Market Outlook

India Research
April 26, 2012

Dealers Diary
The Indian markets are expected to open flat tracing flat to positive opening in the major Asian bourses and SGX Nifty. Globally, US stocks saw significant strength during the trading on Wednesday and closed firmly positive on upbeat corporate earnings (mainly Apples) and Feds monetary policy announcement. The Fed left interest rates at near-zero levels and reiterated that economic conditions are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014. European markets also closed in the green again on Wednesday thanks to the euphoria over U.S corporate earnings, which helped markets to ignore the unexpected announcement that the U.K. economy had slipped into recession. Meanwhile, Indian shares fell modestly on Wednesday, after S&P downgraded India's long-term rating outlook to negative from stable citing the worsening fiscal situation and political constraints for pursuing economic reforms. However, stocks recovered some of their early losses courtesy to Finance minister assurance of governments commitment towards economic reforms to control fiscal deficit and achieve higher economic growth.
Domestic Indices BSE Sensex Nifty MID CAP SMALL CAP BSE HC BSE PSU BANKEX AUTO METAL OIL & GAS BSE IT Global Indices Dow Jones NASDAQ FTSE Nikkei Hang Seng Straits Times Shanghai Com Chg (%) (Pts) (Close)

(0.3) (0.4) (0.6) (0.5) 0.1 (0.4) 0.2 (0.4) (0.4) (1.5)
Chg (%)

(56.0) 17,151 (20.7) (34.9) (35.9) 5.8 5,202 6,267 6,754 6,767 7,201

(1.4) (103.4)

(51.5) 11,716 22.9 10,603 (38.2) 10,976 (34.9) (82.2)

(Pts)

7,900 5,480
(Close)

0.7 2.3 0.2 1.0 (0.2) 0.1 0.8

89.2 13,091 68.0 9.4 93.0 3.4 18.0 3,030 5,719 9,561 2,978 2,407

Markets Today
The trend deciding level for the day is 17,140 / 5,200 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 17,261 17,370 / 5,239 5,275 levels. However, if NIFTY trades below 17,140 / 5,200 levels for the first half-an-hour of trade then it may correct up to 17,030 16,910 / 5,163 5,124 levels.
Indices SENSEX NIFTY S2 16,910 5,124 S1 17,030 5,163 PIVOT 17,140 5,200 R1 17,261 5,239 R2 17,370 5,275

(30.9) 20,646

Indian ADRs

Chg (%)

(Pts)

(Close)

INFY WIT IBN HDB

0.8 (5.1) (0.3) 0.9

0.4 (0.5) (0.1) 0.3

$46.1 $9.8 $32.3 $33.8

News Analysis

4QFY2012 Result Reviews Wipro, Nestle India, Sterlite Industries, LIC Housing, Yes Bank, India Cements, Alembic Pharma 4QFY2012 Result Previews Idea Cellular

Advances / Declines Advances Declines Unchanged

BSE

NSE

972 1,444 436

448 987 67

Refer detailed news analysis on the following page

Net Inflows (April 24, 2012)

` cr FII MFs Purch 2,212 423 Sales 3,051 524 Net (839) (101) MTD (1,598) (408) YTD 43,728 (5,982)
Volumes (` cr) BSE NSE

2,077 10,478

FII Derivatives (April 25, 2012)

` cr
Index Futures Stock Futures

Purch 6,023 7,758

Sales 6,337 7,539

Net (315) 219

Open Interest 13,746 24,192

Gainers / Losers
Gainers Company
United Spirits IVRCL LTD Wockhardt Indiabulls Fin Motherson Sumi

Losers Company
Wipro Petronet LNG IRB Infra Power Finance Lanco Infra

Price (`)
739 64 718 221 184

chg (%)
8.3 5.3 3.4 3.3 3.2

Price (`)
410 139 172 176 15

chg (%)
(7.3) (5.1) (5.0) (4.6) (4.3)

Please refer to important disclosures at the end of this report

Sebi Registration No: INB 010996539

Market Outlook | India Research

Result Reviews
Wipro (CMP: `410 / TP: - / Upside: -)
For 4QFY2012, Wipros results came in-line with our expectations. For 4QFY2012, Wipro registered a 1.3% qoq decline in its revenue to `9,869cr. Revenue from the IT services segment came in at US$1,536, up 2.0% qoq, primarily led by 0.8% qoq volume growth in global IT services. Revenue from the consumer care and lighting segment grew strongly by 25.2% yoy, while the IT products segment reported merely 2.9% yoy revenue growth. EBIT margin of the IT services, IT products and consumer care and lighting business declined by 8bp, 60bp and 61bp qoq to 20.7%, 4.7% and 12.5%, respectively. Wipros overall EBIT margin declined by 8bp qoq to 17.2%. PAT came in at `1,481cr, up 1.7% qoq. The companys client base increased to seven in the US100mn+ bracket at the end of FY2012 from three in FY2011, which was a positive sign. The major disappointment came from managements 1QFY2013 USD revenue growth guidance of -1 to 1%, which is very sluggish as 1Q is typically a good quarter for IT companies. This guidance indicates that management is seeing further delays in deal closures and ramp-up of projects. Now, managements endeavor is to grow at par with industrys average revenue growth. Nasscom has guided for 1114% yoy USD revenue growth for FY2013 to achieve this Wipro needs to record at least 3.5% qoq USD revenue growth post 1QFY2013. This number indicates that management is banking more on back-ended growth for FY2013, which makes us slightly cautious about the companys growth outlook. We recommend Neutral on the stock.

Y/E March FY13E FY14E

Sales (` cr) 41,918 46,879

OPM (%) 19.4 19.9

PAT (` cr) 6,152 7,030

EPS (`) 25.1 28.6

ROE (%) 18.6 18.3

P/E (x) 16.4 14.3

P/BV (x) 3.0 2.6

EV/EBITDA (x) 10.6 8.6

EV/Sales (x) 2.1 1.7

Sterlite Industries (CMP : `108, TP : Under review)

Sterlite Industries (Sterlite) 4QFY2012 results were in line with our expectations. Net sales increased 7.6% yoy to `10,763cr in line with our estimate of `10,912r. Net sales growth was driven by increases in zinc segment and power segment. Zinc and Power segment revenues grew 48.4% and 457.0% yoy to `4,945cr and `737cr, respectively. On the operating front, Sterlites EBITDA decreased by 0.5% yoy to `3,037cr. Copper and power segment EBIT grew by 40.4% and 691.7% yoy, respectively to `273cr and `151cr, respectively. Aluminium segment reported an EBIT profit of `23cr, compared to EBIT loss of `23cr in 3QFY2012 and EBIT of `195cr in 4QFY2011. The company reported exceptional items related to net incidental damages payable to Asarco of `423cr in 4QFY2012. Hence, adjusted net profit decreased 16.9% yoy to `1,709cr, which was above our estimate of `1,311cr. Reported net profit decreased 33.7% yoy to `1,277cr.

April 26, 2012

Market Outlook | India Research

Balco is now nearing regulatory approvals for its 211mn tonne coal block. Approval of coal block by the regulatory authorities could potentially make Balco operations profitable. We maintain a Buy on the stock while we keep our target price under review.

Y/E Mar
FY13E FY14E

Sales (` cr) 47,332 48,802

OPM (%) 24.0 25.0

PAT (` cr) 6,195 6,494

EPS (`) 18.4 19.3

RoE (%) 12.7 11.9

P/E (x) 5.9 5.6

P/BV (x) 0.7 0.6

EV/EBITDA (x) 2.8 2.4

EV/sales (x) 0.7 0.6

Nestle - 1QCY2012 (CMP: `4,938 TP: - Upside: -)

Nestle India (Nestle) reported its 1QCY2012 results. The companys top line grew by 13.1% yoy to `2,047cr, primarily due to better realization. Domestic sales rose by 13.7% yoy to `1,946cr. However, domestic sales were to an extent adversely affected by product portfolio and channel optimization. Nestles OPM expanded by 92bp yoy to 22%, aided by higher realization. The companys bottom line rose by 7.8% yoy to `275cr, in-line with our estimates. We remain Neutral on the stock.
Y/E Dec. CY12E CY13E Sales (` cr) 8,848 10,681 OPM (%) 21.0 21.4 PAT (` cr) 1,165 1,444 EPS (`) 120.8 149.8 RoE (%) 73.6 61.7 P/E (x) 40.9 33.0 P/BV (x) 25.2 17.1 EV/EBITDA (x) 26.0 20.9 EV/sales (x) 5.4 4.4

LIC Housing Finance (CMP: `258 / TP: `295 / Upside: 14.1%)

For 4QFY2012, LIC Housing posted a weak set of numbers, with net profit declining by 19.4% yoy, below our estimates mainly because of lower net interest income than estimated by us. Management had guided for ~`1,000cr of disbursals to high-yielding project loans during 4QFY2012, however it disbursed only `274cr. Consequently, reported NIM of the company during 4QFY2012 declined by ~100bp yoy to 2.4%. Individual disbursements for 4QFY2012 stood at `6,345cr, lower by 1.8% yoy (up 21.6% yoy excluding staff loan portfolio of `1,245cr taken over from LIC of India). Disbursals of project loans were down by 17.7% yoy to `274cr. Total loan portfolio of the company grew by 23.5% yoy to `63,080cr. The proportion of developer loans to overall loans dipped further from 6.0% as of 3QFY2012 to 5.0% as of 4QFY2012 (10.5% as of 3QFY2011). Asset quality of the company continued to be healthy with gross NPA ratio at 0.42% and net NPA ratio at 0.14%. At the CMP, the stock is trading at 1.6x FY2014 ABV. We value the stock at 1.85x FY2014 ABV and recommend an Accumulate rating on the stock with a target price of `295.

April 26, 2012

Market Outlook | India Research

Y/E March FY13E FY14E

Op. Inc (` cr) 2,149 2,662

NIM (%) 2.7 2.7

PAT (` cr) 1,276 1,611

EPS (`) 25.3 31.9

ABV (%) 133.8 159.4

RoA (x) 1.7 1.8

RoE (x) 20.4 20.8

P/E (x) 10.2 8.1

P/ABV (x) 1.9 1.6

Yes Bank (CMP: `366 / TP: `477 / Upside: 30.3%)

For 4QFY2012, Yes bank reported a healthy set of numbers, with net profit increasing by 33.6% yoy to `272cr, in-line with our estimates. Robust traction in saving account deposits and healthy asset quality were the key highlights of the result. The banks advances and deposits grew by 10.5% yoy and 7.0% yoy, respectively. Saving account deposits of the bank more than doubled sequentially to `2,501cr, resulting in incremental saving account deposits per branch increasing from `1.0cr in 3QFY2012 to `3.6cr in 4QFY2012. Consequently, CASA ratio of the bank jumped by 244bp during 4QFY2012 to 15.0%. The bank continued to maintain a healthy asset quality in 4QFY2012, with gross NPA ratio of 0.22% and net NPA ratio of 0.05%. Provision coverage ratio also stood elevated at 79.2%. At the CMP, the stock is trading at valuations of 1.6x FY2014E ABV. We recommend Buy on the stock with a target price of `477.

Y/E March FY13E FY14E

Op. Inc (` cr) 3,250 4,269

NIM (%) 2.8 2.8

PAT (` cr) 1,236 1,546

EPS (`) 35.0 43.8

ABV (%) 161.7 197.9

RoA (x) 1.5 1.5

RoE (x) 23.8 24.4

P/E (x) 10.5 8.4

P/ABV (x) 2.3 1.9

India Cements (CMP: `87 TP: - Upside: -)

For 4QFY2012, India Cements registered 11.8% yoy growth in its standalone net sales to `1,116cr, which was in-line with our estimates. Growth in net sales was on account of substantial improvement in realization. The companys net plant realization rose by 12.0% yoy to `3,465/tonne. Despite higher per tonne operating costs of `2,025 (up 15% yoy), the company posted a 135bp yoy increase in its OPM, which stood at 19.5%, due to strong realizations. India Cements per tonne variable costs rose by 15% yoy to `2,025 on account of higher power and fuel and freight costs. On the bottom-line front, net profit rose by healthy 17.4% yoy to `65cr, aided by strong operational performance and higher other income. We will be releasing a detailed result update shortly. We maintain our Neutral view on the stock.

Y/E March FY13E FY14E

Sales (` cr) 4,423 4,906

OPM (%) 18.2 18.8

PAT (` cr) 303 389

EPS (`) 9.9 12.7

RoE (%) 8.6 10.5

P/E (x) 8.8 6.9

P/BV (x) 0.7 0.7

EV/EBITDA (x) 4.8 4.1

EV/sales (x) 0.9 0.8

April 26, 2012

Market Outlook | India Research

Alembic Pharma (CMP: `57, TP: `95, Upside: 66%)

For 4QFY2012, Alembics revenue came in-line with expectations at `342.3cr, registering growth of 15.0% yoy. Growth came on the back of robust 17% yoy growth on the domestic front. On the other hand, exports during the quarter grew only by 12.5% yoy. Growth in exports was dragged by sales of international generics, which declined by 9% during the period. International Generics and API exports grew by 29% yoy and 99% yoy, respectively. Alembic reported OPM of 11.6% in 4QFY2012, which expanded by 2.7%, on the back of better product mix, which aided GPM to be around 54.7% in FY2012, an expansion of 5.7%. However, the company registered a substantial rise in other expenditure and R&D expenses, which rose by 32.0% yoy and 40.7% yoy, respectively. Improved OPM along with reduction in interest expenses aided the net profit to grow at 97.9% yoy. However, net profit came in at `20.3cr, lower than our estimate of `26.5cr, mainly due to lower-than-expected OPM of 14.0%. At the CMP, the stock is trading at attractive valuations. Hence, we maintain our Buy recommendation on the stock with a target price of `95.

Y/E March

Sales (` cr) 1,576 1,813

OPM (%) 15.9 16.9

PAT (` cr) 155 179

EPS (`) 8.2 9.5

ROE (%) 38.8 37.0

P/E (x) 6.9 5.9

P/BV (x) 2.4 2.0

EV/EBITDA (x) 5.7 4.6

EV/sales (x) 1.8 1.6

FY13E FY14E

Result Previews
Idea
Idea Cellular (Idea) is slated to announce its 4QFY2012 results. We expect the company to record revenue of `5,193cr, up 3.2% qoq. This is expected primarily on the back of a 0.3% qoq increase in ARPM to `0.43/min and a marginal decline in MOU to 368min. APRU is expected to remain stable qoq at `160/month. EBITDA margin of the company is expected to decline by 67bp qoq to 26.1%. PAT is expected to come in at `191cr. We remain Neutral on the stock.

April 26, 2012

Market Outlook | India Research

Quarterly Bloomberg Brokers Consensus Estimates

Idea Cellular - Consolidated (26/04/2012)
Particulars (` cr) Net sales EBITDA EBITDA margin (%) Net profit 4Q FY12E 5,304 1,429 26.9 245 4Q FY11 4,199 1,075 25.6 275 (11) y-o-y (%) 26 33 3Q FY12 5,020 1,345 26.8 201 22 q-o-q (%) 6 6

Axis Bank - (27/04/2012)

Particulars (` cr) Net profit 4Q FY12E 1,175 4Q FY11 1,020 y-o-y (%) 15 3Q FY12 1,102 q-o-q (%) 7

ICICI Bank - (27/04/2012)

Particulars (` cr) Net profit 4Q FY12E 1,732 4Q FY11 1,452 y-o-y (%) 19 3Q FY12 1,728 q-o-q (%) 0

Jindal Steel & Power Ltd. - Consolidated (27/04/2012)

Particulars (` cr) Net sales EBITDA EBITDA margin (%) Net profit 4Q FY12E 4,859 1,953 40.2 1,130 4Q FY11 3,848 1,727 44.9 1,002 13 y-o-y (%) 26 13 3Q FY12 4,355 1,742 40.0 996 13 q-o-q (%) 12 12

Siemens India - (27/04/2012)

Particulars (` cr) Net sales EBITDA EBITDA margin (%) Net profit 2Q SY12E 3,150 306 9.7 196 2Q SY11 3,034 445 14.7 278 (30) y-o-y (%) 4 (31) 1Q SY12 2,361 123 5.2 71 176 q-o-q (%) 33 148

Maruti Suzuki - (28/04/2012)

Particulars (` cr) Net sales EBITDA EBITDA margin (%) Net profit 4Q FY12E 11,674 924 7.9 566 4Q FY11 9,864 1,010 10.2 660 (14) y-o-y (%) 18 (8) 3Q FY12 7,664 417 5.4 206 175 q-o-q (%) 52 122

April 26, 2012

Market Outlook | India Research

Economic and Political News

S&P revises India outlook to 'negative' from 'stable' No need for panic after S&Ps India outlook revision: Pranab Mukherjee Air India estimated to incur `7,853cr loss in FY2012

Corporate News

TDSAT reserves judgement on telcos' 3G roaming pacts GAIL suspends cargo operations at Dabhol Ranbaxy launches malaria drug Synriam Federal Bank cuts base rate by 0.2% to 10.45%

Source: Economic Times, Business Standard, Business Line, Financial Express, Mint

Results Calendar
26/04/2012 27/04/2012 28/04/2012 30/04/2012 02/05/2012 03/05/2012 04/05/2012 Idea Cellular, Gujarat Gas, MRF, Vesuvius India ICICI Bank, Jindal Steel, Axis Bank, Siemens, Indiabulls Fin., Hind. Const. Maruti Titan Inds., Bank of India, Dabur India, Godrej Consumer, Exide Industries, Oriental Bank, United Phosphorus, Areva, Vijaya Bank, Punj Lloyd, KPIT Cummins, Automotive Axle, Taj GVK HUL Bharti Airtel, Hero Motocorp Marico, Aventis, KEC International, Finolex Cables

April 26, 2012

Market Outlook | India Research

Research Team Tel: 022 - 39357800

Source: Economic Times, Business Standard, Business Line, Financial Express, Mint

E-mail: research@angelbroking.com

Website: www.angelbroking.com

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April 26, 2012