The market opened firmly but pared some gains later in the day due to profit-taking. Key indices closed near the day's high, with heavyweights leading the rally. All sectoral indices on the BSE were in the green. Mid and small-cap stocks outperformed frontline stocks. Career Point IPO is recommended with a subscribe rating. Eros International Media IPO is also recommended with a subscribe rating up to a 16% upside. Bajaj Hindusthan received export permission for 200,000 tonnes of raw sugar. Cement prices are expected to increase in southern India by Rs30 per bag.

1. Market Outlook
India Research
September 20, 2010
Dealer’s Diary Domestic Indices Chg (%) (Pts) (Close)
The market opened on a firm note, tracking gains in Asian stocks. The Sensex BSE Sensex 0.9% 177.3 19,595
surged to a 32-month high in early trade. Stocks held firm in early afternoon Nifty 1.0% 56.3 5,885
trade. The market was range bound in mid-morning trade. The market cut
MID CAP 1.4% 114.4 8,104
gains in mid-afternoon trade on profit booking. However, it regained strength
SMALL CAP 0.9% 94.5 10,239
in late trade. Key benchmark indices regained strength in late trade to settle
BSE HC 2.1% 117.6 5,842
near the day's high, with index heavyweights leading the rally. All 13 sectoral
BSE PSU 0.2% 23.0 10,242
indices on the BSE were in green. The Sensex and Nifty closed up by 0.9% and
1.0%, respectively. BSE mid and small-cap indices were up by 1.4% and 0.9%, BANKEX 0.7% 94.0 13,745
respectively. Among the front liners, RCOM, ACC, Bharti Airtel, RIL and Sterlite AUTO 0.7% 60.9 9,276
Ind. gained 2–5%, while HDFC, Wipro, BHEL, SBI and NTPC lost METAL 1.7% 279.9 16,489
0–1%. Among mid caps, Ispat Ind., Bhushan Steel, Texmaco, IndusInd Bank OIL & GAS 1.8% 187.3 10,736
and Birla Corp. gained 6–17%, while Berger Paints, IBN18 Board, HCL BSE IT 0.5% 30.5 5,844
Infosystems, Shree Global Trading and Eicher Motors lost 1–3%. Global Indices Chg (%) (Pts) (Close)
Dow Jones 0.1% 13.0 10,608
Markets Today
NASDAQ 0.5% 12.4 2,316
The trend deciding level for the day is 19557/ 5871 levels. If NIFTY trades
FTSE -0.6% (31.7) 5,508
above this level during the first half-an-hour of trade then we may witness a
further rally up to 19677–19759/5913–5940 levels. However, if NIFTY trades Nikkei 1.2% 116.6 9,626
below 19557/5871 levels for the first half-an-hour of trade then it may correct Hang Seng 1.3% 279.4 21,971
up to 19475–19354/5843–5801levels. Straits Times 0.3% 9.3 3,076
Shanghai Com -0.1% (3.8) 2,599
Indices S2 S1 R1 R2
SENSEX 19,354 19,475 19,677 19,759 Indian ADRs Chg (%) (Pts) (Close)
NIFTY 5,801 5,843 5,913 5,940 Infosys 0.2% 0.2 $65.1
Wipro 0.1% 0.0 $13.8
News Analysis Satyam -1.9% (0.1) $5.1
Subscribe Career Point IPO up till moderate listing gains ICICI Bank 0.7% 0.3 $47.8
EIML – IPO Note: Recommend Subscribe HDFC Bank 1.4% 2.4 $182.1
Bajaj Hindusthan receives export permission
Cement prices to be hiked in the southern region Advances / Declines BSE NSE
Domestic aviation sector update for August 2010 Advances 1,805 944
Hotel Leela plans to sell Chennai, Pune projects to prune debt Declines 1,207 423
Refer detailed news analysis on the following page.
Unchanged 93 36
Net Inflows (September 16, 2010)
Rs cr Purch Sales Net MTD YTD Volumes (Rs cr)
FII 3,507 2,363 1,144 11,904 71,030 BSE 4,988
MFs 522 1,273 (751) (2,057) (17,888)
NSE 16,982
FII Derivatives (September 17, 2010)
Open
Rs cr Purch Sales Net
Interest
Index Futures 1,650 1,151 499 23,333
Stock Futures 1,799 1,923 (124) 40,002
Gainers / Losers
Gainers Losers
Price chg Price chg
Company Company
(Rs) (%) (Rs) (%)
Ispat Ind 24 17.0 Apollo Hosp 410 (1.4)
GCPL 459 10.0 Shriram Trans 775 (1.4)
Bhushan Steel 2,115 6.9 Bank of Baroda 875 (1.2)
Lupin 388 6.5 Neyveli Lignite 158 (1.2)
1
IndusInd Bank 263 6.0 Patni Computer 447 (1.1)
Please refer to important disclosures at the end of this report Sebi Registration No: INB 010996539

2. Market Outlook | India Research
Career Point IPO: Recommend Subscribe
IPO details: Career Point Infosystem (CPIL), a Kota-based tutorial services company, is
coming out with its IPO for Rs115cr through fresh issue of 0.37cr–0.39cr shares in the
price band of Rs295–310/share. The issue proceeds would be utilised for the construction
and development of an integrated campus facility, expansion of classroom and office
facilities and acquisition and strategic initiatives.
A mammoth target market: CPIL services the country’s formal and informal education
markets. In case of the informal market, the company provides tutorial services to high
school and post-high school students for various competitive exams such as AIEEE, IIT-JEE,
AIPMT and AIPDT. The number of students appearing for these competitive exams is rising
at a scorching pace, despite subdued increase in the number of seats. We expect demand
for these services will remain upbeat, considering that India is more of a services economy
(53% to GDP) and the population aged below 14 composes one-third of the total
population. In the first four months of FY2011, the enrollment in CPIL for IIT-JEE, AIEEE
and AIPMT stood robust and almost comparable to the full year enrollment number of
FY2010. Hence, we expect the company to continue its growth momentum on the back of
strong volume growth.
Valuation and outlook: CPIL reported a strong 28% CAGR in its revenue over FY2007–10,
with good profitability growth in EBITDA (11% CAGR) and PAT (14% CAGR). On the back
of strong enrollment in the first four months of FY2011, we are confident that CPIL will
continue its growth momentum. The setting up of a campus facility from the net proceeds
of the IPO will make the company’s business model asset heavy, thereby diluting the
company’s return ratios. At the higher end of the price band i.e., Rs310/share, the stock’s
implied trailing P/E would be ~25.2x FY2010 EPS. We recommend SUBSCRIBE on this
IPO, up till moderate listing gains.
September 20, 2010 2

3. Market Outlook | India Research
EIML IPO Note: Recommend Subscribe
IPO Details: Eros International Media (EIML) is making a Rs350cr IPO with a price band of
Rs158–175/share, resulting in a public issue of 2.0cr and 2.2cr equity shares with a face
value Rs10, resulting in promoter shareholding dilution of 22% and 24% at the upper and
lower price band, respectively. The company plans to use the IPO proceeds for acquiring
and co-producing Indian films, primarily Hindi language films as well as certain Tamil and
other regional language films. The company has already deployed ~Rs54cr towards Hindi
and Marathi film projects as on July 31, 2010. However, no funds have been deployed for
Tamil films
EIML has a proven track record of robust growth both on the top-line and bottom–line
fronts. Going forward, we estimate the company to record revenue and earning CAGR of
~21% and ~29% respectively, over FY2010–12E. At the upper price band of Rs175, EIML
is available at 19.4x FY2010 fully diluted EPS of Rs9, which we believe is reasonable given:
1) valuable and diversified content library of over 1,000 titles, 2) de-risked business
model–co-productions and acquisition, 3) promising movie pipeline (including 8
big-budget Hindi language films), 4) proven execution skills (has successfully released
Om Shanti Om, Love Aaj Kal and Karthik Calling Karthik, among others), and 5) derives
synergistic advantages from parent Eros plc.
We have valued EIML at 9x EV/EBITDA and 25% discount to UTV Software, as it is a pure
play on movie production/distribution, while UTV Software is a diversified entertainment
conglomerate. We have arrived at a fair value of Rs203, translating into ~16% upside
from the upper price band. Hence, we recommend a Subscribe view to the IPO.
Key risks to our recommendation: 1) Relative success of films at the box-office, 2) any
delay in the release of a film, 3) failure in effectively exploiting film content in the
international market, 4) high dependence on maintenance of IPR/piracy, and 5)
inexperience in movie production.
Bajaj Hindusthan receives export permission
Bajaj Hindusthan (BJH) has received the government’s permission to export 200,000tonnes
of raw sugar. This indicates the improving domestic demand–supply situation.
Internationally, raw sugar prices have risen by 71% from the bottom of 14cents/pound to
24cents/pound. The price increase was driven by the expected lower international
production, except India for SY2011. Although, the current raw futures are trading at
24cents/pound, forward nine-month (SY2011) averages are at 22cents/pound, which
translate into approximately Rs22/kg. We have assumed realization of Rs24/kg for free
sale sugar for BJH; hence, we believe current export would not add substantially to profit.
At the current price, the stock is trading at 1.1 SY2011 EV/IC (enterprise value to invested
capital), we maintain our Neutral rating on the stock.
September 20, 2010 3

4. Market Outlook | India Research
Cement prices to be hiked in the southern region
As per media reports, cement prices are expected to be hiked across the southern region,
with effect from September 20, 2010. Our independent dealer check has also revealed
that the price hike in the range of Rs30 per 50kg bag is likely. Post this hike, price is
expected to be at Rs260 per bag in Chennai and around Rs200 per bag in Hyderabad.
The price hike if enforced will be the second hike within a fortnight, as cement
manufacturers in the region had carried out a price hike in the Rs35–45 range, with effect
from September 7, 2010, to minimise their losses as prices in the region, especially
Andhra Pradesh, had fallen close to the cost of production.
The pricing pressure has been severe in the region, as it has suffered due to over capacity
and a decline in demand. The southern region witnessed the highest capacity addition of
18mtpa over the last 15 months, which accounted for close to 30% of the all-India capacity
addition during the period, resulting in over capacity. Demand in the major cement
consuming state of Andhra Pradesh has slowed down due to lower off-take from the
housing and infrastructure sectors and reduced government spending. The intensification
of monsoon has also affected construction activities. Further, the rise in coal and diesel
prices and frequent power cuts in Andhra Pradesh have led to cost pressure and negative
EBITDA for the companies. All these factors have lead to a second price hike within a
fortnight.
We feel the price hike is not sustainable and, thus, expect price correction
of Rs10–15 per bag in the next few days. We maintain Buy on India Cements and Madras
Cements with a Target Price of Rs139, due to their attractive valuations. We maintain Buy
on JK Lakshmi Cement with a Target Price of Rs92 and remain Neutral on ACC and
Ambuja Cements.
Domestic aviation sector update for August 2010
Domestic passenger traffic witnessed growth for the eight consecutive month, but
decreased by 2.3% month-on-month to 39.9lakh (40.8lakh) passengers in
August 2010. From January 2010 to August 2010, passenger traffic grew by robust 19.3%
yoy to 339.1akh (284.2lakh) passengers.
In August 2010, SpiceJet witnessed a 12.4% yoy increase in domestic passenger traffic to
5.02lakh (4.5lakh), becoming the fifth largest carrier in the domestic market
behind Kingfisher (7.97lakh), Jet Airways (7.79lakh), Air India (7.3lakh) and Indigo
(6.56lakh).
The industry’s overall load factor witnessed a month-on-month decline in August, primarily
due to active monsoons in various parts of the country. During the month, load factors for
SpiceJet, Jet Airways and IndiGo declined to 70.3%, 70.4% and 73.2%, respectively.
Kingfisher and Air India reported a month-on-month increase in load factors at 80.9% and
65.5%, respectively.
At the end of the month, market shares of the major industry players stood at 18.3% for Air
India (Domestic), 19.5% for Jet Airways, 7.5% for JetLite, 20.0% for Kingfisher, 12.6% for
SpiceJet, 5.7% for GoAir and 16.4% for IndiGo. We continue to maintain a Neutral rating
on SpiceJet.
September 20, 2010 4

5. Market Outlook | India Research
Hotel Leela plans to sell Chennai, Pune projects to prune debt
Hotel Leela is looking to cash in on the growing real estate market in Chennai, as it plans
to partly sell and lease its Leela IT Park in Chennai. The property, spread across 2.75 lakh
sq. ft. located in Adyar, is expected to fetch Rs275cr–300cr for the company. The deal for
partial sale of the property is expected to be finalised in a month. Moreover, the company
has decided not to have a hotel in Pune and instead develop the land for a residential
complex. Earnings from that initiative, which could be worth Rs250cr, will also be used to
clear debt. The moves would enable the company reduce its debt of Rs2,600cr by
Rs550cr–600cr. We believe these initiatives to have a positive impact on the financials of
the company, considering the existing high debt on its books. We maintain our Neutral
rating on the stock.
Economic and Political News
Govt. to give diesel subsidy to drought-hit farmers, says Pawar
Govt. raises DA to 45%, to cost exchequer Rs9,303cr p.a.
India infrastructure boom to boost world growth, says Montek Singh
Sugar production may be over 22mn–23mn tonnes in 2010–11, says Pawar
US poverty rate hits 15-year high
Corporate News
IPOs of insurance companies likely before March 2011: CARE
Essar ties-up US $1bn for Minnesota operation
HPCL eyeing oil blocks in Africa
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint
September 20, 2010 5

6. Market Outlook | India Research
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