Market Strategy Report

8/4/2019 Market Strategy Report

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Market StrategyMarket StrategyMarket StrategyMarket StrategyMarket StrategySeptember 2011September 2011September 2011September 2011September 2011

Please refer to important disclosures at the end of this report. 1

Global headwinds blowing, India relatively well placed

Global equities have corrected sharply over the past one month on concerns of

slower global growth. The US economy continues to face risks of a double-dip

recession on tepid economic growth and high unemployment. Eurozone countries

also remain on a weaker footing due to concerns regarding sovereign debt crisis.

In the backdrop of these headwinds, we believe India is better placed to weather

the current scenario due to lower dependence on exports for driving economic

growth and benefits arising from lower commodity and energy prices due to slower

global growth.

Inflation expected to moderate on lower global commodity and energy prices :Inflation expected to moderate on lower global commodity and energy prices :Inflation expected to moderate on lower global commodity and energy prices :Inflation expected to moderate on lower global commodity and energy prices :Inflation expected to moderate on lower global commodity and energy prices :

The Reserve Bank of India (RBI) has continued its rate hike spree on account of

persistence of higher inflation. The RBI has raised the key policy rate - the repo

rate - on 11 occasions since March 2010, leading to a sharp 475bp rise in the

operative policy rate. The sticky nature of inflation at higher levels has been partly

on account of a sharp rise in global commodity and energy prices, as economic

recovery in developed economies picked pace. However, with the prospects of

slower-than-anticipated growth in these economies and moderating growth trends

in emerging economies, commodity and energy prices have come off considerably

from their recent peaks. With declining stimulus measures and slower global growth,

we expect prices to remain in check in the near term. Reduced prices are expected

to be materially positive for the Indian economy, as it will aid in a) reducing fiscal

deficit, b) cooling inflationary pressures and c) putting an end to the prolonged

monetary tightening cycle.

Slower domestic growth may also prompt an end to monetary tightening:Slower domestic growth may also prompt an end to monetary tightening:Slower domestic growth may also prompt an end to monetary tightening:Slower domestic growth may also prompt an end to monetary tightening:Slower domestic growth may also prompt an end to monetary tightening: Apart

from reduced inflationary pressures, the slowdown in domestic growth and

heightened risks in the global macro environment are expected to lead to an end to

the monetary policy tightening stance. Domestic growth has slowed considerably,

as evident from the slowing GDP growth rates, tepid IIP growth, moderating growth

in quarterly gross fixed capital formation and declining vehicle sales and cement

dispatches growth rates. Credit sanctions have also slackened substantially in the

recent months. India's manufacturing PMI has slipped to a 29-month low of

52.6 during August 2011. Although recent indications from the RBI suggest

another 25bp hike in the repo rate in the upcoming monetary policy review,

there is an increasing likelihood, due to the above-mentioned reasons, that theRBI may pause after that hike.

VVVVValuations attractive:aluations attractive:aluations attractive:aluations attractive:aluations attractive: Indian markets have fallen by ~20% in CY2011YTD and

have underperformed emerging market peers by ~8% and global peers by ~11%

due to concerns of higher inflation and interest rates. The earnings growth trajectory

for Indian corporates remains moderate despite higher raw-material costs and

interest rates hurting margins over the past few quarters. While FY2012 earnings

growth is likely to be modest, cooling inflation and interest rates should underpin

healthier growth in FY2013. Based on one-year forward earnings, the Sensex is

trading at attractive valuations of 13.5x vis--vis its last five-year average of 15.7x.

We value the Sensex at a conservative 14x target P/E multiple to arrive at a Sensextarget of 19,100. We maintain our positive stance on Indian equities considering

their relative better positioning globally, reasonable earnings growth trajectory and

attractive valuations vis--vis Indias structurally positive outlook.

Note: Investment period - 12 Months

BSE Sensex (16,713) and Price as on September 5, 2011

Angel Portfolio

Sector Weight (%) Stocks

Auto & 6.0 Ashok Leyland,

Ancillaries MRF

Banking 29.0 ICICI Bank,

Axis Bank,

SBI, HDFC BankCap Goods 11.0 L&T, IVRCL,

& Infra LMW

FMCG 3.0 ITC

Hotels 3.0 Taj GVK

Media 3.0 Jagran Prakashan

Metals 12.0 Tata Steel, Hindalco,

Tata Sponge

Oil & Gas 12.0 Reliance Industries

Pharma 3.0 Lupin

Software 12.0 Infosys, TCS, Mphasis

Others 6.0 Greenply,

United Phosphrus

Top Picks

Company CMP (`) TP (`)

LLLLLarge Caparge Caparge Caparge Caparge Cap

Axis Bank 1,116 1,555

ICICI Bank 881 1,193

Infosys 2,264 3,200

L&T 1,621 1,903

Lupin 471 593

Mphasis 358 420

RIL 789 1,099

Satyam 76 89

Tata Steel 495 614United Phosphorus 144 208

Mid CapMid CapMid CapMid CapMid Cap

Finolex Cables 40 59

Greenply 192 311

Jagran Prakashan 109 148

Relaxo 319 399

Tata Sponge 303 429


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Market Strategy

September 2011 Please refer to important disclosures at the end of this report. 2

Exhibit 1: US GDP growth continues to be tepid

Source: Bloomberg, Angel Research

(10.0)

(8.0)

(6.0)

(4.0)

(2.0)

-

2.0

4.0

6.0

Dec

-06

Jun

-07

Dec

-07

Jun

-08

Dec

-08

Jun

-09

Dec

-09

Jun

-10

Dec

-10

Jun

-11

(%)

India likely to remain resilient amid the global slowdown:India likely to remain resilient amid the global slowdown:India likely to remain resilient amid the global slowdown:India likely to remain resilient amid the global slowdown:India likely to remain resilient amid the global slowdown: In

our view, India is relatively better placed to withstand the weakerglobal macroeconomic scenario due to its lower dependence

on exports (exports to GDP of ~20% vs. ~40% for peers) and

benefit of lower commodity and energy prices. A recent report

by global rating agency Fitch titled 'What if the US falls back into

recession?' also finds that India is going to be amongst the least

impacted countries if the US falls back into recession as the impact

of the exposure to US will be offset by the benefits of lower oil prices.

Exhibit 3: India has a lower dependence on exports

Source: World Bank, Angel Research; Note: Data for 2009

CountryCountryCountryCountryCountry Exports as a % of GDPExports as a % of GDPExports as a % of GDPExports as a % of GDPExports as a % of GDP

Brazil 11.1

India 19.6

Indonesia 24.1

China 26.7

South Africa 27.3

Russian Federation 27.7

Mexico 27.8

Korea, Rep. 49.9

Thailand 68.4

Malaysia 96.4

India: Relatively better placed amid global downturn

Economic recovery in the US continues to be weak:Economic recovery in the US continues to be weak:Economic recovery in the US continues to be weak:Economic recovery in the US continues to be weak:Economic recovery in the US continues to be weak: The recent

US GDP growth data, though better than the dismal 0.4%

registered in 4QFY2011, was still considerably lower at 1.0%

(3.8% recorded in 1QFY2011). US Fed in its recent meeting

decided to keep interest rates at exceptionally low levels till at

least mid-2013, which is likely to be favourable for flows into

emerging markets. Economies of Eurozone countries also

continue to face headwinds due to issues regarding sovereign

debt crisis. In our view, there are structural issues facing the

Eurozone due to the inherent conflict between common monetary

policy and independent fiscal policies of member countries.

Exhibit 2: India likely to be resilient amid slowdown

Source: Fitch, Angel Research

Country (%) Slowdown vs. baseline GDP forecastCountry (%) Slowdown vs. baseline GDP forecastCountry (%) Slowdown vs. baseline GDP forecastCountry (%) Slowdown vs. baseline GDP forecastCountry (%) Slowdown vs. baseline GDP forecast

CY11ECY11ECY11ECY11ECY11E CY12ECY12ECY12ECY12ECY12E CY13ECY13ECY13ECY13ECY13E CY11ECY11ECY11ECY11ECY11E CY12ECY12ECY12ECY12ECY12E CY13ECY13ECY13ECY13ECY13E

Brazil (0.3) (0.3) (0.5) 3.7 4.2 4.5

Russia (0.1) (1.5) (1.9) 4.4 2.5 2.1

India (0.1) (0.4) 0.2 7.6 7.8 8.9

China (0.1) (1.5) (1.1) 8.6 7.0 6.9

Singapore (0.2) (2.4) (1.5) 5.8 3.1 4.5

Thailand (0.1) (1.0) (1.1) 3.9 3.5 3.5

Hong Kong (0.1) (1.2) (0.8) 6.0 3.8 4.3

Indonesia (0.1) (0.7) (0.6) 6.1 5.6 5.9

US (0.8) (2.9) (1.4) 1.0 (0.6) 1.5

Euro area - (0.4) (0.3) 1.7 1.4 1.8Japan (0.1) (0.5) (0.5) 0.4 2.2 0.8

UK - (0.5) (0.5) 1.4 1.2 1.6

Inflation expected to moderate, leading to end of

the monetary tightening cycle

Slowdown in global growth likely to keep commodity and energySlowdown in global growth likely to keep commodity and energySlowdown in global growth likely to keep commodity and energySlowdown in global growth likely to keep commodity and energySlowdown in global growth likely to keep commodity and energy

prices under pressure - Materially positive for the Indianprices under pressure - Materially positive for the Indianprices under pressure - Materially positive for the Indianprices under pressure - Materially positive for the Indianprices under pressure - Materially positive for the Indian

economy:economy:economy:economy:economy: Fears of a double-dip recession in the US, sovereign

debt crisis concerns in Eurozone countries and the overall

expected slower global growth had cooled off commodity and

energy prices. During August 2011, the Reuters CRB index had

come off 2011 YTD peaks by ~15% and WTI crude oil prices

had declined substantially by ~30% from CY2011 peak.

However, with the Federal Reserve keeping the door open for

further quantitative easing (QE) in its September meet, prices

have clawed back a bit over the last week. However, with rising

deficit and the failure of the first two rounds of QE in stimulating

economic growth, we do not expect further QE measures from

the Fed, and even if it goes for these measures, the quantum is

likely to be relatively smaller.

Rising global growth concerns and declining fiscal stimulus

measures in developed economies (on concerns of expanding

fiscal deficits and unsustainable public debt to GDP) are likely to

keep commodity and energy prices in check at least in the short

term. Even in the latest meet of the US Federal Reserve at the

Jackson Hole, the Chairman abstained from adopting further

quantitative easing measures despite signs of further weakness

in the economy. Lower prices are expected to be materially positive

for the Indian economy, as they will aid in a) reducing fiscal

deficit, b) cooling inflationary pressures and c) putting an end to

the prolonged monetary tightening stance of the RBI.


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Market Strategy


Exhibit 4: Reuters CRB Index off peaks


300

320

340

360

380

Jan

-11

Fe

b-1

1

Mar-

11

Apr-

11

May-1

1

Jun

-11

Jul-11

Au

g-1

1

Reuters CRB Index

Exhibit 5: WTI crude prices ruling at lower levels


70

80

90

100

110

120

Jan

-11

Fe

b-1

1

Mar-

11

Apr-

11

May-1

1

Jun

-11

Jul-11

Au

g-1

1

Sep

-11

WTI Crude Futures (US$/bl)

Slower domestic growth may also prompt an end to monetarySlower domestic growth may also prompt an end to monetarySlower domestic growth may also prompt an end to monetarySlower domestic growth may also prompt an end to monetarySlower domestic growth may also prompt an end to monetary

tightening:tightening:tightening:tightening:tightening: Apart from reduced inflationary pressures, the

slowdown in domestic growth and heightened risks in the global

macro environment are expected to lead to an end to the

monetary policy tightening stance. Domestic growth has slowed

considerably, as evident from slowing GDP growth rates, tepid

IIP growth, moderating growth in quarterly gross fixed capital

formation and declining vehicle sales and cement dispatches

growth rates. Also, liquidity conditions in the system have eased

off considerably, with deposit mobilisation gaining strong traction

and muted credit offtake. Credit sanctions have also slackened

substantially in the recent months. India's manufacturing PMI

has slipped to a 29-month low of 52.6 during August 2011.

Although recent indications from the RBI suggest another 25bp

hike in the repo rate in the upcoming monetary policy review,

there is an increasing likelihood, due to the above-mentioned

reasons, that the RBI may pause after that hike.

Exhibit 6: GDP growth slows to lowest in six quarters

Source: MOSPI, Angel Research

4.0

6.0

8.0

10.0

3QFY07

4QFY07

1QFY08

2QFY08

3QFY08

4QFY08

1QFY09

2QFY09

3QFY09

4QFY09

1QFY10

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

Exhibit 7: IIP data continues to be tepid

Source: MOSPI, Angel Research

WTI Crude (US$/bl)

70

80

90

100

110

120

Jan-1

1

Feb

-11

Mar-11

Apr-11

May-1

1

Jun-1

1

Jul-11

Aug-1

1

Exhibit 8: Mfg. PMI moderates for forth month in a row


India - Mfg PMI

55.1

57.258.4

56.7 56.857.9 57.9 58.0 57.5

55.3

53.652.6

45.0

50.0

55.0

60.0

Sep

-10

Oc

t-10

Nov-1

0

Dec

-10

Jan

-11

Fe

b-1

1

Mar-

11

Apr-

11

May-1

1

Jun

-11

Jul-11

Au

g-1

1

Exhibit 9: Services PMI tumbles to lowest level since Jun09


55.6 56.2

60.1

57.7 58.1

60.258.8 59.2

55.0

56.1

58.2

53.8

46.0

50.0

54.0

58.0

62.0

Sep

-10

Oc

t-10

Nov-1

0

Dec

-10

Jan

-11

Fe

b-1

1

Mar-

11

Apr-

11

May-1

1

Jun

-11

Jul-11

Au

g-1

1

India Services PMI

Exhibit 10: PV sales growth in negative territory


(60.0)

(40.0)

(20.0)

-

20.0

40.0

60.0

80.0100.0

120.0

Apr-

99

Nov-9

9

Jun

-00

Jan

-01

Au

g-0

1

Mar-

02

Oc

t-02

May-0

3

Dec

-03

Jul-04

Fe

b-0

5

Sep

-05

Apr-

06

Nov-0

6

Jun

-07

Jan

-08

Au

g-0

8

Mar-

09

Oc

t-09

May-1

0

Dec

-10

Jul-11

Domestic Passenger Vehicle Sales yoy growth (%)


4/22

Market Strategy


Hence, we believe that we are very close to the peak of the current

interest rate cycle due to a) expected moderation in domestic

inflation on the back of good monsoons and easing off of global

commodity and energy prices due to slowing global growth,

sovereign debt crisis concerns in the Eurozone and possibility of

a double-dip recession in the US and b) slowing domestic growthas evident from considerable moderation in GDP and IIP growth

data, slowing vehicle and cement sales, sharp moderation in

credit offtake and moderating pace of gross fixed capital

formation. The latest 1QFY2012 GDP growth showed

continuance of the moderating trend in growth. Also, the lagged

effects of prolonged monetary tightening are yet to flow through

fully, in our view.

Interest rates have risen sharply over the past one year

(250-300bp hike in base rate). Higher interest rates have slowed

down the pace of capital formation and have impacted earnings

growth of corporates. In fact, the RBI's effort to moderate inflation

by cutting demand side pressures seems to have started taking

effect, as evident from the decline in yoy growth in private

consumption expenditure to its lowest since 4QFY2009 at 6.3%

in 1QFY2012. Accordingly, we believe that we are very close to

the peak of the current interest rate cycle, which should bode

well for the overall market and especially for interest rate sensitive sectors.

Valuations attractive

Indian markets have fallen by ~20% in CY2011YTD and have

underperformed emerging market peers by ~8% and global

peers by ~11% due to concerns of higher inflation and interest

rates. The earnings growth trajectory for Indian corporates

remains moderate despite higher raw-material costs and interest

rates hurting margins over the past few quarters. While FY2012

earnings growth is likely to be modest, cooling inflation and

interest rates should underpin healthier growth in FY2013. We

expect Sensex companies to deliver EPS growth of 13.0% in

FY2012 and improve further to 19.1% in FY2013, translating

into a reasonable 17.0% CAGR over FY2011-13E. Earningsgrowth is expected to be broad-based, with higher contribution

from banking stocks. Oil and gas, metals and IT stocks are

expected to be the other major contributors to growth.

Based on one-year forward earnings, the Sensex is trading at

attractive valuations of 13.5x (12.3x based on FY2013E earnings)

vis--vis its last five-year average of 15.7x. In fact, the valuations

are just ~20% higher than the valuations prevailing post-Lehman

crash, when the entire global economy was in turmoil and

constrained by severe credit crisis; and let us not forget that from

those levels markets rallied more than 100%. However, thescenario is not that gloomy in the current environment, which

makes the current valuations attractive. We value the Sensex at

a conservative 14x target P/E multiple to arrive at a Sensex target

of 19,100. We maintain our positive stance on Indian equities

considering their relative better positioning globally, reasonable

earnings growth trajectory and attractive valuations vis--vis their

structurally positive outlook.

Exhibit 11: India's underperformance vs. world equities


70

80

90

100

110

Jan-1

1

Feb

-11

Mar-11

Apr-11

May-1

1

Jun-1

1

Jul-11

Aug-1

1

MSCI - India MSCI - EM MSCI - World

Exhibit 12: Sensex EPS expected to grow by 17% CAGR over FY11-13

Source: Angel Research

834

1,014

1,146

1,364

400

600

800

1,000

1,200

1,400

FY2010 FY2011 FY2012E FY2013E

(`)

21.6%

growth

13.0%

growth 19

.1%gro

wth

Exhibit 13: Sensex one-year forward P/E

Source: Angel Research

0.0

5.0

10.0

15.0

20.0

25.0

30.0

M ar-04 M ar-05 M ar-06 M ar-07 M ar-08 M ar-09 M ar-10 M ar-11

(x

)

Sensex 1 -yr f wd P/E Averag e P /E

Exhibit 14: Earnings yield vs. bond yield


0.0

2.0

4.0

6.0

8.0

10.0

12.0

Apr-04 Apr-0 5 Apr-0 6 Apr-0 7 Apr-0 8 Apr-0 9 Apr-1 0 Apr-1 1

(%)

Bond Yield Earnings Yield


5/22

Market Strategy


BSE 100 Angel

Sector Company CMP (`) Target Price (`) Weightage (%) Weightage (%) Stance

Auto & AncillariesAuto & AncillariesAuto & AncillariesAuto & AncillariesAuto & Ancillaries 7.07.07.07.07.0 6.06.06.06.06.0 UnderweightUnderweightUnderweightUnderweightUnderweightAshok Leyland 26 31 0.2 3.0 Overweight

MRF 6,947 8,710 0.0 3.0 Overweight

BFSIBFSIBFSIBFSIBFSI 27.227.227.227.227.2 29.029.029.029.029.0 OverweightOverweightOverweightOverweightOverweight

ICICI Bank 881 1,193 5.5 12.0 Overweight

Axis Bank 1,116 1,555 1.7 9.0 Overweight

SBI 2,000 2,547 3.2 5.0 Overweight

HDFC Bank 469 519 4.5 3.0 Underweight

Capital GoodsCapital GoodsCapital GoodsCapital GoodsCapital Goods 9.59.59.59.59.5 11.011.011.011.011.0 OverweightOverweightOverweightOverweightOverweight

& Infrastructure L&T 1,621 1,903 4.5 5.0 OverweightIVRCL Infra 38 64 0.0 3.0 Overweight

LMW 2,032 2,780 0.0 3.0 Overweight

CementCementCementCementCement 2.22.22.22.22.2 0.00.00.00.00.0 UnderweightUnderweightUnderweightUnderweightUnderweight

FMCGFMCGFMCGFMCGFMCG 10.010.010.010.010.0 3.03.03.03.03.0 UnderweightUnderweightUnderweightUnderweightUnderweight

ITC 203 205 5.3 3.0 Underweight

HotelsHotelsHotelsHotelsHotels 0.00.00.00.00.0 3.03.03.03.03.0 OverweightOverweightOverweightOverweightOverweight

Taj GVK 92 140 0.0 3.0 Overweight

ITITITITIT 10.510.510.510.510.5 12.012.012.012.012.0 OverweightOverweightOverweightOverweightOverweight

Infosys 2,264 3,200 5.9 5.0 Underweight

TCS 1,028 1,368 2.9 4.0 Overweight

Mphasis 358 420 0.0 3.0 Overweight

MediaMediaMediaMediaMedia 0.40.40.40.40.4 3.03.03.03.03.0 OverweightOverweightOverweightOverweightOverweight

Jagran Prakashan 109 148 0.0 3.0 Overweight

MetalsMetalsMetalsMetalsMetals 7.87.87.87.87.8 12.012.012.012.012.0 OverweightOverweightOverweightOverweightOverweight

Tata Steel 495 614 1.6 5.0 Overweight

Hindalco Inds 153 196 1.0 4.0 Overweight

Tata Sponge 303 429 0.0 3.0 Overweight

Oil & GasOil & GasOil & GasOil & GasOil & Gas 12.212.212.212.212.2 12.012.012.012.012.0 EqualweightEqualweightEqualweightEqualweightEqualweight

Reliance Industries 789 1,099 6.9 12.0 Overweight

PharmaPharmaPharmaPharmaPharma 4.64.64.64.64.6 3.03.03.03.03.0 UnderweightUnderweightUnderweightUnderweightUnderweight

Lupin 471 593 0.6 3.0 Overweight

PPPPPowerowerowerowerower 4.04.04.04.04.0 0.00.00.00.00.0 UnderweightUnderweightUnderweightUnderweightUnderweight

Real EstateReal EstateReal EstateReal EstateReal Estate 0.70.70.70.70.7 0.00.00.00.00.0 UnderweightUnderweightUnderweightUnderweightUnderweight

TTTTTelecomelecomelecomelecomelecom 3.53.53.53.53.5 0.00.00.00.00.0 UnderweightUnderweightUnderweightUnderweightUnderweight

OthersOthersOthersOthersOthers 0.60.60.60.60.6 6.06.06.06.06.0 OverweightOverweightOverweightOverweightOverweight

Greenply 192 311 0.0 3.0 Overweight

United Phosporus 144 208 0.0 3.0 Overweight

Angel Model Portfolio


6/22

Market Strategy


Top Picks


7/22

Market Strategy


Axis Bank has increased its CASA market share multi-fold over the last eight years

(4.2% as of FY2011) on the back of robust branch and ATM network expansion

(400 branches opened in FY2011 itself). Annual addition of 250+ branches hereon

is expected to lead to a 30-50bp increment in CASA market share every year.

Fee income contribution across a spectrum of services has been a meaningful

2.0% of assets (almost twice the level in PSBs) over FY2009-11.

We expect Axis Bank to raise capital in the next 12-18 months. (Axis Bank had last

raised capital in 2QFY2010, when its tier-I CAR was 9.4%). Dilution is likely to be

book-accretive and will aid in further enhancing the bank's credit market share

going forward.

Axis Bank is trading at 1.8x FY2013E ABV (~43.4% discount to HDFC Bank). The

bank's ALM position vis--vis HDFC Bank is currently a disadvantage; however,

with the interest rate cycle close to its peak, in our view, the bank will also benefit

more once interest rates cool off a bit in CY2012. Hence, we maintain our Buywe maintain our Buywe maintain our Buywe maintain our Buywe maintain our Buy

view on the stock with a target price ofview on the stock with a target price ofview on the stock with a target price ofview on the stock with a target price ofview on the stock with a target price of `````1,555.1,555.1,555.1,555.1,555.

Axis Bank (CMP: `1,116/ TP: `1,555/ Upside: 39%)

Y/EY/EY/EY/EY/E Op Inc.Op Inc.Op Inc.Op Inc.Op Inc. NIMNIMNIMNIMNIM PPPPPAAAAATTTTT EPSEPSEPSEPSEPS ABABABABABVVVVV RoARoARoARoARoA RoERoERoERoERoE P/EP/EP/EP/EP/E P/ABP/ABP/ABP/ABP/ABVVVVV

MarchMarchMarchMarchMarch (((((````` cr)cr)cr)cr)cr) (%)(%)(%)(%)(%) (((((````` cr)cr)cr)cr)cr) (((((`````))))) (((((`````))))) (%)(%)(%)(%)(%) (%)(%)(%)(%)(%) (x)(x)(x)(x)(x) (x)(x)(x)(x)(x)

FY2012E 12,951 2.9 4,112 96.9 529.0 1.5 19.8 11.5 2.1

FY2013E 16,186 2.9 5,120 120.7 621.8 1.5 21.0 9.2 1.8

ICICI Bank's substantial branch expansion (from 955 branches at the end of

3QFY2008 to 2,533 branches as of 1QFY2012) and strong capital adequacy at

19.6% (Tier-I at 13.4%) have positioned it to gain CASA and credit market share,

respectively. During FY2011, the bank improved its market share of savings deposits

by 10bp over FY2010, capturing a substantial 5.8% incremental market share.

The bank has been able to increase its CASA ratio to 45% as of FY2011 and,

contrary to the overall trend in the sector, we expect this favourable change in the

bank's liability mix to improve its NIM to ~2.7% by FY2013.

The bank's asset quality continues to show further improvement, with a declining

trend in additions to gross as well as net NPAs. We expect the reduction in risk

profile of advances (and the consequent lower yield on advances) to result in a

~90bp decline in NPA provisioning costs by 2013E over FY2011.

The stock is trading at attractive valuations of 1.6x FY2013E P/ABV. Hence,

we maintain our Buy view on the stock with a target price ofwe maintain our Buy view on the stock with a target price ofwe maintain our Buy view on the stock with a target price ofwe maintain our Buy view on the stock with a target price ofwe maintain our Buy view on the stock with a target price of `````1,1931,1931,1931,1931,193, valuing the

core bank at 2.3x FY2013E P/ABV and assigning a value of `191 to its subsidiaries.

ICICI Bank (CMP:`

881/ TP:`

1,193/ Upside: 35%)

Y/EY/EY/EY/EY/E Op Inc.Op Inc.Op Inc.Op Inc.Op Inc. NIMNIMNIMNIMNIM PPPPPAAAAATTTTT EPSEPSEPSEPSEPS ABABABABABVVVVV RoARoARoARoARoA RoERoERoERoERoE P/EP/EP/EP/EP/E P/ABP/ABP/ABP/ABP/ABVVVVV

MarchMarchMarchMarchMarch (((((````` cr)cr)cr)cr)cr) (%)(%)(%)(%)(%) (((((````` cr)cr)cr)cr)cr) (((((`````))))) (((((`````))))) (%)(%)(%)(%)(%) (%)(%)(%)(%)(%) (x)(x)(x)(x)(x) (x)(x)(x)(x)(x)

FY2012E 18,142 2.6 6,397 55.5 509.4 1.4 13.7 15.9 1.7

FY2013E 22,847 2.7 8,146 70.7 549.6 1.5 16.0 12.5 1.6


8/22

Market Strategy


L&T (CMP: `1,621/ TP: `1,903/ Upside:17%)

PPPPProxy to India's infra story:roxy to India's infra story:roxy to India's infra story:roxy to India's infra story:roxy to India's infra story: L&T has an order book of >`1.3tn, lending good

revenue visibility. L&T's strong balance sheet, a sound execution engine, wide array

of capabilities, integrated operations tailored to suit India's infrastructure growth

story and multiple, recurring value-unlocking triggers over the medium term lead

us to place faith in this default India infrastructure story.

WWWWWell-ell-ell-ell-ell-capitalised balance sheet funding the expansion:capitalised balance sheet funding the expansion:capitalised balance sheet funding the expansion:capitalised balance sheet funding the expansion:capitalised balance sheet funding the expansion: L&T had a well-capitalised

balance sheet at a debt-equity ratio of 0.3x as of FY2011, despite having a strong

portfolio of assets and having invested in future growth areas. We believe the key

factors for the same are 1) high margins and 2) better working capital management.

Buy L&T with an SOBuy L&T with an SOBuy L&T with an SOBuy L&T with an SOBuy L&T with an SOTP TP ofTP TP ofTP TP ofTP TP ofTP TP of `````1,903:1,903:1,903:1,903:1,903: L&T has outperformed the BSE Sensex by

~10.2% over the last six months on the back of 1) strong quarterly performances;

and 2) robust guidance for FY2012 for both revenue and order booking. Further,

we have discounted margin pressure in our numbers. Ascribing separate values to

its parent business on a P/E basis and investments in subsidiaries on P/E, P/BV and

mcap basis, our target price works out to `1,903, which provides 17.4% upside

from current levels. Hence, we recommend Buy on the stock.we recommend Buy on the stock.we recommend Buy on the stock.we recommend Buy on the stock.we recommend Buy on the stock.

Y/EY/EY/EY/EY/E SalesSalesSalesSalesSales OPMOPMOPMOPMOPM PPPPPAAAAATTTTT EPSEPSEPSEPSEPS RoERoERoERoERoE P/EP/EP/EP/EP/E P/BP/BP/BP/BP/BVVVVV EV/EBITDEV/EBITDEV/EBITDEV/EBITDEV/EBITDAAAAA EV/SalesEV/SalesEV/SalesEV/SalesEV/Sales

MarchMarchMarchMarchMarch (((((````` cr)cr)cr)cr)cr) (%)(%)(%)(%)(%) (((((````` cr)cr)cr)cr)cr) (((((`````))))) (((((%%%%%))))) (x)(x)(x)(x)(x) (x)(x)(x)(x)(x) (x)(x)(x)(x)(x) (x)(x)(x)(x)(x)

FY2012E 52,765 12.0 3,965 64.9 16.9 25.0 4.0 16.9 2.0

FY2013E 66,551 12.0 4,885 80.0 18.1 20.3 3.4 13.7 1.6

Infosys strongly focuses on consulting and package implementation services (~25%

of revenue). Globally, license sales for SAP and Oracle services are surging, leading

to higher implementation opportunities for offshore vendors such as Infosys. Further,

key IT spend-thrift verticals such as BFSI (35.4%), manufacturing (20.3%) and retailand CPG (16%) would continue to be the primary growth drivers for the company.

We expect Infosys to record a 21% CAGR in USD revenue over FY2011-13E, with

CAGR in INR revenue, EBITDA and PAT at 19.1%, 15.3% and 15.7%, respectively.

The stock has corrected significantly YTD2011 just on concerns of management

restructuring, which are unwarranted given the company's strong domain focus

with superior clientele, robust business model with the highest margin in the Indian

IT industry and healthy balance sheet with cash of US$3.9bn (1QFY2012). Currently,

the stock is trading at cheap valuations of just 14.2x FY2013E EPS of `159.9 i.e.,

only at ~17% premium to BSE Sensex vs. its five and two-year historical premiums

of 20% and 27%, respectively.WWWWWe value the company at 20x FY2013 EPS i.e., ate value the company at 20x FY2013 EPS i.e., ate value the company at 20x FY2013 EPS i.e., ate value the company at 20x FY2013 EPS i.e., ate value the company at 20x FY2013 EPS i.e., at

`````3,200 and recommend it as one of our top picks with a Buy rating3,200 and recommend it as one of our top picks with a Buy rating3,200 and recommend it as one of our top picks with a Buy rating3,200 and recommend it as one of our top picks with a Buy rating3,200 and recommend it as one of our top picks with a Buy rating.....

Infosys (CMP: `2,264/ TP: `3,200/ Upside: 41%)



FY2012E 32,497 30.9 7,819 136.9 23.6 16.5 3.9 10.9 3.3

FY2013E 39,071 30.6 9,136 159.9 22.7 14.2 3.2 8.7 2.7


9/22

Market Strategy


Lupin is amongst the highest filers in the Indian pharmaceuticals industry. As of

FY2011, the companys cumulative filings stood at 148, of which 48 have been

approved. Lupin plans to launch 10 products in the US in FY2012 and another 80

products over the next three years. Overall, we expect the US market to post a

CAGR of 28.8% over FY2011-13E.

In the oral contraceptive (OC) segment, Lupin has filed 22 ANDAs and expects to

get approvals from 2HFY2012. As per management, the OC segment is expected

to contribute US$100mn to the company's top line over the next 2-3 years.

Lupin continues to make strides in the Indian market. Currently, Lupin ranks No.5,

climbing up from being No.11 six years ago. Lupin has been the fastest growing

company among the top-5 companies in the domestic formulation space, registering

a strong CAGR of 20% over the last three years.

Management has given a revenue guidance of US$3bn by FY2013-14. We expect

Lupin's net sales to grow at a 20.4% CAGR to `8,272cr and earnings to grow at a

24.0% CAGR to `29.7/share over FY2011-13E. Currently, the stock is trading at21.1x and 15.9x FY2012E and FY2013E earnings, respectively. Based on the

above-mentioned triggers, we maintain our positive outlook on the company andwe maintain our positive outlook on the company andwe maintain our positive outlook on the company andwe maintain our positive outlook on the company andwe maintain our positive outlook on the company and

recommend a Buy rating on the stock with a target price ofrecommend a Buy rating on the stock with a target price ofrecommend a Buy rating on the stock with a target price ofrecommend a Buy rating on the stock with a target price ofrecommend a Buy rating on the stock with a target price of `````593.593.593.593.593.

Lupin (CMP: `471/ TP: `593/ Upside: 26%)



FY2012E 6,817 18.3 997 22.4 28.2 21.1 5.6 17.6 3.2

FY2013E 8,272 19.7 1,324 29.7 30.8 15.9 4.4 13.2 2.6

Mphasis is witnessing modest growth from the non-HP channel business. The

company's ITO business is witnessing good growth, with open billable position

standing at 600 in 3QFY2011. In fact, this business segment has grown at a

scorching pace of 9.7% CQGR over 1QFY2010-3QFY2011 and is expected to

continue as a growth driver for the company.

The company is looking at an inorganic strategy to supplement its growth further.

Recently, management acquired Wyde, an international software vendor and creator

of Wynsure - an insurance policy administration IP solution - to scale up its insurance

portfolio. This acquisition is expected to be EBITDA accretive, as Wyde enjoys EBITDA

margin of 18%, higher than the company's EBITDA margin.

Going forward, management expects the direct channel (33% to revenue) and HP

non-enterprise solution business (which is currently ~5% of revenue from HP channel)

to drive growth, whereas the HP-ES business is expected to remain sluggish. We

expect the company to record a revenue CAGR of 10% over FY2011E-13E.

WWWWWe value teh company at 11.5x FY2013E (October ending) EPS ofe value teh company at 11.5x FY2013E (October ending) EPS ofe value teh company at 11.5x FY2013E (October ending) EPS ofe value teh company at 11.5x FY2013E (October ending) EPS ofe value teh company at 11.5x FY2013E (October ending) EPS of `````36.4, which36.4, which36.4, which36.4, which36.4, which

gives us a target price ofgives us a target price ofgives us a target price ofgives us a target price ofgives us a target price of `````420 and recommend a Buy rating on the stock.420 and recommend a Buy rating on the stock.420 and recommend a Buy rating on the stock.420 and recommend a Buy rating on the stock.420 and recommend a Buy rating on the stock.

Mphasis (CMP: `358/ TP: `420/ Upside: 18%)


Oct.Oct.Oct.Oct.Oct. (((((````` cr)cr)cr)cr)cr) (%)(%)(%)(%)(%) (((((````` cr)cr)cr)cr)cr) (((((`````))))) (((((%%%%%))))) (x)(x)(x)(x)(x) (x)(x)(x)(x)(x) (x)(x)(x)(x)(x) (x)(x)(x)(x)(x)

FY2012E 5,485 16.2 707 33.7 15.3 10.6 1.6 5.7 0.9

FY2013E 5,924 14.5 719 36.4 13.6 9.8 1.4 5.1 0.7


10/22

Market Strategy


RIL reported robust refining margin of US$9.8/bbl in 1QFY2012. With the start of

its FCCU, we expect the company to report robust refining margins in the coming

quarters. Similarly, on the petchem side, we do not expect margins to fall below the

current level consequent to higher demand from emerging economies and recovery

in OECD economies.

The upstream segment still has a significant upside in store, considering the huge

untapped resources. Timely ramp-up in producing fields would bring into picture

other prospective basins also. Although RIL is producing natural gas below its

potential 80mmscmd from KG-D6 due to constraints over reservoir pressure,

we are confident that it will ramp up its production over the medium term with the

help of BPs technical expertise.

RIL has been eyeing inorganic routes for diversifying its asset portfolio by entering

into newer ventures on the back of significant cash pile and treasury stocks. Initiatives

such as shale gas acquisitions, with in-place reserves of ~12TCF, could prove to be

a potential trigger for the stock in the long term.

The stock is currently trading at P/E of 11.6x FY2012E and 9.9x FY2013E. On a

P/B basis, the stock trades at 1.4x FY2012E and 1.2x FY2013E earnings.

WWWWWe maintain our Buy view on the stock with a target price ofe maintain our Buy view on the stock with a target price ofe maintain our Buy view on the stock with a target price ofe maintain our Buy view on the stock with a target price ofe maintain our Buy view on the stock with a target price of `````1,0991,0991,0991,0991,099.....

RIL (CMP: `789/ TP: `1,099/ Upside:39%)



FY2012E 310,994 13.2 22,241 68.0 13.6 11.6 1.4 7.1 0.9

FY2013E 314,718 14.9 26,151 79.9 14.1 9.9 1.2 5.5 0.8

Mahindra Satyam (Satyam) has enterprise business solutions (EBS) (~40% of

revenue) and manufacturing (~32% of revenue) as its anchor service line and

vertical, respectively, which are showing strong traction. Hence, we expect Satyam

to grow at a revenue CAGR of 19.4%, in-line with its peers, over FY2011-13E.

Satyam has adequate margin levers such as 1) employee pyramid rationalisation,

2) strong volume growth expected on the back of a strengthening deal pipeline

expected to improve utilisations to 75% by FY2013 from the current 74%, 3) better

pricing on the back of improvement in business mix and 4) current SGA at 20.5%of sales, which can be brought down to 19.0% by FY2013.

We expect Satyam to maintain its growth momentum as recorded over the past few

quarters and grow at rates comparable to its peers at a 19.4% CAGR in USD

revenue and a 32.5% CAGR in earnings over FY2011-13E. At the CMP of`76, the

stock is trading at 10.2x FY2013E EPS of `7.4 i.e., at a PEG of 0.31x. We value the

stock at 40% discount to Infosys' target FY2013 PE i.e., 12.0x.WWWWWe recommende recommende recommende recommende recommend

Satyam as one of our top picks with a target price ofSatyam as one of our top picks with a target price ofSatyam as one of our top picks with a target price ofSatyam as one of our top picks with a target price ofSatyam as one of our top picks with a target price of `````89.89.89.89.89.

Mahindra Satyam (CMP: `76/ TP: `89/ Upside:18%)



FY2012E 6,115 14.3 803 6.8 14.8 11.1 1.6 7.9 1.1

FY2013E 7,120 15.0 871 7.4 13.8 10.2 1.4 5.9 0.9


11/22

Market Strategy


Tata Steel is expanding its capacity by 2.9mn tonnes in Jamshedpur through

brownfield expansion. The project is expected to be commissioned by the end of

FY2012E. From FY2013E, the proportion of sales volume from India, which is a

high-margin centre, is expected to increase substantially, thereby leading tosignificant earnings accretion. We expect sales volume to register a 15.6% CAGR

over FY2011-13E.

Tata Steel is in the process of developing a coking coal mine in Mozambique and an

iron ore mine in Canada to enhance Tata Steel Europe's (TSE) raw-material integration

levels. The projects are expected to be commissioned by October 2011 with lower

offtake initially; full benefit is expected to accrue in FY2013E. However, we have not

factored the savings in our estimates, indicating an upside to our target price.

The company has undertaken various cost-reduction initiatives and restructuring

measures at TSE, which would lead to savings of US$375mn annually. We expect

the current normalised EBITDA/tonne of US$50 at TSE to increase to US$75 on theback of these initiatives in FY2013E.

The stock is currently trading at inexpensive valuations of 5.7x FY2012E and 4.8x

FY2013E EV/EBITDA. On a P/B basis, the stock trades at 1.0x FY2012E and 0.9x

FY2013E earnings.WWWWWe maintain our Buy view with a taget price ofe maintain our Buy view with a taget price ofe maintain our Buy view with a taget price ofe maintain our Buy view with a taget price ofe maintain our Buy view with a taget price of `````614 .614 .614 .614 .614 .

Tata Steel (CMP: `495/ TP: `614/ Upside:24%)



FY2012E 130,317 12.8 6,786 69.5 26.1 7.1 1.0 5.7 0.4

FY2013E 138,260 13.9 7,699 78.8 15.4 6.3 0.9 4.8 0.3

United Phosphorus (UPL) figures among the top-5 generic agrichemical players in

the world, with a presence across major markets such as the US, EU, Latin America

and India.

Total off-patent market is worth US$29bn, of which a mere US$16bn is currently

being catered by generic players. Furthermore, 61% of the same is controlled by

the five largest generic players, including UPL. Moreover, entry of new players is

also restricted, given the high entry barriers by way of high investments. Thus,

amidst this scenario and on account of having a low-cost base, we believe UPL

enjoys an edge over competition and is placed in a sweet spot to leverage the

upcoming opportunities in the global generic space.

Over FY2011-13E, we expect UPL to post a CAGR of 13% and 14% in sales and

PAT, respectively. At current valuations of 9.0x FY2013E EPS, the stock is attractively

valued vs. its global (10x) and domestic (17x) peers and historic average (15x).

WWWWWe maintain our Buy view on the stock with a target price ofe maintain our Buy view on the stock with a target price ofe maintain our Buy view on the stock with a target price ofe maintain our Buy view on the stock with a target price ofe maintain our Buy view on the stock with a target price of `````208.208.208.208.208.

United Phosphorous (CMP: `144/ TP: `208/ Upside:44%)



FY2012E 6,935 19.7 686 14.9 17.1 9.7 1.5 6.1 1.2

FY2013E 7,424 19.7 739 16.0 16.1 9.0 1.4 6.0 1.1


12/22

Market Strategy


Finolex Cables is poised for strong growth over the next few years, owing to entry

in the verticals of high tension (HT) and extra high voltage (EHV) cables and market

share expansion in the existing low tension (LT) cables segment.

The rapid ramp-up of production at the Roorkee plant has already started delivering

results. The proximity to the growing North Indian markets and tax benefits from

this plant are expected to boost the turnaround of the company. We expect the

companys profits to increase to `151cr in FY2013E from `87cr in FY2011.

Finolex Cables has registered substantial derivative losses over FY2009-11. The

companys derivative losses are expected to decline further going ahead.

By FY2013, these losses are estimated to decline to`13cr from `34cr in FY2011.

At the CMP, the stock is trading at attractive valuations of 4.0x FY2013E EPS and

0.6x FY2013E BV. We have valued the stock at P/E of 6.0x FY2013E EPS and

arrived at a target price of `59.WWWWWe have a Buy rating on the stock.e have a Buy rating on the stock.e have a Buy rating on the stock.e have a Buy rating on the stock.e have a Buy rating on the stock.

Finolex Cables (CMP: `40/ TP: `59/ Upside:47%)



FY2012E 2,332 8.7 121 7.9 15.8 5.1 0.7 2.6 0.2

FY2013E 2,584 8.8 151 9.9 17.1 4.0 0.6 1.9 0.2

Greenply Industries (GIL) is a leading plywood and laminates brand, supported byad spend as high as 4.0% of sales (around 10% of laminates revenue). The company

also has the largest distribution network of over 15,000 dealers in the industry.

GIL increased its laminates capacity by 88% in FY2010 and is witnessing strong

demand for its products. The company achieved 98% capacity utilisation in

1QFY2012 and ended FY2011 with 94% capacity utilisation. We expect utilisation

to further improve to 110% in FY2012, which will boost its revenue going ahead.

GIL forayed into the lucrative, high-growth MDF market in FY2011, with the largest

MDF plant in India (1,80,000m3/year capacity). The MDF opportunity is especially

huge as it constitutes 20% of wood panel consumption in India, while plywood

constitutes 80% the reverse holds true globally. In 4QFY2011, the segment reportedfirst-time revenue of around `32cr, which further improved to `46cr in 1QFY2012

due to higher utilisation, which increased to 49.3% for the quarter. We expect the

segment to achieve 45% capacity utilisation by FY2012, which would further bolster

the companys revenue and improve its margin.

Currently, the stock is trading at 4.9x FY2013E earnings, which is at the lower end

of its historical average of 4.3x-17.0x one-year forward EPS.WWWWWe maintain our Buye maintain our Buye maintain our Buye maintain our Buye maintain our Buy

rating on the stock with a target price ofrating on the stock with a target price ofrating on the stock with a target price ofrating on the stock with a target price ofrating on the stock with a target price of `````311.311.311.311.311.

Greenply Industries (CMP: `192/ TP: `311/ Upside: 62%)



FY2012E 1,426 12.5 69 28.4 19.3 6.8 1.2 5.5 0.7

FY2013E 1,574 13.0 95 38.8 21.7 4.9 1.0 4.4 0.6


13/22

Market Strategy


Jagran Prakashan (JPL) continues to remain the leader in UP (Indias largest state)

and stands at No. 2 in Bihar (the second-largest state), with overall readership of

~5.4cr and covering ~70% of Hindi speaking readers. During 1QFY2012, the

company successfully launched Punjabi Jagran (now JPL caters to five differentlanguages). JPL also launched the 11th edition of The Inquilab, the largest read

Urdu newspaper in UP and New Delhi, through its subsidiary Mid-Day Infomedia Ltd

during 1QFY2012. Further,City Plus launched four more editions, now totaling 30 editions.

We expect JPL to post a 9% CAGR in its top line over FY2011-13E, driven by the

~10% CAGR in advertising and a ~3% CAGR in circulation revenue. The other

businesses and MML are estimated to record a CAGR of ~11% and 13%,

respectively, over FY2011-13E on better traction. In terms of earnings, we expect

JPL to report a 10% CAGR over FY2011-13E, driven by top-line growth and various

cost-curtailment measures and improving profitability in its nascent businesses.

The underperformance of the stock and attractive valuations (at the CMP, the stock

trades at 13.5x FY2013E EPS) provide a good entry point for investors. Hence,

we maintain our Buy view with a revised target price ofwe maintain our Buy view with a revised target price ofwe maintain our Buy view with a revised target price ofwe maintain our Buy view with a revised target price ofwe maintain our Buy view with a revised target price of `````148148148148148, based on a

P/E multiple of 18x FY2013E (in-line with its historical valuations).

Jagran Prakashan (CMP: `109/ TP: `148/ Upside:36%)



FY2012E 1,339 29.4 229 7.2 33.2 15.0 4.8 8.4 2.5

FY2013E 1,453 29.5 255 8.1 34.4 13.5 4.5 7.7 2.3

Relaxo Footwears (CMP: `319/ TP: `399/ Upside: 25%)

Relaxo Footwears is estimated to report a 21.8% revenue CAGR, aided by a 16%

CAGR in volumes, leading to a 41.0% CAGR in net profit over FY2011-13E.

We expect the company's operating profit margin to improve by 158bp from 10.5%

in FY2011 to 12.1% in FY2013E on the back of an estimated price rise of 8% yoy

in FY2011 and increased proportion of higher-value brands such as Flite and

Sparx in the revenue mix.

Relaxo is now more focused on the branding of its high-value brands (Flite andSparx) and establishing its name in footwear other than Hawaii slippers. The

company has increased its advertisement expense by 55% to `20cr in FY2010

from `13cr in FY2009, which is expected to result in increased RoE of 24.2% in

FY2013E as compared to 19.8 in FY2011.

At `319, the stock is trading at attractive valuations of 10.4x and 7.2x for FY2012E

and FY2013E earnings, respectively. WWWWWe maintain our Buy view on the stock with ae maintain our Buy view on the stock with ae maintain our Buy view on the stock with ae maintain our Buy view on the stock with ae maintain our Buy view on the stock with a

target price totarget price totarget price totarget price totarget price to `````399, based on a target PE of 9x FY2013E earnings.399, based on a target PE of 9x FY2013E earnings.399, based on a target PE of 9x FY2013E earnings.399, based on a target PE of 9x FY2013E earnings.399, based on a target PE of 9x FY2013E earnings.



FY2012E 876 10.9 37 31 21.7 10.4 2.3 6.1 0.7

FY2013E 1027 12.1 53 44 24.2 7.2 1.7 4.6 0.6


14/22

Market Strategy


Tata Sponge Iron Ltd. (TSIL) is an associate company of Tata Steel, which holds a

39.7% stake in the company. TSIL is a leading manufacturer of sponge iron, which

is used as a raw material in steel manufacturing, with an installed capacity of

3,90,000mtpa and a 26MW captive power plant.

The company gets 100% supplies of iron ore from Tata Steel with a 20-25% discount

from market prices, thus leading to at least 5% higher margins from other

non-integrated sponge iron players.

TSIL has a 45% stake in Talcher coal block in Orissa with estimated reserves of

120mn tonnes for captive consumption. The company has deposited money for

the first phase of land acquisition with the Government of Orissa. Forest clearance

for the block is pending.

At the CMP of `303, the stock is trading at PE of 4.2x its FY2013E earnings and

P/B of 0.7x for FY2013E. The company is debt free with cash reserves of `299cr

and RoIC of 62.2% for FY2013E. WWWWWe maintain our Buy view on the stock with ae maintain our Buy view on the stock with ae maintain our Buy view on the stock with ae maintain our Buy view on the stock with ae maintain our Buy view on the stock with a

target price oftarget price oftarget price oftarget price oftarget price of `````429 and a target P/E of 6x for FY2013E429 and a target P/E of 6x for FY2013E429 and a target P/E of 6x for FY2013E429 and a target P/E of 6x for FY2013E429 and a target P/E of 6x for FY2013E.....

Tata Sponge Iron (CMP: `303/ TP: `429/ Upside: 42%)



FY2012E 813 20.5 109 71.0 66.2 4.3 0.8 1.2 0.2

FY2013E 820 20.8 110 71.5 62.2 4.2 0.7 0.8 0.2


15/22

Market Strategy


Stock Watch


16/22


17/22


18/22


19/22


20/22

May 2011 Please refer

PPPPPowerowerowerowerower

CESC Buy 299 383 3,758 4,453 4,817 24.5 23.8 42.3 44.8 7.1 6.7

GIPCL Buy 81 96 1,223 1,512 1,542 28.6 27.6 10.6 11.2 7.6 7.2

NTPC Buy 164 202 135,432 63,539 71,207 24.9 25.2 12.2 13.5 13.5 12.2

PTC India Neutral 73 - 2,146 11,109 13,430 2.0 1.9 6.5 7.1 11.2 10.2Real EstateReal EstateReal EstateReal EstateReal Estate

Anant Raj Buy 64 90 1,877 697 1,110 60.1 55.9 7.5 11.5 8.5 5.5

DLF Neutral 208 - 35,288 10,466 11,702 43.6 44.5 9.8 11.9 21.3 17.5

HDIL Buy 107 175 4,459 2,875 3,206 53.8 55.0 26.0 30.0 4.1 3.6

TTTTTelecomelecomelecomelecomelecom

Bharti Airtel Accum. 406 451 154,100 71,710 81,885 33.7 35.0 15.7 23.1 25.8 17.6

Idea Cellular Neutral 101 - 33,334 19,014 21,166 26.8 27.0 2.6 3.3 38.3 30.9

Rcom Neutral 88 - 18,143 20,881 24,528 32.8 33.5 3.9 6.8 22.6 13.0

OthersOthersOthersOthersOthers

Bajaj Electrical Neutral 176 - 1,753 3,302 3,956 8.0 9.0 15.1 21.1 11.7 8.4

Blue Star Neutral 253 - 2,271 3,406 3,972 5.9 7.4 14.5 22.1 17.4 11.4

CRISIL Neutral 8,018 - 5,693 766 926 34.8 35.0 282.7 343.9 28.4 23.3

Finolex Cables Buy 40 59 613 2,332 2,584 8.7 8.8 7.9 9.9 5.1 4.0

Greenply Buy 192 311 463 1,426 1,574 12.5 13.0 28.4 38.8 6.8 4.9

Page Industries Neutral 2,584 - 2,881 658 822 18.6 18.6 64.0 79.1 40.4 32.7

Sintex Buy 151 212 4,118 5,296 6,256 18.3 17.4 20.8 23.6 7.3 6.4

Siyaram Silk Mills Buy 305 422 286 982 1,150 12.2 11.6 65.1 70.4 4.7 4.3

SpiceJet Neutral 26 - 1,067 4,327 5,703 0.0 2.3 (0.4) 1.3 (72.7) 20.1

Taj GVK Buy 92 140 577 310 360 40.4 40.6 9.5 11.7 9.7 7.9

Company Name Reco CMP Target Mkt Cap Sales (`cr) OPM (%) EPS (`) PER (x)

(`) Price (`) (` cr) FY12E FY13E FY12E FY13E FY12E FY13E FY12E FY13E

Source: Company, Angel Research, Note: *estimates for CY11E and CY12E; September year end; $Recurring EPS taken for calculations; Price as on September 5, 201


21/22

Market Strategy


Disclaimer

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Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations

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positions in the stocks recommended in this report.positions in the stocks recommended in this report.positions in the stocks recommended in this report.positions in the stocks recommended in this report.positions in the stocks recommended in this report.

Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)Reduce (-5% to -15%) Sell (< -15%)

Ratings (Returns) :


22/22

Market Strategy

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Research Team

Fundamental:

Sarabjit Kour Nangra VP-Research, Pharmaceutical [email protected]

Vaibhav Agrawal VP-Research, Banking [email protected]

Shailesh Kanani Infrastructure [email protected]

Srishti Anand IT, Telecom [email protected]

Bhavesh Chauhan Metals & Mining [email protected]

Sharan Lillaney Mid-cap [email protected]

V Srinivasan Research Associate (Cement, Power) [email protected]

Yaresh Kothari Research Associate (Automobile) [email protected]

Shrinivas Bhutda Research Associate (Banking) [email protected]

Sreekanth P.V.S Research Associate (FMCG, Media) [email protected] Thaker Research Associate (Capital Goods) [email protected]

Nitin Arora Research Associate (Infra, Real Estate) [email protected]

Ankita Somani Research Associate (IT, Telecom) [email protected]

Varun Varma Research Associate (Banking) [email protected]

Technicals:

Shardul Kulkarni Sr. Technical Analyst [email protected]

Sameet Chavan Technical Analyst [email protected]

Derivatives:

Siddarth Bhamre Head - Derivatives [email protected]

Institutional Sales Team:

Mayuresh Joshi VP - Institutional Sales [email protected]

Abhimanyu Sofat AVP - Institutional Sales [email protected]

Meenakshi Chavan Dealer [email protected]

Gaurang Tisani Dealer [email protected]

Akshay Shah Dealer [email protected]

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Market Strategy Report