Macquarie Research:: Buy Sterlite Industries- Growth to overshadow other concerns

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Sterlite Industries- Growth to overshadow other concerns
Event
 On track for growth: Sterlite reported strong 3Q results and has achieved
72% of our full year estimate in 9M FY11. We believe that continued strength
in commodity prices and growth in capacities will help deliver 40% growth in
earnings in FY12. Maintain Outperform and TP.

Macquarie Research:: Dr. Reddy's Laboratories- Thesis intact – Upgrade to Outperform

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Dr. Reddy's Laboratories- Thesis intact – back to Outperform

Event
 DRRD reported 3Q FY11 numbers with revenue at Rs19bn (up 10% YoY) and
PAT at Rs2.7bn (up 18% YoY). EBITDA margin at 21% was flat YoY due to
higher SG&A spend which was boosted by an one-time expense of US $9m.
This was the main reason for PAT being lower than our estimate of Rs3.1b.
 DRRD has corrected ~15% since 16 Dec 2010 (see our note, Dr. Reddy’s
Laboratories: Pause for breath – awaiting Fonda). Correction does provide an
entry opportunity given the strong growth ahead. Maintain our TP of Rs1775 &
upgrade to OP.

BofA Merrill Lynch:: Jindal Steel and Power -3Q: Power profits disappoint

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Jindal Steel and Power Limited -3Q: Power profits disappoint 

„3Q results miss as power profits disappoint, Underperform
Consol. PAT grew 6%QoQ to Rs9.5bn vs. Rs10.5bn est led by lower power profits
owing to fall in merchant tariffs. Standalone PAT was 8% below our est. led by
lower captive power profits. We cut our FY11e EPS by 5% to factor lower JPL
profits & delays in ramp up of captive power units. JSPL’s steel unit is better
placed due raw material integration but core power business (56% of PAT) is
facing headwinds from lower merchant prices. Valuations are full at 9x FY12e
EBITDA, 4.1x FY12eBV & premium to SOTP NPV Rs640. Underperform

Macquarie Research: Hindustan Unilever- No more cost levers

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Hindustan Unilever- No more cost levers

Event
 Hindustan Unilever reported disappointing 3Q FY11 results, with a 4% decline
in adjusted net profit, which missed our and the street estimates by ~10%. Net
sales grew 12% YoY to Rs51.3bn, aided by 13% volume growth on a lower
base.

Morgan Stanley :: Jindal Steel & Power -Lower Prices, Delay in Power; Remain OW

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Jindal Steel & Power  -Lower Prices, Delay in Power; Reduce PT but Remain OW  

What's Changed
Price Target  Rs816.00 to Rs799.00
 F11, F12, F13 EPS   Down 11%, 16% and 2%
Investment conclusion: We remain positive on JSPL’s
prospects given: (a) its strong backward integration will
likely fetch premium valuations over its peers even as
rising steel prices improve sentiment for the broader
steel sector; (b) earnings from pellet plant, new plate mill
and Shadeed DRI plant are yet to be properly factored
into the stock price; (c) slightly falling merchant power
rates and regulatory delays on some of JSPL’s projects
are already reflected in the stock, which has under-
performed the Sensex by ~15% since January 10; and
(d) JSPL’s project pipeline is amongst the best in class.  

Macquarie Research: IDBI -Very poor results

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IDBI -Very poor results
Event
 IDBI’s 3Q11 results were marked by asset-quality shock, stagnating loan
growth and fees. PAT of Rs4.5bn was boosted by a deferred tax writeback of
Rs2.8bn. Excluding that, PAT was down 39%YoY. We are cutting our TP from
Rs155 to Rs120 while retaining our Underperform rating on the stock.

Goldman Sachs: Hindustan Zinc- In line; delivers strong operating performance

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EARNINGS REVIEW
Hindustan Zinc (HZNC.BO) 
Not Rated 
In line with expectations; delivers strong operating performance 
What surprised us
Hindustan Zinc (HZNC) reported 3QFY11 net income of Rs12.9 bn (+12%
yoy, +36% qoq), largely in line with GS estimates and 18% above Reuters’
consensus. Revenue came in at Rs26.0 bn (+20% qoq, +17% yoy) led by
stronger realizations and volumes. It was another quarter of record
volumes, with mined metal production at 222,250 tons, +11% yoy, +9%
qoq. While refined zinc volumes were up 20% yoy, it was partially offset by
lead production, which was lower by 35% due to maintenance shutdowns.
Both zinc and lead realizations were strong, up 15%/13% qoq respectively.
At the operating level, zinc EBITDA margin came in at 57%, down 386 bp
yoy, as higher volumes and realizations were offset by higher coal and
stripping costs -zinc metal costs (ex. Royalty) were up 5% yoy.

Macquarie Research:: Ultratech Cements- South connections

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Ultratech Cements-South connections

Event
 3Q results – recovery as expected: Ultratech reported results that were
mostly in line with our estimates, driven by sharply higher cement prices in
South India. This recovery was driven by supplier discipline and we believe is
on shaky footing given weak fundamentals. We maintain our Underperform
recommendation and target price.

DBS: Economics Overview of Asia

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Southeast Asia, India
• SG: Industrial production for December due today is expected to register 20.3% YoY,
down from 39.8% in the previous month. While a modest pullback in pharmaceutical
output cannot be discounted, a softer production growth from the electronics segment
could be the key factor for the moderation. Apart from seasonal effect where producers
typically front-load their Christmas season output to October, global electronics inventory
restocking is also coming to an end. This is evident in the recent SEMI book-to-bill
ratio as well as the global semiconductor sales numbers, which both are moderating
from the peak in early 2010. Concomitantly, the PMI numbers are also showing some
signs of weakening in manufacturing growth. The broad manufacturing PMI index
though continues to show that the sector remains in expansion mode, the pace of
growth is moderating. Moreover, the PMI sub-indices show that new orders and production
are declining while inventory and stock levels are building up, suggesting that the
manufacturing sector could be in for a soft patch ahead. Couple that with the Chinese
New Year effect in the next two months, in which plants in China will typically go into
a lull period during the festive season, the headline production index will surely
experience significant volatility.

Morgan Stanley Research: Tata Power -Upside from Indonesian Coal Asset

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Tata Power Co  
Upside from Indonesian Coal Asset; Retain EW 
What's Changed
Price Target  Rs1,087.00 to Rs1,231.00
 F2011 EPS   From Rs33.68 to Rs37.81
 F2012 EPS   From Rs31.10 to Rs33.65
Investment conclusion: We maintain an Equal-weight
rating on Tata Power with a revised target price of
Rs1,231 largely due to higher upside from investments
in Indonesian coal assets. In our view, the company has
strong execution capabilities, and there is high visibility
on the implementation of power projects. However, the
stock is trading at 2.2x P/B and 9.8x EV/EBITDA on our
F2012 consolidated estimates, which we believe is
expensive relative to peers.

Goldman Sachs: Sterlite Industries- Below expectations; loss from VAL offsets strong operating profits

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EARNINGS REVIEW
Sterlite Industries (India) (STRL.BO)
Not Rated
Below expectations; loss from VAL offsets strong operating profits 
What surprised us
Sterlite reported 3QFY11 net income of Rs11.0bn, up 51% yoy, which is 13%
below GSe and 10% below Reuters consensus estimate due to higher-thanexpected losses at its associate Vedanta Aluminum (29.5% stake). The
company reported a healthy operating performance with EBITDA of Rs19.8bn
(+12% yoy) in line with our estimate, and 6% above consensus. Key highlights:
1) The performance was driven by Zinc business with revenue of Rs25.8bn
(+18% yoy) and EBITDA of Rs14.9bn (+9% yoy); EBITDA margin came in at
57% (down 400 bps yoy) as the positive impact of higher volumes and LME
prices was offset by higher coal and stripping costs. 2) Copper business was in
line, with EBITDA at Rs2.2bn, up 21% yoy, as higher acid realizations offset
lower TC/RC rates– TC/RC rate stood at 11.18 cents/lb (11.7 c/lb in 2QFY11).

CLSA- HINDUSTAN UNILEVER Lagged pain

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HINDUSTAN UNILEVER
Lagged pain


We maintain our Underperform call on Hindustan Unilever and lower our
earnings estimates by 5-9% for FY12-13. Management has given a clear
message in the 3QFY11 result announcement that protecting growth and
market share takes precedence over margins. The strategy is in the longterm interests of shareholders.

Macquarie Research:: Grasim Industries -Defensive play : target: Rs2,488

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Grasim Industries: Defensive play
Event
 Results slightly above estimates: Grasim reported 3Q FY 3/11 earnings,
which were 7% higher than our estimates largely driven by price increases in
cement and VSF.  Grasim continues to focus on growth as it expands
capacity in VSF, cement as well as chemical division. We like the diversified
nature of the business, which provides stability to profits against pure play
cement in the current environment. Maintain Outperform.

BofA Merrill Lynch: Idea Cellular- 3Q surprises; growth to slow

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Idea Cellular Ltd. -3Q surprises; growth to slow 


„3Q events refuel expectations of ownership change
Idea posted better-than-expected 3Q net profit of Rs2.4bn, up 35% QoQ. Key 3Qrelated events that have likely re-fueled market expectations of a potential
ownership change include: 1) the resignation of the CEO – Mr Sanjeev Aga, 2)
potential valuation upside from recent strong subscriber additions; Idea’s net adds
are up from ~1.7mn per month in 1H FY11 to ~2.9mn per month in Nov/Dec 2010,
and 3) prima facie, slower-than-peers timetable for 3G rollout.

Accumulate Bharat Forge – 3QFY2011 Result Update - Angel Broking

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Bharat Forge – 3QFY2011 Result Update

Angel Broking recommends an Accumulate on Bharat Forge with a Target Price of Rs. 404.

Consolidated performance above expectations: For 3QFY2011, Bharat Forge

(BFL) posted 50.2% yoy top-line growth to `1,235.3cr, above our expectation of

`1,178.5cr and largely aided by the substantial jump in domestic operations.

EBITDA margins came in 32bp above our estimates at 18.1%, a jump of 151bp

yoy. Net profit grew strongly by 190.5% yoy (on a low base of last year) to

`73.3cr (`25.2cr in 3QFY2010), as against our estimate of `67cr, largely aided

by improved operating performance

Bharti Airtel -Malawi – dense but attractive : Nomura research

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Bharti Airtel -Malawi – dense but attractive

~ Action
Malawi is one of the poorest and most densely populated countries in the world,
relying heavily on foreign aid; yet for telecoms, it appears to be an attractive and
important market for Bharti (6% of earnings). Penetration is low at 20% and Bharti
dominates with a 63% share in this duopoly market. 3G/WiMAX is also being rolled
out, and Bharti is looking to spend US$100mn to further expand coverage over the
next few years. ARPUs are appealing at US$7 currently, but the risk of regulatory
intervention appears to be rising. We expect margins to remain stable in 40% range.
aCatalysts
Operational improvements in Africa and progress on 3G/data would be positive
catalysts. Regulatory risks on MNP, USO and spectrum prices remain.
Anchor themes
The subscriber growth cycle is by no means over, but returns on incremental
subscribers are uncertain. 3G/data should offer further growth opportunities.

CLSA: Buy DR REDDY'S LABORATORIES - Prospects remain healthy

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DR REDDY'S LABORATORIES
Prospects remain healthy


Notwithstanding  a  weak  quarter,  we  remain  positive  on  Dr  Reddy’s
considering a strong pipeline that will largely unfold in FY12 and FY13,
resulting in strong earnings growth. With settlement of the Nexium patent
litigation, the drug company has extended opportunity for FY15 as well.
We expect branded formulations growth to remain on track with some
blips in between. Dr Reddy’s trades at attractive valuations on reported
earnings in comparison to its peer group. Maintain BUY.

Grey Market Premium Indian IPOs:Midvalley (list tomm); Omkar Jan 26, 2011

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Company Name	Offer Price	Premium
	(Rs.)	(Rs.)
Midvalley entertainment	70	2 to 3
Tata Steel FPO	594- 610	Current Market Price
Omkar Speciality Chemicals	95 to 98	5 to 6

Accumulate Ashok Leyland – 3QFY2011 Result Update - Angel Broking

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 Ashok Leyland – 3QFY2011 Result Update

Angel Broking recommends an Accumulate on Ashok Leyland with a Target Price of Rs. 62.

For 3QFY2011, Ashok Leyland (ALL) registered 22.5% yoy growth in net sales,
aided by 14.3% growth in volumes. Net average realisation increased by 7.2%
yoy due to change in product mix. EBITDA margins came in substantially lower
than our expectation at 7.5%. Net profit registered a substantial decline of 58.6%
yoy due to higher raw-material cost and other expenditure. As a result, we revise
downwards our FY2011 and FY2012 earnings estimates for the company to `3.4
(`4) and `4.8 (`5.2). However, due to the recent correction in the stock price, we
recommend Accumulate on the stock.

Accumulate Bank of India – 3QFY2011 Result Update Angel Broking

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Bank of India – 3QFY2011 Result Update

Angel Broking maintains an Accumulate on Bank of India with a Target Price of Rs. 500.

For 3QFY2011, Bank of India posted robust net profit growth of 61.1% yoy to
`653cr, in line with our estimates of `669cr. Strong improvement in NIM coupled
with lower slippages were the key highlights of the result. We maintain our
Accumulate view on the stock.

Sesa Goa -Short of expectations, opportunities ahead; Hold :: Emkay

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Sesa Goa

Short of expectations, opportunities ahead; Hold

HOLD

CMP: Rs 330                                       Target Price: Rs 354

---

n     Despite improvement on both YoY and QoQ basis Sesa Goa reported lower than expected numbers for Q3FY11 with revenue came at Rs 22.5 bn up 19% YoY

n     EBITDA remained at Rs 12.3 bn up by 19% YoY while EBITDA margin remained flat YoY at 54.8%. Higher export duty and logistics costs partly offset YoY rise in realizations  

n     APAT grew by 29% YoY and 177% QoQ to Rs 10.65 bn, this is due to YoY reduction in depreciation and interest cost by 8% and 47% respectively

n     Revising our earnings estimates for FY11E and FY12E to Rs 48.6 and Rs 44.3 respectively. Recommend HOLD

Accumulate KPIT Cummins Infosystems – 3QFY2011 review- Angel Broking

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 KPIT Cummins Infosystems – 3QFY2011 Result Update

Angel Broking recommends an Accumulate on KPIT Cummins Infosystems with a Target Price of Rs. 181

KPIT Cummins Infosystems (KPIT) reported modest set of numbers for 3QFY2011
with robust volume growth of 7.6% qoq. The company revised its USD revenue
growth guidance for FY2011 to 38-40% yoy from 25% yoy earlier and PAT
growth for FY2011 to 8-10% yoy from 5% yoy earlier. Management stated that its
demand pipeline was strengthening on account of recovery in its anchor vertical,
manufacturing, resulting in the company going in for aggressive hiring, which is
expected to be higher than FY2011 as well. Thus, we recommend an Accumulate
on the stock.

RBS: buy IDBI Bank Tough times, but still looks good value; Target Rs 181

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IDBI Bank
Tough times, but still looks good value
For 3QFY11, IDBI Bank reported in-line core earnings, but asset quality slipped
qoq and management has lowered business growth targets to improve NIMs and
ROAs. The rising interest rate environment poses a challenge going forward but,
with valuations remaining attractive, in our view, we reiterate our Buy rating.

UBS: Buy Pantaloon Retail - Takeaways from management call; Target Rs 550

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UBS Investment Research
Pantaloon Retail (India) Ltd. 
Takeaways from management call 
 
„ Opportunities ahead for modern retail
Management believes that modern retail can grow to $20-25bn in next 7-8 years.
There remains the opportunity to unlock value through strategic partnership with
foreign retailers once FDI opens. GST implementation will aid consumption
growth and lower cost structures for retailers.

Buy United Phosphorus -Lower 3Q interims: Deutsche Bank

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RoW drives the 3Q revenue while forex loss constrain PAT growth:
Seasonally weak 3Q also saw weak guidance. 3Q Revenue (INR 12.2bn,
+6% yoy, DBe - INR 12.5bn) was driven by RoW (+36% yoy, 43% of 3Q
revenue) and domestic market (+6% yoy, 27%) while constrained by Europe (-24% yoy, 16%) and North America (-4% yoy, 14%). Lower raw
material/ sales (340bp yoy and 220bp qoq) were neutralized by a similar
increase in other expenses/sales (240bp, 150bp). Hence EBITDA of INR
2.21bn (13% against 17% expected) was largely inline. Forex loss of INR
0.3bn boosted interest cost constraining PAT growth to 31% against expected 83%. Continual weather disturbances that had resulted in weak 3Q
interim guidance has resulted in management guiding for 5% revenue
growth in FY11e against ~10% earlier.

JP Morgan: Sterlite Industries- Coming out of a 'Perfect Storm', better times ahead

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Sterlite Industries
Overweight
STRL.BO, STLT IN
Coming out of a 'Perfect Storm', better times ahead? We believe so


• FY11, a year of disappointments for STLT...:  Operational issues (zinc
segment impacted by acute water crisis),  regulatory issues (non approval of
bauxite mine, copper smelter court case, alumina refinery expansion not
approved, BALCO arbitration against STLT, Anglo Zinc acquisition not being
done via HZL),  teething problems with the 2400MW power project (instead
of earlier expectation 2 units entering into commercial production by end
March-11, we now expect only 1 unit to flow into P&L in FY11) and continued
investor fears of STLT’s cash support to associate VAL being higher than its
stake of 29.5%, have all contributed to the massive underperformance in 2010
(STLT -14% v/s +18% for NIFTY and +54% for HNDL). We do not view the
arbitration panel judgment as very negative for STLT.

Bank of America Merrill Lynch: India Macro Watch- RBI: Hey, back in May!

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India Macro Watch 
   
RBI: Hey, back in May! 
25bp hike in RBI policy rates
                  Reverse repo    Repo rates
Actual:            5.50%              6.50%
Previous:        5.25%              6.25%
Consensus:    5.50%              6.50%
BofAML:         5.50%              6.50%

Bottom line: RBI on the curve; next 25bp hike on May 3
„ We continue to expect the RBI to hike policy rates 25bp in its May 3 policy.  It,
of course, hiked 25bp today as we and consensus predicted. It also naturally
hiked the March 2011 inflation forecast to 7% (7.1% BofAMLe) from 5.5%. Is
it behind the curve? Not really, in our view. In fact, we would rather that
2010’s 100bp CRR and 200bp rate hikes got some time to have effect.

Buy Dhanlaxmi Bank Rapid business growth; Anand Rathi

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Dhanlaxmi Bank 
Rapid business growth; maintain Buy  
Dhanlaxmi’s 3QFY11 profit improved 450% yoy, led by 87.8%
yoy growth in NII and improved productivity. However, we
lower our FY11e and FY12e EPS by 37.4% and 34.2%
respectively, given the delay in materialization of expected
improved productivity and higher NPA provisions. We reduce
our target price to `152 from `240 due to lower RoE. We
maintain Buy as we expect rapid business growth, improving
NIM and productivity to double RoA by FY13e, to 0.6%.

Accumulate Punjab National Bank – 3QFY2011 Result Update Angel Broking

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Punjab National Bank – 3QFY2011 Result Update

Angel Broking recommends an Accumulate on Punjab National Bank with a Target Price of Rs1,259.

For 3QFY2011, PNB posted moderate net profit growth of 1.4% qoq and 7.8%
yoy to `1,090cr, in line with our estimates of `1,100cr. However, the bank
reported higher provisioning expenses, over 30% above estimates, which were
offset by higher non-interest income. We recommend Accumulate on the stock.

Buy Union Bank of India – 3QFY2011 Result Update- Angel Broking

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Union Bank of India  – 3QFY2011 Result Update

Angel Broking recommends a Buy on Union Bank of India with a Target Price of Rs. 389.

Union Bank of India (UBI) reported moderate 8.5% yoy (91.0% qoq) growth in net
profit to `580cr mainly on a low base and in line with our estimate of `594cr.
However, the bank reported provisioning expenses of over 80.9%, which
exceeded our estimate and was offset by higher non-interest income. We
recommend a Buy on the stock.

Upgrade Sesa Goa to Accumulate – 3QFY2011 Result Update- Angel Broking

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 Sesa Goa – 3QFY2011 Result Update

Angel Broking upgrades Sesa Goa from Neutral to Accumulate with a Target Price of Rs. 356.

For 3QFY2011, Sesa Goa reported moderate growth of 19.1% yoy to `2,250cr,
above our estimates of `1,855cr. Net sales came in above our expectations on
account of higher-than-expected realisation on iron ore sales; however, sales
volumes came in below expectations.

Infotech Enterprises - conference call transcript-19-Jan-11 (Edelweiss)

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Corporate Participants
Mr. B.V.R. Mohan Reddy -Chairman And Managing Director
Mr. Sundar Vishwanathan -CFO
Mr. Ashok Reddy B -President, Global HR And Corporate Affairs
Mr. John Renard - President, N&CE
Mr. Krishna Bodanapu -President,Engineering
Mr. Bhanu Cherukuri -Chief Strategy Officer


Questions and Answers
Moderator: Ladies and gentlemen good day and welcome to the Infotech
Enterprises Q3FY11 earnings conference call hosted by Edelweiss Securities. As
a reminder, for the duration of this presentation, all participants’ lines will be in
the listen-only mode. And there will be an opportunity for you to ask questions
thereafter. If you should need assistance during this conference call, please
signal an operator by pressing * and then 0 on your touch tone phone. Please
note that this conference is being recorded. I would now like to hand the
conference over to Mr. Kunal Sangoi. Thank you and over to you Mr. Sangoi.

Buy State Bank of India – 3QFY2011 Result Update Angel Broking

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State Bank of India – 3QFY2011 Result Update

Angel Broking maintains a Buy on State Bank of India with a Target Price of Rs. 3,490

For 3QFY2011, SBI’s standalone net profit posted growth of 13.1% qoq and
14.1% yoy to `2,828cr, slightly below our estimate of `2,911cr on account of
higher effective tax rate. Sequential NIM expansion coupled with lower slippages
was the key highlight of the results. We maintain our Buy recommendation on the
stock.

DB Corp Cost pressure to remain, maintain hold : Emkay

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DB Corp

Cost pressure to remain, maintain hold

HOLD

CMP: Rs260                                        Target Price: Rs284

---

n     Q2FY11 PAT grew by 30.4% yoy to Rs659mn, slightly below our estimate of Rs684mn impacted by sharp rise in opex towards newsprint cost and new launches

n     Robust advertisement revenue of Rs2.8bn grew by 29% yoy led by volume and price growth

n     Significant yoy increase of 26% and 34% in raw material and other operating cost dents EBITDA and profitability

n     Robust revenue ad growth to continue but margin pressure to remain in short term. Maintain HOLD rating with target price Rs284

Rallis India – 3QFY2011 Result Update Angel Broking

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 Rallis India – 3QFY2011 Result Update

Angel Broking maintain  Neutral  view on Rallis India.

Rallis India’s (RAIL) 3QFY2011 results were broadly in line with our estimates.
Total sales grew 31.2% to `271.4cr, which was 6.7% ahead of our estimate of
`254.4cr. However, EBITDA margin at 19.1% came in 90bp below our estimate.
We remain Neutral on the stock.

JP Morgan: Scrap prices surge seems to be peaking out, HRC price surge

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While scrap prices surge seems to be peaking out (for
the time at least), HRC price surge continues


• Scrap prices peaking out? Long steel prices could hit near term ‘air
pocket', HRC price surge continues: Scrap prices after a sharp rally since
Nov, seems to be peaking out with recent transactions taking below MB index
price of $503/MT and as a result export prices of billets and re-bars from
Turkey have fallen by $20/MT. JPM Europe Steel analyst believes pullback
of Turkish scrap buyers could hit long product prices. HRC price increase
continues with CIS import prices increasing to $725/MT (implying landed
domestic steel prices of Rs37.5K/MT v/s estimated domestic prices of
Rs34.5K/MT). While headline HRC price increase is positive for Indian mills
(imports are not yet taking place as there is a gap between imported and
domestic prices with the latter being lower), sluggish domestic demand in our
view is not allowing for large price increases. We believe the recent sharp
increase in steel prices, could potentially impact apparent demand (as restocking
ebbs down).

BHEL – 3QFY2011 Result Update Angel Broking

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BHEL – 3QFY2011 Result Update
Angel Broking maintains a Neutral view on BHEL.



BHEL’s 3QFY2011 results were ahead of our expectations, largely aided by
margin expansions at the EBIDTA and PAT levels. The numbers were positively
impacted by the one-off adjustment in turnover, PBT and PAT arising on account
of modifications in the method of calculating the percentage completion for
revenue recognition. Inclusive of the above adjustments, BHEL’s revenue grew by
24.8% yoy, while PAT increased by 30.8% yoy. We maintain our Neutral view on
the stock.

Persistent Systems -Supply side issues to erode margins: Centrum

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Persistent Systems -Supply side issues to erode margins
Persistent’s revenue grew by 6.7% sequentially in dollar
terms backed by a muted volume growth of 3.4% and
unexpected pricing increase. Company however continues to
struggle with high attrition levels which rose to 21.5% forcing
the company to declare an interim wage hike of 10%. As we
had elaborated in our initiation report (‘Positioning Trap’
dated 25th October), Persistent would continue to face supply
side issues resulting in further margin erosion. We maintain
our negative stance on niche players’ ability to create value in
the long term as concerns raised by us are now panning out.

Maruti Suzuki Concall Invite on 29 January 2011 at 2:30 PM (Emkay)

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JK Tyre and Industries- Concall Invite 28 January 2011 at 11:30 AM (Emkay)

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UBS: Company Rating Price (LC) PT (LC) Upside / Downside Mkt Cap (US$ bn) EPS Growth 11e PE 11e P/BV 11E Comments LG Display Buy 37950 49000 29% 12.1 4% 9.54 1.09 The potential panel order from Sony in 2011 should allow LG Display to outperform other LCD stocks. The company is also a beneficiary of growing tablet PC demand. Bangkok Bank Buy 164 189 15% 10.2 9% 11.58 1.28 Prime beneficiary of new credit cycle in Thailand. Demand for credit from corporations (over 70% of BBL’s loan book) is likely to be the key driver in the 18 months. Cheung Kong Inf Buy 36.8 45.5 24% 10.7 43% 12.98 1.74 Well-positioned to acquire assets to improve ROE. Cement business in HK an overlooked generator of EBITDA. China National Building Material Buy 18.92 30 59% 6.6 61% 8.93 2.08 Beneficiary of government policy to consolidate supply and dampen property prices via increasing housing supply. H-share placement has alleviated concerns over gearing. EV/ton valuation at historical low. OCBC Buy 10 11.3 13% 25.9 4% 13.57 1.73 OCBC should benefit more from the strong liquidity in Singapore via its Wealth Management Business. Private banking has better growth and profitability and thus should help command a valuation premium. Shriram Transport Finance Buy 743.1 1000 35% 3.7 30% 11.18 2.88 SHTF Is the only established player in financing for second-hand commercial vehicles in India. It has around 20-25% market share in a market which is expected to grow & and has high barriers to entry. Lanco Infratech Buy 53.45 105 96% 2.8 105% 13.67 2.82 Strong execution track record in building power plants underappreciated. New projects could offer Rp35 upside to the current share price Sun Hung Kai P Buy 136.1 225.9 66% 44.9 21% 17.61 1.33 A sector leader that command premium pricing (superior profitability); income stream from commercial properties holding underappreciated; large landbank holder and a beneficiary of the credit upcycle in Hong Kong Industrial & Commercial Bank Of China-H Buy 5.95 7.7 29% 255.3 11% 11.61 2.22 Strong capital position and provisioning buffer, rising net interest margin and healthy, albeit sequentially slower, loan growth. Source: UBS (prices as of 20th January 2011)

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UBS Investment Research
Asia Equity Strategy
Anomalies from the rise in commodities
􀂄 Inflation still the principal concern
Inflation remains the core question in all our meetings at the moment. This note
takes a look at the theme behind the theme: the spike in commodities – how much
of an impact do they really have on Asian equities at the market and stock level?
􀂄 Market level: limited absolute impact. Relative impact is higher
Over the last ten years, the correlation of commodities with Asian equities has
risen and is now positive. Asian equities go up along with commodity prices. But
the relative performance impact is more nuanced – unsurprisingly, Asia ex Japan
equities tend to lag the commodity equity markets (e.g. other EM) in times of
rising commodities.

Ashok Leyland -3Q PAT below estimates (-59% yoy) on drop in operating margin, JPMorgan,

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Ashok Leyland Underweight
ASOK.BO, AL IN
3Q PAT below estimates (-59% yoy) on drop in operating margins


• 3Q PAT at Rs.434m (-59% yoy) was below ours and street estimates
as the company had a sharp decline in operating profits – margins
came in at 7.5% (-390bp yoy & -380bp qoq) given a sharp increase in
staff costs as well as other expenditure.

JP Morgan- ITC Q3FY11 : strong quarter; encouraging cigarette volume growth trends

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ITC Limited Overweight
ITC.BO, ITC IN
Q3FY11 : strong quarter; encouraging cigarette volume growth trends

• Q3FY11 earnings 5% above estimates: Net sales, EBITDA, and PAT
grew 19%, 19%, and 21% y/y, respectively. Higher-than-estimated
cigarette, agri and other FMCG business revenues led to sales coming in 4%
above our expectations. However, EBITDA was in line with our
expectations as lower (than estimated) margins for cigarette and paper
business offset margin gains for agri and hotel business. Higher other
income (supported to some extent by sale of some investments) led to
higher PAT growth.

Buy PNB: 3Q11: NII growth strong, but asset quality disappoints: JP Morgan

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Punjab National Bank Overweight
PNBK.BO, PNB IN
3Q11: NII growth strong, but asset quality disappoints


• 3Q11 misses estimates: PNB reported Rs10.9bn of net profit, up 8% y/y
but below our and the consensus estimate of Rs11.4bn. Overall revenue
growth was strong, with positive margin surprise and strong balance
sheet growth but higher NPA provisions and operating costs led to the
earnings miss.

Idea Cellular - Festive cheers but no upgrades: Emkay

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Idea Cellular

Festive cheers but no upgrades

SELL

CMP: Rs 71                                       Target Price: Rs 60

---

n     Q3FY11 PAT at Rs2.4bn (v/s our est. Rs1.8bn) and EBIDTA at Rs9.5bn (v/s our est. 9.1bn), festive season drives volume growth but higher opex keeps the EBITDA margin flat qoq

n     Strong revenue growth of 8.1% qoq to Rs39.6 bn v/s our estimate of Rs38.1bn

n     Robust 10.2% rise in traffic on network. ARPU improves to Rs168 v/s Rs 167 in Q2FY11. MOUs rise to 401 v/s 394 in Q2FY11

n     Valuations expensive at 9.7x & 8.2x EV/EBIDTA for FY11E & FY12E respectively. Prefer Bharti Airtel available at 6.9x FY12E EV/EBIDTA. Retain SELL rating with target Rs60