Maruti Suzuki: Slow pace 2007

Maruti Suzuki’s total sales in September 2007 went up by 13.5 per cent y-o-y to 67,448 units, which was much lower than the sales
growth recorded in July and August. For instance, in August 2007, Maruti’s total sales grew 27.2 per cent y-o-y, while in July they had
expanded 24.8 per cent y-o-y.

The comparatively slower sales growth in September 2007 vis-a-vis the first two months of Q2 FY08, is attributed to a steep 32 per
cent y-o-y decline in the sales of Maruti 800 to 5,221 units, which partially offset the impressive 21.8 per cent growth in the key A2
segment (comprising Alto and Swift).

Sales in its A3 segment continued to remain strong with a growth of 43.3 per cent to 4,885 units in the previous month, thanks to the
recently launched SX4 model, and volumes in this segment, also includes Esteem and Baleno.

Analysts point out that discounts at dealer level are prevalent in only some of the older models, which have lower margins.

Meanwhile, in August 2007, sales in the A2 segment had improved by 28.6 per cent y-o-y to 41,736 units, but sales of Maruti 800
declined only 14.7 per cent y-o-y.

Also, sales in the A3 segment grew a whopping 70.6 per cent y-o-y in August. Similarly, in July 2007, the company’s A2 segment sales
went up by 18.6 per cent y-o-y, but Maruti 800 sales declined merely 1.2 per cent y-o-y.

Nevertheless, the company’s total sales rose an impressive 21.3 per cent y-o-y to 191,325 units in the September 2007 quarter.

In the June 2007 quarter, Maruti’s total sales rose 17 per cent y-o-y to 169, 669 units.

The Maruti stock declined 0.8 per cent to Rs 992 on Monday after the company announced its sales figures.

MSL 2008
Recent underperformance an opportunity to buy: Maruti Suzuki India
Ltd’s (MSIL) stock price recently hit a 52-week low (Rs. 530.5 on
July 8, 2008) and is currently trading at a forward P/E of 9.4x for FY09E,
much below the Company’s and industry’s historical P/E average of 14x
and 13x, respectively.

MSL 2009

Performance Analysis

Maruti maintained its leadership position in the market reporting the highest ever sales in the current quarter. The company sold
246188 units of cars in Q2FY10 as compared to 189451 units in Q2FY09, a growth of 29.9%. The year saw the launch of A Star the
concept car from their stable which is mainly exported to European countries and Ritz which together led to a 109.1% growth in exports
for Q2FY10 as compared to Q2FY09. Valuation & Recommendation

At the current price of Rs. 1517 per share, Maruti is currently available at 16.9x FY11E and 15.2x FY12E. We expect the company to
earn a ROCE of 26.6% in FY11E and 25.4% in FY12E. At Rs. 1517 per share the stock is trading at a discount of 9.9% from our
intrinsic price of Rs. 1668 per share. We believe that though the company being a leader in this segment and having more than 50% of
market share, the competition is increasing in the A2 & A3 segments which are the major revenue earners for the company. We believe
the company will record a volume growth of around 10.4% for FY10. But higher price realization due to better product mix will help the
company to improve its overall profitability margins. We recommend a HOLD on the stock with a price target of Rs. 1668 per share.
Performance Highlights

- Performance better than expectation on back of robust volumes: For 2QFY2010, Maruti recorded a 46.6% jump in Net Sales to
Rs7,080.7cr (including Service Income), which was above our expectation of Rs6,897cr. The Sales performance came on the back of a
robust 30% yoy increase in Volumes while average realisation per vehicle moved up 12.9% yoy, which was primarily due to the change
in Sales mix and better performance by high realisation Segments like A3 and MUVs. Exports grew manifold with 70% of the volumes
driven by the European markets, primarily due to the scrappage schemes, recording Revenues of Rs1,249cr (Rs562cr), a yoy growth
of 122.2%. Bottom-line grew 92.5% yoy to Rs570cr largely due to buoyant volumes from the increased demand in the festive season
as well from the export markets, better operating leverage and enhanced product mix from constant innovation
Outlook and Valuation

The recent macro-economic turmoil cast a shadow on the Car industry growth in FY2009. As such, the Car industry witnessed
slowdown in 9MFY2009. However, the Segment registered good recovery in 4QFY2009 and 1HFY2010 aided by various stimulus
packages announced by the government and declining Interest rates following positive measures announced by the RBI. Hence, we
have estimated around 10% growth in Passenger Vehicle volumes for FY2010. As expected, the Industry’s core business performance
changed for the better in the last two quarters, wherein Auto companies reported a sequential spurt in Revenues on better Volumes.
Most of the stocks have also shown positive bustle up in the last few months on better growth visibility for the Sector.

We continue to maintain our positive outlook on Maruti and expect it to register 22% yoy increase in overall volumes in FY2010 aided
by around 16% yoy growth in Domestic volumes and more than 70% yoy growth in Export volumes. This is also supported by the fact
that lower commodity prices and improving operating leverage will help the company clock robust growth in Bottom-line. For FY2010E,
we estimate the company’s Top-line to grow at around 32.4% yoy to Rs27,171cr and Net Profit to grow by 84.1% to Rs2,244cr
following improvement in Operating Margins (due to lower input costs). We marginally upgrade our EPS estimates to Rs77.6 (Rs75.7
earlier) for FY2010E and maintain Rs92.2 for FY2011E. We expect the company clock Net Profit of Rs2,664cr in FY2011E.
We believe that Maruti’s valuation would be largely determined by its ability to maintain marketshare amidst intensifying competition. At
the CMP, the stock is trading at 16.5x FY2011E Earnings. In view of the recent decline in the stock price, we upgrade the stock to
Accumulate from Neutral with a Target Price of Rs1,656. On account of the favourable relative tradeoff, the stock could continue to
gather momentum on any positive surprises on the Volume
Performance Analysis

Maruti maintained its leadership position in the market reporting the highest ever sales in the current quarter. The company sold
226729 units of cars in Q1FY10 as compared to 192584 units in Q1FY09, a growth of 17.7%. The year saw the launch of A Star the
concept car from their stable which is mainly exported to European countries which led to a 135% growth in exports for Q1FY10 as
compared to Q1FY09.
Valuation & Recommendation

At the current price of Rs. 1290 per share, Maruti is currently available at 18.1x FY10E & 13.3x FY11E. We expect the company to
earn a ROCE of 24.7% in FY10E & 28.6% in FY11E. At Rs. 1290 per share the stock is trading at a discount of 14.4% from our intrinsic
price of Rs. 1475 per share. We believe that though the company being a leader in this segment & having more than 50% of market
share, the competition is increasing in the A2 & A3 segments which are the major revenue earners for the company. We believe the
company will record a volume growth of around 13% for FY10. But higher price realisation due to better product mix will help the
company to improve its profit margins. We recommend a HOLD on the stock with a price target of Rs. 1475 per share.

MSL 2010

It has been sometime now that the report came out about Maruti Suzuki loosing a significant market share in the

Indian Car market. interestingly, the report for Maruti loosing its market share comes at a time when the overall car sales

are reported to be shooting up with a record number. So what's going wrong with Maruti?? Is it a call for the investors to

exit this stock? Let's have a look at certain points:

Many things can be considered here. Maruti has come out with various new models, competitive prices, new designs and so

on, and they are also backed by many other historical things - largest service netowrk in the country, most trusted car brand

of India, claims of having the highes retail value for used cars, known to be a brand for common man of India and so on.

Still, Maruti has lost its market share.

Design of new Maruti Suzuki Cars:

First and foremost, let's look at the new models - Maruti launched Eeco recently, then new version of WagonR, and then

there are these other cars like Estillo, A-Star, Ritz, etc. However, looking at the designs of Wagon-R, it makes me wonder

whether the design engineers at Maruti have taken a break or what? WagonR was one of the most successful cars from

Maruti. They launched the new upgraded version with a new design called "Blue-Eyed Boy". What came out was a complete

turn-off for many aspirants (buyers), as the looks just made them dump their decision to buy new WagonR. Compare that to

Beat or Polo or i10, and you will know why the looks of WagonR are a complete turn-off. They call it the "Blue-Eyed Boy".

Sounds good, but what about the blue eyes, when I want to buy some colour other than blue??

Then came the new Alto K10 - except for the new K Series engine promising better mileage, nothing has changed. It is still

the same conjusted space inside. And on top of that, the price has increased.

I believe Maruti needs to really work on the design and looks.

Pricing of Maruti Suzuki Cars:

Yes, its true that maruti still offers the economical but quality cars, but are the prices still competitive??

Take Alto K10, take WagonR, they all are now above 3 Lakhs. Add to it the other charges and the price happily shoots upto

3.6 plus. Someone who wants to spend 3.6 can as well go for other options available, that too with better looks from the
brands of Hyundai, Volkswagen, Chevrolet and so on. Then comes the games played at the showrooms - many stories are

known about how financing is forced onto the customers and that's not just with Maruti, it is with other car makers and two

wheelers as well - if you want to buy you vehicle on your own without loan, the waiting period will be longer (in months), but

if you want to buy it on loan (so that costs extra), you can get it as early as next week.

Although this is a problem with every car and bike manufacturer, it is something which maruti can work on improving.

With the current competitive offerings from other brands, Maruti is no longer offering competitive prices. Right from 1 Lakh

car Tata Nano to high end hatchbacks like Honda Jazz, Maruti needs to position its prices to be "real competitive".

The metro city youth are now open to more choices - Chevrolet, Volkswagen, Nissan, etc. And its the small city regions

which Maruti is loosing out on. These rural, semi-urban, non-metro small city population is still not open to the moderate to

high prices of maruti. They still expect better economical prices.

The taste is changing, the variety is changing, people expect more.

Servicing & Support of Maruti Suzuki Cars:

Now that is what Maruti has been banking upon - the widest network of services nationawide. However, there have been

many problems which dissatisfy a customer. Right from forceful selling of extra accessories, to forcing the customer to go for

extra repairs, to forcing cars to be bought on loan for early delivery even if the customer is willing to buy on his own.

The moment a customer enters the showroom, he is quoted a big price upfront. What is said to be costing 3 Laks in the ads,

easily becomes 4 lak plus. And that's where people start to looks around for options. In India, customers are still new to the

cars. They may not know what a bumper is, what are fog lamps and how does ABS work. The problem at showrooms is that

customers go their with 3L price tag in mind, and the representative quote something like 4 Lk plus. Even a customised

number plate is quoted to cost 2000 Rs. while buying a car. If the customer does not notice it, he finds it out later and feels

cheated. These are straightaway turn-offs.

Its the service networks that make or break the brand.

My own experience with the authorized dealers and service stations has been quite dissatisfying. Even during the guarantee

period, replacement of faulty parts took more than 2-3 months and several reminders and escalations through their wesbite.

A magazine also carried out stories about authorized service centers selling faulty and duplicate parts in the name of Maruti.

As a brand name, it is the responsibility of Maruti to take due care of these instances. Agreed that largest network is difficult

to manage, but if one doesnt do it, one should be prepared to take the hit.

Overall Maruti Suzuki Cars:

It's time for Maruti to look back at what went wrong and why did they loose the market share so significantly. The car

market has seen many new players - competition is tough. People have options, they know to explore them before going for

a decision of laks.

So what if there is the largst repair network. Are these networks living upto the promised expectations set by the brand or

are they breaking it for earnig more money by selling extra unwanted accessories and forcing unwanted repairs?

Design part - need a complete overhaul. With the likes of Beat, Figo, Polo hitting the streets, customers may not want to

settle for the looks of WagonR or the conjusted spaces of Alto K10 that fall into the same price band
For 3QFY2010, Maruti Suzuki (Maruti) registered 62.2% yoy growth in Net Sales to Rs7,502.9cr (Rs4,625.8cr) and Net Profit of
Rs687.5cr (Rs213.6cr), which was above our expectations. The company reported a robust performance on the Operating front owing
to the substantial dip in Raw Material cost and improved Operating leverage. Due to which the company recorded a 15.1% jump in
OPM. We believe that going ahead, Maruti’s valuation would be largely determined by its ability to maintain marketshare amidst
intensifying competition. We maintain a Buy on the stock.
Outlook and Valuation: We believe that the PV Segment would clock around 13% growth in Volumes for FY2010E. Further, lower
penetration, favourable demographics and improving per capita would support around 12% CAGR by the PV Segment over the next 4-
5 years. We remain positive on Maruti and expect it to register 23% yoy increase in overall Volumes in FY2010E aided by around 17%
yoy growth in Domestic volumes and more than 70% yoy growth in Export volumes. We have marginally upgraded our FY2010E EPS
estimates to Rs85 (Rs82 earlier), while maintaining Rs97.1and Rs110.2 for FY2011E and FY2012E, respectively. At the CMP, the
stock is trading at 14.8x and 13.1x FY2011E and FY2012E Earnings. We maintain a Buy on Maruti with a Target Price of Rs1,873.

Outlook and Valuation

The PV Segment registered good recovery in 9MFY2010 aided by various stimulus packages announced by the government, improved
business economic scenario and benign Interest rates following positive measures announced by the RBI. As expected, the Industry’s
core business performance changed for the better in the last two quarters, wherein Auto companies reported a sequential spurt in
Revenues on better Volumes. Accordingly, we believe that the PV Segment would clock around 13% growth in Volumes for FY2010E.
Further, lower penetration, favourable demographics and improving per capita would support around 12% CAGR in the PV Industry
over the next 4-5 years.

We remain positive on Maruti and expect it to register 23% yoy increase in overall Volumes in FY2010E aided by around 17% yoy
growth in Domestic Volumes and more than 70% yoy growth in Export Volumes. This is also supported by the fact that lower
commodity prices and improving Operating leverage will help the company clock robust growth in Bottom-line. For FY2010E, we
estimate the company’s Top-line to grow at around 34.5% yoy to Rs27,623cr and Net Profit to grow by 98.9% to Rs2,458cr following
improvement in Operating Margins (due to lower input costs and higher Operating leverage). We have marginally upgraded our EPS
estimates for FY2010E to Rs85 (Rs82 earlier), while maintaining Rs97.1and Rs110.2 for FY2011E and FY2012E, respectively.

ONGC 2007
Stock market performance:
ONGC is an important constituent of both Sensex (Scrip Code: 500312, Group: A, free float market capitalization: Rs.50,456
crores, weightage: 4.04%) and also Nifty (Ticker: ONGC, FFMC: Rs.266,578 crores, weightage: 8.01%). It is also traded In the
Futures and Options segment of NSE with a lot size of 225 shares.
Long term outlook:

In the monthly chart shown above, the stock had broken its resistance at 1009 during last month. Clearly the stock is in its fifth
wave and the support trendline holds well. The stock has already doubled from its low of 613.3 in the fourth wave. The long
term target for the stock works out to 1461; but the support at 1009 is critical. A monthly close below this will mean that the
long term bull run has ended. Long term investors can hold the stock for the time being.
 Medium term outlook:

The weekly chart indicates the formation of a bearish “Harami” candlestick pattern. Note that the entire red candle has been
engulfed by a green candle. This formation is highly reliable. However, a confirmation this week in the form of a red candle
and close below 1170 will be required to judge the medium term trend reversal. Sould this happen this Friday, the medium term
investors may exit the stock at higher levels. Otherwise, they can hold the stock.
Short term outlook:

The short term outlook for the stock is bearish. It has completed the five waves as shown in the daily chart above. The short
term support (previous resistance) at 1220 has been broken yesterday while closing below the support trendline. The trend
reversal can be confirmed by increasing volumes when the stock broke the support. The next major support for the stock is at
1052. Short term investors may exit the stock at higher levels due to technical rallies.
Conclusion:
• Long term investors may hold the stock
• Medium term investors need to wait for confirmation this week
• Short term investors may exit.

Exploration and production stock, ONGC has recovered by over 11 per cent in March,2007. In the last one week, the counter has
gained around 4.14 per cent. But the current market valuation of Rs 878 is considered a pale shadow of its peak-traded price of Rs
1,514, hit in May 2006.

Gross sales for the quarter and nine months ended on 31st December, 2006 include Rs. 1381.18 crore (previous quarter Rs. 527.96
crore) and Rs. 4690.88 crore (previous nine months Rs. 2679.98 crore) respectively towards trading of products of MRPL, a subsidiary
of ONGC .

The 2006-07 results, expected by the middle of next month, may show higher profit by ONGC Videsh Ltd , a 100 per cent subsidiary
of ONGC .
India's premier E&P company, ONGC's financial statements' analysis throws some interesting figures which are quite
worthy of a look. As stated, the company's main business is to explore and produce crude oil and natural gas to meet
the energy requirement of the country. Its importance to the Nation cannot be emphasized in words but we as
investors, can definitely make an effort to determine the value it possess. I am presenting some statistics for your
perusal:

Book-Value: Rs.287(31.03.2007)

No. of shares issued: 213.89 crores.

Quoted Investments it holds, stated at acquisition cost in the Balance Sheet: Rs. 2756.48 crores

Market Value of those Quoted Investments: Rs. 22058.71 crores.

difference between market value of quoted investments and their acquisition as shown on the books= Rs. 19302.23
crores.

Difference per share of ONGC= 19302.23/213.89=Rs. 90.24

Now, you as investor will ask you what big deal deal, if the book value is 287 and even if you add 90 rupees to that it
works out to 377. Surely not.

Now I will come to the main business. The company holds proven, possible and probable reserves of Oil and Natural
gas. The company expects Net future earnings from Proved Reserves to be approximately 241,515.564 crores.
( Pg.48 of the Annual Report for the Y.E.31.03.2007). This figure is only for Proved reserves and not
probable/possible reserves. The company has priced its revenue at the subsidised price. And the best part is, the
revenue stream expected has been discounted at 10 p.a. Also, note, this is not revenue, but post tax estimated profit.
Now, if I state this figure into what it means for us as investors of ONGC, it means that the company is expected to
generate a profit which has a present value of 1129.17 rs. per share. Also note, the calculation has been done at
2005-06 average realisation price of crude and not current realisable price of crude. This is further value which cannot
be estimated at this moment. Also note, it doesnt include expected profit emanating from its share in various
overseas JVs.( see footnotes on Pg. 48 of the annual report for the Year Ended 31.03.2007).

Now, lets sum it up:

Book value :Rs. 287.00

Investment gain :Rs. 90.24

Present Value of expected profits:Rs. 1129.17

The added value is Rs. 1506.41

The current price of ONGC is 1145. This imply its trading at a discount of 361.41 to its fair value. This is 24 p.c.
discount to Fair Value. Graham has said a stock is worth a look if its 30 p.c. discount to book-value. So, where from
to get additional 6 p.c?

While we are calculating fair value, we have overlooked ONGC Videsh. this company is operating 26 E&P projects as
on 31.03.2007. It is a profit making, dividend paying company. The company has valued this share in its book at face
value of Rs.100. Given what valuations,E&P companies , this is quite a gross underestimation. Let this take care of
the balance 6 p.c.

Also conceptualise the increase in present value of expected profits, in case crude prices are reset to current levels.
this can take care of all the remaining doubts, I believe.
so, in a nutshell, its a matter of shock that in case of a raging bull market, we are getting an A-group stock which
Benjamin Graham would have at least considered for his decision. What do you say??????

ONGC 2008

ONGC

Step1 – Calculating intrinsic value

Step A – Calculate average growth of earning per share for last 5 years
Rs.
2005/06 2006/07 2007/08 2008/09 2009/10
EPS 98.22 71.66 78.09 75.19 78.18
CAGR (EPS) 2.20%
We will assume CAGR of EPS form 2005/06 to 2009/10 of 2.2%. But in the year 2008/09 due to global
financial crisis ONGC stocks was primarily affected beyond justification. Hence we will assume a better
growth rate of say 4% for our calculations. EPS will grow form present levels in 2009/10 to 2014/15 as
tabulated below:
2010/11 2011/12 2012/13 2013/14 2014/15
EPS 78.1834 81.3 84.6 87.9 91.5
CAGR 4.00% 4.00% 4.00% 4.0% 4.0%
EPS ^ 81.3 84.6 87.9 91.5 95.1
Step B – Assume Price Earning Ratio (P/E) in the fifth year of investment horizon
Rs.
2005 2006 2007 2008 2009
EPS 98.22 71.66 78.09 75.19 78.1834
Market Price 864 842 1009 783 1085
P/E 8.8 11.7 12.9 10.4 13.9
Average P/E 11.6
We will assume that the same level of P/E ratio of 19.9 will be maintained by the company in 5th year of
investment horizon.
Step C – Predict market price of stocks in the fifth year of investment horizon
Market price = EPS X P/E
Market price = (EPS in the year 2015) x (P/E ratio in the fifth year)
EPS P/E Market Price
95.1 11.6 1098.8
Step D – Calculate present value of market price of stock
Market price of stock in the fifth year = Rs 512
Rate of inflation assumed = 9% p.a.
2010/11 2011/12 2012/13 2013/14 2014/15
714 778.26 848.3034 924.650706 1007.86927
Rate of Inflation 9.00% 9.00% 9.00% 9.00% 9.00%
778.26 848.30 924.65 1,007.87 1,098.58
Present value of Rs 1098 (2015) = Rs 714

Step 2 – Maintain margin of safety

Price maintaining margin of safety = Present Value X 2/3
Present Value Margin of safety Intrinsic Value
714 66.67% 476.0
 Step 3 – Compare current market price
with 2/3 of intrinsic value
2009/10
Current Market Price 1085
2/3 x Intrinsic Value 476.0

Conclusion
As market price (Rs 1085) is higher than the calculated intrinsic value (with margin of safety, Rs 476)
hence we can consider this stock as overvalued. Overvalued stocks are never purchased by the great
value investor Warren Buffett and undervalued stocks are never ignored

ONGC profits decline 6.4% on strong rupee, growing subsidies The company’s performance suffered primarily due to the growing
subsidy burden— Rs6,080 crore for the quarter, 176% higher than in the same period last year

Third quarter net profits at India’s largest exploration and production firm, Oil and Natural Gas Corp. Ltd, fell 6.4% to
Rs4,367 crore from a year ago.

The company’s performance suffered primarily due to the growing subsidy burden— Rs6,080 crore for the quarter, 176%
higher than in the same period last year—it had to asborb with domestic fuel prices being kept pegged down, even as global
crude prices spiked. In addition, the appreciating rupee meant that the company earned less for its oil sales, which are
priced in dollars.

“There is a requirement for price correction. I feel prices are likely to be increased as per my assessment based on the
fundamentals. The government should also take a call on the ad valorem component. If the same position continues
profitability will be impacted,” R.S. Sharma, chairman and managing director of the company, told reporters.

Company officials, who did not wish to be identified, estimate that net of the subsidy burden, profits in the three months to
December would have aggregated Rs8,029 crore.

R.S.Sharma

Chairman and managing director, ONGC Ltd

Similar demands have been made by oil marketing companies such as Indian Oil Corp., Hindustan Petroleum Corp. Ltd and
Bharat Petroleum Corp. Ltd, which have projected Rs71,808 crore in losses on fuel sales in 2007-08 if prices and duties are
not revised. These companies lose Rs9.20 per litre on petrol, Rs11 per litre on diesel, Rs331 per liquefied petroleum gas
(LPG) cylinder and Rs20 per litre on kerosene. However, the second meeting of the group of ministers to decide on a solution
to this vexing issue could not be held on Monday. And no new dates have been fixed for a meeting, since petroleum minister
Murli Deora is to leave for a New Exploration Licensing Policy roadshow in London on Tuesday, and is expected back only on
27 January.

Though there was a minimal increase in crude oil production, the rupee appreciating 12.3% reduced the exploration
company’s turnover by 2.6% to Rs15,218 crore compared with the same period last year.

Oil industry analysts concurred that ONGC’s numbers would have been better in the absence of subsidy burden sharing. Ravi
Mahajan, partner at accounting firm Ernst and Young, said, “The company has suffered a big hit on account of the sharing of
under-recoveries. The consensus on the pricing issue has to be achieved at the earliest, as only then there will be some kind
of breather for the companies across the hydrocarbon value chain, be it upstream or downstream.”

ONGC produces 685 million tonnes (mt) of crude and 375 billion cu. m of gas from its 115 fields and plans to invest
Rs18,000 crore in 2008-09 out of its internal accruals.

In another development, Mangalore Refinery and Petrochemicals Ltd, a unit of ONGC, on Monday entered into an agreement
with Shell Aviation, part of the Shell group of companies in India, to supply aviation turbine fuel at the Bangalore and
Hyderabad airports.
ONGC stock fell 7.89% on the Bombay Stock Exchange to close at Rs1,114.05. The Sensex fell by 7.41% to close at
17,605.35 points.

ONGC 2009
2. Dividend
Despite slightly lower Net Profit of Rs. 1193 Crore (Previous year Rs. 1272 Crore), the
shareholders have approved a dividend of 12%, the same as last year on Equity
capital of Rs.17,52.65 crore, which will absorb Rs.246 Crore, including Rs.36 Crore as
tax on dividend. The shareholders have also confirmed a dividend of 0.01% on
Preference Shares of aggregate value of Rs. 9.19 crore for the financial year ended
31.03.2009.

3. Financial performance
MRPL has achieved an excellent performance in terms of physical parameters during
the financial year 2008-09. The company has achieved a turnover at Rs.42,719 Crore,
up 14% from Rs.37,339 Crore. The company earned a net profit of Rs.1,193 Crore as
compared to Rs.1,272 Crore in the previous year, after providing for Interest and
finance charges of Rs.143 Crore (Rs.148 Crore), depreciation of Rs.382 Crore (Rs.378
Crore) and tax liability of Rs.619 Crore (Rs.461 Crore net of credit for MAT paid in
earlier year). The exports during the year were Rs.11,636 Crore (Rs.11,141 Crore).

 Dividend payout
ONGC shareholders approved a dividend payment of Rs 14 per share (140%) at the
16th Annual General Meeting held today (23rd September 2009) at New Delhi which
along with the interim dividend of Rs 18 per share (180%) totals to Rs 32 per share
(320%). In absolute terms this amounts to Rs 6,844 Crore. This payout is at par with
last year dividend and highest ever dividend paid by any Indian Corporate.

BL Research Bureau:

Expectations of a strong showing in the December quarter saw the ONGC stock gain around 1.9 per cent in
Friday's trade, compared with the steep 1.5 per cent fall in the Sensex.
The company, which declared its results after market hours, did not disappoint. For the December 2010 quarter,
it more than doubled its profits year-on-year to Rs 7,083 crore (Rs 3,054 crore in the December 2009 quarter).
Net sales grew at a relatively modest 21 per cent to Rs 18,586 crore.
Gas Pool Account
In addition to increasing crude oil prices (which improved ONGC's net realisations), and the doubling in APM
gas prices last calendar, what significantly benefitted the company's bottom-line was the Rs 1,898 crore
received from the Gas Pool Account. Save for this one-time settlement on natural gas dues, the company's
profits would have grown by around 70 per cent. The more-than-doubling in the price for gas under the
administered pricing mechanism (APM) from $1.79/mBtu to $3.82/mBtu last May, would have helped the
company add around Rs 800 crore in the recent December quarter, a benefit not available in the previous
period. Excluding this too, ONGC's profits would have grown by a more modest but still quite healthy 44 per
cent on a year-on-year basis.
Strong growth (comparable) in the company's sales and profits can be attributable, to a good extent, on the
buoyancy in crude oil prices. This helped the oil and gas producing major improve its net realization per barrel
of crude oil by 12 per cent year-on-year from $57.69 in the previous year to $64.79. This was despite a 21 per
cent hike in the subsidy burden footed by the company to Rs 4,222 crore, as part of the product discounts given
to public sector oil marketing companies.
ONGC 2010

ONGC board approves special dividend, share split and bonus shares ahead of
stake sale news

16 December 2010

State-run explorer Oil and Natural Gas Corporation Ltd (ONGC) will pay a special interim dividend of Rs32 per Rs10
fully paid-up share for the financial year 2010-11.
The board of directors of the company at its meeting today also recommended for approval of the shareholders sub
division of each Rs10 fully-paid equity share into two fully paid-up equity shares of Rs5 each.
The board also proposed issuance of bonus shares in the proportion of one new equity share of Rs5 each for every one
existing equity share of Rs5 each post split, by capitalisation of reserves.
The board said ONGC would seek shareholders' approval for the proposals for the stock split and bonus share offer
through a postal ballot.
The dividend works out to 2.41 per cent based on the current market price of the ONGC stock of Rs1,323.35. Dividend
comes tax-free in the hands of shareholders although the company pays a dividend distribution tax of 15 per cent.
The ONGC stock hit a high of Rs1,338.90 and a low of Rs1,304 during today's morning trade. The stock had hit a
record high of Rs1,472 on 28 September 2010 and a 52-week low of Rs997.35 on 22 April 2010.
The stock had outperformed the market gaining 0.44 per cent against the Sensex's 3.26 per cent fall over the past one
month ended 15 December 2010.

ONGC has, meanwhile, bagged the award for best financial performance and corporate governance jointly awarded by
the department of public enterprises in association with Indian Chamber of Commerce and Deloitte early this month.

TCS 2007

TCS has delivered an average set of numbers this quarter. The results,
however, appear to indicate that the impact of subprime crisis on its BFSI Stories in this Section
clientele’s IT spending and revenue growth slowdown due to rupee Non-basmati rice prices crash on
appreciation may not be very pronounced. export ban

The numbers

NE monsoon seeks launch window

The revenue for the quarter stood at Rs 5,640 crore, a growth of 8.4 per
cent on a sequential basis. EBITDA at Rs 1,479 crore and net profit at Rs
1,252 crore have grown 10.5 per cent and 4.1 per cent, respectively.
In terms of contribution to revenues, BFSI (43.3 per cent) has, in fact, seen Crude oil prices continue to rule
a marginal increase, indicating that the company’s mortgage-client exposure
 high, pushing $88
may be lower. TCS has hedged $2.6 billion, nearly 50 per cent of its
revenues, which may mitigate in part the effect of the appreciating rupee.
The medium term prospects for TCS appear to be reasonable on the back of
Oil price a global economy risk
good performance in certain key metrics.
High value service

TCS now derives 30 per cent (25 per cent the previous quarter) of its Are investors willing to bite the
consulting revenues offshore. If this trend in offshoring consulting services research bullet?
sustains, there is likely to be a significant expansion in margins. This, along
with the fact that all other high margin non-ADM (application development
and maintenance) services now contribute over 50 per cent of the revenues, Power sector financiers for
is a healthy augury for the company. Fixed price contracts are also showing changes in bidding norms
an increasing trend. This would ensure optimal resource deployment and
utilisation of resources and manpower. It could also help TCS device a
sound hedging strategy. Increasingly, overseas clientele are more inclined
Power stocks sizzle in volatile
towards fixed price contracts rather than time and material based billing. market
Attrition at 11.5 per cent has remained flat over the quarter, indicating
lowered execution risks.
While the trends in revenue growth appear stable based on this quarter’s Today's Pick: Bajaj Auto (Rs
performance, investors might have to wait till the end of this year or early 2540.55)
next year for a clearer picture to emerge on trends in IT spends by clients in
the US and Europe.
More Stories on : Software | Stocks | Financial Performance | Tata Consultancy Services Ltd | Day trading guide
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Mineral stocks’ prices go through

the roof

HDIL to benefit from airport project

HCL Tech Q1 net income rises on

new orders

Housing Development bags

Mumbai airport slum rehab project

TCS hiring plans ‘well on track’

Medium-term prospects for TCS

reasonable

SEBI plans curbs on FII

participatory notes

High level of capital inflows ‘a

matter of concern’

Sensex ends flat in see-saw trade

 on weak Asian cues

Sub-prime crisis brewing here,

warns Tarapore

A space flight for $200,000

Bridging the Gap: TCS topples Infosys as Most-

valued IT company
Let me take you back by 6 years, when I took a plunge into stock markets – Infosys was a marquee name for
me then and, may be, even now. And, at that time I was not even aware that TCS was a bigger company than
Infosys (Oops! my ignorance). In fact, TCS was not even listed on the stock exchanges then, if I am not wrong.
Yes, TCS always lacked that extra-edge and aura that revolved around the Infosys, ever since its inception.
Though, the success story of TCS cannot be undermined by any bit and its business remains as robust as ever.
Some IT analysts are of the opinion that this extra zing is due to the sheer professionalism that the Infosys
management has exhibited under the leadership of Narayan Murthy followed by Nandan Nilekani. While
other wise people say that Infosys has always indulged and stuck with the high margin game.

The fact of the matter is that the bellwether IT major Infosys Technologies still continues to remain the
torchbearer of the Indian outsourcing industry– this, even as its business size is trifle smaller than that of
TCS. But, it’s high time that TCS regain its reputation as the most illuminative Indian IT company.
The much needed shift is already shaping up as TCS stands out as a much stronger company coming out of the
global recession especially over the last two quarters. Infosys Technologies has been toppled by the
country’s leading software exporter TCS as the most valued IT company.
In fact, the Tata group company has outperformed Infosys in terms of various parameters including strong
demand momentum. For the Q1 results, Infosys reported a negative surprise with 2.6% drop in its profits, but it
was an up-tick in its full-year revenue guidance on hopes of strong outsourcing demand which proved as a face-
saver to some extent.
On the other hand, TCS came up with a stellar performance of 24% jumpin the June quarter profit of
Rs.1906 crore as against Rs.1534 crore for the same quarter last year. On the back of stable pricing
environment, the company continues to log geographically and industry-wise spread broad-based growth. Two
contrasting results performances, indeed!
Interestingly, led by robust revival of the global economy from the worst recession ever, both Infosys and TCS
battles with the problem of rising employee churn and high attrition levels on the back of higher demand for IT
professionals during the April to June quarter. However, TCS stands out in the way that it has managed its staff
constructively over the last few quarters.
TCS logged a strong 8% volume growth as against 6% growth reported by Infosys. In fact, the Ebitda margin at
29.3% for TCS has almost closed down the gap with that of Infosys which stood at 31.6%. The revenues for
TCS grew by 62% while that of Infosys surged by a lower 4.8%.
On Friday, TCS rallied 6% to notch the market capitalization of Rs.1.63 lakh crore as against that of Rs.1.59
lakh crore of Infosys. The real catch is the margin game over where the erosion was much higher in case of
Infosys at 180 bps vis-à-vis 36 bps for TCS. Thus, TCS is gradually improving on the margin front relative to
Infosys.
Better than expected bottom-line led by cost-efficiencies and improving deal pipeline has placed TCS on a
forward curve as against Infosys. Further, below-expectation results by Infosys and upward revision of earnings
from TCS will provide an added edge to the Tata group company in narrowing down the valuation gap between
both the Indian IT giants

TCS 2008
Reliance Money has maintained its hold rating on Tata Consultancy Services (TCS) with a target price of Rs 561 in its
October 25, 2008 research report. "After putting a unexciting performance in Q1FY09, TCS’s performance for Q2FY09
does brings some respite with a 6% blended volume growth and stable pricing (up by 0.30% qoq). Consolidated revenues
in USD term was up by 3.2% to USD 1574 million, in the INR term aided by better rupee reliasation up by 8.5% to Rs
69534 million."
"Though valuations are seems to be attractive at the current level at 9x FY09E and 8X FY10E, however we believe there
could be further weakness in the stock performance in the medium term owing to subdued market condition and loss of
invertors confidence in the Indian IT sector, which is quite reflected in multi years low trading PE multiple. To factor the
weak industry headwinds and subdued market , we have revised our one year target PE multiple for TCS from 16X to
10X, thus we have revised our target price to Rs 561 . We maintained HOLD on TCS with a 12M target price of Rs 561, at
our target price stock will be valued at 10X FY09 and 8X FY10," says Reliance Money's research report.
Motilal Oswal has maintained its buy rating on Tata Consultancy Services (TCS) with a target of Rs 760 in its October
22, 2008 research report. "TCS reported USD revenue growth of 3.2% QoQ and 11.2% YoY at USD 1574 m (v/s our est.
of USD 1,600 million). PAT at Rs 12.6 billion grew 1.4% QoQ (1.2% YoY), significantly below our estimates (Rs 14.1
billion) due to forex losses of Rs 2.6 billion. We are revising our FY10 USD revenue growth estimates downward by
470bp from 19% to 14.3%, on account of client specific issues with respect to TCS and overall demand uncertainty."
"Our FY09 EPS stands revised to Rs 58.1 from Rs 60.4 while we have lowered our FY10 EPS to Rs 63.3 from Rs 69.1.
We are assuming an average rate of Rs 45.2/USD for FY09 and Rs44/USD for FY10 against our earlier estimate of Rs
43/USD for FY09 and Rs 42/USD for FY10. We expect FY08-FY10 revenue CAGR of 19% and EPS CAGR of 11%. The
stock is trading at 8.6x FY10E earnings. We revise our target price to Rs 760 (12x FY10 EPS), implying 39% upside.
Maintain Buy," says Motilal Oswal's research report.

Tata Consultancy Services

Below par performance; See more pain in the offing

Emkay
Research
Result
Update
Q4 Result Highlights; Weakest amongst peers
TCS reported the weakest set of numbers amongst peers with revenues growing by a
mere 2.9% QoQ, 2% below estimates. EBITDA margins were down 120 bps
sequentially (V/s our expectation of 110 bps increase). Net profits at Rs 12.6 bn (-5.5%
QoQ) disappointed as against expectations of ~5% increase.
Revenues from the Indian subsidiary also remained muted, with the company reporting
only 1.2% sequential growth. While revenues from BFSI, Europe remained flat QoQ, the
revenues from top clients degrew by ~5% sequentially. Attrition inched up to 12.6%
(however the company’s employee turnover still remains the lowest in the industry)
Cloudy Outlook; Expect more ‘weakness’ for a while
TCS during the investor call indicated that they had been keeping a close tab on the
situation in the US closely, working closely with customers. Besides the company
articulated that they had continued to invest in growing ‘capacity and capability’. We
note that though the company’s disclosure of bagging 6 US$ 50 mn+ deals along with a
gross employee addition of 30k-35 k should provide comfort, we believe that the
company could continue to witness near term pressure on account of (1) High exposure
to the BFSI segment (TCS’s exposure to BFSI is ~44% of revenues, next only to
Cognizant amongst the Indian offshore services vendors) and (2) project delays/
deferrals at some Tier 1 client accounts ( the company witnessed trouble at 2 Top 10
clients from the BFSI space who had deferred some projects during Q4FY08.
which are expected to mar H1FY09 performance as well)
We have tweaked our earnings estimates for (1) Slower H1FY09 ( company indicated
that volume growth would remain sublime during H1FY09, with one of the top
clients having deferred ramp-up until Q2FY09 while another Tier 1 starting
engagements on a ‘case by case basis’), (2) Exchange rate assumption of Rs
39/$(from Rs 38/$). We have cut our earnings estimates for FY09E and FY10E by
~4.2% and 3% respectively and now expect TCS to record revenue, EBITDA and net
profits CAGR of 19%, 18.8% and 12% over FY08-10E. We highlight that TCS’s policy of
not providing any future guidance coupled with the worsening macro environment could
continue to keep TCS’s stock under pressure. We reduce our target price on TCS to Rs
1034, based on 16.2x FY10E earnings (10% discount to our target multiple for Infosys)
Results table (consolidated)
In Rs mn Q4FY08 Q3FY08 QoQ (%) Q4FY07 YoY (%)
Net sales 60,947 59,241 2.9% 51,464 18.4%
Total Income 60,947 59,241 51,464
Operating expenses 45,423 43,452 36,896
EBITDA 15,524 15,789 -1.7% 14,568 6.6%
Margins (%) 25.5 26.7 28.3
Depreciation 1,625 1,475 1,395
EBIT 13,899 14,314 -2.9% 13,173 6%
Margins (%) 22.8 24.2 25.6
Interest Paid 0 113 0
Other income 781 1,161 898
Pre-tax profit 14,681 15,362 -4.4% 14,070 4%
Tax provided 1988 1947 2,188
Profit after tax 12,693 13,415 11,882
Emkay Net profit 12,574 13,308 -5.5% 11,728 7.2%
Source: Company, Emkay Research
Manik Taneja
manik.taneja@emkayshare.com
+91 22 6612 1253
Financials Tata Consultancy Services Result Update
Emkay Research 22 April 2008 2
Weakest numbers amongst peers
TCS reported the weakest set of numbers amongst peers (please refer to the table
below). Revenues at Rs 60.95 bn (+2.9% QoQ) were much below our expectations.
Apart from the subdued performance from the International business, revenues from the
domestic business also remained muted at 1.2% sequential growth. EBITDA margins
were down by 120 bps QoQ as against our expectation of 110 bps margin expansion.
March'07 perf ormance TCS Infosys HCLT Satyam
Volume growth, % 4.8 7.8 5.3 8.8
BFSI revenues QoQ increase, % 0.7 -3 2.3 7.7
US revenues QoQ increase 2.9 2.6 7.0 11.6
Headcount YoY increase, % 24.6 26.2 24.0 28.9
Margin expansion QoQ, bps -120 -5 100 130
Margin expansion YoY, bps -280 77 -20 -30
Source: Company, Emkay Research
BFSI, Europe flat, Top client degrows by 5% QoQ
TCS reported flat revenues from Europe as well as the BFSI revenues were up by a
mere 0.7% QoQ. Besides the company reported ~5% sequential decline in revenue
contribution from the top client. Interestingly despite trouble at 2 Wall Street clients,
the revenues from North America were up 2.9% QoQ whereas revenues from
Europe and Asia Pac which have remained relatively insulated from the financial
crisis reported 0.7% and -6.2% sequential growth respectively.
Attributes ‘free transition’ as the culprit for disappointing margins
TCS management during the investor call indicated that they were carrying ‘ free
transition’ on some large deals during the quarter due to which threw was effort growth
(Sequential Volume growth was 4.8%) which could be the reason for sequential decline
in price realization of ~1.6%. We note that although ‘free transitions’ on large projects
are not uncommon, however this could be an early indicator of some pressures on
price discounts from the clients.
Besides we wish to highlight that the company’s tone has changed over the past three
months on the pricing front with the company talking of ‘stable pricing’ from ‘stable
pricing with an upward bias’ earlier. We note that this could just be a function of the
weak macro environment which could limit pricing increases for the offshore vendors
over the next few quarters.
Announces 6 US$ 50 mn+ deals, gross addition of 30-35k for FY09
The company indicated that it won 6 large deals of US$ 50 mn+ during the quarter as
well as it was chasing 25 deals of similar size. We note that this combined with the gross
addition of 30k-35 k could be slightly reassuring, the company could continue to face
some near term pressures given (1) TCS’s higher exposure to the BFSI segment (TCS
derives ~44% of the revenues from BFSI segment, next only to Cognizant’s
exposure) as well as (2) slower rampup/ project deferrals at Tier 1 BFSI clients (
company indicated that of the 2 BFSI clients who had deferred projects during
Q4FY08, one of them expected to increase engagement from the middle of Q2FY09
and the other had started projects on a ‘case by case’ basis).
Guides for offshore increments of 8-10%
TCS indicated that it would increase offshore salaries by ~8-10% (in line with Wipro’s
indication and lower than peers like Infosys: 11-13% and Satyam: 12-14%). We note that
this could put some pressure on the employee turnover (showed a jump from 12.2% in
Q3FY08 to 12.6% in Q4FY08)
Financials Tata Consultancy Services Result Update
Emkay Research 22 April 2008 3
Cut estimates by ~3-4%; Reduce TP to Rs 1034
We have revised our earnings to build in (1) a slower H1FY09 ( company expects volume
pick up from Q2FY09 onwards) and (2) exchange rate assumption of Rs 39/$ (from Rs
38/$ earlier).We have cut our FY09E and FY10E earnings by ~4.2% and 3% respectively
to Rs 57.4 and Rs 63.8 respectively (from Rs 59.9 and Rs 65.8 earlier). We note that
TCS’s stock could continue to witness some near term pressure on account of higher
BFSI exposure as well as project delays in Tier 1 BFSI clients. We maintain ‘BUY’ with a
revised target price of Rs 1034, based on 16.2x FY10E earnings of Rs 63.8,(at 10%
discount to our target multiple for Infosys)
Revised estimates
FY09E FY10E
( All fig in Rs mn except EPS)
Old New %
change Old New %
change
Revenues 279,493 270,500 -3.2 342,683 322,863 -5.8
EBITDA 72,723 69,366 -4.6 87,890 84,019 -4.4
Net profits 58,592 56,136 -4.2 64,384 62,464 -3.0
EPS 59.9 57.4 -4.2 65.8 63.8 -3.0

TCS 2009

TCS shares rise to their highest in more than a

year
Shares in Tata Consultancy Services soared more than 15 percent on Monday to their highest in more than a year after
the outsourcer posted strong quarterly earnings and prompted a flurry of brokerage upgrades. ( Watch )

Analysts said the surprising strong performance by India's top software services firm by sales helped dispel some gloom
surrounding the $60 billion software and services sector. ( Watch )

Tata Consultancy beat expectations by posting a 22 percent rise in quarterly profit late on Friday, but said the business
environment remained weak and there was pressure on fees due to the global economic downturn.

"TCS has continued to make long-term investments, the effect of which is partly visible in the current quarter's
performance despite a tough macro," Viju George and Kunal Sangoi, analysts at brokerage Edelweiss, wrote in a report.

By 0627 GMT, shares in Tata Consultancy, which has a market value of more than $17 billion, was up 15.1 percent at
499.10 rupees after having risen 15.3 percent to their highest since June 2008. The main market was up 2 percent.

Edelweiss raised its earnings per share by 13 percent to 29.50 rupees for the full year to March, and forecast revenue to
rise 7.4 percent.

Citigroup, which has a buy on the stock, increased its earnings per share target for this fiscal and next year by 8.7 percent
and 5.9 percent respectively.

Brokerage Reliance Equities said better-than-expected results by Goldman Sachs, JPMorgan and Citigroup had raised
hopes for a rise in IT spending, which would benefit Tata Consultancy that gets a bulk of its revenue from financial clients.

It raised its target price on the stock to 540 rupees from 453 rupees earlier.

Top Indian outsourcing cos Nine trends for IT in 2009 Cities that are IT hubs
Tata Consultancy Services Ltd Company Snapshot Purchase a Full Report on this
Company
Business Description:

Tata Consultancy Services Limited (TCS) is an information technology (IT) company. It offers a range of
IT services, outsourcing and business solutions. It also offers IT infrastructure services, business process
outsourcing services, engineering and industrial services, global consulting and asset leveraged solutions.
Its segments include banking, financial services and insurance; manufacturing; retail and distribution, and
telecom. On June 5, 2009, TCS, through its wholly owned subsidiary, Tata Consultancy Services Canada
Inc., acquired 100% interest in ERI Holdings Corp. On January 1, 2010, the Company, through its wholly
owned subsidiary, TCS Iberoamerica S.A., subscribed to 100% interest of TCS Uruguay S.A. On January
1, 2010, it purchased 100% interest of MGDC S.C.,Mexico, through its wholly owned subsidiaries, TCS
Uruguay S.A. and TCS Argentina S.A. In September 2010, Unisys Corporation sold Unisys Insurance
Services Limited to Diligenta Limited, a subsidiary of the Company.