31 January 2011

Indian market Recap for Jan 31, 2011

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* INDICES: Sensex 18,327(-68), Nifty 5,505(-6), CNXMCAP 7,922(+42).
* VOLUMES: NSE $3.08bn(14,184), BSE $0.77bn(3,548cr), F&O $28.64bn(1,31,626cr)
* AVERAGE 10 DAYS MKT VOL: NSE $2.95bn (13,600) BSE $0.74bn (3,418)
                           F&O $32.63bn(1,49,954).
* SECTORS: REALTY -1.97%  METAL +0.30%   BANKEX +0.48%   POWER  +1.34%
           AUTO +0.94%  CAP.GOODS +3.27% PHARMA +0.69%  IT -1.56%.
* ADV-DEC RATIO : BSE500 Index 200 Advances & 294 Declines.
* INDEX GAINERS : ONGC +4%, BHEL & HINDALCO +3%, LT & M&M +2%, MARUTI &
                  SBI +1%.
* INDEX LOSERS  : JPA -5%, ITC & HDFC -3%, BHARTIARTL, RELINFRA, TCS, RCOM,
                  T.POWER, INFOSYS & STER -2%.

* TOP 5 VOLUMES : SBI, RIL IND, SIEMENS, T.STEEL & I.BANK.

* MAJOR BLOCKS  : 1) CROMTON GREAV          12,25,000 @  271.90,
                  2) RAINBOW PAPERS         11,12,127 @   57.00,
                  3) EXIDE IND              10,00,000 @  130.30,
                  4) ASIAN PAINTS            1,44,053 @ 2566.00,
                  5) SADHBHAV ENG           32,00,000 @  100.00,
                  6) BRITANIA IND              77,300 @  384.90.

* BSE500 GAINERS: SIEMENS +17%, UBL & BHARAT BIJLEE +8%, KPIT CUMM, CAN BANK,
                  & AQUA LOGISTICS +7%, CROMTON GREAV, PANACEA BIO, KEC INTL &
                  NIIT TECH +6%.
* BSE500 LOSERS : JAIN IRRI -11%, HEIDELBERG, HDIL, LAKSHMI ENER, NB VEN &
                  UNITECH -6%, THOMAS COOK, JKTYRE, EID PARRY & MINDTREE -5%.

* FII INVESTMENT FROM 1st JAN 2011 to 27th Jan 2011: $-0.1bn.

Credit Suisse on Siemens:: Modest PAT growth in 1Q; Rich valuations cap upside

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Siemens -------------------------------------------------------------------------------- Maintain NEUTRAL
Modest PAT growth in 1Q; Rich valuations cap upside


● Siemens reported PAT growth of 3% YoY in this quarter despite a
38% growth in sales due to a sharp decline in margins. Given high
base of margins and an order book growth of 9% YoY, we believe
achieving consensus earnings growth est. of over 20% this year
may be challenging.

Dish TV- Good outlook, fair valuations: Upgrade to ADD: Kotak Sec,

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DishTV (DITV)
Media
Good outlook, fair valuations. Dish TV reported 3QFY11 EBITDA at Rs667 mn (+475%
yoy, +34% qoq), marginally below our Rs700 mn expectation but hardly a cause for
pessimism given the emerging stage of development of the business. More important,
operating metrics were largely positive led by volume growth (1.14 mn gross, 0.93 mn net
additions) and ARPUs (Rs142; +5% yoy, +2% qoq) but for higher-than-expected churn rate
(11.6% annualized). We note the Dish TV valuation challenge given (1) emerging operating
environment and (2) high sensitivity to operating metrics. Upgrade to ADD but recommend
only for high-risk, high-reward portfolios.

Sun TV – Buy: Revenue up 51% Y-o-Y; Edelweiss

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Sun TV – Buy
n Revenue up 51% Y-o-Y; robust growth across revenue streams
Sun TV Network (Sun TV) reported Q3FY11 revenue of INR 5,980 mn against our
estimate of INR 5,673 mn. Ad revenue grew 16% Y-o-Y over a lower base as last year
festive season overlapped Q2. Broadcast fees jumped 20% Y-o-Y. Subscription revenue
growth was driven by 59%, 36%, and 43% Y-o-Y growth in the DTH, cable, and
international subscription revenue streams, respectively. In Q3FY11 Sun TV earned
revenues of INR 1,790 mn from the release of ‘Enthiran’ in Tamil and ‘Robot’ in Telugu
and Hindi. Additionally, INR 150 mn is expected from satellite rights, which hasn’t been
included in Q3FY11 revenues. INR 1,320 mn was spent on the production of the movie.

Sesa Goa -Slowing iron ore shipments lead to earnings miss: Kotak Sec

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Sesa Goa (SESA)
Metals & Mining
Slowing iron ore shipments lead to earnings miss. Sesa’s 3QFY11 EBITDA of Rs12.3
bn (+18.8% yoy) was helped by record high iron ore realization of US$86/ton which
was in line with our estimate. Net income of Rs10.7 bn (+28.7% yoy) was 10.6% lower
than our estimate. Despite record high iron ore prices, we maintain our REDUCE rating
for (1) regulatory uncertainties, (2) potential increase in export taxes, (3) potential risk to
volume assumptions and (4) imposition of mining tax that may hurt Sesa the most.

Edelweiss Model Portfolio for February 2011

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Investment philosophy: Passive versus active management
One of the most common debates in modern investment philosophy revolves around whether
active management of equities is efficient or investors should be advised to passively
manage their portfolios. Investors have realized that traditional investment vehicles become
increasingly risky when the markets take a rollercoaster ride. The traditional long only
investment styles gets handcuffed in volatile market as neither it safeguards the investments
nor is able to take the advantage of the short side of the market. Addressing this issue, we
introduce quantitative concept of co-integration based optimization that deals with issues
such as:
􀂾 A classic index tracking strategy
􀂾 A long-short equity market neutral strategy
By using the co-integration based classic index tracking strategy, portfolio managers (PMs)
can replicate a benchmark in terms of returns and volatility. With the long-short equity
market neutral strategy, PMs can seek to minimize volatility and generate steady returns
under all market circumstances. Combination of both could enable PMs to enhance the
properties of basic strategies.
Various portfolio enhancement strategies
Investors and PMs always quest to achieve optimal returns by enhancing the portfolio
through various strategies. The spectrum of such strategies is boundless. Each portfolio has
its unique characteristics and, hence, the strategy has to be unique. Few of the enhancement
strategies are:
􀂾 Co-integration optimization approach
􀂾 Statistical long/short market neutral strategy
􀂾 Enhance indexing
􀂾 Leveraging and structured instruments
􀂾 Superior stock selection
The idea of using enhancement strategies is either to outperform the benchmark what we
call Alpha over market or use these strategies to derive consistent returns with minimum
volatility i.e. the absolute return strategy. Enhanced indexing aims at gaining alpha over the
benchmark whereas long-short market neutral strategies are used for absolute returns. Cointegrating
optimization helps us achieve the best of both worlds.

Buy Jagran Prakashan– revenues boosted by 31% ad revenue growth:: Edelweiss

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Jagran Prakashan– Buy
n JPL revenues boosted by 31% ad revenue growth
Jagran Prakashan’s (JPL) Q3FY11 revenue, at INR 2,860 mn, rose 26% Y-o-Y against our
estimate of INR 2,791 mn. The topline growth was driven by advertising revenues, which
jumped 31% Y-o-Y to INR 1,945 mn. Circulation revenues grew 7% Y-o-Y to INR 570
mn. The company has registered a growth in circulation of 10% during the quarter.
Outdoor event management and digital revenues stood at INR 252 mn, a strong 20% Yo-
Y growth.

Sell Ashok Leyland - Not the right time to bottomfish:: Kotak Securities

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Ashok Leyland (AL)
Automobiles
Not the right time to bottomfish. We reduce our target price on Ashok Leyland to
Rs56 from Rs60 driven by (1) marginal cut in earnings based on downward revision in
volumes and EBITDA margins and (2) cut in our target multiple to 12X PE (from 13X
earlier) on our FY2012E EPS. We believe slowing commercial vehicle industry growth
coupled with escalating raw material costs could put pressure on the company’s
profitability. Hence we maintain SELL rating on the stock.

Buy PVR: Exhibition business PAT, at INR 80 mn, ahead of estimate: Edelweiss

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PVR – BUY
n Exhibition business PAT, at INR 80 mn, ahead of estimate
PVR’s Q3FY11 exhibition business revenue and PAT stood at INR 1,032 mn and INR 80
mn (against our estimate of INR 1,000 mn and INR 67 mn), respectively. Y-o-Y,
exhibition business revenues rose 5% and PAT dipped 6%. Film distributor’s share as a
percentage of revenues decreased 30bps Y-o-Y. Q3FY11 EBITDA and PAT margins for
exhibition business stood at 20.5% and 7.8%, respectively.
n Occupancy at 28%; ATP up 5% Y-o-Y
The company enjoyed 28% occupancy in Q3FY11 against 37% in Q3FY10 and 30% in
Q2FY11. Footfalls increased 2% to 5.2 mn from 5.1 mn in Q3FY10. ATP for the quarter
grew at 5% over Q3FY10 (from INR 159 to INR 167). F&B spending per head and
advertising & royalty income increased 3% and 35%, Y-o-Y, respectively. The company
is expected to start operations at 24 more screens over the next 4 months.

Kotak Sec: IDEA -Strong revenue growth fails to translate into margin expansion.

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IDEA (IDEA)
Telecom
Strong revenue growth fails to translate into margin expansion. Idea reported a
modest beat on revenue estimates and a massive beat on PAT, despite missing our
EBITDA estimate for 3QFY11. Strong volume-led revenue growth was on expected lines,
but the sharp increase in S&M costs (which impacted margins) was not. Competition is
possibly hurting in more areas than just tariffs – this quarter it was increased churn,
higher trade channel payouts (possibly) and increased ad expenses. Remain Cautious.

Buy JK Paper Results in line with estimates: Target Price: Rs 84:; Emkay

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JK Paper
Results in line with estimates


BUY

CMP: Rs 53                                       Target Price: Rs 84

n     Q3FY11 results were in line with estimates with revenue growth of 18% yoy (8% volume and 10% realisations) to Rs 3.1 bn and PAT growth of 23% yoy to Rs 251 mn
n     EBITDA margins contraction of 200 bps yoy to 20.8% is attributed to high input (wood) cost due to adverse monsoon, however the same is expected to improve by Q4FY11
n     Company revised its capex to Rs 16.5 bn (previously Rs 15 bn) due to upwards revision in planned capacity - funding for capex plans is tied up
n     Valuations remain compelling at FY12E P/E of 3.8x, EV/EBITDA of 3.2x and 40% discount to book value. We re-iterate BUY

Kotak Sec: buy Sobha : In-line results but volumes disappoint.

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Sobha ( SOBHA )
Property
In-line results but volumes disappoint. Sobha reported an in-line quarter with
revenues 4% lower than KIE while net income is 16% above KIE estimate. With
3QFY11 sales volume down 5% qoq, we now expect Sobha to just about meet its
FY2011E sales target of 3 mn sq. ft. We increase our WACC assumption to 15% and
cut target price to Rs380. We retain our BUY rating as we believe Sobha’s Bangalorecentric
residential model is relatively more insulated compared to peers.

Buy Titan: net profit jumps 82.4%; margins expand 193bps:: Edelweiss,

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Titan Industries (TTAN IN, INR 3,495, Buy)
n Stellar performance; net profit jumps 82.4%; margins expand 193bps
Titan Industries’ (Titan) Q3FY11 revenues, at INR 19.5 bn, jumped ~37% Y- o- Y, above
our estimate of INR 16.5 bn. Titan posted a commendable EBIDTA of INR 1.95 bn for the
quarter vis-à-vis INR 1.07 bn for Q3FY10. EBITDA margin jumped 193bps Y-o-Y, to 10%.
Lower COGS contributed 78bps Y-o-Y, employee cost 73bps and other expenses 46bps,
to margin expansion, ad spends remained flat for Q3FY11. PAT catapulted ~82% to INR
1.37 bn, surpassing our estimate of INR 1.2 bn.

Bonds close the week on a firm note; 10 Yr bond closes at 8.13%.:: Edelweiss

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Bonds close the week on a firm note; 10 Yr bond closes at 8.13%.
Government securities
 Bonds ended the week on a firm note on the back of the softer than expected
action taken by the central bank to rein in the soaring inflation. RBI raised its key
rates by only 25bps at its policy review on Tuesday despite the persistently high
inflation. With only two more sovereign auction pending in the current fiscal (of
INR 100bn each), the supply is also relatively lower. The 7.80% 2020 bond and
the 8.13% 2022 bond both closed 1bps lower at 8.13% and 8.16% respectively.

Buy DB Corp: 3QFY11 festivities galore:: Kotak Sec,

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DB Corp (DBCL)
Media
3QFY11 festivities galore; festival season does not return till next year, however.
DBCL reported strong 3QFY11 EBITDA at Rs1.15 bn (+20% yoy, +21% qoq) led by strong
29% yoy advertising growth (complete festival season in 3Q) despite investments in new
markets; operating expenses increased 13% qoq led by first full quarter of operation of
Ranchi edition and launch of Jamshedpur edition in Jharkhand market. Retain BUY with 12-
month DCF-based TP of Rs325 (30%+ upside). However, 33% EBITDA margin may not
sustain given rising investments; we model 28-30% EBITDA margins in FY2012E-13E, still
strong given peak investment period. DBCL also declared Rs2/share interim dividend, already
implying an annualized dividend yield of 1.6%.

Sell Polaris Software: 3QFY11 – in-line revenues, disappointing margins,::, Kotak Sec,

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Polaris Software Lab (POL)
Technology
Margins disappoint; forex income saves the day. Polaris reported a 250 bps qoq
decline in EBITDA margin despite tailwinds from higher offshore leverage, higher
product revenue contribution and increase in utilization. Management attributed the
margin weakness to Re appreciation and wage pressure in the lateral as well as fresher
market. Even as Re could swing either way, the latter is a structural pressure point and
keeps us Cautious on the mid-caps in general. Retain SELL on Polaris.

ONGC -Neutral: Highest ever quarterly profit:: Credit Suisse

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ONGC ----------------------------------------------------------------------------------- Maintain NEUTRAL
Highest ever quarterly profit


● ONGC reported 3QFY11 EPS of Rs.33.1, 28% above estimates,
principally on lower DD&A charges and higher other income. For
3Q, ONGC was expected to receive money from GAIL for the gas
pool settlement. At Rs19 bn, this was Rs4 bn above estimates.
● DD&A charges for ONGC have been volatile, typically surprising
on the upside on higher dry well write-offs. The 3Q write offs have
almost halved QoQ, and contributed materially to the EPS beat.
● Encouragingly, ONGC’s domestic oil output grew 1% QoQ, while
gas output was flat. Restart of Panna Mukta fields has helped JV
oil numbers. Due to lag in domestic LPG pricing, 4Q subsidy
payouts will rise even if crude remains flat. Its net realisations rose
on higher crude, though impact may be overstated.
● The ONGC stock has been weak on subsidy concerns (on high
crude) and before the large government share sale. Yet
valuations, at less than 10x P/E and appear attractive at about 4x
EV/EBITDA.

Kotak Sec: Buy SKS Microfinance : Target Rs 950

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SKS Microfinance (SKSM)
Banks/Financial Institutions
Provisions on AP loan book pull down earnings. SKS reported PAT of Rs341 mn,
down 38% yoy. Stable NIM and marginal qoq loan book decline due to lower
disbursements have driven core earnings – up 8% qoq and 59% yoy. However, large
provisions have pulled down reported earnings. We find two risks to SKS’s business
model (1) lower non-fund based income and (2) high credit losses as the scenario in AP
has not improved for longer-than-expected period. We will revisit our estimates and
price target after conference call with the management.

Buy VIP INDUSTRIES Growth Visibility just got better: Edelweiss

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􀂄 Top-line marginally ahead of estimate; adj. PAT above estimates
VIP Industries (VIP) reported Q3FY11 topline of INR 1,948 mn, 2.2% higher
than our estimates of INR 1907 mn, primarily driven by increased contribution
from the soft luggage segment (contributed 60% to sales for the quarter).
Adjusted PAT came at INR 232 mn, 9.7% higher than our estimates of INR 212
mn, primarily due to higher EBIDTA margins. However, consolidated PAT came
at INR 300 mn against INR 148 mn due to INR 89 mn tax write back on account

FII & DII trading activity on NSE and BSE as on 31-Jan-2011

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FII trading activity on NSE and BSE on Capital Market Segment
The following is combined FII trading data across NSE and BSE collated on the basis of trades executed by FIIs on 31-Jan-2011.
FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
CategoryDateBuy ValueSell ValueNet Value
FII31-Jan-20112599.843520.22-920.38

 
 
Domestic Institutional Investors trading activity on NSE and BSE on Capital Market Segment
The following is combined Domestic Institutional Investors trading data across NSE and BSE collated on the basis of trades executed by Banks, DFIs, Insurance, MFs and New Pension System on 31-Jan-2011.
DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
CategoryDateBuy ValueSell ValueNet Value
DII31-Jan-20112064.481056.341008.14


-- 

FII DERIVATIVES STATISTICS FOR 31-Jan-2011

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FII DERIVATIVES STATISTICS FOR 31-Jan-2011 
 BUYSELLOPEN INTEREST AT THE END OF THE DAY 
 No. of contractsAmt in CroresNo. of contractsAmt in CroresNo. of contractsAmt in Crores 
INDEX FUTURES906582482.291084752961.9541148411323.60-479.66
INDEX OPTIONS3223098737.472849687846.91163939445124.10890.57
STOCK FUTURES613661616.11712481895.51113714828163.45-279.40
STOCK OPTIONS20074550.8221088574.9915335407.32-24.17
      Total107.34

 

Buy USHA MARTIN Hit by increased costs and capital charges: Edelweiss

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􀂃 Volume and realisations below expectation
Usha Martin (UML) reported Q3FY11 consolidated net revenue of INR 7.5 bn,
below our expectation of INR 7.9 bn, partly due to low sales volume at
standalone level of 117 kt (our estimate: 123 kt). Blended realisations, at INR
52,200/t, were also below our estimates. Billet production is down 13% Q-o-Q,
due to breakdown in 30 MW CPP and inadequate power supply from JSEB; the
CPP has resumed operations post repairs last month.

ADD Indian Bank: target price of Rs 320: Kotak Sec

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Indian Bank (INBK)
Banks/Financial Institutions
Margins stable; NPL decline on sell down and lower slippages. 3QFY11 numbers
were higher than our estimates on the back of lower operating expenses and
provisions. Margins were stable for the quarter at 3.8%. The decline in gross NPL was
driven by a loan sell-down to ARCIL and lower slippages. The lower cost for retirement
benefits comes as a surprise but we expect a revision in 4QFY11. Valuations are
attractive at 1.1X FY2012 PBR and 5X PER. Maintain ADD with a target price of `320.

Buy THERMAX Beats estimates; near-term expectations rise:: Edelweiss

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THERMAX
Beats estimates; near-term expectations rise


Thermax (TMX) reported 66% and 77% Y-o-Y growth in revenue and PAT,
respectively, in Q3FY11 on back of strong execution. New orders during the quarter
remained muted with a 20% Y-o-Y decline to INR 12.3 bn, which for 9mFY11
remained muted at INR 44 bn. Despite concerns over dip in orders in 9mFY11, we
expect new order growth to be decent in FY11.

Buy Union Bank- Margins expand; not much respite on NPLs yet: Kotak Sec

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Union Bank (UNBK)
Banks/Financial Institutions
Margins expand; not much respite on NPLs yet. A tight liquidity environment is
resulting in reasonable pricing power, resulting in further margin improvement – NIMs
up by 20 bps qoq to 3.4%. However, asset quality continued to disappoint with
slippages remaining high at 2.4%, even as it has improved from 2Q levels. Earnings
growth to remain attractive in FY2012-13E, despite pressure on margins, on the back of
lower credit costs. Valuations are attractive at 1.3X FY2012E PBR and 6X FY2012E PER,
for a 22-23% RoE bank. BUY.

Credit Suisse:: Jain Irrigation: 3Q11 results: disappointment across segments - buying opportunity

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Jain Irrigation System ------------------------------------------------------------- Maintain NEUTRAL
3Q11 results: disappointment across segments but could provide a buying opportunity


● Jain Irrigation’s 3Q results were weaker than expectations across
segments, leading to miss on both revenue (10% YoY growth vs
23%) as well as profit (29% below estimate). MIS and PVC pipes
were affected by the extended monsoon. Onion dehydration
business was impacted by availability and price of onions.
● Post results, we cut our full-year estimates for revenue growth and
EBITDA margin for its different businesses. Overall, we cut our
FY11E, FY12E and FY13E EPS by 12-17%. We raise our target
price to Rs248 (from Rs232) as we now value it at 20x 12-month
forward EPS as of Jan-12 vs FY12 EPS earlier.
● Management elaborated on its plans to set up an NBFC to extend
credit to farmers. We are concerned that this may increase credit
risk for Jain and dilute its positioning as a play on MIS penetration.
● We believe that the underlying reasons for the weak earnings in
2Q and 3Q are temporary in nature and the MIS business in
particular will continue to show strong growth over the next few
years. The weakness in the stock price could provide a buying
opportunity.

JP Morgan on India IT - Wage inflation concerns in the Indian IT industry persist;

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India IT Services
Wage inflation concerns in the Indian IT industry
persist; the mid-cap has to run a lot faster to stay still


• Wage inflation concerns still persist in the Indian IT industry. We believe
that annual wage hikes in FY12 is likely to be at least 12-15% (offshore) and
3% (onsite). Offshore wage pressures are likely to remain particularly sticky
in view of (a) high domestic inflation in India and (b) continued attrition in
the industry evident from the Dec-10 results (with the exception of
TCS/Infosys, we note that attrition is still uncomfortably high, particularly
with the mid-caps – some of them such as MindTree and TechMahindra -
reported quarterly annualized attrition exceeding 30% for the Dec-10 quarter).

Emkay: NTPC - Results hinting at change in grossing up again



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NTPC
Results hinting at change in grossing up again   


HOLD

CMP: Rs 188                                       Target Price: Rs 190

n     APAT of Rs23.2bn (prior year sales not adj.) is higher than est. of Rs20.6bn - we see change in grossing up again to full tax rate led by 25.6% tax rate in the qtr (project delays)
n     Detailed analysis of Q310 & Q311 numbers indicate that Q311 APAT should have been lower byRs5.7bn, had NTPC followed MAT rate grossing up but actually its lower by only Rs450mn  
n     Though this might increase our FY11E earnings by ~10% but we believe that NTPC in all probabilities is likely to fall under MAT rate in FY12E - thus no change in FY12E earnings
n     Valuations at 2.2xFY12E Book value, reasonable on core ROE of 25%; to review earnings post the concall tomorrow; Maintain Hold

Credit Suisse: HDFC Bank- OUTPERFORM:: Core profitability continues to improve

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HDFC Bank--------------------------------------------------------------------- Maintain OUTPERFORM
Core profitability continues to improve


● HDFC Bank’s core operating profits continued to grow at 50%+
YoY. Reported net profit (+33% YoY) was in line with estimates.
● Robust loan growth (33% YoY), stable margins (4.2%) and
declining credit costs (0.5%) were the key drivers for the strong
operating profit growth. While the corporate loans were down 8%
QoQ (due to run-off of short-term loans), retail loan growth
momentum continued to be strong (36% YoY; 10% QoQ).

Asian Paints- Timing mismatch in cost inflation and price increases: Kotak Sec

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Asian Paints (APNT)
Consumer products
Timing mismatch in cost inflation and price increases impact margins. 3FY11:
Positive surprise – 30% domestic volume growth; negative surprise – retail price stability
during a festival season hurting margins. While input cost inflation is starting to hurt
consumer companies now (palm oil for HUL and GCPL, copra for Marico, LLPO for
Marico and Dabur etc.), TiO2, a key input for paints has been inflationary through
CY2010 and paint industry has managed gross margins well. Channel checks suggest a
further 3% price increase by APNT to be implemented in early February 2011. Price
elasticity is not a tool for competition to improve market position, in our view. ADD.

Buy TECHNO ELECTRIC & ENGINEERING Muted quarter: Edelweiss

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�� Numbers below estimate; wind business drags earnings
Techno Electric & Engineering’s (TEE) Q3FY11 consolidated results were below our
expectations, primarily due to lower generation at Simran Wind, given seasonal
nature of the wind business besides de-growth in the EPC business. The company
reported revenue de-growth of 8.6% Y-o-Y, to INR 1,526 mn, as the energy
segment (6% of total revenue) de-grew 37.9% Y-o-Y, to INR 98 mn, while EPC
(87.7% of total revenue) recorded moderate de-growth of 5.5% to INR 1,428 mn.
EBITDA grew 1.6% Y-o-Y, to INR 373 mn, on the back of improved operating
performance. EBTIDA margin improved 245bps Y-o-Y, to 24.4%, due to significant
fall in raw material prices (down 513bps Y-o-Y to 61.9% of sales) even as other
expenses increased (up 197bps Y-o-Y to 10.4% of sales). Sharp increase in
interest expenses (up 54.6% Y-o-Y), together with reduced other income (down
17.2% Y-o-Y), impacted consolidated PAT that de-grew 17.2% Y-o-Y to INR 236
mn. For 9mFY11, consolidated revenues grew 7.5%, to INR 5,188 mn, while
EBTIDA grew 24.3% to INR 1,347 mn. OPM improved 351bps, to 26.0% for
9mFY11, while PAT grew 0.2% to INR 929 mn. The company recorded order inflow
of INR 2.5 bn during Q3FY11, taking the order backlog to INR 12.5 bn.

STERLITE TECHNOLOGIES Disappointing results: Edelweiss

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STERLITE TECHNOLOGIES
Disappointing results


􀂄 Results nosedive on all fronts
Sterlite Technologies (SOTL) reported disappointing Q3FY11 results, below our and
consensus estimates. Revenues degrew 33.2% Y-o-Y, to INR 5.8 bn, primarily led
by sharp fall in telecom revenues, which were down 64.9% (to INR 1.6 bn) and flat
revenue growth in the power segment. The telecom segment was down on the back
of: (a) high base effect of Q3FY10; (b) lower sales to China; (c) no sale from access
business and (d) optical fibre price drop. Power segment revenues were hampered
due to: (a) lower conductor volume; and (b) lack of order flows from Power Grid
Corporation (PGCIL).

Credit Suisse:: Buy Havells - Strong consumption Sylvania turnaround on track

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Havells --------------------------------------------------------------------------- Maintain OUTPERFORM
Strong consumption trends drive domestic business; Sylvania turnaround on track


● Havells’s domestic earnings growth of 4%, although modest, was
ahead of our estimates. Higher-than-expected margins in the
lighting division was the reason for the beat.
● Apart from the strong growth in sales for both cables and lighting
products (25% YoY) , strength in consumer durables business
(55% YoY) was noteworthy. New product introduction(Geysers)
appear to be the key driver. We expect consumer business to
remain strong.

Buy Crompton Greaves -In-line quarter; a positive management tone:: Credit Suisse,

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Crompton Greaves ---------------------------------------------------------- Maintain OUTPERFORM
In-line quarter; a positive management tone critical for outperformance


● While sales growth was in line, PAT growth was above estimates,
largely led by lower-than-expected taxes in the quarter. This
quarter was expected to be weak, as domestic T&D sales were
expected to be muted due to continued delay in scheduling of
delivery of orders by customers.
● We believe that with domestic sales growth tracking ~15% with
flat EBITDA margins, the risk to annual guidance is not substantial
and downward revisions, if any, should be modest. CGL needs to
achieve only 4% consolidated PAT growth in 4Q to meet FY11
estimates.
● International sales growth of ~10% (in euro terms) in 3Q was
ahead of estimates. CS Europe capital goods analyst, Simon
Smith, highlights that T&D orders in Europe should stay flat YoY
in CY11 versus a single-digit declines last year and a 25% decline
in CY09. Demand for medium voltage products is anticipated to
be stronger.
● A key driver in the medium term is management expectations for
FY12. With recovery in T&D evident from 4Q tenders, we expect a
positive tone from management. Maintain OUTPERFORM.

Jindal Steel& Power -Earnings miss on lower steel realizations:: Kotak Sec

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Jindal Steel and Power (JSP)
Metals & Mining
Earnings miss on lower-than-expected steel realizations. JSP reported consolidated
EBITDA of Rs16 bn, 5% lower than our estimate. Net income of Rs9.5 bn was 7.8%
lower than our estimate. JPL performance was in line with our estimate while steel
business performance was about 7% lower than our estimate. Lower-than-expected
realizations in steel business accounted for most of the miss. We will review our
estimates and TP post quarterly earnings call. REDUCE rating stays.

Add ICICI Bank -Stable quarter; earnings driven by lower provisions: Kotak Sec

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ICICI Bank (ICICIBC)
Banks/Financial Institutions
Stable quarter; earnings driven by lower provisions. ICICI Bank reported in-line
results with stable margins at 2.6% and loan growth at 15% yoy. As expected, NPLs
have declined resulting in lower requirement on provisions, driving earnings growth at
31% yoy. However, we are somewhat disappointed with the margin outlook
(management expects it to decline) especially on a relative basis, as most other banks
are witnessing an improvement. Valuations have turned reasonable at 1.9XFY2012E
(adjusted) PBR. Retain ADD with a TP of `1,230.

Buy SIEMENS Strong growth outlook: Edelweiss

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Siemens reported revenue and PAT ahead of estimates on the back of strong
growth across verticals, including power transmission, distribution, and oil
& gas. It reported decent increase in order book, adjusted for mega order
impact last year. Increased focus from the parent towards utilising Indian
operations as a low-cost manufacturing hub could lead to strong earnings
momentum for the Indian subsidiary.

Buy PHOENIX MILLS Steady quarter: Edelweiss

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􀂃 Results in line with expectations
The Phoenix Mills’ (PML) standalone Q3FY11 revenue of INR 451 mn and PAT of
INR 238 mn were in line with our revenue and PAT estimates of INR 480 mn and
INR 241 mn, respectively. Reported EBITDA margin at ~72% was flat Q-o-Q.
High Street Phoenix (HSP) is earning average rent of ~INR 160/sf/month across
the retail/commercial space as of December 2010. It saw footfalls of over 1.5 mn
in December 2010 and new stores to have opened during the quarter are Veda,
Armani, Chanel, Crew Republica, and Levi’s Signature.