Morning Insight 8 Jan 2013 - kotaksecurities.com · Packaged consumer goods firm Marico plans to demerge its services business Kaya into a separate listed firm in a move that could

JANUARY 8, 2013

Economy News The Central Board of Excise and Customs ( CBEC) has issued an order

making it mandatory for companies to pay indirect taxes even if a stayplea is pending before an appellate body, a move some industryrepresentatives describe as 'draconian'. (ET)

A panel of ministers on spectrum recommended up to a 50% cut in thereserve price for airwaves used for CDMA-based mobile services andapproved a plan to start the next round of spectrum auctions from March11, a telecom department official said. (ET)

Prime Minister Manmohan Singh has said the government must raisediesel, kerosene and cooking gas prices in a phased manner. PM'sstatement assumes significance as the government has initiated inter-departmental discussion to implement the Kelkar committeerecommendation, to increase fuel prices, particularly diesel, by less than arupee per month to pair it with market rates and eventually deregulateit by next fiscal year. (ET)

Corporate News Packaged consumer goods firm Marico plans to demerge its services

business Kaya into a separate listed firm in a move that could helpimprove valuations of the parent company that has been weighed downby the weak performance of its services arm. (ET)

Debt-laden GMR Infrastructure has terminated its contract withNational Highways Authority of India (NHAI) for six-laning of theambitious Kishangarh - Udaipur -Ahmedabad highway, the infrastructuremajor informed bourses. In 2011, GMR Infrastructure bagged NHAI'sbiggest project, the Rs 72 bn Kishangarh-Udaipur-Ahmedabad highwayproject, by quoting an aggressive premium of Rs 6.36 bn. (ET)

The Krishna-Godavari D6 block operated by Reliance Industries Ltdmay not be able to produce more than 40-50 million standard cubicmetres a day (mmscmd) natural gas without new discoveries, a significantdrop from earlier estimates. (BL)

Tata Power's wholly-owned subsidiary Coastal Gujarat Power Ltd hassynchronised the fourth 800 MW unit of its Mundra power plant inGujarat. With this Tata Power's total power generation capacity standsat 7699 MW, making it the largest integrated power company as well asprivate power producer in the country. (BL)

Kingfisher lenders will soon decide on future course of action withregard to the grounded airline as they do not want the company to closedown, State Bank of India (SBI) said. (FE)

The Cabinet Committee on Economic Affairs (CCEA) is likely to consideroffloading 10 per cent of its equity in Engineers India. The meeting isscheduled on Thursday, a senior Government official told.(BL)

Financial institutions have declined to participate in the open offer madeby GlaxoSmithKline (GSK) for its Indian subsidiary GlaxoSmithKlineConsumer Healthcare, terming the Rs 3,900-a-share offer unattractive.The institutions jointly hold 32 per cent stake. (BS)

The Rs 55 bn open offer from Diageo to the shareholders of UnitedSpirits Ltd (USL) has been deferred and would not be on during theJanuary 7-18 window, the schedule earlier announced by Diageo. This isbecause there are quite a number of statutory clearances, which are stillpending for the $2.1-billion transaction. (BS)

After protracted wrangling, the Comptroller and Auditor General ofIndia (CAG) will on Wednesday begin the second round of audit ofReliance Industries spending on the flagging eastern offshore KG-D6gas block. (BS)

Equity% Chg

7 Jan 13 1 Day 1 Mth 3 Mths

Indian IndicesSENSEX Index 19,691 (0.5) 1.4 5.3NIFTY Index 5,988 (0.5) 1.4 5.5BANKEX Index 14,603 (0.6) 3.0 11.9BSET Index 5,810 0.2 2.9 (0.3)BSETCG INDEX 10,933 (1.5) (2.7) (0.9)BSEOIL INDEX 8,875 0.2 4.3 3.1CNXMcap Index 8,768 0.2 4.7 11.2BSESMCAP INDEX 7,657 0.5 2.8 7.3

World IndicesDow Jones 13,384 (0.4) 1.7 (1.5)Nasdaq 3,099 (0.1) 4.1 (0.4)FTSE 6,065 (0.4) 2.5 3.8NIKKEI 10,599 (0.8) 10.7 19.0HANGSENG 23,330 (0.0) 4.7 11.6

Value traded (Rs cr)7 Jan 13 % Chg - Day

Cash BSE 2,529 0.3Cash NSE 12,365 (1.8)Derivatives 76,062 (10.5)

Net inflows (Rs cr)4 Jan 13 % Chg MTD YTD

FII 1,252 (13.1) 4,901 134,220Mutual Fund (307) 530.7 (357) (20,547)

FII open interest (Rs cr)4 Jan 13 % Chg

FII Index Futures 7,588 (2.5)FII Index Options 41,093 2.3FII Stock Futures 32,883 1.1FII Stock Options 2,328 10.2

Advances / Declines (BSE)7 Jan 13 A B T Total % total

Advances 90 1,197 318 1,605 53Declines 108 945 263 1,316 43Unchanged 2 86 38 126 4

Commodity % Chg

7 Jan 13 1 Day 1 Mth 3 Mths

Crude (NYMEX) (US$/BBL) 93.3 0.1 8.6 4.4Gold (US$/OZ) 1,646.0 (0.1) (3.0) (7.0)Silver (US$/OZ) 30.0 0.6 (8.3) (11.1)

Debt / forex market7 Jan 13 1 Day 1 Mth 3 Mths

10 yr G-Sec yield % 8.0 8.1 N/A N/ARe/US$ 55.2 55.1 54.5 52.6

Sensex

Source: ET = Economic Times, BS = Business Standard, FE = Financial Express,BL = Business Line, ToI: Times of India, BSE = Bombay Stock Exchange

15,000

16,250

17,500

18,750

20,000

Jan-12 Apr-12 Jul-12 Oct-12 Jan-13

Kotak Securities - Private Client Research Please see the disclaimer on the last page For Private Circulation 2

MORNING INSIGHT January 8, 2013

MARICO LTD.PRICE: RS.228 RECOMMENDATION: BUYTARGET PRICE: RS.248 FY14E P/E: 28.8X

Marico has announced a restructuring of operations, which involves demerger ofKaya into a separate entity, Marico Kaya Enterprises (MaKE). Marico's Con-sumer Products Business and International Business Group shall form a unifiedFMCG business. The company has said that initially, MaKE shall be a 100% sub-sidiary of Marico Ltd. Eventually (record date expected to be in June/ July),Marico shareholders shall be issued shares of MaKE. One fully paid up equityshare of Rs 10 each of MaKE shall be issued and allotted at a premium of Rs200/ share for every fifty shares held in Marico Ltd. Shares of MaKE shall belisted on BSE&NSE. The appointed date of the demerger is April 1, 2013.

The prime motivations for the above, as per management, are: 1/ greater con-vergence of the CPB and the IBG businesses, and the synergies therein, 2/ scale- up in the international business as well as the Kaya business has enabled thedecision, 3/ Kaya and Marico's FMCG businesses are different businesses andrequire different approach.

Following the demerger, the two companies shall operate with an independentleadership and different board of directors. The shareholding structure of MaKEwill mirror that of Marico immediately after the demerger.

There will be no impact on Marico's P&L account from the demerger in FY13.Going forward, we expect the company to report improving margins (and broadlysimilar profits, in the near-term),as Kaya had reported PBIT losses of Rs 325mn,on revenues of Rs 2.79Bn in FY12. The company's release notes that investmentsof Marico in Kaya will be adjusted against the securities premium account.Marico's exposure to Kaya at the end of 1HFY13 was Rs 1.81Bn (this may un-dergo a change from now to April 1, 2013), which includes an interest - freeloan of Rs 1.07Bn. Separately from the loan provided by Marico, the Kaya enti-ties would have, under their two subsidiaries, debt of c.$28mn.

The management has said that it would like to, post-restructuring, put Kaya in adebt-free position. As of now, MaKE's capital requirements are not expected tobe very large. However, the management has said that the demerger may, atsome point of time, also provide an opportunity for MaKE to issue fresh capitalshould the need arise.

The change to Marico's (FMCG) business and its management shall be: 1/theleadership: henceforth, the CPB and IBG shall report to a single leadership. Thismay, as per management, improve the quality of decision-making (unification ofapproach to portfolio), and also save some people related costs (to the extentthat there may be duplication), 2/ Benefits in terms of supply chain manage-ment. From management comments, we infer that these benefits are unlikely tobe significant.

The key benefit from this exercise, we believe, shall be the ability to placegreater focus on Marico's FMCG businesses and the ability to have greater flex-ibility in choosing the growth trajectory for MaKE. Moreover, since valuation ofFMCG companies tends to focus on profits, we believe it is likely that the restruc-turing will improve value perception of Marico. We agree with the spirit of thedemerger, and maintain a positive stance on Marico.

Summary table

(Rs mn) FY12 FY13E FY14E

Sales 40,083 48,036 56,954Growth (%) 26.3 26.7 18.6EBITDA 4,844 6,723 7,973EBITDA margin (%) 12.8 14.0 14.0PBT 4,021 5,641 6,818Net profit 3,171 4,234 5,107EPS (Rs) 5.2 6.6 7.9Growth (%) 34.1 26.7 20.6CEPS (Rs) 6.4 7.9 9.5Book value (Rs/share) 19.0 33.0 41.2Dividend per share (Rs) 0.7 0.7 0.9ROE (%) 30.3 25.7 21.4ROCE (%) 18.0 17.7 15.9Net cash (debt) (6,260) (7,347) (3,738)NW Capital (Days) 67 64 63P/E (x) 44.0 34.7 28.8P/BV (x) 12.0 6.9 5.5EV/Sales (x) 3.9 3.2 2.7EV/EBITDA (x) 30.2 22.9 18.9

Source: Company, Kotak Securities - PrivateClient Research

COMPANY UPDATE

Ritwik [email protected]+91 22 6621 6310

We recommend BUY onMarico with a price target of

Rs.248

Kotak Securities Limited has two independent equity research groups: Institutional Equities and Private Client Group. This report has been pre-pared by the Private Client Group. The views and opinions expressed in this document may or may not match or may be contrary with the views,estimates, rating, target price of the Institutional Equities Research Group of Kotak Securities Limited.



RESULTS PREVIEW

Research [email protected]+91 22 6621 6301

Q3FY13 RESULTS PREVIEW

11.7% revenue growth expected during the quarterWe expect stocks under our coverage (ex-banking / NBFCs) to report revenuegrowth of about 11.7% on a YoY basis. Among sectors, IT, Oil & Gas and FMCG areexpected to propel this growth. Revenues of IT companies are expected to be drivenby the near 6% rupee depreciation YoY. Sustained demand and some inorganic ini-tiatives should support growth for FMCG companies. We will watch our for execu-tion issues, if any, in Construction and Capital Goods sectors.

For banks / NBFCs, net income for Banks & NBFCs under our coverage is expectedto grow at slower pace - 14.4% YoY as compared to 18.4% YoY witnessed duringQ2FY13. Our private banking universe is likely to grow faster at 22.8%, while PSUbanks under our coverage are likely to grow at subdued pace (8.2% YoY). Thecredit growth has moderated marginally to 16.3% YoY (as on December 14, 2012)as compared to previous fortnight, when it had crossed 17.0% mark. Deposit mobi-lization continued to lag the overall credit growth - 13.4% YoY (as on December 14,2012) as compared to ~18%, a year back. This has led to rise in the C/D ratio to77.1% at the end of December 14, 2012, as compared to 75-76% seen during pre-vious two quarters.

For Banks & NBFCs under our coverage, we expect NII growth of 8.5% YoY, withprivate banks growing at 22.1% YoY while PSU banks likely to report almost flat NII(2.7% YoY). During the same period, NBFCs are likely to witness healthy growth innet income (19.2%).

We expect NIM to remain flat QoQ with some negative bias as pressure on lendingrates due to change in competitive landscape (especially retail book) will be largelyoff-set by 50bps cut in CRR by RBI in two tranches during mid-September and Octo-ber-end meets along with lowering of their term deposit rates in recent times.

Margins are expected to be flat for our coverage universe (ex-banking / NBFCs)EBIDTA margins for the sectors under our coverage are expected to be flat on a YoYbasis. Auto, Cement, Oil & Gas and IT companies are expected to report lower mar-gins YoY, whereas Construction, Media and Metals are expected to witness an im-provement. The pressure on margins for some sectors is due to lower realisations(cement) and higher raw material prices, which companies have not been able topass on fully. For IT, margins are expected to be lower, largely due to the subduedrevenue growth and lower utilization rates. On the other hand, better volumes andhigher subscription revenues (media) should help margins for the above-mentionedsectors.

We believe asset quality pressure to persist; we also expect restructured book to riseespecially on corporate book side as there has been large addition to the CDR inrecent times. However, private sector banks are better placed with significant expo-sure to retail assets and this segment is doing better in terms of asset quality.

Q2FY13 estimates - Banking & NBFC

Sector Net Interest Income Pre-Provisioning Profit PAT

(Rs mn) 3QFY13 3QFY12 YoY (%) 3QFY13 3QFY12 YoY (%) 3QFY13 3QFY12 YoY (%)

Banking (12) 351,897 326,669 7.7 268,747 248,081 8.3 134,953 118,709 13.7

NBFCs (4) 34,330 29,292 17.2 34,587 29,088 18.9 21,702 18,202 19.2

Total 386,227 355,961 8.5 303,334 277,169 9.4 156,655 136,911 14.4

Source: Companies, Kotak Securities - Private Client Research



Q3FY13 estimates - ex-Banking & NBFCs

Sector Revenues (Rs mn) EBIDTA (%) EBIDTA (Rs mns) PAT (Rs mns)

3QFY13 3QFY12 YoY (%) 3QFY13 3QFY12 3QFY13 3QFY12 YoY (%) 3QFY13 3QFY12 YoY (%)

Auto (8) 801,554 727,286 10.2 12.5 13.5 100,514 98,410 2.1 51,468 52,517 (2.0)

Capital Goods (26) 488,795 442,874 10.4 11.7 11.7 57,184 51,694 10.6 37,703 36,218 4.1

Cement (5) 164,604 155,347 6.0 20.0 20.5 32,952 31,902 3.3 16,492 18,719 (11.9)

Construction (12) 155,951 146,717 6.3 17.1 14.4 26,731 21,144 26.4 5,314 6,354 (16.4)

FMCG (3) 166,569 145,411 14.6 25.9 25.4 43,180 36,962 16.8 31,298 27,143 15.3

IT (12) 470,679 409,132 15.0 24.0 25.9 112,946 105,974 6.6 86,282 78,294 10.2

Logistics/Shipping (10) 75,297 70,131 7.4 24.8 23.9 18,653 16,784 11.1 8,623 9,484 (9.1)

Media (8) 37,722 33,351 13.1 25.7 24.8 9,709 8,265 17.5 5,188 3,734 39.0

Metals (2) 475,626 466,187 2.0 11.7 10.1 55,632 47,007 18.3 19,828 12,010 65.1

Oil and Gas (6) 316,549 240,627 31.6 14.6 15.5 46,297 37,401 23.8 36,394 29,739 22.4

Power (1) 86,770 62,810 38.1 18.5 16.0 16,094 10,029 60.5 2,159 4,600 (53.1)

Real Estate (1) 680 505 34.7 66.0 73.9 449 373 20.4 327 269 21.5

Total 3,240,796 2,900,376 11.7 16.1 16.1 520,341 465,945 11.7 301,075 279,080 21.5


Focus areasWhile 3QFY13 results will be important, the focus has been and is expected to be onsome of the other pressing concerns.

Domestically, we will focus hard on the order bookings of capital goods and con-struction companies. There has been some improvement in the business confidencepost the recent reform initiatives from the Government. The same needs to be trans-lated into project initiations and order bookings. Management commentary on mo-mentum of decision-making and order placements will be important for us.

Global commodity prices have increased over the past few weeks in line with theliquidity easing in USA, Europe and Japan. Positive data points from China have alsoraised hopes of growth rates improving in that economy. Further increase in com-modity prices will potentially impact margins of various companies, if the increasesare not fully passed on. Any lingering impact may dampen sentiments.

We will also closely track the management comments on the impact of the globaleconomic issues on client decisions and budgets. This will be more important for theprospects of the IT sector.

ConclusionMarkets have moved up over the past few months in anticipation of additional fundflows (due to global liquidity easing) and of further reform initiatives from the Gov-ernment. Valuations are at around the long-term average, based on consensus esti-mates for the Sensex companies.

We opine that, if the markets have to sustain the current levels and move up, it willneed to have more confidence in the medium-to-long term growth rates of Corpo-rate India. Growth rates will move up once there is a more-enabling investment cli-mate and a lower-interest rate regime.

Disappointment in earnings or on future outlook may result in corresponding specificcorrections.



RESULTS PREVIEW

Arun [email protected]

+91 22 6621 6143

AUTOMOBILE

Volume growth remains flat YoY despite festive seasonSlowdown in the economy continued to impact volumes for the auto manufacturersin 3QFY13. Volumes remained largely flat YoY despite pre festive season inventorybuild-up happening in 3QFY13 as against 2Q in last financial year. However, impactof festive demand was visible on a sequential basis, where overall volumes in3QFY13 grew in double-digit over 2QFY12.

Volume performance Q3 Q2 QoQ Q3 YoY

Company FY13 FY13 (%) FY12 (%)

Ashok Leyland 22,666 29,840 (24.0) 23,385 (3.1)

Bajaj Auto 1,127,741 1,049,208 7.5 1,075,441 4.9

Hero MotoCorp 1,573,135 1,332,805 18.0 1,589,286 (1.0)

Maruti Suzuki 301,453 230,376 30.9 239,528 25.9

Tata Motors 203,853 221,090 (7.8) 227,110 (10.2)

TVS Motors 518,496 485,999 6.7 527,700 (1.7)

Total 3,747,344 3,349,318 11.9 3,682,450 1.8

Source: Companies

For the companies under our coverage, most of the players reported YoY drop involumes. Only Bajaj Auto and Maruti Suzuki reported YoY volume growth whichwas on account of lower 3QFY12 base. During 3QFY13, M&HCV segment was theworst hit in terms of demand, both YoY and QoQ. Weak macro factors led toM&HCV volumes declines significantly during the quarter. Demand in the passengercar segment and the 2W category was relatively better.

Revenues expected to grow; both YoY and QoQWe expect the revenues for the companies under our coverage to grow by 10%YoY. Maruti Suzuki's revenues are expected to grow by 33% YoY on the back ofvolume growth and improved product mix. Tata Motor's revenues are expected toreceive boost from healthy JLR performance. On the other hand, we expect AshokLeyland's revenues to de-grow by 16% YoY due to weak M&HCV demand. Over2QFY13, we expect revenues for our coverage universe to grow by 12.8% in3QFY13.

EBITDA margins to be lower YoYEBITDA margin is expected to be lower YoY for majority of the players. AshokLeyland is expected to be negatively impacted by poor operating leverage (on weakvolumes) and heavy discounting. For all the 2W companies, we expect YoY dip inEBITDA margin given largely weak demand scenario. Maruti Suzuki’s EBITDA mar-gin is likely to be better due to weak 3QFY12 base (performance in 3QFY12 was im-pacted by labor issues). For Apollo Tyres, softening natural rubber prices should bepositive for the margins in 3QFY13. Escorts too have shown margin improvement forthe past few quarters and we expect that trend to continue for the company. Se-quentially, we expect all players (except Ashok Leyland) to report margin expansion.

PAT growth to be strong QoQNet profits in 3QFY13 are expected to grow strongly over 2QFY13, aided by volumegrowth and margin expansion. On YoY basis though, we expect net profit for thecompanies under our coverage to de-grow by 2%. We expect all the companies toreport sequential jump in profits (except Ashok Leyland). We expect Ashok Leylandto report loss during the quarter.

Top Picks:

Tata Motors




Key points Apollo Tyres - Softening domestic natural rubber prices should benefit

company's margins and profits in 3QFY13

Ashok Leyland - M&HCV volumes were under significant pressure. Negativeoperating leverage and heaving discounting is expected to lead to loss for thecompany.

Bajaj Auto - We expect the product-mix to be better during the quarter and thesame is expected to reflect on margins and profitability.

Escorts - Overall tractor demand has been weak but the company has reportedmargin improvement over the past couple of quarters.

Hero MotoCorp - Volumes in 3QFY13 improved over 2QFY13 and the sameshould help the company show sequential margin expansion.

Maruti Suzuki India - New launches for the company has done well. Further,currency too has turned favorable for Maruti Suzuki.

Tata Motors - Company's standalone performance is under severe stress. How-ever, healthy JLR performance will drive sequential growth in profitability.

TVS Motors - Volume growth and margin expansion over 2QFY13 is expected tolead to healthy sequential growth in net profit.

Quarterly estimates - Automobiles

Company Revenues (Rs mn) EBIDTA (%) PAT (Rs mn) EPS (Rs)

Q3 Q2 QoQ Q3 YoY Q3 Q2 Q3 Q3 Q2 QoQ Q3 YoY Q3 Q2 QoQ Q3 YoYFY13 FY13 (%) FY12 (%) FY13 FY13 FY13 FY13 FY13 (%) FY12 (%) FY13 FY13 (%) FY12 (%)

Apollo Tyres 32,430 33,748 (3.9) 32,282 0.5 11.5 10.9 10.0 1,559 1,522 2.5 980 59.0 3.1 3.0 2.5 1.9 59.0

Ashok Leyland 24,499 32,960 (25.7) 29,035 (15.6) 6.7 10.1 7.2 (127) 1,426 - 669 - (0.0) 0.5 - 0.3 -

Bajaj Auto 54,573 49,706 9.8 49,859 9.5 19.5 18.4 19.7 8,458 7,389 14.5 7,952 6.4 29.2 25.5 14.5 27.5 6.4

Hero MotoCorp 61,752 51,875 19.0 60,315 2.4 15.0 13.9 15.6 6,144 4,406 39.4 6,130 0.2 30.8 22.1 39.4 30.7 0.2

Maruti Suzuki 102,545 83,054 23.5 77,316 32.6 7.9 6.1 5.2 4,624 2,274 103.3 2,056 124.9 16.0 7.9 103.3 7.1 124.9

Tata Motors 497,540 434,029 14.6 452,603 9.9 13.1 12.3 15.1 29,976 20,747 44.5 34,056 (12.0) 9.4 6.5 44.5 10.7 (12.4)

TVS Motors 17,929 16,906 6.0 17,622 1.7 6.3 6.0 6.9 553 452 22.4 565 (2.1) 1.2 1.0 22.4 1.2 (2.1)

Q1 Q4 QoQ Q1 YoY Q1 Q4 Q1 Q1 Q4 QoQ Q1 YoY Q1 Q4 QoQ Q1 YoY FY13 FY12 (%) FY12 (%) FY13 FY12 FY12 FY13 FY12 (%) FY12 (%) FY13 FY12 (%) FY12 (%)

Escorts 10,286 8,234 24.9 8,255 24.6 6.0 5.7 3.2 281 189 48.6 109 158.2 2.3 1.5 48.6 1.1 115.5

Total 801,554 710,513 12.8 727,286 10.2 12.5 11.7 13.5 51,468 38,405 34.0 52,517 (2.0)




CAPITAL GOODS, ENGINEERING & POWER

In the Dec-ending quarter, the BSE Capital Goods index underperformedthe Sensex. While the market sentiment has improved in recent weeks, itis yet to reflect in broad economic datapoints.

Even as the government remains committed to addressing the issue ofshortage of coal, there is no short-term solution to the problem. Thus,virtual standstill continues in finalization of power generation projects.

The management commentaries has been cautious, as one wouldexpect given the weak environment. The main points on the out-look are : Corporates continue to be concerned with slow pace of decision making at gov-

ernment level, delay in land acquisition and emerging resource crunch (Coal andGas)

In the current environment, managements are focusing on cutting costs and re-structuring balance sheets (Voltas and Blue Star).

Corporates are also eyeing new geographies to offset the slowdown in domesticmarket. L&T is targeting a higher share of orders from the Middle East region.Similarly, Voltas is targeting to deepen its engagement in the Saudi Arabianmarket.

During the quarter, the government formed the "Cabinet Committee on Invest-ments" to expedite projects of over Rs 10 bn in unit size that are delayed due tomultiplicity of approvals/clearances. How effective the CCI would be in reversingthe downswing in investments remains to be seen. However, this is a positivemove in the right direction.

The Government unveiled the new Urea Investment policy. As per this policy,the government will give 12%-20% post-tax return on fresh capital infused bythe manufacturers for setting up of new plants as well as for expansion and re-vamp of the existing ones. India imports 30% of its urea requirement and it is amajor drain on the foreign exchange.

Preview Highlights We expect aggregate revenue growth of 10.4% YoY in the Dec-ending quarter,

driven mainly by L&T, Cummins, and other midcaps.

Aggregate EBITDA is expected to grow in line with revenue as we project aggre-gate EBITDA margins to remain stable at 11.7%. Aggregate PAT is expected topost modest growth of 4.1% yoy in Q3 FY13.

In our view, a sustained upturn in the capex cycle is still not forthcoming; a soft-ening in interest rates and commodity prices, coupled with the resolution of fueland environmental/land issues would trigger the next capex cycle. We retain ourcautious view on the Indian capital goods space

Remain selective in our stock picks with preference for product-oriented compa-nies over project-oriented ones. Prefer L&T, Greaves Cotton, Elgi Equipments,Voltas and Engineers India Ltd.

Forex Scenario - INR largely stable during the quarterRupee has remained range-bound in the quarter hence don't expect any surprises onforex fluctuation front.

Top Picks:

L&TGreaves CottonElgi Equipments

VoltasEngineers India Ltd

RESULTS PREVIEW

Sanjeev [email protected]+91 22 6621 6305

Ruchir [email protected]+91 22 6621 6448




Quarterly preview / Stock view ABB: The power transformer sector is going through a prolonged phase of mar-

gin pressure as players have been undercutting prices to utilize their capacity.The company has continued to report depressed margins and delay in finalizationof projects is slowing down order intake.

Alstom T&D: The company's revenue booking has slowed down as clients espe-cially private utilities are facing issues like land acquisition and cash crunch. Dur-ing Q2FY13, the company took a hit of Rs 300 mn on account of delay in receiv-ables.

Voltamp: The company's transformer business continues to reel under pricingpressure. The company reported sharp drop in margins in H1FY13 as over-supplyin the domestic transformer capacity is depressing product prices. Margins arelikely to remain at sub-normal levels in the medium term, the management hasmaintained.

BHEL: Order intake has not picked up in the 3Q as well and we continue to re-main negative on the stock. The company is now seeing issues on execution aswell due to cash crunch faced by its clients.

Larsen & Toubro: After a significant outperformance in Q2FY13, the L&T stockhas remained largely range-bound in the 3Q. In the current quarter, the companyhas reported order wins of ~ Rs 11bn, which is lower than the run-rate in Q1 andQ2. As in H1FY13, most orders are in the construction and infrastructure seg-ment.

Hind Dorr Oliver: The company continues to face the brunt of slackness in rev-enues, depressed order backlog and elevated interest burden. We continue to benegative on the stock.

Thermax: In the third quarter, the company won a Rs 5.0 bn order for CaptivePower Plant from a Cement major. Aided by this large order, the companyshould be able to report healthy order intake.

Voltas: The business environment for MEP players has deteriorated in India aswell as Middle East. The company reiterated that following the techno-commer-cial review of the Sidra Medical project, it does not anticipate further provisionson account of cost over-runs. The company has completed 85% of the work andthe balance would be executed by June 2013. Till then, revenue on this projectwould continue to be booked at zero margins.

Blue Star: In a recent interaction, the Blue Star management has continued tohighlight sustained weakness in order intake. It now expects to exit the fiscalwith decline of 25-30% in order backlog.

Bharat Electronics: BEL's H1FY13 has been much lower than expected on allfronts. The defence equipment procurement process goes through several layersof approvals and delay in the same is impacting revenue booking on orders.

Greaves Cotton: We expect relatively flat revenues in Q3FY13 as the 3W vol-umes have seen a modest growth.

Diamond Power Infrastructure (DPIL): The demand for HT cables has beenstrong but EPC segment has been sluggish. We are concerned by the massivecapex of Rs 7.5 bn (spread over 3-4 years) that the company is planning to un-dertake in cables.

Everest Kanto: The offtake from Iran (EKC's most profitable market) continuesto remain adversely affected due to geopolitical developments. The company re-ported loss (at PBT level) in Q2 FY13 results due to sharp fall in volumes andhigher interest and depreciation charges. We expect this trend to continue in Q3as well.



Time Technoplast: Revenue growth should be healthy, driven by the comple-tion of industrial packaging plants in Asia and Middle East.

Bajal Electricals Limited (BAEL): We expect BAEL to report meaningful growthin revenues in Q3 FY13 aided by robust growth in consumer appliances business.We believe that infrastructure business should start recovering as an outcome ofrecently taken measures for restructuring.

AIA Engineering Ltd (AIA): AIA is expected to report marginal growth in rev-enues as well as profits in Q3FY13. This would mainly be on account of contin-ued up tick in new market creation in mining space.

Cummins India: We expect resilient domestic market sales driven power andindustrial segments along with significant YoY improvement in export sales.Company is likely to witness slight moderation in its margin at EBITDA and PATlevels.

Crompton Greaves: CGL should report moderate earnings growth in the quartermainly due to lack of activity in the power segment. Ongoing restructuring ininternational subsidiaries could have negative impact on the EBITDA margins.

Siemens: We forecast moderate revenue growth for Siemens after poor perfor-mance in Q4FY12. Margins are likely to remain at previous year level.

EIL: We expect company to report meaningful YoY growth in revenues driven byconsultancy division. Company is likely to observe YoY expansion in operatingmargins.

ELGI Equipment Ltd (EEL): EEL is expected to report continued momentum indemand for compressors in domestic as well as overseas geographies. We expectcompany to maintain margins in the quarter.

Tractors India Limited (TIL): TIL is expected to report moderate increase insales for the quarter. We believe that the sluggish infrastructure spending andrising interest rate scenario pose a negative impact on company's growth.

Havells India Ltd (HIL): HIL is likely to report moderate YoY growth in net prof-its. Sylvania is likely to negatively impact the operating margins. Domestic busi-ness is likely to report growth on account of robust demand from tier II and tierIII cities.

Suzlon: We expect another set of poor results from Suzlon as the combined im-pact of lower up tick in international business and higher interest costs erodingprofitability. Although company has succeeded in increasing its order book re-cently in the domestic market and this could be a positive for the company goingahead. The stock has underperformed the broader market in the past and orderbook growth remains a key variable to monitor.

Kalpataru Power Transmission: KPTL is likely to observe growth due to im-provement in execution. Interest charges are also expected to stabilize after in-creasing earlier on account of increase in working capital.

Power Tata Power: Generation is expected to be driven by higher volumes from the

three units of 800 MW each at Mundra. Coal prices have remained weak in 3Qas well hence profitability of its investment in Bumi Resources is not likely to im-prove significantly.



Quarterly estimates - Capital Goods



Capital Goods

Voltamp 1,275 1,223 4.3 1,620 (21.3) 5.9 4.2 2.5 69 57 21.1 94 (26.6) 6.8 5.7 19.8 9.3 (26.8)

Cummins 11,465 10,870 5.5 9,624 19.1 17.0 18.4 16.7 1,605 1,612 (0.4) 1,410 13.8 5.8 5.8 - 5.1 13.7

BEL 14,430 10,399 38.8 14,316 0.8 12.9 (1.0) 9.0 2,277 802 183.9 1,746 30.4 28.5 10.0 184.6 21.8 30.4

Blue Star 5,483 5,735 (4.4) 5,833 (6.0) 3.9 3.5 (0.5) 91 73 24.8 (328) (127.7) 1.0 0.8 25.0 (3.6) (127.8)

Voltas 12,297 11,601 6.0 11,539 6.6 5.2 3.8 7.6 444 284 56.3 1,429 (68.9) 1.3 0.9 44.4 4.3 (69.8)

Thermax 11,912 11,811 0.9 12,630 (5.7) 10.3 11.5 9.6 870 911 (4.5) 955 (8.9) 7.3 7.7 (5.2) 8.0 (8.8)

Hind Dorr 1,100 820 34.1 1,847 (40.4) 2.0 (3.2) 7.6 (88) (118) (25.8) 30 (388.2) (1.2) (1.6) (25.6) 0.4 (390.5)

L&T 166,303 131,952 26.0 139,986 18.8 9.8 10.7 9.6 10,810 8,701 24.2 9,916 9.0 17.7 14.2 24.2 16.2 9.0

ABB 22,000 17,861 23.2 21,693 1.4 6.7 3.7 5.0 764 214 257.0 638 19.7 3.6 1.0 256.4 3.0 19.6

Alstom T&D 7,500 6,780 10.6 6,789 10.5 9.7 8.8 8.4 195 (16) (1,318.8) 159 22.6 0.8 (0.1) (900.0) 0.7 23.0

Siemens 26,210 33,752 (22.3) 23,986 9.3 5.0 2.9 5.1 917 (556) - 708 29.5 2.8 (1.7) - 2.2 29.0

BHEL 111,058 103,996 6.8 105,480 5.3 18.9 18.3 19.7 13,923 12,745 9.2 14,326 (2.8) 5.7 5.2 9.6 5.9 (3.4)

Greaves Cotton 4,494 4,092 9.8 4,392 2.3 13.4 14.5 13.3 383 387 (1.0) 342 12.0 1.6 1.6 - 1.4 14.3

TIL 4,095 2,850 43.7 3,226 26.9 5.0 6.2 4.3 80 (41) - 6 1,190.3 8.0 (4.1) - 0.6 1,150.0

Havells 10,324 9,642 7.1 8,981 15.0 13.0 13.4 12.7 908 870 4.4 789 15.1 7.3 7.0 4.4 6.3 15.2

AIA Engg 4,005 4,403 (9.0) 3,470 15.4 19.0 12.6 20.3 520 403 29.0 502 3.6 5.5 4.3 28.8 5.3 4.5

CGL 32,779 29,241 12.1 30,279 8.3 6.0 4.7 6.0 819 429 90.9 756 8.3 1.3 0.7 91.0 1.2 8.5

Kalpataru Power 9,286 7,174 29.4 8,008 16.0 11.0 8.8 11.3 464 265 75.1 403 15.1 3.0 1.7 76.5 2.6 15.4

Bajaj Electricals 8,861 7,327 20.9 7,928 11.8 10.0 3.3 8.2 408 290 40.7 328 24.4 4.1 0.4 838.6 3.3 24.4

EIL 9,837 6,677 47.3 7,925 24.1 18.0 25.3 23.0 1,672 1,612 3.7 1,513 10.5 5.0 4.8 3.5 4.5 10.5

Elgi 2,620 2,614 0.2 2,521 3.9 11.5 8.8 10.9 191 130 46.9 173 10.4 1.2 0.8 47.6 1.1 10.6

Diamond Power 5,361 6,516 (17.7) 5,391 (0.6) 10.8 11.4 11.3 182 381 (52.2) 308 (40.9) 4.9 10.2 (52.0) 8.3 (41.0)

Everest Kanto 1,500 1,485 1.0 1,432 4.7 11.0 11.9 10.7 (85) 109 (178.3) (222) (61.8) (0.8) 1.0 (180.0) (2.1) (61.9)

Time Technoplast 4,600 4,319 6.5 3,978 15.6 16.5 17.1 15.9 284 267 6.4 237 19.8 1.4 1.3 7.7 1.1 27.3

Total 488,795 433,140 12.8 442,874 10.4 11.7 11.0 11.7 37,703 29,810 26.5 36,218 4.1 122.5 77.6 107.6

Power

Tata Power 86,770 76,468 13.5 62,810 38.1 18.5 19.7 16.0 2,159 1,662 29.9 4,600 (53.1) 0.9 0.7 30.0 1.9 (53.1)




RESULTS PREVIEW

Teena [email protected]+91 22 6621 6302

CEMENTCement demand during Q3FY13 was impacted by delays witnessed in onsetof construction activity in northern region, monsoons in southern Indiawhile elections in Gujarat also impacted the demand growth in westernregion. This resulted in price declines during Nov-Dec, 2012. Cement priceshad moved up in October in anticipation of healthy demand growth butlater witnessed corrections during remaining part of Q3FY13. Averagecement prices at the end of Q3FY13 witnessed a correction of 4% QoQ andstood at Rs 284 per bag while prices improved by nearly 5% on YoY basis.

Cost pressures continue to remain high due to higher railway freight ratesand hike in diesel rates which had led to corresponding hike in road freightrates during last quarter. Though coal prices have witnessed a correctionduring Q3FY13, but corresponding decline in cement prices may result inlower EBITDA/tonne for the companies during Q3FY13.

We expect revenues in our coverage universe to grow by 6% on YoY basis.Operating margins are expected to decline sequentially due to loweraverage cement prices during Q3FY13. Net profit during Q3FY13 is expectedto decline by 12% YoY on account of low growth in revenues and highercosts.

We believe that recent decline in cement prices provides a good opportunityto enter cement stocks with attractive valuations. Pace of capacity additionshas slowed down and demand is expected to witness an improvementgoing forward led by housing and infrastructure segment. Cement prices arealso likely to firm up going forward from mid-Jan, 2013. We thus expectcement companies to benefit from improvement in cement prices andvolumes and hence we maintain our positive stance on the sector. Our toppicks in the cement sector remain Shree Cement and Grasim Industries. Wecontinue to maintain ACCUMULATE rating on ACC and Ultratech Cementswhile maintain a REDUCE rating on India Cements

Key highlights during the quarter

Demand growth expected to improve going forwardCement demand had started improving during H1FY13. However, it was impactedduring Q3FY13 due to various issues such as elections in Gujarat, labor unavailability,monsoons in southern India as well as delay in onset of construction activities. De-mand is expected to improve going forward led by pre-election spend in some of theregions, recovery witnessed in real estate sector as well as revival in infrastructuresector.

Pricing scenario in different regionsNorth - During Oct, 12 cement prices witnessed an increase of Rs 10-12 per bagwhile they declined by Rs 15-20 per bag during November. The changes weremainly led by festive season of Diwali and labor shortage. Prices further declined byRs 10-15 per bag in Dec, 2012 mainly due to inventory clearances by large playersand lower than expected demand

Top Pick

Grasim IndustriesShree Cement




190

210

230

250

270

290

310

185

205

225

245

265

285

305

325

190

215

240

265

290

315

340

North (Rs/bag)

Source: Dealer feedback

South - Prices declined by Rs 20-25 per bag in southern region due to disruption inconstruction activities led by cyclone, power non-availability as well as monsoons.Prices in Andhra Pradesh had witnessed some improvement during Oct, 12 but cor-rected sharply due to lack of demand.

South (Rs/bag)


East - Eastern region witnessed only marginal correction in cement prices withKolkata witnessing a decline of Rs 10-15 per bag due to low demand during festiveseason of Durga Puja and Diwali but prices remained largely stable in Patna andBhubaneshwar.

East (Rs/bag)


West - Cement prices witnessed decline of Rs 15-20 per bag in Mumbai and Gujaratdue to low demand. Regions like Pune and Nagpur also witnessed sharp fall in ce-ment prices. Prices have started improving post Gujarat elections.



Quarterly estimates - Cement



Grasim 66,770 65,519 1.9 62,601 6.7 21.1% 20.7% 20.9% 6,629 6,196 7.0 6,691 (0.9) 72.2 67.5 7.0 72.9 (1.0)

ACC* 26,700 24,445 9.2 25,027 6.7 15.3% 17.8% 15.6% 2,555 2,487 2.7 4,704 (45.7) 13.6 13.2 2.7 25.0 (45.7)

India Cement 9,875 11,227 -12.0 9,415 4.9 16.9% 18.3% 20.7% 241 491 (51.0) 563 (57.3) 0.8 1.6 (51.0) 1.8 (57.3)

Shree Cement** 12,739 13,230 -3.7 12,586 1.2 25.8% 29.7% 26.4% 1,714 2,281 (24.9) 592 189.5 49.2 65.5 (24.9) 17.0 189.5

Ultratech Cement 48,520 46,996 3.2 45,719 6.1 20.2% 21.4% 21.1% 5,353 5,500 (2.7) 6,169 (13.2) 19.5 20.1 (2.7) 22.5 (13.2)

TOTAL 164,604 161,417 2.0 155,347 6.0 16,492 16,955 (2.7) 18,719 (11.9)

Source: Companies, Kotak Securities - Private Client Research; *ACC is CY ending company; results are for Q4CY12**Shree Cements has changed its finacial yr to June; results are for Q2FY13

195

220

245

270

295

320

West (Rs/bag)


Cost pressures to remain highCost pressures are likely to remain high for the sector due to higher freight rates. Fullimpact of hike in road freight rates is expected to be felt during Q3FY13 post thediesel price hike in Sep, 2012. Coal prices have witnessed a marginal decline duringQ3FY13. However, with decline in average cement prices during the quarter,EBITDA/tonne is expected to decline sequentially.

RecommendationWe maintain our positive stance on the sector. Our top picks in the cement sectorremain Shree Cement and Grasim Industries. We continue to maintain ACCUMU-LATE rating on ACC and Ultratech Cements while maintain a REDUCE rating onIndia Cements



CONSTRUCTION

Construction sector performance during Q3FY13 is expected to improve on asequential basis led by improvement in execution. Revenues are expected togrow by 14% QoQ for construction companies in our coverage universewhile on yearly basis, revenue growth is expected to be slow at 6% due tolower than expected revival in order inflows during current financial year.Though margins are expected to remain stable but steep increase in workingcapital requirements as well as borrowings are expected to dent theprofitability on yearly basis. Order inflow continued to witness lacklusteractivity in the current fiscal till date.

We have witnessed eagerness from the government's side to reduceadministrative hassles in award of large sized projects with plans of settingup of National investment board (NIB) or Cabinet Committee onInfrastructure. NIB, once set up, would provide a single window clearanceto large sized projects which are stuck up and would result in improvingorder inflow scenario for the entire sector.

Going ahead we would watch out for further progress on NIB or CCI,improvement in order inflows across segments, fund raising at SPV level,decline in interest rates and faster environmental clearances for speedierfinancial closure. Till that time, we continue to remain selective on thesector and would prefer companies with healthy order book, improvedexecution and attractive valuations. We would thus prefer IRBInfrastructure, IL&FS Transportation Network, Jaiprakash Associates, UnityInfraprojects and Pratibha Industries

Key expectations about Q3FY13

Revenue growth to witness improvement on sequential basisRevenue growth of our coverage companies during Q3FY13 is likely to be led byramp up in execution, after witnessing dull quarter Q2FY13. However, revenuegrowth is not expected to jump up sharply despite healthy order book for the com-panies as they try to contain working capital cycle and maintain balance sheetstrength. It is expected to grow by 6% YoY only for our coverage universe ledmainly by healthy execution by IRB Infra, IL&FS Transportation, NCC, Punj Lloyd andPratibha Industries. Order inflow also continued to remain lacklustre for the sectorwhich can impact future revenue visibility for the sector.

Net profits to be impacted by higher interest outgoAggregate net profit of companies in our coverage universe is expected to declineby 16% YoY for Q3FY13 led by steep increase in interest outgo. Interest outgo andoverall borrowings are likely to remain high during FY13 also due to stretched work-ing capital cycle and higher interest rates. However, reversal of interest rate cycle orstake sale by companies at the SPV level would be positive for the sector since itwould help in reducing overall interest outgo.

Fund raising at SPV level continued to witness delaysThough companies have been in talks with several players for selling stake in theirSPVs executing road, power or cement projects, continued delays have been wit-nessed. JP Associates was planning to finalize stake sale in their cement plant byend of Q3FY13 but it has been delayed. NCC was planning to finalize stake sale intheir road or power projects which is also delayed. IVRCL had managed to sell stakein some of its projects during past two quarters but we would wait for further an-nouncement during Q3FY13.

RESULTS PREVIEW

Teena [email protected]+91 22 6621 6302

Top Pick

IRB InfrastructureIL&FS transportation network

Jaiprakash AssociatesUnity InfraprojectsPratibha Industries

Phoenix mills




Quarterly estimates - Construction & Real estate



Construction

Punj Lloyd 31,454 27,281 15.3 26,944 16.7 9.0 9.7 0.3 87 (179) - 703 (87.6) 0.3 (0.5) - 2.1 (87.6)

Jaiprakash Associates 30,730 29,825 3.0 32,579 (5.7) 25.0 26.5 23.6 1,368 1,280 6.9 2,050 (33.3) 0.6 0.6 6.9 1.0 (33.3)

IRB Infra 9,650 8,784 9.9 7,792 23.8 44.5 47.1 48.2 1,113 1,210 (8.0) 1,314 (15.3) 3.3 3.6 (8.0) 4.0 (15.3)

IL&FS Transportation 16,500 13,704 20.4 12,684 30.1 30.0 33.0 25.3 1,282 1,159 10.6 877 46.1 6.6 6.0 10.6 4.5 46.1

IVRCL* 11,200 9,947 12.6 11,955 (6.3) 8.0 7.0 7.3 (114) (396) (71.2) 68 - (0.4) (1.3) (71.2) 0.3 -

NCC 14,696 13,261 10.8 12,636 16.3 8.5 8.3 6.1 160 81 99.2 (95) - 0.6 0.3 99.2 (0.4) -

BGR energy 7,500 6,265 19.7 8,023 (6.5) 14.0 15.1 16.2 425 347 22.4 547 (22.3) 5.9 4.8 22.4 7.6 (22.3)

Simplex Infra 15,443 13,965 10.6 15,943 (3.1) 9.0 8.4 8.0 201 110 82.8 180 11.4 4.0 2.2 82.8 3.6 11.4

Madhucon Projects 4,477 3,188 40.4 6,249 (28.3) 10.0 17.1 8.4 55 50 10.8 75 (27.1) 0.7 0.7 10.8 1.0 (27.1)

Unity Infra 5,425 4,011 35.2 4,896 10.8 13.5 17.6 14.5 272 166 64.4 247 10.4 3.7 2.2 64.4 3.3 10.4

Pratibha Industries 6,059 4,422 37.0 4,508 34.4 13.0 13.2 12.5 257 213 20.7 191 34.9 2.5 2.1 20.7 1.9 32.7

J Kumar Infraprojects 2,817 2,153 30.8 2,507 12.4 15.0 17.3 16.0 207 169 22.7 196 5.9 7.5 6.1 22.7 7.0 5.9

Total 155,951 136,806 14.0 146,717 6.3 5,314 4,210 26.2 6,354 (16.4)

Real Estate

Phoenix mills Ltd 680 665 2.33 505 34.7 66.0 66.0 73.9 327 330 (1.0) 269 21.5 2.3 2.3 (1.0) 1.9 21.5


Remain selective on the sector in lieu of execution and order in-flow related concernsWe continue to remain selective on the sector and would prefer companies withhealthy order book, improved execution and attractive valuations. We would thusprefer IRB Infrastructure, IL&FS transportation network, Jaiprakash Associates, UnityInfraprojects and Pratibha Industries. We would also continue to maintain our posi-tive bias for Phoenix mills based on its strong rental revenue stream, excellent mar-gins as well as likely commissioning of market city in Chennai and would recom-mend accumulating the stock on declines.

Key risks to our recommendations would come from lower than expected project ex-ecution and higher than expected working capital cycle



RESULS PREVIEW


FMCGWe expect companies under our coverage to report healthy earnings for thequarter, with sales and earnings growth aggregating at 15% each.Companies are likely to report higher gross margins in the quarter onaccount of declining expenses on several raw materials (most notable beingpalm oil and copra). We believe that gross margin gains shall be modestlyoffset by other expenses. Three of the four companies in our coverage areexpected to report stronger EBITDA margins. Expect Godrej Consumer tolead sales growth (impact of inorganic growth), and Marico to lead PATgrowth within our coverage universe.

Godrej Consumer: Godrej Consumer: We expect the company to report 26% y/y growth in sales, contributed significantly by acquisitions (higher integration ofDarling). Expect gross margin improvement to be modest, and limited to soaps.Expect EBITDA margins to decline significantly on account of higher A&P spendsand employee expenses. We expect earnings growth of 15% y/y.

Hindustan Unilever: Expect sales growth in HPC segment to moderate to 14%,with domestic sales rising 13%. HUL will continue to register gross margin gains,aided by price hikes and lower raw material prices; expect EBITDA margin tostrengthen 70bps y/y. We expect earnings growth of 15.5% on weaker otherincome.

ITC: We expect 1% growth in cigarette volumes. Expect net sales growth of14.5%, contributed significantly by cigarette sales growth, with strong growthalso in the other FMCG segment. Expect EBITDA margin expansion of 80 bps oncontinued strength in gross margins, savings on other expenses. We expect 15%growth in earnings.

Marico: Expect Marico to report 18.5% growth in net sales on continuedstrength in CNO, and benefits of Halite acquisition. Expect significant expansionin gross margins leading to 1.9ppt rise in EBITDA margin. Expect PAT growth tobe moderated to 18% on higher interest expenses, expect EPS growth to be fur-ther moderated to 15% (dilution impact y/y).

Quarterly estimates - FMCG



Godrej Consumer 16,992 16,003 6.2 13,509 25.8 17.8 15.6 20.2 1,918 1,593 20.4 1,671 14.8 5.6 4.7 20.4 4.9 14.8

Hindustan Unilever 66,073 63,108 4.7 59,376 11.3 17.0 15.5 16.3 8,803 8,069 9.1 7,621 15.5 4.1 3.7 9.1 3.5 15.5

ITC 70,975 71,460 -0.7 61,954 14.6 38.3 36.5 37.6 19,567 18,364 6.5 17,009 15.0 2.5 2.3 6.5 2.2 15.0

Marico 12,528 11,559 8.4 10,572 18.5 13.6 12.8 11.7 1,009 859 17.5 842 19.8 1.6 1.3 17.5 1.4 14.4

Total 166,569 162,130 2.7 145,411 14.6 26.0 24.6 24.6 31,298 28,886 8.4 27,143 15.3 14 12 13.9 12 15.0

Source: Company Reports, Kotak Securities - Private Client Research

Top Picks

ITCMarico





INFORMATION TECHNOLOGY

We expect companies under our coverage to report a sequential revenuegrowth of about 2.9%, driven by volumes. Volumes for the Top 4 companiesare expected to rise by 2% - 3%. While there is a seasonal impact, slowergrowth in discretionary spends and continued delays in spending decisionshave likely continued to impede revenue growth, we believe. HurricaneSandy also had a marginal negative impact, we understand. The crosscurrency volatility impact is expected to be marginally positive but the near2% QoQ appreciation of the rupee on an average will have a negativeimpact on revenues Average realizations are expected to have remainedstable QoQ, barring few cases of declines.

EBIDTA margins are expected to be marginally lower QoQ for our coverageuniverse. Salary hikes by select companies, rupee appreciation and relativelylower number of billing days will likely have an impact. Quarterly variationsin some companies will also likely impact the overall picture. We expectEBIDTA to rise by about 1% QoQ, for companies under our coverage.

Companies follow different hedging strategies and different accountingpolicies. This may lead to corresponding impact of currency volatility onother income. Consequently, PAT is expected to de-grow by about 1.1% forcompanies under our coverage (About 2.4% de-growth for the Top 4).

With higher-than-expected impact of delays in decision-making and clientshut-downs in 3Q, we expect Infosys to reduce the organic annual revenueguidance marginally.

Among other things, we will also watch out for :

a) Comments by company managements on budget spending patterns andorder-booking trends,

b) CY2013 budgets,

c) Pricing declines, if any and comments on the same,

d) Strength in any of the verticals / services

While the economies of USA and EU may take long to stabilize and improve,the stimulus measures taken by the developed economies of USA and EUhave eased concerns of catastrophic defaults / bankruptcies. The bid by theUS Government to avert the fiscal cliff may instill more confidence in themedium term prospects of the US economy and may lead to better decision-making by client companies. This may prevent demand from falling in theforeseeable future. While stocks may trend side-ways in near term, wemaintain our constructive view on the medium-to-long term prospects ofthe sector on expectations of improving demand over this period.

2% - 3% sequential volume growth expected for top tier compa-niesWe expect top-tier companies to report organic volume growth of about 2% - 3%QoQ. We understand that, apart from seasonality, delays in decision making havecontinued and also, the actual amount of spends as compared to budgets are rela-tively lower. Hurricane Sandy has probably resulted in shutdowns by some compa-nies, further impacting revenue growth in 3Q. We will closely hear managementcomments on the potential order flows from USA as well as Europe, especially afterthe 'fiscal cliff' has been averted.

Infosys is expected to see a higher revenue growth because of consolidation of Lode-stone revenues. While volumes are expected to grow QoQ, we expect realizations tobe largely stable, subject to some cases of reductions. However, we will closelywatch out for management comments on potential price reductions.

RESULT PREVIEW

Dipen [email protected]+91 22 6621 6301



Impact of cross currency movementsThe Indian rupee has appreciated v/s USD (1.9%) and GBP (0.16%), while depreci-ating v/s the Euro (1.94%). The USD has depreciated v/s Euro (3.7%) and v/s GBP(1.7%). To that extent, the impact on USD-based revenues is expected to be posi-tive.

Margins expected to be lowerWe expect margins to be marginally lower on a QoQ basis due to rupee apprecia-tion, salary hikes / promotions by few companies and lower number of workingdays.

Volatility in other incomeFor 3Q, we expect the other income component to be lower QoQ. The overall forexgains / losses are influenced by the hedging strategies and accounting methods fol-lowed, apart from the movement of the rupee. Utilisation of cash for M&A activity(Infosys) is also expected to have a moderate impact. Consequently, OI is expectedto be 20% lower QoQ for the set of companies under our coverage.

PAT is expected to fall by about 1.1% QoQ for companies under our coverage,partly due to quarterly volatility in earnings of some companies. On a YoY basis,revenues are expected to grow by 15% and PAT by about 10%, for companiesunder our coverage.

Factors to watchThe annual guidance from Infosys will be of interest. The management has beenconsistent in cautioning that, there have been delays in decision making and the un-certainty persists. Management comments on the client spending and CY2013 bud-gets will gain additional importance. We expect volume growth guidance to be low-ered marginally due to a weaker-than-expected 3Q.

Apart from Infosys' guidance, we will closely track comments on CY13 budget esti-mates. Pricing declines, if any and comments on the same, further insights into anypick up in discretionary spends, hiring trends and comments on new opportunitieslike Cloud Computing, etc will be also of importance to us.

We will closely watch the progress made by and expectations of the various compa-nies in new areas of opportunities. Cloud Computing provides a big potential andorder flows in this business will be of interest to us. Non-linear initiatives are becom-ing very important from the perspective of sustaining margin. Progress on the sameby various companies will be of interest to us.

Remain constructive on medium-to-long term prospects; to watchmacro scene closelyWhile the economies of USA and EU may take long to stabilize and improve, thestimulus measures taken by the developed economies of USA and EU have easedconcerns of catastrophic defaults / bankruptcies. Recent actions in USA to avert thefiscal cliff may also instill more confidence.

This may prevent demand from falling in the foreseeable future. However, thestocks may remain range-bound in the short term on continuing macro concerns. Wemaintain our constructive view on the medium-to-long term prospects of the sectoron expectations of improving demand over this period.



Quarterly Estimates (October - December 2012) - Information Technology

Company Revenues (Rs mn) EBIDTA (%) PAT (Rs mns) EPS (Rs)


Infosys ^ 102230 98,580 3.7 92,980 9.9 25.3 26.3 31.2 22,038 23,690 (7.0) 23,720 (7.1) 38.6 41.5 (7.0) 41.5 (7.1)

TCS 158820 156,208 1.7 132,040 20.3 28.5 28.4 31.0 34,586 35,123 (1.5) 28,866 19.8 17.7 17.9 (1.5) 14.7 19.8

Wipro 112022 106,566 5.1 100,591 11.4 19.6 20.1 19.7 16,582 16,177 2.5 14,564 13.9 6.7 6.6 2.5 5.9 13.7

HCL Tech * 62122 60,910 2.0 52,452 18.4 21.1 22.2 18.5 8,403 8,641 (2.8) 5,528 52.0 11.9 12.2 (2.8) 7.8 52.0

TOTAL 435194 422,264 3.1 378,063 15.1 81,609 83,631 (2.4) 72,678 12.3

Geometric 2548 2,616 -2.6 2,190 16.3 20.0 21.6 18.2 238 179 32.8 213 11.6 3.8 2.8 32.8 3.4 11.5

Infotech Ent 4880 4,771 2.3 4,165 17.2 18.3 18.7 20.6 577 503 14.7 340 69.9 5.2 4.5 14.7 3.1 69.9

KPIT 5690 5,672 0.3 3,789 50.2 16.0 16.6 15.3 566 461 22.7 411 37.8 3.0 2.4 22.7 2.3 28.2

NIIT Ltd 2376 2,791 -14.9 2,501 -5.0 8.0 9.4 10.0 108 116 (6.9) 407 (73.5) 0.7 0.7 (6.9) 2.5 (73.5)

NIIT Tech 4991 5,001 -0.2 4,330 15.3 16.4 17.0 18.0 524 432 21.2 640 (18.2) 8.7 7.2 21.2 10.7 (18.9)

Oracle 8372 7,935 5.5 8,159 2.6 31.5 27.1 34.9 2,161 1,574 37.3 3,030 (28.7) 25.8 18.8 37.3 36.2 (28.7)

R Systems ** 1163 1,145 1.6 1,127 3.2 6.6 6.7 9.5 42 46 (9.1) 54 (22.6) 3.4 3.8 (9.1) 4.4 (22.6)

Zensar 5465 5,373 1.7 4,808 13.7 13.0 13.6 14.5 458 322 42.3 522 (12.2) 10.5 7.4 42.3 12.0 (12.2)

TOTAL 35485 35,304 0.5 31,069 14.2 4,673 3,633 28.6 5,616 (16.8)

TOTAL 470679 457,568 2.9 409,132 15.0 24.0 24.4 25.9 86,282 87,264 (1.1) 78,294 10.2


* - Estimates are for 2QFY13

** - Estimates are for 4QCY12.

^ - Margin numbers and % are EBIT and EBIT %, respectively, for Infosys



LOGISTICS

Logistics - Port volumes at 12 major ports in Q3FY13Performance of Logistics companies involved with container rail business,CFS business and related business is strongly linked to performance of theport sector in the country. With the container volumes in October andNovember 2012 (December 2012 data not available) at the 12 major ports ofthe country growing to 1.29 mn TEUs (-2% YoY) and minor ports likeMundra estimated to grow much faster (14% CAGR), we expect the Logisticscompanies in our coverage to report marginal growth in Q3FY13. Themarginal growth would be primarily on account of improved realisation anddiversified business profile.

Container Corporation of India (Reduce: TP - Rs 975) Q3FY13 consolidated revenue is expected to increase ~4 % YoY and increase ~

3% QoQ to Rs 10,900 mn in sync with growth in volumes at major ports. It is im-portant 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~5%. In the previous quarter Concor had reported a 5% YoY decline in domesticvolumes primarily led by new railway policy effective August-2012.

Operating profit is expected at Rs 2,650 mn which translates into an operatingmargin of ~24 %, declining almost 220 bps YoY from 26.4% primarily due to in-creased competition in the Exim segment (waning pricing power) and higherhaulage cost in domestic segment (not completely passed to customers till date).

Net profit for Q3FY13 is expected at Rs.2,650 mn versus Rs 2,574mn in Q2FY13(+3% QoQ).

Gateway Distriparks Ltd (Accumulate: TP - Rs 154) We expect GDL's Q3FY13 revenues to increase ~26% YoY and increase ~3%

QoQ to Rs 2,450 mn. This we believe would be largely led by congestion at JNPTand Chennai port (it leads to higher CFS volumes and realization) and improvedload factor in the rail business.

The rail business is expected to report healthy load factor of 80% (previous year75%) with operating margin of 15%. This would be eighth consecutive quarterfor the rail business to report profits at net level.

With improved CFS realizations (YoY) and robust rail performance we expectGDL to report operating profit of Rs 650 mn which translates into healthy operat-ing margin of ~27%

Net profit is expected at Rs 340 mn versus Rs 298 mn in Q2FY13 and Rs 331 mnin Q3FY12.

RESULTS PREVIEW

Amit [email protected]

+91 22 6621 6222

Top Picks:

Arshiya InternationalAllcargo Global

Adani Port




Allcargo Global Logistics (Buy: TP - Rs 195) Q3FY13 consolidated revenue is expected to increase ~ 23% YoY and increase

3% QoQ to Rs 10,010 mn, Again the congestion at JNPT and Chennai portwould help the company report better numbers in the CFS business. HoweverECU line and domestic Multimodal Transport Operations (MTO) business is esti-mated to report sluggish growth in volumes in line with slowness in global con-tainer shipping business. Even the realization may be under pressure due to un-certainty in Eurozone.

Operating profit is expected at Rs 1161 mn which translates into an operatingmargin of ~11.6 %, falling 130 bps YoY primarily due to slowness in the keyMTO business.

Net profit is expected at Rs 571mn against profit of Rs 555 mn in Q2FY13 andprofit of Rs 609 mn in Q3FY12.

Arshiya International (Buy: TP - Rs 188) Consolidated revenue is expected to increase ~ 42% YoY and increase ~4%

QoQ to Rs 3,875 mn. The revenues would be primarily led by fast growth in theFree Trade Warehousing Zone (FTWZ) segment. The company has now startedoperations at its Khurja facility in FTWZ segment with 2 warehouses. The railsegment which primarily operates in the domestic segment is expected to reportmarginal growth with the 3PL segment reporting flattish revenues.

Operating profit is expected at Rs 1,125 mn which translates into an operatingmargin of 29%, improving YoY from ~25.77% primarily due to improved shareof high margin FTWZ business in the overall revenues.

Net profit is expected at Rs 370 mn versus profit of Rs 354mn QoQ and profit ofRs 345 mn in Q3FY12. FTWZ segment would be the key driver for the profitabil-ity for the company.

Adani Port and Special Economic Zone (ADSEZ) (Buy: TP - Rs 156) The overall volumes at the port are expected to reach 23 mn tonnes in the cur-

rent quarter (Q2FY13 ~20.4 mn tonnes) with significant contribution from coaland container. We are expecting marginal sales in the SEZ segment due to un-certainty of laws on taxation of SEZ units and SEZ developers (as mentioned inDirect Tax Code) and also due to slowing corporate capex.

Q3FY13 consolidated revenue is expected to increase ~ 19% YoY and increase~7% QoQ to Rs 8,200 mn. The revenues would be primarily led by volumegrowth and improving realisation per tonne/per TEU.

Operating profit is expected at Rs 5700mn which translates into an operatingmargin of ~70%. We expect the company to report sustained operating margins.Quicker berthing of ships, faster turnaround time, mechanized operations, amplestorage facility and good hinterland connectivity enables the company to com-mand superior realisation in comparison to government ports and even privatecounterparts.

Net profit for Q3FY13 is expected at Rs.4000 mn versus Rs 3107mn in Q3FY12.

Recently ADSEZ has signed a concession agreement to develop a highly mecha-nized bulk terminal on BOOT basis for Rs 10 bn at Kandla port.



Quarterly estimates - Logistics



Concor 10,900 10,548 3.3 10,462 4.2 24.3 24.4 26.5 2,340 2,324 0.7 2,413 (3.0) 18.0 17.9 0.6 18.6 (3.2)

Gateway Distriparks 2,450 2,373 3.2 1,942 26.2 26.5 24.7 31.5 340 298 14.1 331 2.7 3.2 2.8 14.3 3.1 3.2

Allcargo Global 10,010 9,752 2.6 8,116 23.3 11.6 11.6 12.9 571 555 2.9 609 (6.2) 4.1 4.0 2.5 4.5 (8.9)

Arshiya International 3,875 3,726 4.0 2,724 42.3 29.0 29.0 25.8 370 354 4.5 345 7.2 6.3 6.0 5.0 5.8 8.6

Adani Port 8,200 7,643 7.3 6,906 18.7 69.5 72.2 69.7 4,000 4,298 (6.9) 3,107 28.7 2.1 2.2 (4.5) 1.5 40.0

Gujarat Pipavav Port 1,010 943 7.1 1,155 (12.6) 40.1 35.6 50.6 125 81 54.3 268 (53.4) 0.3 0.1 200.0 0.7 (57.1)

Source: Companies; Kotak Securities - Private Client Research

Gujarat Pipavav Port (GPPL) (Buy: TP - Rs 59) We expect GPPL to report volumes of 1 mn tonnes (+15% QoQ) in the bulk seg-

ment and 1.4 lakh TEUs (+14% QoQ and -17% YoY) in the container segment,The YoY fall is primarily due to loss of ME1 (Maersk) service during the previousquarter.

Q3FY13 consolidated revenue is expected to decrease ~ 12% YoY and increase~10% QoQ to Rs 1,010 mn.

Operating profit is expected at Rs 405 mn which translates into an operatingmargin of ~40 %.

Net profit for Q3FY13 is expected at Rs.125 mn versus Rs 268 mn in Q3FY12 andRs 125mn in Q2FY13.



SHIPPING

The dry bulk market is persistently facing problem of oversupply of shipspegged at 8 to 9% per annum (Gross supply of 144 mn tonnes in the next2 years) and that is putting the various Baltic Indices and freight ratesunder pressure. During the quarter all the baltic indices were under pres-sure. The key Baltic Dry Index (BDI) lost 20% in the quarter to 845 points.Minimum activity was reported in the spot cargo for larger ships in thequarter which led to freights declining marginally by 5 to 10% on differ-ent routes. Little activity was also seen in the Panamax, Supramax andthe Handymax segments, not good enough to boost sentiment andfreight levels in the quarter. The orderbook to fleet ratio has also im-proved which currently stands at 21% - down from 36% in December2011 and 52% in December 2010.

The oversupply of vessels is a serious concern even in the crude tankermarket. Activity has slowed down in all the key segments of tanker mar-ket primarily due to sluggish world economy and the debt crisis in Eu-rope leading to poor demand for crude oil and petroleum products. Char-ters are withholding cargoes in anticipation of better freight rates. Thisis negatively impacting the market with number of ships exceeding thenumber of cargoes. The tanker market remained flat in the quarter prima-rily due to winter season in the west.

With slowing consumer demand and burgeoning order book, the con-tainer market was weak in Q3FY13 and is estimated to remain flattish innear term.

Shipping asset prices continue to hold in the quarter across segmentswhich is positive reading for the shipowners. Concurrently, the NAV andreplacement cost of most of the companies should continue to hold.

Another major positive news for the shipping industry was the fall inbunker prices which has fallen from $734/ tonne in March 2012(Singapore) to $630/tonne. Lower bunker cost during the quarter shouldpositively impact the margins for shipping companies.

Shipping Corporation of India (Reduce: TP - Rs 55) We expect SCI's Q3FY13 revenues to increase 6% YoY and remain flat QoQ at

Rs 10,300 mn, led by increased fleet size of the company and flattish tankermarket.

Operating profit is expected to improve marginally QoQ to Rs 200 mn (loss in pre-vious year) which translates into an operating margin of ~2%.This would be dueto stable tanker market and 15% fall in bunker prices which constitute almost30% of the operating cost.

Again we expect SCI to report net loss of Rs 500 mn versus a huge loss of Rs1605 mn in Q2FY13. This would be primarily due to flattish freight market, lowergains from sale of ships, increased depreciation and higher interest impact thisquarter.

We also estimate the gross NAV of the company to remain stable in the currentquarter.

Great Eastern Shipping Company (Accumulate: TP - Rs 286) Q3FY13 consolidated revenue is expected to decrease ~10 % YoY and remain

flattish QoQ to Rs 6714 mn amidst declining fleet and weak freight market. Theoffshore segment is expected to do well in the quarter with Brent crude sustain-ing above $100 per barrel in the quarter.

Operating profit is expected at Rs 2,174 mn which translates into an operatingmargin of ~32 %, declining almost 800 bps YoY from ~40% primarily due toweak shipping market.

RESULTS PREVIEW

Amit [email protected]

+91 22 6621 6222

Top Picks:

Mercator Ltd




Net profit is expected at Rs 400 mn versus loss of Rs 399 mn in Q2FY13 andprofit of Rs 718 mn in Q2FY13. The QoQ improvement would be primarily due tolower bunker price, higher gains from sale of ships and stable tanker market.

Mercator Lines Ltd (Buy: TP - Rs 34) Q3FY13 consolidated revenue is expected to increase ~ 6% QoQ and decrease ~

20% YoY to Rs 8,724 mn with significant contribution from the coal segment(~68%).

The offshore segment is also expected to do well in the quarter with Brent crudesustaining above $100 per barrel in the quarter. However the shipping segmentwith heavy exposure to dry bulk segment is expected to report subdued num-bers.

Operating profit is expected at Rs 1,455 mn which translates into an operatingmargin of ~17 %,

Net profit for Q3FY13 is expected at Rs 27 mn versus Rs 53 mn in Q2FY13.

The latest net NAV that we had estimated in the month of December 2012 forthe company is Rs 45/ share.

MLL is looking forward to get the 100% mining subsidiary listed (Oorja holdingltd) which would lead to value unlocking for the parent company (an upside of~5 to 10% from the current levels). However, due to poor market conditions, thelisting of Oorja holding may get deferred to the next financial year (FY14E) whichcan be a dampener for the company which is already struggling with weak ship-ping business.

ABG Shipyard (Accumulate: TP - Rs 378) We expect ABG's Q3FY13 revenues to increase 3% YoY and increase 12% QoQ

at Rs 6,400 mn on the back of strong order book of Rs 160 bn of the company.

Operating profit is expected at Rs 1710 mn which translates into an operatingmargin of ~27%.Operating margins are expected to remain stable as the com-pany orders a significant portion of the raw material upon winning the order.

We don't expect the company to book any significant subsidy amount the quar-ter

Net profit for Q3FY13 is expected at Rs.450 mn versus Rs 465 mn in Q3FY12 pri-marily due lower booking of subsidy and higher interest cost.

Pipavav Defence and Offshore Limited (Accumulate: TP - Rs 92) We expect Pipavav' s Q3FY13 revenues to increase 50% YoY and increase 1%

QoQ at Rs 6,714 mn on the back of strong order book of Rs 100 bn of the com-pany.

Operating profit (ex-subsidy) is expected at Rs 1423 mn which translates into anoperating margin of ~21%. .

Net profit for Q3FY13 is expected at Rs.900 mn versus Rs 95 mn in Q3FY12 pri-marily due to higher depreciation and higher interest cost.

Quarterly estimates - Shipping



GE shipping 6,714 6,653 0.9 7,514 (10.6) 32.4 40.2 33.4 810 972 (16.7) 885 (8.5) 5.3 6.4 (17.2) 5.8 (8.6)

Mercator Lines 8,724 8,223 6.1 10,952 (20.3) 16.7 20.6 16.7 27 53 (49.1) 227 (88.1) 0.1 0.2 (50.0) 1.0 (90.0)

SCI 10,300 10,259 0.4 9,670 6.5 1.9 -2.3 -6.5 -500 -1,605 (68.8) 739 (167.7) (1.0) (3.4) (70.6) 1.6 (162.5)

ABG Shipyard 6,400 5,725 11.8 6,192 3.4 26.7 28.4 24.6 450 431 4.4 465 (3.2) 8.8 8.5 3.5 9.1 (3.3)

Pipavav Defence 6,714 6,660 0.8 4,498 49.3 21.2 21.0 22.5 90 86 4.7 95 (5.3) 0.1 0.1 - 0.1 -




RESULTS PREVIEW


MEDIA

Advertising expenditures' growth has likely been soft in the quarter.However, demand from certain categories such as FMCG is likely to showcontinued strength, leading to benefits for TV broadcasters. Expect TVbroadcasters to lead advertising growth, while advertising growth in printis likely to be subdued. We estimate 14% growth in aggregate revenues ofour coverage universe. Expect EBITDA of our coverage universe to rise 17%y/y, led by growth in TV18 and Dish TV.

DB Corp: We expect 8.6% y/y growth in revenues for the company, with c.10%growth in advertising revenues. Expect flat margins and we forecast 16% growthin PAT for the company.

Dish TV: Expect revenues to rise 14.3% on account of higher net subscribers(post DAS implementation) and higher ARPUs (impact of price hikes taken ear-lier in the year). Expect 3.7 ppt rise in EBITDA margin (continued benefit on con-tent expenses and a relatively smaller offset from advertising spends). We expectthe company to report Rs 229 mn loss for the quarter.

ENIL: Expect 15% growth in net sales for the quarter, as the company continuesto engage advertisers with a more comprehensive offering. WE expect EBITDAmargins to decline significantly in the quarter, on account of : 1/ higher contribu-tion from low-margin activation business, and 2/ 3QFY12 carried benefits of one-time items relating to withdrawal of private treaties provisions. We forecast amodest decline in earnings for the quarter.

HT Media: We expect the English newspapers to continue bringing flattish rev-enues, and revenues to rise 8% in the quarter. We expect margins to decline 70bps in the quarter, on account of weaker margins from English newspapers. Ex-pect 2% growth in PAT for the quarter.

Jagran Prakashan: We expect 7% advertising revenue growth for the com-pany, over a tough base (advertising revenue growth for 3QFY12 was c.15%).Expect EBITDA growth to come in at 8%, while PAT will rise meaningfully onaccount of reduction in effective tax rates.

Sun TV Network: We expect 12% growth in revenues, led by strong growth inadvertising revenues, while analogue subscription revenues are also likely to reg-ister gains (y/y) on account of deal with Arasu Cable. Expect margins to decline90 bps y/y, on account of higher content expenses. PAT is likely to grow mod-estly, at Rs 1733mn.

TV18 Broadcast: (Does not include ETV Financials) Expect 13% growth in rev-enues, on account of growth in advertising revenues, as also inclusion of rev-enues from Indiacast. We expect continued improvement in the company's mar-gins as new channels gain traction in advertising and subscription revenues. Ex-pect PAT losses to decline to Rs 39mn as interest expenses decline.

Zee Entertainment: We expect continued strength in advertising revenues aswell as subscription revenues of the company, leading to net sales growth of21.5%. Expect 4.6 ppt y/y contraction in margins on account of new channelsand higher losses from sports, leading to a 17% growth in PAT.

Top Pick

TV18 BroadcastDB Corp




Quarterly estimates - Media



DB Corp 4,294 3,784 13.5 3,956 8.6 25.6 22.8 25.7 640 486 31.6 554 15.6 3.5 2.7 31.6 3.0 15.6

Dish TV 5,608 5,336 5.1 4,905 14.3 28.2 29.2 24.5 (229) (213) 7.2 (430) -46.8 -0.2 -0.2 7.2 -0.4 -46.8

ENIL* 876 771 13.6 758 15.5 34.2 24.5 41.2 178 103 72.4 181 -1.7 3.7 2.2 72.4 3.8 -1.7

HT Media 5,700 5,107 11.6 5,266 8.2 14.0 11.1 14.7 492 333 47.6 482 2.1 2.1 1.4 47.6 2.0 2.1

Jagran Prakashan 3,452 3,221 7.2 3,240 6.5 26.5 24.3 26.3 788 694 13.5 413 90.8 2.5 2.2 13.5 1.3 90.8

Sun TV Network* 4,776 4,333 10.2 4,251 12.3 52.9 49.7 53.8 1,733 1,517 14.2 1,679 3.2 4.4 3.8 14.2 4.3 3.2

TV18 Broadcast 3,851 3,651 5.5 3,427 12.4 7.6 3.9 -9.9 (39) (406) NM (538) NM -0.02 -0.24 -90.5 -1.5 NM

Zee Entertainment 9,166 9,535 -3.9 7,548 21.4 24.0 22.8 28.6 1,626 1,875 -13.3 1,393 16.7 1.7 2.0 -13.3 1.5 16.7

Total 37,722 35,738 5.6 33,351 13.1 26.6 23.5 25.6 5,188 4,389 18.2 3,734 39.0




METALS

Another weak quarter but remarkable improvement lies ahead.Expect strong sector performance over next few months.

Steel - worst behind us. Expect steel price hikes ahead Indian steel demand grew by just 0.4% to 5.65mt in Nov 2012, as per data re-

ported by Joint Plant Committee (JPC). With almost no growth in Oct-Nov 2012,steel demand growth over Apr-Nov' 12 had been just 4.2%. Steel demand hasmoderated significantly from 8-10% growth seen in Q1FY13. Despite weak de-mand, net imports increased to 234KT in Nov 2012 vs. 75-80KT seen in Sep-Octmonths.

Recent data of India's manufacturing activity surging to a 6 month high in Dec2012, boosted by strong factory output and a spike in new orders, is a positiveindicator for revival of domestic steel demand. There are expectations of rate cutby RBI in this quarter and global macro news flow also seems to be turning posi-tive.

Our experience has been that, barring an odd year, Jan-May period happens tobe typically strongest season for steel companies. We are likely to witness similartrend in 2013 wherein steel prices are likely to move upwards from Jan 2013 andremain firm over next few months. Already signs of this are visible, as in Asianregion, Baosteel, China's steel leader and Posco, Korean steel major, have an-nounced price increases for Jan 2013. Similarly in Europe, Arcelor Mittal andTata Steel Europe have announced sharp price increases. Latest news flow isthat Baosteel has further raised steel prices for Feb shipment by $15/t-$25/t.

Indian steel prices are likely to follow the global trend more so given it would bebeginning of peak seasonality. Some Indian steelmakers attempted to increasesteel prices between Rs500-1500/t in Dec 2012 without much success. There hasbeen again price increase of 2-3% announced in Jan 2013 by Indian steel mills.We expect Indian steel prices can rise by up to $40/t over next 2-4 months.

Ferrous raw materials 62% Fe grade iron ore export spot prices to China have rallied 30% over last

month and are trading at c$153/t CIF and rallied >70% from the lows of $86/t inearly Sep 2012. Similarly, 58% Fe grade prices are trading at c$142/t CIF, rally-ing almost 80% from the lows of below $80/t four months back. Rally is drivenby improvement in industrial activity in China and in backdrop of China iron oreport inventory hitting more than a two year low of 71mt Iron over last fortnight.

Quarterly contract price for Q4FY13 hard coking coal has fallen by 3%Q/Q to$165/t while it is trading at $160/t in spot. Coking coal contract prices had main-tained their continuous fall and are now half of Jan 2011 levels of $330/t. Fall incoking coal prices is positive for Indian steel companies and benefits of it wouldflow into their P&L in Q4FY13e and Q1FY14e.

As anticipated, coking coal prices remain subdued unlike iron ore prices whichare rallying due to few recent developments in the industry primarily (i) newsources of supply emerging from Mongolia and Mozambique and (ii) China hasremoved 40% export duty on coking coal in line with a WTO ruling from 1 Dec2012.

Scrap prices recovered by c10% during Q3FY13 and benchmark Rotterdam scrapprices are trading at $ 383/t FOB.

RESULTS PREVIEW

Saurabh [email protected]

+91 22 6621 6309




Base metals Average LME aluminium prices for Q3FY13 recovered 3.6%Q/Q but were still

down 4.6% Y/Y. Average aluminium inventory at LME has started rising againand is up 4.8% Q/Q and up 10.8% Y/Y. We again reiterate that LME inventorylevels are >5x the levels of late 2008 financial crisis and so aluminium prices areunlikely to recover smartly in medium term.

Average LME copper prices for Q3FY13 marginally improved by 2% Q/Q andwere up 4.8% Y/Y. Average copper inventory at LME have reversed trend androse 8.3% Q/Q but are still down by massive 37.8%Y/Y. Copper dd-ss balanceremains relatively more favourable than other base metals.

Average LME zinc prices for Q3FY13 also improved 3.8% Q/Q and 3.7%Y/Y. Av-erage zinc inventory at LME maintain their rising trend, up massive 19.1% Q/Qand now up 49.2 Y/Y. Zinc fundamentals remain weakest amongst base metals.

We expect base metal prices might improve further over next few months amidstrong seasonality. But we expect market performance of steel companies tooutperform base metal companies over next few months.

Hind Zinc We are building in c10% sequential improvement in sales volumes for the com-

pany as it had guided for strong revival in 2HFY13. We are forecasting Q3 inte-grated production volumes of 170Kt for zinc, 25kt for lead and 82tons for silver.Metal realizations are expected to improve 4 to 6% Q/Q.

We have not built in much improvement in margins unlike management guid-ance of considerable fall in CoP from Rampura Agucha mine from Q3. We fore-cast 90bps improvement in Q3 EBITDA margins to 52%.

We expect 14.8% Q/Q improvement in Q3 EBITDA to Rs16.57bn and 6.7% im-provement in Q3 PAT to Rs16.33bn.

We expect company to again disappoint on cost structure mainly CoP at RampurAgucha. However, if company can deliver closer to its strong guidance on pro-duction volumes on cost improvement then we might upgrade our recommenda-tion on the stock.

SAIL Operating margins of SAIL had fallen to decade low levels in Q2FY13. We see

sustained upward reversal from this quarter onwards. We expect profitability tohave bottomed out in near, medium and long term.

SAIL's Q3 steel realizations are likely to have fallen 3%Q/Q as it is likely to haveoffered discounts to Improve volumes.

SAIL is likely to deliver sales volumes of 2.875mt in Q3 up 9.6% Q/Q .This au-gurs well not only for revenue growth but also for margin improvement as thereare considerable fixed costs (c25% of operating costs), and thus higher EBITDAgrowth.

We expect SAIL's Q3 EQITDA margins to improve 255bps to 12.8%. We expect32.9% Q/Q improvement in Q3 EBITDA and 27.3% Q/Q improvement in Q3PAT.

We have recently reinitiated coverage on SAIL with a BUY as we believe SAILhas a good potential for sustainable upward re-rating over next few years. Wesee bright prospects ahead with 38% CAGR in earnings for SAIL over FY13-15period primarily driven by 17.5% CAGR in sales volume and improved margins.



Tata Steel Tata Steel (standalone) is expected is expected to post a 2% Q/Q decline in

realisations during Q3FY13. We do not expect price hikes announced by domes-tic steel companies in Dec 2012 to have materialized last month.

We expect domestic steel volumes to improve 4% Q/Q to 1.8mt in Q3. Majorvolume jump is likely to happen from Q4 onwards.

Even despite commissioning of new Coke plant early Dec 2012, external cokepurchases (hurting margins) are set to continue in Q3FY13 (like Q2FY13) andwould come down from Q4.

We expect Indian operations to report marginally better Q/Q performance with70bps improvement in margins driven by lower coking coal prices and improvedsales volumes.

Tata Steel Europe (TSE) is expected to continue its weak performance in Q3 astraditionally this happens to be weakest season in Europe. Major steel pricehikes have been announced in Europe beginning Jan 2013 and benefit wouldflow in Q4FY13. Partial shutdown of Italian steel major ILVA is likely to supporthigher steel prices in Europe over next few months.

We expect TSE to report Q3 EBITDA of $8/t vs EBITDA loss of $2.3/t in Q2 asbenefit of lower coking coal prices is likely to have started flowing into P&L andinventory loss reported last quarter is unlikely to be repeated.

We expect consolidated Q3 EBITDA margins to improve 60bps to 7.4%. We fore-cast 5.3% Q/Q improvement in consolidated Q3 EBITDA and 24.9% Q/Q im-provement in consolidated Q3 PAT.

We see Q3 to be last quarter of pain for the company and see remarkable im-provement in financials from Q4 onwards, driven by improved domestic volumesand realizations further helped by better steel industry macro in Europe.

Quarterly estimates - Metal



Hind Zinc 32,213 28,655 12.4% 27,868 15.6 52.0 51.1 51.1 16,337 15,314 6.7 12,562 30.1 3.9 3.6 6.7 3.0 30.1

SAIL 115,140 108,202 6.4% 107,288 7.3 12.8 10.3 14.7 6,915 5,431 27.3 6,321 9.4 1.7 1.3 27.3 1.5 9.4

Tata Steel - Standalone 93,153 91,506 1.8% 83,819 11.1 28.2 27.5 31.5 13,073 13,508 -3.2 14,213 -8.0 13.5 13.9 -3.2 14.8 -9.2

Tata Steel - Consolidated 328,274 341,327 -3.8% 331,031 -0.8 7.4 6.8 5.2 (3,424) (4,560) -24.9 (6,874) -50.2 (2.7) (3.7) -27.9 (6.2) -56.5

Total 475,626 478,184 -0.5% 466,187 2.0 11.7 10.2 10.1 19,828 16,185 22.5 12,010 65.1




Copper Price ($/t) & Inventory (t)

Source: Bloomberg

Silver Price (Rs/Kg)

Source: Bloomberg

China iron ore port inventory (mt)

Source: Bloomberg

Rotterdam Export Shredded Scrap (FOB) US$/t

Source: Bloomberg

Aluminium Price ($/t) & Inventory (t)

Source: Bloomberg

Zinc Price ($/t) & Inventory (t)

Source: Bloomberg

4,500,000

4,700,000

4,900,000

5,100,000

5,300,000

1800

2000

2200

2400

2600LME Inventory LME Price (RHS)

720,000

850,000

980,000

1,110,000

1,240,000

1750

1875

2000

2125


200,000

275,000

350,000

425,000

500,000

6800

7300

7800

8300


49000

54000

59000

64000MCX Price

65

75

85

95

105

330

360

390

420

450

Scrap price

INDUSTRY CHARTS



Australian Coking Coal Spot Price (FOB) US$/t

Source: Bloomberg

N Europe HRC ex-works price (US$/t)

Source: Bloomberg

China Rebar Export Price (FOB $/t)

Source: Bloomberg

China HRC Export Price (FOB $/t)

Source: Bloomberg

130

160

190

220

250Coking Coal Spot Price

550

600

650

700

750HRC price (ex works)

490

545

600

655

710

Rebar export price

490

550

610

670

730HRC export price

China iron ore import price (CIF $/t)

Source: Bloomberg

75

100

125

150

175

62% Fe 58% Fe



RESULTS PREVIEW

Sumit [email protected]+91 22 6621 6313

OIL & GAS

In Q3FY13, Brent crude oil price (global benchmark) touched a high of USD$117.6/ bbls but settled lower at USD $ 112.84/ bbls. Due to lack of keytriggers globally, crude traded in a narrow range of USD$ 116-118/bbls.

On the other hand, rupee remained volatile and traded in a wide range ofINR 51.75-55.73/ USD $. It averaged at ~ INR54.15/$ and closed at INR 55.0/USD$ (4.04% QoQ depreciation).

On the domestic front, sector favorable news flows from the media kept thesector in limelight. To begin with, Rangarajan Committee report onproduction sharing contract (for E&P blocks) was tabled, suggesting movingto revenue sharing (prospectively) from current cost recovery, thus reducingcontinuous cost monitoring by the government. Further, the Cabinet isconsidering a proposal raising diesel price by Rs1/lit./month thus wipingout under-recoveries on diesel in the next ten months. The oil ministryproposed key reforms, though implementation needs to be closely watched.

Refiners: In Q3FY13, Singapore refining margins averaged ~USD $ 6.43/bblsafter touching a high of USD $9.66/ bbls mainly on account of weak globaldemand and pressure on gasoline-crude, diesel-crude & FO-crude cracks. Weexpect refining companies to show subdued gross refining margins but partof it will be negated by weak rupee.

The natural gas supply in India was lower due to delay in ramp-up of thenatural gas production from KG-D6 by RIL. This will not only negativelyimpact the performance of RIL but also impact gas-utility companies such asGSPL, GAIL, Gujarat Gas, etc. However, part of the gas volume loss wascompensated by higher import of LNG by PLNG.

Key highlightsWe expect upstream companies to report strong growth in revenues in Q3FY13mainly on account of elevated crude oil prices and weak rupee. Gas utility compa-nies can see some volume pressure on account of lower domestic natural gas sup-ply. At the same time, the raw material cost will be higher as part of the gas sup-plied was costly imported LNG which will have negative impact on the profitability.

Oil & Gas Companies Cairn India Ltd. We expect, CIL to report strong top line growth both on QoQ

and YoY basis on account of volume and realization growth. Cairn India is a pri-vate exploration company so it will reap full benefits of rising crude oil prices. Wealso expect Company to report forex gain.

Petronet LNG (PLNG). We expect the Company to show strong volume growthon sequential basis mainly on account of higher gas demand and lower KG-D6gas production. The Company filled the supply-demand gap by importing higherLNG. We expect higher re-gasification tariffs.

Castrol. We expect the Company to show volume pressure both in the automo-tive segment and industrial segment. The rupee depreciation will impact theCompany's margins negatively.

Indraprastha Gas (IGL). We expect IGL to show decent volume growth YoYbasis mainly due to conversion of vehicles to CNG. On sequential basis, the gasvolume performance and margins are expected to be better due to higher de-mand and price hikes under taken in Sep'12. In Jan'13, the Company has furtherhiked CNG prices by 4% to ring-fence its margins. The 4% revision in CNGprice results in increase of Rs 1.55/kg to Rs. 39.90 per kg in the consumer priceof CNG in Delhi and Rs 1.80/kg to Rs 45.10 per kg in Noida, Greater Noida andGhaziabad. However, the full benefit of the same will be reflected in Q4FY13.

Top picks

Cairn IndiaMRPL

Petronet LNG




3M performance

Source: Bloomberg

1M performance

Source: Bloomberg

Refining margin ($/bbls)

Source: Bloomberg

Brent Crude Price Movement (US$/bbls)

Source: Bloomberg

MRPL. We expect MRPL to show decent performance on account of higher ca-pacity and better margins on account of improved yields.

GSPL. We expect GSPL to report de-growth in profits. However, there may beimprovement in volumes in Q3FY13. PAT is expected to be under-pressure. TheCompany may get benefit of take-or-pay clause.

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

Singapore

WTI Crack USG Ref. Margin

Urals Crack Med Ref. Margin

90

95

100

105

110

115 BSE Oil and Gas Sensex

2.4

7.3

2.8

3.8

5.8

7.6

13.4

10.8

3.8

0.8

-13.7

-2.8

1.8

1.8

0.9

3.0

-5.6

-20 -15 -10 -5 0 5 10 15

RIL

ONGC

CAIRN

GAIL

IOCL

BPCL

HPCL

MRPL

Essar Oil

Aban

Shivvani

IGL

PLNG

OIL

GGAS

GUJS

Ageis

-0.4

0.0

5.0

-6.8

7.9

8.2

4.0

1.0

20.2

-15.8

-23.7

-1.8

3.9

-11.5

-0.3

-3.0

9.6

-30 -20 -10 0 10 20 30

RIL

ONGC

CAIRN

GAIL

IOCL

BPCL

HPCL

MRPL

Essar Oil

Aban

Shivvani

IGL

PLNG

OIL

GGAS

GUJS

Ageis

Quarterly estimates - Oil & Gas



Cairn India 47,889 44,431 7.8 30,968 54.6 63.0 59.4 76.5 28,010 23,222 20.6 22,619 23.8 14.69 12.17 20.7 11.9 23.5

PLNG 79,800 75,486 5.7 63,303 26.1 6.3 6.9 8.0 2,865 3,148 -9.0 3001.8 -4.6 3.82 4.20 -9.0 4.0 -4.6

Castrol * 7,859 7,195 9.2 7,694 2.1 18.1 16.6 19.9 1,012 857 18.1 1068.0 -5.2 2.05 1.73 18.1 2.2 -5.2

IGL 9,230 8,546 8.0 6,615 39.5 22.9 24.1 22.5 1,014 992 2.2 691.5 46.7 7.24 7.09 2.2 4.9 46.7

MRPL 168,883 163,101 3.5 129,308 30.6 2.9 8.8 2.4 2,199 11,851 -81.4 1098 100.3 1.25 6.74 -81.4 0.7 92.1

GSPL 2,887 2,732 5.7 2,739 5.4 91.1 92.2 91.9 1,293 1,328 -2.6 1261.294 2.5 2.30 2.36 -2.6 2.2 2.5

Total 316,549 301,491 5.0 240,627 31.6 14.6 17.2 15.5 36,394 41,398 -12.1 29,739 22.4

Source: Companies; Kotak Securities - Private Client Research; * Follows calendar year



BANKING & NBFCS

Outlook: Neutral During Q3FY13, net income for Banks & NBFCs under our coverage is ex-

pected to grow at slower pace - 14.4% YoY as compared to 18.4% YoYwitnessed during Q2FY13. Our private banking universe is likely to growfaster at 22.8%, while PSU banks under our coverage are likely to growat subdued pace (8.2% YoY). During the same period, NBFCs are likely towitness healthy growth in net income (19.2%).

The credit growth has moderated marginally to 16.3% YoY (as on Decem-ber 14, 2012) as compared to previous fortnight, when it had crossed17.0% mark. Deposit mobilization continued to lag the overall creditgrowth - 13.4% YoY (as on December 14, 2012) as compared to ~18%, ayear back. This has led to rise in the C/D ratio to 77.1% at the end ofDecember 14, 2012, as compared to 75-76% seen during previous twoquarters.

We expect NIM to remain flat QoQ with some negative bias as pressureon lending rates due to change in competitive landscape (especially retailbook) will be largely off-set by 50bps cut in CRR by RBI in two tranchesduring mid-September and October-end meets along with lowering oftheir term deposit rates in recent times.

We believe asset quality pressure to persist; we also expect restructuredbook to rise especially on corporate book side as there has been largeaddition to the CDR in recent times. However, private sector banks arebetter placed with significant exposure to retail assets and this segmentis doing better in terms of asset quality.

Top Picks: ICICI Bank and HDFC Bank

Net Income expected to grow at 13.8% for banks & NBFC underour coverage; while private banking universe is likely to growfaster, PSU banks to grow at subdued pace on back of modest NIIand higher provisions on restructured portfolio.During Q3FY13, net income for Banks & NBFCs under our coverage is expected togrow at slower pace - 14.4% YoY as compared to 18.4% YoY witnessed duringQ2FY13. Our private banking universe is likely to grow faster at 22.8%, while PSUbanks under our coverage are likely to grow at subdued pace (8.2% YoY) on backof modest NII and higher provisions on restructured porfolio despite strong treasurygains.

For Banks & NBFCs under our coverage, we expect NII growth of 8.5% YoY, withprivate banks growing at 22.1% YoY while PSU banks likely to report almost flat NII(2.7% YoY). During the same period, NBFCs are likely to witness healthy growth innet income (19.2%).

Credit growth moderated marginally to 16.3% YoY (as on Decem-ber 14, 2012) vis-à-vis previous fortnight; however, deposit mo-bilization continued to lag the overall credit growth, leading torise in the C/D ratio.The credit growth has moderated marginally to 16.3% YoY (as on December 14,2012) as compared to previous fortnight, when it had crossed 17.0% mark. Depositmobilization continued to lag the overall credit growth - 13.4% YoY (as on Decem-ber 14, 2012) as compared to ~18%, a year back. This has led to rise in the C/Dratio to 77.1% at the end of December 14, 2012, as compared to 75-76% seenduring previous two quarters.

We are expecting loan growth at ~16% during FY13, marginally below the RBI'sprojection of 17% on back of subdued credit off-take on corporate segments.

Top Picks:

ICICI BankHDFC Bank

RESULTS PREVIEW

Saday [email protected]+91 22 6621 6312




Expect NIM to remain stable QoQ with negative bias; higher trea-sury profit to partly offset the higher provisioning requirementon restructured bookWe expect NIM to remain flat QoQ with some negative bias as pressure on lendingrates due to change in competitive landscape (especially retail book) will be largelyoff-set by 50bps cut in CRR by RBI in two tranches during mid-September and Octo-ber-end meets along with lowering of their term deposit rates in recent times.

During Q3FY13, 10-Yr G-Sec came down by 13bps to 8.03%, which could lead tosome write-back on Investment provisions. We also expect banks to report highertreasury profit during Q3FY13 on back of decline in bond yields/rise in bond prices.However, this would have limited impact on the earnings as many banks have toincrease the provisioning requirements on their restructured book due to change inRBI norms.

Asset quality pressure to persist; credit costs for PSU banks arelikely to be higher on back of increased provisioning require-ment on restructured book.We will be closely watching the corporate book - especially exposure to sensitivesectors like power, aviation, textiles, Iron & steel and construction etc. However,private sector banks are better placed with significant exposure to retail assets andthis segment is doing better in terms of asset quality.

We expect slippages to remain high for PSU banks but few of them (e.g. UnionBank etc.), who have reported higher slippage during previous quarters could seehigher recovery/up-gradation, translating into lower addition to gross NPA. Although,we expect marginal uptick in CDR restructuring especially on corporate book side,PSU banks have to provide more to meet the 75bps additional provisioning require-ment on restructured book.

Cautious on PSU banks; prefer private sector banks which havehigher retail focus with lower asset quality overhang.We reiterate our cautious stance on PSU banking space in near term on back ofdeteriorating macro environment. Slowing loan growth with almost completely driedup new corporate capex proposals has forced many banks to go aggressive on retailbook to deliver some respectable loan growth, in-turn impacting their margins.

Although many PSU banks are still trading below its average trading multiple, webelieve, the near term outlook remains challenging for the stock on back of highshare of stressed assets (restructured book + net NPA) along with relatively lowercoverage ratio (62.8%). We prefer private sector banks which have higher retail fo-cus with lower asset quality overhang.

Top Picks:ICICI bank and HDFC Bank



Quarterly estimates - Banking & NBFC

Company Net Interest Income (Rs mn) Pre-Provisioning Profit (Rs mn) PAT (Rs mn) EPS (Rs)

Q3 Q2 QoQ Q3 YoY Q3 Q2 QoQ Q3 YoY Q3 Q2 QoQ Q3 YoY Q3 Q2 QoQ Q3 YoYFY13 FY13 (%) FY12 (%) FY13 FY13 (%) FY12 (%) FY13 FY13 (%) FY12 (%) FY13 FY13 (%) FY12 (%)

Banks

Allahabad Bank 13,147 11,743 12.0 13,805 (4.8) 9,297 8,023 15.9 10,300 (9.7) 3,597 2,342 53.6 5,604 (35.8) 7.2 4.7 53.6 11.8 (38.9)

Andhra Bank 9,300 8,938 4.1 9,839 (5.5) 6,650 4,751 40.0 7,676 (13.4) 3,050 3,256 (6.3) 3,032 0.6 5.5 5.8 (6.3) 5.4 0.6

Axis Bank 24,200 23,269 4.0 21,403 13.1 23,700 21,783 8.8 20,592 15.1 12,850 11,235 14.4 11,023 16.6 30.9 27.1 14.1 26.7 15.7

BOB 29,150 28,623 1.8 26,555 9.8 24,650 23,826 3.5 26,082 (5.5) 13,276 13,014 2.0 12,899 2.9 32.2 31.6 2.0 32.8 (2.0)

HDFC Bank 38,500 37,317 3.2 31,160 23.6 29,750 25,713 15.7 23,780 25.1 18,600 15,600 19.2 14,297 30.1 7.9 6.6 19.2 6.1 30.1

ICICI Bank 34,500 33,712 2.3 27,120 27.2 32,750 31,933 2.6 26,871 21.9 21,000 19,561 7.4 17,281 21.5 18.2 17.0 7.3 15.0 21.5

Indian Bank 11,750 11,203 4.9 11,700 0.4 8,600 9,073 (5.2) 9,116 (5.7) 3,950 4,967 (20.5) 5,259 (24.9) 9.2 11.3 (18.6) 12.2 (24.9)

IOB 13,400 12,462 7.5 12,216 9.7 9,000 8,071 11.5 8,224 9.4 2,250 1,584 42.0 1,083 107.8 2.8 2.0 41.9 1.7 61.3

J&K Bank 5,600 5,527 1.3 4,508 24.2 4,150 4,227 (1.8) 3,236 28.3 2,500 2,695 (7.2) 2,132 17.3 51.6 55.6 (7.2) 44.0 17.2

PNB 38,300 36,494 4.9 35,366 8.3 28,700 25,329 13.3 26,764 7.2 11,300 10,656 6.0 11,500 (1.7) 33.3 31.4 6.0 33.9 (1.7)

SBI 114,500 109,738 4.3 115,188 (0.6) 77,600 73,537 5.5 72,600 6.9 36,600 36,581 0.1 32,630 12.2 54.5 54.5 0.1 48.6 12.2

Union Bank 19,550 18,502 5.7 17,809 9.8 13,900 12,727 9.2 12,841 8.2 5,980 5,546 7.8 1,970 203.6 10.9 10.1 7.9 3.8 188.9

NBFCs

HDFC Ltd 13,150 12,942 1.6 11,557 13.8 15,735 15,880 (0.9) 13,482 16.7 11,435 11,510 (0.7) 9,812 16.5 7.7 7.8 (0.7) 6.7 16.4

IDFC 6,850 6,560 4.4 5,470 25.2 7,490 7,259 3.2 6,344 18.1 4,615 4,766 (3.2) 3,816 20.9 3.0 3.1 (3.2) 2.5 21.4

M&M Finance 5,720 5,259 8.8 4,228 35.3 4,067 3,625 12.2 2,797 45.4 2,207 1,875 17.7 1,547 42.7 21.5 18.2 17.7 15.1 42.4

Shriram Transport 8,610 8,678 (0.8) 8,038 7.1 7,295 7,119 2.5 6,465 12.8 3,445 3,376 2.1 3,027 13.8 15.2 14.9 2.1 13.4 13.8

TOTAL 386,227 370,965 4.1 355,961 8.5 303,334 282,873 7.2 277,169 9.4 156,655 148,565 5.4 136,912 14.4




Gainers & Losers Nifty Gainers & LosersPrice (Rs) chg (%) Index points Volume (mn)

Gainers

Infosys Ltd 2,375 1.1 3.8 1.1

M&M 954 1.4 1.9 1.3

ONGC 288 1.1 1.8 3.8

Losers

HDFC 823 (1.8) (7.2) 2.0

L&T 1,588 (2.5) (6.8) 1.8

HDFC Bank 668 (1.6) (6.4) 2.8

Source: Bloomberg

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Fundamental Research TeamDipen ShahIT, [email protected]+91 22 6621 6301

Sanjeev ZarbadeCapital Goods, [email protected]+91 22 6621 6305

Teena VirmaniConstruction, Cement, Mid [email protected]+91 22 6621 6302

Saurabh AgrawalMetals, [email protected]+91 22 6621 6309

Saday SinhaBanking, NBFC, [email protected]+91 22 6621 6312

Arun AgarwalAuto & Auto [email protected]+91 22 6621 6143

Ruchir KhareCapital Goods, [email protected]+91 22 6621 6448

Ritwik RaiFMCG, [email protected]+91 22 6621 6310

Sumit PokharnaOil and [email protected]+91 22 6621 6313

Amit AgarwalLogistics, [email protected]+91 22 6621 6222

Jayesh [email protected]+91 22 6652 9172

K. [email protected]+91 22 6621 6311

Technical Research Team

Shrikant [email protected]+91 22 6621 6360

Amol [email protected]+91 20 6620 3350

Premshankar [email protected]+91 22 6621 6261

Derivatives Research TeamSahaj [email protected]+91 22 6621 6343

Rahul [email protected]+91 22 6621 6198

Malay [email protected]+91 22 6621 6350

Prashanth [email protected]+91 22 6621 6110

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