Null

DOLAT CAPITAL
Petrichor*...
(scent of the first rain)
India Research
...Time To Sow the Seed(s)...!!!

Winning Ideas
*(pronounced /p[trhkYr/; from Greek petros “stone” + ichor “the fluid that is supposed to flow in the veins of the gods in Greek
mythology”) is the name of the scent of rain on dry earth.
The term was coined in 1964 by two Australian researchers, Bear and Thomas, for an article in the journal ‘Nature’. In the article, the authors describe how the smell derives from
oil exuded by certain plants during dry periods, whereupon it is adsorbed by clay-based soils and rocks. During rain, the oil is released into the air along with another compound,
geosmin, producing the distinctive scent.
Dola
Dolatt Research 24 June 2009
24 June 2009
Valuation Snapshot
Company Name CMP Target M Cap Net Sales OPM (%) Net Profit EPS (Rs) P/E (x) ROANW (%) ROACE (%)
(Rs mn) (Rs) (Rs) (Rs bn) FY09E FY10E FY11E FY09E FY10E FY11E FY09E FY10E FY11E FY09E FY10E FY11E FY09E FY10E FY11E FY09E FY10E FY11E FY09E FY10E FY11E
Ahluwalia Contracts 83 108 5.2 11574 14517 19478 11.0 11.4 11.3 594 671 975 9.5 10.7 15.5 8.8 7.8 5.3 39 32 34 43 38 42
Biocon 200 244 40.0 16165 20488 23728 20.5 20.0 20.4 2403 2932 3481 12.0 14.7 17.4 16.6 13.6 11.5 16 17 17 13 14 15
Cadila Healthcare 345 418 47.1 29274 34575 41149 20.7 21.1 21.5 3459 4184 5185 25.4 30.7 38.0 13.6 11.2 9.1 26 29 28 22 21 21
CMC 638 885 9.7 9398 10105 11184 16.5 18.3 19.5 1161 1345 1675 76.7 88.8 110.6 8.3 7.2 5.8 32 29 28 36 34 32
Container Corp Of Ind Ltd 940 1181 122.2 34133 39048 46358 25.9 26.6 27.6 7396 8258 10234 56.9 63.5 78.7 16.5 14.8 11.9 21 20 20 26 24 25
Coromandel Fertilisers 178 224 25.0 93750 53774 66120 7.0 11.0 10.6 5593 3551 4478 28.6 25.4 32.0 6.2 7.0 5.6 53 24 24 5 7 6
Dish TV 39 69 50.8 7376 12014 17661 (20.3) 1.6 10.9 (3871) (2925) (1830) (4.1) (3.1) (1.9) 0.0 0.0 0.0 - - - - - -
Dishman Pharma 181 272 14.7 10671 12648 15318 24.9 24.8 24.3 1461 1799 2210 18.0 22.1 27.2 10.1 8.2 6.7 23 23 23 15 16 17
Dredging Corporation of India 485 632 13.6 8660 9938 11789 11.5 17.5 19.7 881 1277 1768 31.5 45.6 63.2 15.4 10.6 7.7 7 10 12 8 11 13
Engineers India Ltd 1011 - 56.8 15324 21077 30669 20.2 17.1 16.3 3445 3243 3911 61.4 57.8 69.6 16.5 17.5 14.5 27 22 22 45 36 36
GSK Pharma 1207 1347 102.2 16807 18621 20724 35.6 35.7 36.1 4483 5081 5735 52.9 60.0 67.7 22.8 20.1 17.8 31 32 33 41 41 43
HDFC Bank 1456 1711 657.5 74211 88010 105359 4.9 4.6 4.5 22449 28153 35570 52.8 62.3 78.8 27.6 23.4 18.5 17 16 16 1 1 1
IGL 137 180 19.2 8528 10875 13275 35.5 32.8 29.1 1725 1866 2038 12.3 13.3 14.6 11.1 10.3 9.4 27 25 24 39 37 35
Indusind Bank 83 94 29.4 4590 5990 7828 1.9 2.1 2.3 1483 1923 2510 4.2 5.4 7.1 19.9 15.3 11.7 10 11 14 1 1 1
Manappuram General Finance 273 346 9.0 1527 2275 3513 14.2 13.1 13.2 481 712 1158 17.4 21.5 35.0 15.7 12.7 7.8 33 22 26 8 7 9
Maruti Suzuki India Ltd. 1059 846 306.3 208525 232095 254918 8.8 10.3 10.2 12187 15908 17461 42.2 55.0 60.4 25.1 19.3 17.5 15 15 14 19 19 18
Mundra Port & Sez Ltd 611 487 244.8 11949 14525 21786 61.4 67.1 72.3 4325 6062 11217 10.8 15.1 28.0 56.6 40.4 21.8 16 19 28 11 14 20
Nestle India* 1700 1950 163.9 43242 52766 61571 20.0 20.9 20.9 5340 6665 8138 58.6 70.2 84.4 30.7 24.6 20.1 120 127 126 221 287 314
OFSS 1211 1561 101.4 29276 33986 40276 32.6 28.6 30.0 7365 8047 9331 87.9 96.1 111.5 13.8 12.6 10.9 23 21 20 29 23 24
Page Industries 508 612 5.7 2546 3200 3904 20.0 20.7 22.1 316 421 569 28.4 37.8 51.0 17.9 13.4 10.0 39 45 50 41 45 50
Patel Engg 379 493 22.6 22230 29461 38633 16.1 14.6 13.5 1638 1955 2500 27.5 32.8 41.9 13.8 11.6 9.0 18 18 19 13 14 15
Power Fin Corp Ltd. 189 236 216.5 22593 25878 30570 3.9 3.6 3.4 19796 18868 22651 17.2 16.4 19.7 11.0 11.5 9.6 19 16 18 4 3 3
Rallis India Ltd 544 670 6.5 8523 10042 11610 15.9 17.3 18.2 712 927 1146 59.5 77.3 95.7 9.1 7.0 5.7 24 28 32 30 34 36
Rural Elec Corp. Ltd. 158 182 135.9 17680 21440 25867 3.8 3.6 3.5 12719 14300 17196 14.8 16.7 20.0 10.7 9.5 7.9 22 22 22 3 2 2
Skumars Nationwide (SKNL) 45 65 11.0 21940 29658 36067 20.5 22.8 23.8 1646 2194 3156 7.4 9.0 13.0 6.1 5.0 3.5 12 10 11 14 14 16
Tata Steel Limited 405 335 349.0 1444799 930394 959136 13.8 13.4 15.7 94759 32680 52980 109.8 37.9 61.4 3.7 10.7 6.6 27 9 13 17 8 11
TIL 198 300 1.9 10498 9841 10974 9.9 9.8 10.1 447 359 428 44.6 35.9 42.7 4.4 5.5 4.6 21 16 17 25 21 23
Torrent Power 140 171 66.1 43157 53527 66699 15.6 17.0 20.2 3992 4007 7745 8.4 8.5 16.4 16.6 16.5 8.5 13 12 21 9 11 16
Zee News Limited 40 51 9.6 5216 6180 7150 17.0 17.0 17.6 445 475 631 1.9 2.0 2.6 21.5 20.2 15.2 18 16 18 25 20 22
SOTP CMP Target M Cap EPS Rs / Share

(Rs) (Rs) (Rs) (Rs bn) FY11E
Financial Technologies 1,340 1,725 61.5 54.5 817.0
MCX 56.9 444.0
NBHC 6.8 90.0
MCX Sx 312.0
DOLAT CAPITAL
Other Ventures 62.0
Total 1,725.0
Note
* -CY, ** DCF Valuation
Note: - For Banks/FI and NBFC

Net Sales - NII
OPM - NIM
RoACE - RoAA
2
DOLAT CAPITAL
Index
S.N. Contents Pg. No.
Strategy 5
Summary 13
1 Ahluwalia Contracts (India) Ltd. 23
2 Biocon Ltd. 25
3 Cadila Healthcare Ltd. 27
4 CMC Ltd. 29
5 Container Corporation of India Ltd. 31
6 Coromandel Fertilisers Ltd. 33
7 Dish TV India Ltd. 35
8 Dishman Pharma & Chemicals Ltd. 37
9 Dredging Corporation of India Ltd. 39
10 Engineers India Ltd. 41
11 Financial Technologies India Ltd. 43
12 GlaxoSmithkline Pharmaceuticals Ltd. 45
13 HDFC Bank 47
14 Indraprastha Gas Ltd. 49
15 IndusInd Bank Ltd. 51
16 Manappuram General Finance & Leasing Ltd. 53
17 Maruti Suzuki India Ltd. 55
18 Mundra Port and Special Economic Zone Ltd. 57
19 Nestle India Ltd. 59
20 Oracle Financial Services Software Ltd. 61
21 Page Industries Ltd. 63
22 Patel Engineering Ltd. 65
23 Power Finance Corporation Ltd. 67
24 Rallis India Ltd. 69
25 Rural Electrification Corporation Ltd. 71
26 S.Kumars Nationwide Ltd. 73
27 Tata Steel Ltd. 75
28 TIL Ltd. 77
29 Torrent Power Ltd. 79
30 Zee News Ltd. 81
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Petrichor*...
...Time To Sow the Seed(s)...!!!
The mood certainly is to join the joyride till it lasts. The extent of demand destruction in the developed world has
not yet been fully complemented by shrinkages of the money cycle and therefore the economics would remain
in a steady state for some time with slightly lower level of activity than the earlier average before it resumes its
upwards journey.
We feel the decoupling theory would be under a systemic short-term challenge. One can safely imagine an
extended period of tug-of-war on currency front to cause frequent flight of capital back and forth across multiple
asset classes – making uncertainty the only reality in the interim.
The election results and the build up to budget have created a captive environment to attract global capital
waiting for a stable yet high growth opportunity. The businesses globally depend on India for customized value
addition more than mass cost reduction – something which can turn to India’s advantage as and when the
global trade resumes its base buoyancy.
We feel more money would be made outside the index, than within, over the next three years, as the India story
starts gathering momentum both in terms of performance as well as flavor (they are interlinked…aren’t they?).
This piece is an attempt to handpick few ideas under following themes which would be integral to the long term
India story. The themes that we like are Domestic Consumption, Investment Super Cycle, Evergreen Revolution,
Outsourcing.
Relief… a Reality …or Illusion…?

The world has been witnessing a relief rally on the back of successive sovereign stimuli over the last 9 months. The illusion
is almost like an enjoyable dream. The mood certainly is to join the joyride till it lasts. The truth about dreams is that they exist
when one is in a state of denial, the longer they persist the harder is the landing to reality and concurrently they all bring you
to a new dawn.
The extent of demand destruction in the developed world has not yet been fully complemented by shrinkages of the money
cycle – a pending event waiting to happen anytime. The global trade, which also includes an Exim cascade, is nearing the
end of the downward spiral – with near completion of the supply destruction stage. The economics would remain in a steady
state for some time with slightly lower level of activity than the earlier average before it resumes its upwards journey.
The (de)coupling parable

We are all in an environment where money moves at a click of a button. What we have recently witnessed in most of the non-
US markets is a rally triggered by Dollar-Carry-Trade. The global capital flows are driven by the undercurrents on the currency
call. There has been rhetoric of de-coupling of emerging markets from the developed world.
We feel the decoupling theory would be under a systemic short-term challenge. The intertwined exim relations coupled with
the dominance of developed markets spending in deciding sizeable share of emerging market GDP would still be a latent
driver of global growth. The sheer size difference means that a suppressed growth of the developed world needs a concurrent
growth in excess of 8% for next three years of the emerging markets– a distinct reality in an interdependent world.
One can safely imagine an extended period of tug-of-war on currency front to cause frequent flight of capital back and forth
across multiple asset classes – making uncertainty the only reality in the interim.
India - The Refreshing Climate Change

From a scorching-summer-heat to a soothing-drizzle…market is adjusting to the new season change. The fear-sweat has
given way to the joy-raindrops of optimism. The election results and the build up to budget have created a captive environment
to attract global capital waiting for a stable yet high growth opportunity.
India has benefited from the fact that it is a small participant in global trade. The businesses globally depend on India for
customized value addition more than mass cost reduction – something which can turn to India’s advantage as and when the
global trade resumes its base buoyancy.
24 June 2009 5
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As things stand today, the India story has following defining elements –
a. Size – sheer size in terms of numbers and quality
b. Well diversified steady growth macroeconomics
c. Proven political infrastructure under constant media surveillance
d. Well defined micro infrastructure of bureaucracy, law, science, and education
e. Evolving yet vibrant refined financial markets and entrepreneur culture
f. Benefit in hindsight for a late follower of open economy with shortest path of execution through migration of learnings
from other evolved economies
India’s social-politico-economic roadmap was charted almost 210-yrs back and the cost of sounding bit patriotic, we feel
mandate-2009 completes an important leg in India’s evolution into a supra-economic power. (Refer Fig. I (Page 10) & II (Page
11) for our belief on the long term India story)
“If I was a young person and I could live anywhere in the world and decide what type of education I wanted to get and where
I should go? I would focus on infrastructure and real estate development and other things in India.
India was slow moving towards the capitalist model and the government has not been as strong as it should be. People in
developed countries want laissez faire governments. We want government to have infrastructure and laws and such but we
don’t want the interfering stuff. We want markets, and entrepreneurs, and business and investments to drive our economy.
That’s not true in emerging countries. They don’t have the infrastructure and they don’t have the rules and regulations. The
Government needs to step in and get the country going and then once things are really moving they can let free markets
drive the economy. India has been slow moving towards this. But they’re starting to realize that they need infrastructure and
foreign direct investment. They’re the people who most want to be like Americans in the world.
The Chinese do not. Chinese want to top us but they don’t want to be like us per say. In India, where I visited for
several weeks a few years ago, they want to be just like us. They want to be movie stars and watch soap opera’s
and they want to have a big house and own flat screen TV’s.
I think that India is the choicest single country in the world that is large enough to have scale, extend the product ...and it’s
starting to emerge on a ... let’s call it a 20 year lag to China and it has demographics much longer. “
- Harry Dent Author of the Book The Great Depression Ahead 2008
What It Means For Indian Equities

Economy – Certainly, in a trickiest of the positions. The base level activity is certainly improved – as can be seen from
dispatch numbers of cement, steel and two wheelers. The fiscal impetus in terms of lower duties and softer taxes is panning
out its results. Though, the cost for the same (fisc. Deficit at ~ 12%) is still to bite.
The forthcoming budget would be first strong statement of the new government to highlight its preferences. As things stand
today, the global softness on commodities and concurrent currency strength is making inflation-control a secondary priority to
growth and infrastructure. One should expect a softer monetary regime with range bound interest rates. Monsoon is turning a
critical lever to current fiscal performance.
Fundamentals – Corporate performances and tax collection numbers are suggesting that the India Inc. has already seen its
worst period. One must not forget that as the dispatches and hence production scale up (albeit slowly), system inventory
filling would more than offset the existing pricing power (nobody knows China’s response as yet on how is it going to fill up its
volume gap with falling US consumption). Sustenance of domestic demand revival remains key to future performance. CDR
exercises and Capital restructuring can gain momentum in mid-term.
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Sentiments – Certainly mixed. The single side run of ~ 6-weeks has raised more question marks than beliefs? With the end
of slog-overs, the mood is that of consolidation. While most of the business confidence indices have suggested bottoming out
of the economy, corporate earnings cycle is yet to shape up. The paradox of too much too soon along with the long term India
opportunity is balancing it. The corporates too are queuing up for the fund raising spree. The initial response from institutions
was akin to the groom parade operah of a sex bomb on one of the frontline channel!!. Though, off late there is visible softness
in the activity as witnessed by scaled down targets of some of the MF NFOs and the nixed QIPs of some of the perennial fund
raisers.
There exists a latent aggression to exploit investment opportunities – though the ability and willingness (along with quantum
of commitment) is on a slow slide. The expected tight-ropewalk of the annual budgetary exercise is playing its weight thus far.
Any surprises on this front would take the lid off to create a new wave of optimism.
Liquidity – We all have learnt the hard way in these 12-months cycle that liquidity is material representation of the
confidence of trade participants (across all trades). The same investor who had questioned validity of a buy call on a
stock (6-months back) is seen buying the same stock at 2-3x the price prevalent at the bottom. Impact costs (in inverse) are
now embedded in valuations. The domestic monies at the periphery are ~ USD3 bn. The breadth of the markets is widening
by the day with increased interest from all segments (retail, HNI, etc.). The short-term would pan out at the mercy of global
capital flows. The markets might get a shot in the arm if the government opts for a special disclosure scheme (akin to VDIS
’98) that can open a new harmonized money-flow into the system.
What are the market levels then?

On valuations, the market is now trading near the long-term historic PER mean. History suggests that this the valuations can
stretch at best to a variance of 2-z (sigma) when exuberance trades at the edge of rationality. Any slip in towards irrationality
can cause a further stretch to the same (albeit with a higher risk).
4
3.5
3
2.5
2
1.5
1
(Z)
0.5
0
-0.5
-1
-1.5
-2
-2.5
-3
May-94
May-99
May-04
May-09
Nov-91
Mar-95
Nov-96
Mar-00
Nov-01
Mar-05
Nov-06
Jan-91
Jul-93
Sep-92
Jan-96
Jul-98
Jul-03
Sep-97
Jan-01
Sep-02
Jan-06
Jul-08
Sep-07
Source : Bloomberg, Dolat Research
Market is a bazaar which works on demand and supply. The ticker represents the tilt of trade in terms of choice and compulsions
with both buyers and sellers. The market was imbalanced in favour of buyer not long back. Although, the changed sentiments,
improved risk appetite, the “left out” feeling and scarcity of quality options (for global money) has certainly shifted the buyer
psyche from choice to compulsion. Higher the compulsion, higher is the price (PER).
The interest rate cycle, and expected risk premium of the market being where it is one can expect the markets to trade at an
earnings-yield range of about 5.5%-8.5% (PER band of ~11x-18x).
The market seems to have already discounted a flat FY10 (a high single digit earning growth at max) and the current optimism
is based on FY11 estimation of a higher teen earnings growth. In terms of GARP (growth at reasonable price) valuations the
recent market momentum has factored in the time adjusted undervaluation.
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One must not forget though that the indices are dynamic representation of markets at a given point in time. Our broader call
is that the indices in 1992, 1996, 2000, 2004 and 2008 were different. The 2012 indices composition too would be different.
We feel more money would be made outside the index than within over the next three years, as the India story starts gathering
momentum both in terms of performance as well as flavor (they are interlinked…aren’t they?).
How Does One Play This?

As a conscious effort we are avoiding short term calls here as we firmly believe India is a steady performer. Further, mapping
the market cycle theory to our current state of the market, we feel we are close to completion of the decline phase and set to
enter the accumulation phase. The base premise here is that over a medium term one must prepare to witness a significant
low than the current levels. The portfolio there fore needs following structural adjustments -
a. With a near-90% run in 13-weeks, certainly, time to blend mid-term aggression with safety
b. In the short-term action would remain confined to liquid stocks although with a trading tilt than investment. One should
slowly increase the investment tilt in the portfolio over period.
c. The mid-cap space would still continue to witness participation – though one should stick to the theme of quality as
much as possible
Themes We Like
Our DNA is that of an India-Bull (!). We have already highlighted the long-term theme on the India story. We feel as we move
into a constructive phase of India story, one need to take a re-look at themes that are set to pan out to enable India reach its
ultimate destiny.
Domestic Consumption
We had highlighted the “Access” theme in our strategy report in October 2007. The evolution of the story today makes us to
revisit the same theme with some modification. We foresee domestic consumption as a key growth driver for India. In fact,
after China, India provides the largest denominator, when it comes to consumption. The evolving income levels and widening
prosperity matrices favor corporates that have built businesses, brands that reach the numbers.
The obvious segments to play are BFSI, Consumer Non-Durables, Pharma, Media, Gas Transportation, Textile Retail and
Logistics (as a second Derivative). We like HDFC Bank, Hindustan Unilever/ Nestle, GSK Pharma, Zee News, IGL, CONCOR,
and S K N L. We also like financial services space (Kotak Bank and India Infoline) #.
Investment Super Cycle

The quotes of Mr. Dent referred earlier are being seriously addressed by a single-minded focus on correcting this ignored
segment. Each segment of the infrastructure is being reinforced with a dedicated focus with already committed expenditure to
the tune of USD800 bn+ over the next three years. Each of the constituents in this value chain is set to participate in the
monetization opportunity. We like PFC/ REC (a preferred intersection of power and finance), Patel Engineering, Ahluwalia
Contracts (both in contracting space), TIL (material Handling), Dredging Corporation (port infrastructure), Engineers India
(Niche Design Participant), Torrent Power (a new generation private power utility) and CMC (e-governance) on this front.
Evergreen Revolution
Since the green revolution of 70’s, there have been hardly any incremental investments in agri-productivity. The sector forms
~17% of GDP, but accounts for 50%+ domestic consumption. The falling land holding per capita is increasing pressure on
improving yields. Empowering farmer with better cash in such a scenario would continue to be the central theme of agri-
reforms. The recent experience of global meltdown, the concurrent solidarity displayed by the rural segment (both in production
as well as consumption) and the recent concentration of the ruling party’s vote share align to fortify the relevance of this
sector in prioritization of policies.
Micronutrients, fertilizers, seeds, water, farm equipments, processing, trade monetizing as well as trade finance are areas
which would undergo strong reorganization – in favour of all the stakeholders of the supply chain. The increased area under
irrigation and resultant need towards yields optimization augurs well for overall demand for each of the constituent. One
should not get surprised if some of these participants get index representation incoming years.
We like – Corromondel Fertilisers (Fertilizers), Rallis (Agrochem), FT (monetization facilitator of agri-trade value chain) and
Jain Irrigation (micro-irrigation in this space). Although, we have avoided coverage of Jain in this piece due to our concerns on
valuations at this point in time.
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Outsourcing/ Exports
The stronger currency does provide an interim drag for the export centric stories. We prefer companies which have garnered
a critical space in their customer value chain and are at the edge of innovation. We are against business model that are
resting of a foreign front end that is in combat with the industry goliaths. The non-conflicting business models with an adequate
back end capability are key to success here. We like Cadilla, Dishman and OFSS in this space.
Stand-alone Businesses
We have three unique candidates here
Gold Finance – Manappuram General Finance and Leasing (MGFL) is a unique business model with a distinctive process of
asset verification, customer selection and pricing strategies, which offer higher margins and return ratios with virtually ‘Zero’
NPAs.
Innerwear Brand – Page Industries is a brand licensee of Jockey with an asset light model. Well integrated to leverage on the
association with Jockey International to right-price the product designed correctly on comfort, quality, fashion (in sports
wear), and affordability without compromising on the brand value.
New Age Bank with change of guard - Indus Ind Bank is undergoing a strong character change under the new guard. The
new management is fiercely operating towards a goal of reaching the Top-3 slot among its peers across business lines. The
management model and the focus makes it a serious tranformation bet in the banking sector.
Dark Horse
We have three themes here –
Dish TV – The segment displays traits of what we have witnessed in telecom. Might just be right this time - with timely
availability of finance (Rights issue), Dish TV should regain its aggression in the competitive DTH scenario of five players.
The company is set to achieve positive EBIDTA in FY10 and is set to corner incremental market share of ~ 20-25%. At worst
you make money if it gets sold (!).
Biocon – The option value of the R&D card on Oral insulin is long pending its due monetization. The outsourcing model
(CRAM) provides the near term cash flow relief. The management approach of guided aggression too is favorable.
Retail Companies – The key variables consumption, capital, labour and rentals have bottomed out and are on the path of
revival. As of now options are limited. We have short-listed Vishal Retail as a possible candidate (though not covered in this
report).
Top Sell Ideas

In an accumulation phase it can be suicidal to short any stocks. The word SELL here is with a connotation of “don’t-own” or
“get-rid-off”. Following are some of the stocks with this flavour –
TATA Steel – Steel outlook yet to look up with lower industry level utilizations and weaker demand outlook from user industries.
The high leverage on the Corus acquisition biting in difficult times. Valuations are richer when the product prices are yet to
recover – a paradox unfavorable on risks.
Maruti - The company would continue to benefit from the growth in the Indian auto industry, however, increased level of
competition in the compact car segment would result in loss in market share from current 70%+ levels.
Mundra Port – Though we remain positive on the growth prospects on the back of its strategic positioning in emerging India
logistics and industrial scenario the short term outlook is weak for the SEZ business with a slower industrial capex cycle. The
recent run up in the stock price has taken the valuation beyond fair value assessed by us of Rs 487.
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Fig. I - India - Forces of Global Emergence

External Factors
1. Econo-Liberal Supremacy - Different Eras
2. The Global Wealth Line - 1000 years of Wealth Transition
“ For five hundred years the epicentre of maritime trade moved steadily west. In the 15th century, Venice (and soon after
Genoa) was at the crossroads of trade, followed by Antwerp and Amsterdam in the 16th and 17th Centuries, and London in
18th century.
By 19th Century steamships carried the Westline across the Atlantic to North America and in the twentieth century the growth
centre of maritime commerce took another giant step towards west across the pacific to Japan and South Korea. So finally, in
2003, the growth centre of maritime trade has shifted to China.” - Martin Stopford, Managing Director, Clarksons Research
“Historically, it has been observed that the nations that have industrialised later have grown at a faster pace and in a
shorter time frame. Western Europe grew with a growth rate of 1-2% over an extended two centuries and half. Subsequently,
as the maritime epicentre shifted to North America, the growth rates inched to 3-4% in the late 19th and first half of 20th
century. Japan grew with 7-8% in its growth phase in 1950s-60s. The emerging Asian tigers grew by 9-10% in 1980s till
mid-90s. China is growing by 13% since 1990.” – ( Prof.Sabestian Morris – IIM Ahmedabad).”
3. Econo-Religious Factors of Global Leadership
Addapted from “India in the World Economy I-CUE Analysis” by i-maritime Research
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Fig. II - India - Forces of Global Emergence
Internal Forces
India’s social reforms started at the beginning of the 19th Century and were followed by political and economic reforms. The
earlier social and political reformcycles took around 90 years and currently India is passing through the economic reformcycle.
Within a reformcycle, first 30 years could be termed as initiation (I) phase, next 30 year as the growth (G) phase and final
30 years as consolidation (C) phase. .
Major events of various reform processes are enlisted as under....
Addapted from “India in the World Economy I-CUE Analysis” by i-maritime Research
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Petrichor......Time To Sow the Seed(s)...!!!

As of now, everybody seems to be enjoying the joyride. The election results and the build up to budget have
created a captive environment to attract global capital waiting for a stable yet high growth opportunity. We feel
more money would be made outside the index, than within, over the next three years, as the India story starts
gathering momentum both in terms of performance as well as flavor (they are interlinked…aren’t they?).
This piece is an attempt to handpick few ideas under following themes which would be integral to the long term
India story. The themes that we like are Domestic Consumption, Investment Super Cycle, Evergreen Revolution,
and Outsourcing.
Sr. Company Name Market Cap CMP Target

No. (Rs.) (Rs.)
1 Ahluwalia Contracts (India) Ltd. Rs.5.2bn 83 108
High Performance - Delivered...!!!
Ahluwalia Contracts India Ltd. (ACIL) is a premium player in contracting and caters to industrial, real estate and
infrastructure segment. A healthy order book of Rs41.5 bn provides a revenue visibility of 3.6 years. Increased
contribution from Government Contracts (32% of order book) enhances certainty in the order book. ACIL has been
awarded the time critical Commonwealth Projects which exhibits its quality and timely execution skills. With proven
execution skills, strong promoter pedigree and sound financials along with positive free cash flows, we believe that
ACIL is attractively placed. We recommend a BUY with a 12 months price target of Rs108 which discounts its FY11E
EPS of Rs15.5 by 7x.
Year Net Sales % growth EBITDA OPM% PAT % growth EPS(Rs.) PER(x) EV/EBITDA(x) ROANW(%) ROACE(%)
FY08 8,801 31.5 1,063 12.1 516 65.6 8.2 10.1 4.3 50.9 57.0
FY09E 11,575 31.5 1,278 11.0 594 15.0 9.5 8.8 4.1 39.3 42.7
FY10E 14,517 25.4 1,656 11.4 671 13.0 10.7 7.8 2.8 32.1 38.2
FY11E 19,478 34.2 2,208 11.3 976 45.4 15.5 5.3 1.7 34.1 42.1
Figure in Rs mn
2 Biocon Ltd. Rs. 40bn 200 244

Clinical Gains...!!!
Biocon has increased its focus from statins to branded biotech formulations and contract research services.
We estimate Biopharma division to grow at 15% CAGR over FY09-11E with increasing contribution from domestic
branded formulations and ramp up in bulk supplies for products going off patent.The company stands as a
beneficiary in the event of, ‘Biogenerics’ opening up in key regulated markets. We estimate 33% revenue growth
in its CRO segment over FY09- 11E with the BMS deal yet to realise its full potential. Possible outlicensing deal
for its product(s) Oral insulin IN105 (Phase III) and antibody T1h (to initiate Phase III shortly) are triggers ahead.
Year Net Sales % growth EBIDTA OPM % Adj.PAT* % growth Adj.EPS(Rs.) % growth PER (x) ROANW % ROACE %
FY08 10576 7.3 3024 28.6 2245 12.1 11.2 12.1 17.8 15.2 13.6
FY09P 16165 52.8 3312 20.5 2403 7.0 12.0 7.0 16.6 15.6 13.1
FY10E 20488 26.7 4105 20.0 2933 22.0 14.7 22.0 13.6 16.6 14.4
FY11E 23728 15.8 4845 20.4 3482 18.7 17.4 18.7 11.5 17.0 15.1
Figure in Rs mn,* Excl. forex exceptional items
3 Cadila Healthcare Ltd. Rs.47bn 345 418

Prism Of Growth…!!!
Cadila Healthcare (CHL) has an interesting business model with thrust on export formulations and contract
manufacturing, well complemented with a strong domestic franchise. Strategic acquisitions and front end tie ups
has been key to CHL’s growth trajectory in export formulations. The company through JV’s has positioned itself as
a preferred contract manufacturer. Sustained cash flows from its flagship segment - domestic formulations (44%
sales) permits it to augment international operations. Possible outlicensing of candidates currently in advanced
stages of its NME pipeline, is a latent trigger. We recommend “Accumulate” with target price of 418 (11x FY11E EPS).
Year Net Sales# % growth EBIDTA OPM % Adj.PAT* % growth Adj.EPS(Rs.) % growth PER (x) ROANW % ROACE %
FY08 23,230 27.0 4,582 19.7 2,466 6.0 18.1 6.0 19.1 26.7 20.8
FY09P 29,275 26.0 6,058 20.7 3,460 40.3 25.4 40.3 13.6 25.6 21.8
FY10E 34,575 18.1 7,295 21.1 4,185 21.0 30.7 21.0 11.2 28.4 20.5
FY11E 41,149 19.0 8,847 21.5 5,185 23.9 38.0 23.9 9.1 27.5 20.9
Figure in Rs mn, # Includes other operating income,* Excl. forex exceptional items, P=Balance Sheet figures are projected.
24 June 2009 13
DOLAT CAPITAL

No. (Rs.) (Rs.)
4 CMC Ltd. Rs.9.7bn 638 885

Out of the Cocoon...!!!
CMC is an IT Solutions and Services company with a predominant domestic focus. CMC has been immune to all the
slowdown in the Global IT services outsourcing market. Apart from the domestic focus, another factor which favors
CMC is its presence in the ITES led domestic governance projects, which are turnkey in nature and give CMC an
assured revenue stream. With the government spending on governance not slowing down, we believe that CMC will
be a direct beneficiary of these new opportunities and are positive on CMC. At CMP of Rs. 638, CMC is trading at
7.2xFY10E EPS and 5.8xFY11E EPS. We initiate coverage on the stock with a Buy rating and a target price of Rs.
885 (8xFY11E EPS) over a 12-18 month period.
Year Net Sales % growth EBITDA OPM% PAT % growth EPS(Rs.) % growth PER(x) ROANW(%) ROACE(%)
FY08 10,647 (1.4) 1,310 12.3 923 33.2 60.9 33.2 10.5 33.5 41.2
FY09 9,398 (11.7) 1,547 16.5 1,161 25.8 76.7 25.8 8.3 32.3 36.4
FY10E 10,106 7.5 1,853 18.3 1,345 15.8 88.8 15.8 7.2 28.9 33.9
FY11E 11,184 10.7 2,183 19.5 1,675 24.6 110.6 24.6 5.8 28.0 31.9
Figure in Rs mn
5 Container Corporation of India Ltd. Rs. 122.2bn 940 1181

Material Life Line...!!!
Container Corporation of India (CONCOR) is the largest container operator with 57 terminals across the country
transporting containerized products including engineering goods, automobiles, agri commodities etc. On
financials CONCOR has a track record of consistent earnings growth (CAGR 14% over 5 years), high return on
equity (ROE) and near monopoly status in business. It is debt free and has Rs135 per share cash on books. At a
CMP of Rs940 we recommend a BUY on the stock with a 12 - 18 months price target of Rs1181 (15x FY11E EPS)
FY08 33,473 9.5 8,904 26.6 7,505 7.8 115.5 7.8 8.1 25.8 30.9
FY09E 34,133 2.0 8,832 25.9 7,397 (1.4) 56.9 (50.7) 16.5 20.9 25.5
FY10E 39,048 14.4 10,368 26.6 8,258 11.6 63.5 11.6 14.8 19.5 23.9
FY11E 46,358 18.7 12,797 27.6 10,234 23.9 78.7 23.9 11.9 20.3 24.9
Figure in Rs mn
6 Coromandel Fertilisers Ltd. Rs.25.9bn 179 224

Fertile Connections...!!!
Coromandel Fertiliser Ltd (CFL) is the leading manufacturer of a wide range of farm inputs and is the second largest
manufacturer of Phosphatic fertilizers. The company is diversifying its revenue base towards the non-subsidy farm
business by entering into high margin segments of specialty nutrients and pesticides. Presence in the niche area of
complex fertilisers and an assured supply of key raw materials differentiates CFL from its peers. Foray into rural
markets and increasing exposure to non-subsidy business would augur well for the company. At CMP of Rs 179, CFL
trades at a P/E of 5.6x FY11E EPS of Rs.32. We recommend a BUY with a price target of Rs 224 (7x FY11E EPS).
FY08 37,573 181.8 4,128 11.0 2,101 214.7 15.0 194.9 11.9 31.2 26.5
FY09E 93,750 149.5 6,520 7.0 4,008* 90.8 28.6* 90.8 6.2 52.8 30.6
FY10E 53,774 (42.6) 5,929 11.0 3,551 (11.4) 25.4 (11.4) 7.0 23.8 19.0
FY11E 66,120 23.0 6,977 10.6 4,479 26.1 32.0 26.1 5.6 23.9 23.6
Figure in Rs mn, * Adjusted PAT / EPS / PER
24 June 2009 14
DOLAT CAPITAL

No. (Rs.) (Rs.)
7 Dish TV India Ltd. Rs.36.9bn 39 69

Wish for More...!!!
Dish TV offers an opportunity to participate in high growth Indian M&E space with annuity like revenue flow with
staggered capex commitment over a period of time. The recent staggered rights issue of Rs 11 bn has eased the
financial burden on the company and is poised to garner incremental market share of 20%. Further the ease of
competition aggression and cheap STBs would lead to lower customer acquisition cost. We value Dish TV on DCF
for its predictability of revenue streams. We initiate coverage on the stock with DCF based 12 month price target of Rs 69.
8 Dishman Pharma & Chemicals Ltd. Rs.14.7bn 181 272
Perfect Recipe...!!!
Dishman Pharma has a de-risked CRAMS model. It’s focus on APIs and intermediates and not on formulations does
not pose any competition to its customers. The company has successfully signed agreements with several reputed
innovator companies based in EU and US. Through Joint Ventures, it has marked its entry in various geographies. Its
strategy to synergize operations and leverage on key capabilities enables it to consolidate its position globally.
Year Net Sales# % growth EBIDTA OPM % Adj.PAT* % growth FDEPS(Rs.) % growth PER (x) ROANW % ROACE %
FY08 8,044 36.0 1,542 19.2 818 0.6 10.1 0.6 18.0 27.3 10.8
FY09P 10,671 32.7 2,662 24.9 1,462 78.6 18.0 78.6 10.1 23.2 15.1
FY10E 12,649 18.5 3,131 24.8 1,800 23.1 22.1 23.1 8.2 23.1 16.1
FY11E 15,318 21.1 3,715 24.3 2,211 22.8 27.2 22.8 6.7 22.9 17.1
Figure in Rs mn, # Includes other operating income, *Excl. forex exceptional items., P=Balance Sheet figures are projected.
9 Dredging Corporation of India Ltd. Rs.13.6bn 485 632

Mint-in-the-Silt...!!!
Dredging Corporation India Limited (DCIL) is blessed with an enviable situation of being an exclusive local participant
in a blow-out opportunity in the space of Indian Maritime Infrastructure. DCIL is also adding to its repertoire of
necessary skill-sets that widen its operating canvass. The right-of first refusal on existing dredging contracts and a
multiplier on the current space (post completion of maritime upgrade) stands a business advantage further. The
strong PSU disinvestment undercurrent works as an additional sweetener. We reiterate our Buy recommendation
with a price target of Rs.632 (10x FY11E EPS)over the next 12 months.
FY08 7,053 23.1 1,276 18.1 1,548 (18.0) 55.3 (19.7) 8.8 13.1 12.6
FY09E 8,661 22.8 993 11.5 881 (43.1) 31.5 (43.1) 15.4 7.1 7.8
FY10E 9,938 14.8 1742 17.5 1,277 44.9 45.6 44.9 10.6 9.9 10.7
FY11E 11,790 18.6 2,317 19.7 1,769 38.5 63.2 38.5 7.7 12.4 12.7
Figure in Rs mn
24 June 2009 15
DOLAT CAPITAL

No. (Rs.) (Rs.)
10 Engineers India Ltd.(EIL) Rs.56.8bn 1011 Unrated

Making of a Butterfly...!!!
EIL, a globally competent GOI undertaking takes pride in providing high end Project Management Consultancy
(PMC) services to the downstream PSU hydrocarbon companies. With an extension of EPC services through its
Lump Sum Turnkey (LSTK) arm, EIL has earned the status of a ‘Total Solution Provider’. Scalability through
LSTK without loosing focus on high margin PMC, an asset light model with a positive free cash flow and
surplus cash position makes EIL even more attractive. We like the business model of the company and expect
it to be one of the beneficiaries of the divestment.
Year Net Sales % Growth EBIDTA OPM % PAT % Growth EPS (Rs.) % Growth PER (x) ROANW (%) ROACE (%)
FY08 7,377.5 29.2 1,727.1 23.4 1,946.0 36.1 34.7 36.1 29.2 17.8 29.7
FY09 15,324.6 107.7 3,100.0 20.2 3,445.3 77.0 61.4 77.0 16.5 27.3 44.6
FY10E 21,077.8 37.5 3,599.9 17.1 3,243.7 (5.9) 57.8 (5.9) 17.5 21.7 35.5
FY11E 30,669.3 45.5 4,999.2 16.3 3,911.1 20.6 69.6 20.6 14.5 22.0 35.6
Figure in Rs.mn
11 Financial Technologies India Ltd.(FT) Rs.61.5bn 1340 1725
U Trade I Mint…!!!
Financial Technologies (FT) started its business with the vision of dominating the global transaction market and its
transaction engine is its USP. FT is a transaction centric business wherein the transactions drive each and every
component of the business across asset classes back ended by superior products which provide faster, efficient,
secure and a convenient mechanism to drive these transactions. The emphasis is on providing services with Finance
as the core domain, convenience as the tool and disintermediation as the envelope covering FT’ services. As India
picks up the pieces in the downturn and the markets stabilize, FT will be at the core of most of the transactions that
happen in any market in India. We are positive on the stock and initiate coverage on the company with a ‘Buy’ rating
and a price target of Rs. 1725 valued on SOTP method.
12 GlaxoSmithkline Pharmaceuticals Ltd. Rs.102.2bn 1207 1347

Chill Pill...!!!
GSK Pharma is our preferred pick in the MNC Pharma space on the back of parents’ strong commitment towards
introducing high value patented products through Glaxo India in the domestic market. Lower dependency on price
controlled products, new product launches with minimal generic competition and moderate pricing ensures revenue
visibility. Healthy cash per share and a reasonable dividend yield, serves as a classic addition to the defensive
portfolio.
Year Net Sales# % growth EBIDTA OPM % PAT* % growth EPS(Rs.)* % growth PER (x) ROANW % ROACE %
CY07 15,962 2.8 5,521 34.6 3,968 9.7 46.8 9.7 25.8 31.1 42.5
CY08 16,807 5.3 5,980 35.6 4,484 13.0 52.9 13.0 22.8 30.9 40.6
CY09E 18,621 10.8 6,646 35.7 5,081 13.3 60.0 13.3 20.1 31.8 41.2
CY10E 20,724 11.3 7,478 36.1 5,736 12.9 67.7 12.9 17.8 33.1 42.8
Figure in Rs mn, # Includes other operating income,* Adjusted.
24 June 2009 16
DOLAT CAPITAL

No. (Rs.) (Rs.)
13 HDFC Bank Rs.657.5bn 1456 1711
All Weather Stock…!!!
HDFC Bank is now well entrenched to sustain a strong 20% plus earnings growth rate. The bank has scaled down
the unsecured retail assets book of the erstwhile CBoP, thus looking to curb its slippages. Benefits of its merger with
CBoP will start reflecting in its improved branch productivity and a drop in cost to income ratio over the next few
years. Additionally the bank is well capitalized to sustain this growth over the next few years . Despite rising slippages,
HDFC Bank’s asset quality remains one of the best in class with the additional credit of lowest restructured loans
amongst other banks.
At CMP the stock trades at 18.5x FY11E EPS of Rs 78.8, 2.8x FY11E Book Value and 3.0x FY10E Adj. book value. We
maintain a Accumulate on the stock with a revised price target of Rs 1711 (3.25x FY11E book value).
Year NII Growth(%) Net Profit Growth(%) NIM(%) EPS(Rs) PER(x) P/BV(x) P/ABV(x) RoANW(%) RoAA(%)
FY08 52.3 40.9 15.9 39.3 4.9 44.9 32.5 4.5 4.6 17.7 1.4
FY09 74.2 42.0 22.4 41.2 4.9 52.8 27.6 4.2 4.4 17.2 1.4
FY10E* 88.0 18.6 28.2 25.4 4.6 62.3 23.4 3.1 3.3 15.8 1.4
FY11E* 105.4 19.7 35.6 26.3 4.5 78.8 18.5 2.8 3.0 15.9 1.4
Figure in Rs.bn
14 Indraprastha Gas Ltd.(IGL) Rs.19.2bn 137 180

Ready for Common- “Wealth”...!!!
The green fuel culture with inbuilt cost economics is driving the City Gas Distribution (CGD) projects. Indraprastha
Gas Ltd’s (IGL) business model has a location advantage of catering to the high growth National Capital Region
(NCR), home to the largest number of four wheelers and expanding residential population. The expansion phase
undertaken by IGL to capture new demand from commonwealth games, increasing conversion of private vehicles to
CNG would keep IGL on growth trajectory. The promoter (GAIL) strength ensures availability of gas on a priority
basis to IGL. IGL has witnessed some operating margin pressure in FY09 due to additional gas requirements beyond
allocated quota but IGL has raised the selling price of CNG to counter it. We reiterate our BUY recommendation with
a revised DCF based price target of Rs. 180 at which it would trade at 12.4x FY11E earnings.
Year Net Sales % Growth EBIDTA OPM % PAT NPM % EPS (Rs.) PER (x) EV/EBIDTA (x) ROANW(%) ROACE (%)
FY08 7,060 15.0 3,070 43.1 1,745 24.5 12.5 11.0 5.8 33.4 47.0
FY09P 8,528 20.8 3,044 35.5 1,725 20.1 12.3 11.1 5.9 27.4 39.0
FY10E 10,875 27.5 3,582 32.8 1,866 17.1 13.3 10.3 4.9 25.4 36.9
FY11E 13,275 22.1 3,883 29.1 2,038 15.3 14.6 9.4 4.1 24.2 35.2
Figure in Rs.mn, P=Balance Sheet Nos. are Projected.
15 IndusInd Bank Ltd. Rs.29.4bn 83 94

New wine in a new bottle…!!!
IndusInd Bank is in restructuring mode after a change in the top level management. The bank historically was
characterized by low business growth and profitability. However, the restructuring efforts have started showing
results with improved performance in the various business segments – profitability, NIMs and business growth.
We believe the stock is yet to completely re-rate with the change in business performance. At CMP, the stock
trades at 11.7x FY11E EPS of Rs 7.1, 1.8x FY11E book value of Rs 47 and 2.3x FY11E adjusted book value of Rs
35.5. We recommend Accumulate with a target price of Rs 94 (2x FY11E book value) over the next 12 months.
Year NII % chg NIM (%) Net Profit % chg EPS (Rs) P/E (x) P/BV (x) P/ABV (x) RoANW (%) RoAA (%)
FY08 3,008.0 10.8 1.5 750.5 11.6 2.3 35.4 2.4 3.2 6.2 0.3
FY09E 4,590.3 52.6 1.9 1,483.4 97.7 4.2 19.9 2.2 2.5 10.0 0.6
FY10E 5,990.7 30.5 2.1 1,923.4 29.7 5.4 15.3 2.0 2.4 11.4 0.6
FY11E 7,828.6 30.7 2.3 2,510.8 30.5 7.1 11.7 1.8 2.3 13.7 0.7
Figure in Rs.mn
24 June 2009 17
DOLAT CAPITAL

No. (Rs.) (Rs.)
16 Manappuram General Finance & Leasing Rs.9.03bn 273 346
Midas Touch...!!!
Manappuram General Finance and Leasing (MGFL) is a unique business model with a focus on low ticket borrowers.
It has adopted a distinctive process of asset verification, customer selection and pricing strategies, which offer
higher margins and return ratios with virtually ‘Zero’ NPAs. The securitisation of loans with banks/ FIs, recent capital
infusion and the merger with the group company (MFTL) is expected to enhance the merged entity’s loan book as
well as the balance sheet size.
At CMP, the stock trades at 8x FY11E EPS of Rs 35; 1.8x FY11E book value and 1.8x FY11E adj. book value. We
recommend a BUY on the stock with a revised target price of Rs 346 (2.3x FY11BV) for the next 12months.
Year (Rs.mn) NII % chg Net Profit % chg NIM (%) EPS (Rs) PER (x) P/BV (x) P/ABV (x) RoANW (%) RoAA (%)
FY09E* 1,527.1 77.7 481.0 70.0 14.2 17.4 15.7 3.1 3.1 33.2 8.4
FY10E* 2,275.1 49.0 712.2 48.1 13.1 21.5 12.7 2.3 2.3 22.1 7.3
FY11E* 3,513.3 54.4 1,158.5 62.7 13.2 35.0 7.8 1.8 1.8 25.6 8.5
Note: - * - Fully Diluted and post merger
17 Maruti Suzuki India Ltd. Rs.306.3bn 1060 846

Impending Traffic...!!!
MSIL’s dominance in the Indian passenger car market with more than 50% market share can be ascribed to its ability
to repeatedly introduce new models encompassing its core philosophy of value for money in a relatively benign
competitive landscape. Although, we believe that the company would continue to benefit from the growth in the
Indian auto industry, however, increased level of competition in the compact car segment would result in loss of
market share from current 70%+ levels. Furthermore, possibility of expansion in working capital cycle along with
shift in operating model by undertaking higher development efforts by MSIL, act as potential valuation dampeners.
We expect the company to trade below the top end of its 1 Yr forward PER band. At CMP, the stock is trading at 17.5x
FY11E EPS. We recommend a SELL with a price target of Rs 846 (14x FY11E).
FY08 184,957 26.2 28,028 15.2 17,308 10.8 59.9 10.8 17.7 22.7 29.5
FY09 208,525 12.7 18,321 8.8 12,187 -29.6 42.2 -29.5 25.1 14.7 18.5
FY10E 232,095 11.3 24,021 10.3 15,908 30.5 55.0 30.3 19.3 14.5 18.7
FY11E 254,918 9.8 26,119 10.2 17,461 9.8 60.4 9.8 17.5 13.8 18.0
Figure in Rs mn
18 Mundra Port and Special Economic Zone Ltd. Rs.245bn 611 487
Above Sea Level...!!!
Mundra Port offers a rare model of an all weather private port with an integrated SEZ. The business model is blessed
with strategic location, futuristic infrastructure, a diversified cargo mix and contemporary hinterland connectivity.
We remain positive on the growth prospects of port operation on the back of its strategic positioning in emerging
India logistics and industrial scenario. Outlook for SEZ business looks bleak for at least the next two quarters on
account of current slowdown in the economy. However, the recent run up in the stock price has taken the valuation
beyond fair value assessed by us and therefore we recommend a SELL on the stock with a revised target price of Rs 487.
FY08 8,182 41.1 5,354 65.4 2,134 13.9 5.1 -2.6 114.7 12.7 11.3
FY09P 11,949 46.0 7,340 61.4 4,325 102.7 10.8 113.0 56.6 15.5 11.0
FY10E 14,526 21.6 9,749 67.1 6,062 40.2 15.1 40.2 40.4 18.7 13.6
FY11E 21,786 50.0 15,761 72.3 11,217 85.0 28.0 85.0 21.8 27.8 20.2
Figure in Rs mn
24 June 2009 18
DOLAT CAPITAL

No. (Rs.) (Rs.)
19 Nestle India Ltd. Rs.163.9bn 1700 1950

Lap it up...!!!
Low penetration, market leadership and broad yet focused product profile makes Nestle the best investment
proposition in FMCG sector. Superior financials in terms of earning growth, highest ROE and 75% dividend
payout are compelling argument for higher valuation. At CMP, it quotes at 24.6x its CY09E EPS. Top tier valuation
is justified for Nestle due to strong brands in under-penetrated product lines and superior financial management.
We recommend Accumulate on the stock with a 12 month price target of Rs 1950 (23x CY10 EPS).
Year Net Sales % growth EBIDTA OPM % PAT % growth EPS(Rs.) % growth PER (x) ROANW % ROACE %
CY07 35,044 - 6,963 19.9 4,138 - 44.7 - 39.6 102.5 174.6
CY08 43,242 23.4 8,637 20.0 5,341 29.1 58.6 31.0 30.7 119.8 220.7
CY09E 52,766 22.0 11,029 20.9 6,665 24.8 70.2 19.9 24.6 126.9 287.2
CY10E 61,571 16.6 12,879 20.9 8,138 22.1 84.4 20.2 20.1 125.9 314.4
Figure in Rs mn
20 Oracle Financial Services Software Rs.101.4bn 1211 1561
Bank on IT...!!!
Oracle Financial Services Software Ltd. (OFSS) is a leader in the Core Banking Solutions space and even in the
current financial scenario they have been able to deliver consistent performance. With Regulation and
Compliance related concerns coming to the fore, banks are looking for core banking capabilities. OFSS with its
leadership position is able to address this market. The Oracle muscle is opening up new geographies and new
customers and OFSS is tapping these opportunities which Oracle generates. Even in this tough environment
OFSS has been able to add new customers for their core banking solution which provides the visibility for their
product portfolio going forward. At CMP the stock is trading at 12.6xFY10E, and 10.9xFY11E. We maintain our
‘BUY’ rating on the stock with a price target of Rs. 1561 over a 12 month period.
FY08 23,802 15.5 5,312 22.3 4,156 11.6 49.6 11.0 24.4 16.0 17.8
FY09 29,276 23.0 9,544 32.6 7,365 77.2 87.9 77.2 13.8 23.4 28.6
FY10E 33,987 16.1 9,730 28.6 8,048 9.3 96.1 9.3 12.6 20.6 23.1
FY11E 40,277 18.5 12,083 30.0 9,332 16.0 111.5 16.1 10.9 19.5 23.5
Figure in Rs mn
21 Page Industries Ltd. Rs.5.7bn 508 612
Comfort Fit...!!!
Page Industries Ltd. (PIL) is the sole licensee for the “Jockey” brand in India. Strong brand image, pan India
presence in the premium segment and wide acceptance among its target customers makes PIL well poised to
capture the growth in volumes and value. We recommend an ACCUMULATE rating on the stock with a price
target of Rs.612 (12xFY11E) over a 12 month period.
FY08 1,925 41.5 364 18.9 240 39.0 21.5 39.0 23.6 33.0 35.4
FY09 2,547 32.3 509 20.0 316 31.9 28.4 32.0 17.9 38.6 40.5
FY10E 3,200 25.7 661 20.7 422 33.4 37.8 33.3 13.4 44.5 44.6
FY11E 3,905 22.0 862 22.1 569 34.9 51.0 34.9 10.0 50.1 49.6
Figure in Rs mn
24 June 2009 19
DOLAT CAPITAL

No. (Rs.) (Rs.)
22 Patel Engineering Ltd.(PEL) Rs.22.6bn 379 493

First Amongst Others...!!!
PEL is the market leader with a 22% share in the high margin and high entry barrier Hydropower sector. It
enjoys the distinction of bieng the only Indian company with an experience and technology in niche high
margin segments of RCC, Microtunneling & Double Lake Tapping. Real estate foray will monetize the low cost
land bank which would provide capital for new ventures in the Power sector. PEL has decent revenue visibility
on account of a strong order book. However, margins are expected to remain subdued. We recommend a BUY
on the stock with a price target of Rs.493 (SOTP – 10x FY11E EPS of Rs 42 = Rs 420 + 1.75x on land BV per share
= Rs 73).
FY08 15,073 28.6 2,740 18.2 1,519 33.1 25.5 14.9 10.8 19.6 13.0
FY09E 22,230 47.5 3,575 16.1 1,639 7.9 27.5 13.8 8.8 17.7 13.1
FY10E 29,461 32.5 4,292 14.6 1,956 19.3 32.8 11.6 7.2 17.9 13.5
FY11E 38,633 31.1 5,216 13.5 2,500 27.8 41.9 9.0 6.1 19.1 15.3
Figure in Rs mn
23 Power Finance Corporation Ltd. Rs.216.5bn 189 236

‘Power’ful Business…!!!
Power Finance Corporation (PFC) is a leader in the power financing space and a direct play on India’s growing
energy needs - identified as core to India’s economic growth. The company’s strong credit/ project appraisal techniques
have mitigated the asset quality concerns thus enabling PFC to have a clean and healthy asset book. A favorable 3
year reset clause on the loan book aid’s PFC to maintain its spreads (2%) and margins (3.6%) in the coming years.
At CMP, the stock trades at 9.6x FY11E EPS of Rs 19.7; 1.6x FY11E book value of Rs 118 and 1.6x FY10E adj. book
value of Rs 118. We recommend a Buy on the stock with a target price of Rs 236 (2xFY11E BV)
Year NII Chg (%) Net profit Chg (%) NIM (%) EPS (Rs) PE (x) P/ BV (x) P/ ABV (x) RoANW (%) RoAA (%)
FY08 17.0 18.8 12.1 22.5 3.6 10.5 17.9 2.3 2.3 13.5 2.6
FY09E 22.6 32.8 19.8 63.9 3.9 17.2 10.9 1.9 1.9 19.0 3.5
FY10E 25.9 14.5 18.9 (4.7) 3.6 16.4 11.5 1.8 1.8 16.1 2.7
FY11E 30.6 18.1 22.7 20.1 3.4 19.7 9.6 1.6 1.6 17.8 2.6
Figure in Rs.bn
24 Rallis India Ltd. Rs.6.5bn 544 670
Harvesting Growth..!!!
Rallis redefined its DNA as a focused agrochemical player with complementary strengths in both manufacturing and
distribution. Its business model rests on a strong USP of its ‘Farmer Connect’ and multiple relationships with global
innovators. It has carefully turned around its manufacturing investments into a complementary global outsourcing
model to provide predictable business growth. We recommend ‘Accumulate’ on the stock with a target price of Rs.
670 (7x FY11E EPS).
Year Net Sales# % growth EBIDTA OPM % PAT % growth EPS(Rs.) % growth PER (x) ROANW % ROACE %
FY08* 6,922 7.6 812 11.7 496 13.3 41.4 13.3 13.1 19.1 21.4
FY09 8,523 23.1 1,354 15.9 713 43.7 59.5 43.7 9.1 23.7 29.5
FY10E 10,042 17.8 1,738 17.3 927 30.0 77.3 30.0 7.0 27.7 34.4
FY11E 11,611 15.6 2,115 18.2 1,146 23.7 95.7 23.7 5.7 31.6 35.9
Figure in Rs mn, # Incl. Other Operating Income,* Excl. extraordinary items
24 June 2009 20
DOLAT CAPITAL

No. (Rs.) (Rs.)
25 Rural Electrification Corporation Ltd. Rs.135.9bn 158 182

Lighting the Last Mile…!!!
Rural Electrification Corporation (REC) offers an attractive opportunity to play the buoyancy in the power sector. The
company is one of the few financial institutions specializing in power financing. We believe that REC will continue to
deliver steady earnings growth (16% CAGR between FY09- FY11) and high profitability as its business prospects
remain strong. In the near term, loans for generation projects will likely drive growth. We also expect the share of
private sector and transmission projects to move up over long term. At CMP, the stock trades at 7.9x FY11E EPS of
Rs 20; 1.6x FY11E book value of Rs 97 and 1.6x FY10E adj. book value of Rs 96. We recommend an Accumulate
rating with a target price of Rs. 182 (1.9x FY11E BV)
FY08 13.1 55.2 8.6 30.3 3.6 10.0 15.8 2.5 2.6 18.3 2.3
FY09E 17.7 35.0 12.7 47.9 3.8 14.8 10.7 2.2 2.2 22.0 2.8
FY10E 21.4 21.3 14.3 12.4 3.6 16.7 9.5 1.9 1.9 21.5 2.4
FY11E 25.9 20.6 17.2 20.2 3.5 20.0 7.9 1.6 1.6 22.3 2.3
Figure in Rs.bn
26 S.Kumars Nationwide Ltd. Rs.11bn 45 65

Tailor Made Profits...!!!
Skumars Nationwide (SKNL) is one of the largest integrated textile manufacturers with a strong focus on brand and
distribution. It has grown at a CAGR of ~35% (FY06-09E). We feel this growth is sustainable to a certain extent given
the fact that the company has experience, strong brand, scalability and strong distribution network. We initiate
coverage with a BUY recommendation on the stock with a target price of Rs.65 (5xFY11E) over a period of 12~18
months.
Year Net Sales % growth EBITDA OPM% PAT % growth FDEPS(Rs.) % growth PER(x) ROANW(%) ROACE(%)
FY08 17,486 42.2 3,835 21.9 2,056 66.4 9.5 48.9 4.7 26.4 16.8
FY09E 21,940 25.5 4,489 20.5 1,647 (19.9) 7.4 (22.8) 6.1 11.5 13.5
FY10E 29,658 35.2 6,757 22.8 2,195 33.3 9.0 22.5 5.0 9.8 14.0
FY11E 36,067 21.6 8,594 23.8 3,156 43.8 13.0 43.8 3.5 11.2 15.8
Figure in Rs mn
27 Tata Steel Ltd. Rs.349bn 405 335

Off the Cliff...!!!
The financial crisis in the world had a the destructive effect on steel demand and the steel consumption is expected
to decline by 15% in 2009 as per WSA. Europe is expected to be amongst the last to recover out of the recessionary
trends. Tata Steel performance will remain under pressure with its 64% of its volumes exposed to developed markets.
High leverage and high fixed cost will lead to earnings drop by 66% to Rs 32.68 bn in FY10. We initiate the coverage
with a SELL recommendation on Tata Steel with a price target of Rs335 (6x FY10 EV/EBITDA)
Year Net Sales % growth EBITDA OPM% PAT EPS % growth PER(x) EV/EBITDA ROANW(%) ROACE(%)
FY08 1,315,359 421.7 180,035 13.7 123,603 84.6 198.9 4.8 6.0 50.6 21.5
FY09E 1,444,800 9.8 199,292 13.8 94,759 109.8 (23.3) 3.7 4.3 26.8 16.6
FY10E 930,394 (35.6) 124,769 13.4 32,680 37.9 (65.5) 10.7 6.5 8.7 8.3
FY11E 959,136 3.1 150,280 15.7 52,981 61.4 62.1 6.6 5.1 13.0 10.7
Figure in Rs mn
24 June 2009 21
DOLAT CAPITAL

No. (Rs.) (Rs.)
28 TIL Ltd. Rs.1.9bn 198 300
Taking Fresh Guard...!!!
The Material Handling and Construction Equipment (MHCE) industry is expected to touch Rs 300 bn by 2011.
Political stability with a strong mandate would translate into increased thrust on infrastructure development in-
order to drive overall economic growth. TIL, with an extensive product offering, is an ideal candidate to play the
large opportunity in the infrastructure space. The company has re-enforced its focus on the high margin Material
Handling Solutions (MHS) segment by way of undertaking its earlier deferred capex plans in a phased manner
and carving out its agency businesses into a separate subsidiary. We recommend a BUY on the stock with a
price target of Rs 300 (7x FY11E Consol EPS).
Year Net Sales Growth-% EBITDA OPM% Net Profit Growth-% EPS (Rs) Growth-% PER (X) ROANW-% ROACE-%
FY08 10,579 37.8 870 8.2 431 84.8 43.0 79.3 4.6 30.0 34.2
FY09P 10,499 -0.8 1,041 9.9 447 3.7 44.6 3.7 4.4 21.4 24.7
FY10E 9,842 -6.3 960 9.8 360 -19.6 35.9 -19.6 5.5 16.3 21.2
FY11E 10,975 11.5 1,112 10.1 429 19.2 42.7 19.2 4.6 17.4 23.2
Figure in Rs mn, Consolidated
29 Torrent Power Ltd. Rs.66.1bn 140 171

New-GEN-Utility...!!!
Torrent Power’s presence across the value chain in generation, transmission and distribution in the high growth
regions of Gujarat makes it best placed to tap the economic growth. With capacity expansion increasing
internal sourcing and hence improved profitability we feel, TPL is on a high growth trajectory. As interaction
with the management is extremely difficult, based on our analysis, we feel that Torrent’s expertise in reducing
transmission losses can multiply its growth prospects. At CMP of Rs140, the stock is trading at a P/B of 1.7xFY11E
and P/E of 8.5xFY11E. We initiate coverage with a ‘BUY’ recommendation with a price target of Rs171 at which it
would be trading 2xFY11E BV.
Year Net sales % growth EBIDTA OPM% PAT % growth EPS(Rs) % growth PER(x) BV P/BV(x) ROANW(%) ROACE(%)
FY08 (12M) 36,183 160.7 4,806 13.3 2,105 193.4 4.5 193.4 31.4 61.2 2.3 7.5 8.3
FY09P 43,158 19.3 6,733 15.6 3,992 89.6 8.4 89.6 16.6 66.9 2.1 13.2 9.3
FY10E 53,528 24.0 9,105 17.0 4,007 0.4 8.5 0.4 16.5 73.0 1.9 12.1 10.8
FY11E 66,699 24.6 13,473 20.2 7,745 93.3 16.4 93.3 8.5 84.8 1.7 20.8 15.5
Figure in Rs mn
30 Zee News Ltd. Rs.9.6bn 40 51

Bouquet of Entertainment...!!!
ZEE News offers an opportunity to play at resurgent regional TV entertainment. We continue to remain positive on
the sound fundamentals of the company (a perfect recipe of entertainment and current affairs in regional languages
to counter the slowdown). However in the short term the company may face pressure on account of slow down in the
media sector altogether. Company’s increased debt position to Rs 2 bn (Q4FY09) from ~ Rs 1 bn (Q3FY09) and high
cost of debt (~15%) remains a cause of worry for future downward revision of our price target. Considering losses of
new channels, we believe Mcap/Sales portray a better valuation methodology. In the interim, we maintain BUY with
price target of Rs 51 (2x FY10E sales).
FY08 3,671 52.6 704 19.2 395 429.0 1.6 429.0 24.3 19.3 30.2
FY09P 5,216 42.1 888 17.0 445 12.6 1.9 12.6 21.5 18.0 24.6
FY10E 6,180 18.5 1,049 17.0 475 6.7 2.0 6.7 20.2 16.2 20.0
FY11E 7,150 15.7 1,260 17.6 631 32.8 2.6 32.8 15.2 18.1 22.2
Figure in Rs mn
24 June 2009 22
Ahluwalia Contracts (India) Ltd.
DOLAT CAPITAL
CMP: Rs 83
Target Price: Rs 108 Construction / Buy
High Performance - Delivered...!!!
Ahluwalia Contracts India Ltd. (ACIL) is a premium player in contracting and caters to industrial, real estate and
infrastructure segment. A healthy order book of Rs41.5 bn provides a revenue visibility of 3.6 years. Increased
contribution from Government Contracts (32% of order book) enhances certainty in the order book. ACIL has been
awarded the time critical Commonwealth Projects which exhibits its quality and timely execution skills. With proven
execution skills, strong promoter pedigree and sound financials along with positive free cash flows, we believe that
ACIL is attractively placed. We recommend a BUY with a 12 months price target of Rs108 which discounts its FY11E
EPS of Rs15.5 by 7x.
Analyst: Sameer Panke Investment Rationale

Tel : +9122 4096 9757
Email: sameer@dolatcapital.com Strong experience in execution and association with reputed clients
Associate : Manpreet Singh to give an edge
Tel : +9122 4096 9720 ACIL has a proven track record in executing private and government projects. The
Email: manpreet@dolatcapital.com company, in the past and currently, is associated with landmark projects like IFCI
Tower - New Delhi, ITC Grand Central - Mumbai, Regional Headquarter of ADB,
BSE Sensex 14423
NSE Nifty 4293
SEBI Headquarter etc with quality focused blue-chip clients like DMRC, CPWD,
NBCC, PSBs etc. We believe that the goodwill which it commands places ACIL in
Scrip Details
an ideal position.
Equity Rs.125.5mn
Face Value Rs.2/- Huge opportunity in the infrastructure segment
Market Cap Rs5.2bn ACIL is actively bidding for Urban Infrastructure Projects (especially projects under
US$107.7mn
the JNNURM scheme) and is currently associated with projects like Metro Rail in
52 week High/Low Rs.155/25.2
1-Month Avg. Volume 243900 Mumbai, Delhi and Bangalore, Airport development in Ranchi etc. Under the
BSE Code 532811 JNNURM scheme, projects worth Rs692 bn are to be allocated over the next 3
NSE Symbol - years thereby providing ACIL a substantial opportunity landscape in the Urban
Bloomberg Code AHLU IN
Infrastructure space.
Reuters Code AHLU.BO
Business Group - Indian Private Healthy order book position to enhance revenue visibility
Shareholding Pattern as on Mar’09(%) ACIL has a current order book of Rs41.5 bn (3.6x FY09E sales) catering to
Promoter 74.53
residential, commercial retail, hospitality and healthcare segment. The company is
MF/Banks/FIs 2.74 currently executing time critical commonwealth projects worth Rs8.9 bn (~21% of
FIIs 4.93 order book) thereby exhibiting its credibility of timely execution. Going forward, the
Corporate Bodies 13.22 company will increase focus on Infrastructure and Government projects which would
Public / Others 4.58
perk up the order book quality. ACIL, currently, has an order pipeline of Rs10 bn.
Ahluw alia relative to BSE Sensex Out of woods.....poised for high growth
120 The Company has recently received its long pending payment from Emaar MGF for
100 the Commonwealth Games Village Project which has addressed the short term
concerns, thereby infusing sufficient liquidity in the project and ramping up the
80
execution. We expect ACIL to clock a revenue and net profit CAGR of 30.3%and
60 23.6% respectively between FY09E and 11E.The company has been generating
positive free cash flows for the last 2 years and is expected to continue with the
40
cash flow generation in the next 2 years.
20
Valuations
0 At CMP, the stock trades at 7.8x its FY10E earning and 5.3x its FY11E earning. We
Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 recommend a BUY with a 12 months price target of Rs108 which discounts its
Ahluw alia BSE Sensex FY11E EPS of Rs15.5 by 7x.
Financials
FY08 8,801 31.5 1,063 12.1 516 65.6 8.2 10.1 4.3 50.9 57.0
FY09E 11,575 31.5 1,278 11.0 594 15.0 9.5 8.8 4.1 39.3 42.7
FY10E 14,517 25.4 1,656 11.4 671 13.0 10.7 7.8 2.8 32.1 38.2
FY11E 19,478 34.2 2,208 11.3 976 45.4 15.5 5.3 1.7 34.1 42.1
Figure in Rs mn
24 June 2009 Ahluwalia Contracts (India) Ltd. 23

DOLAT CAPITAL
INCOME STATEMENT Rs.mn IMPORTANT RATIOS
Particulars Mar’08 Mar’09E Mar’10E Mar’11E Particulars Mar’08 Mar’09E Mar’10E Mar’11E
Net Sales 8,800.9 11,574.6 14,517.3 19,478.3 (A) Measures of Performance (%)
Other income 64.8 71.3 21.7 33.8 Contribution Margin
Total Income 8,865.8 11,645.9 14,539.1 19,512.1 EBIDTA Margin (excl. O.I.) 12.1 11.0 11.4 11.3
Total Expenditure 7,738.2 10,296.5 12,861.9 17,270.4 EBIDTA Margin (incl. O.I.) 12.8 11.7 11.6 11.5
Raw Material 4,289.4 5,731.8 7,260.0 9,865.5 Interest / Sales 1.3 1.2 1.1 0.9
Employee Expenses 385.2 599.0 748.8 936.0 Gross Profit Margin 11.5 10.5 10.4 10.6
Other Construction Expenses 2,722.4 3,517.6 4,288.2 5,678.0 Tax/PBT 33.9 31.0 37.8 37.7
Administrative Expenses 157.5 206.3 258.7 366.4 Net Profit Margin 5.9 5.1 4.6 5.0
Provisions & Write Offs
Other Expenses 183.7 241.8 306.2 424.5 (B) As Percentage of Net Sales
EBIDTA (Excl. Other Income) 1,062.7 1,278.1 1,655.5 2,207.9 Raw Material 48.7 49.5 50.0 50.6
EBIDTA (Incl. Other Income) 1,127.5 1,349.4 1,677.2 2,241.7 Employee Expenses 4.4 5.2 5.2 4.8
Interest 118.1 133.3 162.7 172.5 Other Construction Expenses 30.9 30.4 29.5 29.2
Gross Profit 1,009.4 1,216.1 1,514.5 2,069.2 Administrative Expenses 1.8 1.8 1.8 1.9
Depreciation 228.0 354.7 435.5 503.5 Provisions & Write Offs 0.0 0.0 0.0 0.0
Profit Before Tax & EO Items 781.4 861.3 1,079.0 1,565.7 Other Expenses 2.1 2.1 2.1 2.2
Extra Ordinary Exps/(Income)
Profit Before Tax 781.4 861.3 1,079.0 1,565.7 (C) Measures of Financial Status
Tax 265.1 267.4 407.9 590.0 Debt / Equity (x) 0.5 0.6 0.5 0.4
Net Profit 516.4 594.0 671.2 975.7 Interest Coverage (x) 9.5 10.1 10.3 13.0
Minority Interest Average Cost Of Debt (%) 20.4 16.0 14.1 13.6
Net Profit 516.4 594.0 671.2 975.7 Debtors Period (days) 93.8 118.8 123.8 118.8
Closing stock (days) 14.4 15.2 13.4 12.2
BALANCE SHEET Inventory Turnover Ratio (x) 11.7 7.4 7.4 7.4
Particulars Mar’08 Mar’09E Mar’10E Mar’11E Fixed Assets Turnover (x) 4.9 4.9 5.3 6.2
Sources of Funds Working Capital Turnover (x) 16.7 7.5 6.3 5.7
Equity Capital 125.5 125.5 125.5 125.5 Non Cash Working Capital (Rs Mn) (638.4) 440.2 541.6 601.1
Preference Capital
Share Premium 16.0 16.0 16.0 16.0 (D) Measures of Investment
Other Reserves (excl Share Premium & Rev Res) 1,100.5 1,638.2 2,258.0 3,182.3 EPS (Rs.) (excl EO) 8.2 9.5 10.7 15.5
Net Worth 1,242.0 1,779.8 2,399.5 3,323.9 EPS (Rs.) 8.2 9.5 10.7 15.5
Revaluation reserve 8.0 0.0 0.0 0.0 CEPS (Rs.) 11.9 15.1 17.6 23.6
Secured Loans 555.7 1,090.0 1,206.3 1,314.5 DPS (Rs.) 0.7 0.7 0.7 0.7
Unsecured Loans 9.5 9.5 9.5 9.5 Dividend Payout (%) 8.5 7.4 6.5 4.5
Loan Funds 565.2 1,099.5 1,215.8 1,324.0 Profit Ploughback (%) 91.5 92.6 93.5 95.5
Deferred Tax Liability (Net of Deffered Tax Assets) (37.6) 0.0 0.0 0.0 Book Value (Rs.) 19.8 28.4 38.2 53.0
Total Capital Employed 1,777.6 2,879.2 3,615.4 4,647.9 RoANW (%) 50.9 39.3 32.1 34.1
RoACE (%) 57.0 42.7 38.2 42.1
Applications of Funds RoAIC (%) (Excl Cash & Invest.) 151.2 84.6 68.4 95.2
Gross Block 1,811.6 2,361.6 2,761.6 3,161.6
Less: Accumulated Depreciation 707.5 1,062.2 1,497.7 2,001.2 (E) Valuation Ratios
Net Block 1,104.1 1,299.3 1,263.9 1,160.4 CMP (Rs.) 83.0 83.0 83.0 83.0
Capital Work in Progress 104.2 0.0 0.0 0.0 P/E (x) 10.1 8.8 7.8 5.3
Investments 42.4 42.4 42.4 42.4 Market Cap. (Rs. Mn.) 5,209.3 5,209.5 5,209.5 5,209.5
Deferred Tax Assets (Net) MCap/ Sales (x) 0.6 0.5 0.4 0.3
Current Assets, Loans & Advances EV (Rs. Mn.) 4,609.7 5,212.0 4,658.1 3,689.8
Inventories 755.2 1,560.9 1,959.3 2,623.3 EV/Sales (x) 0.5 0.5 0.3 0.2
Sundry Debtors 2,260.7 3,767.7 4,922.5 6,340.4 EV/EBDITA (x) 4.3 4.1 2.8 1.7
Cash and Bank Balance 1,164.8 1,096.9 1,767.2 2,843.7 P/BV (x) 4.2 2.9 2.2 1.6
Loans and Advances 277.7 347.1 433.8 542.3 Dividend Yield (%) 0.84 0.84 0.84 0.84
Other Current Assets 52.7 71.2 96.1 129.7 E-estimates
sub total 4,511.1 6,843.7 9,178.8 12,479.4
Less : Current Liabilities & Provisions
Current Liabilities 3,871.4 5,138.6 6,672.8 8,791.7
Provisions 113.2 167.9 197.3 242.9
sub total 3,984.6 5,306.6 6,870.1 9,034.6
Net Current Assets 526.5 1,537.1 2,308.8 3,444.8
Misc Expenses 0.4 0.4 0.3 0.3
Total Assets 1,777.6 2,879.2 3,615.4 4,647.9
CASH FLOW
Particulars Mar’08 Mar’09E Mar’10E Mar’11E
Profit before tax and extra ordinary items 781.4 861.3 1,079.0 1,565.7
Depreciation & w.o. 228.0 354.7 435.5 503.5
Net Interest Exp 37.5 133.3 162.7 172.5
Direct taxes paid (291.3) (267.4) (407.9) (590.0)
Change in Working Capital (Non Cash) 447.0 (1,078.6) (101.4) (59.5)
Other (6.1) 24.9 0.0 0.0
(A) Cash Flow from Operating Activities 1,196.5 28.3 1,168.0 1,592.2
Capex {Inc./ (Dec.) in Fixed Assets n WIP} (668.1) (445.8) (400.0) (400.0)
Free Cash Flow 528.3 (417.4) 768.0 1,192.2
Inc./ (Dec.) in Investments 0.0 0.0 0.0 0.0
Other 43.0 0.0 0.0 0.0
(B) Cash Flow from Investing Activities (625.1) (445.8) (400.0) (400.0)
Issue of Equity/ Preference 0.0 0.0 0.0 0.0
Inc./(Dec.) in Debt (27.4) 534.2 116.4 108.2
Interest exp net (73.9) (133.3) (162.7) (172.5)
Dividend Paid (Incl. Tax) (22.0) (51.4) (51.4) (51.4)
Other
(C) Cash Flow from Financing (123.4) 349.5 (97.7) (115.7)
Net Change in Cash 448.0 (67.9) 670.3 1,076.5
Opening Cash balances 716.8 1,164.8 1,096.9 1,767.2
Closing Cash balances 1,164.8 1,096.9 1,767.2 2,843.7
E-estimates
24 June 2009 Ahluwalia Contracts (India) Ltd. 24

Biocon Ltd.
DOLAT CAPITAL
CMP: Rs 200
Target Price: Rs 244 Pharmaceuticals / Accumulate
Clinical Gains...!!!
Biocon has increased its focus from statins to branded biotech formulations and contract research services.
We estimate Biopharma division to grow at 15% CAGR over FY09-11E with increasing contribution from domestic
branded formulations and ramp up in bulk supplies for products going off patent.The company stands as a
beneficiary in the event of, ‘Biogenerics’ opening up in key regulated markets. We estimate 33% revenue growth
in its CRO segment over FY09- 11E with the BMS deal yet to realise its full potential. Possible outlicensing deal
for its product(s) Oral insulin IN105 (Phase III) and antibody T1h (to initiate Phase III shortly) are triggers ahead.
Analyst: Bhavin Shah Investment Rationale

Tel : +9122 4096 9731
Email: bhavin@dolatcapital.com Risk Adjusted Growth Strategy
Biocon is the only company which has made remarkable progress in the Indian
BSE Sensex 14423
Biotech industry with Oncology and Diabetes as its focus areas. Over the years,
NSE Nifty 4293
the company has entered into strategic alliances, bought out IPR’s in the diabetic
Scrip Details
space. With a backend laboratory in place, these initiatives have resulted in
Equity Rs.1000mn
minimizing costs and speedier commercialisation. Its R&D subsidiaries have further
Face Value Rs.5/-
Market Cap Rs.40bn consolidated their standing having partnered with global biotech majors in areas of
US$818mn complex research and development.
52 week High/Low Rs.242/86
1-Month Avg. Volume 1579507 Biopharma: To Provide Long Term Stability
BSE Code 532523 Biocon was synonymous with ‘Statins’. The emphasis on this segment is reducing
NSE Symbol BIOCON
with concurrent focus on Biopharma business which includes insulin,
Bloomberg Code BIOS IN
Reuters Code BION.BO immunosuppressants, monoclonal antibodies (MAb’s) and other products. We expect
Business Group - Indian Private
statins contribution to lower down in the near term with higher growth in the insulin,
immunosuppressant segments. Positive developments on novel insulin delivery
Shareholding Pattern as on Mar’09(%)
mechanisms and monoclonal antibodies would attract a huge premium by way of
Promoter 60.9
MF/Banks/FIs 11.0 outlicensing deals. Biocon is also gearing up its development pipeline and
FIIs 6.0 registrations, considering higher probablity of ‘Biogenerics’ opening up in key
Corporate Bodies 1.3 regulated markets. We expect Biopharma division to grow at 15% CAGR over FY09-
11E.
Contract research services: Poised For Growth...

Biocon relative to BSE Sensex
120 With the BMS deal yet to realise its full potential and operations being ramped up in
Clinigene, we estimate 33% revenue growth over FY09- 11E. Revenue contribution
110
is estimated to increase from ~17% in FY08 to 25% in FY11E.
100
Valuations
90 Biocon has managed to maintain its core operational performance despite several
uncertainties experienced in the global meltdown. We believe the positive progress
80
in its R&D pipeline and the latent opportunity in biogenerics is yet to be factored in.
70
At CMP of Rs.200, the stock trades at 13.6x FY10E and 11.5x FY11E earnings.
60
We recommend “Accumulate” on the stock with target price of Rs.244
Jun-08 Oct-08 Feb-09 Jun-09
(14x FY11E).
Biocon BSE Sensex
Financials
FY08 10576 7.3 3024 28.6 2245 12.1 11.2 12.1 17.8 15.2 13.6
FY09P 16165 52.8 3312 20.5 2403 7.0 12.0 7.0 16.6 15.6 13.1
FY10E 20488 26.7 4105 20.0 2933 22.0 14.7 22.0 13.6 16.6 14.4
FY11E 23728 15.8 4845 20.4 3482 18.7 17.4 18.7 11.5 17.0 15.1
Figure in Rs mn,* Excl. forex exceptional items,P = Balance Sheet figures are projected.
24 June 2009 Biocon Ltd. 25

DOLAT CAPITAL
Particulars Mar’08 Mar’09 Mar’10E Mar’11E Particulars Mar’08 Mar’09P Mar’10E Mar’11E
Other income 326.2 567.1 600.0 600.0 Operating Profit Margin (excl. O.I.) 28.6 20.5 20.0 20.4
Total Income 10,902.0 16,732.2 21,088.0 24,328.2 Operating Profit Margin (incl. O.I.) 31.7 24.0 23.0 22.9
Total Expenditure 7,552.0 12,853.1 16,382.5 18,883.5 Interest / Sales 1.0 1.1 1.3 1.3
Operating Profit (excl. Other Income) 3,023.8 3,312.0 4,105.5 4,844.7 Gross Profit Margin 30.7 22.9 21.7 21.7
Operating Profit (incl. Other Income) 3,350.0 3,879.1 4,705.5 5,444.7 Tax/PBT 2.7 10.5 6.6 6.5
Interest 101.8 176.6 263.3 297.7 Net Profit Margin 21.2 14.9 14.3 14.7
Gross Profit 3,248.2 3,702.5 4,442.2 5,147.1
Depreciation 939.2 1,102.5 1,271.9 1,391.9 (B) Measures of Financial Status
Profit Before Tax & EO Items 2,309.0 2,600.0 3,170.2 3,755.1 Debt / Equity (x) 0.2 0.3 0.3 0.3
Extra Ordinary Exps/(Income) -2,393.7 1,471.9 Interest Coverage (x) 32.9 22.0 17.9 18.3
Profit Before Tax 4,702.7 1,128.1 3,170.2 3,755.1 Average Cost Of Debt (%) 4.0 3.4 4.6 5.1
Tax 128.9 118.3 207.7 243.3 Debtors Period (days) 89.4 82.9 86.0 89.0
Net Profit 4,573.8 1,009.8 2,962.6 3,511.9 Closing stock (days) 61.8 72.1 75.0 75.0
Minority Interest 65.0 -78.6 -30.0 -30.0 Inventory Turnover Ratio (x) 5.9 5.1 4.9 4.9
Net Profit After Minority Interest 4,638.8 931.2 2,932.6 3,481.9 Fixed Assets Turnover (x) 1.2 1.2 1.5 1.8
Net Profit After Minority Interest (w/o EOI) 2,245.1 2,403.1 2,932.6 3,481.9 Working Capital Turnover (x) 4.5 4.5 3.4 2.8
BALANCE SHEET (C) Measures of Investment
Particulars Mar’08 Mar’09P Mar’10E Mar’11E Earnings Per Share (Rs.) (excl EO) 11.2 12.0 14.7 17.4
Earnings Per Share (Rs.) 23.2 4.7 14.7 17.4
Sources of Funds
Cash Earnings Per Share (Rs.) 27.9 10.2 21.0 24.4
Equity Capital 500.0 1,000.0 1,000.0 1,000.0
Preference Capital 0.0 0.0 0.0 0.0 Dividend Per Share (Rs.) 5.0 3.0 3.0 3.0
Reserves (excl Rev Res) 14,268.3 14,421.0 16,651.6 19,431.5 Dividend Payout (%) 21.6 64.4 20.5 17.2
Profit Ploughback (%) 78.4 35.6 79.5 82.8
Net Worth 14,768.3 15,421.0 17,651.6 20,431.5
Revaluation reserve Book Value (Rs.) 73.8 77.1 88.3 102.2
Secured Loans 1,350.4 3,983.0 4,483.0 5,033.0 Return on Avg. Net Worth (%) 15.2 15.6 16.6 17.0
Unsecured Loans 1,200.1 1,275.0 1,275.0 775.0 Return on Avg. Cap. Employed (%) 13.6 13.1 14.4 15.1
Loan Funds 2,550.6 5,258.0 5,758.0 5,808.0 Return on Cap. Employed (%) (Excl Cash & Invest.) 18.6 16.0 17.8 19.2
Deferred Tax Liability 465.0 465.0 506.5 555.2

(D) Valuation Ratios
Total Capital Employed 17,783.8 21,144.0 23,916.1 26,794.7
Market Price - Average (Rs.) 200.0 200.0 200.0 200.0
Price / Earnings Ratio - Average (x) 17.8 16.6 13.6 11.5
Applications of Funds
Average Market Cap. (Rs. Cr.) 40,000.0 40,000.0 40,000.0 40,000.0
Gross Block 11,547.9 16,958.6 18,158.6 19,158.6
Market Capitalisation to Sales (x) 3.8 2.5 2.0 1.7
Less: Accumulated Depreciation 2,511.1 3,613.6 4,885.5 6,277.4
Enterprise Value (Rs. Cr.) 42,454.4 45,140.4 45,338.9 45,083.8
Net Block 9,036.8 13,345.0 13,273.1 12,881.2
EV/Sales (x) 4.0 2.8 2.2 1.9
Capital Work in Progress 1,382.1 0.0
EV/EBDITA (x) 12.7 11.6 9.6 8.3
Intangibles 276.0 499.0 499.0 499.0
Market Price to Book Value (x) 2.7 2.6 2.3 2.0
Investments 4,747.7 3,676.0 4,176.0 4,976.0
Dividend Yield (%) 2.5 1.5 1.5 1.5
Current Assets, Loans & Advances
E-estimates
Inventories 1,789.8 3,192.0 4,209.9 4,875.7
Sundry Debtors 2,591.3 3,671.0 4,827.3 5,785.8
Cash and Bank Balance 96.2 117.6 419.1 724.2
Loans and Advances 869.2 1,015.0 1,515.0 2,315.0
Other Current Assets 0.0 0.0
sub total 5,346.4 7,995.6 10,971.3 13,700.6
Provisions 704.9 1,448.3 1,607.7 1,743.3
sub total 3,005.2 4,371.6 5,003.3 5,262.1
Net Current Assets 2,341.2 3,624.0 5,968.0 8,438.5
Total Assets 17,783.8 21,144.0 23,916.1 26,794.7
E-estimates
24 June 2009 Biocon Ltd. 26

Cadila Healthcare Ltd.(CHL)
DOLAT CAPITAL
CMP: Rs 345
Prism Of Growth…!!!
Cadila Healthcare (CHL) has an interesting business model with thrust on export formulations and contract
manufacturing, well complemented with a strong domestic franchise. Strategic acquisitions and front end tie ups
has been key to CHL’s growth trajectory in export formulations. The company through JV’s has positioned itself as a
preferred contract manufacturer. Sustained cash flows from its flagship segment - domestic formulations (44% sales)
permits it to augment international operations. Possible outlicensing of candidates currently in advanced stages of
its NME pipeline, is a latent trigger. We recommend “Accumulate” with target price of 418 (11x FY11E EPS).
Analyst: Bhavin Shah

Tel : +9122 4096 9731
Investment Rationale
Email: bhavin@dolatcapital.com International Formulations: Two Fold Focus
Strategic acquisitions has been a key enabler for CHL to consolidate and expand
BSE Sensex 14423 its footprint in key regulated and emerging markets. Through its distribution tie ups,
NSE Nifty 4293
complex product filings and cost competencies (backended domestic
Scrip Details manufacturing), it has achieved 60% growth over FY07-09 in its export formulations
Equity Rs.682mn business. We estimate 29% revenue growth over FY09-11E on the back of ramp
Face Value Rs.5/-
up in product filings and newer acquisitions (Japan, Spain, South Africa) which are
Market Cap Rs.47bn
US$962mn
yet to realise their full earnings potential.
52 week High/Low Rs.360/222 CRAMS - Sharing The Risk
1-Month Avg. Volume 87536
The Nycomed JV (formerly Altana JV) for manufacturing pantoprazole (Protonix®)
BSE Code 532321
NSE Symbol CADILAHC intermediates has been one of the most profitable contracts signed within the
Bloomberg Code CDHIN domestic industry (68% net margins – FY09). We believe decline in profitability due
Reuters Code CADI.BO to early genericisation of pantoprazole, will be duly arrested with commencement
Business Group - Cadila of Hospira JV (manufacturing oncology injectables) - estimated to contribute Rs.
Shareholding Pattern as on Mar’09(%) 500mn & 1000mn during FY10E and FY11E.Also, the scope of Nycomed JV is
Promoter 74.6 being expanded to 17 API’s (phase wise over FY11E).
MF/Banks/FIs 15..2 Domestic Formulation business: Cash COW!
FIIs 2.2
Corporate Bodies 0.6
This is the flagship segment of the company where it owns 3.6% share of the
Public / Others 7.3 domestic pharma industry. It has a leading position in key therapies - CVS, Gastro,
Women health care and Respiratory (58% of the portfolio). We estimate 12% CAGR
over FY09-11E to Rs.16.3bn with increasing contribution from new product launches.
Cadila relative to BSE Sensex Strong cash flow from this division further enables CHL to fund its international
180 expansion plans.
170
Research Focus – Investing for the future
160 A strong discovery platform and development engine to support early stage clinical
150 development has been yielding remarkable results with 6 IND’s, addressing key
140 therapeutic areas of metabolic disorders and inflammation.CHL has also forged
130 strategic alliances with pharma majors like EliLilly etc. in joint drug discovery and
120 development programmes, creating long term value inflexion points. Monetisation
110 of late stage candidates in its NME pipeline remains a latent trigger.
100 Valuations
90 With impact of Pantoprazole expected to be fully offset by the Hospira JV as well
80 as strong growth in the Regulated and Emerging markets, CHL is poised to achieve
Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 adjusted earnings CAGR of 22.4% through FY09-11E. Out licensing of R&D
molecules as well as inorganic growth over this period may provide further upside
Cadila BSE Sensex
to our estimates. We recommend “Accumulate” on the stock with target price of
418 (11x FY11E EPS).
Financials
FY08 23,230 27.0 4,582 19.7 2,466 6.0 18.1 6.0 19.1 26.7 20.8
FY09P 29,275 26.0 6,058 20.7 3,460 40.3 25.4 40.3 13.6 25.6 21.8
FY10E 34,575 18.1 7,295 21.1 4,185 21.0 30.7 21.0 11.2 28.4 20.5
FY11E 41,149 19.0 8,847 21.5 5,185 23.9 38.0 23.9 9.1 27.5 20.9
Figure in Rs mn, # Includes other operating income,* Excl. forex exceptional items, P=Balance Sheet figures are projected.
24 June 2009 Cadila Healthcare Ltd. 27

DOLAT CAPITAL
Operating Income 568.8 650.9 716.0 787.6 Contribution Margin
Income From Operations 23,229.7 29,274.9 34,575.3 41,149.1 EBIDTA Margin (excl. O.I.) 19.7 20.7 21.1 21.5
Non Operating Income 19.5 203.6 100.0 100.0 EBIDTA Margin (incl. O.I.) 19.8 21.2 21.3 21.7
Total Income 23,249.2 29,478.5 34,675.3 41,249.1 Interest / Sales 1.5 4.2 2.9 2.6
Total Expenditure 18,647.5 23,217.1 27,279.9 32,302.0 Gross Profit Margin 18.4 17.2 18.5 19.1
Raw Material 7,902.3 9,565.9 11,306.1 13,455.7 Tax/PBT 19.0 18.0 17.0 17.0
Employee Expenses 2,766.1 3,520.8 4,079.9 4,732.1 Net Profit Margin 10.6 11.7 12.1 12.6
Other Expenses 7,979.1 10,130.4 11,893.9 14,114.1
EBIDTA (Excl. Other Income) 4,582.2 6,057.8 7,295.4 8,847.1 (B) As Percentage of Net Sales
EBIDTA (Incl. Other Income) 4,601.7 6,261.4 7,395.4 8,947.1 Raw Material 34.9 33.4 33.4 33.3
Interest 330.7 1,204.8 973.3 1,050.3 Employee Expenses 12.2 12.3 12.0 11.7
Gross Profit 4,271.0 5,056.6 6,422.1 7,896.8 R&D Expenses 0.0 0.0 0.0 0.0
Depreciation 968.7 1,118.2 1,378.8 1,648.1 Other Expenses 35.2 35.4 35.1 35.0
Profit Before Tax & EO Items 3,302.3 3,938.4 5,043.3 6,248.6
(C) Measures of Financial Status
Exceptional Items 68.7 241.0 0.0 0.0
Debt / Equity (x) 0.8 1.0 0.8 0.7
Profit Before Tax 3,233.6 3,697.4 5,043.3 6,248.6
Interest Coverage (x) 13.9 5.2 7.6 8.5
Tax 613.6 665.8 857.4 1,062.3
Average Cost Of Debt (%) 5.1 9.7 7.4 7.3
Reported Net Profit 2,620.0 3,031.6 4,185.9 5,186.4
Debtors Period (days) 57.3 60.0 65.0 68.0
Adjustments on consolidation 45.1 1.0 1.0 1.0
Net Profit 2,574.9 3,030.6 4,184.9 5,185.4
Inventory Turnover Ratio (x) 4.8 4.5 4.3 4.1
Extraordinary & Forex Items (109.0) 429.0 0.0 0.0
Fixed Assets Turnover (x) 1.2 1.3 1.4 1.5
Adjusted Net Profit 2,465.9 3,459.6 4,184.9 5,185.4
Working Capital Turnover (x) 3.7 2.8 2.3 2.0
Non Cash Working Capital (Rs Mn) 5,246.0 7,258.8 9,908.5 13,290.9
BALANCE SHEET
Particulars Mar’08 Mar’09P Mar’10E Mar’11E
(D) Measures of Investment
Sources of Funds
Adj. EPS (Rs.) (excl EO) 18.1 25.4 30.7 38.0
Equity Capital 628.0 682.0 682.0 682.0
EPS (Rs.) 18.9 22.2 30.7 38.0
Preference Capital 0.0 0.0 0.0 0.0 CEPS (Rs.) 27.3 33.6 40.8 50.1
Share Premium 2,247.0 2,247.0 2,247.0 2,247.0 DPS (Rs.) 4.5 4.5 5.0 5.0
Other Reserves 7,747.0 10,085.8 13,502.2 18,304.2 Dividend Payout (%) 23.8 20.3 16.3 13.2
Net Worth 10,622.0 13,014.8 16,431.2 21,233.2 Profit Ploughback (%) 76.2 79.7 83.7 86.8
Secured Loans 6,402.0 10,432.0 11,932.0 13,032.0 RoANW (%) 26.7 25.6 28.4 27.5
Unsecured Loans 1,975.0 1,972.0 1,972.0 1,972.0 RoACE (%) 20.8 21.8 20.5 20.9
Loan Funds 8,377.0 12,404.0 13,904.0 15,004.0 RoAIC (%) (Excl Cash & Invest.) 22.0 23.7 23.5 25.0
Deferred Tax Liability 1,234.0 1,367.2 1,538.6 1,751.1
Minority Interest 194.0 0.0 0.0 0.0 (E) Valuation Ratios
Total Capital Employed 20,427.0 26,786.0 31,873.8 37,988.3 CMP (Rs.) 345.0 345.0 345.0 345.0
P/E (x) 19.1 13.6 11.2 9.1
Applications of Funds Market Cap. (Rs. Mn.) 43,332.0 47,058.0 47,058.0 47,058.0
Gross Block 19,118.0 22,869.0 25,069.0 27,469.0 MCap/ Sales (x) 1.9 1.6 1.4 1.1
Less: Accumulated Depreciation 6,518.0 7,636.2 9,015.0 10,663.1 EV (Rs. Mn.) 50,783.0 56,621.6 56,350.7 55,170.5
Net Block 12,600.0 15,232.8 16,054.0 16,805.9 EV/Sales (x) 2.2 1.9 1.6 1.3
Capital Work in Progress 1,401.0 700.0 500.0 0.0 EV/EBDITA (x) 11.1 9.3 7.7 6.2
Investments 254.0 754.0 800.0 1,000.0 P/BV (x) 4.1 3.6 2.9 2.2
Current Assets, Loans & Advances Dividend Yield (%) 1.3 1.3 1.4 1.4
Inventories 4,729.0 6,430.6 7,885.0 9,731.0 E-estimates
Sundry Debtors 3,555.0 4,705.3 6,029.7 7,519.4
Cash and Bank Balance 926.0 2,840.4 4,611.3 6,891.5
Loans and Advances 2,013.0 3,013.0 4,513.0 6,013.0
Other Current Assets 0.0 0.0 0.0 0.0
sub total 11,223.0 16,989.3 23,039.1 30,154.9
Provisions 913.0 1,604.8 2,373.4 2,757.7
sub total 5,051.0 6,890.1 8,519.3 9,972.4
Total Assets 20,427.0 26,786.0 31,873.8 37,988.3
CASH FLOW
Profit before tax and extra ordinary items 3,302.3 3,938.4 5,043.3 6,248.6
Depreciation & w.o. 968.7 1,118.2 1,378.8 1,648.1
Net Interest Exp 330.7 1,204.8 973.3 1,050.3
Direct taxes paid (613.6) (665.8) (857.4) (1,062.3)
Change in Working Capital (Non Cash) (1,811.0) (2,012.8) (2,649.6) (3,382.5)
Other (113.8) (242.0) (1.0) (1.0)
(A) Cash Flow from Operating Activities 2,063.3 3,340.8 3,887.4 4,501.3
Capex {Inc./ (Dec.) in Fixed Assets n WIP} (5,768.0) (3,050.0) (2,000.0) (1,900.0)
Free Cash Flow (3,704.7) 290.8 1,887.4 2,601.3
(Inc)/ Dec. in Investments 7.0 (500.0) (46.0) (200.0)
Others (Bal Fig) 850.4 (60.8) 171.5 213.5
(B) Cash Flow from Investing Activities (4,910.6) (3,610.8) (1,874.5) (1,886.6)
Inc./(Dec.) in Debt 3,842.0 4,027.0 1,500.0 1,100.0
Interest exp net (330.7) (1,204.8) (973.3) (1,050.3)
Others
(C) Cash Flow from Financing 2,783.3 2,184.4 (241.9) (334.6)
Net Change in Cash (64.0) 1,914.4 1,770.9 2,280.2
Opening Cash balances 990.0 926.0 2,840.4 4,611.3
Closing Cash balances 926.0 2,840.4 4,611.3 6,891.5
E-estimates
24 June 2009 Cadila Healthcare Ltd. 28

CMC Ltd. DOLAT CAPITAL
CMP: Rs 638
Target Price: Rs 885 IT / Buy
Out of the Cocoon...!!!
CMC is an IT Solutions and Services company with a predominant domestic focus. CMC has been immune to all the
slowdown in the Global IT services outsourcing market. Apart from the domestic focus, another factor which favors
CMC is its presence in the ITES led domestic governance projects, which are turnkey in nature and give CMC an
assured revenue stream. With the government spending on governance not slowing down, we believe that CMC will
be a direct beneficiary of these new opportunities and are positive on CMC. At CMP of Rs. 638, CMC is trading at
7.2xFY10E EPS and 5.8xFY11E EPS. We initiate coverage on the stock with a Buy rating and a target price of Rs.
885 (8xFY11E EPS) over a 12-18 month period.
Analyst: Indrajeet Kelkar

Tel : +9122 4096 9751
Email: indrajeet@dolatcapital.com Domestic focus increases immunity
CMC generates ~69% of their revenues from the Indian IT services market.
BSE Sensex 14423
NSE Nifty 4293
With outsourcing facing a slowdown, the domestic focus is helping CMC. New
projects are opening up in the e-Governance space. CMC has expertise in this
Scrip Details
area and with TCS’s help it is likely to benefit from these opportunities. Apart
Equity Rs.151.5 mn
Face Value Rs.10/-
from the e-Governance space there is a slew of domestic projects in the SI and
Market Cap Rs.9.7bn ITES space, where CMC can focus on to generate higher revenues.
US$201mn
52 week High/Low Rs.774/250 TCS brings Business Focus
1-Month Avg. Volume 61673 CMC had a major problem earlier with the inability to prioritize in terms of revenues
BSE Code 517326 and profitability. Also CMC was doing too many things and losing focus. With
NSE Symbol CMC
Tata Sons taking over CMC, the earlier missing business focus has come in and
Bloomberg Code CMCIN
Reuters Code CMC.BO the hitherto untapped potential is being realized. CMC has now changed their
Business Group - Tata focus to the ‘Solutions’ approach. The marketing focus has also changed and
TCS has been showcasing CMC’s capabilities in a ‘Joint Go To Market’ strategy
which has resulted in client wins across the globe
Promoter 51.1
MF/Banks/FIs 24.1 Moving out of the Low margin equipment business
FIIs 13.0
Corporate Bodies 1.4 CMC has shifted their focus from the lower margin equipment business to the
Public / Others 10.3 higher margin SI and ITES business. CMC will take up equipment business only
when this results in up selling of their solutions business. CMC is focusing on
CMC relative to BSE Sensex operating efficiencies and this has resulted in higher operating margins. CMC is
120 also using TCS’s internal tools which have helped them improve utilization.
110 Financials & Valuations
100 There remains lumpiness in CMC’s revenues with the low margin equipment
business contribution being a part of revenues. But with improved focus on the
90
longer duration ITES and SI projects, we expect this to get resolved. We also
80 expect CMC to improve their margins as the internal efficiencies that TCS has
built in have started to kick in. At CMP, the stock is available at 7.2xFY10E EPS
70
and 5.8xFY11E EPS. The domestic focus, as well as the new opportunities arising
60 out of the governance space and TCS as the backbone, makes us positive on
50 the stock. We initiate coverage on the stock with a Buy rating and a target price
Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 of Rs. 885 (8xFY11E EPS) over a 12-18 month period.
CMC BSE Sensex
Financials
FY08 10,647 (1.4) 1,310 12.3 923 33.2 60.9 33.2 10.5 33.5 41.2
FY09 9,398 (11.7) 1,547 16.5 1,161 25.8 76.7 25.8 8.3 32.3 36.4
FY10E 10,106 7.5 1,853 18.3 1,345 15.8 88.8 15.8 7.2 28.9 33.9
FY11E 11,184 10.7 2,183 19.5 1,675 24.6 110.6 24.6 5.8 28.0 31.9
Figure in Rs mn
24 June 2009 CMC Ltd. 29

DOLAT CAPITAL
Particulars Mar’08 Mar’09 Mar’10E Mar’11E Particulars Mar’08 Mar’09 Mar’10E Mar’11E
Other Operational Income 119.0 279.9 155.4 202.0 Contribution Margin
Raw Material 3,766.0 2,228.9 2,094.9 2,125.0
Interest / Sales (0.0) 0.2 0.2 0.2
Employee Expenses 2,371.2 2,627.8 2,881.4 3,355.3
Gross Profit Margin 12.2 15.8 17.8 19.0
Power, Oil & Fuel
Tax/PBT 25.1 19.2 22.0 18.0
Selling & Administrative Expenses 3,319.6 3,274.7 3,512.4 3,802.7
Net Profit Margin 8.6 12.0 13.1 14.7
Provisions & Write Offs
Other Expenses
EBIDTA (Excl. Other Income) 1,309.5 1,546.8 1,772.6 2,103.4 (B) As Percentage of Net Sales
Other Income 0.0 0.0 80.0 80.0 Raw Material 35.4 23.7 20.7 19.0
Interest (3.1) 15.1 24.9 24.9 Power, Oil & Fuel 0.0 0.0 0.0 0.0
Gross Profit 1,312.7 1,531.6 1,827.8 2,158.5 Selling & Administrative Expenses 31.2 34.8 34.8 34.0
Profit Before Tax & EO Items 1,233.6 1,438.2 1,724.4 2,043.2 Other Expenses 0.0 34.8 34.8 34.0
Extra Ordinary Exps/(Income) 0.0 0.0 0.0
Profit Before Tax 1,233.6 1,438.2 1,724.4 2,043.2 (C) Measures of Financial Status
Tax 310.2 276.7 379.4 367.8 Debt / Equity (x) 0.1 0.1 0.1 0.1
Net Profit 923.4 1,161.5 1,345.0 1,675.4 Interest Coverage (x) (416.0) 102.2 74.5 87.8
Extraordinary Items 0.0
Average Cost Of Debt (%) (1.3) 3.8 5.0 5.0
Net Profit 923.4 1,161.5 1,345.0 1,675.4
BALANCE SHEET
Particulars Mar’08 Mar’09 Mar’10E Mar’11E
Sources of Funds
Equity Capital 151.5 151.5 151.5 151.5
Non Cash Working Capital (Rs Mn) 1,054.6 1,935.7 764.8 799.1
Preference Capital 0.0 0.0 0.0 0.0
Share Premium
Other Reserves (excl Share Premium & Rev Res) 2,975.7 3,921.4 5,089.8 6,588.6
Net Worth 3,127.2 4,072.9 5,241.3 6,740.1 EPS (Rs.) (excl EO) 60.9 76.7 88.8 110.6
Revaluation reserve EPS (Rs.) 60.9 76.7 88.8 110.6
Secured Loans 0.0 0.0 0.0 0.0 CEPS (Rs.) 66.2 82.8 95.6 118.2
Unsecured Loans 289.3 497.2 497.2 497.2 DPS (Rs.) 11.0 15.0 10.0 10.0
Loan Funds 289.3 497.2 497.2 497.2 Dividend Payout (%) 18.0 19.6 11.3 9.0
Deferred Tax Liability (Net of Deffered Tax Assets) 0.0 0.0 0.0 0.0 Profit Ploughback (%) 82.0 80.4 88.7 91.0
Total Capital Employed 3,416.5 4,570.1 5,738.5 7,237.2 Book Value (Rs.) 206.4 268.8 346.0 444.9
RoANW (%) 33.5 32.3 28.9 28.0
Applications of Funds RoACE (%) 41.2 36.4 33.9 31.9
Gross Block 1,475.4 1,622.5 1,822.5 2,022.5 RoAIC (%) (Excl Cash & Invest.) 49.9 41.2 48.5 66.1
Less: Accumulated Depreciation 789.8 801.4 904.8 1,020.1
Net Block 685.6 821.1 917.8 1,002.4 (E) Valuation Ratios
Capital Work in Progress 162.7 148.7 148.7 148.7 CMP (Rs.) 638.0 638.0 638.0 638.0
Goodwill 3.4 3.4 3.4 3.4 P/E (x) 10.5 8.3 7.2 5.8
Deferred Tax Asset 40.5 37.5 37.5 37.5
Market Cap. (Rs. Mn.) 9,665.7 9,665.7 9,665.7 9,665.7
Investments 956.3 1,198.8 1,198.8 1,198.8
MCap/ Sales (x) 0.9 1.0 1.0 0.9
EV (Rs. Mn.) 9,441.6 9,737.9 7,495.3 6,115.5
Inventories 198.7 153.8 189.4 210.1
EV/Sales (x) 0.9 1.0 0.7 0.5
Sundry Debtors 2,284.8 2,573.3 2,249.0 2,495.6
EV/EBDITA (x) 7.2 6.3 4.2 2.9
Cash and Bank Balance 513.4 424.9 2,667.5 4,047.4
Loans and Advances 976.6 1,493.1 815.3 904.7 P/BV (x) 3.1 2.4 1.8 1.4
Unbilled Revenues 1,088.3 900.2 945.3 992.5 Dividend Yield (%) 1.7 2.4 1.6 1.6
sub total 5,061.8 5,545.3 6,866.5 8,650.3 E-estimates
Provisions 627.9 638.8 702.6 772.9
sub total 3,493.8 3,184.7 3,434.1 3,803.9
Total Assets 3,416.5 4,570.1 5,738.5 7,237.2
CASH FLOW
Depreciation & w.o. 79.1 93.4 103.4 115.4
Net Interest Exp (3.1) 15.1 24.9 24.9
Change in Working Capital (Non Cash) 89.9 (881.1) 1,170.9 (34.3)
Other 885.8 120.5
(A) Cash Flow from Operating Activities 1,975.0 509.4 2,644.1 1,781.3
Free Cash Flow 1,951.4 376.3 2,444.1 1,581.3
Other (64.8) 13.8
Inc./(Dec.) in Debt 111.8 207.8 0.0 0.0
Interest exp net 3.1 (15.1) (24.9) (24.9)
Other 45.8 74.4
Net Change in Cash 1,853.0 392.2 2,242.6 1,379.8
Opening Cash balances 537.7 513.4 424.9 2,667.5
Add: Transitional Provision as per AS15 not affecting CF30.3 0.0 0.0
Exchange Difference (0.3) 2.3 0.0 0.0
Closing Cash balances 513.4 424.9 2,667.5 4,047.4
E-estimates
24 June 2009 CMC Ltd. 30

Container Corporation of India Ltd. DOLAT CAPITAL
CMP: Rs 940
Target Price: Rs 1181 Logistics / BUY
Material Life Line...!!!

Container Corporation of India (CONCOR) is the largest container operator with 57 terminals across the country
transporting containerized products including engineering goods, automobiles, agri commodities etc. On
financials CONCOR has a track record of consistent earnings growth (CAGR 14% over 5 years), high return on
equity (ROE) and near monopoly status in business. It is debt free and has Rs135 per share cash on books. At a
CMP of Rs940 we recommend a BUY on the stock with a 12 - 18 months price target of Rs1181 (15x FY11E EPS)
Analyst: Nadeem Parkar

Tel : +9122 4096 9736
Email: nadeem@dolatcapital.com Growth in Containarised Cargo
The EXIM cargo across major ports has grown at a CAGR of 10.5% over 5 years.
BSE Sensex 14423
The containerized cargo has grown faster at 13% CAGR during the same period.
NSE Nifty 4293
Containerized cargo accounts 20% of the total EXIM tonnage compared to 10% a
Scrip Details decade ago. The forecasted CAGR of containerised cargo is 14% over FY08-10.
Equity Rs.1299mn
Face Value Rs.10/- The other major opportunity is the increase in the percentage of domestic cargo
Market Cap Rs.122.2bn movement by rail which is 40% of the current volumes of 800 MT.
US$2498.6mn
52 week High/Low Rs.1090/540 CONCOR being an early established participant in the container rail space is a
1-Month Avg. Volume (Daily) 92316 strategic player in an emerging sector and will benefit the most from the volume
BSE Code 531344 growth due to its massive infrastructure and reach.
NSE Symbol CONCOR
Bloomberg Code CCRI IN Infrastructure advantage
Reuters Code CCRI.BO
For container shipping lines and consolidators infrastructure; reach and service
Business Group - Govt. of India levels are the key parameters for selection of service providers for hinterland
Shareholding Pattern as on Mar’09(%) connectivity. CONCOR with 57 Internal Container Depots (ICD’s) at strategic
Promoter 63.1 locations across India; 180 rakes/ trains has the reach and infrastructure allowing it
MF/Banks/FIs 8.4 to pitch in for more volumes from the shippers.
FIIs 26.0
Corporate Bodies 1.0 Competitive concerns diluted
Public / Others 1.6 CONCOR has 85% market share which it is likely to retain for sometime. Availability
of vast stretches of land at strategic locations is not only expensive but also time
Cocor relative to BSE Sensex consuming. Concor’s large scale infrastructure and relationship with major shipping
170
lines dilutes competitive concerns for CONCOR.
160
150 Valuations
140 CONCOR has a strong balance sheet with zero debt and Rs135 per share cash on
130 books, higher return on shareholder equity. It plans to utilize the cash for a capex of
Rs10 bn over two years. Also with a probable verdict of disinvestment of government
120
stake in public sector companies, CONCOR with 63% government holding becomes
110 a potential candidate.
100
At CMP, of Rs.940 the stock trades 11.9x its FY11E earnings (EPS 78.7) we
90
recommend BUY on the stock with a 12 - 18 months price target of Rs1181 (15x
80
FY11E EPS)
Jun-08 Sep-08 Dec-08 Mar-09 Jun-09
Concor BSE Sensex
Financials
FY08 33,473 9.5 8,904 26.6 7,505 7.8 115.5 7.8 8.1 25.8 30.9
FY09P 34,133 2.0 8,832 25.9 7,397 (1.4) 56.9 (50.7) 16.5 20.9 25.5
FY10E 39,048 14.4 10,368 26.6 8,258 11.6 63.5 11.6 14.8 19.5 23.9
FY11E 46,358 18.7 12,797 27.6 10,234 23.9 78.7 23.9 11.9 20.3 24.9
Figure in Rs mn
24 June 2009 CONCOR 31

DOLAT CAPITAL
Other Income 1,644.7 1,918.2 1,757.2 2,086.1 Contribution Margin
Raw Material / Terminal and Other Service Charges 22,923.9 23,606.1 26,825.6 31,358.9
Interest / Sales 0.0 0.0 0.0 0.0
(Accretion) / Deceration to stock 0.0 0.0 0.0 0.0
Employee Expenses 550.0 653.5 663.8 788.1
Tax/PBT 20.9 22.0 22.0 22.0
Power, Oil & Fuel 161.6 170.7 195.2 231.8
Selling & Administrative Expenses 912.3 853.3 976.2 1,159.0
Provisions & Write Offs 0.6 0.3 0.4 0.5
(B) As Percentage of Net Sales
Other Expenses 20.9 17.1 19.5 23.2
Interest 0.0 0.0 0.0 0.0 Power, Oil & Fuel 0.5 0.5 0.5 0.5
Depreciation 1,063.4 1,267.3 1,537.3 1,762.3 Provisions & Write Offs 0.0 0.0 0.0 0.0
Extra Ordinary Exps/(Income) 0.0 0.0 0.0 0.0
Tax 1,979.8 2,086.3 2,329.2 2,886.5 Debt / Equity (x) 0.0 0.0 0.0 0.0
Net Profit 7,505.2 7,396.8 8,258.2 10,234.1 Depriciation / Gross Block 4.7 4.5 4.5 4.5
BALANCE SHEET
Particulars Mar’08 Mar’09E Mar’10E Mar’11E Inventory Turnover Ratio (x) 695.9 730.0 730.0 730.0
Sources of Funds Fixed Assets Turnover (x) 1.5 1.2 1.2 1.2
Equity Capital 649.9 1,299.8 1,299.8 1,299.8
Preference Capital 0.0
Non Cash Working Capital (Rs Mn) (1,564.9) (1,528.9) (1,572.7) (1,561.3)
Share Premium 0.0
Other Reserves 31,189.3 37,487.4 44,646.9 53,782.3
Net Worth 31,839.2 38,787.2 45,946.7 55,082.1
EPS (Rs.) (excl EO) 115.5 56.9 63.5 78.7
Revaluation reserve 0.0
EPS (Rs.) 115.5 56.9 63.5 78.7
Secured Loans 0.0
Unsecured Loans 0.0 CEPS (Rs.) 131.8 66.7 75.4 92.3
Loan Funds 0.0 0.0 0.0 0.0 DPS (Rs.) 26.0 7.5 7.5 7.5
Deferred Tax Liability 1,736.8 1,910.5 2,101.5 2,311.7 Dividend Payout (%) 22.5 13.2 11.8 9.5
Total Capital Employed 33,576.0 40,697.7 48,048.3 57,393.8 Profit Ploughback (%) 77.5 86.8 88.2 90.5
Book Value (Rs.) 489.9 298.4 353.5 423.8
Applications of Funds RoANW (%) 25.8 20.9 19.5 20.3
Gross Block 22,442.2 28,163.0 34,163.0 39,163.0 RoACE (%) 30.9 25.5 23.9 24.9
Less: Accumulated Depreciation 5,790.9 7,058.2 8,595.6 10,357.9 RoAIC (%) (Excl Cash & Invest.) 53.2 46.7 43.1 45.9
Net Block 16,651.3 21,104.8 25,567.4 28,805.1
Capital Work in Progress 1,720.8 1,000.0 1,000.0 1,000.0 (E) Valuation Ratios
Investments 1,553.6 1,709.0 1,879.9 2,067.8 CMP (Rs.) 940.0 940.0 940.0 940.0
Current Assets, Loans & Advances P/E (x) 8.1 16.5 14.8 11.9
Inventories 48.1 46.8 53.5 63.5 Market Cap. (Rs. Mn.) 61,090.6 122,183.1 122,183.1 122,183.1
Sundry Debtors 137.3 140.3 160.5 190.5 MCap/ Sales (x) 1.8 3.6 3.1 2.6
Cash and Bank Balance 15,215.0 18,412.9 21,178.0 27,093.0
EV (Rs. Mn.) 45,875.6 103,770.2 101,005.1 95,090.1
EV/Sales (x) 1.4 3.0 2.6 2.1
EV/EBDITA (x) 5.2 11.7 9.7 7.4
sub total 19,021.1 22,290.2 25,524.6 32,137.5
P/BV (x) 1.9 3.2 2.7 2.2
Dividend Yield (%) 2.8 0.8 0.8 0.8
Earnings Yield 12.3 6.1 6.8 8.4
Provisions 1,227.3 1,024.0 1,171.5 1,390.7
sub total 5,371.0 5,406.2 5,923.6 6,616.7 MCap/ Operating Profit (x) 6.9 13.8 11.8 9.5
Net Current Assets 13,650.1 16,884.0 19,601.0 25,520.9 E-estimates
Misc Expenses 0.0
Total Assets 33,575.8 40,697.7 48,048.3 57,393.8
CASH FLOW
Depreciation & w.o. 1,063.4 1,267.3 1,537.3 1,762.3
Net Interest Exp 0.0 0.0 0.0 0.0
Direct taxes paid (1,979.8) (2,086.3) (2,329.2) (2,886.5)
Change in Working Capital (Non Cash) (10.1) (36.0) 48.1 (4.9)
Other
Free Cash Flow 6,677.1 3,628.1 3,843.6 6,991.5
Inc./ (Dec.) in Investments (236.6) (155.4) (170.9) (188.0)
Other
Inc./(Dec.) in Debt 0.0 0.0 0.0 0.0
Interest exp net 0.0 0.0 0.0 0.0
Dividend Paid (Incl. Tax) (1,904.3) (1,098.7) (1,098.7) (1,098.7)
Other
(C) Cash Flow from Financing (1,904.3) (448.8) (1,098.7) (1,098.7)
Net Change in Cash 4,536.2 3,024.0 2,574.1 5,704.8
Opening Cash balances 10,625.9 15,215.0 18,412.9 21,178.0
E-estimates
24 June 2009 CONCOR 32

Coromandel Fertilisers Ltd.
DOLAT CAPITAL
CMP: Rs 179
Target Price: Rs 224 Fertiliser / Buy
Fertile Connections...!!!
Coromandel Fertiliser Ltd (CFL) is the leading manufacturer of a wide range of farm inputs and is the second largest
manufacturer of Phosphatic fertilizers. The company is diversifying its revenue base towards the non-subsidy farm
business by entering into high margin segments of specialty nutrients and pesticides. Presence in the niche area of
complex fertilisers and an assured supply of key raw materials differentiates CFL from its peers. Foray into rural
markets and increasing exposure to non-subsidy business would augur well for the company. At CMP of Rs 179, CFL
trades at a P/E of 5.6x FY11E EPS of Rs.32. We recommend a BUY with a price target of Rs 224 (7x FY11E EPS).
Analyst: Ritesh Poladia Investment Rationale

Tel : +9122 4096 9753
Email: ritesh@dolatcapital.com Revision in policy to benefit complex fertiliser manufacturers
Associate : Neha Sarwal Coromandel fertiliser (CFL) stands to differentiate from other fertiliser players by
Tel : +9122 4096 9740 catering to the non-nitrogenous fertilizer segment where in the demand growth is
Email: neha@dolatcapital.com higher and Government control is lower in comparison to Urea segment. Also, the
current government policy has brought all the subsidized prices of NPK
BSE Sensex 14423
(Nitrogen,Phosphorous and Potash) at a fixed level, thereby encouraging farmers
NSE Nifty 4293
to ensure a balanced consumption of nutrients. This would boost the use of non-
Scrip Details urea fertilizers.
Equity Rs.280mn
Face Value Rs.2/-
Established raw material linkages
Market Cap Rs.25.9bn
US$529.3mn CFL’s strategic tie-ups with companies in South Africa and Tunisia ensure availability
52 week High/Low Rs.232/73 of key raw materials including Rock Phosphate, Sulphur and Phosphoric Acid at
1-Month Avg. Volume 189391 competitive prices. The company is also spreading its wings to West Asian Countries
BSE Code 506395
and is in talks to set-up an Urea and Ammonia manufacturing plant. This will help
NSE Symbol COROMNFERT
Bloomberg Code CRFTIN the company increase its share in Nitrogen segment.
Reuters Code CORF.BO
Business Group - Murugappa Group Leveraging its strong Brand Equity
Shareholding Pattern as on Mar’09(%) CFL has a strong hold in the southern market and is trying to leverage it by focusing
on brand building and expanding its retail reach. It has increased its retail network
Promoter 64.3
MF/Banks/FIs 9.7 from 20 centres in FY08 to 400 centres in FY09.These centres are on rental basis
FIIs 2.9 and would focus on marketing of farm inputs. In short term it can drag down the
Corporate Bodies 1.8 return ratios but would be a fruitful investment over the longer period.
Focus on non-subsidy business

Coromanfert relative to Sensex CFL plans to diversify its business by focussing on pesticide and speciality nutrient
200
segments like Water Soluble Fertilisers and Micro-Nutrients. This segment has
180 shown an increase in revenues @ 34% CAGR from FY06- FY08. Increased share
from this segment will enhance the overall revenues for the company.
160
140 Valuation
Increased impetus to complex fertilizer manufacturers by way of policy amendment
120 along with better visibility of raw material supplies instills confidence in core business.
100 Furthermore, focus on higher margin non fertilizer businesses enable the company
to reduce vulnerability to controlled sector exposure.CFL has been a consistent
80 dividend paying company with the current dividend yield of 5.6% in FY09. At CMP
Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 of Rs 179, CFL trades at a P/E of 5.6x FY11E EPS. We recommend a BUY with a
Coromanfert BSE Sensex price target of Rs 224 (7x FY11E EPS).
Financials
FY08 37,573 181.8 4,128 11.0 2,101 214.7 15.0 194.9 11.9 31.2 26.5
FY09E 93,750 149.5 6,520 7.0 4,008* 90.8 28.6* 90.8 6.2 52.8 30.6
FY10E 53,774 (42.6) 5,929 11.0 3,551 (11.4) 25.4 (11.4) 7.0 23.8 19.0
FY11E 66,120 23.0 6,977 10.6 4,479 26.1 32.0 26.1 5.6 23.9 23.6
Figure in Rs mn, * Adjusted PAT / EPS / PER
24 June 2009 Coromandel Fertilisers Ltd. 33

DOLAT CAPITAL
Particulars Mar’08 Mar’09 Mar’10E Mar’11E Particulars Mar’08 Mar’09E Mar’10E Mar’11E
Other income 432.1 2,066.2 699.1 859.6 Contribution Margin
Employee Expenses 977.2 1,334.8 1,451.9 1,520.8 Gross Profit Margin 10.2 8.0 10.8 10.8
Power, Oil & Fuel 661.8 1,406.3 1,215.9 1,369.7 Tax/PBT 37.1 35.9 33.0 33.0
Selling & Administrative Expenses 1,806.0 2,925.3 2,362.9 2,533.4 Net Profit Margin 5.5 5.8 6.5 6.7
Other Expenses 979.1 1,888.1 1,625.0 1,833.9 (B) As Percentage of Net Sales
Extra Ordinary Exps/(Income) (1,585.9)
Tax 1,238.4 3,139.6 1,749.1 2,205.9 Debt / Equity (x) 1.3 1.5 0.8 0.5
Net Profit 2,101.0 5,593.9 3,551.2 4,478.7 Interest Coverage (x) 6.5 9.8 8.7 13.5
Net Profit 2,101.0 5,593.9 3,551.2 4,478.7 Debtors Period (days) 9.7 44.5 34.0 31.6
Equity Capital 279.8 279.8 279.8 279.8 Non Cash Working Capital (Rs Mn) 7,227.6 16,760.2 11,554.3 13,552.2
Preference Capital
Share Premium 600.6 600.6 600.6 600.6 (D) Measures of Investment
Other Reserves 7,074.6 12,341.2 15,734.7 20,055.7 EPS (Rs.) (excl EO) 15.0 28.6 25.4 32.0
Net Worth 7,955.0 13,221.6 16,615.1 20,936.1 EPS (Rs.) 15.0 40.0 25.4 32.0
Revaluation reserve CEPS (Rs.) 18.7 44.0 29.4 36.1
Secured Loans 5,122.7 14,776.5 7,776.5 4,776.5 DPS (Rs.) 3.5 10.0 5.0 5.0
Unsecured Loans 4,899.0 4,899.0 4,899.0 4,899.0 Dividend Payout (%) 23.3 25.0 19.7 15.6
Loan Funds 10,021.7 19,675.6 12,675.6 9,675.6 Profit Ploughback (%) 76.7 75.0 80.3 84.4
Deferred Tax Liability 824.7 824.7 824.7 824.7 Book Value (Rs.) 56.9 94.5 118.8 149.7
RoANW (%) 31.2 52.8 23.8 23.9
RoACE (%) 26.5 30.6 19.0 23.6
RoAIC (%) (Excl Cash & Invest.) 28.7 31.3 19.6 24.8
Gross Block 11,311.0 11,411.0 11,511.0 11,611.0
(E) Valuation Ratios
CMP (Rs.) 179 179 179 179
Net Block 7,293.9 6,831.8 6,364.8 5,892.8
P/E (x) 11.9 4.5 7.0 5.6
Capital Work in Progress 108.4 100.0 100.0 100.0
Market Cap. (Rs. Mn.) 24,971.6 24,972.2 24,972.2 24,972.2
Investments 3,508.2 9,508.2 10,508.2 10,508.2
MCap/ Sales (x) 0.7 0.3 0.5 0.4
EV (Rs. Mn.) 34,330.0 44,126.0 36,059.6 33,264.5
Inventories 8,648.7 12,842.5 11,049.5 13,586.3
EV/Sales (x) 0.9 0.5 0.7 0.5
Sundry Debtors 999.1 11,439.6 5,006.4 5,721.9
EV/EBDITA (x) 8.3 6.8 6.1 4.8
Cash and Bank Balance 663.3 521.7 1,588.1 1,383.2
P/BV (x) 3.1 1.9 1.5 1.2
Dividend Yield (%) 2.0 5.6 2.8 2.8
Other Current Assets
E-estimates
sub total 16,251.2 31,040.8 24,192.9 27,567.8
Provisions 1,036.9 1,451.7 1,306.5 1,371.8
sub total 8,360.3 13,759.0 11,050.4 12,632.4
Misc Expenses
Total Assets 18,801.4 33,721.8 30,115.4 31,436.4
CASH FLOW
Depreciation & w.o. 522.1 562.1 567.0 572.0
Net Interest Exp 698.5 876.2 760.5 580.5
Change in Working Capital (Non Cash) (3,193.7) (9,532.6) 5,205.8 (1,997.8)
Other 1,585.9
(A) Cash Flow from Operating Activities 127.8 (2,500.4) 10,084.6 3,633.3
Capex {Inc./ (Dec.) in Fixed Assets n WIP} (4,018.4) (91.6) (100.0) (100.0)
Free Cash Flow (3,890.6) (2,592.0) 9,984.6 3,533.3
Inc./ (Dec.) in Investments (1,393.1) (6,000.0) (1,000.0) 0.0
Other
(B) Cash Flow from Investing Activities (5,411.6) (6,091.6) (1,100.0) (100.0)
Inc./(Dec.) in Debt 4,528.5 9,653.9 (7,000.0) (3,000.0)
Interest exp net (698.5) (876.2) (760.5) (580.5)
Other
(C) Cash Flow from Financing 3,745.4 8,450.3 (7,918.2) (3,738.2)
Net Change in Cash (1,538.3) (141.6) 1,066.4 (204.9)
Opening Cash balances 1,695.4 663.3 521.7 1,588.1
Closing Cash balances 663.3 521.7 1,588.1 1,383.2
E-estimates
24 June 2009 Coromandel Fertilisers Ltd. 34

Dish TV India Ltd. DOLAT CAPITAL
CMP: Rs 39
Target Price: Rs 69 Media / Buy
Wish for More...!!!

Dish TV offers an opportunity to participate in high growth Indian M&E space with annuity like revenue flow with
staggered capex commitment over a period of time. The recent staggered rights issue of Rs 11 bn has eased the
financial burden on the company and is poised to garner incremental market share of 20%. Further the ease of
competition aggression and cheap STBs would lead to lower customer acquisition cost. We value Dish TV on DCF
for its predictability of revenue streams. We initiate coverage on the stock with DCF based 12 month price target of Rs
69.
Analyst: Ritesh Poladia

Tel : +9122 4096 9753
Investment rationale
Email: ritesh@dolatcapital.com DTH: Macro factors getting favorable Play on Indian M&E in a Telecom
Associate : Namrata Sharma way: Higher capital outlay with visible revenue stream
Tel : +9122 4096 9726 DTH offers a play on Indian media space akin to telecom economics – higher capital
Email: namrata@dolatcapital.com outlay at one go (Subscription acquisition cost of ~ Rs 3000) and annuity kind of
BSE Sensex 14423 revenue flow (ARPU: Rs 200 and growing). With telecom subscriber growth hits
NSE Nifty 4293 plateau, DTH becomes an exciting opportunity.
Scrip Details Media bargaining power: tilting towards Access player

Equity Rs.946.4mn Initially broadcasters squeezed DTH player on content cost, which is getting
Face Value Re.1/- reversed. DTH Subscriber base of already ~ 10 mn (current growth rate at 80%),
the bargaining power has certainly shifted towards DTH and other access players.
US$754.8mn
We believe, the pressure on content cost has eased for the DTH player and has an
52 week High/Low Rs.60/11.75
1-Month Avg. Volume 16207328 opportunity to earn carriage fees from new broadcasters.
BSE Code 532839
NSE Symbol DISHTV Dish TV: Best in place – funding done for 10 mn subscribers
Bloomberg Code DSTV IN The company has grappled for fund raising in recent past which has been
Reuters Code DITV.BO considerably eased with staggered rights issue of Rs 11 Bn. Assuming subscriber
Business Group - Subhash Chandra acquisition cost of Rs 3000, the company is set to achieve 10 mn mark by 2012
(24% CAGR of FY09-12). Current gross subscriber base stands at 5.2 million and
Shareholding Pattern as on Mar’09(%) the company is garnering 20% share of incremental subscribers.
Promoter 57.9
MF/Banks/FIs 7.8
Valuations
FIIs 11.9
At CMP, the stock quotes at 3.4x FY10E EV/Sales. We value Dish TV on DCF for
Public / Others 17.0 its predictability of revenue streams. We initiate coverage on the stock with DCF
based 12 month price target of Rs 69.
Key points to watch for:

DishTV relative to BSE Sensex
140 Excessive promotional activities
130 Last year, industry has witnessed 3 new players in DTH with heightened promotional
120 activities, which has increased subscriber acquisition cost from Rs 2000-2500 to
110 Rs 3000.
100
90 Alternate technology poses biggest threat
80 3G and Mobile TV though at nascent stage poses biggest risk as they provide truly
70 personalized experience. Any technology breakthrough in cable or IPTV will offer
60
many choices to customers.
50
40
Dish TV BSE Sensex
24 June 2009 Dish TV India Ltd. 35

DOLAT CAPITAL
Particulars Mar’07 Mar’08 Mar’09P Mar’10E Mar’11E Particulars Mar’07 Mar’08 Mar’09P Mar’10E Mar’11E
Net Sales 1,909.2 4,127.4 7,376.0 12,014.1 17,661.3 (A) Measures of Performance (%)
Other income 34.0 29.7 13.6 146.6 360.0 Contribution Margin
Total Income 1,943.1 4,157.2 7,389.6 12,160.8 18,021.4 EBIDTA Margin (excl. O.I.) (97.3) (52.1) (20.3) 1.5 10.9
Total Expenditure 3,766.3 6,279.6 8,875.4 11,826.3 15,733.5 EBIDTA Margin (incl. O.I.) (93.8) (51.1) (20.1) 2.7 12.7
EBIDTA (Excl. Other Income) (1,857.2) (2,152.2) (1,499.3) 187.8 1,927.8 Interest / Sales 6.2 12.4 9.8 3.2 1.0
EBIDTA (Incl. Other Income) (1,823.2) (2,122.4) (1,485.7) 334.4 2,287.8 Gross Profit Margin (99.9) (63.4) (29.9) (0.5) 11.7
Interest 117.8 513.2 726.8 390.0 180.0 Tax/PBT (0.1) (0.2) 11.3 11.3 11.3
Gross Profit (1,941.0) (2,635.7) (2,212.6) (55.5) 2,107.8 Net Profit Margin (129.6) (99.4) (52.4) (24.0) (10.1)
Depreciation 575.3 1,490.5 2,154.1 3,244.1 4,172.3
Profit Before Tax & EO Items (2,516.3) (4,126.2) (4,366.7) (3,299.6) (2,064.5) (C) Measures of Financial Status
Profit Before Tax (2,516.3) (4,126.2) (4,366.7) (3,299.6) (2,064.5) Debt / Equity (x) 4.1 12.3 1.6 1.2 0.8
Tax 2.5 6.4 (494.7) (373.8) (233.9) Interest Coverage (x) (15.5) (4.1) (2.2) 0.8 12.7
Net Profit (2,518.8) (4,132.5) (3,871.9) (2,925.7) (1,830.6) Average Cost Of Debt (%) 12.8 14.6 13.2 5.3 2.0
Debtors Period (days) 74.7 34.0 36.0 36.0 36.0
BALANCE SHEET Closing stock (days) 2.2 4.2 5.0 5.0 5.0
Particulars Mar’07 Mar’08 Mar’09P Mar’10E Mar’11E Fixed Assets Turnover (x) 0.3 0.5 0.5 0.6 0.7
Sources of Funds Working Capital Turnover (x) (0.3) (0.5) (0.7) (1.3) (2.4)
Equity Capital 428.2 428.2 946.4 946.4 946.4
Share Premium 0.0 0.0 2,551.9 6,634.9 10,717.9 (D) Measures of Investment
Net Worth 428.2 428.2 3,498.3 7,581.3 11,664.3 EPS (Rs.) (excl EO) (5.9) (9.7) (4.0) (3.0) (1.9)
Loan Funds 1,751.0 5,266.3 5,683.9 9,000.0 9,000.0 EPS (Rs.) (5.9) (9.7) (4.0) (3.0) (1.9)
Total Capital Employed 2,179.2 5,694.5 9,182.2 16,581.3 20,664.3 CEPS (Rs.) (4.5) (6.2) (1.8) 0.3 2.4
Book Value (Rs.) 1.0 1.0 3.7 8.0 12.3
Applications of Funds RoANW (%) (89.8) (965.0) (197.0) (52.8) (19.0)
Gross Block 6,170.2 8,480.4 14621.1 20,417 25,074.6 RoACE (%) (64.4) (91.8) (48.8) (22.6) (10.1)
Less: Accumulated Depreciation 673.7 2,164.1 4,318.2 7,562.2 11,734.6 RoAIC (%) (Excl Cash & Invest.) (65.9) (95.6) (57.7) (30.8) (14.9)
Net Block 5,496.5 6,316.3 10,302.9 12,854.8 13,340.0

Capital Work in Progress 1,126.4 1,379.8 0.0 0.0 0.0 (E) Valuation Ratios
Investments 944.5 944.5 944.5 944.5 944.5 CMP (Rs.) 39.0 39.0 39.0 39.0 39.0
Current Assets, Loans & Advances Market Cap. (Rs. Mn.) 16700.0 16,700.0 36,909.6 36,909.6 36,909.6
Inventories 11.4 47.1 101.0 164.5 241.9 MCap/ Sales (x) 8.75 4.0 5.0 3.1 2.1
Sundry Debtors 390.6 384.4 727.5 1,184.9 1,741.9 EV (Rs. Mn.) 18,338.3 21,767.5 40,525.3 41,069.9 38,776.9
Cash and Bank Balance 113.3 199.4 2,068.1 4,839.6 7,132.6 EV/Sales (x) 9.6 5.2 5.4 3.4 2.7
Loans and Advances 1,869.4 2,844.2 3,128.6 3,441.4 3,785.6 EV/EBDITA (x) (9.8) (10.1) (27.0) 218.6 20.1
sub total 2,384.7 3,475.1 6,025.6 9630.5 12,902.1 P/BV (x) 39.0 39.0 10.5 4.8 3.1
Less : Current Liabilities & Provisions E-estimates, P=Balance Sheet Nos. are Projected.
Current Liabilities 8,577.0 11,340.8 16,878.5 18,558.5 20,058.5

Provisions 18.9 35.3 38.9 42.8 47.0
sub total 8,595.9 11,376.1 16,917.4 18,601.7 20,105.6
DCF Model
Net Current Assets (6,211.2) (7,901.1) (10,892.2) (8,970.7) (7,203.5)
Misc Expenses/ P&L Bal 823.0 4,955.0 8,826.9 11,752.7 13,583.3 Particulars Mar’07 Mar’08 Mar’09 Mar’10E Mar’11E Mar’12E ..... Mar’20E
PAT (2,519) (4,133) (3,872) (2,926) (1,831) 492 - 29,180
Total Assets 2,179.2 5,694.5 9,182.2 16,581.3 20,664.3
Depreciation 575 1,490 2,154 3,244 4,172 4,877 - 840
Interest(1-T) 118 514 645 346 160 160 - 70
CASH FLOW
Capex 6,103 2,564 4,761 5,796 4,658 4,425 - 1,500
Particulars Mar’07 Mar’08 Mar’09P Mar’10E Mar’11E
Inc in Non-Cash Working Capital (6,053) (1,776) (4,860) (850) (526) (363) - 250
Profit before tax and extra ordinary items (2,516.3) (4,126.2) (4,366.7) (3,299.6) (2064.5)
Free Cash Flow (1,775) (1,340) (975) (4,282) (1,630) 1,467 - 28,340
Depreciation & w.o. 575.3 1,490.5 2,154.0 3,244.1 4,172.3
Add: Deferred Tax 0 0 0 0 - 0
Net Interest Exp 117.8 513.2 726.0 390.0 180.0
Total Free Cash Flow (975) (4,282) (1,630) 1,467 - 28,340
Direct taxes paid (2.5) (6.4) 494.7 373.8 233.9
100 114 131 150 171 - 501
Change in Working Capital (Non Cash) 6,053.1 1,776.0 4,859.8 850.0 525.8
Discount Rate 0 1 1 1 1 - 0
(A) Cash Flow from Operating Activities 4,227.4 (352.8) 3,868.9 1,558.4 3,047.0
PV of Free Cash Flow (852) (3,273) (1,090) 857 - 5,652
Capex {Inc./ (Dec.) in Fixed Assets n WIP} (6,103.3) (2,563.5) (4,761.0) (5,796.0) (4,657.5)
Cumulative Cash Flow (852) (4,125) (5,214) (4,357) - 27,320
Free Cash Flow (1,875.9) (2,916.3) (892.2) (4237.6) (1610.0)
-
Inc./ (Dec.) in Investments 124.2 0.0 0.0 0.0 0.0
Assumed Terminal Year (n) - 2,021
(B) Cash Flow from Investing Activities (5,979.1) (2,563.5) (4,761.0) (5,796.0) (4,657.0)
Cash Flow at N+1 - 28,906
Issue of Equity/ Preference (1,027.5) 0.0 3,070.1 4,083.0 4,083.0
Growth Rate (Post 2020) - 2
Inc./(Dec.) in Debt 1,667.2 3,515.2 417.6 3,316.1 0.0
WACC (%) - 14
Interest exp net (117.8) (513.2) (726.8) (390.0) (180.0)
Dividend Paid (Incl. Tax) 0.0 0.0 0.0 0.0 0.0
Terminal Value - 233,492
(C) Cash Flow from Financing 522.0 3,002.0 2,760.8 7,009.2 3,903.0
Discounted Terminal Value - 46,566
Net Change in Cash (1,229.8) 85.7 1,868.6 2,771.5 2,293.0
Present Value of Firm till Terminal Year - 27,320
Opening Cash balances 59.4 113.3 199.4 2,068.1 4,839.6
Total Discounted Value of Firm - 73,887
Closing Cash balances 113.3 199.4 2,068.0 4,839.6 7,132.6
Less: Current net Debt of the Firm - 9,000
E-estimates, P=Balance Sheet Nos. are Projected.
Present Value of Equity - 64,887
No. of Equity Shares (Mn) - 946
Fair Value of Equity Shares (Rs) 69
E-estimates
24 June 2009 Dish TV India Ltd. 36

Dishman Pharma & Chemicals Ltd. DOLAT CAPITAL
CMP: Rs 181
Target Price: Rs 272 Pharmaceuticals / Buy
Perfect Recipe...!!!
Dishman Pharma has a de-risked CRAMS model. It’s focus on APIs and intermediates and not on formulations does
not pose any competition to its customers. The company has successfully signed agreements with several reputed
innovator companies based in EU and US. Through Joint Ventures, it has marked its entry in various geographies. Its
strategy to synergize operations and leverage on key capabilities enables it to consolidate its position globally.

Tel : +9122 4096 9731
Email: bhavin@dolatcapital.com CRAMS a US$3 billion Opportunity
The Indian contract manufacturing market estimated at $869mn (2007) is poised to
BSE Sensex 14423 grow at 42% CAGR to touch $2.46bn by 2010. Big pharma products going off patent,
NSE Nifty 4293
slowdown in NDA’s, rising costs towards drug development and consequently lower
Scrip Details R&D productivity have led to adoption of severe cost cutting measures.
Equity Rs.163mn
Face Value Rs.2/- Playing its Cards well
Market Cap Rs.14.7bn The company has been investing aggressively to equip itself with strong technology
US$301mn platforms both onshore and globally. Strategic acquisitions and tie-ups entered into
52 week High/Low Rs.332/87 over the years have created a strong base for Dishman in the CRAMS domain.
BSE Code 532523
Dishman has entered into several JV’s which provides it access to markets other
NSE Symbol DISHMAN than EU and US, and enables it to bring forth its technological prowess.
Bloomberg Code DISH IN
Reuters Code DISH.BO Robust Active Pipeline assures traction in earnings over the long term
Dishman Pharma has long term contracts with Astrazeneca, GSK, Johnson & Merck.
Non-Solvay CRAMS revenue contribute ~78% to the CRAMS segment. Dishman
has order book of about US$100mn to be executed in FY10E. It is also in midst of
Promoter 60.8
negotiations of signing more agreements - Takeda (key intermediates) and Novartis
MF/Banks/FIs 17.4
FIIs 10.4 (oncology products).
Public / Others 2.9
Recent Strategic Bets
Dishman’s Chinese plant is built as per USFDA standards and is expected to start
production by July’09E which will be utilised towards supplying few products for
Dishman relative to Sensex
Astrazeneca and other Big pharma companies. The fine chemicals and vitamin
130
facility (acquired from Solvay - the only one in the world to have all four known
120
Vitamin analogues) is estimated to contribute Rs.1580mn during FY11E.
110
100 Valuations
90 Dishman has maintained its growth momentum despite the credit crunch and
80 inventory destocking issues affecting most CRAMS players. We expect capacity
70
utilizations to improve with products in its pipeline nearing commercialisation which
in turn enhances revenue visibility.
60
50 We expect Dishman to record 20% revenue and 23% adjusted earnings CAGR for
40 FY09-11E with ramp up in base business and steady growth in Carbogen Amcis.
30 Possibility of signing additional CRAMS contracts remains a latent trigger.
Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 At CMP of Rs.181/- the stock trades at 8.2x FY10E and 6.7x FY11E earnings.
Dishman BSE Sensex We recommend a BUY on the stock with price target of Rs.272/- (10x FY11E
FDEPS) over a 12 month horizon.
Financials
Year Net Sales# % growth EBIDTA OPM % Adj.PAT* % growth FDEPS(Rs.) % growth PER (x) ROANW % ROACE %
FY08 8,044 36.0 1,542 19.2 818 0.6 10.1 0.6 18.0 27.3 10.8
FY09P 10,671 32.7 2,662 24.9 1,462 78.6 18.0 78.6 10.1 23.2 15.1
FY10E 12,649 18.5 3,131 24.8 1,800 23.1 22.1 23.1 8.2 23.1 16.1
FY11E 15,318 21.1 3,715 24.3 2,211 22.8 27.2 22.8 6.7 22.9 17.1
Figure in Rs mn, # Includes other operating income, *Excl. forex exceptional items., P=Balance Sheet figures are projected.
24 June 2009 Dishman Pharma 37

DOLAT CAPITAL

Other Operating Income 13.6 47.6 50.0 50.0 Operating Profit Margin (excl. O.I.) 19.2 24.9 24.8 24.3
Income From Operations 8,044.4 10,671.2 12,648.9 15,318.5 Operating Profit Margin (incl. O.I.) 20.2 24.9 25.5 24.9
Other Income 84.4 0.0 100.0 100.0 Interest / Sales 3.8 4.3 4.3 3.9
Total Income 8,128.8 10,671.2 12,748.9 15,418.5 Gross Profit Margin 16.4 20.7 21.3 21.0
Total Opex 6,502.1 8,009.0 9,518.3 11,603.7 Tax/PBT 1.1 6.8 7.0 7.0
Operating Profit (excl. Other Income) 1,542.3 2,662.2 3,130.6 3,714.7 Net Profit Margin 14.9 13.7 14.2 14.4
Operating Profit (incl. Other Income) 1,626.8 2,662.2 3,230.6 3,814.7
Interest 305.0 458.5 540.0 600.4 (B) Measures of Financial Status
Gross Profit 1,321.8 2,203.7 2,690.6 3,214.3 Debt / Equity (x) 1.2 1.0 0.9 0.7
Depreciation 471.9 629.1 755.3 837.0 Interest Coverage (x) 5.3 5.8 6.0 6.4
Profit Before Tax & EO Items 849.9 1,574.6 1,935.3 2,377.3 Average Cost Of Debt (%) 5.0 6.7 7.3 8.0
Exceptional Items 18.1 5.5 0.0 0.0 Debtors Period (days) 92.8 55.8 60.0 60.0
Forex Gain/Loss -378.6 0.0 0.0 0.0 Closing stock (days) 138.5 106.5 120.0 130.0
Profit Before Tax 1,210.4 1,569.1 1,935.3 2,377.3 Inventory Turnover Ratio (x) 2.6 3.4 3.0 2.8
Tax 13.3 107.2 135.5 166.4 Fixed Assets Turnover (x) 1.2 1.2 1.3 1.5
Net Profit 1,197.1 1,461.9 1,799.8 2,210.9 Working Capital Turnover (x) 2.0 2.5 2.1 2.0
Adjusted Net Profit 818.5 1,461.9 1,799.8 2,210.9
(C) Measures of Investment
BALANCE SHEET Earnings Per Share (Rs.) (excl EO) 10.1 18.0 22.1 27.2
Particulars Mar’08 Mar’09P Mar’10E Mar’11E Earnings Per Share (Rs.) 14.7 18.0 22.1 27.2
Sources of Funds Cash Earnings Per Share (Rs.) 20.5 25.7 31.4 37.5
Equity Capital 159.4 161.4 162.6 162.6 Dividend Per Share (Rs.) 1.0 1.2 1.5 1.5
Preference Capital 0.0 0.0 0.0 0.0 Dividend Payout (%) 6.9 6.7 6.8 5.5
Reserves (excl Rev Res) 5,498.6 6,793.0 8,446.4 10,511.0 Profit Ploughback (%) 93.1 93.3 93.2 94.5
Net Worth 5,658.0 6,954.4 8,609.1 10,673.6 Book Value (Rs.) 71.0 86.2 105.9 131.3
Revaluation reserve 76.8 76.9 76.9 76.9 Return on Avg. Net Worth (%) 27.3 23.2 23.1 22.9
Secured Loans 5,796.2 5,296.2 5,396.2 5,296.2 Return on Avg. Cap. Employed (%) 10.8 15.1 16.1 17.1
Unsecured Loans 783.6 1,904.1 2,104.1 2,304.1 Return on Cap. Employed (%) 9.0 14.8 15.3 16.3
Loan Funds 6,579.8 7,200.3 7,500.3 7,600.3
Deferred Tax Liability/(Asset) 149.2 149.2 149.2 149.2 (D) Valuation Ratios
Market Price - Average 181.0 181.0 181.0 181.0
Price / Earnings Ratio (x) 18.0 10.1 8.2 6.7
Market Cap. (Rs. mn.) 14718.7 14718.7 14718.7 14718.7
Gross Block 7,800.6 10,585.4 12,085.4 13,285.4
Enterprise Value (Rs. mn.) 20,927.5 21,519.0 21,681.1 21,869.5
EV/Sales (x) 2.6 2.0 1.7 1.4
Net Block 6,682.9 8,838.5 9,583.1 9,946.1
EV/EBDITA (x) 12.9 8.1 6.7 5.7
Capital Work in Progress 1,484.7 1,000.0 500.0 500.0
Investments 175.0 250.0 300.0 350.0
Dividend Yield (%) 0.56 0.66 0.83 0.93
E-estimates
Inventories 3,047.3 3,098.5 4,142.1 5,438.1
Sundry Debtors 2,041.8 1,623.0 2,071.1 2,509.9
sub total 6,587.0 6,948.5 9,278.0 11,724.4
Provisions 513.2 596.8 743.2 889.6
sub total 2,472.3 2,662.5 3,332.0 4,027.0
Total Assets 12,463.7 14,380.8 16,335.5 18,500.0
E-estimates
24 June 2009 Dishman Pharma 38

Dredging Corporation of India Ltd.
DOLAT CAPITAL
CMP: Rs 485
Target Price: Rs 632 Dredging / Buy
Mint-in-the-Silt...!!!
Dredging Corporation India Limited (DCIL) is blessed with an enviable situation of being an exclusive local participant
in a blow-out opportunity in the space of Indian Maritime Infrastructure. DCIL is also adding to its repertoire of
necessary skill-sets that widen its operating canvass. The right-of first refusal on existing dredging contracts and a
multiplier on the current space (post completion of maritime upgrade) stands a business advantage further. The
strong PSU disinvestment undercurrent works as an additional sweetener. We reiterate our Buy recommendation
with a price target of Rs.632 (10x FY11E EPS)over the next 12 months.
Analyst: Kapil Yadav Investment Rationale

Tel : +9122 4096 9735
Email: kapil@dolatcapital.com
Dredging – a mission critical national mega-expenditure
India has been witnessing inadequate port facilities as a bottleneck to its exim
BSE Sensex 14423 growth. The national policy on infrastructure has identified development of existing
NSE Nifty 4293 and new ports as an immediate priority. The modernisation efforts by Govt are
Scrip Details being complemented by some large ticket private sector investments in several
Equity Rs.280mn
large Greenfield projects like Dhamra, Rewas, Machlipatnam, Dahej and
Face Value Rs.10/- Gangavaram. The 11th plan highlights total capital dredging requirement of major
ports and Sethusamudram project estimates at ~298.28mn cu mtr. Concurrently,
US$277.7mn
the maintenance dredging activity is projected at 380.06mn cu mtr.
52 week High/Low Rs.650/180 DCIL at a pole position to play the opportunity
Month Avg. Volume 94368 DCIL is the dominant player in dredging with ~80% market share of the maintenance
BSE Code 523618 dredging industry. It enjoys assured business from the major ports like JNPT and
NSE Symbol DREDGECORP Kolkata (~40% of its revenue) and has long term contracts with established ports. It
Bloomberg Code DCILIN
also stands to benefit from its “right of first refusal” clause with the port trust authorities
Reuters Code DRDG.BO
over foreign players. The current domain expertise also puts it in an enviable position
Business Group - Govt. of India in securing bids with its ability to quickly mobilize fleets.
Well-geared to complement the business prospects
Currently, the company is operating at 93% capacity utilization which limits growth
Promoter 78.6
in medium term. Considering the expected demand growth, the company plans to
MF/Banks/FIs 9.9
acquire two dredgers one for maintenance and the other one for capital dredging
FIIs 3.5
work with a capital investment of Rs~13.5bn. This would increase the capacity by
15% to 91.49 cu mtr by FY11. We believe that this would help maintain its market
Public / Others 4.7
share going ahead.
Dredging relative to Sensex Sethusamudram: a defining development opportunity
120 Completion of Rs270bn Sethusamudram is on government’s priority list. DCIL is an
110 equity participant in this SPV. The project is a landmark to establish DCI’s credentials
100
in the Capital Dredging segment (a weaker territory till date) and enable its business
model migration into this space. This migration coupled with its priority right on
90 maintenance provides long term sustainability to DCIL’s business.
80
Valuation
70 DCIL is an exclusive domestic particiant in an emerging space of Indian maritime
60 sector. Its tryst with Sethusamudram project would enable DCIL to righteously
enhance its capcity when India is set to expand its maritime infrastructure. DCIL is
50
set to witness change in its growth profile in the coming years (profit CAGR of 42%
40 till FY11E). DCIL would trade at a premium valuation on account of its virtual
Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 monopoly in a high-growth segment, tempting valuations and a possible trigger of
Dredging BSE Sensex disinvestment (which means improved liquidity and enhanced price realisation
mechanism). We reiterate our Buy recommendation with a price target of Rs.632
(10x FY11E EPS).
Financials
FY08 7,053 23.1 1,276 18.1 1,548 (18.0) 55.3 (19.7) 8.8 13.1 12.6
FY09E 8,661 22.8 993 11.5 881 (43.1) 31.5 (43.1) 15.4 7.1 7.8
FY10E 9,938 14.8 1742 17.5 1,277 44.9 45.6 44.9 10.6 9.9 10.7
FY11E 11,790 18.6 2,317 19.7 1,769 38.5 63.2 38.5 7.7 12.4 12.7
Figure in Rs mn
24 June 2009 Dredging Corporation of India Ltd. 39

DOLAT CAPITAL
Particulars Mar’08 Mar’09E Mar’10E Mar’11E Particulars Mar’08 Mar’09 Mar’10E Mar’11E
EBIDTA (Excl. Other Income) 1,276.4 992.8 1,741.6 2,317.5 Interest / Sales 0.2 0.2 1.0 0.2
EBIDTA (Incl. Other Income) 1,937.8 1,508.5 2,233.1 2,779.0 Gross Profit Margin 25.0 16.3 20.5 22.5
Interest 13.0 13.7 95.2 28.6 Tax/PBT 11.3 11.0 11.0 11.0
Gross Profit 1,924.8 1,494.9 2,137.9 2,750.4 Dep/Grossblock 4.5 5.0 5.0 5.0
Depreciation 417.3 504.9 703.3 762.8 Net Profit Margin 20.1 9.6 12.2 14.4
Profit Before Tax & EO Items 1,507.5 990.0 1,434.7 1,987.7
Profit Before Tax 1,507.5 990.0 1,434.7 1,987.7 (B) As Percentage of Net Sales
Tax 170.1 108.9 157.8 218.6 Spares & Stores 7.8 10.5 8.0 8.0
Net Profit 1,548.0 881.1 1,276.9 1,769.0 Employee Expenses 6.4 7.1 6.7 6.0
Repairs & Maintenance 8.7 11.0 8.7 9.0
BALANCE SHEET Fuel and Lubricant 28.7 24.0 26.0 26.0
Particulars Mar’08 Mar’09E Mar’10E Mar’11E Insurance 0.8 1.0 1.0 1.0
Sources of Funds Other operational exp 21.7 25.5 25.6 25.6
Equity Capital 280.0 280.0 280.0 280.0 Provisions 0.7 1.0 1.0 1.0
General reserve 7,002.7 7,402.8 8,198.8 9,486.9 Admin exp 7.1 8.0 8.0 8.0
Tonnage tax 1,170.0 693.0 1,004.3 1,391.4
Net Worth 12,387.8 12,311.0 13,418.3 15,093.5 (C) Measures of Financial Status
Secured Loans 0.0 0.0 0.0 Debt / Equity (x) 0.0 0.0 0.1 0.0
Unsecured Loans 165.3 227.6 1,586.8 476.0 Interest Coverage (x) 149.0 110.5 23.5 97.3
Loan Funds 165.3 227.6 1,586.8 476.0 Average Cost Of Debt (%) 5.6 6.0 6.0 6.0
Total Capital Employed 12,553.2 13,098.6 15,565.1 16,129.5 Debtors Period (days) 153.5 154.0 154.0 154.0
Applications of Funds Inventory Turnover Ratio (x) 23.9 24.3 24.3 24.3
Gross Block 9,235.7 10,098.1 14,065.1 15,255.2 Fixed Assets Turnover (x) 0.8 0.9 0.7 0.8
Less: Accumulated Depreciation 5,918.7 6,423.6 7,126.8 7,889.6 Working Capital Turnover (x) 1.1 1.3 1.3 1.4
Net Block 3,317.0 3,674.5 6,938.3 7,365.6 Non Cash Working Capital (Rs Mn) 3,901.9 5,744.0 6,628.7 7,911.0

Investments 245.0 245.0 245.0 245.0 (D) Measures of Investment
Current Assets, Loans & Advances EPS (Rs.) (excl EO) 55.3 31.5 45.6 63.2
Inventories 295.6 355.9 408.4 484.5 EPS (Rs.) 55.3 31.5 45.6 63.2
Sundry Debtors 2,965.9 3,654.1 4,193.1 4,974.2 CEPS (Rs.) 70.2 49.5 70.7 90.4
Cash and Bank Balance 2,734.1 1,054.9 1,277.0 417.4 DPS (Rs.) 15.0 15.0 15.0 15.0
Loans and Advances 1,595.5 1,905.4 2,186.5 2,593.7 Dividend Payout (%) 27.1 47.7 32.9 23.7
Other Current Assets 1,345.2 1,645.5 1,888.3 2,240.0 Profit Ploughback (%) 72.9 52.3 67.1 76.3
sub total 8,936.4 8,615.9 9,953.3 10,709.9 Book Value (Rs.) 442.4 439.7 479.2 539.1
Less : Current Liabilities & Provisions RoANW (%) 13.1 7.1 9.9 12.4
Current Liabilities 1,982.3 1,559.0 1,788.9 2,122.1 RoACE (%) 12.6 7.8 10.7 12.7
Provisions 318.1 258.0 258.6 259.3 RoAIC (%) (Excl Cash & Invest.) 17.4 9.2 11.6 13.4
sub total 2,300.4 1,817.0 2,047.5 2,381.4

Net Current Assets 6,636.0 6,798.9 7,905.8 8,328.5 (E) Valuation Ratios
CMP (Rs.) 485.0 485.0 485.0 485.0
Total Assets 12,553.2 13,098.6 15,565.1 16,129.5
P/E (x) 8.8 15.4 10.6 7.7
Market Cap. (Rs. Mn.) 13,580.0 13,580.0 13,580.0 13,580.0
CASH FLOW
MCap/ Sales (x) 1.9 1.6 1.4 1.2
EV (Rs. Mn.) 11,011.2 12,752.7 13,889.8 13,638.6
Profit before tax and extra ordinary items 1,507.8 990.0 1,434.7 1,987.7
EV/Sales (x) 1.6 1.5 1.4 1.2
Depreciation & w.o. 417.3 504.9 703.3 762.8
EV/EBDITA (x) 8.6 12.8 8.0 5.9
Net Interest Exp (342.9) 13.7 95.2 28.6
P/BV (x) 1.1 1.1 1.0 0.9
Direct taxes paid 669.9 (108.9) (157.8) (218.6)
Dividend Yield (%) 3.1 3.1 3.1 3.1
Change in Working Capital (Non Cash) (1,402.9) (1,842.1) (884.8) (1,282.3)
E-estimates
Other (13.8) 69.3 0.0 0.0
(A) Cash Flow from Operating Activities 835.4 (373.1) 1,190.6 1,278.0
Capex {Inc./ (Dec.) in Fixed Assets n WIP} (1,687.9) (887.5) (2,062.9) (904.5)
Free Cash Flow (852.5) (1,260.6) (872.3) 373.6
Inc./ (Dec.) in Investments (100.0) 0.0 0.0 0.0
Other 377.9 216.1 0.5
(B) Cash Flow from Investing Activities (1,410.0) (887.5) (1,846.8) (904.0)
Inc./(Dec.) in Debt (136.2) 62.3 1,359.2 (1,110.8)
(C) Cash Flow from Financing (676.8) (418.6) 878.3 (1,233.7)
Net Change in Cash (1,251.4) (1,679.2) 222.1 (859.6)
Opening Cash & Cash equivalent 3,985.5 2,734.1 1,054.9 1,277.0
Closing Cash & Cash equivalent 2,734.1 1,054.9 1,277.0 417.4
E-estimates
24 June 2009 Dredging Corporation of India Ltd. 40

Engineers India Ltd. (EIL)
DOLAT CAPITAL
CMP: Rs 1011 Engineering / Unrated

Making of a Butterfly...!!!
EIL, a globally competent GOI undertaking takes pride in providing high end Project Management Consultancy
(PMC) services to the downstream PSU hydrocarbon companies. With an extension of EPC services through its
Lump Sum Turnkey (LSTK) arm, EIL has earned the status of a ‘Total Solution Provider’. Scalability through
LSTK without loosing focus on high margin PMC, an asset light model with a positive free cash flow and surplus
cash position makes EIL even more attractive. We like the business model of the company and expect it to be
one of the beneficiaries of the divestment.

Tel : +9122 4096 9757
Email: sameer@dolatcapital.com
Niche player focused on Hydrocarbons
EIL had secured domestic order inflow of 13% out of the total outlay of Rs 366 billion
Associate : Bindal Totlani
by the downstream PSU Petroleum and Natural Gas (PNG) companies during the
Tel : +9122 4096 9724
Email: bindal@dolatcapital.com
10th five year plan. In the 11th plan this budgeted outlay has nearly doubled to Rs 626
billion. Of this, EIL has already captured 12% share in FY08 & FY09. We expect this
BSE Sensex 14423 share to grow to 37% by the end FY12 at a CAGR of 18% on the back of doubling of
NSE Nifty 4293 the opportunity pie and increased LSTK focus by the company.
Scrip Details Enhancing Core Competencies
Equity Rs.561.6mn EIL has profound experience in complying with international standards such as ASME
Face Value Rs.10/- (American Standard of Mechanical Engineering) codes and practices used in designing
Market Cap Rs.56.8bn of hydrocarbon plants. Being an expert in delivering high end technical services such
US$1169.1mn as ‘Detailed Engineering Design’, the company is truly a globally competent engineering
consultancy enterprise. EIL has successfully delivered these services through a pool
BSE Code 532178 of its skilled professionals, innovative tools and use of collaborative techniques. EIL is
NSE Symbol ENGINERSIN an infrastructure play with its domain expertise in engineering.
Bloomberg Code ENGR IN
Business Model altered to track growth
Reuters Code ENGI.BO
LSTK focused - With sudden spurt in LSTK revenue share from 16% in FY08 to 46%
Business Group - Govt. of India in FY09; the revenue has grown by ~ 108%. This stupendous growth corresponds to
margin dilution due to low EBIT margins of ~ 4.4% in LSTK business but indicates
ROCE protection since there is lower additional capital required for incremental LSTK
Promoter 90.4
revenues. We expect Rs 75 billion of total current order book (OB), to grow to Rs ~
MF/Banks/FIs 4.5
FIIs 1.6 123 billion by FY11. LSTK segment will occupy major share of 63% in FY11 OB. This
Corporate Bodies 0.4 will enhance the LSTK revenue share to 61% in FY11.
Public / Others 3.0 Adjacent diversification- EIL believes that basic engineering is same for all the areas/
sectors and hence is well poised to foray into high margin sectors such as Nuclear
EIL relative to BSE Sensex Power, Solar Power and unexplored areas of Water with minimum incremental costs.
200
Currently, 90% of EIL’s business comes from PSU PNG companies.
180 Earning estimates revised upwards post Q4FY09 results
We have revised salary expenditure estimates for FY10 and FY11 downwards by
160
21% and 30% respectively to take cognizance of the write back of Rs 602 mn
140 towards higher employee expense provision in FY08. This has resulted in an upward
revision in EPS by ~ Rs 3 each in FY10 and FY11 to Rs 57.8 and Rs 69.6 respectively.
120
Risks and Concerns
100 Slowdown in order inflow due to drying up of investments in hydrocarbon might hamper
scalability. Margin dilution expected due to rise in LSTK’s share in total revenue.
80
Valuations
We have revised the fair price to Rs 895/- per share (PMC-Rs 540 + LSTK-Rs 92+
EIL BSE Sensex Cash per share of FY09E – Rs 263) from Rs 830/- by assigning respective earning
multiples to segmental Core EPS of FY11E (PMC 15x and LSTK 9x) and adding cash
Financials per share.
Year Net Sales % Growth EBIDTA OPM % PAT % Growth EPS (Rs.) % Growth PER (x) ROANW (%) ROACE (%)
FY08 7,377.5 29.2 1,727.1 23.4 1,946.0 36.1 34.7 36.1 29.2 17.8 29.7
FY09 15,324.6 107.7 3,100.0 20.2 3,445.3 77.0 61.4 77.0 16.5 27.3 44.6
FY10E 21,077.8 37.5 3,599.9 17.1 3,243.7 (5.9) 57.8 (5.9) 17.5 21.7 35.5
FY11E 30,669.3 45.5 4,999.2 16.3 3,911.1 20.6 69.6 20.6 14.5 22.0 35.6
Figure in Rs.mn
24 June 2009 Engineers India Ltd. 41

DOLAT CAPITAL
Other income 1,355.7 2,215.3 1,541.9 1,317.1 Contribution Margin
Raw Material 920.3 6,853.3 10,616.8 16,654.8 Interest / Sales 0.2 0.0 0.1 0.3
Employee Expenses 3,259.4 3,869.3 4,217.5 4,597.1 Gross Profit Margin 41.6 34.7 24.3 20.3
Selling & Administrative Expenses 363.9 0.0 1,038.6 1,636.2 Tax/PBT 33.8 33.8 34.6 34.9
Other Expenses 1,106.8 1,502.1 1,605.0 2,781.9 Net Profit Margin 26.4 22.5 15.4 12.8
EBIDTA (Excl. Other Income) 1,727.1 3,100.0 3,599.9 4,999.2
EBIDTA (Incl. Other Income) 3,082.9 5,315.3 5,141.8 6,316.4 (B) As Percentage of Net Sales
Interest 15.5 2.5 23.8 104.8 Raw Material 12.5 44.7 50.4 54.3
Gross Profit 3,067.4 5,312.8 5,118.0 6,211.6 Employee Expenses 44.2 25.2 20.0 15.0
Depreciation 104.3 108.1 158.8 200.0 Power, Oil & Fuel 0.0 0.0 0.0 0.0
Profit Before Tax & EO Items 2,963.0 5,204.7 4,959.2 6,011.6 Selling & Administrative Expenses 4.9 5.0 4.9 5.3
Extra Ordinary Exps/(Income) 24.2 0.0 0.0 Provisions & Write Offs 0.0 0.0 0.0 0.0
Profit Before Tax 2,938.8 5,204.7 4,959.2 6,011.6 Other Expenses 15.0 15.0 7.6 9.1
Tax 992.8 1,759.3 1,715.6 2,100.5
Net Profit 1,946.0 3,445.3 3,243.7 3,911.1 (C) Measures of Financial Status
Debt / Equity (x) 0.0 0.0 0.0 0.0
BALANCE SHEET Interest Coverage (x) 198.8 2,143.3 215.9 60.3
Particulars Mar’08 Mar’09P Mar’10E Mar’11E Average Cost Of Debt (%) 0.0 0.0 0.0 27.9
Sources of Funds Debtors Period (days) 87.3 95.3 120.0 130.0
Equity Capital 561.6 561.6 561.6 561.6 Closing stock (days) 0.4 7.0 7.0 7.0
Preference Capital Inventory Turnover Ratio (x) 879.2 52.1 52.1 52.1
Share Premium 92.0 95.0 95.0 95.0 Fixed Assets Turnover (x) 4.7 8.4 9.5 11.3
Other Reserves (excl Share Premium & Rev Res) 10,866.9 13,096.8 15,552.1 18,674.8 Working Capital Turnover (x) 0.9 1.4 1.6 1.8
Net Worth 11,520.5 13,753.4 16,208.6 19,331.4 Non Cash Working Capital (Rs Mn) (3,940.2) (3,949.4) (3,075.1) (1,703.1)
Secured Loans 0.0 0.0 0.0 750.0
Unsecured Loans 0.0 0.0 0.0 0.0 (D) Measures of Investment
Loan Funds 0.0 0.0 0.0 750.0 EPS (Rs.) (excl EO) 35.1 61.4 57.8 69.6
Deferred Tax Liability (959.2) (963.2) (963.2) (963.2) EPS (Rs.) 34.7 61.4 57.8 69.6
Total Capital Employed 10,561.3 12,790.2 15,245.5 19,118.2 CEPS (Rs.) 36.5 63.3 60.6 73.2
DPS (Rs.) 11.0 18.5 12.0 12.0
Applications of Funds Dividend Payout (%) 31.7 30.2 20.8 17.2
Gross Block 1,581.3 1,820.5 2,220.5 2,720.5 Profit Ploughback (%) 68.3 69.8 79.2 82.8
Less: Accumulated Depreciation 1,112.4 1,220.5 1,379.3 1,579.2 Book Value (Rs.) 205.2 244.9 288.6 344.2
Net Block 468.9 600.0 841.2 1,141.3 RoANW (%) 17.8 27.3 21.7 22.0
Capital Work in Progress 34.7 0.0 0.0 0.0 RoACE (%) 29.7 44.6 35.5 35.6
Investments 1,468.1 1,368.1 1,368.1 1,368.1 RoAIC (%) (Excl Cash & Invest.) (315.5) (263.9) (350.0) (20,538.6)

Inventories 8.4 293.9 404.2 588.2 (E) Valuation Ratios
Sundry Debtors 1,765.5 4,000.0 6,929.7 10,923.3 CMP (Rs.) 1,011.0 1,011.0 1,011.0 1,011.0
Cash and Bank Balance 12,525.8 14,771.5 16,111.2 18,311.9 P/E (x) 29.2 16.5 17.5 14.5
Loans and Advances 1,816.7 1,512.7 1,763.0 1,801.9 Market Cap. (Rs. Mn.) 56,773.9 56,773.9 56,773.9 56,773.9
Other Current Assets 2,114.6 2,372.2 2,351.8 2,378.6 MCap/ Sales (x) 7.7 3.7 2.7 1.9
sub total 18,231.0 22,950.3 27,560.0 34,004.0 EV (Rs. Mn.) 44,248.1 42,002.4 40,662.7 39,212.0
Less : Current Liabilities & Provisions EV/Sales (x) 6.0 2.7 1.9 1.3
Current Liabilities 7,973.4 9,219.1 11,875.6 14,561.0 EV/EBDITA (x) 25.6 13.5 11.3 7.8
Provisions 1,671.9 2,909.1 2,648.2 2,834.1 P/BV (x) 4.9 4.1 3.5 2.9
sub total 9,645.3 12,128.2 14,523.8 17,395.1 Dividend Yield (%) 1.1 1.8 1.2 1.2
Net Current Assets 8,585.6 10,822.1 13,036.2 16,608.8 E-estimates

Total Assets 10,561.3 12,790.2 15,245.5 19,118.2
CASH FLOW
Depreciation & w.o. 104.3 108.1 158.8 200.0
Net Interest Exp 15.5 2.5 23.8 104.8
Direct taxes paid (992.8) (1,759.3) (1,715.6) (2,100.5)
Change in Working Capital (Non Cash) 2,239.5 9.2 (874.3) (1,372.0)
Other (1,207.0)
Free Cash Flow 2,967.2 3,360.7 2,151.9 2,343.9
Other 895.8
(B) Cash Flow from Investing Activities 646.0 (104.5) (400.0) (500.0)
Inc./(Dec.) in Debt 0.0 0.0 0.0 750.0
Interest exp net (15.5) (2.5) (23.8) (104.8)
Dividend Paid (Incl. Tax) (720.6) (1,215.4) (788.4) (788.4)
Other 79.1
(C) Cash Flow from Financing (657.0) (1,215.0) (812.2) (143.2)
E-estimates
24 June 2009 Engineers India Ltd. 42

Financial Technologies India Ltd.(FT)
DOLAT CAPITAL
CMP: Rs 1340
U Trade I Mint…!!!
Financial Technologies (FT) started its business with the vision of dominating the global transaction market and its
transaction engine is its USP. FT is a transaction centric business wherein the transactions drive each and every
component of the business across asset classes back ended by superior products which provide faster, efficient,
secure and a convenient mechanism to drive these transactions. The emphasis is on providing services with Finance
as the core domain, convenience as the tool and disintermediation as the envelope covering FT’ services. As India
picks up the pieces in the downturn and the markets stabilize, FT will be at the core of most of the transactions that
happen in any market in India. We are positive on the stock and initiate coverage on the company with a ‘Buy’ rating
and a price target of Rs. 1725 valued on SOTP method.
Analyst: Indrajeet Kelkar Investment Rationale

Tel : +9122 4096 9751 Transaction at the Core
Email: indrajeet@dolatcapital.com FT is an IT products company which creates an interface through their flagship
product ODIN which facilitates transaction processing across different asset classes,
BSE Sensex 14423 making things faster, transparent and live. FT has sold 360000 ODIN licenses so
NSE Nifty 4293 far and is the market leader in the commodities and equities segment (85% market
Scrip Details share). The Brokerage solutions business contributes ~70% of the revenues, and
Equity Rs.91.8mn this core business will drive and be driven by the new ventures that FT has started.
Face Value Rs.2/-
Exchange Business - Kernel of convenience and surveillance
The exchange business operates around the core transaction engine and enables
US$1257.4mn
52 week High/Low Rs.1900/404 FT to address different asset classes. MCX is the largest commodity exchange
1-Month Avg. Volume (Daily) 288827 with over an 80% of the market share of the US$1.1 trillion Indian commodities
BSE Code 526881 market. MCX is the primary driver for FT’s core IT products business and this
NSE Symbol FINANTECH emulates the transaction centric business that FT has been driving. With ODIN as
Bloomberg Code FTECH IN
the front end for the commodities exchange it derives the benefits of any rise in the
Reuters Code FITE.BO
commodities market. With an average daily turnover of Rs. 138.7bn MCX
compliments the transaction centric approach that FT has created. We expect
Shareholding Pattern as on Mar’09(%) commodity volumes to pick up going forward and this will drive MCX growth.
Promoter 45.6
Leveraging proven expertise into newer domains
MF/Banks/FIs 6.8
FIIs 24.7 FT is replicating the MCX success in other exchange ventures. The MCX experience
Corporate Bodies 3.6 has allowed FT to drive new geographies and create new markets and MCX-SX is
Public / Others 19.3 one such venture. MCX-SX is currently operates in the currency futures business
with plans to operate as the third National Exchange apart from BSE and NSE in
the equities market. With FT’s presence in the brokerage solutions segment, SEBI
FT relativet to BSE Sensex approval for the third equities exchange will increase trading volumes, effectively
150
assuring a new revenue stream for FT.
130 NBHC - Monetization of the Agricultural Value chain
NBHC is a commodity and warehouse management solution which creates an
110 opportunity for futures trading in agricultural commodities. With 4000 connected
warehouses and a storage capacity of 1.64mn MT, NBHC offers farmers an
90 opportunity to bring liquidity to the agricultural produce. The produce can be stored
in NBHC warehouses and used as collateral for bank loans. NBHC gets 25bps
70 from the farmer and 75bps from the bank for these services. The market is in a
nascent stage and we can expect multifold growth in this business going forward.
50
Valuations
30 FT offers an IT products company which creates value through ventures driven by
Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 the core transaction engine. The different exchange ventures drive FT’s growth.
We are positive on the stock and initiate coverage on the company with a ‘Buy’
FT BSE Sensex
rating and a price target of Rs. 1725 valued on SOTP basis.
24 June 2009 Financial Technologies India Ltd. 43

DOLAT CAPITAL
Total Expenditure 926.5 1,474.8 1,707.4 2,180.1 EBIDTA Margin (incl. O.I.) 912.2 149.0 85.1 77.7
Raw Material 45.4 119.9 113.4 146.3 Interest / Sales 7.9 0.0 0.0 0.0
Selling & Administrative Expenses 881.1 1,354.9 1,594.1 2,033.8 Gross Profit Margin 904.3 149.0 85.1 77.7
EBIDTA (Excl. Other Income) 449.1 1,334.4 1,697.8 2,209.7 Tax/PBT 22.6 19.6 21.0 21.0
EBIDTA (Incl. Other Income) 12,548.3 4,186.2 2,897.8 3,409.7 Net Profit Margin 698.8 116.8 63.0 56.9
Other Income 12,099.2 2,851.8 1,200.0 1,200.0
Interest 109.3 0.6 0.0 0.0 (B) As Percentage of Net Sales
Gross Profit 12,439.0 4,185.6 2,897.8 3,409.7 Raw Material 3.3 4.3 3.3 3.3
Depreciation 23.5 103.8 183.3 246.9 Employee Expenses 0.0 0.0 0.0 0.0
Profit Before Tax 12,415.4 4,081.8 2,714.5 3,162.8 Power, Oil & Fuel 0.0 0.0 0.0 0.0
Tax 2,802.9 801.9 569.1 663.8 Selling & Administrative Expenses 64.1 48.2 46.8 46.3
Net Profit 9,612.5 3,279.9 2,145.4 2,499.0 Provisions & Write Offs 0.0 0.0 0.0 0.0
Minority Interest Other Expenses 0.0 0.0 0.0 0.0
Net Profit 9,612.5 3,279.9 2,145.4 2,499.0
BALANCE SHEET Debt / Equity (x) 0.3 0.3 0.3 0.2
Particulars Mar’08 Mar’09E Mar’10E Mar’11E Interest Coverage (x) - - - -
Sources of Funds Average Cost Of Debt (%) - - - -
Equity Capital 91.8 91.8 91.8 91.8 Debtors Period (days) 50.3 60.0 60.0 60.0
Preference Capital Closing stock (days) 0.1 0.0 0.0 0.0
Share Premium 0.0 0.0 0.0 0.0 Inventory Turnover Ratio (x) - - - -
Other Reserves 14,602.0 17,345.1 18,953.7 20,915.9 Fixed Assets Turnover (x) 3.0 1.4 1.0 0.9
Net Worth 14,693.8 17,436.9 19,045.5 21,007.7 Working Capital Turnover (x) 0.5 0.5 0.5 0.6
Secured Loans - - - - Non Cash Working Capital (Rs Mn) (658.7) (787.0) (1,030.5) (1,341.4)
Unsecured Loans 3,994.5 4,845.0 4,845.0 4,845.0

Loan Funds 3,994.5 4,845.0 4,845.0 4,845.0 (D) Measures of Investment
Deferred Tax Liability 0.0 0.0 0.0 0.0 EPS (Rs.) (excl EO) 209.5 71.5 46.8 54.5
EPS (Rs.) 209.5 71.5 46.8 54.5
CEPS (Rs.) 210.0 73.7 50.8 59.8
DPS (Rs.) 10.0 5.0 5.0 5.0
Dividend Payout (%) 4.8 7.0 10.7 9.2
Gross Block 458.0 1,958.0 3,458.0 4,658.0
Less: Accumulated Depreciation 77.5 181.3 364.6 611.4
Book Value (Rs.) 320.2 380.0 415.1 457.8
Net Block 380.5 1,776.7 3,093.5 4,046.6
RoANW (%) 115.3 20.4 11.8 12.5
RoACE (%) 100.1 19.9 11.8 12.7
Investments 13,743.3 13,743.3 13,743.3 13,743.3
Inventories 0.4 0.0 0.0 0.0
CMP (Rs.) 1,340.1 1,340.1 1,340.1 1,340.1
Sundry Debtors 189.6 461.8 559.8 721.6
P/E (x) 6.4 18.7 28.7 24.6
Market Cap. (Rs. Mn.) 61,488.7 61,488.7 61,488.7 61,488.7
Loans and Advances 416.2 769.7 932.9 1,202.7
MCap/ Sales (x) 44.7 21.9 18.1 14.0
EV (Rs. Mn.) 61,963.0 59,795.8 59,060.3 57,740.4
sub total 4,128.9 7,772.0 8,768.8 10,520.5
EV/Sales (x) 45.0 21.3 17.3 13.2
EV/EBDITA (x) 138.0 44.8 34.8 26.1
Current Liabilities 600.8 1,154.5 1,399.4 1,804.0
P/BV (x) 4.2 3.5 3.2 2.9
Provisions 666.6 866.6 1,126.6 1,464.6
Dividend Yield (%) 0.7 0.4 0.4 0.4
sub total 1,267.4 2,021.1 2,526.0 3,268.6
E-estimates
Total Assets 18,688.3 22,281.9 23,890.5 25,852.7
CASH FLOW
Depreciation & w.o. 23.5 103.8 183.3 246.9
Direct taxes paid (2,802.9) (801.9) (569.1) (663.8)
Change in Working Capital (Non Cash) 331.0 128.3 243.5 310.9
Other (9,891.8)
(A) Cash Flow from Operating Activities 184.6 3,512.6 2,572.2 3,056.7
Capex {Inc./ (Dec.) in Fixed Assets n WIP} (1,400.9) (807.9) (1,300.0) (1,200.0)
Free Cash Flow (1,216.3) 2,704.7 1,272.2 1,856.7
Inc./ (Dec.) in Investments (9,599.4) 0.0 0.0 0.0
Other 7,100.6
(B) Cash Flow from Investing Activities (3,899.7) (807.9) (1,300.0) (1,200.0)
Inc./(Dec.) in Debt (349.7) 850.5 0.0 0.0
Interest exp net (109.3) (0.6) 0.0 0.0
Dividend Paid (Incl. Tax) (1,070.5) (536.8) (536.8) (536.8)
Other 4,786.7
(C) Cash Flow from Financing 3,260.8 313.1 (536.8) (536.8)
Net Change in Cash (454.3) 3,017.8 735.4 1,319.9
E-estimates
24 June 2009 Financial Technologies India Ltd. 44

GlaxoSmithkline Pharmaceuticals Ltd. DOLAT CAPITAL
CMP: Rs 1207
Chill Pill...!!!
GSK Pharma is our preferred pick in the MNC Pharma space on the back of parents’ strong commitment towards
introducing high value patented products through Glaxo India in the domestic market. Lower dependency on price
controlled products, new product launches with minimal generic competition and moderate pricing ensures revenue
visibility. Healthy cash per share and a reasonable dividend yield, serves as a classic addition to the defensive
portfolio.

Tel : +9122 4096 9731
Email: bhavin@dolatcapital.com GSK India beneficiary of its parent’s commitment
GSK Plc has firm commitments towards launching patented products in India through
BSE Sensex 14423 the listed entity. The parent has one of the strongest pipelines with 83 products in
NSE Nifty 4293
the mid-to-late stage. Glaxo India emerges as a clear beneficiary on back of access
Scrip Details to parents enriching pipeline which is skewed towards India specific diseases and
Equity Rs.847mn is exposed to minimal generic competition.
Face Value Rs.10/-
US$2091mn
Focus on Priority products and brand building initiatives
52 week High/Low Rs.1299/930 Glaxo’s well structured product mix favouring minimal DPCO exposure at 27% and
1-Month Avg. Volume 5954 the balance arising from priority brands has consequently boosted topline growth
BSE Code 500660 and ensured margin expansion. The company’s strong sales and marketing
NSE Symbol GLAXO
capabilities has made it a preferred partner of choice for global big pharma
Bloomberg Code GLXO IN
Reuters Code GLAX.BO companies towards product licensing arrangements.
Business Group - MNC Associate
CY08 – Green flags for new product launches
GSK kicked off CY08 with several new product launches of the parent’s shelf namely
Promoter 50.7
MF/Banks/FIs 17.4
Infanrix/Boostrix (Triple combination vaccine), Rotarix (Rotavirus vaccine) and Tykerb
FIIs 14.8 (breast cancer drug). The trend continues to sustain with Cervarix (cervical cancer
Corporate Bodies 1.1 vaccine) launched early CY09. We believe moderate pricing and significant domestic
Public / Others 16.1 potential for these drugs ensures gradual scalability. Anticipated product launches
during the remaining course of the year include Mycamine (in-licensed product
GSK Pharma relative to Sensex from Astellas), Eltrombopag (platelet aggregator) - recently approved in the US and
250 few other branded generic products.
200 Healthy Cash position

GSK currently has cash and cash equivalents of Rs.16.6bn translating to Rs.196
per share. Management is evaluating various options including brand acquisitions,
150
share buyback or high dividend payouts to deploy surplus cash.
100
Valuations
Gradual scale up in revenues from new product launches would result in 11%
50
revenue and 13% earnings growth over CY08-10E. The company remains fairly
insulated from the global credit environment being a focused domestic pharma
0
play with strong liquidity in the balance sheet. Healthy cash per share and a
reasonable dividend yield, serves as a classic addition to the defensive portfolio.
GSK Pharma BSE Sensex
At CMP of 1207/- the stock trades at 20.1x CY09E and 17.8x CY10E earnings.
We recommend “Accumulate” on the stock with a target price of 1347/- (17x
CY10E earnings and cash of 196/- per share).
Financials
Year Net Sales# % growth EBIDTA OPM % PAT* % growth EPS(Rs.)* % growth PER (x) ROANW % ROACE %
CY07 15,962 2.8 5,521 34.6 3,968 9.7 46.8 9.7 25.8 31.1 42.5
CY08 16,807 5.3 5,980 35.6 4,484 13.0 52.9 13.0 22.8 30.9 40.6
CY09E 18,621 10.8 6,646 35.7 5,081 13.3 60.0 13.3 20.1 31.8 41.2
CY10E 20,724 11.3 7,478 36.1 5,736 12.9 67.7 12.9 17.8 33.1 42.8
Figure in Rs mn, # Includes other operating income,* Adjusted.
24 June 2009 GlaxoSmithkline Pharmaceuticals Ltd. 45

DOLAT CAPITAL

Particulars Dec’07 Dec’08 Dec’09E Dec’10E Particulars Dec’07 Dec’08 Dec’09E Dec’10E
Operating Income 190.3 202.7 220.0 242.0 Operating Profit Margin (excl. O.I.) 34.6 35.6 35.7 36.1
Income From Operations 15,961.7 16,806.8 18,621.4 20,724.0 Operating Profit Margin (incl. O.I.) 39.0 41.4 42.5 43.1
Other income 708.1 982.8 1,275.3 1,444.2 Interest / Sales 0.0 0.0 0.0 0.0
Total Income 16,669.8 17,789.6 19,896.7 22,168.1 Gross Profit Margin 39.0 41.4 42.5 43.1
Total Expenditure 10,440.8 10,827.2 11,975.2 13,245.6 Tax/PBT 28.1 28.7 34.5 34.5
Operating Profit (excl. Other Income) 5,520.9 5,979.6 6,646.2 7,478.4 Net Profit Margin 33.7 34.3 27.3 27.7
Operating Profit (incl. Other Income) 6,229.0 6,962.4 7,921.5 8,922.5
Interest 0.0 0.0 0.0 0.0 (B) Measures of Financial Status
Depreciation 161.6 163.4 164.3 166.0 Interest Coverage (x) 0.0 0.0 0.0 0.0
Profit Before Tax & EO Items 6,067.4 6,799.0 7,757.2 8,756.5 Average Cost Of Debt (%) 0.0 0.0 0.0 0.0
Extra Ordinary Exps/(Income) (1,408.7) (1,282.1) 0.0 0.0 Debtors Period (days) 8.7 12.7 13.0 14.0
Profit Before Tax 7,476.1 8,081.1 7,757.2 8,756.5 Closing stock (days) 37.0 35.6 37.5 37.5
Tax 2,099.5 2,315.4 2,676.2 3,021.0 Inventory Turnover Ratio (x) 7.7 7.3 7.3 7.3
Net Profit 5,376.6 5,765.7 5,081.0 5,735.5 Fixed Assets Turnover (x) 18.0 18.4 18.6 19.1
Adjusted Net Profit 3,967.9 4483.6 5,081.0 5,735.5 Working Capital Turnover (x) (19.8) 2.5 2.4 2.2
BALANCE SHEET (C) Measures of Investment
Particulars Dec’07 Dec’08 Dec’09E Dec’10E Earnings Per Share (Rs.) (excl EO) 46.8 52.9 60.0 67.7
Sources of Funds Earnings Per Share (Rs.) 63.5 68.1 60.0 67.7
Equity Capital 847.0 847.0 847.0 847.0 Cash Earnings Per Share (Rs.) 65.4 70.0 61.9 69.7
Preference Capital 0.0 0.0 0.0 0.0 Dividend Per Share (Rs.) 36.0 40.0 40.0 42.0
Reserves (excl Rev Res) 12,762.1 14,563.9 15,680.9 17,254.3 Dividend Payout (%) 56.7 58.8 66.7 62.0
Net Worth 13,609.2 15,410.9 16,528.0 18,101.4 Profit Ploughback (%) 43.3 41.2 33.3 38.0

Secured Loans 0.0 0.0 0.0 0.0 Return on Avg. Net Worth (%) 31.1 30.9 31.8 33.1
Unsecured Loans 57.7 56.5 56.5 56.5 Return on Avg. Cap. Employed (%) 42.5 40.6 41.2 42.8
Loan Funds 57.7 56.5 56.5 56.5 Return on Avg. Cap. Employed (%) (Excl Cash & Invest.) (762.5) (411.0) (450.0) (529.1)
Deferred Tax Liability -201.4 -296.0 -296.0 -296.0
Minority Interest 0.0 0.0 0.0 0.0 (D) Valuation Ratios
Market Price - Average (Rs.) 1,207.0 1,207.0 1,207.0 1,207.0
Price / Earnings Ratio - Average (x) 25.8 22.8 20.1 17.8
Average Market Cap. (Rs. Mn.) 102,236.5 102,236.5 102,236.5 102,236.5
Gross Block 2,667.1 2,821.5 3,071.0 3,320.5
Enterprise Value (Rs. Mn.) 100,744.2 93,227.6 92,055.0 90,654.0
EV/Sales (x) 6.3 5.5 4.9 4.4
Net Block 874.7 904.0 989.2 1,072.7
EV/EBDITA (x) 16.2 13.4 11.6 10.2
GOODWILL 0.0 0.0 0.0 0.0
Dividend Yield (%) 3.0 3.3 3.3 3.5
Investments 13,333.2 7,518.7 7,518.7 7,518.7
E-estimates
Inventories 2,059.6 2,283.8 2,520.7 2,805.7
Sundry Debtors 377.7 579.4 655.4 785.6
sub total 5,576.4 13,910.3 15,567.8 17,607.1
Provisions 3,925.5 4,545.1 4,863.9 5,162.1
sub total 6,373.2 7,261.1 7,886.7 8,436.2
Net Current Assets -796.8 6,649.2 7,681.0 9,170.9
Total Assets 13,465.4 15,171.5 16,288.5 17,861.9
E-estimates
24 June 2009 GlaxoSmithkline Pharmaceuticals Ltd. 46

HDFC Bank
DOLAT CAPITAL
CMP: Rs 1456
Target Price: Rs 1711 Banking / Accumulate
All Weather Stock…!!!
HDFC Bank is now well entrenched to sustain a strong 20% plus earnings growth rate. The bank has scaled down the
unsecured retail assets book of the erstwhile CBoP, thus looking to curb its slippages. Benefits of its merger with
CBoP will start reflecting in its improved branch productivity and a drop in cost to income ratio over the next few
years. Additionally the bank is well capitalized to sustain this growth over the next few years . Despite rising slippages,
HDFC Bank’s asset quality remains one of the best in class with the additional credit of lowest restructured loans
amongst other banks.
At CMP the stock trades at 18.5x FY11E EPS of Rs 78.8, 2.8x FY11E Book Value and 3.0x FY10E Adj. book value. We
maintain a Accumulate on the stock with a revised price target of Rs 1711 (3.25x FY11E book value).
Analyst: Darpin Shah

Tel : +9122 4096 9754
Email: darpin@dolatcapital.com Well poised for a strong traction in earnings
Associate : Jaynee Shah Migration to Basel-II has lowered risk weight on rated corporate loans and lowering
Tel : +9122 4096 9723 of risk weights on some asset segments by the central bank in the past few months
Email: jaynee@dolatcapital.com has resulted in large capital release for HDFC Bank. Tier-one CAR has jumped
BSE Sensex 14423 from 8.80% in September 2008 to 10.60% in March-2009. Additionally the bank is
NSE Nifty 4293 expected to receive capital in the form of a likely conversion of warrant by its parent
Scrip Details HDFC. This high-capital adequacy gives the bank enough capital to sustain growth
Equity Rs. 4,516mn for multiple years. We expect the bank to record a 23% CAGR in its loan book over
Face Value Rs.10/- FY09-FY11E.
Market Cap Rs. 657.5bn
Asset quality remains comfortable despite rising delinquencies
US$13445.9mn
52 week High/Low Rs.1580/774 Delinquencies have moved up sharply in the last few quarters on account of rising
1-Month Avg. Volume 1582147 slippages in its unsecured retail loan portfolio of e CBoP (Rs 10.1bn of fresh additions
BSE Code 500180 from eCBoP’s book). As a result, the bank has been running down the risky assets
NSE Symbol HDFCBANK
from eCBoP’s portfolio. The bank has already bought provisioning standards on
Bloomberg Code HDFCB IN
Reuters Code HDBK.BO the retail book of eCBoP (which was witnessing some stress) and corporate book
mismatches in line with its exacting standards, and now only needs incremental
Business Group - HDFC
NPL provisioning. Consequently, HDFC Bank’s asset quality though continues to
be robust and at just 0.4% of loans, it has one of the lowest restructured assets
Promoter 19.4
among the banks in FY09. However, we expect gross NPL’s at 3% for FY10e and
MF/Banks/FIs 13.9
FIIs 25.7 3.7% for FY11e with provision coverage of ~70%.
Strong liability franchise to aid margins
Owing to its high CASA levels and a low quantum of bulk deposits, HDFC Bank is
likely to retain a good pricing power despite rate cuts. It would also be a beneficiary
HDFC Bank relative to Sensex
150 of fresh branch licenses that should help the bank further capitalize on its customer
140 base and liability franchise. The bank’s focus on retail assets at a time when most
banks are exiting this space, should also enable it to sustain its margins.
130
120
Valuations
HDFC Bank trades at a premium compared to its peers, which in our view is justified
110
in view of the bank’s strong business model along with high core profitability. The
100 bank has strived to build in place superior systems and processes which along with
90 a robust deposit franchise will help it withstand earning pressures better than its
peers.
80
At CMP the stock trades at 18.5x FY11E EPS of Rs 78.8, 2.8x FY11E Book
Value and 3.0x FY11E Adj. book value. We maintain a Accumulate on the stock
HDBK BSE Sensex
with a revised price target of Rs 1711 (3.25x FY11E book value).
Financials
Year NII Growth(%) Net Profit Growth(%) NIM(%) EPS(Rs) PER(x) P/BV(x) P/ABV(x) RoANW(%) RoAA(%)
FY08 52.3 40.9 15.9 39.3 4.9 44.9 32.5 4.5 4.6 17.7 1.4
FY09 74.2 42.0 22.4 41.2 4.9 52.8 27.6 4.2 4.4 17.2 1.4
FY10E* 88.0 18.6 28.2 25.4 4.6 62.3 23.4 3.1 3.3 15.8 1.4
FY11E* 105.4 19.7 35.6 26.3 4.5 78.8 18.5 2.8 3.0 15.9 1.4
Figure in Rs.bn
24 June 2009 HDFC Bank 47

DOLAT CAPITAL

Interest Income 101,150 163,323 185,611 219,158 Valuation
Interest Expenses 48,871 89,111 97,601 113,799 EPS (Rs) 44.9 52.8 62.3 78.8
Net Interest Income 52,279 74,212 88,010 105,359 Book Value (Rs) 324.4 344.3 462.5 526.6
Other Income 22,831 32,906 39,514 46,752 Adj. Book Value (Rs) 316.6 329.6 437.0 486.3
Operating Income 75,110 107,118 127,524 152,112 P/E (x) 32.5 27.6 23.4 18.5
Operating Expenses 37,456 55,328 68,541 81,668 P/BV (x) 4.5 4.2 3.1 2.8
Operating Profit 37,654 51,790 58,983 70,443 P/ABV (x) 4.6 4.4 3.3 3.0
Provisions and Contengencies 14,843 18,791 17,884 18,893
Profit before Tax 22,811 32,999 41,100 51,551 Profitability (%)
Provision for Tax 6,909 10,549 12,946 15,981 RoANW 17.7 17.2 15.8 15.9
Profit after Tax 15,902 22,449 28,153 35,570 RoAA 1.4 1.4 1.4 1.4
Cost / Income Ratio 49.9 51.7 53.7 53.7
BALANCE SHEET Cost / Avg. Earning Assets 3.5 3.7 3.6 3.5
Particulars Mar’08 Mar’09 Mar’10E Mar’11E Avg. yield on Advances 12.6 15.0 12.5 11.8
Sources of Funds Avg. yield on Investments 7.2 7.4 7.0 7.0
Equity Capital 3,544 4,254 4,516 4,516 Avg. cost on Deposits 5.2 6.6 5.7 5.4
Reserver & Surplus 111,428 142,209 204,332 233,280 Spread 4.0 3.8 3.6 3.6
Net Worth 114,972 146,463 208,848 237,796 Net Interest Margin 4.9 4.9 4.6 4.5
Deposits 1,007,686 1,428,116 1,733,854 2,155,214
Borrowings 45,949 26,858 37,211 45,448 Growth (%)
Other Liabilities 163,158 227,206 235,962 272,183 Net Interest Income 40.9 42.0 18.6 19.7
Other Income 50.6 44.1 20.1 18.3
Total Liabilities 1,331,766 1,832,708 2,215,940 2,710,706
Operating Profit 34.2 37.5 13.9 19.4
Net Profit 39.3 41.2 25.4 26.3
Application of Funds
Credit 35.1 55.9 22.5 25.0
Cash & Balance with RBI 125,532 135,272 142,432 148,690
Deposit 47.5 41.7 21.4 24.3
Bal. with Banks/ Short Notice 22,252 39,794 44,910 49,099
C/D ratio 62.9 69.2 69.9 70.3
Advances 634,269 988,830 1,211,317 1,514,147
Investment / Deposit Ratio 49.0 41.2 41.6 41.6
Investments 493,935 588,175 721,922 897,293
Fixed Assets 11,751 17,067 20,624 22,192
Asset Quality
Other Assets 44,027 63,568 74,734 79,286
NPAs as % to Net Advances (%) 0.4 0.6 1.0 1.2
Total Assets 1,331,766 1,832,708 2,215,940 2,710,706
Dividend
E-estimates
DPS (Rs) 8.5 10.0 11.5 13.0
Capital Adequacy (%)
CAR 13.6 15.7 14.8 13.1
Efficiency
Avg. Business per Employee (Rs cr) 3.7 3.9 4.3 4.6
Avg Profit per Employee (Rs lakh) 3.6 3.6 4.1 4.4
E-estimates
24 June 2009 HDFC Bank 48

Indraprastha Gas Ltd.(IGL)
DOLAT CAPITAL
CMP: Rs 137
Target Price: Rs 180 Oil & Gas / Buy
Ready for Common- “Wealth”...!!!
The green fuel culture with inbuilt cost economics is driving the City Gas Distribution (CGD) projects. Indraprastha
Gas Ltd’s (IGL) business model has a location advantage of catering to the high growth National Capital Region
(NCR), home to the largest number of four wheelers and expanding residential population. The expansion phase
undertaken by IGL to capture new demand from commonwealth games, increasing conversion of private vehicles to
CNG would keep IGL on growth trajectory. The promoter (GAIL) strength ensures availability of gas on a priority basis
to IGL. IGL has witnessed some operating margin pressure in FY09 due to additional gas requirements beyond
allocated quota but IGL has raised the selling price of CNG to counter it. We reiterate our BUY recommendation with
a DCF based price target of Rs. 180 at which it would trade at 12.4x FY11E earnings.
Analyst: Priyank Chandra Investment Rationale

Tel : +9122 4096 9737
Email: priyank@dolatcapital.com
Monopoly Play on Future Fuel in NCR (Delhi)
NCR is the pioneer in delivering Green Fuel culture in the country. Indraprastha
BSE Sensex 14423 Gas Ltd. (IGL) is the exclusive supplier of CNG (for transport) and PNG (for
NSE Nifty 4293 household and commercial) for this region. The marketing exclusivity extension
Scrip Details from 2010 till 2012 would enable IGL to strengthen its distribution network across
Equity Rs.1400mn the region. IGL being incumbent retains the network access premium and benefits
Face Value Rs.10/- from latent relative fuel economy of CNG.
Market Cap Rs.19.2bn Enviable User Economics
US$392.2mn The usage of CNG as transport fuel offers unprecedented savings (~67% v/s. petrol
52 week High/Low Rs.153/92 and ~40% v/s. diesel). The regulatory compliance of the green fuel for public transport
1-Month Avg. Volume (Daily) 592700
further strengthens the case for sustainable demand scenario. Future revenue growth
BSE Code 532514
triggers would come in from better institutional spread, and conversion of private
NSE Symbol IGL
Bloomberg Code IGL IN
vehicles to CNG owing to fuel economics.
Reuters Code IGAS.BO Visible Growth – both in depth and breadth
Business Group - Govt. of India
IGL plans to increase its compression capacity at its existing CNG stations and
plans to add another 35 stations by 2010. IGL added 18 stations in FY09. It is also
Shareholding Pattern as on Mar’08(%) expanding its pipeline network to fully cover New Delhi along with the extended
Promoter 45.0 areas of Noida, Greater Noida and Ghaziabad. The NCR region is at its inflexion
MF/Banks/FIs 23.2 with the onset of Commonwealth 2010. Not only is it expected to benefit from the
FIIs 17.2
demand for public transport in form of buses and radio taxis, but also from the new
residential development around the proposed Metro.
Limited Risk Business Model
IGL is a beneficiary of a promoter pedigree like GAIL – which is the key driver of the
IGL relative to BSE Sensex
190 gas economy in India. GAIL, (which owns 22.5% of IGL), is its sole supplier. IGL
has witnessed some operating margin pressure in FY09 due to additional gas
170 requirements over and above the allocated quota. To counter the same up to some
extent, IGL has raised the selling price of CNG. The selling price of CNG in NCR is
150
cheapest in the country. The last mile exclusivity (coupled with relative fuel economy
130 in the entire fuel chain) also makes the model blessed with sufficient pricing power.
Valuation
110
IGL would benefit from three key factors in its business model – an enabler of
90
energy economy (with adequate pricing power), a facilitator of green fuel culture
and an exclusive supplier (incumbent) in a high growth region. These positives
70 weigh-in both in its cash generation capacities, as well as the access premium.
Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 IGL is a debt free company and generates enough internal accruals to fund its
IGL BSE Sensex future expansions. We reiterate our BUY recommendation with a DCF based price
target of Rs.180 at which it would trade at 12.4x FY11E earnings.
Financials
Year Net Sales % Growth EBIDTA OPM % PAT NPM % EPS (Rs.) PER (x) EV/EBIDTA (x) ROANW(%) ROACE (%)
FY08 7,060 15.0 3,070 43.1 1,745 24.5 12.5 11.0 5.8 33.4 47.0
FY09P 8,528 20.8 3,044 35.5 1,725 20.1 12.3 11.1 5.9 27.4 39.0
FY10E 10,875 27.5 3,582 32.8 1,866 17.1 13.3 10.3 4.9 25.4 36.9
FY11E 13,275 22.1 3,883 29.1 2,038 15.3 14.6 9.4 4.1 24.2 35.2
Figure in Rs.mn, P=Balance Sheet Nos. are Projected.
24 June 2009 Indraprastha Gas Ltd. 49

DOLAT CAPITAL
Other Operating Income 69.6 43.5 45.7 48.0 Contribution Margin
Power, Oil & Fuel 90.1 0.0 141.4 172.6 Tax/PBT 33.1 35.0 35.0 35.0
Selling & Administrative Expenses 452.6 0.0 771.4 965.6 Net Profit Margin 24.5 20.1 17.1 15.3
Other Expenses 152.5 1,184.0 250.1 312.0 (B) As Percentage of Net Sales
Other Income 164.8 218.7 233.8 280.6 Raw Material 45.3 48.2 54.0 57.5
EBIDTA (Excl. Other Income) 3,069.9 3,044.3 3,582.0 3,883.2 Employee Expenses 2.2 2.8 2.6 2.5
EBIDTA (Incl. Other Income) 3,234.7 3,262.9 3,815.8 4,163.8 Power, Oil & Fuel 1.3 0.0 1.3 1.3
Interest 0.0 0.0 0.0 0.0 Selling & Administrative Expenses 6.4 0.0 7.1 7.3
Gross Profit 3,234.7 3,262.9 3,815.8 4,163.8 Provisions & Write Offs 0.2 0.0 0.2 0.2
Depreciation 625.8 674.3 944.6 1,028.6 Other Expenses 2.2 13.9 2.3 2.4
Extra Ordinary Exps/(Income) 0.0 0.0 0.0 0.0 (C) Measures of Financial Status
Profit Before Tax 2,609.0 2,588.6 2,871.2 3,135.2 Debt / Equity (x) 0.0 0.0 0.0 0.0
Tax 864.4 863.9 1,004.9 1,097.3 Interest Coverage (x) - - - -
Net Profit 1,744.6 1,724.7 1,866.3 2,037.9 Average Cost Of Debt (%) 0.0 0.0 0.0 0.0
Minority Interest Debtors Period (days) 11.7 12.0 13.0 14.0
Net Profit 1,744.6 1,724.7 1,866.3 2,037.9 Closing stock (days) 11.8 12.5 13.0 13.5
BALANCE SHEET Fixed Assets Turnover (x) 1.1 1.0 1.0 1.2
Particulars Mar’08 Mar’09 Mar’10E Mar’11E Working Capital Turnover (x) 8.6 9.5 10.9 5.0
Sources of Funds Non Cash Working Capital (Rs Mn) (581.3) (496.0) (765.4) (829.5)
Equity Capital 1,400.0 1,400.0 1,400.0 1,400.0

Other Reserves 4,364.6 5,434.2 6,481.5 7,577.6 (D) Measures of Investment
Revaluation reserve EPS (Rs.) 12.5 12.3 13.3 14.6
Secured Loans 0.0 0.0 0.0 CEPS (Rs.) 16.9 17.1 20.1 21.9
Unsecured Loans 68.3 79.6 92.1 104.6 DPS (Rs.) 4.0 4.0 5.0 5.8
Loan Funds 68.3 79.6 92.1 104.6 Dividend Payout (%) 32.1 32.5 37.5 39.5
Deferred Tax Liability 238.5 299.2 370.6 399.2 Profit Ploughback (%) 67.9 67.5 62.5 60.5
Book Value (Rs.) 41.2 48.8 56.3 64.1
RoANW (%) 33.4 27.4 25.4 24.2
RoACE (%) 47.0 39.0 36.9 35.2
Gross Block 6,680.1 8,380.1 10,380.1 11,180.1
Net Block 3,575.8 4,601.5 5,656.9 5,428.3
CMP (Rs.) 137.0 137.0 137.0 137.0
P/E (x) 11.0 11.1 10.3 9.4
Investments 1,088.4 1,034.0 1,085.7 1,194.2
Market Cap. (Rs. Mn.) 19,180.0 19,180.0 19,180.0 19,180.0
MCap/ Sales (x) 2.7 2.2 1.8 1.4
Inventories 229.2 292.0 387.3 491.0
EV (Rs. Mn.) 17,849.5 17,866.1 17,505.0 15,796.3
Sundry Debtors 226.4 280.4 387.3 509.2
EV/Sales (x) 2.5 2.1 1.6 1.2
EV/EBDITA (x) 5.8 5.9 4.9 4.1
Loans and Advances 406.5 606.5 756.5 1,056.5
P/BV (x) 3.3 2.8 2.4 2.1
Dividend Yield (%) 2.9 2.9 3.6 4.2
sub total 2,279.1 2,590.5 3,316.3 5,563.0
E-estimates
Current Liabilities 788.4 1,012.8 1,463.7 1,923.5
Provisions 673.2 680.2 851.0 980.8
sub total 1,461.5 1,693.0 2,314.7 2,904.3
Net Current Assets 817.6 897.5 1,001.6 2,658.8
Misc Expenses
Total Assets 6,071.4 7,212.9 8,344.2 9,481.3
CASH FLOW
Depreciation & w.o. 625.8 674.3 944.6 1,028.6
Direct taxes paid (954.1) (863.9) (1,004.9) (1,097.3)
Change in Working Capital (Non Cash) (93.8) (85.3) 269.4 64.0
Other (157.0) 60.7 71.4 28.6
Capex {Inc./ (Dec.) in Fixed Assets n WIP} (854.6) (1,790.3) (1,920.0) (400.0)
Free Cash Flow 1,175.2 584.1 1,231.7 2,759.1
Inc./ (Dec.) in Investments 188.0 54.4 (51.7) (108.6)
Other 108.1
(B) Cash Flow from Investing Activities (558.4) (1,735.9) (1,971.7) (508.6)
Inc./(Dec.) in Debt 14.5 11.3 12.5 12.5
Other
(C) Cash Flow from Financing (476.9) (643.9) (806.5) (929.3)
Net Change in Cash 994.4 (5.4) 373.6 1,721.2
E-estimates
24 June 2009 Indraprastha Gas Ltd. 50

IndusInd Bank Ltd.
DOLAT CAPITAL
CMP: Rs 83
Target Price: Rs 94 Banking / Accumulate
New wine in a new bottle…!!!
IndusInd Bank is in restructuring mode after a change in the top level management. The bank historically was
characterized by low business growth and profitability. However, the restructuring efforts have started showing
results with improved performance in the various business segments – profitability, NIMs and business growth.
We believe the stock is yet to completely re-rate with the change in business performance. At CMP, the stock
trades at 11.7x FY11E EPS of Rs 7.1, 1.8x FY11E book value of Rs 47 and 2.3x FY11E adjusted book value of Rs
35.5. We recommend Accumulate with a target price of Rs 94 (2x FY11E book value) over the next 12 months.
Analyst: Darpin Shah Investment Rationale

Tel : +9122 4096 9754
Email: darpin@dolatcapital.com Change of guard to augur well for business growth
Associate : Jaynee Shah
IndusInd bank has roped in a new management with a clear focus on profitability,
Tel : +9122 4096 9724 productivity and efficiency. The new management aims to reposition the bank
Email: jaynee@dolatcapital.com as a top 3 performer – in terms of RoE, RoA, NIM, Asset Quality and efficiency
amongst the new private banking space. The management has created separate
BSE Sensex 14423
NSE Nifty 4293 business units to cater to the needs of specific customers and increase the
client base. Additionally, effort has been made to increase per branch productivity
Scrip Details and efficiency with a focus on cost reduction. The bank has licenses for 30
Equity Rs. 3552 mn branches from RBI and intends to apply for additional licenses. This, in our
Face Value Rs.10/-
opinion, would entail higher CASA and consequently stronger NIM’s. We expect
US$ 602mn the bank’s core earnings to register a 31% CAGR during FY09-FY11e.
52 week High/Low Rs.91.3/26
Improvement in core operations
BSE Code 532187 The restructuring process has started showing results in the bank’s performance
NSE Symbol INDUSINDBK with core earnings growing 53%, NIMs improving to 1.9% (1.5% in FY08) and
Bloomberg Code IIB IN net profit growing by 98% in FY09. Further, the C/I ratio has improved to ~60%
Reuters Code INBK.BO
(67% in FY08). Going forward, we expect the bank’s core earnings to grow by a
Business Group - Hinduja 31% CAGR driven by business growth of 22.2% CAGR and NIMs improving to
Shareholding Pattern as on Mar’09(%) 2.3%. Net profit is expected to grow by 30% CAGR after factoring higher slippages
Promoter 25.6 and also increasing the coverage ratio to 48.5% (30% in FY09). The RoE and
MF/Banks/FIs 1.0 RoA improve to 13.7% and 0.7% in FY 11e respectively.
FIIs 18.7
Corporate Bodies 14.7 Factoring in asset quality deterioration but no major worries
Public / Others 40.0 The bank has been saddled with poor asset quality historically. However post
the turnaround in its strategy, the bank has been able to improve its gross NPL’s
IndustInd relative to BSE Senses
140
and net NPLs to 1.6% and 1.1% respectively (3.1% and 2.3% in FY08) with a
coverage ratio of 30%. We factor in increased slippages for the bank (gross
130
NPL’s at 3.3% in FY10E and net NPL’s at 1.7% in FY10E) and consequently
120 build in higher provisions in our estimates.
110
Valuation
100
We believe that the bank will continue to reap the fruits of its turnaround
90 strategy and record an impressive growth on the business and operational
80 front. We believe the stock is yet to completely re-rate with the change in
70 the business performance.
60 At CMP, the stock trades at 11.7x FY11E EPS of Rs 7.1, 1.8x FY11E book
Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 value of Rs 47and 2.3x FY11E adjusted book value of Rs 35.5. We
IndustInd BSE Sensex recommend Accumulate with a target price of Rs 94 (2xFY11E book value)
over the next 12 months.
Financials
Year NII % chg NIM (%) Net Profit % chg EPS (Rs) P/E (x) P/BV (x) P/ABV (x) RoANW (%) RoAA (%)
FY08 3,008.0 10.8 1.5 750.5 11.6 2.3 35.4 2.4 3.2 6.2 0.3
FY09E 4,590.3 52.6 1.9 1,483.4 97.7 4.2 19.9 2.2 2.5 10.0 0.6
FY10E 5,990.7 30.5 2.1 1,923.4 29.7 5.4 15.3 2.0 2.4 11.4 0.6
FY11E 7,828.6 30.7 2.3 2,510.8 30.5 7.1 11.7 1.8 2.3 13.7 0.7
Figure in Rs.mn
24 June 2009 IndusInd Bank Ltd. 51

DOLAT CAPITAL
Provisions and Contengencies 819 1,408 1,672 1,839
Profit before Tax 1,143 2,275 2,871 3,747 Profitability (%)
Provision for Tax 392 792 947 1,237 RoANW 6.2 10.0 11.4 13.7
Profit after Tax 750 1,483 1,923 2,511 RoAA 0.3 0.6 0.6 0.7
Cost / Income Ratio 67.2 59.8 58.9 58.3
BALANCE SHEET Cost / Avg. Earning Assets 2.0 2.3 2.3 2.3
Avg. yield on Advances 11.9 12.6 11.9 11.1
Avg. yield on Investments 6.4 6.6 6.7 6.7
Sources of Funds
Avg. cost on Deposits 7.6 8.2 7.6 6.9
Equity Capital 3,205 3,563 3,552 3,552
Spread 0.9 1.4 1.6 1.8
Reserver & Surplus 10,292 12,601 13,925 15,716
Net Interest Margin 1.5 1.9 2.1 2.3
Net Worth 13,497 16,164 17,477 19,268
Deposits 190,374 221,103 269,637 328,218
Growth (%)
Borrowings 10,954 18,565 21,964 26,478
Net Interest Income 10.8 52.6 30.5 30.7
Other Liabilities 17,793 20,291 23,570 27,486
Other Income 21.9 53.3 10.8 10.5
Total Liabilities 232,619 276,123 332,648 401,451
Net Profit 11.6 97.7 29.7 30.5
Credit 15.4 23.3 22.0 23.5
Cash & Balance with RBI 15,263 11,884 14,390 17,364
Deposit 7.9 16.1 22.0 21.7
Bal. with Banks/ Short Notice 6,518 7,329 7,799 8,269
C/D ratio 67.2 71.3 71.4 72.4
Advances 127,953 157,706 192,402 237,616
Investment / Deposit Ratio 34.8 36.6 36.2 35.4
Investments 66,297 80,834 97,484 116,346
Fixed Assets 6,251 6,232 7,816 8,533
Asset Quality
Other Assets 10,337 12,138 12,757 13,322
Total Assets 232,619 276,123 332,648 401,451 Dividend
E-estimates DPS (Rs) 0.6 1.2 1.5 1.8
Capital Adequacy (%)
CAR 11.9 12.3 11.7 11.2
Efficiency
Avg. Business per Employee (Rs cr) 10.6 8.2 8.6 8.7
E-estimates
24 June 2009 IndusInd Bank Ltd. 52

Manappuram General Finance & Leasing
DOLAT CAPITAL
CMP: Rs 273
Target Price: Rs 346 Financial Institution / BUY
Midas Touch...!!!
Manappuram General Finance and Leasing (MGFL) is a unique business model with a focus on low ticket borrowers.
It has adopted a distinctive process of asset verification, customer selection and pricing strategies, which offer
higher margins and return ratios with virtually ‘Zero’ NPAs. The securitisation of loans with banks/ FIs, recent capital
infusion and the merger with the group company (MFTL) is expected to enhance the merged entity’s loan book as
well as the balance sheet size.
At CMP, the stock trades at 8x FY11E EPS of Rs 35; 1.8x FY11E book value and 1.8x FY11E adj. book value. We
recommend a BUY on the stock with a revised target price of Rs 346 (2.3x FY11BV) for the next 12months.

Tel : +9122 4096 9754
Unique financing model
Email: darpin@dolatcapital.com
MGFL has a unique model of financing where the focus is on financing the borrower
Associate : Jaynee Shah based on asset security rather than the cash flow capability. The model is categorized
Tel : +9122 4096 9723
by multiple disparate assets (sub-Rs.20K) with a focus on financing low ticket borrowers
Email: jaynee@dolatcapital.com
with virtually no finance records. The process has evolved through the years and offers
BSE Sensex 14423
modular scalability to the business. The unique process of asset (Household Used
NSE Nifty 4293 Jewellery - HUJ) verification, customer selection (emotional involvement with asset)
and pricing strategies (value and rate) offer a unique business with high customer
Scrip Details
relevance, higher margins, better return ratios and also virtually clean Balance Sheet.
Equity Rs.331.4mn
Face Value Rs.10/- Building blocks in place for future growth
Market Cap Rs.9.03bn The model is also blessed with regulatory provisions which allow MGFL for securitising
US$184.9mn its loan book with banks (which fall under the core sector category for these banks). To
adapt the regulatory compliance of maintaining CAR, MGFL has merged itself with one
BSE Code 531213 of the promoter group companies – Manappuram Finance Tamil Nadu Ltd (MFTL).
NSE Symbol - MFTL is also engaged in the similar business (AUM of ~ Rs 2.9bn and a balance sheet
Bloomberg Code MGFLIN size of Rs1.34bn - Dec 2008) and has raised capital of the tune of Rs 240mn in 2007
Reuters Code MGFL.BO and Rs 324mn in 2008. The process will enhance the merged entity’s AUM to Rs 31.9bn
Business Group - Indian Private and have a balance sheet size to Rs 15.6bn in FY11E.
Shareholding Pattern as on Mar’09(%) Enviable financial parameters
Promoter 30.4 MGFL is a ‘Specimen Case’ in NBFC segment - NIMs in excess of 13%, a committed
MF/Banks/FIs 0.9 flow from banks for extension of their priority sector commitments and a virtually zero
FIIs 3.1
NPA balance sheet. The model gains further strength with the fact that with the recent
Public / Others 65.5 capital infusion and the proposed business restructuring adds a growth angle to an
already exciting story. Not to forget the fact that the Rs.12bn book is back-ended with
MGFL relative to Sensex 11T gold equivalent HUJ items (worth Rs 13.5bn).
210
Impervious business model
190 MGFL is the only listed NBFC and its entire portfolio comprises of gold lending in India.
170 In an environment of uncertainty, reliance on gold as a security increases, thus providing
150 a safe haven for the lender as well as enhancing short term liquidity for customer.
130 Further the target audience at the bottom of the pyramid offers uniform stratum with
specific location flair (something which MGFL has already engrained in its
110
processes).The increased relevance of gold in global ecosystem further enhances the
90 value proposition of a business that finances against the yellow metal.
70
Valuation
50
At CMP, the stock trades at 7.8x FY11E EPS of Rs 35; 1.8x FY11E book value and
1.8x FY11E adj. book value. We recommend a BUY on the stock with a revised
MGFL BSE Sensex target price of Rs 346 (2.3x FY11BV) for the next 12months.
Financials
Year (Rs.mn) NII % chg Net Profit % chg NIM (%) EPS (Rs) PER (x) P/BV (x) P/ABV (x) RoANW (%) RoAA (%)
FY09E* 1,527.1 77.7 481.0 70.0 14.2 17.4 15.7 3.1 3.1 33.2 8.4
FY10E* 2,275.1 49.0 712.2 48.1 13.1 21.5 12.7 2.3 2.3 22.1 7.3
FY11E* 3,513.3 54.4 1,158.5 62.7 13.2 35.0 7.8 1.8 1.8 25.6 8.5
Note: - * - Fully Diluted and post merger
24 June 2009 MGFL 53

DOLAT CAPITAL
Particulars Mar’09E Mar’10E Mar’11E Particulars Mar’09E Mar’10E Mar’11E

Interest Income 1,931.0 2,937.5 4,416.2 Valuation
Interest Expenses 403.9 662.4 902.9 EPS (Rs) 17.4 21.5 35.0
Net Interest Income 1,527.1 2,275.1 3,513.3 Book Value (Rs) 89.1 120.3 152.9
Other Income 52.7 71.3 89.5 Adj. Book Value (Rs) 88.8 119.8 152.1
Operating Income 1,579.7 2,346.4 3,602.9 P/E (x) 15.7 12.7 7.8
Operating Expenses 761.3 1,105.0 1,593.0 P/BV (x) 3.1 2.3 1.8
Operating Profit 818.4 1,241.4 2,009.9 P/ABV (x) 3.1 2.3 1.8
Provisions and Contengencies 88.4 159.9 249.9
Profit before Tax 730.0 1,081.5 1,759.9 Profitability (%)
Provision for Tax 249.1 369.3 601.4 RoANW 33.2 22.1 25.6
Profit after Tax 481.0 712.2 1,158.5 RoAA 8.4 7.3 8.5
Leverage 4.0 3.0 3.0
BALANCE SHEET Cost / Income Ratio 24.5 23.9 22.4
Particulars Mar’09E Mar’10E Mar’11E Cost / Assets 9.5 9.6 10.2
Sources of Funds Avg. yield on Advances 18.0 16.9 16.6
Equity Capital 275.9 331.4 331.4 Avg. cost on Deposits 10.5 10.1 10.0
Pref Shares 150.0 0.0 0.0 Spread 7.5 6.7 6.6
Reserver & Surplus 2,033.7 3,655.4 4,734.5 Net Interest Margin 14.2 13.1 13.2
Net Worth 2,459.6 3,986.8 5,065.9

Loan Funds 5,571.8 7,512.9 10,563.8 Growth (%)
- Secured Fund 4,976.6 6,318.4 8,894.2 Net Interest Income 77.7 49.0 54.4
- Unsecured Fund 595.2 1,194.5 1,669.6 Other Income 77.9 35.3 25.6
Deferred Tax Liability 1.2 1.2 1.2 Operating Profit 74.4 51.7 61.9
Net Profit 70.0 48.1 62.7
Total Liabilities 8,032.7 11,500.9 15,630.8
Credit 158.3 35.5 41.4
Funds 158.3 34.8 40.6
Asset Quality
Goodwill 0.0 0.0 0.0
NPAs as % to Net Advances (%) 0.2 0.2 0.2
Net Fixed Assets 334.8 470.1 591.8
Dividend
Total Investments 21.9 19.7 18.2
DPS (Rs) 2.5 2.8 3.0
Loans and Advances 5,875.4 7,962.5 11,255.1
E-estimates
Total Current Assets 2,176.1 3,474.7 4,299.6
Total Current Liabilities 375.5 426.1 533.9
Net Current Assets 1,800.6 3,048.6 3,765.7
Total Assets 8,032.7 11,500.9 15,630.8
E-estimates
24 June 2009 MGFL 54

Maruti Suzuki India Ltd.
DOLAT CAPITAL
CMP: Rs 1060
Target Price: Rs 846 Automobile / Sell
Impending Traffic...!!!
MSIL’s dominance in the Indian passenger car market with more than 50% market share can be ascribed to its ability
to repeatedly introduce new models encompassing its core philosophy of value for money in a relatively benign
competitive landscape. Although, we believe that the company would continue to benefit from the growth in the
Indian auto industry, however, increased level of competition in the compact car segment would result in loss of
market share from current 70%+ levels. Furthermore, possibility of expansion in working capital cycle along with
shift in operating model by undertaking higher development efforts by MSIL, act as potential valuation dampeners.
We expect the company to trade below the top end of its 1 Yr forward PER band. At CMP, the stock is trading at 17.5x
FY11E EPS. We recommend a SELL with a price target of Rs 846 (14x FY11E).
Analyst: Navin Matta

Rationale
Tel : +9122 4096 9752
Email: navin@dolatcapital.com Compact car segment to witness increased competition
Associate : Harshal Patil India being pegged as a small car hub is likely to witness several new launches in
Tel : +9122 4096 9725 the segment over the next two to three years. Most global auto majors including
Email: harshal@dolatcapital.com Toyota, Ford, Volkswagen and Honda in addition to the ultra low cost car category
BSE Sensex 14423 are targeting the fast growing compact car segment, with high level of localization
NSE Nifty 4293 thereby ensuring competitive price points. Although MSIL holds distinct advantages
Scrip Details
through its extensive sales and dealer network and well entrenched rural reach, we
Equity Rs 1,445 mn
believe its 70%+ market share in the compact car segment would be dented by the
Face Value Rs.5/- elevated level of competition. Notwithstanding the growth potential in the Indian
Market Cap Rs 306.3bn automobile market, 30-40% increase in capacity addition would put pressure on
US$ 6,256 mn the market leader.
52 week High/Low Rs.1,120/428
1-Month Avg. Volume 966668 Increase in SKU’s to stretch working capital cycle
BSE Code 532500 MSIL’s strategy of expanding its product portfolio with frequent new model/variant
NSE Symbol MARUTI launches has enabled its volumes to outpace industry growth rate. However, the
Bloomberg Code MSILIN
Reuters Code MRTI.BO
wide product range poses a challenge of maintaining higher number of SKU’s, both
at the company and the dealer level, therefore translating into expansion in MSIL’s
working capital cycle. In view of increasing number of choices for the customer, we
believe higher waiting period for MSIL’s vehicles would eventually result in loss of
Promoter 54.2 sales.
MF/Banks/FIs 21.7
FIIs 19.4 Unfavorable shift in operating model
Corporate Bodies 2.3 In the context of shortening product life cycles and higher product development
Public / Others 2.5
expenses, we firmly believe that companies adopting a lower operating leverage
model are better placed compared to those having a higher fixed costs structure.
Maruti relative to BSE Sensex
180 The key benefits lie in lowering the dependence on success of new launches as
well as ability to shrink time to market for new model/variant launches. MSIL’s
160
increased involvement in development efforts towards the recently launched A-star
140 signals an a shift towards a higher fixed cost model.
120 Valuation and View

MSIL’s stock price has increased by 90% YTD primarily on the back of stronger
100 than expected volume growth over the past six months along with improvement in
80 overall economic scenario. However, we believe MSIL’s current valuations disregard
the adverse effect on the company’s volume growth in the context of increased
60 competition and possible sunset clause on stimulus package announced in Dec’08.
Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 We expect the company to trade below the top end of its 1 Yr forward PER band. At
Maruti BSE Sensex CMP, the stock is trading at 17.5x FY11E EPS. We recommend a SELL with a price
target of Rs 846 (14x FY11E).
Financials
FY08 184,957 26.2 28,028 15.2 17,308 10.8 59.9 10.8 17.7 22.7 29.5
FY09 208,525 12.7 18,321 8.8 12,187 -29.6 42.2 -29.5 25.1 14.7 18.5
FY10E 232,095 11.3 24,021 10.3 15,908 30.5 55.0 30.3 19.3 14.5 18.7
FY11E 254,918 9.8 26,119 10.2 17,461 9.8 60.4 9.8 17.5 13.8 18.0
Figure in Rs mn
24 June 2009 Maruti Suzuki India Ltd. 55

DOLAT CAPITAL
Net Sales 178,603 203,583 226,720 249,057 (A) Cost Analysis (%)
Income from services 759 971 1,165 1,398 Excise/Gross Sales 14.7 11.8 9.3 9.1
Other Operating income 5,595 3,972 4,210 4,463 Net Raw Material Cost/net sales 76.4 79.8 77.8 78.0
Total Income 184,957 208,525 232,095 254,918 Power & Fuel/net sales 0.8 0.0 1.2 1.1
Net Raw Material Cost 136,468 162,427 176,321 194,312 Employee Cost/net sales 2.0 2.3 2.3 2.2
Power & Fuel 1,473 2,697 2,840 Other Mfg exp/net sales 3.5 0.0 4.2 4.2
Employee Cost 3,562 4,711 5,141 5,454 Selling & Distribution & Admin exp/net sales 3.0 0.0 3.9 3.9
Other Mfg exp 6,386 9,710 10,733 Other Expenses/net sales 1.9 11.3 2.3 2.2
Selling & Distribution & Admin exp 5,602 9,098 9,973
Other Expenses 3,439 23,067 5,107 5,487 (B) Operational Performance (%)
Total Expenditure 156,929 190,205 208,074 228,799 Operating Profit Margin (excl. O.I.) 15.2 8.8 10.3 10.2
Operating Profit 28,028 18,321 24,021 26,119
Operating Profit Margin (incl. O.I.) 16.9 11.7 13.3 13.5
Other income 3,281 6,013 6,889 8,254
Other Income/net sales 1.8 2.9 3.0 3.2
Interest 596 510 480 480
Gross Profit 30,712 23,824 30,430 33,893
Dep/Gross Block 7.8 8.0 7.8 7.6
Depreciation 5,682 7,065 8,335 9,641
Profit Before Tax & EO Items 25,031 16,759 22,095 24,252
Tax/PBT 30.9 27.3 28.0 28.0
Extra Ordinary Exps/(Income) 0 0 0
Profit Before Tax 25,031 16,759 22,095 24,252
Tax 7,722 4,571 6,187 6,791
(C) Financial Performance
Net Profit 17,308 12,187 15,908 17,461
EPS 60 42 55 60 Average Cost Of Debt (%) 7.8 6.0 6.0 6.0
BALANCE SHEET Closing stock (days) 26.3 30.0 30.0 32.0
Particulars Mar’08 Mar’09P Mar’10E Mar’11E Fixed Assets Turnover (x) 5.4 4.9 4.4 4.0
Sources of Funds Creditors Period (days) 65.5 65.0 66.0 65.0
Equity Capital 1,445 1,445 1,445 1,445 Working Capital Turnover (days) (25.9) (21.0) (22.0) (18.0)
Preference Capital 0 0 Non-Cash Working Capital (518.0) 697.8 1,830.0 4,516.2
Application Money 0 0 Current Ratio (x) 1.1 1.3 1.3 1.4
Share Premium Account 4,241 4,241 4,241 4,241
Reserves (excl Rev Res) 78,468 89,621 104,348 120,628 (D) Other Ratios
Net Worth 84,154 95,307 110,034 126,314 Debt / Equity (x) 0.1 0.1 0.1 0.1
Revaluation reserve Interest Coverage (x) 52.5 47.7 64.4 71.6
Total Reserves 78,468 89,621 104,348 120,628 ROANW (%) 22.7 14.7 14.5 13.8
Secured Loans 1 1 1 1 ROACE (%) 29.5 18.5 18.7 18.0
Unsecured Loans 9,001 8,000 8,000 8,000
Total Loan Funds 9,002 8,001 8,001 8,001 (E) Per Share Data
Deferred Tax Liability 2,697 2,832 2,973 3,122
Earnings Per Share (Rs.) 59.9 42.2 55.0 60.4
Total Capital Employed 95,853 106,140 121,008 137,437 Cash Earnings Per Share (Rs.) 79.6 66.6 83.9 93.8
Dividend Per Share (Rs.) 5.0 3.5 4.0 4.0
Dividend Payout (%) 1.0 1.0 1.0 1.0
Gross Block 72,853 88,853 106,853 126,853
Less: Accumulated Depreciation 39,888 46,953 55,288 64,929
Book Value (Rs.) 291.2 329.8 380.7 437.1
Net Block 32,965 41,900 51,565 61,924
Capital Work in Progress 7,363 5,000 5,000 3,000
Investments 51,807 47,000 51,000 55,000 (F) Valuation Ratios
Current Assets, Loans & Advances Market Price (Rs.) 1060 1060 1060 1060
Inventories 10,380 13,350 15,512 18,226 Price / Earnings Ratio (x) 17.7 25.1 19.3 17.5
Sundry Debtors 6,555 7,809 8,696 10,235 Market Cap. (Rs. mn.) 306,340.0 306,340.0 306,340.0 306,340.0
Cash and Bank Balance 3,240 10,497 10,515 11,843 Market Cap/Sales (x) 1.7 1.5 1.4 1.2
Loans and Advances 10,403 11,963 13,160 14,476 Enterprise Value (Rs. mn.) 312,102.0 303,844.0 303,826.8 302,498.7
Other Current Assets 331 381 419 461 EV/Sales (x) 1.7 1.5 1.3 1.2
sub total 30,909 44,000 48,302 55,240 EV/EBDITA (x) 11.1 16.6 12.6 11.6
Less : Current Liabilities & Provisions E-estimates
Current Liabilities 24,492 28,925 31,883 34,604
Provisions 3,695 3,880 4,074 4,277
sub total 28,187 32,805 35,956 38,881
Net Current Assets 2,722 11,195 12,345 16,360
Misc Expenses
Deferred Tax Asset 996 1,046 1,098 1,153
Total Assets 95,853 106,140 121,008 137,437
E-estimates
CASH FLOW
Profit before tax. 25030 16759 22095 24252
Depreciation & w.o. 5682 7065 8335 9641
Net Interest Exp (812) 510 480 480
Direct taxes paid (8647) (4571) (6187) (6791)
Change in Working Capital (Non Cash) (83) (1216) (1132) (2686)
Other (2866)
(A) Cash Flow from Operating Activities 18304 18547 23591 24896
Capex {Inc./ (Dec.) in Fixed Assets n WIP} (16930) (13637) (18000) (18000)
Free Cash Flow 1374 4910 5591 6896
Inc./ (Dec.) in Investments (16843) 4807 (4000) (4000)
Other 3158
(B) Cash Flow from Investing Activities (30615) (8830) (22000) (22000)
Issue of Equity/ Preference 0 0 0 0
Inc./(Dec.) in Debt 3365 (1001) 0 0
Interest exp net (743) (510) (480) (480)
Dividend Paid (Incl. Tax) (1299) (1178) (1347) (1347)
Other 85 89 94
(C) Cash Flow from Financing 1323 (2604) (1737) (1733)
Net Change in Cash (10988) 7113 (147) 1163
Opening Cash balances 14228 3240 10497 10515
Closing Cash balances 3240 10497 10515 11843
E-estimates
24 June 2009 Maruti Suzuki India Ltd. 56

Mundra Port and Special Economic Zone Ltd.
DOLAT CAPITAL
CMP: Rs 611
Target Price: Rs 487 Infrastructure and Port / Sell
Above Sea Level...!!!
Mundra Port offers a rare model of an all weather private port with an integrated SEZ. The business model is blessed
with strategic location, futuristic infrastructure, a diversified cargo mix and contemporary hinterland connectivity.
We remain positive on the growth prospects of port operation on the back of its strategic positioning in emerging
India logistics and industrial scenario. Outlook for SEZ business looks bleak for at least the next two quarters on
account of current slowdown in the economy. However, the recent run up in the stock price has taken the valuation
beyond fair value assessed by us and therefore we recommend a SELL on the stock with a revised target price of Rs 487.
Analyst: Kapil Yadav Rationale

Tel : +9122 4096 9735
Email: kapil@dolatcapital.com
Strategic Location-Quick evacuation of cargo
MPSEZ is an all weather port, with its deep draft (17mt-32mt) and a location on
BSE Sensex 14423 western coast which offers better rail connectivity (it has a 218km distance
NSE Nifty 4293 advantage over the competing ports in the northern hinterland with lower
transportation costs). The futuristic infrastructure at port offers quicker turnaround
Scrip Details
time (reduced cost for shipping lines). Its berths are capable of handling post
Equity Rs.4006.8mn
Panamax and 5th generation container vessels (8000 TEUs).
Face Value Rs.10/-
Market Cap Rs.245bn Long term agreement providing- future growth
US$5006mn MPSEZ has a balanced mix when it comes to type of cargo, shippers, shipping
52 week High/Low Rs.705/250 lines as well as Logistics players. The long term agreements range from IOC, GGSRL
1-Month Avg. Volume 1055797 (for single point mooring facility for crude oil), to Tata power and Adani Power (more
BSE Code 532921 than 50% of the estimated coal traffic tied up with these two power plants). Apart
NSE Symbol MUNDRAPORT from this it also gets direct access to the northern exim belt for other aggregated
Bloomberg Code MSEZ IN cargo (Containerized). This balance provides the much needed visibility and stability
Reuters Code MPSE.BO
to MPSEZ’s future cash flows.
Business Group - Adani Group
SEZ – distinction to the business model; but near term outlook is subdued
Shareholding Pattern as on Mar’09(%) MPSEZ could not lease any additional land in the last 6 months. The near term
Promoter 81.2 outlook for the SEZ business remain subdued unless economic recovery happens
MF/Banks/FIs 2.8 at accelerated pace. We have moderated our outlook for SEZ business for FY10
FIIs 6.5 and estimated a fresh lease of land of 250 acres against earlier estimate of 300
acres. We have valued the SEZ at Rs 46/- per share in its current state.
Public / Others 8.4
Increased capacity expansion and new services to provide next leg of growth
MPSEZ has been developed with detailed planning. The Phase-I is already complete.
Mundra relative to Sensex With building blocks in place (in terms of infrastructure (operative and logistic),
110
alliances, trade history and business learning), MPSEZ stands to benefit from
increased momentum in the trade velocity with minimal incremental investments.
100
But the liquidity crunch has forced private sector companies to pushback and/or
90 cancels investments. This will have an impact not only on trade volumes as economic
activities contracts, but will also hurt demand for land.
80 Valuation
We expect the revenues of MPSEZ to grow at CAGR of 35% and PAT to grow at a
70
CAGR of 61% for the next two years. This is primarily due to additional contribution
60
from coal terminal and increase in cargo handling at all its facilities like bulk container
and liquid cargo from 35.7mt to 50mt from FY09-FY11. The SEZ business looks
50 bleak for at least the next two quarters due to slow down in the economy. We have
Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 revised our earning estimates upward by increasing port volume for next two years.
However, the recent run up in the stock price has taken the valuation beyond fair
Mundra BSE Sensex
value assessed by us and therefore we recommend a SELL on the stock with a
revised target price of Rs. 487.
Financials
FY08 8,182 41.1 5,354 65.4 2,134 13.9 5.1 -2.6 114.7 12.7 11.3
FY09P 11,949 46.0 7,340 61.4 4,325 102.7 10.8 113.0 56.6 15.5 11.0
FY10E 14,526 21.6 9,749 67.1 6,062 40.2 15.1 40.2 40.4 18.7 13.6
FY11E 21,786 50.0 15,761 72.3 11,217 85.0 28.0 85.0 21.8 27.8 20.2
Figure in Rs mn
24 June 2009 Mundra Port and Special Economic Zone Ltd. 57

DOLAT CAPITAL

Particulars Mar’08 Mar’09P Mar’10E Mar’11E Particulars Mar’08 Mar’09P Mar’10E Mar’11E
Other income 279.0 446.0 446.0 446.0 EBIDTA Margin (excl. O.I.) 65.4 61.4 67.1 72.3
Total Income 8,461.1 12,395.2 14,971.8 22,232.2 EBIDTA Margin (incl. O.I.) 66.6 62.8 68.1 72.9
Total Expenditure 2,828.0 4,609.5 4,776.8 6,025.1 Interest / Sales 13.0 12.2 13.1 9.2
Operating Expense 1,616.8 3,194.9 3,271.1 4,325.6 Gross Profit Margin 54.0 51.0 55.3 63.8
Employee Expenses 266.1 403.8 393.7 476.3 Tax/PBT 41.8 11.0 10.6 10.8
Selling & Administrative Expenses 726.1 1,010.9 1,112.0 1,223.2 Dep/Grossblock 3.1 4.0 4.0 4.0
EBIDTA (Excl. Other Income) 5,354.1 7,339.8 9,749.1 15,761.1 Net Profit Margin 25.2 34.9 40.5 50.5
EBIDTA (Incl. Other Income) 5,633.1 7,785.7 10,195.0 16,207.1
Interest 1,062.2 1,459.5 1,909.0 2,014.8 (C) Measures of Financial Status
Depreciation 1,006.4 1,467.9 1,506.6 1,621.2 Interest Coverage (x) 5.3 5.3 5.3 8.0
Profit Before Tax & EO Items 3,564.6 4,858.3 6,779.4 12,571.2 Average Cost Of Debt (%) 6.7 7.5 8.0 8.0
Profit Before Tax 3,668.2 4,858.3 6,779.4 12,571.2 Debtors Period (days) 132.2 133.3 123.6 123.3
Tax 1,534.1 533.4 717.3 1,354.1 Closing stock (days) 8.2 8.4 7.8 8.1
Net Profit 2,134.1 4,325.0 6,062.1 11,217.0 Inventory Turnover Ratio (x) 44.3 43.6 46.9 45.1
BALANCE SHEET Working Capital Turnover (x) 0.8 0.7 0.9 1.0
Particulars Mar’08 Mar’09P Mar’10E Mar’11E Non Cash Working Capital (Rs Mn) 1348.8 2158.4 2719.2 4463.8
Sources of Funds
Equity Capital 4006.8 4006.8 4006.8 4006.8 (D) Measures of Investment
Preference Capital 28.1 28.1 28.1 28.1 EPS (Rs.) (excl EO) 5.1 10.8 15.1 28.0
Share Premium 18952.4 18952.4 18952.4 18952.4 EPS (Rs.) 5.3 10.8 15.1 28.0
Other Reserves 3137.8 6774.6 12148.6 22677.5 CEPS (Rs.) 7.8 14.5 18.9 32.0
Amount Received under long term Infra 6811.0 6470.4 6146.9 5839.5 DPS (Rs.) 1.5 1.5 1.5 1.5
Net Worth 26125.1 29761.9 35135.9 45664.7 Dividend Payout (%) 28.2 13.9 9.9 5.4
Revaluation reserve 0.0 0.0 0.0 0.0 Profit Ploughback (%) 71.8 86.1 90.1 94.6
Secured Loans 18847.7 22743.6 22234.2 23477.8 Book Value (Rs.) 65.2 74.3 87.7 114.0
Unsecured Loans 219.8 222.0 224.2 225.3 RoANW (%) 12.7 15.5 18.7 27.8
Loan Funds 19067.5 22965.6 22458.4 23703.1 RoACE (%) 11.3 11.0 13.6 20.2
Deferred Tax Liability 1774.2 2359.9 2500.3 2951.1 RoAIC (%) (Excl Cash & Invest.) 12.8 13.7 17.4 25.7
Total Capital Employed 53777.7 61557.8 66241.4 78158.4

Applications of Funds CMP (Rs.) 611.0 611.0 611.0 611.0
Gross Block 32016.7 36969.0 37665.7 40529.1 P/E (x) 114.7 56.6 40.4 21.8
Less: Accumulated Depreciation 3598.4 5066.3 6572.9 8194.1 Market Cap. (Rs. Mn.) 244814.9 244814.9 244814.9 244814.9
Net Block 28418.3 31902.7 31092.7 32335.0 MCap/ Sales (x) 29.9 20.5 16.9 11.2
Capital Work in Progress 4058.3 58.3 2938.3 4380.0 EV (Rs. Mn.) 254986.7 253465.0 253708.0 251054.8
Investments 10826.6 13123.0 15926.0 19516.5 EV/Sales (x) 31.2 21.2 17.5 11.5
Current Assets, Loans & Advances EV/EBDITA (x) 47.6 34.5 26.0 15.9
Inventories 184.7 273.9 310.0 482.7 P/BV (x) 9.4 8.2 7.0 5.4
Sundry Debtors 2963.4 4364.1 4918.6 7361.3 Dividend Yield (%) 0.25 0.25 0.25 0.25
Cash and Bank Balance 8895.6 14315.5 13565.2 17463.2 E-estimates, P=Balance Sheet Nos. are Projected.
Loans and Advances 1484.5 1514.2 1544.5 1575.4

sub total 13979.5 21009.4 20988.3 27662.5
Current Liabilities 2554.3 3726.8 3873.8 4787.1
Provisions 950.9 808.7 830.1 948.4
sub total 3735.1 4535.5 4703.9 5735.5
Net Current Assets 10244.4 16473.9 16284.4 21927.0
Total Assets 53777.7 61557.8 66241.4 78158.4
CASH FLOW
Profit before tax and extra ordinary items 3668.2 4858.3 6779.4 12571.2
Depreciation & w.o. 1006.4 1467.9 1506.6 1621.2
Net Interest Exp 1138.6 1459.5 1909.0 2014.8
Change in Working Capital (Non Cash) 290.8 (809.6) (560.8) (1744.6)
Other (869.3) 475.2 (183.1) 143.5
(A) Cash Flow from Operating Activities 5191.5 6917.9 8733.8 13251.8
Free Cash Flow (4311.0) 5965.6 5157.1 8946.7
Inc./ (Dec.) in Investments (1983.7) (2296.4) (2803.0) (3590.5)
Other 266.8
Inc./(Dec.) in Debt 6228.9 3898.2 (507.2) 1244.7
Interest exp net (1278.2) (1459.5) (1909.0) (2014.8)
Dividend Paid (Incl. Tax) 0.0 (688.2) (688.2) (688.2)
Other (615.6)
(C) Cash Flow from Financing 22045.2 1750.5 (3104.4) (1458.2)
Net Change in Cash 16017.3 5419.8 (750.2) 3898.0
Opening Cash & Cash equivalent 326.7 8895.6 14315.5 13565.2
Closing Cash & Cash equivalent 16344.0 14315.5 13565.2 17463.2
24 June 2009 Mundra Port and Special Economic Zone Ltd. 58

Nestle India Ltd. DOLAT CAPITAL
CMP: Rs 1700
Target Price: Rs 1950 FMCG / Accumulate
Lap it up...!!!
Low penetration, market leadership and broad yet focused product profile makes Nestle the best investment
proposition in FMCG sector. Superior financials in terms of earning growth, highest ROE and 75% dividend
payout are compelling argument for higher valuation. At CMP, it quotes at 24.6x its CY09E EPS. Top tier valuation
is justified for Nestle due to strong brands in under-penetrated product lines and superior financial management.
We recommend Accumulate on the stock with a 12 month price target of Rs 1950 (23x CY10 EPS).

Tel : +9122 4096 9753
Email: ritesh@dolatcapital.com Low penetration and market leadership makes healthy investment recipe
Associate : Namrata Sharma Nestle is either no.1 or no.2 player in various product profile (milk products,
Tel : +9122 4096 9726 beverages, prepared dishes and chocolates) with low to medium penetration level.
Email: namrata@dolatcapital.com This augurs well for Nestle’s revenue growth potential vis-à-vis other MNC FMCG
companies (with saturated product penetration level). Nestle can effectively shield
BSE Sensex 14423
NSE Nifty 4293 from new competition (mostly from ITC) owing to low penetration level, as competition
in low penetration product generally increases the market size rather than fighting
Scrip Details
for market share.
Equity Rs.964.2mn
Face Value Rs.10/-
Vertical expansion of well balanced portfolio of matured and new brands
US$3351.8mn Nestle has remained very judicious in launching new brands/ product profile. It has
52 week High/Low Rs.1855/1220 also withdrawn some of the products like Water and premium confectionery brands.
Meanwhile, the company has maintained its growth in the existing product profile
BSE Code 500790
NSE Symbol NESTLE with innovations and renovations. It has thus maintained its leadership position
Bloomberg Code NEST IN or maintained strong No. 2 position.
Reuters Code NEST.BO
Superior financials
Nestle has delivered 20% CAGR revenue and profit growth over CY05-08. With
Shareholding Pattern as on Mar’09(%) dividend payout ratio of 75%, the company enjoys high ROE of 120% and ROIC of
Promoter 61.9 220%. The company has declared dividend of Rs 42.5 for CY08 and has paid
MF/Banks/FIs 11.9 interim dividend of Rs 9.
FIIs 8.0
Public / Others 16.6 Valuations
Low penetration, market leadership and broad yet focused product profile makes
Nestle relative to BSE Sensex Nestle the best investment proposition in FMCG sector. Superior financials in
180 terms of earning growth, highest ROE and 75% dividend payout are compelling
170 argument for higher valuation. At CMP, it quotes at 24.6x its CY09E EPS. Top
160 tier valuation is justified for Nestle due to strong brands in under-penetrated
150 product lines and superior financial management. We recommend Accumulate
140 on the stock with a 12 month price target of Rs 1950 (23x CY10 EPS).
130
120
110
100
90
80
Nestle BSE Sensex
Financials
CY07 35,044 - 6,963 19.9 4,138 - 44.7 - 39.6 102.5 174.6
CY08 43,242 23.4 8,637 20.0 5,341 29.1 58.6 31.0 30.7 119.8 220.7
CY09E 52,766 22.0 11,029 20.9 6,665 24.8 70.2 19.9 24.6 126.9 287.2
CY10E 61,571 16.6 12,879 20.9 8,138 22.1 84.4 20.2 20.1 125.9 314.4
Figure in Rs mn
24 June 2009 Nestle India Ltd. 59

DOLAT CAPITAL
Particulars Dec’07 Dec’08 Dec’09E Dec’10E Particulars Dec’07 Dec’08 Dec’09E Dec’10E
Power, Oil & Fuel 1,239.4 1,597.6 - - Tax/PBT 34.2 30.9 34.5 33.0
Selling & Administrative Expenses 3,330.4 1,943.6 - - Net Profit Margin 11.7 12.3 12.6 13.2
Provisions & Write Offs 0.0 0.0 - -
Other Expenses 3,293.8 6,876.9 12,890.9 15,897.6 (B) As Percentage of Net Sales
Extra Ordinary Exps/(Income) 175.0 308.0 105.3 -
Tax 2,148.0 2,387.4 3,510.5 4,008.4 Debt / Equity (x) 0.0 0.0 0.0 0.0
BALANCE SHEET Debtors Period (days) 5.6 3.8 6.0 6.0
Particulars Dec’07 Dec’08 Dec’09E Dec’10E
Sources of Funds
Equity Capital 964.2 964.2 964.2 964.2
Working Capital Turnover (x) (11.0) (11.2) (26.1) (170.9)
Other Reserves 3,220.1 3,769.3 4,808.4 6,195.5
Non Cash Working Capital (Rs Mn) (3,576.8) (5,797.0) (4,176.7) (3,437.1)
Net Worth 4,184.2 4,733.5 5,772.5 7,159.7
Secured Loans 28.7 8.2 8.2 8.2
Loan Funds 28.7 8.2 8.2 8.2
EPS (Rs.) (excl EO) 44.7 58.6 70.2 84.4
EPS (Rs.) 42.9 55.4 69.1 84.4
CEPS (Rs.) 50.7 65.0 79.5 94.7
Applications of Funds DPS (Rs.) 33.0 42.5 50.0 60.0
Gross Block 11,797.7 14,048.5 15,340.1 15,340.1 Dividend Payout (%) 76.9 76.7 72.3 71.1
Less: Accumulated Depreciation 5,779.6 6,518.5 7,515.6 8,512.8 Profit Ploughback (%) 23.1 23.3 27.7 28.9
Net Block 6,018.1 7,529.9 7,824.5 6,827.4 Book Value (Rs.) 43.4 49.1 59.9 74.3
Capital Work in Progress 737.0 1,091.7 0.0 0.0 RoANW (%) 102.5 119.8 126.9 125.9
Investments 944.0 349.0 349.0 349.0 RoACE (%) 151.3 167.6 182.9 177.7
Current Assets, Loans & Advances RoAIC (%) (Excl Cash & Invest.) 174.6 220.7 287.2 314.4
Inventories 4,012.2 4,349.1 6,071.7 7,084.9
Sundry Debtors 534.9 455.9 867.4 1,012.1 (E) Valuation Ratios
Cash and Bank Balance 377.6 1,936.9 2,152.7 3,797.4 CMP (Rs.) 1,700 1,700 1,700 1,700
Loans and Advances 1,453.9 1,237.6 2,216.2 2,586.0 P/E (x) 39.6 30.7 24.6 20.1
Other Current Assets Market Cap. (Rs. Mn.) 163,906.7 163,906.7 163,906.7 163,906.7
sub total 6,378.5 7,979.5 11,308.0 14,480.5 MCap/ Sales (x) 4.7 3.8 3.1 2.7
Less : Current Liabilities & Provisions EV (Rs. Mn.) 163,557.8 161,978.0 161,762.1 160,117.5
Current Liabilities 4,599.7 5,066.5 6,558.9 7,347.0 EV/Sales (x) 4.7 3.8 3.1 2.6
Provisions 4,977.9 6,773.2 6,773.2 6,773.2 EV/EBDITA (x) 23.5 18.8 14.7 12.4
sub total 9,577.7 11,839.7 13,332.0 14,120.2 P/BV (x) 39.2 34.6 28.4 22.9
Net Current Assets (3,199.2) (3,860.1) (2,024.0) 360.3 Dividend Yield (%) 1.9 2.5 2.9 3.5
E-estimates
Total Assets 4,499.9 5,110.5 6,149.5 7,536.7
CASH FLOW
Particulars Dec’07 Dec’08 Dec’09E Dec’10E
Depreciation & w.o. 747.4 923.6 997.1 997.1
Change in Working Capital (Non Cash) 478.2 2,220.3 (1,620.3) (739.6)
Other
Capex {Inc./ (Dec.) in Fixed Assets n WIP} (1,569.5) (2,605.5) (200.0) 0.0
Free Cash Flow 3,977.8 6,203.6 5,961.7 8,411.8
Other
(B) Cash Flow from Investing Activities (1,927.4) (2,010.4) (200.0) 0.0
Inc./(Dec.) in Debt (134.0) (20.5) 0.0 0.0
Interest exp net (8.5) (16.4) (14.7) (16.1)
Dividend Paid (Incl. Tax) (3,585.8) (4,782.0) (5,625.9) (6,751.0)
Other (277.6) (365.0)
(C) Cash Flow from Financing (4,005.9) (5,183.9) (5,640.6) (6,767.1)
E-estimates
24 June 2009 Nestle India Ltd. 60

Oracle Financial Services Software Ltd.
DOLAT CAPITAL
CMP: Rs 1211
Bank on IT...!!!
Oracle Financial Services Software Ltd. (OFSS) is a leader in the Core Banking Solutions space and even in the
current financial scenario they have been able to deliver consistent performance. With Regulation and Compliance
related concerns coming to the fore, banks are looking for core banking capabilities. OFSS with its leadership
position is able to address this market. The Oracle muscle is opening up new geographies and new customers
and OFSS is tapping these opportunities which Oracle generates. Even in this tough environment OFSS has
been able to add new customers for their core banking solution which provides the visibility for their product
portfolio going forward. At CMP the stock is trading at 12.6xFY10E, and 10.9xFY11E. We maintain our ‘BUY’
rating on the stock with a price target of Rs. 1561 over a 12 month period.
Analyst: Indrajeet Kelkar Investment Rationale

Tel : +9122 4096 9751
Email: indrajeet@dolatcapital.com Quality Play in IT Products space
OFSS has been an IT product driven company since inception. Products like
BSE Sensex 14423 Flexcube (Integrated Banking Solutions) and Reveleus (BI product) – account for
NSE Nifty 4293 ~55% sales, with the rest of the revenues coming from the services space. These
Scrip Details products are core to the product and vertical focus strategy of ‘Oracle’. OFSS’s
Equity Rs418.8 mn product offers a right-complement to the requirement of large banks currently looking
Face Value Rs.5/- at technology upgrades of their core banking systems through third party
Market Cap Rs.101.4 bn applications.
US$2.1 bn
52 week High/Low Rs.1569/405 Oracle Pedigree brings Focus and Broader Canvas
1-Month Avg. Volume 95730 The OFSS and Oracle combine is well poised to participate in newer opportunities
BSE Code 532466 arising in the Core Banking area. The transition towards being an Oracle entity is
NSE Symbol OFSS now complete and OFSS is now reaping the benefits of the Oracle parenthood.
Bloomberg Code OFSSIN
This has led to addition of new customers and geographies as well as reduction in
Reuters Code ORCL.BO
costs which has led to higher margins and reduced cash flow cycle. Oracle is also
bundling the Reveleus product with Oracle’s Hyperion and this has resulted in
Shareholding Pattern as on Mar’09(%) improved sales of the Reveleus solution. The Oracle ownership has already increased
Promoter 80.6 the product sales canvas to Tier I banks in Europe, USA, and Japan.
MF/Banks/FIs 2.1
FIIs 0.5 Products driven growth strategy
Corporate Bodies 1.1 OFSS has a clear focus on the higher margin products business and is seeing
Public / Others 15.8 growth from this domain with Regulations and Compliance related issues driving
the core banking implementation space. OFSS will target the services business but
OFSS relative to BSE Sensex the focus will be on margin expansion rather than on topline growth. OFSS is looking
140 at margin improvement in the existing services business and is targeting higher
130 utilization and has implemented different cost control measures.
120 Surfing the Subprime Wave
110 The deal pipeline is robust for OFSS and even in the wake of the global financial
100 crisis, OFSS has signed 26 new customers in Q4FY09, with 23 customers in the
90 products business. This signifies the demand for core banking solutions, which has
80 become a necessity rather than a luxury. OFSS has a tank size of $120mn which
70 indicates their revenue visibility. OFSS is poised to take advantage of these
opportunities and with their quality products will be able to ride this wave.
60
50 Financials and Valuations
40 OFSS has been delivering consistent performance and we feel the stock offers a
Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 growth opportunity to ride on a product driven company backed by well-thought out
penetration strategy and renewed vigor on the back of change in management. We
OFSS BSE Sensex
maintain our BUY recommendation on the stock with a target price of Rs. 1561
(14x FY11E EPS) over a 12 month period.
Financials
FY08 23,802 15.5 5,312 22.3 4,156 11.6 49.6 11.0 24.4 16.0 17.8
FY09 29,276 23.0 9,544 32.6 7,365 77.2 87.9 77.2 13.8 23.4 28.6
FY10E 33,987 16.1 9,730 28.6 8,048 9.3 96.1 9.3 12.6 20.6 23.1
FY11E 40,277 18.5 12,083 30.0 9,332 16.0 111.5 16.1 10.9 19.5 23.5
Figure in Rs mn
24 June 2009 OFSS 61

DOLAT CAPITAL
Employee Expenses 13,040.3 14,491.6 18,366.1 22,073.9 Interest / Sales 0.0 0.0 0.0 0.0
Selling & Administrative Expenses 6,089.8 7,029.8 6,670.0 6,620.0 Gross Profit Margin 22.3 32.6 28.6 30.0
EBIDTA (Excl. Other Income) 4,672.3 7,754.8 8,950.5 11,583.0 Tax/PBT 9.6 10.2 11.0 17.0
EBIDTA (Incl. Other Income) 5,312.0 9,544.2 9,730.5 12,083.0 Net Profit Margin 17.5 25.2 23.7 23.2
Other Income 639.7 1,789.4 780.0 500.0
Interest 0.0 0.0 0.0 0.0 (B) As Percentage of Net Sales
Gross Profit 5,312.0 9,544.2 9,730.5 12,083.0 Raw Material 0.0 0.0 0.0 0.0
Depreciation 705.9 557.9 676.0 828.0 Employee Expenses 54.8 49.5 54.0 54.8
Profit Before Tax & EO Items 4,606.1 8,986.3 9,054.5 11,255.0 Power, Oil & Fuel 0.0 0.0 0.0 0.0
Extra Ordinary Exps/(Income) 4.1 760.0 12.0 12.0 Selling & Administrative Expenses 25.6 24.0 19.6 16.4
Profit Before Tax 4,602.0 8,226.3 9,042.5 11,243.0 Provisions & Write Offs 0.0 0.0 0.0 0.0
Tax 441.7 835.4 994.7 1,911.3 Other Expenses 0.0 0.0 0.0 0.0
Net Profit 4,160.3 7,390.9 8,047.8 9,331.7
Minority Interest 4.4 25.5 0.0 0.0 (C) Measures of Financial Status
Net Profit 4,155.9 7,365.4 8,047.8 9,331.7 Debt / Equity (x) 0.0 0.0 0.0 0.0
Interest Coverage (x) - - - -
BALANCE SHEET Average Cost Of Debt (%) - - - -
Particulars Mar’08 Mar’09 Mar’10E Mar’11E Debtors Period (days) 129.6 104.8 105.0 105.0
Sources of Funds Closing stock (days) 0.0 0.0 0.0 0.0
Equity Capital 418.7 418.8 418.8 418.8 Inventory Turnover Ratio (x) - - - -
Preference Capital Fixed Assets Turnover (x) 2.1 2.4 2.4 2.7
Share Premium 9,444.6 9,444.6 9,444.6 9,444.6 Working Capital Turnover (x) 1.3 1.2 1.1 1.0
Other Reserves (excl Share Premium & Rev Res) 17,913.5 25,204.5 33,252.4 42,584.0 Non Cash Working Capital (Rs Mn) 8,703.9 9,557.9 11,178.2 13,300.9
Net Worth 27,776.8 35,068.0 43,115.8 52,447.5
Revaluation reserve (D) Measures of Investment
Loan Funds 0.0 0.0 0.0 0.0 EPS (Rs.) (excl EO) 49.6 87.9 96.1 111.5
Deferred Tax Liability 4.7 20.7 20.7 20.7 EPS (Rs.) 49.6 87.9 96.1 111.4
Total Capital Employed 27,781.5 35,088.7 43,136.5 52,468.2 CEPS (Rs.) 58.1 94.6 104.1 121.3
DPS (Rs.) 0.0 0.0 0.0 0.0
Applications of Funds 1,429.6 664.3 1,500.0 600.0 Dividend Payout (%) 0.0 0.0 0.0 0.0
Gross Block 11,088.3 12,052.8 14,066.1 15,066.1 Profit Ploughback (%) 100.0 100.0 100.0 100.0
Less: Accumulated Depreciation 2,575.0 3,360.4 4,036.4 4,864.4 Book Value (Rs.) 331.7 418.6 514.7 626.1
Net Block 8,513.2 8,692.4 10,029.7 10,201.7 RoANW (%) 16.0 23.4 20.6 19.5
Capital Work in Progress 1,313.5 1,013.3 500.0 100.0 RoACE (%) 17.8 28.6 23.1 23.5
Investments 54.9 9.6 9.6 9.6 RoAIC (%) (Excl Cash & Invest.) 25.8 46.8 43.5 49.0

Current Assets, Loans & Advances (E) Valuation Ratios
Inventories 0.0 0.0 0.0 0.0 CMP (Rs.) 1,211.0 1,211.0 1,211.0 1,211.0
Sundry Debtors 8,454.0 8,402.3 9,777.0 11,586.5 P/E (x) 24.4 13.8 12.6 10.9
Cash and Bank Balance 8,965.6 15,489.5 21,093.1 28,530.1 Market Cap. (Rs. Mn.) 101,413.9 101,440.6 101,440.6 101,440.6
Loans and Advances 5,241.6 6,442.3 7,477.0 8,860.9 MCap/ Sales (x) 4.3 3.5 3.0 2.5
Other Current Assets 1,137.1 1,746.9 1,834.2 1,925.9 EV (Rs. Mn.) 92,448.3 85,951.0 80,347.4 72,910.5
sub total 23,798.3 32,081.0 40,181.3 50,903.5 EV/Sales (x) 3.9 2.9 2.4 1.8
Less : Current Liabilities & Provisions EV/EBDITA (x) 19.8 11.1 9.0 6.3
Current Liabilities 5,601.8 6,095.0 7,138.1 8,184.8 P/BV (x) 3.7 2.9 2.4 1.9
Provisions 527.0 938.6 771.9 887.7 Dividend Yield (%) 0.0 0.0 0.0 0.0
sub total 6,128.8 7,033.6 7,910.0 9,072.5 E-estimates

Total Assets 27,781.5 35,088.7 43,136.5 52,468.2
CASH FLOW
Depreciation & w.o. 705.9 557.9 676.0 828.0
Change in Working Capital (Non Cash) (1,021.6) (854.0) (1,620.2) (2,122.7)
Other 57.3 (727.1) 0.0 0.0
Capex {Inc./ (Dec.) in Fixed Assets n WIP} (1,429.6) (664.3) (1,500.0) (600.0)
Free Cash Flow 2,476.4 5,703.5 5,603.6 7,437.0
Other (2,647.1) (4,219.1) 0.0 0.0
(B) Cash Flow from Investing Activities (4,072.5) (4,838.0) (1,500.0) (600.0)
Inc./(Dec.) in Debt 0.0 0.0 0.0 0.0
Dividend Paid (Incl. Tax) 0.0 0.0 0.0 0.0
Other (19.4) (9.5) (12.0) (12.0)
(C) Cash Flow from Financing 13.6 (9.4) 0.0 0.0
Effect of Exchange Difference 18.5 274.5
Net Change in Cash (134.3) 1,520.3 5,603.6 7,437.0
E-estimates
24 June 2009 OFSS 62

Page Industries Ltd.
DOLAT CAPITAL
CMP: Rs 508
Target Price: Rs 612 Textiles / Accumulate
Comfort Fit...!!!
Page Industries Ltd. (PIL) is the sole licensee for the “Jockey” brand in India. Strong brand image, pan India
presence in the premium segment and wide acceptance among its target customers makes PIL well poised to
capture the growth in volumes and value. We recommend an ACCUMULATE rating on the stock with a price
target of Rs.612 (12xFY11E) over a 12 month period.
Analyst: Ankit Babel Investment Rationale:

Tel : +9122 4096 9732
At pole position in niche segment
Email: ankit@dolatcapital.com
Page Industries Ltd. (PIL) is the sole licensee for the “Jockey” brand in India and
BSE Sensex 14423 the largest licensee of Jockey International across the globe (excluding US &
NSE Nifty 4293 Europe). It pays 5% royalty for the use of the brand. Within a decade of its launch
in India, it has emerged as the leading brand in the innerwear segment (premium
Scrip Details
category). Over the years it has carved its own position in the innerwear segment
Equity Rs.111.5mn
Face Value Rs.10/-
(~Rs.90 bn market growing @9-10%) with innovative offerings in many product
Market Cap Rs.5.7bn lines.
US$115.9mn
Established Value Positioning
The strength of PIL’s business model lies in its alignment with Jockey. It is well
BSE Code 532827 poised to deliver a right combination of product-quality-price-utility matrix. Jockey
NSE Symbol PAGEIND as a brand is in the middle of the pyramid. While it commands a premium over
Bloomberg Code PAG IN existing local brands, it is positioned in the value for money (VFM) category with
Reuters Code PAGE.BO respect to other international brands. This is facilitated by adapting the global
learnings of Jockey from its common knowledge platform (the prototypes, patterns,
designs, technical assistance, advertisement models) of 43 licensees across
Shareholding Pattern as on Mar’09(%) the globe.
Promoter 67.0
Strong Distribution Channel
MF/Banks/FIs 14.4
FIIs 13.6 PIL over the years has developed a supportive distribution strength enabling them
Corporate Bodies 3.1 to have a pan India presence. It has ~319 distributors catering to ~16k retail
Public / Others 2.0 outlets in 1100 odd cities (largest amonst its peers in the premium segment).
There is also an effort to add a complementary Exclusive Brand Outlets (EBOs)
Page Ind. relative to BSE Sensex initiative (already at 46 outlets) to service the brand equity.
160
Timely booster of Scalability
150
PIL has accomplished its capacity augmentation from 56mn pcs to 74mn pcs
140 p.a. The expansion is also timed to perfection to support the aggression in its
130 recent marketing initiatives in terms of entry into Sportswear and Ladies innerwear.
This provides PIL with a sales velocity of ~26% CAGR in its sales (FY09-11).
120
Integrated in house operations would reduce the lead time for further expansions.
110
Valuation
100
PIL’s asset light business model is blessed with strong brand association, efficient
90 production and established distribution presence. With no more incremental capex,
80 we expect the return ratios to gain further momentum - something which we
Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 expect would reflect in valuations in the medium term. We recommend an
ACCUMULATE rating on the stock with a target price of Rs.612 (12xFY11E) over
Page Ind. BSE Sensex
a 12 month period.
Financials
FY08 1,925 41.5 364 18.9 240 39.0 21.5 39.0 23.6 33.0 35.4
FY09 2,547 32.3 509 20.0 316 31.9 28.4 32.0 17.9 38.6 40.5
FY10E 3,200 25.7 661 20.7 422 33.4 37.8 33.3 13.4 44.5 44.6
FY11E 3,905 22.0 862 22.1 569 34.9 51.0 34.9 10.0 50.1 49.6
Figure in Rs mn
24 June 2009 Page Industries Ltd. 63

DOLAT CAPITAL
India Research
Net Sales 1924.9 2546.5 3200.1 3904.8 (A) Measures of Performance (%)
Other income 44.8 63.8 70.0 90.0 Contribution Margin 35.4 33.6 35.4 36.9
Total Income 1969.7 2610.3 3270.1 3994.8 EBIDTA Margin (excl. O.I.) 18.9 20.0 20.7 22.1
Total Expenditure 1561.2 2037.7 2538.7 3043.2 EBIDTA Margin (incl. O.I.) 20.7 21.9 22.4 23.8
Raw Material 643.3 878.7 1046.0 1237.5 Interest / Sales 1.4 1.2 1.2 1.2
Manufacturing Expenses 309.8 381.7 511.0 621.6 Tax/PBT 30.6 32.5 31.0 31.0
Selling & Administrative Expenses 306.6 348.0 471.6 578.9 Net Profit Margin 12.2 12.1 12.9 14.2
EBIDTA (Excl. Other Income) 363.7 508.8 661.5 861.6
EBIDTA (Incl. Other Income) 408.5 572.6 731.5 951.6 (B) As Percentage of Net Sales
Interest 26.7 30.7 40.0 45.0 Raw Material 33.4 34.5 32.7 31.7
Gross Profit 381.8 542.0 691.5 906.6 Employee Expenses 15.7 16.9 15.9 15.5
Depreciation 36.1 73.3 80.0 82.0 Manufacturing Expenses 16.1 15.0 16.0 15.9
Profit Before Tax & EO Items 345.6 468.6 611.5 824.6 Selling & Administrative Expenses 15.9 13.7 14.7 14.8
Extra Ordinary Exps/(Income)/share in JV 0.0 0.0 0.0
Profit Before Tax 345.6 468.6 611.5 824.6 (C) Measures of Financial Status
Tax 105.9 152.1 189.6 255.6 Debt / Equity (x) 0.5 0.5 0.6 0.5
BALANCE SHEET Debtors days (average) 13.9 17.9 19.0 18.2
Particulars Mar’08 Mar’09 Mar’10E Mar’11E Closing stock days (average) 88.9 89.8 78.8 71.3
Sources of Funds Inventory Turnover Ratio (x) 3.4 3.7 4.6 4.7
Equity Capital 111.5 111.5 111.5 111.5 Fixed Assets Turnover (x) 3.8 3.6 4.0 4.5
Preference Capital 0.0 0.0 0.0 0.0 Working Capital Turnover (x) 4.5 4.4 4.2 4.1
Share Premium 412.0 412.0 412.0 412.0 Non Cash Working Capital (Rs Mn) 424.2 480.8 603.2 710.0
Other Reserves 250.2 344.7 505.1 721.3 Non Cash Working Capital Turnover (x) 4.54 5.30 5.31 5.50
Net Worth 773.8 868.2 1,028.6 1,244.9

Revaluation reserve 0.0 0.0 0.0 0.0 (D) Measures of Investment
Secured Loans 372.0 419.2 372.0 372.0 EPS (Rs.) (excl EO) 21.5 28.4 37.8 51.0
Unsecured Loans 0.0 0.0 197.7 256.2 EPS (Rs.) 21.5 28.4 37.8 51.0
Loan Funds 372.0 419.2 569.7 628.2 CEPS (Rs.) 24.7 35.0 45.0 58.4
Deferred Tax Liability 16.3 16.8 16.3 16.3 DPS (Rs.) 10.0 17.0 20.8 28.1
Dividend Payout (%) 46.5 59.9 55.0 55.0
Book Value (Rs.) 69.4 77.8 92.2 111.6
RoANW (%) 33.0 38.6 44.5 50.1
Gross Block 506.6 698.5 810.0 860.0
RoACE (%) 35.4 40.5 44.6 49.6
Net Block 412.8 549.9 581.5 549.5
Investments 299.8 52.3 250.0 350.0
CMP (Rs.) 508.0 508.0 508.0 508
P/E (x) 23.6 17.9 13.4 10.0
Inventories 573.8 679.9 701.4 823.8
Market Cap. (Rs. Mn.) 5666 5666 5666 5,666
Sundry Debtors 91.2 158.7 175.4 214.0
MCap/ Sales (x) 2.9 2.2 1.8 1.5
EV (Rs. Mn.) 6036 5982 6086 6,044
EV/Sales (x) 3.1 2.3 1.9 1.5
EV/EBDITA (x) 16.6 11.8 9.2 7.0
sub total 1,002.3 1,402.3 1,588.3 1,987.8
P/BV (x) 7.3 6.5 5.5 4.6
Dividend Yield (%) 2.0 3.3 4.1 5.5
E-estimates
Provisions 206.0 391.3 210.9 279.1
sub total 576.3 818.5 835.2 1,027.8
Total Assets 1,162.1 1,304.2 1,614.6 1,889.4
CASH FLOW
Depreciation & w.o. 35.7 73.3 80.0 82.0
Net Interest Exp 14.5 (1.9) 40.0 45.0
Change in Working Capital (Non Cash) (172.8) (56.6) (122.3) (106.8)
Other 7.3 (0.1)
Free Cash Flow (100.2) 26.4 396.3 539.2
(Inc)./ Dec. in Investments (165.2) 247.5 (197.7) (100.0)
Other 22.0 0.0 0.0
Inc./(Dec.) in Debt 118.8 47.2 150.5 58.5
Interest exp net (33.8) 2.0 (40.0) (45.0)
Other (11.1) (32.2)
(C) Cash Flow from Financing (56.7) (172.7) (151.0) (339.2)
Net Change in Cash (300.2) 101.2 47.6 100.0
Opening Cash balances 301.9 1.7 103.0 150.0
Closing Cash balances 1.7 103.0 150.0 250.0
E-estimates
24 June 2009 Page Industries Ltd. 64

Patel Engineering Ltd. (PEL)
DOLAT CAPITAL
CMP: Rs 379
Target Price: Rs 493 Infrastructure / Buy
First Amongst Others...!!!
PEL is the market leader with a 22% share in the high margin and high entry barrier Hydropower sector. It enjoys
the distinction of bieng the only Indian company with an experience and technology in niche high margin segments
of RCC, Microtunneling & Double Lake Tapping. Real estate foray will monetize the low cost land bank which
would provide capital for new ventures in the Power sector. PEL has decent revenue visibility on account of a
strong order book. However, margins are expected to remain subdued. We recommend a BUY on the stock with
a price target of Rs.493 (SOTP – 10x FY11E EPS of Rs 42 = Rs 420 + 1.75x on land BV per share = Rs 73).

Tel : +9122 4096 9757
Amongst the selected few in the high entry barrier Hydropower sector
Email: sameer@dolatcapital.com
Hydropower construction being a highly specialized activity requires huge
Associate : Manpreet Singh
experience with high technical and execution skills for complex projects in
Tel : +9122 4096 9720
mountainous regions. PEL is the leader in the high margin Hydropower segment
Email: manpreet@dolatcapital.com
with a market share of ~22% with a six decade experience.
BSE Sensex 14423
NSE Nifty 4293 Well poised to grab the huge opportunity with strong revenue visibility
NHPC plans to add 5322 MW capacity in 11th five year plan with investments of
Scrip Details
Rs 346 bn which includes near term pending investments of Rs 98.5 bn to be
Equity Rs.59.7mn
made by Dec 2011. PEL has an order book of Rs 72 bn dominated by Hydro
Face Value Rs.1/-
and Irrigation. PEL is pre-qualified for projects worth Rs110 bn and the Company
US$468mn expects order inflow of Rs 30 bn in the next 4 to 5 quarters.
1-Month Avg. Volume 386772 Technology leadership enhances value proposition
BSE Code 531120 PEL is the only experienced Indian company with technology in high margin
NSE Symbol PATELENG and niche RCC (Roller Compacted Concrete), Microtunneling & Double Lake
Bloomberg Code PEC IN
Tapping. However, these segments would form a small part of the order book
Reuters Code PENG.BO
(Rs 5 bn) and revenue. We expect overseas projects to add value going forward.
Shareholding Pattern as on Mar’09(%) Power generation & road annuity foray - Undergoing character change
Promoter 53.8
PEL is planning a 1200 MW Thermal Power project with a total capital cost of
MF/Banks/FIs 11.1 Rs 60 bn in 3 phases. PEL requires Rs 6.12 bn towards its 51% equity share
FIIs 6.3 for the same. It is acquiring mining assets in Indonesia. It owns 60% stake in 2
Corporate Bodies 2.3 annuity road projects of Rs 10.4 bn and has a 100 MW hydropower plant as
IPP. It is clearly moving up the value chain - From a Contractor to a Developer.
Patel Eng. relative to Sensex Real estate – Sizable option value will relieve funding worries
110 PEL has total land reserves of 1000 acres in Mumbai, Chennai, Bangalore and
100 Hyderabad with developable area of 16.23 msf over the next 10 years. DTZ,
90 an independent real estate research and valuation firm has valued the entire
80
land bank at ~Rs 20 bn whose book value is Rs 2.5 bn.The entire land bank is
in the company with 100% ownership.
70
60 Key Risks
50 Higher proportion of Irrigation revenues might erode margins. High dependence
40 on NHPC for hydro order flow, exposure to cash strapped State Governments,
30 current slowdown in real estate and nascent stage of power generation projects
Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 would make these forays revenue neutral for next 2 - 3 years. Move to normal
tax rate from MAT and equity dilution will augment resources.
Patel Eng. BSE Sensex
Valuations
We recommend a BUY on the stock with a price target of Rs.493 (SOTP – 10x
Financials (Consolidated) FY11E EPS of Rs 42 = Rs 420 + 1.75x on land BV per share = Rs 73).
FY08 15,073 28.6 2,740 18.2 1,519 33.1 25.5 14.9 10.8 19.6 13.0
FY09E 22,230 47.5 3,575 16.1 1,639 7.9 27.5 13.8 8.8 17.7 13.1
FY10E 29,461 32.5 4,292 14.6 1,956 19.3 32.8 11.6 7.2 17.9 13.5
FY11E 38,633 31.1 5,216 13.5 2,500 27.8 41.9 9.0 6.1 19.1 15.3
Figure in Rs mn
24 June 2009 Patel Engineering Ltd. 65

DOLAT CAPITAL
Other Construction related cost 9,243.1 13,862.2 18,569.5 24,741.7 Tax/PBT 12.2 16.2 17.0 17.0
Administrative Expenses 944.8 1,555.6 2,062.3 2,762.3 Net Profit Margin 10.1 7.4 6.6 6.5
Other Expenses 0.0 0.0 0.0 0.0 (B) As Percentage of Net Sales
Interest 295.0 808.8 777.4 864.8 Other Construction related cost 61.3 62.4 63.0 64.0
Gross Profit 2,482.2 2,817.4 3,560.6 4,399.8 Administrative Expenses 6.3 7.0 7.0 7.2
Depreciation 627.1 732.7 1,072.7 1,255.9 Provisions & Write Offs 0.0 0.0 0.0 0.0
Extra Ordinary Exps/(Income) 0.0 0.0 0.0 0.0
Tax 227.0 336.7 422.9 534.5 Debt / Equity (x) 1.2 1.0 0.9 0.7
Minority Interest 109.1 109.1 109.1 109.1 Average Cost Of Debt (%) 4.5 8.0 7.5 8.4
Net Profit 1,519.1 1,638.9 1,955.9 2,500.4 Debtors Period (days) 111.8 130.0 130.0 130.0
Equity Capital 59.7 59.7 59.7 59.7 Non Cash Working Capital (Rs Mn) 10,989.3 14,769.2 16,596.1 20,241.0
Preference Capital 0.0 0.0 0.0 0.0
Share Premium 4,069.8 4,069.8 4,069.8 4,069.8 (D) Measures of Investment
Other Reserves 4,329.5 5,892.3 7,743.5 10,139.2 EPS (Rs.) (excl EO) 25.5 27.5 32.8 41.9
Net Worth 8,459.0 10,021.7 11,872.9 14,268.6 EPS (Rs.) 25.5 27.5 32.8 41.9
Revaluation reserve CEPS (Rs.) 36.0 39.8 50.8 63.0
Secured Loans 6,019.7 6,460.5 6,280.5 6,444.4 DPS (Rs.) 1.5 1.5 1.5 1.5
Unsecured Loans 3,744.3 3,994.3 3,994.3 3,994.3 Dividend Payout (%) 5.9 5.5 4.6 3.6
Loan Funds 9,764.0 10,454.7 10,274.7 10,438.7 Profit Ploughback (%) 94.1 94.5 95.4 96.4
Deferred Tax Liability 150.9 185.7 225.3 265.2 Book Value (Rs.) 141.8 168.0 199.0 239.2
Contractee Advance 2,178.0 2,178.0 2,178.0 2,178.0 RoANW (%) 19.6 17.7 17.9 19.1
Minority Interest 405.4 405.4 405.4 405.4 RoACE (%) 13.0 13.1 13.5 15.3

CMP (Rs.) 379.0 379.0 379.0 379.0
Gross Block 6,151.6 8,503.4 9,153.4 9,803.4
P/E (x) 14.9 13.8 11.6 9.0
Market Cap. (Rs. Mn.) 22,610.8 22,610.8 22,610.8 22,610.8
Net Block 4,350.6 5,969.7 5,547.0 4,941.1
MCap/ Sales (x) 1.5 1.0 0.8 0.6
Capital Work in Progress 2,351.8 650.0 650.0 900.0
EV (Rs. Mn.) 29,492.8 31,477.9 30,938.2 31,737.7
Investments 360.8 250.0 200.0 150.0
EV/Sales (x) 2.0 1.4 1.1 0.8
Deferred Tax Assets 0.0 0.0 0.0 0.0
EV/EBDITA (x) 10.8 8.8 7.2 6.1
P/BV (x) 2.7 2.3 1.9 1.6
Inventories 8,148.0 13,703.5 18,160.9 23,814.9
Dividend Yield (%) 0.4 0.4 0.4 0.4
Sundry Debtors 4,617.5 7,917.6 10,493.0 13,759.7
E-estimates
sub total 20,359.8 28,718.7 36,111.1 44,396.4
Provisions 23.3 114.1 114.1 114.1
sub total 6,488.6 12,361.8 17,567.7 22,843.6
Misc Expenses 22.9 19.0 16.0 12.0
Total Assets 20,957.4 23,245.5 24,956.4 27,555.9
CASH FLOW
Depreciation & w.o. 627.1 732.7 1,072.7 1,255.9
Net Interest Exp 295.0 808.8 777.4 864.8
Other 850.0 (136.6) (161.0) (159.8)
(A) Cash Flow from Operating Activities (734.8) (627.1) 1,927.1 925.4
Capex {Inc./ (Dec.) in Fixed Assets n WIP} (4,822.7) (650.0) (650.0) (900.0)
Free Cash Flow (5,557.5) (1,277.1) 1,277.1 25.4
Inc./ (Dec.) in Investments 1,353.2 110.8 50.0 50.0
Other
(B) Cash Flow from Investing Activities (3,469.5) (539.2) (600.0) (850.0)
Issue of Equity/ Preference 0.0 (0.0) 0.0 0.0
Inc./(Dec.) in Debt 6,344.3 690.7 (180.0) 163.9
Interest exp net (295.0) (808.8) (777.4) (864.8)
Other
(C) Cash Flow from Financing 6,039.2 (128.1) (967.4) (711.0)
Net Change in Cash 1,834.9 (1,294.4) 359.7 (635.5)
E-estimates
24 June 2009 Patel Engineering Ltd. 66

Power Finance Corporation Ltd. DOLAT CAPITAL
CMP: Rs 189
Target Price: Rs 236 Financial Institution / Buy
‘Power’ful Business…!!!
Power Finance Corporation (PFC) is a leader in the power financing space and a direct play on India’s growing
energy needs - identified as core to India’s economic growth. The company’s strong credit/ project appraisal techniques
have mitigated the asset quality concerns thus enabling PFC to have a clean and healthy asset book. A favorable 3
year reset clause on the loan book aid’s PFC to maintain its spreads (2%) and margins (3.6%) in the coming years.
At CMP, the stock trades at 9.6x FY11E EPS of Rs 19.7; 1.6x FY11E book value of Rs 118 and 1.6x FY10E adj. book
value of Rs 118. We recommend a Buy on the stock with a target price of Rs 236 (2xFY11E BV)

Tel : +9122 4096 9754
Growth opportunities remain substantial
PFC remains in a favorable position with the ongoing focus on infra spend. The
company is the nodal agency for most government power schemes and has
Tel : +9122 4096 9723
contributed ~26% of the total investments (Xth plan) in the power sector investments.
Two key opportunities going forward could be the revised APDRP and UMPP’s.
BSE Sensex 14423 The massive capital investments in the power sector provide strong visibility to its
NSE Nifty 4293 core lending business. We expect the company’s loan book to grow at a CAGR of
Scrip Details
24% to Rs 984bn by FY11E.
Equity Rs.11478mn Prudent risk management practices minimizes asset quality concerns
Face Value Rs.10/- Exposure to ailing state power utilities has not deterred PFC from keeping its asset
Market Cap Rs.216.5bn book clean and healthy. The company’s positioning as a specialist institution
US$4426.8mn
providing power related financing and advisory work has helped the company to
1-Month Avg. Volume 1667609 develop a sharp focus in credit/ project appraisal. PFC also secures its lending
BSE Code 532810 through Government guarantees, charge on assets and a built in escrow mechanism.
NSE Symbol PFC This is evident from its low NPA ratio of 0.01% (FY09). However, we are factoring in
Bloomberg Code POWF IN a modest increase in gross NPA’s to 0.03% in FY10E and further to 0.05% in FY11E
Reuters Code PWFC.BO
Business Group - Govt. of India - FIs
Stable margins with favorable asset liability structure
PFC has around 60% of its loan book under the 3 year reset clause (20% under the
10 year reset clause). Moreover, on the liability side only 13% of its borrowings are
Promoter 89.8 floating. This has enabled the company to maintain its spreads and margins. Going
MF/Banks/FIs 3.2 forward, we expect the company to maintain its spreads at ~ 2% and the NIM at ~
FIIs 4.0
3.6% over FY09 - FY11E.
Public / Others 2.1 No regulatory constraints
PFC, unlike banks and other NBFC’s, is not bound to comply with the statutory
PFC relative to BSE Sensex reserve requirement norms. This aids their margins siginificantly. Furthermore, unlike
220
most power utility companies, their return ratios are not capped. Thus, power finance
200 companies, in our view offer the best of both- power and financial services sectors.
180 Valuation
160 PFC offers a direct play on the high priority power sector. We believe, the company
offers a distinct business model with a clear focus on high “Growth” sector with well
140
managed “Quality”. The recent development of reversal of deferred tax liability would
120 further aid the net worth of the company and enable it increase its leverage beyond
100
the current levels.
80
At CMP, the stock trades at 9.6x FY11E EPS of Rs 19.7; 1.6x FY11E book value of
Rs 118 and 1.6x FY11E adj. book value of Rs 118. We recommend a Buy on the
stock with a Target Price of Rs 236 (2xFY11E BV)
PFC BSE Sensex
Financials
FY08 17.0 18.8 12.1 22.5 3.6 10.5 17.9 2.3 2.3 13.5 2.6
FY09E 22.6 32.8 19.8 63.9 3.9 17.2 10.9 1.9 1.9 19.0 3.5
FY10E 25.9 14.5 18.9 (4.7) 3.6 16.4 11.5 1.8 1.8 16.1 2.7
FY11E 30.6 18.1 22.7 20.1 3.4 19.7 9.6 1.6 1.6 17.8 2.6
Figure in Rs.bn
24 June 2009 PFC 67

DOLAT CAPITAL
Operating Income 50,502 65,720 78,277 93,965 Valuation
Interest Income 47,809 64,033 73,984 88,857 EPS (Rs) 10.5 17.2 16.4 19.7
Interest Expenses 30,795 41,440 48,106 58,287 Book Value (Rs) 81.3 100.3 103.6 118.1
Net Interest Income 17,013 22,593 25,878 30,570 Adj. Book Value (Rs) 81.2 100.3 103.4 117.9
Other Income (94) (2,249) (2,144) (1,697) P/E (x) 17.9 10.9 11.5 9.6
Operating Income 19,613 22,031 28,027 33,982 P/BV (x) 2.3 1.9 1.8 1.6
Operating Expenses 1,840 1,894 2,517 3,178 P/ABV (x) 2.3 1.9 1.8 1.6
Operating Profit 17,773 20,136 25,509 30,804

Provisions for Bad and Doubtful Debts (104) 40 215 444 Profitability (%)
Depriciation 45 41 49 57 RoANW 13.5 19.0 16.1 17.8
Profit before Tax 17,833 20,055 25,245 30,303 RoAA 2.6 3.5 2.7 2.6
Provision for Tax 5,809 258 6,377 7,652 Cost / Income Ratio (%) 9.3 7.7 8.3 8.9
Profit after Tax 12,024 19,797 18,868 22,652 Cost / Assets (%) 0.4 0.3 0.3 0.3
Prior Period Adjustments 52 0 0 0 Avg. yield on Advances 10.0 10.8 10.3 10.0
Net Profit 12,076 19,797 18,868 22,652 Avg. cost on Funds 8.3 8.9 8.2 7.9
Spread 1.7 1.9 2.1 2.1
BALANCE SHEET Net Interest Margin 3.6 3.9 3.6 3.4

Growth (%)
Sources of Funds
Equity Capital 11,478 11,478 11,478 11,478
Other Income
Net Worth 93,299 115,176 118,908 135,568
Net Profit 22.5 63.9 (4.7) 20.1
Loan Funds 406,478 521,600 651,724 823,891
Advances 17.5 24.9 23.0 24.3
Interest subsidy from Govt 10,668 9,090 10,908 13,090
Loan Funds 21.0 28.3 24.9 26.4
Deferred Tax Asset / Liability 12,403 13,760 14,621 15,708
Asset Quality
Gross NPA % 0.0 0.0 0.1 0.1
Net NPA % 0.0 0.0 0.0 0.0
Fixed Assets & WIP 770 799 807 835
Dividend
Advances 515,683 644,290 792,299 984,840
DPS (Rs) 3.5 4.0 4.3 4.5
Investments 656 340 408 449
Efficiency
Current Asstes 29,896 46,727 44,354 54,406
Avg. Advances per Employee (Rs cr) 154.5 185.6 219.0 259.4
E-estimates
Deferred Tax Asset / Liability 0 0 0 0
Total Assets 522,847 659,626 796,161 988,257
E-estimates
24 June 2009 PFC 68

Rallis India Ltd.
DOLAT CAPITAL
CMP: Rs 544
Target Price: Rs 670 Agro Chemicals / Accumulate
Harvesting Growth..!!!
Rallis redefined its DNA as a focused agrochemical player with complementary strengths in both manufacturing and
distribution. Its business model rests on a strong USP of its ‘Farmer Connect’ and multiple relationships with global
innovators. It has carefully turned around its manufacturing investments into a complementary global outsourcing
model to provide predictable business growth. We recommend ‘Accumulate’ on the stock with a target price of Rs.
670 (7x FY11E EPS).

Tel : +9122 4096 9731
Email: bhavin@dolatcapital.com DNA Redefined
Rallis’ history leaves us with sequential management changes, assimilation of non
BSE Sensex 14423 profitable businesses and high borrowings. Subsequent to restructuring initiatives
NSE Nifty 4293 the overheads were significantly curtailed while proceeds from sale of non core
Scrip Details assets and surplus land were effectively deployed towards retirement of debt.
Equity Rs.119.8mn Successful implementation of various strategies altered the company’s profile to a
Face Value Rs.10/- focused agrochemical company with complementary strengths in both manufacturing
Market Cap Rs.6.5bn and distribution.
US$133.3mn
1-Month Avg. Volume 29992 Domestic Business: Farmer Connect - The core advantage....
BSE Code 500355 Rallis’ forte is its century old association with the Indian farming community. Focused
NSE Symbol RALLIS group discussions and regular interactions with farmers provides indepth market
Bloomberg Code RALI IN
Reuters Code RALL.BO knowledge which it incorporates in its marketing and product avenues. Rallis has
adopted a two pronged strategy to grow its domestic business – Product launches
Business Group - Tata
through Own (in-house research) and via Strategic alliances. Performance of new
product launches are evaluated through its “Innovation turnover Index” tool -
Promoter 45.2 benchmarked at 25% of sales. We estimate domestic operations to grow at 6%
MF/Banks/FIs 26.8
FIIs 5.2 CAGR over FY09-11E to Rs. 6981mn driven by innovative product launches and
Corporate Bodies 5.0 dedicated co-marketing strategies.
Exports – Provides the new balance...
Rallis (I) relative to BSE Sensex Focus on International markets enables it to mitigate seasonal volatilities experienced
200 in the domestic business. The ‘Apollo’ programme is a devised strategy aimed at
realising high growth in exports through - supply contracts, registration based sales
180
and entry into new geographies. The company has outlined phasewise investment
of Rs.2bn towards new capacities at Dahej SEZ to capitalize on opportunities in
160
Contract manufacturing. We expect these initiatives to catapult contribution from
140 international business to 44% by FY11E from 21% - FY08 of total sales.
120 Valuation
Successful implementation of ‘DISHA’ programme has resulted in substantial
100 improvement in the operational performance and consequently high return ratios.
We estimate earnings growth at 22% CAGR (FY09-11E) to Rs.1146mn led by
80 sustainable growth in the domestic business and increasing contribution from
Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 exports. Possible acquisition - complementing its adjacent verticals viz. distribution
Rallis (I) BSE Sensex and manufacturing would add to the growth momentum. At CMP of Rs.544, the
stock trades at attractive 7x FY10E and 5.7x FY11E earnings. We recommend
‘Accumulate’ on the stock with a target price of Rs. 670 (7x FY11E EPS).
Financials
Year Net Sales# % growth EBIDTA OPM % PAT % growth EPS(Rs.) % growth PER (x) ROANW % ROACE %
FY08* 6,922 7.6 812 11.7 496 13.3 41.4 13.3 13.1 19.1 21.4
FY09 8,523 23.1 1,354 15.9 713 43.7 59.5 43.7 9.1 23.7 29.5
FY10E 10,042 17.8 1,738 17.3 927 30.0 77.3 30.0 7.0 27.7 34.4
FY11E 11,611 15.6 2,115 18.2 1,146 23.7 95.7 23.7 5.7 31.6 35.9
Figure in Rs mn, # Incl. Other Operating Income,* Excl. extraordinary items
24 June 2009 Rallis India Ltd. 69

DOLAT CAPITAL
Net Sales 6710.7 8328.5 9818.7 11352.1 (A) Measures of Performance (%)
Operating Income 210.8 194.5 223.7 258.7 Contribution Margin
Income from Operations 6921.6 8523.0 10042.3 11610.8 EBIDTA Margin (excl. O.I.) 11.7 15.9 17.3 18.2
Non Operating Income 27.6 29.1 23.0 25.0 EBIDTA Margin (incl. O.I.) 12.1 16.2 17.5 18.4
Total Income 6949.2 8552.1 10065.3 11635.8 Interest / Sales 0.5 0.4 1.2 1.5
Total Expenditure 6109.7 7169.5 8304.1 9496.1 Gross Profit Margin 12.0 16.2 16.8 17.3
Raw Material 4084.4 5055.7 5866.6 6731.8 Tax/PBT 14.4 32.7 31.0 26.5
Employee Expenses 599.4 664.3 792.9 908.2 Net Profit Margin 18.1 8.4 9.2 9.9
Other Operating Expenses 444.7 423.3 589.1 681.1
Administrative Expenses 981.1 1026.2 1055.5 1174.9 (B) As Percentage of Net Sales
EBIDTA (Excl. Other Income) 811.9 1353.5 1738.2 2114.7 Raw Material 59.0 59.3 58.4 58.0
EBIDTA (Incl. Other Income) 839.5 1382.6 1761.2 2139.7 Employee Expenses 8.7 7.8 7.9 7.8
Interest 36.6 30.0 114.5 174.5 Other Opearting Expenses 6.4 5.0 5.9 5.9
Gross Profit 802.9 1352.7 1646.7 1965.3 Administrative Expenses 14.2 12.0 10.5 10.1
Profit Before Tax & EO Items 602.2 1123.2 1343.4 1559.8 Other Expenses 0.0 0.0 0.0 0.0
Extra Ordinary Exps/(Income) (859.5) 63.1 0.0 0.0
Profit Before Tax 1461.7 1060.1 1343.4 1559.8 (C) Measures of Financial Status
Tax 209.8 347.2 416.5 413.3 Debt / Equity (x) 0.1 0.2 0.3 0.4
Net Profit after Minority Interest 1251.9 712.9 927.0 1146.4 Debtors Period (days) 55.0 50.1 55.0 60.0
Adjusted Net Profit (EO) 496.3 776.0 927.0 1146.4 Closing stock (days) 79.1 64.5 70.0 75.0
BALANCE SHEET Fixed Assets Turnover (x) 2.3 2.5 2.1 1.9
Particulars Mar’08 Mar’09 Mar’10E Mar’11E Working Capital Turnover (x) 5.0 9.5 10.2 7.4
Sources of Funds Non Cash Working Capital (Rs Mn) 1265.6 809.8 895.9 1467.4
Equity Capital 119.8 119.8 119.8 119.8
Preference Capital 880.0 880.0 0.0 0.0 (D) Measures of Investment
Share Premium 0.0 0.0 0.0 EPS (Rs.) (excl EO) 41.4 64.8 77.3 95.7
Other Reserves 2075.5 2486.9 3098.3 3915.1 EPS (Rs.) 104.5 59.5 77.3 95.7
Net Worth 3075.4 3486.8 3218.2 4035.0 CEPS (Rs.) 121.2 78.6 102.7 129.5
Revaluation reserve DPS (Rs.) 16.0 16.0 17.0 18.0
Secured Loans 373.5 248.1 388.5 388.5 Dividend Payout (%) 15.3 26.9 22.0 18.8
Unsecured Loans 65.4 557.4 565.4 1065.4 Profit Ploughback (%) 84.7 73.1 78.0 81.2
Loan Funds 438.9 805.5 953.9 1453.9 Book Value (Rs.) 256.6 290.9 268.5 336.7
Deferred Tax Liability 0.0 0.0 0.0 0.0 Adj.RoANW (%) 19.1 23.7 27.7 31.6
RoACE (%) 21.4 29.5 34.4 35.9
Total Capital Employed 3514.3 4292.3 4172.1 5488.9
Gross Block 2960.4 3376.6 4767.3 5867.3
CMP (Rs.) 544.0 544.0 544.0 544.0
P/E (x) 13.1 9.1 7.0 5.7
Net Block 1346.3 1585.9 2673.3 3367.8
Market Cap. (Rs. Mn.) 6519.7 6519.7 6519.7 6519.7
MCap/ Sales (x) 1.0 0.8 0.7 0.6
Investments 555.1 1361.6 400.0 450.0
EV (Rs. Mn.) 6883.4 7253.7 7410.3 7909.5
Deferred Tax asset 132.3 101.6 132.3 132.3
EV/Sales (x) 1.0 0.9 0.8 0.7
EV/EBDITA (x) 8.5 5.4 4.3 3.7
Inventories 1454.5 1472.7 1883.0 2332.6
P/BV (x) 2.1 1.9 2.0 1.6
Sundry Debtors 1011.6 1143.7 1479.5 1866.1
Dividend Yield (%) 2.9 2.9 3.1 3.3
E-estimates
sub total 3343.1 3472.7 4285.7 5222.7
Provisions 592.7 640.3 943.5 1114.1
sub total 2002.2 2591.4 3326.5 3691.2
Total Assets 3514.3 4292.3 4172.1 5488.9
CASH FLOW
Depreciation & w.o. 200.7 229.5 303.3 405.5
Net Interest Exp 36.6 30.0 114.5 174.5
Change in Working Capital (Non Cash) (930.8) 455.8 (86.1) (571.5)
Other 827.5 (149.3) 33.3
Free Cash Flow 331.3 767.6 191.9 54.9
Inc./ (Dec.) in Investments (237.9) (806.5) 961.6 (50.0)
Other
Issue of Equity/ Preference 0.0 0.0 (880.0) 0.0
Inc./(Dec.) in Debt 91.0 366.6 148.4 500.0
Interest exp net (36.6) (30.0) (114.5) (174.5)
Other
Net Change in Cash (153.7) (3.8) (8.2) 0.8
Closing Cash balances 75.3 71.5 63.4 64.2
E-estimates
24 June 2009 Rallis India Ltd. 70

Rural Electrification Corporation Ltd.
DOLAT CAPITAL
CMP: Rs 158
Target Price: Rs 182 Financial Institution / Accmulate
Lighting the Last Mile…!!!
Rural Electrification Corporation (REC) offers an attractive opportunity to play the buoyancy in the power sector. The
company is one of the few financial institutions specializing in power financing. We believe that REC will continue to
deliver steady earnings growth (16% CAGR between FY09- FY11) and high profitability as its business prospects
remain strong. In the near term, loans for generation projects will likely drive growth. We also expect the share of
private sector and transmission projects to move up over long term. At CMP, the stock trades at 7.9x FY11E EPS of
Rs 20; 1.6x FY11E book value of Rs 97 and 1.6x FY10E adj. book value of Rs 96. We recommend an Accumulate rating
with a target price of Rs. 182 (1.9x FY11E BV)

Tel : +9122 4096 9754
Strong business traction expected
REC is one of the few financial institutions in India specializing in power financing
and is expected to benefit significantly from the government’s thrust on addressing
Tel : +9122 4096 9723
India’s power and infrastructure needs. We expect REC to deliver high loan growth
(26% CAGR over FY09-FY11), primarily driven by the generation segment.
BSE Sensex 14423 Diversification of the loan portfolio
NSE Nifty 4293 REC was incorporated primarily as a sole financer for rural power projects. Gradually,
Scrip Details the scope for financing power infrastructure for REC was widened to cover the
Equity Rs.8,587mn
entire range of power infrastructure and generation. Thereafter, REC’s loan book
Face Value Rs.10/- which was predominately tilted towards the T&D segment started shifting towards
Market Cap Rs.135.9bn the generation segment as well. REC’s loan book currently stands at Rs 513bn and
US$2778.8mn the company plans to grow at ~ 30% CAGR in the next couple of years with a focus
52 week High/Low Rs.167/53 on the generation segment.
BSE Code 532955 Strong yields and low cost funds to sustain margins
NSE Symbol RECLTD REC has a major advantage of raising capital gain bonds, thus having lower cost of
Bloomberg Code RECLIN funds. This has helped the company to maintain healthy margins at around 3.6%.
Reuters Code RURL.BO
However, the proportion of these bonds has declined to 32% of the total borrowed
Business Group - Govt. of India - FIs funds from 45% levels in FY08, which indicates REC’s ability to pass on its funding
Shareholding Pattern as on Mar’09(%) costs to its borrowers. We expect NIM’s to remain stable at ~3.5% for FY09-FY11E.
Promoter 81.8 Asset quality to remain stable
MF/Banks/FIs 8.3
Over the past few years, REC has been able to improve asset quality. REC had a
FIIs 3.4
Corporate Bodies 1.5 higher proportion of riskier T&D loan portfolio. However, with the diversification in
Public / Others 4.9 the loan book over the last couple years, the company has reduced its gross NPL’s.
Almost 99% of the company’s loan book is secured with ~ 98% recovery rate.
REC relative to BSE Sensex However, as a prudential measure, the company follows the 180 day NPA recognition
190
cycle and accordingly provides for the same. REC also has most of its loan book
170 secured through an escrow mechanism. These strong risk management practices
enable the company to maintain its impeccable asset quality.
150
Valuations
130 REC offers another play on India’s growing energy needs apart from PFC. The
company has an edge over PFC in terms of cost of funds which remain the lowest
110 in the industry and a better ROE. The recent disinvestment proposal will further
enhance REC’s Book Value (and have lower impact on RoE’s). The Deferred Tax
90
Liability reversal is expected to further enhance book value by ~ 11 / per share.
70 At CMP, the stock trades at 7.9x FY11E EPS of Rs 20; 1.6x FY11E book value
Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 of Rs 97 and 1.6x FY10E adj. book value of Rs 96. We recommend an
RECLTD BSE Sensex Accumulate rating with a target price of Rs. 182 (1.9x FY11E BV)
Financials
FY08 13.1 55.2 8.6 30.3 3.6 10.0 15.8 2.5 2.6 18.3 2.3
FY09E 17.7 35.0 12.7 47.9 3.8 14.8 10.7 2.2 2.2 22.0 2.8
FY10E 21.4 21.3 14.3 12.4 3.6 16.7 9.5 1.9 1.9 21.5 2.4
FY11E 25.9 20.6 17.2 20.2 3.5 20.0 7.9 1.6 1.6 22.3 2.3
Figure in Rs.bn
24 June 2009 REC Ltd. 71

DOLAT CAPITAL
Provisions and Contengencies 400 24 141 199

Depriciation 14 14 21 28 Profitability (%)
Profit before Tax 13,130 19,200 21,505 25,859 RoANW 18.3 22.0 21.5 22.3
Provision for Tax 4,523 6,480 7,204 8,663 RoAA 2.3 2.8 2.4 2.3
Profit after Tax 8,601 12,720 14,301 17,196 Cost / Income Ratio (%) 8.9 5.4 6.5 6.2
Cost / Assets (%) 0.3 0.2 0.2 0.2
BALANCE SHEET Avg. yield on Advances 9.4 10.3 9.9 9.4

Avg. cost on Funds 6.4 7.3 7.0 6.6
Spread 3.1 3.0 2.9 2.8
Sources of Funds
Net Interest Margin 3.6 3.8 3.6 3.5
Equity Capital 8,587 8,587 8,587 8,587
Growth (%)
Net Worth 53,677 61,876 71,304 83,226
Loan Funds 342,828 449,360 589,416 731,915
Other Income (21.2) 9.1 (23.0) (1.9)
Deferred Tax Asset / Liability 8,171 9,570 10,185 10,962
Net Profit 30.3 47.9 12.4 20.2
Advances 22.5 30.7 27.2 25.4
Loan Funds 13.2 31.1 31.2 24.2
Fixed Assets & WIP 779 942 1,082 1,237
Advances 393,165 513,810 653,817 820,073
Asset Quality
Investments 11,474 10,060 10,563 11,355
Current Asstes 23,725 24,201 36,669 37,693
Dividend
DPS (Rs) 3.0 4.5 4.9 5.3
Net Current Assets (742) (4,007) 5,442 (6,562)
Efficiency
Deferred Tax Asset / Liability 0 0 0 0
Avg. Disbursement per Employee (Rs cr) 50.8 63.9 82.2 103.4
Total Assets 404,676 520,806 670,905 826,103 Avg Profit per Employee (Rs lakh) 107.2 150.1 190.0 220.3
E-estimates E-estimates
24 June 2009 REC Ltd. 72

S.Kumars Nationwide Ltd.
DOLAT CAPITAL
CMP: Rs 45
Target Price: Rs 65 Textiles / Buy
Tailor Made Profits...!!!

Skumars Nationwide (SKNL) is one of the largest integrated textile manufacturers with a strong focus on brand and
distribution. It has grown at a CAGR of ~35% (FY06-09E). We feel this growth is sustainable to a certain extent given
the fact that the company has experience, strong brand, scalability and strong distribution network. We initiate coverage
with a BUY recommendation on the stock with a target price of Rs.65 (5xFY11E) over a period of 12~18 months.
Analyst: Ankit Babel Investment Rationale

Tel : +9122 4096 9732
Strong Brand Image
Email: ankit@dolatcapital.com
SKNL caters to all the socio-economic group from economy to luxury segment. Its
BSE Sensex 14423 flagship brand “Skumars” (economy segment) has a strong heritage and is well
NSE Nifty 4293 recognized in the Indian hinterland and mainland. It is the market leader in the
Scrip Details branded uniform and institutional work wear segment with ~30% market share. In
Equity Rs.2436mn
the premium segment, SKNL’s “Reid & Taylor” brand has steadily gained market
Face Value Rs.10/- share (~18% in this segment) with strong brand appeal. The company is making
Market Cap Rs.11bn efforts to build up newer brands – Belmonte, Carmichael House, Stephen Brothers
US$225mn and Balmoral. SKNL is on the verge of making its entry in the casual segment by
52 week High/Low Rs.114/13 launching a new brand in the premium category.
BSE Code 514304 Established Distribution Channel
NSE Symbol SKUMARSYNF Over the years the company has developed a supportive distribution strength
Bloomberg Code SKUM IN enabling it to have a pan India presence. It sells its products through ~30K retail
Reuters Code SKMK.BO
outlets (a key differentiator matched by only a few players like Raymond) across
Business Group - Indian Private India. This accompanied by strong relationship acts as an entry barrier for new
Shareholding Pattern as on Mar’09(%) entrants and smaller players. Through Brand House Retail (BHRL) - the de-merged
Promoter 46.9 arm of SKNL, it plans to increase its geographical reach by increasing the rollouts
MF/Banks/FIs 0.4 of EBOs (Exclusive brand outlets).
FIIs 25.3
Corporate Bodies 16.9 Investment by GIC (Singapore) in Reid & Taylor (R&T)
Public / Others 10.5 GIC has acquired 25.4% stake in Reid & Taylor (74.6% subsidiary of SKNL) for
Rs.9bn. valuing the subsidiary at Rs.35.4bn. This is a pure equity investment with
S.Kumar Nat relative to Sensex no minimum guarantee or commitments attached to it. Company has already received
120 Rs.7.9bn (remaining Rs.1.1bn would be received in FY10). Proceeds received would
be used to pay off the debts under the CDR (corporate debt restructuring) scheme
100
and capacity expansion in R&T.
80 Domestic focus
Domestic sales contribute over 98% of the total revenue (FY08) keeping the company
60 insulated from the vagaries of international slowdown and currency fluctuations.
SKNL has consciously avoided exports,with a strategy to tap the high margin
40
domestic market. Even after expanding facilities focusing on exports; the share of
20 exports is not expected to rise beyond 10% of total revenue in the near future.
Valuations
0
SKNL’s domestic focus coupled with its strong brands, design led approach and
lean operations leave them well placed in the current environment. Increase in
S.Kumar N BSE Sensex capacities, geographical reach and increase in share of high margin products will
be prime growth drivers going forward. Coming out of the CDR scheme will provide
autonomy in daily operations. At CMP, the stock is trading at a PER of 5x FY10E &
3.5x FY11E earnings. We inititate coverage with a BUY recommendaion on the
stock with a target price of Rs.65 (5x FY11E) over a period of 12~18 months.
Financials (Consolidated)
Year Net Sales % growth EBITDA OPM% PAT % growth FDEPS(Rs.) % growth PER(x) ROANW(%) ROACE(%)
FY08 17,486 42.2 3,835 21.9 2,056 66.4 9.5 48.9 4.7 26.4 16.8
FY09E 21,940 25.5 4,489 20.5 1,647 (19.9) 7.4 (22.8) 6.1 11.5 13.5
FY10E 29,658 35.2 6,757 22.8 2,195 33.3 9.0 22.5 5.0 9.8 14.0
FY11E 36,067 21.6 8,594 23.8 3,156 43.8 13.0 43.8 3.5 11.2 15.8
Figure in Rs mn
24 June 2009 Skumars Nationwide Ltd. (SKNL) 73

DOLAT CAPITAL
Other income 100.5 100.0 180.0 200.0 Contribution Margin 30.5 28.8 32.7 31.9
Tax/PBT 21.4 30.9 36.5 36.9
Manufacturing Expenses 515.4 1,037.0 2,197.0 2,780.0
Selling & Administrative Expenses 1,428.7 1,725.3 2,809.3 3,602.4
EBIDTA (Excl. Other Income) 3,835.4 4,489.0 6,756.8 8,593.7
(B) As Percentage of Net Sales
EBIDTA (Incl. Other Income) 3,935.9 4,589.0 6,936.8 8,793.7
Raw Material 64.5 64.4 57.7 55.9
Interest 893.3 1,195.3 1,114.9 1,189.9
Employee Expenses 2.4 2.6 2.6 2.6
Gross Profit 3,042.6 3,393.7 5,821.9 7,603.7
Manufacturing Expenses 2.9 4.7 7.4 7.7
Depreciation 426.1 612.5 1,534.0 1,650.5
Selling & Administrative Expenses 8.2 7.9 9.5 10.0
Profit Before Tax 2,616.5 2,781.3 4,287.9 5,953.2
Tax 560.5 859.9 1,564.0 2,198.9
Debt / Equity (x) 1.4 0.8 0.6 0.5
Net Profit 2,055.9 1,921.4 2,723.8 3,754.4
Interest Coverage (x) 4.4 3.8 6.2 7.4
Minority Interest 274.6 529.2 598.3
Net Profit 2,055.9 1,646.7 2,194.6 3,156.1
BALANCE SHEET
Equity Capital 2,153.5 2,233.9 2,436.0 2,436.0 Non Cash Working Capital (Rs Mn) 14,401.2 18,480.3 23,351.5 27,323.7
Preference Capital 1,697.9 0.0 0.0 0.0
Other Reserves 5,794.5 16,748.0 23,319.9 27,976.0 (D) Measures of Investment
Revaluation reserve 108.6 108.6 108.6 108.6 EPS (Rs.) 9.5 7.4 9.0 13.0
Secured Loans 11,821.0 CEPS (Rs.) 11.5 10.1 15.3 19.7
Unsecured Loans 2,129.3 15,821.5 15,504.8 16,150.6 Book Value (Rs.) 44.8 85.0 105.7 124.8
Loan Funds 13,950.3 15,821.5 15,504.8 16,150.6 RoANW (%) 26.4 11.5 9.8 11.2
Deferred Tax Liability 41.2 RoACE (%) 16.8 13.5 14.0 15.8
Minority Interest 274.6 803.8 1,402.0 RoAIC (%) (Excl Cash & Invest.) 16.9 14.3 15.3 17.7
Applications of Funds CMP (Rs.) 45.0 45.0 45.0 45.0
Gross Block 5,616.9 10,303.5 15,153.5 17,253.5 P/E (x) 4.7 6.1 5.0 3.5
Less: Accumulated Depreciation 1,801.9 2,321.5 3,750.3 5,295.5 Market Cap. (Rs. Mn.) 9,691 10,053 10,962 10,962
Net Block 3,815.0 7,981.9 11,403.2 11,957.9 MCap/ Sales (x) 0.6 0.5 0.4 0.3
Capital Work in Progress 5,403.7 3,000.0 1,500.0 500.0 EV (Rs. Mn.) 23,529 22,529 22,928 21,201
Investments 13.7 2,379.6 2,379.6 2,379.6 EV/Sales (x) 1.3 1.0 0.8 0.6
Current Assets, Loans & Advances EV/EBDITA (x) 6.1 5.0 3.4 2.5
P/BV (x) 1.0 0.5 0.4 0.4
Inventories 5,794.5 6,410.2 8,483.6 10,237.3
Dividend Yield (%) 0.0 0.0 0.0 0.0
Sundry Debtors 8,013.9 9,022.5 12,115.6 14,747.2
E-estimates
Cash and Bank Balance 112.3 3,344.9 3,538.7 5,912.0
Other Current Assets 0.0 2,107.7 2,002.4 1,897.2
sub total 16,811.3 25,350.5 30,945.6 37,897.6
Provisions 777.7
sub total 2,297.8 3,525.4 4,055.4 4,661.9
Total Assets 23,745.9 35,186.7 42,173.0 48,073.2
CASH FLOW
Depreciation & w.o. 426.1 612.5 1,534.0 1,650.5
Net Interest Exp 871.0 1,195.3 1,114.9 1,189.9
Direct taxes paid (297.1) (859.9) (1,564.0) (2,198.9)
Other 118.8
(A) Cash Flow from Operating Activities 1,015.7 (349.9) 501.4 2,622.7
Free Cash Flow (2,835.0) (2,632.7) (2,848.6) 1,522.7
Inc./ (Dec.) in Investments 0.1 (2,365.9) 0.0 0.0
Other 22.3
Issue of Equity/ Preference 1,652.3 7,555.3 4,474.0 1,394.7
Inc./(Dec.) in Debt 2,020.7 1,871.3 (316.7) 645.8
Interest exp net (893.3) (1,195.3) (1,114.9) (1,189.9)
(C) Cash Flow from Financing 2,779.7 8,231.3 3,042.4 850.6
E-estimates
24 June 2009 Skumars Nationwide Ltd. (SKNL) 74

Tata Steel Ltd.
DOLAT CAPITAL
CMP: Rs 405
Target Price: Rs 335 Metals / Sell
Off the cliff!!!

The financial crisis in the world had a the destructive effect on steel demand and the steel consumption is expected
to decline by 15% in 2009 as per WSA. Europe is expected to be amongst the last to recover out of the recessionary
trends. Tata Steel performance will remain under pressure with its 64% of its volumes exposed to developed markets.
High leverage and high fixed cost will lead to earnings drop by 66% to Rs 32.68 bn in FY10. We initiate the coverage
with a SELL recommendation on Tata Steel with a price target of Rs335 (6x FY10 EV/EBITDA)
Analyst: Ram Modi Rationale

Tel : +9122 4096 9757
Email: ram@dolatcapital.com Steel outlook weak with industry still operating at low capacity utilizations.
Globally steel demand collapsed following the financial crisis in the world. The
BSE Sensex 14423 demand environment continues to remain challenging with the demand in user
NSE Nifty 4293 industry (Auto and Construction) remaining weak. We believe the price correction
Scrip Details has been done, though volumes will continue to remain challenging over next year.
Equity Rs.8628mn With capacity utilization still running low at 72%, we expect upside in prices (Current
Face Value Rs.10/- prices of HR Coil at US$520/mt) to be capped as the restarting of steel capacities
Market Cap Rs.349bn will increase supply.
US$7146mn
52 week High/Low Rs.832/146 Volumes at Corus to remain low with capacity utilisation at 64%.
1-Month Avg. Volume 17706567 Europe continues to face strong recessionary tailwinds resulting in weak demand
BSE Code 500470 for steel.Eurofer expects steel consumption in Europe to decline by 15% yoy in
NSE Symbol TATASTEEL
FY09 and recover modestly by 1.7% yoy in 2010. We expect realizations to remain
Bloomberg Code TATA IN
Reuters Code TISC.BO weak as UK and Europe continue to be under recessionary trends. Volumes will
remain at risk with withdrawl of offtake agreement at Teesside and weak demand .
Business Group - Tata
Carryover volumes of high cost coking coal (6.5 mn mt) combined with low
Shareholding Pattern as on Mar’09(%) realizations and high fixed cost will lead to low margins at Corus.We expect Corus
Promoter 34.0 to report an EBITDA/mt of US$40/mt in FY10 (Largely due to cost savings).
MF/Banks/FIs 24.8
FIIs 13.2 High leverage to continue to weigh on cash flows.
Corporate Bodies 3.3 Tata Steel, on a consolidated basis, has a net debt of close to US$12bn as of
Public / Others 24.7 December 2008. Although the company has obtained a relaxation in debt covenants
for Corus for FY10, Tata Steel will have to infuse equity of US$200mn for proposed
Tata Steel relativet to Sensex debt prepayment under the agreement with creditors.Interest coverage ratio for
120 Corus remains a concern and will remain dependent on Tata Steel, India, for debt
repayment in the near term.
100
Volume growth of 22% in FY10 with integrated operations at Tata Steel
80 India will still lead to earnings drop in FY10.
Tata Steel India operations will continue to benefit from its integrated operations.
60
Increase in volumes by 22% will help to mitigate drop in realizations . We expect
40
Tata Steel operations to report an EBITDA/mt to Rs 13600/mt due to low realisations
(HRC at US$520/mt) and volume of 6 mn mt .Tata Steel India 3mtpa expansion is
20 on track at its Jamshedpur plant and will contribute to earnings only in FY12.
Valuations
0
We value Tata Steel on EV/EBITDA basis with an high leverage balance sheet and
challenging environment.We value Tata Steel on consolidated basis at 6x FY10
Tata Steel BSE Sensex EV/EBITDA (15% discount to global average multiple for steel stocks). At our target
price Tata Steel will trade at 8.8x FY10EPS and P/BV of 1.4x FY10 (Adj BV for
goodwill).
Financials (Consolidated)
Year Net Sales % growth EBITDA OPM% PAT EPS % growth PER(x) EV/EBITDA ROANW(%) ROACE(%)
FY08 1,315,359 421.7 180,035 13.7 123,603 84.6 198.9 4.8 6.0 50.6 21.5
FY09E 1,444,800 9.8 199,292 13.8 94,759 109.8 (23.3) 3.7 4.3 26.8 16.6
FY10E 930,394 (35.6) 124,769 13.4 32,680 37.9 (65.5) 10.7 6.5 8.7 8.3
FY11E 959,136 3.1 150,280 15.7 52,981 61.4 62.1 6.6 5.1 13.0 10.7
Figure in Rs mn
24 June 2009 Tata Steel Ltd. 75

DOLAT CAPITAL
Net Sales 1,315,359 1,444,800 930,394 959,136 (A) Measures of Performance (%)
Other income 5,742 1,896 2,000 2,000 Contribution Margin 100.0 100.0 100.0 100.0
EBIDTA Margin (excl. O.I.) 13.7 13.8 13.4 15.7
Total Income 1,321,101 1,446,695 932,394 961,136
EBIDTA Margin (incl. O.I.) 14.1 13.9 13.6 15.8
Total Expenditure 1,135,324 1,245,508 805,625 808,856
EBIDTA (Excl. Other Income) 180,035 199,292 124,769 150,280
EBIDTA (Incl. Other Income) 185,777 201,187 126,769 152,280
Tax/PBT 24.7 18.5 24.0 24.0
Interest 41,838 34,679 38,500 36,400
Gross Profit 143,940 166,508 88,269 115,880
Depreciation 41,370 44,223 46,453 47,353 (B) Measures of Financial Status
Profit Before Tax & EO Items 102,570 122,285 41,816 68,527 Net Debt / Equity (x) 1.4 1.4 1.2 1.0
Extra Ordinary Exps/(Income) (61,244) 8,848 0 0 Interest Coverage (x) 4.4 5.8 3.3 4.2
Profit Before Tax 163,815 113,437 41,816 68,527 Average Cost Of Debt (%) 7.8 6.2 7.0 7.0
Tax 40,493 20,937 10,036 16,447 Debtors Period (days) 51.9 51.0 51.1 51.1
Net Profit 123,321 92,500 31,780 52,081 Closing stock (days) 64.0 65.0 65.0 65.0
Minority Interest (282) (2,259) (900) (900) Inventory Turnover Ratio (x) 5.7 5.6 5.6 5.6
Net Profit 123,603 94,759 32,680 52,981 Fixed Assets Turnover (x) 1.4 1.4 0.9 0.9
BALANCE SHEET Non Cash Working Capital (Rs Mn) 243,835.9 304,544.8 266,217.1 261,387.3

Sources of Funds
EPS (Rs.) (excl EO) 42.7 120.1 37.9 61.4
Equity Capital 7,301 8,628 8,628 8,628
EPS (Rs.) 84.6 109.8 37.9 61.4
Preference Capital 54,900 54,900 175 175
CEPS (Rs.) 113.0 161.1 91.7 116.3
Share Premium 63,921 63,919 118,644 118,644
DPS (Rs.) 16.0 10.0 10.0 10.0
Other Reserves 215,792 238,374 260,060 302,046 Dividend Payout (%) 18.9 9.1 26.4 16.3
Net Worth 341,914 365,821 387,507 429,493 Profit Ploughback (%) 81.1 90.9 73.6 83.7
Minority Interest 8,327 9,992 10,892 11,792 Book Value (Rs.) 221.1 214.8 239.9 288.6
Secured Loans 354,152 374,152 370,000 350,000 RoANW (%) 50.6 26.8 8.7 13.0
Unsecured Loans 181,775 181,775 180,000 170,000 RoACE (%) 21.5 16.6 8.3 10.7
Loan Funds 535,928 555,928 550,000 520,000 RoAIC (%) (Excl Cash & Invest.) 24.2 17.4 8.8 11.6
Provision for Employee Separations 10,801 8,463 6,213 3,963
Deferred Tax Liability 24,544 24,544 24,544 24,544 (E) Valuation Ratios
CMP (Rs.) 405.0 405.0 405.0 405.0
Total Capital Employed 921,514 964,748 979,156 989,792
P/E (x) 4.8 3.7 10.7 6.6
Market Cap. (Rs. Mn.) 591,389.1 349,434.0 349,434.0 349,434.0
MCap/ Sales (x) 0.4 0.2 0.4 0.4
Gross Block 962,294 1,022,294 1,042,294 1,062,294
EV (Rs. Mn.) 1,076,673.2 859,577.1 813,560.8 769,841.9
Less: Accumulated Depreciation 631,106 643,612 690,065 737,419
EV/Sales (x) 0.8 0.6 0.9 0.8
Net Block 331,187 378,681 352,228 324,875
EV/EBDITA (x) 6.0 4.3 6.5 5.1
Capital Work in Progress 88,962 20,000 50,000 70,000 P/BV (x) 1.8 1.9 1.7 1.4
Goodwill 180,500 180,500 180,500 180,500 Dividend Yield (%) 4.0 2.5 2.5 2.5
Investments 33,674 43,674 53,674 63,674 E-estimates
Inventories 230,643 257,293 165,687 170,805
Sundry Debtors 186,963 201,876 130,255 134,279
Cash and Bank Balance 42,316 35,792 74,981 87,800
Loans and Advances 154,744 158,928 102,343 105,505
Other Current Assets 0 0 0 0
sub total 614,667 653,889 473,266 498,389
Provisions 64,576 27,724 22,274 25,479
sub total 328,515 313,552 132,068 149,202
Misc Expenses 1,038 1,556 1,556 1,556
Total Assets 921,514 964,748 979,156 989,792
CASH FLOW
Profit before tax and extra ordinary items 163,815 122,285 41,816 68,527
Depreciation & w.o. 41,370 44,223 46,453 47,353
Net Interest Exp 41,838 34,679 38,500 36,400
Direct taxes paid (26,867) (20,937) (10,036) (16,447)
Change in Working Capital (Non Cash) (19,777) (60,709) 38,328 4,830
Other (66,176) (109,601) (9,373) (9,372)
(A) Cash Flow from Operating Activities 134,202 9,941 145,688 131,291
Capex {Inc./ (Dec.) in Fixed Assets n WIP} (79,935) 8,962 (50,000) (40,000)
Inc./ (Dec.) in Investments (387,649) (10,000) (10,000) (10,000)
Other 5,631
(B) Cash Flow from Investing Activities (461,953) (1,038) (60,000) (50,000)
Issue of Equity/ Preference 103,578 1,325 0 0
Inc./(Dec.) in Debt 169,753 20,000 (5,928) (30,000)
Interest exp net (42,708) (34,679) (38,500) (36,400)
Dividend Paid (Incl. Tax) (9,478) (2,072) (2,072) (2,072)
Other (16,018)
(C) Cash Flow from Financing 205,127 (15,427) (46,500) (68,472)
Net Change in Cash (122,624) (6,524) 39,189 12,819
Opening Cash balances 164,941 42,316 35,792 74,981
Closing Cash balances 42,316 35,792 74,981 87,800
E-estimates
24 June 2009 Tata Steel Ltd. 76

TIL Ltd.
DOLAT CAPITAL
CMP: Rs 198
Target Price: Rs 300 Engineering Equipments / Buy
Taking Fresh Guard...!!!
The Material Handling and Construction Equipment (MHCE) industry is expected to touch Rs 300 bn by 2011.
Political stability with a strong mandate would translate into increased thrust on infrastructure development in-
order to drive overall economic growth. TIL, with an extensive product offering, is an ideal candidate to play the
large opportunity in the infrastructure space. The company has re-enforced its focus on the high margin Material
Handling Solutions (MHS) segment by way of undertaking its earlier deferred capex plans in a phased manner
and carving out its agency businesses into a separate subsidiary. We recommend a BUY on the stock with a
price target of Rs 300 (7x FY11E Consol EPS).
Analyst: Navin Matta Investment Rationale

Tel : +9122 4096 9752
Email: navin@dolatcapital.com
z TIL- an ideal candidate to play the revival in infrastructure activities: After a
period of sharp slowdown in overall economic activity, the strong government
Associate : Harshal Patil
mandate would act as a catalyst to restart infrastructure spending so as to drive
Tel : +9122 4096 9725
Email: harshal@dolatcapital.com overall economic growth. TIL with an extensive product range including
manufacturing of cranes between the 5 to 100 tons range and Caterpillar
BSE Sensex 14423 dealership for Construction & Mining and Generator sets is an ideal candidate
NSE Nifty 4293 to play the large opportunity.
Scrip Details z Commissioning of MHS capex in phased manner to improve revenue
Equity Rs.100.3 mn potential: TIL has earlier announced a Rs 2 bn greenfield capex towards setting
Face Value Rs.10/- up a facility for MHS segment. However, initial delay on account of land acquisition
Market Cap Rs 1.9bn
which was subsequently followed by major slump in economic activities resulted
US$ 40.54.mn
52 week High/Low Rs.408/70 in the company deferring the expansion plans. However, as per revised
1-Month Avg. Volume (Daily) 13949 arrangement, TIL would undertake the capex in a phased manner. The first
BSE Code 505196 phase is likely to be commissioned by Q1FY11, which would have a revenue
NSE Symbol TIL generating capacity of ~ Rs 2 bn (Asset/Turnover - 4x).
Bloomberg Code TILL IN
Reuters Code TIL.BO z Traction in Power Systems business to continue: Improvement in availability
of gas in the coming years, would ensure strong growth for the company’s gas
based gensets. TIL has received several orders from some of the oil companies
Shareholding Pattern as on Mar’09(%) for its gensets which are likely to continue in the future aswell. Between 2007-
Promoter 50.9 09 period, PSS segment grew by CAGR of 20%, which we expect to continue
MF/Banks/FIs 26.5 for the next few years. Higher level of value addition in the segment ensures
FIIs 0.0 better margins compared to the regular agency business.
Public / Others 17.8 z Construction and Mining segment set to turnaround: TIL’s CMS business
was worst hit during the sharp demand meltdown as the company was burdened
TIL relative to BSE Sensex by high inventory levels. However, two quarters of de-stocking efforts with low
120 production levels has enabled overall working capital to return to near normal
levels. Going forward, the current government has spelt out its desire to bring in
100
reforms in the coal sector so as to ramp up the power generation capacity of the
80 country. TIL’s agency business is likely to be a key beneficiary as it hold Caterpillar
dealership for the Northern and Eastern India, which is typically the coal mining
60 belt.
40 Valuation
Infrastructure development is likely to be one of the key themes for driving economic
20
growth. TIL, which has a wide gamut of products in each of its business segments
0 would stand to benefit from increase in infrastructure spending. Additionally, reduction
Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 in working capital and resumption of capex in a phased manner act as positives for
TIL BSE Sensex the company. At CMP, the stock trades at 4.6x FY11 EPS. We believe, the revival in
infrastructure spend would speed up order inflow for the company. We recommend
Financials (Consolidated) a BUY on the stock with a price target of Rs 300 (7x FY11E Consol EPS).
Year Net Sales Growth-% EBITDA OPM% Net Profit Growth-% EPS (Rs) Growth-% PER (X) ROANW-% ROACE-%
FY08 10,579 37.8 870 8.2 431 84.8 43.0 79.3 4.6 30.0 34.2
FY09P 10,499 -0.8 1,041 9.9 447 3.7 44.6 3.7 4.4 21.4 24.7
FY10E 9,842 -6.3 960 9.8 360 -19.6 35.9 -19.6 5.5 16.3 21.2
FY11E 10,975 11.5 1,112 10.1 429 19.2 42.7 19.2 4.6 17.4 23.2
Figure in Rs mn
24 June 2009 TIL Ltd. 77

DOLAT CAPITAL

Net Sales 10,578.8 10,498.5 9,841.9 10,974.7 (A) Cost Analysis (%)
Total Expenditure 9,708.7 9,457.8 8,882.2 9,863.2 Excise/Gross Sales
Operating Profit 870.1 1,040.7 959.7 1,111.6 Net Raw Material Cost/net sales 79.2 75.5 0.0 0.0
Other income 82.5 5.4 12.5 15.0 Direct Mfg Exp / Net Sales 1.7 0.0 0.0 0.0
Operating Profit (incl. Other Income) 952.6 1,046.1 972.2 1,126.6 Power & Fuel/net sales 0.0 0.0 0.0 0.0
Interest 168.1 227.6 247.4 263.2 Employee Cost/net sales 5.0 6.8 0.0 0.0
Gross Profit 784.5 818.5 724.7 863.3 Other Mfg exp/net sales 0.0 0.0 0.0 0.0
Depreciation 127.5 165.5 194.2 227.5 Selling & Distribution & Admin exp/net sales 0.0 0.0 0.0 0.0
Profit Before Tax & EO Items 657.0 653.0 530.5 635.8 Other Expenses/net sales 5.9 7.8 0.0 0.0
Profit Before Tax 657.0 653.0 530.5 635.8
Tax 225.9 205.8 170.9 207.1 (B) Operational Performance (%)
Net Profit 431.1 447.2 359.6 428.7 Operating Profit Margin (excl. O.I.) 8.2 9.9 9.8 10.1
EPS 43.0 44.6 35.9 42.7 Operating Profit Margin (incl. O.I.) 9.0 10.0 9.9 10.3
Other Income/net sales 0.8 0.1 0.1 0.1
BALANCE SHEET Interest / Sales 1.6 2.2 2.5 2.4
Particulars Mar’08 Mar’09P Mar’10E Mar’11E Dep/Gross Block 8.0 8.4 8.3 8.3
Sources of Funds Gross Profit Margin 7.4 7.8 7.4 7.9
Equity Capital 100.3 100.3 100.3 100.3 Tax/PBT 34.4 31.5 32.2 32.6
Share Premium Account 87.8 87.8 87.8 87.8 Net Profit Margin 4.1 4.3 3.7 3.9
Reserves (excl Rev Res) 1,539.7 1,946.8 2,256.2 2,634.7
Net Worth 1,727.8 2,134.9 2,444.3 2,822.9 (B) Financial Performance
Revaluation reserve 73.5 73.5 73.5 73.5 Average Cost Of Debt (%) 19.1 16.8 18.3 20.3
Total Reserves 1,613.2 2,020.3 2,329.7 2,708.3 Debtors Period (days) 50.2 57.9 62.1 60.3
Secured Loans 750.0 1,100.0 1,250.0 1,350.0 Closing stock (days) 80.5 76.2 77.5 77.1
Unsecured Loans 125.1 30.0 80.0 80.0 Fixed Assets Turnover (x) 11.6 9.3 7.7 7.6
Total Loan Funds 875.1 1,130.0 1,330.0 1,430.0 Current Ratio (x) 1.6 1.7 1.9 2.0
Total Capital Employed 2,709.9 3,375.2 3,888.3 4,370.9 (C) Other Ratios
Debt / Equity (x) 0.5 0.5 0.5 0.5
Applications of Funds Interest Coverage (x) 5.7 4.6 3.9 4.3
Gross Block 1,597.4 1,977.5 2,332.6 2,737.6 ROANW (%) 30.0 21.4 16.3 17.4
Less: Accumulated Depreciation 684.0 849.5 1,043.7 1,271.2 ROACE (%) 34.2 24.7 21.2 23.2
Net Block 913.4 1,128.0 1,271.3 1,448.9
Capital Work in Progress 106.0 150.0 150.0 100.0 (D) Per Share Data
Investments 0.7 0.7 0.7 0.7 Earnings Per Share (Rs.) 43.0 44.6 35.9 42.7
Current Assets, Loans & Advances Cash Earnings Per Share (Rs.) 55.7 61.1 55.2 65.4
Inventories 2,333.7 2,191.4 2,088.5 2,318.6 Dividend Per Share (Rs.) 4.0 4.0 5.0 5.0
Sundry Debtors 1,455.8 1,664.9 1,674.8 1,813.8 Dividend Payout (%) 9.3 9.0 13.9 11.7
Cash and Bank Balance 61.5 57.8 162.0 137.3 Profit Ploughback (%) 90.7 91.0 86.1 88.3
Loans and Advances 552.1 877.8 1,044.5 1,247.6 Book Value (Rs.) 172.3 212.8 243.7 281.4
sub total 4,570.8 4,985.0 5,133.5 5,685.8 (E) Valuation Ratios
Less : Current Liabilities & Provisions Market Price (Rs.) 198.0 198.0 198.0 198.0
Current Liabilities 2,370.3 2,342.6 2,110.5 2,287.9 Price / Earnings Ratio (x) 4.6 4.4 5.5 4.6
Provisions 510.7 544.8 582.8 612.3 Market Cap. (Rs. Mn.) 1,985.9 1,985.9 1,985.9 1,985.9
sub total 2,881.0 2,887.3 2,693.2 2,900.2 Market Cap/Sales (x) 0.2 0.2 0.2 0.2
Net Current Assets 1,689.8 2,097.7 2,440.3 2,785.6 Enterprise Value (Rs. MN.) 2,799.6 3,058.2 3,153.9 3,278.6
Misc Expenses EV/Sales (x) 0.3 0.3 0.3 0.3
Deferred Tax Asset EV/EBDITA (x) 3.2 2.9 3.3 2.9
Total Assets 2,709.9 3,375.2 3,888.3 4,370.9 Market Price to Book Value (x) 1.1 0.9 0.8 0.7
Dividend Yield (%) 2.0 2.0 2.5 2.5
CASH FLOW E-estimates, P=Balance Sheet Nos. are Projected.

Net Profit Before tax 657.0 653.0 530.5 635.8
Dep & w/o 127.5 165.5 194.2 227.5
Change in Wcap (367.4) (411.5) (238.4) (370.0)
Other op exp (49.9) (205.8) (170.9) (207.1)
Cash Flow from Operating Act 367.1 201.2 315.4 286.2
Changes in Investment 0.0 0.0 0.0 0.0
Capex (313.0) (424.2) (355.1) (355.1)
Others (0.0) 3.3 3.7 4.0
Cash Flow from Investing Act (313.0) (420.8) (351.4) (351.0)
Procceds from Equity Issue 97.8 0.0 0.0 0.0
Inc/Dec in Debt 59.8 254.9 200.0 100.0
Dividend Paid (34.1) (40.1) (50.2) (50.2)
Others (151.6)
Cash Flow from Fin Act (28.0) 214.7 149.9 49.9
Net change in Cash 26.1 (4.9) 113.9 (15.0)
Cash at Beginning 35.4 61.5 57.8 162.0
Cash at End 61.5 57.8 162.0 137.3
24 June 2009 TIL Ltd. 78

Torrent Power Ltd.
DOLAT CAPITAL
CMP: Rs 140
Target Price: Rs 171 Utilities / Buy
New-GEN-Utility...!!!
Torrent Power’s presence across the value chain in generation, transmission and distribution in the high growth
regions of Gujarat makes it best placed to tap the economic growth. With capacity expansion increasing internal
sourcing and hence improved profitability we feel, TPL is on a high growth trajectory. As interaction with the
management is extremely difficult, based on our analysis, we feel that Torrent’s expertise in reducing transmission
losses can multiply its growth prospects. At CMP of Rs140, the stock is trading at a P/B of 1.7xFY11E and P/E of
8.5xFY11E. We initiate coverage with a ‘BUY’ recommendation with a price target of Rs171 at which it would be
trading 2xFY11E BV.
Analyst: Sanjeev Patkar

Tel : +9122 4096 9745
Email: sanjeev@dolatcapital.com Direct beneficiary of industrial & commercial growth in Gujarat
Associate : Gracy Mittal Torrent’s presence in the core business areas of Ahmedabad and Surat, which are
Tel : +9122 4096 9722 witnessing higher growth than national GDP, makes it well placed to tap the
Email: gracy@dolatcapital.com increasing power demands of these areas and cash in on the opportunity. Despite
economic slowdown hitting the key consumers in FY09E (77% of sales contributed
BSE Sensex 14423 by industrial customers), Torrent Power managed a revenue growth of 19%. With
NSE Nifty 4293
improved economic conditions kicking in, we feel that Torrent Power would be a
Scrip Details key beneficiary of the investments in Gujarat as it is best placed to tap the increasing
Equity Rs.4724.5mn power requirement of the state.
Face Value Rs.10/- Increased internal reliability as capacity more than triples
Market Cap Rs.66.1bn The company is expanding its capacity by 1147.5MW at ‘SUGEN’ which would be
US$1352.6mn
operational in FY10E; thereby taking the total operational capacity to 1647.5MW.This
strengthens the business model of Torrent by increasing internal reliability as greater
BSE Code 532779 number of units would be contributed by its own generation business. In addition,
NSE Symbol TORNTPOWER the project has been awarded mega project status which makes it eligible for tax
Bloomberg Code TPW IN benefits. This is expected to improve the bottomline as the company would be able
Reuters Code TOPO.BO to avail lower tax rate going forward.
Business Group - Torrent Gas availability to improve performance and margins
Shareholding Pattern as on Mar’09(%) With KG basin gas coming in, 76% of the capacity would have increased fuel
Promoter 52.8 availability resulting in better capacity utilization. Higher generation is expected to
MF/Banks/FIs 24.2 improve margins as meeting the power requirements by in-house generation than
FIIs 0.3 purchase from a third party (GUVNL- Gujarat SEB) would result in better cost
Corporate Bodies 10.7 economics. As the project becomes operational in FY10E we expect it to contribute
Public / Others 12.1 25% of the requirement in the first year itself. Consequently, operating margins
improve to 17% in FY10E and 20.2% in FY11E from 15.6% in FY09.
Torrent Pow er relativet to Sensex
170 Aggressive growth strategy
With a proven track record of reducing transmission losses, Torrent Power is best
160
suited for distribution business in various challenging areas. The company bagged
150
Bhiwandi distribution business on the same grounds and reduced the T&D losses
140 to ~27% from 44% in the very first year of operations. It has followed the ritual by
130 bagging distribution licenses for Agra and Kanpur. With an approval for Dahej SEZ
120 distribution and JV with Power Grid to augment transmission capacity in Gujarat,
110 Torrent is going strong. We feel that TPL is poised for high growth on the back of its
100 reputation and expertise in lowest T&D losses in the country and aggressive growth strategy.
90 Valuations
80 Catering to growing power demands of select economies, we expect TPL to grow
Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 at a CAGR of ~23% on the topline and ~54% on the bottomline between FY08 and
Torrent Pow er Sensex FY11E. At CMP of Rs140, the stock is trading at a P/B of 1.7xFY11E and P/E of
8.5xFY11E. We initiate coverage with a ‘BUY’ recommendation with a price target
Financials of Rs171 at which it would be trading 2xFY11E BV.
Year Net sales % growth EBIDTA OPM% PAT % growth EPS(Rs) % growth PER(x) BV P/BV(x) ROANW(%) ROACE(%)
FY08 (12M) 36,183 160.7 4,806 13.3 2,105 193.4 4.5 193.4 31.4 61.2 2.3 7.5 8.3
FY09P 43,158 19.3 6,733 15.6 3,992 89.6 8.4 89.6 16.6 66.9 2.1 13.2 9.3
FY10E 53,528 24.0 9,105 17.0 4,007 0.4 8.5 0.4 16.5 73.0 1.9 12.1 10.8
FY11E 66,699 24.6 13,473 20.2 7,745 93.3 16.4 93.3 8.5 84.8 1.7 20.8 15.5
Figure in Rs mn
24 June 2009 Torrent Power Ltd. 79

DOLAT CAPITAL
Particulars Mar’08 Mar’09P Mar’10E Mar’11E Particulars Mar’08 Mar’09E Mar’10E Mar’11E
Other income 1,036.8 1,460.0 1,807.1 2,197.4 Contribution Margin 24.2 25.2 25.3 27.3
EBIDTA (Excl. Other Income) 4,806.1 6,732.5 9,104.5 13,472.7 Interest / Sales 1.7 3.6 7.1 5.9
EBIDTA (Incl. Other Income) 5,842.9 8,192.6 10,911.6 15,670.1 Gross Profit Margin 14.1 14.9 12.9 17.1
Interest 605.1 1,558.6 3,778.9 3,912.1 Tax/PBT 44.0 16.2 18.0 18.0
Gross Profit 5,237.8 6,634.0 7,132.7 11,758.0 Net Profit Margin 5.7 8.9 7.2 11.2
Depreciation 1,479.4 1,871.9 2,245.9 2,312.6
Profit Before Tax & EO Items 3,758.4 4,762.0 4,886.8 9,445.4 (B) As Percentage of Net Sales
Profit Before Tax 3,758.4 4,762.0 4,886.8 9,445.4 Raw Material 75.8 74.8 74.7 72.7
Tax 1,653.3 770.0 879.6 1,700.2 Employee Expenses 6.3 6.3 6.3 6.3
Net Profit 2,105.1 3,992.0 4,007.2 7,745.3 Selling & Administrative Expenses 4.6 3.3 2.0 0.8
BALANCE SHEET (C) Measures of Financial Status
Particulars Mar’08 Mar’09E Mar’10E Mar’11E Debt / Equity (x) 0.9 1.3 1.2 1.1
Sources of Funds Interest Coverage (x) 9.7 5.3 2.9 4.0
Equity Capital 4,724.5 4,724.5 4,724.5 4,724.5 Average Cost Of Debt (%) 2.5 3.5 8.0 8.0
Other Reserves 24,173.1 26,899.0 29,777.2 35,340.2 Debtors Period (days) 41.6 40.0 40.0 40.0
Net Worth 28,897.6 31,623.5 34,501.7 40,064.7 Closing stock (days) 16.7 17.0 17.0 17.0
Revaluation reserve Inventory Turnover Ratio (x) 21.8 21.5 21.5 21.5
Secured Loans 24,760.0 39,964.6 41,921.0 42,671.0 Fixed Assets Turnover (x) 1.0 1.0 1.0 1.3
Unsecured Loans 612.5 551.3 496.1 446.5 Working Capital Turnover (x) (17.5) 7.5 4.8 3.4
Loan Funds 25,372.5 40,515.8 42,417.1 43,117.5 Non Cash Working Capital (Rs Mn) (3,931.0) 2,280.6 3,675.0 4,181.5
Service line & security deposits 3,346.8 4,016.2 4,819.4 5,783.3

Deferred Tax Liability 927.3 927.3 927.3 927.3 (D) Measures of Investment
Total Capital Employed 58,544.2 77,082.8 82,665.4 89,892.7 EPS (Rs.) (excl EO) 4.5 8.4 8.5 16.4
EPS (Rs.) 4.5 8.4 8.5 16.4
Applications of Funds CEPS (Rs.) 7.6 12.4 13.2 21.3
Gross Block 36,892.3 43,376.3 51,686.3 53,168.8 DPS (Rs.) 1.2 2.0 2.1 4.1
Less: Accumulated Depreciation 5,173.7 7,125.6 9,451.5 11,844.1 Dividend Payout (%) 26.9 23.7 25.0 25.0
Net Block 31,718.6 36,250.7 42,234.7 41,324.7 Profit Ploughback (%) 73.1 76.3 75.0 75.0
Capital Work in Progress 28,279.0 34,763.0 29,061.6 28,579.0 Book Value (Rs.) 61.2 66.9 73.0 84.8
Investments 618.8 339.4 176.9 94.6 RoANW (%) 7.5 13.2 12.1 20.8
Current Assets, Loans & Advances RoACE (%) 8.3 9.3 10.8 15.5
Inventories 1,658.0 2,010.1 2,493.1 3,106.5 RoAIC (%) (Excl Cash & Invest.) 8.5 9.7 11.6 17.9
Sundry Debtors 4,128.0 4,729.6 5,866.1 7,309.5

Cash and Bank Balance 1,858.8 3,449.1 7,517.3 15,713.0 (E) Valuation Ratios
Loans and Advances 4,670.9 6,824.0 9,699.1 10,414.0 CMP (Rs.) 140.0 140.0 140.0 140.0
Other Current Assets 4.3 3.1 1.0 0.7 P/E (x) 31.4 16.6 16.5 8.5
sub total 12,320.0 17,015.9 25,576.5 36,543.7 Market Cap. (Rs. Mn.) 66,143.0 66,143.0 66,143.0 66,143.0
Less : Current Liabilities & Provisions MCap/ Sales (x) 1.8 1.5 1.2 1.0
Current Liabilities 8,342.3 9,600.0 11,951.4 14,112.8 EV (Rs. Mn.) 89,656.7 103,209.7 101,042.8 93,547.5
Provisions 6,049.9 1,686.1 2,432.8 2,536.5 EV/Sales (x) 2.5 2.4 1.9 1.4
sub total 14,392.2 11,286.1 14,384.2 16,649.2 EV/EBDITA (x) 18.7 15.3 11.1 6.9
Net Current Assets (2,072.2) 5,729.7 11,192.3 19,894.5 P/BV (x) 2.3 2.1 1.9 1.7
Misc Expenses 0.0 0.0 0.0 0.0 Dividend Yield (%) 0.9 1.4 1.5 2.9
E-estimates
Total Assets 58,544.2 77,082.8 82,665.4 89,892.7
CASH FLOW
Depreciation & w.o. 1,479.4 1,871.9 2,245.9 2,312.6
Net Interest Exp 392.3 1,558.6 3,778.9 3,912.1
Change in Working Capital (Non Cash) (395.2) (6,211.6) (1,394.4) (506.5)
Other 96.7
Free Cash Flow (8,526.0) (11,757.0) 6,029.1 12,463.4
Other 88.6 749.4 883.2 1,043.9
(B) Cash Flow from Investing Activities (12,482.5) (11,939.2) (1,562.8) 126.2
Inc./(Dec.) in Debt 9,101.0 15,143.3 1,901.3 700.4
Interest exp net (337.9) (1,558.6) (3,778.9) (3,912.1)
Dividend Paid (Incl. Tax) 0.0 (1,266.1) (1,129.0) (2,182.2)
Other 720.0
(C) Cash Flow from Financing 9,483.1 12,318.6 (3,006.7) (5,393.9)
E-estimates
24 June 2009 Torrent Power Ltd. 80

Zee News Ltd.
DOLAT CAPITAL
CMP: Rs 40
Target Price: Rs 51 Media / Buy
Bouquet of Entertainment...!!!
ZEE News offers an opportunity to play at resurgent regional TV entertainment. We continue to remain positive on the
sound fundamentals of the company (a perfect recipe of entertainment and current affairs in regional languages to
counter the slowdown). However in the short term the company may face pressure on account of slow down in the
media sector altogether. Company’s increased debt position to Rs 2 bn (Q4FY09) from ~ Rs 1 bn (Q3FY09) and high
cost of debt (~15%) remains a cause of worry for future downward revision of our price target. Considering losses of
new channels, we believe Mcap/Sales portray a better valuation methodology. In the interim, we maintain BUY with

Tel : +9122 4096 9753
Email: ritesh@dolatcapital.com Regional media gathering momentum: An exciting play on media at relatively
Associate : Namrata Sharma low capital outlay.
Tel : +9122 4096 9726 We find regional media an exciting way to participate in multi faced Indian M&E
Email: namrata@dolatcapital.com space at lower capital commitment. ‘Colors’ channel, a Hindi GEC, (relative share
of Hindi GEC for CS 4+ yrs is 25.3%) was launched at a capital outlay of ~Rs8 bn,
BSE Sensex 14423
NSE Nifty 4293
where as Tamil GEC (relative share of Tamil GEC for CS 4+ yrs is 14 %), was
launched at a capital outlay of ~Rs1 bn.
Scrip Details
¾ New offering’s: Genres as well as Languages
Equity Rs.239.8mn
Zee news has a strong news and entertainment channel bouquet, it has expanded
Face Value Rs.1/-
its portfolio to regional movie channel (Zee Talkies: Marathi Movie channel) and
Market Cap Rs.9.6bn
US$196.1mn has also added new languages (Zee Tamil, Zee 24 Gantalu and Zee News UP).
52 week High/Low Rs.56/25 Company is planning to launch another cinema channel in Telugu – ‘Zee
1-Month Avg. Volume 2812687 Cinemalu’ this year. Its offering of full bouquet of regional channels would enable
BSE Code 532794
the company to enjoy the major share in regional advertisement without
NSE Symbol ZEENEWS
Bloomberg Code ZEEN IN depending on any particular channel or regional language.
Reuters Code ZEEN.BO
¾ Margin to remain stable despite new channel launches in near term
Business Group - Subhash Chandra The Q4FY09 and FY09 result clearly indicates that the company is in a
Shareholding Pattern as on Mar’09(%) comfortable position to maintain its margin despite of heightened activities
Promoter 54.1 pertaining to three new channels (Zee Tamil, Zee 24 Gantalu and Zee News
MF/Banks/FIs 24.1 UP). The company has reported losses of Rs 546 million in FY09 as compared
FIIs 6.9 to Rs 498 million in FY08 from the new channels. We have estimated loss of Rs
660 million in FY10 considering start up losses of Zee Cinemalu.
Public / Others 9.3
¾ Existing business to show robust growth going forward
Zee New s relative to Sensex The existing business has been growing at a lucrative pace of 26% in terms of
130 revenue to Rs 4.1bn in FY09. We expect it to grow at 13% 2Yr CAGR to Rs 5.29
120 bn in FY11 and maintain its margin at 36.7% in FY10.
110
Valuation:
ZEE News offers an opportunity to play the resurgent regional TV entertainment. At
100 CMP, the stock is quoted at 1.6x its FY10E sales. We continue to remain positive
on the sound fundamentals of the company (a perfect recipe of entertainment and
90
current affairs in regional languages to counter the slowdown). However in the
80 short term the company may face pressure on account of slow down in the media
sector altogether. Company’s increased debt position to Rs 2 bn from ~ Rs 1 bn
70
(Q3FY09) and high cost of debt (~15%) remains a cause of worry for future downward
revision of our price target. Considering losses of new channels, we believe Mcap/
Zee New BSE Sensex
Sales portray a better valuation methodology. In the interim, we maintain BUY with
Financials
FY08 3,671 52.6 704 19.2 395 429.0 1.6 429.0 24.3 19.3 30.2
FY09P 5,216 42.1 888 17.0 445 12.6 1.9 12.6 21.5 18.0 24.6
FY10E 6,180 18.5 1,049 17.0 475 6.7 2.0 6.7 20.2 16.2 20.0
FY11E 7,150 15.7 1,260 17.6 631 32.8 2.6 32.8 15.2 18.1 22.2
Figure in Rs mn
24 June 2009 Zee News Ltd. 81

DOLAT CAPITAL

Particulars Mar’08 Mar’09P Mar’10E Mar’11E Particulars Mar’08 Mar’09P Mar’10E Mar’11E
Raw Material/Programming Cost 2,121.8 2,650.5 3,004.3 Interest / Sales 0.2 3.1 4.5 3.9
Other Expenses 2,966.7 857.0 0.0 0.0 Gross Profit Margin 19.3 15.2 13.4 14.8
EBIDTA (Excl. Other Income) 703.9 887.5 1,048.9 1,259.7 Tax/PBT 38.1 37.2 33.0 33.0
EBIDTA (Incl. Other Income) 714.7 965.1 1,119.1 1,351.8 Net Profit Margin 10.7 8.4 7.6 8.7
Interest 5.8 159.4 280.0 280.0
Gross Profit 708.9 805.6 839.1 1,071.8 (B) As Percentage of Net Sales
Depreciation 75.7 95.2 130.0 130.0 Raw Material 0.0 40.7 42.9 42.0
Profit Before Tax & EO Items 633.2 710.5 709.1 941.8 Employee Expenses 0.0 12.8 14.6 15.6
Extra Ordinary Exps/(Income) (4.8) 1.6 0.0 0.0 Power, Oil & Fuel 0.0 0.0 0.0 0.0
Profit Before Tax 638.0 708.9 709.1 941.8 Selling & Administrative Expenses 0.0 13.1 25.6 24.7
Tax 242.8 263.7 234.0 310.8 Provisions & Write Offs 0.0 0.0 0.0 0.0
Net Profit 395.2 445.1 475.1 631.0 Other Expenses 80.8 16.4 0.0 0.0
Minority Interest
Net Profit 395.2 445.1 475.1 631.0 (C) Measures of Financial Status
Debt / Equity (x) 0.1 0.7 0.6 0.5
BALANCE SHEET Interest Coverage (x) 123.2 6.1 4.0 4.8
Particulars Mar’08 Mar’09P Mar’10E Mar’11E Average Cost Of Debt (%) 9.0 15.0 14.0 14.0
Sources of Funds Debtors Period (days) 139.2 140.0 140.0 140.0
Equity Capital 239.8 239.8 239.8 239.8 Closing stock (days) 1.0 1.1 1.8 1.8
Preference Capital Inventory Turnover Ratio (x) 367.1 347.6 206.2 202.8
Share Premium Fixed Assets Turnover (x) 3.7 3.1 3.5 3.9
Other Reserves (excl Share Premium & Rev Res) 2,004.1 2,449.2 2,924.3 3,555.3 Working Capital Turnover (x) 2.4 1.6 1.7 1.6
Net Worth 2,243.8 2,689.0 3,164.1 3,795.1 Non Cash Working Capital (Rs Mn) 1,514.4 2,644.7 2,726.1 2,743.9
Revaluation reserve
Secured Loans 116.0 2,010.0 2,000.0 2,000.0 (D) Measures of Investment
Unsecured Loans 0.0 EPS (Rs.) (excl EO) 1.6 1.9 2.0 2.6
Loan Funds 116.0 2,010.0 2,000.0 2,000.0 EPS (Rs.) 1.6 1.9 2.0 2.6
Deferred Tax Liability (Net of Deffered Tax Assets) 10.0 12.0 14.0 14.0 CEPS (Rs.) 2.0 2.3 2.5 3.2
Total Capital Employed 2,369.8 4,711.0 5,178.1 5,809.1 DPS (Rs.) 0.4 - - -
Dividend Payout (%) 24.3 0.0 0.0 0.0
Applications of Funds Profit Ploughback (%) 75.7 100.0 100.0 100.0
Gross Block 1,000.0 1,700.0 1,750.0 1,850.0 Book Value (Rs.) 9.4 11.2 13.2 15.8
Less: Accumulated Depreciation 155.3 250.5 380.5 510.5 RoANW (%) 19.3 18.0 16.2 18.1
Net Block 844.7 1,449.5 1,369.5 1,339.5 RoACE (%) 30.2 24.6 20.0 22.2
Capital Work in Progress 0.0 50.0 100.0 0.0 RoAIC (%) (Excl Cash & Invest.) 30.6 26.8 23.7 29.5
Investments
Current Assets, Loans & Advances (E) Valuation Ratios
Inventories 10.0 15.0 30.0 35.3 CMP (Rs.) 40.0 40.0 40.0 40.0
Sundry Debtors 1,400.0 2,000.6 2,370.4 2,742.5 P/E (x) 24.3 21.5 20.2 15.2
Cash and Bank Balance 10.8 566.7 982.5 1,725.6 Market Cap. (Rs. Mn.) 9,590.4 9,590.4 9,590.4 9,590.4
Loans and Advances 504.8 530.0 556.5 600.0 MCap/ Sales (x) 2.6 1.8 1.6 1.3
Other Current Assets 700.0 1,750.0 1,700.0 1,550.0 EV (Rs. Mn.) 9,695.4 11,033.7 10,607.9 9,864.8
sub total 2,625.6 4,862.3 5,639.4 6,653.4 EV/Sales (x) 2.6 2.1 1.7 1.4
Less : Current Liabilities & Provisions EV/EBDITA (x) 13.8 12.4 10.1 7.8
Current Liabilities 979.0 1,428.3 1,693.3 1,943.8 P/BV (x) 4.3 3.6 3.0 2.5
Provisions 121.4 222.6 237.6 240.0
Dividend Yield (%) 0.9 0.0 0.0 0.0
sub total 1,100.4 1,650.9 1,930.8 2,183.8
Misc Expenses
Total Assets 2,369.8 4,711.0 5,178.1 5,809.1
CASH FLOW
Depreciation & w.o. 75.7 95.2 130.0 130.0
Net Interest Exp 5.8 159.4 280.0 280.0
Change in Working Capital (Non Cash) (501.3) (1,130.3) (81.4) (17.9)
Other
(A) Cash Flow from Operating Activities (29.4) (429.0) 803.7 1,023.2
Capex {Inc./ (Dec.) in Fixed Assets n WIP} (112.4) (750.0) (100.0) 0.0
Free Cash Flow (141.8) (1,179.0) 703.7 1,023.2
Other
(B) Cash Flow from Investing Activities (112.4) (750.0) (100.0) 0.0
Inc./(Dec.) in Debt 103.0 1,894.0 (10.0) 0.0
Interest exp net (5.8) (159.4) (280.0) (280.0)
Dividend Paid (Incl. Tax) (108.1) 0.0 0.0 0.0
Other
(C) Cash Flow from Financing (10.9) 1,734.6 (290.0) (280.0)
Net Change in Cash (152.7) 555.6 413.7 743.2
Closing Cash balances 10.8 566.7 982.5 1,725.6
24 June 2009 Zee News Ltd. 82

DOLAT CAPITAL
India Research
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24 June 2009 83
DOLAT CAPITAL
The ratings are based on the absolute upside of our target price from the current price.
Upside Ratings
> 25 % Buy
15% - 25% Accumulate
0% - 15% Reduce
<0% Sell
DOLAT TEAM
DOLAT
Sector / Tel. No. Tel. No.
Research Sales
research@dolatcapital.com sales@dolatcapital.com
Sanjeev Patkar Head of Research, Strategy
Mayur Shah +9122 4096 9796
sanjeev@dolatcapital.com +9122 4096 9745
mayur@dolatcapital.com
Ritesh Poladia Media, Entertainment, Consumer Vikram Babulkar +9122 4096 9746
ritesh@dolatcapital.com +9122 4096 9753 vikram@dolatcapital.com
Darpin Shah Banking, Finance, Insurance R. Sriram +9122 4096 9706
darpin@dolatcapital.com +9122 4096 9754 rsriram@dolatcapital.com
Navin Matta Auto, Auto Comp, Engineering
navin@dolatcapital.com +9122 4096 9752 Equity Sales Traders
Sameer Panke Real Estate, Construction, Engineering salestrading@dolatcapital.com +9122 4096 9797
sameer@dolatcapital.com +9122 4096 9757
Indrajeet Kelkar IT, Retail Chandrakant Ware +9122 4096 9707
indrajeet@dolatcapital.com +9122 4096 9751 chandrakant@dolatcapital.com
Bhavin Shah Pharma, Healthcare, Agro Chemical Jignesh Shahukar +9122 4096 9727
bhavin@dolatcapital.com +9122 4096 9731 jignesh@dolatcapital.com
Ram Modi Metals, Mining, Cement P. Sridhar +9122 4096 9728
ram@dolatcapital.com +9122 4096 9756 sridhar@dolatcapital.com
Kapil Yadav Hospitality, Maritime, Rail, Politics Parthiv Dalal +9122 4096 9705
kapil@dolatcapital.com +9122 4096 9735 parthiv@dolatcapital.com
Priyank S. Chandra Telecom, Oil & Gas, Cables
priyank@dolatcapital.com +9122 4096 9737
Nadeem Parkar Logistics, Aviation
nadeem@dolatcapital.com +9122 4096 9736
Derivatives Team
Ankit Babel Textile, Capital Goods, Engineering Vijay Kanchan +9122 4096 9704
ankit@dolatcapital.com +9122 4096 9732 vijayk@dolatcapital.com
Associates Derivatives Sales Traders

Bindal J. Totlani Chirag Makati +9122 4096 9702-03
bindal@dolatcapital.com +9122 4096 9724 chiragm@dolatcapital.com
Jaynee Shah Mihir Thakar +9122 4096 9701
jaynee@dolatcapital.com +9122 4096 9723 mihir@dolatcapital.com
Harshal Patil
harshal@dolatcapital.com +9122 4096 9725 Quantitative Research
Namrata Sharma derivativesinfo@dolatcapital.com
namrata@dolatcapital.com +9122 4096 9726
Gracy Mittal Prachi Save Derivatives Research
gracy@dolatcapital.com +9122 4096 9722 prachi@dolatcapital.com +9122 4096 9733
Neha Sarwal
neha@dolatcapital.com +9122 4096 9740 Sachin Mulay Technicals
Manpreet Singh Sandhu sachin@dolatcapital.com +9122 4096 9720
manpreet@dolatcapital.com +9122 4096 9720
Bloomberg Id
Support Staff dolatcapital@bloomberg.net
Rajesh Shinde +9122 4096 9743
rajesh@dolatcapital.com Board Lines +9122 4096 9700
Paresh Girkar +9122 4096 9742 +9122 2265 9200
pareshgirkar@dolatcapital.com Fax Lines +9122 2265 0410
+9122 2265 1278
Dolat Capital Market Pvt. Ltd.

20, Rajabahadur Mansion, 1st Floor, Ambalal Doshi Marg, Fort, Mumbai - 400 001
This report contains a compilation of publicly available information, internally developed data and other sources believed to be reliable. While all reasonable care has been taken
to ensure that the facts stated are accurate and the opinion given are fair and reasonable, we do not take any responsibility for inaccuracy or omission of any information and
will not be liable for any loss or damage of any kind suffered by use of or reliance placed upon this information. For Pvt. Circulation & Research Purpose only.

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DOLAT CAPITAL

...Time To Sow the Seed(s)...!!!

SOTP CMP Target M Cap EPS Rs / Share

Note: - For Banks/FI and NBFC

Relief… a Reality …or Illusion…?

The (de)coupling parable

India - The Refreshing Climate Change

What It Means For Indian Equities

What are the market levels then?

Source : Bloomberg, Dolat Research

How Does One Play This?

Investment Super Cycle

Top Sell Ideas

Fig. I - India - Forces of Global Emergence

2. The Global Wealth Line - 1000 years of Wealth Transition

3. Econo-Religious Factors of Global Leadership

Fig. II - India - Forces of Global Emergence

Major events of various reform processes are enlisted as under....

Petrichor......Time To Sow the Seed(s)...!!!

Sr. Company Name Market Cap CMP Target

2 Biocon Ltd. Rs. 40bn 200 244

3 Cadila Healthcare Ltd. Rs.47bn 345 418

Sr. Company Name Market Cap CMP Target

4 CMC Ltd. Rs.9.7bn 638 885

5 Container Corporation of India Ltd. Rs. 122.2bn 940 1181

6 Coromandel Fertilisers Ltd. Rs.25.9bn 179 224

Sr. Company Name Market Cap CMP Target

7 Dish TV India Ltd. Rs.36.9bn 39 69

8 Dishman Pharma & Chemicals Ltd. Rs.14.7bn 181 272

9 Dredging Corporation of India Ltd. Rs.13.6bn 485 632

Sr. Company Name Market Cap CMP Target

10 Engineers India Ltd.(EIL) Rs.56.8bn 1011 Unrated

11 Financial Technologies India Ltd.(FT) Rs.61.5bn 1340 1725

12 GlaxoSmithkline Pharmaceuticals Ltd. Rs.102.2bn 1207 1347

Sr. Company Name Market Cap CMP Target

14 Indraprastha Gas Ltd.(IGL) Rs.19.2bn 137 180

15 IndusInd Bank Ltd. Rs.29.4bn 83 94

Sr. Company Name Market Cap CMP Target

17 Maruti Suzuki India Ltd. Rs.306.3bn 1060 846

Sr. Company Name Market Cap CMP Target

19 Nestle India Ltd. Rs.163.9bn 1700 1950

20 Oracle Financial Services Software Rs.101.4bn 1211 1561

21 Page Industries Ltd. Rs.5.7bn 508 612

Sr. Company Name Market Cap CMP Target

22 Patel Engineering Ltd.(PEL) Rs.22.6bn 379 493

23 Power Finance Corporation Ltd. Rs.216.5bn 189 236

24 Rallis India Ltd. Rs.6.5bn 544 670

Sr. Company Name Market Cap CMP Target

25 Rural Electrification Corporation Ltd. Rs.135.9bn 158 182

26 S.Kumars Nationwide Ltd. Rs.11bn 45 65

27 Tata Steel Ltd. Rs.349bn 405 335

Sr. Company Name Market Cap CMP Target

29 Torrent Power Ltd. Rs.66.1bn 140 171

30 Zee News Ltd. Rs.9.6bn 40 51

Analyst: Sameer Panke Investment Rationale

24 June 2009 Ahluwalia Contracts (India) Ltd. 23

24 June 2009 Ahluwalia Contracts (India) Ltd. 24

Analyst: Bhavin Shah Investment Rationale

Contract research services: Poised For Growth...

24 June 2009 Biocon Ltd. 25

INCOME STATEMENT Rs.mn IMPORTANT RATIOS

BALANCE SHEET (C) Measures of Investment