India Strategy Oct 2012

October 2012
India Strategy
GST
Bank
License
Lokpal
Aadhaar
MMDR
NPPP
LARR
Spectrum
Digit
Roads
Coal
izati
on
FDI
nt
stme
Dive
FDI
Fired up?
Research Team (Rajat@MotilalOswal.com)
Contents
Section A: India Strategy - Fired up? ......................................................................................... A1-59
Section B: 2QFY13 Highlights & Ready Reckoner ..................................................................... B1-12
Section C: Sectors & Companies .............................................................................................. C1-199
1.
Automobiles
Bajaj Auto
Hero MotoCorp
Mahindra & Mahindra
Maruti Suzuki India
Tata Motors
2.
Capital Goods
ABB
BGR Energy
BHEL
Crompton Greaves
Cummins India
Havells India
Larsen & Toubro
Siemens
Thermax
10-22
14
15
16
17
18
19
20
21
22
Cement
ACC
Ambuja Cement
Birla Corporation
Grasim Industries
India Cements
Jaiprakash Associates
Shree Cement
UltraTech Cement
23-33
26
27
28
29
30
31
32
33
Consumer
Asian Paints
Britannia Industries
Colgate Palmolive
Dabur India
GSK Consumer
Godrej Consumer Products
Hindustan Unilever
ITC
Marico
Nestle India
Pidilite Industries
United Spirits
34-48
37
38
39
40
41
42
43
44
45
46
47
48
Financials
Andhra Bank
Axis Bank
Bank of Baroda
Bank of India
Canara Bank
Dewan Housing
Federal Bank
HDFC
HDFC Bank
ICICI Bank
IDFC
Indian Bank
IndusInd Bank
49-79
55
56
57
58
59
60
61
62
63
64
65
66
67
3.
4.
5.
2-9
5
6
7
8
9
ING Vysya Bank

Kotak Mahindra Bank
LIC Housing Finance
M & M Financial Services
Oriental Bank
Power Finance Corporation
Punjab National Bank
Rural Electricfication
Shriram Transport
State Bank
Union Bank
Yes Bank
6.
7.
Healthcare
Biocon
Cadila Healthcare
Cipla
Divis Laboratories
Dishman Pharma
Dr Reddys Labs.
GSK Pharma
Glenmark Pharma
IPCA Laboratories
Jubilant Life Sciences
Lupin
Opto Circuits
Ranbaxy Labs.
Sanofi India
Strides Acrolab
Sun Pharmaceuticals
Torrent Pharma
68
69
70
71
72
73
74
75
76
77
78
79
80-101
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
101
Media
Dish TV
HT Media
Jagran Prakashan
Sun TV Network
Zee Entertainment
102-112
108
109
110
111
112
8.
Metals
Hindalco
Hindustan Zinc
Jindal Steel & Power
JSW Steel
Nalco
NMDC
Sesa Goa
SAIL
Sterlite Industries
Tata Steel
113-127
118
119
120
121
122
123
124
125
126
127
9.
Oil & Gas

BPCL
Cairn India
Chennai Petroleum
GAIL
128-144
132
133
134
135
Gujarat State Petronet

HPCL
IOC
Indraprastha Gas
MRPL
Oil India
ONGC
Petronet LNG
Reliance Industries
136
137
138
139
140
141
142
153
144
10. Real Estate

Anant Raj Industries
DLF
HDIL
Mahindra Lifespaces
Oberoi Realty
Phoenix Mills
Unitech
145-156
150
151
152
153
154
155
156
11. Retail
Jubilant Food
Pantaloon Retail
Shoppers Stop
Titan Industries
157-163
160
161
162
163
12. Technology
Cognizant Technology
HCL Technologies
Infosys
MphasiS
TCS
Tech Mahindra
Wipro
164-173
167
168
169
170
171
172
173
13. Telecom
Bharti Airtel
Idea Cellular
Reliance Communication
Tulip Telecom
174-182
179
180
181
182
14. Utilities
CESC
Coal India
JSW Energy
NHPC
NTPC
Power Grid Corp.
PTC India
Reliance Infrastructure
Tata Power
183-195
187
188
189
190
191
192
193
194
195
15. Others
196-199
Castrol India
196
Multi Commodity Exchange
197
Sintex Industries
198
United Phosphorus
199
Note: All stock prices and indices for Section C as on 28 September 2012, unless otherwise stated
India Strategy | Fired up?
India Strategy
BSE Sensex: 18,763
S&P CNX: 5,703
Fired up?
Policy engine revives| Next challenge: Investment cycle | New earnings cycle?
2QFY13 highlights: Non-cyclicals have a field day in muted quarter

2QFY13 is likely to be a muted quarter in terms of India's corporate sector performance.
PAT growth of 9% YoY: We expect MOSL Universe (ex RMs, oil refining and
marketing companies) to report PAT growth of 9% YoY. This is the lowest 2Q PAT
growth in the last 7 years, barring the Lehman-crisis quarter of September 2009.
Expect Technology, Financials, Healthcare and Consumer to positively dominate
the quarter's performance. On the other hand, global commodities (mainly, Oil &
Gas and Metals) will pull down aggregate profits.
Sensex PAT growth is even more muted at just 2% (ex ONGC, the growth is 9%). Six
global cyclicals are major drags, ex which Sensex PAT should be up 15%.
Top five Sensex companies by PAT growth: TCS (+42% YoY), SBI (+31%), HDFC Bank
(+30%), Sun Pharma (+29%), and Infosys (+26%).
Bottom five Sensex companies by PAT growth: Tata Steel (-63% YoY), Maruti Suzuki
(-51%), Bharti (-36%), Tata Power (-30%) and Hero Motocorp (-27%).
Quarterly performance - MOSL universe (INR b)
Sector
(No of companies)
High YoY PAT Growth
Cement (8)
Technology (6)
Health Care (17)
Medium/Low YoY PAT Growth
Financials (25)
Private Banks (8)
PSU Banks (9)
NBFC (8)
Consumer (12)
Media (5)
Others (4)
Utilities (10)
Oil & Gas ex RMs (10)
Oil & Gas incl RMs (13)
Negative YoY PAT Growth
Auto (5)
Capital Goods (9)
Retail (4)
Metals (10)
Real Estate (7)
Telecom (4)
MOSL (139)
MOSL Excl. RMs (136)
Sensex (30)
October 2012
Sales
Sep-11 Sep-12
680
145
361
174
749
402
96
251
54
245
25
38
485
1,441
3,126
1,017
623
336
57
937
41
276
7,271
5,587
3,769
830
162
460
208
854
460
118
276
66
283
27
40
534
1,703
3,886
1,148
721
364
64
932
35
310
8,487
6,304
4,229
EBITDA
PAT
Var % Sep-11 Sep-12
Var Sep-11 Sep-12
YoY
% YoY
22
11
27
20
14
14
22
10
21
16
10
7
10
18
24
13
16
8
12
0
-13
12
17
13
12
153
26
89
39
588
320
79
189
53
51
8
8
119
301
191
121
75
41
5
161
19
88
1,240
1,350
838
198
36
116
46
674
369
98
206
64
60
9
7
127
288
385
135
86
42
6
159
15
91
1,555
1,458
866
30
38
31
20
15
15
24
10
22
18
2
-2
6
-4
102
11
15
4
14
-2
-21
3
25
8
3
101
10
65
25
285
160
46
78
36
35
4
4
65
179
38
76
46
28
2
91
8
15
597
738
466
139
19
88
32
339
191
57
91
43
41
4
4
70
181
245
75
46
27
2
80
6
10
865
802
477
EBITDA Margin
Var Sep-11 Sep-12
Var
% YoY
(bp)
38
89
34
28
19
19
23
17
19
18
17
15
7
1
539
-1
0
-1
-6
-12
-28
-32
45
9
2
22.5
17.8
24.5
22.3
78.4
79.7
81.9
75.1
96.6
20.7
34.5
20.4
24.6
20.9
6.1
11.9
12.1
12.1
9.3
17.2
47.0
31.9
17.1
24.2
22.2
23.9
22.1
25.2
22.3
78.9
80.2
83.4
74.8
97.4
21.2
32.1
18.7
23.7
16.9
9.9
11.8
12.0
11.7
9.5
17.0
42.5
29.4
18.3
23.1
20.5
139
425
73
8
45
55
142
-36
83
51
-243
-172
-87
-398
381
-17
-6
-47
23
-23
-452
-246
127
-104
-175
A1
From Cradle of Pessimism came a Ray of Hope. Have things FIRED UP?
For almost 18 months, the Indian economy and markets have been groping through
intensifying darkness and concerns, culminating in the Cradle of Pessimism (our 4QFY12
strategy theme). At the beginning of 2QFY13, there were some Rays of Hope (our
1QFY13 strategy theme) with the Presidential elections giving way to new political
alignments. While things remained stuck during July-August, the month of September
2012 saw a complete U-turn from policy paralysis to raging reforms. The last few
weeks have seen a significant number of policies / announcements / discussions, and
the debate has shifted to "whether UPA-2 led by Congress is finally FIRED UP?"
MACRO ECONOMY
FDI
Re-starting the policy engine FDI in limelight; further growth catalysts

lower deficits, improved flows, monetary easing
With a precipitous fall in the Indian rupee coupled with a rating downgrade staring
India, the government finally bit the proverbial bullet with a change in Finance Minister
and a series of policy measures, even at the cost of severing ties with the largest ally,
TMC. This, in turn, has catalyzed a slew of measures in the last few weeks that have
led to an improvement in sentiment: (1) fuel price hike / reforms, (2) opening/relaxing
FDI in multi-brand retail, aviation, broadcasting, (3) Cabinet approval to raise FDI in
insurance and pension, (4) easing of fund-raising abroad, (4) proposed GAAR deferral,
etc. It also appeared to wade through the political fallout of these measures.
While reality will take a lot longer to reflect the first round of reforms, and require
several more follow-up initiatives, the perception has undoubtedly started changing
for the better. To some extent, this is visible in INR appreciation (a 7% appreciation),
revival of flows (FIIs inflows at USD 16b in CY12) and market sentiment (Sensex up 8%
in 3QCY12, making India among the best peforming markets in the world). We believe
that 3 important drivers for the markets, going forward, are:
(1) Fiscal situation our FY13 deficit estimate revised down from 5.9% to 5.4%,
(2) Domestic flows into equity markets base-case USD30b inflows over FY14-17,
(3) Shift towards a more accommodative monetary stance RBI should cut interest
rates / CRR in 4QCY12.
INVESTMENT CYCLE
Addressing logjam the next big challenge

The next big challenge is to address the investment logjam. However, unlike the
initial set of reforms that have been largely addressed through policy decisions, the
investment phase requires a more involved decision-making process, as land, water,
resources, etc, are the prerogatives of the state governments. Execution is the key
challenge, as several structural issues impacting growth remain unaddressed. We
believe that the government will kick-start its efforts towards reviving the investment
climate by accelerating public spending. Our action wish list includes:
Successful resolution of the contentious issues in the Power sector (through SEB
debt recast, standard bidding document, and coal price pooling)
Close monitoring of CPSU capex (FY13 investment target at INR1.8t is double the
highest ever - INR931b in FY11)
Take-off of large public expenditure projects (like Dedicated Freight Corridor,
railways, urban transport, etc). Addressing structural issues impacting
infrastructure investments has become important.
Acceleration of financial sector reforms, including corporate bond market and
October 2012
A2
access to Insurance / Pension money for investment projects. Also, an expenditure

switching strategy is required that reduces government revenue spending by
cutting subsidies and steps up capital expenditure to crowd-in private investments.
Successful implementation of the National Investment Board that will provide

"single window" clearance. The government has identified 89 projects worth
USD20b for fast track clearance.
We identify the key structural issues in core segments:
#1 UTILITIES: Initial steps encouraging, but new investments sometime away
#2 METALS & MINING: Huge investments stuck; will require close monitoring
#3 FINANCIALS: Loan growth moderating; revival will ease asset quality concerns
#4 TELECOM: Spectrum pricing and allocation, conducive M&A policy critical
#5 OIL & GAS: Rational product pricing, gas reforms imperative
#6 INFRASTRUCTURE: Creating conducive environment for large scale development
#7 MEGA PROJECTS: DFC, railways, urban transport can accelerate investment spend
FY14 EARNINGS
Early signs of a rebound in earnings growth; FY14 Sensex EPS to grow 14%
to INR1,395
Our bottom-up estimates for the MOSL universe of companies (ex RMs) suggests FY14
EBITDA growth of 15% and PAT growth of 14%. This growth is driven mainly by (1)
Bounce back in sectors which were affected in FY13 (Auto, Telecom); and (2) Steady
growth in seculars (Consumer, Healthcare, Financials) offsetting low growth in specific
sectors like Oil & Gas, Technology and Capital Goods.
For the 5 years ending FY13, Sensex EPS CAGR has been muted at 8%. However, India's
long period average (LPA) earnings growth is 15%. Now, our bottom-up earnings
estimates for Sensex companies suggest FY14 Sensex EPS growth of 14%, close to the
LPA. The key question: Is FY14 the beginning of a new earnings cycle? We believe
there are a few early signs that this is a distinct possibility:
1. Earnings downgrade cycle has bottomed out
2. Our FY14 assumptions are not aggressive
3. FY14 earnings mix is less vulnerable than that of FY13 initial estimates
4. More stocks have a bias for earnings upgrade than downgrade.
INVESTMENT STRATEGY Valuations below long-term averages; scope to re-rate as growth returns
Strategy
Navin Agarwal
Navin@MotilalOswal.com
Rajat Rajgarhia
Rajat@MotilalOswal.com
Economist
Dipankar Mitra
Dipankar.Mitra@MotilalOswal.com
Sources of exhibits in this section
include RBI, CMIE, Bloomberg, IMF,
UN, Rogers International, Industry,
Companies, and MOSL database
October 2012
Combined action of government and RBI could lead to upgrades in FY13 GDP growth
estimate (currently at 6.5%). Our earnings estimates for FY13 and FY14 have been
stable for the last 2 quarters. We believe the downgrade cycle is now behind us.
Recent government measures along with more to come, monetary easing, and stable
to declining commodities can drive earnings upgrades, going forward. Valuations
remain below historical averages (FY14 P/E of 13.5x v/s 10-year average of 14.8x). We
see more upsides in markets from here.
Our top Overweights are Financials (ICICI / SBI / LIC Housing), Infrastructure & related
(L&T, Jaiprakash) and Autos (Tata Motors, Maruti). Our key Underweights are Consumer,
Technology, Oil & Gas and Utilities. We have a significant allocation to mid-caps too.
Our preferred picks are Yes Bank, MCX, CESC, Hexaware, Petronet, Sun TV, JSW Energy
and Oberoi.
A3
MARKETS Indian equities Top performer in CY12 YTD

In 3QCY12, Indian markets yielded 8% return QoQ, after an almost flat 2QCY12. With
this, the BSE Sensex is up by 21% YTD CY12, and among the best performing markets
globally. As the recent series of reforms led to significant appreciation in currency,
USD return of Sensex at 22% is also among the best.
With this performance, India now trades at a marginal premium to the rest of the
global markets, well supported by an expected rebound in FY14 corporate performance
14% earnings growth coupled with a strong 17% RoE. The confidence of FIIs has
remained intact throughout CY12, despite a significant slowdown in macroeconomic
parameters. They have bought another USD16b of Indian equities, while DIIs have
been big sellers to the extent of over USD7b.
Indian markets grew 8% in 3QCY12 after a flat 2QCY12
49
31
2 0 1
-5 -3
-6
-25
Sep-08
Mar-08
Sep-07
Mar-07
Sep-06
Mar-06
Sep-05
Mar-05
Sep-04
Mar-04
Sep-03
Mar-03
Sep-02
-14
-14
-13
-23
Mar-02
-4
-5
-6
13
Mar-11
-10
-19
Sep-01
-2
-4
Sep-09
-8
Mar-09
-6
13
12
11
Sep-12
18
18 17
17
Mar-12
11
20
Sep-11
20
16 18
13
Sep-10
23
Mar-10
18
16
No negative quarters in 2012 to date,

despite several challenges facing the
economy and corporate sector
World Equity Indices CY12YTD (local currency, %) World Equity Indices 3QCY12 (local currency, %)
Indi a - Sens ex
21
S&P 500
India is amongst the top

performing markets
globally in 2012
15
South Korea
8
8
MSCI EM
Indi a - Sens ex
South Korea
MSCI EM
Ta i wan
S&P 500
Tai wan
Ja pan
Rus s i a MICEX
UK
Bra zi l
Chi na
Rus s i a MICEX
UK
Chi na (HSCEI)
October 2012
Brazi l
3
-1
Japan
-2
A4
World Equity Indices CY12 YTD Perf (%) in USD
South Korea
14
Brazi l
Ta i wan
13
Tai wan
MSCI EM
Even in USD terms, India's

performance has been
amongst the better ones
11
South Korea
15
S&P 500
13
Indi a - Sens ex
22
India - Sens ex
World Equity Indices 3QCY12 Perf (%) in USD
MSCI EM
Rus s i a MICEX
Rus s i a MICEX
UK
UK
China (HSCEI)
Bra zi l
7
6
6
S&P 500
Ja pan
Chi na (HSCEI)
-1
Japan
-4
3
1
India v/s World: Richer valuations supported by superior growth and profitability
Global Indices EPS growth and PE
Global Indices P/B and RoE
12
1.6
2.0
2.3
16
17
2.6
11
15
Average P/B :1.5x

Average RoE: 13.6%
Pvt-Ba nks
19
Sectoral Performance for CY12 YTD (%)

15
Pvt-Ba nks
43
Rea lEs ta te
11
Cons umer
36
Cons umer
10
Capita l Goods
36
Auto
10
PSU-Ba nks
35
Hea lthca re
Rea l Es tate
34
Capi tal Goods
BSEMid-Cap
29
Sens ex
Hea l thcare
28
BSEMi d-Cap
Auto
28
Oi l
Sens ex
PSU-Ba nks
21
Oi l
15
Uti li ti es
Uti l iti es
14
Technol ogy
Meta l
13
Metal
Tel ecom -8
October 2012
1.5
10
15
Sectoral Performance for 3QCY12 (%)
Banks and Consumer have

been the top performers
in 2012
1.3
Indonesia
12
1.2
India
11
1.2
US-S&P500
1.1
13
28
India
Indonesia
Singapore
UK-FTSE
1.1
Taiwan
14
0.6
RoE (%) CY13 / FY14
UK-FTSE
18
14
Singapore
13
HongKong
12
13
Average P/E :10.9x

32 Average EPS Growth: 14.7%
Brazil
17
13
China
11
Korea
China
Russia
15
12
Korea
-2
10
Brazil
10
Russia
10
US-S&P500
HongKong
P/B (x) CY13 / FY14
EPS Growth CY13/FY14 (%)
Taiwan
PE (x) CY13 / FY14
-2
Technol ogy
Tel ecom
-17
A5
Sensex Stock Performance CY12 YTD (%)

60 54
50 47 47
40 38 35 34
L&T, ICICI Bank

the top performers
in CY12
27 23 21 21
20 19 19 19 15
11 11 9
5 4 4 3 0
-1 -4 -6
-8
L&T
ICICI Bank
TataMotors
HDFCBank
Maruti
SunPharma
SBI
ITC
HUL
M&M
TataPower
SENSEX
Reliance
TataSteel
CoalIndia
Cipla
HDFC
Bajaj Auto
TCS
Sterlite
ONGC
NTPC
Dr Reddy's
Hindalco
BHEL
GAIL
HeroMoto
Wipro
JSPL
Infosys
Bharti
-23
Sensex Stock Performance 3QCY12 (%)

22 20
20 18 18 17 15
14 13 12
10 9 9 8
6 5 5 4 3 2
1 1 1 0
-9 -9
-12
-13
M&M
Cipla
HUL
HDFC
ICICI Bank
BajajAuto
Maruti
L&T
RelianceInd.
HDFC Bank
TataMotors
SunPharma
GAIL
SENSEX
BHEL
NTPC
ITC
SBI
Coal India
TataPower
TCS
Infosys
Hindalco
DrReddy's
ONGC
Sterlite
Wipro
JSPL
TataSteel
Hero Moto
Bharti
-2 -3
-5
Trend in net FII Investment (USD b)

Annual Trend
Quarterly Trend
29.3
6.4
6.9
5.2 4.4
2.3
0.1 0.8
-0.5
Trend in net DII Investment (USD b)

Annual Trend
3.0 3.2
2.4
2.1
Sep-12
Jun-11
Mar-11
Dec-10
Sep-10
Jun-10
2.4
1.8
0.8
0.5
0.4
2.1
0.8
0.6
0.5
5.9
5.3
5.4
Mar-10
Quarterly Trend
16.9 Indian institutional investors have been

net sellers of equities Jan-09 to date
3.7
Dec-09
Sep-09
Jun-09
Dec-08
-1.0 -0.4
-1.3
Mar-09
-2.4-3.3
Sep-08
CY12 YTD
CY11
CY10
CY09
CY08
CY07
CY06
CY05
CY04
CY03
CY02
CY01
CY00
-12.2
0.1
Jun-12
10.8
8.1
6.7 8.6
9.1
7.4
Mar-12
16.1
Dec-11
1.5 2.7 0.7
17.6
Sep-11
17.8
12.6
10.1
-2.2
-3.4
Sep-12
Jun-12
Dec-11
Sep-11
Jun-11
Mar-11
Dec-10
Sep-10
Jun-10
Mar-10
Dec-09
Sep-09
Jun-09
Mar-09
Dec-08
CY12
YTD
CY11
CY10
CY09
CY08
CY07
CY06
October 2012
Sep-08
-5.2
-7.4
Mar-12
-4.7
-4.4
A6
MACRO ECONOMY Re-starting the policy engine; FDI in limelight

Further growth catalysts: Lower deficits, improved flows, monetary easing
The UPA-2 government had significantly disappointed the Indian markets by
abstaining from any critical policy decisions to improve the looming macroeconomic
crisis - industrial production slump, high inflation, high interest rates, depressed
investment climate and damaged global perception of India.
India has a track record of initiating far-reaching reforms only when faced with
extreme crisis. With a precipitous fall in the Indian rupee coupled with a rating
downgrade staring India, the government finally bit the proverbial bullet with a
change in Finance Minister and a series of policy measures, even at the cost of
severing ties with the largest ally, TMC (Trinamool Congress led by Mamta Banerjee).
FDI
This, in turn, has catalyzed a slew of measures in the last few weeks that has led to
an improvement in sentiment. These measure include (1) fuel price hike,
(2) opening/relaxing FDI in multi-brand retail, aviation, broadcasting, (3) Cabinet
approval to raise FDI in insurance and pension fund, (5) easing of fundraising abroad,
(6) proposed GAAR implementation, etc. It also appeared to wade through the
political fallout of these measures.
Simultaneously, the government also sought to give a thrust to development by
finalizing the 12th Plan, putting in place a mechanism to monitor large infrastructure
projects at the PMO level, developing an airport hub, international airports, etc.
While reality will take a lot longer to reflect the first round of reforms, and require
several more follow-up initiatives, the perception has undoubtedly started changing
for the better. To some extent, this is visible in INR appreciation, revival of flows
and market sentiment.
In this backdrop, we attempt to reassess three factors that can act as significant
catalysts for further economic revival
(1) fiscal situation
(2) domestic flows into equity markets, and
(3) possible shift towards a more accommodative monetary stance.
A. Fiscal deficit slippage to be of lower order than envisaged earlier

YTD FY13 fiscal situation has remained stressful
So far, the current financial year has displayed weaknesses on the fiscal front,
with receipts falling short of expenditure, widening the fiscal gap (23% YoY).
On the receipts side, while tax revenue was buoyant (21% YoY), non-tax revenue
(9% YoY) and capital receipts (-50% YoY) fell with spectrum sale and disinvestment
yet to take off.
On the expenditure front, subsidy ballooned resulting in highest ever non-plan
spend as a share of full-year budget in 15 years at 43%. Curtailment of plan
expenditure (12% YoY) was not enough to bring the overall spending as a
percentage of full-year budget at 38% higher than the long period average (LPA)
of 35%.
October 2012
A7
This resulted in the deficit indicators surpassing their 15-year averages by a fairly
wide margin. Fiscal deficit reached 66% of full year target (v/s LPA of 52%) while
the same for revenue deficit was as high as 79% (v/s LPA of 68%).
All these resulted in our prediction of a large fiscal slippage placed at 5.9% of GDP
(as against the budgeted 5.1%), taking it closer to the FY12 level, indicating no
fiscal correction YoY. If the current trend would have continued, the worst case
fiscal deficit could stand as high as 6.3%.
While tax trends have kept up with LPA, total receipts have lagged behind
Tota l Recei p ts
35%
25%
15%
5MFY13
5MFY12
5MFY11
5MFY10
5MFY09
5MFY08
5MFY07
5MFY06
5MFY05
5MFY04
5MFY03
5MFY02
5MFY01
5MFY00
5MFY99
5%
5MFY98
As % of Budgeted Amount
Tax Reven ue (Ne t)

45%
5MFY12
5MFY13
5MFY12
5MFY13
5MFY11
5MFY10
5MFY09
To tal Expe ndi ture
5MFY08
5MFY07
5MFY06
5MFY05
5MFY04
5MFY03
Pl an Expe ndi ture
5MFY02
5MFY01
5MFY00
5MFY99
Non-Pl an Expend i ture

48%
44%
40%
36%
32%
28%
24%
20%
5MFY98
As % of B udgeted Amount
Highest ever non-plan expenditure along with lower than LPA plan expenditure
Fi scal Defi ci t
October 2012
Reven ue De fi ci t
200%
150%
100%
50%
5MFY11
5MFY10
5MFY09
5MFY08
5MFY07
5MFY06
5MFY05
5MFY04
5MFY03
5MFY02
5MFY01
5MFY00
5MFY99
0%
5MFY98
As % of Budgeted Amount
Deficit indicators stay well above the long period average
A8
Our initial fiscal deficit estimate for FY13 pegged it at 5.9%

6.5
5.5
4.5
-0.3
5.9
minus cash
carry forward
add shortfall
in
disinvestment
add shortfall
i n spectrum
drought
add food, fert.,
add fuel
subsidy
FY13BE
5.1
FY13E
3.5
2.5
1.5
0.1
0.2
0.3
0.6
Slew of measures taken may take fiscal deficit to GDP ratio to 5.5% in FY13
Divestment
Roads
Spectrum
Coal
The recent policy measures taken by the government, however, have changed
the deficit outlook significantly for the remaining part of FY13.
As a first measure, the government increased the price of diesel and capped the
subsidized quantum of LPG, along with rationalization of taxes, resulting in a net
gain of INR100b to the exchequer.
To kick-start the disinvestment program, the government has shortlisted four PSUs.
Besides, it is considering alternative and fast track mode of disinvestment through
strategic sale of Hindustan Zinc, Balco and SUUTI. All these may take the
disinvestment proceeds higher than the budgeted amount of INR300b.
The government has also alerted PSUs to transfer their huge cash reserves as
special dividend or undertake fresh investment. Either way, it would help bridge
the fiscal gap.
As evidenced by recent experiences, the provision of planned expenditure has
exceeded actual expenditure by a fair margin. Continuation of this trend would
provide a cushion of INR200b buffer to spillover of non-plan spend, especially on
subsidies.
The recent Supreme Court opinion on Presidential reference has possibly given
additional levers to the government for meeting its resource sale targets
(eg. Spectrum, land, coal mines etc).
The above measures undertaken and contemplated have led us to reduce our
fiscal deficit estimate to 5.5% of GDP from 5.9% earlier. Further, we expect no
additional borrowing, as the extent of fiscal slippage is small and can be met by
recourse to short-term borrowing.
Recent policy measures have rekindled hope of containing slippage at manageable levels
As % of GDP
6.5
6.0
0.1
5.5
5.0
0.1
0.2
5.9
5.5
4.5
4.0
F Y13 - Ea rl i er
esti m ate
October 2012
l ess
l e ss l ower o i l
di si n ve stm ent
b ill
l e ss l ower
p l an
expend i ture
FY13E - Revi s ed
A9
A few factors that can alter the fiscal scenario dramatically

Disinvestment
i)
Planned expenditure
Special dividend from PSUs
Spectrum sale
Government approved disinvestment of four PSUs including

three mining and one OMC. This would mobilize INR150b.
i i ) Vedan ta Group incr eas es the offer f or s trategic sale of
Hindustan Zinc and Balco to INR220b.
i i i ) SUUTI stake sale to garner INR200b.
A curtailment in plan expenditure would free up sizable resources.
For example, in FY12, planned expenditure grew 12.6% against 16.5%
growth provided in the budget. A 4% scaling back on 22% growth in
plan expenditure in FY13 would free resourses to the tune of
INR200b, or 0.2% of GDP.
The nine cash rich PSUs have significant cash balance with them.
Even if a part of this is ploughed back to the government, it would
reduce fiscal deficit.
The government has budgeted ~INR400b out of telecom spectrum
sale. The recent Supreme Court opinion on Presidential reference
has possibly given additional levers to the government for meeting
its resource sale targets (eg. Spectrum, land, coal mines etc).
Expect fiscal consolidation in FY14 despite higher welfare bill
The fiscal consolidation attempt is likely to be carried forward to FY14, aided by a

few additional factors.
We expect GDP growth to revive to 6.5% in FY14 from 5.8% in FY13. In the past, we
have seen that revenue buoyancy improves on the back of higher GDP growth.
Imputing this trend, the tax-GDP ratio in FY14 should touch FY09 levels (close to
8%), but be lower than the levels seen during the FY07-08 peak (8.2-8.8%).
Reform in petroleum product prices together with the oil and INR outlook would
result in lower petroleum subsidy bill in FY14 to INR660b than INR1.1t in FY13. This
would create the necessary headroom for implementing the Food Security Bill (if
only on a limited scale to begin with) even if the principle of limiting subsidies to
2% of GDP is broadly adhered to.
Additionally, as witnessed during the previous episode of fiscal correction, the
planned expenditure growth may be pruned to only 14-15% if need be.
These three factors, viz., higher revenue buoyancy on account of faster growth,
reduction in petroleum subsidy and cutback on planned expenditure would see
FY14 fiscal deficit ratio improving to 4.5% to GDP as envisaged in the revised fiscal
consolidation framework (FRBM).
With better growth in FY14, tax-GDP ratio is expected to inch up

Tax-GDP
10
GDP growth
8
6
4
2
October 2012
FY14E
FY13BE
FY12RE
FY10
FY11
FY09
FY07
FY08
FY06
FY05
FY02
FY03
FY04
FY00
FY01
FY99
FY97
FY98
FY95
FY96
FY93
FY94
FY92
FY90
FY91
A10
Containment of oil subsidy would create headroom for Food Security Bill and still keep subsidy
bill within 2.2% of GDP
Fe rti l i ze r
Foo d
Petrol eu m
Oth ers
Sub si dy a s % o f GDP (RHS)
3,000
2,000
1,000
0
FY12RE
FY13BE
FY13E
FY14E
India plans to come back to revised FRBM track

6.0
5.9
5.7
5.3
4.5
3.9
FY15 - FRBM
FY14 - FRBM
FY13E
FY12
FY11
FY10
2.5
FY09
3.3
FY08
3.9
4.0
6.4
4.7
FY07
FY04
FY03
FY02
FY01
4.5
FY06
6.2
FY05
5.7
B. Likely revival of flows to equity market
October 2012
Even during strong years for equity markets, a low share of savings actually gets
channelized to the same.
While the average share of household equity investments stands at 5% of financial
savings, it goes down to half of that level and less than 2% when taken as a share
of household savings and overall savings of the country as a whole.
Even within that, there is a wide variation, with household savings as a percentage
of financial savings varying between a negative 0.9% to a high of 12.8% in the last
decade.
In recent years, flows to equity market (comprising of investments from mutual
funds, insurance, etc.) have been negligible due to GDP slowdown and nonperformance of the domestic equity market.
With the revival in growth and recent market performance, interest in equity
market should revive.
The government in recent weeks has been in active engagement with the domestic
mutual fund and insurance sectors to initiate reforms and revive inflows. This,
along with the likely drop in interest rates and improved GDP growth, should
create a positive backdrop for domestic flows into Indian equities. These flows
typically come in phases, and the next 3-4 years could be one such significantly
positive phase.
A11
However, a mean reversion can lead to USD30b of domestic flows into equity market
DIIs in ve stment (LHS) - Bas e cas e
DII (as % of fi n . s avi n gs ) - Ba se cas e
DII (as % of fi n. savi ngs) - Bul l cas e

DII (as % of fi n.s avi ngs) - Bear cas e
36
USD48b
(USD b)
27
USD31
18
USD13
9
0
FY17E
FY16E
FY15E
FY14E
FY13E
FY12
FY11
FY10
FY09
FY08
FY07
FY06
FY05
FY04
FY03
FY02
FY01
-9
12
9
6
3
0
-3
-6
C. Monetary policy: Case for change in policy stance
October 2012
So far, RBI has maintained a strict anti-inflationary stance, as inflation has stayed
above its comfort level for too long.
However, a few factors have changed, raising hopes that inflation could moderate,
going forward.
At the outset, rapid appreciation of the INR changes the inflationary outlook for
the petroleum and manufacturing group inflation with expected easing of 2240bp for these groups.
Moreover, after the initial bout, the impact of QE3 on commodities has been
rather limited. This, together with INR appreciation, has aligned the commodity
trends in India and abroad.
This would yield positive benefits for core inflation in India, which is expected to
move back towards 5% by March 2012 after hardening to 6% in the near term.
Thus, while a firm up of the inflationary trend appears inevitable for 3QFY13 (~8%),
it is expected to ease considerably in 4QFY13 (7.6%).
RBI is also likely to take due note of the improving fiscal outlook and slew of
reform measures initiated - the two reasons put forward by it for not easing policy
rates further more.
Thus, a cut in the policy rates in October 2012 is highly probable.
Meanwhile, RBI's liquidity injections in the form of OMO have been a big relief on
the liquidity front, which has come to the striking distance of being in surplus
mode on latest count. This has eased market rates considerably, well ahead of
RBI's rate cut.
Irrespective of the possibility of further rate cut, RBI must keep liquidity
intervention ongoing, as policy rate easing could only be made effective in a
situation of lower liquidity deficit. As money supply growth at 13.4% as at
September 2012 remains well within RBI's indicative projection of 15%, there is
space for further monetary easing without creating inflationary impulses.
A12
INR appreciation would reduce the gap between

commodity price trends in India and abroad
Ro gers USD (Yo Y %)
Core inflation would go below 5% again by March 2013, if INR

appreciates to 52 in 2HFY13
Ro gers INR (YoY %)
10
10
20
20
Oct12
Sep12
Apr12
Jan12
Indi a 's core i nfl ati o n
Mar10
May10
Jul10
Sep10
Nov10
Jan11
Mar11
May11
Jul11
Sep11
Nov11
Jan12
Mar12
May12
Jul12
Sep12
Nov12
Jan13
Mar13
Aug12
Jul12
25
Jun12
May12
10
Mar12
R oge rs INR (RHS)

40
Feb12
20
10
Inflationary pressures may ease somewhat on INR

appreciation and easing commodity prices
F Y13E Earl i er
Liquidity is coming close to neutral zone now

LAF bala nce (ne t reverse repo ) (LHS)
3mth CP rates (RHS)
FY13E Revi se d
9.0%
900
8.5%
12
400
8.0%
100
7.5%
Apr 10
Jun10
Aug 10
Oct10
Dec10
Feb11
Apr 11
Jun11
Aug 11
Oct11
Dec11
Feb12
Apr 12
Jun12
Aug 12
Latest
Mar13
F eb13
Jan13
Dec12
Nov12
Oct12
1600
S ep12
6.0%
Aug12
Jul12
1100
Jun12
6.5%
May12
600
Apr12
7.0%
RBI would consider improved fiscal Expect RBI to cut rates going forward
outlook for monetary easing
Re po R ate
8%
7%
6.25%
Jan 12
5.50%
6.00%
6%
October 2012
4%
Oct12
7.50%
R BI surprised
the mkt
Sep12
Oct12
4.50%
4.00%
Mar12
4.75%
Dec12
Oct12
Nov12
Jul12
Aug12
Sep12
Jun12
Jan12
Feb12
Mar12
Nov11
Dec11
Oct11
Aug11
Sep11
Jul11
Jun11
Apr11
May11
Feb11
Mar11
3%
Jan11
FY13 (Current
expectations)
5%
FY13 (Earl ier

expectations)
FY13BE
Apr12
8.00%
8.50%
Apr12
May12
5.3
5.1
Cash Res erve Ra ti o
9%
5.9
A13
INVESTMENT Addressing logjam the next big challenge

Requires more involved decision making process
After a long hiatus during which the government was widely criticized for policy inaction,
and the opposition and coalition politics too were blamed for stalling key reforms, the
government seems to have tightened its belt to streamline the decision making process.
The first round of reforms has centered around FDI approvals, subsidy rationalization and
discussions on improving capital market flows.
The next big challenge is to address the investment logjam. However, unlike the initial set
of reforms that have been largely addressed through policy decisions, the investment
phase requires a more involved decision making process, as land, water, resources, etc,
are the prerogatives of the state governments.
Crystal gazing: What can possibly revive the investment climate?

The investment climate has worsened over the past 18 months due to structural
impediments, policy uncertainty, persistent inflation and rising interest rates. We
believe that the government will kick-start its efforts towards reviving the investment
climate by accelerating public spending. Our action wish list includes:
Successful resolution of the contentious issues in the Power sector (through SEB
debt recast, standard bidding document, and coal price pooling)
Close monitoring of CPSU capex (FY13 investment target at INR1.8t is double the
highest ever - INR931b in FY11)
Take-off of large public expenditure projects (like Dedicated Freight Corridor,
railways, urban transport, etc). Addressing structural issues impacting
infrastructure investments has become important.
Acceleration of financial sector reforms, including corporate bond market and
access to Insurance / Pension money for investment projects. Also, an expenditure
switching strategy is required that reduces government revenue spending by
cutting subsidies and steps up capital expenditure to crowd-in private investments.
Successful implementation of the National Investment Board that will provide
"single window" clearance. The government has identified 89 projects worth
USD20b for fast track clearance.
Rays of hope include

Decline in global commodity prices
Currency appreciation
Moderation in interest rates
Fiscal consolidation, leading to possible crowd-in of private investments
Slowdown more pronounced for industry, particularly in core sectors

The investment climate has worsened over the past 18 months due to structural
impediments, policy uncertainty, persistent inflation and rising interest rates. The
slowdown has had a pronounced impact on GDP growth rate. Addressing the current
logjam is the next big challenge.
Industrial sector has acted as a continued drag on the overall GDP growth with its
contribution to GDP dropping to 10-20% currently from 30-50% earlier. Moreover,
industry has been particularly stuck by the empty middle structure with investment
facing sectors dragging industrial growth to near zero level.
October 2012
A14
Collapse in the Industrial growth had triggered

a downgrade in GDP
60
45
30
-10
15
YTDFY13
Nondurables
Durables
Consumer
goods
-20
Intermediate
goods
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
Jun-11
Sep-11
Dec-11
Mar-12
Jun-12
FY12
10
12
Capital
goods
16
FY11
20
Basic goods
Sha re of Indus try in overal l growth (%, RHS)

Indus try growth
GDP growth
Empty middle structure continues to haunt
Structural issues impacting growth remain unaddressed

The next big challenge is to address the investment logjam, but this is easier said than
done. Unlike the initial set of reforms that have been largely addressed through
policy decisions, the investment phase requires a more involved decision making
process, as land, water, resources, etc, are the prerogatives of the state governments.
Execution is the key challenge, as several structural issues impacting growth remain
unaddressed.
We identify the key structural issues in core segments like Utilities, Metals, Financials,
Telecom, Oil & Gas and Infrastructure:
#1 UTILITIES: Initial steps encouraging, but new investments sometime away
#2 METALS & MINING: Huge investments stuck; will require close monitoring
#3 FINANCIALS: Loan growth moderating; revival will ease asset quality concerns
#4 TELECOM: Spectrum pricing and allocation, conducive M&A policy critical
#5 OIL & GAS: Rational product pricing, gas reforms imperative
#6 INFRASTRUCTURE: Creating conducive environment for large scale development
#7 MEGA PROJECTS: DFC, railways, urban transport can accelerate investment spend
#1 Utilities
Initial steps encouraging, but new investments sometime away

The Indian Utilities sector has seen step-up in capacity addition under the 11th Plan to
52GW v/s ~20GW in the earlier plan period. However, the fuel supply ramp-up, both
for coal and gas projects has been below par, impacting project economics.
Additionally, higher commercial losses of DISCOMs have also impacted affordability,
investments in T&D and growth in demand for power.
Over the last 12 months, the Prime Minister's Office (PMO), Ministry of Petroleum
(MoP) and Ministry of Coal (MoC) have taken several measures to put the sector back
on track. These include (1) financial restructuring plan (FRP) for DISCOMs, (2) steps to
enhance rake availability / easing of environment norms to help ramp up domestic
coal production, and (3) steps being taken to formulate new bid document, which
would have fuel cost as pass-through under tariff. While these measures are
October 2012
A15
encouraging, their successful implementation would first boost current/upcoming

capacity additions under the 12th Plan. We believe new investments in the Power
sector, particularly by the private sector, are still sometime away. Private developers
might face issues, given higher DER, existing PPA/FSA issues, ventures like overseas
mine acquisition, etc.
(a) DISCOMs: Weakest link in value chain but recent initiatives to drive
improvement
losses
at
Key measures that will drive improvement
-596
Financial
restructuring plan
(FRP)
FY12E
-669
FY11E
-635
FY10
-537
Particulars
Tariff increase
FY09
-319
FY08
-271
FY07
FY06
-209
Commercial
INR600b+
LT power
availability /
ST power cap
Remarks
Loss making states like Tamil Nadu, Rajasthan and Haryana have raised
tariffs. UP too has filed tariff petition. Fuel adjustment on quarterly basis.
State regulator empowered to carry out suo moto tariff hike.
State government (50%) and lenders (50%) to recast debt of INR1.9t.
Conditions include (1) abolition of any gaps between revenue and cost, (2)
annual tariff revision, (3) audit of books, (4) reduction in T&D losses, etc.
Central government support of INR240b for debt to be assumed by state.
Incentive-based scheme for T&D loss reduction.
Higher availability at lower rates given sizable capacity addition.
ST power procurement monitored and now through bids only.
Cap on ST procurement as also regulatory approval.
OUR VIEW: Positive

Impact of above measures
DISCOMs would have higher cash inflows through tariff, while moratorium would
provide cushion in cash outflows, which would drive growth in power demand.
Lenders relatively secured now, as state government is made party to
restructuring - should start incremental disbursement/growth.
Kick-start investment in T&D sector, as reduction in AT&C losses is a precondition
to avail benefits.
(b) Fuel, PPA issues at the forefront; domestic production ramp-up is key;
new bid document to allow fuel cost pass-through
Shortfall in meeting capacity addition beyond FY10
FSA Qty
Cumulative Requirement
CIL's total
OLD FSA
Quantity
@ 80%
supply
Comm.#
FY10
24
24
19
298
274
FY11
25
49
39
304
274
FY12
72
121
97
312
274
FY13E
40
161
128
347
274
FY14E
44
205
164
377
274
FY15E
47
252
201
407
274
#Assumed old FSA will be given coal only up to 90% ACQ levels till FY09.
assuming 65% domestic supply and 15% import for 80% trigger level are
October 2012
Supply to
Shortfall
new FSA
24
0
30
-9
38
-59
73
-55
103
-61
133
-68
* Calculated
sacrosanct numbers
A16
PPA review sought

Developer
Adani Power
JSW Energy
Tata Power
Cap (MW)
1,000
300
4,000
Reliance Power
4,000
Lanco Infratech
Jaiprakash Power
600
1,000
Remarks
GUVNL PPA signed at INR2.39/unit is proposed to be reviewed
PPA with MSEDCL under contest, given change in Indonesian laws
Mundra UMPP tariff review sought; INR0.67/unit increase on levelized
tariff bid of INR2.26/unit
Krishnapatnam UMPP progress halted due to Indonesia price
regulation
Amarkantak project PPA in dispute with state over cost, tariff cap, etc
Karcham Wangtoo project PPA under review due to cost escalation
Key measures taken to address issues

Particulars
Coal production
PPAs
Remarks
CEPI and No-Go hurdle removed
Rake availability enhanced
Greater focus on captive coal development
Mandate to sign FSA to bring accountability
Review taken up for discussion at various levels
Auditor General's view sought - PPA can be reviewed
New bid document under preparation - bid on capacity charge ONLY, fuel cost
pass-through
OUR VIEW: Steps in right direction; would watch for milestone/

improvement
Impact of above measures
Coal India's production has begun to look up - production/dispatches up 7.6%/
6.2% YTD FY13 v/s near-zero growth in FY12. Domestic coal supply improvement
to enable low cost power availability to DISCOMs.
Coal price pooling would be inevitable to tide over domestic shortfall through
imports - states' consent crucial.
New projects would have significantly lower risk, as developers bid on capacity
charge and fuel cost pass-through - an important enabler to kick-start investment
process.
Captive coal block development now being monitored and developers made
accountable; several instances of de-allocation, forfeiture of bank guarantees.
#2 Metals & Mining
Huge investments stuck; will require close monitoring

Metals & Mining is another sector that will require close monitoring to restart the
investment cycle. The huge investments made by various companies are stuck at
different levels. Various projects of Vedanta, Hindalco, JSPL, JSW Steel, Tata Steel, etc
still face delays because of issues relating to land acquisition, mining clearances,
availability of water, etc. These issues are yet to be addressed in the current wave of
reforms. Vedanta has served notice for its closure, as it is unable to source bauxite
despite proximity to mines in Odisha and has already run losses of INR25b. Operating
assets are closing down and projects are getting delayed.
October 2012
A17
The following examples highlight the deteriorating state of investments

Economic activity/Projects
Mahan 359ktpa smelter
and 900MW CPP
Issues
Coal block was allocated in JV with Essar Energy
in 2006. Production was expected to start in
2009. The Mahan Coal Block was declared in
no-go area in 2010. EGOM gave the coal block
stage-I forest clearance in May 2012.
Mining ban in Goa
Iron ore mining in Goa is largely meant for

exports. The low grade ore can be used after
blending it with high grade ore. High cost of
logistics makes it unviable for Indian steel
producers. Ineffective administration was
unable to check illegal mining. The Shah
Commission
report
made
numerous
allegations. Clueless state and central
governments put a blanket ban on mining,
impacting even the disciplined players.
JSPL's 1.6mtpa steel expansion in Angul
involves a coal gasification based DRI plant.
The Utkal B1 coal mine is essential for the
profitability of the project.
JSPL, Angul
(Greenfield project)
#3 Financials
Current status
INR86b has already been spent from the total
INR107b. Without stage-I approval, production
is not expected in the next two years. The
project NPV is negative without captive coal
block. There is no further communication by
the government on coal block clearance since
May 2012.
The Goa government temporarily suspended
all mining operations in the state in
September. In a tug of war between the state
and the center, the MoEF later suspended
environmental clearances for iron ore mines.
This has complicated the matter further for
restart of mining in the state.
JSPL is yet to sign mining lease despite most

approvals in place for the last one year. The
issue keeps moving between the state and
central governments, as officials are reluctant
to take any action in light of the controversy
over various mine allotments. The mantra
seems to be "no decision is a good decision".
Loan growth moderating; economic revival will ease asset quality concerns
Dearth of deployment opportunities leading to moderation in loan growth: Given the
backdrop of slowing economic growth, policy logjam and issues related to documental
clearances, corporate capital spending has slowed down significantly. CMIE data
indicates that new project investments in FY12 have declined 35% and are lower than
in FY07. The deceleration continued in 1HFY13 as well, with new investments declining
by as much as 50% YoY. This has also translated into moderate loan growth, with
deceleration in key sectors like Infrastructure (especially Power), Metals and Services.
Incremental loan growth decelerating (INR b)
Added
Revi ved
Shel ved
Del eted
On a quarterly basis, incremental loans decelerated in FY12

except in 4Q and the trend of deceleration continues in FY13
FY08
FY09
FY10
FY11
2,000
October 2012
Jul-12
Sep-12
Mar-12
May-12
Jan-12
Nov-11
Sep-11
Jul-11
Mar-11
May-11
Jan-11
Nov-10
Sep-10
Jul-10
May-10
Mar-10
1Q
2Q
1,211
1,066
1,499
-87
437
256
4,000
1,109
1,454
791
171
605
56
6,000
1,634
1,461
561
8,000
3Q
FY12
FY13
2,154
1,124
2,202
1,767
3,279
Quarterly project additions in the quarter ended September

2012 lowest since June 2004
3,401
2,170
New project additions slowing down
4Q
A18
Loan growth has moderated across key segments (%)
Loans
Industry
within which
Infrastrcuture
Of which Power
Of which Telecom
Of which Roads and Ports
Metals
Textiles
Services
Real Estate
NBFCs
Personal Loans
Housing Loans
Agriculture
* till August 2012: annualized
YoY Growth
Mar-10 Mar-11 Mar-12
16.6
20.8
17.2
24.4
23.6
21.3
Mar-09
17.8
20.9
31.5
30.9
31.5
36.5
19.7
6.5
18.3
48.4
31.3
10.1
9.3
23.8
40.7
50.9
18.0
56.3
26.5
18.2
12.5
-0.3
14.8
4.1
7.7
22.9
38.6
43.3
69.2
25.8
28.8
19.2
23.9
21.4
54.8
17.0
15.0
10.6
Incremental Contribution
Mar-09 Mar-10 Mar-11 Mar-12
100.0
100.0
100.0
100.0
45.6
58.4
48.1
53.9
YTD*
4.4
2.4
17.6
22.2
-6.8
23.6
21.8
10.4
14.7
7.8
26.3
12.1
12.1
13.5
9.8
19.3
-13.6
13.9
12.7
-5.6
-0.3
-9.6
20.3
13.6
18.7
2.1
16.1
7.3
3.0
3.1
5.3
1.6
24.9
7.5
5.9
12.9
5.9
16.2
24.9
14.4
2.1
6.0
7.8
4.2
18.3
-0.1
3.3
5.3
4.9
17.6
22.8
12.7
6.4
3.0
7.3
3.6
27.1
3.1
9.7
15.5
7.0
6.9
14.4
9.3
-1.1
3.4
7.1
2.4
20.6
1.4
7.2
13.0
6.5
9.7
YTD*
100.0
24.3
31.4
32.8
-6.5
8.2
16.8
-4.6
-1.9
-6.0
23.2
53.9
37.3
5.8
Cost of funds in the system needs to be lowered: With inflation being relatively sticky
and above comfort zone, RBI has refrained from aggressive cuts in repo rate. Headline
interest rates have remained at an elevated level. This is also reflected in higher term
deposit cost (+160bp YoY) for banks under our coverage. Coupled with sharp fall in
incremental CASA ratio (especially due to decline in CA deposits), cost of funds for
the banking system has gone up significantly. With the current growth-inflation
dynamics and government actions being pro-growth, it is important for interest rates
in the system to go down to boost the improving sentiment.
Incremental CASA ratio lowest
in a decade (%)
Nega ti ve Carry on CRR
10.0
8.5
7.0
5.5
4.0
26
1922
16
13
29
54
4750
43
40
3336
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
7.5
8.0
FY12
FY11
FY10
FY09
FY08
FY07
6 9
0 3
FY06
FY11
19.5
FY10
FY09
FY08
FY07
FY06
FY05
23.2
FY05
29.9
36.1
34.2
FY04
37.6
FY04
Cos t of Depos i ts
Cos t of Term Depos i ts
Repo Rate
50.3
44.8
FY12
48.3
Reduction in CRR to bring down negative

carry by 3-4bps
Cost of deposits has increased (%)
Repo rate/CRR cut would help the cause: Under the current base rate regime, for
lending rate to decline, it becomes imperative for cost of funds to go down first.
However, with repo rate at the current level of 8%, it is unlikely that term deposit
rates (blended rate at ~8% v/s 6.5% in FY11; implies that cost of incremental term
deposits is even higher) would decline. Hence, RBI action in the form of reduction in
repo rate and CRR is warranted, which could ease pressure on systemic interest rates
and in-turn, a gradual decline in lending rates as well. Government action along with
supportive actions by the RBI is a must to combat the slowdown in the economy.
October 2012
A19
How did we derive incremental

cost of deposits (including
negative carry) of 8.7%?
Incremental SA ratio of
20% and CA ratio of 0%
(due to sharp moderation
in corporate profitability
and
better
treasury
management).
Thus
weighted average CASA
cost stood at 0.4%
Share of retail term
deposits
in
overall
deposits at 60% and cost
of deposits at 9%, thus
weighted average cost of
deposits at 5.4%
Share of bulk deposits at
20% with the cost of
deposits at 9.8%, thus
weighted average cost of
deposits at 1.96%
Negative carry on account
of CRR (50bp) and SLR (at
8% Yield on Investments
at 10bp)
Incremental cost of fund have increased in the system
2.0
0.5
0.8
0.1
8.7
5.4
Reta i l TD Cos t
-ve Ca rry on
SLR
-ve Ca rry on
CRR
CASA Cos t
Bul k Dep. Cos t
Incr. Cos t of
Dep.
Stress loans ex-AI and SEBs have increased 110bp v/s reported increase of 280bp:
Stress loans for state-owned banks (MOSL coverage) have increased to 7.7% in 1QFY13
as compared to 4.9% in FY11. However, it is important to note that restructuring of SEB
and Air India (state-owned entities) loans constituted bulk of the stress loans (1.7%),
excluding which the increase would have been 110bp. The stated stress loans appear
higher even on account of loans restructured prior to FY10 (2.1% of loan book), which
would be eligible for removal from the restructured loan category if the Mahapatra
Committee recommendations on restructuring are approved in the current form.
Stress loans would decline significantly to 3.8% (ex-AI and SEBs) as against headline
numbers of 7.7% (6% ex-AI and SEBs).
SEB and AI forms bulk of new restructer loans

( %)
NNPA
OSRL
Of which AI and SEB
Of Prior to FY10
OSRL ex AI and SEB
Stress loans
Stress Loans ex AI and SEB
Stress Loans ex AI and SEB and
loans restructured prior to FY10
1QFY11
1.1
4.2
4.2
5.3
5.3
-
2QFY11
1.1
4.1
4.1
5.2
5.2
-
3QFY11
1.1
4.0
4.0
5.1
5.1
-
4QFY11
1.1
3.8
3.8
4.9
4.9
-
1QFY12
1.2
3.8
3.8
4.9
4.9
-
2QFY12
1.5
3.8
3.8
5.3
5.3
-
3QFY12
1.6
4.1
0.1
4.0
5.7
5.6
-
4QFY12
1.5
5.3
1.2
2.1
4.2
6.8
5.6
3.5
1QFY13
1.8
6.0
1.7
2.1
4.2
7.7
6.0
3.8
Growth revival will assuage asset quality concerns: The key feature of the current
economic slowdown is that it is particularly severe for the industrial sector. IIP growth
decelerated to 3.1% in FY12 and is expected to decelerate to sub-2% in FY13. This is
important from the Banking sector's perspective because the industrial sector accounts
for ~45% of bank loans and improvement in economic growth could help assuage a lot
of asset quality issues. Within Industry, we note that the proportion Power sector
loans has increased to 7.5% in FY12 as against 4.2% in FY08. There could be increased
stress in Power sector loans. However, the silver lining of the government's serious
intent to improve the health of SEBs and resolve issues relating to the Power sector
could be a big boost to the health of banks.
October 2012
A20
#4 Telecom
Spectrum pricing and allocation, conducive M&A policy critical

Over FY07-12, private telecom operators invested ~USD60b, including the outlay for 3G
and BWA spectrum. Hypercompetition and lack of regulatory clarity has significantly
impacted the return ratios of all operators, with the challengers currently incurring
significant losses. Listed operators require an RPM increase of 12-64% to reach even the
base RoCE level of 12%. Further investments in the sector have been curtailed due to
low returns and lower availability of funding due to stressed balance sheets of most
operators. Investment activity is unlikely to resume, unless balance sheets get repaired.
RPM increase required to reach 12% RoCE (FY13 basis)
Bharti (India & SA)
Avg Capital Employed (INRb)
783
EBIT for 12% ROCE (INRb)
140
Wirelss traffic (b min)
997
Wireless revenue (INRb)
444
EBIT (INRb)
75
Wireless RPM (INR)
0.43
Incremental EBIT required (INRb)
66
Incremental revenue required (INRb)
82
Incremental RPM required (INR)
0.08
Wireless RPM required (INR)
0.51
% increase required
19
Idea
272
49
556
231
26
0.41
22
28
0.05
0.46
12
RCom
692
124
426
185
29
0.43
95
119
0.28
0.71
64
Some of the initiatives that the government can take to restore financial health of the
sector are:
1) Clear policy on spectrum pricing and allocation, with visibility on roadmap for all
spectrum blocks to be made available in the future
2) Putting all available spectrum to auction upfront rather than creating artificial
scarcity by putting limited amounts for auction
3) Conducive M&A policy which can support transfer of spectrum from inefficient
operators to efficient ones
4) Negotiation-based settlement on 3G intra-circle roaming and Vodafone tax case
5) Removal of policy overhangs like spectrum re-farming that might result in
significant operational disruption as well as financial burden for the industry
#5 Oil & Gas
Rational product pricing, gas reforms imperative

Petroleum product under-recoveries have been continuously rising in the last few
years, led by increasing oil prices and a depreciating rupee. Gross under-recoveries
for FY13 are likely to be at a new high of INR1.6t v/s INR1.4t in FY12. However, with oil
price at ~USD110/bbl and the rupee appreciating, the outlook for the sector appears
better. More importantly, over the years, the Indian economy has acquired increased
resilience to high oil prices and high under-recoveries. If the average oil price were to
remain at USD105-110/bbl in FY13/FY14, the import bill as well as subsidy estimate as
a percentage of GDP would be well below FY09 levels, when oil prices had averaged
at USD85-90/bbl. Recent steps by the Indian government to hike diesel prices and
limit subsidized LPG cylinders are bold (though inevitable!), in our view. Further policy
follow-up by fast-tracking the implementation of subsidy through cash transfer is
positive.
October 2012
A21
120
9.0
FY14E
FY13E
FY12
FY11
FY10
FY09
FY08
FY07
-1.0
FY06
0
FY05
1.5
FY04
30
FY03
4.0
FY02
60
FY01
6.5
FY00
90
India's high oil dependence (~80%)

overshadows the increased resilience
of the Indian economy to high oil
prices and high under-recoveries.
Brent price of USD110/bbl now
India's net oil import bill and
government subsidy burden as a
percentage of GDP
is similar to Brent at USD85-90/bbl
in FY09
Oil imports & subsidy

(% to GDP)
Brent Crude Pri ce (USD/bbl ) - LHS

Net petrol eum i mports (% to GDP)
Petrol eum Subs i dy (% to GDP)
FY99
Brend Oil price (USD/BL)
Oil @ USD110 now is oil @ USD85-90 in FY09
Model diesel price hike of INR2/liter in FY14, exchange rate of INR54/52/USD for FY13/14
Rational petroleum product prices imperative for healthy economic growth:

Controlling (under-pricing) petroleum products not only results in inefficiencies such
as (i) substitution of low value products (e.g. fixed price diesel replacing marketpriced fuel oil), and (ii) adulteration, but also impacts (a) India's energy security, (b)
financial health of oil companies (increased debt, reduced profitability), and (c)
government finances (high fiscal deficit). If India's GDP were to grow by 9%, energy
consumption would grow by 6-7%. Rational energy prices are necessary for healthy
economic growth. They would also incentivize domestic producers to increase their
production.
Under-recoveries and their sharing (INR b) Sensitivity of under-recoveries to oil price/exchange rate (INR b)
695
1,000
426
508
FY08 FY09 FY10 FY11 FY12 FY13EFY14E
500
-600
100*
709
888
1,068
1,247
1,426
105*
921
1,109
1,297
1,485
1,673
110*
1,134
1,330
1,526
1,722
1,919
120*
1,558
1,771
1,985
2,198
2,411
0
FY14E
375
144
573 610
347 458 316 405
600
FY12
461
80* 90*
50 191 296
52 216 447
54 242 609
56 296 772
58 441 934
Brent (USD/bbl)*
Fx Rate (INR /USD
968
FY13E
812
1,500
FY11
575
780
2,000
1,200
FY10
773
1,203
FY09
1,033
1,800
1,577
Gross Under recoveries (INRb)
OMC's s ha ring
Oi l Bonds /Ca s h
Ups trea m
Tota l
FY08
Auto Fuel s
Domes ti c Fuel s
Total
1,385
Recent policy actions are positive
October 2012
The recent Kelkar Committee report had recommended immediate price hikes
and had also provided a roadmap of policy goals to reduce under-recoveries.
Diesel: Aim to eliminate half the diesel subsidy per unit in FY13 and the
remaining half over FY14.
LPG: To eliminate LPG subsidy by FY15 by reducing it by 25% by FY13, with the
remaining 75% over the next two years.
Kerosene: To reduce the subsidy by one-third by FY15.
A22
Though government has been largely aware of the path required to reduce underrecoveries and in turn the subsidy burden, it has not been able to follow a clear
roadmap. Nevertheless, despite all the political constraints, the government has
in part put itself on a path to reduce under-recoveries. Few of its steps include:
Decontrol of petrol prices (with small hiccups, petrol is now largely
deregulated).
Limiting of subsidized LPG cylinders (real impact would be seen over the
medium term).
Subsidy by cash transfer to beneficiaries' accounts (reduce leakages and subsidy
through direct targeting). For instance, a study by NCAER indicates that ~40%
of the PDS kerosene is diverted for non-PDS use.
Gas price reforms to boost domestic production: Domestic gas price has been
historically controlled by the government. Against the price of imported gas at USD11/
mmbtu, domestic gas price is limited at USD4.2-5.7/mmbtu. The last hike in
administered gas price was in June 2011, post KG-D6 gas pricing. With domestic gas
prices at a significant discount to imported gas prices, there is little incentive for
upstream companies to invest at the fixed gas price of USD4.2/mmbtu. Also, the
breakeven price for new deepwater discoveries in the country is pegged at USD5-6/
mmbtu.
While there is no clear policy roadmap to increase or rationalize domestic gas price,
we expect the next price revision to take place in sync with the scheduled price
revision for KG-D6 gas in March 2014 or earlier in view of declining KG-D6 production
and dire need for gas in India. Though it would be difficult to estimate the likely price
revision, it is easy to identify the beneficiaries. Higher gas price is likely to facilitate
the development of RIL's discoveries in KG-D6 and NEC-25, but from the earnings
perspective, we believe ONGC will be the largest beneficiary.
ONGC's EPS is more sensitive to increase in gas price than RIL's

Gas Price (USD/mmbtu)
4.2
6.0
7.0
8.0
9.0
Exchange rate (INR/USD)
55.0
55.0
55.0
55.0
55.0
Gas Price (INR/mscm)
8,085
11,550
13,475
15,400
17,325
ONGC - FY14 basis
Standalone gas sales (mmscmd)
53
53
53
53
53
Standalone gas sales (bcm)
19
19
19
19
19
Incremental PBT (INRb) - cumulative
67
104
141
178
Incremental PAT (INRb) - cumulative*
45
70
95
119
Incremental EPS (INR/sh) - cumulative
33.4
5.2
8.1
11.1
14.0
% increase over base FY14 EPS
16
24
33
42
RIL - FY14 basis; 60% stake in KG-D6
Gas production (mmscmd)
25.0
25.0
25.0
25.0
25.0
Gas production (bcm)
9.1
9.1
9.1
9.1
9.1
Incremental PBT (INRb) - cumulative
19
30
40
51
Incremental PAT (INRb) - cumulative**
15
24
32
40
Incremental EPS (INR/sh) - cumulative
69.7
5.2
8.1
10.9
13.8
% increase over base FY14 EPS
7
12
16
20
* Full tax rate assumed; **tax rate of 20% assumed; Sensitivity would be in favor of RIL if its
production increases beyond 40mmscmd
October 2012
A23
#6 Infrastructure
Creating conducive environment for large scale development

Infrastructure spending in India was targeted at USD500b (7.5% of GDP) under the
11th Plan, up from USD227b in the 10th Plan (5% of GDP). The initial estimate for the
12th Plan suggested infrastructure spending at USD1t, representing 9% of GDP. The
share of the private sector was expected to increase from 24% in the 10th Plan to
36.2% in the 11th Plan and to 51% in the 12th Plan. This, in our view, is difficult, with
several policy/regulatory hindrances, lack of established models for PPP framework,
lack of initiatives to establish long-term funding for the sector, etc. Except for the
Roads sector, other major areas of infrastructure are languishing. In Roads too,
developers, particularly those that bid aggressively, are witnessing financial crunch.
#7 Mega projects
DFC, railways, urban transport can accelerate investment spend

Take-off of large public expenditure projects (like DFC, railways, urban transport, etc)
has become important at the current juncture. In this context, the ruling coalition
regaining control over the Railway Ministry (contributing ~12% of the infrastructure
spending in 12th Plan) raises hopes of an accelerated spending program.
Urban infrastructure development is now becoming an important priority, given
the haphazard urbanization in various cities. There are 30 cities in India with a
population of over 2m each, and according to the Planning Commission, these
cities might implement Metro Rail at some stage or the other. There are 14 cities
with a population of over 3m each and 7 cities with a population of over 5m each.
Several of these cities are actively planning Metro Rail. Delhi has completed its
Metro Rail project, while Bangalore has opened a section. Metro Rail projects are
under construction in Chennai, Kolkata, Mumbai, Jaipur and Hyderabad. During
the 12th Plan (FY13-17), the Working Group of Urban Transportation estimates
investments in Metro Rail projects at INR1.3t.
Capacity addition in transport infrastructure (particularly railways) since
independence has been woefully inadequate. The railway route kilometers have
increased at a CAGR of 0.3% and running track kilometers at a CAGR of 0.7%. In
comparison, net ton kilometers have increased at a CAGR of 4.5%. This has led to
massive pressure on the existing infrastructure, and the accumulated deficiencies
are acting as key growth bottlenecks for several segments. Coal availability to
power projects has been impacted, given the evacuation constraints, though Coal
India continues to carry a large inventory of 60m tons. There is an urgent need to
address the logistics issue, given that a large part of India's mineral resources is
located in the eastern states of Jharkhand, Chhattisgarh and Orissa, while western
and southern India are the major consumption and industrial centers. Indian
Railways has planned a steep increase in spending in the 12th Plan to INR5t+ v/s
~INR2.2t in the 11th Plan, but funding remains a key challenge.
The Dedicated Freight Corridor (DFC) is an important project that attempts to
partly correct the under-investment in railway infrastructure, and we expect
project awards to commence in FY13. The project is being funded by multilateral
agencies from Japan and World Bank. Hence, funding is not expected to be a
major challenge. We believe that the DFC combined with the Delhi Mumbai
Industrial Corridor will have a meaningful multiple effects on the economy.
October 2012
A24
FY14 Earnings Early signs of a rebound in earnings growth

Sensex EPS growth reverts to LPA of 15%; Earnings downgrades bottoming out
Expect FY14 earnings growth of 14%
Sensex EPS growth has reverted to LPA of 15%
Is FY14 the beginning of a new earnings cycle? There are some early signs:
#1 Earnings downgrade cycle has bottomed out
#2 Our FY14 assumptions far from aggressive
#3 FY14 earnings mix is less vulnerable than that of FY13 initial estimates
#4 More stocks have a bias for earnings upgrade than downgrade
Expect FY14 earnings growth of 14%

Our bottom-up estimates for the MOSL universe of companies (ex RMs) suggests FY14
sales growth of 8%, EBITDA growth of 15% and PAT growth of 14%. This growth is
driven mainly by
1. Bounceback in sectors which were affected in FY13 (Auto, Telecom); and
2. Steady growth in secular sectors (Consumer, Healthcare, Financials) offsetting
low growth in specific sectors like Oil & Gas, Technology and Capital Goods.
Annual Performance - MOSL Universe
Sector
FY13E
Sales (INR B)
FY14E
CH.
(%) #
CH.
(%) @
FY13E
EBIDTA (INR B)
FY14E
CH.
(%) #
CH.
(%) @
High PAT Growth YoY

5,309 5,989
14
13
952 1,114
9
Telecom (4)
1,264 1,386
11
10
376
423
4
Retail (4)
281
328
17
17
27
32
18
Real Estate (11)
232
294
3
26
95
123
2
Auto (5)
3,532 3,981
16
13
454
537
14
Medium PAT Growth YoY
8,408 9,308
8
11
2,923 3,436
12
Media (5)
112
128
11
14
36
41
10
Health Care (17)
880
966
19
10
205
223
17
Others (4)
173
192
10
11
34
39
6
Consumer (12)
1,175 1,360
17
16
247
292
21
Metals (10)
3,962 4,179
1
5
717
844
3
Financials (27)
2,106 2,482
14
18
1,685 1,997
14
NBFC (8)
272
323
23
19
265
315
21
Private Banks (8)
484
583
21
20
410
499
22
PSU Banks (11)
1,350 1,576
10
17
1,010 1,184
10
Low PAT Growth YoY
14,216 14,807
15
4 2,695 2,984
8
Cement (8)
963
1,104
13
15
228
260
20
Utilities (10)
2,185 2,413
15
10
621
726
19
Technology (6)
1,864 2,083
23
12
468
503
22
Excl. RMs (10)
7,546 7,422
14
-2
1,166 1,275
-2
Oil & Gas (13)
16,160 16,193
11
0 1,421 1,577
-2
Capital Goods (9)
1,659 1,785
9
8
212
222
2
MOSL (145)
36,547 38,875
11
6 6,824 7,837
9
27,933 30,104
13
8 6,570 7,534
10
Sensex (30)
9,740 10,314
13
6 1,902 2,160
9
Nifty (50)
10,978 11,605
11
6 2,183 2,474
10
*Growth FY12 over FY11; # Growth FY13 over FY12; @ Growth FY14 over FY13. For Banks
Operating Profits; Note: Sensex & Nifty Numbers are Free Float
October 2012
FY13E
PAT (INR B)
FY14E
CH.
(%) #
CH.
(%) @
17
324
420
-6
30
12
48
73
-23
50
21
10
14
18
32
30
46
60
-1
30
18
219
274
-4
25
18 1,583 1,865
14
18
17
17
20
15
20
8
127
152
22
20
16
19
22
4
19
18
166
198
20
19
18
381
451
4
18
19
874
1,022
16
17
19
176
209
19
19
22
248
294
20
18
17
449
519
14
16
11 1,675 1,800
9
7
14
118
134
19
13
17
384
428
10
11
7
352
382
23
8
9
677
712
4
5
11
761
810
-4
7
5
144
146
1
1
15 3,666 4,184
8
14
15 3,583 4,085
10
14
14 1,039
1187
10
14
13 1,199
1363
11
14
: Sales = Net Interest Income, EBIDTA =
A25
Sensex EPS growth has reverted to LPA of 15%

For the 5 years ending FY13, Sensex EPS CAGR has been muted at 8%. However, it
becomes more interesting when seen from a longer term perspective. Indias longperiod average (LPA) earnings growth is 15%. However, the last 20 years earnings can
be bracketed into 4 distinct cycles of 5 years each as shown below.
Sensex EPS trend: Distinct boom-bust cycles
4
1,395
FY93-13: 15% CAGR
FY08-12: 8% CAGR
1,024
FY03-08: 25% CAGR

718
1,221
834
FY14E
FY13E
FY10
FY09
FY08
523
FY07
450
FY06
FY04
272
FY03
216 236
FY02
280
FY01
278
FY00
FY97
291
FY99
266
FY98
250
FY96
FY95
FY94
FY93
81
129 181
348
FY05
FY98-03: -1% CAGR
FY93-98: 29% CAGR
833 820
1,125
FY12
FY11
Is FY14 the beginning of a new earnings cycle?

Post Cycle 3 i.e. the FY03-08 boom, the 15-year Sensex EPS CAGR scaled up to 17%.
However, the slowdown since then has caused the same to revert to the LPA of 15%.
Now, our bottom-up earnings estimates for Sensex companies suggest FY14 Sensex
EPS growth of 14%, close to the LPA. The key question: Is FY14 the beginning of a new
earnings cycle?
A definitive yes or no is tough, given the high level of global and domestic uncertainty
on several macroeconomic and business variables resolution of Eurozone crisis,
GDP growth (both global and for India), commodity prices especially oil, exchange
rate, etc. Still, we believe that there are a few early signs that this is a distinct
possibility:
1. Earnings downgrade cycle has bottomed out
2. Our FY14 assumptions are far from aggressive
3. FY14 earnings mix is less vulnerable than that of FY13 initial estimates
4. More stocks have a bias for earnings upgrade than downgrade.
Early sign #1 Earnings downgrade cycle has bottomed out

We introduced our FY13 estimates in December 2010 when bottom-up aggregation of
Sensex companies PAT suggested FY13 EPS of 1,492. Since then, a combination of
global headwinds (mainly sovereign debt crisis in Eurozone) and domestic politicoeconomic logjam has led to an 18% downgrade in Sensex EPS to 1,218 currently.
October 2012
A26
However, the pace of downgrade has slowed down considerably. In the last 9 months,
Sensex EPS downgrade is less than 4%, and in the last 3 months, there is actually a
miniscule upgrade. Equally important, if not more, FY14 earnings estimates have not
seen any meaningful downgrade in the last 6 months. Clearly, the last two quarters
are some evidence of a possible end to the earnings downgrade cycle.
Earnings downgrade cycle seems to have bottomed out for FY13
FY13 EPS (INR)
FY13 EPS Growth YoY (%)
15% downgrade in the first 12 months

1,492
1,471
18
18
Dec 10
Ma r 11
1,397
1,337
18
17
Jun 11
New
Seri es
Sep 11
and also FY14
Less than 4% downgrade

in last 9 months
1,267
1,259
14
14
Dec 11
New
Seri es
FY14 EPS (INR)
Ma r 12
1,218
1,221
June 12
Sep 12
FY14 EPS YoY (%)
1,431
1,387
1,395
14
14
14
Mar 12
June 12
Sep 12
Bharti, Reliance and Tata Steel led the downgrade of FY13 Sensex EPS
18
-16
-17
-18
-18
-19
-20
-21
-43
RIL
Tata
Steel
JSPL
NTPC
BHEL
SBI
Sterlite
ONGC
L&T
Maruti
TCS
Coal
India
Sensex EPS
(Dec-10)
-54
1,221
-64
-21
Sensex EPS
(Current)
-13
Others
(net)
35
Bharti
1,492
Early sign #2 Our FY14 assumptions far from aggressive

We believe most of our underlying assumptions for FY14 estimates are far from
aggressive, impacted by the current macroeconomic slowdown and weak business
sentiment. Thus, in most sectors, key operating metrics are assumed at the same
depressed levels of FY13 or lower e.g. Capital Goods order intake, Consumer revenue
growth, prices of most metals and oil, credit offtake, credit cost, wireless traffic,
power tariff, etc. The only metrics where some recovery is modeled in are Auto/
Cement volumes and USD revenue growth for Technology sector.
October 2012
A27
Key Operating Metrics / Assumptions

FY12A
Auto
2 Wheeler Volume Growth
12%
4 Wheeler Volume Growth
10%
CV Volume Growth
19%
Capital Goods
Avg order intake growth (%)
-26%
Cement
Volume Growth (%)
7.0
Price Change (INR/bag)
23.0
Consumer
Value Growth (%)
19.0
EBITDA Margins (%)
20.0
Financials
Credit Growth (%)
17.0
Credit cost (% of average loans) 0.9
Media
Ad Revenue Growth (%)
2
Metals
Steel (USD/ton)
863
Aluminium (USD/ton)
2,346
Copper (USD/ton)
8,501
Zinc (USD/ton)
2,121
Oil & Gas
Brent Oil Price (USD/bbl)
114.5
FY13E
FY14E
Remarks
3%
5%
8%
12%
15%
14%
21%
8%
Industrial capex, orders to remain sluggish on high cost of capital.
8.0
20.0
10.0
10.0
FY14 volumes to be driven by pre-election developmental activities,

as well as demand from individual housing.
17.0
21.0
16.0
21.0
Marginally revised the gross margin assumptions upward
16.0
1.0
16.0
1.0
Unchanged as investment climate is yet to improve

We continue to build higher credit cost in FY14
10
12
720
1,996
7,898
1,910
672
2,100
7,500
2,000
Domestic steel price assumptions lowered by 10%-15% given sluggish

demand, significant decline in RM prices and increased threat of
cheaper imports, especially from China.
No major change in Base metals assumptions.
110
105
High uncertainty in oil market fundamentals: demand growth (pegged

at 0.8mmbbl/d in 2012, 2013), geopolitics (Iran situation, US election).
OPEC (ex Iran) producing at historically high levels.
Unless meaningful closures happen. GRMs unlikely to rise above USD79/bbl. Global operating rates (ex of US) are likely to remain low led by
lower demand and commissioning of new refineries.
FY13 volume growth downgraded to 3%

Recovery in FY14 on low base (strike in Marutis Manesar plant)
M&HCV to grow -2.5%/+12% in FY13/FY14, LCVs 15%/15%.
Ad growth to recover in FY13 on a low base and improve in FY14
Singapore GRM (USD/bbl)
8.3
8.0
8.0
Technology
USD Rev. Growth (top-tier)
USD / INR
21%
48.2
12%
54.5
16%
53
Sluggish beginning to CY12 marred growth rates for FY13. Continued

budget spends albeit at a slower pace imply some pick up in growth in
FY14, though still not enough to match that in FY12
16
11
-0.9
-1.9
2.4
Wireless traffic growth to impacted by withdrawal of promotions and

lower subscriber additions
Pricing pressures to recede on corrective actions by the industry
3.5
66
4.0
67
4.0
67
Telecom
Wireless traffic growth (%)
RPM change (%)
Utilities
Merchant Power Rate
PLF
Early sign #3
Our assumptions for Utilities sector remain unchanged
FY14 earnings mix is less vulnerable than that of FY13 initial estimates
We compared the FY14 earnings mix with that of our initial FY13 initial estimates
(which saw sharp downgrades subsequently). We believe that the current earnings
mix has lower likelihood of major downgrades. Our key observations:
Earnings mix has marginally improved in favor of domestic plays over global plays.
More importantly, with both domestic and global plays, share of non-cyclicals has
increased. Thus, share of overall non-cyclical earnings has increased from 55% in
FY13IE (initial estimates in Dec-2010) to 60% for FY14E.
October 2012
A28
Within Domestic Non-cyclicals, the share of Telecom is lower in FY14E vis--vis

FY13IE, whereas share of Financials, Utilities and Consumer is higher.
Likewise, within Global cyclicals, share of volatile Oil & Gas and Metals is lower,
whereas share of Tata Motors (which has majorly turned around) is higher.
Finally, there is no chunky contributor to the build-up of Sensex EPS from 1,221
for FY13 to 1,395 for FY14. This, we believe, further reduces the risk of downgrade
due to adverse developments in 1-2 companies.
FY14 earnings mix suggests FY13 kind of downgrades unlikely to recur

MOSL Universe PAT mix (%)
FY13IE
FY13CE
FY14E
Sensex EPS mix (%)

FY13IE
FY13CE
FY14E
Domestic Plays
Domestic Non-cylical
Financials
Utilities
Auto Ex Tata Motors
Telecom
Consumer
Others
Domestic Cyclical
Capital Goods
Cement
Real Estate
Global Plays
Global Non-Cyclical
Technology
Health Care
Global Cyclical
Oil & Gas ex RMs
Metals
Tata Motors
57
47
24
9
4
4
4
3
10
5
3
2
43
12
9
3
32
18
11
3
54
45
24
11
3
1
5
1
9
4
3
1
46
13
10
4
33
19
11
3
55
47
25
10
3
2
5
1
9
4
3
2
45
13
9
4
32
17
11
3
48
41
16
11
6
4
4
6
6
52
14
12
2
39
24
11
4
48
43
18
13
5
1
5
5
5
52
16
14
3
36
23
7
5
49
44
19
13
6
2
5
4
4
51
16
13
3
35
22
8
6
Total Non-cyclical
Total Cylical
58
42
59
41
60
40
55
45
59
41
60
40
Total PAT (INR b)/Sensex EPS (INR)

3,934
3,583
4,085
1,492
1,221
Growth YoY (%)
17
10
14
18
9
IE - Initial Estimates; CE - Current Estimates; Note: Others Include Media, Retail
1,395
14
M&M
TCS
Maruti
Bharti
Bajaj Auto
L&T
NTPC
Reliance
Ind.
Reliance
HUL
-1 -3
1,395
-5
BHEL
JSPL
Infosys
11
14 12
16 14
20
22
ONGC
FY14 Sensex EPS build-up is well diversified

1
October 2012
FY14E EPS
Tata Power
GAIL
Cipla
Sun Pharma
Coal India
Wipro
Hero Moto
Dr Reddys
Sterlite Inds.
Hindalco
ITC
HDFC
ICICI Bank
SBI
HDFC Bank
Tata Steel
Tata Motors
FY13E EPS
1,221
A29
Early sign #4
More stocks have a bias for earnings upgrade than downgrade

As things stand, we believe more stocks in the Sensex are likely to see an upgrade in
their FY14 estimates, based on the impact of recently announced policy measures
and expected macroeconomic developments (e.g. rate cut). More importantly, the
stocks account for 48% of aggregate Sensex PAT v/s 24% of PAT for those with potential
downgrades. Also, stocks like Bharti, Tata Steel and BHEL could see a swing in either
direction depending on 1-2 key triggers playing out. Such stocks account for 6% of
Sensex PAT.
FY14 Sensex EPS: Favorable Upgrade-Downgrade equation
October 2012
Potential Upgrades
(48% of Sensex PAT)
Potential Downgrades
(24% of Sensex PAT
Potential swings either side

(6% of Sensex PAT)
Dr Reddy s Labs
ICICI Bank
Larsen & Toubro
Maruti Suzuki
NTPC
ONGC
Reliance Inds.
State Bank
Tata Motors
Coal India
Hero Motocorp
Infosys
JSPL
TCS
Bharti Airtel
BHEL
Tata Steel
A30
India Strategy | Fired Up?
Valuations and Model Portfolio

Indian markets have staged a strong comeback in September 2012 to end the quarter
with a gain of 8%. Our June quarter strategy report had focused on RAY OF HOPE as we
expected the changing political realignments to lead to some positive reforms. And
indeed, the Indian government, post the monsoon session of Parliament, has pursued
a hectic agenda of reforms to kickstart growth and infuse confidence among investors
and corporates.
Most of the measures announced till date have been largely confidence boosters.
However, the government needs to act now on 2 key issues: (1) Strong steps to curb
fiscal deficit, and (2) Re-starting the investment/capex cycle. Concrete actions on
both these fronts hold the key to further re-rating of the markets. Recent currency
appreciation will help ease inflation, and also enable RBI do its bit to stimulate growth.
Combined action of government and RBI could lead to upgrades in FY13 GDP growth
estimate (currently at 6.5%).
Our earnings estimates for FY13 and FY14 have been stable for the last 2 quarters. We
believe the downgrade cycle is now behind us. Recent government measures along
with more to come, monetary easing, and stable to declining commodities can drive
upgrades going forward. Valuations remain below historical averages (FY14 PE of 13.5x
v/s 10-year average of 14.8x). We see more upsides in markets from here.
Sensex PE (x): 12-month forward
27
Sensex PB (x): 12-month forward

4.8
24.6
4.2
3.9
22
10 Year Avg:
14.8x
17
14.3
12
3.0
2.4
10 Year Avg:
2.7x
2.1
10.7
7
1.6
Indian market Cap to GDP
82
95
83
10 Year Avg: 20.2%

17.2
Sep-12
Sep-11
Sep-10
Sep-08
Sep-07
Sep-06
Sep-05
Sep-04
Sep-03
Sep-09
15.8
Sep-02
FY13E
FY12
FY11
FY10
FY09
FY08
FY07
FY06
FY05
Sep-12
20.0
17.5
FY04
FY03
FY02
Sep-11
65
55
15.0
FY01
Sep-10
24.2
22.5
23
October 2012
Sep-09
Sep-08
Sep-07
Sep-06
Sep-05
Sep-04
25.0
89
70
Average of 62%
for the period 52
42
26
Sep-03
Sensex RoE (%)

103
26
Sep-02
Sep-12
Sep-11
Sep-10
Sep-09
Sep-08
Sep-07
Sep-06
Sep-05
Sep-04
Sep-03
Sep-02
1.2
A31
We make the following changes in our Model Portfolio for 2QFY13:

We marginally raise our weight in Financials through PSU Banks, and increase our
weight in Autos, and Infrastructure/related sectors
We cut weights in Technology, Consumer and Healthcare.
Our biggest Overweight is Infrastructure & related sectors, and our biggest
Underweight is Consumer.
We have further increased our exposure to mid-caps.
Sensex v/s Autos index
Sensex v/s Consumer index
Se nse x
130
B se Auto
145
Sen sex
Bs e Cons ume r
130
115
115
100
100
Sep-11
Sep-11
Oct-11
Nov-11
Dec-11
Dec-11
Jan-12
Feb-12
Mar-12
Mar-12
Apr-12
May-12
Jun-12
Jun-12
Jul-12
Aug-12
Sep-12
Sep-12
S ep-11
S ep-11
Oct-11
Nov-11
Dec-11
Dec-11
Jan-12
F eb-12
Mar-12
Mar-12
Apr-12
May-12
Jun-12
Jun-12
Jul-12
Aug-12
S ep-12
S ep-12
85
85
Sensex v/s BSE Mid-caps

Sen sex
Bs e Ba nke x
126
120
112
105
98
90
84
75
70
Sep-11
Sep-11
Oct-11
Nov-11
Dec-11
Dec-11
Jan-12
Feb-12
Mar-12
Mar-12
Apr-12
May-12
Jun-12
Jun-12
Jul-12
Aug-12
Sep-12
Sep-12
135
Financials
October 2012
Sens ex
Bs e Mi dcap
Sep-11
Sep-11
Oct-11
Nov-11
Dec-11
Dec-11
Jan-12
Feb-12
Mar-12
Mar-12
Apr-12
May-12
Jun-12
Jun-12
Jul-12
Aug-12
Sep-12
Sep-12
Sensex v/s Bankex
Financials: Biggest weight; ICICI Bank, SBI top picks

Financials remain the biggest weight in the Model Portfolio (in-line with the
benchmark) as recent policy measures by government and expected monetary easing
will lower asset quality pressures. We have raised our stance to Overweight as we
believe that credit costs have peaked and valuations will gain further.
ICICI Bank is our top bet in the sector. Re-rating of ICICI will be led by expansion in
RoEs over the next 2 years coupled with strong capital adequacy of above 10%.
Any release of capital in Insurance JV will be an added catalyst.
Among other private banks, we have kept our weights unchanged on HDFC Bank
and Yes Bank, despite strong gains in CY12. Fall in deposit rates and growing loan
book will drive earnings for the sector.
SBI remains our second biggest Overweight in Financials. Despite high slippages,
the bank has been able to show strong profits and improve RoE. As credit costs
peak in FY13, earnings upgrade cycle can be strong for SBI in FY14. Valuations are
attractive (FY14E P/B of 1.2x), and the stock could get re-rated in a falling interest
rate scenario.
A32
We retain Union Bank as we expect 22% EPS CAGR over FY12-14 (led by lower
credit costs) and improvement in RoE to 16.9%. Stock trades at 0.7x FY14 book and
offers dividend yield of 4%.
We have removed M&M Financial Services post a strong stock performance.
We have added LIC Housing (valuations now attractive at 1.8xP/B FY14, beneficiary
of fall in rates, and steady business growth).
Power Finance is another addition as SEB loan restructuring eases bad loan worries
and loan disbursements resume. The stock trades at 0.9x P/B FY14.
ICICI Bank P/B
Yes Bank P/B

P/B (x)
3.3
Avg(x)
Peak (x)
Mi n(x)
P/B (x)
6.0
Avg(x)
Pe ak(x)
Mi n(x)
4.8
2.9
2.6
1.9
4.5
1.8
1.7
1.2
3.0
2.2
1.5
0.7
0.5
2.1
0.5
SBI P/B
Sep-12
Mar-12
Sep-11
Mar-11
Sep-10
Mar-10
Sep-09
Mar-09
Sep-08
Mar-08
Sep-07
Sep-12
Mar-12
Sep-11
Mar-11
Sep-10
Mar-10
Sep-09
Mar-09
Sep-08
Mar-08
Sep-07
0.0
LIC HSF P/B

P/B (x)
2.6
Avg(x)
Peak (x)
Mi n(x)
2.3
P/B (x)
3.2
Avg(x)
Pe ak(x)
Mi n(x)
2.9
2.1
2.4
1.6
1.6
1.4
1.6
1.2
0.8
October 2012
Sep-10
Mar-10
Sep-09
Mar-09
Sep-08
Mar-08
Sep-07
S ep12
Mar12
S ep11
Mar11
S ep10
Mar10
S ep09
Mar09
S ep08
Mar08
S ep07
Infrastructure
Sep-12
0.5
0.0
Mar-12
0.6
Sep-11
0.8
Mar-11
1.1
2.0
Infrastructure & related: Biggest Overweight; add L&T, Jaiprakash, DLF

Last quarter, we had changed our stance on Infrastructure and related sectors from
Underweight to Overweight after several quarters. Now, we have added further
weight to the sector.
L&T remains the top stock (upgraded to Buy a quarter back) on the back of continued
strong order intake (led by Infrastructure and Overseas orders), excellent risk
management, expected stable margins, and management commitment to correct
capital structure.
We have added our exposure to Jaiprakash as the stock benefits from strong
cement realizations, de-leveraging of balance sheet, and fall in interest rate.
DLF is a new addition as it benefits from positive macro, improving operating

leverage and financial de-leveraging. Its favorable near-term market-mix and
product-mix offer high conviction on meaningful uptick in FY13 sales (we estimate
~INR60b v/s INR53b in FY12). Operating cash deficit to improve in FY13 to INR8.1b
(v/s INR20.4b in FY12) before breakeven in FY14. Our target price is INR286.
A33
L&T P/E
DLF P/B
P/E (x)
54
Avg(x)
Pe ak(x)
Mi n(x)
45.9
P/B (x)
10.5
Avg(x)
Peak (x)
8.8
8.0
36
Mi n(x)
5.5
18.1
P/E (x)
30
23.2
Avg
Peak (x)
17.5
18
10.4
Sep-12
Mar-12
Sep-11
Mar-11
Sep-10
Mar-10
Sep-09
Mar-09
Sep-08
Mar-08
Sep-07
Sep-12
Mar-12
Aug-11
Jan-11
Jul-10
Dec-09
May-09
Nov-08
Apr-08
14.6
12
LPA o f -2%
-32.4
Sep-07
Sep-12
24.7
5.1
-20
Mi n
24
20
October 2012
Mar-12
Infos ys P/E
Techno l ogy PE Rel ati ve to Se nse x PE (%)
Sep-11
Our stance on Technology remains Underweight with restricted exposure to Infosys

and HCL Tech.
Our FY14 USD revenue growth estimate across the top-tier is 15%, up from 10% in
FY13. However, signs of meaningful demand pick-up remain elusive, implying
downgrade risk to current volume estimates for FY14.
INR has appreciated to 51.75/USD, which could trigger a 4-8% downgrade in our
FY14 EPS estimates (currently based on INR53/USD).
Despite ~22% INR depreciation from 1QFY12 to 1QFY13, margins across the toptier hardly benefited, as the currency gains got reinvested in lower-margin
contracts and high-cost workforce onsite. As most of these investments are
irrevocable in nature, offsets to margin headwinds appear limited in an appreciating
currency environment. Margin sustainability is a key concern.
40
Oil & Gas
Mar-11
Sep-09
Mar-09
Sep-08
Mar-08
Sep-07
S ep-12
Mar-12
S ep-11
Mar-11
S ep-10
Mar-10
Mar-09
S ep-08
Mar-08
S ep-07
S ep-09
Technology: Remain Underweight; concerns on volumes, margins
Tech P/E relative to Sensex P/E
-40
1.4
0.9
0.5
Mar-10
10.1
0
Technology
2.5
3.0
Sep-10
22.2
18
Oil & Gas: Remain Underweight; cut Reliance, add ONGC

We remain Underweight on the Oil & Gas sector.
Expect RIL to deliver strong 2QFY13 earnings led by high GRMs; however, recent
refining margins have again turned weak. Core businesses remain volatile with
very limited upside potential. Upgrade in Reliance could come from hike in gas
prices, which remains an event risk. As the stock has delivered a strong return of
20% from the recent lows, we have cut our exposure.
A34
We have added exposure to ONGC at current levels. Recent policy actions of

diesel price hike/limiting subsidized cylinders, coupled with appreciating INR/
USD, augur well for ONGC as its subsidy burden reduces. Despite subsidy burden,
ONGC's RoE is at a respectable 18% level. The stock trades at P/E of 8.4x FY14 EPS
of INR33.4, attractive EV/BOE of 5.3x (1P basis; >40% discount to global peers),
and offers a dividend yield of 3.5%.
Oil & Gas Sector P/E
ONGC P/B
Oil & Gas Se ctor - PE
P/B (x)
3.7
Avg(x)
Pe ak(x)
Mi n(x)
23
20.4
3.1
2.8
17
LPA of 12.3x
1.9
2.0
1.5
10.0
Sep-12
Mar-12
Mar-10
Sep-09
Mar-09
Sep-08
Mar-08
Sep-07
Sep-12
Mar-12
Aug-11
Jan-11
Consumer: Biggest Underweight; valuations rich; ITC only exposure
Consumer
Jul-10
Dec-09
May-09
Nov-08
Apr-08
Sep-07
1.0
Sep-11
1.4
Mar-11
9.0
Sep-10
11
After a massive outperformance, Consumer sector now trades at historical high

valuations relative to the markets. We are Underweight on the sector due to slowing
demand growth led by weakening rural buoyancy. Our only exposure in the sector is
ITC (which is also an Underweight).
Consumer P/E relative to Sensex P/E
HUVR P/E
P/E (x)
Cons ume r PE Re l ati ve to Sen sex PE
Avg(x)
Pea k(x)
36
160
Mi n(x)
32.4
32.4
120
80
105
LPA of 50%
73
40
24.8
20
10
28
18.7
-40
Healthcare
October 2012
Sep-12
Mar-12
Sep-11
Mar-11
Sep-10
Mar-10
Sep-09
Mar-09
Sep-08
Mar-08
Sep-07
Sep-12
Mar-12
Aug-11
Jan-11
Jul-10
Dec-09
May-09
Nov-08
Apr-08
Sep-07
12
Healthcare: Cutting weight; hit by recent headwinds

We have reduced our weight on Healthcare, given recent headwinds of new drug
pricing policy, currency appreciation, and strong outperformance of the sector YTDCY12.
Our top bet in the sector is Dr Reddy's as we expect strong performance in FY13
leading to earnings upgrade; valuations remain attractive.
We continue to like Divi's as it benefits from its core abilities of good chemistry
skills coupled with strong customer relationships, leading to ramp-up in order
inflows. Strong order-backed capex and healthy guidance (25% topline growth for
FY13) are the key positives from a near-to-medium term perspective.
A35
Healthcare Sector P/E
Dr Reddy's P/E
He al thca re Sector PE (x)

33
P/E (x)
84
Avg(x)
Pea k(x)
30.0
77.2
64
26
20.6
LPA of 22.5x
19
Mi n(x)
Negative
Earnings Cycle
44
24.2
24
15.9
17.8
17.8
Sep12
Mar12
Sep11
Mar11
Sep10
Mar10
Sep09
Mar09
Sep08
Sep07
Sep12
Mar12
Aug11
Jan11
Jul10
Dec09
May09
Nov08
Apr08
Sep07
Autos
Mar08
12
Autos: Overweight; bet on Tata Motors, Maruti, Bajaj Auto

We raise our weight in Autos to Overweight in this quarter.
Tata Motors is our top bet in Autos and we have further raised our exposure to the
stock. JLR volumes will retain volume momentum (15%) and profitability. Domestic
volumes should see recovery in FY14. Strong FCF will further help the balance
sheet. Our target price of INR370 has over 40% upside.
Maruti is another top pick as it benefits from currency appreciation and stable
commodity prices including oil. Resolution of labor issues has led to stronger than
expected volumes recently, driving upgrades. We expect earnings to rebound in
FY14 with growth of14%. Our target price has 19% upside.
Within 2-wheelers, we prefer Bajaj Auto as FY14 volumes should grow 13% and
margins remain strong due to hedges at higher levels. Strong cash flow will drive
INR300/share cash on books and high dividends. The stock trades at P/E of 14x
FY14 EPS.
Autos Sector P/E
Maruti Cash P/E

Auto Se ctor PE (x)
35
Ca s h P/E (x)
Avg(x)
Pe ak(x)
Mi n(x)
18
14.9
29.2
27
14
LPA of 12x
10.9
11
9.2
10
10.3
6
6.1
Sep-12
Jan-11
Aug-11
Jun-10
Nov-09
Apr-09
Sep-08
Feb-08
Aug-07
Jan-07
Jun-06
Apr-05
Nov-05
Sep-04
Jul-03
Sep12
Mar12
Aug11
Jan11
Jul10
Dec09
May09
Nov08
Apr08
Sep07
October 2012
Feb-04
Utilities
4.4
Feb-12
19
Utilities: Cutting weight; remove Coal India on multiple concerns

We have cut our weight on Utilities as we remove Coal India from the portfolio.
For Coal India, lower international coal prices coupled with appreciating rupee
will impact PAT from market-linked e-auction sales (15%+ of volume, 40-45% at
PBT level). We see risk to our FY13/14E earnings, as current realizations are
marginally higher than FY12 average, and have a downside risk. Importantly, current
earnings already factor superior production/dispatch growth. Negative surprise
A36
could also come from implementation of MMDR Act. Valuations at 12x FY14E P/E
(downside risk to EPS of INR31) and 3.6x P/BV (RoE of 25%) limit potential upside.
NTPC remains our preferred bet as capacity addition delays are now getting
addressed and FY13-15 could see capacity addition of 4GW per annum v/s historic
average of 2GW. Over FY12-15, NTPC would add 15GW of commercial capacity,
which could drive FY14E EPS to ~INR14 FY14E (18 months from now). The stock is
trading attractive at 1.7x FY14E BV of INR103/share.
Utilities Sector P/B
NTPC P/B
Uti l i tie s Se ctor - PB
4.0
P/B (x)
4.3
Avg(x)
Pe ak(x)
Mi n(x)
3.7
3.7
3.6
3.3
LPA of 2.1x
2.5
1.8
2.8
1.6
1.7
2.3
2.1
1.7
1.5
1.0
Telecom
Sep-12
Mar-12
Sep-11
Mar-11
Sep-10
Mar-10
Sep-09
Mar-09
Sep-08
Mar-08
Telecom: Wait & watch; concerns, stock prices bottomed out;
We had cut our weight in Telecom last quarter and retain the lower weight. Pricing
seems to have bottomed-out given renewed industry attempts to raise tariffs and
lower promotions/discounting. Significant balance sheet stress, continued high level
of losses for challengers, and potential large payments towards spectrum should
prevent irrational competition. We await outcome of upcoming 2G spectrum auction
in November which could provide visibility on future competitive structure as well as
liability for spectrum payments. While stocks may have bottomed out, we would wait
for the earnings cycle to improve for any change in view.
Bharti EV/EBITDA
Idea EV/EBITDA
EV/EBDITA(x)
16.0
Sep-07
Sep-12
Mar-12
Aug-11
Jan-11
Jul-10
Dec-09
May-09
Nov-08
Apr-08
Sep-07
1.3
Pea k(x)
Avg(x)
Mi n(x)
EV/EBDITA(x)
Pea k(x)
Avg(x)
Mi n(x)
18.0
14.5
10.0
9.1
5.5
Mar-12
Sep-11
Mar-11
Sep-10
Mar-10
Sep-09
Mar-09
Sep-08
2.0
Mar-08
Sep-12
Mar-12
Sep-11
Mar-11
Sep-10
Mar-10
Sep-09
Mar-09
Sep-08
Mar-08
Sep-07
4.0
6.0
6.0
Sep-07
6.3
October 2012
8.6
10.0
6.1
7.0
16.9
14.0
Sep-12
13.0
A37
Metals
Metals: Underweight; but still like Hindalco, Sterlite
We are Underweight on Metals as we have negative outlook for steel stocks, while
base metal stocks still have to bear near-to-medium term pain of low returns on large
investment in greenfield aluminum projects in India. We believe that steel intensity
of the world is on decline once again after a decade of high growth. China, which was
the sole driver of demand, has already achieved high level of per capita steel
consumption vis-a-vis peak levels achieved by developed countries. Historically,
decline in world steel intensity has resulted in stock underperformance. We believe
that base metal stocks are better placed over steel stocks because (1) monetary
expansion (e.g. QE3) boosts LME prices, earnings and stock valuations, and (2) the
fundamentals of steel pricing are more dependent on return of high fixed assets.
We continue to like Hindalco because its conversion business provides 70% of
operating cash flows and is insulated from LME volatility. Investments in low RoI
aluminum greenfield projects in India have led to the stock's underperformance.
We believe current valuations already factor in most negatives. Strong spot
premium and LME have improved earnings outlook. Valuation at 1x P/B FY14E
adjusted for goodwill (RoE 18.5%) is attractive.
We have introduced Sterlite in the portfolio. Sterlite is likely to get re-rated as its
investment cycle is now behind and Hindustan Zinc's cash flows after minority
buy-out will de-stress the balance sheet of merged Sesa-Sterlite. Any visibility on
availability of bauxite in Odisha could be catalyst as well.
Hindalco P/B
Sterlite P/B
Avg(x)
Peak (x)
Mi n(x)
4.5
2.0
1.1
1.3
Mi n(x)
1.6
1.4
0.7
0.6
0.8
S ep-12
Mar-12
S ep-11
Mar-11
S ep-10
Mar-10
S ep-09
Mar-09
Sep-12
Mar-12
Sep-11
Mar-11
0.0
Sep-10
Sep-09
Mar-09
Sep-08
Mar-08
Sep-07
October 2012
Mar-10
0.6
0.1
Pe ak(x)
2.5
S ep-08
2.5
Avg(x)
2.4
Mar-08
3.7
P/B (x)
3.2
S ep-07
P/B (x)
4.9
A38
Our preferred mid-caps

Yes Bank [YES IN, Mkt Cap USD2.6b, CMP INR382]
Investment Argument
YES is effectively using the current phase of moderation in economic growth to
de-risk and de-bulk its balance sheet, expand its retail franchise, and improve risk
management systems. In the process, growth is expected to be lower than historical
levels, but liability mix is likely to improve.
Rapid branch expansion, acquisition of new customers and deepening of existing
customer relationships would ensure healthy growth across parameters. With
50% of the existing branches less than 18 months old, we expect strong productivity
gains to occur going forward.
Post deregulation of savings deposit rates, share of SA in overall deposits increased
to 6% v/s ~2% as on 1HFY12 and CASA ratio improved from 11% to 16.3%. We
expect CASA ratio to further improve to 18.6%/20.9% in FY13/14.
Asset quality of the bank remains one of the best in the industry with stress assets
merely 0.6% of the loan book.
12-month Outlook
As rates decline and liquidity improves, YES (being a wholesale borrower) would
be a key beneficiary on margins.
Healthy core income growth, control over opex, and healthy asset quality will
drive PAT growth of 28%.
CRAR stood at 16.5%, with tier-I ratio at 9.2%. We expect the bank to raise capital
over next 12 months, which will further be book accretive.
Key Risks
Deterioration in SME business outlook could increase YES's risk quotient.
Delay in capital raising could hurt growth prospects and expansion plans.
Valuations
We expect earnings CAGR of 25% over FY12-14. RoA/RoE are expected to be strong
at ~1.5%/23%+.
In an easy liquidity environment, the stock can see further re-rating from the
current P/B of 1.9x FY14E. Buy.
Union Bank [UNBK IN, Mkt Cap USD2.2b, CMP INR208]

Investment Argument
UNBK has been able to deliver impressive margins of 3%+ despite higher slippages
(which led to higher interest income reversal) and tight liquidity conditions (FY12
NIM was 3.2%, down just 10bp YoY). Management expects to maintain 3% margin
going forward led by fall in cost of funds and improvement in asset quality. Loan
CAGR is expected to be ~16% during FY12-14 which would lead to similar NII CAGR.
October 2012
A39
UNBK's fee income to average assets (ex income on forex transactions) at 40bp
remains low vis-a-vis peers. However, management's increased focus on the same
has started yielding results fee income growth has improved to 17% in 1QFY13
v/s 14% for FY12 and 4% in FY11. Continued traction in fee income can provide
cushion to earnings in case pressure on asset quality increases.
UNBK is highly leveraged to macroeconomic environment given the asset quality
pressure seen over past two years. As the situation improves and liquidity condition
eases, concerns over asset quality should abate, leading to re-rating of the stock.
12-month Outlook
Near-term challenges remain in terms of asset quality risks and higher asset
restructuring. However, we believe current valuations largely discount the same.
Of UNBK's total SEB exposure of INR110b, INR58b is towards healthy SEBs and
INR34b has already been restructured. As per the recent SEB debt restructuring
plan, there could be some relief for UNBK on this front.
Key Risks
Despite equity infusion of INR7.6b over FY11/12, UNBK's core Tier I ratio stood at
7.7% which implies higher capital requirement in coming years, especially under
the Basel III regime.
Valuations
We expect 16% earnings CAGR over FY12-14, and RoA/RoE at 0.8%/17%.
The stock has run up substantially (30%+ in past one month), in line with other
mid-sized PSBs. Still, valuations remain attractive at 0.7x FY14E P/B and dividend
yield of 4%+. Maintain Buy.
Hexaware [HEXW IN, Mkt Cap USD678m, CMP INR123]

Investment Argument
HEXW's decision to develop core competence and differentiation in key areas
Capital Markets, Travel & Transportation, EAS, and Testing is the right approach
for a relatively small player. The 'foot-in-the-door' obtained from flagship services
like PeopleSoft helped it forge relationships, strengthened further by cross-selling
services like IMS and BPO.
Large deals won by the company act as strong references in facilitating similar
such wins in the future. It now has four services contributing more than 10% of its
revenue v/s two a couple of quarters ago.Oracle may release a new version of
PeopleSoft in CY13, and HEXW is well placed to tap that opportunity.
HEXW has restricted itself to pure services deals, reducing the risk around revenue
quality and profitability.
12-month Outlook
We expect healthy growth to continue with CY11-13 USD revenue CAGR of 19.8%.
Our EBITDA margin estimate is 22.5% for CY12 (INR/USD @ 53.6) and 22.1% for
CY13 (INR/USD @ 53.5).
Our EPS CAGR over CY11-13 stands at 24.8%.
October 2012
A40
Key Risks
Sharp appreciation in the currency will impact profitability.
Slowdown in deal signings momentum will hurt revenue growth.
Within BFSI, it has high exposure to capital markets, the segment under maximum
stress.
Valuations
The stock trades at 9.9x CY12E and 8.6x CY13E EPS.
Our target price of INR167 is based on 12x CY13E EPS. Buy.
MCX [MCX IN IN, Mkt Cap USD1.2bm, CMP INR1,244]

Investment Argument
Multi Commodity Exchange of India (MCX) is a state-of-the-art electronic
commodity futures exchange, and has over 86% share (as at 31 March 2012) of the
Indian commodity futures market.
Growth potential in volumes remains huge given that number of clients trading
on the commodities platform is currently less than 2m v/s an estimated 18-20m in
equities. Also, globally, Gold futures volumes are 70-80x that of physical trade
v/s 17-18x in India, 20x in Crude v/s 7x in India, 100x in Aluminum v/s 8-9x in India.
Bill to amend the outdated Forward Contracts (Regulation) Act (FCRA) could be
passed by the Parliament in the forthcoming session. This will give a fillip to
MCX's volumes with entry of new products and participants. We believe value
from MCX-SX (stock exchange promoted by MCX and FTECH in 2008) is more definite
than merely option value.
12-month Outlook
Given the drop in volatility index over the last couple of quarters, we assume flat
volumes YoY in FY13.
If the FCRA Bill gets passed in the forthcoming parliamentary session, it will lead
to volume surge from:
1) introduction of options trading,
2) introduction of new related products such as freight-, rainfall-, and commodity
indices, and
3) increased investor participation, as banks, mutual funds and foreign
institutional investors could be allowed to transact on India's commodity
futures markets.
Key Risks
Significant proportion of costs incurred towards parent and group companies.
Concentration of turnover in four commodities.
Regulatory paralysis could impact growth.
Valuations
We expect revenue CAGR of 11% over FY12-15 and EPS CAGR of 12.5%.
The stock trades at 22.2x FY13E and 18.7x FY14E EPS.
October 2012
A41
We value the standalone commodity exchange business at 20x FY14E earnings,

which translates to a value of INR1,330/share. We value MCX-SX at INR14b, 11x the
potential revenues of INR1.3b in FY14. MCX's share in MCX-SX (including warrants)
contributes additional INR110/share to its valuation.
Our target price is INR1,440. Buy.
JAYPEE INFRATECH [JPIN IN, Mkt Cap USD1.4b, CMP INR53]

Investment Argument
JPIN offers a unique synergistic business model of infrastructure development
(Yamuna Expressway, YE) and real estate value unlocking.
The company is expected to generate free cash flow (FCF) beginning FY13 itself,
given (1) expressway going ex-capex, and (2) strong operating performance in
real estate. FCF will be utilized for debt repayment and potential growth in payout.
Value unlocking story is sustainable, though a bit clouded by some concerns:
(a) traffic growth at YE, (b) relative weakness real estate market mix, and (c) risk
of policy actions. Some of the concerns are easing off.
12-month Outlook
Expect steady sales momentum, and strong collections to continue in Noida and
GB Nagar land parcels on the back of improvement in market outlook.
We expect meaningful clarity over YE toll income to emerge in the first 6-9 months
of operations. Our recent interaction with the management suggests initial PCUs
of ~10,000 in the month of August 2012.
We estimate net surplus (FCF - interest) of ~INR2.1b/5.2b in FY13/14, which would
most likely be utilized towards repayment of YE debt over the next 12-13 years,
along with potential growth in payout.
Key Risks
Downside risks to expressway traffic growth assumptions.
Delay in revival of Noida market.
Policy risks from new government at Uttar Pradesh.
Valuations
We expect 22% revenue CAGR over FY12-14, translating into ~15% EBITDA CAGR.
PAT is likely to decline @ 12% over FY12-14 on account of depreciation and interest
charge related to the Yamuna Expressway.
JPIN trades at (a) P/E of 7.9x FY13E and 7.4x FY14E, (b) P/BV of 1.1x FY13E and 1x
FY14E vis--vis RoE of ~15%.
Buy with target price of INR60, given sustainable value unlocking story, steady
operations and inexpensive valuations.
October 2012
A42
United Phosphorus [UNTP IN, Mkt Cap USD1.1b, CMP INR131]

Investment Argument
Worst is behind us with trough operating performance in FY12. Expect FY13 to be
a recovery year: (a) strong volume bounceback in key markets, (b) integration of
LatAm acquisitions, c) benefit of lower crude, and (d) benefit of weaker INR.
UNTP is getting stronger in the global generic agrochem industry, as it has
outperformed large peers like Makhteshim and Nufarm. While UPL's performance
was muted in FY09-12, its global peers performance was even worse with severe
margin erosion and net losses.
With acquisitions of SIB and DVA Agro Brazil, UNTP has established a strong foothold
in key LatAm market. These acquisitions will be a key growth driver over next 2-3
years, reduce seasonality in its business and boost margins.
UNTP is targeting 5-year revenue CAGR of 15% and part recovery in profitability,
driven by strong growth in emerging markets, ~USD5.5b products going off-patent
over next 3-4 years, and focus on cost.
12-month Outlook
FY13 revenues is expected to grow ~15%, EBITDA margin stable (not factoring in
favorable forex), and PAT growth of 17% (adj for MTM forex loss).
Key Risk
Adverse climatic conditions in any of the key regions.
Valuations
Long-term outlook is positive given integration benefits from SIB and DVA Agro.
However, there are no short-term re-rating catalysts. Ongoing buyback of up to
19.2m shares up to INR150/share should support stock prices. The stock trades at
8.8x FY13E and 6.7x FY14E EPS. Buy with target price of INR195 (~10x FY14E EPS).
Petronet LNG [PLNG IN, Mkt Cap USD2.2b, CMP INR158]

Investment Argument
Strong earnings visibility: Petronet LNG's earnings offer high visibility in near /
long term given (a) huge gas demand-supply gap in India, and (b) annual re-gas
charge escalation to protect IRR. Besides, 2.8x capacity expansion over next few
years will further boost earnings.
Unlikely to come under PNGRB purview: PNGRB has no mandate to regulate LNG
business, and if desired, the same will have to be through an amendment to the
PNGRB Act passed by the Parliament. Further, marketing margins are unlikely to
be curtailed as LNG prices are market determined and unlike domestic gas, LNG
sourcing requires serious efforts.
Capacity expansion projects on track: PLNG expects to commission its Kochi
terminal by Dec-12 and also, expect simultaneous completion of 44km Phase-I of
Kochi-Bangalore pipeline through which it will supply gas. Further, it expects to
complete (a) Dahej 2nd jetty project by 4QFY14 (additional capacity of 3mmt),
(b) Dahej expansion by 2015-end (taking overall capacity to 18mmt), and
(c) Gangavaram terminal by 2016-end and interim FSRU facility by 2014-end.
October 2012
A43
12-month Outlook
As Phase 2 of Kochi-Mangalore-Bengaluru pipeline will commission in 2HCY13,
earnings growth will be back ended in FY14. FY13 earnings will be muted (can see
growth if marketing margins remain flat v/s our assumption of decline) as Kochi
terminal's depreciation would hit P&L but its revenue contribution would start
accruing only in FY14.
Key Risks
LNG business is currently unregulated. Recently, concerns have emerged on the
likely control of marketing margins. If this happens, it could pose a risk to PLNG's
earnings.
Valuations
With no risk to near-term earnings, we believe the next cycle of earnings growth
would come post FY13 led by (1) volume ramp-up at Kochi, (2) second jetty at
Dahej, and (3) new capacity at Dahej and Gangavaram. We build conservative
marketing margin of INR22/15 per mmbtu in FY13/14 and nil thereafter.
The stock trades at 10.5x FY14E EPS of INR15. We value PLNG at INR205, the average
of two methodologies (1) P/E (13x FY14E EPS), and (2) DCF (INR214). Buy.
Crompton Greaves [CRG IN, Mkt Cap USD1.5b, CMP INR126]

Investment Argument
For CG, the attempt now is to ensure that 'the value of whole is substantially
more than the sum of the parts' and make a full transformation to a global
corporation. We believe that this journey provides several levers to boost
revenues. Internationalization / integration could potentially double industrial
business revenues new factories in new geographies, new products like
switchgear plant in Brazil, transformer plant in Brazil / Saudi, etc will contribute
incrementally in a meaningful manner. The recent acquisition of ZIV has targets to
nearly treble revenues in 3 years' time given synergy benefits.
Overseas business is likely to see significant turnaround and could possibly become
profitable by mid-FY13 driven by ongoing revenue optimization and cost reduction.
12-month Outlook
Aggressive restructuring of its manufacturing footprint in overseas business will
help it turn profitable by mid-FY13, in our view. We expect international
subsidiaries to report EPS of INR0.5 in FY13, from loss of INR2.1 in FY12.
Organizational restructuring across geographies / product segments has been
completed to break away from 'silo' structures towards integrated product
offerings; initial success in railways / oil & gas has been encouraging.
The switchgear plant in Brazil is expected to add USD100m to revenues,
contributing to ~10% of the overseas business. In India, commissioning of the
drives plant in 3QFY13 will also contribute meaningfully to standalone operations.
October 2012
A44
Key Risks
Volatile macro environment, deterioration in European market, etc, could delay
recovery in earnings in overseas business.
Valuations
The risk-reward appears favorable we model 47% consolidated earnings CAGR
over FY12-14 driven by 14% revenue CAGR and 230bp margin expansion.
We arrive at price target of INR163/sh, based on P/E of 12x FY14E for standalone
business and EV/EBIDTA of 8x FY14E for overseas business.
CESC Ltd [CESC IN, Mkt Cap USD0.8b, CMP INR340]

Investment Argument
Regulated business provides earnings/cash flow comfort: CESC gets an assured
return and steady cash flows from its regulated business in Kolkata (INR5b+ pa).
FY14 corporate EBITDA break-even for Spencer: Spencer's store-level EBITDA has
improved from INR25/sq ft in FY11 to INR32 in FY12 and has already crossed INR50
in YTDFY13. Robust revenue growth and expansion would help achieve corporate
EBITDA break-even by FY14.
New projects on strong footing: CESC is constructing 1.2GW of power projects
with 0.6GW expected in next 12 months and additional 0.6GW by FY15. While PPA
is not yet signed for 1GW, the new bid document allows fuel cost pass-through,
and we believe that project return closer to regulated return (18-20% RoE) should
not be an issue. Equity already invested is INR8b+.
12-month outlook
Key variables for CESC are: (1) Continued positive momentum in Spencer
performance, and (2) Progress on 600MW Chandrapur project. While FDI in
multibrand retail has recently been allowed, we believe this is only a long-term
positive for Spencer as it can currently fund its expansion through CESC.
Key Risks
Slowdown in overall retail and Spencer, impacting pace of loss reduction (reduction
of INR400-450m pa compared to loss of INR1.1b in FY12).
Valuation
We expect CESC to report standalone PAT of INR6b in FY13 (up 8% YoY) and INR6.7b
in FY14 (up 12% YoY).
Stock quotes at PER and P/B of 6x and 0.6x FY14E standalone. Maintain Buy.
JSW Energy [JSW IN, Mkt Cap USD1.9b, CMP INR61]

Investment Argument
Beneficiary of lower thermal coal prices: 2GW of JSWEL's capacity is combination
of merchant power sales and spot coal purchases. Also, these capacities are located
in Southern/Western India, which are high deficit regions and command higher ST
tariffs. Lower international coal price thus would drive earnings.
October 2012
A45
1.1GW of regulated project provides further comfort: JSWEL's 1.1GW Raj West
project in Rajasthan has captive lignite mine, and is based on CERC terms (cost
plus RoE). This could provide sizable earnings growth in FY14 (project to be fully
operational by 2QFY13).
12-month outlook
Continue weakness in imported coal and rupee appreciation could be twin
benefits. JSWEL's gross margin improved to INR2.1/unit in 1QFY13 v/s INR0.21/
unit in 2QFY12.
Sustained gross margin, higher PLF and contribution from Raj West are key earnings
drivers.
Key Risks
Earnings volatility could be higher owing to converter business model.
INR depreciation in the past has been steep and volatility has been high
unfavorable to JSWEL.
Delay in the approval of Raj West tariff order could impact interim profitability.
Valuations
We expect consolidated PAT of INR6.2b for FY13 (up 88%) and INR10.5b for FY14
(up 69%).
Stock trades at 10x FY14E reported EPS. Buy.
Sun TV Network [SUNTV IN, Mkt Cap USD2.6b, CMP INR349]

Investment Argument
Deal with Arasu cable has removed a significant overhang for Sun TV and indicates
a more stable regulatory environment for Sun going forward.
Sun TV to benefit from mandatory digitization resulting in higher subscription
revenue from cable system without any incremental investment.
Advertising cycle is close to its lowest ebb and likely to improve as economic
environment improves.
Most profitable media company with high dividend yield of 3% and a healthy payout ratio of 50%.
12 Month Outlook
With de-growth in analog revenue from Tamil Nadu largely behind, we expect
revenue growth to improve from 5% in FY13 to 12% in FY14.
Success of digitization for phase I (4 metros) and phase II (38 cities) over the next
12 months should be a significant sentiment booster for the entire TV value chain.
Key Risk
Further delay in mandatory digitization
Continued sluggishness in ad environment
Any adverse news flow from ongoing investigations in 2G scam.
Valuations
After a decline in FY13, we expect earnings growth of 10% in FY14
Sun TV is trading at a P/E of 19x FY13 and 17.4x FY14. Buy
October 2012
A46
MOSL model portfolio

Sector weight /
Portfolio Picks
Financials
Private
ICICI Bank
HDFC Bank
Yes Bank
PSU
SBI
PNB
Union Bank
NBFCs
LIC Housing
Power Finance
Infrastructure & Related sectors
Larsen & Toubro
BHEL
ACC
DLF
Oil & Gas
Reliance Inds.
ONGC
BPCL
Auto
Tat a Motor s
Maruti Suzuki
Bajaj Auto
Technology
Infosys
HCL Tech
Healthcare
Dr Reddy's
Divi's Lab
Consumer / Retail
ITC
Metals
Hindalco
Sterlite
Telec om
Bharti Airtel
Idea Cellular
Utilities
NTPC
Others
CESC
Crompton
Eicher Motors
Hexaware
Jaypee Infra
JSW Energy
MCX
Oberoi
Petronet
Sun TV
United Phosphorous
Zee Entertainment
Cash
Total
October 2012
BSE-100
27.6
14.7
5.5
5.3
0.5
5.9
2.7
0.5
0.2
7.0
0.4
0.3
10.4
4.0
0.4
1.0
0.6
0.4
12.0
6.7
2.7
0.5
7.6
2.3
0.9
1.2
10.7
5.6
0.7
4.8
0.9
0.3
13.3
6.7
3.8
0.7
0.7
2.1
1.6
0.3
5.7
1.2
1.9
0.0
0.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.2
0.5
0.0
100.0
MOSL
Weight
28.0
13
7
4
2
10
6
2
2
5
3
2
14.0
5
3
2
2
2
10.0
4
4
2
9.0
4
3
2
8.0
6
2
5.0
3
2
4.0
4.0
4.0
2
2
3.0
2
1
3.0
3
12.0
1
1
1
1
1
1
1
1
1
1
1
1
0
100.0
Weight relative
to BSE-100
0.4
-1.7
1.5
-1.3
1.5
4.1
3.3
1.5
1.8
-2.0
2.6
1.7
3.6
1.0
2.6
1.0
1.4
1.6
-2.0
-2.7
1.3
1.5
1.4
1.7
2.1
0.8
-2.7
0.4
1.3
0.2
2.1
1.7
-9.3
-2.7
0.2
1.3
1.3
0.9
0.4
0.7
-2.7
1.8
10.1
1.0
0.8
1.0
1.0
1.0
1.0
1.0
1.0
1.0
1.0
0.8
0.5
0.0
Effective Sector
Stance
Overweight
Neutral
Buy
Neutral
Buy
Overweight
Buy
Buy
Buy
Neutral
Buy
Buy
Overweight
Buy
Buy
Neutral
Neutral
Buy
Underweight
Neutral
Buy
Buy
Overweight
Buy
Buy
Buy
Underweight
Buy
Buy
Overweight
Buy
Buy
Underweight
Buy
Neutral
Buy
Buy
Neutral
Neutral
Buy
Underweight
Buy
Overweight
Buy
Neutral
Not Rated
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Neutral
A47
2QFY13 PREVIEW Non-cyclicals have a field day in muted quarter

Technology, Healthcare, Financials & Consumer continue to deliver strong results
2QFY13 PAT growth 9% YoY; lowest for any 2Q in last 7 years (ex global crisis)
Sectoral analysis: Non-cyclicals have a field day; Technology, Healthcare, Financials &
Consumer continue to deliver strong results
2QFY13 Sensex PAT growth just 2% YoY, lowest in last 12 quarters ex SBI-shocker 4QFY11
2HFY13 residual PAT growth 9% for aggregate and 7% for Sensex; allays downgrade
concerns for FY13.
2QFY13 PAT growth 9% YoY; lowest for any 2Q in last 7 years (ex global crisis)
2QFY13 is likely to be yet another muted quarter in terms of Indias corporate
sector performance. We expect MOSL Universe (ex RMs, oil refining and marketing
companies) to report PAT growth of 9% YoY.
This is the lowest 2Q PAT growth in the last 7 years, barring the global-financialcrisis quarter of 2QFY10 when PAT de-grew 11%. In fact, excluding the financialcrisis quarters, 2QFY13 PAT growth is also the second lowest in the last 7 years.
Ex crisis, 2QFY13 is lowest 2Q PAT growth in last 7 years
and the second lowest PAT growth in last 28 quarter
37
55
25
22
20
3437
11
Global
crisis
36 34
25
42
24 26
20
15
Global
Crisis
18
9 1311
11 9
1QFY13
3QFY12
1QFY12
3QFY11
1QFY11
3QFY10
1QFY10
1QFY09
3QFY08
1QFY08
3QFY07
1QFY07
Sep12E
Sep11
Sep10
Sep09
Sep08
Sep07
Sep06
Sep05
23 26 22 24
-8
-11
-15-15
11
3QFY09
21
Sensex performance weak, both absolute and relative to aggregate: 2QFY13 aggregate
PAT for Sensex 30 companies is expected to grow only 2% YoY. This is very weak in
more than one way
1. It is the lowest Sensex PAT growth in the last 12 quarters, excluding the SBI-shock
quarter of 4QFY11 which saw SBI PAT collapsing to near zero; and
2. Relative to the aggregate too, 2QFY13 Sensex PAT growth is weak 6pp lower than
aggregate PAT growth, the highest in the last 12 quarters, again excluding the SBIshock quarter.
Lowest Sensex PAT growth ex the "SBI-shock quarter"
and worst growth relative to aggregate (ex SBI shock)
44
12
26
20
27
30
22
12
16
15
6
4
0
-1
-2
-3
-6
October 2012
2QFY13E
1QFY13
4QFY12
3QFY12
2QFY12
1QFY12
4QFY11
3QFY11
2QFY11
1QFY11
4QFY10
3QFY10
2QFY13E
1QFY13
4QFY12
3QFY12
2QFY12
-11
1QFY12
4QFY11
3QFY11
2QFY11
1QFY11
4QFY10
3QFY10
-2
A48
Sectoral analysis: Non-cyclicals to have a field day

A sectoral breakdown of 2QFY13 corporate performance clearly suggests the
dominance of non-cyclical sectors:
Of the large sectors, the highest YoY PAT growth is expected to be in Technology
(+34%), Healthcare (+28%), Financials (+19%) and Consumer (+18%).
Telecom is the only major non-cyclical to report major PAT de-growth (-32% YoY).
Another non-cyclical, Utilities, continues to maintain steady performance (PAT up
7% YoY).
Expect most cyclicals to report negative or flat PAT growth: Oil & Gas ex RMs (+1.3%),
Metals (-12%), Autos (flat), Capital Goods (flat) and Real Estate (-28%).
Cement is the only major cyclical expected to report robust PAT growth (+89%
YoY).
Non-cyclicals contribute 103% of the incremental PAT over 2QFY12, whereas
cyclicals have a negative contribution of 3%.
Quarterly performance - MOSL universe (INR b)
Sector
(No of companies)
High YoY PAT Growth
Cement (8)
Technology (6)
Health Care (17)
Medium/Low YoY PAT Growth
Financials (25)
Private Banks (8)
PSU Banks (9)
NBFC (8)
Consumer (12)
Media (5)
Others (4)
Utilities (10)
Oil & Gas ex RMs (10)
Oil & Gas incl RMs (13)
Negative YoY PAT Growth
Auto (5)
Capital Goods (9)
Retail (4)
Metals (10)
Real Estate (7)
Telecom (4)
MOSL (139)
Sensex (30)
Sales
Sep-11 Sep-12
680
145
361
174
749
402
96
251
54
245
25
38
485
1,441
3,126
1,017
623
336
57
937
41
276
7,271
5,587
3,769
830
162
460
208
854
460
118
276
66
283
27
40
534
1,703
3,886
1,148
721
364
64
932
35
310
8,487
6,304
4,229
EBITDA
PAT
Var % Sep-11 Sep-12
Var Sep-11 Sep-12
YoY
% YoY
22
11
27
20
14
14
22
10
21
16
10
7
10
18
24
13
16
8
12
0
-13
12
17
13
12
153
26
89
39
588
320
79
189
53
51
8
8
119
301
191
121
75
41
5
161
19
88
1,240
1,350
838
198
36
116
46
674
369
98
206
64
60
9
7
127
288
385
135
86
42
6
159
15
91
1,555
1,458
866
30
38
31
20
15
15
24
10
22
18
2
-2
6
-4
102
11
15
4
14
-2
-21
3
25
8
3
101
10
65
25
285
160
46
78
36
35
4
4
65
179
38
76
46
28
2
91
8
15
597
738
466
139
19
88
32
339
191
57
91
43
41
4
4
70
181
245
75
46
27
2
80
6
10
865
802
477
EBITDA Margin
Var Sep-11 Sep-12
Var
% YoY
(bp)
38
89
34
28
19
19
23
17
19
18
17
15
7
1
539
-1
0
-1
-6
-12
-28
-32
45
9
2
22.5
17.8
24.5
22.3
78.4
79.7
81.9
75.1
96.6
20.7
34.5
20.4
24.6
20.9
6.1
11.9
12.1
12.1
9.3
17.2
47.0
31.9
17.1
24.2
22.2
23.9
22.1
25.2
22.3
78.9
80.2
83.4
74.8
97.4
21.2
32.1
18.7
23.7
16.9
9.9
11.8
12.0
11.7
9.5
17.0
42.5
29.4
18.3
23.1
20.5
139
425
73
8
45
55
142
-36
83
51
-243
-172
-87
-398
381
-17
-6
-47
23
-23
-452
-246
127
-104
-175
Other aggregate highlights

Sales growth at 13% YoY is the lowest in the last 12 quarters, and is expected to
moderate further in 2HFY13 to 10%. This is led by a combination of both lower
commodity prices and slowing volume growth.
EBITDA margin is expected to contract 120bp YoY led by Oil & Gas ex RMs(-400bp)
and Telecom (-250bp). As a result, EBIDTA growth at 8% is lower than Sales growth.
October 2012
A49
EBITDA growth is expected to pick up somewhat in 2HFY13, as lower commodity

prices have a lag impact on raw material costs.
There are 3 sectors/sub-sectors where all companies are expected to report
positive PAT growth Technology, Private Banks and NBFCs. In 2 other sectors,
only one company is expected to report PAT de-growth Cement (Jaiprakash) and
Consumer (United Spirits).
There are 3 sectors where only one company is expected to clock positive PAT
growth even as all its peers de-grow Metals (Nalco), Telecom (Idea), and Real
Estate (Phoenix Mills).
Non-cyclicals (Technology, Healthcare, Consumer, Financials) dominate 2QFY13 corporate performance
2QFY13 PAT growth by sector (%)
Contribution to YoY PAT delta by sector (%)
89
34
8
-6 -23 -47 -87
-124
-243 -246
Media
MOSL*
Utilities
Cap Goods
Metals
Retail
Health
Care
Auto
Consumer
Technology
Cement
Real Estate
Metals
-398
-452
Telecom
O&G
exRMs
Real Est
73 51 23
Cap Goods
Media
Utilities
Cement
Retail
Telecom
MOSLEx.RMs
Financials
Consumer
Auto
Oil Ex. RMs
Metals
425
-13
Health Care
Real
Cap. Goods
Retail
Auto
Oil Ex. RMs
Utilities
Consumer
NBFC
Health
Cement
Banks-Pvt
Banks-PSU
Technology
Telecom
Metals
Real Estate
-17
but EBITDA margin damage widespread (chg in margin, bp)
Technology
-8
-28-32
2QFY13 sales growth (%) healthy across sectors

27 20
18 16 16
14 13 12 12
11 10 10
-1 -4
-12
Retail
Auto
Cap. Goods
Sensex
Oil Ex. RMs
Utilities
MOSLEx.RMs
Media
Banks-PSU
Consumer
NBFC
Banks - Pvt
Technology
Health Care
-1 -6
Cement
Media
2 1
17 14
11 10 10
7
Telecom
21
34 28
23 19 18 17 17
9 7
Distribution of earnings growth: Skew towards PAT de-growth persists

15-30%
0-15%
<0%
PAT growth ex RMs (%)
32
39
35
29
34
23
19
19
26
13
22
27
24
15
17
18
23
22
20
25
24
27
24
Sep 12E
38
23
40
June 12
18
21
18
18
43
Mar 12
20
35
Dec 11
10
22
31
Sep 11
24
June 11
32
43
25
Mar 11
27
41
27
Dec 10
14
10
30
Sep 10
51
14
22
18
14
Mar 10
9
17
27
9
13
31
Dec 09
35
Sep 09
26
32
June 09
22
10
41
Mar 09
42
June 10
-8.4 -15.5 -14.9 -11.3 22.7 41.7 25.5 22.3 23.7 8.9 13.1 10.6 4.4 18.4 11.1 8.7
Dec 08
Sep 08
June 08
Mar 08
Dec 07
52
June 07
54
Mar 07
60
>30%
25.1 15.4 24.3 25.6 19.7

14 21 24 23
26
15
14 19
24 26
23 21
11
18
18
48 44 45
35 30
Sep 07
55.2 36.4 34.0

11 17 14
11
11 11
19
19 23
Dec 06
% of MOSL Universe companies
Earnings Growth %
PAT Growth Ex RMs (%)
October 2012
A50
Sector highlights
October 2012
AUTOS: Volume slowdown visible across segments, except UVs/LCVs. While

commodity prices are benign, adverse product mix and Fx movement would lead
to an increase in RM cost by 30bp QoQ and 10bp YoY. We estimate 2QFY13 EBITDA
margins to decline 70bp QoQ (70bp YoY), impacted by adverse product mix, adverse
Fx movement and negative operating leverage. Maruti Suzuki (-200bp YoY/-290bp
QoQ) and Hero MotoCorp (-190bp YoY/-120 QoQ) would be worst impacted. We
are downgrading our earnings estimates for Bajaj Auto and Hero MotoCorp to
factor in weaker than expected demand and adverse currency movement (except
Bajaj). We prefer Tata Motors, Maruti Suzuki and Bajaj Auto.
CAPITAL GOODS: We expect 2QFY13 revenue growth to moderate to 8% YoY

(v/s 17% YoY in 1QFY13), given the depleting order book and constrained
environment. Ordering activity continues to be sluggish, particularly in the
industrial / power generation segment. Current BTB stands at 2.4x, the lowest in
18 quarters and continues to impact reported performance. In 2QFY13, we expect
EBITDA margin of 12%, down 40bp YoY, impacted by poor fixed cost absorption.
While commodity prices have corrected meaningfully, a large part of the decline
is negated by currency movements. Companies with high local manufacturing
content (like BHEL, Cummins and Thermax) will be the key beneficiaries.
CEMENT: Cement volume growth is expected to be muted at 2% YoY (down

~12%QoQ). As a result, capacity utilization is also expected to decline 120bp YoY
(-10pp QoQ). However, cement prices remain strong with only moderate seasonal
corrections in 2QFY13 of INR5/bag (national average). QoQ drop in realizations,
coupled with negative operating leverage (950bp QoQ lower utilizations) and
cost push (partial impact of diesel price hike) would drive down EBITDA/ton to
INR979/ton (down INR224/t QoQ, +INR383/ton YoY). We expect recovery in volumes
and strong pricing in 2HFY13 to restore strong operating performance.
CONSUMER: Sustenance of volume growth amidst weaker macro environment

will be the key highlight of 2QFY13, in our view. For 2QFY13, we estimate our
coverage universe to post ~16% revenue growth (16% in 1QFY13) and ~18% PAT
growth (~22 % in 1QFY13). EBITDA is likely to grow 18.5% on the back of sustained
revenue growth and some softening in input costs. We expect ITC to post 16%
sales growth (1% cigarette volume growth) and ~17% PAT growth; HULs sales are
likely to grow 15% (8% volume growth) and 19% PAT growth.
FINANCIALS are likely to report healthy 2QFY13 PAT growth of 19%, led by Private
Banks and select PSU banks, viz, SBI, BOI, OBC and UNBK. In terms of segments, we
expect PAT growth of 23% YoY for Private Banks, 8.6% YoY for Public Sector Banks
(ex SBI), and ~19% YoY for NBFCs. Performance of Public Sector Banks is expected
to be mixed with SBI (+32%), OBC (+98%), BOI (+44%) and UNBK (+66%) reporting
strong numbers on a lower base and many others muted or lower. Asset quality
will remain the most important driver of PAT performance. Private Banks are likely
to report better earnings and asset quality performance vis--vis Public Sector
Banks. Ex Kotak Mahindra and Federal, private banks are expected to report PAT
A51
growth in the range of 20-30%. Among NBFCs, MMFSL is expected to report the
strongest earnings growth of 35%+, followed by DEWH. Other NBFCs are likely to
report 20% earnings growth, except LICHF whose PAT growth is likely to be muted.
HEALTHCARE: For 2QFY13, we expect topline growth of 21% YoY for our universe
(ex one-offs) with EBITDA growth at 22% YoY. Adjusted PAT is expected to grow
28% YoY. Adjusted PAT growth at 28% is higher than EBITDA growth mainly due to
reversal of forex losses due to the appreciation of the INR v/s the USD in last few
weeks. Among CRAMS companies, we expect Divi's and Dishman to report strong
operational performance on a low base, new order inflow, and favorable currency.
MEDIA: Aggregate PAT for our media universe is expected to improve 10% YoY. Ad
revenue trends remain sluggish but are likely bottoming-out. Headwinds for print
companies seem to be receding on gradual decline in newsprint costs as well as
sharp appreciation in the INR. Digitization remains a strong theme for broadcasting
and distribution stocks as most participants do not foresee a postponement in the
digitization deadline of October 31 for metros.
METALS: Ferrous: Domestic operations of steel majors are expected to report 3%

lower revenue QoQ, with 4% higher volumes more than offset by 7% decline in
realization. EBITDA is expected to be down 10% QoQ and EBITDA/ton lower by
USD20-30/t. SAIL and Tata Steel (India) are expected to deliver volume growth of
8% and 4% QoQ and JSW Steel flat. In 1QFY13 most steel companies had increased
inventories which are expected to be partially liquidated in the current quarter.
Non-ferrous Average 1QFY13 base metal LME prices corrected 0-3% QoQ but
spot premiums moved up significantly supporting margins. Operating margins for
both Sterlite and Hindalco (standalone) are expected to improve QoQ. HZL volumes
and margins are expected to remain flat QoQ.
October 2012
OIL & GAS: Ex RMs, expect EBITDA decline of 4% and flat PAT (up 1% YoY). We
expect Reliance Industries to report 17% YoY EBITDA decline, led by lower GRMs,
petchem margins and KG-D6 gas volumes. Cairn is likely to report 79% YoY EBITDA
growth led by Rajasthan production growth. ONGC and Oil India are estimated to
report 16% and 22% YoY decline in EBITDA led by lower net realization (~USD54/
bbl in 2QFY13 v/s ~USD85/bbl in 2QFY12) and higher cess rate of INR4,500/MT v/s
INR2,500 in FY12. The quantum of government support to OMCs and subsidy sharing
by upstream companies remains uncertain. Still, refiners earnings are expected
to benefit by crude inventory gains and rupee appreciation.
REAL ESTATE: Given spillover launches (which were deferred by delay in approvals)
and a weak 2QFY12, we expect our real estate universe to post a YoY uptick in sales
momentum. We expect aggregate sector revenue de-growth of 13.1% YoY (+7.7%
QoQ), EBITDA decline of 21.4% YoY (-9.2% QoQ) and PAT decline of 27.6% YoY
(-7.8% QoQ). Despite improved operating cash flow, meaningful success in debt
reduction plan is likely to be visible in 2HFY13 only.
A52
TECHNOLOGY: Aggregate INR revenue is expected to grow 27.5% YoY and PAT
33.6%, led by 21% YoY depreciation in the Rupee v/s the US Dollar. USD revenue
growth across the top-tier is 8% YoY (10% including Cognizant). TCS, Cognizant and
HCL are likely to continue leading revenue growth (+3.6%-4.6% QoQ), followed by
Infosys (+2.9% QoQ) and Wipro (+1% QoQ). Pricing is expected to be stable across
the board. Margins are expected to decline at Wipro on two-month residual impact
of wage hikes and hedge losses in the topline, as also at HCL due to wage hikes
becoming effective from July 1.
TELECOM: Aggregate 2QFY13 PAT for listed wireless majors is expected to decline
32% YoY and 17% QoQ. For 2QFY13, we expect average wireless traffic for top 4
operators to decline ~1% QoQ led by seasonal weakness and lower promotions.
Wireless RPM decline is likely to abate, down 0.3% QoQ v/s ~2% QoQ decline in
the preceding two quarters. Among operators, we expect Bharti to exhibit
relatively lower traffic decline given its price aggression.
UTILITIES: We expect our Utility universe (ex Coal India) to report aggregate 2QFY13
revenue growth of 9% YoY and PAT de-growth of 2% YoY. PAT growth is likely to be
muted for IPPs. NTPC (higher capacity addition) and PGCIL (better capitalization)
would show PAT growth of 26% and 22% YoY, respectively. ST prices at IEX touched
a high of INR6/unit in mid-July but fell sharply post that. ST forward curve has
been strong and the last 3-month contracts are executed at price of INR4+/unit.
Globally, imported coal prices have weakened and INR has shown weakness too.
Players fueling their plants on imported coal will report improved gross margins.
Company highlights
October 2012
DLF: We expect flat revenue QoQ at INR21.4b in 2QFY13, 25% YoY de-growth in
EBITDA and 18% PAT de-growth to INR2.9b owing to higher interest expense. During
2QFY13, DLF divested NTC Mills and received initial tranche of INR5b. However,
we expect leverage level to remain largely unaltered due to operating deficit.
Progress in major divestments (Aman Resort, windmills) and balance payment in
NTC Mills deals followed by debt reduction are key factors to watch out for.
HDFC BANK: It will most likely report its 52nd consecutive quarter of 30%+ PAT
growth on back of superior margins, strong loan growth and commendable
performance on asset quality. Our estimates suggest this trend will sustain all
through FY13.
HUL: Turnaround which began in FY11 has gathered steam and is evident in
sustained volume momentum notwithstanding higher base. HUVRs distribution
and trade initiatives coupled with improved go-to-market capabilities and
aggressive innovation pipeline has laid a foundation for strong performance in
FY13 and FY14, in our view. This should translate into a robust 8% volume growth
and 19% PAT growth for 2Q13.
A53
October 2012
MARUTI SUZUKI: 2QFY13 performance is expected to be impacted by recent labor

issue at its Manesar plant. Moreover, weak demand for petrol cars and consequent
high discounts, adverse mix, unfavorable forex and recent wage hike negotiated
with workers are expected to hurt margins. We estimate 260bp QoQ (-160bp YoY)
decline in EBITDA margin to 4.7% and PAT decline of 51% YoY (-72% QoQ) to INR1.18b.
BHARTI: Consolidated PAT is expected to decline 36% YoY and 14% QoQ to INR6.6b.
PAT for India & SA is expected to decline 22-23% YoY/QoQ. We have not assumed
any forex gain/loss for Bharti in our 2QFY13 estimates. However Bharti could report
forex gain for the quarter due to INR appreciation.
WIPRO: Wipro accounts for its hedge losses in the topline; segmental breakdown
of IT Services revenues also include translation losses. In 2QFY13, closing currency
appreciated QoQ (implying loss on assets translations) while average INR
depreciated QoQ (implying losses on hedges taken too). Therefore, while for
most IT companies, this could imply other income losses, at Wipro, the same is
likely to have operating margin implications. We are currently modeling 100bp
QoQ decline in IT Services EBIT margin at 20%. Large forex impact would imply a
significant miss on the same.
NTPC: We expect NTPC to report PAT growth of 26% YoY largely on the back of base
effect, as operations in September 2011 were impacted due to coal shortage/wet
coal and strike at Coal India. Generation for Jul-Aug 2012 stood at 36.5BUs (up 2%
YoY) and coal plant PLF for the same period stood at 77% v/s 82% YoY.
SBIN is expected to report PAT growth of 30%+, led by strong margin and lower
provisions (on a higher base of 2QFY12). Higher slippages have been a concern in
the past and the trend needs to be watched.
SESA GOA: Sesa Goa is expected to report 57% YoY decline in revenues due to
lower iron ore volumes, affected by temporary closure of mining in Goa. There is
further downside risk to our iron ore volume estimates of 7.9dmt in FY13 and
15.7dmt in FY14 as restarting of mining could take much longer time than expected.
A54
2QFY13 Sensex PAT growth just 2% YoY
For 2QFY13, we expect Sensex companies aggregate Sales growth of 12% YoY. A
175bp damage to margin leads to EBITDA growth being sharply lower than Sales
growth at only 3% YoY. PAT growth at 2% YoY is in line with EBITDA growth. All
growth figures are well below long-period averages.
This performance is very weak in more than one way
1. It is the lowest Sensex PAT growth in the last 12 quarters, excluding the SBIshock quarter of 4QFY11 which saw SBI PAT collapsing to near zero. Nearly
half (i.e. 14 out of 30) Sensex companies are expected to post YoY PAT decline
for 2QFY13.
2. Relative to the aggregate too, 2QFY13 Sensex PAT growth is weak 6pp lower
than aggregate PAT growth, the highest in the last 12 quarters, again excluding
the SBI-shock quarter. This is primarily led by PAT decline in several cyclicals
Oil &Gas (ONGC, GAIL, Reliance Inds), Metals (Hindalco, Sterlite, Tata Steel)
and Autos (Hero MotoCorp, Bajaj Auto, Maruti) many of these companies
had reported PAT growth in 1QFY13.
As in the MOSL Universe aggregates, non-cyclicals and cyclicals have a major and
distinct impact on Sensex PAT:
Of the 9 Sensex companies with highest PAT growth, 8 are non-cyclicals.
Non-cyclicals more than offset the 390% drag on PAT contribution by the
cyclicals.
Given ONGCs high 13% weight in Sensex PAT and its sharp de-growth of 26% YoY,
it alone accounts for a 7pp drop in Sensex PAT growth. Thus, ex ONGC, aggregate
Sensex PAT growth is a much more respectable 9%.
Top five Sensex companies by PAT growth: TCS (+42% YoY), SBI (+31%), HDFC Bank
(+30%), Sun Pharma (+29%), and Infosys (+26%).
Sensex Sales growth (YoY, %)

44
34
27
20
33
23 21 20
30
37 36 38
32
32
31 30
22
22
LPA 22%
19
28
22 18
23 26 22 25
19
17 12
16
6
-5
-11
-6
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2QE
FY05
October 2012
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13E
A55
Sensex PAT growth (YoY, %)
25
28
39 42 33
43
31 30
24
44
33
30 26
17 19
25 23
LPA 19%
20
30
26 27 22
16
12 6
12
-7
15
6
-2
-15
-21
-25
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2QE
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13E
Sensex 2QFY13 performance - It's cyclicals v/s non-cyclicals (INR b)

Sales
Sep-12
Var %
YoY
High PAT Growth
TCS
State Bank
HDFC Bank
Sun Pharma
Infosys
NTPC
Coal India
Wipro
ICICI Bank
Cipla
Med/Low PAT Growth
HDFC
Hind. Unilever
M&M
ITC
Tata Motors
Larsen & Toubro
Negative PAT Growth
Reliance Inds.
BHEL
Bajaj Auto
Sterlite Inds.
Hindalco
Dr Reddys Labs
JSPL
GAIL
ONGC
Hero Motocorp
Tata Power
Bharti Airtel
Maruti Suzuki
Tata Steel
Sensex (30)
October 2012
898
158
115
36
23
100
156
147
111
33
20
820
15
65
95
70
443
133
2,511
937
105
48
104
197
25
51
112
218
52
71
196
83
313
4,229
17
36
10
22
26
24
1
12
22
30
15
21
18
15
31
15
22
18
8
19
2
-7
2
2
15
15
15
-4
-11
14
13
5
-5
12
EBDITA
Sep-12
Var %
YoY
313
46
85
28
9
31
31
27
21
30
5
134
16
10
11
26
58
13
418
82
18
9
25
22
5
16
14
119
5
13
60
4
28
866
18
36
13
30
20
23
-3
10
22
29
18
23
21
19
28
16
29
13
-10
-17
-1
-12
0
2
9
-14
-15
-16
-28
-3
2
-21
2
3
EBITDA margin
Sep-12
Var
(bp)
34.9
29.2
73.8
76.5
38.1
30.9
20.1
18.6
19.2
93.4
25.2
16.4
111.9
15.3
11.7
36.8
13.1
10.0
16.6
8.8
16.8
17.8
23.8
11.2
18.3
30.6
12.4
54.9
9.3
18.4
30.4
4.7
9.0
20.5
47
17
245
432
-201
-13
-98
-27
9
-51
58
21
299
57
-23
33
66
-44
-330
-378
-60
-105
-51
-2
-110
-1019
-454
-773
-220
-322
-324
-157
58
-175
PAT
Sep-12
203
35
37
16
7
24
19
28
16
18
4
79
12
8
9
18
25
8
196
55
12
7
13
9
2
8
8
64
4
3
7
1
1
477
Var %
YoY
29
42
31
30
29
26
26
25
22
21
21
14
19
19
17
17
11
3
-18
-3
-4
-11
-15
-15
-17
-20
-24
-26
-27
-30
-36
-51
-63
2
PAT Contbn
% Growth
%
42
7
8
3
1
5
4
6
3
4
1
17
2
2
2
4
5
2
41
12
3
1
3
2
0
2
2
13
1
1
1
0
0
404
91
79
32
14
44
34
50
26
29
6
85
17
11
11
23
21
2
-389
-14
-5
-8
-20
-15
-4
-19
-23
-200
-15
-12
-33
-11
-12
A56
Bottom five Sensex companies by PAT growth: Tata Steel (-63% YoY), Maruti Suzuki
(-51%), Bharti Airtel (-36%), Tata Power (-30%) and Hero MotoCorp (-27%).
Tata Steel and Maruti Suzuki are the bottom performers for the second quarter in
a row.
2HFY13 residual PAT growth modest; allays downgrade concerns for FY13
In 1HFY13, PAT growth for MOSL Universe (ex RMs) was 6% YoY. In order to meet our
full year FY13 PAT growth estimate of 9%, implied residual 2HFY13 PAT works out to
12% YoY.
Most sectors comfortably placed for 2HFY13 PAT; no major earnings downgrade risk for FY13
32
29
20
18
19
36
21 19
23
18
17
15
16
45
28
21
10
10
Capital
Goods
Metals
Financials
Utilities
Technology
Oil ex RMs
Retail
Consumer
Real Estate
13
16
Cement
29
Health Care
23
Media
22
19
Telecom
38
2HFY12A (PAT growth YoY, %)
Automobiles
2HFY13E YoY (PAT growth YoY, %)

42
Even the disaggregated, sector-wise picture for residual 2HFY13 is comforting. Only 4
sectors need to deliver PAT growth of 25%+, viz, Media, Real Estate, Healthcare and
Cement. Of these, Media and Real Estate enjoy the benefit of low base as their 2HFY12
PAT was down 23% and 29%, respectively.
Sensex 2HFY13E PAT growth at 7%: As in the case of aggregates, even for Sensex,
2HFY13 PAT growth is a modest 7% with earnings headwinds adequately modeled in,
in our view.
2HFY13E PAT for Sensex companies: As in the aggregates, no major downgrade concerns here too
LtoP
48
9
October 2012
Tata Power
BHEL
JSPL
Hero Moto
Bajaj Auto
ONGC
Sun Pharma
L&T
Infosys
Sterlite Inds.
SBI
Sensex
M&M
Coal India
Wipro
Hindalco
Reliance Inds.
NTPC
ICICI Bank
ITC
Cipla
HDFC
Hind. Unilever
GAIL
TCS
HDFC Bank
Maruti Suzuki
Dr Reddys
Tata Steel
6 9 10
12 18 18
25 28
Bharti Airtel
30 25 25
20 20 18 17 17 16
13 11
Tata Motors
57
2HFY13E YoY (PAT growth YoY, %)
A57
Intra-sector 2QFY13 earnings divergence (%)

Sectors
Sector
Growth (%)
Autos
Capital Goods
-1
+30% Growth
ABB: 145
Cement
89
Consumer
18
Bank - Private
Bank - PSU
Bank - NBFC
Healthcare
Media
Metals
Oil & Gas

(Ex RMS)
Real Estate
23
17
19
28
17
-12
-28
0-15% growth
M & M: 17
Tata Motors: 11
Cummins: 23
Havells: 6,
L&T: 3
-ve earnings
growth (%)
-6
Jubilant Foodworks: 45
Technology
34
HCL Tech: 65,

TCS: 42
Telecom
-32
Idea Cellular: 92
7
Titan Inds: 15
Infosys: 26, Tech
Mah: 24, Wipro: 22
MphasiS: 14
Earnings
momentum
0 1 1
Bajaj Auto: -11,
3
HMCL: -27, MSIL: -51
BHEL: -4,
1 1
2
Siemens: -11,
5
CRG: -14, TMX: -18
Jaiprakash
1
Associates: -27
5 1 1
Shree Cement: LP,

India
Grasim
ACC: 103, Ultratech: 94,
Cements: 22
Industries: 4
ACEM: 92, Birla Corp: 54
Marico: 37,
Pidilite Inds: 28,
Britannia: 12,
United
Godrej Consumer: 36 Dabur: 22, HUVR: 19, GSK Consumer: 12,
Spirits: -2
ITC: 17, CLGT/APNT: 16
Nestle: 10
Yes Bank: 30,
IndusInd Bank: 28,
ING Vysya Bk: 15,
HDFC Bank: 30
Axis Bank: 22,
KMB: 6,
ICICI Bank: 21
Federal Bank: 5
OBC: 98,
Andhra Bank: 2,
BOB: -7,
Union Bank: 66,
PNB: 1,
Canara Bank: -14
BOI: 44, SBIN: 31
Indian Bank: 0
M&M Financial: 37,
PFC: 21, IDFC: 20,
Shriram Trans: 10,
Dewan Housing: 33
HDFC: 19,
LIC Hsg. Fin.: 1
REC: 19
Dishman: LP,
Sun Pharma: 29,
Torrent Pharma: 12,
Cadila: 110, Glenmark: 92,
Divis Lab: 27,
Opto Circuits: 10
Sanofi India: -9
Jubilant Life: 67,
Lupin: 22, Cipla: 21,
Ranbaxy Labs: 4, Dr Reddy's Lab: -17
IPCA Labs: 41
GSK Pharma: 18
Biocon: 3
Dish TV: Loss,
Jagran Prakashan: 59
Zee Ent: 2
Sun TV: -1
HT Media: -8
HZ: -1, NMDC: -7,
Sesa Goa: 139
Nalco: 23
STLT: -15, HNDL: 15,
JSPL: -20, SAIL: -36,
JSW: -35, TATA -63
MRPL: 3,365,
Indraprastha
RIL: -3, GSPL: -16,
Chennai Petroleum: 305,
Gas: 12,
Oil India: -17,
Cairn India: 271
Petronet LNG: 0 GAIL: -24, ONGC: -26
Oberoi Realty: 2,
Phoenix Mills: 26
MLIFE: -3, HDIL: -27,
DLF: -37, Unitech: -47
Retail
Utilities
15-30% growth
6 3
3 3 0
1 0
3 2
3 0
2 5
Shopper's Stop: -82, 1 0

Pantaloon: -94
Bharti Airtel: -36,

1 0
Tulip Telecom: -37,
RCom: -60,
Adani Power: PL,
1 4
Tata Power: -30,
Reliance Infra: -48
October 2012
6
2
1 0
2 3
0 3
NTPC: 26,
Coal India: 25,
CESC: 14,
2
Powergrid: 24,
NHPC: 10
PTC India: 19
Earnings momentum: Represents number of companies in each of the growth brackets; PL: Profit to Loss; LP: Loss to Profit
JSW Energy: LP
A58
N O T E S
October 2012
A59
September 2012 Results Preview
BSE Sensex: 18,763
S&P CNX: 5,703
MOSL Universe:
2QFY13 Highlights
&
Ready Reckoner
Note: In our quarterly performance tables, our four-quarter numbers may not always add up to the full-year
numbers. This is because of differences in classification of account heads in the companys quarterly and
annual results or because of differences in the way we classify account heads as opposed to the company.
All stock prices and indices as on 28 September 2012, unless otherwise stated.
October 2012
MOSL Universe
MOSL Universe: 2QFY13 aggregate performance highlights

Quarterly performance - MOSL universe
(INR Billion)
Sales
(No of companies)
Sep-12
EBITDA
Var.
Var.
YoY (%)
QoQ (%)
Sep-12
Net Profit
Var.
Var.
YoY (%)
QoQ (%)
Auto (5)
721
15.7
-3.2
86
15.1
-5.9
Capital Goods (9)
364
8.2
14.7
42
4.0
26.3
Cement (8)
162
11.1
-9.9
36
37.7
-22.7
Consumer (12)
283
15.6
3.4
60
18.5
6.1
Financials (25)
460
14.4
4.1
369
15.2
3.9
Private Banks (8)
118
22.1
3.6
98
24.2
4.8
PSU Banks (9)
276
10.0
4.1
206
9.5
3.1
NBFC (8)
66
21.2
5.1
64
22.2
5.0
Health Care (17)
208
19.7
6.8
46
20.2
4.9
Media (5)
27
9.5
3.4
9
1.8
0.3
Metals (10)
932
-0.5
-4.8
159
-1.8
-9.4
Oil & Gas (13)
3,886
24.3
8.9
385
101.9
LP
Excl. RMs (10)
1,703
18.1
5.3
288
-4.4
24.8
Real Estate (7)
35
-13.1
7.7
15
-21.4
-9.2
Retail (4)
64
11.6
8.1
6
14.4
9.2
Technology (6)
460
27.5
4.8
116
31.3
2.9
Telecom (4)
310
12.2
0.3
91
3.5
-0.1
Utilities (10)
534
10.1
-2.0
127
6.2
-13.8
Others (4)
40
6.6
-6.1
7
-2.3
-7.4
MOSL (139)
8,487
16.7
4.1
1,555
25.4
48.0
6,304
12.8
1.6
1,458
8.0
2.4
Sensex (30)
4,229
12.2
0.8
866
3.3
0.4
For Banks : Sales = Net Interest Income, EBITDA = Operating Profits; LP = Loss to Profit
Sep-12
Var.
Var.
YoY (%)
QoQ (%)
-0.2
-1.4
89.0
17.7
19.0
22.9
16.8
18.7
28.2
17.1
-12.1
539.3
1.3
-27.6
-5.5
33.6
-32.4
7.0
15.3
44.9
8.7
2.4
-8.8
10.2
-24.9
4.1
-0.4
2.9
-4.0
3.6
16.7
14.3
-23.2
LP
25.7
-7.8
11.8
2.5
-16.1
-22.6
-12.0
112.3
-1.3
-3.6
46
27
19
41
191
57
91
43
32
4
80
245
181
6
2
88
10
70
4
865
802
477
Quarterly performance - MOSL universe

Sector
(No. of Companies)
Auto (5)
Capital Goods (9)
Cement (8)
Consumer (12)
Financials (25)
Private Banks (8)
PSU Banks (9)
NBFC (8)
Health Care (17)
Media (5)
Metals (10)
Oil & Gas (13)
Excl. RMs (10)
Real Estate (7)
Retail (4)
Technology (6)
Telecom (4)
Utilities (10)
Others (4)
MOSL (139)
Sensex (30)
October 2012
Sep.11
12.1
12.1
17.8
20.7
79.7
81.9
75.1
96.6
22.3
34.5
17.2
6.1
20.9
47.0
9.3
24.5
31.9
24.6
20.4
17.1
24.2
22.2
EBITDA Margin (%)

Sep.12
12.0
11.7
22.1
21.2
80.2
83.4
74.8
97.4
22.3
32.1
17.0
9.9
16.9
42.5
9.5
25.2
29.4
23.7
18.7
18.3
23.1
20.5
Chg. (%)
Sep.11
-0.1
-0.5
4.3
0.5
0.6
1.4
-0.4
0.8
0.1
-2.4
-0.2
3.8
-4.0
-4.5
0.2
0.7
-2.5
-0.9
-1.7
1.3
-1.0
-1.8
7.4
8.2
7.1
14.1
39.9
47.9
31.2
65.8
14.2
15.4
9.8
1.2
12.4
20.1
4.0
18.1
5.6
13.5
9.4
8.2
13.2
12.4
Net Profit Margin (%)

Sep.12
6.4
7.5
12.0
14.4
41.5
48.2
33.1
64.5
15.3
16.5
8.6
6.3
10.7
16.7
3.4
19.0
3.4
13.1
10.2
10.2
12.7
11.3
Chg. (%)
-1.0
-0.7
4.9
0.3
1.6
0.3
1.9
-1.3
1.0
1.1
-1.1
5.1
-1.8
-3.4
-0.6
0.9
-2.2
-0.4
0.8
2.0
-0.5
-1.1
B1
MOSL Universe
MOSL Universe: 2QFY13 aggregate performance highlights (Ex RMs)

Quarter-wise sales growth (% YoY)
Quarter-wise net profit growth (% YoY)

17.1%
22.2%
17.6%
15.3%
10.8%
12.8%
8.7%
5.1%
Dec-11
Ma r-12
June-12
Dec-11
Sep-12E
Ma r-12
June-12
Sep-12E
Sectoral sales growth - quarter ended September 2012 (%)

27
20
18
16
16
14
13
12
12
11
10
10
8
0
Utilities
Media
2
-2
-4
Real
Estate
Cement
Metals
Retail
Cap Goods
Telecom
MOSL Ex.
RMs
Financials
Consumer
Auto
Oil Ex. RMs
Healthcare
Technology
-13
Sectoral EBITDA growth - quarter ended September 2012 (%)

38
31
20
18
15
15
14
Metals
Oil Ex. RMs
Real
Estate
Media
Cap Goods
Telecom
Utilities
MOSL Ex.
RMs
Retail
Auto
Financials
Consumer
Healthcare
Technology
Cement
-21
-1
-6
-12
-28
-32
Sectoral net profit growth - quarter ended September 2012 (%)
October 2012
Metals
Real
Estate
Telecom
Retail
Cap Goods
Auto
Utilities
MOSL Ex.
RMs
17
Media
18
Consumer
19
Financials
28
Health
Care
Technology
Cement
34
Oil Ex. RMs
89
B2
October 2012
110
103
Top 10 by net profit growth (%)
98
-94
-82
Oil India
Strides
Arcolab
MCX
-48
-47
-42
Hero
Motocorp
BGR
Energy
-24
Maruti Suzuki
-31
-25
-11
-22
DLF
1,135
-28
-11
Oil India
Worst 10 by EBITDA growth (%)
NHPC
-18
Gujarat
State
-20
-14
DLF
-21
Unitech
-57
-22
-16
Tulip Telecom
MCX
-60
-51
BGR Energy
-63
DLF
271
Unitech
3,365
Reliance
Infrastructure
Worst 10 by net profit growth (%)
Maruti Suzuki
143
Reliance
Infrastructure
Hero
Motocorp
-49
Unitech
-62
-49
Shopper's
Stop
-55
Reliance
Comm
58
Tata Steel
60
Sesa Goa
37
Adani Power
Top 10 by EBITDA growth (%)
Sesa Goa
Godrej
Consumer
Divis Labs
39
Nalco
66
Ultratech
Cement
Jubilant
Foodworks
Dewan
Housing
Indraprastha
Gas
Power Grid
Corp.
MRPL
Shree
Cement
Petronet LNG
Cairn India
Top 10 by sales growth (%)
Pantaloon
Retail
Shopper's
Stop
120
40
Oriental
Bank of
139
76
ABB
77
43
ACC
145
Ambuja
Cements
Dishman
Pharma
79
43
United
Phosphorous
Cadila
Health
190
44
Sesa Goa
89
Cairn India
ACC
111
44
ABB
305
47
Strides
Arcolab
Birla
Corporation
Shree
Cement
MRPL
52
Cairn India
Chennai
Petroleum
MRPL
MOSL Universe
Corporate Scoreboard (quarter ended September 2012)

Worst 10 by sales growth (%)
84
-9
-21
-37
-37
Source: MOSL
B3
MOSL Universe
Annual performance - MOSL universe

Sales
EBITDA
FY12 FY13E FY14E Chg.# Chg.@ FY12 FY13E FY14E Chg.# Chg.@ FY12
(%)
(%)
(%)
(%)
Auto (5)
3,041 3,532
3,981 16.1 12.7
399
454
537
13.8 18.1
228
Capital Goods (9) 1,525 1,659
1,785
8.8
7.6
207
212
222
2.3
4.7
143
Cement (8)
853
963
1,104 12.9 14.7
190
228
260
20.1 13.8
99
Consumer (12)
1,005 1,175
1,360 17.0 15.7
204
247
292
20.7 18.4
138
Financials (27)
1,843 2,106
2,482 14.3 17.9 1,473 1,685 1,997
14.4 18.5
751
Private Banks (8) 400
484
583 20.9 20.5
336
410
499
22.0 21.6
207
PSU Banks (11) 1,222 1,350
1,576 10.5 16.7
917 1,010 1,184
10.1 17.2
395
NBFC (8)
221
272
323 23.1 18.8
219
265
315
20.8 19.0
148
Health Care (17)
739
880
966 19.0
9.9
176
205
223
16.8
8.5
104
Media (5)
101
112
128 10.9 14.2
32
36
41
9.7 16.6
15
Metals (10)
3,914 3,962
4,179
1.2
5.5
694
717
844
3.3 17.7
365
Oil & Gas (13)
14,578 16,160 16,193 10.8
0.2 1,447 1,421 1,577
-1.8 11.0
789
Excl. RMs (10)
6,603 7,546
7,422 14.3
-1.6 1,185 1,166 1,275
-1.6
9.3
653
Real Estate (11)
226
232
294
2.6 26.4
93
95
123
1.8 29.6
47
Retail (4)
240
281
328 16.9 17.0
23
27
32
17.6 21.4
9
Technology (6)
1,521 1,864
2,083 22.6 11.7
385
468
503
21.8
7.3
287
Telecom (4)
1,140 1,264
1,386 10.9
9.6
360
376
423
4.5 12.3
63
Utilities (10)
1,893 2,185
2,413 15.4 10.4
521
621
726
19.1 16.8
350
Others (4)
157
173
192
9.8 11.4
32
34
39
6.3 16.2
18
MOSL (145)
32,778 36,547 38,875 11.5
6.4 6,236 6,824 7,837
9.4 14.8 3,405
Excl. RMs (142)
24,803 27,933 30,104 12.6
7.8 5,973 6,570 7,534
10.0 14.7 3,269
Sensex (30)
8,597 9,740 10,314 13.3
5.9 1,739 1,902 2,160
9.4 13.5
945
Nifty (50)
9,902 10,978 11,605 10.9
5.7 1,981 2,183 2,474
10.2 13.3 1,077
# Growth FY13 over FY12; @ Growth FY14 over FY13. For Banks : Sales = Net Interest Income,
Note: Sensex & Nifty Numbers are Free Float.
(INR Billion)
Net Profit
FY13E FY14E Chg.# Chg.@
(%)
(%)
219
274
-3.8 24.8
144
146
0.8
0.8
118
134 18.9 13.2
166
198 20.4 18.8
874 1,022 16.4 17.0
248
294 19.8 18.3
449
519 13.6 15.5
176
209 18.8 18.9
127
152 22.1 19.7
17
20 14.5 20.3
381
451
4.5 18.3
761
810
-3.6
6.5
677
712
3.8
5.1
46
60
-1.4 30.0
10
14 18.2 32.3
352
382 22.6
8.5
48
73 -22.8 50.2
384
428
9.7 11.4
19
22
4.4 19.5
3,666 4,184
7.7 14.1
3,583 4,085
9.6 14.0
1,039 1,187
9.9 14.3
1,199 1,363 11.3 13.7
EBITDA = Operating Profits;
Valuations - MOSL universe

Sector
(No. of companies)
Auto (5)
Capital Goods (9)
Cement (8)
Consumer (12)
Financials (27)
Private Banks (8)
PSU Banks (11)
NBFC (8)
Health Care (17)
Media (5)
Metals (10)
Oil & Gas (13)
Excl. RMs (10)
Real Estate (11)
Retail (4)
Technology (6)
Telecom (4)
Utilities (10)
Others (4)
MOSL (145)
Sensex (30)
Nifty (50)
N.M. - Not Meaningful.
October 2012
P/E
(x)
FY12 FY13E FY14E
EV/EBITDA
(x)
FY12 FY13E FY14E
P/BV
(x)
FY12 FY13E FY14E
RoE
Div.
PAT
(%)
yld (%) CAGR
FY12 FY13E FY14E FY12 FY12-14
11.9
16.5
18.1
38.1
12.3
19.7
7.4
15.1
26.4
32.0
9.6
9.9
10.5
18.0
45.2
19.3
22.7
14.6
16.7
14.6
14.9
16.7
16.3
6.7
10.7
9.8
25.5
NM
NM
NM
NM
15.9
14.4
6.4
6.2
5.6
14.0
19.0
13.5
7.2
11.0
10.3
N.M
N.M
N.M
N.M
3.9
3.6
2.8
13.3
2.1
3.1
1.3
2.9
5.2
5.7
1.3
1.6
1.7
1.1
7.3
4.9
1.5
2.4
3.6
2.5
2.5
2.9
2.7
32.4
21.6
15.8
34.9
17.3
15.9
17.4
19.5
19.7
17.7
13.3
15.8
16.0
6.1
16.0
25.2
6.5
16.3
21.8
16.8
16.9
17.1
16.7
12.4
16.4
15.2
31.6
10.6
16.4
6.5
12.7
21.6
27.9
9.2
10.3
10.1
18.3
38.3
15.7
29.5
13.3
16.0
13.5
13.6
15.4
15.0
9.9
16.3
13.4
26.6
9.0
13.9
5.6
10.7
18.1
23.2
7.8
9.6
9.6
14.0
28.9
14.5
19.6
12.0
13.4
11.8
11.9
13.5
13.2
5.6
10.6
8.3
21.0
NM
NM
NM
NM
13.6
12.8
6.5
6.2
5.6
13.4
16.1
10.8
6.9
9.6
9.5
N.M
N.M
N.M
N.M
4.6
10.0
7.1
17.6
NM
NM
NM
NM
12.3
10.7
5.6
5.5
5.0
10.0
13.2
9.7
5.8
8.4
7.9
N.M
N.M
N.M
N.M
3.0
3.1
2.6
10.8
1.8
2.7
1.1
2.5
4.3
5.0
1.2
1.4
1.5
1.1
6.4
4.1
1.4
2.2
3.3
2.2
2.2
2.6
2.6
2.5
2.8
2.2
9.1
1.6
2.4
0.9
2.1
3.7
4.5
1.1
1.3
1.4
1.0
5.5
3.4
1.3
1.9
2.9
1.9
2.0
2.3
2.3
24.4
19.1
16.8
34.2
17.2
16.7
16.7
19.4
20.1
18.0
12.8
13.9
14.9
5.8
16.7
26.4
4.9
16.1
20.5
16.1
16.4
16.9
17.0
25.1
17.1
16.7
34.0
17.5
17.4
16.8
19.9
20.6
19.4
13.6
13.4
14.1
7.0
19.1
23.5
6.9
16.2
21.5
16.3
16.5
17.0
17.0
1.7
1.5
1.0
1.2
1.8
1.1
2.5
2.1
1.0
1.2
1.9
2.0
2.0
0.9
0.6
1.8
0.4
2.4
2.1
1.7
1.7
1.6
1.6
Source:
9.6
0.8
16.0
19.6
16.7
19.1
14.6
18.9
20.9
17.4
11.2
1.3
4.4
13.2
25.0
15.3
7.7
10.6
11.7
10.9
11.8
12.1
12.5
MOSL
B4
MOSL Universe
Ready reckoner: quarterly performance

(INR Million)
CMP
(INR)
28.09.12
Rating
Sep.12
Sales
Var.
% YoY
Var.
% QoQ
Sep.12
EBITDA
Var.
% YoY
Var.
% QoQ
Sep.12
Net Profit
Var.
% YoY
Var.
% QoQ
Automobiles
Bajaj Auto
Hero Motocorp
Mahindra & Mahindra
Maruti Suzuki
Tata Motors
Sector Aggregate
1,833
1,879
865
1,350
267
Buy
Buy
Buy
Buy
Buy
48,254
51,770
95,445
82,507
442,658
720,634
-6.9
-10.5
30.6
5.4
22.3
15.7
-0.8
-16.6
3.2
-23.4
2.2
-3.2
8,573
4,801
11,193
3,909
57,988
86,465
-12.1
-27.7
28.1
-20.9
28.7
15.1
-1.7
-28.3
0.9
-50.3
0.8
-5.9
7,005
4,401
8,656
1,175
24,824
46,061
-11.3
-27.1
17.4
-51.1
10.5
-0.2
-2.5
-28.5
19.3
-72.3
-3.2
-8.8
Capital Goods
ABB
BGR Energy
BHEL
Crompton Greaves
Cummins India
Havells India
Larsen & Toubro
Siemens
Thermax
Sector Aggregate
798
275
247
126
508
625
1,597
709
561
Neutral
Neutral
Neutral
Neutral
Neutral
Buy
Buy
Neutral
Neutral
19,190
7,038
105,257
29,629
12,056
9,796
132,967
35,693
12,020
363,645
10.1
-8.8
2.2
9.5
10.6
15.0
18.2
-1.1
-7.8
8.2
1.9
15.2
26.4
5.4
-4.2
-5.4
11.2
25.5
22.2
14.7
1,109
883
17,694
1,981
2,230
1,162
13,297
2,914
1,142
42,411
66.3
-19.9
-1.3
-12.4
26.8
12.9
13.3
0.7
-18.7
4.0
4.6
0.4
47.2
18.8
-4.1
-4.9
6.6
201.6
18.5
26.3
543
296
12,329
1,003
1,584
784
8,223
1,579
837
27,179
145.1
-42.3
-4.1
-14.0
23.2
5.9
3.0
-11.3
-17.7
-1.4
5.2
-11.5
33.9
16.8
-12.3
-10.9
-18.0
333.8
24.6
10.2
Cement
ACC
Ambuja Cements
Birla Corporation
Grasim Industries
India Cements
Shree Cement
Ultratech Cement
Sector Aggregate
1,469
202
282
3,315
95
82
3,954
1,968
Neutral
Buy
Buy
Buy
Buy
Buy
Buy
Buy
24,042
21,709
5,456
11,736
11,466
32,233
10,927
44,095
161,664
11.8
20.3
5.8
-2.5
5.3
2.9
47.4
12.8
11.1
-13.4
-15.4
-17.1
-5.3
-4.6
8.8
-24.9
-13.1
-9.9
4,167
5,512
766
2,856
2,519
7,266
3,216
9,358
35,661
89.0
77.0
142.7
-1.7
0.0
-2.9
111.1
60.3
37.7
-36.0
-23.7
-39.1
-3.3
-9.3
-5.8
-33.2
-27.6
-22.7
2,497
3,561
404
3,597
854
943
2,166
5,402
19,423
103.2
92.1
54.5
4.3
22.5
-26.7
LP
93.6
89.0
-40.3
-24.1
-52.3
31.8
14.1
-31.6
-38.4
-30.6
-24.9
Consumer
Asian Paints
Britannia
Colgate
Dabur
Godrej Consumer
GSK Consumer
Hind. Unilever
ITC
Marico
Nestle
Pidilite Inds.
United Spirits
Sector Aggregate
3,937
476
1,206
128
668
2,994
545
272
199
4,374
206
1,218
Neutral
Sell
Sell
Neutral
Neutral
Neutral
Neutral
Buy
Buy
Neutral
Buy
Neutral
25,500
14,500
7,700
14,700
16,250
8,100
64,500
69,700
11,500
22,750
8,450
19,700
283,350
13.3
12.0
17.2
16.5
37.0
12.5
15.0
14.5
18.0
15.9
19.0
10.0
15.6
0.4
18.7
4.6
0.5
17.0
11.0
1.1
3.8
-9.2
14.5
-7.4
-4.2
3.4
3,825
827
1,670
2,852
2,860
1,377
9,869
25,650
1,564
4,960
1,622
2,916
59,990
18.5
7.1
18.2
20.5
36.9
16.7
19.4
15.6
34.1
20.9
24.6
13.9
18.5
-12.6
27.1
2.8
38.4
43.8
24.4
2.1
8.3
-15.4
15.5
-14.9
-13.0
6.1
2,428
548
1,253
2,122
1,736
1,153
7,784
17,680
1,074
2,954
1,108
828
40,669
16.3
12.3
16.5
22.1
35.9
11.9
19.3
16.8
37.2
10.0
28.2
-2.3
17.7
-15.8
26.2
6.7
37.5
33.0
8.2
-8.9
10.4
-13.3
21.6
-16.9
-25.1
4.1
PULL OUT
October 2012
B5
MOSL Universe

(INR Million)
Healthcare
Biocon
Cadila Health
Cipla
Dishman Pharma
Divis Labs
Dr Reddy s Labs
Glenmark Pharma
GSK Pharma
IPCA Labs.
Jubilant Life
Lupin
Opto Circuits
Ranbaxy Labs
Sanofi India
Strides Arcolab
Sun Pharma
Torrent Pharma
Sector Aggregate
CMP
(INR)
28.09.12
Rating
Sep.12
Sales
Var.
% YoY
Var.
% QoQ
Sep.12
EBITDA
Var.
% YoY
Var.
% QoQ
Sep.12
Net Profit
Var.
% YoY
Var.
% QoQ
275
872
381
96
1,080
1,647
422
1,977
482
212
596
130
530
2,374
883
693
695
Neutral
Buy
Neutral
Neutral
Buy
Buy
Buy
Buy
Buy
Neutral
Buy
Neutral
Neutral
Neutral
Buy
Neutral
Buy
6,067
15,810
20,468
3,436
4,932
24,822
11,589
6,674
7,133
12,803
20,925
7,012
25,341
3,901
6,185
22,526
8,290
207,915
19.3
27.0
15.1
27.6
39.3
15.1
25.0
9.8
14.4
22.2
27.2
24.8
20.9
24.8
-19.6
26.4
21.3
19.7
5.2
2.1
17.2
9.0
5.3
8.9
17.5
2.4
12.4
3.6
2.1
-1.9
10.0
4.3
21.7
-2.2
8.1
6.8
1,453
3,439
5,156
830
1,833
4,542
2,076
2,082
1,639
2,691
3,674
1,885
2,706
636
1,555
8,583
1,659
46,439
8.9
24.7
17.8
76.5
45.2
8.6
19.9
18.3
3.7
14.0
32.9
21.9
55.4
26.4
-9.6
20.1
18.0
20.2
18.4
0.6
24.8
-0.7
-3.8
26.4
12.8
2.7
23.3
-0.1
12.4
-0.7
9.1
21.8
37.6
-17.5
6.4
4.9
886
2,158
3,735
304
1,350
2,229
1,426
1,720
1,098
1,326
2,442
1,337
1,688
499
1,347
7,063
1,119
31,728
3.4
110.1
20.9
LP
27.3
-17.0
91.5
17.8
40.9
67.0
21.5
10.5
4.2
-8.9
189.9
29.5
11.9
28.2
12.4
10.8
22.2
-21.6
-19.4
-4.3
181.5
1.4
155.5
43.8
16.4
-3.1
-2.0
23.3
1050.3
5.2
9.8
16.7
Media
Dish TV
HT Media
Jagran Prakashan
Sun TV
Zee Entertainment
Sector Aggregate
83
93
91
349
196
Neutral
Neutral
Neutral
Buy
Neutral
5,406
4,982
3,317
4,491
8,640
26,836
12.1
1.0
8.6
-0.5
20.3
9.5
4.0
1.7
4.5
5.5
2.5
3.4
1,548
674
864
3,518
1,997
8,602
27.1
-5.3
9.3
-3.7
-3.8
1.8
-0.5
0.8
9.6
8.9
-14.4
0.3
-100
403
729
1,787
1,598
4,417
Loss
-8.0
59.2
-0.8
2.4
17.1
Loss
-0.9
30.7
8.8
1.0
14.3
Metals
Hindalco
Hindustan Zinc
JSPL
JSW Steel
Nalco
NMDC
SAIL
Sesa Goa
Sterlite Inds.
Tata Steel
Sector Aggregate
121
135
428
757
51
194
85
171
99
401
Buy
Buy
Neutral
Sell
Neutral
Buy
Sell
Neutral
Buy
Sell
197,200
26,853
50,958
83,636
16,991
28,466
107,892
3,363
104,064
312,934
932,355
2.0
1.8
15.2
9.6
5.3
-7.0
-3.6
-57.4
2.1
-4.6
-0.5
-1.0 22,023
-2.3 14,162
8.4 15,591
-7.5 14,335
-2.8
2,418
0.2 22,246
0.1 13,918
-80.6
1,001
-2.3 24,805
-7.5 28,051
-4.8 158,550
1.8
-3.3
-13.6
9.4
58.5
-8.7
4.9
-61.5
-0.1
2.0
-1.8
10.0
-0.9
-2.1
-19.1
-20.5
-3.4
-8.2
-85.2
7.5
-22.1
-9.4
9,117
13,555
8,401
3,882
1,714
18,226
6,377
5,621
12,653
791
80,338
-15.5
-0.6
-20.0
-35.2
23.0
-7.2
-36.4
138.8
-15.3
-62.8
-12.1
1.2
-14.3
-12.4
-41.5
-23.2
-4.4
-27.8
-50.5
-10.8
-90.0
-23.2
14.4
-24.2
-18.3
8.2
-2.3
-12.0
7.3
-6.0
-8.9
-7.4
1,057
712
751
1,568
4,087
11.2
-20.6
-23.8
119.9
15.3
-12.6
10.0
-0.8
-22.7
-12.0
Others
Castrol India
MCX
Sintex Inds.
United Phosphorous
Sector Aggregate
311
1,284
67
131
Buy
Buy
Buy
Buy
7,745
1,283
10,710
20,360
40,097
15.3
-17.7
-7.4
14.7
6.6
-9.0
4.3
-0.9
-8.1
-6.1
1,490
811
1,669
3,521
7,492
PULL OUT
October 2012
B6
MOSL Universe

(INR Million)
Sep.12
Sales
Var.
% YoY
346
331
129
383
81
307
251
265
61
490
280
158
837
Buy
571,811
Neutral
48,725
Buy
100,501
Neutral
111,932
Neutral
2,426
Buy
496,111
Buy
1,115,444
UR
8,530
Neutral
168,502
Buy
25,886
Buy
217,664
Buy
81,708
Neutral
937,028
3,886,267
1,702,901
35.2
83.7
6.7
15.4
-13.6
34.0
25.1
42.9
44.4
-20.8
-3.8
52.2
19.3
24.3
18.1
71
234
98
378
265
196
24
Buy
Buy
Neutral
Buy
Buy
Buy
Buy
868
21,370
4,192
1,173
2,134
628
4,888
35,252
-4.9
-15.6
-5.1
25.0
-4.1
32.5
-21.9
-13.1
-12.2
-2.8
108.4
12.6
6.7
0.3
19.9
7.7
425
8,762
3,144
293
1,238
396
709
14,966
-16.5
-25.3
-14.6
13.5
7.1
18.7
-48.7
-21.4
-15.1
-17.9
8.2
-8.0
8.7
0.4
29.5
-9.2
Retail
Jubilant Foodworks
Pantaloon Retail
Shopper's Stop
Titan Industries
Sector Aggregate
1,373
214
401
262
Neutral
Neutral
Neutral
Neutral
3,450
30,562
5,660
24,450
64,122
43.5
5.0
13.8
16.6
11.6
9.7
3.2
26.7
10.9
8.1
628
2,812
198
2,469
6,107
46.9
11.4
-48.8
23.3
14.4
Technology
HCL Technologies
Infosys
MphasiS
TCS
Tech Mahindra
Wipro
Sector Aggregate
577
2,534
402
1,294
972
381
Buy
Buy
Sell
Neutral
Neutral
Buy
62,080
100,052
13,551
157,685
16,291
110,824
460,483
33.5
23.5
3.1
35.5
22.2
21.9
27.5
4.9 11,987
4.0 30,956
0.0
2,768
6.1 46,122
5.6
3,085
4.0 21,299
4.8 116,217
195,659
54,458
52,462
7,328
309,908
13.3
17.9
4.1
4.2
12.2
Oil & Gas

BPCL
Cairn India
Chennai Petroleum
GAIL
HPCL
IOC
Indraprastha Gas
MRPL
Oil India
ONGC
Petronet LNG
Reliance Inds.
Sector Aggregate
Oil & Gas Excl. RMs
UR = Under Review
Real Estate
Anant Raj Inds
DLF
HDIL
Mahindra Lifespace
Oberoi Realty
Phoenix Mills
Unitech
Sector Aggregate
CMP
(INR)
28.09.12
Rating
Telecom
Bharti Airtel
265
Neutral
Idea Cellular
85
Buy
Reliance Comm
65
Neutral
Tulip Telecom
46
Sell
Sector Aggregate
PL: Profit to Loss; LP: Loss to Profit
Sep.12
EBITDA
Var.
% YoY
4.9 17,903
9.7 37,609
-8.9
4,499
0.9 13,935
-9.3
2,218
12.6 16,697
15.5 62,858
12.2
1,861
31.5
9,306
10.9 12,679
8.4 119,438
16.2
4,380
2.0 82,024
8.9 385,406
5.3 287,949
LP
78.8
LP
-15.5
-14.2
LP
LP
18.3
1134.8
-21.7
-15.6
-2.3
-16.7
101.9
-4.4
Var.
% QoQ
1.1
-1.1
-1.4
2.3
0.3
59,536
13,775
15,916
1,949
91,177
Var.
% QoQ
Sep.12
Net Profit
Var.
% YoY
LP 10,183
7.7 28,308
LP
2,962
-26.6
8,364
-10.0
1,085
LP 11,403
LP 41,570
3.8
866
LP
8,361
15.7
9,399
8.2 64,009
-4.2
2,616
21.6 55,482
LP 244,609
24.8 181,453
Var.
% QoQ
LP
271.0
304.7
-23.6
-16.1
LP
LP
12.2
3365.2
-17.4
-25.9
0.5
-2.7
539.3
1.3
LP
-26.0
LP
-26.2
-13.1
LP
LP
1.9
LP
1.1
5.3
-3.4
24.0
LP
25.7
299
2,331
1,084
303
1,090
301
492
5,901
-13.8
-37.4
-27.3
-3.4
-2.2
26.2
-46.8
-27.6
-15.6
-20.4
2.9
3.5
8.1
-1.5
7.2
-7.8
9.6
1.8
43.7
16.5
9.2
344
21
36
1,764
2,165
45.5
-93.6
-81.8
15.4
-5.5
6.4
-45.3
186.0
13.0
11.8
54.4
23.0
17.9
36.3
51.1
22.4
31.3
-6.2
5.1
3.5
6.4
-6.6
-0.6
2.9
7,932
24,015
2,092
34,563
2,978
15,927
87,506
65.3
26.0
14.3
41.7
23.7
22.4
33.6
-5.7
4.9
0.2
5.4
-12.0
0.8
2.5
2.4
16.1
-0.8
-4.1
3.5
1.8
-4.0
-3.5
1.6
-0.1
6,563
2,036
1,281
545
10,424
-36.1
92.5
-60.3
-37.4
-32.4
-13.9
-13.1
-33.1
-0.4
-16.1
PULL OUT
October 2012
B7
MOSL Universe

(INR Million)
CMP
(INR)
28.09.12
Utilities
Adani Power
CESC
Coal India
JSW Energy
NHPC
NTPC
Power Grid Corp.
PTC India
Tata Power
Sector Aggregate
PL: Profit to Loss; LP: Loss
53
331
359
61
19
168
120
71
539
107
Rating
Sep.12
Sales
Var.
% YoY
Sep.12
EBITDA
Var.
% YoY
Var.
% QoQ
Sep.12
Neutral
Buy
Buy
Buy
Neutral
Buy
Buy
Buy
Buy
Neutral
11,649
12,980
147,128
20,198
16,515
155,840
31,672
29,853
37,700
70,935
534,468
8.6
4.6
11.9
102.7
-11.1
1.3
39.9
25.0
-4.6
13.5
10.1
-20.4
2,320
-8.6
2,882
-10.8 27,321
-7.8
5,438
16.2 11,540
-2.4 31,290
9.7 27,572
50.2
536
9.4
4,901
-2.2 13,048
-2.0 126,847
-55.3
10.8
10.3
360.2
-13.1
-3.4
45.3
20.8
-30.9
-3.4
6.2
88.3
-0.6
-43.3
-6.8
27.7
-13.8
11.9
71.4
6.6
-7.7
-13.8
-2,872
1,297
27,919
1,100
8,533
18,604
9,392
423
2,551
3,097
70,044
PL
13.8
25.0
LP
9.8
25.7
23.6
19.0
-48.0
-30.0
7.0
Loss
3.8
-37.7
-43.6
32.3
-22.1
3.6
84.9
-22.0
1.2
-22.6
Rating
Net Interest Income

Sep.12
Var.
Var.
% YoY % QoQ
Operating Profit
Var.
Var.
% YoY % QoQ
Sep.12
Net Profit
Var.
% YoY
Var.
% QoQ
Var.
% QoQ
Net Profit
Var.
% YoY
Var.
% QoQ
to Profit
CMP
(INR)
28.09.12
Financials
Private Banks
Axis Bank
1,137
Buy
Federal Bank
446
Buy
HDFC Bank
629
Neutral
ICICI Bank
1,057
Buy
IndusInd Bank
354
Buy
ING Vysya Bank
407
Buy
Kotak Mahindra Bank
648
Neutral
Yes Bank
382
Buy
Pvt Banking Sector Aggregate
PSU Banks
Andhra Bank
113
Buy
Bank of Baroda
799
Neutral
Bank of India
310
Neutral
Canara Bank
431
Buy
Indian Bank
192
Buy
Oriental Bank
302
Buy
840
Buy
State Bank
2,238
Buy
Union Bank
208
Buy
PSU Banking Sector Aggregate
PSU Banking Sector Aggregate Ex SBI
NBFC
Dewan Housing
200
Buy
HDFC
773
Buy
IDFC
154
Buy
LIC Housing Fin
282
Buy
M & M Financial
898
Buy
Power Finance Corp
189
Buy
Rural Electric. Corp.
218
Buy
Shriram Transport Fin.
619
Buy
NBFC Banking Sector Aggregate
Financials Sector Aggregate
22,743
5,190
36,067
32,582
5,232
3,527
7,463
4,975
117,778
13.3
9.4
22.5
30.0
24.8
16.1
23.3
29.0
22.1
9,737
28,121
23,844
19,006
11,991
11,799
37,455
114,777
19,468
276,198
161,421
1,596
14,663
6,548
3,817
5,214
14,031
11,711
8,384
65,964
459,940
4.3
5.6
3.5
2.0
8.1
2.7
3.5
5.4
3.6
Sep.12
20,314
3,835
27,598
30,430
4,300
2,254
4,564
4,893
98,187
14.4
6.1
29.8
29.3
29.1
19.0
20.1
26.8
24.2
3.5
10.7
6.9
3.2
6.4
3.6
1.8
6.5
4.8
11,242
2,006
15,616
18,236
2,481
1,321
2,764
3,066
56,733
22.2
4.9
30.2
21.3
28.5
14.5
6.3
30.5
22.9
-2.5
5.4
10.2
0.5
5.0
1.5
-2.1
5.7
2.9
2.4
9.6
25.2
-3.1
5.6
19.2
8.5
9.5
17.2
10.0
10.4
3.8
6,990
0.5 22,446
16.7 18,708
3.1 13,970
4.0
8,908
4.8
8,840
1.4 28,275
3.2 84,660
6.9 13,685
4.1 206,482
4.7 121,822
1.8
5.5
20.6
-13.0
-3.3
16.6
11.9
13.3
13.6
9.5
7.0
-0.6
0.2
11.8
0.2
6.0
-1.4
-0.5
3.5
8.0
3.1
2.7
3,209
10,833
7,095
7,336
4,709
3,320
12,183
36,952
5,834
91,472
54,520
1.5
-7.1
44.5
-13.9
0.5
98.0
1.1
31.5
65.5
16.8
8.6
-11.3
-4.9
-20.0
-5.4
2.0
-15.2
-2.2
-1.5
14.0
-4.0
-5.6
43.3
17.9
31.5
14.2
33.6
29.9
23.3
0.4
21.2
14.4
11.1
1,417
12.4 16,413
4.1
6,793
8.9
3,730
6.9
3,430
0.7 13,806
0.5 11,801
4.5
6,882
5.1 64,272
4.1 368,940
44.1
21.2
31.0
11.2
35.1
30.9
23.0
0.9
22.2
15.2
18.5
954
15.6 11,592
3.6
4,002
7.2
2,559
5.6
1,863
0.4
9,713
-1.5
8,548
1.4
3,295
5.0 42,527
3.9 190,732
32.8
19.4
20.5
1.3
37.4
21.1
19.3
10.1
18.7
19.0
22.7
15.7
5.4
12.4
15.7
-5.6
-5.5
2.4
3.6
-0.4
PULL OUT
October 2012
B8
MOSL Universe
Ready reckoner: valuations

CMP (INR)
28.09.12
Automobiles
Bajaj Auto
Hero Motocorp
Mahindra & Mah.
Maruti Suzuki
Tata Motors
Sector Aggregate
1,833
1,879
865
1,350
267
Rating
EPS (INR)
FY12 FY13E FY14E
P/E (x)
FY12 FY13E FY14E
EV/EBITDA (x)
FY12 FY13E FY14E
RoE (%)
FY12 FY13E FY14E
Buy
Buy
Buy
Buy
Buy
107.4
119.1
51.2
58.2
37.8
99.3
108.0
63.7
67.2
33.2
124.3
124.1
78.4
94.8
41.3
17.1
15.8
16.9
23.2
7.1
11.9
18.4
17.4
13.6
20.1
8.0
12.4
14.7
15.1
11.0
14.2
6.5
9.9
12.5
13.4
5.9
13.2
4.6
6.7
12.9
14.5
4.7
9.0
3.8
5.6
9.9
11.2
3.8
6.3
3.1
4.6
56.7
55.4
23.0
10.8
38.4
32.4
43.3
41.8
21.7
10.5
25.2
24.4
44.5
39.7
19.3
13.2
24.7
25.1
Capital Goods
ABB
798
BGR Energy
275
BHEL
247
Crompton Greaves
126
Cummins India
508
Havells India
625
Larsen & Toubro
1,597
Siemens
709
Thermax
561
Sector Aggregate
Neutral
Neutral
Neutral
Neutral
Neutral
Buy
Buy
Neutral
Neutral
8.7
31.0
28.2
5.7
19.8
29.6
78.0
16.9
33.9
11.3
21.1
24.9
9.3
24.1
31.1
85.2
23.1
27.1
17.4
25.3
20.3
12.6
25.6
41.4
91.4
31.3
31.5
91.6
8.9
8.8
22.0
25.6
21.1
20.5
42.0
16.6
16.5
70.9
13.0
9.9
13.6
21.0
20.1
18.7
30.7
20.7
16.4
45.7
10.9
12.2
10.0
19.8
15.1
17.5
22.7
17.8
16.3
58.6
6.1
5.4
10.7
19.0
13.0
14.3
23.3
9.9
10.7
41.7
8.0
6.1
8.4
15.2
12.1
12.7
17.0
11.4
10.6
27.6
8.2
7.3
6.5
13.7
9.6
10.9
12.8
9.0
10.0
7.4
22.2
30.3
10.7
28.8
38.7
17.8
14.6
27.4
21.6
9.1
13.4
22.2
15.6
30.7
31.7
17.1
18.8
18.7
19.1
13.0
14.5
16.0
18.7
28.9
32.1
16.4
23.0
19.2
17.1
Cement
ACC
Ambuja Cements
Birla Corporation
Grasim Industries
India Cements
J P Associates
Shree Cement
Ultratech Cement
Sector Aggregate
1,469
202
282
3,315
95
82
3,954
1,968
Neutral
Buy
Buy
Buy
Buy
Buy
Buy
Buy
59.0
8.2
31.1
288.6
9.6
4.8
274.4
87.5
73.3
11.9
33.0
348.3
11.1
3.6
310.2
109.5
86.4
13.2
32.9
375.8
14.8
4.6
361.4
122.6
24.9
24.7
9.1
11.5
9.9
17.1
14.4
22.5
18.1
20.0
17.0
8.5
9.5
8.5
23.1
12.7
18.0
15.2
17.0
15.3
8.6
8.8
6.4
17.9
10.9
16.1
13.4
14.6
14.5
5.8
5.2
5.9
9.4
9.0
13.4
9.8
11.0
10.0
5.5
4.5
5.2
9.6
6.9
11.3
8.3
9.6
8.8
5.1
3.6
4.2
8.5
5.8
9.7
7.1
16.2
16.3
10.7
15.5
7.3
10.4
40.5
20.4
15.8
18.5
21.5
10.5
16.0
7.3
7.6
34.4
21.2
16.8
20.0
21.1
9.7
15.0
8.9
9.8
31.7
19.9
16.7
Consumer
Asian Paints
Britannia
Colgate
Dabur
Godrej Consumer
GSK Consumer
Hind. Unilever
ITC
Marico
Nestle
Pidilite Inds.
United Spirits
Sector Aggregate
3,937
476
1,206
128
668
2,994
545
272
199
4,374
206
1,218
Neutral
Sell
Sell
Neutral
Neutral
Neutral
Neutral
Buy
Buy
Neutral
Buy
Neutral
103.1
15.6
33.4
3.7
16.3
84.5
11.9
8.0
5.2
105.7
7.0
19.5
117.8
18.4
38.6
4.4
21.6
101.7
15.5
9.4
6.8
117.1
8.4
19.3
137.3
23.7
43.8
5.4
26.3
113.5
18.0
11.0
8.5
138.5
10.1
35.1
38.2
30.4
36.1
34.6
41.0
35.4
45.7
34.1
38.4
41.4
29.5
62.4
38.1
33.4
25.9
31.2
29.0
30.9
29.4
35.1
29.0
29.4
37.4
24.5
63.2
31.6
28.7
20.1
27.6
23.6
25.4
26.4
30.2
24.7
23.6
31.6
20.4
34.7
26.6
24.4
21.9
26.7
26.4
29.0
22.2
34.6
22.9
27.7
27.6
20.4
18.6
25.5
21.0
16.8
22.6
21.4
21.9
19.0
27.2
19.1
20.5
22.7
15.4
16.5
21.0
17.4
12.1
19.3
17.5
17.9
16.6
23.3
16.0
16.3
18.7
12.5
14.8
17.6
36.0
34.9
107.7
37.1
25.2
31.0
74.6
32.7
28.0
95.7
26.3
4.9
34.9
34.0 33.2
35.1 37.9
111.3 103.5
36.0 36.2
23.1 24.3
31.4 29.8
72.1 63.4
32.5 32.4
21.6 21.8
73.6 63.5
24.6 24.8
4.7
7.9
34.2 34.0
PULL OUT
October 2012
B9
MOSL Universe

CMP (INR)
28.09.12
Rating
EPS (INR)
FY12 FY13E FY14E
P/E (x)
FY12 FY13E FY14E
EV/EBITDA (x)
FY12 FY13E FY14E
RoE (%)
FY12 FY13E FY14E
275
872
381
96
1,080
1,647
422
1,977
482
212
596
130
530
2,374
883
693
695
Neutral
Buy
Neutral
Neutral
Buy
Buy
Buy
Buy
Buy
Neutral
Buy
Neutral
Neutral
Neutral
Buy
Neutral
Buy
16.9
27.6
14.0
7.0
40.2
71.4
11.4
74.5
21.9
13.6
19.4
23.6
14.1
83.0
38.5
22.4
38.4
17.9
41.2
16.2
15.6
53.0
85.1
18.2
81.0
29.3
21.0
24.1
22.5
18.0
73.5
52.8
26.5
49.5
18.4
52.4
18.4
17.5
64.1
100.1
26.3
92.6
38.2
33.4
31.2
25.3
21.8
92.4
61.5
29.4
59.0
16.2
31.5
27.2
13.8
26.9
23.1
37.0
26.5
22.0
15.5
30.7
5.5
37.5
28.6
23.0
30.9
18.1
26.4
Media
Dish TV
HT Media
Jagran Prakashan
Sun TV
Zee Entertainment
Sector Aggregate
83
93
91
349
196
Neutral
Neutral
Neutral
Buy
Neutral
-1.5
7.0
5.6
17.6
5.9
-0.5
6.0
5.6
18.2
7.0
0.3
6.8
6.5
20.1
8.5
Metals
Hindalco
Hindustan Zinc
JSPL
JSW Steel
Nalco
NMDC
SAIL
Sesa Goa
Sterlite Inds.
Tata Steel
Sector Aggregate
121
135
428
757
51
194
85
171
99
401
Buy
Buy
Neutral
Sell
Neutral
Buy
Sell
Neutral
Buy
Sell
17.1
13.2
42.4
66.5
3.4
18.5
9.0
31.8
16.7
18.6
18.9
14.4
39.8
49.9
3.5
20.4
6.7
36.1
16.3
31.2
20.6
16.7
38.5
73.7
3.3
24.9
8.6
33.5
17.7
56.6
7.1
10.3
10.1
11.4
15.2
10.5
9.5
5.4
6.0
21.6
9.6
Buy
Buy
Buy
Buy
9.8
56.1
13.0
12.8
9.5
56.1
13.0
14.9
11.7
66.5
15.3
19.5
31.7
22.9
5.1
10.3
16.7
Healthcare
Biocon
Cadila Health
Cipla
Dishman Pharma
Divis Labs
Dr Reddy s Labs
Glenmark Pharma
GSK Pharma
IPCA Labs.
Jubilant Life
Lupin
Opto Circuits
Ranbaxy Labs
Sanofi India
Strides Arcolab
Sun Pharma
Torrent Pharma
Sector Aggregate
Others
Castrol India
311
MCX
1,284
Sintex Inds.
67
United Phosphorous 131
Sector Aggregate
15.3
21.2
23.5
6.2
20.4
19.4
23.2
24.4
16.4
10.1
24.8
5.8
29.5
32.3
16.7
26.2
14.0
21.6
14.9
16.7
20.7
5.5
16.9
16.5
16.0
21.4
12.6
6.3
19.1
5.1
24.3
25.7
14.4
23.6
11.8
18.1
9.0
17.3
17.6
7.6
20.3
12.3
13.3
19.6
12.8
8.4
21.0
6.7
14.6
29.7
15.9
20.5
11.3
15.9
8.3
13.9
15.0
4.8
15.6
14.0
14.2
18.3
10.3
6.0
16.3
5.6
12.4
24.1
11.4
16.5
9.0
13.6
8.0
11.3
14.0
4.3
12.3
12.4
11.3
15.7
8.7
5.0
13.4
4.9
16.5
19.4
10.7
15.7
7.3
12.3
14.9
23.8
15.0
6.3
25.0
21.1
13.5
32.9
24.0
9.7
23.8
37.2
-72.0
17.3
16.9
21.5
29.3
19.7
14.3
29.0
15.0
12.9
27.5
21.9
17.7
33.5
26.4
13.5
24.3
28.7
28.3
13.9
18.5
20.7
30.9
20.1
13.4
29.3
15.1
12.9
27.7
22.7
20.5
34.2
27.6
18.8
26.2
26.6
15.7
15.6
14.5
19.7
29.2
20.6
-55.2 -181.0
13.2
15.5
16.2
16.3
19.8
19.2
33.2
27.9
32.0
27.9
264.6
13.8
14.1
17.4
23.1
23.2
19.3
6.4
10.3
9.6
24.9
14.4
15.2
6.3
8.9
9.1
20.7
12.8
11.7
5.2
8.1
7.8
17.0
10.7
NA
11.0
24.5
26.3
17.5
17.7
NA
8.6
20.6
24.7
18.3
18.0
NA
8.8
20.2
25.1
19.3
19.4
6.4
9.4
10.7
15.2
14.7
9.5
12.8
4.8
6.1
12.9
9.2
5.9
8.1
11.1
10.3
15.6
7.8
10.0
5.1
5.6
7.1
7.8
6.9
6.5
8.4
6.7
7.2
6.3
7.4
5.2
3.0
7.3
6.4
7.2
5.6
9.5
6.6
7.3
5.4
8.9
13.6
2.8
6.8
6.5
6.3
4.1
8.9
6.0
6.5
4.1
7.9
10.9
2.4
6.1
5.6
20.3
22.5
24.6
8.9
7.6
31.7
9.6
19.8
14.1
7.8
13.3
20.2
20.8
19.7
6.6
7.5
28.3
6.7
20.6
12.4
11.5
12.8
18.5
20.4
17.0
9.3
6.8
26.9
8.2
18.7
12.3
18.9
13.6
32.7
22.9
5.1
8.8
16.0
26.7
19.3
4.4
6.7
13.4
22.6
14.8
5.4
5.7
10.3
22.6
15.3
5.0
4.7
9.5
18.0
14.8
4.0
3.7
7.9
93.7
31.0
14.0
14.9
21.8
83.8
26.9
12.7
15.5
20.5
75.6
27.8
13.3
17.8
21.5
PULL OUT
October 2012
B10
MOSL Universe

CMP (INR)
28.09.12
Rating
EPS (INR)
FY12 FY13E FY14E
P/E (x)
FY12 FY13E FY14E
EV/EBITDA (x)
FY12 FY13E FY14E
RoE (%)
FY12 FY13E FY14E
346
331
129
383
81
307
265
251
61
490
280
158
837
Buy
Neutral
Buy
Neutral
Neutral
Buy
UR
Buy
Neutral
Buy
Buy
Buy
Neutral
10.8
48.7
4.2
28.8
9.3
26.9
21.9
49.2
5.2
57.3
30.4
14.1
67.7
21.6
64.2
13.8
31.0
7.7
24.5
25.3
24.4
2.9
58.7
29.8
13.1
67.8
21.5
54.0
34.5
32.1
7.6
27.4
28.0
30.3
8.5
64.7
33.4
15.0
69.7
32.1
6.8
31.1
13.3
8.7
11.4
12.1
5.1
11.7
8.5
9.2
11.2
12.4
9.9
10.5
16.1
5.2
9.4
12.3
10.4
12.5
10.5
10.2
21.2
8.3
9.4
12.1
12.3
10.3
10.1
16.1
6.1
3.7
11.9
10.5
11.2
9.5
8.3
7.2
7.6
8.4
10.5
12.0
9.6
9.6
11.5
5.3
50.9
9.6
5.4
12.6
6.4
8.1
6.5
3.9
3.7
7.6
8.0
6.2
5.6
8.5
3.5
9.8
9.0
5.9
11.3
5.5
8.9
7.3
3.7
3.7
7.9
9.3
6.2
5.6
8.8
3.4
5.3
8.7
5.8
9.0
4.8
7.0
4.6
3.3
3.1
5.9
8.9
5.5
5.0
5.0
21.0
1.6
17.9
23.4
7.1
27.5
20.2
13.2
20.7
20.7
34.1
13.0
15.8
16.0
9.5
23.1
5.3
17.2
16.4
6.2
26.4
9.5
6.8
18.7
17.7
25.1
11.7
13.9
14.9
8.9
16.7
12.5
16.0
14.3
6.6
24.7
11.0
18.2
18.4
17.8
23.8
11.0
13.4
14.1
71
234
599
98
58
52
378
265
196
136
24
Buy
Buy
Neutral
Neutral
Buy
Buy
Buy
Buy
Buy
Buy
Buy
3.8
7.1
12.6
19.3
3.5
9.3
29.2
14.1
7.3
2.5
0.9
5.0
9.0
16.0
12.9
4.2
6.7
32.5
15.8
7.8
5.5
0.8
6.6
10.7
19.6
17.8
6.1
7.2
34.0
24.7
16.0
8.2
1.3
18.6
33.0
47.7
5.1
16.5
5.6
12.9
18.8
26.9
53.9
26.8
18.0
14.3
26.1
37.4
7.6
13.7
7.7
11.6
16.8
25.2
24.5
30.2
18.3
10.8
21.8
30.6
5.5
9.5
7.2
11.1
10.7
12.3
16.5
18.8
14.0
17.9
16.3
39.5
5.3
11.5
8.3
10.8
15.3
20.9
20.7
34.3
14.0
13.6
17.1
32.3
5.3
9.8
7.8
9.7
11.9
17.3
12.8
37.8
13.4
9.7
13.4
24.4
3.8
7.8
6.2
9.1
6.9
10.2
9.8
23.0
10.0
3.1
4.5
8.3
7.9
2.2
24.5
10.3
13.1
6.2
4.1
2.0
6.1
3.8
5.5
8.4
5.1
2.6
15.2
10.5
13.1
6.3
8.4
1.7
5.8
4.8
6.3
9.5
6.6
3.6
14.3
10.0
17.9
11.7
11.0
2.7
7.0
Retail
Jubilant Foodworks1,373
Pantaloon Retail
214
Shopper's Stop
401
Titan Industries
262
Sector Aggregate
Neutral
Neutral
Neutral
Neutral
16.4
4.8
7.8
6.8
23.9
6.7
2.7
8.1
35.4
9.3
6.8
10.0
83.9
44.6
51.2
38.5
45.2
57.3
31.9
149.1
32.4
38.3
38.8
22.9
59.3
26.2
28.9
46.0
8.0
23.3
26.8
19.0
30.7
7.2
33.9
21.7
16.1
21.4
6.6
21.8
17.4
13.2
37.7
3.4
9.9
48.7
16.0
38.2
4.6
3.3
42.4
16.7
39.0
6.2
7.8
34.8
19.1
Technology
HCL Technologies
Infosys
MphasiS
TCS
Tech Mahindra
Wipro
Sector Aggregate
577
2,534
402
1,294
972
381
Buy
Buy
Sell
Neutral
Neutral
Buy
35.1
145.5
37.5
54.4
70.4
22.7
46.3
166.5
40.8
71.6
87.2
26.0
47.6
180.7
37.2
78.8
101.0
28.2
16.5
17.4
10.7
23.8
13.8
16.8
19.3
12.5
15.2
9.9
18.1
11.1
14.7
15.7
12.1
14.0
10.8
16.4
9.6
13.5
14.5
10.2
11.6
8.3
17.4
10.5
11.8
13.5
8.0
9.8
7.6
13.0
6.6
10.0
10.8
7.4
8.8
8.2
11.5
5.6
9.0
9.7
26.0
28.0
18.7
36.7
30.2
21.2
25.2
27.8
27.3
17.5
38.3
24.4
20.7
26.4
25.8
25.8
13.9
33.7
23.0
19.4
23.5
Telecommunication
Bharti Airtel
Idea Cellular
Reliance Comm
Tulip Telecom
Sector Aggregate
265
85
65
46
Neutral
Buy
Neutral
Sell
11.2
2.2
4.8
19.1
7.6
3.1
3.6
12.2
10.5
5.8
5.9
11.2
23.6
39.0
13.5
2.4
22.7
34.9
27.2
17.8
3.8
29.5
25.2
14.7
11.0
4.2
19.6
7.0
8.1
7.6
4.0
7.2
6.9
6.8
7.2
4.7
6.9
5.8
5.2
6.4
4.7
5.8
8.1
5.7
2.9
22.9
6.5
5.3
7.7
2.3
11.3
4.9
7.0
12.8
3.6
9.5
6.9
Oil & Gas

BPCL
Cairn India
Chennai Petroleum
GAIL
Guj. State Petronet
HPCL
Indraprastha Gas
IOC
MRPL
Oil India
ONGC
Petronet LNG
Reliance Inds.
Sector Aggregate
Oil & Gas Ex RMS
UR = Under Review
Real Estate
Anant Raj Inds
DLF
Godrej Properties
HDIL
IBREL
Jaypee Infratech
Mahindra Lifespace
Oberoi Realty
Phoenix Mills
Prestige Estates
Unitech
Sector Aggregate
PULL OUT
October 2012
B11
MOSL Universe

CMP (INR)
28.09.12
Utilities
Adani Power
CESC
Coal India
JSW Energy
NHPC
NTPC
Power Grid Corp.
PTC India
Reliance Infra.
Tata Power
Sector Aggregate
53
331
359
61
19
168
120
71
539
107
CMP (INR)
28.09.12
Private Banks
Axis Bank
1,137
Federal Bank
446
HDFC Bank
629
ICICI Bank
1,057
IndusInd Bank
354
ING Vysya Bank
407
Kotak Mah. Bank
648
Yes Bank
382
Private Bank Aggregate
PSU Banks
Andhra Bank
113
Bank of Baroda
799
Bank of India
310
Canara Bank
431
Corporation Bank
418
Dena Bank
106
Indian Bank
192
Oriental Bank
302
Punj. National Bank 840
State Bank
2,238
Union Bank
208
PSU Bank Aggregate
NBFC
Dewan Housing
200
HDFC
773
IDFC
154
LIC Housing Fin
282
M & M Financial
898
Power Finance Corp 189
Rural Electric. Corp. 218
Shriram Transport
619
NBFC Aggregate
Sector Aggregate
Rating
EPS (INR)
FY12 FY13E FY14E
Neutral
Buy
Buy
Buy
Neutral
Buy
Buy
Buy
Buy
Neutral
-0.4
44.1
25.4
2.0
2.0
10.1
7.2
6.9
74.8
7.4
Rating
EPS (INR)
FY12 FY13E FY14E
P/E (x)
FY12 FY13E FY14E
Buy
Buy
Neutral
Buy
Buy
Buy
Neutral
Buy
102.7
45.4
22.0
56.1
17.2
30.4
24.7
27.7
109.5
47.0
28.7
68.3
22.0
35.4
26.2
35.4
125.6
55.7
35.8
78.7
27.5
40.3
29.8
43.0
11.1
9.8
28.6
18.9
20.6
13.4
26.2
13.8
19.7
10.4
9.5
21.9
15.5
16.1
11.5
24.7
10.8
16.4
9.0
8.0
17.6
13.4
12.9
10.1
21.8
8.9
13.9
2.1
1.3
4.9
2.6
3.7
1.6
3.7
2.9
3.1
1.8
1.2
4.2
2.3
3.1
1.4
3.2
2.4
2.7
1.6
1.1
3.6
2.1
2.5
1.3
2.8
1.9
2.4
20.3
14.4
18.7
12.8
19.2
14.3
15.4
23.1
15.9
18.8
13.4
20.7
14.2
20.7
13.0
14.0
24.1
16.7
18.4
14.3
21.9
14.7
21.6
13.2
13.9
23.9
17.4
Buy
Neutral
Neutral
Buy
Neutral
Buy
Buy
Buy
Buy
Buy
Buy
24.0
121.4
46.6
74.1
101.7
22.9
40.6
39.1
144.0
228.6
32.3
25.0
110.6
53.9
73.7
110.5
27.0
42.8
50.8
155.5
284.5
42.0
28.0
129.0
63.7
85.5
119.2
31.1
45.7
56.6
185.1
330.3
48.1
4.7
6.6
6.7
5.8
4.1
4.6
4.7
7.7
5.8
9.8
6.4
7.4
4.5
7.2
5.8
5.9
3.8
3.9
4.5
5.9
5.4
7.9
4.9
6.5
4.0
6.2
4.9
5.0
3.5
3.4
4.2
5.3
4.5
6.8
4.3
5.6
0.8
1.3
1.0
0.9
0.7
0.9
0.9
0.8
1.1
1.5
0.9
1.3
0.7
1.1
0.8
0.8
0.6
0.7
0.8
0.7
0.9
1.3
0.8
1.1
0.7
1.0
0.7
0.7
0.6
0.6
0.7
0.7
0.8
1.1
0.7
0.9
19.2
22.1
15.6
17.1
19.5
20.7
19.8
10.7
21.1
17.2
14.9
17.4
17.5
16.6
15.5
14.9
18.4
20.2
18.0
12.7
18.5
17.8
16.8
16.7
17.2
16.8
16.0
15.2
17.3
19.6
16.8
12.8
18.8
18.0
16.9
16.8
25.6
27.9
10.3
18.1
60.4
23.9
28.6
55.6
37.7
32.1
10.9
21.8
79.4
29.5
34.9
59.8
51.3
38.6
13.3
31.7
93.7
32.7
41.7
70.4
7.8
27.7
15.0
15.6
14.9
7.9
7.6
11.1
15.1
12.3
5.3
24.0
14.2
12.9
11.3
6.4
6.3
10.3
12.7
10.6
3.9
20.0
11.7
8.9
9.6
5.8
5.2
8.8
10.7
9.0
1.2
6.0
1.9
2.5
3.1
1.2
1.5
2.3
2.9
2.1
1.0
4.9
1.7
2.2
2.6
1.1
1.3
2.0
2.5
1.8
0.8
4.3
1.6
1.8
2.2
0.9
1.1
1.6
2.1
1.6
18.5
27.3
13.7
20.3
22.8
17.5
20.5
23.1
19.5
17.3
21.7
29.4
12.8
18.0
25.1
17.6
21.6
20.6
19.4
17.2
22.7
30.9
14.1
20.8
24.6
17.4
22.2
20.3
19.9
17.5
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
1.5
47.5
28.8
3.7
2.0
11.5
8.6
7.7
43.5
5.7
P/E (x)
FY12 FY13E FY14E
2.6 -124.7
53.0
7.5
30.9
14.1
6.3
30.1
2.1
9.4
13.5
16.6
10.3
16.8
9.5
10.2
48.0
7.2
4.0
14.4
14.6
36.2
7.0
12.5
16.5
9.6
14.6
14.0
9.2
12.4
18.7
13.3
20.3
6.2
11.6
9.7
9.3
12.4
11.6
7.4
11.2
27.0
12.0
EV/EBITDA (x)
FY12 FY13E FY14E
RoE (%)
FY12 FY13E FY14E
28.6
5.5
10.3
12.4
7.0
11.6
12.4
14.0
2.0
17.9
11.0
-1.5
12.1
31.9
5.8
8.6
11.8
14.8
5.4
11.4
9.8
16.3
13.8
5.2
8.1
8.0
7.9
11.3
10.1
7.3
3.0
17.2
9.6
10.0
4.9
7.1
6.1
7.7
9.3
9.4
6.5
2.4
17.6
8.4
P/BV (x)
FY12 FY13E FY14E
5.3
11.7
28.5
10.3
7.9
12.5
16.1
6.4
6.3
8.6
16.1
9.2
11.7
25.0
15.9
7.9
13.7
17.4
7.6
6.6
6.5
16.2
RoE (%)
FY12 FY13E FY14E
PULL OUT
October 2012
B12
Sectors & Companies

BSE Sensex: 18,763
S&P CNX: 5,703
Note: In our quarterly performance tables, our four-quarter numbers may not always add up to the full-year
numbers. This is because of dif fer ences in classific ation of acc ount heads in the compan y s quarterly and
annual results or because of dif ferences in the way we cla ssify accoun t heads as oppose d to the comp an y.
All stock prices and indices as on 28 September 2012, unless otherwise stated.
October 2012
C1

Sector: Automobiles
Automobiles
Company Name
Bajaj Auto
Hero MotoCorp
Mahindra & Mahindra
Maruti Suzuki India
Tata Motors
Slowdown visible across segments except UVs and LCVs

Slowdown, hitherto visible in M&HCVs, cars and 3Ws, is now evident in 2Ws as well
with volumes down 4% YoY in 2QFY13. The only segments with healthy growth are
UVs (+29% YoY) and LCVs (+13% YoY). Our channel checks indicate that start to the
festive season has not been encouraging. Dealer inventory is high particularly in
2Ws and cars. Recent hike in diesel prices does not augur well for CVs. Expected
softening in interest rates and reform-led improvement in macro environment and
consumer sentiment hold the key for volume growth to resume.
2QFY13 margins to remain under pressure due to adverse mix, forex and
negative operating leverage
Despite benign commodity prices, expect RM cost to rise 30bp QoQ and 10bp YoY on
the back of adverse product mix, weak currency and negative operating leverage.
We expect 2QFY13 EBITDA margins to decline 70bp QoQ (70bp YoY). Maruti Suzuki (200bp YoY/-290bp QoQ) and Hero MotoCorp (-190bp YoY/-120 QoQ) are likely to be
worst impacted.
Easing of macro headwinds a key catalyst for demand recovery

Lending rates are expected to fall from near peak levels, auguring well for PV and
CV demand. Strengthening INR is positive for Maruti Suzuki and Hero MotoCorp, but
negative for Bajaj Auto. Softening in commodity prices would support profitability.
Easing of macro headwinds remains the key driver for volume growth and
profitability, and in turn, for re-rating of auto stocks.
Widespread earnings downgrade; prefer Maruti, Tata Motors, Bajaj

We are downgrading our earnings estimates for Bajaj Auto, Hero MotoCorp and
Maruti Suzuki to factor in weaker than expected demand in 2QFY13 and adverse
currency movement (except for Bajaj). Changing competitive landscape in the auto
sector will likely be a key determinant of stock performance. While we believe that
the worst of competitive pressure is behind for passenger cars, the same is increasing
for incumbents in 2W, UVs and CVs, implying at least a near-term overhang on
valuations. We prefer Maruti Suzuki, Tata Motors and Bajaj Auto.
Expected quarterly performance summary

CMP
(INR)
28.09.12
Bajaj Auto
1,833
Hero Motocorp
1,879
Mahindra & Mahindra
865
Maruti Suzuki
1,350
Tata Motors
267
Sector Aggregate
(INR Million)
Rating
Sep.12
Buy
Buy
Buy
Buy
Buy
48,254
51,770
95,445
82,507
442,658
720,634
Sales
Var.
% YoY
-6.9
-10.5
30.6
5.4
22.3
15.7
Var.
% QoQ
-0.8
-16.6
3.2
-23.4
2.2
-3.2
Sep.12
8,573
4,801
11,193
3,909
57,988
86,465
EBITDA
Var.
% YoY
-12.1
-27.7
28.1
-20.9
28.7
15.1
Var.
% QoQ
-1.7
-28.3
0.9
-50.3
0.8
-5.9
Net Profit
Sep.12
Var.
% YoY
7,005
-11.3
4,401
-27.1
8,656
17.4
1,175
-51.1
24,824
10.5
46,061
-0.2
Var.
% QoQ
-2.5
-28.5
19.3
-72.3
-3.2
-8.8
Jinesh Gandhi (Jinesh@MotilalOswal.com) / Chirag Jain (Chirag.Jain@MotilalOswal.com)

October 2012
C2

Sector: Automobiles
Commodity prices have moderated (INR, indexed)

1QFY12
2QFY12
3QFY12
4QFY12
INR continues to depreciate (indexed)
1QFY13
USD
2QFY13E
Euro
GBP
JPY
180
95
95
Sep-12
Jun-12
Mar-12
Dec-11
Sep-11
Jun-11
Mar-11
Dec-10
Sep-10
Jun-10
Mar-10
Rubber
Dec-09
81
83
100
96
Al umi ni um
80
Sep-09
Lea d
105
Jun-09
Steel (HRC)
100
93
95
95
93
95
130
100
83
90
87
86
103
100
113
97
103
100
95
155
Source: Bloomberg/MOSL
Trend in EBITDA margins (%)
Trend in segment-wise EBITDA margins (%)
Aggregate
Aggrega te (i ncl JLR)
1QFY12
2QFY12
3QFY12
4QFY12
1QFY13
2QFY13E
18
8.8
7.2
6.7
9.5
7.3
7.3
12
11.2
9.0
8.9
8.7
9.4
8.5
13.9
14.9
15.1
14.7
13.9
13.5
15
2QFY13E
1QFY13
4QFY12
3QFY12
2QFY12
1QFY12
4QFY11
3QFY11
2QFY11
1QFY11
4QFY10
3QFY10
2QFY10
1QFY10
2W
Cars
CVs
Source: Company/MOSL
Interest costs have started to moderate (%)
Trend in fuel costs (INR/liter)
HDFC Ba nk Ba s e Ra te
11
80
10
65
Petrol
Di es el (INR/l tr)
50
INR21.5/Ltr
35
8
Source: HDFC Bank PLR
October 2012
Aug-12
Dec-11
Apr-11
Aug-10
Dec-09
Sep-12
Apr-09
Apr-12
Aug-08
Nov-11
Dec-07
Jun-11
Apr-07
Ja n-11
Aug-06
Aug-10
Dec-05
Apr-05
20
C3

Sector: Automobiles
Trend in Key Financials

Volumes (000 units)
2Q
YoY
QoQ
FY13E
(%)
(%)
Sensex Index
MOSL Automobiles Index
Sensex Index
Indus try ('000 uni ts )
3,948
4,090
4,388
4,551
4,743
1QFY11
2QFY11
3QFY11
4QFY11
16%
12%
4,949
18%
4QFY10
20%
3,559
2QFY10 3,484
3,108
1QFY10
Sep-12
Jun-12
Mar-12
Dec-11
Sep-11
10%
3QFY10
110
95
80
28%
16%
8% -3%
12%
2QFY13E
32% 26%
5,214
140
125
Growth YoY (%)
40%
1QFY13
37%
5,307
MOSL Automobiles Index
Revised EPS estimates (INR)
Key operating indicators
-2.5
-25.2
-83.9
19.3
232.4
-3.2
14.6
Trend in industry volumes
4QFY12
Relative Performance-1Yr (%)
5,079
Sep-12
Jun-12
Jul-12
Aug-12
85
3QFY12
95
Bajaj Auto
1,046
-10.2
-3.1
17.8
-100
-10 7,005
-11.3
Hero MotoCorp*
1,398
-9.5
-14.9
9.6
-190
-120 4,602
-23.8
Maruti Suzuki
208
-17.4
-29.6
4.4
-190
-290
684
-71.5
M&M
189
10.8
3.9
11.6
-30
-20 8,656
17.4
Tata Motors (S/A)
222
5.2
16.5
7.3
10
-10 11,453 308.0
Tata Motors (Cons)
13.1
70
-20 24,824
10.5
Aggregate **
3,063
-8.4
-9.6
9.4
-70
-70 32,401
22.2
*Normalized; **Aggregate includes Tata Motors standalone performance only
5,111
105
Adj PAT (INR M)

2Q
YoY
QoQ
FY13E
(%)
(%)
2QFY12
115
EBITDA Margins (%)

2Q
YoY
QoQ
FY13E
(bp)
(bp)
1QFY12 4,822
Relative Performance-3m (%)
FY13E
Rev
Old
Chg (%)
Bajaj Auto
99.3
103.2
-3.7
Hero MotoCorp
108.0
113.0
-4.4
Maruti *
65.1
68.2
-4.5
M&M *
55.4
55.3
0.2
Tata Motors *#
33.2
33.5
-0.9
* Consolidated; # Normalized EPS adj. for R&D capitalization
Volumes ('000 units)

EBITDA Margins (%)
2Q
2Q
YoY
1Q QoQ
2Q
2Q
YoY
1Q
FY13E FY12
(%) FY13
(%) FY13E FY12
(bp) FY13
Bajaj Auto
1,046 1,164 -10.2 1,079
-3.1
17.8
18.8
-100
17.9
Hero MotoCorp* 1,398 1,544
-9.5 1,642 -14.9
9.6
11.5
-190
10.8
Maruti Suzuki
208
252 -17.4
296 -29.6
4.4
6.3
-190
7.3
M&M
189
171
10.8
182
3.9
11.6
11.9
-30
11.8
Tata Motors (S/A) 222
211
5.2
191 16.5
7.3
7.2
10
7.3
Tata Motors (Cons)
13.1
12.4
70
13.3
Aggregate**
3,063 3,343
-8.4 3,390
-9.6
9.4
10.1
-70
10.1
*Normalized; ** Aggregate includes Tata Motors standalone performance only
Rev
124.3
124.1
93.6
61.0
41.3
FY14E
Old
130.1
127.3
95.6
61.2
38.3
Chg (%)
-4.4
-2.5
-2.1
-0.3
8.1
Source: MOSL
Adjusted PAT (INR m)

QoQ
2Q
2Q
YoY
1Q QoQ
(bp) FY13E FY12
(%) FY12 (%)
-10 7,005 7,898 -11.3 7,184 -2.5
-120 4,602 6,036 -23.8 6,155 -25.2
-290
684 2,404 -71.5 4,238 -83.9
-20 8,656 7,374 17.4 7,256 19.3
-10 11,453 2,807 308.0 3,446 232.4
-20 24,824 22,461 10.5 25,651 -3.2
-70 32,401 26,519 22.2 28,278 14.6
Source: SIAM/ MOSL
Comparative valuation
CMP (INR)
28.09.12
Rating
Automobiles
Bajaj Auto
1,833 Buy
Hero Motocorp
1,879 Buy
Mahindra & Mah.
865 Buy
Maruti Suzuki
1,350 Buy
Tata Motors
267 Buy
Sector Aggregate
* Consolidated # Normalized EPS (for
October 2012
EPS (INR)
FY12 FY13E FY14E
P/E (x)
FY12 FY13E FY14E
EV/EBITDA (x)
FY12 FY13E FY14E
RoE (%)
FY12 FY13E FY14E
107.4
119.1
51.2
58.2
37.8
17.1
15.8
16.9
23.2
7.1
11.9
12.5
13.4
5.9
13.2
4.6
6.7
56.7
55.4
23.0
10.8
38.4
32.4
99.3
108.0
63.7
67.2
33.2
124.3
124.1
78.4
94.8
41.3
18.4
17.4
13.6
20.1
8.0
12.4
14.7
15.1
11.0
14.2
6.5
9.9
12.9
14.5
4.7
9.0
3.8
5.6
9.9
11.2
3.8
6.3
3.1
4.6
43.3
41.8
21.7
10.5
25.2
24.4
44.5
39.7
19.3
13.2
24.7
25.1
R&D capitalization)
C4

Sector: Automobiles
Bajaj Auto
BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Wk Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
5,703
BJAUT IN
289.4
1,850/1,410
2/2/7
530.3
10.1
CMP: INR1,833
Year
End
3/11A
3/12A
3/13E
3/14E
Net Sales
PAT
EPS
(INR m) (INR m) (INR)
163,981 26,150
90.4
195,290 31,069 107.4
195,245 28,748
99.3
226,449 35,980 124.3
Buy
EPS
Gr. (%)
43.9
18.8
-7.5
25.2
P/E
(X)
16.9
18.3
14.6
P/CE
(X)
16.2
17.4
14.0
P/BV
(X)
8.7
7.3
5.9
EV/
EBITDA
12.4
12.8
9.8
RoE
(%)
66.7
56.7
43.3
44.5
RoCE
(%)
76.0
73.0
60.0
61.2
We expect BJAUTs 2QFY13 volumes to decline 10.2% YoY (-3.1% QoQ) to 1.05m, impacted by weak demand and
late start to the festive season. However, product mix is expected to improve QoQ with higher 3W sales (key
export markets are stabilizing) and greater contribution of executive/premium segment motorcycles (driven
by recent launches in domestic market).
Price increases in July in both 2Ws and 3Ws together with product mix improvement should drive up realizations
(+3.6% YoY, +2.3% QoQ). So, expect fall in net sales to be checked at 7% YoY (-0.8% QoQ) to INR48.3b.
Expect EBITDA margin to remain largely stable QoQ at 17.8% (-100bp YoY, -10bp QoQ) as RM cost pressures offset
the benefits of price hikes and favorable product mix.
We expect EBITDA of INR8.57b (-12.1% YoY, -1.7% QoQ). Higher other income will likely offset impact of increase
in taxation (Pantnagar tax exemption lower at 30% from 100% to 30%). We expect adjusted PAT to decline 11.3%
YoY to INR7b (-2.5% QoQ).
We are downgrading our EPS estimates for FY13/14 by 3.7%/4.4% to factor in weaker than expected demand
environment. We model in USD/INR at 52.5 for FY14; a weaker INR holds potential for upgrade. The stock trades
at 18.3x FY13E and 14.6x FY14E EPS. Maintain Buy.
Quarterly Performance
Y/E March
(INR Million)
FY13E
1Q
2Q
3Q
4Q
1Q
2QE
3QE
4QE
Volumes ('000nos)
1,092.8 1,164.1 1,075.4 1,017.2 1,079.0 1,045.6 1,106.3 1,027.1 4,349.6 4,257.8
Change (%)
17.7
16.3
13.6
7.3
-1.3
-10.2
2.9
1.0
13.7
(2.1)
Realization
43,066
44,543
46,361
45,729
45,095
46,151
46,382
45,786
44,899 45,856
Change (%)
2.8
2.6
5.1
4.6
4.7
3.6
0.0
0.1
4.7
2.1
Net Sales
47,063
51,854
49,859
46,514
48,657
48,254
51,310
47,025 195,290 195,245
Change (%)
21.0
19.4
19.4
12.2
3.4
-6.9
2.9
1.1
19.1
0.0
RM/Sales %
73.6
72.5
71.5
71.2
72.1
72.1
71.8
71.7
72.2
71.9
Staff cost/Sales %
3.0
2.8
2.6
2.6
3.3
3.3
3.1
3.0
2.8
3.2
Oth. Exp./Sales %
5.5
6.1
6.5
6.9
6.9
6.9
7.1
7.3
6.2
7.1
EBITDA
8,398
9,755
9,841
9,206
8,717
8,573
9,280
8,503
37,200 35,073
EBITDA Margins (%)
17.8
18.8
19.7
19.8
17.9
17.8
18.1
18.1
19.0
18.0
Other Income
1,441
1,564
1,681
1,395
1,820
1,750
1,800
1,902
6,080
7,271
Extraordinary Expenses/Inc
0
-954
-589
203
0
0
0
0
-1,340
0
Interest
2
202
0
18
0
26
25
51
222
102
Depreciation
306
394
321
434
352
360
370
383
1,456
1,466
PBT
9,531
9,768
10,612
10,351
10,184
9,937
10,685
9,971
40,262 40,777
Tax
2,420
2,510
2,660
2,631
3,000
2,931
3,152
2,946
10,221 12,029
Effective Tax Rate (%)
25.4
25.7
25.1
25.4
29.5
29.5
29.5
29.5
25.4
29.5
Rep. PAT
7,111
7,258
7,952
7,720
7,184
7,005
7,533
7,025
30,041 28,748
Adj. PAT
7,111
7,898
8,340
7,590
7,184
7,005
7,533
7,025
31,069 28,748
Change (%)
20.5
15.8
25.0
12.3
1.0
(11.3)
(9.7)
(7.4)
-9.7
-7.5
E: MOSL Estimates; 4QF12, 3QFY12, & 4QFY11 numbers are not comparable with other quarterly numbers due to restatement
October 2012
FY12
FY13
FY12
C5

Sector: Automobiles
Hero MotoCorp
BSE Sensex
S&P CNX
18,763
Bloomberg
Equity Shares (m)
52 Wk Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
5,703
HMCL IN
199.7
2,279/1,703
-8/-15/-18
375.3
7.1
CMP: INR1,879
Year
End
3/11A
3/12A
3/13E
3/14E
Buy
Net Sales
PAT
(INR m) (INR m)
192,450 20,077
233,681 23,781
230,292 21,566
265,789 24,779
EPS
(INR)
100.5
119.1
108.0
124.1
EPS
P/E
GR. (%) (X)
-10.0
18.4
15.8
-9.3
17.4
14.9
15.1
P/CE
(X)
14.2
15.3
13.3
P/BV
(X)
8.7
7.3
6.0
EV/
EBITDA
10.1
10.6
8.7
RoE
(%)
62.5
55.4
41.8
39.7
RoCE
(%)
59.2
52.4
45.7
50.4
We expect HMCLs 2QFY13 volume to decline 9.5% YoY to 1.39m (-14.9% QoQ) on the back of weak retail demand
and high channel inventory. Realizations are expected to decline 25bp QoQ (+70bp YoY) given adverse product
mix as buyers downtrade to cheaper and more fuel-efficient motorcycles.
We estimate net sales at INR52.7b, down 9% YoY, 15% QoQ. EBITDA margin (adjusted for change in royalty
accounting) is expected to decline 120bp QoQ at 9.6% (-190bp YoY) on account of adverse product mix and lag
impact of weaker INR (on both RM cost and royalty). Adj EBITDA is expected to decline 24% YoY (-25% QoQ),
translating into 24% YoY decline in PAT to INR4.6b (-25.2% QoQ).
The management expects 2W industry volumes to grow 4-5% in FY13, with Hero MotoCorp growing in-line with
the industry. Demand pick-up in festive season would be critical for the company to achieve this guidance.
HMCL has announced capacity addition of 2m by 2QFY14. It is investing INR25.75b on two plants (capacity of
0.75m at Rajasthan by 1QFY14 and 1.25m at Gujarat by 2QFY14) and an R&D center. The company will be funding
these investments through internal accruals and cash of ~INR40b as at March 2012.
We are downgrading our EPS estimates for FY13/14 by 4.4%/2.5%, to factor in weaker than expected demand
environment and high channel inventory restricting wholesale dispatches. The stock trades at 17.4x FY13E and
15.1x FY14E EPS. Maintain Buy.
(INR Million)
Y/E March
Total Volumes ('000 nos)
Change (%)
Net Realization
Change (%)
Net Sales
Change (%)
Total Cost
RM Cost (% sales)
Staff Cost (% sales)
Other Exp (% sales)
EBITDA
EBITDA Margins (%)
Adj. EBITDA Margins (%)
Other Income
Depreciation
PBT
Adj. PAT
Change (%)
E: MOSL Estimates
October 2012
FY12
1Q
1,529.6
23.9
36,858
6.7
56,376
32.2
48,536
75.3
2.9
7.9
7,840
13.9
10.7
1,379
2,398
6,696
16.7
5,579
13.5
2Q
1,544.3
20.1
37,456
6.8
57,843
28.2
49,106
73.0
3.1
8.8
8,737
15.1
11.5
1,248
2,785
7,245
16.7
6,036
19.4
3Q
1,589.3
11.3
37,649
5.0
59,836
16.9
50,887
73.4
3.3
8.3
8,949
15.0
11.1
1,305
2,987
7,238
15.3
6,130
24.3
FY13
4Q
1,572.0
8.1
37,929
3.1
59,625
11.4
51,097
74.1
3.2
8.4
8,529
14.3
10.8
1,774
2,804
7,469
19.2
6,036
20.3
1Q
1,642.3
7.4
37,799
2.6
62,078
10.1
53,104
74.1
3.3
8.1
8,974
14.5
10.8
1,439
3,035
7,349
16.3
6,155
10.3
2QE
1,373.0
-11.1
37,705
0.7
51,770
-10.5
44,968
74.5
3.7
8.7
6,801
13.1
9.3
1,300
2,800
5,271
16.5
4,401
-27.1
3QE
1,520.0
-4.4
37,988
0.9
57,741
-3.5
50,023
74.3
3.6
8.8
7,718
13.4
9.7
1,400
2,840
6,248
16.5
5,217
-14.9
FY12
4QE
1,538.5
-2.1
38,155
0.6
58,703
-1.5
50,478
74.1
3.6
8.3
8,225
14.0
10.4
1,583
2,818
6,959
16.8
5,792
-4.0
FY13E
6,235.2 6,073.8
15.4
-2.6
37,478 37,915
5.2
1.2
233,681 230,292
21.4
-1.5
199,603 198,574
74.0
74.3
3.1
3.5
8.3
8.5
34,078 31,718
14.6
13.8
11.0
10.1
5,756
5,722
10,973 11,493
28,647 25,827
17.0
16.5
23,781 21,566
19.4
-9.3
C6

Sector: Automobiles
Mahindra & Mahindra

BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
5,703
MM IN
598.6
875/622
6/17/-5
517.5
9.8
CMP: INR865
Year
End
3/11A
3/12A
3/13E
3/14E
N. Sales
(INR m)
234,603
318,535
393,584
443,341
Buy
PAT * S/A EPS * Cons. Con EPS Cons,

(INR m) (INR) EPS (INR) Gr (%) P/E (X)
25,732
43.0
48.0
18.1
28,888
48.3
51.2
6.6
16.9
33,149
55.4
63.7
24.4
13.6
36,511
61.0
78.4
22.9
11.0
RoE
(%)
25.0
23.0
21.7
19.3
RoCE
(%)
26.8
23.1
24.3
22.7
EV/
EV/
Sales EBITDA
1.6
13.5
1.3
11.1
1.2
10.4
* S/A including MVML
2QFY13 performance is not strictly comparable YoY due to merger of MADPL in 4QFY12. We expect MM to report
overall 2QFY13 volume growth of 10.8% YoY (+3.9% QoQ), driven by 23.9% YoY (+10.2% QoQ) growth in UV &
pick-ups, but 13.3% YoY de-growth (-16.5% QoQ) in tractors. Realizations to decline 0.6% QoQ to INR505k.
We estimate net sales at INR96.5b, up 31% YoY and 3% QoQ. We expect EBITDA margin to decline 20bp QoQ to
11.6% (down 30bp YoY). However, EBITDA margin (incl MVML) is expected to improve 30bp YoY (down 30bp
QoQ) to 13.6% driven by ramp-up in recent launches in auto segment (manufactured at Chakan plant). We
estimate EBITDA at INR11.2b, up 28% YoY and 0.9% QoQ. Other income is likely to be higher sequentially at
INR2.6b due to receipt of dividend from subsidiaries; this would translate into adjusted PAT of INR8.7b (+17.4%
YoY, 19.3% QoQ). Including MVML, EBITDA and adjusted PAT are estimated at INR12.5b and INR9.2b.
Outlook for the auto division remains healthy with both key segments UVs and pick-ups performing well.
Recent launch of refreshed Verito and Quanto (mini-SUV based on Xylo platform) should help sustain healthy
growth momentum. Management has guided for FY13 tractor industry growth of 0-2% considering weak monsoon
(albeit the late recovery), pressure on crop prices, and lower infrastructure/construction activity.
We have marginally upgraded our FY13 consolidated EPS by 1.6% to factor in strong performance from the auto
division. However, we downgrade our FY14 consolidated EPS 4.7% for higher than expected losses at Ssangyong
Motors. The stock trades at 13.6x FY13E and 11x FY14E consolidated EPS. Maintain Buy.
(INR Million)
Y/E March
Total Volumes (nos)
Change (%)
Net Realization
Change (%)
Net Sales
Change (%)
Operating Other Income
EBITDA
EBITDA Margins (%)
EBITDA Margins (incl MVML)
Other income
Interest
Depreciation
EO Expense
Reported PAT
Adj PAT
Change (%)
PAT (incl MVML)
E: MOSL Estimates
October 2012
FY12
1Q
159,197
25.1
416,344
3.4
66,281
29.3
990
8,954
13.3
14.2
550
262
1,099
0
25.7
6,049
6,049
7.6
2Q
170,701
29.2
428,047
6.5
73,068
37.6
538
8,740
11.9
13.3
2,315
49
1,257
0
24.4
7,374
7,374
1.4
3Q
183,228
23.3
451,808
10.5
82,784
36.3
1,045
10,230
12.2
13.3
667
348
1,408
0
27.6
6,622
6,622
7.3
6,770
FY13
4Q
195,478
21.8
472,753
14.4
92,413
39.3
1,459
9,694
10.3
12.1
956
709
1,997
-1,083
3.1
8,745
7,696
26.9
8,030
FY12
1Q
182,149
14.4
507,713
21.9
92,479
39.5
1,195
11,094
11.8
13.9
599
460
1,548
2QE
189,175
10.8
504,531
17.9
95,445
30.6
1,050
11,193
11.6
13.6
2,600
500
1,675
3QE
204,250
11.5
499,425
10.5
102,008
23.2
1,300
12,294
11.9
13.3
850
550
1,925
4QE
196,678
0.6
501,084
6.0
98,552
6.6
1,556
11,524
11.5
13.0
1,231
553
2,028
25.1
7,256
7,256
20.0
7,785
25.5
8,656
8,656
17.4
9,154
25.5
7,948
7,948
20.0
8,441
25.9
7,538
7,538
-2.1
7,768
FY13E
704,935 772,252
24.2
9.5
445,318 503,053
9.7
13.0
313,920 388,484
36.2
23.8
4,615
5,100
37,707 46,105
11.8
11.7
13.3
13.6
4,658
5,280
1,628
2,063
5,761
7,176
1,083
0
20.2
25.5
28,789 31,398
27,924 31,398
8.1
12.4
28,888 33,149
C7

Sector: Automobiles
Maruti Suzuki India

BSE Sensex
18,763
S&P CNX
5,703
Bloomberg
MSIL IN
Equity Shares (m)
302.1
52 Week Range (INR) 1,428/906
1,6,12 Rel Perf (%)
10/-5/12
Mcap (INR b)
407.8
Mcap (USD b)
7.7
CMP: INR1,350
Year
End
3/11A
3/12A
3/13E
3/14E
Buy
Net Sales
PAT Cons.EPS EPS Cons.P/E P/CE
(INR m) (INR m) (INR) Gr. (%) (X)
(X)
369,199 23,101
82.4
-9.2
355,871 16,351
58.2
-29.4
23.2
14.1
427,281 19,993
67.2
15.5
20.1
10.6
500,583 28,234
94.8
41.1
14.2
8.1
P/BV
(X)
2.6
2.1
1.9
EV/
EBITDA
12.6
9.1
6.3
RoE
(%)
16.5
10.8
10.5
13.2
RoCE
(%)
22.1
13.2
12.4
15.9
Our quarterly estimates exclude SPIL merger, as the company would be reporting performance without SPIL.
However, our full year estimates include SPIL.
MSILs 2QFY13 performance is expected to be impacted due to supply constraint in diesel cars given recent
labor unrest at its Manesar plant. Moreover, margins will be hit by (1) weak petrol car demand and consequent
high discounts, (2) lag impact of unfavorable currency movement in 1QFY13, and (3) recent wage hike negotiated
with workers (assuming 1HFY13 provisioning happens in 2QFY13).
We expect MSILs 2QFY13 volumes to de-grow 8.7% YoY (-22% QoQ) to 230,376. Realizations are likely to decline
2.3% QoQ (+16.4% YoY) on lower proportion of diesel car given supply constraints. EBITDA margin is likely to
decline 260bp QoQ (-160bp YoY) to 4.7% with lower volumes, adverse mix and forex, and higher wages. EBITDA
expected at INR3.9b, down 21% YoY (-50% QoQ), translating into recurring PAT of INR1.2b (-51% YoY, -72% QoQ).
We are revising our estimates to factor in for faster than estimated ramp-up. Our estimates now factors in for
volume growth of 3.8%/15% in FY13/FY14 to 1.18m/1.35m units, JPY/INR of 0.685/0.663 and ~10bp/10bp increase
in staff cost in FY13 and FY14, resulting in -10bp/+140bp change in EBITDA margins in FY13/FY14 (excl SPIL). As a
result, our consol. EPS has seen upgrade of ~3%/1% for FY13/FY14 to INR67.2/94.8 and cash EPS upgrade of ~2/1%
to INR127/INR166. The stock trades at 14.2x FY14E consolidated EPS and 8.1x FY14E cash EPS. Maintain Buy.
Y/E March
1Q
2Q
Total Volumes ('000 nos)
281.5
252.3
Change (%)
-0.6
-19.6
Realizations (INR/car)
293,279 298,741
Change (%)
3.2
4.8
Net Op. Revenues
84,541
78,316
Change (%)
1.7
-14.4
RM Cost (% of Sales)
78.0
78.6
Staff Cost (% of Sales)
2.1
2.5
Other exp. (% of Sales)
10.3
12.5
Total Cost
76,437
73,374
EBITDA
8,104
4,942
EBITDA Margins (%)
9.6
6.3
Change (%)
-5.5
-48.5
Non-Operating Income
1,841
1,177
Interest
58
109
Depreciation
2,425
2,664
PBT
7,462
3,346
Tax
1,970
942
26.4
28.1
PAT
5,492
2,404
Change (%)
7.2
-59.8
E:MOSL Estimates; * Excluding SPIL Merger
October 2012
(INR Million)
FY12
3Q
239.5
-27.6
314,247
12.0
77,316
-18.6
79.1
2.7
13.0
73,282
4,034
5.2
-55.3
1,746
178
2,989
2,613
557
21.3
2,056
-63.6
4Q
360.3
4.9
318,770
11.7
117,270
17.2
79.6
2.2
10.9
108,685
8,585
7.3
-15.3
2,969
208
3,306
8,040
1,642
20.4
6,398
1.4
1Q
295.9
5.1
355,839
21.3
107,782
27.5
77.8
2.2
12.6
99,919
7,863
7.3
-3.0
1,123
332
3,399
5,255
1,018
19.4
4,238
-22.8
2QE
230.4
-8.7
347,724
16.4
82,507
5.4
78.8
3.2
13.3
78,598
3,909
4.7
-20.9
1,250
300
3,400
1,459
285
19.5
1,175
-51.1
FY13*
3QE
305.1
27.4
351,202
11.8
109,786
42.0
78.3
2.4
12.0
101,737
8,049
7.3
99.6
2,000
300
3,450
6,299
1,228
19.5
5,071
146.6
4QE
345.5
-4.1
360,311
13.0
127,206
8.5
78.6
2.3
11.2
117,134
10,072
7.9
17.3
2,950
269
3,516
9,237
1,808
19.6
7,429
16.1
FY12
FY13E*
1,133.7
-10.8
306,131
7.7
355,871
-2.8
78.9
2.4
11.7
330,742
25,129
7.1
-30.9
8,269
552
11,384
21,462
5,111
23.8
16,351
-29.2
1,176.8
3.8
354,361
15.8
427,281
20.1
78.4
2.5
12.2
397,387
29,893
7.0
19.0
7,323
1,200
13,765
22,251
4,339
19.5
17,912
9.5
C8

Sector: Automobiles
Tata Motors
BSE Sensex
S&P CNX
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
5,703
TTMT IN
3,323.8
321/145
6/-11/57
889.0
16.9
CMP: INR267
Year
End*
3/11A
3/12A
3/13E
3/14E
Sales
(INR M)
1,221,279
1,656,545
1,971,042
2,185,850
Buy
Adj. PAT Adj. EPS Normal

Cons. Normal
(INR M) (INR) EPS (INR) ^ P/E (X) P/E (X)
90,695
27.3
15.4
125,568 37.8
22.2
7.1
12.0
110,482 33.2
14.0
8.0
19.1
137,408 41.3
19.5
6.5
13.7
RoE
(%)
47.3
38.4
25.2
24.7
RoCE
(%)
26.5
24.1
23.9
24.2
EV/
EV/
Sales EBITDA
0.6
4.4
0.5
3.7
0.4
3.1
* Consolidated; ^ Normalized for capitalized expenses
On a consolidated basis, we expect 2QFY13 net operating revenues to grow 22% YoY (+2.2% QoQ) to INR442b.
Expect standalone revenues to de-grow 4.2% YoY (+17.3% QoQ), while JLR should grow 17.2% YoY (-6.1% QoQ).
We expect EBITDA at INR58b, up 28.7% YoY (+0.4% QoQ), as EBITDA margin improves 70bp YoY (-20bp QoQ) to
13.1%. However, Adjusted PAT is expected to grow only 10.5% YoY (down 3.2% QoQ) due to increase in JLR tax
provision (post tax credit accounted in 4QFY12 on accumulated JLR losses).
We expect 2QFY13 standalone volumes to grow 5.2% YoY (+16.5% QoQ), driven by growth in LCVs and PVs. Post
inventory correction in 1Q, M&HCV volumes are expected to improve 27% QoQ but would still be lower YoY on
weak demand. We estimate 2QFY13 standalone net sales at INR124, stable EBITDA margin at 7.3% (+10bp YoY, 10bp QoQ), and EBITDA at INR9b, down 3.4% YoY (+16.4% QoQ). Other income is expected to be higher QoQ/YoY
with dividend income from JLR (GBP150m); this would translate into PAT growth of 2.7x YoY (2.3x QoQ) to
INR11.5b.
For JLR, we expect strong volume growth of 16.1% YoY (-5.4% QoQ) to 78,981 driven by Evoque. Realizations
would likely decline 75bp QoQ (+90bp YoY), resulting in 17.2% YoY (-6% QoQ) revenue growth to GBP3.4b (IFRS).
We expect EBITDA margin at 14.1% (-40bp QoQ, -30bp YoY), impacted by negative operating leverage and
weaker product mix in favor of Evoque & Freelander and lower RR volumes ahead of new model launch. As a
result, expect recurring PAT to be GBP240m (+39% YoY, +1.6% QoQ).
We marginally lower our FY13 consolidated EPS by 0.9% to factor in higher than expected weakness in the
M&HCV business. However, we upgrade our FY14 consolidated EPS by 8% to factor better product/market mix
in JLR. The stock trades at 6.5x FY14E consolidated EPS, and 13.7x FY14E normalized EPS. Maintain Buy.
Quarterly Performance (Consolidated)
(INR Million)
Y/E March
Total Op Income
Growth (%)
EBITDA
EBITDA Margins (%)
Depreciation
Other Income
Interest Expenses
PBT before EO Exp
Adj PAT
Growth (%)
JLR Volumes
Growth (%) QoQ
JLR EBITDA Margins (%)
S/A Volumes (nos)
Change (%)
S/A EBITDA Margins (%)
E: MOSL Estimates
October 2012
FY12
1Q
332,888
23.0
42,358
12.7
11,432
1,658
8,556
24,028
20,481
(3.5)
62,037
-6.2
13.4
197,606
3.8
8.8
2Q
361,975
26.9
45,039
12.4
13,308
608
5,251
27,089
22,461
6.4
68,000
9.6
14.4
211,400
1.8
7.2
3Q
452,603
44.0
68,270
15.1
16,159
1,675
7,204
46,581
35,307
43.9
86,322
26.9
17.0
231,328
19.2
6.7
FY13
4Q
509,079
44.3
67,445
13.2
15,354
1,586
7,721
45,956
44,403
79.2
98,074
13.6
14.6
286,019
16.7
9.5
1Q
433,236
30.1
57,548
13.3
15,659
2,386
8,044
36,232
25,651
25.2
83,452
-14.9
14.5
190,900
-3.4
7.3
2QE
442,658
22.3
57,988
13.1
16,000
1,250
7,000
36,238
24,824
10.5
78,981
-5.4
14.1
222,317
5.2
7.3
3QE
503,274
11.2
61,399
12.2
16,500
1,500
7,000
39,399
27,102
-23.2
94,250
19.3
14.2
243,000
5.0
7.9
FY12
FY13E
4QE
591,873 1,656,545 1,971,042
16.3
35.6
19.0
78,446 223,112 255,382
13.3
13.5
13.0
23,317
56,254
71,476
1,700
6,618
6,836
9,648
29,822
31,692
47,180 143,654 159,050
33,061 125,568 110,482
-25.5
38.5
-12.0
105,877 314,433 362,560
12.3
29.1
15.3
14.8
15.0
14.4
282,589 922,867 936,680
-1.2
10.4
1.5
8.9
8.1
8.0
C9

Sector: Capital Goods
Capital Goods
Company Name
ABB
Revenue, margins impacted by declining order book: We expect revenue growth in

2QFY13 to moderate to 8% YoY (v/s 17% YoY in 1QFY13), given the depleting order
books and constrained environment. Ordering activity continues to be sluggish,
particularly in the industrial / power generation segment. Current BTB stands at 2.4x,
the lowest in 18 quarters and continues to impact reported performance. In 2QFY13,
we expect EBITDA margin of 12%, down 40bp YoY, impacted by poor fixed cost
absorption. While commodity prices have corrected meaningfully, a large part of the
decline is negated by currency movements. Companies with high local manufacturing
content (like BHEL, Cummins and Thermax) will be the key beneficiaries.
BGR Energy
BHEL
Crompton Greaves
Cummins India
Havells India
Larsen & Toubr o
Investment climate at crossroads; environment challenging: Net banking credit to

the Infrastructure sector is declining since June 2011 and has reached FY09 levels.
Project sanctions in 4QFY12 were the lowest since FY06, indicating accentuating
slowdown in Industrial and Infrastructure spending. Net projects added per quarter
have shown a continuous decline - INR1.5t in 1QFY13 v/s the run rate of INR5t during
the period September 2006 to June 2010. Our interactions with several companies
suggest that banks are insisting on 70-100% upfront equity for Infrastructure projects,
resulting in larger players taking a "bidding holiday". Structural issues like SEB finances
(for Power sector), resource availability, land / water / environment, and tight liquidity
for project financing are challenges for capex upturn. The government is attempting
to address several of these.
Siemens
Thermax
Gauging the environment through non-covered companies: Our analysis of 29 noncovered companies also points towards growing challenges, particularly for industrial
products, which have relatively shorter business cycles than projects. In 1QFY13,
aggregate revenue declined 12% YoY for nine non-covered industrial product
companies and 4% YoY for five covered companies (based on segmental analysis).
Project revenues are relatively insulated (up 17% YoY in 1QFY13 for non-covered
companies), led by healthy execution of existing orders. Also, the impact of slowdown
has been building up over the last 3-4 quarters, with TTM sales growth declining from
20% in 2QFY12 to 2% in 1QFY13, aggregated for the 14 companies. Management
commentary across companies indicates challenging and uncertain outlook in the
medium term.
ABB
BGR Energy
BHEL
Crompton Greaves
Cummins India
Havells India
Larsen & Toubr o
Siemens
Thermax
Sector Aggregate
CMP
(INR)
28.09.12
798
275
247
126
508
625
1,597
709
561
(INR Million)
Rating
Sep.12
Neutral
Neutral
Neutral
Neutral
Neutral
Buy
Buy
Neutral
Neutral
19,190
7,038
105,257
29,629
12,056
9,796
132,967
35,693
12,020
363,645
Sales
Var.
% YoY
10.1
-8.8
2.2
9.5
10.6
15.0
18.2
-1.1
-7.8
8.2
Var.
% QoQ
1.9
15.2
26.4
5.4
-4.2
-5.4
11.2
25.5
22.2
14.7
Sep.12
1,109
883
17,694
1,981
2,230
1,162
13,297
2,914
1,142
42,411
EBITDA
Var.
% YoY
66.3
-19.9
-1.3
-12.4
26.8
12.9
13.3
0.7
-18.7
4.0
Var.
% QoQ
4.6
0.4
47.2
18.8
-4.1
-4.9
6.6
201.6
18.5
26.3
Net Profit
Sep.12
Var.
% YoY
543
145.1
296
-42.3
12,329
-4.1
1,003
-14.0
1,584
23.2
784
5.9
8,223
3.0
1,579
-11.3
837
-17.7
27,179
-1.4
Var.
% QoQ
5.2
-11.5
33.9
16.8
-12.3
-10.9
-18.0
333.8
24.6
10.2
Satyam Agarwal (AgarwalS@MotilalOswal.com) / Deepak Narnolia (Deepak.Narnolia@MotilalOswal.com)

October 2012
C10

Initial ray of hope, but near-term concerns impact valuations: Our Capital Goods
coverage trades at 15x FY13E earnings (20% discount to long-term average of 18x). The
premium relative to the Sensex enjoyed by the sector (MOSL coverage universe) has
significantly eroded over the past two years. Our Capital Goods universe now trades
at a 4% discount to the Sensex v/s long-term average premium of 29%. We expect flat
earnings over FY12-14 for our coverage. The government's resolve to address the
contentious issues in the Power sector, close monitoring of PSU capex, take-off of
large public expenditure projects (like DFCC, railways, urban transport, etc) can possibly
kick-start the investment cycle. Decline in commodity prices provides another ray of
hope. We are Neutral on the sector; our top picks are L&T and Crompton Greaves.
Revenue growth supported by project business
Expect margin compression across companies
Moderating sales growth is likely to impact margins, while softening commodity prices could have a positive impact
going forward; estima te 2QFY13 industr y margins a t 10.5% (down 39bp YoY).
17.5
12.3
11.0
8.2
1QF Y13
4QF Y12
13.1
9.2
3QF Y12
12.4
8.5
2QF Y12
12.0
8.4
1QF Y12
15.2
15.9
10.6
10.2
3QF Y11
4QF Y11
9.7
14.3
9.0
2QF Y11
13.3
EB ITDA Margi n (%)
1QF Y11
16.5
11.9
4QF Y10
16.1
10.6
3QF Y10
13.5
9.1
2QF Y10
11.6
8.2
1QF Y10
11.5
4QF Y09
15.4
9.6
3QF Y09
11.7
12.1
8.5
8.7
2QF Y09
1QF Y09
19.1
31.3
28.8
19.7
26.8
8.9
7.2
4.7
25.0
15.6
24.1
30.4
14.5
15.3
17.5
15.3
18.4
16.6
38.0
35.1
32.2
1QFY08
2QFY08
3QFY08
4QFY08
1QFY09
2QFY09
3QFY09
4QFY09
1QFY10
2QFY10
3QFY10
4QFY10
1QFY11
2QFY11
3QFY11
4QFY11
1QFY12
2QFY12
3QFY12
4QFY12
1QFY13
13.5
Net Profi t Margi n (%)
En g Sector (reven ue growth %)
Sour ce: Company, MOSL
1QFY13 order growth boosted by NTPC bulk tender awards
BTB (x) declining on slowing order inflows
Order intake remains sluggish, impacted by slowdown in the power sector and slowing industrial capex; the T&D
segment showed pick-up in ordering, driven by improved ordering by Power Grid. Ordering activity in
the building & construction has also been showing healthy traction.
-16
-12
-22
2.4
2.4
2.4
2.6
2.7
2.8
2.6
2.7
2.8
3.0
3.0
3.0
3.1
2.9
2.9
2.9
2.8
2.6
2.4
2.4
1,427
1,529
1,632
1,849
2,051
2,196
2,232
2,340
2,494
2,705
2,888
3,007
3,170
3,199
3,397
3,405
3,472
3,374
3,228
3,320
-7
-34-47
1QFY13
1QFY10
3QFY09
1QFY09
3QFY08
1QFY08
-19
20
3QFY12
-2
36
20
1QFY12
23
3QFY11
22
1QFY11
13
25
BTB (x)
2QF Y08
3QF Y08
4QF Y08
1QF Y09
2QF Y09
3QF Y09
4QF Y09
1QF Y10
2QF Y10
3QF Y10
4QF Y10
1QF Y11
2QF Y11
3QF Y11
4QF Y11
1QF Y12
2QF Y12
3QF Y12
4QF Y12
1QF Y13
46 41
40
3QFY10
53
Orde r boo k (INR bn)
Order intake YoY %

64
October 2012
C11

Incremental credit disbursements now lower than industry
Infrastructure credit disbursement declining since June 2011

Infra structure (Bank Cre di t, ttm, INR b)
Ind ustri es excl i nfra (Bank Credi t, ttm INR b )
In frastru ctu re (Ba nk Cred i t, ttm, INR b)

In frastru ctu re ba nk cre di t (ttm, % YoY)
3,200
1,600
80
2,400
1,300
40
1,000
1,600
700
-40
400
-80
800
0
Apr-07
Apr-08 Feb-09 De c-09 Oct-10 Au g-11 Jun-12
4QFY12 project sanctions at shocking levels
194
169
8,000
151
827
1,250
1,067
787
821
787
575
506
255
4QFY10
1QFY11
2QFY11
3QFY11
4QFY11
1QFY12
2QFY12
3QFY12
4QFY12
Coverage companies have fared better in maintaining

margins (Industrial product EBIT Margins, %, ttm)
Non covered co mpa ni es
Non covered compan i es
Co ve red com pan i es
1QF Y13
3QF Y12
1QF Y12
3QF Y11
1QF Y11
3QF Y10
1QF Y10
1QF Y08
3QF Y09
5%
1QF Y09
0%
1QFY13
-25%
3QFY12
8%
1QFY12
3%
3QFY11
0%
1QFY11
11%
3QFY10
14%
6%
1QFY10
9%
25%
3QF Y08
17%
50%
3QFY09
F eb-08
Mar-09
Apr-10
May-11
Jun-12
1,194
3QFY10
Dec-05
Jan-07
1,327
2QFY10
2,000
Oct-03
Nov-04
908
4,000
1QFY10
154
Apr-97
May-98
Jun-99
Jul-00
Aug-01
S ep-02
160
GDP Growth
Covered comp ani es
1QFY09
Apr-12
10,000
Industrial products revenue have strong co-relation

with GDP growth (revenue growth % YoY, ttm)
3QFY08
Apr-11
6,000
181
146
1QFY08
Apr-10
Net Projects adde d (INR b)
Projects (No s)
167
175
Ap r-09
Net project additions decline to INR1.5t in 1QFY13
Mar-96
189
Sancti ons (INR B)

231
202
Ap r-08
Power products Revenues show contrasting trends (ttm, % YoY), Power products margins have eroded, but showing signs of
with coverage companies witnessing demand improvement
stabilization (% EBIT margins, ttm)
1QFY13
3QFY12
1QFY12
3QFY11
1QFY11
3QFY10
Non covered co mpa ni es )
1QFY10
3QFY09
1QFY09
1QF Y13
3QF Y12
1QF Y12
0%
3QF Y11
-20%
1QF Y11
5%
3QF Y10
0%
1QF Y10
10%
3QF Y09
20%
1QF Y09
15%
3QF Y08
40%
1QF Y08
60%
20%
3QFY08
Covered comp ani es
Non covere d comp ani es
1QFY08
Covered comp ani es
Source: Company, MOSL

October 2012
C12

75
90
60
Sep-12
Sep-12
95
Jun-12
90
Sep-11
100
Aug-12
105
Jul-12
105
Jun-12
Sens ex Ind ex
MOSL Capi ta l Goods Inde x
120
Mar-12
Sen sex In dex

MOSL Cap ita l Good s Ind ex
110
Dec-11
Relative Performance - 3m (%)
CMP (INR)
28.09.12
Capital Goods
ABB
798
BGR Energy
275
BHEL
247
Crompton Greaves 126
Cummins India
508
Havells India
625
Larsen & Toubr o
1,597
Siemens
709
Thermax
561
Sector Aggregate
October 2012
Rating
EPS (INR)
FY12 FY13E FY14E
P/E (x)
FY12 FY13E FY14E
EV/EBITDA (x)
FY12 FY13E FY14E
RoE (%)
FY12 FY13E FY14E
Neutral
Neutral
Neutral
Neutral
Neutral
Buy
Buy
Neutral
Neutral
8.7
31.0
28.2
5.7
19.8
29.6
78.0
16.9
33.9
91.6
8.9
8.8
22.0
25.6
21.1
20.5
42.0
16.6
16.5
58.6
6.1
5.4
10.7
19.0
13.0
14.3
23.3
9.9
10.7
7.4
22.2
30.3
10.7
28.8
38.7
17.8
14.6
27.4
21.6
11.3
21.1
24.9
9.3
24.1
31.1
85.2
23.1
27.1
17.4
25.3
20.3
12.6
25.6
41.4
91.4
31.3
31.5
70.9
13.0
9.9
13.6
21.0
20.1
18.7
30.7
20.7
16.4
45.7
10.9
12.2
10.0
19.8
15.1
17.5
22.7
17.8
16.3
41.7
8.0
6.1
8.4
15.2
12.1
12.7
17.0
11.4
10.6
27.6
8.2
7.3
6.5
13.7
9.6
10.9
12.8
9.0
10.0
9.1
13.4
22.2
15.6
30.7
31.7
17.1
18.8
18.7
19.1
13.0
14.5
16.0
18.7
28.9
32.1
16.4
23.0
19.2
17.1
C13

ABB
BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
5,703
ABB IN
211.9
915/541
2/-13/-6
169.1
3.2
CMP: INR798
Neutral
Year
Net Sales
PAT
EPS
End
12/10A 62,871
632
3.0
12/11A 73,703
1,845
8.7
12/12E 80,876
2,386
11.3
12/13E 93,730
3,696
17.4
EPS
Gr (%)
-82.2
191.9
29.3
54.9
P/E
(x)
91.6
70.9
45.7
P/BV
(x)
6.7
6.3
5.7
RoE
(%)
2.6
7.4
9.1
13.0
RoCE
(%)
3.1
8.1
9.5
13.1
EV/
EV/
Sales EBITDA
2.3
58.6
2.0
41.7
1.7
27.6
We expect ABB to report revenue growth of 10% YoY and EBITDA margin of 5.8% (up 200bp YoY) for 3QCY12,
aided by a low base. Profitability would remain under pressure, given higher competitive intensity and execution
of low margin fixed price contracts. Also, the benefit of softening commodity prices has largely been negated
by INR depreciation as 40% of the raw material consumption is imported (largely from parent company).
For CY12, we expect PAT to grow 30% on a low base to INR2.4b. We assume EBITDA margin of 5.8%, up 100bp;
EBITDA margin expansion would be driven by ABB's exit from rural electrification projects. However, profitability
continues to face headwinds and is lagging expectations due to intensifying competition and low margin legacy
orders.
During 2QCY12, ABB reported a turnaround in Power Systems after reporting losses in the segment for 8
consecutive quarters. However, its Process Automation business is facing cost overruns. Also, margins in its
Low Voltage Product business have been impacted by MCB capacity expansion by 3x, led by poor fixed cost
absorption.
Order book currently stands at INR91.7b, up 9% YoY. BTB stands at 1.2x TTM sales.
ABB has announced plans to again double its MCB capacity and is also expanding its High Voltage Products
capacity at a cost of INR2.5b. In Process Automation, ABB is making efforts to build a service portfolio that will
provide stability to margins. We believe that correcting the manufacturing footprint will be the key driver of
structural improvement in margins.
Key things to watch for: a) EBITDA margin devlopment, b) order in flow from industry sector.
The stock trades at 70.9x CY12E and 45.7x CY13E earnings. Maintain Neutral.
(INR Million)
Y/E December
Sales
Change (%)
EBITDA
Change (%)
As % of Sales
Depreciation
Interest
Other Income
PBT
Tax
Repot ed PAT
Adj. PAT
Change (%)
Order Intake
Order Book
BTB (x)
E: MOSL Estimates
October 2012
CY11
1Q
17,960
21.7
1,016
356.2
5.7
144
40
45
877
282
32.1
595
595
796.8
16,951
83,291
1.2
2Q
17,125
18.4
855
70.8
5.0
264
67
65
589
202
34.3
387
387
1.1
17,918
84,150
1.2
3Q
17,435
24.8
666
93.3
3.8
263
71
38
371
149
40.2
222
222
92.6
24,926
91,513
1.2
CY12
4Q
21,999
6.2
1,080
230.5
4.9
124
129
14
840
199
23.7
641
641
845.3
22,093
91,288
1.2
1Q
17,903
(0.3)
975
-4.0
5.4
223
54
19
716
240
33.5
476
476
-20.0
16,320
90,280
1.2
2Q
18,838
10.0
1,060
24.0
5.6
231
77
14
766
250
32.6
516
516
33.2
20,606
91,750
1.2
3QE
19,190
10.1
1,109
66.3
5.8
260
75
25
799
256
32.0
543
543
145.1
28,665
101,200
1.3
4QE
25,727
16.9
1,579
46.2
6.1
280
75
29
1,254
403
32.2
850
850
32.6
25,407
99,989
1.2
CY11
CY12E
74,742
17.5
3,618
131.9
4.8
795
307
162
2,677
832
31.1
1,845
1,845
191.8
81,888
91,288
1.2
81,658
9.3
4,723
30.5
5.8
995
280
87
3,535
1,149
32.5
2,386
2,386
29.3
90,998
99,989
1.3
C14

BGR Energy
BSE Sensex
18,763
S&P CNX
5,703
Bloomberg
BGRL IN
Equity Shares (m)
72.0
52 Week Range (INR)
374/173
1,6,12 Rel Perf (%)
0/-24/-30
Mcap (INR b)
19.8
Mcap (USD b)
0.4
CMP: INR275
Neutral
Year
Net Sales
PAT
EPS
End
03/11A 47,632
3,124
43.3
03/12A 34,471
2,237
31.0
03/13E 35,162
1,522
21.1
03/14E 41,489
1,823
25.3
EPS
Gr. (%)
54.6
-28.4
-31.9
19.8
P/E
(X)
8.9
13.0
10.9
P/BV
(X)
2.4
1.6
1.5
RoE
(%)
37.7
22.2
13.4
14.5
RoCE
(%)
16.3
10.7
7.7
8.1
EV/
EV/
Sales EBITDA
1.0
7.3
0.9
8.0
1.0
8.2
For 2QFY13, we expect revenue of INR7.03b (down 9% YoY), EBITDA of INR883m (down 20% YoY), with EBITDA
margin at 12.5% (down 180bp YoY), and net profit of INR296m (down 42% YoY). For FY13, we expect revenue to
grow 2% YoY, EBITDA margin of 11.8% (down 190bp), and PAT of INR1.55b (down 31%). The management expects
revenue of INR37b-38b, up 10% on the back of existing order book and 11-12% EBITDA margin in FY13/14.
Order book as at the end of June 2012 stood at INR150b, of which INR7b were product orders and INR143b were
projects. Projects include NTPC bulk tenders of INR86b (57% of total order book), INR22b of EPC and INR30b of
BOP. The management has indicated that bidding pipeline stands at ~11GW for FY13.
Land for the turbine factory has already been acquired and construction work is expected to have started by the
end of July 2012, while 70% of the land for the Boiler factory has been acquired. However, we believe that order
execution would be crucial, especially in light of the companys constrained cash flows.
Key things to watch for: (a) Realization of the retention money, as increasing debtors balance has significantly
deteriorated working capital cycle, (b) Profitability in the NTPC bulk tenders, in which BGR has reportedly bid
aggressively.
The stock trades at 13x FY13E and 10.9x FY14E earnings. Maintain Neutral.
Quarterly Performance (Standalone)
(INR Million)
Y/E March
Sales
Change (%)
EBITDA
Change (%)
As of % Sales
Depreciation
Interest
Other Income
PBT
Tax
Reported PAT
Adj PAT
Change (%)
Order Intake
Order book
BTB (x)
E: MOSL Estimates
October 2012
FY12
1Q
7,329
-19.2
948
-8.7
12.9
37
180
13
743
241
32.4
503
503
-17.0
2,602
75,000
1.6
2Q
7,715
-32.1
1,102
-16.7
14.3
40
302
0
761
247
32.5
514
514
-34.0
5,260
72,554
1.7
3Q
8,037
-36.1
1,313
-10.8
16.3
41
461
0
811
263
32.4
548
548
-37.4
15,469
80,000
2.1
FY13
4Q
11,377
-22.2
1,356
-19.0
11.9
43
411
51
954
282
29.6
672
672
-31.7
6,537
75,160
2.2
1Q
2QE
3QE
6,109
7,038
8,447
-16.6
-8.8
5.1
880
883
977
-7.2
-19.9
-25.6
14.4
12.5
11.6
41
43
48
342
400
460
0
2
2
496
442
471
162
146
153
32.6
33.0
32.5
335
296
318
335
296
318
-33.4
-42.3
-42.0
31,073
56,907
8,000
100,125 150,000 149,561
2.2
1.6
2.5
FY12
4QE
13,595
19.5
1,430
5.4
10.5
53
490
2
889
289
32.5
600
600
-10.7
14,020
149,945
2.5
FY13E
34,471
35,190
-27.6
2.1
4,731
4,169
-14.1
-11.9
13.7
11.8
161
185
1,354
1,692
53
8
3,268
2,300
1,033
750
31.6
32.6
2,235
1,550
2,235
1,550
-31.1
-30.7
29,868
29,868
75,160 149,945
1.7
2.2
C15

BHEL
BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
5,703
BHEL IN
2,447.6
344/195
4/-12/-39
604.2
11.5
CMP: INR247
Year
Net Sales
End
(INR m)
03/11A 404,443
03/12A 479,788
03/13E 476,593
03/14E 454,887
PAT
EPS
(INR m) (INR)
56,650
23.1
68,918
28.2
60,836
24.9
49,569
20.3
Neutral
EPS
Gr. (%)
20.9
21.7
-11.7
-18.5
P/E
(X)
11.5
9.9
12.2
P/BV
(X)
3.1
2.1
1.8
RoE
(%)
31.4
30.3
22.2
16.0
RoCE
(%)
35.0
33.0
23.6
16.9
EV/
EV/
Sales EBITDA
1.5
7.3
1.1
6.1
1.2
7.3
Declining commodity prices in USD terms and INR depreciation have meaningfully improved BHEL's competitive
positioning, given that the competitors' cost base is largely composed of imported equipment, while BHEL has
a larger in-house domestic cost base.
Order book stood at INR1,329b (down 17%) as at June 2012; BTB declined from a peak of 4-4.5x in FY09 to 2.7x.
Given the execution period of 3.5-4 years for power sector projects, the ratio is now in an uncomfortable zone
and would constrain revenue growth, going forward. We expect revenue to decline by 1%/5% in FY13/FY14.
In FY13, BHEL targets 14-15GW of orders, which appears challenging, given the prevailing business environment
in the Power sector. BHEL's utility power order intake in FY12 was 2.8GW and industry size was 4GW.
While the investment climate remains constrained, we believe that the situation could improve, driven by
structural drivers like the following: (1) Imposition of 21% effective import duty has improved the competitive
positioning of domestic players by 14%, (2) SEB debt restructuring, (3) Coal price pooling and increased domestic
coal availability, (4) New standard bidding document making fuel cost pass-through, (5) continued strong
growth in power consumption, etc.
Key things to watch for: (a) Order inflow, (b) Performance on profitability - increasing pricing pressure and
negative operating leverage are likely to squeeze EBITDA margin.
The stock trades at 9.9x FY13E and 12.2x FY14E earnings. Maintain Neutral.
Y/E March
Sales (Net)
Change (%)
EBITDA
As a % Sales
Adjusted EBITDA
Change (%)
As a % Sales
Interest
Depreciation
Other Income
PBT
Tax
Reported PAT
Change (%)
Adj. PAT
Change (%)
Order intake
Order book (INRb)
BTB (x)
E: MOSL Estimates
October 2012
(INR Million)
FY12
1Q
2Q
3Q
4Q
71,234 102,986 105,426 192,595
9.9
23.7
19.1
7.5
10,184
19,592
20,350
49,372
14.3
19.0
19.3
25.6
8,524
17,932
20,350
49,372
-17.1
5.2
-5.3
68.5
14.1
16.9
19.1
25.2
88
96
145
183
1,709
1,888
1,861
2,541
3,435
2,199
2,415
3,989
11,822
19,806
20,758
50,637
3,667
5,686
6,432
16,838
31.0
28.7
31.0
33.3
8,155
14,120
14,326
33,798
21.8
23.6
2.1
20.8
8,155
12,858
14,326
33,580
14.8
11.1
-0.2
73.6
24,710 143,060 (15,040)
68,230
1,596
1,610
1,465
1,347
3.8
3.6
3.2
2.9
FY13
1Q
83,262
16.9
12,022
14.4
12,022
41.0
14.2
55
2,284
3,663
13,346
4,137
31.0
9,209
12.9
9,209
12.9
55,900
1,330
2.7
2QE
3QE
105,257 112,275
2.2
6.5
17,694
20,017
16.8
17.8
17,694
20,017
-1.3
-1.6
16.5
17.5
125
130
2,200
2,300
2,500
2,350
17,869
19,937
5,539
6,180
31.0
31.0
12,329
13,756
-12.7
-4.0
12,329
13,756
-4.1
-4.0
30,000 60,000
1,255
1,202
2.6
2.4
FY12
FY13E
4QE
167,016 472,279 467,811
-13.3
13.6
-0.9
37,118
98,880
86,850
22.2
20.2
18.2
37,118
97,076
86,850
-24.8
20.6
-10.5
21.8
20.3
18.2
408
513
718
2,120
8,000
8,904
2,427
12,656
10,939
37,017 103,023
88,167
11,476
32,623
27,332
31.0
31.7
31.0
25,541
70,400
60,836
-24.4
17.1
-13.6
25,541
68,919
60,836
-23.9
21.8
-11.7
60,621 220,960 295,021
1,141
1,353
1,141
2.4
2.9
2.4
C16

Crompton Greaves
BSE Sensex
S&P CNX
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
5,703
CRG IN
641.5
175/102
4/-18/-31
81.0
1.5
CMP: INR126
Year
End
3/11A
3/12A
3/13E
3/14E
Neutral
Net Sales
PAT
EPS
100,051
9,268
14.3
112,486
3,733
5.7
131,290
6,029
9.3
145,945
8,104
12.6
EPS
Gr. (%)
12.4
-59.7
61.5
34.4
P/E
(X)
22.0
13.6
10.0
P/BV
(X)
2.2
2.0
1.8
RoE
(%)
30.5
10.7
15.6
18.7
RoCE
(%)
28.1
9.6
13.0
15.0
EV/
EV/
Sales EBITDA
0.9
13.3
0.7
7.8
0.6
5.9
The management has guided 12-14% growth in consolidated revenue, EBITDA margin of 8-9%, and 15% growth
in order intake for FY13.
Over the next three years, the management expects to improve EBITDA margin by 450bp (from 7.1% in FY12),
driven by improved product offerings/new geographies (+150bp), raw material sourcing rationalization (+150bp),
rationalization of manufacturing footprint (+100bp) and improvement in manufacturing processes (+100bp).
Key things to watch for: (a) Profitability in overseas and domestic power business, (b) Further announcements
on efficiency improvement measures.
The stock trades at 13.6x FY13E and 10x FY14E earnings. Maintain Neutral.
Quarterly performance
(INR Million)
Y/E March
Standalone Performance
Sales
Change (%)
EBITDA
Change (%)
As of % Sales (Adj)
Subsidiaries Performance
Revenues
Revenue growth (%)
EBITDA
As of % Sales (Adj)
Consolidated performance
Sales (Net)
Change (%)
EBITDA
Change (%)
As of % Sales (Adj)
Depreciation
Interest
Other Income
PBT
Tax
Minority interest
PAT
Change (%)
Order book
Order Intake
BTB (x)
E: MOSL Estimates
October 2012
FY12
FY13
FY12
FY13E
1Q
2Q
3Q
4Q
1Q
2QE
3QE
4QE
14,688
9.4
1,867
-10.8
12.7
14,515
0.5
1,614
-30.1
11.1
16,245
16.1
1,753
-23.1
10.8
19,406
9.9
1,973
-25.3
10.2
16,592
13.0
1,684
-9.8
10.1
16,102
10.9
1,642
1.8
10.2
18,333
12.9
2,035
16.1
11.1
22,164
14.2
2,901
47.0
13.1
64,854
9.0
7,207
-22.7
11.1
73,190
12.9
8,162
13.3
11.2
9,689
1.0
-48
-0.5
12,541
31.6
646
5.2
14,035
40.6
73
0.5
11,367
-0.5
158
1.4
11,520
18.9
84
0.7
13,527
7.9
338
2.5
14,624
4.2
658
4.5
13,693
20.5
788
5.8
47,632
17.5
830
1.7
53,364
12.0
1,868
3.5
24,377
5.9
1,819
-38.8
7.5
608
110
151
1,253
475
37.9
-17.1
795
(58.4)
70,880
17,040
0.7
27,056
12.8
2,260
-32.2
8.4
726
102
215
1,647
463
28.1
16.5
1,167
(45.4)
71,200
22,600
0.7
30,280
26.3
1,826
-46.3
6.0
627
112
155
1,242
487
39.2
-16.4
771
(66.9)
81,830
34,010
0.7
30,774
5.8
2,132
-42.9
6.9
639
139
3
1,357
396
29.2
-42.9
1,003
(65.4)
83,664
28,961
0.7
28,111
15.3
1,668
-8.3
5.9
466
99
192
1,294
445
34.4
-9.6
859
8.1
91,720
27,170
0.8
29,629
9.5
1,981
-12.4
6.7
545
172
142
1,406
420
29.9
-17.2
1,003
(14.0)
97,537
29,810
0.8
32,956
8.8
2,693
47.5
8.2
590
218
127
2,012
520
25.8
-17.3
1,510
95.7
102,675
31,678
0.8
40,593 112,486 131,290

31.9
12.4
16.7
4,588
8,037
10,930
115.2
-40.2
36.0
11.3
7.1
8.3
940
2,600
2,540
341
463
830
20
524
480
3,328
5,498
8,040
696
1,821
2,080
20.9
33.1
25.9
-24.9
-59.9
-69.0
2,657
3,736
6,029
164.8
(59.7)
61.4
104,087
83,664 104,087
29,265 102,611 117,923
0.8
0.7
0.8
C17

Cummins India
BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
5,703
KKC IN
277.2
518/322
3/0/9
140.7
2.7
CMP: INR508
Year
End
3/11A
3/12A
3/13E
3/14E
Neutral
Net Sales
PAT
EPS
40,425
5,911
21.3
41,172
5,502
19.8
47,278
6,691
24.1
52,885
7,107
25.6
EPS
Gr. (%)
33.1
-6.9
21.6
6.2
P/E
(x)
25.6
21.0
19.8
P/BV
(x)
6.9
6.1
5.4
RoE
(%)
35.5
28.8
30.7
28.9
RoCE
(%)
35.4
28.8
30.9
29.1
EV/
EV/
Sales EBITDA
2.8
16.3
2.9
15.3
2.6
13.8
For FY13, we expect revenue growth of 15%, aided by new products from Phaltan Megasite, and pre-buying,
given stringent emission norms for Powergen. However, the scenario continues to be challenging, given the
slowdown, and the impact is more pronounced in the high horsepower (HHP) segment. Domestic demand for
DG sets declined 5-10% in FY12.
We believe that the twin trend of softening commodity prices and INR depreciation have meaningfully improved
near-term margin outlook for Cummins (KKC). Currency depreciation makes KKC more competitive in the global
network of Cummins Inc, leading to possibilities for increased outsourcing. Weak INR has also improved KKCs
competitive positioning vis--vis competitors, who largely rely on imports.
The DG sets business faces multiple headwinds: (1) Limited demand drivers, given economic slowdown and
tight liquidity, (2) Increased competitive intensity, particularly in HHP segment, and (iii) Structural lowering of
power deficit in India (KKC has been a key beneficiary of the demand spurt in Southern region over the last one
year current TTM base deficit at 11.3% v/s 4.1% TTM in August 2011; we believe that commissioning of
Kudankulam nuclear plant / synchronous grid connection will lower deficits).
Key things to watch for: (a) Demand growth in the domestic market tight liquidity conditions are likely to
impact growth, (b) Any slowdown in the export market, as Caterpillar dealer sales show 13% decline in YTD
FY13.
The stock trades at 21x FY13E and 19.8x FY14E earnings. Maintain Neutral.
(INR Million)
Y/E March
Sales
Change (%)
EBITDA
Change (%)
As of % Sales
Depreciation
Interest
Other Income
PBT
Tax
Reported PAT
Change (%)
Adjusted PAT
Change (%)
Domestic Sales
Change (%)
Exports
Change (%)
E: MOSL Estimates
October 2012
FY12
1Q
10,335
11.4
1,739
-11.9
16.8
94
11
283
2,432
661
27.2
1,772
26.3
1,360
(3.0)
7,456
10.3
2,763
27.9
2Q
10,903
-0.1
1,759
-19.0
16.1
98
5
163
1,819
534
29.3
1,286
-23.4
1,286
(23.4)
7,689
17%
3,009
9.0
3Q
9,624
-3.0
1,612
-10.3
16.7
109
11
454
1,945
536
27.5
1,410
1.5
1,410
1.5
6,653
(4.04)
2,768
4.5
FY13
4Q
10,404
-0.1
1,948
9.2
18.7
119
21
242
2,049
604
29.5
1,446
0.4
1,446
0.4
6,846
(11.22)
3,367
24.7
1Q
12,588
21.8
2,325
33.7
19.5
114
14
385
2,582
777
30.1
1,806
1.9
1,806
32.7
8,104
8.7
4,310
56.0
2QE
12,056
10.6
2,230
26.8
18.5
128
15
175
2,262
679
30.0
1,584
23.2
1,584
23.2
8,376
8.9
3,500
16.3
3QE
10,874
13.0
1,979
22.8
18.2
142
15
350
2,172
608
28.0
1,564
10.9
1,564
10.9
7,444
11.9
3,250
17.4
4QE
11,761
13.0
2,358
21.0
20.0
166
17
232
2,407
669
27.8
1,738
20.2
1,738
20.2
7,874
15.0
3,705
10.0
FY12
FY13E
41,172
1.8
6,972
-8.7
16.9
420
54
1,233
7,732
2,334
30.2
5,913
0.0
5,501
(6.9)
28,614
(0.3)
11,908
12.3
47,278
14.8
8,892
27.5
19.1
550
60
1,141
9,423
2,733
29.0
6,691
13.2
6,691
21.6
31,798
10.5
14,765
24.0
C18

Havells India
BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
5,703
HAVL IN
124.8
640/335
11/2/59
78.0
1.5
CMP: INR625
Buy
Year
Net Sales PAT*
EPS*
EPS*
End
(INR m) (INR m) (INR) Gr. (%)
3/11A
56,126
3,067
24.6
341.1
3/12A
65,182
3,699
29.6
20.6
3/13E
70,469
3,879
31.1
4.9
3/14E
76,782
5,160
41.4
33.0
* Consolidated nos, pre exceptionals
P/E
(X)
21.1
20.1
15.1
P/BV
(X)
8.2
6.3
4.9
RoE
(%)
46.9
38.7
31.7
32.1
RoCE
(%)
20.6
23.6
22.7
24.1
EV/
EV/
Sales EBITDA
0.9
8.9
1.2
12.1
1.0
9.6
For 2QFY13, we expect standalone revenue of INR9.7b (up 15% YoY), EBITDA of INR1162m with EBITDA margin at
11.9% (down 100bp YoY), impacted by doubling of Switchgear capacity. Net profit is likely to be INR784m (up 6%
YoY).
For FY13, we expect revenue growth of 16%, EBITDA margin of 11.9% (down 30bp), and PAT of INR3.4b (up 11%).
The management expects 15-20% growth in standalone sales on the back of 10-15% growth in Switchgear, 1520% in Cables and Wires, and 20%+ growth in Consumer Durables along with Lighting and Fixtures. The company
is confident of maintaining its margin levels.
Sylvania, which had been reporting sustained improvement in profitability after its turnaround beginning
2QFY11, has again reported losses in 1QFY13, impacted by adverse currency movement and decline in sales.
The business continues to face currency headwinds in the near term while European sales are likely to be
muted. The management expects 2-3% growth in EUR terms and stable EBITDA margin in FY13. We have factored
in a sales growth of 1% in EUR terms and EBITDA margin of 6.5% (down 70bp).
Key things to watch for: (a) Growth in new product launches in Consumer Appliances, (b) Slowdown in overseas
demand, (c) Cross-selling opportunities.
The stock trades at 20.1x FY13E and 15.1x FY14E earnings. Maintain Buy.
(INR Million)
Y/E March
Sales
Change (%)
EBITDA
Change (%)
EBITDA margin (%)
Depreciation
Interest
Other Income
PBT
Tax
Reported PAT
Change (%)
Adj PAT
Change (%)
E: MOSL Estimates
October 2012
FY12
FY13
1Q
2Q
3Q
4Q
1Q
2QE
3QE
4QE
8,235
19.4
973
8.7
10.8
86
94
2
795
147
18.5
648
21.5
566
3.6
8,518
28.5
1,029
38.0
12.9
91
71
2
868
166
19.1
703
21.0
741
39.9
8,982
29.8
1,144
39.6
13.5
104
75
1
967
178
18.4
789
29.1
830
44.1
10,485
24.2
1,468
46.8
13.8
166
197
3
1,108
192
17.3
916
34.4
1,022
50.0
10,353
25.7
1,222
46.9
12.6
118
102
2
1,004
204
20.3
800
23.5
880
55.5
9,796
15.0
1,162
6.1
11.9
120
90
4
956
172
18.0
784
11.6
784
5.9
10,239
14.0
1,218
0.3
11.9
125
85
5
1,013
182
18.0
830
5.3
830
0.0
11,668
11.3
1,402
-4.5
12.0
125
88
9
1,198
214
17.8
984
7.5
984
-3.7
FY12
FY13E
36,220
25.4
4,621
29.1
12.8
447
444
8
3,738
683
18.3
3,060
26.4
3,056
26.5
42,056
16.1
5,004
8.3
11.9
488
365
20
4,171
772
18.5
3,404
11.2
3,399
11.3
C19

Larsen & Toubro

BSE Sensex
18,763
S&P CNX
5,703
Bloomberg
LT IN
Equity Shares (m)
608.9
1,6,12 Rel Perf (%)
11/12/0
Mcap (INR b)
972.2
Mcap (USD b)
18.4
CMP: INR1,597
Buy
Year
Net Sales PAT*
EPS*
EPS
End
(INR m) (INR m) (INR) Gr. (%)*
3/11A
439,059 42,416
69.7
13.0
3/12A
531,705 47,730
78.0
11.9
3/13E
618,981 52,140
85.2
9.2
3/14E
701,694 55,953
91.4
7.3
Consolidated; EPS is fully diluted
P/E*
(X)
18.5
18.7
17.5
P/BV
(X)
3.5
3.4
3.0
RoE
(%)
16.6
17.8
17.1
16.4
RoCE
(%)
13.9
14.1
13.8
13.5
EV/
EV/
Sales EBITDA
1.7
14.3
1.6
14.3
1.5
12.6
We expect standalone revenue to grow 18% YoY in 2QFY13, driven by healthy execution of existing order book.
In FY13, we expect revenue to grow 16%. The management has guided 15-20% revenue growth in FY13.
We estimate standalone EBITDA margin at 10% (down 40bp YoY) for 2QFY13 and at 11.5% (down 30bp) for FY13.
In the E&C business, we expect EBITDA margin to remain flat at 12.7% in FY13 v/s the management's guidance
of +/-50bp change. Margins will be supported by commodity price declines, especially in overseas orders.
In 1HFY12, L&T announced orders amounting to INR282b (INR151b in 1QFY13 and INR130b in 2QFY13). Reported
order intake over 1QFY13 was INR196b, up 21% YoY. In 2QFY13, the company has been awarded an EPC order
worth INR7,490m by ONGC for four wellheads in the hydrocarbon sector after a long gap of over one year. This
is significant, given the loss of key orders to competition in the last 1-2 years. L&T also won a significant order
worth INR13,020m from Petroleum Development Oman LLC.
Key things to watch for: (a) Any deterioration in working capital cycle, (b) E&C margins, as one-third of the order
book is on fixed price contracts and decline in commodity prices should start supporting margins, going forward.
The stock trades at 18.7x FY13E and 17.5x FY14E earnings. Maintain Buy.

Y/E March
(INR Million)
FY12
1Q
2Q
3Q
Net Sales
94,826 112,452 139,836
Change (%)
21.1
20.5
22.5
EBITDA
11,265
11,741
13,641
Change (%)
12.1
16.7
10.2
Margin (%)
11.9
10.4
9.8
Adjusted EBITDA
11,265
11,741
15,641
Adjusted Margin (%)
11.9
10.4
11.2
Depreciation
1,679
1,709
1,803
Interest
1,613
1,970
1,907
Other Income
2,962
3,632
4,271
Extraordinary Inc/(Exp)
0
0
0
Reported PBT
10,935
11,693
14,202
Tax
3,474
3,709
4,286
31.8
31.7
30.2
Reported PAT
7,461
7,984
9,915
Adjusted PAT
7,461
7,984
11,275
Change (%)
12.0
15.0
40.0
Adj PAT (excl Subs Dividend)
6,901
7,094
9,085
Change (%)
12.0
10.6
19.5
Order Intake
162
161
171
Order book (INR b)
1,362
1,422
1,458
BTB (x)
3.0
3.0
2.9
E: MOSL Estimates; All quarterly numbers are for standalone
October 2012
FY13
4Q
184,609
21.0
25,608
9.3
13.9
25,608
13.9
1,804
1,211
3,142
550
26,285
7,081
26.9
19,204
18,654
22.1
18,144
25.5
212
1,457
2.7
entity
1Q
2QE
3QE
119,554 132,967 162,789
26.1
18.2
16.4
10,869
13,297
17,500
-3.5
13.3
28.3
9.1
10.0
10.8
12,469
13,297
17,500
10.4
10.0
10.8
1,919
1,900
2,100
2,284
2,300
2,300
6,058
2,650
2,650
-383
0
0
12,340
11,747
15,750
3,705
3,524
5,040
30.0
30.0
32.0
8,635
8,223
10,710
10,023
8,223
10,710
34.3
3.0
-5.0
7,103
7,973
10,460
2.9
12.4
15.1
196
177
188
1,531
1,575
1,601
2.8
2.7
2.7
FY12
FY13E
4QE
203,672 531,705 618,981
10.3
21.1
16.4
29,753
62,826
71,418
16.2
11.4
13.7
14.6
11.8
11.5
29,753
64,826
71,418
14.6
12.2
11.5
2,160
6,995
8,079
2,316
6,661
9,200
2,498
13,383
13,856
0
550
-383
27,775
63,103
67,612
7,793
18,538
20,061
28.1
29.4
29.7
19,982
44,565
47,550
19,982
44,825
48,948
7.1
23.7
9.2
19,886
40,745
45,432
9.6
20.0
11.5
179
706
741
1,578
1,457
1,578
2.6
3.3
3.0
C20

Siemens
BSE Sensex
S&P CNX
18,763
5,703
Bloomberg
SIEM IN
Equity Shares (m)
337.0
52 Week Range (INR)
872/627
1,6,12 Rel Perf (%)
-1/-1 7/-29
Mcap (INR b)
238.9
Mcap (USD b)
4.5
CMP: INR709
Neutral
Year
Net Sales PAT*
EPS*
EPS*
End
9/11A
121,064
8,434
25.0
2.0
9/12E
125,775
5,690
16.9
-32.5
9/13E
140,580
7,769
23.1
36.5
9/14E
160,190 10,540
31.3
35.7
* Standalone, Year end - September
P/E*
(X)
42.0
30.7
22.7
P/BV
(X)
6.0
5.6
4.9
RoE
(%)
23.1
14.6
18.8
23.0
RoCE
(%)
24.4
15.3
19.6
24.0
EV/
EV/
Sales EBITDA
1.9
23.1
1.6
16.9
1.4
12.7
For 4QFY12, we expect Siemens (SIEM) to report revenue of INR35b, down 1% YoY. In 9MFY12, it reported
revenue of INR90b (up 6% YoY), impacted by delays in offtake by customers and sluggish industrial capex,
though strong execution of Qatar/Torrent projects supported revenue. A large part of SIEMs business portfolio
comprises of early and mid-cycle products; hence, the impact of slowdown has started becoming more
pronounced. The revenue break-up is as follows: Products 56%, Projects 31% and Services 12%.
We expect order intake to remain muted, with a growth of 5% in FY12. During 9MFY12, order intake declined
23% YoY to INR73b; excluding large orders received last year, base orders posted a growth of ~8% YoY. Post the
Qatar project, SIEM is aggressively tapping other MENA (Middle East and North Africa) markets, which should
help support order intake.
We expect margins to remain flattish in 4QFY12 at 8.2% due to pricing pressure in the Power business though
softening commodity prices should support margins. Depreciation of the INR against the EUR is likely to impact
margins, given that around half the raw material and components cost is based on imports from the parent
company.
We expect SIEM to report a PAT of INR1.6b in 4QFY12, down 11% YoY. For FY12, we expect a PAT of INR5.7b (down
32%).
Key things to watch for: (a) Margins, particularly in Industrial Solutions and Power Transmission businesses, (b)
Any large size order inflow from MENA.
The stock trades at 30.7x FY13E and 22.7x FY13E earnings. Maintain Neutral, with a target price of INR743 (25x
FY12E earnings).
(INR Million)
Y/E September
Total Revenues
Change (%)
EBITDA
Change (%)
As % of Revenues
Depreciation
Interest Income
PBT
Tax
Reported PAT
Adjusted PAT
Change (%)
Order Intake (INR b)
Order book (INR b)
BTB (x)
E: MOSL Estimates
October 2012
FY11
1Q
25,804
35.7
3,688
0.3
14.3
345
258
3,600
1,220
33.9
2,381
2,381
25.9
40
151
1.5
2Q
31,208
40.2
4,288
49.9
13.7
367
229
4,151
1,407
33.9
2,744
2,744
51.5
33
154
1.4
3Q
27,825
23.9
2,508
3.6
9.0
401
182
2,288
741
32.4
1,548
1,548
-0.9
23
150
1.3
FY12
4Q
36,085
19.3
2,895
-27.1
8.0
410
223
2,708
927
34.2
1,781
1,781
-29.1
27
139
1.2
1Q
23,676
-8.2
1,254
-66.0
5.3
431
227
1,050
343
32.7
707
707
-70.3
28
140
1.2
2Q
37,973
21.7
4,944
15.3
13.0
469
41
4,516
1,476
32.7
3,040
3,040
10.8
18
126
1.0
3Q
28,433
2.2
966
-61.5
3.4
506
76
536
172
32.1
364
364
-76.5
27
125
1.0
FY11
FY12E
4QE
35,693 120,290
-1.1
28.0
2,914
13,371
0.7
3.4
8.2
11.1
630
1,522
106
900
2,391
12,750
811
4,295
33.9
33.7
1,579
8,454
1,579
8,454
-11.3
2.2
31
123
119
139
1.0
1.2
125,775
3.9
10,079
-25.3
8.0
2,036
450
8,492
2,802
33.0
5,690
5,690
-32.5
104
119
1.0
C21

Thermax
BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
5,703
TMX IN
119.2
570/388
7/9/1
66.9
1.3
CMP: INR561
Neutral
Year
Net Sales
PAT
EPS
End
3/11A
52,472
3,818
32.0
3/12A
60,313
4,034
33.9
3/13E
57,936
3,231
27.1
3/14E
57,229
3,748
31.5
Consolidated
EPS
Gr. (%)
48.7
5.7
-19.9
16.0
P/E
(x)
15.1
20.7
17.8
P/BV
(x)
3.7
3.6
3.2
RoE
(%)
31.9
27.4
18.7
19.2
RoCE
(%)
29.0
22.9
15.4
16.1
EV/
EV/
Sales EBITDA
0.9
8.9
1.0
11.4
0.9
9.0
Revenue visibility for FY13 remains low, given loss of key expected projects to competition in recent months
and lack of concrete pipeline for large power projects / slowing industrial capex.
We expect order intake to remain muted in FY13 up 20% on a low base to INR53b. Consolidated order book as
at the end of 1QFY13 was down 26% YoY at INR50.4b. Power EPC accounts for ~1/3rd of the current backlog.
Thermax last reported large orders in 1QFY12, when it received two key orders an order worth INR4b to
construct a 3x32MW cogeneration plant on EPC basis and an order worth INR3.66b to supply of boilers for a
120MW captive power plant. Project side orders from segments like Power, Oil & Gas, Metallurgy, Cement, etc
continue to get deferred, given the macro volatility; the scenario continues to be challenging.
Thus far, Thermax has shown impressive performance on the profitability front, even in a challenging business
environment. ~20% of its staff costs and 40-50% of other costs are variable, providing a cushion to manage
margins. However, we believe that if the macro environment continues to be volatile, Thermax might have to
start compromising on margins to bag orders (as market share / fixed costs are important priorities). Decline in
commodity prices should provide support to margins.
Key things to watch for: (a) Order inflow, particularly from the Power segment for the boiler-turbine-generator
(BTG) manufacturing plant being built, (b) Pick-up in ordering activity in the Renewable Energy segment.
The stock trades at 20.7x FY13E and 17.8x FY14E earnings. Maintain Neutral.
(INR Million)
Y/E March
Sales
Change (%)
EBITDA
As of % Sales
Depreciation
Interest
Other Income
PBT
Tax
Reported PAT
Change (%)
Adj PAT
Change (%)
Order Book
Order Intake
BTB (x)
E: MOSL Estimates
October 2012
FY12
1Q
10,443
32.2
1,135
10.9
111
4
149
1,170
371
31.7
799
20.7
799
20.7
58,890
14,440
1.1
2Q
13,035
19.4
1,405
10.8
117
11
208
1,485
468
31.5
1,017
13.6
1,017
13.6
57,700
11,890
1.1
3Q
12,693
2.3
1,364
10.7
120
17
157
1,384
429
31.0
955
-4.7
955
(4.7)
51,000
5,900
0.9
FY13
4Q
16,868
-4.5
1,853
11.0
121
34
272
1,971
673
34.1
1,298
2.6
1,298
2.6
42,300
8,090
0.8
1Q
9,835
-5.8
964
9.8
132
37
187
981
309
31.5
672
-15.9
672
(15.9)
44,740
12,580
0.9
2QE
12,020
-7.8
1,142
9.5
129
12
230
1,231
394
32.0
837
-17.7
837
(17.7)
42,846
8,323
0.8
3QE
11,530
-9.2
1,153
10.0
132
18
180
1,184
367
31.0
817
-14.5
817
(14.5)
40,897
8,260
0.8
4QE
15,678
-7.1
1,647
10.5
122
2
221
1,744
575
33.0
1,169
-9.9
1,169
(9.9)
40,897
11,137
0.8
FY12
FY13E
53,041
9.3
5,839
11.0
470
66
705
6,009
1,940
32.3
4,069
6.4
4,069
6.4
42,300
40,320
0.8
49,063
-7.5
4,906
10.0
515
69
818
5,140
1,645
32.0
3,495
-14.1
3,495
(14.1)
40,897
40,300
0.8
C22

Sector: Cement
Cement
Company Name
ACC
Ambuja Cements
Birla Corporation
Grasim Industries
2QFY13 dispatches growth to moderate at ~2% led by delayed monsoon: Recovery in

cement demand was thwarted in 2QFY13 given (1) heavy rains in August (delayed
monsoon), and (2) weak demand from organized housing and infrastructure. We
estimate cement dispatches growth of 2% YoY (down ~12% QoQ). As a result, capacity
utilization is also expected to decline 120bp YoY (-10pp QoQ). We expect demand to
recover post monsoon, with FY13 volume growth of 7.9% for the industry, translating
into capacity utilization of 75% in FY13 as against 74% in FY12. 1HFY13 volume growth
of ~6.7% implies residual growth of 8.9% for 2HFY13.
India Cements
Shree Cement
UltraTech Cement
Prices resilient; decline during monsoon lower than our initial estimates: Despite
demand weakness, cement prices remained strong with only modest seasonal
correction in 2QFY13. National average retail price for 2Q was down only INR5/bag
QoQ (+INR30/bag YoY). Prices are (1) broadly stable QoQ in West, North and South
(except AP where prices are down INR30-35/bag QoQ), and (2) down INR10/bag in
East and Central. We are factoring in INR20/bag improvement in FY13 realizations
over FY12 average, which is INR10/bag higher than 2QFY13 average pricing.
Profitability to deteriorate QoQ on lower realization, higher cost: Expect EBITDA/ton
to be down INR224 QoQ at INR979/ton (+INR383/ton YoY) on the back of (1) lower
realizations, (2) negative operating leverage (utilization down 950bp QoQ), and (3)
cost push (partial impact of diesel price hike). We expect the potential benefit of
softening rupee on lower imported coal prices to reflect partially from 2QFY13, which
will dilute impact of higher freight rates due to diesel price hike. For FY13, we expect
EBITDA to improve only ~INR210/ton (to INR1,110/ton) as INR400/ton higher realization
is diluted by cost push.
Valuation and view: Cement prices have been resilient even during seasonally weak
period. This, we believe, reflects high cost (both opex and capex), implying little
downside risk to any major price correction in medium-to-long term. Cement stocks
have outperformed the market led by strength in pricing; this has resulted in large
caps trading at slight premium to replacement cost. We expect strong earnings growth
to drive stock performance hereon. Recovery in cement volume growth would be the
key catalyst for stock performance to sustain. We prefer Ambuja Cement and
UltraTech/Grasim in large-caps, and Shree Cement in mid-caps.

CMP
(INR)
28.09.12
ACC
1,469
Ambuja Cements
202
Birla Corporation
282
Grasim Industries
3,315
India Cements
95
82
Shree Cement
3,954
Ultratech Cement
1,968
Sector Aggregate
(INR Million)
Rating
Sep.12
Neutral
Buy
Buy
Buy
Buy
Buy
Buy
Buy
24,042
21,709
5,456
11,736
11,466
32,233
10,927
44,095
161,664
Sales
Var.
% YoY
11.8
20.3
5.8
-2.5
5.3
2.9
47.4
12.8
11.1
Var.
% QoQ
-13.4
-15.4
-17.1
-5.3
-4.6
8.8
-24.9
-13.1
-9.9
EBITDA
Sep.12
Var.
% YoY
4,167
89.0
5,512
77.0
766
142.7
2,856
-1.7
2,519
0.0
7,266
-2.9
3,216
111.1
9,358
60.3
35,661
37.7
Var.
% QoQ
-36.0
-23.7
-39.1
-3.3
-9.3
-5.8
-33.2
-27.6
-22.7
Net Profit
Sep.12
Var.
% YoY
2,497
103.2
3,561
92.1
404
54.5
3,597
4.3
854
22.5
943
-26.7
2,166
LP
5,402
93.6
19,423
89.0
Var.
% QoQ
-40.3
-24.1
-52.3
31.8
14.1
-31.6
-38.4
-30.6
-24.9
Jinesh K Gandhi (Jinesh@MotilalOswal.com) / Sandipan Pal (Sandipan.Pal@MotilalOswal.com)

October 2012
C23
3,441
3,520
3QFY09
4QFY09
October 2012
444
601
2QFY13 retail prices inclusive of excise duty hike of INR4-6/bag
1QFY13
2QFY13E
Central
1,036
1,034
786
248
263
283
298
293
1QFY13
4QFY12
South
832
614
Wes t
2QFY12
3QFY12
Ea s t
203
223
245
275
262
North
1,068
921
294
295
304
310
303
4QFY12
1QFY12
4QFY11
Rea li zati on (INR/ton)
3QFY11
965
908
247
259
283
290
295
3QFY12
2QFY11
4QFY10
1QFY11
843
1,218
2QFY12
2QFY10
3QFY10
Cha nge (%)
1,298
229
260
299
340
328
2QFY13
2QFY13
4QFY12
2QFY12
4QFY11
2QFY11
4QFY10
2QFY10
4QFY09
2QFY09
4QFY08
2QFY08
4QFY07
2QFY07
4QFY06
6.2
245
262
274
273
272
18.3
52
1QFY10
293
2QFY13
1QFY13
6.0
894
1,102
298
1QFY13
4QFY12
10.3
2QFY09
3QFY09
4QFY09
283
4QFY12
2.1
3QFY12
51 56 64 59
2QFY12
Growth (%)
1QFY09
263
3QFY12
7.6
Avg Na ti onal Retai l Pri ces (INR/ba g)
14.0
248
2QFY12
Expect demand growth to moderate at 2.9%
1,039
910
4,404
4,268
1QFY13
9.8
261
1QFY12
1QFY12
4QFY11
10.2
2QFY13E
4,299
4QFY12
11.1
258
4QFY11
3.2
3.2
4,211
237
3QFY11
3QFY11
54
3QFY12
11.0
223 -11.2
2QFY11
2QFY11
1QFY11
4QFY10
9.4 9.3
3,915
243
1QFY11
5.9
10.8
2QFY12
232
4QFY10
11.0
-2.7
229
3QFY10
50 46 49 55 53 48 51 58
4,102
3,910
-2.4
252
2QFY10
3QFY10
Des pa tches (MT)
1QFY12
4QFY11
3,524
3,346
-3.5
250
1QFY10
2QFY10
6.9
3QFY11
2QFY11
3,707
3,497
4QFY10
2.7
238
4QFY09
1QFY10
4.0
1QFY11
3,410
3,744
3QFY10
3,740
2QFY10
3.0
238
3QFY09
6.2
3.2
238
2QFY09
12.2
1QFY10
2QFY09
3,423
3,475
1QFY09

Sector: Cement
utilization to decline YoY

120%
9.0
105%
90%
0.9
75%
60%
Source: CMA/MOSL
2QFY13 average cement prices seasonally down QoQ, although lower than estimated (INR/bag)
2QFY13E
Nati ona l
Average
Source: CMA/MOSL
Cost inflation, negative operating leverage to offset benefit of higher realizations
EBITDA (INR/ton)
C24

Sector: Cement
Trend in key operating parameters

Volume (m tons)
2QFY13E
YoY (%)
QoQ (%)
6.3
10.0
2.6
5.3
10.0
-9.1
10.1
9.2
-3.5
1.4
-0.9
-3.4
2.6
5.1
4.1
2.7
9.6
-16.8
28.3
8.6
-4.2
ACC
Ambuja Cement
UltraTech
Birla Corp
India Cement
Shree Cement
Sector Aggregate
Realization (INR/ton)
2QFY13E YoY (INR) QoQ (INR)
4,196
418
-200
4,220
466
-160
4,598
419
-151
3,854
206
-107
4,386
163
60
3,411
0
-200
4,268
353
-135
EBITDA (INR/ton)
2QFY13E YoY (INR) QoQ (INR)
606
219
-299
876
229
-261
840
218
-258
473
176
-275
1,033
-5
105
757
-46
-336
786
172
-248
Trend in key financial parameters

Net Sales (INR m)
2QFY13
YoY (%)
QoQ (%)
26,265
22.2
-2.1
22,320
23.7
-12.4
46,322
18.5
-6.6
5,396
4.7
-6.1
11,729
7.7
0.8
9,657
13.0
-35.1
121,689
17.9
-9.3
ACC
Ambuja Cement
UltraTech
Birla Corp
India Cement
Shree Cement
Sector Aggregate

Sens ex Index
MOSL Cement Index
Sep-12
Aug-12
Jul-12
Jun-12
145
130
115
100
85
ACC
Ambuja Cement
Grasim
UltraTech
Birla Corp
India Cement
Shree Cement
200
EV (USD/Ton)
140
120
100
Net Profit (INR m)

YoY (%)
QoQ (%)
89.9
-33.7
60.7
-31.2
71.0
-28.6
-31.3
-66.0
25.6
26.6
-43.8
-94.9
59.6
-35.9
Rev
FY13E
Old
Chg (%)
Rev
FY14E
Old
Chg (%)
66.8
10.8
330.2
103.4
24.1
11.9
310.2
70.3
10.8
324.6
103.4
34.8
12.0
300.7
-4.9
-0.2
1.7
-0.1
-30.7
-0.4
3.2
83.0
12.6
365.2
116.9
26.9
15.6
361.4
86.1
12.7
352.6
113.2
36.7
15.6
345.2
-3.6
-0.7
3.6
3.2
-26.7
0.2
4.7
Replacement Cost at
USD140/ton
150
Ul traTech
ACC
100
Ambuja
Shree
Gra s i m
Indi a Cement
50
Bi rl a Corp
Sep-12
Jun-12
80
Mar-12
2QFY13
2,333
2,979
4,770
180
1,083
99
11,444
Recent correction makes valuations attractive (FY12)
160
Dec-11
EBITDA Margins (%)

YoY (BP) QoQ (BP)
420
-610
350
-520
360
-490
150
-660
-70
290
-170
-430
270
-470
Revised EPS estimates (INR)
Sens ex Index
MOSL Cement Index
Sep-11
2QFY13
14.4
20.8
18.5
7.6
22.5
21.7
18.2
0%
6%
12%
18%
24%
30%
RoCE (%)
36%
42%
48%
54%
CMP (INR)
28.09.12
Cement
ACC
Ambuja Cements
Birla Corporation
Grasim Industries
India Cements
J P Associates
Shree Cement
Ultratech Cement
Sector Aggregate
October 2012
1,469
202
282
3,315
95
82
3,954
1,968
Rating
EPS (INR)
FY12 FY13E FY14E
P/E (x)
FY12 FY13E FY14E
EV/EBITDA (x)
FY12 FY13E FY14E
RoE (%)
FY12 FY13E FY14E
Neutral
Buy
Buy
Buy
Buy
Buy
Buy
Buy
59.0
8.2
31.1
288.6
9.6
4.8
274.4
87.5
24.9
24.7
9.1
11.5
9.9
17.1
14.4
22.5
18.1
14.6
14.5
5.8
5.2
5.9
9.4
9.0
13.4
9.8
16.2
16.3
10.7
15.5
7.3
10.4
40.5
20.4
15.8
73.3
11.9
33.0
348.3
11.1
3.6
310.2
109.5
86.4
13.2
32.9
375.8
14.8
4.6
361.4
122.6
20.0
17.0
8.5
9.5
8.5
23.1
12.7
18.0
15.2
17.0
15.3
8.6
8.8
6.4
17.9
10.9
16.1
13.4
11.0
10.0
5.5
4.5
5.2
9.6
6.9
11.3
8.3
9.6
8.8
5.1
3.6
4.2
8.5
5.8
9.7
7.1
18.5
21.5
10.5
16.0
7.3
7.6
34.4
21.2
16.8
20.0
21.1
9.7
15.0
8.9
9.8
31.7
19.9
16.7
C25

Sector: Cement
ACC
BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Wk Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
5,703
ACC IN
187.9
1,475/1,077
4/1/21
276.1
5.2
CMP: INR1,469
Year
Net Sales
PAT
End
(INR m) (INR m)
12/10A 77,173
10,137
12/11A 94,387
11,083
12/12E 109,564 13,781
12/13E 125,950 16,231
Neutral
EPS
(INR)
53.9
59.0
73.3
86.4
EPS
Gr. (%)
-38.2
9.3
24.3
17.8
P/E
(X)
25.5
20.6
17.0
P/BV
(X)
3.8
3.6
3.2
RoE
(%)
16.2
16.2
18.5
20.0
RoCE
EV/ EV/Ton
(%) EBITDA (USD)
16.3
157
15.7
14.6
154
19.9
11.0
150
21.5
9.6
148
Expect 2QCY12 dispatches to de-grow 4.2% YoY (~10% down QoQ) to 5.45mt, and Average realization to decline
3.9% QoQ to INR4,411/ton (+13% YoY).
Net sales should grow 11.8% YoY (down 13% QoQ) to INR24b. EBITDA margins are expected to compress 6.1pp
QoQ (up 7pp YoY) to 17.3%, on the back of lower realizations and negative operating leverage. EBITDA/ton is
estimated to improve by ~INR377/ton YoY (-INR311/ton QoQ) to INR765.
Expect EBITDA to de-grow 36% QoQ (up ~89% YoY) to INR4.2b, translating into PAT de-growth of ~40% QoQ (up
~103% YoY).
We are downgrading our EPS estimates for CY12/CY13 by 1%/2% to INR73.3/86.4 to factor in lower volumes and
marginally lower realization.
We believe ACC stock valuations at 17x CY13E EPS and 9.6x CY13E EV/EBITDA fairly reflect underlying business
fundamentals. Maintain Neutral with target price of INR1,396 (9x CY13 EV/EBITDA).
(INR Million)
Y/E December
Cement Sales (m ton)
YoY Change (%)
Cement Realization
YoY Change (%)
QoQ Change (%)
Net Sales
YoY Change (%)
Total Expenditure
EBITDA
Margins (%)
Depreciation
Interest
Other Income
PBT before EO Item
EO Income/(Expense)
PBT after EO Item
Tax
Rate (%)
Reported PAT
Adjusted PAT
Margins (%)
YoY Change (%)
E: MOSL Estimates
October 2012
CY11
1Q
6.16
10.4
3,893
3.4
11.6
23,982
14.1
18,439
5,542
23.1
1,125
253
669
4,834
0
4,834
1,327
27.5
3,507
3,507
14.6
-13.4
2Q
5.93
12.5
4,052
5.7
4.1
24,030
18.9
18,527
5,503
22.9
1,158
271
771
4,845
0
4,845
1,479
30.5
3,366
3,366
14.0
-6.2
3Q
5.69
17.8
3,779
11.5
-6.8
21,500
31.3
19,296
2,204
10.3
1,199
253
944
1,695
617
2,312
637
27.5
1,676
1,229
5.7
22.8
CY12
4Q
5.95
6.1
4,206
20.5
11.3
25,027
27.8
21,134
3,893
15.6
1,270
192
982
3,414
2,280
5,693
2,466
43.3
3,227
1,935
7.7
39.2
1Q
6.72
9.1
4,256
9.3
1.2
28,602
19.3
22,442
6,161
21.5
1,305
316
948
5,487
-3,354
2,134
580
27.2
1,554
3,859
13.5
10.1
2Q
6.05
2.0
4,591
13.3
7.9
27,778
15.6
21,270
6,508
23.4
1,356
301
1,157
6,009
0
6,009
1,829
30.4
4,179
4,179
15.0
24.2
3QE
5.45
-4.2
4,411
16.8
-3.9
24,042
11.8
19,876
4,167
17.3
1,375
300
1,050
3,542
0
3,542
1,045
29.5
2,497
2,497
10.4
103.2
4QE
6.46
8.6
4,512
7.3
2.3
29,141
16.4
23,882
5,259
18.0
1,411
299
1,045
4,594
0
4,594
1,348
29.3
3,246
3,246
11.1
67.7
CY11
CY12E
23.7
11.5
3,978
9.7
24.7
4.0
4,440
11.6
94,387
22.3
77,395
16,992
18.0
4,753
969
3,518
14,788
2,897
17,685
4,431
25.1
13,254
11,083
11.7
9.3
109,564
16.1
87,469
22,095
20.2
5,448
1,216
4,200
19,631
-3,354
16,278
4,802
29.5
11,476
13,781
12.6
24.3
C26

Sector: Cement
Ambuja Cements
BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
5,703
ACEM IN
1,534.4
206/136
2/11/23
309.9
5.9
CMP: INR202
Year
Net Sales
PAT
End
(INR m) (INR m)
12/10A 73,902
12,434
12/11A 85,306
12,547
12/12E 101,997 18,262
12/13E 117,222 20,213
Buy
EPS
(INR)
8.1
8.2
11.9
13.2
EPS
Gr. (%)
4.3
0.6
45.5
10.7
P/E
(X)
24.7
17.0
15.3
P/BV
(X)
3.9
3.5
3.0
RoE
(%)
18.1
16.3
21.5
21.1
RoCE
EV/ EV/Ton
(%) EBITDA (USD)
24.1
23.2
14.5
194
31.2
10.0
189
30.6
8.8
184
Expect dispatches to grow ~0.9% YoY (down 14% QoQ) to 4.85mt, and average realization to decline 1.8% QoQ
(up ~19.2% YoY) to INR4,476/ton.
Net sales should grow 20.3% YoY (down 15% QoQ) to INR21.7b. EBITDA margin is expected to contract 280bp
QoQ (up 8.1pp YoY) to 25.4%, impacted by QoQ lower utilization and negative operating leverage. EBITDA/ton
should be down INR146/ton QoQ to INR1,136 (+INR489/ton YoY).
Expect EBITDA to de-grow 24% QoQ (up +77% YoY) to INR5.5b, translating into PAT de-growth of 24% QoQ (up
92% YoY) to INR3.6b.
We broadly maintain our EPS estimates for CY12/13 at INR11.9/13.2. We believe valuations at 15.3x CY13E and
8.8x CY13E EV/EBITDA are attractive given Ambuja's superior profitability. Maintain Buy with target price of
INR207 (9x CY13E EV/EBITDA).
(INR Million)
Y/E December
Sales Volume (m ton)
YoY Change (%)
YoY Change (%)
QoQ Change (%)
Net Sales
YoY Change (%)
EBITDA
Margins (%)
Depreciation
Interest
Other Income
PBT before EO Item
PBT after EO Exp/(Inc)
Tax
Rate (%)
Reported Profit
Adj PAT
YoY Change (%)
E: MOSL Estimates
October 2012
CY11
1Q
5.64
6.7
3,923
4.2
11.2
22,125
11.2
6,170
27.9
1,061
138
621
5,592
0
5,592
1,517
27.1
4,075
4,075
-7.8
2Q
5.29
-3.5
4,114
10.1
4.9
21,764
6.3
5,853
26.9
1,074
152
693
5,320
0
5,320
1,845
34.7
3,475
3,475
-11.2
3Q
4.81
6.7
3,754
8.1
-8.7
18,051
15.4
3,115
17.3
1,079
138
857
2,755
-206
2,548
834
32.7
1,715
1,854
21.9
CY12
4Q
5.71
12.6
4,092
16.0
9.0
23,366
30.6
4,285
18.3
1,238
99
937
3,886
-243
3,643
544
14.9
3,099
3,305
31.2
1Q
6.18
9.6
4,260
8.6
4.1
26,333
19.0
7,445
28.3
1,209
168
1,147
7,215
-2,791
4,424
1,301
29.4
3,122
5,075
24.5
2Q
5.63
6.5
4,556
10.7
6.9
25,660
17.9
7,223
28.2
1,215
180
908
6,736
0
6,736
2,047
30.4
4,689
4,689
34.9
3QE
4.85
0.9
4,476
19.2
-1.8
21,709
20.3
5,512
25.4
1,265
160
1,000
5,087
0
5,087
1,526
30.0
3,561
3,561
92.1
4QE
6.18
8.2
4,579
11.9
2.3
28,296
21.1
7,301
25.8
1,306
137
1,195
7,052
0
7,052
2,115
30.0
4,937
4,937
49.4
CY11
CY12E
21.45
5.4
3,977
9.5
22.84
6.5
4,465
12.3
85,306
15.4
19,315
22.6
4,452
526
3,050
17,387
-358
17,029
4,740
27.8
12,289
12,547
0.9
101,997
19.6
27,481
26.9
4,995
646
4,250
26,090
-2,791
23,299
6,990
30.0
16,309
18,262
45.5
C27

Sector: Cement
Birla Corporation
BSE Sensex
18,763
S&P CNX
5,703
Bloomberg
BCORP IN
Equity Shares (m)
77.0
52 Week Range (INR)
345/202
1,6,12 Rel Perf (%)
26/-10/-29
Mcap (INR b)
21.8
Mcap (USD b)
0.4
CMP: INR282
Year
Net Sales
PAT
End
(INR m) (INR m)
03/11A 21,238
3,199
03/12A 22,469
2,392
03/13E 24,243
2,545
03/14E 27,537
2,532
Buy
EPS
(INR)
41.5
31.1
33.0
32.9
EPS
Gr. (%)
-42.6
-25.2
6.4
-0.5
P/E
(X)
9.1
8.5
8.6
P/BV
(X)
1.0
0.9
0.8
RoE
(%)
15.5
10.7
10.5
9.7
RoCE
EV/ EV/Ton
(%) EBITDA (USD)
15.4
11.3
5.8
44
12.0
5.5
45
11.6
5.1
44
Expect Birla Corp's revenues to grow 18% YoY (down 17% QoQ) to INR5.5b. Cement volume growth should be
muted at 2.6% YoY (down ~11% QoQ) to 1.45mt, impacted by limestone mining ban at its Rajasthan plant.
However, realization is likely to improve 19% YoY (down 5% QoQ) to INR3,821/ton.
Expect EBITDA margin to slip 5.1pp to 14% (+7.9% YoY) on the back of (1) lower realizations, (2) negative
operating leverage, and (3) cost push due to higher RM cost (as purchased limestone/clinker replaces captive
source) and higher energy cost. We estimate cement EBITDA/ton at INR528 (down INR245/ton QoQ, but up
INR305/ton YoY). As a result, EBITDA is estimated to de-grow 39% QoQ (up 143% YoY) to INR766m, translating
into PAT de-growth of 52% QoQ (up 54.5% YoY) to INR404m.
Birla Corp's Rajasthan plant (~2mt capacity) operations are impacted since August 2011 due to ban on mining
within 10km of the Chittorgarh Fort. The company lost its appeal in the High Court. The company has appealed
against the verdict in the Supreme Court, and since then the levy has been stayed. Non-resolution of this issue
would severely curtail operations at Rajasthan plant, especially as the company is expanding capacity there.
Our estimates partly factor in non-resolution of the ban in foreseeable future, resulting in higher RM Cost.
We are maintaining our EPS estimates for FY13/14 at INR33/INR32.9. The stock trades at 8.6x FY14E EPS and 5.1x
FY14 EV/EBITDA. Maintain Buy with target price of INR277 (5x FY14E EV/EBITDA).
(INR Million)
Y/E March
Cement Sales (m ton)
YoY Change (%)
Cement Realization
YoY Change (%)
QoQ Change (%)
Net Sales
YoY Change (%)
Total Expenditure
EBITDA
Margins (%)
Depreciation
Interest
Other Income
Profit before Tax
Tax
Rate (%)
PAT
Margins (%)
YoY Change (%)
E: MOSL Estimates
October 2012
FY12
1Q
1.52
2.0
3,413
-2.8
-0.1
5,570
-3.1
4,082
1,487
26.7
175
120
346
1,538
420
27.3
1,119
20.1
-5.4
2Q
1.41
2.0
3,213
3.0
-5.9
5,155
6.4
4,840
316
6.1
178
117
275
295
34
11.5
261
5.1
-62.1
3Q
1.39
-6.7
3,500
18.5
8.9
5,341
11.4
4,678
664
12.4
188
161
341
656
219
33.4
437
8.2
-37.2
FY13
4Q
1.63
7.2
3,612
5.7
3.2
6,514
9.7
5,731
782
12.0
259
128
575
970
396
40.8
575
8.8
-8.9
1Q
1.63
7.1
4,021
17.8
11.3
6,580
18.1
5,322
1,258
19.1
235
237
346
1,132
284
25.1
847
12.9
-24.3
2QE
1.45
2.6
3,821
18.9
-5.0
5,456
5.8
4,690
766
14.0
280
240
300
546
142
26.0
404
7.4
54.5
3QE
1.47
6.0
3,921
12.0
2.6
5,649
5.8
4,865
784
13.9
300
265
350
569
148
26.0
421
7.5
-3.7
4QE
1.71
4.7
4,120
14.1
5.1
6,558
0.7
5,340
1,218
18.6
300
270
544
1,192
320
26.8
872
13.3
51.8
FY12
FY13E
5.96
0.4
3,415
6.3
6.26
5.0
3,978
16.5
22,469
5.8
19,345
3,124
13.9
800
525
1,662
3,461
1,068
30.9
2,392
10.6
-25.2
24,243
7.9
20,217
4,026
16.6
1,115
1,012
1,540
3,439
894
26.0
2,545
10.5
6.4
C28

Sector: Cement
Grasim Industries
BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Wk Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
5,703
GRASIM IN
91.7
3,347/2,208
4/19/32
304.1
5.8
CMP: INR3,315
Year
Net Sales
PAT
End
(INR m) (INR m)
03/11A* 213,183 22,790
03/12A* 249,878 26,475
03/13E* 267,983 31,944
03/14E* 306,836 34,468
* Consolidated
Buy
EPS
(INR)
248.5
288.6
348.3
375.8
EPS
Gr. (%)
-16.7
16.2
20.7
7.9
P/E
(X)
11.5
9.5
8.8
P/BV
(X)
1.8
1.5
1.3
RoE
(%)
16.8
16.7
17.3
16.0
RoCE
EV/ EV/Ton
(%) EBITDA (USD)
16.5
143
17.7
7.4
146
18.8
6.5
147
18.5
5.3
109
Expect Grasim's 2QFY13 VSF volumes to be stable at 73,375 tons (+1.4% YoY, +1% QoQ) given steady demand and
no production impact due to water shortage. VSF realization should also be stable at INR127/kg (+INR2.5/kg YoY,
-INR1/kg QoQ) on back of bottomed-out utilization level. We assume FY13/14 realization of INR127/129 per kg.
Grasim's 2QFY13 standalone revenues are estimated to de-grow 2.5% YoY (-5% QoQ) to INR11.7b, impacted by
lower volume. EBITDA margin is likely to remain stable YoY at 24.3% (up 50bp QoQ).
EBITDA is estimated to de-grow 2% YoY (-3% QoQ) to INR2.9b, translating into PAT of INR3.6b, up 4% YoY and 32%
QoQ.
We are maintaining our consolidated EPS for FY13/14 at INR348.3/375.8. The stock trades at attractive valuations
of 8.8x FY14E consolidated EPS, 5.3x FY14E EV/EBITDA and 1.3x P/BV. Implied valuation of the cement business
is USD109/ton. Maintain Buy with target price of INR3,357 (SOTP based).
Y/E March
(INR Million)
FY12
1Q
2Q
3Q
4Q
1Q
2QE
VSF Volume (ton)
54,839
78,959
78,215
94,904
77,013
77,838
YoY Change (%)
-18.5
17.0
-7.6
10.8
40.4
-1.4
VSF Realization (INR/ton)
152,409 124,689 128,499 121,293 128,024 127,024
YoY Change (%)
29.3
7.1
4.4
-16.3
-16.0
1.9
QoQ Change (%)
5.1
-18.2
3.1
-5.6
5.5
-0.8
Net Sales
10,237
12,035
12,429
13,885
12,390
11,736
YoY Change (%)
8.3
29.0
2.4
-2.6
21.0
-2.5
Total Expenditure
6,707
9,130
9,575
11,717
9,438
8,879
EBITDA
3,529
2,905
2,854
2,168
2,953
2,856
Margins (%)
34.5
24.1
23.0
15.6
23.8
24.3
Depreciation
351
356
366
369
360
400
Interest
106
107
72
74
61
60
Other Income
1,010
2,157
1,093
1,503
844
2,100
PBT after EO Items
4,082
4,599
3,509
3,228
3,376
4,496
Tax
941
1,150
765
792
647
899
Rate (%)
23.0
25.0
21.8
24.5
19.2
20.0
Reported PAT
3,141
3,448
2,745
2,436
2,729
3,597
Adj. PAT
3,141
3,448
2,745
2,436
2,729
3,597
Margins (%)
30.7
28.7
22.1
17.5
22.0
30.7
YoY Change (%)
40.3
23.3
-2.9
-38.4
-13.1
4.3
E: MOSL Estimates; '* Not comparable YoY due to demerger of cement business
October 2012
FY13
3QE
82,915
6.0
127,024
-1.1
0.0
12,557
1.0
9,496
3,061
24.4
475
80
1,000
3,506
701
20.0
2,805
2,805
22.3
2.2
4QE
100,662
6.1
127,164
4.8
0.1
14,384
3.6
10,895
3,488
24.3
557
83
1,556
4,404
909
20.6
3,495
3,495
24.3
43.5
FY12
FY13E
306,917
0.6
129,563
2.3
338,428
10.3
127,293
-1.8
48,724
7.3
37,114
11,611
23.8
1,442
358
5,607
15,418
3,648
23.7
11,770
11,770
24.2
-0.4
51,067
4.8
38,709
12,358
24.2
1,792
284
5,500
15,782
3,156
20.0
12,626
12,626
24.7
7.3
C29

Sector: Cement
India Cements
BSE Sensex
S&P CNX
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
5,703
ICEM IN
307.2
119/65
5/-29/23
29.2
0.6
CMP: INR95
Year
Net Sales
PAT
End *
(INR m) (INR m)
03/11A 35,007
664
03/12A 42,034
2,958
03/13E
46,069
3,035
03/14E
52,563
3,918
* Consolidated
Buy
EPS
(INR)
2.3
9.6
11.1
14.8
EPS
Gr. (%)
-79.6
314.9
16.2
32.6
P/E
(X)
9.9
8.5
6.4
P/BV
(X)
0.7
0.6
0.6
RoE
(%)
1.6
7.3
7.3
8.9
RoCE
EV/ EV/Ton
(%) EBITDA (USD)
3.6
10.3
5.8
67
11.2
4.8
64
12.5
3.9
58
Expect India Cement's 2QFY13 volumes to grow 3% YoY (+5% QoQ) to 2.5mt, and realization at INR4,374/ton (up
3.6% YoY, down 2% QoQ) on stable pricing environment due to production discipline.
2QFY13 revenues are estimated to grow 5.3% YoY (-5% QoQ) to INR11.5b, including INR400m revenues from IPL
(v/s INR515m in 2QFY12).
Expect EBITDA of INR2.5b (-9% QoQ, flat YoY) with EBITDA margin down 1.1pp QoQ/YoY to 22%, translating into
PAT growth of 22.5% YoY (+14% QoQ) to INR854m. Our estimate does not factor in any MTM forex loss.
Pure Cement's EBITDA/ton is estimated to decline INR158/ton QoQ (-INR30/ton YoY) to INR1,008. Our estimates
factor in EBITDA of INR100m from IPL in 2QFY13 and INR310m in FY13.
While our estimates do not yet factor in any benefit of softening in imported coal prices, India Cement would
be one of the biggest beneficiaries with ~15% higher EPS for 10% lower imported coal prices.
We are downgrading our EPS estimates for FY13/14 by 2%/4.5% to INR11.1/14.8, led by higher freight cost post
increase in diesel prices. Valuations at 6.4x FY14E EPS, 3.9x FY14E EBITDA and USD58/ton are attractive. Maintain
Buy with target price of INR142 (5x FY14E EV/EBITDA).
(INR Million)
Y/E March
Sales Dispatches (m ton)
YoY Change (%)
YoY Change (%)
QoQ Change (%)
Net Sales
YoY Change (%)
Total Expenditure
EBITDA
Margins (%)
Depreciation
Interest
Other Income
PBT before EO expense
Extra-Ord expense
PBT
Tax
Rate (%)
Reported PAT
Adj PAT
YoY Change (%)
Margins (%)
E: MOSL Estimates
October 2012
FY12
1Q
2.31
-13.0
4,148
29.2
8.8
10,568
20.0
8,151
2,417
22.9
619
619
49
1,229
0
1,229
208
16.9
1,021
1,021
749.5
9.7
2Q
2.43
-10.6
4,223
45.2
1.8
10,891
29.5
8,371
2,520
23.1
626
895
29
1,027
0
1,027
330
32.1
697
697
-257.4
6.4
3Q
2.19
7.1
4,242
15.7
0.5
9,415
20.6
7,470
1,946
20.7
622
750
46
620
0
620
57
9.2
563
563
137.0
6.0
FY13
4Q
2.60
2.0
4,245
11.4
0.1
11,160
11.8
9,008
2,152
19.3
646
640
70
935
0
935
286
30.6
649
649
-9.5
5.8
1Q
2.38
2.9
4,464
7.6
5.1
12,014
13.7
9,237
2,777
23.1
692
949
37
1,173
200
973
353
36.2
621
748
-26.7
6.2
2QE
2.50
3.0
4,374
3.6
-2.0
11,466
5.3
8,947
2,519
22.0
700
700
50
1,169
0
1,169
316
27.0
854
854
22.5
7.4
3QE
2.25
3.0
4,362
2.8
-0.3
10,046
6.7
8,194
1,852
18.4
725
700
60
487
0
487
131
27.0
356
356
-36.9
3.5
4QE
2.70
3.9
4,581
7.9
5.0
12,543
12.4
9,698
2,845
22.7
753
725
78
1,445
0
1,445
382
26.4
1,063
1,063
63.8
8.5
FY12
FY13E
9.52
-4.4
4,216
24.9
9.83
3.2
4,450
5.6
42,034
20.1
33,001
9,034
21.5
2,513
2,867
193
3,846
0
3,846
880
22.9
2,966
2,966
347.1
7.1
46,069
9.6
36,075
9,994
21.7
2,870
3,075
225
4,275
200
4,075
1,182
29.0
2,893
3,035
2.3
6.6
C30

Sector: Cement
BSE Sensex
S&P CNX
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
5,703
JPA IN
2,126.5
89/50
10/-3/3
174.8
3.3
CMP: INR82
Buy
Year
Net Sales
PAT
EPS*
EPS*
P/E*
P/BV
RoE
RoCE
EV/
EV/
End
(X)
(%)
(%)
Sales EBITDA
3/11A
129,665
7,421
3.5
-17.0
8.3
10.6
3/12A
128,531 10,203
4.8
37.5
15.3
1.5
10.4
10.0
2.3
8.7
3/13E
142,843
8,997
4.2
-11.8
16.6
1.4
8.5
10.9
2.1
8.6
3/14E
160,665 11,577
5.4
28.7
12.9
1.3
10.4
12.5
1.8
7.6
* Not Fully Diluted; FCCB O/S of INR14b at conversion price of INR166/sh (dilution of ~5%)
We expect Jaiprakash Associates (JPA) to post 2QFY13 revenue of INR32.2b, EBITDA of INR7.3b and PAt of
INR943m. The numbers are not comparable YoY due to de-merger of cement capacity.
Contribution from the EPC division is expected to be moderate with revenue down 12% YoY to INR12.5b. We
expect EBIT of INR3b in 2QFY13 (v/s INR5.5b YoY) and EBIT margin of 21.5% v/s 35% YoY. 2QFY13 performance
would be healthy due to cement division where EBIT would be higher YoY, given the rise in cement capacity,
coupled with improved realizations.
In FY12, cement capacity stood at 33m tons (up from 26m tons as at end-FY11). The management expects
installed capacity to reach 36m tons by March 2013, which would drive contribution from the division in FY13. Of
this, Gujarat and AP capacity (~10m tons) has been hived off to wholly-owned subsidiary, Jaypee Cements Ltd.
JPA is looking to divest stake in Jaypee Cement to raise funds for de-leveraging.
We expect JPA to post standalone PAT of INR7.6b in FY13E (down 26% YoY) and INR9.8b in FY14E (up 30% YoY).
The stock trades at a reported P/E of 12.9x FY14E. Maintain Buy.
FY12
FY13
1Q
2Q
3Q
4Q
1Q
2QE
3QE
Sales
31,833
31,324
33,054
40,621
29,636
32,233
37,860
Change (%)*
0.3
4.6
14.2
4.0
EBITDA
7,728
7,482
8,160
10,194
7,713
7,266
8,992
Change (%)*
20.4
9.9
3.1
31.7
As of % Sales
24.3
23.9
24.7
25.1
26.0
22.5
23.8
Depreciation
1,721
1,761
2,022
1,638
1,763
1,750
1,800
Interest
4,284
4,049
4,485
5,800
4,653
4,700
4,750
Other Income
74
560
1,205
317
731
550
600
Extra-ordinary income
-2
-3
16
49
9
0
0
PBT
1,796
2,228
2,873
3,123
2,037
1,366
3,042
Tax
726
942
824
285
649
424
943
40.4
42.3
28.7
9.1
31.8
31.0
31.0
Reported PAT
1,070
1,287
2,050
2,838
1,388
943
2,099
Adj PAT
1,072
1,287
2,034
2,789
1,379
943
2,099
Change (%)*
1.3
11.4
-12.9
-3.3
E: MOSL Estimates, *Change (% YoY) is not comparable due to Jaypee Cement de-merger
(INR Million)
Y/E March
4QE
41,871
10,423
24.9
1,863
4,771
618
0
4,407
1,380
31.3
3,027
3,027
FY12
FY13E
128,531
-0.9
34,397
19.1
26.8
6,142
17,817
2,645
61
13,143
2,880
21.9
10,264
10,203
37.8
141,997
34,505
24.3
7,176
18,874
2,499
0
10,953
3,395
31.0
7,558
7,558
Nalin Bhatt (NalinBhatt@MotilalOswal.com)/Satyam Agarwal (AgarwalS@MotilalOswal.com)

October 2012
C31

Sector: Cement
Shree Cement
BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Wk Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
5,703
SRCM IN
34.8
3,989/1,725
7/20/107
137.7
2.6
CMP: INR3,954
Year
Net Sales
PAT
End
(INR m) (INR M)
03/11A 34,535
6,972
06/12A 48,792
9,558
06/13E
60,273
10,847
06/14E
68,347
12,760
Buy
EPS
(INR)
200.1
274.4
310.2
361.4
EPS
Gr. (%)
-31.4
37.1
13.0
16.5
P/E
(X)
14.4
12.7
10.9
P/BV
(X)
5.0
3.9
3.1
RoE
(%)
36.5
40.5
34.4
31.7
RoCE
EV/ EV/Ton
(%) EBITDA (USD)
8.4
19.6
9.0
157
27.4
6.9
131
25.1
5.8
113
Expect Shree's 2QFY13 cement volumes to grow 14.7% YoY (-15% QoQ) to 2.85mt (including clinker) and realization
to improve 2.7% QoQ (flat YoY) to INR3,785/ton.
Merchant power sale is estimated at 100m units (v/s 14m units YoY and 390m QoQ) @ INR4.25/unit (v/s INR4.44
in 5QFY12 and INR4.98 in 2QFY12).
Expect 2QFY13 sales to grow 47.4% YoY (down 25% QoQ) to INR10.9b, driven by strong recovery in both cement
and merchant power business. Merchant power revenues are estimated at INR425m (v/s INR1.7b in 5QFY12 and
INR69m in 2QFY12).
Cost push in form of fuel and freight will dilute benefit of better cement realizations and higher merchant
power volumes, resulting in EBITDA margin compression of 3.7pp QoQ (up 8.8pp YoY) to 29.4%. Cement EBITDA/
ton is expected to decline by ~INR210/ton QoQ (up ~INR504/ton YoY) to INR1,114/ton. Expect lower depreciation
to boost adjusted PAT to INR2.2b (v/s loss of INR1.3b in 2QFY12).
We are upgrading our adjusted EPS estimates for FY13/14 by 3%/5% to INR310/361.4 to account for (1) lower pet
coke/imported coal prices, and (2) upgrade in volume on the back of new capacity.
The stock trades at 10.9x FY14E EPS, 5.8x FY14E EBITDA and USD113/ton. Maintain Buy with target price of
INR4,230 (SOTP based).
FY12
1Q
2Q
3Q
4Q
Sales Dispat. (m ton)
2.69
2.49
2.85
3.47
YoY Change (%)
8.3
9.0
8.8
20.6
Realization (INR/Ton)
3,405
2,955
3,798
3,560
YoY Change (%)
4.0
-1.8
33.2
7.9
QoQ Change (%)
3.2
-13.2
28.5
-6.2
Net Sales
10,187
7,413 12,586 14,241
YoY Change (%)
7.9
3.3
61.4
33.1
EBITDA
2,591
1,524
3,320
4,210
Margins (%)
25.4
20.6
26.4
29.6
Depreciation
1,598
1,619
2,351
2,346
Interest
476
468
519
411
Other Income
158
204
172
774
PBT before EO Exp
676
-360
622
2,227
Extra-Ord Expense
83
-468
0
508
PBT
593
108
622
1,719
Tax
43
-277
30
576
Rate (%)
7.3
-256.9
4.9
33.5
Reported PAT
550
385
592
1,143
Adj PAT
627
-1,286
592
1,481
YoY Change (%)
-73.7
-360.7
304.8
NA
E:MOSL Estimates; ^ Y/E March for FY11; * volumes are estimated
(INR Million)
Y/E June
October 2012
5Q *
3.37
25.1
3,805
11.8
6.9
14,553
42.9
4,812
33.1
818
480
322
3,836
1
3,835
320
8.3
3,515
3,516
460.9
1Q
2.85
14.7
3,685
24.7
-3.2
10,927
47.4
3,216
29.4
850
450
250
2,166
0
2,166
0
0.0
2,166
2,166
-268.4
FY13E
2Q
3.09
8.6
3,785
-0.3
2.7
14,261
13.3
3,829
26.9
950
455
175
2,599
0
2,599
552
21.3
2,047
2,047
245.7
3Q
3.76
8.1
3,985
11.9
5.3
17,729
24.5
5,328
30.1
1,700
470
700
3,858
0
3,858
820
21.3
3,038
3,038
105.2
FY12
4Q (15 Mon)
3.67
14.87
8.8
15.9
3,988
3,576
4.8
14.8
0.1
17,356 58,980
19.3
36.6
4,981 16,456
28.7
27.9
1,781
8,731
476
2,354
325
1,630
3,048
7,001
0
123
3,048
6,878
1,079
693
35.4
10.1
1,969
6,185
1,969
6,296
-44.0
66.9
FY13E
13.37
-10.1
3,876
8.4
60,273
2.2
17,353
28.8
5,281
1,851
1,450
11,671
0
11,671
2,451
21.0
9,220
9,220
46.4
C32

Sector: Cement
UltraTech Cement
BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Wk Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
5,703
UTCEM IN
274.0
2,005/1,057
7/23/57
539.2
10.2
CMP: INR1,968
Buy
Year
Net Sales
PAT
EPS
EPS
P/E
P/BV
End
(X)
03/11A* 132,062 14,042
51.2
-41.7
03/12A 181,664 23,982
87.5
70.8
22.5
4.2
03/13E 210,570 30,013 109.5
25.2
18.0
3.5
03/14E 244,669 33,594 122.6
11.9
16.1
2.9
* Merger of Grasim's cement business assumed w.e.f. 1 July
RoE
(%)
18.4
20.4
21.2
19.9
2010
RoCE
EV/ EV/Ton
(%) EBITDA (USD)
21.1
23.7
13.4
207
24.7
11.3
209
24.2
9.7
172
Expect UltraTech's 2QFY13 cement volumes to de-grow 1.3% YoY (down 12% QoQ) to 9.1mt, and realization to
improve 13.6% YoY (down 3.4% YoY) to INR3,984/ton. Consequently net revenue is expected to grow 12.8% YoY
(down 13% QoQ) to INR44.1b.
White cement revenue should grow 5% YoY and RMC business volumes 9% YoY.
Despite cost push in energy and freight, higher realization should drive up EBITDA margin 6.3pp YoY at 21.2%
(down 4.3pp QoQ). EBITDA/ton works out to INR1,051, up ~INR389 YoY (down +INR222 QoQ).
Expect EBITDA to grow 60% YoY (down ~28% QoQ) to INR9.4b, translating into PAT growth to ~94% YoY (-31%
QoQ) to INR5.4b.
We maintaining our EPS estimate for FY13/14 at INR109.5/122.6. The UltraTech stock trades at 16.1x FY14E EPS,
9.7x FY14E EBITDA and USD172/ton. Maintain Buy with target price of INR1,832 (9x FY14E EV/EBITDA).
FY12
1Q
2Q
3Q
Sales (m ton)
9.86
9.22
10.11
YoY Change (%)
-3.9
0.3
3.2
Grey Cement Realn.(INR/ton) *
3,749
3,507
3,759
YoY Change (%)
11.8
19.3
19.0
QoQ Change (%)
6.2
-6.5
7.2
Net Sales
43,515
39,101
45,681
YoY Change (%)
9.1
21.6
23.0
EBITDA
11,882
5,837
9,647
Margins (%)
27.3
14.9
21.1
Depreciation
2,230
2,228
2,236
Interest
712
660
281
Other Income
641
1,002
876
PBT before EO expense
9,583
3,952
8,005
PBT after EO Expense
9,583
3,952
8,672
Tax
2,752
1,162
2,503
Rate (%)
28.7
29.4
28.9
Reported PAT
6,831
2,790
6,169
Adj PAT
6,831
2,790
5,695
YoY Change (%)
22.5
141.0
78.5
E: MOSL Estimates; * Grey cement realization is our estimate
(INR Million)
Y/E March
October 2012
FY13
4Q
11.54
6.9
3,894
10.3
3.6
53,366
18.9
12,641
23.7
2,332
586
2,000
11,723
11,723
3,050
26.0
8,673
8,673
19.3
1Q
10.33
4.8
4,124
10.0
5.9
50,748
16.6
12,918
25.5
2,281
498
849
10,987
10,987
3,203
29.2
7,784
7,784
14.0
2QE
9.10
-1.3
3,984
13.6
-3.4
44,095
12.8
9,358
21.2
2,350
500
1,100
7,608
7,608
2,206
29.0
5,402
5,402
93.6
3QE
10.80
6.8
4,084
8.7
2.5
52,867
15.7
11,513
21.8
2,400
565
900
9,448
9,448
2,740
29.0
6,708
6,708
17.8
4QE
12.49
8.2
4,284
10.0
4.9
62,860
17.8
15,467
24.6
2,492
571
2,051
14,455
14,455
4,175
28.9
10,280
10,280
18.5
FY12
FY13E
40.7
1.7
3,738
14.7
42.7
4.9
4,131
10.5
181,664
37.6
40,007
22.0
9,026
2,239
4,520
33,262
33,929
9,467
27.9
24,462
23,982
70.8
210,570
15.9
49,256
23.4
9,523
2,135
4,900
42,498
42,498
12,324
29.0
30,174
30,174
25.8
C33

Sector: Consumer
Consumer
Expect another steady quarter - 16% sales growth, 18% PAT growth: For 2QFY13, we
expect our coverage universe to post ~16% revenue growth (16% in 1QFY13) and
~18% PAT growth (~22% in 1QFY13). EBITDA is likely to grow 18.5% on sustained
revenue growth and softening input costs. We expect ITC to post 16% sales growth
(1% cigarette volume growth) and ~17% PAT growth; Hindustan Unilever's sales are
likely to grow 15% (volume growth of 8%) and PAT is likely to grow 19%, led by
healthy growth in Soaps & Detergents and Personal Care products.
Company Name
Asian Paints
Colgate Palmolive
Dabur India
GSK Consumer
Hindustan Unilever
ITC
Marico
Nestle India
No concerns on broadbased demand outlook; no down-trading witnessed: Except

for a few discretionary categories, consumer demand in Processed Foods has been
healthy. Late revival of the monsoon provides respite to future rural consumer
demand. Despite the past few quarters of price hikes, volume growth across product
categories is likely to remain healthy. We expect moderation in demand in few
discretionary categories. All companies under our universe, barring Nestle, are likely
to report healthy volume growth in HPC categories.
Agri-based input costs and crude soften; INR depreciation negates impact: Prices of
edible oils like groundnut oil, safflower oil and sunflower oil, and other agri
commodities like copra, wheat, barley, sugar and palm oil are down on a YoY basis.
Prices of crude and crude-linked commodities are also on a downward trend.
However, steep INR depreciation has negated the impact in many commodities,
prices of which are linked globally. Britannia, GlaxoSmithKline, Hindustan Unilever,
Nestle and Marico are likely to report EBITDA margin expansion while Asian Paints
and Colgate are likely to report flat margins.
Pidilite Industries
United Spirits
New launches continue, albeit at a slower pace; we sense better pricing

environment: Despite the relatively sober macroeconomic environment, new launch
activity remained healthy during the quarter. However, the pace of new launches
has moderated. Our discussions with industry players as well as our channel checks
do not indicate any let down in competitive intensity. Consequently, sales promotion
Asian Paints
Britannia
Colgate
Dabur
Godrej Consumer
GSK Consumer
Hind. Unilever
ITC
Marico
Nestle
Pidilite Inds.
United Spirits
Sector Aggregate
CMP
(INR)
28.09.12
3,937
476
1,206
128
668
2,994
545
272
199
4,374
206
1,218
(INR Million)
Rating
Sep.12
Neutral
Sell
Sell
Neutral
Neutral
Neutral
Neutral
Buy
Buy
Neutral
Buy
Neutral
25,500
14,500
7,700
14,700
16,250
8,100
64,500
69,700
11,500
22,750
8,450
19,700
283,350
Sales
Var.
% YoY
13.3
12.0
17.2
16.5
37.0
12.5
15.0
14.5
18.0
15.9
19.0
10.0
15.6
Var.
% QoQ
0.4
18.7
4.6
0.5
17.0
11.0
1.1
3.8
-9.2
14.5
-7.4
-4.2
3.4
Sep.12
3,825
827
1,670
2,852
2,860
1,377
9,869
25,650
1,564
4,960
1,622
2,916
59,990
EBITDA
Var.
% YoY
18.5
7.1
18.2
20.5
36.9
16.7
19.4
15.6
34.1
20.9
24.6
13.9
18.5
Var.
% QoQ
-12.6
27.1
2.8
38.4
43.8
24.4
2.1
8.3
-15.4
15.5
-14.9
-13.0
6.1
Net Profit
Sep.12
Var.
% YoY
2,428
16.3
548
12.3
1,253
16.5
2,122
22.1
1,736
35.9
1,153
11.9
7,784
19.3
17,680
16.8
1,074
37.2
2,954
10.0
1,108
28.2
828
-2.3
40,669
17.7
Var.
% QoQ
-15.8
26.2
6.7
37.5
33.0
8.2
-8.9
10.4
-13.3
21.6
-16.9
-25.1
4.1
Gautam Duggad (Gautam.Duggad@MotilalOswal.com) / Sreekanth P.V.S. (Sreekanth.P@MotilalOswal.com)

October 2012
C34

Sector: Consumer

Sens ex Index
MOSL Cons umer Index
112
108
104
100
Sep-12
Jun-12
Jul-12
Aug-12
96
145
Sens ex Index
MOSL Cons umer Index
130
115
100
Sep-12
Jun-12
Mar-12
Dec-11
Sep-11
85
schemes continue unabated, especially in modern trade outlets. Pricing environment

in the HPC bucket has improved, given P&G's focus on improving profitability. Pricebased competition from P&G, especially in Hair Care, has softened.
Peak sector valuations drive our preference for niche plays: Consumer demand in the
staples and HPC categories continues to be healthy, higher base and tough macro
environment notwithstanding. Volume growth should remain healthy, barring few
exceptions. Given the absolute as well as relative peak sector valuations, we see
limited absolute upside in most of our coverage universe. We continue to prefer
niche plays with strong pricing power and greater visibility on volume growth and
profitability. ITC, Marico, GlaxoSmithKline Consumer and Pidilite are our top picks in
the sector.
Slight moderation in volume growth visible
Quarter Ending
Sep-10 Dec-10 Mar-11
Asian Paints
Colgate (Toothpaste)
Dabur
Godrej Consumer
Soaps
Hair Color
GSK Consumer
Hindustan Unilever
ITC (cigarette)
Marico
Parachute
Hair Oil
Saffola
United Spirits
Jun-11 Sep-11 Dec-11 Mar-12
27.0
13.0
10.0
16.0
13.0
9.3
15.0
14.0
8.6
15.0
15.0
10.0
12.0
15.0
10.8
18.0
14.0
12.4
-2.0
13.0
12.0
5.0
14.0
9.0
-10.0
12.0
18.0
14.0
-0.5
3.0
2.0
13.0
13.0
2.0
9.0
5.0
5.5
14.0
-2.0
9.0
10.0
14.0
8.3
8.0
19.0
8.0
8.0
9.8
7.5
19.0
9.0
12.0
9.1
5.0
17.0
9.0
7.0
10.0
5.5
22.0
5.0
7.4
9.0
1.5
12.0
5.0
7.0
9.0
1.0
10.0
18.0
14.0
16.0
5.0
31.0
13.0
14.0
5.0
21.0
14.0
12.0
10.0
32.0
15.0
15.4
10.0
26.0
11.0
8.0
13.0
20.0
15.0
0.7
New launches during 2QFY13

Company
Britannia
Parag Milk Foods
CavinKare
D S Group
Perfetti Van Melle
HUL
Marico
Nestle India
Jun-12 Sep-12E
0.0
12.0
13.5
Brand
Daily Fresh
Go Milk
Cavin's Pure+
Yomil
Alpenliebe Juzt Jelly
TRESemme/Comfort One Rinse
Saffola Muesli
Munch Rollz, Kit Kat
11.1
18.0
9.0
17.5
12.0
14.0
3.3
25.0
15.0
5.1
1.9
6.0
Category
Flavoured yoghurt-mango, vanilla, strawberry
100% natural & zero preservative UHT milk
Beverages (UHT treated milk)
Milk-based powdered beverage
Candy
Hair Care/Laundry Care
Breakfast cereal market
Chocolate/Chocolate
Softening in input costs augurs well for sector gross margins

Input
Price Trend
(YoY)
Unit
Current
Price (INR)
LAB
Soda Ash
Palm Fatty Acid
Palm Oil
HDPE
Sugar
Wheat
Milk
TiO2
Copra
Sideways
Up
Down
Down
Sideways
Sideways
Up
Up
Sideways
Down
INR/Kg
INR/50Kg
US$/MT
MYR/MT
INR/Kg
INR/Qtl
INR/Qtl
Index
INR/Kg
INR/Qtl
117
1,140
670
2,169
93
3,795
1,460
206
250
4,025
October 2012
12m
chg. %
Change from
peak/bottom
7
18
-17
-26
19
28
26
48
0
-29
Peak
Peak
-62
-64
Peak
28
Peak
Peak
-16
7
Impact
Companies
Negative
Neutral
Positive
Positive
Negative
Positive
Negative
Negative
Positive
Positive
HUL
HUL
HUL, Godrej Consumer
Britannia, Nestle, HUL, ITC
All Companies
Britannia, Nestle, GSK Consumer
Nestle, ITC and Britannia
Nestle, GSK Consumer
Asian Paints
Marico
Source:Companies, MOSL
C35

Sector: Consumer
Input costs: Mixed trends

Palm Fatty Acid: Range bound (INR/ton)
LAB Prices: continue to stay firm (INR/kg)

LAB Pri ces
PFAD pri ces (INR/ton)
70,000
140
55,000
40,000
INR/Kg
46,446
45,781
25,000
110
90 85
95
89
117
82
71
65
10,000
Sep-08
Dec-08
Mar-09
Jun-09
Sep-09
Dec-09
Mar-10
Jun-10
Sep-10
Dec-10
Mar-11
Jun-11
Sep-11
Dec-11
Mar-12
Jun-12
Sep-12
Sep-12
Jun-12
Mar-12
Dec-11
Sep-11
Jun-11
Copra prices; trending down after steep rise (INR/Qtl)

Copra Pri ces
6,700
6,250
Ti O2 Dupont pri ce Del hi

278
7,300
250
6,150
220
180
152
140
5,525
6,125
5,000
4,350
3,850
3,900
Oct-11
Jul-11
Apr-11
Jan-11
Oct-10
Jul-10
Jan-10
Apr-10
2,700
Sep-12
Jun-12
Mar-12
Dec-11
Sep-11
Jun-11
Mar-11
Dec-10
Sep-10
Jun-10
Mar-10
Dec-09
100
4,175
5,400
Jul-12
220
INR/Qtl
260
Apr-12
300
Jan-12
Mar-11
Dec-10
Sep-10
Jul-10
Apr-10
Dec-09
Oct-09
50
Titanium Dioxide: at an all time high
Sep-09
114
109
91
76
80
30,216
112
116
125
Source: Companies, MOSL
CMP (INR)
28.09.12
Consumer
Asian Paints
Britannia
Colgate
Dabur
Godrej Consumer
GSK Consumer
Hind. Unilever
ITC
Marico
Nestle
Pidilite Inds.
United Spirits
Sector Aggregate
October 2012
3,937
476
1,206
128
668
2,994
545
272
199
4,374
206
1,218
Rating
EPS (INR)
FY12 FY13E FY14E
P/E (x)
FY12 FY13E FY14E
EV/EBITDA (x)
FY12 FY13E FY14E
RoE (%)
FY12 FY13E FY14E
Neutral
Sell
Sell
Neutral
Neutral
Neutral
Neutral
Buy
Buy
Neutral
Buy
Neutral
103.1
15.6
33.4
3.7
16.3
84.5
11.9
8.0
5.2
105.7
7.0
19.5
38.2
30.4
36.1
34.6
41.0
35.4
45.7
34.1
38.4
41.4
29.5
62.4
38.1
24.4
21.9
26.7
26.4
29.0
22.2
34.6
22.9
27.7
27.6
20.4
18.6
25.5
36.0
34.9
107.7
37.1
25.2
31.0
74.6
32.7
28.0
95.7
26.3
4.9
34.9
117.8
18.4
38.6
4.4
21.6
101.7
15.5
9.4
6.8
117.1
8.4
19.3
137.3
23.7
43.8
5.4
26.3
113.5
18.0
11.0
8.5
138.5
10.1
35.1
33.4
25.9
31.2
29.0
30.9
29.4
35.1
29.0
29.4
37.4
24.5
63.2
31.6
28.7
20.1
27.6
23.6
25.4
26.4
30.2
24.7
23.6
31.6
20.4
34.7
26.6
21.0
16.8
22.6
21.4
21.9
19.0
27.2
19.1
20.5
22.7
15.4
16.5
21.0
17.4
12.1
19.3
17.5
17.9
16.6
23.3
16.0
16.3
18.7
12.5
14.8
17.6
34.0 33.2
35.1 37.9
111.3 103.5
36.0 36.2
23.1 24.3
31.4 29.8
72.1 63.4
32.5 32.4
21.6 21.8
73.6 63.5
24.6 24.8
4.7
7.9
34.2 34.0
C36

Sector: Consumer
Asian Paints
BSE Sensex
18,763
S&P CNX
5,703
Bloomberg
APNT IN
Equity Shares (m)
95.9
52-Week Range (INR) 4,170/2,551
1,6,12 Rel. Perf. (%)
-1/17/12
M.Cap. (INR b)
377.6
M.Cap. (USD b)
7.2
CMP: INR3,937
Year
End
3/11A
3/12A
3/13E
3/14E
Neutral
Net Sales Adj.PAT EPS

77,223
8,432
87.9
96,322
9,887
103.1
110,400 11,637 121.3
129,785 13,718 143.0
EPS
Gr. (%)
1.0
17.3
17.7
17.9
P/E
(X)
38.2
32.4
27.5
P/BV
(X)
13.7
11.2
9.3
RoE
(%)
38.5
36.0
34.7
33.8
RoCE
(%)
50.7
47.8
46.6
45.6
EV/
EV/
Sales EBITDA
3.8
24.4
3.4
20.4
2.8
16.8
We expect Asian Paints (APNT) to report net sales of INR25.5b, a growth of 13.3%. Domestic decorative paints
demand is likely to remain subdued but better than 1QFY13. We expect 4-5% volume growth.
In the international business, South Asia is likely to do well, but the Middle East business still remains under
pressure.
We expect gross margin to expand 100bp to 41% on stable INR and lower titanium dioxide prices. We estimate
EBITDA margin at 15% and adjusted PAT at INR2.4b, up 16.3%.
Average titanium dioxide (20% of RM) prices softened 3-4% in 2QFY13. APNT's RM index increased by 6% during
the quarter.
APNT's current valuations adequately capture the positives, viz. strong long-term growth visibility, dominant
market positioning, and thought leadership in the Paints industry. However, the current macroeconomic
environment presents near-term challenges for decorative paints demand. The stock trades at 32.4x FY13E EPS
and 27.5x FY14E EPS. Neutral.
What to look for

Volume growth in domestic market and the trend in gross and EBITDA margins.
(INR Million)
Y/E March
Volume Growth %*
Net Sales
Change (%)
Raw Material/PM
Gross Profit
Gross Margin (%)
Operating Expenses
% of Sales
EBITDA
Margin (%)
Change (%)
Interest
Depreciation
Other Income
PBT
Tax
PAT before Minority
Minority Interest
Adjusted PAT
Change (%)
E: MOSL Estimates
October 2012
FY12
FY13
1Q
2Q
3Q
4Q
1Q
2QE
3QE
4QE
15.0
22,571
23.3
13,537
9,035
40.0
5,149
22.8
3,886
17.2
11.9
65
291
338
3,868
1,155
29.9
2,713
79
2,634
18.5
15.0
22,508
24.3
13,507
9,001
40.0
5,772
25.6
3,229
14.3
-2.6
88
300
292
3,133
955
30.5
2,179
91
2,087
-2.8
12.0
25,605
22.0
15,514
10,092
39.4
6,118
23.9
3,974
15.5
15.2
90
307
225
3,802
1,138
29.9
2,664
96
2,569
16.6
18.0
25,387
29.5
15,213
10,174
40.1
6,420
25.3
3,754
14.8
31.8
166
314
470
3,744
1,097
29.3
2,647
52
2,595
39.5
-2.0
25,393
12.5
14,838
10,554
41.6
6,176
24.3
4,379
17.2
12.7
109
334
326
4,262
1,273
29.9
2,989
106
2,884
9.5
5.0
25,500
13.3
15,045
10,455
41.0
6,630
26.0
3,825
15.0
18.5
130
365
300
3,630
1,107
30.5
2,523
95
2,428
16.3
13.0
30,100
17.6
17,910
12,191
40.5
7,104
23.6
5,087
16.9
28.0
130
375
300
4,882
1,489
30.5
3,393
95
3,298
28.4
11.0
29,407
15.8
17,431
11,977
40.7
7,139
24.3
4,837
16.4
28.9
135
464
282
4,521
1,406
31.1
3,115
87
3,028
16.7
FY12
FY13E
15.0
96,322
24.7
57,770
38,552
40.0
23,465
24.4
15,088
15.7
211.9
410
1,211
1,074
14,541
4,335
29.8
10,206
319
9,887
17.3
8.0
110,400
14.6
65,224
45,176
40.9
27,049
24.5
18,128
16.4
20.1
504
1,538
1,209
17,295
5,275
30.5
12,020
382
11,637
17.7
C37

Sector: Consumer
BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1,6,12 Rel. Perf. (%)
M.Cap. (INR b)
M.Cap. (USD b)
S&P CNX
5,703
BRIT IN
119.5
600/434
-9/-25/-9
56.9
1.1
CMP: INR476
Sell
Year
Net Sales
PAT
End
(INR m) (INR m)
03/11A 41,983
1,453
03/12A 49,470
1,867
03/13E 56,500
2,198
03/14E 66,094
2,828
EPS
(INR)
12.2
15.6
18.4
23.7
EPS
Gr. (%)
-13.2
28.5
17.7
28.7
P/E
(X)
30.4
25.9
20.1
P/BV
(x)
10.6
9.1
7.6
RoE
(%)
32.2
34.9
35.1
37.9
RoCE
(%)
31.2
36.1
59.3
53.8
EV/
EV/
Sales EBITDA
1.1
21.9
1.0
16.8
0.8
12.1
We expect Britannia Industries (BRIT) to report sales of INR14.5b, a growth of 12%. Volume growth is likely to
remain in single digits, as the discretionary processed foods category is undergoing a slowdown.
We estimate 100bp expansion in gross margin to 35.2% and 30bp contraction in EBITDA margin due to firm input
costs.
We estimate 12.3% PAT growth, with tax rate at ~28%, up 90bp.
Among input costs, wheat prices are up ~16%, sugar prices are 18% higher. INR depreciation has negated the
effect of declining palm oil prices to a large extent.
We expect competitive intensity to remain elevated, as players like Parle, ITC and Cadbury try to increase share
in the high margin premium creams and cookies segment. The increased competition will keep growth and
margin expansion under check.
Premiumization across product portfolios and launches in non Bakery segments (Milk, Snacks and Breakfast
Cereals) is likely to continue, as it offers attractive potential for growth.
The stock trades at 25.9x FY13E EPS and 20.1x FY14E EPS. Sell.
What to look for

Gross and EBITDA margins, and new launches in premium categories.
(INR Million)
Y/E March
Net Sales
YoY Change (%)
COGS
Gross Profit
Margins (%)
Other Exp
% of Sales
Total Exp
EBITDA
Margins (%)
YoY Growth (%)
Depreciation
Interest
Other Income
PBT
Tax
Rate (%)
Adjusted PAT
YoY Change (%)
E: MOSL Estimates
October 2012
FY12
FY13
1Q
2Q
3Q
4Q
1Q
2QE
3QE
4QE
11,030
21.0
7,257
3,773
34.2
3,300
29.9
7,073
473
4.3
15.6
111
93
304
573
155
27.0
418
27.2
12,941
18.2
8,408
4,533
35.0
3,761
29.1
12,170
772
6.0
45.9
116
97
110
670
182
27.1
488
48.8
12,474
15.4
7,910
4,565
36.6
3,749
30.1
11,658
816
6.5
46.3
122
95
148
747
206
27.6
541
42.8
13,096
16.8
8,223
4,873
37.2
4,192
32.0
12,415
680
5.2
8.0
125
95
226
685
155
22.6
530
22.6
12,216
10.8
7,575
4,642
38.0
3,991
32.7
11,566
651
5.3
37.6
130
95
179
605
170
28.1
435
4.0
14,500
12.0
9,396
5,104
35.2
4,278
29.5
13,674
827
5.7
7.1
135
90
160
762
213
28.0
548
12.3
14,150
13.4
8,971
5,179
36.6
4,316
30.5
13,287
863
6.1
5.8
140
75
160
808
226
28.0
582
7.6
15,634
19.4
10,144
5,491
35.1
4,603
29.4
14,747
887
5.7
30.4
142
63
197
879
245
27.9
634
19.5
FY12
FY13E
49,541
18.0
31,798
17,743
35.8
15,003
30.3
46,801
2,740
5.5
32.8
473
381
788
2,675
698
26.1
1,977
36.1
56,500
14.0
36,085
20,415
36.1
17,188
30.4
53,273
3,227
5.7
17.8
547
323
696
3,053
855
28.0
2,198
11.2
C38

Sector: Consumer
Colgate Palmolive
BSE Sensex
S&P CNX
18,763
5,703
Bloomberg
CLGT IN
Equity Shares (m)
136.0
52-Week Range (INR) 1,264/932
1,6,12 Rel. Perf. (%)
-3/-2/11
M.Cap. (INR b)
164.0
M.Cap. (USD b)
3.1
CMP: INR1,206
Year
Net Sales
PAT
End
(INR m) (INR m)
03/11A 22,206
4,026
03/12A 26,239
4,544
03/13E 30,921
5,251
03/14E 35,798
5,950
Sell
EPS
(INR)
29.6
33.4
38.6
43.8
EPS
Gr. (%)
-0.3
12.9
15.6
13.3
P/E
(X)
36.1
31.2
27.6
P/BV
(X)
38.7
31.5
26.1
RoE
(%)
114.1
107.7
111.3
103.5
RoCE
(%)
114.3
108.4
111.7
103.9
EV/
EV/
Sales EBITDA
6.1
26.7
5.1
22.6
4.4
19.3
We expect Colgate Palmolive (CLGT) to post sales growth of 17% to INR7.7b. Toothpaste volume growth is likely
to be 14% v/s ~13% in 1QFY13.
Gross margin would be flat at 60%. Price hikes and mix improvement would aid marginal gross margin expansion
of 10bp.
We expect 20bp expansion in EBITDA margin to 21.1% due to continuous investments in ad spends and sales
promotion on account of heightened competitive activity by HUL (has launched range of products under the
Pepsodent Expert Protection range).
PBT would grow 18%. Higher tax rate at 25.5% (up 260bp) would result in 16.3% increase in PAT to INR1.2b.
Though volume growth remains steady, input cost and increasing ad spends will keep earnings growth in check.
While we like CLGT's sustained double-digit volume growth in its core Toothpaste category, we believe current
valuations leave little room for error, given the context of rising competitive intensity, especially in the high
margin Sensitive category.
We estimate PAT CAGR of 14.4% over FY12-14. The stock trades at 31.2x FY13E EPS and 27.6x FY14E EPS. Sell.
What to look for

Ad spends and market share in both Toothpaste and Toothbrush categories.
(INR Million)
Y/E March
Toothpaste Volume Gr %
Net Sales
YoY Change (%)
COGS
Gross Profit
Gross Margin (%)
Other operating Expenses
% to sales
Other operating Income
EBITDA
Margins (%)
Depreciation
Interest
Financial other Income
PBT
Tax
Rate (%)
Adj PAT
YoY Change (%)
E: MOSL Estimates
October 2012
FY12
FY13
1Q
2Q
3Q
4Q
1Q
2QE
3QE
4QE
14.0
6,111
15.6
2,467
3,644
59.6
2,476
40.5
166
1,335
21.3
88
4
138
1,381
377
27.3
1,004
-17.6
15.0
6,572
19.1
2,637
3,936
59.9
2,706
41.2
183
1,413
20.9
106
8
95
1,395
319
22.9
1,076
7.2
15.0
6,696
20.0
2,651
4,045
60.4
2,754
41.1
202
1,493
21.6
99
6
97
1,485
330
22.2
1,156
74.3
14.0
6,859
17.9
2,748
4,112
59.9
2,583
37.7
170
1,699
24.2
100
2
131
1,728
420
24.3
1,308
14.6
13.0
7,361
20.5
2,997
4,364
59.3
2,939
39.9
200
1,625
21.5
105
0
112
1,632
457
28.0
1,174
16.9
14.0
7,700
17.2
3,080
4,620
60.0
3,160
41.0
210
1,670
21.1
100
8
120
1,682
429
25.5
1,253
16.5
14.0
7,850
17.2
3,062
4,789
61.0
3,269
41.6
230
1,750
21.7
100
7
100
1,743
436
25.0
1,307
13.1
13.0
8,010
16.8
2,968
5,042
62.9
3,266
40.8
214
1,990
24.2
95
5
102
1,991
475
23.9
1,516
15.9
FY12
FY13E
14.0
26,239
18.2
10,502
15,736
60.0
10,514
40.1
738
5,960
22.1
393
21
443
5,989
1,446
24.1
4,544
12.9
13.0
30,921
17.8
12,107
18,814
60.8
12,634
40.9
855
7,035
22.1
400
20
434
7,048
1,797
25.5
5,251
15.6
C39

Sector: Consumer
Dabur India
BSE Sensex
S&P CNX
18,763
5,703
Bloomberg
DABUR IN
Equity Shares (m)
1,740.7
52-Week Range (INR)
132/92
1,6,12 Rel. Perf. (%)
-1/14/11
M.Cap. (INR b)
223.0
M.Cap. (USD b)
4.2
CMP: INR128
Year
End
3/11A
3/12A
3/13E
3/14E
Neutral
Net Sales
PAT
(INR m) (INR m)
40,774
5,686
52,832
6,449
61,276
7,698
70,614
9,463
EPS
(INR)
3.3
3.7
4.4
5.4
EPS
Gr. (%)
13.2
13.4
19.4
22.9
P/E
(X)
34.6
29.0
23.6
P/BV
(X)
12.9
10.4
8.5
RoE
(%)
40.9
37.1
36.0
36.2
RoCE
(%)
36.9
37.3
39.4
41.2
EV/
EV/
Sales EBITDA
4.3
26.4
3.6
21.4
3.1
17.5
We expect Dabur to report net sales of INR14.7b, up 16.5%, with 9% volume growth. We expect the stable
growth trajectory to continue in 2QFY13. Growth would be led by a combination of volume growth (8-9%), mix
improvement and modest price hikes.
Competitive intensity remains strong in Shampoos, with companies running various sales promotion schemes
to gain market share. However, recent price hike by P&G in Pantene Bottles (up 5% w.e.f. October 2012) offers
some respite.
On the international business front, no positive surprises are expected and growth in the Middle East would
remain muted.
We expect 70bp EBITDA margin expansion, driven by a favorable input cost environment and price hikes taken
over the past 12 months. EBITDA is likely to grow 20.5% to INR2.8b.
PAT would grow 22% to INR2.1b.
The stock trades at 29x FY13E EPS and 23.6x FY14E EPS. Neutral.
What to look for

Organic volume growth, ad spends and margins in the domestic business.
(INR Million)
Y/E March
Volume Growth (%)
Net Sales
YoY Change (%)
Total Exp
EBITDA
Margins (%)
YoY Growth (%)
Depreciation
Interest
Other Income
PBT
Tax
Rate (%)
Minority Interest
Adjusted PAT
YoY Change (%)
E: MOSL Estimates
October 2012
FY12
FY13
1Q
2Q
3Q
4Q
1Q
2QE
3QE
4QE
8.6
12,046
31.4
10,267
1,779
14.8
29.9
248
145
216
1,602
323
20.1
2
1,277
19.6
10.0
12,623
29.8
10,258
2,366
18.7
16.5
217
172
189
2,166
427
19.7
0
1,739
8.4
10.8
14,527
34.5
12,312
2,215
15.2
5.7
208
183
231
2,055
337
16.4
-10
1,728
11.9
12.4
13,636
23.0
11,483
2,153
15.8
4.7
293
57
280
2,083
377
18.1
0
1,705
16.0
12.0
14,620
21.4
12,559
2,061
14.1
15.9
267
213
342
1,923
378
19.6
2
1,543
20.8
9.0
14,700
16.5
11,848
2,852
19.4
20.5
280
180
250
2,642
518
19.6
2
2,122
22.1
9.0
16,500
13.6
13,728
2,772
16.8
25.2
300
160
250
2,562
502
19.6
2
2,058
19.1
8.0
15,457
13.4
12,782
2,675
17.3
24.2
300
161
243
2,457
482
19.6
2
1,974
15.7
FY12
FY13E
10.5
52,832
29.6
44,319
8,513
16.1
10.0
967
557
917
7,905
1,464
18.5
-8
6,449
13.4
9.5
61,276
16.0
50,916
10,360
16.9
21.7
1,147
714
1,085
9,584
1,879
19.6
8
7,698
19.4
C40

Sector: Consumer
GlaxoSmithKline Consumer
BSE Sensex
S&P CNX
18,763
5,703
Bloomberg
SKB IN
Equity Shares (m)
42.1
52-Week Range (INR)3,111/2,179
1,6,12 Rel. Perf. (%)
-3/2/18
M.Cap. (INR b)
125.9
M.Cap. (USD b)
2.4
CMP: INR2,994
Neutral
Year
Net Sales
PAT
EPS
End
12/10A 23,800
2,998
71.3
12/11A 27,759
3,552
84.5
12/12E 30,253
4,278
101.7
13/13E 36,701
4,775
113.5
EPS
Gr. (%)
28.8
18.5
20.4
11.6
P/E
(X)
35.4
29.4
26.4
P/BV
(X)
11.0
9.2
7.8
RoE
(%)
31.2
31.0
31.4
29.8
RoCE
(%)
47.3
47.5
47.2
44.7
EV/
EV/
Sales EBITDA
4.1
22.2
3.6
19.0
3.1
16.6
In 3QCY12, we expect GlaxoSmithKline Consumer (SKB) to report net sales of INR8.1b, up 12.5%. MFD volume
would grow ~7%, in line with 2QCY12 performance. We do not see any pick-up in CSD offtake in the remaining
quarters of CY12.
We estimate 60bp increase in EBITDA margin despite high wheat prices on account of price hikes, mix
improvement due to underperformance of the CSD segment and lower ad spends in non-MFD categories.
EBITDA is likely to grow 16.7%; we expect ~13% growth in PBT due to lower other income.
We estimate ~12% increase in PAT, impacted by higher tax rate at 33.3%.
We are positive on SKB's strong leadership position in the MFD space. However, we believe that the stock price
and current valuations factor in the positives. We maintain Neutral at 29.4x CY12E and 26.4x CY13E EPS.
What to look for

MFD volume growth, performance of Horlicks Oats, update on CSD situation, and Foodles' current market
status.
(INR Million)
Y/E December
MFD Volume Growth (%)
Net Sales
YoY Change (%)
Total Exp
EBITDA
Margins (%)
YoY Change (%)
Depreciation
Interest
Other Income
PBT
Tax
Rate (%)
Adj PAT
YoY Change (%)
E: MOSL Estimates
October 2012
CY11
CY12
1Q
2Q
3Q
4Q
1Q
2Q
3QE
4QE
5.5
7,100
9.5
5,647
1,453
20.5
9.2
109
7
340
1,677
571
34.0
1,106
15.0
14.0
6,534
21.6
5,548
985
15.1
10.2
113
9
360
1,223
398
32.6
825
14.9
8.0
7,201
17.5
6,021
1,180
16.4
24.1
117
10
476
1,530
499
32.6
1,030
31.1
12.0
6,021
18.6
5,404
616
10.2
5.5
121
9
487
973
327
33.6
646
21.0
7.0
8,130
14.5
6,514
1,617
20.3
11.3
119
12
479
1,964
645
33.0
1,320
19.3
7.4
7,297
11.7
6,191
1,107
15.2
12.3
86
8
572
1,585
519
32.8
1,066
29.3
10.0
8,100
12.5
6,723
1,377
17.0
16.7
137
11
500
1,729
576
33.3
1,153
11.9
10.0
6,725
11.7
5,943
782
11.6
26.9
228
9
560
1,108
369
33.3
739
14.5
CY11
CY12E
10.0
26,855
16.5
22,566
4,289
16.0
13.8
460
35
1,608
5,403
1,851
34.3
3,552
18.5
9.0
30,253
12.7
25,370
4,883
16.1
13.8
570
40
2,114
6,387
2,109
33.0
4,278
20.4
C41

Sector: Consumer

BSE Sensex
S&P CNX
18,763
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1,6,12 Rel. Perf. (%)
M.Cap. (INR b)
M.Cap. (USD b)
5,703
GCPL IN
340.3
702/370
-6/30/52
227.2
4.3
CMP: INR668
Year
End
3/11A
3/12A
3/13E
3/14E
Net Sales
PAT
(INR m) (INR m)
36,763
4,736
48,509
5,266
63,147
7,363
78,327
8,962
Neutral
EPS
(INR)
14.6
16.3
21.6
26.3
EPS
Gr. (%)
32.8
11.2
33.0
21.7
P/E
(X)
41.0
30.9
25.4
P/BV
(X)
10.3
7.1
6.2
RoE
(%)
27.5
25.2
23.1
24.3
RoCE
(%)
18.4
20.4
22.7
24.6
EV/
EV/
Sales EBITDA
4.9
27.7
3.9
21.9
3.2
17.9
We expect Godrej Consumer Products (GCPL) to post 37% increase in net sales to INR16.2b, driven by continued
momentum in domestic business (both toilet soaps and household insecticides) and beneficial impact of
inorganic growth (Darling and Chile acquisition). We expect ~20% organic sales growth for the quarter.
Gross margin would expand in domestic business; we estimate EBITDA margin at 17.6% for 2QFY13.
Despite higher depreciation and interest costs, other income would lead PAT growth, which is likely to grow
36% YoY to INR1.7b.
The volume growth momentum achieved in Soaps in the last few quarters is likely to continue in 2QFY13.
However, margins in the category would be under pressure due to high competitive intensity and
disproportionate ad spends behind Cinthol re-launch.
GCPL has USD305m of unhedged forex loans; it plans to repay loans of USD60m in FY13 and retire its debt by
FY18.
We expect GCPL's domestic business growth to remain healthy, driven by continued synergistic benefits from
GHPL and GCPL trade integration. However, recent outperformance leaves limited upside potential in the near
term.
The stock trades at 30.9x FY13E EPS and 25.4x FY14E EPS. Neutral.
What to look for

Soaps volume growth, revenue growth in Home Insecticides and performance of Megasari.
(INR Million)
Y/E March
Net Sales
YoY Change (%)
EBITDA
Margins (%)
YoY Growth (%)
Depreciation
Interest
Other Income
Forex gain / (loss)
PBT
Tax
Rate (%)
Minority Int
Adj PAT
YoY Change (%)
E: MOSL Estimates
October 2012
FY12
1Q
9,978
39.6
1,427
14.3
11.5
159
111
132
24
1,314
312
23.8
0
1,002
10.3
2Q
11,860
23.3
2,088
17.6
25.1
159
241
220
-166
1,742
432
24.8
33
1,277
-2.0
3Q
13,441
35.9
2,653
19.7
60.1
171
287
248
-55
2,388
555
23.2
162
1,671
40.7
FY13
4Q
13,230
32.4
2,481
18.8
39.6
155
194
203
-8
2,327
547
23.5
50
1,730
22.1
1Q
13,886
39.2
1,988
14.3
39.3
199
164
181
-176
1,630
112
6.9
213
1,305
30.2
2QE
16,250
37.0
2,860
17.6
36.9
220
300
200
0
2,540
660
26.0
144
1,736
35.9
3QE
17,000
26.5
3,366
19.8
26.9
230
300
250
0
3,086
802
26.0
144
2,140
28.0
4QE
16,010
21.0
3,083
19.3
24.3
238
282
351
176
3,090
829
26.8
78
2,183
26.2
FY12
FY13E
48,509
32.0
8,607
17.7
35.4
644
658
672
-205
7,771
2,261
29.1
245
5,266
11.2
63,147
30.2
11,298
17.9
31.3
887
1,046
982
0
10,346
2,404
23.2
579
7,363
39.8
C42

Sector: Consumer
Hindustan Unilever
BSE Sensex
S&P CNX
18,763
5,703
Bloomberg
HUVR IN
Equity Shares (m)
2,159.5
52-Week Range (INR) 554/319
1,6,12 Rel. Perf. (%)
-2/22/49
M.Cap. (INR b)
1176.0
M.Cap. (USD b)
22.3
CMP: INR545
Year
End
3/11A
3/12A
3/13E
3/14E
Neutral
Net Sales
PAT
(INR m) (INR m)
197,352 21,533
229,214 26,567
262,323 33,530
293,494 38,973
EPS
(INR)
10.0
12.3
15.5
18.0
EPS
Gr. (%)
3.5
23.4
26.2
16.2
P/E
(X)
44.3
35.1
30.2
P/BV
(X)
34.1
25.3
19.1
RoE
(%)
81.8
74.6
72.1
63.4
RoCE
(%)
103.7
97.2
94.3
83.4
EV/
EV/
Sales EBITDA
5.2
34.6
4.4
27.2
3.8
23.3
We expect Hindustan Unilever (HUVR) to report 15% increase in sales to INR64.5b and estimate volume growth
of ~8%. Demand momentum in core categories remains healthy, barring some moderation in the discretionary
part of the Foods portfolio.
Gross margin would expand 240bp to 48%, led by change in product mix, better pricing environment for Soaps
& Detergents and softening in palm oil and PFAD prices.
We believe that HUVR's limited pricing actions and comparatively higher base should restrict operating margin
expansion during the quarter to 60bp. Other income should revert to the normative trend in the absence of
one-offs. We expect PAT growth of 19% YoY to INR7.8b. In 2QFY13, the company launched Tresseme Shampoo.
The stock trades at 35.1x FY13E and 30.2x FY14E earnings. We like the sustained volume momentum in HUVR's
categories as also the increased aggression in trade coupled with strong innovation pipeline. However, rich
valuations and tough comparables in 2HFY13 underscore our Neutral rating.
What to look for
Volume growth: sustenance of volume growth in mid to high single digits.
2Q margins for Soaps & Detergents and Personal Products.
Commentary around Foods business.
(INR Million)
Y/E March
Volume Growth (%)
S&D EBIT Margin (%)
PP EBIT Margin (%)
Net Sales (incl service inc)
YoY Change (%)
COGS
Gross Profit
Margin %
Operating Exp
% to sales
EBITDA
YoY Change (%)
Margins (%)
Depreciation
Interest
Other Income
PBT
Tax
Rate (%)
Adjusted PAT
YoY Change (%)
E: MOSL Estimates
October 2012
FY12
FY13
1Q
2Q
3Q
4Q
1Q
2QE
3QE
4QE
8.3
9.8
9.1
10.0
9.0
9.0
9.0
9.0
FY12
FY13E
9.3
9.0
9.2
12.4
10.8
11.3
12.2
12.6
11.3
11.7
11.6
12.5
25.3
55,889
14.6
30,798
25,091
44.9
17,548
31.4
7,543
10.8
13.5
562
0
506
7,487
1,702
22.7
5,784
11.0
24.4
56,105
17.8
30,010
26,095
46.5
17,828
31.8
8,267
27.8
14.7
571
5
777
8,467
1,942
22.9
6,525
22.3
25.9
59,561
16.2
30,751
28,810
48.4
18,921
31.8
9,890
36.4
16.6
568
5
801
10,118
2,496
24.7
7,622
29.9
26.3
57,659
16.1
31,223
26,437
45.8
18,103
31.4
8,334
29.8
14.5
571
2
700
8,461
1,825
21.6
6,636
29.0
25.8
63,788
14.1
33,677
30,110
47.2
20,446
32.1
9,665
28.1
15.2
576
53
2,186
11,222
2,676
23.8
8,546
47.7
25.0
64,500
15.0
33,540
30,960
48.0
21,092
32.7
9,869
19.4
15.3
590
3
900
10,176
2,391
23.5
7,784
19.3
26.4
67,000
12.5
34,237
32,763
48.9
21,239
31.7
11,524
16.5
17.2
595
2
910
11,837
2,782
23.5
9,055
18.8
26.5
67,035
16.3
34,808
32,227
48.1
21,921
32.7
10,306
23.7
15.4
596
2
898
10,606
2,492
23.5
8,114
22.3
25.5
229,214
16.1
122,781
106,432
46.4
72,399
31.6
34,033
27.1
14.8
2,272
12
2,783
34,532
7,966
23.1
26,567
26.6
25.3
262,323
14.4
136,262
126,061
48.1
84,697
32.3
41,363
21.5
15.8
2,357
70
4,894
43,830
10,300
23.5
33,530
26.2
C43

Sector: Consumer
ITC
BSE Sensex
S&P CNX
18,763
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1,6,12 Rel. Perf. (%)
M.Cap. (INR b)
M.Cap. (USD b)
5,703
ITC IN
7,738.1
273/189
-5/10/24
2,104.0
39.9
CMP: INR272
Year
End
3/11A
3/12A
3/13E
3/14E
Buy
Net Sales
PAT
(INR m) (INR m)
214,590 49,867
251,738 61,624
291,436 72,431
334,890 85,198
EPS
(INR)
6.5
8.0
9.4
11.0
EPS
Gr. (%)
28.9
23.6
17.5
17.6
P/E
(X)
34.1
29.0
24.7
P/BV
(X)
11.2
9.5
8.0
RoE
(%)
31.3
32.7
32.5
32.4
RoCE
(%)
43.5
45.7
45.8
46.0
EV/
EV/
Sales EBITDA
8.2
22.9
6.9
19.1
5.9
16.0
We expect ITC to post 14.5% revenue growth to INR69.7b. Margin expansion of 30bp would drive (a) ~15.6%
growth in EBITDA to INR25.6b, and (b) 16.8% YoY growth in PAT to INR17.6b.
Cigarette volumes would grow ~1%, impacted by price hikes post the changes in duty structure and increase in
VAT rates in many states. We expect flattish EBIT margin for the Cigarettes business.
Sustained momentum in Staples and Personal Care should drive non-Cigarette FMCG sales. We expect
sequential improvement in profitability and estimate INR300m loss at EBIT level.
Paper margins are likely to remain flat; revenue growth would be moderate at ~11% owing to capacity constraints.
The Hotels business is likely to remain under pressure, owing to continued weak macroeconomic environment
and higher supply. ITC commissioned its Chennai property during the quarter.
The company is test marketing cigarettes in the 64mm category and has launched 5-6 brands at the INR2 and
INR2.5 price points (Gold flake).
The stock trades at 29x FY13E EPS of INR9.4 and 24.7x FY14E EPS of INR11. Buy.
What to look for

Cigarette volume growth and margins, reduction in losses in FMCG business.
INR Million
Y/E March
Cigarette Vol Gr (%)
Cigarette-net EBIT Margin (%)
Non Cigarette FMCG Loss
Net Sales
YoY Change (%)
Total Exp
EBITDA
Growth (%)
Margins (%)
Depreciation
Interest
Other Income
PBT
Tax
Rate (%)
Adj PAT
YoY Change (%)
E: MOSL Estimates
October 2012
FY12
FY13
1Q
2Q
3Q
4Q
1Q
2QE
3QE
4QE
8.0
7.5
5.0
5.0
1.5
1.0
2.2
2.5
FY12
FY13E
6.4
2.0
54.9
58.2
57.0
54.1
57.5
58.2
57.8
55.0
56.1
57.1
(763)
58,524
20.4
38,945
19,579
19.1
33.5
1,665
200
1,656
19,370
6,043
31.2
13,327
24.5
(559)
60,852
17.6
38,662
22,190
18.0
36.5
1,701
142
1,808
22,155
7,012
31.6
15,143
21.5
(468)
62,478
14.2
38,667
23,811
18.0
38.1
1,739
157
2,851
24,767
7,757
31.3
17,010
22.5
(167)
69,545
16.9
46,913
22,633
18.8
32.5
1,880
148
2,079
22,683
6,540
28.8
16,143
26.0
(388)
67,131
14.7
43,447
23,683
21.0
35.3
1,948
138
1,768
23,366
7,344
31.4
16,021
20.2
(297)
69,700
14.5
44,050
25,650
15.6
36.8
1,800
200
1,900
25,550
7,869
30.8
17,680
16.8
(250)
73,500
17.6
45,350
28,151
18.2
38.3
2,030
200
2,950
28,871
8,892
30.8
19,978
17.5
(50)
81,105
16.6
53,939
27,166
20.0
33.5
2,263
212
2,117
26,808
8,057
30.1
18,751
16.2
(1,957)
251,738
17.3
163,252
88,486
19.4
35.2
6,985
779
8,253
88,975
27,352
30.7
61,624
23.6
(985)
291,436
15.8
186,786
104,650
18.3
35.9
8,041
750
8,734
104,594
32,163
30.8
72,431
17.5
C44

Sector: Consumer
Marico
BSE Sensex
S&P CNX
18,763
5,703
Bloomberg
MRCO IN
Equity Shares (m)
643.8
52-Week Range (INR) 209/134
1,6,12 Rel. Perf. (%)
-3/9/24
M.Cap. (INR b)
128.4
M.Cap. (USD b)
2.4
CMP: INR199
Year
End
3/11A
3/12A
3/13E
3/14E
Buy
Net Sales
PAT
(INR m) (INR m)
31,283
2,375
39,968
3,189
47,179
4,361
54,963
5,442
EPS
(INR)
3.9
5.2
6.8
8.5
EPS
Gr. (%)
1.4
34.2
30.5
24.8
P/E
(X)
38.4
29.4
23.6
P/BV
(X)
10.7
6.4
5.1
RoE
(%)
25.9
28.0
21.6
21.8
RoCE
(%)
29.7
30.5
30.5
30.6
EV/
EV/
Sales EBITDA
3.1
26.5
2.8
20.5
2.3
16.3
Marico (MRCO) is likely to report net sales of INR11.5b, up 18%, with domestic volume growth at 13%.
We expect double-digit volume growth in value-added hair oil and Saffola. Parachute should report 8-10%
volume growth.
Copra prices witnessed a sharp fall, with the 2QFY13 average 33% lower than in 2QFY12. Rice bran and kardi oil
prices continue to be firm.
Gross margin should expand 300bp to 48.5% due to benefits of sharp fall in copra prices and lack of any meaningful
price cuts.
We expect 160bp expansion in EBITDA margin to 13.6%. PAT would grow 37% YoY to INR1.07b.
The stock trades at 29.4x FY13E EPS and 23.6x FY14E EPS. Buy.
What to look for

Volume growth in Parachute and Saffola, performance / gross margin of international business.
(INR Million)
Y/E March
Volume Growth (%)
Net Sales
YoY Change (%)
COGS
Gross Profit
Gross margin (%)
Other Expenditure
% to Sales
EBITDA
Margins (%)
YoY Change (%)
Depreciation
Interest
Other Income
PBT
Tax
Rate (%)
Minority Interest
Adjusted PAT
YoY Change (%)
E: MOSL Estimates
October 2012
FY12
FY13
1Q
2Q
3Q
4Q
1Q
2QE
3QE
4QE
14.0
10,414
31.8
5,952
4,462
42.8
3,211
30.8
1,251
12.0
18.6
169
98
92
1,075
210
19.6
15
850
15.3
14.0
9,745
25.6
5,329
4,415
45.3
3,249
33.3
1,167
12.0
17.7
177
91
106
1,005
205
20.4
17
783
9.4
13.0
10,578
29.4
5,451
5,127
48.5
3,909
37.0
1,217
11.5
22.1
188
82
92
1,039
178
17.1
20
841
21.0
17.0
9,177
22.9
4,264
4,913
53.5
3,814
41.6
1,100
12.0
38.8
191
113
105
901
189
20.9
-2
714
-0.6
14.0
12,672
21.7
6,411
6,261
49.4
4,414
34.8
1,848
14.6
47.7
193
170
176
1,660
403
24.2
19
1,238
45.7
13.0
11,500
18.0
5,923
5,578
48.5
4,014
34.9
1,564
13.6
34.1
205
180
180
1,359
272
20.0
13
1,074
37.2
14.0
12,250
15.8
6,125
6,125
50.0
4,557
37.2
1,568
12.8
28.8
220
160
180
1,368
274
20.0
13
1,081
28.6
14.0
10,757
17.2
6,012
4,745
44.1
3,339
31.0
1,407
13.1
27.9
240
155
205
1,216
229
18.8
21
967
35.3
FY12
FY13E
14.0
39,968
27.9
20,987
18,981
47.5
14,240
35.6
4,741
11.9
15.9
725
424
429
4,021
782
19.5
50
3,189
34.2
13.5
47,179
18.0
24,470
22,709
48.1
16,323
34.6
6,386
13.5
34.7
858
665
741
5,604
1,177
21.0
66
4,361
36.8
C45

Sector: Consumer
Nestle India
BSE Sensex
S&P CNX
18,763
5,703
Bloomberg
NEST IN
Equity Shares (m)
96.4
52-Wk. Range (INR) 5,024/3,930
1,6,12 Rel. Perf. (%) -13/-12/-11
M.Cap. (INR b)
421.8
M.Cap. (USD b)
8.0
CMP: INR4,374
Neutral
Year
Net Sales Adj. PAT EPS
End
12/10A 62,547
8,370
86.8
12/11A 74,908
10,188 105.7
12/12E 85,777
11,287 117.1
12/13E 101,953 13,349 138.5
EPS
P/E
YoY (%) (X)
20.0
50.4
21.7
41.4
10.8
37.4
18.3
31.6
P/BV
(X)
33.1
33.1
23.5
17.5
RoE
(%)
116.5
95.7
73.6
63.5
RoCE
(%)
151.8
89.6
61.7
59.6
EV/
EV/
Sales EBITDA
6.7
33.4
5.7
27.6
5.0
22.7
4.2
18.7
We expect Nestle India (NEST) to report net sales of INR22.7b, up 16%. Growth would be price-led; volume
recovery would be gradual, in our view.
Gross margin is likely to expand 110bp YoY to 53% due to the benefit of price increases in the last few quarters.
We expect EBITDA margin to expand 90bp to 21.8% on account of mix improvement and savings in overheads.
EBITDA is likely to increase 21% to INR4.9b. We estimate higher interest at INR230m and depreciation at INR680m
due to capacity expansion.
We expect 10% growth in PBT and 10% growth in PAT, as tax rates remain flat at ~30%.
We remain positive on NEST's long-term prospects on healthy demand and growth potential of its portfolio.
However, at current valuations, the stock appears expensive, given the context of sub-par volume growth. The
stock trades at 37.4x CY12E and 31.6x CY13E EPS. Neutral.
(INR Million)
Y/E December
Net Sales
YoY Change (%)
COGS
Gross Profit
Margin (%)
Operating Exp
EBITDA
Margins (%)
YoY Growth (%)
Depreciation
Interest
Other income
PBT
Tax
Rate (%)
Adjusted PAT
YoY Change (%)
E: MOSL Estimates
October 2012
CY11
1Q
2Q
3Q
4Q
1Q
18,100
22.3
8,841
9,259
51.2
5,406
3,853
21.3
26.7
327
1
128
3,653
1,027
28.1
2,626
33.3
17,631
20.2
8,718
8,912
50.5
5,467
3,445
19.5
17.2
367
6
80
3,152
956
30.3
2,196
9.0
19,631
19.9
9,454
10,177
51.8
6,074
4,103
20.9
27.2
394
12
121
3,819
1,134
29.7
2,685
23.5
19,547
17.0
8,880
10,667
54.6
6,540
4,127
21.1
25.1
446
33
181
3,828
1,148
30.0
2,681
20.9
20,475
13.1
9,384
11,091
54.2
6,519
4,572
22.3
18.7
528
23
136
4,158
1,272
30.6
2,886
9.9
CY12
2Q
19,866
12.7
9,024
10,842
54.6
6,547
4,295
21.6
24.7
673
220
113
3,514
1,085
30.9
2,429
10.6
3QE
4QE
22,750
15.9
10,693
12,058
53.0
7,098
4,960
21.8
20.9
680
230
165
4,215
1,260
29.9
2,954
10.0
22,686
16.1
10,007
12,680
55.9
7,682
4,997
22.0
21.1
683
178
172
4,307
1,290
29.9
3,018
12.6
CY11
CY12E
74,908
19.8
35,894
39,015
52.1
23,487
15,528
20.7
24.3
1,533
51
509
14,452
4,264
29.5
10,188
21.7
85,777
14.5
39,107
46,670
54.4
27,846
18,824
21.9
21.2
2,564
651
586
16,194
4,907
30.3
11,287
10.8
C46

Sector: Consumer
Pidilite Industries
BSE Sensex
S&P CNX
18,763
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1,6,12 Rel. Perf. (%)
M.Cap. (INR b)
M.Cap. (USD b)
5,703
PIDI IN
506.1
212/134
5/16/11
104.5
2.0
CMP: INR206
Year
End
3/11A
3/12A
3/13E
3/14E
Buy
Net Sales Adj.PAT

(INR m) (INR m)
23,806
3,330
28,164
3,557
33,820
4,415
40,398
5,305
EPS
(INR)
6.6
7.0
8.4
10.1
EPS
Gr. (%)
13.4
6.5
20.2
20.2
P/E
(X)
29.5
24.5
20.4
P/BV
(X)
7.8
6.0
5.1
RoE
(%)
29.2
26.3
24.6
24.8
RoCE
(%)
30.9
29.1
31.4
32.5
EV/
EV/
Sales EBITDA
3.6
20.5
3.0
16.0
2.5
13.0
We expect Pidilite Industries (PIDI) to post 19% revenue growth, led by double-digit volume growth in the
Consumer and Bazaar segments, though Industrial Chemicals would remain under pressure. We expect margin
pressure to sustain in Industrial Chemicals but margins would expand in the Consumer and Bazaar segments.
Gross margin would expand 100bp on account of decline in VAM prices. EBITDA margin is also likely to increase
90bp to 19.2%, driven by higher gross margin and operating leverage.
We expect tax rate to increase by 200bp to 27%. However, healthy revenue growth would ensure PAT growth of
~28% to INR1.1b.
Uncertainty regarding the synthetic elastomer project continues and the company is yet to take a call on the
project implementation.
The stock trades at 24.5x FY13E EPS of INR8.4 and 20.4x FY14E EPS of INR10.1. Maintain Buy.
(INR Million)
Y/E March
Sales
Change (%)
Gross Profit
Gross Margin %
Operating Expenses
% of sales
EBITDA
EBITDA Margin %
Change (%)
Depreciation
Interest
Other Income
PBT
Tax
Adj PAT
Change (%)
E: MOSL Estimates
October 2012
FY12
FY13
1Q
2Q
3Q
4Q
1Q
2QE
3QE
4QE
7,680
21.5
3,439
44.8
1,918
25.0
1,521
19.8
-2.2
116
48
70
1,428
350
24.5
1,078
0.1
7,103
20.5
3,093
43.5
1,791
25.2
1,302
18.3
4.8
118
59
29
1,153
289
25.1
864
2.2
6,918
16.5
2,989
43.2
1,782
25.8
1,207
17.4
1.9
121
73
45
1,058
268
24.8
790
-6.5
6,519
15.6
3,045
46.7
2,087
32.0
958
14.7
17.8
124
47
152
939
190
20.2
749
41.6
9,125
18.8
4,087
44.8
2,180
23.9
1,907
20.9
25.4
124
91
139
1,831
498
27.2
1,333
23.6
8,450
19.0
3,769
44.6
2,146
25.4
1,622
19.2
24.6
135
40
70
1,517
410
27.0
1,108
28.2
8,300
20.0
3,735
45.0
2,175
26.2
1,560
18.8
29.3
140
35
50
1,435
388
27.0
1,048
32.7
7,946
21.9
3,773
47.5
2,510
31.6
1,263
15.9
31.8
150
39
148
1,222
296
24.2
926
23.7
FY12
FY13E
28,164
18.3
12,490
44.3
7,540
26.8
4,950
17.6
2.5
479
245
428
4,653
1,096
23.6
3,557
6.8
33,820
20.1
15,363
45.4
9,011
26.6
6,353
18.8
28.3
548
205
407
6,007
1,592
26.5
4,415
24.1
C47

Sector: Consumer
United Spirits
BSE Sensex
S&P CNX
18,763
5,703
Bloomberg
UNSP IN
Equity Shares (m)
130.8
52-Week Range (INR) 1,295/450
1,6,12 Rel. Perf. (%)
25/98/37
M.Cap. (INR b)
159.3
M.Cap. (USD b)
3.0
CMP: INR1,218
Year
End
3/11A
3/12A
3/13E
3/14E
Net Sales Adj.PAT

(INR m) (INR m)
73,762
3,458
87,794
2,390
101,377
2,359
116,676
4,299
Neutral
EPS
(INR)
28.2
19.5
19.3
35.1
EPS
Gr. (%)
9.4
-30.9
-1.3
82.2
P/E
(X)
43.1
62.4
63.2
34.7
P/BV
(X)
3.6
3.1
3.0
2.8
RoE
(%)
8.2
4.9
4.7
7.9
RoCE
(%)
9.7
8.3
8.8
10.4
EV/
EV/
Sales EBITDA
3.0
20.7
2.7
20.3
2.4
18.1
2.1
14.8
We expect United Spirits (UNSP) to post 10% revenue growth to INR19.7b in 2QFY13, led by 6% volume growth.
The premium segment would grow at a faster pace, aided by up-trading and increased investments in this
segment by the company.
Modest ~3% QoQ growth in ENA prices would aid 50bp expansion in margins to 14.8%.
PAT would decline 2% to INR828m, impacted by 37% increase in interest cost and higher tax rate.
We note that Kerala has announced a price increase, which will provide support to margins. The industry
expects price increase in Andhra Pradesh in October, which could boost 3Q margins.
The stock trades at 63.2x FY13E EPS of INR19.3 and 34.7x FY14E EPS of INR35.1. Neutral. Positive news flow
around Diageo deal will favorably impact stock price.
What to look for

Volume growth recovery, given the slower volume growth in 1QFY13 (1.9%).
ENA price trend and outlook; increase in ENA prices post 2Q can limit expected margin recovery in FY13.
Interest cost trends.
(INR Million)
Y/E March
Volume Growth %
ENA Price/Case
Net Sales
YoY Change (%)
Total Exp
EBITDA
Margins (%)
Depreciation
Interest
PBT From operations
Other income
PBT
Tax
Rate (%)
PAT
YoY Change (%)
Reported PAT
E: MOSL Estimates
October 2012
FY12
FY13
1Q
2Q
3Q
4Q
1Q
2QE
3QE
4QE
15.4
147
19,354
32.3
16,051
3,303
17.1
127
1,302
1,874
165
2,039
671
32.9
1,369
12.6
8
1,377
8.0
153
17,906
32.2
15,346
2,560
14.3
152
1,241
1,167
100
1,267
419
33.1
848
5.7
632
1,479
0.7
164
19,539
-0.3
17,671
1,869
9.6
155
1,392
322
170
492
165
33.5
327
-71.3
143
471
5.1
162
18,627
17.0
16,867
1,760
9.5
175
1,663
-77
132
55
-24
-43.8
79
-86.7
21
100
1.9
151
20,573
6.3
17,223
3,350
16.3
162
1,656
1,532
262
1,794
689
38.4
1,105
-19.3
345
1,450
6.0
153
19,700
10.0
16,784
2,916
14.8
180
1,700
1,036
200
1,236
408
33.0
828
-2.3
10.0
154
24,500
25.4
21,193
3,308
13.5
200
1,700
1,408
200
1,608
530
33.0
1,077
228.9
10.0
154
22,414
20.3
20,299
2,115
9.4
206
1,452
457
638
1,095
322
29.4
774
874.2
828
1,077
774
FY12
FY13E
10.0
154
75,427
18.4
65,934
9,492
12.6
609
5,944
2,940
1,119
4,059
1,288
31.7
2,771
-20.5
657
3,428
7.0
154
87,186
15.6
75,499
11,687
13.4
748
6,507
4,432
1,300
5,732
1,949
34.0
3,783
36.5
3,783
C48

Sector: Financials
Financials
Company Name
Andhra Bank
Axis Bank
Bank of Baroda
Bank of India
Canara Bank
Dewan Housing
HDFC
HDFC Bank
Federal Bank
ICICI Bank
IDFC
Indian Bank
IndusInd Bank
ING Vysya
Kotak Mahindra Bank
LIC Housing
M&M Financial Services
Oriental Bank
Rural Electrification
Shriram Transport
State Bank
Union Bank
Yes Bank
Challenges for the Financials sector continued in 2QFY13 as well, led by moderation
in growth and sustained pressure on asset quality. However, the government's
concrete steps towards reforms have brought in a ray of hope.
Banks - aggregate PAT growth to remain healthy

For 2QFY13, we expect our Banking coverage universe to report healthy PAT growth of
19% YoY (~15% YoY ex-SBIN), largely driven by 23% YoY profit growth from private
sector banks. PAT of state-owned banks is likely to grow 17% YoY (9% YoY ex-SBIN), but
decline 4% QoQ (led by higher provisions, muted fees and higher tax rate in some
cases).
A lean business quarter; CD ratio falls; higher monies parked in government securities:
For the fortnight ended 21 September 2012, loans grew 16.4% YoY and deposits grew
13.7% YoY. On a sequential basis, while loans were flat, deposits increased marginally.
Higher funds are flowing into G-Secs, as a result of which the incremental ID ratio is
100%+ whereas the overall CD ratio has declined from 76.4% to 75.8%. As in FY12, in
FY13 too, working capital would be a key driver for corporate loan growth. 2-3 years of
continued moderation in the capex cycle will have a lag impact on other loan segments
(Services and Retail). We expect loan growth for the system to be 15-16% for FY13.
While SA deposit growth is likely to improve, it is unlikely to keep pace with overall
deposit growth. Further, CA deposits in the system continue to decline. This would
pressurize CASA ratio.
Benefits of fall in deposit rates to be compensated by fall in yields on assets - NIM to
remain stable: QTD 3M, 6M and 12M bulk deposit rates have declined by 60bp each,
whereas on YTD basis the decline is much sharper at 225bp, 180bp and 130bp
respectively the benefits of which will percolate in the form of lower cost of funds.
However, this would be compensated by (a) fall in yields on loans, as banks have
reduced spreads on loans in certain cases and have reduced base rate/PLR in May
2012, (b) continued pressure on CASA ratio, and (c) higher flow of money into low
yielding investments due to muted loan growth. We expect margins to be flattish/
improve marginally QoQ. Specific banks (viz. Bank of India), wherein margins declined
significantly in 1QFY13 due to higher reversal of interest income (on the back of
restructuring / slippages) may see some relief.
Addition of stress on balance sheet to continue: Considering the challenging macro
environment, we expect slippages to remain elevated (especially for state-owned
banks), led by stress in mid-size corporate and SME segments. Retail focused banks
are likely to be better placed (most private sector banks). However, unlike the past,
retail delinquency has started increasing. Hence, NPAs are expected to rise in this
segment, as well. Increased focus on balance sheet management by banks may lead
to improvement in recoveries and upgradations, which would provide cushion to
asset quality.
Alpesh Mehta (Alpesh.Mehta@MotilalOswal.com)/

Sohail Halai (Sohail.Halai@MotilalOswal.com)/Umang Shah (Umang.Shah@MotilalOswal.com)
October 2012
C49

Sector: Financials
Pace of restructuring has slowed down: With most SEB loans restructured and SEB
restructuring package approved by the Cabinet, we do not expect significant SEB
restructuring in 2QFY13. As witnessed in 1QFY13, restructuring would be significantly
lower than in 4QFY12. However, stress in the large corporate segment and higher
referrals to CDR would lead to some increase in overall restructured portfolio.
Muted trading gains in debt market; equity gains can surprise positively: In 2QFY13,
the 1-year and 10-year benchmark G-Sec yields have remained largely stable. As a
result, higher MTM reversals in case of bond portfolio are unlikely, though there may
be some write-back on the equity portfolio. Trading gains would be flat/ decline
QoQ, as yields remained in a narrow range.
Estimate aggregate profit growth of ~19% YoY, led by private banks (23% YoY); ExSBIN, state-owned banks' profit to grow 8.6% YoY: The performance of private sector
banks is likely to remain better than their state-owned counterparts. For the private
sector banks under our coverage, NII growth is likely to be ~22% YoY (led by healthy
loan growth and largely stable margins), operating profit growth is likely to be ~24%
YoY (due to contained cost) and PAT growth is likely to be ~23% (due to stable credit
cost). State-owned banks are likely to report NII and operating profit growth of ~10%
each YoY. PAT would grow 17% YoY, led by lower growth in provisions on a high base.
Continued reforms key to improvement in growth and asset quality outlook: Recent
reforms by the government have led to improvement in sentiment and growth outlook,
in turn leading to improvement in valuations. Further re-rating will be contingent
upon expected resolution of the problems faced in the Infrastructure space and fall in
interest rates (boost to G-Sec portfolio). On a reported basis, near-term profitability
is likely to be under pressure due to continued stress on asset quality, led by economic
moderation and sluggish growth. Benefits of reforms would be reflected in business
and asset quality with a lag.
Top picks in our Banking universe: Our top picks are SBIN (most exposed to
improvement in macroeconomic environment and strategy to recognize stress
upfront), ICICIBC (healthy capitalization and asset quality, improving core operations),
OBC (focused strategies and attractive valuations), and YES (strong play on
improvement in liquidity and healthy asset quality).
Deposit growth improves
14.3
13.4
13.7
58.3
61.0
62.3
62.9
3QFY12
4QFY12
1QFY13
21Sep-12
17.4
54.9
1QFY12
16.9
52.1
4QFY11
56.2
49.9
3QFY11
2QFY12
14.4
16.8
47.1
2QFY11
15.9
18.5
15.0
46.4
1QFY11
17.2
47.7
44.9
47.6
1QFY13
21Sep-12
4QFY10
46.9
4QFY12
42.7
43.7
3QFY12
3QFY10
41.5
2QFY12
19.8
17.7
16.4
40.9
1QFY12
41.2
16.5
39.4
4QFY11
2QFY10
19.5
37.7
3QFY11
Chg YoY (%)
40.3
20.0
34.3
2QFY11
De pos i ts (INR t)
1QFY10
21.5
34.1
1QFY11
18.7
19.2
32.4
4QFY10
15.9
21.9
13.8
30.2
3QFY10
17.1
12.7
28.7
2QFY10
16.2
28.0
Chg YoY (%)
1QFY10
24.5
Loa ns (INR t)
22.0
Loan growth remains moderate

October 2012
C50

Sector: Financials
Incremental deposit mobilization healthy (INR b)

3,279
21Sep12
617
1,167
1QFY13
Jul12
2,671
2,030
3QFY12
4QFY12
1,313
2QFY12
2,857
744
2QFY11
1QFY12
1,440
1QFY11
2,222
2,240
4QFY10
4QFY11
1,502
3QFY10
2,745
876
2QFY10
3QFY11
1,969
Apr12
CD ratio has moderated YTD
1QFY10
56
21S ep12
1QF Y13
4QF Y12
3QF Y12
561
605
2QF Y12
1QF Y12
4QF Y11
3QF Y11
171
2QF Y11
1QF Y11
4QF Y10
3QF Y10
2,170
1,461
1,767
1,634
2,202
791
2QF Y10
1QF Y10
256
1,499
3,401
Incremental loans flat QoQ (INR b)
Liquidity has improved since April/May-12
CD Ratio (%)
N et R epo (INR b)
1,600
78.0
800
74.0
70.0
800
66.0
1,600
Bulk deposit rates have cooled off significantly

12.5
Sep12
Jun12
Feb12
Nov11
Jul11
Apr11
Dec10
Sep10
May10
Apr09
2.5
Feb10
4.5
Oct09
6.5
Jul09
8.5
Slippage ratio for state-owned banks to remain high (%)

PSB s (ExSBIN)
3.3
2.8
2.3
1.9
2.4
1.9
8.0
7.0
7.2
Sep12
Feb12
Nov11
Sep11
Jul11
Apr11
Feb11
Nov10
8.1
8.0 7.9
6.9 7.0
2.6
8.3 8.4
8.6 8.5
8.1 8.2
8.3
8.5 8.1 8.0 8.0
8.0
7.4
6.0
5.0
10Yea r GSe c Yi el d
5.8
5.0
4.8
4.1
4.0
4.3
5.2
Referrals to CDR remain high

Agg. De bt (INR b)
3.4
2.42.2
Sep10
9.0
PSBs
2.5
Jun10
1Year GSec Yi el d
12 Mo nth (%)
10.5
9.4
9.8
9.0 9.7 10.2 9.5
9.5
8.9
7.9
10.1
6.5
9.4
9.6
9.4
9.3
8.8
8.7
5.6 6.7
5.8 6.0
7.6
6.0
6.3
4.7 4.6
10.5
Apr10
Yield cur ve remains flat (%)
Apr09
Jun09
Aug09
Nov09
Jan10
Apr10
Jun10
Sep10
Nov10
Jan11
Apr11
Jun11
Sep11
Nov11
Feb12
Apr12
Jun12
Sep12
6 Mon th (%)
2,400
Jan10
21Sep12
4QFY12
4QFY11
2QFY12
2QFY11
2QFY10
4QFY10
2QFY09
4QFY09
4QFY08
2QFY08
4QFY07
2QFY07
4QFY06
2QFY06
4QFY05
62.0
3.3
No. o f Ca ses Re cd .
87
2.6
49
1.7
41
31
202
226
679
205
192
4QF Y11 1QF Y12 2QFY12 3QFY12 4QF Y12 1QF Y13 2QF Y13E
29
FY10
FY11
FY12
1QFY13
2QQTD

October 2012
C51

Sector: Financials
NBFCs - performance continues to be strong

The performance of retail NBFCs (HFCs as well as retail AFCs) remains strong, led by
healthy growth and benign asset quality outlook. Pick-up in monsoon, expected
resolution of some of the issues faced by the Infrastructure segment, SEB package,
and continued buoyancy in the rural economy augurs well for the growth and asset
quality of NBFCs. Even improvement in liquidity and decline in bulk borrowing rates
will lead to healthy spreads and profitability. While there are various positives at
play, increasing competition from banks (especially in home loan and auto loan
segments) and rising delinquencies in the CV segment reduce the margin of safety to
an extent, as valuations remain rich. Within the NBFC space, we continue to like
HDFC, IDFC and MMFS.
Housing Finance Companies: For housing finance companies (HFCs), 2QFY13 is likely
to remain a steady quarter, as growth in individual loans remains buoyant. Growth in
the developer loan portfolio is likely to remain muted due to unfavorable macro
environment. However, we expect overall loan growth for HDFC, LICHF (despite weak
developer loan growth) and DEWH to remain healthy. Margins are likely to remain
stable on a sequential basis. Asset quality would continue to be healthy. No major
regulatory changes were announced during the quarter.
Infrastructure Finance Companies: 2QFY13 witnessed one of the major and much
awaited reforms in the form of SEB Debt Restructuring Plan to improve the financial
health of DISCOMs. We believe this is a major step forward by the government towards
reforms and also for the Infrastructure / Power sector as a whole. For the major
infrastructure finance companies (IFCs) - IDFC, POWF and RECL, we expect growth to
remain healthy. Margins are likely to get some cushion due to fall in wholesale rates
YTD. Overall, we expect margins to be stable QoQ. While no large accounts are likely
to fall into NPA category, asset quality will remain a key monitorable in the current
environment.
Asset Finance Companies: Retail asset finance companies (AFCs) have delivered strong
performance both in terms of growth as well as asset quality in the current cycle.
Among the AFCs under our coverage, we expect MMFS to report healthy growth in
AUM on the back of its multi-product strategy; for SHTF, growth is likely to remain
sluggish. Margins would remain stable sequentially. Asset quality will be a key
monitorable against the backdrop of slowdown in the macroeconomic environment
and delayed monsoon. During the quarter, the RBI released the final securitization as
well as the final priority sector guidelines. The final guidelines on both the issues are
less disruptive and are unlikely to impact the AFCs in a negative way.
October 2012
C52

Sector: Financials

CMP
(INR)
28.09.12
Rating
(INR Million)
Net Interest income
Sep.12
Var.
Var.
% YoY % QoQ
Operating Profit
Sep.12
Var.
Var.
% YoY % QoQ
Net Profit
Sep.12
Var.
% YoY
Financials
Private Banks
Axis Bank
1,137
Buy
22,743
13.3
4.3 20,314
14.4
3.5 11,242
Federal Bank
446
Buy
5,190
9.4
5.6
3,835
6.1
10.7
2,006
HDFC Bank
629
Neutral
36,067
22.5
3.5 27,598
29.8
6.9 15,616
ICICI Bank
1,057
Buy
32,582
30.0
2.0 30,430
29.3
3.2 18,236
IndusInd Bank
354
Buy
5,232
24.8
8.1
4,300
29.1
6.4
2,481
ING Vysya Bank
407
Buy
3,527
16.1
2.7
2,254
19.0
3.6
1,321
Kotak Mah. Bank (SA)
648
Neutral
7,463
23.3
3.5
4,564
20.1
1.8
2,764
Yes Bank
382
Buy
4,975
29.0
5.4
4,893
26.8
6.5
3,066
Pvt Banking Sector Aggregate
117,778
22.1
3.6 98,187
24.2
4.8 56,733
PSU Banks
Andhra Bank
113
Buy
9,737
2.4
3.8
6,990
1.8
-0.6
3,209
Bank of Baroda
799
Neutral
28,121
9.6
0.5 22,446
5.5
0.2 10,833
Bank of India
310
Neutral
23,844
25.2
16.7 18,708
20.6
11.8
7,095
Canara Bank
431
Buy
19,006
-3.1
3.1 13,970
-13.0
0.2
7,336
Indian Bank
192
Buy
11,991
5.6
4.0
8,908
-3.3
6.0
4,709
Oriental Bank of Comm.
302
Buy
11,799
19.2
4.8
8,840
16.6
-1.4
3,320
840
Buy
37,455
8.5
1.4 28,275
11.9
-0.5 12,183
State Bank
2,238
Buy
114,777
9.5
3.2 84,660
13.3
3.5 36,952
Union Bank
208
Buy
19,468
17.2
6.9 13,685
13.6
8.0
5,834
PSU Banking Sector Aggregate
276,198
10.0
4.1 206,482
9.5
3.1 91,472
PSU Banking Sector Aggregate Ex SBI
161,421
10.4
4.7 121,822
7.0
2.7 54,520
NBFC
Dewan Housing
200
Buy
1,596
43.3
11.1
1,417
44.1
18.5
954
HDFC
773
Buy
14,663
17.9
12.4 16,413
21.2
15.6 11,592
IDFC#
154
Buy
6,548
31.5
4.1
6,793
31.0
3.6
4,002
LIC Housing Fin
282
Buy
3,817
14.2
8.9
3,730
11.2
7.2
2,559
M & M Financial
898
Buy
5,214
33.6
6.9
3,430
35.1
5.6
1,863
Power Finance Corp.*
189
Buy
14,031
29.9
0.7 13,806
30.9
0.4
9,713
Rural Electric. Corp.*
218
Buy
11,711
23.3
0.5 11,801
23.0
-1.5
8,548
Shriram Transport F in.
619
Buy
8,384
0.4
4.5
6,882
0.9
1.4
3,295
NBFC Banking Sector Aggregate
65,964
21.2
5.1 64,272
22.2
5.0 42,527
Sector Aggregate
459,940
14.4
4.1 368,940
15.2
3.9 190,732
* For POWF/RECL operating profit and profit after tax are adjusted for forex gains/losses
# For IDFC operating profit and profit after tax growth is adjusted for extraordinary gains in 2QFY12
October 2012
Var.
% QoQ
22.2
4.9
30.2
21.3
28.5
14.5
6.3
30.5
22.9
-2.5
5.4
10.2
0.5
5.0
1.5
-2.1
5.7
2.9
1.5
-7.1
44.5
-13.9
0.5
98.0
1.1
31.5
65.5
16.8
8.6
-11.3
-4.9
-20.0
-5.4
2.0
-15.2
-2.2
-1.5
14.0
-4.0
-5.6
32.8
19.4
20.5
1.3
37.4
21.1
19.3
10.1
18.7
19.0
22.7
15.7
5.4
12.4
15.7
-5.6
-5.5
2.4
3.6
-0.4
C53

Sector: Financials
Se ns e x Inde x
MOSL Fi nanci al s Index
120
Se ns ex Index
MOSL Fi na nci a l s Index
130
120
110
110
100
Sep-12
Jun-12
Dec-11
Sep-11
Sep-12
Aug-12
80
Jul-12
80
Jun-12
90
Mar-12
100
90
CMP (INR)
28.09.12
Private Banks
Axis Bank
1,137
Federal Bank
446
HDFC Bank
629
ICICI Bank
1,057
IndusInd Bank
354
ING Vysya Bank
407
Kotak Mah. Bank
648
Yes Bank
382
Private Bank Aggregate
PSU Banks
Andhra Bank
113
Bank of Baroda
799
Bank of India
310
Canara Bank
431
Indian Bank
192
Oriental Bank
302
Punjab Nat. Bank
840
State Bank
2,238
Union Bank
208
PSU Bank Aggregate
NBFC
Dewan Housing
200
HDFC
773
IDFC
154
LIC Housing Fin
282
M & M Financial
898
Power Finance Corp 189
Rural Electric. Corp. 218
Shriram Transport
619
NBFC Aggregate
Sector Aggregate
October 2012
Rating
EPS (INR)
FY12 FY13E FY14E
P/E (x)
FY12 FY13E FY14E
Buy
Buy
Neutral
Buy
Buy
Buy
Neutral
Buy
102.7
45.4
22.0
56.1
17.2
30.4
24.7
27.7
109.5
47.0
28.7
68.3
22.0
35.4
26.2
35.4
125.6
55.7
35.8
78.7
27.5
40.3
29.8
43.0
11.1
9.8
28.6
18.9
20.6
13.4
26.2
13.8
19.7
10.4
9.5
21.9
15.5
16.1
11.5
24.7
10.8
16.4
9.0
8.0
17.6
13.4
12.9
10.1
21.8
8.9
13.9
2.1
1.3
4.9
2.1
3.7
1.6
3.7
2.9
3.1
1.8
1.2
4.2
1.9
3.1
1.4
3.2
2.4
2.7
1.6
1.1
3.6
1.7
2.5
1.3
2.8
1.9
2.4
20.3
14.4
18.7
12.8
19.2
14.3
15.4
23.1
15.9
18.8
13.4
20.7
14.2
20.7
13.0
13.7
24.1
16.7
18.4
14.3
21.9
14.7
21.6
13.2
13.8
23.9
17.4
Buy
Neutral
Neutral
Buy
Buy
Buy
Buy
Buy
Buy
24.0
121.4
46.6
74.1
40.6
39.1
144.0
228.6
32.3
25.0
110.6
53.9
73.7
42.8
50.8
155.5
284.5
42.0
28.0
129.0
63.7
85.5
45.7
56.6
185.1
330.3
48.1
4.7
6.6
6.7
5.8
4.7
7.7
5.8
9.4
6.4
7.4
4.5
7.2
5.8
5.9
4.5
5.9
5.4
7.5
4.9
6.5
4.0
6.2
4.9
5.0
4.2
5.3
4.5
6.5
4.3
5.6
0.8
1.3
1.0
0.9
0.9
0.8
1.1
1.4
0.9
1.3
0.7
1.1
0.8
0.8
0.8
0.7
0.9
1.2
0.8
1.1
0.7
1.0
0.7
0.7
0.7
0.7
0.8
1.0
0.7
0.9
19.2
22.1
15.6
17.1
19.8
10.7
21.1
17.2
14.9
17.4
17.5
16.6
15.5
14.9
18.0
12.7
18.5
17.8
16.8
16.7
17.2
16.8
16.0
15.2
16.8
12.8
18.8
18.0
16.9
16.8
25.6
27.9
10.3
18.1
60.4
23.9
28.6
55.6
37.7
32.1
10.9
21.8
79.4
29.5
34.9
59.8
51.3
38.6
13.3
31.7
93.7
32.7
41.7
70.4
7.8
22.7
15.0
15.6
14.9
7.9
7.6
11.1
15.1
12.3
5.3
19.1
14.2
12.9
11.3
6.4
6.3
10.3
12.7
10.6
3.9
15.0
11.7
8.9
9.6
5.8
5.2
8.8
10.7
9.0
1.2
5.9
1.8
2.5
3.1
1.2
1.5
2.3
2.9
2.1
1.0
5.4
1.6
2.2
2.6
1.1
1.3
2.0
2.5
1.8
0.8
4.3
1.5
1.8
2.2
0.9
1.1
1.6
2.1
1.6
18.5
27.3
16.2
20.3
22.8
17.5
20.5
23.1
19.5
17.3
21.7
29.4
14.8
18.0
25.1
17.6
21.6
20.6
19.4
17.2
22.7
30.9
16.0
20.8
24.6
17.4
22.2
20.3
19.9
17.5
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
P/BV (x)
FY12 FY13E FY14E
RoE (%)
FY12 FY13E FY14E
C54

Sector: Financials
Andhra Bank
BSE Sensex
18,763
S&P CNX
5,703
Bloomberg
ANDB IN
Equity Shares (m)
559.6
52 Week Range (INR)
139/79
1,6,12 Rel Perf (%)
17/-12/-23
Mcap (INR b)
63.0
Mcap (USD b)
1.2
CMP: INR113
Year
End
3/11A
3/12A
3/13E
3/14E
Buy
NET INC.
PAT
EPS
41,179
12,671 22.6
46,193
13,447 24.0
49,767
13,998 25.0
56,158
15,658 28.0
EPS
Gr. (%)
5.0
6.1
4.1
11.9
P/E
(X)
5.0
4.7
4.5
4.0
BV
(INR)
116
134
152
173
P/BV
(X)
1.0
0.8
0.7
0.7
P/ABV
(X)
1.0
0.9
0.9
0.8
RoAA
(%)
1.3
1.1
1.0
1.0
RoAE
(%)
23.2
19.2
17.5
17.2
NIM is likely to be stable QoQ, as the benefit of fall in cost of funds would be negated by corresponding
pressure on yield on loans. The 25bp reduction in base rate in August 2012 and continuous reversal on account
of FITL would keep yields under pressure.
On a higher base of INR8.3b, slippages are likely to decline QoQ. However, due to challenges in the macro
environment, we model in slippages at an elevated level of INR5b+. ANDB has performed well on recoveries
and upgradations in 2HFY12, and strong performance on these could provide cushion to asset quality.
With the exception of SEBs, the pace of restructuring is likely to slow down in 2QFY13. However, ANDB's
exposure to some SEBs may get restructured in FY13.
The stock trades at 0.7x FY14E BV, and at 4x FY14E EPS. Maintain Buy.
Key things to watch for: (1) Asset quality: Net slippages and outlook on restructuring and (3) NIM performance.
(INR Million)
Y/E March
Interest Income
Interest Expense
Net Interest Income
% Change (Y-o-Y)
Other Income
Net Income
Operating Expenses
Operating Profit
% Change (Y-o-Y)
Other Provisions
Profit before Tax
Tax Provisions
Net Profit
% Change (Y-o-Y)
Operating Metrics
NIM (Reported, %)
NIM (Cal, %)
Deposit Growth (%)
Loan Growth (%)
CASA Ratio (%)
Tax Rate (%)
Asset Quality
OSRL (INR b)
OSRL (%)
Gross NPA (INR b)
Gross NPA (%)
E: MOSL Estimates
October 2012
FY12
FY13
FY12
FY13E
1Q
26,342
17,239
9,104
23.7
2,170
11,273
4,277
6,997
37.1
1,770
5,227
1,370
3,857
20.4
2Q
27,825
18,313
9,512
21.4
1,778
11,290
4,423
6,868
21.7
2,607
4,261
1,100
3,161
4.3
3Q
29,230
19,392
9,839
17.1
2,353
12,191
4,515
7,676
22.5
3,094
4,582
1,550
3,032
-8.4
4Q
29,990
20,851
9,139
6.1
2,299
11,438
4,828
6,610
-7.1
2,437
4,173
776
3,397
8.6
1Q
31,215
21,830
9,385
3.1
2,357
11,742
4,708
7,034
0.5
2,066
4,968
1,350
3,618
-6.2
2QE
32,004
22,267
9,737
2.4
2,256
11,993
5,003
6,990
1.8
2,502
4,488
1,279
3,209
1.5
3QE
32,887
22,712
10,175
3.4
2,503
12,679
5,172
7,507
-2.2
2,516
4,991
1,422
3,568
17.7
4QE
34,083
23,428
10,654
16.6
2,699
13,354
5,656
7,697
16.5
2,702
4,995
1,392
3,603
6.1
113,387
75,794
37,593
16.7
8,599
46,193
18,042
28,150
16.7
9,907
18,243
4,796
13,447
6.1
130,188
90,237
39,952
6.3
9,816
49,767
20,540
29,228
3.8
9,785
19,442
5,444
13,998
4.1
3.8
3.7
21.7
32.0
27.8
26.2
3.8
3.8
20.2
21.5
26.1
25.8
3.8
3.8
20.2
20.3
26.6
33.8
3.3
3.3
14.9
17.1
26.4
18.6
3.3
3.2
18.5
14.3
26.7
27.2
3.3
16.3
18.0
28.5
3.3
16.3
16.0
28.5
3.3
16.0
15.0
27.9
3.7
3.5
14.9
17.1
26.4
26.3
3.2
16.0
15.0
28.0
21.7
2.9
11.8
1.6
22.5
3.0
19.9
2.7
32.3
4.1
18.8
2.4
55.9
6.6
18.0
2.1
67.7
7.8
23.6
2.7
26.1
3.0
29.5
3.2
32.8
3.4
55.9
6.6
18.0
2.1
32.8
3.4
C55

Sector: Financials
Axis Bank
BSE Sensex
S&P CNX
CMP: INR1,137
18,763
5,703
Bloomberg
AXSB IN
Equity Shares (m)
413.2
1,6,12 Rel Perf (%)
5/-8/-8
Mcap (INR b)
469.7
Mcap (USD b)
8.9
Year Net Income

End
(INR m)
3/11A
111,951
3/12A
134,380
3/13E
154,433
3/14E
182,976
PAT
(INR m)
33,885
42,422
46,566
53,422
Buy
EPS
(INR)
82.5
102.7
109.5
125.6
EPS
Gr. (%)
33.0
24.4
6.6
14.7
P/E
(X)
11.1
10.4
9.0
BV
(INR)
463
547
625
731
P/BV
(X)
2.1
1.8
1.6
P/ABV
(X)
2.1
1.9
1.6
RoAA
(%)
1.6
1.6
1.5
1.5
RoAE
(%)
19.3
20.3
18.8
18.4
Loan growth is expected to remain strong at over 25% YoY, partially aided by a lower base of 2QFY12.
NIM are likely to expand by 10bp, as low yielding priority sector loans runs off and bulk deposit rates have
cooled down. In 1QFY13, AXSB had reported NIM of 3.4%.
Fee income growth is expected to be ~15% YoY. Pressure on fees from Corporate Banking and Capital Marketrelated services is expected to continue, but Retail fees would remain strong.
Gross stress addition (i.e. gross slippage and addition to restructured loans) is expected to remain high, so does
the credit cost. Improvement in upgradations and recoveries remains the key.
The stock trades at 1.8x FY13E and 1.6x FY14E BV, and at 10.4x FY13E and 9.0x FY14E EPS. Buy.
Key things to watch for: (1) Pressure on asset quality has increased and performance on gross slippages and
restructured loans remains a key thing to monitor, (2) margins are expected to improve, but scope for positive
surprise remains, (3) fee income growth.
(INR Million)
Y/E March
FY12
FY12
FY13E
1Q
48,814
31,573
17,241
13.9
11,679
28,920
13,335
15,585
7.5
1,758
13,826
4,403
9,424
27.0
2Q
52,760
32,687
20,073
24.3
12,349
32,422
14,665
17,756
19.5
4,056
13,701
4,497
9,203
25.2
3Q
57,770
36,367
21,403
23.5
14,298
35,701
15,109
20,592
24.2
4,223
16,369
5,346
11,023
23.7
4Q
60,603
39,142
21,461
26.2
15,876
37,337
16,962
20,376
11.9
1,393
18,983
6,210
12,773
25.2
1Q
64,829
43,030
21,799
26.4
13,355
35,154
15,517
19,637
26.0
2,588
17,048
5,513
11,535
22.4
2QE
66,526
43,783
22,743
13.3
14,649
37,392
17,078
20,314
14.4
3,659
16,656
5,413
11,242
22.2
3QE
68,292
44,549
23,742
10.9
15,912
39,654
18,104
21,550
4.7
4,590
16,960
5,512
11,448
3.9
4QE
69,665
45,791
23,874
11.2
18,359
42,233
19,007
23,227
14.0
4,903
18,324
5,983
12,341
-3.4
219,946
139,769
80,177
22.2
54,202
134,380
60,071
74,309
15.8
11,430
62,878
20,456
42,422
25.2
269,311
177,153
92,158
14.9
62,275
154,433
69,706
84,728
14.0
15,740
68,987
22,421
46,566
9.8
3.3
3.2
24.5
21.4
40.5
31.8
3.8
3.7
23.9
26.7
42.2
32.8
3.8
3.7
33.9
20.4
41.6
32.7
3.6
3.4
16.3
19.2
41.5
32.7
3.4
3.3
21.3
29.8
39.1
32.3
3.4
17.9
25.8
32.5
3.4
14.3
24.4
32.5
3.3
15.0
18.0
32.7
3.6
3.3
16.3
19.2
41.5
32.5
3.2
15.0
18.0
32.5
21.5
1.6
15.7
1.1
24.1
1.7
17.4
1.1
27.0
1.8
19.1
1.1
30.6
1.8
18.1
0.9
38.3
2.2
20.9
1.1
24.7
1.4
28.3
1.5
32.5
1.6
30.6
1.8
18.1
0.9
32.5
1.6
Interest Income
Interest Expense
Net Interest Income
% Change (Y-o-Y)
Other Income
Net Income
Operating Expenses
Operating Profit
% Change (Y-o-Y)
Other Provisions
Profit before Tax
Tax Provisions
Net Profit
% Change (Y-o-Y)
Operating Metrics
NIM (Reported,%)
NIM (Cal, %)
Deposit Growth (%)
Loan Growth (%)
CASA Ratio (%)
Tax Rate (%)
Asset Quality
OSRL (INR b)
OSRL (%)
Gross NPA (INR b)
Gross NPA (on customer assets, %)
E: MOSL Estimates
October 2012
FY13
C56

Sector: Financials
Bank of Baroda
BSE Sensex
S&P CNX
CMP: INR799
18,763
5,703
Bloomberg
BOB IN
Equity Shares (m)
412.4
52 Week Range (INR)
881/606
1,6,12 Rel Perf (%)
21/-8/-13
Mcap (INR b)
329.3
Mcap (USD b)
6.2
Year Net Income

End
(INR m)
3/11A
116,114
3/12A
137,393
3/13E
154,075
3/14E
180,172
Neutral
PAT
EPS
(INR m) (INR)
42,417
108
50,070
121
45,605
111
53,193
129
EPS
Gr. (%)
29.1
12.4
-8.9
16.6
P/E
(X)
6.6
7.2
6.2
BV
(INR)
502
621
715
825
P/BV
(X)
1.3
1.1
1.0
P/ABV
(X)
1.3
1.2
1.0
RoAA
(%)
1.3
1.2
0.9
0.9
RoAE
(%)
25.2
22.1
16.6
16.8
Margins should remain stable QoQ or decline marginally, as the pressure on yields on loans would offset any
benefits from fall in bulk deposit rates. NII is likely to grow 10% YoY.
We expect fee income growth to moderate to sub-5% YoY. However, higher trading gains would lead to strong
non-interest income growth of over 23% YoY.
Stress on the balance sheet has increased, with gross slippage ratio in the last two quarters at 2%+. While
slippages are expected to remain high, recoveries and upgradations could provide some respite to asset quality.
The pace of restructuring had slowed down in 1QFY13, with the bank restructuring loans worth INR7.7b as
against INR50.3b in 4QFY12. However, pressure in corporate segment restructuring is likely to continue.
The stock trades at 1.1x FY13E and 1x FY14E BV, and 7.2x FY13E and 6.2x FY14E EPS. Maintain Neutral.
Key things to watch for: (1) Performance on asset quality, especially on gross slippages, (2) Restructured portfolio,
(3) Fee income growth, (4) Guidance on tax rate.
(INR Million)
Y/E March
FY12
FY12
FY13E
1Q
66,318
43,346
22,972
23.6
6,409
29,380
11,198
18,183
19.0
3,911
14,272
3,944
10,328
20.2
2Q
72,514
46,845
25,669
25.9
7,343
33,013
11,743
21,270
28.4
4,834
16,436
4,775
11,661
14.4
3Q
76,720
50,165
26,555
15.8
11,493
38,048
12,097
25,952
40.2
8,367
17,585
4,686
12,899
20.7
4Q
81,185
53,211
27,974
7.0
8,978
36,952
16,550
20,402
4.9
8,437
11,965
-3,217
15,182
17.3
1Q
85,576
57,595
27,981
21.8
7,708
35,689
13,281
22,407
23.2
8,938
13,469
2,081
11,389
10.3
2QE
86,580
58,459
28,121
9.6
9,082
37,203
14,757
22,446
5.5
7,807
14,639
3,806
10,833
-7.1
3QE
89,114
59,921
29,193
9.9
9,775
38,968
15,187
23,780
-8.4
8,109
15,671
4,075
11,597
-10.1
4QE
93,379
62,356
31,023
10.9
11,193
42,216
17,007
25,209
23.6
8,981
16,227
4,440
11,787
-22.4
296,737
193,567
103,170
17.2
34,223
137,393
51,587
85,806
22.9
25,548
60,258
10,188
50,070
18.0
354,649
238,331
116,317
12.7
37,758
154,075
60,232
93,843
9.4
33,836
60,007
14,402
45,605
-8.9
2.9
2.7
22.9
25.2
33.9
27.6
3.1
2.9
22.1
23.9
34.0
29.1
3.0
2.9
24.0
25.8
34.1
26.6
3.0
2.8
26.0
25.7
33.2
-26.9
2.7
2.6
22.3
23.0
32.2
15.4
2.6
19.8
22.5
26.0
2.6
18.5
17.4
26.0
2.7
16.0
16.0
27.4
3.0
2.8
26.0
25.7
33.2
16.9
2.6
16.0
16.0
24.0
92.4
98.4
116.6
171.4
179.8
4.0
4.1
4.5
6.0
6.3
34.3
34.0
39.0
44.6
53.2
1.5
1.4
1.5
1.5
1.8
loans restructured in international book
58.7
2.0
64.3
2.1
68.7
2.0
171.4
6.0
44.6
1.5
68.7
2.0
Interest Income
Interest Expense
Net Interest Income
% Change (YoY)
Other Income
Net Income
Operating Expenses
Operating Profit
% Change (YoY)
Other Provisions
Profit before Tax
Tax Provisions
Net Profit
% Change (YoY)
Operating Metrics
NIM (Reported, %)
NIM (Calculated, %)
Deposit Growth (%)
Loan Growth (%)
CASA Ratio (%)
Tax Rate (%)
Asset Quality
OSRL (INR b)
OSRL (%)
Gross NPA (INR b)
Gross NPA (%)
E: MOSL Estimates; # This includes
October 2012
FY13
C57

Sector: Financials
Bank of India
BSE Sensex
S&P CNX
18,763
5,703
Bloomberg
BOI IN
Equity Shares (m)
574.5
52 Week Range (INR) 408/254
1,6,12 Rel Perf (%)
11/-20/-16
Mcap (INR b)
178.3
Mcap (USD b)
3.4
CMP: INR310
Year Net Income
End
(INR m)
3/11A
104,525
3/12A
116,346
3/13E
132,579
3/14E
156,010
Neutral
PAT
EPS
(INR m) (INR)
24,887 45.5
26,775
46.6
30,974
53.9
36,582
63.7
EPS
Gr.(%)
37.4
2.5
15.7
18.1
P/E
(X)
6.7
5.8
4.9
BV
(INR)
283
327
371
423
P/BV
(X)
1.0
0.8
0.7
P/ABV
(X)
1.1
1.0
0.9
RoAA
(%)
0.8
0.7
0.7
0.7
RoAE
(%)
17.8
15.6
15.5
16.0
Loan growth is likely to be above industry average at ~25% YoY, while deposit growth is likely to be lower at
~17%. Lower deposit growth is in line with the banks strategy to reduce bulk deposits in its balance sheet.
Margins are expected to improve by ~25bp in the absence of one-offs. In 1QFY13, margins had declined sharply
by 60bp led by reversal of interest income on Air India restructuring and NPAs.
Fee income should grow ~15% YoY. However, overall growth in non-interest income is likely to be flat, led by
muted treasury gains and recoveries from written-off accounts.
High slippages and restructuring are likely to continue translating into higher credit cost.
The stock trades at 0.8x FY13E and 0.7x FY14E BV, and at 5.8x FY13E and 4.9x FY14E EPS. Maintain Neutral.
Key things to watch for: (1) Gross and net slippages, (2) Restructured portfolio and outlook on the same,
(3) Margin movement.
(INR Million)
Y/E March
Interest Income
Interest Expense
Net Interest Income
% Change (Y-o-Y)
Other Income
Net Income
Operating Expenses
Operating Profit
% Change (Y-o-Y)
Other Provisions
Profit before Tax
Tax Provisions
Net Profit
% Change (Y-o-Y)
Operating Metrics
NIM (Reported, %)
NIM (Cal, %)
Deposit Growth (%)
Loan Growth (%)
CASA Ratio (Reported, %)
Tax Rate (%)
Asset Quality
OSRL (INR b)
OSRL (%)
Gross NPA (INR b)
Gross NPA (%)
E: MOSL Estimates
October 2012
FY12
FY13
FY12
FY13E
1Q
66,336
47,926
18,410
5.8
6,601
25,011
11,051
13,959
-1.0
5,672
8,287
3,112
5,175
-28.6
2Q
68,864
49,825
19,039
7.2
8,418
27,457
11,942
15,515
12.5
11,544
3,972
-940
4,911
-20.4
3Q
71,501
50,826
20,676
4.1
8,522
29,197
11,878
17,319
24.7
6,931
10,388
3,227
7,162
9.7
4Q
78,106
53,096
25,010
8.4
9,671
34,681
14,535
20,146
67.1
7,018
13,128
3,601
9,527
93.0
1Q
77,092
56,656
20,436
11.0
8,409
28,844
12,109
16,736
19.9
4,722
12,013
3,139
8,875
71.5
2QE
81,777
57,933
23,844
25.2
8,553
32,397
13,689
18,708
20.6
8,350
10,358
3,263
7,095
44.5
3QE
83,948
59,028
24,920
20.5
9,363
34,283
14,059
20,225
16.8
9,250
10,975
3,457
7,518
5.0
4QE
86,111
60,033
26,078
4.3
10,977
37,055
16,726
20,329
0.9
9,426
10,903
3,416
7,487
-21.4
284,807
201,672
83,134
6.4
33,212
116,346
49,407
66,939
24.3
31,164
35,775
9,000
26,775
7.6
328,928
233,650
95,278
14.6
37,302
132,579
56,582
75,997
13.5
31,748
44,249
13,275
30,974
15.7
2.2
2.3
25.4
21.6
30.5
37.6
2.4
2.4
24.1
17.7
31.6
-23.7
2.6
2.5
21.7
20.9
32.4
31.1
2.9
2.9
6.5
16.3
34.3
27.4
2.3
2.2
15.7
22.9
32.0
26.1
2.5
16.7
24.9
31.5
2.6
17.6
19.9
31.5
2.6
18.0
17.2
31.3
2.5
2.5
6.5
16.3
34.3
25.2
2.5
18.0
17.2
30.0
87.6
4.1
57.9
2.7
84.5
3.9
65.5
3.0
104.5
4.5
63.9
2.7
134.8
5.4
58.9
2.3
175.7
6.6
67.5
2.6
75.3
2.8
83.7
3.0
92.7
3.1
134.8
5.4
58.9
2.3
92.7
3.1
C58

Sector: Financials
Canara Bank
BSE Sensex
18,763
S&P CNX
5,703
Bloomberg
CBK IN
Equity Shares (m)
443.0
52 Week Range (INR)
566/306
1,6,12 Rel Perf (%)
28/-15/-19
Mcap (INR b)
191.0
Mcap (USD b)
3.6
CMP: INR431
Year Net Income
End
(INR m)
3/11A
105,108
3/12A
106,169
3/13E
111,631
3/14E
133,833
Buy
PAT
EPS
(INR m) (INR)
40,259 90.9
32,827 74.1
32,634
73.7
37,860
85.5
EPS
Gr. (%)
23.3
-18.5
-0.6
16.0
P/E
(X)
5.8
5.9
5.0
BV
(INR)
405
464
525
597
P/BV
(X)
0.9
0.8
0.7
P/ABV
(X)
1.0
0.9
0.8
RoAA
(%)
1.3
0.9
0.8
0.8
RoAE
(%)
26.4
17.1
14.9
15.2
Loan and deposit growth is expected to be below industry average at ~7% and ~10%, respectively, in line with
CBK's strategy of de-bulking the balance sheet.
Margins are expected to remain largely flat QoQ.
Fee income growth is likely to be muted on a YoY basis. Lower decline in recoveries from written-off accounts
may pressurize overall non-interest income growth.
Slippages expected to remain at elevated levels. However, strong performance on recoveries and upgradations
may ease some pressure. As at the end of 1QFY13, CBK has restructured INR55b of SEB loans, out of its overall
exposure of INR120b.
The stock trades at 0.8x FY13E and 0.7x FY14E BV, and 5.9x FY13E and 5x FY14E EPS. Buy.
Key things to watch for: (1) Margins could surprise positively, (2) Trading profits and MTM write-back, given high
proportion of AFS investments, (3) Performance on net slippages.
(INR Million)
Y/E March
Interest Income
Interest Expense
Net Interest Income
% Change (Y-o-Y)
Other Income
Net Income
Operating Expenses
Operating Profit
% Change (Y-o-Y)
Other Provisions
Profit before Tax
Tax Provisions
Net Profit
% Change (Y-o-Y)
Operating Metrics
NIM (Rep, %)
NIM (Cal, %)
Deposit Growth (%)
Loan Growth (%)
CASA Ratio (%)
Tax Rate (%)
Asset Quality
OSRL (INR b)
OSRL (%)
Gross NPA (INR b)
Gross NPA (%)
E: MOSL Estimates
October 2012
FY12
FY13
FY12
FY13E
1Q
71,565
53,877
17,688
2.4
5,510
23,198
10,495
12,703
-14.4
3,446
9,258
2,000
7,258
-28.4
2Q
76,145
56,528
19,617
-2.1
8,283
27,900
11,847
16,053
13.4
5,531
10,522
2,000
8,522
-15.4
3Q
78,121
58,935
19,186
-8.2
7,791
26,976
11,209
15,767
4.2
5,012
10,756
2,000
8,756
-20.8
4Q
82,675
62,273
20,402
5.0
7,693
28,094
13,187
14,907
-12.0
4,616
10,291
2,000
8,291
-7.8
1Q
84,729
66,293
18,435
4.2
6,926
25,362
11,424
13,938
9.7
4,185
9,752
2,000
7,752
6.8
2QE
85,962
66,956
19,006
-3.1
7,542
26,548
12,578
13,970
-13.0
4,800
9,170
1,834
7,336
-13.9
3QE
87,872
67,626
20,246
5.5
8,344
28,590
13,342
15,248
-3.3
4,715
10,533
2,107
8,426
-3.8
4QE
90,080
68,343
21,736
6.5
9,395
31,132
15,066
16,066
7.8
4,729
11,337
2,218
9,119
10.0
308,506
231,613
76,893
-0.1
29,276
106,169
46,737
59,432
-2.4
18,605
40,827
8,000
32,827
-18.5
348,642
269,218
79,424
3.3
32,208
111,631
52,409
59,222
-0.4
18,430
40,792
8,158
32,634
-0.6
2.4
2.4
25.7
23.7
25.4
21.6
2.6
2.5
25.4
23.8
25.8
19.0
2.6
2.4
19.7
15.5
23.9
18.6
2.6
2.5
11.5
10.0
24.3
19.4
2.4
2.2
11.5
4.9
23.3
20.5
2.2
10.3
6.6
20.0
2.3
12.5
10.2
20.0
2.4
12.0
11.0
19.6
2.5
2.5
11.5
10.0
24.3
19.6
2.3
12.0
11.0
20.0
78.1
3.6
36.1
1.7
77.2
3.5
37.9
1.7
85.1
3.9
40.0
1.8
75.1
3.2
40.3
1.7
129.6
5.7
45.0
2.0
48.1
2.1
50.0
2.1
51.3
2.0
75.1
3.2
40.3
1.7
51.3
2.0
C59

Sector: Financials
Dewan Housing Finance

BSE Sensex
S&P CNX
18,763
5,703
Bloomberg
DEWH IN
Equity Shares (m)
116.8
1,6,12 Rel Perf (%)
13/-25/-19
Mcap (INR b)
23.4
Mcap (USD b)
0.4
CMP: INR200
Year Net Income
End
(INR m)
3/11A
7,126
3/12E
8,418
3/13E
12,158
3/14E
15,225
Buy
PAT
(INR m)
2,937
2,987
4,408
5,507
EPS
(INR)
28.1
25.6
37.7
51.3
EPS
Gr. (%)
48.8
-9.1
47.6
36.1
P/E
(X)
7.8
5.3
3.9
BV
(INR)
149
173
206
246
P/BV
(X)
1.2
1.0
0.8
RoAA
(%)
2.0
1.3
1.5
1.4
RoAE
(%)
26.7
18.5
21.7
22.7
Consolidated financials
DEWHs strong loan growth momentum is likely to continue in 2QFY13. We expect loan growth (on balance
sheet) of 35%+ YoY and AUM growth of 45%+ YoY. We expect NII to grow 43% YoY to INR1.6b.
Margins are likely to remain stable QoQ, as the liquidity situation has eased considerably and wholesale
borrowing costs have come off substantially.
We expect asset quality to remain stable sequentially.
We expect PAT to grow 33% YoY and 23% QoQ to INR954m.
The stock trades at 1x FY13E and 0.8x FY14E BV. Maintain Buy.
Key things to watch for: (1) Business growth trends, (2) Movement in spreads, (3) Cost to income ratio,
(4) FBHFL performance.
(INR Million)
Y/E March
Interest Income
Interest Expenses
Net Interest Income
YoY Growth (%)
Fees and other income
Net Income
YoY Growth (%)
Operating Expenses
YoY Growth (%)
Operating Profits
YoY Growth (%)
Provisions
Profit before Tax
Tax Provisions
PAT including extraordinary item
YoY Growth (%)
Extraordinary Items
PAT excluding extraordinary item
YoY Growth (%)
Operating Metrics
Loan growth (%)
Borrowings growth (%)
Cost to Income Ratio (%)
Tax Rate (%)
E: MOSL Estimates
October 2012
FY12
FY13
FY12
FY13E
1Q
4,652
3,599
1,053
48.2
325
1,378
36.0
471
36.0
907
36.0
33.0
874
216
658.1
28.4
0
658
28.4
2Q
5,404
4,290
1,114
37.4
486
1,599
3.9
616
50.0
983
-13.0
116.0
867
148
718.9
-23.1
0
719
23.9
3Q
6,029
4,788
1,241
43.6
590
1,831
47.2
692
60.0
1,138
40.0
150.0
988
238
749.7
21.4
0
750
21.4
4Q
6,498
5,213
1,285
34.7
714
1,999
40.3
806
46.0
1,193
36.0
-62.0
1,255
317
937.6
59.9
250
688
17.2
1Q
6,957
5,521
1,436
36.4
432
1,868
35.5
672
43.0
1,196
32.0
150.0
1,046
268
778.0
18.2
0
778
18.2
2QE
7,531
5,935
1,596
43.3
600
2,196
37.3
779
26.0
1,417
44.0
127.0
1,290
335
954.5
32.8
0
954
32.8
3QE
8,039
6,262
1,778
43.3
650
2,428
32.6
860
24.0
1,568
38.0
134.0
1,434
373
1,061.0
41.5
0
1,061
41.5
4QE
8,603
6,666
1,937
50.8
713
2,651
32.6
924
15.0
1,727
45.0
171.2
1,556
408
1,147.2
22.4
0
1,147
66.8
22,583
17,890
4,693
40.5
2,114
6,807
30.4
2,585
48.0
4,221
21.0
237.0
3,984
920
3,064.3
15.6
250
2,814
22.5
31,130
24,383
6,747
43.8
2,395
9,142
34.3
3,235
25.0
5,907
40.0
582.2
5,325
1,385
3,940.7
28.6
0
3,941
40.0
56.7
55.9
34.2
24.7
50.7
61.7
38.5
17.1
49.8
50.8
37.8
24.1
37.2
28.9
40.3
25.3
39.5
38.6
36.0
25.6
37.2
28.9
35.5
26.0
37.1
41.1
35.4
26.0
44.6
47.6
34.9
26.3
37.2
28.9
38.0
23.1
44.6
47.6
35.4
26.0
C60

Sector: Financials
Federal Bank
BSE Sensex
S&P CNX
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
5,703
FB IN
171.0
480/322
4/-3/7
76.2
1.4
CMP: INR446
Year Net Income
End
(INR m)
3/11A
22,634
3/12A
24,857
3/13E
27,048
3/14E
32,209
Buy
PAT
EPS
(INR m) (INR)
5,871
34.3
7,768
45.4
8,041
47.0
9,530
55.7
EPS
Gr. (%)
26.4
32.3
3.5
18.5
P/E
(X)
9.8
9.5
8.0
BV
(INR)
298
333
369
412
P/BV
(X)
1.3
1.2
1.1
P/ABV
(X)
1.4
1.3
1.2
RoAA
(%)
1.2
1.4
1.2
1.3
RoAE
(%)
12.0
14.4
13.4
14.3
We expect loan growth to remain in line with industry average at ~17%. However, on a high base deposit growth
expected to be below industry average at ~11%.
Easing pressure on cost of deposits, improving yield on advances and absence of one-offs is likely to provide
cushion to margins, which are expected to improve ~10bp.
Fee income is expected to grow by ~5% YoY. However, expected strong trading gains would drive overall noninterest income, which is likely to grow ~24% YoY.
On slippages, we expect a run-rate similar to 1QFY13. However, stress in the large corporate segment remains
a risk.
The stock trades at 1.2x FY13E and 1.1x FY14E BV, with RoA of over 1.2%. However, RoE is likely to be in lowerteens, as leverage remains low on strong capital base. Maintain Buy.
Key things to watch for: (1) Trend in slippages and recoveries, (2) Business growth, (3) Fee income performance.
(INR Million)
Y/E March
Interest Income
Interest Expense
Net Interest Income
% Change (YoY)
Other Income
Net Income
Operating Expenses
Operating Profit
% Change (YoY)
Other Provisions
Profit before Tax
Tax Provisions
Net Profit
% Change (YoY)
Operating Metrics
NIM (Reported,%)
NIM (Cal, %)
Deposit Growth (%)
Loan Growth (%)
CASA Ratio (%)
Tax Rate (%)
Asset Quality
OSRL (INR b)
OSRL (%)
Gross NPA (INR b)
Gross NPA (%)
E: MOSL Estimates
October 2012
FY12
FY13
FY12
FY13E
1Q
12,447
7,850
4,598
11.2
1,169
5,767
2,226
3,541
5.6
1,340
2,200
739
1,462
10.8
2Q
13,678
8,934
4,744
8.2
1,170
5,914
2,301
3,613
-6.2
722
2,891
979
1,912
36.2
3Q
14,668
9,388
5,280
18.1
1,379
6,660
2,472
4,187
17.4
1,153
3,035
1,016
2,019
41.1
4Q
14,790
9,878
4,912
9.7
1,606
6,518
2,793
3,724
6.3
155
3,569
1,193
2,376
38.4
1Q
15,367
10,451
4,916
6.9
1,243
6,160
2,695
3,465
-2.1
628
2,837
934
1,904
30.2
2QE
15,849
10,660
5,190
9.4
1,451
6,640
2,805
3,835
6.1
818
3,017
1,011
2,006
4.9
3QE
16,128
10,793
5,335
1.0
1,596
6,931
2,944
3,988
-4.8
962
3,025
998
2,027
0.4
4QE
16,424
10,928
5,496
11.9
1,821
7,317
3,162
4,156
11.6
1,122
3,033
929
2,104
-11.4
55,584
36,050
19,534
11.8
5,323
24,857
9,793
15,065
5.6
3,370
11,695
3,927
7,768
32.3
63,769
42,832
20,937
7.2
6,111
27,048
11,605
15,443
2.5
3,530
11,913
3,872
8,041
3.5
3.9
3.9
22.7
17.8
27.2
33.6
3.8
3.8
30.9
21.6
26.4
33.9
3.9
4.0
26.6
17.6
28.7
33.5
3.6
3.6
13.8
18.2
27.5
33.4
3.4
3.4
17.8
19.0
28.7
32.9
3.5
10.7
16.6
33.5
3.5
16.4
22.7
33.0
3.5
16.0
15.0
30.6
3.8
3.8
13.8
18.2
27.5
33.6
3.5
16.0
15.0
32.5
14.2
4.4
13.0
3.9
14.5
4.3
12.5
3.6
14.4
4.3
13.6
4.0
24.7
6.5
13.0
3.4
26.7
7.0
14.1
3.6
15.3
3.8
16.5
3.9
18.1
4.1
24.7
6.5
13.0
3.4
18.1
3.4
C61

Sector: Financials
HDFC
BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
5,703
HDFC IN
1,477.0
785/601
0/7/7
1,141.5
21.7
CMP: INR773
Year
Net Income
End
(INR m)
3/11A
53,181
3/12A
61,975
3/13E
75,126
3/14E
90,173
Buy
PAT
EPS
(INR m) (INR)
35,350
24.1
41,226
27.9
49,225 32.1
59,173 38.6
EPS
P/BV
Gr. (%) (X)
22.4
15.8
6.0
15.1
4.9
20.2
4.3
ABV* AP/ABV* AP/AE# RoAA Adj RoE

(INR)
(X)
(X)
(%)
(%)
91.2
2.9
26.6
100.5
5.9
22.7
2.8
27.3
105.9
5.4
19.1
2.9
29.4
125.8
4.3
15.0
2.9
30.9
* Price adj. for value of key ventures. BV is adj. by deducting invt in key ventures from NW
# Price adj. for value of key ventures. EPS is adj. for dividend from key ventures
HDFCs loan growth (net of sell downs) is likely to remain healthy at ~20%+ YoY. Spreads should be largely stable
at ~2.2%.
Non-interest income is likely to grow ~33% YoY. We have modeled investment gains of INR500m as against
INR869m in 2QFY12. We expect dividend income to increase to INR1.8b from INR1.6b in 1QFY13.
Asset quality has remained healthy over the past several quarters and the trend is likely to continue. In 1QFY13,
GNPAs were 0.79% on 90 days overdue basis and 0.49% on 180 days overdue basis.
However, we conservatively model higher provisions (similar to 1QFY13 levels) of INR424m against INR400m in
1QFY13 and INR170m in 2QFY12.
The stock trades at 4.3x FY14E AP/ABV and 15x FY14E AP/AEPS (price adjusted for value of other businesses and
book value adjusted for investments made in those businesses). Maintain Buy.
Key things to watch for: (1) Movement of spreads, (2) Loan growth and guidance, (3) Asset quality trend.
(INR Million)
Y/E March
Interest Income
Interest Expense
Net Interest Income
YoY Change (%)
Profit on Sale of Inv.
Other operating income
Net Operating Income
YoY Change (%)
Other Income
Total Income
Operating Expenses
Pre Provisioning Profit
YoY Change (%)
Provisions
PBT Ex Invest. profits
YoY Change (%)
PBT
YoY Change (%)
Provision for Tax
PAT
YoY Change (%)
E: MOSL Estimates
October 2012
FY12
1Q
36,098
25,149
10,948
17.1
163
1,909
13,020
20.8
47
13,067
1,132
11,935
21.6
180
11,593
19.9
11,755
21.6
3,310
8,445
21.6
2Q
39,340
26,905
12,435
14.7
869
1,430
14,734
18.1
52
14,786
1,239
13,547
17.9
170
12,508
16.4
13,377
18.0
3,670
9,707
20.2
3Q
42,488
30,124
12,364
15.1
880
1,306
14,549
9.9
52
14,601
1,119
13,483
9.8
200
12,403
18.6
13,283
9.5
3,470
9,813
10.1
FY13
4Q
46,823
29,389
17,434
27.2
791
1,233
19,458
18.3
63
19,520
1,030
18,491
17.1
250
17,450
22.9
18,241
17.4
4,980
13,261
16.1
1Q
46,924
33,882
13,042
19.1
202
2,223
15,467
18.8
74
15,541
1,342
14,199
19.0
400
13,597
17.3
13,799
17.4
3,780
10,019
18.6
2QE
49,222
34,560
14,663
17.9
500
2,550
17,713
20.2
50
17,763
1,350
16,413
21.2
424
15,489
23.8
15,989
19.5
4,397
11,592
19.4
3QE
50,596
35,078
15,518
25.5
750
1,600
17,868
22.8
50
17,918
1,475
16,443
22.0
456
15,237
22.9
15,987
20.4
4,356
11,630
18.5
4QE
56,535
35,906
20,629
18.3
1,048
2,151
23,828
22.5
40
23,868
1,337
22,531
21.8
678
20,805
19.2
21,852
19.8
5,905
15,947
20.3
FY12
FY13E
163,689
111,568
52,121
16.3
2,702
6,939
61,762
16.7
213
61,975
4,519
57,456
16.4
800
53,954
19.7
56,656
16.4
15,430
41,226
16.6
203,277
139,426
63,852
22.5
2,500
8,524
74,876
21.2
250
75,126
5,504
69,622
21.2
1,958
65,164
20.8
67,664
19.4
18,438
49,225
19.4
C62

Sector: Financials
HDFC Bank
BSE Sensex
18,763
S&P CNX
CMP: INR629
5,703
Bloomberg
HDFCB IN
Equity Shares (m)
2,346.7
52 Week Range (INR)
639/400
1,6,12 Rel Perf (%)
0/13/23
Mcap (INR b)
1,475.4
Mcap (USD b)
28.0
Year Net Income

End
(INR m)
3/11A
148,783
3/12A
175,405
3/13E
217,274
3/14E
263,511
Neutral
PAT
EPS
(INR m) (INR)
39,264
16.9
51,671 22.0
67,291 28.7
83,920 35.8
EPS
Gr. (%)
31.0
30.4
30.2
24.7
P/E
(X)
28.6
21.9
17.6
BV
(INR)
109.1
127.4
149.4
176.8
P/BV
(X)
4.9
4.2
3.6
P/ABV
(X)
5.0
4.3
3.6
RoAA
(%)
1.6
1.7
1.8
1.8
RoAE
(%)
16.7
18.7
20.7
21.9
HDFCB is expected to deliver above industry loan and deposit growth, both on a YoY and QoQ basis. On a YoY
basis, loans and deposits are likely to grow ~20% and ~19%, respectively.
NIMs are expected to decline marginally QoQ. Strong loan growth coupled with healthy margins would translate
into NII growth of 3% QoQ and ~23% YoY .
Fee income growth is expected to be 20%+, aided by lower base. Further, trading gains and strong growth in
forex income would boost growth in non-interest income to 30%+.
Asset quality is likely to remain healthy. However, stress in few segments of retail loans has increased, which
needs to be watched.
The stock trades at 4.2x FY13E and 3.6x FY14E BV, and at 21.9x FY13E and 17.6x FY14E EPS. Maintain Neutral.
Key things to watch for: (1) Traction in fee income, (2) Being largely in retail lending, HDFCB has reported
commendable asset quality performance; trend and outlook on retail portfolio remains a key factor to watch.
(INR Million)
Y/E March
FY12
FY12
FY13E
1Q
59,780
31,300
28,480
18.6
11,200
39,680
19,346
20,334
16.3
4,437
15,897
5,047
10,850
33.7
2Q
67,177
37,732
29,445
16.6
12,117
41,562
20,304
21,258
17.6
3,661
17,598
5,604
11,994
31.5
3Q
72,026
40,867
31,160
12.2
14,200
45,360
21,580
23,780
14.7
3,292
20,488
6,191
14,297
31.4
4Q
73,880
39,997
33,883
19.3
14,920
48,803
24,671
24,132
15.1
2,983
21,149
6,618
14,531
30.4
1Q
80,074
45,234
34,841
22.3
15,295
50,135
24,326
25,809
26.9
4,873
20,936
6,762
14,174
30.6
2QE
82,658
46,591
36,067
22.5
16,424
52,491
24,894
27,598
29.8
4,800
22,798
7,181
15,616
30.2
3QE
85,171
47,290
37,881
21.6
17,770
55,651
25,304
30,347
27.6
3,200
27,147
8,551
18,595
30.1
4QE
87,352
47,857
39,494
16.6
19,502
58,996
28,336
30,660
27.1
2,946
27,714
8,809
18,905
30.1
272,864
149,896
122,968
16.6
52,437
175,405
85,901
89,504
15.9
14,373
75,132
23,461
51,671
31.6
335,254
186,971
148,283
20.6
68,990
217,274
102,860
114,414
27.8
15,819
98,594
31,304
67,291
30.2
4.2
4.7
15.4
20.0
49.1
31.7
4.1
4.5
18.1
20.0
47.3
31.8
4.1
4.6
21.0
22.1
48.6
30.2
4.2
4.7
18.3
22.2
48.4
31.3
4.3
4.6
22.0
21.5
46.0
32.3
4.5
18.9
20.5
31.5
4.5
24.4
21.6
31.5
4.5
21.0
22.0
31.8
4.2
4.6
18.3
22.2
48.4
31.2
4.5
21.0
22.0
31.8
24.0
1.0
26.4
1.1
28.3
1.2
2.0
0.1
20.0
1.0
28.3
1.2
Interest Income
Interest Expense
Net Interest Income
% Change (Y-o-Y)
Other Income
Net Income
Operating Expenses
Operating Profit
% Change (Y-o-Y)
Other Provisions
Profit before Tax
Tax Provisions
Net Profit
% Change (Y-o-Y)
Operating Metrics
NIM (Reported,%)*
NIM (Cal, %)#
Deposit Growth (%)
Loan Growth (%)
CASA Ratio (%)
Tax Rate (%)
Asset Quality
OSRL (INR b)
OSRL (%)
Gross NPA (INR b)
Gross NPA (%)
E: MOSL Estimates; * Reported on
October 2012
FY13
3.5
1.9
1.9
2.0
2.1
0.2
0.1
0.1
0.1
0.1
18.3
18.9
20.2
20.0
20.9
1.0
1.0
1.0
1.0
1.0
total assets; # Cal. on interest earning assets
C63

Sector: Financials
ICICI Bank
BSE Sensex
18,763
S&P CNX
5,703
Bloomberg
ICICIBC IN
Equity Shares (m)
1,152.8
1,6,12 Rel Perf (%)
8/13/8
Mcap (INR b)
1,218.8
Mcap (USD b)
23.1
CMP: INR1,057
Buy
Year Net Income PAT

EPS
EPS
P/E
AP/E* ABV* AP/ABV* Core RoAA
End
(X)
(INR)
(X) RoAE (%) (%)
3/11A 156,648 51,514 44.7
23.9
19.7
371
11.5
1.3
3/12A 182,369 64,653 56.1
25.4
18.9
15.6
409
2.1
12.8
1.5
3/13E 220,063 78,775 68.3
21.8
15.5
12.6
453
1.9
14.2
1.5
3/14E 256,506 90,734 78.7
15.2
13.4
10.7
504
1.7
14.7
1.5
* Price adjusted for value of key ventures and BV adjusted for investments in these ventures
Loan growth is expected to remain healthy at 18% YoY, led by growth in the domestic segment. While on a YoY
basis, deposit growth is likely to be a moderate 14%, on a QoQ basis, it is likely to be in line with loan growth.
Fee income is expected to be muted. However, trading profits as against trading loss of INR800m in 2QFY12
would provide cushion to non-interest income.
Asset quality has been holding fairly well over the past few quarters. We expect this to continue, given the
benign asset quality in the retail segment, changing loan portfolio mix (unsecured retail loans now constitute
just 1.3% of overall loans as against 9%+ in FY08), and better risk management practices.
Excluding subsidiaries, the stock trades at 1.7x FY14E ABV (BV adjusted for NPAs and investments in subsidiaries)
and 10.7x FY14E EPS. Maintain Buy.
Key things to watch for: (1) Margin performance, (2) Guidance on loan growth, (3) While performance on asset
quality has been strong, increasing stress in large and mid-corporate segments might lead to higher restructuring.
(INR Million)
Y/E March
Interest Income
Interest Expense
Net Interest Income
% Change (YoY)
Other Income
Net Income
Operating Expenses
Operating Profit
% Change (YoY)
Other Provisions
Profit before Tax
Tax Provisions
Net Profit
% Change (YoY)
Operating Metrics
NIM (Reported,%)
NIM (Cal, %)
Deposit Growth (%)
Loan Growth (%)
CASA Ratio (%)
Tax Rate (%)
Asset Quality
OSRL (INR b)
OSRL (%)
Gross NPA (INR b)
Gross NPA (%)
E: MOSL Estimates
October 2012
FY12
FY13
FY12
FY13E
1Q
76,185
52,076
24,109
21.1
16,429
40,538
18,200
22,338
2.1
4,539
17,800
4,480
13,320
29.8
2Q
81,576
56,512
25,064
13.7
17,396
42,460
18,922
23,537
6.4
3,188
20,350
5,318
15,032
21.6
3Q
85,919
58,799
27,120
17.3
18,919
46,039
19,168
26,871
14.7
3,411
23,460
6,179
17,281
20.3
4Q
91,746
60,699
31,048
23.7
22,285
53,332
22,216
31,116
35.0
4,693
26,423
7,405
19,018
31.0
1Q
95,457
63,527
31,929
32.4
18,799
50,729
21,235
29,493
32.0
4,659
24,835
6,684
18,151
36.3
2QE
98,015
65,433
32,582
30.0
19,902
52,484
22,054
30,430
29.3
5,449
24,981
6,745
18,236
21.3
3QE
100,263
65,924
34,339
26.6
22,060
56,399
22,996
33,403
24.3
5,963
27,440
7,409
20,031
15.9
4QE
102,354
65,433
36,920
18.9
23,530
60,451
24,595
35,856
15.2
5,201
30,654
8,298
22,356
17.6
335,427
228,085
107,342
19.0
75,028
182,369
78,504
103,865
14.8
15,830
88,034
23,382
64,653
25.5
396,088
260,317
135,771
26.5
84,292
220,063
90,880
129,183
24.4
21,273
107,910
29,136
78,775
21.8
2.6
2.5
14.8
19.7
40.0
25.2
2.6
2.5
9.9
20.5
38.3
26.1
2.7
2.5
19.7
19.1
39.0
26.3
3.0
2.8
13.3
17.3
39.0
28.0
3.0
2.8
16.1
21.6
39.1
26.9
2.8
13.6
18.2
27.0
2.8
12.2
15.7
27.0
2.9
20.6
15.4
27.1
2.7
2.6
13.3
17.3
39.0
26.6
2.8
20.6
15.4
27.0
19.7
0.9
99.8
4.4
25.0
1.1
100.2
4.1
30.7
1.2
97.2
3.8
42.6
1.7
94.8
3.6
41.7
1.6
98.2
3.5
99.2
3.5
102.2
3.5
104.1
3.5
42.6
1.7
94.8
3.6
104.1
3.5
C64

Sector: Financials
IDFC
BSE Sensex
S&P CNX
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
5,703
IDFC IN
1,512.4
162/90
6/11/25
233.6
4.4
CMP: INR154
Buy
Year
Net Inc.
PAT
End
(INR m) (INR m)
3/11A
25,455
12,817
3/12A
29,788
15,540
3/13E
33,582
16,466
3/14E
39,479
20,047
*Adjusted for Investment in
EPS
EPS
(INR)
Gr. (%)
8.8
7.4
10.3
17.1
10.9
6.0
13.3
21.7
subsidaries , Prices
P/E
(x)
15.0
14.2
11.7
adjusted
ABV
AP/ABV
RoAA
Core
(INR)*
(x)
(%) RoE (%)
60.6
3.2
17.8
72.7
1.8
2.9
16.2
80.7
1.6
2.5
14.8
90.5
1.5
2.6
16.0
for other ventures
Loan growth is likely to remain strong. We model in 4% QoQ and 33% YoY loan growth.
We expect spreads to remain largely stable on a QoQ basis, translating into ~4% QoQ and 32% YoY growth in NII.
We factor modest gains of INR300m from principal investments as against INR2.4b in 2QFY12 (one-off; IDFC had
booked gains on partial stake sale in NSE).
Revenues from Investment Banking and Broking likely to remain muted sequentially, given the subdued activity
levels in capital markets. However, we expect revenues from Asset Management to improve marginally QoQ.
Asset quality is expected to remain stable. However, we conservatively model in provisions of INR1b as against
INR631m in 2QFY12.
The stock trades at 11.7x FY14E EPS and 1.5x FY14E ABV. Maintain Buy.
Key things to watch for: (1) Business growth guidance, (2) Movement in spreads, (3) Emerging asset quality
trends.
(INR Million)
Y/E March
NII
% Change (YoY)
- Infra Loans
- Treasury
Fees
- Asset management
- IB and Broking
- Loan related/others
Principal investments
Other Income
Net Income
% Change (YoY)
Operating Expenses
Operating profit
% Change (YoY)
Provisions
PBT
Tax
PAT
Less: Consol Adjustments
Consol PAT
% Change (YoY)
E: MOSL Estimates
October 2012
FY12
1Q
4,830
43.3
4,280
550
1,165
620
150
395
(20)
76
6,051
(1.1)
1,142
4,909
399
4,509
1,378
3,132
(4.8)
3,136
(6.2)
2Q
4,980
33.2
4,390
590
1,480
800
180
500
2,430
11
8,901
36.9
1,314
7,587
44.0
631
6,956
1,715
5,241
(1.7)
5,243
54.9
FY13
3Q
5,460
18.7
4,730
730
1,220
680
240
300
910
7
7,597
15.1
1,266
6,331
27.0
978
5,353
1,537
3,816
4.1
3,812
18.6
4Q
5,860
22.6
5,400
460
1,037
600
140
297
290
63
7,251
3.4
1,505
5,746
13.0
838
4,908
1,590
3,319
(29.7)
3,348
16.5
1Q
6,290
30.2
5,550
740
1,392
640
90
662
20
14
7,716
27.5
1,160
6,556
34.0
1,026
5,530
1,713
3,817
19.2
3,798
21.1
2QE
6,548
31.5
5,763
786
1,145
750
95
300
300
40
8,033
(9.7)
1,240
6,793
(10.0)
1,000
5,793
1,796
3,997
(5.0)
4,002
(23.7)
3QE
6,882
26.1
6,022
860
1,270
800
145
325
325
65
8,542
12.5
1,400
7,142
13.0
1,000
6,142
1,904
4,238
(5.0)
4,243
11.3
4QE
7,301
24.6
6,352
949
1,530
940
208
382
379
81
9,291
28.1
1,842
7,449
30.0
1,051
6,398
1,984
4,413
(9.2)
4,423
32.1
FY12
FY13E
21,130
28.1
18,800
2,330
4,902
2,700
710
1,492
3,610
157
29,799
13.6
5,227
24,572
22.0
2,846
21,726
6,219
15,508
(32.1)
15,540
21.2
27,022
27.9
23,687
3,335
5,336
3,130
538
1,669
1,024
200
33,582
12.7
5,642
27,941
14.0
4,077
23,864
7,398
16,466
0.0
16,466
6.0
C65

Sector: Financials
Indian Bank
BSE Sensex
S&P CNX
18,763
5,703
Bloomberg
INBK IN
Equity Shares (m)
429.8
52 Week Range (INR)
265/152
1,6,12 Rel Perf (%)
12/-23/-25
Mcap (INR b)
82.6
Mcap (USD b)
1.6
CMP: INR192
Year Net Income
End
(INR m)
3/11A
52,180
3/12A
56,502
3/13E
60,014
3/14E
68,846
Buy
PAT
EPS
(INR m) (INR)
17,141 39.9
17,470 40.6
18,386 42.8
19,621 45.7
EPS
Gr. (%)
10.2
1.9
5.2
6.7
P/E
(X)
4.7
4.5
4.2
BV
(INR)
184
215
248
283
P/BV
(X)
0.9
0.8
0.7
P/ABV
(X)
0.9
0.8
0.7
RoAA
(%)
1.5
1.3
1.2
1.1
RoAE
(%)
22.9
19.8
18.0
16.8
We expect business growth to moderate further, with a loan and deposit growth of 12-13%.
NIM is likely to remain stable on a QoQ basis, however, decline ~30bp on a YoY basis. Consequently, NII growth
would be restricted to just 5% YoY.
Asset quality is expected to be under pressure, led by increased stress in the large corporate segment.
Performance on recoveries and upgradations would be a key thing to watch for.
INBKs exposure to SEBs as at the end of 1QFY13 stood at INR50b, of which INR22b has been restructured.
Restructuring of SEBs and other corporate accounts would lead to an increase in the restructured portfolio.
The stock trades at 0.8x FY13E and 0.7x FY14E BV, and at 4.5x FY13E and 4.2x FY14E EPS. Maintain Buy.
Key things to watch for: (1) Asset quality outlook: Gross slippages and restructured portfolio, (2) Margin
performance.
(INR Million)
Y/E March
Interest Income
Interest Expense
Net Interest Income
% Change (Y-o-Y)
Other Income
Net Income
Operating Expenses
Operating Profit
% Change (Y-o-Y)
Other Provisions
Profit before Tax
Tax Provisions
Net Profit
% Change (Y-o-Y)
Operating Metrics
NIM (%)
NIM (Cal, %)
Deposit Growth (%)
Loan Growth (%)
CASA Ratio (%)
Tax Rate (%)
Asset Quality
OSRL (INR b)
OSRL (%)
Gross NPA (INR b)
Gross NPA (%)
E: MOSL Estimates
October 2012
FY12
FY13
FY12
FY13E
1Q
27,814
17,514
10,300
11.2
2,493
12,793
4,982
7,811
-6.8
1,770
6,042
1,972
4,069
10.5
2Q
30,348
18,994
11,354
15.5
3,423
14,777
5,568
9,209
24.6
2,203
7,005
2,318
4,687
12.7
3Q
32,240
20,540
11,700
12.8
2,812
14,513
5,397
9,116
12.3
2,361
6,754
1,495
5,259
7.0
4Q
31,911
21,085
10,826
-2.6
3,070
13,896
5,923
7,973
-11.7
5,618
2,354
-1,100
3,454
-21.3
1Q
33,738
22,206
11,532
12.0
2,227
13,759
5,356
8,402
7.6
1,457
6,945
2,328
4,617
13.5
2QE
34,530
22,540
11,991
5.6
2,958
14,949
6,041
8,908
-3.3
1,982
6,926
2,216
4,709
0.5
3QE
35,220
22,878
12,342
5.5
2,973
15,315
5,916
9,399
3.1
2,348
7,051
2,256
4,795
-8.8
4QE
35,799
22,832
12,968
19.8
3,024
15,991
6,517
9,474
18.8
3,158
6,316
2,052
4,264
23.4
122,313
78,133
44,180
9.5
12,322
56,502
21,870
34,632
8.3
11,953
22,679
5,209
17,470
1.9
139,287
90,455
48,832
10.5
11,181
60,014
23,830
36,183
6.2
8,945
27,238
8,852
18,386
5.2
3.4
3.6
21.3
21.3
31.3
32.6
3.8
3.8
18.6
23.4
30.0
33.1
3.6
3.7
17.8
19.1
31.3
22.1
3.2
3.3
14.2
20.4
31.5
(46.7)
3.3
3.5
15.0
13.8
29.3
33.5
3.5
12.6
11.5
32.0
3.5
13.3
13.2
32.0
3.5
15.0
14.7
32.5
3.4
3.6
14.2
20.4
31.5
23.0
3.5
15.0
14.7
32.5
52.5
6.4
8.1
1.0
51.3
5.9
10.5
1.2
55.7
6.3
11.9
1.4
89.0
9.8
18.5
2.0
99.2
10.6
15.5
1.7
18.1
1.9
20.8
2.1
22.7
2.2
89.0
9.8
18.5
2.0
22.7
2.2
C66

Sector: Financials
IndusInd Bank
BSE Sensex
S&P CNX
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
5,703
IIB IN
467.7
356/222
5/9/20
165.5
3.1
CMP: INR354
Year Net Income
End
(INR m)
3/11A
20,902
3/12A
27,160
3/13E
35,438
3/14E
44,971
Buy
PAT
EPS
(INR m) (INR)
5,773
12.4
8,026
17.2
10,287
22.0
12,844
27.5
EPS
Gr. (%)
45.3
38.5
28.2
24.9
P/E
(X)
20.6
16.1
12.9
BV
(INR)
82
97
115
139
P/BV
(X)
3.7
3.1
2.5
P/ABV
(X)
3.7
3.1
2.6
RoAA
(%)
1.4
1.6
1.6
1.7
RoAE
(%)
19.3
19.2
20.7
21.6
We expect IIB to report above industry business growth, with loan growth of 30% and deposit growth of 23%.
Margins are likely to expand ~10bp, led by decline in cost of funds and higher proportion of fixed loans. As a
result, NII is expected to grow 25%. Traction in savings account (SA) deposits is likely to continue, providing
further cushion to margins.
Fee income growth expected to be strong at 30%.
Asset quality is likely to remain healthy. In 1QFY13, IIB had reported a slippage ratio of 1.5%, led by higher
slippages in the corporate segment.
The stock trades at 3,1x FY13E and 2.5x FY14E BV, and at 16.1x FY13E and 12.9x FY14E EPS. Maintain Buy.
Key things to watch for: (1) IIB has shown commendable performance on the asset quality front over the last
few quarters; however, given its high exposure to the CV segment, performance on asset quality needs to be
watched, (2) Growth in SA deposits, (3) Branch additions.
(INR Million)
Y/E March
FY12
1Q
11,646
7,746
3,900
31.9
2,154
6,054
2,937
3,117
35.2
446
2,671
870
1,802
52.0
2Q
13,239
9,047
4,192
27.1
2,392
6,584
3,254
3,330
27.2
470
2,860
929
1,931
45.0
3Q
13,897
9,591
4,307
18.6
2,651
6,958
3,465
3,492
19.9
428
3,064
1,005
2,060
33.9
FY13
FY13E
4Q
14,810
10,166
4,644
19.7
2,921
7,565
3,774
3,791
27.2
460
3,331
1,097
2,234
30.1
1Q
16,320
11,479
4,841
24.1
3,188
8,029
3,989
4,040
29.6
535
3,505
1,143
2,363
31.1
2QE
16,941
11,709
5,232
24.8
3,264
8,495
4,195
4,300
29.1
625
3,675
1,194
2,481
28.5
3QE
17,492
11,885
5,607
30.2
3,494
9,102
4,474
4,628
32.5
725
3,903
1,268
2,635
27.9
4QE
18,012
12,012
6,000
29.2
3,812
9,812
4,823
4,989
31.6
832
4,157
1,347
2,809
25.8
53,592
36,549
17,042
23.8
10,118
27,160
13,430
13,730
26.9
1,804
11,927
3,900
8,026
39.0
68,765
47,085
21,680
27.2
13,758
35,438
17,481
17,957
30.8
2,717
15,240
4,953
10,287
28.2
3.3
3.3
23.3
34.0
27.3
32.9
3.2
3.3
27.8
31.2
27.9
32.6
3.4
23.4
29.8
32.5
3.4
23.7
27.8
32.5
3.5
25.0
25.0
32.4
3.3
3.6
23.3
34.0
27.3
32.7
3.7
25.0
25.0
32.5
0.9
0.9
0.3
0.2
3.5
3.7
4.1
4.6
5.1
1.0
1.0
1.0
1.1
1.2
assets, yearly on interest earning assets
0.9
0.3
3.5
1.0
5.1
1.2
Interest Income
Interest Expense
Net Interest Income
% Change (YoY)
Other Income
Net Income
Operating Expenses
Operating Profit
% Change (YoY)
Other Provisions
Profit before Tax
Tax Provisions
Net Profit
% Change (YoY)
Operating Metrics
NIM (Reported,%)
3.4
3.4
3.3
NIM (Cal, %)
3.3
3.4
3.3
Deposit Growth (%)
28.8
22.6
32.3
Loan Growth (%)
31.4
28.5
29.7
CASA Ratio (%)
28.2
27.7
26.5
Tax Rate (%)
32.5
32.5
32.8
Asset Quality
OSRL (INR b)
1.1
0.9
0.7
OSRL (%)
0.4
0.3
0.2
Gross NPA (INR b)
3.1
3.3
3.3
Gross NPA (%)
1.1
1.1
1.0
E: MOSL Estimates; Quarterly calculated margins based on total
October 2012
FY12
C67

Sector: Financials
ING Vysya Bank

BSE Sensex
S&P CNX
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
5,703
VYSB IN
150.1
415/276
4/8/20
61.1
1.2
CMP: INR407
Year Net Income
End
(INR m)
3/11A
16,614
3/12A
18,781
3/13E
22,409
3/14E
26,809
Buy
PAT
EPS
(INR m) (INR)
3,186
26.3
4,563
30.4
5,313
35.4
6,055
40.3
EPS
Gr. (%)
42.3
15.4
16.4
14.0
P/E
(X)
13.4
11.5
10.1
BV
(INR)
208
258
288
322
P/BV
(X)
1.6
1.4
1.3
P/ABV
(X)
1.6
1.4
1.3
RoAA
(%)
0.9
1.1
1.0
1.0
RoAE
(%)
13.4
14.3
13.0
13.2
Business growth is expected to be above industry average, with loans and deposits growing at 21-22% YoY.
Though margins would be lower by 10bp on a YoY basis, they would be stable QoQ at 3.3%. NII is likely to grow
16% YoY and 3% QoQ.
Macro-economic challenges coupled with high exposure to the SME segment could lead to some pressure on
asset quality. In 1QFY13, slippages increased QoQ to INR1b, led by higher slippages in the mid-corporate and
SME segments. We expect similar run-rate of slippages to continue; upgradations and recoveries need to be
watched.
Key things to watch for: (1) Margin movement, (2) Fee income and opex growth, which would be key factors for
RoA improvement, (3) Performance on asset quality.
(INR Million)
Y/E March
Interest Income
Interest Expense
Net Interest Income
% Change (Y-o-Y)
Other Income
Net Income
Operating Expenses
Operating Profit
% Change (Y-o-Y)
Other Provisions
Profit before Tax
Tax Provisions
Net Profit
% Change (Y-o-Y)
Operating Metrics
NIM (Reported,%)
NIM (Calculated,%)
Deposit Growth (%)
Loan Growth (%)
CASA Ratio (%)
Tax Rate (%)
Asset Quality
Gross NPA (INR b)
Gross NPA (%)
PCR ( %)
E: MOSL Estimates
October 2012
FY12
FY13
FY12
FY13E
1Q
8,708
6,088
2,620
10.1
1,405
4,025
2,557
1,468
-1.2
62
1,406
466
940
36.1
2Q
9,331
6,295
3,036
19.4
1,625
4,661
2,767
1,894
2.8
175
1,719
566
1,154
53.3
3Q
9,915
6,679
3,236
31.6
1,699
4,935
2,822
2,113
32.5
334
1,779
584
1,195
44.0
4Q
10,615
7,423
3,192
18.9
1,968
5,160
2,957
2,203
53.9
566
1,637
363
1,274
39.5
1Q
11,714
8,281
3,433
31.0
1,710
5,142
2,967
2,175
48.1
267
1,908
607
1,301
38.4
2QE
11,973
8,447
3,527
16.1
1,860
5,387
3,133
2,254
19.0
325
1,929
608
1,321
14.5
3QE
12,248
8,616
3,632
12.2
2,065
5,697
3,289
2,408
13.9
450
1,958
627
1,331
11.4
4QE
12,516
8,720
3,796
18.9
2,387
6,183
3,455
2,729
23.8
711
2,018
659
1,359
6.7
38,568
26,485
12,084
20.1
6,698
18,781
11,102
7,679
20.9
1,138
6,541
1,978
4,563
43.2
48,451
34,064
14,387
19.1
8,022
22,409
12,844
9,565
24.6
1,752
7,813
2,500
5,313
16.4
3.0
3.0
29.4
25.5
33.8
33.1
3.4
3.3
17.8
22.8
32.6
32.9
3.5
3.5
16.1
22.6
32.6
32.8
3.3
3.2
16.6
21.8
34.2
22.2
3.3
3.2
14.6
22.9
33.3
31.8
3.2
21.5
20.7
31.5
3.2
25.0
19.8
32.0
3.2
22.0
20.0
32.7
3.3
3.2
16.6
21.8
34.2
30.2
3.2
22.0
20.0
32.0
5.2
2.2
83.9
5.1
2.0
84.8
5.4
2.0
85.0
5.6
1.9
90.7
5.9
2.0
90.4
6.4
2.1
86.0
6.9
2.1
82.0
7.5
2.1
79.3
5.6
1.9
90.7
7.5
2.1
79.3
C68

Sector: Financials
Kotak Mahindra Bank

BSE Sensex
S&P CNX
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
5,703
KMB IN
740.7
650/418
6/15/27
479.9
9.1
CMP: INR648
Year
End
3/11A
3/12A
3/13E
3/14E
Neutral
Cons. PAT Cons. EPS EPS

(INR m)
(INR) Gr. (%)
15,667
21.3
13.3
18,322
24.7
16.3
19,420
26.2
6.0
22,046
29.8
13.5
P/E Cons. BV P/BV

(X)
(INR)
(X)
148.8
26.2 174.2
3.7
24.7 199.6
3.2
21.8 228.5
2.8
P/ABV
(X)
3.8
3.3
2.9
Cons. RoAA* Core

RoE (%) (%) RoE*(%)
16.6
1.9
15.4
15.4
1.9
15.4
14.0
1.5
13.7
13.9
1.5
13.8
* For standalone Bank
Lending business
Growth in profit of the lending business is likely to remain muted. We expect ~8% YoY growth in lending
business profit.
Growth in loans and deposits for the standalone bank is expected to be ~19% YoY and ~21% YoY, respectively.
Margins are likely to remain under pressure on a QoQ basis.
For Kotak Prime, we expect loan growth of ~18% YoY and PAT growth of ~10% YoY.
Capital Market and Asset Management business
We expect PAT of capital market related businesses to grow by ~22% YoY on a lower base. Profit from the
Securities business would grow sequentially but decline on a YoY basis.
In the Asset Management business, we expect strong growth in profit to INR155m v/s INR80m in 2QFY12 and
INR70m in 1QFY13, as international subsidiaries are expected to report profit in 2QFY13 v/s net loss of INR70m
in 2QFY12.
The stock trades at 3.2x FY13E and 2.8x FY14E BV. Maintain Neutral.
Key things to watch for: (1) Business growth and outlook, (2) Improvement in CASA ratio, (3) Asset quality
trends and (4) Margin movement.
KMB Group: Earnings Trends
(INR Million)
Y/E March
Kotak Bank (Standalone)
Kotak Prime
Kotak Mah. Investments
Lending Business
YoY Growth (%)
Kotak Securities
Kotak Mah. Capital Co.
Capital Market Business
YoY Growth (%)
Intl. Subsidiaries
Kotak Mah. AMC & Trustee Co.
Kotak Investment Advisors
Asset Management Business
YoY Growth (%)
Consol. PAT excluding Kotak Life
YoY Growth (%)
Kotak OM Life Insurance
Consolidation Adjust.
Consol. PAT Including Kotak Life
YoY Growth (%)
E: MOSL Estimates
October 2012
FY12
1Q
2,520
940
30
3,490
29.3
230
10
240
-55.8
-30
90
110
170
-52.0
3,900
8.4
460
-200
4,160
26.9
2Q
2,600
900
30
3,530
33.7
290
-40
250
-57.7
-70
70
80
80
-60.7
3,860
12.4
530
-60
4,330
18.9
FY13
3Q
2,760
1,040
30
3,830
34.7
240
40
280
-48.4
-40
30
70
60
-71.3
4,170
16.0
470
-10
4,630
20.7
4Q
2,970
970
60
4,000
17.5
500
50
550
-16.9
30
30
100
160
-34.7
4,710
9.2
570
-70
5,210
6.2
1Q
2,820
940
40
3,800
8.9
230
60
290
20.8
-50
40
80
70
-58.8
4,160
6.7
320
-50
4,430
6.5
2QE
2,764
991
44
3,799
7.6
256
49
305
22.0
10
55
90
155
93.8
4,259
10.3
583
-30
4,812
11.1
3QE
2,718
1,034
48
3,800
-0.8
269
54
323
15.3
20
70
95
185
208.3
4,308
3.3
541
-30
4,818
4.1
4QE
2,892
1,092
53
4,038
0.9
288
59
347
-36.9
20
95
110
225
40.6
4,610
-2.1
790
-40
5,359
2.9
FY12
FY13E
10,850
3,849
153
14,852
28.0
1,260
60
1,320
-43.5
-110
220
360
470
-53.4
16,642
11.3
2,030
-349
18,322
16.9
11,195
4,057
185
15,437
3.9
1,044
222
1,265
-4.2
0
260
375
635
35.1
17,337
4.2
2,233
-150
19,420
6.0
C69

Sector: Financials
LIC Housing Finance

BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
5,703
LICHF IN
505.0
290/206
7/-1/21
142.3
2.7
CMP: INR282
Year
End
3/11A
3/12A
3/13E
3/14E
Net Inc.
(INR m)
17,710
16,240
19,094
25,128
Buy
PAT Adj. PAT EPS

EPS
(INR m) (INR m)* (INR)* Gr. (%)
9,743 10,285
21.7
55.5
9,142 10,011 19.8
-8.4
11,015 11,015 21.8
10.0
15,987 14,827 29.4
34.6
P/E
(X)
14.2
12.9
9.6
BV
(INR)
87.8
112.5
129.2
153.5
P/BV
Adj. Adj. RoAE
(X) RoAA (%) (%)
2.4
27.2
2.5
1.8
20.3
2.2
1.6
18.0
1.8
1.7
20.8
*Adjusted for extraordinary items
LICHFs loan growth is likely to remain healthy on the back of buoyant demand in the individual loans segment.
We expect loan growth to remain healthy at ~23% YoY. However, the YoY decline in the builder loan portfolio is
likely to continue.
We expect margins to expand ~10bp QoQ, led by (1) moderating cost of funds, and (2) re-pricing of teaser rate
loans (expected re-pricing of loans worth ~INR25b in 2QFY13), which would provide cushion to margins.
Asset quality is likely to remain healthy. We model provisioning expense of ~INR200m (v/s INR2b of provisions
in 2QFY12 on account of change in the standard asset provisioning requirement by NHB) for the quarter.
The stock trades at 2.2x FY13E and 1.8x FY14E BV. Maintain Buy.
Key things to watch for: (1) Outlook on disbursement growth, especially builder loans, (2) Movement in spreads,
(3) Emerging asset quality trends.
(INR Million)
Y/E March
Interest Income
Interest Expenses
Net Interest Income
YoY Growth (%)
Fees and other income
Net Income
YoY Growth (%)
Operating Expenses
Operating Profit
YoY Growth (%)
Provisions and Cont.
Profit before Tax
Tax Provisions
Net Profit
YoY Growth (%)
Adj PAT (Post Tax)
YoY Growth (%)
Operating Metrics
Loan Growth (%)
Borrowings Growth (%)
Tax Rate (%)
E: MOSL Estimates
October 2012
FY12
FY13
FY12
FY13E
1Q
13,581
9,971
3,610
22.6
601
4,211
24.7
422
3,789
27.0
334
3,454
889
2,565
21.0
2,565
21.0
2Q
14,580
11,238
3,342
9.5
574
3,916
5.9
561
3,354
5.1
2,047
1,307
323
984
-58.0
2,527
7.9
3Q
15,387
12,129
3,258
-7.5
538
3,795
-30.4
534
3,262
-33.3
-797
4,059
1,003
3,056
43.1
2,258
-23.5
4Q
16,280
12,572
3,708
-11.8
610
4,318
-16.7
854
3,464
-22.7
-24
3,488
952
2,536
-19.4
2,536
-12.9
1Q
17,179
13,674
3,505
-2.9
494
3,999
-5.0
521
3,479
-8.2
436
3,043
766
2,277
-11.2
2,277
-11.2
2QE
18,038
14,221
3,817
14.2
603
4,420
12.9
690
3,730
11.2
200
3,530
971
2,559
160.1
2,559
1.3
3QE
18,869
14,718
4,151
27.4
676
4,826
27.2
715
4,111
26.0
225
3,886
1,069
2,817
-7.8
2,817
24.8
4QE
20,152
15,084
5,068
36.7
781
5,849
35.5
872
4,976
43.7
242
4,734
1,373
3,361
32.5
3,361
32.5
59,827
45,911
13,916
1.4
2,324
16,240
-8.3
2,371
13,870
-10.8
1,561
12,309
3,167
9,142
-6.2
10,011
-2.7
74,237
57,697
16,540
18.9
2,554
19,094
17.6
2,798
16,296
17.5
1,103
15,193
4,178
11,015
20.5
11,015
10.0
32.1
31.3
10.0
25.7
29.3
28.0
14.3
24.7
26.6
25.9
14.1
24.7
23.5
24.2
19.8
27.3
24.1
23.7
13.0
25.2
23.4
22.7
15.6
27.5
24.3
24.0
14.8
27.5
23.9
26.1
14.9
29.0
23.5
24.2
14.6
25.7
23.9
26.1
14.7
27.5
C70

Sector: Financials
M & M Financial Services

BSE Sensex
18,763
S&P CNX
5,703
Bloomberg
MMFS IN
Equity Shares (m)
102.7
1,6,12 Rel Perf (%)
12/27/26
Mcap (INR b)
92.3
Mcap (USD b)
1.8
CMP: INR898
Year Net Income
End
(INR m)
3/11A
13,173
3/12A
16,743
3/13E
22,688
3/14E
27,460
PAT
(INR M)
4,631
6,201
8,151
9,625
Buy
EPS
(INR)
45.2
60.4
79.4
93.7
EPS
Gr. (%)
26.0
33.6
31.4
18.1
P/E
(X)
14.9
11.3
9.6
BV
(INR)
243
287
346
415
P/BV
(X)
3.1
2.6
2.2
P/ABV RoA on
(X) AUM (%)
3.7
3.2
3.5
2.7
3.6
2.2
3.5
RoAE
(%)
22.0
22.8
25.1
24.6
MMFS will continue to benefit from its multi-product strategy and sustain the strong growth momentum in the
CV, used vehicle and car segments. We expect AUM growth to be healthy at ~32% YoY.
Margins are likely to remain stable on a sequential basis. In 1QFY13, gross spreads were 9.3%.
MMFS delivered strong asset quality performance in FY12, which continued in 1QFY13. As at June 2012, GNPAs
were 3.8% and NNPAs were 1.2%. We expect asset quality to remain healthy.
During the quarter, the company sold partial stakes in its insurance broking subsidiary. Gains on the same are
likely to be booked in 3QFY13.
Key things to watch for: (1) Business growth trends, (2) Movement in spreads, (3) Asset quality trends.
(INR Million)
Y/E March
Operating Income
Other Income
Total income
YoY Growth (%)
Interest Expenses
Net Income
Operating Expenses
Operating Profit
YoY Growth (%)
Provisions
Profit before Tax
Tax Provisions
Net Profit
YoY Growth (%)
Operating Metrics
AUM growth (%)
Borrowings growth (%)
Provisions/Operating Profits (%)
Tax Rate (%)
E: MOSL Estimates
October 2012
FY12
FY13
FY12
FY13E
1Q
5,538
64
5,603
39.6
2,160
3,443
1,369
2,074
25.5
561
1,513
491
1,022
37.7
2Q
6,491
159
6,650
38.9
2,589
4,061
1,521
2,539
22.3
523
2,016
661
1,355
16.3
3Q
7,378
36
7,414
39.9
3,150
4,264
1,467
2,797
22.8
494
2,303
756
1,547
33.5
4Q
8,393
77
8,470
44.6
3,304
5,166
1,603
3,563
45.0
142
3,421
1,144
2,277
45.4
1Q
8,351
39
8,390
49.8
3,475
4,916
1,667
3,248
56.6
854
2,395
784
1,610
57.6
2QE
8,810
100
8,910
34.0
3,596
5,314
1,884
3,430
35.1
650
2,780
917
1,863
37.4
3QE
9,295
100
9,395
26.7
3,722
5,673
1,858
3,815
36.4
750
3,065
1,011
2,054
32.7
4QE
10,382
133
10,515
24.1
3,729
6,786
2,131
4,654
30.6
728
3,926
1,302
2,624
15.3
27,425
521
27,946
41.3
11,203
16,743
5,920
10,823
29.0
1,570
9,254
3,051
6,202
33.9
36,838
372
37,210
33.2
14,523
22,688
7,540
15,148
40.0
2,982
12,167
4,015
8,152
31.4
38.9
49.2
39.8
27.1
32.4
40.7
51.1
37.5
20.6
32.8
40.1
49.5
34.4
17.7
32.8
36.2
44.3
31.0
4.0
33.4
37.9
44.8
33.9
26.3
32.8
31.6
34.0
35.4
18.9
33.0
27.9
24.1
32.7
19.7
33.0
25.6
24.9
31.4
15.6
33.2
36.2
44.3
35.4
14.5
33.0
25.6
24.9
33.2
19.7
33.0
C71

Sector: Financials
Oriental Bank of Commerce

BSE Sensex
S&P CNX
18,763
5,703
Bloomberg
OBC IN
Equity Shares (m)
291.8
52 Week Range (INR)
324/190
1,6,12 Rel Perf (%)
36/15/-11
Mcap (INR b)
88.0
Mcap (USD b)
1.7
CMP: INR302
Year Net Income
End
(INR m)
3/11A
51,376
3/12A
54,560
3/13E
64,461
3/14E
74,684
Buy
PAT
EPS
(INR m) (INR)
15,029 51.5
11,416 39.1
14,821 50.8
16,502 56.6
EPS
Gr. (%)
13.7
-24.0
29.8
11.3
P/E
(X)
7.7
5.9
5.3
BV
(INR)
350
380
419
462
P/BV
(X)
0.8
0.7
0.7
P/ABV
(X)
0.9
0.8
0.8
RoAA
(%)
1.0
0.7
0.8
0.7
RoAE
(%)
17.1
10.7
12.7
12.8
Focus on de-bulking of balance sheet coupled with higher base of 2QFY12 (sequential growth was 7.5%+) would
lead to moderation in business growth. We expect sub-10% YoY growth in loans and deposits.
Margins are likely to expand ~5bp, led by re-pricing of liabilities. However, pressure on loan yields would
contain the expansion. We expect NII to grow ~5% QoQ and 19% YoY.
Slippages are likely to remain elevated; continued traction in recoveries and upgradations would be the key.
With the cabinet approving the SEB debt restructuring package, the pending restructuring of SEB loans would
be important. Further stress in the large corporate segment could lead to increase in the restructuring pool.
Key things to watch for: (1) Performance on asset quality, especially on net slippages and restructured loans, (2)
Margin movement, (3) Fee income growth has been volatile in the last few quarters; improvement in fee
income growth would be a key positive, (4) Decrease in bulk deposits on the balance sheet.
(INR Million)
Y/E March
Interest Income
Interest Expense
Net Interest Income
% Change (YoY)
Other Income
Net Income
Operating Expenses
Operating Profit
% Change (YoY)
Other Provisions
Profit before Tax
Tax Provisions
Net Profit
% Change (YoY)
Operating Metrics
NIM (Rep, %)
NIM (Cal,%)
Deposit Growth (%)
Loan Growth (%)
CASA Ratio (%)
Tax Rate (%)
Asset Quality
OSRL (INR b)
OSRL (%)
Gross NPA (INR b)
Gross NPA (%)
E: MOSL Estimates
October 2012
FY12
FY13
FY12
FY13E
1Q
35,965
25,782
10,183
-3.7
3,238
13,421
5,408
8,014
-2.5
3,143
4,871
1,324
3,547
-2.4
2Q
38,011
28,116
9,895
-8.1
2,774
12,669
5,087
7,582
-5.9
4,853
2,729
1,051
1,677
-57.8
3Q
41,965
30,566
11,399
10.7
2,953
14,352
6,081
8,271
6.9
3,809
4,462
920
3,542
-13.2
4Q
42,208
31,526
10,682
5.4
3,438
14,119
6,580
7,539
-10.6
5,344
2,196
-453
2,649
-20.6
1Q
42,872
31,613
11,258
10.6
4,084
15,343
6,377
8,965
11.9
3,321
5,644
1,730
3,914
10.4
2QE
43,996
32,197
11,799
19.2
3,591
15,390
6,550
8,840
16.6
4,097
4,744
1,423
3,320
98.0
3QE
45,167
32,738
12,429
9.0
3,557
15,986
6,781
9,204
11.3
4,180
5,024
1,457
3,567
0.7
4QE
46,636
33,261
13,375
25.2
4,367
17,743
7,417
10,325
37.0
4,565
5,761
1,742
4,019
51.7
158,149
115,991
42,158
0.9
12,402
54,560
23,155
31,406
-3.2
17,148
14,258
2,842
11,416
-24.0
178,671
129,810
48,861
15.9
15,600
64,461
27,125
37,336
18.9
16,163
21,172
6,352
14,821
29.8
2.9
2.7
17.5
14.1
23.4
27.2
2.6
2.6
18.9
20.8
22.9
38.5
2.9
2.9
20.8
21.9
22.3
20.6
2.7
2.6
12.2
16.7
24.1
-20.6
2.8
2.7
9.4
16.0
24.0
30.7
2.8
8.4
10.5
30.0
2.8
7.9
9.7
29.0
2.9
16.0
15.0
30.2
2.8
2.7
12.2
16.7
24.1
19.9
2.7
16.0
15.0
30.0
36.6
3.7
20.3
2.1
41.2
3.9
31.1
3.0
60.9
5.5
32.3
2.9
95.1
8.4
35.8
3.2
109.5
9.6
33.8
3.0
34.8
3.0
36.0
3.0
37.0
2.8
95.1
8.4
35.8
3.2
37.0
2.8
C72

Sector: Financials

BSE Sensex
S&P CNX
18,763
5,703
Bloomberg
POWF IN
Equity Shares (m)
1,319.9
52 Week Range (INR)
224/131
1,6,12 Rel Perf (%)
11/0/10
Mcap (INR b)
249.0
Mcap (USD b)
4.7
CMP: INR189
Year
End
3/11A
3/12A
3/13E
3/14E
Net Inc.
(INR m)
36,736
43,756
54,505
61,599
Buy
Adj PAT
(INR m)
26,391
31,539
38,924
43,180
EPS
(INR)
23.0
23.9
29.5
32.7
EPS
Gr. (%)
16.0
3.9
23.4
10.9
P/E
(X)
7.9
6.4
5.8
BV
(INR)
133
158
177
200
P/BV Adj. RoAA Adj. RoAE

(X)
(%)
(%)
2.9
18.5
1.2
2.7
17.5
1.1
2.8
17.6
0.9
2.7
17.4
We expect loan growth to remain healthy at ~25% YoY. On a sequential basis, loans and borrowings are expected
to grow at ~2%.
After increasing sharply in 1QFY13 (+31bp QoQ), we expect margins to decline by ~10bp QoQ. As a result, NII
would grow ~30% YoY, but remain largely flattish sequentially.
We expect MTM loss of INR600m in 2QFY13 (due to higher proportion of unhedged foreign currency borrowings),
lower than the INR770m recorded in 1QFY13 (due to currency appreciation during the quarter).
Asset quality would be a key monitorable given the uncertain macro environment. We are conservatively
factoring in INR500m of provisions for the quarter.
Key things to watch for: (1) Managements outlook on business growth, (2) Asset quality trend, and (3) Impact
of SEB debt restructuring plan.
Y/E March
(INR Million)
FY12
1Q
2Q
3Q
Interest Income
28,480
30,740
32,130
Interest Expenses
18,580
19,940
21,160
Net Interest Income
9,900
10,800
10,970
YoY Gr %
15.4
20.5
18.5
Other Income
350
80
240
Net Operational Income
10,250
10,880
11,210
Exchange gain/(loss)
-750
-5,040
4,210
Total Net Income
9,500
5,840
15,420
YoY Gr %
10.3
-41.6
64.7
Operating Expenses
270
330
290
YoY Gr %
N.M.
-10.8
0.0
% to Income
2.8
5.7
1.9
Operating Profit
9,230
5,510
15,130
YoY Gr %
7.3
-42.8
66.8
Adjusted PPP (For Forex)
9,980
10,550
10,920
YoY Gr %
8.2
17.6
17.7
Provisions
70
0
390
PBT
9,160
5,510
14,740
Tax
2,298
1,320
3,660
Tax Rate %
25.1
24.0
24.8
PAT
6,862
4,190
11,080
YoY Gr %
5.1
-40.2
68.1
Adjusted PAT (For Forex)
7,424
8,023
7,915
E:MOSL Estimates; Quarterly and annual numbers would not
October 2012
FY13
4Q
1Q
2QE
3QE
4QE
35,890
39,000
39,780
40,377
41,725
23,600
25,060
25,749
26,393
27,375
12,290
13,940
14,031
13,984
14,351
45.8
40.8
29.9
27.5
16.8
530
90
150
200
260
12,820
14,030
14,181
14,184
14,611
200
-770
-600
-600
-530
13,020
13,260
13,581
13,584
14,081
48.6
39.6
132.5
-11.9
8.1
409
286
375
410
476
32.0
5.8
13.6
41.4
16.5
3.1
2.2
2.8
3.0
3.4
12,611
12,974
13,206
13,174
13,604
49.2
40.6
139.7
-12.9
7.9
12,411
13,744
13,806
13,774
14,134
51.4
37.7
30.9
26.1
13.9
960
20
500
1,000
980
11,651
12,954
12,706
12,174
12,624
3,455
3,240
3,431
3,287
3,414
29.7
25.0
27.0
27.0
27.0
8,196
9,714
9,275
8,887
9,210
35.2
41.6
121.4
-19.8
12.4
8,055
10,292
9,713
9,325
9,597
match due to differences in classification
FY12
FY13E
97,605
64,606
43,960
24.5
1,200
45,160
-1,380
43,780
19.2
1,294
32.5
3.0
42,486
18.8
43,861
23.0
1,420
41,066
10,733
26.1
30,333
15.8
31,417
126,025
84,940
56,305
37.0
700
57,005
-2,500
54,505
24.5
1,547
19.6
2.8
52,958
24.6
55,458
26.4
2,500
50,458
13,371
26.5
37,087
22.3
38,927
C73

Sector: Financials

BSE Sensex
S&P CNX
18,763
5,703
Bloomberg
PNB IN
Equity Shares (m)
339.2
1,6,12 Rel Perf (%)
18/-18/-27
Mcap (INR b)
284.8
Mcap (USD b)
5.4
CMP: INR840
Year Net Income
End
(INR m)
3/11A
154,199
3/12A
176,175
3/13E
203,863
3/14E
235,001
PAT
(INR m)
44,335
48,847
52,753
62,776
Buy
EPS
(INR)
139.9
144.0
155.5
185.1
EPS
Gr. (%)
13.0
2.9
8.0
19.0
P/E
(X)
5.8
5.4
4.5
BV
(INR)
632
777
906
1,059
P/BV
(X)
1.1
0.9
0.8
P/ABV
(X)
1.2
1.1
0.9
RoAA
(%)
1.3
1.2
1.1
1.1
RoAE
(%)
24.5
21.1
18.5
18.8
We expect loan growth to remain above industry average at 21% YoY. Deposit growth would be moderate at 16%
YoY on a higher base.
Margins are likely to be stable at ~3.6% QoQ, but would be lower by 35bp on a YoY basis. Consequently, NII is
likely to grow ~10% YoY and be flat QoQ.
Stress on the balance sheet has increased, with gross slippage ratio in the last two quarters at 4.5%+. We expect
slippages to remain high, but recoveries and upgradations could provide some respite to asset quality.
The pace of restructuring had slowed down in 1QFY13, with the bank restructuring loans worth INR12b as
against INR86b in 4QFY12. However, with referrals to CDR remaining at an elevated level, restructuring during
the quarter would be a key thing to watch for.
Key things to watch for: (1) Balance sheet growth and guidance, (2) Net slippages, (3) Outlook on restructuring,
(4) Margin movement, (4) CASA ratio.
(INR Million)
Y/E March
FY12
1Q
83,152
52,000
31,153
19.9
10,837
41,990
17,250
24,739
17.9
8,935
15,804
4,753
11,051
3.4
2Q
89,520
54,994
34,526
16.0
8,889
43,414
18,137
25,278
20.4
7,103
18,175
6,124
12,050
12.1
3Q
94,810
59,444
35,366
10.4
9,541
44,907
18,143
26,764
13.9
9,461
17,303
5,803
11,501
5.5
FY13
4Q
96,798
63,698
33,100
9.3
12,760
45,859
16,498
29,362
17.1
10,273
19,089
4,848
14,241
18.6
1Q
105,450
68,498
36,951
18.6
11,660
48,611
20,203
28,409
14.8
10,325
18,084
5,627
12,457
12.7
2QE
107,251
69,795
37,455
8.5
11,410
48,865
20,590
28,275
11.9
10,489
17,786
5,602
12,183
1.1
FY13E
3QE
110,304
71,131
39,173
10.8
11,957
51,130
20,880
30,250
13.0
11,180
19,070
6,007
13,063
13.6
4QE
113,782
72,433
41,349
24.9
13,908
55,257
21,815
33,441
13.9
11,368
22,073
7,022
15,051
5.7
364,280
230,131
134,149
13.6
42,026
176,175
70,028
106,148
17.2
35,773
70,375
21,528
48,847
10.2
436,787
281,858
154,929
15.5
48,934
203,863
83,488
120,375
13.4
43,362
77,012
24,259
52,753
8.0
3.5
15.8
21.3
31.50
3.5
15.0
16.0
31.81
3.8
3.5
21.3
21.3
36.2
30.6
3.4
15.0
16.0
31.50
126.9
142.2
230.6
7.9
87.2
142.2
Interest Income
Interest Expense
Net Interest Income
% Change (YoY)
Other Income
Net Income
Operating Expenses
Operating Profit
% Change (YoY)
Other Provisions
Profit before Tax
Tax Provisions
Net Profit
% Change (YoY)
Operating Metrics
NIM (Rep, %)
3.8
4.0
3.9
3.5
3.6
NIM (Cal, %)
3.6
3.9
3.8
3.3
3.5
3.5
Deposit Growth (%)
26.9
25.0
23.4
21.3
18.9
16.1
Loan Growth (%)
23.4
19.3
18.7
21.3
21.2
21.2
CASA Ratio (%)
38.1
37.1
36.2
36.2
35.6
Tax Rate (%)
30.1
33.7
33.5
25.4
31.1
31.5
Asset Quality
OSRL (INR b)
114.2
137.4
155.5
230.6
240.5
OSRL (%)
4.7
5.5
5.9
7.9
8.2
Gross NPA (INR b)
48.9
51.5
64.4
87.2
99.9
112.7
E: MOSL Estimates, Yearly numbers vary with full year number on account of reclassification
October 2012
FY12
C74

Sector: Financials
Rural Electrification Corp

BSE Sensex
S&P CNX
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
5,703
RECL IN
987.5
251/142
6/2/13
215.4
4.1
CMP: INR218
Year
End
3/11A
3/12A
3/13E
3/14E
Net Inc.
(INR m)
36,443
40,777
49,817
59,561
Buy
PAT
(INR m)
25,664
28,170
34,455
41,199
EPS
(INR)
25.9
28.6
34.9
41.7
EPS
Gr. (%)
28.2
10.1
22.2
19.6
P/E
(X)
7.6
6.3
5.2
BV
(INR)
129
149
174
202
P/BV
(X)
1.5
1.3
1.1
RoAA
(%)
3.4
3.0
3.1
3.1
RoAE
(%)
21.5
20.5
21.6
22.2
We expect loan growth momentum to remain healthy at ~23% YoY and ~4% QoQ.
After the sharp improvement in 1QFY13, we expect NIM to moderate by ~20bp QoQ in 2QFY13, as RECL utilized
the excess liquidity on the balance sheet in 1QFY13. The higher increase in borrowings during the quarter could
impact margins.
We are factoring in MTM loss of INR200m for 2QFY13 v/s INR374m in 1QFY13.
Asset quality is likely to remain a key monitorable given the uncertain macro environment. We conservatively
model in higher provisions (INR250m) during the quarter.
Key things to watch for: (1) Managements outlook on business growth and asset quality, (2) Movement in
spreads, and (3) Impact of SEB debt restructuring plan.
Y/E March
Net Interest Income
YoY Gr (%)
Other Operational Income
Net Operational Income
YoY Gr (%)
Other Income
Total Net Income
YoY Gr (%)
Operating Expenses
YoY Gr (%)
% to Income
Operating Profit
YoY Gr %
Op. Profit adj. forex gain /loss
YoY Gr (%)
Provisions
PBT
YoY Gr (%)
Tax
Tax Rate (%)
PAT
YoY Gr (%)
Adjusted PAT
YoY Gr (%)
E:MOSL Estimates; Quarterly and
October 2012
(INR Million)
FY12
1Q
2Q
3Q
9,097
9,501
10,052
17.3
21.8
18.5
393
171
136
9,490
9,673
10,188
18.9
18.1
12.6
136
-880
1,221
9,625
8,793
11,408
16.3
0.5
21.4
419
456
779
22.2
18.5
101.6
4.4
5.2
6.8
9,206
8,337
10,629
16.1
-0.3
17.9
9,278
9,597
9,763
16.9
18.7
8.6
250
0
241
8,956
8,337
10,389
12.9
-0.3
15.2
2,338
2,112
2,693
26.1
25.3
25.9
6,619
6,225
7,695
12.7
0.7
15.9
6,672
7,166
7,054
13.5
19.8
6.5
annual numbers would not
FY13
4Q
1Q
2QE
3QE
4QE
10,207
11,654
11,711
11,925
12,322
19.5
28.1
23.3
18.6
20.7
595
717
250
250
169
10,803
12,372
11,961
12,175
12,491
22.2
30.4
23.7
19.5
15.6
145
-133
200
300
451
10,948
12,239
12,161
12,475
12,943
9.2
27.2
38.3
9.4
18.2
671
456
560
660
831
19.7
8.7
22.9
-15.2
23.9
6.1
3.7
4.6
5.3
6.4
10,277
11,784
11,601
11,815
12,112
8.6
28.0
39.1
11.2
17.9
10,341
11,984
11,801
11,941
13,012
16.2
29.2
23.0
22.3
25.8
32
0
250
250
250
10,245
11,784
11,351
11,565
11,862
8.3
31.6
36.2
11.3
15.8
2,618
3,016
2,951
3,007
3,139
25.6
25.6
26.0
26.0
26.5
7,627
8,767
8,400
8,558
8,723
8.9
32.5
34.9
11.2
14.4
7,675
9,046
8,548
8,706
8,816
16.5
35.6
19.3
23.4
14.9
match due to differences in classification
FY12
FY13E
38,852
19.3
736
39,588
16.2
1,189
40,777
11.9
2,326
38.7
5.7
38,451
10.6
38,980
14.9
523
37,929
9.1
9,758
25.7
28,170
9.6
28,566
14.0
47,612
22.5
1,386
48,999
23.8
819
49,817
22.2
2,506
7.8
5.0
47,311
23.0
78,438
101.2
750
46,561
22.8
12,106
26.0
34,455
22.3
35,115
22.9
C75

Sector: Financials
Shriram Transport Finance

BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
CMP: INR619
5,703
SHTF IN
226.3
680/416
-6/-4/-14
140.1
2.7
Year Net Income

End
(INR m)
3/11A
30,680
3/12A
34,130
3/13E
36,273
3/14E
41,445
Buy
PAT
EPS
(INR m) (INR)
12,028 53.2
12,574 55.6
13,542 59.8
15,930 70.4
EPS
P/E
GR. (%) (X)
37.4
4.5
11.1
7.7
10.3
17.6
8.8
BV
(INR)
217
265
316
377
P/BV P/ABV RoA on AUM

(X)
(X)
(%)
3.2
2.3
2.4
2.8
2.0
2.0
2.6
1.6
1.7
2.6
RoAE
(%)
27.5
23.1
20.6
20.3
We expect AUM to grow ~15% YoY. On a sequential basis, disbursements are likely to remain largely stable. We
are modeling growth of 1.5% QoQ.
Margins are expected to remain stable sequentially. As a result, NII (including securitization income) growth
should be flat on a YoY basis.
Given the uncertain macro environment, asset quality continues to be a key monitorable. We have factored in
higher provisions (INR2b) similar to 1QFY13 levels.
We expect PAT to grow ~10% YoY and 2% QoQ.
The stock trades at 2x FY13E and 1.6x FY14E BV. Maintain Buy.
Key things to watch for: (1) Outlook on growth, (2) Movement in spreads, (3) Asset quality trend.
Quaterly Performance
(INR Million)
Y/E March
FY12
1Q
8,368
5,714
2,654
-15.1
5,167
7,821
16.0
477
8,297
16.8
1,678
6,620
18.3
1,420
5,200
1,727
3,473
20.2
Interest Income
Interest expenses
Net Interest Income
YoY Growth (%)
Securitisation income
Net Income (Incl. Securitization)
YoY Growth (%)
Fees and Other Income
Net Operating Income
YoY Growth (%)
Operating Expenses
Operating Profit
YoY Growth (%)
Provisions
Profit before Tax
Tax Provisions
Net Profit
YoY Growth (%)
Operating Metrics
AUM Growth (%)
Disbursement Growth (%)
Securitization Inc. / Net Inc. (%)
Tax Rate (%)
E: MOSL Estimates; * Quaterly nos
October 2012
2Q
9,675
6,153
3,522
-4.4
4,825
8,347
19.3
258
8,605
19.0
1,788
6,818
20.4
2,363
4,454
1,460
2,994
0.2
FY13
3Q
9,458
6,347
3,110
-23.2
4,927
8,038
4.5
294
8,331
5.7
1,867
6,465
5.5
1,920
4,545
1,518
3,027
0.4
4Q
9,158
6,259
2,899
-10.6
5,157
8,056
5.4
255
8,311
6.3
1,782
6,529
4.1
1,918
4,610
1,530
3,081
-9.6
22.3
19.9
16.2
11.1
20.4
5.0
-4.2
-19.7
62.3
56.1
59.1
62.0
20.2
20.8
22.4
21.4
33.2
32.8
33.4
33.2
and full year nos will not tally due to
1Q
8,876
6,173
2,702
1.8
5,323
8,025
2.6
702
8,727
5.2
1,940
6,787
2.5
2,026
4,761
1,543
3,219
-7.3
FY12
FY13E
35,581
23,950
11,632
-17.0
20,075
31,707
9.5
2,423
34,130
11.2
7,638
26,492
13.0
7,683
18,809
6,235
12,574
4.5
42,325
27,379
14,946
28.5
19,147
34,093
7.5
2,181
36,273
6.3
8,248
28,026
5.8
7,963
20,062
6,520
13,542
7.7
14.5
15.1
15.5
11.1
13.7
12.3
11.9
-2.0
53.5
49.3
47.9
58.8
22.1
23.5
23.1
22.4
32.5
32.5
32.6
33.1
way of reporting financial nos
15.5
12.5
52.8
22.7
32.5
2QE
10,384
6,729
3,655
3.8
4,729
8,384
0.4
450
8,834
2.7
1,952
6,882
0.9
2,000
4,882
1,587
3,295
10.1
13.3
12.2
61.0
22.2
32.4
different
3QE
11,215
7,032
4,183
34.5
4,530
8,714
8.4
475
9,189
10.3
2,159
7,029
8.7
1,975
5,054
1,643
3,412
12.7
4QE
11,850
7,445
4,405
51.9
4,565
8,970
11.3
553
9,523
14.6
2,196
7,327
12.2
1,963
5,365
1,748
3,617
17.4
C76

Sector: Financials
State Bank of India

BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Wk Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
5,703
SBIN IN
671.0
2,475/1,576
15/-2/0
1,501.7
28.5
CMP: INR2,238
Buy
Year Net Income

PAT
EPS
*Cons. Cons. Cons. BV *Cons.
*Cons. RoAA
End
(INR m) (INR m) (INR) EPS (INR) P/E (X)
(INR) P/BV (X) P/ABV (X) (%)
3/11A 483,510
82,645 130.2
168.3
1,303
0.7
3/12A 576,425 117,073 174.5
228.6
9.4
1,541
1.4
1.6
0.9
3/13E 636,297 151,763 226.2
284.5
7.5
1,773
1.2
1.5
1.0
3/14E 725,138 174,922 260.7
330.3
6.5
2,043
1.0
1.4
1.0
* Valuation multiples are adjusted for SBI Life's value
RoAE
(%)
12.7
16.0
17.4
17.5
Strong traction in CASA and fall in bulk deposits rates would keep a check on cost of funds. However, this would
be offset by the impact on yields, as the bank has reduced lending rates in specific segments. We expect
margins to remain largely stable QoQ; NII is likely to grow 3% QoQ and ~10% YoY.
We expect slippages to decline QoQ but still remain at an elevated level, given the challenging macro
environment. Improvement in upgrades and recoveries would be critical. In 1QFY13, gross slippages had increased
significantly to INR108.4b (annualized slippage ratio of 5.6%).
Restructuring is likely to increase sequentially, led by systemic restructuring.
Adjusted for the value of Insurance (INR107/share), the stock trades at 1x FY14E consolidated BV and 6.5x FY14E
consolidated EPS. Maintain Buy.
Key things to watch for: (1) Trend in slippages and recoveries, (2) Restructured loans and outlook on the same,
(2) Growth and margin outlook.
(INR Million)
Y/E March
Interest Income
Interest Expense
Net Interest Income
% Change (YoY)
Other Income
Net Income
Operating Expenses
Operating Profit
% Change (YoY)
Other Provisions
Profit before Tax
Tax Provisions
Net Profit
% Change (YoY)
Operating Metrics
NIM (Reported, %)
NIM (Cal, %)
Deposit Growth (%)
Loan Growth (%)
CASA Ratio (%)
Tax Rate (%)
Asset Quality
OSRL (INR b)
OSRL (%)
Gross NPA (INR b)
Gross NPA (%)
E: MOSL Estimates
October 2012
FY12
FY13
FY12
FY13E
1Q
241,974
144,979
96,995
32.8
35,342
132,338
59,913
72,424
18.1
41,569
30,855
15,020
15,835
-45.7
2Q
260,269
155,452
104,817
29.2
33,674
138,492
63,749
74,743
17.6
33,855
40,888
12,784
28,104
12.4
3Q
277,144
161,956
115,188
27.3
20,730
135,918
63,318
72,600
7.3
24,074
48,526
15,895
32,630
15.4
4Q
285,828
169,918
115,911
43.8
53,768
169,678
73,710
95,968
57.8
31,404
64,564
24,061
40,503
N.A.
1Q
289,167
177,979
111,189
14.6
34,988
146,177
64,410
81,767
12.9
24,563
57,204
19,688
37,516
136.9
2QE
295,095
180,318
114,777
9.5
36,421
151,198
66,538
84,660
13.3
28,245
56,415
19,463
36,952
31.5
3QE
301,432
182,934
118,499
2.9
39,885
158,384
72,969
85,414
17.7
29,886
55,528
19,157
36,371
11.5
4QE
309,663 1,065,215 1,195,358
187,877 632,304 729,107
121,786 432,911 466,250
5.1
33.1
7.7
58,752 143,514 170,046
180,538 576,425 636,297
85,173 260,690 289,091
95,365 315,735 347,206
-0.6
24.6
10.0
32,812 130,902 115,507
62,553 184,833 231,699
21,628
67,760
79,936
40,925 117,073 151,763
1.0
41.7
29.6
3.6
3.7
16.5
18.0
47.8
48.7
3.8
3.9
13.8
16.1
47.6
31.3
4.1
4.1
13.9
16.5
47.5
32.8
3.9
4.0
11.7
14.7
46.6
37.3
3.6
3.7
16.1
18.9
46.1
34.4
3.6
17.3
18.9
34.5
3.6
18.0
15.5
34.5
3.6
18.0
18.0
34.6
3.9
3.9
11.7
14.7
46.6
36.7
3.6
18.0
18.0
34.5
289
3.8
278
3.5
277
3.5
340
4.2
261
3.1
401
4.6
312
3.6
397
4.4
295
3.2
472
5.0
528
5.4
581
5.8
631
6.0
312
3.6
397
4.4
631
6.0
C77

Sector: Financials
Union Bank of India

BSE Sensex
S&P CNX
18,763
5,703
Bloomberg
UNBK IN
Equity Shares (m)
550.5
1,6,12 Rel Perf (%)
29/-16/-31
Mcap (INR b)
114.3
Mcap (USD b)
2.2
CMP: INR208
Year Net Income
End
(INR m)
3/11A
82,550
3/12A
92,413
3/13E
102,017
3/14E
119,311
Buy
PAT
EPS
(INR m) (INR)
20,819 39.6
17,871 32.3
23,221
42.0
26,585
48.1
EPS
GR. (%)
-3.6
-18.5
30.1
14.6
P/E
(X)
6.4
4.9
4.3
BV
(INR)
211
236
267
303
P/BV
(X)
0.9
0.8
0.7
P/ABV
(X)
1.0
1.0
0.9
RoAA
(%)
1.0
0.7
0.8
0.8
RoAE
(%)
20.9
14.8
16.7
16.9
Loan growth is expected to remain healthy at 22% YoY and deposit growth to improve to 17% YoY on lower base.
Margins are likely to expand by 10bp+ QoQ. In 1QFY13, UNBK reported a 25bp decline in NIM to 3%, led by
(1) higher reversal of interest income and (2) due to seasonal factors.
Fee income growth is expected to be healthy at ~15%, however, lower trading and forex gain would lead to
non-interest income growth of ~5%.
Slippages are expected to remain high. However, the high base of 1QFY13 would lead to a sequential decline.
In 1QFY13, UNBK had reported slippages of INR16.3b, led by slippages in few large corporate accounts. Recoveries
and upgradations are likely to remain healthy and provide cushion to asset quality.
Key things to watch for: (1) Margin movement, (2) Gross slippages and traction in recoveries and upgradations.
(INR Million)
Y/E March
Interest Income
Interest Expense
Net Interest Income
% Change (YoY)
Other Income
Net Income
Operating Expenses
Operating Profit
% Change (YoY)
Other Provisions
Profit before Tax
Tax Provisions
Net Profit
% Change (YoY)
Operating Metrics
NIM (Reported,%)
NIM (Cal, %)
Deposit Growth (%)
Loan Growth (%)
CASA Ratio (%)
Tax Rate (%)
Asset Quality
OSRL - Facilitywise (INR b)
OSRL (%)
Gross NPA (INR b)
Gross NPA (%)
E: MOSL Estimates
October 2012
FY12
FY13
FY12
FY13E
1Q
49,157
33,255
15,902
18.0
4,840
20,742
9,084
11,658
11.7
4,284
7,374
2,730
4,644
-22.8
2Q
51,104
34,492
16,611
8.2
5,009
21,621
9,571
12,050
6.6
6,228
5,822
2,297
3,524
16.2
3Q
53,747
35,939
17,809
10.2
5,921
23,730
10,889
12,841
1.8
9,727
3,114
1,144
1,970
-66.0
4Q
57,434
38,668
18,766
9.3
7,554
26,320
10,332
15,988
83.9
5,172
10,816
3,085
7,732
29.4
1Q
60,699
42,482
18,217
14.6
4,912
23,129
10,459
12,671
8.7
5,185
7,486
2,370
5,116
10.2
2QE
63,377
43,909
19,468
17.2
5,247
24,715
11,030
13,685
13.6
5,041
8,644
2,809
5,834
65.5
3QE
65,056
44,863
20,193
13.4
5,886
26,078
11,413
14,666
14.2
5,600
9,066
2,946
6,119
210.6
4QE
67,972
46,838
21,134
12.6
6,960
28,094
12,464
15,631
-2.2
6,425
9,206
3,055
6,151
-20.4
211,443
142,354
69,089
11.1
23,324
92,413
39,875
52,538
22.0
25,410
27,128
9,256
17,871
-14.2
257,104
178,091
79,013
14.4
23,004
102,017
45,365
56,652
7.8
22,250
34,401
11,180
23,221
29.9
3.1
3.0
16.4
16.7
31.5
37.0
3.2
3.2
10.0
16.5
32.1
39.5
3.3
3.3
10.0
16.8
32.5
36.7
3.3
3.2
10.1
18.3
31.3
28.5
3.0
3.0
11.5
19.5
31.0
31.7
3.1
17.0
21.7
32.5
3.1
15.9
19.5
32.5
3.1
16.0
15.0
33.2
3.3
3.0
10.1
18.3
31.3
34.1
3.0
16.0
15.0
32.5
24.1
1.7
37.5
2.6
23.2
1.6
51.4
3.5
39.3
2.5
52.1
3.3
74.7
4.1
54.5
3.0
84.2
4.8
65.4
3.8
69.0
3.9
74.3
4.0
79.4
3.8
74.7
4.1
54.5
3.0
79.4
3.8
C78

Sector: Financials
Yes Bank
BSE Sensex
S&P CNX
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
5,703
YES IN
353.0
389/231
7/0/26
134.9
2.6
CMP: INR382
Year Net Income
End
(INR m)
3/11A
18,702
3/12A
24,728
3/13E
32,650
3/14E
40,727
Buy
PAT
EPS
(INR m) (INR)
7,271
20.9
9,770
27.7
12,506
35.4
15,167 43.0
EPS
Gr. (%)
48.9
32.1
28.0
21.3
P/E
(X)
13.8
10.8
8.9
BV
(INR)
109
132
162
197
P/BV
(X)
2.9
2.4
1.9
P/ABV
(X)
2.9
2.4
2.0
RoAA
(%)
1.5
1.5
1.5
1.5
RoAE
(%)
21.1
23.1
24.1
23.9
Loan growth is expected to be ~16% YoY as bank continues to focus on building granularity and invest in high
rated corporate papers. Deposit growth would be ~17%.
YES is focusing on increasing its CASA base to build its liability franchise. Its CASA ratio stood at 16.3% as at the
end of 1QFY13. Movement in CASA ratio remains a key parameter to monitor.
Margins are expected to remain largely stable QoQ, despite a decline in bulk deposit rates. As higher investment
in credit substitutes would put pressure on yields on assets.
YES has been able to manage asset quality fairly well as of 2QFY13. However, increasing stress in the large
corporate segment could throw a negative surprise.
Key things to watch for: (1) Business growth and outlook for FY14, (2) Margin movement in a falling interest rate
scenario, led by higher SA deposit rate, (3) CASA ratio, (4) Branch expansion.
(INR Million)
Y/E March
Interest Income
Interest Expense
Net Interest Income
% Change (Y-o-Y)
Other Income
Net Income
Operating Expenses
Operating Profit
% Change (Y-o-Y)
Other Provisions
Profit before Tax
Tax Provisions
Net Profit
% Change (Y-o-Y)
Operating Metrics
NIM (Reported,%)
NIM (Cal, %)
Deposit Growth (%)
Loan Growth (%)
CASA Ratio (%)
Tax Rate (%)
Asset Quality
OSRL (INR m)
OSRL in bp
Gross NPA (INR b)
Gross NPA (%)
E: MOSL Estimates
October 2012
FY12
FY13
FY12
FY13E
1Q
13,995
10,454
3,542
35.1
1,653
5,195
1,944
3,251
30.6
15
3,236
1,075
2,161
38.2
2Q
14,387
10,530
3,856
23.1
2,141
5,997
2,138
3,859
37.1
379
3,481
1,130
2,350
33.3
3Q
16,841
12,565
4,276
32.3
2,114
6,390
2,402
3,988
28.1
224
3,765
1,224
2,541
32.9
4Q
17,851
13,369
4,482
28.6
2,664
7,146
2,842
4,304
23.4
285
4,019
1,301
2,718
33.6
1Q
18,863
14,142
4,722
33.3
2,881
7,603
3,007
4,596
41.4
300
4,296
1,395
2,901
34.3
2QE
19,294
14,318
4,975
29.0
2,925
7,900
3,008
4,893
26.8
350
4,543
1,476
3,066
30.5
3QE
19,710
14,461
5,249
22.8
3,075
8,324
3,148
5,175
29.8
450
4,725
1,536
3,190
25.5
4QE
20,256
14,742
5,514
23.0
3,308
8,823
3,302
5,520
28.3
557
4,963
1,615
3,348
23.2
63,074
46,917
16,156
29.6
8,571
24,728
9,325
15,402
29.4
902
14,500
4,730
9,770
34.4
78,123
57,663
20,460
26.6
12,189
32,650
12,465
20,184
31.0
1,657
18,527
6,021
12,506
28.0
2.8
2.7
44.1
26.1
10.9
33.2
2.9
2.9
10.2
12.7
11.0
32.5
2.8
2.9
18.9
15.3
12.6
32.5
2.8
2.8
7.0
10.5
15.0
32.4
2.8
2.8
15.2
16.4
16.3
32.5
2.8
17.3
15.5
32.5
2.9
15.7
14.5
32.5
2.9
17.0
15.0
32.5
2.8
2.6
7.0
10.5
15.0
32.6
2.7
17.0
15.0
32.5
870
26
0.6
0.2
1,755
51
0.7
0.2
1,757
49
0.7
0.2
2,013
53
0.8
0.2
1,965
51
1.1
0.3
1.4
0.4
1.9
0.4
2.3
0.5
2,013
53
0.8
0.2
2.3
0.5
C79

Sector: Healthcare
Healthcare
Topline to grow by 21%, EBITDA by 22% on the back of strong operational
performance by Sun Pharmaceuticals, Ranbaxy, Divi's Laboratories, Cadila
and Lupin
Company Name
Biocon
Cadila Healthcare
For 2QFY13, we expect topline growth of 21% YoY for our universe (excluding oneoffs), with EBITDA growth at 22% YoY. Adjusted PAT is likely to grow 28% YoY. EBITDA
growth would be mainly led by strong performance by Sun Pharmaceuticals,
Ranbaxy, Cadila, Lupin and Divi's Laboratories, and would be partly aided by favorable
currency. Adjusted PAT growth at 28% would be higher than EBITDA growth, mainly
because of reversal of forex losses due to the appreciation of the INR v/s the USD in
the last few weeks.
Cipla
Dishman Pharma
Divis Laboratories
Dr Reddys Labs.
GSK Pharma
Glenmark Pharma
IPCA Laboratories
2QFY13 aggregates excluding one-offs
Healthcare Universe
YoY Growth (%)
EBITDA Margin
Net Profit Margin
Aggregates
Sales EBITDA Adj. PAT Sep-12 Sep-11 Chg.(bp) Sep-12 Sep-11 Chg.(bp)
MNC Pharma
14.9
20.1
10.5
25.7 24.6
111
21.0 21.8
-83
Big 4 Generics
21.8
25.7
14.5
23.1 22.4
71
15.5 16.4
-98
CRAMS
26.7
30.8
66.4
25.3 24.5
79
14.1 10.7
336
Second Tier generics 18.7
16.6
52.2
20.4 20.8
-37
13.8 10.8
303
Sector Aggregate
20.9
22.6
28.2
22.6 22.3
32
15.1 14.2
87
Note: Above numbers exclude one-offs to facilitate comparison of core operations. Big-4
Generics include Ranbaxy, Cipla, Dr Reddy's and Sun.
Lupin
Opto Circuits
Ranbaxy Labs.
Sanofi India
Strides Arcolab
Sun Pharmaceuticals
Torrent Pharma

CMP
(INR)
28.09.12
275
872
381
96
1,080
1,647
422
1,977
482
212
596
130
530
2,374
883
693
695
(INR million)
Rating
Sales
EBITDA
Net Profit
Sep.12
Var.
Var. Sep.12
Var.
Var. Sep.12
Var.
% YoY % QoQ
% YoY % QoQ
% YoY
Biocon
Neutral
6,067
19.3
5.2
1,453
8.9
18.4
886
3.4
Cadila Health
Buy
15,810
27.0
2.1
3,439
24.7
0.6
2,158
110.1
Cipla
Neutral
20,468
15.1
17.2
5,156
17.8
24.8
3,735
20.9
Dishman Pharma
Neutral
3,436
27.6
9.0
830
76.5
-0.7
304
LP
Divis Labs
Buy
4,932
39.3
5.3
1,833
45.2
-3.8
1,350
27.3
Dr Reddy s Labs
Buy
24,822
15.1
8.9
4,542
8.6
26.4
2,229
-17.0
Glenmark Pharma
Buy
11,589
25.0
17.5
2,076
19.9
12.8
1,426
91.5
GSK Pharma
Buy
6,674
9.8
2.4
2,082
18.3
2.7
1,720
17.8
IPCA Labs.
Buy
7,133
14.4
12.4
1,639
3.7
23.3
1,098
40.9
Jubilant Life
Neutral
12,803
22.2
3.6
2,691
14.0
-0.1
1,326
67.0
Lupin
Buy
20,925
27.2
2.1
3,674
32.9
12.4
2,442
21.5
Opto Circuits
Neutral
7,012
24.8
-1.9
1,885
21.9
-0.7
1,337
10.5
Ranbaxy Labs
Neutral
25,341
20.9
10.0
2,706
55.4
9.1
1,688
4.2
Sanofi India
Neutral
3,901
24.8
4.3
636
26.4
21.8
499
-8.9
Strides Arcolab
Buy
6,185
-19.6
21.7
1,555
-9.6
37.6
1,347
189.9
Sun Pharma
Neutral
22,526
26.4
-2.2
8,583
20.1
-17.5
7,063
29.5
Torrent Pharma
Buy
8,290
21.3
8.1
1,659
18.0
6.4
1,119
11.9
Sector Aggregate
207,915
19.7
6.8 46,439
20.2
4.9 31,728
28.2
Note: Historic numbers include one-offs and hence YoY comparison may not give the correct picture
Var.
% QoQ
12.4
10.8
22.2
-21.6
-19.4
-4.3
181.5
1.4
155.5
43.8
16.4
-3.1
-2.0
23.3
1050.3
5.2
9.8
16.7
Nimish Desai (NimishDesai@MotilalOswal.com)

October 2012
C80

Sector: Healthcare
Core 2QFY13 performance: Key highlights

Sun, Ranbaxy, Divi's, Cadila and Lupin to record strong operational improvement:
From our coverage universe, we expect Sun Pharmaceuticals, Ranbaxy, Divi's
Laboratories, Cadila and Lupin to record strong EBITDA growth for 2QFY13. We
attribute the following company-specific reasons for this performance:
1. Sun Pharmaceuticals: Expect strong operating performance, primarily led by
improvement in profitability of Taro and favorable currency.
2. Ranbaxy: Likely to report healthy growth in EBITDA, led by a very low base.
3. Divi's Laboratories: Strong operational performance, led by healthy topline
growth, favorable currency and low base effect.
4. Cadila: Expect strong growth in EBITDA, led by healthy topline growth, mainly
due to strong growth in the international business.
5. Lupin: Healthy growth in EBITDA, led by topline growth (mainly regulated and
semi-regulated markets) and partly due to favorable currency.
CRAMS companies to report strong operational performance: We expect Divi's
Laboratories and Dishman to report strong operational performance on a low base,
new order inflows and favorable currency.
Sector view
Generics
Emerging markets to help improve profitability gradually from 2012.
New launches imperative for driving growth in core US business.
Differentiation becoming imperative - low competition/patent challenge products,
brands, NCE research will be key differentiators.
Increasing MNC interest in Generics space - may lead to large acquisitions/supply
arrangements with Indian companies.
Top picks: Dr Reddy's, Cadila, IPCA and Torrent.
CRAMS (Contract Research & Manufacturing Services)
Favorable macro trends: India on the threshold of significant opportunity, given
the optimum combination of strong chemistry & regulatory skills and low-costs.
Inventory de-stocking impacted performance over the last couple of years. Expect
healthy performance FY13 onwards.
Top picks: Divi's Laboratories.
MNC Pharma
Portfolio realignment in favor of lifestyle products to drive growth in medium-tolong term.
Branded generics, patented products and in-licensing to drive long-term growth.
Parent's commitment to listed entity is imperative.
Short-term adverse impact likely from the proposed new pharma policy.
Top picks: GlaxoSmithKline Pharmaceuticals.
October 2012
C81

Sector: Healthcare
Proposed New Pharma Policy: Highlights

The GoM (Group of Ministers) has recently proposed the New Pharma Policy (although
the Supreme Court has raised some objections to it). We give below the key highlights
based on broad details released to the media:
All 348 drugs under the National List of Essential Medicines (NLEM) will come
under price control.
Price cap for these drugs will be calculated as the weighted average price (WAP)
of all the brands having market share of more than 1%. Players selling any of these
drugs at prices higher than WAP will have to lower their prices.
Combinations will be kept out of price controls.
These proposals will now be sent by the GoM to the Cabinet for a final approval.
Our view
Based on the overall details available (we are still awaiting the fine print and the
actual policy document), we expect MNC players to take the maximum hit due to
their premium pricing policy.
Among Indian players, companies with high exposure to anti-infectives may get
adversely impacted since such medicines account for 17% of NLEM. In our coverage
universe of Indian companies, Cipla, Cadila and Ranbaxy have high exposure to
anti-infectives. For the remaining companies, the impact is likely to be relatively
moderate-to-low. Actual impact on these companies may vary depending on their
positioning/pricing policy for each drug.
We await details from various companies on the exact impact.
Combinations to be kept outside price controls: The proposed policy is relatively
better than general expectations, since combination drugs have been kept outside
the purview of price control. It was generally perceived that combinations will be
subjected to price controls, thus increasing the overall span of price control to
~60%. If combinations are kept outside the purview of price controls, then the
span of price control will be 30-40% rather than 60%, which should please the
industry.
Market-based pricing: The GoM has resisted pressure of finalizing a cost-based
pricing policy, which is also incrementally positive, as for the first time, the policy
will make drug prices market-determined.
Trade channels to share part of the impact: The hit on the industry due to lower
prices will be partly compensated by lower margins for the trade/retail channels
for drugs that get impacted.
Preliminary estimates indicate that the hit to the overall industry will be higher
than the impact under the proposed NPPP (in October 2011), wherein the impact
was estimated at INR25b-30b. Once cleared by the Cabinet, prices of 60% of
essential medicines (NLEM) will be reduced by over 20%, while in certain cases
the prices may come down by even 70%.
This implies that under the new proposals, the overall impact on the industry will
be 2-3x that proposed under the NPPP.
October 2012
C82

Sector: Healthcare
The table below gives the impact on key companies if the same ratio is applied:
Proposed Pharma Policy: Impact on FY14 EPS (INR m)

Company
GSK Pharma
Ranbaxy
Cadila
Cipla
Dr Reddy's Lab
Glenmark
IPCA
Sun Pharma
Lupin
DF
Sales
27,905
25,701
27,151
43,220
17,101
13,950
10,050
38,734
28,284
% of Total
Sales
97
24
36
48
15
26
32
34
28
Impact on EPS (%)

NPPP w/o combinations
2x NPPP
3x NPPP
13
20-25
30-40
4
5-10
10-15
3
5-7
7-10
3
5-7
7-10
2
3-5
5-10
2
3-5
5-10
2
3-5
5-10
1
2
3-5
1
2
3-5
However, it should be noted that application of the above multiples may not give
the exact picture, as the NPPP had proposed bringing all combination drugs under
price control whereas the latest proposals exclude combination drugs from price
control. The table above gives our approximate estimates.
We note that MNCs like GlaxoSmithKline Pharmaceuticals will be adversely
impacted along with Indian players like Ranbaxy, Cipla and Cadila. While the actual
impact on these companies will be known only when further details on the policy
are available, we believe that these three companies will be relatively more
impacted, given their significant exposure to the anti-infective segment.
None of the companies have confirmed the impact depicted in the table above
and we await more clarity from the management of these companies.
The above view is based on the preliminary details that have been made public.
We will analyze the actual impact post the receipt of the final policy document.
Spate of US FDA clearances during the quarter

2QFY13 witnessed some positive news flows related to US FDA clearances for Indian
players. Some of the companies that had favorable outcome include:
1. Cadila: Resolved the US FDA warning letter for its Moraiya facility. This could
potentially have positive implications during the coming quarters, as the US FDA
starts clearing pending products from this facility.
2. Claris Lifesciences: Resolved the US FDA warning letter for its Gujarat facility. This
will help the company ramp up the US business gradually from CY13.
3. Sun Pharmaceuticals: US subsidiary, Caraco received US FDA clearance for resuming
manufacturing at its US facility. The manufacturing was stopped by the US FDA in
FY10.
Recent appreciation of the INR will reverse forex losses for many companies
The INR has depreciated by ~17% YoY against the USD but has appreciated ~5% from 30
June 2012. This appreciation is likely to partially reverse the forex losses recorded by
many pharmaceuticals companies in 1QFY13. Some of the key companies where such
reversals will result in significant positive impact on profits are: 1. Ranbaxy, 2. Cadila,
3. Dishman, 4. Glenmark, 5. IPCA Labs and 6. Jubilant Lifesciences.
October 2012
C83

Sector: Healthcare
Currency movement (INR/USD)

58
55
52
49
46
43
Sep-12
Aug-12
Jul-12
Jun-12
May-12
Apr-12
Mar-12
Feb-12
Jan-12
Dec-11
Nov-11
Oct-11
Sep-11
Aug-11
Jul-11
Jun-11
40
Source: Bloomberg
95
95
80
Sep-11
100
Sep-12
110
Aug-12
105
Jul-12
125
Jun-12
110
Sep-12
140
Jun-12
115
Sens ex Index
MOSL Hea l thca re Index
Mar-12
Sens ex Index
MOSL Heal thca re Index
Dec-11
CMP (INR)
28.09.12
Rating
EPS (INR)
FY12 FY13E FY14E
P/E (x)
FY12 FY13E FY14E
Healthcare
Biocon
275 Neutral
16.9
17.9
18.4
16.2
15.3
14.9
Cadila Health
872 Buy
27.6
41.2
52.4
31.5
21.2
16.7
Cipla
381 Neutral
14.0
16.2
18.4
27.2
23.5
20.7
Dishman Pharma
96 Neutral
7.0
15.6
17.5
13.8
6.2
5.5
Divis Labs
1,080 Buy
40.2
53.0
64.1
26.9
20.4
16.9
Dr Reddy s Labs
1,647 Buy
71.4
85.1 100.1
23.1
19.4
16.5
Glenmark Pharma
422 Buy
11.4
18.2
26.3
37.0
23.2
16.0
GSK Pharma
1,977 Buy
74.5
81.0
92.6
26.5
24.4
21.4
IPCA Labs.
482 Buy
21.9
29.3
38.2
22.0
16.4
12.6
Jubiliant Life
212 Neutral
13.6
21.0
33.4
15.5
10.1
6.3
Lupin
596 Buy
19.4
24.1
31.2
30.7
24.8
19.1
Opto Circuits
130 Neutral
23.6
22.5
25.3
5.5
5.8
5.1
Ranbaxy Labs
530 Neutral
14.1
18.0
21.8
37.5
29.5
24.3
Sanofi India
2,374 Neutral
83.0
73.5
92.4
28.6
32.3
25.7
Strides Arcolab
883 Buy
38.5
52.8
61.5
23.0
16.7
14.4
Sun Pharma
693 Neutral
22.4
26.5
29.4
30.9
26.2
23.6
Torrent Pharma
695 Buy
38.4
49.5
59.0
18.1
14.0
11.8
Sector Aggregate
17
26.4
21.6
18.1
Ranbaxy core valuations adjusted for DCF value of Para-IV upsides of INR61/sh
October 2012
EV/EBITDA (x)
FY12 FY13E FY14E
RoE (%)
FY12 FY13E FY14E
9.0
17.3
17.6
7.6
20.3
12.3
13.3
19.6
12.8
8.4
21.0
6.7
14.6
29.7
15.9
20.5
11.3
15.9
14.9
23.8
15.0
6.3
25.0
21.1
13.5
32.9
24.0
9.7
23.8
37.2
-72.0
17.3
16.9
21.5
29.3
19.7
8.3
13.9
15.0
4.8
15.6
14.0
14.2
18.3
10.3
6.0
16.3
5.6
12.4
24.1
11.4
16.5
9.0
13.6
8.0
11.3
14.0
4.3
12.3
12.4
11.3
15.7
8.7
5.0
13.4
4.9
16.5
19.4
10.7
15.7
7.3
12.3
14.3
29.0
15.0
12.9
27.5
21.9
17.7
33.5
26.4
13.5
24.3
28.7
28.3
13.9
18.5
20.7
30.9
20.1
13.4
29.3
15.1
12.9
27.7
22.7
20.5
34.2
27.6
18.8
26.2
26.6
15.7
15.6
14.5
19.7
29.2
20.6
C84

Sector: Healthcare
Biocon
BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
5,703
BIOS IN
200.0
363/208
5/8/-35
54.9
1.0
CMP: INR275
Year
Net Sales
PAT
End
(INR m) (INR m)
03/11A 27,707
547
03/12A 20,865
3,384
03/13E 24,895
3,580
03/14E 27,549
3,675
Neutral
EPS
(INR)
2.7
16.9
17.9
18.4
EPS
Gr. (%)
-81.3
518.6
5.8
2.7
P/E
(X)
16.3
15.4
15.0
P/BV
(X)
2.4
2.2
2.0
RoE
(%)
2.7
14.9
14.3
13.4
RoCE
(%)
6.5
13.0
13.6
13.2
EV/
EV/
Sales EBITDA
2.2
9.0
1.9
8.3
1.8
8.0
We expect Biocons 2QFY13 topline to grow 19% YoY to INR6b, mainly on the back of (1) contract research
revenue, led by new customer additions, and (2) 19% growth in Biopharma revenue. Licensing income is likely
to decline 28% YoY to INR262m.
EBITDA would grow 9% YoY to INR1.45b and EBITDA margin would shrink 230bp to 24% due to increased R&D
spending on the biogeneric pipeline.
We expect adjusted PAT to grow just 3% YoY to INR886m on account of higher depreciation and higher tax rate.
The key growth drivers for FY13/14 would be: (1) traction in the companys Insulin initiative in emerging markets,
(2) ramp-up in Contract Research business, and (3) incremental contribution from immunosuppressant API supplies.
However, given the high cost of developing biogeneric products, we believe cost pressures are likely to continue
in FY13/14, impacting earnings and return ratios. Option values for the future include separate listing of Contract
Research business and potential out-licensing of the Oral Insulin NCE. The stock trades at 15.4x FY13E and 15x FY14E
earnings. Return ratios are likely to remain subdued, with both RoE and RoCE in the 13-14% range for FY13 and FY14.
Maintain Neutral.
Consolidated Quarterly Performance

Y/E March
(INR Million)
FY13E
1Q
2Q
3Q
4Q
1Q
2QE
3QE
4QE
Net Sales
4,417
5,084
5,172
6,102
5,767
6,067
6,354
6,707
20,865
24,895
YoY Change (%)
-33.3
-25.1
-29.0
-13.0
30.6
19.3
22.9
9.9
-24.7
19.3
Total Expenditure
3,213
3,750
3,898
4,556
4,540
4,615
4,855
5,117
15,691
19,126
EBITDA
1,204
1,334
1,274
1,546
1,227
1,453
1,500
1,590
5,174
5,769
Margins (%)
27.2
26.2
24.6
25.3
21.3
23.9
23.6
23.7
24.8
23.2
Depreciation
451
429
434
431
427
473
482
548
1,744
1,930
Interest
57
20
29
30
32
20
33
48
122
133
Other Income
123
160
150
13
159
161
215
233
618
769
PBT
820
1,045
961
1,099
927
1,121
1,199
1,228
3,926
4,475
Tax
119
188
113
121
137
235
258
265
541
895
Rate (%)
14.6
18.0
11.8
11.0
14.8
21.0
21.5
21.6
13.8
20.0
Minority Interest
0
0
0
0
2
0
0
-2
0
0
PAT
701
857
848
978
788
886
941
965
3,384
3,580
YoY Change (%)
-8.7
-3.9
-15.8
-3.0
12.5
3.4
11.0
-1.3
518.6
5.8
Margins (%)
15.9
16.9
16.4
16.0
13.7
14.6
14.8
14.4
16.2
14.4
Licensing income
140
365
292
463
139
262
294
395
1,253
1,090
YoY Change (%)
-33.3
58.7
-62.0
35.4
-0.7
-28.3
0.8
-14.7
-19.2
-13.0
Contract research
880
928
1,120
1,180
1,224
1,280
1,386
1,442
4,101
5,331
YoY Change (%)
22.2
19.0
42.1
32.3
39.1
37.9
23.8
22.2
29.0
30.0
E: MOSL Estimates; Note - Quarterly nos will not add up to full-year nos due to restatements; FY12 topline shows degrowth due
to divestment of Axicorp business which had contributed INR9.7b to topline in FY11
October 2012
FY12
FY13
FY12
C85

Sector: Healthcare
Cadila Healthcare
BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
5,703
CDH IN
204.7
964/629
-7/9/-2
178.6
3.4
CMP: INR872
Year
Net Sales
PAT
End
(INR m) (INR m)
03/11A 46,302
6,334
03/12A 52,633
5,660
03/13E 65,272
8,431
03/14E 75,697
10,718
Buy
EPS
(INR)
30.9
27.6
41.2
52.4
EPS
Gr. (%)
26.4
-10.6
49.0
27.1
P/E
(X)
31.5
21.2
16.7
P/BV
(X)
6.9
5.5
4.4
RoE
(%)
37.5
27.5
29.0
29.3
RoCE
(%)
30.5
22.8
25.2
26.9
EV/
EV/
Sales EBITDA
3.7
17.3
3.0
13.8
2.5
11.2
Cadilas 2QFY13 topline is likely to grow 27% YoY to INR15.8b, led by 30% YoY growth in the domestic formulations
business and 29% YoY growth in the formulations export business. While the acquisition of Biochem would
drive growth in the domestic formulations, growth in the formulations export business would be partially led
by favorable currency.
We expect EBITDA to grow 25% YoY to INR3.4b. EBITDA margin is likely to contract by 30bp YoY to 21.8% due to
lower profitability of the acquired companies.
Adjusted PAT would grow 110% YoY to INR2.1b, primarily led by the low base of 2QFY12, when PAT was impacted
by forex losses of INR900m v/s estimated forex gains of INR160m.
We expect strong 37% EPS CAGR over FY12-14 for the core operations, excluding one-offs. Over the next two years,
RoCE would be 25% and RoE would be ~29%. Our estimates exclude the impact of the proposed new pharma policy.
Sustaining double-digit growth without diluting return ratios has been Cadilas key USP over the past few years.
The company has chalked out a detailed plan to achieve revenue of USD3b in FY16. We believe it will be a difficult
target to achieve this organically. Yet, we expect strong earnings growth trajectory, given (1) recovery in growth for
the US business post the recent resolution of US FDAs warning letter, (2) presence in key geographies, and (3)
strong growth expected in revenue from various JVs. The stock trades at 21.2x FY13E and 16.7x FY14E consolidated
EPS. Maintain Buy.
(INR Million)
Y/E March
1Q
Net Revenues
12,457
YoY Change (%)
9.9
Total Expenditure
9,433
EBITDA
3,024
Margins (%)
24.3
Depreciation
347
Interest
189
Other Income
140
PBT after EO Income
2,628
Tax
285
Rate (%)
10.9
Min. Int/Adj on Consol
45
Reported PAT
2,298
Adj PAT
1,433
YoY Change (%)
-11.9
Margins (%)
11.5
Adj PAT incl one-offs
2,298
E: MOSL Estimates; # Forex loss is lower
October 2012
FY12
2Q
12,450
11.5
9,693
2,757
22.1
375
255
-790
1,337
235
17.6
75
1,027
1,027
-39.9
8.2
1,027
3Q
13,832
18.6
11,193
2,640
19.1
465
276
-160
1,739
174
10.0
74
1,492
1,492
-7.9
10.8
1,492
FY13
4Q
13,980
15.3
11,152
2,828
20.2
391
350
151
2,238
436
19.5
93
1,709
1,709
23.9
12.2
1,709
1Q
15,486
24.3
12,067
3,419
22.1
434
301
-21
2,663
654
24.5
61
1,948
1,948
36.0
12.6
1,948
2QE
15,810
27.0
12,372
3,439
21.8
476
318
255
2,900
667
23.0
75
2,158
2,158
110.1
13.6
2,158
3QE
16,799
21.4
13,304
3,495
20.8
495
324
20
2,695
620
23.0
74
2,002
2,002
34.2
11.9
2,002
4QE
17,176
22.9
13,402
3,774
22.0
499
329
135
3,081
668
21.7
90
2,323
2,323
36.0
13.5
2,323
FY12
FY13E
52,633
13.7
41,385
11,248
21.4
1,579
1,069
-658
7,942
1,130
14.2
286
6,526
5,660
-10.6
10.8
6,526
65,272
24.0
51,145
14,127
21.6
1,904
1,272
389
11,340
2,608
23.0
300
8,431
8,431
49.0
12.9
8,431
C86

Sector: Healthcare
Cipla
BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
5,703
CIPLA IN
802.9
395/276
-3/17/18
305.6
5.8
CMP: INR381
Year
Net Sales
PAT
End
(INR m) (INR m)
03/11A 63,145
9,671
03/12A 70,207
11,442
03/13E 79,591
12,993
03/14E 88,698
14,779
Neutral
EPS
(INR)
12.0
14.0
16.2
18.4
EPS
Gr. (%)
-3.7
16.2
15.3
13.6
P/E
(X)
27.1
23.5
20.6
P/BV
(X)
4.0
3.5
3.1
RoE
(%)
14.5
14.7
15.0
15.1
RoCE
(%)
15.8
18.8
19.9
19.0
EV/
EV/
Sales EBITDA
4.3
18.3
3.8
15.7
3.4
14.8
Ciplas core topline for 2QFY13 is likely to grow 15% YoY to INR20.46b while reported topline (including oneoffs) is likely to grow 23% YoY, driven by generic Lexapro supplies to Teva. The domestic formulations business
would grow 19% YoY to INR9.8b while exports (excluding one-offs) would grow 12% YoY to INR10.2b, impacted
by muted 10% YoY growth in formulation exports to INR8.2b.
Core EBITDA would grow 18% YoY. EBITDA margin is likely to expand 60bp YoY to 25.2%, led by favorable revenue
mix, improving capacity utilization at Indore SEZ, and favorable currency. Reported EBITDA (including one-offs)
is likely to grow 37% YoY.
We expect adjusted PAT to grow 21% YoY to INR3.7b, led by healthy operational performance and higher other
income. Reported PAT (including one-offs) is likely to grow 41% YoY to INR4.4b.
Cipla continues to face short-term headwinds in ramping up its core formulation exports business despite a favorable
currency. Its muted export performance raises uncertainty on the timelines of ramp-up at Indore SEZ. While large
capex (for past few years) is a long-term positive, we believe it is imperative for the company to improve asset
utilization at Indore to drive future growth and derive benefits of operating leverage (overhead expenses continue
to adversely impact performance). Strong 1HFY13 bottomline growth will be mainly driven by generic Lexapro
supplies to Teva which will not recur from 2HFY13. The stock trades at 23.5x FY13E and 20.6x FY14E earnings. Our
estimates exclude the impact of the proposed new pharma policy. Maintain Neutral.
(INR Million)
Y/E March
Net Revenues
YoY Change (%)
Total Expenditure
EBITDA
Margins (%)
Depreciation
Interest
Other Income
Profit before Tax
Tax
Rate (%)
Reported PAT
Adj PAT
YoY Change (%)
Margins (%)
Domestic formulation sales
YoY Change (%)
Other operating income
YoY Change (%)
E: MOSL Estimates
October 2012
FY12
1Q
15,914
7.5
12,219
3,695
23.2
703
43
249
3,199
666
20.8
2,533
2,533
-1.6
15.9
7,202
8.9
411
-21.6
2Q
17,780
10.1
13,404
4,376
24.6
656
24
243
3,939
850
21.6
3,090
3,090
17.5
17.4
8,208
9.8
462
30.2
3Q
17,580
13.2
13,666
3,915
22.3
757
32
302
3,426
727
21.2
2,699
2,699
16.0
15.4
8,457
17.5
465
-11.0
FY13
4Q
18,530
11.2
14,330
4,200
22.7
1,006
22
390
3,561
794
22.3
2,767
2,577
20.3
13.9
7,182
12.3
498
13.2
1Q
19,582
23.0
14,183
5,399
27.6
728
11
531
5,190
1,182
22.8
4,008
3,057
20.7
15.6
9,388
30.4
408
-0.7
2QE
20,468
15.1
15,312
5,156
25.2
766
12
291
4,669
934
20.0
4,369
3,735
20.9
18.3
9,771
19.0
492
6.5
3QE
19,832
12.8
15,240
4,592
23.2
781
13
306
4,104
821
20.0
3,283
3,283
21.7
16.6
9,581
13.3
496
6.5
4QE
19,709
6.4
15,487
4,222
21.4
850
13
328
3,688
770
20.9
2,918
2,918
13.2
14.8
8,068
12.3
406
-18.6
FY12
FY13E
70,207
11.2
53,619
16,589
23.6
3,122
383
1,395
14,478
3,036
21.0
11,442
11,252
16.3
16.0
31,048
12.2
1,730
-6.1
79,591
13.4
60,222
19,369
24.3
3,125
49
1,456
17,651
3,707
21.0
13,944
12,993
15.5
16.3
36,808
18.6
1,802
4.1
C87

Sector: Healthcare
Dishman Pharma
BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
5,703
DISH IN
81.3
107/33
-8/104/48
7.8
0.1
CMP: INR96
Year
Net Sales
PAT
End
(INR m) (INR m)
03/11A
9,908
814
03/12A 11,221
568
03/13E 13,898
1,265
03/14E 15,856
1,426
Neutral
EPS
(INR)
10.0
7.0
15.6
17.5
EPS
Gr. (%)
-29.6
-30.2
122.5
12.7
P/E
(X)
13.7
6.2
5.5
P/BV
(X)
0.8
0.7
0.7
RoE
(%)
9.7
6.3
12.9
12.9
RoCE
(%)
8.1
8.9
13.6
13.8
EV/
EV/
Sales EBITDA
1.5
7.5
1.2
4.8
1.0
4.3
We expect Dishmans revenue to increase 27.6% YoY to INR3.4b in 2QFY13, partially led by favorable currency.
The CRAMS business is likely to grow 26% YoY to INR2.1b, boosted mainly by strong performance in CRAMS
supplies from Indian facilities. Revenue from CarbogenAMCIS is would decline 10% YoY to INR957m. Revenue
from MM business would grow 30% YoY to INR1.3b.
EBITDA is likely to grow 76% YoY to INR830m. EBITDA margin would expand 670bp YoY to 24.2% due to low base
effect, better product mix with lower share of QUATs business, and favorable currency.
The company is likely to report net profit of INR304m due to better operational performance and absence of
forex losses (forex losses for 2QFY12 were INR187m).
The macro environment for CRAMS business remains favorable given Indias inherent cost advantages and chemistry
skills. We believe Dishmans India operations will benefit from increased outsourcing from India, given its
strengthening MNC relations and expansion of some of the existing customer relationships. However, the company
needs to ramp-up its contracts with innovators to take advantage of the macro opportunity. We expect revenue
CAGR of 18.8%, EBITDA CAGR of 27.8% and earnings CAGR of 58% over FY12-14. Earnings growth is led by recovery
in operational performance, better product-mix and lower tax expense. Low asset utilization, high debt and delayed
ramp-up of CRAMS contracts remain our main concern. The stock currently trades at 6.2x FY13E and 5.5x FY14E
earnings. RoCE will continue to be subdued till new facilities and CRAMS contracts ramp up. Maintain Neutral.
(INR Million)
Y/E March
Net Sales
YoY Change (%)
Total Expenditure
EBITDA
Margins (%)
Depreciation
Interest
Other Income
PBT after EO Income
Tax
Rate (%)
Reported PAT
Adj PAT
YoY Change (%)
Margins (%)
CRAMS - India Sales
YoY Change (%)
Carbogen AMCIS Sales
YoY Change (%)
E: MOSL Estimates
October 2012
FY12
1Q
2,372
17.5
1,935
437
18.4
187
137
56
169
17
10.4
151
151
-44.3
6.4
840
56.9
748
-16.1
2Q
2,692
26.5
2,222
471
17.5
207
150
-183
-70
-7
9.3
-64
-64
-121.6
-2.4
626
-10.0
1,062
16.4
3Q
2,655
14.5
2,128
526
19.8
191
164
89
260
93
35.7
167
167
859.7
6.3
668
-15.1
1,023
28.7
FY13
4Q
3,502
1.7
2,677
825
23.5
180
218
95
522
208
39.9
313
313
36.4
8.9
1,044
19.6
1,154
9.1
1Q
3,153
32.9
2,317
836
26.5
193
231
26
438
50
11.5
387
387
156.1
12.3
640
-23.7
1,330
77.8
2QE
3,436
27.6
2,605
830
24.2
203
238
39
428
124
29.0
304
304
8.8
1,169
86.6
957
-9.9
3QE
3,565
34.3
2,756
809
22.7
216
243
35
385
112
29.0
274
274
63.6
7.7
1,275
90.7
1,037
1.3
4QE
3,745
6.9
2,871
875
23.3
234
239
35
436
135
31.1
300
300
-4.2
8.0
1,366
30.9
664
-42.5
FY12
FY13E
11,221
13.2
8,996
2,225
19.8
765
729
150
880
312
35.4
568
568
-30.1
5.1
3,178
9.9
3,987
9.0
13,898
23.9
10,549
3,350
24.1
847
951
135
1,686
422
25.0
1,265
1,265
122.5
9.1
4,450
40.0
3,987
0.0
C88

Sector: Healthcare
Divi's Laboratories
BSE Sensex
S&P CNX
18,763
5,703
Bloomberg
DIVI IN
Equity Shares (m)
132.7
1,6,12 Rel Perf (%)
-11/36/33
Mcap (INR b)
143.4
Mcap (USD b)
2.7
CMP: INR1,080
Year
Net Sales
PAT
End
(INR m) (INR m)
03/11A 13,071
4,293
03/12A 18,586
5,333
03/13E 23,488
7,030
03/14E 29,363
8,507
Buy
EPS
(INR)
32.4
40.2
53.0
64.1
EPS
Gr. (%)
25.7
24.1
31.8
21.0
P/E
(X)
26.9
20.4
16.9
P/BV
(X)
6.7
5.6
4.7
RoE
(%)
25.9
27.1
30.0
30.2
RoCE
(%)
28.2
34.1
37.2
37.6
EV/
EV/
Sales EBITDA
7.7
21.0
6.1
16.0
4.9
12.9
Divis Laboratories (DIVI) is likely to post 39% YoY increase in 2QFY13 revenue to INR4.9b on new order inflows.
The CCS business would grow 44% YoY while the API business is likely to grow 39% YoY. Carotenoids revenue
would grow 10% YoY.
EBITDA is likely to grow 45% YoY to INR1.83b, led by strong revenue growth and low base effect. EBITDA margin
would expand 150bp.
We expect adjusted PAT to grow 27% YoY to INR1.35b. PAT growth would be lower than EBITDA growth YoY due
to higher depreciation and absence of forex gains (for 2QFY12, the company had recorded forex gains of
INR90m).
We expect DIVI to be a key beneficiary of the increased pharmaceutical outsourcing from India, given its strong
relationships with global innovator companies. It is targeting a fresh capex of INR1.5b-2b for FY13, despite the
~INR4.5b capex undertaken in the past two years. We believe that this reflects the managements confidence in
driving future growth since DIVI does not usually undertake capex without adequate visibility of customer orders.
We estimate 37% RoCE and 30% RoE for the next two years, led by traction in the high-margin CRAMS business,
sustained profitability in the Generics business and increased contribution from the new SEZ. The stock trades at
20.4x FY13E and 16.9x FY14E earnings. Maintain Buy.
Y/E March
(INR Million)
FY12
1Q
2Q
Net Op Revenue
3,586
3,541
YoY Change (%)
36.1
38.7
Total Expenditure
2,308
2,279
EBITDA
1,277
1,262
Margins (%)
35.6
35.6
Depreciation
140
152
Interest
2
6
Other Income
164
227
PBT
1,299
1,332
Tax
273
257
Deferred Tax
1
14
Rate (%)
21.0
20.4
Reported PAT
1,026
1,061
Adj PAT
1,026
1,061
YoY Change (%)
22.5
47.4
Margins (%)
28.6
30.0
CCS Revenues
1,757
1,650
YoY Change (%)
42.6
49.3
Carotenoid Revenues
140
240
YoY Change (%)
-17.6
100.0
E: MOSL Estimates; Quarterly financials from 1QFY12
October 2012
3Q
4Q
4,147
7,080
33.9
47.9
2,663
4,251
1,484
2,829
35.8
40.0
162
166
2
27
284
78
1,604
2,714
341
566
38
0
23.6
20.9
1,226
2,148
1,226
2,148
24.5
22.9
29.6
30.3
1,831
3,682
26.8
58.9
200
230
33.3
27.1
are on stand-alone
FY13
1Q
2QE
4,684
4,932
30.6
39.3
2,780
3,100
1,904
1,833
40.7
37.2
175
198
4
8
418
83
2,143
1,708
469
359
0
0
21.9
21.0
1,674
1,350
1,674
1,350
63.2
27.3
35.7
27.4
2,148
2,382
22.2
44.3
210
262
50.0
9.0
basis while annual
3QE
5,520
33.1
3,456
2,064
37.4
211
8
124
1,969
413
0
21.0
1,555
1,555
26.9
28.2
2,723
48.7
283
41.7
financials
FY12
FY13E
4QE
8,352
18,586
23,488
18.0
42.2
26.4
5,220
11,736
14,555
3,132
6,850
8,932
37.5
36.9
38.0
243
621
827
13
37
34
203
615
827
3,079
6,806
8,899
627
1,474
1,869
0
0
0
20.4
21.7
21.0
2,452
5,333
7,030
2,452
5,333
7,030
14.1
24.2
31.8
29.4
28.7
29.9
3,988
8,921
11,241
8.3
46.3
26.0
335
810
1,090
45.7
30.4
34.6
are on consolidated basis
C89

Sector: Healthcare
Dr Reddy's Laboratories
BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Wk Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
5,703
DRRD IN
169.2
1,818/1,444
-9/-13/-3
278.7
5.3
CMP: INR1,647
Year
Net Sales
PAT
EPS
End
03/11A 74,693
11,099
65.6
03/12A 96,737
12,109
71.4
03/13E 104,990 14,426
85.1
03/14E 116,165 16,977 100.1
Buy
EPS
Gr. (%)
12.6
19.1
17.7
P/E
(X)
23.1
19.4
16.5
P/BV
(X)
4.9
4.2
3.7
RoE
(%)
24.1
21.1
21.9
22.7
RoCE
(%)
16.7
20.3
17.0
18.0
EV/
EV/
Sales EBITDA
3.0
12.3
2.8
14.0
2.6
12.3
We expect Dr Reddys Laboratories (DRRD) to post 15% YoY growth in core revenue (excluding one-off sales) for
2QFY13 to INR24.8b. This would be led by 18% YoY growth in core US revenue and 16% YoY growth in the
international branded formulations segment. PSAI business revenue is likely to grow 15.5% YoY.
Core EBITDA is likely to grow just 7% YoY to INR4.5b, impacted mainly by higher SG&A and R&D expenses and
partly due to absence of export incentives. We expect core EBITDA margin to decline 140bp YoY to 18.3%.
Adjusted PAT would decline 17% YoY to INR2.2b, impacted mainly by muted EBITDA growth and estimated forex
loss of INR450m v/s forex gain of INR151m for 2QFY12. Higher tax rate will also adversely impact PAT growth.
Including contribution from one-off opportunities, we expect PAT to decline 11% YoY to INR2.7b.
Traction in the US, branded formulations and PSAI businesses will be the key growth drivers for DRRD over the next
two years. We believe that FY13 will be a year of strong growth for DRRD, with the management guiding a topline
of USD2.5b. Earnings upgrade is likely as and when the street gets convinced that DRRD can achieve this target. We
estimate core EPS at INR85.1 for FY13 and INR100 for FY14. Our estimates exclude upsides from patent challenges/
low-competition opportunities in the US (we estimate one-time PAT contribution of INR3.3b from such
opportunities in FY13). The stock currently trades at 19.4x FY13E and 16.5x FY14E core earnings. Our estimates
exclude the impact of the proposed new pharma policy. Maintain Buy.
Quarterly Performance - IFRS
Y/E March
(INR Million)
FY12
1Q
2Q
3Q
4Q
Gross Sales
19,783
22,679
27,692
26,583
YoY Change (%)
17.5
21.3
45.9
31.8
Total Expenditure
15,948
17,880
19,003
20,167
EBITDA
3,835
4,799
8,689
6,416
Margins (%)
19.4
21.2
31.4
24.1
Amortization
1,233
1,268
1,307
2,444
Other Income
144
178
365
292
Profit before Tax
2,746
3,709
7,747
4,264
Tax
120
631
2,616
837
Rate (%)
4.4
17.0
33.8
19.6
Net Profit
2,626
3,078
5,131
3,427
One-off/low-competition PAT in US 363
393
2,726
1,372
Adjusted PAT
2,263
2,685
2,405
2,055
YoY Change (%)
47.6
9.3
0.8
-3.5
Margins (%)
11.4
11.8
8.7
7.7
E: MOSL Estimates; Note-Estimates do not include one-off upsides.
October 2012
FY13
1Q
25,406
28.4
20,410
4,996
19.7
1,296
25
3,725
365
9.8
3,360
1,031
2,329
2.9
9.2
2QE
24,822
9.5
20,280
4,542
18.3
1,394
-363
2,786
557
20.0
2,737
508
2,229
-17.0
9.0
3QE
26,734
-3.5
21,254
5,481
20.5
1,451
74
4,104
821
20.0
3,854
571
3,283
36.5
12.3
4QE
28,028
5.4
21,839
6,189
22.1
1,548
79
4,719
1,017
21.6
4,986
1,284
3,702
80.1
13.2
FY12
FY13E
96,737
29.5
72,997
23,740
24.5
6,254
979
18,465
4,204
22.8
14,261
4,854
9,408
10.6
9.7
104,990
8.5
83,782
21,208
20.2
5,689
-185
15,334
2,760
18.0
14,938
3,394
11,543
22.7
11.0
C90

Sector: Healthcare
GlaxoSmithKline Pharmaceuticals
BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Wk Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
5,703
GLXO IN
84.7
2,338/1,830
-11/-21/-19
167.5
3.2
CMP: INR1,977
Year
Net Sales
PAT
End
(INR m) (INR m)
12/10A 21,116
5,814
12/11A 23,380
6,314
12/12E 25,650
6,864
12/13E 28,899
7,840
Buy
EPS
(INR)
68.6
74.5
81.0
92.6
EPS
Gr. (%)
15.2
8.6
8.7
14.2
P/E
(X)
26.5
24.4
21.4
P/BV
(X)
8.7
8.2
7.3
RoE
(%)
30.1
32.9
33.5
34.2
RoCE
(%)
44.8
47.9
48.9
49.9
EV/
EV/
Sales EBITDA
6.2
19.6
5.7
18.3
5.0
15.7
We expect GlaxoSmithKline Pharmaceuticals (GLXO) to post 10% YoY growth in 3QCY12 topline to INR6.6b. The
muted growth in topline would be because of lower offtake of acute therapy products during the quarter due
to erratic rainfall.
EBITDA is likely to grow 18% YoY to INR2.1b, on a low base. EBITDA margin would expand 220bp to 31.2% due to
low base of 3QCY11, when EBITDA margin was 29%.
We expect PAT to grow 18% YoY to INR1.7b in 3QCY12, in line with operational performance.
We believe GLXO is one of the best plays on the IPR regime in India, with aggressive plans to launch new products
in the high-growth lifestyle segments. It is likely to record double-digit topline growth in the long-term, though
the proposed new pharma policy may adversely impact growth in the short term. Given the high profitability of
operations, we expect this growth to lead to sustainable RoE of ~30%. This growth is likely to be funded through
miniscule capex and negative net working capital. GLXO deserves premium valuations due to strong parentage,
brand-building ability and likely positioning in post patent era. It is one of the few companies with the ability to
drive reasonable growth without any major capital requirement, leading to high RoCE of 45-50%. Our estimates
exclude potential adverse impact of the proposed new pharma policy. The stock is currently valued at 24.4x CY12E
and 21.4x CY13E earnings. Maintain Buy.
(INR Million)
Y/E December
Net Sales
YoY Change (%)
Total Expenditure
EBITDA
Margins (%)
Depreciation
Interest
Other Income
PBT before EO Expense
Tax
Rate (%)
Adjusted PAT
YoY Change (%)
Margins (%)
Extra-Ord Expense
Reported PAT
E: MOSL Estimates
October 2012
CY11
1Q
6,029
11.4
3,920
2,109
35.0
44
0
580
2,645
782
29.6
1,863
15.6
30.9
1,859
5
2Q
5,615
12.8
3,746
1,870
33.3
49
0
421
2,242
725
32.3
1,517
8.6
27.0
41
1,475
3Q
6,076
4.4
4,316
1,760
29.0
49
0
441
2,152
692
32.2
1,460
-7.7
24.0
1
1,459
4Q
5,660
15.4
3,954
1,706
30.1
61
3
535
2,177
703
32.3
1,474
20.5
26.0
106
1,367
1Q
6,228
3.3
4,271
1,957
31.4
41
0
804
2,720
863
31.7
1,857
-0.3
29.8
628
1,229
CY12
2Q
3QE
6,520
6,674
16.1
9.8
4,492
4,592
2,028
2,082
31.1
31.2
43
43
0
0
479
472
2,464
2,511
768
791
31.2
31.5
1,696
1,720
11.8
17.8
26.0
25.8
61
0
1,635
1,720
4QE
6,229
10.0
4,353
1,876
30.1
44
0
492
2,324
734
31.6
1,590
7.9
25.5
0
1,590
CY11
CY12
23,380
10.7
15,935
7,445
31.8
204
3
1,978
9,216
2,902
31.5
6,314
8.6
27.0
2,008
4,306
25,650
9.7
17,707
7,944
31.0
171
0
2,248
10,020
3,156
31.5
6,864
8.7
26.8
689
6,175
C91

Sector: Healthcare
Glenmark Pharmaceuticals
BSE Sensex
S&P CNX
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
5,703
GNP IN
269.8
450/265
-4/29/17
113.8
2.2
CMP: INR422
Buy
Year
Net Sales
PAT
EPS
EPS
P/E
P/BV
RoE
RoCE
EV/
EV/
End
(X)
(%)
(%)
Sales EBITDA
03/11A 29,491
3,548
12.5
7.2
17.4
13.4
03/12A 40,206
3,244
11.4
-8.6
37.0
4.8
13.5
12.1
3.3
13.3
03/13E 47,388
5,169
18.2
59.3
23.2
3.9
17.7
16.8
2.8
14.2
03/14E 54,005
7,472
26.3
44.5
16.1
3.1
20.5
20.6
2.4
11.3
Note: Company has adopted IFRS accounting wef FY11. Estimates exclude one-off upsides
We expect Glenmark Pharmaceuticals (GNP) to post 25% YoY growth in core revenue (excluding one-offs and
R&D income) for 2QFY13 to INR11.59b, led mainly by like-to-like growth of 33% in the generics business. The
branded business is likely to grow 19% YoY. We do not expect any R&D licensing income in 2QFY13 (INR1.18b
recorded in 2QFY12).
Core EBITDA is likely to grow 20% YoY to INR2.07b, while EBITDA margin would decline 80bp to 18% due to
higher R&D expenses.
GNP is likely to report 91% YoY growth in adjusted PAT to INR1.4b, primarily due to low base of 2QFY12, when
the company had recorded MTM forex losses of INR810m.
We believe that improved working capital and moderate capex will impart flexibility to the management to target
debt reduction. Return ratios should improve gradually over the next two years, with RoCE increasing from 12.1%
to 20-21% and RoE increasing from 13.5% to 20-21%. GNP has differentiated itself among Indian pharmaceutical
companies through its significant success in NCE research. Improved working capital cycle coupled with potential
debt reduction is likely to address investor concerns related to adverse balance sheet in the coming quarters. The
stock trades at 23.2x FY13E and 16.1x FY14E EPS. Our estimates exclude the impact of the proposed new pharma
policy. Maintain Buy.
Y/E March
(INR Million)
FY12
1Q
2Q
3Q
4Q
Net Revenues (Core)
8,683
10,554
10,311
10,659
YoY Change (%)
27.4
45.7
37.3
34.5
EBITDA
2,966
2,983
2,046
1,864
Margins (%)
34.2
28.3
19.8
17.5
Depreciation
264
247
231
236
Interest
408
291
357
410
Other Income
125
-808
-912
377
2,420
1,637
545
1,595
Extra-Ord Expense
0
1,317
0
0
2,420
321
545
1,595
Tax
319
-238
84
73
Rate (%)
13.2
-74.2
15.4
4.6
Reported PAT (incl one-offs)
2,101
559
461
1,522
Minority Interest
8
11
10
11
Adj PAT (excl one-offs)
1,092
745
76
1,331
YoY Change (%)
17.8
-24.6
-92.2
101.4
Margins (%)
12.6
7.1
0.7
12.5
US Sales
2,512
3,001
3,190
3,435
YoY Change (%)
37.2
34.1
56.3
53.1
R&D licensing income
1,112
1,185
238
0
YoY Change (%)
24.3
E: MOSL Estimates; 1Q and 2Q numbers will not be comparable yoy due
October 2012
FY13
1Q
2QE
3QE
4QE
10,404
11,589
12,464
12,931
19.8
9.8
20.9
21.3
2,198
2,076
2,371
2,646
21.1
17.9
19.0
20.5
275
261
272
259
380
385
371
346
-521
250
-25
40
1,022
1,679
1,703
2,082
0
0
0
0
1,022
1,679
1,703
2,082
218
233
237
272
21.3
13.9
13.9
13.1
804
1,589
1,577
1,920
21
20
20
19
506
1,426
1,446
1,791
-53.6
91.5 1,803.5
34.5
4.9
12.3
11.6
13.8
3,924
3,803
3,883
4,238
56.2
26.8
21.7
23.4
0
0
0
0
-100.0
to absence of R&D licensing income
FY12
FY13E
40,206
40.6
9,860
24.5
979
1,466
-1,218
6,198
1,317
4,881
238
4.9
4,643
40
3,244
-8.6
8.1
12,137
45.3
2,535
183.2
47,388
17.9
9,291
19.6
1,067
1,482
-256
6,486
0
6,486
961
14.8
5,891
80
5,169
59.3
10.9
15,848
30.6
245
-90.3
C92

Sector: Healthcare
IPCA Laboratories
BSE Sensex
S&P CNX
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
5,703
IPCA IN
125.7
493/230
12/35/66
60.6
1.1
CMP: INR482
Year
Net Sales
PAT
End
(INR m) (INR m)
03/11A 18,969
2,628
03/12A 23,587
2,762
03/13E 27,968
3,701
03/14E 32,555
4,816
Buy
EPS
(INR)
20.9
21.9
29.3
38.2
EPS
Gr. (%)
25.7
4.7
34.0
30.1
P/E
(X)
22.0
16.4
12.6
P/BV
(X)
4.8
3.9
3.1
RoE
(%)
27.4
24.0
26.4
27.6
RoCE
(%)
25.6
24.1
27.7
29.4
EV/
EV/
Sales EBITDA
2.8
12.8
2.3
10.3
2.0
8.7
We expect IPCAs 2QFY13 topline to grow 14.4% YoY to INR7.1b, led mainly by 23% growth in API exports.
Domestic formulations would grow 13.4% YoY to INR2.6b. The malaria season in the domestic market did not
pick up strongly due to erratic rainfall though there was some recovery in September. This would impact growth
in domestic formulations.
EBITDA is likely to grow just 4% YoY to INR1.6b due to a 230bp decline in EBITDA margin to 23%, led mainly by
lower growth in the domestic formulations business.
We expect adjusted PAT to grow 41% YoY to INR1b despite the muted growth in EBITDA due to low base of
2QFY12, when the company had reported forex loss of INR271m against which we expect it to report a forex
gain of INR100m.
Strong traction in exports coupled with growth recovery in the domestic formulations business will be the key
triggers for IPCA over the next two years. We expect IPCA to clock EPS CAGR of 32% over FY12-14 on the back of 17%
revenue CAGR, coupled with 120bp EBITDA margin expansion and reversal of MTM forex losses. Return ratios
continue to be strong, with RoCE of ~28% and RoE of 27%, which is reflective of the conservative management
strategy and efficient capital allocation. The stock currently trades at 16.4x FY13E and 12.6x FY14E EPS. Our estimates
exclude the impact of the proposed new pharma policy. Maintain Buy.
(INR Million)
Y/E March
Net Revenues (Core)
YoY Change (%)
EBITDA
Margins (%)
Depreciation
Interest
Other Income
PBT
Tax
Rate (%)
Reported PAT
Adj PAT
YoY Change (%)
Margins (%)
Domestic formulation
YoY Change (%)
Export formualtions
YoY Change (%)
E: MOSL Estimates
October 2012
FY12
1Q
5,299
26.8
952
18.0
154
83
118
832
215
25.9
617
617
58.8
11.6
1,890
12.3
2,066
69.3
2Q
6,235
20.3
1,580
25.3
176
118
-245
1,042
262
25.2
780
780
-17.1
12.5
2,292
3.3
2,605
48.8
3Q
6,148
31.8
1,513
24.6
181
108
-359
864
225
26.0
639
639
0.0
10.4
1,876
5.7
2,898
73.4
FY13
4Q
5,611
13.5
1,117
19.9
142
111
88
952
186
19.5
766
766
16.9
13.7
1,477
14.7
2,393
5.2
1Q
6,344
19.7
1,329
21.0
199
95
-470
565
135
23.9
430
430
-30.3
6.8
2,242
18.6
2,245
8.7
2QE
7,133
14.4
1,639
23.0
202
102
130
1,464
366
25.0
1,098
1,098
40.9
15.4
2,599
13.4
2,892
11.0
3QE
7,112
15.7
1,720
24.2
219
117
60
1,444
361
25.0
1,083
1,083
69.4
15.2
2,166
15.5
3,269
12.8
4QE
7,378
31.5
1,670
22.6
222
112
125
1,461
372
25.4
1,090
1,090
42.2
14.8
1,657
12.2
4,167
74.2
FY12
FY13E
23,587
24.3
5,135
21.8
671
413
-408
3,643
881
24.2
2,762
2,762
5.3
11.7
7,534
8.2
9,961
44.0
27,968
18.6
6,359
22.7
843
426
-155
4,935
1,234
25.0
3,701
3,701
34.0
13.2
8,664
15.0
12,573
26.2
C93

Sector: Healthcare

BSE Sensex
S&P CNX
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
5,703
JOL IN
159.3
226/154
21/8/-7
33.7
0.6
CMP: INR212
Year
Net Sales
PAT
End
(INR m) (INR m)
03/11A 34,334
2,297
03/12A 42,540
2,173
03/13E 52,145
3,345
03/14E 59,572
5,328
Neutral
EPS
(INR)
14.4
13.6
21.0
33.4
EPS
Gr. (%)
-45.7
-5.4
53.9
59.3
P/E
(X)
15.5
10.0
6.3
P/BV
(X)
1.4
1.3
1.1
RoE
(%)
10.5
0.6
13.5
18.8
RoCE
(%)
6.0
8.1
12.2
15.5
EV/
EV/
Sales EBITDA
1.6
8.4
1.2
6.0
1.0
5.0
For 2QFY13, we expect healthy topline growth for Jubilant Organosys (JOL) at 22.2% YoY to INR12.8b, driven by
the Generics and Life Science Ingredients businesses. While the Generics business would grow 30% YoY, the
Life Science Ingredients business would grow 24% YoY. The Life Science Services business is likely to grow 8%
YoY.
We expect EBITDA to grow 14% YoY to INR2.69b despite 22% YoY topline growth due to a 150bp decline in EBITDA
margin to 21%.
Adjusted PAT would grow 67% YoY to INR1.3b, mainly led by a low base of 2QFY12, when JOL had reported forex
loss of INR426m against our expectation of a forex gain of INR313m.
We expect JOL to record 18% topline CAGR, 22% EBITDA CAGR, and 56% EPS CAGR (on a low base) over FY12-14.
Strong earnings growth would be partly led by the reversal of forex loss to forex gains based on our assumption of
currency appreciation over FY12. JOL needs to restructure its balance sheet significantly (currently, it has debt of
INR36b to support an overall topline of INR42.5b). High debt continues to be concerning. Some of its past acquisitions
(like Draxis) have been at expensive valuations, resulting in extended payback periods and lower return ratios.
High debt and low RoCE (12-15%) remain overhangs. The stock trades at 10x FY13E and 6.3x FY14E EPS. Maintain
Neutral.
(INR Million)
Y/E March
Net Sales
YoY Change (%)
Total Expenditure
EBITDA
Margins (%)
Depreciation
Interest
Other Income
Extra-Ord Expense
Tax
Rate (%)
PAT
Minority Interest
Reported PAT
Adjusted PAT
YoY Change (%)
Margins (%)
E: MOSL Estimates
October 2012
FY12
1Q
9,443
-3.8
7,623
1,820
19.3
498
434
37
925
0
925
152
16.4
774
3
771
771
22.9
8.2
2Q
10,481
6.1
8,120
2,361
22.5
508
497
-372
984
0
984
93
9.5
891
97
794
794
-3.3
7.6
3Q
10,872
25.5
8,801
2,071
19.0
539
566
-1,507
-541
0
-541
89
-16.4
-630
154
-784
-784
-277.7
-7.2
FY13
4Q
11,711
31.5
9,899
1,812
15.5
662
586
29
593
820
-227
351
-154.5
-578
57
-635
476
-22.8
4.1
1Q
12,359
30.9
9,666
2,693
21.8
591
593
-968
541
0
541
389
71.8
152
102
50
50
-93.5
0.4
2QE
12,803
22.2
10,113
2,691
21.0
649
595
383
1,830
0
1,830
403
22.0
1,427
101
1,326
1,326
67.0
10.4
3QE
13,325
22.6
10,594
2,731
20.5
703
619
80
1,489
0
1,489
298
20.0
1,191
101
1,090
1,090
8.2
4QE
13,657
16.6
11,210
2,447
17.9
762
620
75
1,140
0
1,140
161
14.1
979
100
879
879
84.5
6.4
FY12
FY13E
42,540
23.9
34,547
7,992
18.8
2,207
2,096
-929
2,761
1,620
1,141
684
60.0
457
311
146
2,173
-5.4
5.1
52,145
22.6
41,584
10,561
20.3
2,705
2,427
-429
5,000
0
5,000
1,250
25.0
3,750
405
3,345
3,345
53.9
6.4
C94

Sector: Healthcare
Lupin
BSE Sensex
S&P CNX
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
5,703
LPC IN
446.2
632/410
-2/6/11
266.1
5.0
CMP: INR596
Year
Net Sales
PAT
End
(INR m) (INR m)
03/11A 57,068
8,582
03/12A 69,597
8,676
03/13E 88,755
10,748
03/14E 101,852 13,950
Buy
EPS
(INR)
19.3
19.4
24.1
31.2
EPS
Gr. (%)
25.9
0.7
23.9
29.8
P/E
(X)
30.7
24.8
19.1
P/BV
(X)
6.6
5.5
4.6
RoE
(%)
29.3
23.8
24.3
26.2
RoCE
(%)
25.1
24.6
26.8
27.8
EV/
EV/
Sales EBITDA
4.0
21.0
3.1
16.3
2.7
13.4
We expect Lupins 2QFY13 topline to grow 27% YoY, driven mainly by 73% YoY growth in Japan on the back of Irom
acquisition and favorable currency, 28% YoY growth in revenue from advanced markets (Ex-Japan) and 31% YoY
growth in formulations revenue from exports to semi-regulated markets. The domestic formulations business
is likely to report 17% YoY growth to INR6b.
EBITDA would grow 33% YoY, with EBITDA margin expanding 80bp YoY on the back of a low base, favorable
currency and better product mix.
We expect adjusted PAT to grow 21.5% YoY to INR2.4b. PAT growth would be lower than EBITDA growth due to
higher tax rate.
Key growth drivers for Lupin will be: (1) increased traction in India formulations and emerging markets, (2) strong
launch pipeline for the US, and (3) contribution from oral contraceptives in the US. We expect EPS of INR24.1 for
FY13 (up 24%) and INR31.2 for FY14 (up 30%), translating into 27% EPS CAGR over FY12-14. Significant
internationalization of operations without dilution of return ratios has been Lupins key achievement over the last
five years. We expect this to sustain. The stock trades at 24.8x FY13E and 19.1x FY14 EPS. Our estimates exclude the
impact of the proposed new pharma policy. Maintain Buy.
Y/E March
(INR Million)
FY12
FY13
1Q
2Q
3Q
4Q
1Q
2QE
3QE
4QE
Net Sales
15,432
16,448
17,917
18,832
22,192
20,925
22,280
23,359
YoY Change (%)
17.6
17.1
22.1
23.7
43.8
27.2
24.3
24.0
Total Expenditure
12,734
13,684
14,134
15,511
17,961
17,250
17,831
18,681
EBITDA
2,698
2,764
3,783
3,321
4,230
3,674
4,449
4,678
Margins (%)
17.5
16.8
21.1
17.6
19.1
17.6
20.0
20.0
Depreciation
471
522
576
706
654
698
712
728
Interest
58
66
86
145
101
117
113
120
Other Income
257
324
-15
489
582
420
340
407
PBT
2,426
2,499
3,106
2,960
4,058
3,279
3,965
4,237
Tax
286
441
701
1,677
1,208
787
912
978
Rate (%)
11.8
17.6
22.6
56.7
29.8
24.0
23.0
23.1
Reported PAT
2,140
2,718
2,406
1,283
2,850
2,618
3,053
3,259
Extra-Ordinary Exp/(Inc)
0
-659
0
0
0
0
0
0
Minority Interest
39
49
55
56
46
50
50
54
Recurring PAT
2,101
2,010
2,498
499
2,098
2,442
3,003
3,205
YoY Change (%)
7.0
-6.5
11.5
-77.6
-0.1
21.5
20.2
542.3
Margins (%)
13.6
12.2
13.9
2.6
9.5
11.7
13.5
13.7
Advanced mkt formulations
7,013
7,761
9,300
11,811
11,826
10,729
12,030
13,021
YoY Change (%)
11.9
15.3
26.0
50.4
68.6
38.2
29.4
10.2
Emerging mkt formulations
6,317
6,711
6,637
6,065
8,049
8,095
8,113
8,376
YoY Change (%)
24.4
28.7
32.3
22.6
27.4
20.6
22.2
38.1
E: MOSL Estimates; Quarterly nos will not add up to full year nos due to restatement of past quarters
October 2012
FY12
FY13E
69,597
22.0
56,382
13,215
19.0
2,275
355
1,376
11,961
3,086
25.8
10,295
659
199
8,677
1.1
12.5
35,885
27.1
25,730
27.0
88,755
27.5
71,723
17,032
19.2
2,791
451
1,749
15,539
3,885
25.0
11,780
0
200
10,748
23.9
12.1
47,606
32.7
32,633
26.8
C95

Sector: Healthcare
Opto Circuits
BSE Sensex
S&P CNX
18,763
5,703
Bloomberg
OPTC IN
Equity Shares (m)
242.3
52 Week Range (INR)
225/115
1,6,12 Rel Perf (%)
-2/-41/-41
Mcap (INR b)
31.4
Mcap (USD b)
0.6
CMP: INR130
Year
Net Sales
PAT
End
(INR m) (INR m)
03/11A 15,856
3,661
03/12A 23,569
5,719
03/13E 29,207
5,441
03/14E 33,413
6,128
Neutral
EPS
(INR)
15.1
23.6
22.5
25.3
EPS
Gr. (%)
49.3
56.2
-4.9
12.6
P/E
(X)
5.5
5.7
5.1
P/BV
(X)
1.8
1.5
1.2
RoE
(%)
30.4
37.2
28.7
26.6
RoCE
(%)
24.1
22.4
22.5
22.1
EV/
EV/
Sales EBITDA
1.7
6.7
1.5
5.6
1.2
4.9
We expect Opto Circuits (OPTC) to post 25% YoY growth in 2QFY13 revenue to INR7b, led by a growth of 49% YoY
in the invasive business. The non-invasive segment is likely to post 20% YoY growth to INR5.6b.
EBITDA would grow 22% YoY to INR1.9b and EBITDA margin would contract by 60bp, mainly due to higher
overheads.
We expect OPTC to post PAT growth of 10.5% YoY despite healthy operational performance due to higher
depreciation & amortization, increased interest cost and higher tax rate.
OPTC has delivered strong revenue and earnings growth over the last few years, coupled with high return ratios.
Despite rapid growth, it remains a marginal player in the global medical devices industry, which gives OPTC the
opportunity to sustain its high revenue growth rate for the next couple of years. However, large accumulated
goodwill in the books , high working capital requirements leading to high debt, inadequate free cash flow generation
remain our major concerns. We note that the management is targeting reduction in working capital. We believe it
is imperative for the company to deliver this without diluting the overall growth for the business. Potential fund
raising in Eurocor could dilute earnings, with commensurate benefits from the equity dilution accruing only over
the long-term (since the funds are likely to be utilized for financing clinical trials for key products, which could be
time-consuming). The stock trades at 5.7x FY13E and 5.1x FY14E EPS. Maintain Neutral.
(INR Million)
Y/E March
Net Revenues
YoY Change (%)
Total Expenditure
EBITDA
Margins (%)
Depreciation
Interest
Other Income
PBT before EO Income
EO Exp/(Inc)
PBT after EO Income
Tax
Rate (%)
Min. Int/Adj on Consol
Reported PAT
Adj PAT
YoY Change (%)
Margins (%)
Non Invasive sales
YoY Change (%)
Invasive sales
YoY Change (%)
E: MOSL Estimates
October 2012
FY12
1Q
5,208
78.4
3,776
1,432
27.5
150
109
49
1,222
0
1,222
57
4.7
1
1,164
1,164
40.6
22.4
4,220
99.4
940
25.3
2Q
5,620
69.6
4,074
1,547
27.5
109
138
-51
1,248
0
1,248
33
2.7
5
1,210
1,210
56.3
21.5
4,640
100.9
940
4.3
3Q
6,113
46.4
4,403
1,710
28.0
141
168
-42
1,359
-5
1,364
109
8.0
3
1,251
1,253
30.4
20.5
4,770
56.2
1,300
24.5
FY13
4Q
6,627
21.7
5,163
1,464
22.1
146
177
186
1,328
0
1,328
-772
-58.1
6
2,093
2,093
90.9
31.6
5,090
23.8
1,490
19.8
1Q
7,151
37.3
5,251
1,899
26.6
196
187
27
1,544
0
1,544
150
9.7
15
1,380
1,380
18.6
19.3
5,828
38.1
1,251
33.1
2QE
7,012
24.8
5,126
1,885
26.9
202
197
16
1,502
0
1,502
150
10.0
15
1,337
1,337
10.5
19.1
5,566
19.9
1,401
49.0
3QE
7,476
22.3
5,510
1,966
26.3
234
213
18
1,537
0
1,537
154
10.0
-15
1,398
1,368
9.2
18.3
5,913
24.0
1,518
16.8
4QE
7,569
14.2
5,682
1,887
24.9
175
192
9
1,528
0
1,528
158
10.3
15
1,355
1,355
-35.3
17.9
5,883
15.6
1,667
11.9
FY12
FY13E
23,569
48.6
17,404
6,165
26.2
546
592
136
5,162
0
5,162
-572
-11.1
15
5,719
5,719
56.2
24.3
18,720
61.5
4,670
18.6
29,207
23.9
21,569
7,638
26.2
806
789
70
6,112
0
6,112
611
10.0
60
5,441
5,441
-4.9
18.6
23,190
23.9
5,838
25.0
C96

Sector: Healthcare
Ranbaxy Laboratories
BSE Sensex
S&P CNX
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
5,703
RBXY IN
420.4
578/367
-10/17/-6
222.6
4.2
CMP: INR530
Neutral
Year
Net Sales
PAT
EPS
EPS
P/E
P/BV
RoE
End
(INR m) (INR m) (INR) GR. (%) (X)
(X)
(%)
12/10A 73,623
3,008
25.8
467.1
19.4
12/11A 80,509
5,955
14.1
-45.3
33.2
4.9
-72.0
12/12E 98,819
7,586
18.0
27.4
26.0
3.9
28.3
12/13E 110,022
9,203
21.8
21.3
21.5
3.4
15.7
Note: All valuation ratios adjusted for INR61/sh DCF value of FTFs
RoCE
(%)
15.9
19.4
21.9
14.7
EV/
EV/
Sales EBITDA
2.3
14.6
2.0
12.3
2.2
16.5
We expect Ranbaxy Laboratories (RBXY) to post 21% YoY growth in core topline for 3QCY12, partially led by
favorable currency. 3QCY12 performance will reflect the core operating performance after several quarters, as
we do not expect any one-offs from Para-IV upsides.
We expect core EBITDA to grow 55% YoY to INR2.7b. EBITDA margin would expand by 240bp YoY to 10.7% on a
very low base.
Adjusted PAT would grow 4% YoY to INR1.68b despite healthy operational performance due to higher interest
cost and significantly higher tax outgo.
The US FDA/DoJ settlement and signing of the consent decree is likely to delay the full recovery of supplies to US
from India into CY13 compared to our previous assumption of the benefits coming through in CY12. The current
valuations factor in the likely improvement in core EBITDA margin (we expect margins to improve to 13.6% by CY13
from the current 10-11%). We believe that for the stock to get higher valuations, it is imperative for RBXY to
improve core business margins, as one-offs wane in the coming quarters. The stock is valued at 26x CY12E and 21.5x
CY13E core EPS, adjusting for INR61/share of DCF value of Para-IV pipeline. Our estimates exclude the impact of the
proposed new pharma policy. We rate the stock Neutral.
(INR Million)
Y/E December
Net Income
YoY Change (%)
EBITDA
Margins (%)
Depreciation
Interest
Other Income
Extra-Ord Expense
Tax
Rate (%)
Reported PAT
Minority Interest
Reported PAT (incl one-offs)
Adj PAT
YoY Change (%)
Margins (%)
E: MOSL Estimates
October 2012
CY11
1Q
21,809
-19.2
4,032
18.5
736
145
671
3,823
-20
3,842
782
20.4
3,060
16
3,044
1,724
223.2
7.9
2Q
20,931
-2.7
1,817
8.7
735
166
607
1,522
-1,118
2,640
185
7.0
2,455
23
2,432
1,055
-30.4
5.0
3Q
4Q
20,955
37,923
8.3
74.3
1,741
8,601
8.3
22.7
788
1,681
153
304
-1,490
-790
-690
5,825
3,624
34,859
-4,313 -29,034
256
747
-5.9
-2.6
-4,569 -29,780
77
47
-4,646 -29,828
1,620
1,556
58.9 -2,675.7
7.7
4.1
1Q
37,868
73.6
9,552
25.2
799
377
1,556
9,933
-4,047
13,980
1,374
9.8
12,606
139
12,468
2,017
17.0
5.3
CY12
2Q
3QE
32,285
25,341
54.2
20.9
5,113
2,706
15.8
10.7
783
892
483
486
-2,972
2,302
875
3,629
5,994
-2,420
-5,119
6,049
683
726
-13.3
12.0
-5,801
5,323
56
100
-5,857
5,223
1,722
1,688
63.2
4.2
5.3
6.7
4QE
29,282
-22.8
3,221
11.0
958
489
439
2,212
550
1,662
200
12.0
1,461
106
3,921
2,159
38.7
7.4
CY11
CY12E
101,614
13.4
16,189
15.9
3,940
768
-1,001
10,480
37,345
-26,865
1,969
-7.3
-28,834
-163
-28,997
5,955
98.0
5.9
124,776
22.8
20,592
16.5
3,432
1,836
1,325
16,649
76
16,573
2,983
18.0
13,590
400
16,610
7,586
27.4
6.1
C97

Sector: Healthcare
Sanofi India
BSE Sensex
S&P CNX
18,763
Bloomberg
Equity Shares (m)
52 Wk Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
5,703
SANL IN
23.0
2,430/2,002
4/1/-10
54.7
1.0
CMP: INR2,374
Year
Net Sales
PAT
End
(INR m) (INR m)
12/10A 10,850
1,550
12/11A 12,297
1,912
12/12E 14,864
1,693
12/13E 17,144
2,128
Neutral
EPS
(INR)
67.3
83.0
73.5
92.4
EPS
Gr. (%)
-1.5
23.3
-11.4
25.7
P/E
(X)
28.6
32.3
25.7
P/BV
(X)
4.9
4.5
4.0
RoE
(%)
15.5
17.3
13.9
15.6
RoCE
(%)
23.6
25.3
20.6
23.1
EV/
EV/
Sales EBITDA
4.3
29.7
3.4
24.1
2.9
19.4
We expect Sanofi Indias 3QCY12 topline to grow 25% YoY to INR3.9b, led by the domestic formulations business.
The domestic formulations business is likely to grow 27% YoY to INR3.2b on the back of the acquisition of
Universal Medicare. The export business would grow 13% YoY to INR625m.
EBITDA is likely to grow 26% YoY to INR636m, led mainly by topline growth. We expect EBITDA margin to expand
by 20bp YoY to 16.3%.
We expect PAT to decline 9% YoY to INR499m, despite better operational performance. This is because other
income would decline 16% YoY due to payment made towards the acquisition of Universal Medicare and
depreciation & amortization charges would jump 219% YoY due to amortization of acquisition goodwill.
We believe Sanofi India (SANL) will be one of the key beneficiaries of the patent regime in the long term. The
parent has a strong R&D pipeline, with a total of 61 products undergoing clinical trials, of which 18 are in Phase-III
or pending approvals. Some of these are likely to be launched in India. However, SANLs profitability has declined
significantly in the last five years, with EBITDA margin declining from 25% in CY06 to 14.3% in CY11, mainly impacted
by discontinuation of Rabipur sales in the domestic market, lower export growth and higher staff & promotional
expenses. RoE has declined from 28.6% to 17.3% during the period. The stock trades at 32.3x CY12E and 25.7x CY13E
EPS. Our estimates do not factor in the impact of the proposed new pharma policy. We believe that the stock
performance will remain muted in the short term until clarity emerges on future growth drivers. Maintain Neutral.
(INR Million)
Y/E December
Net Sales
YoY Change (%)
Total Expenditure
EBITDA
Margins (%)
Depreciation
Interest
Other Income
PBT
Tax
Effective tax Rate (%)
PAT
YoY Change (%)
Margins (%)
Domestic sales
YoY Change (%)
E: MOSL Estimates
October 2012
CY11
1Q
2,763
9.9
2,328
435
15.7
54
2
379
758
252
33.2
506
40.2
18.3
2,221
12.6
2Q
3,028
11.5
2,600
428
14.1
54
0
361
735
238
32.4
497
17.2
16.4
2,440
12.1
3Q
3,127
13.5
2,624
503
16.1
61
0
369
811
263
32.4
548
15.9
17.5
2,575
11.0
4Q
3,379
17.9
2,985
394
11.7
142
2
286
535
-10
-1.8
545
16.1
2,788
24.5
1Q
3,225
16.7
2,733
492
15.3
183
4
289
594
193
32.5
401
-20.8
12.4
2,765
24.5
CY12
2Q
3QE
3,741
3,901
23.5
24.8
3,219
3,266
522
636
14.0
16.3
186
195
4
0
267
309
599
750
194
250
32.4
33.4
405
499
-18.5
-8.9
10.8
12.8
3,029
3,276
24.1
27.2
4QE
4,008
18.6
3,525
483
12.1
200
2
323
604
205
33.8
400
-26.7
10.0
3,293
18.1
CY11
CY12E
12,297
13.3
10,537
1,760
14.3
311
4
1,395
2,839
743
26.2
2,096
31.2
17.0
10,024
15.1
14,864
20.9
12,743
2,122
14.3
764
10
1,188
2,535
842
33.2
1,693
-19.2
11.4
12,364
23.3
C98

Sector: Healthcare
Strides Arcolab
BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
5,703
STR IN
57.7
958/330
0/42/144
51.0
1.0
CMP: INR883
Year
Net Sales
PAT
End
(INR m) (INR m)
12/10A 16,958
1,220
12/11A 25,245
2,245
12/12E 23,880
3,080
12/13E 25,790
3,588
Buy
EPS
EPS
P/E
(INR) YOY (%) (X)
20.9
99.8
38.5
84.0
23.4
52.8
37.2
17.1
61.5
16.5
14.6
P/BV
(X)
3.8
2.3
2.0
RoE
(%)
11.6
16.9
18.5
14.5
RoCE
(%)
11.9
12.8
13.7
14.8
EV/
EV/
Sales EBITDA
2.3
12.7
2.2
8.9
2.0
8.3
We expect Strides Arcolabs (STR) to post 19.6% QoQ decline in 3QCY12 revenue to INR6.18b, impacted by the
divestment of the Australasia generics business. On a like-to-like basis, we expect topline growth of 7%, led by
33% growth in specialty business. The residual pharma business (post divestment) is likely to grow 20% YoY to
INR2.1b, while licensing income is likely to decline by a significant 51% YoY to INR839m.
EBITDA would decline 10% YoY to INR1.56b on account of lower licensing income and divestment of the Australasia
generics business. However, EBITDA margin would expand 280bp due to higher contribution of the high-margin
specialty business.
We expect adjusted net profit to grow 190% YoY to INR1.34b due to a significantly low base of 3QCY11, when the
company had reported forex loss of INR583m. Lower interest cost and lower tax rate is also likely to aid PAT
growth.
STR is set to emerge as a specialty products company, with revenue contribution from this segment increasing from
28% in CY09 to an estimated 67% in CY13. The company has an impressive specialty product pipeline. It has large
manufacturing capacities in place to support revenue scale-up, coupled with strong marketing partners like Pfizer
and GSK. We expect STR to post 26% earnings CAGR over CY11-13, led by revenue ramp-up in the SI (sterile injectables)
segment and substantial reduction in interest cost owing to debt repayment. Return ratios are set to improve over
CY11-13 and debt-equity should decline from 1.9x in CY10 to 0.6x in CY13. The stock trades at 17.1x CY12E and 14.6x
CY13E EPS. Maintain Buy.
Quarterly performance (consolidated)
Y/E December
(INR Million)
CY11
CY12
1Q
2Q
3Q
4Q
1Q
2Q
3QE
Net Revenues
4,875
5,813
7,693
6,865
5,275
5,083
6,185
YoY Change (%)
30.5
27.9
86.6
50.7
8.2
-12.6
-19.6
Total Expenditure
3,958
4,731
5,973
5,893
4,007
3,952
4,630
EBITDA
917
1,081
1,720
972
1,267
1,130
1,555
Margins (%)
18.8
18.6
22.4
14.2
24.0
22.2
25.1
Depreciation
183
340
222
298
237
257
275
Interest
438
467
491
507
390
510
410
Other Income
245
515
-477
700
-143
-223
595
PBT before EO Income
540
790
530
867
497
141
1,464
EO Exp/(Inc)
0
0
0
0
-6,316
-946
0
PBT after EO Income
540
790
530
867
6,813
1,087
1,464
Tax
89
94
62
141
392
182
117
Rate (%)
16.5
12.0
11.7
16.3
5.7
16.7
8.0
Minority Int/Adj on Consol
44
6
4
42
1
0
0
Reported PAT
407
689
465
684
6,421
905
1,347
Adj PAT
407
689
465
684
467
117
1,347
YoY Change (%)
18.2
8.7
76.0
14.8
-83.0
189.9
Margins (%)
8.4
11.9
6.0
10.0
8.9
2.3
21.8
E: MOSL Estimates; Note: Quarterly numbers don't add up to full year numbers due to restatement
October 2012
4QE
7,338
6.9
5,458
1,879
25.6
290
400
375
1,565
0
1,565
116
7.4
-1
1,450
1,450
111.9
19.8
CY11
CY12
25,245
48.9
20,594
4,652
18.4
1,043
1,903
1,021
2,727
0
2,727
387
14.2
95
2,245
2,245
84.0
8.9
23,880
-5.4
18,048
5,833
24.4
1,059
1,710
603
3,666
-7,263
10,929
807
7.4
0
10,122
2,860
27.4
12.0
C99

Sector: Healthcare
Sun Pharmaceuticals Industries

BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
5,703
SUNP IN
1,035.6
698/448
-5/12/33
718.0
13.6
CMP: INR693
Year
Net Sales
PAT
End
(INR m) (INR m)
03/11A 52,066
14,041
03/12A* 80,057
25,873
03/12A 74,406
23,228
03/13E 90,922
27,449
03/14E 111,894 30,425
*Including Para-IV/one-off
Neutral
EPS
EPS
(INR) Gr. (%)
13.6
47.8
25.0
42.5
22.4
65.4
26.5
18.2
29.4
10.8
upsides
P/E
(X)
51.1
27.7
P/BV
(X)
0.0
5.9
RoE
(%)
16.2
21.5
RoCE
(%)
23.4
30.3
26.1
23.6
5.0
4.3
20.7
19.7
30.2
27.0
EV/
EV/
Sales EBITDA
0.0
0.0
8.3
20.4
6.4
5.5
16.5
15.7
We expect Sun Pharmaceuticals (SUNP) to post 37% YoY growth in core topline (excluding one-offs) for 2QFY13
to INR24.5b, mainly led by 37% YoY growth in revenue from Taro and 40% YoY growth in core revenue from the
US. While better product pricing would aid growth in revenue from Taro, low base would aid growth in core
revenue from the US. The domestic formulations business is likely to grow 21% YoY to INR8.5b. The export
formulations business (other than the US) is likely to grow 35% YoY. Including revenue from one-off product
opportunities, the topline would grow 40% YoY to INR26.5b.
Core EBITDA (ex-Para IV/low competition products) is likely to grow 34% YoY to INR9.6b. Core EBITDA margin
would decline 100bp to 39.1% on a high base. Including the upsides from one-off product opportunities, EBITDA
is likely to grow 35% YoY to INR10.6b.
We expect adjusted PAT to grow 30% YoY to INR7b, in line with strong operational performance, but pulled
down by increased tax rate. Including one-offs, reported PAT is likely to grow 30% YoY to INR7.8b.
An expanding generics portfolio coupled with sustained double-digit growth in high-margin lifestyle segments in
India is likely to bring in long-term benefits for SUNP. Its ability to sustain superior margins even on a high base is
a clear positive. Key drivers for the future include: (1) Ramp-up in US business and recovery of sales at Caraco post
the resolution of cGMP issues, (2) Monetization of the Para-IV pipeline in the US, (3) Launch of controlled substances
in the US, and (4) Sustaining Taros high profitability. The stock is currently valued at 26.1x FY13E and 23.6x FY14E
core earnings. Our estimates exclude the impact of the proposed new pharma policy. While we are positive on
SUNPs business outlook, rich valuations have tempered our bullishness. We maintain Neutral. Large inorganic
initiatives (SUNP has cash of USD0.9b-1b) would be the key upside risk to our Neutral view.

Y/E March
(INR Million)
FY12
1Q
2Q
3Q
4Q
Net Revenues
16,357
18,946
21,451
23,299
YoY Change (%)
16.9
38.3
34.0
59.2
Total Expenditure
10,883
11,106
11,814
13,748
EBITDA
5,474
7,840
9,638
9,552
Margins (%)
33.5
41.4
44.9
41.0
Depreciation
647
668
774
823
Net Other Income
969
1,183
-272
2,082
PBT
5,796
8,355
8,591
10,811
Tax
143
1,281
634
1,768
Rate (%)
2.5
15.3
7.4
16.4
Profit after Tax
5,653
7,074
7,957
9,043
Share of Minority Partner
643
1,097
1,274
841
Reported PAT
5,010
5,977
6,683
8,202
One-off upsides
624
523
573
923
Adj Net Profit
4,386
5,454
6,110
7,279
YoY Change (%)
30.4
32.8
99.2
39.5
Margins (%)
26.8
28.8
28.5
31.2
E: MOSL Estimates; Quarterly no. dont match with annual no. because
October 2012
FY13
1Q
2QE
26,581
24,501
62.5
29.3
14,413
14,910
12,169
9,591
45.8
39.1
801
805
-231
1,165
11,136
9,951
1,925
1,791
17.3
18.0
9,211
8,160
1,256
1,097
7,956
7,775
1,240
712
6,716
7,063
53.1
29.5
25.3
28.8
of reinstatement of
3QE
4QE
24,153
25,060
12.6
7.6
15,296
16,772
8,856
8,288
36.7
33.1
872
876
1,940
2,203
9,925
9,615
1,786
1,810
18.0
18.8
8,138
7,805
1,274
999
7,999
7,229
1,135
423
6,864
6,806
12.3
-6.5
28.4
27.2
financials
FY12
FY13E
80,057
39.9
47,550
32,507
40.6
2,912
3,958
33,554
3,826
11.4
29,727
3,855
25,873
2,644
23,228
65.4
29.0
100,296
25.3
61,392
38,904
38.8
3,354
5,078
40,627
7,313
18.0
33,314
4,626
30,958
3,510
27,449
18.2
27.4
C100

Sector: Healthcare
Torrent Pharma
BSE Sensex
S&P CNX
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
5,703
TRP IN
84.6
727/505
-8/4/13
58.8
1.1
CMP: INR695
Year
Net Sales
PAT
End
(INR m) (INR m)
03/11A 22,049
2,702
03/12A 26,959
3,251
03/13E 32,764
4,191
03/14E 38,020
4,989
Buy
EPS
(INR)
31.9
38.4
49.5
59.0
EPS
Gr. (%)
0.8
20.3
28.9
19.0
P/E
(X)
18.1
14.0
11.8
P/BV
(X)
4.9
3.9
3.1
RoE
(%)
29.2
29.3
30.9
29.2
RoCE
(%)
25.9
28.5
32.0
31.5
EV/
EV/
Sales EBITDA
2.1
11.3
1.7
9.0
1.4
7.3
We expect Torrent Pharmaceuticals (TRP) to post 21% YoY growth in core topline for 2QFY13 to INR8.29b, led by
the international formulations segment, which is likely to grow 26% YoY on the back of strong growth in the US,
Europe (ex-Germany) and Brazil. Topline growth would be partially led by favorable currency. We expect
domestic formulations to grow 11.7% YoY to INR2.6b.
EBITDA is likely to grow 18% YoY while EBITDA margin is likely to decline by 60bp mainly due to higher staff costs
and overheads as well as uptick in R&D spending.
We expect adjusted PAT to grow 12% YoY to INR1.1b despite 18% EBITDA growth due to higher tax outgo.
Over the last seven years, TRP has delivered 33% EPS CAGR, though capital employed has grown at a CAGR of just
17%. It has consistently improved its profitability, with RoCE increasing from 14.5% in FY05 to 28.5% in FY12. We
expect 24% EPS CAGR over FY12-14, in line with strong operating performance. Its high return ratios are likely to
sustain, despite large capex and growing cash on the books. We believe that current valuations do not reflect the
improvement in business profitability, the turnaround of international operations, and TRPs strong positioning in
the domestic formulations business, particularly in chronic therapeutic segments. TRP should trade at a premium
to most mid-cap pharma companies, and its valuation gap vis--vis frontline pharma companies should reduce. The
stock trades at 14x FY13E and 11.8x FY14E earnings. Our estimates exclude the impact of the proposed new pharma
policy. Maintain Buy.
(INR Million)
Y/E March
Net Revenues (Core)
YoY Change (%)
EBITDA
Margins (%)
Depreciation
Interest
Other Income
Extra-Ord Expense
Tax
Rate (%)
Reported PAT
Minority Interest
Adj PAT
YoY Change (%)
Margins (%)
Dom. formulations sales
YoY Change (%)
Intl. formulations sales
YoY Change (%)
E: MOSL Estimates
October 2012
FY12
1Q
6,475
19.7
1,531
23.6
202
41
24
1,313
0
1,313
287
21.9
1,026
1
893
20.3
13.8
2,460
10.1
3,061
19.3
2Q
6,833
17.5
1,406
20.6
201
28
43
1,219
0
1,219
212
17.3
1,008
8
1,000
31.2
14.6
2,385
8.4
3,762
36.7
3Q
6,966
20.6
1,215
17.4
197
2
23
1,040
0
1,040
201
19.3
839
7
832
8.1
11.9
2,294
8.4
3,787
33.6
FY13
4Q
6,743
33.6
850
12.6
218
89
124
668
654
14
24
3.6
-10
7
527
23.1
7.8
2,016
9.6
3,854
51.1
1Q
7,669
18.4
1,560
20.3
201
94
140
1,404
0
1,404
374
26.6
1,030
12
1,019
14.1
13.3
2,802
13.9
4,071
33.0
2QE
8,290
21.3
1,659
20.0
224
89
145
1,491
0
1,491
373
25.0
1,119
0
1,119
11.9
13.5
2,665
11.7
4,745
26.1
3QE
8,476
21.7
1,607
19.0
238
82
150
1,438
0
1,438
324
22.5
1,114
0
1,114
34.0
13.1
2,633
14.8
4,910
29.7
4QE
8,171
21.2
1,201
14.7
269
106
125
950
0
950
182
19.1
769
0
769
45.8
9.4
2,350
16.6
4,928
27.9
FY12
FY13E
26,959
22.3
5,006
18.6
817
395
445
4,240
654
3,586
723
17.1
2,863
23
3,251
20.3
12.1
9,167
9.3
14,332
33.9
32,764
21.5
6,186
18.9
932
371
560
5,443
0
5,443
1,252
23.0
4,191
0
4,191
28.9
12.8
10,450
14.0
18,795
31.1
C101

Sector: Media
Media
Company Name
Dish TV
Ad environment remains tough but worst likely behind; festive season holds the key:
Advertising spends remained subdued in 2QFY13. Zee is likely to clock another strong
quarter of ad growth (17% YoY), led by low base, contribution from the sports segment
and strong ratings performance. However, ad growth for other companies is likely to
remain subdued - 6-8% YoY growth for Sun TV / Jagran and ~1% YoY decline for HT
Media.
H T Media
Jagran Prakashan
Sun TV Network
Zee Entertainment
PAT to remain flat YoY for broadcasting companies; expect significant reduction in
Dish TV's Net loss: Zee's adjusted PAT is likely to remain largely flat YoY and QoQ, as
higher ad revenue would be offset by higher programming costs, launch expenses
and sports loss. Sun TV's PAT would be flat, led by muted ad growth and decline in
overall subscription revenue due to lower analog revenue from Tamil Nadu. Dish TV's
net loss is likely to decline 70-80% YoY/QoQ on better margin performance and no
forex loss. Among print companies, we expect Jagran to report 11% PAT growth while
HT Media is likely to report 19% PAT decline, largely due to ad revenue decline in the
English print segment v/s growth in Hindi.
DTH: Subscriber additions likely to remain flat QoQ; festive season and mandatory
digitization to favorably impact 3QFY13 numbers: We expect DTH subscriber additions
to remain largely flat QoQ, given the relatively tough macroeconomic situation and
limited benefit of digitization in the metros. DTH additions are likely to increase
meaningfully in 3QFY13, led by festive season as well as the implementation of
mandatory digitization in the metros.
All eyes on metro digitization; further postponement unlikely: Our interactions across
the industry value chain indicate that 31 October 2012 is likely to remain the deadline
for digitization of metros and further postponement is unlikely. Data released by the
Abbreviations and acronyms
GEC: General entertainment Ministry of I&B indicate that 68% set-top box seeding has already been achieved as of
September 2012, with Mumbai at ~95% and other metros at 50-70%.
channel
DTH: direct to home
Hindi GEC ratings: Strong competition among top-4: During 2QFY13, Zee TV improved
its average weekly GRP by ~11% QoQ to 239 - third consecutive quarter of
improvement. All top-4 GECs, except Star Plus, improved average ratings performance
in 2QFY13, significantly bringing down the lead enjoyed by Star Plus. Sustenance of
ratings in 3QFY13 would be critical for Zee to monetize the festive season.
Dish TV
HT Media
Jagran Prakashan
Sun TV
Zee Entertainment
Sector Aggregate
CMP
(INR)
28.09.12
83
93
91
349
196
(INR million)
Rating
Sep.12
Neutral
Neutral
Neutral
Buy
Neutral
5,406
4,982
3,317
4,491
8,640
26,836
Sales
Var.
% YoY
12.1
1.0
8.6
-0.5
20.3
9.5
Var.
% QoQ
4.0
1.7
4.5
5.5
2.5
3.4
Sep.12
1,548
674
864
3,518
1,997
8,602
EBITDA
Var.
% YoY
27.1
-5.3
9.3
-3.7
-3.8
1.8
Var.
% QoQ
-0.5
0.8
9.6
8.9
-14.4
0.3
Net Profit
Sep.12
Var.
% YoY
-100
Loss
403
-8.0
729
59.2
1,787
-0.8
1,598
2.4
4,417
17.1
Var.
% QoQ
Loss
-0.9
30.7
8.8
1.0
14.3
Shobhit Khare (Shobhit.Khare@MotilalOswal.com)

October 2012
C102

Sector: Media
Digitization remains a strong theme for broadcasting stocks; headwinds for print
receding: Ad revenue trends remain sluggish but likely bottoming out, with most
companies expecting stable/improving ad spends QoQ. Headwinds for print
companies seem to be receding, with gradual decline in newsprint costs and sharp
INR appreciation. Digitization remains a strong theme for broadcasting and distribution
as most participants do not foresee postponement in digitization deadline for metros.
Media coverage - Quarterly
1QFY11 2QFY11 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13E YoY (%) QoQ (%)
Advertisement Revenue (INR b)
ZEEL
3.8
Sun TV
2.6
Dish TV
NM
HT Media
3.3
Jagran Prakashan
1.9
Subscription Revenue (INR b)
ZEEL
2.6
Sun TV
1.7
Dish TV
2.5
HT Media
0.5
Jagran Prakashan
0.6
Total Revenue (INR b)
ZEEL
6.8
Sun TV
4.4
Dish TV
3.0
HT Media
4.0
Jagran Prakashan
2.7
EBITDA (INR b)
ZEEL
1.9
Sun TV
3.6
Dish TV
0.3
HT Media
0.80
Jagran Prakashan
0.90
EBITDA Margin (%)
ZEEL
27.6
Sun TV
81.7
Dish TV
10.6
HT Media
19.8
Jagran Prakashan
33.4
Adjus ted PAT (INR b)
ZEEL
1.21
Sun TV
1.71
Dish TV
-0.63
HT Media
0.41
Jagran Prakashan
0.56
4.1
2.7
NM
3.3
1.9
4.4
3.0
NM
3.7
1.9
4.8
3.0
NM
3.6
1.9
3.8
2.7
NM
3.8
2.0
3.9
2.7
NM
3.7
2.1
4.0
2.9
NM
4.1
2.2
4.2
2.8
NM
3.7
2.1
4.5
2.8
NM
3.7
2.2
4.6
2.9
NM
3.7
2.3
17
6
NM
-1
8
3
4
NM
-2
4
2.7
1.4
2.7
0.4
0.5
2.8
2.7
3.1
0.5
0.6
3.1
1.5
3.7
0.5
0.6
3.1
1.6
3.9
0.5
0.6
2.9
1.6
4.1
0.5
0.6
3.3
1.2
4.3
0.5
0.6
4.0
1.3
4.3
0.5
0.6
3.6
1.2
4.6
0.5
0.6
3.7
1.3
4.7
0.5
0.7
27
-17
14
6
11
1
10
3
2
6
7.1
4.2
3.3
4.5
2.8
7.5
6.0
3.7
4.7
2.9
8.0
4.6
4.3
4.7
2.8
7.0
4.5
4.6
5.0
3.0
7.2
4.5
4.8
4.9
3.1
7.5
4.3
4.9
5.3
3.2
8.7
4.3
5.2
4.9
3.1
8.4
4.3
5.2
4.9
3.2
8.6
4.5
5.4
5.0
3.3
20
0
12
1
9
2
5
4
2
4
1.9
3.3
0.5
0.79
0.91
1.5
5.0
0.7
0.88
0.90
2.3
3.6
0.9
0.88
0.71
1.6
3.7
1.1
0.90
0.82
2.1
3.7
1.2
0.71
0.79
2.2
3.4
1.2
0.78
0.85
1.6
3.3
1.4
0.48
0.66
2.3
3.2
1.6
0.67
0.79
2.0
3.5
1.5
0.67
0.86
-4
-4
27
-5
9
-14
9
-1
1
10
26.5
78.2
15.3
17.8
32.8
20.4
83.9
17.9
19.0
31.4
28.4
79.0
20.8
18.6
25.3
22.3
80.6
24.4
18.2
26.9
28.9
81.0
25.2
14.4
25.9
28.6
80.2
24.5
14.8
26.3
18.4
76.9
27.5
9.7
21.2
27.7
75.9
29.9
13.7
24.8
23.1
78.3
28.6
13.5
26.1
1.26
1.67
-0.45
0.39
0.56
1.14
2.25
-0.44
0.48
0.53
2.09
2.08
-0.37
0.53
0.42
1.34
1.88
-0.18
0.52
0.50
1.56
1.80
-0.49
0.44
0.46
1.39
1.68
-0.43
0.48
0.41
1.42
1.59
-0.49
0.22
0.43
1.58
1.64
-0.32
0.38
0.39
-578bp -455bp
-263bp 249bp
338bp -129bp
-91bp -12bp
17bp 123bp
1.60
2
1
1.79
-1
9
-0.10
NM
NM
0.35
-19
-7
0.51
11
31
Phase-I digitization status (September 2012)
Mumbai
Kolkata
Delhi
Chennai
Tot al
House
TV penetration
Holds (m)
(%)
2.7
85
3.3
61
3.3
88
1.1
95
10.4
80
October 2012
TV HHs
(m)
2.3
2.0
2.9
1.1
8.2
DTH subs
(m)
0.7
0.3
0.9
0.6
2.6
Cable TV
HHs (m)
1.6
1.6
2.1
0.4
5.7
20% provision
for 2nd TV
0.3
0.3
0.4
0.1
1.1
Cable TV
STB
STB seeding
subs (m) installed (m) achieved (%)
1.9
1.8
95
2.0
1.3
67
2.5
1.3
53
0.5
0.3
49
6.8
4.7
68
C103

Sector: Media
Recent GRP trends of major Hindi GECs

Zee TV
Son y
Star Pl us
Sab
Co l ors
Li fe Ok
11%
10%
420
6%
330
240
150
60
-2%
Dec-10
Jan-11
Jan-11
Mar-11
Mar-11
Apr-11
May-11
Jun-11
Jul-11
Aug-11
Sep-11
Oct-11
Nov-11
Dec-11
Jan-12
Feb-12
Mar-12
Apr-12
May-12
Jun-12
Jul-12
Aug-12
Sep-12
GRPs of
leading
Hindi GECs,
except
Star Plus,
improved
during the
quarter.
Hindi GEC: QoQ increase (decrease) in GRP (%)
Star Pl us
Col ors
Zee TV
Son y
Hindi GEC (~31% of viewership)

S tar Pl us
Col o rs
Zee TV
S ony
S AB
40
30
20
10
S ep-12
Jul-12
Apr-12
F eb-12
Nov-11
S ep-11
Jun-11
Apr-11
Jan-11
Nov-10
Aug-10
Mar-10
Jan-10
Oct-09
Aug-09
Jun-09
Mar-09
0
Jan-09
With a decline in ratings

for Star Plus, the top-4
GECs are evenly placed.
The success of launches
during the festive season
is likely to determine the
leadership position
Jun-10
Market share trends
Hindi movies (~12% of viewership)

Zee Ci n ema
MAX
Star Gol d
Movi es OK
60
45
30
15
Sep-12
Jul-12
Apr-12
Feb-12
Dec-11
Sep-11
Jul-11
May-11
Feb-11
Dec-10
Oct-10
Jul-10
May-10
Mar-10
Dec-09
Oct-09
Aug-09
May-09
Mar-09
0
Jan-09
Top-3 channels continue

to compete strongly in
the Hindi Movie genre.
Movies OK has emerged
as the undisputed
number-4 in a cluttered
genre
Bengali GEC (~3% of viewership)

Star Jal s ha
Ze e Ban gl a
ETV B angl a
65
50
35
20
October 2012
Sep-12
Jul-12
Apr-12
Feb-12
Dec-11
Sep-11
Jul-11
May-11
Feb-11
Dec-10
Oct-10
Jul-10
May-10
Mar-10
Dec-09
Oct-09
Aug-09
May-09
Mar-09
5
Jan-09
The Bengali GEC

market has become an
effective duopoly given
continued market share
decline for ETV
C104

Sector: Media
Marathi GEC (4% of viewership)

Ze e Marathi
Star Pravah continues to

improve upon its
leadership position in the
Marathi GEC market
ETV Mara thi
Sta r Pra va h
60
45
30
15
Sep-12
Jul-12
Apr-12
Feb-12
Dec-11
Sep-11
Jul-11
May-11
Feb-11
Dec-10
Oct-10
Jul-10
May-10
Mar-10
Dec-09
Oct-09
Aug-09
May-09
Mar-09
Jan-09
Tamil GEC (~5% of viewership)

S un TV
Sun TV remains the

market leader in the
Tamil GEC market
Star Vi jay TV
Kal ai gnar TV
Jaya TV
75
60
45
30
15
S ep-12
Jun-12
Mar-12
Dec-11
S ep-11
Jul-11
Apr-11
Jan-11
Oct-10
Jul-10
Apr-10
Jan-10
Oct-09
Jul-09
Apr-09
Jan-09
Telugu GEC (~4% of viewership)

Gemi ni TV
ETV Tel ugu
Zee Te l ugu
Maa Tel u gu
50
40
30
20
10
Sep-12
Jun-12
Mar-12
Dec-11
Sep-11
Jun-11
Mar-11
Dec-10
Sep-10
Jun-10
Mar-10
Dec-09
Sep-09
Jul-09
Apr-09
0
Jan-09
Gemini TV remains the

market leader in
Telugu GEC; Maa Telugu
has emerged as the clear
number-2 and has
been closing the gap
v/s Gemini
Kannada GEC (~3% of viewership)

Uda ya TV
Udaya TV continues to
maintain a wide lead over
competitors in the
Kannada GEC market
Suvarna
ETV Kanna da
Zee Kan nada
50
40
30
20
10
October 2012
Sep-12
Jun-12
Apr-12
Jan-12
Nov-11
Aug-11
Jun-11
Mar-11
Jan-11
Oct-10
Jul-10
May-10
Feb-10
Dec-09
Sep-09
Jul-09
C105

Sector: Media
Malyalam GEC (~1% of viewership)

Asi a net
Su rya TV
Mazhavi l Manora ma
75
Asianet remains a
strong number-1
60
45
30
15
Sep-12
Jul-12
Apr-12
Feb-12
Nov-11
Sep-11
Jun-11
Apr-11
Jan-11
Nov-10
Aug-10
Jun-10
Mar-10
Jan-10
Oct-09
Aug-09
Jun-09
Jan-09
Mar-09
Balaji Telefilms: Trends in OPH and programming rates

Co mmi ssi o ned programmi ng hours
4.0
270
3.0
180
2.0
90
1.0
0.0
3QFY06
4QFY06
1QFY07
2QFY07
3QFY07
4QFY07
1QFY08
2QFY08
3QFY08
4QFY08
1QFY09
2QFY09
3QFY09
4QFY09
1QFY10
2QFY10
3QFY10
4QFY10
1QFY11
2QFY11
3QFY11
4QFY11
1QFY12
2QFY12
3QFY12
4QFY12
1QFY13
Rate per hour for Balaji

Telefilms improved in
1QFY13 after two
consecutive quarters
of decline
Ra te pe r hour (INR m)
360
Industry DTH subscriber base and additions trend
32
36
39
2.0
41
44
46
4QFY12
26
3.4
2.3
3QFY12
24
2.9
1QFY12
21
3.5
3QFY11
19
2QFY11
2.7
1QFY11
17
2.5
4QFY10
15
1.8
2.2
3QFY10
13
2QFY10
3QFY09
2.2
1QFY10
11
2.1
4QFY09
8
2QFY09
1.2
1.0
7
2.0
2QFY12
5.6
3.1
1QFY09
Industry DTH additions

remain sluggish; expect
improvement in 3QFY13
Quarte rl y sub scri ber a dds (m)
4QFY11
DTH s ubscri be rs (m)
Newsprint prices have been largely stable (USD/MT)

800
700
Newsprint prices
(USD/ton) have
remained largely flat
600
500
October 2012
Sep-12
Jun-12
Mar-12
Dec-11
Sep-11
Jun-11
Mar-11
Dec-10
Sep-10
Jun-10
Mar-10
Dec-09
Sep-09
Jul-09
Apr-09
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
400
C106

Sector: Media
95
80
80
Sep-12
Sep-12
95
Sep-11
110
Aug-12
110
Jul-12
125
Jun-12
125
Dec-11
140
Sens ex Inde x
MOSL Medi a Index
140
Jun-12
Sens ex Inde x
MOSL Medi a Inde x
Mar-12
CMP (INR)
28.09.12
Media
Dish TV
HT Media
Jagran Prakashan
Sun TV
Zee Entertainment
Sector Aggregate
October 2012
83
93
91
349
196
Rating
EPS (INR)
FY12 FY13E FY14E
P/E (x)
FY12 FY13E FY14E
EV/EBITDA (x)
FY12 FY13E FY14E
Neutral
Neutral
Neutral
Buy
Neutral
-1.5
7.0
5.6
17.6
5.9
-55.2 -181.0
13.2
15.5
16.2
16.3
19.8
19.2
33.2
27.9
32.0
27.9
19.3
6.4
10.3
9.6
24.9
14.4
-0.5
6.0
5.6
18.2
7.0
0.3
6.8
6.5
20.1
8.5
264.6
13.8
14.1
17.4
23.1
23.2
15.2
6.3
8.9
9.1
20.7
12.8
11.7
5.2
8.1
7.8
17.0
10.7
RoE (%)
FY12 FY13E FY14E
NA
11.0
24.5
26.3
17.5
17.7
NA
8.6
20.6
24.7
18.3
18.0
NA
8.8
20.2
25.1
19.3
19.4
C107

Sector: Media
Dish TV
BSE Sensex
S&P CNX
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
5,703
DITV IN
1,063.6
85/52
14/29/-9
87.7
1.7
CMP: INR83
Neutral
Year
Net Sales
PAT
EPS
End
03/11A 14,366
-1,897
-1.8
03/12A 19,578
-1,588
-1.5
03/13E 22,622
-485
-0.5
03/14E 28,197
332
0.3
EPS
P/E
Gr. (%) (X)
NA
NA
NA
NA
NA
NA
NA
264.6
P/BV
(X)
139.8
NA
NA
NA
RoE
(%)
NA
NA
NA
NA
RoCE
(%)
NA
NA
3
10
EV/
EV/
Sales EBITDA
4.8
18.9
4.2
15.0
3.3
11.5
We expect revenue to increase 12% YoY and 4% QoQ to INR5.4b.
Subscription revenue is likely to grow 3% QoQ to INR4.7b.
We expect gross additions of 0.5m and net additions of 0.15m in 2QFY13.
EBITDA margin is likely to decline 130bp QoQ to 28.6% largely due to higher opex.
Net loss would decline 70-80% YoY/QoQ to INR0.1b. We have not modeled any forex gain/loss in 2QFY13.
The stock trades at an EV of 15x FY13E and 11.5x FY14E EBITDA. Maintain Neutral.
(INR Million)
Y/E March
Sales
YoY Change (%)
Operating expenses
EBITDA
YoY Change (%)
EBITDA margin (%)
Depreciation
Interest
Other Income
PBT
Adjusted net profit
YoY Change (%)
Net Subs (m)
ARPU (INR/month)
Revenue break-up (INR m)
Subscription revenue
Lease rentals
Others
Total revenue
E: MOSL Estimates
October 2012
FY12
FY13
FY12
FY13E
1Q
2Q
3Q
4Q
1Q
2QE
3QE
4QE
4,604
51.3
3,482
1,122
248.5
24.4
1,107
334
137
-183
-183
-71.0
8.9
150
4,822
47.8
3,605
1,217
144.5
25.2
1,162
634
92
-487
-487
7.7
9.2
152
4,905
31.4
3,703
1,202
80.2
24.5
1,232
477
78
-430
-430
-3.0
9.5
152
5,247
21.2
3,805
1,442
59.9
27.5
1,678
348
94
-490
-490
32.4
9.6
151
5,200
12.9
3,644
1,556
38.7
29.9
1,512
473
106
-324
-324
76.8
9.8
156
5,406
12.1
3,858
1,548
27.1
28.6
1,452
303
107
-100
-100
-79.5
10.0
158
5,773
17.7
4,366
1,408
17.2
24.4
1,474
234
108
-192
-192
-55.4
10.8
161
6,243
19.0
4,458
1,785
23.8
28.6
1,502
263
111
131
131
-126.6
11.3
165
19,578
36.3
14,594
4,984
108.7
25.5
5,180
1,778
386
-1,588
-1,588
-16.3
9.6
153
22,622
15.5
16,326
6,296
26.3
27.8
5,939
1,273
432
-485
-485
-69.5
11.3
157
3,923
550
131
4,604
4,133
550
140
4,822
4,258
449
198
4,905
4,338
660
249
5,247
4,556
460
184
5,200
4,707
500
199
5,406
5,039
520
215
5,773
5,474
540
229
6,243
16,650
2,209
719
19,578
19,776
2,020
827
22,622
C108

Sector: Media
H T Media
BSE Sensex
18,763
S&P CNX
5,703
Bloomberg
HTML IN
Equity Shares (m)
235.0
52 Week Range (INR)
157/82
1,6,12 Rel Perf (%)
-6/-38/-47
Mcap (INR b)
21.9
Mcap (USD b)
0.4
CMP: INR93
Neutral
Year
Net Sales Adj. PAT Adj EPS EPS
End
03/11A 17,861
1,809
7.7
26
03/12A 20,030
1,655
7.0
-9
03/13E 20,226
1,594
6.0
-14
03/14E 22,417
1,792
6.8
12
P/E
(x)
13.2
15.5
13.8
P/BV
(x)
1.4
1.3
1.2
RoE
(%)
14.9
11.0
8.6
8.8
RoCE
(%)
13.0
10.5
9.9
10.4
We expect revenue to grow 1% YoY to INR5b.
Ad revenue would decline 1% YoY to INR3.7b, led by 3% decline in the English business.
We expect circulation revenue to increase 6% YoY to INR0.53b.
EBITDA margin is likely to decline 90bp YoY to 13.5%.
Adjusted earnings would decline 19% YoY to INR0.35b.
The stock trades at 15.5x FY13E and 13.8x FY14E EPS. Neutral.
Quarterly performance (Consolidated)
(INR Million)
Y/E March
Revenue
YoY (%)
Operating expenses
EBITDA
YoY (%)
EBITDA margin (%)
Depreciation
Interest
Other Income
Extra-ordinary exps
PBT
Tax
PAT
Minority Interest
Reported PAT
Adj PAT
YoY (%)
Ad revenue growth (%)
-English
-Hindi
Circulation revenue growth (%)
-English
-Hindi
E: MOSL Estimates
October 2012
EV/
EV/
Sales EBITDA
0.9
6.4
0.9
6.3
0.7
5.2
FY12
FY13
1Q
2Q
3Q
4Q
1Q
2QE
3QE
4QE
4,969
22.9
4,066
903
13.0
18.2
214
53
146
0
782
242
30.9
540
25
515
515
24.4
17
18
15
3
4
3
4,931
10.7
4,219
713
-9.9
14.4
233
74
204
0
610
141
23.1
469
31
438
438
13.0
12
8
24
21
34
16
5,266
13.2
4,489
777
-12.0
14.8
220
83
168
0
642
161
25.1
481
-1
482
482
0.8
10
11
8
7
0
10
4,941
5.0
4,460
481
-45.1
9.7
249
104
179
0
307
81
26.4
226
6
220
220
-58.5
3
-4
21
3
-15
13
4,899
-1.4
4,230
669
-25.9
13.7
220
103
209
0
555
129
23.2
426
19
407
407
-21.0
-3
-6
5
8
-3
13
4,982
1.0
4,308
674
-5.3
13.5
225
100
185
0
534
101
18.9
433
30
403
403
-8.0
-1
-3
3
6
-5
11
5,243
-0.4
4,459
784
0.9
15.0
230
101
190
0
643
122
19.0
521
48
473
473
-1.8
-3
-10
18
7
-8
15
5,102
3.3
4,475
627
30.4
12.3
248
101
190
0
469
88
18.9
380
70
310
310
41.2
1
0
5
13
10
15
FY12
FY13E
20,107
12.6
17,234
2,873
-14.2
14.3
916
315
697
0
2,340
625
26.7
1,715
61
1,655
1,655
-9
10
8
17
8
4
10
20,226
0.6
17,472
2,754
-4.1
13.6
923
405
774
0
2,201
440
20.0
1,761
167
1,594
1,594
-4
-1
-5
8
9
-2
14
C109

Sector: Media
Jagran Prakashan
BSE Sensex
S&P CNX
18,763
5,703
Bloomberg
JAGP IN
Equity Shares (m)
316.3
52 Week Range (INR)
115/78
1,6,12 Rel Perf (%)
-7/-19/-29
Mcap (INR b)
28.9
Mcap (USD b)
0.5
CMP: INR91
Neutral
Year
Net Sales Adj PAT Adj EPS EPS
End
03/11A 12,211
2,183
6.9
18
03/12A 13,557
1,783
5.6
-18
03/13E 15,833
1,777
5.6
0
03/14E 17,172
2,050
6.5
15
P/E
(X)
16.2
16.3
14.1
P/BV
(X)
3.8
3.8
2.7
RoE
(%)
33.2
24.5
20.6
20.2
RoCE
(%)
24.4
15.6
18.1
14.1
EV/
EV/
Sales EBITDA
2.4
10.3
1.9
8.9
1.7
8.1
We expect advertising revenue to grow 8% YoY to INR2.3b on a standalone basis.
Circulation revenue is likely to grow 11% YoY and 6% QoQ to INR0.7b.
Aggregate revenue would increase 9% YoY to INR3.3b.
We estimate EBITDA at INR0.86b, up 9% YoY. We expect EBITDA margin to expand 20bp YoY to 26.1%.
Adjusted earnings would grow 11% YoY to INR0.51b.
The stock trades at 16.3x FY13E and 14.1x FY14E EPS. Neutral.
(INR Million)
Y/E March
FY12
1Q
3,046
12.9
2,226
820
-9.0
26.9
150
28
78
720
223
31.0
497
-10.6
0
497
Sales
YoY (%)
Operating expenses
EBITDA
YoY (%)
EBITDA margin (%)
Depreciation
Interest
Other Income
PBT
Tax
Effective Tax Rat e (%)
Reported net profit
YoY (%)
Extra-ordinary item
Adjusted net profit
Revenue break-up
Ad revenue
2,043
Circulation revenue
582
Other s (Outdoor,ev ent mgmt, etc)
422
Total revenue
3,046
E: MOSL Estimates
October 2012
FY13
FY12
FY13E
2Q
3,054
10.3
2,263
791
-13.0
25.9
160
29
40
642
184
28.6
458
-17.5
0
458
3Q
3,240
13.3
2,389
851
-5.2
26.3
165
44
-42
600
187
31.2
413
-21.5
0
413
4Q
3,104
9.8
2,445
659
-7.7
21.2
181
45
183
615
187
30.4
428
1.8
0
428
1Q
3,175
4.2
2,387
788
-3.9
24.8
148
76
-7
557
0
0
557
12.1
167
390
2QE
3,317
8.6
2,453
864
9.3
26.1
150
73
88
729
0
0
729
59.2
219
510
3QE
3,591
10.8
2,600
990
16.3
27.6
150
70
88
858
0
0
858
107.7
257
600
4QE
3,391
9.2
2,614
777
17.9
22.9
150
68
88
646
0
0
646
50.9
194
452
12,445
11.6
9,324
3,121
-8.8
25.1
657
146
259
2,577
781
30.3
1,796
-12.7
0
1,796
13,474
8.3
10,054
3,419
9.6
25.4
598
287
255
2,790
0
0
2,790
55.3
837
1,953
2,119
612
323
3,054
2,235
623
382
3,240
2,103
628
373
3,104
2,207
641
328
3,175
2,288
676
352
3,317
2,459
704
428
3,591
2,271
701
418
3,391
8,500
2,445
1,500
12,445
9,225
2,722
1,527
13,474
C110

Sector: Media
Sun TV Network
BSE Sensex
S&P CNX
18,763
5,703
Bloomberg
SUNTV IN
Equity Shares (m)
394.1
52 Week Range (INR)
362/177
1,6,12 Rel Perf (%)
15/6/19
Mcap (INR b)
137.7
Mcap (USD b)
2.6
CMP: INR349
Year
End
3/11A
3/12A
3/13E
3/14E
Buy
Net Sales
PAT
EPS
19,237
7,722
19.6
17,574
6,946
17.6
18,390
7,178
18.2
20,616
7,914
20.1
EPS
Gr. (%)
36.1
-10.0
3.3
10.3
P/E
(X)
19.8
19.2
17.4
P/BV
(X)
5.2
4.7
4.4
RoE
(%)
32.4
26.3
24.7
25.1
RoCE
(%)
63.1
51.2
47.0
49.5
We expect revenue to remain flat YoY but increase 5% QoQ to INR4.5b.
Advertising and broadcasting revenue would grow 6% YoY and 4% QoQ to INR2.9b.
We expect total subscription revenue (domestic + international) to decline 17% YoY to INR1.3b.
EBITDA is likely to decline 4% YoY to INR3.5b.
We expect PAT to decline 1% YoY to INR1.79b.
The stock trades at 19.2x FY13E and 17.4x FY14E EPS. Maintain Buy.
(INR Million)
Y/E March
1Q
Revenue
4,540
YoY (%)
3.1
EBITDA
3,659
YoY (%)
1.7
As of % Sales
80.6
Depreciation and Amortization
1,061
Interest
2
Other Income
173
PBT
2,769
Tax
892
32.2
Reported PAT
1,876
Adj PAT
1,876
YoY (%)
9.8
Revenue Breakup (INR m)
Advertising and Broadcast
2,700
International
200
DTH
840
Domestic Cable
560
Films and Others
240
Total
4,540
E: MOSL Estima tes * YoY growth f or 3QFY12
October 2012
EV/
EV/
Sales EBITDA
7.7
9.6
7.1
9.1
6.1
7.8
FY12
2Q
3Q*
FY12
FY13E
17,574
-8.6
14,007
-10.1
79.7
4,430
56
742
10,263
3,317
32.3
6,946
6,946
-10.0
18,390
4.6
14,314
2.2
77.8
4,318
17
623
10,602
3,425
32.3
7,178
7,178
3.3
2,740
2,850
2,800
2,800
2,904
3,192
3,113
11,090
180
240
220
260
270
276
286
840
790
840
860
890
916
941
959
3,330
470
290
310
300
370
400
420
1,630
333
31
80
8
30
30
25
684
4,513
4,251
4,270
4,258
4,491
4,839
4,804
17,574
adjust ed for one-time revenue/cost rela ted to 'Enthiran' in 3QFY11
12,009
1,092
3,706
1,490
93
18,390
4,513
6.2
3,654
10.0
81.0
1,176
8
186
2,657
856
32.2
1,801
1,801
7.6
4,251
-4.9
3,411
-2.8
80.2
1,125
36
232
2,483
804
32.4
1,679
1,679
-14.4
FY13
4Q
1Q
2QE
3QE
4QE
4,270
-7.3
3,282
-9.8
76.9
1,068
9
151
2,355
765
32.5
1,590
1,590
-23.7
4,258
-6.2
3,230
-11.7
75.9
933
2
132
2,427
784
32.3
1,643
1,643
-12.4
4,491
-0.5
3,518
-3.7
78.3
1,026
5
152
2,640
853
32.3
1,787
1,787
-0.8
4,839
13.8
3,814
11.8
78.8
1,180
5
172
2,801
905
32.3
1,896
1,896
13.0
4,804
12.5
3,752
14.3
78.1
1,180
5
167
2,734
883
32.3
1,851
1,851
16.4
C111

Sector: Media
Zee Entertainment Enterprises

BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
5,703
Z IN
958.8
202/110
12/50/54
187.6
3.6
CMP: INR196
Year
End
3/11A
3/12A
3/13E
3/14E
Neutral
Net Sales
PAT
EPS
29,414
5,852
6.0
30,406
5,712
5.9
35,139
6,730
7.0
39,786
8,107
8.5
EPS
Gr. (%)
14.4
-1.4
19.0
20.5
P/E
(X)
33.2
27.9
23.1
P/BV
(X)
5.6
4.9
4.3
RoE
(%)
16.9
17.5
18.3
19.3
RoCE
(%)
23.8
25.5
26.4
27.8
EV/
EV/
Sales EBITDA
5.8
23.8
4.9
19.7
4.3
16.2
We expect advertising revenue to grow 17% YoY and 3% QoQ to INR4.6b.
We estimate subscription revenue at INR3.7b, up 1% QoQ. Broadcasters continue to focus on signing new deals
for upcoming digitization, limiting near-term growth in domestic subscription revenue.
EBITDA margin is likely to decline 580bp YoY and 450bp QoQ to 23.1%. Margins would be impacted by higher
programming costs, launch expenses for new channels like Zee Aflam and higher Sports loss due to India-Sri
Lanka series telecast (monetization was further impacted, as the series was not telecast on DD).
Adjusted PAT is likely to increase 2% YoY and 1% QoQ to INR1.6b.
The stock trades at 28x FY13E and 23x FY14E EPS. Neutral.
(INR Million)
Y/E March
Advertsing Revenue
Subscription Revenue
Other Sales and Services
Net Sales
Change (%)
Pr og, Transmission & Direct Exp
Staff Cost
Selling and Other Exp
EBITDA
As of % Sales
Depreciation
Finance cost
Other Income
Extraordinary items
PBT
Tax
PAT
Minority Interest
Adj PAT after Minority Interest
Change (%)
E: MOSL Estimates
October 2012
FY12
FY13
1Q
2Q
3Q
4Q
1Q
2QE
3QE
4QE
3,787
3,051
145
6,983
3.2
3,423
747
1,253
1,560
22.3
89
30
255
0
1,696
394
23.2
1,302
-35
1,337
10.4
3,949
2,910
324
7,184
1.0
3,224
688
1,197
2,076
28.9
78
56
279
0
2,221
621
28.0
1,600
40
1,560
23.6
3,955
3,262
332
7,548
0.0
3,422
731
1,236
2,160
28.6
74
182
340
0
2,243
867
38.6
1,376
-17
1,393
22.1
4,150
4,022
519
8,691
8.9
4,242
759
2,090
1,600
18.4
81
-219
330
180
2,248
618
28.2
1,630
28
1,422
-31.8
4,472
3,641
317
8,430
20.7
3,757
888
1,453
2,332
27.7
99
18
301
0
2,517
947
37.6
1,570
-12
1,582
18.3
4,621
3,693
327
8,640
20.3
4,283
828
1,532
1,997
23.1
100
18
302
0
2,181
595
27.3
1,586
-12
1,598
2.4
4,701
3,836
337
8,873
17.5
4,283
836
1,624
2,129
24.0
101
18
304
0
2,314
632
27.3
1,682
-12
1,694
21.6
4,774
4,079
345
9,197
5.8
4,283
850
1,716
2,348
25.5
102
19
302
0
2,530
689
27.3
1,841
-14
1,855
30.5
FY12
FY13E
15,841
13,245
1,320
30,406
3.4
14,311
2,925
5,775
7,395
24.3
323
50
1,204
180
8,407
2,500
29.7
5,907
15
5,712
-2.4
18,567
15,248
1,325
35,139
15.6
16,605
3,402
6,325
8,807
25.1
401
73
1,210
0
9,543
2,863
30.0
6,680
-50
6,730
17.8
C112

Sector: Metals
Metals
COMPANY NAME
Hinda lco
Global steel prices decline, led by China; domestic prices also correct
9-10% QoQ
Nalco
Global steel prices continued their downtrend, with major correction in China. Average
steel prices declined 8%, 4%, 14% and 4% QoQ, respectively in Russia, Europe, China
and North America. Domestic steel prices also mirrored global steel prices, with long
and flat steel prices declining 9% and 10% QoQ, respectively. The price correction in
China is also impacting prices in other regions, as Chinese mills are flooding steel
products elsewhere to compensate for domestic slowdown. In India, imports have
already jumped by 39% YoY in 1HFY13 to 3.3mt.
NMDC
Global HRC prices trending downwards (USD/ton)
Hindustan Zinc
JSW Steel
Sesa Goa
Ru ss i a
900
North Ameri ca
Europe RHS(Euro /to n)
650
Sep12
Jul12
May12
450
Mar12
540
Jan12
500
Nov11
630
Sep11
Tat a Steel
Jul11
550
May11
720
Mar11
Sterlite Industries
Jan11
600
Nov10
810
Sep10
SAIL

CMP Rating
(INR)
Sep.12
28.09.12
Hindalco
121 Buy
197,200
Hindustan Zinc
135 Buy
26,853
JSPL
428 Neutral
50,958
JSW Steel
757 S e l l
83,636
Nalco
51
Neutral
16,991
NMDC
194 Buy
28,466
SAIL
85
Sell
107,892
Sesa Goa
171 Neutral
3,363
Sterlite Inds.
99
Buy
104,064
Tat a Steel
401 S e l l
312,934
Sector Aggregate
932,355
Sales
Var.
% YoY
2.0
1.8
15.2
9.6
5.3
-7.0
-3.6
-57.4
2.1
-4.6
-0.5
Var. Sep.12
% QoQ
-1.0 22,023
-2.3 14,162
8.4 15,591
-7.5 14,335
-2.8
2,418
0.2 22,246
0.1 13,918
-80.6
1,001
-2.3 24,805
-7.5 28,051
-4.8 158,550
EBITDA
Var.
% YoY
1.8
-3.3
-13.6
9.4
58.5
-8.7
4.9
-61.5
-0.1
2.0
-1.8
Var.
% QoQ
10.0
-0.9
-2.1
-19.1
-20.5
-3.4
-8.2
-85.2
7.5
-22.1
-9.4
(INR Million)
Net Profit
Sep.12
Var.
Var.
% YoY % QoQ
9,117
-15.5
1.2
13,555
-0.6
-14.3
8,401
-20.0
-12.4
3,882
-35.2
-41.5
1,714
23.0
-23.2
18,226
-7.2
-4.4
6,377
-36.4
-27.8
5,621
138.8
-50.5
12,653
-15.3
-10.8
791
-62.8
-90.0
80,338
-12.1
-23.2
Sanjay Jain (SanjayJain@MotilalOswal.com) / Pavas Pethia (Pavas.Pethia@MotilalOswal.com)

October 2012
C113

Sector: Metals
Chinas domestic steel prices also declining (USD/ton)

HRC
800
Reb ar
700
600
Sep-12
Jul-12
Jun-12
Apr-12
Mar-12
Jan-12
Nov-11
Oct-11
Aug-11
Jul-11
May-11
Apr-11
Feb-11
Dec-10
Nov-10
Sep-10
500
In India, both flat and long steel prices witnessed 9-10% correction (INR/ton)
HRC Mumbai
TMT (Mu mba i)
39,000
42,000
37,000
40,000
38,000
35,000
S ep-12
Aug-12
Jun-12
May-12
Mar-12
F eb-12
Dec-11
S ep-11
Sep-12
Aug-12
Jul-12
Jun-12
May-12
Apr-12
May-12
Mar-12
Feb-12
Jan-12
Dec-11
32,000
Nov-11
31,000
Oct-11
34,000
Sep-11
33,000
Nov-11
36,000
Global steel production growth stagnates, as Chinese demand plateaus

The global monthly crude steel production decreased 0.5% YoY to 123.7mt in August,
as most regions registered degrowth/flat production. Though demand had been weak
in Europe and other developed regions, China alone was able to fuel global steel
consumption growth so far. However, demand in China too appears to have plateaued.
Major economic indicators in China point to a slowdown - China PMI dropped to 49.2
in August 2012. We expect China's per capita steel consumption growth to moderate
to ~2% from the double-digit growth witnessed in the last decade (refer to our report,
"Downhill Run" dated August 2012 for more information)
Global steel production flat in August, as capacity utilization declined 3pp to 75%
YoY (%)
Capaci ty Uti l i zati on
Aug-12
Jun-12
Apr-12
Feb-12
Dec-11
70
Oct-11
-9
Aug-11
105
74
Jun-11
Apr-11
112
77
Feb-11
13
81
Dec-10
119
Oct-10
24
84
Aug-10
126
Percentage
35
Aug-09
Oct-09
Dec-09
Feb-10
Apr-10
Jun-10
Aug-10
Oct-10
Dec-10
Feb-11
Apr-11
Jun-11
Aug-11
Oct-11
Dec-11
Feb-12
Apr-12
Jun-12
(m tons)
Gl ob al
133
October 2012
C114

Sector: Metals
China production growth averaged just 3% in last 12 months

YoY (%)
60
30
55
17
50
45
-9
PMI
43
YoY (%)
58
65
54
50
46
Aug-09
Oct-09
Dec-09
Feb-10
Apr-10
Jun-10
Aug-10
Oct-10
Dec-10
Feb-11
Apr-11
Jun-11
Aug-11
Oct-11
Dec-11
Feb-12
Apr-12
Jun-12
Aug-12
Aug-09
Oct-09
Dec-09
Feb-10
Apr-10
Jun-10
Aug-10
Oct-10
Dec-10
Feb-11
Apr-11
Jun-11
Aug-11
Oct-11
Dec-11
Feb-12
Apr-12
Jun-12
Aug-12
(m tons)
Chi na
China PMI dipped below 50 to 49.2 in August 2012
Spreads of Chinese steel mills unaffected due to falling raw material prices;
expect steel prices to decline further
Despite severe correction in steel prices, Chinese mills are still able to maintain healthy
spreads, as raw material prices have also declined. Low-vol premium hard coking coal
average prices (fob Australia) have declined 18% QoQ in 2QFY13. Similarly, average
iron ore prices have corrected 18% QoQ in 2QFY13. With China's burgeoning demand
for raw materials moderating, the downtrend in both iron ore and coking coal prices
is likely to continue. We expect Chinese steel prices to correct further, in line with
raw material prices.
Correction in raw material prices much more severe than in steel prices (USD/ton)
63.5% Iron ore F i nes CIF
Sp ot cok i ng co al (fob Aus tral i a)
Sep-12
Sep-12
Aug-12
Aug-12
Jul-12
Jun-12
Apr-12
Feb-12
Dec-11
Oct-11
Aug-11
Jun-11
S ep-12
Apr-11
120
Oct-10
75
Jul -12
250
May-12
170
Mar-12
110
Jan-12
330
Nov-11
220
S ep-11
145
Jul -11
410
May-11
270
Mar-11
180
Jan-11
490
Nov-10
215
S ep-10
570
Feb-11
320
Dec-10
Chi na 2n d grade cok e
... while Chinese mills spread remained healthy

Ri cha rds B ay Ste am Coal
250
200
USD PER TSS
120
105
90
75
150
100
50
Sep-12
Jul-12
May-12
Mar-12
Jan-12
Nov-11
Sep-11
Jul-11
May-11
Mar-11
Jan-11
Nov-10
Sep-10
0
Nov-10
Dec-10
Dec-10
Jan-11
Mar-11
Apr-11
May-11
Jun-11
Jul-11
Aug-11
Sep-11
Sep-11
Nov-11
Dec-11
Jan-12
Feb-12
Mar-12
Apr-12
May-12
Jun-12
Jul-12
Aug-12
Sep-12
USD/t
135
October 2012
C115

Sector: Metals
Non-ferrous
Base metal prices recover in September; aluminum spot premiums at alltime high
Average 2QFY13 non-ferrous metal prices have corrected 0-3% QoQ, with sharp
recovery in September, after the announcement of QE III. With LME prices remaining
weak during the quarter, aluminum spot premium has shot up to all-time high levels.
Weaker demand for the metal has resulted in capacity cuts by aluminum majors such
as Rusal, Alcoa Inc and Norsk Hydro. However, subsidies and other benefits offered
by the governments in Australia, China and Europe are still keeping some of the high
cost smelters afloat. We are factoring aluminum prices of USD1,996/ton in FY13 and
USD2,100/ton in FY14.
Margin pressure has eased a little
CPC
USD/ton
4,000
Al um in a
Po w er
LM E
3,000
2,000
1,000
Sep-12
May-12
Feb-12
Oct-11
Jun-11
Mar-11
Nov-10
Jul-10
Apr-10
Dec-09
Aug-09
May-09
Jan-09
Sep-08
May-08
Feb-08
Oct-07
US aluminum spot premiums at all-time high

Al umi n i um
300
Zi nc
Coppe r
235
170
105
Sep-12
Apr-12
Oct-11
May-11
Nov-10
Jun-10
Dec-09
Jul-09
Jan-09
Aug-08
Feb-08
Sep-07
Mar-07
Oct-06
Apr-06
40
October 2012
C116

Sector: Metals
Quarterly average of base metal prices on LME (USD/tonne)

Aluminium
Avg. QoQ YoY
1,912
-3 -20
1,978
-9 -24
2,175
4 -13
2,090 -13 -11
2,398
-8 15
2,598
4 24
2,502
7 16
2,343
12
17
2,089
0 16
2,092
-3 41
Copper
Avg. QoQ
7,689
-2
7,869
-5
8,308
11
7,488 -17
8,982
-2
9,137
-5
9,644
12
8,633
19
7,242
3
7,013
-3
YoY
-14
-14
-14
-13
24
30
33
30
24
50
Lead
Avg. QoQ
1,964
0
1,973
-6
2,093
6
1,982 -19
2,458
-4
2,550
-2
2,603
9
2,389
18
2,031
5
1,943 -12
Relative performance-3m (%)
Alumina
YoY Avg. QoQ
-20 315
-1
-23 317
0
-20 317
-4
-17 329 -12
21 372
-8
31 404
4
17 391
7
4 366
15
6 317
-5
29 335
3
Silver (INR/kg)
Avg. QoQ
YoY
55,532
2
-6
54,406
-2
-5
55,256
3
15
53,770
-9
35
58,791
2
96
57,430
20
101
48,008
20
82
39,929
33
46
29,948
5
28
28,557
8 30%
Relative performance-1Yr (%)
Sens ex Ind ex
MOSL Metal s In dex
110
YoY
-15
-22
-19
-10
17
21
20
20
18
61
Sen sex In dex

MOSL Meta l s Inde x
120
105
110
100
100
95
90
Sep-11
Sep-12
80
Sep-12
Aug-12
Jul-12
Jun-12
90
Jun-12
YoY
-15
-14
-15
-18
10
12
5
5
15
37
Mar-12
2QFY13
1QFY13
4QFY12
3QFY12
2QFY12
1QFY12
4QFY11
3QFY11
2QFY11
1QFY11
Zinc
Avg. QoQ
1,879
-2
1,927
-5
2,024
7
1,897
-15
2,223
-1
2,249
-6
2,393
3
2,315
15
2,012
0
2,017
-12
Dec-11
Quarter
CMP (INR)
28.09.12
Metals
Hindalco
Hindustan Zinc
JSPL
JSW Steel
Nalco
NMDC
SAIL
Sesa Goa
Sterlite Inds.
Tat a Steel
Sector Aggregate
October 2012
121
135
428
757
51
194
85
171
99
401
Rating
EPS (INR)
FY12 FY13E FY14E
Buy
Buy
Neutral
Sell
Neutral
Buy
Sell
Neutral
Buy
Sell
17.1
13.2
42.4
66.5
3.4
18.5
9.0
31.8
16.7
18.6
18.9
14.4
39.8
49.9
3.5
20.4
6.7
36.1
16.3
31.2
20.6
16.7
38.5
73.7
3.3
24.9
8.6
33.5
17.7
56.6
P/E (x)
FY12 FY13E FY14E
7.1
10.3
10.1
11.4
15.2
10.5
9.5
5.4
6.0
21.6
9.6
6.4
9.4
10.7
15.2
14.7
9.5
12.8
4.8
6.1
12.9
9.2
5.9
8.1
11.1
10.3
15.6
7.8
10.0
5.1
5.6
7.1
7.8
EV/EBITDA (x)
FY12 FY13E FY14E
6.9
6.5
8.4
6.7
7.2
6.3
7.4
5.2
3.0
7.3
6.4
7.2
5.6
9.5
6.6
7.3
5.4
8.9
13.6
2.8
6.8
6.5
6.3
4.1
8.9
6.0
6.5
4.1
7.9
10.9
2.4
6.1
5.6
RoE (%)
FY12 FY13E FY14E
20.3
22.5
24.6
8.9
7.6
31.7
9.6
19.8
14.1
7.8
13.3
20.2
20.8
19.7
6.6
7.5
28.3
6.7
20.6
12.4
11.5
12.8
18.5
20.4
17.0
9.3
6.8
26.9
8.2
18.7
12.3
18.9
13.6
C117

Sector: Metals
Hindalco
BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
5,703
HNDL IN
1,990.0
16 5/100
7/-14/-23
239.8
4.5
CMP: INR121
Year
Net Sales
End
(INR m)
3/11A
720,779
3/12A
808,214
3/13E
816,863
3/14E
854,498
Consolidated
Buy
PAT
EPS
(INR m) (INR)
34,998
17.6
33,970
17.1
37,671
18.9
41,002
20.6
EPS
Gr. (%)
278.5
-3.0
10.9
8.8
P/E
(X)
7.1
6.4
5.9
P/BV
(X)
1.4
1.2
1.0
RoE
(%)
23.1
20.3
20.2
18.5
RoCE
(%)
10.1
7.5
7.6
8.2
EV/
EV/
Sales EBITDA
0.7
6.9
0.8
7.2
0.7
6.3
Net sales to grow 5% QoQ: We expect net sales to grow 5% QoQ (1% YoY) to INR63.5b on a lower base of 1QFY13,
where production of both copper and aluminium was affected due to operational hiccups. Copper operations
are back to normal and sales volume is likely to grow 13% QoQ to 80k tons. Aluminum volume is likely to remain
flat at 125k tons, as Hirakud smelter's captive power plant operations were partially shut due to breach of ash
pond. Average LME aluminum and copper prices have decreased 3% and 2% QoQ, respectively to USD1,912/ton
and USD7,689/ton. HNDL's blended realization for aluminum is likely to decrease 3% QoQ to INR162,311/ton
while copper realization would decrease 4% QoQ to INR540,340/ton.
EBITDA to grow 29% QoQ: We expect EBITDA to grow 29% QoQ to INR6b on a lower base of 1QFY13. We expect
aluminum EBITDA to increase 12% QoQ to INR3.8b and copper EBITDA to increase 77% QoQ to INR2.1b.
Maintain Buy: We expect consolidated EBITDA to increase 14% to INR100.8b in FY14, driven by 28% growth in
primary aluminum production to 700k tons and 36% growth in alumina production to 1.9m tons in India and 6%
volume growth at Novelis. EPS growth, however, would be lower at 9% to INR20.6 due to higher interest and
depreciation charge. The stock trades at 5.9x FY14E EPS and at an EV of 6.3x FY14E EBITDA. Maintain Buy.
(INR Million)
Y/E March
1Q
Production ('000 tons)
Aluminium (sales, kt)
Copper (sales, kt)
Exchange USD/INR
Avg LME Aluminium (USD/T)
Net Sales
Change (YoY %)
EBITDA
As % of Net Sales
EBITDA - Aluminium
EBITDA-Copper
Interest
Depreciation
Other Income
PBT (after EO item)
Tot al Tax
% Tax
Reported PAT
Adjusted PAT
Novelis adj. EBITDA (USD m)
Consolidated adj. PAT
E: MOSL Estimates
October 2012
131
73
44.7
2,618
60,309
16.5
8,671
14.4
6761
1,909
667
1,754
1,779
8,029
1,589
19.8
6,440
6,440
306
11,772
FY12
2Q
129
75
45.4
2,450
62,719
7.0
6,692
10.7
4,758
1,935
675
1,741
1,761
6,037
1,012
16.8
5,025
5,025
301
10,784
FY13
FY12
3Q
4Q
1Q
2QE
3QE
147
84
51.0
2,115
66,470
11.3
7,149
10.8
4,532
2,618
793
1,747
901
5,509
1,002
18.2
4,507
4,507
213
7,519
149
94
50.2
2,225
76,471
11.7
8,648
11.3
5,258
3,390
801
1,658
1,605
7,794
1,395
17.9
6,400
6,400
233
10,141
124
71
54.5
1,985
60,279
0.0
4,631
7.7
3,415
1,216
815
1,705
3,014
5,126
878
17.1
4,248
4,248
259
9,008
125
80
55.5
1,900
63,491
1.2
5,804
9.1
3,815
2,147
847
1,776
1,796
4,977
1,045
21.0
3,932
3,932
266
8,993
145
86
54.0
2,000
70,878
6.6
6,775
9.6
4,627
2,306
881
1,782
919
5,030
1,056
21.0
3,974
3,974
252
8,340
FY13E
4QE
155
556
549
95
325
332
54.0
47.9
54.5
2,100
2,352
1,996
79,121 265,968 273,770
3.5
11.5
2.9
8,536
31,160
25,746
10.8
11.7
9.4
6,127
21,309
15,403
2,567
9,851
10,343
916
2,936
3,460
1,824
6,900
7,087
1,637
6,046
7,366
7,433
27,370
22,566
1,561
4,998
4,541
21.0
18.3
20.1
5,872
22,372
18,025
5,872
22,372
18,025
270
1,053
1,047
10,945
33,970
37,296
C118

Sector: Metals
Hindustan Zinc
BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
5,703
HZ IN
4,225.3
150/107
3/-2/-2
572.3
10.9
CMP: INR135
Year
Net Sales
End
(INR m)
3/11A
99,121
3/12A
114,053
3/13E
119,276
3/14E
136,299
Consolidated
Buy
PAT
EPS
(INR m) (INR)
49,179
11.6
55,604
13.2
60,947
14.4
70,707
16.7
EPS
Gr. (%)
21.7
13.1
9.6
16.0
P/E
(X)
10.3
9.4
8.1
P/BV
(X)
2.1
1.8
1.5
RoE
(%)
24.2
22.5
20.8
20.4
RoCE
(%)
28.3
27.2
24.8
24.3
EV/
EV/
Sales EBITDA
3.4
6.5
3.0
5.6
2.3
4.1
Net sales to decline 2% QoQ on lower LME prices and flat volumes: We expect net sales to decline 2% QoQ
(grow 2% YoY) to INR26.9b on lower LME prices and flat sales volume. LME zinc prices have declined 2% QoQ to
USD1,879/ton while lead prices have remained flat at USD1,964/ton. We expect zinc realization to decrease 1%
QoQ to INR112,515/ton and lead realization to increase 6% QoQ to INR121,070/ton. Refined zinc and lead
production volume is likely to decrease 1% QoQ to 184k tons.
EBITDA to decrease 1% QoQ: We expect EBITDA to decrease 1% QoQ to INR14.2b (-3% YoY) on lower LME prices.
Silver volumes are expected to increase 4% QoQ to 76 tons. Current metal production has been lower as per
mining plan which is expected to improve in 2HFY13.
Zinc production to remain flat in FY13; maintain Buy: Zinc production has been impacted as the Rampur Agucha
mines are currently mining narrow ore body. Though production ramp-up in 2HFY13 is likely to make up for lost
production in 1HFY13, we expect FY13 production to remain flat. Silver volume would increase to 331 tons. The
stock trades at 8.1x FY14E EPS and at an EV of 4.1x FY14E EBITDA. Maintain Buy.
(INR Million)
Y/E March
Zn & Pb ('000 tons)
Silver (tons)
Net Sales
Change (YoY %)
EBITDA
As % of Net Sales
Interest
Depreciation
Other Income
PBT (before EO item)
Extra-ordinary Income
PBT (after EO item)
Tot al Tax
% Tax
Reported PAT
Adjusted PAT
Change (YoY %)
Avg LME Zinc (USD/T)
Avg LME Lead (USD/T)
Silver (USD/oz)
E: MOSL Estimates
October 2012
1Q
207
41
28,471
44.3
15,923
55.9
65
1,345
3,554
18,066
-44
18,022
3,073
17.1
14,949
14,986
68.2
2,271
2,531
35
FY12
2Q
3Q
200
218
41
49
26,368
27,868
19.8
6.0
14,648
14,023
55.6
50.3
120
87
1,455
1,591
3,868
3,819
16,940
16,164
-239
-64
16,702
16,099
3,255
3,363
19.5
20.9
13,447
12,736
13,639
12,787
41.2
-0.8
2,247
1,917
2,449
2,009
36
29
FY13
4Q
227
74
31,350
-3.2
16,590
52.9
24
1,671
3,811
18,706
-84
18,622
4,494
24.1
14,128
14,192
-19.9
2,050
2,120
31
1Q
186
73
27,477
-3.5
14,286
52.0
129
1,734
5,743
18,166
0
18,166
2,353
13.0
15,813
15,813
5.5
1,938
1,989
28
2QE
184
76
26,853
1.8
14,162
52.7
129
1,665
4,366
16,734
0
16,734
3,180
19.0
13,555
13,555
-9.5
1,900
1,980
28
3QE
230
92
32,248
15.7
17,180
53.3
129
1,665
4,496
19,882
0
19,882
3,778
19.0
16,104
16,104
18.1
1,900
1,900
28
FY12
FY13E
4QE
235
852
835
89
205
331
32,698 114,053 119,276
4.3
15.1
4.6
17,390
60,695
63,018
53.2
53.2
52.8
129
140
515
1,684
6,107
6,747
4,783
15,428
19,388
20,360
69,877
75,143
0
-431
0
20,360
69,445
75,143
4,886
14,185
14,196
24.0
20.4
18.9
15,474
55,260
60,947
15,474
55,604
60,947
21.0
13.1
9.6
1,900
2,121
1,910
1,900
2,277
1,942
28
33
28
C119

Sector: Metals

BSE Sensex
18,763
S&P CNX
5,703
Bloomberg
JSP IN
Equity Shares (m)
934.8
52 Week Range (INR)
663/321
1,6,12 Rel Perf (%)
13/-28/-31
Mcap (INR b)
399.6
Mcap (USD b)
7.6
CMP: INR428
Year
Net Sales
End
(INR m)
3/11A
131,122
3/12A
182,086
3/13E
208,816
3/14E
212,763
Consolidated
Neutral
PAT
EPS
(INR m) (INR)
37,539
40.1
39,649
42.4
37,215
39.8
36,045
38.5
EPS
Gr. (%)
6.0
5.6
-6.1
-3.1
P/E
(X)
10.1
10.7
11.1
P/BV
(X)
2.2
2.0
1.8
RoE
(%)
30.5
24.6
19.7
17.0
RoCE
(%)
21.3
16.9
13.6
12.2
EV/
EV/
Sales EBITDA
3.1
8.4
3.0
9.5
3.1
8.9
Steel volumes to increase 3% YoY: We expect standalone net sales to grow 11% YoY (11% QoQ) to INR36.9b on
liquidation of inventory accumulated in the previous quarter and higher power sales. Steel sales volume would
increase 3% YoY (10% QoQ) to 615k tons. We expect pellet sales volume to grow 1% YoY (35% QoQ). Power sales
are likely to grow 147% YoY (decline 6% QoQ) to 549m units. We expect standalone EBITDA to decline 2% QoQ
to INR10.1b on lower steel prices.
Jindal Power PAT to increase 21% QoQ: Power sales volumes at Jindal Power are likely to be up 2% YoY to 1.9b
units while the average rate is likely to decline 8% YoY (flat QoQ) to INR3.7/unit. PAT would grow 21% QoQ, as
performance in the previous quarter was impacted by INR1b of accumulated electricity duty imposed by
Chhattisgarh government.
Earnings have peaked; maintain Neutral: JSP's existing operating assets continue to deliver superior results,
but future projects are likely to have lower return ratios. We believe that earnings have already peaked and
expect them to decline at 5% per annum over FY12-14. The stock trades at 11.1x FY14E EPS, 1.8x FY14E BV, and an
EV of 8.9x FY14E EBITDA. Maintain Neutral.
(INR Million)
Y/E March
1Q
Sales volume
Steel ('000 tons)
Pellets (000 tons)
CPP (M kwh)
Net Sales
Change (YoY %)
Tot al Expenditur e
EBITDA
Change (YoY %)
As % of Net Sales
Interest
Depreciation
Other Income
PBT (before EO item)
PBT (after EO item)
Tot al Tax
% Tax
Reported PAT
Adjusted PAT
Consolidated PAT
Change (YoY %)
E: MOSL Estimates
October 2012
457
347
259
25,265
19.1
15,631
9,634
21.7
38.1
1,325
2,066
167
6,410
0
6,410
1,709
26.7
4,702
4,702
9,188
-2.4
FY12
2Q
598
526
222
33,338
45.0
21,471
11,867
38.6
35.6
1,459
2,139
77
8,346
-2,478
5,869
1,911
32.6
3,958
6,435
10,495
19.1
FY13
FY12
3Q
4Q
1Q
2QE
3QE
591
464
350
32,983
36.8
22,528
10,454
11.7
31.7
1,553
2,103
202
7,001
-500
6,501
1,890
29.1
4,610
5,110
10,210
15.4
737
691
557
41,740
52.2
28,648
13,093
22.5
31.4
2,490
2,364
1,412
9,650
0
9,650
1,814
18.8
7,836
7,836
11,670
2.0
561
395
584
33,311
31.8
22,934
10,377
7.7
31.2
2,186
2,372
122
5,942
-5,741
201
76
38.1
124
4,602
9,594
4.4
615
533
549
36,906
10.7
26,765
10,141
-14.5
27.5
1,870
2,390
81
5,962
0
5,962
1,669
28.0
4,293
4,293
8,401
-20.0
735
489
709
39,453
19.6
28,629
10,824
3.5
27.4
1,870
2,366
212
6,800
0
6,800
1,904
28.0
4,896
4,896
9,645
-5.5
FY13E
4QE
741
2,385
2,652
516
2,028
1,934
709
1,446
2,550
39,787 133,326 149,457
-4.7
39.3
12.1
28,723
88,278 107,051
11,064
45,048
42,406
-15.5
23.3
-5.9
27.8
33.8
28.4
1,870
6,827
7,796
2,342
8,672
9,469
1,515
1,857
1,930
8,367
31,407
27,072
0
-2,978
-5,741
8,367
28,430
21,330
2,343
7,324
5,993
28.0
25.8
28.1
6,024
21,106
15,338
6,024
24,083
19,816
9,574
41,563
37,215
-18.0
10.7
-10.5
C120

Sector: Metals
JSW Steel
BSE Sensex
S&P CNX
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
5,703
JSTL IN
223.1
885/464
0/-3/19
168.8
3.2
CMP: INR757
Year
Net Sales
End
(INR m)
3/11A
241,059
3/12A
343,681
3/13E
363,204
3/14E
363,314
Consolidated
Sell
PAT
EPS
(INR m) (INR)
16,783
75.2
14,844
66.5
11,143
49.9
16,442
73.7
EPS
Gr. (%)
17.7
-11.6
-24.9
47.6
P/E
(X)
11.4
15.2
10.3
P/BV
(X)
1.0
1.0
0.9
RoE
(%)
12.3
8.9
6.6
9.3
RoCE
(%)
9.9
9.2
8.5
9.5
EV/
EV/
Sales EBITDA
1.2
6.7
1.2
6.6
1.2
6.0
Revenue to increase 10% YoY on higher steel sales: We expect standalone net sales to increase 10% YoY (fall 7%
QoQ) to INR83.6b due to lower steel realization and flat QoQ volumes. Average steel realization would fall 7%
QoQ to INR39,827/ton. Domestic steel pricing environment remained weak in 2QFY13; long and flat prices
decreased 9% and 10% QoQ, respectively.
EBITDA to decrease 19% QoQ: We expect JSTL's EBITDA to decline 19% QoQ to INR14.3b on lower realization and
higher iron ore cost. With rapidly depleting inventory at Karnataka, JSTL is forced to procure iron ore from
Odisha, which would result in higher raw material cost on account of transportation cost. We expect EBITDA/
ton to decrease 20% QoQ to USD123.
Low cost iron ore benefit faded permanently in Karnataka; maintain Sell: Availability of iron ore is likely to ease
post the starting of category A mines in Karnataka, but lower caps on volumes coupled with increased costs
such as FBT would result in higher iron ore prices. We believe that the benefit of low cost iron ore for steel mills
in Karnataka has faded permanently. We also expect steel prices to correct further and eat up any benefits on
account of lower coking coal prices. The stock trades at an expensive 10.3x FY14E EPS and an EV of 6x FY14E
EBITDA. Maintain Sell.

Y/E March
Sales ('000 tons)
Change (YoY %)
Realization (INR per ton)
Net Sales
Change (YoY %)
EBITDA
Change (YoY %)
As % of Net Sales
EBITDA (USD per ton)
Interest
Depreciation
Other Income
PBT (before EO Item)
EO Items
PBT (after EO Item)
Tot al Tax
% Tax
Reported PAT
Preference Dividend
Adjusted PAT
Change (YoY %)
E: MOSL Estimates
October 2012
1Q
1,714
44.0
41,245
70,694
51.0
14,082
36.1
19.9
184
2,268
3,879
327
8,263
0
8,263
2,480
30.0
5,783
70
5,713
66.6
(INR Million)
FY12
2Q
3Q
1,882
1,908
19.0
19.8
40,553
41,281
76,321
78,765
32.1
35.6
13,104
12,534
32.1
25.3
17.2
15.9
152
129
2,645
3,274
4,039
4,444
527
456
6,947
5,271
-5,130
-3,188
1,817
2,083
546
-4,600
30.0
-220.8
1,271
6,684
70
70
5,993
9,592
82.6
155.7
FY13
4Q
2,310
33.3
41,319
95,447
34.3
16,518
-0.1
17.3
143
3,677
4,720
483
8,604
1,992
10,596
3,074
29.0
7,522
70
5,592
-32.3
1Q
2,109
23.0
42,853
90,376
27.8
17,728
25.9
19.6
154
4,067
4,678
723
9,706
-5,921
3,786
1,096
28.9
2,690
70
6,632
16.1
2QE
2,100
11.6
39,827
83,636
9.6
14,335
9.4
17.1
123
4,116
4,859
537
5,898
0
5,898
1,946
33.0
3,951
70
3,882
-35.2
3QE
2,036
6.7
37,066
75,464
-4.2
11,957
-4.6
15.8
109
4,198
4,956
465
3,267
0
3,267
1,078
33.0
2,189
70
2,119
-77.9
FY12
FY13E
4QE
2,170
7,814
8,415
-6.0
28.1
7.7
36,324
41,109
39,014
78,836 321,227 328,312
-17.4
37.5
2.2
15,706
56,238
59,726
-4.9
17.7
6.2
19.9
17.5
18.2
134
150
130
4,083
11,864
16,464
4,943
17,082
19,435
493
1,793
2,218
7,174
29,085
26,045
0
-6,326
-5,921
7,174
22,759
20,124
2,367
1,499
6,487
33.0
6.6
32.2
4,806
21,260
13,637
70
279
279
4,737
26,890
17,370
-15.3
36.5
-35.4
C121

Sector: Metals
Nalco
BSE Sensex
18,763
S&P CNX
5,703
Bloomberg
NACL IN
Equity Shares (m)
2,577.2
52 Week Range (INR)
68/48
1,6,12 Rel Perf (%)
-6/-16/-32
Mcap (INR b)
131.8
Mcap (USD b)
2.5
CMP: INR51
Neutral
Year
Net Sales
PAT
EPS
End
3/11A
59,590
10,703
4.2
3/12A
66,116
8,650
3.4
3/13E
71,495
8,960
3.5
3/14E
77,506
8,448
3.3
Consolidated
EPS
Gr. (%)
33.2
-19.2
3.6
-5.7
P/E
(X)
15.2
14.7
15.6
P/BV
(X)
1.1
1.1
1.1
RoE
(%)
9.9
7.6
7.5
6.8
RoCE
(%)
13.3
10.0
10.2
9.7
EV/
EV/
Sales EBITDA
1.2
7.2
1.3
7.3
1.1
6.5
Net sales to grow 5% YoY on higher alumina sales, despite lower LME prices: We expect net sales to grow 5% YoY
to INR17b on higher alumina volumes, despite lower realizations. LME prices have fallen 3% QoQ (20% YoY) to
USD1,912/ton. We expect average metal realization to decrease 3% QoQ to INR118,104/ton and alumina
realization to decrease 9% QoQ to INR16,872/ton. Alumina sales volume would grow 14% QoQ to 287k tons
while metal volumes would increase 1% QoQ to 103k tons.
EBITDA to decrease 21% QoQ: We expect EBITDA to decline 21% QoQ to INR2.4b on lower LME prices, despite
better volumes. Adjusted PAT would decline 23% QoQ to INR1.7b.
Power cost to remain high till Utkal coal block commissioning; maintain Neutral: NACL has been suffering on
account of high power cost and lower LME prices. It is unable to get sufficient linkage coal from Mahanadi Coal
Field and has to depend on high cost e-auction and imported coal. Till the commissioning of Utkal coal block,
NACL will not be able to reap full benefits of its increased refining capacity and power capacity. Coal field
remains a risk. The stock trades at 15.6x FY14E EPS, 1.1x FY14E BV, and an EV of 6.5x FY14E EBITDA. Maintain
Neutral.

Y/E March
Aluminium Sales ('000 tons)
Alumina Sales ('000 tons)
Avg LME Aluminium (USD/ton)
Alumina Exports (USD/ton)
Net Sales
Change (YoY %)
Tot al Expenditur e
EBITDA
As % of Net Sales
Interest
Depreciation
Other Income
PBT
Tot al Tax
% Tax
Reported PAT
Adjusted PAT
Change (YoY %)
E: MOSL Esitmates
October 2012
1Q
109
197
2,618
428
17,625
34.7
12,327
5,298
30.1
0
1,019
1,266
5,545
1,776
32.0
3,768
3,768
32.7
(INR Million)
FY12
2Q
3Q
101
98
180
163
2,450
2,115
448
358
16,139
14,509
9.1
0.5
14,614
13,824
1,526
684
9.5
4.7
0
1
1,179
1,235
1,321
1,262
1,667
710
274
198
16.4
27.9
1,393
512
1,393
512
-37.8
-80.0
FY13
4Q
107
285
2,225
343
17,845
-2.2
14,778
3,067
17.2
8
1,232
1,594
3,960
1,139
28.8
2,821
2,437
-20.2
1Q
102
253
1,985
341
17,481
-0.8
14,439
3,042
17.4
32
1,224
1,403
3,190
959
30.1
2,231
2,231
-40.8
2QE
103
287
1,900
304
16,991
5.3
14,573
2,418
14.2
0
1,230
1,333
2,521
807
32.0
1,714
1,714
23.0
3QE
105
298
2,000
320
17,833
22.9
14,753
3,080
17.3
0
1,236
1,266
3,111
995
32.0
2,115
2,115
313.0
4QE
107
309
2,100
336
19,190
7.5
14,887
4,303
22.4
0
1,242
1,203
4,264
1,364
32.0
2,899
2,899
19.0
FY12
FY13E
415
826
2,352
394
66,118
11.0
55,543
10,575
16.0
9
4,666
5,442
11,882
3,387
28.5
8,495
8,109
-24.2
417
1,147
1,996
325
71,495
8.1
58,652
12,843
18.0
32
4,931
5,205
13,086
4,126
31.5
8,960
8,960
10.5
C122

Sector: Metals
NMDC
BSE Sensex
18,763
S&P CNX
5,703
Bloomberg
NMDC IN
Equity Shares (m)
3,964.7
52 Week Range (INR)
255/136
1,6,12 Rel Perf (%)
-6/13/-29
Mcap (INR b)
768.4
Mcap (USD b)
14.6
CMP: INR194
Year
Net Sales
End
(INR m)
3/11A
113,689
3/12A
112,615
3/13E
126,708
3/14E
158,171
Consolidated
Neutral
PAT
EPS
(INR m) (INR)
64,992
16.4
73,182
18.5
81,052
20.4
98,826
24.9
EPS
Gr. (%)
88.8
12.6
10.8
21.9
P/E
(X)
10.5
9.5
7.8
P/BV
(X)
3.1
2.6
2.1
RoE
(%)
29.7
31.7
28.3
26.9
RoCE
(%)
29.5
31.5
28.2
26.8
EV/
EV/
Sales EBITDA
5.0
6.3
4.2
5.4
3.3
4.1
Iron ore sales to decline 21% QoQ: We expect standalone net sales to decline 7% YoY (flat QoQ) to INR28.5b due
to lower iron ore sales. Production during the quarter was impacted due to heavy rains, leading to lower sales
volume. We expect iron ores sales volume to decrease 21% YoY to 6m tons. Iron ore realization is likely to
increase 17% YoY (15% QoQ) to INR4,744/ton.
EBITDA to decrease 3% QoQ: We expect EBITDA to decrease 3% QoQ to INR22.2b on lower iron ore volume and
higher operating cost. 1QFY13 margins were boosted by lower operating cost, especially royalty payments.
Domestic iron ore scenario favoring NMDC; maintain Buy: Declining grades and availability of iron ore, increased
regulatory vigil and increasing steel capacity has shifted the domestic iron ore demand-supply dynamics in
favor of NMDC. Despite falling iron ore prices internationally, NMDC is able to maintain its realization and
margins. It is our most preferred pick in the Metals space. We expect earnings to register a CAGR of 16% over
FY12-14 due to strong volume growth. The stock trades at 7.8x FY14E EPS, 2.1x FY14E BV, and an EV of 4.1x FY14E
EBITDA. Maintain Buy.

Y/E March
Sales (m tons)
Avg Iron ore realisation (USD/t)
Net Sales
Change (YoY %)
EBITDA
As % of Net Sales
EBITDA per ton (USD)
Interest
Depreciation
Other Income
PBT (before EO Item)
PBT (after EO Item)
Tot al Tax
% Tax
Reported PAT
Adjusted PAT
Change (YoY %)
E: MOSL Esitmates
October 2012
(INR Million)
1Q
6.9
90
27,826
10.5
22,547
81.0
73
0
338
4,418
26,627
FY12
2Q
3Q
7.6
6.4
88
86
30,623
28,220
24.5
7.7
24,354
22,607
79.5
80.1
70
69
0
0
324
345
5,029
5,254
29,059
27,516
26,627
8,615
32.4
18,012
18,012
19.8
29,059
9,428
32.4
19,632
19,632
42.4
27,516
8,928
32.4
18,588
18,588
22.4
FY13
4Q
6.5
79
25,946
-31.2
19,774
76.2
61
15
321
5,468
24,905
-513
24,392
7,970
32.7
16,423
16,768
-20.1
1Q
6.8
76
28,404
2.1
23,020
81.0
62
0
328
5,521
28,214
2QE
6.0
85
28,466
-7.0
22,246
78.1
67
0
336
5,705
27,615
3QE
7.7
84
34,783
23.3
27,707
79.7
67
0
344
5,937
33,299
28,214
9,154
32.4
19,060
19,060
5.8
27,615
9,389
34.0
18,226
18,226
-7.2
33,299
11,322
34.0
21,977
21,977
18.2
FY12
4QE
7.7
27.3
84
86
35,056 112,615
35.1
-0.9
27,144
89,281
77.4
79.3
65
68
0
15
353
1,328
6,222
20,169
33,013 108,108
-513
33,013 107,595
11,224
34,941
34.0
32.5
21,789
72,654
21,789
73,000
29.9
12.3
FY13E
28.2
82
126,708
12.5
100,117
79.0
65
0
1,362
23,385
122,141
122,141
41,089
33.6
81,052
81,052
11.0
C123

Sector: Metals
Sesa Goa
BSE Sensex
18,763
S&P CNX
5,703
Bloomberg
SESA IN
Equity Shares (m)
869.1
52 Week Range (INR)
270/149
1,6,12 Rel Perf (%) -12/-19/-26
Mcap (INR b)
149.0
Mcap (USD b)
2.8
CMP: INR171
Neutral
Year
Net Sales
PAT
EPS
End
3/11A
92,051
42,225
48.6
3/12A
83,101
27,616
31.8
3/13E
39,514
31,359
36.1
3/14E
58,000
29,142
33.5
Consolidated
EPS
Gr. (%)
53.6
-34.6
13.6
-7.1
P/E
(X)
5.4
4.8
5.1
P/BV
(X)
1.0
1.0
0.9
RoE
(%)
40.0
19.8
20.6
18.7
RoCE
(%)
47.3
25.7
19.5
18.9
EV/
EV/
Sales EBITDA
2.2
2.1
4.6
5.5
3.2
4.5
Revenue to decline 57% YoY: We expect SESA's revenue to decline 57% YoY to INR3.4b due to lower sales
volumes. The Goa government temporarily suspended all mining operations in the state in September. The
announcement was followed by suspension of environmental clearances for iron ore mines in Goa by MoEF.
We expect iron ore sales volumes to decrease 72% YoY in 2QFY13 to 437k tons due to suspension of mining in
Goa. Average iron ore realization is likely to decline 19% QoQ to USD80/ton due to significant decline in
international iron ore prices in 2QFY13. Average iron ore spot prices in China have declined 18% YoY to USD118/
ton CFR.
EBITDA to decline 85% QoQ: We expect EBITDA to decline 85% QoQ to INR1b and EBIT/ton to decline 28% QoQ
to USD22 due to lower iron ore realization.
FY13 volumes at risk on Goa mining suspension; maintain Neutral: We have cut our volume assumption for FY13
from 14.7m tons to 7.9m tons due to Goa mining suspension. We are still maintaining our FY14 volume estimate
of 15.7m tons, which is contingent on restarting of mining in Goa (13.5m tons) and Karnataka (2.2m tons). The
stock trades at 5.1x FY14E EPS, 0.9x FY14E BV, and an EV of 4.5x FY14E EBITDA. We upgrade the stock to Buy, based
on the valuation of the Sesa-Sterlite merged entity.

Y/E March
Realization (USD/dmt)
Sales Qty ('000 dmt)
Net Sales
Change (YoY %)
EBITDA
As % of Net Sales
Interest
Depreciation
Other Income
PBT (before XO item)
EO
PBT (after XO item)
Tot al Tax
% Tax
Reported PAT before MI
Profit from associates
Adjusted PAT
Change (YoY %)
E: MOSL Estimates
October 2012
1Q
102
4,247
21,089
-12.6
11,474
54.4
493
269
1,521
12,232
-15
12,217
3,811
31.2
8,406
0
8,421
-39.7
(INR Million)
FY12
2Q
3Q
84
93
1,540
5,040
7,897
26,171
-14.0
16.3
2,600
10,852
32.9
41.5
516
730
243
263
504
180
2,345
10,039
-2,341
-1,779
4
8,260
-9
2,564
-245.9
31.0
13
5,696
0
1,219
2,354
8,695
-33.0
-18.4
FY13
4Q
102
5,100
27,944
-22.9
11,579
41.4
702
286
141
10,732
79
10,811
3,848
35.6
6,963
4,658
11,542
-20.9
1Q
99
2,900
17,326
-17.8
6,762
39.0
1,178
303
151
5,432
-2,522
2,910
922
31.7
1,988
7,652
11,362
34.9
2QE
80
437
3,363
-57.4
1,001
29.8
934
303
129
-106
0
-106
-32
30.0
-74
5,696
5,621
138.8
3QE
62
1,176
5,980
-77.2
1,845
30.9
934
303
77
686
0
686
206
30.0
480
5,708
6,188
-28.8
4QE
58
3,450
12,844
-54.0
3,861
30.1
934
303
39
2,664
0
2,664
799
30.0
1,865
5,523
7,388
-36.0
FY12
FY13E
99
15,927
83,101
-9.7
36,505
43.9
2,441
1,061
2,346
35,348
-4,056
31,292
10,214
32.6
21,078
5,877
31,012
-27.2
74
7,963
39,514
-52.5
13,469
34.1
3,979
1,211
397
8,676
-2,522
6,154
1,895
30.8
4,259
24,578
30,582
-1.4
C124

Sector: Metals
Steel Authority of India

BSE Sensex
S&P CNX
18,763
5,703
Bloomberg
SAIL IN
Equity Shares (m)
4,130.4
52 Week Range (INR)
117/73
1,6,12 Rel Perf (%)
-3/-1 7/-34
Mcap (INR b)
352.9
Mcap (USD b)
6.7
CMP: INR85
Year
Net Sales
End
(INR m)
3/11A
428,144
3/12A
463,726
3/13E
439,733
3/14E
483,437
Consolidated
Sell
PAT
EPS
(INR m) (INR)
49,466
12.0
37,174
9.0
27,527
6.7
35,442
8.6
EPS
Gr. (%)
-27.4
-24.8
-26.0
37.7
P/E
(X)
9.5
12.8
10.0
P/BV
(X)
0.9
0.8
0.8
RoE
(%)
13.9
9.6
6.7
8.2
RoCE
(%)
13.9
10.1
7.4
8.2
EV/
EV/
Sales EBITDA
1.0
7.4
1.2
8.9
1.2
7.3
Net sales to decline 4% YoY on lower volumes: We expect net sales to decline 4% YoY (flat QoQ) to INR108b due
to lower saleable steel volumes. Sales volumes are likely to decrease 5% YoY to 2.7m tons. Realization would be
up 2% YoY (down 7% QoQ) to INR39,960/ton. The domestic steel pricing environment remained weak in 2QFY13;
long and flat prices decreased 9% and 10% QoQ, respectively. Global steel prices have also shown downward
bias. Average steel prices have decreased 8%, 4%, 14% and 4% QoQ, respectively in Russia, Europe, China and
North America
Margins to shrink 16% QoQ to USD93/ton: We expect EBITDA/ton to decline 16% QoQ to USD93/ton due to
lower realization. We expect the benefits of lower coking coal prices to accrue slowly but downward pressure
on realization would overshadow any incremental benefit. Other income would fall by 43% QoQ to INR1.6b, as
cash is used to support capex.
Steel volumes to remain flat in FY13; maintain Sell: We expect earnings to decline at 2% per annum over FY1214 despite 10% CAGR in volumes due to SAIL's uncompetitive cost structure, execution delays, decline in steel
realization and poor operating efficiencies. The full benefits of the INR720b capex will be seen only in FY15. The
stock still appears expensive at 10x FY14E EPS and an EV of 7.3x FY14E EBITDA. Maintain Sell.

Y/E March
Sales (m tons)
Realization (INR per ton)
Change (YoY %)
Net Sales
Change (%)
EBITDA
Change (YoY %)
As % of Net Sales
EBITDA per ton (USD)
Interest
Depreciation
Other Income
PBT (after EO Inc.)
Tot al Tax
% Tax
Reported PAT
Adjusted PAT
Change (YoY %)
E: MOSL Estimates
October 2012
1Q
2.75
40,689
3.4
111,896
22.5
13,114
-28.8
11.7
107
1,710
3,742
4,630
12,293
3,913
31.8
8,381
8,381
-28.8
(INR Million)
FY12
2Q
3Q
4Q
2.85
2.60
3.20
39,289
42,476
42,787
10.2
22.0
10.6
111,973 110,437 136,920
3.6
-2.4
12.9
13,271
15,811
18,713
-21.7
-12.0
-15.4
11.9
14.3
13.7
102
119
117
2,000
1,855
1,210
3,938
4,093
3,891
4,903
3,837
2,156
7,149
9,037
23,014
2,203
2,716
7,244
30.8
30.1
31.5
4,946
6,321
15,770
10,034
10,984
8,524
-7.9
-0.8
-38.1
FY13
1Q
2QE
3QE
2.50
2.70
3.0
43,110
39,960
37,800
5.9
1.7
-11.0
107,775 107,892 113,400
-3.7
-3.6
2.7
15,153
13,918
13,222
15.5
4.9
-16.4
14.1
12.9
11.7
111
93
82
1,249
1,499
2,411
4,018
4,871
5,070
2,785
1,599
1,469
10,101
9,148
7,211
3,137
2,744
2,163
31.1
30.0
30.0
6,964
6,403
5,048
8,833
6,377
5,027
5.4
-36.4
-54.2
4QE
3.2
37,044
-13.4
118,541
-13.4
17,854
-4.6
15.1
103
2,878
5,922
1,352
10,407
3,122
30.0
7,285
7,255
-14.9
FY12
FY13E
11.4
41,336
11.8
471,226
8.6
60,909
-19.3
12.9
111
6,774
15,664
15,526
51,493
16,076
31.2
35,418
37,140
-22.5
11.4
39,264
-5.0
447,608
-5.0
60,147
-1.3
13.4
97
8,036
19,881
7,205
36,866
11,166
30.3
25,700
27,491
-26.0
C125

Sector: Metals
Sterlite Industries
BSE Sensex
18,763
S&P CNX
5,703
Bloomberg
STLT IN
Equity Shares (m)
3,361.2
52 Week Range (INR)
138/86
1,6,12 Rel Perf (%) -11/-19/-31
Mcap (INR b)
333.9
Mcap (USD b)
6.3
CMP: INR99
Year
Net Sales
End
(INR m)
3/11A
304,285
3/12A
411,789
3/13E
421,214
3/14E
463,018
Consolidated
Buy
PAT
EPS
(INR m) (INR)
50,993
15.2
56,058
16.7
54,883
16.3
59,632
17.7
EPS
Gr. (%)
26.2
9.9
-2.1
8.7
P/E
(X)
6.0
6.1
5.6
P/BV
(X)
0.8
0.7
0.7
RoE
(%)
13.9
14.1
12.4
12.3
RoCE
(%)
15.2
15.1
13.7
14.0
EV/
EV/
Sales EBITDA
0.7
4.0
0.7
3.8
0.6
3.5
Net sales to decrease 2% QoQ: We expect consolidated net sales to decline 2% QoQ (increase 2% YoY) to
INR104b on lower base metal prices. LME prices for all base metals have declined 0-3% QoQ. Refined zinc and
lead production would be 1% lower QoQ at 184k tons. Aluminum production from Balco is likely to increase 2%
QoQ to 61k tons. Copper cathode production would increase 1% QoQ to 88k tons.
EBITDA to grow 7% QoQ: We expect EBITDA to grow 7% QoQ (flat YoY) to INR24.8b on a lower base of 1QFY13,
when copper business was impacted by lower by-product realizations. Copper EBIT is likely to increase 29%
QoQ to INR2.6b. Aluminum (Balco) EBIT would decline to a negative INR358m on account of lower LME prices.
EBIT from the Power segment would grow 38% QoQ to INR2.6b.
Maintain Buy: We expect adjusted PAT to grow at a CAGR of just 3% over FY12-14 to INR59.6b due to project
commissioning delays, lower LME prices and higher raw material costs (coal and bauxite). Domestic zinc
production growth would be moderate, as mine production has witnessed some setbacks recently. However,
valuations remain attractive. The stock trades at 5.6x FY14E EPS and an EV of 3.5x FY14E EBITDA. Maintain Buy.

Y/E March
Copper cathode ('000 tons)
Aluminum (BALCO, '000 tons)
Aluminum (VAL , '000 tons)
Net Sales
Change (YoY %)
EBITDA
As % of Net Sales
Interest
Depreciation
Other Income
PBT (before XO item)
Extra-ordinary Exp.
PBT (after XO item)
Tot al Tax
% Tax
Reported PAT
Minority interest Profit/ (Loss)
Loss/(profit) of Associates
Adjusted PAT
Change (YoY %)
Avg LME Aluminium (USD/T)
Avg LME Copper (USD/T)
Avg LME Zinc (USD/T)
E: MOSL Estimate
October 2012
1Q
74
61
112
98,607
65.2
27,583
28.0
1,740
4,200
7,646
29,289
726
30,015
6,137
20.4
23,878
6,420
1,061
15,672
81.7
2,618
9,163
2,271
(INR Million)
FY12
2Q
3Q
87
84
60
63
89
107
101,957 103,037
67.6
23.7
24,820
23,183
24.3
22.5
1,549
1,573
4,450
4,575
8,002
8,768
26,823
25,803
-4,339
-4,318
22,485
21,484
5,049
5,053
22.5
23.5
17,436
16,431
5,030
4,660
1,812
2,636
14,932
13,453
48.1
21.7
2,450
2,090
8,993
7,530
2,247
1,917
FY13
4Q
80
62
115
108,189
7.6
27,054
25.0
3,280
5,072
7,035
25,737
-1,005
24,733
4,867
19.7
19,866
5,499
1,598
13,774
-20.5
2,225
8,318
2,050
1Q
2QE
88
88
60
61
124
124
106,484 104,064
8.0
2.1
23,083
24,805
21.7
23.8
2,419
2,501
5,182
5,268
9,484
8,107
24,966
25,143
-2,174
0
22,792
25,143
3,339
5,783
14.7
23.0
19,453
19,360
5,771
4,706
1,666
2,001
14,190
12,653
-9.5
-15.3
1,985
1,900
7,890
7,700
1,938
1,900
3QE
82
62
124
103,006
0.0
28,205
27.4
2,601
6,018
8,236
27,822
0
27,822
6,677
24.0
21,145
5,721
1,746
13,678
1.7
2,000
8,000
1,900
FY12
FY13E
4QE
82
325
61
246
124
423
107,660 411,789
-0.5
35.3
29,641 102,640
27.5
24.9
2,701
8,142
6,768
18,298
8,524
31,452
28,696 107,652
0
-8,936
28,696
98,717
7,174
21,106
25.0
21.4
21,522
77,611
5,670
21,609
1,490
7,107
14,361
57,831
4.3
22.8
2,100
2,346
8,000
8,501
1,900
2,121
340
260
500
421,214
2.3
105,734
25.1
10,223
23,234
34,350
106,626
-2,174
104,452
22,973
22.0
81,479
21,867
6,903
54,883
-5.1
1,996
7,898
1,910
C126

Sector: Metals
Tata Steel
BSE Sensex
S&P CNX
18,763
5,703
Bloomberg
TATA IN
Equity Shares (m)
971.4
52 Week Range (INR)
501/332
1,6,12 Rel Perf (%)
-1/-22/-20
Mcap (INR b)
389.3
Mcap (USD b)
7.4
CMP: INR401
Year
Net Sales
End
(INR m)
3/11A 1,187,531
3/12A 1,328,997
3/13E 1,354,936
3/14E 1,372,147
Consolidated
Sell
PAT
EPS
(INR m) (INR)
59,724
62.3
18,054
18.6
30,279
31.2
55,029
56.6
EPS
Gr. (%)
-n/a-70.1
67.7
81.7
P/E
(X)
21.6
12.9
7.1
P/BV
(X)
1.5
1.4
1.2
RoE
(%)
40.5
7.8
11.5
18.9
RoCE
(%)
13.2
9.1
8.8
10.5
EV/
EV/
Sales EBITDA
0.7
7.3
0.7
6.8
0.7
6.1
Tata Steel India (TSI): We expect net revenue to increase 5% YoY (fall 3% QoQ) to INR86.5b due to increase of 5%
YoY (decline of 5% QoQ) in steel realization and flat YoY volumes. Sales volumes are likely to remain flat YoY
(increase 4% QoQ) to 1.65m tons in 2QFY13. Average steel price realization is expected to be INR48,840/ton.
Domestic steel pricing environment remained weak in 2QFY13; long and flat prices decreased 9% and 10% QoQ,
respectively. We expect EBITDA to decline 4% QoQ to INR28.7b and EBITDA/ton to decline 6% QoQ to USD304/
ton.
TSE and others: We expect Tata Steel Europe (TSE) and other subsidiaries to report negative EBITDA due to
declining realization in Europe. Average steel prices declined 4% QoQ in 2QFY13 in Europe. We expect EBITDA/
ton to decrease from USD28 in 1QFY13 to a negative USD3 in 2QFY13. We also expect steel shipments to decline
16% YoY (8% QoQ) to 3.8m tons, as demand is very weak in Europe.
Steel environment challenging, price outlook negative; maintain Sell: We expect further correction in steel
prices due to weak demand in developed regions, correction in raw material prices and slowdown in Chinese
steel consumption, which has been the major demand driver so far. Though TSE's converter model will enable
it to get benefits of lower raw material prices, lower realization will eat away the gains. TSI margins are also
likely to decline in FY13 and FY14 due to higher proportion of purchased coking coal in the mix and lower
realization. The stock trades at 7.1x FY14E EPS, 1.2x FY14E BV, and an EV of 6.1x FY14E EBITDA. Maintain Sell.

Y/E March
(INR Million)
FY12
2Q
3Q
1,648
1,622
46,402
47,340
82,119
83,819
15.6
13.3
27,698
26,441
33.7
31.5
357
305
2,343
4,811
2,871
2,891
236
1,976
22,720
20,716
7,767
6,503
34.2
31.4
14,952
14,213
14,952
14,213
1Q
Sales ('000 tons)
1,593
Avg Seg. Realization (INR/tss)
45,832
Net Sales
78,603
Change (YoY %)
20.0
EBITDA
31,148
(% of Net Sales)
39.6
EBITDA(USD/tss)
419
Interest
4,537
Depreciation
2,853
Other Income
2,564
PBT (after EO Inc.)
30,482
Tot al Tax
8,288
% Tax
27.2
Reported PAT
22,194
Adjusted PAT
18,034
Consolidated Financials
Net Sales
330,002 327,979 331,031
EBITDA
44,572
27,500
19,133
Reported PAT (before MI & asso.) 52,937
1,390
-6,874
Adj. PAT (after MI & asso)
19,846
2,124
-6,027
E: MOSL Estimates; tss=ton of steel sales
October 2012
FY13
4Q
1,768
49,103
94,794
13.7
29,916
31.6
324
5,140
2,900
1,829
23,706
8,101
34.2
15,605
15,605
339,986
31,788
2,032
4,335
1Q
1,590
51,530
89,080
13.3
29,768
33.4
324
4,544
3,544
1,519
21,229
7,663
36.1
13,566
15,536
2QE
1,650
48,840
86,509
5.3
28,703
33.2
304
5,460
3,886
1,848
21,204
5,513
26.0
15,691
15,691
FY12
FY13E
3QE
1,900
45,900
94,549
12.8
27,151
28.7
251
5,559
4,132
1,857
19,317
4,443
23.0
14,874
14,874
4QE
2,350
6,631
7,490
44,982
47,214
47,455
113,509 339,335 383,647
19.7
15.4
13.1
31,074 115,368 116,696
27.4
34.0
30.4
223
347
268
5,657
19,254
21,221
4,379
11,514
15,941
1,866
8,864
7,090
22,904
97,624
84,654
4,810
30,659
22,429
21.0
31.4
26.5
18,094
66,964
62,225
18,094
62,804
64,195
338,212 312,934 338,232

36,003
28,051
37,967
5,170
238
11,017
7,949
791
11,469
365,559 1,328,997 1,354,936

40,068 124,168 142,088
12,212
49,485
28,637
12,686
20,279
32,895
C127

Sector: Oil & Gas
Oil & Gas

Company Name
BPCL
Cairn India
Chennai Petroleum
GAIL
HPCL
GRM up 36% QoQ, but YTD, both oil and GRM down 5% : Brent average crude price for
2QFY13 was marginally up 1% QoQ to USD110/bbl. However, volatility was high, led by
Eurozone uncertainty, geopolitical developments, and QE3. Brent, after hitting a low
of USD89/bbl in June-12, again rose to high of USD116/bbl in mid-Aug, before settling
at current levels of USD111/bbl.
Similar to oil, product cracks also were volatile with regional benchmark, Reuters
Singapore GRM averaging USD9.1/bbl v/s USD6.7/bbl in 1QFY13. Unless meaningful
refinery closures happen, we expect margins to remain subdued as global utilization
is likely to remain low led by lower demand and commissioning of new refineries.
IOC
Indraprastha Gas
MRPL
Oil India
ONGC
Petronet LNG
Reliance Industries
Petchem spreads subdued: In 2QFY13, polymer spreads over naphtha are down 7-8%
QoQ, while integrated polyester spreads are down 2-4% QoQ. However, YoY, PE spreads
are up 24% and PP spreads 7%. Polymer margins seem to have bottomed out and are
expected to slowly recover, contingent on the global economic growth.
Lower LPG losses help QoQ drop in under-recoveries: We estimate 2QFY13 underrecoveries at INR390b, down 18% QoQ, primarily helped by lower LPG losses due to
lower international prices. As the recent government decision to increase diesel price
by INR5/ltr and limit subsidized LPG cylinder was effected on 13 September 2012, the
meaningful positive impact of the same will be seen in subsequent quarters. Subsidy
sharing would be again ad hoc as in the previous years, and it will be finalized in the
last quarter. We model upstream sharing at 40% and downstream sharing at nil/8% for
FY13/FY14, with the balance being the government's share.
Valuation and view: Recent diesel price hike and limiting subsidized LPG cylinders
will reduce under-recoveries. However, FY13 estimated under-recoveries remain high
at INR1.6t (+14% YoY) v/s INR1.4t in FY12. Nevertheless, OMC stocks are at attractive
valuations and BPCL is our top pick for its E&P upside potential.

CMP
(INR)
28.09.12
BPCL
346
Cairn India
331
Chennai Petroleum
129
GAIL
383
81
HPCL
307
IOC
251
Indraprastha Gas
265
MRPL
61
Oil India
490
ONGC
280
Petronet LNG
158
Reliance Inds.
837
Oil & Gas Sector Aggregate
Oil & Gas Excl. RMs
(INR Million)
Rating
Sep.12
Buy
571,811
Neutral
48,725
Buy
100,501
Neutral
111,932
Neutral
2,426
Buy
496,111
Buy
1,115,444
Under Review8,530
Neutral
168,502
Buy
25,886
Buy
217,664
Buy
81,708
Neutral
937,028
3,886,267
1,702,901
Sales
Var.
% YoY
35.2
83.7
6.7
15.4
-13.6
34.0
25.1
42.9
44.4
-20.8
-3.8
52.2
19.3
24.3
18.1
Var. Sep.12
% QoQ
4.9 17,903
9.7 37,609
-8.9
4,499
0.9 13,935
-9.3
2,218
12.6 16,697
15.5 62,858
12.2
1,861
31.5
9,306
10.9 12,679
8.4 119,438
16.2
4,380
2.0 82,024
8.9 385,406
5.3 287,949
EBITDA
Var.
% YoY
LP
78.8
LP
-15.5
-14.2
LP
LP
18.3
1134.8
-21.7
-15.6
-2.3
-16.7
101.9
-4.4
Var.
% QoQ
LP
7.7
LP
-26.6
-10.0
LP
LP
3.8
LP
15.7
8.2
-4.2
21.6
LP
24.8
Net Profit
Sep.12
Var.
% YoY
10,183
LP
28,308
271.0
2,962
304.7
8,364
-23.6
1,085
-16.1
11,403
LP
41,570
LP
866
12.2
8,361 3365.2
9,399
-17.4
64,009
-25.9
2,616
0.5
55,482
-2.7
244,609
539.3
181,453
1.3
Var.
% QoQ
LP
-26.0
LP
-26.2
-13.1
LP
LP
1.9
LP
1.1
5.3
-3.4
24.0
LP
25.7
Harshad Borawake (HarshadBorawake@MotilalOswal.com)

October 2012
C128

Sector: Oil & Gas
Valuations are also attractive for upstream companies, ONGC and Oil India. Likely
further policy actions to reduce under-recoveries augurs well for them too.
We maintain Neutral on GAIL and GSPL due to headwinds on incremental gas
availability in the medium term. In contrast, domestic gas scarcity is a positive for
Petronet LNG.
RIL's new mega projects (petcoke gasification and off-gases cracker) are likely to
add to earnings from FY15/FY16. However, the medium-term outlook on core
business remains weak with RoE reaching sub-15%. Neutral.
GRM up QoQ; crude average remains largely flat

Crude price average largely flatQoQ (USD/bbl)
Brent-WTI spread average at USD17.7/bbl in 2QFY13 (USD/bbl)
160
20
120
80
-10
40
-25
-40
Sep-04
Sep-06
Sep-08
Sep-10
Sep-12
Aug-08
Aug-09
Aug-10
Aug-11
Aug-12
Singapore GRM up 36% QoQ to USD9.1/bbl in 2QFY13 (USD/bbl) Auto fuel cracks meaningfully up QoQ (USD/bbl)
2QFY13
4QFY12
2QFY12
4QFY11
2QFY11
4QFY10
2QFY10
4QFY09
2QFY09
4QFY08
2QFY08
4QFY07
2QFY07
4QFY06
2QFY06
4QFY05
2QFY05
Si nga pore GRM (Qtr Avg)

9.5
8.8
9.1 9.1
8.9
8.0
8.6
8.1
7.7
7.2
7.4 8.0
6.8
5.8 5.5
7.5 6.7
4.9
4.7 6.4 7.0
6.6 6.2 6.3
5.5
4.1
4.6
4.2
3.7
3.9
3.6 3.2
1.9
2QFY12
3QFY12
4QFY12
30
15
1QFY13
19.5
2QFY13
20.5
12.6
-0.6
0
-15
-6.4
-30
-31.9
-45
Gas ol i ne Naphtha
LPG
Di es el
Jet/Kero Fuel Oi l
Arab L-H differential lower by USD0.7/bbl in 2QFY13 (USD/bbl)

10
Our key assumptions

Our crude price assumption for FY13/14/15 is USD110/105/
100/bbl and USD90/bbl over long term.
8
6
4
2
0
Sep-02
Sep-04
Sep-06
Sep-08
Sep-10
We expect regional benchmark Singapore Reuters GRM

to remain in the USD7-9/bbl range for the near term.
We model Singapore GRM at USD8/bbl in FY13 and FY14.
Sep-12
Source: Reuters/Bloomberg/MOSL
October 2012
C129

Sector: Oil & Gas
Petchem margins weak on QoQ basis in 2QFY13 (INR/kg)

(RIL basic prices)
PP
PVC
POY
PE
2QFY11
3QFY11
4QFY11
1QFY12
2QFY12
3QFY12
4QFY12
1QFY13
2QFY13
QoQ (%)
YoY (%)
70.1
73.4
74.3
76.6
76.3
80.3
83.4
91.9
91.2
-0.7
19.6
72.4
76.1
81.9
87.9
81.9
84.0
84.1
92.1
91.9
-0.2
12.2
52.0
53.3
53.5
60.7
57.3
53.5
56.2
61.8
63.5
2.7
10.8
69.7
79.8
97.1
95.1
89.3
91.2
91.7
92.4
93.8
1.5
5.0
PSF
Naphtha
PE
68.9
80.8
103.8
104.4
93.4
97.1
96.4
95.8
96.2
0.4
2.9
31.2
36.4
41.9
44.8
44.1
45.6
51.9
48.5
51.3
5.7
16.2
38.9
37.0
32.4
31.8
32.1
34.7
31.4
43.3
39.9
-7.9
24.2
Polymer spreads decline QoQ in 2QFY13 (INR/kg)

PE
60
PP
Simple spreads
PP
PVC
41.3
39.7
40.0
43.0
37.8
38.5
32.1
43.5
40.6
-6.8
7.4
Integrated spreads
POY
PSF
20.8
16.9
11.6
15.8
13.2
7.9
4.2
13.3
12.2
-8.3
-7.6
Source:
45.2
44.3
51.0
52.0
64.2
70.9
59.8
69.1
54.4
58.5
55.2
61.1
50.5
55.2
54.0
57.4
53.0
55.4
-1.9
-3.5
-2.6
-5.4
Bloomberg/MOSL
POY/PSF spreads largely flat QoQ (INR/kg)

POY
PVC
PSF
2QFY13
1QFY13
4QFY12
3QFY12
2QFY12
1QFY12
4QFY11
2QFY11
2QFY13
1QFY13
20
4QFY12
0
3QFY12
35
2QFY12
15
1QFY12
50
4QFY11
30
3QFY11
65
2QFY11
45
3QFY11
80

Sens ex Index
MOSL Oi l & Gas Index
2QFY13 under-recoveries down 18% QoQ to INR390b; we model upstream share at 40% in FY13
(INR b)
110
105
100
Sep-12
Jun-12
Jul-12
Aug-12
95

Sens ex Index
MOSL Oi l & Gas Index
120
110
100
90
October 2012
Sep-12
Jun-12
Mar-12
Dec-11
Sep-11
80
FY09
FY10
FY11
FY12
Fx Rate (INR/USD)
46.0
Brent (USD/bbl)
84.8
Gross Under recoveries (INR b)
Auto Fuels
575
Domestic Fuels
458
Total
1,033
Sharing (INR b)
Oil Bonds/Cash
713
Upstream
329
OMC's sharing
-9
Total
1,033
Sharing (%)
Government
69
Upstream
32
OMC's sharing
-1
Total
100
47.5
69.6
45.6
86.3
47.9
114.5
1QFY13 2QFY13E FY13E

54.2
108.7
55.5
110.2
54.4
110.0
FY14E
53.0
105.0
144
316
461
375
405
780
812
573
1,385
290
188
478
243
147
390
968
610
1,577
695
508
1,203
260
145
56
461
410
303
67
780
835
550
0
1,385
0
151
324
475
242
148
0
391
946
631
0
1,577
626
481
96
1,203
56
31
12
100
53
39
9
100
60
40
0
100
0
32
68
100
62
60
52
38
40
40
0
0
8
100
100
100
C130

Sector: Oil & Gas
ONGC's net realization estimated at USD53/bbl

Net Realizat ion (USD/ bbl)
GAIL transmission volumes under pressure (mmscmd)
Subsidy Burden (USD/bbl)
97
115 116 115 120 120 117 119 119 116 110 109
107 109
33.2
14.1 19.0 27.7 32.8
16.5 24.3 70.1
2.3
58.356.4 57.7 51.4 48.1 62.7 64.8
73.2
66.8 77.3 63.3 59.4

83.7
38.7 48.1
45.0 44.3 46.6 53.3

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
FY10
FY11
FY12
FY10
FY13
FY11
FY12
FY13
Lower Light-Heavy spreads to pressure RIL premium(USD/bbl) Cairn's Rajasthan production likely to average 173kbpd
20
Premi um/ (di s count)

RIL
Singapore GRM (Qtr Avg)
15
116
125 118
125
125
125
1Q
2Q
3Q
167
173
1Q
2Q
138
10
5
45
0
-5
1234123412341234123412341234123412341234123412
1Q
FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12F Y13
2Q
3Q
4Q
FY11
4Q
FY12
FY13
CMP (INR)
28.09.12
Oil & Gas
BPCL
Cairn India
Chennai Petroleum
GAIL
Guj. State Petronet
HPCL
Indraprastha Gas
IOC
MRPL
Oil India
ONGC
Petronet LNG
Reliance Inds.
Sector Aggregate
Oil & Gas Ex RMS
October 2012
346
331
129
383
81
307
265
251
61
490
280
158
837
Rating
EPS (INR)
FY12 FY13E FY14E
P/E (x)
FY12 FY13E FY14E
EV/EBITDA (x)
FY12 FY13E FY14E
RoE (%)
FY12 FY13E FY14E
Buy
Neutral
Buy
Neutral
Neutral
Buy
UR
Buy
Neutral
Buy
Buy
Buy
Neutral
10.8
48.7
4.2
28.8
9.3
26.9
21.9
49.2
5.2
57.3
30.4
14.1
67.7
32.1
6.8
31.1
13.3
8.7
11.4
12.1
5.1
11.7
8.5
9.2
11.2
12.4
9.9
10.5
11.5
5.3
50.9
9.6
5.4
12.6
6.4
8.1
6.5
3.9
3.7
7.6
8.0
6.2
5.6
5.0
21.0
1.6
17.9
23.4
7.1
27.5
20.2
13.2
20.7
20.7
34.1
13.0
15.8
16.0
21.6
64.2
13.8
31.0
7.7
24.5
25.3
24.4
2.9
58.7
29.8
13.1
67.8
21.5
54.0
34.5
32.1
7.6
27.4
28.0
30.3
8.5
64.7
33.4
15.0
69.7
16.1
5.2
9.4
12.3
10.4
12.5
10.5
10.2
21.2
8.3
9.4
12.1
12.3
10.3
10.1
16.1
6.1
3.7
11.9
10.5
11.2
9.5
8.3
7.2
7.6
8.4
10.5
12.0
9.6
9.6
8.5
3.5
9.8
9.0
5.9
11.3
5.5
8.9
7.3
3.7
3.7
7.9
9.3
6.2
5.6
8.8
3.4
5.3
8.7
5.8
9.0
4.8
7.0
4.6
3.3
3.1
5.9
8.9
5.5
5.0
9.5
23.1
5.3
17.2
16.4
6.2
26.4
9.5
6.8
18.7
17.7
25.1
11.7
13.9
14.9
8.9
16.7
12.5
16.0
14.3
6.6
24.7
11.0
18.2
18.4
17.8
23.8
11.0
13.4
14.1
C131

Sector: Oil & Gas
BPCL
BSE Sensex
S&P CNX
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
5,703
BPCL IN
723.0
395/230
-9/-6/-6
250.4
4.8
Buy
CMP: INR346
Year
Net Sales Adj. PAT Adj. EPS EPS
End
(INR b) (INR b) (INR) Gr. (%)
03/11A
1,536
16.3
22.6
0.2
03/12A
2,121
7.8
10.8
-52.2
03/13E
2,455
15.6
21.6
99.8
03/14E
2,339
15.6
21.5
-0.1
* Consolidated
P/E
(X)
32.1
16.1
16.1
P/BV
(X)
1.6
1.5
1.4
RoE
(%)
11.1
5.0
9.5
8.9
RoCE
(%)
5.5
5.2
7.4
6.5
EV/
EV/
Sales EBITDA
0.3
11.5
0.2
8.5
0.2
8.8
Similar to prior quarters, profitability of OMCs (BPCL, HPCL, IOC) would depend more on subsidy sharing, which
is ad hoc, than on business fundamentals. Government subsidy compensation typically comes with a delay.
OMCs' 2QFY13 results would be benefited by (a) inventory gains as crude price are higher USD14/bbl at the
quarter-end, and (b) forex gain as rupee has appreciated by ~4%.
2QFY13 under-recoveries are down 18% QoQ, despite higher crude price and average exchange rate, primarily
due to lower LPG prices and diesel price hike effected on 13 September 2012.
For subsidy sharing, we model OMCs' sharing at nil/8%, upstream sharing at 40%/40% and government sharing
at 60%/52% in FY13/FY14. We model nil under recovery sharing for 2FY13.
We expect BPCL to report PAT of INR10b v/s loss of INR32.3b in 2QFY12 and INR88.4b in 1QFY13.
Key things to watch out for: (a) Subsidy sharing, (b) Forex fluctuations and (c) GRM.
Adjusted for investment value of INR187/sh (E&P, Bina and other listed investments post 25% discount), the
stock trades at FY13E P/B of INR0.7x. Buy.
(INR Million)
Y/E March
Net Sales
Change (%)
EBITDA
Change (%)
% of Sales
Depreciation
Interest
Other Income
PBT
Tax
Tax rate (%)
PAT
Change (%)
Adj. PAT
Adj. EPS
Key Assumption (INR b)
Gross under recovery
Upstream sharing
Govt. sharing
Net Under/(Over) recovery
As a % of Gross
E: MOSL Estimates
October 2012
FY12
FY13
1Q
461,177
34.7
-21,861
nm
-4.7
4,901
3,349
4,492
-25,619
0
0.0
-25,619
nm
-25,619
-35.4
2Q
422,819
19.7
-27,148
nm
-6.4
4,600
4,532
3,987
-32,293
0
0.0
-32,293
nm
-32,293
-44.7
3Q
588,245
60.4
36,874
406.3
6.3
4,667
5,174
4,389
31,422
26
0.1
31,396
1,575.5
31,396
43.4
4Q
646,422
42.9
50,571
207.6
7.8
4,681
4,941
4,382
45,331
5,703
12.6
39,628
323.8
39,628
54.8
1Q
545,227
18.2
-81,757
nm
-15.0
4,801
5,205
3,395
-88,368
0
0.0
-88,368
nm
-88,368
-122.2
2QE
571,811
35.2
17,903
nm
3.1
4,950
5,215
4,991
12,729
2,546
20.0
10,183
nm
10,183
14.1
3QE
662,679
12.7
56,235
52.5
8.5
5,245
5,200
3,707
49,497
9,899
20.0
39,598
26.1
39,598
54.8
103
34
35
34
32.6
49
16
0
32
66.3
76
36
70
-29
nm
98
43
92
-36
nm
116
37
0
80
68.5
93
35
58
0
0.1
91
41
90
-40
nm
FY12
FY13E
4QE
571,855 2,118,662 2,351,572
-11.5
39.9
11.0
53,889
38,436
46,270
6.6
12.6
20.4
9.4
1.8
2.0
5,564
18,849
20,560
5,000
17,996
20,619
2,308
17,250
14,402
45,634
18,842
19,493
-6,013
5,729
6,433
-13.2
30.4
33.0
51,646
13,113
13,060
30.3
-15.2
-0.4
51,646
13,113
13,060
71.4
18.1
18.1
93
43
90
-40
nm
326
130
197
0
0.0
393
156
237
0
nm
C132

Sector: Oil & Gas
Cairn India
BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
5,703
CAIR IN
1,907.4
401/258
-9/-12/4
630.9
12.0
Neutral
CMP: INR331
Year
Net Sales
PAT Adj. EPS EPS
End
03/11A 102,779 63,343
33.3
502.6
03/12A 131,130 92,929
48.7
46.3
03/13E 188,419 122,387 64.2
31.7
03/14E 184,280 102,970 54.0
-15.9
*Consolidated
P/E
(X)
6.8
5.2
6.1
P/BV
(X)
1.3
1.1
1.0
RoE
(%)
17.1
21.0
23.1
16.7
RoCE
EV/
EV/
(%) BOE (1P)EBITDA
17.9
18.5
20.3
16.2
5.3
23.9
12.7
3.5
18.5
11.5
3.4
We expect Cairn India to report net sales of INR48.7b (v/s INR44.4b in 1QFY13), led by higher average production
at its Rajasthan block. We estimate EBITDA at INR37.6b v/s INR21b in 2QFY12 and INR35b in 1QFY13.
We estimate gross oil sales of 173kbpd from Rajasthan field and total net sales of 131kboepd (v/s 99.2kboepd in
2QFY12 and 127kboepd in 1QFY13).
We expect Other income to increase led by higher cash balance. We estimate forex loss of INR2.7b v/s gain of
INR8.7b in 1QFY13 due to ~4% QoQ rupee appreciation v/s 10% depreciation in 1QFY13.
The company's near-term focus areas are: (1) debottlenecking of its pipeline, (2) production ramp-up, (3)
approvals on further exploration in Rajasthan, and (4) maiden dividend.
We model in Brent crude price of USD110/105/105bbl in FY13/14/15 and long-term price of USD90/bbl, and take
a quality discount for Cairn India of 10.5% in FY13 and 12% long-term. We have assumed FY13 tax rate of 9% at
the upper end of management guidance of 5-9%.
Key things to watch out for: (a) Net realization, (b) Forex fluctuations.
The stock currently trades at 5.2x FY13E EPS of INR64.2. Maintain Neutral.

Y/E March
(INR Million)
FY12
1Q
37,127
341.7
31,748
3,647
446
528
-8
2Q
3Q
Net Sales
26,522
30,968
Change (%)
-1.3
0.0
EBITDA
21,040
25,456
D,D & A (inc. w/off)
3,531
5,550
Interest
1,228
240
Other Income (Net)
620
1,124
Forex Fluctuations
5,310
3,015
Exceptional items
13,552
PBT
28,175
22,211
23,803
Tax
909
1,029
1,184
Tax rate* (%)
3.2
6.1
5.7
PAT
27,266
7,630
22,619
YoY Change (%)
868.9
-51.9
12.5
EPS
14.3
4.0
11.9
Key Assumptions and Cain's share in production (kboepd)
44.7
45.8
51.0
Brent Price (USD/bbl)
116.8
112.9
109.3
Ravva and Cambay Prodn.
12.1
11.5
11.4
Rajasthan Production
87.6
87.7
87.6
Total
99.6
99.2
99.0
E: MOSL Estimates; * Excluding forex fluctuations, includes
October 2012
FY13
FY12
FY13E
188,419
43.7
145,633
23,335
345
5,846
5,910
0
133,710
11,323
8.9
122,387
54.2
64.2
54.4
110.0
10.2
121.1
131.3
4Q
36,513
-0.1
29,812
4,663
305
923
-2,170
1Q
44,400
19.6
34,921
4,726
295
964
8,663
2QE
48,725
83.7
37,609
4,963
50
1,476
-2,752
3QE
47,238
52.5
36,028
6,450
0
1,597
0
4QE
48,055
31.6
37,075
7,196
0
1,809
0
23,598
1,735
6.7
21,862
-11.0
11.5
39,528
1,271
4.1
38,257
40.3
20.1
31,319
3,011
8.8
28,308
271.0
14.8
31,175
2,806
9.0
28,369
25.4
14.9
31,688
4,236
13.4
27,452
25.6
14.4
131,130
27.6
108,056
17,391
2,220
3,194
6,148
13,552
97,787
4,857
5.3
79,378
25.3
41.6
55.5
110.2
10.2
121.1
131.3
54.0
110.0
10.2
122.5
132.7
54.0
111.1
10.2
123.8
134.0
47.9
114.5
11.5
89.8
101.3
50.2
118.8
10.9
96.3
107.3
MAT credit.
54.2
108.7
10.2
117.0
127.2
C133

Sector: Oil & Gas
Chennai Petroleum Corporation

BSE Sensex
S&P CNX
18,763
5,703
Bloomberg
MRL IN
Equity Shares (m)
149.0
52 Week Range (INR)
206/117
1,6,12 Rel Perf (%)
-10/-25/-51
Mcap (INR b)
19.3
Mcap (USD b)
0.4
Buy
CMP: INR129
Year
Net Sales
PAT
End
(INR m) (INR m)
03/11A 331,406
5,115
03/12A 407,962
619
03/13E 520,945
2,053
03/14E 510,725
5,146
EPS
(INR)
34.3
4.2
13.8
34.5
EPS
Gr. (%)
-15.2
-87.9
231.9
150.7
P/E
(X)
31.1
9.4
3.7
P/BV
(X)
0.51
0.49
0.45
RoE
(%)
14.2
1.6
5.3
12.5
RoCE
Div
EV/
(%) Yld (%) EBITDA
12.2
8.1
1.0
1.3
50.9
7.2
3.4
9.8
11.4
7.7
5.3
We expect CPCL to report 2QFY13 PAT of INR2.9b v/s INR732m in 2QFY12 and loss of INR9.7b in 1QFY13.
EBITDA is expected to be INR4.5b against EBITDA loss of INR7.8b in 1QFY13. The turnaround is led by positive
GRM helped by crude inventory gains. Regional benchmark Reuters Singapore GRM is up 36% QoQ to USD9.1/
bbl from USD6.7/bbl.
On the operational front, we expect refinery throughput at 2mmt (down 21% QoQ and 23% YoY) due to planned
75-day shutdown for tie-up of revamped CDU/VDU units which will increase its refining capacity by 0.6mmt.
We expect refining margins to remain subdued as the global operating rates (ex US) are likely to remain low led
by lower demand (particularly in Europe), commissioning of new refineries and delay in capacity closures
(protectionist policies by European governments).
Key things to watch out for: (a) GRM, (b) Forex fluctuations, (c) Inventory changes.
For CPCL we model in GRM of USD4.7/bbl for FY13 and USD5.5/bbl for FY14. The stock trades at FY14E P/E of 3.7x
and EV/EBITDA of 5.3x. Maintain Buy.
(INR Million)
Y/E March
Net Sales
Change (%)
EBITDA
% of Sales
% Change
Depreciation
Interest
Other Income
PBT
Tax
Rate (%)
PAT
Change (%)
EPS
Key Assumptions
GRM (USD/bbl)
Throughput (mmt)
E: MOSL Estimates
October 2012
FY12
FY13
FY12
FY13E
1Q
98,953
55.6
642
0.6
255.6
913
587
42
-816
-265
nm
-551
nm
-3.7
2Q
94,231
16.0
-2,102
-2.2
nm
918
93
110
-3,002
-3,734
nm
732
-25.1
4.9
3Q
111,509
33.6
619
0.6
-82.2
910
956
309
-939
-305
32.5
-634
nm
-4.3
4Q
103,270
0.2
2,239
2.2
-61.5
913
858
2,707
3,175
2,103
66.2
1,072
-65.9
7.2
1Q
110,379
11.5
-7,848
-7.1
nm
894
1,093
60
-9,774
-85
0.9
-9,690
nm
-65.0
2QE
100,501
6.7
4,499
4.5
nm
950
1,095
1,350
3,804
842
22.1
2,962
304.7
19.9
3QE
153,688
37.8
6,895
4.5
1,014.3
980
1,100
480
5,295
1,173
22.1
4,122
nm
27.7
4QE
156,377
51.4
5,764
3.7
157.4
1,096
1,135
480
4,013
-929
-23.1
4,942
361.1
33.2
407,962
23.1
1,398
0.3
-88.4
3,654
2,494
3,168
-1,582
-2,201
139.1
619
-87.9
4.2
520,945
27.7
9,311
1.8
565.9
3,919
4,423
2,370
3,338
1,002
30.0
2,337
277.8
15.7
2.4
2.5
0.3
2.6
3.4
2.7
4.5
2.7
-2.2
2.5
7.1
2.0
7.1
3.2
6.7
3.2
2.6
10.6
4.7
10.9
C134

Sector: Oil & Gas
GAIL (India)
BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
5,703
GAIL IN
1,268.5
445/303
-2/-5/-23
485.9
9.2
Neutral
CMP: INR383
Year
Net Sales Adj. PAT EPS
End
03/11A 324,586 35,610
28.7
03/12A 402,807 36,538
28.8
03/13E 445,447 39,363
31.0
03/14E 489,873 40,771
32.1
*Adjustment for investments
EPS
Gr. (%)
16.0
0.4
7.7
3.6
*P/E
(X)
10.6
9.8
9.5
*P/BV
(X)
1.8
1.6
1.4
RoE
(%)
19.8
17.9
17.2
16.0
RoCE
(%)
24.8
21.0
18.6
16.2
*EV/
*EV/
Sales EBITDA
1.1
7.2
1.1
7.2
1.1
7.1
We expect GAIL to report adjusted PAT of INR8.4b (down 24%YoY and 26% QoQ).
Subsidy sharing assumption: For FY13, we model upstream sharing at 40%, similar to FY12. We also model GAIL's
share at INR7.9b in 2QFY13 v/s INR5.7b in 2QFY12 and INR7b in 1QFY13.
Segmental EBIT (pre-subsidy) is sharply down 20% QoQ primarily due to lower LPG realizations (down 30%
QoQ) and lower gas trading EBIT (1Q included one-time gains). This is partly compensated by higher petchem
EBIT (volumes up 59% QoQ). We model gas transmission volumes at 109mmscmd v/s 119 in 2QFY12 and 110 in
1QFY13.
Key things to watch out for: a) Subsidy sharing, b) Transmission volumes.
Adjusted for investments, the stock trades at 9.5x FY14E EPS of INR32.1. Though we like the management's
strategy to build network to enable gas sourcing, we remain Neutral due to medium-term earnings concern led
by likely under-utilization of its new network on account of headwinds to incremental gas availability.
(INR Million)
Y/E March
FY12
1Q
88,674
25.0
15,556
17.5
8.4
1,782
208
863
14,429
4,582
31.8
9,847
11.0
Net Sales
Change (%)
EBITDA
% of Net Sales
Change (%)
Depreciation
Interest
Other Income
PBT
Tax
Rate (%)
PAT
Change (%)
Key Assumptions
Gas Trans. volume (mmsmd)
117
Petchem sales ('000MT)
88
LPG realization (USD/MT)
958
Segmental EBIT Breakup (INRm)
Natural Gas transmission
6,520
LPG transmission
690
Natural Gas Trading
3,131
Petrochemicals
2,434
LPG & Liq.HC (pre-subsidy)
9,104
Total
21,544
Less: Subsidy
-6,819
Total
14,725
E: MOSL Estimates
October 2012
FY12
FY13E
2Q
96,990
19.7
16,482
17.0
15.0
2,008
226
1,434
15,682
4,738
30.2
10,944
18.5
3Q
112,598
34.6
17,605
15.6
33.9
1,975
207
557
15,980
5,066
31.7
10,914
12.8
4Q
104,546
17.6
7,338
7.0
-42.3
2,143
523
2,637
7,309
2,476
33.9
4,833
-38.3
1Q
110,886
25.0
18,991
17.1
22.1
2,169
588
612
16,846
5,508
32.7
11,338
15.1
2QE
111,932
15.4
13,935
12.4
-15.5
2,185
590
1,008
12,168
3,804
31.3
8,364
-23.6
FY13
3QE
113,224
0.6
17,409
15.4
-1.1
2,223
598
1,350
15,938
4,997
31.4
10,942
0.3
4QE
109,405
4.6
15,214
13.9
107.3
2,276
307
39
12,670
3,950
31.2
8,720
80.4
402,807
24.1
56,981
14.1
4.5
7,907
1,165
5,491
53,400
16,862
31.6
36,538
2.6
445,447
10.6
65,549
14.7
15.0
8,853
2,082
3,008
57,622
18,259
31.7
39,363
7.7
119
129
898
119
113
819
116
118
977
110
66
1,015
109
105
710
114
110
900
124
113
800
118
448
912
114
394
856
5,562
722
2,866
4,041
9,187
21,560
-5,666
15,894
6,208
775
3,230
3,875
8,416
22,068
-5,361
16,707
3,248
533
1,659
4,309
10,663
20,037
-13,980
6,057
5,673
709
4,956
1,958
11,373
24,751
-7,000
17,751
5,487
686
2,978
3,754
6,851
19,755
-7,887
11,868
5,740
690
2,978
3,894
10,599
23,900
-8,616
15,284
5,527
692
2,908
3,973
8,683
21,783
-9,354
12,429
21,539
2,720
10,886
14,658
37,371
85,209
-31,826
53,383
22,427
2,777
13,821
13,579
37,506
90,189
-32,858
57,332
C135

Sector: Oil & Gas

BSE Sensex
S&P CNX
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
5,703
GUJS IN
562.7
107/62
-6/-2/-35
45.4
0.9
Neutral
CMP: INR81
Year
P/E
P/BV
End
(INR m) (INR m) (INR) Gr. (%) (x)
(x)
03/11A 10,391
5,064
9.0
22.3
03/12A 11,153
5,221
9.3
3.1
8.7
1.8
03/13E
9,676
4,350
7.7
-16.7
10.4
1.6
03/14E
9,278
4,303
7.6
-1.1
10.5
1.4
*Our EPS numbers does not factor in any provision towards
RoE
RoCE
EV/
EV/
(%)
(%)
Sales EBITDA
28.4
25.6
23.4
22.8
4.9
5.4
16.4
17.9
5.4
5.9
14.3
15.9
5.3
5.8
"Social Contribution Fund"
We expect GSPL to report net sales of INR2.4b and PAT of INR1.1b (down 16% YoY and 13% QoQ).
We build lower gas transmission volumes at 30mmscmd in 2QFY13 (v/s 35.2mmscmd in 2QFY12 and 31.1mmscmd
in 1QFY13) led by decline in KG-D6 production.
The recent tariff approval by PNGRB for GSPL's high pressure pipeline indicates 12.5% tariff cut for GSPL,
however was above our and consensus estimate. Further, as against our earlier understanding of retrospective
likely impact of (a) tariff change and (b) return the cost of system use gas (SUG), including unaccounted gas;
management indicated that they are unlikely to have to refund. Given the non-clarity on this issue we do not
build any impact in our estimates and would await for more clarity.
GSPL has won all 3 bids for cross country pipelines and in JV with OMC's is currently building the same. However,
concerns remain on the gas availability for these pipelines and are likely to remain underutilized in the initial
years of operation.
Key things to watch out for: a) Transmission volumes, b) Clarity on the recent tariff order by PNGRB.
We build gas transmission volumes of 30mmscmd in FY13 and 33mmscmd in FY14. We model average tariff at
INR850/mscm in FY13 and INR800/mscm in FY14. The stock trades at 10.5x FY14E EPS of INR7.6. Neutral.
(INR Milllion)
Y/E March
Net Sales
Change (%)
EBITDA
% of Net Sales
% Change
Depreciation
Interest
Other Income
PBT
Tax
Rate (%)
PAT
Change (%)
EPS (INR)
Transmission Vol. (mmscmd)
Implied tariff (INR/mscm)
E: MOSL Estimates
October 2012
FY12
1Q
2,843
12.9
2,619
92.1
10.0
453
324
112
1,954
581
29.7
1,374
31
2.4
36.8
813
2Q
2,808
11.0
2,584
92.0
11.3
440
337
143
1,949
656
33.7
1,293
41
2.3
35.2
835
3Q
2,739
-1.9
2,518
91.9
-3.9
460
325
175
1,907
646
33.9
1,261
-21
2.2
32.8
899
FY13
4Q
2,763
8.3
2,520
91.2
9.7
466
316
165
1,902
610
32.0
1,293
-14
2.3
31.1
956
1Q
2,676
-5.9
2,465
92.1
-5.9
439
317
176
1,884
636
33.7
1,248
-9
2.2
31.1
903
2QE
2,426
-13.6
2,218
91.4
-14.2
475
320
175
1,598
513
32.1
1,085
-16
1.9
30.0
850
3QE
2,387
-12.8
2,181
91.4
-13.4
478
324
175
1,554
499
32.1
1,055
-16
1.9
29.5
850
4QE
2,188
-20.8
1,988
90.9
-21.1
509
336
353
1,495
534
35.7
962
-26
1.7
29.4
797
FY12
FY13E
11,153
7.3
10,241
91.8
6.5
1,819
1,302
593
7,714
2,493
32.3
5,221
3
9.3
34.0
872
9,676
-13.2
8,852
91.5
-13.6
1,902
1,297
878
6,532
2,182
33.4
4,350
-17
7.7
30.0
850
C136

Sector: Oil & Gas
HPCL
BSE Sensex
S&P CNX
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
5,703
HPCL IN
339.0
385/239
-8/0/-29
104.2
2.0
Buy
CMP: INR307
Year
End
03/11A
03/12A
03/13E
03/14E
Sales
Adj. PAT Adj. EPS EPS
1,309,342 15,390
45.4
18.3
1,781,392 9,115
26.9
-40.8
1,898,362 8,292
24.5
-8.7
2,007,946 9,295
27.4
11.7
P/E
(X)
11.4
12.5
11.2
P/BV
(X)
0.8
0.8
0.7
RoE
(%)
12.8
7.1
6.2
6.6
RoCE
(%)
8.6
6.7
6.2
6.6
EV/
EV/
Sales EBITDA
0.2
9.6
0.1
7.9
0.1
6.4
Standalone
We expect HPCL to report PAT of INR11.4b v/s loss of INR33.6b in 2QFY12 and INR92.5b in 1QFY13.
Key things to watch out for: (a) Subsidy sharing, (b) Forex fluctuations and (c) GRM.
HPCL trades at 12.5x FY13E EPS and 0.8x FY13E BV. We have a Buy rating due to attractive valuations.
(INR Million)
Y/E March
Net Sales
Change (%)
EBITDA
% of Net Sales
Change (%)
Depreciation
Interest
Other income
Exceptional Item
PBT
Tax
Rate (%)
PAT
Change (%)
Adj. EPS
Key Assumptions (INR b)
Upstream sharing
Oil Bonds/Cash subsidy
Net Under recovery
Net Sharing (%)
E: MOSL Estimates
October 2012
FY12
FY13
1Q
407,980
39.6
-26,873
-6.6
66.3
3,886
2,641
2,585
12
-30,803
0
0.0
-30,803
63.5
-90.9
2Q
370,302
31.6
-29,437
-7.9
nm
4,150
3,028
2,971
0
-33,644
0
0.0
-33,644
nm
-99.2
3Q
479,174
41.3
35,725
7.5
470.1
4,368
6,982
2,876
95
32
33
31
32
47
16
0
31
67
FY12
27,252
0
0.0
27,252
1,191.6
80.4
4Q
523,936
32.1
54,667
10.4
176.8
4,726
4,326
3,790
-17
49,387
3,077
6.2
46,310
312.5
136.6
1Q
440,765
8.0
-88,759
-20.1
nm
4,544
5,492
6,337
-29
-92,488
0
0.0
-92,488
nm
-272.8
2QE
496,111
34.0
16,697
3.4
nm
4,650
4,160
4,925
0
12,812
1,409
11.0
11,403
nm
33.6
3QE
513,057
7.1
52,817
10.3
47.8
4,755
3,520
1,925
0
46,467
5,111
11.0
41,356
51.8
122.0
71
34
66
-28
nm
91
40
85
-34
nm
107
34
0
73
69
86
33
53
0
nm
84
38
83
-36
nm
FY13E
4QE
448,428 1,781,392 1,898,362
-14.4
36.1
6.6
50,319
34,082
31,073
11.2
1.9
2
-8.0
3.0
-215.6
4,995
17,129
18,944
3,040
16,977
16,212
1,291
12,222
14,478
0
-5
-29
43,574
12,193
10,366
-4,448
3,077
2,073
nm
25.2
20.0
48,022
9,115
8,292
3.7
-40.8
-9.0
141.7
26.9
24.5
85
40
82
-36
nm
304
121
183
0
nm
362
144
218
0
nm
C137

Sector: Oil & Gas
Indian Oil Corporation

BSE Sensex
S&P CNX
18,763
5,703
Bloomberg
IOCL IN
Equity Shares (m)
2,428.0
1,6,12 Rel Perf (%)
-5/-13/-34
Mcap (INR b)
608.3
Mcap (USD b)
11.5
Buy
CMP: INR251
Year
End
03/11A
3,081
78.3
32.3
-26.9
03/12A
4,072
119.3
49.2
52.4
03/13E
4,261
59.4
24.4
-50.3
03/14E
4,425
73.6
30.3
24.0
*Consolidated
P/E
(X)
5.1
10.2
8.3
P/BV
(X)
1.0
0.9
0.9
RoE
(%)
14.2
20.2
9.5
11.0
RoCE
(%)
11.2
12.9
9.4
11.1
EV/
EV/
Sales EBITDA
0.3
7.2
0.3
8.0
0.3
6.3
We expect IOCL to report PAT of INR41.6b v/s loss of INR75b in 2QFY12 and INR224b in 1QFY13. Reported PAT in
FY12 was impacted due to one-time provision of INR77.1b towards entry tax for its Mathura refinery in UP.
Key things to watch out for: (a) Subsidy sharing, (b) Forex fluctuations, and (c) GRM.
IOC trades attractively at 0.9x FY13E book value and 10.2x FY13E EPS. Buy.

Y/E March
Net Sales
Change (%)
EBITDA
% of Net Sales
% Change
Depreciation
Interest
Other Income
PBT
Tax
Rate (%)
Adj. PAT
Change (%)
Extraordinary Items
PAT
Adj. EPS
Key Assumptions (INR b)
Upstream sharing
Govt. sharing
Net Under recovery
As a % of Gross
E: MOSL Estimates
October 2012
(INR Million)
FY12
1Q
1,007,239
40.5
-24,225
-2.4
nm
12,235
10,376
9,649
-37,187
0
nm
-37,187
nm
-37,187
-15.3
238
79
82
77
32.2
FY13E
2Q
3Q
4Q
1Q
2QE
3QE
4QE
891,456 1,152,084 1,277,355 966,028 1,115,444 1,199,679 1,257,876 4,328,133 4,539,026
16.1
43.4
30.0
-4.1
25.1
4.1
-1.5
32.3
4.9
-53,618 107,247 140,402 -202,360
62,858 149,549 143,184
169,807
153,230
-6.0
9.3
11.0
-20.9
5.6
12.5
11.4
3.9
3.4
nm
293.2
163.7
nm
nm
39.4
2.0
45.7
-9.8
12,638
12,839
10,966
12,775
13,500
13,700
14,099
48,678
54,074
14,840
15,652
15,038
18,491
15,930
14,813
14,672
55,905
63,906
6,241
7,810
25,699
9,117
10,795
10,433
7,209
49,398
37,554
-74,855
86,566 140,098 -224,510
44,223 131,469 121,622
114,621
72,805
0
0
-2,003
0
2,653
10,518
1,390
-2,003
14,561
nm
nm
-1.4
nm
6.0
8.0
1.1
-1.7
20.0
-74,856
86,566 142,101 -224,510
41,570 120,952 120,232
116,624
58,245
nm
429.5
263.9
nm
nm
39.7
-15.4
56.6
-50.1
-61,682 -15,396
0
0
0
0
-77,078
0
-74,856
24,884 126,704 -224,510
41,570 120,952 120,232
39,546
58,245
-30.8
35.7
58.5
-92.5
17.1
49.8
49.5
48.0
24.0
118
39
0
78
66.7
FY13
178
83
164
-70
nm
222
98
209
-85
nm
255
80
0
175
68.5
211
80
131
0
0.1
FY12
205
92
201
-87
nm
208
97
198
-88
nm
755
300
455
0
0.0
880
350
530
0
0.0
C138

Sector: Oil & Gas
Indraprastha Gas
BSE Sensex
18,763
S&P CNX
5,703
Bloomberg
IGL IN
Equity Shares (m)
140.0
1,6,12 Rel Perf (%)
-1/-38/-51
Mcap (INR b)
37.1
Mcap (USD b)
0.7
Under Review
CMP: INR265
Year
Net Sales
PAT
End
(INR m) (INR m)
03/11A 17,437
2,594
03/12A 25,151
3,072
03/13E 35,309
3,540
03/14E 43,200
3,916
EPS
(INR)
18.5
21.9
25.3
28.0
EPS
Gr. (%)
20.4
18.4
15.2
10.6
P/E
(X)
12.1
10.5
9.5
P/BV
(X)
3.0
2.6
2.2
RoE
(%)
28.4
27.5
26.4
24.7
RoCE
(%)
35.7
33.2
32.2
29.5
EV/
EV/
Sales EBITDA
1.6
6.4
1.2
5.5
0.9
4.8
We expect IGL to report 2QFY13 volume of 3.72mmscmd and PAT of INR866m (up 12% YoY and 2% QoQ).
We expect 2QFY13 CNG volumes to grow 8% YoY to 2.8mmscmd and PNG volumes to grow 24% YoY to 0.9mmscmd.
Historically, owing to favorable economics vis--vis alternative fuels, IGL has been able to pass on any hike in its
gas cost thereby insulating any impact on its EBITDA margin. But with absence of KG-D6 gas supply, there is
pressure on company's margin as it is sourcing more expensive RLNG to meet demand.
Key things to watch out for: (a) EBITDA margin, (b) Sales volume.
We model in total volumes of 3.9/4.5mmscmd in FY13/FY14. The stock trades at 10.5x FY13E EPS of INR25.3.
Post the High Court quashing PNGRB's tariff cut order on IGL, PNGRB has now approached Supreme Court and
the hearing is still on. Given the uncertainty in the likely judgment and impact on the profitability of the
company, we keep our rating Under Review.
(INR Million)
Y/E March
Net Sales
Change (%)
EBITDA
EBITDA (INR/scm)
% of Net Sales
% Change
Depreciation
Interest
Other Income
PBT
Tax
Rate (%)
PAT
PAT (Rs/scm)
Change (%)
EPS (INR)
Gas Volumes (mmscmd)
CNG
PNG
Total
E: MOSL Estimates
October 2012
FY12
FY13
FY12
FY13E
1Q
5,364
60.1
1,573
5.6
29.3
47.4
322
90
24
1,185
384
32.4
801
2.8
40.1
5.7
2Q
5,969
34.1
1,574
5.1
26.4
27.9
344
118
21
1,132
360
31.8
772
2.5
16.5
5.5
3Q
6,615
45.5
1,488
4.7
22.5
17.3
368
135
31
1,016
324
31.9
692
2.2
2.9
4.9
4Q
7,203
41.4
1,685
5.3
23.4
24.2
397
136
27
1,179
372
31.5
808
2.5
16.8
5.8
1Q
7,602
41.7
1,793
5.6
23.6
13.9
427
155
36
1,247
396
31.8
850
2.6
6.2
6.1
2QE
8,530
42.9
1,861
5.4
21.8
18.3
445
158
39
1,297
431
33.2
866
2.5
12.2
6.2
3QE
9,178
38.7
1,899
5.2
20.7
27.6
457
159
45
1,327
441
33.2
886
2.4
28.2
6.3
4QE
9,999
38.8
1,977
5.2
19.8
17.3
464
177
51
1,386
449
32.4
937
2.5
16.0
6.7
25,151
44.2
6,320
5.2
25.1
28.4
1,432
479
103
4,512
1,440
31.9
3,072
2.5
18.3
21.9
35,309
40.4
7,529
5.3
21.3
19.1
1,793
650
171
5,257
1,717
32.7
3,540
2.5
15.2
25.3
2.38
0.71
3.10
2.60
0.74
3.34
2.64
0.77
3.41
2.66
0.86
3.52
2.67
0.88
3.55
2.80
0.92
3.72
2.97
0.98
3.94
3.19
1.06
4.25
2.57
0.77
3.34
2.91
0.96
3.87
C139

Sector: Oil & Gas
MRPL
BSE Sensex
18,763
S&P CNX
5,703
Bloomberg
MRPL IN
Equity Shares (m)
1,752.6
52 Week Range (INR)
75/50
1,6,12 Rel Perf (%)
-12/-7/-17
Mcap (INR b)
106.6
Mcap (USD b)
2.0
Neutral
CMP: INR61
Year
Net Sales
PAT
End
(INR m) (INR m)
03/11A 389,567 11,766
03/12A 537,703
9,086
03/13E 659,992
5,026
03/14E 648,920 14,841
EPS
(INR)
6.7
5.2
2.9
8.5
EPS
Gr. (%)
11.2
-22.8
-44.7
195.3
P/E
(X)
11.7
21.2
7.2
P/BV
(X)
1.5
1.4
1.2
RoE
(%)
19.4
13.2
6.8
18.2
RoCE
(%)
23.7
19.2
10.3
16.8
EV/
EV/
Sales EBITDA
0.3
6.2
0.2
7.7
0.2
4.4
We expect MRPL to report 2QFY13 PAT of INR8.4b (v/s INR241m in 2QFY12 and net loss of INR15b in 1QFY13).
EBITDA is expected at INR9.3b (v/s INR754m in 2QFY12 and EBITDA loss of INR13b in 1QFY12). The QoQ turnaround
to profit is led by positive GRM helped by crude inventory gains. Regional benchmark Reuters Singapore GRM
is up 36% QoQ to USD9.1/bbl from USD6.7/bbl.
On the operational front, we expect refinery throughput at 3.5mmt (up 21% QoQ and 14%YoY), helped by no
shutdowns and start of Phase 2 CDU by end-September 2012.
Key things to watch out for: a) GRM, b) Forex fluctuations, c) Inventory changes.
We expect refining margins to remain subdued as the global operating rates (ex US) are likely to remain low led
by lower demand (particularly in Europe), commissioning of new refineries and delay in capacity closures
(protectionist policies by European governments).
For MRPL, we model inn GRM of USD4/bbl for FY13 and USD7.3/bbl for FY14. The stock trades at FY14E P/E of 7.2x
and EV/EBITDA of 4.4x. Maintain Neutral.
(INR Million)
Y/E March
Net Sales
Change (%)
EBITDA
% of Net Sales
% Change
Depreciation
Interest
Other Income
Exceptional items
PBT
Tax
Rate (%)
PAT
Change (%)
EPS (INR)
GRM (USD/bbl)
Throughput (mmt)
E: MOSL Estimates
October 2012
FY12
1Q
133,691
69.9
2,225
1.7
67
-952
-270
1,352
-11
2,366
-639
nm
1,727
506.8
1.0
3.0
3.3
2Q
116,657
39.6
754
0.6
-80
-965
-999
1,522
8
304
-63
-20.6
241
-91.5
0.1
1.7
3.1
3Q
129,308
25.3
3,011
2.3
-45
-1,174
-423
248
47
1,615
-518
-32.0
1,098
-65.0
0.6
3.8
3.0
FY13
4Q
158,384
27.6
7,821
4.9
-8
-1,248
-375
2,697
-22
8,918
-2,897
-32.5
6,021
8.9
3.4
7.1
3.4
1Q
128,099
-4.2
-12,966
nm
nm
-1,375
-1,102
495
0
-14,948
-257
nm
-15,206
nm
-8.7
-4.2
2.9
2QE
168,502
44.4
9,306
5.5
1,135
-1,380
-1,110
1,694
0
8,509
-148
-1.7
8,361
3,365.2
4.8
7.5
3.5
3QE
175,883
36.0
8,015
4.6
166
-1,382
-1,113
800
0
6,320
-126
-2.0
6,194
464.3
3.5
6.3
3.8
4QE
187,438
18.3
8,538
4.6
9
-1,382
-633
881
0
7,404
-1,727
-23.3
5,677
-5.7
3.2
6.4
4.0
FY12
FY13E
538,040
38.1
13,811
2.6
-27.2
-4,339
-2,067
5,819
22
13,203
-4,116
-31.2
9,086
-22.9
5.2
3.9
12.8
659,922
22.7
12,893
2.0
-6.7
-5,519
-3,958
3,869
0
7,285
-2,258
-31.0
5,026
-44.7
2.9
4.0
14.2
C140

Sector: Oil & Gas
Oil India
BSE Sensex
S&P CNX
18,763
Bloomberg
OINL IN
Equity Shares (m)
601.1
52 Week Range (INR)
552/431
1,6,12 Rel Perf (%)
-6/-10/-22
Mcap (INR b)
294.3
Mcap (USD b)
5.6
Buy
CMP: INR490
5,703
Year
Net Sales
PAT
End
(INR b) (INR b)
03/11A 83,034
28,872
03/12A 97,741
34,469
03/13E 102,845 35,259
03/14E 113,194 38,867
EPS
(INR)
48.0
57.3
58.7
64.7
EPS
Gr (%)
10.6
19.4
2.3
10.2
P/E
(X)
8.5
8.3
7.6
P/BV
(X)
1.7
1.5
1.3
RoE
(%)
19.7
20.7
18.7
18.4
RoCE EV (USD)/ EV/

(%)
BoE EBITDA
27.3
27.7
7.6
3.9
25.8
6.7
3.7
25.7
6.9
3.3
We expect Oil India to report 2QFY13 PAT of INR9.4b (v/s INR11.4b in 2QFY12 and INR9.3b in 1QFY13). We
estimate EBITDA at INR12.7b (down 22% YoY and up 16% QoQ).
We estimate gross realization at USD110.4/bbl v/s USD112.5 in 2QFY12 and USD109.8 in 1QFY13 and net realization
at USD55.5/bbl v/s USD86.3 in 2QFY12 and USD53.9 in 1QFY13.
Subsidy sharing assumption: For FY13, we model upstream sharing at 40% (similar to FY12), and Oil India's share
at 13.2% of upstream. We model Oil India to share INR21.2b (USD55/bbl) in 2QFY13.
Key things to watch out for: (a) Subsidy sharing, (b) DD&A charges, (c) Oil & Gas production volumes.
Our Brent price assumption is USD110/105/100/90bbl for FY13/14/15/long-term and we model upstream sharing
at 40% in FY13/14 and 33% beyond that.
The stock trades at 7.6x FY14E EPS of INR64.7. We remain positive on Oil India due to its strong operational
foothold: (1) steady production growth, (2) high share of oil in its reserves (55% in 1P and 62% in 2P), and (3)
attractive valuations (>50% discount to its global peers on EV/BOE, 1P basis). Buy.
(INR Billion)
Y/E March
Net Sales
Change (%)
EBITDA
% of Net Sales
Change (%)
D,D&A
Interest
OI (incl. Oper. other inc)
PBT
Tax
Rate (%)
PAT
Change (%)
% of Net Sales
Adj. PAT
Key Assumptions (USD/bbl)
Gross Oil Realization
Subsidy
Net Oil Realization
Subsidy (INR b)
E: MOSL Estimates
October 2012
FY12
FY13
FY12
FY13E
1Q
22.9
50.2
12.5
54.5
67.8
3.6
0.1
3.8
12.6
4.1
32.4
8.5
69.5
37.1
8.5
2Q
32.7
37.8
16.2
49.5
19.9
5.9
0.0
6.8
17.1
5.7
33.5
11.4
24.3
34.8
11.4
3Q
25.0
4.5
13.3
53.5
-3.4
2.9
0.0
4.7
15.1
5.0
33.0
10.1
1.2
40.6
10.1
4Q
17.2
-14.8
4.8
28.0
-50.0
2.8
0.0
4.2
6.2
1.7
28.2
4.4
-20.9
25.9
4.4
1Q
23.3
2.0
11.0
47.0
-12.2
2.0
0.0
4.8
13.8
4.5
32.5
9.3
9.5
39.9
9.3
2QE
25.9
-20.8
12.7
49.0
-21.7
3.9
0.0
5.1
13.8
4.4
32.1
9.4
-17.4
36.3
9.4
3QE
27.1
8.5
13.5
49.9
1.2
4.1
0.0
4.9
14.3
4.7
33.0
9.6
-5.6
35.3
9.6
4QE
26.5
54.4
12.4
46.9
158.0
4.2
0.0
5.5
13.8
4.5
33.0
9.2
107.3
34.7
9.2
97.7
0.0
46.9
47.9
5.5
15.3
0.1
19.5
51.0
16.5
32.4
34.5
15.6
35.3
34.5
102.8
5.2
49.6
48.2
352.4
14.2
0.0
20.3
55.7
18.2
32.6
37.5
303.2
36.5
37.5
44.7
116.3
56.8
59.6
17.8
45.8
112.5
26.2
86.3
8.4
51.0
110.1
53.1
57.0
18.5
50.2
119.7
80.8
38.9
28.7
54.2
109.8
55.9
53.9
20.2
55.5
110.4
54.9
55.5
21.2
54.0
110.2
51.3
58.9
19.7
54.0
111.3
50.1
61.2
19.1
47.9
114.7
54.2
60.4
73.5
54.4
110.4
53.1
57.4
80.1
C141

Sector: Oil & Gas
ONGC
BSE Sensex
S&P CNX
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
Buy
CMP: INR280
5,703
ONGC IN
8,555.5
304/240
-7/-1/-7
2,399.0
45.5
Year
Net Sales
PAT
EPS
EPS
End
03/11A
1,176
210
24.5
8.1
03/12A
1,464
260
30.4
24.1
03/13E
1,599
255
29.8
-1.9
03/14E
1,696
286
33.4
11.8
*Consolidated, EV/BOE in USD on 1P basis
P/E
(X)
9.2
9.4
8.4
P/BV
(X)
1.8
1.6
1.4
RoE
(%)
19.5
20.7
17.7
17.8
RoCE
(%)
18.8
19.4
16.6
16.8
EV/
BoE
6.9
6.6
5.5
5.3
EV/
EBITDA
3.7
3.7
3.1
We expect ONGC to report 2QFY13 PAT of INR64b (v/s INR86.4b in 2QFY12 and INR60.8b in 1QFY13). We estimate
EBITDA at INR119b (down 16% YoY and up 8% QoQ). YoY EBITDA decline is primarily due to lower net realization
and higher cess rate of INR4,500/MT v/s INR2,500MT in FY12.
We estimate gross realization at USD112.7/bbl v/s USD116.8 in 2QFY12 and USD109.9 in 1QFY13, and net realization
at USD53.3/bbl v/s USD83.6 in 2QFY12 and USD46.6 in 1QFY13.
Subsidy sharing assumption: For FY13, we model upstream sharing at 40% (similar to FY12), and ONGC's share at
~82% of upstream. We expect ONGC to share INR119.2b (USD59.4/bbl) in 2QFY13.
Key things to watch out for: (a) Subsidy sharing, (b) DD&A charges, (c) Oil & Gas production volumes.
Key medium term earnings triggers include (a) likely production increase in FY14 led by monetization of marginal
fields v/s flat production in last several years and (b) likely gas price hike in March-14. Further, likely reserve
upsides from its large NELP/nomination acreage would add value over longer term.
Our Brent price assumption is USD110/105/100/90bbl for FY13/14/15/long-term and we model upstream sharing
at 40% in FY13/14 and 33% beyond that.
Despite subsidy burden, RoE is at respectable level of ~18%. Stock trades at P/E of 8.4x FY14 EPs of INR33.4/sh;
attractive EV/BOE of 5.3x (1P basis; >40% discount to global peers) and has an implied dividend yield of 3.5%.
We value ONGC on SOTP basis at INR320/sh. Buy.
Quaterly performance (Standalone)
(INR Billion)
Y/E March
Net Sales
Change (%)
EBITDA
% of Net Sales
D,D & A
Interest
Other Income
PBT
Tax
Rate (%)
PAT
Adjusted PAT
Change (%)
Adj. EPS (INR)
Fx rate (INR/USD)
Gross Oil Realization
Subsidy
Net Oil Realization
Subsidy (INR b)
E: MOSL Estimates
October 2012
FY12
FY13
FY12
FY13E
1Q
162.0
18.5
92.7
57.2
41.2
0.0
9.3
60.7
19.8
32.5
40.9
40.9
11.8
4.8
2Q
226.2
24.3
141.6
62.6
32.8
0.1
14.4
123.2
36.7
29.8
86.4
86.4
60.4
10.1
3Q
181.2
-2.5
106.6
58.8
45.3
0.0
44.9
106.2
38.7
36.5
67.4
46.4
-20.2
5.4
4Q
188.2
22.2
110.6
58.8
49.1
0.2
15.1
76.4
20.0
26.1
56.5
56.4
119.4
6.6
1Q
200.8
24.0
110.4
55.0
32.0
0.3
11.3
89.4
28.6
32.0
60.8
60.8
48.4
7.1
2QE
217.7
-3.8
119.4
54.9
40.6
0.3
14.4
92.9
28.9
31.1
64.0
64.0
-25.9
7.5
3QE
202.9
11.9
107.1
52.8
49.2
0.2
13.3
70.9
21.7
30.6
49.2
49.2
6.1
5.7
4QE
190.4
1.2
97.6
51.3
50.2
0.2
15.9
63.0
15.8
25.1
47.2
47.2
-16.3
5.5
757.6
15.1
451.4
59.6
168.4
0.3
83.8
366.5
115.2
31.4
251.3
230.2
32.0
26.9
811.8
7.2
434.5
53.5
172.0
1.0
54.9
316.3
95.1
30.1
221.2
221.2
-3.9
25.9
44.7
121.3
73.2
48.1
120.5
45.8
116.8
33.2
83.6
57.1
51.0
111.7
66.8
45.0
125.4
50.2
121.6
77.3
44.3
141.7
54.2
109.9
63.3
46.6
123.5
55.5
112.7
59.4
53.3
119.2
54.0
112.5
65.2
47.3
127.4
54.0
113.6
73.8
39.8
144.1
47.9
117.9
62.6
55.2
444.7
54.4
112.2
65.4
46.8
514.2
C142

Sector: Oil & Gas
Petronet LNG
BSE Sensex
18,763
S&P CNX
5,703
Bloomberg
PLNG IN
Equity Shares (m)
750.0
1,6,12 Rel Perf (%)
-3/-13/-13
Mcap (INR b)
118.3
Mcap (USD b)
2.2
Buy
CMP: INR158
Year
Net Sales
PAT Adj. EPS EPS
End
03/11A 131,973 6,197
8.3
53.2
03/12A 226,959 10,575
14.1
70.7
03/13E 310,807 9,795
13.1
-7.4
03/14E 362,088 11,253
15.0
14.9
P/E
(X)
11.2
12.1
10.5
P/BV
(X)
3.4
2.8
2.3
RoE
(%)
25.2
34.1
25.1
23.8
RoCE
(%)
19.9
26.6
22.4
34.1
EV/
EV/
Sales EBITDA
0.6
7.8
0.5
8.1
0.4
6.1
We expect Petronet to report 2QFY13 PAT of INR2.6b (largely flat YoY and QoQ). We estimate EBITDA at INR4.4b
(down 2% YoY and 4% QoQ). Our lower QoQ profit estimate is primarily due to our lower marketing margin
assumption.
We have built in LNG volumes at 2.8mmt in 2QFY13, higher than 2.5mmt in 1QFY13 given (1) completion of
seasonal fertilizer plant shutdown, and (2) likely uptick in spot volumes due to lower spot LNG prices. We
model in 10.7mmtpa volume in FY13 at Dahej, of which 7.5mmtpa would be on long-term contract, 2mmtpa on
2-year contract and the rest on spot/third party basis. We model in Kochi volumes at 0.2mmtpa in 4QFY13.
We model in 5% escalation in re-gasification tariff till FY14 and flat thereafter at Dahej, and Kochi volumes at
0.3/1.1mmt for FY13/14.
Key things to watch out for: (a) Spot volumes, (b) Regasification margin on spot volumes.
With no risk to near term earnings, we believe the next cycle of earnings growth would come post FY13 led by
(1) volume ramp-up at Kochi, (2) second jetty at Dahej, and (3) new capacity at Dahej and Gangavaram. We build
conservative marketing margin of INR22/15/mmbtu in FY13/14 and nil thereafter.
The stock trades at 10.5x FY14E consolidated EPS of INR15. Lower spot LNG prices and the likely gas price pooling
policy for power sector are key near-term positives for the stock. Buy.
(INR Million)
Y/E March
Net Sales
Change (%)
EBITDA
% of Net Sales
Change (%)
Depreciation
Interest
Other Income
PBT
Tax
Rate (%)
PAT
Change (%)
EPS (INR)
Dahej Gas Volume (TBTU)
Dahej Gas Volumes (mmt)
Kochi Gas Volumes (mmt)
Avg. Dahej Regas (INR/mmbtu)
E: MOSL Estimates
October 2012
FY12
FY13
1Q
46,233
83.0
4,381
9.5
76.9
458
464
263
3,722
1,155
31.0
2,567
130.5
3.4
133.4
2.7
2Q
53,669
75.5
4,483
8.4
65.1
463
458
201
3,763
1,160
30.8
2,603
98.5
3.5
135.1
2.7
3Q
63,303
74.5
5,080
8.0
47.0
463
393
164
4,389
1,435
32.7
2,954
72.8
3.9
144.9
2.9
4Q
63,754
0.6
3,655
5.7
4.0
458
342
796
3,651
1,200
32.9
2,451
18.8
3.3
135.0
2.7
1Q
70,304
0.5
4,571
6.5
4.3
459
329
266
4,048
1,340
33.1
2,708
5.5
3.6
127.2
2.5
2QE
81,708
0.5
4,380
5.4
-2.3
462
365
295
3,848
1,231
32.0
2,616
0.5
3.5
138.4
2.8
3QE
77,291
0.2
4,022
5.2
-20.8
464
382
275
3,451
1,104
32.0
2,347
-20.5
3.1
135.9
2.7
42.2
41.7
45.2
41.7
45.3
40.7
38.2
4QE
81,503
0.2
4,524
5.6
23.8
1,000
839
268
2,953
829
28.1
2,124
-13.4
2.8
137.0
2.7
0.2
40.1
FY12
FY13E
226,959
72.0
17,600
7.8
44.7
1,842
1,657
1,424
15,525
4,950
31.9
10,575
70.7
14.1
548.4
10.9
0.0
42.7
310,807
36.9
17,497
5.6
-0.6
2,386
1,915
1,104
14,299
4,504
31.5
9,795
-7.4
13.1
538.6
10.7
0.2
41.1
C143

Sector: Oil & Gas
Reliance Industries
BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
RIL IN
3,242.5
902/671
-1/6/-9
2,713.0
51.5
Neutral
CMP: INR837
5,703
Year
Net Sales
PAT
EPS
End
(INR b) (INR b) (INR)
03/11A
2,482
203
62.0
03/12A
3,299
200
61.3
03/13E
3,682
198
61.3
03/14E
3,364
204
63.0
*Adjusted for treasury shares
P/E ADJ. EPS* Adj. P/E Adj. P/B

(X)
(INR)
(X)
(X)
68.4
13.7
67.7
12.4
1.5
13.6
67.8
12.3
1.4
13.3
69.7
12.0
1.2
RoE
(%)
14.8
13.0
11.7
11.0
RoCE
EV/
(%) EBITDA
12.9
12.1
8.1
11.1
9.2
10.7
8.9
We estimate RIL to report strong 2QFY13 GRM at USD9.5/bbl v/s USD6.7/bbl in 1QFY13 helped by higher cracks in
auto fuels. However, petchem profits are unlikely to increase due to subdued product spreads.
We expect average 2QFY13 KG-D6 volume of 29mmscmd v/s 33mmscmd in 1QFY13.
We expect RIL to report PAT of INR55.5b (v/s INR57b in 2QFY12 and INR44.7b in 1QFY13).
Key things to watch out for: (a) GRM, (b) Petchem margin, (c) KG-D6 production.
RIL trades at 12x FY14E adjusted EPS of INR69.7. We maintain Neutral due to concerns on cash utilization, RoE
reaching sub-15% and increased share (80%) of cyclical refining and petchem businesses in its earnings.
(INR Billion)
Y/E March
Net Sales
Change (%)
EBITDA
% of Net Sales
Change (%)
Depreciation
Interest
Other Income
PBT
Tax
Rate (%)
PAT
Change (%)
Fx Rate (INR/USD)
Brent Price (USD/bbl)
RIL GRM
Singapore GRM
Premium/(disc) to Singapore
KG-D6 Gas Prodn (mmscmd)
Segmental EBIT Breakup (INR b)
Refining
Petrochemicals
E&P, others
Total
E: MOSL Estimates; EPS adjusted
October 2012
FY12
FY13
FY12
FY13E
1Q
810.2
39.1
99.3
12.3
6.3
32.0
5.5
10.8
72.6
16.0
22.1
56.6
16.7
2Q
785.7
36.7
98.4
12.5
4.8
29.7
6.6
11.0
73.2
16.1
22.1
57.0
15.8
3Q
851.4
42.4
72.9
8.6
-23.7
25.7
6.9
17.2
57.4
13.0
22.6
44.4
-13.6
4Q
851.8
17.2
65.6
7.7
-33.3
26.6
7.7
23.0
54.3
12.0
22.0
42.4
-21.2
1Q
918.8
13.4
67.5
7.3
-32.0
24.3
7.8
19.0
54.3
9.6
17.7
44.7
-21.0
2QE
937.0
19.3
82.0
8.8
-16.7
24.2
7.7
19.2
69.3
13.8
19.9
55.5
-2.7
3QE
915.8
7.6
74.2
8.1
1.9
24.2
7.6
20.3
62.8
13.1
20.9
49.7
11.9
4QE
927.4
8.9
73.3
7.9
11.7
24.3
7.6
20.6
62.0
13.5
21.8
48.5
14.4
3,299.0
32.9
336.2
10.2
-11.8
113.9
26.7
61.9
257.5
57.1
22.2
200.4
-1.2
3,698.9
12.1
297.1
8.0
-11.6
97.0
30.7
79.1
248.4
50.1
20.2
198.4
250.4
44.7
117
10.3
8.6
1.7
48.6
45.8
113
10.1
9.1
1.0
45.3
51.0
109
6.8
7.9
-1.1
41.0
50.2
119
7.6
7.5
0.1
35.5
54.2
108.7
7.6
6.7
0.9
33.0
55.5
110.2
9.5
9.1
0.4
29.0
54.0
110.0
8.4
8.1
0.3
26.5
54.0
111.1
8.3
8.1
0.3
23.5
47.9
114
8.7
8.3
0.4
42.6
54.4
110
8.5
8.0
0.5
28.0
16.9
21.6
12.9
51.4
17.0
21.7
9.5
48.2
21.5
17.6
9.7
48.8
35.0
17.5
8.7
61.2
26.7
17.6
8.7
53.0
26.3
20.1
7.2
53.6
96.6
89.7
52.7
238.9
109.4
72.8
34.3
216.5
32.0
30.8
22.2
24.2
14.8
15.4
69.0
70.4
for treasury shares
C144

Sector: Real Estate
Real Estate
Macro impetus and reform thrust positive for the sector
Company Name
Recent favorable macro trends and reform thrust, viz, much-awaited FDI in multibrand retail, policy relaxation in single brand retail, expected interest rate
downcycle, etc, are positive for the real estate (RE) sector.
Approval hurdles in worst performing Mumbai market are seemingly easing off
with fast-track clearances on the back of new DCR (development control
regulations), resulting in visible increase in new launches.
Rational approaches from developers in choosing right product and market mix
in their near-term monetization plan have led to better offtake in their recent
launches.
While leverage situation is broadly unaltered, improving liquidity outlook and
success in divestment transactions have enhanced the expectation of substantial
de-leveraging over 2HFY13.
DLF
HDIL
Mahindra Lifespaces
Oberoi Realty
Phoenix Mills
Unitech
Despite seasonal weakness, 2QFY13 to see YoY improvement in sales

momentum
We expect our real estate universe to post a YoY uptick in 2QFY13 sales momentum
on the back of (1) spillover launches (which were deferred by delay in approvals)
and (2) low base of weak 2QFY12.
Some much awaited launches in Sep-12 (e.g. Phoenix's One Bangalore West and
Godrej Summit, Gurgaon) have seen encouraging success even during a weak
home buying season.
Phoenix sold ~0.7msf (275+ units @ INR7,000/sf, INR5.3b) in a week's time after
launch and Godrej Properties sold ~1msf (695 units @ INR5,800/sf) on the day of
launch, despite doing unconventional non-broker marketing. This reaffirms the
underlying demand for products offered by branded developers at right prices.
We expect the outperformance to continue in NCR and Southern Markets, but
meaningful sign of sales revival in Mumbai market is anticipated in take place
only over 2HFY13.
Anant Raj Inds

DLF
HDIL
Mahindra Lifespace
Oberoi Realty
Phoenix Mills
Unitech
Sector Aggregate
CMP
(INR)
28.09.12
71
234
98
378
265
196
24
(INR Million)
Rating
Sep.12
Buy
Buy
Neutral
Buy
Buy
Buy
Buy
868
21,370
4,192
1,173
2,134
628
4,888
35,252
Sales
Var.
% YoY
-4.9
-15.6
-5.1
25.0
-4.1
32.5
-21.9
-13.1
Var.
% QoQ
-12.2
-2.8
108.4
12.6
6.7
0.3
19.9
7.7
Sep.12
425
8,762
3,144
293
1,238
396
709
14,966
EBITDA
Var.
% YoY
-16.5
-25.3
-14.6
13.5
7.1
18.7
-48.7
-21.4
Var.
% QoQ
-15.1
-17.9
8.2
-8.0
8.7
0.4
29.5
-9.2
Net Profit
Sep.12
Var.
% YoY
299
-13.8
2,331
-37.4
1,084
-27.3
303
-3.4
1,090
-2.2
301
26.2
492
-46.8
5,901
-27.6
Var.
% QoQ
-15.6
-20.4
2.9
3.5
8.1
-1.5
7.2
-7.8
Sandipan Pal (Sandipan.Pal@MotilalOswal.com)

October 2012
C145

Sector: Real Estate
Key expectations
For 2QFY13, our RE universe is expected to post revenue de-growth of 13.1% YoY
(up +7.7% QoQ), EBITDA decline of 21.4% YoY (down 9.2% QoQ) and PAT decline of
27.6% YoY (down 7.8% QoQ).
We expect operating cash flow to (a) improve for DLF (higher focus on execution),
HDIL (FSI and TDR sales), Phoenix (on the back of new launches in residential),
and (b) remain stable for Oberoi, Prestige, and Unitech. Despite improving support
from operating cash flow, meaningful success in debt reduction is likely to be
visible only in 2HFY13.
Key factors to watch for
Status of planned launches for Mahindra Lifespaces, Oberoi, and DLF's Magnolia
launch.
Sign of uptick in revenue booking for Prestige (booked higher sales in past quarters),
DLF (execution outsourcing), Unitech (refinancing trouble) and customer
collection run-rate;
Leasing velocity and outlook of management in the commercial vertical.
Progress in divestment plan de-leveraging target.
New project acquisition by developers with better liquidity (Oberoi, Mahindra
Lifespaces).
Expect a restrained business focus to pay off during recovery; return metrics
to improve
We believe RE developers are now highly controlled and rational in their business
approach. Funding constraint has forced them to focus only on select verticals and
performing assets, which we believe would be beneficial for medium-term supplydemand economics.
Higher focus on execution by moving to outsourcing model (DLF, IBREL) would
bring more certainty to construction and cash flow timelines.
We expect RoE to improve with (a) better asset turn, (b) stable costs, and (c)
easing financial leverage.
Sticking to bottom-up stock picking; prefer DLF, Prestige, Phoenix and Oberoi
We continue to prefer companies with (a) strong operating performance, and (b)
delta from ebbing concerns - DLF (a play on improving operating and financial
leverage), Prestige, Phoenix (steady operations), and Oberoi (still the best
defensive bet in inefficient Mumbai market). Coincidentally DLF, Phoenix and
Prestige are also the biggest beneficiaries of the likely revival in the retail vertical.
Despite weaker operating performances, high beta stocks like UT, HDIL, IBREL and
Anantraj may surprise positively due to bigger scope of macro-driven operational
improvement.
October 2012
C146

Sector: Real Estate
Prestige, Sobha, JPIN and DLF have been key outperformers in sales
1QFY11 2QFY11 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12 1QFY13
12.9
12.6
15.0
18.9
11.1
6.3
9.6
25.8
6.0
13.0
10.1
10.4
9.8
10.2
10.7
9.4
7.8
7.0
2.1
0.9
2.3
0.1
1.0
1.6
0.9
0.9
1.6
3.1
31.0
8.7
5.6
3.8
4.9
4.5
6.3
NA
6.4
5.2
7.7
1.5
1.9
7.7
0.6
0.5
0.5
1.8
1.4
3.3
3.5
2.6
2.3
1.8
2.8
2.1
0.8
7.4
3.2
2.5
2.1
7.8
4.7
6.0
10.0
0.9
2.6
2.3
1.2
1.7
0.8
3.0
0.6
0.5
1.4
0.6
3.3
4.6
2.3
2.1
3.5
3.5
5.0
2.7
2.7
2.8
2.7
3.0
4.9
4.5
5.0
4.8
13.9
10.8
6.3
10.0
5.7
5.8
16.4
11.0
6.8
DLF
Launch volume improved QoQ, sales volume steady
242
217
234
4QCY10
1QCY11
2QCY11
3QCY11
305
227
3QCY10
2QCY12
250
2QCY10
1QCY12
221
1QCY10
227
4QCY09
248
232
3QCY09
2QCY09
70
2QCY12
69
1QCY12
68
4QCY11
56
3QCY11
58
2QCY11
63
1QCY11
58
4QCY10
66
200
63
317
88
84
70
3QCY10
62
2QCY10
69
Sob ha
Sales value (INR b) jumped 11%QoQ (Top 6 cities)
53
1QCY10
4QCY09
3QCY09
67
UT
285
89
55
38
61
HDIL
Sal e s (ms f)
95
74
PEPL
4QCY11
Launch (ms f)
GPL
14.0
-8
12.5
12.9
14.0
14.0
4QFY12
12.0
13.0
14.0
400
2QFY12
14.0
Sep-05
Feb-06
Jul-06
Dec-06
May-07
Oct-07
Mar-08
Aug-08
Jan-09
Jun-09
Nov-09
Apr-10
Sep-10
Feb-11
Jul-11
Dec-11
May-12
800
4QFY11
13.5
16
12.8
1,200
1QFY11
11.8
12.8
24
13.0
13.0
14.0
Growth (%)
1,600
10.5
Loan (INR b)
Cost of debt stabilized (%)
12.5
13.8
13.7
Bank loan to developers rose to INR1157b as on July-12
9.5
9.9
11.1
11.2
Sales (INR b)
DLF
Unitech
Anantraj
IBREL
HDIL
ORL
PEPL
MAHLIFE
GPL
Sobha
JPIN
Trend of QoQ price growth (%) shows (a) moderation for Mumbai, b) stagnation for NCR
4QCY10
2QCY12
Chennai
3QCY10
4QCY11
Hyderabad
2QCY10
3QCY11
Pune
1QCY10
2QCY11
Bangalore
Mumbai
20
15
10
5
0
-5
-10
NCR
4QCY09
1QCY11
Source: Liases Foras/Company/MOSL

October 2012
C147

Sector: Real Estate
Mumbai
New launches yet to pick up
to desired level (msf)
Sales volume up, value down - implying

higher sales in mid-segments
Avg. Quo ted p ri ce s (INR /s f)

Avg. s al es pri ces (INR/sf)
Inven tory mo nth
50
17
16
16
64 62
11
11
12
9
16
12
99 93
71
85
80 79
67
57 50
72
Thousands
21
27
S al es vol ume (ms f)

S al es val ue (INR b)
53
12
Quoted prices refuse to fall
40
30
6
4
20
10
2QCY09
3QCY09
4QCY09
1QCY10
2QCY10
3QCY10
4QCY10
1QCY11
2QCY11
3QCY11
4QCY11
1QCY12
2QCY12
2QCY09
3QCY09
4QCY09
1QCY10
2QCY10
3QCY10
4QCY10
1QCY11
2QCY11
3QCY11
4QCY11
1QCY12
2QCY12
2QCY09
3QCY09
4QCY09
1QCY10
2QCY10
3QCY10
4QCY10
1QCY11
2QCY11
3QCY11
4QCY11
1QCY12
2QCY12
20 18 13 12 13 12 11 9 8 9 8 9 10
12
10
NCR
17
18
70
35
0
2QCY09
3QCY09
4QCY09
1QCY10
2QCY10
3QCY10
4QCY10
1QCY11
2QCY11
3QCY11
4QCY11
1QCY12
2QCY12
34
32
19
105
50
40
30
20
10
2QCY09
3QCY09
4QCY09
1QCY10
2QCY10
3QCY10
4QCY10
1QCY11
2QCY11
3QCY11
4QCY11
1QCY12
50
48
30
49
26
19
11
11
140
27
Avg Quoted pri ces (INR/sf)

Avg. sa l es pri ce s (INR /s f)
Invento ry month (RHS )
Thousands
S al es vo l ume (ms f)
Sal es va l ue (INR b)
36
2QCY09
3QCY09
4QCY09
1QCY10
2QCY10
3QCY10
4QCY10
1QCY11
2QCY11
3QCY11
4QCY11
1QCY12
2QCY12
Pricings firm, inventory level declining

(still very high at Noida)
Sales performance down QoQ
59
Launch volume down, absence of any

big project (msf)
Bangalore
Sales momentum showing spiraling trend Pricing strengthened, inventory down
31
Launch volume down QoQ (msf)
Sal es vol ume (msf)

Sal es val ue (INR b)
Inven tory as k pri ces (INR/s f)

S ol d p ri ce s (INR/s f)
Inven tory mon th
67
30
35 36
23
33
23
35
39
8
3 8 4 8 8 11 10 7 9 7 9 14 11 16
Thousands
11
11
23
12
27
10
11
54
4
3
2
68
34 3030
23 18 20 22 22
16
30
181712
1QCY09
2QCY09
3QCY09
4QCY09
1QCY10
2QCY10
3QCY10
4QCY10
1QCY11
2QCY11
3QCY11
4QCY11
1QCY12
2QCY12
1QCY09
2QCY09
3QCY09
4QCY09
1QCY10
2QCY10
3QCY10
4QCY10
1QCY11
2QCY11
3QCY11
4QCY11
1QCY12
2QCY12
2QCY09
3QCY09
4QCY09
1QCY10
2QCY10
3QCY10
4QCY10
1QCY11
2QCY11
3QCY11
4QCY11
1QCY12
2QCY12
Source: Liases Foras/Company/MOSL
October 2012
C148

Sector: Real Estate
Overall commercial absorption deteriorates; Bangalore remain best placed in vacancy

2Q2011
2.0
3.4
1.7
2.2
2.6
1.8
0.4
14.1
2.0
2.1
3.3
1.1
1.0
1.3
0.3
11.0
32
23
18
26
28
10
28
24
3Q2011
1.6
2.4
1.6
0.8
0.6
7.0
1.0
1.0
2.4
0.6
0.4
0.6
1.4
7.4
32
24
18
27
28
10
21
24
4Q2011
2.0
1.0
0.8
0.6
0.3
4.7
1.6
1.2
3.0
1.2
0.5
0.4
0.5
8.4
31
23
16
25
26
11
19
22
95
75
85
60
Sep-12
Sep-11
90
Aug-12
105
Jul-12
105
Sep-12
120
115
Jun-12
Se ns ex Inde x
MOSL Re al Es tate Index
Jun-12
Sens e x Index
MOSL Rea l Es tate Inde x
125
2Q2012
0.7
0.5
0.7
0.6
0.2
0.3
0.2
3.1
1.7
0.4
1.8
0.7
0.3
0.5
0.5
5.9
30
23
14
24
25
10
15
22
Source: DTZ/MOSL
Mar-12
1Q2012
1.0
2.7
1.7
0.3
0.3
6.0
0.9
1.1
3.6
0.7
0.5
0.5
0.2
7.5
31
23
15
24
26
10
18
22
Dec-11
Supply (msf) NCR

Mumbai
Bangalore
Chennai
Pune
Hyderabad
Kolkata
India
Absorption (msf) NCR
Mumbai
Bangalore
Chennai
Pune
Hyderabad
Kolkata
India
Vacancy (%) NCR
Mumbai
Bangalore
Chennai
Pune
Hyderabad
Kolkata
India
CMP (INR)
28.09.12
Real Estate
Anant Raj Inds
71
DLF
234
Godrej Properties
599
HDIL
98
Indiabulls Real Estate58
Jaypee Infratech
52
Mahindra Lifespace 378
Oberoi Realty
265
Phoenix Mills
196
Prestige Estates
136
Unitech
24
Sector Aggregate
October 2012
Rating
EPS (INR)
FY12 FY13E FY14E
P/E (x)
FY12 FY13E FY14E
EV/EBITDA (x)
FY12 FY13E FY14E
RoE (%)
FY12 FY13E FY14E
Buy
Buy
Neutral
Neutral
Buy
Buy
Buy
Buy
Buy
Buy
Buy
3.8
7.1
12.6
19.3
3.5
9.3
29.2
14.1
7.3
2.5
0.9
18.6
33.0
47.7
5.1
16.5
5.6
12.9
18.8
26.9
53.9
26.8
18.0
17.9
16.3
39.5
5.3
11.5
8.3
10.8
15.3
20.9
20.7
34.3
14.0
3.1
4.5
8.3
7.9
2.2
24.5
10.3
13.1
6.2
4.1
2.0
6.1
5.0
9.0
16.0
12.9
4.2
6.7
32.5
15.8
7.8
5.5
0.8
6.6
10.7
19.6
17.8
6.1
7.2
34.0
24.7
16.0
8.2
1.3
14.3
26.1
37.4
7.6
13.7
7.7
11.6
16.8
25.2
24.5
30.2
18.3
10.8
21.8
30.6
5.5
9.5
7.2
11.1
10.7
12.3
16.5
18.8
14.0
13.6
17.1
32.3
5.3
9.8
7.8
9.7
11.9
17.3
12.8
37.8
13.4
9.7
13.4
24.4
3.8
7.8
6.2
9.1
6.9
10.2
9.8
23.0
10.0
3.8
5.5
8.4
5.1
2.6
15.2
10.5
13.1
6.3
8.4
1.7
5.8
4.8
6.3
9.5
6.6
3.6
14.3
10.0
17.9
11.7
11.0
2.7
7.0
C149

Sector: Real Estate

BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
5,703
ARCP IN
294.6
80/35
47/17/9
21.0
0.4
CMP: INR71
Year
End
3/11A
3/12A
3/13E
3/14E
Buy
Net Sales
PAT
EPS
4,241
1,681
5.7
3,115
1,135
3.8
4,326
1,473
5.0
5,667
1,948
6.6
EPS
Gr. (%)
-29.5
-32.5
29.7
32.3
P/E
(X)
18.6
14.3
10.8
P/BV
(X)
0.5
0.5
0.5
RoE
(%)
4.6
3.1
3.8
4.8
RoCE
(%)
5.9
3.7
4.4
5.9
EV/
EV/
Sales EBITDA
9.8
18.0
6.7
13.6
4.9
9.7
Delay in Gold Course Road project revenue recognition: We expect revenue to de-grow 5% YoY to INR868m,
EBITDA to de-grow 17% YoY to INR425m and PAT to de-grow 14% YoY to INR299m. We estimate EBITDA margin of
49%. The de-growth is attributable to delay in revenue recognition from plotted project at Golf Course Road,
which is yet to reach 25% development expenditure hurdle (development expenditure comprises infrastructure
development like road network, water supply etc - almost INR7.5m/acre)
Sales run-rate lowered QoQ, collections up in Golf Course Road project: During 2QFY13, the company sold
additional 100 at Neemrana (v/s 462units in 1QFY13) and 20 units in Sector-91 (v/s 27 units in 1QFY13). Selling
prices at Sector-91 is up to INR4,800/sf (from INR,4200/sf in 1Q), while at Golf Course Road project, the company
is selling at INR90,000/sq yard as against initial launch price of INR75,000/sq yard. Of the total sales of INR4.5b
in the Golf Course Road project, the company has collected ~INR1.25b to date.
Rental income to improve with higher contribution from mall: Expect rental run-rate (ex Tricolor Hotel) to
improve to INR273m (v/s INR255m in 1QFY13) on account of higher contribution from Kirti Nagar mall. While the
mall is already 80% occupied, it is operating at effective rental of INR70/sf/m, almost 30% below minimum
guarantee rental of INR100/sf/m.
Anant Raj trades at 34% discount to our one-year forward NAV of INR108/share, 10.8x FY14E EPS of INR6.6 and
0.5x FY14E BV. Maintain Buy.
(INR Million)
Y/E March
Total Sales
Change (%)
EBITDA
Change (%)
As of % Sales
Depreciation
Interest
Other Income
PBT
Tax
Reported PAT
Change (%)
E MOSL Estimates
October 2012
FY12
1Q
838
-19.0
493
-13.3
59
27
45
45
466
115
24.7
351
-23.5
2Q
913
-31.3
509
-18.8
56
30
57
76
498
135
27.2
347
-27.7
3Q
922
-25.9
490
-36.5
53
36
69
51
437
97
22.2
315
-37.4
FY13
4Q
449
-29.1
199
-56.2
44
17
36
25
174
48
27.8
122
-60.1
1Q
989
18.0
501
1.5
51
32
37
44
475
110
23.3
355
1.2
2QE
868
-4.9
425
-16.5
49
35
51
55
394
95
24.0
299
-13.8
3QE
1,180
28.1
578
18.0
49
37
58
51
535
134
25.0
401
27.3
4QE
1,244
176.7
630
216.3
51
43
76
62
573
156
27.1
418
242.1
FY12
FY13E
3,115
-26.5
1,699
-27.9
55
110
206
195
1,578
396
25.1
1,135
-32.4
4,326
38.8
2,134
25.6
49
147
223
213
1,977
494
25.0
1,473
29.7
C150

Sector: Real Estate
DLF
BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
CMP: INR234
5,703
DLFU IN
1,714.4
261/170
10/9/-10
400.8
7.6
Year
End
3/11A
3/12A
3/13E
3/14E
Buy
Net Sales
PAT
EPS
95,606
16,396
9.7
96,294
12,008
7.1
85,482
15,191
9.0
103,723 18,243
10.7
EPS
Gr. (%)
-5.2
-26.8
26.5
20.1
P/E
(X)
33.0
26.1
21.8
P/BV
(X)
1.5
1.5
1.4
RoE
(%)
5.8
4.5
5.5
6.3
RoCE
(%)
7.1
7.4
8.4
8.6
EV/
EV/
Sales EBITDA
6.5
16.0
7.0
16.8
5.6
13.2
EBITDA, PAT to de-grow YoY: We expect DLF's 2QFY13 revenue at INR21.4b (near-flat QoQ), EBITDA to de-grow
25% YoY to INR8.8b, and PAT to de-grow 37% to INR2.3b owing to higher interest expense.
Leverage level to remain broadly unaltered: During 2QFY13, DLF concluded divestment of NTC Mills and received
initial tranche of INR5b. However, we expect leverage level to remain largely unaltered due to prevailing
operating deficit. Receipt of balance INR22b by 3QFY13 would be a key debt reduction trigger to watch out for.
Focus on luxury launches: In 2QFY13, DLF launched Bella Greens, a luxury-end villa project at Bannerghatta
Road, Bengaluru (ticket size INR28.4-45.6m), re-affirming its strong focus on premium projects in FY13. We
expect successful launch of super luxury Magnolia II in 3QFY13 to hold the key to improve its operating deficit.
Key things to watch out for:

1. Progress in major divestments (Aman Resort, windmills), and receipt of balance amount in NTC Mills sale
followed by debt-reduction.
2. Successful launch of Magnolia II.
3. Pick-up in cash conversion post shift to third-party contractors and
4. Leasing momentum in the backdrop of FY13 guidance of 2msf.
DLF trades at 21.8x FY14E EPS of INR10.7, 1.4x FY14E BV and 18% discount to our NAV estimate of INR286.
Maintain Buy.
(INR Million)
Y/E March
Sales
Change (%)
Total Expenditure
EBITDA
Change (%)
As % of Sales
Depreciation
Interest
Other Income
PBT
Tax
Reported PAT
Change (%)
E: MOSL Estimates
October 2012
FY12
1Q
24,458
20.6
13,349
11,110
13.4
45.4
1,702
4,964
574
5,018
1,278
25
3,584
(12.8)
2Q
25,324
6.9
13,594
11,730
26.3
46.3
1,753
5,263
448
5,161
1,475
29
3,724
(11.0)
3Q
20,344
(18.0)
12,116
8,227
-30.2
40.4
1,797
6,199
3,617
3,848
1,353
35
2,584
(44.5)
FY13
4Q
26,168
-2.5
18,192
7,976
19.7
30.5
1,636
6,039
1,307
1,448
-413
-28.5
2,117
(38.6)
1Q
21,977
-10.1
11,307
10,670
-4.0
48.6
1,786
6,226
1,311
3,970
1,137
29
2,928
(18.3)
2QE
21,370
(15.6)
12,609
8,762
-25.3
41.0
1,751
6,321
2,249
2,940
705
24
2,331
(37.4)
3QE
20,516
0.8
12,309
8,206
-0.3
40.0
1,860
5,896
9,747
10,197
2,651
26
7,642
195.8
4QE
21,619
-17.4
13,368
8,251
3.4
38.2
1,898
5,142
1,688
2,898
707
24
2,289
26.4
FY12
FY13E
96,294
0.7
57,251
39,043
4.0
40.5
6,888
22,465
5,945
15,635
3,694
23.6
12,008
(26.8)
85,482
-11.2
49,592
35,889
-8.1
42.0
7,295
23,585
14,996
20,005
5,201
26.0
15,191
26.5
C151

Sector: Real Estate
HDIL
BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
5,703
HDIL IN
419.0
135/52
28/9/-16
40.9
0.8
CMP: INR98
Year
End
3/11A
3/12A
3/13E
3/14E
Neutral
Net Sales
PAT
EPS
18,655
8,218
19.8
20,064
8,098
19.3
19,054
5,394
12.9
24,259
7,461
17.8
EPS
Gr. (%)
25.5
-2.5
-33.4
38.3
P/E
(X)
5.1
7.6
5.5
P/BV
(X)
0.4
0.4
0.4
RoE
(%)
9.0
7.9
5.1
6.6
RoCE
(%)
10.7
10.0
8.9
10.9
EV/
EV/
Sales EBITDA
3.9
5.3
3.9
5.3
2.8
3.8
We expect HDIL's 2QFY13 consolidated revenue at INR4.2b (down 5%YoY), EBITDA at INR3.1b, and PAT at INR1.1b
(down 27%).
The key revenue contributors are likely to be (1) 1.5-2msf/quarter of FSI sales in Virar/Vasai, (2) TDR sales from
newly generated 2msf at Kurla Premiere (owing to change in usage), and (3) other potential FSI sales like one
advance staged deal for 1.2msf of Metropolis commercial.
With deferment completion target of its three residential projects (Premiere, Galaxy and Metropolis) to 3/
4QFY13, no revenue is going to get recognized under project completion method (PCM) in 1HFY12.
We expect cash flow from FSI sales (has been weak till date) to improve on the back of early sign of easing off
of approval hurdles. This should also boost construction pace and customer collection run-rate.

1. Response to its recently launched plotted project Imperial County, Noida, and Premiere Kurla
2. Progress on new launches in Virar, Ghatkopar and Shahad
3. Clarity over other FSI sales under negotiation
4. Progress in de-leveraging
5. Progress in MIAL relocation and status of subsequent phases
The stock trades at 5.5x FY14E and 0.4x FY14E BV and 29% discount to NAV of INR138. Maintain Neutral.

Y/E March
1Q
2Q
Sales
5,144
4,416
Change (%)
13.0
15.7
Total Expenditure
920
733
EBITDA
4,223
3,683
Change (%)
45.6
41.6
As % of Sales
82.1
83.4
Depreciation
213
214
Interest
1,437
1,527
Other Income
60
73
PBT
2,633
2,014
Tax
739
524
28.1
26.0
Reported PAT
1,894
1,491
Change (%)
-12.5
-24.2
E: MOSL Estimates; Numbers as per Schedule 6
October 2012
(INR Million)
FY12
3Q
4,254
-8.2
1,229
3,024
9.0
71.1
216
1,603
133
1,338
-220
-16.4
1,558
-31.6
FY13
4Q
6,251
13.1
2,122
4,129
-6.5
66.0
215
1,682
247
2,401
-752
-31.3
3,156
70.4
1Q
2,012
-60.9
-893
2,904
-21.1
144.4
210
1,541
94
1,248
195
15.6
1,054
-29.3
2QE
4,192
-5.1
1,048
3,144
-14.6
75.0
225
1,806
133
1,246
162
13.0
1,084
-27.3
3QE
5,145
21.0
1,286
3,858
27.6
75.0
225
1,878
133
1,889
246
13.0
1,643
5.5
4QE
7,706
23.3
3,662
4,044
-2.1
52.5
234
1,998
172
1,977
288
14.6
1,613
-48.9
FY12
FY13E
20,064
7.6
5,005
15,059
-9.4
75.1
858
6,249
513
8,464
290
3.4
8,098
-1.5
19,054
-5.0
5,104
13,951
-7.4
73.2
901
7,222
533
6,360
890
14.0
5,394
-33.4
C152

Sector: Real Estate
Mahindra Lifespaces
BSE Sensex
S&P CNX
18,763
5,703
Bloomberg
MLIFE IN
Equity Shares (m)
40.8
1,6,12 Rel Perf (%)
3/10/15
Mcap (INR b)
15.4
Mcap (USD b)
0.3
CMP: INR378
Year
End
3/11A
3/12A
3/13E
3/14E
Net Sales
PAT
EPS
6,119
1,082
26.5
7,013
1,191
29.2
7,760
1,325
32.5
8,086
1,389
34.0
Buy
EPS
Gr. (%)
37.7
10.1
11.3
4.8
P/E
(X)
12.9
11.6
11.1
P/BV
(X)
1.3
1.2
1.1
RoE
(%)
10.2
10.3
10.5
10.0
RoCE
(%)
10.8
10.9
11.1
11.3
EV/
EV/
Sales EBITDA
2.9
10.8
2.7
9.7
2.4
9.1
We expect Mahindra Lifespaces' 2QFY13 standalone revenue to grow 25% YoY to INR1,173m, EBITDA to de-grow
9.2% YoY to INR293m and PAT to de-grow 3.4% YoY to INR303m.
We expect EBITDA margin at 25%, lower than 31% in 1QFY13 given higher proportion revenue contribution from
non-Mumbai projects.
Key things to watch out for

1. Progress in stated launches at Hyderabad and Pune (yet to take off)
2. Leasing progress in Jaipur DTA
3. Progress of land acquisition in North Chennai SEZ.
The stock trades at a ~19% discount to our one-year forward SOTP value of INR469/share, 11.1x FY14E EPS of
INR4.8 and 1.1x FY14E BV. Buy.
Quarterly Performance: Standalone

Y/E March
FY12
FY13
1Q
2Q
3Q
4Q
1Q
2QE
3QE
4QE
Sales
815
938
1,538
1,400
1,041
1,173
1,407
1,069
Change (%)
19.9
5.4
-1.3
-14.6
27.8
25.0
-8.5
-23.6
Total Expenditure
642
679
1,076
1,082
723
879
1,055
814
EBITDA
172
258
462
318
319
293
352
255
As % of Sales
21.2
27.5
30.0
22.7
30.6
25.0
25.0
23.9
Change (%)
-11.5
5.0
9.3
-7.7
44.6
-9.2
-16.7
5.0
Depreciation
7
7
7
7
4
7
7
10
Interest
2
5
2
20
14
24
24
34
Other Income
91
182
87
162
134
154
154
173
PBT
255
428
539
453
434
416
474
385
Tax
84
114
144
132
141
112
123
102
32.9
26.6
31.0
29.1
32.5
27.0
26.0
26.5
Reported PAT
171
314
395
321
293
303
351
283
Change (%)
18.0
27.4
18.1
5.3
71.5
-3.4
-11.1
-11.9
E: MOSL Estimates; *Revenue outside Standalone is largely contributed by Mahindra World City (MWC) Chennai
October 2012
(INR Million)
FY12
FY13E
4,690
4,690
-1.6
0.0
3,479
3,471
1,210
1,219
25.8
26.0
-1.4
0.7
27
29
30
95
522
614
1,676
1,709
474
479
28.3
28.0
1,202
1,231
16.6
2.4
and Jaipur
C153

Sector: Real Estate
Oberoi Realty
BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
5,703
OBER IN
328.2
323/205
9/-6/5
87.0
1.7
CMP: INR265
Year
End
3/11A
3/12A
3/13E
3/14E
Buy
Net Sales
PAT
EPS
9,960
5,172
15.8
8,247
4,629
14.1
10,669
5,178
15.8
17,178
8,109
24.7
EPS
Gr. (%)
12.9
-10.5
11.9
56.6
P/E
(X)
18.8
16.8
10.7
P/BV
(X)
2.3
2.1
1.8
RoE
(%)
19.9
13.1
13.1
17.9
RoCE
(%)
23.6
17.1
17.9
24.8
EV/
EV/
Sales EBITDA
9.0
15.3
6.8
11.9
4.1
6.9
We expect Oberoi Realty's 2QFY13 revenue to de-grow 4.1% YoY to INR2.1b, EBITDA to grow 7% YoY to INR1.2b
and PAT to de-grow ~2% to INR1.1b. We estimate EBITDA margin of 58%. Esquire is likely to cross revenue
recognition threshold by 4QFY13.
We expect 2QFY13 sales to remain largely flat QoQ. Post increase in the prices across its ongoing projects, the
offtake run-rate has declined to 2 apartments every 3 days from 1 per day.
Mulund project is yet to receive MoEF approvals and will be delayed further. On the other hand, we believe
Worli project is witnessing decent response during soft launch.

1. Sales momentum in Esquire (Goregaon) and Grande (Andheri)
2. Visibility on new project acquisition
3. Leasing visibility in commercial projects.
The stock trades at 10.7x FY14E EPS of INR24.7, 1.8x FY14E BV and ~21% discount to one-year forward NAV of
INR337. Maintain Buy.
(INR Million)
Y/E March
Total Revenue
Change (%)
Total Expenditure
EBITDA
Change (%)
As of % Sales
Depreciation
Interest
Other Income
PBT
Tax
Reported PAT
Change (%)
E: MOSL Estimates
October 2012
FY12
1Q
1,609
0.5
706
903
6.6
56
65
1
542
1,374
316
20.0
1,058
32.5
2Q
2,226
30.9
1,071
1,156
14.8
51.9
66
0
343
1,432
317
22.2
1,114
16.7
3Q
1,873
-53.0
739
1,134
-54.1
60.5
68
1
310
1,375
354
25.8
1,021
-50.3
FY13
4Q
2,548
-4.5
906
1,642
13.3
64.5
70
1
307
1,879
443
23.6
1,436
5.1
1Q
1,999
24.2
860
1,139
26.1
57
70
1
309
1,376
368
26.8
1,008
-4.7
2QE
2,134
-4.1
896
1,238
7.1
58.0
77
0
333
1,493
403
27.0
1,090
-2.2
3QE
2,347
25.3
962
1,385
22.1
59
77
0
333
1,640
443
27.0
1,197
17.3
4QE
4,189
64.4
1,877
2,312
40.8
55
85
0
356
2,585
701
27.1
1,883
31.2
FY12
FY13E
8,247
-17.2
3,412
4,835
-16.2
58.6
269
3
1,501
6,059
1,430
23.6
4,629
-10.5
10,669
29.4
4,596
6,073
25.6
56.9
310
0
1,330
7,090
1,915
27.0
5,174
11.9
C154

Sector: Real Estate
Phoenix Mills
BSE Sensex
S&P CNX
18,763
5,703
Bloomberg
PHNX IN
Equity Shares (m)
144.8
1,6,12 Rel Perf (%)
19/-15/-21
Mcap (INR b)
28.4
Mcap (USD b)
0.5
CMP: INR196
Year
End
3/11A
3/12A
3/13E
3/14E
Buy
Net Sales
PAT
EPS
2,102
842
5.8
3,666
1,056
7.3
4,315
1,128
7.8
8,690
2,316
16.0
EPS
Gr. (%)
36.5
25.5
6.7
105.4
P/E
(X)
26.9
25.2
12.3
P/BV
(X)
1.7
1.6
1.4
RoE
(%)
5.0
6.2
6.3
11.7
RoCE
(%)
5.2
6.1
6.1
10.4
EV/
EV/
Sales EBITDA
12.1
20.9
10.0
17.3
4.8
10.2
In 1QFY13, PHNX changed its accounting practice by including electricity charges recovered from licensees in
revenue (on gross basis), which were earlier netted off against expense. With this, results for FY13 will not be
comparable YoY.
We expect High Street Phoenix's (HSP) 2QFY13 rental at INR628m (v/s INR626m in 1QFY13), EBITDA at INR396m
(v/s INR394m in 1QFY13), and PAT of INR301m, up 26%. The growth in rental is attributable to revenue sharing.
Among Market City retails, we expect further increase in pre-leasing in Bengaluru and Chennai, while in Pune,
we expect incremental pre-leasing to remain muted due to new product proposition under evaluation.
Recent residential launch at Bangalore One has been encouraging with sales of 0.7msf+ (INR5.3b). Steady sales
at Chennai project led to prices rising to INR10,000/sf.

1. Momentum in commercial and residential sales in Market City projects
2. Progress on ramp-up in recently commenced malls
3. Visibility over stake increase in Market City projects or new acquisitions.
The stock trades at a PER of 12.3x FY14E EPS of INR16, 1.4x FY14E BV and a 25% discount to its one-year forward
NAV of INR262. Maintain Buy.
(INR Million)
Y/E March
Sales
Change (%)
Total Expenditure
EBITDA
Change (%)
As % of Sales
Depreciation
Interest
Other Income
PBT
Tax
Adj. PAT
Change (%)
E: MOSL Estimates
October 2012
FY12
1Q
535
32.4
205
331
12.6
62
67
10
110
363
91
25
272
49.1
2Q
474
6.9
141
333
5.1
70
69
31
89
323
84
26
239
8.0
FY13
3Q
505
12.0
132
373
14.0
74
74
57
113
355
86
24
269
13.1
4Q
600
28.3
237
363
13.2
61
73
68
146
368
95
26
273
0.6
1Q
626
17.0
232
394
19.3
63
67
58
143
413
107
26
306
12.4
2QE
628
32.5
232
396
18.7
63
67
64
137
402
100
25
301
26.2
3QE
638
26.4
223
415
11.1
65
67
78
143
412
103
25
309
15.0
4QE
630
5.0
221
410
12.7
65
67
90
147
401
97
24
304
11.3
FY12
Cons.
3,666
74.4
1,552
2,114
50.4
57.7
563
944
446
1,053
189
18.0
1,056
25.5
FY13E
Cons.
4,315
17.7
1,804
2,511
18.8
58.2
884
1,097
646
1,175
282
24.0
1,128
6.7
C155

Sector: Real Estate
Unitech
BSE Sensex
S&P CNX
18,763
5,703
Bloomberg
UT IN
Equity Shares (m)
2,438.8
52 Week Range (INR)
38/17
1,6,12 Rel Perf (%)
20/-22/-24
Mcap (INR b)
59.3
Mcap (USD b)
1.1
CMP: INR24
Buy
Year
Net Sales
PAT
EPS
End
3/11A
33,960
5,677
2.2
3/12A
24,219
2,373
0.9
3/13E
22,217
2,106
0.8
3/14E
28,746
3,470
1.3
EPS
Gr. (%)
-21.6
-58.2
-11.3
60.6
P/E
(X)
26.8
30.2
18.8
P/BV
(X)
0.6
0.6
0.6
RoE
(%)
4.9
2.0
1.7
2.7
RoCE
(%)
5.6
2.8
2.1
3.2
EV/
EV/
Sales EBITDA
4.8
35.6
5.2
39.3
4.0
23.9
Expect margins to improve: We expect 2QFY13 revenue to de-grow 22% YoY to INR4.9b, EBITDA to de-grow 49%
to INR709m and PAT to de-grow 47% YoY to INR492m. EBITDA margin is estimated at 14.5%, which should see
steady improvement with MTM loss provisioning taken out of P&L.
New launches subdued: Focus on new launches has been low (as guided by the management earlier) to prioritize
execution of ongoing projects. We expect sales to deteriorate YoY, except in Noida where run-rate should
remain steady. The company launched Exquisite in Noida during 2QFY13.
Execution run-rate contingent on liquidity improvement: Successful re-financing is the key to boost Unitech's
execution. We remain concerned about Unitech's FY13 repayment obligation of INR15b+.

1. Sales momentum on the back of lower new launches (estimate INR37b in FY13)
2. Progress in construction and delivery (the company aims at INR4-4.5b/qtr run-rate v/s INR3b currently),
along with improvement in debtor days.
3. Strategy to address impending repayment of INR15b+ loan in FY13.
Unitech trades at 40% discount to its one-year forward NAV estimate of INR40 and 18.8x FY14E EPS of INR1.3 and
0.6x FY14E BV. Maintain Buy.
(INR Million)
Y/E March
Sales
Change (%)
Total Expenditure
EBITDA
Change (%)
As of % Sales
Depreciation
Interest
Other Income
PBT
Tax
Reported PAT
Change (%)
E: MOSL Estimates
October 2012
FY12
1Q
6,155
-25.7
4,957
1,198
-59.2
19.5
84
337
714
1,490
468
31.4
984
-45.4
2Q
6,261
-2.9
4,880
1,381
-45.4
22.1
85
338
403
1,362
424
31.1
924
-46.8
3Q
5,086
-22.9
4,057
1,029
-50.7
20.2
93
279
387
1,044
469
44.9
552
-50.4
FY13
4Q
6,717
-46.8
6,772
-54
-102.8
-0.8
172
252
576
97
475
491.0
23
-97.9
1Q
4,077
-33.8
3,530
547
-54.3
13.4
99
117
345
677
261
38.5
459
-53.4
2QE
4,888
-21.9
4,179
709
-48.7
14.5
111
141
322
779
265
34.0
492
-46.8
3QE
5,999
17.9
5,129
870
-15.4
14.5
116
141
322
935
318
34.0
595
7.8
4QE
7,253
8.0
6,432
822
-1,612
11.3
120
166
299
834
189
22.7
622
2,652
FY12
FY13E
24,219
-28.7
20,938
3,281
-65.3
13.5
434
563
2,080
4,365
1,896
43.4
2,373
-58.2
22,217
-8.3
19,270
2,948
-10.2
13.3
446
564
1,289
3,227
1,033
32.0
2,106
-11.3
C156

Sector: Retail
Retail
Company Name
Jubilant Foodworks
Pantaloon Retail
We expect our Retail universe to post 11.6% and 14.4% YoY growth in sales and EBITDA
respectively. PAT would decline 5%, due to weak performance by Shoppers Stop and
Pantaloon Retail. However, we estimate Jubilant Foodworks' to continue to outpeform
and post 45% YoY PAT growth. Titan should post sequentially better Jewellery volumes.
Shoppers Stop
Titan Industries
No recovery yet; expect specialty retailers to outperform: Consumer sentiment

remains subdued, impacting footfalls and same store sales (SSS) growth of traditional
retailers, in our view. Discretionary consumption has not shown any uptick
notwithstanding the improving macro environment post the recent government
announcements. Jewelry volumes, though sequentially better, are likely to remain
under pressure, as higher gold prices and macro uncertainty continue to deter buying.
The Quick Service Restaurant (QSR) segment remains an outlier, with continued
momentum on the back of more store openings and new launches.
Footfalls back to normal after discount season: Discount season sale attracted footfalls
in August. However, post the discount season, the footfalls did not sustain. This
coupled with weaker than expected ramp up in new stores will continue to impact
operating margins of traditional retailers. Committed capex plans will further put
strain on financials and increase debt. Shoppers Stop has added 1 department store
and Jubilant Foodworks is likely to add ~25 stores during the quarter. We understand
that Titan Industries is expanding Fastrack and Jewelry at a rapid pace, but is going
slow on Eyewear.
FDI in multi-brand retail cleared; do not expect deals in near term: During the quarter,
the Government of India (GoI) allowed 51% FDI in multi-brand retail and also amended
the sourcing norms for single-brand retail. The most important change vis--vis the
earlier announced policy is that state governments will have the final say in allowing
multi-brand retail in their respective states. It will be the privilege of state
governments to decide whether and where a multi-brand retailer with foreign partner
should be allowed to open outlets in the state. It will be restricted to cities with
population above one million. We believe letting in FDI is a long term positive for
Indian Retail, as apart from the natural benefits like technology, back-end expertise,
etc, which a global player may bring to the table, it allows capital starved players an

CMP
(INR)
28.09.12
JJubilant Foodworks
1,373
Pantaloon Retail
214
Shopper's Stop
401
Titan Industries
262
Sector Aggregate
(INR Million)
Rating
Sep.12
Neutral
Neutral
Neutral
Neutral
3,450
30,562
5,660
24,450
64,122
Sales
Var.
% YoY
43.5
5.0
13.8
16.6
11.6
Var.
% QoQ
9.7
3.2
26.7
10.9
8.1
Sep.12
628
2,812
198
2,469
6,107
EBITDA
Var.
% YoY
46.9
11.4
-48.8
23.3
14.4
Var.
% QoQ
9.6
1.8
43.7
16.5
9.2
Net Profit
Sep.12
Var.
% YoY
344
45.5
21
-93.6
36
-81.8
1,764
15.4
2,165
-5.5
Var.
% QoQ
6.4
-45.3
186.0
13.0
11.8
Gautam Duggad (Gautam.Duggad@MotilalOswal.com) / Sreekanth P.V.S. (Sreekanth.P@MotilalOswal.com)

October 2012
C157

Sector: Retail
access to long-term capital. However, given the tough preconditions and complexity
in stitching a deal (separate entity, which complies with extant state FDI rules, will
have to be floated), we do not see any deal announcement in the near term.
No dawn yet; prefer specialty retailers: We remain cautious in the near term, as the
sector continues with flat to low single digit same store sales (SSS) growth. We believe
segments like Apparel, Home Retailing and Jewelry will take some time to recover
from the slowdown due to weak macroeconomic environment and low consumer
confidence. Shoppers Stop will face pressure on profitability due to low SSS growth
and resultant lack of operating leverage, given weaker ramp up in stores opened in
the past 18 months. Jubilant Foodworks has strong cash flows; we would watch for
SSS growth trends and revenue from the newly opened Dunkin Donuts. We maintain
our Neutral rating on Jubilant and Shoppers Stop. Festive season demand in 3Q holds
the key for Titan.
Shoppers' Stop - SSS growth remains flat
Titan's jewelry SBU; watch out for Gold prices, volume mix
Jewel ry growth %
LTL Sa l es Gr (%)
22
16
21
Gol d pri ce cha nge % (YoY)
90
13
60
7
14
11
-1
10
30
1
2
-6
3QFY07
4QFY07
1QFY08
2QFY08
3QFY08
4QFY08
1QFY09
2QFY09
3QFY09
4QFY09
1QFY10
2QFY10
3QFY10
4QFY10
1QFY11
2QFY11
3QFY11
4QFY11
1QFY12
2QFY12
3QFY12
4QFY12
1QFY13
2QFY13
Sep-12E
Jun-12
Mar-12
Dec-11
Sep-11
Jun-11
Mar-11
Dec-10
Sep-10
Jun-10
Mar-10
Dec-09
Sep-09
Jun-09
-30
Gold prices up 31% YoY and 5% QoQ (INR/10g)
Jubilant Foodworks' LTL sales growth

43.8
30,000
29,297
INR/10 gm
27,000
37.0
35.7
26,607
33.2
36.7
24,000
26.7
30.1
26.2
22.3
21,000
25.0
18,000
2QFY13E
1QFY13
4QFY12
3QFY12
2QFY12
1QFY12
4QFY11
3QFY11
2QFY11
Sep-12
Jun-12
Mar-12
Dec-11
Sep-11
Jun-11
Mar-11
Dec-10
Sep-10
Jun-10
Mar-10
Dec-09
12,000
1QFY11
15,000
October 2012
C158

Sector: Retail
Area addition plans on track

Shoppers Stop
Jubilant Foodworks
Shoppers Stop (LHS)
Hyperci ty (RHS)
60
49
50
52
12
12
12
43
41
51
55
320
338
392
378
364
465
439
411
489
514
90
87
93
96
100
105
110
115
2QFY13E
77
74
4QFY12
3QFY12
2QFY12
1QFY12
4QFY11
3QFY11
1QFY11
Sep-12
Jun-12
Mar-12
Dec-11
Sep-11
Jun-11
Mar-11
Dec-10
2QFY11
8
Sep-10
10
1QFY13
10
30
Jun-10
20
Ci ti es
10
40
30
Stores
14
Relative to performance-1Yr (%)
100
95
80
85
60
Sep-12
Jun-12
Sep-11
105
Aug-12
120
Jul-12
115
Sep-12
140
Dec-11
125
Sens ex Index
MOSL Reta i l Index
Jun-12
Sens ex Index
MOSL Reta i l Index
Mar-12
Relative to performance-3m (%)
CMP (INR)
28.09.12
Retail
Jubilant Foodworks1,373
Pantaloon Retail
214
Shopper's Stop
401
Titan Industries
262
Sector Aggregate
UR: Under Review
October 2012
Rating
EPS (INR)
FY12 FY13E FY14E
P/E (x)
FY12 FY13E FY14E
EV/EBITDA (x)
FY12 FY13E FY14E
RoE (%)
FY12 FY13E FY14E
Neutral
Neutral
Neutral
Neutral
16.4
4.8
7.8
6.8
83.9
44.6
51.2
38.5
45.2
46.0
8.0
23.3
26.8
19.0
37.7
3.4
9.9
48.7
16.0
23.9
6.7
2.7
8.1
35.4
9.3
6.8
10.0
57.3
31.9
149.1
32.4
38.3
38.8
22.9
59.3
26.2
28.9
30.7
7.2
33.9
21.7
16.1
21.4
6.6
21.8
17.4
13.2
38.2
4.6
3.3
42.4
16.7
39.0
6.2
7.8
34.8
19.1
C159

Sector: Retail
Jubilant Foodworks
BSE Sensex
S&P CNX
18,763
5,703
Bloomberg
JUBI IN
Equity Shares (m)
63.5
1,6,12 Rel Perf (%)
12/18/44
Mcap (INR b)
87.2
Mcap (USD b)
1.7
CMP: INR1,373
Year
Net Sales Adj PAT
End
(INR m) (INR m)
03/11A
6,783
720
03/12A 10,175
1,056
03/13E 14,807
1,545
03/14E 20,697
2,284
Neutral
EPS
(INR)
11.2
16.4
23.9
35.4
EPS
Gr. (%)
112.4
46.7
46.3
47.8
P/E
(X)
83.9
57.3
38.8
P/BV
(X)
31.6
21.9
15.1
RoE
(%)
37.6
37.7
38.2
39.0
RoCE
(%)
45.1
51.4
53.7
53.5
EV/
EV/
Sales EBITDA
8.6
46.8
5.8
31.2
4.1
21.8
We expect Jubilant Foodworks (JUBI) to report 43.5% increase in sales to INR3.4b. Like to like (LTL) sales growth
would be ~25%, marginally higher than in 1QFY13.
Gross margin would improve marginally to 74.2%; operating leverage would enable 40bp expansion in EBITDA
margin to 18.2%.
EBITDA is likely to grow 47% to INR628m. PAT would grow 45.5% to INR344m, driven by 100bp increase in tax
rate.
We expect the company to add 25 new stores, taking the total to 514 stores. In August, JUBI inaugurated its
500th store in Delhi.
Three Dunkin Donuts stores are under operation in New Delhi. The company plans to add 80-100 stores in India
in the next five years.
We estimate 47% PAT CAGR over FY12-14. However, valuations of 57.3x FY13E and 38.8x FY14E EPS capture the
positives and do not factor in an increase in competitive activity in the existing business. Neutral.
What to look for

Operating leverage; trend in EBITDA margin, given price increases and rising overheads on new stores.
(INR Million)
Y/E March
No of Stores
LTL Growth (%)
Net Sales
YoY Change (%)
Gross Profit
Gross Margin (%)
Other Expenses
% of Sales
EBITDA
EBITDA Growth %
Margins (%)
Depreciation
Interest
Other Income
PBT
YoY Change (%)
Tax
Rate (%)
Adjusted PAT
YoY Change (%)
E: MOSL Estimates
October 2012
FY12
1Q
392
36.7
2,169
60.0
1,617
74.5
1,196
55.2
420
67.2
19.4
87
0
12
346
84.9
108
31.1
232
52.0
2Q
411
26.7
2,404
47.1
1,769
73.6
1,341
55.8
427
43.8
17.8
93
0
14
348
51.6
111
32.0
237
28.4
3Q
439
30.1
2,770
49.2
2,066
74.6
1,551
56.0
516
59.9
18.6
96
0
14
434
72.9
139
32.1
295
55.4
FY13
4Q
465
26.2
2,832
46.2
2,113
74.6
1,604
56.6
509
54.0
18.0
100
0
17
425
65.7
132
31.1
293
51.8
1Q
489
22.3
3,145
45.0
2,309
73.4
1,736
55.2
573
36.3
18.2
117
0
19
475
11.7
152
31.9
323
39.3
2QE
514
25.0
3,450
43.5
2,559
74.2
1,931
56.0
628
46.9
18.2
135
3
24
514
47.7
170
33.0
344
45.5
3QE
535
23.0
4,000
44.4
2,967
74.2
2,207
55.2
760
47.4
19.0
140
3
24
641
47.8
212
33.0
429
45.8
4QE
563
23.0
4,212
48.7
3,148
74.7
2,348
55.7
800
57.2
19.0
141
5
23
676
58.9
223
33.0
453
54.5
FY12
FY13E
463
30.0
10,175
50.0
7,564
74.3
5,698
56.0
1,866
55.3
18.3
377
0
57
1,546
67.3
490
31.7
1,056
46.7
563
23.0
14,807
45.5
10,982
74.2
8,221
55.5
2,761
48.0
18.6
533
11
90
2,306
49.1
761
33.0
1,545
46.3
C160

Sector: Retail
Pantaloon Retail
BSE Sensex
S&P CNX
18,763
5,703
Bloomberg
PF IN
Equity Shares (m)
217.1
1,6,12 Rel Perf (%)
42/40/-15
Mcap (INR b)
46.4
Mcap (USD b)
0.9
CMP: INR214
Neutral
Year
Net Sales
PAT
End
(INR m) (INR m)
06/11A 110,122
1,897
06/12A 122,526
1,071
06/13E 139,931
1,498
06/14E 158,024
2,086
EPS
(INR)
8.7
4.8
6.7
9.3
EPS
Gr. (%)
7.1
-45.2
39.9
39.0
P/E
(X)
44.6
31.9
22.9
P/BV
(X)
1.5
1.5
1.4
RoE
(%)
6.2
3.4
4.6
6.2
RoCE
(%)
12.1
12.0
13.2
9.5
EV/
EV/
Sales EBITDA
0.7
8.2
0.7
7.2
0.6
6.6
We expect core retail sales to grow 5% to INR30.6b in 5QFY13 (year extended to December for FY12) for Pantaloon
Retail (PF).
Same store sales (SSS) growth dynamics has not seen improvement in the September quarter due to prevailing
weak consumer sentiment.
EBITDA would grow 11% to INR2.8b, with operating margins expanding 50bp YoY.
Adjusted PAT would decline 94% to INR21m, as interest cost continues to consume 2/3rd of EBITDA.
Recent deals (AB Nuvo-Pantaloon transaction, Future Capital) will help alleviate the debt strain for PF. Core
retail debt stands at INR60b.
News flow around potential deals after the allowance of 51% FDI in multi-brand retail will keep fundamentals
in the background, we believe.
The stock trades at 31.9x FY13E EPS and 22.9x FY14E EPS. Maintain Neutral.
What to look for

Same store sales growth for Value and Lifestyle business.
Space addition.
Interest cost.
Quarterly Performance; Core Retailing
(INR Million)
Y/E June
Net Sales
YoY Change (%)
Total Exp
EBITDA
Growth (%)
Margins (%)
Depreciation
Interest
Other Income
PBT
Tax
Rate (%)
Adjusted PAT
YoY Change (%)
E: MOSL Estimates
October 2012
FY11
1Q
25,814
32.1
23,687
2,127
15.3
8.2
630
933
81
645
218
33.7
428
62.4
2Q
27,586
31.2
25,202
2,383
12.1
8.6
650
1,078
52
708
235
33.2
472
5.5
3Q
28,119
17.6
25,641
2,479
14.0
8.8
660
1,096
34
757
252
33.2
505
34.8
4Q
28,604
15.4
26,019
2,585
26.2
9.0
737
1,177
63
735
242
33.0
492
-17.1
1Q
29,106
12.8
26,583
2,523
18.6
8.7
828
1,305
79
468
138
29.5
330
-22.8
2Q
28,933
4.9
26,321
2,612
9.6
9.0
877
1,582
40
193
58
30.1
135
-71.4
FY12
3Q
30,264
7.6
27,488
2,776
12.0
9.2
887
1,725
16
180
60
33.3
120
-76.2
FY12E
4Q
29,627
3.6
26,864
2,763
6.9
9.3
929
1,804
28
58
19
33.0
39
-92.1
5QE
30,562
5.0
27,750
2,812
11.4
9.2
940
1,890
50
32
10
33.0
21
-93.6
6QE
31,827
10.0
28,867
2,960
13.3
9.3
960
1,947
53
106
35
33.0
71
-47.5
180,319
66.8
163,873
16,446
117.3
9.1
5,422
10,253
266
1,037
321
30.9
716
-62.3
C161

Sector: Retail
Shoppers Stop
BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
5,703
SHOP IN
82.2
427/251
7/-6/-1
32.9
0.6
CMP: INR401
Year
Net Sales
PAT
End
(INR m) (INR m)
03/11A 16,589
752
03/12A 19,300
643
03/13E 22,308
221
03/14E 26,579
555
Neutral
EPS
(INR)
9.1
7.8
2.7
6.8
EPS
P/E
Gr. (%) (X)
120.1
-14.5
51.2
-65.7 149.1
151.3 59.3
P/BV
(X)
5.1
4.9
4.6
RoE
(%)
12.6
9.9
3.3
7.8
RoCE
(%)
16.3
11.0
5.0
9.6
EV/
EV/
Sales EBITDA
1.7
23.3
1.5
35.1
1.2
21.8
We expect Shoppers Stop (SHOP) to report 13.8% increase in sales to INR5.7b. However, same store sales (SSS)
growth would be 1-2%, in our view.
We estimate EBITDA margin at 3.5%, still below the normal trend of 5-6%, as new stores continue to see weak
traction. We expect PAT to decline 81% due to weak SSS performance and consequent lack of operating leverage.
Like to like (LTL) sales are likely to grow 1-2% on account of modest demand, despite discount sale season in
August.
Higher overheads on new store openings and extended discount period would impact profit margins for the
quarter.
Hypercity would remain a drag on consolidated profitability.
The company has added one Shoppers Stop departmental store in 2QFY13.
The stock trades at 149.1x FY13E and 59.3x FY14E standalone EPS. Maintain Neutral.
(INR Million)
Y/E March
LTL Sales Gr %
Deptt Stores
Net Sales
YoY Change (%)
Total Exp
EBITDA
Growth %
Margins (%)
Depreciation
Interest
Other Income
PBT
Tax
Rate (%)
Adjusted PAT
YoY Change (%)
E: MOSL Estimates
October 2012
FY12
1Q
7
41
3,930
14.4
3,667
263
5.2
6.7
81
44
37
176
59
33.5
117
17.2
2Q
11
43
4,973
14.9
4,586
387
1.4
7.8
88
57
52
294
98
33.5
195
12.5
3Q
-1
49
5,017
9.9
4,603
414
-19.7
8.2
94
76
46
290
97
33.5
193
-30.8
FY13
4Q
10
51
5,406
18.5
5,042
363
-2.8
6.7
115
74
44
218
81
37.1
137
-31.0
1Q
1
52
4,467
13.6
4,329
138
-47.7
3.1
120
77
74
15
3
17.9
12
-89.4
2QE
2
55
5,660
13.8
5,462
198
-48.8
3.5
110
75
40
53
18
33.0
36
-81.8
3QE
7
58
5,850
16.6
5,558
293
-29.3
5.0
115
75
40
143
47
33.0
95
-50.5
4QE
5
60
6,331
17.1
6,006
325
-10.5
5.1
108
102
4
119
41
34.9
77
-43.8
FY12
FY13E
7
51
19,300
16.3
17,873
1,427
-6.2
7.4
377
250
178
978
335
34.3
643
-14.5
4
60
22,308
15.6
21,354
954
-33.2
4.3
453
329
159
329
109
33.0
221
-65.7
C162

Sector: Retail
Titan Industries
BSE Sensex
S&P CNX
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
5,703
TTAN IN
887.8
263/154
12/7/12
232.2
4.4
CMP: INR262
Year
Net Sales
PAT
End
(INR m) (INR m)
03/11A 65,209
4,336
03/12A 88,384
6,048
03/13E 103,823
7,158
03/14E 123,199
8,858
Neutral
EPS
(INR)
4.9
6.8
8.1
10.0
EPS
Gr. (%)
65.8
38.4
19.3
23.8
P/E
(X)
38.7
32.4
26.2
P/BV
(X)
16.0
12.0
9.1
RoE
(%)
49.6
48.7
42.4
34.8
RoCE
(%)
61.8
66.8
58.7
54.1
EV/
EV/
Sales EBITDA
2.5
26.8
2.1
21.7
1.7
13.9
We expect Titan Industries (TTAN) to post sales of INR24.5b, up 16.6%. EBITDA is likely to grow 23%, with margin
expansion of 50bp, driven by savings on excise and direct import of gold. PAT is likely to increase 15.4% to
INR1.7b.
Sequentially, footfalls have increased in the Jewelry segment, driven by improved consumer sentiment and
better wedding demand.
We estimate 10% decline in Jewelry volumes, as higher gold prices and weak consumer sentiment continue to
impact footfalls and demand; however, value growth will remain healthy due to ~23% higher gold prices.
We expect sales to grow 15% in the Jewelry segment and 14% in the Watches segment.
We believe store expansion and festive season demand in 3QFY13 are the key factors to watch for in FY13.
We estimate 21% PAT CAGR over FY12-14, but deterioration in consumer sentiment and decline in gold prices
are risks to our estimates. The stock trades at 32.4x FY13E EPS of INR8.1 and 26.2x FY14E EPS of INR10. Neutral.
(INR Million)
Y/E March
Net Sales
YoY Change (%)
Total Exp
EBITDA
EBITDA Growth %
Margins (%)
Depreciation
Interest
Other Income
PBT
Tax
Rate (%)
Adjusted PAT
YoY Change (%)
E: MOSL Estimates
October 2012
FY12
1Q
20,205
61.3
18,284
1,921
73
9.5
99
88
233
1,968
532
27.0
1,436
76.9
2Q
20,963
36.5
18,961
2,002
15
9.6
106
2
201
2,096
567
27.1
1,529
19.7
3Q
24,401
24.8
22,272
2,129
9.2
8.7
119
10
247
2,247
608
28.5
1,639
16.4
FY13
4Q
22,814
28.3
20,744
2,071
95.7
9.1
125
131
255
2,070
627
30.3
1,443
72.0
1Q
22,057
9.2
19,937
2,120
10.3
9.6
123
126
252
2,122
561
28.0
1,561
8.7
2QE
24,450
16.6
21,981
2,469
23.3
10.1
110
160
250
2,449
686
28.0
1,764
15.4
3QE
29,000
18.8
26,100
2,900
36.2
10.0
117
160
240
2,863
802
28.0
2,061
25.8
4QE
28,316
24.1
25,709
2,607
25.9
9.2
131
204
235
2,507
735
29.3
1,772
22.8
FY12
FY13E
88,384
35.5
80,054
8,329
42
9.4
449
437
941
8,384
2,336
27.9
6,048
39.5
103,823
17.5
93,727
10,096
21
9.7
482
650
977
9,941
2,784
28.0
7,158
18.3
C163

Sector: Technology
Technology
Company Name
Cognizant Technology
HCL Technologies
Infosys
MphasiS
TCS
Tech Mahindra
Wipro
Expect TCS, Cognizant to lead growth amid moderate traction in seasonally strong
quarter: We expect tier-I IT to grow USD revenue by 1-4.7% QoQ, led by TCS (4.1%
QoQ) and Cognizant (4.7% QoQ). Infosys' revenue growth estimate stands at 2.9%
QoQ, after two successive quarters of sequential revenue decline, bridging the growth
gap with leaders. HCL is likely to continue steady growth (3.6% QoQ), while Wipro
may lag, growing 1% QoQ (v/s guidance of 0.3-2.3%), as large deals remain elusive.
Margins to decline at HCL Tech and Wipro, remain flat at TCS and Infosys: INR has
depreciated by 1.9% QoQ in 2QFY13, which will be slight tailwind for margins. Also,
the commentary around pricing remained stable across the board, with no spike in
instances of abnormal pricing. Given the wage hikes effective from 1 June 2012 at
Wipro and 1 July 2012 at HCL Tech, we expect operating profit margins to decline at
these two companies (by 90bp QoQ and 220bp QoQ, respectively). Despite pressures
from continued hiring, onsite shift and geographic mix, we expect margins to remain
stable at TCS QoQ. Even at Infosys, we expect margins to remain within a tight band.
Expect guidance to remain unchanged on the back of unchanged macro outlook:
Worries on the macro front have not abated, and there is not enough to suggest
incremental change in the commentary across the board. We expect caution to
dominate the outlook for FY13, and guidance to remain unchanged. Deal signings
lend confidence to Infosys' outlook of at least 5% growth, and Cognizant too should
maintain guidance of at least 20% growth. Change in currency assumed in the guidance
is likely to moderate EPS estimate at Infosys by ~2pp to INR162. We expect hiring
guidance to remain unchanged at TCS and Wipro to guide 1-3% QoQ growth in USD
revenue for 3QFY13.
Watch for commentary on deal pipeline and velocity, BFSI and Europe: Given the
continued sluggishness in the environment, deal signing cycles are likely to remain
stretched, potentially thwarting the growth outlook. Also, continued trouble in Europe
and BFSI imply that outlook on the two would be keenly anticipated. From the
individual company's perspective, watch for volume growth and hiring at TCS, USD
revenue growth and pricing at Infosys, volume growth at Wipro and HCL Tech, and
BFSI performance at Cognizant.

CMP
Rating
(INR)
28.09.12
HCL Technologies
577
Buy
Infosys
2,534
Buy
MphasiS
402
Sell
TCS
1,294
Neutral
Tech Mahindra
972
Buy
Wipro
381
Buy
Sector Aggregate
Sep.12
62,080
100,052
13,551
157,685
16,291
110,824
460,483
Sales
Var.
% YoY
33.5
23.5
3.1
35.5
22.2
21.9
27.5
Var. Sep.12
% QoQ
4.9 11,987
4.0 30,956
0.0
2,768
6.1 46,122
5.6
3,085
4.0 21,299
4.8 116,217
EBITDA
Var.
% YoY
54.4
23.0
17.9
36.3
51.1
22.4
31.3
Var.
% QoQ
-6.2
5.1
3.5
6.4
-6.6
-0.6
2.9
(INR Million)
Net Profit
Sep.12
Var.
Var.
% YoY % QoQ
7,932
65.3
-5.7
24,015
26.0
4.9
2,092
14.3
0.2
34,563
41.7
5.4
2,978
23.7
-12.0
15,927
22.4
0.8
87,506
33.6
2.5
Ashish Chopra (Ashish.Chopra@MotilalOswal.com)

October 2012
C164

Sector: Technology
Prefer HCL Tech, Infosys: Large deals signed lend visibility to HCL Tech's revenue
growth in FY13, while Infosys' commentary improved slightly through the quarter on
the back of deals won. TCS' incrementally cautious outlook on Telecom and rich
valuations keep us Neutral on the stock. We agree with Wipro's strategy of investing
in the downturn; but improvement in environment remains imperative for quick
fruition of its efforts.
Expect TCS to lead growth, Infosys to bridge the gap
TCS
Infos ys
Wi pro
HCL Tecg
13

Sensex Index
MOSL Technology Index
110
105
100
95
90
85
9
4.1 3.6
2.9
1.0
5
1
Relative Performance - 1Yr (%)
2QFY13E
1QFY13
4QFY12
2QFY12
1QFY12
Q4FY11
3QFY12
2QFY13E
1QFY13
4QFY12
3QFY12
2QFY12
Sep-12
Jun-12
Mar-12
Dec-11
1QFY12
14%
4QFY11
100
3QFY11
20%
2QFY11
110
1QFY11
26%
4QFY10
120
1QFY10
32%
Sep-11
HCLT
38%
130
90
EBITDA Margins across toptier

TCS
Wi pro (overal l )
Infos ys
2QFY10
Sensex Index
MOSL Technology Index
Q3FY11
Q2FY11
EBITDA margin to decline at HCL and Wipro on wage hikes
3QFY10
Sep-12
Aug-12
Jul-12
Jun-12
Q1FY11
-3
Aggregate PAT to increase 35% YoY, aided by currency swing

Company
TCS
Infosys
Wipro
HCLT
Aggregate
2QFY13E
2,841
1,803
1,530
1,119
7,292
Company
TCS
Infosys
Wipro
HCLT
Aggregate
2QFY13E
27.6
28.3
16.7
16.8
23.4
October 2012
Revenues (USD)
2QFY12
Yoy (%)
1QFY13
2,525
12.5
2,728
1,746
3.2
1,752
1,473
3.9
1,515
1,002
11.6
1,080
6,746
8.1
7,074
EBIT Margin(%)
2QFY12
Yoy (%)
1QFY13
27.1
51
27.5
28.2
16
28.0
16.4
32
17.6
13.9
291
19.0
22.6
80
23.8
QoQ (%)
4.1
2.9
1.0
3.6
3.1
2QFY13E
158
100
111
62
431
QoQ (%)
12
32
-89
-224
(42)
2QFY13E
35
24
16
8
82
Revenues (INR b)
Yoy (%)
1QFY13 QoQ (%)
35.5
149
6.1
23.5
96
4.0
21.9
107
4.0
33.5
59
4.9
28.6
411
4.9
PAT (INR b)
2QFY12
Yoy (%)
1QFY13 QoQ (%)
24
41.7
33
5.4
19
26.0
23
4.9
13
22.4
16
0.8
5
65.2
8
-5.7
61
34.6
80
3.2
2QFY12
116
81
91
47
335
C165

Sector: Technology
EBITDA margin to decline at HCL and Wipro on wage hikes

Incremental revenues - USD m
225
150
75
0
-75
TCS
Infos ys
Wi pro
HCL
Cognizant
EPS Estimates (INR) - MOSL v/s Consensus
Infosys
TCS
Wipro
HCL Tech
Mphasis
Tech Mahindra
Cognizant
2QFY13
MOSL
Consensus
42.0
42.0
17.7
17.4
6.5
6.4
11.3
11.0
9.9
9.7
22.4
22.5
0.9
0.9
FY13
MOSL
Consensus
166.4
164.3
71.6
69.3
26.0
26.2
46.3
43.5
37.5
37.3
87.2
81.9
3.4
3.5
FY14
MOSL
Consensus
180.7
177.0
78.8
76.6
28.2
28.6
47.6
48.3
40.8
39.2
101.0
89.1
3.9
4.1
Upside/Downside to Consensus (%)

3QFY12
FY12
FY13
0.1
1.3
2.1
1.4
3.5
3.0
2.1
-0.9
-1.5
2.6
6.4
-1.6
2.9
0.6
3.9
-0.4
6.4
13.3
0.6
-2.2
-4.1
2QFY13 Currency highlights (INR)

USD
Rates (INR)
EUR
GBP
AUD
USD
Average
55.2
69.0
87.1
57.3
0.9
Closing
52.9
68.3
85.6
55.1
-5.0
Change (QoQ, %)
EUR
GBP
-0.1
AUD
1.9
5.0
-2.5
-1.5
-2.8
Source: Company,MOSL
2QFY13 Currency highlights (in USD)

EUR
Rates (USD)
GBP
AUD
EUR
Change (QoQ, %)
GBP
AUD
Average
1.25
1.58
1.04
-2.5
-0.2
2.9
Closing
1.29
1.62
1.04
1.5
2.9
1.4
2QFY13 guidance exchange rate assumptions
CMP (INR)
28.09.12
Technology
HCL Technologies
577
Infosys
2,534
MphasiS
402
TCS
1,294
Tech Mahindra
972
Wipro
381
Sector Aggregate
October 2012
Guided at
EUR
GBP
AUD
INR/USD
Infosys
1.26
1.56
1.02
55.00
Wipro
1.26
1.58
1.01
54.76
Actual (Average)
1.25
1.58
1.04
55.30
Rating
EPS (INR)
FY12 FY13E FY14E
P/E (x)
FY12 FY13E FY14E
EV/EBITDA (x)
FY12 FY13E FY14E
RoE (%)
FY12 FY13E FY14E
Buy
Buy
Sell
Neutral
Buy
Buy
35.1
145.5
37.5
54.4
70.4
22.7
16.5
17.4
10.7
23.8
13.8
16.8
19.3
10.2
11.6
8.3
17.4
10.5
11.8
13.5
26.0
28.0
18.7
36.7
30.2
21.2
25.2
46.3
166.5
40.8
71.6
87.2
26.0
47.6
180.7
37.2
78.8
101.0
28.2
12.5
15.2
9.9
18.1
11.1
14.7
15.7
12.1
14.0
10.8
16.4
9.6
13.5
14.5
8.0
9.8
7.6
13.0
6.6
10.0
10.8
7.4
8.8
8.2
11.5
5.6
9.0
9.7
27.8
27.3
17.5
38.3
24.4
20.7
26.4
25.8
25.8
13.9
33.7
23.0
19.4
23.5
C166

Sector: Technology
Cognizant Technology Solutions

BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52-Week Range (USD)
1,6,12 Rel. Perf. (%)
M.Cap. (INRb)
M.Cap. (USD b)
S&P CNX
Not Rated
CMP: USD69
5,703
Year
Net Sales
PAT
EPS
End
(USD m) (USD m) (USD)
12/10A
4,592
734
2.38
12/11A
6,121
884
2.86
12/12E
7,347
1,060
3.45
12/13E
8,711
1,211
3.94
CTSH US
307.3
84/53
4/-5/21
1,118.6
21.2
EPS
Gr. (%)
34.2
20.0
20.5
14.2
P/E
(X)
24.4
20.3
17.7
P/BV
(X)
5.5
4.6
3.7
RoE
(%)
23.5
23.4
24.6
23.0
RoCE
(%)
27.2
28.6
29.5
27.3
EV/
EV/
Sales EBITDA
3.2
15.5
2.6
12.5
2.1
10.4
We expect Cognizant's revenue to grow 4.7% QoQ to USD1.88b in 3QCY12. The company had guided revenue of
USD1.875b, implying a growth of 4.4% QoQ.
We expect Cognizant to retain its full-year revenue growth guidance of at least 20%, which implies 4QCY12
growth rate of 4.3% QoQ on our 3Q revenue estimate.
1QCY12 was only the second time in the past six years when the company lowered its full-year guidance. The
last time when it did so in CY08 (in the middle of the financial meltdown), it was just a one-quarter phenomenon
and guidance was again increased in the next quarter.
Our EBITDA margin estimate stands at 21.2% (+70bp QoQ) v/s 20.5% in 2QCY12, on some favorable impact from
currency.
Our GAAP EPS estimate is USD0.9 v/s the company's guidance of USD0.86.
Key things to watch: Commentary on likely client budgets in CY13; traction in discretionary spending; commentary
on Europe.
The stock trades at 20.3x CY12E and 17.7x CY13E EPS. Not Rated.
Quarterly Performance (US GAAP)
(USD Million)
Y/E December
Revenues
Q-o-Q Change (%)
Direct Expenses
SG&A
SG&A as % of Sales
EBITDA
Margins (%)
Other Income
Depreciation
PBT bef. Extra-ordinary
Provision for Tax
Rate (%)
PAT before EO
Q-o-Q Change (%)
Operating Metrics
Headcount addition
Closing Headcount
Utilization (%)
October 2012
CY11
CY12
CY11
CY12E
1Q
1,371
4.6
782
296
21.6
293
21.3
15
27
280
72
25.7
208
1.0
2Q
1,485
8.3
861
327
22.0
298
20.0
8
28
278
70
25.1
208
-0.1
3Q
1,601
7.8
925
353
22.1
323
20.2
-5
30
288
61
21.1
227
9.2
4Q
1,664
3.9
971
352
21.2
341
20.5
15
32
323
83
25.7
240
5.7
1Q
1,711
2.9
985
374
21.9
353
20.6
4
35
322
79
24.4
244
7.3
2Q
1,795
4.9
1,031
397
22.1
368
20.5
3
36
335
83
24.8
252
3.4
3QE
1,880
4.7
1,067
413
22.0
399
21.2
9
38
371
93
25.0
278
10.4
4QE
1,961
4.3
1,118
431
22.0
411
21.0
10
39
382
95
25.0
286
2.9
6,121
33.3
3,539
1,329
21.7
1,254
20.5
33
117
1,169
286
24.4
884
20.5
7,347
20.0
4,201
1,616
22.0
1,530
20.8
26
147
1,410
350
24.8
1,060
19.9
7,200
111,200
70
7,100
118,300
70
11,700
130,000
70
7,700
137,700
68
2,800
140,500
67
4,500
145,000
68
6,399
151,450
69
5,335
156,850
69
33,700
137,700
69
19,150
156,850
68
C167

Sector: Technology
HCL Technologies
BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
CMP: INR577
5,703
HCLT IN
702.9
595/374
-3/13/28
405.8
7.7
Year
End
6/11A
6/12A
6/13E
6/14E
Sales
(INR m)
159,118
210,312
257,162
288,099
PAT*
(INR m)
16,098
24,556
32,655
33,784
Buy
EPS*
(INR)
23.1
35.1
46.3
47.6
EPS
Gr. (%)
35.0
52.0
31.9
2.9
P/E*
(X)
16.5
12.5
12.1
P/BV
(X)
3.8
3.1
2.6
RoE
(%)
20.8
26.0
27.8
25.8
RoCE
(%)
15.9
21.4
25.2
22.3
EV/
EV/
Sales EBITDA
1.9
9.9
1.5
7.9
1.3
7.4
* After ESOP charges
We estimate HCL Tech's 1QFY13 revenue at USD1.12b, up 3.6% QoQ. In INR terms, our revenue estimate is
INR62.08b, up 4.9% QoQ.
We expect volume growth of 3.6% QoQ in Software Services, and USD revenue growth of 3.5% QoQ in Software
Services, 2.1% QoQ in BPO and 4.2% QoQ in IMS.
Despite our assumption of 1.2% QoQ depreciation in the INR v/s the USD, we expect EBITDA margin to decline
230bp QoQ (after adjusting for ESOP charges) on account of wage hikes effective from 1 July 2012.
We estimate SGA spends at 13.9% of revenue, +70bp QoQ.
We expect PAT to decline 5.7% QoQ to INR7.9b (after adjusting for ESOP charges), translating into an EPS of
INR11.3.
Key things to watch: Commentary on deal pipeline; impact of wage hikes on margins.
Quarterly Performance (US GAAP)
(INR Million)
Y/E June
FY12
1Q
46,513
8.2
7,764
16.7
59
4,800
-2.3
59.8
6.9
1,002
4.1
Revenues
Q-o-Q Change (%)
EBITDA
Margins (%)
Other Income
PAT
Q-o-Q Change (%)
Y-o-Y Change (%)
Diluted EPS (INR)
USD Revenues
Q-o-Q Change (%)
Operating Metrics
Gross Margin (%)
SGA (%)
Tax rate (%)
Net Employee additions
Util. - incl. trainees (%)
Q-o-Q Volume Growth (%)
Q-o-Q Realization change (%)
Offshore revenues (%)
E: MOSL Estimates; After adjusting
October 2012
2Q
52,452
12.8
9,487
18.1
-670
5,526
15.1
48.5
7.9
1,022
2.0
3Q
52,156
-0.6
9,363
18.0
-136
5,818
5.3
30.6
8.3
1,048
2.5
FY13E
4Q
59,191
13.5
12,782
21.6
-423
8,409
44.5
71.2
12.0
1,080
3.0
1Q
62,080
4.9
11,987
19.3
287
7,932
-5.7
65.3
11.3
1,119
3.6
2Q
62,794
1.2
11,768
18.7
342
7,774
-2.0
62.0
11.0
1,163
4.0
3Q
65,061
3.6
12,471
19.2
370
8,334
7.2
50.8
11.8
1,205
3.6
4Q
67,227
3.3
12,867
19.1
400
8,615
3.4
48.1
12.2
1,253
4.0
31.1
32.6
32.1
34.8
33.2
32.8
33.0
14.4
14.5
14.2
13.2
13.9
14.1
13.9
26.3
25.5
25.5
22.4
24.0
24.0
24.0
3,474
2,556
-612
1,855
2,600
2,800
3,200
69.7
69.6
72.2
72.4
73.0
72.5
72.5
4.0
4.9
2.9
1.8
3.6
3.8
3.7
1.1
-1.2
-1.0
0.0
-0.1
-0.1
-0.1
42.3
42.1
43.8
42.8
42.9
43.0
43.1
for ESOP charges; Axon is consolidated since December 2008
33.0
13.8
24.0
3,650
72.5
3.7
0.0
43.1
FY12
FY13E
210,312
32.2
39,396
18.7
-1,170
24,553
257,162
22.3
49,094
19.1
-942
27,685
43.6
35.1
4,152
17.1
12.8
46.3
4,268
2.8
31.3
14.7
24.5
7,273
70.8
16.7
0.4
42.8
31.3
14.7
24.5
12,250
72.6
13.9
-0.8
43.0
C168

Sector: Technology
Infosys
BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Wk Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
5,703
INFO IN
571.4
2,990/2,102
-2/-20/-12
1,447.9
27.5
CMP: INR2,534
Year
End
3/11A
3/12A
3/13E
3/14E
Net Sales
PAT
(INR m) (INR m)
275,010 68,230
337,340 83,160
405,699 95,045
446,507 103,248
Buy
EPS
(INR)
119.4
145.5
166.5
180.7
EPS
Gr. (%)
11.2
21.9
14.4
8.5
P/E
(X)
17.4
15.2
14.0
P/BV
(X)
4.3
4.0
3.3
RoE
(%)
27.8
28.0
27.3
25.8
RoCE
(%)
33.1
32.9
32.5
30.3
EV/
EV/
Sales EBITDA
3.7
11.6
3.0
9.9
2.6
8.8
Our 2QFY13 revenue estimate stands at USD1.8b, up 2.9% QoQ. In INR terms, our revenue growth estimate is
INR100b, up 4% QoQ.
We expect Infosys to grow its volumes by 3% QoQ in 2QFY13. To meet its minimum volume growth of 9.5% in
FY13, the company requires a volume CQGR of 2.8% over 2Q-4Q.
Infosys had guided USD revenue growth of "at least" 5% for FY13, and had stopped giving guidance for the
immediate quarter.
We expect reported pricing to be flattish, after declining 3.2% on a blended basis in constant currency in 1Q.
This would still imply some like-to-like decline, given that there is a tailwind of ~80bp on the realization metric
from one-time revenue reversal in 1QFY13.
We expect EBITDA margin to expand 30bp QoQ to 30.9%, given our assumption of ~1% depreciation in the
realized INR QoQ.
We expect 4.9% increase in PAT to INR24b. Our EPS estimate is INR42.
Key things to watch: Volume growth in 2QFY13; commentary on discretionary spends and pricing; deal signings
performance QoQ.
The stock trades at 15.2x FY13E and 14x FY14E EPS. Maintain Buy.
Quarterly Performance (IFRS)
(INR Million)
Y/E March
Revenues
Q-o-Q Change (%)
EBITDA
Margins (%)
Other Income
PAT
Q-o-Q Change (%)
Diluted EPS (INR)
USD Revenues
Q-o-Q Change (%)
Operating Metrics
Gross Margin (%)
SGA (%)
Tax rate (%)
Utilization - incl. trainees (%)
E: MOSL Estimates
October 2012
FY12
FY13
1Q
74,850
3.2
21,750
29.1
4,430
17,220
-5.3
30.1
1,671
4.3
2Q
80,990
8.2
25,160
31.1
3,870
19,060
10.7
33.4
1,746
4.5
3Q
92,980
14.8
31,350
33.7
4,220
23,720
24.4
41.5
1,806
3.4
4Q
88,520
-4.8
28,900
32.6
6,520
23,160
-2.4
40.5
1,771
-1.9
1Q
96,160
8.6
29,460
30.6
4,760
22,890
-1.2
40.1
1,752
-1.1
2QE
100,052
4.0
30,956
30.9
5,249
24,015
4.9
42.0
1,803
2.9
3QE
103,412
3.4
31,164
30.1
5,140
24,069
0.2
42.1
1,915
6.2
4QE
106,075
2.6
32,201
30.4
4,257
24,164
0.4
42.3
1,964
2.6
41.8
12.8
28.1
2,740
74.9
3.2
1.2
44.3
13.3
28.6
8,262
77.3
4.4
0.5
45.7
11.9
28.6
3,266
77.4
3.0
(0.1)
44.0
11.4
29.8
4,906
73
-0.6
(1.1)
42.2
11.6
27.8
1,157
42.7
11.8
28.5
5,210
42.6
12.4
28.5
4,159
42.6
12.3
28.5
3,184
2.8
(3.7)
3.0
(0.1)
3.3
2.9
2.6
-
FY12
FY13E
337,340
22.7
107,160
31.8
19,040
83,160
21.9
145.5
6,994
15.8
405,699
20.3
123,689
30.5
19,405
95,045
14.3
166.5
7,434
6.3
44.1
12.3
28.8
19,174
79.1
10.8
4.7
42.5
12.0
28.3
13,710
76.0
9.8
-3.2
C169

Sector: Technology
Mphasis
BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
5,703
MPHL IN
210.0
439/277
3/-12/4
84.5
1.6
CMP: INR402
Year
Net Sales
PAT
End
(INR m) (INR m)
10/10A 50,366
10,269
10/11A 50,980
8,308
10/12E 54,063
7,921
10/13E 56,775
8,611
Sell
EPS
(INR)
48.6
39.3
37.5
40.8
EPS
P/E
Gr. (%) Ratio
12.5
-19.1
10.2
-4.7
10.7
8.7
9.9
P/BV
(x)
2.2
1.9
1.6
RoE
(%)
36.4
23.1
18.7
17.5
RoCE
(%)
36.4
22.2
19.4
18.6
EV/
EV/
Sales EBITDA
1.3
6.7
1.2
5.9
1.0
4.9
We expect Mphasis to report sequentially flattish revenue at INR13.5b in 4QFY12, as growth in the direct
channel is offset by continued decline in the HP channel.
In USD terms, we expect revenue of USD254m v/s USD252m in 3QFY12 (+0.7% QoQ). We estimate 1.1% QoQ
growth in ITS and 1% QoQ decline in revenue from Applications.
We model INR400m hedge losses for the company in the topline.
Our EBITDA margin estimate is 20.4%, +70bp QoQ, given the company's continued cost focus amid limited
revenue visibility.
We expect 10.2% QoQ growth in PAT to INR2.09b, translating into an EPS of INR9.9.
Key things to watch: Outlook on HP channel in FY13; plans around cash; traction and deal pipeline in the direct
channel.
The stock trades at 10.7x FY12E and 9.9x FY13E EPS. Maintain Sell.
Mphasis - Quarterly Performance
(INR Million)
Y/E October
Revenues
Q-o-Q Change (%)
Direct Expenses
Sales, Gen. & Admin. Exp.
Operating Profit
Margins (%)
Other Income
Depreciation
Provision for Tax
Rate (%)
PAT bef. Extra-ordinary
Q-o-Q Change (%)
Diluted EPS (INR)
USD Revs
Q-o-Q Change (%)
E: MOSL Estimates
October 2012
FY11
1Q
12,335
-8.3
8,769
1,167
2,399
19.5
346
359
2,386
295
12.4
2,091
-19.9
9.9
271
-8.5
2Q
12,571
1.9
8,950
949
2,672
21.3
497
337
2,832
393
13.9
2,439
16.6
11.6
282
3.9
3Q
12,936
2.9
9,396
1,024
2,516
19.4
429
440
2,505
557
22.2
1,948
-20.1
9.3
290
2.9
FY12
4Q
13,138
1.6
9,626
1,165
2,347
17.9
479
414
2,412
582
24.1
1,830
-6.1
8.7
276
-4.7
1Q
13,672
5.7
9,995
1,155
2,522
18.4
338
468
2,392
544
22.7
1,848
-5.1
8.8
271
-2.0
2Q
13,289
-2.8
9,454
1,221
2,614
19.7
340
455
2,499
605
24.2
1,894
2.5
9.0
266
-1.8
3Q
13,551
2.0
9,596
1,280
2,675
19.7
441
415
2,701
614
22.7
2,087
10.2
9.9
252
-5.2
4QE
13,551
0.0
9,513
1,271
2,768
20.4
386
419
2,735
643
23.5
2,092
0.2
9.9
254
0.7
FY11
FY12E
50,980
1.2
36,741
4,305
9,934
19.5
1,751
1,550
10,135
1,827
18.0
8,308
-19.1
39.3
1,119
1.7
54,063
6.0
38,558
4,927
10,579
19.6
1,505
1,757
10,327
2,406
23.3
7,921
-4.7
37.5
1,042
-6.8
C170

Sector: Technology
Tata Consultancy Services

BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Wk Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
5,703
TCS IN
1,957.2
1,438/1,015
-10/2/9
2,532.6
48.1
CMP: INR1,294
Year
End
3/11A
3/12A
3/13E
3/14E
Net Sales
(INR m)
373,245
488,938
632,683
725,936
Neutral
PAT
(INR m)
86,826
106,384
140,221
154,286
EPS
(INR)
44.4
54.4
71.6
78.8
EPS
Gr. (%)
26.3
22.5
31.8
10.0
P/E
(X)
23.8
18.1
16.4
P/BV
(X)
7.8
6.2
5.0
RoE
(%)
37.4
36.7
38.3
33.7
RoCE
(%)
42.2
44.1
45.4
39.8
EV/
EV/
Sales EBITDA
5.1
17.4
3.8
13.0
3.2
11.5
We expect TCS to grow its revenue by 4.1% QoQ to USD2.84b in 2QFY13, on the back of 3.9% sequential growth
in volumes.
In INR terms, we expect revenue growth of 6% QoQ to INR158b. Pricing would remain flat QoQ.
EBITDA margin would be sequentially flattish at 29.2%, as gains from currency would be offset by [1] continued
traction in hiring, [2] slight onsite shift on account of new project start-ups, and [3] higher growth from lower
margin geographies like APAC and South America.
We expect PAT to grow 5.4% QoQ to INR34.6b, translating into an EPS of INR17.7.
We expect net hiring of 9,181 employees. Utilization including trainees would increase by 200bp QoQ to 74.3%.
Key things to watch: Volume growth; gross hiring; impact from forex.
The stock trades at 18.1x FY13E and 16.4x FY14E EPS. Maintain Neutral.
Quarterly Performance (IFRS)
(INR Million)
Y/E March
FY12
1Q
107,970
6.3
30,310
28.1
2,887
23,804
-0.9
12.2
2,412
7.5
Revenues
Q-o-Q Change (%)
EBITDA
Margins (%)
Other Income
PAT
Q-o-Q Change (%)
Diluted EPS (INR)
USD Revenues
Q-o-Q Change (%)
Operating Metrics
Gross Margin (%)
45.5
SGA (%)
17.5
Tax rate (%)
22.7
3,576
Utilization - excluding trainees (%) 83.2
7.5
-0.5
55.2
E: MOSL Estimates
October 2012
FY13
FY12
FY13E
2Q
116,335
7.7
33,829
29.1
997
24,390
2.5
12.5
2,525
4.7
3Q
132,040
13.5
40,921
31.0
-920
28,866
18.3
14.7
2,586
2.4
4Q
132,593
0.4
39,117
29.5
1,077
29,324
1.6
15.0
2,648
2.4
1Q
148,687
12.1
43,328
29.1
1,754
32,806
11.9
16.8
2,728
3.0
2QE
157,685
6.1
46,122
29.2
2,430
34,563
5.4
17.7
2,841
4.1
3QE
159,882
1.4
46,263
28.9
3,011
35,057
1.4
17.9
2,961
4.2
4QE
166,429
4.1
49,718
29.9
3,156
37,796
7.8
19.3
3,082
4.1
488,938
31.0
144,177
29.5
4,041
106,384
22.5
54.4
10,171
24.2
632,683
29.4
185,430
29.3
10,351
140,221
31.8
71.6
11,612
14.2
46.6
17.5
24.3
12,580
83.1
6.3
-1.0
54.8
48.0
17.1
22.6
11,981
82.0
3.2
2.0
55.0
47.8
18.3
21.6
11,832
80.6
3.3
-1.0
54.8
47.2
18.1
22.2
4,962
81.3
5.3
-1.0
55.3
47.1
17.9
24.0
9,181
83.7
3.9
-0.1
55.4
47.3
18.3
24.0
7,924
84.0
4.2
0.0
55.9
47.6
17.8
24.0
7,702
83.9
3.5
0.6
55.9
47.1
17.6
22.8
39,969
82.2
23.0
1.1
54.9
47.3
18.0
23.6
29,768
83.3
15.7
-0.9
55.6
C171

Sector: Technology
Tech Mahindra
BSE Sensex
S&P CNX
18,763
5,703
Bloomberg
TECHM IN
Equity Shares (m)
127.5
1,6,12 Rel Perf (%)
9/29/53
Mcap (INR b)
123.9
Mcap (USD b)
2.4
CMP: INR972
Buy
Year
Net Sales PAT#
End
(INR m) (INR m)
3/11A
48,413
7,093
3/12A
54,897
9,299
3/13E
70,869
11,512
3/14E
82,293
13,337
# Reported PAT incl Satyam;
EPS*
EPS
P/E
P/BV
R0E
RoCE
EV/
EV/
(INR) Gr. (%) (X)
(X)
(%)
(%)
Sales EBITDA
54.3
7.4
30.2
22.1
70.4
29.7
13.8
2.9
30.2
24.5
2.9
13.8
87.2
23.8
11.1
2.3
24.4
24.0
2.3
8.9
101.0
15.9
9.6
1.7
23.0
22.1
1.7
7.6
* EPS incl profits from Satyam, adjusted for restructuring charge
We expect Tech Mahindra's revenue to grow 4.3% QoQ to USD294m, on account of ~USD12m contribution from
the acquisition of HGS. In INR terms, we expect revenue of INR16.3b, +55.6% QoQ.
At Mahindra Satyam, we expect revenue to grow 3% QoQ to USD352m. In Rupee terms, revenue would be
INR19.55b.
Tech Mahindra's EBITDA margin is expected to decline 250bp QoQ to 18.9% in 2QFY13, on account of wage hikes
effective from the onset of the quarter. Even at Satyam, we expect EBITDA margin to decline 210bp QoQ to
19.6%.
Our PAT estimate for Tech Mahindra is INR1.73b and INR1.34b after adjusting the impact of restructuring fees.
Our PAT estimate for Satyam is INR2.9b.
Key things to watch: Pipeline in Managed Services; outlook on BT; margin profile post acquisitions.
Quarterly Performance (Indian GAAP) - SA
(INR Million)
Y/E March
Revenues
Q-o-Q Change (%)
Direct Cost
Other Operating Exps
Operating Profit
Margins (%)
Other Income
Interest
Depreciation
Provision for Tax
Rate (%)
Net Inc. aft. sh. of profits fr. asso.
Q-o-Q Change (%)
Diluted EPS (INR)
USD Revenues
Q-o-Q Change (%)
E: MOSL Estimates
October 2012
FY12
1Q
12,925
2.5
8,540
1,967
2,418
18.7
460
223
334
2,321
509
21.9
2,768
200.5
18.2
290
4.1
2Q
13,333
3.2
9,069
2,222
2,042
15.3
972
721
507
1,786
393
22.0
2,407
-13.0
15.3
296
2.2
3Q
14,449
8.4
9,861
2,245
2,343
16.2
147
338
390
1,762
294
16.7
2,763
14.8
17.8
289
-2.5
FY13
4Q
14,190
-1.8
9,312
2,487
2,391
16.8
-211
131
383
1,666
242
14.5
3,023
9.4
19.7
282
-2.5
1Q
15,434
8.8
9,684
2,448
3,302
21.4
-174
240
421
2,467
585
23.7
3,384
11.9
22.6
281
-0.1
2QE
16,291
5.6
10,551
2,655
3,085
18.9
-123
286
436
2,240
515
23.0
2,978
-12.0
19.5
294
4.3
3QE
19,300
18.5
12,790
3,127
3,384
17.5
-39
258
507
2,580
593
23.0
3,190
7.1
21.1
357
21.8
4QE
19,844
2.8
13,003
3,215
3,626
18.3
-6
231
512
2,878
662
23.0
3,479
9.1
23.3
367
2.8
FY12
FY13E
54,897
13.4
36,782
8,921
9,194
16.7
1,368
1,413
1,614
7,535
1,438
19.1
4,104
-17.6
70.9
1,156
8.8
70,869
29.1
46,027
11,445
13,397
18.9
-342
1,014
1,876
10,165
2,355
23.2
5,863
42.9
86.7
1,300
12.4
C172

Sector: Technology
Wipro
BSE Sensex
S&P CNX
CMP: INR381
18,763
5,703
Bloomberg
WPRO IN
Equity Shares (m)
2,455.6
1,6,12 Rel Perf (%)
-2/-21/-4
Mcap (INR b)
936.3
Mcap (USD b)
17.8
Year
End
3/11A
3/12A
3/13E
3/14E
Net Sales
PAT
(INR m) (INR m)
310,986 52,794
375,248 55,731
440,757 63,749
480,255 69,192
Buy
EPS
(INR)
21.6
22.7
26.0
28.2
EPS
Gr. (%)
15.1
5.1
14.4
8.5
P/E
(X)
16.8
14.7
13.5
P/BV
(X)
3.3
2.8
2.4
RoE
(%)
24.2
21.2
20.7
19.4
RoCE
(%)
20.1
19.4
19.5
18.6
EV/
EV/
Sales EBITDA
2.3
11.8
1.9
10.0
1.7
8.9
We estimate Wipro's IT revenue at USD1.53b, +1% QoQ, in line with the company's guidance of USD1.52b-1.55b.
In INR terms, we estimate Services revenue at INR84.9b, +2.1% QoQ.
We expect volume growth of 1.3% QoQ and flat pricing for IT Services. Wipro's overall revenue is likely to grow
4% QoQ to INR111b.
IT Services EBIT margin would decline 100bp QoQ to 20% on two months of residual impact from wage hikes.
Overall EBIT margin would decline 90bp QoQ to 16.7%.
We estimate PAT at INR15.9b, up 0.8% QoQ, and EPS at INR6.48.
Key things to watch: Guidance for 3QFY13; commentary around deals; outlook on BFSI and Telecom.
Wipro Quarterly Performance (IFRS)
(INR Million)
Y/E March
Revenues
Q-o-Q Change (%)
EBITDA
Margins (%)
Margins after taking hedges
on top-line (%)
Other Income
PAT
Q-o-Q Change (%)
Y-o-Y Change (%)
Diluted EPS (INR)
USD Revenues
Q-o-Q Change (%)
Operating Metrics
Gross Margin (%)
SGA (%)
IT Services EBIT (%)
Tax rate (%)
Utilization-incl.trainees (%)
Q-o-Q Volume Growth(%)
Q-o-Q Realization Chg. (%)
Rev Guidance (USDm)
Q-o-Q Change (%)
E: MOSL Estimates
October 2012
FY12
FY13
1Q
85,640
3.2
17,290
20.2
2Q
90,945
6.2
17,397
19.1
3Q
99,972
9.9
19,843
19.8
4Q
98,691
-1.3
19,611
19.9
1Q
106,530
7.9
21,426
20.1
2QE
110,824
4.0
21,299
19.2
3QE
111,205
0.3
21,195
19.1
4QE
112,198
0.9
21,380
19.1
17.5
1,542
13,349
-2.9
1.2
5.4
1,408
0.5
16.4
962
13,009
-2.5
1.2
5.3
1,473
4.6
17.2
1,249
14,564
12.0
10.4
5.9
1,506
2.2
17.2
1,984
14,809
1.7
7.7
6.0
1,536
2.0
17.6
1,223
15,802
6.7
18.4
6.4
1,515
-1.4
16.7
1,444
15,927
0.8
22.4
6.5
1,530
1.0
16.5
1,482
15,866
-0.4
8.9
6.5
1,568
2.5
16.5
1,681
16,154
1.8
9.1
6.6
1,601
2.1
29.9
12.5
22.0
18.9
4,105
71.2
1.8
-2.1
47.6
1,3941,422
-0.4-+1.6
28.6
12.2
20.0
18.0
5,240
70.1
6.0
-0.5
45.7
1,4361,464
2.0-4.0
30.3
13.0
20.8
20.7
5,004
67.0
1.8
2.7
45.6
1,5001,530
1.9-3.9
30.6
13.5
20.7
21.2
-814
67.8
0.8
0.5
46.1
1,5201,540
1-3
30.4
14.0
21.0
20.2
2,632
69.5
0.8
-2.2
45.6
1,5201,550
-1 to 1
30.3
13.8
20.0
19.5
2,415
69.3
1.3
-0.3
46.1
1,5201,550
0.3-2.3
30.2
13.8
19.8
19.5
2,915
70.0
2.7
-0.2
46.2
29.8
13.7
19.5
19.5
3,565
70.0
2.4
-0.3
45.6
FY12
FY13E
375,248
20.7
74,141
19.8
440,757
17.5
85,300
19.4
5,737
55,731
5,829
63,749
5.2
22.7
5,921
13.4
14.4
26.0
6,213
4.9
29.9
12.8
20.8
19.8
13,535
69.0
11.5
3.2
46.2
30.6
13.8
20.1
19.7
11,527
69.7
6.9
-0.6
46.1
C173

Sector: Telecom
Telecom
Company Name
Bharti Airtel
Idea Cellular
Tulip Telec om
Wireless traffic to decline ~1% QoQ; RPM pressure to abate: We expect average
wireless traffic for top-4 operators to decline ~1% QoQ, led by seasonal weakness
and lower promotions. Wireless RPM decline is likely to abate, with average RPM
declining by 0.3% QoQ v/s ~2% QoQ declines in the preceding two quarters. Within
operators, we expect Bharti Airtel (BHARTI) to exhibit relatively lower traffic decline,
given its price aggression.
Wireless EBITDA margin to be under pressure: We expect consolidated EBITDA margin
for BHARTI to remain largely flat QoQ at 30.4%; margin for India and South Asia business
is also likely to be stable at 32%, despite flat revenue, driven by lower SGA expenses.
Idea Cellular (IDEA) is likely to report consolidated EBITDA margin of ~25%, down
80bp QoQ. For Reliance Communications (RCOM), we model 2QFY13 consolidated
EBITDA margin of 30%.
Forex gain could boost PAT: Consolidated PAT is likely to decline by 13-14% QoQ for
BHARTI/IDEA and 33% for RCOM, largely due to decline in wireless traffic. While we
have not modeled any forex gains, sharp appreciation of the INR v/s the USD could
drive mark-to-market gains for all the wireless companies, given their significant USD
liabilities.
Abbreviations and acronyms

RPM: revenue per minute
MNP: mobile number portability
VLR: visitor location register
TRAI:
Telec om
Regula tor y
Authority of India
ARPU: average revenue per user
MOU: minutes of use
Expect improved performance at Bharti Africa: We expect improved performance in

Africa business with QoQ revenue/EBITDA likely to grow at 3/5% QoQ. 2QFY13
performance in Africa should be supported by ~1% average appreciation in Bharti's
African currency basket vs USD. We have not modeled any forex gain/loss in Africa
business.
Industry subscriber numbers decline in July/August: Industry subscribers declined by
~21m in July 2012 and by a further ~6m in August 2012. While the decline in July was
largely due to disconnection by one operator (RCOM), all major operators except
RCOM/Aircel reported MoM decline in subscribers during August 2012. The decline
was led by lower promotions/ channel commissions as well as likely non-availability
of number series.
Bharti Airtel
Idea Cellular
Reliance Comm
Tulip Telec om
Sector Aggregate
CMP
(INR)
28.09.12
265
85
65
46
(INR Million)
Rating
Sep.12
Neutral
Buy
Neutral
Sell
195,659
54,458
52,462
7,328
309,908
Sales
Var.
% YoY
13.3
17.9
4.1
4.2
12.2
Var.
% QoQ
1.1
-1.1
-1.4
2.3
0.3
Sep.12
59,536
13,775
15,916
1,949
91,177
EBITDA
Var.
% YoY
2.4
16.1
-0.8
-4.1
3.5
Var.
% QoQ
1.8
-4.0
-3.5
1.6
-0.1
Net Profit
Sep.12
Var.
% YoY
6,563
-36.1
2,036
92.5
1,281
-60.3
545
-37.4
10,424
-32.4
Var.
% QoQ
-13.9
-13.1
-33.1
-0.4
-16.1
Shobhit Khare (Shobhit.Khare@MotilalOswal.com)

October 2012
C174

Sector: Telecom
2G auction the key event to watch for: The regulatory environment continues to be
uncertain. 2G spectrum auction scheduled in November 2012 would be crucial in
determining spectrum pricing, going forward. While industry consolidation/exit of
new entrants could lead to an improvement in the operating environment, potential
participation of Reliance Industries in the 2G auction could disrupt the market
recovery.
Valuation and view: During FY12-14, we expect 7/19/5% EBITDA CAGR for BHARTI/
IDEA/RCOM, led by 9/15/6% traffic CAGR in the India wireless business. Reiterate Buy
on IDEA (trades at an EV of 5.3x FY14E EBITDA), and Neutral on BHARTI (trades at an EV
of 5.8x FY14E EBITDA) and RCOM (trades at an EV of 6.4x FY14E EBITDA).
8
5
F eb-09
Mar-09
Apr-09
May -09
J un-09
J ul-09
Aug-09
Sep-09
Oct-09
Nov -09
Dec -09
J an-10
F eb-10
Mar-10
Apr-10
May -10
J un-10
J ul-10
Aug-10
Sep-10
Oct-10
Nov -10
Dec -10
J an-11
F eb-11
Mar-11
Apr-11
May -11
J un-11
J ul-11
Aug-11
Sep-11
Oct-11
Nov -11
Dec -11
J an-12
F eb-12
Mar-12
Apr-12
May -12
J un-12
J ul-12 -21
Aug-12
-6
7
7
8
8
Industry subscriber
base declined in
July/August 2012
9
10
7
8
14
16
12
12
12
14
15
15
17
18
19
20
19
21
17
16
18
17
18
17
19
23
23
19
20
20
15
13
11
Wireless subscriber net additions (m)
Operator wise monthly subscriber additions (m)
Negative additions
for operators during
August 2012
QoQ wireless traffic growth (%)
We expect wireless traffic

for majors to decline by
~1% QoQ in 2QFY13
Source: TRAI/MOSL
October 2012
C175

Sector: Telecom
We expect RPM to remain largely flat QoQ (INR)

B harti
Id ea
Vodafone -In di a
RCOM
0.46
We expect RPM to remain

largely flat QoQ
0.44
0.43
0.42
0.41
0.40
Net Debt/EBITDA (FY12, x)
2QFY13E
1QF Y13
4QF Y12
3QF Y12
2QF Y12
1QF Y12
4QF Y11
3QF Y11
2QF Y11
1QF Y11
0.38
Net Debt/Equity (FY12, x)
6.0
1.2
Leverage remains
reasonable for
Bharti/Idea but alarming
for RCom
0.9
0.9
3.5
RCom
Vodafone
Indi a
2.7
2.6
Bharti
Idea
RCom
Ide a
Bharti
Aggregate traffic growth and RPM trend for wireless majors

Qo Q traffi c growth (%)
7
4
5
2
0
-2
-2
-1
2QF Y13E
-1
1QFY13
1QFY12
4QFY11
3QFY11
2QFY11
-1
4QFY12
-2
-4
3QFY12
1
-1
1QFY11
Traffic to decline on
seasonality; RPM to
stabilize
QoQ RPM Growth (%)
2QFY12
10
Source: TRAI
October 2012
C176

Sector: Telecom
2QFY13: Summary Expectations

Wireless KPIs
137
69
111
109
143
74
117
116
152
82
126
124
162
90
136
135
169
95
143
142
173
100
147
145
176
106
150
148
181
113
153
150
187
117
155
154
186
116
135
154
8
16
-8
6
-0.8
-1.1
-12.6
-0.1
132
66
107
105
140
72
114
112
148
78
121
120
157
86
131
129
166
92
139
138
171
98
145
143
174
103
149
146
178
110
152
149
184
115
154
152
187
116
145
154
9
19
0
7
1.2
1.4
-5.8
1.0
215
182
130
191
202
167
122
177
198
168
111
176
194
161
107
171
190
160
103
169
183
155
101
168
187
159
100
173
189
160
99
179
185
156
98
180
181
152
104
175
-1
-2
2
4
-2.2
-2.4
5.9
-3.0
480
415
295
328
437
454
394
276
311
415
449
401
251
308
410
449
397
241
307
410
445
391
233
308
411
423
364
227
297
396
419
369
224
303
405
431
379
227
318
424
433
379
228
324
433
424
371
242
316
422
0
2
7
6
6
-2.0
-2.1
6.4
-2.5
-2.5
0.45
0.44
0.44
0.58
0.44
0.44
0.42
0.44
0.57
0.43
0.44
0.42
0.44
0.57
0.43
0.43
0.41
0.44
0.56
0.42
0.43
0.41
0.44
0.55
0.41
0.43
0.43
0.45
0.57
0.42
0.45
0.43
0.45
0.57
0.43
0.44
0.42
0.44
0.56
0.42
0.43
0.41
0.43
0.55
0.42
0.43
0.41
0.43
0.55
0.41
-1
-4
-4
-2
-2
-0.2
-0.2
-0.5
-0.5
-0.5
190
82
94
103
138
191
85
94
105
140
199
94
91
111
147
212
102
94
119
159
221
109
98
128
170
217
106
99
128
170
219
114
100
133
178
231
124
103
142
190
239
132
105
148
197
85
75
75
60
Sep-12
90
Jun-12
95
Sep-12
105
Aug-12
105
Jul-12
120
Jun-12
115
Sens ex Ind ex
MOSL Tel ecom Ind ex
Mar-12
Sens ex Ind ex
MOSL Tel ecom In dex
October 2012
237
9
-0.8
130
22
-1.0
105
6
0.2
146
14
-1.5
194
14
-1.5
Dec-11
Sep-11
EOP Wireless Subs (m)

Bharti (India)
Idea*
RCOM
Voda fone - India
AV. Wirele ss Subs (m)
Bharti (India)
Idea*
RCOM
Voda fone - India
ARPU (INR/month)
Bharti (India)
Idea*
RCOM
Voda fone - India
MOU/Sub
Bharti (India)
Idea*
RCOM
Voda fone India (report ed)
Vodafone India (adj)
Revenue per min (INR)
Bharti (India)
Idea*
RCOM
Wireless traffic (B min)
Bharti (India)
Idea*
RCOM
C177

Sector: Telecom
Quarterly Financials
Revenue (INR b)
Bharti (ex Africa)*
Bharti (consolidated)*
Idea**
RCOM#
EBITDA (INR B)
Bharti (ex Africa)*
Bharti (consolidated)*
Idea**
RCOM#
EBITDA Margin (%)
Bharti (ex Africa)
Bharti (consolidated)
Idea**
RCOM#
PAT (INR B)
Bharti (ex Africa)
Bharti (consolidated)
Idea**
RCOM
EPS (INR)
Bharti
Idea
RCOM
112.7
122.3
36.5
51.1
113.3
152.2
36.6
51.2
117.2
157.6
39.6
50.0
121.2
162.7
42.0
53.3
126.3
169.7
45.2
53.1
126.8
172.7
46.2
50.4
131.6
184.8
50.3
50.5
134.2
187.3
53.7
53.1
137.2
193.5
55.0
53.2
136.4
195.7
54.5
52.5
8
13
18
4
-0.5
1.1
-1.1
-1.4
42.4
44.1
8.9
16.3
42.2
51.2
8.8
16.6
43.7*
53.2*
9.5
16.7
44.3
54.5
10.0
15.9
46.0
57.1
12.0
16.0
45.7
58.2
11.9
16.1
45.2
59.6
13.4
16.1
47.4
62.3
15.1
16.3
43.6
58.5
14.4
16.5
43.7
59.5
13.8
15.9
-4
2
16
-1
0.2
1.8
-4.0
-3.5
37.6
36.1
24.3
31.9
37.3
33.7
24.0
32.4
37.3*
33.8*
24.0
33.3
36.6
33.5
23.9
29.9
36.4
33.6
26.6
30.2
36.1
33.7
25.7
31.8
34.4
32.2
26.7
31.9
35.3
33.3
28.1
30.7
31.8
30.2
26.1
31.0
32.0 -405bp
30.4 -324bp
25.3
-39bp
30.3 -151bp
24bp
20bp
-79bp
-68bp
19.0
16.8
2.0
3.0
20.4
16.6
1.8
4.9
18.3
13.0
2.4
5.3
18.2
14.0
2.0
1.8
15.2
12.2
1.8
2.2
14.5
10.3
1.1
3.2
12.7
10.1
2.0
2.4
13.5
10.1
3.4
2.0
14.3
7.6
2.3
1.9
11.1
6.6
2.0
1.3
-23
-36
92
-60
-22.4
-13.9
-13.1
-33.1
4.4
0.6
1.5
4.4
0.5
2.4
3.4
0.7
2.5
3.7
0.8
0.9
3.2
0.5
1.1
2.7
0.3
1.6
2.7
0.6
1.2
2.7
0.7
1.0
2.0
0.7
0.9
1.7
0.6
0.6
-36
92
-60
-13.9
-13.1
-33.1
Capex (INR b)
Bharti (ex Africa)
17.4
29.3
29.3
Idea
3.6
3.0
9.5
RCOM
7.9
9.3
19.1
* Before re-branding expenses in 3QFY11; # Adj for
consolidation with Spice; full merger from 1QFY11;
31.1
24.7
20.6
7.8
11.0
29.3
25.0
21
-14.7
14.6
10.4
11.0
9.0
8.4
4.1
8.8
-20
114.0
6.6
3.6
3.5
3.6
4.3
3.7
3.7
7
1.2
change in accounting for IRU sales in 4QFY11; ** Idea 4QFY10 includes 1 month
Adj for one-off revenue of ~Rs340m and costs reversal of ~Rs380m in 4QFY11
CMP (INR)
28.09.12
Telecommunication
Bharti Airtel
265
Idea Cellular
85
Reliance Comm
65
Tulip Telec om
46
Sector Aggregate
October 2012
Rating
EPS (INR)
FY12 FY13E FY14E
Neutral
Buy
Neutral
Sell
11.2
2.2
4.8
19.1
7.6
3.1
3.6
12.2
10.5
5.8
5.9
11.2
P/E (x)
FY12 FY13E FY14E
23.6
39.0
13.5
2.4
22.7
34.9
27.2
17.8
3.8
29.5
25.2
14.7
11.0
4.2
19.6
EV/EBITDA (x)
FY12 FY13E FY14E
7.0
8.1
7.6
4.0
7.2
6.9
6.8
7.2
4.7
6.9
5.8
5.2
6.4
4.7
5.8
RoE (%)
FY12 FY13E FY14E
8.1
5.7
2.9
22.9
6.5
5.3
7.7
2.3
11.3
4.9
7.0
12.8
3.6
9.5
6.9
C178

Sector: Telecom
Bharti Airtel
BSE Sensex
S&P CNX
18,763
5,703
Bloomberg
BHARTI IN
Equity Shares (m)
3,793.9
52 Week Range (INR)
412/239
1,6,12 Rel Perf (%)
0/-31/-44
Mcap (INR b)
1,004.8
Mcap (USD b)
19.1
CMP: INR265
Year
End
3/11A
3/12A
3/13E
3/14E
Net Sales
PAT
(INR b) (INR b)
595
60
715
43
796
29
870
40
Buy
EPS
(INR)
15.9
11.2
7.6
10.5
EPS
Gr. (%)
-32.6
-29.6
-32.4
38.4
P/E
(X)
23.6
34.9
25.2
P/BV
(X)
1.9
1.8
1.7
RoE
(%)
12.6
8.1
5.3
7.0
RoCE
(%)
8.7
6.2
4.5
5.1
EV/
EV/
Sales EBITDA
2.3
7.0
2.1
6.9
1.8
5.8
We expect consolidated revenue to grow 13.3% YoY and 1.1% QoQ to INR195.7b, largely driven by Africa. India
and South Asia revenue would grow 8% YoY but decline 0.5% QoQ to INR136.5b. Africa business revenue is
likely to grow 3% QoQ to USD1.1b.
Consolidated EBITDA margin is likely to expand 20bp QoQ to 30.4%. EBITDA margin in the Africa business as well
as India and South Asia would remain flat QoQ at 26% and 32%, respectively.
We expect India and SA mobile revenue to grow 8% YoY but decline 1% QoQ to INR106b, led by 0.8% traffic
decline and 0.2% RPM decline. Mobile EBITDA margin is likely to be 30.6%, up 30bp QoQ, led by lower SGA costs.
Africa business performance is likely to improve, boosted by favorable currency movement resulting in 3%/5%
revenue/EBITDA growth on a QoQ basis. We estimate an ARPU of USD6.4 and subscriber base of 59m.
Consolidated net profit is likely to decline 36% YoY and 14% QoQ to INR6.6b. PAT for India and South Asia would
decline 22-23% YoY/QoQ. We have not assumed any forex gain/loss for BHARTI in our 2QFY13 estimates.
The stock trades at an EV of 6.9x FY13E and 5.8x FY14E EBITDA. Maintain Neutral.
Key things to watch: QoQ mobile traffic in India (we expect 0.8% decline), forex loss (we have not modeled any
forex loss/gain), Africa business financials (we expect 3%/5% revenue/EBITDA growth in USD terms).

Y/E March
FY12
1Q
2Q
3Q
4Q
Revenue
169,749 172,698 184,767 187,294
QoQ Growth (%)
4.4
1.7
7.0
1.4
EBITDA
57,058
58,151
59,584
62,329
QoQ Growth (%)
4.7
1.9
2.5
4.6
Margin (%)
33.6
33.7
32.2
33.3
Net Finance Costs
8,551
11,186
7,877
10,572
Depreciation & Amortization
31,314
31,839
35,845
34,683
Profit before Tax
17,195
15,126
15,807
17,056
Income Tax Expense / (Income)
5,141
4,900
5,585
6,976
Profit after Tax
12,054
10,226
10,222
10,080
Reported Net Profit / (Loss)
12,152
10,270
10,113
10,059
YoY Growth (%)
-27.7
-38.2
-22.4
-28.2
India - Mobile ARPU (INR/month)
190
183
187
189
QoQ Growth (%)
-1.6
-4.0
2.2
1.1
India - Mobile MOU/sub/month
445
423
419
431
QoQ Growth (%)
-0.7
-5.0
-1.0
2.8
India - Mobi le Traffic (B Min)
221
217
219
231
QoQ Growth (%)
4.6
-1.9
0.9
5.4
India - Mobile RPM (INR/min)
0.43
0.43
0.45
0.44
QoQ Growth (%)
-0.9
1.0
3.2
-1.7
Africa - Subscribers (m)
46
48
51
53
Africa - ARPU (USD/month)
7.2
7.3
7.1
6.8
Africa - EBITDA margin (%)
25.2
26.2
26.7
27.8
E: MOSL Estimates
October 2012
(INR Million)
FY13
1Q
2QE
3QE
193,501 195,659 200,269
3.3
1.1
2.4
58,487
59,536
61,512
-6.2
1.8
3.3
30.2
30.4
30.7
8,211
9,561
9,929
37,571
38,335
39,168
12,629
11,592
12,366
4,878
4,985
5,273
7,751
6,607
7,093
7,622
6,563
7,016
-37.3
-36.1
-30.6
185
181
188
-2.2
-2.2
4.3
433
424
437
0.4
-2.0
3.0
239
237
245
3.7
-0.8
3.0
0.43
0.43
0.43
-2.6
-0.2
1.3
56
59
61
6.5
6.4
6.3
25.8
26.2
26.5
FY12
FY13E
4QE
206,559 714,507 795,989
3.1
64,092 237,122 243,626
4.2
31.0
33.2
30.6
10,458
38,185
38,159
40,260 133,680 155,334
13,324
65,184
49,911
5,629
22,602
20,765
7,696
42,582
29,146
7,589
42,595
28,791
-24.6
-29.6
-32.4
195
188
189
3.5
447
431
438
2.2
252
889
973
3.0
0.44
0.44
0.43
1.3
64
53
64
6.2
7.1
6.3
26.8
26.5
26.3
C179

Sector: Telecom
Idea Cellular
BSE Sensex
S&P CNX
18,763
5,703
Bloomberg
IDEA IN
Equity Shares (m)
3,308.8
52 Week Range (INR)
103/71
1,6,12 Rel Perf (%)
8/-22/-27
Mcap (INR b)
282.4
Mcap (USD b)
5.4
CMP: INR85
Year
End
3/11A
3/12A
3/13E
3/14E
Net sales
PAT
EPS
155,032
8,986
2.7
195,412
7,231
2.2
224,887 10,390
3.1
255,652 19,228
5.8
Buy
EPS
Gr. (%)
-11.6
-19.6
43.5
85.0
P/E
(X)
39.0
27.2
14.7
P/BV
(X)
2.2
2.0
1.8
RoE
(%)
7.6
5.7
7.7
12.8
RoCE
(%)
5.2
5.4
6.1
9.2
EV/
EV/
Sales EBITDA
2.1
8.1
1.8
6.8
1.5
5.2
Consolidated revenue is likely to grow 18% YoY but decline 1% QoQ to INR54.5b.
We expect IDEA to report 0.9% QoQ decline in mobile traffic. RPM would decline 0.2% QoQ.
ARPU is likely to decline 2.4% QoQ to INR152 (v/s 2.5% decline in 1QFY13).
EBITDA margin would decline 80bp QoQ to 25.3%. We estimate EBITDA loss in new circles at INR1.7b, flat QoQ.
Net profit would grow 92% YoY but decline 13% QoQ to INR2b. The QoQ decline is largely due to negative
operating leverage.
The stock trades at an EV of 6.8x FY13E and 5.3x FY14E EBITDA. Maintain Buy.
Key things to watch for: QoQ RPM trend (we expect 0.2% decline), mobile traffic (we expect 0.9% QoQ decline),
EBITDA loss in new circles (we expect INR1.7b).

Y/E March
(INR Million)
FY12
1Q
2Q
3Q
4Q#
1Q
2QE
Gross Revenue
45,207
46,199
50,308
53,697
55,037
54,458
YoY Growth (%)
23.7
26.3
27.2
27.8
21.7
17.9
QoQ Growth (%)
7.6
2.2
8.9
6.7
2.5
-1.1
EBITDA
12,040
11,866
13,446
15,071
14,355
13,775
YoY Growth (%)
35.5
35.0
41.8
50.2
19.2
16.1
QoQ Growth (%)
20.0
-1.4
13.3
12.1
-4.8
-4.0
Margin (%)
26.6
25.7
26.7
28.1
26.1
25.3
Net Finance Costs
2,463
2,939
2,880
2,275
2,670
2,358
7,026
7,369
7,575
7,844
8,324
8,509
Profit before Tax
2,551
1,559
2,991
4,952
3,361
2,909
Inc ome Tax Exp. / (Income)
778
501
981
1,523
1,019
873
Adj Net Profit / (Loss)
1,773
1,058
2,010
3,429
2,342
2,036
YoY Growth (%)
-12.0
-41.1
-17.3
69.4
32.1
92.5
Margin (%)
3.9
2.3
4.0
6.4
4.3
3.7
Mobile ARPU (INR/month)
160
155
159
160
156
152
QoQ Growth (%)
-0.6
-3.1
2.6
0.6
-2.5
-2.4
Mobile MOU/sub/month
391
364
369
379
379
371
QoQ Growth (%)
-1.5
-6.9
1.4
2.7
0.0
-2.0
Mobi le Traffic (B Min)
109
106
114
124
131
130
QoQ Growth (%)
6.5
-2.2
7.3
9.1
5.3
-0.9
Mobile RPM (INR)
0.41
0.43
0.43
0.42
0.41
0.41
QoQ Growth (%)
0.9
4.1
1.2
-2.0
-2.5
-0.4
E: MOSL Estimates; # Adjusted for INR1.5b one-off provision for licence and WPC charges
October 2012
FY13
3QE
56,567
12.4
3.9
14,913
10.9
8.3
26.4
2,320
8,712
3,882
1,164
2,717
35.2
4.8
158
3.9
382
2.9
134
3.0
0.41
0.9
FY12
FY13E
4QE
58,823 195,411 224,886
9.5
26.0
15.1
4.0
15,942
50,924
58,986
5.8
34.3
15.8
6.9
27.1
26.1
26.2
2,307
10,557
9,655
8,929
29,814
34,474
4,706
10,553
14,857
1,412
3,322
4,468
3,294
7,231
10,390
-3.9
-19.5
43.7
5.6
3.7
4.6
162
158
158
2.7
388
372
383
1.6
138
453
533
3.0
0.42
0.42
0.41
1.0
C180

Sector: Telecom
BSE Sensex
S&P CNX
18,763
5,703
Bloomberg
RCOM IN
Equity Shares (m)
2,063.0
52 Week Range (INR)
110/47
1,6,12 Rel Perf (%)
21/-33/-31
Mcap (INR b)
133.6
Mcap (USD b)
2.5
CMP: INR65
Year
End
3/11A
3/12A
3/13E
3/14E
Neutral
Net Sales
PAT
EPS
205,627 14,936
7.2
203,424
9,884
4.8
213,915
7,518
3.6
226,430 12,101
5.9
EPS
Gr. (%)
-69.4
-33.8
-23.9
61.0
P/E
(X)
13.5
17.8
11.0
P/BV
(X)
0.4
0.4
0.4
RoE
(%)
3.9
2.9
2.3
3.6
RoCE
(%)
2.9
2.7
2.9
3.4
EV/
EV/
Sales EBITDA
2.4
7.6
2.2
7.2
2.0
6.4
We expect revenue to decline 1.4% QoQ to INR52.5b.

Wireless ARPU is likely to grow 6% QoQ to INR104, led by ~20m subscriber disconnections in July 2012.
We expect RPM to decline 0.5% QoQ to INR0.43. RCOM's RPM has remained largely flat over the last several
quarters.
Wireless traffic is likely to grow 7% YoY and remain flat QoQ.
Consolidated EBITDA would grow 3% YoY to INR16.5b and margins would expand 30bp QoQ to 31%.
We expect RCOM to report proforma PAT of INR1.9b.
The stock trades at an EV of 7.2x FY13E and 6.4x FY14E EBITDA. Neutral.
Key things to watch for: Margin trajectory in wireless business (we expect 150bp QoQ decline), RPM trend (we
expect 0.5% decline).
(INR Million)
Y/E March
1Q
Gross Revenue
49,401
YoY Growth (%)
-3.3
QoQ Growth (%)
-7.3
EBITDA
16,021
YoY Growth (%)
-1.8
QoQ Growth (%)
0.6
Margin (%)
32.4
Net Finance Costs
4,050
9,760
Profit before Tax
2,211
-24
Adjusted Net Profit / (Loss)
2,235
YoY Growth (%)
-25.4
Margin (%)
4.5
Extraordinary Exp/Minority Interest 661
Reported Net Profit / (Loss)
1,574
Wireless ARPU (INR/month)
103
QoQ Growth (%)
-3.4
Wireless MOU/sub/month
233
QoQ Growth (%)
-3.3
Wireless Traffic (B Min)
98
QoQ Growth (%)
3.2
Wireless RPM (INR)
0.44
QoQ Growth (%)
-0.1
E: MOSL Estimates
October 2012
FY12
2Q
50,402
-1.5
2.0
16,051
-3.3
0.2
31.8
2,274
10,540
3,237
14
3,223
-34.3
6.4
702
2,521
101
-1.9
227
-2.6
99
1.4
0.45
0.7
3Q
50,521
1.0
0.2
16,111
-3.4
0.4
31.9
3,782
9,780
2,549
141
2,408
-54.2
4.8
546
1,862
100
-1.6
224
-1.3
100
1.0
0.45
-0.3
FY13
4Q
53,100
-0.4
5.1
16,322
2.5
1.3
30.7
5,795
9,703
824
-1,193
2,017
13.6
3.8
-1,299
3,316
99
-0.6
227
1.3
103
3.4
0.44
-2.0
1Q
53,192
7.7
0.2
16,502
3.0
1.1
31.0
5,534
9,093
1,875
-39
1,914
-14.4
3.6
290
1,624
98
-1.0
228
0.4
105
1.8
0.43
-1.3
2QE
52,462
4.1
-1.4
15,916
-0.8
-3.5
30.3
5,316
9,293
1,307
26
1,281
-60.3
2.4
229
1,052
104
5.9
242
6.4
105
0.2
0.43
-0.5
3QE
53,237
5.4
1.5
16,550
2.7
4.0
31.1
5,278
9,396
1,876
38
1,839
-23.6
3.5
229
1,610
114
9.7
262
8.1
107
1.4
0.43
1.4
FY12
FY13E
4QE
53,136 203,424 213,915
0.1
-1.1
5.2
-0.2
16,912
64,506
65,880
3.6
-1.5
2.1
2.2
31.8
31.7
30.8
5,067
15,901
21,036
9,472
39,783
37,254
2,373
8,822
7,590
47
-1,062
72
2,325
9,884
7,518
15.3
-33.8
-23.9
4.4
4.9
3.5
229
610
976
2,096
9,274
6,542
116
102
106
1.9
263
231
244
0.5
109
399
426
1.6
0.44
0.44
0.43
1.4
C181

Sector: Telecom
Tulip Telecom
BSE Sensex
S&P CNX
18,763
5,703
Bloomberg
TTSL IN
Equity Shares (m)
145.0
52 Week Range (INR)
163/42
1,6,12 Rel Perf (%)
-56/-58/-85
Mcap (INR b)
6.7
Mcap (USD b)
0.1
CMP: INR46
Year
End
3/11A
3/12A
3/13E
3/14E
Neutral
Net Sales
PAT
EPS
23,511
3,064
18.9
27,050
3,096
19.1
29,586
1,771
12.2
34,330
1,620
11.2
EPS
Gr. (%)
32.7
1.0
-35.9
-8.6
P/E
(X)
2.4
3.8
4.1
P/BV
(X)
0.5
0.4
0.4
RoE
(%)
28.6
22.9
11.3
9.5
RoCE
(%)
14.0
12.0
8.1
7.4
EV/
EV/
Sales EBITDA
1.1
4.0
1.2
4.7
1.2
4.7
We expect consolidated revenue to grow 4% YoY to INR7.3b
EBITDA margin is likely to remain flat QoQ at ~27%. EBITDA would grow 2% QoQ to INR1.95b.
We expect reported PAT to decline 37% YoY to INR545m.
The stock trades at an EV of 4.7x FY13/FY14E EBITDA. Neutral.
Key things to watch for: Net finance cost (we expect 3% QoQ increase to INR571m), EBITDA margin trend (we
expect margins to remain stable QoQ).
(INR Million)
Y/E March
Gross Revenue
YoY Growth (%)
QoQ Growth (%)
Tot al Operating Expenses
EBITDA
YoY Growth (%)
QoQ Growth (%)
Margin (%)
Net Finance Costs
Non-Operating Income
Profit before Tax
Tax rate (%)
Adjusted Net Profit / (Loss)
YoY Growth (%)
QoQ Growth (%)
Margin (%)
Exceptional items
Reported PAT
E: MOSL Estimates
October 2012
FY12
1Q
6,539
24.5
2.5
4,691
1,848
30.3
-1.0
28.3
319
-11
495
1,023
251
25
772
20.3
-6.7
11.8
0
772
2Q
7,029
20.1
7.5
4,998
2,032
24.4
10.0
28.9
345
-26
502
1,159
288
25
871
11.6
12.8
12.4
0
871
3Q
6,866
14.0
-2.3
4,875
1,991
16.0
-2.0
29.0
427
10
526
1,048
276
25
773
-5.5
-11.3
11.3
0
773
FY13
4Q
6,617
3.7
-3.6
4,925
1,691
-9.4
-15.0
25.6
537
68
604
617
-42
25
660
-20.2
-14.6
10.0
0
660
1Q
7,165
9.6
8.3
5,246
1,919
3.9
13.5
26.8
556
0
628
736
189
26
547
-29.1
-17.1
7.6
616
1,163
2QE
7,328
4.2
2.3
5,379
1,949
-4.1
1.6
26.6
571
8
665
721
177
25
545
-37.4
-0.4
7.4
0
545
3QE
7,515
9.5
2.5
5,592
1,923
-3.4
-1.4
25.6
748
8
703
480
120
25
360
-53.4
-33.8
4.8
0
360
4QE
7,577
14.5
0.8
5,674
1,903
12.5
-1.0
25.1
734
10
762
417
103
25
314
-52.4
-12.8
4.1
0
314
FY12
FY13E
27,051
15.1
29,586
9.4
19,490
7,561
14.0
21,892
7,694
1.8
28.0
1,629
41
2,127
3,847
772
20
3,075
0.3
26.0
2,600
26
2,758
2,362
590
25
1,771
-42.4
11.4
0
3,075
6.0
616
2,382
C182

Sector: Utilities
Utilities
COMPANY NAME
CESC
Coal India
JSW Energy
NHPC
NTPC
Power Grid
PTC India
Tata Po wer
We expect utilities companies under our coverage (excluding Coal India) to report
aggregate revenue growth of 9% YoY and PAT de-growth of 2% YoY for 2QFY13. PAT
growth would be muted for IPPs. However, CPSUs would witness robust PAT growth,
led by 26% YoY PAT growth for NTPC (higher capacity addition) and 24% YoY PAT growth
for Power Grid (better capitalization).
July-August 2012 generation growth muted; PLFs of private coal-based plants most
impacted: In July-August 2012, All India generation grew 2% YoY v/s 1QFY13/FY12
generation grow th of 6%/8%. Lower generation grow th despite capacity addition
(6.9GW in YTD FY13) is led by de-growth in generation for gas-based (24% YoY) and
hydro plants (14% YoY). Coal-based plants reported generation growth of 12%;
however, PLF was muted. PLFs of private sector plants were most impacted in YTD
FY13, down 10ppt YoY to 60%. Over the last 12 months, India has commissioned 22.6GW
of projects (ex renewable energy). Capacity addition should remain strong, as CEA
has targeted to add 18GW of projects in FY13, while 6.9GW of projects are already
commissioned till August 2012.
Power demand strong at 10% YoY; deficit up: Power demand has been strong in YTD
FY13. Demand for the months of July-August 2012 grew 10% YoY. Uptick in demand has
led to uptick in the deficit for India. YTD FY13 base deficit stood at 8.5% v/s 5.9% a year
ago. Also, a relatively volatile monsoon season led to 239bp increase in peak deficit in
August 2012 to 11% - in double digits for the first time since March 2012.
Imported coal prices remain weak, ST prices also firm: Globally, imported coal prices
have weakened. However, INR depreciation has partially taken away the benefit. In
INR terms, during 2QFY13 the RB Index declined 5-6% QoQ (Coal Index down 8% QoQ
to USD88/ton; INR depreciated 2% QoQ to INR55.2/USD). However, the recent INR
appreciation could significantly improve fuel cost savings in 3QFY13. Average spot
rate at IEX for 2QFY13 stood at INR3.5/unit (down 1% QoQ and up 22% YoY). ST prices at

CMP
(INR)
28.09.12
Adani Power
53
CESC
331
Coal India
359
JSW Energy
61
NHPC
19
NTPC
168
Power Grid Corp.
120
PTC India
71
539
Tata Po wer
107
Sector Aggregate
Sector Aggregate Ex Coal India
(INR Million)
Rating
Sep.12
Neutral
Buy
Buy
Buy
Neutral
Buy
Buy
Buy
Buy
Neutral
11,649
12,980
147,128
20,198
16,515
155,840
31,672
29,853
37,700
70,935
534,468
387,341
Sales
Var.
% YoY
8.6
4.6
11.9
102.7
-11.1
1.3
39.9
25.0
-4.6
13.5
10.1
9.4
Var. Sep.12
% QoQ
-20.4
2,320
-8.6
2,882
-10.8 27,321
-7.8
5,438
16.2 11,540
-2.4 31,290
9.7 27,572
50.2
536
9.4
4,901
-2.2 13,048
-2.0 126,847
1.8 99,527
EBITDA
Var.
% YoY
-55.3
10.8
10.3
360.2
-13.1
-3.4
45.3
20.8
-30.9
-3.4
6.2
5.1
Var.
% QoQ
88.3
-0.6
-43.3
-6.8
27.7
-13.8
11.9
71.4
6.6
-7.7
-13.8
0.5
Net Profit
Sep.12
Var.
% YoY
-2,872
PL
1,297
13.8
27,919
25.0
1,100
LP
8,533
9.8
18,604
25.7
9,392
23.6
423
19.0
2,551
-48.0
3,097
-30.0
70,044
7.0
42,125
-2.3
Var.
% QoQ
Loss
3.8
-37.7
-43.6
32.3
-22.1
3.6
84.9
-22.0
1.2
-22.6
-7.9
Nalin Bhatt (NalinBhatt@MotilalOswal.com)/Satyam Agarwal (AgarwalS@MotilalOswal.com)

Vishal Periwal (Vishal.Periwal@MotilalOswal.com)
October 2012
C183

Sector: Utilities
IEX touched a high of INR6/unit in the middle of July 2012, but have fallen sharply
since then. The ST forward curve has been strong; in the last three months, contacts
have been executed at over INR4/unit.
Valuation and view: The Power sector has begun to witness several initiatives by the
authorities to address concerns on SEBs, fuel supply pacts and PPAs. However, it
would take a while for clarity to emerge on several issues. In this environment, we
continue to prefer CPSUs, which are relatively better positioned on these fronts. Our
top picks are NTPC and JSW Energy.
Generation and PLFs of various plants

Capacity
Aug-12
(MW)* Generation
PLF (%)
Adani Power
- Mundra Phase 1
4,620.0
GVK
- JP 1 & 2
455.0
- Gautami
464.0
GMR
- Barge Mounted
220.0
- Chennai
200.0
- Vemagiri
370.0
JPL
- Chattisgarh
1,000.0
Rel Infra
- Dahanu
500.0
- Samalkot (AP)
220.0
- Goa
48.0
- Kochi
174.0
Rel Power
- Rosa
1,200.0
Tata Power
- Tromba y
1,580.0
- TISCO (Jamshedpur)
441.3
- Mundra UMPP
800.0
Torrent Power
- Existing
500.0
- Sugen
1,147.5
JSW Energy
- Rajwest Unit-I
540.0
-Karnataka
2,060.0
CESC
1,285.0
Lanco Infratech
- Kondapali
716.0
- Amarkantak (LANCO)
600.0
- UPCL
1,200.0
KSK
- Wardha
540.0
Sterlite
- Jharsuguda
2,400.0
*Monitored capacity by CEA
October 2012
Aug-11
Generation
PLF (%)
Generation
Jul-Aug-12
Jul-Aug-11
Chg
(%)
1,414.1
41.1
1,251.7
85.0
3,117.8
2,181.9
42.9
143.1
92.8
43.0
27.4
266.1
268.5
80.0
79.3
290.8
200.6
466.5
512.1
-37.7
-60.8
38.1
46.7
70.4
23.7
32.0
26.1
125.5
45.8
198.8
78.1
31.4
73.6
90.2
84.1
292.8
361.5
112.6
465.3
NA
-25.3
-37.1
707.3
95.1
662.5
89.0
1,343.8
1,412.4
-4.9
385.1
58.8
23.3
0.0
103.5
36.6
66.4
0.0
351.3
136.0
19.6
0.0
94.4
84.7
55.9
0.0
773.5
133.0
38.3
0.0
728.3
231.6
19.6
0.0
6.2
-42.5
95.2
NA
649.2
72.7
303.4
68.0
1,102.8
727.4
51.6
817.3
265.0
394.5
65.0
94.3
33.1
692.0
226.5
0.0
56.3
84.6
0.0
1,668.6
549.9
561.5
1,377.0
429.9
0.0
21.2
27.9
NA
254.2
428.8
85.4
51.2
293.0
732.7
82.9
87.5
551.0
825.9
596.7
1,410.7
-7.7
-41.5
295.1
1,401.6
814.6
73.5
91.5
85.2
0.0
873.8
790.6
0.0
133.5
83.0
474.6
2,710.8
1,640.9
0.0
762.4
1,613.9
NA
255.6
1.7
202.9
293.5
331.9
38.8
65.7
31.2
230.7
332.5
282.5
44.1
74.5
64.5
443.7
692.9
707.5
634.4
581.5
531.5
-30.1
19.2
33.1
227.0
56.5
208.7
70.6
552.2
442.0
24.9
749.6
42.0
494.5
37.6
1,517.2
1,099.8
37.9
Source: CEA
C184

Sector: Utilities
12%
80
75 78 74 77 75 75 77 77 81 81 78 83
0%
Mar
Feb
Jan
Dec
Nov
Oct
Sept
6.5
4.0
Forward ST prices at over INR4/unit
7.8
ST prices flattish (INR/unit)
4.26
45.0
45
23-Nov-12
8-Nov-12
8-Dec-12
55
40
25
46
10
40.5
-5
36.0
-20
2QFY13
2QFY13
1QFY13
4QFY12
3QFY12
2QFY12
1QFY12
4QFY11
3QFY11
2QFY11
1QFY11
* 6000Kcal, FoB South Africa, 2QFY12 price till 17 August
45 45
55
50
1QFY13
-30%
INR/USD
4QFY12
88
46
3QFY12
96
46
2QFY12
104 121 121 117 107 105
40
50
1QFY12
0%
October 2012
24-Oct-12
54.0
49.5
80
YoY (%)
54
3QFY11
30%
QoQ (%)
58.5
2QFY11
QoQ
60%
1QFY11
YoY
120
88
9-Oct-12
3.6
2QFY13
INR depreciation negated some of the impact (INR/USD)
Avg RB Index (USD/ton)
91
24-Sep-12
3.6
1QFY13
9-Sep-12
3.4
4QFY12
RB Index* softening (USD/ton)

160
4.22
4.22
4.6
2.9
2QFY12
3QFY12
3.1
1QFY12
4QFY11
2.3
3QFY11
3.1
2QFY11
1QFY11
3.6
5.3
4.1
4QFY10
3QFY10
2QFY10
1QFY10
3.5
5.3
4.20
4QFY11
Aug
July
June
May
April
60
9.2
7.5 8.6
Jul
4%
9.0
9.1
Jun
65
79
8.2
Apr
70
8%
84 85 86 83
FY12
14.0
11.5
75
FY11
Mar
85
FY13
16.5
Feb
16%
Jan
Gr (%)
Dec
FY13
Base deficit moving up (%)
Nov
FY 12
90
Aug-12
Aug-12
May-12
Feb-12
Nov-11
Aug-11
May-11
Feb-11
Power demand: Strong; up 10% YoY in YTD FY13
Jun-12
50
Apr-12
Feb-12
60
62
67
72
66
75
71
75
70
73
72
70
74
71
73
73
71
77
75
79
76
75
73
Nov-10
55
70
Dec-11
2 2
Pri vate Sector
80
Oct
60
Aug-11
90
Sep
12
Jun-11
Aug
Sta te Sector
Apr-11
9 9
May
65
100
Feb-11
10
7 8
Centre Sector
16
Dec-10
11
70
Gr (YoY, %)
Oct-10
Al l Indi a Genera ti on (BUs )

14
14
75
PLFs of coal-based plants: Private sector most impacted (%)
Oct-11
July-August 2012: All-India generation grew 2% YoY
Source: CEA, IEX, CERC, Bloomberg, MOSL

C185

Sector: Utilities
101
90
98
80
Sep-12
Jun-12
Sep-12
100
Sep-11
104
Aug-12
110
Jul-12
107
Dec-11
110
Se nse x Index
MOSL Uti l i ti es Inde x
120
Jun-12
Sen sex Ind ex

MOSL Util i ti e s Index
Mar-12
CMP (INR)
28.09.12
Rating
EPS (INR)
FY12 FY13E FY14E
P/E (x)
FY12 FY13E FY14E
EV/EBITDA (x)
FY12 FY13E FY14E
RoE (%)
FY12 FY13E FY14E
Utilities
Adani Power
53
CESC
331
Coal India
359
JSW Energy
61
NHPC
19
NTPC
168
Power Grid Corp.
120
PTC India
71
Reliance Infra.
539
Tata Power
107
Sector Aggregate
* Coal India RoE adjusted
October 2012
Neutral
Buy
Buy
Buy
Neutral
Buy
Buy
Buy
Buy
Neutral
-0.4
44.1
25.4
2.0
2.0
10.1
7.2
6.9
74.8
7.4
1.5
47.5
28.8
3.7
2.0
11.5
8.6
7.7
43.5
5.7
2.6 -124.7
53.0
7.5
30.9
14.1
6.3
30.1
2.1
9.4
13.5
16.6
10.3
16.8
9.5
10.2
48.0
7.2
4.0
14.4
14.6
36.2
7.0
12.5
16.5
9.6
14.6
14.0
9.2
12.4
18.7
13.3
20.3
6.2
11.6
9.7
9.3
12.4
11.6
7.4
11.2
27.0
12.0
28.6
5.5
10.3
12.4
7.0
11.6
12.4
14.0
2.0
17.9
11.0
13.8
5.2
8.1
8.0
7.9
11.3
10.1
7.3
3.0
17.2
9.6
10.0
4.9
7.1
6.1
7.7
9.3
9.4
6.5
2.4
17.6
8.4
-1.5
12.1
31.9
5.8
8.6
11.8
14.8
5.4
11.4
9.8
16.3
5.3
11.7
28.5
10.3
7.9
12.5
16.1
6.4
6.3
8.6
16.1
9.2
11.7
25.0
15.9
7.9
13.7
17.4
7.6
6.6
6.5
16.2
for OB reserves
C186

Sector: Utilities
CESC
BSE Sensex
S&P CNX
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
5,703
CESC IN
125.6
339/186
1/12/6
41.6
0.8
CMP: INR331
Buy
Year
Net Sales
PAT
EPS*
End
03/11A 40,942
4,670
38.9
03/12A 46,050
5,543
44.1
03/13E 52,527
5,970
47.5
03/14E 58,139
6,662
53.0
* Excl Spencers; fully diluted
EPS*
Gr. (%)
13.5
7.7
11.6
P/E*
(X)
7.5
7.0
6.2
P/BV
(X)
0.9
0.8
0.7
RoE
(%)
11.3
12.1
11.7
11.7
RoCE
(%)
10.2
10.6
10.4
10.2
EV/
EV/
Sales EBITDA
1.3
5.4
1.1
5.1
1.0
4.8
We expect CESC to report revenue of INR13b (up 5% YoY) and PAT of INR1.3b (up 14% YoY) for 2QFY13. For the
period April-May 2012, CESC's 1,225MW generation projects operated at 92% PLF v/s 90% in April-May 2011,
while generation was 1.6BU, up 2% YoY.
After several rounds of discussions, the Cabinet has approved 51% FDI in multi-brand retail with a rider that the
states will have the final say in accepting the proposals. FDI in retail has opened up a window of opportunity for
Spencer's to raise long-term funds for its growth. However, state nod is the key to success; 53% of Spencer's
area is in states that are opposing the FDI policy.
Restructuring led to improvement in Spencer's gross margin and overall performance in 1QFY13. Average sales
at Spencer's grew 14% YoY in 1QFY13 to INR1,151/sf/month and store-level EBITDA improved to INR42/sf/
month v/s INR26/sf/month in 1QFY12. We understand that store EBITDA has improved further to INR50/sf/
month on the back of same store sales (SSS) growth of 15%. CESC targets EBITDA breakeven in 3QFY14.
CESC has spent INR8.3b (equity) towards 1.2GW of projects as at June 2012. The management expects the
Chandrapur project to commission in the next 12 months. The Haldia project is likely to be operational by FY15.
We expect CESC to post standalone PAT (ex Spencer's) of INR6b in FY13 (up 8%) and INR6.7b in FY14 (up 12%).
The stock trades at 7x FY13E and 6.2x FY14E reported EPS. Maintain Buy.
Operational Details
Generation
Sales
Realization (INR/unit)
Overall PLF (Derived) (%)
1QFY12
2,395
2,256
5.2
89.3
2QFY12
2,356
2,324
5.3
87.8
3QFY12
2,197
2,005
5.1
81.9
4QFY12
1,997
1,811
7.6
74.4
1QFY13 2QFY13E 3QFY13E 4QFY13E

2,430
2,425
2,220
2,041
2,467
2,392
2,026
1,678
5.8
5.4
6.5
7.6
90.6
90.4
82.8
76.1
Quarterly Performance (Standalone Numbers - excl Spencers Retail)

Y/E March
Sales
Change (%)
EBITDA
Change (%)
As of % Sales
Depreciation
Interest
Other Income
PBT
Tax
Reported PAT
Adjusted PAT
Change (%)
E: MOSL Estimates
October 2012
2Q
12,410
12.3
2,600
-18.2
21.0
720
750
290
1,420
280
19.7
1,140
1,140
-15.6
3Q
10,320
9.9
2,130
-15.8
20.6
750
660
200
920
180
19.6
740
740
-32.7
FY13
4Q
13,790
57.6
4,320
75.6
31.3
720
650
380
3,330
670
20.1
2,660
2,510
124.1
FY13E
9,116
8,556
6.1
92.5
(INR Million)
FY12
1Q
11,830
7.9
2,671
4.3
22.6
710
700
130
1,391
280
20.1
1,111
1,111
1.0
FY12
8,945
8,396
5.5
83.3
1Q
14,200
20.0
2,900
8.6
20.4
770
780
210
1,560
310
19.9
1,250
1,250
12.5
2QE
12,980
4.6
2,882
10.8
22.2
785
740
275
1,632
335
20.5
1,297
1,297
13.8
3QE
13,125
27.2
3,473
63.1
26.5
800
730
310
2,253
462
20.5
1,791
1,791
142.1
4QE
12,782
-7.3
3,011
-30.3
23.6
816
732
399
1,862
391
21.0
1,471
1,471
-41.4
FY12
FY13E
45,930
12.2
11,570
7.8
25.2
2,900
2,760
1,000
6,910
1,410
20.4
5,500
5,500
17.8
52,527
14.4
12,426
7.4
23.7
3,171
2,982
1,194
7,467
1,497
20.0
5,970
5,970
8.5
C187

Sector: Utilities
Coal India
BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
5,703
COAL IN
6,316.4
386/294
-6/-1/-13
2,270.4
43.1
CMP: INR359
Buy
Year
Net Sales* PAT* # EPS#
End
FY11A 502,336 109,309 17.3
FY12A 624,154 160,725 25.4
FY13E 693,038 181,666 28.8
FY14E 746,196 194,891 30.9
*Consolidated; # Adjusted; $ RoE is
EPS
Gr. (%)
11.2
47.0
13.0
7.3
adj. for
P/E
P/BV
RoE$
RoCE
EV/
EV/
(X)
(X)
(%)
(%)
Sales EBITDA
26.4
54.8
14.1
5.6
31.9
57.3
2.7
10.3
12.5
4.4
28.5
56.0
2.4
8.1
11.6
3.6
25.0
48.2
2.1
7.1
OB reserves accounts, as appplicable under IFRS
We expect Coal India (COAL) to report revenue of INR147b (up 12% YoY) and PAT of INR28b (up 25% YoY).
We estimate production at 90m tons (up 12% YoY) and dispatches at 104m tons (up 12% YoY). During 2QFY13 (till
9 September) COAL's production was 69m tons (up 9% YoY) and dispatches were 79m tons (up 6% YoY).
E-auction price has been one of the key drivers of earnings growth for COAL. However, we saw a marginal dip in
e-auction realization in 1QFY13. We gather that premium over notified prices has further weakened in 2QFY13.
We build in e-auction realization of INR2,300/ton in 2QFY13 v/s an average of INR2599/ton in FY12 and INR2,562/
ton in 1QFY13. Softening in global coal prices and appreciating INR could put pressure on realizations of marketlinked volumes (e-auction/washed) for COAL.
The board has approved new FSA (fuel supply agreement) norms, with supply of 65% coal from its own
production and 15% from imports. It has approved a revised penalty structure, with base penalty of 1.5%
(trigger level of 65-80%) and peak penalty of 40% (supply below 50%).
We expect COAL to report consolidated PAT of INR182b for FY13 (up 13%) and INR195b for FY14 (up 7%). The
stock trades at 12.5x FY13E and 11.6x FY14E reported EPS. Maintain Buy.
Operational Details
Volume Assumptions (m tons)
Production
Sales/Offtake
Blended Realization (INR/ton)
- Regulated
- E-auction
1QFY12
2QFY12
3QFY12
4QFY12
96.3
106.3
80.3
93.2
114.6
110.3
144.6
122.9
102.5
113.0
90.0
104.0
121.0
119.0
1,188
2,246
1,225
2,435
1,174
2,852
1,339
2,852
1,261
2,562
1,260
2,300
1,260
2,750
FY12
FY13E
154.5
132.0
435.8
433.1
468.0
468.0
1,349
2,802
1,235
2,599
1,285
2,617
Y/E March
Sales
Change (%)
EBITDA
Change (%)
As of % Sales
Depreciation
Interest
Other Income
EO Income/(Expense)
PBT
Tax
Reported PAT
Adjusted PAT*
Change (%)
E: MOSL Estimates
October 2012
(INR Million)
FY12
1Q
2Q
3Q
144,991 131,481 153,493
26.8
18.2
20.9
48,197
24,773
45,421
55.5
39.8
34.5
33.2
18.8
29.6
4,308
5,734
5,257
55
83
76
15,589
17,942
18,559
132
165
52
59,555
37,064
58,699
18,115
11,132
18,322
30.4
30.0
31.2
41,439
25,931
40,378
41,308
22,341
36,901
62.8
46.8
39.7
FY13
4Q
194,190
29.7
37,856
-27.2
19.5
4,103
326
23,280
458
57,164
17,221
30.4
39,943
60,493
43.6
1Q
2QE
3QE
165,006 147,128 172,505
13.8
11.9
12.4
48,146
27,321
49,319
-0.1
10.3
8.6
29.2
18.6
28.6
5,356
5,500
5,600
126
150
160
20,714
18,500
19,500
-103
0
0
63,275
40,171
63,059
18,582
12,252
19,391
29.4
30.5
30.8
44,693
27,919
43,668
44,796
27,919
43,668
8.4
25.0
18.3
4QE
208,400
7.3
75,073
98.3
36.0
5,744
181
20,576
0
89,725
27,632
30.8
62,093
62,093
2.6
FY12
FY13E
624,154
24.3
156,388
16.6
25.1
19,402
540
75,369
734
212,549
64,790
30.5
147,759
160,725
47.1
693,038
11.0
203,049
29.8
29.3
22,200
617
79,290
0
259,522
77,857
30.0
181,666
181,666
13.0
C188

Sector: Utilities
JSW Energy
BSE Sensex
S&P CNX
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
5,703
JSW IN
1,640.1
77/36
30/-4/-2
99.7
1.9
CMP: INR61
Year
Net Sales *
End
(INR m)
3/11A
42,944
3/12A
61,189
3/13E
90,980
3/14E
102,038
* Consolidated
Buy
PAT*
EPS
(INR m) (INR)
8,418
5.1
3,314
2.0
6,056
3.7
10,269
6.3
EPS
Gr. (%)
12.5
-60.6
82.7
69.6
P/E
(X)
11.8
30.1
16.5
9.7
P/BV
(X)
1.8
1.7
1.7
1.5
RoE
(%)
14.8
5.8
10.3
15.9
RoCE
(%)
9.7
6.4
10.7
14.0
EV/
EV/
Sales EBITDA
3.0
12.7
2.3
8.2
1.9
6.2
We expect JSWEL to report consolidated revenue of INR20.2b (up 103% YoY) and PAT of INR1.1b (v/s loss of
INR221m in 2QFY12) for 2QFY13.
JSWEL generated 3.2BU (up 74% YoY) during July-August 2012. Average PLF for the 2,060MW Karnataka/Ratnagiri
project stood at 90% (v/s 71% a year ago) and at 59% (v/s 74% in 1QFY13) for the 540MW Rajwest project. In
2QFY13, we expect JSWEL to sell 4.5BU (up 75% YoY). 55% of its sales would be on merchant tariffs.
JSWEL's gross margin had improved to INR2.1/unit in 1QFY13. Consumption of high cost inventory had restricted
margin expansion in 1Q. The management expects gross margin expansion from 2QFY13.
540MW of capacity at Rajwest is in operations and JSWEL has synchronized an additional 3 units (405MW). The
entire project would be ready for commissioning by 2QFY13.
We expect JSWEL to report consolidated PAT of INR6.2b for FY13 (up 88%) and INR10.5b for FY14 (up 69%). The
Operational Details
Sales (MUs)
- Long Term
- Merchant
ST as a % of total
Realization (INR/unit)
1QFY12
2,422
672
1,750
72.3
4.51
2QFY12
2,593
646
1,947
75.1
3.15
3QFY12
3,965
1,441
2,524
63.7
3.99
4QFY12
4,617
2,157
2,460
53.3
4.18

4,731
4,481
5,149
5,806
2,233
2,062
2,714
3,273
2,498
2,419
2,435
2,533
52.8
54.0
47.3
43.6
4.56
4.51
4.49
4.43
Total Operating Income

Change (%)
EBITDA
Change (%)
Depreciation
Interest
Other Income
Extraordinary items
PBT
Tax
Reported PAT
Exceptional Income/ (Expense)
Reported PAT (Post MI)
Adjusted PAT
Change (%)
E: MOSL Estimates
October 2012
FY13E
20,167
10,282
9,885
49.0
4.51
(INR Million)
Y/E March
FY12
1Q
12,724
36.5
3,932
-13.1
1,048
1,338
220
0
1,766
441
25.0
1,326
0
1,363
1,363
-54.4
FY12
13,594
4,902
8,692
63.9
4.37
2Q
9,965
17.8
1,182
-63.6
1,098
1,510
708
868
-1,586
-481
30.3
-1,105
868
-1,089
-221
-114.3
3Q
17,687
64.3
3,495
-1.2
1,379
1,995
288
1,375
-965
-148
15.3
-817
1,375
-827
549
-60.2
FY13
4Q
20,812
44.6
5,869
35.5
1,509
2,329
259
-621
2,910
607
20.9
2,303
-621
2,303
1,683
-18.3
1Q
21,915
72.2
5,834
48.4
1,697
2,426
764
2,325
150
160
106.4
-10
1,915
34
1,949
43.0
2QE
20,198
102.7
5,438
360.2
1,721
2,450
425
0
1,692
592
35.0
1,100
0
1,100
1,100
n.a.
3QE
23,142
30.8
6,556
87.6
1,977
2,650
440
0
2,369
829
35.0
1,540
0
1,540
1,540
180.6
4QE
25,724
23.6
7,342
25.1
2,349
3,227
428
0
2,193
769
35.0
1,425
0
1,467
1,467
-12.8
FY12
FY13E
61,187
42.5
14,477
-7.4
5,033
7,172
1,466
1,613
2,125
419
19.7
1,706
1,613
1,700
3,313
-60.6
90,980
48.7
25,169
73.9
7,744
10,753
2,057
2,325
6,404
2,350
36.7
4,055
1,915
4,141
6,056
82.8
C189

Sector: Utilities
NHPC
BSE Sensex
S&P CNX
18,763
5,703
Bloomberg
NHPC IN
Equity Shares (m)
12,300.7
52 Week Range (INR)
25/15
1,6,12 Rel Perf (%)
2/-10/-32
Mcap (INR b)
238.0
Mcap (USD b)
4.5
CMP: INR19
Year
Net Sales
End
(INR m)
03/11A 51,436
03/12A 69,203
03/13E 60,489
03/14E 67,177
* Pre Exceptional
Neutral
PAT
EPS
EPS
(INR m) (INR) Gr. (%)
18,169
1.6
17.4
23,652
2.0
28.4
23,187
2.0
-1.7
24,071
2.1
3.8
Earnings, Consolidated
P/E
(X)
9.4
9.6
9.3
P/BV
(X)
0.8
0.8
0.8
RoE
(%)
7.0
8.6
7.9
7.9
RoCE
(%)
8.6
10.3
7.6
7.9
EV/
EV/
Sales EBITDA
4.9
7.0
4.9
7.9
4.8
7.7
We expect NHPC to report revenue of INR16.5b (down 11% YoY) and PAT of INR8.5b (up 10% YoY) for 2QFY13. In
July-August 2012, NHPC's generation was 5.2BU (up 10% YoY).
In FY13, NHPC is targeting to add 1.1GW of projects. It has commissioned Chamera-III 231MW in YTD FY13.
Chutak (44MW) and Nimo Bazgo (45MW) projects are ready for commissioning but CoD is partly impacted due
to transmission line delays. Local agitation has impacted the commissioning of Uri-II (240MW). The Kishanganga
project (330MW) is caught in the controversy between India and Pakistan.
The Supreme Court has asked the Ministry of Power (MoP), the Ministry of Environment and Forests (MoEF),
and NHPC to file an affidavit on the ongoing Lower Subansiri Hydel Electric Project (LSHEP), which is caught in
controversy after an NGO, Assam Public Works (APW), prayed before the apex court to take note of the impact
of the LSHEP on low lying areas.
As at the end of 1QFY13, NHPC's outstanding debtors stood at INR21b and debtors above 60 days stood lower at
INR9.1b (v/s INR12b+ as at the end of FY12).
We expect NHPC to report consolidated PAT of INR23.2b for FY13 (down 2%) and INR24.1b for FY14 (up 4%). The
stock trades at 9.6x FY13E and 9.3x FY14E reported EPS. Maintain Neutral.
Operational Details
Generation (MUs)
Increase/ (Decrease) (%)
Installed Capacity (MW)
- Owned
- JV's
1QFY12
6,284
11.0
5,287
3,767
1,520
2QFY12
6,939
-2.6
5,287
3,767
1,520
3QFY12
860
-72.0
5,287
3,767
1,520
4QFY12
1,423
-46.1
5,287
3,767
1,520

6,148
7,618
1,313
3,673
-2.2
9.8
52.7
158.1
5,287
5,518
5,518
5,979
3,767
3,998
3,998
4,459
1,520
1,520
1,520
1,520
Sales
Change (%)
EBITDA
Change (%)
As of % Sales
Depreciation
Interest
Other Income
EO Income/(Expense)
PBT
Tax
Reported PAT
Adjusted PAT
Change (%)
E: MOSL Estimates
October 2012
FY13E
18,752
0.4
5,979
4,459
1,520
(INR Million)
Y/E March
FY12
1Q
14,708
44.2
9,565
17.4
65.0
2,258
865
3,275
0
9,717
1,807
18.6
7,910
6,050
18.4
FY12
18,683
1.0
5,287
3,767
1,520
2Q
18,585
45.1
13,283
25.4
71.5
2,234
883
3,042
-352
12,856
3,191
24.8
9,665
7,769
13.3
3Q
8,820
17.5
3,788
-17.7
43.0
2,237
876
2,032
0
2,707
586
21.6
2,122
2,976
63.9
FY13
4Q
14,437
23.0
9,942
94.6
68.9
2,199
799
2,255
689
9,889
1,868
18.9
8,021
2,109
-18.3
1Q
14,218
-3.3
9,040
-5.5
63.6
2,218
798
2,451
0
8,475
1,777
21.0
6,698
6,450
6.6
2QE
16,515
-11.1
11,540
-13.1
69.9
2,350
830
2,650
0
11,010
2,477
22.5
8,533
8,533
9.8
3QE
10,170
15.3
5,095
34.5
50.1
2,550
875
2,400
0
4,070
916
22.5
3,154
3,154
6.0
4QE
9,426
-34.7
3,816
-61.6
40.5
2,702
1,096
2,931
0
2,949
671
22.7
2,278
2,279
8.1
FY12
FY13E
56,550
33.8
36,579
28.6
64.7
8,927
3,422
10,604
337
35,169
7,452
21.2
27,717
18,884
15.1
50,329
-11.0
29,491
-19.4
58.6
9,819
3,599
10,432
0
26,504
5,841
22.0
20,664
20,664
9.4
C190

Sector: Utilities
NTPC
BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
5,703
NTPC IN
8,245.5
190/139
-9/-6/-14
1,384.0
26.3
CMP: INR168
Buy
Year
Net Sales PAT *
EPS*
EPS
P/E
P/BV
End*
(X)
03/11A 548,740 79,580
9.7
-5.9
03/12A 611,449 79,720
9.7
0.2
17.4
1.9
03/13E 711,487 93,776
11.4
17.6
14.8
1.8
03/14E 790,502 111,540 13.5
18.9
12.4
1.6
* Pre Excep tional consolida ted Earnings; We have f actored
wef FY11 onwards
RoE
RoCE
EV/
EV/
(%)
(%)
Sales EBITDA
12.2
12.2
11.8
11.8
2.8
11.7
12.5
12.5
2.5
11.3
13.7
13.7
2.4
9.3
in RoE gross-up ba se d on MAT
We expect NTPC to report revenue of INR156b (up 2% YoY) and PAT of INR18.6b (up 26% YoY) for 2QFY13. PAT
growth would largely be on the back of base effect, as September 2011 operations were impacted due to coal
shortage/wet coal and due to strike at Coal India.
Generation for the period July-August 2012 was 36.5BU (up 2% YoY) while 1QFY13 generation was up 8% YoY.
This is largely due to maintenance shutdown taken for a large part of its coal capacity. Coal-based generation
was up 3% YoY in July-August 2012 while gas-based generation was down 1% YoY. NTPC's coal plant PLF for JulyAugust 2012 was 77% v/s 82% in July-August 2011.
YTD FY13, NTPC has added capacity of 2.1GW (FY13 target of 4.1GW) and has commercialized 2.3GW. In JulyAugust 2012, it commercialized 660MW Sipat U-III. We expect accelerated capacity addition and
commercialization in 2HFY13.
Under the 12th Plan, NTPC's capacity addition target is 14GW and it has 16.6GW capacity under construction.
Additional 2.6GW (Meja/Solapur) is targeted for addition during the 12th Plan period on best effort basis.
We expect NTPC to report PAT of INR94b for FY13 (up 13%) and INR112b for FY14 (up 18%). The stock trades at
14.8x FY13E and 12.4x FY14E reported EPS. Maintain Buy.
Operational Details
Installed Capacity (MW)
Addition (MW)
PLF (%)
- Coal based projects
- Gas based projects
1QFY12
34,854
660
2QFY12
34,854
-
3QFY12
36,014
1,160
4QFY12
37,014
1,000
86.9
62.6
78.4
60.8
83.5
71.1
91.1
66.8

39,174
39,174 40,674
41,174
2,160
1,500
500
86.5
64.5
80.0
65.0
89.0
65.0

Y/E March
FY13E
41,174
4,160
85.0
65.2
85.0
65.0
(INR Million)
FY12
1Q
2Q
3Q
4Q
1Q
2QE
Sales
141,715 153,775 153,333 162,639 159,600 155,840
Change (%)
9.5
4.2
13.6
4.8
12.6
1.3
EBITDA
28,662
32,387
28,564
41,127
36,306
31,290
Change (%)
2.2
-2.2
-22.1
12.9
26.7
-3.4
As of % Sales
20.2
21.1
18.6
25.3
22.7
20.1
Depreciation
6,411
6,583
7,560
7,363
7,602
8,500
Interest
3,744
3,312
4,496
4,870
4,994
5,150
Other Income
9,964
10,093
9,121
7,679
8,849
7,500
PBT
28,472
32,586
25,629
36,574
32,559
25,140
Tax
7,714
8,346
4,324
10,640
7,573
6,536
27.1
25.6
16.9
29.1
23.3
26.0
Reported PAT
20,758
24,240
21,304
25,934
24,987
18,604
Adjusted PAT
19,015
14,797
20,692
22,958
23,888
18,604
Change (%)
13.0
-8.4
-1.1
-10.6
25.6
25.7
E: MOSL Estimates; Adj profit based on the calculations provided by the management
October 2012
95.3
64.5
FY12
37,014
2,820
FY13
3QE
181,322
18.3
38,372
34.3
21.2
9,200
5,400
7,550
31,322
8,144
26.0
23,179
23,179
12.0
FY12
FY13E
4QE
214,725 611,462 711,487
32.0
7.8
16.4
45,978 131,437 151,947
11.8
-2.1
15.6
21.4
21.5
21.4
10,620
27,917
35,922
6,066
17,116
21,610
7,713
36,858
31,612
37,005 123,262 126,026
9,648
31,024
31,151
26.1
25.2
24.7
27,357
92,238
94,875
27,357
79,720
93,776
19.2
0.2
17.6
C191

Sector: Utilities
Power Grid Corporation

BSE Sensex
S&P CNX
18,763
5,703
Bloomberg
PWGR IN
Equity Shares (m)
4,629.7
52 Week Range (INR)
124/95
1,6,12 Rel Perf (%)
-7/4/10
Mcap (INR b)
557.2
Mcap (USD b)
10.6
CMP: INR120
Year
End
3/11A
3/12A
3/13E
3/14E
Net Sales
(INR m)
83,887
100,353
133,383
158,493
Buy
PAT
EPS
(INR M) (INR)
25,411
5.5
33,199
7.2
39,908
8.6
47,902
10.3
EPS
Gr (%)
0.3
30.6
20.2
20.0
P/E
(X)
16.8
14.0
11.6
P/BV
(X)
2.4
2.1
1.9
RoE
(%)
13.6
14.8
16.1
17.4
RoCE
(%)
9.3
9.2
9.7
9.5
EV/
EV/
Sales EBITDA
10.4
12.4
8.7
10.1
8.1
9.4
We expect Power Grid Corporation of India (PWGR) to report revenue of INR32b (up 40% YoY) and PAT of
INR9.3b (up 24% YoY) for 2QFY13. PWGR capitalized ~INR9b in July 2012 and is likely to capitalize INR35b in
2QFY13. The board has accorded investment approval for projects worth INR72b (v/s INR97b YoY) in YTD FY13.
Over the last few months, PWGR's order awards have picked up. It has awarded orders worth INR74b
(v/s INR21.2b YoY) in YTDFY13, against project awards of INR232b in FY12 and INR161b in FY11.
For FY13, we expect PWGR to capitalize INR170b, up 21%. In FY12, fixed asset capitalization stood at INR141b
v/s INR68b in FY11. For FY13, PWGR has approved capex plans of INR200b v/s INR177b in FY12.
Despite the issues relating to fuel and SEB financials raising doubts on capacity addition in the country, PWGR
is upbeat on its capitalization target. Under the 12th Plan, it is focusing on capitalization of corridors rather than
transmission lines dedicated to generation projects.
We expect PWGR to report PAT of INR40b in FY13 (up 20%) and INR47.9b in FY14 (up 20%). The stock trades at 14x
FY13E and 12x FY14E reported EPS. Maintain Buy.
Operational Details
Capitalization (INR m)
Regulated Equity (INR m)
1QFY12
8,020
137,918
2QFY12
32,550
147,683
3QFY12
22,280
154,367
4QFY12
78,150
177,812

FY12
41,000
35,000
45,000
49,000 141,000
190,112 200,612 214,112 228,812 177,812
(INR Million)
Y/E March
Sales
Change (%)
EBITDA
Change (%)
As of % Sales
Depreciation
Interest
Other Income
Extraordinary Inc / (Exp)
PBT
Tax
Reported PAT
Adjus ted PAT (Pre Exceptional)
Change (%)
E: MOSL Estimates
October 2012
FY13E
170,000
228,812
FY12
1Q
22,025
10.2
18,455
9.8
83.8
5,790
4,446
1,432
13
9,638
2,586
26.8
7,053
7,022
18.9
2Q
22,644
6.5
18,978
6.3
83.8
5,966
5,556
1,942
-21
9,419
2,331
24.8
7,087
7,601
27.1
3Q
24,666
20.2
21,027
21.7
85.2
6,792
4,735
1,096
31
10,565
2,472
23.4
8,092
7,743
28.1
FY13
4Q
31,019
40.3
26,038
40.2
83.9
7,177
5,413
3,069
164
16,354
6,037
36.9
10,317
10,832
44.7
1Q
28,883
31.1
24,646
33.6
85.3
7,565
6,461
920
0
11,540
2,836
24.6
8,705
9,065
29.1
2QE
31,672
39.9
27,572
45.3
87.1
8,100
6,800
650
0
13,322
3,930
29.5
9,392
9,392
23.6
3QE
34,010
37.9
29,560
40.6
86.9
9,000
7,300
700
0
13,960
4,118
29.5
9,842
9,842
27.1
FY12
FY13E
4QE
38,820 100,353 133,383
25.1
19.6
32.9
32,597
83,824 114,375
25.2
18.9
36.4
84.0
83.5
85.7
9,505
25,725
34,170
7,822
19,432
28,023
718
7,497
2,989
0
187
0
15,989
45,976
55,170
4,738
13,427
15,622
29.6
29.2
28.3
11,251
32,550
39,548
11,251
33,199
39,908
3.9
30.7
20.2
C192

Sector: Utilities
PTC India
BSE Sensex
S&P CNX
18,763
5,703
Bloomberg
PTCIN IN
Equity Shares (m)
294.5
52 Week Range (INR)
76/38
1,6,12 Rel Perf (%)
19/11/-11
Mcap (INR b)
20.8
Mcap (USD b)
0.4
CMP: INR71
Buy
Year
Net Sales PAT*
EPS*
End
03/11A 90,632
1,660
5.6
03/12A 76,502
2,041
6.9
03/13E 99,995
2,266
7.7
03/14E 128,054
2,816
9.5
* Consolidated
EPS*
Gr. (%)
50.0
22.9
11.0
24.3
P/E*
(X)
10.2
9.2
7.4
P/BV
(X)
0.9
0.9
0.9
RoE
(%)
6.5
5.4
6.4
7.6
RoCE
(%)
9.2
8.6
6.0
5.9
EV/
EV/
Sales EBITDA
0.2
11.8
0.2
14.8
0.1
12.6
We expect PTC India (PTCIN) to report revenue of INR30b (up 25% YoY) and PAT of INR423m (up 19% YoY) for
2QFY13.
Over July-August 2012, PTCIN's volumes stood at ~6.3BU (up 4% YoY). In 2QFY13, we expect PTCIN's traded
volumes to be 9.4BU (up 8.6% YoY). Volume growth should pick up in 2HFY13, with the commissioning of sizable
projects (including tolling projects) on LT basis. In FY13, we expect PTCIN to trade 28BU (up 15%).
We expect average trading margin (adjusted for surcharge and rebates) of INR0.039/unit in 2QFY03 (v/s INR0.058/
unit in 2QFY12). The muted margin growth would be primarily led by increasing competitive intensity in India's
power trading market. PTCIN's market share (excluding cross border and intra-state) in ST volumes for July 2012
increased 2% YoY to 35%.
In 1QFY13, PTCIN received INR1b from Tamil Nadu (TN) and another tranche of INR750m from TN in July/August
2012. Thus, the outstandings from TN are lower at INR4.5b v/s INR7b earlier. The managment expects to receive
the balance dues from TN by 3QFY13. We understand that PTCIN has also begun to realize small sums from UP
and expect increased payments once the tariff hike is approved for UP.
We expect PTCIN to report consolidated PAT of INR2.2b for FY13 (11%) and INR2.8b for FY14 (up 24%). The stock
trades at 9.2x FY13E and 7.4x FY14E reported EPS. Maintain Buy.
Operational Details
Power Traded (MUs)
Adj Margins (Ps/Unit)
1QFY12
6,726
4.91
2QFY12
8,655
4.16
3QFY12
4,564
3.78
4QFY12
4,380
4.68

6,566
9,400
5,500
6,531
3.98
3.97
3.48
4.30

Y/E March
FY12
24,325
4.39
(INR Million)
FY12
FY13
FY12
1Q
2Q
3Q
4Q
1Q
2QE
3QE
4QE
Sales
24,874
23,890
13,300
14,436
19,869
29,853
20,881
29,392
76,502
Change (%)
-9.8
-3.3
-24.3
-30.6
-20.1
25.0
57.0
103.6
-15.6
EBITDA
476
444
210
323
313
536
400
590
1,453
Change (%)
77.1
16.5
-48.5
-5.9
-34.4
20.8
90.6
82.8
3.7
As of % Sales
1.9
1.9
1.6
2.2
1.6
1.8
1.9
2.0
1.9
Depreciation
11
11
11
11
10
11
11
14
45
Interest
14
79
103
64
1
0
0
1
260
Other Income
174
140
43
150
26
80
85
90
505
PBT
626
493
138
394
304
605
474
666
1,656
Tax
173
138
43
98
98
181
142
200
452
27.7
27.9
31.0
25.0
32.3
30.0
30.0
30.0
27.3
Reported PAT
453
356
95
302
206
423
332
466
1,204
Adjusted PAT
453
356
95
299
229
423
332
466
1,201
Change (%)
59.4
-0.5
-74.9
-10.5
-49.4
19.0
248.5
56.0
-11.1
E: MOSL Estimates; % Change for FY13E not comparable given inclusion of tolling profits from 1QFY13 onwards
October 2012
FY13E
27,997
3.81
FY13E
99,995
1,838
26.5
1.8
45
2
281
2,095
622
29.7
1,474
1,450
C193

Sector: Utilities
BSE Sensex
S&P CNX
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
5,703
RELI IN
267.5
680/328
9/-15/17
144.1
2.7
CMP: INR539
Buy
Year
Net Sales
PAT
EPS*
End
3/11A
95,289
10,809
40.4
3/12A
178,503 20,002
74.8
3/13E
163,041 11,638
43.5
3/14E
151,643 12,845
48.0
* Consolidated, Fully Diluted
EPS
P/E*
Gr. (%) RATIO
1.0
85.0
7.2
-41.8 12.4
10.4
11.2
P/BV
(X)
0.8
0.7
0.7
RoE
(%)
6.8
11.4
6.3
6.6
RoCE
(%)
7.4
13.3
8.6
8.0
EV/
EV/
Sales EBITDA
0.3
2.0
0.4
2.9
0.3
2.2
We expect Reliance Infrastructure (RELI) to report revenue of INR37.7b (down 16% YoY) and PAT of INR2.5b
(down 37% YoY) for 2QFY13.
Towards its EPC segment, RELI is likely to post revenue of INR18.5b (v/s INR24b in 2QFY12) and EBITDA margin of
8% (v/s 23% in 2QFY12) for 2QFY13. The company's EPC order book stands at INR156b (book-to-bill ratio of 1.3x).
For FY13, RELI is targeting EPC revenue of INR90b-100b and margins of 8-10%.
The company has exited the INR51b Worli-Haji Ali Sealink project, citing changes in terms of contract by MSRDC.
It has received BG of INR1b from MSRDC however it had spent INR1.5b in preliminary activites towards the
project.
Post tariff hike in Mumbai business, RELI has not seen RAB (regulatory asset base) addition in the last three
quarters in its Mumbai distribution business. Similarly, for its Delhi distribution business, the accretion to RAB
is NIL on an ongoing basis post tariff hike and 8% surcharge. Fuel cost is also allowed to be passed through on a
quarterly basis. The Delhi business has RAB of INR130b, of which DERC has approved RAB of INR90b. RAB
addition of INR40b over 2011-12 is likely to be approved once the petition for 2013-14 is filed.
We expect RELI to report standalone PAT of INR11.6b for FY13 (down 42%) and INR12.8b for FY14 (up 10%). The
Operational Details
EPC Revenues (INR m)
EPC EBITDA (INR m)
Margin (%)
1QFY12
18,849
3,824
20.3
2QFY12
24,309
5,579
23.0
3QFY12
29,801
5,020
16.8
4QFY12
43,823
4,982
11.4

17,749
18,500 21,000
29,251
3,031
1,480
1,890
2,702
17.1
8.0
9.0
9.2

Y/E March
FY13E
86,500
9,103
10.5
(INR Million)
FY12
1Q
2Q
3Q
Sales
36,607
39,505
44,777
Change (%)
64.3
62.0
69.8
EBITDA
6,961
7,096
6,518
Change (%)
174.7
70.5
144.1
As of % Sales
19.0
18.0
14.6
Depreciation
689
638
615
Interest
570
833
1,231
Other Income
1,093
1,126
1,468
PBT
6,795
6,752
6,140
Tax (incl con ting encies)
2,490
1,794
1,982
36.6
26.6
32.3
Reported PAT
4,305
4,957
4,158
PAT (Pr e Exceptionals)
2,874
4,903
4,057
Change (%)
16.7
122.4
118.6
E: MOSL Estimates; Quarterly nos. are on standalone basis
October 2012
FY12
116,781
19,405
16.6
FY13
4Q
57,316
148.1
6,173
156.1
10.8
736
1,832
1,685
5,290
-1,292
-24.4
6,581
6,478
56.6
1Q
34,473
-12.7
4,598
-35.2
13.3
1,130
1,902
2,586
4,152
882
21.2
3,270
3,270
-33.3
2QE
37,700
-15.8
4,901
-24.8
13.0
1,100
1,925
1,350
3,226
675
20.9
2,551
2,551
-37.1
3QE
40,655
-29.1
5,285
-14.4
13.0
1,100
1,900
1,375
3,660
765
20.9
2,895
2,895
-55.3
FY12
FY13E
4QE
50,213 178,205 163,041
-49.1
85.3
-8.5
5,447
26,748
20,231
-47.2
127.1
-24.4
10.8
15.0
12.4
1,121
2,678
4,452
1,852
4,466
7,579
1,202
5,372
6,514
3,676
24,977
14,714
755
4,975
3,077
20.5
19.9
20.9
2,921
20,002
11,638
2,921
19,621
11,638
-71.9
84.1
-40.7
C194

Sector: Utilities
Tata Power
BSE Sensex
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
S&P CNX
5,703
TPWR IN
2,373.3
122/81
2/3/-8
253.8
4.8
CMP: INR107
Neutral
Year
Net Sales PAT*
EPS*
EPS* P/E*
P/BV
End
(X)
03/11A 69,180
17,516
7.4
18.4
03/12A 84,958
17,628
7.4
0.6
14.4
2.2
03/13E 93,003
13,490
5.7
-23.5 18.8
2.1
03/14E 97,488
9,357
3.9
-30.6 27.1
2.0
* Consolidated incl share of profit from KPC and Arutmin
Diluted
RoE
RoCE
EV/
EV/
(%)
(%)
Sales EBITDA
7.5
6.2
9.8
6.2
3.8
17.9
8.5
5.3
3.4
17.2
6.4
5.2
3.3
17.6
mines, Pre Exceptionals, Fully
We expect Tata Power (TPWR) to report standalone revenue of INR22b (up 9% YoY) and PAT of INR2.2b (down
39% YoY) for 2QFY13. Consolidated PAT for the quarter is likely to be INR3.1b (down 31% YoY).
Generation from TPWR's 2,021MW (Mumbai region) capacity in July-August 2012 was 2.2BU, up 23% YoY. Mundra
UMPP generation for the period was 561MU and PLF was muted at 30% v/s 87% in 1QFY13.
TPWR has synchronized the 2nd unit of Mundra UMPP and we expect FY14 to be the first full year of operations.
Losses from Mundra UMPP will limit consolidated earnings growth.
TPWR has filed a petition with India's CERC, asking for a tariff hike of ~INR0.67/unit for its Mundra project. CERC
has heard TPWR petition and has asked buyers of electricity from the 4,000MW Mundra project to submit their
response by the first week of October.
Owing to falling imported coal prices, PT Berau Coal Energy, a subsidiary of Bumi Plc has lowered its production
forecast to 20m-22m tons from 23m tons. However, KPC/Arutmin has kept production target intact.
We expect TPWR to report consolidated PAT of INR13.5b for FY13 (down 24%) and INR9.4b for FY14 (down 31%).
The stock trades at 18.8x FY13E and 27.1x FY14E reported EPS. Maintain Neutral.
(INR Million)
Y/E March
Units Generated
Total Operating Income
Change (%)
EBITDA
Change (%)
As of % Sales
Depreciation
Interest
Other Income
PBT
Tax
Reported PAT
Adjusted PAT
Change (%)
Consolidated Adjusted PAT
Change (%)
E: MOSL Estimates
October 2012
FY12
1Q
3,889
19,212
2.9
4,279
-5.1
22.3
1,331
1,124
2,476
4,299
1,484
34.5
2,816
2,940
33.9
4,158
-1.0
2Q
3,772
19,481
19.1
4,189
19.3
21.5
1,353
1,165
3,323
4,995
1,865
37.3
3,130
3,658
68.3
4,425
12.8
3Q
3,970
22,519
36.3
4,751
43.2
21.1
1,512
1,280
4,105
6,065
1,483
24.5
4,582
1,844
23.9
5,523
34.9
FY13
4Q
3,599
23,747
34.7
4,443
7.8
18.7
1,508
1,388
-69
1,478
308
20.9
1,170
2,295
43.1
3,522
-36.3
1Q
4,259
22,841
18.9
3,759
-12.1
16.5
1,548
1,386
3,456
4,281
1,158
27.1
3,123
3,721
26.6
3,059
-26.4
2QE
3,850
21,170
8.7
4,745
13.3
22.4
1,550
1,400
1,250
3,045
822
27.0
2,223
2,223
-39.2
3,097
-30.0
3QE
4,100
23,925
6.2
4,725
-0.6
19.7
1,575
1,475
1,325
3,000
810
27.0
2,190
2,190
18.8
3,521
-36.3
4QE
3,783
25,067
5.6
5,059
13.9
20.2
1,554
1,528
1,333
3,310
891
26.9
2,419
2,419
5.4
3,839
9.0
FY12
FY13E
15,230
84,958
22.8
17,662
14.3
20.8
5,704
4,957
9,835
16,837
5,140
30.5
11,696
10,736
38.7
17,628
-0.7
15,992
93,003
9.5
18,288
3.5
19.7
6,227
5,789
7,364
13,636
3,682
27.0
9,954
10,553
-1.7
13,490
-23.5
C195

Sector: Consumer
Castrol India
BSE Sensex
S&P CNX
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
5,703
CSTRL IN
494.6
318/193
-2/11/14
154.0
2.9
CMP: INR311
Net Sales
PAT
Year
End
(INR m) (INR m)
12/10A 28,020
4,914
12/11A 30,821
4,853
12/12E 33,290
4,715
12/13E 35,811
5,768
Buy
EPS
(INR)
9.9
9.8
9.5
11.7
EPS
P/E
YoY (%) (X)
27.6
-1.2
31.7
-2.8
32.6
22.3
26.7
P/BV
(X)
25.5
23.9
21.5
RoE
(%)
79.4
93.7
83.8
75.6
RoCE
(%)
112.6
133.6
109.4
101.0
EV/
EV/
Sales EBITDA
4.8
22.5
4.4
22.5
4.1
18.0
We expect Castrol (CSTRL) to report volume growth of ~5.8% YoY and value growth of ~15.3% YoY for 3QCY12,
primarily driven by a low base (3QCY11 volumes had declined 8.7% YoY) and recent price hikes. CSTRL had taken
price increases of 4-5% across key categories in June 2012 and 2-3% in 3QCY12, the impact of which would be
visible in 3QCY12.
Nonetheless, one-time marketing initiatives like discount of INR20/Kl for two-wheeler lubes during part of
3QCY12 are likely to partially negate the benefits of the price hikes.
Almost 80% of CSTRL's demand in volume terms is from the replacement market. The OEM market accounts for
only ~20%. Since profitability in the OEM segment is very low, the share of OEM market in operating profit is
even lower. Hence, we believe CSTRL is unlikely to be much impacted by the current growth slowdown in
automotive segments such as HCVs and two-wheelers.
EBITDA is likely to grow 14% YoY to INR1.5b while EBITDA margin is likely to shrink 20bp YoY to 19.2% on the back
of higher raw material cost. We expect net profit to grow 11.2% YoY to INR1.1b.
The stock trades at 32.6x CY12E and 26.7x CY13E EPS. We remain bullish on CSTRL's long-term prospects, given its
pricing power, unique positioning in the lubricants industry and strong fundamentals. Buy.
(INR Million)
Y/E December
Volumes (MT)
% YoY
Net Sales
YoY Change (%)
Net Raw Material
Employee Expenses
Other Operating Expenses
Total Expenditure
EBITDA
Margins (%)
Depreciation
Interest
Other Income
PBT
Tax
Rate (%)
PAT
YoY Change (%)
Margins (%)
E: MOSL Estimates
CY11
1Q
56
2.4
7,507
14.8
3,965
259
1,489
5,713
1,794
23.9
63
4
303
2,030
664
32.7
1,366
16.6
18.2
2Q
54
-10.1
7,900
6.2
4,378
297
1,269
5,944
1,956
24.8
63
2
226
2,117
692
32.7
1,425
-5.2
18.0
3Q
46
-8.7
6,716
4.8
3,948
318
1,147
5,413
1,303
19.4
62
9
170
1,402
451
32.2
951
-18.6
14.2
CY12
4Q
52
-3.7
7,694
10.6
4,654
285
1,225
6,164
1,530
19.9
63
4
147
1,610
542
33.7
1,068
0.8
13.9
1Q
53
-5.9
7,817
4.1
4,590
265
1,394
6,249
1,568
20.1
60
7
335
1,836
607
33.1
1,229
-10.0
15.7
2Q
57
4.8
8,513
7.8
4,974
339
1,506
6,819
1,694
19.9
60
3
162
1,793
584
32.6
1,209
-15.2
14.2
3QE
49
5.8
7,746
15.3
4,521
325
1,409
6,255
1,491
19.2
67
5
166
1,585
527
33.3
1,058
11.2
13.7
4QE
55
-2.9
9,214
19.8
4,993
320
2,096
7,408
1,806
19.6
70
5
167
1,898
678
35.7
1,219
14.2
13.2
CY11
CY12E
208
-7.3
29,817
9.0
16,945
1,159
5,130
23,234
6,583
22.1
251
19
846
7,159
2,349
32.8
4,810
-1.9
16.1
213
6.6
33,290
11.6
19,078
1,248
6,405
26,731
6,558
19.7
257
19
830
7,112
2,397
33.7
4,715
-2.0
14.2
Siddharth Bothra (Siddharth.Bothra@MotilalOswal.com)

October 2012
C196
Multi Commodity Exchange of India

BSE Sensex
18,763
S&P CNX
5,703
Bloomberg
MCX IN
Equity Shares (m)
51.0
1,6,12 Rel Perf (%)
11/-6/Mcap (INR b)
65.5
Mcap (USD b)
1.2
CMP: INR1,284
Year
End
3/11A
3/12A
3/13E
3/14E
Sales
(INR m)
3,689
5,262
5,172
6,152
PAT
(INR m)
1,728
3,618
3,542
3,392
Buy
EPS
(INR)
33.9
56.1
56.1
66.5
EPS
Gr. (%)
(21.6)
65.6
18.5
P/E
(X)
22.9
22.9
19.3
P/BV
(X)
6.6
5.8
5.0
RoE
(%)
22.4
31.0
26.9
27.8
RoCE
(%)
16.7
24.8
25.8
26.9
EV/
EV/
Sales EBITDA
10.1
15.9
10.1
16.2
8.3
12.9
We expect revenue to grow 4.3% QoQ (but decline 17.7% YoY) to INR1.28b.
Total value of trades at the exchange increased 6.2% QoQ, but declined 19% YoY, on a huge base of 2QFY12,
when trading in gold and silver had surged.
Our EBIT estimate stands at INR740m, implying an EBIT margin of 57.7%, +170bp QoQ, on leverage effect of
quarterly volume increase. Our EBIT estimate implies a decline of 26% YoY.
Our PAT estimate is INR712m, up 10% QoQ but down 21% YoY.
Key things to watch: Terminal additions; market share; transaction yield.
(INR Million)
Y/E March
Sales
Q-o-Q Gr. (%)
Staff Costs
Admin and other expenses
Depreciation
EBIT
Margins (%)
Other Income
PBT
Tax
Rate (%)
Net Income after exceptional item
Q-o-Q Gr. (%)
EPS (INR)
E: MOSL Estimates
FY12
1Q
1,169
10.4
69
382
64
654
55.9
215
869
248
28.6
620
12.9
12.2
2Q
1,558
33.3
67
421
71
999
64.1
224
1,223
327
26.7
896
44.5
17.5
3Q
1,296
-16.8
65
411
70
750
57.9
280
1,030
342
33.2
688
-23.2
13.5
FY13
4Q
1,239
-4.4
79
420
67
672
54.3
308
981
181
18.4
800
16.3
12.9
1Q
1,230
-0.7
78
396
67
689
56.0
233
921
274
29.7
647
-19.1
12.7
2QE
1,283
4.3
79
393
71
740
57.7
256
996
284
28.5
712
10.0
14.0
3QE
1,326
3.4
80
405
71
769
58.0
272
1,040
297
28.5
744
4.5
14.6
4QE
1,352
2.0
82
413
71
787
58.2
280
1,067
304
28.5
763
2.6
15.0
FY12
FY13E
5,262
42.6
280
1,635
272
3,075
58.4
1,027
4,102
1,098
26.8
2,862
62.8
56.1
5,172
-1.7
340
1,607
286
2,940
56.8
1,044
3,984
1,121
28.1
2,863
56.1
Ashish Chopra (Ashish.Chopra@MotilalOswal.com)

October 2012
C197

Sector: Diversified
Sintex Industries
BSE Sensex
18,763
S&P CNX
5,703
Bloomberg
SINT IN
Equity Shares (m)
271.0
52 Week Range (INR)
148/50
1,6,12 Rel Perf (%)
14/-29/-66
Mcap (INR b)
18.1
Mcap (USD b)
0.3
CMP: INR67
Net Sales
PAT
Year
End
(INR m) (INR m)
03/11A 44,837
4,553
03/12A 44,535
3,535
03/13E 46,347
3,537
03/14E 51,778
4,151
Buy
EPS
(INR)
16.8
13.0
13.0
15.3
EPS
YoY (%)
57.2
-22.4
0.1
17.4
P/E
(X)
5.1
5.1
4.4
P/BV
(X)
0.7
0.6
0.5
RoE
(%)
20.9
14.0
12.7
13.3
RoCE
(%)
14.8
11.3
10.9
12.7
EV/
EV/
Sales EBITDA
0.9
5.4
0.8
5.0
0.7
4.0
Expect YoY de-growth: We expect Sintex Industries' 2QFY13 revenue to de-grow 7% YoY to INR10.7b, EBITDA to
de-grow 11% to INR1.7b and Adjusted PAT to de-grow 24% to INR751m.
Expect marginal uptick in monolithic; overseas composite to post another weak quarter: We expect the degrowth to be driven by slowdown in Monolithic segment (18% YoY revenue de-growth, +7%QoQ) and overseas
composites (20% YoY revenue de-growth). In monolithic, Sintex is witnessing slow improvement in approval
process and expects full clarity on the stalled sites by 3QFY13. Overseas, automobile and electrical verticals are
yet to show any sign of improvement, but the management expects uptick in electrical segment by 3QFY13.
Prefab, Textiles to remain stable: Most other verticals are likely to remain stable: (1) Prefab 18% revenue
growth with margin of 20%, and (2) Stable margin in Textiles (21%) and Tanks (10%). Domestic composites is
expected to de-grow 14% YoY as Bright was impacted by strikes at Maruti during 2QFY13.
Clarity on funding of FCCB redemption key: Sintex has to redeem FCCBs worth USD285m in Mar-13. Of this,
USD110m is unutilized; Sintex plans to fund the balance with a mix of ECBs and internal accruals. Clarity on this
is a key factor to watch out for.
The stock trades at FY13E P/E of 4.4x and EV/EBITDA of 5x. Sintex's current valuation reflects both (1) growth
moderation, and (2) other concerns (FCCB repayment, potential conflict of interest in power venture, etc). We
value Sintex at INR91 per share based on FY13E P/E of 7x, which is a 33% discount to its LPA P/E.
(INR Million)
Y/E March
1Q
Operating Income
11,120
YoY Growth (%)
22.1
EBITDA
1,892
EBITDA Margin (%)
17.0
YoY Growth (%)
22.1
Depreciation
439
Interest
350
Other Income
168
Extraordinary items
-9
Profit before Tax
1,271
Tax Provisions
338
Tax / PBT
26
PAT before MI & Income from Assoc
933
Min. Int. and Profit from Associate
0
Consolidated PAT
946
Adj. Consolidated PAT
946
YoY Growth (%)
20.0
E: MOSL Estimates
FY12
2Q
11,571
25.4
2,044
17.7
19.1
437
416
67
-596
662
275
22
387
0
389
985
-61.1
3Q
11,608
-2.1
1,631
14.1
-17.1
467
354
154
135
1,099
283
29
816
-6
824
689
-27.8
FY13
4Q
10,236
-30.1
1,600
15.6
-45.2
335
238
115
4
1,147
263
23
884
28
913
909
-45.3
1Q
10,806
-2.8
1,776
16.4
-3.4
483
354
42
-289
692
241
35
451
17
468
757
-20.0
2QE
10,710
-7.4
1,669
15.6
-11.8
435
365
81
-8
942
207
22
735
8
742
751
-23.8
3QE
11,980
3.2
1,921
16.0
14.1
452
365
67
-180
991
227
23
764
8
772
952
38.2
4QE
12,891
25.9
2,104
16.3
4.4
404
377
79
-189
1,214
266
19
948
8
956
1,145
26.0
FY12
FY13E
44,535
-0.7
7,177
16.1
-12.0
1,678
1,358
505
-466
4,179
1,160
25.0
3,019
0
3,068
3,535
-22.4
46,347
4.1
7,474
16.1
4.1
1,774
1,461
270
-666
3,842
941
20.9
2,901
30
2,871
3,537
0.1
Sandipan Pal (Sandipan.Pal@MotilalOswal.com)

October 2012
C198

Sector: Agrochemicals
United Phosphorus
BSE Sensex
S&P CNX
18,763
Bloomberg
Equity Shares (m)
52 Week Range (INR)
1,6,12 Rel Perf (%)
Mcap (INR b)
Mcap (USD b)
5,703
UNTP IN
461.8
169/105
7/-8/-19
60.6
1.2
CMP: INR131
Year
Net Sales
PAT
End
(INR m) (INR m)
03/11A 58,045
5,701
03/12A 76,547
5,890
03/13E 87,801
6,885
03/14E 98,629
9,003
Buy
EPS
(INR)
12.3
12.8
14.9
19.5
EPS
Gr. (%)
3.8
3.3
16.9
30.8
P/E
(X)
10.3
8.8
6.7
P/BV
(X)
1.5
1.3
1.1
RoE
(%)
17.0
14.9
15.5
17.8
RoCE
(%)
17.0
17.3
17.0
18.2
EV/
EV/
Sales EBITDA
1.0
6.3
0.8
5.2
0.7
4.1
Expect United Phosphorus (UNTP) to report 15% YoY growth in consolidated revenue to INR20.4b, with domestic
revenue growing 6% and international revenue 30%. (Performance is strictly not comparable YoY due to
consolidation of Sipcam and DVA Agro.)
EBITDA margin is expected to decline by 100bp YoY to 17.3% due to higher RM costs and fixed cost, translating
into EBITDA growth of 8% to INR3.5b.
We are factoring in MTM forex gain of INR110m (v/s forex loss of INR1.1b in 2QFY12), boosting 120% YoY growth
in PAT to INR1.57b.
UNTP has guided for FY13 revenue growth of 15%, EBITDA margin of 18-20% and tax rate of 15-20%.
The company has announced buyback of up to 19.2m shares at a price up to INR150 i.e. cash outgo of up to
~INR2.9b.
We believe current valuations of 8.8x FY13E EPS of INR14.9 and 6.7x FY14E EPS of INR19.5 factor in short-term
headwinds. Maintain Buy with target price of INR195 (10x FY14E EPS).
(INR Million)
Y/E March
Net Revenues
YoY Change (%)
Total Expenditure
EBITDA
Margins (%)
Depreciation
Interest
Other Income
Extra-Ord Expense
Tax
Rate (%)
Reported PAT
Income from Associate Co
Adjusted PAT
YoY Change (%)
Margins (%)
E: MOSL Estimates
FY12
1Q
18,542
26.3
15,173
3,370
18.2
628
714
305
2,332
0
2,332
466
20.0
1,866
-23
1,843
29.5
9.9
2Q
17,757
41.3
14,502
3,255
18.3
719
1,918
196
814
144
670
151
22.5
519
51
713
-37.8
4.0
3Q
19,080
56.1
15,798
3,282
17.2
785
826
305
1,977
11
1,966
626
31.8
1,340
-216
1,135
35.2
5.9
FY13
4Q
21,269
15.9
17,402
3,867
18.2
792
688
173
2,560
242
2,319
37
1.6
2,282
-263
2,256
-3.4
10.6
1Q
22,142
19.4
18,278
3,864
17.5
734
1,109
354
2,375
0
2,375
703
29.6
1,672
357
2,029
10.1
9.2
2QE
20,360
14.7
16,839
3,521
17.3
850
890
190
1,971
0
1,971
453
23.0
1,518
50
1,568
119.9
7.7
3QE
21,613
13.3
17,813
3,800
17.6
900
1,000
300
2,200
0
2,200
660
30.0
1,540
-190
1,350
19.0
6.2
4QE
23,686
11.4
19,296
4,390
18.5
1,040
1,131
202
2,421
0
2,421
156
6.5
2,265
-327
1,938
-14.1
8.2
FY12
FY13E
76,547
32.9
62,873
13,674
17.9
2,924
4,146
979
7,582
396
7,187
1,280
17.8
5,907
-398
5,834
0.0
7.6
87,801
14.7
72,225
15,576
17.7
3,524
4,131
1,046
8,968
0
8,968
1,973
22.0
6,995
-135
6,860
17.6
7.8
Jinesh K Gandhi (Jinesh@MotilalOswal.com)

October 2012
C199
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October 2012

ING Vysya Bank

Oil & Gas

Gujarat State Petronet

10. Real Estate

India Strategy | Fired up?

S&P CNX: 5,703

2QFY13 highlights: Non-cyclicals have a field day in muted quarter

India Strategy | Fired up?

Re-starting the policy engine FDI in limelight; further growth catalysts

Addressing logjam the next big challenge

Acceleration of financial sector reforms, including corporate bond market and

India Strategy | Fired up?

access to Insurance / Pension money for investment projects. Also, an expenditure

Successful implementation of the National Investment Board that will provide

India Strategy | Fired up?

MARKETS Indian equities Top performer in CY12 YTD

No negative quarters in 2012 to date,

India is amongst the top

India Strategy | Fired up?

World Equity Indices CY12 YTD Perf (%) in USD

Even in USD terms, India's

World Equity Indices 3QCY12 Perf (%) in USD

Average P/B :1.5x

Sectoral Performance for CY12 YTD (%)

Capi tal Goods

Sectoral Performance for 3QCY12 (%)

Banks and Consumer have

RoE (%) CY13 / FY14

Average P/E :10.9x

P/B (x) CY13 / FY14

EPS Growth CY13/FY14 (%)

PE (x) CY13 / FY14

India Strategy | Fired up?

Sensex Stock Performance CY12 YTD (%)

L&T, ICICI Bank

Sensex Stock Performance 3QCY12 (%)

Trend in net FII Investment (USD b)

Trend in net DII Investment (USD b)

16.9 Indian institutional investors have been

1.5 2.7 0.7

India Strategy | Fired up?

MACRO ECONOMY Re-starting the policy engine; FDI in limelight

A. Fiscal deficit slippage to be of lower order than envisaged earlier

India Strategy | Fired up?

Tax Reven ue (Ne t)

To tal Expe ndi ture

Pl an Expe ndi ture

Non-Pl an Expend i ture

Deficit indicators stay well above the long period average

India Strategy | Fired up?

Our initial fiscal deficit estimate for FY13 pegged it at 5.9%

add food, fert.,

India Strategy | Fired up?

A few factors that can alter the fiscal scenario dramatically

Special dividend from PSUs

Government approved disinvestment of four PSUs including

Expect fiscal consolidation in FY14 despite higher welfare bill

The fiscal consolidation attempt is likely to be carried forward to FY14, aided by a

With better growth in FY14, tax-GDP ratio is expected to inch up

India Strategy | Fired up?

Sub si dy a s % o f GDP (RHS)

India plans to come back to revised FRBM track

B. Likely revival of flows to equity market