S. Kumars Nationwide :: Karvy research

Attractive Valuations Far Outweigh Margin
Call Concerns
Margin Call on Pledged Equity — Overhang on the Stock:
There has been a rise in pledged shares over the last two quarters—the
pledged shares have already reached 99.8% in Q1FY13 from 83.6% in Q4FY12
(see Risks & Concerns). We believe since there is no buffer left for more shares
to be offered, there are possibilities for margin call going forward.
Accordingly, a margin call could have an adverse impact on the stock
However, the management clearly denied the possibility of a pledged share
sale in the market as there was no margin price discussed; they feel that any
possibility for margin calls does not exist. Moreover, management stated that
they have been in talks with the banks to release the pledged equity. We
prefer waiting for the release of the pledged equity even though the
management has been reiterating its position with similar explanations.

Vardhman Textiles :: Karvy research

Worst is Behind‐ Margins Back in Business
Over the past year, the textile industry has been witnessing high volatility in
prices leading to higher turnovers amid high inventory losses. At the same
time, uncertainity prevailing in the US and European markets led to lower
demand for yarn and fabric on the exports front. The yarn and fabric
activities of Vardhman Textiles (Vardhman) contributes over 80% of
revenues. Bumper cotton season, favourable decline in price volatility
sugget stabilization of margins in the yarn business. Vardhman is expected
to maintain its growth momentum largely from Bangladesh & China. The
Company is expanding its capacities in yarn and fabric processing as well,
which we believe will aid revenue growth.

Maxwell Industries :: Karvy research

Business Disintegration – A Revised Strategy
to Focus on Innerwears
Maxwell is in the process of disintegarting spinning and weaving with a
view to concentrating solely on innerwear business, as earlier the Company
was actively involved in the entire process right from procuring cotton to
shipping innerwear etc. Henceforth, Maxwell would procure fabric directly
and concentrate on manufacturing of innerwears, which will help in
maintaining low inventory levels, higher margins and strict quality control.
The first step of this process led to discarding spinning unit for a
consideration of Rs. 390 mn and debt repayment.

Textiles & Apparel:: Underlying Strengths Outweigh Prevailing Pessimism :: Karvy

Underlying Strengths Outweigh Prevailing
Pessimism
Over the last 12 months, the textile stocks have largely underperformed the
broader market, and are currently trading at a significant discount to their
respective average long‐term trading multiples. In fact, five of the seven
stocks covered in this report are trading in a discount range of 13%‐47% to
their respective 5 year average valuation multiples. Such discounts offer an
opportunity to invest in these stocks, given the strong brand positioning of
their products coupled with robust growth prospects, going forward.

Siyaram Silk Mills :: Karvy research

Good Growth Prospects at Attractive
Valuations
Siyaram Silk Mills (SSML) is under capex implementation of Rs. 2.2 bn over
the next 2‐2½ years, thereby adding up 286 looms and 400 machines to
increase its capacity by 20 mn metres of fabric per year and 60,000 pieces of
garments per month to the existing annual capacity of 60 mn meters of fabric
and 2.4 mn pieces of readymade garments. This expansion would lead the
Company to capitalise on the growing demand for branded fabric and
apparel across Tier II & III cities and rural markets.

Kewal Kiran Clothing :: Karvy research

Strong Financials and Brand Portfolio
Kewal Kiran Clothing (KKCL) has a diversified brand portfolio across the
value pyramid. It’s brands like Killer, Integriti, LawmanPg3 and Easios caters
from premium apparel to mass brands where preference is shifting towards
branded apparel. Killer, the Company’s flagship brand is aimed at the
premium segment and has witnessed good growth due its positioning as an
attractive brand for the youth, while other three are strategically targeted at
semi‐premium to value‐for‐money branded segment ensuring minimal
cannibalisation across brands.

Raymond Ltd. :: Karvy research

Wide Distribution Reach & Near‐Perfect
Brand Recall to Fuel Growth
Market Leader in Worsted Fabric: Raymond has a diversified and premium
product portfolio in worsted suiting segment. Ranked amongst the Top‐3
fully integrated manufacturers of worsted suitings in the world, Raymond
enjoys ~60% market share in this segment that contributes nearly half to the
Company’s total revenues

Page Industries :: Karvy research

Leading Brand with Strong Recall Value
Page Industries’ (Page) strong market presence with the global brand ‘Jockey’
in its arsenal makes the Company the market leader in branded innerwear
segment in India. We expect domestic innerwear market worth Rs. 140 bn to
grow at 12%‐15% over a couple of years. Page – with its extensive
distribution channel coupled with fully integrated in‐house manufacturing
facilities and accredited quality controls – is expected to benefit the rising
demand ride. ‘Jockey’ is the only innerwear brand in India to be awarded the
‘Superbrand’ status and is certified by the US‐based World Wide Responsible
Apparel Production (WRAP).

Tata Consultancy Services- Good performance met heightened expectation:: Prabhudas Lilladher

Tata Consultancy Services (TCS) reported Q2FY13 results in line with PLe/consensus
expectation. Revenue was touch ahead, whereas margin was softer than expectation.
The management continues to remain upbeat on the clients’ behaviour and no delay in
discretionary spend. We retain our ‘Accumulate’ rating, with a revised target price of
Rs1,450 (from Rs1,360).

RELIANCE INDUSTRIES Refining margins boost earnings:: Edel

RIL’s Q2FY13 PAT at INR53.8bn was in line with the estimated INR53.9bn
and higher by 20% QoQ due to better refining margins and flat petchem
EBIT. GRMs for Q2FY13 at USD9.5/bbl were in-line with our estimates. RIL
is awaiting MC approval for revised FDP for D1/D3 to augment
production, and plans to submit the Integrated Development Plan for the
satellite fields by December 2012. Our anti-consensus call on RIL initiated
as part of the ‘Braveheart Series,’ when the stock was at INR719 is playing
out. We see the strength in GRMs to persist as refinery closures offset new
capacities. Further, bottoming out of petchem margins, strong shale gas
production (27% QoQ, 7% of EBITDA) and progress in core capex support
our call of EBITDA doubling in 5 years. Reiterate ‘BUY’ with a TP of INR906.

Bajaj Auto - “New model launches to support FY 14 growth” ::LKP

Results above expectations

Bajaj Auto’s Q2 FY13 numbers came in above our expectations as net sales including other operating income came in at Rs49.7 bn, which was 2.2% up qoq and down by 4.1% yoy. Realizations were up 8% yoy and 5.5% qoq to Rs 48,614 which somewhat offset the 10% yoy decline in volumes to 1.049 mn. Domestic volumes declined by 11% yoy and 1% qoq, while exports declined by 8% yoy and 6% qoq mainly on weak market conditions in Sri Lanka, Egypt, Iran and Argentina. At the EBITDA levels, RM costs to sales dipped to 71.77% from 72.1% qoq and 72.56% yoy. EBITDA margins were up to 18.4% from 17.9% qoq , but was lower on a yoy basis by 40 bps. Staff costs declined sequentially as a % of sales from 3.4% to 3.2%. Rise in other expenses due to derivative and MTM losses came in at 7.2% of sales, which was higher than 6.4% yoy and 7.1% qoq. Higher tax rates at 28.5% v/s 25.7% yoy due to Pantnagar sops going out from last quarter pulled the profits down by 10% yoy, while they were 3% above qoq.

Should you subscribe -Bronze Infra IPO? VS Fernando, IPO Analyst at India Aarthik Research

Though Bronze sounds like a high-tech infra company, it’s nothing but a low-end ‘sub-contractor’! The company netted an aggregate profit of only Rs 8 lakh in five fiscals but, asks a premium of Rs 2.85 cr!! How will it service a large equity of Rs 17 cr?

OFFER AT A GLANCE
Name	Bronze Infra-Tech Ltd
Offer Amount	Rs 8.56 cr
Offer Quantity	57.04 lakh shares of Rs 10 each
Offer on Total Equity	33.2%
Post-issue Free Float	49.6%
Post-IPO Capital	Rs 17.20 cr
Offer Price	Rs 15
Application Quantity	8000 & Multiples of 8000
Offer Opens	October 19, 2012
Offer Closes	October 23, 2012
Listing	SME Platform of BSE
Lead Manager	Inventure Merchant Banker
Registrar	CB Management Services

The Offer

The Kolkata-based Bronze Infra-Tech Ltd (BIL) is making an initial public offer (IPO) of 57.07 lakh shares of Rs 10 each at a fixed price of Rs 15 a piece aggregating to Rs 8.56 cr. While the Mumbai-based Inventure Merchant Banker, who is lead managing an IPO for the first time, has underwritten 8.56 lakh shares (15.01% of the issue), a little known private company of Kolkata, Sherwood Securities, has underwritten as much as 84.99% (48.48 lakh shares). Subscribers must apply for a minimum of 8000 shares (Rs 1.2 lakh). The shares are proposed to be listed on the SME-Platform of Bombay Stock Exchange (BSE).

Sundaram Select Focus: Betting on oil & gas :: Business Line

UTI Equity fund: INVEST :: Business Line