Maruti Suzuki - Stock offers an attractive entry point: Kotak Sec

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Maruti Suzuki (MSIL)
Automobiles
Stock offers an attractive entry point. We believe the stock offers an attractive entry
point given cheap valuations (12.7X PE on FY2012E EPS) and strong earnings growth
outlook (17% yoy in FY2012E). 3QFY11 results were 4% ahead of our estimates driven
by cost-cutting initiatives. We maintain our BUY rating but cut target price to Rs1,460
(from Rs1,701) due to (1) 2-6% cut in earnings over FY2011-2013E and (2) cut in target
multiple to 15X (from 17X earlier) on FY2012E EPS.

Sell Ambuja Cement- Margins contract despite selective price hikes:: Kotak Sec

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Ambuja Cements (ACEM)
Cement
Margins contract despite selective price hikes. Ambuja Cement (ACEM) reported
sedate earnings, with margins coming under pressure despite selective price increases in the key
market of West. We continue to remain pessimistic on the prospects of ACEM with the industry
facing headwinds in the form of (1) lower cement prices, (2) inflating input costs with rising
prices of imported coal, and (3) muted demand environment (+4.3% YTD). Maintain SELL rating
and target price of Rs108/share. ACEM currently trades at US$161/ton on CY2011E production.

Oil & Natural Gas Corporation (ONGC): A solid quarter, finally:: Kotak Sec

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Oil & Natural Gas Corporation (ONGC)
Energy
A solid quarter, finally. ONGC reported strong 3QFY11 standalone net income at
`70.8 bn (+31.4% qoq, +132% yoy) versus our estimate of `59.5 bn with certain oneoffs
contributing to the large beat. Adjusted net income at `57.8 bn was marginally
below our estimate with other expenditure surprising negatively. We maintain our BUY
rating noting 25% potential upside to our revised target price of `1,420 (`1,500
previously). ONGC stock price is currently discounting net crude price realization of
US$46/bbl in FY2012E versus US$58.7/bbl in 9MFY11.

IT 3QFY11 review – good, but not enough to silence naysayers: Kotak Sec

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Technology
India
3QFY11 review – good, but not enough to silence naysayers. Even as there was a
lot to like about the Indian IT companies’ (especially the Tier-I names’) earnings reports
for the Dec 2010 quarter, high expectations going into the quarter diverted focus
towards the few misses. It was an ‘on track’ quarter, in our view – industry is on track
to deliver 20-25% US$ rev growth in FY2012E, select large companies 30%+; midsized
companies are on track to underperform larger peers for a few more quarters. We
remain positive overall with a bias towards the Tier-I names. Infosys, TCS top picks.

Sell ACC Cement-- Limited respite. :: Kotak Sec

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ACC (ACC)
Cement
Limited respite. ACC reported a marginal improvement in profitability (270 bps) from
the historic lows of the previous quarter. Higher input costs, including provisions for
obsolete spares, offset the 3% qoq increase in realizations. We continue to maintain
our conservative stance on ACC, as the current valuations do not take cognizance of
price weakness in ACC’s key markets of North and Central India. We downgrade to SELL and
revise our target price to Rs920/share, implying an EV/ton of US$127 on CY2011E production.

Anand Rathi:: Buy DB Realty 3QFY11 – As expected

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DB Realty
3QFY11 – As expected; Buy
3QFY11 margin improved as sales realization increased more
than costs actually expended. We expect margin to slide,
however, as construction progresses, since costs have increased.
Management guided to a cautious 2-3 quarters. Sales collection
is 43% of the value sold. We maintain our Buy, with a Mar ’12e
price target of `299.

Hero Honda: target of Rs1,576 ; REDUCE rating :: Kotak Securities

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HERO HONDA MOTORS (HH)
RECOMMENDATION: REDUCE
TARGET PRICE: RS.1576
FY12E P/E: 13.5X
q Hero Honda's (HH) 3QFY11 revenues were in line with our expectations.
However sharp spike in the other expenses led to lower than expected
margins and profitability.
q Furthermore exceptional item to the tune of Rs798mn also dented the
company profitability during the quarter.
q As anticipated, rising raw material prices kept the margins under pressure
and the same is expected to continue in 4QFY11.
q In view of rising commodity prices, we are lowering our FY11 and FY12
margin estimates for the company. Based on that, our revised EPS for HH
now stands at Rs99.7 (earlier Rs102.8) for FY11E and Rs112.6 (earlier
Rs120.8) for FY12E.
q Given the company's skewed product mix towards the deluxe motorcycle
segment, we believe HH will find it relatively difficult to combat operating
margins pressures as compared to Bajaj Auto. We therefore lower
our target multiple from 15x to 14x (discount to Bajaj Auto).
q We revise our price target downward to Rs1,576 (from Rs1,812) and continue
to maintain REDUCE rating on the stock

Buy NTPC – 3QFY2011 Result Update -Angel Broking

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NTPC  – 3QFY2011 Result Update

           Angel Broking maintains a Buy on NTPC with a Target Price of Rs. 230.

For 3QFY2011, on a standalone basis NTPC reported 11.0% yoy increase in

adjusted net profit to `2,319cr, aided by higher plant availability factor (PAF)

leading to higher incentives. The coal-based plants reported PAF of 93.6%, up

239bp yoy, while the gas-based plants posted PAF of 95.6%, up 251bp yoy.

Other income however, declined due to lower interest rates and redemption of

tax-saving bonds. We maintain a Buy on the stock.

Edelweiss:: VOLTAS -Weak quarter; challenging time ahead

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􀂄 Earnings disappoint; margins continue to decline
Voltas (VOLT) reported disappointing Q3FY11 numbers, which were below our
and consensus estimate. The company’s revenue grew a mere 5% Y-o-Y as it
faced slower execution in the electro-mechanical project & services (EMPS)
business, especially in international geographies. The EMPS division declined 3%
Y-o-Y to INR 6.9 bn. The engineering products & services (EPS) and unitary
cooling products (UCP) divisions continued their growth momentum at 22% and
31%, respectively. The company reported 12% Y-o-Y decline in EBTIDA to INR
793 mn led by a 144bps Y-o-Y dip in margin to 7.6%. The weaker operating
performance coupled with higher interest cost on the back of increased working
capital borrowing led to a 20% Y-o-Y decline in PAT to INR 534 mn. The earnings
are adjusted for one-offs, i.e., sale of property (INR 155 mn) during the quarter.
Earnings during the quarter disappointed due to decline in the EMPS division due
to: (a) slower than our estimate execution, especially in Qatar; and (b) higher
costs leading to loss (INR 90 mn) at Rohini Electricals (RE).

Anand Rathi: buy Phillips Carbon Black Robust volume growth; target Rs 261

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Phillips Carbon Black
Robust volume growth; maintain Buy
Phillips Carbon Black (PCBL) registered robust 3QFY11 volume
growth of 20.4% yoy (7.6% qoq), in line with our estimate.
Exports were up 7% yoy and 18% qoq. These and better
realization helped PCBL clock-in a healthy 24.3% revenue
growth, despite lower contribution from the power segment.

Angel Broking:: Buy on Oriental Bank of Commerce: 3QFY2011 Update

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 Oriental Bank of Commerce – 3QFY2011 Result Update

Angel Broking recommends a Buy on Oriental Bank of Commerce with a Target Price of Rs. 393.

For 3QFY2011, Oriental Bank of Commerce (OBC) posted healthy net profit
growth of 41.1% yoy and 2.7% qoq to `408cr, in line with our estimates of
`410cr. Modest operating performance along with asset-quality pressures was the
key highlight of the result. However, post the sharp correction in the stock price,
we recommend Buy on the stock.

Anand Rathi,: Buy Glenmark Pharma In line quarter; target Rs 392

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Glenmark Pharma
In line quarter; maintain Buy
Glenmark’s 3QFY11 results paralleled our estimates. Revenue
grew 17% yoy, to `7.5bn (vs. our estimate of `7.6bn), while
adjusted net profit grew 16.5% yoy to `1.1bn. EBITDA margin
declined 50bps yoy to 22.2%, lower than our estimate of 25%.

Buy PVR – 3QFY2011 Result Update -Angel Broking

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PVR – 3QFY2011 Result Update

Angel Broking maintains a Buy on PVR with a Target Price of Rs. 160.

We have revised our estimates downwards to factor in: 1) cricket heavy
4QFY2011, 2) volatility in the box office performance of movies, and 3) higher
movie related expenses (movie production, distribution and amortisation costs).
We maintain a Buy on the stock.

Uco Bank – 3QFY2011 Result Update - Angel Broking

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Uco Bank – 3QFY2011 Result Update

Angel Broking maintains a Neutral on Uco Bank.

Uco Bank announced its 3QFY2011 results today, registering a robust growth in
net profit of 22.5% yoy and 152.7% qoq to `301cr, well above our estimates. This
was mainly because we had been factoring in one more quarter of cleaning up
on the NPA front. However, the bank reported ~`100cr lower NPA provisioning
than expected for 3QFY2011 and will meet the 4% shortfall (~`110cr) in
4QFY2011.We maintain our Neutral recommendation on the stock.

Buy NAVABHARAT VENTURES- Lower rates, rising fuel costs increase risks; Edelweiss

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􀂄 Lower rates, high fixed costs, and sugar segment losses dent earnings
Navabharat Ventures’ (NVL) Q3FY11 PAT, at INR 493 mn (our expectation
INR 800 mn), dipped 62% Y-o-Y, due to lower–than-expected merchant
realisations at INR 3.24/INR (our expectation INR 3.8/kWh). Operations at the
ferro alloy unit were subdued with the ferro chrome facility being practically shut
down, while part of the manganese facility was also not operational due to sub
optimal prices. However, fixed costs for these units were still borne, resulting in
lower earnings. The sugar segment also posted losses as prolonged rains have
delayed the crushing season. Ferro alloy and sugar segments are expected to post
better performance in 4QFY11, though impact on overall earnings may be
marginal. The 64 MW Orissa unit has been installed and awaiting environmental
clearance for commercialisation, which is expected by March-April 2011.

Buy Bharti Airtel- In line with estimates, save rebranding cost… ICICI Sec

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Bharti Airtel -In line with estimates, save rebranding cost… 
Bharti Airtel’s Q3FY11 numbers were  in line with our estimates on the
topline front. The company reported a consolidated topline of | 15756.0
crore against our expectation of  | 15826.5 crore, registering QoQ
growth of 3.6%. EBITDA declined 2.7% QoQ while margins contracted
by 204 bps to 31.6%. Bharti incurred one-time expense of | 339.5 crore
on a re-branding exercise. Adjusting for this, the margin would have
been at 33.8%. Consolidated PAT for the quarter was at | 1303.3 crore
(I-direct estimate of  | 1580.0 crore) declining 21.5% QoQ due to one
time re-branding cost and higher interest cost of tax outgo.

AMBUJA CEMENT -Operating performance in line with estimates- Edelweiss

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􀂄 One offs lead to higher than estimate PAT
Ambuja Cement’s (ACEM) reported Q4CY10 PAT at INR 2.58 bn was higher than
our estimate of INR 1.9 bn largely due to: (a) tax credit of INR 371 mn related
to provisions made in earlier years; and (b) exceptional income of INR 65 mn
due to reduction in provisioning for recognising slow-moving inventories of
spares compared to the amount provided in Q1CY10. These are one-off items
and unlikely to appear again in the coming quarters. However, the reported
revenue at INR 17.9 bn and EBITDA at INR 3.1 bn were broadly in line with our
estimates.

Anand Rathi:; Buy Jyoti Structures 3Q lower than estimated, execution to pick up in 4Q

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Jyoti Structures
3Q lower than estimated, execution to pick up in 4Q; Buy
We maintain our positive stance on Jyoti Structures following an
expected pick-up in orders and execution, steady operating
margins, a 13% earnings CAGR over FY10-13 and attractive
valuations. We retain our Buy, with a revised target of `143 (from
`157 earlier) based on 12x FY12e earnings.

Buy Jammu and Kashmir Bank – 3QFY2011 Result Update - Angel Broking

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  Jammu and Kashmir Bank – 3QFY2011 Result Update

Angel Broking maintains a Buy on Jammu and Kashmir Bank with a Target Price of Rs. 987.

For 3QFY2011, J&K Bank registered healthy net profit growth of 19.9% yoy to
`168cr, above our estimate of `121cr, primarily on account of lower-thanestimated
provisioning expenses. We were conservatively penciling in higher NPA
provisions to create a margin of safety considering the political disturbances in the
state of J&K during 9MFY2011. We maintain a Buy on the stock.
Strong credit growth momentum, improving NIM and robust asset quality:
Advances showed strong traction with growth of 9.4% qoq and 22% yoy
compared to growth of 0.6% qoq and 9.8% yoy in 2QFY2011. The CD ratio
improved to 62.1% from 58.4% as of 2QFY2011. Deposits registered healthy
growth of 21.4% yoy. Saving account deposits grew by a strong 29.6% yoy.
However, due to reduction in current account deposits overall CASA growth was
slower at 16.8% yoy. CASA ratio remained stable ~40% levels. Improvement in
CD ratio coupled with higher yield on investments and decline in cost of deposits
aided NIM expansion to 3.70% compared to 3.66% in 2QFY2011 and 3.28% in
3QFY2010. Asset quality of the bank improved further with decline in both gross
and net NPAs. Gross NPA ratio improved to 1.95% compared to 2.17% in
2QFY2011 and the net NPA ratio improved to 0.04% from 0.13% in 2QFY2011.
Outlook and Valuation: The stock is trading at 0.9x FY2012E ABV vis-à-vis its
historic range of 0.8-1.4x and median of 1.1x. We maintain our positive view on
the stock considering the bank's strong deposit mix, dominant regional market
share and healthy track record in asset quality. We believe that this provides
sufficient margin of safety from the risks of political disturbances in J&K, especially
in light of the bank's steady performance even during past crises.
Even taking into account the inherently lower-than-national average growth (in
GDP, deposits, credit) in J&K, at just 0.9x FY2012E P/ABV and with sustainable
RoEs of at least 17%, the stock is inexpensive. Hence, we maintain a Buy on the



Strong credit growth; multiple levers to improve it further
During 3QFY2011, the bank showed strong traction in business. Advances grew
by 9.4% qoq and 22% yoy to `25,363cr compared to growth of 0.6% qoq and
9.8% yoy in 2QFY2011. Deposits increased by 3% qoq and 21.4% yoy to
`40,877cr. The faster credit growth aided the improvement in credit-to-deposit
ratio to 62.1% from 58.4% in 2QFY2011.
The bank is likely to see repayment of loans to the tune ~`2,300cr (~9.1% of the
loan book as of 3QFY2011) from the Jammu & Kashmir state government over
the next couple of quarters. However, despite this management is confident of
achieving balance sheet growth of 20-25% in FY2012. Management has indicated
of having sanctions of ~`3,000cr that will be disbursed in 4QFY2011.
To leverage the low CD ratio, the bank plans to increase exposure outside the state
of J&K. Plans on the anvil include opening 10 branches p.a. outside the state of
J&K, in the commercial centres and in southern tier-II and tier-III cities for

increasing its advances and exploiting its specialisation in agricultural lending,
respectively.
We believe that the bank has ample headroom to grow its advances at a healthy
pace, even in the current systemic liquidity deficit scenario, given its low credit-todeposit
ratio of 62.1% as of 3QFY2011. Accordingly, we have factored in credit
growth of 18% for FY2011 and 22% for FY2012.


During 3QFY2011, total deposits of the bank grew by 21.4% yoy on the back of
strong growth in savings account deposits of 29.2% yoy. However, on account of
the 6.9% yoy decline in current account deposits, overall CASA deposits growth
was lower at 16.8% yoy. On a sequential basis, deposit growth was muted at 3%
due to coming off of current account floats (declining 16.7% qoq).
On account of relatively slower growth in CASA deposits, the bank’s CASA ratio
declined to 39.6% from 41.1% each in 2QFY2011 and 3QFY2010. However, the
bank’s CASA ratio still remains amongst the better ones in industry and is expected
to cushion NIM pressures in the current rising interest rate environment.
Out of the total deposits, ~65% is contributed by the state of J&K. Of this 65%,
~55% of the deposits comprise CASA deposits. The pace of CASA deposits
accretion in the state of J&K is expected to be maintained with the bank planning
to open ~30-40 branches p.a. in the rural areas of J&K going forward.


stock, with a Target Price of `987, implying an upside of 33% from current levels.



NIM improves due to falling cost of deposits and rising yield on
investments
Reported NIMs for 3QFY2011 improved both sequentially and on a yoy basis to
3.70% from 3.66% in 2QFY2011 and 3.28% in 3QFY2010. The sequential
expansion in NIM came on the back of the 9bp qoq fall in cost of deposits and
43bp improvement in yield on investments. Yield on advances declined
sequentially by 29bp to 10.71%. Improvement in NIMs led to a healthy 32.7% yoy
growth in net interest income (NII) to `390cr.
Going forward, the bank’s yield on advances is likely to improve on account of
utilisation of ~`2,300cr of proposed loan repayment by the J&K government
for higher yielding advances. Management is targeting to maintain a NIM of
~3.5% for 4QFY2011, which is 20bp lower than that of 3QFY2011.



Robust asset quality
The bank continued to maintain robust asset quality with gross NPAs declining by
1.7% qoq to `504cr and net NPAs dipping by 65.7% qoq to a marginal `11cr.
Consequently, the gross NPA ratio improved to 1.95% from 2.17% in 2QFY2011
and the net NPA ratio improved to 0.04% from 0.13% in 2QFY2011. Provision
coverage ratio, which was already the best in the industry, further improved to
98.4% from 95.5% in 2QFY2011. NPA provisions-to-average assets declined to
0.1% from 0.4% each in 1HFY2011 and FY2010. Management is targeting to
reduce the gross NPAs by ~`70cr in 4QFY2011.



During 3QFY2011, provisioning expenses declined by 21.1% qoq to `31cr on the
back of the substantial 61.5% qoq decline in NPA provisions compared to
2QFY2011. NPA provisions fell by 25% yoy to `15cr. Provisions for restructured
advances doubled sequentially to `6cr, but were up a moderate 14.2% yoy.


Operating expenses under control; branch expansion to pick up
Operating expenses increased 14.5% qoq and 28.7% yoy to `186cr on the back
of the 37.2% rise in employee expenses and 13.4% increase in other operating
costs. As the bank’s operating income grew at a relatively slower rate of 20% yoy,
the cost-to-income ratio increased to 39.9% (36.4% in 2QFY2011 and 37.2% in
3QFY2010).



The bank’s branch network growth has been muted over the past one year.
However, going forward the bank is planning to roll out ~40-50 branches every
year out of which 30-40 are planned in the state of Jammu & Kashmir, while ~10
branches will be opened in commercial centres and certain tier-II and III southern
cities. This planned expansion is expected to further strengthen the liability
franchise through CASA deposit accretion and better NIM on the back of
improvement in credit-to-deposit ratio.


Strong capital adequacy
The bank has strong capital adequacy with CAR of 15.5%, out of which more than
82% is tier-I component. Hence, the bank is well capitalised to grow at a healthy
pace and also has ample headroom for raising funds through tier-II components.
However, the bank’s capital adequacy is likely to decline by ~100bp due to
utilisation of the amount repaid by the J&K state government for advances with
higher risk weightage.



Investment Arguments
Well-protected loan book
Structurally the bank's credit mix has only a small portion directly exposed to credit
risks from political disturbances in J&K state. For instance, 48.5% of the bank's
`23,183cr loan book as of 1HFY2011 is outside the state of Jammu & Kashmir, of
which 60% is to corporates. Further, ~40% of J&K lending has almost no risk
attached to it, being lent to the state government and its employees. The
repayment of state government loans is also likely to be deployed in high rated
corporates outside J&K. Only 17% of the total loans are in the relatively sensitive
Kashmir valley region, large portion of which is to the healthy horticulture and
trade sectors, which see minimal disruption even during strikes due to essential
linkages with rest of the country.
Robust asset quality
Over the years, the bank has maintained robust asset quality, with the best-inindustry
provision coverage ratio of 98.4% as of 3QFY2011. Despite substantial
disturbances in 3QFY2011, the bank managed to maintain its strong track record
on the asset quality front with an actual decrease in gross NPAs. On a conservative
basis, we have factored in provisioning expenses of `67cr for 4QFY2011, which is
more than double of 3QFY2011. Moreover, being almost the sole source of
funding in the state with a credit market share of 87%, once disturbances subside,
the bank has usually seen very strong recoveries too.
Strong branch network and legacy = dominant market share
The bank has ~400 branches in J&K. Due to its strong branch network and legacy
of banking relationships, the bank has a dominant 70% market share in deposits
in J&K. CASA deposits constituted a strong 51.2% of the incremental deposits
growth from FY2004-10. This strong base of low-cost deposits is expected to
sustain one of the highest NIMs amongst mid-sized banks of 3.3-3.4%.



Attractive valuations
The stock is trading at 0.9x FY2012E ABV vis-à-vis its historic range of 0.8-1.4x
and 5-year median of 1.1x. We maintain a positive view on the stock considering
the bank's strong deposit mix, dominant regional market share and healthy track
record in asset quality. We believe that this provides sufficient margin of safety
from the risks of political disturbances in J&K, especially in light of the bank's
steady performance even during past crises.
Even taking into account the inherently lower-than-national average growth (in
GDP, deposits, credit) in J&K, at just 0.9x FY2012E P/ABV and with sustainable
RoEs of at least 17%, the stock is still inexpensive. Moreover, immediate levers in
the form of increase in CD ratio from the current low 62.1% as well as
re-deployment of state government loans into higher yielding advances are likely
to provide near-term higher momentum to NII growth for the bank relative to other
mid-sized banks. Further, with 40% CASA ratio, the bank is also more favourably
placed than its peers to handle NIM pressures from rising deposit rates. Hence, we
maintain a Buy on the stock, with a Target Price of `987, implying an upside of
33% from current levels.

Reduce ACC -Results disappoint : Edelweiss

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�� Operating performance below estimate; PAT higher due to one offs
Though ACC’s revenue, at INR 19.6 bn, was in line with estimate, the INR 2.9 bn
EBITDA (adjusted to one-time provision in other expenditure of INR 712 mn on
account of change in the basis for identifying obsolescence of spare parts) was
below our estimate of INR 3.49 bn due to increase in operating costs. Despite a
23% Q-o-Q increase in depreciation, reported PAT at INR 2.56 bn was higher
than our estimate of INR 2.27 bn due to one-off adjustments related to: (a)
other operating income of INR 644 mn arising due to write back in provisioning
of sales tax subsidy in earlier years; and (b) tax credit of INR 820 mn related to
earlier years.

Anand Rathi, : Buy NTPC Diminished demand leads to lower generation

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NTPC
Diminished demand leads to lower generation; Buy
NTPC saw flat generation and a lower load factor due to
diminished demand from states, despite higher availability. The
company has signed PPAs of 100GW, thereby assuring RoE and
easing concerns regarding tariff-based bidding.

Buy Sadbhav Engineering– 3QFY2011; Target Rs. 173 -- Angel Broking

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Sadbhav Engineering– 3QFY2011 Result Update

Angel Broking maintains a Buy on Sadbhav Engineering with a Target Price of Rs. 173.

Sadbhav Engineering (SEL) reported impressive set of numbers for 3QFY2011,
which were above our estimates both on top-line and bottom-line front. We are
revising our estimates upwards for FY2011 and FY2012 given the higher-thanexpected
performance this quarter. We believe that SEL has performed
particularly well over the last few quarters in the roads and mining segment, as its
order book has increased to `7,280cr i.e. 4.1x FY2011E revenues, one of the
highest in industry. We maintain a Buy on the stock.

Nalco – 3QFY2011 Result Update - Angel Broking

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  Nalco – 3QFY2011 Result Update

Angel Broking maintains a Sell on Nalco with a Target Price of Rs. 319.

Nalco’s 3QFY2011 results were below our expectations. The company’s top line
grew by 2.8% yoy to `1,425cr (below our estimate of `1,673cr). Net profit grew
by 65.0% yoy to `256cr (below our estimate of `278cr). In light of rising cost of
production and rich valuations of the stock, we maintain Sell on the stock.
Mixed top-line segmental performance: Nalco’s net sales increased by 2.8% yoy
to `1,425cr mainly on account of increased realisations. The aluminum segment’s
sales increased by 1.5% yoy to `1,159cr during the quarter. However, the
chemicals and electricity segments reported 3.5% and 28.5% yoy decline in
revenue to `491cr and `250cr, respectively, in 3QFY2011.

Surge in food inflation continues to worry, benchmark closes at 8.16%:: Edelweiss

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Surge in food inflation continues to worry, benchmark closes at 8.16%
Government securities
 Yields closed marginally higher as a sharp spike in the weekly food articles inflation
weighed in on the sentiment. Underlying sentiment continues to remain bearish
due to the uncertainty about the movement of the key policy rates due to the
inflationary pressures. In the week ended Jan 22, food articles inflation surged to
17.05% from 15.57% a week before. Primary articles inflation rose to a four week
high of 18.44% from 17.26% a week ago. A mild rate hike at the last policy meet
on 25th Jan and the surging inflation (despite active intervention) has created an
expectation that RBI will continue with its tightening cycle. OIS rates did not see
any easing despite the improvement in the liquidity due to the concerns of soaring
prices. One year and five year OIS closed at 7.41% and 8.03% respectively.

Economy – Foreign Trade -- Trade deficit at five-year low :: Anand Rathi

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Economy – Foreign Trade
Trade deficit at five-year low
India’s exports have outgrown imports in the past four months,
resulting in considerable narrowing of the trade deficit. A sharp
fall in oil imports in Dec ’10, however, is intriguing. Overall,
improving outlook of the global economy would continue to
support India’s exports. Our exports target of US$211bn for
FY11 looks within reach.

Buy Philips Carbon Black – 3QFY2011 Result; Target Rs. 254 - Angel Broking

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  Philips Carbon Black – 3QFY2011 Result Update

Angel Broking maintains a Buy on Philips Carbon Black with a Target Price of Rs. 254.

For 3QFY2011, Philips Carbon Black (PCBL) reported robust top-line growth of
24.4%, to `432cr (`347cr), which was in-line with our estimates. OPM also
expanded yoy to 14.0% (13.8%) though coming in below our estimate of 16.0%.
PAT for the quarter declined by 10.7% yoy to `30cr (`34cr), despite higher
top-line and OPM, mainly because of lower-than-normal tax rate in 3QFY2010.
We remain positive on the company, given the strong supply-demand scenario in
the carbon black industry. However, we have revised our OPM estimates for
FY2011 and FY2012 downwards to 15.0% and 15.6% from 15.3% and 15.8%,
respectively. We maintain a Buy on the stock.

Accumulate GSK Consumer – 4QCY2010; Target Rs. 2,268- Angel Broking

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GSK Consumer – 4QCY2010 Result Update

Angel Broking maintains an Accumulate on GSK Consumer with a Target Price of Rs. 2,268.



GSK Consumer posted lower-than-estimated performance for the quarter.
Top-line grew 21.4 % yoy to `507.8cr (`418.1cr). On the operating front, the
company recorded a 271bp yoy expansion in margins. Earnings for the
quarter grew by 58.5% yoy to `53.4cr (`33.7cr). We maintain an Accumulate
on the stock.

Buy Shree Cement -Subdued 3Q, Recovery ahead led by cement: Anand Rathi

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Shree Cement
Subdued 3Q, Recovery ahead led by cement
Shree’s 3QFY11 profit was below our estimates, due to lower profit
in both cement and power business. We lower our profit estimate
64%/62% for FY11/12 owing to reduced profitability in both
businesses, and introduce FY13 estimates. We lower our target
price to `2,145 (`2,730 earlier). Post recent correction, stock factors
in most of the concerns & valuation looks attractive. Maintain Buy.

NMDC – 3QFY2011 Result Update -Angel Broking

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NMDC – 3QFY2011 Result Update

Angel Broking recommends a Neutral on NMDC.

For 3QFY2011, NMDC reported revenue growth of 65.2% yoy to `2,622cr,
mainly on account of high realisation of iron ore. The company’s EBITDA
increased by 84.4% yoy to `2,275cr, while EBITDA margin expanded by massive
904bp yoy in 3QFY2011 on account of a steep rise in iron ore prices, which
outpaced the increase in costs significantly.

Buy DLF- No non-real estate issues, but operations yet to improve:: Anand Rathi

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DLF
No non-real estate issues, but operations yet to improve
DLF’s 3Q results were flat yoy, although debt rose as cash from
operations was utilized in land replenishment and preferenceshare
redemption. Sales & leasing momentum sustained, with
~`15bn worth of stock sold and 1.62m sqft leased. Management
guided for big launches in 4Q. We lower our Mar ’12e price
target to `309 from `368. Maintain Buy.

Emkay: ACC- Results disappoint- Cost pressures increase : Target: Rs 1,035

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ACC

Results disappoint- Cost pressures increase

ACCUMULATE

CMP: Rs 986                                       Target Price: Rs 1,035

---

n     APAT at Rs1.8bn (-47%yoy) sharply below est of Rs2.6bn led by lower realizations & higher RM & staff costs. Revenue up 1.9% yoy - volumes +4.7%yoy, realizations down 2.7% yoy

n     Costs increases drag EBITDA to Rs2.8bn (-43%yoy). EBITDA/t at Rs499 (-45%yoy). Key negative surprises -RM cost/t (+18%qoq), staff cost(+27%qoq) & OE(+15%qoq)

n     Downgrade CY11 earnings by 16.7%. Cement offtake improves in Jan. Prices hiked across regions. Sustainability remains uncertain, as demand yet to see significant pick up

n     Valuation at PER of 16.6X& EV/ton of USD112, though not cheap, looks reasonable considering ACC’s CY11E RoCE of ~21.2% & FCF of Rs77/share. Maintain ACCUMULATE