JSW Steel - Buy Namaste India conference highlights :Deutsche Bank

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We hosted JSW Steel's management at our DB Access India Conference.
The key takeaways from the meeting are :
*Iron ore availability has improved significantly over the last six months.
JSW Steel has purchased c. 9m tonnes of iron ore, out of c.16 m tonnes
through e-auctions, and received c. 6m tonnes of ore till now.
*The company remains confident of meeting its full-year guidance of c.7.5m
tonnes of production in FY12.
*The steelmakers in Karnataka are keenly awaiting the next Supreme Court
hearing on the mining ban. The steelmakers expect a partial relaxation of
the mining ban, in line with the CEC recommendations. The CEC has recommended
resumption of mining in category-A iron ore mines, which are
legal mines without any violations. E-auction is likely to continue as the preferred
mode for the sale of ore to the steelmakers.
*Management remains optimistic on the steel demand-supply scenario in
India. It expects only a minor surplus in the domestic flat products market
with the commencement of 15-16m tonnes of capacity over the next two
to three years.
*The domestic steel demand has shown an uptick over the past couple of
months, allowing the company to increase prices of various steel products.
Long steel products are doing better than the flat products.
*Management indicated that the company has plans to spend c.US$3bn
over the FY12-14 period and US$0.8bn in FY12 for the capacity in various
expansion projects.
*The agreement to supply power at c.INR5/unit by JSW Energy to JSW
Ispat is likely to have a positive impact of INR500-700/MT on JSW Ispat's
EBITDA level.
*The progress on US coal assets is slow and mining contracts are yet to be
awarded. Mozambique coal mines are expected to start operation in another
four to five years.
*The company has to make a repayment of c.INR1.2-1.5bn every year excluding
FCCB obligations to the tune of c.USD319m which is likely to mature
in June 2012.
*The weighted average cost of JSW Steel is c.7-8% and 11-12% for JSW
Ispat.

25 March 2012- Gray Market Premium: NBCC, MT Educare IPO

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Company Name	Offer Price (Rs)	Expected Listing Price Premium
National Buildings Construction Corporation (NBCC)	Rs 90/- to Rs 106/- (retail 5% discount)	None. Expected to list at IPO price. Retail may expect 5% as they get discount.
MT EDUCARE	Rs.74 to Rs.80	Discount

HINDUSTAN ZINC Marginal impact of Vizag smelter shutdown : Edelweiss

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Hindustan Zinc (HZL) has suspended production at its Vizag zinc smelter
(56 ktpa) since mid February 2012 due to high smelting cost. Vizag
operations are unlikely to restart owing to the recent increase in rail
freight and unviable custom smelting at this old plant. The company
intends to install roasters at Dariba (to begin with) and other smelting
units, which will enhance their production by ~20kt each and also make
up for production loss at Vizag. We have reduced our FY13 and FY14 zinc
production estimates by ~3% each, leading to EPS cut of ~3% for both
FY13 and FY14. Maintain ‘BUY’ with revised target price of INR146/share.
Operations at Vizag suspended since mid Feb’12
HZL has suspended production at its Vizag zinc smelter (56ktpa) since mid Feb’12 due
to higher smelting cost (USD 700/t vs USD 500/t for the company). The recently
announced increase in railway freight by >20% has come in as a final nail in the coffin
for the closure of this unit. Capacity utilisation at this facility was already low at ~70%
in FY11 and ~53% in FY12. The company doesn’t intent to restart the smelter, as
custom smelting will not be profitable at this old plant.
Dariba unit to make up for Vizag production loss
HZL aims to make‐up for the loss of production at Vizag by installing new roaster at
Dariba which will enhance production of units by ~20kt. The company intends to install
similar roasters near each smelter, going forward.
Outlook and valuations: Positive; maintain ‘BUY/SO’
We have cut down our FY13 and FY14 zinc production estimates by ~3% each, reducing
our EPS estimates by ~3% for both FY13 and FY14. Hence, EPS of Sterlite Industries is
also estimated to be revised down by ~2% each for FY13 and FY14. We maintain
BUY/SO with revised TP INR146/share (INR150 earlier). The stock currently trades at
4.8x FY13E EV/EBITDA.

Man Industries (India) Ltd. …the line pipe people ::Target ` 159 Initiating Coverage - Buy ::SKP

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Company Profile
Incorporated in 1988, Man Industries (India) Ltd’s (MIIL) business line includes
manufacturing and coating of large diameter SAW pipes. The company’s state-ofthe-
art manufacturing units are situated at Pithampur, Madhya Pradesh and Anjar,
Gujarat. Both the plants are equipped with all types of anti corrosion coating
facilities. Majority of its revenues are generated through exports.
Investment Rationale
Well positioned to cater export led growth:
􀂃 Pipe manufacturing requires quality assurance certificates from various
agencies, both national and international such as KVQA, API, BIS and so
on. MIIL has all these certificates in place.
􀂃 MIIL has also undergone a technology based MoU with CHR Haeusler
AG of Switzerland, which assures high quality production output from
the company’s plants.
􀂃 MIIL maintains cordial relationship with its clients in the countries like
USA, Iran, Egypt, Abu Dhabi, UAE, Qatar, Iraq and so on by providing
quality pipes in time which helps them to garner repeat orders.
Exploiting rising demand of global oil & gas consumption:
􀂃 The oil and gas sector is the primary end user and the biggest demand
driver for pipes historically. Higher oil and gas prices typically drive
exploration capex which drives the momentum for drilling activities and
oil and gas transportation from the oil well to the end consumer. Demand
drivers for the industry are as follows:
→ Increasing demand of crude oil in non-OECD countries.
→ Increasing demand of natural gas.
→ Increasing shale gas consumption in USA, Canada, Europe and
Australia.
􀂃 Increasing consumption of fossils will lead to more and more E&P
activities globally which is likely benefit the export focused companies
like MIIL
Strong Order Book in access of Rs 15 bn:
􀂃 MIIL has the strong order book position in excess of ` 15 bn, executable
within 6-9 months.
􀂃 60% orders are for LSAW pipes and the rest are for HSAW.
􀂃 Majority of the order book consists of export orders (about 70-80%).
Outlook & Recommendation
􀂃 At the current market price of ` 112, the stock is trading at a P/E of 6.5x,
5.2x and 4.2x of FY12E, FY13E and FY14E earnings of ` 17.2, ` 21.6
and ` 26.5 per share respectively.
􀂃 We recommend BUY rating on the stock with a target price of ` 159/-
(42% upside) at the P/E of 6x on FY14E earnings over the period of 18
months.

Jindal Steel & Power - Buy Namaste India conference highlights :Deutsche Bank

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Jindal Steel & Power Ltd. (JSPL) represented in our Namaste India conference.
The guidance from the company remained same as presented by the
company in the post result conference call. The key highlights of the meeting
were -
* Debottlenecking has resulted in steel capacity increasing from 2.7mtpa
to 3.5mtpa. Production ramp up to be largely completed in the current quarter.
* Target for external pellet sales likely to increase from 1.8mnt in FY12 to
2.5mnt in FY13E.
* Commissioning of capacities in Angul plant is likely to be delayed by c3
months. Operational cost details are paramount and the company's endeavor
is that profitability of projects in Angul should be similar to that of
existing facilities.
* While JPL has received Environmental Clearance for the Dumka power
(likely commissioning FY16), while the same for Godda is still pending (likely
COD in FY17). The company has not placed the equipment order for either
of these projects.
* After acquiring 60% stake in the Gopalpur port, with a capacity of 20mtpa,
the company is open for other inorganic options in steel and power provided
investments meet their hurdle rates.
* Within first full year of operation of the Shadeed (Oman) plant, the utilisation
has improved to 80%. Management believes there is a further room
for improvement.
* The company is in discussion with the Bolivian government to sort out
some of the differences regarding the expansion plans there and some outcome
is expected in next 1 month.
We have a Buy on JSPL with a target price of INR 710 and it is one of our
top-infra picks.

Gilts stick to tighter range; Call rates and LAF borrowing surge • : Edelweiss

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Gilts stick to tighter range; Call rates and LAF borrowing surge
• Gilts continued to be dictated by the same set of factors that have restricted their
movement to a marginal upper bias amidst subdued volumes. Trading action was further
limited ahead of the extended weekend for the bond market.
• The yields improved a bit and closed marginally lower at 8.38% vs the previous close of
8.39% with the range for the day being 8.37%-8.41%. The 9.15%, 2024 bond which is the
second most liquid paper showed significant movement and rallied from 8.39% to 8.34%.
• The OIS market had multiple cues to fall back on as risk aversion took centre stage
globally when the China manufacturing PMI for February slipped to a 4-month low. As a
result, swaps continued being in the receiving mode and rates were sharply lower across
tenors. The 1Y OIS closed at 8.09-8.15% vs 8.15-8.21%, while the 5Y swap ended at 7.48-
7.54% vs 7.55-7.61%.
Non-SLR Market
PSB placed 3M CD worth INR 5bn @ 11%. Corporation Bank placed 1Y CD worth INR 4bn @
10.50%. Vijaya Bank placed same tenor @ 10.59% for INR 2.5bn.
Money Market
In order to meet the reserve requirement for this reporting fortnight in a truncated week,
call rates surged with deals being struck as high as 10%. The WAR for the day was 9.40% -
more than 40bps higher than the previous session. The LAF borrowing across the 2 windows
combined today was once again back at extreme stress levels of INR 1.89tn. The MSF
window was also accessed yesterday with borrowing of INR 22.5bn.

India Cements Hold Namaste India conference highlights :Deutsche Bank

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We hosted India Cements, the largest player in South Indian cement industry,
at our DB Access India conference. The key takeaways from the
meeting are
* South Indian demand, after seven consecutive quarters of negative
growth, has started to recover from 3QFY12 with a 11.5% growth. It has
continued into the fourth quarter primarily on the back of a pick-up in Government
projects in Tamil Nadu, improved real estate demand in Karnataka
and the rural demand in Andhra Pradesh.
* With only Jaypee's capacity pending commissioning, the demand recovery
in South should help capacity utilizations to improve strongly from the
60% utilization in the region. In this environment, the company expects the
prices to hold on, if not improve.
* Cost pressures in the form of higher power costs and railway freight rate
hike may have to be passed on as return ratios at current operating levels
are not remunerative.
* Next round of capacity additions too could take longer as the time for land
acquisition, forest clearances have extended. The capital cost (excluding
land and captive power) has also moved up to US$100-120.
* With regards to the company, the company is likely to focus on improving
the utilizations at their existing units and look at expansions in Himachal,
Madhya Pradesh only over the medium term. The company envisages becoming
a 20 mn tonne player (from 15.5 mn tones) over the next 3-4 years.
* Its current gross debt at INR 29 bn (the 0.75x debt to equity). Pending
capex of INR 5 bn over the next two years is largely towards the 50 MW
captive power plant in Andhra Pradesh, the coal mine in Indonesia and the
normal maintenance.
Given the improving industry utilizations, we continue to remain positive on
the Sector. At the current valuations, maintain Hold on India Cements. In
our coverage universe, we continue to maintain our overweights on ACC
(Buy) and Grasim (Buy).

TELECOM No saturation yet: Edelweiss

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We launch our telecom monthly, which apart from carrying updates on
monthly subscriber numbers, will include meeting notes with companies
across the telecom value chain. Our inaugural issue kicks off with insights
into Vodafone’s strategy based on our meeting with its India CEO and
CFO. Our analysis indicates that the sector has not hit saturation as yet.
Hotline: Vodafone India pursuing balanced growth approach
We met Mr. Marten Peiters, CEO, and Mr. Deegan Colman, CFO, Vodafone India.
Vodafone’s revenue market share (RMS) rose from 21.2% to 22.4% in the past 12
months. It is focusing on improving yields in circles where it is strong and ramping up
volumes in weak circles. Thus, it is reporting a healthy mix of volume and RPM growth.
Vodafone expects Bharti to ‘hit back’ as it has lost RMS, but believes the latter will not
be disruptive as that will be counterproductive to its own revenue growth and ROCE.
Value‐added service: Industry revenue surges 15% YoY
Industry revenue grew 15% YoY in Q3FY12. Contrary to popular perception, every operator
(barring RCOM) registered revenue growth despite each following a different strategy,
implying that there is room for diverse business models and the industry is still not
saturated. Industry ARPU grew 3.9% QoQ after declining for several quarters. The surge was
primarily driven by tariff hikes effected in July 2011 by most large operators. Tata Docomo
(Tata) churned out about ~4.5mn passive subscribers, which also contributed to the higher
ARPU. Growth in data (2G and 3G) revenue too led to increase in ARPU.
Monthly signal: Bharti ups the ante in subscriber additions
Subscriber numbers reported for January 2012 indicate that Bharti is walking the talk of
focusing on market share. It added 1.3mn subscribers compared to the average 0.95mn
monthly additions during the past four months. GSM operators (ex‐RCOM and Tata)
added 8.4mn subscribers, highest in the past seven months.
Network monitoring: Mixed bag; prefer Bharti
Telecom stocks have posted mixed performance YTD with RCOM out performing due to
media reports of an imminent sale of its towerco, Idea performing in line with market
despite the Supreme Court order cancelling its licences due to strong Q3FY12
performance and Bharti underperforming due to disappointing Q3FY12. At the current
price, we prefer Bharti as risk‐reward is favourable.

BMW AG Going’s good so far : Edelweiss

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BMW’s Q4CY11 group net profit, at EUR804mn (down 61% YoY and 26%
QoQ), was lower than the Street estimate, mainly due to higher launch
related expenses and greater risk provisions. Group revenue, at EUR18.3bn
(up 10% YoY and 11% QoQ), was however ahead of Street expectation.
BMW expects to make up for the slowdown in China by growth in other
emerging markets (BRIKT). It expects strong sales in CY12 on the back of
new launches, namely the 3 Series. Incentives are already on the higher side
and are likely to rise further as the slowdown spills over to North Europe
from South Europe. The company expects sustainable EBIT margins in the
automobile segment at 8‐10% going forward.
CY11: A record year
Despite global macro challenges, the company’s group revenues rose 14% to EUR68.8bn
on higher sales volume and better product mix. Overall car sales were up ~14% in CY11.
China sales grew ~38% and contributed ~14% to the global auto sales. Currency
movements were also in favour of the company and offset any increase in raw material
costs. Group EBIT and PAT increased a healthy 57% and 52%, respectively.
CY12: A mixed bag
The company expects CY12 to be a record year in terms of sales and PBT with focus on
increasing efficiency. Major new models to be launched during the year are BMW 3 Series
Sedan, BMW 6 Series Gran Coupe, MINI Roadster etc. EBIT margins in the automobile
division are likely to be on the higher side at 8‐10% (11.8% in CY11).
However, major risks emanate from slowdown spreading to the UK and Germany, drop in
residual value and decline in China sales. The company targets to keep capex and R&D
expenditure at higher levels.
Read across for Tata Motors
Tata Motor has met tremendous response for its newly launched Evoque in China. Hence,
the company will be hit hard, if the slowdown impacts China premium car market
(currently limited to mass segment). Similar risk comes from rising incentive level in South
Europe where JLR has a low presence. If incentives levels rise in UK too, they could pose
significant margin risks.


Company Description
Founded in 1917, Bayerische Motoren Werke AG (BMW) is a German automobile,
motorcycle and engine manufacturing company and owns global premium brands like BMW,
MINI and Rolls‐Royce. In addition to its strong position in the motorcycles market with the
BMW and Husqvarna brands, the BMW Group also offers a successful range of financial
services.
The company has major prodcution facilities in countries like Germany, UK, Austria, US and
South Africa. Besides, BMW also has local assembly operation in Thailand, Russia, Egypt,
Indonesia, Malaysia, and India, for 3, 5, 7 series and X3 models.
In CY11, the company sold ~1.67mn cars and ~114 thousand motorcycles globally across all
its brands.

MEDIA & ENTERTAINMENT CONFERENCE NOTE :Pinc

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We hosted PINC Media & Entertainment Conference on 28th Feb, 2012. Players from across the platforms of media
participated in the event. Sony Entertainment, Industry Experts, Media planners and unlisted players helped us
understand better about the Industry scenario and the competitive landscape of the respective segment. The
conference clearly elucidated short term apprehensions and integral long term growth story.
Given below are the key highlights of the conference.
Broadcasting: Not a great year but an exception for few
The year started on a positive note, however slowdown in the economy and high inflationary environment resulted in ad
budgets being hampered and hence only necessary advertising was done especially for second rung channels and regional
players like Sun TV. However, lead channels like Sony Entertainment and Star Plus performed well. TV advertisement
registered growth of 9% in 2011. In 2012 Television is expected to maintain a marginal growth rate of 10%.
Print: Regional outperformed English
The Print advertising segment grew at 8% in 2011. The growth rate was down mainly in English press advertising (regional
print revenue in double digits, however English Print grew at low single digit rate) which led to slow growth in the entire print
segment. Advertisers, specifically from BFSI and telecom spent cautiously on print in the second half of the year. No big
IPOs and no big launches impacted the advertising revenues. The entire focus was on regional consolidation with existing
players launching new editions into existing and new markets. Print media advertising is expected to reflect a growth of 6%
in 2012.
Radio: Bleak performance
Radio advertisements grew marginally by 2% in 2011 owing to lack of innovation in the medium. The only happening factor
was Phase III policy announcement by the government. Radio advertisement growth rate in 2012 is expected to be better at
5% mainly because of Phase III.
Outdoor: Blank period
Outdoor advertising revenue fell 10% in 2011 with its share in the total ad pie falling from 6.1% in 2010 to 5.1%. Spends on
outdoor have decreased in the major metros but some respite is seen on the back of rising spends in Tier II and Tier III cities.
2012 is expected to see some revival with a modest growth of 5%.
Cinema: Blockbuster year
The segment performed exceptionally well on account of blockbuster releases like – Ready, Bodyguard, Dabaang, Don 2,
RaOne, Rockstar etc. The Ad revenue grew 18% in 2011 pocketing Rs1.4bn revenues. Cinema advertising is expected to
increase its contribution in 2012 to 0.6% of the total ad pie from the current 0.4%.
Our View:
We reiterate that regional players will be better placed during the current economic slowdown. Despite slowdown in national
advertising, local spending (Automobile, FMCG, Clothing) will provide support to the regional players. Rising newsprint cost
for print players and surging content cost for broadcasting players remain a concern. With mandatory digitisation we expect
MSOs and broadcasters to gain immensely on account of increase in the declared subscriber base and higher subscription
revenue.

NHAI TO MISS FY12 TARGET: PINC

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A tall job at hand
With only one month left to meet its targets of 7300km, NHAI is putting its act together to award the remaining
~3015km of road projects. Considering the awarded projects, current bid stage and execution, we believe NHAI
will miss both its target of awarding and completion. Till date (FY12), NHAI has awarded ~4,285km of road
projects worth Rs408.9bn. We believe it's difficult for NHAI to award ~7300km this fiscal, as current bid stage of
projects suggest possibility of awarding ~1635km by end of March. Though NHAI may stretch and award ~2000-
2200km, still it will fall short by ~800-1000km of awarding. The Cabinet Committee on Infrastructure yesterday
had approved three projects worth Rs35bn spanning 332km (Exhibit 1, highlighted) and awarding of these projects
will start from today. Though we have witnessed very competitive bidding throughout the last year, we believe
competition would ease going forward, as already developers are facing challenges regarding financial closures
and our channel check suggest ~40 projects are on the block. Our stance get further vindicated by looking at the
recent bid of Kiratpur-Ner Chowk in Himachal Pradesh won by ILFS Transportation that witnessed only four
bidder.

MphasiS -Muted HP channel puts pressure on growth ::PINC

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Muted HP channel puts pressure on growth
HP channel led to revenue decline - Revenue declined 3%QoQ to
USD265.6mn, below expectation. Rupee revenue grew 4.1%QoQ to
Rs13,672mn. HP channel revenue remained flattish in rupee terms
with 58% contribution but direct channel revenue grew 14.4%QoQ
with 42% contribution, up from 31% contribution from a year back.
EBITDA margin expanded 57bpsQoQ to 18.4%, below our expectation.
PAT was Rs1,848mn, 1%QoQ growth. EPS was Rs8.8, 1%QoQ growth.
Onsite pricing for Applications declines, stable for other towers –
Onsite pricing for applications segment declined 2.9%QoQ to
USD67/hr. All other pricing including offshore and onsite for
Applications, ITO and BPO remained stable. The management
expects no pressure from HP in terms of price negotiation. Overall
pricing is also expected to be stable.
US and Europe decline - In dollar terms, America (65% contribution)
declined 4.5%QoQ, Europe (15% contribution) declined 9.1%QoQ and
Emerging Markets (20% contribution) grew 7.7%QoQ.
All service lines decline except IMS - In rupee terms, Application
maintenance (32% contribution) grew 1.8%QoQ, application
development (28% contribution) grew 4.6%QoQ, IMS (24%
contribution) grew 11.9%. Technical help desk (5% contribution)
declined 16%QoQ and customer service (5% contribution) declined
3.3%QoQ.
Employee headcount declines; robust new client addition – Total
headcount declined 4%QoQ to 38,798. Utilisation (including trainees)
for Application, BPO and ITO grew 100bpsQoQ each to 77%, 71% and
81% respectively. Added 28 new clients (17 from direct channel and
11 from HP channel). Top client declined 3%QoQ, top 10 clients
declined 3%QoQ.
Outlook and Recommendation – Q1FY12 financials are below
expectations with higher than expected decline from HP. As HP is
not performing well in its Enterprise Solutions segment, we expect
pressure on revenue growth in MphasiS as well with a risk of pricing
cut in future. The stock was at attractive valuations after the last
quarter’s earnings and it has given 37% absolute returns. We
downgrade the recommendation from BUY to ‘REDUCE’ with a target
price of Rs400 based on 10x PER multiple on 18-months forward
earnings.

Lanco Infratech -Buy Namaste India conference highlights :Deutsche Bank

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We hosted the management of Lanco Infra in our Access India conference.
Key takeaways from the meetings were similar to ones stated in post-results
conference call as-
* Currently, Lanco has a capacity of 4.4GW and expect to reach a capacity
of 9.4GW by FY15. In FY13, the company is not adding any capacity.
* Out of the existing 4400MW, 760Mw is available for merchant sale. However,
Lanco will look to convert them to PPA in due course.
* Kondapalli Ph-3 open cycle will be commissioned by March'12. But the
company said that the plant may not operate for one year on account of gas
issues and the interest cost will be added to the project cost during this
period. Gas reallocation from other sectors is expected to operationalise the
project.
* Udupi U#1 has stabilized and it is currently operating over 90% PLF for
last 3 months. For U#2, the company expects the transmission line to be
commissioned by Jul-Aug'12 post which commercial generation from U#1
can also commence.
* Anpara project has started commercial operation and Lanco has signed
PPA with TN to sell 100MW for a period of 5 years for tariffs upwards of
INR4/kWh.
* Lanco management believes that the current PPA structure is risky and
hence, they are not signing any fixed case I bidding. The company is awaiting
modified case I bidding from government which allows fuel as full passthrough.
* Lanco cited that the SEBs are slow in signing PPA and have resorted to
load shedding to reduce supply as they are strapped for cash. Next year
tariff rates are expected to be higher as the tariff revision are happening and
the power purchase is also expected to rise.
* Lanco is planning to raise $600 to 750mn through private equity (equivalent
to 25% stake in ~9000Mw portfolio) and the entire fund would be used
for further investments in power business.
* The company has a gross debt of INR330bn with average cost of 11.5%
and a debt:equity of 4x. Higher debt has been attributed to coal assets purchased
with 100% debt. Total debt under power business is ~INR220bn.
We have a Buy rating with INR25/sh target price.

Cement Sector- Namaste India conference highlights :Deutsche Bank

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We hosted Heidelberg Cement India Ltd (Unrated) at our DB Access India
conference. The key takeaways from the meeting are
1) Heidelberg Cement India Ltd (HCIL) expects demand to grow at 7.5 to
8.5% on the back of revival in demand from housing segment and the
Government's thrust on infrastructure. With minimal incremental supply
pending commissioning, HCIL expects the utilization levels to only get
tighter.
2) In this environment, HCIL envisages to become a 15 mn tonne player (in
line with parent's vision) by 2015 from the current 6 mn tonne operation.
They expect to achieve this through both organic and inorganic expansions.
3) Cost of new capacity addition, meanwhile, has increased by US$ 10-20/
t for brownfield expansions (excluding captive power) to US$ 120-140.
4) More importantly, the greenfield capacities, according to HCIL make
sense only at a retail price of INR 325-350 per 50 kg bag given the current
cost trends. Gestation period meanwhile has increased to 36 months for
brownfield expansions (48-60 months for Greenfield expansions).
5) While cost inflation in the form of higher coal, power and freight (including
the recent railway freight hike) have kept margins under check, HCIL expects
the improving demand supply scenario and the economies of scale
from the upcoming 3 mn tonne expansion (commercial production expected
by 2QCY12) to help improve EBITDA margins to its target levels of
25-30% and RoEs to 20+%.
We continue to remain positive on the Sector given the improving utilization
scenario. At the current valuations, our key overweights are ACC (Buy) and
Grasim (Buy) in our coverage universe.

BPCL - Hold Namaste India conference highlights :Deutsche Bank

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We met BPCL at the Deutsche Bank Namaste India conference. The key
takeaways from the meeting were:
** Upstream business: i) Mozambique (Area 1 in Rovuma Basin): BPCL
estimates 2P recoverable gas reserve of 15-30 tcf in the block. BPCL expects
its share of exploration capex in Mozambique at US$100m each in
FY13 and FY14 - 5 exploration and 3 appraisal wells in FY13 and 4 exploration
and appraisal wells each in FY14. BPCL holds 10% stake in the block.
ii) Brazil (Block BM-C-30): BPCL estimates its share of exploration capex
in the block at US$170m in FY13 (5 exploration wells and 3 appraisal wells)
and US$60m in FY14 (2 exploration wells and 1 appraisal well). BPCL holds
12.5% stake in the block.
** Bina refinery (BPCL 49% stake): Capacity utilization at the 6mmtpa Bina
refinery is currently at 80% and is expected to reach 100% in the next few
months. All the secondary units have also been commissioned, and the final
capex for the project is INR122bn (US$2.4bn).
** Kochi refinery expansion: BPCL plans to expand the Kochi refinery from
9.5mmtpa to 15.5mmtpa and also upgrade it from a Nelson Complexity of
6 to 9.1. The estimated capex for the project is INR120bn (US$2.4bn) and
it is expected to be commissioned in FY17. The company also plans to set
up a niche specialty chemicals production facility in Kochi with an estimated
capex of INR60bn (US$1.2bn).
** Capex: BPCL estimates capex spend of INR35-40bn (US$700-800m) in
FY13, with cINR18bn (US$360m) being spent on upstream business and
the rest on refining and marketing infrastructure. The total capex spend on
upstream business over the next five years is expected at INR100bn (US
$2bn).
** Debt: Gross debt currently stands at INR220bn (US$4.4bn), down from
INR250bn (US$5bn) in Dec 2011, after the receipt of Government compensation
for 1HFY12 subsidy losses in Jan/Feb 2012.
We rate BPCL a Hold as high oil prices without an increase in regulated
product prices are likely to lead to higher losses from sales of subsidized
petroleum fuels.

PTC India :Cluster: Apple Green Recommendation: Buy Price target: Rs75 ::ShareKhan

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PTC India
Cluster: Apple Green
Recommendation: Buy
Price target: Rs75
Current market price: Rs62
Tariff hike and policy reforms the key to future growth
The past two quarters have been depressed for PTC India owing to the continuous delay in receiving payment from two state electricity boards (SEBs), Tamil Nadu SEB and Uttar Pradesh SEB. These two SEBs together owe over Rs1,000 crore to PTC India. While the power supply to Tamil Nadu has been completely stopped, Uttar Pradesh is being supplied on a cautious basis. However, the recent petition filed by the Tamil Nadu state utility to hike tariff with effect from April 1, 2012 amid mounting losses could see the enforcement of the tariff hike and would augur well for PTC India. Uttar Pradesh can also see some progress on the tariff hike proposal post- election; however we are not expecting any immediate action now. Also, the commissioning of its first power tolling project, the Simhapuri power plant (150MW), is expected by March end and would boost its trading volumes from FY2013 onwards. Sound policy action on tariff hike and receipt of delayed payments (which would lower its interest cost) along with a surcharge remain the key monitorables for the stock in the near term. We maintain Buy on PTC India with a revised price target of Rs75.

Buy Nestlé India; Target : Rs 5074 :: ICICI Securities PDF link

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http://content.icicidirect.com/mailimages/ICICIdirect_NestleIndia_InitiatingCoverage.pdf


S t r o n g   b r a n d   d o m i n a  n c e   t o   r u l e   g r o w t h …  
Nestlé India Limited (NIL), the undisputed leader of instant noodles
(~88% share by volume in FY11) and milk products segment in India, is
largest food company in  country. Its strong brands, ‘Maggi’, ‘Cerelac’,
‘Nescafe’ and ‘KitKat’ have become synonymous with the respective
categories. Despite increasing competition in the segments (noodles,
milk products and chocolate), NIL’s strong brand value has helped it to
consistently maintain its volume growth (~12% CAGR FY04-11). Going
ahead, with slew of new launches and aggressive promotion
campaigns, we expect the sales growth by volumes to be at 13.1%
CAGR and revenue growth to be 17.8% CAGR (CY11-13E). Growth in
profitability would continue to be impressive at ~20.7% CAGR (CY11-
13E), in spite of the huge capex undertaken by the company. We initiate
coverage on the stock with BUY rating.

Industrials: Budget 2013: Broadly positive for infrastructure/capital goods :: Kotak Securities PDF link

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http://www.kotaksecurities.com/pdf/indiadaily/indiadaily19032012.pdf


Industrials
India
Budget 2013: Broadly positive for infrastructure/capital goods. The budget carried
broadly positive news for infrastructure such as (1) augmentation of cheaper, longer-term
funds (doubled limit on long-term tax-free bonds to Rs600 bn, reduced ECB withholding
tax), (2) higher investment plans (rural infrastructure, defense, railways) and (3) investment
incentives (logistics, VGF for irrigation). Concerns: reduced customs duty for construction
equipment in several sectors (mining, roads) may increase competition and lackluster PSU
budgeted spending, particularly in power (declining 7% yoy versus FY2012RE).

Metals & Mining: Relief for flats segment :: Kotak Securities PDF link

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http://www.kotaksecurities.com/pdf/indiadaily/indiadaily19032012.pdf


Metals & Mining
India
Relief for flats segment. The Indian Government has increased customs duty on hotrolled products to 7.5% from 5% earlier. Flat products are priced in the domestic
market on import parity basis; hence increase in duty (benefit of US$16-20/ tonne) will
prevent immediate correction in prices. Our FY2013E EBITDA forecast will increase by
9% and 1.6% for JSW and Tata Steel if companies raise steel prices. We retain our
Cautious view on steel equities due to unfavorable demand-supply dynamics. Tata Steel
is an exception due to strong near-term catalysts.

fixed 11.25% Quarterly with AA rated Cox & Kings Secured Bonds

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We are pleased to present you the details of Secured, Redeemable Non-Convertible Debentures (NCDs) of Cox & Kings Ltd. These bonds carry an attractive coupon rate of 11.25% p.a.(payable quarterly). The bonds have been rated AA by CARE. Instruments with this rating carry very low credit risk and are considered to have high degree of safety regarding timely servicing of financial obligations.

Bond Details:

Particulars	Details
ISIN No	INE008I07262
Rating	AA by CARE
Face Value/Debenture	Rs.10,00,000
Put/Call Option	N.A.
Coupon	11.25% p.a.
Interest Payment Frequency	Quarterly
Interest Payment Dates	1st of Jan/Apr/July/Oct
Yield to Maturity	11.00% p.a.
Quantum Available	Rs.10 Lakh & Multiples

Company Profile:

Cox & Kings (C&K) is the longest established travel company in the world. Its distinguished history began in 1758 when it was appointed as general agents to the regiment of Foot Guards in India under the command of Lord Ligonier. Between 1750's and 1950's, Cox & Kings was witness to an exciting era in Indian history, and, in its own way, helped to shape it. In 1947, the British administration departed, but bound by strong ties to India, Cox & Kings stayed on and flourished. Today, Cox & Kings is a premium brand in all travel related services in the Indian subcontinent, employing over 800 trained professionals. Its India operations are headquartered in Mumbai and has the status of a limited company. It has over 12 fully owned offices in India across key cities such as New Delhi, Chennai, Bangalore, Kolkata, Ahmedabad, Kochi, Hyderabad, Pune, Goa, Nagpur and Jaipur. The worldwide offices are located in UK, USA, Japan, Russia, Singapore and Dubai. It has associate offices in Germany, Italy, Spain, South Africa, Sweden and Australia

Financial Highlights:

                                                                                               (Rs. Lakh)

Particulars	FY 09	FY 10	FY 11
Net Sales	28,690.02	39,915.40	49,673.91
Profit after Tax	6,280.85	13,384.99	12,908.60
Net worth	22,736.51	80,803.64	120,619.90

Why Invest:

• Secured Debentures
• Holding period is approximately 30 months
• Strong Credit Rating (AA by CARE)
• Interest payable every quarter
• Quantum available in smaller lots.

Indian Construction: Growth is still not in vicinity :Dolat Capital

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The construction space (Asset owners and EPC players), for Dec-11 quarter, has
delivered improved performance as compared to the first two quarters of the current
fiscal. This was primarily led by better performance of asset owners as compared
to EPC players. However, the profitability on operating and net level continues to be
under stress. We believe, it will take few more quarters for the sector to deliver
accelerated performance, subject to improvement in the macro economic
environment and clarity emerging on policy issues.
We have analyzed the results of 25 companies in the construction space (EPC and
Asset owners). The key highlights of the Dec-11 quarter were— the highest order
inflow of ` 391 bn —in any quarter of FY12, rising proportion of slow moving/stalled
orders in the order book, deteriorating working capital coupled with margins erosion—
on account of rise in commodity prices (primarily Cement)— and 42% YoY growth
in the interest expenditure due to higher interest rate and stretched working capital..
The EBIDTA and PAT margins witnessed an erosion of 123 bps and 101 bps YoY
respectively and stood at 14.8% (Asset Owners: 22.8%, EPC: 9.1%) and 3.8%
(Asset Owners: 8.4%, EPC: 0.6%) respectively. The revenue registered a growth of
23% YoY (Asset Owners: 42%, EPC: 12%). The EBIDTA grew by 13% YoY (Asset
Owners: 36%, EPC: -13%) and PAT declined by 3% YoY (Asset Owners: 41%,
EPC: -75%) respectively. Deterioration in working capital has been largely
responsible for rise in interest expenditure as companies have resorted to high cost
borrowing to overcome liquidity paucity.

How to save on taxes at the last minute ::Business Line

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Who doesn't want to save on tax?

Those who are still to make their investments before March 31, 2011 should try and avoid investing in wrong products.

Here is a last-minute checklist for this year's tax saving vehicles:

Stay invested in equities to beat inflation: Jaideep Bhattacharya, chief marketing officer of UTI Mutual Fund.

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India and other Asian economies are known for high savings rates of its people (about 36%). However, due to lack of innovation and poor marketing by financial firms, these savings are not translated into investments, says Jaideep Bhattacharya, chief marketing officer of UTI Mutual Fund. He spoke to Neeraj Thakur on the sidelines of the World Marketing Summit (WMS) in Dhaka last week.

In your presentation at the WMS, you mentioned financial inclusion. Please elaborate.
I focused on what we have done in India. We have to see how we can get people at the bottom of the pyramid to also live a life of dignity in their sunset years. We have to make sure that poor people are able to finance their children’s higher education. This is possible only by following a disciplined approach. I have introduced the concept of ‘ICE’(innovation, collaboration and experience).

Innovation means that there are a lot of problems and you need to be innovative for your products to stand out. In a population of 1.2 billion, one has to come out with many products that are innovative.

The next couple of decades are going to be about collaboration. Unlike now, when a big corporation starts from bottom-up, big corporations will have to see how they can work with like-minded organisations that are already focused on the investors and the customers, and add value to the customers in a nice way. And we have also shown how the government, regulators and NGOs can come together and add value to the products and the industry.

Experience is required for the last mile connectivity with the customer. The person who talks to the end customer is of prime importance because through him or her, you can communicate the message and we feel that we need to find the way through which we strengthen the last-mile connectivity.

Where financial literacy is very low, how can you educate people about the financial products?Yes, in South-East Asia, it takes a long time for people to understand financial products. What I have suggested is that we should use colours. For example: we can use traditional colours like red and green to warn the customers about the risk factors associated with, say, derivatives, insurance or debt products. So, if someone is signing on a red stripe or bar, then he is going to think twice before signing. In case of green, the person might sign immediately.

Wouldn’t colour-coding make it difficult for companies to sell risky products coded in red?First of all, we have to educate, because every product has a risk attached to it, whether it is a banking product or an insurance product or a mutual fund. What is important from an investor’s perspective is that he should know what is the risk factor in the product.

When you and I sign on a home loan paper, there are about 40 papers that we are supposed to read. Do any of us read those 40 papers? I have never read them. So, someone has to look into the interests of the customers. Companies should look at the customers from a life-time value perspective. For a company, an investor should be for a lifetime, not just for one transaction.

Do you see opportunity for Indian companies in the rest of Asia?From the people’s perspective and the topography, we understand each other better. A lot of time, we are using the same language. Our cultures are the same; our values are the same. In all the countries of this region, the savings rates are very high. People understand that the social security net is not very strong. Unless you save for tomorrow, you would be in difficulty. If you look at the trade in this region, it is less than 5% of the total global trade. If you look at Europe, it is one-fifth to two-third of the trade. So, we need to find a way through which we can collaborate to learn from each other in different fields. For example, Indians understand micro-pensions because India has been doing it for quite some time. But in microfinance, Bangladesh is so far ahead that Indian can learn from it.

How can the problem of unethical marketing of financial products be tackled?Sometimes, telling a person not to buy a financial product is also good marketing. If you think this is not the right product for your customer, you should tell him so upfront, even if he wants that product. Corporations should look to add to their business. And values and profits are not something that cannot co-exist. You need to provide value to your customers and investors and in return they will reward you by giving larger percentage of business to you.

What is your advice for retail investors?After the 2008 crash, there’s a lot of maturity among investors; they have learnt that investment is about achieving long-term goals and not about trading goals. There is no good time for investing, every time is a good time for investing. Valuations are attractive now. Investors should enter the market and stay invested.I believe in the next three to five years, they will make substantial wealth in their portfolios that they would be investing in now.
 

No matter how much we try, we cannot time the market. But, the way India is poised, over the next few years, it’ll grow at over 6%. And anyone will give his right hand for this growth rate. I am sure even the markets will do well. If we look at the last 25 years, the stock markets in India have given returns between 14% and 16%. This means, as an asset class, equity markets will beat most of the other asset classes. India is a high inflation economy. Any asset class with a fixed rate of return can’t meet the deficit created by inflation. So, we need to stay invested in the equity markets to beat inflation.

What is your outlook on debt funds?With respect to bond funds and short-term interval funds, we expect that with falling interest rates, these two types of funds will perform. If you look at the liquid category of funds, we feel, it depends upon the liquidity in the market. You know that last week, there have been `1.80 lakh crore of borrowings from the market. So, I feel that unless the corporates have liquidity in the market to borrow, we might not see substantial growth.

What impact will the recent stock market uptrend have on systematic investment plans (SIPs)? Well, the purpose of investing in SIPs is to diversify the risk. Otherwise, someone could invest directly in the equity market. And people invest in SIPs with specific financial goals. So such goals are long term and they do not change. We will definitely see a spike in SIP sales. But ideally, people should buy SIPs with long-term goals, irrespective of the fluctuation in the market in the short term.