UBS :: Nifty target for end-2014 at 8000

UBS :: Nifty target for end-2014 at 8000

Reiterating its bullishness on the domestic equities, Swiss brokerage UBS has said Nifty will scale the 8,000-mark by December even though market expectations from government remain "unrealistically" high.

"The market direction is likely to remain positive going forward. We believe investors will be willing to give a premium for growth potential, especially as cyclical economic recovery starts manifesting in data points...therefore we maintain our Nifty target for end-2014 at 8000," UBS analyst Gautam Chhaochharia said in a note.

Stating that the Modi government has already unveiled a lot of reform initiatives, the UBS note said, "Concerns about government inaction are misplaced which in fact is more a case of unrealistic expectations...and we are starting to see initial signs of scepticism from the market about the government's apparent "inaction" or lack of big bang reforms. This is misplaced." 

Stating that the Modi government has already taken many important steps in every major area, but they are ignored by the market, he said that expectations remain high and are arguably unrealistic as the government cannot address all problems at a go.

It listed ease of doing business, labour reforms, e-clearance of environmental and forest clearance, automatic production expansion licence to existing mines, widening of the scope of the Project Monitoring Group to include actual project implementation monitoring etc. as big steps.

UBS also listed the FDI in rail, insurance and defence as well introduction of real estate investment trusts (REITs) as big steps. 

-- 

Reliance Power Overhangs remain; downgrading to Sell ::UBS

Reliance Power

Overhangs remain; downgrading to Sell

Reliance Power has been one of the best performing stocks in the last month

Following positive sentiment in the sector driven by the formation of a new Central

Government, Reliance Power has been one of the best performing stocks in our

coverage universe, up around ~50% in the last month. However, we do not think

much has changed fundamentally for the company in such a short span and many

serious overhangs remain. We are downgrading our rating to Sell from Buy while

maintaining our price target of Rs100.

Overhangs remain: Gas availability; low power demand; usage of excess coal

We think the following overhangs remain: 1) no visibility on gas availability for the

2,400MW Samalkot Project; 2) power demand from distribution companies has been

lower (due to their poor financial position), which is a risk for plant utilisation; and 3)

there is still no final clarity on usage of excess coal from Sasan UMPP. The other issues

are a lack of visibility on imported coal-based 4,000MW Krishnapatnam UMPP and slow

hydro project development.

We are still positive on structural reforms in the sector

Direct control by the central government on some core power sector issues is limited

but we are positive regarding the initiation of structural reforms in the sector because:

1) state electricity boards (SEBs) and power distribution companies need financial

support from banks and they are controlled by the central government; 2) the central

government could help SEBs improve performance by offering efficiency-linked

incentives; and 3) the central government controls public sector undertakings (PSUs)

such as NTPC and Power Grid. If large-scale structural reforms are implemented, we

think the impact on distribution (and, therefore, the power sector) would be positive.

Valuation: Downgrading rating to Sell from Buy; maintain PT of Rs100

Our DCF-based PT includes 13,680MW of projects assuming an 8.8% risk-free rate, a

risk premium of 6.5% for the Chitrangi power station and 5.5% for other projects.

Brokerage Notes on FED: UBS

The Fed Balks
„ “Await[ing] more evidence that progress will be sustained…”
The FOMC on September 18 decided to maintain its current purchase program at
$85 billion per month. The policy statement noted that the “Committee decided to
await more evidence that progress will be sustained before adjusting the pace of its
purchases”. In putting off a tapering, the Fed surprised market participants, the vast
majority of whom expected a modest taper at this meeting.
Chairman Bernanke after the announcement cited two key risks: the ongoing fiscal
drag and the tightening of financial conditions. Regarding fiscal policy, he noted
that “a factor that did concern us in our discussion was some upcoming fiscal
policy decisions. I would include both the possibility of a government shutdown,
but also the debt limit issue.” In the FOMC statement, the committee noted that
“the tightening of financial conditions observed in recent months, if sustained,
could slow the pace of improvement in the economy and labor market.”
„ Resetting the clock to Q1
The budget concerns suggest that the Oct. 29-30 meeting may be too soon for the
Fed to begin the long-awaited tapering of quantitative easing as negotiations may
still be ongoing. Also, we believe the Fed would prefer to avoid a Dec. 17-18
meeting tapering that could be viewed as too risky in the midst of the key holiday
shopping season. In our view, particularly now that any Fed warnings regarding a
taper are likely to be discounted by market participants, there are higher odds of a
disruptive sell-off in equity markets in response to a taper announcement.
As a result, we now believe that the Fed will not begin tapering until the first
quarter of 2014, with the January 28-29 FOMC meeting somewhat more likely
than the March 18-19 meeting. Chairman Bernanke stressed that policy changes
need not take place at meetings with press conferences (and updated forecasts), an
argument that was also supported by the statement language. By late January
economic conditions are likely to be showing the economy improving at a pace
that would likely allow them to claim that conditions are now ripe for a tapering of
policy. However, an earlier budget resolution, an acceleration in payroll growth
and a sustained decline in 10-year yields (to 2.50%) could result in an earlier taper.
With tapering delayed, the expected termination of overall Fed balance sheet
expansion now looks like the end of next year instead of mid-year. Accordingly, the
first fed funds rate hikes now appear likely only in mid-2015 rather than the start
of the year.
The constructive near-term bond market effects of these changes in the Fed
outlook re-enforce our confidence that annual average real GDP growth will
pick up next year to 3.0%.

UBS Investment Research-- Ranbaxy Pressures are in the price, Upgrade to Buy „

UBS Investment Research
Ranbaxy
Pressures are in the price, Upgrade to Buy
„ Valuations look compelling; Concerns seems overblown
We believe valuations have now turned attractive after a sharp 33% decline in
stock price over last 3 mths. We do not expect further disruption in the US business
due to potential ‘483’s for Mohali facility post inspection last year. We have also
gained more confidence that mgmt. is taking steps to address the low profitability
of the base business and expect margins to improve significantly over next 3 years.
We see US product approvals as the key trigger for the stock in the near term.
„ Absorica, higher utilization and cost control to help improve margins
We expect EBITDA margins to improve to 14.6% by CY15 from 7.8% in Q1CY13
driven by strong growth in US branded business (Absorica), step down in
remediation spending by end CY14, cost control and better utilization of mfrg.
facilities. Absorica continues to steadily gain market share in Isotretnoin market.
We expect US branded business to account for ~50% of CY15 EPS.
„ Expectations low – resumption of approvals will be the key trigger
We cut our CY13 EPS by 38% as we build in Rs 5bn of FX losses due to INR
depreciation. We expect approval for Diovan and Valcyte in CY13. Mgmt. expects
to maintain its exclusivity for Diovan despite the delay in approval. We note that
ex FTF’s Ranbaxy has not won any generic approvals from the USFDA since
2009. Resumption of approvals therefore will be a key upside trigger for the stock.
„ Valuation: Upgrade to Buy, Maintain Price target of Rs 400
We derive our price target from a DCF-based methodology and explicitly forecast
long-term valuation drivers using UBS’s VCAM tool with a WACC of 11%.

UBS Investment Research :: Show me the money

UBS Investment Research
Macro Keys
Show me the money
The announcement of the Federal Reserve that it might, at some point this year,
consider buying fewer bonds in the US Treasury market has been met with
consternation in some quarters. There is a common misperception that the
Federal Reserve’s liquidity pumping operations must surely have flooded the
world with a tidal wave of cash, and so the turning off of the taps will lead to
some kind of draining of that cash with significant implications for markets.
As Stephane Deo and our asset allocation team have pointed out, there are
clearly implications from the Fed slowing its liquidity purchases. Implications
for the domestic US economy were covered by Maury Harris in the Macro
Keys “Life after QE” (21 June). However, the direct impact of dollar cash on
the global economy is conspicuously absent. Following the money trail does
not lead to tidal waves of cash floating the world’s financial market. US cash
flooded domestic checking accounts, not international markets
The following chart shows the quarterly acquisition of financial assets by the
Federal Reserve, accompanied by the quarterly acquisition of foreign bonds
and equities by US nationals. Clearly, the money printed by the Fed has
massively outstripped the inclination to purchase foreign securities from US

Gold - Protect against downside • UBS

Gold
Protect against downside
• Expectations that the Fed will reduce QE, that inflation should not
be an issue and that equity markets seem to be the better place
have burdened the price of gold in recent weeks.
• Investment houses have lowered their forecasts and the technical
chart picture has deteriorated as well – reinforcing downward pressure.
• These uncertainties prompt us to reiterate that gold investors should
protect their positions over the next three months.
Testing USD 1,525/oz
As highlighted in our latest gold report Fragile sentiment published on 4
April, we advise investors to protect their gold positions over the next three
months. The lack of investment demand due to fading inflation concerns
in the Western world, a bias towards more USD strength in the short run
and a bull run in US equities are set to trigger a gold price decline beyond
USD 1,525/oz. Gold also finds no support in the discussion among FOMC
members to taper off – or to halt – the US Fed's quantitative easing program
over the coming quarters. We therefore expect the fragile sentiment of the
yellow metal to continue in 2Q13 with the bias to break below key support
levels.
Recommendation
Although we think that the decline in the gold price is overdone and does
not correspond with our outlook of ongoing negative real interest rates,
even long-term investors should seek out short-term price protection. We
also advise investors to avoid gold as an underlying for yield enhancement
strategies for the time being.
Forecast adjusted
To reflect a lower starting point for our 12-month forecast, we lowered our
long-term gold forecast to USD 1,750/oz from USD 1,875/oz. That said, we
reiterate our message that the developed world still has issues to resolve
that favor debt monetization and money's loss in purchasing power.

Global Outlook 2013-14 􀂄 UBS

G lobal Outlook 2013-14
􀂄 Generally better, but not without risk
As is our autumn custom, we launch our Global Economic Outlook, including an
initiation of 2014 forecasts. Overall, we expect a gradual improvement in global
real GDP growth from a low point of 2.7% this year to 3.0% next year and 3.4% in
2014. Although growth rates in many parts of the world economy are expected to
improve over the next two years, a key theme is US cyclical leadership. Risks to
our forecasts remain in the form of the US ‘fiscal cliff’, a re-escalation of the
Eurozone crisis, a harder landing in China, or an energy price shock.
􀂄 Implications for interest and exchange rates
As recently reinforced by Fed Chairman Bernanke, the Fed is likely to remain
highly accommodative well into recovery. The implication is that policy rates will
remain very low over the forecast horizon. High levels of excess capacity and a
still-moderate pace of recovery suggests that bond yields, when they begin to move
higher, will do so gradually. The dollar should appreciate modestly, given better
US fundamentals.
􀂄 Update on de-leveraging
Private sector de-leveraging in the US is advanced, including in the financial,
household, and non-financial corporate sectors. Headwinds of US private sector
de-leveraging are therefore lessening. The same is not true in much of peripheral
Europe or the UK, which together with Eurozone structural adjustment suggests
continued growth restraint across much of the EU. The next big de-leveraging
resides in the US and Japanese public sectors (continental Europe is generally more
advanced in this dimension). Fiscal adjustment represents both a key risk factor for
global growth and an enduring source of global demand restraint in the years
ahead.
􀂄 American revival?
Lessening private-sector de-leveraging, improved competitiveness, and supply-side
innovations (for example in energy) suggest the US economy may be poised for
revival ahead of its peer group of advanced economies, but also amid a secular
slowing in the emerging complex. One implication is stronger capital inflows into
the US.

UBS - Yield compression – how much is too :: PDF link

http://www.docstoc.com/docs/136280255/UBS---Yield-compression---how-much-is-too

United Spirits Ltd - Downgrade due to Kingfisher Airlines hangover UBS Research

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


UBS Investment Research
United Spirits Ltd
Downgrade due to Kingfisher Airlines
h angover [EXTRACT]
�� Downgrade from Buy to Neutral
We downgrade United Spirits (USL) to Neutral due to uncertainty surrounding
Kingfisher Airlines (KFA). USL’s share price is down 51% since 1 January 2011,
and we expect it to remain under pressure until the KFA issue is resolved. We also
cut our FY12-14 EPS estimates by 18-19% to take into account its higher debt as
of December 2011.
�� A raw material cost reduction is possible
USL has been investing in primary distillation capacity, which should help lower
its raw material costs. However, we will only incorporate these into our forecasts
once the benefits kick in fully. USL is facing high raw material costs, with high
energy prices boosting its system costs.
�� Business is intact; underlying debt and governance are concerns
Our underlying view on USL remains resilient growth in branded spirits. We think:
1) USL should remain a beneficiary of India’s growing, young population and
rising discretionary spending; and 2) USL has one of the widest and most dominant
distribution networks in India, which aids its 34 ‘millionaire brands’ (brands that
sells more than 1m cases annually) in the segment; and 3) USL will benefit from
investments made in primary distillation capacity.
�� Valuation: lower our price target from Rs850.00 to Rs780.00
We derive our price target from a DCF-based methodology and explicitly forecast
long-term valuation drivers using UBS’s VCAM tool. We assume a WACC of
11.4%. We lower our FY12/13/14 EPS estimates from Rs34.47/43.90/54.85 to
Rs28.25/35.22/44.31.

United Spirits Ltd - Downgrade due to Kingfisher Airlines hangover UBS Research

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


UBS Investment Research
United Spirits Ltd
Downgrade due to Kingfisher Airlines
h angover [EXTRACT]
􀂄 Downgrade from Buy to Neutral
We downgrade United Spirits (USL) to Neutral due to uncertainty surrounding
Kingfisher Airlines (KFA). USL’s share price is down 51% since 1 January 2011,
and we expect it to remain under pressure until the KFA issue is resolved. We also
cut our FY12-14 EPS estimates by 18-19% to take into account its higher debt as
of December 2011.
􀂄 A raw material cost reduction is possible
USL has been investing in primary distillation capacity, which should help lower
its raw material costs. However, we will only incorporate these into our forecasts
once the benefits kick in fully. USL is facing high raw material costs, with high
energy prices boosting its system costs.
􀂄 Business is intact; underlying debt and governance are concerns
Our underlying view on USL remains resilient growth in branded spirits. We think:
1) USL should remain a beneficiary of India’s growing, young population and
rising discretionary spending; and 2) USL has one of the widest and most dominant
distribution networks in India, which aids its 34 ‘millionaire brands’ (brands that
sells more than 1m cases annually) in the segment; and 3) USL will benefit from
investments made in primary distillation capacity.
􀂄 Valuation: lower our price target from Rs850.00 to Rs780.00
We derive our price target from a DCF-based methodology and explicitly forecast
long-term valuation drivers using UBS’s VCAM tool. We assume a WACC of
11.4%. We lower our FY12/13/14 EPS estimates from Rs34.47/43.90/54.85 to
Rs28.25/35.22/44.31.

UBS - Global Equity Strategy --Multiple Expansion

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


UBS Investment Research
Global Equity Strategy
M ultiple Expansion
􀂄 A slowing growth backdrop . . .
Global earnings growth is set to slow significantly in 2012 as the cycle matures.
Further, ongoing public- and financial-sector deleveraging are apt to result in a
persistently sluggish economic growth backdrop.
􀂄 . . . with mounting margin pressure
Another implication of the maturing cycle is increased margin pressure. Corporate
profit margins have begun to roll over in recent quarters. Historically, these turns
have been followed by anaemic earnings growth (which we detail below). In fact,
in nearly half of the episodes we examined, earnings contracted over the 3-year
period following a peak in profit margins.
􀂄 But multiples can expand
Within economic cycles, earnings growth and valuation multiples typically have an
inverse relationship. So while we’re stuck with a lousy growth backdrop, the good
news is that multiples do typically rise at this stage of the cycle. Further, the
combination of undemanding current valuations and an elevated risk premium lend
additional support to the re-rating case.
􀂄 Piecing it together: Total return expectations
We expect global earnings growth in the low-single-digit range over the next few
years. Add the current 2.7% dividend yield and some modest multiple re-rating,
and it’s not overly demanding to expect total returns in the high single digit range
in coming years. This outlook is predicated, of course, on fading cyclical and
systematic risks, which would allow the equity risk premium to moderate

HCL Technologies :UBS India – Least Preferred Stock Ideas for 2012

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


HCL Technologies
Investment case: We remain negative on HCL Tech as we expect the stock to
be less defensive in a downturn given its lower margin resilience and relatively
weaker balance sheet compared to peers. In addition, we expect a period of
potential sluggishness in demand by early 2012, which could cause downgrades
to FY13 outlook. We expect HCL Tech’s operating margin to remain low, with
the senior management indicating increased expenditure on sales and marketing
in the next few quarters. We think the company needs to consistently spend
more on sales and marketing in order to sustain revenue growth. We remain
cautious given our concern about a potential tradeoff between margins and
revenue growth.
Valuation: We derive our price target from a DCF-based methodology and
explicitly forecast long-term valuation drivers using UBS’s VCAM tool,
assuming a WACC of 12.4% and a terminal growth rate of 3%. Our price target
implies a one-year forward PE multiple of 15.7x, which we believe is reasonable
given the lower margin profile.
2012 Catalysts: 1) Increased investment in client-facing activities that will
manifest itself in the form of higher SG&A is likely to impact margins; and 2)
continuing negative newsflow in developed economies is likely to impair 2012
IT services budgets and pose significant downside risk in the near term.


read details and other companies in list (click link below)
UBS India – Outlook 2012 ::Most & Least Preferred Stock Ideas for 2012

LIC Housing Finance :UBS India – Least Preferred Stock Ideas for 2012

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


LIC Housing Finance
Investment case: We are cautious on LIC Housing Finance (LICHF) as rising
risks do not seem to be priced in at 2.2x FY12E book. We think risks include: 1)
a slowdown in mortgage volumes due to the slowing economy, high interest
rates and high real estate prices; 2) likely pressure on NIMs as competition from
banks will remain high; 3) falling interest rates will not necessary benefit LICHF
as asset yields would also re-price downwards; and 4) continued regulatory risks
as capital requirements for housing finance companies remain more benign
compared to other NBFCs; LICHF has a low tier-1 capital at 9%, with leverage
at 12x.
Valuation: We value the stock using a residual income method. Our price target
implies 1.9x FY12E book and 8x FY12E earnings.
2012 Catalysts: The National Housing Bank could introduce higher
provisioning for developers at 1%.


read details and other companies in list (click link below)
UBS India – Outlook 2012 ::Most & Least Preferred Stock Ideas for 2012

Tata Motors :UBS India – Least Preferred Stock Ideas for 2012

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


Tata Motors
Investment case: We remain negative on the domestic MHCV growth outlook
given weak industrial growth. In addition, Tata Motors continues to invest in
promotional and dealer support and expansion activities, mainly in its passenger
vehicle business. We therefore expect domestic margins to remain under
pressure. We see limited upside risk to JLR volume growth given the
challenging global macro environment. Volume growth ex-Evoque has
continued to slow. We continue to view the risk-reward profile as unfavourable.


Valuation: We have a Sell rating. We value the domestic business (and other
subsidiaries) at 8x FY13E EV/EBITDA and JLR at 3x FY13E EV/EBITDA. We
adjust our EBITDA for R&D capitalisation.
2012 Catalysts: IIP growth could continue to disappoint in the near term, acting
as a negative catalyst for MHCV growth. Strong Evoque sales could act as a
positive catalyst in early 2012.



read details and other companies in list (click link below)
UBS India – Outlook 2012 ::Most & Least Preferred Stock Ideas for 2012

Bank of India :UBS India – Least Preferred Stock Ideas for 2012

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


Bank of India
Investment case: We are cautious on Bank of India as the bank’s exposure to
potentially stressed sectors is high compared to the other banks under our
coverage. Its volatile loan recovery trends and provisioning coverage of around
59% do not provide comfort on its ability to manage the potential stress ahead.
We expect loan loss provisioning to increase from 66bp in FY11 to 95bp in
FY12-13. We forecast an earnings CAGR of 5.6% in FY11-13.
Valuation: We value the stock using a residual income method. Our price target
implies 0.9x FY12E book and 6.7x FY12E earnings.


2012 Catalysts: We believe a sustained economic slowdown and higher loan
restructuring could pose further downside risk to the share price.




read details and other companies in list (click link below)
UBS India – Outlook 2012 ::Most & Least Preferred Stock Ideas for 2012

Mahindra & Mahindra :UBS India – Most Preferred Stock Ideas for 2012

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


Mahindra & Mahindra
Investment case: Given its high exposure to the rural segment, we believe
M&M will continue to benefit from the strong government focus on improving
rural income levels and rural infrastructure. The stock remains one of our
preferred picks in the Indian auto sector.
Valuation: We have a Buy rating, based on a sum-of-the-parts methodology.
We value the standalone business at Rs732 per share, based on 8x 2013E
EV/EBITDA, and its subsidiaries (including Ssangyong) at Rs208 per share.
2012 Catalysts: New product launches including Rexton and Korando from
Ssangyong in the India market by mid-2012 and a compact model of the Verito
to be launched in the next six to eight months. Additional levies on diesel could
act as a negative catalyst as M&M has an all-diesel product line-up that has
benefited from the increasing cost differential between petrol and diesel.


read details and other companies in list (click link below)
UBS India – Outlook 2012 ::Most & Least Preferred Stock Ideas for 2012

Idea Cellular :UBS India – Most Preferred Stock Ideas for 2012

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


Idea Cellular
Investment case: Idea is one of our top picks in the telecom sector as: 1) we
expect the company to benefit the most from the improving pricing environment
and regulatory outlook since it is a pure play on the Indian mobile sector; 2) the
company continues to outperform its peers in terms of revenue and earnings
growth and we expect the outperformance to continue given its high operating
leverage; and 3) Idea management has demonstrated its ability to run an efficient
mobile business harnessing its spectrum advantage. Given its strong 900 Mhz
footprint, we think Idea could also be an M&A candidate as and when
consolidation plays out in the sector.
Valuation: Our price target is SOTP based. We value Idea at Rs123 and its
share in Indus at Rs20, we also incorporate a charge of Rs23 towards one time
spectrum fees, spectrum renewal fees and savings from uniform licence fees.
We use a WACC of 11.0% in our DCF to value Idea.
2012 Catalysts: 1) The NTP 2011 is likely to be announced in 2012; 2) BWA
companies are likely to launch data services during H112; and 3) greater clarity
on issues pertaining to 2G spectrum pricing and allocation.


read details and other companies in list (click link below)
UBS India – Outlook 2012 ::Most & Least Preferred Stock Ideas for 2012

Federal Bank :UBS India – Most Preferred Stock Ideas for 2012

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


Federal Bank
Investment case: We like Federal Bank as we believe it is at the brink of an
operational turnaround brought about by a change in leadership and a structural
improvement in asset quality. Under the new management we expect the bank to
focus on improving the contribution of fee-based income (which is one of the
lowest in the industry) to offset the cyclical decline in NIMs, while we expect
pickup in asset growth and a decline in credit costs to support earnings growth
of 27% over FY11-13E, which is one of the highest rates in the industry.
Valuation: We derive our price target using a residual income model which
implies 1.5x FY13E book and 10x FY13E earnings. At 0.9x FY13E book and
6.4x FY13E earnings, FB is one of the cheapest private sector banks in India
with the potential to re-rate to new generation private sector bank peers, in our
view.



2012 Catalysts: We expect a fall in slippages to a sustainable level to lead to a
decline in credit costs; coupled with growth in fee income this should result in
ROE expansion from the current 12% to 16% in FY13.



read details and other companies in list (click link below)
UBS India – Outlook 2012 ::Most & Least Preferred Stock Ideas for 2012

Coal India :UBS India – Most Preferred Stock Ideas for 2012

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


Coal India
Investment case: We have a Buy rating on Coal India (CIL), because we
believe the recent share price correction is overdone. We believe the correction
has been led by negative newsflow on: 1) the proposed mining tax; 2) concerns
about wage negotiations; 3) a production miss in H1 FY12; and 4) concerns over
delays in getting environmental/forest clearances and approvals needed to drive
volume growth. However, we believe the structural theme is intact and that these
concerns do not impact the structural positives, ie: 1) strong domestic coal
demand; 2) a virtual monopoly; 3) ASPs significantly below global prices—
leaving the potential for price hikes; 4) low earnings volatility; and 4) the
company’s status as one of the lowest cost producers globally.
Valuation: Our FY13 PAT estimate of Rs169bn is marginally above the
consensus estimate. We continue to value CIL on 15x FY13E PE. We have a
Buy rating on the stock with a price target of Rs400.00.
2012 Catalysts: We believe markets have reconciled themselves to the fact that
CIL will struggle to meet its production/despatch targets. We believe
expectations on the stock are currently very low. We believe key triggers would
be: 1) any favourable buy back scheme by CIL; 2) environmental and forest
clearances for the new mines; 3) progress in ordering activity for washeries; and
4) if e-auction volumes remain approximately 11% of total volumes.



read details and other companies in list (click link below)
UBS India – Outlook 2012 ::Most & Least Preferred Stock Ideas for 2012

Bharti Airtel :UBS India – Most Preferred Stock Ideas for 2012

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


Bharti Airtel
Investment case: Bharti is the leading mobile operator in India in terms of both
revenue and subscriber market share. It is one of our preferred stocks in the
sector as: 1) we remain positive on the outlook for the sector as we see
increasing evidence of an improving regulatory and pricing environment. Given
its dominant position in the sector, we expect Bharti to emerge as one of the
beneficiaries of the improving outlook; 2) we believe India is at an inflexion
point of mobile data growth post the 3G launch, and we expect the company to
benefit from uptake of data usage. We expect to see some evidence of data pickup
in 2012; and 3) we think the Zain acquisition is likely to be positive in the
medium term. We expect the transaction to be EPS-accretive from FY13.



Valuation: Our price target of Rs530.00 is SOTP-based. We value India/South
Africa operations at Rs453, Bharti Infratel at Rs45, the stake in Indus Towers at
Rs54 and Africa operations at Rs10. We also incorporate a charge of Rs32
towards one time spectrum fees, spectrum renewal fees and savings from
uniform license fees. We used a WACC of 10.7% in our DCF to value Bharti’s
India/South Africa operations.
2012 Catalysts: 1) The new telecom policy (NTP 2011) is likely to be
announced during the year; 2) broadband wireless access (BWA) companies are
likely to launch data services in H112; 3) strong operating performance in
Bharti’s Africa operations; and 4) clarity likely to emerge on issues pertaining to
2G spectrum pricing and allocation.



read details and other companies in list (click link below)
UBS India – Outlook 2012 ::Most & Least Preferred Stock Ideas for 2012