1. Market Outlook
India Research
April 29, 2010
Dealer’s Diary Domestic Indices Chg (%) (Pts) (Close)
The Indian indices witnessed a major fall for the second straight session, in line
BSE Sensex -1.8% (310.5) 17,380
with global indices, after S&P downgraded ratings outlook for Greece and
Nifty -1.8% (92.9) 5,215
Portugal. The markets witnessed a gap-down opening, but sustained at the
MID CAP -1.6% (114.1) 7,038
lower level for most part of the session. However, a sharp sell-off took the
SMALL CAP -2.0% (189.2) 9,055
markets further down, as the major European markets opened deep in the red.
Volatility was on the lower side, despite F&O expiry tomorrow. The Sensex and BSE HC -0.2% (9.6) 5,304
Nifty closed with a loss of 1.8% each. Markets witnessed a broad based sell-off BSE PSU -0.9% (85.4) 9,008
as the BSE Mid-cap and Small-cap indices fell by 1.6% and 2.0%, respectively. BANKEX -1.1% (123.1) 10,917
Among the front-liners, Sun Pharma, SBI, ACC, HUL and NTPC were up by 0- AUTO -1.0% (78.3) 7,613
2%, while JP Associates, RIL, Tata Steel, DLF and Tata Motors were down by 3- METAL -2.3% (405.0) 17,538
5%. In the Mid-cap segment, Motilal Oswal, Blue Dart, Cummins India, Gujarat OIL & GAS -2.8% (276.6) 9,733
Inds and Bajaj Finserv were up by 2-8%, while IB Real Estate, National BSE IT -1.5% (83.7) 5,326
Fertilisers, Bajaj Holdings, Whirlpool and Kirloskar Bros were down by 5-6%.
Markets Today Global Indices Chg (%) (Pts) (Close)
Dow Jones 0.5% 53.3 11,045
The trend deciding level for the day is 17456/5242 levels. If NIFTY trades
above this level during the first half-an-hour of trade then we may witness a NASDAQ 0.0% 0.3 2,472
further rally up to 17568 – 17755/5282 – 5348 levels. However, if NIFTY FTSE -0.3% (16.9) 5,587
trades below 17456/5242 levels for the first half-an-hour of trade then it may Nikkei -2.6% (287.9) 10,925
correct up to 17269 – 17157/5176 – 5136 levels Hang Seng -1.5% (312.4) 20,949
Indices S2 S1 R1 R2 Straits Times -2.0% (59.6) 2,932
SENSEX 17,157 17,269 17,568 17,755 Shanghai Com -0.3% (7.6) 2,900
NIFTY 5,136 5,176 5,282 5,348
Indian ADRs Chg (%) (Pts) (Close)
News Analysis Infosys -0.2% (0.1) $60.4
Graphite India Ltd – Initiating Coverage – Buy Wipro 0.4% 0.1 $22.6
Satyam -1.9% (0.1) $5.2
Jaypee Infratech, SJVN – IPO Note
ICICI Bank 1.1% 0.5 $41.4
GE Shipping - Company Update HDFC Bank 0.6% 0.9 $149.6
Reliance notifies latest Cambay discovery to petroleum ministry;
Results Reviews: Balaji Tele, Balrampur Chini, Bharti, Dabur, Essel Propack, Advances / Declines BSE NSE
Exide, Marico, Shopper’s Stop, PTC India Advances 693 198
Results Previews: Cadila, CESC, IOB, KEC, OBC, Ultratech Declines 2,217 1,130
Refer detailed news analysis on the following page. Unchanged 80 26
Net Inflows (Apr 27, 2010)
Volumes (Rs cr)
Rs cr Purch Sales Net MTD YTD
BSE 4,781
FII 2,684 2,524 160 8,603 28,413
MFs NSE 14,005
419 448 (29) (1,638) (7,456)
FII Derivatives (Apr 28, 2010)
Open
Rs cr Purch Sales Net
Interest
Index Futures 5,245 6,111 (866) 15,718
Stock Futures 7,349 8,273 (924) 32,317
Gainers / Losers
Gainers Losers
Company Price (Rs) Chg (%) Company Price (Rs) Chg (%)
RNRL 66 6.3 GMR Infra 63 -6.6
Cummins India 536 3.9 Concor 1,311 -6.5
Bajaj Auto 2,067 2.0 IBREAL 155 -6.3
Bajaj Finserv 328 1.6 Bajaj Holdings 625 -5.2
BOB 687 1.6 GMDC 132 -4.7
1
Please refer to important disclosures at the end of this report Sebi Registration No: INB 010996539
2. Market Outlook | India Research
Graphite India Ltd – Initiating Coverage – Buy
Graphite India (GIL) is the world's fifth largest manufacturer of Graphite Electrodes, which
is a key input in steel production through the electric arc furnace (EAF) route. The Graphite
Electrodes Industry is on a rebound, with EAF steel production expected to increase to
417.4 million metric tonne (mn mt) by FY2011E, a CAGR of 10.8% over CY2009-11E. We
expect GIL to ride the uptrend and gain further Market Share. GIL has strong labour cost
advantages compared to its global peers, as the other companies have their plants in
locations where labour costs are significantly higher compared to India. Historically, GIL
has passed on a part of this advantage in order to gain Market Share. But, with the rate of
Market Share addition expected to slow down, we expect GIL to retain a larger part of this
cost advantage and thereby improve its Margins over historical average levels. At current
levels, the stock is trading at 1.2x and 1.1x FY2011E and FY2012E BV, respectively. We
Initiate Coverage on the stock with a Buy recommendation and Target Price of Rs117,
valuing the business at 1.3x FY2012E Book Value based on sustainable RoEs of 17.0%
and growth rate of 5.0%.
April 29, 2010 2
3. Market Outlook | India Research
Jaypee Infratech – IPO Note
IPO - Details
Jaypee Infratech (JIL) plans to raise up to Rs1,650cr via its Initial Public offer (IPO) priced in
Rs102-117 band implying fresh equity issuance of 14.1cr/16.2cr at the upper and lower
price band, respectively. The issue offers a discount of 5% for the retail investors. Besides
the fresh issue, promoter Jaiprakash Associates (JAL) would offload six crore shares to
raise around Rs700cr. Part of the IPO proceeds would be utilized for financing the Yamuna
Expressway Project.
Company Background
JIL is constructing the 165km stretch (Yamuna Expressway Project ~69% completed) and
planning real estate development at five locations (approx 530mn sq ft from land reserves
of around 254mn sq ft) alongside the Expressway over the next few years. This is one of its
kind business models among the listed players, wherein shortfall in the toll revenue would
be compensated from the realisations from the Real Estate space.
Funding in place + Strong Parentage Execution
JIL stands to benefit from JAL’s strong technical capabilities as well as capitalise on its
strong parentage. Moreover, the total project cost of Rs9,739cr for the 165km stretch is
fully funded, which instills confidence on the execution front. On the Real Estate front too,
the company has met with good response for all its projects and sold 21.3mn sq.ft till
March 31, 2010, which further aids its capex plans.
Geographically concentrated bet
JIL’s entire land reserves are located in UP between Noida and Agra unlike established
players like DLF and Unitech, who have a diversified presence. We like players with
diversified presence owing to the cyclical nature of the Real Estate industry. Thus, JIL’s
future prospects are closely dependent on the general economic conditions and activities in
this region, besides the government policies relating to infrastructure development.
Fairly valued
The land required for Yamuna Expressway has been acquired to the extent of 96%,
whereas that required for Real estate development to the extent of around 61%. The Toll
policy relating to the Yamuna Expressway is yet to be finalized and toll operations would
be the prime Revenue driver in the foreseeable future. We have assumed a ten-year
development period for the company's existing land bank (530mn sq ft). We have assumed
average realisation of Rs4,000per sq ft and Rs8,000per sq ft on JIL's saleable interest in
Residential (50%) and Commercial (33%) property based on its geographical presence,
which gives us a Fair Value of Rs95/share. Thus, the IPO is available at a premium to our
NAV. Further, the IPO is fairly valued on P/BV basis also at 3.8x and 4.2x on FY2010E
basis on the lower and upper price bands, respectively. Hence, we are Neutral on the IPO.
April 29, 2010 3
4. Market Outlook | India Research
SJVN – IPO Note
SJVN has set a price band of Rs23-26 a share for its initial public offer of 41.5cr shares,
which will be open for subscription between April 29- May 3, 2010. The issue is available
at a 5% discount to retail investors. The current issue, which involves a central government
disinvestment of 10.03%, does not involve any fresh issue of equity and will comprise
10.03% of the fully-diluted post-issue paid-up capital of the company. At the lower and
upper end of the price band the company will raise Rs940-1,063cr.
The company is a joint venture between the Government of India and the state government
of Himachal Pradesh, formed to develop and operate the 1,500MW Nathpa Jhakri Hydro
Power Station (NJHPS). NJHPS is currently the largest operational hydroelectric power
generation facility in India based on installed capacity, and is located on the Sutlej River in
Himachal Pradesh. SJVN is currently developing a 412MW plant at a cost of Rs2,047cr at
Rampur in Himachal Pradesh. The company also has seven projects of 3,588MW under
development. SJVN's upcoming projects are strategically located in India's North and North
Eastern regions, which are bestowed with perennial rivers with continuous water supply.
Moreover many of the states in the north and are currently facing considerable power
shortage and are expected to face healthy demand in the future as well. SJVN is expected
to enjoy stable revenue inflow from its currently operational NJHPS project, which has
assured offtake along with guaranteed returns. Further, maintaining PAF in excess of the
normative level will enable the company to recover the full amount of capacity charges as
well as qualify for certain performance-based incentives based on excess generation and
normative annual plant availability factor. The steady cash flows from the existing plant are
sufficient to fund, its equity contribution portion for the existing pipeline of projects, and
also support its working capital requirements and debt servicing while maintaining a
healthy level of cash in the balance sheet.
We believe that the issue has been attractively priced, considering the fact that the
company has 1,500MW of operational assets, which provides it with good near-term
revenue visibility and a steady cash flow. At the lower and higher end of the price band,
the stock would trade at Price to Book multiples of 1.2x and 1.3x, respectively, on the basis
of FY2012E financials. The company’s public sector peer NHPC, with an operational
capacity of 5,175MW, and lower ROE of 5.9%, is trading at a P/BV multiple of 1.4. At the
issue price, SJVN would trade at a substantial discount to its private sector peers such as
Jaiprakash Power Ventures (P/BV of 4.1)and KSK Energy Ventures (P/BV of 4.9), which
have operational assets of 700MW and 279MW, respectively. We recommend a Subscribe
to the IPO.
GE Shipping – Company Update
GE Shipping (Gesco) has emerged almost unscathed from the downturn of the shipping
cycle on account of timely purchase and sale of assets and sound mix of time spot ratio.
Accordingly, with the bottoming out of the freight rates and asset prices, we expect Gesco
to register 49.3% CAGR in Net Profit over CY2010-12E. Further, the company plans to list
its wholly-owned offshore subsidiary, Greatship Limited (GIL) by end FY2011E, which we
believe will unlock value for the shareholders. On NAV basis, the Shipping business fetches
Rs263/share (10% discount to NAV), while we have valued the Offshore business at 6.5x
FY2012E EV/EBIDTA in line with its global peers and fetches Rs133/share. Based on our
Target Price of Rs396 the implied EV/ EBITDA, P/BV, P/E multiple works out to 5.7x, 0.9x,
and 5.7x respectively, on FY2012E basis. Thus, on account of trading at a significant
discount to its global peers, we recommend a Buy on stock.
April 29, 2010 4
5. Market Outlook | India Research
Reliance notifies latest Cambay discovery to petroleum ministry; flow rates
positive
Reliance Industries Ltd. (RIL) has notified its latest oil discovery -- 10A-F1 -- in Cambay
onland block CB-ONN-2003/1 to the petroleum ministry. 10A-F1 discovery -- now
dubbed Dhirubhai–47 -- is presently being ascertained by the operator for an upside
potential in the NELP-V block. Reliance recently struck oil in two hydrocarbon bearing
zones in the well from 1,397-1,407 meters and 1,378-1,382 meters at a rate of 300
barrels of oil per day (BOPD) through 6 mm beam, making it the fourth discovery in the
block. Prior to the latest development Reliance encountered a gross reservoir thickness of
15 metres in another well 10A-A1 -- re-named Dhirubhai–47 -- in the block. The well
flowed at a rate of 500 barrels of oil per day (BOPD), through a 6mm beam on
conventional testing. Two previous wells have also struck oil and gas in the Cambay
acreage. Reliance exploratory programme in the block has a primary objective of
screening the acreage in-line with the play-fairway mapping strategy. The block lies in the
prospective Cambay basin area, at a distance of 130 kms from Ahmedabad in Gujarat. It
covers an area of 635 sq km, and is divided into two parts viz. Part-A, which is located in
the west, and covers an area of 570 kms, and Part B, located in the east, which is stretched
over the remaining 65 kms. We maintain buy on RIL, with a Target Price of Rs1,260.
Result Reviews
Balaji Telefilms
Balaji Telefilms posted poor 4QFY2010 results on both Revenue and Operating front
impacted due to further dip in realisations on account of low yielding shows. The
company’s revenue continued to be depressed, registering a 32.2% yoy de-growth in Top-
line to Rs33.5cr (Rs49.4cr). The Operating Loss for the company stood at 1.3cr (operating
loss of Rs17.4cr last year). The decrease in Operating Loss may be attributed to decrease
in Production cost (down by 1,911bp yoy) and Other Expenditure (down by 2,250bp yoy).
However, the Staff cost increased by 1,041bp yoy. The Bottom line for the company this
quarter stood at Rs3.4cr (over a loss of Rs14.6cr last year), aided by 138.5% yoy increase
in the Other Income to Rs14.6cr (Rs6.1cr) and decrease of 80.6% yoy in the Depreciation
cost to Rs 2.4cr (Rs12.5cr). Currently the stock is under review.
Balrampur Chini (2QSY2010)
Balrampur Chini (BRCM) announced its 2QSY2010 results, which were below of our
expectation. Net Sales came in at Rs471cr against our expectation of Rs502cr. OPM came
in 17%, a yoy decline of 1900bp. The company reported Net Profit of Rs28cr, down by
59%, against our expectation of Rs95cr. Currently, we have a Neutral rating on the stock.
We will revise our earnings estimates and rating after interacting with the management.
Bharti Airtel
Bharti Airtel recorded 2.4% yoy growth (2.9% qoq growth) in its overall Net Revenue in
4QFY2010 mainly on account of improved Mobile business revenues, as the Mobile
subscriber base was up by 35.9% yoy (7.4% qoq) and stood at 127.6mn, while the Minutes
of usage (MoUs) per month though down by 3.5% yoy recovered by 4.9% qoq. It reported
272bp yoy drop (down 201bp qoq) in EBIDTA Margins during 4QFY2010 mainly on
account of 380bp yoy (210bp qoq) increase in SG&A, with ~Rs98cr one-time expenses
being incurred as advisory and professional fees related to the acquisition of Warid
Telecom and Zain Africa. Thus, the depressed margins along with the depreciation, which
was up by 19.9% yoy (3.4% qoq) and the effective tax rate, which was up by 591bp yoy
(162bp qoq) dragged the Bottom-line further by 8.2% yoy (7% qoq). At the current market
price, we maintain a Buy on the stock, with a Target Price of Rs 360.
April 29, 2010 5
6. Market Outlook | India Research
Dabur India
Dabur posted a healthy growth in Top-line by 16.0% yoy to Rs849cr (Rs732cr) on a
consolidated basis, below our expectations of a 22.6% yoy growth. The Top-line growth
was led by a modest 13.3% volume growth, 2.3% price increases and 0.7% translation
gain. In terms of categories, CCD posted a healthy 14.6% growth led by strong
performance of Shampoos, Skincare and Foods division, CHD grew 15% yoy and
International business grew 26.3% for full year FY2010. Fem added 3% to the Top-line for
FY2010. Dabur’s reported Earnings for the quarter on a consolidated basis registered a
robust growth of 29.7% yoy to Rs135cr (Rs104cr), despite a sharp jump of 691bp yoy in
Tax rate, significantly above our estimates of a 16.5% yoy growth to Rs122cr, owing to
Margin expansion, lower Interest cost (declined 70.3% yoy due to reduction in debt) and
higher Other Income (up 59% yoy). On the Operating front, Dabur India delivered a
Margin expansion of 137bp yoy to 19.1% (17.7%) driving a robust growth of 25% yoy in
EBITDA to Rs162cr (Rs129.6cr). Gross Margin expansion (up 150bp yoy on account of
lower input costs and efficient buying) and lower Other Expenses (down 113bp) were the
key levers behind Margin expansion. The stock is currently under review and we will be re-
visiting our numbers after the concall with the management.
Essel Propack (5QFY2010)
Essel Propack (EPP) announced its 5QFY2010 results, which were slightly below of our
expectation. Net Sales came in at Rs301cr against our expectation of Rs340cr. OPM came
in 16%, a yoy decline of 70bp. The company reported Profit of Rs9cr against loss of Rs4cr
in same quarter last year. Currently, we have a Buy rating on the stock. We will revise our
earnings estimates and rating after interacting with the management.
Exide Industries
Exide Industries clocked a 28.9% yoy growth for 4QFY2010 in its Net Sales to Rs1,028cr
(Rs798cr), which was above our estimate of Rs958cr. During 4QFY2010, Exide witnessed
a 434bp yoy increase in its EBITDA Margins, owing to a 366bp yoy fall in Raw Material
costs, which accounted for around 59.7% of Sales (63.3% in 4QFY2009). The company’s
Bottom-line growth at 97.3% yoy to Rs134.5cr (Rs68.2cr) also came in marginally below
our estimate of Rs139cr. For FY2010 the company reported 11.8% yoy jump in Net Sales
and a substantial 88.9% yoy surge in Net Profit, largely aided by 16% yoy growth in
volume growth of Automotive Battery segment and about 10% yoy increase in Industrial
Battery Segment. The company has shown a substantial improvement in consolidated Net
Profit to Rs494cr (Rs192cr), indicating improved operating performance of Subsidiaries
and Associate companies.
We estimate the company to clock around a 13% CAGR in volumes over FY2010-12E.
Thus Top-line and Bottom-line are estimated to post a CAGR of 18% and 13% respectively,
in the mentioned period. We upgrade marginally our EPS estimates for the company to
Rs7.1 (Rs7 earlier) and to Rs8 (Rs7.9 earlier) for FY2011E and FY2012E, respectively owing
to reduction in debt in FY2010. At the CMP, the stock is quoting at 17.3x FY2011E and
15.5x FY2012E Earnings. We have valued its stake in ING Vysya Life Insurance at
Rs12/share on the FY2012E New Business Arrived Profit (NBAP). At the adjusted valuations
of 14x FY2012E Earnings for its core business, the stock is available at reasonable
valuations. Hence, we maintain an Accumulate on the stock, with a Target Price of Rs132.
April 29, 2010 6
7. Market Outlook | India Research
Marico
Marico declared yet another quarter of disappointing Top-line growth of 6.4% yoy to
Rs602cr (Rs566cr) below our estimates of a 10.8% growth to Rs622cr owing to steep price
cuts. However, volume growth stood at a strong 14% driven by price cuts and promotional
offers. Its core brands Parachute and Saffola posted volume growth of 10% and 13%
respectively for the quarter. Marico’s International business continued to post steady
growth of 16% yoy (22% yoy adjusted for currency movement) for the quarter. Kaya posted
revenue of Rs45cr and a loss of Rs5.3cr for the quarter. Marico witnessed significant
expansion in Gross Margin by 644bp yoy as copra and safflower prices were 20% and
22% lower, respectively during FY2010. However, Marico re-invested majority gains into
higher ad-spends (up by 517bp yoy) limiting Operating Margin expansion to 80bp. In
terms of Earnings, Marico posted a growth of 15% yoy to Rs51.1cr (Rs44.4cr) on a
reported basis impacted by higher Taxes (due to low base, treated loss on Sundari closure
as business loss in 4QFY2009) and muted Top-line. However, adjusted for one-off items
like provision of impairment of assets/write-offs to the tune of Rs3cr and one-time loss of
Rs5.7cr on closure of Kaya Life centers, Recurring Earnings grew a muted 0.7% yoy to
Rs60cr, below our estimates of a 7.8% yoy growth to Rs64cr.
Post disappointing Top-line growth on account of evident lack of pricing power (especially
in benign input cost scenario) and disappointing performance from Kaya, we have
marginally tweaked our Top-line estimates downwards by ~2%. In terms of Earnings, we
have downgraded our estimates by 4-6% owing to lower Margins (due to higher ad-spends
and weak pricing power) and marginal jump in Tax. While we continue to remain bullish
on management’s ability and sound product portfolio to deliver consistent growth going
ahead, near term concerns over Marico’s value growth (steep price cuts) and slowdown in
Kaya (key factors to monitor in near term) coupled with rich valuations are likely to limit
returns from current levels. Hence, we maintain Neutral view on the stock.
PTC India
PTC’s 4QFY2010 Top-line grew by 5.4% yoy to Rs1,244cr, due to a substantial decline in
realisations to Rs3.9/unit. The sales volume grew by 47% yoy to 3,200MU on account of
increased volumes from Captive Power and Long Term Trade. However, the company’s
operating profit grew by 120.1% yoy in 4QFY2010 to Rs9.4cr on account of a substantial
40bp expansion in OPM’s to 0.8%. The OPMs improved despite the company beginning
to charge margins as per the new CERC only from 1QFY2011. As per the new CERC
regulations, the company’s margins are capped at 7 paisa per unit (For power sold at
above Rs3/unit under Short Term Trade) as against the previous cap of 4 paisa per unit on
all transactions. On the Bottom-line front, the company’s net profit declined by 10.7% yoy
to Rs13.9cr (Rs15.5cr), on account of lower other income, due to interest rate decline and
higher tax expense, on the back of the increased composition of debt-based instruments in
overall investments. We maintain a Buy on the stock, with a Target Price of Rs136.
Shopper’s Stop
Shoppers’ Stop Limited (SSL) reported a decent 4QFY2010 performance. The company
posted a top-line growth of 23.1% yoy to Rs388.8cr (Rs315.8cr) for 4QFY2010 on the
back of robust Same Store Sales (SSS) growth of ~16% during the quarter. Lifestyle
retailing has picked up recently with consumers opening their wallet for discretionary
spends which in turn benefited SSL. On the operating front, the EBITDA improved
substantially from Rs4.2cr in 4QFY2009 to Rs24.3cr in 4QFY2010, while the margins
improved by 490bp to 6.2%. Consequently, SSL posted a net profit of Rs12.6cr in
4QFY2010 against a loss of Rs24.5cr in 4QFY2009. We maintain our Neutral
recommendation on the stock.
April 29, 2010 7
8. Market Outlook | India Research
Result Previews
Cadila Healthcare
Cadila Healthcare (Cadila) is slated to announce its 4QFY2010 results today. Cadila is
expected to post a strong 28.3% growth in Top-line to Rs902.3cr on the back of robust
growth in Export Formulations and Consumer Division. We expect the company's OPM to
expand by 165bp to 19.9% following change in product mix. Net Profit is expected to
increase by a strong 93.3% to Rs112.1cr albeit on a low base driven by Top-line growth
and OPM expansion. We recommend a Neutral on the stock.
CESC
CESC is set to announce its results today. We expect the company to register an 18.5% yoy
growth in its standalone Top-line to Rs878cr in 4QFY2010. The growth in the Top-line is
expected to be aided by a higher tariff of Rs4.57/unit charged by the company in
4QFY2010 (Rs3.91/unit in 4QFY2009). The company's OPMs are expected to expand by
104bp yoy to 21.6%. On the Bottom-line front, we expect CESC to record an 18.3% yoy
growth in its Net Profit to Rs111cr. We maintain a Buy on the stock, with a Target Price of
Rs460.
Indian Overseas Bank
Indian Overseas Bank is expected to post a 4QFY2010 net profit of Rs157cr, de-growth of
51% yoy. NII of the bank is expected to grow by 19% yoy to Rs838cr in 4QFY2010. Non-
interest Income of the bank is expected to decline by 62% yoy to Rs1,105cr, due to
absence of treasury gains in 4QFY2010. Performance of the restructured accounts is the
key to watch in the results. Amongst mid-sized banks, IOB offers a combination of
moderate CASA franchise (30% CASA ratio) and Fee income shored up by high financial
leverage. However, increasing competition and deteriorating cost-competitiveness along
with gradual unwinding of high yield on investments, pose downside risks to NIMs, RoEs
and Earnings growth. Moreover, IOB’s Gross NPAs are increasing rapidly and there are
downside asset quality risks exacerbated by the Bank’s relatively higher-yield higher-risk
portfolio and huge restructuring. At the CMP, the stock is trading at 8.6x FY2012E EPS and
0.8x FY2012E Adjusted Book Value. Currently, we have a Neutral rating on the stock.
Oriental Bank of Commerce
OBC is expected to post 4QFY2010 net profit of Rs365cr, a growth of 86% yoy. NII is
expected to grow by 75% yoy to Rs203cr, on account of repricing benefit and a low base in
4QFY2009. Operating Income of the bank is expected to increase by 26.0% yoy to
Rs1,008cr. The key weaknesses of the bank are the small, regional and urban-centric
nature of its operations and the inconsistency in fee income growth. The stock is trading at
8.6x FY2012E EPS of Rs39.1 and 1.0x FY2012E Adjusted Book Value of Rs350. We have a
Neutral rating on the stock.
KEC International
KEC International is scheduled to announce its 4QFY2010 results today. The top-line of the
company is expected to grow at 18.3% yoy to Rs1,342cr. On the operating front, we
expect the company to register a 67bp margin expansion to 10.3%. Accounting for the tax
benefits due to the merger of RPG cables, the reported net profit is expected to increase at
173.3% yoy to Rs131cr. We maintain a Buy recommendation on the stock.
April 29, 2010 8
9. Market Outlook | India Research
Ultratech
Ultratech is set to announce its results today. We expect the company to record a 1.6% yoy
decline in net sales to Rs1,830cr during 4QFY2010. The OPMs are expected to decline by
413bp yoy to 24.5% on account of increase in raw material and freight costs. The Bottom-
line is expected to de-grow by 22.4% yoy to Rs240cr. We remain Neutral on the stock.
Economic and Political News
Food Inflation to decline in coming months, economy to grow 8.5%: FM
Govt. cancels 5 coal blocks for delay in production
3G bids seen entering final lap, price touches Rs8,914cr
Corporate News
Tata, Actis to roll out US $2bn JV for road projects
Jet may lose Rs826cr plot at Bandra-Kurla
AT & T sells entire TechM stake for Rs600cr profit
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint
April 29, 2010 9
10. Market Outlook | India Research
Events for the day
Andhra Bank Dividend, Results
Ashok Leyland Dividend, Results
BASF India Dividend, Results
Bata India Results
Biocon Dividend, Results
Cadila Healthcare Dividend, Results
Camlin Dividend, Results
Ceat Dividend, Results
Firstsource Solutions Results
Garware Offshore Results
GTL Infra Results
Hanung Toys Results
HCL Infosystems Results
Hexaware Technologies Results
Indiabulls Real Estate Dividend, Results
ING Vysya Bank Results
IOB Dividend, Results
KEC International Results
Mahindra Holidays Dividend, Results
MRF Results
Parsvanatth Developers Dividend, Results
Puravankara Projects Results
Shriram Transport Finance Dividend, Results
Siemens Dividend, Results
Ultratech Cement Dividend, Results
United Breweries Holdings Dividend, Results
United Phosphorus Dividend, Results
VIP Industries Dividend, Results
April 29, 2010 10
11. Market Outlook | India Research
Research Team Tel: 022-4040 3800 E-mail: research@angeltrade.com Website: www.angeltrade.com
DISCLAIMER
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in
this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem
necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and
risks involved), and should consult their own advisors to determine the merits and risks of such an investment.
Angel Securities Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that
are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the
company may or may not subscribe to all the views expressed within.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as
opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals.
The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be
true, and is for general guidance only. Angel Securities Limited has not independently verified all the information contained within this document.
Accordingly, we cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this
document. While Angel Securities Limited endeavours to update on a reasonable basis the information discussed in this material, there may be
regulatory, compliance, or other reasons that prevent us from doing so.
This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed
on, directly or indirectly.
Angel Securities Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or other advisory
services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in the past.
Neither Angel Securities Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection with
the use of this information.
Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section).
Address: Acme Plaza, ‘A’ Wing, 3rd Floor, M.V. Road, Opp. Sangam Cinema, Andheri (E), Mumbai - 400 059.
Tel : (022) 3952 4568 / 4040 3800
Angel Broking Ltd: BSE Sebi Regn No : INB 010996539 / CDSL Regn No: IN - DP - CDSL - 234 - 2004 / PMS Regn Code: PM/INP000001546 Angel Securities Ltd:BSE: INB010994639/INF010994639 NSE:
INB230994635/INF230994635 Membership numbers: BSE 028/NSE:09946
Angel Capital & Debt Market Ltd: INB 231279838 / NSE FNO: INF 231279838 / NSE Member code -12798 Angel Commodities Broking (P) Ltd: MCX Member ID: 12685 / FMC Regn No: MCX / TCM /
CORP / 0037 NCDEX : Member ID 00220 / FMC Regn No: NCDEX / TCM / CORP / 0302
April 29, 2010 11
