekly Revieweekly Revieweekly Revieweekly Revieweekly Review

Markets witness profit booking

After remaining subdued for the past several weeks, the Indian marketswitnessed profit booking during the current week of trade, with both thebenchmark indices, the BSE Sensex and the NSE Nifty, ending lower by4.0% and 4.1%, respectively. The BSE Mid- and Small- Cap indices werealso at the receiving end, losing 3.8% and 3.4%, respectively. The USPresident, Barack Obama's proposed new restrictions to limit the size andthe risk taken by large banks weighed heavily on the global market sentiment,including that in India. On the sectoral front, all the major sectoral indicesended in the red, with the BSE Realty index losing the maximum of 8%.

BSE Realty Index - Leading the pack of losers

The BSE Realty Index underperformed the benchmark indices, and lost 8%during the week. The top losers in the realty space were Peninsula Land(-11.3%), Unitech (-10.5%), Omaxe (-9.2%), Ansal Properties (-8.8%) andDLF (-8.7%). Realty stocks fell on reports that the finance ministry had rejectedthe Department of Industrial Policy and Promotion's (DIPP) proposal ofdropping the mandatory three-year lock-in for foreign direct investment(FDI) in the real estate sector, affecting the prospects of the sector raisingfunds from overseas investors. In company specific news, HDIL was downby 6.2% despite reporting a good set of results for 3QFY2010.

Inside This Weekly

Dishman Pharma - Initiating Coverage - Dishman Pharma - Initiating Coverage - Dishman Pharma - Initiating Coverage - Dishman Pharma - Initiating Coverage - Dishman Pharma - Initiating Coverage - Dishman would now reap benefitsof Organic capex incurred in the last three years and with the Abbott-Solvaycontract also expected to normalise post completion of the acquisition in4QFY2010E. Thus, overall the company is estimated to report CAGR of23.5% and 35.5% in Top-line and Bottom-line respectively, overFY2010-12E. WWWWWe Initiate Coverage on the stock with an Accumulatee Initiate Coverage on the stock with an Accumulatee Initiate Coverage on the stock with an Accumulatee Initiate Coverage on the stock with an Accumulatee Initiate Coverage on the stock with an Accumulaterecommendation and 15-month Trecommendation and 15-month Trecommendation and 15-month Trecommendation and 15-month Trecommendation and 15-month Target Parget Parget Parget Parget Price of Rs311.rice of Rs311.rice of Rs311.rice of Rs311.rice of Rs311.

GSPL - Company Update - GSPL - Company Update - GSPL - Company Update - GSPL - Company Update - GSPL - Company Update - We expect the GSPL stock to get re-rated on theback of improving availability of gas and increasing probability of the GSEDStax not likely to get implemented. Also, current valuations are building in anover pessimistic scenario with regards to Transmission Tariffs. At 1.7x FY2012EPrice/Adj Book Value, we believe the stock provides an attractive entry levelfor investors. Hence, we maintain a Buy on the stock, with a 15-monthHence, we maintain a Buy on the stock, with a 15-monthHence, we maintain a Buy on the stock, with a 15-monthHence, we maintain a Buy on the stock, with a 15-monthHence, we maintain a Buy on the stock, with a 15-monthTTTTTarget Parget Parget Parget Parget Price of Rs121.rice of Rs121.rice of Rs121.rice of Rs121.rice of Rs121.

Aqua LAqua LAqua LAqua LAqua Logistics (ALL) - IPO Note - ogistics (ALL) - IPO Note - ogistics (ALL) - IPO Note - ogistics (ALL) - IPO Note - ogistics (ALL) - IPO Note - ALL is primarily engaged in freightforwarding services with agents to provide end-to-end solution to its clients.At the lower price band, the IPO is available at 13.4x FY2012E EPS, whichis in line with Allcargo, but at a premium to GDL on our estimated FY2012EEPS. We believe ALL should trade at a discount to Allcargo and GDL giventhat these players have a proven track record, diversified portfolio of servicesand stronger balance sheets. Hence, we recommend an Avoid on the IPOHence, we recommend an Avoid on the IPOHence, we recommend an Avoid on the IPOHence, we recommend an Avoid on the IPOHence, we recommend an Avoid on the IPO.....

Note: Stock Prices are as on Report release date; Refer all Detailed Reports on Angel website

January 23, 2010

FII activity during the Week (Rs crore)As Cash Futures Neton (Equity) Activity

Jan 18 (890) (329) (1,218)

Jan 19 295 (352) (57)

Jan 20 (452) (798) (1,250)

Jan 21 (32) (735) (767)

Jan 22 (570) (4,293) (4,863)

NetNetNetNetNet (1,649) (1,649) (1,649) (1,649) (1,649) (6,507) (6,507) (6,507) (6,507) (6,507) (8,155) (8,155) (8,155) (8,155) (8,155)

Mutual Fund activity (Equity) (Rs crore)As on Purchases Sales Net Activity

Jan 18 507 622 (115)

Jan 19 506 1,004 (499)

Jan 20 730 936 (206)

Jan 21 798 1,261 (463)

NetNetNetNetNet 2,540 2,540 2,540 2,540 2,540 3,822 3,822 3,822 3,822 3,822 (1,282) (1,282) (1,282) (1,282) (1,282)

Note: Mutual Fund data for 22nd Jan not updated in SEBI

Key Movements

Indices Jan. Jan. Weekly YTD

15, 10 22, 10 (% chg)

BSE 30 17,554 16,860 (4.0) (3.5)

NSE 5252 5036 (4.1) (3.2)

Nasdaq 2,288 2,205 (3.6) (2.8)

DOW 10,610 10,173 (4.1) (2.4)

Nikkei 10,982 10,591 (3.6) 0.4

HangSeng 21,654 20,726 (4.3) (5.2)

Straits Times 2,908 2,820 (3.1) (2.7)

Shanghai Composite 3,224 3,129 (3.0) (4.5)

KLSE Composite 1,299 1,300 0.1 2.2

Jakarta Composite 2,647 2,610 (1.4) 3.0

KOSPI Composite 1,702 1,684 (1.0) 0.1

Indices Jan. Jan. Weekly YTD

15, 09 22, 10 (% chg)

BANKEX 9,921 9,810 (1.1) (2.2)

BSE AUTO 7,443 7,402 (0.5) (0.5)

BSE IT 5,402 5,190 (3.9) 0.1

BSE PSU 9,931 9,769 (1.6) 2.5

January 23, 2010

For Private Circulation Only | Angel Broking Ltd: BSE Sebi Regn No : INB 010996539 / CDSL Regn No: IN - DP - CDSL - 234 - 2004 / PMS Regn Code: PM/INP00000154 6 Angel Securities Ltd:BSE: INB010994639/INF010994639 NSE: INB230994635/INF230994635 Membership numbers: BSE 028/NSE:09946 2

FFFFFundamental Fundamental Fundamental Fundamental Fundamental Focus |ocus |ocus |ocus |ocus |

Dishman Pharmaceuticals - Accumulate

Initiating CoverageReliance InfratelReliance InfratelReliance InfratelReliance InfratelReliance Infratel

Organic Growth Ahead

Dishman Pharmaceuticals & Chemicals (Dishman), over theyears, has established itself as a strong and preferredoutsourcing player through acquisition of Carbogen Amics (CA)and scale up of its Indian CRAMS business. Dishman registeredCAGR of 35.5% in Net Sales over FY2007-09 to Rs1,062crand healthy OPM of 26.0%. Going ahead, the company wouldreap benefits of Organic capex incurred in the last three years,with the commencement of its China and HPAPI facilities inFY2011E. The Abbott-Solvay contract is expected to normalisepost completion of the acquisition in 4QFY2010E. Thus, overallthe company is expected to report CAGR of 23.5% and 35.5%in Top-line and Bottom-line respectively, over FY2010-12E. Onthe valuation front, the stock is trading at 13.7x FY2011E and11.3x FY2012E Earnings, which discounts the expected subduedperformance in FY2010E. We Initiate Coverage on the stockwith an Accumulate recommendation and 15-month Target Priceof Rs311, valuing the company at 13x FY2012E Earnings.

Capex benefits to accrue from FY2011E onwards:Capex benefits to accrue from FY2011E onwards:Capex benefits to accrue from FY2011E onwards:Capex benefits to accrue from FY2011E onwards:Capex benefits to accrue from FY2011E onwards: Dishmanincurred organic capex of Rs300cr in the last three years towardsexpansion of existing facilities at its Bavla unit and building theChina and HPAPI facilities. Post all these facilities comingon-stream FY2011E onwards, Dishman would strengthen itsties with the Global Innovators leading to stable Revenue flowover the long run.

AbbottAbbottAbbottAbbottAbbott-----Solvay contract to normalise by FY2011ESolvay contract to normalise by FY2011ESolvay contract to normalise by FY2011ESolvay contract to normalise by FY2011ESolvay contract to normalise by FY2011E::::: Solvay, akey client of Dishman, contributed 16% to its Top-line in FY2009.However, Revenues from Solvay were subdued in 1HFY2010on account of Abbott announcing acquisition of Solvay in2QFY2010 as well as inventory rationalisation. Going ahead,with the acquistion likely to close by 4QFY2010E, Revenuesfrom the contract would normalise by 1QFY2011E.

Outlook and Valuation

Dishman reported lower-than-expected 1HFY2010 resultsprimarily due to the higher-than-expected de-growth registeredby the Abbott- Solvay contract and marginal underperformanceon the CA front. We expect both Abbott-Solvay contract andCA to extend their lacklustre performance to 2HFY2010E as

PPPPPrice - Rs 426rice - Rs 426rice - Rs 426rice - Rs 426rice - Rs 426TTTTTarget Parget Parget Parget Parget Price - Rs 525rice - Rs 525rice - Rs 525rice - Rs 525rice - Rs 525

Research Analyst - Sarabjit Kour Nangra/Sushant Dalmia

Source:Source:Source:Source:Source: Company, Angel Research; Price as on January 18, 2010

Key Financials (Consolidated)

Net SalesNet SalesNet SalesNet SalesNet Sales 1,062 1,062 1,062 1,062 1,062 970 970 970 970 970 1,236 1,236 1,236 1,236 1,236 1,478 1,478 1,478 1,478 1,478

% chg 32.3 (8.7) 27.4 19.6

Net PNet PNet PNet PNet Profitrofitrofitrofitrofit 146.2 146.2 146.2 146.2 146.2 105.9 105.9 105.9 105.9 105.9 159.9 159.9 159.9 159.9 159.9 194.5 194.5 194.5 194.5 194.5

% chg 22.1 (27.6) 51.0 21.6

EPS (Rs)EPS (Rs)EPS (Rs)EPS (Rs)EPS (Rs) 18.1 18.1 18.1 18.1 18.1 13.0 13.0 13.0 13.0 13.0 19.7 19.7 19.7 19.7 19.7 23.9 23.9 23.9 23.9 23.9

EBITDA Margin (%) 26.0 22.9 24.7 25.3

P/E (x) 14.8 20.7 13.7 11.3

RoE (%) 22.9 13.9 17.9 18.5

RoCE (%) 16.1 10.1 12.9 14.7

RoIC (%) 19.6 12.3 15.0 16.2

P/BV (x) 3.1 2.7 2.3 1.9

EV/Sales (x) 2.7 3.0 2.4 2.0

EV/EBITDA (x) 10.7 12.4 9.3 7.6

Y/E March (Rs cr) FY2009 FY2010E FY2011E FY2012E

Price - Rs269Target Price - Rs311

well. However, post completion of the Abott-Solvay acquisition,Revenues of the entity would gather momentum on the back ofhigher off-take of Eprosartan and commencement of FenofibrateAPI supplies. Further, we expect Dishman to gain from itsfront-end nature of capex FY2011E onwards as it will enterlong-term contracts with major Global Innovators resulting insteady Revenue flow thereon. We expect the company'sTop-line to grow by CAGR of 23.5% over FY2010E-12E toRs1,478cr and Bottom-line to register CAGR of 35.5% toRs194.5cr primarily driven by Organic Capex and uptick in theAbbott-Solvay contract, which would result in the stock gettingre-rated on the bourses.

On the valuation front, Dishman is factoring in the dismalperformance expected in FY2010E. We Initiate Coverage onthe stock, with a Buy recommendation. WWWWWe have arrived at ae have arrived at ae have arrived at ae have arrived at ae have arrived at a15-month T15-month T15-month T15-month T15-month Target Parget Parget Parget Parget Price of Rs 311, valuing the stock at 13xrice of Rs 311, valuing the stock at 13xrice of Rs 311, valuing the stock at 13xrice of Rs 311, valuing the stock at 13xrice of Rs 311, valuing the stock at 13xFY2012EFY2012EFY2012EFY2012EFY2012E, implied EV/EBITD, implied EV/EBITD, implied EV/EBITD, implied EV/EBITD, implied EV/EBITDA of 8.5x and EV/Sales 2.2x onA of 8.5x and EV/Sales 2.2x onA of 8.5x and EV/Sales 2.2x onA of 8.5x and EV/Sales 2.2x onA of 8.5x and EV/Sales 2.2x onFY2012 estimates, and translating into an upside of 16% fromFY2012 estimates, and translating into an upside of 16% fromFY2012 estimates, and translating into an upside of 16% fromFY2012 estimates, and translating into an upside of 16% fromFY2012 estimates, and translating into an upside of 16% fromcurrent levels.current levels.current levels.current levels.current levels.

January 23, 2010



GSPL - Buy

Company Update

Stepping on Gas

We expect the GSPL stock to get re-rated on the back ofimproving availability of gas and increasing probability of theGSEDS tax not likely to get implemented. We believe new inter-state pipelines could address scalability concerns to a largeextent. Also, current valuations are building in an over pessimisticscenario with regards to Transmission Tariffs. At 1.7x FY2012EPrice/Adj Book Value, we believe the stock provides an attractiveentry level for investors. Hence, we maintain a Buy on the stock,with a 15-month Target Price of Rs121.

TTTTTariff decline Risk captured in Variff decline Risk captured in Variff decline Risk captured in Variff decline Risk captured in Variff decline Risk captured in Valuation:aluation:aluation:aluation:aluation: Assuminglong-term volume flow of 49mmscmd, the current market priceis discounting Perpetual Blended Tariffs of close to Rs0.57/scm(factoring in 36% fall over the reported average TransmissionTariffs of 2QFY2010 and around 24% lower than managementguidance). Thus, current valuations are building in an overpessimistic scenario.

VVVVVolumes to propel Polumes to propel Polumes to propel Polumes to propel Polumes to propel Profitability despite Trofitability despite Trofitability despite Trofitability despite Trofitability despite Tariff decline:ariff decline:ariff decline:ariff decline:ariff decline: We estimateGSPL's Transmission Volumes to increase by 3.2x overFY2009-12E, from 15.1 mmscmd to 49.0mmscmd. Thus, inspite of the decline in Blended tariffs to Rs0.68/scm from currentlevels of 0.89/scm, we anticipate Profit to register a CAGR of56.6% over FY2009-12E.

New pipelines could open new growth vistas:New pipelines could open new growth vistas:New pipelines could open new growth vistas:New pipelines could open new growth vistas:New pipelines could open new growth vistas: If GSPL is able tobag bids for any of the new pipelines, concerns of scalability ofoperations beyond Gujarat will cease to exist to a large extent.These pipelines could open up growth vistas tore-deploy Operating Cash Flow of Rs850-900cr likely to begenerated annually. We are currently not ascribing any valueto these pipelines in our Target Price. However, if GSPL bagsthe Mehsana-Bhatinda pipeline, it could add Rs25-30 to ourTarget Price.


GSPL is a leveraged play on the increasing gas demand in thehydrocarbon capital of the country, Gujarat. Given its locationaladvantage, GSPL is likely to be the key beneficiary of theimproving gas supplies in the country on account of rise indomestic production and LNG imports. We estimate the


Research Analyst - Deepak Pareek/Amit Vora

Key Financials

Net SalesNet SalesNet SalesNet SalesNet Sales 487.5 487.5 487.5 487.5 487.5 1,046.7 1,046.7 1,046.7 1,046.7 1,046.7 1,134.0 1,134.0 1,134.0 1,134.0 1,134.0 1,207.8 1,207.8 1,207.8 1,207.8 1,207.8

% chg 16.7 114.7 8.3 6.5


% chg 23.4 256.7 (1.9) 9.9

OPM (%) 87.1 94.5 93.4 93.3


P/E (x) 44.5 12.5 12.7 11.6

P/BV (x) 4.5 3.5 2.9 2.4

RoE (%) 10.2 27.7 22.4 20.8

RoCE (%) 10.8 25.0 20.7 20.0

EV/Sales (x) 13.4 6.4 5.8 4.9

EV/EBITDA (x) 15.4 6.8 6.2 5.2



company's Volume growth to continue on account of favourableSpot gas dynamics and ramp up of gas production fromKG-basin. We estimate GSPL's Transmission Volumes to increaseby 3.2x over FY2009-12E, from 15.1mmscmd to 49.0mmscmd.Higher gas supplies would also enhance GSPL's operatingleverage going ahead, which is reflected in the 620bp spurt inOperating Margins from 87.1% in FY2009 to 93.3 % inFY2012E.

Our DCF-based 15-month Target Price for the company standsat Rs121 in the Base case scenario, where we have not assumed30% PBT sharing with the Government of Gujarat. In case GSPLdoes start contributing to GSEDS, our Target Price would standreduced at Rs84. At current levels, we maintain a Buy on theAt current levels, we maintain a Buy on theAt current levels, we maintain a Buy on theAt current levels, we maintain a Buy on theAt current levels, we maintain a Buy on thestock, with a Tstock, with a Tstock, with a Tstock, with a Tstock, with a Target Parget Parget Parget Parget Price of Rs121rice of Rs121rice of Rs121rice of Rs121rice of Rs121, translating into an upsideof 24.7% on a point-to-point basis, and around 19.7% on anannualised basis.

January 23, 2010



Aqua Logistics - Avoid

IPO Note - Expensive `Aqua’sition

Research Analyst - Param Desai / Mihir Salot

enhanced focus on development of logistics parks free tradewarehousing zones and the move towards a hub and spokemodel in the Infrastructure space are some of the factorsthat would facilitate growth of the 3PL industry in India.

…but, IPO richly priced:…but, IPO richly priced:…but, IPO richly priced:…but, IPO richly priced:…but, IPO richly priced: The company, which has been onhigh growth trajectory since the last three years on a low base,may not extend such growth going forward, especially in theMTO Segment. However, we have assumed 50% Earnings CAGRover FY2009-12E on account of Margin expansion due to highercontribution from Project Cargo and Contract Logistic Segmentand overall improvement in the trade scenario. At the lowerprice band, the ALL IPO is available at 13.4x FY2012E EPS,which is in line with Allcargo, but at a premium to GDL on ourestimated FY2012E EPS. We believe ALL should trade at adiscount to Allcargo and GDL given that these players have aproven track record, diversified portfolio of services and strongerbalance sheet. Hence, we recommend an Avoid on the IPOHence, we recommend an Avoid on the IPOHence, we recommend an Avoid on the IPOHence, we recommend an Avoid on the IPOHence, we recommend an Avoid on the IPO.....

Objects of the Issue

PPPPParticularsarticularsarticularsarticularsarticulars Amount (Rs cr)Amount (Rs cr)Amount (Rs cr)Amount (Rs cr)Amount (Rs cr)

Purchase of Specialized Equipment 30.5

Expansion and Establishment of Offices 17.1

Proposed Acquisitions 35.0

Additional Working Capital Requirement 45.0

Public Issue Expenses 12.0

General Corporate Purposes 10.4

TTTTTotalotalotalotalotal 150.0150.0150.0150.0150.0

Source: Company RHP, Angel Research

Aqua Logistics (ALL) is in freight forwarding services with agentsto provide end-to-end solution to its clients. It delivers logisticrequirements to verticals such as Power, Heavy Engineering,Pharmaceutical, etc. ALL is banking on India's emergence as aglobal outsourcing hub with the country’s trade likely to post aCAGR of 8-10% over the next five years.

LLLLLacks Integration Solutions:acks Integration Solutions:acks Integration Solutions:acks Integration Solutions:acks Integration Solutions: ALL has been in the low-marginfreight forwarding business since 1999. Unlike peers, ALL hasneither scaled up its operations nor achieved sectoraldiversification. ALL posted Top-line of Rs213cr in FY2009contributed primarily by the MTO Segment. Lack of presencein the entire Logistic value chain and low global exposure inthe MTO Segment will prevent ALL from offering 3PL customisedservices to the large MNCs and expose it to the unorganisedMTO market, which is rife with competition and low on Margins.

Banking on high-Margin Segments:Banking on high-Margin Segments:Banking on high-Margin Segments:Banking on high-Margin Segments:Banking on high-Margin Segments: To provide value-addedservices and diversify its portfolio, in 2007, ALL ventured intothe high-Margin Project Cargo and Contract Logistics Segment.During FY2009 and 1HFY2010, ALL derived 10% of its Incomefrom these Segments.


Bullish on Industry…:Bullish on Industry…:Bullish on Industry…:Bullish on Industry…:Bullish on Industry…: India's GDP is expected to grow by7-8% over the next few years and it could emerge as a globaloutsourcing hub. In the current decade so far, cargo traffichas registered 9% CAGR at major ports. We expect this trendto continue and estimate cargo traffic to register 8-10%CAGR over the next five years. Further, GST implementation,

Key Financials

Net SalesNet SalesNet SalesNet SalesNet Sales 213.4213.4213.4213.4213.4 309.6309.6309.6309.6309.6 418.6418.6418.6418.6418.6 521.3521.3521.3521.3521.3

% chg 153.3 45.1 35.2 24.5

Net PNet PNet PNet PNet Profitrofitrofitrofitrofit 9.89.89.89.89.8 19.319.319.319.319.3 27.127.127.127.127.1 33.033.033.033.033.0

% chg 74.8 96.3 40.5 21.5


EBITDA Margin (%) 10.5 12.0 12.7 13.2

P/E (x) 45.1 23.0 16.3 13.4

P/CEPS (x) 40.4 20.4 13.0 9.8

RoE (%) 20.6 16.4 11.7 13.1

RoCE (%) 29.6 19.3 16.8 18.0

P/BV (x) 5.1 2.0 1.8 1.6

EV/Sales (x)* 2.2 1.1 1.0 0.9

EV/EBITDA (x)* 21.1 9.4 7.9 6.6


Source: Source: Source: Source: Source: Company, Angel Research; Note: *Projected valuations are atthe lower-end of the price band

January 23, 2010



Jubilant Foodworks - Subscribe

IPO Note - In for the Long-Run

Research Analyst - Viraj Nadkarni

internal accruals, without much dependence on externalborrowings.


Over FY2006-09, JFL's Revenues, EBIDTA and PAT havewitnessed a CAGR of 42.5%, 45.7% and 49.6%, respectively.We estimate JFL's Top-line, EBIDTA and PAT to witness a CAGRof 31%, 37% and 95%, respectively, over FY2009-12E. On theinternational front, the comparable, listed Domino's franchiseesin the UK and Australia trade at around 15-19x FY2012EEarnings. Considering JFL's higher growth rate expectations overits peers, we believe that its premium valuations are justified.On the lower and upper end of the price band, the stock wouldquote at 17.2x and 18.5x its post-diluted FY2012E estimates,respectively. Although the IPO price appears expensive onFY2009 valuations, we believe that the long-term growthprospects for the company are decent. WWWWWe recommend ae recommend ae recommend ae recommend ae recommend aSubscribe view to the IPO for investors with a longSubscribe view to the IPO for investors with a longSubscribe view to the IPO for investors with a longSubscribe view to the IPO for investors with a longSubscribe view to the IPO for investors with a long-term-term-term-term-terminvestment horizon.investment horizon.investment horizon.investment horizon.investment horizon.

Rationale for our Subscribe recommendation

Jubilant Foodworks Limited (JFL), founded in 1995, is afood-service company and currently operates Domino's pizzastores in India and (through a sub-franchisee) in Sri Lanka.

Scalable business model, with huge market potential: Scalable business model, with huge market potential: Scalable business model, with huge market potential: Scalable business model, with huge market potential: Scalable business model, with huge market potential: As perthe Technopak Report, 2009, only 2% of the monthly expenditureon food bought from outside or ordered-in by households inIndia is spent on pizzas and pastas. We believe that factors likechanging population demographics and an increasing trendof consuming ordered-in food will drive the spending in thefuture. The current lower penetration provides JFL with a hugescope to expand its presence further.

Exclusive franchisees, with strong technical, marketing andExclusive franchisees, with strong technical, marketing andExclusive franchisees, with strong technical, marketing andExclusive franchisees, with strong technical, marketing andExclusive franchisees, with strong technical, marketing andoperational support: operational support: operational support: operational support: operational support: JFL operates its pizza stores pursuant to aMaster Franchise Agreement with Domino's International. Thisprovides JFL with the ability to use Domino's globally-recognisedbrand name, as well as leverage its operational support,commissary and logistics management support, globalmarketing and vendor development know-how. This associationprovides JFL with the technical, marketing and operationalexpertise to compete with restaurants in the QSR (Quick-ServiceRestaurants) industry.

PPPPPositive cash flows at the operational level to enable expansionsositive cash flows at the operational level to enable expansionsositive cash flows at the operational level to enable expansionsositive cash flows at the operational level to enable expansionsositive cash flows at the operational level to enable expansionsthrough internal accruals:through internal accruals:through internal accruals:through internal accruals:through internal accruals: Historically, JFL has operated withnegative working capital, primarily because it has minimalreceivables, and inventory turn rates are faster than the normalpayment terms on current liabilities. Additionally, JFL's salesare not seasonal, which further limits working capitalrequirements. The negative working capital requirement enablesJFL to generate decent cash flows at the operational level. Thiswill enable the company to fund its future expansions through

Key Financials

Net SalesNet SalesNet SalesNet SalesNet Sales 280.6 280.6 280.6 280.6 280.6 366.2 366.2 366.2 366.2 366.2 475.4 475.4 475.4 475.4 475.4 630.8 630.8 630.8 630.8 630.8

% chg 32.9 30.5 29.8 32.7


% chg (13.2) 150.4 113.8 38.6


EBITDA Margin (%) 12.3 14.2 14.2 14.2

P/E (x) 125.2 54.7 25.6 18.5

P/CEPS (x) 35.1 24.3 15.5 12.8

ROE (%) 29.5 17.0 26.7 27.0

ROCE (%) 16.6 20.9 24.0 28.8

P/BV (x) 37.0 9.3 6.8 5.0

EV/Sales (x) 3.3 2.7 2.0 1.5

EV/EBITDA (x) 26.8 18.7 14.4 10.9


Source: Source: Source: Source: Source: Company RHP, Angel Research; Note: Projected valuations areat the upper-end of the price band

Objects of the Issue

PPPPParticularsarticularsarticularsarticularsarticulars Amount (Rs cr)Amount (Rs cr)Amount (Rs cr)Amount (Rs cr)Amount (Rs cr)

Repayment of Loans 35

General Corporate Purposes *

TTTTTotalotalotalotalotal *****Source: Company RHP, Angel Research

January 23, 2010


Axis Bank - Buy

3QFY2010 Result Update

Performance Highlights

Axis Bank reported a strong Net Profit growth of 31.0% yoy toRs656cr, which was ahead of our expectations, on the back ofsubstantial treasury profits of Rs170cr during the quarter. Thecore business growth continued to be subdued, in line withsectoral trends. The key positive from the result was a strongtraction in the core fee income growth and sequential CASAimprovement, while the bank continued with its retail networkexpansion.

NIM uptick, on the back of CASA growth and equity boost:NIM uptick, on the back of CASA growth and equity boost:NIM uptick, on the back of CASA growth and equity boost:NIM uptick, on the back of CASA growth and equity boost:NIM uptick, on the back of CASA growth and equity boost:Advances increased by 12.5% yoy and 4.6% sequentially toRs84,770cr, while Deposits increased to Rs1,13,853cr, a growthof 7.7% yoy and almost flat sequentially, on the back of asequential de-growth of 6.3% in term deposits. The CASA ratioof the bank improved to 45.6%, from 42.8% in 2QFY2010and from 38.0% in 3QFY2009. This, coupled with the Rs3,800crof equity capital raised during October 2009, was reflected inthe strong uptick in reported NIMs of the bank, to the 4.0%level (against 3.5% in 2QFY2010). As a result, the Net InterestIncome of the bank recorded a growth of 45.1% yoy and 17.3%sequentially. The management has guided towards a sustainableNIM level of 3.5%, over the long-term, for the bank.

Non-interest income driven by Core fee as well as treasuryNon-interest income driven by Core fee as well as treasuryNon-interest income driven by Core fee as well as treasuryNon-interest income driven by Core fee as well as treasuryNon-interest income driven by Core fee as well as treasurygains: gains: gains: gains: gains: Non-interest income of the bank grew by a strong 35%yoy to Rs988cr driven by strong core fee income as well asbetter than expected treasury gains. Core Fee income registereda growth 29.4% yoy. Fee income from Large and Mid Corporatesegment grew 69% yoy, followed by that from Retail Business(38% yoy), Treasury (33% yoy), SME and Agri lending businesses(18% yoy) and Business Banking (13% yoy). Managementattributed buoyancy in core fee income to the sanctions andincrease in off-balance sheet exposure.

Asset Quality Stable: Asset Quality Stable: Asset Quality Stable: Asset Quality Stable: Asset Quality Stable: The GNPAs were up by 3.7% qoq toRs1,173cr and the coverage remained largely stable at 63.4%.The Gross and Net NPAs ratio of the bank were stablesequentially at 1.2% and 0.5%, respectively. As per the newcalculation method for the provision coverage as prescribed bythe RBI, it improved to 69%, after adjusting for technical write-offs. The cumulative restructured portfolio reduced sequentially

Price - Rs1,078Target Price - Rs1,450


by 2% to Rs 2,309cr, and stood at 2.43% of gross customerassets. For the quarter, the bank restructured ~40% each in thelarge and mid corporate credit, and the SME segment, and thebalance was restructured in agriculture. A sector-wise analysisby the bank indicates that restructuring of textiles was the highestat 40%, followed by education 21%, agriculture 19%, IT andITES 11%, and the balance in others. Delinquencies are showingsigns of plateauing and with the improving economic outlookand reducing corporate leverage, could provide upside to ourearnings estimates (which still factor NPA provisions at 0.7% ofassets in FY2012E vs. an average of 0.3% over FY2005-09).


At Rs1,078, the stock is trading at 11.3x FY2012E EPS of Rs95.3and 2.1x FY2012E Adjusted Book Value (ABV) of Rs517.9. Weremain positive on the Bank and believe it deserves premiumvaluations on account of its attractive CASA franchise, multiplesources of sustainable fee income, strong growth outlook andA-list management. Our Target FY2012E P/ABV multiple forthe bank is 2.8x, representing a 20% discount to our Targetmultiple of 3.5x for HDFC Bank, keeping in mind the relativelyhigher credit and market risks, though we do believe that asthe bank establishes a longer credible track record of pricingand managing risks, this gap vis-à-vis HDFC Bank could narrowfurther. WWWWWe maintain a Buy on the stock, with a 15-month Te maintain a Buy on the stock, with a 15-month Te maintain a Buy on the stock, with a 15-month Te maintain a Buy on the stock, with a 15-month Te maintain a Buy on the stock, with a 15-month TargetargetargetargetargetPPPPPrice of Rs1,450, implying an annualised return of 28%.rice of Rs1,450, implying an annualised return of 28%.rice of Rs1,450, implying an annualised return of 28%.rice of Rs1,450, implying an annualised return of 28%.rice of Rs1,450, implying an annualised return of 28%.

Key Financials

NIINIINIINIINII 3,686.23,686.23,686.23,686.23,686.2 4,945.74,945.74,945.74,945.74,945.7 6,238.56,238.56,238.56,238.56,238.5 7,857.27,857.27,857.27,857.27,857.2

% chg 42.6 34.2 26.1 25.9

Net PNet PNet PNet PNet Profitrofitrofitrofitrofit 1,815.41,815.41,815.41,815.41,815.4 2,381.72,381.72,381.72,381.72,381.7 2,881.22,881.22,881.22,881.22,881.2 3,822.93,822.93,822.93,822.93,822.9

% chg 69.5 31.2 21.0 32.7

NIM (%) 3.0 3.2 3.3 3.4

EPS (Rs)EPS (Rs)EPS (Rs)EPS (Rs)EPS (Rs) 50.650.650.650.650.6 59.459.459.459.459.4 71.871.871.871.871.8 95.395.395.395.395.3

P/E (x) 21.3 18.2 15.0 11.3

P/ABV (x) 3.8 2.8 2.4 2.1

RoA (%) 1.4 1.5 1.5 1.6

RoE (%) 19.1 18.3 17.0 19.7



Research Analyst - Vaibhav Agrawal/Amit Rane

January 23, 2010



Bayer India - Buy

3QFY2010 Result UpdateReliance InfratelReliance InfratelReliance InfratelReliance InfratelReliance Infratel


Bayer India reported a 224% yoy growth in its Net Profit, quiteahead of our estimates, backed by a strong demand fromfarmers during the Rabi season. The major surprise from theresults was the 310bp yoy improvement in the EBITDA margin.With a drought-like situation in 2QFY2010, a resurgence ofdemand was witnessed in the domestic market. We expect thecompany to be on a strong growth path for the next few years,on account of the high prices of agro-commodities. Hence,with the strong performance in 9MFY2010, we have revisedour EPS estimates upwards. We maintain our Buyrecommendation on the stock.

Sales growth ahead of expectation:Sales growth ahead of expectation:Sales growth ahead of expectation:Sales growth ahead of expectation:Sales growth ahead of expectation: Bayer India's 3QFY2010results were ahead of our expectations; sales for the quartergrew by 25%. We consider Bayer's sales growth to be acommendable job, considering the drought in 2QFY2010.

Margin improvement continues:Margin improvement continues:Margin improvement continues:Margin improvement continues:Margin improvement continues: PAT for the quarter grew by224%, aided by a strong top-line growth, a 359bp expansionin the EBITDA margin and a lower base in 3QFY2009. Webelieve that the strong volume growth and the reduction in staffcosts are the key reasons for the improvement in margins. Staffcosts for the quarter reduced by 8.5% yoy, while other operatingcosts grew by a minor 4%.

FFFFFarmers capitalise on the Rabi season:armers capitalise on the Rabi season:armers capitalise on the Rabi season:armers capitalise on the Rabi season:armers capitalise on the Rabi season: As per our 2QFY2010note, the monsoon was below normal in India; however, laterainfall (in early October) has helped the country increase itswater reservoir levels, and brought it at the long-term average.Thus, the Rabi season witnessed a good sowing, as farmerswho lost their crops in the Kharif season took advantage of theincreased water levels; the same proved beneficial for Bayer.

FY2011E and FY2012E estimates stand revised:FY2011E and FY2012E estimates stand revised:FY2011E and FY2012E estimates stand revised:FY2011E and FY2012E estimates stand revised:FY2011E and FY2012E estimates stand revised: We arerevising our estimates for Bayer, on account of its above-parperformance in 9MFY2010. We expect Bayer to post an EPS ofRs44.3 and Rs51.0 in FY2011E and FY2012E, respectively,

(against our earlier estimates of Rs41.2 and Rs45.8).


Considering the stupendous 9MFY2010 performance of Bayer,we are revising our estimates. We estimate Bayer's Sales to grow


Research Analyst - Sageraj Bariya



by 15.7% and 12.4% for FY2011E and FY2012E, respectively.Correspondingly, the EPS would grow by 19.2% and 15.1% forFY2011E and FY2012E, respectively. We expect the operatingmargin to expand from 11.1% in FY2009, to 13.6% and 13.5%in FY2010E and FY2011E, respectively. The PAT would witnessa higher growth compared to the sales, due to the expansionin EBITDA margins, a reduction in the interest outflow (as debtwould be redeemed on the back of higher cash generationfrom operations) and better working capital management. Wehave increased our EPS estimates by 7.5% and 11.3% forFY2010E and FY2011E, respectively.

At Rs578, the stock is trading at attractive valuations of 13xand 11.3x its FY2011E and FY2012E estimates, respectively.We have arrived at a revised SOTP Target Price of Rs713, whichincludes the value of BCS's Core business (at Rs612/share, 12xFY2012E EPS), and a 50% discounted value of the Thane land(Rs101/share, post-tax). WWWWWe maintain our Buy recommendatione maintain our Buy recommendatione maintain our Buy recommendatione maintain our Buy recommendatione maintain our Buy recommendationon the stock, with a 15-month Ton the stock, with a 15-month Ton the stock, with a 15-month Ton the stock, with a 15-month Ton the stock, with a 15-month Target Parget Parget Parget Parget Price of Rs713 (Rs596),rice of Rs713 (Rs596),rice of Rs713 (Rs596),rice of Rs713 (Rs596),rice of Rs713 (Rs596),implying annualised returns of 19%.implying annualised returns of 19%.implying annualised returns of 19%.implying annualised returns of 19%.implying annualised returns of 19%.

Key Financials

Net SalesNet SalesNet SalesNet SalesNet Sales 1,4831,4831,4831,4831,483 1,7571,7571,7571,7571,757 2,0322,0322,0322,0322,032 2,2852,2852,2852,2852,285

% chg 19.7 18.5 15.7 12.4

Net PNet PNet PNet PNet Profitrofitrofitrofitrofit 9494949494 147147147147147 175175175175175 201201201201201

% chg 92.5 55.4 19.2 15.1

EBITDA Margin (%) 11.1 13.5 13.6 13.5


P/E (x) 24.1 15.5 13.0 11.3

P/BV (x) 5.1 4.0 3.1 2.5

RoE (%) 23.0 28.6 26.8 24.7

RoACE (%) 30.0 37.1 35.8 33.3

EV/Sales (x) 1.5 1.3 1.1 0.9

EV/EBITDA (x) 14.0 9.7 7.9 6.6


January 23, 2010


Dr. Reddy's Laboratories - Accumulate



Revenues in line with expectations, down 5.6%: Revenues in line with expectations, down 5.6%: Revenues in line with expectations, down 5.6%: Revenues in line with expectations, down 5.6%: Revenues in line with expectations, down 5.6%: For 3QFY2010,DRL reported Net Sales (as per Indian GAAP) of Rs1,704cr(Rs1,805cr), which was down 5.6% yoy as 3QFY2009 wasbuoyed by launch of generic version of Imitrex, which contributedRs360cr earlier. Excluding the one-off, DRL's Recurring Salesgrew 17%. The Global Generic Segment de-grew 14.3% toRs1,172cr (Rs1,369cr), as North America region de-grew 55.3%to Rs297.4cr (Rs665.2cr), while Europe grew 3.0% to Rs257.9cr(Rs250.5cr). On the other hand, stellar performance wasrecorded by India and Russia region, which grew 33.8% toRs263.2cr (Rs196.7cr) and 38.0% to Rs276.9cr (Rs200.6cr),respectively. The PSAI Segment clocked strong growth of 17.5%to Rs523.8cr (Rs445.7cr) on the back of 22.8% growth clockedin Europe to Rs215.2cr (Rs175.2cr) and RoW registering growthof 24.8% to Rs175.7cr (Rs140.8cr). For 9MFY2010, DRL's NetSales grew 8.6% to Rs5,283cr (Rs4,862cr) driven by NorthAmerica, India and Russia region.

OPM expands 238bp to 19.3%: OPM expands 238bp to 19.3%: OPM expands 238bp to 19.3%: OPM expands 238bp to 19.3%: OPM expands 238bp to 19.3%: The company reported OPMof 19.3% for the quarter, which expanded by 238bp and waswell ahead of our expectation of 14.9% on the back of lowerRaw Material cost and reduction in SG&A and R&D expenses.Raw Material cost fell16.6% to Rs513.6cr (Rs615.6cr) and SG&Ade-grew by 14.9% to Rs477.8cr (561.7cr) on account of benefitsof Operating leverage and cost containment exercise. For9MFY2010, the company reported Operating Profit ofRs1,023cr (Rs726.1cr) with OPM of 19.4%. Going ahead, thecompany expects to maintain its OPM at current levels.

Recurring PRecurring PRecurring PRecurring PRecurring PAAAAAT exceeds expectation, spikes 41.5%: T exceeds expectation, spikes 41.5%: T exceeds expectation, spikes 41.5%: T exceeds expectation, spikes 41.5%: T exceeds expectation, spikes 41.5%: DRL wroteoff Intangibles to the tune of Rs458.3cr due to the persistentpricing pressure faced in Germany translating into Net Loss ofRs233.0 (against Profit of Rs159.2cr). Adjusting for the one-offitem, Recurring Net Profit grew by a whopping 41.5% toRs225.3cr (Rs159.2cr) on account of robust OPM.


DRL is among the largest Indian Pharmaceutical company withstrong product portfolio and vertical integration across itsbusiness segments, viz. Global Generic Business,






% chg 38.2 3.9 19.3 16.3

Net PNet PNet PNet PNet Profitrofitrofitrofitrofit (916.4)(916.4)(916.4)(916.4)(916.4) 481.2481.2481.2481.2481.2 982.5982.5982.5982.5982.5 1,249.11,249.11,249.11,249.11,249.1

% chg 104.2 27.1

Adj Net PAdj Net PAdj Net PAdj Net PAdj Net Profitrofitrofitrofitrofit 545.6545.6545.6545.6545.6 939.4939.4939.4939.4939.4 982.5982.5982.5982.5982.5 1,249.11,249.11,249.11,249.11,249.1

% chg 24.5 72.2 4.6 27.1

EPS (Rs)EPS (Rs)EPS (Rs)EPS (Rs)EPS (Rs) ----- 28.628.628.628.628.6 58.358.358.358.358.3 74.274.274.274.274.2

Adj EPS (Rs)Adj EPS (Rs)Adj EPS (Rs)Adj EPS (Rs)Adj EPS (Rs) 32.432.432.432.432.4 55.855.855.855.855.8 58.358.358.358.358.3 74.274.274.274.274.2

EBITDA Margin (%) 17.5 18.9 17.9 18.0

P/E (x) - 42.1 20.6 16.2

RoE (%) - 13.0 22.8 23.6

RoCE (%) 11.6 17.0 19.5 23.0

P/BV (x) 5.8 5.3 4.3 3.5

EV/Sales (x) 3.2 3.1 2.5 2.1

EV/EBITDA (x) 18.4 16.4 14.0 11.5


Source:Source:Source:Source:Source: Company, Angel Research, Note: Adjusted Net Profit Excludeswrite-off pertaining to Intangibles; Price as on January 20, 2010

Pharmaceutical Services and Active Ingredients, and ProprietaryProducts. We remain positive on the company on account of:1)Robust growth likely in the US Generic business driven by strongBase business and limited competition product launches, viz.Omeprazole OTC, Arixtra, Allegra D 24 and Lotrel, which ensurehigher Revenue visibility for the next three years; 2) Alliancewith GSK to start bearing fruits from FY2011E onwards byproviding DRL access to newer markets; 3) Up-tick in DomesticFormul ation business through launch of Biosimilars and ChronicSegment products; and 4) Improving Return Ratios - RoCE islikely to improve from 17% in FY2010 to 23% in FY2012E.

On the Valuation front, the stock is trading at 20.6x FY2011Eand 16.2x FY2012E Earnings. We have valued the companyon SOTP basis wherein the Base business is valued at Rs1,273(20x FY2012E Earnings) and Rs40 for the one-off productopportunities. WWWWWe recommend an Accumulate on the stock,e recommend an Accumulate on the stock,e recommend an Accumulate on the stock,e recommend an Accumulate on the stock,e recommend an Accumulate on the stock,with a 15-month Twith a 15-month Twith a 15-month Twith a 15-month Twith a 15-month Target Parget Parget Parget Parget Price of Rs1,313.rice of Rs1,313.rice of Rs1,313.rice of Rs1,313.rice of Rs1,313.

January 23, 2010


HDFC Bank - Buy



HDFC Bank announced its 3QFY2010 results, reporting a NetProfit growth of 31.6% yoy to Rs819cr, in line with our estimates.Signs of improvement in business growth and asset quality,coupled with strong traction in CASA deposits on the back ofsustained branch expansion, were the key positives from theresults.

Improving Business Growth and PImproving Business Growth and PImproving Business Growth and PImproving Business Growth and PImproving Business Growth and Profitability:rofitability:rofitability:rofitability:rofitability: Advancesregistered a yoy growth of 21.1% to reach Rs1,19,614cr. InFY2010, the bank's advances have grown by 21% (YTD), asagainst a growth of 9.1% for the banking system as a whole.Deposits reached Rs1,54,789cr in 3QFY2010, up by 7% fromRs1,44,863cr in 3QFY2009. The CASA ratio increased to 52%of total deposits during 3QFY2010, as against 40% as at3QFY2009 and 50% as at 2QFY2010. The credit-deposit ratioof the bank stood at 77.3%, increasing by 910bp yoy and 140bpsequentially. Consequently, NIMs improved to 4.3% in2QFY2010, as against 4.2% in 2QFY2010.

Strong growth in CASAStrong growth in CASAStrong growth in CASAStrong growth in CASAStrong growth in CASA::::: The key positive from the results wasthe CASA deposits growth of 39% yoy and 6% sequentially,leading to a 200bp sequential improvement in the CASA ratioto 52% (from 50% in 2QFY2010). The management hasindicated a continuation of its strategy to expand the branchnetwork in Tier-II and Tier-III cities. The bank has also started toleverage its brand name through the branch network of CBOP(which was taken over by the bank at the end of FY2008).Against this backdrop, we expect the CASA of the bank to remainstable in the range of 49 to 52%, going forward.

Robust Asset Quality and Capital Adequacy:Robust Asset Quality and Capital Adequacy:Robust Asset Quality and Capital Adequacy:Robust Asset Quality and Capital Adequacy:Robust Asset Quality and Capital Adequacy: The asset qualityof the bank improved sequentially, with Gross NPAs at 1.6%(1.8% in 2QFY2010) and net NPAs at 0.4% (0.5% in2QFY2010). The NPA coverage ratio based on specificprovisions was at 73% in 3QFY2010, as compared to 68% in3QFY2009. Total restructured assets, including applicationsreceived for loan restructuring, which were yet to be approvedor implemented, were 0.4% of the advances, which is very lowas compared to the industry average, attributable primarily todifferences in the bank's credit mix vis-à-vis PSU Banks.



Key Financials

NIINIINIINIINII 7,4217,4217,4217,4217,421 8,1918,1918,1918,1918,191 10,43410,43410,43410,43410,434 13,33113,33113,33113,33113,331

% chg 42.0 10.4 27.4 27.8

Net PNet PNet PNet PNet Profitrofitrofitrofitrofit 2,2452,2452,2452,2452,245 2,9152,9152,9152,9152,915 3,7613,7613,7613,7613,761 5,0615,0615,0615,0615,061

% chg 41.2 29.9 29.0 34.5

NIM (%) 4.9 4.3 4.4 4.5


P/E (x) 32.0 26.2 20.3 15.1

P/ABV (x) 4.8 3.7 3.2 2.8

RoA (%) 1.4 1.4 1.5 1.6

RoE (%) 16.9 16.2 16.8 19.7




Healthy FHealthy FHealthy FHealthy FHealthy Fee Income:ee Income:ee Income:ee Income:ee Income: The Bank's Fee income grew at areasonably strong 12% yoy to Rs724cr. The Bank also bookedan MTM loss of Rs26cr on its investment book. Forex andDerivative linked income at Rs154cr was up by a strong 145% yoy.

FFFFFocus on costocus on costocus on costocus on costocus on cost-----control continues: control continues: control continues: control continues: control continues: The management has clearlydelineated cost control as a key focus area during the currentfiscal, and this has been reflected in the flat operating cost yoy,and in the cost-to-income ratio of 47.2% (from 50% in3QFY2009). The bank opened a substantial 219 branches and325 ATMs during the quarter, to take its branch network to1,725 branches and 3,898 ATMs at the end of 3QFY2010.


We believe that HDFC Bank is among the most competitivebanks in the sector, with an A-list management that has one ofthe best track records in the sector. We believe that the bank'scompetitive advantages, driving gains in CASA market shareand traction in multiple fee revenue streams, can support up to5% higher core sustainable RoEs (vis-à-vis sectoral averages)over the long-term, creating a material margin of safety in ourtarget valuation multiples. At Rs1,691, the stock is trading at15.1x FY2012E EPS of Rs112.1 and 2.8x FY2012E ABV ofRs607.6. WWWWWe maintain a Buy on the stock, with a 15-monthe maintain a Buy on the stock, with a 15-monthe maintain a Buy on the stock, with a 15-monthe maintain a Buy on the stock, with a 15-monthe maintain a Buy on the stock, with a 15-monthTTTTTarget Parget Parget Parget Parget Price of Rs2,127, implying an annualised return of 20%.rice of Rs2,127, implying an annualised return of 20%.rice of Rs2,127, implying an annualised return of 20%.rice of Rs2,127, implying an annualised return of 20%.rice of Rs2,127, implying an annualised return of 20%.

January 23, 2010


HT Media - Accumulate



For 3QFY2010, HT Media (HTML) reported weak Advertisinggrowth of around 3% (dragged down due to Englishpublication), Circulation growth of 30% (cover price hikes) andoverall Revenue growth of 4.6% yoy to Rs359.4cr onconsolidated basis. However, Earnings grew at an impressivepace to Rs35.8cr driven by strong Operating performance.Effective December 1, 2009, HTML de-merged its Hindi Businessinto a separate subsidiary and has started reporting consolidatedresults (includes internet business) rendering quarterlycomparisons meaningless. Owing to significant improvementin Profitability of its growing businesses, possibility of separatelisting of its Hindi business (IPO likely in 6-9 months) andpotential up-tick in Advertising Revenues, we upgrade HTML toAccumulate.

Stellar Earnings performance despite muted Top-line: For3QFY2010, HTML posted strong Earnings of Rs35.8cr (loss ofRs12.8cr) and Margin expansion of 1,313bp to 18.8% (5.7%),despite weak Revenue growth, aided by lower cost of newsprintand reduced losses in growing businesses. Top-line grew 4.6%yoy to Rs359.4cr (Rs343.5cr) on a consolidated basis, largelyaided by 30% rise in Circulation Revenue as Advertising Revenuegrew marginally to Rs285.5cr (Rs278cr). Hindi businessexhibited robust growth of 15.3% in Revenue v/s a flattish 1.3%growth in English business. Radio business witnessed substantialRevenue traction registering a growth of 49.5% yoy in Revenueto Rs10.2cr (Rs6.8cr) as Losses dropped significantly to Rs1.3cr(Loss of Rs17.4cr) during the quarter.


While HTML continues to disappoint on the Revenue front largelyowing to poor performance of its English publication, we believeup-tick in activities from sectors like Real Estate, BFSI and Autocoupled with a low base will aid higher Advertising growth inFY2011E. Moreover, our Revenue estimates do not factor inpotential upside from investments in HT-Burda JV (expected tostart production from 4QFY2010).

In terms of Operating performance, benign newsprintenvironment (factoring in 12-15% rise during FY2010-12E),



Research Analyst - Anand Shah/Chitrangda Kapur




% chg 11.9 5.4 12.9 12.8

Adj. Net PAdj. Net PAdj. Net PAdj. Net PAdj. Net Profitrofitrofitrofitrofit 20.020.020.020.020.0 136.2136.2136.2136.2136.2 167.4167.4167.4167.4167.4 199.5199.5199.5199.5199.5

% chg (80.3) 580.9 22.9 19.2

OPM (%) 6.5 17.5 18.3 18.6


P/E (x) - 28.7 22.7 18.1

P/BV (x) 4.3 3.7 3.2 2.7

RoE (%) 2.4 14.1 14.2 15.1

RoCE (%) 1.5 13.8 15.7 16.7

EV/Sales (x) 2.9 2.7 2.4 2.0

EV/EBITDA (x) 44.5 15.6 12.9 10.9


reduction of losses in its growing businesses (Radio, Internet,HT Mumbai and Mint) and Advertising rate hikes will help HTMLpost higher Margins during FY2010-12E.

In the past six months, the HTML stock has outperformed theSensex by a significant 41% driven by turn-around in its growingbusinesses (Radio, HT Mumbai, Mint and Internet), news-flowof its Hindi business de-merger (completed this quarter) andstrong Earnings momentum.

At Rs154, HTML is trading at 18.1x FY2012E consolidatedAt Rs154, HTML is trading at 18.1x FY2012E consolidatedAt Rs154, HTML is trading at 18.1x FY2012E consolidatedAt Rs154, HTML is trading at 18.1x FY2012E consolidatedAt Rs154, HTML is trading at 18.1x FY2012E consolidatedEPS of Rs8.5. Owing to the significant improvement inEPS of Rs8.5. Owing to the significant improvement inEPS of Rs8.5. Owing to the significant improvement inEPS of Rs8.5. Owing to the significant improvement inEPS of Rs8.5. Owing to the significant improvement inPPPPProfitability of its growing businesses, possibility of separaterofitability of its growing businesses, possibility of separaterofitability of its growing businesses, possibility of separaterofitability of its growing businesses, possibility of separaterofitability of its growing businesses, possibility of separatelisting of its Hindi business (IPO likely in 6-9 months) andlisting of its Hindi business (IPO likely in 6-9 months) andlisting of its Hindi business (IPO likely in 6-9 months) andlisting of its Hindi business (IPO likely in 6-9 months) andlisting of its Hindi business (IPO likely in 6-9 months) andpotential uppotential uppotential uppotential uppotential up-tick in Advertising Revenues, we upgrade HTML-tick in Advertising Revenues, we upgrade HTML-tick in Advertising Revenues, we upgrade HTML-tick in Advertising Revenues, we upgrade HTML-tick in Advertising Revenues, we upgrade HTMLto Accumulate, with a Tto Accumulate, with a Tto Accumulate, with a Tto Accumulate, with a Tto Accumulate, with a Target Parget Parget Parget Parget Price of Rs170 (Based onrice of Rs170 (Based onrice of Rs170 (Based onrice of Rs170 (Based onrice of Rs170 (Based on20x P/E multiple to FY2012E Earnings).20x P/E multiple to FY2012E Earnings).20x P/E multiple to FY2012E Earnings).20x P/E multiple to FY2012E Earnings).20x P/E multiple to FY2012E Earnings).

Downside risks to our estimates: 1) Sharp rise in newsprintprices, 2) Weak recovery in English Print markets, and 3)Higher-than-expected losses or re-investment in growingbusinesses (Radio, HT Mumbai, Mint and Internet)

January 23, 2010



ICICI Bank - Buy



ICICI Bank's net profit declined by 13.4% yoy to Rs1,101cr,which was in line with our estimates. The key positives from theresults are the 270bp qoq improvement in CASA to 39.6% anda decline in operating expenses by 21.4% yoy and 4.4% qoq,despite the bank adding 106 branches during the quarter, takingthe total branch network to 1,626. Along with the large plannedbranch network of 2,000 branches by FY2011E and a capitaladequacy of 19.4%, we believe that the Bank is verywell-positioned to leverage to improve its return ratios. At thecurrent levels, we believe that the stock is trading at attractivevaluations.

Strategic transformation continues:Strategic transformation continues:Strategic transformation continues:Strategic transformation continues:Strategic transformation continues: The Bank's Balance Sheetcontraction continued in 3QFY2010, as an outcome of theongoing strategy over the past few quarters to favorably realignthe mix of assets and liabilities. The total deposits of the bankremained flat sequentially (declined by 5.5% yoy) toRs1,97,653cr during 3QFY2010; however, the advancesdeclined sharply by 6.1% sequentially (15.6% yoy) toRs1,79,269cr. The sharp drop in the advances book wasattributable to the repayments from retail, and the overseasadvances portfolio.

Strong CASAStrong CASAStrong CASAStrong CASAStrong CASA; NIMs improve: ; NIMs improve: ; NIMs improve: ; NIMs improve: ; NIMs improve: The highlight of the quarterwas the improvement in the Bank's CASA ratio to 39.6% (from36.9% in 2QFY2010 and 27.6% in 3QFY2009). The bank wasable to garner substantial CASA deposits of Rs5,317cr (35.8%yoy and 7.3% qoq growth). As a result of the improved depositmix, although the overall Balance Sheet de-grew by about 1.1%qoq, Net Interest Income increased by 1.1%, as NIMs improvedby a further 10bp sequentially to 2.6%.

AssetAssetAssetAssetAsset-----quality stable: quality stable: quality stable: quality stable: quality stable: The asset quality of the bank showed signsof stabilising, with gross slippages at Rs750cr (against a quarterlyrun-rate of about Rs1,000cr for the bank). The Gross NPAratio of the bank was up at 4.8% (as against 4.7% in 2QFY2010and 4.1% in 3QFY2009), mainly on account of the ongoingcontraction in the loan book. The Provision coverage ratio ofthe bank was stable sequentially at 51.2% in 3QFY2010, thisratio can improve up to the 62% level, after the implementationof the revised methodology of the calculation of provision

Price - Rs853Target Price - Rs1,155


Key Financials

NIINIINIINIINII 9,0929,0929,0929,0929,092 8,9188,9188,9188,9188,918 10,16910,16910,16910,16910,169 12,87712,87712,87712,87712,877

% chg 10.9 (1.9) 14.0 26.6


% chg (9.6) 6.0 25.1 36.4

NIM (%) 2.6 2.7 2.8 2.9


P/E (x) 25.3 23.8 19.1 14.0

P/ABV (x) 2.0 1.9 1.8 1.7

RoA (%) 0.9 1.0 1.2 1.3

RoE (%) 9.2 9.5 11.4 15.1



coverage, which takes into account technicalwrite-offs. The Bank has restructured loans of Rs5,338cr on acumulative basis (3.0% of total loans, 10.2% of the networth).

Costs remain in check: Costs remain in check: Costs remain in check: Costs remain in check: Costs remain in check: The Bank has been building a strongpipeline for CASA growth through aggressive branch expansion(106 branches added in 3QFY2010, 210 in the last 12 months).At the same time, operating expenses have remained firmly incheck, with the management consistently delivering on itsarticulated objective of cost savings without sacrificing on branchexpansion. During 3QFY2010, operating expenses declinedby 4.4% qoq and 21.4% yoy to Rs1,362cr, driven by a decreasein both staff expenses (5.0% qoq, 15.1% yoy), as well as otheroperating expenses (4.1% qoq, 24.0% yoy).


At Rs853, the Bank's Core Banking business (after adjustingRs307 per share towards the value of the subsidiaries) is tradingat 1.7x FY2012E ABV of Rs511.8. Including subsidiaries, thestock is trading at 1.7x FY2010E ABV of Rs461. We value theBank's subsidiaries at Rs307 per share of ICICI Bank and thecore Bank at Rs848 (2.25x FY2012E ABV). WWWWWe maintain a Buye maintain a Buye maintain a Buye maintain a Buye maintain a Buyon the stock, with a 15-month Ton the stock, with a 15-month Ton the stock, with a 15-month Ton the stock, with a 15-month Ton the stock, with a 15-month Target Parget Parget Parget Parget Price of Rs1,155, implyingrice of Rs1,155, implyingrice of Rs1,155, implyingrice of Rs1,155, implyingrice of Rs1,155, implyingan annualised return of 27.4%.an annualised return of 27.4%.an annualised return of 27.4%.an annualised return of 27.4%.an annualised return of 27.4%.

January 23, 2010



Jaiprakash Associates - Accumulate



JP Associates (JAL) recorded a robust set of numbers for3QFY2010. The Consolidated Top-line growth came in mainlyon account of robust Construction & EPC (C&EPC) division sales.EBITDA margins also saw an improvement yoy, on account ofC&EPC performance. The adjusted Bottom-line exhibited arobust growth, excluding extra-ordinary expenses. Owing tothe strong quarterly numbers, the Jaypee Infratech IPO in thepipeline, and overall positive outlook, we have upgraded thestock from Neutral to Accumulate.

All cylinders firing:All cylinders firing:All cylinders firing:All cylinders firing:All cylinders firing: JAL registered a robust consolidatedTop-line growth of 109.2% to Rs2,964cr, against our estimatesof Rs2,370cr, mainly on account of the C&EPC division. Salesof the C&EPC segment of JAL posted a robust growth of 130.3%to Rs1,643cr, against our estimate of Rs1,105cr. The Top-linecontribution from the Cement segment was mostly in line withestimates, whereas that from the Real Estate segmentoutperformed our estimates to Rs345.6cr. The EBITDA marginfor the quarter came in at 29.9% (as against our estimate of27.3%), which was a 630bp improvement yoy. The adjustedPAT grew by 86.8%, inspite of a higher tax outflow. However,the reported PAT de-grew by 38.9% yoy to Rs103cr, primarilyon account of extraordinary expenses on account of employeecompensation expenses (ESOPs) to the tune of Rs212cr.


JAL is one of the leading companies in the infra space, spreadacross the verticals of Cement, Construction, Power, Real Estateand Hospitality, and is a major beneficiary of the ongoing thrustin infrastructure development.

We believe that JAL would be one of the fastest growingcompanies, and would post a Top-line and Bottom-line CAGRof 45% and 40%, respectively, over FY09-12E.

We have valued JAL's Cement business at 8x EV/EBITDA, givenits high operating margins, and the company is expected togrow >40% CAGR (over FY09-12E on the Cement sales front),on the back of capacity expansion. Accordingly, JAL's CementDivision contributes Rs87.7/share to our Target Price.


Research Analyst - Shailesh Kanani/Aniruddha Mate

Key Financials

Net SalesNet SalesNet SalesNet SalesNet Sales 6,148 6,148 6,148 6,148 6,148 10,896 10,896 10,896 10,896 10,896 15,134 15,134 15,134 15,134 15,134 18,72918,72918,72918,72918,729

% chg 43.8 77.2 38.9 23.8

Adj. Net PAdj. Net PAdj. Net PAdj. Net PAdj. Net Profitrofitrofitrofitrofit 897 897 897 897 897 1,241 1,241 1,241 1,241 1,241 2,081 2,081 2,081 2,081 2,081 2,4412,4412,4412,4412,441

% chg 47.0 38.4 67.7 17.3

Adj. EPS (Rs)Adj. EPS (Rs)Adj. EPS (Rs)Adj. EPS (Rs)Adj. EPS (Rs) 6.4 6.4 6.4 6.4 6.4 5.8 5.8 5.8 5.8 5.8 9.8 9.8 9.8 9.8 9.8 11.511.511.511.511.5

EBITDA Margin (%) 33.6 31.0 32.2 30.8

P/E (x) 25.1 27.5 16.4 14.0

RoE (%) 15.9 15.9 21.2 20.4

RoCE (%) 10.3 12.3 14.7 14.9

P/BV (x) 3.4 3.8 3.2 2.6

EV/Sales (x) 5.3 4.4 3.4 2.8

EV/EBITDA (x) 15.8 14.1 10.5 9.0



We have valued JAL's Construction Division at a FY12E targetEV/EBITDA multiple of 8x, which is in line with listed peers likeIVRCL Infra, Hindustan Construction and NagarjunaConstruction. JAL's Construction Division contributes Rs65.3/share to our target price.

We have valued JAL's stake in Jaiprakash Power Ventures on aMCap basis, by assigning a 20% holding company discount,thereby contributing Rs48.7/share.

We continue to value JAL's Real Estate initiative at Rs33.7/share,on an NAV basis. JAL's Hospitality Division has been valued at8x its FY12E PAT, at Rs0.7/share. We have not considered theGanga Expressway Project in our valuation, as it has notachieved financial closure

The unsold treasury stock has been valued at the CMP of Rs160,thereby contributing Rs16.5/share. The net debt for the Cement,Construction and Real Estate businesses, for FY12E, has beendeducted.

Based on the SOTP methodology, we have arrived at a TargetPrice of Rs194/share. Hence, we upgrade the stock from NeutralHence, we upgrade the stock from NeutralHence, we upgrade the stock from NeutralHence, we upgrade the stock from NeutralHence, we upgrade the stock from Neutralto Accumulate, with a target price of Rs194.to Accumulate, with a target price of Rs194.to Accumulate, with a target price of Rs194.to Accumulate, with a target price of Rs194.to Accumulate, with a target price of Rs194.

January 23, 2010


JK Tyre & Industries - Buy



Marginal TMarginal TMarginal TMarginal TMarginal Topopopopop-line growth, strike affects Sales:-line growth, strike affects Sales:-line growth, strike affects Sales:-line growth, strike affects Sales:-line growth, strike affects Sales: JK Tyre's reportedmarginal 2.5% yoy growth in Net Sales to Rs802.0cr (Rs782.2cr)in 3QFY2010. The company's Rajasthan plant was shut formost part of 3QFY2010 causing an estimated Loss of aboutRs250cr in Top-line. In tonnage terms, the company clockedflat yoy growth in volume to 51,500MT in 3QFY2010 (57,000in 2QFY2010). The company announced hike in prices in3QFY2010 to pass-through the Raw Material cost increase.Around an average 5% hike across the segments is applicablefrom Jan 2009 to abbreviate the spurt in Raw Material costs.The average procurement price of Rubber in 3QFY2010 stoodat Rs117-119/kg compared to Rs95/kg in 3QFY2009.

OPM above expectation at 12.1% on yoy dip in Raw MaterialOPM above expectation at 12.1% on yoy dip in Raw MaterialOPM above expectation at 12.1% on yoy dip in Raw MaterialOPM above expectation at 12.1% on yoy dip in Raw MaterialOPM above expectation at 12.1% on yoy dip in Raw Materialcost:cost:cost:cost:cost: On the Operating front, the company earned Profit ofRs96.8cr (Rs9.7cr). OPM for the quarter stood at 12.1% primarilyon account of the 1,073bp yoy dip in Raw Material cost. Thecompany attributed the substantial expansion in OPM to itscost reduction measures, better operating efficiencies and richerproduct mix. However, OPM growth was partially arrested bythe spike in Other expenditure, which comprised of an increasein discounts and other selling and distribution expenses. Thecompany also hiked prices by 5%, and has guided onsubsequent price hikes in the event of rubber prices shootingupwards from current levels to greater than Rs140.

Net PNet PNet PNet PNet Profit in line with expectations at Rs36.5cr: rofit in line with expectations at Rs36.5cr: rofit in line with expectations at Rs36.5cr: rofit in line with expectations at Rs36.5cr: rofit in line with expectations at Rs36.5cr: For 3QFY2010,JK Tyre recorded a phenomenal increase in Net Profit to Rs36.5cr(Net Loss of Rs27.4cr), primarily on account of a robustoperational performance and significant payback in workingcapital loans leading to a fall in Interest costs (Debt on booksof standalone entity is Rs780cr (Rs1,100cr).

Update on TUpdate on TUpdate on TUpdate on TUpdate on Tornel Operations:ornel Operations:ornel Operations:ornel Operations:ornel Operations: JK Tyre had acquired Tornel,Mexico in June 2008 for a consideration of around Rs270cr.Tornel was acquired by JK Tyre through a 100% special purposevehicle (SPV). JK Tyre is yet to declare its consolidated financialstatements post the Tornel acquisition. Management indictedthat, Tornel, which has a total capacity of 6.6mn tonnes perannum, recorded turnover of around Rs1,000cr in CY2009,Net Profit of approximately Rs60cr and had Debt of


Research Analyst - Vaishali Jajoo/Shreya Gaunekar


Source:Source:Source:Source:Source: Company, Angel Research, Note: JK Tyre has changed itsaccounting year from September to March end. Accordingly, FY2009 forthe company was of 18-months (6 quarters) ending March 2009.Price as on January 22, 2010


Net SalesNet SalesNet SalesNet SalesNet Sales 5,553.25,553.25,553.25,553.25,553.2 4,665.24,665.24,665.24,665.24,665.2 5,266.85,266.85,266.85,266.85,266.8 5,819.15,819.15,819.15,819.15,819.1

% chg 98.7 (16.0) 12.9 10.5

Adj. Net PAdj. Net PAdj. Net PAdj. Net PAdj. Net Profitrofitrofitrofitrofit (104.0)(104.0)(104.0)(104.0)(104.0) 227.6227.6227.6227.6227.6 171.5171.5171.5171.5171.5 196.7196.7196.7196.7196.7

% chg (249.5) - (24.6) 14.7

OPM (%) 3.0 12.3 10.7 10.6

Adj. EPS (Rs)Adj. EPS (Rs)Adj. EPS (Rs)Adj. EPS (Rs)Adj. EPS (Rs) (26.3)(26.3)(26.3)(26.3)(26.3) 55.455.455.455.455.4 41.841.841.841.841.8 47.947.947.947.947.9

P/E (x) (6.5) 3.1 4.1 3.5

P/BV (x) 1.0 0.8 0.7 0.6

RoE (%) (15.6) 25.3 16.2 15.9

RoCE (%) 1.9 19.6 14.8 14.9

EV/Sales (x) 0.4 0.4 0.4 0.3

EV/EBITDA (x) 11.8 3.4 4.0 3.1


Rs150-160cr in books as on 31st Dec 2009. Tornel's operationsturned EPS accretive for JK Tyre in its very first year of operation.


The Tyre industry, in 9MFY2010, benefited largely from thesubstantial decline in Raw Material prices and spike inReplacement demand. Going ahead, we are positive on theSector as OEM off-take is expected to improve on better overallAuto industry Volume growth. The recent run up in Raw Materialprices is however a concern and expected to exert some pressureon OPM. Nonetheless, on account of the better-than-expected3QFY2010 performance, we estimate the company to clockEPS of Rs41.8 in FY2011E and Rs47.9 in FY2012E.

We believe that, strong demand, prevailing high capacityutilization levels and higher investment requirements, wouldhelp the Indian Tyre industry to arrest sharp decline in Marginsdespite the upward move in Input costs (Rubber and CarbonBlack). Thus, we recommend a Buy on JK TThus, we recommend a Buy on JK TThus, we recommend a Buy on JK TThus, we recommend a Buy on JK TThus, we recommend a Buy on JK Tyre with a Tyre with a Tyre with a Tyre with a Tyre with a TargetargetargetargetargetPPPPPrice of Rs240, at which level the stock would trade at 5x, 3.6xrice of Rs240, at which level the stock would trade at 5x, 3.6xrice of Rs240, at which level the stock would trade at 5x, 3.6xrice of Rs240, at which level the stock would trade at 5x, 3.6xrice of Rs240, at which level the stock would trade at 5x, 3.6xand 0.8x FY2012E EPSand 0.8x FY2012E EPSand 0.8x FY2012E EPSand 0.8x FY2012E EPSand 0.8x FY2012E EPS, EV/EBITD, EV/EBITD, EV/EBITD, EV/EBITD, EV/EBITDA and P/BA and P/BA and P/BA and P/BA and P/BVVVVV, respectively, respectively, respectively, respectively, respectively.....

January 23, 2010



JSW Steel - Buy



YYYYYet another quarter of stellar results:et another quarter of stellar results:et another quarter of stellar results:et another quarter of stellar results:et another quarter of stellar results: JSW Steel's 3QFY2010results were ahead of our expectations, with Net Revenue atRs4,796cr as against our estimate of Rs4,453cr, registering agrowth of 46.7% yoy. Although steel prices were downsequentially, blended realisations increased 4.2% qoq toRs32,194/tonne on account of an improved sales mix - shareof semis, as a % of total sales, fell to 19% against 28% in2QFY2010. Sales volumes increased 100% yoy to 1.4mntonnes. EBITDA margins expanded by 706bp yoy to 22.5%.Other Income included forex gain of Rs102.5cr and InterestExpenses fell 21.7% to Rs258.3cr. Adjusted for the forex gain,Net Profit came in at Rs361.4cr, which was above our estimateof Rs282.9cr. The US operations are also on the path of recovery,with the company reducing EBITDA Loss to US $8mn, from US$21mn registered in 2QFY2010.

Key Result highlights and Analyst Meet Takeaways

Sales volumes increased by 100% yoy to 1.4mn tonnes,but were down 2% qoq, due to the production loss in Karnataka(floods and extended monsoon). Management expects toachieve Sales volume of 1.6mn tonnes in 4QFY2010E.

Raw material costs increased by US $31/tonne qoq. Thiswas mainly on account of: a) increased purchase of pellets asthe captive pellet plant was shut down for a few days, b) increasein Spot prices of iron ore fines from Rs980 in 2QFY2010E toRs1,500, and c) price increase of Rs275/tonne by NMDC.

Other expenses increased by US $11/tonne qoq on accountof increase in stores and spares. Management expects storesand spares cost to increase in 4QFY2010E.

EBITDA/tonne increased by 4.9% qoq to US $168/tonne.For the first 9 months, the company posted EBITDA/tonne ofUS $151/tonne. With the price increase (Rs1,800-Rs 2,000/tonne) that have taken place in the last one month, we believethe company will be able to surpass its targeted EBITDA/tonneof US $150/tonne for FY2010E. Further, incremental EBITDAof US $20-25/tonne is expected in FY2011E due tocommencement of: a) beneficiation plant, and b) 3.5 mtpaHSM mill.

Price - Rs 1,124Target Price - Rs 1,360

Research Analyst - Paresh Jain



% chg 28.7 16.9 32.0 23.0

Net PNet PNet PNet PNet Profitrofitrofitrofitrofit 804.3804.3804.3804.3804.3 1,178.31,178.31,178.31,178.31,178.3 1,8521,8521,8521,8521,852 2,3302,3302,3302,3302,330

% chg 5.1 6.3 7.6 7.7

OPM (%) 18.8 21.6 22.5 22.9


P/E (x) 27.3 18.4 11.6 9.2

P/BV (x) 2.8 2.4 2.0 1.6

RoE (%) 10.7 14.6 19.4 20.1

RoCE (%) 9.8 10.6 13.6 15.4

EV/Sales (x) 2.3 2.0 1.7 1.3

EV/EBITDA (x) 12.4 9.3 7.3 5.6



The US plate and pipe mills are on path of recovery:Capacity utilisation at the pipe mill has improved to 20%, versus12% in 2QFY2010. Capacity utilization at the plate mill hasremained at same levels of 20% versus 2QFY2010. The USoperations posted EBITDA Loss of US $8mn against a Loss ofUS $21mn in 2QFY2010. Management expects to marginallyturn EBITDA positive (US $6mn) in 4QFY2010. In FY2011E,management expects EBITDA of US $40mn assuming capacityutilisation level of 30%.


At Rs1,124, the stock is trading at 7.3x FY2011E and 5.6xFY2012E EV/EBITDA, respectively. Going ahead, we believeJSW is well poised to benefit from: 1) strong domestic demand;2) Margin expansion on account of Sales mix enrichment; 3)Turnaround in US operations; and 4) downside for steel pricesis limited on account of expected increase in raw material costs.Hence, we maintain a Buy on the stock with a March'11 THence, we maintain a Buy on the stock with a March'11 THence, we maintain a Buy on the stock with a March'11 THence, we maintain a Buy on the stock with a March'11 THence, we maintain a Buy on the stock with a March'11 TargetargetargetargetargetPPPPPrice of Rs1,360, at which the stock would trade at 6.5xrice of Rs1,360, at which the stock would trade at 6.5xrice of Rs1,360, at which the stock would trade at 6.5xrice of Rs1,360, at which the stock would trade at 6.5xrice of Rs1,360, at which the stock would trade at 6.5xFY2012E EV/EBITDFY2012E EV/EBITDFY2012E EV/EBITDFY2012E EV/EBITDFY2012E EV/EBITDAAAAA.....

January 23, 2010



Piramal Healthcare - Buy



Revenues below expectation, up 9.0%:Revenues below expectation, up 9.0%:Revenues below expectation, up 9.0%:Revenues below expectation, up 9.0%:Revenues below expectation, up 9.0%: For 3QFY2010, PiramalHealthcare (PHL) reported Net Sales of Rs907.7cr (Rs832.4cr),which grew 9.0% on a yoy basis and was lower than our estimateof Rs977.0cr. The lower-than-expected growth on the Top-linefront was on account of the subdued performance by the PharmaSolution (CRAMS) and Piramal Critical Care (PCC) Segments.While the CRAMS Segment de-grew by 18.4% to Rs209.1cr(Rs256.1cr), the PCC Segment registered lower growth of163.7% to Rs77.8cr (Rs29.5cr). However, the HealthcareSolution (Domestic Formulations) continued to grow at a robustpace of 21.5% to Rs499.4cr (Rs410.9cr), well above the Industryaverage growth rate. For 9MFY2010, the company reportedNet Sales of Rs2,729cr (Rs2,430cr), up 12.3% yoy driven bythe Domestic Formulation and Minrad acquisition.

OPM remains flat at 19.5%: OPM remains flat at 19.5%: OPM remains flat at 19.5%: OPM remains flat at 19.5%: OPM remains flat at 19.5%: PHL reported flat OPM of 19.5%(19.2%) for the quarter, which was below our expectation of21.0% and came on the back of lower contribution from thehigh-Margin Early Phase clinical work and slow ramp up inMinrad's contract. During 3QFY2010, Employee expensesincreased 20.9% to Rs141.6cr (Rs117.2cr).

In-line PIn-line PIn-line PIn-line PIn-line PAAAAAT driven by TT driven by TT driven by TT driven by TT driven by Tax credit:ax credit:ax credit:ax credit:ax credit: PHL reported Net Profit ofRs136.2cr (Rs59.7cr), up 128.1% and in line with our estimatealbeit on a low base and Tax credit of Rs20.4cr on closure ofthe Huddersfield facility in UK. Interest cost for the quarterde-grew by 17.1% to Rs21.7cr (Rs26.1cr) on the back ofrepayment of Debt of Rs140cr, while Depreciation increased47.1% to Rs43.4cr (Rs29.5cr) on the back of the Minradacquisition.


PHL is the fourth largest player in the India Domestic Formulationmarket with a strong sales force and wide product basket. Thecompany has been able to grow faster than the Industry averageon the back of its renewed focus and increasing penetration inTier II/Rural areas. On the CRAMS front, after a subduedFY2010E, the company expects to be back on growth trajectorywith Volumes expected to pick up given that inventoryrationalisation is likely to end by 4QFY2010 and several large





global M&A deals were also completed in CY2009 due to whichOrder inflow is likely to pick up. The PCC Segment is expectedto post strong growth on account of the Minrad acquisition, asthe company launches Sevoflurane in Europe and Desfluranein US market thereby increasing capacity utilisation and resultinginto expansion in OPM.

We maintain our FY2010 estimates in spite of a subdued3QFY2010 as we were already factoring in Top-line growthand EPS of 13.5% and of Rs22.5, respectively. Going ahead,we expect Top-line and EPS to register CAGR of 12.9% toRs4,744cr and 16.4% to Rs30.5 respectively, overFY2010-12E.

On the Valuation front, the stock is trading at 13.4x FY2011Eand 11.7x FY2012E Earning, which we believe is attractive. WWWWWeeeeemaintain a Buy on the stock, with a 15-month Tmaintain a Buy on the stock, with a 15-month Tmaintain a Buy on the stock, with a 15-month Tmaintain a Buy on the stock, with a 15-month Tmaintain a Buy on the stock, with a 15-month Target Parget Parget Parget Parget Price ofrice ofrice ofrice ofrice ofRs457.Rs457.Rs457.Rs457.Rs457.



% chg 15.2 13.5 13.8 12.0

Net PNet PNet PNet PNet Profitrofitrofitrofitrofit 316.0316.0316.0316.0316.0 469.6469.6469.6469.6469.6 553.4553.4553.4553.4553.4 636.6636.6636.6636.6636.6

% chg (5.3) 48.6 17.8 15.0


EBITDA Margin (%) 20.2 20.4 20.1 20.4

P/E (x) 23.5 15.8 13.4 11.7

RoE (%) 27.4 32.2 30.9 29.2

RoCE (%) 23.6 22.1 22.9 24.2

P/BV (x) 5.7 4.6 3.8 3.1

EV/Sales (x) 2.6 2.3 1.9 1.7

EV/EBITDA (x) 12.4 10.6 9.3 7.8


January 23, 2010



Rallis India - Buy



Rallis India (RAIL) reported a 55% yoy growth in its Net Profit,quite ahead of our estimates, backed by a strong demand fromfarmers during the Rabi season. The major surprise from theresults was the 671bp yoy improvement in the EBITDA margin.With a drought-like situation in 2QFY2010, a resurgence ofdemand was witnessed in the domestic market. We expect thecompany to be on a strong growth path for the next few years,on account of the high prices of agro-commodites and thecommissioning of the Dahej plant for the export market. Wemaintain our Buy recommendation on the stock.

Results ahead of expectations: Results ahead of expectations: Results ahead of expectations: Results ahead of expectations: Results ahead of expectations: RAIL’s 3QFY2010 results wereahead of our expectations. Sales for the quarter de-grew by3.5%, mainly on account of a sluggish exports. However, thePAT (after extra-ordinary items) for the quarter grew by 55%.

Margin improvement continues:Margin improvement continues:Margin improvement continues:Margin improvement continues:Margin improvement continues: Gross margins improved by690bp, from 36% to 42.9%, indicating an increase inrealisations, on account of a better product-mix. Other operatingcosts declined by 2.6% yoy, while EBITDA margins expandedfrom 14% to 20.7% (an improvement of 671bp), on the backof a healthy expansion in gross margins.

FFFFFarmers capitalise on the Rabi season: armers capitalise on the Rabi season: armers capitalise on the Rabi season: armers capitalise on the Rabi season: armers capitalise on the Rabi season: As per our 2QFY2010note, the monsoon was below normal in India; however, laterainfall (in early October) has helped the country increase itswater reservoir levels, and brought it at the long-term average.Thus, the Rabi season witnessed a good sowing, as farmerswho lost their crops in the Kharif season took advantage of theincreased water levels; the same proved beneficiary for RAIL.

Dahej Plant on track:Dahej Plant on track:Dahej Plant on track:Dahej Plant on track:Dahej Plant on track: RAIL's new plant at Dahej is progressingwell and is expected to be commissioned as per schedule inJuly 2010. The total capex of the Dahej plant is estimated atRs150cr. We expect this plant to contribute Rs450cr to thecompany's Total Sales (at peak capacity utilisation).

FY2011E and FY2012E estimates stand revised:FY2011E and FY2012E estimates stand revised:FY2011E and FY2012E estimates stand revised:FY2011E and FY2012E estimates stand revised:FY2011E and FY2012E estimates stand revised: We are revisingour estimates on account of its above-par performance in9MFY2010. We expect RAIL to post an EPS of Rs96.3 and Rs122in FY2011E and FY2012E, respectively (as against our earlierestimates of Rs95.4 and Rs116.8).


Research Analyst - Sageraj Bariya


Key Financials

Net SalesNet SalesNet SalesNet SalesNet Sales 837837837837837 885885885885885 982982982982982 1,1301,1301,1301,1301,130

% chg 24.0 7.2 11.0 15.0

Net PNet PNet PNet PNet Profitrofitrofitrofitrofit 6464646464 9191919191 125125125125125 158158158158158

% chg 47.4 41.3 37.4 26.7

EBITDA Margin (%) 13.3 19.0 19.1 18.9

FDEPS (Rs)FDEPS (Rs)FDEPS (Rs)FDEPS (Rs)FDEPS (Rs) 53.653.653.653.653.6 70.170.170.170.170.1 96.396.396.396.396.3 122.0122.0122.0122.0122.0

P/E (x) 19.7 15.1 11.0 8.6

P/BV (x) 4.8 3.3 2.7 2.2

RoE (%) 19.6 23.9 27.2 27.9

RoACE (%) 22.4 33.9 34.9 32.0

EV/Sales (x) 1.4 1.4 1.2 1.0

EV/EBITDA (x) 10.8 7.4 6.3 5.1




Going ahead, we expect OPM to expand from 13.3% in FY2009to 19.1% and 18.9% in FY2010E and FY2011E, respectively,as the contribution from the domestic business starts to increaseand the benefits of various cost-cutting initiatives (DISHA) keepaccruing. Additionally, the start of operations at the Dahej plantin July 2010 would add to the revenue and the profitability ofthe company. The PAT would witness a higher growth comparedto the sales, due to the expansion in EBITDA margins, a reductionin the interest outflow (as debt would be redeemed on the backof higher cash generation from operations) and better workingcapital management. We have increased our EPS estimates by0.9% and 4.5% for FY2010E and FY2011E, respectively.

At Rs1,055, the stock is trading at attractive valuations of 11.0xAt Rs1,055, the stock is trading at attractive valuations of 11.0xAt Rs1,055, the stock is trading at attractive valuations of 11.0xAt Rs1,055, the stock is trading at attractive valuations of 11.0xAt Rs1,055, the stock is trading at attractive valuations of 11.0xand 8.6x its FY2011E and FY2012E estimates. Going ahead,and 8.6x its FY2011E and FY2012E estimates. Going ahead,and 8.6x its FY2011E and FY2012E estimates. Going ahead,and 8.6x its FY2011E and FY2012E estimates. Going ahead,and 8.6x its FY2011E and FY2012E estimates. Going ahead,on account of improving Return Ratios and higher Net Pon account of improving Return Ratios and higher Net Pon account of improving Return Ratios and higher Net Pon account of improving Return Ratios and higher Net Pon account of improving Return Ratios and higher Net Profitrofitrofitrofitrofitgrowth, we expect the stock to trade at higher valuations thangrowth, we expect the stock to trade at higher valuations thangrowth, we expect the stock to trade at higher valuations thangrowth, we expect the stock to trade at higher valuations thangrowth, we expect the stock to trade at higher valuations thanits historical average. Wits historical average. Wits historical average. Wits historical average. Wits historical average. We maintain our Buy recommendatione maintain our Buy recommendatione maintain our Buy recommendatione maintain our Buy recommendatione maintain our Buy recommendationon the stock, with a 15-month Ton the stock, with a 15-month Ton the stock, with a 15-month Ton the stock, with a 15-month Ton the stock, with a 15-month Target Parget Parget Parget Parget Price of Rs1,464 (Rs1,401),rice of Rs1,464 (Rs1,401),rice of Rs1,464 (Rs1,401),rice of Rs1,464 (Rs1,401),rice of Rs1,464 (Rs1,401),implying an annualised return of 30%.implying an annualised return of 30%.implying an annualised return of 30%.implying an annualised return of 30%.implying an annualised return of 30%.

January 23, 2010



Reliance Industries - Buy



Reliance Industries (RIL) declared better-than-expected set ofnumbers on both Top-line as well as on the Bottom-line frontfor 3QFY2010. Numbers exceeded our estimates primarily onaccount of the higher-than-expected Refining throughput andhigher sales of Petrochemical products.

VVVVVolumes drive Tolumes drive Tolumes drive Tolumes drive Tolumes drive Topline, EBITDopline, EBITDopline, EBITDopline, EBITDopline, EBITDA above expectations:A above expectations:A above expectations:A above expectations:A above expectations: RIL reportedbetter-than-expected 3QFY2010 numbers on the Topline andEBITDA front. Top-line increased 92.3% yoy to Rs56,856cr(Rs29,564cr) primarily on the back of 142.9% yoy growth inRefining Revenues to Rs48,000cr (Rs19,763cr), and a whopping242.4% yoy increase in Oil & Gas Revenues to Rs3,530cr(Rs1,031cr). Growth in the Refining Segment was driven by theincrease in Refining throughput during the quarter coupled withincrease in crude oil prices. Crude oil processed during thequarter was higher by 110.9% yoy to 16.6mn tonnes (7.79mntonnes) following commissioning of SEZ refinery. KG-D6 gasproduction further scaled up in the current quarter with averageproduction increasing qoq to 46mmscmd (33mmscmd in2QFY2010). The Petrochemical Segment Volumes also grew27% on account of increase in polypropylene capacity.

Margins in line, VMargins in line, VMargins in line, VMargins in line, VMargins in line, Volumes surprise :olumes surprise :olumes surprise :olumes surprise :olumes surprise : During the quarter, RILreported GRMs of US $5.9/bbl (US $10.0/bbl) as against ourexpectation of US $5.5/bbl. Benchmark complex SingaporeMargins, during the quarter, stood at around US $1.9/bbl. Thus,RIL managed to earn a spread of US $4.0/bbl, which was betterthan its performance in 2QFY2010. Oil & Gas EBIT Marginsdeclined by a substantial 1,674bp yoy to 41.8% (58.6%) onaccount of higher Depreciation of KG-D6. Petchem Marginsweakened qoq on account of subdued Petrochemical spreads.Operating Profit grew by 46.1% yoy to Rs7,844cr (Rs5,369cr),which was higher than our estimate by 10.8% on account ofhigher Volumes and slightly higher Refining Margins.

Interest and Depreciation increases; Other Income declines:Interest and Depreciation increases; Other Income declines:Interest and Depreciation increases; Other Income declines:Interest and Depreciation increases; Other Income declines:Interest and Depreciation increases; Other Income declines:Interest expenditure increased to Rs550cr, up 13.6% yoy. OtherIncome at Rs508cr, registered a decline of 23.4% yoy and waslower than our estimate of Rs600cr. Depreciation during thequarter increased 111.3% yoy on account of additionaldepreciation from SEZ refinery and KG-basin gas facility.

PPPPPrice - Rs 1,053rice - Rs 1,053rice - Rs 1,053rice - Rs 1,053rice - Rs 1,053TTTTTarget Parget Parget Parget Parget Price - Rs 1,260rice - Rs 1,260rice - Rs 1,260rice - Rs 1,260rice - Rs 1,260

Research Analyst - Deepak Pareek / Amit Vora

Key Financials

Net Sales Net Sales Net Sales Net Sales Net Sales 151,224151,224151,224151,224151,224 222,704222,704222,704222,704222,704 242,997242,997242,997242,997242,997 252,085252,085252,085252,085252,085

% chg 10.3 47.3 9.1 3.7

Net P Net P Net P Net P Net Profitrofitrofitrofitrofit 14,96914,96914,96914,96914,969 17,87817,87817,87817,87817,878 26,71126,71126,71126,71126,711 28,68928,68928,68928,68928,689

% chg (23.3) 19.4 49.4 7.4

EPS (Rs) EPS (Rs) EPS (Rs) EPS (Rs) EPS (Rs) 45.645.645.645.645.6 54.454.454.454.454.4 81.381.381.381.381.3 87.387.387.387.387.3

EBITDA Margin (%) 15.5 14.9 19.1 19.4

P/E (x) 23.1 19.4 13.0 12.1

RoE (%) 14.3 13.5 17.5 16.2

RoCE (%) 10.6 11.1 14.4 13.8

P/BV (x) 2.8 2.5 2.1 1.8

EV/ Sales (x) 2.6 1.9 1.6 1.4

EV/ EBITDA 17.1 12.7 8.4 7.3



PPPPPAAAAAT grew 15.8%:T grew 15.8%:T grew 15.8%:T grew 15.8%:T grew 15.8%: PAT grew 15.8% yoy to Rs4,008cr (Rs3,462cr),which was higher than our expectation of Rs3,739cr mainlybecause of higher-than-expected Volumes.


RIL has successfully executed its two mega ventures, viz. KGbasin gas and the RPL refinery. These ventures speak aboutRIL's successful execution capability as KG-D6 has been one ofthe fastest deepwater developments across the globe, while theSEZ refinery is one of the most complex refineries. We expectthese ventures to be likely key drivers of Profitability going ahead.Ramp up of gas production and higher oil production wouldincrease the share of E&P in the Profit matrix in turn reducingexposure to cyclical segments.

Recent sale of treasury shares (garnering Rs9,328cr) coupledwith inorganic growth plans are likely to provide a positivecatalyst to the stock price going ahead. This along with lowDebt/Equity ratio of 0.42x is likely to keep the company in highgrowth orbit going ahead. Given its valuation of 1.8x FY2012EP/BV, we believe the company is relatively undervalued at currentlevels. WWWWWe maintain a Buy on RILe maintain a Buy on RILe maintain a Buy on RILe maintain a Buy on RILe maintain a Buy on RIL, with a T, with a T, with a T, with a T, with a Target Parget Parget Parget Parget Price of Rs1,260,rice of Rs1,260,rice of Rs1,260,rice of Rs1,260,rice of Rs1,260,providing an upside of 19.6% from current levels.providing an upside of 19.6% from current levels.providing an upside of 19.6% from current levels.providing an upside of 19.6% from current levels.providing an upside of 19.6% from current levels.

January 23, 2010



TCS - Accumulate



TCS reported a spurt of 10.7% qoq in its Net Profit, quite aheadof our and consensus' estimates, clocking its highest-everutilisation levels, and growth across services and verticals,backed by a strong IT demand environment and a revival ofpent-up demand. The major surprise from the results was the103bp qoq improvement in the EBIT margin. With a resurrectionof the IT demand environment and large deal flows, we expectthe company to be on a strong growth trajectory for the nextfew years, after facing the brunt of the downturn. Thus, with thestrong 3QFY2010 performance and positive cues from thecompany, we have revised our EPS estimates upwards. At thecurrent levels, we maintain an Accumulate on the stock.

Growth across businesses, with strong volumes and improvedGrowth across businesses, with strong volumes and improvedGrowth across businesses, with strong volumes and improvedGrowth across businesses, with strong volumes and improvedGrowth across businesses, with strong volumes and improvedmargins:margins:margins:margins:margins: TCS recorded a Top-line growth of 2.9% qoq (5.1%yoy), mainly attributable to a 6.6% qoq growth in volumes.However, this positive impact on growth was curtailed by a 2.5%qoq impact of cross-currencies, mainly triggered by the averageRupee rate appreciating against the US dollar for the companyby 3.2% qoq (4.6% yoy) to Rs46.79 in 3QFY2010. Ahead ofthis, the 20bp shift in the offshore mix at 51.3% also draineddown the revenue growth to some extent. The internationalrevenues grew by 1.5% qoq (3.2% yoy) to Rs7,002.5cr, whilethe domestic revenues, which de-grew by 17.8% in 2QFY2010,witnessed a strong growth of 20% qoq to Rs647.8cr. TCSrecorded a strong sequential growth of 3.8%, 7.2%, 24.9%,respectively, in Telecom, Hi-Tech, and Energy and Utilitiesservices. The company also closed 10 large deals, which added32 new clients during the quarter. The EBIT margin expandedby 103bp qoq, due to an overall productivity improvement, asthe utilisation level surged up to 81.1%. On account of its stronghedges, the company reported net other income (including forexincome) of Rs 56.9cr (loss of Rs 14.4cr in 2QFY2010). Thus,TCS recorded an impressive 10.7% qoq growth in its 3QFY2010Bottom-line.


Going forward, TCS is expected to maintain its strong manpoweraddition plans, due to the strong visibility in upcoming businessopportunities, with the improved global IT spend and expected


Research Analyst - Hitesh Agrawal/Vibha Salvi

Key Financials (Consolidated, US GAAP)


% chg 23.0 8.8 18.1 15.5


% chg 3.0 31.3 12.9 15.0

EBITDA Margin (%) 25.8 28.9 28.6 28.5

FDEPS (Rs)FDEPS (Rs)FDEPS (Rs)FDEPS (Rs)FDEPS (Rs) 26.426.426.426.426.4 34.734.734.734.734.7 39.239.239.239.239.2 45.145.145.145.145.1

P/E (x) 30.0 22.8 20.2 17.6

P/BV (x) 7.6 5.7 4.5 3.6

RoE (%) 36.9 37.2 32.4 29.6

RoACE (%) 42.7 43.9 39.6 36.3

EV/Sales (x) 5.5 4.9 4.1 3.4

EV/EBITDA (x) 21.2 17.1 14.2 12.1



revival in discretionary spend in the next few quarters. Thecompany expects to maintain it EBIT margins by maintainingits utilisation levels, with higher productivity through fixed priceprojects and efficient execution of deals. The offshore mix forTCS is expected to remain high, which would further cushionthe margins and growth to be spread across verticals, servicesand geographies, going forward. Manufacturing, telecom andHi-Tech are expected to recover slowly, while BFSI is expectedto do well. Pricing is expected to be stable, with a slight upwardmovement to be witnessed over the next few quarters. However,any drastic movements in the Rupee/US Dollar rate need to betracked closely, going forward.

We expect TCS to record a 14.1% CAGR in its Top-line, whilethe Bottom-line is expected to clock a 19.5% CAGR overFY2009-12E. Subsequent to its stupendous outperformancevis-à-vis ours and consensus' estimates this quarter, we haveraised our EPS forecasts by 9%, 10.6% and 12.4%, respectively,for FY2010E, FY2011E and FY2012E. At Rs792, the stock istrading at 17.6x its FY2012E EPS. Hence, we maintain anHence, we maintain anHence, we maintain anHence, we maintain anHence, we maintain anAccumulate on the stock, with a TAccumulate on the stock, with a TAccumulate on the stock, with a TAccumulate on the stock, with a TAccumulate on the stock, with a Target Parget Parget Parget Parget Price of Rs900, implyingrice of Rs900, implyingrice of Rs900, implyingrice of Rs900, implyingrice of Rs900, implyinga forward P/E of 20x its FY2012E EPSa forward P/E of 20x its FY2012E EPSa forward P/E of 20x its FY2012E EPSa forward P/E of 20x its FY2012E EPSa forward P/E of 20x its FY2012E EPS.....

January 23, 2010


Wipro - Accumulate



Wipro reported a strong bottom-line performance, ahead ofour and consensus estimates, backed by a 77bp improvementin its EBIDTA margins, with the highest-ever utilisation, whichincreased by 400bp qoq to 84.5%. With a resurrection of the ITdemand environment, and improved deal flows, Wipro'scombined IT services witnessed a 3.4% qoq growth in revenues.However, on account of de-growth in Wipro's IT productbusiness, which was a cyclical blip, the overall top-line stoodmarginally up by 0.5% qoq. We believe that with theimprovement in the IT demand environment globally, thecompany is poised to witness a strong performance in the nearfuture, considering the large deal flows across services andverticals, while its focus to drive the growth through non-linearinitiatives would help it maintain its margins. At the currentlevels, we maintain an Accumulate on the stock.

Growth backed by strong volumes and improved productivity:Growth backed by strong volumes and improved productivity:Growth backed by strong volumes and improved productivity:Growth backed by strong volumes and improved productivity:Growth backed by strong volumes and improved productivity:Wipro recorded a 0.5% qoq growth (5% yoy growth) in its overallNet Revenue in 3QFY2010. Combined IT Service Revenuesclocked a 3.4% qoq growth (1.7% yoy growth) in Rupee terms,backed by a 4.7% qoq growth in blended volumes; in Dollarterms, the Revenues stood at US $1,127mn, surpassing theguidance of US $1,092-1,113mn. The company acquired 31new clients and made a net addition of 4,855 employees(highest-ever in the last five quarters), exhibiting signs of abusiness recovery. Wipro recorded a 77bp qoq expansion inoverall EBITDA Margins, mainly due to a 98bp reduction inG&A expenses. Thus, on account of the strong operationalperformance Wipro reported a 4.8% qoq jump in theBottom-line.


Wipro plans to focus on its non-linear initiatives, which includesplatform-based pricing. One such initiative that the companyis currently focusing on includes Green IT, which aims atdelivering IT services by optimising client costs related to Powerconsumption. Currently, non-linear initiatives contribute 8% ofcompany's overall revenues, and are expected to witness asignificant ramp-up. The company plans to further scale up its


Research Analyst - Hitesh Agrawal/Vibha Salvi





% chg 28.6 7.2 13.4 18.2

Adj. Net PAdj. Net PAdj. Net PAdj. Net PAdj. Net Profitrofitrofitrofitrofit 3,9003,9003,9003,9003,900 4,6634,6634,6634,6634,663 5,1005,1005,1005,1005,100 5,8475,8475,8475,8475,847

% chg 18.8 19.6 9.4 14.6

OPM (%) 20.2 21.8 21.7 21.6


P/E (x) 27.2 22.8 20.8 18.2

P/BV (x) 7.8 6.2 5.1 4.3

RoE (%) 30.8 30.2 26.8 25.7

RoCE (%) 26.8 27.4 28.0 30.0

EV/Sales (x) 4.0 3.7 3.2 2.7

EV/EBITDA (x) 20.0 17.2 14.9 12.4


operations through non-linear programs, rather than be drivenby manpower additions, going forward. This would also helpWipro in managing and maintaining its margins effectively.The company is also expected to witness growth through theBFSI vertical, and has signed 5 deals, which are large integrationprojects (including discretionary spend-related compliance andregulatory work on the M&A front). Telecom and Manufacturing,which were the most challenged verticals, are expected to seea steady recovery from here onward. Large project spends,which were held up earlier by clients, are now coming back,and are expected to drive the top-line growth in the near term.

We expect Wipro to record a 12.8% CAGR in its Top-line, whilethe Bottom-line is expected to clock a 14.5% CAGR overFY2009-12E. Thus, with a positive near-term guidance andthe strong visibility in IT demand opportunities globally, we haveraised our EPS forecasts by 2%, 3.9% and 7%, for FY2010E,FY2011E and FY2012E, respectively. At Rs725, the stock istrading at 18.2x its FY2012E EPS. Hence, we maintain anHence, we maintain anHence, we maintain anHence, we maintain anHence, we maintain anAccumulate on the stock, with a TAccumulate on the stock, with a TAccumulate on the stock, with a TAccumulate on the stock, with a TAccumulate on the stock, with a Target Parget Parget Parget Parget Price of Rs760, implyingrice of Rs760, implyingrice of Rs760, implyingrice of Rs760, implyingrice of Rs760, implyinga forward P/E of 19x its FY2012E EPSa forward P/E of 19x its FY2012E EPSa forward P/E of 19x its FY2012E EPSa forward P/E of 19x its FY2012E EPSa forward P/E of 19x its FY2012E EPS.....

January 23, 2010


TTTTTechnical Picks |echnical Picks |echnical Picks |echnical Picks |echnical Picks |

Pattern Formation

On the Daily chart, we are witnessing a breakdown of apattern that resembles a Rising Wedge, which indicates furtherweakness. The projected target of the said pattern is around16000 / 4800 levels.

On the weekly charts, we are witnessing a negativecrossover on the momentum oscillator viz. the RSI and thestochastic. This suggests of further weakness in the coming week.

Bulls lose steam - Markets may slide further

Sensex (16860) / Nifty (5036)

In our previous weekly report, we had mentioned that if indicessustain above 17620 / 5300 levels then it is likely to test 17830/ 5370 levels. Further, we had clearly emphasized that if 17256/ 5170 levels are broken then traders should exit their longposition. The week rolled out with positive sentiments, whichwere short lived, and indices breached 17256 / 5170 levels toclose at the lowest point of the week. The Sensex ended with anet loss of 3.96 % where as the Nifty lost 4.12 % vis-à-vis theprevious week.

Rising Wedge

Source: Falcon

Source: Falcon

Future Outlook

The coming week being truncated, coupled with F&O expiry,we are likely to witness volatile sessions going ahead. Further,looking at the above pattern formation indices are likely tohead lower to test 16600 - 16000 / 4950 - 4800 levels.However, a bounce from current levels up to 17160 - 17290 /5120 - 5163 cannot be ruled out.

TTTTTraders are advised to go short ONLraders are advised to go short ONLraders are advised to go short ONLraders are advised to go short ONLraders are advised to go short ONLY on a bounce toY on a bounce toY on a bounce toY on a bounce toY on a bounce to5120 - 5163 levels if any5120 - 5163 levels if any5120 - 5163 levels if any5120 - 5163 levels if any5120 - 5163 levels if any. The stop loss for this trade setup. The stop loss for this trade setup. The stop loss for this trade setup. The stop loss for this trade setup. The stop loss for this trade setupwould be above 5200. Fwould be above 5200. Fwould be above 5200. Fwould be above 5200. Fwould be above 5200. First target of 4950 and second targetirst target of 4950 and second targetirst target of 4950 and second targetirst target of 4950 and second targetirst target of 4950 and second targetof 4800 levels can be expected.of 4800 levels can be expected.of 4800 levels can be expected.of 4800 levels can be expected.of 4800 levels can be expected.

January 23, 2010


TTTTTechnical Picks |echnical Picks |echnical Picks |echnical Picks |echnical Picks |

Technical Research Team

Weekly Pivot Levels For Nifty 50 Stocks

SENSEXNIFTY

BANKEXA.C.C.ABB LTD.

AMBUJACEMAXISBANKBHARAT PETRO

BHARTIARTLBHELCAIRN

CIPLADLFGAIL

GRASIM IND.HCL TECHNOLOHDFC BANK

HERO HONDAHINDALCOHINDUNILVR

HOUS DEV FINICICI BANKIDEA

IDFCINFOSYS TECHITC

JINDL STL&POJPASSOCIATLT

MAH & MAHMARUTINTPC

ONGC CORP.PNBPOWERGRID

RANBAXY LAB.RCOMREL.CAPITAL

RELIANCERELINFRARPOWER

SIEMENSSTATE BANKSTEEL AUTHOR

STERSUN PHARMA.SUZLON

TATA POWERTATAMOTORSTATASTEEL

TCSUNITECH LTDWIPRO

SCRIPS R2 R1 PIVOT S1 S2

18,165.00 17,512.00 17,060.00 16,408.00 15,956.00 5,432.00 5,234.00 5,094.00 4,896.00 4,757.00

9,421.00 9,097.00 8,878.00 8,554.00 8,336.00 1,023.00 974.00 939.00 890.00 855.00

911.00 859.00 830.00 779.00 750.00

118.00 112.00 108.00 102.00 98.00 1,231.00 1,131.00 1,078.00 979.00 925.00

667.00 619.00 582.00 534.00 496.00

341.00 332.00 323.00 314.00 305.00 2,535.00 2,458.00 2,347.00 2,270.00 2,159.00

308.00 290.00 279.00 261.00 250.00

372.00 351.00 337.00 316.00 302.00 409.00 381.00 364.00 335.00 318.00 463.00 431.00 413.00 382.00 364.00

2,945.00 2,782.00 2,676.00 2,514.00 2,408.00 409.00 396.00 376.00 362.00 342.00

1,843.00 1,760.00 1,707.00 1,624.00 1,571.00

1,754.00 1,702.00 1,648.00 1,596.00 1,543.00 176.00 168.00 162.00 155.00 148.00 266.00 262.00 257.00 253.00 248.00

2,956.00 2,683.00 2,316.00 2,042.00 1,676.00 912.00 877.00 849.00 813.00 785.00

66.00 64.00 60.00 58.00 54.00

168.00 160.00 154.00 145.00 140.00 2,744.00 2,660.00 2,606.00 2,522.00 2,468.00

261.00 255.00 248.00 242.00 235.00

703.00 689.00 670.00 656.00 637.00 176.00 162.00 153.00 138.00 129.00

1,764.00 1,618.00 1,527.00 1,381.00 1,290.00

1,233.00 1,183.00 1,141.00 1,091.00 1,049.00 1,518.00 1,481.00 1,443.00 1,406.00 1,368.00

239.00 231.00 225.00 217.00 211.00

1,269.00 1,192.00 1,146.00 1,069.00 1,023.00 963.00 931.00 908.00 876.00 853.00 125.00 120.00 115.00 109.00 104.00

542.00 504.00 479.00 441.00 416.00 201.00 191.00 184.00 174.00 167.00 964.00 906.00 871.00 812.00 778.00

1,154.00 1,104.00 1,067.00 1,017.00 980.00 1,194.00 1,127.00 1,085.00 1,018.00 976.00

168.00 159.00 154.00 145.00 139.00

717.00 673.00 634.00 590.00 551.00 2,243.00 2,165.00 2,109.00 2,031.00 1,975.00

248.00 237.00 230.00 219.00 212.00

926.00 872.00 831.00 777.00 735.00 1,608.00 1,520.00 1,460.00 1,372.00 1,312.00

96.00 88.00 83.00 75.00 70.00

1,572.00 1,453.00 1,378.00 1,259.00 1,184.00 848.00 813.00 784.00 748.00 719.00 676.00 650.00 634.00 608.00 591.00

861.00 810.00 777.00 725.00 693.00 93.00 86.00 82.00 75.00 70.00

777.00 739.00 717.00 678.00 657.00

January 23, 2010


Mutual FMutual FMutual FMutual FMutual Fund Fund Fund Fund Fund Focus |ocus |ocus |ocus |ocus |

Fidelity Global Real Assets Fund (FOF) - NFO Analysis

Disclaimer: -Angel Broking Ltd is not responsible for any error or inaccuracy or any losses suffered on account of information contained in this report. Data source - FidelityGlobal Real Assets fund NFO Note.

Source: FIL limited, June 2009.

Real Assets outperform when inflation rises

Fund Features NFO Date:-11th Jan 2010 to 29th Jan 2010Scheme Objective The investment objective of the Scheme is to aim to achieve long-term capital growth from a portfolio which

will be primarily invested in Fidelity Funds - Global Real Asset Securities Fund, an offshore fund launchedby Fidelity Funds (an open-ended investment company incorporated in Luxembourg) and similar to anIndian mutual fund scheme.

Type of Scheme An Open Ended Fund of Funds (FOF) SchemeTerms of Issue Rs 10/- per unitFund Manager Amit C.LodhaBench Mark Index MSCI ACWI - Industrials (20 %), Real Estate (20 %), Utilities (10 %) Materials (20%) and Energy (30%)Plans & Option(s) Growth Option and Dividend Option.

The Dividend Option offers dividend payout and dividend re-investment facilities.Min Investment Lump sum- Rs. 5000/- and SIP -Rs 500/-Entry load NilExit Load 31% if redeemed within 1 year of date of allotment or purchaseAsset Allocation Instruments Indicative Allocation Risk Profile

(% of Total Assets)Shares/units of the Underlying Scheme*/Foreign Securities 80% - 100% HighMoney Market Instruments and/or liquid/cash schemes of 0% - 20% Low to Mediummutual funds registered with SEBI

*The Underlying Scheme may have equity exposure through investments in shares, depositary receipts, investment trusts, stapled securities, warrants and other participation rights. Subject to the foregoing, theUnderlying Scheme may have equity exposure, to a limited extent, through investment in convertible securities, index and participation notes and equity linked notes. The Underlying Scheme may also invest inExchange Traded Funds subject to the maximum limit specified under the Regulations from time to time. The Scheme shall invest at least 65% of its net assets in shares/units of the Underlying Scheme.

Why invest in this Fund?

Real Assets outperform when inflation rises.

Scarcity value and Long term Driver.

Listed and traded Real Asset based opportunities in India arelimited.

Dynamic Asset Allocation across Real Assets to optimise returns.

Benefit from Fidelity's research resources and expertise.

Ideal for Investors

Looking to benefit from growth in real assets sectors.

Adds geographical diversification to investors' portfolios.

PPPPParticularsarticularsarticularsarticularsarticulars FFFFFundundundundund BenchmarkBenchmarkBenchmarkBenchmarkBenchmark ExcessExcessExcessExcessExcess Excess returnsExcess returnsExcess returnsExcess returnsExcess returns(%)(%)(%)(%)(%) (%)(%)(%)(%)(%) returns (%)returns (%)returns (%)returns (%)returns (%) over BSEover BSEover BSEover BSEover BSE

Sensex (%)Sensex (%)Sensex (%)Sensex (%)Sensex (%)Since SICAV launch* 16.1 14.3 1.8 3.21 Year^ 86.2 37.2 49.0 9.9

*SICAV LAUNCH 02.09.09 ^PILOT PERFORMANCE FROM 01.01.09.

FF -Global Real Asset Securities Fund

What is Fidelity Global Real Assets Fund?A First-of-its-kind opportunity to benefit from owningcommodities, real estate, and more in one fundFeeder Fund (FF) into to the Fidelity Funds -Global Real AssetSecurities FundFF -Global Real Asset Securities Fund: Invests in stocksunderpinned by real assets in the following areas:- Energy (Oil, Natural Gas, Uranium, Coal, Solar etc.)- Materials (Gold, Platinum, Steel, Chemicals, Agriculture,

Aluminum, Copper etc.)- Industrials (Infrastructure -aerospace, construction, rail,cement, roads, defence , ports, ship building etc.)- Real Estate and Utilities (Electricity, Power, Water)A portfolio of 40 -60 best ideas and No market cap / style bias.Sector allocation will be dynamic and unconstrained -stockpositions +/-10% of benchmark.

Following are the main asset classes that should be presentin almost every investor's portfolio

Lack of access and liquidity makes it difficult for investors totake exposure to Real Assets.But investors need to invest in Real Assets to optimize returnsand risk.

Convenient investment option which provides exposure to RealConvenient investment option which provides exposure to RealConvenient investment option which provides exposure to RealConvenient investment option which provides exposure to RealConvenient investment option which provides exposure to RealAssetsAssetsAssetsAssetsAssets-F-F-F-F-Fidelity Global Real Assets Fidelity Global Real Assets Fidelity Global Real Assets Fidelity Global Real Assets Fidelity Global Real Assets Fundundundundund

Financial Assets

Equities

Bonds

Cash

Tangible/Real Assets

Cash and Gold

Real Estate

Commodities

January 23, 2010


Mutual FMutual FMutual FMutual FMutual Fund Fund Fund Fund Fund Focus |ocus |ocus |ocus |ocus |

Bharti AXA Focused Infrastructure Fund- NFO Analysis

Fund Features NFO Date:-20th Jan 2010 to 15th Feb 2010

Factors lead to a favorable risk reward for equityMacro indicators are showing signs of recovery-V shaped.Currencies are stabilizing and global flows have resumed.Risk appetite has increased - Capital raising back in action.Corporate balance sheets have been repaired.Growth momentum has been restored- Earnings should bounceand Historically Earnings growth has been superior.Stock picking to be rewarded going ahead in FY11.Valuations at slightly below long terms average.Inflation and interest rate are below average.Political environment is stable.

Funds Investment Universe Focused on InfrastructureCement & Cement ProductsConstruction and EnergyIndustrial Manufacturing and MetalsServices (Only Infrastructure related services)TelecommunicationFinancial Services (only those primarily engaged in financinginfrastructure projects)

Scheme Objective The Scheme seeks to generate long term capital appreciation through a portfolio of predominantly equity andequity related securities of companies engaged in infrastructure and infrastructure related sectors. The Schemeis not providing any assured or guaranteed returns. Further, there can be no assurance that the investmentobjectives of the scheme will be realized

Type of Scheme An Open-Ended Equity SchemeTerms of Issue Rs 10/- per unitBench Mark Index BSE 100 IndexPlans & Option(s) - Growth Option for capital appreciation

- Quarterly Dividend Option offering Dividend Re-investment and Dividend Pay-out facilities- Regular Dividend Option offering Dividend Re-investment and Dividend Pay-out facilities

Min Investment Lump sum- Rs. 5000/-, Monthly SIP -Rs 1000/- and Daily SIP -Rs 300Entry Load NilExit Load 1% if redeemed within 1 year of date of allotment or purchaseAsset Allocation Instruments Indicative Allocation Risk Profile

(% of Total Assets)Equity and equity related securities of companies engagedin infrastructure and infrastructure related sectors 65% - 100% HighDebt & money market securities/ instruments# 0% - 35% Low to Medium

Disclaimer: Angel Broking Ltd is not responsible for any error or inaccuracy or any losses suffered on account of information contained in this report. Data source - Bharti AXA FocusedInfrastructure fund NFO Note.

# No investments will be made in securitized debt.

Performance of Funds managed by Fund Manager

SchemesSchemesSchemesSchemesSchemes 11111 33333 66666 11111 SinceSinceSinceSinceSince

MonthMonthMonthMonthMonth MonthsMonthsMonthsMonthsMonths MonthsMonthsMonthsMonthsMonths YYYYYearearearearear InceptionInceptionInceptionInceptionInception

Bharti AXA

Equity Fund 6.22 7.41 27.89 91.18 86.40

Bharti AXA Regular

Return Fund 0.41 (0.15) 3.66 N.A 12.26

Bharti AXA

Tax Advantage Fund 5.71 9.93 37.42 N.A 136.70

Note: Returns (%) are Absolute Basis as on 20th Jan 2009

5 reasons to invest in this Fund

India - An Infrastructure starved country.

Government committed to Infrastructure Investment.

This Fund is "Truly Focused" Infrastructure Fund.

Core Infrastructure has been an outperformer.

Experienced Fund Manager with a proven track record.

Ideal for Investors

Investment Horizon Investment Horizon Investment Horizon Investment Horizon Investment Horizon - Long Term

Risk AppetiteRisk AppetiteRisk AppetiteRisk AppetiteRisk Appetite - High

Fund Manager Profile

Name:Name:Name:Name:Name: Mr. Prateek Agrawal (Head-Equities)

Educational Qualifications:Educational Qualifications:Educational Qualifications:Educational Qualifications:Educational Qualifications: PGDM from XIM-B

Experience:Experience:Experience:Experience:Experience: Over 15 years' experience in fund management &equity research

Core Infrastructure has been outperformer

Past Performance may or may not be sustained in the future. #BSE 100 Index (adjusted for infra related sectors)is a depiction of BSE 100 returns after removing the sectors in which Bharti AXA Focused Infrastructure Fund willnot invest .$ The portfolio composition and the benchmarks of the Top 5 Infrastructure Funds - shown in graphabove - may vary from that of Bharti AXA Focused Infrastructure Fund. The Top 5 Infrastructure funds have beenselected on the basis of returns given by open ended Infrastructure funds for the period Jan 1, 07 to Jan 4, 10.

January 23, 2010


Mutual Fund Focus

FIIs' Selling Indicates That Bottom Fishing Can Wait

Nifty spot has closed at 5036 5036 5036 5036 5036 this week, against a close of 52525252525252525252 last week. The Put-Call Ratio is at 1.041.041.041.041.04 levels, against 1.291.291.291.291.29 levels lastweek, and the annualized Cost of Carry (CoC) is negative 19.7519.7519.7519.7519.75%. The Open Interest in Nifty Futures has increased by 23.9323.9323.9323.9323.93%.

Over-the-week, we have witnessed a sharp reduction in thePCR-OI by 25 basis points, which are mainly due to a hugebuild up in most of the call options and unwinding of around70,000 contracts in the 5200 put option. Over-the-week FIIsselling in the cash market segment was Rs.3749cr and in theIndex futures it is Rs.7448cr. According to the selling pressurefrom the FIIs, further correction in the market cannot beruled out.

Put-Call Ratio Analysis Futures Annual Volatility Analysis

The Historical Volatility of the Nifty has increased from 18.26%to 20.77%. As per our expectation, IV has increased from lowerlevel of 18.50% and hovering around 24.50%. As per thevolatility in the market and expiry of Jan series we expect it toincrease further around 28.00%. Some liquid counters whereHV has increased significantly are LT, DRREDDY, HDFCBANK,BHEL and PUNJLLOYD. Stocks where HV has declined are GTL,EDUCOMP, GTLINFRA, IFCI and HINDUNILVR.

Scrip : ONGCScrip : ONGCScrip : ONGCScrip : ONGCScrip : ONGC CMP : 1,114.50/-CMP : 1,114.50/-CMP : 1,114.50/-CMP : 1,114.50/-CMP : 1,114.50/- LLLLLot Size : 225ot Size : 225ot Size : 225ot Size : 225ot Size : 225 Expiry Date (F&O) : Expiry Date (F&O) : Expiry Date (F&O) : Expiry Date (F&O) : Expiry Date (F&O) : 28th Jan, 2010

Expected PayoffView: Mildly Bullish

Rs. 1060.00

Rs. 1100.00

Rs. 1140.00

Rs. 1180.00

Rs. 1220.00

BEPBEPBEPBEPBEP: 1,122.00: 1,122.00: 1,122.00: 1,122.00: 1,122.00Max. Risk:Max. Risk:Max. Risk:Max. Risk:Max. Risk: Rs. 2,700.00 Max. PMax. PMax. PMax. PMax. Profit:rofit:rofit:rofit:rofit: UNLIMITEDIf ONGC closes at or below Rs.1,110 on expiry. If Stock continues to trade above BEP.

NOTE: Profit can be booked before expiry, if market moves in a favorable direction.

Strategy: Long Call

Derivative Strategy

(Rs. 12.00)

(Rs. 12.00)

Rs. 18.00

Rs. 58.00

Rs. 98.00

We have just three trading session till expiry, the Nifty JanuaryFutures' closed at a discount of 16.35 points, which was at apremium of 2.20 points in the last week. The February Futurealso closed at a discount of 8.80 points. Some liquid counterswhere CoC is positive are ANDHRABANK, GVKPIL, JPASSOCIAT,STERLINBIO and IOC. Counters where CoC is negative arePRAJIND, INDIAINFO, TATACHEM, TATAMOTORS andHEROHONDA.

The total Open Interest of the market is Rs. 1,27,086 crore, asagainst Rs. 1,11,245 crore last week, and the Stock Futures'open interest has increased from Rs. 35,585 crore to Rs. 36,445crore. The Rollover in the Nifty Futures is 23.73% and in MiniftyFutures it is 35.09%. Some liquid counters that added significantOpen Interest are PUNJLLOYD, TRIVENI, ONGC, LT andTATASTEEL, while stocks where Open Interest has decreasedsignificantly are SINTEX, TECHM, BAJAJ-AUTO, PTC andCHAMBLFERT.

Open Interest Analysis Cost-of-Carry Analysis

Buy/SellBuy/SellBuy/SellBuy/SellBuy/Sell QtyQtyQtyQtyQty ScripScripScripScripScrip StrikeStrikeStrikeStrikeStrike SeriesSeriesSeriesSeriesSeries OptionOptionOptionOptionOption PPPPPricericericericericePPPPPricericericericerice TTTTTypeypeypeypeype (Rs.)(Rs.)(Rs.)(Rs.)(Rs.)

Buy 225 ONGC 1110 January Call 12.00

Derivatives Review |Derivatives Review |Derivatives Review |Derivatives Review |Derivatives Review |

Closing PClosing PClosing PClosing PClosing Pricericericericerice ExpectedExpectedExpectedExpectedExpectedPPPPProfit/Lrofit/Lrofit/Lrofit/Lrofit/Lossossossossoss

January 23, 2010


Base metal

Sr. Research Analyst (Commodity) - Reena Walia Nair

Copper managed to end in the green last week despite aCopper managed to end in the green last week despite aCopper managed to end in the green last week despite aCopper managed to end in the green last week despite aCopper managed to end in the green last week despite arise in inventoriesrise in inventoriesrise in inventoriesrise in inventoriesrise in inventories

Base metal Base metal Base metal Base metal Base metal prices ended last week in the negative territory asconcerns over the strength of the global economic recoverycoupled with monetary policy tightening in China put pressureon prices. The only exception was Copper as the red metalreversed losses by the end of the week as fund buying came inas a support to prices. Base metal prices faced downsidepressure in the last week as a stronger US Dollar also exertedpressure on prices. Though China released upbeat economicdata financial markets witnessed risk aversion that reduceddemand for higher-yielding and riskier investment assets.Economic data from China indicated that the country's GDPgrowth for the year 2009 was higher than expectations, reaching8.7%. China's fourth-quarter GDP for 2009 increased 10.7%and the country's industrial output grew 11% for 2009. Thoughthis data is positive, base metal prices may feel pressure on thedownside as this sharp growth in GDP could demand furtherstringent monetary policy tightening by the Chinese government.This could be a bearish factor for base metals as China is thedriver for base metals demand and curb in credit could affectdemand for the commodities.

Commodities Center |Commodities Center |Commodities Center |Commodities Center |Commodities Center |

Stronger US Dollar puts pressure on pricesStronger US Dollar puts pressure on pricesStronger US Dollar puts pressure on pricesStronger US Dollar puts pressure on pricesStronger US Dollar puts pressure on prices

The dollar gained 1.4% in the last week and put pressure ondollar-denominated commodities. A stronger dollar makes basemetals look unattractive for holders of other currencies. Thedollar is gaining strength as risk aversion in the financial marketscoupled with poor investor sentiment has led to higher demandfor the low-yielding dollar. Overall commodity prices alsodeclined on concern that China will raise interest rates andbanking curbs proposed by US President Barack Obama maydent the US economic recovery. If worries over the globaleconomic strength continue to linger then the dollar couldstrengthen further and add downside pressure on dollar-

denominated commodities. Markets still remain concerned thatthe economic recovery may have been backed by the stimulussupport measures by global policymakers and the impact maynot be visible in the immediate future. These concerns in thefinancial markets may reduce risk appetite of investors andlead to selling pressure in higher-yielding and riskier investmentassets.

Economic update for the coming weekEconomic update for the coming weekEconomic update for the coming weekEconomic update for the coming weekEconomic update for the coming week

The US is expected to announce a host of economic data in thecoming week. On Monday, the US will release data on existinghome sales, which may show a decline. But the major highlightof the week will be the two-day FOMC meeting and thestatement will be announced on 27th January. We do not expecta change in the monetary or credit policy in this meeting butthe focus of the meeting will revolve around the exit strategyand whether policymakers will discuss further asset purchasesto support the mortgage beyond the end of March decline.Other important data releases from the US in the coming weekinclude, consumer confidence, new home sales, durable goodsorders, unemployment claims, Chicago PMI. But by the end ofthe week markets could get choppy ahead of the release of theadvance report on fourth-quarter GDP on Friday. The GDP isexpected to advance 4.5% in the fourth-quarter against 2.2%in the last quarter. If the data comes in as per expectations thenrisk appetite in the financial markets could rise and prices ofbase metals could rise on expectations of a rise in demandfrom the world's largest economy.

FFFFFundamental Outlookundamental Outlookundamental Outlookundamental Outlookundamental Outlook

The base metals complex will continue to take cues from themovement in the dollar, economic data and risk sentiment inthe financial markets. Though Chinese data has come on thepositive side concerns over lower lending in the world's biggestbase metal consumer may lead to downside pressure. If thedollar continues to retain strength on the back of risk aversionthen base metal prices could witness downside pressure. Butsharp losses in the case of Nickel could be capped on the backof supply-related issues.

Metal S1 S2 CMP R1 R2Copper Feb 333.35 325.65 341.05 348.60 355.00

Zinc Jan 103.05 98.75 107.35 115.40 119.70

Nickel Jan 828.10 807.75 848.40 876.95 905.75

Lead Jan 98.00 93.20 102.80 110.55 118.30

Aluminum Jan 100.00 97.90 102.15 104.95 107.80

LME P LME P LME P LME P LME Prices ($/Trices ($/Trices ($/Trices ($/Trices ($/Tonne)onne)onne)onne)onne)

MetalMetalMetalMetalMetal 22-22-22-22-22-JanJanJanJanJan 15-15-15-15-15-JanJanJanJanJan ChangeChangeChangeChangeChange % Chg% Chg% Chg% Chg% Chg

Copper 7,395 7,390 5 0.1

Zinc 2,340 2,450 (110) (4.5)

Nickel 18,450 18,560 (110) (0.6)

Lead 2,235 2,430 (195) (8.0)

Aluminum 2,245 2,300 (55) (2.4)

Tin 17,680 18,050 (370) (2.0)

Base metals performance in the last week

Source: Telequote

Technical Outlook: Base Metals on the MCX

January 23, 2010


Sr. Technical Analyst (Commodities) - Samson P

Bullion

Last week, Copper prices opened the week at 341.50 initiallymade a high of 348.40, and then fell sharply lower but foundsupport at 333.20 levels. Later prices recovered towards 344.40and finally ended the week with a marginal gain of Rs.0.45 toclose at 341.30.

Trend: Neutral

Trading Levels:

This week market is expected to find good support in the rangeof 336-334 levels. And strong support is seen at 331-329 levels.

Trading below 329 would lead to lower prices initially towards326 then 323.60 and then finally towards 320 levels.

Resistance is observed in the range of 343-345 levels and strongresistance is seen at 348-350 levels.

Trading above 350 would lead to higher prices initially towards354 and then finally towards 361 levels.

Recommendation:Recommendation:Recommendation:Recommendation:Recommendation: Sell MCX Copper Feb in the range of343-345 with strict stop-loss above 351 Targeting initially 331levels and then 326.

Commodities Center |Commodities Center |Commodities Center |Commodities Center |Commodities Center |

Last week, Gold prices opened the week at 16850 initially movedhigher, but found strong resistance at 16944 levels. Later pricesfell sharply lower made a low of 16351 and finally ended theweek with a loss of Rs.368 to close at 16484

Trend : Bearish

Trading Levels:

This week market is expected to find very good support at16200-16150 levels. And strong support is seen at 15900-15870 levels.

Trading below 15860 would lead to lower prices initially towards15730 then 15530 and then finally towards the major supportat 15140.

Resistance is observed in the range of 16610-16640 and strongresistance is seen at 16820-16850.

Trading above 16850 would lead to higher prices initiallytowards 16942 then 17042 and then finally towards the majorresistance at 17210.

Daily Close above 17210 would confirm that a short termbottom has been posted in the market.

Recommendation: Recommendation: Recommendation: Recommendation: Recommendation: Sell MCX Gold Feb in the range of 16600-16630 levels with strict stop-loss above 16850 Targeting 16200initially and then 16000.

MCX February Gold

Last week, Silver prices opened the week at 28328 initiallymoved higher, but found strong resistance at 28680 levels.Later prices fell sharply lower breaking all the key supports,made a low of 26600 and finally ended the week with a hugeloss of Rs.1547 to close at 26728.

Trend : Bearish

Trading Levels:

This week market is expected to find good support at 26450-26400 levels. And strong support is seen at 26050-26000levels.

Trading below 26000 would lead to lower prices initially towards25730 then 25275 and then finally towards the major supportat 24450 levels.

Resistance is observed in the range of 27050-27100 and strongresistance is seen at 27300-27350.

Trading above 27370 would lead to higher prices initiallytowards 27530 then 27850 and then finally towards 28350.

Recommendation:Recommendation:Recommendation:Recommendation:Recommendation: Neutral

MCX March Silver

MCX February Copper

Last week, Crude prices opened the week at 3600 initially madea high of 3628, and then fell sharply lower throughout theweek, made a low of 3443 and finally ended the week withhuge loss of Rs.162 to close at 3448.

Trend : Bearish

Trading Levels:

This week market is expected to find good support in the rangeof 3385-3370 levels. And strong support is seen at 3318-3296 levels.

Trading below 3295 would lead to lower prices initially towards3257 then 3180 finally towards the major support at 3074.

Resistance is observed in the range of 3480-3505 levels andstrong resistance is seen at 3580-3600.

Trading above 3600 would lead to higher prices initially towards3630 then 3680 and then finally towards 3748.

Recommendation: Recommendation: Recommendation: Recommendation: Recommendation: Sell MCX Crude oil Feb in the range of 3480-3500 with a strict stop-loss above 3580 Targeting initially 3385then 3320.

MCX February Crude

Weekly Review

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Opinion expressed is our current opinion as of the date appearing on this material only. While we endeavor to update on a reasonable basisthe information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. Prospectiveinvestors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice. Ourproprietary trading and investment businesses may make investment decisions that are inconsistent with the recommendations expressedherein.

The information in this document has been printed on the basis of publicly available information, internal data and other reliable sourcesbelieved to be true and are for general guidance only. While every effort is made to ensure the accuracy and completeness of informationcontained, the company takes no guarantee and assumes no liability for any errors or omissions of the information. No one can use theinformation as the basis for any claim, demand or cause of action.

Recipients of this material should rely on their own investigations and take their own professional advice. Each recipient of this documentshould make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companiesreferred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risksof such an investment. Price and value of the investments referred to in this material may go up or down. Past performance is not a guide forfuture performance. Certain transactions - futures, options and other derivatives as well as non-investment grade securities - involve substantialrisks and are not suitable for all investors. Reports based on technical analysis centers on studying charts of a stock's price movement andtrading volume, as opposed to focusing on a company's fundamentals and as such, may not match with a report on a company's fundamentals.

We do not undertake to advise you as to any change of our views expressed in this document. While we would endeavor to update theinformation herein on a reasonable basis, Angel Securities, its subsidiaries and associated companies, their directors and employees areunder no obligation to update or keep the information current. Also there may be regulatory, compliance, or other reasons that may preventAngel Securities and affiliates from doing so. Prospective investors and others are cautioned that any forward-looking statements are notpredictions and may be subject to change without notice. Angel Securities Limited and affiliates, including the analyst who has issued thisreport, may, on the date of this report, and from time to time, have long or short positions in, and buy or sell the securities of the companiesmentioned herein or engage in any other transaction involving such securities and earn brokerage or compensation or act as advisor or haveother potential conflict of interest with respect to company/ies mentioned herein or inconsistent with any recommendation and relatedinformation and opinions.

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Note: Please refer important `Stock Holding Disclosure' report on Angel web-site (Research Section).

Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)Reduce (-5% to -15%) Sell (< -15%)

Ratings(Returns) :

Weekly Review

Research Team

Fundamental:

Hitesh Agrawal Head - Research [email protected]

Sarabjit Kour Nangra VP-Research, Pharmaceutical [email protected]

Vaibhav Agrawal VP-Research, Banking [email protected]

Vaishali Jajoo Automobile [email protected]

Shailesh Kanani Infrastructure, Real Estate [email protected]

Anand Shah FMCG , Media [email protected]

Deepak Pareek Oil & Gas [email protected]

Puneet Bambha Capital Goods, Engineering [email protected]

Sushant Dalmia Pharmaceutical [email protected]

Rupesh Sankhe Cement, Power [email protected]

Param Desai Real Estate, Logistics, Shipping [email protected]

Sageraj Bariya Fertiliser, Mid-cap [email protected]

Viraj Nadkarni Retail, Hotels, Mid-cap [email protected]

Paresh Jain Metals & Mining [email protected]

Amit Rane Banking [email protected]

Jai Sharda Mid-cap [email protected]

Amit Vora Research Associate (Oil & Gas) [email protected]

V Srinivasan Research Associate (Cement, Power) [email protected]

Aniruddha Mate Research Associate (Infra, Real Estate) [email protected]

Shreya Gaunekar Research Associate (Automobile) [email protected]

Mihir Salot Research Associate (Logistics, Shipping) [email protected]

Chitrangda Kapur Research Associate (FMCG, Media) [email protected]

Vibha Salvi Research Associate (IT, Telecom) [email protected]

Technicals:

Shardul Kulkarni Sr. Technical Analyst [email protected]

Mileen Vasudeo Technical Analyst [email protected]

Krunal Dayma Technical Analyst [email protected]

Derivatives:

Siddarth Bhamre Head - Derivatives [email protected]

Jaya Agrawal Jr. Derivative Analyst [email protected]

Institutional Sales Team:

Mayuresh Joshi VP - Institutional Sales [email protected]

Abhimanyu Sofat AVP - Institutional Sales [email protected]

Nitesh Jalan Sr. Manager [email protected]

Pranav Modi Sr. Manager [email protected]

Sandeep Jangir Sr. Manager [email protected]

Jay Harsora Sr. Dealer [email protected]

Meenakshi Chavan Dealer [email protected]

Production Team:

Bharathi Shetty Research Editor [email protected]

Dharmil Adhyaru Assistant Research Editor [email protected]

Bharat Patil Production [email protected]

Dilip Patel Production [email protected]

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