05 March 2011

Jain Irrigation -Subsidy support for micro irrigation raised further; JM Financial,

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Jain Irrigation -Subsidy support for micro irrigation raised further
􀂄 FY12 subsidy raised further; new schemes under RKVY likely positive: The
Finance Minister’s Union Budget provides for an increase in the central
government’s subsidy support for the National Mission on Micro Irrigation
(NMMI) to `11.3bn for FY11-12 (vs an original allocation of `10.0bn for FY10-11
that is now revised downward to `9.7bn). We note that central government also
subsidises micro irrigation (MI) via various other schemes, budgetary
allocations for which are also raised (Exhibit 1). In particular, a number of new
schemes have been created under the Rashtriya Krishi Vikas Yojana (RKVY) that
could meaningfully expand the addressable opportunity (Exhibit 2) and provide
for additional subsidy support for MI. The downward revision in FY10-11 NMMI
subsidy estimate to `9.7bn could be driven by slower than expected farmer
demand due to prolonged and excessive rainfall in late-CY10.

Hindustan Zinc: Key takeaways from mine and plant visit:: Kotak Sec,

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Hindustan Zinc (HZ)
Metals & Mining
Key takeaways from mine and plant visit. Meetings, mine and plant visit of
Hindustan Zinc lend significant confidence on (1) expansion of Sindeshwar Khurd (SK)
mine, which is running ahead of schedule with the company running at close to 1.2
mtpa annualized rate of ore production, (2) strong volume growth in FY2012E, and (3)
significant step-up in contribution from silver to overall earnings; HZ is targeting silver
production of 400 tons in FY2012E. HZ trades at an inexpensive 5.1X FY2012E EBITDA;
BUY with a 12-month target price of Rs1,535.

Macquarie Research: Weekly US oil data -More constructive data

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Weekly US oil data
More constructive data
As if oil markets need more bullish input, much of this morning's weekly US data
expands what was already a strengthening fundamentals story. To a degree, what is
happening in the US in the next month or two is a leading indicator of what typically
happens around the world: Refiners first reduce throughput as many take down units
for seasonal maintenance and when plants later come back online, global refiner
feedstock demand rises from trough to peak by some 4 million barrels per day.

Grey Market Premium Indian IPOs: Lovable, Acropetal, Fineotex, Sudar Garments, SBI Bonds : March 5,11

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Company Name
Offer Price
Premium
Kostak

(Rs.)
(Rs.)
(Rs.)
Lovable Lingerie
195 to 205
20-22

Acropetal
88 to 90
DISCOUNT

Fineotex
60 to 72
DISCOUNT

72 to 77
DISCOUNT

SBI Bonds


11,000-12,000

Buy Mundra Port and SEZ -Exciting structural story :BNP Paribas

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Mundra Port and SEZ - Exciting structural story
􀂃 Key beneficiary of under-capacity in ports, rising trade
􀂃 Channel checks across the value chain suggest a good outlook
􀂃 Strong FCFs (FY13E onward) supported by long-term contracts
􀂃 Initiate with a BUY and TP of INR171 based on two-stage DCF

Goldman Sachs: Global: Technology: Enterprise IT spending firmly intact; consultants benefit directly

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Global: Technology: IT Services-Consulting &
Outsourcing
Equity Research
Enterprise IT spending firmly intact; consultants benefit directly
Late cycle Services spending beginning to hit its stride
Following recent questions about the strength of enterprise IT spending,
and weak results from HP Services we have reconfirmed the building
blocks underlying our positive view on enterprise IT spending. Specifically,
our checks suggest the following: (1) IT spending intentions for 2011
remain firmly intact, with budget cycles shifting from maintenance spend
to growth initiatives which provides support for downstream services
spending. (2) Our global checks suggest healthy levels of contract signings
and active pipelines. (3) Increased spending intentions on systems
integration shows enterprises making the natural shift to services required
to tie together hardware and software platforms. (4) The secular shift to
global delivery continues with offshore companies poised for solid midteens
or higher revenue growth. Against this backdrop, we believe that the
evidence supporting our late-cycle view on Services spend remains intact,
with the consulting models hitting their stride on the back of enterprise IT
spend. Finally, the results from our latest IT Spending survey reinforces
strong spending intentions with both our total IT Spending Index and our
Tech Capital Spending Index back to recent highs.

Buy Gujarat Pipavav- Operating inflection point; target Rs73 -BNP Paribas

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Gujarat Pipavav -Operating inflection point
􀂃 Profitability to turn around on improving container realisation
􀂃 A key beneficiary of under-capacity at JNPT, Mumbai
􀂃 Checks with shipping lines suggest good outlook for Pipavav
􀂃 Initiate at BUY with TP of INR73, based on a two-stage DCF model

Edelweiss, MONTHLY REALTY PULSE Headwinds to weigh on near-term performance

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􀂃 Festival season keeps volumes stable; expect slowdown ahead
Although volumes on a pan-India level (ex-Mumbai) were healthy across cities in
Q4CY10, rising property prices and hardening mortgage rates combined with
slowdown in investor demand will lead to volumes declining across most cities in
H1CY11. Volumes in Mumbai are down 50% below peak levels and we believe a
similar trend (though less acute) may play out in NCR over H1CY11. Bengaluru
and Chennai markets have recovered smartly in CY10 on the back of end-user
demand from the IT/ITES sector and a stable pricing environment. We expect
Bengaluru volumes to remain stable, while sustainability of volumes in Chennai
is a key monitorable.

Kotak Sec, Maruti Suzuki: Management meeting takeaways

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Maruti Suzuki (MSIL)
Automobiles
Management meeting takeaways: Well placed for strong volumes and margins.
We met Maruti’s management to discuss the company’s strategy and future plans. The
management seemed confident of achieving 15% volume growth in FY2012 and
increasing EBITDA margins by 1.5-2% over the next 2-3 years. The company’s strategy
will revolve around protecting its market share and reducing costs through localization
to improve its EBITDA margins. We retain our BUY rating on the stock with a target
price of Rs1,460.

Macquarie Research: Agri-view -Inverted forward curves point to acute shortages

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Macquarie Agri-view
Inverted forward curves point to acute
shortages
Feature article
 Recent price movements across the agricultural commodity space have been
very volatile, culminating in a large sell-off last week. Open interest has
started to fall in many futures markets, as prices begin looking “toppy” amidst
renewed risk aversion following the Middle Eastern unrest. But the underlying
fundamentals across each market remain very much constructive. Indeed, the
decline in prices has been met with strong support as commercials identify a
potential buying opportunity to take physical cover before prices resume their
uptrend. Short-term supply shortages (with proper supply relief still at least 6
months away) are very much the name of the day, as evidenced by inverted
futures curves across the grains and softs complex.

Macquarie Research -Mphasis :Addendum confirms investor fears

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Mphasis
Addendum confirms investor fears
Event
 On Thursday after market close Mphasis released quarterly data on segment
revenue, profitability and billing rates. These regular quarterly metrics were
not made available post the 1Q results (Oct year end) declared last week.
 Following poor 1Q results and investor angst over disclosure issues the stock
has corrected 30%. The additional information provided now confirms the
margin pressure in the business coming from parent HP. We also note that
these metrics would no longer be reported beyond next three quarters. Retain
Underperform.

Weekly Review Report - March 05, 2011 :Angel Broking

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Markets rally in the Budget week
The Indian stock market staged a spectacular run during the week, which
began with the presentation of the Union Budget. The market viewed the
Budget announcements positively and both the benchmark indices, Nifty
and Sensex, rose 4.4% each, despite the continuation of global concerns.
Crude oil continued to trade at high prices, despite proposals for peace
talks doing the rounds. BSE mid-cap and small-cap indices underperformed
the large-cap counterparts during the week, gaining 3.8% and 2.7%,
respectively. All the major sectoral indices were in green during the week.
The BSE auto index outperformed the other indices, gaining 8.1%, followed
by the BSE FMCG index, which was up by 6.8%.
BSE auto index rallies on positive Budget cues
The BSE auto index (up 8.1%) outperformed the Sensex (up 4.4%) during
the week. Auto stocks rallied on account of the status-quo in central excise
duty in the Union Budget 2011-12 and buoyant monthly volumes reported
by auto majors in February 2011. Ashok Leyland, M&M, Maruti, Bharat
Forge and Apollo Tyres were the major gainers, rising by 14.7%, 13.6%,
12.2%, 10.1% and 9.8%, respectively. We remain positive on the long-term
prospects of the Indian auto sector and continue to prefer companies in the
four-wheeler space over companies in the two-wheeler space, considering
reasonable valuations and volume growth visibility.
Inside This Weekly
Union Budget 2011-12 Review: In the Union Budget 2011-12, it was restraint
that was required on the expenditure side. And, by not having any major
populist measures, the Finance Minister has managed to bring down the
targeted fiscal deficit to 4.6% - the key positive from the Budget. Even though
on some counts, such as subsidy estimates, the targets are likely to be
overshot, but because of the absence of any major populist measures and
substantial restraint on most items of expenditure, any overshooting of the
fiscal deficit is likely to be contained to 20-40bp of GDP. In other words, the
deficit is unlikely to exceed the FY2011 levels of 5.1%.
Automobile Sector Update - February 2011: Automakers extended their
robust performance into February 2011 as well, with domestic demand
remaining buoyant on the back of positive consumer sentiment. Pre-budget
buying to avoid the likely increase of excise duty in the Union Budget
2011-12 was also partially responsible for the strong performance during
the month. Among the majors, Mahindra & Mahindra, Hero Honda and
TVS Motor reported better-than-expected volumes for February.
Sesa Goa - Event Update: The Union Budget 2011-12 has proposed raising
the export duty on iron ore to ad valorem 20% on lumps and fines. In line
with this, we have raised our export duty expenses for Sesa Goa to `1,903cr
for FY2012 v/s our previous forecast of `485cr for FY2012. Our EBITDA
estimate for FY2012 also stands pruned by 26.1% to `4,008cr. We continue
to value Sesa Goa at 3.5x FY2012 EV/EBITDA, but at a lower target price
of `298 (`356). We maintain our Accumulate rating on the stock.

India Banks -CV Financing: Bottom-Up View Healthier than Top-Down:: Citi

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India Banks
CV Financing: Bottom-Up View Healthier than Top-Down


 CV financing, a good indicator of macro pressures — CV financing is strongly
linked to the overall macro and is a good indicator of any budding asset-quality
pressures despite its relatively small size (2-4% of total loans). We carried out
extensive channel checks to gauge the impact of the current macro headwinds.
Key takeaways: a) Demand is still strong (macro overriding higher rates); b) Scope
for passing more rate hikes (up to 50bps); c) Growth rates are currently high (25-
30%), but should moderate to 10-15% for the industry; d) NIMs under some
pressure (can decline 20-30bps); and e) Asset quality is the best-ever currently. In
sum, the business seems better bottom-up than the macro suggests.

Lovable Lingerie- IPO overview

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Lovable Lingerie

Issue Terms
 
Issue price / Floor Price (Rs)
195-205
Application per share (Rs)
195.00
Minimum investment amount (Rs)
5,850.00
Minimum bid (no of shares)
30 shares and in multiples of 30 thereafter
Maximum Shares for Retail
1020-960



Issue Date and Size
 
Issue opens
08-Mar-11
Issue closes
11-Mar-11
Listing on
BSE,NSE
Issue size (Rs cr)
88.73-93.28
Mkt cap at issue price (Rs cr)
327.60-344.40



Shares on Offer
Lakhs
Total shares offered
45.50
Of above, offered to public
45.50
Post-issue shares
168.00
Post-issue promoters' holding(%)
66.96



Company Financials (Rs cr)
2009-12-31
No of months
9
Turnover
86.57
Net profit / (loss)
12.61
Borrowings
0.34




Lead Managers & Registrar
Lead Manager(1)
Anand Rathi Advisors Ltd
E-mail
lovable.ipo@rathi.com
Lead Manager(2)
N.A.
E-mail
N.A.
Registrar
Link Intime India Pvt Ltd
E-mail
lovable.ipo@linkintime.co.in



Company Contact Details
Company's address
A - 46, Street No. 2, MIDC, Andheri (East), Mumbai.
Pincode
400 093
Tel No.
91 22 2838 3581
Fax No.
91 22 2838 3582
Website
http://www.lovableindia.in




Description
Company is one of India leading women\'s innerwear manufacturers.
Objects of Issue
  • Setting up of a manufacturing facility to create additional capacity at Bengaluru;
  • Expenses to be incurred for brand building;
  • Brand Development expenses for our College Style brand;
  • Investment in Joint Venture;
  • Setting up of exclusive brand outlets (EBOs);
  • Setting up of retail store modules for shop-in-shop;
  • Up gradation of design studios










Auto – February 2011 volume update : Emkay

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Auto – February 2011 volume update
Hero Honda (HH) – on expected lines
n    Total sales increased by 23.5% YoY to 472,055 units.
Maruti Suzuki India Ltd (MSIL) – strong set of numbers
n    Total sales for February 2011 increased by 15.5% YoY to 111,620 units.
n    Domestic sales grew by only 19.8% YoY to 101,518 units.
n    Export declined by 15% YoY to 10,102 units.
n    Product mix improves with higher share of A3 segment and higher domestic sales.
Mahindra & Mahindra (M&M) – above estimates
n    Total sales increased by 24.6% YoY to 50,368 units.
n    Passenger UVs disappoint marginally with increase of 11.4% YoY to 14,288 units. THiw was more than compensated by strongshow in pick ups
n    Total tractors sales increase by 36.8%  YoY to 19,041 units.
Tata Motors Ltd (TML) – M&HCV disappoints marginally
n    Total sales increased by 11.7% YoY to 77,543 units.
n    M&HCVs sales increased by only 1.1% YoY to 17,632 units.
n    LCVs sales increased by 17.4% YoY to 23,776 units.
n    UVs and Nano reported good set of numbers, car (ex Nano) grew by only 0.7% YoY to 19,010 units
n    Export sales increased by 39% YoY to 4,504 units
TVS Motor Ltd (TVSL) – On expected lines
n    Total sales increased by 24.3% YoY to 177,412 units
n    Motorcycle sales increased by 12.7% YoY to 71,462 units.
n    Scooters/Mopeds increased by 31.9% YoY to 101,738 units.
n    Total domestic sales increased by 24.8% YoY to 151,526 units.
n    Export sales increased by 21.7% YoY to 25,886 units.

Reduce Sesa Goa; Export duty to impact earnings…Target : Rs 265: ICICI Securities

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Sesa Goa; Export duty to impact earnings…


Export duty to impact earnings…
The export duty on iron ore has been hiked to 20% on an ad valorem
basis across all grades in the Union Budget. Earlier it stood at 5% for
fines and 15% for lumps. Additionally, export duty on iron ore pellets
has been removed. We believe Sesa Goa will be largely impacted due to
the aforementioned development as it exports 80% of its volume,
largely constituted by fines. We have revised our target price downward
to | 265 and maintained our REDUCE rating on the stock.
􀂃 Negative impact on Sesa Goa
Sesa Goa exports 80% of its sales to China. Also, the product mix of Sesa
Goa is more bent towards sales of fines, which constitute 80-85% of its
volumes. As we factor in this increase in export duty, we have revised our
FY12E EBITDA and PAT to | 3207 crore and | 3170 crore, respectively, i.e.
26.0% and 21.6% lower than our previous estimates (EBITDA of | 4369
crore and PAT of |4048 crore).


Outlook & Valuation
Due to a rise in export duty, challenges for Sesa have multiplied.
Moreover, the volume growth concerns us as the company was unable
to ramp up its volumes from Goa operations while the ongoing export
ban in Karnataka is expected to result in muted volumes, going
forward. At the CMP of | 270, the stock is trading at 3.6x FY12E
EV/EBITDA. We have valued the stock at 3.5x its FY12E EV/EBITDA,
thereby arriving at a target price of | 265 with a REDUCE rating.

BNP Paribas:: BUY Shiv-Vani Oil: Awaiting order-book boost

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Awaiting order-book boost
􀂃 Delay in orders increases concerns about future growth
􀂃 Recent fund raising eases balance-sheet concerns
􀂃 Sell-off unwarranted; new order bookings key to re-rating, in our view
􀂃 Reiterate BUY with a reduced TP of INR402, P/E of 7x FY12E

Pharma Pill: March 2011 :ICICI Securities

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Summary
In February, we saw two pharma bellwethers reporting disappointing
quarterly numbers. While Cipla’s performance in Q3FY11 was muted on
account of tepid domestic growth and cost pressure from the new
facilities, Ranbaxy’s performance for Q4CY10 was affected by lower than
expected sales from FTF opportunity Aricept (anti-Alzheimer’s) in the US
and write-offs. In other December quarter results, we saw mixed fortunes
for CRAMS players. While Divi’s reported better-than-expected numbers,
Piramal surprised with rejuvenated growth. However, the other two
CRAMS players such as Dishman and Jubilant continued to reel under
pressure at the client’s end and posted disappointing numbers.

CLSA: IT Services: Visa woes- Increased fees, procedural hurdles and impending regulations

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Visa woes
Increased fees, procedural hurdles and impending regulations
Scare around visa issues is not new for the Indian IT industry and the industry has
weathered multiple such bumps in the past decade. While we do not consider
protectionism a game changer for services outsourcing yet, incidents of the past
few months have us especially worried. Events are silently piling up, and perhaps a
keener look is warranted. Checks indicate that rejection rates for H-1/L-1 visas
have doubled over the last few months and increased hurdles in visa processing are
causing problems. While near-term impact for Indian Techs could be lost revenues
and higher sub-contracting costs, medium/long-term impact could be in the form of
higher onsite delivery costs and lower competitiveness in select cases. With the
external demand environment happily favourable for the industry and supply-side
worries in India also abating for now, the excitement is shifting towards visa
regulations in US, which could fundamentally alter the Indian IT Services business
model. TCS, Infosys and Wipro remain our favoured picks amid this storm.

Cox & Kings - BUY; Target Price Rs. 510:: KJMC

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Cox & Kings Ltd. (C&K) is one of the oldest and most reputed travel and tour
operators in India, offering a one‐stop shop for the travel needs of all segments of
travellers. The company with a global presence has 255 touch points in 164 cities
across 4 continents. The company’s business can be broadly divided into four
different segments viz. Leisure, Corporate, Forex and Visa Processing. In the last five
years (FY06‐10), consolidated net sales and PAT have grown at a CAGR of 45% and
50% respectively. The net sales are expected to grow by 25% in FY11.

Eicher Motors -Back on track: Emkay

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Eicher Motors
Back on track


ACCUMULATE

CMP: Rs1,101                                        Target Price: Rs1,505

n     Worst is behind; Growth and profitability back on track. CY10 margins of 8.1% sustainable with an upward bias
n     Expect M&HCV comeback to succeed this time due to strong support from Volvo. Expect 18% CAGR M&HCV growth (twice that of industry) during CY10-12
n     High ROIC (>100%) despite an asset heavy M&HCV business to ensure cash generation. Healthy growth in 2-wheelers (29% volume CAGR) & outsourcing potential to chusion business model
n     Expect a 22.7% EPS growth during CY10-12. Initiate coverage with a Accumulate rating and a SOTP price target of Rs 1,505. Key risks are execution delays and higher metal prices