1. .
Market Outlook
India Research
August 3, 2010
Dealer’s Diary Domestic Indices Chg (%) (Pts) (Close)
The key benchmark indices got a strong boost from good auto sales numbers of
BSE Sensex 1.2% 212.9 18,081
July 2010. Stocks surged at the onset of the trading session, tracking firm Asian
Nifty 1.2% 64.0 5,432
equities, but the market came off the higher level later. However, it hit a fresh
MID CAP 1.1% 85.0 7,493
intraday high in afternoon trade as European stocks rose in early trade. The
SMALL CAP 0.9% 86.3 9,435
uptrend continued in mid-afternoon trade as European stocks extended gains
and as US index futures surged. The market extended gains in late trade. The BSE HC 0.1% 7.2 5,604
Sensex and Nifty recovered and ended up by 1.2% each. The BSE mid-cap and BSE PSU 0.7% 62.4 9,639
small-cap indices also closed up by 1.2% and 1.0%, respectively. Among the BANKEX 2.4% 277.3 11,817
front liners, ICICI Bank, Bharti Airtel, SBI, ONGC and Sterlite Inds. gained AUTO 0.3% 29.2 8,453
between 3–4%, while NTPC, TCS, Cipla, M&M and Tata Power lost between METAL 1.4% 214.4 15,614
0.0–0.3%. Among mid caps, Manappuram General Finance, Man Infra., OIL & GAS 1.0% 99.3 10,265
Gujarat State Fertilizers, Videocon Inds. and Bayer Crop gained between 8– BSE IT 0.3% 14.4 5,489
20%, while REI Agro, Infotech Enterprises, Trent, Fresenius Kabi and Gujarat Global Indices Chg (%) (Pts) (Close)
Fluorochemicals lost between 3–17%. Dow Jones 2.0% 208.4 10,674
NASDAQ 1.8% 40.7 2,295
Markets Today
FTSE 2.6% 139.1 5,397
The trend deciding level for the day is 18032 / 5407 levels. If NIFTY trades
Nikkei 0.3% 33.0 9,570
above this level during the first half-an-hour of trade then we may witness a
further rally up to 18153 – 18225 / 5463 – 5495 levels. However, if NIFTY Hang Seng 1.8% 383.0 21,413
trades below 18032 / 5407 levels for the first half-an-hour of trade then it may Straits Times 1.2% 37.3 3,025
correct up to 17960 – 17839 / 5376 – 5320 levels. Shanghai Com 1.3% 35.0 2,673
Indices S2 S1 R1 R2
Indian ADRs Chg (%) (Pts) (Close)
SENSEX 17,839 17,960 18,153 18,225 Infosys 1.4% 0.9 $61.3
NIFTY 5,320 5,376 5,463 5,495 Wipro 0.2% 0.0 $13.6
Satyam -1.2% (0.1) $4.9
News Analysis ICICI Bank 6.4% 2.5 $41.4
Auto sales numbers - July 2010 HDFC Bank 0.5% 0.8 $165.4
Larsen and Toubro secures order worth Rs6,500cr from JP Group
Result Reviews: Bhushan Steel, GAIL, GSK Consumer, India Cements Advances / Declines BSE NSE
Madhucon Projects, Madras Cements, Nestle, NMDC, Subros Advances 1,755 849
Result Previews: Hindalco, Punj Lloyd Declines 1,218 485
Refer detailed news analysis on the following page.
Unchanged 81 45
Net Inflows (July 30, 2010)
Rs cr Purch Sales Net MTD YTD Volumes (Rs cr)
FII 3,394 2,354 1,040 17,658 47,941 BSE 3,974
MFs 702 875 (173) (4,405) (12,623) NSE 11,690
FII Derivatives (August 02, 2010)
Open
Rs cr Purch Sales Net
Interest
Index Futures 1,467 828 639 15,337
Stock Futures 1,314 946 368 33,489
Gainers / Losers
Gainers Losers
Price Price
Company chg (%) Company chg (%)
(Rs) (Rs)
Videocon Ind. 228 7.9 MMTC 1,650 (5.2)
Bank of India 439 7.1 Exide Ind. 142 (2.6)
Jai Corp 253 6.5 Oil India 1,380 (2.1)
Bombay Dyeing 551 5.8 Madras Cement 100 (2.1) 1
Adani Power 135 5.5 NHPC 31 (1.7)
Please refer to important disclosures at the end of this report Sebi Registration No: INB 010996539

2. Market Outlook | India Research
Auto sales numbers - July 2010
Maruti Suzuki (Maruti): In July 2010, Maruti recorded robust total sales growth of 29.2%
yoy to 100,857 units (78,074 units). This includes 10,743 units of exports, up 1.9% yoy. In
July 2010, the company sold 90,114 units in the domestic market, up 33.4% yoy. Maruti
continues to grow at a strong pace in the domestic A2, A3 and C segments, registering
33.2%, 13.7% and 86.5% growth, respectively, in July 2010. The A3 segment comprises
the company’s extremely popular models SX4 and DZire. The recently launched Eeco
continues to boost sales in the C segment.
Mahindra & Mahindra (M&M): M&M reported strong growth of 20.4% yoy in total sales to
42,641 units (35,413 units) in July 2010, aided by 24% yoy growth in auto vehicles and
14% yoy growth in farm equipment vehicles. The utility vehicle (UV) segment recorded flat
growth in July 2010 at 16,720 units (16,688 units). However, the three-wheeler segment,
including GIO and Maximmo, posted substantial 106% yoy volume growth to 7,824 units
(3,806 units) in July 2010. Domestic tractor sales grew by 12% in July 2010. M&M posted
healthy tractor exports sales, growing 47% yoy during July 2010. M&M continues to face
component shortage (fuel injection system, casting and tyres) issues from suppliers, which
is restricting the company’s overall sales growth.
Tata Motors: Tata Motors’ total sales (including exports) of commercial and passenger
vehicles in July 2010 stood at 67,799 vehicles, reporting growth of 41% yoy. Domestic
sales of Tata commercial and passenger vehicles for July 2010 were reported at 63,558
units, increasing 39% yoy. Sales of commercial vehicles in July 2010 in the domestic
market were at 35,694 units, growing 26% yoy. LCV sales increased 15% yoy to 20,438
units. M&HCV sales stood at 15,256 units, increasing 43% yoy. The passenger vehicles
business reported total sales and distribution off-take of 30,165 units (27,864 Tata +
2,301 Fiat) in the domestic market in July 2010, an increase of 52%. Sales of Tata
passenger vehicles were at 27,864 units, growing 62% yoy. Sales of Tata Nano were
reported at 9,000 units. Sales from the Indica range were at 8,006 units, higher by 1%
yoy. The Indigo range recorded sales of 7,007 units, growing 100% yoy. The Sumo/Safari
range accounted for sales of 3,251 units, higher by 22% yoy.
Two-wheelers
Bajaj Auto: Bajaj Auto reported a 65% increase in overall sales for July 2010 at 318,415
units (192,835 units). The company’s motorcycle sales rose 66% to 279,781 units
(168,163 units), while three-wheeler sales increased 60% to 38,634 units (24,104 units) in
July 2010 over July 2009. Total exports jumped 56% to 106,794 units. The management
has indicated that production constraints restricted growth in sales of motorcycles and
three-wheelers.
Hero Honda: Hero Honda reported a 16.6% yoy increase in volumes in July 2010 to
427,686 units (366,808 units), aided by growth in the motorcycle segment and scooter
segment. Scooter sales grew by 60% during the month. The company has posted four
lakh-plus sales for the third consecutive month. Shortage of component from suppliers
impacted the company’s sales growth during the month.
TVS Motor: TVS Motor posted significant 36% growth in overall sales for July 2010, aided
by 35% growth in two-wheeler sales and 209% growth in three wheeler sales. Domestic
sales
(two-wheeler) registered 34% yoy growth, increasing to 146,147 units (120,994 units), in
July 2010. Motorcycle sales grew by 42% yoy in July 2010, with sales of 61,051 units
(42,998 units). Scooter sales continued their good run, growing by 46% to 40,357 units in
July 2010 from 27,673 units in July 2009. Maintaining its upward growth trend, the
company's three-wheeler business registered sales of 3,108 units in July 2010 as
compared to 1,005 units in July 2009. Exports posted significant growth of 54% yoy in July
2010, with two-wheeler sales reported at 20,067 units (13,061 units).
August 3, 2010 2

3. Market Outlook | India Research
Larsen and Toubro secures order worth Rs6,500cr from JP Group
Larsen and Toubro (L&T) has secured an order worth Rs6,500cr from Jaiprakash Power
Ventures Ltd., a Jaiprakash Group Power company. The work scope includes supply,
erection and commissioning of boiler-turbine generator package, critical piping,
electrostatic precipitators and power plant automation for JP’s 3x660MW power plant
being set up in Uttar Pradesh. The plant is expected to be fully commissioned in 60
months, with the first unit scheduled to go into commercial production in 48 months. The
outstanding order book of L&T stands at more than Rs1lakh crore (~3.0x FY2010 revenue)
and continues to render visibility. At the CMP of Rs1,812, the stock trades at 26.3x
FY2012E EPS and 4.4x FY2012E P/BV. We maintain our Neutral view on the stock.
Result Reviews-1QFY2011
Bhushan Steel
For 1QFY2011, Bhushan Steel (BSL) reported a 14.4% yoy (21.2% qoq) decline in sales
volume to 309,333 tonnes, of which flat sales accounted for 215,808 tonnes and long
products sales stood at 93,525 tonnes. However, on the positive side, average gross
realisation increased by 23.9% yoy and 9.3% qoq to Rs44,375/tonne. Consequently, net
revenue grew by 5.2% yoy but fell by 14.7% qoq to Rs1,373cr. The 1.9mn tonne hot strip
mill is under trial runs and BSL produced 62,789 tonnes of hot rolled steel during the
quarter. The mill is expected to be commissioned in 2QFY2011.
Despite muted top-line performance, EBITDA margin expanded by 696bp yoy and 366bp
qoq to 29.7% mainly on account of lower raw-material cost. Raw-material cost as a
percentage of revenue fell to 54.6% in 1QFY2011 as compared to 66.1% in 1QFY2010
and 60.8% in 4QFY2010. Consequently, EBITDA grew by 37.4% yoy to Rs408cr but
declined 2.7% qoq. EBITDA/tonne increased to US $289 from US $232 in 4QFY2010 and
US $169 in 1QFY2010. Consequently, net income increased by 19.7% yoy to Rs206cr but
declined 14.6% sequentially.
At the CMP of Rs1,559, the stock is trading at 7.3x FY2011E and 6.0x FY2012E
EV/EBITDA. We expect BSL to post a 26.2% CAGR in volumes over FY2010–15E on
completion of its Phase-III expansion plan by October 2012 along with EBITDA/tonne
increasing to US $331 in FY2011E. Moreover, with debt/equity expected to decline from
3.3x in FY2009 to 2.0x in FY2012E, we maintain our Buy recommendation on the stock
with a Target Price of Rs1,979, valuing the stock at 6.5x FY2012E EV/EBITDA.
GAIL
GAIL India (GAIL) delivered a good set of numbers for 1QFY2011, which were in line with
our estimates. Net sales increased 17.8% yoy, while the net profit increased by 35.2% yoy.
GAIL reported an increase in net sales to Rs7,096cr (Rs6,021cr), primarily on the back of a
good performance in the natural gas transmission and trading, and LPG and liquid
hydrocarbon segments.
The natural gas transmission segment registered top-line growth of 22.3%. Operating
profit in the segment was up by 23.7% yoy. Gas transmission volumes registered growth of
20.2% yoy to 116.2mmscmd (96.7mmscmd), marginally higher than our expectation.
Similarly, the LPG and liquid hydrocarbon segment also performed well during the quarter.
This was driven by higher volumes and realisations, coupled with lower-than-anticipated
provision towards the subsidy burden. The segment registered top-line growth of 14.3%
yoy. The segment’s operating profit grew by 48.8% yoy to Rs256cr as against Rs172cr
during 1QFY2010. OPM grew by 252bp yoy to 20.2% (17.7%) on account of mere 3.4%
increase in raw-material cost coupled with robust operating profit growth in the natural gas
transmission, natural gas trading and LPG and liquid hydrocarbon segments on account of
higher realisations and volume growth (except in petrochemicals).
August 3, 2010 3

4. Market Outlook | India Research
Overall, operating profit during the quarter increased by 34.7% yoy to Rs1,435cr, which
was in line with our expectation of Rs1,426cr. PAT during the quarter stood at Rs887cr
(Rs656cr), registering growth of 35.2% yoy, which was also in line with our expectation of
Rs881cr. We maintain a Buy rating on GAIL, however the Target Price is under review.
GSK Consumer
GSK Consumer posted moderate top-line growth of 14.5% yoy (lowest in the last 10
quarters) to Rs537cr (Rs469cr), below our estimates of 20% growth. However, earnings
registered strong growth of 30% yoy to Rs71.8cr (Rs55.2cr), ahead of our estimates of 19%
yoy growth, aided by margin expansion, a 24% yoy jump in other income and a 243bp
decline in tax rate. At the operating level, GSK Consumer reported margin expansion of
69bp yoy, despite a 100bp yoy gross margin contraction, largely aided by a 200bp
reduction in advertising spends (flat yoy in absolute terms). We have tweaked our estimates
to marginally account for lower revenue traction exhibited during the quarter and higher
OPM (tweaked our ad spends downwards). However, there is no material change in our
earnings estimates. We maintain Reduce on the stock with a Target Price of Rs1,622.
India Cements
For 1QFY2011, India Cements’ net sales declined by 8.1% yoy on account of a substantial
price decline in Andhra Pradesh, which contributes close to 45% of the company’s overall
revenue. Net plant realisations for the quarter stood at Rs2,501/tonne, down 21% on a yoy
basis. On the operating front, the company’s margin fell by 1,895bp yoy to 11.6% (30.5%)
on account of the fall in realisations as well as increase in raw-material and freight costs.
On the bottom-line front, the company’s net profit declined by 82.7% yoy to Rs25.0cr,
primarily because of the company’s poor operating performance. The bottom line was
bolstered by Rs26.4cr of profit booked on account of stake sale in Bharati Cement. After
adjusting for foreign exchange translation loss of Rs11.55cr and other income, net profit
stood at Rs10.16cr. We maintain a Buy on the stock and the Target Price is under review.
Madhucon Projects
Madhucon Projects (MPL) reported top-line growth ahead of our estimates, primarily led by
pick up in the execution in the road and irrigation segments. Operating margin and
earnings also exceeded our expectations. MPL’s order book at 3.5x FY2010 revenue gives
revenue visibility for the next couple of years. However, MPL’s money-raising plans have hit
a road block due to regulatory norms, and the company has raised debt in lieu of equity,
which makes PE money coming in also a remote possibility. In line with this, we are
changing our valuation methodology and not factoring in dilution. Hence, we downgrade
the stock to Accumulate with a Target Price of Rs174.
Madras Cements
Madras Cements registered a 9% yoy decline in top line to Rs697cr, primarily due to a
10.7% fall in cement realisations. However, the company’s sales volume improved by 5.3%
yoy to 2mn tonnes. On the operating front, the company’s profit declined by 32.7% yoy to
Rs196cr. The decline in operating profit was due to the fall in top line coupled with a
23.7% yoy increase in power and fuel costs. On the bottom-line front, the company’s net
profit declined by 47.6% yoy to Rs73cr. We maintain a Buy on the stock with a Target Price
of Rs141.
August 3, 2010 4

5. Market Outlook | India Research
Nestle
Nestle registered modest top-line growth of 21.3% yoy to Rs1,467cr, in line with our
estimates, supported by higher volumes and limited price increases. The bottom line
registered muted growth of 20.3% yoy to Rs195cr, slightly above our expectation of
Rs186cr. On the operating margin front, there was a dip of 160bp yoy to Rs20cr due to
high commodity prices, especially milk solids and sugar. Other expenditure grew
significantly by 113bp yoy due to increased fuel prices. The stock is under review.
NMDC
NMDC reported growth of 97.0% yoy and 27.0% qoq to Rs2,518cr for 1QFY2011. On the
operating front, the company’s EBITDA margin expanded by 726bp yoy to 81.5%. During
the quarter, royalty on iron ore increased to Rs139cr as against Rs11cr in 1QFY2010 as
the government started charging royalty on an ad valorem basis from 2QFY2010. Driven
by strong top-line performance, EBITDA and net profit increased by 116.3% yoy and
94.4% yoy to Rs2,051cr and Rs1,504cr. We will review our numbers after having a
discussion with the management.
Subros
Subros reported decent set of numbers for 1QFY2011, with net sales up by 11.6% to
Rs234cr, which came in marginally below our expectations. Top line increased primarily
on the back of 13.8% growth in volumes; however, average realisation registered a
marginal yoy decline. On the operating front, EBITDA margin expanded by 44bp on
account of a 306bp yoy dip in raw-material costs. Input costs registered a decline owing to
the ongoing localised procurement of raw materials by the company. Staff costs and other
expenditure, however, increased by 100bp and 165bp yoy during the quarter, respectively.
The company’s bottom line spiked substantially by 117% yoy on the low base effect of last
year.
We believe growth in the passenger vehicle segment will augur the company’s volume
growth. Thus, we expect the company to register a volume CAGR of 16% over FY2010–
12E. We expect realisation to be stable or decline marginally due to the aggressive pricing
adopted by OEMs. We estimate the company to post EPS of Rs5 for FY2011E and Rs6 for
FY2012E. At the CMP of Rs50, the stock is trading at 8.3x FY2012E earnings. We maintain
a Buy on the stock with a Target Price of Rs60.
Result Previews-1QFY2011
Hindalco
Hindalco is slated to announce its 1QFY2011 results. The company is expected to register
a 28.8% yoy jump in top line to Rs4,986cr. However, on the operating front, EBITDA
margin is expected to contract by 227bp to 17.3%. Hence, the bottom line is expected to
grow by 15.7% yoy to Rs556cr. We maintain a Buy view on the stock with a Target Price of
Rs208.
Punj Lloyd
Punj Lloyd is expected to declare its 1QFY2011 results. We expect the company to post top
line of Rs2,661cr, 9.9% down on a yoy basis. Operating profit margin is expected to be at
8.5%, a 130bp drop yoy. Whereas, bottom line is expected to post a yoy decline of 54.6%
to Rs57.7cr. We maintain a Buy view on the stock with a Target Price of Rs170.
August 3, 2010 5

6. Market Outlook | India Research
Economic and Political News
About 79k patent applications lying with the government
Mineral production in May rises 9%
OMCs to float tenders for ethanol procurement at Rs27 per litre
Government not considering duty on wheat imports, says Pawar
Corporate News
Aurobindo gets FDA nod for ulcer drug
SAIL invites bankers for 10% stake sale
HCL Infosystems consortium bags order from MP government
Videocon to set up Rs1,500cr TV unit in Tamil Nadu
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint
Events for the day
Aplab Results
Crew Bos Results
Fedders Lloyd Results
Godawari Power Results
Hindalco Inds Results
Infinite Comp Sol Results
NDTV Results
NESCO Results
Plethico Pharma Results
Punj Lloyd Results
Shiv Vani Oil Results
Swaraj Engines Results
Welspun India Results
August 3, 2010 6

7. 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 Broking 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, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for
general guidance only. Angel Broking or any of its affiliates/ group companies shall not be in any way responsible for any loss or
damage that may arise to any person from any inadvertent error in the information contained in this report. Angel Broking 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 Broking 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 Broking 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 Broking 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 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
August 3, 2010 7