subscription figures for HUDCO & IRFC Tax Free Bonds @ EOD 27.01.2012.

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Please find the subscription figures for HUDCO & IRFC Tax Free Bonds @ EOD 27.01.2012.

HUDCO Tax Free Bonds
Category	%	Issue Size (Rs. In Crores)	Actual Collected (Rs. In Crores)
Category I	45%	2108.13	1706
Category II	25%	1171.18	446
Category III	30%	1405.41	281
Total	100%	4684.72	2433

IRFC Tax Free Bonds
Category	%	Issue Size (Rs. In Crores)	Actual Collected (Rs. In Crores)
Category I	45%	2835	8970.69*
Category II	25%	1575	1976.26*
Category III	30%	1890	700-1000 (Approximately)*
Total	100%	6300	11946.95

*the IRFC numbers may vary & are subject to change.

Interest rate cut by RBI only in April: Barclays in HT

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The Reserve Bank is unlikely to cut lending rate before April despite moderation in inflation, but may further reduce the Cash Reserve Ratio (CRR) in view of the tight liquidity, global financial major Barclays said. "We continue to see risks of a 25 basis points repo rate cut at the March mid-quarter policy review, while maintaining our base case that the rate-cutting cycle will start in April," Barclays Capital said in its The Emerging Markets Weekly report.

It further added: "We maintain our view of a slow but calibrated reduction in policy rates in 2012-13. However, given the ongoing pressures on liquidity, another 50 basis points cut in the CRR in March cannot be ruled out at this stage".

RBI is scheduled to announce its fourth mid-quarterly monetary policy review on March 15 and its annual review for 2012-13 on April 17.

At its third quarterly monetary policy review on January 24, the central bank had injected Rs 32,000 crore into the system by lowering the CRR by half-a-percentage point to 5.5% but kept the short-term lending, or repo rate unchanged.

Headline inflation, which also factors in manufactured items, fell to a two-month low of 7.47% in December. Food inflation has been in the negative zone for four consecutive weeks since mid-December and stood at (-)1.03% for the week ended January 14.

RBI has, however, said inflation remains a concern in view of volatile crude prices in international markets and widening fiscal deficit.

Attributing the decline in food inflation mainly to seasonal factors, the central bank said the impact of good vegetable output will remain limited in the absence of effective measures to address supply-side bottlenecks.

RBI, which has pegged the year-end inflation at 7%, said the revision in domestic-administered prices would add to inflationary pressures.

RBI had hiked interest rates 13 times between March, 2010 and October, 2011 to curb demand and tame inflation. India Inc has blamed the high interest rate regime, which has increased the cost of borrowings, for hindering investments and industrial slowdown in the country.

Economic growth slipped to 6.9% in the second quarter (July-September), the lowest in over two years. The RBI has revised down the growth forecast for the current fiscal to 7%, from the earlier estimate of 7.6%.

Barclays Capital said that pressure from large government borrowing is compounding the problem of capital spending.

"The RBI expects a modest rebound in growth in 2012-13, along with marginally lower inflation, which we again sense is something that can broadly be achieved," it said.

Buy Biocon; Target : Rs 366 ::ICICI Securities

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P o o r   s h o w   b y   B i o p h a r m a ,   n e g a t i v e   s u r p r i s e …
Biocon’s Q3FY12 results were far below our expectation. The company
posted flat growth of 1% YoY to | 518.5 crore compared to our
expectation of | 597 crore, mainly on the back of lower than anticipated
growth in the biopharmaceuticals business. Biopharma, excluding
licensing income, grew marginally by 6% as against our expectation of
17% on the back of lower production  activities. During the quarter, the
company has allocated a part of its production facility to development
programmes. EBITDA margins declined 734 bps to 24.8% YoY below our
expectation of 27.8% on the back of a sharp increase in the raw material
cost and employee cost. The net profit grew by 14% to | 84.9 crore as
against our expectation of | 94.8 crore. We have reduced our target price
in line with revised estimates after accounting for unforeseen delays and
a slowdown in the Biopharma space. We, however, maintain BUY after
considering the recent sharp correction, which we believe is overdone.
ƒ Biopharma ex-licensing income posts 6% growth YoY
Biopharma business excluding licensing income grew marginally by
6% to | 376.3 crore. With recent launches including Insupen device,
branded formulations business grew 49% to | 70 crore.
ƒ R&D services business grows by 42% YoY
Research services business witnessed robust 42% growth to | 111.9
crore on the back of expansion by existing clients and favourable
currency movement. Growth in constant currency was ~32%.
V a l u a t i o n
 We have cut our revenue and profitability estimates for FY13E by 7% and
15%, respectively, due to 1) delay in anticipated product launches
through Pfizer deal in emerging  markets and 2) slower offtake of
Fidaxomicin API. Lumpiness of licensing income and its reporting is also
adding to our concerns. Although positive news from Itolizumab studies
holds promise, we will have to wait for the possible commercialisation
deal. We have valued the stock at | 366 i.e.18x FY13E revised EPS of |
20.4

Sell Sterlite Technologies; Target : Rs 31 ::ICICI Securities

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D i s a p p o i n t i n g   o n c e   a g a i n…
Sterlite Technologies reported disappointing Q3FY12 results as revenues
came below our expectations at | 664 crore (I-direct estimate: | 755
crore). This was mainly on the back of a 3% decline in power conductor
volumes. Though reported EBITDA  was in line at | 56 crore (EBITDA
margins for Q3FY12 stood at 8%), stabilisation issues on the expanded
fibre capacity led to subdued telecom segment margins. Consequently,
higher interest costs (up 80% YoY) and adverse impact on a merger of
Sterlite Infratech (9 month loss of | 6 crore) impacted PAT, which came in
at | 9 crore, down 45% YoY. Going ahead we believe, a miss in volume
guidance, high interest & depreciation costs will lead to earnings
downgrade for FY12 and FY13.
ƒ Highlights of the quarter
The order backlog for Q3FY12 stood at | 2400 crore. The power segment
comprises 90% of the overall backlog as the segment witnessed order
inflows to the tune of | 664 crore.  In the power segment, orders from
PGCIL stood at | 1200 crore. During Q3FY12, volumes declined 3% YoY
to 32,600 MT and EBITDA/tonne improved to | 7980/tonne, up 23% YoY.
In the telecom segment, volumes for optical fibre and optical fibre cable
stood at 2.9 million fibre km (fkm) and 0.9 mn fkm, respectively.
Stabilisation issues on the expanded capacity marred margins in the
telecom segment as it remained flattish QoQ at 15.9%. On infrastructure
projects, the management expects equity infusion of | 1,000 crore by
FY14 (| 220 crore equity infused till Q3FY12) and expects all projects to
get commissioned by FY14.
V a l u a t i o n
At the CMP of | 37, the stock is trading at 31x and 11x on FY12E and
FY13E EPS, respectively. Though we believe FY13 will look better for the
company, at the same time, we would wait for the performance delivery
to happen before getting positive. We value the company at 10x its FY13E
EPS and arrive at a price target of | 31 and downgrade the stock to SELL

Buy IRB Infrastructure; Target : Rs 189 ::ICICI Securities

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Results ahead of estimates…
IRB Infrastructure’s Q3FY12 performance was ahead of our estimates on
account of a better-than-expected performance in the construction
division, lower-than-expected depreciation at the Surat Dahisar project
(the depreciation was considered for 15 days in Q3FY12) and lower-thanexpected effective tax rate. In the construction division, IRB reported net
revenues at ~| 500 crore (jump of 9.2% YoY) with healthy EBITDA
margin of ~24% despite completion of the Surat Dahisar and Kolhapur
IRDP projects. During the quarter, the Panaji Goa Project was terminated
due to NHAI’s inability to acquire land. IRB is in the process of claiming
compensation from NHAI towards  cancellation. We maintain our BUY
rating with an SOTP price target of | 189/share.
ƒ Strong Q3FY12 results led by construction division
IRB reported net revenues at ~|  500 crore (jump of 9.2% YoY) with
healthy EBITDA margin of ~24%  in the construction division despite the
completion of the Surat Dahisar & Kolhapur IRDP projects. Additionally,
lower depreciation (| 72.4 crore vs. our estimates of | 102.9 crore) with
only 15 days depreciation for Surat Dahisar project and lower tax rate
(18% vs. our estimates of 25%) led to a better performance in Q3FY12.
ƒ Toll revenues grow 5.6% sequentially
IRB’s gross toll revenues grew 5.6% sequentially to | 322 crore. The
Surat Dahisar project witnessed 13.2% sequential growth to | 106.3
crore. However, we highlight that the implied traffic growth rate for two
out of three key projects has been muted in Q3FY12.
ƒ Panaji Goa project terminated by NHAI
In Q3FY12, the Panaji Goa Project was terminated due to NHAI’s inability
to resolve land acquisition matters,  clearance of forest & environment
department and dispute on toll rates with the Goa government. IRB is in
the process of claiming compensation from NHAI towards cancellation
(IRB is liable for compensation of ~150% of equity invested).
V a l u a t i o n
At the CMP of | 168, IRB is trading at 12.1x FY13E EPS and 1.7x FY13E
P/BV. With a strong project portfolio & robust order book, we maintain
BUY with an SOTP price target of | 189/share (BOT project - | 120/share,
construction - | 64/share & investment in real estate at | 5/share).

Sell Kotak Mahindra Bank ; Target :Rs 436 ::ICICI Securities

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S t r o n g   c r e d i t   g r o w t h ,   C A S A   u p t i c k   s e e n … .
The strong performance of the financing businesses continues to drive
consolidated PAT growing 21% YoY and 6% QoQ to | 463 crore.
Standalone bank PAT jumped 47% YoY and 6.2% QoQ to | 276 crore.
The banking and financing business had 85% contribution (| 276 crore
and | 104 crore) in consolidated PAT. Savings rate hike impacted margins
that dipped to 4.7% from 4.8% sequentially but savings balance also rose
sharply leading to CASA portion surging to 28% from 26%. We remain
bullish on the banking business. However, an unfavourable environment
is impairing the capital market and related businesses. GNPA and NNPA
remained stable at 1.52% and 0.56% but increased 16% and 22% in
absolute values to | 439 crore and | 196 crore, respectively.
We have revised our FY12E credit growth to 31% from 25% and raised
PAT by 10% to | 1037 crore for FY12E and to |1316 crore for FY13E.
Robust non interest income, higher NII support bottomline….
Better forex income and higher recoveries from written off and stressed
assets led to non interest income growing 41% YoY and 33% QoQ to |
281.9 crore.
Deposits also grew a healthy 36% YoY and 5.5% QoQ to | 38385 crore
with  CASA  rising  to  28%  from  26%  sequentially.  Savings  balance  grew
24% in the quarter to | 4426 crore  from | 3564 crore. Strong credit
growth of 38% YoY and 6.5% QoQ to | 39772 crore were driven by
CV/CE, personal loans and agriculture credit (Exhibit 3).
NII grew 21.3% YoY and 7.6% QoQ to | 651.5 crore. A structural shift to
higher collateralised credit portfolio and higher savings rate led to NIM
dipping to 4.7% from 4.8% sequentially. The bank expects to maintain
margins around these levels.
We expect 27% and 28% CAGR in advances and deposits leading to 23%
CAGR NII growth and 27% CAGR PAT growth over FY11-13E.
V a l u a t i o n
In spite of a strong lending business performance and rising life insurance
profitability (| 124 crore in 9MFY12), the consolidated valuation was
marred by capital market linked businesses. This is resulting in
consolidated RoE of 15.8% for FY13E.  We maintain the target price at
| 436 on an SOTP basis and recommend SELL on the stock

Buy Sterlite Industries; Target : Rs 125 ::ICICI Securities

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A l u m i n i u m   d e n  t s   o v e r a l l   c on s i s t e n t   p e r f o r m a n c e …
Sterlite Industries’ (SIL) Q3FY12 results were below our expectations,
primarily on the back of a muted performance from aluminium
businesses. The bottomline during the quarter under review stood at |
913.5 crore, which was lower then our estimate of | 1065.8 crore. The
topline came at | 10246.2 crore (our estimate: | 9423.3 crore), which was
23.5% higher YoY and 1.1% higher QoQ. However, on the back of higher
input costs, the EBITDA margin declined by 130 bps YoY and 190 bps
QoQ to 22.6% (our estimate: 24.1%). The subsequent EBITDA stood at |
2318.3 crore (our estimate: | 2269.1 crore), which was 17.2% higher YoY
but 6.6% lower QoQ. The ensuing reported PAT stood at | 913.5 crore
(our estimate: | 1065.8 crore), which was 17% lower YoY and 8.4% lower
QoQ. The reported PAT during the quarter under review was dented by
foreign currency losses. Due to depreciation of the INR, the net impact of
foreign currency exchange fluctuations during the quarter resulted in a
loss of | 425.39 crore.
Subdued performance by Balco and VAL
The subdued performance of the aluminium and power businesses
during Q3FY12 impacted the overall performance of SIL. In the aluminium
business, during the quarter under review, Balco reported a loss to the
tune of | 17 crore while SIL’s share in Vedanta Aluminium’s (VAL) loss
was to the tune of | 264 crore. The subdued performance was due to a
rise in the cost of production.
V a l u a t i o n
At the CMP of | 111, the stock is trading at FY13E PE of 6.2x on a
consolidated basis.  We expect the company to register growth of 21%,
9% and 10% CAGR in topline, EBITDA and bottomline, respectively,
during FY11-FY13E. We have a cautiously positive stance on the stock.
We have valued it on an SOTP basis and arrived at a target price of | 125
assigning a BUY rating.

Telecom Industry -Improving scenario – time to buy … ::ICICI Securities

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The telecom industry is coming out of the intense competition phase
highlighted in declining net adds, withdrawal of unviable customer
acquisition offers, emerging regulatory stability, price hikes by
incumbents and upward tick in ARPMs. We believe this is a good time to
buy into telecom stocks with a selective approach as companies are set
for a rapid jump in profitability over the next two years, led by growth in
revenue yielding traffic. Also, all telcos will witness declining capex
intensity, debt repayment and reduced  interest costs. With more clarity
on NTP expected in a few months, the regulatory scenario seems to be
more stable now than what it seemed about a year ago. Airtel would
benefit from huge FCF to comfortably repay majority of its debt and
improving margins in the African business. It remains our top pick in the
sector with a target price of | 450. We expect Idea’s EBITDA to grow 1.9x
by FY14E led by increasing revenue share and lower network operating
costs. However, spectrum pricing may remain an overhang on the stock.
We reiterate HOLD with a target price of | 99. We r a t e  RCom a s   S E L L
due to huge debt levels. However, our view may change if some of the
several positive developments like higher external tenancy, monetisation
of tower assets and possible listing of undersea cable business fructify.
Slowing net adds; stabilising ARPM coupled with steady increase in MoU
Net adds have fallen significantly in the past months as new operators cut
down on capacity expansion. Incumbents would continue to witness
steady growth in subscribers and traffic. Idea, with increasing penetration
in new circles would witness fastest CAGR of 17.7% over FY11-14 to 591
billion minutes while Airtel (already the widest coverage) would be slower
at CAGR of 7.9% to 995 billion minutes. RCom (to lose out on minutes
share due to curtailed capex) would register minutes CAGR of 5.9% over
FY11-14E to 445 billion minutes. Going forward, we expect the ARPM to
rise marginally and stabilise at those levels in the near term.
Peak capex cycle over, debt to reduce
All the telcos are past their peak capex cycle with Bharti Airtel, Idea
Cellular and RCom guiding for capex of about | 10000 crore, | 4000 crore
and | 1500 crore, respectively, in FY12E. We believe all three telcos would
be generating free cash flow, going forward, to start repaying debt. This
would result in a significant reduction in interest costs. However,
significantly lower capex for RCom may impact network quality.
NTP – Overhang still remains but seems to be priced in…
Trai has come out with a New Telecom Policy, which  has positives for
both incumbents and subscribers.  We expect implementation of a
watered down version of the policy, which would impact industry players
relatively less. Nonetheless, Idea is most sensitive to current policy
recommendations. Per share impact for Airtel, Idea & RCom would be
about | 46.7 (10.4% of TP), | 32.9 (33.2%) & | 19.6 (23.3%), respectively.

Buy HT Media; Target : Rs 147 ::ICICI Securities

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A f f e c t e d   b y   s l o w i n g   e c o n o  m y ;   a s   e x p e c t e d …
HT Media reported its Q3FY12 numbers, which were in line with our
expectations on the topline and bottomline front. The topline for the
quarter stood at | 526.6 crore vs. our estimate of | 516.8 crore, growing
13.2% YoY led by ad revenue growth of 10.1% to | 407.3 crore. EBITDA
for the quarter stood at | 77.7 crore vs. our estimate of | 95.0 crore,
marred by a forex loss of | 10 crore and a provision of | 7.5 crore for
diminution in value of investments relating to partnership for growth
business. The EBITDA margin stood at 14.8%, down 424 bps YoY but up
31 bps QoQ. PAT for the quarter stood at | 48.2 crore vs. our estimate of
| 46.0 crore.

Highlights of the quarter
English ad revenues grew 10.7% to  | 296.6 crore, which included 18%
growth shown by ‘Mint’. Hindi ad revenues posted a modest growth of
8.4% to | 102.4 crore as Hindi ad revenue for Q3FY11 included a one-time
revenue from Bihar elections. The radio segment reported a marginal
decline YoY in the revenue to | 17.4 crore. HT Burda reported an increase
in revenue from | 14.9 crore to | 22.6 crore while reducing EBITDA losses
from | 4.9 crore to | 1.7 crore. The overall EBITDA margin, however,
contracted by 424 bps to 14.8% as the company endured forex losses of
| 10 crore and a provision related to ‘partnership for growth’ business of |
7.5 crore.
V a l u a t i o n
Due to continuous pressure on ad growth and menacing newsprint
prices, we have reduced our EPS estimates for HT Media from | 10.2 to |
9.8 for FY13. At the CMP of | 125, HT Media is trading at 15.6x FY12 EPS
and 12.8x FY13 EPS. We have valued the stock at 15x FY13 EPS to arrive
at a target price of | 147 implying an upside potential of 17%. We
maintain our BUY rating on the stock.

Buy Asian Paints; Target : Rs 3,390 ::ICICI Securities

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M a r g i n s   s u s t a i n e d   l e d   b y   p r i c e   h i k e s …
Asian Paints reported strong Q3FY12 results as net sales witnessed 22%
growth on the back of sustained volume growth in the festive season and
price hikes taken by the company. The EBITDA margin, however,
contracted by 90 bps compare to Q3FY11 but improved 120 bps
compared to Q2FY12. This was mainly on the back of price hikes taken by
the company and better inventory management. The company witnessed
strong growth in the decorative  segment and subdued growth in the
automotive paints segment. Simultaneously, the international business
witnessed slower growth due to continued macro political uncertainly in
the Middle Eastern region. Higher EBITDA resulted in 16.6% growth in net
profit.
Standalone performance
On a standalone basis, net sales grew 20.2% to | 2109.5 crore compared
to | 1754.2 crore in Q3FY11. EBITDA margins sustained at 17.1% as the
company has taken judicious price  hikes to counter increasing raw
material pressure. Raw materials like titanium dioxide continued to
witness a price rise that resulted in higher raw material cost for the
company. Net profit grew 21.2% to | 250.5 crore led by strong EBITDA.
V a l u a t i o n
At the CMP of | 2818, the stock is trading at 28x and 22x its FY12 and
FY13 estimated EPS of | 101.4 and | 126.6, respectively. We believe the
company would witness slower growth in the next two quarters due to a
slowdown in the housing and automotive sectors. Simultaneously, raw
material cost pressures would results in margins contraction in the
coming quarters. However, we believe the company would be able to
pass on rising costs with a lag effect. We have maintained our BUY rating
and target price of | 3390 on the stock.

Buy Hindustan Zinc; Target :Rs 142 ::ICICI Securities

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I n   l i n e   p e r f o r m a n c e …
Hindustan Zinc’s (HZL) Q3FY12 numbers were broadly in line with our
estimates. Net sales came in at | 2747 crore (I-direct estimate: | 2863.1
crore) registering growth of 5.9%  QoQ and 5.6% YoY. On the back of
muted realisations, EBITDA margins declined 540 bps QoQ and 690 bps
YoY to 51.1%. The resultant net profit declined by 5.3% QoQ and 1.2%
YoY to | 1273.6 crore (I-direct estimate: | 1297.9 crore).
ƒ Operational performance
Refined zinc production in the quarter under review was up 7% YoY
at 190,946 tonnes, primarily on account of improved throughput and
operational efficiencies. Refined lead production in Q3 was highest
ever at 28,804 tonnes, up 102% YoY. This was primarily due to
volume contribution from the  newly commissioned 100kt Dariba
Lead smelter, currently under ramp-up. Refined silver production in
Q3 was the highest ever at 57,595 kg, up 37% YoY. This was mainly
attributable to higher input from mines and volume contribution
from the new 350 TPA silver refinery commissioned during the
quarter.
ƒ Expansion projects
The ramp-up of the Sindesar Khurd mine is on track to achieve its
targeted 2.0 million tonnes per annum (MTPA) capacity by March
2012. The new silver refinery of 350 TPA was successfully
commissioned in Q3FY12.
V a l u a t i o n
At the CMP of | 135, after adjusting for LME volatility in our estimates, the
stock is trading at FY12E EV/EBITDA of 5.4x and FY13E EV/EBITDA of
4.1x. We expect the company to register growth of 11.8% and 13.9%
CAGR in topline and bottomline, respectively, during FY11-FY13E. We
have valued the stock at FY13E EV/EBITDA of 5.0x to arrive at our target
price of | 142 and assigned a BUY rating to the stock

Buy Syndicate Bank ; Target : Rs 111 ::ICICI Securities

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N I M   s u r p r i s e s   p o s i t i v e l y ,  l o a n   g r o w t h   m o d e r a t e s …
Net profit grew 32% YoY and 5% QoQ to | 338 crore ahead of our
estimated | 299 crore boosted by 15.2% YoY NII growth, lower operating
expenses and reduced tax provisions. NIM surprised by expanding 19
bps QoQ to 3.45% from 3.26%. The cost to income ratio declined to
41.8% from 44.8% in Q2FY12 and 47% in Q1FY12. The effective tax rate
further dipped to 10.8% from 15.9% in Q2FY12 but was same as 10.1% in
Q3FY11 mainly due to MAT liability provisions needed for full year. Asset
quality remained relatively stable QoQ due to w/offs and recoveries.
ƒ Margins rise 19 bps QoQ…
Yield on funds rose to 9.40% from 9.21% while cost of funds rose to
6.24% from 6.1% leading to NIM  expansion to 3.45% from 3.26%
sequentially. Even NII growth of 15.2% YoY and 1% QoQ to | 1325
crore was higher than the estimated | 1300 crore. We believe loans
pending for revised base rate repricing have happened in Q3FY12
resulting in yields surging despite lower 15% YoY credit growth.
We expect NIM to stay above 3% for FY12E supported by credit
growth of 16.3% and deposit growth of 17% for FY12E. Non-interest
income increased marginally by 5.6% YoY to | 244 crore.
ƒ GNPA, NNPA decline QoQ, provision coverage at 78.5%…
GNPA declined QoQ to | 2673 crore (2.29%) from | 2721 crore
(2.38%)  mainly  due  to  w/offs  to  the  tune  of  |  110  crore  in  the
quarter. NNPA also dipped from | 1051 crore (0.86%) to | 992 crore
(0.93%) sequentially. Provisions remained high at | 543 crore vs. our
estimate of | 489 crore. PCR has remained at 78.5%. With risk to
NPAs from power exposure being high, we estimate GNPA at | 2971
crore (2.4%) and NNPA at | 1191 crore (1%) for FY12E.
V a l u a t i o n
The operational performance has improved with NIM >3%, RoA at 0.85%
and RoE at 17.73%. However, the C/D ratio at 81% and leverage (average
assets/average equity) >20x levels still remain high. We maintain our PAT
estimates of | 1612 crore in FY13 with 24% CAGR over FY11-13. The
stock is currently trading at 0.7x FY13E ABV. We are cautiously revising
our target price to | 111 valuing the bank at 0.9x FY13E ABV (1x ABV
earlier) and recommend a BUY rating on it.

Buy ITC Limited ; Target : Rs 230 ::ICICI Securities

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M  o d e r a t e   v o l u m e   g r o w  t h  ,  r i s e   i n   o t h e r   i n c o m e . . .
ITC posted strong results with ~22.5% growth in earnings in Q3FY12. Net
sales witnesses 13.6% growth YoY to | 6195.4 crore led by ~11% growth
in cigarettes and 24.5% growth in the FMCG business. Cigarettes and
FMCG constitutes ~74% of the total sales. EBITDA margins expanded by
200 bps to 38.4% compared to 36.4% in Q3FY11. Other income increased
by 47.7% to | 285.1 crore mainly on account of treasury income. Strong
EBITDA growth and higher other income resulted in a 22.5% increase in
net profit to | 1701.0 crore.
ƒ Segmental results
Cigarette revenues grew 11% to | 5809 crore on the back of strong
volume growth of ~5% and ~5.7% price led growth. The steep price
hike of ~10% in most categories resulted in volume growth moderating
from ~7% in H1FY12 to ~5% in Q3FY12. We believe ITC will witness
volume growth of ~5% in Q4FY12 and FY13. The FMCG business
witnessed 24.5% growth in sales led by almost ~15-17% volume growth
in the food segment of the FMCG business. The hotel business
witnessed 2.5% growth in sales led by marginal improvement in average
room rates (ARR).
V a l u a t i o n
Currently, the stock is trading at 25x its FY12E EPS of | 8.0 and 21x its
FY13E EPS of | 9.4. We believe a continuous reduction in FMCG losses
and sustained growth in the cigarettes business (mainly led by price
hikes) would continue to drive bottomline growth and expand overall
margins in FY13E. However, due to moderate volume growth in
cigarettes, we are changing multiples for the cigarettes business from 26x
P/E to 25x P/E. Simultaneously, the risk of a steep increase in excise duty
would remain an overhang on the stock till the 2012 Budget. We have
valued the stock on an SOTP basis and arrived at a fair value of | 230.

Buy Shree Cement ; Target : Rs 2497 :: ICICI Securities

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H i g h   r e a l i s a t i o n   l e a d s   t o   s p u r t   i n   e a r n i n g s…
Shree Cement’s Q3FY12 net sales of | 1259 crore (up ~61% YoY, ~47%
QoQ) and EBITDA of | 332 crore (up ~111% YoY, ~66% QoQ) were in
line with our respective estimates of | 1225 crore and | 328 crore.
However, net profit of | 59 crore (up ~77% YoY, ~49% QoQ) was lower
than our estimate of | 74 crore on account of higher than expected
depreciation of | 235 crore (our estimate: | 177 crore). The EBITDA
margin improved 620 bps YoY (296 bps QoQ) to 26.4% on higher cement
realisations and decline in fuel cost. Cement revenues increased ~45%
YoY (~27% QoQ) to | 1081 crore on higher volumes and realisations.
Power sales increased significantly to | 177 crore on increase in power
volumes to 256 million units. Going  forward, we expect cement sales
volume to grow ~7% in FY12E to 11 MT and ~6% YoY in FY13E to 11.6
MT.  Cement  EBITDA  is  expected  at  |  962/tonne  in  FY12E  and
| 1029/tonne in FY13E.
ƒ Cement volume up ~12% YoY (~17% QoQ)
Cement sales volumes increased ~12% YoY and ~17% QoQ to 2.92
MT due to a pick-up in demand post monsoons. Cement realisations
increased ~30% YoY (~8% QoQ)  to | 3703/tonne on account of
price hikes during the quarter.
ƒ Cement EBITDA increases to | 1084/tonne
The EBITDA/tonne increased ~96% YoY (~35% QoQ) to |
1084/tonne on account of higher  realisation, which negated the
impact of an increase in input costs.
V a l u a t i o n
At the CMP of | 2231, the stock is trading at 35.6x and 17.3x its FY12E and
FY13E earnings, respectively. The stock is trading at an EV/EBITDA of 7.2x
and 5.7x FY12E and FY13E EBITDA, respectively. On an EV/tonne basis,
the stock is trading at $91/tonne  and $83/tonne its FY12E and FY13E
capacities, respectively. We have valued the cement business at
$100/tonne its FY13E capacity of 13.5 MT (~35% discount to the current
replacement cost of $135/tonne) and maintained our BUY rating on the
stock with a revised target price of | 2497/share.

Buy Exide Industries; Target :Rs 141 :: ICICI Securities

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R e s u r g e n c e   p a t h   i l l u m i n a t e d ! ! !
Exide Industries (EIL) reported an improved set of numbers for Q3FY12
with revenues rising 6.3% QoQ to  | 1250.1 crore (I-direct estimate: |
1213.8 crore). The revenue performance was driven by higher
replacement offtake in both the automotive and industrial battery
segments. EBITDA margins, which had contracted to 7.7% in Q2FY12,
jumped to 13.2% (up 548 bps QoQ) with RM cost as a proportion of sales
dipping 487 bps sequentially. The automotive and industrial gross
margins jumped to 14.8% and 31.8%, respectively, as price hikes to OEM
happen with a one quarter lag. Lead price for the quarter stood at
|  131/kg  (down  ~2%QoQ).  The  PAT  more  than  doubled  sequentially  to
|104.3 crore but is still down 16.2% YoY.

Highlights of the quarter
The volume bounce back is a major  positive during the quarter. EIL
clocked sturdy SLI volume of 2.05 million batteries (up 3.5% QoQ) with
two-wheeler sales touching 3.55 million units (up 2.6% QoQ) despite
lower OEM demand in November and December. The industrial sales of
403 MnAH (up 3.1% QoQ) were driven by home inverter and power backup segments. These witnessed strong traction as volumes jumped ~40%
YoY while the low margin telecom segment saw volumes shrinking
~50%. The margin performance was aided by higher ratio of replacement
sales to OEM at 1.24:1 up from  ~1:1 in Q2FY12. The company has
recently acquired a facility in Uttarakhand for ~| 17 crore to supply fully
built inverters. The project is expected to generate incremental inverter
battery volumes of ~30,000/month.
V a l u a t i o n
We expect an improved performance from EIL as replacement demand
picks up coupled with stable lead prices. We have upgraded our core
target P/E multiple to 15x FY13E EPS of | 8.2. At the CMP of | 128, the
stock is trading at13.8x FY13E EPS. We have valued the stock on an SOTP
basis with the core business at | 122, valuing other subsidiaries and
investments at | 19/share to arrive at target price of | 141. We had
recommended that our long term investors accumulate the stock at lower
levels and continue to have a BUY rating on the stock

Buy Praj Industries; Target :Rs 96 :: ICICI Securities

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S u s t a i n a b l e   o r d e r   i n f l o w s …
Praj Industries posted strong Q3FY12 results with topline growth of 54%
to | 219.3 crore compared to | 148.2  crore in Q3FY11. Out of the total
sales, 50% is from the domestic business and the rest from the
international business. Raw material  to sales increased from 62.9% in
Q3FY11 to 63.6% of the sales in the quarter. Despite high raw material
cost, EBITDA margins improved by 180 bps to 9.4% led by increasing
enquiries/higher engineering income  from domestic as well as African
region. Other income increased from | 6.7 crore to | 10.3 crore on
account of higher treasury gains. Higher EBITDA and other income
resulted in a 50.3% jump in net profit from | 13.7 crore to | 21.5 crore.
ƒ Highlights of the quarter
The company received orders worth | 220 crore (~85% domestic orders
and ~15% exports orders) during the quarter. Order inflow constitutes
58% of orders from ethanol and 42%  non-ethanol segment (out of this
29% from beer and 71% waste water management). Total order book at
the end of the quarter stands at | 900 crore (46% international & 54%
domestic). In the total order book, 74% comprises ethanol based orders &
26% non-ethanol (out of which 40% is from the waste water segment).
V a l u a t i o n
At the CMP, the stock is trading at 19.5x and 15.6x its FY12E and FY13E
EPS of | 4.1 and | 5.1, respectively. With a sustainable order book at
| 900 crore and continuous order inflows to the tune of | 200 crore, the
outlook for the ethanol equipment is improving. We believe the rise in
ethanol prices and rising ethanol demand to more than 1000 million litres
in domestic market would further improve the demand for ethanol
equipment and more enquiries would result in higher engineering income
and, in turn, higher margins, going forward. We remain positive on the
stock and maintain our BUY rating and target price of | 96/share.

Buy Maruti Suzuki India ; Target : Rs 1275 :: ICICI Securities

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C o m i n g   t o   t h e   e n d   o f   d o w n g r a d e s …
Maruti Suzuki India’s (MSIL) Q3FY12 numbers, which seem disappointing
on the face of it, was marred by currency. The bright view of the results
came in as net sales surprised us at | 7663.6 crore (I-direct estimate: |
7133.6 crore) as average realisations (ASP) jumped 7.1%QoQ and 14.1%
YoY as richer product mix and lower discounts helped (down ~10% QoQ
at | 12,200). Volumes, however, declined ~28% YoY at ~2.4 lakh units as
industrial strike, slow ramp-up led to ~40,000 unit’s loss. The realisation
jump is heartening as even in a weak quarter with “discount December”
the domestic ASPs rose 6.2% QoQ reflecting the strong pricing power of
MSIL’s  diesel  portfolio.  EBITDA  margins,  however,  shrunk  to  5.4%  with
forex impacting ~1% of net sales in net terms; also ~|39 crore of one-off
items came. However, healthy capital gains on FMPs helped PAT come in
line with our estimates at | 205.6 crore (I-direct estimate: | 208.8 crore).
Highlights of the quarter
MSIL’s Q3/Q2 were both similar ranging from labour issues to currency
challenges. The loss of 40,000 units coupled with steep INR depreciation
(~11%) led to a poor operating performance. MSIL had currency impact
on royalty, raw material, vendors and one time reinstatement of liabilities.
The MTM impact was the worst for the royalty, which was higher by ~|
75 crore. On the bright side, retail sales for December 2011 were 1.16 lakh
units, which reflected on the demand possibilities in case rates come
down or fuel prices ease. The reducing discount is an early indicator of
two things: the demand for diesel vehicles continues to remain strong
and MSIL’s diesel pricing power is second to none. Another fillip came
from additional 0.1 million diesel engines sourcing from FIAT
V a l u a t i o n
We believe the worst is behind for MSIL. The market is looking at the
extent of bounce back in FY13E. At the CMP of 1158, the stock is trading
at 13.7x FY13E EPS. We have upgraded our target multiple to 15x FY13E
EPS considering the strong earnings growth potential in FY13E. We have
a target price of | 1286/share and maintain our BUY rating on the stock.

Monetary Policy Update (January 2012) :: ICICI Securities

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CRR cut positive, GDP and credit growth cut negative…
Key statements….
ƒ The RBI cut the CRR by 50 bps to 5.5% from 6% effective from
January 28, 2012. Release of | 32,000 crore in liquidity expected
ƒ The central bank has kept repo rate unchanged at 8.5% as expected.
(refer ‘Monthly Inflation’ update dated January 17, 2012)
ƒ GDP growth target has been revised to 7% from 7.6% for FY12
ƒ RBI has revised downwards credit growth estimate to 16% from
18% as expected
ƒ Inflation moderated sharply to 7.47% from 9.11% in November 2011
and 9.45% in December last year but the RBI remained cautious of
upside risks and maintained its year end inflation target of 7%
ƒ M3 growth projection of 15.5% has been maintained as it has
already moderated to 15.6% as at end December 2011
ƒ Borrowings under the LAF window rose to | 120,000 crore during
January 2012 from around | 49,000 crore during April-October 2011.
OMO operations conducted to the tune of | 70,000 crore by RBI
As indicated by RBI, stance of monetary policy is…
ƒ Maintain an interest rate environment to contain inflation and anchor
inflation expectations
ƒ Manage liquidity to ensure that it remains in moderate deficit,
consistent with effective monetary transmission
ƒ Respond to increasing downside risks to growth

Hold Bajaj Auto; Target : Rs 1460 :: ICICI Securities

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N o t   t h r i l l e d !   C o r e   g r o w t h   r e m a i n s   f r a g i l e …
Bajaj Auto (BAL) reported its Q3FY12 numbers with sales coming in
above our estimate at | 5,063.2 crore (I-direct estimate: | 4,967.9 crore) a
21.2% YoY jump. It was driven by a mix of volume growth (up 13.6%
YoY) at 1.07 million units and higher realisation/unit (up 5.0% YoY) to |
47,276. BAL had hiked prices ~3.5% to offset the DEPB impact coupled
with benefits arising from a depreciating rupee as average USD rate for
the quarter was higher 3.3% QoQ at  | 49.4. RM cost as proportion to
sales declined 103 bps QoQ as EBITDA margins got enhanced to 21.0%
(up ~90 bps QoQ). Reported PAT was ahead of our estimates at ~| 795.2
crore (I-direct estimate: | 788.0 crore), a jump of 19.2% YoY. However,
we will analyse beyond these numbers further in the report.
Highlights of the quarter
Bajaj Auto’s overall volume growth of 13.6% YoY was led by three
wheeler growth of 18.8% YoY and motorcycle volume growth of 12.9%
YoY. Although the export volume growth is robust at 28.4% YoY, we
remain cautious on the domestic growth front as early signs of an
industry wide slowdown have started creeping in. The weak domestic
market performance is reflected in a QoQ dip of 7.6% with overall
domestic sales in December sliding below the 2 lakh unit mark for the first
time in FY12. Bajaj Auto had previously undertaken a price hike across its
export segment to cover the impact of DEPB. The recently launched
Boxer-150 cc has not met expectations with BAL looking at repositioning
the same. The management expects Q4FY12 industry growth to slide
down to ~5-6% and does not expect a “V-shaped” rebound for the same
in FY13 in line with our bearish stance for the segment.

V a l u a t i o n
We believe BAL’s domestic volume growth is under serious threat as
witnessed in the last couple of months and exports have been the only
shining light. On exports also, we believe competition from Honda and
Hero MotoCorp would be stiff. Any appreciation of the rupee could
impact our estimates negatively. At the CMP of | 1,561, the stock is
trading at 13.7x FY13E EPS. We have valued the stock at 13.9x FY13E EPS
to arrive at a target price | 1,460. We maintain our HOLD rating on BAL.

India still a foreign investment hot spot: Ernst & Young

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Foreign direct investment in India is set to swell in coming years as investors stomach a lack of transparency, poor infrastructure and policy paralysis in their search for growth, professional services firm Ernst & Young (E&Y) said in a report.

Overseas investment in Asia's third-largest economy rose for the first time in three years in 2011, the report noted, as global investors put their faith in rising salaries, an expanding middle-class and a large and cheap labour force.

"The fundamentals that make India attractive to investors remain intact," Farokh T. Balsara, head of markets at Ernst & Young India, wrote in the report released on Sunday.

"However, our respondents continue to cite inadequate infrastructure and a lack of governance and transparency as major obstacles to investment."

Foreign direct investment (FDI) in India rose 13 percent to $50.81 billion in the first 11 months of 2011 from a year earlier, while the total number of projects rose 25 percent to 864, the report said, citing data from the Financial Times' FDI Intelligence service.

Business confidence in India has declined over the past year, as economic growth slowed from an annual rate of 8.5 percent in 2010/11 to about 7 pe rcent, and corruption and policy paralysis discouraged investment in big projects.

Just over half of chief executives in India are still "very confident" of revenue growth in the next 12 months, down from 88 percent a year ago, according to a recent survey by PricewaterhouseCoopers.

The majority of companies surveyed by E&Y were confident in the long-term prospects for investment in India, given sluggish growth in the United States and debt problems in Europe.

Almost 70 percent of 382 international companies surveyed said they plan to increase or maintain their operations in India, said the report, which was prepared for the World Economic Forum gathering in Davos, Switzerland.

Just 19 percent said they had no plans to enter the country or were preparing to withdraw.

Robust domestic demand, cost competitiveness and a cheap, ever-growing labour force were cited India's key benefits.

"Although the ongoing global uncertainty...(has) prompted some discomfort among global investors to make long-term commitments, India's inherent advantages and its proven resilience to counter macroeconomic challenges far outweigh these concerns," Balsara said.

Automakers led the way in investing in India last year, boosting spending by 46 percent, E&Y said.

Technology and life sciences companies were other big spenders, while spending by foreign companies on infrastructure and retail projects declined.

Ford Motor Co, which said this month it would spend $142 million on its Indian operations, and the Renault-Nissan alliance are among companies that are stepping up investment in India.

Other companies, particularly retailers, are not so sure.

Sweden's IKEA, the world's biggest furniture retailer, said this week that would be difficult to set up shop in India because of complex government sourcing rules announced this month.

Plans by companies such as Wal-Mart were set back in December when the government, under pressure from political allies, abandoned a long-mooted policy to open up the supermarket sector to direct investment by foreign companies.

Food inflation stays in negative zone :: Business Line

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How to prevent cheque frauds (rupeetimes/ rediff)

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Even in this electronic age cheques are still the preferred mode of payment and banking transactions. Naturally, cheque frauds are rising too. But you can easily prevent them.

Monetary transactions by means of an instrument called 'cheque' have been in practice since a long time now. With the advent of electronic payment systems, there have been many mode of payments made available to you. But payment through cheques still continues to be a major mode of transaction for most people.

Fraudulent cases by hackers and spammers are on a rapid rise these days and cheque frauds don't lag behind. Particularly because of the fact that customers still prefer using cheques, one of the major reasons being that it offers a tangible record of the transaction but cheque frauds are also increasing.

Types of cheque frauds

Fraud in a cheque is mainly done when the cheque is:

• Altered
• Counterfeited
• Forged

Jan 30 week Pivotals - Reliance Industries, SBI, Infosys, Tata Steel :: Business Line

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The stock surged 3 per cent in the previous weekin line with our expectations. It is hovering well above both the 21- and 50-day moving averages.

Traders can prolong holding their long positions with stop-loss at Rs 790. We restate the upper target at Rs 827 and Rs 845.

The stock has a significant obstacle in the band between Rs 845 and Rs 850.

Short-term supports for the stock are pegged at Rs 770 and Rs 750.

Though the medium-term trend is down for the stock, its long-term support in the band between Rs 700 and Rs 750 is cushioning the stock.

Conclusive breach of Rs 850 will pave way for a rally to Rs 900 in the upcoming weeks. An emphatic weekly decline below Rs 687 will twist the long-term view bearish.

Infosys (Rs 2,720.6)

The stock witnessed a strong rally by climbing 5.3 per cent in the last week, after taking support at around Rs 2,585 level. Short-term perspective traders can consider holding their long positions with stop-loss at Rs 2,670 levels.

Targets are Rs 2,775 and Rs 2,812. Failure to move above the first target will be cue for taking the profits off the table.

But fall below the immediate support at Rs 2,660 can pull the stock down to Rs 2,585 or to Rs 2,555 in the short-term.

Medium-term trend remains up for the stock.

This view will be negated only if the stock declines below Rs 2,467 levels. Investors with a medium-term perspective can hold the stock with stop-loss at Rs 2,467.

A move above the medium-term resistance level at Rs 2,900 will take the stock higher to Rs 3,000.

State Bank of India (Rs 2,042.6)

SBI jumped 5.7 per cent in the last week, penetrating its immediate resistance at around Rs 1,975.

The stock has been on a short-term uptrend since its December 2011 trough of Rs 1,576. But it is likely to face resistance at Rs 2,100 levels in the near future.

Short-term traders should, therefore, tread with caution as the stock is nearing a key resistance and its daily indicators are reaching overbought levels.

Immediate supports for the week ahead are at Rs 1,967 and Rs 1,890. Key resistance above Rs 2,100 are at Rs 2,190 and Rs 2,220.

As long as the stock trades above Rs 1,830 its short-term uptrend remains in place. A fall below this level will pull the stock down to Rs 1,765 and to Rs 1,715 levels.

Tata Steel (Rs 458.7)

Tata Steel too surged 5 per cent with good volumes in the last week.

The stock is moving in line with our expectation and we reaffirm our upper target at Rs 478 and Rs 491. Traders can consider holding their long positions with stop-loss at Rs 442.

Supports for the ensuing week are at Rs 433, Rs 419 and Rs 400. A decisive tumble below Rs 400 will mar the current short-term uptrend and drag the stock down to Rs 380 and Rs 363 levels.

The stock is also currently nearing the medium-term trend deciding zone between Rs 476 and Rs 485.

Strong move above this zone will reverse the stock's trend upwards and take it higher to Rs 505 in medium-term.

Sensex jumps over 495 points this week:: Business Line

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A host of positive factors kept the mood in the stock market upbeat for the fourth straight week with the biggest weekly gaining streak since September 2010, sending the benchmark Sensex up by another 495 points to end at over 11-week high of 17,233.98.

Sensex gained 1,779.60 points or 11.51 per cent in the fourth straight week as also in the current month, between January 2 and January 27, 2012.

Buying was seen across-the-field as barring realty, other 12 sectoral indices closed with sharp to moderate gains between 5.64 per cent and 0.71 per cent, while 20 out of 30 Sensex-based scrips registered increase in their values.

Monetary policy review

The first day of the week saw some lacklustre activity but on the second day investors’ confidence surged after the Reserve Bank of India, in its third quarter monetary policy review, cut the cash reserve ratio (CRR) by 50 basis points to infuse liquidity in the system, keeping the short-term lending rate unchanged.

The move will pump Rs 32,000 crore into the financial system, and gives signals of a cut in the lending rate in the near future.

FII buying

One of the main reasons behind the current gush was also the frantic buying by Foreign Institutional Investors (FIIs), the main market movers, who injected Rs 3,308.66 crore in the week (including provisional data of January 27) and Rs 9,073.10 crore in the current month till January 25, as per SEBI figures.

The last day of futures & options (F&O) contracts on Wednesday compelled operators to cover their short-positions after the RBI announced the Q3 monetary policy on Tuesday, lowering the CRR. This, in turn, boosted the market sentiment.

Food inflation

Staying of food inflation in the negative terrain for the fourth straight week at (-) 1.03 for the week ended January 14 from (-) 0.42 per cent in the preceding week too aided the investors’ confidence.

Marketmen expected that the decline in food inflation will help rein in the overall inflation and assist the central bank to cut the key lending rates in March.

GDP growth estimate

However, the central bank cut 2011-12 GDP growth estimate to 7 per cent from 7.6 per cent earlier. It expects inflation to be at 7 per cent in March.

The Bombay Stock Exchange’s 30-share indicator, although resumed lower, recovered later and registered gains for all four trading days in the week as the market was closed on January 26 for Republic Day.

The Sensex moved in a range of 17,258.97 and 16,659.32 before concluding the week at 17,233.98, highest closing since November 9, 2011 when it had settled at 17,362.10, showing a net gain of 494.97 points or 2.96 per cent.

The NSE broad-based Nifty also flared up by 56.10 points or 3.09 per cent to end above 5,200-mark at 5,204.70 after more than 11 weeks.

Capital goods, technology, auto, IT, consumer durables, banking and metal segments were at the forefront.

Second-line counters outperformed the Sensex with the BSE-Smallcap and BSE-Midcap gaining by nearly 3.4 per cent each, signalling increase in retail investors’ participation.