US monetary conditions remain loose.:Macquarie Research

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


US monetary conditions remain loose
Event
 Six weeks out from the end of QE2 and US interest rates are falling.
Impact
 Together with new lows for the US$, the American economy is headed for the
end of QE2 with monetary conditions that remain extremely loose. Indeed
they have loosened noticeably over the past three months.
 This is coinciding with clear evidence of both lower bank lending standards
and greater demand for credit.
 It is a monetary backdrop that will sustain US growth well beyond the end of
QE2.
Analysis
 The transmission mechanism from the end of QE2 to weakness in the US
economy and financial markets was supposed to be tighter monetary
conditions. Rising interest rates and a consequent rise in the US$ were
supposed to be the means by which the withdrawal of Federal Reserve
support is converted into an economic slowdown.
 With the end of QE2 now just six weeks away, these shifts should be starting.
Yet this is just not happening. In fact US monetary conditions are easing
rather than tightening and this is potentially a major plus for American
economic growth over the second half of 2011.
 Most obvious is the decline in US government bond yields. Contrary to the
forecasts of some well-known asset managers, US long-term interest rates
have fallen markedly since peaking in February. While still above the trough of
late 2010, US 10-year yields are extremely low.
 Five-year real yields are matching the low of late 2010. The five-year TIPS
yield is negative once again and this is much lower than the yield that
prevailed at the end of QE1 in March 2010.

Jaiprakash Associates -- Strong Realty offset by weak Cement and E&C: BofA Merrill Lynch,

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Jaiprakash Associates Limited
Strong Realty offset by weak
Cement and E&C: PO cut
􀂄 Weak 4Q – Cut EPS and PO to Rs170, but reiterate Buy
JPA (parent) had weak 4Q with Rec PAT -27%YoY. But consolidated results,
likely next month, is a better way to analyze this developer, in our view. Realty was
strong in 4Q – revenues +380%YoY, EBIT +635% – on high-margin JP Green,
Noida and Greater Noida sales and Rs866mn dividend from JP Infra. But this was
offset by a 2%YoY fall in cement ASP and weak E&C execution/margins. We are
cutting FY12-13E parent EPS by 12-18% to reflect weak 4Q margins and higher
interest costs. Our PO is down to Rs170 from Rs200 due to lower parent EPS and
a 12% cut in our PO for JP Power. Catalysts are start of – 1) Karcham HEP May-
Aug.’11, 2) Yamuna expressway in 4Q, and 3) Capex peak at parent & JP Infra in
FY11 leading to deleveraging from FY12. Buy JPA on assets trading at 49%
discount to NAV, which could be unlocked by improving visibility of cash flow.
Realty surprise, but Cement and E&C disappoint
JPA’s 4Q11 EBITDA fell 6%YoY on a 511bp fall in margins due to weak Cement
and E&C (EBIT margin -797bp). Sales rose 17%YoY (4% below BofAMLe) on
strong realty +380%YoY, but offset by 11%YoY fall in E&C sales on slow progress
at expressway and AP tunnel site. Cement sales +27%YoY but EBIT fell 26%YoY
on 2% fall in cement ASP and start-up costs of 4.4mtpa (21% of capacity).
Captive orders to support E&C; Cement capacity +64% by FY13
Growth in top-line of E&C led by a) start of civil works at 2.7GW Lower Siang HEP in
FY12, order value of which shall be bigger then Karcham Wangtoo & Yamuna
Expressway put together, b) build >500mn sqft of realty along Yamuna Expressway
and c) US$1bn civil works at thermal plants of JP power over FY11-13E. JPA to
ramp-up cement capacity to 37mtpa +64% by FY13E vs 22.8mtpa till 3QFY11.
Buy – Assets at a 49% discount, 32% EPS CAGR in FY11-13E
JPA is one of the best asset plays (49% disc to NAV). Triggers: a) Timely start of
projects (esp. Karcham), BTG order for 2GW Bara Ph 2, b) monetization of realty,
c) bottoming of cement prices in 2HFY12 and d) approval for Gr. Noida airport.

Weekly US oil data Mixed messages ::Macquarie Research

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Weekly US oil data
Mixed messages
Suddenly soggy demand data look unusually strange
Especially now that violent market volatility obscures what is happening to the
underlying fundamentals, it would have been lovely to get more of a sense of
direction from the US weekly data. It‟s too bad then that these numbers are even
more puzzling than normal.
Let's start with what's clear: On the crude oil front this morning's data are
constructive from a global perspective. Imports of crude oil into the US remain
extremely low (12% below normal, and on par with March levels). Currently 4wk MA
imports of 5.2mb/d into the Gulf Coast are more than 800kb/d short of their 5yr norm,
and they're 11% lower than last year. Evidently, producers are not 'pushing' oil onto
US customers. Indeed these data jive with our assessment that global crude oil
balances will be in deficit in 2Q and 3Q of this year. Correspondingly, inventories of
crude oil should fall and Brent futures curve structures should strengthen.
What's hopelessly unclear is the US demand data. If we're to believe the US EIA
then oil demand here just softened materially. On a 4wk MA, and comparing y/y, we
are suddenly more than 500kb/d in the red (down 3%). The entire change from near
flat is composed of a 300kb/d swing in diesel demand (from middling growth to
pronounced decline) and a 200kb/d acceleration in the y/y declines for 'other
products' -- which is a new shift. Either the EIA is wrong, or the US economy just
weakened something awful without anyone else noticing.
Top three numbers in today’s weekly US oil data
 Crude oil inventories were unchanged – The build was concentrated in the
East and West Coast regions. Levels at Cushing, OK fell -1.6mbs.
 Downstream stocks turn modestly lower, -0.1mbs, as a -1.2mbs draw in
middle distillates helps soften the effect of a +2.9mbs build in other products.
 Demand growth turns negaive at -2.9% (four week MA, y/y).

Weekly Fund Flow Tracker- Taiwan takes the marbles ::Macquarie Research

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Weekly Fund Flow Tracker
Taiwan takes the marbles
Local exchange data: Taiwan regains momentum
 Firming foreign net-buying driven by Taiwan Thailand and Philippines.
For the week ending Wed, 11 May, aggregate foreign net-buying for the six
Asia ex-Japan markets where data is available (ie, Korea, Taiwan, India,
Thailand, Indonesia and the Philippines) increased WoW to US$998m from
US$548m a week ago. Taiwan recorded net-buying of US$789m (vs last
week’s US$560m), marking a third week of consecutive net-buying. Thailand
and the Philippines also recorded increased weekly net-buying to US$62m
and US$227m, respectively (vs. -US$13m and US$9m last week). YTD
foreign net-buying in the Philippines now represents fully 2% of market cap.
 Net-selling in India eased WoW to -US$86m from -US$541m, with daily
frequency data showing positive net-buying since Mon, 9 May. Meanwhile,
Korea recorded modest net-selling of -US$30m vs. net-positive foreign buying
of US$272m the week before, mainly driven by a single day of net-selling on
6 May. Net-buying in Indonesia moderated to US$35.6m from US$251m the
week before.
 Accelerating foreign net-buying in Japan. Japan reports net-buying data
with a one-week lag. But for the week ending 29 April, foreign investors netbought
Japan by US$1.5bn, a substantial pickup from the prior week’s
US$975m and well above 52-week average of US$917m.
 Frontier markets still signal preference for risk. Aggregate foreign netbuying
for the three frontier markets where data is available (ie, Vietnam,
Pakistan and Sri-Lanka) stood at US$23m, a moderation from last week’s
US$31m but still well above the YTD average of US$7m. This is driven
primarily by net-buying in Pakistan, which after the killing of Osama bin Laden
recorded US$17m in net-buys – a 16-week high.
Fund subscriptions data: Taiwan and Greater-China escape
waning appetite
 GEM funds net-subscriptions slower but net-positive. Weekly
subscriptions to Global Emerging Markets funds moderated WoW to
US$434m from a strong week of US$1.3bn previously, but remain much
stronger than the net-negative YTD average of -US$138m.
 Emerging Asia: net-subscriptions to Pan-Asia ex-Japan regional funds
ended three-week net-positive streak. Asia ex-Japan regional funds
received net-redemptions of -US$77m vs US$245m the week before. Ten out
of 13 single-country funds received either waning net-subscriptions or
increased net-redemptions – key exceptions being China funds (easing netredemptions
WoW to -US$127m from -US$248m), Greater-China funds
(US$31m vs net-redemptions of -US$40m) and Taiwan-focused funds
(US$59m vs net-redemptions of -US$94m).
 Developed Asia: net-redeemed overall. Japan funds received -US$31m
net-redemptions – a reversal from US$108m net-subscriptions the week
before. Asia-Pacific funds (which combine Australia and New Zealand with
Japan and emerging Asia) received increased weekly net-redemptions of -
US$66m from -US$29m the week before.

Goldman Sachs, :: SAP conference confirms an intact backdrop for IT services

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


SAP conference confirms an intact backdrop for IT services
SAP conference confirms healthy demand backdrop for IT services
At SAP’s annual Sapphire conference, we met with Accenture, Atos Origin,
Cognizant Technology Solutions, HCL Technologies, Infosys, TCS, and
Wipro to discuss their specific efforts around SAP and enterprise
applications. Consistent with the latest GS IT Spending Survey and
recently reported results, our conversations as well as record attendance at
the conference confirmed healthy demand for applications and ERP
services, and support our positive view on the consulting models including
Accenture, CGI Group, Cognizant, and Sapient.
Enterprise applications remain a significant growth driver
We believe enterprise applications remain a significant growth driver for IT
services. All of the vendors indicated that their SAP practices have grown
faster than company averages, both in revenue and headcount; these
practices are expected to sustain 20%-30% annual growth over the next
few years. A couple of integrators noted that the initial wave of “pent-up”
demand drove growth in 2H10, with a more gradual but sustainable phase
of growth expected going forward. The drivers for ERP activities include a
combination of upgrades, platform consolidation, new sales in emerging
countries, and global deployments for large multi-national corporations.
Intact discretionary IT spend supported by growth investments
Our conversations suggest that the backdrop for discretionary IT spending
remains intact, driven by increased growth investments, particularly in the
areas of Cloud, analytics, and mobility. This is consistent with our view that
new technology spending initiatives driven by both cyclical and secular
factors will drive sustained growth in IT spending in 2011 and beyond. For
perspective, SAP currently expects that its offerings in these new areas will
grow to €5 bn in revenue, or about 25% of its business by 2015.
Strong momentum in N.A. and emerging markets; Europe sluggish
Virtually all integrators pointed to solid business momentum in North
America and emerging markets. However, demand remains sluggish in
Europe due to a weaker macro backdrop and a more gradual loosening of
discretionary spending budgets. From an industry perspective, verticals
showing strength include retail and consumer packaged goods, health
care, utilities and financial services, while telecom and public sector lag;
consistent with recently reported earnings results.

LCD – May 1st sell-through is fine ::Macquarie Research

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��

LCD – May 1st sell-through is fine
Event
 We provide an update on China’s 5/1 labour day LCD TV sell-through.
Despite conflicting data points, our checks indicate holiday sell-through was
generally good, with double-digit YoY growth. More importantly for panel
makers, inventory levels exiting the holiday period for both TV brands and
retail channels were clean/healthy, leading to re-stocking demand in 2Q from
China TV brands, which is supportive of panel price hikes. Overall, we retain a
positive view on AUO/LGD on the recovery of panel makers from the bombedout
base in 1Q and pickup in TV into 2H11 amid low expectations. We also
like Radiant, Coretronic, Asahi Glass, NEG and Chipbond in supply chain.
Impact
 Good May 1 sell-through. Per our checks with panel makers (AUO, CMI, LGD,
Samsung) and TV brands (TCL, Skyworth), China 5/1 TV sell-through was
generally good with around double-digit YoY growth, and both TV brands and
retail channels exited 5/1 with healthy inventory levels. Some market confusion
has arisen as AVC data shows -4.7% YoY for the three-day period, creating
negative sentiment. However, we believe this is misleading as: 1) AVC 5/1 data
captures mostly urban and does not include rural demand, which is a major
portion of China TV sales currently, 2) week prior to 5/1 (week 17) was +38%
YoY, week after 5/1 (week 19) was +45% YoY, and 3) AVC data is inconsistent
with feedback from both LCD panel makers and China TV brands.
 Positive read-through from TV brands. Both Skyworth and TCL see AVC
data as incomplete as it does not reflect rural demand during 5/1, which is a
large portion of the China TV market. Skyworth’s April sell-in units grew +20%
YoY, and it noted rural demand as the key driver. During the holidays, mgmt
noted some shortage in certain models (large size, 3DTV), and thus sees post-
5/1 inventory as clean. TCL expects at least double digit (+10-20% YoY) growth
during the 5/1 period with low inventory exiting the holidays, and thus will look to
re-stock panels in May/June with some TV panel price hike (consistent with
panel side). Strong April 2011 units from TCL over the next few days and
continued momentum in May/June should support and confirm this view.
 Recovering order flow and panel pricing. The consistent message from all
our checks is that overall 5/1 sell-through was good, and exiting 5/1 holidays,
inventory levels (which impact panel makers the most right now) at both the
TV set side (3-4 weeks) and retail channel (2-3 weeks) are at slightly below
normal levels. Panel makers are thus seeing consistent order flow from China
TV brands post 5/1 (and also why we think the AVC numbers are low); this is
also supportive of TV panel price hikes, which our checks indicate is already
being accepted in May. Both of these are positive for LCD panel makers.
Outlook
 We see limited downside and retain OP on AUO and LGD regionally, and like
Radiant, Coretronic, Asahi Glass, NEG and Chipbond in supply chain. We see
sequential improvement in 2Q from a bombed-out 1Q base in terms of units and
pricing for panel makers as inventory levels are healthy, with China being
supportive. TV cost structure should start to re-set in 2Q as TV brands can (for
the first time in almost one year) finally start to incorporate lower panel prices
into their cost structure, helping to improve margins (already seen in 1Q) while
also lowering the retail price premium. Our forward view into 2H11 would be for
elasticity to kick in against a backdrop of low expectations for end demand.

Result Review L&T::Angel Broking,

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Result Review
L&T
L&T posted a mixed set of numbers with disappointment on the top-line front and strong
EBITDA margin for 4QFY2011. The top line grew by 13.2% yoy to `15,384cr (`13,585cr),
against our expectations of `16,334cr. On the operating front, the company managed to
improve its margin to 15.2% (15.1%) against all odds, considering that this quarter was
marred by high commodity prices and inflation, among others. Further, reported PAT got
an added boost by higher other income and sale of investments to `1,685cr (`1,438cr).
The most heartening factor was order inflow for the quarter at `30,281cr (27% yoy
growth), which was ahead of our and street expectations. Order inflow and outstanding
order book for FY2011 stood at `79,769cr and `1,30,217cr, respectively (3.0x FY2011
revenue), with majority of contribution (~70% combined) coming from the infrastructure
and power segments. Also, guidance given by management on the order inflow front for
FY2012 is encouraging at 15–20%, given the current macro headwinds faced by the
economy. Further, management guided for robust top-line growth of 25% for FY2012,
which is also positive. L&T continues to be our top pick. We maintain our Buy view on the
stock; however, the target price is under review.

State Bank of India Lower estimates, target price; maintain Sell ::anand rathi,

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


State Bank of India
Lower estimates, target price; maintain Sell
We slash SBI’s FY12e/FY13e net profit by 5.2%/5.3% on lower
NIM assumptions and higher employee pension provisions.
Hence, we cut our target price to `2,393 from `2,585. We retain
Sell as SBI’s high employee liabilities and provisions to raise
NPA coverage would keep RoE lower than peers’.
 CASA share improves, yet NIM decline likely. NII declined
11% qoq, led by 90bps fall in domestic credit-to-deposit to 76.3%.
CASA share improved 49bps qoq to 48.7%, and grew 22.1% yoy.
Yet, given SBI’s rising liability costs, particularly short-tenure
deposits and a stretched credit-to-deposit, NIM has little scope
for gains. We lower our NII for FY12e/FY13e by 6.1%/6.6%.
 Higher employee expenses erode networth. Staff costs
increased 20.1% qoq due to provisions for pensions (`8.8bn in
4QFY11; `24.7bn in FY11). While management estimates `25bn
of pension provisions in FY12, gratuity provisions are likely to be
lower (`4bn amortized over four years). SBI also adjusted
`79.27bn from its reserves for previous pension provisions.
 Asset quality suffers, low CAR necessitates infusion. Fresh
slippages of `56.5bn indicate that asset quality is still suspect; 17%
of restructured loans (`31.3bn) are NPAs. Additional provisions
of `11bn (for 70% NPA coverage) and `5bn (for restructured
standard loans) would limit earnings growth. The low tier-1 of
7.77% makes capital infusion paramount for business growth.
 Valuation and risks. We value the standalone bank at `1,753
(1.7x 1-year forward BV) and subsidiaries at `640. Risks: lower
credit costs; faster accretion in low-cost deposits.

China Ahead Of The Curve-- Change in growth rate is the fear ::Macquarie Research

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


China Ahead Of The Curve
Change in growth rate is the fear
Event
 China has inflation under control but growth indicators will likely print a
mixed picture over next month or so.
Impact
 There has been some slowing in China inflation, especially in the allimportant
food category. Credit growth has also slowed. Our Head of China
Economics, Paul Cavey, believes inflation will slow in coming months, but
so too will growth.
 With China being the locomotive of growth for the world over the past year,
investors will naturally question the outlook in the short term. However, the
outlook is for stronger world growth in the medium term.
 Investors also remain concerned as to the rate of growth of the US in the
short term after a slow start to the year. This combination will result in mixed
returns for markets in next few months.
 Risk levels are climbing as evidenced by the VIX index and weaker
performances of high-growth beta investments. The VIX historically posts a
low in April and rises into July. This was indeed the case this year, with the
VIX up around 18% since the low seen in late April.
 With the economic growth outlook clouded, markets will likely mark time
between now and August. This is typically a seasonally mixed period for
returns.
Outlook
 We recommend investors increase holdings in emerging markets and in
Europe in this period. Markets offering value include the UK, Germany
Korea and Russia. Those appearing to be poorly priced include Japan,
India, Hong Kong, Switzerland, Canada and Australia. Our Asia Strategist
Michael Kurtz is recommending Korea, Taiwan as overweight and Hong
Kong as an underweight.
 With risk likely to be higher in this period – emerging markets will offer an
attractive entry point compared to developed markets. Developed markets
will perform more strongly in the next few months.

Credit Suisse,::Suzlon-- Forex gains and accounting change prop an otherwise extremely disappointing 4Q

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Suzlon----------------------------------------------------------------------------------- Maintain NEUTRAL
Forex gains and accounting change prop an otherwise extremely disappointing 4Q


● Suzlon’s 4Q adjusted PAT of Rs1.0 bn was significantly below
estimates (over Rs3 bn) and disappointing. The reported PAT
included: 1) forex gains of Rs2.2 bn, 2) sudden change in accounting
policy at Repower that overstated PAT in 4Q by Rs1.1 bn and sales
by Rs9.7 bn, 3) taxes lower by Rs0.55 bn due to recognition of
deferred tax assets (auditors have expressed their reservations).
● 4Q wind group sales of 492 MW were below management’s
expectation of over 700 MW sales (as highlighted in the 3Q call).
Order inflows were only 144 MW. Repower executed only 851
MW in FY11. Guidance for FY12 points at EPS similar to that of
consensus and hence an irrelevant datapoint.
● Given an extremely weak quarter and continued stress on balance
sheet (debt remains unchanged), steep valuations of the stock
could be questioned. We intend to review our earnings model to
factor in the changes in accounting norms at Repower and to
account for the dilution on new FCCBs.
Accounting policy change surprising
The notes to results highlights that until the December quarter, sales
at Repower (95% subsidiary of Suzlon) were adjusted to align them to
the group’s accounting policy but a detailed exercise by Suzlon’s
management suggested that it might be appropriate to treat revenue
recognition differently at Repower and Suzlon, given the difference in
the nature of customisation of contracts/clauses at Repower and
Suzlon. This overstated the March quarter revenues substantially –
revenue overstated by Rs9.7 bn and PAT at Repower overstated by
Rs1.1 bn. Management’s explanation on the key drivers behind this
change in accounting policy is awaited.
Auditor qualification (comments)
We note that there were auditor comments with regards to: 1) taking
credit of deferred tax asset, 2) non-provision of premium on
redemption of FCCBs (Rs5.7 bn) and 3) non provision of IDC’s worth
Rs0.64 bn with regards to levy by TNEB.
Guidance equates to consensus EPS
Suzlon’s management has guided for Rs240-260 bn of consolidated
sales with EBIT margins at 7-8%. This amounts to EPS of Rs3.0 (at
the mid-point of guidance), in line with the street’s estimates. Given
the short cycle nature of the business and an order booking policy that
does not require even a financial closure of the project to get
completed, we see risk to such guidance as delivery schedules could
continue to get postponed, impacting numbers. Suzlon’s management
in its 3Q conference call had indicated India sales at over 700 MW;
however, actual sales came in at only 492 MW, which highlights the
difficulty in predicting sales for even a quarter ahead.

Credit Suisse,::Areva T&D - 1Q below estimates; overall T&D competitive environment remains challenging

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Areva T&D India Ltd----------------------------------------------------- Maintain UNDERPERFORM
1Q below estimates; overall T&D competitive environment remains challenging


● Areva T&D reported weak March quarter results with PAT ~51%
below estimates. We were expecting EBITDA margins to range in
early teens this year, given the cost actions by Areva T&D in the
past, expected improvement in utilisation rates and no ramp up in
costs; however, EBITDA margin of 8.4% was impacted by an
unusual increase in other expenses.
● Order inflow in 4Q of ~Rs13 bn was up 29% YoY but largely in
line with estimates. Order book at ~Rs52 bn grew only 4% YoY
and is indicative of revenue performance over the next few
quarters. Management’s commentary also suggests that market
environment in 4Q was challenging due to pricing decline and low
market growth (due to postponement in power, industrial and infra
ordering activities).
● We believe that given the tough operating environment it could be
difficult for Areva T&D to grow order inflows in FY11 and this
could impact the street’s earnings estimates. We note that Areva
T&D has also announced the demerger of its distribution business
as that has been globally sold to Schneider. We maintain our
UNDERPERFORM rating

JPMorgan:: Suzlon Energy - 4q results fall short, but strong guidance for FY12

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Suzlon Energy Ltd
Neutral
SUZL.BO, SUEL IN
4q results fall short, but strong guidance for FY12


• A profit after 8 consecutive loss making quarters, but lags expectations.
Suzlon reported consolidated Mar-q PAT of Rs4.3bn, however adjusted for
forex gain of Rs2.2bn; recurring PAT of Rs2.1bn was below our est.
(Rs3.4bn). The disappointment was led by lower WTG sales volume
(492MW in Mar-q vs. est. of 641MW). According to management
~160MW of deliveries got postponed to 1QFY12. The overseas order
backlog in Suzlon wind (~877MW) continues to be sticky and the company
has sold only 77MW outside India in Mar-q vs. our est. of 195MW.
• Pricing healthy, but margins and inflows disappoint: Suzlon wind
reported healthy gross profit realization of ~Rs22mn/MW (~10% higher
than est.); amid our concerns on falling wind turbine prices and rising RM
cost (see our note- Risk scores over reward). Wind business EBITDA
margin (ex-forex gains) improved to only 7%, well below estimate (12.9%).
This was mainly owing to lower sales volumes, and to some extent higher
employee and fixed operating costs. Order inflow momentum seems to have
slowed down, since beginning of Feb-11 Suzlon has reported only 144MW
orders, all from India (vs. 2.48GW in 9MFY11).
• REpower delivers on guidance: REpower posted a strong Mar-q and
reported EBITDA of Rs4.7bn after a loss of Rs230mn in 9MFY11. It
managed to meet lower end of guidance with FY11 revenue of Euro1.27bn
(guidance of Euro1.25-1.35bn) and EBIT margin of 5.2% (range of 5-7%).
• Challenging consol. level guidance for FY12. Suzlon has guided to
Rs240-260bn consol sales (vs. our est. of Rs227bn) and 7-8% EBIT margin
(vs. our est. of 6.5%), ahead of our and street estimates. Prima-facie
guidance appears to be factoring in a blue sky scenario, where Suzlon wind
is able to deliver 2.25GW+, pricing remains healthy, RM costs do not spike
up, and fixed costs remain stable.

Tata Power - Upstream value clouded by Mundra .:Macquarie Research

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Tata Power
Upstream value clouded by Mundra
Event
 TPWR reported headline NPAT of Rs20.9bn, above our estimate of Rs19.9bn
and the market at Rs19.1bn driven by a stronger EBIT contribution from coal,
while weaker merchant realisations at Haldia and Trombay pulled down
underlying earnings in the stand-alone business. After stripping away noncash
and one-off items, however, group NPAT appears to have slipped 3%
from FY10.
 TPWR has performed in-line with the market over the past six months. What
we like about TPWR is its undervalued coal assets which put it strategically
ahead of its peers and should drive earnings growth for the next two quarters.
It is clearly lagging other thermal producers due to the uncertainty over
Mundra UMPP profitability. With the stock trading 25% below valuation, we
maintain our Outperform – our preferred defensive large cap.
Impact
 Strong FY11 head-line result, but boosted by some one-offs… after
adjusting for some non-cash and one-off items (namely deferred stripping
costs and profit on sale of investments) FY11 NPAT appears 3% lower than
FY10 NPAT.
 FY12 an action packed year: with 1,050MW Maithon ~95% complete,
4,000MW Mundra 80% complete, 120MW Jojobera being commissioned in
March 2011 and anticipated coal production of 67mtpa (CY11) from the
KPC/Arutmin assets, TPWR is set for a year of strong operational growth.
 Platt’s reporting US$134-135/t settlement for Bumi: noting that some
Japanese Power Utilities have agreed to an FY12 settlement of US$134-135/t
for Bumi’s high-quality KPC coal – a premium to the Australian-Japanese
settlement of US$130/t given the freight differential.
 -Rs48/share (-4%) impact from repricing of fixed coal contract: company
management acknowledged on the conference call that they are in
discussions with the Indonesian Government regarding the fixed cost portion
(3mtpa) of its 10mtpa coal contract with Bumi. Management highlighted that
an adverse outcome could see Tata Power pay an additional US$35/t for the
3mtpa fixed component of the contract to FY17.
Earnings and target price revision
 FY14 NPAT +7% on the back of thermal coal upgrades.
Price catalyst
 12-month price target: Rs1,553.00 based on a Sum of Parts methodology.
 Catalyst: coal price settlements with Japanese buyers over next week and a
strong 1Q12 due to higher coal volumes/prices and merchant realisations.
Action and recommendation
 Outperform.

Securities Funds Pulse -- Back in black  .:Macquarie Research

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Securities Funds Pulse
Back in black
 After last month’s limp performance, where only Global funds posted a
positive return, it’s good to see all mandates come out of the red and back
into black this month. The US and Global Funds once again led the charge.
Over 12 months it is noticeable that all mandates except Australia are
clustered around the 19%-22% level.

Commodity price forecast changes – catching the knife :Macquarie Research

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Commodity price forecast changes –
catching the knife
Feature article
 In today‟s article, we outline the main changes to our commodity price forecast
profiles, which were released at 11am GMT on Tuesday. While our views on
the direction of most commodity prices are unchanged, we have become more
bullish on the prospects for the level of iron ore in particular (short, medium
and long term), and state our bullish 2H11/2012 copper view (ie, remove our
short-term bearish trading call). Meanwhile, zinc has fallen to the point that the
commodity is now viewed as a strong buy, together with lead, which we
continue to view as an attractive opportunity for those who can gain exposure.
 We substantially downgrade our uranium price profile in this round, and
continue to hold a bearish view on the outlook for nickel (2H11) and aluminium
(2H12), although we expect aluminium to perform well in the short term.
 For a summary of our views on the entire base, precious, steel/bulk,
agricultural and energy commodities that we cover, please ask your sales
representative for a copy of the May edition of the Macquarie Commodities
Compendium, released alongside our new forecasts on Tuesday.
Latest news
 Aluminium prices fell by 2.8% on Tuesday, on reports of a potential large
delivery onto the LME this week, and concerns about the potential for the
LME to change warehousing rules in the coming week. The latter also
resulted in further selling of zinc, which fell by 3.0% on Tuesday, to a level
which is digging significantly into the Chinese zinc cost curve.
 The International Nickel Study Group reports that estimated world nickel use
rose 5.8% YoY in the January-March 2011 period to 387.9k, while production
grew by 11.6% to 376.9kt, implying a deficit of 11.1kt. These numbers are
broadly in line with our own estimates with the exception of China where we
believe usage was an estimated 178kt vs. the INSG's estimate of 155kt and
suggest to us a further significant rundown in Chinese unreported nickel
stocks (of more than 25kt in 1Q). We expect the market to swing from a first
half deficit to a second half surplus as supply catches up and eventually
overtakes demand by mid-year.
 Inside Coal have reported that Anglo American has agreed a price of $315/t
FOB Australia for its German Creek hard coking coal brand for Q3 shipments
with a European buyer. This is as yet unconfirmed, but would be in line with
our price forecast for 3Q. We expect to see more pushback from Japanese
buyers given the weakness at the lower end of the market; however, with hard
coking coal availability still limited, the price level looks set to remain above
the $300/t mark into 3Q.
 US Industrial output was flat MoM in April, up 5% YoY, mainly due to a drop in
auto assemblies following the disruption in parts supplies from the Japan
disasters. Excluding the decline of motorvehicles from 9.0m annually to 7.9m
annually, factory production rose 0.2% MoM.

.Commodity price changes-- The best way to play Asia :Macquarie Research

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Commodity price changes
The best way to play Asia
Underlying volumes remain strong – focus on the upstream
While both the Commodity and Equity markets have been difficult to predict, we
remain comfortable with our growth forecasts for volumes in China and as a
result we also feel comfortable about our Commodity price forecasts.
After the most recent round of pricing changes, we remain positive on the
upstream asset commodities like Copper, Iron Ore, Coking Coal and Thermal
Coal. We are more cautious on Zinc, Steel and Aluminium while we remain
relatively neutral on the Gold sector.

Larsen & Toubro- Going into Q4FY11 with low expectations .:Macquarie Research

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Larsen & Toubro
Going into Q4FY11 with low expectations
Event
􀂃 L&T reports its crucial Q4FY11 earnings on 19th May. Street expectations are
very muted in relation to margins and order inflows, which limits downside for
the stock. L&T still remains one of the best ways to play the infrastructure
story in India. Maintain Outperform with a price target of Rs2,215.
Impact
􀂃 Q4FY11 estimates 7% ahead of consensus: We are forecasting revenue of
Rs164.4bn, up 21% YoY, led by domestic E&C. We are building in a margin
decline of 50bps in this quarter, primarily in the electrical business, due to a
sharp movement in copper prices. Our PAT estimate is Rs16.4bn (up 22%
YoY on a recurring basis), which is 7% ahead of consensus.
􀂃 Earnings expectations very low: The street is building in revenue growth of
only 17% in Q4FY11 despite the strong momentum in revenues in the last 2
quarters. The street has also factored in a large miss in order inflows in Q4,
due to no announcement of large wins.
􀂃 Pick-up in order inflow announcement in Q1FY12 compared to Q4FY11:
L&T has announced orders worth US$1.1bn this week from power and oil&
gas sector, which is encouraging, given Q4FY11 was unusually very dry in
terms of order inflows.
􀂃 GSPC order marks further inroads into deep-water development: L&T
has announced US$300m order for offshore process platform for GSPC to be
delivered in 2 years. L&T had received a US$230m order for offshore
wellhead platform from same customer. This now qualifies L&T to participate
in the large deep water development opportunity in India and overseas.
Earnings and target price revision
􀂃 No change
Price catalyst
􀂃 12-month price target: Rs2,215.00 based on a Sum of Parts methodology.
􀂃 Catalyst: Q4FY11 earnings, guidance on order inflows and margins
Action and recommendation
􀂃 Guidance on order inflow and margins critical: Impact on FY12 revenues
would be limited despite miss in order inflows in FY11. So street would be
more concerned on the outlook for margins and order inflows in FY12.
Expectations are already muted on these fronts.
􀂃 Clarity expected on fate of electrical business: We would also look forward
to hear the future roadmap on the electrical business which is proposed to be
transferred to a subsidiary or any other external entity.
􀂃 Downside limited in the stock from current levels: The stock is trading at
around 14x FY12 earnings (adj for subs). Valuations and low expectations
mean that risk reward is favourable for the stock at these levels. Retain OP.

Director‟s Cut -Sprint splat, blood flat ::Macquarie Research

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Director‟s Cut
Sprint splat, blood flat
It is a truism that the hardest competitor to influence is the collective industry
dynamic.
As Kevin Smithen emphasises, Sprint Nextel (US) is likely to turn up to the
party brimming with smiles and all dressed up, but a day too late – they should
have read the invitation more closely!
Kevin points out that there is enough evidence to show Sprint will launch iPhone
4 onto their network just as the competitors move to the next new thing – iPhone
5. It‟s hard for an Apple FanBoy to impress his friends by whipping out the 4
when someone pipes up, „so what, look at my 5‟.
As T and VZ move to iPhone 5, it is likely they will drop the price of iPhone 4 to
$99, which Sprint will need to match, leaving them with a big subsidy bill. So you
are left to compete on price rather than features – in a commodity market such
as voice/data carriage, having a client base disproportionately skewed to value
purchases is not a comfortable position.
Further, the subsidy bill drag on FCF comes at a time when Sprint is facing large
debt maturities and an expensive capex choice in continuing the Clearwire 4G
strategy at a time when the industry transitions to LTE devices. It seems the
industry is moving on again to the next location.
With 35% downside from current prices, that is less a Sprint and more a Splat.
>> Read Report
Fainting is the body‟s autonomic defence mechanism to put you in a prone
position as blood pools away from the vital organs – as I read Craig Collie’s
analysis of the plasma therapeutics market, I get a similar feeling.
What stood up as many years of good growth is now looking very flat. Keep in
mind, this is essentially a slow moving industry (due to regulatory entry/exit
barriers and therapeutic switching costs) but, nonetheless it is still at heart a
commodity product. As Craig details, the 15% industry growth rates of the
recent past are actually an anomaly and growth rates closer to the long-term
norm of 3 – 5% are likely to prevail going forward.
Whilst the focus of the report is CSL (AU), the industry structure trends he
articulates are equally relevant to other plasma market stocks such as Baxter
(US), Grifols (ES) and Talecris (US, currently being acquired by Grifols).
CSL is trading at a PER premium of around 50% to the Australian market due to
a strong track record coupled with quality management, a premium that is now
looking increasingly hard to justify. >> Read Report
The old maxim of when good management meets a bad industry, it is the
industry that maintains its reputation looks set to play out once again

Orchid Pharma Beats FY11 guidance ::Macquarie Research

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Orchid Pharma
Beats FY11 guidance
Event
 OCP reported FY11 sales of Rs17.2b (up 33% YoY), EBITDA of Rs4.2b and
PAT of Rs1.56b. The EBITDA margin was 23.5%. Adjusting for the asset sale
to Hospira in FY10, sales growth was ~60% YoY. Results were well ahead of
our estimates and company guidance. OCP announced that a fund-raising
resolution of a maximum Rs10bn (including equity and debt) has been
considered by the board primarily for upcoming FCCB repayment. We
maintain our OP rating. Lack of financial discipline or higher than anticipated
equity dilution remain key risks to our investment thesis.

India telecom sector Mobile data… the silver lining ::Macquarie Research

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


India telecom sector
Mobile data… the silver lining
2G - a life-changer; 3G- a game-changer
News flow in the last six months has been dominated by depressing headlines
related to the 2G telecom scandal. The clouds of uncertainty around the new
telecom policy are forcing long term investors onto the sidelines. We however
urge such investors to keep an eye firmly on the big picture. Voice-based
telecom changed peoples’ lives and the way many small and micro-businesses
operate. We also acknowledge, however, that the low hanging fruit (read: urban
subscriber) has been tapped and 2G ARPMs continue to fall with rising
penetration. We believe the next uptick in revenues/margins will be driven by the
pick-up in data/3G over next 3-5 years. This can dramatically impact sector
landscape and earnings, currently under pressure due to hyper-competition.

India Strategy – April inflation in line with RBI's forecast ::RBS

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


April's headline WPI of 8.7% was a bit above market expectations of 8.5%, but in line with the
Reserve Bank's forecast of 9%. Yoy core manufacturing product inflation was 6.3%, down from
the 7.4% reading for March.
April headline yoy WPI of 8.7% vs. Bloomberg consensus of 8.5%
􀀟 Yoy WPI inflation moderated from the revised 9.1% reading for March. The Reserve Bank,
per its monetary policy statement on 3 May, had forecast yoy WPI inflation to stay close to 9%
through September.
February inflation numbers revised upward
􀀟 February yoy WPI inflation was revised up to 9.5% from 8.3%, linked to the upward revision in
yoy core manufactured products inflation to 7.6% from 6.1%.
􀀟 Separately, the WPI series was also revised from April 2004 onwards to correct an error in
the series. The WPI data released earlier did not incorporate the WPI for Metal Products. As a
result, the yoy WPI inflation reading for March was revised to 9.04% from 8.98%, and the yoy
core manufactured products inflation reading was revised to 7.35% from 7.01%.
Core manufacturing inflation trends down on a yoy and sa mom basis
􀀟 Yoy core manufacturing inflation (excluding food products) reached 6.3% in April, down from
a revised 7.4% in March. On a seasonally adjusted (sa) basis, the core manufacturing price
index declined nine basis points from March. On a non-seasonally adjusted basis, the index
increased 1.2% mom.
􀀟 Given the significant upward revisions in the February data, we think it may be too early to
predict a downtrend in core inflation. We think yoy core inflation could again climb north of 7%
by July due to the pass through impact of expected retail fuel price hikes.
However, yoy food inflation ticked up in April
􀀟 Total food inflation (primary and manufactured) increased to 7.6% from 6.8% in March driven
by the increase in manufactured food inflation to 5.7% from 2.4%. Primary food articles yoy
inflation moderated to 8.7% in April from 9.5% in March.

May 19; News Update ::RBS

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


News headlines
Oil & Gas
􀀟 HPCL to import 12.5m tonnes crude oil in FY12. (Economic times)
􀀟 Cairn India eyes expansion into east Africa. (Economic times)
􀀟 Reliance Industries rebuts DGH's KG-D6 report, hopes BP will fix problem. (Economic times).
􀀟 Reliance Industries trying to settle insider-trading case again. (Economic times)
􀀟 Reliance Cap's subsidiary hikes stake in HPCL to 5% for Rs128mn. (Economic times)
􀀟 Govt to stand by its decision on D6 supply cuts. (Business Standard)
Banks
􀀟 SBI's associate banks make up for its profit slump. (Economic times)
􀀟 SBI pegs pension liability at Rs11.70bn. (Economic times)
􀀟 Banks' deposit growth continues to decline. (Business Standard)
􀀟 Superseded co-operative bank claims marked progress. (Business Standard)
Pharma
􀀟 Orchid Pharma plans to raise up to Rs10bn long-term funds. (Economic times)
􀀟 Aurobindo Pharma clears all outstanding FCCBs for Rs 6bn. (Economic times)
􀀟 Suven Life completes long- term studies of its drug. (Business Standard)
􀀟 Pre-trial ruling in Glumetza patent case goes against Lupin. (Business Standard)
Commodity
􀀟 Karnataka ore exporters may miss China biz. (Economic times)
􀀟 CIL refers plan to buy 15% in US company's Australian project to coal min. (Economic times)
􀀟 Orissa resumes land acquisition for Posco's 12-m ton steel plant. (Economic times)
􀀟 Indian steel cos plan strategic tieups with global majors. (Economic times)
Consumer
􀀟 Dabur plans three new plants overseas; FY12 capex at Rs2,000m. (Economic times)
􀀟 Unilever launches Knorr noodles in Pakistan, Sri Lanka. (Economic times)
􀀟 Tata's Tetley tea brand gets new look. (Economic times)
􀀟 India fastest-growing market for Kraft Foods. (Economic times)
Retail/ Real Estate
􀀟 Realtors grapple with huge unsold stock; rising prices & costlier loans hit buying plans.
(Economic times)
􀀟 DDA becoming more like 'Finance Company': Chawla Panel. (Economic times)
􀀟 Alpha G Corp plans capex of Rs3.5bn in real estate projects. (Economic times)
􀀟 Kotak Realty Funds to raise Rs6bn via 4th realty fund. (Economic times)
􀀟 Fire Capital to mop up $100b for housing projects. (Economic times)
􀀟 Indiareit in talks to sell Pune SEZ stake for Rs5bn. (Economic times)


IT & Telecom
􀀟 Infosys gave away Rs50bn of stock options to employees. (Economic times)
􀀟 Infosys fastest to seize industry shift towards high-value enterprise services. (Economic
times)
􀀟 SAP cornering $11bn market for green software. (Economic times)
􀀟 'Diesel used for telecom towers causing Rs2.6bn loss to govt. (Economic times)
􀀟 MTNL, BSNL in talks to offer customers a pan-India service. (Economic times)
􀀟 MTNL partners with DigiVive, to provide mobile TV. (Economic times)
􀀟 S Tel introduces international calls at 1 paisa per second. (Economic times)
Power, engineering & infrastructure
􀀟 Reliance-ADAG to invest $5-10bn in Indonesia. (Economic times)
􀀟 Shortage of coal, power comes under PM scanner. (Economic times)
􀀟 PowerMin for temporary ban on coal e-auction. (Business Standard)
􀀟 India calls for equitable access to energy. (Economic times)
􀀟 L&T wins contract worth Rs14.5bn. (Economic times)
Automobiles
􀀟 Sweden's Scania to set up assembly plant in Bangalore. (Economic times)
􀀟 Audi launches new A7 Sportsback and RS5 in India. (Economic times)
􀀟 Honda, Toyota relook at just-in-time mantra. (Economic times)

Bajaj Auto – 4Q results - in line EBIDTA ::RBS

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Bajaj's 4Q EBITDA growth eased to 11% yoy and flat qoq, which is just 4% better than our
estimate. EBITDA margin was 20.5%, as improved product mix helped overcome market share
pressure in 2-wheelers. With high growth behind now and segment leader Hero Honda expansion
impacting market share, Sell.

NMDC – Strong as an ox : Buy with a Rs298 target: RBS

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


NMDC is India's largest iron ore producer. We forecast an earnings CAGR of 22% for FY11-
14, driven by volume growth, steady pricing and low costs. Iron ore reserves and resources
of 1.3bn tonnes indicate business longevity. We initiate coverage with a Buy
recommendation and a target price of Rs298.

Morning meeting notes from CLSA India Friday, 20 May 2011

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


News headlines: Corporate
􀂉 Crompton Greaves has acquired Sweden-based Emotoron
Group in a deal worth 57.8mn euros. (BS)
􀂉 Air India’s spokesperson has stated that the company is in final
stages of discussions with banks for restructuring its Rs200bn debt
and expects to complete the formalities by end-June. (BS)
􀂉 The government has approved the proposal to set up Neyveli
Lignite's Rs59bn lignite-based thermal power project in Tamil
Nadu. (BS)
􀂉 RIL is reported to be in negotiation with AmEx to form a JV that
could offer services such as payment gateways. (ET)
􀂉 Petroleum and Natural Gas Regulatory Board (PNGRB) has rejected
Adani group's application for setting up a city gas distribution
network in Jaipur and Udaipur. (BS)
News headlines: Economic and political
􀂉 RBI’s governor has stated that it would be very difficult for the
government to attain its 4.6% fiscal deficit target. (ET)
􀂉 As per sources, unavailability of some ministers could delay the
meeting of the Empowered Group of Ministers (EGOM) to decide on
petrol price hike beyond the next week. (BS)


The central government has approved a Rs13.5bn five-year project
ending 2016, for the construction, upgradation and improvement
of 433 km-long road in six North-East states. (BL)
􀂉 Calling for market-determined pricing of natural gas, a high-level
government committee headed by former Finance Secretary has
recommended the use of gas as an industrial fuel and for cooking
and transport purposes instead of burning it in power and fertiliser
plants. (BS)
􀂉 Continuing on its downward trajectory, food inflation as measured
by WPI slipped further to 7.47%YoY for week ended May 7. (BS)
News headlines: Corporate
􀂉 The government has decided to divest its entire 95% stake in
Scooters India Limited. (FE)
􀂉 Global brand consultancy Interbrand has valued the Godrej group
brand at US$3bn. (FE)
􀂉 Ashok Leyland has announced a capex of Rs8-10bn for FY12.
(BS)
􀂉 Triveni Engineering & Industries expects to list its demerged
turbine business, Triveni Turbine, by June-end or early July. (BS)
􀂉 SAIL is keen to set up a steel plant in Afghanistan if the country
provides infrastructure support and raw material sources. (BS)


News headlines: Corporate
􀂉 The committee set up to find a successor to Tata group Chairman
Ratan Tata has reportedly shortlisted around 11 candidates. (BS)
􀂉 Reliance has approached SEBI for the third time seeking an out of
court settlement to the charges of insider trading. (ET)
􀂉 L&T has secured a contract worth Rs14.5bn from Gujarat State
Petroleum Corporation. (ET)
News headlines: Economic and political
􀂉 RBI has tightened prudential norms for banks and increased the
provisioning requirement for bad loans by up to 10%. (BS)
􀂉 The government is likely to take a decision in the next three
months on allowing FDI in multi-brand retail. (BS)
􀂉 The power Ministry is planning to make a case for temporary ban
on coal E-auction during its meeting with prime minister on 7-Jun.
(BS)
􀂉 Oil Ministry has raised the commission for petrol pump owners
which would result in a marginal rise in the prices of diesel and
petrol. (ET)
􀂉 The revenue secretary has stated that the Duty Entitlement Pass
Book Scheme (DEPB) which gives tax incentives to exporters will
end on 30-Jun-11. (FE)

News headlines: Corporate
􀂉 Bajaj Auto’s adjusted net earnings for 4QFY11 rose 27% YoY to
Rs6.8bn. (BS)
􀂉 Air India’s promotional scheme offering reduced fares has
triggered a price war among airlines. (ET)
􀂉 Reliance ADA Group is planning to invest US$5-10bn in mining
infrastructure in Indonesia. (BS)
􀂉 The Coal India board has referred the proposal to pick up a 15%
stake in US based Peabody Energy’s US$600m Wilkie Creek
mining project in Australia to the coal ministry. (ET)
􀂉 Dabur is planning to set up two new factories and introduce more
products in Africa. (ET)
􀂉 After a gap of nine months, Orrissa government resumed land
acquisition work for the Rs520bn Posco steel plant. (BL)
􀂉 Bajaj Auto is planning to enter into Brazil, the world’s third
largest market, with the KTM Duke by the year-end. (BL)
􀂉 Indian GSM telecom operators added 11.1m subscribers in Apr-11,
taking the subscriber base to 580.7m. (BS)

Jet Airways 4Q FY11: Yields to improve; could hurt near-term demand ::JP Morgan

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Jet Airways (India) Ltd.
Overweight
JET.BO, JETIN IN
4Q FY11: Yields to improve; could hurt near-term
demand


Jet Airways’ 4Q EBITDAR margins of 8.7% were below estimates on account of
higher fuel costs. Recent price increases are likely to mitigate cost pressure, but
could hurt near-term demand. We cut EBITDAR by 5%/2% to reflect pressure on
load factors, but raise our PT to Rs575 as we roll forward our timeframe.
• Fuel costs abating: Jet Kerosene prices, currently at US$125/bbl, have
corrected 13% from US$143/bbl in mid-April. Based the forecasts of our Oil &
Gas research team, we expect a further correction in oil prices. We are assuming
Singapore jet kerosene at US$115/bbl for 2011 and US$127/bbl for 2012. Every
US$1/bbl increase in oil would have a 5% adverse earnings impact on JETIN.

Tata Steel- Scunthorpe Restructuring: A Move Toward a Leaner and Stronger Tata Europe ::Morgan Stanley

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Tata Steel
Scunthorpe Restructuring: A
Move Toward a Leaner and
Stronger Tata Europe
Quick Comment:  We remain OW on Tata Steel as
we believe: 1) the Street is unfairly bearish on Tata’s
ability to implement technological and operational
interventions to improve its European operations; 2) the
45% capacity increase at its Indian operations that is
likely in F2H12 is yet to be reflected in the stock price;
and 3) steel prices in F2H12 should turn out to be better
than general expectations.
What's new: Tata Steel has proposed a restructuring
mainly at its Scunthorpe plant to introduce greater
flexibility into its costs and operations. As per the
company’s press release, as a part of the restructuring,
Tata is proposing (in Scunthorpe): 1) to close the Bloom
and Billet Mill and associated steel caster. 2) To
mothball the Queen Bess blast furnace, which will be
kept in readiness for a market upturn. 3) To review the
operations of the Billet Caster. As per the company,
about 1,500 jobs (about 4.5% of Tata Europe’s
headcount) may become redundant post this exercise.
Impact: Scunthorpe is a 4.5mt long product plant with
low profitability. We feel the low profitability has mainly
been due to poor demand from the construction sector
and inefficient and old operations at Scunthorpe.
1) As this blast furnace has been out of operation since
last year, the production impact should be minimal.
2) While the redundancies are unfortunate, probably for
the long-term viability of Scunthorpe plant, Tata and the
unions are looking to execute the above changes. Given
the wage bill of about US$ 2.9bn for Tata Europe, the
annual saving could be ~US$125mn, i.e., about
US$8-9/t (more than 15% of Tata Europe’s F3Q11
EBITDA), we estimate.

Goldman Sachs, :: BUY Tata Power :: In line with expectations: Execution to gain momentum in FY12E

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Tata Power Company (TTPW.BO)
Buy  Equity Research
In line with expectations: Execution to gain momentum in FY12E
What surprised us
Tata Power (TTPW) reported FY11 PAT of Rs20.6bn, in line with GS
estimate and marginally higher than Bloomberg consensus estimate of
Rs19.6bn. The higher realizations at Bumi for 4QFY11 of US$87.6/ton vs.
US$73/ton in 3QFY11 and US$62.7/ton in 4QFY10 was offset by lower
production of 58mt vs. our estimate of 62mt. Merchant realizations were
Rs5/kwh for the Trombay unit 8 and Rs3.45/kwh for the Haldia unit.
Management indicated in the conference call that: 1) Unit 1 of Maithon
would be commissioned in June and Unit 2 in October; 2) Mundra is on
track for 3QFY11; and 3) it would seek exemption from the Indonesian
government for a minimum price obligation given its fixed price contract
with Bumi for Mundra falls under an integrated investment mechanism. If
exemption is not granted, it would likely have to pay about US$30-
US$35/ton more for 2.6mn tons of coal that it could receive from Bumi
under the fixed price contract.
What to do with the stock
We reiterate our Buy rating on Tata Power. We lower our 12m SOTP-based
TP to Rs1,436 (from Rs1,477) and FY12E/13E EPS by 4% primarily to reflect
higher fuel costs for the Mundra power plant, pending the decision of the
Indonesian government. We believe Tata Power is best positioned to
withstand a high fuel cost environment, and news flow on commissioning
of 5GW of projects under construction and 6GW of projects under
development would be key catalysts for the stock. Key risk: Delay in receipt
of execution milestone approvals

Gail --Cut FY11E EPS by 7% on higher subsidy but still up 12% YoY „:: BofA Merrill Lynch

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Gail India Ltd.
   
Cut FY11E EPS by 7% on higher
subsidy but still up 12% YoY
„FY11 EPS cut by 7% to Rs27.66 on higher subsidy
FY11 subsidy sharing has been finalized today. The main negative surprise is that
upstream companies’ share in subsidy has been raised to 38.7% of FY11 subsidy
as against the expected 33.3%. We therefore cut FY11E EPS of GAIL by 7%.
Despite a higher share in subsidy we expect GAIL’s FY11 EPS to be 12% YoY
higher driven mainly by gas transmission EBITDA rise. Gas transportation volume
growth is a concern for GAIL in FY12E. The share of upstream in subsidy being
increased to 38.7% is now an additional concern. GAIL may not also gain from
fuel price hikes if only diesel price is hiked and LPG-kerosene price are kept
unchanged. We therefore retain underperform on GAIL.  
FY11 EPS up 12% YoY despite higher subsidy
GAIL’s FY11 EPS at Rs27.7 is expected to be 12% YoY higher despite 59%
(Rs7.8bn) YoY higher subsidy and petrochemical EBIT being YoY lower. GAIL’s
gas transmission business is expected to be the main driver of its FY11E
earnings. GAIL’s gas transmission EBITDA was up 24% YoY in 9M driven by 13%
higher volumes and higher tariff. We expect FY11 gas transmission EBITDA to be
28% YoY.
Concern over increased subsidy & volume growth
The share of upstream in subsidy being increased to 38.7% is a concern. It
means that upstream share in subsidy being 33% is no longer sacrosanct. It has
created uncertainty about upstream company earnings. There appears to be a
risk that upstream share in subsidy may be increased even in future to cap their
earnings growth.

Oil India- Cut FY11E EPS & PO on negative surprise on subsidy „:: BofA Merrill Lynch

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Oil India Ltd
   
Cut FY11E EPS & PO on
negative surprise on subsidy
„FY11E EPS cut by 8% and PO by 1% on higher subsidy
FY11 subsidy sharing has been finalized. The main negative surprise is that
upstream companies have had to bear 38.7% of FY11 subsidy as against the
expected 33.3%. We therefore cut our FY11E EPS by 8% and our PO by 1% to
Rs1,583/share. Despite a higher share in subsidy we expect OIL’s FY11 EPS to
be 13% YoY higher driven mainly by the steep hike in APM gas price from June
2010. The share of upstream in subsidy being increased to 38.7% is a concern
but we still retain Buy on OIL. A near term trigger is likely to be fuel price hike to
cut FY12E subsidy, which has the potential to improve OIL’s FY12 earnings
outlook. Our revised PO also offers 21% potential upside.  
OIL’s FY11E EPS up 13% YoY despite higher subsidy
Despite a higher share in subsidy for upstream OIL’s FY11 EPS is expected to be
13% YoY higher. We estimate OIL’s FY11 oil price net of subsidy at US$58.3/bbl
up 4% YoY over US$56.2/bbl in FY10. However the rupee has also appreciated
by 4% YoY in FY11, thereby taking away OIL’s oil price realization gains. The
main driver of OIL’s FY11 earnings is thus expected to be the more than doubling
of APM gas price from June 2010.
Increase in upstream share in subsidy a concern
The share of upstream in subsidy being increased to 38.7% is a concern. It
means that upstream share in subsidy being 33% is no longer sacrosanct. It has
created uncertainty about upstream company earnings. There appears to be a
risk that upstream share in subsidy may be increased even in future to cap their
earnings growth.

Buy BPCL : FY11E EPS estimated at Rs51; could have been worse „:: BofA Merrill Lynch

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


BPCL
   
FY11E EPS estimated at Rs51;
could have been worse
„Cut FY11 EPS by 1%; cut could have been lot steeper
FY11 subsidy sharing has been finalized today. The main surprise was that
upstream companies’ share in FY11 subsidy was raised to 38.7% as against the
expected 33.3%. Rise in upstream share in subsidy to 38.7% meant R&M
companies’ share in subsidy is 8.8%. R&M companies like BPCL have thus
gained from the rise in upstream share in subsidy but their subsidy hit is still
higher than our optimistic assumption. We therefore had to cut BPCL’s FY11E
EPS by 1% to Rs51. However, its FY11E EPS could have been far lower at
Rs36.5 if upstream share in subsidy was 33% and R&M had to bear 14%. A near
term trigger is likely to be fuel price hike to cut FY12E subsidy. Our PO of Rs650
implies 4% potential upside. We retain Neutral on BPCL.
Earlier EPS estimate on very optimistic subsidy assumption
Our FY11 EPS estimate for BPCL was earlier based on optimistic assumption of
subsidy hit of R&M companies of just Rs45bn. Their subsidy hit would have been
as high as Rs111bn if upstream share was 33%. However, with upstream share
up to 38.7% R&M companies’ subsidy will be just Rs69bn, which is still higher
than our assumption. We therefore have cut BPCL’s FY11 EPS by 1%.
FY11 EPS up 13% on reported basis; 22% down on recurring
We now estimate FY11E EPS of BPCL at Rs51. BPCL’s FY11E EPS is 13% YoY
higher than its FY10 reported EPS of Rs45.1. However, it is 22% YoY lower than
its FY10 recurring EPS of Rs65. BPCL’s FY10 reported EPS was lower than
recurring EPS due to hefty provision for mark to market on oil bonds.

BUY Hindustan Petro. (HPCL) FY11E EPS estimated at Rs40.1; could have been worse „:: BofA Merrill Lynch

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Hindustan Petro.
   
FY11E EPS estimated at
Rs40.1; could have been worse
„Cut FY11 EPS by 11%; cut could have been lot steeper
FY11 subsidy sharing has been finalized. The main surprise was that upstream
companies’ share in FY11 subsidy was raised to 38.7% as against the expected
33.3%. Rise in upstream share in subsidy to 38.7% meant R&M companies’ share
in subsidy is 8.8%. R&M companies like HPCL have thus gained from the rise in
upstream share in subsidy but their subsidy hit is still higher than our optimistic
assumption. We therefore cut our estimate of HPCL’s FY11E EPS by 11% to
Rs40.1. However, its FY11E EPS could have been far lower at Rs22.8 if
upstream share in subsidy was 33% and R&M had to bear 14%. HPCL is
inexpensive in our view, trading at its FY11 book value (P/BV at 0.97). A
near term trigger is likely to be fuel price hike to cut FY12E subsidy. We retain
Buy on HPCL.
Earlier EPS estimate on very optimistic subsidy assumption
Our FY11 EPS estimate for HPCL was earlier based on optimistic assumption
of subsidy hit of R&M companies of just Rs45bn. Their subsidy hit would have
been as high as Rs111bn if upstream share was 33%. However, with upstream
share up to 38.7% R&M companies’ subsidy will be just Rs69bn, which is still
higher than our assumption. We therefore have cut our estimate of HPCL’s FY11
EPS by 11%.
FY11 EPS up 4% on reported basis; 24% down on recurring
We now estimate FY11E EPS of HPCL at Rs40.1. Our FY11 estimate is 4%
higher than the FY10 reported EPS of Rs38.4. However, it is 24% YoY lower than
its FY10 recurring EPS of Rs53. HPCL’s FY10 reported EPS was lower than
recurring EPS due to hefty provision for mark to market on oil bonds.

Suzlon -Impact analysis: Caparo’s 2GW order on Gamesa ::, BofA Merrill Lynch,

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Suzlon Energy Ltd.
   
Impact analysis: Caparo’s 2GW
order on Gamesa
„Indian wind market shift to IPPs / sustainable; Buy Suzlon
Caparo Energy (CEL LN - a client of Suzlon) signed a framework agreement with
Gamesa of US$2bn to supply of 2GW wind turbines for phase II expansion by
2016. Three implications: a) we see the order as validating our argument of the
Indian wind market shifting towards IPPs and we believe that makes it a
sustainable market v/s tax break driven markets, b) it should improve funding
prospects for Suzlon’s 1GW order should CEL be able to secure equity funds
following 19% stock run-up led by its order on Gamesa and c) we believe it should
increase competitive intensity over the medium term, in-line with our view.
Maintain our recent upgrade to a Buy on Suzlon, on a turnaround. Risks to our
non-consensus Buy call are delivery push-back, currency and execution.
Show me the land & money – $260mn CEL places $3.5bn order
„ CEL intends to set up 5GW of wind power assets in India, for which it may
use 2-4 vendors to diversify suppliers. Phase – I of 3GW for which it has an
agreement with Suzlon and Phase - II was of 2GW.
„ CEL placed its 1
st
 firm order of 1GW with Suzlon on EPC including land, its
competitive advantage and with better margin. CEL in its release indicates
taking delivery of 100MW in 1QFY12, 400MW in 2HFY12, and 500MW in
FY13E, which should re-assure markets, worried on execution of the order.
„ CEL signed framework agreement with Gamesa (phase II) on turbine EPC
basis (no land), where it may have obtained better pricing and also achieved
vendor diversification. We were not expecting Suzlon to get this repeat order.
„ CEL, has funds for ~250MW of the 3GW pipeline yet. Should CEL able to
secure equity /mezz. funds following stock run-up (+19% since last week low)
led by its order on Gamesa. This fund raising shall only improve visibility for
Suzlon's top-line (250MW in FY12E and 500MW in FY13E in BofAMLe).
„ If CEL is able to raise funding and secure land for 2GW (a big challenge –
CEL claims to has it even before installing wind masts!), Gamesa could get
established as a top 3 player in India behind Suzlon. However, which player it
takes the spot from (Vestas / Enercon), remains to be seen.

Coal India ::Indian coal – Getting even more scarce:: Deutsche bank,

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Coal India (CIL) remains our top pick – raising target price to INR 450
Increased wagon supply by railways could help deplete inventory at a faster rate
than envisaged, prompting us  to  raise our FY12E EPS by 8%  to  INR 24.8 – one of
the highest on the Street. Second, the inability to source cheap domestic coal is
resulting in power plant utilisation falling below 68%, a level at which debt
servicing could be a challenge. One solution is to raise domestic coal prices at a
5% CAGR over FY12-17E, resulting in an INR 450 target price. Finally, the start of
coal block auctions could spice up valuations of Coal India. We maintain Buy.

Morgan Stanley BEST idea:: Buy Larsen & Toubro -Focus on Order Inflow Pickup

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Larsen & Toubro
Focus on Order Inflow Pickup
What's Changed
Price Target  Rs2,268.00 to Rs2,010.00
F2012e EPS  Down 4.4% to Rs91.4
F2013e EPS  Down 4.3% to Rs114.2
Scoring on two out of three parameters, promising
delivery on third in F12e: L&T surprised us with
margins (up 140 bps YoY adjusted for one-time items)
moving to a new peak (16.5%) in F4Q11. More
importantly, the company answered the question that
has been worrying the Street – when does order inflow
begin? – by clocking 27% YoY growth in inflows to
Rs303 bn. The last key variable, revenue growth, was
not as exciting, with 13% growth in the quarter (albeit on
a high base). However, the company’s F12 revenue
growth guidance of 25% indicates that it sees a
strengthening of execution (in line with our thesis)
around the corner.
Shifting numbers and price target down marginally:
Despite the revenue disappointment, margin strength
ensured that overall net profit (for the standalone
company) came in 2% ahead of our estimate for F11.
However, we have conservatively taken down our
revenue estimates by 4-5% for F12-13e, assuming that
the execution pick up is not as strong as we thought
earlier, which results in a 4% downtick in our EPS for
F12-13e. Despite the downtick, we remain 17-20%
ahead of consensus on earnings for F12-13e.
Investment conclusion: L&T, in revenue terms, is
larger than the next six largest Indian construction
companies put together. Yet, owing to the fragmented
market (L&T’s market share is still only 2.5% in Indian
capex) and its high-quality execution, it has consistently
gained market share over the last two decades. It is also
the vendor of choice for the private sector, making it the
best way to play the structural growth story in Indian
infrastructure. Our revised price target of Rs2,010 per
share implies a 26% return from current levels.

Goldman Sachs :: Godrej Properties :: Current valuations pricing in high expectations; Sell

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Godrej Properties (GODR.BO)
Sell  Equity Research
Current valuations pricing in high expectations; retain Sell
What's changed
Godrej Properties (GPL) gross debt increased by Rs2.4 bn in FY2011.
4QFY11 saw revenue booking of Rs3.3 bn, which was a sharp increase
from Rs0.48 bn in 3QFY11. Receivables increased to Rs2.9 bn in 4QFY11 as
compared to Rs1 bn as at end-3QFY11 as receipts from customers did not
match revenues booked. Qoq revenue booking in several projects was
high, with GGC-Phase I (36% completed at Dec 2010 to 58% at Mar 2011),
GGC-Phase II (0% to 25%) and Godrej Frontier Phase 1 (7% to 32%)
clocking large completion. Management attributed this sharp increase to
advances towards construction, while receipts are construction linked.

Goldman Sachs:: Punj Lloyd :: Execution will be key for us to turn more constructive; retain Sell

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Punj Lloyd (PUJL.BO)
Sell  Equity Research
Execution will be key for us to turn more constructive; retain Sell
What's changed
Year-to-date Punj Lloyd is down 48% vs. Sensex down 12% over the same
period. Despite the recent correction, we believe concerns driving our Sell
thesis have actually increased: (1) we lower our order inflows forecast for
FY11E/FY12 by 2%-8%, implying 36% yoy de-growth for FY11E, (2) no
resumption in work at the Libya projects (16% of order book) impacting
revenue billings for FY11E, (3) exclusion of Sembawang’s Libyan order book
impacting revenues for FY12E. We wait for signs of improvement in execution
to have a more constructive view on the stock.
Implications
We cut our FY11E-FY13E revenue by 2%-9% and our EPS for the same period
by 13%-40%. Of the ten projects in Libya, we remove three inactive projects
from our forecasts based on the company’s announcement, as these projects
have been nonmoving for over 18 months. This brings the outstanding order
backlog to Rs214 bn – reducing order book coverage from 2.6X to 2X on fwd
sales. We expect the company to report its third consecutive year of losses in
FY11; we expect Rs63 mn loss vs. Bloomberg consensus expectation of Rs239
mn of profit implying 4Q profit of over Rs90 mn, which we believe would be
difficult to achieve. The company has continued to surprise the Street
negatively on earnings for the past few quarters and we have seen no
significant change in the operational environment.
Valuation
Valuations look reasonable with stock trading 0.7X FY12 P/B which is
substantially below its 5-yr historical median of 2.2X. However, re-rating is
likely only if the company is able to deliver on earnings and revert back to
original margins of c.11% and ROEs of 15%-17%. We reduce our 12-m TP to
Rs62 (from Rs71), still based on 11XFY12E P/E. Given one of the stocks with
least upside potential within our coverage, we retain our Sell rating.
Key risks
Faster-than- expected execution collection; award activity pick up in Middle East.
INVESTMENT LIST MEMBERSHIP
Asia Pacific Sell List
 
 
Coverage View:  Neutral

Goldman Sachs, BUY Orient Green Power :: Twin drivers of stock performance to the fore

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Orient Green Power (ORIN.BO)
Buy  Equity Research
Twin drivers of stock performance to the fore; reiterate Buy
What's changed
Orient Green (OGPL) stock is down 53% since listing (Oct 18, 2010), under
performing BSE Small cap index and BSE Power index by 13%/14% YTD.
We believe: 1) lack of visibility on execution of wind & biomass projects;
and 2) doubts on OGPL’s ability to derive benefits under renewable energy
certificate (REC) mechanism are key reasons for the under performance.
Implications
While the current stock price implies no value for: 1) REC benefits; 2)
Biomass business; and 3) 110MW project in Sri Lanka, we believe the
following twin drivers of performance will come to the fore:
1) Execution: OGPL is likely to commission about 100MW of wind over
May/June (just before commencement of wind season in May) and 30MW
of biomass in 1QFY12E. Our visit to 24MW wind farm and 10MW biomass
plant in Tamil Nadu shows that machines are already erected and waiting
for final stage clearances to start commercial operations.
2) Emerging visibility on demand for REC’s: The trading of REC’s has
commenced and for March 2011 the REC’s traded at a cap price of
Rs3.9/kwh (average Rs2.5/kwh for Feb-April 2011). The momentum in REC
trading (despite deteriorating finances of discoms), gives us confidence
that stock will start reflecting the REC benefits on commissioning of new
wind capacities that are likely to be eligible under REC mechanism.
Valuation
We reiterate our Buy rating on OGPL with 12m SOTP based TP of Rs48 implying
upside of 118%. OGPL is trading at 0.8x FY11 P/B, implying wind projects to
have equity IRR of 10%. Our scenario analysis, assuming no REC’s and valuing
800MW, indicates value 46% above current share price, implying IRR of 15%.
Key risks
1) Weak 4Q numbers due to delays in biomass capacities; 2) TN regulator
ruling new capacities are ineligible under REC mechanism.
INVESTMENT LIST MEMBERSHIP
Asia Pacific Buy List
 
 
Coverage View:  Cautious

UBS:: Reliance Industries -Upgrade to Buy on recent weakness

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


UBS Investment Research
Reliance Industries
Upgrade to Buy on recent weakness
 
„ Event: Stock down to attractive levels, upgrade to buy
RIL is down 11% in 1MTD on: 1) uncertainty on KG-D6 gas volumes ,2) lower
petchem/refining contribution in 4QFY11 results. Going forward, we see little
downside on gas volumes and attribute the lower commodity contribution in
4QFY11 to the unscheduled shutdown which will reverse. As a result of higher
capacity utilization we hike our PT by 5% and our EPS estimates by 6% for both
FY12 and FY13
„ Impact: Pricing in the bad news, low downside risk
We believe downside is limited from here; ~3.4% downside to PT if gas peaks at
45 vs our assumption of 60mmscmd.  Additionally, the company had a shutdown
at its refinery in 3Q11 and 4Q11 which negatively impacted its contribution at a
time when international margins were high. Going forward, we expect higher
operating rates in refining and petrochemicals will provide earnings support.
„ Action: Upgrade to a Buy- stock prices in a weak upstream outlook
Declining contribution from upstream means now nearly 75% of EBIT is
contributed by the refining and petrochemicals business, which has tended to be
ignored due to concerns over upstream. Additionally, we expect commodity
margins to bounce back as seasonal demand comes back from Q4CY11.
„ Valuation: Increase SOTP based PT to Rs 1,170/share(27% upside)
We value the petrochem/refining business at 7xFY13e EBIDTA and upstream on
NPV. At 6.3 x FY13e EV/EBIDTA and 11.4 FY13e EPS stock is attractive vs.
Asian peers which are trading at 7.6x EV/EBIDTA, 11.1xEPS. The stock is down
13% 6MTD vs. peers which are ~25% up in the same period