Buy Indoco Remedies: target Rs 511: 3Q FY11 analysis: ICICI Securities

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Indoco Remedies- Muted margins…
Indoco’s Q3FY11 sales increased 19.4% to | 114.3 crore in line with our
expectation of  | 117 crore mainly driven by growth in formulation
exports and the domestic API business. However, at the EBITDA level,
margins were subdued at 12.7%, below our expectation of 15.1% due to
change in the product mix, increase in raw materials cost and fall in
realisation due to currency fluctuation. Increase in the taxation YoY
restricted the net profit growth to 14% to  | 8.8 crore. We believe the
domestic formulation business will be normalised in due course. We
also expect a couple of products to be launched in semi-regulated
markets in Q4FY11. We have maintained our BUY rating on the stock.

Buy Dish TV -Strongest ever subscriber addition: target Rs 70: ICICI Sec

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Dish TV -Strongest ever subscriber addition…
Dish TV reported its Q3FY11 consolidated results that were better than
our estimates. The company reported a topline of | 373.2 crore (I-direct
estimate of | 350.1 crore) higher than our expectations, growing 26.5%
YoY and 8.1% QoQ. The EBITDA margin at 17.9% improved by a
staggering 1329 bps YoY on the back of high operating leverage kicking
in. EBITDA for the quarter stood at | 66.7 crore. Net loss for the quarter
was at | 44.3 crore as compared to  | 45.2 crore in Q2FY11 and  | 75.1
crore in Q3FY10. The company reported a higher-than-expected loss
partly due to upfront payment for opening up a new LC, which bloated
the interest cost by about  | 8 crore. Interest expense for the quarter
stood at | 22.5 crore as against | 13.1 crore in the last quarter.

Buy Transport Corporation -Seaways segment drags down profitability, ICICI Securities,

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Transport Corporation of India- Seaways segment drags down profitability…
Transport Corporation of India’s (TCI) Q3FY11 results were below our
estimates, mainly on the back of the poor performance of the seaways
division. Due to dry docking of three ships and requisite expense for the
same, the seaways division reported a loss at the PBIT level of | 1.29
crore. On the whole, the company recorded net sales of | 444.4 crore,
growth of 16.6% YoY and 0.5% QoQ. The EBITDA margin increased 31
bps YoY to 7.5% but decreased 44 bps QoQ. The subsequent PAT stood
at | 11.8 crore, remaining flat YoY and declining 18.4% QoQ.

Buy Larsen & Toubro- Improved execution led to strong topline growth: KR Choksey

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Larsen & Toubro- Improved execution led to strong topline growth;  Buy
Q3FY11 results of the company were largely in line with our estimates.
Operating income grew 40% yoy to Rs 11,413 cr against Rs 8,122 cr in
Q3FY10. However raw material expenses jumped by 86.7% YoY leading
to 151 basis points decline in EBITDA margins. Rising commodity prices
and price escalation lag in variable price contracts have put the margins
under pressure across the segment. Engineering & Construction (E&C)
segment continued with its impressive growth improving its contribution
to the topline by 255bps to 86%. Interest expenses went up 31% yoy on
account of increased borrowing and higher interest cost. The company
divested a stake in its subsidiary and associate company resulting in a
one time gain of Rs 35 cr. Order inflow for the quarter was Rs. 13,366
crore and order backlog at the end of the Q3FY11 stood at Rs.114,882
crore giving it a revenue visibility for 3.13 years.

Buy Bharat Heavy Electricals : Robust performance despite one-offs: ICICI Sec

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Robust performance despite one-offs… 
Bharat Heavy Electricals (Bhel) reported a strong operating performance
for Q3FY11. Revenues at  | 9023 crore were above Street estimates
though it included revenues worth  | 444 crore owing to a change in
accounting policy. The key highlight was the robust EBITDA margin
driven mainly by better vendor management, high labour productivity
and better raw material management. Reported EBITDA margins stood
at 23.4% for Q3FY11 vs. our estimate of 19.6%. Subsequently, PAT grew
31% YoY to | 1403 crore (this includes | 60 crore of one-off change in
accounting policy). Going ahead, the  company is on track to meet its
FY11 guidance in terms of order inflows of | 60000 crore.

Buy State Bank of India: target Rs 3, 600: Motilal Oswal

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SBI's 3QFY11 PAT was up 14% YoY at Rs28.3b (10% higher than our estimate). Performance on operating parameters
was significantly better than we had anticipated. Some of the positive surprises are: margin improvement of 18bp QoQ (v/
s our estimate of 10bp decline), lower than expected opex (13% lower than estimated), and stable asset quality.
Key highlights
 Margins have improved 18bp QoQ and 79bp YoY to 3.61%, led by a sequential drop in cost of deposits (13bp).
Improvement in CASA ratio (~90bp QoQ) and CD ratio at elevated level of 77% also aided NIM expansion. The
management guided that margins would be maintained at current levels (may see 10bp improvement in 4QFY11).
For FY12, the management guided margin of 3.3% v/s ~3.5% expected in FY11.
 Operating expenses increased 11% YoY (down 3% QoQ), 13% lower than our estimate. With increase in benchmark
yields, gratuity liability is revised to Rs19b as against Rs22b earlier.
 In absolute terms, GNPA remained flat QoQ at Rs234b. PCR including technical write-offs increased to 64% (v/s
62.8% in 2QFY11). Reported slippages for the quarter were at Rs39b (including Rs7.7b of URIPY balance reduction).
 The management said that SBI's special home loan scheme does not classify as teaser rate loan; hence, it has not
made 2% standard provision on this portfolio. The bank has currently provided at 0.4% and if RBI does not agree, it
will have to make an additional provision of Rs5b. Also, its second pension liability provisions are without considering
the 9th bipartite agreement and provided as per 8th bipartite agreement. The management is still waiting for actuarial
valuations for the same and plans to amortize the liability over five years.
Valuation and view: The stock trades at 1.5x FY12E and 1.3x FY13E consolidated BV. We expect RoA to improve
from 0.9% in FY10 to ~1% in FY11 and ~1.1% in FY12-13. RoE is likely to improve from 15% in FY10 to 18-19% by
FY13 (without assuming capital raising). Maintain Buy.

J. KUMAR INFRAPROJECTS : Order inflow disappoints; downgrade to HOLD: PINC

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Order inflow disappoints; downgrade to HOLD
J Kumar results are inline with our estimates, topline grew
by 24% at Rs2.5bn vs our est. of Rs2.45bn. Ebidta margin
declined by 82bps YoY to 14.2% and was lower than our est.
of 15%, largely due to increase in labour cost and higher
diesel and steel prices. Profit grew by 8% YoY to Rs180mn vs
our est. of Rs186mn.The company disappointed on order inflow
front which during the quarter was at ~Rs1.2bn, which is
below our estimate. The current order book stands at
~Rs13.1bn (1.5x FY11E revenue) and current L1 is about
Rs4.8bn. The stock has been recently de-rated owing to order
inflow concerns, current order book does not comfort us future
visibility.. Hence, we have cut our FY11 estimate by 6.2%,
reduced margin by 50bps to 14.7% to factor in the increased
cost and reduced PAT by 11.8% to Rs693mn. We would relook
at our FY12 nos post conference call. We value the
company at Rs181 which is 6x one year forward earning of
Rs30.2 and we downgrade our rating from ‘BUY’ to ‘HOLD’.

Buy Asian Paints: FY2011 3Q Analysis: Motilal Oswal

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Asian Paints' results were below estimates as consolidated EBITDA margin contracted 320bp YoY to 16.4%. Net sales
grew well by 29.6% due to strong growth (up 37%) in the standalone business. Adjusted PAT grew 11% to RsRs2.2b.

Buy Automotive Axle: Results in line, rising input costs a worry: ICICI Sec

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Automotive Axle: Results in line, rising input costs a worry… 
Automotive Axles (AAL) reported its Q1SY11 numbers that were in line
with our estimates. Topline for Q1FY11 was reported at | 179.5 crore (Idirect estimate: | 180 crore), a  sedate 7.5% QoQ jump due to  slower
traction of CV sales post BS-III implementation. EBITDA margins have
seen an increase of 50 bps QoQ and 260 bps YoY to touch 12.4% mainly
due to efficient raw material costs and other expenses management. On
the bottomline front, the company reported  | 9.8 crore (I-direct
estimate: | 10 crore), which was a ~190% YoY jump and flattish QoQ
mainly due to better operating leverage and lower taxes on a YoY basis.

Pix Transmissions Limited Concall Invite on 31st Jan @ 4pm

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NETWORTH STOCK BROKING

is pleased to invite you for a conference call to discuss Q3 FY11 result of

PIX TRANSMISSIONS LIMITED

With

Mr. Amarpal Sethi

(Chairman & Managing Director)

Mr. Sonepal Sethi

(Joint Managing Director)

Mr. T. N. Chandrassekar

(Chief Finance Officer)

On Monday 31 January, 2011 4.00 p.m.

BUY ITC ;price target of Rs 195: Latin Manharlal Securities

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 ITC Ltd."

COMPANY PROFILE

ITC Ltd has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging, Agri Business, Packaged Foods & Confectionery, Branded Apparel, Greeting Cards, Safety Matches and other FMCG products.

While ITC is an outstanding market leader in its traditional businesses of Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports, it is rapidly gaining market share even in its nascent businesses of Packaged Foods & Confectionery, Branded Apparel and Greeting Cards & Stationery.

Buy Banswara Syntex : target Rs245: Anand Shah

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Banswara Syntex (Buy)
Current Market Price (Jan 25, 2011): Rs135 12 Month Price Target: Rs245
Banswara Syntex’s move towards value added segment is likely to witness acceleration in the coming
years as it widens the product portfolio of Fabrics and rapidly scales up Garment business. Interestingly,
significant benefits from the capex undertaken across all its segments would start flowing from Q4FY11.
Coupled with hike in prices of fabrics and garments after a lag, the YoY profit growth in H2FY11 is likely
to be higher than H1FY11. Overall, earning CAGR of 45% is expected between FY10-12E and volatility of
profit margins is likely to reduce due to increased contribution from value added segment. Besides,
rerating of the stock is likely on the back of potential increase in Dividend Payouts and gradual
acquisition of stake in the Company by a Private Equity Investor. We expect the stock to nearly double to
Rs245 over the next 12 months at FY12E P/E of 5.5x. Further, downside risk looks capped due to
expected high Dividend Yield of >7% for FY12E. We strongly reiterate BUY.

UltraTech Cement: expects gradual recovery in margins: Motilal Oswal

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UltraTech Cement (UTCEM IN; Mkt Cap USD6.1b, CMP Rs1,019, Neutral) 

Results are not comparable YoY due to merger of Samruddhi Cement. 2QFY11 are rebased for QoQ comparisons.

Volumes were flat YoY (~7% QoQ growth) on like-to-like basis at 9.8MT (vs est 10.1MT). Grey cement realization at Rs3,159/ton (up 7% QoQ; est Rs3,192/ton).

Sales were at Rs37.1b (vs est Rs38.2b) and PAT at Rs3.19b (vs est Rs3.47b). EBITDA was up by 74% QoQ at Rs7.08b (vs est Rs7.44b), EBITDA margin at 19.1% (~640pp QoQ recovery) and EBITDA/ton of 

 Rs712 (vs est Rs695).

The management believes trough in the cycle is behind us and expects gradual recovery in margins to normal levels by FY13.

 2HCY10 is expected to be bottom-of-the-cycle period for the cement industry. Cement prices are expected to be buoyant in 1HCY11 driven by recovery in demand. We maintain our estimates for FY12E at Rs62.8 

and for FY13 to Rs96.9, as upgrade in pricing assumption is negated by lower volumes and higher cost push. The stock trades at 16.2x FY12 and 10.5x FY13 EPS, and EV/Ton of US$123. Maintain Neutral with 

 target price of Rs1,254 (~10x FY12 EV/EBITDA).

Buy Grasim Industries: Net revenues grew 18% YoY to Rs12.1b: Motilal Oswal

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 Grasim Industries (GRASIM IN; Mkt Cap USD4.7b, CMP Rs2,369, Buy)

 VSF business volumes grew 4% YoY (~25% QoQ) to 84,621 tons (vs est 85,500 tons). Realizations improved Rs6.6/kg QoQ to Rs123/kg (vs est Rs122/kg).

  Net revenues grew 18% YoY to Rs12.1b. EBITDA margins at 29.9% were lower 790bp YoY (+160bp QoQ) impacted by higher than estimated cost push.

 VSF margins are expected to improve driven by price increase of ~Rs7/Kg from 1-Jan, benefit of which would be partly diluted by higher pulp prices.

 3QFY11 VSF utilization at ~100% leaves limited headroom to grow volumes till new capacities commence operations in FY13.

The outlook for VSF business has improved considerably. This coupled with improving short-term outlook for cement business augurs well for Grasim. We are upgrading consolidated EPS for FY12 by 2.2%.  The 

stock is quoting at very attractive valuations of 8.9x FY12E consolidated EPS and 7x FY13E consolidated EPS, and 1.3x FY12 P/BV and 1.1x FY13 P/BV. Maintain Buy with target price of Rs2,852. 

buy Sterlite Industries PAT increased 10% YoY: Motilal oswal

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 Sterlite Industries (STLT IN; Mkt Cap USD13.3b, CMP Rs179, Buy)

 Sterlite Industries adjusted consolidated PAT increased 10% YoY to Rs11b lower than our estimate due to higher losses at VAL and lower other income.

 Zinc (MIC) production increased 9% QoQ.  The acquisition of Anglo’s Skorpion mine was completed in Dec 2010. Skorpion produced 13.2k tons of refined zinc.

Copper cathode production grew 17% QoQ to 78,990 tons despite temporary shutdown following the Madras High Court order in September 2010

 Aluminium production at Balco remained flat QoQ at 65,459 tons and cost of production increased 3% QoQ to US$1,795 largely due to rupee appreciation.

 Revenue from power business declined 19% QoQ to Rs1.3b as realization fell sharply by 21% QoQ to Rs2.72/kwh and volumes grew 10% to 454m units.

 FY11 and FY12 EPS are cut by 5% and 3% to Rs12.8 and Rs21.4, respectively, after factoring in (1) positive contribution from zinc acquisition, and (2) slippage in Sterlite Energy’s power unit. Stock is trading at 

 FY12 P/E of 8.4x and EV/EBITDA of 5.4x. We value the stock at Rs221 based on STOP. We remain positive on the stock as both zinc and energy businesses have potential to drive earnings stronger than 

 estimates. Maintain Buy.

Buy Orient Paper and Industries -High cement realisation improves margin:: ICICI Sec

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Orient Paper and Industries -High cement realisation improves margin… 
Orient Paper reported net sales of  | 438.4 crore and net profit of  | 30.9
crore, which was higher than our respective estimates of | 401.1 crore and
| 18.9 crore. This was on account of higher than expected profitability
from cement and paper business. During the quarter, cement sales
increased ~7% YoY (~23% QoQ) to  | 229 crore (our estimate:  |  206.1
crore) aided by 24% YoY (29% QoQ) increase in realisation to | 2969 per
tonne. It also helped in a significant improvement of ~1752 bps QoQ in
the cement EBIT margin to 20.4% (our estimate: 15%). Paper business
reported EBIT margin of 2.7% (our estimate: -2%) implying EBIT of | 2.4
crore against incurring losses in the last seven quarters. The fan business
showed margin improvement of 66 bps YoY and 319 bps QoQ to 8.5%.

Add Tech Mahindra: Jaded growth, reducing price target to 750; ICICI Sec

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Tech Mahindra : Jaded growth, reducing price target… 
Tech Mahindra reported Q3FY11 revenues of  | 1,211 crore vs. our  |
1,241 crore estimate led by sluggish growth in both BT and non-BT
revenues. EBITDA margins declined 90 bps QoQ due to wage hikes and
F/X headwinds. Feeble net additions, 30% quarterly annualised attrition
coupled with high utilisation, which continues to top the comfort band
of 68-76%, leaves limited upside for operational improvement till
campus hires join. Consequently, though we have maintained our ADD
rating on the stock we have reduced our price target to  | 750 (| 790
earlier) and continue to prefer HCL Technologies to Tech Mahindra.

Shopper's Stop - 3QFY11 results were above our estimates: Motilal Oswal

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Shopper's Stop (SHOP IN; Mkt Cap USD0.7b, CMP Rs371, Neutral)

3QFY11 results were above our estimates with adjusted PAT growth of 131% to Rs279m. Net sales grew 22% to Rs4.6b aided by strong same store sales growth of 22%. Gross margins contracted 130bp to 38.2% and lower lease rent (down 80bp), administrative expense (down 140bp) enabled EBITDA margin expansion of 90bp to 11.2%.

-      

We estimate mid single digit same store sales growth and 70bp margin expansion over FY11-13. We are increasing standalone FY11 EPS estimates by 8% to Rs8.6 (Rs7.9 earlier) and FY12 EPS estimates by 

 4% to Rs13.1 (Rs12.6 earlier). Our estimates for FY13 are unchanged at Rs17.6.  

 We expect the department store format to be free cash flow positive and fund its growth in the coming years. However, Hypercity is likely to require incremental investment in the coming few years. We expect 

 Hypercity to turn EBITDA positive by FY12 and PAT positive by FY14. The stock trades at 28.4x FY12E EPS of Rs13.1 and 21.1x FY13E EPS of Rs17.6 on a standalone basis. Maintain Neutral.

IDBI Bank's 3QFY11 PAT grew 58% YoY: Motilal Oswal

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IDBI Bank (IDBI IN; Mkt Cap USD3.4b, CMP Rs152, Neutral)

IDBI Bank's 3QFY11 PAT grew 58% YoY and 6% QoQ, driven by higher NII growth and lower opex (up 2% YoY, but down 19% QoQ).   However, pressure on asset quality persists.  

In absolute terms, GNPA increased by 22% QoQ to Rs30b. In percentage terms, GNPA increased 34bp QoQ to 2.2%. NNPA remained stable QoQ in percentage terms, as the bank accelerated provisions during 

the quarter. PCR including technical write-offs improved 100bp to ~76%.

      

Loan growth moderated to 21% YoY and 3% QoQ (v/s 34% in FY10). Deposits were up 5% YoY but declined 3% QoQ (YTD, deposits are down 10%).NIM for 3QFY11 was stable QoQ at 2.28% (but improved 

102bp YoY) on the back of increase in base rate (50bp) and BPLR (75bp).  

Restructuring of balance sheet and slower growth augurs well for IDBI Bank. However, sustained stress on asset quality is a key risk. We expect the bank to report NII CAGR of 38% and PAT CAGR of 28% over 

FY10-13. We expect RoA to improve to 0.7% and RoE to 14-15% by FY13. IDBI Bank has some strategic investments, which we value at Rs28/share; adjusted for this, the stock is trading at 0.9x FY12E BV. 

Maintain Neutral.

Buy United Phosphorus: 3QFY11 performance above estimates: Motilal oswal

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United Phosphorus (UNTP IN; Mkt Cap USD1.5b, CMP Rs155, Buy)

UNTP's 3QFY11 operating performance was above estimates, with EBITDA margins of 19.8% and EBITDA of Rs2.48b . However MTM forex loss of ~Rs300m resulted in lower-than-expected PAT of Rs839b  

Revenue grew by 7.8% to Rs12.48b driven by 15% volume growth. However, realizations were 3% lower and there was a 5% adverse forex impact.

      

The management has scaled down its revenue guidance to 5% revenue growth in FY11 (against 15% earlier), but maintained EBITDA margin guidance of 21%.

We are downgrading our EPS estimate for FY11 by 4.6% to Rs12.7 but maintain our FY12 EPS estimate of Rs17.3. Valuations of 8.9x FY12E EPS and 7.4x FY13E EPS, do not reflect growth potential (organic and inorganic). Maintain Buy with a target price of Rs208 (~10x FY13E EPS).

Accumulate IRB Infrastructure Target: Rs 304: Construction margins up; Emkay

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IRB Infrastructure Developers

Construction margins steels the limelight

ACCUMULATE

CMP: Rs 214                                        Target Price: Rs 304

---

n     PAT at Rs1331mn (+45.5% yoy) ahead of our and street expectation – driven by better than expected construction margins (24.88% v/s est of 18.0%) and MAT credit of Rs147 mn

n     Revenues at Rs6.7bn (+54.4% yoy) - aided by +94.1% yoy growth in construction segment and 3.7%yoy growth in BOT segment

n     EBITDA at Rs2.93 bn (+29.2% yoy) higher than estimates (Rs2.7 bn),  driven by 129.8% growth in construction EBIDTA & 2.1% growth in BOT EBIDTA

n     Ramp up in collections at Bharuch Surat & Surat Dahisar finally visible for BOT. Upgrade FY11E earnings by 5.8%. Retain ACCUMULATE-Target Rs304 

Tata Steel FPO allotment details OUT

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**CLICK HERE** Tata Steel FPO allotment details OUT **CLICK HERE**

 Tata Steel FPO fixed at upper band of Rs 610 / share


For application of Rs 2 Lacs (320 shares); 210 shares have been alloted Rs 128, 100

For application of Rs 1 Lacs (160 shares); 105 shares have been alloted Rs 64,050

Gray Market Premium: Tata Steel; Omkar Speciality Chemicals: Jan 29th, 2011

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Company Name	Offer Price	Premium
	(Rs.)	(Rs.)
Tata Steel FPO	610	Current Market Price
Omkar Speciality Chemicals	95 to 98	1 to 2

Motilal Oswal:: buy State Bank of India 3QFY11 Results Update

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SBI's 3QFY11 PAT was up 14% YoY at Rs28.3b (10% higher than our estimate). Performance on operating parameters
was significantly better than we had anticipated. Some of the positive surprises are: margin improvement of 18bp QoQ (v/
s our estimate of 10bp decline), lower than expected opex (13% lower than estimated), and stable asset quality.

Tech Mahindra- Jaded growth, reducing price target… ICICI Securities

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Tech Mahindra- Jaded growth, reducing price target… 
Tech Mahindra reported Q3FY11 revenues of  | 1,211 crore vs. our  |
1,241 crore estimate led by sluggish growth in both BT and non-BT
revenues. EBITDA margins declined 90 bps QoQ due to wage hikes and
F/X headwinds. Feeble net additions, 30% quarterly annualised attrition
coupled with high utilisation, which continues to top the comfort band
of 68-76%, leaves limited upside for operational improvement till
campus hires join. Consequently, though we have maintained our ADD
rating on the stock we have reduced our price target to  | 750 (| 790
earlier) and continue to prefer HCL Technologies to Tech Mahindra.

Mahindra Finance Samruddhi Fixed Deposits: Sprism

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Mahindra Finance has started accepting Fresh Deposits under the scheme Mahindra Finance Samruddhi Fixed Deposits w.e.f. Jan 24, 2011. The interest rates have been revised upwards by 0.50% under all the categories and tenure. This FD scheme has been rated FAAA by CRISIL indicating highest safety.

Cumulative Scheme					Non - Cumulative Scheme
Period	Amount Payable (Rs)	Interest (% p.a)	Effective Yield (% p.a)		Period	Interest (% p.a) Half Yearly	Interest (% p.a) Quarterly
12 Months	10,850	8.50	8.50		12 Months	8.25	8.15
18 Months	11,391	9.00	9.27		24 Months	9.25	9.15
24 Months	11,990	9.50	9.95		36, 48,  60 Months	9.75	9.65
36 Months	13,310	10.00	11.03
48 Months	14,641	10.00	11.06		Minimum Amount (Rs)	25,000	50,000
60 Months	16,105	10.00	12.21

• Minimum Amount (Cumulative Scheme) Rs: 10,000
• Additional amount in this scheme will be accepted in multiples of Rs.1,000
• Effective yield is compounded annually for cumulative scheme
• Senior Citizens & Employees will get an additional interest of 0.25% p.a.
• Renewals will be accepted in the scheme prevailing on the date of maturity and only principal amount will be renewed

Note: Interest rates and credit rating are subject to change. Kindly check the scheme details before investing.

Company Financials:

(Rs. Lakh)

Year Ended	PBT	PAT	Dividend on Equity Shares
2007-08	27197.15	17702.40	45%
2008-09	32562.09	21452.06	55%
2009-10	52056.85	34270.73	55%