ESS_Little Black Book_Jan 2012

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IndiaSnapshot

LITTLEBLACK

B O O K

Januar 2012


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Contents

Equity Overview 3

Conviction ideas from the Sales Desk 8

Valuation Matrix 9

Valuation Charts 10

Earnings Momentum 11

FII flows 13

Price Momentum 14

IPO Snapshot 17

Economic Indicators 18

Recent Publications 26

Authors of the report

Nick Paulson-EllisAditya Jhawar

Nitesh Sharma

Deepali Bhargava

Published 11th January 2012


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January 2012

FIT FORA NEW ERA_________________________________________________________________________________________ Page 3 of 34

Equity Overview

INTRODUCTION

Welcome to the January 2012 edition of Espirito Santo Investment Banks Little Black Book. In this

monthly publication we offer a quick snapshot view of Indian equities, with our summary view on

key markets issues, as well as valuation, momentum, investor flows, IPOs and key economicstatistics and some key ideas from the sales desk.

Nick Paulson-Ellis India Country Head [email protected]

BETTER TO BE SAFE THAN SORRY

New Year, new hope?

2011 was Indias annus horribilis, topping

the charts of the worlds worst performers,

losing over a third in dollar terms and

delivering the countrys second worstequity market performance in history. I

think most of us recognize the reasons why,

though too many government officials still

blame Europe, when most of Indias

current problems are in fact self-inflicted

(you dont get the prize for the worst

performing major market and currency

simply due to external factors). That

means they are technically within Indias

control to resolve: indeed, the steps taken

to resolve the multitude of issues will be the

key to the outcome for markets in 2012.

Come January and the truck load of year

ahead predictions lands on your desk.

Rather ironically, however bearish the tone,

they all seem to plump for a year end

Sensex target of around 18,000. Tempting

though it is at this time of year to make

bold predictions for the year ahead, we

think it is too early. Forecasting is

inherently difficult as it is, but with ceteris

paribus seemingly a dead concept it isparticularly futile right now. The fact is that

the outlook remains extremely foggy and

the biggest single factor will be political

decisions that have not yet been taken, and

are hard to predict. 2011 was an

extraordinary year in many ways, but

particularly in the influence of politics on

financial markets whether the Euroquake,

Arab Spring, divisive US party politics

impairing its credit rating, or indeed Indias

political cacophony. Systemic concerns,

politics and policy announcements drove

financial markets more than corporate

fundamentals last year. In large part this

explains why the majority of active funds

across the world underperformed in 2011: it

is easier and we are better at predicting

corporate earnings than political outcomes.

Unfortunately it looks unlikely that early

2012 will be a return to normal, with any

shift back to focus on economic and

corporate fundamentals. Certainly thatlooks unlikely in India ahead of important

state elections and the budget in March.

Until there is greater clarity on the political

environment and policy initiatives in the

Union budget, we think investors are better

off taking a wait and see stance, and

remaining relatively cautious and

defensively positioned.

But what about the new rate cycle?

The big plus this year is likely to be the turnin the monetary policy cycle, with the RBIs

policy priority gradually shifting from

controlling inflation to ensuring a

stabilization and then recovery in growth.

There has been growing certainty over the

last fortnight on where we are in the

monetary policy cycle. Inflation is starting

to fall, given the high base effect and falls in

food inflation. Recent rhetoric from the RBI

reflects that rate hikes are over and assigns

almost a 100% probability on its next move

being an interest rate cut. We think that the

uncertainty on core inflation in the face of

worsening deficit indicators and INR

depreciation, as well as the RBIs desire to

be very careful about inflationary

expectations, means uncertainty in the

exact timing of a rate cut, though we

expect the first Repo rate cut in Q1 FY13,

with the April meeting being our best

guess. We expect a CRR cut in January

2012 as increased government borrowing,election related spending and RBI

intervention (USD selling) negatively

impact domestic INR liquidity. We also


4/34

January 2012


Equity Overview

expect the RBI to lower its GDP growth

target for FY12 from 7.6% YoY currently to

about 7.2% YoY in the third quarter review

meeting in January 2012. Its inflation

projection of 7% YoY in March 2012 is likelyto remain unchanged.

The rate cut cycle this time is unlikely to be

as aggressive as in 2008. Back then, the

entire rate cut cycle was short in duration

merely six months and heavy on quantum

- with an initial 100 bps cut in the Repo rate

and cumulative cuts of 425 bps. That was in

response to a sudden and highly uncertain

global crisis. The backdrop this time is

serious, but very different; a structurally

challenged though better understooddeveloped world scenario, but combined

with a more difficult domestic scenario. In

the absence of a systemic crisis caused by

a tail event in Europe, we think a better

parallel for assessing the impact might be

the rate cut cycle of 2001-2004, which was

far more gradual extended over three

years - and less aggressive with

cumulative cuts of 400 bps in the Repo

rate. In that cycle, from an average of 7% in

the one year before the rate cuts began,

WPI inflation slipped to an average of 3.7%

in the two years following the first rate cut,

with manufacturing inflation slipping from

3% YoY to 2.2% in the corresponding

periods. To the extent that it is driven by

structural factors in the current high-

inflation scenario, it is unlikely that inflation

will moderate in a hurry in FY13 as it did in

the 2001-2004 rate cut cycle. We expect

WPI inflation to average 7.2% in FY13. So

with this combination of persistent

domestic structural inflationary factors, astubbornly high oil price and twin deficit

concerns meaning a weak Rupee, it is hard

to see the RBI doing a sudden volte face

and aggressively easing.

In terms of the impact on investment, our

analysis suggests that real investment

growth started picking up only after the

rate cut cycle was over i.e. around March

2004, and moved above trend only in

2004-05. The investment growth slowdown

is expected to be prolonged this time as

well. Though the trends in fixed investment

growth so far are not necessarily more

worrisome than in 2001-2004, itll likely be

more difficult for corporates to finance

investment both externally and

domestically, even after the RBI embarkson the rate cut cycle, given: 1) high

government market borrowings (up by INR

930bn over and above the budget for

FY12), which will likely crowd out already

shallow bank credit growth; 2) risk aversion

limiting availability of global liquidity and

3) policy and political uncertainty

negatively impacting foreign investment

into India. Also, the critical investment led

growth can only recover when domestic

and foreign investors not only see reforms

and investment-friendly policies and

initiatives, but also regain confidence in the

governments ability to implement them.

That wont happen overnight.

Lastly, in terms of the impact of rate cuts

on the markets, theres no historical

evidence, from the 2001-2004 or 2008-

2009 rate cut cycles, to suggest that the

markets will be in a hurry to recover ahead

of, or early in the rate cut cycle. In the

2001-2004 cycle, the Nifty remained range-bound for most of the period of rate cuts,

recovered marginally in the last phase, to

then recover significantly only once the rate

cuts were over and the RBI went into a

pause mode. The RBI paused after March

2004 and the Nifty returned 15% in the year

that followed and 92% by March 2006.

Things were entirely different in the 2008-

2009 cut cycle, when the equity market

continued to collapse for the entire

duration of aggressive rate cuts and

recovered only after the RBI had paused.

The huge rebound of 65% over the

following year was to a great extent about

a recovery in confidence following a period

of unprecedented global uncertainty.

Source: Bloomberg, ESIB research


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January 2012


Equity Overview

What implications does this have for

market behaviour this time? History doesnt

give any real precedent to assume that the

market will be in any hurry to lift itself with

a turnaround in the rate cycle. History isonly ever a guide and clearly the backdrop

of rate cuts is different this time, but we

suspect the turn in the rate cycle alone is

not in itself enough of an inflection point,

and it is still too early to switch to an

aggressive recovery stance. There are three

things to look for clarity on first: 1) a

bottoming out of the earnings downgrade

cycle; 2) the Eurozone crisis and, most

importantly, 3) Indias state elections,

budget and ensuing policy initiatives.

1) The earnings cycle: when will it bottom

out?

Macro predictions for India are now mostly

fairly pessimistic and this has gradually

filtered down to bottom-up earnings

estimates, though we dont think it has

gone far enough and the divergence in

consensus expectations is now very wide.

The consensus expectation for FY13

earnings growth is ~15%, but this masks arange from 0% to high teens. We expect

the Q3 FY12 results season, which kicks off

this week, to be a difficult one, resulting in

FY13 earnings being pared back several

percentage points. The driver of

downgrades over the past two quarters has

been raw material input and interest cost

inflation both squeezing margins, and whilst

these have peaked, there is now weakness

in previously robust revenue growth. So we

expect the earnings downgrade cycle to

continue throughout calendar Q1.

2) Eurozone: no silver bullet, but at least a

wave of liquidity

A Eurozone recession in 2012 seems a near

certainty given the fiscal drag, collapse in

business and consumer confidence and

lending slowdown in the face of banking

system de-leveraging. No doubt were in for

a few surprises, but at least some progress

has been made, notably in the ECBs

extraordinary liquidity measures (490bn),easing pressure on Europes banking

system and buying time for politicians to

deliver longer-term solutions. But Q1 is

likely to remain a dicey period in Europe,

given 14.4bn of Greek debt matures on

20th March, a busy schedule of sovereign

debt auctions, the need for Eurozone

governments to ratify the Decemberagreements on greater fiscal unity and,

critically, visibility on progress towards

European banks meeting the European

Banking Associations core tier 1 capital

requirement of 9% by June 2012. Europe

wont be the primary driver for India, but

given its potential impact on sentiment, and

the importance of the European banks to

Indian corporate borrowing, all these

events in Q1 strengthen our belief that

caution is the right approach for now.

3) Indias state elections, budget and

ensuing policy initiatives

But the biggest driver of our caution in

calendar Q1 is the uncertainty caused by a

busy state election calendar, especially in

Uttar Pradesh (UP), and then the

announcement of the budget just after the

election results in March.

Policy paralysis is likely to persist in the run

up to elections, and there is also risk ofpopulist election friendly measures, whilst

the ensuing budget will be a critical one in

terms of signaling a return to a reform

agenda, but also steps towards fiscal

consolidation, some of which could be

negative for corporate earnings, such as a

hike in corporate tax rates to raise

revenues.

2012 begins elections in five states in Q1,

then there is a gap before ending with

Gujarats polls in Nov-Dec 2012. The UP

election is the key one and may materially

impact the composition of central

government and therefore ensuing policy

trends and reforms over the remaining two

years of UPA rule. Given volatile and

unreliable allies like DMK and TMC, a more

stable partner like SP with its 23 MPs could

boost confidence and help pave the way

for reforms. We see three possible

scenarios:

a) SP + Congress: This is the best result forthe central government as SP can support

and form part of the government,

potentially helping it get rid of TMC.


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January 2012


Equity Overview

c.10x levels seen in previous troughs, and

given the uncertainties weve raised above,

sensible valuations arent compelling

enough.

The valuation argument does become morecompelling when one looks beyond market

level multiples to different sectors, as well

as mid/small cap vs. large cap. One of the

features of 2011 was a flight to 1)

defensives, particularly Consumer Staples;

2) to quality and away from any

governance risk and 3) a big move up the

liquidity curve away from mid and small

caps. This caused a massive divergence of

performance between sectors, and

between large vs. mid/small caps. So whilstConsumer Staples is trading at a 14%

premium to its historic average, Industrials

and Financials are at an >40% discount (see

below). This suggests that in the months

ahead there may well be compelling

opportunities to become more aggressive

in some of the mid caps and in beaten

down sectors, such as Industrials and

Capital Goods, so investors should keep a

close eye on project approvals. But whilst

we watch and wait, in the meantime our

stock focus is:

here)

here)

Source: Bloomberg, ESIB Research

MSCI Indices P/E (x) Avg% Disc / Pre to

Avg

Consumer Staples 24 21 14

Telecom 15.3 15.6 -2

Healthcare 18.4 20 -8

IT 17.3 19.5 -11

Utilities 11.2 14.1 -21

Materials 7.7 9.9 -22

Energy 9.3 12.5 -25

Consumer Discretionary 9.5 14.2 -33

Industrials 10.1 17.8 -44

P/B (x) Avg% Disc / Pre

to AvgFinancials 1.6 2.7 -42

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8/34

January 2012


Manappuram - Poorva Upadhyaya

(MGFL IN, BUY, CMP: Rs 51, FV: Rs 80, 57%

upside)

The stock struggled in 2011 because of the

RBIs removal of priority sector status on

gold loans and more recently due to the

falling gold prices. However, over the last

two quarters the company has shown that

most of these concerns are unfounded,

achieving 15% and 25% QoQ loan and profit

growth in Q2 FY12.

For all the non-believers in the gold story,

the fact remains that funds investing in gold

have outperformed equities in the past one

year with a gain of 27-31% compared withlosses in equity funds.

The company is well on its way to its

guided quarterly loan book of Rs 135bn by

the end of March. Following the removal of

priority sector status for gold loan

companies, it was expected that the ROE

would reduce as a result of no assignments

and an increased cost of funding. However,

Manappuram has been able to pass on the

increased cost of funding to its customers.

We expect the ROE to improve further

towards 30% with economies of scale

kicking in and the cost of funds going down

in FY13.

We recently increased our profit forecasts

by 27% for FY12 and 66% for FY13, mainly

due to the ability to pass on most of the

increased cost of funding to borrowers and

the increase in AUM forecasts. We would

expect the company to report more than

60% YoY growth in earnings and its loanbook for this quarter.

We expect to the stock to catch up and be

in line with the trading multiples of the

broader sector. Currently the stock is

trading at 1.2x FY13E, our fair multiple for

the stock is 2x FY13E.

LIC Housing Finance - Sunny Shah

(LICHF IN, BUY, CMP: Rs 231, FV Rs 260,

13% upside)

LICHF outperformed the Bankex by 46%

last year, emerging largely unscathed from

the bribe for loan scandal. It was able to

grow its loan book at 32% CAGR and profit

at 26% over the last three years with less

than 0.7% gross NPLs. We think that going

forward on a structural basis, strong drivers

in terms of low mortgage penetration, a

rising middle class, increasing affordability

and taxation benefits will keep the housing

finance market growing at 15-20% over the

next 3-5 years.

We rate LICHF as a good quality franchise

given its strong distribution and mainly

retail base with a small ticket size (Rs 1.6m)

and low LTVs. In FY13 we expect a growth

rate of 15% and NPLs to remain low owing

to the smaller LTVs and loan size. Given

the lag in transmission of the increased cost

of funds to borrowers and with the majority

of teaser loans getting converted to fixed

from July 2012, we expect NIMs to start

increasing. Also, reversal of extraprovisioning (C.100 crores) and expected

recoveries can further boost the bottom-

line in coming quarters.

On the negative front, LICHF has amongst

the highest leverage of HFCs and NBFCs,

with Tier I capital at 8.6% compared to 12%

for HDFC and an average of c.16% for

NBFCs. Hence we can expect the company

to raise capital in the near term if it intends

to grow its loan book.

Lastly on valuation, we think the stock is

relatively cheap, trading at 1.7x FY13E P/B,

which is a 40% discount to HDFC.

Reiterate BUY.

Conviction ideas from the sales desk


9/34


10/34

January 2012


Valuations

Figure 1: Sensex 12M forward P/E, falls below long term average

Source: FactSet , Espirito Santo Investment Bank Research

Figure 2: FY1 P/E of leading MSCI Emerging market indices.

Source: Bloomberg , Espirito Santo Investment Bank Research

Avg 14.3

Max 22.4

Min 9.1

+1Sd 17.2

-1Sd 11.3

5.0

7.0

9.0

11.0

13.0

15.0

17.0

19.0

21.023.0

25.0

Jan-01

Aug-01

Mar-02

Oct-02

May-03

Dec-03

Jul-04

Mar-05

Oct-05

May-06

Dec-06

Jul-07

Feb-08

Sep-08

Apr-09

Nov-09

Jun-10

Jan-11

Aug-11

(x)

0

2

4

6

8

10

12

14

16

18

20

M

exico

Malaysia

India

Indonesia

T

aiwan

South

Africa

Brazil

P

oland

China

Korea

Russia

FY1 P/E 5 yr Average


11/34

January 2012


Earnings Momentum

Figure 3: Earnings sentiment


In the earnings sentiment chart above we look at the cycle of three monthsrolling net earnings upgrades/downgrades of the 30 stocks in Sensex and theindex price movements.

8,000

10,000

12,000

14,000

16,000

18,000

20,000

22,000

-80%

-60%

-40%

-20%

0%

20%

40%

60%

Net upgrades Sensex (RHS)

Net Upgrades

Net Downgrades


12/34

January 2012


Earnings Momentum

Figure 4: Earnings revision for FY12

Company Sector% Change in EPS No of EPS

1m 2m 3m est.

BSE 100 - Top 15 by EM

Tata Chemicals Ltd. Materials 0.6 6.8 8.4 18

Infosys Ltd. Information Technology 1.2 2.0 8.2 8

NMDC Ltd. Materials (0.8) (0.8) 8.1 57

Tata Communications Ltd. Telecommunication Services (0.3) 3.0 6.7 12

NHPC Ltd. Utilities 1.9 1.4 6.0 7

Infrastructure Development Finance Financials 0.8 5.8 5.5 12

Hindustan Unilever Ltd. Consumer Staples 0.2 1.4 5.4 24

Reliance Infrastructure Ltd. Utilities 1.1 2.3 5.2 34

Bajaj Auto Ltd. Consumer Discretionary 0.2 0.3 4.7 17

Hero MotoCorp Ltd. Consumer Discretionary (0.0) 0.3 4.4 41

Tata Motors Ltd. Consumer Discretionary 1.8 4.1 3.2 45

Sun Pharmaceutical Industries Ltd. Health Care 0.2 3.4 2.9 28

Tata Consultancy Services Ltd. Information Technology 1.3 1.4 2.6 33

Grasim Industries Ltd. Materials 1.6 1.8 2.5 43

Wipro Ltd. Information Technology 0.6 1.1 2.5 24

BSE 100 - Bottom 15 by EM

Union Bank of India Financials (0.4) (1.7) (16.2) 35

Bharti Airtel Ltd. Telecommunication Services (5.3) (15.5) (16.2) 37

Cummins India Ltd. Industrials (0.3) (16.2) (16.9) 12

Steel Authority of India Ltd. Materials (8.9) (16.4) (18.1) 31

Bharat Petroleum Corp. Ltd. Energy (2.0) (5.6) (18.5) 27

National Aluminium Co. Ltd. Materials (3.4) (17.9) (19.2) 19

Ranbaxy Laboratories Ltd. Health Care (9.0) (20.4) (21.1) 29

Adani Power Ltd. Utilities (2.6) (18.4) (21.3) 27

Sesa Goa Ltd. Materials (8.0) (9.9) (21.7) 27

Maruti Suzuki India Ltd. Consumer Discretionary (2.4) (4.0) (21.8) 41

JSW Steel Ltd. Materials (2.8) (10.0) (22.2) 41

Reliance Capital Ltd. Financials (3.6) (15.0) (22.2) 10

Suzlon Energy Ltd. Industrials (3.5) (11.8) (22.7) 19

Tata Steel Ltd. Materials (5.4) (22.1) (24.7) 38

Exide Industries Ltd. Consumer Discretionary (0.0) (2.7) (29.1) 23



13/34

January 2012


FII Flows

Figure 5: Net FII and DII inflows in the Indian equity market

Source: Bloomberg, Espirito Santo Investment Bank Research

Figure 6: FII & DII flows Figure 7: Yearly FII flows (US$ m)

Source: Bloomberg, ESIB Research

(2,500)

(2,000)

(1,500)

(1,000)

(500)

0

500

1,000

1,500

2,000

2,500

Jan-11

Feb-11

Mar-11

Apr-11

May-11

Jun-11

Jul-11

Aug-11

Sep-11

Oct-11

Nov-11

Dec-11

FII (US$ m) DII (US$ m)

10,901

8,338

18,518

(12,918)

17,639

29,321

(512)

(20,000)

(15,000)

(10,000)

(5,000)

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

2005 2006 2007 2008 2009 2010 2011

MonthFII

(US$ m)DII

(US$ m)Sensex Perf

(%)

Oct-10 5,579 (2,660) (0.2)

Nov-10 4,159 542 (2.6)

Dec-10 329 (109) 5.1

Jan-11 (1,387) 1,150 (10.6)

Feb-11 (826) 1,270 (2.8)

Mar-11 1,556 7 9.1

Apr-11 1,574 (127) (1.6)

May-11 (1,156) 915 (3.3)

Jun-11 734 (21) 1.9

Jul-11 1,667 (44) (3.4)

Aug-11 (2,107) 1,831 (8.4)

Sep-11 (204) 342 (1.3)

Oct-11 508 (469) 7.6

Nov-11 (859) 918 (8.9)

Dec-11 (12) 168 (4.1)


14/34

January 2012


Price Momentum

Figure 8: Performance of major MSCI indices in December-11


Figure 9: Performance of major MSCI indices in 2011


-10.6%

-5.8%

-4.4%

-2.4%

-1.3%

-0.2%

0.8%

1.2%

1.6%

2.0%

2.4%

-12% -10% -8% -6% -4% -2% 0% 2% 4%

Russia

Poland

India

Brazil

EM

DM

USA

UK

Hong Kong

Europe

China

-25.9%

-24.7%

-22.1%

-20.8%

-20.0%

-19.9%

-19.0%

-11.3%

-7.4%

-6.6%

-0.1%

-30% -25% -20% -15% -10% -5% 0%

India

Brazil

Poland

Russia

EM

China

Hong Kong

Europe

DM

UK

USA


15/34

January 2012


Price Momentum

Figure 10: Performance of key indices

in December-11Figure 11: 2011 performance of key indices

Source: Bloomberg , Espirito Santo Investment Bank Research Source: Bloomberg , Espirito Santo Investment Bank Research

Figure 12: Performance of sectorindices in December-11

Figure 13: 2011 performance of sectorindices

Source: Bloomberg, Espirito Santo Investment Bank Research Source: Bloomberg , Espirito Santo Investment Bank Research

-9.0%

-8.8%

-4.8%

-4.3%

-4.1%

-10% -8% -6% -4% -2% 0%

BSE Small Cap

BSE Mid Cap

BSE 100

NSE Nifty

BSE Sensex

-41.9%

-33.4%

-25.2%

-24.2%

-24.2%

-50% -40% -30% -20% -10% 0%

BSE Small Cap

BSE Mid Cap

BSE 100

NSE Nifty

BSE Sensex

-16.6%

-12.4%

-9.1%

-7.6%

-7.3%

-7.1%

-6.4%

-3.4%

-3.1%

-0.1%

0.8%

-25% -15% -5% 5%

Capital Goods

Realty

Metal

Oil & Gas

Power

Bank

Consumer Dur

Auto

Healthcare

FMCG

Teck

-50.7%

-47.4%

-46.9%

-39.5%

-30.6%

-28.7%

-19.7%

-16.3%

-16.2%

-12.4%

9.9%

-70% -20% 30%

Realty

Capital Goods

Metal

Power

Bank

Oil & Gas

Auto

Consumer Dur

Teck

Healthcare

FMCG


16/34

January 2012


Price Momentum

Figure 14: BSE 200 best and worst performing stocks in December-11


Figure 15: BSE 200 best and worst performing stocks in 2011


-34.3%

-33.7%

-33.0%

-31.3%

-29.8%

-28.5%-27.5%

-26.9%

-26.8%

-26.5%

4.7%

5.2%

5.5%

6.0%

7.3%

7.6%

9.7%

11.1%

11.1%

11.3%

-40% -30% -20% -10% 0% 10% 20%

Pantaloon Retail

Jet Airways

Sintex Indus

Syndicate Bank

United Spirits

Jai CorpEssar Oil

Central Bk India

India Infoline

Oriental Bank Of Com

Ambuja Cements

Oil India

Wipro

Infosys

Grasim Inds

Tata Global Beve

Bombay Rayon Fas

Tata Communicati

Pipavav Defence

Gvk Power & Infr

-84.8%

-77.6%

-76.7%

-76.5%

-75.8%

-74.8%

-74.8%

-71.7%

-71.1%

-70.1%

19.4%

20.0%

20.3%

20.5%

21.1%

25.5%

31.9%

38.4%

42.4%

46.2%

-100% -80% -60% -40% -20% 0% 20% 40% 60%

Lanco Infratech

Ivrcl Ltd

Jet Airways Ind

Jai Corp Ltd

Ncc Ltd

Gujarat Nre Coke

Shree Renuka Sug

Housing Developm

Gvk Power & Infr

Unitech Ltd

Apollo Hospitals

Divi Labs Ltd

Idea Cellular

Jubilant Foodwor

Marico Ltd

Petronet Lng Ltd

Hindustan Unilev

Bombay Rayon Fas

Gitanjali Gems L

Bata India Ltd


17/34

January 2012


IPO Snapshot

Figure 16: Performance of IPO index vs. Sensex (Rebased to 100 as of Jan 2006)


Figure 17: Table showing performance on recent IPO listings.


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BSE IPO Index BSE Sensex

Latest

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till date

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return

Relative to Sensex

post listing

Gravita India 125 450 11/16/2010 410 195% 68% 107%

Aanjaneya Lifecare 234 1,170 5/26/2011 492 111% 0% 122%

Prakash Constrowell 138 600 10/4/2011 239 72% 67% 62%

Lovable Lingerie 205 933 3/24/2011 326 59% 22% 40%

Tree House Education 135 1,138 8/26/2011 178 29% -13% 34%

Inventure Growth & Securities 117 819 8/4/2011 148 27% 77% 36%

Coal India 245 154,751 11/4/2010 326 24% 40% 36%

C Mahendra Exports 110 1,650 1/20/2011 134 23% 1% 33%

Midvalley Entertainment 70 600 1/27/2011 72 0% -20% 9%

Future Ventures India 10 7,500 5/10/2011 9 -11% -18% 13%

Muthoot Finance 175 9,010 5/6/2011 156 -12% 1% -2%

Fineotex Chemical 70 295 3/11/2011 58 -13% 86% -12%

TD Power Systems 256 2,270 9/8/2011 228 -13% 8% -7%

L&T Finance Holdings 52 12,450 8/12/2011 44 -17% -4% -8%

Innoventive Industries 117 2,170 5/13/2011 89 -22% -20% -7%

Shekhawati Poly-Yarn 30 360 1/12/2011 23 -22% 58% -16%

RPP Infra Projects 75 488 12/6/2010 53 -30% -8% -5%

Sudar Garments 77 700 3/11/2011 52 -35% 47% -29%

PG Electroplast 210 1,210 9/26/2011 130 -36% 98% -39%

MOIL 375 12,600 12/15/2010 243 -38% 24% -38%

Birla Pacific Med Spa 11 652 7/7/2011 6 -39% 81% -43%

SRS Ltd 58 2,030 9/16/2011 35 -40% -43% -42%

Omkar Speciality Chemicals 98 794 2/10/2011 56 -43% -53% -36%

Punjab & Sind Bank 120 4,708 12/30/2010 60 -49% 6% -38%

Claris Lifesciences 228 3,000 12/20/2010 106 -53% -10% -29%

PTC India Financial Services 28 4,332 3/30/2011 11 -62% -11% -41%

M and B Switchgears 186 930 10/20/2011 59 -68% 71% -61%

Sanghvi Forging & Engineering 85 369 5/23/2011 23 -73% 32% -62%

Ravi Kumar Distilleries 64 736 12/27/2010 16 -76% 25% -59%

A2Z Maintenance 400 7,762 12/23/2010 90 -78% -18% -57%

Taksheel Solutions 150 825 10/19/2011 13 -84% -61% -85%Shilpi Cable Technologies 69 559 4/8/2011 10 -86% -30% -69%

Acropetal Technologies 90 1,700 3/9/2011 12 -86% 0% -73%

Tijaria Polypipes 60 600 10/14/2011 8 -86% -69% -80%

Company Name

OfferPrice

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AmountRaised

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Date of

Listing

Performance (%)


18/34

January 2012


Economic Indicators

The current account deficit widened to USD 16.9bn (3.7% of GDP) in Q2 FY12

from USD 15.8bn (3.4% of GDP) in Q1 FY12. The widening of the current

account deficit was driven by an increase in the merchandise trade deficit

from USD 41.7bn in Q1 FY12 to USD 43.9bn in Q2 FY12

WPI inflation moderated to 9.11% in November, 2011 from 9.73% in October,

led by a collapse in food price inflation.

RBI left the Repo rate and cash reserve ratio unchanged at 8.5% and 6.0%

respectively with a clear shift in policy stance in favour of rate cuts, the

timing of which continues to be uncertain. Though RBI notes that growth is

clearly decelerating, we think that absence of sustained signs of moderation

in core inflation will prevent a rate cut as soon as January 2012. We expect

RBI to embark on the rate cut cycle in Q1FY13.

Figure 18: India real GDP growth (YoY)


Figure 19: Industrial Production (IIP, YoY%)


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19/34

January 2012


Economic Indicators

Figure 20:YoY % change in WPI inflation


Figure 21: Breakdown of WPI inflation (YoY %)


Figure 22: Key policy rates (%)


9.11

Average = 6.8

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20/34

January 2012


Economic IndicatorsFigure 23: Forthcoming Economic Data releases


Major release for India Major release for US

Date Event Date Event

8-10 Jan India Local Car Sales 10-Jan Wholesale Inventories Data

12-Jan Industrial Production 12-Jan Retail Sales

12-Jan Weekly Inflation Data 12-Jan Initial Jobless Claims

16-Jan DEC WPI 13-Jan Trade Balance

19-Jan Weekly Inflation Data 18-Jan Industrial Production

24-Jan RBI policy meet 19-Jan Consumer Price Index

26-Jan Weekly Inflation Data 19-Jan Housing Starts

31-Jan 3QFY11 GDP Data 19-Jan Initial Jobless Claims1-Feb Export/Import Data 20-Jan Existing Home Sales

2-Feb Weekly Inflation Data 25-Jan FOMC rate decision

26-Jan New Home sales

27-Jan 4Q11 GDP Data

31-Jan S&P Case Shiller Index

2-Feb Domestic Vehicle Sales


21/34


22/34


Economic Indicators

Figure 25: India Summary of key economic indicators


Q1FY08 Q2FY08 Q3FY08 Q4FY08 Q1FY09 Q2FY09 Q3FY09 Q4FY09 Q1FY10 Q2FY10 Q3FY10 Q4

GDP

Real GDP growth (%) 9.3 9.4 9.7 8.5 7.8 7.5 6.1 5.8 6.3 8.6 7.3 9

Real GDP by production (%YoY)

Agriculture 3.1 3.9 8.7 2.1 3.2 2.4 (1.4) 3.3 1.8 1.2 (1.6) 1

Mining 1.1 4.6 4.5 5.1 2.6 1.6 2.7 (0.3) 6.9 6.6 5.2 8

Manufacturing 12.1 10.3 10.7 8.3 5.9 5.5 1.3 0.6 2.0 6.1 11.4 15

Electricity 10.2 9.1 7.1 7.8 3.3 4.3 4.0 4.1 6.2 7.5 4.5 7

Constrution 10.7 13.1 9.6 7.1 9.8 7.2 1.1 5.7 5.4 5.1 8.3 9

Balance of Payments, $ bn

Exports 34.4 38.3 41.0 52.5 57.5 53.6 39.4 39.8 39.2 43.4 47.2 52

Imports 56.3 59.5 67.0 74.9 82.7 92.8 73.5 54.4 64.8 73.0 78.1 83Trade balance (22.0) (21.2) (26.1) (22.3) (25.3) (39.1) (34.0) (14.6) (25.6) (29.6) (30.9) (3

Current account (6.7) (4.3) (4.5) (1.5) (3.3) (12.6) (11.7) 4.7 (4.5) (9.2) (12.2) (13

Capital account 17.9 33.5 31.0 26.5 5.5 7.8 (6.1) (5.3) 4.0 19.3 14.6 16

A NEW ERA______________________________________________________________________________________________________FIT FOR


23/34

January 2012


Economic Indicators

Figure 26: WTI Spot crude oil (US$/bl) Figure 27: Gold spot (US$/per ounce)

Source: Bloomberg , Espirito Santo Investment Bank Research Source: Bloomberg, Espirito Santo Investment Bank Research

Figure 28: LME Steel (in US$/MT) Figure 29: S&P GSCI Agri commodity Index


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24/34

January 2012


Economic Indicators

Figure 30: GDP growth (YoY %) of key EM Figure 31: GDP growth (YoY %) of DM


Figure 32: CPI (YoY %) for major EM* Figure 33: CPI (YoY %) for major DM

Source: Bloomberg, Espirito Santo Investment Bank Research* Refer to fig 20 for Indias WPI.


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25/34

January 2012


Policy watch

Winter session - Bills that mattered

The Winter session of parliament that lasted for 38 days was overall subdued with almost half of

the session being washed out with the logjam over foreign direct investment and anti-graft bill.

Source: PIB, PRS, ESIB Research

TitleofBills Description StatusTheLokpalBill,2011

To enact the legislation relating to establishment of the institution of the Lokpal to

enquireintoallegationsofcorruption againstpublicfunctionaries PassedonlyinLoksabha

The Cable Television Networks

(Regulation)AmendmentBill,2011

Aims at regulating cable operators and digitalising the analog TV network across the

countryinaphasedmannerby2014 Clearedbytheparliament

TheNationalFoodSecurityBill,2011

Food security bill seeks to provide rice at Rs 3, wheat at Rs 2 and coarse grains at Rs 1

perkgtooverhalfofIndia's1.2billionpopulation IntroducedinLokSabha

TheCompaniesBill,2011. AimstoreplacethefivedecadeoldCompaniesActof1956bytheCompaniesAct,2011 WithdrawninLokSabha

TheSeedsBill,2004

Regulatingthequalityofseedsforsale,importandexportandtofacilitateitsproduction

andsupply NotTabled

ThePesticidesManagement Bill,2008.

Effectively manage and regulate the sale, management import, export, distribution and

useofpesticides NotTabled

The Mines and Minerals (DevelopmentandRegulation)Bill,2011.

Proposes coal miners to share 26% of the profit and noncoal miners' 100% of the

royalty annually to project

affected people. The bill also envisages introduction ofcompetitivebiddingprocessforcoalminingblocks IntroducedinLokSabha

The Pension Fund Regulatory and

Development AuthorityBill,2011

To establish a statutory Pension Fund Regulatory and Development Authority (PFRDA) to

promote old age income security by establishing, developing and regulating pension

funds. NotTabled


26/34

January 2012


Recent Publications

N.B. all prices, valuations and recommendations within this section as per date of research note

Healthcare - Analyst : Chirag Talati

Date Company\Title Headline comment1.12 Ranbaxy

RBXY INOn time delivery

NEUTRAL 6% upsidePrice 435 : FV 460

9 pages

In-line with our expectations, the US FDA approved Ranbaxys Lipitor

ANDA paving the way for a launch over the coming days from its OhmLabs facility in the US. This was the most keenly awaited approval forRanbaxy, and the company has maintained its track-record of

monetizing all key Para-IV opportunities despite the substantialuncertainty involved with the ongoing FDA/DoJ issues. While this isvery positive for Ranbaxy, we await further clarity on the

comprehensive settlement that would entail a clearance of the Dewasand Paonta Sahib facility and is key to driving the operating leveragethat is central to Ranbaxys investment case. We also expect the market

to now focus on its post launch execution of Lipitor and keenly awaitearly market share trends. Re-iterate Neutral.

Healthcare - Analyst : Chirag Talati1.12 Ranbaxy

RBXY INA twist in the tale

NEUTRAL 4% upsidePrice 443 : FV 460

9 pages

In line with our expectations, the US FDA approved Ranbaxys LipitorANDA paving the way for a launch over the coming days from its OhmLabs facility in the US. However, the launch was not without its share of

glitches, as Ranbaxy unexpectedly announced a profit share with Tevaduring the 180 day exclusivity. We are yet to get clarity whether theTeva agreement stands for API or involves co-distribution, but it is adampener on sentiment and will lead to cuts in consensus expectations

on Lipitor. We await clarity on the comprehensive settlement that wouldentail a clearance of the Dewas and Paonta Sahib facilities and is key todriving the operating leverage that is central our investment case on

Ranbaxys. Re-iterate Neutral.

BFSI Analyst : Santosh Singh, CFA, Nidhesh Jain

9.12 Housing FinanceInitiate on HDFC asNeutral, DEWH as Buyand retain Buy on LICHF

37 pages

HFCs have substantially outperformed the Bankex this year due to theirdefensive qualities and strong and consistent operating performance.We expect the underlying businesses to continue to perform strongly,but premium valuations cap upside in the stocks. However, in such an

uncertain environment they still look attractive as relatively safe havens.We initiate on HDFC with a Neutral stance, but highlight it as the mostdefensive stock, on Dewan with a Buy stance and highest upside of the

three, but also highest risk and we remain buyers of LICHF as ourpreferred sector pick.

India Economics Chief Economist: Deepali Bhargava14.12 Inflation moderates, RBI

headed for a pause

5 pages

WPI inflation moderated to 9.11% in November, 2011 from 9.73% inOctober led, by a collapse in food price inflation. RBI may not be able to

draw significant comfort from todays inflation numbers as core

inflation continued to edge higher. But given the sharp moderation ingrowth as reflected in the industrial production growth in October, weexpect RBI to keep rates on hold in the December 16th policy meeting.

Infrastructure Analysts : Krishnakant Thakur & Pawan Parakh15.12 Mundra Port & SEZ

MSEZ IN

BUY 50% upsidePrice 195: FV 130

16 pages

We like MSEZ for its strong cash flow generation, assured cargovolumes and strategic location. Since we initiated both the quarterly

earnings and the acquisition of the Abbot Point terminal havestrengthened our confidence in the business model and its assuredcargo based expansion strategy. Yet despite what we think are good

fundamentals, the stock has reacted negatively to newsflow around themining scam and MOEF notice. We think the recent 30% correctionpresents an attractive entry point for clients who like the business but

have baulked at the valuation. It is among the few firms in the

infrastructure sector with a combination of defensiveness and growth,and we reiterate BUY and highlight it as our top sector pick.


27/34

January 2012


Recent Publications

N.B. all prices, valuations and recommendations within this section as per date of research note

India Strategy Analyst : Aditya Jhawar, Nick Paulson-Ellis & Nitesh SharmaDate Company\Title Headline comment

15.12 GSFC Ltd.GSFC IN

BUY 39% upsidePrice 550: FV 395

17 pages

With 70% of revenues from fertilizers, and at a headline 4.9x FY13E and2.4x cash & investments adjusted P/E, GSFC stands out as the value

play in the fertilizer sector, which due to de-regulation anddemand/supply mismatch is a core investment theme for us. Yes,volatility in industrial chemicals and near-term weak volume in the

fertilizer sector are issues, but we believe that these are more thanbaked into the price. We initiate with a Buy and round out our coverageof listed complex fertilizer plays.

India Economics Chief Economist : Deepali Bhargava16.12 India: Rates unchanged,

cuts not on horizon yet

10 pages

RBI left the Repo rate and cash reserve ratio unchanged at 8.5% and6.0% respectively with a clear shift in policy stance in favour of rate

cuts, the timing of which continues to be uncertain. Though RBI notesthat growth is clearly decelerating, we think that absence of sustainedsigns of moderation in core inflation will prevent a rate cut as soon as

January 2012. We expect RBI to embark on the rate cut cycle in Q1FY13.

Healthcare - Analyst : Chirag Talati19.12 Cipla-haler

CIPLA IN

BUY 16% upsidePrice 329 : FV 380

21 pages

After a 2-year hiatus, Ciplas operational performance has shown signsof improvement over the past two quarters, driven by the benefits ofoperating leverage from the Indore SEZ and an improving product mix.

While we are not fans of Ciplas partnership model for the regulatedmarkets, its footprint in EMs including India and Africa is enviable.However, the real gem in Cipla is its respiratory franchise, which webelieve offers a sustainable competitive advantage that has not yet

been fully appreciated by the market. We set out our framework for

respiratory generics in this note, and initiate with a BUY and a fair valueof Rs.380, offering 13% upside.

Consumer Analyst : Nitin Mathur20.12 Consumer Pair Trade:

Long volumes (HUL),

short margins (ITC)

22 pages

While all quoted consumer stocks benefit from Indian demographicsand the low penetration of consumer goods in India, relative stock

market outperformance will be achieved by companies which continueto drive volumes and increase scale, even if that implies a compromiseon margins in the near term. Large cap valuation multiples are at

historical peaks, yet despite that Investors interest shows no sign offlagging as they seek safe havens. We propose a sector neutral strategy long HUL (focus on volumes) and short ITC (focus on margins).


28/34

January 2012


Blank for notes


29/34

January 2012


Share price and ratings history

Manappuram MGFL IN

Report Date Recommendation Fair Value (INR)

08-Nov-11 Buy Rs80.0

26-Sep-11 Buy Rs70.0

17-Feb-11 Buy Rs140.0

24-Nov-10 Sell Rs160.0


B

BB

S

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J an-09 Apr -09 J ul-09 O ct -09 J an-10 Apr -10 J ul-10 O ct -10 J an-11 Apr -11 J ul-11 Oc t- 11 J an-12

LIC Housing Finance LICHF IN

Report Date Recommendation Fair Value (INR)

09-Dec-11 Buy Rs260.0

27-Jan-11 Buy Rs255.0

01-Oct-10 Buy Rs1607.0

15-Apr-10 Buy Rs943.0

24-Feb-10 Buy Rs894.0


B

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J an-09 Apr -09 J ul-09 O ct -09 J an-10 Apr -10 J ul-10 O ct -10 J an-11 Apr -11 J ul-11 O ct -11 J an-12


30/34

January 2012


Important Disclosures

This report was prepared by Esprito Santo Investment Bank Research, a global brand name for the equity research teams of BancoEsprito Santo de Investimento, S.A., with headquarter in Lisbon, Portugal, of its Branches in Spain and Poland and of its affiliatesBES Securities do Brasil, S.A Corretora de Cmbio e Valores Mobilirios, in Brazil, and Execution Noble Limited, in the UnitedKingdom, all authorized to engage in securities activities according to each domestic legislation. All of these entities are includedwithin the perimeter of the Financial Group controlled by Esprito Santo Financial Group S.A. (Banco Esprito Santo Group).

Analyst Certification

Each research analyst primarily responsible for the content of this research report, in whole or in part, certifies that with respect toeach security or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personalviews about those securities or issuers; the issuers were not previously informed about the content of the recommendationincluded in this research report and the assumptions were not validated by the issuers; (2) no part of his or her compensation isdirectly or indirectly related to: (a) the specific recommendations or views expressed by that research analyst in the researchreport; and/or (b) any services provided or to be provided by Banco Esprito Santo de Investimento, S.A. and/or by any of itsaffiliates to the issuer of the securities under recommendation. Moreover, each of the analysts hereby certifies that he or she hasno economic or financial interest whatsoever in the companies subject to his or her opinion and does not own or trade anysecurities issued by the latter.

Explanation of Rating System

12-MONTH RATING DEFINITION

BUY Analyst expects at least 10% upside potential to fair value, which should be realized in the next 12 months

NEUTRALAnalyst expects upside/downside potential of between +10% and -10% to fair value, which should be realized in the next 12months..

SELL Analyst expects at least 10% downside potential to fair value, which should be realized in the next 12 months

SHORT TERM RATING DEFINITION

ST POSITIVEAnalyst expects the stock price to appreciate in value within 3 months of the rating assignation because of a specificallyidentified catalyst(s) or event(s)

ST NEGATIVEAnalyst expects the stock price to decline in value within 3 months of the rating assignation because of a specifically identifiedcatalyst(s) or event(s)

For further information on Rating System please see Definitions and distribution of ratings on: http://www.espiritosantoib-

research.com

Ratings Distribution

Espirito Santo Investment Bank Research hereby provides the distribution of the equity research ratings in relation to the totalIssuers covered and to the investment banking clients as of 30 September 2011.

As at end September 2011 Total ESIB Research Total Investment Banking Clients (IBC)

Recommendation Count % of Total Count % of IBC % of Total

BUY 223 53.0% 33 70.3% 7.9%

NEUTRAL 125 29.8% 12 25.5% 2.9%

SELL 68 16.2% 1 2.1% 0.2%

RESTRICTED 4 1.0% 1 2.1% 0.2%

TOTAL 420 100% 47 100%

As at end June 2011 Total ESIB Research Total Investment Banking Clients (IBC)

Recommendation Count % of Total Count % of IBC % of Total

SHORT TERM POSITIVE 0 0% 0 0% 0%

SHORT TERM NEGATIVE 0 0% 0 0% 0%

TOTAL 0 0% 0 0%

Share Prices

Share prices are as at the close of business on 10 January 2012, unless otherwise specified.

Coverage PolicyEsprito Santo Investment Bank Research reserves the right to choose the securities it expresses opinions on. The main criteriato choose such securities are: 1) markets in which they trade 2) market capitalisation 3) liquidity, 4) sector suitability. EspritoSanto Investment Bank Research has no specific policy regarding the frequency in which opinions and investmentrecommendations are released.


31/34

January 2012


Representation to Investors

Esprito Santo Investment Bank Research has issued this report for information purposes only. This material constitutes"investment research" for the purposes of the Markets in Financial Instruments Directive and as such contains an objective orindependent explanation of the matters contained in the material.

Any recommendations contained in this document must not be relied upon as investment advice based on the recipient'spersonal circumstances.. This report is not, and should not be construed as an offer or a solicitation to buy or sell any securities orrelated financial instruments. The investment discussed or recommended in this report may be unsuitable for investors depending ontheir specific investment objectives and financial position. The material in this research report is general information intended for

recipients who understand the risks associated with investment. It does not take account of whether an investment, course ofaction, or associated risks are suitable for the recipient. This research report does not purport to be comprehensive or to contain allthe information on which a prospective investor may need in order to make an investment decision and the recipient of this reportmust make its own independent assessment and decisions regarding any securities or financial instruments mentioned herein. Inthe event that further clarification is required on the words or phrases used in this material, the recipient is strongly recommendedto seek independent legal or financial advice. Where an investment is denominated in a currency other than the investorscurrency, changes in rates of exchange may have an adverse effect on the value, price of, or income derived from theinvestment. Past performance is not necessarily a guide to future performance. Income from investments may fluctuate. Theprice or value of the investments to which this report relates, either directly or indirectly, may fall or rise against the interest ofinvestors. Any recommendation and opinion contained in this report may become outdated as a consequence of changes in theenvironment in which the issuer of the securities under analysis operates, in addition to changes in the estimates and forecasts,assumptions and valuation methodology used herein. The securities mentioned in this publication may not be eligible for sale insome states or countries.

All the information contained herein is based upon information available to the public and has been obtained from sourcesbelieved to be reliable. However, Esprito Santo Investment Bank Research does not guarantee the accuracy or completeness of

the information contained in this report. The opinions expressed herein are Esprito Santo Investment Bank Research presentopinions only, and are subject to change without prior notice. Esprito Santo Investment Bank Research is not under any obligationto update or keep current the information and the opinions expressed herein nor to provide the recipient with access to any additionalinformation.

Esprito Santo Investment Bank Research has not entered into any agreement with the issuer relating to production of this report.Esprito Santo Investment Bank Research does not accept any form of liability for losses or damages which may arise from theuse of this report or its contents.

Ownership and Material Conflicts of Interest

Banco Esprito Santo de Investimento, S.A. and/or its Affiliates (including all entities within Esprito Santo Investment BankResearch) and/or their directors, officers and employees, may have, or have had, interests or qualified holdings on issuersmentioned in this report. Banco Esprito Santo de Investimento, S.A. and/or its Affiliates may have, or have had, businessrelationships with the companies mentioned in this report.For a complete list of the covered Issuers in which Banco Esprito Santo de Investimento, S.A. or its Affiliates hold stakes in

excess of 1% and for information on possible material conflicts of interest arising from investment banking activities please seedisclosures on Conflicts of Interest on http://www.espiritosantoib-research.com.

Confidentiality

This report cannot be reproduced, in whole or in part, in any form or by any means, without Esprito Santo Investment BankResearchs specific written authorization. This report is confidential and is intended solely for the designated addressee.Therefore any disclosure, replication, distribution or any action taken in reliance on it, is prohibited and unlawful. Receipt and/orreview of this research report constitutes your agreement not to redistribute, retransmit, or disclose to others the contents,opinions, conclusion, or information contained in this report (including any investment recommendations, estimates or pricetargets without first obtaining express permission from an authorized officer of Banco Esprito Santo de Investimento, S.A.

Regulatory Authorities

For information on the identity of the Regulatory Authorities that supervise the entities included within Esprito Santo InvestmentBank Research please see http://www.espiritosantoib-research.com.

IMPORTANT DISCLOSURES FOR U.S. PERSONS

This report was prepared by Esprito Santo Investment Bank Research, a global brand name for the equity research teams of BancoEsprito Santo de Investimento, S.A., with headquarter in Lisbon, Portugal, of its Branches in Spain and Poland and of its affiliatesBES Securities do Brasil, S.A Corretora de Cmbio e Valores Mobilirios, in Brazil, and Execution Noble Limited, in the UnitedKingdom, all authorized to engage in securities activities according to each domestic legislation. Neither Banco Esprito Santo deInvestimento, S.A. nor these affiliates are registered as a broker-dealer in the United States and therefore, is not subject to U.S.rules regarding the preparation of research reports and the independence of research analysts. This report is provided fordistribution to U.S. institutional investors in reliance upon the exemption from registration provided by Rule 15a-6 of the U.S.Securities Exchange Act of 1934, as amended. This report is confidential and not intended for distribution to, or use by, persons otherthan the addressee and its employees, agents and advisors.


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E.S. Financial Services, Inc. is the U.S. distributor of this report. E.S. Financial Services, Inc. accepts responsibility for the contents ofthis report, subject to the terms set out below, to the extent that it is delivered to a U.S. person other than a major U.S. institutionalinvestor. Any U.S. person receiving this report and wishing to effect securities transactions in any security discussed in the reportshould do so only through E.S. Financial Services, Inc.

Contact Information:

Garreth Hodgson Senior Managing Director /Head of Sales(212) 351-6054 [email protected]

Eva Gendell Vice President(212) 351-6058 [email protected]

Joseph Mcglone Vice President (212) 351-6061 [email protected]

Joy Bejasa Vice President(212) 351-6055 [email protected]

Lisa Gottardo Executive Director(212) 351-6060 [email protected]

Mike Maione Executive Director(212) 351-6067 [email protected]

MikeWilliams Vice President(212) 351-6052 [email protected]

Pedro Marques Vice President(212) 351-6051 [email protected]

Poorva Upadhyaya Assistant Vice President(212) 351-6056 [email protected]

E.S. Financial Services, Inc.New York Branch340 Madison Avenue, 12th FloorNew York, N.Y. 10173

Each analyst whose name appears in this report certifies the following, with respect to each security or issuer that the analystcovers in this report: (1) that all of the views expressed in this report accurately reflect the personal views of the analyst aboutthose securities and issuers; and (2) that no part of the compensation of the analyst was, is, or will be, directly or indirectly,related to the specific recommendations or views expressed by the analyst in this report. The analysts whose names appear inthis report are not registered or qualified as research analysts with the Financial Industry Regulatory Authority ("FINRA") and maynot be associated persons of E.S. Financial Services, Inc. and therefore may not be subject to the applicable restrictions underFINRA Rules on communications with a subject company, public appearances and trading securities held by a research analystaccount.


Banco Esprito Santo de Investimento, S.A. and/or its Affiliates and/or their directors, officers and employees, may have, or have had,

interests or qualified holdings on issuers mentioned in this report. Banco Esprito Santo de Investimento, S.A. and/or its Affiliates may have,or have had, business relationships with the companies mentioned in this report. For a complete list of the covered Issuers in which BancoEsprito Santo de Investimento, S.A. or its Affiliates hold stakes in excess of 1% and for information on possible material conflicts of interestarising from investment banking activities please see Important disclosures for US persons on http://www.espiritosantoib-research.com.

Receipt of CompensationFor information on Receipt of Compensation from subject Issuers please see Important disclosures for US persons on

http://www.espiritosantoib-research.com.

Representation to Investors

Esprito Santo Investment Bank Research has issued this report for information purposes only. All the information containedtherein is based upon information available to the public and has been obtained from sources believed to be reliable. However,Esprito Santo Investment Bank Research does not guarantee the accuracy or completeness of the information contained in thisreport. The opinions expressed herein are our present opinions only, and are subject to change without prior notice. Esprito

Santo Investment Bank Research is not under any obligation to update or keep current the information and the opinionsexpressed herein. This report is not, and should not be construed as an offer or a solicitation to buy or sell any securities orrelated financial instruments. The investment discussed or recommended in this report may be unsuitable for investorsdepending on their specific investment objectives and financial position. Where an investment is denominated in a currency otherthan the investors currency, changes in rates of exchange may have an adverse effect on the value, price of, or income derivedfrom the investment. Past performance is not necessarily a guide to future performance. Income from investments may fluctuate.The price or value of the investments to which this report relates, either directly or indirectly, may fall or rise against the interest ofinvestors. Any recommendation and opinion contained in this report may become outdated as a consequence of changes in theenvironment in which the issuer of the securities under analysis operates, in addition to changes in the estimates and forecasts,assumptions and valuation methodology used herein. The securities mentioned in this publication may not be eligible for sale insome states or countries. Esprito Santo Investment Bank Research does not accept any form of liability for losses or damageswhich may arise from the use of this report. Please note that investing in any non-U.S. securities or related financial instrumentsdiscussed in this research report may present certain risks. The securities of non-U.S. issuers may not be registered with theU.S. Securities and Exchange Commission or subject to regulation in the United States. Information on such non-U.S. securitiesor related financial instruments may be limited. Foreign companies may not be subject to audit and reporting standards andregulatory requirements comparable to those in the United States.


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Contact Information:

Garreth Hodgson Senior Managing Director /Head of Sales (212) 351-6054 [email protected]

Eva Gendell Vice President (212) 351-6058 [email protected]

Joseph Mcglone Vice President (212) 351-6061 [email protected]

Joy Bejasa Vice President (212) 351-6055 [email protected]

Lisa Gottardo Executive Director (212) 351-6060 [email protected]

Mike Maione Executive Director (212) 351-6067 [email protected]

MikeWilliams Vice President (212) 351-6052 [email protected]

Pedro Marques Vice President (212) 351-6051 [email protected]

Poorva Upadhyaya Assistant Vice President (212) 351-6056 [email protected]

E.S. Financial Services, Inc.New York Branch340 Madison Avenue, 12th FloorNew York, N.Y. 10173

Each analyst whose name appears in this report certifies the following, with respect to each security or issuer that the analyst covers in this

report: (1) that all of the views expressed in this report accurately reflect the personal views of the analyst about those securities and issuers;and (2) that no part of the compensation of the analyst was, is, or will be, directly or indirectly, related to the specific recommendations orviews expressed by the analyst in this report.

The analysts whose names appear in this report are not registered or qualified as research analysts with the Financial Industry RegulatoryAuthority ("FINRA") and may not be associated persons of E.S. Financial Services, Inc. and therefore may not be subject to the applicablerestrictions under FINRA Rules on communications with a subject company, public appearances and trading securities held by a researchanalyst account.


Banco Esprito Santo de Investimento, S.A. and/or its Affiliates and/or their directors, officers and employees, may have, or have had,interests or qualified holdings on issuers mentioned in this report. Banco Esprito Santo de Investimento, S.A. and/or its Affiliates may have,or have had, business relationships with the companies mentioned in this report.For a complete list of the covered Issuers in which Banco Esprito Santo de Investimento, S.A. or its Affiliates hold stakes in excess of 1%and for information on possible material conflicts of interest arising from investment banking activities please see Important disclosures for

US persons on http://www.espiritosantoib-research.com.

Receipt of Compensation

For information on Receipt of Compensation from subject Issuers please see Important disclosures for US persons on

http://www.espiritosantoib-research.com.

Representation to InvestorsEsprito Santo Investment Bank Research has issued this report for information purposes only. All the information contained therein is basedupon information available to the public and has been obtained from sources believed to be reliable. However, Esprito Santo InvestmentBank Research does not guarantee the accuracy or completeness of the information contained in this report. The opinions expressed hereinare our present opinions only, and are subject to change without prior notice. Esprito Santo Investment Bank Research is not under anyobligation to update or keep current the information and the opinions expressed herein. This report is not, and should not be construed as an

offer or a solicitation to buy or sell any securities or related financial instruments. The investment discussed or recommended in this reportmay be unsuitable for investors depending on their specific investment objectives and financial position. Where an investment is denominatedin a currency other than the investors currency, changes in rates of exchange may have an adverse effect on the value, price of, or incomederived from the investment. Past performance is not necessarily a guide to future performance. Income from investments may fluctuate. Theprice or value of the investments to which this report relates, either directly or indirectly, may fall or rise against the interest of investors. Anyrecommendation and opinion contained in this report may become outdated as a consequence of changes in the environment in which theissuer of the securities under analysis operates, in addition to changes in the estimates and forecasts, assumptions and valuationmethodology used herein. The securities mentioned in this publication may not be eligible for sale in some states or countries. Esprito SantoInvestment Bank Research does not accept any form of liability for losses or damages which may arise from the use of this report. Pleasenote that investing in any non-U.S. securities or related financial instruments discussed in this research report may present certain risks. Thesecurities of non-U.S. issuers may not be registered with the U.S. Securities and Exchange Commission or subject to regulation in the UnitedStates. Information on such non-U.S. securities or related financial instruments may be limited. Foreign companies may not be subject toaudit and reporting standards and regulatory requirements comparable to those in the United States.


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ContactdetailsCountry Head IndiaNick Paulson-Ellis +91 22 4315 6814

SalesSalesAshish Goenka +44 20 3429 2012 Arjay Prasad +91 22 4315 6841Poorva Upadhyaya +1 212 351 6056 Sunny Shah +91 22 4315 6842

Research

Banks / Financial Services Power and InfrastructureSantosh Singh +91 22 4315 6822 Krishnakant Thakur +91 22 4315 6832Sri Karthik +91 22 4315 6826 Pawan Parakh +91 22 4315 6833Nidhesh Jain +91 22 4315 6823Saikiran Pulavarthi +91 22 4315 6824

StrategyHealthcare Aditya Jhawar +91 22 4315 6819Chirag Talati +91 22 4315 6828 Nitesh Sharma +91 22 4315 6820

Metals and Mining TechnologyRitesh Shah +91 22 4315 6831 Soumitra Chatterjee +91 22 4315 6829Consumer EconomicsNitin Mathur +91 22 4315 6821 Deepali Bhargava +91 22 4315 6827

ASIA UK USA

1203A, Floor 12A, 15/F St Johns Building 10 Paternoster Square 340 Madison AvenueTower 2A 33 Garden Road 3rd Floor 12th FloorOne Indiabulls Center Central London New YorkElphinstone Road Hong Kong EC4M 7AL NY 10173Mumbai 400 013 China UK USAIndiat: +91 22 4315 6800 t: +852 3181 4000 t: +44 20 7456 9191 t: +1 212 351 6000

e: [email protected]

ESS_Little Black Book_Jan 2012

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