Idea Cellular:: Strong Q3, but environment challenging :: Centrum Research

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Strong Q3, but environment challenging
Idea Cellular (Idea) reported strong performance during Q3FY12. While
topline was a tad better than our estimates, the EBITDA margin was lower
than expected at 26.6% (we were slightly bullish on margin expansion for Q3
on RPM increase). We revise our target price lower to Rs82 based on the
revision in EBITDA margin estimates. We expect lower margin expansion as
growth in data services and revenue per minute may happen at a lower rate
that we expected due to circle level competition and uncertainty over
equipment clearance due to security norms. We retain our Hold rating on the
stock with a cautious stance as continuing regulatory risk can dent
profitability and increase pressure on return on equity.
􀂁 Topline in line; EBITDA margin below estimates: Idea reported 9% QoQ
growth in topline to Rs50.2bn against our estimate of Rs48.47bn. Minutes of
usage bounced back and registered 7.3% QoQ on the back of strong 6.2mn
net addition in subscribers. Revenue per minute (RPM) grew by 1.4% QoQ to
43.3p/min driven by revenue from value added services but voice RPM
remained flat. EBITDA margin expanded by 108bp QoQ to 26.6% (we
expected tariff increase to expand margin) driven by savings from network
cost.
􀂁 Operational matrix saw mixed performance during Q3: MoU/sub increased
to 369 in Q3 from 364 in Q2FY12 despite strong addition in net subscribers
compared to last quarter. This indicates improvement in usage on Idea
network, but this could not translate into higher voice RPM despite significant
subscribers migrating to newer tariff. Both established and newer circles
showed strong growth and improvement in operating margin. 3G coverage
expanded to 2,300 cities and registered 2.25mn subscribers, giving
incremental ARPU of Rs79.

Federal Bank :Strong core performance : Centrum Research

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Strong core performance
FED’s Q3FY12 bottom-line performance (Rs2.02bn, up 41% YoY) was well
ahead of our estimates led by a positive surprise on NIMs and fx related
revenue streams. Importantly, the management has delivered on its promise
by bringing down slippages in retail & SME book, though large corporate
slippages jumped QoQ. We raise our earnings estimates (~9% for FY12 & 3%
for FY13) and remain Buyers with a revised price target of Rs435.
􀂁 NIM surprises on the upside: NII grew by a healthy 18.1% yoy (ahead of
estimates) led by a moderate but healthy credit growth (17.6% yoy) while the
reported NIM surprised positively (up 17 bps QoQ). Blended yields benefitted
from higher share of high yielding gold loans and higher investment yields
during the quarter. Against this, the increase in cost of funds was contained at
~10bps QoQ as the bank shed some of its high cost deposits. NIMs are likely to
move lower in quarters to come as the impact of deregulation of NRE deposit
rates trickles down.
􀂁 Credit growth tracking industry average: The advances book grew by
17.6% yoy to Rs332bn primarily driven by the corporate segment (30% YoY).
The management’s focus remains on profitable growth and hence has guided
a muted ~15% loan book growth for FY13. Meanwhile, deposits grew by a
strong 27% yoy led by strong traction in savings deposits.
􀂁 Asset quality: a mixed bag: FED’s Q3FY12 asset quality matrices were mixed
as slippage rate eased marginally led by retail and SME segments, however,
GNPA position deteriorated both on absolute and relative basis (up 9% & 35
bps QoQ respectively). Some of the large corporate slippages may undergo
restructuring during Q4FY12 and hence may no longer be classified as NPA.
Additional restructuring pushed the cumulative restructured assets to
Rs14.4bn (4.3% of loans) with cumulative slippages at ~30%. We maintain our
view that restructured portfolio is likely to increase further led by challenges
faced by certain sectors (infrastructure, aviation & textile).

Oberoi Realty :: TP: INR295 Buy ::Motilal Oswal

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 Oberoi Realty has reported 3QFY12 results with EBITDA in line with our estimates. However revenue
recognition was below our estimate and declined by 53%YoY to IN1.9b. EBITDA margin improved QoQ due to
recent price appreciation across ongoing projects and one-time cost adjustment effect in 2QFY12.
 Sales declined sharply QoQ, to 0.12msf (~INR1.8b) as against ~0.19msf (INR2.3b) in 2QFY12 and 0.21msf
(INR2.6b) in 1QFY12. Esquire (Goregaon Garden City) and Grande (JVLR) continues to be key sales driver with
~77%/72% volume/value contribution on 3QFY12 sales. 9MFY12 residential sales stood at 0.52msf/INR6.5b
(up from 0.4msf in 9MFY11) as against our estimate of 0.7msf/INR10.6b in FY12.
 During 3QFY12, OBER has repaid ~INR170m of loan of I-Ven Realty, while net cash and cash equivalent stood
at INR13.2b as against INR13.4b in 2QFY12.
 Revenue contribution from Esquire is likely to be delayed by a quarter to 1QFY13 (as against earlier expectation
of 4QFY12). Therefore, we are downgrading our FY12 revenue estimate by ~24% and PAT estimate by 17% due
to shifting of revenue recognition of Esquire from 4QFY12.
 OBER has established strong brand equity among Mumbai developers due to its 1) focus on destination
development, 2) superior product quality and 3) management goodwill, which enable it to command a premium
pricing and enjoy a customer preference. Strong cash surplus of ~INR13.2b offers a huge opportunity to
acquire value-augmenting projects at competitive prices in the backdrop of low competition from cashstrapped
competitors and rationalizing land prices. While successful launch of its super premium project
Oasis (Worli) would be a key sales booster, sustained delay in MoEF approval for Mulund project remains a
major overhang. The stock is currently trading at 10.8x FY13E EPS of INR22.9 and 1.8x FY13E BV and ~24%
discount our NAV of INR325. Maintain Buy.

Maruti Suzuki :Operating results in line; Maintain Buy: Centrum Research

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Operating results in line; Maintain Buy
Maruti Suzuki’s (MSIL) 3QFY12 operating results were largely in line with our
expectations with EBITDA margins at 5.3% compared to our estimate of 5.2%.
Higher than expected increase in blended realization helped the company absorb
the increase in RMC. As a result despite higher than expected RMC and other
expenditure, operating performance came in line. However, PAT stood higher at
Rs.2.1bn compared to our estimate of Rs.1.6bn on account of higher than
expected other income (Rs.1.6bn vs. est. Rs.1.2bn) and lower tax rate (21% vs.
est.28%). Though, the company will continue to face margin pressure in mediumterm,
we believe that the worst is behind and margins should improve from
3QFY12 levels. We continue to remain positive on the stock and maintain BUY
with a revised target price of Rs.1,307 (earlier Rs.1,288).
􀂁 Operating results in line; PAT beats expectation: Driven by better than expected
realizations (up 7% QoQ driven by price hike in Nov 2010 on its diesel portfolio,
favourable product-mix change and better exports due to rupee depreciation) helped
the company absorb higher than expected RMC and other overheads, leading to in line
operating performance. However, PAT stood higher at Rs.2.1bn compared to our
estimate of Rs.1.6bn on account of higher than expected other income (Rs.1.6bn vs. est.
Rs.1.2bn) and lower tax rate (21% vs. est. 28%). Company hiked prises by 1-3% across its
product range effective 20 Jan 2011.
􀂁 Conference call highlights: 1.) Discount stood lower in 3QFY12 at
Rs.12,200/vehicle vs. Rs.13,500/vehicle in 2QFY12, 2.) MSIL to source 100,000 diesel
engines annually from Fiat, current capacity for diesel engines at SPIL stands at
290,000 units 3.) MSIL has incurred capex of Rs.20bn YTDFY12 and has guided for
capex of Rs.25-30bn in FY12E and FY13E each. 4.) 4QFY12 will have an Impact
related to indirect imports by vendors as this is compensated to vendors with a
quarter lag, the impact is likely to be higher than in 3QFY12 5.) Company has
hedged $/Yen, Euro/Yen for 4QFY12E but $/Re is kept open.

Buy Bharat Gears Ltd.::Gearing up for the big leap”:: LKP Small Cap Pick

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Investment Rationale
 Bharat Gears Ltd (BGL) is India”s largest non OEM producer of Crown Wheel Pinion – CWP gears or bevel gears manufactured using Gleason & Oerlilon systems. It has a dominant position in the domestic CWP gears in the after market for ring gears and pinions. The After Market segment accounts for about 20% of its revenues.
 The `4bn BGL is a leading player in the Tractor gear segment and this segment accounts for about 50% of its revenues.
 BGL with two manufacturing facilities (Mumbai & Delhi) is now putting up its third facility at Satara in Maharashtra and shall be spending `650mn in 3 phases financed through debt and internal accruals.
 BGL‟s main customers are original equipment manufacturers (OEMs) in the tractor and commercial vehicle (CV) industry. The surge in the volume growth for these OEMs would derive demand growth for BGL‟s products. BGL has marquee customers which include Tata Motors, Mahindra, Ashok Leyland, TAFE, Escorts, VST Tillers Tractors, John Deere, New Holland Tractors, Carraro India, JCB among others.
 Shifting from diesel to PNG at its Faridabad unit and converting furnace based on Propane to PNG would in our view reduce power cost next fiscal and improve margins.
Valuation
The `4bn BGL is the largest independent gear producer in India and its present market capitalisation of `400mn is less than even the market value of spare land at its Mumbai facility.
BGL spent over `500mn during the past three years to increase capacities and upgrade technology and this was funded largely through cash accruals of `450mn over this period.
A dominant player like BGL in a business which is both capital intensive and working capital intensive trades at 0.6x book and we believe that with ROCE of over 20% and compelling valuations makes it an excellent small cap pick with an 18 month target price of `125.

Shree Cement: Operating results in-line, maintain Hold : Centrum Research

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Operating results in-line, maintain Hold
Shree Cement’s Q3FY12 results were largely in-line with our estimates with
Revenues at Rs12.6bn, 5.8% above our estimates and EBITDA at Rs3.3bn,
4.1% above our estimates. The company reported EBITDA margin of 26.4%
against our estimates of 26.8%. However, higher depreciation charges
(Rs2.4bn vs. est. Rs1.8bn) due to the commissioning of power plants resulted
in lower-than-estimated profit of RS592mn vs. est. Rs832mn. Though the
company is set to benefit from higher cement prices in its key markets and
lower pet coke price, concerns related to merchant power business still
prevail as the company has not yet entered into long term contracts. We
revise EBITDA estimates upwards by 4.4%/5.8%/2.4% to
Rs11.5bn/Rs13.9bn/Rs14.1bn for FY12E/FY13E/FY14E to factor in higher
realizations during the quarter and lower pet coke price and maintain Hold
rating on the stock with revised price target of Rs2,328 (earlier: Rs2,102).
􀂁 Higher realization and better product-mix lead to improved performance
of cement division: Blended realizations of cement increased 33.2% YoY to
Rs3.797/tonne on the back of a) higher cement price in the North an d Central
markets and b) better product- mix (grey cement sales volume increased
21.5% YoY to 21.8mt and clinker sales declined 85% YoY) during the quarter.
Higher realization and sales volume resulted in 44.9% YoY growth in Cement
segment’s revenue, whereas, EBITDA increased 115.8% YoY to Rs3.2bn.
EBITDA margin of cement segment improved 9.7pp YoY to 29.5% and
EBITDA/tonne increased 98.3% YoY to Rs1,120/tonne.
􀂁 Income form power business improves but margins decline significantly:
Revenue from external power sales increased 3.4x YoY to Rs1.1bn on the back
of 3.5x increase in sales volume to 256mn units. Realization from power
declined 1.7% YoY to Rs4.5/unit. EBITDA from this segment increased 37.4%
YoY whereas EBITDA margin declined 17.3pp YoY to 11.6% due to higher
costs.

Result update Mahindra & Mahindra Financial Services:: NIRMAL BANG

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Q3FY’12 Result update
Mahindra & Mahindra Financial Services Ltd.(MMFSL) announced
numbers better than expectation with a net profit of Rs.154.7
crore compared to Rs.115.9 crore during Q3FY’11. The Net
Interest Income for the quarter stood at Rs.417.8 crore
compared to Rs.339.1 crore during Q3FY’11.
Highlights of the result
Immune to the general slowdown in the automobile markets:
The company’s financial performance for the quarter and
the nine months period, coupled with the management’s
optimistic outlook clearly highlight the fact that the
company is immune to the slowdown in the automobile
markets.
Performance aided by CV segment: The company’s overall
strong performance is aided by relatively higher contribution
from the CV segment.
Cashflows in rural areas continue to be bouyant: The
company’s cash collection efficiency as well as dealer
feedback does not suggest slowdown of any kind in the rural
automobile markets.
Adequately funded for the next 18 months: The company’s
capital adequacy ratio is strong at 17 per cent plus levels
and therefore, does not need to shore up the capital atleast
for the next 18 months.
Valuation & Recommendation
We expect the company to post a Net Interest Income of Rs.1522
crore for FY’12E and Rs.1743.6 crore for FY’13E. The net profit
for FY’12E and FY’13E is expected to be Rs.554.4 crore and
Rs.671.6 crore respectively. The EPS for FY’12E and FY’13E
should be Rs.53.3 and Rs.64.6 respectively. We expect the
company to trade at 2.3x FY’13E Adj. book value to arrive at a
price target of Rs.830 over the next 6 to 9 months

Dish TV:: Guidance lowered Dish TV posted disappointing Q3FY12:: Centrum

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Guidance lowered
Dish TV posted disappointing Q3FY12 results on the back of lower subscriber
addition, high churn and flat ARPU along with higher cost. This led to lower
sequential margins and high forex losses reducing profitability. We believe
mandatory digitisation would help the company to add subscribers while the
ARPU would grow marginally going forward. Maintain Buy.
􀂁 Disappointing results: Dish TV reported 31.4% YoY (1.7% QoQ) growth in
revenue to Rs4905mn while operating profit grew by 80% YoY (down 1.4%
QoQ) to Rs1201mn. It reported a loss of Rs430mn against Rs478mn in Q3FY11.
Lower subscriber addition, high churn, high commission expenses and
Rs1156mn forex loss impacted the results.
􀂁 Guidance lowered: Management has reduced its FY12 gross subscriber
addition guidance from 3-3.5mn to 2.7mn on the back of reduced free viewing
period and increased entry level price coupled with tough macro
environment. In 9MFY12 the company added 2mn subscribers with 0.74mn in
Q3FY12 itself. The company has also lowered its ARPU guidance from Rs160-
165 to Rs155 on the back of lower package upgrades from subscribers, lower
subscription of sports packages and high churn.

Colgate-Palmolive (India): Strong volume growth continues ::Centrum

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Strong volume growth continues
Colgate-Palmolive posted strong 20% revenue growth in Q3FY12 on the back
of 15% volume growth in its core toothpaste category. Lower than expected
A&P and other expenditure led to margin expansion and strong 74% PAT
growth. We believe premium valuations are not sustainable and hence
maintain SELL on the stock.
􀂁 Robust growth: Colgate posted robust 20% sales growth on the back of
strong 15% YoY volume growth in the toothpaste category with revenue at
Rs6898mn (up 19.6% YoY and 2% QoQ). With significant margin expansion on
the back of lower A&P spend coupled with low admin & other expenditure,
PAT was higher than expected at Rs1156mn (up 74% YoY; up 16% QoQ).
􀂁 Strong growth across categories: For the 15th consecutive quarter the
company posted a double digit volume growth led by the toothpaste
category. Even tough the company hiked prices by 3-5% early in FY12, volume
growth has only got stronger. Market share in toothpaste dipped marginally
by 10bps to 52.5%. Market share in higher price point products such as
mouthwash grew to 27.4%. In the toothbrush category the company launched
a few new products for adults and kids.

Maruti Suzuki| Q3FY12: The worst may be over, maintain Neutral:: MFglobal

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Operating results in line: MSIL's PAT at Rs 2.05bn (down 66% yoy) was ~7%
above our estimates, but 6% below the street. The variance with our estimates
was on account of higher-than-expected realisations (up 7% YoY) and a lowerthan-
estimated tax rate.
Realisations improve, margins decline: Realisations improved 7% QoQ due to
a higher proportion of diesel variants in the product mix and stronger currencyrelated
export realisations. EBITDA margins though continued their downward
trend to 5.3% (down 100bps QoQ). The impact of negative operating leverage
was visible, while currency-induced raw material cost pressures mounted.
The worst may have been over for margins: Going forward, EBITDA margins
are likely to show an improvement from the current levels on account of: (a)
operating leverage, (b) recent price hikes, and (c) further improvement in product
mix as the share of diesel variants could rise. However, margin improvement
could partially be offset by the lagged impact of foreign currency movements on
the vendor imports.
Maintain Neutral: With a resolution of the labour issues and currency rates now
stabilising, the worst for MSIL may well be over. In addition, incremental
competitive intensity in the small car segment is on a decline. However, we note
that: (a) demand has not shown any significant signs of a revival, and (b) the threat
of a higher duty on diesel cars persists.
We tweak our FY12 earnings downwards, while maintaining FY13E estimates
(based on a 8.5% EBITDA margin). We revise our target price upwards to Rs 1075
(increase multiple from 12.5x to 14x FY13E EPS) to reflect the relative stability in
exchange rates and potential improvement in EBITDA margins. The recent run-up
though prevents us from upgrading our rating. Maintain NEUTRAL.

Godrej Consumer:: Q3FY12 – Strong growth across businesses.::GEPL

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Q3FY12 – Strong growth across businesses. International business margin
boosted overall EBITDA margins
• Consolidated net sales stood at `13.5 bn, up 36% Y-o-Y (including acquisition), due to a
strong growth across geographies and businesses. Consolidated EBIDTA stood at `2.7 bn 59% up
Y-o-Y. EBITDA margins expanded 160bps Y-o-Y to 20.1%. Consolidated PAT grew 40.6% Y-o-Y to
`1.7 bn. PAT margins expanded 42bps Y-o-Y to 12.4%
• Standalone sales grew 20% Y-o-Y to `7.8 bn. EBITDA grew 19.2% Y-o-Y at `1.6 bn while EBITDA
margin was flat on Y-o-Y at 20.5%. Godrej Household Products reported strong sales growth of
30% Y-o-Y. International business reported sales of `5.7 bn, 68% up Y-o-Y, while EBITDA was up
225% Y-o-Y to `1.13 bn.
• The company acquired 60% stake in Chilean Hair care company, Cosmetica Nacional, for an
US$38 mn. The company is market leader in US$110 mn (~`5 bn) hair colour market with 30%
market share in Chile.
• GCPL announced preferential allotment of 16.7 mn shares to Baytree Investments (Temasek
arm) at `410 per share with total size of issue to be `6.8 bn.
Result Highlights
Performance boosted by international business, while domestic business grew by strong 20%
Consolidated net sales at `13.5 bn, up 36% Y-o-Y, due to strong performance by international
business which grew by 68% Y-o-Y. The international business growth was push up by Darling group
acquisition and currency Impact. However business growth was strong across geographies. Further
the Indian subcontinent posted a strong 20% Y-o-Y sales growth led by 31% Y-o-Y growth in soaps
and 30% Y-o-Y growth in household insecticides.
EBITDA margin expansion led by incremental margins in international business
Consolidated EBIDTA stood at `2.7 bn 59% up Y-o-Y. EBITDA margins expanded 160bps Y-o-Y to
20.1% led by strong EBITDA margin expansion in the international business (961bps to 20%). Margin
pressure on the Indian business eased out with Y-o-Y flat margins and 144bps expansion on Q-o-Q
basis to 20.5%. High interest and taxes restricted PAT growth to 40.6% Y-o-Y to `1.7 bn. PAT
margins expanded 42bps Y-o-Y to 12.4%.
Acquisition of Cosmetica Nacional, (Chile) to boost the LATAM hair care business portfolio
GCPL has increased its presence in LATAM by acquiring 60% in Chilean hair care company,
Cosmetica Nacional. With this acquisition, GCPL gets deeper access to LATAM hair care and colour
cosmetics market with strong presence in Chile. Management has indicated acquisition to be EPS
accretive from first year.
Valuation & Viewpoint
The company has maintained strong growth trajectory during the quarter. However we have a
cautious view on the company due to the currency risk, integration risk of recent acquisitions and
slow growth in domestic hair color business.

Exide Industries - "Positive developments factored in":: LKP

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Q3 FY12 - Sequential improvement

On the back of strength shown from 2 wheeler segment, Exide was in a
position to put up a sequential improvement in numbers. Total income
increased by 6% qoq, while 19% yoy. At the EBITDA levels, there was an
increase of 84% qoq and a 3% yoy. RM to sales came down significantly to
67.4% v/s 72.3% qoq while it was still up from 62.7% yoy. The reason for
sequential dip was the exhaustion of high cost lead which impacted Q2
margins. EBITDA margins came in at 13.2% v/s 7.6% qoq and 15.2% yoy.PAT
almost doubled to Rs1.04 mn on strong operational performance.

2W volumes strong, 4W subdued, industrial post a growth

The volume improvement in the quarter was on the back of strong 2W battery
sales. The auto battery volumes grew 19% yoy and 3% qoq to 3.55mn while 4W
volumes declined by 21% yoy, while grew by 6% qoq. On the industrial side,
volume growth was 13% yoy and 3% qoq on harsh October summer and demand from
telecom industry increasing. On the capacity side, the company is through
with 4W capacity expansion at 12mn units, while is still in the process of
increasing 2W capacity which is slated to move up to 21mn. The management is
confident about 2W demand getting back on track quickly, while has
pessimistic outlook on 4W demand. In Q3 FY12, the company functioned at 82%
utilization rate on the auto side while 81% on the industrial side, which
was a sequential improvement of 72% and 62% respectively. The replacement:
OEM ratio on the auto side was 1.24:1 which was an improvement qoq. Going
forward, we believe that 2W demand on the OEM side will be slightly soft as
the sector has seen some slowdown off late, while on the 4W side OEM demand,
we believe softness will continue over a couple of quarters. On the
replacement side, we believe that Q1 FY13 will see some turnaround emanating
from the demand for automobiles 3 years ago, both on 2W as well as 4W.

Margin improvement may come in coming quarters

The improvement in margin performance was in line with our expectations as
high cost lead was expected to get over this quarter. The composition of
replacement in the total volumes also improved and is expected to improve
even more from FY 13. This will assist margin performance.Softening of lead
prices as seen in Q3 is expected to continue and help the margins going
forward. We have already factored in about 400 bps improvement in margins in
FY 13 to 15.7%.

Industrial segment to remain subdued

Going forward with improving power conditions,we see the demand for
inverters going down from current levels in the long term. In Q3, inverter
sales were up due to strong summer in October, while stronger winter in most
parts of the country would be reducing the sales of inverters in Q4. We
expect the contribution of inverter sales to reduce in the total topline
from FY 13, though the company is planning to enter the inverter business.
On the telecom side of the industrial batteries, winning of contract by
rival Amara Raja for supplying batteries to Bharti's Africa business may
take some market share from Exide.

Outlook and valuation

With results coming inline and the stock having rallied to reach our target
price of Rs128, we believe the stock is fairly priced at current levels.
With all the positives factored in our numbers and replacement demand yet to
pick up, we believe the stock will hover in the range of Rs125 and Rs135. At
CMP of Rs 128, the stock trades at 16.8x FY13E earnings. We maintain Exide's
standalone business value at Rs 116(15x times FY 13E EPS of Rs 7.7) and
insurance business at Rs 12 taking the total TP to Rs128, thus downgrading
the stock from a Neutral to Underperformer.

Sarda Energy ::TP: INR120 Neutral ::Motilal Oswal

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 Sarda Energy and Mineral (SEML) posted standalone adjusted PAT of INR187m (up 35% QoQ) for 3QFY12.
Higher coal production, stabilization of pellet plant, and higher merchant power volumes and rates boosted
earnings.
 Net sales increased 13% QoQ to INR2.8b (v/s our estimate of INR2.5b), driven by higher pellet and power
sales, and increase in sponge iron prices.
 EBITDA increased 34% QoQ to INR481m, driven by increase in production of pellets and coal, higher power
generation, and higher sponge iron prices. Pellets are currently enjoying superior margins due to shortage of
DRI grade iron ore and strong sponge iron prices.
 Reported standalone PAT was INR278m. This includes INR137m MTM impact of forex loss reversal, as SEML
has adopted new guidelines for amortization of forex loss over a longer period.
Valuation and view: After a couple of quarters of subdued performance, the pellet plant has stabilized. The coal
washery, which was started in August 2011, is also ramping up well and mining production has increased. We are
increasing our earnings estimate for FY13 to factor in stabilization of the pellet plant and coal washery, and rampup
of coal mining. The stock trades at an EV of 5.3x FY12E EBITDA. Maintain Neutral.

Results above expectations for Ajanta Pharma :::: NIRMAL BANG

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Results above expectations
Ajanta Pharma reported better than expected results for Q3FY12. Sales grew by
21.3% qoq and 36% yoy at Rs 163.9 cr. EBITDA margin has improved by 340 bps
qoq and 170 bps yoy at 20.6%. PAT margins have also improved by 250 bps qoq
and 140 bps yoy at 11.3%.
Key Highlights
􀂾 Q3FY12 result includes Rs 6 cr forex loss because of MTM adjustment. This
has been included in other expenses. The company got the benefit of
exchange fluctuation to the tune of Rs 4.5 cr in sales.
􀂾 EBITDA margin has improved to 20.6% during the quarter, which is purely
on operational efficiency. Management has indicated that these levels are
sustainable and expects margin to inch up further in Q4FY12.
􀂾 Tax rate has increased during the quarter to 17.7%. It is expected to go
further up in Q4FY12 due to full utilization of past carry forward losses. For
full year we have assumed tax rate of 14% and 22% for FY13
􀂾 The company is expected to start sales from two approved ANDAs by
Q1FY13. During the quarter, the company has filed two more ANDAs and
expects to file another three in Q4FY12 taking the total number of filings to
10. The company is steadily building its ANDAs portfolio in US, which would
ensure sustained growth in the coming years.
Valuation & Recommendation
With base business growing at decent 20% CAGR and new businesses like US
are adding, we remain positive on the future prospects of the company.
We are rolling our target price to FY13E. We recommend “BUY” on Ajanta
Pharma Limited with a target price of Rs. 409 (earlier was Rs 385) indicating a
potential upside of 18% from current levels. We also recommend investors to
accumulate the stock on declines

Axis Bank:: Ex-one offs, In line :Centrum

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Ex-one offs, In line
Axis Bank reported a healthy set of numbers with a ~6% bottom-line beat
driven by Fx treasury gains (Rs1300mn) and lower provisioning costs.
Moreover, asset quality was largely stable and NIM compression was lower
than expected. Excluding the fx related gains on prop book, the earnings
performance was largely inline. We maintain Buy on lower valuations.
􀂁 NIM stable QoQ, Loan growth @ 22%: NII grew by a healthy 23.5% yoy (inline)
to Rs21.4bn led by a moderate but healthy credit growth (20.4% yoy)
while the reported NIM was stable sequentially at 3.75%. Blended yields
benefitted from higher share of retail business and higher investment yields
during the quarter. However, this was offset by 20 bps increase in cost of
funds leading to QoQ flattish NIM. NIMs are likely to move lower in quarters to
come from current levels.
􀂁 Healthy credit growth: The advances book grew by a healthy 20.4% yoy to
Rs1,487bn primarily driven by the retail segment (32% YoY) and SME (21.3%
YoY). Axis bank has been gradually increasing the share of retail business
(from 20.3% a year ago to 22.4% now) and the trend is likely to continue
during FY13. Deposits grew by a strong 34% yoy to Rs2,087bn led by current
and time deposits, though growth in SB was healthy at ~21%.
􀂁 Slippage rate sustains at 1.5%: Slippage rate sustained at high level (1.5%)
while recovery environment continues to remain tough. However, significant
write-offs (Rs2.4bn) helped contain the rise in GNPA to ~10% to Rs19.2bn
(%GNPA - 1.1% flattish QoQ). Additional restructuring of ~Rs3bn (likely from
Petroleum sector) pushed the cumulative restructured assets to Rs27bn (1.8%
of loans). Meanwhile, PCR witnessed some erosion (to 75.3% from 77.7% in
previous quarter). We maintain our view that restructured portfolio is likely to
increase further led by challenges faced by the infrastructure companies.

Ultra Tech Cement: Result above estimates, earnings growth to moderate ::Centrum

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Result above estimates, earnings growth to moderate
Ultra Tech’s Q3FY12 result was above estimates primarily due to higher than
estimated domestic realization of Rs3,938/tonne vs. estimated Rs3,856/tonne.
Higher realization resulted in operating margins of 21.1% vs. estimated
19.8% and adjusted profit of Rs5.1bn vs. estimates of Rs4.6bn. Though higher
domestic realizations (up ~18% YoY, despite lower industry utilization rate)
helped the company to register robust earnings growth of 44% in 9MFY12
(which in our view led to outperformance of the stock in FY12 despite higher
valuations, sluggish demand and concerns on sustainability of higher prices),
going forward, we expect the earnings growth to moderate in FY13E. The
new pricing formula of Coal India, if implemented would result in EBITDA
margin contraction if the companies are not able to pass on the rise in coal
cost and we are awaiting clarity on the issue to factor in our assumptions. We
maintain Sell on UTCEM with target price of Rs945.
􀂁 Higher realizations help to beat estimates and post better results: Higher
domestic realization (up 20.1% YoY) and sales volume (up 3.2% YoY) resulted
in 23.1% YoY growth in revenues to Rs45.7bn, 1.2% above our estimates of
Rs45.2bn. Higher realizations led to 36.3% YoY increase in EBITDA to Rs9.6bn
(est.: Rs8.9mn) and 21.1% in EBITDA margin, 1.3pp above our estimates of
19.8%. Adjusted profit (adjusted for subsidies related to earlier years) of the
company increased 60.5% YoY to Rs5.1bn, 12.1% above our estimates of
Rs4.6bn.
􀂁 Increase in operating costs offset by steep increase in realization:
Operating costs increased 16.3% YoY led by an increase of 21% YoY in energy
costs, 17% YoY in raw material costs, 15% YoY in staff costs, 14.7% YoY in
other expenses and 11.8% YoY in freight costs. Despite higher operating costs,
EBITDA margin improved 2pp YoY to 21.1% primarily driven by steep 20.1%
YoY increase in domestic realization. Blended EBITDA/tonne improved 28%
YoY to Rs924 during the quarter.
Y/E March (Rsmn) Q3FY12 Q3FY11 % YoY Q2FY12 % QoQ
Net Sales 45,719 37,152 23.1 39,098 16.9
Expenses 36,069 30,074 19.9 33,281 8.4
EBITDA 9,649 7,078 36.3 5,816 65.9
EBITDA margin (%) 21.1 19.1 205bps 14.9 623bps
Reported PAT 6,169 3,190 93.4 2,789 121.2
Adjusted PAT 5,118 3,190 60.5 2,632 94.4
Source: Company, Centrum Research
􀂁 Earnings growth to moderate going forward: Benefitting from higher
domestic realizations (up ~18% YoY despite lower industry utilization rate),
adjusted EPS of the company increased 44% YoY to Rs52.3 in 9MFY12. We
believe that outperformance of the stock over the past 1 year was driven by
stellar earnings growth despite concerns on the sustainability of pricing power
and sluggish volume growth. Going forward, we factor in a growth of 3% YoY
in earnings in Q4FY12E and 7% YoY in FY13E.
􀂁 Increasing costs remain a challenge, maintain Sell on expensive
valuations: Operating costs (up 16% YoY in Q3FY12) continue to remain
higher and if the new pricing formula of Coal India is implemented, operating
margins could be under pressure going ahead. We are awaiting clarity on the
pricing formula adopted by the Coal India to factor in our assumptions. As of
now, we have factored in ~9% increase in coal costs in FY13E. The stock is
trading at 15.5x FY13E EPS, 8.6x EV/EBITDA and US$165.9 EV/tonne. We
maintain Sell on the stock with target price of Rs945, which gives a downside
of 22% from its CMP.

ULTRATECH CEMENT PAT shines due to one‐offs:: Edelweiss

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UltraTech Cement reported Q3 earnings above estimates due to one‐off
items like INR666mn subsidies related to earlier years and INR384mn in
interest subsidy. The adjusted EB/t of INR953 was below our assumption
of INR1,003/t. Cement sales volume increased 4.6% YoY but the YTD
growth remains muted at ~2% YOY. Adjusted blended realization surged
5.5% QoQ, but was offset by 7.3% increase in cost of fuel and 4.7% hike in
freight costs. With the current surge in prices being unsustainable in FY13
due to low industry capacity utilisation of 75%, we maintain ‘HOLD.’
PAT above estimates due to one‐offs
Reported PAT for the quarter at INR6.2bn was above our estimates of INR5.6bn due to
INR666mn of other operating income, related to subsidies at the Rajasthan plant for
earlier years and INR384mn in interest rate subsidy. Going ahead, ~INR160mn‐170mn
of interest subsidy is likely to continue every quarter for ~3 years.
Operating performance below estimates
Adjusted to one‐off items, the EBITDA/tonne for the quarter stood at INR953 (vs our
estimate of INR1,003). Though the adjusted blended realization surged 5.5% QoQ to
INR 4,468/t, the gain was offset by 7.3% QoQ increase in the cost of power and fuel per
tonne and 4.7% QoQ hike in the freight cost per tonne. Grey cement sales volume for
the quarter inched up by 4.6% YoY though the YTD growth remains muted at 2% YoY.
(Refer table 1 for volume break up).
Outlook and valuations: Sector concerns remain; maintain ‘HOLD’
Due to the busy season, cement prices are likely to firm up in the near term, but
we see the same as unsustainable in FY13 due to low industry capacity utilization
of 75%. Due to the high other operating income and low interest cost, our earnings
for FY12 are being revised upwards by 15% though our earnings for FY13 remain
largely unchanged. We are also introducing our FY14 earnings estimate with a YoY
growth of 15.6%, factoring in benefits of 9.2 mtpa capacity addition in Q1FY14. We
are valuing the stock at 8x FY13E EV/EBITDA vs the current valuation of 8.6x FY13E
EV/EBITDA. Maintain ‘HOLD/Sector Performer’ recommendation/rating.

Hero MotoCorp:: In-line; Maintain Hold ::Centrum

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In-line; Maintain Hold
Hero MotoCorp Limited’s (HMCL) 3QFY12 operating results were largely in line
with our estimates with EBITDA margins at 15.6% compared to our estimate of
15.7%. Revenue growth was higher by 1.4% compared to our estimate at Rs.60bn
on account of better-than-expected realizations (up 0.5% QoQ vs. est. drop of
0.8%), leading to in-line operating performance despite higher than expected
RMC and employee cost. Adjusted PAT stood at Rs.6.13bn (our est. Rs6.22bn).
Lower tax rate (15.3% vs. est. 16.7%) aided profitability. Management indicated
that volume growth would moderate to 10-11% in 4QFY12 and would be in
similar range for FY13E (in line with our estimate of 11% for FY13E). We continue
to maintain Hold rating on the stock with a target price of Rs.2,048 as the stock
offers limited upside from current levels.
􀂁 Strong revenue growth led by volumes: Net sales increased 17% YoY to
Rs60.3bn (our estimate: Rs59.5bn), led by a growth of 11% in volume and 5% in
realization. On a sequential basis, sales were up 3.5%, led by growth in volume of
3% and realization of 0.5%. While we had assumed realization drop of 0.8% QoQ
due to unfavourable shift in product mix and lack of pricing action during the
quarter, actual realization stood higher at 0.5% QoQ.
􀂁 …Margins in-line: Despite higher than expected RMC and employee cost,
better than expected revenue growth helped the company register in-line
operating performance (Ebitda margins at 15.6% vs. est. 15.7%). Adjusted PAT
stood at Rs.6.13bn (our est. Rs6.22bn).Lower tax rate (15.3% vs. est. 16.7%)
aided profitability.
􀂁 Conference call highlights: 1.) 4QFY12 volume growth will moderate to 10-11%
and similar figures are expected for FY13E YoY. Rural demand (45% of sales) is set
to outpace Urban demand 2) Overall capacity will be 7mn units in FY12E. Haridwar
capacity will go up to 9,500 units/day from 8,500 units. Scooter segment capacity
will go up to 50k units/pm from c.30k 3) Pricing environment will remain stable
and 4) Targets 1mn units in exports over the next 4-5years.


􀂁 Valuations and Recommendations: At the CMP of Rs.1,946, the stock is currently
trading at 15.9x FY12E EPS of Rs.122 and 13.6x FY13E EPS of Rs.143. We continue to
maintain Hold rating on the stock. Post the recent appreciation in the stock price,
the absolute upside looks limited from current levels.

Fund Managers Meet Update Rallis India ::Emkay

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Fund Managers Meet Update

Rallis India Reco: HOLD CMP: Rs 123 Target Price: Rs 120 Domestic growth under pressure, maintain HOLD Key highlights from Rallis Fund managers’ meet - ·      Domestic business was negatively impacted in Q3 due to erratic nature of North Eastern monsoon. Agri-input consumption was also impacted due to pressure on farmer profitability ·      FX loss of Rs 82mn related to the MTM loss on exchange rate fluctuations on import of raw materials.  ·      Dahej plant remains on track and achieved 75% capacity utilization during Q3. While growth in Q3 was led by exports, domestic business is under pressure ·      Management sounded cautious on rabi outlook and future expectations are built from a favorable monsoon. We maintain HOLD with target price of Rs 120

Metals: Monthly Report - January 2012: Centrum Research

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Monthly Report - January 2012
Metals:: Early signs of revival seen…
Global steel production pruning continued with
capacity utilization at 71.7% in December’11 and steel
prices started going up as restocking activity picked up
along with supply easing. Raw material prices remained
subdued and demand showed improvement in some
parts of the globe. We see clear signs of revival for steel
producers (who had been grappling with high costs, low
prices and demand) and expect earnings improvement
going ahead.
􀂁 Monthly steel production stood at ~117 MT in December
2011, up ~0.8% YoY with a daily run rate of 3.8 MT/day and
a capacity utilization of 71.7%, down by ~200 bps MoM on
account of cuts from marginal and high cost producers.
CY11 global steel production growth stood at ~6.8%.
􀂁 HR coil prices saw a pullback after supply eased
considerably in December and HR coil price went to
US$625/tonne in CIS markets during Jan-12. Steel prices
hovered in the range of US$650-670/tonne in China and
European markets.
􀂁 Spot iron ore prices remained at ~US$140/tonne for 62%
Fe grade; hard coking coal spot prices continue to remain
soft and Q4FY12 contract prices settled at US$230/tonne.
􀂁 Rupee depreciation w.r.t US dollar has started to reverse
and is expected to help steelmakers recover some of their
MTM losses on foreign currency loans and payables.
􀂁 Steel producers’ profitability is expected to improve going
forward with pickup in demand, pullback in product prices
and reduction in raw material costs (especially coking
coal).
􀂁 Among base metals, LME average prices remained flat to
positive MoM as current LME prices remained below the
marginal COP. Inventories remained high overall despite
some supply cuts coming from producers.
􀂁 We remain positive on mining stocks based on attractive
valuations and HZL remains our top pick in the mining
space. Macro concerns have reduced in the steel space
with drop in production, support for steel prices and
reduction in raw material costs. We turn positive on JSW
steel and have upgraded it to buy. We maintain our sell
calls on Tata Steel and SAIL.

Patel Engineering (PEL) :Q3FY12 Result Update:ULJK

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Patel Engineering (PEL)
Lower construction costs and lower interest outgo resulted in PEL’s PAT improving 128.1% Y-o-Y
in Q3FY12 aided by a sharp 42.5% rise in sales at `6,193mn. The company was able to book
lot of sales from old projects, which got delayed in Q2FY12 due to flash floods and adverse
weather conditions.
Key Highlights:
◊ PEL posted one of its highest EBITDA margin of 18.3% in recent quarters. This was largely
due to it being able to book sales from some of its old projects, which had got stalled in
earlier quarters due to flash floods (happened in December 2010 as well as in Q2FY12) &
adverse weather conditions. The corresponding EBITDA margins of Q2FY12 & Q1FY12
were 11.8% and 15.8% respectively.
◊ Construction and raw material expense declined 1004bps aiding achieving higher EBITDA
margin.
◊ Q3FY12 EBITDA was `1,136mn, up 3% Y-o-Y and flat Q-o-Q.
◊ Interest outgoing declined 31.4% due to nil provision of MTM loss in the quarter. This resulted
in PAT margin rising 121bps Y-o-Y to 3.2% (2.0% in Q3FY11).
◊ PEL was expected to achieve financial closure and environmental clearance for its 144 MW
hydro power project located at Arunachal Pradesh and 1050 MW thermal power project
located in Tamil Nadu by the end of Q3FY12 but could not do so due to continued political
uncertainty in both the states.
◊ In the last nine months PEL has not been able to grab a single order in its core segments
like hydropower, irrigation and urban infrastructure. There is lack of clarity of fresh flow of
orders in these segments as well, going forward.
◊ We have marginally increased our PAT estimates for FY12 & FY13 as we have reduced
interest outgoings marginally.
◊ We further believe that execution would play a vital role in Q4FY12E just like it did in
Q3FY12. Since its power projects are likely to remain stalled a lot will depend on how it
executes its existing, old projects the way it did in Q3FY12.
Outlook & Valuations:
We upgrade our rating to HOLD from Sell on PEL with 12 month price target of `107
due to better results posted by the company in Q3FY12. As stock is currently available at a
cheap valuation, so we believe any new order flow would provide positive trigger which may
further improve the rating going forward. So we believe The stock is trading at 5.6x and 4.8x
FY12E and FY13E EPS of `18 and `21 respectively & 5.5x and 5.2x FY12E and FY13E EV/
EBITDA respectively. We value PEL on sum of parts methodology to arrive at a target of `107

Bajaj Auto::Strong operating performance continues ::Centrum

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Strong operating performance continues
Bajaj Auto’s (BAL) 3QFY12 results were better than our expectations with
EBITDA margin at 21% (est. 20.7%). Revenues at Rs.50.6bn were higher by
2.3% compared to our estimate of Rs49.5bn, largely on account of better than
expected export realizations (up 9.9% QoQ, driven by 3.5% price hike and
rupee depreciation). Adjusted PAT stood at Rs.8.39bn higher by 6% compared
to our estimate of Rs.7.93bn. We continue to remain positive on the stock and
maintain Buy rating with a revised target price of Rs.1,759.
􀂁 Better than expected operating performance driven by higher export
realizations: Revenues at Rs.50.6bn stood higher than our estimate by 2.3%
largely driven by higher export realizations (up 9.9% QoQ). Though the RMC
per unit stood higher by 3% compared to our estimate, higher than expected
revenues and marginally lower than expected other overheads helped margin
expansion by 90bps QoQ and 60bps YoY at 21%.
􀂁 Conference call highlights: 1) Against management commentary from Hero
MotoCorp (expecting 10-11% YoY growth for the industry in 4QFY12E), BAL
was conservative expecting the growth to moderate to 5-6% in the period.
However, the company expects long term CAGR volume growth of 10-12% to
continue for the industry over the next 3-5years 2) Export volume growth to
remain strong and FY13E should see the repeat of FY12E (YTDFY12 export
growth was 30%+) 3) KTM bike will be launched on 24 Feb 2012 and two new
products will be launched between Discover and Pulsar from BAL’s stable.

MAHINDRA & MAHINDRA FINANCIAL SERVICES Growth, asset quality intact; margins temper:: Edelweiss

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MMFSL’s PAT at INR1.5bn, up 34%YoY (7% ahead of our estimates),
comes on the back of strong growth metrics (AUM up 45%YoY to
INR195bn) and controlled LLPs as asset quality continues to hold ground
(GNPA at 4.1%, NNPA at 1.1%). On the flip side, increase in cost of funds
(up ~50bps QoQ) resulted in margin moderation of ~25bps to 9.2% (calc.).
We factor in RoA of ~3.3% and RoE of ~21.5% for FY12-14E. Assigning 2.2x
FY13E adj. BV, we come to a TP of INR706 and maintain ‘HOLD’.
Growth: No signs of fatigue, CVs provide further boost
Given the festive season, Q3FY12 registered a strong disbursement growth of INR59bn,
up 39%/32% YoY/QoQ. This has led to a 45% AUM growth, within which, CVs corner
12% vis-à-vis 8% in Q3FY11. Along with CVs, all other asset classes continue to do well.
Assignment resumes: Pool now stands at 9% of AUM
Post nil assignment during H1FY12, Q3 saw INR6.5bn of loans being assigned (primarily
tractor loans). The pool now stands at INR17.7bn, 9.1% of the AUM. Consequently,
income from operations for Q3FY12 includes INR187mn of income from fresh
securitization transactions (INR107mn in Q3FY11). MMFSL changed the accounting
policy from upfront recognition of securitization income to that of amortization over
the life of the loan hence the previous quarter numbers are not comparable.
Asset quality: Remains the good run, Q4 to see recoveries
GNPA at 4.1% and NNPA at 1.1% reiterate the presence of strong cash flows in the
rural economy. Coverage ratio stands at 74.4%. As is the case, Q4 witnesses increased
recovery drives on the back of which NPAs are likely to hold the current levels.
Outlook and valuations: Play on rural spirit; maintain ‘HOLD’
We believe that structural (growing non-farm income) as well as cyclical (demand in
rural auto segment) drivers are conducive for MMFSL’s asset and earnings growth. It
also implies that GNPAs are unlikely to touch the previous highs of 8%-9%. Regulatory
overhang has eased to an extent with clarity emerging on provisions and treatment of
off-book assets. We build in an asset and PAT CAGR of 25% and 21% over FY12-14E
respectively. Maintain ‘HOLD’ with a target price of INR 706/share

Indian Railways Finance Corporation Ltd (IRFC) Tax Free Bonds Open today

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Dear Customer, Indian Railways Finance Corporation Ltd (IRFC) opens its public issue of tax - free bonds of the face-value of INR 1000 each on January 27, 2012. The income by way of interest on these Bonds is fully exempt from Income Tax under Section 10(15)(iv)(h) of the Income Tax Act, 1961 and shall not form a part of the total income. Please find below details about the issue: Issuer Indian Railways Finance Corporation Ltd ( IRFC) Rating AAA/Stable by CRISIL Face Value INR 1000 each Issue Size 6300 crores Tenure 10 years/15 years Interest Rates (Application < 5 lac) 8.15% for 10 years, 8.30% for 15 years Interest Rates (Application > 5 lac) 8.00% for 10 years, 8.10% for 15 years Interest payout Frequency Annual Issue Starts on January 27, 2012 Issue Closes on February 10, 2012 Basis of Allotment First-come, first-served

Third Quarter Monetary Policy Review: RBI Buys Time::Dhanlaxmi Bank

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RBI Cuts CRR 50 bps, Rates Left Unchanged
R ESERVE Bank of India slashed cash reserve ratio (CRR) by 50 bps to 5.5% of Net Demand and Time Liabilities (NDTL)at its third quarter monetary policy on January 24. RBI’s move has been guided by severe liquidity tightness that has prevailed since December. RBI said ―the persistence of tight liquidity conditions could disrupt credit flow and further exacerbate growth risks‖ and therefore reduced excessive strain on liquidity with a cut in CRR. RBI’s move will inject around `32,000 crore in the system.
The central bank left interest rates unchanged as non-food manu-factured inflation has remained high and risks to it remain on the upside. RBI remarked that given the risk to inflation trajectory, it would be premature to ease interest rates at this juncture. However, it guided that rates would ease contingent to sustainable modera-tion in inflation. The central bank has also explicitly stated that fiscal consolidation is a pre-condition to easing rates. RBI took the following decisions at its January third quarter review of the 2011-12 (April-March) monetary policy:
 CRR cut by 50 bps to 5.5%, while statutory liquidity ra-tion has been left unchanged
 Repo rate unchanged at 8.50%
 Consequently, reverse repo rate unchanged at 7.50%, as it has been pegged 100 bps below repo rate
 Marginal Standing Facility (MSF), instituted 100 bps above repo rate, unchanged at 9.50%
RBI’s pause in rate action in the latest policy follows its assess-ment of upside risks to inflation. Today’s policy is also a reflection of the central bank’s inability to ease rates due to several external and internal factors despite sharply decelerating economic growth momentum, as well as overwhelming presence of downside risks to growth. RBI has indicated a reversal from its tightening mone-tary policy maintained so far, provided core inflation eases sustain-ably. The following point sum up the policy stance:
 Interests Rates Easing Contingent on Inflation : RBI high-lighted that global and domestic economic conditions have deterio-rated further from its second quarter monetary policy review in October. Inflation is likely to moderate, but risks remain on the upside. With sharp decline in investments and industrial activity, it is also necessary to look at growth dynamics. However, risks to inflation, particularly due to sharp depreciation of rupee and ele-vated commodity prices, restrict RBI from supporting growth at this juncture. Reversal of interest rates cycle is contingent on mod-eration in inflation.
PRU View: RBI’s policy document reflects RBI’s inability to assist growth due to risks to inflation, despite a clear slowdown in growth and falling investments. However, a CRR cut is pragmatic as it prevents further disruption in the economy due to liquidity stress. RBI has started weighing the weakening global economic scenario along with weakening demand pressures in the domestic economy, but gave conditional guidance for reversal of policy rates. The central bank cut GDP growth forecast further to 7% from 7.6% earlier, but left inflation projection unchanged due to pressure from commodity prices. We feel RBI will cut rates when two conditions are met. One, after non-food manufactured infla-tion shows signs of sustainable moderation and, second, when there are clear signs of fiscal consolidation. Two logical outcomes emerge: expect RBI to support rupee to contain core inflation pressures, and, rate cuts can now happen only after the Budget.