Ed l i Fi i l Ad i LtdEdelweiss Financial Advisors LtdEdelweiss Financial Advisors LtdEdelweiss Financial Advisors Ltdde e ss a c a d so s td

MIDCAP STOCK IDEASMIDCAP STOCK IDEASMIDCAP STOCK IDEASMIDCAP STOCK IDEAS

11

MARKETS OVERVIEW MARKETS OVERVIEW MARKETS OVERVIEW

h d b bi i i i f h k i h b h h d di h iMarch 2011 turned out to be a big positive surprise for the markets with both the NIFTY and Sensex recording sharp gainsMarch 2011 turned out to be a big positive surprise for the markets with both the NIFTY and Sensex recording sharp gainsof over 10% on the back of robust FII Flows to the tune of over $ 2 bn which were earlier completely missing since Jan 2011of over 10%, on the back of robust FII Flows to the tune of over $ 2 bn which were earlier completely missing since Jan 2011, $ p y gonwardsonwards.

Major reasons for the current rally are: a) Very High level of FII Inflows in the Indian markets b) cooling of food inflationMajor reasons for the current rally are: a) Very High level of FII Inflows in the Indian markets. b) cooling of food inflationl l ) A t f 3 bi FDI d l lik th BP POSCO d th Ni R li Lif d l d) t I dilevels c) Announcement of 3 big FDI deals like the BP, POSCO, and the Nippon Reliance Life deals d) strong Indian economylevels c) Announcement of 3 big FDI deals like the BP, POSCO, and the Nippon Reliance Life deals d) strong Indian economynumbers especially on Exports which are showing strong growth and reduction in the Current Account deficitnumbers especially on Exports which are showing strong growth and reduction in the Current Account deficit.p y p g g g

Also the Union Budget for 2011 12 presented by the FM clearly spelt out the governments renewed focus on sustaining theAlso the Union Budget for 2011‐12 presented by the FM clearly spelt out the governments renewed focus on sustaining theg p y y p g gh fGDP growth at over 8% for current yearGDP growth at over 8% for current year.

However with the markets having run up significantly in a short time we believe that markets could see some consolidationHowever with the markets having run up significantly in a short time, we believe that markets could see some consolidationi h d b th l b l d d ti h d i d ti t i h ll i i ll ith d t i i dgoing ahead, as both global and domestic headwinds continue to remain challenging especially with regards to rising crudegoing ahead, as both global and domestic headwinds continue to remain challenging especially with regards to rising crude

oil prices and interest ratesoil prices and interest rates.

From the Liquidity point of view FII’s which invested over $ 2bn in March 2011 have again invested over $ 1bn in the firstFrom the Liquidity point of view FII s which invested over $ 2bn in March 2011 have again invested over $ 1bn in the firstq y p gk f A il 2011 d hi i lik l itwo weeks of April 2011 and this is likely to continuetwo weeks of April 2011 and this is likely to continue.

h l l f h d f h h l k d hAt the current level of 19506 the Sensex is trading at 15x FY12E earnings of Rs 1269 which looks attractive considering theAt the current level of 19506, the Sensex is trading at 15x FY12E earnings of Rs 1269 which looks attractive considering thehistorical mean multiples (16x 17x) Technically the market has good support around 5700 levels and resistance aroundhistorical mean multiples (16x‐17x). Technically the market has good support around 5700 levels and resistance aroundp ( ) y g pp6000 levles6000 levles.

Domestic investment and export dependent sectors are likely to perform well in the current high growth environment suchDomestic investment and export dependent sectors are likely to perform well in the current high growth environment suchp p y p g gA t C it l d B k P E i t d I f ti T h las Auto, Capital goods, Banks, Power Equipment and Information Technology.as Auto, Capital goods, Banks, Power Equipment and Information Technology.

22

MARKETS OVERVIEW MARKETS OVERVIEW MARKETS OVERVIEW

W b li h l k l l b l li idi d QE2 d i l i ill l l b lWe believe strong growth outlook surplus global liquidity due to QE2 and attractive valuations will compel globalWe believe strong growth outlook, surplus global liquidity due to QE2 and attractive valuations will compel globalinstitutional investors to allocate sizable funds to India to generate above average market returns on their global portfolioinstitutional investors to allocate sizable funds to India to generate above average market returns on their global portfolio.g g g p

On domestic front liquidity is likely to improve on the back of rising government spending and growth in deposits puttingOn domestic front liquidity is likely to improve on the back of rising government spending and growth in deposits, puttingq y y p g g p g g p , p gdownward pressure on short end of the yield curvedownward pressure on short end of the yield curve.

We believe interest rates are closer to peak level and lower government borrowing will drive private sector investmentsWe believe, interest rates are closer to peak level and lower government borrowing will drive private sector investmentsp g g pi f d H i i d il i ff t fi l d fi it d i t t i t t d ili thgoing forward. However, rising crude oil prices may affect fiscal deficit and private sector investment, derailing growthgoing forward. However, rising crude oil prices may affect fiscal deficit and private sector investment, derailing growth

momentummomentum.

Net Net however we suggest taking a stock specific approach where valuations are attractive and stick to qualityNet Net however we suggest taking a stock specific approach where valuations are attractive and stick to qualitygg g p pp q yb b h dbusinesses run by honest and competent managementsbusinesses run by honest and competent managements.

33

Q4 RESULT EXPECTATIONS Q4 RESULT EXPECTATIONS Q4 RESULT EXPECTATIONS Q

K S i l E iKey Sectorial Expectations –Key Sectorial Expectations –y p

Auto Growth continues to remain robust but increasing raw material prices continue to dent profitability however pricingAuto – Growth continues to remain robust but increasing raw material prices continue to dent profitability however, pricingg p p y , p gaction taken by major OEM’s should ease the pressure on their margins to some extent Top Picks here are M & M and Tataaction taken by major OEM s should ease the pressure on their margins to some extent. Top Picks here are M & M and TataM tMotorsMotors

B k NII th d f i lik l t i t th b k f b t l th d h lth f iBanks – NII growth and fee income likely to remain strong on the back of robust loan growth and healthy fee incomeBanks NII growth and fee income likely to remain strong on the back of robust loan growth and healthy fee incomeprogression Compression in margins coupled with slippage from stressed sectors like MFI and telecom could act as earningprogression. Compression in margins coupled with slippage from stressed sectors like MFI and telecom could act as earningp g p g p pp g gd T Pi k h ICICI B k A i B k B k f B d d F d l B kdampener Top Picks here are ICICI Bank Axis Bank Bank of Baroda and Federal Bankdampener. Top Picks here are ICICI Bank, Axis Bank, Bank of Baroda and Federal Bank

d l f h l ll l d l l h h l dIT ‐ Budget cycle of the clients will lead to lower volume growth in IT companies Whereas improvement in utilization andIT Budget cycle of the clients will lead to lower volume growth in IT companies. Whereas, improvement in utilization andoperating leverage will assist operating margin improvement Top Picks here are TCS HCL Tech and Eclerxoperating leverage will assist operating margin improvement. Top Picks here are TCS, HCL Tech and Eclerx.ope at g e e age ass st ope at g a g p o e e t op c s e e a e CS, C ec a d c e

I f t t & C t ti M i f th i f d t ti l t i d d t hi hInfrastructure & Construction – Margins of the infra and construction players to remain under pressure due to high rawInfrastructure & Construction Margins of the infra and construction players to remain under pressure due to high rawmaterial prices and interest costs However sales will pick on the back of seasonally better execution in the last quarter ofmaterial prices and interest costs. However sales will pick on the back of seasonally better execution in the last quarter ofp p y q

t fi l T Pi k h i IRB I fcurrent fiscal. Top Pick here is IRB Infra.current fiscal. Top Pick here is IRB Infra.

C Sl h i h d d d i i i f l d f i h b h ll f hCement –Slower growth in the cement demand and increase in input cost of coal and freight to be a challenge for theCement Slower growth in the cement demand and increase in input cost of coal and freight to be a challenge for thecement players Top Pick here is Grasimcement players. Top Pick here is Grasim.p y p

Fertili ers Domestic demand for agrochemicals to remain strong for the q arter dri en b rabi season Top Picks here areFertilizers – Domestic demand for agrochemicals to remain strong for the quarter driven by rabi season. Top Picks here areFertilizers Domestic demand for agrochemicals to remain strong for the quarter driven by rabi season. Top Picks here areCoromandel International and ZuariCoromandel International and Zuari.

FMCG Volume growth to remain healthy however rising raw material costs (palm oil copra milk) to dent marginsFMCG – Volume growth to remain healthy, however rising raw material costs (palm oil, copra, milk) to dent margins,g y g (p p ) gti ll ff t b l ti l T Pi k h ITC D b d G d j Cpartially offset by lower promotional expenses. Top Picks here are ITC, Dabur and Godrej Consumer.partially offset by lower promotional expenses. Top Picks here are ITC, Dabur and Godrej Consumer.

44

Q4 RESULT EXPECTATIONS Q4 RESULT EXPECTATIONS Q4 RESULT EXPECTATIONS Q

M t l M i t i d th b k f hi h t i l t h i dit iMetals – Margins to remain under pressure on the back of higher raw material costs, however, surge in commodity pricesMetals Margins to remain under pressure on the back of higher raw material costs, however, surge in commodity pricesand subsequent price hikes to offset raw material cost inflation to a certain extent though we expect tough times for theand subsequent price hikes to offset raw material cost inflation to a certain extent, though we expect tough times for theq p g p g

i d l l T Pi k h T S l d JSW S lmore non‐integrated steel players Top Picks here are Tata Steel and JSW Steelmore non integrated steel players. Top Picks here are Tata Steel and JSW Steel.

h S & d i f l i l d b h O i i i d i b d l hiPharma – US & domestic formulation leads robust growth Operating margins to improve driven by new product launchingPharma US & domestic formulation leads robust growth. Operating margins to improve driven by new product launchingin the niche therapeutic area Top Picks here are Lupin Torrent Pharma and Apollo Hospitalsin the niche therapeutic area. Top Picks here are Lupin, Torrent Pharma and Apollo Hospitals.p p p , p p

R l E t t Th l t t t ill i ft d t l l d ti t f hi h t iReal Estate ‐ The real estate sector will remain soft due to low sales and execution on account of high property prices.Real Estate The real estate sector will remain soft due to low sales and execution on account of high property prices.Margins are likely to be under pressure due to rise in input costsMargins are likely to be under pressure due to rise in input costs.

Capital goods & Power Driven by the spending in power sector and considering seasonality factor capital goods areCapital goods & Power – Driven by the spending in power sector and considering seasonality factor, capital goods arep g y p g p g y , p gd h l h i Q4FY11 H l ff f hi h f d f l i ill bexpected to grow at a healthy pace in Q4FY11 However lag effect of high ferrous and non ferrous metal prices will beexpected to grow at a healthy pace in Q4FY11. However lag effect of high ferrous and non ferrous metal prices will be

reflected in the profit margins Top picks here are KEC Thermax L & T and BHELreflected in the profit margins. Top picks here are KEC, Thermax. L & T and BHEL.p g p p ,

SECTORS TO INVEST SECTORS TO AVOIDSECTORS TO INVEST                        SECTORS TO AVOID  AUTOS CONTSRUCTIONAUTOS CONTSRUCTION BANKS CEMENTSBANKS CEMENTSBANKS    CEMENTS ENGINEERING/CAPITAL GOODS REAL ESTATEENGINEERING/CAPITAL GOODS  REAL ESTATE  /FERTILISERS INFRASTRUCTUREFERTILISERS  INFRASTRUCTURE  AGRO INPUTS TELECOMSAGRO INPUTS         TELECOMS  IT SERVICES OMC COMPANIESIT SERVICES OMC COMPANIESIT SERVICES            OMC COMPANIESPOWER EQUIPMENTPOWER EQUIPMENT  QPHARMAPHARMA  METALSMETALS  FMCGFMCGFMCG  OFF SHORE OIL PLAYERSOFF SHORE OIL PLAYERS  

55

MIDCAP STOCKPICKS RECOMMENDED MIDCAP STOCKPICKS RECOMMENDED MIDCAP STOCKPICKS RECOMMENDED

NAME OF STOCK CMP(RS) EPS (RS EPS (RS EPS (RS P/E(X) P/E(X) P/E(X) TP (RS) * UPSIDE (%)NAME OF STOCK CMP(RS) EPS (RS EPS (RS EPS (RS P/E(X) P/E(X) P/E(X) TP (RS) * UPSIDE (%)NAME OF STOCK  CMP(RS) EPS (RS EPS (RS EPS (RS P/E(X) P/E(X) P/E(X) TP (RS)  UPSIDE (%)FY10A FY11E FY12E FY10A FY11E FY12EFY10A FY11E FY12E FY10A FY11E FY12EFY10A FY11E FY12E FY10A FY11E FY12E

IL & FS TRANSPORT 245 14 6 19 3 23 5 17 13 10 325 33IL & FS TRANSPORT 245 14.6 19.3 23.5 17 13 10 325 33I & FS TRANSPORT 45 4.6 9.3 3.5 7 3 0 3 5 33ELECON ENGINEERING 76 5 4 7 00 9 00 14 11 8 100 32ELECON ENGINEERING 76 5.4 7.00 9.00 14 11 8 100 32SHIV VANI OIL 308 42 9 49 3 58 2 7 6 5 425 38SHIV‐VANI OIL  308 42.9 49.3 58.2 7 6 5 425 38LUPIN PHARMA 410 14 9 18 7 30 6 28 22 13 510 24LUPIN PHARMA 410 14.9 18.7 30.6 28 22 13 510 24PERSISTENT SYSTEMS 413 28 8 33 00 36 00 14 13 11 504 22PERSISTENT SYSTEMS 413 28.8 33.00 36.00 14 13 11 504 22POLARIS SOFTWARE 209 16 00 21 00 24 5 13 10 9 270 29POLARIS SOFTWARE 209 16 00 21 00 24 5 13 10 9 270 29POLARIS SOFTWARE 209 16.00 21.00 24.5 13 10 9 270 29PIRAMAL GLASS 126 0 5 10 00 18 00 13 7 180 43PIRAMAL GLASS 126 0.5 10.00 18.00 13 7 180 43PIRAMAL GLASS 126 0.5 10.00 18.00 13 7 180 43ECLERX SERVICES 754 24 8 42 30 48 5 30 18 16 829 10ECLERX SERVICES 754 24.8 42.30 48.5 30 18 16 829 10ECLERX SERVICES  754 24.8 42.30 48.5 30 18 16 829 10KPR MILLS 189 13 4 33 00 38 00 14 6 5 215 14KPR MILLS 189 13.4 33.00 38.00 14 6 5 215 14KPR MI S 89 3.4 33.00 38.00 4 6 5 5 4ENGINEERS INDIA 299 13 00 15 00 18 00 23 20 17 355 19ENGINEERS INDIA  299 13.00 15.00 18.00 23 20 17 355 19DEEPAK FERTILISERS 172 16 00 20 00 25 00 11 9 7 206 20DEEPAK FERTILISERS 172 16.00 20.00 25.00 11 9 7 206 20DIAMOND POWER 169 21 00 31 00 42 00 8 5 4 287 70DIAMOND POWER 169 21.00 31.00 42.00 8 5 4 287 70GLOBUS SPIRITS 147 14 60 17 50 22 00 10 8 7 196 33GLOBUS SPIRITS 147 14.60 17.50 22.00 10 8 7 196 33GLENMARK PHARMA 297 16 40 19 52 23 90 18 15 12 361 22GLENMARK PHARMA 297 16 40 19 52 23 90 18 15 12 361 22GLENMARK PHARMA  297 16.40 19.52 23.90 18 15 12 361 22KEC INTERNATIONAL 87 6 00 9 00 12 00 15 10 7 105 21KEC INTERNATIONAL 87 6 00 9 00 12 00 15 10 7 105 21KEC INTERNATIONAL 87 6.00 9.00 12.00 15 10 7 105 21* Ti F f 6 th t 1 Y* Time Frame of 6 mths to 1 Year. Time Frame of 6 mths to 1 Year. 

66

IL&FS TRANSPORTIL&FS TRANSPORTIL&FS TRANSPORT

STOCK PRICE EPS EPS EPS PE PE PE TP(RS) UPSIDE %STOCK PRICE  EPS EPS EPS  PE PE PE TP(RS) UPSIDE %( )RS FY10 FY11E FY12E FY10 FY11E FY12ERS FY10 FY11E FY12E FY10 FY11E FY12ERS  FY10 FY11E FY12E FY10 FY11E FY12E245 0 14 6 19 3 23 5 17 0 13 0 10 0 325 0 33245.0 14.6 19.3 23.5 17.0 13.0 10.0 325.0 33245.0 14.6 19.3 23.5 17.0 13.0 10.0 325.0 33

IL&FS Transportation Network Ltd (BO ILFT) is the largest developer operator and investor of surface transportationIL&FS Transportation Network Ltd (BO.ILFT) is the largest developer, operator and investor of surface transportationp ( ) g p , p pinfrastructure projects in India enjoying a pan‐India presence and a diverse project portfolio consisting of 23 road projectsinfrastructure projects in India enjoying a pan‐India presence and a diverse project portfolio consisting of 23 road projects,b t t ti d t il j tbus transportation and a metro rail project.bus transportation and a metro rail project.

Th i ll i d t it li th h d i t it i th d i f t t t d tThe company is well equipped to capitalise on the huge and growing opportunity in the road infrastructure sector due toThe company is well equipped to capitalise on the huge and growing opportunity in the road infrastructure sector due toits established track record in operating BOT road projects its execution capabilities and the strong support from IL&FSits established track record in operating BOT road projects, its execution capabilities and the strong support from IL&FS.p g p j , p g pp

ILFTN has Rs 134 6 bn worth of project capital works remaining to be executed in over the next 3 4 yearsILFTN has Rs 134.6 bn worth of project capital works remaining to be executed in over the next 3‐4 years.p j p g y

Going ahead National Highway Authority of India (NHAI) has plans to award 100 road projects of around 7000 kms to beGoing ahead National Highway Authority of India (NHAI) has plans to award 100 road projects of around 7000 kms to beg g y y ( ) p p jawarded in current financial year ILFT has maintained 9% market share in FY10 and we believe that it will be a naturalawarded in current financial year. ILFT has maintained 9% market share in FY10 and we believe that it will be a naturalb fi i t b th t itibeneficiary to grab these opportunities.beneficiary to grab these opportunities.

W t CAGR f 50% th i d f FY10 13E i il l d b i i C t ti d F iWe expect revenue CAGR of 50% over the period of FY10‐13E primarily led by increase in Construction and Fee income.We expect revenue CAGR of 50% over the period of FY10 13E primarily led by increase in Construction and Fee income.For FY11 we expect Revenues to touch Rs 3740 crs And Rs 6200 crs in FY12 with PAT estimated at Rs 440 and Rs 545 crs inFor FY11 we expect Revenues to touch Rs 3740 crs And Rs 6200 crs in FY12 with PAT estimated at Rs 440 and Rs 545 crs inpFY11 d FY12 i h EPS f R 19 3 d R 23 5 f FY11 d FY12 W BUY i h TP f 325 hFY11 and FY12 with a EPS of Rs 19 3 and Rs 23 5 for FY11 and FY12 We suggest a BUY with a TP of 325 over the nextFY11 and FY12 with a EPS of Rs 19.3 and Rs 23.5 for FY11 and FY12. We suggest a BUY with a TP of 325 over the next12months12months.

77

ELECON ENGINEERING ELECON ENGINEERING ELECON ENGINEERING

STOCK PRICE EPS EPS EPS PE PE PE TP(RS) UPSIDE %STOCK PRICE EPS EPS EPS PE PE PE TP(RS) UPSIDE %STOCK PRICE  EPS EPS EPS  PE PE PE TP(RS) UPSIDE %RS FY10 FY11E FY12E FY10 FY11E FY12ERS  FY10 FY11E FY12E FY10 FY11E FY12E76 0 5 4 7 0 9 0 14 0 10 0 8 0 100 0 3276 0 5 4 7 0 9 0 14 0 10 0 8 0 100 0 3276.0 5.4 7.0 9.0 14.0 10.0 8.0 100.0 32

Elecon is a leading player of material handling equipment (MHE) and industrial gears segmentsElecon is a leading player of material handling equipment (MHE) and industrial gears segments.

The company has an unexecuted order book of Rs 1690 crs as on dateThe company has an unexecuted order book of Rs 1690 crs as on date.p y

Elecon Engineering (Elecon) reported strong Q3FY11 results with Revenues up by 20% Y o Y at Rs 300 crs led by 35%Elecon Engineering (Elecon) reported strong Q3FY11 results, with Revenues up by 20% Y‐o‐Y, at Rs 300 crs led by 35%g g ( ) p g Q , p y , yh h d ( f )growth in the gear division (46% of revenue)growth in the gear division (46% of revenue).

The material handling equipment (MHE) division (54% of revenue) however grew lower at 9% during the quarter EBITDAThe material handling equipment (MHE) division (54% of revenue), however, grew lower at 9% during the quarter. EBITDA,t R 49 7 j d 27 5% Y Y L t i l t d l t h l d d EBITDA i t 16 4% iat Rs 49.7 crs jumped 27.5% Y‐o‐Y. Lower raw material costs and employee cost helped expand EBITDA margin to 16.4% inat Rs 49.7 crs jumped 27.5% Y o Y. Lower raw material costs and employee cost helped expand EBITDA margin to 16.4% inQ3FY11Q3FY11.

PAT adjusted for profits from sale of investment rose 34 5% to Rs 16 3 crs driven by lower interest cost and tax rate asPAT, adjusted for profits from sale of investment, rose 34.5% to Rs 16.3 crs driven by lower interest cost and tax rate as, j p , yd b l l i d d lidebt levels continued to declinedebt levels continued to decline.

h l h d l d f h f dThe Elecon Management has reiterated its earlier guidance of achieving turnover of Rs 1 250 crore in FY11 and Rs 1 500The Elecon Management has reiterated its earlier guidance of achieving turnover of Rs 1,250 crore in FY11 and Rs 1,500crore in FY12 on standalone basis It also expects to attain a 25 30% growth in order inflows in FY12 with marginscrore in FY12 on standalone basis. It also expects to attain a 25‐30% growth in order inflows in FY12 with marginsp % g gsustainable at current levelssustainable at current levels.

Currently EEC is trading at PE of 10x on FY11E EPS of Rs 7 and 8x on FY12E EPS of Rs 9 We suggest a BUY on the stock withCurrently EEC is trading at PE of 10x on FY11E EPS of Rs 7 and 8x on FY12E EPS of Rs 9. We suggest a BUY on the stock withy g ggTP f R 100a TP of Rs 100.a TP of Rs 100.

88

SHIV VANI OIL & GAS EXPLORATION SHIV-VANI OIL & GAS EXPLORATION SHIV VANI OIL & GAS EXPLORATION

STOCK PRICE EPS EPS EPS PE PE PE TP(RS) UPSIDE %STOCK PRICE EPS EPS EPS PE PE PE TP(RS) UPSIDE %STOCK PRICE  EPS EPS EPS  PE PE PE TP(RS) UPSIDE %RS FY10 FY11E FY12E FY10 FY11E FY12ERS  FY10 FY11E FY12E FY10 FY11E FY12E308 0 42 9 49 3 58 2 7 0 6 0 5 0 425 0 38308.0 42.9 49.3 58.2 7.0 6.0 5.0 425.0 38308.0 42.9 49.3 58.2 7.0 6.0 5.0 425.0 38

SVOG has evolved into an integrated onshore oilfield service provider and now dominates the Indian upstream onshoreSVOG has evolved into an integrated onshore oilfield service provider and now dominates the Indian upstream onshoreg p piservices space.services space.

A d ti i id SVOG th l t fl t f b th h i i (10 ) d d illi (40 i )Among domestic service providers, SVOG owns the largest fleet of both onshore seismic (10 crews) and drilling (40 rigs)Among domestic service providers, SVOG owns the largest fleet of both onshore seismic (10 crews) and drilling (40 rigs)assetsassets.

K li l A d 90% f h ’ f ONGC d Oil I di A b SVOG’ iKey clientele: Around 90% of the company’s revenues come from ONGC and Oil India Asset base: SVOG’s extensive assetKey clientele: Around 90% of the company s revenues come from ONGC and Oil India. Asset base: SVOG s extensive assetbase spread across the country gives it strong competitive advantage against peersbase spread across the country gives it strong competitive advantage against peers.p y g g p g g p

SVOG is expected to be a key beneficiary in the Indian onshore services space as industry activity is buoyed by betterSVOG is expected to be a key beneficiary in the Indian onshore services space, as industry activity is buoyed by betterp y y p y y y yh d b i di NELP it t d tl b ONGC d Oil I dihydrocarbon prices, pending NELP commitments and capex outlay by ONGC and Oil India.hydrocarbon prices, pending NELP commitments and capex outlay by ONGC and Oil India.

Q3FY11 consolidated revenue at Rs 380 crs jumped 6 9% Y o Y as the quarter saw optimum utilisation of the company’sQ3FY11 consolidated revenue, at Rs 380 crs jumped 6.9% Y‐o‐Y as the quarter saw optimum utilisation of the company’sQ , j p q p p yh ll d l d d d b k b dassets with all rigs under operation Its consolidated order book as on December 31 2010 stands at Rs 3000 crsassets with all rigs under operation. Its consolidated order book as on December 31, 2010, stands at Rs 3000 crs.

O ll SVOG’ lid d PAT INR 700 d 21 0% Y Y d 114 8% Q Q i il b k f hi hOverall SVOG’s consolidated PAT at INR 700 mn surged 21 0% Y‐o‐Y and 114 8% Q‐o‐Q primarily on back of higherOverall, SVOG s consolidated PAT, at INR 700 mn, surged 21.0% Y o Y and 114.8% Q o Q primarily on back of higherEBITDA margins and lower tax expensesEBITDA margins and lower tax expenses.g p

We maintain our positive stance on crude and thus also anticipate oil & gas companies to increase their FY12 capexWe maintain our positive stance on crude and thus also anticipate oil & gas companies to increase their FY12 capexb dgets benefitting O&G ancillar pla ers like SVOGbudgets benefitting O&G ancillary players like SVOG.budgets benefitting O&G ancillary players like SVOG.

At the CMP of Rs 311 the stock trades at P/E of 5x FY12E and we suggest a BUY with a TP of Rs 425At the CMP of Rs 311, the stock trades at P/E of 5x FY12E and we suggest a BUY with a TP of Rs 425, / gg

99

LUPINLUPINLUPIN

STOCK PRICE EPS EPS EPS PE PE PE TP(RS) UPSIDE%STOCK PRICE EPS EPS EPS PE PE PE TP(RS) UPSIDE%STOCK PRICE  EPS EPS EPS  PE PE PE TP(RS) UPSIDE %RS FY10 FY11E FY12E FY10 FY11E FY12ERS FY10 FY11E FY12E FY10 FY11E FY12ERS  FY10 FY11E FY12E FY10 FY11E FY12E410 14 6 19 3 23 5 17 13 10 510 24410 14.6 19.3 23.5 17 13 10 510 24

LPC is India’s fifth largest compan b domestic sales L pin’s re en es and profits ha e posted 29% and 40% CAGR inLPC is India’s fifth largest company by domestic sales. Lupin’s revenues and profits have posted 29% and 40% CAGR inLPC is India s fifth largest company by domestic sales. Lupin s revenues and profits have posted 29% and 40% CAGR inFY06‐10 to Rs 4900 crs and Rs 680 crs in FY10 respectivelyFY06‐10, to Rs 4900 crs and Rs 680 crs in FY10, respectively.

With the expansion in the branded portfolio through the anticipated launch of Allernaze we expect the US business toWith the expansion in the branded portfolio through the anticipated launch of Allernaze we expect the US business top p g p pt CAGR f 20% FY2011 13 W t th b d d b i t t ib t b t 35% f th t t l US lgrow at a CAGR of 20% over FY2011‐13. We expect the branded business to contribute about 35% of the total US salesgrow at a CAGR of 20% over FY2011 13. We expect the branded business to contribute about 35% of the total US sales

over the next two yearsover the next two years.y

We expect Lupin’s total sales to grow at 16% CAGR between FY10 12E primarily led by domestic formulation growth ofWe expect Lupin s total sales to grow at 16% CAGR between FY10‐12E primarily led by domestic formulation growth ofp p g p y y g18% Y‐o‐Y18% Y‐o‐Y.

We expect robust sales growth in US generics business over FY13‐14E primarily exclusive product launches (expect toWe expect robust sales growth in US generics business over FY13‐14E primarily exclusive product launches (expect tol h 70 d t t 3 4 ) N t fit t d t t 19% CAGR i FY10 12E t R 960 i FY12launch 70 products over next 3‐4 years). Net profits are expected to grow at 19% CAGR in FY10‐12E to Rs 960 crs in FY12.launch 70 products over next 3 4 years). Net profits are expected to grow at 19% CAGR in FY10 12E to Rs 960 crs in FY12.

W t L i t t i CAGR f 19% FY2011 13 ith t i t th ti l l At 21We expect Lupin to report an earnings CAGR of 19% over FY2011‐13 with strong margins at the operating level At 21xWe expect Lupin to report an earnings CAGR of 19% over FY2011 13 with strong margins at the operating level. At 21xFY2011E and 13x FY2012E earnings Lupin offers limited downside from the current levels We suggest a Buy on LUPINFY2011E and 13x FY2012E earnings, Lupin offers limited downside from the current levels. We suggest a Buy on LUPINg , p gg yi h f 0with a TP of Rs510with a TP of Rs510.

1010

PERSISTENT SYSTEMS PERSISTENT SYSTEMS PERSISTENT SYSTEMS

STOCK PRICE EPS EPS EPS PE PE PE TP(RS) UPSIDE %STOCK PRICE  EPS EPS EPS  PE PE PE TP(RS) UPSIDE %( )RS FY10 FY11E FY12E FY10 FY11E FY12ERS  FY10 FY11E FY12E FY10 FY11E FY12E413 0 28 8 33 0 36 0 14 0 12 0 11 0 504 0 22413.0 28.8 33.0 36.0 14.0 12.0 11.0 504.0 22

Persistent Systems limited (PSL) is a leading services provider in niche and rapidly growing outsourced software productPersistent Systems limited (PSL) is a leading services provider in niche and rapidly growing outsourced software producty ( ) g p p y g g pdevelopment (OPD) spacedevelopment (OPD) space.

The increasingly compelling advantages of OPD and early investments in cloud computing mobility collaboration andThe increasingly compelling advantages of OPD and early investments in cloud computing, mobility, collaboration andl ti h ld bl th t id th t f thanalytics should enable the company to ride the next wave of growth.analytics should enable the company to ride the next wave of growth.

PSL h f h li l id i d IT l h i l l i hi i h lik IBMPSL has one of the strongest clientele among mid‐sized IT players having long term relationships with marquees like IBMPSL has one of the strongest clientele among mid sized IT players having long term relationships with marquees like IBM,Microsoft Salesforce com among others More than 40 clients with US$1bn+revenues (with sizeable R&D spend) whichMicrosoft, Salesforce.com among others. More than 40 clients with US$1bn+revenues (with sizeable R&D spend) which, g $ ( p )ff loffer strong mining potentialoffer strong mining potential.

Fueled by the strong growth opportunities in new technology areas acceleration of new product introduction and strongFueled by the strong growth opportunities in new technology areas, acceleration of new product introduction and strongi bl li t l t PSL t t 24% CAGR FY11 13mineable clientele, we expect PSL to post 24% revenue CAGR over FY11‐13.mineable clientele, we expect PSL to post 24% revenue CAGR over FY11 13.

W t PSL t d R f R 770 d R 990 i FY11 d FY12 f ll d b PAT f R 130 d RWe expect PSL to record Revenues of Rs 770 crs and Rs 990 crs in FY11 and FY12 followed by a PAT of Rs 130 crs and RsWe expect PSL to record Revenues of Rs 770 crs and Rs 990 crs in FY11 and FY12 followed by a PAT of Rs 130 crs and Rs144crs in FY11 and FY12 resulting in a EPS of Rs 33 and Rs 36 in FY11 and FY12 respectively144crs in FY11 and FY12 resulting in a EPS of Rs 33 and Rs 36 in FY11 and FY12 respectively.g p y

We believe PSL’s valuation is attractive at 11x FY12E We suggest a BUY with a TP of Rs 504We believe PSLs valuation is attractive at 11x FY12E. We suggest a BUY with a TP of Rs 504.gg

1111

POLARIS SOFTWARE POLARIS SOFTWARE POLARIS SOFTWARE

STOCK PRICE EPS EPS EPS PE PE PE TP(RS) UPSIDE %STOCK PRICE EPS EPS EPS PE PE PE TP(RS) UPSIDE %( )RS FY10 FY11E FY12E FY10 FY11E FY12ERS FY10 FY11E FY12E FY10 FY11E FY12E

209 0 16 0 21 0 24 5 13 0 10 0 8 0 270 0 29209.0 16.0 21.0 24.5 13.0 10.0 8.0 270.0 29

Polaris is one of the few integrated midcap IT companies having a strong foothold in the BFSI vertical and offerings in bothPolaris is one of the few integrated midcap IT companies having a strong foothold in the BFSI vertical and offerings in bothg p p g g gh i d l ithe service and solution segmentsthe service and solution segments.

Polaris Software with a strong presence in the BFSI space and offerings in both the service and solution segments is wellPolaris Software with a strong presence in the BFSI space and offerings in both the service and solution segments is welli d t it li th i t l di f th tpoised to capitalise on the incremental spending from the sector.poised to capitalise on the incremental spending from the sector.

I t ll t th fl hi b ki d t f th ld b h f l t ti OIntellect, the flagship banking product of the company, would be a game changer from a longer‐term perspective. OverIntellect, the flagship banking product of the company, would be a game changer from a longer term perspective. Overthe years Intellect has been growing steadily with new client additions and increasing geographical reachthe years, Intellect has been growing steadily with new client additions and increasing geographical reach.y g g y g g g p

Polaris has a cash kitty of around Rs500 crore which we believe could boost its inorganic initiatives which will continue toPolaris has a cash kitty of around Rs500 crore, which we believe could boost its inorganic initiatives which will continue toy , gf i l f l i ’ h i fform an integral part of Polaris’ growth strategy in futureform an integral part of Polaris growth strategy in future.

We expect Polaris to grow at a CAGR of 22% in its earnings over FY2010‐13 At the current market price of Rs 208 theWe expect Polaris to grow at a CAGR of 22% in its earnings over FY2010‐13. At the current market price of Rs 208, thet k t d t 10 FY2011E d 8 FY2012E i W t EPS f R 21 d R 24 i FY11 d FY12 ti lstock trades at 10x FY2011E and 8x FY2012E earnings. We expect a EPS of Rs 21 and Rs 24 in FY11 and FY12 respectivelystock trades at 10x FY2011E and 8x FY2012E earnings. We expect a EPS of Rs 21 and Rs 24 in FY11 and FY12 respectivelyand suggest a BUY on the stock with a TP of Rs 270and suggest a BUY on the stock with a TP of Rs 270.

1212

PIRAMAL GLASS PIRAMAL GLASS PIRAMAL GLASS

STOCK PRICE EPS EPS EPS PE PE PE TP(RS) UPSIDE %STOCK PRICE EPS EPS EPS PE PE PE TP(RS) UPSIDE %( )RS FY10 FY11E FY12E FY10 FY11E FY12ERS FY10 FY11E FY12E FY10 FY11E FY12ERS FY10 FY11E FY12E FY10 FY11E FY12E

126 0 0 5 10 0 18 0 17 0 13 0 7 0 180 0 43126 0 0 5 10 0 18 0 17 0 13 0 7 0 180 0 43126.0 0.5 10.0 18.0 17.0 13.0 7.0 180.0 43

Piramal Glass is a speciality life style company operating in the Glass Container business catering to business segmentsPiramal Glass is a speciality life style company operating in the Glass Container business catering to business segmentsp y y p y p g g glik C i & P f Ph i l d S i li F d & Blike Cosmetics & Perfumery Pharmaceuticals and Speciality Food & Beverages spacelike Cosmetics & Perfumery, Pharmaceuticals and Speciality Food & Beverages space.

f ll b i d hi i l l f i d fQ3FY11 performance was well above expectations and this improvement was largely on account of gains made fromQ3FY11 performance was well above expectations, and this improvement was largely on account of gains made fromoperating leverage and richer product mix Key highlights of Q3FY11 results include a revenue growth 10 7% yoy to Rs316operating leverage and richer product mix. Key highlights of Q3FY11 results include a revenue growth 10.7% yoy to Rs316p g g p y g g Q g y ycrs with Ebidta growth of 24 9% yoy to Rs 78 crs bn and PAT growth of 104 7% yoy to Rs23 1 crscrs with Ebidta growth of 24.9% yoy to Rs 78 crs bn and PAT growth of 104.7% yoy to Rs23.1 crs.

Piramal is a leading supplier to leading C&P brands like P &G coty Coreal Revelon LVMH Elizabeth Arden and AvonPiramal is a leading supplier to leading C&P brands like P &G coty, Coreal, Revelon, LVMH, Elizabeth Arden and Avon.

Presently the C&P glass generates 50% of total revenues gain of 10% on yoy basis These gains have registered againstPresently the C&P glass generates 50% of total revenues, gain of 10% on yoy basis. These gains have registered againsty g g , g y y g g gd li i ib i f F&B l d Ph l b idecline in contribution from F&B glass and Pharma glass businessdecline in contribution from F&B glass and Pharma glass business.

h f d hWith strong operating performance in Q3FY11 and 9MFY11 we expect FY11E Revenue estimates at Rs1220 crs with PATWith strong operating performance in Q3FY11 and 9MFY11, we expect FY11E Revenue estimates at Rs1220 crs with PATestimated at Rs79 3 crs For FY12 we expect Revenues of Rs 1450 crs and a PAT of Rs 150 crs The EPS for FY11 and FY12 isestimated at Rs79.3 crs. For FY12 we expect Revenues of Rs 1450 crs and a PAT of Rs 150 crs. The EPS for FY11 and FY12 ispestimated at Rs 10 and Rs 18 respectivelyestimated at Rs 10 and Rs 18 respectively.

PGL has successfully implemented said strategy increasing share of C&P glass and lowering share of Pharma glass inPGL has successfully implemented said strategy ‐ increasing share of C&P glass and lowering share of Pharma glass ini Th t l ti l k t l tt ti h i th t k t d t P/E f 7 b d FY12Erevenue mix. The current valuations look extremely attractive wherein the stock trades at a P/E of 7x based on FY12E.revenue mix. The current valuations look extremely attractive wherein the stock trades at a P/E of 7x based on FY12E.

W h BUY i h TP f R 180We hence suggest a BUY with a TP of Rs 180We hence suggest a BUY with a TP of Rs 180.

1313

ECLERX SERVICES ECLERX SERVICES ECLERX SERVICES

STOCK PRICE EPS EPS EPS PE PE PE TP(RS) UPSIDE %STOCK PRICE EPS EPS EPS PE PE PE TP(RS) UPSIDE %( )RS FY10 FY11E FY12E FY10 FY11E FY12ERS FY10 FY11E FY12E FY10 FY11E FY12E

754 0 24 8 42 3 48 5 29 0 17 0 14 0 829 0 10754 0 24 8 42 3 48 5 29 0 17 0 14 0 829 0 10754.0 24.8 42.3 48.5 29.0 17.0 14.0 829.0 10

l f h f b l d d d d d l d d l l b leClerx is one of the first KPOs to be listed in India and provides data analytics and customized process solutions to globaleClerx is one of the first KPOs to be listed in India and provides data analytics and customized process solutions to globalenterprise clients from its offshore delivery centers in Indiaenterprise clients from its offshore delivery centers in India.e te p se c e ts o ts o s o e de e y ce te s d a

Cl i t l diff ti t d l i I di ’ b i KPO d t d t b i t f it b i d leClerx is a strongly differentiated play in India’s burgeoning KPO space and stands out by virtue of its business model.eClerx is a strongly differentiated play in India s burgeoning KPO space and stands out by virtue of its business model.

Th h b ilt t d l ti l t t d iti i ifi hi h t it t h d tThe company has built a strong and relatively uncontested position in specific high opportunity segments such as dataThe company has built a strong and relatively uncontested position in specific high opportunity segments such as dataanalytics & management and process improvement solutions thus positioning itself as an established provider ofanalytics & management and process improvement solutions thus positioning itself as an established provider ofy g p p p g p

i li d ispecialised servicesspecialised services.

l l f l b l h f leClerx is now aggressively scouting for acquisition as scale becomes critical hereon for larger projectseClerx is now aggressively scouting for acquisition as scale becomes critical hereon for larger projects.

With strong operating performance in Q3FY11 and 9MFY11 we expect FY11E Revenue estimates at Rs339 crs with PATWith strong operating performance in Q3FY11 and 9MFY11, we expect FY11E Revenue estimates at Rs339 crs with PATti t d t R 126 F FY12 t R f R 450 d PAT f R 1 Th EPS f FY11 d FY12 iestimated at Rs126 crs. For FY12 we expect Revenues of Rs 450 crs and a PAT of Rs 1crs. The EPS for FY11 and FY12 isestimated at Rs126 crs. For FY12 we expect Revenues of Rs 450 crs and a PAT of Rs 1crs. The EPS for FY11 and FY12 is

estimated at Rs 42 and Rs 49 respectivelyestimated at Rs 42 and Rs 49 respectively.p y

Significant profitability 40% plus return ratios and efficient operations are eClerx’s distinctive factors At Rs 72 the stockSignificant profitability, 40% plus return ratios and efficient operations are eClerx s distinctive factors At Rs 72 the stockg p y, p pd P/E f 14 FY12E W Cl d i i h hi h di id d d itrades at a P/E of 14x on FY12E We expect eClerx to trade at a premium given the high dividend payout and return ratiostrades at a P/E of 14x on FY12E. We expect eClerx to trade at a premium given the high dividend payout and return ratios.

We suggest a BUY on the Eclerx stock with a TP of Rs 829We suggest a BUY on the Eclerx stock with a TP of Rs 829.gg

1414

KPR MILLS LIMITED KPR MILLS LIMITED KPR MILLS LIMITED

STOCK PRICE EPS EPS EPS PE PE PE TP(RS) UPSIDE %STOCK PRICE EPS EPS EPS PE PE PE TP(RS) UPSIDE %STOCK PRICE EPS EPS EPS PE PE PE TP(RS) UPSIDE %RS FY10 FY11E FY12E FY10 FY11E FY12ERS FY10 FY11E FY12E FY10 FY11E FY12E

189 0 13 4 33 0 38 0 13 0 6 0 5 0 215 0 14189 0 13 4 33 0 38 0 13 0 6 0 5 0 215 0 14189.0 13.4 33.0 38.0 13.0 6.0 5.0 215.0 14

K PR Mills Limited is one of the largest vertically integrated textile players in India having presence across the entire valueK.P.R. Mills Limited is one of the largest vertically integrated textile players in India having presence across the entire valuechain ‐ from Fiber to Fashion including production of yarn and fabric designing dyeing and manufacturing of readymadechain ‐ from Fiber to Fashion, including production of yarn and fabric, designing, dyeing and manufacturing of readymadegarmentsgarments.

The company has marquee relationships of over 15 years with about 1 000 regular domestic clients for yarn and fabric andThe company has marquee relationships of over 15 years with about 1,000 regular domestic clients for yarn and fabric andaround 40 international apparel retailersaround 40 international apparel retailers

’ d f h h l d d b d h l hKPR’s integrated manufacturing operations have helped it to provide better products to the clients as per theirKPR s integrated manufacturing operations have helped it to provide better products to the clients as per theirf h b d lspecifications thereby ensuring optimum and consistent quality assurancespecifications thereby ensuring optimum and consistent quality assurance.

d i d % f i f d i k d f i h i lKPR derives around 71% of its revenues from domestic market and rest from Exports However with incrementalKPR derives around 71% of its revenues from domestic market and rest from Exports. However with incrementali i i i i i f d i k i f 71% i FY10capacities in spinning coming on stream we expect revenues from domestic market to increase from 71% in FY10 tocapacities in spinning coming on stream, we expect revenues from domestic market to increase from 71% in FY10 tod 73% b FY13Earound 73% by FY13Earound 73% by FY13E.

Th h l i d i i f 40MW 62MW i J 2011 i d i iThe company has also increased its power capacity from 40MW to 62MW in Jan 2011 in order to support its capacityThe company has also increased its power capacity from 40MW to 62MW in Jan 2011 in order to support its capacityi i i i i i i hi h i d b A 2011 h b i 75% f iexpansion in spinning activities which is expected to come onstream by August 2011 thereby supporting 75% of its powerexpansion in spinning activities which is expected to come onstream by August 2011 thereby supporting 75% of its power

d ti t f ll itneeds operating at full capacityneeds operating at full capacity.

Thi t t h h l d i b i lf li t i ti d d t d it tThis strategy has helped company in becoming self reliant in power consumption needs and to reduce its power costs.This strategy has helped company in becoming self reliant in power consumption needs and to reduce its power costs.

With t ti f i Q3FY11 d 9MFY11 t FY11E R ti t t R 1114 ith PATWith strong operating performance in Q3FY11 and 9MFY11, we expect FY11E Revenue estimates at Rs1114 crs with PATWith strong operating performance in Q3FY11 and 9MFY11, we expect FY11E Revenue estimates at Rs1114 crs with PATti t d t R 127 F FY12 t R f R 1466 d PAT f R 146 Th EPS f FY11 d FY12 iestimated at Rs127 crs. For FY12 we expect Revenues of Rs 1466 crs and a PAT of Rs 146 crs. The EPS for FY11 and FY12 isestimated at Rs127 crs. For FY12 we expect Revenues of Rs 1466 crs and a PAT of Rs 146 crs. The EPS for FY11 and FY12 isti t d t R 33 d R 38 ti lestimated at Rs 33 and Rs 38 respectively.estimated at Rs 33 and Rs 38 respectively.

Th t l ti l k t l tt ti h i th t k t d t P/E f 5 b d FY12EThe current valuations look extremely attractive wherein the stock trades at a P/E of 5x based on FY12E.The current valuations look extremely attractive wherein the stock trades at a P/E of 5x based on FY12E.

W h t BUY ith TP f R 215We hence suggest a BUY with a TP of Rs 215We hence suggest a BUY with a TP of Rs 215

1515

ENGINEERS INDIA ENGINEERS INDIA ENGINEERS INDIA

STOCK PRICE EPS EPS EPS PE PE PE TP(RS) UPSIDE %STOCK PRICE EPS EPS EPS PE PE PE TP(RS) UPSIDE %( )RS FY10 FY11E FY12E FY10 FY11E FY12ERS FY10 FY11E FY12E FY10 FY11E FY12ERS FY10 FY11E FY12E FY10 FY11E FY12E

299 0 13 0 15 0 18 0 23 0 20 0 17 0 355 0 19299 0 13 0 15 0 18 0 23 0 20 0 17 0 355 0 19299.0 13.0 15.0 18.0 23.0 20.0 17.0 355.0 19

Over the past four decades EIL has developed the technical skills and capability to offer integrated services fromOver the past four decades, EIL has developed the technical skills and capability to offer integrated services fromO e e pas ou decades, as de e oped e ec ca s s a d capab y o o e eg a ed se ces oconcept to commissioning for the entire hydrocarbon industry valuechainconcept to commissioning for the entire hydrocarbon industry valuechain.p g y y

Order backlog has increased from Rs6200 crs as on FY10 to Rs 8000 crs by Dec 2010Order backlog has increased from Rs6200 crs as on FY10 to Rs 8000 crs by Dec 2010.

F th d ti l h t b bl t d l i il f i i kill t i ll i thFurther, domestic players have not been able to develop a similar range of engineering skill sets, especially in theFurther, domestic players have not been able to develop a similar range of engineering skill sets, especially in thehydrocarbon space which limits competition on the domestic fronthydrocarbon space, which limits competition on the domestic front.y p , p

EIL had an RoCE of 38 5% and RoE of 35 3% in FY10 which we expect to sustain over the next two years despite the fallEIL had an RoCE of 38.5% and RoE of 35.3% in FY10, which we expect to sustain over the next two years despite the falll d b hin margins led by a strong revenue growthin margins led by a strong revenue growth.

EIL i l t d bt f d h h lth h fl iti Th l t FPO d b EIL i J l 2010 t i f REIL is almost debt free and has a healthy cash flow position. The last FPO done by EIL was in July 2010 at a price of RsEIL is almost debt free and has a healthy cash flow position. The last FPO done by EIL was in July 2010 at a price of Rs290 per share to the Indian public Against the present equity base of Rs 56 crs free Revenues stood at Rs 1000 crs290 per share to the Indian public. Against the present equity base of Rs. 56 crs, free Revenues stood at Rs. 1000 crsp p g p q y ,march 10march 10

i di ( ) d i ( % ) i h b % iEngineers India (EIL) reported Q3FY11 earnings at Rs123 crs (+10% yoy) with Revenues up by 37% yoy to Rs677 crs inEngineers India (EIL) reported Q3FY11 earnings at Rs123 crs (+10% yoy), with Revenues up by 37% yoy to Rs677 crs inQ3FY11 l d i l b 70% j i LSTK (l t k t t ) LSTK i d tQ3FY11 led mainly by a 70% yoy jump in LSTK (lump sum turnkey contracts) revenues. LSTK revenues increased toQ3FY11 led mainly by a 70% yoy jump in LSTK (lump sum turnkey contracts) revenues. LSTK revenues increased toR 390 hil f th lt d i i j t (CEP) t i d b 9% t R 290Rs390 crs while revenues from the consultancy and engineering projects (CEP) segment increased by 9% yoy to Rs290Rs390 crs while revenues from the consultancy and engineering projects (CEP) segment increased by 9% yoy to Rs290crscrs.

We maintain our EIL estimates at an EPS of Rs15 for FY11 and Rs18 for FY12 EIL’s robust order backlog provides visibilityWe maintain our EIL estimates at an EPS of Rs15 for FY11 and Rs18 for FY12. EILs robust order backlog provides visibilityf h hfor strong revenue growth over the next two yearsfor strong revenue growth over the next two years.

We believe the strong revenue growth is likely to offset the sharp fall in margins and drive an improvement in returnWe believe the strong revenue growth is likely to offset the sharp fall in margins and drive an improvement in returne be e e t e st o g e e ue g o t s e y to o set t e s a p a a g s a d d e a p o e e t eturatios over the next two years At 17x FY12E earnings we believe the stock is attractive in view of its superior returnratios over the next two years. At 17x FY12E earnings, we believe the stock is attractive in view of its superior returny g , pratios Rs60/share cash on the books and visibility of strong earnings growth Excluding cash per share EIL’s P/E forratios, Rs60/share cash on the books and visibility of strong earnings growth. Excluding cash per share EILs P/E fory g g g g pFY12E works out to 14x which looks attractiveFY12E works out to 14x which looks attractive .

W h t BUY th EIL t k ith TP f R 355We hence suggest a BUY on the EIL stock with a TP of Rs 355.We hence suggest a BUY on the EIL stock with a TP of Rs 355.

1616

KEC INTERNATIONAL KEC INTERNATIONAL KEC INTERNATIONAL

STOCK PRICE EPS EPS EPS PE PE PE TP(RS) UPSIDE %STOCK PRICE EPS EPS EPS PE PE PE TP(RS) UPSIDE %RS FY10 FY11E FY12E FY10 FY11E FY12ERS FY10 FY11E FY12E FY10 FY11E FY12E87 6 9 12 14 10 7 105 2187 6 9 12 14 10 7 105 21

KEC which is part of the RPG Group is in the business of designing and manufacturing power transmission towers andKEC which is part of the RPG Group is in the business of designing and manufacturing power transmission towers andp p g g g pt l i f t ttelecom infrastructure.telecom infrastructure.

N l 70% f KEC’ f h i i l k i h h l h i d b kl fNearly 70% of KEC’s revenues comes from the international market with the company currently having a order backlog ofNearly 70% of KEC s revenues comes from the international market with the company currently having a order backlog ofRs 8000 crs as on Feb 2011 While 55% of the new orders were from the international market the remaining 45% cameRs 8000 crs as on Feb 2011. While 55% of the new orders were from the international market, the remaining 45% came, gf h d k (l l ) b l ffrom the domestic market (largely PGCIL) Hence Revenue visibility for KEC is very strongfrom the domestic market (largely, PGCIL). Hence Revenue visibility for KEC is very strong.

We believe KEC is also likely to significantly benefit from increased fresh order flows from PGCIL Further KEC being presentWe believe KEC is also likely to significantly benefit from increased fresh order flows from PGCIL. Further, KEC being presenti 20 t i i th i t ti l hi i l t d t k i t ti l d fl i iin over 20 countries in the international geographies, is also expected to keep international orders flowing in.in over 20 countries in the international geographies, is also expected to keep international orders flowing in.

With it l b l b li th t KEC i b tt i d t t l b l k tWith its global presence, we believe that KEC is better equipped to tap global markets.With its global presence, we believe that KEC is better equipped to tap global markets.

Wi h i f i Q3FY11 d 9MFY11 FY11E R i R 4917 i h PATWith strong operating performance in Q3FY11 and 9MFY11 we expect FY11E Revenue estimates at Rs4917 crs with PATWith strong operating performance in Q3FY11 and 9MFY11, we expect FY11E Revenue estimates at Rs4917 crs with PATestimated at Rs 234 crs For FY12 we expect Revenues of Rs 6213 crs and a PAT of Rs 305 crs The EPS for FY11 and FY12 isestimated at Rs 234 crs. For FY12 we expect Revenues of Rs 6213 crs and a PAT of Rs 305 crs. The EPS for FY11 and FY12 isp

d d l ( f )estimated at Rs 9 20 and Rs 12 respectively (On a Fv of Rs 2)estimated at Rs 9.20 and Rs 12 respectively. (On a Fv of Rs 2)

The current valuations look extremely attractive wherein the stock trades at a P/E of 7x based on FY12EThe current valuations look extremely attractive wherein the stock trades at a P/E of 7x based on FY12E.

We hence suggest a BUY with a TP of Rs 105We hence suggest a BUY with a TP of Rs 105.gg

1717

D k F tli Deepak Fertlisers Deepak Fertlisers p

STOCK PRICE EPS EPS EPS PE PE PE TP(RS) UPSIDE %STOCK PRICE EPS EPS EPS PE PE PE TP(RS) UPSIDE %S 10 11 12 10 11 12RS FY10 FY11E FY12E FY10 FY11E FY12ERS FY10 FY11E FY12E FY10 FY11E FY12E

172 16 20 25 11 9 7 206 20172 16 20 25 11 9 7 206 20172 16 20 25 11 9 7 206 20

Deepak Fertilizers & Petrochemicals Corp is a leading manufacturers of industrial chemicals and fertilisers in India TheDeepak Fertilizers & Petrochemicals Corp is a leading manufacturers of industrial chemicals and fertilisers in India. Thep p gi h b i h i l ib i d i l ilicompany operates in three business segments—chemicals agribusiness and specialty retailingcompany operates in three business segments chemicals, agribusiness, and specialty retailing.

( )It is the leader in the Indian Technical Ammonium Nitrate (TAN) market with 30% share The company has increased itsIt is the leader in the Indian Technical Ammonium Nitrate (TAN) market, with 30% share. The company has increased itsTAN it f th b 300 000 MT f 132 000 MT t f ~R 6 5 bTAN capacity further by 300,000 MT from 132,000 MT, at a capex of ~Rs. 6.5 bnTAN capacity further by 300,000 MT from 132,000 MT, at a capex of Rs. 6.5 bn

It i l th k t l d f I P l Al h l (IPA) i I di ith 75% k t h IPA i d b i d t i i thIt is also the market leader for Iso Propyl Alcohol (IPA) in India, with 75% market share. IPA is used by industries in theIt is also the market leader for Iso Propyl Alcohol (IPA) in India, with 75% market share. IPA is used by industries in thesectors like pharma agro chem organic chemicals imaging chemicals healthcare and paintssectors like pharma, agro‐chem, organic chemicals, imaging chemicals, healthcare and paints.p g g g g p

With strong operating performance in Q3FY11 & 9MFY11 we expect FY11E Revenue estimates at Rs 1545 cr and a PAT ofWith strong operating performance in Q3FY11 & 9MFY11 we expect FY11E Revenue estimates at Rs. 1545 cr and a PAT ofg p g p p8 2 h 2082 d f 3 2 h S f d 2 iRs 178 crs For FY12E we expect Revenues to touch Rs 2082 crs and a PAT of Rs 312 crs The EPS for FY11 and FY12 isRs. 178 crs. For FY12E we expect Revenues to touch Rs. 2082 crs and a PAT of Rs. 312 crs. The EPS for FY11 and FY12 is

estimated of Rs 20 crs to 25 crs respectivelyestimated of Rs. 20 crs to 25 crs respectivelyp y

C id i th t d fit th t th t t ( ith b tt it tili tiConsidering the strong revenue and profit growth prospects over the next two years (with better capacity utilisation, newConsidering the strong revenue and profit growth prospects over the next two years (with better capacity utilisation, newcapacities) the stock looks attractive at current levels We have a BUY with a TP of Rs 206capacities),the stock looks attractive at current levels. We have a BUY with a TP of Rs 206.

1818

Di d P I f Diamond Power Infra Diamond Power Infra

STOCK PRICE EPS EPS EPS PE PE PE TP(RS) UPSIDE %STOCK PRICE EPS EPS EPS PE PE PE TP(RS) UPSIDE %STOCK PRICE EPS EPS EPS PE PE PE TP(RS) UPSIDE %RS FY10 FY11E FY12E FY10 FY11E FY12ERS FY10 FY11E FY12E FY10 FY11E FY12ES 0 0

169 0 21 0 31 0 42 0 8 0 6 0 4 0 287 0 70169.0 21.0 31.0 42.0 8.0 6.0 4.0 287.0 70

Di d i f i th l EPC l ith j ti f iliti (80% f th j t t) hi h i thDiamond power infra is the only EPC player with major captive facilities (80% of the project cost) which gives the companyDiamond power infra is the only EPC player with major captive facilities (80% of the project cost) which gives the companyan advantage over competitionan advantage over competition.g p

Capacity expansion and foray into transmission project will enable it to achieve robust growth over coming years WhileCapacity expansion and foray into transmission project will enable it to achieve robust growth over coming years. Whilep y p y p j g g ydemand in high voltage segment remains good revenue visibility in near term also remains across the segmentdemand in high voltage segment remains good, revenue visibility in near term also remains across the segment.

At the end of FY11 the order book position stood at Rs 16 5 bn which gives strong revenue visibility over the next 12‐15At the end of FY11, the order book position stood at Rs 16.5 bn which gives strong revenue visibility over the next 12‐15thmonths.months.

Th h l i i d i i i l d l i EHV bl l ThThe company has recently commissioned its transmission towers plant and expects to complete its EHV cables plant TheThe company has recently commissioned its transmission towers plant and expects to complete its EHV cables plant. Thestock trades at attractive valuations of 4x FY12E EPS of Rs 42/sharestock trades at attractive valuations of 4x FY12E EPS of Rs 42/share./

With strong operating performance in Q3FY11 & 9MFY11 we expect FY11E Revenue estimates at Rs 1492 crs and a PAT ofWith strong operating performance in Q3FY11 & 9MFY11 we expect FY11E Revenue estimates at Rs. 1492 crs and a PAT ofg p g p Q pRs 113 crs For FY12E we expect Revenues to touch Rs 2044 crs and a PAT of Rs 158 crs The EPS for FY11 and FY12 isRs. 113 crs. For FY12E we expect Revenues to touch Rs. 2044 crs and a PAT of Rs. 158 crs. The EPS for FY11 and FY12 isti t d t R 31 d R 42 ti lestimated at Rs. 31 and Rs 42 respectively.estimated at Rs. 31 and Rs 42 respectively.

W t B th t k ith TP f R 287We suggest a Buy on the stock with a TP of Rs. 287.We suggest a Buy on the stock with a TP of Rs. 287.

1919

Gl b S i it Ltd Globus Spirits Ltd Globus Spirits Ltd p

STOCK PRICE EPS EPS EPS PE PE PE TP(RS) UPSIDE %STOCK PRICE EPS EPS EPS PE PE PE TP(RS) UPSIDE %( )RS FY10 FY11E FY12E FY10 FY11E FY12ERS FY10 FY11E FY12E FY10 FY11E FY12E

147 0 14 6 17 5 22 0 10 0 8 0 7 0 196 0 33147.0 14.6 17.5 22.0 10.0 8.0 7.0 196.0 33

Globus Spirits is the only company having a 360 degree presences It is a leading player in the country liquor market inGlobus Spirits is the only company having a 360 degree presences. It is a leading player in the country liquor market inp y p y g g p g p y y qN th I di h i t i th t t f H R j th D lhi d Ch di h d iNorth India, having strong presence in the states of Haryana, Rajasthan, Delhi and Chandigarh engaged inNorth India, having strong presence in the states of Haryana, Rajasthan, Delhi and Chandigarh engaged inmanufacturing marketing and sale of country liquormanufacturing, marketing and sale of country liquor.g, g y q

The company has two modern Distrilleries in Behror District Alwar Rajasthan and Samlka District Panipat HaryanaThe company has two modern Distrilleries in Behror, District Alwar, Rajasthan and Samlka, District Panipat, Haryana.p y , , j , p , yh h ll l d d h d f l l bl fWhich are well located and have advantage of easily available of rawWhich are well located and have advantage of easily available of raw.

The company has a tie‐up to manufacture & bottle the IMFL brands of Jagatjit industries (Aristocrat whisky) in the stateThe company has a tie‐up to manufacture & bottle the IMFL brands of Jagatjit industries (Aristocrat whisky) in the statef H hi h i ti l f A il 2010 Th ti t th i t d t dd 2 f IMFL l f thof Haryana which is operational from April 2010. The tie‐up together is expected to add 2mn cases of IMFL sales for theof Haryana which is operational from April 2010. The tie up together is expected to add 2mn cases of IMFL sales for the

company in FY11E Increasing volume from tie up sales to 3mn cases in FY11E from 1mn cases in FY10 & boostingcompany in FY11E. Increasing volume from tie‐up sales to 3mn cases in FY11E from 1mn cases in FY10 & boostingp y g p gi f thi tincome from this segment.income from this segment.

Wi h i f i Q3FY11 & 9MFY11 FY11E R i R 325 d PAT fWith strong operating performance in Q3FY11 & 9MFY11 we expect FY11E Revenue estimates at Rs 325 crs and a PAT ofWith strong operating performance in Q3FY11 & 9MFY11 we expect FY11E Revenue estimates at Rs. 325 crs and a PAT ofRs 34 crs For FY12E we expect Revenues to touch Rs 525 crs and a PAT of Rs 51 crs The EPS for FY11 and FY12 isRs. 34 crs. For FY12E we expect Revenues to touch Rs. 525 crs and a PAT of Rs. 51 crs. The EPS for FY11 and FY12 isp

d d lestimated at Rs 17 5 and 22 respectivelyestimated at Rs. 17.5 and 22 respectively.

We suggest a Buy on the stock with a TP of Rs 196We suggest a Buy on the stock with a TP of Rs. 196.

2020

Gl k Ph ti l LtdGlenmark Pharmaceuticals LtdGlenmark Pharmaceuticals Ltd.

STOCK PRICE EPS EPS EPS PE PE PE TP(RS) UPSIDE %STOCK PRICE EPS EPS EPS PE PE PE TP(RS) UPSIDE %STOCK PRICE EPS EPS EPS PE PE PE TP(RS) UPSIDE %RS FY10 FY11E FY12E FY10 FY11E FY12ERS FY10 FY11E FY12E FY10 FY11E FY12ERS FY10 FY11E FY12E FY10 FY11E FY12E

297 0 16 4 19 5 23 9 18 0 15 0 12 0 361 0 23297 0 16 4 19 5 23 9 18 0 15 0 12 0 361 0 23297.0 16.4 19.5 23.9 18.0 15.0 12.0 361.0 23

Glenmark is a leading player in Dermatology segment and among the very few Indian companies which has been ableGlenmark is a leading player in Dermatology segment, and among the very few Indian companies which has been ableg p y gy g , g y pf ll i i h i lito successfully monetize its research pipelineto successfully monetize its research pipeline.

l k’ b i ( l i li ) i d f % h d i b hGlenmark’s core business (excl NCE Pipeline) is expected to grow at a CAGR of 19% over the next 3 years driven by theGlenmark s core business (excl. NCE Pipeline) is expected to grow at a CAGR of 19% over the next 3 years driven by thesustained high growth in the domestic formulation segment and turnaround of the US operations owing to the flurry ofsustained high growth in the domestic formulation segment and turnaround of the US operations owing to the flurry ofg g g p g yANDA approvals (14 approvals from Apr‐Dec 2010) and niche product launchesANDA approvals (14 approvals from Apr‐Dec 2010) and niche product launches.

The company’s in licensed opportunity of Crofelmer is expected to be launched in FY12 glenmark expects peakThe company s in‐licensed opportunity of Crofelmer is expected to be launched in FY12, glenmark expects peakf thi l d t th t f $80 Al ith thi th h t d i t t li irevenues from this noval drug to the tune of $80 mn. Along with this the company has entered into an out‐licensingrevenues from this noval drug to the tune of $80 mn. Along with this the company has entered into an out licensing

deal with Sanofi Aventis valued at $325 mn for its GRC15300 molecule to treat chronic pain further the company has adeal with Sanofi Aventis valued at $325 mn for its GRC15300 molecule to treat chronic pain, further the company has ap , p yh i li hi h b li d f d d ld id h idstrong research pipeline which may be outlicensed at a future date and could provide huge upsidesstrong research pipeline which may be outlicensed at a future date and could provide huge upsides.

h h b l f h d l k k l h h d hThe company has robust pipeline of niche Para IV products like Tarka Malarone among others where it is expected theThe company has robust pipeline of niche Para IV products like Tarka, Malarone among others where it is expected thecompany would enjoy extended exclusivitycompany would enjoy extended exclusivity.p y j y y

With t ti f i Q3FY11 & 9MFY11 t FY11E R ti t t R 1897 d PATWith strong operating performance in Q3FY11 & 9MFY11 we expect FY11E Revenue estimates at Rs. 1897 crs and a PATWith strong operating performance in Q3FY11 & 9MFY11 we expect FY11E Revenue estimates at Rs. 1897 crs and a PATof Rs 244 crs For FY12E we expect Revenues to touch Rs 2275 crs and a PAT of Rs 298 crs The EPS for FY11 and FY12of Rs. 244 crs. For FY12E we expect Revenues to touch Rs. 2275 crs and a PAT of Rs. 298 crs. The EPS for FY11 and FY12i ti t d t R 19 5 d 23 9 ti lis estimated at Rs. 19.5 and 23.9 respectively.is estimated at Rs. 19.5 and 23.9 respectively.

W B h k i h TP f R 361We suggest a Buy on the stock with a TP of Rs 361We suggest a Buy on the stock with a TP of Rs. 361

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