Grey market premium, July 24, 2011: Indian IPOs and NCDs (bonds)

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Company Name	Offer Price (Rs)	Expected Listing Price Premium
IFCI Bonds	10,000	2% - 3%
L & T Finance	51 to 59	5
Inventure Growth	100 to 117	2
Bharatiya Global Infomedia	82	Discount

Pipes �� ::Q1FY12 Result Preview -ICICI Securities

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Pipes
�� Improvement in topline but higher costs impact EBITDA margins
We expect the topline of the I-direct coverage universe to increase
by 8.2% YoY to | 1659 crore, primarily on the back of improved
volumes. However, the EBITDA is expected to decline by ~16%
YoY and ~7.5% QoQ on the back of higher cost of raw material. As
a result, we expect the EBITDA margins to decline by 500 bps from
~23% to ~18% YoY.
�� Order book position deteriorates
Despite crude prices remaining at elevated levels, the overall
demand for pipes has been muted in Q1FY11. This is evident from
the order book position of pipes companies (I-direct coverage) at the
end of Q1FY11 we expect it to stands at ~|4348 as compared to
|5097 at the beginning of the quarter. This indicates there has been
order execution but not any significant order accretion.


Company specific view
Company Remarks
Jindal SAW In Q1FY12, overall volumes of the company are expected to improve ~6% YoY to
~2,18,000 tonnes while topline is expected to improve ~4%. However, due to
higher input cost of iron ore and coking coal, cost of production is expected to rise
leading to a sharp decline in margins by 600 bps YoY and ~74 bps QoQ
Maharashtra
Seamless
We expect volumes to grow by 10% YoY to ~84375 MT due to higher demand for
seamless and ERW pipes. EBITDA margin is expected to remain stable at ~25%,
(blended EBITDA/tonne of ~| 14500/tonne). Net profit margin is expected to
decline to ~16% from ~24% in Q1FY11 due to lower other income as compared to
Q1FY11
Source: Company , ICICIdirect.com Research

India Strategy: QE Jun-11 Earnings Season Thus Far ::Morgan Stanley Research,

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India Strategy
Quick Comment: QE Jun-11 Earnings Season Thus Far



Still early days for earnings
Initial signals indicate strong revenue and earnings growth and margin compression. Excluding the energy companies, the aggregate revenue and earnings are up 22% and 20% YoY, respectively, in-line with Morgan Stanley’s analysts’ expectations.
MS Coverage beat ratio @ 47%
So far, 8 out of 17 companies have beaten MS analyst expectations (see slide 4 for details).
Broad market (ex-energy) earnings growth @ 19% YoY
Thus far, 161 companies in the broad market have reported. Excluding the energy companies, the aggregate revenue and earnings are up 25% and 19% YoY, respectively.

Construction & Infrastructure 􀂃 ::Q1FY12 Result Preview -ICICI Securities

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Construction & Infrastructure
􀂃 Execution woes, stretched balance sheet to limit topline growth
We expect our construction universe revenues to grow 9.3% YoY in
Q1FY12E despite a low base in Q1FY11 on account of execution
woes and stretched balance sheet due to expanded working capital.
Among these, IVRCL is expected to post ~14% YoY topline growth
followed by NCC and Simplex with ~12% and ~9% growth in
revenues, respectively. In our infrastructure coverage, topline is
expected to remain flattish. IRB’s topline is expected to grow ~24%
on account of strong growth in construction revenues (24% YoY to
| 410 crore) while JAL topline is expected to decline ~4% YoY
largely due to de-growth in the construction division.
􀂃 Rising interest cost to lead to bottomline de-growth
Given the rise in interest rate and higher debt level led by
deteriorating working capital condition, interest expenses in our
construction universe have expanded to 1.5x YoY (as percentage of
revenues increased 160 bps YoY to 5.5%) in Q1FY12. Consequently,
the bottomline is expected to decline ~39% YoY. In our
infrastructure coverage universe, a sharp rise in interest and
depreciation expenses will lead to decline in NPM to 3.2% in
Q1FY12 vs. 5.2% in Q1FY11 largely dragged by GMR.
􀂃 Government decision making remains slow…
The deceleration in the government’s decision making has not only
impacted our construction universe order inflow but also led to a
deadlock for regulatory reforms in the infrastructure space. In
Q1FY12, our coverage construction companies witnessed a muted
order inflow of ~| 4600 crore (Simplex Infra: | 1000 crore, IVRCL: |
900 crore, HCC: | 1000 crore Unity: | 700 crore, NCC: | 1000 crore)
vs. ~| 6500 crore in Q4FY11. In the infrastructure space, a deadlock
continues to remain for regulatory reforms such as clarity on AERA
guidelines, pending approval for monetisation of the MIAL land bank
and pending court decision over merchant power sale. In the road
space, while there has been some pick-up in terms of road awarding
activity and improving transparency through an e-bidding process.


Company specific view
Company Remarks
Simplex Infra Order inflow for Q1FY12E is ~| 800-1000 crore. We expect SIL to post
~9% YoY topline growth. However, the bottomline is expected to decline
~16% YoY due to a rise in interest expenses by ~33% YoY. Key
monitorable: Execution rate, interest cost and revenues from the
international segment
Unity Infra Unity is expected to report muted revenue growth of ~6% YoY. The
bottomline, however, will witness de-growth of 27% YoY on the back of
high interest cost. Unity has reported order inflow to the tune of ~| 700
crore during the first two months of Q1FY12
NCC NCC has received orders worth ~ | 1000 crore in Q1FY12. We expect
topline growth of ~9% YoY. Bottomline, however, is expected to decline
~32% YoY on the back of high interest cost in Q1FY12 (expected to rise
by 100% YoY). Key monitorable: update on power project, working capital
position and order inflow
IVRCL We expect IVRCL to post revenue growth of ~14% YoY in Q1FY12.
However, high interest cost (rise of ~32% YoY) will lead to revenue
decline of ~7% YoY in Q1FY12. Key monitorable: management
commentary on execution rate and status of three road projects where
financial closure is still awaited
HCC HCC redeemed FCCBs worth US$133 million in February 2011, which has
been funded from internal accruals & debt leading to higher interest cost
and interest outgo. Consequently, we expect HCC to post bottomline
decline of ~80% YoY in Q1FY12 with~64% YoY increase in interest
expenses. Key monitorable: clarity on Lavasa environmental issues,
working capital and interest cost
Patel Engineering We expect sluggishness in execution to continue for PEL in Q1FY12. The
concern over muted order inflow also remains with no growth in order
book in the last couple of quarters. Key monitorable: order inflow,
execution rate, interest cost & clarity on tax raid
JP Associates This quarter is expected to remain subdued for JAL due to de-growth in
the construction division and decline in cement division EBIT margin. In
the cement division, while realisation is expected to remain more or less
same as last quarter we should see the full impact of cost escalation in
coal prices
GMR Infrastructure GMR is expected to continue to report losses on account of higher
depreciation and interest charges from DIAL. The high court ruling in June
quashed collection of ADF at DIAL. Meanwhile, GMR has approached
AERA for approval to collect ADF
GVK Power Power division is expected to continue reporting lower PLF due to gas
supply constraints. We expect road division to report margin of 72.3% vs.
46.4% in Q1FY11 due to major maintenance expenses that were charged
in Q1FY11. Consequently, we expect overall margin to expand 150 bps
YoY to 27.2% in Q1FY12
IRB Infrastructure The toll revenue is expected to be boosted by the toll hike of ~17% in the
Mumbai-Pune Expressway from April, 2011. IRB bagged the Ahmedabad
Vadodara project worth | 4920 crore (including IDC charges & part of
premium payable to NHAI during construction phase)

Tea 􀂃 Increasing global prices to improve export realisations ::Q1FY12 Result Preview -ICICI Securities

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Tea
􀂃 Increasing global prices to improve export realisations
Tea production in Kenya has declined by 21.1% during the first four
months of 2011. Simultaneously, flat production in Sri Lanka of
139.7 million kg (138.1 in the corresponding period), has resulted in
~10-12% increase in global tea prices. Tea prices in Kenya are
prevailing at US$3.2 per kg. Low export availability from Kenya and
other African countries would divert export demand to India. Higher
global prices would help Indian companies to export greater
quantity at a higher price. In the Q1FY12, we believe companies will
sell a similar quantity as June 2010. However, realisations would be
strong. We believe North India based tea companies would benefit
from stronger tea prices as demand for higher quality tea remains
strong in the UK and other European countries.
􀂃 Domestic production to increase marginally
Tea production in India would remain in the range of 980-1000
million kg (mkg) in 2011. Limited area under tea cultivation and very
slow pace of increase in yields has capped the production at ~980
million kg in the last five years. We believe sustainable growth of
~3% in consumption and increasing export demand would result in
higher realisations for the companies. In Q1FY12, domestic prices
would remain steady on the back of export demand. Exports from
India are likely to increase above ~200 million kg, which would keep
domestic tea prices above ~| 150 per kg.
􀂃 McLeod to benefit from export
McLeod Russell, being the largest bulk producer in the country,
would benefit the most from higher prices. We believe consolidation
of acquired subsidiaries in Africa and Vietnam would help increase
volumes by ~10 million kg in 2011. This would result in higher
revenue growth and earnings for the company.


Company specific view
Company Remarks
Harrison
Malayalam
We expect rubber & tea sales volumes to be lower YoY at 2.3 mkg & ~4.3 mkg,
respectively. However, realisations would be higher at ~| 77/kg for tea & ~| 210/kg
for rubber. Led by higher realisations, we expect margins to improve to 4.6% (0.2% in
Q1FY11) and bottomline to be back to black at ~| 4 crore
Jayshree
Tea
Jayshree Tea would be selling 3.6 mkg of tea with average realisations of | 132 per kg
compared to 3.1 mkg with | 130 per kg realisations in Q1FY11. With the increase in
volumes and increase in realisations, margins for the company will improve to ~21%
from ~9.6% in Q1FY11
McLeod
Russel
On a standalone basis, the company is likely to sell 8.9 mkg of tea with average
realisations of | 152.0 per kg as against 8.7 mkg of volumes with average realisations
of 140 per kg in Q1FY11. The company would be selling 5.2 mkg of tea (African
subsidiaries) at an avg realisation of | 81/kg
Source: ICICIdirect.com Research

Textiles 􀂃 and Others ::Q1FY12 Result Preview -ICICI Securities

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Textiles
􀂃 Domestic textile companies take a breather
Cotton prices (domestic and international) have corrected ~40% to
| 38,000/candy in Q1FY12E. Consequently, buyers have halted
buying decisions and are awaiting price stability. Local spinners
have been affected by this as they are sitting on high cost inventory.
While newspaper articles reported under-utilisation of capacities to
avoid piling of inventory, fully integrated companies are operating at
optimal utilisation rates. We expect revenue growth for our textile
universe to be a subdued 7% YoY in Q1FY12E.
􀂃 Operating margin to dip for varied reasons
While Alok Industries’ margin is likely to dip due to increased share
of polyester business (lower margin than cotton), Kewal Kiran is
likely to be hit by increased advertising expenses (IPL sponsorship).
Operating margin for our textile universe is likely to be dampened
due to a subdued demand scenario and high cost inventory held.
􀂃 Manmade fibre players feeling the pain also
The manmade fibre industry is also feeling the pinch as realisations
are falling in line with declining cotton prices. Also, the ratio of
blended fabrics has started to come down (due to lower cotton
prices), thereby leading to inventory pile ups. Compared to a robust
FY11, we expect Q1FY12 to be a subdued quarter for these players


: Company specific view
Company Remarks
Alok
Industries
Alok Industries is likely to post 35% YoY revenue growth to | 1,483.6 crore as it will get
the full benefit of increased capacities. We expect the operating margin to dip by 60 bps
QoQ to 24.7% due to increased share of polyester (low margin) segment
Bombay
Rayon
Fashions
We expect a marginal YoY dip of 2% in BRFL's Q1FY12E revenues to | 493.1 crore due
to a 10% volume dip in the garments segment. However, we expect fabric volumes to
increase marginally (~2%) to 21.2 mn metre. We expect margins to dip by 130 bps YoY
to 24.2% due to input cost pressures
JBF
Industries
We expect an 8% decline in JBF's Q1FY12E revenues at | 1,293.4 crore led by ~12%
volume de-growth. The operating margin is also expected to be under pressure due to
lower offtake and rising input prices. JBF is likely to report an EBITDA margin of 10.1%
(as against 10.9% in Q1FY11 and 11.3% in Q4FY11)
Kewal Kiran KKCL is expected to report 23.2% YoY growth in revenues to | 56.0 crore due to a price
hike taken in Q1FY12, marginal volume growth and increased accessories sales. The
operating margin is likely to dip by 190 bps YoY and 250 bps QoQ due to increased
advertising expenses (IPL sponsorship)
Vardhman
Textiles
Lower cotton prices and reduced offtake are likely to affect Vardhman Textiles as well.
We expect a flat topline of | 812.1 crore in Q1FY12E. While the EBITDA margin is likely
to slip by 300 bps QoQ to 26.7%, we expect it to remain higher YoY as realisations are
still higher than those in Q1FY11
Source: Company, ICICIdirect.com Research


OTHERS::


Company specific view
Company Remarks
Everest Kanto We expect sales growth of ~53% to be led both by volume and value growth.
Cylinder sales volumes are expected to be ~2.5 lakh at an average realisation of
~| 9000/cylinder. Higher realisations and increasing demand in international
markets are expected to improve the margins to ~20%
InfoEdge On the back of sustained hiring across the board, revenues are expected to grow
23.3% YoY. However, with higher spend on marketing and promotional activities,
margins are expected to remain under pressure
Nitin Fire With the rising demand for CNG cylinders in the Dubai and Middle Eastern market,
the company is expected to witness higher revenues growth led by volume growth
as well as higher realisations. We expect margins to improve from 14.3% in Q1FY11
to 16.0%
Orbit
Corporation
We expect pre-sales volumes to remain weak during Q1FY12 due to lower offtake.
Orbit’s revenue is expected to witness muted growth of ~7% QoQ on account of
slower execution across projects in Mumbai. Key monitorable: Pre-sales volume,
execution pick up, sales collection & debtors and debt level
Praj
Industries
Led by the improvement in the order book to ~| 750 crore (as on March 31, 2011)
and increasing execution rate, we expect the company's revenues to witness
robust revenue growth of ~70%. Moreover, with ~60% of orders being from
international markets, margins are expected to be higher at ~19%
Ruchi Soya We expect 10% YoY growth in Q1FY12E. However, operating margins are likely to
be under pressure as due to the oversupply scenario in the industry. We expect
Ruchi Soya to report an EBITDA margin of 2.8% in Q1FY12E
Source: Company, ICICIdirect.com Research

Telecom �� Peaking subscriber addition ::Q1FY12 Result Preview -ICICI Securities

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Telecom
�� Peaking subscriber addition
We expect the industry to add 47 million subscribers in Q1FY12,
which is the lowest in the last seven quarters, indicating peaking
subscriber addition. The slowdown in net adds is partly on the back
of reduced competitive intensity and cessation of unsustainable
customer acquisition offers from new entrants. We expect the
overall subscriber base to increase to 851 million by the end of
Q1FY12. We expect 3-5% QoQ revenue growth for telecom service
providers (adjusting for RCom’s IRU income in Q4FY11) while the
sector is expected to witness 11.4% YoY growth (ex-Zain).
�� Traffic growth
The domestic traffic of our coverage universe is expected to post a
growth of about 6.3% QoQ in Q1FY12E to 443 billion minutes as
against 5.8% QoQ in Q4FY11. Reliance Communication would
continue to prune free minutes on the network resulting in lower
growth of 4.4% in traffic. ARPM across players is expected to
decline only marginally (41-44 paisa) while it may remain stable for
Reliance Communication.
�� EBITDA margin to show mixed trend, PAT margin to take a beating
Margins would show a mixed trend with Idea Cellular exhibiting YoY
expansion in margins as competitive intensity has declined
significantly from Q1FY11. However, with 3G rollout and slower
growth in MoU, margins would remain under pressure on a
sequential basis. Airtel, on the other hand, would witness YoY
decline in margins due to full quarter impact of Zain. However, a
sequential improvement in Africa (175 bps to 28.0%) would aid
margin expansion QoQ. Both RCom and TTML would continue to
witness profitability erosion with steeper than industry decline in key
metrics and eroding subscriber quality. PAT margins across players
(except Airtel) would decline substantially as operators have
completed 3G rollout and would start charging interest cost and
amortisation to P&L. We have factored in interest cost of ~ | 350
crore for RCom on account of FCCB redemption in May 2011.
�� Regulatory developments - positive sentiment for industry
DoT recently announced that the new telecom policy would be
finalised by October 2011. Also, the several high profile arrests by
CBI in the 2G scam have helped build investor confidence in
incumbent players, which have so far remained clean of any
allegation like Bharti Airtel and Idea Cellular. This is also reflected in
the price. With DoT’s indication of a level playing field and lenient
M&A policy, we believe the sector may witness a re-rating.


Company specific view
Company Remarks
Bharti Airtel Margins in the Indian business are expected to remain more or less stable while the
African business would post about 170 bps expansion to ~28%. We expect it to
add 8.0 million subscribers in India and SA and 2.2 million in Africa. India APRU
would fall 1% to | 192 while that of Africa would decline 0.8% to US$7.1. With the
management's focus on increasing usage in Africa, we expect MoU to increase
2.5% QoQ to 118. We expect other businesses to grow at a moderate 3% QoQ
Idea Cellular We expect Idea to add 6.7 million subscribers with a 2.1% QoQ decline in ARPU to
| 158. MoU is expected to decrease 2.0% to 389 resulting in ARPM remaining at 41
paisa. Idea would start charging interest on 3G related debt and amortisation of
license fees to P&L resulting in incremental charges to the tune of | 180 crore
OnMobile OnMobile is expected to launch services in more countries with Vodafone and
Telefonica. Additional revenue from these operators is expected to flow in this
quarter. Domestic operations may see an up-tick with competitive intensity starting
to ease off
Reliance
Comm.
RCom would add 6.8 million subscribers. We expect ARPU to fall 2.9% to | 104
while MoU would decline 2.0% to 236 and ARPM would remain stable at 44 paisa.
We do not expect any major up-tick from 3G in this quarter. The broadband
revenues are expected to decline marginally by 1.4% QoQ while global revenues
would fall by 2.6% QoQ adjusting for IRU income in Q4FY11
TTML Subscriber addition is expected to slow down with 0.5 million subscribers against
0.6 million in the last quarter. ARPU is expected to rise marginally by 0.3% to | 180
(for active subscribers) while MoU would remain stable at around 407. Key metrics
would fare better due to increasing usage of data card services
Tulip
Telecom
We expect improved realisation to aid revenue growth though new client addition
may remain at moderate levels
Source: Company, ICICIdirect.com Research

Sugar 􀂃 Global prices move northwards ::Q1FY12 Result Preview -ICICI Securities

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Sugar
􀂃 Global prices move northwards
Global sugar prices remained subdued in April - May, 2011 on back
of improved production in Thailand (second largest exporter).
However, prices surged from 21 cents/lb to 28 cents/lb in June, 2011
on back of ~21% decline in sugar production in Brazil led by higher
diversion (almost 57-59% towards ethanol and lower recovery rates
(12% compared to 12.3%). We believe sugar production in Brazil
would increase during its peak crushing time (July-October) but will
not exceed last year’s production. Hence, this would limit the
downside in global sugar prices. Shree Renuka Sugar’s presence in
Brazil would result in higher consolidated margins for the company.
􀂃 High by-product volumes to lead to improvement in earnings
With higher availability of sugarcane, by-product volumes in the
June quarter would improve significantly. We believe higher
realisations from ethanol (~| 27/litre) and power (~| 4/unit) would
lead to higher earnings in the June quarter for millers.
􀂃 Further 5 lakh tonnes of exports being allowed
Government has allowed Indian mills to export further 0.5 million
tonnes (MT) in June 2011 under the open general licence (OGL). It
had allowed 1.2 MT under advance licence scheme (AGL) in October
2010 and 0.5 MT under OGL in April 2011. We believe 2.2 MT of
outgo of sugar would lead inventory levels to fall to~ 4-5 MT in
September 2011, which would drive domestic prices to ~| 30/kg.


Company Specific View
Company Remarks
Balrampur
Chini
We estimate sugar sales volume will be lower at ~1.5 lakh tonnes with an
improvement in realisations to ~|28.7/kg. Moreover, led by higher sales volume
from distillery, estimated at ~22,400 kl (~88% higher YoY) and higher realisations at
| 27/litre, we expect revenues to witness a marginal improvement of ~6% YoY
Bajaj
Hindustan
We expect the company to sell 3.0 lakh tonnes of sugar at average realisations of |
28.7 per kg. With increasing volumes of by-products and strong distillery realisations
remaining at | 27 per kg and power realisations at | 4.1 per kg, we expect margins
to improve from 25.3% in Q2SY11 to 26.3% in Q3SY11
Dhampur
Sugar
Lower sales volumes of sugar at ~1.05 lakh tonnes at an average realisation of ~|
28.5/kg would keep revenue growth in Q1FY12 capped. However, lower cane cost
and higher realisations from ethanol would drive the margins back to black,
simultaneously improving the earnings for the company
Shree Renuka
Sugars
In Indian operations, we expect the company to witness 2.4 lakh tonnes of volume
with average realisations of |27.6 per kg. However, in Brazil, we expect the company
to sell ~2.9 lakh tonnes at an average realisations of 24 cents/lb
Source: Company, ICICIdirect.com Research

Logistics 􀂃 Muted growth in container volumes ::Q1FY12 Result Preview -ICICI Securities

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Logistics
􀂃 Muted growth in container volumes
Overall volumes at major ports during the first two months of
Q1FY12 registered an increase of 5.1% YoY to 99.7 million tonnes
(MT) while container volumes have increased by 1.0% YoY to 1.3
million TEUs (6.2% YoY in tonnage terms to 19.9 MT).
􀂃 EBITDA margins to decline YoY and remain flat QoQ
We expect the EBITDA for the ICICIdirect.com coverage universe to
increase 8.5% YoY to | 474.9 crore mainly due to higher volumes.
EBITDA margins are expected to remain flat QoQ. However, they
would decline by 70 bps YoY to 19.5%. We expect the PAT for the
ICICIdirect.com coverage universe to increase 9.1% YoY to | 307.1
crore.


Company specific view
Company Remarks
Allcargo
Global
Logistics
We expect 13.0% YoY growth in revenues on the back of a healthy performance
anticipated from ECU Line. ECU Line has reported good volume growth over the last
couple of quarters. EBITDA margins are expected to increase 60 bps YoY to 11.0%.
PAT is expected to increase 25.5% YoY on the back of the low base effect
Container
Corporation
We expect marginal volume growth of 1.0% QoQ in the Exim segment and de-growth
of 2.0% QoQ in the domestic segment. Realisations are expected to be flattish QoQ.
As a result, revenues are expected to remain flat sequentially. EBITDA margins are
expected to decline 220 bps YoY to ~24.8%
Gateway
Distriparks
We expect 23.1% YoY revenue growth primarily on the back of better volumes. We
expect volume growth of 8% YoY in the CFS segment and 12% YoY in the rail
segment. Realisations are expected to improve 11% YoY in CFS and are expected to
remain flat in the rail segment
Sanghvi
Movers
On the back of a firm demand scenario from key user industry segments, we expect
capacity utilisation levels during Q1FY12E to remain stable at ~ 80%. However,
EBITDA margins are expected to decline 260 bps YoY to 72.0%
Transport
Corporation
We expect TCI to report a 17.1% YoY increase in revenue mainly on the back of a
healthy contribution from the SCS and XPS divisions. Furthermore, higher
contribution from high margin businesses (like SCS and XPS) is also expected to
result in a 50 bps improvement YoY to ~7.8%
Source: Company, ICICIdirect.com Research

Shipping/Offshore/Shipbuilding 􀂃::Q1FY12 Result Preview -ICICI Securities

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Shipping/Offshore/Shipbuilding
􀂃 Dry bulk rates improve while crude tanker rates decline in Q1FY12
The Baltic Dry Index average for Q1FY12 at 1381 was 1.2% higher
than in Q4FY11. Dry bulk freight rates were volatile during the
quarter with a decline in April and recovery in the initial part of June.
However, the later half of June has seen a decline on account of
rising iron ore inventory and lower imports by China. The Baltic
Dirty Index average for Q1FY12 at 796 was 3.9% lower than in
Q4FY11 while the Baltic Clean Index average for Q1FY12 at 784 was
12.2% higher than Q4FY11. Crude carrier rates were weak during
the quarter as they declined due to low demand and oversupply of
tonnage.
􀂃 Offshore vessel utilisation levels remain stable
Utilisation levels for drill ships, semi-subs and jack-up rigs was
reported at 79%, 86% and 80% in May 2011 as against 77%, 84%
and 80% in April 2011, respectively. Utilisation levels showed signs
of improvement but did not translate into a significant rise in charter
rates, which remained stable during the quarter.
􀂃 Q1FY12E performance (QoQ basis)
The revenues of shipping companies are expected to improve due
to an up move in dry bulk freight rates but weakness in tanker
freight rates would limit the growth. The performance of
shipbuilding companies is expected to be better with a pick-up in
execution while the performance of offshore companies in our
coverage is expected to remain stable due to high utilisation levels
being maintained.
􀂃 Top pick - Mercator Lines
Mercator Lines (MLL) operates a diversified fleet of 30 vessels
including dry bulk, tankers, dredgers and floating production cum
storage unit along with coal mines in Indonesia. MLL is well placed
to ride the volatility of the shipping business due to a diversified
revenue stream and long-term charter contracts. MLL is trading at
0.39x FY13 P/BV of | 103 and offers a value buying opportunity.


Company specific view
Company Remarks
Aban
Offshore
We expect revenues to decline by 5% QoQ as its assets Aban 3 and Aban 4 have
been deployed at lower day rates. EBITDA is expected to be lower by 3% due to
lower revenues. We expect the company to report a flattish PAT of | 152.6 crore in
Q1FY12
ABG
Shipyard
The topline is expected to rise 10% QoQ on the back of higher subsidy booking. The
operating margin is likely to rebound owing to higher proportion of export orders
with better margins being executed, compared to Q4FY11, which had lower margin
domestic coast guard orders
Bharati
Shipyard
We expect a 7% decline in topline while the operating margin (including subsidy) is
expected to decline from 35.6% in Q4FY11 to 32.2% in Q1FY12 due to lower
subsidy booking. Net profit in Q1FY12 is likely to decline by 42.8% to | 21.8 crore
GE Shipping Revenue is expected to rise 10.8% QoQ due to induction of three new dry bulk
carriers to the fleet. We expect a recovery in the operating margin to 43% from
38.6% due to a decline in expense on hire of chartered ship due to purchase of a rig
from Mercator Lines, which was earlier on charter hire basis
Global
Offshore
Revenue is expected to increase QoQ by 14.6% to | 58.4 crore due to increased
utilisation for MV Mahananda and MV Poorna, which remained idle in the
preceding quarter. The EBITDA margin is expected to improve by 170 bps owing to
better day rates
Great
Offshore
Revenue is expected to rise significantly QoQ in Q1FY12 to | 240.1 crore due to
improved utilisation of its OSVs fleet. PAT is likely to decline owing to the absence
of extraordinary profit of | 55 crore, which was accounted in Q4FY11 on account of
a change in inventory policy
Mercator
Lines
Revenue is expected to rise 2.8% to ~ | 801.8 crore in Q1FY12 due to a rise in coal
trading activity and better day rates for its FPSU that has secured a seven-year
contract. PAT is expected to improve in Q1FY12 due to the absence of
extraordinary loss of | 42 crore on sale of a rig in the preceding quarter
Pipavav
Shipyard
Revenue is expected to rise by 11.6% to ~ | 292.3 crore in Q1FY12 as execution
gains pace and the company launched its first two ships. PAT for Q4FY11 was
higher due to one-time reversal of expenses to the tune of | 30.28 crore while PAT
for Q1FY12 is expected to be at | 21.6 crore
SCI Topline is expected to contract by 3.0% in Q1FY12 to | 839.0 crore due to
weakness in tanker freight rates. We expect the EBITDA margin to remain subdued
owing to high bunker costs though QoQ we expect the margin to improve from the
abysmally low level of 11% in Q4FY11 to 14.7% in Q1FY12
SEAMEC Topline is expected to rise by 31.0% in Q1FY12 to | 36.7 crore due to deployment
of SEAMEC I on a long-term contract. Expected low fleet utilisation (59%) and high
dry docking expense owing to the old fleet will impact its operating performance.
We expect it to report a net loss of | 9.6 crore in Q1FY12
Varun
Shipping
Revenue is expected to rise 22% QoQ to | 101.8 crore in Q1FY12 due to securing a
long-term contract for three AHTS vessels. Though fleet utilisation is expected to
improve, lower EBITDA margin due to reduction in owned fleet would result in
Varun reporting EBITDA of | 4 crore and net loss of | 80 crore
Source: ICICIdirect.com Research

Retail 􀂃 Still to feel the impact of inflation on consumption::Q1FY12 Result Preview -ICICI Securities

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Retail
􀂃 Still to feel the impact of inflation on consumption
Domestic retailers are yet to feel the pinch of high inflation. So far,
while customers are taking note of the prevalent inflationary
situation demand has not yet been largely impacted. Though a
marginal impact might be seen on volumes, price hikes taken to
mitigate the impact of higher input costs will aid revenue growth in
the April–June quarter.
􀂃 Revenue growth to continue, albeit at a lower pace
We expect topline growth of 20% for our retail universe backed by a
combination of factors like space addition, promotional offers, price
hikes and revival in same store sales growth (SSSG). During the
quarter, Pantaloon Retail had a month long promotional offer – ’The
Great Indian Shopping Festival’, which will boost topline growth.
Shoppers Stop also awarded triple reward points to its loyalty club
members for all purchases during April 30-May 15, 2011. For Titan
Industries, we expect overall growth to be subdued (as compared to
FY11) due to the higher base effect.
􀂃 Margins to remain flattish sequentially
We expect operating margins for Pantaloon Retail and Shoppers
Stop to remain flattish on a sequential basis. Retailers have taken a
price hike in the range of 10-15% in the apparel segment to make up
for the increase in raw material prices and also to partly set off the
impact of increased excise duty on branded apparel. We expect
Titan to return to ~9% EBITDA margin levels due to inventory gains
due to lower cost diamond inventory and also lower sales of low
end watches (Sonata) as that segment was highly affected by
inflation.
􀂃 While space addition continues, revenue psf is likely to decline
The organised domestic retailers seem to be on track with their
space addition plans. However, the focus still remains on profitable
growth. During the April–June quarter we expect Pantaloon Retail to
add 0.82 million sq ft of space taking the operational retail space to
15.67 million sq ft. Shoppers Stop has also announced addition of
13 stores across various formats this quarter. We expect its total
operational space to increase from 3.37 million sq ft in March 2011
to 3.58 million sq ft (addition of 0.21 million sq ft) at the end of this
quarter. We expect a 5% YoY dip in revenue per sq ft (psf) for both
Pantaloon Retail and Shoppers Stop as newer stores will take some
time to stabilise. We expect Pantaloon Retail to report a revenue per
sq ft of | 1,799 (| 1,875 – June 2010) and Shoppers Stop to report a
revenue per sq ft of | 1,751 (| 1,842 – June 2010).


Company specific view
Company Remarks
Pantaloon
Retail
We expect 13% sales growth to | 2,818.8 crore led by space addition, ~15% price hike
taken in April to deal with rising input prices & also a revival in SSSG. We expect
EBITDA margin to be maintained at 8.7%. While PAT is likely to remain flat QoQ it will
look suppressed YoY due to higher other income in Q4FY10
Shoppers
Stop
We expect a 72.9% YoY increase in revenues on the back of 0.8 mn sq ft of space
addition (YoY) and increased average selling price. We expect the operating margin to
decline 160 bps YoY to 5.6%. However, sequentially we expect an improvement (60
bps) in operating margin led by improved HyperCity performance
Titan
Industries
We expect subdued growth in the watches & jewellery segment due to higher base
effect. We forecast 19% YoY topline growth to | 1,493 crore led by 12% and 23%
growth in watches & jewellery segment, respectively. We expect Titan to return to
~9% operating margin backed by lower share of low-end watches (Sonata)
Source: Company, ICICIdirect.com Research

Power 􀂃 ::Q1FY12 Result Preview -ICICI Securities

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Power
􀂃 Muted capacity addition of coverage universe
In YTD FY12 (April-May 2011), aggregate incremental capacity
addition was 1285 MW (800 MW in April- May 2010). Our coverage
universe has added 910 MW during this quarter. However, only 250
MW has been commercialised. The installed capacity currently
stands at 1,74,911 MW. For the rest of the year, we expect ~ 13500
MW of capacity addition taking the total capacity addition in the XIth
Five Year Plan to ~ 46000 MW (vs. original target of 72000 MW).
Electricity generation during April-May 2011 has increased by 8%
YoY. Average base deficit during April May 2011 was 7% (decline of
600 bps YoY) while average peak deficit was 10% (decline of 305
bps YoY)
􀂃 Merchant power rates decline QoQ and YoY
Merchant power rates have declined ~18% QoQ and 38% YoY in
Q1FY12 (though traditionally the best quarter for merchant rates).
We expect companies with merchant power exposure (Lanco
Infratech, Tata Power) to report a realisation in the range of ~| 3.9-
4.2 Kwhr.
􀂃 Firm global coal prices, Indonesian law – key headwinds for IPPs
During Q1FY12, international spot thermal coal prices (6700 kcal)
have declined by 7% QoQ ($120/tonne). However, a decline in
merchant prices and change in Indonesian law (with reference to
pricing of imported coal) would put profitability of merchant IPP
(based on imported coal) under pressure. Similarly, declining gas
output from Reliance (case in point: Lanco Infra) would mean lower
PLFs, going forward.
􀂃 SEBs losses at ~| 80000 crore , tariff increase inevitable
As per the XIII Finance Commission, SEB’s losses have widened to |
80,319 crore (based on 2008-09 prices) from | 55,000 crore in FY09.
However, tariff hikes in states like MP, Bihar & proposed hike in Delhi
are a way forward unlike the bailout sought by Tamil Nadu SEB.
􀂃 PAT, EBITDA to increase YoY, but decline on QoQ basis
From our coverage universe, we expect EBITDA margins to remain
stable QoQ (due to limited exposure of our coverage universe to
merchant power) but to decline marginally by 150 bps YoY. Higher
depreciation & interest cost of newly commissioned projects would
lead PAT margin contraction of 300 bps QoQ and 180 bps YoY


Company specific view
Company Remarks
NTPC We expect NTPC to sell ~51.2 BU in Q1FY12, a decline of 2.1% YoY mainly due to a
fall in production in its gas-based power plants. We expect realisation to be ~ |
2.64 per unit (based on grossing of tariff on pre-tax RoE of 23%). During the quarter,
the company had added 660 MW super critical power in Sipat
NHPC We expect NHPC to sell ~6289 MUs in Q1FY12 (14% growth YoY). We expect per
unit realisation to be | 1.85 per unit (same as Q1FY11). We estimate revenue
growth of 14% YoY and PAT growth of 7% (lower tax in Q1FY11)
Neyveli Lignite The company is expected to report topline growth of 1% and bottomline de-growth
of 13.5% YoY (higher depreciation and interest on 125 MW capacity addition),
respectively. The company is expected to sell ~4804 MUs, up 1% YoY. We have
built in a realisation rate of | 2.41/unit
JP Hydro We have built in sales of~1270 MUs in Q1FY12. We expect average realisation of
| 2.0 per unit. During the quarter, the company has commissioned first unit (250
MW) of Karcham Wangtoo. We expect revenue growth of 30% YoY and PAT growth
of 57% YoY due to capacity addition this quarter and extraordinary expense of | 10
crore in Q1FY11
PTC India We expect PTC to report trading volumes of 6966 MUs for Q1FY12E, implying a 22%
YoY growth. The trading margins are also expected to be at 5.4 paisa/unit in
Q1FY12E. We have built in average realisation of | 3.9 per unit in Q1FY12E
Lanco Infratech
**
The company has sold ~ 3200 MUs. We expect merchant power realisation to be |
3.9/kwhr (decline of 10% YoY). We expect revenue growth of 11% YoY due to Griffin
coal numbers. We expect EBITDA and PAT to decline by 13% (higher coal costs) and
40% (higher interest cost), respectively
Tata Power The company is expected to report topline de-growth of 4% on account of a decline
in generation (for 1580 MW) and bottomline growth of 44% YoY (higher tax rate in
Q1FY11), respectively. We expect coal realisation at $85/tonne in Bumi resources
with volume of 15.5 MT
Source: Company, ICICIdirect.com Research
**One offs like higher inter segment elimination; other income may impact PAT growth

Hospitals 􀂃 ::Q1FY12 Result Preview -ICICI Securities

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Hospitals
􀂃 Hospital revenues to grow 34.5% YoY with Fortis leading the pack
We expect our I-direct hospital universe revenues to increase by
34.5% YoY on the back of robust revenue growth by Fortis
Healthcare due to the SRL acquisition. Overall, we expect in-patient
volumes and average revenue per bed (ARPOB) to grow by 11%
and 6% YoY, respectively, for the quarter.
􀂃 Operating margins to improve sequentially
Operating margins of the I-direct hospital universe are likely to
improve by 50 bps sequentially to 14.7%. Operating margins of
Apollo Hospital are likely to improve by 60 bps to 15.9% QoQ due to
an improvement in the pharmacy segment while the operating
margin of Fortis Healthcare is likely to see an improvement of 50
bps QoQ to 13.2% for Q1FY12E due to a pick-up in the utilisation of
newly commissioned hospitals at Shalimar Baug, Delhi and Mulund.
􀂃 Profitability to improve on better margins
Profitability of the I-direct hospital universe is expected to improve
on stable operating margins and better revenue growth. Among the
peer set, we expect Fortis Healthcare to report net profit of | 33.5
crore vs. loss of | 14.5 crore reported last year. Apollo Hospitals is
expected to report net profit growth of 29.3% YoY on stable
business and better margins.

QCOM 3Q11 results implications ::Macquarie Research

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QCOM 3Q11 results implications
Event
 QCOM reported its 3Q FY11 revenue of US$3.62bn, down 6% QoQ or up
34% YoY, above the street’s consensus of US$3.5bn and meeting the high
end of the guidance. EPS came in at US$0.73, ahead of consensus and
management guidance of US$0.68-0.72.
 QCOM’s comments on increasing penetration of low-end smartphones in
emerging markets supports our view that rising volume through the
proliferation of low-to-mid end smartphones will directly benefit the Taiwan
upstream sector, particularly TSMC (25-30% revenue contribution from
mobile-centric customers) and ASE (25-30%).
Impact
 Positive guidance for 4Q FY11 and raises full year FY11. QCOM guided
4Q FY11 revenue of US$3.86-4.16bn, or up 7-15% sequentially, compared to
street’s expectation of 9% QoQ growth. Company’s guidance of FY4Q EPS of
US$0.60-0.65 is also in line with consensus of US$0.63.
 FY11 ASP higher but 4Q FY11 shipment slightly missed. After raising the
expected ASP from US$190-200 to US$199-209 in the last quarter,
Qualcomm again raised the expected ASP for FY11 to US$204-210 as the
company continues to see low-end smartphones penetrating into emerging
markets, replacing feature phones. QCOM shipped 120m units of MSM
(snapdragon/SoC) in 3Q FY11, higher than its original guidance of 115-119m
units. Qualcomm expects shipment to reach 120-125m units this quarter,
which is slightly below the street’s 130m expectation, citing inventory
correction in Europe, which shouldn’t be a surprise given the concerns the
market has been discussing on HTC recently, in our view.
 Expect inventory level to decline. While Qualcomm’s inventory days
increased from 41 days to 54 days, the company expects the level to decline
this quarter. Earlier this week, Altera reported its 2Q11 results and saw its
inventory days down to 74 days from 88 days in 1Q11. This trend supports
our view that semiconductor inventories are likely to peak in 2Q and decline
and potentially bottom in 3Q as the supply chain goes through a correction,
which effectively would lead to recovery in orders to foundries and OSAT.
 Shipment of 28nm product by year end. QCOM indicates that it will start
shipping products based on 28nm by year end. This also supports our view
that the increasing adoption of the 28nm will benefit TSMC and become a
strong revenue driver in 2012, given its 40-50% ASP premium over 40nm.
 Continue to be the reliable partner in China smartphone. QCOM
reiterated its commitment to the rising low-end smartphone market and its
strong relationship with China manufacturers and operators. Paul Jacobs,
QCOM’s CEO, also stated after its return from China Unicom's supplier forum
that operators require a reliable supplier to lead the industry direction. This
echoes our view that operators are unlikely to adopt MTK smartphone
solutions massively due to lack of track record, and market expectation for
MTK smartphone in 2012 is too high (50-70m units).

Pharmaceuticals 􀂃 ::Q1FY12 Result Preview -ICICI Securities

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Pharmaceuticals
􀂃 Consolidated topline to grow at ~19% YoY
The pharma companies under our coverage are expected to post
mixed results. Sun Pharma’s numbers will not be comparable due to
consolidation of Taro’s numbers and also due to discontinuance of
anti-ulcerant Protonix and anti-cancer Eloxatin in the US market.
Similarly, the results of Opto Circuits, Elder Pharma and Biocon are
also not comparable as Opto acquired the US-based Cardiac
Science, Elder acquired Bulgaria based Biomeda and Biocon sold a
stake in Axicorp. Companies like Aurobindo, Cadila, Glenmark,
Indoco, Lupin and Torrent Pharma are expected to report good YoY
sales growth due to new launches and increase in field force. We
expect Cadila and Lupin to lead the pack with ~20% sales growth.
We expect Unichem Laboratories to report marginal growth in sales
due to a change in the distribution pattern. While healthy growth in
domestic formulations sales coupled with good growth in the US
market will drive the numbers, growth will be arrested by absence
of F2F products for Sun and Glenmark. Overall, our pharma universe
is expected to clock ~19% sales growth YoY at | 9819 crore.
􀂃 EBITDA to grow mere ~5% YoY
We expect the EBITDA of the coverage universe to witness marginal
growth of ~5% YoY to | 2308 crore due to factors such as
consolidation of lower margin businesses by some companies and
absence of revenues from high margin F2Fs products. Increase in
the field force and expansion of capacities will also lead to pressure
on margins. Overall EBITDA margins for the universe are expected
to be ~ 23%.
􀂃 PAT to witness marginal growth of ~ 1% YoY on high base
We expect the PAT of the coverage universe to witness a marginal
growth of ~1% to | 1558 crore YoY due to higher Q1FY11 base
which was inflated by FTF sales by Sun and Glenmark. Glenmark,
Ipca and Lupin are expected to lead the growth pack.



Company specific view
Company Remarks
Aurobindo
Pharma
Sales are expected to grow ~18% YoY driven by ~25-30% growth in US formulations
and ~20% growth in the ARV business. EBITDA margins are expected to expand
~170 bps YoY due to higher contribution from formulations. Net profit will grow more
than 125% on the back of low base in Q1FY11
Biocon We expect sales to decline 25% YoY due to divestment in Axicorp. Excluding Axicorp,
we expect like to like sales to grow 21% YoY mainly driven by both bio-pharmaceutical
and the R&D services segments. However, EBITDA margins will expand more than 900
bps due to exit from low margin Axicorp
Cadila
Healthcare
Sales are expected to grow ~20% YoY driven by ~18% growth in domestic
formulation business, 20% growth in the US business and traction from Hospira JV.
EBITDA margins may decline marginally by 40-50 bps YoY due to increase in materials
cost for the wellness business
Elder Pharma Results will not be comparable YoY as it completed the acquisition of Biomeda and
NeutraHealth. We expect overall sales to grow ~ 60% YoY and like-to-like sales to
grow ~ 19%. The growth in the base business will be driven by new launches
including line extension of the Shelcal brand
Glenmark
Pharma
We expect sales growth of 20% YoY. Excluding revenues from out-licensing deals in
Q1FY11 (US$20 million) and Q1FY12 (US$25million), the base business is expected to
increase by 19% YoY. However, EBITDA margins will contract by 200 bps on the back
of a change in the product mix
Indoco
Remedies
We expect sales growth of 19% YoY, mainly driven by growth in the domestic
formulation business and export of formulations to regulated markets. However, at the
EBITDA level we expect margins to decline 40 bps YoY due to recent addition of field
force and higher R&D expenditure
Ipca
laboratories
We expect Ipca to clock sales growth of ~15% YoY, driven by 20% growth in
domestic formulations, although export APIs to register muted growth. EBITDA
margins to improve on YoY basis due to lower growth in anti malarial business which
dented Q1FY11 margins.
Lupin We expect sales growth of ~20% YoY, mainly driven by new launches in advanced
countries, domestic formulation market and increase in the prescriptions of its
branded product Antara in the US markets. We expect EBITDA margins to decline
~40-50 bps YoY
Opto Circuits The numbers will not be comparable YoY on account of the acquisition of US based
Cardiac Science. We expect sales to grow ~75% YoY mainly driven by the Invasive
segment. On a like-to-like basis, the base business expected to grow 20%. The EBITDA
margins will decline ~900 bps YoY
Strides
Arcolab
We expect sales to grow 13% YoY on a higher base as it received higher licensing
income in Q2CY11. The specialty and pharma business are expected to grow at 15%
and 12%, respectively YoY. EBITDA margins will decline ~650 bps on the back of
lower licensing income
Sun Pharma The numbers will not be comparable due to the Taro acquisition. On a like-to-like basis,
we expect sales to decline ~10% YoY due to higher revenues from F2F drugs in
Q1FY11. Including Taro numbers, sales are expected to grow ~23.5% YoY. EBITDA
margins will decline ~1500 bps to 28.9% on the back of Taro consolidation and higher
spend for corrective measures
Torrent
Pharma
The topline is expected to grow ~18% YoY on the back of ~17% growth in the
domestic business, ~19% growth in CRAMS business and 20% growth in Brazilin
sales. However, EBITDA margins are expected to decline ~190-200 bps as it
increased its field force and completed the expansion of Indrad facility
Unichem
Labs
We expect marginal sales growth of 6% YoY due to lower growth in the domestic
formulation business on account of inventory adjustment in the distribution channel.
EBITDA margins will continue to remain under pressure (down 950 bps YoY) due to
increase in employee cost and other expenditure
Source: Company, ICICIdirect.com Research

Oil and Gas 􀂃 ::Q1FY12 Result Preview -ICICI Securities

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Oil and Gas
􀂃 Brent crude oil prices increase 10.7% QoQ to US$116.7 per barrel
High liquidity and a weak monetary policy in the global markets led
to 52.7% YoY and 10.7% QoQ increase in average Brent crude oil
prices to US$116.7 per bbl in Q1FY12 (historically third highest
quarterly average). Brent crude oil prices declined to ~US$112 per
bbl at the end of the current quarter after touching a high of
~US$127 per bbl in April on International Energy Agency’s (IEA)
decision to release 60 million bbls of government oil that had been
held in the strategic reserve oil stockpile. However, higher average
oil prices would increase the realisations and profitability of the
exploration and production (E&P) companies. Cairn India, ONGC,
OIL India and RIL would be the key beneficiaries.
􀂃 Gross under-recoveries for Q1FY12E at ~| 43,000 crore
Higher crude oil prices would increase the estimated gross crude oil
under-recoveries from | 31,230 crore in Q4FY11 to | 42,938 crore in
Q1FY12E. We have modelled upstream companies share of subsidy
burden at 33.3% in Q1FY12E on the basis of media reports. We
estimate upstream, downstream and government will bear subsidy
burden of | 14,311 crore, | 3,779 crore (8.8% share) and | 24,848
crore (57.8% share), respectively, in Q1FY12. Hence, we believe that
oil marketing companies (HPCL, BPCL and IOC) would report profits
in the current quarter against loss in the corresponding quarter of
the previous year.
􀂃 Gross refining margin to increase QoQ
Singapore gross refining margins (GRM) have increased QoQ from
$7.4 per barrel in Q4FY11 to $8.5 per barrel in Q1FY12 mainly on
account of higher spread on middle distillates in Asia. The shutdown
of some refineries in Japan also led to higher GRMs for the quarter.
This would benefit refiners like RIL, Essar Oil, CPCL and MRPL.
􀂃 Lower domestic gas volumes to be replaced by higher priced LNG
The decline in gas production from the Reliance KG-D6 basin from
~60 mmscmd in Q1FY11 to ~48 mmscmd in Q1FY12E has led to
higher import of costlier priced LNG from the global markets. Hence,
large gas transportation companies would report muted volumes
YoY. However, the city gas distribution (CGD) companies would
report a steady increase in YoY volumes on the back of higher
demand from the industrial and CNG segment



Company specific view
Company Remarks
Bharat
Petroleum
We expect 57.4% YoY increase in revenues due to a 7.6% increase in retail sales
volumes to 7.9 MT and higher product prices. We expect BPCL to report profits in
the current quarter as against a loss in the last quarter YoY as we have assumed the
government will share 57.8% of total under-recoveries. We have modelled net underrecoveries
for OMCs at 8.8% in FY12E
Cairn India
Ltd
Revenues would increase 362.5% YoY due to higher production from Mangala field
and higher oil prices. The net oil & gas production is expected to increase 119.5%
YoY to 98,361 boepd while oil realisation is expected to increase by 42.9% YoY to
$102.9 per barrel. We have not assumed royalty payment for the quarter
Gujarat Gas Volumes are expected to increase 7.4% YoY to 3.5 mmscmd on account of an
increase in LNG volumes. Realisations would improve 40.6% YoY to 19.7 per scm to
pass on higher gas costs to the customers. Margins would decline YoY by 120 bps
to 21.1% in Q2CY11E on account of higher procurement of LNG
GSPL Revenues are expected to remain flat due to lower gas volumes of 35.8 mmscmd in
Q1FY12 against 36.2 mmscmd YoY. We expect a marginal increase in transmission
charges from | 0.76 per scm to | 0.78 per scm YoY. A change in the depreciation
policy would mainly contribute to profit growth during the quarter
Hindustan
Petroleum
We expect a 64.1% YoY increase in revenues due to a 7.1% increase in retail sales
volumes to 7.2 MT and higher product prices. We expect refining margins of $6.9
per bbl against $3.7 per bbl YoY and net under-recoveries for OMCs at 8.8% in FY12E
Indraprastha
Gas
Revenues would increase 67.5% YoY on account of a 27% increase in sales volume
to 3.1 mmscmd and 30.8% increase in gross realisation to | 22.2 per scm. However,
margins are expected to decline to 26.6% due to an increase in gas purchase prices
Oil India Revenues are expected to increase YoY mainly due to higher oil and natural gas
realisations. We expect oil production of 6.77 mmboe (higher 17.2% YoY due to
shutdown of NRL refinery last year), subsidy of $51.8 per bbl (| 1560 crore) and net
realisation of $61.3 per bbl in Q1FY12E against $49.7 per bbl YoY
Petronet LNG We expect robust revenues due to higher volumes as well as realisations. We
expect volumes to increase 37.2% YoY to 130.5 trillion British thermal unit (2.5 MT)
in Q1FY12 on account of lower domestic gas production. PAT is expected to
increase due to higher regasification margins of | 33.3 per mmbtu
Shiv Vani Oil We expect revenues to decline marginally by 1% YoY on account of flat order book
of ~| 2,700 crore. The EBITDA margin is expected to increase 250 bps YoY to
46.5% in Q1FY12E
Source: ICICIdirect.com Research

Metals 􀂃 ::Q1FY12 Result Preview -ICICI Securities

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Metals
􀂃 EBITDA/tonne to be lower on the back of higher raw material cost
We expect steel companies within our coverage universe to report a
muted set of numbers for Q1FY12 on the back of higher raw
material costs and subdued demand. On the back of supply side
constraints, sequentially there was a sharp rise in the prices of key
raw materials such as coking coal (higher by 46.7% QoQ).
Furthermore, muted growth in steel demand led to a marginal
decline in steel prices. As a result, for Q1FY12 we expect EBITDA
per tonne of steel companies to decline in the range of | 1500- 2500
per tonne QoQ. Going forward, we expect EBITDA margins of steel
players to remain under pressure as the prices of key inputs is
expected to remain firm due to supply side bottlenecks.
􀂃 Non-ferrous companies to perform well YoY
All base metals prices were significantly higher in Q1FY12 as
compared to Q1FY11, driven mainly by strong demand and liquidity
in the global market. LME prices of Copper, Aluminium and Lead
registered a healthy growth of ~31% ~24% and ~31% YoY
respectively, whereas Zinc prices grew modestly by ~11% YoY. In
our coverage, we expect Hindustan Zinc and Sterlite Industries to
post a good set of numbers driven by higher volumes, improved
realisations on the LME for zinc, lead & copper, higher TC/RC
margins and improvement in by-product realisation viz., sulphuric
acid, phosphoric acid and silver.
􀂃 EBITDA margins to take a hit QoQ
In Q1FY12E, we expect the EBITDA of the I-direct coverage universe
to decline by 23.8% QoQ mainly on the back of higher operating
costs. EBITDA margins will decline by 310 bps QoQ to 19.1%. We
expect PAT for the I-direct coverage universe to decline by 25.6% to
| 8777.9 crore.


Company specific view
Company Remarks
Adhunik We expect overall sales growth of ~15% on the back of higher realisations and
marginally higher sales volumes(up by 2.5%) to ~89600. At OMML, iron ore volumes
are expected at 0.3MT whereas manganese ore volumes at 0.05 MT. Lower
realisation on manganese ore (dip of 20%) will lead flattish performance at OMML.
Graphite
India
In Q1FY12, on a YoY basis, we expect ~20% growth in sales volume of graphite
electrodes primarily on the back of muted volumes in Q1FY11. However, the EBITDA
margin is expected to decline 370 bps YoY to 19.3% on the back of higher operating
costs
HEG During Q1FY12E, the capacity utilisation level of the graphite electrodes segment is
expected to be ~80% while realisations are expected to remain stable QoQ. PAT is
expected to increase ~17.5% YoY on account of the lower base effect
Hindustan
Zinc
Refined zinc sales is expected at ~190,000 tonnes (up ~16% YoY) while refined lead
sales are expected at ~15,100 tonne, up ~10% YoY. Silver production for Q1FY12E is
estimated at ~ 81250 kg(up by 185% YoY). We expect overall performance to
improve on the back of higher volumes & better realisation.
JSW Steel We expect JSW Steel to post sales volume of ~1.7 MT in Q1FY12 flattish on a
sequential basis. However on the back of higher raw material cost, the EBITDA
margin is expected to decline by 590 bps YoY & 650 bps QoQ to 16.3%. As a result the
EBITDA is expected to decline by 31.6% QoQ .
SAIL The topline is expected to increase by 25% YoY primarily on the back of higher sales
volume. The sales volume is expected to be ~3.2 MT in Q1FY12 as compared to 2.3
MT in Q1FY11. However, on account of higher coking coal, cost EBITDA margin is
expected to decline by 320 bps QoQ and 420 bps YoY to 16.0%
Sesa Goa Sales volumes for Q1FY12E are expected to decline ~31% QoQ and decline ~34%
YoY. We expect a dip in the volumes due to no contribution from Karnataka. However,
the improvement in topline is expected on the back of better realisations, which is
expected improved from $90 in Q1FY11 to ~$107 in Q1FY12E.
Sterlite
Industries
The topline is expected to grow ~63% YoY on the back of higher performance from
the domestic and international zinc business. We expect EBITDA margins to improve
by 280 bps to 25.3% as compared to 22.5%in Q1FY11. PAT is expected to post growth
of ~5.7% YoY on the back of higher interest and depreciation cost
Tata Steel Consolidated sales volumes for Q1FY12E are expected to grow ~3% YoY but decline
~6% QoQ to 6.22 MT. Blended EBITDA margins are expected to decline by 180 bps
QoQ to 11.4% on the back of higher operating costs. We expect PAT to increase
sharply due to one-time gain on stake sale in Riversdale
Usha Martin The topline for Q1FY12 is expected to increase ~17.9% YoY but decline by ~7.7%
QoQ. However, on the back of higher coking coal costs the EBITDA margin is
expected to decline by 420 bps YoY to 17.2%. PAT is expected to decline ~33% YoY
on account of higher depreciation and interest cost
Visa Steel We expect overall sales volumes in Q1FY12E to grow ~48% YoY, we expect
significant contribution coming from sales of pig iron(~36,000), which was lower in
Q1FY11 at ~533 tonnes. EBITDA for Q1FY12 will improved ~20% YoY but
sequentially it is likly to be lower by 32% on the back of higher input cost
Source: Company, ICICIdirect.com Research

Media 􀂃 ::Q1FY12 Result Preview -ICICI Securities

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Media
􀂃 Interest rate hikes and overall slowdown hits ad revenue growth
Media companies would witness a relatively weak quarter as
advertisement revenue growth would remain subdued on account
of reduced ad spends by corporates and interest rate sensitive
sectors like automobile, realty and BFSI. Regional print media would
also witness substantial decline in national advertisement, impacting
overall ad growth. Our media universe would witness a revenue
growth of 15.0% YoY and 1.7% QoQ. Also, there will be a delay in
the ad spend from the education sector and would roll into Q2.
􀂃 Occupancy on a rise
Multiplexes are expected to be hit by IPL but they are poised to do
better than last quarter which was completely overshadowed by ICC
cricket world cup. Hollywood movies like “Pirates of the Caribbean”
and “Kung Fu Panda 2” along with Bollywood movies like “Ready”
have been able to significantly pull in audiences. We expect average
occupancy to rise by 7-8 percentage points across multiplexes. ATP
is expected to remain more or less stable QoQ.
􀂃 Good quarter for Dish TV
Though lower than the previous two quarters buoyed by festive
season and ICC World Cup, Dish TV would continue strong
subscriber addition on the back of higher demand during IPL season
4. The company is expected to add 0.9 million subscribers taking the
total to 11.3 million. The ARPU is expected to grow 1.6% to |152 on
back of recent price hike and increasing share of HD subscribers.
􀂃 Profitability to show mixed trend
Margins across print and broadcasting players are expected to dip
QoQ as revenue growth hasn’t been able to keep pace with rising
input costs. Print media is expected to suffer the most due to rising
newsprint prices. Only Deccan Chronicle is expected to show a rise
as it suffered negative margins last quarter due to Telangana issues.
Multiplexes would witness margin expansion with rising occupancy
as patrons return to theatres post the ICC World Cup. Dish TV would
continue the margin expansion trend with rising subscriber base
with relatively fixed cost structure. Also, ENIL would witness margin
expansion since the loss making OOH business was hived off. Our
universe coverage EBITDA margin is expected to expand 320 bps
QoQ to 30.3% primarily due to negative base of Deccan Chronicle.


Company specific view
Company Remarks
Cinemax The company rolled out a new property in New Delhi with six new screens and
seating capacity of 1116. After a weak quarter marred by the ICC World Cup,
Q1FY12 would also be weak due to IPL Season 4 in the first two months of the
quarter. Occupancy would increase marginally to ~21.0% while ATP is expected to
be at | 128
DB Corp We expect a modest ad growth of 13.5% YoY mainly due to poor growth in national
ad revenues. Also, a rise in newsprint prices and increased circulation in recently
launched Aurangabad would lead to contraction of margins in this quarter. The
company may slightly delay its plans for a Bihar launch in the wake of declining ad
volumes
Deccan
Chronicle
We expect ad revenue to decline 12.5% YoY over the Telangana issue, which has
vastly affected the company. This, coupled with firming up newsprint prices would
put downward pressure on margins. Our valuation for Deccan Chronicle does not
include the contribution from the sporting venture
Dish TV We expect the company to add 0.9 million subscribers in this quarter backed by
the IPL taking the total subscriber base to 11.3 million. With increasing share of HD
subscribers and recent price hike, we expect ARPU to grow 1.6% to | 152
ENIL We expect a marginal increase in ad rates this quarter. The inventory utilisation is
expected to be better than that of Q1FY11 but not as good as that of Q4FY11. Top
10 stations would have inventory utilisation of about 80% while in the remaining 22
stations it would be about 60%. Realisation per slot is expected to rise to | 283 per
slot from | 280 in the last quarter
HT Media We expect English ad revenues to grow 13.0% YoY and Hindi ad revenues to grow
16.0% YoY. Revenues from the radio segment are expected at | 14.7 crore,
growing 20.0% YoY. Margins would remain under pressure on the back of firm
newsprint prices
Jagran
Prakashan
We expect ad revenues to grow at 10% YoY owing to low national ad growth and
delay in education sector ad spend and slowdown in the auto and BFSI sector.
Jagran took a ~10% price hike in April, which is still not passed on fully. Increase
in newsprint prices is expected to put pressure on the margins
PVR PVR did not roll out any new properties in the last three quarters. Though the
occupancy was affected by IPL season 4, it would still be more than the last
quarter thanks to Hollywood movies like "Pirates of the Caribbean" and "Kung Fu
Panda 2" and Bollywood movies like "Ready" doing well on the box office. We
expect occupancy to rise to 28% from 21% in Q4FY11 and ATP to fall to | 160 from
| 166. We also expect the sale of the Phoenix property to contribute ~ | 10 crore
to the PAT in Q1FY12
Sun TV We expect ad revenues to grow at a very low rate of 4.2% YoY in line with the
slowdown in the entire industry. Sun TV released one mid-sized movie this quarter
with a budget of about | 10.0 crore. After a very healthy growth in the last quarter,
we expect the company to add 0.3 million subscribers in its DTH segment
UTV
Software
UTV released "Thank You" in April 2011, which had a decent performance at the
box office. UTV also launched the game "EL Shaddai" in Japan, which recorded presales
of 2.0 lakh units
Source: Company, ICICIdirect.com Research

Information Technology 􀂃 ::Q1FY12 Result Preview -ICICI Securities

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Information Technology
􀂃 Preview discussions generally encouraging
We expect Tier-I IT services companies to report US dollar revenue
growth of 1.6-5.4% led by average 3.4% volume growth and pricing
improvements. Reconciling our preview discussions suggests
continued demand momentum, reinforced by Accenture’s Q3FY11
earnings but what differs is the tone. While TCS’ FY12 commentary
continues to be enthusiastic, Infosys continues to maintain “normal”
vs. “accelerated” demand in FY11. Despite Wipro’s consistent tone,
expect lopsided quarterly revenue growth due to domestic issues
whereas HCL Tech’s revenue growth could likely be in the top
quartile.
􀂃 What does this translate to Infosys’ FY12 guidance?
We expect Infosys to revise its FY12 US dollar revenue growth
guided range to 18.5-20.5% vs. 18-20% earlier to account for the
modest Q1FY12 beat relative to its guidance and the 1.4%, 1.2%
and 2.9% depreciation of the US$ vs. the euro, pound and
Australian dollar relative to what it had assumed in Q4FY11. That
said, Infosys could likely maintain its EPS guidance pending a likely
higher than anticipated impact on Q1FY12 operating margins.
􀂃 Seasonal cost to pressurise operating margins in Q1
Depending on the operating model, topical Q1 headwinds include
wage inflation that could impact operating margins by 250-300 bps
and visa cost (80-100 bps). Although Wipro’s wage costs would be
spread 1/3 and 2/3 in Q1 and Q2, our channel checks suggest the
company awarded bonuses to a minority set of employees in Q1.
HCL Tech’s annual appraisals are effective July 1. We expect TCS,
Infosys and Wipro’s EBIT margins to decline 185 bps, 315 bps & 40
bps, respectively, while that of HCL Tech would improve by 69 bps.
􀂃 Accenture (ACN) continues to surprise the Street
Earlier last week, Accenture raised its FY11 (August year end)
guidance, a third consecutive quarter, led by strength in BFSI (grew
19%, 20% & 21% in local currency in Q3, Q2 & Q1FY11,
respectively) and discretionary spending as reflected by consulting
bookings that continue to be strong. ACN now expects revenues to
grow 14-15% vs. 11-14% earlier. To summarise, ACN’s initial FY12
revenue growth guidance of 7-10% appears conservative and
anticipate a likely upward estimate revision, going forward.


Company specific view
Company Remarks
HCL Tech We expect US$ revenue growth of 4% QoQ primarily driven by core software (4.8%
QoQ growth) and Infrastructure structure services (3.7%). Japanese revenues,
though less than 5% of total, could be modestly impacted in Q4FY11 (June year
end). EBIT margins could improve by 69 bps QoQ.to 15.7%
Infosys We expect US$ revenue growth of 4% QoQ led by 3.7% volume growth and 0.3%
pricing improvements. Wage inflation could negatively impact EBIT (modelling
25.8% for Q1FY12) margins by 200 bps, visa costs (100 bps), offset by the
depreciation of the average US$ relative to guidance assumption
Mastek We expect revenues to decline 4.8% QoQ due to partial loss on capita account. The
EBITDA margin could be (-2%) as declining revenue could offset gains made by cost
rationalisation measures. Expect sluggish revenue performance as rampup at the
new UK based client would start in Q1FY12 (June year end)
NIIT Ltd We expect SLS and ILS business to be the growth driver with 7% & 6% YoY growth.
We are modelling EBITDA margins of 12.5% primarily impacted by wage hikes in Q1.
For FY12, expect ~18% revenue growth in ILS/CLS business respectively with
flat/150 bps improvement in operating margin
Patni
Computers
We expect a modest 1.8% rupee revenue growth QoQ led by volume growth. EBIT
margins would likely decline by 137 bps due to 9-10% offshore and 2-4% onsite
wage hikes. Mangement commentary on iGate-Patni integration, delisting of patni
should be of investor focus
Rolta We expect revenues to grow 4.2% QoQ . At 39.9%, EBITDA margins should be flat
QoQ and improve 104 bps YoY. Expect demand momemtum from EGDS and EITS
business to continue led by homeland security, utilities, mapping projects. Wage
inflation effective July 1 would impact margins in Q1FY12
Sasken We expect Sasken to report 4.5% QoQ decline in revenues as Nokia continues to
shift onsite work offshore. At 14%, EBITDA margins should improve by 0.7
percentage points QoQ. FY12 tax rates should rise to ~23-25% vs. 16.7% leading to
lower PATmargin of 10% vs. 13.4% in FY11
TCS We expect TCS to report 5.4% US$ & 5.2% rupee revenue growth on the back of
4.7% volume growth, 0.6% pricing and favourable cross currency. Further, we expect
salary revisions and visa cost to impact EBIT margins by 185 bps. We are modelling
EBIT margin of 26.2% vs. 28.0% in Q4FY11
Tech
Mahindra
We expect US$ revenues to grow 2.9% primarily driven by 5% QoQ growth in non-
BT accounts. The EBITDA margin are expected to decline 36 bps primarily led by
rising costs coupled with sluggish revenue growth while major impact would come
in Q2 as the company gives salary hikes effective July 1
Wipro We expect IT services revenues to grow 1.6% QoQ in US$ terms. Revenues from
SAIC oil & gas business could provide upside to our estimates. Consolidated
revenues are expected to grow 1.9% QoQ while EBIT margin should decline by 40
bps to 17.4%. FY12E tax rates could rise to 19-20% vs.16% in FY11
Source: Company, ICICIdirect.com Research

Hotels 􀂃 Addition of rooms and rise in occupancy to drive topline::Q1FY12 Result Preview -ICICI Securities

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Hotels
􀂃 Addition of rooms and rise in occupancy to drive topline
The average revenue growth for the I-direct universe is expected to
be in the range of 24-25% YoY in Q1FY12E. The growth would
mainly be driven by incremental revenue from the addition of hotel
rooms and improvement in occupancy levels. In our coverage
universe, we expect average occupancy and average room rate
(ARR) to increase by ~220 bps and 3-4%, respectively, compared to
last year. However, on a QoQ basis, companies are expected to
report average revenue de-growth of ~19% (except Taj GVK Hotels)
due to seasonality of the hotel business.
􀂃 Re-opening of major hotels, cost control management to help
expand margins
Due to a sharp rise in topline driven by incremental revenue and
moderate growth in operating costs, we expect operating margins
to expand by ~1010 bps YoY to ~28%. Under our coverage, we
expect the margin of Indian Hotels to improve by 60 bps compared
to last year due to re-opening of Taj Heritage while the margin of
EIH is expected to be better compared to last year due to addition of
new rooms in BKC Mumbai and Hyderabad. However, on a
sequential basis, we expect margins to decline by 520 bps due to
seasonality of the business.
􀂃 Improved demand and better margins to stimulate profit
Companies under the I-direct universe are expected to report net
profit of | ~88.5 crore in Q1FY12E against loss of | 1.3 crore in
Q1FY11 due to a revival in demand from business destinations.
Indian Hotels is expected to report a sharp growth in net profit due
to re-opening of Taj Heritage Mumbai and improved occupancy
while EIH is expected to report net profit of | 20.5 crore vs. a loss of
| 15.9 crore during the corresponding period last year taking into
account new room additions in BKC and new hotel in Hyderabad.
􀂃 Business destination to outperform compared to leisure
destination
Due to seasonality of the business, we expect business destinations
to attract more tourists than leisure destinations in Q1FY12E.
Business destinations such as South Mumbai, Chennai, Bengaluru
and Hyderabad showed a 300 bps YoY improvement in average
occupancy levels from 61% to 64% in Q1FY12E, with an increase in
business related travel expenditure. On the other hand, Goa, Jaipur
and Agra (among leisure destinations) are likely to see marginal
improvement of 100 bps YoY in occupancy to around 56%.


Company specific view
Company Remarks
EIH Revenues are expected to grow 26% YoY due to growth in FTAs and incremental
revenue flow from its hotel in Hyderabad and BKC Mumbai. On a QoQ basis, topline
is expected to decline due to the seasonality factor. The company is expected to
report profit compared to loss last year due to better topline growth
Indian Hotels Revenues for the quarter are likely to see healthy revenue growth compared to last
year due to re-opening of its Taj Heritage wing, Mumbai and improvement in foreign
tourists data. We expect average occupancy levels to improve by 380 bps to 68%
whereas ARRs are likely to improve by 2% YoY to | 9600
Kamat Hotel Revenue is expected to grow by 10.5% YoY led by better occupancy & ARR across
Mumbai region compared to last year. However, operating margin is expected to
take a hit of ~600 bps due to higher other expenses and raw material cost. It is
expected to report a profit against loss on a sequential basis
Royal Orchid
Hotel
Revenues are expected to grow 25% YoY due to a rebound in the IT/BFSI segment
and addition of new rooms in the Jaipur and Hyderabad region. The PAT margin is
likely to improve by 200 bps on a sharp rise in topline due to additional inflow from
the launch of two new hotels
Taj GVK Hotel Revenues are expected to grow ~15% YoY due to an improvement in occupancy
level by ~250 bps and ARR by ~5%. Pick-up in occupancy and ARR is in line with a
steady pick-up in the business in Hyderabad region. Operating margins are expected
to increase 60 bps YoY to 38% due to better cost control management
Source: ICICIdirect.com Research

FMCG 􀂃 Mixed trend in revenue growth ::Q1FY12 Result Preview -ICICI Securities

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FMCG
􀂃 Mixed trend in revenue growth
Though majority of the price increases by FMCG companies were
taken until the last quarter of FY11, some companies (Dabur and
Asian Paints) took a further increase (~4-5% during the quarter).On
other hand Marico did not take any price increases, and hence the
growth will be largely volume led.
􀂃 Margins to show marginal improvement
Having passed on the increasing cost pressures to consumers, we
expect margins to show a marginal improvement QoQ. However, it
would continue to remain under pressure on a YoY basis. Going
ahead, with the prices of crude oil and agricultural inputs softening,
we expect margin pressures to ease.
􀂃 International business to increase contribution in revenues
With companies completing a slew of acquisitions in FY11, the
contribution of international businesses to the topline is expected to
increase almost two-fold from Q1FY12E onwards. We expect the
contribution for Dabur and Marico to increase to ~30% (Q4FY11
stood at 14.3%) and ~25% (Q4FY11 stood at ~17%), respectively.


Company specific view
Company Remarks
Asian Paints Volume growth would remain flat YoY with topline growth to be led by ~12% price
increase in FY11 and further 4.3% in May, 2011. Price hikes would help in improving
margins on a QoQ basis by ~120 bps though it would continue to remain lower YoY by
~310 bps
Dabur India With series of price increases (~6-7%) across the portfolio & increase in int'l business
contribution to ~30%, we expect topline to grow ~36% YoY.Margins would remain flat
QoQ but improve ~280 bps YoY.Higher interest (for acquisitions) would continue to keep
PAT margins low at 12% (-130 bps QoQ)
Jyothy Lab We expect standalone sales to grow ~7.5% QoQ and ~10% YoY with Ujala witnessing
~6% growth YoY and Maxo gaining traction. Also, JFSL's contribution to sales would
increase to ~5% led by acquisitions in Delhi and Mumbai. Higher interest (debt for
Henkel's acquisition) would keep PAT margins lower at ~5%
Kansai
Nerolac
Sales growth in the quarter is expected to be ~11% YoY and~12% QoQ. It would largely
be driven by higher realisations with volume growth remaining subdued. Despite passing
on cost pressures via increase in prices, margins would continue to remain under pressure
declining ~350 bps YoY to ~12%
Marico Revenue growth of ~15% YoY is expected to be largely volume led. Impact of price hikes
taken in Q4FY11 would provide marginal respite to margins (up 70 bps) QoQ. However, it
would continue to remain subdued (down 200 bps) YoY. Marico did not launch any new
products or take further price hikes in Q1FY12
Source: Company, ICICIdirect.com Research