Templeton India Growth Fund: Invest:: Business Line

ESSAR OIL Superior operations achieved; deleveraging awaited:: Edel

Essar Oil (ESOIL) reported Q3FY13 profit of INR320mn, lower than our
INR1030mn estimate due to higher interest cost and forex losses.
However, operationally the performance was superior. This was the first
quarter reflecting full benefits of the expanded complex refinery. While
the refinery operated at 102.8% utilisation (5.14 mmt), clean GRMs rose
to USD9.75/bbl reflecting the rise in complexity to 11.8. ESOIL used 84%
heavy and ultra-heavy crude and produced 85% light and middle
distillates. Going forward, reduction in debt and lower financing costs via
raising ECB will be key. Maintain ‘BUY’ with a target price of INR101

CMC All round performance – beat expectations:: Prabhudas Lilladher,

CMC reported Q3FY13 results exceeding our/consensus expectation. The revenue
growth has been consistently supported by SI (CQGR of ~9% over the last three
quarters), while ITES remained relatively muted in Q3FY13. The margin profile
continues to be stable as reiterated by the management. We reiterate our
‘Accumulate’ rating, with a revised target price of Rs1,350 (from Rs1,270) as we
revise our estimates up for better growth and margin expectation

Buy Bajaj Corp:: Cost efficient player- Motilal Oswal

Cost efficient player
Possible resolution of mining ban, a key trigger; Buy
 Birla Corp (BCORP) is one of the most cost efficient cement producers, with average
cost of production being consistently 8-10% lower than the MOSL Cement Universe.
 We expect strong scale-up in BCORP's volumes over FY12-15 on the back of stabilization
of recently added capacities and favorable market mix.
 The ban on limestone mining at its Rajasthan plant has impacted its volumes and cost
adversely. Resolution of the mining ban would be a key trigger.
 Strong balance sheet renders flexibility to expansion as both expansion plans marred
by litigation. We value BCORP at INR464/share (4x FY15E EV/EBITDA with implied EV/
ton of USD52). Maintain Buy; our target price implies 46% upside.

YES BANK Beat on core earnings aids higher provisions:: Edelweiss

Yes Bank’s Q3FY13 PAT at INR3.42bn (up 34.7% YoY) surpassed our
estimate. In spite of proactive provision of INR0.5bn towards Deccan
Chronicle (net exposure now at INR0.3bn) beat at the NII level (up 36.7%
YoY) and fee income acceleration (up 48% YoY) aided performance. Good
got better; led by recoveries and lower slippages, headline asset quality
continued to impress with GNPA coming off from 0.24% to 0.17%, while
restructured book is at mere 0.43%--NIL restructuring during the quarter.
Saving bank balances surged 27% QoQ to propel CASA to 18.3% (10.3% in
FY11)—a key beneficiary of the saving rate deregulation. We remain
confident of management’s ability to execute Version II strategy (30%
CASA by FY15) and consequently tread the path of re-rating. Maintain
‘BUY’ with target price of INR615.

Raymond A weak performance; Inventory overhang persists: Prabhudas Lilladher

! Weak quarter despite festive season: Raymond’s performance across major
segments was extremely poor despite the festive quarter which is usually the
strongest quarter for the company. The consumer sentiment was extremely
poor through the quarter and hence, despite festivals and marriages, the offtake
remained weak.
The company reported revenues of Rs10.5bn, a 10% YoY increase and 5.6%
sequential decline. However, the major disappointment was on margins, with
EBITDA margins at 9.6% as against 16.4% in Q3FY13 and 14.3% in Q2FY13.
Reported PAT stood at Rs128.4m, 79% YoY and 75% QoQ decline. The company
incurred VRS expenses of Rs124m on retiring employees in their retail segment.

Bajaj Corp:: Strong Q3, but upsides limited – Religare

Strong Q3, but upsides limited – Maintain HOLD
BJCOR reported Q3FY13 net sales/EBITDA/adj. PAT growth of 31.8%/50.3%/ 46.2%, which came in ahead of our and consensus estimates. Volume growth was strong at 22.3% with margins expanding 360bps on lower LLP prices. We upgrade our FY14/FY15 earnings estimates by ~13% and roll over to March’15 earnings (from September’14) to get a revised March’14 TP of Rs 275. Maintain HOLD on likely volume growth moderation and limited upside from current levels.

Unity Infraprojects Cruising on order inflow:: Angel Broking

Unity Infraprojects (UIP) is one of the fastest growing mid-cap company in the
infrastructure space with focus on civil construction segment (residential,
commercial and industrial structure portfolio) and infrastructure projects in
irrigation & water and transportation segments. The company has a healthy order
book of `4,495cr as of 2QFY2013. Given the strong bid pipeline and L1 status
for projects worth `1,400cr, we estimate UIP to report a revenue CAGR of 11.5%
over FY2012-FY2014E. Its focus on high growth buildings and water/irrigation
segment provides confidence on future growth. We initiate coverage with a Buy
rating and a SOTP target price of `59.
Comfortable order book-to-sales provides revenue visibility: The company’s order
book stands at `4,495cr (excluding L1 orders worth `1,400cr) as on 2QFY2013,
thereby translating into a book-to-bill ratio of 2.2x trailing revenues. This gives a
comfortable revenue visibility for the next two years given the short execution
period of 24-30 months. The order book mix comprises of projects in the civil
(52%), irrigation & WS (21%) and transportation (27%) segments.
Well diversified order book with pan - India presence: UIP initially started off with
a presence in Maharashtra and historically remained skewed towards projects in
and around Maharashtra. It has come a long way in the last decade, making
its presence felt across India by diversifying into new verticals and bidding for new
projects across the country. As on 30th September 2012, 59.1% of UIP’s order
book catered to the North, South and East regions of the country.
Foray into asset ownership model: From being a mere EPC player, UIP has forayed
into asset ownership model through its wholly owned subsidiary Unity Infrastructure
Assets Ltd and has bagged 3 BOT projects under its portfolio. The company has
started construction activity in one of its road BOT project – the Chomu-Mahla project
and is in an advanced stage of achieving financial closure for the other two projects.
Valuation & recommendation: On the back of healthy order book and growth
potential, we believe the company would clock revenue CAGR of 11.5% over
FY2012-2014E. The stock is currently trading at a P/E of 3.5x and 3.1x our FY2013
and FY2014 diluted earnings estimates. We have used sum-of-the-parts (SOTP)
method to value the stock. We value the construction business at a P/E of 3.5x
FY2014E earnings (~30% discount to larger companies under coverage) and UIP’s
BOT projects on a DCF basis at a CoE of 16%. We initiate coverage on the stock
with a Buy rating and target price of `59, indicating an upside of 27%.

EXIDE INDUSTRIES 100% stake in insurance JV to strain core ops ::Edel

Exide has decided to increase its stake in the insurance JV, ING Vysya Life
Insurance (IVL) to 100%. It will pay INR5.5bn for the remaining 50% stake
in the JV which it will acquire from three partners including ING. While
the deal value is attractive at 1x estimated embedded value as against
1.5-2x valuation range for peers, the exit of ING / partners will lay the
onus of supporting and running the business till such time a strategic
partner is roped in. This can drag down the company’s performance in the
near term. Maintain ‘HOLD’ with target price of INR132.

Bajaj Corp Ltd. Rural penetration led robust volume growth…::Ventura

Outlook Bajaj Corp Ltd (BCL) continued to post a robust volume growth of 23.4% in its flagship brand ADHO (Almond Drops Hair Oil) primarily driven by rural penetration (increased distribution reach). We have incorporated FY15 forecasted financials from this quarter and accordingly expect revenues to grow at a CAGR of 24.7% to Rs 916.9 crore over the forecast period of FY13-15 on the back of steady volume growth (~20% avg.) and sustained leadership position in its flagship brand Almond Drops. At a CMP of Rs 253, Bajaj Corp is trading at 19.6x and 17.7x its estimated earnings for FY14 and FY15. Given the stretched valuations, we reiterate a HOLD on the stock with the revised price target of Rs 271 (as against our revised target of Rs 209) representing a limited potential upside of ~6.2%. However, prospective inorganic growth, strong cash availability (~Rs 477 crore) and potential new product launches is an added attraction. Key Takeaways BCL yet again reported a robust top-line growth of 31.8% YoY to Rs 148.1 crore in Q3FY13 as against Rs 112.3 crore in Q2FY12 primarily led by volume growth of ~23.4% YoY from its flagship brand (Almond drops). The growth is also attributable to the rural penetration on the back of increased distribution reach (2.54 mn retail outlets vs. 2.43 mn in Q2FY13). The company reported net profit at Rs 42.2 crore in Q3FY13 as against Rs 28.9 crore in Q3FY12 (+46.2% YoY) partially attributable to the price hike (~8.5%) taken in April 2012 and softening raw material prices (benefit of ~Rs 1.85 crore in Q3FY13).
EBITDA margin at 29.03% for the quarter, expanded by 352 bps YoY on account of price hike taken in April, 2012 and decline in RM costs (LLP – Rs 79.1/kg; ~ -4.5% YoY) partially offset by rising refined oil prices (Rs 80.2/kg; +14.1% YoY). Moreover, BCL has entered into a deal with its LLP supplier (its key raw material; ~36.8% of total cost) which will enable it to buy LLP at an average price of ~Rs 75/kg in Q4FY13. This, we believe will help BCL to maintain its EBITDA margin in the range of ~26-27% in FY13 amidst volatile raw material prices.
BCL’s flagship brand ADHO witnessed a healthy volume growth (23.4% YoY) and value growth (33.1% YoY) which was far ahead from the LHO market growth (volume - ~17.9% YoY and value - ~26.1% YoY). The volume and value market share enjoyed by Almond drops continue to command leadership status i.e. ~51.9% and ~54.6% respectively. Moreover, we believe that Dabur’s foray into LHO category (Dabur Almond Hair Oil)

Petronet LNG- Sell advice by Religare

PAT beats estimates; but future earnings outlook muted
PLNG posted Q3 PAT at Rs 3.18bn above our/street estimates due to a) higher volumes of 140tbtus and b) healthy mktg margins on short/spot volumes. Other highlights: a) commissioning of Kochi terminal by Mar’13 with lower utilization in FY14 (0.5mmtpa), b) completion of second jetty at Dahej terminal by Mar’14 and expansion by early 2016 (10 to 15mmtpa) c) GSPC contracted 2.25mmtpa in PLNG’s expanded capacity for 20yrs. Maintain SELL in light of limited visibility on Kochi terminal utilization

Prabhudas Lilladher, Real Estate review

Real Estate
The real estate markets have shown a cautious outlook, with sales remaining tepid,
and unsold inventory levels witnessing an upward trend. Rising property prices,
coupled with firm interest rates, have also kept genuine buyers away from taking
decisions.
With the onset of the festive season, several projects were launched across the
country. However, with the exception of Bengaluru, offtake has not yet been exciting
in most places; hence, leading to piling inventories.
However, with the RBI indicating a softer interest rate regime, the sentiment seems
to improve, both from a consumer as well as a company standpoint. At specific price
points, we have witnessed good demand for products and hence, a change in the
monetary policy stance could provide the required impetus.
Company balance sheets are witnessing an improvement, with companies steadily
repaying debt and exhibing caution on land bank addition. With input prices and
land prices spiralling, a rate-cut would be the much-required breather for real estate
companies.
The quarter has been a game-changer for DLF, with the receipt of Rs27bn from
Lodha Developers from the sale of Mumbai land parcel as well as completion of
Aman hotel sale transaction. The company now seems to be in a position to revamp
its balance sheet by bringing down debt to manageable levels.
BSE Realty Index has returned 14.9% for the October-December period, while the
SENSEX has returned 3.2% for the same periods.

Petronet LNG Positives priced in:: Prabhudas Lilladher,

Petronet LNG’s (PLNG’s) Q3FY13 result was better than our expectation on the
EBITDA and bottom-line front. Top-line registered a growth of 33.1% YoY to
Rs84.2bn (Rs63.30bn) on account of 38% YoY growth in realisations, while the
volumes were down on YoY basis at 140.6TBTU. EBITDA/TBTU witnessed an
expansion, from Rs34.7/TBTU in Q3FY12 to Rs37.6/TBTU in Q3FY13, broadly in line
with our estimates. Bottom-line, during the quarter, stood at Rs3,185m (Rs2,954m),
an increase of 7.8% YoY as against our expectation of Rs3,003m.

NIIT Technologies Deal ramp‐up to give upside, Reiterate ‘BUY’ :: Prabhudas Lilladher,

NIIT Technologies (NIIT Tech) reported revenues/margin above PLe/Consensus
expectation. However, on the margin front, it disappointed due to the weakness in
GIS and insurance business. Improving revenue momentum in GIS, project ramp-up
in Morris would give the much needed revenue impetus along with margin
expansion in CY13. We retain our ‘BUY’ rating with target price of Rs350.

MUTHOOT FINANCE Growth picks up as regulatory landscape settles:: Edel

Muthoot Finance reported a healthy set of numbers for Q3FY13 with PAT
at INR2.7bn, in line with expectations, on the back of ~8% QoQ growth in
AUMs at INR257bn. The growth comes after 2 quarters, as gold loan
NBFCs, struggled under uncertain regulatory environment. Calculated
yields moderated by ~30bps, though still at a robust 22%, leading to 15‐
20bps decline in NIMs to 10.5%. GNPA, though technical in nature still
continues in the 1% plus range for third quarter in a row. Overall, we
would like to re‐iterate our positive stance on gold loan NBFCs expecting
sustainable RoA/RoE of 3.5%/20% plus. The current quarter is a reflection
of stability returning to the business and with the KUB Rao Committee
report filed we believe the stage is set for growth to return. The quality of
Muthoot Finance’s operations as reflected in its employees, risk
management practices and high branch productivity is also an advantage.
Maintain ‘BUY’ with a target price of INR287.

India Strategy Trigger for PSUs:: Morgan Stanley

PSUs to rally? We are mindful of
the value trap in the shares of public sector (PSU)
companies. The primary reason is the nature of their
businesses; the second is their high level of government
control. However, right now, three things favor PSU
stocks. The first is the likely shift in investment style from
growth to value – PSU shares dominate value screens.
Indeed, as a group, they are trading at multi-year lows
versus the narrow index (Exhibit 1). Most PSU
companies operate in cyclical businesses, and we
believe that cyclicals will outperform defensives in the
coming months, given the likely recovery in growth.
The third reason, and the likely trigger for some rerating
of these shares, is the government’s proposal to create
a PSU ETF. The government has invited bids from asset
managers, and we believe the process will completed
before the close of this financial year (i.e., end-March).
An ETF would provide a low-cost, diversified and,
hence, lower-risk investment option, especially to retail
investors, allowing them to gain exposure to a number of
stocks by paying a small amount. This would improve
liquidity, trading and possibly the valuations of PSU
stocks.
A close examination of the relative performance of PSUs
to the market in 2003-04 and in 2009 is that these stocks
led the recovery in the market (Exhibit 2). The
commonality with these two periods is a shift in
investment style from growth to value and the
resumption of a growth cycle. Both conditions seem to
be satisfied at this point. This could set the stage for an
improvement in performance of PSUs, in our view.
PSU List: Below we have compiled a list of PSUs with
market capitalization greater than US$1 bn, excluding
banks, across the consensus coverage and using the
framework laid down in The Quintessential Quest for
“Quantamental" Alpha” dated December 14, 2012,

Buy ICICI Bank- Motilal oswal,

Set for the next leap
Expect earnings CAGR of 23%+; Rising RoEs to drive more re-rating
 ICICI Bank (ICICIBC) is expected to deliver EPS CAGR of 23%+ over FY12-15E, on a higher
base of 25%+ over FY10-12, driving up the core RoE from ~10% in FY10 to 17%+ in
FY15E. Importantly, the Tier 1 would remain strong at 10%+ at end-FY15.
 With a market share of 4.2% in the domestic loans and largest branch network in the
private financials, above industry growth and favorable margins will drive earnings.
 ICICIBC has managed the asset quality well during the last 18 months of pain in the
Indian economy. While FY14 will be critical to see the fate of few large exposures, the
bank is confident of tiding over this without any dent on its profitability. Recovery in
Indian economy / corporate capex will be viewed positive for ICICIBC.
 Valuations for ICICIBC will evolve as it delivers RoE improvement over the next 2 years
(to come at the near sector averages). Importantly, it will have scope to further boost
its leverage as capital may get boost from return of capital by key subsidiaries.

AXIS BANK Performance beat street:: Edel

Axis Bank reported 22% YoY growth in PAT to INR13.5bn (ahead of our
INR13.2bn estimate) in Q3FY13. In a nutshell, the bank has once again
performed on the key concern area, i.e. asset quality. Incremental stress
buildup (Slippages-INR5.4bn + Restructuring-INR3.7bn) came well within
the guided range. For 9mFY13, the buildup has been at INR29.1bn vis-àvis
the annual guidance of INR50bn, i.e. well within the guided range.
Strategy to build up the retail banking piece is on track with retail fees
(up 35% YoY), asset (up 45% YoY to 27% of total loans) and liabilities (SA +
Retail TD now forms 47% of deposits vis-a-vis 44% a year back)
performing better than the whole bank. We maintain ‘BUY’/sector
Outperformer with a target price of INR1710.

Polaris Financial Technology Missed expectation, Restructuring to unlock values:: Prabhudas Lilladher,

Polaris Software Lab (Polaris) reported Q3FY13 results below PLe/Consensus
expectation due to weaker licenses revenue sale, Identrust’s loss and investment in
FT Cloud. The management cited improving deal pipeline over the last quarter. We
retain our “Accumulate” rating, with a revise target price of Rs135 (from Rs165).

SGX Nifty 6,026.50 +2.50; Markets finally positive again

SGX Nifty 6,026.50 +2.50; Markets finally positive again
Singapore Exchange
8:55 AM
Jan 25, 2013

Mortgage your commercial property to raise loans :: Business Line

I am 65 years old. My wife, 58, prepares snacks and eatables at home and sells them.

I have a 30-year-old son who is married. He has a daughter. I live in my own house. My pension is Rs 16,000 and our family expenses are Rs 35,000.

We have an ancestral commercial property at a prime location that we have let out for Rs 65,000.

My son is not interested in employment. Besides our property, we own a large open space of around 4,000 sq ft. Should I construct shops in the space and let that out for my son’s family’s future needs? We can earn Rs 45,000 by doing so.

But we have no savings to build the same.

Instead, should I sell the plot and deposit the money so that my son can earn interest? Alternatively, should I construct small shops and ask my son to take care of the snack business?

I also need to take care of my granddaughter’s education and marriage.

My concerns are:

If I sell the plot what are the best investment options available? Currently my savings is Rs 10 lakh in fixed deposits.

If I plan to construct a few more shops, what are the best options to raise funds?

— Haricharan