Sadbhav Engineering – 2QFY2011 Result Update Angel Broking

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Sadbhav Engineering – 2QFY2011 Result Update

Angel Broking maintains an Accumulate on Sadbhav Engineering with Target Price of Rs1,623.

Sadbhav Engineering (SEL) reported 2QFY2011 numbers, which were above our

estimates and surprised on the earnings front mainly on account of higher EBITDA

margins. The company has given guidance of >35% growth over the next 12

months. We believe that SEL has performed particularly well over the last few

quarters in the roads and mining segment, which reflects in order book has

increased to `7,800cr i.e. 4.8x FY2011E revenues, one of the highest in industry.

We maintain an Accumulate on the stock.

Coal India: Igniting India growth story:: Macquarie

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Igniting India growth story
NTPC with pricing options
􀂃 We initiate coverage on Coal India Limited with Outperform rating and a target price of
Rs338. Coal India Limited (CIL) is the world’s largest coal company and India’s largest
corporate employer, with nearly 400k employees. It has total coal resources of over 65bn
tonnes, it has been producing at a CAGR of 5.5% for the past decade, and it is expected to
fuel India with 440mt of coal during the financial year of 2011. We think CIL represents a
low risk opportunity. It doesn’t have the usual risks associated with other commodity
stocks. It has no commodity price risk, nor does it suffer from any fluctuations in demand. It
is a pure secular play on the India growth story. The listing of this entity might actually spur
better accountability and, hence, possibly more growth and a better pricing environment.

OBC: F2Q11: A Muted Quarter : Morgan Stanley

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Oriental Bank of
Commerce
F2Q11: A Muted Quarter
Quick comment: OBC reported PAT of Rs. 3.97 bn
Profits were up 9% QoQ and 47% YoY and compare
with our estimate of Rs 4.07 bn. Core pre-provision
profits were flat sequentially and grew by 104% YoY.
The key trends during the quarter were:

India to outpace China’s growth by 2013-15:: Morgan Stanley

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 India to start matching China’s growth in the next
two years: We believe that, over the next two years,
India will start matching China’s GDP growth of around
8.5-9.5%, barring another global financial crisis.
 By 2013-15, India should outpace China: More
importantly, we think that by 2013-15 India will begin to
outpace China’s GDP growth notably. We believe
China’s growth will move towards a more sustainable
rate of 8% by 2015, following the remarkable 10%
average of the past 30 years. We think India’s growth
will accelerate to a sustainable 9-10% by 2013-15, after
an average of 7.3% over the past 10 years.
 What will drive this strong growth? The combined
effect of demographics, structural reforms and
globalization will help create a virtuous cycle of
productive job creation, income growth, savings,
investments, and higher GDP growth.
 Macro impact on the rest of the world – similar to
that of China over the past 10 years: We expect
India’s per capita income to reach China’s 2009 level of
US$3,750 over the next 10-11 years. We think India will
see a further rise in its ratio of investment to GDP,
particularly infrastructure, while China will see a gradual
rise in consumption GDP.

East India Hotels - subdued ARRs, ORs dent performance; Hold:: Edelweiss

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􀂄 ORs subdued due to low occupancy at Trident and Oberoi
East India Hotels (EIH) posted ~46% and INR 9,000 ORs and ARRs, respectively,
during Q2FY11 compared to 44% and INR 8,900 in Q1FY11; in Q2FY10, the
company had recorded 51.6% and INR 8,800 ORs and ARRs. As the Trident (BKC)
and Oberoi (Mumbai) are taking time to come to a steady state of ORs, excluding
these two properties, ORs and ARRs during the current quarter were healthy.
Sales improved 28.2% and 6.1% Y-o-Y and Q-o-Q, respectively. EBIDTA margins
declined to 5.6% compared to 12.7% in Q2FY10 and 12.3% in Q1FY11. They
came under pressure as the company effected yearly wage hike during the
quarter effective April 1. Due to the healthy ORs in October, we maintain our FY11
estimates of 62% ORs, but cutting growth in ARRs from 10% to 5%.

GAIL: Above expectation: Gas volume to rise, margin to improve: Goldman Sachs

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EARNINGS REVIEW
Gas Authority of India (GAIL.BO)
Buy
Above expectation: Gas volume to rise, petchem margin to improve


What surprised us
GAIL reported 2QFY11adjusted net profit of Rs10bn, up 41% yoy and
above our expectation of Rs9bn, primarily driven by higher transmission
tariffs and marketing margins. Although sales at Rs81.3bn was higher than
our estimate of Rs72.6bn, EBITDA at Rs14.6bn, was inline with our
estimate, mainly from higher raw material costs. 2Q petchem volume was
adversely affected from maintenance shutdown, implying higher volumes
in coming quarters. The average transmission tariff for the quarter came
in higher than expected at Rs.927/’000cm vs. Rs.870/’000cm for 2QFY10.

Lupin - performance in line with estimates; Buy:: Edelweiss

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􀂃 Q2FY11 results in line with estimates
Lupin’s (LPC) Q2FY11 results were in line, with net sales of INR 14.3 bn and PBT
of INR 2.5 bn against our estimate of INR 14.2 bn and INR 2.6 bn, respectively.
EBITDA margin, at 20.5%, improved 400bps Y-o-Y (from adjusted EBITDA
margins of 16.6%, excluding INR 250 mn of income from Starlix in Q2FY10); it
was, however, below our estimate of 21.2%, largely due to higher fixed costs,
partly offset by better gross margins. EBITDA at INR 2.95 bn, grew 38% Y-o-Y,
versus our estimate of INR 3 bn. PAT at INR 2.2 bn was marginally higher than
our estimates due to lower tax rate (11% versus estimated 18%).

Havells India- Sylvania outperforms:: Kotak Sec

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Havells India (HAVL)
Others
Sylvania outperforms. Havells’ 2QFY11 consolidated EBITDA at Rs1.16 bn (up 41.6% yoy
and 0.2% qoq) was in line with our estimates at Rs1.17 bn. The less than estimated performance
of the domestic business was mitigated by Sylvania outperforming our estimates. We adjust our
estimates to factor in 1H2011 results and change the underlying assumptions of our DCF model.
Upgrade to REDUCE with a target price of Rs390 (previously Rs240).

Jyoti Structures – 2QFY2011 Result Update Angel Broking

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Jyoti Structures – 2QFY2011 Result Update

Angel Broking maintains a Buy on Jyoti Structures with a Target Price of Rs215.

Results in line, order accretion soars: Jyoti Structures (JSL) reported broadly in-line

results for 2QFY2011, with revenue and net profit registering 14.7% and 19.0%

yoy, respectively. The transmission, substation and rural electrification segments

contributed 66%, 8% and 26% to 2QFY2011 revenues, respectively. Order intake

increased 72% yoy to `700cr. We maintain a Buy on the stock.

Lupin- In-line quarter; growth outlook intact: Kotak Sec

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Lupin (LPC)
Pharmaceuticals
In-line quarter; growth outlook intact. Sales at Rs14 bn and PAT at Rs2.1 bn were
3% lower than our estimate. The growth outlook is intact in FY2012E with (1) abovemarket
growth maintained in India as reported in 1HFY11 at 19% and (2) increase in
the pace of approvals in US and increasing visibility of generic launches in US and
(3) OCs launch in Sep ’2011E. We maintain our FY2011-12E earnings estimates and
expect EPS of Rs19.7 in FY2011E increasing to Rs24.3 in FY2012E, ahead of consensus.
We believe visibility on US launches will lead to an upgrade in consensus estimates.
Maintain ADD with our target price revised to Rs490 (20XFY2012E earnings).

Nalco - high power costs impact PAT; Reduce:: Edelweiss

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􀂃 Q2FY11 PAT below expectations
National Aluminium Company (NALCO) reported Q2FY11 net revenues of INR
14.7 bn against our estimate of INR 13.8 bn. This was largely due to higherthan-
estimated revenues in the electricity segment. Aluminium production, at
109 kt, was largely in line with estimates. PAT came at INR 2.2 bn (our
estimate: INR 2.9 bn, consensus: INR 3.0 bn). Tax rate came higher at 34%
against our estimated 28%.

RBI moves: A step in the right direction:: Macquarie

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India Banks
RBI moves: A step in the right
direction
Event
 RBI raised the key benchmark rates by 25bps. The central bank also tweaked
provisioning and risk-weight norms for housing loans.

RIL: Marginally better than 1QFY11: Kotak Sec

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Reliance Industries (RIL)
Energy
Beats us. RIL’s 2QFY11 reported net income at `49.2 bn beat our expected `43.7 bn
with the positive variance arising largely from an unexpectedly strong performance of
the chemical segment. We note that global polymer margins and prices were significantly
lower qoq. We have fine-tuned FY2012-14E earnings to reflect (1) higher chemical
margins, (2) a stronger rupee and (3) lower oil production. We retain REDUCE rating on
the stock with a revised 12-month SOTP-based target price of `1,050 (`1,015 previously).

India IT: 2QFY11 review – more of the same - Kotak Sec

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Technology
India
2QFY11 review – more of the same. Even as 2QFY11 earning reports delivered an
unequivocal verdict on the strength of the demand environment, forcing US$ revenue
upgrades, revised Re/USD assumptions kept EPS upgrades in check. We stick to our
‘play growth, be wary of margins’ thesis, maintaining our bias towards Tier-I names,
TCS and Infosys in particular. Among the mid-caps, we upgraded Hexaware to a BUY
on robust revenue outlook, low margin risks and inexpensive valuation.

Hathway Cable- Top Pick by UBS

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Hathway (Buy; price target Rs275)
Company background
Hathway Cable & Datacom (Hathway) is one of the largest cable TV
distributors or multi-system operators (MSO) in India. The company estimates it
currently reaches 8.2m homes. Hathway provided cable TV (on digital and
analog platforms) to around 1.7m subscriber homes and cable broadband to
356,000 subscribers as at end-1HFY11.

Dish TV’s net subscriber base to grow at 22% CAGR: UBS

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Dish TV (Buy; price target Rs70)
Company background
Dish TV is part of the Zee Group, a media conglomerate, and is the first and
largest direct-to-home (DTH) operator in India with a strong brand presence and
a wide distribution network. The company had a gross subscriber base of 8.3m
and an estimated 32-33% subscriber market share in 2QFY11.

UTV Software report by UBS

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UTV Software (Not rated)
Company background
UTV is an integrated media and entertainment company with a presence in: 1)
television; 2) movies; and 3) games and interactive, including online, console
and mobile, game development and publishing and distribution. It is one of the
largest movie production houses in India with 10 movie releases planned for
2010-11.

India Media Sector Key takeaways: UBS India CEO/CFO Forum

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UBS Investment Research
India Media Sector
Key takeaways: UBS India CEO/CFO Forum


􀂄 Hathway, Dish TV and UTV participated in UBS India CEO/CFO Forum
We hosted Hathway Cable & Datacom (Hathway), Dish TV and UTV Software
(UTV) at the UBS India CEO/CFO Forum on 1-3 November 2010. Hathway was
represented by its CEO, Mr. K. Jayaraman. Dish TV was represented by its MD,
Mr. Jawahar Goel and its CFO, Mr. Rajeev Dalmia. UTV was represented by Mr.
Rajeev Wagle, Group CFO, and Mr. Amit Banka, Senior VP, Head of Business
Development and Strategy.

Indian Metals & Ferro Alloys- Highlights of 2Q FY11 conference call: Daiwa

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Indian Metals & Ferro Alloys (IMFA IN) Rating:Not rated
Highlights of 2Q FY11 conference call



What has changed?
• We attended Indian Metals & Ferro Alloys’s (IMFA) conference call. The
company has received stage-1 forest clearance for its captive thermal coal mine
and says it is on track to commission its 120MW power plant by 1Q12.

Ashok Leyland -Oct'10 unit sales moderate: JPMorgan

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Ashok Leyland Underweight
ASOK.BO, AL IN
Oct'10 unit sales moderate on emission roll over


• Ashok Leyland unit sales at 5,732 units (+7% yoy but -45% mom)
moderated sharply, given that the emission norms have rolled over to
BSIII from October onwards. Domestic segment sales declined -6%
yoy while exports at 1,104 units were up +177% yoy off a low base.

China steps up base metal concentrate imports in September: Macquarie

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Commodities Comment
China steps up base metal
concentrate imports in September
Feature article
 September’s production and trade figures for China show that, as it has with
other raw materials, China dramatically moved to increase imports of base
metal concentrates in the month. In our view, this reflects both opportunistic
buying and growing confidence in further demand growth into 2011.
Latest news
 Base metals rose across the board on Tuesday on further dollar weakness, as
the market settled into the short lull between Monday’s PMI numbers and
tomorrow’s Fed announcement. Aluminium outperformed, up 2.6% on the
day, while silver gave back some of its recent gains, down 0.7%. Meanwhile,
LME lead stocks rose 1.4% on the day to move back above 200,000t for the
first time in over ten years.

Infosys-Profitable divisions support business-growth momentum : Daiwa

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Infosys Technologies (INFO IN) Rating:1
Profitable divisions should support business-growth momentum



What has changed?
• Revenue from Infosys’s package-implementation and consulting division accounted
for 25.8% of the 2Q FY11 overall revenue (up 14.1% QoQ). This division might look
for a niche acquisition to improve its market presence over the medium term.
Impact
• As Infosys Technologies (Infosys) has been experiencing strong traction in this
division from its global clients, it plans to expand this division by increasing its
overall workforce by 30-35% from its existing 16,000 (for 2Q FY11) over the
next couple of quarters.

Bharti Airtel-: what exactly did Bharti buy in Africa? Daiwa

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Bharti Airtel (BHARTI IN) Rating:4
Goodwill hunting: what exactly did Bharti buy in Africa?



What has changed?
 We have examined the previous financial quarterly statements for Bharti Airtel
(Bharti) and Zain (Not rated) for insights into their recently-concluded transaction.

Aurobindo Pharma- There Is More Value Here :: Citi

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Aurobindo Pharma (ARBN.BO)
There Is More Value Here; Raise TP to Rs1,630/sh
 Good 2Q; stronger 2H ahead — Good traction in all markets & easing of capacity
constraints led to a solid 2Q (in line/ahead of our/Street estimates). We see
momentum picking up in 2H (forecast adj. PAT growth of c60% YoY), as
utilization at the recently commissioned SEZ picks up. We lower FY11E EPS by 8%
(mainly higher tax rate) & raise TP to Rs1,630 (roll over to Mar’12E). Remains a
Top Pick.

Madhucon Projects: 2QFY2011 Result Update: Angel Broking

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Madhucon Projects (MPL) reported top-line growth ahead of our estimates, led
primarily by pick up in execution in the power segment. However, earnings were
below our expectations mainly on account of higher interest cost and tax
provision. MPL’s order book at 2.6x FY2011E revenues, gives good revenue
visibility. Owing to the broadly in-line performance, we maintain our numbers
and Buy recommendation on the stock with a SOTP Target Price of `173.

Gail - Strong 1H growth on low base:: BofA ML

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Gail India Ltd.
Strong 1H growth on low base;
2H growth lower on high base

􀂄 2Q profit up 29% YoY and 1H up 32% YoY on low base
Gail’s 2Q FY11E profit is up 29% YoY driven by a rise in LPG and gas
transmission EBITDA. Its 1H profit is 32% YoY higher. The strong rise in 1H and
2Q FY11E profit is on the low base of 1H FY10 profit. 1H FY10 profit was 23%
lower than 2H. We have raised Gail’s PO by 7% to Rs430/share from Rs402. The
new PO implies 12% potential downside. We therefore retain our Underperform
rating on GAIL.

A Tad More Perky- HSBC India services PMI inched up in October

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A Tad More Perky
HSBC India services PMI inched up in October
Following a deceleration in the pace of expansion recently, Indian service sector activity perked up in October. This
helped raise employment in the sector, but was accompanied by a slower expansion in new business and some easing
of price pressures. However, with the economy close to potential and the outlook for domestic demand still favorable,
underlying price pressures remain. In turn, this calls for further monetary tightening to clamp down on the sticky-high
inflation. Look for RBI to resume tightening in early-2011 following yesterday's 25bps hike and simultaneous signaling
of a pause.

INFY: Positives Headed into Calendar 2011: Janney

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Notes from Analyst Day
Positives Headed into Calendar 2011

INVESTMENT CONCLUSION:
We attended Infosys analyst day held in New York City. The chief concern on
investors minds is what does the demand environment looks like for calendar 2011.
Although it is too early to tell, there are some early positive data points: the demand
environment is improving, slightly larger deal sizes are coming back, 2011 IT budgets
are expected to increase annually, budgets are expected to be set according to the
normal calendar patterns, Infosys is comfortable hiring ahead of demand (increased
confidence), and there is the potential for price increases. Investor's will get a better
idea of future growth potential expectations in the up coming months, but these signs
are encouraging. We maintain our BUY rating.

RBI hikes rates, tightens lending norms:: Goldman Sachs

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The Reserve Bank of India hikes rates, tightens
lending norms


The Reserve Bank of India (RBI) hiked the repo rate by 25 bp and reverse repo rate by 25
bp, in line with the consensus and our expectations. After today’s decision, the reverse repo
rate moves up to 5.25% and the repo rate to 6.25%. The cash reserve ratio (CRR) remains at
6.00%. The effective short-term policy rate has risen by 300 bp in 2010 thus far, in line with our
expectations, with 150 bp in repo rate increases, and another 150 bp by moving from the reverse
repo to the repo rate. The rate hike, in our view, will slowly start transmitting into overall bank
rates.

GAIL-: Robust 2Q, Expect a Stronger 2H; Buy -- Citi

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GAIL (GAIL.BO)
Buy: Robust 2Q, Expect a Stronger 2H; Revise TP to Rs550
 In-line quarter — 2Q PAT of Rs9.24bn was in line with estimates, driven by an
increase in gas transmission EBITDA despite lower vols, which more than offset
the impact of weaker petchem and a higher subsidy than originally envisaged.

Essel Propack – 2QFY2011 Result Update Angel Broking

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  Essel Propack – 2QFY2011 Result Update

Angel Broking maintains a Buy on Essel Propack with a Target Price of Rs75.

For 2QFY2011, Essel Propack’s (EPP) results were marginally ahead of our

expectations, primarily due to higher sales. EPP continued to be profitable on the

back of its stringent cost-cutting initiatives, increasing contribution from

high-margin products and a better production mix at its various geographies.

We maintain Buy on the stock.

CESC - strong performance; Buy:Edelweiss

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􀂃 Q2FY11 PAT ahead of estimates
CESC reported PAT of INR 1.55 bn in Q2FY11 vis-à-vis INR 1.26 bn in Q2FY10
(our estimate INR 1.18 bn), higher on account of tariff hike of Q1FY11 taken in
the current quarter. The company recognises revenues based on actual instead
of the regulated tariff which is based on estimates. Hence, depending on the
extent of approved capex and opex by the regulator in the tariff, earnings are
lumpy during different periods. The tariff approval received in late July 2010
enabled CESC to increase tariff (including arrears) by an average of INR
0.17/unit with retrospective effect from April 01, 2010. We estimate earnings to
the extent of ~INR 200 mn, pertaining to Q1FY11, was booked in Q2FY11.

Shoppers Stop - robust performance; Buy:Edelweiss

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􀂃 Buoyant sales growth in departmental store format
Shoppers Stop’s (SSL) consolidated revenues increased 56.8% Y-o-Y, to INR 6.3
bn. Rise in consumer confidence, coupled with higher volumes, conversion ratio
and transaction size boosted Shopper’s Stop (standalone) like-to-like (LTL) sales
to 13%. Consolidated PAT increased 11% Y-o-Y to INR 96 mn.

Nalco's 2QFY11 PAT increased 41% YoY::Motilal Oswal

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 Nalco's 2QFY11 PAT increased 41% YoY to Rs2.2b, below our estimates of Rs3.3b due to lower than expected
alumina realizations and higher-than-expected power and fuel costs due to seasonal reasons.
 Net sales increased 25% YoY to Rs14.8b. Production of calcined alumina remained flat YoY at 379,500 tons and
that of aluminum increased 7% YoY to 110,333 tons. Production of hydrate suffered due to a shutdown for four days
to hook-up a new stream of expansion.
 Sales of aluminum increased 3% YoY to 108,515 tons. Though only 170,000 tons were available for sale after
captive consumption, alumina sales increased 38% YoY to 226,032 tons augmented by de-stocking.
 The implied average realization for third party alumina sales at US$316/ton was a tad lower than estimates.
 EBITDA increased 24% YoY to Rs3.5b, below our estimate of Rs4.9b, as the cost of production of aluminum
smelting rose due to the higher cost of coal for captive power generation. Cost of coal increased, because Nalco had
to buy more washed/imported coal as linkage coal supply from Coal India was reduced during the quarter.
Growth projects visibility low; FY11 EPS cut 6%; Maintain Sell

Telecom Regulatory Conundrum -COAI, TRAI and DOT::Motilal Oswal

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Telecom Regulatory Conundrum
Key takeaways from interactions with COAI, TRAI and DOT
We hosted a conference call with COAI and met TRAI, DoT, and wireless operators to
assess the current regulatory scenario and get an update on major issues like (1) 2G spectrum
pricing/allocation, (2) proposed spectrum re-farming, (3) mobile number portability (MNP)
implementation, (4) M&A policy, and (5) other issues related to equipment import, radiation
levels, subscriber verification, "Do Not Call" registry, etc. Divergence of views between
incumbent operators and regulator/government remains substantial on key issues of 2G
spectrum pricing and re-farming. We expect TRAI to issue revised recommendations on 2G
spectrum within the current calendar, post which DoT is likely to take a view on these.
However, wireless operators believe that the 2G spectrum pricing/allocation issue is being
directly dealt by the Prime Minister's Office (PMO) and TRAI/DoT views would have a limited
impact on final policy.

Andhra Bank:Asset quality a disappointment:Motilal Oswal

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Asset quality a disappointment
GNPAs in absolute terms increased by 33% QoQ to Rs7.7b and in percentage terms
GNPA and NNPA increased to 1.28% and 0.49% v/s 1% and 0.3% in 1QFY11, respectively.
Slippages in 2QFY11 were ~Rs2.5b and Rs4b in 1HFY11. The management is guiding for
lower slippages in 2HFY11 and expects recoveries to be strong. We model in slippages of
1.75% for FY11 and credit cost of 60bp (stable YoY).
Despite higher provisions of Rs957m v/s Rs170m in 1QFY11 and Rs428m in 2QFY10,
PCR (excluding technical write-offs) declined to 62% v/s 71% in 1QFY11. However
PCR including technical write-off is healthy at 79%. Outstanding restructured loans were
Rs24.8b (4% of the loan book, in line with the industry average), of which ~9.5% (Rs2.2b)
has slipped into NPA.

SpiceJet Ltd Riding the demand wave; Buy :: BofA ML

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SpiceJet Ltd
Riding the demand wave; Buy
􀂄 Raise PO on strong momentum
Post strong 2QFY11 results, we raise our EBITDAR estimates by 3%/12% for
FY11E/12E on (a) raising traffic assumptions for FY11/12 by 2% to 8%, (b) raising
yields assumption for FY11/12 by 2% to 4% and (c) load factor assumptions for
FY11/12 raised by 1%. To factor this strong growth, we raise our PO to Rs107
(from Rs91) on a similar target multiple of 8X FY12E EV/EBITDAR.

Navabharat Ventures - sedate quarter; Buy:: Edelweiss

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􀂄 Lower merchant rates and high ferro alloy fixed costs impact earnings
Navbharat Ventures’ (NVL) Q2FY11 PAT, at INR 847 mn, dipped 29.5%, as
expected, due to lower merchant realisations at INR 4.5/INR (INR 6/kWh in
Q2FY10). Due to lack of transmission capacity, the company continued to operate
its captive power units in Orissa at optimal levels which led to higher operating
costs than silico manganese realizations. Losses would have been greater if the
plant had been shut down completely. With the power transmission facility now
operational, management is confident of profits in H2 in the ferro alloy business.

PVR - improving prospects; Buy:: Edelweiss

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􀂃 Exhibition business PAT, at INR 80 mn, surpasses estimate
PVR’s Q2FY11 exhibition business revenue and PAT stood at INR 1,062 mn and
INR 80 mn (against our estimate of INR 970 mn and INR 63 mn), respectively.
Q-o-Q, exhibition business revenues rose 12% and PAT jumped 76.3%. Film
distributor’s share as a percentage of revenues increased 160bps Y-o-Y on
account of higher e-tax payment as certain cinemas moved out of exemption.
Employee costs were higher at 28.5% Y-o-Y on account of new properties. Other
expenses as a percentage of revenues jumped 90bps Y-o-Y. EBITDA and PAT
margins for the quarter stood at 20.8% and 7.5%, respectively.

Transport Corporation of India - good times ahead; Buy:: Edelweiss

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􀂄 Top-line as estimated; XPS, SCS drive growth
Transport Corporation of India (TCI) reported top-line of INR 4,421 mn in Q2FY11
against INR 3,571 mn in Q2FY10 and INR 3,937 mn in Q1FY11, up 24% Y-o-Y and
12% Q-o-Q. Growth was primarily driven by increased revenue contribution of the
supply chain supply (SCS) segment, from INR 578 mn in Q2FY10 to INR 985 mn
in Q2FY11; contribution from express distribution specialists (XPS) rose from INR
942 mn in Q2FY10 to INR 11,738 mn in Q2FY11. PAT has increased more than
estimated, at INR 149 mn against INR 124 mn in Q2FY10, a growth of 20% Y-o-Y.

Elecon Engineering – 2QFY2011 Result Update Angel Broking

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Elecon Engineering – 2QFY2011 Result Update

Angel Broking recommends a Neutral on Elecon Engineering.

Elecon Engineering (EEC) posted top-line growth of 9.3% to `281cr for

2QFY2011. OPM came in at 14.2%. Lower interest cost and tax rate led to strong

32% yoy growth in bottom-line to `14cr. We have revised downwards our

earnings estimate to factor in the recent acquisition as we do not expect it to be

EPS accretive. Hence, we recommend Neutral view on the stock.

Strong order book offers revenue visibility: EEC's order backlog has been

declining post hitting the peak of `1,812cr in 3QFY2009. At the end of

2QFY2011, the order backlog stood at `1,501cr, a decline from `1,582cr at the

end of 1QFY2011. However, for 1HFY2011 order inflow stood at `8.3bn as

against `7.5bn in 1HFY2010, indicating revival in the capex cycle. We believe

that EEC's current order book of `1,501cr or 1.4x FY2010 revenues, offers good

revenue visibility.

Great Eastern Shipping – 2QFY2011 Result Update Angel Broking

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 The Great Eastern Shipping Co. – 2QFY2011 Result Update

Angel Broking maintains a Buy on The Great Eastern Shipping Co. with a Target Price of Rs396.

GE Shipping’s (Gesco) 2QFY2011 results were in line with our estimates,

reflecting tepid shipping markets but thriving offshore markets. Management has

reported a higher current NAV at `382/share in 2QFY2011 v/s `368/share in

1QFY2011, led by increased asset prices. Management guided that the global

slippages stand at around 25% and 40% for tankers and dry bulk segments,

respectively, with virtually no cancellations creating an over-supply in the near

term. Gesco intends to list its offshore subsidiary Greatship Ltd. (GIL) in the near

future, which will unlock value of its offshore business. We maintain our Buy

rating on the stock.

Jubilant FoodWorks Surprise Package, ACCUMULATE :Emkay

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Jubilant FoodWorks

Surprise Package, Maintain ACCUMULATE

ACCUMULATE

CMP: Rs 552                                       Target Price: Rs 600

---

n     Jubilant FoodWorks (JFL) stellar performance continues – revenue growth of 67.1% yoy to Rs1633 mn and  adjusted net profit growth  doubled to Rs184 mn

n     3rd consecutive quarter of positive surprise - same store sales growth at 43% yoy – demand buoyancy and acceptance of new SKU (Pasta, Wraps & Deserts) are key contributors

n     Revised our assumptions on same store sales growth from 16% to 25% in FY11E

n     Upgrade earnings by 12% (Rs11.3/Share) and 27% (Rs15.4/Share) for FY11E and FY12E -Maintain ‘ACCUMULATE’ rating and revised price target to Rs600/Share

IT Services: Cognizant results inline with peers:: Religare

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IT Services
Cognizant results inline with peers; Maintain neutral view
on Indian IT services


Good 3QCY10 ahead of guidance: Cognizant (CTSH) reported Q3CY10 results
with revenues growing 10% QoQ to US$1.22bn, above their guidance of
US$1.18bn. Margins were flat QoQ at 20% and net profit grew 17.3% QoQ, to
US$216mn. Pricing was flat offshore but up 1% QoQ onsite. Growth was broad
based across the verticals and with strong growth in new application development
(up 14% QoQ) indicating improved discretionary spending. From an Indian IT
perspective, the growth was broadly inline with the other Indian IT peers.

Q2FY11 Results Tracker -Mixed bag so far; No real disappointments:: Religare

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Q2FY11 Results Tracker 2
Mixed bag so far; No real disappointments
We take a quick second look at results in the 2nd quarter earnings season. Twothirds
of the way through—316/500 companies have reported till the 30th—it
has been a mixed bag, with no real sector-level disappointments, except
Cement, to some extent. While top-lines hold steady, margins are peaking,
thanks to firming up of commodity prices over last quarter. IT, Financials, and
consumer discretionary cos. have posted strong numbers while it has been a
weaker-than-expected quarter for cement companies.

Gujurat Gas: Higher RLNG supply to depress margins: Avendus

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GGAS’ net profit increased 26% y‐o‐y, but declined 2.4% q‐o‐q in
3Q2010. Volume increased 12% y‐o‐y and 6% q‐o‐q on higher supply of
Regasified LNG. Revenues increased c31% on the rise in the proportion
of costlier RLNG. Reduction in interest cost aided the increase in PAT.
EBITDA margins declined from 18.2% in 3Q2009 to 17.8% in 3Q2010.
Net margins declined by 50‐bp to 11.1%. Volumes are likely to grow on
account of the new contract of 0.5mmscmd short‐term RLNG supply.
However, the average gas cost increase is likely to lead to margin
compression. We have raised our revenue estimates by c10% for 2010f
and by 9.3% each for 2011f and 2012f, while the EPS estimates have
been lowered by c15% for 2010f and 2011f and by c17% for 2012f. We,
thus, lower our Sep11 target price from INR491 to INR448, but
maintain our Add rating on the stock.

GSPL: Marginally below expectations…:: ICICI Sec

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Marginally below expectations…
GSPL declared its results for Q2FY11, marginally below our estimates
on account of higher administrative and operating expenditure during
the quarter. The company reported revenues of Rs 254.5 crore (flat
YoY), EBITDA of Rs 233.7 crore (down 4.4% YoY) and PAT of Rs 91.5
crore (down 16.9% YoY). Gas transmission tariffs stood at 0.77 per scm
in Q2FY11 in line with our estimates. The gas transmission volume
increased 13.5% YoY from 31.1 mmscmd in Q2FY10 to 35.3 mmscmd in
Q2FY11. We believe supply to Essar, GNFC and Pipavav power plant
would increase its gas transmission volumes in the coming quarters.
We estimate GSPL’s volumes at 37.3 mmscmd and 42.7 mmscmd in
FY11E and FY12E, respectively. The company expects final approval for
authorisation of its pipelines in December 2010 from PNGRB when its
transmission tariffs would be finalised. We estimate gas transmission
tariffs of Rs 0.725 per scm for GSPL from FY12 onwards. GSPL (52%
share) and OMCs (IOC, BPCL, HPCL) JV has recently won bids for
Mallavaram-Bhilwara, Mehsana-Bhatinda pipelines, which would
provide upside to the stock, going forward. Currently, we have not
modelled in these pipelines in our estimates. We recommend a BUY
rating on the stock with a target price of Rs 123.

M&M: Strong show in core business:: IIFL

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Strong show in core business
Mahindra & Mahindra’s 2QFY11 adjusted profits at Rs7.3bn were 12% higher than our estimate. This
was driven by better-than-expected margins, which improved 80bps QoQ on lower raw-material costs,
which declined 150bps QoQ. With supply constraints resolved, volumes should scale up in 2H.
Management reiterated its guidance for a 14% growth in both UVs and tractors in FY11. Consolidated
profit at Rs7bn was lower than standalone profit at Rs8.4bn, primarily on exceptional gains in 2QFY10,
but also on account of losses in new automotive ventures. We reckon these losses could increase
going forward on account of motorcycle and CV launches. We upgrade our estimates by 6-7% and
revise our target price to Rs850.

Packaged growth Ess Dee Aluminium:: IIFL

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Packaged growth
Ess Dee Aluminium is India’s leading provider of aluminium packaging solutions. It sells 85% of
its volumes to pharma companies, and the rest to foods and FMCG players. The aluminium
packaging industry is set for sustained growth, driven by strong volume growth in user
industries. Ess Dee’s volumes have grown eight-fold over FY06-10, and its business model is
such that its margins are relatively unaffected by fluctuations in aluminium prices. We forecast
earnings CAGR of 33% over FY10-13ii, driven primarily by volume growth. We initiate coverage
with a BUY and a target price of Rs668 (11x FY12ii EPS).

HCC: 2Q disappoints; high debt levels a worry:: IIFL

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2Q disappoints; high debt levels a worry
• HCC’s 2QFY11 revenue growth remained sluggish at 13.6% YoY.
Margins surprised positively, expanding 180bps YoY. Consequently,
EBITDA growth was strong at 31.3% YoY.
• Management guided towards a pick-up in revenue growth, as
execution for large new projects ramp up. Financial closure of the
captive road BOT projects in West Bengal should result in
execution ramp-up in 2H.