Emmbi Polyarns Ltd Riding on capacity expansion ::Crisil

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Emmbi Polyarns Ltd (Emmbi) manufactures flexible intermediate bulk containers (FIBCs) and
other woven polypropylene (PP) and polyethylene (PE) specialty packaging products. It
serves both domestic and export markets (exports contributed 36% of revenues in FY11).
Given Emmbi’s relatively small scale of operations in a highly competitive flexible packaging
industry, we assign the company a fundamental grade of 2/5, indicating that its fundamentals
are moderate relative to other listed securities in India.
Capacity expanded three fold
Emmbi expanded its capacity to 18,200 MTPA (metric tonne per annum) as of September
2011 from 5000 MTPA in FY10 largely to increase its export footprint and the share of
specialty products (which comprised around 14% of revenues in FY11).
Share of value added products on the rise
Emmbi is diversifying into various high-margin woven polypropylene and polyethylene
speciality products to expand beyond its woven sacks and FIBC manufacturing. Its target is
to improve its operating profitability over the long term with increased sales contribution from
these newer products.
Client concentration risk, offtake risks remain
Emmbi’s top two clients account for ~30% of its overall revenues. While good client
management has ensured repeat orders, it also exposes Emmbi to client concentration risk.
Any change in clients’ procurement policies can have a negative impact. Further, given its
export concentration (over 90% to the US and Europe), we believe Emmbi will soon find it
challenging to fully utilise its expanded capacity with the slowdown in key export destinations.
Working capital to be stretched
Emmbi has to pay in advance for a large portion of its raw material purchases, whereas its
cash conversion cycles are long. Its working capital cycle is expected to be stretched further
as it would be required to aggressively market its increased production.
Valuations – the current price has ‘strong upside’
CRISIL Research has used the discounted cash flow method to value Emmbi and arrived at a
fair value of Rs 23 per share. This fair value implies P/E multiples of 8.4 FY12E, 9.0 FY13E
and 6.2x FY14E earnings. We initiate coverage on Emmbi with a valuation grade of 5/5.

Gujarat Gas Company :Valuation Support May Erode on BG Divestment : Nirmal Bang

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Valuation Support May Erode on BG Divestment
Gujarat Gas Company (GGCL) enjoyed higher valuation on the back of being a
subsidiary of global gas major British Gas (BG) but with BG showing its
intention to exit, the premium on valuation is likely to erode. With earnings
growth momentum declining following slower volume growth and limited pricing
power, we assign a Sell rating to the stock with a target price of Rs358.

MUTUAL GAINS Sharekhan's top SIP fund picks :: SIP fund picks :PDF link

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


MUTUAL GAINS

Sharekhan's top SIP fund picks

Large-cap funds	Multi-cap funds
Franklin India Bluechip	ICICI Prudential Discovery Fund - IP
DSP BlackRock Top 100 Equity Fund	Tata Dividend Yield Fund
Birla Sun Life Top 100 Fund	Birla Sun Life Dividend Yield Plus
Tata Pure Equity Fund	UTI Opportunities Fund
UTI Top 100 Fund	Quantum Long-Term Equity Fund
BSE Sensex	BSE 500
Mid-cap funds	Tax saving funds
SBI Magnum Sector Funds Umbrella - Emerg Buss Fund	Franklin India Taxshield
IDFC Premier Equity Fund - Plan A	Reliance Tax Saver (ELSS) Fund
DSP BlackRock Small and Midcap Fund	ICICI Prudential Taxplan
Kotak Midcap Fund	HDFC Long Term  Advantage Fund
Franklin India Prima Fund	HDFC Taxsaver
BSE Midcap	S&P Nifty

Fund focus

• IDFC Premier Equity Fund

 

---

Click here to read report: SIP fund picks

Indraprastha Gas :Eroding Pricing Power : Nirmal Bang

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Eroding Pricing Power
We believe the margins of Indraprastha Gas (IGL) peaked out in 1QFY12 and
henceforth its growth will be a function of volume expansion as high-cost
RLNG will gradually erode the company’s pricing power. With the gap
between the prices of gas and competing liquid fuels narrowing, the
company will have limited leeway to hike prices. With earnings growth
expected to moderate gradually over FY13/14, we assign a Sell rating to the
stock with FV of Rs363.

GAIL (India) :Growth Potential in ‘Pipeline’ : Nirmal Bang

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Growth Potential in ‘Pipeline’
GAIL faces a litany of woes such as declining gas supply, possibility of a limit on
marketing margin, irrational bidding for new pipelines and rising upstream
subsidy burden. We believe the risk-reward ratio is quite favourable with limited
downside risk as its stock price is just 8% away from our worst-case scenario
target. We assign Buy rating to GAIL with a target price of Rs427.

Petronet LNG :Umbilical Cord for RLNG Growth : Nirmal Bang

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Umbilical Cord for RLNG Growth
After registering all-time high capacity utilisation in 3QFY12 with reported profit
being 15% higher than street estimate, we believe Petronet LNG will continue to
positively surprise the market, deriving twin benefits from moderating LNG
prices and expectation of its Kochi facility going on stream in 3QFY13. The
company is adding 5mtpa of capacity in a tight supply market, which augurs
well for it. We assign a Buy rating to the stock with a target price of Rs210.

TATA Motors Ltd. Buy:Target: Rs 386 ::SBI Cap

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


TATA Motors Ltd (TML) is India's largest diversified automobile company with ~7 decades of experience in original equipment
manufacturing (OEM). The company has its presence across the world through its subsidiaries and associate companies.
TML is the first company to develop India's fully indigenous Passenger Car (Indica), Sport Utility Vehicle, LCV-Mini Truck
(ACE) and TATA Nano, the peoples car.
TML is the 18th largest automobile company in the world based on volume. In 2008, the company acquired two iconic British
brands JLR (Jaguar and Land Rover) for US$2.3billion. To have a deeper product penetration and market share in China (the
world's 4th largest luxury car market), JLR recently formed a JV with Chery Automobile.

Gujarat State Petronet- Earnings Hedged, it is Repository of Immense Value :: Nirmal Bang

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Earnings Hedged, it is Repository of Immense Value
Gujarat State Petronet (GSPL) is the top pick in our gas sector coverage
universe due to the following reasons: (1) Earnings fairly protected despite
fall in Krishna Godavari Basin-D6 gas block’s output, (2) It is a direct play on
softening spot RLNG prices, (3) Gas transmission volume bottoming out in
3QFY12 with assured supply of one cargo shipment per month, and (4) The
company graduating from a regional transmitter of gas to a pan-India player
soon. We believe the market is focusing on near-term earnings, ignoring
long-term value creation. We assign Buy rating to GSPL with a TP of Rs98.
Stock trading ~25% below fair value: We have valued GSPL on SOTP basis with
Gujarat transmission business valued at Rs112, investment in city gas distribution
(CGD) at 15x at Rs12.34 and the new pipelines at (-)Rs16.35 to arrive at a fair value of
Rs98. We have valued the new pipelines at the stated levelised tariff with capacity
utilisation conservatively kept at 30%/40%/50% in the initial three years of operations,
respectively.

Natural Gas Sector: Focus Shifts To Affordability From Availability :: Nirmal Bang

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Focus Shifts To Affordability From Availability
We believe India’s gas sector growth will hinge upon the pricing of
regasified liquefied natural gas (RLNG) rather than being a function of the
widely accepted notion of supply constraint. The sector, which set a new
paradigm in the energy space on the back of domestic gas in 2010, will now
be driven by RLNG until domestic supply perks up. We believe that despite
the euphoria over surging domestic gas supply fading, the earnings of
players in this sector are fairly intact. We assign Buy rating to Gujarat State
Petronet, Petronet LNG and GAIL (India) who are direct beneficiaries of the
RLNG play in India, while we have Sell rating on city gas distribution (CGD)
companies such as Indraprastha Gas and Gujarat Gas Company as they
seem to be entering a phase of margin contraction.

E&C and Infrastructure-Gravy Train Approaching? :: Ambit Capital

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Gravy Train Approaching?
Expectations of declining interest rates and receding Governmental
policy paralysis are raising hopes of an improved operating
environment for the Engineering & Construction (E&C) and
Infrastructure companies. Whilst we do expect a pick-up in GFCF
growth and a decline in repo rates in FY13, (which can lead to better
execution and higher profitability for companies in these sectors), we
believe that only a small subset of companies will be able to capitalize
this recovery. We highlight L&T, Voltas, Simplex and EIL as the key
filter-based ideas in the E&C sector. In the Infra sector, our filter-based
ideas are Adani Ports, IRB, ITNL and Sadbhav.

TNSEB: Tariff hike, past arrears approval key to financial restructuring ::Motilal Oswal

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


TNSEB: Tariff hike, past arrears approval key to financial restructuring
FAC allowed as pass through on quarterly basis, ST power purchase to come down sizably
 Tamil Nadu Electricity Regulatory Commission (TNERC) has allowed 37% tariff hike for Tamil Nadu Generation and Distribution
Company (TANGEDCO), which would address recurring under recovery. Also, the approval of Fuel adjustment charge (FAC)
would mean that any deviation in power purchase cost/fuel cost is recovered on quarterly basis. Three key aspects of Tariff
Order are: 1) FY13 would see addition of ~2GW of LT power, 2) Power purchase cost on aggregate basis to come down from
INR4/unit in FY12 to INR3.2/unit in FY13, a reduction of 22% and 3) ST power purchase of 2BUs is allowed only as a flexibility
for DISCOM to manage demand and at INR4/unit only.
 DISCOMs need prior approval before increasing quantum or price on ST power procurement. Additionally, State government
has given in-principal approval to arrears of FY11/12, further improving credibility for the DISCOMs.

Thermax India (TMX) Initiate UW: A late-cycle play HSBC Research,

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Thermax India (TMX)
Initiate UW: A late-cycle play
 With c80% exposure to mid- to late-cycle capex, we believe
orders are likely to fall by c16% in FY12 and c6% in FY13
 Weak orders should drive a c10% sales decline in FY13 and
a c130bp margin decline during FY12-13; EPS should bottom
in FY13, in our view
 Initiate coverage at UW and an EVA-driven TP of INR400; we
are c21% below consensus on FY13 EPS and expect
earnings cuts to drive stock lower

The less flamboyant Donald Trump Jr is betting big on India (ET)

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��



Donald Trump Jr, who was in Mumbai this week, is less flamboyance and more work ethic than you would think. He flies commercial, not the family jet, is betting big on India and doesn't apologise for his love of hunting.

Donald Trump Jr, 34, is the quintessential New Yorker - he is direct, has no airs and works incredibly hard.
He was in Mumbai for two days until Friday night when he took a late flight after gruelling rounds of meetings and visits just so he could be with wife Vanessa, daughter Kai, 6, and sons Donald, 3, and Tristan, six months.

Since 2007, when the Trump family decided to bring their ultra-luxury brand to India, Don, as friends call him, has visited India five times. But he has a connection with the subcontinent that goes back to childhood, thanks to which he can sustain spices of the sort that average Indians would wince away from.

Don's father, the flamboyant Donald Trump, had a yatch on which some of the crew were Sri Lankans, who prepared food for themselves. Little Don would sometimes join in and eat the fiery curries, tears rolling down his cheeks and sweat bursting out of every pore. Don and Vanessa, a model, now often go to Indian restaurants to eat "saag-gosth" (lamb-spinach curry) and other favourites such as tandoori chicken.

WATCHING DAD
Don, the eldest of three children that Trump Sr had with Ivana Trump, had an unconventional upbringing. When the day ended at a private school in New York, he would be ferried to his father's office and bundled into his presence, irrespective of what was happening then.

It could be a meeting to decide on the group's next investment strategy, or a board meeting, Don would just sit there and observe the events. "You can see what this must have done to a young and impressionable mind," Don told this writer in a phone conversation. He says his father probably did this because he was very busy and wanted to spend time with his children and at the same time expose them to business very early.

Don's memory of his father extends to the time when he was already a famous businessman. Despite Donald Trump's overwhelming public persona, his parents taught them to be careful with wealth. His paternal grandfather emigrated to the US from Germany and got into development at the bottom of the pile. "He would even be picking nails at construction sites," says Don.

His maternal grandfather was an electrician in then Communist Czechoslovakia and annually for four to six weeks Don would be sent there to see life in its rustic simplicity, devoid of any of the trappings of luxury.

Don went to University in Pennsylvania and later to Wharton. This was a time of heavy drinking and partying. Despite this, he continued to do very well in academics, especially in real estate and finance, perhaps the result of the subliminal inputs he received while sitting in business meetings as a child.


GOING TEETOTAL
Ten years ago, Don gave up drinking. "Once I made up my mind, it took me just a week to get out of it and I haven't had a drop since then," he says. The impetus to get on with work 24x7 came with the realisation that: "I'm just so lucky to have the kind of exposure I had and the Trump platform."

Privately, Don is a very quiet person who prefers to stay low profile. But as he has gradually taken increasing responsibilities within the Trump organisation, he has had to come out of his shell, even though his preference would be to stay private. "Adding value to the business by taking on public platforms far outweighs the disadvantages of giving up your privacy," he says.

Another area where Don differs distinctly from Trump Sr is that he prefers to travel in commercial jets rather than their family's Boeing 757 jetliner that drips with such opulence that the Daily Mail called it a "Shrine to Decadence". It has 24-carat gold plating done liberally, including on the toilet seat.

"We're not wasteful," says Don. "If I were to come to India in that plane, I would spend $250,000 just on fuel, whereas I could get an airline ticket for a few thousand dollars." Don says his father's lifestyle is a brand-building exercise.

He is frank to admit though that it gets tough to travel in a commercial plane with hundreds of other passengers once you've travelled in your own plane. "You know, the running around, the bedrooms and all that."

'LUXURY-STARVED' INDIA
While such privileges are at hand, he gets no leeway at work for being a son. "My father would never subsidise me at the expense of his business, and he is right," says Don.

Typical workdays at home base are 12-14 hours because he has to straddle time zones across continents to connect with partners in Latin America, Asia and Europe. Days overseas last longer.

"He is very simple and down-to-earth, no airs whatsoever," says Kalpesh Mehta, 33, who brought Trump into India for their first project, following a connection through a common alumni - Wharton.

This writer can testify for Don's unassuming nature - no sooner did he learn of my attempts to reach out, he called back and responded frankly to all questions, such as his recent controversial hunting trip in Africa.

"I enjoy hunting and I'm not apologetic about it," he says. He said the hunt was legal and the controversy is being raked by a local NGO, which grabbed the opportunity to get some attention because a Trump was involved.

Don also gamely answers a question on the propriety of offering luxury and opulence to the point of irresponsibility. "There used to be discord in this matter until some years ago. But with improving technology, you can offer products that are luxurious as well as environmentally responsible," he says.

On the Indian market, Don says: "India is a luxury-starved market. People from here have gone all over the world and experienced the best the world has to offer. Now they will get such products here."

Buy Havells India ::Strong domestic demand to drive growth; :: Motilal Oswal

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Strong domestic demand to drive growth; guidance upgraded
 The company is confident of maintaining growth momentum in FY13. It expects
FY13 standalone sales to grow 18-20% and EBITDA margin to be 13-13.5%.
 Despite slower sales outlook, Sylvania is on track to improve margins in FY13.
Repayment of EUR40m of debt due in April 2012 would be met through borrowings.
 We raise our EPS estimates by 3% for FY12 and by 9% for FY13. Maintain Buy, with
a revised target price of INR656.
We met Mr Anil Gupta, Joint MD of Havells India. Key takeaways:
No visible slowdown; guidance upgraded
 Improved outlook for growth and profitability: The company is confident
of maintaining growth momentum across product ranges and does not
see any signs of slowdown. The management has upgraded its outlook
and now expects FY13 standalone sales to grow by 18-20% (v/s 15-20%
earlier) and EBITDA margin to be 13-13.5% (v/s 12.5-13% earlier).
Improvement in the macro environment can further improve outlook.
 Sylvania to post moderate growth; profitability improvement sustainable:
Sylvania is likely to register a growth of 5% in EUR terms in FY13. The
management mentioned that like India, other emerging markets are also
going through challenging times impacting growth in countries like Brazil
in recent quarters. EBITDA margin is likely to improve to 8.5-9%.
Group strategies well on track
 Focus on brand building and geographical/product expansion: Havells has adopted a strategy of aggressive
brand building and expansion of its product ranges and geographical reach. It has been spending 2.5-3.5% of
its annual revenue on advertising, much ahead of peers. Havells is looking at expanding its consumer durables
portfolio beyond its highly successful fans range, which it had launched in 2005.
 Restructuring of Sylvania yielding results: The company remains committed to profitability improvement in
Sylvania. The two successful restructuring programs "Phoenix" and "Prakram" on which it spent INR3.8b over
FY09-10 have resulted in turnaround of Sylvania in FY11 and the management is confident of further
improvement in EBITDA margin to 8.5-9%.
 Reduction of financial leverage: The company is committed to reduce its financial leverage.
Upgrading estimates in light of improved outlook for profit margins
 We believe that Havells will continue to be a key beneficiary of strong demand for consumer electrical goods
in India, backed by impressive brand equity and wide distribution network. In light of the improved sales and
margin outlook, we raise our EPS estimates by 3% for FY12 and by 9% for FY13.
 Buy with a revised target price of INR656 (16x FY13E standalone EPS and 10x FY13E EBITDA for Sylvania).

Sun Pharma ::Sharekhan Top Picks -April 2012

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Remarks: The combination of Sun Pharma and Taro offers an excellent business model for Sun Pharma, as has been
reflected in the M9FY2012 performance (its revenue grew 31% YoY in M9FY2012).
Though Taro may not show a similar performance in the next quarter, but we expect a better performance
from Sun Pharma going forward mainly driven by the resumption of sales from the US based Cranbury facility,
which has been cleared by the USFDA recently. Sun Pharma seeks to acquire the remaining equity in Taro and,
if successful, that will not only help achieve better synergy but also boost earnings from the first year itself.
We expect 24% and 16% revenue and PAT CAGR respectively over FY2011-13. With a strong cash balance, Sun
Pharma is well positioned to capitalise on the growth opportunities. Its debt-free balance sheet insulates it
from the negative impact of volatile currency.
Due to provisions of Union Budget 2012-13, which provided for Alternate Minimum Tax (ALT) on partnershipbased
units availing various tax concessions, Sun Pharma’s earnings are likely to get reduced to the extent of
9% in FY2013.
At the current market price, Sun Pharma is trading at 24.2x and 24.0x FY2012 and FY2013 estimated EPS
respectively. We maintain our Buy recommendation on the stock with a price target of Rs631, which implies
26x FY2013E EPS.

Jindal Steel and Power: Cramping the merchant dream : Kotak Securities PDF link

Please Share::  India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��

http://www.kotaksecurities.com/pdf/indiadaily/indiadaily04042012.pdf

Cramping the merchant dream. Recent media reports suggest a less favorable
regulatory regime for merchant power plants in terms of (1) allocation of incremental
coal/gas supplied, and (2) even revoking captive block allocations if the benefits of lowcost fuel are not passed on to end-consumers. Jindal Steel and Power (JSPL) among our
coverage universe has enjoyed a higher allocation of captive coal blocks, monetized
through the lucrative merchant sale of power, and remains most susceptible to an
unfavorable regulatory regime in the wake of current coal deficit and the recent CAG
report that raised questions on allocations made in the past.

India likely to grow at 6.1 per cent in 2012: Ernst & Young (ET)

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


India is expected to grow at 6.1 per cent in calendar year (CY) 2012, similar to the pace recorded in the fourth quarter of 2011, accroding to the Ernst & Young's quarterly Rapid Growth Markets Forecast (RGMF).

Growth should be picking up in H2, 2012, provided the global economy does not experience a further shock. Over the medium term, we expect a strong recovery in investment, which will help lift overall GDP growth over 9 per cent by 2014, it said.

"India's domestic demand-driven growth model is acting as a catalyst for attracting foreign investments into the country.

Although the ongoing global uncertainty may have prompted global investors to become more cautious, India's inherent advantages and proven resilience to counter-act macroeconomic challenges generally outweighs these concerns," Ernst & Young India Partner & India Markets Leader Farokh Balsara said.

According to the forecast, in India, the biggest development will be in the lower middle class with the number of households with disposable income of USD 5,000 to USD 15,000 rising to around 150 million in 2020 from just under 100 million now. In particular, this represents opportunities for companies in the developed economy such as US and Europe for investments.

While the purchasing managers Index (PMI) and car sales data in January and February of 2012 have hinted at a stronger growth dynamic for India, the country will need to address rising inflation, which is still high.

As per the forecast, the country's central bank will not be in a position to cut interest rates until core inflation (excluding food) is on a clear downtrend and that may still be some months off, particularly as the economy has recently gained considerable momentum.

The wholesale price inflation should trend down through 2012 to about 5 per cent in Q4, reflecting the lagged impact of the weaker economy and lower food prices, the forecast said.

FII investment in stocks falls to 3-year low in FY12 :ET

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


 The net investment by foreign institutional investors (FIIs) in stock market during 2011-12 was the lowest in the last three years at Rs 47,935 crore.

FIIs made a net investment of Rs 47,935 crore in the equity market during the fiscal ended March 31, 2012, which was way below the figure of Rs 1.1 lakh crore in 2010-11 and Rs 96,857 crore during 2009-10, according to the SEBI data.

In 2008-09 financial year, foreign fund houses had offloaded shares worth Rs 47,706 crore.

Fears of a global economic slowdown and domestic troubles with inflation, interest rates, lack of reforms and the falling rupee all collaborated to make the foreign investors cautious in 2011-12, experts said.

Destimoney Securities' Managing Director and CEO Sudip Bandyopadhyay said, "Eurozone worries have pushed the Indian market into risk aversion mode and other emerging countries are performing better than India, so FIIs are staying away from our market."

However, the January-March period of the fiscal saw robust inflows. Out of the total net investment of Rs 47,935 crore, Rs 43,951 crore came during the last quarter of FY12.

Market analysts attributed strong FII inflows in January-March to signs of a reversal in the Reserve Bank of India's ( RBI) monetary policy and the subsequent impact of improved liquidity position.

They expect the positive trend to continue further, given that the liquidity conditions remain strong.

"FIIs have been infusing money into the Indian market due to change in RBI's monetary policy that has added liquidity to the system. This liquidity will help in growth of the country," Wellindia executive director Hemant Mamtani said.

"Indian market will continue to witness inflows in the whole year, if the liquidity conditions remain strong," he added.

During the past fiscal, foreign fund houses infused Rs 49,053 in the debt market this takes the collective net investments by FIIs in the stocks and bonds to Rs 93,725 crore.

Experts also said that outflow was seen in most of the sectors, but interest rate sensitive segments like auto, banking and realty were among the worst hit.

FIIs, the main drivers of the markets, turned negative on equity here last fiscal. The stock market barometer Sensex has plunged 2,041 points or 10 per cent in the fiscal 2011-12. The index finished at 17,404.20 points on March 30.

Earlier in January, the government had announced its decision to allow Qualified Foreign Investors (QFIs) to directly invest in the Indian equity market.

The move comes against the backdrop of significant foreign capital outflows from the domestic equity market in recent times, which has resulted in rupee volatility.

In August last year, the government allowed foreign investors to directly invest up to USD 13 billion in equity and debt schemes of mutual funds.

Selan Exploration ::Sharekhan Top Picks -April 2012

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Remarks: Selan Exploration (Selan) has rights to develop five small discovered (minimal exploration risk) oil fields (Bakrol,
Lohar, Indrora, Karjisan and Ognaj) in Cambay Basin (Gujarat) with proven oil & gas reserves.
Between FY2006 and FY2009, Selan ramped up its production by 4x. In the next phase (FY2009-11), with
stagnate oil production it did preparatory work to ramp up drilling in the existing fields and the new field,
Indrora (the most prolific one with significant reserves). Currently, the company is waiting for the final approval
for drilling which could ramp up its production significantly in the near future.
Based on this, we expect the company to ramp up its production more than two times by FY2014 over that of
FY2011. It would lead to an earnings growth (CAGR) of 41% during FY2011-13.
At the current market price, the stock trades at a PE of 7.5x and EV/EBITDA of 3.6x based on our FY2013
estimates. We remain bullish on its production ramp-up plan and recommend Buy with a price target of Rs500

Marico ::Sharekhan Top Picks -April 2012

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Remarks: Marico is one of the strongest players in the Indian hair care and edible oil markets. Its flagship brand
Parachute along with Nihar commands a 54% share in the domestic branded coconut oil market. Its portfolio
of value-added hair oil got strong traction in the domestic market helping it to clock around 20% volume
growth in the domestic market. The company’s good for heart edible oil brand Saffola is also witnessing midteen
volume growth on account of improving consumer awareness.
Apart from domestic operations, Marico has strong international presence in Bangladesh, Egypt, South Africa,
and the recently entered South East Asia. Though the near-term performance has been affected by political
instability and high inflationary environment in some of the international markets, we believe the long-term
growth potential is intact in these markets.
Kaya is showing signs of improvement with a double-digit same-store collection growth in the past few quarters.
Any significant increase in the prices of the key raw materials (including copra) and a slowdown in the sales
volume growth would act as the key risks to our earnings estimates.
We expect the top line to grow at a CAGR of about 25% over FY2011-13 and the bottom line to grow at a CAGR
of 30% over the same period (on the back of an expected improvement in the margins due to the softening of
raw material prices). At the current market price the stock trades at 32.9x its FY2012E EPS of Rs5.3 and 24.6x
its FY2013E EPS of Rs7.1.

Eicher Motors Ltd : BUY : Hem Secrities

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Eicher Motors Limited, incorporated in 1982, is the flagship
company of the Eicher Group in India and a leading player in the
Indian automobile industry. Its 50-50 joint venture with the Volvo
group, VE Commercial Vehicles Limited, designs, manufactures
and markets reliable, fuel-efficient commercial vehicles of high
quality and modern technology, engineering components and
provides engineering design solutions. Eicher Motors
manufactures and markets the iconic Royal Enfield motorcycles.
The company has registered strong numbers for the quarter
ending December 2011. The sales moved up 27% to Rs. 15766.40
million for the December 2011 quarter as compared to Rs.
12435.10 million during the year-ago period. Operating profit
too jumped about 28% in Q4CY11 at Rs. 1538.40 million. EML
has witnessed sharp growth across all segments coupled with
increasing market gains. A comparatively good net profit
growth of 55.74% to Rs. 854.40 million was reported for the
Q4CY11 compared to Rs. 548.60 million of previous same
quarter.
In Q4 the industry grew by around 10.6% and Eicher has
outperformed the industry by a good margin; so for the year it
grew at 26.6% over 2010 and for Q4 it grew by 25% so it has
beaten the industry by 15% and that has resulted in market
share gains.
EML’s management look forward to another year of profitable
growth with up gradation of its existing product range, capacity
expansion and increasing its market reach.
Valuation
With leadership position in premium segment motorcycles and
leisure biking, strong distribution channels, robust volume growth
and high realizations and increasing market presence; Eicher Motors
Ltd. growth prospects looks promising. We believe Eicher Motors is
trading at an attractive valuation at 15.68x and 12.07x of FY12EPS of
Rs.134.78 and FY13EPS of Rs.174.98. We initiate a ‘BUY’ on the stock
with a target price of Rs.2600 (appreciation of about 23%) with the
medium to long term investment horizon.

WOCKHARDT LTD. BUY -Target Price ` 978 : Ventura

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��

We initiate coverage on Wockhardt Limited (Wockhardt) as a BUY with a Price Objective of ` 978 (target 10.0x FY14 P/E). At CMP of ` 565 the stock is trading at 3.4x and 5.8x its estimated earnings for FY2013E & FY2014E representing a potential upside of ~73% over a period of 18 months. With the contingent liability concerns addressed and bulk of FCCBs already repaid, the sale of nutrition business will lead to a substantial increase in cash which could be used to draw down debt or pursue organic / inorganic grow opportunities. Further its portfolio of high margin niche products and impressive FTF launches should provide for strong growth in revenues (12.3% FY11-14 CAGR) to ` 5311.2 crore and earnings (123.6% FY11-14 CAGR) of ` 97.8 /share by FY14. During the period 2003 through 2008, Wockhardt has traded mostly in line with the 1 Year forward PE multiple of its peers viz: Sun Pharma, Cipla, Lupin and Glenmark. However, post its derivative losses, Wockhardt’s EPS turned negative. Now that the balance sheet is all cleaned up and all contingent liabilities addressed, we expect that going forward, Wockhardt will catch up with its peers leading to a substantial re-rating of the stock

Orient Paper ::Sharekhan Top Picks -April 2012

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Remarks: OPIL, a part of CK Birla group, is a diversified conglomerate operating in three segments; cement, paper and
fans. The cement division contributes over 53% of the total revenue. The company benefits due to its diversified
business model.
Due to the recent increase in cement prices, the present realisation of the company is higher by over 24%
over FY2011. The surge in the realisation will be able to offset the cost inflation and the profitability of the
division is likely to improve (marginally).
In the electrical division, due to the new product launches and gaining market shares, the company would
deliver over 11% revenue growth in FY2012. Going forward, the division can witness growth on the back of
lighting products (CFL) and household appliances.
The restructuring plan to demerge the cement division augurs well for the company as the uncertainty in the
profitability of the paper division was one of the major overhangs on the stock. Hence, the valuation could get
re-rated going ahead.
However, the key concern remains the poor volume offtake in its key market, ie Andhra Pradesh (which
accounts for 37% of the total dispatches).
At the current market price of Rs59, the stock trades at a PE of 5.6x and EV/EBIDTA of 4.1x, discounting its
FY2013 earnings estimate.

Madras Cement::Sharekhan Top Picks -April 2012

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Remarks: Madras Cement is a predominant player in the south region with an installed capacity of 12.5MMT. The
company will be the biggest beneficiary of the recent partial recovery in the cement offtake in the southern
region. Further, the supply discipline has resulted in strong realisation. We expect the earnings of the company
to grow by around 35% over FY2011-13.
The company has posted a volume growth of over 22% YoY for February 2012 and we believe the volume growth
along with the realisation growth would support the revenue growth in Q4FY2012.
To overcome the issue of power shortage in Tamil Nadu and to control the power cost the company is setting
up captive thermal power plants in Ariyalur and RR Nagar to meet the energy requirements. As per the plan a
60MW thermal power plant would be set up at Ariyalur (of this 40MW has already been commissioned and the
balance 20MW is expected in the near term) and a 25MW thermal power plant will be set up at RR Nagar.
The company is likely to be the biggest beneficiary of the sharp correction in the price of imported coal as it
imports 50-60% of its total coal requirement. So going forward, significant savings in the power and fuel costs
can be expected.
Any failure to adhere to supply discipline could be a key risk to the cement price and hence the same could
adversely affect the earnings of the company.
At the current market price of Rs153 the stock trades at PE of 9.4x its FY2013E earnings and an EV/EBIDTA of
5.8x on FY2013E.

ITNL ::Sharekhan Top Picks -April 2012

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��

Remarks: IL&FS Transportation Networks Ltd (ITNL) is India’s largest player in the BOT road segment with 10,269 lane km
in various stages of development, construction or operation. It has a pan-India presence and a diverse project
portfolio consisting of 23 road and bus transportation projects as well as a metro rail project.
Recently it bagged four road BOT projects which form 50% of the existing order book, thus providing good
revenue visibility over the next two to three years. Further, with 8,800km of NHAI’s target for FY2013, ITNL is
well equipped to capitalise on the huge and growing opportunity in the road infrastructure sector due to its
established track record in operating BOT road projects, its execution capabilities and the strong support
from IL&FS.
It has a fair mix of annuity and toll projects in its portfolio which provides revenue comfort. Further, it is
present across the value chain except the civil construction services, which it outsources to the local
contractors. This helps the company to handle a large number of projects at a time and diversify geographically,
reducing the risk of concentration.
Thus, we expect the sales and earnings to grow at CAGR of 10% and 16% respectively over FY2012-14E.
At the current market price, the stock is currently trading at 6.5x its FY2013E earnings and at a P/BV of 0.8x.
We maintain our Buy recommendation with a price target of Rs330.

ICICI Bank ::Sharekhan Top Picks -April 2012

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Remarks: ICICI Bank is back on growth path as its advances are growing at a healthy rate (up 19.1% YoY and 5.2% QoQ in
Q3FY2012). We expect the advances of the bank to grow by 18% CAGR over FY2011-13. This should lead to a 15%
CAGR growth in the net interest income in the same period.
ICICI Bank’s asset quality has shown a turnaround as its NPAs have continued to decline over the last six
quarters led by contraction in slippages. This has led to a sharp reduction in the provisions and an increase in
the profitability. Going forward, we expect the NPAs to decline further which will lead to lower NPA provisions
and hence aid the profit growth.
With a pick-up in the business growth and an improvement in the margins the RoEs are likely to expand to
about 12% over the next two years while the RoA would improve to 1.4%. This would be driven by a 17% CAGR
in profits over FY2011-13.
Despite the run-up in the stock over the past two months it trades at 1.6x FY2013E book value. We expect the
stock to re-rate, given the improvement in the profitability led by lower NPA provisions, a healthy growth in
the core income and improved operating metrics. We recommend Buy with a price target of Rs1,070.

Divis Laboratories ::Sharekhan Top Picks -April 2012

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Remarks: Strong M9FY2012 performance (PAT growth 27%) has re-affirmed our confidence in the growth potential of
Divi’s Labs.
The new DSN SEZ facility at Vishakhapatnam that started production from one of its blocks in June 2011 (the
remaining blocks of this facility are likely to get operational over FY2012-13) is likely to bring better economies
of scale and tax benefits.
A near debt-free balance sheet and strong cash flow are likely to help build a war chest for pursuing strategic
investments (biosimilars) and exploit growth opportunities in niche segments like high potency drugs for
oncology and steroids for contraceptives.
With the order inflow picking up and its new plant getting operational, Divi’s has a strong revenue growth
visibility and the operating leverage in the business will boost its margins. At the current market price the
stock trades at a PE multiple of 16.6x discounting its FY2013E earnings. We maintain our Buy recommendation.

Bharat Electronics ::Sharekhan Top Picks -April 2012

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Remarks: BEL, a public sector unit, is one of the leading defence companies in India. With the increase in the defence
budget and the focus on modernisation of the defence technology, BEL is best placed to take a sizeable pie
of the defence spend.
The company’s order book currently stands at Rs27,000 crore, which is around 5x its FY2011 revenues. This
gives us a strong revenue visibility for at least the next two to three years.
BEL has entered into joint ventures and technology collaborations to strengthen its position in the defence
services space, reap the benefits of the offset clause (which it believes is worth $300 million in the next five
to seven years) and enter into newer areas of operations.
The March quarter is the strongest for BEL and the upcoming budget could also have something positive to
offer to the defence sector and in turn to BEL. Also, in the Budget 2012-13, the defence allocation has been
increased by 17.6% to Rs1.93 lakh crore and the capex budget has been increased by 15% to Rs79,579 crore.
The key risk remains its execution: a delay in release of orders could lead to slower execution.
At the current market price the stock trades at 12x its FY2013E earnings. The company has huge cash reserve
of Rs5,875 crore, which translates into cash per share of Rs734 and gives the stock further support. We
maintain our Buy recommendation on the stock.

Strategy: March 2012 quarter earnings preview : Kotak Securities PDF link

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��

http://www.kotaksecurities.com/pdf/indiadaily/indiadaily04042012.pdf


March 2012 quarter earnings preview.  We expect the net income of the KIE
universe to grow 27.1% yoy and 23.1% qoq on an overall basis. On an ex-Energy basis,
we expect the net income to grow 10.8% yoy. We expect the net income of the
Automobiles, Banking, Energy and Pharmaceuticals sectors to improve yoy while the net
income of Metals & Mining, Real Estate, and Telecom sectors to decline yoy. We expect
the net income of the BSE-30 Index to grow 21% yoy and 17.2% qoq, led by the
Automobiles, Banking and Industrials sectors. On an ex-Energy basis, we expect the net
income of the BSE-30 Index to grow 20.8% yoy.

Bank of Baroda ::Sharekhan Top Picks -April 2012

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Remarks: Bank of Baroda stands out among the PSU banks as it continues to deliver strong earnings growth with
improvement in key operational metrics. The bank’s business growth is expected to remain better than
industry’s (contributed by stronger overseas growth) with relatively stable margins which will lead to a healthy
growth in the top line.
While the asset quality of most PSU banks has deteriorated significantly over the past two to three quarters,
BoB’s asset quality has remained healthy due to lower slippages. Although, the asset quality risks have risen
due to weak macro environment and policy issues, yet BoB is expected to fare better than the other PSU
banks in terms of asset quality, resulting in lower credit cost and higher growth in earnings.
The operating metrics of BoB has improved significantly led by strong focus on CASA, margins, fee income etc.
The bank is expected to post RoE and RoA of around 20% and 1.1% respectively over the next two years.
We believe BoB commands a premium over the other PSU banks due to a steady growth in its core income and
a healthy asset quality. Currently, the stock is trading at 1.2x FY2013 book value which is reasonable. We
recommend a Buy on the stock with a price target of Rs1,065.

Apollo Tyres::Sharekhan Top Picks -April 2012

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Remarks: We view Apollo Tyres as the best tyre play amongst the Indian listed tyre companies. The company is also the
best diversification story whereby it is now the largest radial manufacturer in the country. It is also a global
tyre play after the acquisition of Vredestien in Europe and of Dunlop in South Africa and derives 23% of its sales
globally.
Europe continues to be the shining spot with the company recording double-digit margins at the EBIT level
helped by strong sales of Vredestien’s branded replacement tyres. Increased sales of Apollo branded tyres in
Europe would provide additional fillip to its profitability.
The company is likely to benefit from an uptick in the domestic commercial vehicle (CV) replacement segment
and increased sales of CV radial tyres. The rupee’s depreciation will see reduced threat from Chinese imports.
Stable material prices, recovery in South African operations and increased proportion of Apollo branded tyres
in the premium European market are likely to improve the margins. At the current market price the stock
trades at a PE multiple of 6.8x discounting its FY2013E earnings. We maintain our Buy with a price target of
Rs86.

Oil Refining & Marketing - Sing GRM at 15-week low; RIL up US$1/bbl WoW but weak 􀂄 :: BofA Merrill Lynch

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Oil Refining & Marketing
Sing GRM at 15-week low; RIL
up US$1/bbl WoW but weak
􀂄 Singapore GRM halved over last seven weeks to US$5.1/bbl
Reuters’ Singapore GRM has fallen by 51% since the week ended January 27
from US$10.3/bbl to US$5.1/bbl last week. Singapore GRM last week is at the
lowest level in 15 weeks. Singapore GRM in 4QTD is now at US$8.0/bbl. It has
been hit by a fall in diesel, jet fuel and fuel oil cracks. Fuel oil cracks have
declined the most (US$10.7/bbl) in the last seven weeks. Jet fuel and diesel
cracks are also down from peak levels in 4Q by US$3.7-5.0/bbl to US$13.7-
13.9/bbl. In the last 2-3 weeks diesel and jet fuel cracks are at the lowest level
since Nov-Dec’10.
RIL’s theoretical GRM up US$1.0/bbl WoW at US$4.5-5.7/bbl
RIL’s theoretical GRM last week at US$4.5-5.7/bbl is up US$1.0/bbl WoW with
higher end of the estimate being at US$0.6/bbl premium to Singapore GRM. RIL
has gained from Arab heavy being at US$0.4/bbl discount to Dubai and not
producing fuel oil (cracks down sharply). However, RIL’s GRM was boosted most
by our assumption that its new refinery uses Souedie crude (API of 24), which
was at US$6.3/bbl discount to Dubai. If use of Oriente crude (also API of 24) is
assumed, RIL’s GRM last week would be lower at US$3.6-4.7/bbl.
RIL’s theoretical GRM in Mar’12 lowest since Dec’09
RIL’s theoretical GRM to date in March 2012 at US$3.9-5.0/bbl is at the lowest
level since December 2009.
RIL’s 4QTD GRM below Singapore GRM and down YoY
RIL’s theoretical GRM in 4QTD at US$5.3-6.5/bbl is down US$2.7-3.9/bbl YoY
(US$9.2/bbl in 4Q FY11). It is also US$1.5-2.7/bbl below Reuters’ Singapore
GRM of US$8.0/bbl. RIL’s gain from QoQ product cracks rise is less than that of
Reuters’ product slate. Discount to Dubai of crude RIL uses is also QoQ lower.
RIL’s 4Q profit down 20-30% YoY at 4QTD GRM
RIL’s 4Q profit works out to Rs37.4-43.1bn at 4QTD theoretical GRM of US$5.3-
6.5/bbl and blended petrochemical margin of US$427/t (down 22% YoY in rupee
terms). It would mean 20-30% YoY fall in 4Q profit (4Q FY11: Rs53.8bn).
Downside to RIL’s FY13 EPS 10-20% if GRM at 4QTD level
Our FY13 EPS estimate for RIL assumes its GRM at US$8/bbl. If RIL’s FY13
GRM is at 4QTD FY12 level (ignoring shutdown) of US$5.7-6.8/bbl, its FY13 EPS
would be 10-20% below our estimate of Rs66.9.
R&M companies GRM up WoW and QoQ
BPCL and HPCL’s theoretical GRM last week was up WoW at US$3.1-3.
2/bbl. Their 4QTD theoretical GRM (including inventory gain) is also up QoQ at
US$5.8-5.9/bbl.

Bharat Electronics: Downgrade on weak operating performance, competition : Kotak Securities PDF link

Please Share::  India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��

http://www.kotaksecurities.com/pdf/indiadaily/indiadaily04042012.pdf

Downgrade on weak operating performance, competition. Weak operating
performance in 4QFY12 (marginal decline in sales, EBITDA likely halved) led to a sharp
38% decline in PAT (Rs2.8 bn). Private-sector competition, dilution of offset opportunity
and lack of confidence in execution constrain our view even though the company
trades at 13-14X average free cash gen. adj. for spare cash (Rs400/share) and other
income. Downgrade to REDUCE from ADD (target price cut to Rs1,500 from Rs1,650).

Coal India: FSA with a diluted penalty clause? : Kotak Securities PDF link

Please Share::  India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��

http://www.kotaksecurities.com/pdf/indiadaily/indiadaily04042012.pdf

FSA with a diluted penalty clause? As per media reports, a Presidential directive
asking Coal India (CIL) to sign fuel supply agreements (FSAs) has been issued. However,
the terms of the penalty clause for shortfall below the directed 80% assurance level will
be decided by CIL itself. In our view, CIL will likely be inclined to dilute the penalty
clauses for short-supply of assured quantities, thereby reducing the efficacy of the FSA.
Continued uncertainty over the terms of an FSA will likely weigh on stock performance.

ISMT Ltd Pushing for seamless growth ::Crisil

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


ISMT is one of the leading producers of seamless tubes in India and the only domestic player
to be backward integrated. Though the company faces demand slowdown in the medium
term, both locally and globally, as well as higher competition, the recent commissioning of the
premium quality finishing (PQF) mill and the upcoming power plant are expected to improve
its profitability. We initiate coverage on ISMT with a fundamental grade of 3/5, indicating that
its fundamentals are good relative to other listed securities in India.
Diversification provides better industry positioning
ISMT produces tubes of varying outer diameters (ODs) up to 273 mm which enables it to
cater to the varied industries, securing a diversified revenue portfolio. The diversified industry
mix helps it to negotiate the vagaries of end-user industries better than its peers. However,
ODs above 273 mm not produced by the company have better margins though the end-user
market is mainly Oil and Gas. ISMT’s current capacity utilisation is low at ~40% due to
significant expansion by the company in FY11 and also overcapacity in the industry. We
expect utilisation to improve to 47% in FY14 supported by growth in underlying industries.
Captive power plant + process improvement   margin expansion
The commissioning of its captive power plant (CPP) coupled with the improved capacity
utilisation of the PQF mill will result in margin expansion from an expected 14.1% (down from
16.3% in FY11 due to demand slowdown and increased competition) in FY12 to 15.3% in
FY14. The newly added PQF mill will also expand its addressable market and enable cost
savings for the company due to higher efficiency leading to improvement in margins.
Susceptible to industrial cyclicalities and Chinese dumping
ISMT is exposed to cyclicality of the end-user industries. Also, raw material being a
significant part of the cost structure, any upward price movement is bound to result in margin
erosion for the company. Aggressive imports of seamless tubes from China have lowered
profitability for domestic manufacturers. Countries like the US and Europe has already levied
anti- dumping duty on Chinese imports; a similar move in India will benefit the industry.
Expect three-year revenue CAGR of 12.3% and margins of ~15%
We expect revenues to grow at a CAGR of 12.3% to Rs 24.7 bn in FY14 driven by 9.3%
volume CAGR. We believe that-despite challenges in the industry-CPP commissioning and
process improvement will result in margin expansion (though it would be lower compared to
its past performance) over next two years. Adjusted PAT is estimated grow at 12% over the
same period.
Valuations: Current market price has strong upside
CRISIL Research has assigned price to earnings (P/E) of 5x on FY14E EPS of Rs 8.1 to
arrive at a fair value of Rs 40 per share.

Ashok Leyland- ADD- Hardwired to the infrastructure story :: ICICI Direct

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


With a heritage of over six decades, Ashok Leyland (ALL) is the only listed
pureplay commercial vehicle (CV) manufacturer in India. We are broadly
affirmative on the stock, although we do have concerns. Our positive view is
based on: a) EBITDA margins that appear to have bottomed out, and b) a longterm
trend pointing at the CV industry’s shift towards high-end trucks, which is
ALL’s forte. Our concerns arise from: a) the company’s dependence on core
infrastructure sectors, which makes near-term volume growth vulnerable, b)
increasing competition, which will limit ALL’s pricing power. We expect ALL’s
EPS to grow from ~Rs2.0 in FY12 to Rs2.2/Rs3.1 in FY13/FY14 owing to sales of
~Rs134bn/Rs152bn, and EBITDA margins of 10.1%/10.9% in FY13/14 respectively.
We value ALL at Rs32 (7x FY13-14 average EBITDA, and Rs3/share for its key joint
ventures). Initiate with ADD.

News lats week:Supreme Court rejects Essar Oil's petition ::Business Line

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��

Oil & Gas - Hope of reforms fading? 􀂄 :: BofA Merrill Lynch

Please Share::  India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Oil & Gas
Hope of reforms fading?
􀂄 Reforms outlook poor for next 2 years; risk of de-rating
A hike in petrol and diesel prices was expected after the state elections, which
ended on March 3. However, there were no hikes last week and no hikes appear
to be likely during the ongoing Parliament session. The state election results have
increased the dependence of the government on allies, who have opposed
product price hikes. We believe petrol and diesel prices may be hiked in June
2012 or later if oil price remains high or strengthens and the rupee remains weak
or weakens further. However, the political scenario suggests poor outlook for
reforms until the term of this government ends in mid-2014. Oil PSUs may be derated
if indeed there is no significant progress on reforms, oil price remains high
or the rupee remains weak.
Higher subsidy share main risk to upstream FY12 earnings
9M FY12 recurring profit of ONGC and Oil India (OIL) was up 20-31% YoY
despite upstream share in subsidy being 37.9% (33% in 1H). We expect ONGC
and OIL’s FY12E earnings to be up 22-31% YoY if subsidy sharing is on the same
basis as in 9M. However, upstream companies’ share in subsidy could rise to 42-
43% if R&M companies are not able to bear too much subsidy. In that case,
ONGC and OIL’s FY12E earnings growth would be lower at 6-17%.
If no reforms higher risk of adverse subsidy sharing in FY13
FY13 subsidy would be Rs1.48tn (US$29.5bn) at Brent price of US$112/bbl and
exchange rate of Rs50 if there are no price hikes. Hefty price hikes are required to
significantly cut subsidy. FY13 subsidy will remain high if there is no or only
modest hikes in subsidized products in the next 12 months. When subsidy is high
the risk of upstream share in subsidy being disproportionately high also goes up.
Sharp fall in oil price & stronger rupee could improve outlook
15-54% hike in subsidized products and excise and import duty cut on diesel and
petrol since June 2010 has cut subsidy by US$26bn. However, high oil prices and
a weak rupee has meant that subsidy is high despite the price hike and tax cut.
However, FY13 subsidy would be sharply lower at US$8.6bn if Brent declines to
US$90/bbl and the rupee appreciates to Rs45.
APM gas price hike may be easier than oil subsidy reforms
Press reports indicate that the government is considering a hike in KG D6 gas
price of Reliance Industries (RIL). If indeed KG D6 gas price is hiked, we believe
a similar hike in regulated (APM) gas price of ONGC and OIL cannot be ruled out.
APM gas price hike may be politically easier than a hefty hike in diesel, LPG and
kerosene price. Upside to FY13E EPS of ONGC would be Rs4.2 (13%) and to
OIL's EPS Rs19.2 (14%) if gas price is hiked to US$6/mmbtu from April 2012
according to our estimates. A hike in APM gas price would boost OIL and
ONGC’s EPS to the same extent as 5-6% diesel price hike.

Pivotals - Reliance Industries, SBI, Tata Steel, Infosys ::Business Line

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Pivotals - Reliance Industries (Rs 747.1)

The stock is trading almost at the same price level that it ended on the week before. Its short-term trend will remain down as long as the stock trades below Rs 800. However, within this downtrend, if the stock climbs above Rs 770 a pull back rally to Rs 783 or Rs 800 is possible. Only an emphatic breakthrough of Rs 810 will reverse the stock's downtrend and take it higher to Rs 830 in the medium-term. Key resistance above Rs 830 is at Rs 864.

The stock is hovering well below its 50- and 200-day moving averages. A downward penetration of the stock's immediate support at Rs 723 can drag the stock down to Rs 700. Subsequent medium-term support is positioned at Rs 675.

Infosys (Rs 2,850.4)

Infosys slipped marginally by Rs 14 in the last week. It continued its sideways consolidation movement broadly between Rs 2,810 and Rs 3,000. Short-term traders need to tread with caution as long as the stock trades in the aforesaid range. Its daily as well as weekly relative strength indices are featuring in the neutral region. An emphatic up move above Rs 3,000 will strengthen the stock's medium-term uptrend and push it higher to Rs 3,300. However, we don't rule out a minor pause at around Rs 3,100 and Rs 3,200 while trending higher. Immediate resistance is at Rs 2,935 levels.

A plunge below Rs 2,810 can pull the stock down to Rs 2,744 and to Rs 2,700 in the short-term. Medium-term uptrend of the stock will be mitigated only if it declines below the key medium-term support at Rs 2,580 level.

State Bank of India (Rs 2,164.3)

SBI advanced 3 per cent in the last week, marginally closing above its immediate resistance at Rs 2,130. A strong start in the coming week will take the stock higher to Rs 2,220 and to Rs 2,270 levels. Short-term traders can consider holding their long positions with stop-loss at Rs 2,130. Subsequent resistances are at Rs 2,350 and Rs 2,450.

On the other hand, a fall below Rs 2,130 can pull the stock down to Rs 2,050 or Rs 2,000. Support below this level is at Rs 1,936.

Since the December 2011 low of Rs 1,576, the stock has been on a medium-term uptrend. A slump below Rs 1,936 will mitigate the stock's uptrend and pull it lower to Rs 1,830.

Tata Steel (Rs 474.7)

The stock continues to test its important resistance at Rs 470. A strong beginning in the week ahead would be cues for initiating fresh long position with stop-loss at Rs 470. Targets are Rs 490 and Rs 500.

Further, a decisive rally above Rs 500, which is a significant resistance level, will reinforce the bullish momentum and will signal a medium-term uptrend. Subsequent medium-term target will be Rs 520 and Rs 540.

Failure to move above Rs 500 will restrict the stock to trading between Rs 420 and Rs 500.

The daily as well as the weekly relative strength indices are hovering in the neutral region. Key supports for the stock are pegged at Rs 450, Rs 440, Rs 420 and Rs 400.

Vikas WSP, Jain Irrigation, Shyam Telecom, LIC Housing, Cadila, Cipla, ::Business Line

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��

 

I am holding shares of Vikas WSP purchased at Rs 11. What is the outlook for this company? Should I exit this stock?

Suresh Kumar

Vikas WSP (Rs 66.6): After taking support at around Rs 10 in December 2011, the stock reversed direction and started moving higher. Jumping from circuit limits to circuit limits, the stock penetrated its long-term resistance at Rs 36 in early March and accelerated until it encountered resistance at Rs 70.

The stock is likely to test this resistance in the near future. Its weekly as well as monthly indicators are hovering in the overbought territory signalling a potential short-term corrective decline.

The stock had reversed down from Rs 70 in early 2008 also. Therefore, we advise you to exit from the stock and take profits off the table at this juncture.

A downward reversal can pull the stock down to Rs 50 and then to Rs 36 in the medium-term.

Further fall below Rs 36 will mar the stock's medium-term uptrend and pull it down to Rs 25 or Rs 20. Conversely, breakthrough of the immediate resistance at Rs 70 can push the stock higher to Rs 85 or to Rs 95 in the medium-term.