The document provides 20 stock ideas that are expected to deliver impressive returns over the next year. It gives a brief investment rationale for each stock, including descriptions of the company's business, strengths, and growth opportunities. Overall, the document recommends the 20 stocks as having strong fundamentals and potential for capital appreciation and outperformance over the coming year.

1. Twenty Stock Ideas
(FOR PRIVATE CIRCULATION ONLY) April, 2012
FY12 ended on a disappointing note for equities. In FY13, we believe that GDP growth will bounce back to
7% with monetary easing resulting in a boost in infrastructure activity. We expect that inflation would come
down this year and could average around 7% leading to a nominal growth of 14%. That would lead to
corporate earnings growing by 15-20%. We expect Sensex earnings of INR 1300 for FY13 (E) and around INR
1500 for FY14 (E). We arrive at a year-end Sensex target of 22,500 based on 15 times FY14 (E) earnings which
would give an upside of about 30% from current levels. In the next one year, we expect these 20 stock ideas
to deliver impressive returns.
Gain
Reco. Target Price as Relative
or PVG
Company Sector Price Price Reco. Date on to CNX
Loss (%)
(Rs.) (Rs.) 30-Mar-12 500 (%)
(%)
Axis Bank Financial Services 1,236.7 *1250 9th May'11 1,146.2 -7.3 -1.9 9.1
Bank of Baroda Financial Services 886.3 1,100.0 9th May'11 796.2 -10.2 -4.7 38.2
Cairn India Oil & Gas 343.0 450.0 19th Mar'12 333.9 -2.7 2.8 34.8
Coromandel Fertilisers &
351.3 430.0 29th Jul'11 283.6 -19.3 -13.8 51.6
Inter Pesticides
Media &
Dish TV 68.2 95.0 9th May'11 63.9 -6.3 -0.9 48.7
Entertainment
Exide Inds. Automobile 153.4 165.0 9th May'11 149.2 -2.7 2.7 10.6
Hind.Zinc Metals 134.8 185.0 9th May'11 132.4 -1.8 3.6 39.8
ICICI Bank Financial Services 714.0 1,100.0 30th Nov'11 890.2 24.7 30.1 23.6
ITC Consumer Goods 184.4 230.0 9th May'11 226.9 23.0 28.5 1.4
IVRCL Infrastructure 56.65 76.0 29th Feb'12 66.2 16.8 22.2 14.9
J & K Bank Financial Services 775.7 950.0 9th May'11 919.0 18.5 23.9 3.4
Jagran Media &
119.3 155.0 9th May'11 100.9 -15.4 -10.0 53.5
Prakashan Entertainment
Lanco Infratech Infrastructure 20.90 30.0 29th Feb'12 18.2 -12.9 -7.5 64.8
Lovable
Consumer Goods 541.7 850.0 30th Aug'11 357.8 -33.9 -28.5 137.6
Lingerie
M&M Automobile 709.1 875.0 9th May'11 700.2 -1.3 4.2 25.0
Pidilite Inds. Chemicals 152.1 185.0 9th May'11 176.9 16.3 21.7 4.6
Tata Motors Automobile 270.95 350.0 29th Feb'12 275.3 1.6 7.0 27.2
Tata Power Co. Power 125.7 135.0 9th May'11 100.9 -19.7 -14.3 33.7
Tata Steel Metals 594.7 675.0 9th May'11 471.8 -20.7 -15.2 43.1
Yes Bank Financial Services 297.1 *420 9th May'11 368.8 24.1 29.6 13.9
* Target Price Revised

2. Investment Rationale
Scrips Description
Axis Bank is the third largest private sector bank; which was incorporated in 1993. It has
more than 12.5 mn customers and a distribution network of 1,493 branches. Axis is
predominantly a wholesale lending bank with a strong presence in West India while its
liabilities franchise is spread country-wide. It has 5 wholly owned subsidiaries but they have a
Axis Bank minimal contribution to net profit. Axis Bank has grown its loan book at a rapid pace over the
last few years, all the while ensuring that profit growth outstripped loan growth. We expect
this trend to continue. The bank’s stronghold in infrastructure, SME and project finance
lending, combined with the renewed focus on retail assets, will ensure that the bank grows at
1.2- 1.3x the system rate in FY12 and FY13.
BoB is among the top PSU banks having sizeable overseas presence and a strong domestic
network of 3,691 branches across the country. It has a stronghold in the western and eastern
parts of India. The bank has laid out aggressive plans to expand its income streams from both
Bank of Baroda
domestic and international businesses. The bank has been able to grow its bottom line at a
42.6% CAGR over FY2007–11, driven by strong CASA ratio and market share gains in credit
and deposits and opex leverage.
Cairn India was incorporated in 2006 by Cairn Energy PLC and is engaged in oil and gas
exploration and production activities in India. Cairn India has stake in 10 blocks (9 in India and
one in Sri Lanka), of which 3 blocks namely MBA in Rajasthan, Ravva and Cambay are
currently under production and remaining are exploratory blocks. Rajasthan block is the
flagship block of Cairn India and is currently producing at the rate of 125,000 bopd and is
expected to achieve a peak production of 240,000 bopd subject to regulatory approvals. At
the envisaged peak production of 240,000 bopd, Rajasthan block will produce approximately
Cairn India
30% of India’s current crude production. Resolution of royalty issue has realigned Cairn's
economic interests with the JV partner ONGC and the government. We now expect the
company to regain its operational momentum and look forward to (1) production ramp-up,
and (2) reserve updates. Cairn India is the only company in Oil & Gas space in India which
offers a pure play on crude oil prices. Near-term stock performance will likely be driven by (1)
crude oil prices, (2) exchange rate movement and (3) ramp-up of production from Rajasthan
block.
Is the flagship company of the $3.8bn Murugappa group based in Andhra Pradesh. It is a
leading manufacturer and marketer of a wide range of Fertilisers, Specialty Nutrients, and
Crop Protection products. The Company is also engaged in rural retail business in Andhra
Coromandel Pradesh and Karnataka through a chain of 443 retail centers set up in various parts of these
International States. The company has dominant hold in South India making it a market leader in complex
fertiliser segment. We believe Coromandel is a pure player in the promising Indian
Agriculture industry. We are positive on the nutrient based complex fertiliser segment and on
Coromandel’s strong business models, future growth and return ratios.

3. Dish TV is India’s largest direct‐to‐home (DTH) company and part of the country’s biggest
media conglomerate – the ‘Zee’ Group. Dish TV has on its platform more than 330 channels
and services. Dish TV uses the NSS‐6 satellite platform which is unique in the Indian
subcontinent owing to its automated power control and contoured beam which makes it
suitable for use in India’s tropical climate. Dish TV’s first mover advantage and strong
Dish TV
distribution network help boost the subscriber additions. Dish TV has also managed to cut
costs by shifting from variable to fixed‐cost content contracts with most broadcasters. The
Company is nearing an inflection point which is expected to result in sharp margin gains over
FY11‐13. The Company is also expected to benefit from the digitization ordinance of the
metros which will speed up the process of digitization.
Exide is an undisputed leader in automotive battery segment in India with more than 55%
market share in the organized replacement market. The company also has a strong presence
in Industrial battery space. We believe the long term growth potential is firmly in place on
Exide Industries the back of strong replacement demand coupled with wide distribution network. We believe
investment in Exide would be a safe bet considering expected demand from Auto
replacement market after phenomenal growth in auto sales volume in FY10 and FY11, both in
2-wheeler and 4-wheelers.
The company is a fully integrated zinc producer, with one of the best mining assets in the
world. It has steadily increased its reserves and production through regular investment in
exploration activities and smelting capacity addition. HZL’s captive mines of zinc and lead ore
are located in the state of Rajasthan, with total reserves of 313.2m tons. Its captive mines
Hindustan Zinc and thermal power plants give the company a significant cost advantage, making it one of the
lowest cost producers of zinc in the world. Sterlite Industries has 64.9% stake in Hindustan
Zinc, while 29.5% is owned by the Government of India. We remain positive on stock due to
strong volume growth of zinc metal and sharper growth in lead and silver production over
next few years.
ICICI, originally set up to provide direct finance for development of industrial projects, is one
of India's leading financial institutions. It has built a strong retail franchise to complement its
corporate banking activities and capitalize on the fast growing retail market. The bank has
once again entered an expansionary mode after making a conscious effort to contract its
ICICI Bank
advances book due to asset quality concerns. The bank offers substantial value unlocking
opportunities with the expected listing of its subsidiaries like ICICI Securities and ICICI
Prudential Life Insurance. We remain upbeat on the bank given its healthy 1.4% RoA and
improving RoE.
We are positive on ITC’s diversified business model and expect the cigarette business to
witness strong growth, driven by higher volumes. ITC’s cigarette business, which contributes
around 60%, continues to be a cash cow for the company. Moreover, broad-based growth
across segments, including potential recovery in hotels, strong growth in agri-business and
ITC reducing losses in non-cigarette FMCG businesses will help ITC sustain strong earnings
growth for ensuing quarters. The company endeavours to make a mark in the Indian FMCG
market and with successful brands such as Bingo, Sunfeast and Aashirwaad. We believe ITC is
least susceptible to raw-material and food inflation given its strong presence in the back-end
agri raw-material sourcing and a benign tobacco price environment.

4. IVRCL is a Hyderabad-based construction company, incorporated in 1987 and promoted by
Mr. E Sudhir Reddy. Its niche and key areas of operation are the ‘water’ segment, under
which it executes industrial projects, irrigation work, desalination projects and sewage
systems. In FY10, IVRCL restructured the infrastructure ownership portfolio, and merged it
IVRCL into IVRCL Assets (an 80.5% subsidiary). IVRCL also has 52.8% stake in Hindustan Dorr Oliver.
IVRCL has one of the largest BOT portfolios, with a diversified presence in roads and
desalination projects. Engineering and design capabilities are IVRCL’s proven strengths. Its
turnkey projects in various sectors are characterized by pioneering ideas and impressive
execution capabilities.
The bank’s focused growth strategy towards the J&K state has paid off, helping it achieve
stable NIM, high CASA ratio and improving core business performance. J&KBK was risk
averse over the past 3-4 years and loan CAGR was ~11%. However, going forward, the
J & K Bank
management intends to grow faster than the industry, which is crucial to earnings growth.
Over the years, the bank has maintained robust asset quality, with the best-in-industry
provision coverage ratio. Hence, we are positive on the bank.
The company has a leadership position in Hindi print and publishes Dainik Jagran, Sakhi, Josh,
Jagran Varshiki, Jagran Engage and so on. The Company also has a Hindi news portal in
association with Yahoo India, and the Company’s division J9 provides internet video
Jagran Prakashan recording (IVR)/audio visual research (AVR)/short messaging services (SMS) through its short
code service. We like Jagran because of its robust franchise in key markets and strategy of
vertical expansion with increasing maturity of new media initiatives, including print should
drive growth.
Lanco Infratech, founded in 1993 is one of India’s largest integrated infrastructure developers
and headquartered at New Delhi. The company is present across 6 core sectors viz. EPC,
Power, Natural Resources, Solar, Infrastructure and property development. Lanco is fast
emerging as one of the top three private-sector power developers in India. Lanco Group is
Lanco Infratech also developing 20mn sqft of residential and commercial property in Hyderabad. Its EPC
division has expertise spanning several segments of infrastructure space but specializes in
EPC of coal and gas-based power plants. The EPC division acts as backbone for executing
power projects. Apart from power and EPC, has also forayed into roads, coal mining, solar
power and electricity trading.
Lovable Lingerie is a leading women’s innerwear manufacturer of India; it manufactures and
markets innerwear under the brands Lovable and Daisy Dee. Lovable commands a 22%
market share in the high end branded female innerwear segment. It has strong brands and a
focused strategy. The opportunity in the space is too large owing to the low penetration of
Lovable Lingerie
branded products and the rising income of Indians. The company has been registering a
growth rate of 25% plus for last several years and has a very healthy return on equity. We
recommend a buy to this company because of its competitive strength in a fast growing
market.

5. M&M is the flagship company of Mahindra Group which consists of 105 companies and
covers a wide spectrum of industries from tractors to IT, from automobiles and two wheelers
to airplanes, from financial services and holidays to defence and infrastructure. M&M is the
largest manufacturer of utility vehicles and tractors in India. In UVs, M&M has a dominant
52% market share while in tractors, it has 42% share. M&M is also the second-largest player
in the LCV industry with 33% share. The share of M&M’s core auto business is increasing in
its consolidated profit and valuations. About 73% of M&M’s subsidiary book is invested in
M&M
auto/ auto related subsidiaries. With 75% of volumes coming from rural India, M&M is a play
on India’s rising prosperity in the countryside. M&M should be the biggest beneficiary of a
structural improvement in tractor-industry fundamentals over the coming years. We believe
that a combination of rising rural incomes, improving credit, diversifying usage of tractors
and worsening labour shortage is driving a structural upturn in tractor demand in India. The
company’s low-cost tractor Yuvraj is enjoying a good response and should boost growth
further in the coming years.
Pidilite is the largest branded adhesives player in India, having an iconic brand like Fevicol.
Apart from having a strong presence in adhesives, the company has expanded its presence in
emerging segments like mechanized joinery, modular furniture, flooring, automotive care
Pidilite Industries and waterproofing through Dr Fixit and Roff. The company is a dual play on the consumption
and construction. Consumer products form 77% of the company sales and the remaining
comes from construction. Consumer products would continue to remain a major growth
driver for PIDI going forward.
Is India’s largest automobile company, and is the leader in CVs segment. It is the world’s
fourth largest truck manufacturer, and the world’s third‐largest bus manufacturer. Through
subsidiaries and associate companies, Tata Motors has operations in the UK, South Korea,
Thailand and Spain. Among them is Jaguar Land Rover, a business comprising of iconic British
brands that was acquired in 2008. JLR is the largest contributor to Tata Motors' consolidated
Tata Motor
performance, contributing ~23% to EBITDA. TTMT's domestic business, in which CVs are key
contributor, offers better visibility. We expect TTMT's passenger vehicle (PV) business to
underperform the domestic PV industry and lose market share. We expect Tata motors to
continue with its strong performance in JLR and the interest rate cuts to support its CV
growth.
Pioneering as a power generator, Tata Power has emerged as a well integrated power major
in India. The company's presence across the power sector value chain strengthens each
business segment internally making it a unique business model. The company has an
Tata Power Co. impressive project portfolio with over 6,000MW of projects under construction. The
company is renowned for its executions skills and adequately funded growth plans as well as
its fuel security linkages for its upcoming projects. The company holds a 30% stake in
Indonesia coal mines and hence is also a play on coal.

6. Tata Steel, the lowest cost steel producer in India, has become the sixth largest steel maker
in the world after the acquisition of Corus. The combined entity has its business spread over
Europe, the UK, Asia, North America and the rest of the world with 27mtpa capacity. On a
Tata Steel consolidated level, it has ~22% raw material security and plans to increase it to 50-60%.
Production will increase to 34mtpa through brownfield expansions in Jamshedpur and green-
field projects in Orissa. We expect an improvement its performance on the back of an
increase in steel prices.
Yes Bank, a new generation private bank, started its operations in November 2004 and is the
only greenfield bank approved by RBI in the last decade. The bank is promoted by Rana
Kapoor and Ashok Kapur. Yes Bank follows a unique business model based on knowledge
Yes Bank
banking, which offers product depth and a sustainable competitive edge over established
banking players. Knowledge led banking also enables the bank to generate strong fee
income, which eventually translates into higher return ratios.

7. Disclaimer
The information and views presented here are prepared by Karvy Stock Broking Limited or other
Karvy Group companies. The information contained herein is based on our analysis and upon sources
that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof.
This material is for personal information and we are not responsible for any loss incurred based upon
it.
The investments discussed or recommended here may not be suitable for all investors. Investors
must make their own investment decisions based on their specific investment objectives and financial
position and using such independent advice, as they believe necessary. While acting upon any
information or analysis mentioned here, investors may please note that neither Karvy nor any person
connected with any associated companies of Karvy accepts any liability arising from the use of this
information and views mentioned here.
The author, directors and other employees of Karvy and its affiliates may hold long or short positions
in the above-mentioned companies from time to time. Every employee of Karvy and its associated
companies are required to disclose their individual stock holdings and details of trades, if any, that
they undertake. The team rendering corporate analysis and investment recommendations are
restricted in purchasing/selling of shares or other securities till such a time this recommendation has
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The information given in this document on tax are for guidance only, and should not be construed as
tax advice. Investors are advised to consult their respective tax advisers to understand the specific tax
incidence applicable to them. We also expect significant changes in the tax laws once the new Direct
Tax Code is in force – this could change the applicability and incidence of tax on equity investments.
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