Sell Hindustan Unilever Dismal performance; Anand Rathi

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Hindustan Unilever
Dismal performance; reiterate Sell
HUL continued with its dismal performance in 3QFY11 too,
reporting PAT decline of 5%. Though volume growth is 13%, it
is on account of increase in ad spend and lower margin. We
retain Sell on the stock as we expect the company to report only
5% earnings CAGR over FY10-13e. Reiterate Sell.

Reduce UTV - Target Rs 463:: Kotak Sec

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UTV SOFTWARE
RECOMMENDATION: REDUCE
TARGET PRICE: RS.463
FY12E P/E: 12.8X
q UTV reported a strong set of results for 3QFY11. Revenues and PAT were
ahead of our estimates by 11.7% and 40.4% respectively. Key surprises of
the results were improved profitability in both the television and the
games segments.
q As expected, the company has reported weaker margins for its movies
business (y/y, q/q), on account of poor performance (combined) of the
company's two major releases - Guzaarish and Tees Maar Khan.
q Games segment's profitability has been helped by the recognition of
$5mn of revenues, from the $10mn minimum guarantee deals that the
company has signed for its console game "El Shaddai", while the growth
in television appears to have come in, in our understanding, on the back
of cost savings as well, even as revenues have grown 15.2% y/y.

Buy IRB Infrastructure – 3QFY2011 Result Update - Angel Broking

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    IRB Infrastructure – 3QFY2011 Result Update

Angel Broking maintains a Buy on IRB Infrastructure with a Target Price of Rs. 264.

IRB Infrastructure (IRB) reported a mixed performance for 3QFY2011. While

top-line came below our estimates, EBITDA margins continue to surprise us

positively and resultant bottom-line came in line. We have revised downwards our

FY2011 and FY2012 estimates to factor in lower C&EPC numbers and slowdown

in the award activity in recent times. We maintain a Buy on the stock.

Mixed performance: IRB reported robust top-line growth of 54.4% to `668.8cr

albeit below our expectations of `775.1cr primarily due to the lower-thanexpected

growth in the C&EPC segment, which reported top-line of `466.5cr v/s

our expectation of `572.2cr. IRB continued to surprise on the margin front and

posted EBITDA margins of 43.9% for the quarter v/s our expectation of 37.8%.

Hold Jyothy Laboratories Weak performance; Anand Rathi

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Jyothy Laboratories
Weak performance; reiterate Hold
Jyothy Labs reported weak 3QFY11 results, with net profit
growing only 0.3%. Home Care revenue declined 11%,
registering losses. With lack of clarity on acquisitions, we expect
the stock’s price performance to remain muted. Reiterate Hold.

Angel Broking: Buy HDFC Bank Target Rs. 2,499. 3QFY2011 Update

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HDFC Bank – 3QFY2011 Result Update

Angel Broking maintains a Buy on HDFC Bank with a Target Price of Rs. 2,499.

For 3QFY2011, HDFC Bank reported 19.3% qoq and 32.9% yoy growth in net
profit to `1,088cr, in line with our estimate of `1,091cr. However, operating
income surpassed our estimate, which was offset by higher provisioning expenses,
which aided in further improving the provision coverage ratio. We maintain our
Buy recommendation on the stock.

Buy Karnataka Bank 3QFY11 – Lower estimate, price target; Anand Rathi

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Karnataka Bank
3QFY11 – Lower estimate, price target; re-iterate Buy
We lower our FY11e/FY12e EPS 7%/6.7% for Karnataka Bank
due to higher NPA provisioning. We value the stock at 1.4x
FY12e ABV (earlier 1.45x) owing to lower RoE, and reduce our
target price to `206 from `223. We retain our Buy
recommendation as we expect the bank’s improving margin,
higher fee income potential and better productivity to drive RoE
expansion to 15.3% in FY13e from 9.9% in FY10.

Hold Sesa Goa Regulatory hurdles continue; Anand Rathi

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Sesa Goa
Regulatory hurdles continue; maintain Hold
Sesa’s results were below our estimates due to lower-thanexpected
volume and realization, and higher-than-expected
costs. We marginally prune our earnings estimate and target
price, while maintaining our Hold on the stock.

Buy IDBI Bank 3QFY11 – Core earnings continue to impress; Anand Rathi

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IDBI Bank
3QFY11 – Core earnings continue to impress; Buy
IDBI Bank’s robust net profit was driven by higher net interest
income growth of 67.5% yoy, despite higher NPA provisions of
188% yoy. We maintain Buy as we expect the Bank’s strong
infrastructure focus and better NIM to boost earnings growth.
Also, government’s capital infusion would support future growth
and capitalization.

Monetary Policy, Jan ’11 Baby steps to continue: Anand Rathi

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Economy – Monetary Policy, Jan ’11
Baby steps to continue
Reacting to the lingering high inflation, the RBI today hiked the
repo and reverse repo rates by 25bps each, while leaving the SLR
and CRR unchanged. The RBI now projects WPI inflation at 7%
by end-Mar ’11. We expect two more rate hikes of 25bps each by
Jun ’11.

Buy JSW Steel – 3QFY2011 Result Update - Angel Broking

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  JSW Steel – 3QFY2011 Result Update

Angel Broking upgrades JSW Steel to Buy from Accumulate with a Target Price of Rs. 1,047.

JSW Steel reported disappointing set of numbers for 3QFY2011. Consolidated
revenue increased by 25.2% yoy to `6,003cr (in line with our estimate of
`6,042cr), while net profit decreased by 32.1% yoy to `292cr (significantly below
our estimate of `391cr).

Accumulate IBN18: Target Rs 115:: Kotak Sec

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IBN 18
RECOMMENDATION: ACCUMULATE
TARGET PRICE: RS.115
FY12E P/E: 43.8X
q IBN 18 has reported a strong set of results for 3QFY11. The results are
well above our estimates, with revenues coming in at Rs 2362mn, and
PAT Rs 155mn, against our estimates of Rs 2079 mn and Rs (75) mn respectively.
Reported financials are the highest in IBN18's history.
q Revenue growth came on the back of high growth in both news operations
(+24% y/y) and entertainment operations (+21%, y/y). News operations
as well as consolidated operations have been EBITDA-positive this
quarter, on the back of strong advertising growth as well as management
of expenses.
q Subscription revenues for the company have continued to account for 10-
11% of total revenues. The release guides for soft growth in subscription
revenues through the remainder of FY11, with strong growth expected
FY12-onwards. We continue to believe that IBN18 shall be able to carve a
space for itself in the distribution revenue pie of broadcasters -with Colors'
competitive position being the key factor to watch.
q We change our estimates to incorporate higher growth in advertising
revenues of the company, as well as higher expenses (on account of programming).
We upgrade FY11E/ FY12E EPS to Rs (0.4)/ Rs 2.3. We raise
our FY12-end price target to Rs 115/ share, and believe that upsides could
exist to our price target if Viacom18 is able to successfully launch a Hindi
movie channel. We retain our ACCUMULATE rating on the stock.

Accumulate: BLUE STAR: Target Rs 448: Kotak Sec

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BLUE STAR LTD
RECOMMENDATION: ACCUMULATE
TARGET PRICE: RS.448
FY12E P/E: 17X
q Numbers are lower than expectations as sedate revenue booking in Central
Airconditioning segment fails to offset the fixed costs resulting in
margin compression.
q Order intake remains anaemic, a reflection of continuing subdued activity
in commercial real estate.
q The company is consolidating its product offering in the domestic market
by acquiring businesses that bring in complementary competencies. It
has recently finalized acquisition of DS Gupta constructions which will
enable it to bundle fire-fighting and plumbing solutions with the
company's central AC systems. A good strategic move, we opine. While
the company is making the right moves, growth in the near-term remains
challenging.
q The disappointing 3Q numbers has resulted in a downward revision in
earnings. We expect stock to remain weak in near-term. Maintain Accumulate
with a revised target price of Rs 448 (Rs 500 earlier).

Jain Irrigation Systems – 3QFY2011 Result Update Angel Broking

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Jain Irrigation Systems – 3QFY2011 Result Update

Angel Broking maintains a Neutral on Jain Irrigation Systems.

Jain Irrigation Systems (JISL) reported disappointing numbers for 3QFY2011
results. Total revenue grew by 9% to `696cr. EBITDA margin stood at 19% for the
quarter. Post adjusting for forex loss and one-time VAT refund, adjusted PAT
declined by 18% to `37cr. We maintain our Neutral view on the stock.
Underperformance across segments: The MIS segment, the key contributor to the
company’s revenue and profit, showed mere growth of 19% to `360cr, with
EBITDA margin of 30.6%. The poor performance was on account of heavy rain
witnessed across the country. The PVC pipes, PE pipes and PVC sheets segments
largely remained flat, while EBITDA margin for the same declined by 197bp,
299bp and 469bp. The onion segment declined by 48%, reporting loss of `4cr.
The fruits segment registered growth of 14% yoy in sales and posted steady
margins of 19.3% for the quarter.
Outlook and valuation: Going ahead, we expect the MIS segment to register
healthy 40% yoy growth over the next two years, with the government continuing
to focus on agriculture. The PVC pipes segment is also expected to post decent
performance, with revival in demand visible. At the CMP of `215, the stock is
trading at fair valuations of 18.7x FY2012E adj. FDEPS of `11.5. We remain
Neutral on the stock.

Revenue growth slows down: JISL registered 9% yoy growth in 3QFY2011 to

`696cr (`641cr). Growth was one of the lowest posted by the company in the last

10 quarters, owing to heavy rains across the country, which impacted the

performance of key segments such as MIS, piping and onion.

Change in revenue mix continues: Part of the re-jig has been due to the
discontinuation of the PC sheets division, which contributed 1.3% to revenue and
0.6% to EBITDA in FY2010. Revenue contribution from the high-margin MIS
segment increased by 300bp to 52% (47%) in 3QFY2011, while contribution from
the sheet and agro segments dropped by 100bp and 200bp to 5% (6%) and 13%
(15%), respectively.



MIS segment affected by rains: The MIS segment, the key contributor to the
company’s revenue and EBITDA, posted 19% yoy growth (18% volume growth) for
3QFY2011, increasing its contribution to 52% of sales (50% in 2QFY2011, 51% in
1QFY2011 and 50% in 4QFY2010).
Gujarat, Rajasthan and Andhra Pradesh were the fastest-growing regions for the
company, registering growth of 144%, 132% and 59%, respectively. Other key
states that contributed to the company’s growth were Karnataka (36%) and
Maharashtra (33%).
EBITDA margins of the MIS segment increased marginally on a sequential basis
during the quarter to 30.6% due to change in product mix.



PVC pipes segment affected by monsoons: For the quarter, the segment posted
muted top-line growth of 1.9% yoy in (8% decline in volumes) to `137cr, led by
higher realisation due to increased polymer prices. EBITDA margins of the segment
declined by 197bp to 6% (8%).



PE pipes segment reports flat sales, margin under pressure: The PE pipes segment
reported flat sales of `72cr on a yoy basis, although volumes fell by 14%. EBITDA
margins declined by 299bp yoy and 270bp qoq to 8%. The decline in EBITDA
margin was on account of high raw-material prices.



PVC sheets segment: The PVC sheets segment registered revenue growth of 15.5%
during the quarter. However, the segment’s EBITDA margin declined due to high
cost pressure from rising raw-material prices. EBITDA margin of the segment came
in at 8%, reporting a 469bp decline on a yoy and 230bp on qoq basis.



Agro products (onions and fruit puree): Total revenue of the agro products
segment declined by 5% during the quarter, on account of poor performance by
the onion segment.
Revenue of the onion segment declined by 48% to `15cr, as volumes fell by 33%
for the quarter due to low availability (crop destruction due to untimely rain). The
onion segment posted a loss of `4cr in EBITDA, due to high raw-material prices.
The fruit puree segment recorded revenue growth of 14% to `76cr (`66cr),
although volumes fell by 20%. Sales growth was driven by higher realisation on
account of change in product mix. EBITDA margin came in at 19%, same as
3QFY2010 level.



Key takeaways from the conference call
􀂄 Demand scenario for the MIS division augurs well on the back of continuing
high food inflation, lead by increasing prices in agri-commodities, as it would
encourage farmers to go for installation of micro-irrigation systems.
􀂄 The subsidiary comprising of MIS and dehydrated vegetables business is likely
to breakeven on the net level by FY2011-end and contribute towards
profitability in FY2012.
􀂄 The company is considering to start an NBFC to provide loan to farmers who
are planning to invest in MIS.
􀂄 JISL plans to raise funds worth US $150mn through equity issuances. Raised
funds would be used in 1) reduction of debt from balance sheet 2) equity
contribution towards NBFC start up and 3) regular capex pertaining to MIS
and other divisions.
􀂄 The company has also decided to carve out its solar business in a separate
100% subsidiary.
􀂄 JISL’s board has also passed the resolution pertaining to issuance of
differential voting rights (DVR) bonus share. The company plans to issue 10
DVR equity shares for every 20 held; and every 10 DVR equity shares would
amount to voting right equivalent to one ordinary share.



Investment arguments
Opportunity abound in MIS
JISL is one of the pioneers in introducing micro irrigation systems (MIS) in India.
India has total arable land of 140million hectares (mn ha), of that over 71mn ha is
rain-fed, while the immediate MI potential that can be created through major and
medium irrigation projects is 69mn ha. However, around 4mn ha is covered under
sprinkler and drip irrigation (around 7% of the total MIS potential), which signifies
that there exists huge scope for further MIS in India. The company is the leading
player among organised players, accounting for a sizeable 55% market share of
the MIS market.
Pipes – Unfolding opportunity
JISL had traditionally been in the PVC pipes business, which were primarily used by
farmers for irrigation purposes along with using them for drinking water supply
schemes. However, over the past few years, this segment has evolved with different
applications for pipes ranging from being used in the city gas distribution
networks, for sewage and waste disposal, to telecom cables. Some of JISL’s
esteemed clients include leading telecom and gas companies and municipal
corporations of various cities. With the rise in urban population, JISL’s pipe
segment is well placed to capitalise on the upcoming opportunity.
Agro products (dehydrated vegetables and fruit processing) – A
budding story
Food processing, which was a small part of JISL’s business, is now quite a sizable
business having taken off on the back of the company’s organic as well as
inorganic initiatives. Although the Indian market is not yet ripe for dehydrated
vegetables, the overseas market offers huge opportunities for organised players
such as JISL. Domestically, the industry is fragmented and unorganised, which
supplies semi-finished products in crude form to European or US buyers, who
further process the products into finished products. Since the domestic market is
still evolving, JISL has focused primarily on the overseas market. Globally, India is
the second largest producer of fruits after China. Although, India accounts for
around 10% of the total global fruits production, fruit processing has been limited
to mere 2% of production. JISL is one of successful food processing companies in
India to take advantage of the same. The domestic fruit juice and nectar business
is growing at a fast pace, further offering good potential to JISL.
Outlook and valuation
Going ahead, we believe the MIS segment will continue to post healthy growth, as
the central government focuses on increasing farm output to tackle the long-term
food security issue, along with increasing farmers’ income. We expect the segment
to continue to grow between 40% over the next two years. In case of the PVC pipes
segment, a revival in demand is visible.
At the CMP of `215, the stock is trading at fair valuations of 18.7x FY2012E adj.
FDEPS of `11.5. We remain Neutral on the stock.

Buy JK Lakshmi Cement – 3QFY2011 Result Update - Angel Broking

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 JK Lakshmi Cement – 3QFY2011 Result Update

Angel Broking maintains a Buy on JK Lakshmi Cement with a Target Price of Rs. 80.

For 3QFY2011, JK Lakshmi Cement (JKLC) posted a substantial 1,732bp yoy
decline in operating margin to 7.9% due to the fall in realisations and a steep
66% yoy increase in per tonne power and fuel costs. Going ahead, we expect
JKLC to face relatively less pricing pressures owing to pick-up in demand in the
northern region. JKLC is currently trading at US $32/tonne based on FY2012E
capacity, which is lower than its peers and well below its replacement cost. Hence,
we maintain a Buy on the stock.
PAT declines 87.8% yoy on lower realisations, higher power cost:
JKLC posted 10.7% yoy decline in top-line to `315cr (`353cr) primarily on
account of the substantial fall in realisations on a yoy basis. However, qoq
top-line grew by 18.6%. OPM for the quarter plunged by a substantial 1,732bp
yoy to 7.9% (25%) on account of the fall in realisations and significant increase in
the power and fuel costs. Thus, bottom-line came in at `4.6cr (`46cr), down
90.1% yoy. The decline in bottom-line was however, restricted by the lower tax
expense due to write-backs.
Outlook and valuation: We expect JKLC to post a modest 2.3% CAGR in top-line
over FY2010-12, aided by a 6% CAGR in dispatches over the period. Going
ahead, we expect realisations to improve on the back of better demand from the
housing and real estate sectors. JKLC is currently trading at US $32/tonne on
FY2012E capacity, 57% below its replacement cost. We have valued JKLC at
EV/tonne of US $50 to arrive at a fair value of `80, which is still at a discount to
its replacement cost. We maintain a Buy on the stock, with a revised Target Price
of `80 (`92).

Operational highlights

In 3QFY2011, JKLC’s per tonne cement realisations declined by 3.5% yoy to

`3,186. Dispatches during the quarter also fell by 7.5% yoy to 0.99mn tonnes, as

demand failed to pick up in the company’s primary markets in the northern and

western regions. The low demand in the regions was due to the poor off-take from

the real estate and infrastructure sectors. The company’s per tonne power and fuel

costs increased by 66.4% yoy to `1,059 during the quarter. Per tonne freight cost

also increased by 23.4% yoy to `683. Operating profit per tonne stood at `251

during the quarter, down 76.5% yoy.

Investment arguments
Activity concentration in the northern region to protect margins: JKLC derives more
than 50% of its revenue from the northern region. Although, this region is currently
facing low demand, the long-term demand outlook for the northern region is good
due to huge infrastructure and real estate projects that are likely to come up in the
region. Further, the region is not expected to witness major capacity addition over
the next two years. Thus, we expect players in the region to regain pricing power,
with the improvement in demand situation. Hence, we expect JKLC to gain out of
the positive demand-supply dynamics in the region.
Rising captive power usage to improve profitability: JKLC is planning to increase its
total captive power capacity to 87MW from 36MW by FY2012E, which will be
sufficient to meet nearly 90% of its power requirement on the expanded capacity of
8.1mtpa, thus improving its profitability substantially. Moreover, JKLC has tied up
with VS Lignite, a KSK Group company, for the purchase of 21MW power every
year for the next 20 years at a price of `3.2/unit, which is close to the company’s
captive power cost.
Strong balance sheet: JKLC’s debt currently stands at ~ `1,050cr, of which
~`100cr is on account of deferred sales tax (interest free). The company’s cash
and liquid investments stand at ~`560cr. Thus, JKLC’s balance sheet is well
placed, with net debt/equity of 0.35x, which would enable smooth execution of its
expansion plans. The company is currently setting up a 2.7mtpa green-field plant
at Chattisgarh, which is expected to be operational by FY2013.



Outlook and valuation
We expect JKLC to post a modest 2.3% CAGR in top-line over FY2010-12, aided
by a 6% CAGR in dispatches over the period. Going ahead, we expect realisations
to improve on the back of better demand from the housing and real estate sectors.
JKLC is currently trading at US $32/tonne on FY2012E capacity, 50% below its
replacement cost. Even on relative terms, the company is trading at a huge ~57%
discount v/s the other mid-cap players. We have valued JKLC at an EV/tonne of
US $50 on FY2012 estimates to arrive at a fair value of `80, implying 53% upside
from current levels and it is still at a discount to its replacement cost. Hence, we
maintain a Buy on the stock, with a revised Target Price of `80 (`92).

Buy Dena Bank – 3QFY2011 Result Update- Angel Broking

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  Dena Bank – 3QFY2011 Result Update

Angel Broking maintains a Buy on Dena Bank with a Target Price of Rs. 127.

For 3QFY2011, Dena Bank reported moderate net profit growth of 15.4% yoy
while declining by 3.4% qoq to `155cr, below our estimates of `165cr mainly on
account of higher-than-expected provisioning expenses that partly resulted in
improvement in provision coverage. Strong business growth and improvement in
asset quality were the key positives of the results. We maintain Buy on the stock.

Accumulate SUBEX AZURE: Target Rs 88: Kotak Securities

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SUBEX AZURE LIMITED (SUBEX)
RECOMMENDATION: ACCUMULATE
TARGET PRICE: RS.88
FY12E P/E: 6.7X
Subex's operating performance for 3QFY11 was a mixed bag. Product
revenues were flat on a QoQ basis and came in below expectations. EBIDTA
margins for products division at 32.7% were above expectations. Interest
cost was higher on a sequential basis, which was surprising. The order intake
for the quarter was 39% higher QoQ at Rs.27mn, we believe and
reflected the management optimism on achieving higher revenue growth.
While Subex indicated higher confidence in the macro scene larger peers in
the industry have indicated still sluggish outlook for the telecom vertical.
We need to watch the future pipeline and order book conversions before we
become more optimistic on the future prospects of Subex. The financial
performance of Subex has also been very erratic in the past. Subex's
employee costs continue to fall, surprisingly. We expect revenues to grow
QoQ, leading to higher margins as costs remain under tight control. We
have also assumed full conversion of the restructured FCCBs and preferential
allotment to promoters of 4mn shares. However, we are surprised at the
decision to dilute equity further at these valuations to repay debt and have
not considered the same in our workings. Our FY11 earnings estimates
stand at Rs.8.8 per share and FY12E at Rs.9.3 per share. We maintain
ACCUMULATE with a PT of Rs.88 (Rs.91) based on FY12E earnings. We have
assumed FCCBs to be converted into shares (conversion price about Rs.80,
which may increase liquidity in the stock). Uncertainty over the same may
keep the stock range bound. Better visibility and comfort on the future
performance can make us more bullish on the stock.

Bajaj Electricals – 3QFY2011 Result Update - Angel Broking

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  Bajaj Electricals – 3QFY2011 Result Update

Angel Broking recommends an Accumulate on Bajaj Electricals with a Target Price of Rs. 248.

For 3QFY2011, Bajaj Electricals (BEL) posted top-line growth of 16.4% at `690cr
(`592cr), which was above our estimate of `666cr. OPM at 10.3% (10.3%) came
below our estimate of 11.8%. Net profit increased by 18.7% yoy to `40.5cr
(`34.1cr) and came in below our estimate, owing to suppressed OPM and higher
interest costs. During the quarter, interest cost rose to `9.3cr. For FY2011 and
FY2012, on account higher sales, we have revised upwards our top-line estimates
from `2,686cr and `3,241cr to `2,733cr to `3,285cr and margin estimates lower
from 10.2% and 10.6% to 10.0% and 10.4%, respectively. We also roll over to
FY2013 numbers. We recommend an Accumulate on the stock.

Angel Broking -Buy - Gateway Distriparks- Target -Rs. 123. - 3QFY2011 -Update

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Gateway Distriparks – 3QFY2011 Result Update

Angel Broking maintains a Buy on Gateway Distriparks with a Target Price of Rs. 123.

GDL reported strong revenue growth of 23.0% yoy to `158cr against our

estimates of `142cr on account of better performance across segments. Revenue

growth was driven by healthy volumes across segments, normalcy of operations at

Punjab Conware and breakeven of the rail segment at PAT level. Higher share of

exim revenue in the rail segment improved OPM by 250bp qoq (flat yoy). Fuelled

by higher other income (owing to money received from Blackstone), PAT grew by

36.7% qoq (40.0% yoy) to `28cr v/s our estimates of `21cr. During 3QFY2011,

Gateway Rail Freight (GRFL) begun deploying `300cr infused by Blackstone in

2QFY2011 towards retirement of debt and capex execution. We maintain our Buy

recommendation on GDL.

Angel Broking- Buy CEAT -Target Rs. 163. 3QFY2011 Result Update

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 CEAT – 3QFY2011 Result Update

Angel Broking recommends a Buy on CEAT with a Target Price of Rs. 163.

For 3QFY2011, Ceat reported a substantial 79.1% yoy fall in net profits, owing to
a sharp contraction in operating margins. While the top line reported strong
25.2% yoy growth, following robust OEM volumes, EBITDA margins continued to
get impacted by soaring raw-material costs, especially that of natural rubber.
We revise our earnings estimates marginally downwards to account for the high
rubber prices, which will substantially affect operating margins. Nonetheless, on
account of the recent fall in the stock price, valuations have turned attractive and
we recommend Buy on the stock.

RBS: Lupin – 3Q: Margin pressure disappoints

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While 3QFY11 revenues and earnings were largely in line, US revenue growth of only 10% and
EBITDA margin contraction of 230bps yoy (despite gross margin expansion of 195bps yoy) were
key disappointments. While EBITDA growth was muted at 3% (vs. 17% revenue growth), lower
tax rate resulted in an in line PAT.

SKS Microfinance: Business momentum but tall order ahead: Kotak Sec

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SKS Microfinance (SKSM)
Banks/Financial Institutions
Business gathers positive momentum but tall order ahead. While Malegam
Committee report sets a pitch for future growth, the new business architecture will
moderate SKS’ medium-term RoEs to about 20% from earlier expectation of 30%+.
Longer-then-expected pain in AP poses risk of significant NPLs which will likely increase
pressure on near-term earnings. Valuations remain rich at 2.4X FY2012E PBR. Post the
conference call with the management, we revise estimates and price target to Rs700;
downgrade to REDUCE (from BUY).

Omkar, Tata Steel IPO/ FPO Grey Market premium: Jan 30, 2011

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Company Name	Offer Price	Premium
	(Rs.)	(Rs.)
Tata Steel FPO	610	Current Market Price
Omkar Speciality Chemicals	95 to 98	Discount