1. Market Outlook
India Research
October 21, 2010
Dealer’s Diary
Domestic Indices Chg (%) (Pts) (Close)
Immense volatility was witnessed in the trade today. The market bounced back
BSE Sensex -0.6% (111.0) 19,872
after a weak opening as most Asian stocks recovered from initial losses
Nifty -0.7% (45.2) 5,982
triggered by a surprise rate hike by China. However, the recovery was
MID CAP 0.0% (2.4) 8,289
short-lived and the market moved between the positive and negative terrains
thereafter, as high intraday volatility ensued. A sell-off in late trade dragged the SMALL CAP -0.5% (56.9) 10,582
market to the day's low. The Sensex and Nifty closed the trade in red, losing BSE HC 0.2% 10.3 6,369
0.6% and 0.7%, respectively. BSE mid-cap and small-cap indices, however, BSE PSU -0.3% (30.4) 10,266
outperformed the benchmark indices, closing the trade with loss of 0.0% and BANKEX -0.5% (69.1) 13,862
0.5%, respectively. Among the front liners, Tata Power, NTPC, L&T, RIL and AUTO -0.6% (54.6) 9,711
ONGC gained 0–1%, while Sterlite Industries, HDFC, Tata Steel, Hindalco METAL -2.2% (383.9) 16,892
Industries and Bharti Airtel lost 2–4%. Among mid caps, Indiabulls Power, OIL & GAS 0.2% 16.9 10,755
EID Parry, Shree Global Tradefin, Ballarpur Industries and Jubilant Life Sciences BSE IT -0.1% (8.8) 6,007
gained 5–11%, while Cholamandalam Investment, Rajesh Exports, Global Indices Chg (%) (Pts) (Close)
JM Financial, IVR Prime and Motilal Oswal lost 3–4%. Dow Jones 1.2% 129.3 11,108
Markets Today NASDAQ 0.8% 20.4 2,457
The trend deciding level for the day is 19913/5996 levels. If NIFTY trades FTSE -0.4% (25.0) 5,729
above this level during the first half-an-hour of trade then we may witness a Nikkei -1.7% (157.9) 9,382
further rally up to 20003–20134/6025–6067 levels. However, if NIFTY trades
Hang Seng -0.9% (207.2) 23,557
below 19913/5996 levels for the first half-an-hour of trade then it may correct
Straits Times -0.4% (13.1) 3,179
up to 19782–19692/595–5924 levels.
Shanghai Com 0.1% 2.1 3,004
Indices S2 S1 R1 R2
SENSEX 19,692 19,782 20,003 20,134 Indian ADRs Chg (%) (Pts) (Close)
NIFTY 5,924 5,953 6,025 6,067 Infosys 0.7% 0.5 $66.8
Wipro 1.5% 0.2 $16.3
News Analysis ICICI Bank 1.5% 0.8 $50.2
HDFC Bank 0.0% (0.1) $179.3
Bombay Dyeing – Quick take
2QFY2011 Result Reviews: Hindustan Zinc, HCL Tech, Yes Bank, Ashok
Leyland, Indoco Remedies, Ceat Advances / Declines BSE NSE
2QFY2011 Result Previews: TCS, Ambuja Cement, ACC, Corporation Bank, Advances 1,086 448
TVS Motor, South India Bank Declines 1,902 942
Refer detailed news analysis on the following page
Unchanged 90 36
Net Inflows (October 19, 2010)
Volumes (` cr)
` cr Purch Sales Net MTD YTD
FII 3,329 2,988 341 19,264 1,07,586 BSE 4,878
MFs 600 460 139 (5,655) (28,684) NSE 14,060
FII Derivatives (October 20, 2010)
Open
` cr Purch Sales Net
Interest
Index Futures 1,792 2,164 (372) 16,200
Stock Futures 2,718 2,979 (261) 44,571
Gainers / Losers
Gainers Losers
chg chg
Company Price (`) Company Price (`)
(%) (%)
IB Power 31 11.2 Unitech 88 (4.2)
Jubilant Org 320 5.5 Sterlite Inds 170 (3.5)
IDBI Bank 166 4.3 Indian Bank 286 (3.1)
Canara Bank 657 3.6 Sesa Goa 348 (3.0)
1
Renuka Sugar 84 3.6 Aban Offshore 810 (2.3)
Please refer to important disclosures at the end of this report Sebi Registration No: INB 010996539

2. Market Outlook | India Research
Bombay Dyeing – Quick take
We believe that Bombay Dyeing (BD) monetising its legacy land bank in a timely manner
will be a key trigger for its stock performance. Moreover, ongoing recovery in its
manufacturing (textile and polyester units) business will act as an additional catalyst for the
stock. BD intends to develop 9.0msf of saleable area (1.0msf already developed) on its
historical mill land located in Central Mumbai over the next 8–10 years. For the
manufacturing business, the company has undertaken cost-reduction measures and
launched new products to turn profitable. Consequently, EBIT loss was lower for the textile
division at `14.4cr in 1HFY2011 v/s `22.3cr in 1HFY2010, while the polyester division
reported profit of `9.1cr in 1HFY2011 v/s loss of `39.6cr in 1HFY2010. The promoters
recently issued 4mn warrants at `527.83/share, which will increase their stake from 47.8%
to 52.7% post conversion. We have valued the real estate business at `940/share and the
manufacturing business at 0.5x of its asset value fetching `112/share. Hence,
we recommend a Buy rating on the stock with a Target Price of `894/share (implying 43%
upside from the current level), which is at 15% discount to our NAV..
Result Reviews – 2QFY2011
Hindustan Zinc
For 2QFY2011, Hindustan Zinc (HZL) reported a 20% yoy and 10.9% qoq increase in net
revenue to `2,163cr. Sales volume for zinc, lead and silver increased by 24.4%, 27.0%
and 25.8% yoy, respectively, to 175,309 tonnes, 14,458 tonnes, and 36,879 kg. Average
realisation for zinc, lead and silver increased by 12.9%, 7.5% and 36.2% yoy, respectively,
to US $2,176/tonne, US $2, 285/tonne and US $656/kg, respectively. The new 210Ktpa
zinc smelter contributed ~39,000 tonnes.
EBITDA margins declined by 807bp yoy to 52.0%, although flat on a qoq basis. The
decline was mainly due to a) higher stripping costs at mines, resulting in a 29.7% yoy
increase in mining expenses, b) 90% yoy increase in stores and spares cost and c) 46.8%
yoy increase in power costs on account of increased coal costs. Consequently, EBITDA
grew by 4.6% yoy to `1,125cr. Other income increased by 19.7% yoy to `184cr and
depreciation expense increased by `50.2% to `115.8cr. Consequently, net income grew by
only 1.5% yoy to `949cr.
HZL is expected to benefit from the expansion of zinc-lead smelting capacity and increased
silver production. In addition, HZL has a huge cash balance of `12,213cr at the end of the
quarter (`289 per share). We recommend an Accumulate rating on the stock with a revised
Target Price of `1,342 earlier (`1,227), valuing the stock at 6.0x FY12012E EV/EBITDA.
HCL Technologies – 1QFY2011
HCL Technologies reported its 1QFY2011 results. At the revenue front, in dollar terms,
numbers were ahead of the street as well as our expectations. The company’s revenue
came in at US $803.8mn, with growth of 9% qoq (v/s our expectation of US $792.5mn) on
the back of 7.87% volume growth in core software as well as 7.6% qoq constant currency
growth in infrastructure services. Cross-currency movement further aided growth by 1.6%
qoq. EBIT margins at 12.9% were in line with our expectation. PAT came in at `300.5cr v/s
our expectation of `269cr on the back of stronger growth, lower forex loss (`63.8cr v/s
expectation of `74cr) and lower effective tax rate.
The company is expected to be the outperformer in Tier-I IT pack in terms of volume
growth because of strong deal pipeline spanning across higher value-chain services. The
company is one of our preferred picks in the IT sector. At the CMP of `426, the stock is at
attractive valuations of 13.6x FY2012 EPS. We remain positive on the stock. The stock is
currently under review.
October 21, 2010 2

3. Market Outlook | India Research
Yes Bank
Yes Bank registered robust net profit growth of 57.8% yoy and 12.7% qoq to `176cr, well
above our estimates of `138cr on account of substantially higher balance sheet growth
than guided by the bank towards the beginning of the year. Advances grew strongly by
15.6% qoq and 86.3% yoy compared to marginal industry growth of ~0.6% qoq. Deposits
increased by 32.3% sequentially and by 106.6% yoy compared to ~1.6% sequential
industry growth. This led to 95.8% yoy growth in NII, despite a sequential NIM
compression of 10bp due to a higher-than-sector-average 40bp increase in cost of funds.
While we have been conservatively building in higher provisioning expenses for the bank,
keeping in view the sectoral averages, the bank continues to maintain its track record in
asset quality. Gross and net NPA ratios stood at 0.22% (0.23% in 1QFY2011) and 0.06%
(0.04% in 1QFY2011), respectively, implying a provision coverage ratio of 74.7%,
excluding write-offs (81.4% in 1QFY2011).
Corporate and institutional banking accounted for 69.8% of the portfolio, commercial
banking accounted for 19.6% and branch banking accounted for 10.6%. CASA deposits
registered strong growth of 118.9% yoy. However, CASA ratio declined to 10.1% from
10.5% in 1QFY2011. Operating costs increased by 35.9% yoy and 3.7% qoq to `163cr.
The cost-to-income ratio stood at 36.6%, lower than its eight-quarter average of 38.9%.
Restructured advances (excluding NPAs) declined by `11cr sequentially to `69cr. The
bank’s CAR continued to be healthy at 19.4% with Tier-I at 11.0%.
Considering the experience of the past several quarters, the inherent challenges of building a
retail franchise are substantial despite the management’s high pedigree. Moreover, with rising
interest rates, the cost of funds for the bank is expected to rise at a faster rate due to the bank’s
wholesale-based funding mix. That said, notwithstanding medium-term downside risks to RoAs
towards sectoral averages, the bank’s high rate of growth within the wholesale segment is likely
to drive strong earnings growth in the near term. At the CMP, the stock is trading at 2.7x
FY2012E ABV, which is below our target multiple of 2.9x FY2012E ABV for the bank.
Hence, we recommend Accumulate on the stock with a Target Price of `373.
Ashok Leyland
Ashok Leyland (ALL) reported 72% yoy top-line growth at `2,714cr, which was marginally
below our expectation of `2,788cr and largely aided by ~72% yoy jump in volumes. Net
average realisation for the quarter was flat on a yoy basis at `1,103,684 (`1,103,203 in
2QFY2010), largely due to lower growth in the non-cyclical business. EBITDA margins
came in 104bp ahead of our estimate at 11.3%, a jump of 126bp qoq and 76bp yoy.
Raw-material cost for the quarter increased by almost 460bp yoy. Higher commercial
vehicle volumes helped the company to improve its operating leverage and expand
EBITDA margins. Net profit grew by a substantial 88.5% yoy to `167cr (`89cr in
2QFY2010), as against our estimate of `157cr, largely aided by improved operating
performance.
At current levels, the stock is trading at 16x FY2011E and 13.2x FY2012E earnings.
We maintain our Neutral view on the stock. At present, our fair value for the stock works
out to be `78. We would be releasing a detailed result update post the earnings
conference call with management.
October 21, 2010 3

4. Market Outlook | India Research
Indoco Remedies
Indoco Remedies (Indoco) reported its 2QFY2011 results, which were ahead of our
estimates. Net sales came in at healthy `132cr (`95cr), up 38.7% yoy, as against our
estimates of `113cr. Growth was driven by the domestic formulation (up 37.2%, `88cr)
and export (up 39.0%, `40cr) segments. On the domestic front, growth was driven by the
respiratory, anti-infective and gastro segments. While on the export segment front, the
semi-regulated market grew by 140% to `8cr. The company reported gross margins of
54.2% (57.3%). Employee expenses increased by 28.2% yoy to `19cr (`15cr). The
company reported OPM of 13.4%, which was flat yoy. Indoco reported other income of
`3.1cr (`0.7cr), driven by exchange gain. While depreciation cost came in at `3cr. The
company reported net profit of `15cr (`9cr), up 65.9% yoy, driven by top-line growth.
Further, the company expanded its existing contract with Aspen and Watson, which would
commence meaningful contribution from FY2013. The stock is currently trading at 11.7x
FY2011E and 8.7x FY2012E earnings. The stock is under review.
Ceat
Ceat reported turnover of `843cr (`719cr) for 2QFY2011, up 17.1% yoy. The company’s
top line has been recovering following the uptick in OE volumes; however, during
1HFY2011 and 2QFY2011, capacity constraints restricted top-line growth. The company
posted operating profit of `43.9cr (`106.6cr) for 2QFY2011, a decline on both yoy and
qoq basis primarily due to the spurt in rubber prices, which resulted in a substantial
1,677bp yoy increase in raw-material cost at 69.2% (52.4%) of sales in 2QFY2011. OPM
for the quarter stood at 5.2% (14.8%). Net profit came in at `15.3cr (`61.5cr) for the
quarter. Higher input costs and increased interest and depreciation impacted the bottom
line, which fell by 75% yoy while increasing 10% qoq. In view of the apparent structural
shift that the tyre industry is going through, the stock is available at attractive valuations.
We retain our Buy rating on the stock with a Target Price of `205.
Result Previews – 2QFY2011
TCS
TCS is set to announce its 2QFY2011 results. We expect the company to post revenue of
US $1,927mn with 7.4% qoq growth on the back of volume growth of 8.1%, cross-
currency benefit of 0.55% and higher offshore effort. EBITDA margins are expected to be
flat at 29.3% as promotion cycles will take away the gains due to absorption of wage hike
in 1QFY2011, favourable currency and higher offshore effort. PAT is expected to be at
`1,990cr, with 7.9% qoq growth, on the back of strong revenue growth, maintained
profitability and lower forex losses. TCS remains to be our preferred pick amongst Tier-I IT
companies due to its strong capabilities in the financial services verticals with a broad
service portfolio and diversified geographical presence. At the CMP of `964, the stock is
trading at 20.5x FY2012E EPS of `47 with 7% upside to our Target Price of `1,032.
Ambuja Cements – 3QCY2010
We expect Ambuja Cements to report a 3.5% yoy decline in top line to `1,585cr on
account of a drop in realizations; however, the company’s despatches remained flat at
4.28mn tonnes. The OPM is expected to decline by 217bp yoy to 26.0%. Net profit is
expected to decline by 17.6% yoy to `263cr. We remain Neutral on the stock.
October 21, 2010 4

5. Market Outlook | India Research
ACC – 3QCY2010
We expect ACC to report a 16.7% yoy decline in top line to `1,671cr on account of a
decline in volumes and realisations. The company’s despatches were down by ~7% yoy
during the quarter. We expect the company’s OPM to decline by 1,565bp yoy to 19.4%.
Net profit is expected to decline by 56.6% yoy to `189cr. We remain Neutral on the stock.
Corporation Bank
Corporation Bank is slated to announce its 2QFY2011 results. The bank is expected to
post healthy yoy growth of 40.4% in net interest income (NII) to `707cr. Non-interest
income is expected to decline by 18.1% yoy. Provisioning expenses are expected to
increase by 51.7% yoy. Net profit is expected to be subdued at `303cr. We will be closely
watching slippages from the restructured loans of the bank, which stand at `2,811cr,
forming 46.0% of the net worth. At the CMP, the stock is trading at 1.3x FY2012E ABV of
`555. Currently, we have a Neutral rating on the stock.
TVS Motor 3472
TVS Motor is slated to announce its 2QFY2011 results. We expect the company’s top line
to grow by 41% yoy to `1,573cr on account of 33.4% yoy growth in volumes and higher
realisations. On the operating front, EBITDA margin is expected to expand by 134bp yoy
to 6.9%. Hence, the bottom line is expected to grow by 113.7% yoy to `52.5cr. The stock
rating is under review.
South Indian Bank
South Indian Bank is scheduled to announce its 2QFY2011 results today. The bank is
expected to post a muted Net Interest Income (NII) growth of 4.2% yoy and 2.8% qoq to
`172cr. Non-interest income is expected to decline by 45.4% yoy to `36cr. Provisions are
expected to be lower by 47.4% yoy. The net profit is expected to decline by 13.1% yoy but
it is expected to go up by 8.0% qoq to `63cr. At the CMP, the stock is trading at 1.5x
FY2012E ABV of `17. We have a Neutral rating on the stock.
October 21, 2010 5

6. Market Outlook | India Research
Economic and Political News
Govt. may invest `2,000cr more in Air India
Oil rebounds but stays below US $80 in Asian trade
SBI raises base rate by 10bp to 7.6%
Corporate News
BHEL bags solar power plant contract in Lakshadweep
SAIL seeks to rope in firms for power audit
Wockhardt Hospitals to invest `700cr to double capacity
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint
Events for the day
ACC Results
Allahabad Bank Results
Alstom Projects Results
Ambuja Cements Results
Bajaj Corp Results
Ceat Results
Corporation Bank Results
Fresenius Kabi Results
Indiabulls Financial Services Results
JM Financial Results
Mahindra Forgings Results
Novartis India Results
Sasken Communication Technologies Results
SKF India Results
South Indian Bank Results
Sterlite Tech Results
TCS Results
TVS Motor Results
Wipro Results
Zensar Tech Results
October 21, 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 Limited 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). Also, please refer to the
latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have
investment positions in the stocks recommended in this report.
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
October 21, 2010 7