BHEL : Poor showing, weak outlook ::HSBC Research

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BHEL
UW: Poor showing, weak outlook
 Lower execution and poor order inflow in 1Q FY12
 Outlook should weaken on market compression and tougher
competition; stock can fall further, we believe
 We maintain our estimates and target price of INR1,850 and
reiterate our Underweight rating


Disappointing results: Execution in 1Q FY12 was weak, with revenue up 10% yoy
versus our and the consensus expectations of 20% growth. Order inflow reported at
cINR25bn, -78% yoy, was the lowest in the past 4-5 years. In an important development,
BHEL did not garner any major order in its main power segment, and 90% of order intake
was in the Industry segment. The company indicated c2GW of orders – we estimate the
value of these at INR50-60bn – in hand and not booked for lack of advances. Net profit
grew 22% yoy to INR8.1bn, aided by higher other income of INR3.9bn, up 38% yoy, or
2-3% above our and the consensus estimates.
Company maintains guidance of 10% yoy growth in order intake for FY12. This would
represent an order inflow of INR641bn for 9MFY12, higher than the full-year FY11 order
intake of INR605bn, and this is challenging, in our view. Also, BHEL has indicated a
revenue target of INR500bn, up c19% yoy, for FY12.
Weak outlook: We maintain that BHEL is likely to underperform further, given that 1)
order growth should remain flat, compared to a 26% CAGR over the past five years, with
a downward bias if the market declines due to fuel pressure; 2) margins should start
falling from FY13 – we expect a 300bp decline between now and FY17 – as the order
book mix is shifting towards cleaner, more-efficient, imported supercritical power: c3% in
FY11e to 50% by FY17e; and 3) EPS growth should be flat in FY13-14 versus a c30%
CAGR over the past five years. We are not factoring in possible restrictions on coal-based
power projects due to fuel shortages and greenhouse-gas emission concerns; this could put
further pressure on earnings. See our 10 June report, BHEL: UW: Still unattractive despite
correction, for a complete analysis of our view.
Maintain estimates and target price, and reiterate Underweight rating: We use an
economic value added methodology to value BHEL, assuming a WACC of 11%. We
assume target sales growth of 8% and an operating return of 17% to reflect the weak
outlook. We maintain our target price of INR1,850, implying a potential return, including
dividend yield, of -4.9%, which is below the Neutral band; thus, we reiterate our
Underweight rating.

Upside risks that we see include higher-than-expected order inflow
growth and margins.

JSW Steel -- Delivers against odds :: Macquarie Research

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JSW Steel
Delivers against odds
Event
 Results well above consensus: JSW Steel reported earnings slightly ahead of
our 10% above consensus estimate on operating profits. Against all scepticism,
JSW has delivered a strong margin of $178/t on a standalone basis, even with
pressure on steel prices and an increase in iron ore and coking coal costs. We
expect earnings upgrades to drive the stock, maintain Outperform.
Impact
 Strong 1QFY12 earnings: Net sales at Rs70.6bn were up 52% YoY, led by a
volume increase of 44% and realisation increase of 6% YoY. EBITDA margin
was at $178/t with EBITDA at Rs13.9bn, up 39% YoY. Net profit at Rs5.78bn
was in line with our estimate and up 65% YoY.
 Consensus estimates to see upgrades: On a standalone basis, JSW has done
Rs25/sh of EPS in Q1. The run rate will improve given the increase in capacity by
50%, and increased contribution with the start of mining operations in Chile and
US, both of which are profitable. We are building in Rs121/sh for the full year for
consolidated as compared to the street’s estimate of just Rs92/sh.
 Iron ore and coking coal mining operations start to contribute: As
expected JSW started its mining operations for iron ore in Chile and coking
coal in the US. It is targeting 1mnt of iron ore and 350kt of coking coal n
FY12. Already it has reported a net profit of US$7mn in this quarter from this.
 Blast furnace trial commenced: JSW has commissioned facilities related to the
3.2mtpa expansion with its blast furnace commissioned in July. It is currently
producing at 5000tons per day and should reach 8500tpd as it ramps up and
expects full year production at 8.5mtpa. JSW has tied up a higher proportion of
sales under volume contracts and is confident in selling additional production.
 Worries on Karnataka placated: JSW has tie ups with NMDC and VMPL
meeting 50% of requirements, and the rest is bought on the spot from Bellary
mines which have already been cleared. The company might have to incur
higher costs of Rs200-250/t on freight if sourced from Chitradurga, but this will
be partially offset by low grade being sourced from here.
Earnings and target price revision
 We have made marginal (-2 to 5%) changes to estimates. Also, we now
account for Ispat Industries as an associate rather than full consolidation and
are introducing FY14 estimates.
Price catalyst
 12-month price target: Rs1,229.00 based on a Sum of Parts methodology.
 Catalyst: Increase in production, iron ore and coking coal sales
Action and recommendation
 Top steel pick: JSW remains our preferred play among pure steel
companies. We think it has deleveraged itself and is now well on track to gain
from increased capacity and improving raw material integration.

Shriram Transport Finance- Mixed quarter; headwinds remain :: Macquarie Research

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Shriram Transport Finance
Mixed quarter; headwinds remain
Event
 Shriram Transport reported 1Q12 PAT, 10% ahead of our expectations but in
line with Bloomberg consensus. The beat was mainly due to chunky
securitisation income. Significant headwinds for the stock remain however.
We maintain our Neutral rating and TP of Rs600.
Impact
 Growth slows down. Disbursements were up 20% YoY compared to 35%
YoY for FY11. New commercial vehicle disbursals grew much faster than old.
Total AUMs grew by 22%YoY with the key driver again being the new CV
financing. This we believe makes the AUM growth more susceptible to higher
interest rates/ lower demand because new CV loan growth is more
susceptible to these factors. While disbursements may pick up in 2H12,
management did not rule out the possibility of a material slowdown in growth if
macro conditions remain adverse.
 Margin expansion this quarter, however funding cost pressures remain.
The company booked securitisation income of Rs5.5bn up 47% YoY. This
helped NIM to go up 25bp QoQ to 7.9%. Another reason for the NIM increase
was also lower borrowings done this quarter – total borrowings declined 3%
QoQ. Cost of fund pressure remains however and management believes the
current cost of borrowing of 10.4-10.5% can go up further by ~25-50bp post
the recent rate hike by RBI. It is prepared to trade off some of the margins for
loan growth and thinks (securitisation remaining) the 1Q12 NIM can compress
by ~40bp by end of FY12.
 NPLs and provisioning up. After about six quarters of stable NPLs, gross
NPLs increased by a sizeable 14% QoQ. This resulted in provisions also
being up 31% QoQ. Management thought there may be some seasonality
aspect to this increase. While this may be the case, we believe that credit
costs are likely to show an upward trajectory after having bottomed out in
FY11 and should be a drag on profitability.
 No clarity regarding regulations yet. Management does not have clarity on
the exact timing and/ or content of possible regulations regarding (i) priority
sector lending, (ii) securitisation/ assignment rules (iii) broader NBFC sector
regulations. The hit from regulations could come both on the cost of funds as
well as capital. We believe Shriram would be sufficiently capitalised in case of
moderation in securitisation volumes and if credit enhancements for loan
assignments are deducted from capital. Its current Tier I is healthy at 16% and
total CAR is 23%.
Earnings and target price revision
 No change.
Price catalyst
 12-month price target: Rs600.00 based on a Gordon growth methodology.
 Catalyst: Compression in margins, slowdown in growth
Action and recommendation
 Maintain Neutral with a TP of Rs600.

Maruti Suzuki India- Don’t jump the gun yet :: Macquarie Research

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Maruti Suzuki India
Don’t jump the gun yet
Event
 Maruti reported 1Q FY12 results with adjusted PAT growth of 1.4%, which
was 15% ahead of consensus estimates. PAT was boosted by Rs400m of
capital gains on investments. EBITDA was marginally below our expectations,
and operating margins contracted 16bp. We maintain our contrarian
Underperform recommendation with a target price of Rs1,020 (13% potential
downside).
Impact
 1Q FY12 – weak operational performance. Net sales grew 3.4% YoY to
Rs83.6bn, driven by a 4.2% increase in average realisation, as the company
sold more diesel-powered cars last quarter. Adjusted EBITDA increased 1.2%
YoY to Rs6.5bn, as operating margins contracted by 16bp. RM as a % of sales
increased 80bp YoY, which was offset by lower royalty payout and ad spend.
 Car demand faces various headwinds (excise duty hike, interest rates).
MSIL management confirmed that higher petrol prices and rising interest rates
continue to hurt consumer sentiment. Although it is seeing a pick-up in
enquiries, the conversion rate continues to remain low. The Reserve Bank of
India on Tuesday hiked policy rates by 50bp, and we expect auto lending
rates to go up further. As per media reports, the government is likely to hike
the excise duty on passenger vehicles to keep the fiscal deficit under control.
 Margins to remain under-pressure. Gross margin is likely to remain weak
for at least another quarter, as the company’s current raw material contract is
valid until September 2011. Further, management added that the discounts on
cars have inched up higher in July given the weaker demand environment.
Advertising expense, which came down in 1Q FY12, is likely to go up again
due to the launch of the new Swift. Management maintained the full-year
royalty payout guidance between 5% and 5.5% of sales, which is higher than
4.8% in 1Q FY12.
 Further JPY appreciation will also hurt. The company has stated that it is
hedged for JPY exposure at a better rate than current spot rates until
September 2011. However, the recent appreciation of the JPY has increased
the downside risks for 2H FY12E. In 1Q FY12 the negative impact of a
stronger JPY was offset by a stronger Euro; going forward this will have a
small impact due to declining exports.
Earnings and target price revision
 No change.
Price catalyst
 12-month price target: Rs1,020.00 based on a DCF methodology.
 Catalyst: Volume growth, excise duty changes and increase in lending rates.
Action and recommendation
 Reiterate Underperform. MSIL is currently trading at 14x FY12E earnings.
With a challenging operating environment due to sluggish volume growth
amidst rising interest rates, raw material cost pressure and increasing
competitive intensity, we believe current valuations are not justified.

Cairn India - Downgrade: Side effects of acquisition  HSBC Research,

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Cairn India Limited (CAIR IN)
Downgrade to N: Side effects of acquisition
 We expect Cairn India to start paying a 20% royalty on oil
production from its main producing Rajasthan field
 We believe the recent slowdown in bureaucratic decisionmaking
will hamper Cairn India’s plan for a quick ramp-up of
its oil production
 Downgrade rating to N from OW and lower target price to
INR350 from INR405


We expect Cairn India to start paying a 20% royalty. We believe the huge success of
Cairn India in notching the largest oil discovery in India after the discovery of Bombay
High in the mid-1970 has resulted in the ironic situation it finds itself in. Excited by the
upside potential, Vedanta group (VED) is now closer than ever to gaining control of the
CAIR, with the government approving the sale of majority stakes in CAIR by Cairn Plc to
VED. VED already owns 28.5% of the shares of CAIR and has agreed to buy another
30% from the existing owner Cairn Plc. The government has approved the transfer subject
to CAIR paying a 20% royalty on its share of production from Rajasthan field. We believe
CAIR has little choice but agree, as any opposition would mean that government and JV
approvals required for either day-to-day operation or long term production ramp-up would
become difficult. CAIR management has now decided to approach its shareholders
through a postal ballot, outcome to depend on a simple majority. Note that Vedanta Group
and Cairn Plc together own c80% of the shares of Cairn India.
Operational parameters in line: We further believe the Rajasthan field is on course to
achieve the guided peak output of 240,000 bopd as operational parameters are turning out
to be even better than management’s guidance. The reserves upside in its Barmer
formation in Rajasthan could increase the peak output. However, once the cost recovery
touches the 3.5 times of capex, the profit share of CAIR gets capped at 50%, hence the
impact of higher production on valuation is less pronounced. A hike in peak output from
240,000 bopd to 350,000 bopd, an increase of 46% changes the valuation by merely 11%.
Valuation and Risks. We are downgrading our rating on Cairn India to N from OW and
lowering our TP by 14% to INR350 on account of the additional impact of the royalty
payment despite upping the oil price by 8% in line with our in-house view. We have
valued Cairn India on DCF for production from known reserves, and a risk-weighted
multiple for reserves upside potentials. Crude oil price, exchange rate, new discoveries,
pace of ramp up of production being different from our assumptions can lead to upside
and downside risk to our rating and target price.


Investment view
We believe Cairn India has little choice but to start paying a 20% royalty. We believe the extraordinary
success of Cairn India in notching the largest oil discovery in India after the discovery of Bombay High in the
mid-1970 has resulted in the ironic situation it finds itself in. Excited by the upside potential, Vedanta group is
now closer than ever to gain control of the company. Cairn Management confirmed in its media release that
they would approach the shareholders of Cairn India through a postal ballot to seek approval for agreeing to the
preconditions set by the government for the Cairn-Vedanta deal. They also confirmed on the analyst
conference call that a majority decision would suffice. With Cairn Plc and Vedanta jointly controlling a c80%
stake in CAIR, the outcome of the postal ballot would depend on choices the two make. We believe that by
agreeing to a reduced transaction price of INR355/share instead of the previously agreed INR405/share, the
two entities viz. Cairn Plc and Vedanta are likely to agree to these preconditions.
We believe the recent slowdown in bureaucratic decision-making will hamper Cairn India’s plan
for a quick ramp-up of its oil production The Comptroller & Auditor General (CAG) in its draft report
has levied a series of allegations against certain officials of the Ministry of Oil and Directorate General of
Hydrocarbons for favouring RIL and Cairn India by allowing them to retain their entire exploration
acreage, turning a blind eye to increases in capital expenditure and giving additional area in violation of
the Production Sharing Contracts. As a result we believe the government officials are likely to become
extremely cautious in decision making. We already see some evidence of this, namely approval to Cairn
India on further exploration in Rajasthan and approving production from existing fields are all withheld.


Valuation
The value of Cairn is essentially the value of its reserves in Rajasthan, Ravva, and Cambay. We value
these reserves on a DCF basis, using a WACC of 11% and Brent oil price of USD90/bbl. We assume an
11% discount to Brent for valuing Rajasthan crude oil and now additionally assume payment of royalty to
the government apart from factoring in delay in production ramp up. This result in lowering our DCF
based target price from INR405 to INR350. Under our research model, for stocks without a volatility
indicator, the Neutral band is 5ppt above and below our hurdle rate for Indian stocks of 11%, or 6-16%
around the share price. Our 12-month target price of INR350 implies a potential return of 8.3%, hence we
rate the stock Neutral.


Sensitivity analysis and risks
A company-specific downside risk that we see is non-renewal of the underlying PSC in 2020, slow ramp
up of production which can lead to reduction in our target price. Generic risks for E&P companies include
a fall in the crude oil price different from our assumed crude price, the failure to convert upside into
reserves and new discoveries.
Sensitivity of our target price to various scenarios
Scenario % change
USD10/bbl increase in Brent price 11%
INR1/USD increase in exchange rate 2%
Exemption from payment of royalty 22%
Exemption from payment of cess 11%
Non renewal of PSC after 2020 -17%
Source: HSBC estimates


Key Highlights from conference call
 If royalty were to be cost recoverable, it would lead to a decline in the revenues and profit after tax
for the current quarter by INR12.9bn (US$ 289 m).
 Bhagyam development on track and is expected to commence in Q42011. It is expected to achieve
FDP approved plateau rate of 40Mbbl/d by end 2011. However, its production ramp up and operating
budget still needs to be approved by the government.
 Sri Lanka SL 2007-01-001 block: Drilling programme to commence in August 2011. USD200-300m
is expected to be spent in next 12 months. However, capex outlay will depend upon initial well
exploration results.
 Saraswati field commenced production at the end of May 2011; currently producing at the rate of 250bopd.

BSE, Bulk deals, 27/7/2011

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Deal Date	Scrip Code	Company	Client Name	Deal Type *	Quantity	Price **
27/7/2011	590006	Amrutanjan Health-$	CROSSEAS CAPITAL SERVICES PRIVATE LIMITED	B	26867	951.46
27/7/2011	590006	Amrutanjan Health-$	A K G SECURITIES AND CONSULTANCY LTD	B	41741	952.05
27/7/2011	590006	Amrutanjan Health-$	R M SHARES TRADING PRIVATE LIMITED	B	17976	944.69
27/7/2011	590006	Amrutanjan Health-$	R M SHARES TRADING PRIVATE LIMITED	S	17976	946.31
27/7/2011	590006	Amrutanjan Health-$	A K G SECURITIES AND CONSULTANCY LTD	S	41741	952.62
27/7/2011	590006	Amrutanjan Health-$	CROSSEAS CAPITAL SERVICES PRIVATE LIMITED	S	26867	951.31
27/7/2011	531160	Arcadia Merc	NIPA MUKESHBHAI SHETH	B	50000	7.45
27/7/2011	531160	Arcadia Merc	SHETH MUKESH RASHIKLAL	B	50000	7.45
27/7/2011	531160	Arcadia Merc	RASHIKLAL BALABHAI HUF	B	50000	7.45
27/7/2011	531160	Arcadia Merc	DEENA MUKESH SHETH	B	50000	7.45

NSE, Bulk deals, 27-Jul-2011

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Date	Symbol	Security Name	Client Name	Buy / Sell	Quantity Traded	Trade Price / Wght. Avg. Price	Remarks
27-Jul-2011	AMRUTANJAN	Amrutajan Health Ltd	CROSSEAS CAPITAL SERVICES PVT. LTD.	BUY	27,001	951.65	-
27-Jul-2011	AMRUTANJAN	Amrutajan Health Ltd	CROSSEAS CAPITAL SERVICES PVT. LTD.	SELL	27,001	952.41	-
27-Jul-2011	AMRUTANJAN	Amrutajan Health Ltd	R.M. SHARE TRADING PVT LTD	BUY	17,951	946.64	-
27-Jul-2011	AMRUTANJAN	Amrutajan Health Ltd	R.M. SHARE TRADING PVT LTD	SELL	17,951	945.76	-
27-Jul-2011	ATLASCYCLE	Atlas Cycles (Haryana) Lt	AJAY ASSET MANAGEMENT PRIVATE LIMITED	BUY	25,991	452.32	-
27-Jul-2011	ATLASCYCLE	Atlas Cycles (Haryana) Lt	AJAY ASSET MANAGEMENT PRIVATE LIMITED	SELL	23,375	451.64	-
27-Jul-2011	ATLASCYCLE	Atlas Cycles (Haryana) Lt	ASHWIN STOCKS AND INVESTMENT PRIVATE LIMITED	BUY	1,04,844	453.23	-
27-Jul-2011	ATLASCYCLE	Atlas Cycles (Haryana) Lt	ASHWIN STOCKS AND INVESTMENT PRIVATE LIMITED	SELL	1,00,344	453.12	-
27-Jul-2011	ATLASCYCLE	Atlas Cycles (Haryana) Lt	BP FINTRADE PRIVATE LIMITED	BUY	43,557	448.45	-

27/7/11:: Categories Turnover (Rs. crore) Clients NRI Proprietary Trade Data

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Categories Turnover

(Rs. crore)
	Clients			NRI			Proprietary
Trade Date	Buy	Sales	Net	Buy	Sales	Net	Buy	Sales	Net
27/7/11	1,935.61	1,886.67	48.94	2.48	0.52	1.96	545.72	550.66	-4.94
26/7/11	2,077.55	1,978.62	98.94	1.47	0.60	0.87	570.70	594.37	-23.68
25/7/11	1,996.57	2,052.20	-55.63	2.93	0.75	2.18	573.22	552.14	21.08
Jul , 11	36,098.99	36,669.57	-570.59	22.20	29.74	-7.54	10,543.19	10,421.15	122.04
Since 1/1/11	306,651.86	311,947.33	-5,295.47	171.13	156.50	14.63	87,977.15	87,333.25	643.90

27/7/11 FII & DII Turnover (BSE + NSE) (Rs. crore)

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FII & DII Turnover (BSE + NSE)

(Rs. crore)
	FII			DII
Trade Date	Buy	Sales	Net	Buy	Sales	Net
27/7/11	2,818.42	2,831.35	-12.93	1,309.12	1,309.31	-0.19
26/7/11	2,479.17	2,656.92	-177.75	1,387.82	1,356.33	31.49
25/7/11	2,608.84	2,293.12	315.72	1,511.75	1,287.50	224.25
Jul , 11	43,821.67	39,492.21	4,329.46	21,439.36	22,459.13	-1,019.77
Since 1/1/11   *	370,052.90	374,692.77	-4,639.87	169,132.20	155,640.75	13,491.45

FII DERIVATIVES STATISTICS FOR 27-Jul-2011

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FII DERIVATIVES STATISTICS FOR 27-Jul-2011
	BUY		SELL		OPEN INTEREST AT THE END OF THE DAY
	No. of contracts	Amt in Crores	No. of contracts	Amt in Crores	No. of contracts	Amt in Crores
INDEX FUTURES	180752	4997.84	204429	5663.32	574788	15895.83	-665.48
INDEX OPTIONS	401047	11126.13	398481	11070.32	1610783	44670.34	55.81
STOCK FUTURES	290716	8175.86	317856	8876.08	1280178	35678.55	-700.22
STOCK OPTIONS	7954	219.65	6707	193.42	35483	1005.68	26.23
						Total	-1283.65

 

KIFS Result update of Reliance Ind-Akzo Nobel-Godrej-Jet Air-Sterlite-Kirloskar

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KIFS Result update of:

RELIANCE INDUSTRIES

OVERVIEW

The flagship company of Mukesh Ambani Group, Reliance Industries Limited (RIL), a Fortune Global 500 company is the largest private sector company in India. Reliance enjoys global leadership in its businesses, being the largest polyester yarn and fiber producer in the world and among the top five to ten producers in the world in major petrochemical products. The company buys heavy grades of crude oil, which are cheaper than lighter varieties and turns them into high quality products including gasoline and diesel at its refineries on India’s West coast.

Key highlights:

· Total income grew by 39% Y-o-Y to Rs. 81018 cr  v/s Rs. 58228 cr in June-10

· Operating Profit grew by 9% Y-o-Y to Rs. 11004 cr. v/s Rs. 10064 cr. in    Jun-10

· OPM fell by 335 bps   Y-o-Y to 13.15 % v/s 16.5 % in June-10

· Net profit grew by 17% Y-o-Y to Rs. 5661 cr.  v/s Rs. 4851 cr. in June-10

· NPM fell by 119 bps       Y-o-Y to 6.76 % v/s 7.95 % in June-10

AKZO NOBEL INDIA

OVERVIEW

Akzo Nobal India is engaged in manufacturing and marketing of paints, speciality chemicals and adhesives. The Company sells its products under the ‘Dulux’ brand name. With an employee strength of about 900, the Company has manufacturing sites at Mohali, Punjab, Hyderabad, Andhra Pradesh & Thane and distribution network spread across the country. It has global brands like Alco Chemical, International, Elotex, Butanox etc.

Key highlights:

· Total income grew by 20% Y-o-Y to Rs. 341 cr  v/s Rs. 285 cr in June-10

· Operating Profit grew by 41% Y-o-Y to Rs. 91 cr v/s Rs. 65 cr In Jun-10

· OPM grew by 343 bps   Y-o-Y to 24.3 % v/s 20.88 % in June-10

· Net profit grew by 55% Y-o-Y to Rs. 68 cr.  v/s Rs. 44 cr. in June-10

· NPM grew by 400 bps   Y-o-Y to 18.2 %  v/s 14.2 % in June-10

GODREJ CONSUMER

OVERVIEW

Godrej Consumer Products (GCPL) is a flagship company of Godrej Group. The Company is major player in FMCG market.. It has three manufacturing units located at Malanpur (M.P) Guwahati (Assam) and Baddi (H.P).It has an employee strength of 950 people. It received CGR2+ rating for Corporate Governance and SVG2+ for Stakeholder Value Creation given by ICRA. GCPL has Joint Venture with SCA Hygiene by which It has created brands Snuggy, Libero etc.

Key highlights:

· Total income grew by 20% Y-o-Y to Rs. 636 cr  v/s Rs. 529 cr in June-10

· Operating Profit grew by 22% Y-o-Y to Rs. 129 cr. v/s Rs. 106 cr. in    Jun-10

· OPM grew by 13 bps   Y-o-Y to 19.62 % v/s 19.49 % in June-10

· Net profit grew by 97% Y-o-Y to Rs. 220 cr.  v/s Rs. 112 cr. in June-10

· NPM grew by 1286 bps       Y-o-Y to 33.38 % v/s 20.52 % in June-10

JET AIRWAYS

OVERVIEW

Jet Airways, an airline based in India, serves domestic as well as international routes for passenger and cargo transportation. It operates in two segments namely Air transportation and Aircraft leasing. The company has a subsidiary, Jet Lite (India) Ltd, which operates a fleet of 25 aircrafts. Jet Airways operates flights to 20 international destinations, offering a better choice in the skies. The company’s primary hub and maintenance base is at Mumbai, whereas Delhi, Kolkata, Chennai, Pune, Bengaluru and Brussels are its secondary hubs.

Key highlights:

· Total income grew by 15% Y-o-Y to Rs. 3405 cr  v/s Rs. 2965 cr in Jun-10

· Operating Profit fell by 65% Y-o-Y to Rs. 162 cr. v/s Rs. 460 cr. in Jun-10

· OPM fell by 1225 bps   Y-o-Y to 4.76 % v/s 17.01 % in June-10

· Net profit turn in to loss of Rs. 123 cr.  v/s profit of  Rs. 4 cr. in June-10

· NPM fell by 374 bps   Y-o-Y to –3.62 %  v/s 0.12 % in June-10

STERLITE INDUSTRIES

OVERVIEW

Sterlite Industries (India) Limited is India’s largest diversified metals and mining company. The company produces aluminium, copper, zinc, lead, silver, and commercial energy and has operations in India, Australia, Namibia, South Africa and Ireland. The construction of the captive power plant of 160 MW at Tuticorin is in progress and the first unit is now scheduled for commissioning in Q4 of the financial year 2011-12. The 100 kt per annum lead smelter at Rajpura Dariba is expected to be completed by Q2 of the financial year 2011-12.

Key highlights:

· Total income  grew by 65% Y-o-Y to Rs. 9861 cr. v/s Rs. 5970 cr in June-10

· Operating Profit grew by 63% Y-o-Y to Rs. 3572 cr.  v/s Rs. 2189 cr in June-10

· OPM fell by 43 bps Y-o-Y to 36.2%  v/s 36.7% in June-10

· Net profit grew by 63% Y-o-Y to Rs. 2388 cr.  v/s Rs. 1462 cr in June-10

· NPM fell by 28 bps Y-o-Y to 24.2%  v/s 24.5% in June-10

KIRLOSKAR PNEUMATIC

OVERVIEW

Kirloskar Pneumatic Company established in 1958 is India’s leading name in Compressed Air, Air-conditioning & Refrigeration and Hydraulic Power Transmission. The company is now a part of Kirloskar group. The manufacturing units of the company are located in Pune, Saswad and Kondhapuri in the state of Maharashtra and Faridabad in the state of Haryana.  The Company continues to design and develop various new models of reciprocating compressors for air and gas applications. With the successful productionisation of the 1MW gearbox the Company continues to be one the leaders in the wind power segment in India.

Key highlights:

· Total income  grew by 145% Y-o-Y to Rs. 212 cr. v/s Rs. 87 cr in June-10

· Operating Profit grew by 571% Y-o-Y to Rs. 41 cr.  v/s Rs. 6 cr in June-10

· OPM grew by 1153 bps Y-o-Y to 18.2%  v/s 6.7% in June-10

· Net profit grew by 1026% Y-o-Y to Rs. 26 cr.  v/s Rs. 2 cr in June-10

· NPM grew by 898 bps Y-o-Y to 11.5%  v/s 2.5% in June-10

Thanks and Regards,

KIFS Research