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Initiating Coverage

Theme

Cummins India Limited (CIL) is a 51 percent subsidiary of Cummins Inc.

USA, the world’s largest independent diesel engine designer and

manufacturer above 200 HP. Set up in 1962, CIL is India’s leading

manufacturer of diesel engines with a range from 205 hp to 2365 hp and

value packages serving the Power Generation, Industrial and Automotive

Markets. CIL also caters to the growing market for gas and dual fuel

engines.

Investment Rationale

The “Growth Engines” to zoom up

Cummins India is expected to have a healthy CAGR growth of 13% from FY12-

14E, in its net income mainly driven by higher engine volumes. The user

industries like commercial vehicles, industrial equipments etc. are expected

to grow by 9-18 per cent in the next two years according to industry sources.

Commanding a Lion’s share

The market size of diesel generation (DG) sets (15-kVA-2,000kVA range) in

India stood at INR65.5bn in FY10. A leading dominant player, Cummins had an

overall revenue share of 33.9% & a much higher 53.6% share in the 375-

2,000kVA range. With capacity expansions, increased sales realizations, as

well as higher exports from Cummins Inc. will help CIL to increase its market

share along with higher revenues.

Exports to get boosted

Cummins Inc. has identified sourcing of small generators (<200 KVA) from

Cummins India Ltd. (CIL) for which expansion plans have already been

undertaken at its new factory at Phaltan Megasite. CIL would be investing

close to 300-400 crs in FY12 for its capacity expansion plans. This would start

contributing to production from FY13 onwards. It is also targeting export

revenues of close to 15bln by FY14 from these initiatives.

Operating Margins to stay intact

Despite significant rise in pig iron prices, CIL has been able to protect its

margins and keep it stable at 15% for FY11, which is expected to stay the

same with a blend of superior product mix, increase in sales realization per

unit & aggressive cost cutting measures.

Valuation

At the CMP of Rs 667, the stock quotes a PE of 15x and 13x its FY13E and

FY14E EPS of Rs 43 and 51 per share respectively. We initiate a coverage with

a BUY Rating on the stock, giving a price target of Rs. 779 per share based on

its PE of 18x FY13E EPS of Rs. 43.3 per share.

June 29 th, 2011

Cummins India Ltd.

BUY

Key Take Away

CMP 667

Target Price 779

Expected Upside 18%

Market Data

Nifty Code CUMMINSIND

Sensex 18492

Nifty 5545

52 week High/Low 810/548

Market Cap (Rs Mn) 132125

FV 2

Shareholding Pattern (%)

As on March 2011

Promoters 51.00

MFs, FIs & Banks 20.96

FIIs 11.70

Other Bodies corporate 6.59

Public and others 9.75

Comparative Price Movement

0

100

200

300

400

500

600

700

800

900

0

5000

10000

15000

20000

25000

BSE_SENSEX CIL

Particulars (mns) 2009-10 2010-11 2011-12E 2012-13E

Net Sales 28449 39454 48772 59336

% Growth -14% 39% 24% 22%

PAT 4439 5909 7193 8570

EBIDTA % 21.5% 20.4% 20.1% 19.6%

PAT % 15.6% 15.0% 14.7% 14.4%

EPS 22.4 29.8 36.3 43.3

PE 22.6 22.9 18.4 15.4

ROCE % 34% 38% 38% 37%

ROE % 28% 33% 33% 32%

Sr. Analyst : Jigisha Jaini

Email: [email protected]

Contact: 022 – 40192900

“Fuelling” Engines…



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Initiating Coverage

Cummins India Market Share

CIL - Key power engines

Cummins India Ltd. has four strategic business segments viz, engines, power

generation, components & distribution business.

Engine business

(60-2700HP)

• Automotive

• Industrial (Construction, Mining, Compressors, Pumps, Marine, Rail, Oil & Gas, Defense)

• Recon

Power Generation business

(15-2000 KVA)

• Generators

• Alternators

Component business

• Filtration

• Exhaust & Emission Solutions

• Turbo chargers

Distribution business

• Lubricants (1 PDC/5 zonal offices/ 21 area offices/ 212 dealer

sites)

The engines are normally classified as high horse power (>450 KVA), mid range & low

horse power engines (<200KVA). CIL has a capacity of 20-25 engines per year for its

High horse power range. For its mid range, it has a primary production capacity of 2

lac engines per year which is manufactured through its JV “Tata Cummins Ltd.” off

which 20000 engines are routed through CIL’s legal entity. Power generators have a

manufacturing capacity of close to 15000 generators per year. Overall its capacity

utilization rate is close to 80-85% for FY11.

CIL’s product mix for the respective ranges comprises:

<200KVA – 10%

200-300KVA - 15%

400-450 KVA – 10%

>450 KVA – 40-45%

Total revenues for FY11 has grown by 39% & for FY12 a strong growth of 24% (on a

higher base) is expected on account of strong domestic market, pick up in the

international markets, increased outsourcing from Cummins Inc. & better pricing of

its products (realizations per unit have improved by 1%). Geographically, Exports

have always contributed a major chunk of its revenues as increased outsourcing from

the parent company has been witnessed by CIL due to encouraging & favourable

scenario in the international markets. For FY09, the mix has been 60:40, but was

affected badly in FY10 due to global economic slump which has gradually picked up

in FY11. For FY11, the mix has been 75:25 & going forward we expect the mix to be

slightly tilted towards the domestic market due to favorable conditions.



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Initiating Coverage

Geographical business revenues

3304328449

39454

48772

59336

69912

-13.9%

38.7%

23.6% 21.7%17.8%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

0

10000

20000

30000

40000

50000

60000

70000

80000

2008-09 2009-10 2010-11 2011-12E 2012-13E 2013-14E

Rs. M

ns

Geographical Revenues

Domestic (Rs Mns) Exports Total Total % Growth

60%

40%

83%

17%

74%

26%

71%

29%

70%

30%

71%

29%

Source:Way2wealth Research, Company

Domestic revenues

Revenues on the domestic front are segregated under Powergen unit (PGU),

Industrial business unit (IBU), Auto business unit (ABU), Distribution business unit

(DBU) & spares unit. Power scarcity will fuel demand for diesel engines which will

continue to be strong. Demand for industrial engines, auto-engines and services over

the next couple of years are also expected to stay strong. We expect domestic

demand to grow by 25-20% from FY12-14E.

1991423565

29,454 37,072

45,764 54,304

18.3%

25.0% 25.9%

23.4%

18.7%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

0

10000

20000

30000

40000

50000

60000

2008-09 2009-10 2010-11 2011-12E 2012-13E 2013-14E

Domestic Growth

Domestic (Rs Mns) Dom % Growth

Source: Way2wealth Research, Company



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Initiating Coverage

Segment wise Breakup of Domestic revenues

30%

37%35% 35%

36% 36%

11%

15% 15% 15% 15% 15%

3%

9%

6%

9%8%

7%

16%

22%

19%

25%24%

23%

0%

5%

10%

15%

20%

25%

30%

35%

40%

2008-09 2009-10 2010-11 2011-12E 2012-13E 2013-14E

Segment wise domestic revenues Breakup

Powergen Industrial Auto DBU


Powergen Business Unit

• Powergen has been the highest contributor to the overall domestic revenues

comprising 35% in FY11 & we expect it to stay the same on account of higher

demand for gensets for the ever starving power sector.

• Peak power deficit in India for the year FY10 stood at 12.7% whereas for FY11 the

peak deficit is expected to be 10.2%. With this, the demand for power gensets is

expected to be very strong in the Indian market.

12.20%11.20%

11.70%12.30%

13.80%

16.60%

11.90%12.70%

10.20%

8.80%

7.10% 7.30%8.40%

9.60% 9.90%

11.10%10.10%

8.80%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

18.00%

2003 2004 2005 2006 2007 2008 2009 2010 2011

Indian Power deficit

Peak Deficit Energy Req Deficit



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Initiating Coverage

Source: Way2wealth Research

Diesel Generator Set Market vis-à-vis Cummins market share

• According to Frost & Sullivan, the total market size of diesel generation (DG) sets

(15-kVA-2,000kVA range) pegged at 153305 units in India stood at INR65.5bn in

FY10.

• Cummins had an overall revenue share of 33.9%, but a much higher 53.6% share

in the 375-2,000kVA range (30% of category) while 24.8% share in the 15-375KVA

segment.

• The study estimates the market size to grow at a 10.3% CAGR over FY10-15F,

which will increase the penetration of DG sets. Despite the lower usage in

developed markets, penetration of DG sets is much higher than that in India as it

is a critical back-up power system.

• The Medium Horsepower generator set rated from 375KVA to 750KVA pegged at

5220 units with overall revenue of 12744 mn is expected to grow at CAGR of 6.2%

from FY2010 to 2015. The High Horsepower generator set rated from 750 KVA to

2000 KVA is expected pegged at 1035 units with overall revenue of 7897 mn is

expected to grow at CAGR of 9.8% from FY2010 to 2015.



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Initiating Coverage

Source: Way2wealth Research, Powerica DRHP

Market share of DG Sets in India

KVA Range Units % share Revenues (Rs Mn) % share

MHP-375.1-750 5220 83% 12744.5 62%

HHP-750.1-2000 1035 17% 7897.85 38%

Total 6255 100% 20642.35 100%

Diesel Generator Set Market (FY10)

Cummins Market share in the respective segment

KVA Range Market size Cummins % share Revenues (Rs Mn) Cummins % share

15KVA - 2000KVA 153305 14.7% 66527 33.9%

375-750 KVA 5220 50.8% 12745 53.4%

750-2000KVA 1035 56.0% 7898 54.1%

Rating wise market Estimation in FY10

Cummins has recently entered the below 200KVA range & has been selected by its

parent as the sole base to manufacture power generating sets below 200 kilovolt-

ampere capacity.

End User Market breakUp for MHP & HHP DG Sets in FY10

Units % share Revenue (INR MN) % share

IT/ITES 1376 22.0% 6461 31.3%

Healthcare 1026 16.4% 2374 11.5%

Large Industries 2020 32.3% 6647 32.2%

Others 1833 29.3% 5160 25.0%

Total 6255 100.0% 20642 100.0%

Key demand drivers

Power deficit in peak demand, investments in industrial projects, investments in

large infrastructure projects, growth in commercial & residential real estate & back

up power for critical facilities will drive demand for diesel gensets in India.



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Initiating Coverage

Engines: Key growth numbers

Production of engines is expected to grow by 5.2% in 2011-12 & by 4.8% in 2012-13.

This will be driven by industrial & the automotive segment of industry.

Industrial Business Unit

• Construction, mining, compressors, oilfields, marine, defense, railways and

water-well rigs are key segments of industrial engines usage. Infrastructure

investment will create a strong demand from construction and mining industries.

• The construction & power sector are expected to grow by 11-18% in next 2 years.

Consequently demand for engines is expected to rise by 4-5% growth in terms of

production.

• India stage-III emission norms based on EU stage-IIIA effective from April 2011 on

off-highway wheeled construction equipment, will provide additional growth

opportunity to CIL, as the company offers both mechanical and electronic

engines, meeting emission norms.

Automotive Business Unit

• The demand for automotive segment comes mainly from commercial vehicle and

tractor industries. CIL supplies auto components to many leading heavy

commercial vehicle manufacturers including Ashok Leyland, Tata Motors Volvo-

Eicher Commercial Vehicles and more.

• The production of commercial vehicles is expected to grow by 9-12 per cent in

2011-13. During the same period, the output of tractors too is expected to rise

by 8-15 per cent.

Cummins Sales & Services (CSS)

The CSS division replaces, repowers and reconditions old engines. The segment has

maintained a growth of over 15% in the past years and is expected to grow on similar

lines in the next few years. Rise in the demand for engines will provide more scope

for incremental revenues for this segment.

Capex planned by CIL

• Cummins and several other global automobile and auto parts makers are

expanding their existing facilities to tap into this growing market and also to

export vehicles and components worldwide as production costs in the South Asian

nation are relatively lower than those in Western Europe and the U.S.

• Cummins India has been selected by its parent as the sole base to manufacture

power generating sets below 200 kilovolt-ampere capacity. It plans to spend 300-



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Initiating Coverage

400 crs in FY12 for its manufacturing facility at Phaltan. Four plants at Phaltan

will start in FY12 and another six by 2014. The investment will boost capacity by

20% CAGR over the next five years. Funding will be done from internal accruals.

• The manufacturing facility located on a land bank of 300 acre in Maharashtra

would support future capacity requirements for its auto components as well as

power generation businesses for the next five years.

• The four units coming up includes

o An engine manufacturing unit that would cater the high horsepower

vehicles with 9 to 15 liter engine capacity,

o A re-conditioning facility,

o A unit that would function as parts supply distribution centre and

o The fourth unit for setting up generators for power generation.

• It also has plans to make new products such as turbochargers, alternators, new

fuel systems and also developing larger engines of 350-400 horsepower. They

have been developed and are sold in other parts of the world.

• These engines would fit the Prima range of trucks made by Tata Motors Ltd. as

Tata Motors & Cummins have an equal joint venture to make engines for medium

and heavy commercial vehicles. These new products are likely to contribute 30%

of Cummins India's revenue in the next three years.

Upcoming Projects by various other players in Engines

• ABG Shipyard Ltd has an upcoming diesel engine project at Dahej, Bharuch

entailing a total cost of Rs.3940mn, to be completed by 2011.

• Greaves Cotton to spend Rs.1000mn for its Aurangabad engine manufacturing

plant unit which will have a capacity of 80000 units in 2011.

• General Motors India to have a capacity of 160000 units in Phase I & another

140000 units in Phase II at its Talegaon plant with a total cost of Rs.10450mn by

2012.

• Kirloskar Industries Ltd is spending worth Rs.1000mn for expansion & upgradation

of its DV series of engines from 120-800 HP by 2012.

• Maruti Suzuki India Ltd. to expand its capacity for K-series engines by 250000

units by incurring a capex worth Rs.12500mn at its Gurgaon plant by 2012.

Source: Way2wealth Research, Industry Data



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Initiating Coverage

Exports set to double with Cummins Inc support

13129

4883

10000

11700

13572

15608

-62.8%

110.0%

17.0% 16.0% 15.0%

-80.0%

-60.0%

-40.0%

-20.0%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

2008-09 2009-10 2010-11 2011-12E 2012-13E 2013-14E

Exports Growth

Exports Exports % Growth


• CIL is expected to double its annual exports to its U.S.-based parent to $1 billion

in five years' time, as Cummins Inc seeks to capitalize on India's low-cost, high-

quality manufacturing skills.

• Cummins Inc has decided to source lower than 200kVA diesel gensets from

Cummins India for its global requirements. The company will be setting up a

factory at its Phaltan mega-site in Pune, where it will make the product. The

eventual capacity at the facility will be 40,000 units by FY13. The unit, which

will be commissioned by H1FY12, will have an initial capacity of 15,000 units.

This will boost exports.

• Consequently FY12 exports are likely to cross the Rs11b mark and they are likely

to be approx 15bn by FY14. Demand in Asia and Latin America is expected to be

strong and a revival in the US and Europe is expected to boost exports.

• CIL is also focusing on export of large engines of HHP and these would be of

38liters, 50 liters & 60 liters type of engines. Manufacturing currently takes

places at its Kothrud location but the Management has indicated of putting an

investment at the Phaltan Megasite.



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Initiating Coverage

Cummins Inc Performance targets for the next 5 yrs: Management Guidance

Continuous Endeavor to add product line

Cummins Inc has been continuously adding products to its line of business to make it

more diversified offering a range of products & services to boost its revenues.

Increasing Value Addition to products: Complimentary businesses share

technology, customers & service channel

Cummins Inc expects a CAGR growth of 17% from the Indian market with a well

justified growth in the domestic industry spanning across all segments viz power,

industrial, auto, spares & components as well as export oriented growth from

increased outsourcing & from other Asian & American countries.



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Initiating Coverage

Robust Growth in Emerging Markets: India

Revenue Growth

• We expect revenue growth to be very strong across all product segments &

estimate a growth of 24%, 22% & 18% in FY12E, FY13E & FY14E respectively.

• Growth will be contributed from increased capacity from its Phaltan site,

outsourcing of <200KVA category from the parent company, from higher exports

& also from its reconditioning & servicing department.

Operating Margins

• Cummins India's margins have been impacted by a change in volumes, product

mix and a rise in input costs and pricing action taken by the company.

• Despite a sharp jump in pig iron prices, CIL expects to maintain its operating

margins (21% in FY11E) aided by strong volume growth, price action, a superior

product mix and aggressive cost cutting programs like TRIMS & ACE to maintain

its margins.

Valuations

A strong balance sheet, with zero debt & a strong working capital cycle with ROCE of

close to 38% apart from bullish fundamental growth across its segments, prompts us

to give a BUY Rating on the stock, with a price target of Rs. 779 per share based on

its PE of 18x FY13E EPS of Rs. 43 per share. At the CMP of Rs 667, the stock quotes a

PE of 15x and 13x its FY13E and FY14E EPS of Rs 43 and 51 per share respectively.



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Initiating Coverage

Peer Comparison

Name of company CMP FY10 FY11E FY12E FY13E FY10 FY11E FY12E FY13E FY10 FY11E FY12E FY13E FY10 FY11E FY12E FY13E FY10 FY11E FY12E FY13E

Cummins 667 2 28449 39454 48772 59336 22.8% 21.3% 21.3% 20.8% 15.6% 15.0% 14.7% 14.4% 22.4 29.8 36.3 43.3 22.6 22.9 18.4 15.4

Greaves Cotton 84 2 13923 12789 19606 23270 15.4% 15.6% 16.6% 16.6% 8.4% 9.4% 9.8% 9.8% 4.8 6.6 7.9 9.4 17.5 12.7 10.6 8.9

Swaraj Engines 409 10 2824 3585 4251 4923 17.6% 16.3% 16.1% 16.2% 13.2% 12.2% 11.8% 11.8% 30.1 35.4 40.5 47 13.6 11.6 10.1 8.7

KOEL 128 2 22184 25230 28114 16.3% 13.8% 13.9% 7.4% 6.9% 7.2% 8.5 12.0 14.0 15.1 10.7 9.1

PE FV

EBIDTA % EPS Net Sales PAT %



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Initiating Coverage

Financial Summary

Profit & Loss a/c Statement

Particulars (Rs. Mln) 2009-10 2010-11 2011-12E 2012-13E 2013-14E

Net Sales 28449 39454 48772 59336 69912

Other Income 1216 1774 2195 2373 2796

Total Income 29664 41228 50967 61709 72708

% Growth -14.1% 39.0% 23.6% 21.1% 17.8%

EXPENDITURE :

Raw Materials 18358 26286 32393 39343 46289

Manufacturing Expenses 4816 6533 8177 10037 11896

Total Expenditure 23174 32820 40570 49381 58185

% of Sales 81.5% 83.2% 83.2% 83.2% 83.2%

Operating Profit 6490 8409 10396 12329 14523

EBIDTA Margins % 22.8% 21.3% 21.3% 20.8% 20.8%

Depreciation 361 366 611 672 725

EBIT 6130 8042 9786 11657 13798

EBIT Margins % 21.5% 20.4% 20.1% 19.6% 19.7%

Interest 21 19 20 21 22

PBT & Extraord. Items 6109 8023 9766 11636 13776

EBT Margins % 21.5% 20.3% 20.0% 19.6% 19.7%

Exceptional Items 0 0 0 0 0

PBT but after Ext. Items 6109 8023 9766 11636 13776

Total Tax 1670 2114 2573 3066 3630

Profit After Tax 4439 5909 7193 8570 10146

PAT Margins % 15.6% 15.0% 14.7% 14.4% 14.5%

Balance Sheet

Particulars (Rs. Mln) 2009-10 2010-11 2011-12E 2012-13E 2013-14E

SOURCES OF FUNDS :

Equity capital 396 396 396 396 396

Total Reserves 15214 17666 21389 26496 33179

Total Networth 15610 18062 21785 26892 33575

Debt Capital 86 183 192 201 211

Deferred Tax liability 0 0 0 0 0

Total Liabilities 15696 18245 21977 27093 33786

APPLICATION OF FUNDS :

Gross Block 7776 9217 13272 14600 15768

Less : Accumulated Depreciation 4440 4806 5417 6088 6813

Net Block 3337 4411 7856 8512 8954

Goodwill 0 0 0 0 0

Investments 7329 7255 7255 7255 7255

Deferred Tax Assets 170 187 187 187 187

Current Assets 12673 16804 19629 26758 35678

Inventories 4097 5190 6340 7714 9089

Sundry Debtors 5229 7182 8779 10680 12584

Cash and Bank 559 1037 506 3507 8298

Loans and Advances 2695 3297 3902 4747 5593

Other Current assets 93 99 102 110 115

Current Liabilities 7812 10412 12950 15618 18288

Sundry Creditors 3768 5226 6460 7859 9260

Other Creditors 1409 1883 2439 2967 3496

Provisions 2634 3304 4051 4792 5533

Net Current Assets 4861 6392 6679 11140 17390

Total Assets 15696 18245 21977 27093 33786

Cash Flow

Particulars 2009-10 2010-11 2011-12E 2012-13E 2013-14E

Cash Flow from Operating Act.

Op. Profit before Working Capital 5872 8409 10396 12329 14523

Changes in -

Trade & other Receivables 1568 -1953 -1597 -1901 -1904

Inventories 583 -1093 -1151 -1373 -1375

Trade Payables -780 1931 1790 1927 1930

Loans & Advances -53 -602 -605 -845 -846

Other Current Assets -1 -6 -4 -8 -5

Provisions 120 0 0 0 0

Cash Generated from operations 7309 6686 8830 10128 12323

Direct Taxes Paid -1549 -2114 -2573 -3066 -3630

Net Cash flow from Operating Act. 5759 4572 6257 7062 8693

Cash Flow from Investing Act.

Capex 0 -1441 -4055 -1327 -1168

Purch/Sale of Fixed Assets -618 0 0 0 0

Purch/Sale of Invsts -3340 75 0 0 0

Interest Recd. 23 25 25 25 25

Div recd. 567 725 725 725 725

Advances to subsidiaries -5 0 0 0 0

Net Cash used in Investing act -3368 -615 -3305 -577 -417

Cash Flow from Financing act.

Bnak Overdraft -126 0 0 0 0

Loans repaid 0 0 0 0 0

Dividend Paid -1992 -3463 -3463 -3463 -3463

Interest paid -21 -19 -20 -21 -22

Finance Lease Liability -17 0 0 0 0

Net Cash from Financing act -2155 -3482 -3483 -3484 -3485

Total ( a+b+c) 236 475 -531 3001 4791

Opening balance for cash & cash eq. 326 562 1037 506 3507

Closing balance for cash & cash eq. 562 1037 506 3507 8298

Ratios

Particulars 2009-10 2010-11 2011-12E 2012-13E 2013-14E

Valuation Ratios

Mkt.Price - Rs. 506.00 684.00 667.00

EPS - Rs. 22.4 29.8 36.3 43.3 51.2

EBIDTA % 22.8% 21.3% 21.3% 20.8% 20.8%

PBT % 21.5% 20.3% 20.0% 19.6% 19.7%

PAT % 15.6% 15.0% 14.7% 14.4% 14.5%

EV - Rs. Mln. 99715 134577 135118 132126 127346

EV/EBIDTA 15.4 16.0 13.0 10.7 8.8

EV/Sales 3.5 3.4 2.8 2.2 1.8

Book Value in Rs.per share 78.8 91.2 110.0 135.8 169.6

P/E ratio 22.6 22.9 18.4 15.4 13.0

ROCE - % 33.8% 37.7% 37.9% 36.8% 35.3%

ROE - % 28.4% 32.7% 33.0% 31.9% 30.2%

Dividend Yield 2.4% 2.2% 2.2% 2.2% 2.2%

Balance Sheet Ratios

Debt-Equity Ratio 0.01 0.01 0.01 0.01 0.01

Current Ratio 1.6 1.6 1.5 1.7 2.0

Debtor Days 60 60 59 59 59

Creditor Days 43 43 43 43 43

Depreciation / GFA 4.6% 4.0% 4.6% 4.6% 4.6%

Interest Cover Ratio 298.9 423.3 490.5 556.5 627.3

Turnover Ratios

Fixed Assets 3.7 4.3 3.7 4.1 4.4

Inventory 6.9 7.6 7.7 7.7 7.7

Debtors 5.8 5.8 5.9 5.9 5.9



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Initiating Coverage

Appendix

Cummins in India since 1962

Cummins Product family



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Initiating Coverage

RESEARCH TEAM

RESEARCH TEAM

K.N.Rahaman Deputy Research Head Equities & Commodities [email protected]

Jigisha Jaini Sr. Research Analyst Capital Goods & Engineering [email protected]

Nisha Harchekar

Sr. Research Analyst

FMCG, Hotels, Media

[email protected]

Sejal Jhunjhunwala Sr. Research Analyst Auto, Shipping & Metals [email protected]

Abhishek Kothari Research Analyst Banking, NBFC & Financial Services

[email protected]

Krishna Reddy Research Analyst Commodities, Economic Update [email protected]

MSR Prasad Research Analyst Commodities [email protected]

Ritu Gupta Research Analyst Mutual Funds [email protected]

Aditya Agarwal Sr. Derivative Analyst Derivative Strategist & Technicals [email protected]

Arun Kumar Technical Analyst Technical Analysis - Commodities Arun.Kumar @way2wealth.com

Contact

022-40192900



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Initiating Coverage

DISCLAIMER

Analyst Certification: I, Jigisha Jaini, the research analyst and author of this report, hereby certify that the views expressed in this research report accurately reflect our

personal views about the subject securities, issuers, products, sectors or industries. It is also certified that no part of the compensation of the analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations or views in this research. The analyst(s), principally responsible for the preparation of this research report, receives

compensation based on overall revenues of the company (Way2Wealth Brokers Private Limited, hereinafter referred to as Way2Wealth) and has taken reasonable care to achieve and maintain independence and objectivity in making any recommendations.

Disclaimer

This report is for the personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to you. Way2Wealth is not soliciting any

action based upon it. Nothing in this research shall be construed as a solicitation to buy or sell any security or product, or to engage in or refrain from engaging in any such transaction. The contents of this material are general and are neither comprehensive nor appropriate for every individual and are solely for the informational purposes of the readers. This material does not take into account the specific objectives, financial situation or needs of an individual/s or a Corporate/s or any entity/s. This research has been prepared for the general use of the clients of the Way2Wealth and must not be copied, either in whole or in part, or distributed or redistributed to any other

person in any form. If you are not the intended recipient you must not use or disclose the information in this research in any way. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. Way2Wealth will not treat recipients as customers by virtue of their receiving this report. Neither this document nor any copy of it may be taken or transmitted into the United States (to US Persons), Canada or Japan or distributed, directly or indirectly, in the United States or

Canada or distributed, or redistributed in Japan to any residents thereof. The distribution of this document in other jurisdictions may be restricted by the law applicable in the relevant jurisdictions and persons into whose possession this document comes should inform themselves about, and observe, any such restrictions.

It is confirmed that Ms. Jigisha Jaini, the author of this report has not received any compensation from the companies mentioned in the report in the preceding 12 months. Our

research professionals are paid in part based on the profitability of Way2Wealth, which include earnings from other business. Neither Way2Wealth nor its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information contained in this report.

The report is based upon information obtained from sources believed to be reliable, but we do not make any representation or warranty that it is accurate, complete or up to date

and it should not be relied upon as such. Way2Wealth or any of its affiliates or employees makes no warranties, either express or implied of any kind regarding any matter pertaining to this report, including, but not limited to warranties of suitability, fitness for a particular purpose, accuracy, timeliness, completeness or non-infringement. We accept

no obligation to correct or update the information or opinions in it. Way2Wealth or any of its affiliates or employees 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. The recipients of this report should rely on their own investigations. In no event shall Way2Wealth be liable for any damages of any kind, including, but not limited to, indirect, special, incidental, consequential, punitive, lost profits, or lost opportunity, whether or not

Way2Wealth has advised of the possibility of such damages.

This material contains statements that are forward-looking; such statements are based upon the current beliefs and expectations and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. These uncertainties include but are not limited to: the risk of adverse movements or

volatility in the securities markets or in interest or foreign exchange rates or indices; adverse impact from an economic slowdown; downturn in domestic or foreign securities and trading conditions or markets; increased competition; unfavorable political and diplomatic developments; change in the governmental or regulatory policies; failure of a corporate event and such others. This is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular trading strategy. No

part of this material may be copied or duplicated in any form by any means or redistributed without the written consent of Way2Wealth. In no event shall any reader publish, retransmit, redistribute or otherwise reproduce any information provided by Way2Wealth in any format to anyone. Way2Wealth and its affiliates, officers, directors and employees

including persons involved in the preparation or issuance of this report may from time to time have interest in securities / positions, financial or otherwise in the securities related to the information contained in this report.

To enhance transparency, Way2Wealth has incorporated a Disclosure of Interest Statement in this document. This should, however, not be treated as endorsement of the views expressed in the report.

Disclosure of Interest Statement in CIL as on 29th June 2011

1. Name of the analyst : Jigisha Jaini

3. Analysts’ ownership of any stock related to the information contained : NIL

4. Way2Wealth ownership of any stock related to the information contained : NIL

5. Broking relationship with company covered : NO

6. Investment Banking relationship with company covered : NO

This information is subject to change without any prior notice. Way2Wealth reserves at its absolute discretion the right to make or refrain from making modifications and alterations

to this statement from time to time. Nevertheless, Way2Wealth is committed to providing independent and transparent recommendations to its clients, and would be happy to provide information in response to specific client queries.

Before making an investment decision on the basis of this research or any information contained in this material, the reader needs to consider, with or without the assistance of an

adviser or a qualified professional, whether the advice is appropriate in light of their particular investment needs, objectives and financial circumstances. All investments involve risk and past performance does not guarantee future results. Investigate before you invest. Readers are strongly cautioned to verify any information before using it for any personal or business purpose. The price of securities can and does fluctuate, and an individual security may even become valueless. International investors are reminded of the additional risks

inherent in international investments, such as currency fluctuations and international stock market or economic conditions, which may adversely affect the value of the investment. Opinions expressed are subject to change without any notice. Neither the company nor the director or the employee of Way2Wealth accepts any liability whatsoever for any direct, indirect, consequential or other loss arising from any use of this research and/or further communication in relation to this research.

Copyright in this document vests exclusively with Way2Wealth Brokers Private Limited.

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