PVR Ltd l Exhibiting Steady Growth: KM Global Finance

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Rising Number of Screens to Boost Profits
We spoke to the management of PVR Ltd which is promoted by Ajay Bijli and
Sanjeev Kumar. PVR is engaged in the business of film exhibition. It currently
runs over 158 screens and is looking to add 50-60 screens every year.
PVR is also expanding its bowling alley and ice skating rink businesses housed
under PVR bluO, a JV with Thailand’s Major Cineplex Group.
We expect PVR’s earnings to jump over the next two years fueled by rising
seat capacity coupled with improving margins as operations of its recently
developed properties stabilize. We initiate coverage with a Buy rating and
have a price target of Rs 195 valuing the stock at 12 times FY14e EPS.
Key Takeaways
 To add 50-60 screens across India – In the past, PVR has opened multiplexes
at key locations by tying up with strong developers. It will continue
this strategy and add over 50 screens across India in cities like Pune, Bengaluru,
Cochin, Nagpur, Nanded and Vijaywada.
 Industry growth should help maintain margins – We expect the movie
industry to continue its growth which will lead to occupancy levels of 30%
or higher. Rising ticket prices and food & beverage (F&B) sales will boost
margins in the long run.
 Marquee locations provide lucrative advertisement income – PVR is earning
advertisement revenues which amount to 20% of net ticket sales due
to its location strategy. This strategy is boosting margins and providing a
kicker to the bottom line.
 Bowling alley business to grow manifold - The number of bowling lanes
should grow from 50 to 134 in the next couple of years. This business has
a payback period of 2.5 years and ROCE of 29%. It will help the company
become a one stop shop for retail entertainment and a leading anchor tenant
for mall developers.
 Implementation of GST would be a positive trigger as there will be a fall in
the entertainment tax (e-tax) rate. Currently the company pays an average
e-tax of over 18%. GST implementation will lead to a 1-2% fall in tax rate
which can be retained by PVR.

METALS & MINING :Q4FY12 RESULTS PREVIEW :Kotak Securities PDF link

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METALS & MINING
Improved Q4 performance likely driven by strong seasonality -
Tough quarters to follow
Steel
 Steel companies' earnings would see a relief rebound in Q4, primarily helped by
strong seasonality. Steel prices have risen by 6-8% Q/Q while iron ore prices
have remained flattish and coking coal spot prices have further corrected. So,
steel companies would report better operating margins during Q4 further helped
by improved sales volume on Q/Q basis.
 But we would highlight that the steel capacity in India is ramping up at a fast
pace while domestic steel demand growth has faltered to mere 5%Y/Y levels
which we believe would pressure steel prices in coming months as seasonality
aided demand fades away in a month from here. We believe that next quarter
onwards operating margins of steel companies would be substantially down. So,
non-sustenance of Q4 margin improvement would not help investor sentiment
even if sequentially much better earnings are reported by steel companies.
Raw materials/ Mining
 Quarterly contract prices for hard coking coal continues its downward trend.
Starting Q1FY12 at US$ 330/t FOB, Q2 was marginally lower (4.5% Q/Q) to US$
315/t FOB, Q3 fall accelerated to 9.5% Q/Q to US$ 285/t FOB. Q4 contracts were
settled at US$235/t FOB down 16.1% Q/Q and now Q1FY13 prices have settled
at $206/t, down ~12% Q/Q. Spot coking coal prices have fallen below $200/t.
The fall in coking coal prices is welcome development for Indian steel companies
as they are mostly dependent on its imports. But it also leads to lower steel price
expectations which is not positive.
 62% Fe grade iron ore export spot prices to China are trading at ~147$/t CIF and
58% Fe grade prices are trading at $135/t CIF. Average iron ore prices have
been remarkably stable during Q4 (up  2 to 5% Q/Q for various grades) despite
flattering steel demand in China, indicating that at lower levels, there is appetite
for imported ore as China's domestic iron ore cost of seems to have shot up.
Base metals
 Average LME aluminium prices for Q4FY12 were modestly up 3.5%Q/Q but
sharply down 13.2%Y/Y. Average aluminium inventory at LME continues to pile,
up 8.8%Q/Q and up 11.3% Y/Y. LME inventory levels are now 5x the levels of
late 2008 financial crisis and indicates aluminium price weakness would continue
for quite some time.
 Average LME copper prices for Q4FY12 bounced back by 10%Q/Q but still down
13.8%Y/Y. Average copper inventory at LME was down by massive 24.5% Q/Q
helping it to be down 23.2% Y/Y. Copper is clearly outperforming other base
metals by miles.
 Average LME zinc prices for Q4FY12 were up by 6.2%Q/Q but down 15.9%Y/Y.
Average zinc inventory at LME have risen further 9.4%Q/Q and is up sharp 19%
Y/Y.
 US$ depreciated by ~4% vs. INR during Q4 which negatively impact base metal
companies realization so the positive Q/Q gain would be minimal for zinc and
aluminium companies. Also, to be noted is that aluminium and zinc prices have
corrected by ~10% over last month or so as reflected by piling up of LME inventory date and that does not auger well for next quarter results.
 Domestic coal prices are likely to move up for base metal companies in coming
quarters as more domestic coal gets diverted to power companies at regulated
prices.

MEDIA :Q4FY12 RESULTS PREVIEW :Kotak Securities PDF link

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MEDIA
Advertising expenditures have seen modest growth in the quarter, as per
our discussions with media companies. We expect the industry advertising
revenues to have grown 6-7% in the quarter. Outperformers would include
Jagran Prakashan, HT Media which would benefit from assembly elections
and greater monetization/ improved readership, respectively. Hindi
Entertainment channels, held by Zee Entertainment and TV18 Broadcast, are
likely to have underperformed the industry (emergence of a new player
among top channels). Sun TV financials are likely to feel continued strain on
account of distribution disturbance in the Tamil Nadu market. Expect weak
growth from radio advertising as well, which will impact ENIL.
Costs shall continue to remain on predicted lines. Newspaper publishers'
gross margins shall continue to be under strain on account of high
newsprint prices. Broadcasters' costs are likely to have risen in the quarter,
on account of greater pressure to programming hours/ higher quality of
programming. We expect EBITDA margins of our coverage universe to
decline 5 ppt y/y.
 DB Corp: We expect DB Corp to have grown modestly ahead of the industry, on
account of strong regional drivers of the company and a high dependence on
local advertising, which tends to be more resilient. We forecast revenue growth
of 11%(y/y) for the company. Given favorable base effect of higher newsprint
prices, we expect margin compression to be minor (60bps). EPS is expected to
grow 10%.
 ENIL: On account of an adverse base effect (benefits from cricket season last
year), we expect ENIL to register significant declines in advertising revenues for
the company. This, along with expectations of higher marketing spends in the
quarter (relative to 3QFY12), lead us to expect a sharp decline in the company's
EBITDA margin in the fourth quarter (15 ppt contraction q/q, and y/y). We expect
PAT for the company to decline 52% (y/y) in 4QFY12. We note, however, that
write-backs in private treaties' provisions and lower marketing spends (possible,
with lower competitive intensity) pose significant positive risks to our estimates.
 HT Media: English newspapers' growth shall be kept in check on account of
weakness in advertising in metro cities, while Hindustan shall continue to grow in
double digits. We expect 10% growth in advertising revenues. HT Media shall
continue to face pressure on the gross margin on account of rupee depreciation,
which results in 4.9 ppt decline in EBITDA margin in 4Q (y/y). We expect PAT to
decline 7% y/y.
 Jagran Prakashan: We expect Jagran Prakashan to report advertising revenues
slightly ahead of peers on the back of assembly elections in several states. However, we gather that polictical advertising has been softer than expected on account of restrictions and subsequent monitoring of advertising by the Election
Commission. Expect revenue growth of 13%, minor margin erosion (0.7 ppt),
and 4% growth in PAT for the company.
 Sun TV Network: We expect Sun TV Network shall continue to see weak subscription revenues, on account of distribution issues concerning Arasu Cable. We
estimate total revenues to decline 6.4% y/y. We expect margins to continue on
a downward path, registering 12.3 ppt decline y/y (for comparison purposes, we
look at EBIT margins of Sun TV, and the table above shows the same). Net profit
is expected to be lower 22% y/y.
 Zee Entertainment: Zee Entertainment is likely to see y/y decline in revenues
on continued pressure on advertising revenues of the company. Programming expenses are expected to be higher this quarter, on account of sports as well as
general entertainment, leading to significant shrinkage in EBITDA margins. We
expect PAT Rs 1488mn, down 24% y/y

OIL & GAS Key highlights :Q4FY12 RESULTS PREVIEW :Kotak Securities PDF link

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OIL & GAS
Key highlights
The overall performance of oil and gas companies in Q4FY12 is expected to
be mixed.
In Q4FY12 Brent crude oil prices have increased by 14.89% to $125/bbls
mainly on account of 1). Global supply concerns, 2). Global liquidity and 3).
Dollar index depreciation. Dollar Index has fallen by 1.02% in the period
under-review. However, Indian rupee has appreciated by 4.12% to INR 50.9/
$. The average rupee-dollar rate was 50.3 for the Mar'12 quarter, higher by
1.3% on QoQ basis.
The key beneficiary of higher crude oil prices are the upstream oil
exploration companies. Hence, upstream oil majors such as Cairn India,
ONGC, Oil India and HOEC will see higher realizations. Cairn India remains
our top pick. Higher production from Bhagyam field along with higher
realization will improve Cairn's profitability.
On the other hand, downstream companies i.e. refining and petrochemicals
are expected to witness margin pressure due to lower global demand and
higher raw material prices. However, OMCs’ fate depend on how much the
government compensates for the under-recoveries and retail fuel price hike.
The natural gas industry is expected to see continued pressure as domestic
availability of gas remains tight. Due to limited natural gas availability in
India we can see volume pressure on gas utility companies such GSPL, IGL,
etc. However, PLNG is expected to benefit from fall in the KG-D6 natural gas
supply. It is also expected that around end April'12 the global LNG prices
should cool off partly to seasonality factor and partly due to higher global
supply.
The natural gas supply in India was lower due to decline in natural gas
production from KG-D6. Apart from RIL, it will negatively impact the
performance of gas-utility companies such as GSPL, GAIL, Gujarat Gas, etc.
However, part of the gas volume loss was compensated by higher import of
LNG by PLNG.
Based on the above mentioned observation, we expect upstream companies
to report strong growth in revenues. Gas utility companies can see some
volume pressure on account of lower domestic natural gas supply. At the
same time, the raw material cost will be higher as part of the gas supplied
was costly imported LNG leading to negative impact on the profitability.
In the Union Budget 2012-13, GOI has increased the OIDA cess on crude oil
production to Rs4,500/mt from Rs2,500/mt earlier. The earlier revision in
cess happened during the Budget 2006-07. This increase in cess is attributed
to indexation by the government. Although, cess is cost recoverable while
calculating the profit petroleum for the upstream companies, the absolute
impact in earnings would still be substantial. The same will reflect in FY13.

Energy: The hangover :: Kotak Securities PDF link

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Energy
India
The hangover. We see a big negative impact on the profitability and profit of city gas
distributors from a decision by the Petroleum and Natural Gas Regulatory Board
(PNGRB) to cut IGL’s network tariffs significantly. We have long highlighted concerns
about sustainability of tariffs of CGD networks, given their high returns on investment.
We will look for potential negative developments in other parts of the gas sector.

SHIPPING  :Q4FY12 RESULTS PREVIEW :Kotak Securities PDF link

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SHIPPING
 The dry bulk market is persistently facing problem of oversupply of ships
pegged at 10 to 12% per annum (Gross supply of 231 mn tonnes in the
next 3 to 4 years) and that is putting the various Baltic Indices and
freight rates under pressure. During the quarter all the baltic indices remained flat. Some activity was reported in the spot cargo for larger ships
in January and February 2012 which led to freights increasing marginally
by 5 to 10% on different routes. Little activity was seen in the Panamax,
Supramax and the Handymax segments, but not enough to boost sentiment and freight levels in the month. The orderbook to fleet ratio currently stands at 36% - down from 52% in December 2010.
 The oversupply of vessel is a serious concern even in the crude tanker
market. Activity has slowed down in all the key segments of tanker primarily due to sluggish world economy and the debt crisis in Europe.
Charters are withholding cargoes in anticipation of better freight rates.
This is negatively impacting the market with number of ships exceeding
the number of cargoes.
 With slowing consumer demand and burgeoning order book,even the
container market was weak in Q4FY12 and is estimated to remain flattish
in near term.
 Even shipping asset prices have slipped by 5 to 10 % across segments
impacting the NAV and replacement cost of most of the companies.
 Higher bunker cost is also having a negative impact on the companies.
Shipping Corporation of India (Reduce: Target Price - Rs 60)
 We expect SCI's Q4FY12 revenues to increase 12% YoY and remain flat QoQ to
Rs 9,751 mn, led by increasing fleet size and flattish tanker market.
 Operating profit is expected to again remain flat Rs 1150 mn which translates
into an operating margin of ~12 %.
 Net profit is expected at Rs 850 mn against loss of Rs 62 mn in Q4FY11 and
profit of Rs 739 mn in Q3FY12. Profit is not expected to grow significantly due to
poor freight market, lower gains from sale of ships and higher interest impact
this quarter vs. last year.
 We also estimate the gross NAV of the company to have corrected from Rs 95 in
the previous quarter to around Rs 90 in the current quarter.
Great Eastern Shipping Co (Accumulate: Target Price -Rs 270)
 Q4FY12 consolidated revenue is expected to increase ~27 % YoY and remain
flattish QoQ to Rs 7,610 mn. The offshore segment is expected to do well in the
quarter with Brent crude sustaining above $100 per barrel in the quarter.
 Operating profit is expected at Rs 2,655 mn which translates into an operating
margin of ~35 %, falling almost 300 bps YoY from 38% primarily due to higher
bunker cost and subdued freight market.
 Net profit is expected at Rs 600 mn against profit of Rs 756 mn in Q3FY12 and
profit of Rs 514 mn in Q4FY11. The QoQ fall would be primarily due to lower
gains from sale of ships and also flattish tanker market

FMCG :Q4FY12 RESULTS PREVIEW :Kotak Securities PDF link

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FMCG
We expect strong performance from all FMCG companies under our
coverage. We factor in 10-12% organic growth in sales, on account of
continued improvements in pricing as well as volumes. We believe
companies under our coverage universe shall broadly be able to pass on rise
in raw material prices/ compensate for declining gross margins with other
efficiencies, leading to stable/ growing margins (y/y). We see 17% growth
in revenues and 26% in PAT in our coverage companies.
 Godrej Consumer: We have factored for a 25% y/y growth in revenues, even
as we expect some cool-off in growth in domestic as well as international operations (4QFY12 revenues are expected to be lower by 7% on a sequential basis).
Expect EBITDA margins to remain flat q/q, as improving domestic margins are
likely to offset declines in international operations, which came in strongly in
3QFY12. Expect PAT to grow 16% y/y.
 HUL: We expect 14% growth y/y in HUL's revenues, as pricing improves and
volumes continue to display growth. Expect EBITDA margins will expand 250 bps
y/y, on account of improving gross margins (better pricing), and continued efficiencies in advertising and promotional spends. Expect PAT growth of 32% y/y
on stronger margins and revenue growth.
 ITC: We expect 13%-14% growth in cigarette (gross) revenues on account of
higher pricing. Expect strength in EBITDA margins (6.4 ppt rise y/y) on account of
stronger margins in cigarettes; as well as continued move towards profitability in
the other FMCG segment. We estimate 31% growth in the company's EPS.

BANKING & NBFCS Outlook: :Q4FY12 RESULTS PREVIEW :Kotak Securities PDF link

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BANKING & NBFCS
Outlook: Neutral
 During Q4FY12, net income for Banks & NBFCs under our coverage is expected to register a strong growth (39.2% YoY), mainly on back of low
base (SBI reported weak earnings during Q4FY11). Our PSU banking universe is likely to grow faster at 71.9% (ex-SBI: decline of 4.2%), while
private sector banks under our coverage are likely to grow at 21.3%.
During the same period, our NBFC universe is likely to witness marginal
growth in net income due to subdued YoY growth for HDFC, LIC Housing and STFC.
 Credit growth came at 17.1% YoY (as on March 23, 2012), marginally
higher than witnessed during last few months, though it remained
lower than 21.5% growth witnessed a year ago. However, disappointment came on the deposit mobilization front - deposit growth for the
system came down to 13.4% (as on March 23, 2012) and explains the rationale of many banks hiking their deposit rates to garner more deposits.
 We expect marginal compression in NIM (5-10bps QoQ) during Q4FY12,
as banks are almost through with the last leg of deposit re-pricing; tight
liquidity environment has led to spike in wholesale deposit rates during
the end of Q4FY12. However, we believe full impact of tight liquidity
condition to be reflected in Q1FY13.
 We believe asset quality pressure to persist even though banks have already shifted to system based NPA recognition system. We expect restructured book to rise especially on corporate book side as there has
been large addition to the CDR in recent times. However, banks are likely
to report higher recovery/upgradation as banks are already through with
the transition exercise.
 Although 10-Yr G-Sec yield declined during the quarter from 8.57% at the
end of Q3FY12 to 8.13% (beginning of February), it moved up sharply
during the fag end of FY12 to close at 8.54% and hence banks are likely
to report marginal MTM depreciation on their investment book. We also
expect moderate growth in non-interest income for banks under our coverage due to muted treasury profit along with lower 3rd party distribution income.
 Top Picks: HDFC Bank, ICICI bank, BoB, IDFC and M&M Finance
Core earnings expected to grow at 20.7% for banks & NBFC under
our coverage; net income growth is likely to be much stronger on
low base (subdued performance of SBI during Q4FY11)

Dewan Housing Finance: Buy : Business Line

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News Round-up : April 15 :: Kotak Securities PDF link

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News Round-up
` SBIN IN. State Bank of India plans to buy loans from banks in the US & Europe to
boost its overseas credit assets & profitability. (ECNT)
` IDBI IN. IDBI Bank has raised about USD 121.57mn through a Swiss Franc
denominated bond issue, in one of the first overseas bond issues this FY. (ECNT)
` IDBI IN. IDBI Bank to raise up to USD 1bn via overseas bonds. Plans to increase limit
on medium-term note program to USD 2.5bn from USD 1.5bn in January. (BSTD)
` MAX IN. New York Life to exit Max India JV. Japan’s Mitsui Sumitomo buys 26% in
Max New York Life for USD 535mn. (BSTD)
` MSIL IN. Maruti Suzuki enter MPV segment with Ertiga, vehicle to cost INR 0.589mn –
INR 0.845mn. (ECNT)
` GLXO IN. Glaxo SmithKline and one of the largest generic drug companies, Teva
Pharma, are in separate discussions to acquire the domestic business of Bangalorebased Micro Labs. (BSTD)
` POL IN. Polaris Financial Technology has received shareholders’ nod for the demerger
agreement between Polaris and its BPO subsidiary, Optimus Global Services. (BSTD)  
` IVRC IN. IVRCL to sell 37.5% stake in IOT Utkal Energy Services. (FNLE)
` IVRC IN. IVRCL Infrastructure shares soared on speculation that the Essel Group may
make an open offer at a substantial premium. (ECNT)
` SUEL IN. Suzlon plans to raise fresh loans. The company is believed to be seeking a
term loan of USD 700mn in FY13. (ECNT)
` ABB IN. ABB has won USD 14.71mn order to provide power solutions for a planned
metro rail network for Jaipur, (THBL)
Source: ECNT= Economic Times, BSTD = Business Standard, FNLE = Financial Express, THBL = Business Line.

FEBRUARY IIP: CAME AT 4.1% :: Kotak Securities PDF link

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FEBRUARY IIP: CAME AT 4.1%
High volatility in IIP and components makes it extremely difficult to rely on
the series for policy analysis and makes it difficult to predict its future
trend. Industrial production in February surprised on the downside  with
4.1% growth, though bigger surprise came from sharp downward revision
of January IIP to 1.1% from 6.8%, on account of downward revision in
Consumer non-durables growth from 16.9% to 11%.
Cumulative growth during Apr-Feb FY12 has slowed to 3.5% vs. 8.1% last
year, while the advance GDP estimates indicate the industrial sector growth
for the entire FY12 at 3.9%. To achieve estimated GDP growth of FY12, IIP
growth in Mar should come at 7.7% (YoY) and 19% (MoM), which is
unlikely in our opinion.
3MMA of IIP fell sharply to 2.6% vs. 7.5% 3MMA in February 2011. Improved performance in Electricity (wt. 10.32%) at 8.05% (from 3.2% in Jan) saved the day despite slower growth in manufacturing sector at 3.95% (wt. 75.53%), and reversal in
mining sector with 2.1% (wt. 14.16%) growth.

INFORMATION TECHNOLOGY Preview :: Kotak Securities PDF link

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INFORMATION TECHNOLOGY
We expect companies under our coverage to report a sequential revenue
growth of about 1.3%, driven by higher volumes but impacted by currency
fluctuations. Volumes for the Top 4 companies are expected to rise between
0.2% - 3%. This is a quarter where client budgets are normally finalized and
order flow turns stronger in the April - June quarter. Slower growth in
discretionary spends and continued delays in spending decisions will also
impede revenue growth, we believe. The cross currency volatility impact is
expected to be marginal as compared to last quarter. Average realizations
are expected to have remained stable QoQ, barring few cases of declines.
EBIDTA margins are expected to be lower QoQ on the back of the rupee
appreciation and lower volume increases, along with reduced utilization
rates. We expect EBIDTA to fall by 1.5% QoQ, for companies under our
coverage.
Companies follow different hedging strategies and different accounting
policies. This may lead to corresponding impact of currency volatility on
other income. We expect significant volatility in the other income
component on a QoQ basis for several companies. Consequently, PAT is
expected to remain flat for companies under our coverage (also for Top 4).
The guidance from Infosys will be even more important this time. With
continuing uncertainty on depending decisions (largely discretionary
spends), the guidance may be conservative.
Among other things, we will also watch out for :
a) Comments on CY12 budgets; more importantly on expected spending
patterns,
b) Pricing declines, if any and comments on the same,
c) Salary increments for FY13 and
d) Comments on new opportunities like Cloud Computing, etc
We maintain our optimistic view on the medium-to-long term prospects of
the sector. Over the medium term, we expect large caps to out-perform as
they are better equipped to counter the impact, if any, of any variation in
the demand scenario. We will keep a close watch on the evolving macro
scene in developed economies, where recent economic developments are
concerning.
Infosys and TCS remain our preferred large-cap picks. In mid-caps, we prefer
NIIT Technologies and KPIT Cummins. Mphasis is not covered here because
quarter ends in April.
0.2% - 3% sequential volume growth expected for top tier companies
We expect top-tier companies to report volume growth of about 0.2% - 3% QoQ.
We understand that, there have been some delays in decision making and also, the
actual amount of spends as compared to budgets are relatively lower this fiscal.
While the order flows from US are expected to have grown, we will closely hear
management comments on the potential order flows from Europe, where economic
news has been a source of worry.
While volumes are expected to rise QoQ, we expect realizations to be largely stable,
subject to some cases of reductions. However, we will closely watch out for management comments on potential price reductions.

LOGISTICS :Q4FY12 RESULTS PREVIEW :Kotak Securities PDF link

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LOGISTICS
Performance of Logistics companies involved with container rail business,
CFS business and related business is strongly linked to performance of the
port sector in the country. With the container volumes in January and
February 2012 (March not available) at the 12 major ports of the country
growing to 1.26 mn tonnes ( +3% YoY) and minor ports like Mundra
estimated to grow much faster (14% CAGR), we expect the Logistics
companies in our coverage to report healthy growth in Q4FY12(except
Concor).
Container Corporation of India (SELL: Target Price - Rs 905)
 Q4FY12 consolidated revenue is expected to increase ~ 9 % YoY and ~ 4% QoQ
to Rs 10,850 mn in sync with growth in volumes at major ports. It is important to
note here that Concor primarily operates in Exim segment out of JNPT.
 The domestic volumes of the company are estimated to report a YoY drop of
~10%.  In the previous quarter Concor had reported a 13% YoY decline in domestic volumes primarily led by new railway policy effective Dec-2010. Railways
increased the specified rating of five commodities (cement, stone other than
marbles, iron & steel, alloys & metals, POL products) leading to higher haulage
by 100% to 275%. This led to Concor losing almost the entire volumes of these
commodities to road transportation.
 Operating profit is expected at Rs 2,824 mn which translates into an operating
margin of ~26 %, declining almost 50 bps YoY from 26.5% primarily due to increased competition in the Exim segment (waning pricing power) and higher
haulage cost in domestic segment ( not completely passed to customers till
date).
 Net profit for Q4FY12 is expected at Rs.2,233 mn against Rs 2,413 mn in Q3FY12
(-7% QoQ) and Rs 2,013 mn in Q4FY11.
 Due to recent hike in rail haulage effective 1st April, 2012; we had changed the
rating of the stock from Reduce to SELL.
Gateway Distriparks Ltd (Accumulate: Target Price - Rs 154)
 We expect GDL's Q4FY12 revenues to increase ~25% YoY and  ~8% QoQ to Rs
2,100 mn. This, we believe, would be largely led by congestion at JNPT and
Chennai port (it leads to higher CFS volumes and realization) and improved load
factor in the rail business.
 The rail business is expected to report healthy load factor of 80% (previous year
75%) with operating margin of 17%. This would be fifth consecutive quarter for
the rail business to report profits at net level.
 With improved CFS realizations (YoY) and robust rail performance we expect
GDL to report operating profit of Rs 630 mn which translates into healthy operating margin of ~30%
 Net profit is expected at Rs 343 mn versus Rs 331 mn in Q3FY12 and Rs 350 mn
in Q4FY11.
Allcargo Global Logistics (Buy: Target price - Rs 195)
 Q4FY12 or Q1CY12 consolidated revenue is expected to increase ~ 40% YoY
and 3% QoQ to Rs 10,250 mn, Again, the congestion at JNPT and Chennai port
would help the company report better numbers in the CFS business. ECU line
and domestic MTO business is also estimated to report 5% growth in volumes in
line with growth of global container volumes. However the realization should be
under pressure due to uncertainty in Eurozone.

Bharat Heavy Electricals: Reinitiate coverage with a SELL on potential earnings decline :: Kotak Securities PDF link

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Bharat Heavy Electricals (BHEL)
Industrials
Reinitiate coverage with a SELL on potential earnings decline. We reinitiate
coverage on BHEL with a SELL due to (1) a likely lull in incremental inflows with sectoral
issues and large accumulated ordering (125 GW already placed for XII Plan), (2) strong
competition and (3) likely pressure on margins. Earnings may decline (EPS of Rs22) over
the next 2-3 years as revenues remain stagnant and fixed costs increase; contribution
margins decline would exacerbate the pressure.

CONSTRUCTION :Q4FY12 RESULTS PREVIEW :Kotak Securities PDF link

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CONSTRUCTION
Construction sector performance during Q4FY12 is expected to improve on a
sequential basis led by improvement in execution. Revenues are expected to
grow by 21% QoQ for construction companies in our coverage universe
while on yearly basis, revenue growth is expected to grow at a slower pace
of 7% due to lower than expected order inflows during current financial
year. Margins are likely to remain a mixed bag with some of companies
likely to improve their margins on a full year basis due to diversified project
mix while others may witness a decline in full year margins due to cost
overruns. Continued high working capital and higher interest rates are likely
to dent the profitability adversely.
During FY12, revenue growth of the companies was impacted due to lack of
order inflows as well as execution related issues. Cost overruns, delay in
payment from clients, increase in working capital and steep hike in interest
rates have impacted profitability of companies across the sector and
resulted in sharp increase in leverage. Thus, in order to bring down the
debt, companies have initiated the process of stake sale in the SPVs
executing road, power and real estate projects.
We would continue to look out for following parameters during Q4FY12/
FY13 which will give us an indication of future growth in the sector -
 Faster environmental clearance and land acquisition
 Improvement in order inflows across segments
 Decline in interest rates
 Fund raising or stake sale by companies at the SPV level
 Financial closure of pending projects
Till that time, we continue to remain selective on the sector and would
prefer companies with healthy order book, improved execution and
attractive valuations. We would thus prefer IRB Infrastructure, Unity
Infraprojects and Pratibha Industries. We would also continue to maintain
our positive bias for Phoenix mills based on its strong rental revenue
stream, excellent margins as well as likely commissioning of market city in
Chennai and hotel Shangri-La.
Key highlights during Q4FY12
Revenue growth to witness improvement on sequential basis
Revenue growth of the companies during Q4FY12 is likely to be led by ramp up in
execution.  However, revenue growth is not expected to jump up sharply despite
healthy order book for the companies in order to contain working capital cycle and
maintain balance sheet strength.  It is expected to grow by 7% YoY only for our
coverage universe.
Operating margins for full year FY12 may be lower than previous
year
Operating margins of the companies are expected to be a mixed bag depending
upon the contracts executed in the current quarter. We expect full year FY12 operating margins to come down by 25-50 bps in comparison with last year due to increased competition as well as higher raw material prices for fixed price proportion
of order book. Along with this, margins may also come down due to change in the
revenue mix.

INFORMATION TECHNOLOGY :Q4FY12 RESULTS PREVIEW :Kotak Securities PDF link

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INFORMATION TECHNOLOGY
We expect companies under our coverage to report a sequential revenue
growth of about 1.3%, driven by higher volumes but impacted by currency
fluctuations. Volumes for the Top 4 companies are expected to rise between
0.2% - 3%. This is a quarter where client budgets are normally finalized and
order flow turns stronger in the April - June quarter. Slower growth in
discretionary spends and continued delays in spending decisions will also
impede revenue growth, we believe. The cross currency volatility impact is
expected to be marginal as compared to last quarter. Average realizations
are expected to have remained stable QoQ, barring few cases of declines.
EBIDTA margins are expected to be lower QoQ on the back of the rupee
appreciation and lower volume increases, along with reduced utilization
rates. We expect EBIDTA to fall by 1.5% QoQ, for companies under our
coverage.
Companies follow different hedging strategies and different accounting
policies. This may lead to corresponding impact of currency volatility on
other income. We expect significant volatility in the other income
component on a QoQ basis for several companies. Consequently, PAT is
expected to remain flat for companies under our coverage (also for Top 4).
The guidance from Infosys will be even more important this time. With
continuing uncertainty on depending decisions (largely discretionary
spends), the guidance may be conservative.
Among other things, we will also watch out for :
a) Comments on CY12 budgets; more importantly on expected spending
patterns,
b) Pricing declines, if any and comments on the same,
c) Salary increments for FY13 and
d) Comments on new opportunities like Cloud Computing, etc
We maintain our optimistic view on the medium-to-long term prospects of
the sector. Over the medium term, we expect large caps to out-perform as
they are better equipped to counter the impact, if any, of any variation in
the demand scenario. We will keep a close watch on the evolving macro
scene in developed economies, where recent economic developments are
concerning.
Infosys and TCS remain our preferred large-cap picks. In mid-caps, we prefer
NIIT Technologies and KPIT Cummins. Mphasis is not covered here because
quarter ends in April.
0.2% - 3% sequential volume growth expected for top tier companies

CAPITAL GOODS & POWER :Q4FY12 RESULTS PREVIEW :Kotak Securities PDF link

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CAPITAL GOODS & POWER
Project investment snapshot
 Project investment intentions through fresh proposals declined by a
hefty 62% during the first nine months of 2011-12 on a Y-O-Y basis. According to a project survey, 5,629 new projects were announced during
April-December 2011 envisaging capital outlay of Rs. 2.2 trn as compared
to 7,445 new projects amounting to Rs.5.7 trn in 9M FY11.
 The sharpest drop in investment proposals has been in metals and mining, power and railways. The reasons are not far to seek. Land acquisition and fuel supply issues have stalled investment in Power and Metals/
Mining sector. Investment in rail projects has been affected possibly due
to deterioration in the finances of the Railways.
Preview Highlights
 We expect aggregate revenue growth of 12% YoY in the fourth quarter, driven
mainly by BHEL and L&T.
 Aggregate EBITDA is expected to decline by 4% yoy as we project aggregate
EBITDA margins to contract by 260 bps to 14.4%. The major contribution to
margin decline is attributed to Suzlon. Ex-Suzlon, aggregate EBITDA is projected
to remain flat led by 190 bps decline in EBITDA margin.
 Aggregate PAT is expected to decline 11.4% YoY in Q4 FY12. Excluding Suzlon,
aggregate PAT expected is expected to remain flat.
 We remain cautious on projects-based companies given the negative outlook on
capex cycle and a deteriorating working capital cycle. Interest expenses are seen
spiraling up in this quarter as well.
 While valuations are now reasonable from a historical perspective, we note that
the sector remains vulnerable to earnings downgrades. Remain selective in our
stock picks with preference for product-oriented companies over project-oriented
ones. Prefer Cummins, Voltas and Engineers India Ltd.
Stock Performance
The capital goods sector remained outperformer (21 % gain vs 12% for the Sensex)
for the quarter as the sector rebounded strongly after having beaten down in CY11.
Attractive valuations, pause in monetary tightening by the RBI and expectations of
government reforms were the prime reasons for outperformance.
Commodity prices firmed up in Q4FY12
During the quarter, average price of HR steel coils was up 8.1% qoq to USD 714 per
ton, which would increase cost pressures for Capital Goods companies.
Average price of copper which is the prime raw material for electrical equipment
has increased 10% qoq in the quarter. The effect of this would be in terms of higher
revenues but downside in EBITDA margins.
Forex Scenario - MTM relief likely for EKC, Time Technoplast and
Blue Star
Rupee has appreciated 6% vs the USD during the quarter. Positive for Everest
Kanto, Time Technoplast, Blue Star and Voltas as these companies are net importers.

CEMENT :Q4FY12 RESULTS PREVIEW :Kotak Securities PDF link

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CEMENT
Cement demand has started witnessing improvement on account of
improvement in the construction activity from infrastructure as well as
individual housing segment. Cement prices remained firm during Q4FY12
and recovered back the declines seen in the prices in Dec, 2011-Jan, 2012
period. Along with this, due to cost pressures related to hike in railway
freight rates and excise duty, prices inched up further in the month of
March. Overall costs continued to remain high.
Thus, on a sequential basis, cement realizations for companies are likely to
improve during Q4FY12. We expect revenues in our coverage universe to
grow by 12% on QoQ basis and 13% on YoY basis. Operating margins are
expected to improve sequentially but are likely to be lower on yearly basis
due to higher costs. Net profit during Q4FY12 is expected to decline by 7%
QoQ and 15% YoY led by higher operational costs as well as higher
depreciation charges.
Since we have now begin to see demand growth revival, we would
recommend a selective approach to cement sector and would prefer players
having attractive valuations and higher capacities since delta effect of
higher cement prices will be much more with these players.
Demand growth during Q4FY12
Cement demand growth since Nov, 2011 has grown in double digits on a monthly
basis and demand growth for Apr, 11 - Feb, 12 period now stands at 6.9%. We
expect full year demand to grow by nearly 6% during FY12 led by revival in construction activity. We also expect revival in infrastructure award process during FY13
which would also result in keeping cement demand growth strong. We thus expect
cement demand to improve by 9.5-10% going forward. Focus on infrastructure creation as well as pre-election spend during FY13 and FY14 would be key drivers for
the cement demand growth going forward.
Cost pressures continue to remain high
Companies may continue to witness cost pressures led by higher freight costs as well
as raw material costs. Imported coal prices have come down during the quarter and
thus companies having higher imported coal component such as India Cements may
benefit during the quarter. Government has also reduced import duty on coal in
Union budget but impact of lower duties would be reflected fully only from Q1FY13
onwards. However, power and fuel cost may jump up during FY13 for companies
having higher domestic sourcing such as ACC due to expected increase in coal
prices by Coal India.
Since companies have passed on most of the cost increases, we don't expect
EBITDA margins to come down on a sequential basis. However, on yearly basis,
margins are likely to be lower due to higher costs.

AUTOMOBILE :Q4FY12 RESULTS PREVIEW :Kotak Securities PDF link

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AUTOMOBILE
Sluggish quarter for 2W, improvement in other segments
4QFY12 was a mixed bag with 2W volumes facing a slowdown and the car and
M&HCV segment posting some recovery. Conventionally, fourth quarter is one of
the better quarters for the automobile segment. After a post-festive season slowdown in third quarter, sales gather pace in the fourth quarter.  However given various macro headwind like slowing economy, high interest rates and rising fuel prices
led to relatively dull performance (YoY) during the quarter under review. However
on a sequential basis the passenger car segment and the M&HCV segment displayed some improvement in demand.
Volumes
 Q4 Q3 QoQ Q4 YoY
Company  FY12 FY12 (%) FY11 (%)
Ashok Leyland       35,688       23,385     52.6       29,679     20.2
Bajaj Auto   1,017,167   1,075,441      (5.4)      948,198       7.3
Hero MotoCorp   1,572,027   1,589,286      (1.1)   1,454,431       8.1
Maruti Suzuki      360,334      239,528     50.4      343,340       4.9
TVS Motors      528,012      527,700       0.1      533,772      (1.1)
Source: Companies
Volumes for companies under coverage grew by 6% YoY and 1.7% QoQ. In the
quarter, 2W segment volumes remained under pressure. In the car segment, the
demand remained clearly in favor of diesel models with petrol run cars still facing
the heat of increase in petrol prices. Car sales in 4Q were fueled by anticipated hike
in excise duty in the budget. Finance Minister did increase the general rate of excise
but the expected additional excise duty on diesel vehicles did not come in the budget which came in as major relief for diesel car/UV makers. M&HCV segment performance in 4QFY12 was marked by difficult macro conditions. Tractor segment witnessed a sharp drop in demand in 4QFY12.
Revenues to grow in double digit
We expect the revenues for the companies under our coverage to grow by 11.2%
YoY in 4QFY12. Most of the companies under our coverage are expected to report
double digit revenue growth. Both volumes and price hikes will contribute towards
revenue growth for the companies. For Escorts, we expect revenues to de-grow due
to weak tractor demand during the quarter.
EBITDA margins to remain under pressure
With slowing demand and firm raw material prices, we expect the EBITDA margin to
largely remain under pressure. We do not see any significant change in margins as
compared to 3QFY12 as raw material prices remained firm in 4QFY12 and volume
growth was almost flat. MSIL's 3QFY12 performance was impacted due to strike at
the company's plant. But with production returning to normalcy, we expect the
margins to improve close to pre-strike levels. Ashok Leyland is also expected to report sequential margin improvement in a quarter which is traditionally strong for
M&HCV sales.

Q4FY12 RESULTS PREVIEW ::Kotak Securities PDF link

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Q4FY12 RESULTS PREVIEW
For the quarter, we expect the companies under our coverage to report a
revenue growth of 15% yoy ex-Banking. Margins are expected to be lower
on account of raw material prices, competitive pressures and Rupee
depreciation (YoY). Profits for these companies are expected to be flat YoY.
For Banks/NBFCs we expect NII growth of 21% on moderating credit
growth. Profits are expected to rise by 39% YoY.
15% revenue growth expected during the quarter
We expect stocks under our coverage (ex-banking / NBFCs) to report revenue
growth of about 15% on a YoY basis mainly propelled by the IT sector and scale-up
in revenues of Cairn India. IT sector revenues would be driven by higher volumes
and the rupee depreciation (yoy). We forecast moderation in revenue growth for
Capital Goods and Construction companies. Mining major, Sesa Goa's revenues are
expected to be sharply lower due to combined impact of lower realization (down
16% yoy) and volumes (down 25% yoy).
For Banks / NBFCs, we expect muted credit growth during Q4FY12. Credit growth
came at 17.1% YoY (as on March 23, 2012), marginally higher than that witnessed
during last few months, though it remained lower than 21.5% growth witnessed a
year ago. However, disappointment came on the deposit mobilization front - deposit
growth for the system came down to 13.4% (as on March 23, 2012) and explains
the rationale of many banks hiking their deposit rates to garner more deposits.
Moreover, we are expecting flat/marginal compression in NIM (QoQ) during Q4FY12
(again depending on the CASA mix or liability franchise of the individual banks) as
banks are almost through with the last leg of deposit re-pricing. Tight liquidity environment has led to spike in wholesale deposit rates during the end of Q4FY12
though, we believe full impact of tight liquidity condition may be reflected in
Q1FY13. However, NBFCs are likely to witness continued compression on their margins, as borrowing costs for them have remained at elevated levels with limited
scope to charge higher rates from borrowers on back of moderating loan growth.
EBITDA Margin is expected to be lower for our coverage universe
EBIDTA margin for the companies under our coverage is expected to be lower on a
YoY basis. Most of the sectors, except IT, FMCG and Construction are expected to
witness erosion in margins on YoY basis. The margin compression is due to slack
revenues (Shipping) and higher raw material prices (Automobiles, Capital Goods)
which companies have not been able to pass on fully. For the Capital Goods companies, material cost has been higher due to weak Rupee in H2FY12. Sesa Goa's
margins are forecast to decline sharply due to steep decline in iron ore realization.
As far as banks are concerned, pre-provisioning profits are expected to rise by about
19.7% v/s a 20.7% rise in NIIs. A relatively lower treasury profit is expected to have
an impact. We also believe asset quality pressure to persist even though banks have
already shifted to system based NPA recognition system. We will be very closely
watching the corporate book especially exposure to sensitive sectors like power,
aviation, textiles, construction etc.

Update INDRAPRASTHA GAS LTD (IGL) ::Kotak Securities PDF link

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INDRAPRASTHA GAS LTD (IGL)
PRICE: RS.345 RECOMMENDATION: UNDER REVIEW
TARGET PRICE: NA
 The Petroleum and Natural Gas Regulatory Board (PNGRB) has directed IGL to reduce prices for CNG, PNG and industrial consumers. This is with retrospective
effect (wef 1 April 2008).
 Earlier IGL had proposed to the Board a network rate of Rs 104.05 per million
British thermal units and compression charge of Rs 6.66 per kg of CNG. The
Board approved Rs 38.58 and Rs 2.75, respectively, bringing these down by 63%
and 58.7%.

Technicals: Indraprastha Gas, Petronet LNG, IVRCL, Neha Int, Aishwarya Telecom, Gujarat NRE Coke : Business Line

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Should I buy Indraprastha Gas Ltd and Petronet LNG at current levels?

Suresh Kumar Yadav

Indraprastha Gas (Rs 225.2): Indraprastha Gas was hit hard by the recent order by the Petroleum and Natural Gas Regulatory Board that cut network tariff and CNG compression charge. The board had further asked the company to refund excess amount charged since 2008.

April16: Pivotals: Reliance Industries, SBI, Infosys, Tata Steel : Business Line

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Stock Strategy: Consider shorting ICICI Bank, Dr Reddy's Lab : Business Line

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ICICI Bank (Rs 866): After recent recovery from Rs 650 level, ICICI Bank has been struggling to move past Rs 975. The stock faces strong support at Rs 847. A close below that will trigger a fresh sell-off. In that event, it has supports at Rs 765 and Rs 705. On the other hand, a close above Rs 975 will take ICICI Bank to Rs 1,046 and even to Rs 1,115.

The immediate-term outlook remains negative for ICICI Bank. The RBI is scheduled to meet on April 17 to decide on key rates. It is widely expected that the apex bank might cut interest rate.

A 25 basis point (BPS) cut has already been discounted by market participants . If RBI maintains a status-quo or 25 basis points cut, then the banking stocks will come under fresh selling pressure. On the other hand, a 50 BPS cut may keep these stocks firm with a marginal positive bias.

Investment Focus -IL&FS Transportation Networks: Buy : Business Line

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Cement: 4QFY12E: Accruing the benefits of seasonal price actions :: Kotak Securities PDF link

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Cement
India
4QFY12E: Accruing the benefits of seasonal price actions. Cement companies will
improve profitability by Rs240/ton sequentially, benefiting from (1) higher realizations as
average cement prices improve ~Rs10/bag, (2) improved volumes as we step into the
peak construction season, and (3) lower impact of cost pressures that will likely impact
fully by 1QFY13E. Cement stocks are building a very optimistic scenario for
improvement in profitability (+Rs400/ton) over the next 12 months, preventing us from
taking a constructive view at current levels.

Sizzling Stocks: Max India , BASF India: Business Line

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Sizzling Stocks: Max India (Rs 192.7)

The stock bottomed in early January this year taking support from its long-term base level at Rs 140. Since then, it has been on a medium-term uptrend. Penetrating its 50 and 200-day moving average as well as a key resistance at Rs 185, the stock accelerated last week. But, Friday's decline evaporated some of its weekly gains and the stock finished the week gaining 10 per cent. We notice the formation of a bearish engulfing candlestick pattern in the daily candlestick chart implying short-term trend reversal. The stock can continue its decline and reach Rs 185 and then Rs 174 in the short-term. Nonetheless, its medium-term uptrend will remain in place as long as the stock trades above Rs 166.

Strong breakout of the immediate resistance at Rs 208 will accelerate the stock higher to Rs 220 and to Rs 236 in the medium-term.

BASF India (Rs 620.4)

The stock skyrocketed 19.5 per cent breaking out of its sideways consolidation phase between Rs 490 and Rs 530 last week. This rally has reinforced the stock's medium-term uptrend that has been in place from its December 2011 low of Rs 427. In the medium-term the stock can rally to Rs 655 and then to Rs 685.

But in the near-term, we do not rule out a corrective decline as the stock's daily indicators are featuring in the overbought levels and it is testing key medium-term resistance level at Rs 628. A decline to Rs 590 or even to the next support level at Rs 557 is possible in the near-term. Strong weekly close below Rs 505 will mar the stock's medium-term uptrend and drag it down to Rs 490 and then to Rs 473.

Investing in silver : Business Line

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Investors can bet on silver through the spot commodity market.

Now, suppose one would like to bet on silver for the long term, how can one invest in it?

With silver-ETFs not available in India, investors may choose to bet on silver in the spot commodity market where investment is allowed in electronic form.

The National Spot Exchange of India provides an online platform to buy silver in demat form.

On a daily basis 500-600 units (50,000-60,000 gm) of e-silver are traded on the exchange's platform. The exchange provides counterparty guarantee in terms of quantity and payment. Indian investors have the option of investing in silver in the physical form — bars/coins too. Physical investment brings with it problems of safe-keeping and related charges. But, when bought in the electronic form, from National Spot Exchange (NSEL), the investor is assured liquidity and also lower investment cost.

One unit of e-silver is equal to 100 gm of silver. Units of e-silver can be purchased online through an account with any of the authorised trading members of NSEL. The purchased units are credited to the buyer's de-mat account. Trading of these units can be done online as in equities. However, investors are given an option to take delivery of the units they hold.

Godawari Power and Ispat: Buy : Business Line

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Infy-Wrecked by a gloomy forecast; Max and other news : Business Line

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The stock of Infosys crashed on Friday after revenues for the March '12 quarter showed a decline compared to the December '11 quarter. Revenues in the recently-ended quarter fell 4.8 per cent.

The company also saw a slight decline in volumes and realisations. However, a strong other income component, which was up by 52 per cent stymied a sharp fall in net profits.

Compared to the December '11 quarter, net profits for the March '12 quarter shrank 2.4 per cent.

Darkening the picture was the company's tame growth projections, citing a challenging year for the IT industry on the back of slow recovery in global markets.

Infosys guidance for the fiscal ahead was an 8 to 10 per cent growth in dollar terms. That's well below Nasscom's projection of 11 to 13 per cent for the IT industry.

Profiting from stake sale

New York Life Insurance is exiting from its insurance venture with Max India.

Buying into the insurance company is Japan's Mitsui Sumitomo Insurance Company (MSI). MSI will buy 16.63 per cent directly from New York Life and 9.35 per cent from Max India to bring its total stake to 26 per cent.

Max India will buy 9.35 per cent from New York Life Insurance.

It is this stake which it will sell to MSI. From this deal, the company stands to make a profit of about Rs 800 crore, as it forks out Rs 182 crore for purchase and receives Rs 984 crore from selling the stake.

Max India holds about 70 per cent in Max New York Life Insurance.

On the day of the announcement, the Max India stock shot up 8 per cent, and it closed the week with a 10 per cent gain.

Cut down by tariff

Just two weeks ago, Indraprastha Gas traded at a trailing price-earnings multiple of 17.6 times. By the close of last week, valuations shrank sharply to 10.7 times.

The stock nose-dived 34 per cent in a single day and was down 40 per cent for the week.

Sparking the slide was the downstream regulator, Petroleum and Natural Gas Regulatory Board's directive to the company to make a steep cut in two key gas tariffs for Delhi customers.

The regulator also ordered the company to immediately refund the excessive tariff billed to households for piped cooking gas and automobiles for compressed natural gas (CNG).

The network tariff was slashed by 63 per cent and CNG prices were cut by 59 per cent.

The losses due to the ruling are estimated to be in the range of Rs 1,000 to Rs 1,500 crore. Indraprastha has challenged the directive in the Delhi High Court, and the date for the final hearing is set for April 19.

Hold Reliance Communication; Target :Rs 84 :ICICI Securities, PDF link

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R C o m   ‘ F l a g ’ s   o f f   s t e p   t o   r e d u c e   d e b t …
Reliance Communication (RCom) has announced that it is evaluating the
launch of an initial public offering  (IPO) of its undersea cable unit Flag
Telecom on the Singapore Stock Exchange through a Singapore business
trust. According to media sources, Flag Telecom could be valued in the
range of | 7500 - | 10000 crore. This is the first active step taken by the
company to address its huge debt. Also, the company has been looking
at selling its tower business as well to help ease the debt. Though the IPO
of Flag Telecom and a possible sale of the tower business is a significant
step in addressing the more apparent issue of huge net debt, the
stagnation in revenues is another major concern making the long term
outlook for RCom not very bright. We remain sceptical about the outlook
of RCom and reiterate our HOLD rating on the stock.

52-WEEK BLOCKBUSTER: GODFREY PHILLIPS : Business Line

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52-WEEK FLOP: ADANI ENTERPRISES : Business Line

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Invest in many good funds in order to diversify and benefit from their varied styles.

I am 40 years old, and working in a listed company. I am investing Rs 15000 per month in HDFC Top 200 for the last two years, and would like to add a further Rs 5000 to it. My time horizon is 10 years, with the risk appetite being above average. I also have a portfolio of Rs 10 lakhs in direct equities. Please suggest a mutual fund portfolio. I expect a minimum return of 15 per cent per annum from it.

— MC

It is good that you have given yourself 10 years to reach your goal. Your return expectations too seem fine. But there are several faults in your existing portfolio.

First, you are investing a fairly large sum in just one fund. Second, you want to increase exposure again to that fund. Finally, your portfolio is skewed heavily towards equity.

So, to rectify these, you must invest in many good funds in order to diversify and benefit from their varied styles.

Your investment in HDFC Top 200 during the past two years would total to Rs 3.6 lakh. It hasn't eroded much and the value would be pretty much at the same levels. Don't add any further exposure to this fund and leave it as such for the next 10 years.

From the Rs 15000, invest Rs 4000 each in Frankin India Bluechip, IDFC Premier Equity and Quantum Long-term Equity. The balance Rs 3000 can be parked in UTI Opportunities. This will give you a mix of large, mid and multi-cap funds.

If Rs 15000 is invested every month for 10 years, you would have a corpus of more than Rs 41 lakh, if you earn 15 per cent per annum.

Building a corpus means a balanced approach with exposure to equity, debt, gold and, if possible, real estate.

You can park the remaining Rs 5000 in high-yielding debt instruments, gold ETF etc, to diversify.

Review your portfolio at least once every year to rebalance and weed out any underperformers.

*******

I work in a public sector bank. I have been investing in the following funds through systematic investment plans since 2008, presently contributing Rs 3,000 each in the following funds (recently enhanced from Rs 2,000): DSPBR Top 100 Equity, Franklin India Bluechip (after discontinuing the systematic investment plan in Franklin Prima Plus recently), HDFC Equity, HDFC Prudence, HDFC Top200 and IDFC Premier Equity.

I would like to build up a corpus for my post retirement, which is 7 years away. My risk appetite is above average.

Please suggest changes, if any required, in my portfolio in order to maximise returns.

— Swaminathan

The funds in your portfolio are fairly good with a good performance record. But it can do with some tweaking. You have invested in three funds from HDFC stable.

Although all of them have an excellent long-term performance record, you should diversify to more fund houses in order to reduce concentration risks and benefit from rest of the fund houses' styles. Discontinuing systematic investment plans in Franklin India Prima Plus was a good idea.

As you already have exposure to large-cap funds in the form of DSPBR Top 100 Equity and Franklin India Bluechip, you can exit HDFC Top 200.

Instead, you can park Rs 3000 in Quantum Long-term Equity or Canara Robeco Equity Diversified.