1. .
Market Outlook
India Research
August 13, 2010
Dealer’s Diary Domestic Indices Chg (%) (Pts) (Close)
The key benchmark indices opened weak following cues from global indices, BSE Sensex 0.0% 3.7 18,074
with US markets closing in red and Asian indices trading negative early on. Nifty -0.1% (4.2) 5,416
However, markets witnessed buying in the morning session, which further MID CAP 0.3% 22.3 7,568
strengthened by mid-session, following the positive opening in European SMALL CAP 0.0% 3.1 9,645
markets. Markets managed to trade marginally in green in the final session but BSE HC 0.2% 10.5 5,507
slipped in red again post the sell-off in Europe before marginal buying led BSE PSU 1.0% 93.0 9,615
indices to close flat. Volatility was high with negative market breadth during the BANKEX 1.7% 198.8 12,028
day. Strong result from benchmark heavyweight State Bank of India (SBI) helped AUTO 1.2% 101.1 8,742
indices contain the fall during the day. The Sensex and Nifty closed flat by 0.0%
METAL -0.8% (119.2) 15,361
and -0.1% respectively. BSE mid-cap and small-cap indices gained marginally
OIL & GAS 0.2% 17.0 10,059
by 0.3% and 0.0%, respectively. Among the front liners, SBI, ONGC, HUL, Tata
BSE IT -0.9% (49.7) 5,496
Motors and Hindalco gained 2–7%, while Sterlite, JP Associates, ITC, Wipro and
Global Indices Chg (%) (Pts) (Close)
Infosys lost 1–3%. Among mid caps, Eicher Motors, Hathway Cable, Gujarat
Fluorochem, Patni Computers and Info Edge gained 5–9%, while Essar Dow Jones -0.6% (58.9) 10,320
Shipping, Educomp, Sigrun Holding, Den Network and Berger Paints lost 4–8%. NASDAQ -0.8% (18.4) 2,190
FTSE 0.4% 20.9 5,266
Markets Today Nikkei -0.9% (80.3) 9,213
The trend deciding level for the day is 18034 / 5407 levels. If NIFTY trades Hang Seng -0.9% (188.8) 21,106
above this level during the first half-an-hour of trade then we may witness a Straits Times -0.8% (22.2) 2,927
further rally up to 18153 - 18233 / 5441 - 5465 levels. However, if NIFTY Shanghai Com -1.2% (32.0) 2,575
trades below 18034 / 5407 levels for the first half-an-hour of trade then it may
correct up to 17955 – 17835 / 5382 - 5348 levels. Indian ADRs Chg (%) (Pts) (Close)
Indices S2 S1 R1 R2 Infosys -0.8% (0.5) $59.3
SENSEX 17835 17955 18153 18233 Wipro 0.2% 0.0 $13.2
NIFTY 5348 5382 5441 5465 Satyam -1.3% (0.1) $4.7
ICICI Bank 0.1% 0.0 $40.8
News Analysis HDFC Bank 0.4% 0.7 $158.3
NCC secures orders worth Rs673cr
Advances / Declines BSE NSE
Result Reviews: Indraprastha Gas, SBI, Tata Steel
Result Previews: Allcargo, Cipla Advances 1,297 556
Refer detailed news analysis on the following page. Declines 1,656 793
Unchanged 93 45
Net Inflows (August 11, 2010)
Rs cr Purch Sales Net MTD YTD
FII 2,972 2,779 193 4,027 51,968 Volumes (Rs cr)
MFs 1,054 940 114 (779) (13,402) BSE 5,497
NSE 15,897
FII Derivatives (August 12, 2010)
Open
Rs cr Purch Sales Net
Interest
Index Futures 2,023 2,721 (698) 17,388
Stock Futures 1,407 1,777 (370) 36,184
Gainers / Losers
Gainers Losers
Price Price
Company chg (%) Company chg (%)
(Rs) (Rs)
SBI 2,784 6.9 Educomp 622 (9.8)
Bank of India 462 5.9 IVRCL Infra 158 (7.5)
Patni Computers 477 5.4 MMTC 1,476 (4.8)
UCO Bank 102 5.1 Bajaj Auto 2,559 (3.6)
1
Neyveli Lignite 166 4.9 Unitech 86 (3.4)
Please refer to important disclosures at the end of this report Sebi Registration No: INB 010996539

2. Market Outlook | India Research
NCC secures orders worth Rs673cr
Nagarjuna Construction Company (NCC) has secured six new orders worth Rs673cr from
different clients. These orders are spread across verticals of building, oil/gas and urban
infrastructure. Secured orders are expected to be executed within 8–30 months. With these
new orders, the outstanding order book now stands at ~Rs16,700cr (3.5x FY2010
revenue). At the CMP of Rs161, the stock trades at 16.4x FY2012E P/E and 1.6x FY2012E
P/B. We maintain a Buy rating on NCC with a Target Price of Rs201.
Result Review – 1QFY2011
Indraprastha Gas
Indraprastha Gas (IGL) reported its 1QFY2011 results, which were above our expectations
on the top-line front, but were marginally below expectations on the bottom-line front. The
top line registered growth of 43.5% yoy to Rs336cr (Rs234cr), against our expectation of
Rs318cr. During the quarter, CNG volumes increased 17.8% yoy to 142mnkg
(120.5mnkg), above our expectation of 137mnkg. PNG volumes increased 102.9% yoy to
35.5mmscm (17.5mmscm), above our expectation of 28mmscm. Total volumes came in at
221.5mmscm (175.4mmscm), above our expectation of 207.5mmscm. However, the dent
came in on account of higher-than-expected raw-material cost, which stood at Rs166.7cr,
against our expectation of Rs148.2cr. This resulted in OPM coming in at 32%, which was
below our expectation of 34.3%. Depreciation cost also came in above our expectation at
Rs23.1cr. The bottom line increased 18.4% to Rs57.1cr (Rs48.3cr), against our expectation
of Rs60.3cr. We maintain a Neutral view on the stock.
State Bank of India
For 1QFY2011, State Bank of India (SBI) reported net profit growth of 25.1% on a yoy
basis and 56.1% on a sequential basis to Rs2,914cr, above our estimates, on account of
better-than-estimated NII coupled with lower operating expenses. Robust operating
performance and stable asset quality were the key highlights of the result.
NII grew by healthy 45.4% on a yoy basis and by 8.7% on a sequential basis to Rs7,304cr.
Non-interest income stood at Rs3,690cr, up by 3.4% yoy but down by 18.2% sequentially.
Operating costs decreased 1.2% yoy and 19.5% on a sequential basis. The cost-to-income
ratio stood at 44.2%, much lower than its eight-quarter average of 49.6%. Gross NPAs
were up by 6.6% sequentially to Rs20,825cr, while net NPAs were up by 1.9% sequentially
to Rs11,074cr. The bank’s gross NPA ratio was stable at 3.14% compared to 3.05% as of
4QFY2010. While net NPA ratio improved marginally to 1.70% (from 1.72% in
4QFY2010). The provision coverage ratio excluding technical write-offs was at 46.8%
compared to 44.4% in 4QFY2010. The bank’s CAR stood at 13.5% as compared to 13.4%
in 4QFY2010.
Deposits grew by 6.8% yoy to Rs8,15,297cr, driven by CASA growth of 28.9% and retail
term deposit growth of 10.2%, despite shedding of high-cost bulk deposits by 51.4%. The
CASA ratio improved to 47.5% as of 1QFY2011 from 38.5% as of 1QFY2010. Net
advances registered growth of 20.4% yoy to Rs6,53,220cr, underpinned by strong growth
of 34.7% yoy in large corporate advances and growth of 29.8% yoy in the home loans
segment.
We may revisit our earnings estimates and target price post our interaction with the bank’s
management. SBI (excluding value of insurance and capital market subsidiaries) is trading
at 1.7x FY2012E ABV v/s its five-year range of 1.3–2.0x. We believe this provides sufficient
margin of safety and attractive upside, especially in light of its dominant position and
reach, strong growth and superior earnings quality. Presently, we maintain an Accumulate
rating on the stock with a Target Price of Rs3,021.
August 13, 2010 2

3. Market Outlook | India Research
Tata Steel
Tata Steel’s standalone 1QFY2011 net revenue grew by 16.5% yoy to Rs6,471cr but was
down 13.3% qoq. During the quarter, production was lower on a sequential basis due to
maintenance shutdown and power failure at its plants. While sales volume was flat yoy, it
declined 17.7% qoq to 1.4mn tonnes. Average realisation increased by 22% yoy and 4.9%
qoq to US $1,009/tonne. EBITDA margin expanded by 1,357bp to 43.8% on account of
cost reduction initiatives and higher realisations. Consequently, EBITDA grew by 68.8% yoy
to Rs2,836cr. Interest expense declined by 4.2% yoy to Rs328cr, while other income
increased by 19.3% yoy to Rs129cr. As a result, net profit came in at Rs1,579cr, registering
growth 100% yoy.
On a consolidated basis, Tata Steel’s net revenue increased by 16.8% yoy, down 1.1%
qoq, to Rs27,195cr. In Europe, deliveries increased to 3.7mn tonnes as compared to
3.3mn tonnes in 1QFY2010, but they were down sequentially from 3.9mn tonnes in
4QFY2010. EBITDA/tonne for European operations increased to US $79 in 1QFY2011 as
compared to a loss of US $117 in 1QFY2010. Consolidated EBITDA stood at Rs4,433cr as
compared to a loss of Rs30cr in 1QFY2010 and net profit stood at Rs1,825cr as
compared to a loss of 2,209cr in 1QFY2010. We maintain our Buy rating on the stock
with a Target Price of Rs697.
Result Previews – 1QFY2011
Allcargo Global Logistics – 2QCY2010
Allcargo Global Logistics (AGL) is scheduled to announce its 2QCY2010 results. We expect
AGL to report healthy top-line growth of 12.4% to Rs588cr, led by strong performance of
the MTO and CFS segments on the back of revival in EXIM business. The company’s OPM
is expected to be marginally lower yoy by ~143bp to 10.5% on account of higher freight
charges and appreciation of euro impacting operating profits from ECU line business.
Consequently, we expect AGL’s net profit to fall 22.1% yoy to Rs36.3cr. At Rs167, the stock
is trading at 11.7x its CY2011E earnings of Rs14.3. We maintain a Neutral rating on the
stock.
Cipla
Cipla is slated to announce its 1QFY2011 results. The company is expected to post modest
sales growth of 6.6% to Rs1,412cr, mainly driven by the domestic formulation segment.
The company's OPM (excluding technical know-how fees) is expected to contract by 336bp
to 18.6% on account of lower gross margins and higher employee expenses. Further, net
profit is estimated to fell by 7.0% to Rs225cr because of lower OPM. We recommend
Accumulate on the stock with a Target Price of Rs360.
August 13, 2010 3

4. Market Outlook | India Research
Economic and Political News
June IIP below estimates at 7.1%
Mobile number portability to be rolled out from October 31
April-July Indirect Tax collections up 46.2%
Corporate News
Ssangyong picks M&M as preferred bidder
Maran's offer to buy 20% additional stake in SpiceJet deferred
Vedanta in talks to buy stake in Cairn India
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint
Events for the day
Ackruti City Results
Adani Enterprises Results
Cipla Results
Deccan Chronicle Results
Dhanalakshmi Bank Results
Finolex Ind Results
McNally Bharat Engg. Results
MSK Projects Results
Nitin Fire Results
Patel Engg Results
Pipavav Shipyard Results
Rajesh Exports Results
Reliance Comm Results
Saregama India Results
Shiv Vani Oil Results
Suzlon Energy Results
Tanla Solutions Results
Trigyn Tech Results
Wockhardt Results
August 13, 2010 4

5. Market Outlook | India Research
Research Team Tel: 022-4040 3800 E-mail: research@angeltrade.com Website: www.angeltrade.com
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