1. Market Outlook
India Research
June 24, 2010
Dealer’s Diary Domestic Indices Chg (%) (Pts) (Close)
Market volatility was high as traders rolled over positions in the derivatives BSE Sensex 0.0% 6.3 17,756
segment. The market recovered from an initial steep slide triggered by weak Nifty 0.1% 6.6 5,323
Asian stocks. The recovery gathered steam, with the market hitting a fresh MID CAP 0.8% 59.5 7,124
intraday high in afternoon trade. The market moved into a positive zone in mid- SMALL CAP 0.7% 62.6 9,022
afternoon trade. The key benchmark indices provisionally closed marginally BSE HC 1.4% 80.2 5,741
higher after moving between positive and negative terrains in late trade. Higher BSE PSU 0.4% 34.4 9,257
US index futures helped the domestic bourses erase steep intraday losses. The BANKEX 0.4% 43.6 11,056
Sensex closed up by 0.04% and Nifty closed up by 0.1%. BSE mid-cap and AUTO 0.7% 55.4 8,278
small-cap indices also closed up by 0.8% and 0.7%, respectively. Among the METAL -0.3% (51.6) 15,238
front-liners, Maruti Suzuki, HUL, DLF, Infosys and ACC were up by 1–3%, while OIL & GAS -0.1% (10.1) 10,376
L&T, Jindal Steel, NTPC, Sterlite Industries and Tata Motors were down by 1– BSE IT 0.7% 39.2 5,408
3%. Among the mid-caps, REI Agro, Amtek Auto, Marico, Sterlite Technologies
and Anant Raj Industries were up by 7–12%, while Kwality Dairy, United
Global Indices Chg (%) (Pts) (Close)
Breweries, BGR Energy, Indusind Bank and Honeywell Auto declined by 2–5%.
Dow Jones 0.0% 4.9 10,298
Markets Today NASDAQ -0.3% (7.6) 2,254
The trend deciding level for the day is 17723 / 5315 levels. If NIFTY trades FTSE -0.1% (3.1) 5,179
above this level during the first half-an-hour of trade then we may witness a Nikkei -1.9% (189.2) 9,924
further rally up to 17816 – 17876 / 5342 – 5360 levels. However, if NIFTY Hang Seng 0.2% 37.5 20,857
trades below 17723 / 5315 levels for the first half-an-hour of trade then it may Straits Times -0.2% (6.4) 2,866
correct up to 17663 – 17569 / 5296 – 5270 levels. Shanghai Com -0.7% (18.8) 2,570
Indices S2 S1 R1 R2
Indian ADRs Chg (%) (Pts) (Close)
SENSEX 17,569 17,663 17,816 17,876
Infosys 0.3% 0.2 $62.2
NIFTY 5,270 5,296 5,342 5,360
Wipro -0.7% (0.1) $12.9
News Analysis Satyam 4.0% 0.2 $5.1
ICICI Bank 2.2% 0.8 $38.6
Sun TV Network - Initiating Coverage HDFC Bank -1.1% (1.6) $149.7
Concor - Management Meet Update
Indraprastha Gas - Company Update Advances / Declines BSE NSE
Advances 1,774 851
Shoppers’ Stop announces expansion plans
Declines 1,111 462
Refer detailed news analysis on the following page.
Unchanged 113 51
Net Inflows (June 22, 2010)
Rs cr Purch Sales Net MTD YTD
Volumes (Rs cr)
FII 2,576 1,539 1,037 7,679 28,215
BSE 4,059
MFs 298 529 (232) 309 (6,821)
NSE 12,312
FII Derivatives (June 23, 2010)
Open
Rs cr Purch Sales Net
Interest
Index Futures 7,314 7,174 141 25,492
Stock Futures 6,489 6,962 (473) 30,913
Gainers / Losers
Gainers Losers
Price Price
Company Chg (%) Company Chg (%)
(Rs) (Rs)
Amtek Auto 170 8.5 L&T 272 -3.5
Anant Raj 117 7.2 Indus Ind. 376 -2.9
MMTC 32,361 6.1 Thermax 112 -2.8
Apollo Hspt. 817 6.0 HCL Tech. 254 -2.7
Tech Mah. 750 4.5 JSPL 179 -2.7
Please refer to important disclosures at the end of this report Sebi Registration No: INB 0109965391

2. Market Outlook | India Research
Sun TV Network - Initiating Coverage
Sun TV Network (STNL) is a leader in 3 out of the 4 lucrative southern TV markets through
its bouquet of 20 channels across genres. We have modeled in 23.5%, 24.9% and 25.3%
CAGR in top-line, core EBIT (post amortisation) and earnings respectively, for STNL, over
FY2010-12E. We also estimate STNL's cash balance to swell to a whopping Rs10bn
(~Rs33 per share) in FY2012E. At Rs402, the stock is trading at 19.4x FY2012E Earnings.
We initiate coverage on the stock with a Buy recommendation and Target Price of Rs497
based on 24x P/E FY2012E EPS.
STNL ad revenues to outpace regional ad growth, we peg 19% CAGR: During FY2010-
12E, we expect STNL's standalone Ad revenues to register 19.3% CAGR, ahead of the
13.9% CAGR estimated in Regional advertising during the period, driven by:1) absorption
of rate hikes (ad rates hiked 5-33% across channels),
2) increased traction in niche Kids/Comedy channels, and 3) strong management focus on
utilising inventory during off-peak hours and new weekend programming.
Multiple levers led by DTH to aid 37% CAGR in Subscription Revenues: During FY2010-
12E, we expect STNL to register a robust 37% CAGR in overall Subscription revenues aided
by: 1) strong 58% CAGR in DTH revenues on the back of 28% CAGR in DTH subscribers
and rise in ARPUs to Rs40, and 2) 20% CAGR in Analogue revenues aided by restructuring
of distribution business and Malayalam channels (Surya TV, Kiran TV) turning pay, effective
from April 1, 2010.
Radio losses to reduce, Endhiran the wild card in FY2011E FY2011E: Beyond
broadcasting, we believe reduction in operating losses aided by revenue traction and cost
curtailment in Radio subsidiaries, Kal and SAFM (we have modeled in near breakeven in
FY2012E at operating level) and contribution from big budget movie, Endhiran (slated for
release in 2HFY2011E, we have factored in Rs175cr revenue from movie
distribution/production in FY2011E and 20-25% EBIT Margins from Endhiran) will be the
key factors to watch out for.
Concor - Management Meet Update
We recently met Concor management to get an update on the Exim segment and margin
outlook. Management has indicated that export volumes continue to remain lackluster,
thereby driving empty running. The company has given modest Exim volume guidance of
10–12% in FY2011E, largely driven by low base in 1HFY2011 and higher imports. Concor
has registered moderate 9–10% yoy Exim volume growth for the first two months of
FY2011 in spite of 21% yoy growth at major ports. On other hand, it has guided 12–15%
domestic volume growth with increased focus and strong revival in domestic consumption.
Management has indicated operating margins to remain range-bound in FY2011E.
Further, management has stated that talks about IR increasing haulage charges on certain
routes could come through in the near term. However, we expect a 50bp decline in OPM
in FY2011E on account of increased contribution from low-margin domestic business and
higher empties in 1HFY2011.
We estimate Concor to post muted earnings CAGR of 10.1% over FY2010–12E, as against
a 17.6% CAGR registered during FY2005–09. At the current market price, Concor is
trading at 18.0x FY2012E earnings, which is at the higher end of its historical P/E band
and at 12.2x FY2012E EV/EBITDA. We maintain our Reduce rating on stock with a Target
Price of Rs1,194.
June 24, 2010 2

3. Market Outlook | India Research
Indraprastha Gas - Company Update
The hike in CNG prices have eliminated key headwinds for IGL viz. expected margin
contraction and reduction in earnings and return ratios, to a large extent. Relative ease in
pass through of the APM gas price hike indicates absence of regulatory risks in the near
term. This coupled with strong CNG conversions and growth in newer geographies would
result in strong earnings growth and re-rating of the stock. We revise our target price on
the stock to Rs301 (Rs210) owing to the upward revision in earnings estimates and lower
WACC estimates (to reflect lower risk). We upgrade the stock to Buy from Reduce earlier.
Margin erosion risk subsides: We had concerns over sustainability of IGL's high margins,
which we believed were fueled by lower gas costs (subsidised gas). Also, post end of
marketing exclusivity in CY2011 we believed a level playing field would emerge and IGL
would have to source gas at higher prices in turn squeezing its marketing margins.
However, with the hike in CNG prices, our assumption of margin fall no longer holds
good. It also points at the absence of regulatory risks in the near term. Going ahead, given
that KG-D6 and APM gas prices are freezed till FY2014, IGL would not be required to
make significant CNG price hikes. Thus, the margin erosion risk has subsided
substantially.
Volumes to propel profitability: We expect strong growth in CNG conversion in IGL's area
of operation driven by discretionary CNG demand due to better economics. This coupled
with strong growth expected in the domestic PNG segment is likely to drive the company's
volume growth going ahead. We expect CNG and PNG volumes to register a CAGR of
14.4% and 36.2% over FY2010-12E respectively, resulting in overall volumes CAGR of
16.9% during the mentioned period. Thus, strong volume growth coupled with stable
EBDITA/scm are likely to drive the company’s profitability (CAGR of 17.5% over FY2010-
12E) going ahead.
Shoppers’ Stop announces expansion plans
With consumer sentiment picking up in the lifestyle retailing segment, Shoppers’ Stop Ltd.
is back on its expansion mode, which we believe will bode well for the company going
ahead. SSL announced its plans to invest Rs100cr–120cr to open 12 more Shoppers’ Stop
outlets and four Hypercity stores in FY2011. The company is also planning to spend
Rs125cr on picking up an additional 32% stake in Hypercity, to have a majority stake of
51% by June 30, 2010. Shoppers’ Stop currently holds 19% stake in Hypercity. Moreover,
the company is planning to handover Crossword business to Crossword Bookstores Ltd., a
wholly owned subsidiary of the company. The company has plans to raise Rs300cr through
a qualified institutional placement (QIP) over the next two quarters. We maintain our
Neutral view on the stock.
June 24, 2010 3

4. Market Outlook | India Research
Economic and Political News
RBI may hike rates any time: Pranab Sen
Govt. not to sell 25% equity in Coal India: Jaiswal
Corporate News
Jindal Power faces delay at Chattisgarh plant
French giant Vivendi leading race for 26% stake in RCOM
Shree Cement lines up Rs450cr for expansion
Tata Steel to sell stake in Tata Refractories
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint
Events for the day
Edelweiss Capital Bonus, Stock Split
Navneet Publication Dividend, Results
UB Engineering Results
UTV Software Results
Zenith Birla Dividend, Results
June 24, 2010 4

5. Market Outlook | India Research
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