15 May 2011

Commodities price correction – funds or fundamentals? :: Macquarie Research

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Commodities price correction – funds
or fundamentals?
 Following the steep price declines in most metals prices over the last week
we compare these with bulk commodities and ask what triggered the drop in
metals and whether it is fundamentally warranted.
Latest news
 Metals prices were mixed in trading on Friday. Tin stood out on the upside
with a rise of 2.6%. Zinc made a modest gain while nickel and copper closed
broadly unchanged. However, lead and aluminium both declined on the day.
All precious metals prices fell with silver sinking a further 9.6% to close almost
exactly in line with its average for the year-to-date at $34.2/t.oz. Meanwhile
Brent crude fell by a further 2.6% to below $100/bbl.
 Over the week as a whole, however, almost all metals prices fell heavily.
The main LME metals lost from 5% (zinc) to over 8% (nickel) and gold gave up
3.2%. By far the hardest fall, however, was seen in silver, which was down by
almost 30% WoW. Oil prices also dropped by over 10%.
 US employers added more jobs than anticipated by market consensus in
April. Payrolls increased by 244,000, marking the largest monthly gain since
May 2010, following an upwardly revised rise of 221,000 in March and
235,000 in February, according to the US Labor Department. These data
were reassuring for markets that had become worried that economic recovery
was stalling in the world‟s largest economy.
 Preliminary iron ore export data from Brazil show a rebound from the
lows of March, with a 7% MoM rise on an annualised basis to 292mtpa.
While up 14% YoY, exports remain well below the 352mtpa peak level
reached in October 2010. Exports to China rose 12% MoM to 135mtpa,
while the strength of recovery in the Japanese steel sector following the
March disasters is evident with the second highest level of exports
destined for the country since the financial crisis (42mtpa). In contrast,
exports to Europe fell 16% MoM, albeit compared to an exceptionally
strong March. Exports from the Ponta de Madiera port serving Vale's key
Carajas system continue to disappoint, down over 2mt per month (22%)
from peak levels.
 The inclement Brazilian weather also impacted Vale's Q1 iron ore
production, as widely expected. The Northern System was certainly the
worst hit, with exports down 19% QoQ to 22.65mt. Exports from other
mining systems were also down QoQ (but only in single digits) while pellet
production actually rose 2.5% sequentially. This drop in volumes,
combined with similar weather-impacted underperformance in Australia
and ongoing problems in India, are set to leave seaborne iron ore trade
down markedly HoH in H1 2011.
 Steel rebar has certainly bucked the commodity downtrend over the
past week, with the Platts FOB Turkey assessment rising $17.5/t WoW to
$700/t, a level last seen in January. Firmer international scrap prices and
a pick-up in Turkish domestic construction demand are supporting prices,
while steel flat products have come under price pressure. Indeed, rebar is
now selling at a premium to hot rolled coil in the Mediterranean market.

India real estate: Changing landscape :: UBS

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C hanging landscape
􀂄 India in the early stage of development cycle—significant growth potential
India’s property market is highly fragmented and unorganised—its growth
restricted by a lack of reforms and institutional funding. Structurally, we believe
the large housing shortage, favourable demographics, strong macroeconomic
drivers and robust service sector growth present significant opportunities for
developers. We expect India’s property market to experience long-term secular
growth, despite short-term cyclical difficulties.

UBS :: Phoenix Mills - At an inflection point ; price target of Rs310

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UBS Investment Research
Phoenix Mills
A t an inflection point [EXTRACT]
􀂄 Quality retail asset with near-term catalysts
We believe Phoenix’s prime assets located in Mumbai, Chennai, Bangalore and Pune,
strong rental annuities and a business model relatively insulated from sector/policy
issues differentiate the company. Near-term catalysts are: 1) growing revenue share at
High Street Phoenix (HSP), Mumbai; 2) successful/timely opening of Market City
malls and Hotel Shangri-La over the next six months; 3) earnings surprises from
commercial and residential pre-sales in FY12-13; and 4) strong recovery and
deregulation of retail FDI.

UBS:: Glenmark Pharmaceuticals - Upgrade on robust outlook, cheap vals

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UBS Investment Research
Glenmark Pharmaceuticals
U pgrade on robust outlook, cheap vals
􀂄 Event: Accounting change, weak FY11 margins lead to stock correction
Co. reported only FY11 IFRS GAAP nos. Adj. EBITDA margin for FY11 at
19.7% significantly below our est. of 23.3%. However, higher other income, lower
depreciation and low tax rate helped PAT to Rs 4.58bn, only 6% below UBS-e.

UBS:: Indiabulls Real Estate - Valuations offer a safety margin ; target rs 180

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UBS Investment Research
Indiabulls Real Estate
Valuations offer a safety margin
[ EXTRACT]
􀂄 Correction seems overdone
The share price has corrected 25% over the past 15 days on news of: 1) a lacklustre Q4
FY11 on higher construction and interest costs along with poor disclosure; 2) a sharp
fall in Mumbai pre-sales, particularly central Mumbai; and 3) a lack of clarity on higher
FSI in the public parking scheme. We think this is overdone and there is value at a 61%
discount to our sum-of-the-parts NAV of Rs300.00.

UBS:: Godrej Properties - Superior quality

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UBS Investment Research
Godrej Properties
Superior quality
􀂄 Best positioned in corporate governance; a capital-efficient model
We believe Godrej Properties’ (GPL) superior corporate governance, capitalefficient
structure and joint development model (77% of landbank) positions it well
as funding tightens. Furthermore, its strong brand has driven presales growth of
3.2msf in FY11 (1.9msf in FY10). With access to develop the group’s prime land
in Mumbai and other key cities and the group’s proven value creation ability, we
view GPL as a quality mid-cap company.

UBS - HDIL :: Favourable risk-reward; target Rs218

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UBS Investment Research
HDIL
F avourable risk-reward
􀂄 Concerns likely priced in
With HDIL’s significant underperformance to the Sensex and the sector at 39% and 13%
over the past three months, respectively, we believe the key concerns are largely priced in.
These are: 1) delays in the airport slum rehabilitation project, 2) slowing Transferable
Development Rights’ (TDR) volumes and limited upside to TDR prices from policy risks;
and 3) aggressive land acquisitions using capital raised. Valuations at a 56% discount to
our NAV estimate of Rs335 offer a favorable risk-reward, in our view.

UBS :: Unitech -- News flow a dampener; but attractive

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UBS Investment Research
Unitech
News flow a dampener; but attractive

􀂄 News flow to dampen share price sentiment
We believe the arrest of Unitech’s MD in connection with the 2G investigation has raised
the risk of: 1) more controversy/penalties from 2G fallout; 2) increased differences with
Telenor on the telecom venture; and 3) margin calls on 68% of the pledged co-founder’s
holding. Although we think the 60% correction over the past month prices this in, we
believe weak sentiment will weigh on near-term share performance.

UBS::: Asia Utilities Alpha Preferences 􀂄 Lanco Most Preferred; Adani Power Least preferred.

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Asia Utilities
A lpha Preferences
􀂄 Adding KEPCO to Most Preferred
Following government plans to announce long-term roadmap to rationalize
electricity prices in Korea in June, fuel cost pass-through scheme will start from
July 1 as planned. By June, we should begin to see more details on the tariff hike
which means KEPCO is in the progress to realize its re-rating story. Conviction on
this long awaited tariff hike possibility now is larger than ever. The recent weak
share performance makes the stock even more attractive in our view in addition to
the strong catalyst on tariff hike. We expect the tariff hike to contribute
significantly to KEPCO’s earnings stability and allow KEPCO to earn a fair rate of
return.
􀂄 Reiteration on our Most and Least preferred
Our current Most preferred list contains China Gas, Datang Corp Renewable
Power, Lanco and KEPCO. China Resources Gas, China Longyuan and Adani
Power remain on our Least preferred.

Eicher Motor Ltd. Superlative performance, ACCUMULATE : Target Price: Rs 1,505 :Emkay

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Eicher Motor Ltd.
Superlative performance, Maintain ACCUMULATE

ACCUMULATE

CMP: Rs 1,158                                       Target Price: Rs 1,505

n     Strong performance across segments. Standalone EBIDTA at Rs 198mn is 42% abv est. Subsidiaries EBIDTA at Rs 1.4bn is 77% abv est. Cons. EBIDTA at Rs 1.6bn is 19% abv est.
n     Most of the commodity pressures have filtered in the P&L except for some pending negotiations. Expect to outperform the M&HCV industry with rising share in HD trucks
n     Valued the stock on SOTP basis with TP of Rs 1,505 (current business value – Rs 1,351, NPV of engine business – Rs 154)
n     Remains a preferred play in the CV space.  Find valuations attractive due to high FCF generation and non cyclical revenue stream. Key risk -  cyclical slowdown in the industry

UBS : DLF Limited - Core holding ; price target from Rs350

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UBS Investment Research
DLF Limited
C ore holding
�� Superior business model with best asset-geographic mix
We think DLF is best positioned to outperform based on its focus on development,
strong brand, fully paid-up quality land reserves (400msf) across cities, and a business
model that is relatively insulated from the ongoing 2G controversy. Its large and
growing rental annuity (Rs16.5bn) provides earnings stability and we believe makes it
the best proxy to a commercial real estate recovery.

UBS : Prestige Estates Projects- Best proxy to Bangalore growth

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UBS Investment Research
Prestige Estates Projects
B est proxy to Bangalore growth
􀂄 Strong brand with robust track record
We believe Prestige’s: 1) joint development model, which gives it access to a
prime landbank of 51msf; 2) strong track record in value creation; and 3) mix of
luxury and mass housing and rental and for sale office and retail assets,
differentiates it from peers. We think Prestige provides the best exposure to
Bangalore’s growth potential (at 84% of our NAV estimate).

Power Finance Corporation (PFC) FPO— Priced at Rs 203

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Power Finance Corporation (PFC)  FPO— Priced at Rs 203

Price band was Rs 193-203

Retail and employees get 5% discount

UBS: DB Realty - Headwinds; but distressed valuations

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UBS Investment Research
DB Realty
Headwinds; but distressed valuations\
�� News flow could weigh on near-term stock performance
We believe news of: 1) the arrests of both co-founders in the ongoing 2G spectrum
investigation; 2) potential pre-sale cancellations at key projects and construction delays; and
3) previously awarded projects being re-investigated will weigh on near-term stock
performance; even though we believe the sharp correction of 80% in the past six months
seems to have priced in the worst-case scenario.

Removal of PSL status on loans to NBFCs have minimal impact on MMFS & SHTF:: Standard Chartered Research,

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Regulatory changes to impact NBFCs
 The RBI has withdrawn the priority sector status on direct loans by banks to NBFCs
 Currently, this has minimal impact on earnings for MMFS and SHTF
 Should the RBI remove the status on securtized loans also, earnings could be impacted
by about 10% and CARs could decline, in our view.
 Final guidelines and clarification are expected by Jun ’11, post which we will revisit our
estimates.

Think beyond the obvious 􀂃BNP Paribas

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Think beyond the obvious
􀂃 India has underperformed due to inflation and rate worries, and politics
􀂃 Peaking inflation, lower demand in 2H; RBI may pause after another 75bp hike
􀂃 BUY opportunity in L&T, Bajaj Auto, TCS, IIB, Axis Bank, Reliance
􀂃 TTMT, Ashok Leyland, DLF, Ambuja Cement could underperform more

Union Bank of India – Good show and good valuations: RBS

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In 4QFY11, Union Bank surprised with a stable margin qoq and a decline in slippages. However,
the sharp increase in staff costs was a dampener. We factor in the equity dilution and cut our
estimates for FY12-13 on the back of higher normalised operating costs in FY11. Buy, due to
undemanding valuations.

JPMorgan: India: IP surprises sharply on the upside as capital goods rebound

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India: IP surprises sharply on the upside as capital goods rebound


 
  • March IP surprises sharply on the upside (7.3 % oya; consensus: 4 % ) as capital goods production rebounds strongly
  • In contrast, consumer durables growth slows, possibly signifying that interest rate hikes may be beginning to bite in this sector
  • More generally, however, tepid year-on-year IP growth rates in recent months are masking strong sequential momentum of IP (13.4 % q/q, annualized) likely driven by surging manufacturing exports
  • With the domestic economy likely to slow in FY 12, and elevated crude prices continuing to pose a risk to global activity, one can legitimately ask, however, whether the current momentum can be sustained

Indian Coal Industry- From Allocations to Auctions - Key issues ahead :: JP Morgan

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• Coal Block auctions- hurdles to overcome: The Ministry of Coal (MoC) has
started the process of moving towards auctioning of coal blocks, from the
current policy of allocating blocks. The MoC has invited stakeholder comments
on 4 possible options which differ in terms of payment mechanism and
weightage given to various attributes of the bid/bidder. In our view, there are
still many issues to be resolved including- a) clarity on GO-NO area from the
MOEF (which would indicate which coal blocks can be put up for bids); b) can
the approval process be quickened to allow for faster production; c) potential
issues between previous allocates and new bidders (as coal blocks under
allocation currently do not have to pay any large upfront amount). In our view,
the auction process is unlikely to start before year end (March-2012) at the
earliest.

Weekly US oil data -Algorithm-induced momentum:: Macquarie Research

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Weekly US oil data
Algorithm-induced momentum
Fundamental strengthening behind wildly gyrating oil markets
As currency markets reversed their overwhelmingly bearish view of the US dollar
one fine day last week, oil markets were swept along in the commodity
downdraft. That they bobbed back up to the surface and almost retraced 50% of
the plunge in two days to start this week is, we believe, testimony of the building
bullish momentum in supply/demand fundamentals of global crude oil markets.
Algorithmic trading is serving to add to further volatility as markets break sharply
through technical levels.

Hindustan Unilever 4QFY11 : Low ad spend drives earnings beat :: JP Morgan

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Hindustan Unilever Limited
Underweight
HLL.BO, HUVR IN
4QFY11 : Low ad spend drives earnings beat


• Low ad spend supported earnings growth: HUL reported net sales,
EBITDA and adjusted PAT growth of 13.5%, 8.6% and 21.8%
respectively for 4Q FY11. Poor gross margin trends (for soaps &
detergents particularly) were offset by lower ad spends and employee
costs during the quarter.

Hindalco Industries – Earnings remain robust ::RBS

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Hindalco reported its standalone 4Q and FY11 results. EBITDA was at Rs9.14bn (+9% yoy and
+24% qoq) in-line with our estimate. Annual Tc/Rc contracts have been set at 20% higher for
CY11, which should aid Hindalco's FY12F earnings. Maintain Buy with target price of Rs315.

Sizzling Stocks: Hindustan Unilever and Ranbaxy Laboratories :: Business Line

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Hindustan Unilever (Rs 306.4)
Hindustan Unilever jumped 3.5 per cent with good volumes last Monday following its announcement of demerger of FMCG exports business. This bullish momentum continued over the week. HUL surged 11.5 per cent, breaking through its significant long-term resistance at Rs 290, accompanied by heavy weekly volume. The stock also breached its 50 and 200-day moving average during its current rally.
It can move higher to Rs 320 and then to Rs 330 in the medium-term. Inability to move above the first resistance will mean that the stock can remain consolidating sideways in the range between Rs 290 and Rs 320 in the medium term. However, a slump below Rs 290 will drag the stock down to Rs 275 and then to Rs 265.

Jaypee Infratech -4Q11 comes in below expectations. Toll road project delayed given land acquisition issues :: JP Morgan

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Jaypee Infratech
Overweight
JYPE.BO, JPIN IN
4Q11 comes in below expectations. Toll road project
delayed given land acquisition issues


• 4Q11 results- JPIN reported 4Q11net income of Rs 2.5B (-34% Q/Q,
182% Y/Y) below our estimate of Rs 3.2B. The earnings miss was
primarily driven by lower than expected EBITDA margins of 46% (vs.
72% run rate for 9MFY11). This was on account of higher contribution of
built up property vs. plotted sales. Tax rate during the Q was also higher at
25%. During the Q, JPIN reported a dividend of Rs 0.5, taking the full
year dividend to Rs 1.25 (yield 2.2%). Full year revenues and PAT
improved 34%/194% respectively.

Jaiprakash Associates: nfratech results read-through and UP land acquisition concerns :: JP Morgan

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Jaiprakash Associates Ltd
Neutral
JAIA.BO, JPA IN
Infratech results read-through and UP land acquisition
concerns


• Jaypee Infratech, 83% sub of JPA, missed earnings forecast for
4QFY11 by 22%. See update of Saurabh Kumar / Gunjan Prithyani
on JPIN results. The miss was mainly on
account of higher contribution of built-up property sales, which has
lower margins. JPIN accounts for 35% of JPA's consolidated FY11
EBITDA which will be reported on 14th May.
• Land acquisition protests in UP have delayed the completion of
Yamuna Expressway project to July 2012, from October 2011.
Consequently, JPIN earnings forecast for FY13 has been trimmed by
4%. This should translates into earnings cut of around 3% for JPA. This
is not in our numbers yet.
• Agitations between protestors and state government have taken a
violent turn in UP. Our cement analysts Pinakin Parekh and Neha
Manpuria are concerned about the potential impact on UP cement
demand, a very large market. UP accounted for around 39% of JPA's
FY11 dispatches. According to them, UP cement demand growth so far
has been resilient at 10% despite other North-Indian markets weakening.
Recently North/Central India cement prices have corrected by 2-5%.
They believe the current situation in UP could impact the cement pricing
environment negatively in the Northern/Central India. Cement accounts
for 25% of JPA’s FY12 consolidated EBITDA and 45% of standalone
EBITDA.

SKS Microfinance: Risk-reward still unfavorable; Underweight :: JP Morgan

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SKS Microfinance
Underweight
SKSM.BO, SKSM IN
Risk-reward still unfavorable; maintain Underweight


• We stay Underweight on SKS as the outlook on asset quality and
growth remains weak, in our view, even outside AP. We believe the
risk-reward ratio is still unfavorable, given the high uncertainty of
near-term profits and an expected decline in longer-term sustainable
ROE to ~15%.

May We Help You? - Factsheets explained :Mutual Fund: Business Line

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Of all financial products, mutual funds tend to make high levels of disclosures, usually through the periodical ‘factsheets'. Here's a primer on how best you can read factsheets.

FUND VIEWS

All monthly disclosures start with views of the fund house on the fundamentals of the economy, equity and bond markets in the month gone by as well as its expectations, going forward.
These articles talk about the major events that occurred over the month, as well as those that affected the markets and inflows into it. Some fund houses also give an account of the sectors that they are bullish on. For example, one fund house may not believe in taking a big cash position , while another may take a conservative stance during market corrections and move significantly into cash. This section makes an interesting read, especially when markets fall or gain heavily, as fund managers dwell on what helped or went against their funds.

Grasim Industries – Strong underlying performance:: RBS

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Grasim's 52% EBITDA growth reflected the buoyant conditions in the VSF business. Despite
being constrained for capacity till mid-FY13, we believe VSF business can deliver a volume
growth of 7-8% in FY12. It is strengthening its VSF business by investments in pulp, and the 50%
capacity expansion plan in VSF

NTPC – Focus on capacity addition:: RBS

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NTPC's 4Q11 profits were ahead of its provisional numbers. We remain confident on its
capacity additions but the recent development on coal blocks is an overhang, in our view.
PPAs totalling 100GW ensure longer term RoE defensiveness. We continue to view the
stock as a defensive play. Buy

Tulip Telecom - Q4'FY11: Operational performance beat; watching debt:: JP Morgan

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Tulip Telecom Limited
Overweight
TULP.BO, TTSL IN
Q4'FY11: Operational performance beat; watching debt


Tulip Telecom has reported a solid Q4FY11 result with revenue growth
sustained at 20% and a higher than expected EBITDA margin expansion.
Higher interest costs drove a slight bottom line miss while the investment in
the data centre increased leverage. Nevertheless management reiterated their
data centre targets and is confident of ~17% bookings by year 1. We continue
to like Tulip and see these results as confirmation of improving trends.

Deepak Fertilisers: FY11 Beats Estimates on Higher Realizations, Increase PT to Rs220:: JP Morgan

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Deepak Fertilisers & Petrochemicals Corp
Overweight
DPFE.BO, DFPC IN
FY11 Beats Estimates on Higher Realizations,  Increase PT to Rs220


DFPC’s FY11 profits are 17% ahead of our estimates, surprising on the
upside on account of aggressive price hikes which mitigated raw material cost
pressures. In addition, increase in fertilizer subsidy (effective 1st April ’11)
should aid margins. New 300,000MT TAN plant has become operational and
management have indicated that production will be ramped up to 70%
utilization level by end FY12. We increase our earnings estimates for FY12EFY13E
and increase PT to Rs220.Maintain OW.

Mumbai Airport To fly or not to fly? :: JP Morgan

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Mumbai’s airport modernization project has been getting delayed in a classic
case of political compulsions leading to policy confusion and limited
coordination between various agencies. Deadline on resettlement has been
shifted over and over denting confidence. Delays on this account has led to
sharp de-rating of airport exposed stocks (GVK and HDIL) with the market
writing down most of the value from the project for these two companies.
However, things seem to be improving at the margin (albeit slowly). Given
overall weak sentiment over RE and Infra space for now, we think the market
will unlikely price ahead and will probably await firm clarity from the
government on future policy and course of execution. However, in case it
comes, we believe upside on airport exposed stocks (GVK/ HDIL) could be
meaningful. Both classify as high risk-reward plays on the same, in our view.

JPMorgan: HDFC IN 4Q FY11: Margins resilient; maintain Overweight

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HDFC (Housing Development
Finance Corporation)
Overweight
HDFC.BO, HDFC IN
4Q FY11: Margins resilient; maintain Overweight


• 4Q FY11: Better than expected: HDFC reported Rs11.4B of PAT (up
23% y/y), which was ~10% higher than our and consensus estimates. A
large part of the profit beat was due to higher investment income, but
margins also held up better than expected with NII 6% higher than
expected. Overall 4Q FY11 was a strong quarter, especially on margins
with in-line loan growth.

JPMorgan: Sobha Developers: FY11 bookings miss guidance, but higher realizations make up for the shortfall

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Sobha Developers
Overweight
SOBH.BO, SOBHA IN
FY11 bookings miss guidance, but higher realizations
make up for the shortfall


• 4Q results below expectations – Sobha reported 4Q net income of
Rs402M (-18% Q/Q, -28% Y/Y) below our expectation of Rs480M.
Earnings miss was primarily on account of lower than expected revenues
from RE development segment (Rs2.2B –8%Q/Q, JPMe- Rs2.5B).
EBITDA margins for 4Q stood at 19% vs. 22% in 9M due to higher
contribution from contractual & manufacturing segment (Rs1.3B in 4Q)
and no land sales in 4Q (vs. Rs1.5B of land sales in 9M). Adjusted for
land sales, 4Q revenues/PAT were largely flat Q/Q. For full year FY11,
revenues/PAT at Rs14.6B/Rs1.8B were up 30% Y/Y.

JPMorgan: Adani Power 4QFY11 results: An operationally strong quarter

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Adani Power
Overweight
ADAN.BO, ADANI IN
4QFY11 results: An operationally strong quarter


• Operational results strong, but higher tax led to missing headline
number. Positive trends in operational performance resulted in a 6% and
12% beat to our revenue and EBITDA estimates respectively. However,
50% tax rate in 4Q (due to deferred taxes for 660MW unit commissioned in
Feb) resulted in Adani reporting a PAT of Rs1.74B vs. our est. of Rs2.3B.
Operating highlights. i) Early commissioning of the 1st 660MW unit, which
is currently selling pre-PPA @ merchant rates. Adani sold 12% of total
generation at merchant rate of Rs4.55/unit vs. Rs3.9 in 3Q ii) 4X330MW
units operating at >90% PLF and the 1X660MW at ~72% in its first month
of operation (total units sold were ~10% ahead of est.), iii) ~180bps qoq
reduction in auxilary consumption, iv) Favourable exchange rate reduced
fuel import cost; per unit fuel cost of Rs0.95 vs. Rs1.04 in 3Q.

JP Infratech: Robust sales; project cost up : CLSA

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Robust sales; project cost up
JP Infratech’s 4QFY11 earnings were inline with expectations as
execution on constructed property business picks up. Sales, at 2.6m sf for
the quarter were slightly ahead as sales held well despite pricing gains of
c.15%. 20% inflation in Yamuna expressway project cost came as a
negative surprise and has let to a NAV cut of 6%. Customer collections
meanwhile are robust and at 53% discount to NAV and 5x FY12 earnings,
stock is attractive. Maintain BUY.

Bhushan Steel: 4QFY11 results : CLSA

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4QFY11 results
Bhushan Steel’s (BSL) 4Q11 net profit at Rs2.9bn was up 34% YoY but 17%
below estimates due to lower than expected volumes and higher tax rate.
ASPs grew a strong 11% QoQ which drove a 23% QoQ growth in Ebitda/t to
US$299 – better than we estimated. The board’s approval for US$1bn capital
raising is a positive step towards balance sheet deleveraging. The key trigger
for the stock is the successful commissioning of expansion to 4.7mt by Oct-12.
Till then the stock remains high risk given high gearing. We see limited stock
return on a 12m view, but believe that the stock could double in 2-yrs on
commissioning of Phase-III expansion.

Infosys: Key investor concerns : CLSA

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Key investor concerns
Over the past decade, Infosys has been a flagbearer of the Indian IT
industry and has done an outstanding job in creating value for all its
stakeholders. However, a few fault lines have emerged lately which are
worrying shareholders. Infosys’ objective of targeting growth just above
industry average and not in-line or above peers is being perceived as a
case of aiming too low. Another source of investor worry is company's
unwillingness to return any part of its $3.8 billion cash balance to its
shareholders or even spell out a roadmap for the use of its cash. A few
mishaps on the HR front, a protracted re-organisation and operational
slip-ups, all in the past 18 months have investors wondering whether
Infosys is losing its magical operational excellence. These issues are
impacting the Infosys brand, so well cultivated over the last decade.
We think these are important shareholder concerns which need to be
considered by the Infosys Management as resolution of these is
necessary for stock performance over the medium to longer term. The
details in further pages give a context to these investor worries.

Oil plummets 14% WoW :: Macquarie Research

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Oil plummets 14% WoW
Energy Market Indices WoW Changes
⇒ S&P/TSX Energy Index: -4.3%
⇒ S&P 500 E&P Index: -6.6%
⇒ Oil Service Sector Index: -9.4%
⇒ UK FTSE Oil & Gas Producers Index: -4.0%
⇒ Asia Pacific Oil & Gas Producers Index: -4.3%

Hindustan Unilever- Strong operating performance :price target: Rs235.00: Macquarie Research

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Hindustan Unilever
Strong operating performance
Event
 HUVR reported better than expected 4Q results, with revenue up 13.3% YoY
to Rs49.6bn driven by 11.4% growth in soaps and detergents and 16.2%
growth in personal products. Adjusted for extraordinary items of Rs880mn,
PAT grew 20% YoY to Rs5.1bn, 5% ahead of our estimates.

Adani Power --Solid 4Q11…keep them units comin’ :: Macquarie Research

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Adani Power
Solid 4Q11…keep them units comin’
Event
 NPAT was in line with our estimates while EBITDA steamed ahead, 36%
higher due to volume growth, better operating performance, realisations and
costs. The focus for Adani Power in FY12 will be on rolling out another
2,640MW at Mundra and dispatching large untied volumes into the power
market. In a challenging sector, the stock remains our preferred pick among
Indian IPPs, trading at a 22% discount to our price target and 8x FY13 NPAT.

Mundra Port & SEZ - Harbouring good times.:: Macquarie Research

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Mundra Port & SEZ
Harbouring good times
Event
 MSEZ reported its 4QFY11 and FY11 results, which were in line with our
estimates. Adjusted PAT of Rs9.02bn in FY11 was up 29% YoY on the back
of 29% growth in cargo volumes. We have an Outperform rating on the stock
with a target price of Rs148.

Hindalco Industries- Pay-back time ; target rs 280:: Macquarie Research

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Hindalco Industries
Pay-back time
Event
 In line results – though Street likely disappointed: Hindalco reported
results for FY11, which were in line with our estimates operationally after
adjusting for one-offs. Hindalco’s subsidiary Novelis has returned
USD$658mn of capital (initial equity investment of USD$3.55bn). Also, with
the restructuring of the Novelis debt, we expect regular dividend payouts. We
maintain Outperform and TP.

UBS Investment Research -- Dabur India:: Building a supplements business

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UBS Investment Research
Dabur India Ltd.
B uilding a supplements business
�� News: Dabur buys 30-Plus
Dabur is to acquire Ajanta Pharma’s energizer brand ‘30-Plus’, the oldest herbal
energizer brand in the country. It was launched in 1990. According to media
reports, the brand consideration is ~Rs500m.

UBS: Godrej Properties - Strong 4Q 􀂄 beats UBSe and consensus estimates

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UBS Investment Research
Godrej Properties
S trong 4Q
􀂄 Event: 4Q beats UBSe and consensus
Q4 earnings grew rapidly on QoQ and YoY basis better than expected due to
strong EBITDA growth driven by operating leverage from development business
(vs. asset monetization previously). FY11 also reported strong revenue growth of
86% YoY, with earnings up 7% YoY. Leverage however increased to net debt of
Rs8bn with D/E at 0.85 (vs 0.78 in 3Q). Board declared a dividend of Rs4.5/share.

UBS:: Federal Bank -- On track: Q4 earnings

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UBS Investment Research
Federal Bank
O n track
􀂄 Event: Q4 earnings in line with UBSe, higher than consensus
Federal Bank reported net profit of Rs 1.7 bn (47% Y/Y) in line with UBSe while
well ahead of consensus however NII came slightly below estimates at Rs 4.5 bn
(UBSe Rs 4.7bn). Key highlights of the quarter were 1) Asset quality trends
stabilized as expected, GNPA flat, credit costs declining and provisioning coverage
improved to 83% 2) NIMs decline 30 bps q/q as loan mix changed along with cost
of fund increase 3) Balance sheet growth improves strongly in Q4 at 19% y/y.

UBS Key Calls - Asia C hanges to Key Calls :: Lanco Infra and Shriram Transport from India

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UBS Key Calls - Asia
C hanges to Key Calls
􀂄 Add KEPCO
We believe KEPCO is the beneficiary of a structural change in the Korean
electricity market, which could lead to more stable ROE, lower cost of capital and
a shift in investor perception of the stock. The Korean government announced on
Thursday that it will implement a fuel cost pass-through scheme starting on 1 July.
We view this as positive because 1) it adds visibility to KEPCO's earning, which
could lead to a lower cost of equity (beta is 1.0 now versus the regional average at
0.7); and 2) it signals a desire from the government to rationalise the market, which
could structurally lift KEPCO's ROE. Separately, we are also confident that
KEPCO will be able to raise its tariff by 4-5% ahead of July which will be a nearterm
catalyst. We think these developments could lead to significant upside to the
share price, currently trading at 0.45x PB. Our price target at Won40,000 has
incorporated a 5% tariff hike and is 36% above the current price, and a lower beta
at 0.8 could add another Won5,000 to our fair value.
􀂄 Eleven live Key Calls
We have 11 live Asia Key Calls— Bank of Ayudhya, Cheung Kong Infrastructure
(CKI), China Unicom-H, Genting Singapore, ICBC-H, KEPCO, Lanco Infratech,
LG Display, OCBC, Shriram Transport Finance, and Sun Hung Kai P (SHKP). All
are rated Buy.

Rolta India 3Q: P&L story on track :: Retain OP.:: Macquarie Research

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Rolta India
3Q: P&L story on track
Event
 Good 3Q results. 3Q revenues of Rs4.6bn and EBITDA of Rs1.8bn were 2%
and 3% ahead of our expectations, respectively. The profit beat of 20% was
largely driven by higher other income and lower tax.

GVK Power and Infra- Regulatory overhang remains :: Macquarie Research

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GVK Power and Infra
Regulatory overhang remains
Event
 GVKP declared its 4Q and FY11 results which were in line with our
expectations. FY11 PAT at Rs1.5bn was flat YoY. Power plants’ performance
was hit due to lower availability of gas while airports witnessed robust traffic.
 We cut earning estimates for FY12/13 to factor lower tariffs from power plants
(some merchant built in earlier) and delay in commissioning of Alaknanda
hydro project. We cut our target price by 28% to Rs43 (from Rs60) as we
remove gas expansion projects and assign lower value to Bangalore airport.

KSK -OUTPERFORM; 4Q11 results disappoint; fuel supply clarity key trigger ahead ::Credit Suisse

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KSK ------------------------------------------------------------------------------- Maintain OUTPERFORM
4Q11 results disappoint; fuel supply clarity key trigger ahead


● KSK’s 4Q11 reported PAT at Rs377 mn appeared ahead of CSe at
Rs134 mn, but adjusting for Rs484 mn deferred tax credit created
from accelerated depreciation at Wardha Warora, it had a net loss of
Rs108 mn, despite higher-than-expected volatile project development
fees. FY11 Rec. PAT (Rs1.3 bn) was 7% below CS estimates.
● Performance of the Wardha Warora project led to the disappointment of:
1) generation reported for only 270MW versus 405MW operational during
4Q (rest capitalised on auditor’s guidance); 2) high auxiliary consumption
at 21% led by frequent back-down requested by MSEDCL and low fuel
availability; and 3) merchant tariffs of just Rs3.96/kWh earned on a
negotiated basis from MSEDCL.
● We cut earnings for FY11 by 7% in line with reported results and by
4-5% over FY12-13 on continued delay in the commencement of coal
supplies from Coal India for its Wardha Warora project.
Consequently, we lower our target price by 5% to Rs166.
● The likely start of coal supply from June, commissioning of the
135MW Unit 4 at Wardha Warora and 43MW at Arasmeta, and
potential clearance of Morga-II block from no-go zone are key
positives.