Economy News Corporate News - Kotak Securities · deterioration to stabilize during Q4FY11. PSU...

APRIL 8, 2011

Economy News4 Food inflation fell to a four-month low of 9.18% for the week ended

March 26 from 9.5% in the previous week and 21.15% a year ago (ET).

4 The finance ministry has said that it is holding consultations with the RBIand will approve the draft guidelines for granting new banking licenceswithin 15 to 20 days (ET).

4 India has asked Switzerland to expeditiously ratify the amended doubletaxation avoidance agreement (DTAA) to facilitate exchange ofinformation on funds parked in Swiss banks by Indian nationals (ET).

Corporate News4 Cairn Energy has extended the April 15 deadline to conclude the $9.6-

billion Cairn-Vedanta deal as it expects further delays in getting theIndian governments approval after the Cabinet decided on Wednesday toform a group of ministers (GoM) to examine the transaction (BS).

4 Hotel Leela Venture is considering a new mid-market brand by end thisyear even as it mulls an overseas foray into Maldives and Mauritius (BS).

4 Syndicate Bank has offered an out-of-court settlement withWockhardt which has been taken to court by multiple creditors.The bankhas told the company that it is willing to accept Wockhardt sharesequivalent to the outstanding bond amount (ET).

4 Godrej Consumer Products Ltd (GCPL) is scouting for furtheracquisitions in Asia, Africa and South America. The firm is also planning tointroduce some of its acquired overseas brands in India (BS).

4 Rashtriya Chemicals and Fertilizers (RCF), Coal India and gasdistributor GAIL will together spend Rs.75 bn to build a coal gasificationfacility in Orissa to meet rising demand for power by fertilizer and powergenerating companies (ET).

4 TVS Group is planning to take a plunge into low-cost housing through TVSHousing, a 100 per cent arm of TVS Motor Company, which woulddebut through a pilot low-income housing project at Nanmangalam, nearChennai (BS).

4 The application of Reliance Infrastructure (R-Infra) for an extension inits existing power distribution licence to the suburbs of this metropolishas been rejected. It has, instead, been told to join the competitiveprocess for a new one, with four other bidders (BS).

4 The US drug regulator has opposed American firm Mylans request tostrip Ranbaxy Laboratories of its six months exclusive right to sellLipitor in the US (ET).

Equity% Chg

7 Apr 11 1 Day 1 Mth 3 Mths

Indian IndicesSENSEX Index 19,591 (0.1) 6.2 (0.5)

NIFTY Index 5,886 (0.1) 6.6 (0.3)BANKEX Index 13,385 0.3 7.7 7.0BSET Index 6,605 (0.7) 5.1 (1.1)

BSETCG INDEX 13,721 0.5 8.1 (6.5)BSEOIL INDEX 10,224 (0.5) 6.0 (2.8)CNXMcap Index 8,419 0.9 10.3 (0.8)

BSESMCAP INDEX 8,897 1.3 12.0 (5.0)

World IndicesDow Jones 12,409 (0.1) 1.6 6.3

Nasdaq 2,796 (0.1) 1.1 3.4FTSE 6,007 (0.6) 0.5 0.4Nikkei 9,591 0.1 (8.0) (8.2)

Hangseng 24,282 (0.0) 2.8 2.9

Value traded (Rs cr)7 Apr 11 % Chg - Day

Cash BSE 3,466 (11.4)

Cash NSE 12,548 (14.1)Derivatives 74,190 (28.3)

Net inflows (Rs cr)6 Apr 11 % Chg MTD YTD

FII 716 (54.2) 6,366 3,249Mutual Fund (203) (41.4) (683) 1,369

FII open interest (Rs cr)6 Apr 11 % Chg

FII Index Futures 17,065 (1.4)FII Index Options 42,351 0.5

FII Stock Futures 31,251 1.4FII Stock Options 469 1.7

Advances / Declines (BSE)7 Apr 11 A B S Total % total

Advances 131 1,479 297 1,907 67Declines 72 785 161 857 30

Unchanged 2 82 17 101 4

Commodity % Chg

7 Apr 11 1 Day 1 Mth 3 Mths

Crude (NYMEX) (US$/BBL) 110.8 0.4 5.5 25.8

Gold (US$/OZ) 1,455.8 (0.0) 2.4 6.9Silver (US$/OZ) 39.5 0.4 11.2 38.0

Debt / forex market7 Apr 11 1 Day 1 Mth 3 Mths

10 yr G-Sec yield % 7.97 7.99 7.97 8.20Re/US$ 44.17 44.17 45.05 45.39

Sensex

Source: ET = Economic Times, BS = Business Standard, FE = Financial Express,BL = Business Line, ToI: Times of India, BSE = Bombay Stock Exchange

15,100

16,600

18,100

19,600

21,100

Apr-10 Jul-10 Oct-10 Jan-11 Apr-11

Kotak Securities - Private Client Research Please see the disclaimer on the last page For Private Circulation 2

MORNING INSIGHT April 8, 2011

RESULTS PREVIEW

Research [email protected]+91 22 6621 6301

Q4FY11 RESULTS PREVIEW

22.5% revenue growth expected during the quarter (ex Oil &Gas)We expect stocks under our coverage (ex-banking / NBFCs) to report revenuegrowth of about 26% on a YoY basis. This is partly helped by the scale up inrevenues of Cairn India. Ex - Oil & Gas, revenue growth is expected to be about22.5%. Among others, Auto, Capital Goods and IT are expected to propel thisgrowth. Revenues of auto and IT companies are expected to be driven by volumes,while that of cement would be driven by higher realisation. Higher execution levelsshould drive revenues of capital goods companies, though the growth rate is notexpected to match up to our coverage average. We will watch our for executionissues, if any, in construction and capital goods sectors.

Banks / NBFCs under our coverage are expected to post a 24.6% rise in NII. Ourbanking universe is likely to grow faster with 27.6% growth (Public: 30.6%, Pvt:20.0%); whereas NBFCs are likely to grow at 20.9%. Credit growth for banks haspicked up to 21.5% (as on March 25, 2011, 2010) v/s 17.0% in the correspondingprevious period. During the same period, deposits have grown by 16.0% YoY.

Moreover, we expect 10-20 bps compression in NIM during Q4FY11 (QoQ) on backof lagged impact of deposit re-pricing at higher rates. However, this would be partlycompensated by the recent hike in lending rates as assets are re-priced faster thanthe deposits. However, going forward, we do not foresee any significant pressure onthe margins as we believe FD rates have peaked and recent softening in short termCD rates is likely to further aid in sustaining healthy NIMs.

Margins are expected to be steady for our coverage universe (ex-Oil & Gas)EBIDTA margins for the companies under our coverage are expected to remainsteady on a YoY basis (ex Oil & Gas). Most of the sectors, except Capital Goods &Power, are expected to witness pressure on margins. The pressure on margins is dueto higher raw material prices, which companies have not been able to pass on fully.Moreover, higher attrition and salaries are expected to hurt margins of ITcompanies.

As far as banks are concerned, pre-provisioning profits are expected to rise by about18.6% v/s a 27.6% rise in NIIs. A relatively lower treasury profit is expected to havean impact. NBFCs are expected to report a growth of about 23.5% in pre-provisioning profits, slightly better than the NII growth. We also expect asset qualitydeterioration to stabilize during Q4FY11. PSU banks are likely to report slightlyhigher slippages with the shift to system-based NPA recognition. However, strongrecoveries & upgradation are likely to prevent a sharp rise in overall NPAs. At theother end, private sector banks would further witness improvement in their assetquality leading to lower credit costs.

Focus on concernsWhile 4QFY11 results will be important, the focus has been and is expected to be onsome of the other pressing concerns.

Domestically, we will focus hard on the execution issues, if any, faced by capitalgoods and construction companies. More importantly, the order bookings by largecapital goods and construction companies during the quarter will be of interest to us.The past few months have seen a slow-down in order flows. We will also keenlyhear the management comments on any early signs of momentum in decision -making and order - flows for these companies.

Inflation and the increase in interest rates will remain a focus point for the markets.To that extent, stocks of debt heavy companies are expected to remain underpressure. Also all rate sensitive sectors will be watched with caution by the marketsin the short term, we understand.



Q4FY11 estimates - ex-Banking & NBFCs*

Sector Revenues (Rs mn) EBIDTA (%) EBIDTA (Rs mns) PAT (Rs mns)

4QFY11 4QFY10 YoY (%) 4QFY11 4QFY10 4QFY11 4QFY10 YoY (%) 4QFY11 4QFY10 YoY (%)

Auto (5) 215,983 176,903 22.1 11.9 14.8 25,749 26,201 -1.7 19,501 18,459 5.6

C Goods / Engg (23) 592,249 490,845 20.7 16.2 15.1 96,193 74,288 29.5 60,056 42,915 39.9

Cement (5) 145,986 113,051 29.1 23.5 24.9 34,354 28,204 21.8 16,804 12,551 33.9

Construction (12) 141,331 127,550 10.8 15.9 16.1 22,440 20,515 9.4 8,514 8,055 5.7

IT (14) 341,295 260,165 31.2 25.1 26.3 85,763 68,411 25.4 66,448 54,272 22.4

Media (8) 28,382 22,804 24.5 27.3 30.8 7762.0 7,035 10.3 5,533 4,186 32.2

Oil & gas (4) 97,830 36,240 170.0 41.2 20.2 40,333 7,320 451.0 29,179 5,018 481.5

Power (1) 144,880 123,534 17.3 31.3 24.6 45,381 30,439 49.1 25,082 20,177 24.3

Coverage universe 1,707,936 1,351,092 26.41 21.0 19.4 357,975 262,413 36.4 231,117 165,633 39.5

Source: Companies, Kotak Securities - Private Client Research;

Q4FY11 estimates - Banking & NBFC

Sector Net Interest Income Pre-Provisioning Profit PAT

(Rs mn) 4QFY11 4QFY10 YoY (%) 4QFY11 4QFY10 YoY (%) 4QFY11 4QFY10 YoY (%)

Banking (12) 276,403 216,688 27.56 214,399 180,821 18.57 107999 82307 31.21

NBFCs (5) 207,386 171,606 20.85 159,514 129,163 23.50 98799 74552 32.52

Coverage Universe 483,789 388,294 24.59 373,913 309,984 20.62 206798 156859 31.84

Source: Companies, Kotak Securities - Private Client Research

We will also maintain a close watch on the global commodity prices. These areexpected to impact margins in 4QFY11 and consistent increase in the same maykeep margins of corporate India under pressure, if the increases are not fully passedon. Any lingering impact may dampen sentiments.

ConclusionMarkets have been on an uptrend since mid - March and have risen by about 9 -10% over this period. The possible reasons for this uptrend are the fund flows andlikely short - covering. On the other hand, concerns remain in the form of highinflation and increasing crude prices.

In such a scenario, corporate results assume greater importance if the markets haveto sustain and move higher from the current levels. Expectations are running highabout the ability of the Indian economy to sustain and improve the growth rates,though some concerns like high crude prices have recently emerged. Consequently,corporate revenue growth and profit growth rates are also expected to be sustainedand improved upon.

We opine that, if the markets have to sustain the current levels and move up, it willneed to have more confidence in the medium-to-long term growth rates ofCorporate India. Also, the above-mentioned concerns have to be effectively andimmediately addressed.

The room for disappointment is very limited, in our view. Disappointment in earningsor on future outlook may result in corresponding specific corrections.



RESULTS PREVIEW

Arun [email protected]+91 22 6621 6143

AUTOMOBILE

Volumes remain buoyant despite headwindsOEM's enjoyed yet another quarter of robust volumes despite various headwinds.Retail sales remained healthy for major part of Jan-Mar quarter. Status-quo on exciseduty in the budget came as a major relief for the automobile manufacturers. Vol-umes were strong across all the segments; be it the two wheelers, passenger cars orthe commercial vehicles. Rural demand contributed towards the excellent perfor-mance of the two wheeler segment. General increase in living standard and improv-ing aspirational values continued to drive the demand for passenger cars. Despitevarious macro headwinds commercial vehicles demand remained impressive. Goinginto FY12, despite increased base, volume growth is expected to remain reasonablystrong especially in the two wheeler and passenger car segment. Rising interest cost,increase in vehicle prices, increasing fuel prices and slowdown in the economy willremain the key risk to the volume growth in FY12.

Volumes

Company Q4FY11 Q3FY11 QoQ (%) Q4FY10 YoY (%)

Bajaj Auto 948,195 946,850 0.1 808,973 17.2

Hero Honda 1,454,431 1,428,030 1.8 1,186,536 22.6

Maruti Suzuki 343,350 330,687 3.8 287,422 19.5

TVS Motors 536,689 524,171 2.4 418,852 28.1

Source: Companies

Surging raw material cost to keep margins under checkIncreasing raw material prices have been a concern for the automakers over thepast few quarters and the same continued into 4QFY11. Prices of key metals likesteel and aluminum continued their upward journey. During 4QFY11, spot steel priceare up by 22% YoY and 9.4% QoQ. Spot aluminum prices have jumped by 16%YoY and 6.7% QoQ. Rubber prices too saw a sharp spike in the prices in 4QFY11even though there was some correction in March 2011. Spot rubber prices in4QFY11 were up by 68% YoY and 22% QoQ. Companies have been announcingprice hikes virtually every quarter (and sometimes more than one time in the quar-ter). Through price hikes the companies have been able to pass on only a proportionof cost increases and have been absorbing the balance.

Accordingly, despite volume growth and various rounds of price increases we expectmargins to be lower YoY. Sequentially too due to cost pressure we expect marginsto remain under pressure. However HH, MSIL and Escorts have shown sharp declinein margins over the past few quarters for various reasons. 3QFY11 margins for thesecompanies were also impacted due to one-off items. We believe that their marginshave more or less bottomed and therefore anticipate sequential margin improve-ment but will still remain way below 4QFY10 margins.

Commodity prices

(per tonne) Q4FY11 Q3FY11 QoQ (%) Q4FY10 YoY (%)

Steel $542 $496 9.4 $445 21.9

Aluminium $2,499 $2,342 6.7 $2,163 15.6

Copper $9,650 $8,635 11.8 $7,231 33.4

Nickel $26,896 $23,601 14.0 $19,947 34.8

Source: LME



Profitability trend will continue to remain mixedBAL is expected to report YoY jump in profits on account of healthy volume growthand strong margins versus its peers. TVSM 4QFY10 profit was impacted by an ex-traordinary loss to the tune of Rs455mn and there was tax write back of Rs138mn.For MSIL, HH and Escorts, YoY growth in earnings are expected to remain flat/nega-tive due to sharp contraction in EBITDA margins.

Quarterly estimates - Automobiles

Company Revenues (Rs mn) EBIDTA (%) PAT (Rs mn) EPS (Rs)

Q4 Q3 QoQ Q4 YoY Q4 Q3 Q4 Q4 Q3 QoQ Q4 YoY Q4 Q3 QoQ Q4 YoYFY11 FY11 (%) FY10 (%) FY11 FY11 FY10 FY11 FY11 (%) FY10 (%) FY11 FY11 (%) FY10 (%)

Bajaj Auto 43,791 41,771 4.8 33,995 28.8 19.8 20.3 22.9 6,556 6,671 (1.7) 5,287 24.0 22.7 23.1 (1.7) 18.3 24.0

Hero Honda 51,656 51,617 0.1 41,223 25.3 13.2 11.2 17.3 5,639 4,290 31.5 5,988 (5.8) 28.2 21.5 31.5 30.0 (5.8)

Maruti Suzuki 96,728 93,261 3.7 82,808 16.8 9.0 7.9 11.7 6,549 5,652 15.9 6,566 (0.3) 22.7 19.6 15.9 22.7 (0.3)

TVS Motors 15,785 16,467 (4.1) 12,160 29.8 6.9 7.1 8.4 452 558 (18.9) 203 122.9 1.0 1.2 (18.9) 0.4 122.9

Escorts (Standalone) * 8,023 8,278 (3.1) 6,717 19.4 5.9 4.1 9.3 304 255 19.2 415 (26.7) 2.9 2.4 19.2 4.4 (34.6)

Total 215,983 211,393 2.2 176,903 22.1 19,501 17,425 11.9 18,459 5.6

Source: Companies, Kotak Securities - Private Client Research; * Estimates are for Q1FY11

Key points to watch out for...n Bajaj Auto - Management has been focusing on the 20% EBITDA margin and is

even willing to sacrifice on volumes in order to maintain healthy margins.

n Hero Honda - Volumes for the company remained flat sequentially. We believethat the margins for the company have more or loss bottomed out and thereforeanticipate some recovery there.

n Maruti Suzuki - Volumes for the company remained strong for the quarter.Given stable forex movement, we expect some improvement in margins over3QFY11.

n TVS Motors - No major change in product mix will lead to slight decline in mar-gins.

n Escorts - Price hikes coupled with healthy tractor sales should help the companyimprove margins over 1QFY11.

Steel Price Movement (US$ per ton)

Source: LME

Rubber price movenment (Rs per 100 kgs)

Source - Rubber Board of India

$350

$400

$450

$500

$550

$600

Jan-

10

Mar

-10

May

-10

Jul-1

0

Sep

-10

Nov

-10

Jan-

11

Mar

-11

14,000

16,000

18,000

20,000

22,000

24,000

26,000

Jan-

10

Mar

-10

May

-10

Jul-1

0

Sep

-10

Nov

-10

Jan-

11

Mar

-11



BANKING & NBFCS

Outlook: Positiveq During Q4FY11, core income for Banks & NBFCs under our coverage we

expected to register a robust growth of 24.6% (YoY). Our banking uni-verse is likely to grow faster with 27.6% growth (Public: 30.6%, Pvt:20.0%); whereas NBFCs are likely to grow at 20.9%. Net profit growth islikely to be much stronger (31.8% YoY) aided by low base - private banksare expected to deliver 36.0% growth; PSU banks would see a 28.8%growth in earnings.

q Credit growth has picked up to 21.5% (YoY) as on March 25, 2011 vs.17.0% witnessed a year ago. Deposit mobilization has also improved to16.0% during the same the period. Although last fortnight of FY11 sawsharp rise in loan growth in absolute terms, high base of last yearwedged the overall credit growth number (23.4% YoY as on March 11,2011); however, this number is still higher than 20% projected by theRBI.

q We expect 10-20 bps compression in NIM during Q4FY11 (QoQ) on backof lagged impact of deposit re-pricing at higher rates. However, thiswould be partly compensated by the recent hike in lending rates as as-sets are re-priced faster than the deposits. Banks are likely to witnessimprovement in their NIMs on YoY basis due to low base in Q4FY10.Going forward, we do not foresee any significant pressure on the mar-gins as we believe FD rates have peaked and recent softening in shortterm CD rates is likely to aid in sustaining healthy NIMs.

q We expect asset quality deterioration to stabilize during Q4FY11. PSUbanks are likely to report slightly higher slippages with the shift to sys-tem-based NPA recognition. However, strong recoveries & upgradationare likely to cushion from any sharp rise in overall NPAs. At the otherend, private sector banks would further witness improvement in theirasset quality leading to lower credit costs.

q 10-Yr G-Sec yield remained flat during the Q4FY11. Hence, we do notexpect any significant MTM depreciation hit on the Investment portfoliofor banks under our coverage. We expect moderate growth in non-inter-est income for banks under our coverage due to muted treasury profitalong with lower 3rd party distribution income.

q Top Picks: ICICI bank, Axis Bank, SBI, BoB, Allahabad Bank, J&K Bank

Core income expected to register a robust growth; net incomegrowth to be much strongerDuring Q4FY11, core income for Banks & NBFCs under our coverage are expected toregister a robust growth of 24.6% (YoY). Our banking universe is likely to growfaster with 27.6% growth; whereas NBFCs are likely to grow at 20.9%.

Net profit growth is likely to be much stronger (31.8% YoY) aided by low base -private banks are expected to deliver 36.0% growth; PSU banks would see a 28.8%growth in earnings.

In terms of Net Interest Income (NII), public sector banks under our coverage arelikely to report 30.6% growth higher than the 20.0% growth expected for the pri-vate sector banks. However, in terms of net profit, we expect private sector banksunder our coverage universe to deliver a robust earning growth of 36.0% as againstslightly moderate growth (28.8% YoY) expected for PSU banks due to lower trea-sury profit and higher provisions.

We expect Allahabad Bank, IOB and SBI to deliver relatively better numbers in ourPSU banking space. Similarly in private banking universe, we expect Axis bank,HDFC bank and ICICI bank to deliver better bottom line growth.

Top Picks:ICICI BankAxis Bank

State Bank of IndiaBank of BarodaAllahabad Bank

J&K Bank

RESULTS PREVIEW

Saday [email protected]+91 22 6621 6312



Credit growth to remain strongCredit growth has picked up to 21.5% (YoY) as on March 25, 2011 vs. 17.0% wit-nessed a year ago. Deposit mobilization has also improved to 16.0% during thesame the period. Although last fortnight of FY11 saw sharp rise in loan growth inabsolute terms, high base of last year wedged the overall credit growth number(23.4% YoY as on March 11, 2011); however, this number is still higher than 20%projected by the RBI.

Trend in business growth

(Rs bn) 25-Mar-10 31-Dec-10 26-Mar-10 YoY (%)

Aggregate Deposits 52,047 49,714 44,866 16.9

Bank Credit 39,387 37,632 32,404 21.5

Incremental C/D ratio (YOY - %) 97.2 105.0 71.7

C/D Ratio (%) 75.7 75.7 72.2

Source: RBI

We expect loan to grow at 20%+ during FY12 on back of improvement in businessconfidence which is likely to translate into higher capex demand. Currently bankshave funded this growth by liquidating their SLR and MF investments. However,going forward, deposit growth is likely to calibrate the loan growth.

NIM to slightly compress sequentially; however to improve YoYDuring Q4FY11, we expect 10-20 bps (QoQ) compression in NIM for the bankingsystem as a whole (again depending on the CASA mix or liability franchise of theindividual banks) on back of lagged impact of deposit re-pricing at higher rates.However, this would be partly compensated by the recent hike in lending rates asassets are re-priced faster than the deposits. Banks are likely to witness improve-ment in their NIMs on YoY basis due to low base in Q4FY10.

Going forward, we do not foresee any significant pressure on the margins as webelieve FD rates have peaked and recent softening in short term CD rates is likely toaid in sustaining healthy NIMs.

Treasury gains likely to be muted10-Yr G-Sec yield remained flat during the Q4FY11. Hence, we do not expect anysignificant MTM depreciation hit on the Investment portfolio for banks under ourcoverage. We expect moderate growth in non-interest income for banks under ourcoverage due to muted treasury profit along with lower 3rd party distribution in-come.

Asset quality to stabilize; PSU banks to witness higher slippagewhile Pvt banks to see improvementWe expect asset quality deterioration to stabilize during Q4FY11. PSU banks arelikely to report slightly higher slippages with the shift to system-based NPA recogni-tion. However, strong recoveries & upgradation are likely to cushion from any sharprise in overall NPAs. Hence, we are expecting stable gross NPA with some negativebias.

On the other hand, we have seen NPA formations in retail segment have reduced.Therefore, we are expecting private sector banks to report further improvement intheir asset quality leading to lower credit costs.



Quarterly estimates - Banking

Company Net Interest Income (Rs mn) Pre-Provisioning Profit (Rs mn) PAT (Rs mn) EPS (Rs)

Q4 Q3 QoQ Q4 YoY Q4 Q3 QoQ Q4 YoY Q4 Q3 QoQ Q4 YoY Q4 Q3 QoQ Q4 YoYFY11 FY11 (%) FY10 (%) FY11 FY11 (%) FY10 (%) FY11 FY11 (%) FY10 (%) FY11 FY11 (%) FY10 (%)

Banks

Allahabad Bank 10,594 10,516 0.7 7,426 42.7 7,894 7,884 0.1 6,580 20.0 3,964 4,158 (4.7) 2,245 76.6 8.9 9.3 (4.7) 5.0 76.4

Andhra Bank 8,056 8,399 (4.1) 6,562 22.8 5,939 6,266 (5.2) 5,272 12.6 3,156 3,309 (4.6) 2,403 31.4 6.5 6.8 (4.6) 5.0 31.5

Axis Bank 17,867 17,331 3.1 14,601 22.4 16,954 16,585 2.2 13,838 22.5 9,711 8,914 8.9 7,649 27.0 23.8 21.4 10.8 18.9 25.5

BOB 23,097 22,923 0.8 17,450 32.4 18,270 18,512 (1.3) 15,473 18.1 10,634 10,689 (0.5) 9,063 17.3 28.3 29.3 (3.5) 24.9 13.8

HDFC Bank 28,723 27,767 3.4 23,514 22.2 21,218 20,727 2.4 16,944 25.2 10,990 10,878 1.0 8,366 31.4 23.8 23.5 1.1 18.3 29.8

ICICI Bank 23,444 23,117 1.4 20,349 15.2 23,628 23,117 2.2 20,349 16.1 14,803 14,370 3.0 10,056 47.2 12.9 12.5 3.1 9.0 42.6

Indian Bank 10,697 10,377 3.1 9,341 14.5 7,984 8,119 (1.7) 8,723 (8.5) 4,215 4,913 (14.2) 4,100 2.8 9.8 11.2 (12.1) 9.3 5.8

IOB 10,789 11,302 (4.5) 8,204 31.5 6,592 8,041 (18.0) 4,556 44.7 2,385 2,317 3.0 1,274 87.2 4.4 4.3 3.0 2.3 87.1

J&K Bank 3,824 3,895 (1.8) 3,087 23.9 2,877 2,808 2.5 2,347 22.6 1,586 1,679 (5.5) 1,200 32.1 32.7 34.6 (5.5) 24.8 32.1

PNB 31,041 32,033 (3.1) 24,980 24.3 21,936 23,499 (6.6) 23,325 (6.0) 10,449 10,898 (4.1) 11,350 (7.9) 33.1 34.6 (4.1) 36.0 (7.9)

SBI 92,298 90,498 2.0 67,214 37.3 69,140 67,645 2.2 51,939 33.1 30,140 28,281 6.6 18,666 61.5 47.5 44.5 6.6 29.4 61.5

Union Bank 15,973 16,158 (1.1) 13,961 14.4 11,966 12,611 (5.1) 11,475 4.3 5,966 5,796 2.9 5,935 0.5 11.8 11.5 3.1 11.8 0.5

NBFCs

HDFC Ltd 12,955 10,277 26.1 11,282 14.8 14,565 12,279 18.6 12,819 13.6 10,783 8,909 21.0 9,264 16.4 36.9 30.5 21.0 32.5 13.6

IDFC 64,948 65,624 (1.0) 58,767 10.5 46,965 49,663 (5.4) 37,038 26.8 33,066 32,070 3.1 22,687 45.8 1.4 2.1 (30.9) 1.7 (17.6)

LIC Hsg Finance 3,746 3,522 6.4 2,979 25.7 4,120 4,891 (15.8) 2,856 44.3 2,639 2,136 23.6 2,135 23.6 27.8 22.5 23.5 22.5 23.6

M&M Finance 41,255 33,906 21.7 33,959 21.5 29,977 22,775 31.6 25,069 19.6 16,775 11,588 44.8 14,023 19.6 16.4 12.1 36.2 14.6 12.5

Shriram Transport 84,482 83,665 1.0 64,620 30.7 63,887 63,514 0.6 51,381 24.3 35,536 30,136 17.9 26,444 34.4 15.8 13.4 18.0 12.0 31.8

TOTAL 483,789 471,310 2.6 388,294 24.6 373,913 368,937 1.3 309,984 20.6 206,798 191,039 8.2 156,859 31.8

Source: Companies; Kotak Securities - Private Client Research

Higher pension provisioning might impact earning estimates offew PSU banksIn our view, earnings for few PSU banks might get impacted during Q4FY11 due tohigher operating expenses. This is on back of RBI guidelines released in Feb 2011,when it has asked banks to fully provide for second pension option liability for theretired employees. However, Central Bank has allowed these banks to amortize thepension and gratuity liability for existing employees over five years starting FY11. Inour view, this does not mean increase in overall provisions. This would result intolower future liability by the same amount for these banks.

Top PicksICICI bank, Axis Bank, SBI, BoB, Allahabad Bank, J&K Bank



CAPITAL GOODS & POWER

Diverging from its trend of robust growth in the first half of the year, thecapital goods index has clearly lost steam in recent months. For the monthof January 2011, capital goods index shrunk 18.6% yoy. While higher base ofprevious year certainly contributed to the sharp fall but it is also a fact thatnew project activity has slowed down appreciably in the past six months.

Management commentary indicates that order enquiries have beencontinuously improving, but project finalisation is getting delayed asproject investors are indecisive amidst signs of GDP slowdown and highinterest rates. Projects from state-owned entities have also been affected asthe government has been in a fire-fighting mode after the 2G and CWGfiasco. Apart from this, longer cycle time on land acquisition andenvironmental clearance has also added to lackluster project activity.

However, off-late there is some evidence of an uptick in ordering activity.Feedback from the Roads as well as Power T&D side is indicative of this.Also, several large infrastructure projects have recently been cleared by theMOEF. We expect project activity to improve further in May after thecompletion of assembly elections in five states.

Another area to monitor is the material prices which have also inched up inQ4. Most management have maintained that they should be able tomaintain margins but a minor decline in margins cannot be ruled out.

Preview Highlightsn We expect aggregate revenue growth of 20.7% yoy in the fourth quarter, driven

mainly by BHEL, L&T, Thermax and Cummins.

n Aggregate EBITDA is expected to grow at a smart rate of 29.5% yoy mainlydriven by reduced margins in BHEL, Havells and Thermax.

n Aggregate PAT is expected to grow 40% yoy in Q4.

n The business outlook for Capital Goods remains healthy but it is nowhere closerto the boom times in FY06-07.

n To profit from the capital goods sector, we recommend investors to follow astock specific buying strategy.

n We would recommend selective buying in stocks like L&T, Gujarat Apollo,Cummins India, Havells India, TIL Voltas, Greaves Cotton, Diamond Power andHind Dorr Oliver.

Stock PerformanceThe capital goods sector stocks posted losses during the quarter. Weak order intakeand rise in material prices was the main concern which led to the derating of stocks.L&T, Thermax and Voltas disappointed with their Q3 FY11 order intake. Siemensannounced its open offer for 20% public shareholding at a price of Rs 930, whichwas at a significant premium to ruling price. The open offer is currently on.

Top Picks:L&T

Bharat ElectronicsGujarat Apollo

Cummins IndiaHavells India

TILVoltas

Greaves CottonDiamond Power

Hindustan Dorr Oliver

RESULT PREVIEW

Sanjeev [email protected]+91 22 6621 6305

Ruchir [email protected]+91 22 6621 6448



Price Performance

(Rs) 31/03/2011 31/12/2010 % change

HDO 78 115 -32

Thermax 602 865 -30

DPIL 154 213 -28

Voltamp Transformer 554 758 -27

TIL 540 730 -26

Gujarat Apollo 128 169 -24

Areva 247 324 -24

Everest Kanto 78 99 -21

Kalpataru Power 134 169 -21

Suzlon 45 54 -17

Voltas 182 218 -17

L&T 1668 1979 -16

Blue Star 372 437 -15

AIA Engg 349 402 -13

Cummins India 684 781 -12

CGL 273 310 -12

BHEL 2060 2324 -11

Time Technoplast 55 59 -7

Havells India 371 396 -6

Greaves Cotton 95 100 -5

Bharat Electronics 1679 1751 -4

ABB 797 792 1

Siemens 890 820 9

Source: BSE

Material price scenarioDuring the quarter, average price of HR steel coils was up 24% yoy to Rs 44182 perton. Steel prices are up even on a sequential basis.

Average price of copper which is the prime raw material for electrical equipmenthas increased 32% yoy in the quarter. The effect of this would be in terms of higherrevenues but downward pressure on EBITDA margins coupled with increased inven-tory.

HR Coil Price Rs/ton

Source: ACE Equity

32000

36000

40000

44000

48000

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Jul-0

9

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10

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Jul-1

0

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-11



Forex ScenarioRupee has been largely stable during the quarter against the USD and Yen but hasdepreciated by 5.7% against the Euro. Positive for CGL given large share of its over-seas operations are Euro-denominated.

Stock viewn Suzlon: We expect another set of poor results from Suzlon as the combined im-

pact of lower up tick in international business and higher interest costs erodingprofitability. Although company has succeeded in increasing its order book re-cently in the domestic market and this could be a positive for the company goingahead. The stock has underperformed the broader market in the past and orderbook growth remains a key variable to monitor.

n BHEL: The company has already come out with provisional numbers for FY11.While execution has been strong during the year, profit figures got a leg-up fromchanges in accounting for warranty provisions. The company was also able tomeet its order intake guidance of Rs 600 bn in FY11.

n ABB: ABB had reported another disappointing set of numbers in Q4 CY10 a re-flection of orders won at very low margins as well as loss of business from ruralelectrification projects. The company had also reported drop in order intake inQ4 CY10. The power transformer sector is going through margin pressure asplayers have been undercutting prices to utilize their capacity.

n Crompton Greaves: CGL should report healthy earnings for the quarter mainlydriven by continued momentum in domestic power business and lower interestcharges. Raw material prices could have a minor impact on the EBITDA margins.The company is cash surplus at standalone level and has a minor net debt atconsolidated level.

n Siemens: We forecast healthy revenue growth for Siemens as the company hasstarted the year with a 32% increase in order book. Margins are likely to mod-erate slightly as in 2HYFY10 recorder extra-normal margins.

n Areva: The company had come out with good set of numbers in Q4 CY10. Weexpect revenue growth of 10% yoy and a sharp rise in profit growth (mainly dueto low base). CY10 order intake was flat. The management has highlighted slug-gish ordering, land acquisition issues and intense competition slowing down rev-enue growth.

n Voltamp: In line with other transformer makers, the company reported sharplylower EBITDA margins in Q3 FY11 and has guided for margin pressure for FY12as well. We expect sharp decline in margins to result in degrowth in profits. Butmargins are at historically low levels and close to bottoming out in our view.

n Larsen & Toubro: The street was disappointed by the significant slippage in or-der intake in Q3 FY11. Even in the Q4 the order announcements have been veryweak. In all likelihood, the company may end the year with significant slippagein order intake vs original guidance. We do not anticipate any major slowdownon the execution front and the company should finish the year within strikingdistance of its revenue guidance of 20% in FY11. The company has recentlycompleted financial closure of Hyderabad Metro Project which will add close toRs 125 bn to its order backlog.

n Cummins India: We expect further strength in domestic market sales on backof power and industrial segments along with significant YoY improvement in ex-port sales. Company is likely to maintain its margin at EBITDA and PAT levels.

n Hind Dorr Oliver: The company has been an underperformer in the engineeringuniverse in FY11 as order backlog has remained stagnant for quite some time.We expect profit growth to moderate in FY12.



n Thermax: We expect the company to post excellent revenue and profit growthas the company had begun the fiscal with a very strong order backlog. However,weak order intake in Q3 and possibly Q4 as well may result in the company fin-ishing the year with moderate rise in carryover orders. Thus, we expect revenuegrowth to moderate in FY12.

n Voltas: The 9MFY11 numbers of Voltas has been affected by stagnant overseasorder backlog and loss in its subsidiary Rohini Electricals. Given sedate orderbacklog in FY11, we expect moderate profit growth for the company in FY12.

n Bharat Electronics: Order backlog of the company has virtually doubled by theend of FY11 and the company is well positioned to drive healthy revenue growthin the medium term.

n Kalpataru Power Transmission: KPTL is likely to maintain its margins inQ4FY11. Company should report decent growth in sales and profits. We wouldbe closely monitoring the growth in order book which has remained muted inpast few quarters and should be a key variable for stock performance.

n Greaves Cotton: We expect robust profit growth in Q3 FY11 aided by consis-tently high margins and healthy 3W volumes.

n Diamond Power Infrastructure (DPIL): We expect DPIL to report impressiveset of numbers for Q4 FY11 aided by ramp-up in its cables capacity. The com-pany is expected to commission its EHV cables plant in Q1 FY12, which wouldaid revenue growth in FY12.

n AIA Engineering Ltd (AIA): AIA is expected to report robust growth in revenuesas well as profits in Q4. This would mainly be on account of continued up tick innew market creation in mining space. Cement and power sectors are expectedto report healthy replacement demand for mill internals.

n Gujarat Apollo Ltd: GAL should report muted YoY growth in Q4FY11E mainlydue to the spill over of awarding of major road projects from NHAI into FY12from FY11.We expect company to maintain margins in the Quarter.

n Tractors India Limited (TIL): TIL nos are not comparable as company has re-structures the Caterpillar business into its fully owned subsidiary TIPL. Howeverwe expect the company to report increasing sales trend driven by demand fromports and power sector.

n Havells India Ltd (HIL): HIL is likely to report meaningful YoY growth in netprofits. Sylvania restructuring should progress in positive direction and is expectedto aid to operating margins. Domestic business is likely to report meaningfulgrowth on account of robust demand from tier II and tier III cities.

n Everest Kanto: We expect EKC to report growth in revenues on the back ofpick up in demand for CNG cylinders and higher realisations. The operatingmargins would be higher on YoY basis as high cost inventory has been liqui-dated.

n Time Technoplast: We expect strong growth in revenues and profitability of TTLdue to increased contribution from the newer products like high pressure pipesand prefabricated shelters. Also due to pick up in the industrial activity we ex-pect increased business from the industrial packaging, battery, healthcare and in-frastructure vertical.

Powern NTPC: The company has already announced its provisional numbers for FY11.

Power generation during the year has been hit due to lower offtake by SEBs. Thepower sector has several issues to grapple with including fuel supply concerns,deteriorating financial health of SEBs and delay in land acquisition.



Quarterly estimates - Capital Goods



Capital Goods

Voltamp 1,862 1,336 39.4 1,821 2.3 11.2 10.9 20.3 164 128 28.1 265 (38.1) 16.2 12.7 27.7 26.2 (38.1)

Cummins 11,924 9,925 20.1 7,724 54.4 17.0 18.1 20.8 1,719 1,392 23.5 1,184 45.2 8.7 7.0 23.5 6.0 45.2

BEL 22,249 13,730 62.0 19,145 16.2 24.5 16.2 14.3 3,822 1,706 124.0 1,998 91.3 48.0 21.3 125.4 25.0 92.0

Blue Star 8,784 6,068 44.8 8,546 2.8 11.8 7.8 13.1 621 224 177.2 785 (20.9) 6.9 2.5 176.0 8.7 (20.7)

Voltas 10,145 10,636 (4.6) 9,905 2.4 14.9 8.3 15.1 1,110 623 78.2 1,240 (10.5) 3.4 1.9 78.9 3.8 (10.5)

Thermax 16,112 12,161 32.5 11,715 37.5 13.5 12.0 12.5 1,467 1,002 46.4 992 47.9 12.3 8.4 46.4 8.3 48.2

Hind Dorr 3,300 2,531 30.4 2,695 22.4 10.9 11.6 10.0 188 152 24.1 128 47.6 2.6 2.1 24.1 1.8 46.1

L&T 159,081 113,217 40.5 133,749 18.9 15.1 10.9 15.3 16,043 8,052 99.2 13,374 20.0 27.4 13.7 100.0 22.8 20.2

ABB 14,763 20,506 (28.0) 14,559 1.4 (1.6) 1.6 1.6 (405) 68 (695.6) 66 (713.6) (1.9) 0.3 (693.8) 0.3 (712.9)

Areva 8,545 13,270 (35.6) 7,768 10.0 9.1 13.4 5.4 216 879 (75.4) 35 517.1 0.9 3.7 (75.7) 0.2 500.0

Siemens 28,342 25,254 12.2 22,142 28.0 12.0 14.4 13.0 2,254 2,418 (6.8) 1,829 23.2 6.8 7.3 (6.8) 5.5 23.6

BHEL 189,630 88,493 114.3 135,591 39.9 22.5 23.4 21.2 28,078 14,032 100.1 19,096 47.0 57.4 28.7 100.0 39.0 47.2

Greaves Cotton 4,118 3,579 15.1 4,190 (1.7) 16.6 20.1 13.9 423 450 (6.0) 335 26.3 1.7 1.8 (5.6) 1.4 21.4

TIL* 3,985 3,964 0.5 2,776 43.6 10.0 7.8 13.7 201 155 29.7 280 (28.2) 20.0 15.4 29.9 27.9 (28.3)

Gujarat Apollo 563 463 21.6 575 (2.1) 19.1 18.5 16.2 69 52 33.9 60 14.9 4.1 3.1 34.0 3.6 14.7

Havells 14,653 14,967 (2.1) 13,921 5.3 9.7 7.7 7.1 855 635 34.6 (198) - 7.1 5.3 34.5 (1.7) -

AIA Engg 3,648 2,933 24.4 2,501 45.9 25.3 19.4 19.3 544 463 17.5 392 38.8 5.7 4.9 17.1 4.1 38.6

CGL 28,841 23,970 20.3 25,079 15.0 16.1 14.2 16.1 2,987 2,323 28.6 2,713 10.1 4.7 3.6 30.6 4.2 11.9

Suzlon 55,861 44,330 26.0 60,836 (8.2) 6.6 8.0 8.8 (649) (800) - (1,953) - - - - - -

Kalpataru Power 9,828 7,931 23.9 8,383 17.2 11.6 11.7 11.1 721 508 41.9 574 25.6 4.7 3.3 41.6 3.8 25.3

Diamond Power 4,000 3,785 5.7 2,953 35.5 13.5 13.2 13.1 258 292 (11.6) 224 15.2 6.9 7.8 (11.5) 6.0 15.0

Everest Kanto 2,110 1,983 6.4 1,823 15.7 19.0 19.1 (8.2) 185 229 (19.2) 286 (35.3) 1.7 2.1 (18.1) 2.8 (38.6)

Time Technoplast 3,638 2,469 47.3 3,059 18.9 16.5 25.6 15.6 353 282 25.4 248 42.3 1.7 1.4 25.9 1.2 45.3

TOTAL 592,249 415,300 42.6 490,845 20.7 16.3 13.7 15.1 60,228 34,307 75.6 42,915 40.3 217 132 163

Power

NTPC 144,880 134,213 7.9 123,534 17.3 31.3 32.0 24.6 25,082 23,715 5.8 20,177 24.3 2.9 3.0 (3.3) 2.4 20.8

Source: Companies, Kotak Securities - Private Client Research; * *TIL nos are not comparable due to corporate restructuring



RESULTS PREVIEW

Teena [email protected]+91 22 6621 6302

CEMENTCement demand in the current fiscal till Feb, 11 registered a growth of 4.7%due to lack of construction activity, extended monsoons, non-availability ofsand as well as extreme winter seen in northern region. During Q4FY11,cement prices witnessed sharp increases across several regions which isexpected to drive strong revenue growth during Q4FY11. However, ourrecent interactions with cement dealers indicate that further increase incement prices look difficult from the current levels but these prices mayremain sustained till monsoons.Overall costs for the sector continued to remain high during the quarter dueto higher freight costs as well as power and fuel costs. But due to sharpprice hikes witnessed during Q4FY11, operating margins are expected toimprove on a sequential basis for the companies.Though demand growth is expected to improve in FY12, but we believe thatit will not be sufficient to absorb the surplus capacity. We also expect thedemand-supply gap to remain wide for next 1.5-2 years due to large capacityadditions seen in last 2 years along with additions expected going ahead.Thus on a long term basis, we continue to maintain our cautious stance onthe sector. However in the near term, we expect cement companies to postsequential improvement in revenues and margins owing to sharp price hikesseen in Q4FY11.

We would thus recommend only those players which are expected tobenefit significantly from the recent price hikes and are available atattractive valuations. We would thus recommend ACCUMULATE on Grasim,Ultratech Cements and Shree Cements while we continue to maintainREDUCE on India Cements and ACC.

Key highlights during Q4FY11Demand growth likely to improve in FY12Demand growth for the sector during FY11 till Feb, 2011 stood at 4.7%. Demandgrowth during fiscal 2011 was impacted by lack of infrastructure activity, issues re-lated to sand availability, extended monsoons as well as extreme winter. We expectdemand growth to improve by 10% in FY12 led by increased project awards in vari-ous infrastructure segments.

Cement prices stayed strong during Q4FY11Cement prices stayed strong during Q4FY11 across all regions on supply disciplinebeing observed among cement players. Prices have reached as high as Rs 300 perbag in key regions during the month of March, 2011 as against average prices ofnearly Rs 225-230 per bag at the end of Dec, 2010. Thus we believe that net real-izations for cement companies for Q4FY11 are expected to improve sequentially,thereby translating into healthy growth in revenues for Q4FY11.

Cost pressures remained highCosts pressures during Q4FY11 are expected to remain high with higher freight costsas well as higher coal costs. But with increase in the cement prices, EBITDA/tonnefor the companies is likely to witness an improvement during Q4FY11.

We recommend ACCUMULATEon Grasim, Ultrateh Cementsand Shree Cements while wecontinue to maintain REDUCE

on India Cements and ACC

Quarterly estimates - Cement



Grasim 58,038 53,845 7.8 53,856 7.8 24.2 20.8 25.0 6,713 5,018 33.8 6,544 2.6 73.2 54.7 33.8 71.4 2.6

ACC* 25,022 19,576 27.8 21,018 19.1 25.3 10.7 29.6 4,138 2,531 63.5 4,051 2.1 22.0 13.5 63.5 21.6 2.1

India Cement 9,700 7,810 24.2 9,643 0.6 17.8 16.2 13.1 476 215 121.6 383 24.1 1.5 0.7 121.6 1.2 24.1

Shree Cement 10,246 7,804 31.3 9,440 8.5 27.8 20.3 34.5 1,218 275 343.1 (714) (270.7) 35.0 7.9 343.1 (20.5) (270.7)

TOTAL (exc Ultratech) 103,006 89,035 15.7 93,957 9.6 12,545 8,038 56.1 10,265 22.2

Ultratech Cement^ 42,980 37,152 15.7 19,094 125.1 21.9 19.1 21.1 4,258 3,190 33.5 2,285 86.3 15.5 11.6 33.5 18.4 (15.3)

TOTAL(inc Ultratech) 145,986 126,188 15.7 113,051 29.1 16,804 11,228 49.7 12,551 33.9

TOTAL(exc Ultratech) 103,006 89,035 15.7 93,957 9.6 12,545 8,038 56.1 10,265 22.2

Source: Companies, Kotak Securities - Private Client Research; Note: *ACC is CY ending company; results are for Q1CY11; ^Ultratech numbers are not comparablepost merger of Samrudhdhi



South - Cement prices haveeven moved above Rs 300 per

bag in few southern regionswhile on an average, duringQ4FY11, prices improved by

nearly Rs 15-20 per bag.However, from the lows seen

during Q3FY11, prices moved upby nearly Rs 40 per bag

East - Eastern region alsowitnessed price hikes and

current prices hoveringnearly Rs 300 per bag in

few cities

West - Prices moved inline withother regions and average

prices for the quarterwitnessed a jump of nearly Rs

30 per bag

Pricing trend in different regions

North (Rs/bag)

Source: CMA

South (Rs/bag)

Source: CMA

East (Rs/bag)

Source: CMA

West (Rs/bag)

Source: CMA

North - Average cement pricesfor Q4FY11 moved up by

nearly Rs 35-40 per bag forQ4FY11 as compared to

average cement prices forQ3FY11

195

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235

255

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CONSTRUCTION

During FY11, construction sector witnessed sluggish order inflow activitydue to several issues. Order inflow is expected to increase from FY12onwards due to higher allocations seen in infrastructure segment as well asmeasures taken by government to enhance fund availability with the sectorsuch as setting up of infrastructure debt fund, hike in FII limit forinfrastructure debt bonds etc Along with this, NHAI has also resolved a largenumber of issues such as land acquisition, DPRs, viability study of projectsetc which had impacted the award process in FY11. Thus, with continuedthrust of government, we expect sector to be one of the key beneficiariesgoing forward.

We expect excellent revenue growth for companies during Q4FY11 and fullyear FY11. Operating margins for the companies are likely to be maintaineddue to variable pricing clauses. However, net profit growth is expected tobe impacted by higher interest outgo due to liquidity crunch and hike ininterest rates.

We continue to remain positive on the sector based on revenue visibility,strong order book as well as stable operating margin scenario. Stocks arecurrently trading at very attractive valuations and are already factoring inconcerns related to lack of order inflow and higher interest rates. Our toppicks in the sector would be IRB Infra, IVRCL infra, BGR Energy, PratibhaIndustries and Unity Infra etc Key risks to our recommendations wouldcome from lower than expected revenue execution and further delay inorder inflows.

Key highlights during Q4FY11

Order inflow remained sluggish for FY11Order inflow during FY11 remained sluggish for most of the companies in construc-tion sector due to issues related to land acquisition, environmental clearance delaysor cancellations, corporate governance, lack of funds for the state government enti-ties etc. We had expected order inflow revival to happen by Q4FY11 but it was wit-nessed only for select companies. However, FY12 looks promising in terms of orderinflow for the sector with increased activity to enhance project awards being wit-nessed from NHAI. Government has also enhanced allocation for infrastructure sec-tor specifically irrigation, water supply and housing during union budget 2011-12.Measures such as setting up of infrastructure debt fund, hike in FII limit for infrastruc-ture sector bonds and allowing NHAI, HUDCO to issue of tax free bonds is expectedto ease fund availability with the sector and hence can aid the order inflow for FY12.

RESULTS PREVIEW

Teena [email protected]+91 22 6621 6302

Trend in Order inflow (Rs mn)

Q1FY09 Q2FY09 Q3FY09 Q4FY09 Q1FY10 Q2FY10 Q3FY10 Q4FY10 Q1FY11 Q2FY11 Q3FY11 Q4FY11

Punj Lloyd 29,400 54,700 8,257 13,112 114,881 38,240 32,798 4,960 42,090 13,800

IVRCL 17,900 22,500 26,681 6,700 10,910 17,378 22,213 45,007 53,227 15,000 16,202 5,646

NCC 11,600 13,300 10,110 9,750 3,580 24,940 7,220 27,750 7,910 6,730 32,400 -

Patel Engineering 6,020 7,000 13,507 7,990 7,080 - 1,607

Unity Infra 8,300 2,300 3,752 740 7,622 8,383 999 4,120 2,655 3,695 1,814

BGR energy 427 80,400 429 32,920 450 778 1,000 170 21,680 664

Simplex Infra 20,500 12,200 14,500 11,000 10,000 15,230 15,000 21,660 18,600 22,000 20,000 *

Madhucon 9,900 1,962 187 3,750 17,980 - 27,000

Pratibha 2,575 2,104 6,047 4,020

Source: Companies; * Simplex Infra announces order inflow for the quarter during result declaration.

Top Pick

IRB InfraIVRCL Infra

BGR EnergyPratibha Industries

Unity Infra



Quarterly estimates - Construction



Punj Lloyd 23,874 20,936 14.0 17,001 40.4 7.2 3.4 -34.8 204 (621) (132.9) (3,009) (106.8) 0.6 (1.9) (132.9) (9.1) (106.8)

Jaiprakash Associates 37,999 28,937 31.3 33,452 13.6 25.2 27.4 25.5 3,447 2,326 48.2 2,440 41.3 1.6 1.1 48.2 1.1 41.0

IRB Infra 7,013 6,805 3.1 5,131 36.7 41.5 44.9 47.2 930 1,330 (30.1) 1,416 (34.3) 2.8 4.0 (30.1) 4.3 (34.3)

IVRCL 25,000 14,104 77.3 18,904 32.2 9.0 9.5 10.5 924 423 118.5 852 8.4 3.5 1.6 118.5 3.2 8.4

NCC 17,000 13,355 27.3 15,227 11.6 10.0 9.6 10.0 607 404 50.1 531 14.4 2.4 1.6 50.1 2.1 14.4

BGR energy 15,205 12,511 21.5 16,571 (8.2) 10.2 11.3 10.4 905 876 3.3 1,083 (16.4) 12.5 12.1 3.3 15.0 (16.6)

Patel Engineering 6,500 3,707 75.4 10,560 (38.4) 12.0 28.3 12.0 218 77 183.2 512 (57.5) 3.1 1.1 183.2 7.3 (57.5)

Simplex Infra 14,849 11,659 27.4 12,510 18.7 9.8 9.2 10.2 466 232 100.9 459 1.4 9.4 4.7 100.9 9.3 1.4

Madhucon Projects 5,689 3,521 61.6 4,864 17.0 11.0 12.7 6.4 292 115 153.5 69 323.5 4.0 1.6 153.5 0.9 323.8

Unity Infra 5,115 4,453 14.9 4,933 3.7 12.5 12.4 12.6 266 225 17.9 277 (4.0) 3.6 3.0 17.9 3.7 (4.0)

Pratibha Industries 3,962 2,942 34.7 2,719 45.7 12.6 15.0 17.0 216 142 52.3 210 2.8 2.2 1.4 52.3 2.1 2.8

J Kumar Infraprojects 3,000 2,501 20.0 2,679 12.0 15.5 14.2 14.6 245 180 36.4 207 18.2 8.8 6.5 36.4 7.5 18.2

TOTAL* 141,331 104,494 35.3 127,550 10.8 8,514 6,329 34.5 8,055 5.7

Source: Companies, Kotak Securities - Private Client Research; * Punj Lloyd numbers are not included in the total since it gives us a skewed picture on accountof one time write-offs and extra-ordinary gains

Revenue growth likely to be healthyWith strong order books of construction companies, revenue growth for Q4FY11 andfull year FY11 is expected to be strong. Current order books provide visibility for next2 years. Though order inflow in FY11 was lower than expectation, it may have somenegative impact on FY12 revenues if order inflow doesn't ramp up in next sixmonths. We expect revenue for Q4FY11 for our coverage universe to grow by 11%YoY and 35% QoQ (excluding Punj Lloyd).

Operating margins to be maintainedOperating margins are expected to be stable for FY11 in comparison with FY10 dueto diversified business model and variable pricing clauses. Companies having higherproportion of fixed price contracts may witness some margin contraction due to hikein commodity prices. However, we expect margins to correct by nearly 25-50 bps forFY12 to factor in increased competition as well as hike in the commodity prices seenin past few months.

Higher interest outgo may impact net profit marginsNet profit growth of the companies is expected to be led by healthy revenue growthas well as stable to improved operating margins. However higher interest outgo mayimpact the net profit growth. Interest costs have witnessed an increase in past fewquarters and with high working capital requirements of the construction sector, weexpect interest outgo to remain high for the companies. Excluding Punj Lloyd num-bers, we expect net profits for Q4FY11 to grow by 6% YoY and 35% QoQ.



RESULS PREVIEW

Dipen [email protected]+91 22 6621 6301

We prefer Infosys and TCS inthe large caps. NIIT

Technologies and KPIT Cumminsare the preferred mid cap

stocks

INFORMATION TECHNOLOGY

We expect companies under our coverage to report a sequential revenuegrowth of 5.6%, largely driven by volumes. Volumes for the Top 4companies are expected to rise between 4% - 5%, which is impressive in thebackdrop of a seasonally soft quarter. Average realizations are expected toremain stable. Currency volatility should help revenues marginally - about1% for the top companies.

EBIDTA margins are expected to be marginally higher due to currencyimpact, cost efficiencies and scale benefits. We expect lower 'other income'largely due to currency fluctuations and some one-offs.

Consequently, PAT is expected to rise by 3.7% QoQ for companies under ourcoverage. Among the Top 4, HCLT is expected to report the highest QoQ PATgrowth of about 12%. We have given quarterly expectations of MahindraSatyam but understand that, the numbers can be materially different fromour expectations.

The guidance from Infosys will be important, with markets alreadydiscounting high growth rates for FY12. We expect Infosys to remainconservative while guiding for FY12 revenue and earnings growth. We notethat, Infosys has always preferred to adopt a conservative view whileguiding at the start of the fiscal. The accompanying commentary will allowus to gauge the confidence of the management on expected medium - termgrowth rates.

Among other things, we will also watch out for :

a) Salary increments (most companies give increments WEF 1Q),

b) Comments on opening up of new opportunities like Cloud Computing,etc,

c) Further insights into sustainability of discretionary spends,

d) Pricing improvements and expectations about the same

While we maintain our optimistic view on the medium-to-long termprospects of the sector, the recent run-up in stock prices and a potentiallystronger rupee may limit upsides in the near term. Over the medium term,we expect large caps to out-perform as they are better equipped to counterthe impact of appreciating rupee and capitalize on the strong demandscenario. Infosys and TCS remain our preferred large-cap picks. In mid-caps,we prefer NIIT Technologies and KPIT Cummins. Mphasis is not covered herebecause quarter ends in April.

4% - 5% sequential volume growth expected for top tier compa-niesWe expect top-tier companies to report sustained volume growth of about 4% - 5%QoQ. When seen in the backdrop of a seasonally soft quarter, it is encouraging. TheJan - Mar quarter is normally soft as budgets are finalized and allocated during thequarter while spending picks up in the following quarter. The expected growth is onthe back of consistently improving demand and higher market share. We understandthat, Indian companies have been witnessing continuous business flows as customerslook for better value and reduced costs. In this process, they are likely gaining addi-tional market share.

Over the past few quarters, M&A activity in the global BFSI vertical had resulted inincreased business flows. This is now being substituted by more long term and annu-ity type of businesses, we believe. Moreover, verticals like manufacturing, whichwere slower to start spending, are now seeing increased deal flows, we understand.



While the order flows from US are expected to have grown, we will closely hearmanagement comments on the potential order flows from Europe and Asia. We donot expect any major impact of the events in Japan and MENA.

While volumes are expected to rise QoQ, we expect realizations to be largely stable.However, we will closely watch out for potential price improvements and manage-ment comments regarding these will be of importance to us.

Impact of cross currency movementsThe Indian rupee has depreciated v/s USD, Euro and GBP. The USD has also depre-ciated v/s GBP and Euro. To that extent, USD-based revenues as well as INR-basedrevenues for the quarter are expected to be positively impacted. We expect a posi-tive impact of about 1% QoQ in revenues for the top companies.

For the Top 4 companies, we expect revenues to be about 4.9% higher in INRterms. For the coverage universe, we expect the INR revenues to be at about 5.6%higher QoQ.

Margins expected to be slightly higherWe expect margins to be slightly higher sequentially. Currency volatility, cost effi-ciencies and scale benefits are expected to help. Within the Top 4, we expect TCSto report a marginal decline in margins largely because of normalization of provi-sions for receivables.

Impact on Other Income to keep PAT growth subduedWe expect the other income component to be lower QoQ due to losses on currencyfluctuations and one-off items. Consequently, PAT growth is expected to grow byabout 3.7% over the previous quarter.

Factors to watchApart from Infosys' guidance, we will closely track a) Salary increments (most com-panies give increments WEF 1Q), b) Comments on opening up of new opportunitieslike Cloud Computing, etc, c) Further insights into sustainability of discretionaryspends, d) Pricing improvements and expectations about the same

We expect Infosys' management to remain conservative while giving guidance forFY12. We note that, this has been the case at the start of every fiscal with upwardrevisions being made during the course of the year. However, management com-mentary will be important for understanding the reason for conservatism and also forgauging the confidence of the management on the medium-term demand scenario.

We will closely watch the progress made by and expectations of the various compa-nies in new areas of opportunities. Cloud Computing provides a big potential andorder flows in this business will be of interest to us.

Companies are also now increasingly looking at moving to newer types of pricingmodels like outcome-based pricing, transaction-based pricing, etc. Trends in thesewill be of interest to us from the point-of-view of margin protection and improve-ment.

Most Indian IT companies give salary increments WEF April every year. FY11 hadwitnessed higher-than-normal salary increments because of the high attrition levels.Attrition levels had risen significantly in line with the turnaround in the sector. Attri-tion rates have now moderated. Thus, we expect normalized increments of about11% - 12% in off-shore salaries and 1% - 3% in on-site salaries for FY12.

Pricing is expected to have largely stabilized during the quarter and we will watchout for comments on any potential pricing uptick from clients.



Remain positive on medium-to-long term prospects, but cautiouson near term valuationsWe maintain our positive bias on sector fundamentals over the medium-to-longterm. A slow recovery in the global economy should reflect in increased business forIndian IT vendors. Indian companies have likely been able to increase their marketshare in the global outsourcing pie.

However, the recent run up in prices and potential strength in the rupee may limitthe upsides in the near term. If the rupee strengthens over an extended period oftime, it may impact earnings estimates for most companies. Larger companies arebetter-equipped to handle the appreciating rupee, we admit.

We prefer Infosys and TCS in the large caps. NIIT Technologies and KPIT Cumminsare the preferred mid cap stocks. We have not covered the estimates for Mphasisbecause its quarter ending will be in April.

Quarterly Estimates (January - March 2011) - Information Technology

Company Revenues (Rs mn) EBIDTA (%) PAT (Rs mns) EPS (Rs)


Infosys ^ 71,061 74,419 4.7 59,440 25.2 30.2 30.7 30.3 17,800 18,935 6.4 16,170 17.1 31.2 33.1 6.4 27.5 20.6

TCS 96,634 102,087 5.6 77,365 32.0 30.2 30.1 29.9 23,302 23,676 1.6 19,312 22.6 11.9 12.1 1.6 9.9 22.6

Wipro 78,293 81,415 4.0 69,772 16.7 21.0 21.6 21.9 13,259 13,895 4.8 12,091 14.9 5.4 5.7 4.8 4.9 14.9

HCL Tech * 38,884 41,064 5.6 30,757 33.5 16.3 17.0 19.7 3,745 4,200 12.1 3,215 30.6 5.3 5.9 12.1 4.6 28.1

TOTAL 284,872 298,985 5.0 237,334 26.0 58,106 60,706 4.5 50,788 19.5

Mahindra Satyam 12,793 13,529 5.8 NA - 6.4 9.0 NA 1,122 1,023 (8.9) NA - 1.0 0.9 (8.9) NA -

Oracle 7,376 8,305 12.6 7,578 9.6 38.5 34.3 40.5 2,824 2,427 (14.1) 1,560 55.5 33.7 29.0 (14.1) 18.6 55.5

Infotech Ent 3,138 3,290 4.8 2,441 34.8 15.1 17.0 21.6 368 403 9.4 513 (21.5) 3.3 3.6 9.4 4.7 (22.0)

NIIT Ltd 3,007 3,371 12.1 2,950 14.3 12.3 16.1 16.1 129 305 136.2 248 22.9 0.8 1.8 136.2 1.5 22.9

NIIT Tech 3,006 3,138 4.4 2,392 31.2 20.7 21.9 22.1 478 520 8.7 413 25.8 8.1 8.8 8.7 7.0 25.8

TOTAL 29,320 31,633 7.9 15,360 105.9 4,922 4,677 (5.0) 2,735 71.0

KPIT 2,737 2,866 4.7 1,971 45.4 14.1 15.0 19.6 253 258 1.8 208 23.9 3.1 3.2 1.8 2.7 18.9

Geometric 1,632 1,718 5.3 1,272 35.1 12.3 14.3 14.7 153 167 9.5 118 41.3 2.5 2.7 9.5 1.9 41.3

Zensar 2,591 3,995 54.2 2,357 69.5 15.0 13.5 15.7 339 365 7.7 274 33.2 7.8 8.4 7.7 6.3 33.9

Subex $ 1,232 1,343 9.0 1,147 17.0 28.5 29.2 24.3 240 254 5.7 84 203.6 2.5 2.6 5.7 1.4 79.7

R Systems ** 738 756 2.4 724 4.3 6.5 6.1 8.6 43 21 (49.6) 66 (67.3) 3.7 1.8 (52.3) 5.4 (67.3)

TOTAL 8,930 10,677 19.6 7,471 42.9 1,028 1,066 3.6 750 42.1

TOTAL 323,123 341,295 5.6 260,165 31.2 24.7 25.1 26.3 64,056 66,448 3.7 54,272 22.4

Source: Companies, Kotak Securities - Private Client Research

* - Estimates are for 3QFY11

** - Estimates are for 1QCY11.$ - Excluding the impact of FCCB re-statement^ - Margin numbers and % are EBIT and EBIT %, respectively, for Infosys



RESULTS PREVIEW

Ritwik [email protected]+91 22 6621 6310

MEDIA

We expect media companies in our coverage universe to post strong 4QFY11results. Median revenue growth of our coverage universe is estimated at23% y/y, and median PAT growth is 27% y/y. Growth shall largely be led byadvertising revenues, which will continue to be strong on the back ofimproving consumption and high competition. Y/Y, we also expectimprovement in margins led by higher utilization of inventory andimproving yields. However, growth will be muted/negative on a q/q basis,both in terms of revenues and margins - resulting from seasonality (3Qbeing the strongest quarter of the year) as well as rising inflation in keycommodities (newsprint). Our broad stance on the sector remains positive,and Sun TV Network and HT Media are our top picks. Surprises/ factors towatch for would include: 1/ impact of unexpectedly strong cricketing seasonand impact on various sub-industries, 2/ gaining facts on the extent of(further) flexibility newspaper publishers possess in management ofnewsprint expenses, 3/ overall strength in advertising environment.

n DB Corp: Advertising revenues shall continue to be strong for DB Corp, enablinggrowth of 26% y/y. We expect margins to rise 4.8 ppt y/y, due to improvedyields/ better ad-edit ratios. DB Corp and competitor Dainik Jagran have shownconsiderable flexibility in managing newsprint consumption both by quantity andby quality (substitution of foreign newsprint with domestic newsprint and usageof cheaper newsprint), which we expect shall continue in this quarter, thus soft-ening impact on gross margins. On a q/q basis, however, we expect margins todecline on account of new editions of Dainik Bhaskar, and lower utilization ofpages in comparison with 3QFY11. EPS growth, at 59%, shall continue to berobust.

n HT Media: We expect continued strength in advertising revenues, led by stron-ger readership of the company's newspapers. Hindustan shall continue being ona high growth path, with strong growth in Bihar and Jharkhand as well asstrengthening presence in Uttar Pradesh. HT Media's circulation revenues shallcontinue to register y/y declines on account of higher circulation in Mumbai aswell as price war underway in Jharkhand. We expect margins to decline y/y as aresult of higher newsprint expenses. Including HT Burda revenues, we estimaterevenues of the company to rise 23.9% y/y, and EPS to register growth of 8.7%y/y.

n Jagran Prakashan: Advertising revenues shall grow at a healthy pace. However,circulation revenues shall be flat for the quarter due to ongoing price competitionin Jhakhand/ parts of Uttar Pradesh. Given Jagran's relatively higher dependenceon circulation revenues, this would imply softer revenue growth for the company(12%, y/y) in the quarter. We believe the company shall be able to maintainreasonably strong margins, aided by better ad-edit ratios and improving advertis-ing yields. We estimate 25% y/y growth in EPS for the company. For consistencywith our annual estimates, we do not include Mid-Day Multimedia's financials inour estimates (likely ~Rs 250mn in revenues, ~18-20% EBITDA margin).

n ENIL: ENIL is likely to report strong 3QFY11 results. We think advertising momen-tum in radio advertising shall continue to remain strong and ad-rate hikes af-fected by the company in the last two quarters shall begin to be passed on, re-sulting in 18% y/y revenue growth. The company shall benefit from strong oper-ating leverage as well as lower royalty payments, which shall result in a strongmargin expansion for ENIL (+10.8 ppt, y/y). We estimate EPS growth of 193% y/y on the back of these factors.

Preferred Pick

HT MediaSun TV Network



Quarterly estimates - Media



DB Corp 3,250 3,482 (6.7) 2,572 26.4 31.8 33.0 27.0 585 659 (11.4) 367 59.2 3.2 3.6 (11.4) 2.0 59.2

ENIL* 723 775 (6.7) 612 18.2 34.8 37.8 24.2 140 249 (43.8) 48 193.2 2.9 5.2 (43.8) 1.0 193.2

HT Media 4,771 4,651 2.6 3,851 23.9 20.1 19.0 24.1 533 478 11.6 480 11.1 2.3 2.1 8.7 2.1 8.7

IBN 18 2,054 2,362 (13.0) 1,688 21.7 (4.2) 13.6 1.6 (53) 198 (126.5) (222) (76.3) (0.2) 0.8 (126.5) (0.9) (76.3)

Jagran Prakashan 2,648 2,860 (7.4) 2,363 12.1 27.9 31.4 26.8 457 527 (13.3) 364 25.5 1.5 1.7 (13.3) 1.2 25.5

Sun TV Network* 4,921 5,980 (17.7) 3,919 25.6 52.9 54.8 60.3 2,017 2,256 (10.6) 1,555 29.7 5.1 5.7 (10.6) 3.9 29.7

UTV Software 2,607 2,559 1.9 1,306 99.6 21.8 20.9 30.6 391 415 (5.8) 305 28.0 9.6 9.8 (2.2) 7.5 28.1

Zee Entertainment 7,407 8,249 (10.2) 6,493 14.1 22.9 27.2 28.3 1,463 1,555 (5.9) 1,288 13.6 1.5 1.6 (5.9) 1.3 13.6

Source: Kotak Securities - Private Client Research; **Note: Standalone financials for ENIL and Sun TV Network, EBIT margin (rather than EBITDA margin) for SunTV Network

n Zee Entertainment Enterprises Limited: We believe advertising revenues forZee Entertainment shall be affected adversely by the strength in cricketing sea-son this quarter. While DTH adds have been strong, benefits for the same arelikely to be largely lagged. ZEEL revenues shall grow 14.1% y/y. In the absenceof one-off profits booked last quarter in the sports division, we expect profitabilityto decline on the back of higher content expenses (-5.4 ppt decline in EBITDAmargins), and PAT to grow 13.6%y/y.

n Sun TV Network: We expect Sun TV's advertising revenues to be less affectedby the cricket season than Hindi GEC peers, since local advertising has a strongbearing on Sun TV's total pie. Moreover, we expect Sun TV to report robust DTHrevenues on the back of new contracts. Overall, we expect Sun TV Network'srevenues to grow 26% y/y. Declines on q/q basis is to be expected on account ofEndhiran revenues - a large part of which was booked in 2Q/3Q FY11. We esti-mate Sun TV Network's EPS to grow 29% y/y on the back of revenue growth.

n UTV: Overall, we expect UTV's results to trend towards 3QFY11 results. How-ever, segment-wise, we expect a fair degree of change. While revenues frommovies are unlikely to be as strong as 3QFY11, profitability is expected to behigher (No One Killed Jessica, Saat Khoon Maaf, and Dhobi Ghaat are smallerbudget movies, and the company shall have covered a fair degree of costs inC&S and ancillary rights). The broadcasting business of the company is likely tobe weaker than 3QFY11, as a result of seasonality as well as adverse impactfrom the World Cup. Gaming revenues are expected to be weaker in the quarteras last quarter carried the benefits from sale of rights of El Shaddai. We expectthe company's revenues to rise 2% q/q, and PAT to decline 2.2% q/q.

n IBN18: While advertising revenues shall be adversely impacted by the world cup,IBN 18 has also faced increasing competitive intensity in the key Hindi GECspace, which shall lead to escalation in programming costs, affecting margins(expect 5.8 ppt decline in EBITDA margins). As guided by the management, weexpect that subscription revenues shall rise only modestly in the quarter, withmost gains likely to come in in FY12. We expect IBN18 to report PAT loss of Rs-53mn for the quarter.



RESULTS PREVIEW

Sumit [email protected]+91 22 6621 6313

OIL & GAS

Upstream SegmentBrent crude oil price is trading ~USD$121/bbls due to market uncertainty related to1) the continued unrest in producing countries and its potential impact on supply 2)OPEC decision to increase the supply to compensate for the loss of production 3) therate of global economic recovery and 4) Dollar depreciation.

In Mar'11, OPEC total crude oil supply decreased by 143k bopd (YoY) to 29.02 Mnbopd with Libya's crude supply falling by 1.135 Mn bopd (YoY) to 390k bopd,Angola's supply fell by 185k bopd (YoY) to 1.75 Mn bopd.

In Q4FY11, the average Brent crude oil price surged by 37% (YoY) and 20% (QoQ)to USD$ 105.6/bbls leading to better realizations and margins for oil explorationcompanies.

Brent Crude Price Movement

Particulars Q4FY11 Q3FY11 Q4FY10 QoQ (%) YoY (%)

Brent Crude Oil ($/bbls) 105.6 87.7 77 20 37

Source: Bloomberg

In Q4FY11, the WTI and Brent average spread has surged to USD$ -8.36/bbls asagainst USD$ -0.86/bbls in Q3FY11.

Dated Brent Crude Oil Price (USD$/bbls)

Source: Bloomberg

Down Stream (Refining):On the other hand, due to the loss of refining capacity in Japan (two refineries withcapacity of ~4.5 Mn bopd are shut) the prices of refined products increased. As aresult, world over refiners is seeing their gross refining margins improving. InMarch'11, the Singapore refining margin has improved by 16.5% (MoM) toUSD$7.2/bbls, similarly, Gas oil price has increased by 11.6% (MoM) to USD$133.4/bbls, followed by Naphtha price increased by 9.9% (MoM) to USD$107.4/bbls.

Mid Stream (Natural Gas):Due to rise in crude oil price, the average Naphtha price has also increased to USD$100.5/bbls in Q4FY11 (+14% QoQ, +28% YoY). As a result imported natural gas stillremains attractive as a feed stock. However, we believe two key concerns for do-mestic gas transportation companies are the domestic natural gas availability andthe rising LNG prices.

20

40

60

80

100

120

140

160

Mar

-08

Sep

-08

Mar

-09

Sep

-09

Mar

-10

Sep

-10

Mar

-11

Dated Brent Crude Max Min 3-Year Average



Quarterly estimates - Oil & Gas



IGL 5,492 4,547 20.8 2,878 90.8 30.1 27.9 32.1 785 672 16.8 515 52.5 5.6 4.8 16.8 3.7 52.5

Petronet LNG 40,017 36,276 10.3 23,855 67.8 10.7 8.2 6.6 1,699 1,708 (0.6) 973 74.6 2.3 2.3 (0.6) 1.3 74.6

GSPL 2,650 2,792 (5.1) 2,579 2.8 95.8 93.8 91.9 1,129 1,591 (29.1) 1,079 4.6 2.0 2.8 (29.1) 1.6 23.3

Cairn India 49,671 30,964 60.4 6,928 616.9 64.2 82.1 35.5 25,567 20,101 27.2 2,452 942.8 13.5 10.6 27.2 1.3 942.3

TOTAL 97,830 74,580 31.18 36,240 170.0 0.0 0.0 0.0 29,179 24,073 21.2 5,018 481.5 23 21 8

Source: Companies; Kotak Securities - Private Client Research

Companiesn CAIRN INDIA: Upstream oil exploration company- Cairn India is expected to

show robust performance on volume and realization front in Q4FY11. Cairn Indiais a private exploration company so it will reap full benefits of rising crude oilprices.

In Q4FY11, we expect Cairn India's Rajasthan production to average around 125kbopd. Also, we see marginal impact on profits due to lower other income (ascash was used for exploration purpose) and higher exploration costs. In Q1FY12,we expect the issue related to royalty and cess will be cleared by the govern-ment.

n IGL: IGL is the process of expanding its infrastructure in existing and new areasin and around Delhi. The Company is planning to incur a capex of Rs.70 bn inFY12.

On 2nd April'11, IGL has hiked the price of CNG in Delhi by Rs 0.30 per kg to Rs29.30 per kg and by Rs.0.35 per kg to Rs 32.85 per kg in Noida, Greater Noidaand Ghaziabad because of increase in operating expenses as a result of revisionof minimum wages by the government.

Post price hike, CNG is still ~64% cheaper than the running cost of petrol drivenvehicles and if compared to diesel driven vehicles than it is ~ 22% cheaper.There are more than four lakh CNG-run vehicles - both commercial and private -in Delhi and the national capital region.

n Petronet LNG (PLNG): We expect PLNG to show strong volume growth on QoQbasis mainly on account of higher gas demand and lower KG-6 gas production.The Company filled the supply-demand gap by importing higher LNG. However,with the rise in raw material cost we can see some pressure on profits but theimpact will be mitigated partly due to increase in regasification margins by 5%w.e.f. January 1, 2011.

n GSPL: We expect GSPL to report de-growth in profits. We believe the key con-cern is the domestic natural gas availability.



Trade details of bulk deals

Date Scrip name Name of client Buy/ Quantity Avg.Sell of shares price

(Rs)

7-Apr Agre Developers Yuga Stocks & Commodities Pvt Ltd S 75,121 57.4

7-Apr AP Paper Bakulesh Trambaklal Shah B 225,025 392.0

7-Apr AP Paper KBS Realtors Pvt Ltd S 225,000 392.0

7-Apr Arrow Sec Chimanlal Maneklal Securities Pvt Ltd B 36,654 10.1

7-Apr Bhandari Hos Ravinder Arya B 53,022 34.3

7-Apr Bhandari Hos Asha Bhalla S 120,028 31.2

7-Apr Bhandari Hos Ravinder Arya S 53,022 32.9

7-Apr Centron Indl Chartist Securities Ltd B 10,000 28.8

7-Apr Centron Indl Rashmi Singh S 13,800 28.8

7-Apr Chandni Tex Lakhmendra Chamanlal Khurana B 85,000 45.7

7-Apr Compact Disc Shriparasramholdingpvtltd B 48,654 55.1

7-Apr Emami Infra Milestone Shares & Stock Broking B 125,000 35.0

7-Apr Emami Infra Ratilal Shamji Dedhia S 130,519 35.0

7-Apr Excel Info Jhaveri Trading & Investment Pvt Ltd B 174,696 37.0

7-Apr Excel Info Lakhmendra Chamanlal Khurana S 300,000 37.1

7-Apr Excel Info Ranjana Lakhmendra Khurana S 200,000 37.1

7-Apr Fineotex Ch Swift Tie Up Pvt Ltd B 75,000 226.0

7-Apr Fineotex Ch Trans Fiscal Pvt Ltd B 124,237 223.0

7-Apr Fineotex Ch Sadhna Stocks & Securitiep Ltd B 70,000 224.6

7-Apr Fineotex Ch Sunil Kumar Dham S 130,000 226.0

7-Apr Hasti Finance Fast Track Marketing Services Pvt Ltd B 37,440 61.9

7-Apr Hasti Finance BP Wealth Management Pvt Ltd S 43,325 61.9

7-Apr Indo Bonito Shivcharan Shreedhar Kashyap S 602,000 5.5

7-Apr Indoco Remedies DSP Blackrock Mutual Fund B 115,650 441.0

7-Apr Indoco Remedies Master Trust Bk of Japan LtdAs Trustee of Blackrock India Eq S 115,650 441.0

7-Apr IOL Netcom Darvin Consultancy Pvt Ltd S 140,000 8.5

7-Apr Jaihind Syn Sonal Manishkumar Doshi B 30,000 16.1

7-Apr Jaihind Syn Prasham D Doshi S 51,491 16.4

7-Apr Jupiter Biosc-$ JMP Securities Pvt Ltd B 314,684 26.8

7-Apr Kay Power Prakash Jayshankar Joshi S 59,000 14.8

7-Apr Maestros Med-$ Satyam Silk Mills Ltd S 50,000 59.0

7-Apr Pasari Spin Priyanka Manoj Jain S 100,000 24.6

7-Apr Pro Fin Capital Anupam Narain Gupta B 25,000 19.0

7-Apr Pro Fin Capital Profin Lease & Investments Pvt Ltd S 25,000 19.0

7-Apr Regency Trust Orissa Re Rollers Pvt Ltd B 50,000 101.0

7-Apr Regency Trust Mukesh Nanubhai Desai S 100,000 101.0

7-Apr Seax Global Image Equity (India) Pvt Ltd S 77,950 13.7

7-Apr Softech Inf Kandarpkumar Ratilal Patel B 20,200 34.2

7-Apr Southern Onlin Maya Trade Links Ltd B 700,000 13.5

7-Apr Southern Onlin Satellite Intercontinental Pvt Ltd S 500,000 13.5

7-Apr Svartcorp Abhilasha Money Operations Pvt Ltd S 260,000 7.3

7-Apr Tamboli Cap Life Insurance Corporation S 50,000 15.0

7-Apr Vijay Shanti Bld Keki Dinshah Mehta B 190,000 23.7

7-Apr Vijay Shanti Bld Laxmi Investments S 190,000 23.7

7-Apr Vision Tech Saritha B 175,500 3.3

7-Apr Vision Tech Bindiganavalerangavasanthkumar S 150,000 3.3

7-Apr Zenith Comp Citigroup Global Markets Mauritius S 260,150 24.5

Source: BSE

Bulk deals



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Gainers & Losers Nifty Gainers & LosersPrice (Rs) chg (%) Index points Volume (mn)

Gainers

HDFC 716 2.4 7.2 3.2

L&t 1,670 0.8 2.5 1.6

Hindalco industries 216 1.7 1.6 4.5

Losers

Infosys Tech 3,246 (0.9) (4.7) 0.5

tata Cons 1,199 (1.9) (3.8) 1.1

OnGC 292 (2.2) (2.9) 4.8

Source: Bloomberg

Research TeamDipen ShahIT, [email protected]+91 22 6621 6301

Sanjeev ZarbadeCapital Goods, [email protected]+91 22 6621 6305

Teena VirmaniConstruction, Cement, Mid [email protected]+91 22 6621 6302

Saurabh AgrawalMetals, [email protected]+91 22 6621 6309

Saday SinhaBanking, NBFC, [email protected]+91 22 6621 6312

Arun [email protected]+91 22 6621 6143

Ruchir KhareCapital Goods, [email protected]+91 22 6621 6448

Ritwik RaiFMCG, [email protected]+91 22 6621 6310

Sumit PokharnaOil and [email protected]+91 22 6621 6313

Amit AgarwalLogistics, [email protected]+91 22 6621 6222

Jayesh [email protected]+91 22 6652 9172

Shrikant ChouhanTechnical [email protected]+91 22 6621 6360

K. [email protected]+91 22 6621 6311

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