Power: Angel Broking: 4QFY2011 Results Preview | April, 2011

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For 4QFY2011, we expect power-generating companies in our
universe to report top-line growth of 11.6% yoy, driven by
capacity additions and higher tariffs. However, operating profit
is expected to increase at a higher rate of 25.6% yoy. Net profit
is expected to rise by 10.2% yoy.
Capacity addition: Status check
Generation
As of February 2011, 32,762MW of power capacity was
commissioned, that is a mere 54% of the original Eleventh Plan
target. However, we expect the capacity addition to pick-up in
FY2012, being the last year of the plan period. It may be noted
here that inordinate delays in project completion has led to the
CEA revising the Eleventh Plan capacity estimates to 62,488MW,
much below the target of 78,577MW set at the beginning of
the period. Capacity addition has generally been delayed due
to execution issues relating to acquisition of land and obtaining
environment and other statutory clearances. In all, we expect
49,000MW to be added during the plan period.

Emkay: Fortnightly round up of key banking and economic indicators

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Emkaynomics

Fortnightly round up of key banking and economic indicators

n     The growth in non food credit moderated to 21.4% yoy during the fortnight ended March 25, 2011, while the growth in the deposit mobilization remained moderate at 15.8%.

n     The CD ratio improved marginally to 75.7% for the week ended March 25, 2011 with TTM CD ratio remaining high at 97.2%.

n     The money supply grew at 16.4% in line with reserve money growth of 17.2% The money multiplier was at 5.01x

n     Call money rates have dropped below the reverse repo rate at 5.45%. We believe that this is more seasonal phenomenon as the corporates would have started repaying working capital loans. Once, the government bond auctions start we could see them moving up

n     The shortage of liquidity in the system increased to Rs1.1tn for April 1, 2011. However, as the government spending picked up and the corporate have started repayments, the LAF balances have turned positive now

n     The spread between the long and short end OIS has gone up to 65bps as opposed to 32bps last fortnight

India Equity Strategy- Rural prosperity set to continue:: Deutsche Bank

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Food grain production in India to touch record high in FY11
According to the Government of India’s recently released third advance estimates,
India’s food grain production is likely to touch a new record in FY11, rising by an
estimated 8% to 236mn tonnes. Production of wheat, pulses, oilseeds and cotton
is expected to touch a record high in FY11. Increasing production of foodgrains
remains critical to India where rising rural prosperity (particularly at the bottom of
the pyramid) has resulted in surging demand for foodgrains.
Higher agricultural production to add further momentum to rising rural
prosperity
Rural income in India is likely to witness a meaningful jump in FY11 driven by the
sharper-than-anticipated growth in agricultural production, coupled with a
continuing – albeit modest- increase in minimum support prices (MSPs which have
risen at an average of ~5%). We estimate that minimum support prices of food
grains have risen at a CAGR of 10% since UPA-1 came to power in FY05 – which
is 400bps higher than the average inflation during the same period. Income from
crops under MSP regime is likely to show a 17% yoy rise in FY11, which would be
among the highest in the past 6-7 years - despite the fact that the government has
not raised support prices materially in FY11.
Rural prosperity has also been fuelled by the National Rural Employment
Guarantee Scheme
Landless laborers have also benefited from the government’s National Rural
Employment Guarantee Scheme and a successive increase in minimum wages
across different states. In most of the populous states minimum wages under
NREGS have risen at a rate much higher than the average inflation during FY07-10.
The state of Maharashtra has witnessed the maximum growth of 39% CAGR
(FY07-10) followed by Gujarat and Orissa at 35% and 31%, respectively. On the
other hand, we attribute India’s sticky food inflation to higher rural prosperity
High likelihood of normal Indian monsoon in 2011
Based on meteorological trends and other weather factors, the prospects of a
normal Indian monsoon appear to be high. Any positive forecast on the Indian
monsoon is likely to be seen positively by the market given elevated food inflation.
According to DB’s meteorologist, La Nina conditions are expected to persist
through the summer and early fall of 2011. Empirically we have observed that
such La Nina conditions are generally conducive to a good monsoon.
Key beneficiaries: M&M, Bajaj Auto, ITC, United Phosphorous, SBI, Shriram
Transport, PNB,
Higher agri-income, coupled with continued focus of government to stimulate rural
India, should, in our view, lead to continuing consumption demand from the rural
economy and benefit the following companies: M&M, Bajaj Auto, ITC, United
Phosphorous, and as a derivative SBI, Shriram Transport Finance and PNB.


Rural prosperity set to
continue
Food grain production in India to touch record high in FY11
According to the Government of India’s recently released third advance estimates, India’s
food grain production is likely to touch a new record in FY11, rising by an estimated 8% to
236mn tonnes. Production of food grains – which form the biggest chunk of food items in
India - had declined in FY10 after the previous record high touched in FY09. Production of
wheat, pulses, oilseeds and cotton is likely to touch a record high in FY11. While production
of rice has risen on an annual basis, it remains below the record high seen in FY09. The sharp
increase in food grain production, particularly pulses, should assuage concerns on food
inflation, though we concede that the sharpest increase in food inflation have come more
from protein-linked foods – eggs, milk and fish – than food grains.



Increasing production of foodgrains remains critical to India, where rising rural prosperity
(particularly at the bottom of the pyramid) has resulted in surging demand for foodgrains.
Higher prosperity has resulted in shifting diet patterns with the poorest of the poor shifting
their staple diet from coarse cereals to foodgrains.
The robust growth in production is primarily attributable to the resilience of India’s rural
economy, percolation of new farming techniques and continuing budgetary support of the
government. There has been a sharp increase in investments in agriculture with the
agriculture Gross Capital Formation (GCF) rising to 20.3% in FY10 vs. 13.4% in FY05. In
addition, the agriculture GCF as % of total GCF has also risen from 2.5% in FY05 to 3% in
FY10. This has manifested itself in the form of greater farm mechanization leading to higher
usage of efficiency-enhancing farm implements like drip/micro irrigation, and tractors.



Higher agricultural production to add further momentum to
rising rural prosperity
Rural income in India is likely to witness a meaningful rise in FY11 driven by the sharper-thananticipated
growth in agricultural production coupled with a continuing – albeit modestincrease
in minimum support prices (MSPs – the minimum price which government pays to
farmers for few key crops). Minimum support prices for foodgrains have risen this year at an
average of 5.7%, which though modest is still up yoy. We estimate that the minimum
support prices of foodgrains have now been raised by a CAGR of ~10% since UPA 1 came to
power in FY05 – which is >400bps higher than the average inflation during the same period.



Additional ~INR 527bn to flow into rural economy from higher crop production – which
should drive a continued consumption demand
We estimate that higher agricultural production in FY11 will lead to an additional ~INR527bn
flowing into India’s rural economy solely from those crops which are under MSP regime.
Additionally, the government has continued its focus to stimulate rural India by allocating
INR741bn to the Ministry of Rural Development in the Union budget. These in turn should, in
our view, lead to continuing consumption demand from the rural economy and the following
companies should be key beneficiaries: M&M, Bajaj Auto, ITC, United Phosphorous, and
as a derivative SBI, Shriram Transport Finance and PNB. Domestic consumption remains
the mainstay of Indian economic growth, and rising rural prosperity from accelerating agri
revenues and higher NREGS wages should keep rural consumption buoyant into the next
year.


Income from crops under MSP regime is likely to show a significant jump of 17% yoy in FY11
which would be among the highest in past 6-7 years - despite the fact that the government
has not raised support prices materially in FY11.


Rural Prosperity has also been fuelled by the National Rural Employment Guarantee
Scheme
In addition to farmers, even landless laborers have been benefiting from the government’s
strong focus on rural India. Out of India’s near 400mn workforce dependent on minimum

wages, 70% is rural and more importantly, barely 30-40mn works in the organized sector.
Landless laborers have benefited from the government’s National Rural Employment
Guarantee Scheme and a successive increase in minimum wages across different states.
In most of the populous states minimum wages under NREGS have risen at a rate much
higher than the average inflation during FY07-10. The state of Maharashtra has witnessed the
maximum growth of 39% CAGR (FY07-10) followed by Gujarat and Orissa at 35% and 31%,
respectively. Highly populous states i.e. Uttar Pradesh and Bihar have also witnessed high
growth of 27% and 21%. On the other end of the spectrum, Punjab has raised the minimum
wages at a much lower CAGR of 10% - but on a significantly elevated base and still higher
than the average inflation of 5.3% during the period.


The government focus on the rural economy is evident from the budgetary allocation to
MGNREGS program - which has grown at a CAGR of 39% over FY05-12, even though the
absolute level of allocation has stagnated in the past few years.


As a corollary, higher minimum wages under NREGS have also pushed up the minimum
wages for other economic activities – leading to a mass recalibration of income for the
workers at the bottom of the pyramid, driving greater purchasing power. Given the higher
propensity to consume at the bottom strata of the society, we expect a continuation of
strong top-line growth for those companies which derive meaningful revenue from rural India.
High likelihood of normal Indian monsoon in 2011
By April, the Indian stock markets begin looking at the skies to gauge the prospects of the
Indian monsoon which begins in June and continues till the end of year. With elevated food
inflation, the markets are eagerly looking forward to a favorable monsoon forecast from the
Indian Meteorological Department (IMD). The IMD is expected to release its first monsoon
forecast in late April.
Based on meteorological trends and other weather factors, the prospects of a normal Indian
monsoon appear to be high. A good monsoon season in 2011 should ensure that crop
production for FY12 also remains robust (although the growth may not be as high as in FY11,
as base gets less benign) and drive a continuation in higher agri income in FY12 as well.
As per the National Oceanic and Atmospheric Administration, the appearance and
development of La Niña over the past nine months has been the most powerful on record.
According to DB’s Meterologist, Corey Lefkof, the La Nina conditions are expected to persist
through the summer and early fall of 2011 – albeit the intensity of La Nina may be lower than
that seen in Dec’10-Jan’11.


Empirically we have observed that such La Nina conditions are generally conducive for a
good monsoon precipitation for India. Monsoon rainfall in India has been either normal or
above normal in 10 of the past 12 instances of La Nina. This leads us to believe that 2011
should in all likelihood witness a normal monsoon rainfall, which should not only stimulate
agri-GDP, but also buoy domestic rural consumption and most importantly, prevent any
supply-side driven shocks to food grain prices.

Real Estate ::Angel Broking: 4QFY2011 Results Preview | April, 2011

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Real Estate
The quarter has witnessed a slew of new launches in the
residential space given high pricing in regions like NCR and
Mumbai. However, strong residential volumes in Gurgaon in
February (50% growth mom) came in as a positive surprise.
We expect volumes to remain flat, even though the interest in
commercial properties seems to be improving. Inventory levels
remained high both in Gurgaon and Mumbai. Rentals seem to
have bottomed out and a material uptick may not become visible
until inventory levels come down. Most banks have refinanced
loans, which gives some respite to developers in a declining
volume scenario.
In our universe of stocks, we expect DLF's revenue to be largely
driven by sale of plotted properties in Gurgaon. HDIL is expected
to report flat growth in Transfer of Development Rights (TDR)
volumes and prices, given low inventory of TDRs left and
indefinite stoppage of the MIAL project. However, HDIL is
expected to continue to book partial revenue from the recent
2msf FSI sale (worth ~`1,400cr) in 4QFY2011. For ARIL, we
expect revenue to be driven by the residential segment and
rental income.

3G gathers momentum Indian :: CLSA

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India Telecoms
Our ground checks of 3G tariffs and own user experience
 CLSA


3G gathers momentum
Indian 3G service rollouts are gathering momentum: Bharti Airtel 3G
is currently available in 19 cities and targeted to reach 400 by
December 2011. In less than six weeks Bharti has reached >2m 3G
subscribers and already has 20-22m of its 159m 2G subscribers
carrying 3G handsets. While a ground check on 3G data tariffs across
operators reveals no price competition and no handset subsidies,
even in the bundled schemes. Also while our own user experience of
3G services was mixed, the faster download speed, new content and
aggressive promotions will result in rapid migration to 3G networks,
enabling leading operators to cushion Arpu and even gain market-share.
Bharti remains our top pick and we maintain OPF.

India Cement Sector 4Q FY11 preview – Profitability likely better qoq: Standard Chartered

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4Q FY11 preview – Profitability likely better qoq
 Improvement in demand compared with the previous two quarters, but not a full-fledged
recovery.
 Cement prices up Rs20-25/bag compared with the previous quarter, mainly due to
producer discipline.
 We expect power and fuel costs to be a bit higher this quarter given rise in thermal coal
prices.
 The 23% increase in budgetary allocation for infrastructure likely to boost demand going
forward.
 We prefer ACC among our coverage universe.

India Telecoms Q4FY11 preview: Bharti, Idea, RCOM, TTSL, TCOM : JP Morgan

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• Solid revenue growth, some margin pressure: We forecast 2-5% Q/Q
revenue growth for Bharti/Idea/RCOM driven by strong volumes (2-8%)
but off-set by some ARPM pressures. We expect ~1pp Q/Q margin
declines related to network opex and SG&A expenses. For Bharti Africa
we forecast a 60bp Q/Q increase to 25.7%. JPMe for Bharti
Consolidated / Idea/ RCOM: 33%/23%/33%. We expect 3G related
costs to impact P&L in varying degrees with RCOM having a full
quarter impact, a partial impact for Bharti and a negligible if any impact
for Idea.
• Looking for strong volumes at the incumbents: Strong net adds offset
by some MOU pressures drive our estimate for 6%8%/2% sequential
growth in total wireless minutes at Bharti/Idea/RCOM. We expect MOU
pressure at RCOM as we believe it may have lost some high-usage
subscribers.
• Expect MNP-driven ARPM pressure: We forecast 3% Q/Q declines in
voice ARPMs for both Bharti and Idea, off-set somewhat by non-voice
revenue driving blended ARPMs to INR 0.44/0.41 representing flat/1%
decline. For RCOM we forecast a 1% Q/Q decline in ARPM.
• Key issues to watch [1] MNP impact on post-paid pricing [2] Overall
pricing environment [3] 3G take-up and impact [4] Capex guidance for
FY12 [5] Commentary around regulations and [6] For Bharti Africa,
pricing competition, capex outlook, elasticity, cost reduction efforts.
• We see two positives for the sector in FY12 – easing of competitive
intensity and regulatory clarity. We prefer Bharti as it is best positioned
to absorb any negative regulatory impact in addition to benefiting from
the expected pricing stability in H2 FY12 and strong earnings growth.
We also like Tulip Telecom and expect continued strength in core
business as increased fibre contribution drives both top-line growth and
margin expansion. We remain cautious on Idea Cellular on volume
dilution concerns and a potential increase in leverage if excess spectrum
payments materialize.

Kotak Sec, Software and IT Services, Preview for 4Q 2011 results

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INFORMATION TECHNOLOGY
We expect companies under our coverage to report a sequential revenue
growth of 5.6%, largely driven by volumes. Volumes for the Top 4
companies are expected to rise between 4% - 5%, which is impressive in the
backdrop of a seasonally soft quarter. Average realizations are expected to
remain stable. Currency volatility should help revenues marginally - about
1% for the top companies.
EBIDTA margins are expected to be marginally higher due to currency
impact, cost efficiencies and scale benefits. We expect lower 'other income'
largely due to currency fluctuations and some one-offs.
Consequently, PAT is expected to rise by 3.7% QoQ for companies under our
coverage. Among the Top 4, HCLT is expected to report the highest QoQ PAT
growth of about 12%. We have given quarterly expectations of Mahindra
Satyam but understand that, the numbers can be materially different from
our expectations.
The guidance from Infosys will be important, with markets already
discounting high growth rates for FY12. We expect Infosys to remain
conservative while guiding for FY12 revenue and earnings growth. We note
that, Infosys has always preferred to adopt a conservative view while
guiding at the start of the fiscal. The accompanying commentary will allow
us to gauge the confidence of the management on expected medium - term
growth rates.
Among other things, we will also watch out for :
a) Salary increments (most companies give increments WEF 1Q),
b) Comments on opening up of new opportunities like Cloud Computing,
etc,
c) Further insights into sustainability of discretionary spends,
d) Pricing improvements and expectations about the same
While we maintain our optimistic view on the medium-to-long term
prospects of the sector, the recent run-up in stock prices and a potentially
stronger rupee may limit upsides in the near term. Over the medium term,
we expect large caps to out-perform as they are better equipped to counter
the impact of appreciating rupee and capitalize on the strong demand
scenario. Infosys and TCS remain our preferred large-cap picks. In mid-caps,
we prefer NIIT Technologies and KPIT Cummins. Mphasis is not covered here
because quarter ends in April.

Sector View Pharma Pill -April, 2011- ICICI Securities

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Month of litigation tangles…
In March we observed some important litigation issues, the most bizarre
being the law suit filed by US generic major Mylan against the USFDA
itself to block Ranbaxy’s Lipitor launch in November this year. Mylan’s
plea was to allow other generic players to launch Lipitor at the same
time, since Ranbaxy’s approval was from the troubled Paonta Sahib
facility. In another litigation issue, Wockhardt received some respite from
the Bombay High Court which stayed the petition for winding up brought
by some FCCB holders. In yet another litigation issue the Madras High
Court allowed an interim stay over the notification by the health ministry
which sought to ban 4 drugs including the widely used pain killer
Nimesulide on account of increasing health hazards.
In the domestic formulations market, after a long stint at the top level,
cough & cold drug Corex (Pfizer) lost its spot to Anti-infective Augmentin
(GSK Pharma) as per the latest modified methodology. On the pricing
front, the NPPA provided major relief to the top Insulin manufacturers by
allowing them to hike the Insulin prices by ~19% to accommodate raw
material cost increase.

HNIs are not ‘sensitised' to fixed income opportunities:: Business Line,

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Mr Leslie S. Menkes, Managing Director and Head of Onshore Private Wealth Management for Asia at Morgan Stanley, appears to be at ease discussing about the requirements of Indian high net-worth individuals. In a brief visit to Chennai to open their fifth private wealth management branch in India, Mr Menkes discusses with Business Line the preferences of Indian HNIs and investment opportunities available onshore and globally.

Excerpts:

How do you view the HNI market in India? How has it been growing?

According to a recent survey by Capgemini, the number of HNWIs in India grew 50.1 per cent in 2009. These numbers are an encouraging reflection of the wealth growth in India.

Morgan Stanley started its wealth management business in India on September 16, 2008, a day after Lehman Brothers collapsed. If you consider the growth in the number of high net worth individuals and their wealth since that time, India has been among the highest in the world. We entered the market at an extremely difficult time. But in spite of the challenges, we have seen remarkable growth in our business.

How different are the requirements of Indian investors compared with other markets that you may have seen?

For the vast majority of Indian investors, investments need to be in local currency and have to be traded in the domestic market although they can invest out of the country every year for international diversification. In the domestic investment universe equities appear to be the most favourable asset class for most Indian HNIs.

There is also a deepening and maturing fixed interest asset class, which is everything from deposits to FMPs to gilt funds. There is interest in avenues such as private equity funds and commodities as well.

Indians are said to have bias for real estate as an asset class…

Due to the growth in Asia and India, real estate has an unusually large allocation. Morgan Stanley is not out to change that. Our message to customers is not really to de-emphasise real estate but to consider the correlation between the assets.

If there is a systemic shock to India, whether an active war or a natural disaster – it is highly likely that certain asset classes will perform better than others. Therefore it is important to understand what the correlations are and how one can be defensive.

When we discuss allocation to real estate with our clients, we try to get them to understand how real estate will perform in an inflationary or deflationary environment or a crisis so that investors can think about how real estate fits in their portfolio.

Indian market lacks investment avenues such as REITs, has a less liquid debt market and limited avenues to invest in commodities . How do you overcome these?

Since these investment avenues are still evolving in India, it is a matter of time before they will be ready. For now, we recommend exposure to them via investments in other markets such as Singapore or New York. Firms such as us are creating these asset classes and investment opportunities for clients given the importance of exposure to these assets. We have for instance, been active in the real estate investing sector in India for many years and we look to bringing our expertise to our HNW clients here in the form of real estate funds.

In my view, the deepening of the fixed income markets will become more critical and we truly believe that fixed income investments are important for HNW clients.

These clients are generally more familiar with the equity markets but not as sensitised to the opportunities in fixed income. Over time they would become appreciative of the risk-reward in this asset class.

How would you rate the risk appetite of Indian investors against other markets?

Indian HNIs have a slightly higher risk tolerance than most investors in the US and Europe. It has a lot to do with the culture of short term and relatively more speculative equity trading. In a recent market survey on average number of trades per week in India, 70 per cent said it was more than once a week.

In 70 per cent of the cases average time horizon of holding is a year.

However, our clients truly buy into our approach of long-term investing with lower volatility and more of a sophisticated wealth preservation and growth plan. Preserving wealth does not come at the expense of growth but you grow the wealth in a much more deliberate fashion.

How do you tailor products and services to suit your Indian private wealth clients?

We believe in the PMS approach. We combine research and fundamental analysis to private wealth portfolios. Secondly we do our own analysis on mutual funds.

India is a big mutual fund market but a lot of people don't appreciate the overlaps in these funds.

They may have different themes, different styles or different market-caps but if you do a transparency analysis, you will see there is a tremendous amount of overlap in the stocks held. We are very mindful of that and have a dedicated team that analyses beta and sharpe ratio and other attributes of funds, speaks to fund managers and does a qualitative and quantitative assessment of the merits of the fund.

We then put those in a recommended list and that is a differentiated offering – it provides alpha for clients, it provides out-performance but most importantly helps investors know their real exposure from these funds.

We also run fund-of-funds to invest in themes not available here. There is much access to institutional transactions which are not available to HNIs easily. We let our clients co-invest with Morgan Stanley in some of these transactions

Kotak Sec, Automobiles: 4QFY11 results preview

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Automobiles
India
4QFY11 results preview. We expect a strong quarter from auto companies in our
coverage universe due to strong volume growth and moderate sequential impact on
EBITDA margins. Sharp rise in raw material costs will partially impact companies, in our
view, due to (1) fixed steel contracts till March 2011, (2) most companies have taken 1-
1.5% average price increase in January and (3) product mix has improved for some
companies which could offset impact of rise in commodity costs, in our view.

Suzlon Energy - gaining momentum; visit note; Edelweiss

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Suzlon Energy (SUEL IN, INR 54, Not Rated)

Domestic wind energy space gaining momentum

Suzlon Energy (Suzlon) appeared positive on the Indian wind energy market, given positive dynamics in the renewable IPP (Independent Power Producers) space. Of the company’s total order book of 2.6 GW, ~1.6 GW is from India; order book (consolidated) stands at ~5 GW, including RE Power. The India wind energy market is expected to reach 3.0 GW by FY12 from 1.5 GW in FY10, with Suzlon having ~50% market share, followed by Enercon at ~22%.

Emerging markets to drive incremental business volumes

With no major growth seen recently in the US and European markets, Suzlon is clearly increasing its focus on high-growth markets like India, China and Brazil. While the US market is unlikely to grow beyond 5-6 GW per annum, Europe is expected to remain flat at 10 GW per annum over the next few years. China, on the other hand, is expected to add more than 18-19 GW annually over the next five years. Also, the Indian wind power market is likely to grow robustly from the current 3 GW annually to ~6 GW annually, going forward, given the country’s positive regulatory framework.

Synergies to play out post complete acquisition of RE Power

Post complete acquisition of RE Power, the management expects to further optimise its global operations, integrating RE Power’s European operations with Suzlon’s other entities in India and China, which are low cost manufacturing hubs. Due to stringent regulatory norms, Suzlon has been unable to garner the real potential of RE Power, which is expected to be achieved over the coming quarters.

Outlook and valuations: Positive; Not Rated

With domestic market witnessing pick up (owning to positive regulatory framework) and improving traction in emerging markets like China and Brazil, we believe Suzlon is well-placed to reap benefits, going forward, through its presence in these markets. Also, once Suzlon takes its ownership in RE Power from 95.2% currently to 100% in the next few quarters, its operating performance could improve, owing to further integration of RE Power’s business with Suzlon’s existing wind power business.

Strategy: March 2011 quarter earnings preview:: Kotak Sec,

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Strategy
March 2011 quarter earnings preview. We expect earnings of KIE universe to grow
16.6% yoy led by Automobiles, Banking, Energy and Industrials, while Pharmaceuticals
and Telecom are likely to weigh down earnings. On an ex-Energy basis, we expect the
earnings of KIE universe to grow 12.6% yoy. We expect earnings of BSE-30 Index to
grow 17.6% yoy and 11.7% qoq. On an ex-Energy basis, we expect earnings of the
BSE-30 Index to grow 12% yoy. We expect upstream oil companies to report a sharp yoy
increase in revenues and net income due to (1) higher net crude price realizations and
(2) higher APM gas prices.

Business Line, May We Help You? : The how and why of PoA

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When opening a trading account should one compulsorily sign a power of attorney (PoA) in favour of the stock broker? No, not necessarily. But then, it has become a common exercise in this age of on-line investing. With the Securities Exchange Board of India introducing a set of guidelines last year standardising the norms that brokers to need to follow when obtaining PoA, the risk of the broker misusing his power is limited now!

PoA is only an option available and no stock broker or depository participant can deny service to you simply because you refused to execute a PoA in his favour.

To our many readers including Mr Gautam and Mr T Arun, who wrote to us on their doubts about PoA, here is our answer:

WHY IS POA REQUIRED?

Power of Attorney is giving someone a legal authority to act on your behalf. When you sign a PoA in favour of the broker, the broker will take care of delivery of shares and fund settlement on your behalf.

In normal situations, it is the client who has to make sure that shares are delivered to the broker before the pay-in deadline (the broker acts as the Clearing Member too and settles the trade). Every time the client sells a stock he has to sign and send the delivery instruction slip to the depository participant (with whom he has the demat account) to debit his holdings and give shares for delivery to the Clearing Member. If the stock doesn't reach the clearing member's account in time, the trade by the client will be considered a short sale and the stock will go for auction. In the auction if the Clearing Corporation is able to buy the stock only at a price higher than at which the client actually sold the stock, the client would end making loss in that trade!!

A PoA given in favour of the broker could avoid situations similar to the above. However, SEBI has said that it is not mandatory for clients to give a PoA to their brokers.

CAN IT BE MISUSED?

The Securities Exchange Board of India had in April last year, come up with a set of standard norms under which the PoA has to be drafted following complaints from several investors.

The guidelines here state that the broker can use his power under PoA to only transfer securities from the client's account to meet delivery obligations (and pledging of stock for margin requirements of the client) and transfer funds from the client's bank account to meet settlement obligations (and towards fees due to the broker for using his service).

SEBI has further stated that the broker is not entitled to do the below on the basis of the PoA he has taken from the client (check this link for more information: http://www.cdslindia.com/whatsnew/SEBI-Circular-dated-23042010.pdf)

Transfer of securities off market

Execute trades in the name of the client without the client's consent

Refuse to issue delivery instruction slip to the client

Prohibit clients from operating the account

Finally, if you sign a PoA with your broker, see to it that he gives you a copy of the deed. Also remember that the power of attorney you give the broker can be revoked any time you desire. Knowing your rights and provisions of the law and choosing a stock broker who has a good compliance history will give you a peaceful trading experience

Media: 4QFY2011 Results Preview | April, 2011:: Centrum

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Sports to hobble ad revenues
With the festive season coming to an end, and sports
grabbing eyeballs in this quarter, revenues for media
companies are expected to drop in the quarter
sequentially by 10.6%. However, we expect them to
grow on a YoY basis by 20.5%. With ad revenue under
pressure and margins declining we believe the PAT will
grow by 15% YoY basis but de-grow by 21% QoQ.
Expect positive surprises from ZEEL, Dish TV and Info
Edge.
􀂁 Increased ad spend to boost revenues: The absence
of a festive season and a sports heavy calendar is
expected to drive away ad revenues from media
companies under coverage. We estimate Sun TV to post
the lowest ad revenue growth of 14% while ZEEL, HT
Media and Jagran are expected to post ad growth of
18-21%. Print is expected to fare better with a 2% drop
in revenues (QoQ) while broadcasting is estimated to
witness a drop of 5% in revenues.
􀂁 DTH revenues to boost broadcasting space:
Continuing the momentum of subscriber additions, we
expected DTH revenues to increase in this quarter due
to significant addition to DTH subscriber base in this
sports heavy period. Renewal of contract for Sun TV is
expected during the quarter.
􀂁 Margins expand: Margins for the industry are expected
to shrink by 272 bps YoY and 493 bps sequentially on
the back of increased newsprint prices and high
programming cost coupled with lower ad growth.
􀂁 Profits show steady growth: Profits are expected to
show a steady growth in the quarter by 15.4% on a YoY
basis. Sequentially, PAT is expected to go down by
23.2%. Print is expected to outperform the
broadcasting space by growing at 50% compared to
4.1% for the broadcasting space.
􀂁 Overweight on the sector: We remain overweight on
the sector and have a BUY rating on Sun TV, Jagran
Prakashan, ENIL and Dish TV. We have a HOLD on Info
Edge, ZEEL and HT Media and Balaji Telefilms.

Retail ::Angel Broking: 4QFY2011 Results Preview | April, 2011

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Retail
The year gone by was once again very challenging for the
organised retail segment. Organised retail in India has been
growing at a strong pace, backed by enthusiasm of retailers
and investors alike in the sector. Organised retail was responsible
for bringing in the much-needed revolution in the behaviour of
Indian consumers. It helped Indian consumers become more
shopping savvy and demanding in terms of choice and product
range. However, growth in FY2011 has been mired by rising
prices both for retailers as well as consumers.
During the year, the Indian economy steadily recovered to the
pre-2007 level and economists across the board expect GDP
growth of around 8% for the next decade. During 4QFY2011,
retail consumption trends remained upbeat in both the rural
and urban households. However, the retailer faced pressure on
the margin front because of increasing raw-material prices.
Rising inflation led by higher commodity prices has put pressure
on the retailer's margin. We believe retailers across the board
would start re-evaluating their business model, the beginning
of which has already been made by Pantaloon Retail (PRIL),
which announced the restructuring of its consumer durable retail
chain, eZone, in 3QFY2011.
Cautious approach towards expansion
Overall, optimism was also visible in space booking done by
retailers during the quarter. Markets witnessed strong space
booking not only from domestic retailers but from international
retailers as well, albeit with a cautious approach. We believe
the mood on the street is buoyant due to sustained increase in
consumer spends.
As per the recent CB Richard Ellis report, developers have
chalked out aggressive plans to build 90 new malls and take
the grand total to 280 by the end of 2012. India is estimated to
have added 5 million square feet (mn sq. ft.) in 2010 and
another 15mn sq. ft. is likely to be added by 2012. Of the total
addition, Bangalore forms the largest share of 70%.
Although retailers have gone aggressive in space booking, it
has been done with a very cautious approach post the learning
phase for retailers during the recessionary times of 2008 and
2009. Developers are also a more knowledgeable clan now
and have started appreciating the retailers' matrix (footfalls,
tenant mix and conversion rates) while commencing projects
and approaching retailers. Many developers have changed their
rental model from fixed to variable (revenue share), which is
more acceptable to retailers. We believe the change in strategy
signals evolution in the business model, which allows more
flexibility to retailers in developing their business. This is because
rental is a key cost component in the retail business, which had
witnessed a stunning increase during the pre-recession era. As
a result, during the recession, rental plunged 30-40% across
cities, and it is now stabilising.
Food retailing - The saviour
The food and grocery (F&G) segment forms a major share of
an individual's wallet. It is common knowledge that as a
consumer's earning increases, demand for better food goes up
and the per capita spend on food doubles. F&G is expected to
be at the forefront of the retail revolution. Currently, on an
average, an Indian spends around 60% of his/her earnings on
food, majorly in the unorganised retail segment, thereby offering
an immense opportunity to the organised retailer.
Currently, India is the fourth largest economy on purchasing
power parity terms and is all set to become the third largest by
2013, leaving Japan behind. It is expected that by 2013 there
will be around 300 million middle-class consumers in India
propelling growth of organised food retail in India and
facilitating it to capture a market share of 3.9% of the total
retail sector by CY2013E. Therefore, major players in this
segment, including our top pick PRIL along with Reliance Fresh,
Spencer's and Spinach, stand to benefit from such growth.
Value retailing maintains positive momentum
The value retailing segment is expected to have witnessed robust
growth during 4QFY2011, despite high food prices. Value retail
formats such as Big Bazaar, Food Bazaar, More and D'Mart
tried to cushion the impact of inflation on demand by stepping
up bargains and discount offers across product categories that
have been hit hard by the spiraling prices. PRIL's value retailing
reported same-store-sales growth of 11.5% in the last quarter,
and we expect the segment to register higher double-digit growth
for the quarter under review. Overall, major players in the value
retailing segment, including PRIL, Reliance Retail, Spencer's and
More, stand to benefit from this ongoing trend.
Lifestyle retailing on a roll
Stable economic conditions and a pick-up in consumer
confidence resulted in consumers opening up their wallets for
purchasing lifestyle goods during the quarter. PRIL reported


20.9% same-store-sales growth in lifestyle retailing in
3QFY2011, which is expected to come down in 4QFY2011.
Union Budget 2011: Mixed outcome
The Union Budget 2011 did not mention about FDI. However,
it did have few negative announcements such as levy of 1%
central excise and conversion of optional excise to mandatory
excise (at the rate of 10% for all garments from the earlier 4%
for cotton and 10% for others). Consequently, retailers across
the nation went on a one-day strike, which is estimated to have
cost the industry a loss of `500cr in sales.
However, there were proposals pertaining to the agri and
logistics sectors, which would in turn benefit retailers. Proposals
such as increasing agri credit, higher infrastructure outlay and
granting infra status to cold storage will bring indirect benefits
to the sector.
Retail stocks perform in line with the Sensex
Most retail stocks (excluding PRIL) performed in line with the
Sensex during the quarter. Shoppers Stop underperformed the
benchmark BSE Sensex by 1%, while Titan outperformed the
Sensex by 11%. PRIL continued its underperformance and was
down by 24% during the quarter.


4QFY2011 preview
During 4QFY2011, consumer sentiment was upbeat due to
stable economic outlook, thereby providing the much-needed
security in the minds of people. Additionally, seasonal sales
from January-February have resulted in increased footfalls and,
consequently, translated into higher sales per sq. ft. We expect
value retailing to strengthen further, while lifestyle retailing is
likely to extend its growth trajectory, as the upbeat consumer
sentiment should translate into higher demand for lifestyle
goods. We expect retail stocks under our coverage to report
top-line growth of 37% yoy. We estimate PRIL to lead our universe
with 50% yoy top-line growth.


Outlook and valuation
With economic recovery gathering steam, coupled with revived
consumer sentiment during the festive 3QFY2011, footfalls
registered an upward trend, resulting in an increment in same
store sales and per sq. ft. sales. Going ahead, we expect the
trend to continue and strengthen, thereby keeping long-term
growth prospects for the Indian organised retail segment intact.
We expect organised retail to post a 31% CAGR over the
next five years.
The value retailing segment is likely to lead growth over the
next few years, as more and more consumers are expected to
go for value-for-money goods. However, we expect the lifestyle
retailing segment's growth to pick up on the back of stable
economic conditions. Players such as PRIL, who are straddled
across price and product points, are expected to benefit both in


the short and long term. Overall, the retail segment remains
one of the fastest growing sectors in India and we remain positive
on its growth prospects.
PRIL continues to be our preferred pick
PRIL is better placed than its peers because of its presence across
price points and categories. Apart from cost-rationalisation
measures, the company's restructuring initiatives would also
enable it to enhance its focus on different segments and provide
a good opportunity for value unlocking. At `259, the stock is
trading at 16.7x FY2013E earnings and 1.3x FY2013E P/BV.
Our SOTP target price for PRIL is `332, wherein we have valued
its stake in FCH, Future Bazaar and Future Logistics at `25, `21
and `14, respectively. PRIL continues to be our top pick in the
retail sector and we recommend a Buy rating on the stock.
Titan has a stable and niche business model. In the jewellery
segment, Titan had witnessed a dip in volumes earlier,
as demand fell due to higher gold prices. However, the falling
rate of decline in volumes indicates that consumers may be
adjusting to high prices and do not expect gold prices to correct
significantly. The company's watch segment is performing well,
while the others segment is also expected to perform well,
as there has been a revival in demand for lifestyle category
goods. At `3,811, the stock is trading at 29.3x FY2013E
earnings and at 14.3x FY2013E P/BV. We remain Neutral on
the stock due to its rich valuations.
We expect Shoppers Stop's performance to improve in the
ensuing quarters on the back of pick-up in consumer demand
for lifestyle retailing. At `350, the stock is trading at 25.6x
FY2013E earnings and at 3.2x FY2013E P/BV, we maintain our
Neutral view on the stock.

IndiaER.blogspot.com wishes everyone Rama Navami! Equity Markets CLOSED today

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IndiaER.blogspot.com wishes everyone Rama Navami!

Equity Markets CLOSED today

No trading in NSE or BSE for stocks!

FII DERIVATIVES STATISTICS FOR 11-Apr-2011

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FII DERIVATIVES STATISTICS FOR 11-Apr-2011
	BUY		SELL		OPEN INTEREST AT THE END OF THE DAY
	No. of contracts	Amt in Crores	No. of contracts	Amt in Crores	No. of contracts	Amt in Crores
INDEX FUTURES	46132	1342.55	113238	3293.51	560908	16273.84	-1950.96
INDEX OPTIONS	150579	4325.45	101167	2933.59	1562799	45008.21	1391.86
STOCK FUTURES	35425	969.68	51489	1405.76	1197906	31134.57	-436.07
STOCK OPTIONS	7837	219.61	7393	209.52	17188	472.77	10.10
						Total	-985.08

 

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