09 January 2011

SPY, C. Mahendra Export, Midvalley entertainment: Gray Market Premium: Jan 9th, 2011

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Company Name
Offer Price
Premium
(Rs.)
(Rs.)
Shekhawati Poly Yarn
30 (Fixed)
0.5 to 1
C. Mahendra Export
95 to 110
3 to 4
Midvalley entertainment
64 to 70
6 to 7

Q3FY11 Result Preview - twilight saga: Earnings expected to moderate: Edelweiss

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Q3FY11 Result Preview - twilight saga: Earnings expected to moderate in Q3FY11


n  Growth trajectory moderates
Y-o-Y, Q3FY11E earnings growth for the Sensex is expected to come in at 18.5%, which is below the 24.2% Y-o-Y growth rate clocked in Q2FY11. For companies in our coverage universe (ex OMCs), earnings are expected to grow by 20.2% Y-o-Y. Metals & mining and consumer facing sectors such as media, retail and hotels & hospitality are expected to post robust earnings growth. Earnings are most likely to be under pressure in cement (e -28.8%) and telecom (e -32.1%). A large tailwind to the earnings growth comes from oil & gas sector, wherein earnings growth for the sector (ex OMCs) is expected to be strong.

Pharmaceuticals: Fast ramp up in the US market: ShareKhan

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Pharmaceuticals
Sector Update
Fast ramp up in the US market


Key points
We maintain our positive stance on pharmaceutical
(pharma) companies under our coverage that have
exposure to US generics markets. We estimate a strong
22% compounded annual growth rate (CAGR) for the
US generic business over the next two years which
would be driven by:

TELECOM Seasonally strong quarter: Q3FY11 Result Preview: Edelweiss

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TELECOM
Seasonally strong quarter: Q3FY11 Result Preview: Edelweiss


􀂄 Key highlights of the sector during the quarter
Since Q3 is a seasonally strong quarter subscriber additions have accelerated and
we expect usage also to be higher. While the industry added about 52 mn
subscribers in the quarter ending September 2010, we expect 63 mn additions in
the quarter ending December 2010, a 21% growth Q-o-Q. The monthly subscriber
additions for Bharti Airtel (BHARTI) have remained stable at about 3 mn, but
Vodafone and Idea seemed to have experienced some acceleration in November
2010.

RETAIL Sharp growth due to festive season: Q3FY11 Result Preview: Edelweiss

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RETAIL
Sharp growth due to festive season: Q3FY11 Result Preview: Edelweiss


􀂄 Key highlights of the sector over the past 12 months
Past 12 months’ same store sales (SSS) picked up and it has been in double digits
since past few quarters, following increase in discretionary spend. Employee and
rent costs started to inch up. Past 12 months have witnessed delayed rollout of
stores. Footfalls have increased, followed by higher conversion ratios.

REAL ESTATE Mixed quarter: Q3FY11 Result Preview: Edelweiss

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REAL ESTATE
Mixed quarter: Q3FY11 Result Preview: Edelweiss


􀂄 Key highlights of the sector during the quarter
Q3 is usually a strong quarter with execution pick up across India post monsoon
and festival seasons typically seeing strong demand for new homes. Although
execution is expected to improve Q-o-Q, a string of negative news flow largely on
account of the loan syndication bribery/2G telecom licence allocation cases
coupled with the Reserve Bank of India’s (RBI) policy intervention has dampened
sentiment. Our channel checks indicate that loan sanctions for developers may be
delayed with interest rates also likely to see an upward bias. Also, volumes may
see pressure on account of loan-to-value ratio for housing loans being capped at
80%. The festival season, which typically sees strong volumes across India, is
expected to post stable volumes on pan-India basis, but cities like Mumbai and
pockets of NCR are expected to post volume decline due to steep price rise over
the past 12 months.

POWER Present tense, but future perfect: Q3FY11 Result Preview: Edelweiss

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POWER
Present tense, but future perfect: Q3FY11 Result Preview: Edelweiss


􀂄 Key highlights of the sector during the quarter
• Capacity addition has been lack luster which will result in muted earnings
growth across players.
• EPC revenues / margins are expected to be better as project completion /
milestone payments will be concluded in Q3FY11 for Lanco and Reliance
Infra.

PIPES Gaining traction: Q3FY11 Result Preview: Edelweiss

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PIPES
Gaining traction: Q3FY11 Result Preview: Edelweiss



􀂄 Key highlights of the sector during the quarter
• The rupee appreciated with respect to the dollar during the quarter, with
INR/USD average being 44.9 (up 4.0% Q-o-Q). Thias may have a marginal
negative impact on the companies as most earnings are USD denominated.
• Welspun Corp (~277 KMT pipes and ~57 KMT plates) and Jindal Saw (~105
KMT LSAW) announced new order accretion during the quarter

PHARMA- Revenue growth to remain strong, but status quo in profitability: Q3FY11 Result Preview: Edelweiss

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PHARMACEUTICALS
Revenue growth to remain strong, but status quo in profitability: Q3FY11 Result Preview: Edelweiss


􀂄 Key highlights of the sector during the quarter
We expect growth momentum to continue across coverage stocks led by robust
growth in US generics from launch of key products during the quarter. We expect
moderation in growth for domestic formulations (vis-a-vis more than 20% growth
during H1FY11), while ROW markets (LATAM, Russia etc.) are likely to remain
strong. We expect growth to pick up in Europe. Margin outlook remains stable
from Q2FY11, while lower milestone/tech income will impact Y-o-Y performance.
The closure of key acquisitions or deals is likely to have one-time impact on
margins and revenue growth for some players (Piramal Healthcare and Sun
Pharma).

OIL & GAS Improving quarter: Q3FY11 Result Preview: Edelweiss

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OIL & GAS
Improving quarter: Q3FY11 Result Preview: Edelweiss


􀂄 Key highlights of the sector during the quarter
WTI crude prices averaged USD 84.3/bbl (up 11% Q-o-Q and Y-o-Y) in Q3FY11.
Indian simple GRMs improved to USD 2.6/bbl (USD 1.3/bbl in Q2FY11). GRMs for
complex refiners also improved to USD 11.3/bbl (USD 8.6/bbl in Q2FY11)
increasing the simple-complex spread to USD 8.7/bbl. Product cracks improved
significantly during the quarter with average quarterly under-recoveries at INR
3.6/ltr for diesel, INR 16.1/ltr for kerosene, and INR 229/cyl for LPG. In
petrochemicals, the trend was mixed. Ethylene cracker margins eased

METALS & MINING Fair quarter; improved outlook: Q3FY11 Result Preview: Edelweiss

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METALS AND MINING
Fair quarter; improved outlook: Q3FY11 Result Preview: Edelweiss


􀂄 Key highlights of the sector during the quarter
Ferrous: Q3FY11 saw a sequential increase in average flat and long product
prices of 1.4% and 3.6%, respectively (Source: Steel prices - India, CRISIL).
Companies have increased prices of long products by INR 1,000/t and flat by INR
500-700/t in December. Global HRC prices also remained firm during the quarter
and towards the end rose between USD 25/t and 125/t across regions. Moreover,
coking coal contract prices for Q3FY11 were down ~7% at USD 210/t. The above
factors combined together should result in increased profitability for most steel
companies. However, Tata Steel Europe would see lower EBITDA/t of only USD 29
due to the seasonally lower volumes and marginal decline in prices.

MEDIA Ad growth strong due to festive season: Q3FY11 Result Preview: Edelweiss

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MEDIA
Ad growth strong due to festive season: Q3FY11 Result Preview: Edelweiss


􀂄 Key highlights of the sector during the quarter
Momentum in media spends continues with recovery in the overall economy. This
quarter should get additional benefit of a delayed festive season compared with
last year. Hence, ad spends are higher in Q3FY11. TV medium, in particular, has
benefited from increased competition in the FMCG space (one of the largest ad
spenders). Other categories like home and electronic appliances, automobile, real
estate, textiles, jewellery and luxury products too are contributing to the increase
in ad spends. Star Plus has further consolidated its No. 1 position in the GEC
space, with Colors at a strong No. 2. The fight for No. 3 has become intense
between Zee TV and Sony. Healthy capital market activity should benefit business
news channels. Multiplexes have gained due to continuous flow of movies and
success of Golmaal 3. Increasing digitisation and DTH penetration continue to
boost subscription revenues for all broadcasters. Dish TV too will benefit from the
robust DTH subscriber addition. Newsprint prices have continued to inch up
marginally this quarter.

IT -Demand strong; margin headwind: Q3FY11 Result Preview: Edelweiss

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IT
Demand strong; margin headwind: Q3FY11 Result Preview: Edelweiss


􀂄 Key highlights of the sector during the quarter
Demand environment continued to remain strong during the quarter. Our recent
interaction with companies suggests that barring the impact of fewer working
days during the quarter, performance will be similar to that reported in Q2FY11.
The trend of stable pricing and high attrition seems to have remained unchanged.
While the employee pyramid is likely to be favourable, appreciation of INR vis-àvis
USD and GBP on an average for the quarter will act as a headwind for
margins.

HOSPITALITY Good times to continue: Q3FY11 Result Preview: Edelweiss

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HOSPITALITY
Good times to continue: Q3FY11 Result Preview: Edelweiss


􀂄 Key highlights of the sector during the quarter
Hotels across cities are witnessing better occupancies Y-o-Y due to strong revival in
business sentiments. As per DGCA, air traffic jumped 23.5% during April-November
2010 against the corresponding period in 2009, signaling strong revival in the
overall business environment. Occupancies are up 10-15% across major cities Y-o-
Y, with cities like Delhi, Kolkata, and Chennai witnessing more than 70% occupancy
in October 2010. In the current tourist season, hotels are looking forward to ORs of
75-80% after a long lull. ARRs are expected to show strong growth and are
expected to remain buoyant in Q4 as well. FTA growth in January-November 2010
was 10.4% (4.93 mn arrivals) against 14.8% during November 2010 Y-o-Y.

FMCG Volumes healthy; gross margins under pressure: Q3FY11 Result Preview: Edelweiss

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FMCG
Volumes healthy; gross margins under pressure: Q3FY11 Result Preview: Edelweiss


􀂄 Key highlights of the sector over the past 12 months
Last year saw launches of several new products and categories. With competition
heating up amongst regional players and MNCs, A&P spends in the FMCG sector
have also skyrocketed. Last year saw a surge in M&A activities, with GCPL, Marico
and Dabur leading the pack. Past 12 months also saw COGS deflation, when
almost all players benefitted. However, in the latter half input costs rose, led by
higher crude prices. Overall, most FMCG players have registered strong volume
growth in the past 12 months.

ENGINEERING & CAPITAL GOODS Strong revenue growth: Q3FY11 Result Preview: Edelweiss

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ENGINEERING & CAPITAL GOODS
Strong revenue growth: Q3FY11 Result Preview: Edelweiss


􀂄 Key highlights of the sector during the quarter
Tendering activity has been strong, particularly in power and railways space, while
it has been muted in oil & gas and roads. Also, there was a strong negative
sentiment owing to mega order awards for power equipments to foreign players.
However, certain bid norm changes in the T&D industry for PGCIL and NTPC
tenders is likely to be positive for domestic T&D entities like Crompton, Areva T&D
etc.

CEMENT Demand growth disappoints leading to price cuts: Q3FY11 Result Preview: Edelweiss

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CEMENT
Demand growth disappoints leading to price cuts: Q3FY11 Result Preview: Edelweiss


􀂄 Key highlights of the sector during the quarter
Cement prices remained weak for the major part of 3QFY11 (with the exception of
South, where prices held firm even in the absence of demand growth). During the
quarter, highest price correction was witnessed in the East region (drop of ~5%
QoQ) while higher prices in South, kept the West region insulated from significant
downfall. Prices remained weak as the industry demand failed to meet the
expectations of companies. Though October 2010 saw record growth in industry
despatches (up 18% YoY), November 2010 saw a 2% YoY decline. Industry
despatches for December 2010 are estimated to remain flat, leading us to an
industry growth of 5% YoY for 3QFY11 as well as YTD (Apr-Dec 2010). Nonavailability
of labour due to festive season and extended monsoon in parts of
country along with sand non-availability issues in some regions (mainly West)
kept the overall demand subdued in 3QFY11.

BANKING: Growth strong, margins to be under pressure: Q3FY11 Result Preview: Edelweiss

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BANKING AND FINANCIAL SERVICES
Growth strong, margins to be under pressure
: Q3FY11 Result Preview: Edelweiss


􀂄 Key highlights of the sector during the quarter
• Net reverse repo (at negative INR 600bn) for the quarter remained outside
the RBI’s comfort zone. In the mid quarter policy review, the RBI announced
liquidity enhancing measures- OMO of INR 480bn over the next month and
SLR cut from 25% to 24%. Consequently, banking system experienced
marginal relief from extreme conditions reflecting in net reverse repo coming
to negative INR 1.1tn by end of quarter, against a high of INR 1.7tn.

AUTOMOBILES Growth rate to moderate: Q3FY11 Result Preview: Edelweiss

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AUTOMOBILES Growth rate to moderate: Q3FY11 Result Preview: Edelweiss


􀂄 Key highlights of the sector during the quarter
Demand remained robust during the festival season with two wheeler and car
segments registering double digit sequential volume growth. The exception was
the commercial vehicle space, where volumes declined on account of pre-buying
in the previous quarter on account of a change in emission norms.

CONSTRUCTION Execution to pick up, but concerns on profitability persist: Q3FY11 Result Preview: Edelweiss

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CONSTRUCTION
Execution to pick up, but concerns on profitability persist: Q3FY11 Result Preview: Edelweiss


􀂄 Key highlights of the sector during the quarter
After a subdued monsoon quarter, revenue growth is likely to return in Q3FY11.
Order award activity in NHAI road BOT projects showed signs of pick up towards
the end of the quarter after a six months’ lull. We expect activity to pick up by
Q4FY11 end with a large number of projects entering the bidding process.
Orders from the industrial capex space are picking up. However, uncertainty
regarding Andhra irrigation projects continues; most companies have adopted a
‘wait-and-watch’ attitude towards these projects with some slowing/stopping
execution. Interest rates have also started inching up, albeit slowly.

Business Line: Greaves Cotton: Buy

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Greaves Cotton: Buy

Contracts from auto players and the steady improvement in infrastructure equipment division can be expected to drive volumes, post FY-11.


Piaggio is the company's major client.
Vidya Bala
Greaves Cotton recently won a 10-year contract from Tata Motors to supply small diesel engines for the latter's new half-tonne truck. As commercial vehicles enter a boom period, similar contracts from players such as Piaggio point to the business potential for Greaves Cotton, active in the three- and four-wheeler segment used in last mile connectivity.
These contracts and the resultant capacity-additions, together with steady improvement in the infrastructure equipment division, can be expected to significantly drive volumes after FY-11. Investors can consider phased exposures in the stock with a 1-2 year perspective. At the current market price of Rs 95, the stock trades at 13 times its expected per share earnings for FY-12 (financial year end set to change from June to March in the current fiscal), at a discount to larger engine makers.

CMC: Buy :: Business Line

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CMC: Buy

Pick up in the high-margin services component has resulted in top-line expansion too.

K.Venkatasubramanian
Spending on IT hardware and software by Indian companies and the government is picking up at a rapid pace. Globally too, technology spending is reviving, especially in the US, after a lull of two years. The few companies that operate in this space could benefit from the momentum.

India Industrials Q3 FY11 earnings preview : HSBC Research

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India Industrials
Q3 FY11 earnings preview 
E&C: Execution pickup should drive healthy earnings
growth; however, rising interest costs could play spoilsport
Capital Goods: We see strong execution, stable margins,
and robust earnings growth
Valuations, though, remain full for Capital Goods, while
underperformance by E&C stocks offers investment
opportunity; L&T, IRB, and NCC are our favourite plays

FMCG& Retail Dec quarter results preview , HSBC Research,

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Indian FMCG & Retail 
Dec quarter results preview 
FMCG: top-line growth strong, but cost pressure will
manifest (gross margin down 44 bps y-o-y)
Retail: strong same store sales growth, margins slightly up
(35 bps)
Valuations full for both FMCG and retail, results unlikely to
be stock moving in general

The Great Eastern Shipping Company: Buy:: Business Line

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The Great Eastern Shipping Company: Buy

Strong balance-sheet, a young fleet and an increasing presence in the high-potential offshore business should help the company tide over turbulence.

Anand Kalyanaraman
The continuing lacklustre run of the Baltic Indices (indicative of global shipping freight rates) over the past few months has resulted in many shipping stocks exhibiting weakness on the bourses. The Great Eastern Shipping Company (GESCO), India's largest private sector shipping company, too has not been immune to this.

India Oil & Gas Q3FY11 Preview - Mixed bag :: HSBC

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India Oil & Gas 
Q3FY11 Preview - Mixed bag 
We expect oil marketing companies to post losses in view of
the delay in the government’s subsidy payout, but expect
other companies to post up to c15% sequential growth in
earnings
We do not foresee Q3 FY11 results surprising positively in
any meaningful way as the Q3FY11 value of earnings drivers
are broadly known
We are OW on Cairn, Neutral on RIL, ONGC, OIL (V), GAIL,
IOCL and UW on HPCL & BPCL

Sensex target for End CY11e is 21,910 : Antique

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Outlook for 2011
Economic growth maintained, led by stable manufacturing sector and buoyant consumption:
India’s GDP growth is expected to sustain the growth momentum of the previous year. On similar lines, we anticipate a growth of 8.2% for FY12e (trailing five year average). We expect this strong growth will be supported by robust domestic demand led by the manufacturing sector, with services and agriculture providing an apt foil. Buoyancy in domestic consumption would still be the cornerstone of our economy.

UBS: Unitech - In the ‘value zone’

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UBS Investment Research
Unitech
In the ‘value zone’

􀂄 Correction overdone
Unitech’s 33% share price drop over the past two months was primarily due to
controversy arising from the 2G licence allotments to it in 2008 as well as negative
sentiments on the property market. We think the correction was overdone and there
is value in the stock at a 47% discount to a revised NAV estimate of Rs123.00
(excluding a sum-of-the-parts value of Rs12/share for the 32.75% telecom stake),
which seems to have eroded amid rising penalty risk on the telecom venture.

Deutsche Bank: Tata Steel forms auto grade steel JV with Nippon Steel

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Indian Steel Industry 
Tata Steel forms auto grade steel JV with Nippon Steel


Tata Steel announces JV with Nippon for auto grade steel
Tata Steel has announced formation of a JV with Nippon Steel for a 0.6mn tonne
cold rolling mill at Tata Steel's Jamshedpur plant at a capital cost of ~INR23bn.
This JV formalizes the long-term technology relationship between Nippon and Tata
Steel. While this will dilute future returns from value-added products for Tata Steel
shareholders, we believe that Nippon would not have extended its technology
agreement without an equity stake and hence the JV is part of the emerging new
norm in the Indian steel industry. Reiterate Buy.

Shree Renuka Sugars: Buy:: Business Line

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Shree Renuka Sugars: Buy

Recent flip-flops in sugar policy have battered the prices of sugar stocks, making this a good opportunity for investors to buy the stock of Shree Renuka Sugars, one of the most attractive long-term investments in the sector. At its current market price of Rs 90, the stock trades at a price earnings multiple of just 8.7 times its trailing 12-month earnings and 7 times its estimated earnings for 2010-11. That is at a steep discount to players such as Balrampur Chini and Bajaj

Week Ahead : Nifty has crucial support at 5850 level:: ICICI Securities

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Previous Week : Heavy selling pressure on the last trading day
 
 
Indian equities witnessed heavy selling pressure on the last trading day of the week and closed more than 3.5% for the week. It closed in red for all the five trading days for the week.
On a week-on-week basis, the Sensex was down by 818 points or 3.90%, to close at 19691 levels. The S&P CNX Nifty also closed in the red by 253 points or 3.7% to close at 5904 for the week. Banking, Auto, Capital goods, Cement stocks were the major losers, with index heavyweights like State Bank, L&T and Tata Motors witnessed heavy selling pressure.

UBS: Indiabulls Real Estate - Compelling risk-reward opportunity

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UBS Investment Research
Indiabulls Real Estate
Compelling risk-reward opportunity

􀂄 Significant correction—most concerns priced in
Indiabulls Real Estate (IBREL) has corrected 33% over the past three months due
to negative news such as: 1) the reversal/approval delays for higher FSI under the
public parking scheme in Mumbai due to a change in Maharashtra’s chief minister;
and 2) higher mortgage rates for loans over Rs7.5m dampening presales in south
Mumbai. With the stock trading at a 58% discount to our sum-of-parts derived
NAV of Rs315.00, we believe most of the concerns have been priced in.

UBS: DB Realty- Worst seems priced in

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UBS Investment Research
DB Realty
Worst seems priced in

􀂄 Share price has fallen 51% over the past three months
DB Realty’s share price correction was due to concerns over: 1) the controversy on
2G licence allotments in 2008/likely penalties to DB Group’s associate company,
Etisalat DB; 2) a potential involvement in the loan syndication scam; and 3) likely
delays/cancellation of projects due to a change in Maharashtra’s chief minister.
The company has denied any adverse impact on its core real estate business. Our
discussion with management suggests the correction was an overreaction.

UBS- India Real Estate -In the ‘value zone’

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UBS Investment Research
India Real Estate
In the ‘value zone’

􀂄 We think the worst has been priced in at a 50% discount to est. NAV
The property sector has underperformed the Sensex index by 31% over the past
three months due to negative news/events. We believe the market has overreacted
as core fundamentals remain intact. With the sector trading at: 1) around a 50%
discount to our base NAV (close to peak discounts of 60%); 2) a 15% discount to
our bear case NAVs; and 3) 1.7x FY11E P/BV, we believe the worst has been
priced in the share prices and that there is value in the Indian property sector.

IRB Infrastructure Developers: Traget Rs. 239; Spark

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Focused play on the large US$ 150bn opportunity expected to unfold in the roads sector over the next 4-5 years.
Integrated developer model enables the company benefit entirely from the development value chain by
leveraging upon construction capabilities. We believe the company is a potential beneficiary of one or more
upcoming mega road projects, which is likely to be a niche opportunity. Upgrade to Reduce/Outperform from
Sell/Underperform.
 Massive sector opportunity of US$ 150bn opportunity is expected to unfold in the roads & bridges sector (toll / annuity
roads and cash contracts) over the next 4-5 years and IRB with its integrated development model is well placed to
benefit.
 Profitable portfolio of toll roads which will likely provide a steady stream of cash flows – Over FY12-15E, we expect a
cumulative EBITDA and PBT of >Rs. 50bn and ~Rs.15bn respectively from the toll roads segment.

UBS- Asia Financials Alpha Preferences: LIC Housing least Preferred

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UBS Investment Research
Asia Financials
Alpha Preferences
�� Most preferred: Add Bangkok Bank, CQRCB; remove TISCO and CIMB

Most: Bangkok Bank, CQRCB and OCBC. We remove TISCO as most preferred
due to elevated short-term rates in Thailand. We remove CIMB due to its relative
outperformance. Bangkok Bank is a primary beneficiary of Thailand corporate releveraging
cycle. The stock is trading at an attractive 1.2x ‘10E P/B with 11.4%
ROE and 19%/9% ‘10/11E EPS growth. CQRCB is one of the most liquid (LDR at
62%), well provided (LLR/loans 4.4%; NPL ratio 2.6%) and best capitalized
(YE10e Tier 1 at 15%) Chinese banks, allowing it to achieve loan growth target at
+30% in next 2-3 years. It is trading at 1.8x ‘10 P/B with ‘11 ROE of 14% (and
rising). OCBC is a UBS Key Call. We view OCBC’s acquisition of ING Asia
Private Bank (IAPB) last year as a significant milestone in its strategy to build up
its wealth management business. The stock is currently trading at 1.8x ‘10EP/B,
with ‘11E ROE of 12.6%.

IL&FS Transportation Networks: Target Rs. 306:: Spark

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Diversified play on the large US$ 150bn opportunity expected to unfold in the roads sector over the next 4-5
years. Despite lacking construction capabilities, ITNL captures a lion’s share of the road development value
chain by generating project management fees, generating strong cash flows to the parent. Initiate with
Add/Underperform rating.

Indian Road Sector: High on Highways: Spark

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Sector brimming with opportunity; large players to emerge as winners
With an estimated US$ 1tn of investments earmarked for the 12th plan, the Govt. envisions infrastructure
development as the biggest thrust area necessary to enable India leap-frog into the next phase of development.
The road sector in particular is in focus and will account for ~15% of this expected infra spend translating to a US$
150bn opportunity. Hence we are positive on the road sector.
NHAI – the nodal agency on roads - is at the forefront driving investment in highways through programmes like
NHDP. Spurt in BOT opportunities, simplicity of bidding and execution & high traffic-growth expectations have
lured the private players to take part in the sector & they are expected to corner an ever-increasing share of the
future road projects as well. Of them, the larger players are to specifically benefit due to the recent changes in the
NHAI bid guidelines like the networth criteria, JV stipulation, restriction on number of projects in pipeline etc.
Finally, the planned mega highway projects will also present a niche opportunity to these larger players.
We prefer IRB over ITNL, albeit marginally, due to an in-house construction arm and more profitable
road stretches

Midvalley entertainment IPO Grey Market Premium; SPY, C. Mahendra Export: Jan 9th, 2011

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Company Name
Offer Price
Premium
(Rs.)
(Rs.)
Shekhawati Poly Yarn
30 (Fixed)
0.5 to 1
C. Mahendra Export
95 to 110
4 to 5
Midvalley entertainment
64 to 70
6 to 7

Tata Communications – Watch Neotel: 3Q FY11 preview: JP Morgan

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Tata Communications – Watch Neotel
We forecast 4% Q/Q revenue growth for Tata Communications to INR30,885m,
driven by healthy growth in both voice and data due to the festive season. We
forecast a 90bp sequential margin improvement to 11.0% as a result of operational
leverage. Our net loss estimate is INR1,972m and an EPS of -INR6.9.
We will be looking for an update on margin improvement at Neotel (South Africa
JV), which the company has stated will achieve breakeven for FY11 — unlikely in
our view.
Our Q3 capex estimate is INR4.9bn (~US$110m) and we continue to expect the
company to spend US$400m of capex this fiscal year.


Tata Communications
We have slightly increased our estimate for net interest expense which drives a
INR1.5/0.1 reduction in our FY11/FY12 EPS estimates.

Tata Communications
We have a December 2011 price target of Rs245 based on our SOTP valuation. The
core business (ILD, NLD voice, data and others) contributes Rs45 of the value, its
10.7% stake in Tata Teleservices adds 86 while the surplus land is valued at Rs114.

Risks to our UW rating and price target include: [1] faster-than-expected growth in
data, [2] a quick turnaround in Neotel, [3] visibility with regards to monetization of
surplus land, and [4] sale of stake in Tata Teleservices.

Reliance Communications (3Q11 preview) – Modest Revenue Growth Expected: JP Morgan

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Reliance Communications – Modest
Revenue Growth Expected
We expect 2.5% Q/Q growth in the wireless business for RCOM, a more modest
development relative to peers Bharti (+4.8% Q/Q) and Idea (+4.6% Q/Q). Our
caution stems from a lower minutes growth (RCOM: +3.5%, Bharti: +6.8%, Idea:
+8.7%) and a 0.6paisa ARPM decline after three consecutive quarters of stable
ARPMs. For RCOM’s Global and Broadband business segments, we forecast a
flattish development.

3Q11 preview: Idea Cellular – Watch Margin and Capex: JP Morgan

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Idea Cellular – Watch Margin and Capex
Idea Cellular posted strong net adds in Oct and Nov at 1.8m and 2.8m, respectively.
We believe it has taken some share and also benefited from the holiday season.
While we expect a better trend than in Q2, we also expect to see continued ARPM
pressure and forecast a 1.3% or 0.6paisa Q/Q decline to INR0.42. This drives our
standalone revenue estimate to INR38.6bn or a 4.6% Q/Q increase. Our consolidated
revenue estimate is INR38.3bn, +4.8% Q/Q.

Tulip Telecom:: FY3Q2011 (Dec qtr) preview by JP Morgan

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Tulip Telecom Expect Confirmation of
Better H2 Growth
We’re looking for 6.2% Q/Q growth in revenue in Q3FY11 (to Dec-10) to INR
6.2bn. This implies 24% Y/Y growth, an acceleration from the 19% seen in H1,
based on our expectations of a better seasonality in H2. We forecast 28.5% EBITDA
margin, a 60bp increase.

JP Morgan: Bharti Airtel Dec qtr preview (3Q FY2011)

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Bharti Airtel – Strong India Top Line But
Watch Consol Margins
For Bharti's India business, we expect strong minutes growth in Q3 (+6.9% Q/Q to
~204K), driven by strong net adds tracking at over 3m a month (up 35% from a run
rate of 2.2m in Q2) and a 1.2% increase in MOU. On ARPMs, however, we expect a
slightly bigger Q/Q decline in Q3 driven by holiday promotions – we forecast 1.5%
Q/Q or a 0.7paisa decline to INR0.44 vs. 1.0%/0.4 paisa in Q2. This drives our
estimate for wireless revenue growth of 4.8% Q/Q to INR92.3bn. For the India
business as a whole, we forecast 4.2% Q/Q growth in revenue slightly driven down
by our modest expectations for the Telemedia business.

Metals & Mining: 3QFY11E preview—a strong quarter for non-ferrous companies: Kotak Securities

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Metals & Mining
India
3QFY11E preview—a strong quarter likely for non-ferrous companies. We expect
a strong quarter for non-ferrous companies led by sharp sequential and yoy increase in
commodity prices. Domestic operations of steel companies may have a better quarter
on a sequential basis led by a marginal uptick in steel realization and deliveries, while
international operations may suffer from reduced profitability. Our outlook remains
bright and we continue to prefer integrated players. Hindalco, Sterlite and Tata Steel
are our top picks in the sector