Rajiv Gandhi Equity Saving Scheme

7/27/2019 Rajiv Gandhi Equity Saving Scheme

1/15

Microsec R0th January, 2013

DearInvestors,

IntheUnionBudget201213, theFinanceMinister introducedanewschemewhich

has the dual benefits of understanding and investment in Select Equities and also

enjoying taxbenefits forselect investors.Thehighlightsof thesamearementioned

below.

RajeevGandhiEquitySavingScheme,2012HighlightsoftheScheme:

a) BenefitofthisSchemeisavailablefornewretailinvestor.NewRetailInvestormeans:i. AnyindividualwhohasnotopenedDemataccountorii. AnyindividualwhohasopenedDemataccountbutnotmadeanytransactiontillthedateof

notificationofscheme.

b) Thedeductionunder thisSchemeshallbeavailable to individual investorwhoseGross totalincomeforthefinancialyearislessthanorequaltoRs.10,00,000.

c) Maximum Investment Amount: Rs.50,000. Further, Investment can be made in eligiblesecuritiesinmorethanonetransaction.

d) DeductionAllowed:50%ofInvestmentamount.

e) Existing demat account holder shall submit a declaration in Form A to the depositoryParticipant.

f) Therewilllockinperiodof3yearinwhich1yearwillbefixedlockinperiod.Duringthelockinperiodtheyarenotpermittedtopledgeorhypothecateanyeligiblesecurities.Further,infixed

lockinperiodinvestorcannotselltheshares.


2/15


3/15

Microsec Re0th Janaury, 2013

We recommend ABNL a BUY. ABNL is USD4.5 bn diversified business conglomehaving presence in Financial services (Life insurance, Asset management, NBFC, Pri

Equity, Broking, Wealth management and Insurance borking), Telecom, IT & I

Fashion & Life style and Manufacturing. Companys financial services business is ran

amongst top 5 private fund managers in India and telecom business is ranked

globally with regards to total minutes of use on network.

Investment HighlightsBalanced portfolio of value business:ABNL has a well-balanced portfolio mix of vand growth businesses. Its value business is instrumental in funding growth

transformation. Companys portfolio is best placed in its own way with annual free

flows of INR5bn. Improving business environment would push EBITDA margin

historic average of 16% with the stand-alone business generating 17% earnings CA

over FY13-15e. Capital requirement would go down considerably after achieving siz

insurance and telecom businesses and focusing on profitability and efficiencies.Asset Play on fast growing financial services and telecom businesses:ABNL is a dplay on the fast growing insurance and telecom businesses. It also has stable

generating businesses such as fertilizers and insulators. We believe the market is ov

concerned about its holding company structure, debt-funded growth model, and n

term funding issues.

Multiple triggers for re-rating:In our view, multiple triggers for re-rating exist: a) Vunlocking in the insurance business - One of the ways it could be done is thro

transferring the insurance business to 100% subsidiary and bringing in a private eq

company at the subsidiary level. We believe such a move in the insurance or finan

services business could significantly unlock value for the company (such a transac

will infuse cash into ABNL's books), which would take care of future grorequirements; b) ABNL is a strong contender for new banking licenses to be issue

near future; c) New Urea Policy which can give boost to agri and fertilizer business.

Outlook and Valuations: We see strong growth in almost all major segments. positive policy framework (both on telecom & financial sectors front) shall be

triggers for the stock. Due to diversified nature of the company, the stock does not g

high PE rating; however, any demerger or restructure of business verticals can trigg

very strong upward movement in the stock. At current market price, ABNL is tradin

FY13E and FY14E, P/E multiple of 12.3x and10.1x.

Key Financials Highlights (Figure in Rs

Aditya Birla Nuvo Limited (ABNL)BUY Sector- Diversified

Source: Com an , Microsec Research, Bloomber

ent Market Price (INR) 1,145.00

Week High (INR) 1,169.65

Week Low (INR) 737.90

et Capitalization (In INR Crs.) 13,194.10

Market Data

Promoters, 51%

FII, 18%

Public &

Others, 31%

Shareholding

Code 500303

Code ABIRLANUVO

mberg Ticker ABNL.IN

rs Ticker ABNL.BO

Value (INR) 10.00

y Share Capital (In INR Cr) 113

Average P/E 20.8x

vs Sensex 1.00

end Yield (%) 0.64

ge Monthly Volume ('000s) 274.26

STOCK SCAN

29-Feb-12

29-Mar-12

29-Apr-12

29-May-12

29-Jun-12

29-Jul-12

29-Aug-12

29-Sep-12

29-Oct-12

29-Nov-12

29-Dec-12

29-Jan-13

A BN L SEN SEX

Particulars FY10 FY11 FY12 FY13E FY14E FY1NetSales 15523.34 18,188 21,840 24,408 26,931 29,Growth(%) 17.2% 20.1% 11.8% 10.3% 10EBITDA 1439.6 2,473 2,950 3,753 4,290 4,EBITDAMargin(%) 9.3% 13.6% 13.5% 15.4% 15.9% 16NetProfit 154.56 822 890 1,096 1,387 1,NetProfitMargin(%) 1.0% 4.5% 4.1% 4.5% 5.2% 5DilutedEPS(INR) 14.8 69.08 78.36 93.84 114.54 156P/E 78.58 16.84 14.84 12.39 10.15 7BVPS 2,033.23 584.15 660.30 771.53 885.60 1,047P/BV 0.57 1.99 1.76 1.51 1.31 1EV/EBITDA 9.50 6.55 6.53 7.55 6.40 5RoE 0.25 6.59 14.30 13.15 14.04 17


4/15

Microsec Re0th anuar , 2013

We rate Bharti Airtel Ltd (Bharti) a BUY. Our rating underpins Bhartis leading positiin the Indian telecom space, its ability to generate healthy free cash flows, and emergi

regulatory clearance in the sector. However, its high debt levels and expected cash out

for spectrum impede our optimism a bit.

Investment HighlightsLeading position in the Indian telecom market bodes well: Bharti with 183.61Msubscribers, at the end of November 2012, holds 20.6% subscribers market share in t

Indian telecom market. In addition, 93.9% of the companys subscribers were activ

which is higher than the industry average of 79.4% and second only to Idea. Furthermo

the higher quality of its subscriber base is represented by far higher share in revenu

where Bharti represented 29.0% of total industrys gross revenues in Q2FY2013. W

believe the leading position in the Indian telecom market coupled with its scale

operations and diversification in other geographies makes the company a bett

investment bet, over its peers, in the uncertain regulatory environment. To expa

further, Bharti intends to bid for a license in Myanmar.

Ability to generate healthy free cash flows provides an edge: During twelve months endSeptember 2012, Bharti generated operating free cash flows of INR12,256.8 Crores. Wi

capital expenditure cycle in the Indian telecom space peaking, the company may contin

to generate such cash flows, going forward. Moreover, strong free cash flows will help t

company reduce its debt burden as well as equip Bharti with better liquidity positi

while renewing its licenses.

Emerging regulatory clarity remains positive: The emerging regulatory clarity is likelybe positive for the Indian telecom sector. Bharti, being the leader in the space, will rema

the key beneficiary of the same, in our view.

Valuation seems attractive: Bharti is currently trading at EV/EBIDTA of 8.13x, whichlower than its peer group average. We believe that at current valuations, the company

attractively priced and can be a good investment bet from a long term perspective.

Bharti Financials at a glance (all data in INR Crores unless specified)

Bharti Airtel LimitedBUY Sector- Telecommunication Services

Source: Company Data, Bloomberg

moter

nd

moter

oup50%

FII

17.28%

DII

8.18%

Non

Institutions

6.04%

Shareholding

60

30

0

30

1-Feb-12 2-May-12 1-Aug-12 31-Oct-12 30-Jan-13

Bha rt i Sen sex

nt Market Price (INR) 344.65

eek High (INR) 400.90

eek Low (INR) 238.50

et Capitalization (In INR Crs) 130,881.87

Market Data

ode 532454

Code BHARTIARTL

mberg Ticker BHARTI IB

rs Ticker BRTI.BO

Value (INR) 5.00

y Share Capital (In INR Crs) 1,898.77

ge P/E 24.0x

vs Sensex 0.78ge Daily Volume 613,244

end Yield 0.3%

Ratio NA

STOCK SCAN

Particulars FY2011A FY2012A FY2013E FY2014E FY2015Net Sales (post Excise Duty) 59,467.20 71,508.00 80,531.50 87,903.30 94,900

Growth (%) 42.11% 20.25% 12.62% 9.15% 7.9

EBITDA 20,071.80 23,712.30 25,111.10 28,562.70 32,022

EBITDA Margins (%) 33.75% 33.16% 31.18% 32.49% 33.7

Net Profit 6,046.70 4,259.40 3,566.30 5,678.40 7,667

Net Profit Margins (%) 10.17% 5.96% 4.43% 6.46% 8.0

Net Profit Growth (%) -33.97% -29.56% -16.27% 59.22% 35.0

EPS 15.90 11.20 9.39 14.95 20

BVPS 128.50 133.40 142.79 157.74 177

P/E 22.43 30.11 36.70 23.05 17

P/BV 2.78 2.54 2.41 2.18 1

RoE 13.3% 8.6% 6.6% 9.5% 11

EV/EBITDA 9.81 8.24 7.96 7.00 6


5/15

- 1 -


We recommend Coal India a BUY.Coal India is the single largest coal producer in the wsitting on huge reserves of 18,862.9MT, out of which 10,595.1MT are proved reserves

8,267.8MT are probable reserves. With robust growth in dispatches and better rake availab

higher realizations from shift to GCV (Gross Calorific Value), price hikes, increased produ

and clarity on FSA clauses, improved blended realizations from setting up 20 new coal wash

with a combined capacity of 111.1MT during the 12th plan, we expect CIL to post better marg

Investment Highlights:

BUY Sector Mining

Shift from UHV (Useful Heat Value) to GCV (Gross Calorific Value)-In favor of CIL : CILchanged the pricing mechanism of non-coking coal from UHV based grading system to

based from January, 2012. Under the new GCV grading, coal would be classified under 17 s

(300kcal each) from 2,200-7,000kcal and above 7,000kcal. The same has been positive for C

has led to improvement in realizations in past two quarters with a YoY increase of 19.2%

Q1FY12 & 7.6% in Q2FY12, while having a negative impact on two of its subsidiaries i.e. W

(Western Coal Fields) & ECL (Eastern Coal Fields) (~11% revenue contribution respectively)

has taken a price increase for ~10-15% in case of WCL and we expect similar kind of actio

regard to pricing for other subsidiaries as well.

Transparency on FSA clauses to emerge as a relative safe haven for Investors: CIL will have topenalty of 1.5%, where supply is between 65%-80%; 5% for supply between 60%-65%; 10-

for supply between 50%-60%, and 40% if the supply is less than 50%. CIL will meet

requirement with 15% imported coal & 65% domestic coal. This would be an immaterial amo

for CIL. However, there is no clarity on price pooling arrangement of the imported coal

domestic coal. Given the targeted output, we believe CIL will be able to deliver coal to the po

plants above the 65% level and avoid any meaningful penalty. While further details of quanti

coal to be imported / price pooling etc are yet to be finalized, we believe that CIL wouldnt su

any financial losses on imports.

Rake availability to improve in future, thus removing the logistic bottlenecks: Availabilirakes/day has improved substantially from CY12, which will aid CIL in solving the log

bottlenecks. The targeted sales volume by CIL requires ~193 rakes/day in FY13E. For the first

months of FY13, actual availability has been ~182 rakes/day.

Profit Sharing of 26% in MMDR Bill: The proposed benefit sharing framework under the newwill increase the tax incidence on the mining entities which intends to levy a tax of 26% on

mining profits. But this will help Coal india take the benefit of getting the forest clearance fast

5.64%

90%

4.36%

FIIs Central/State Government Others

D Coal India Ltd

ode (NSE) COALINDIA

ode (BSE) 533278

berg Ticker COAL IN

s Ticker COAL.BO

ry Mining

alue ( INR per share) 10.00

Share Capital ( INR in Cr) 6,316.36

years P/E 17.41

ily volume (Last 1 Year) 2,188,338

s Sensex 0.69

nd Yield 1.00%

Stock Scan

t Market Price (CMP) 350

ek High 386ek Low 289

t Cap (INR in Cr) 221231

Market Data

15000

17000

19000

21000

2-Feb-12

2-Mar-12

2-Apr-12

2-May-12

2-Jun-12

2-Jul-12

2-Aug-12

2-Sep-12

2-Oct-12

2-Nov-12

2-Dec-12

2-Jan-13

Coal India Sensex

alyst: Neha Majithia

[email protected]

3051 2176

Coal India Ltd

Particulars FY10A FY11A FY12A FY13E FY14E FY15

Net Sales 53847 50233 62415 69281 77595

Growth (%) 31.94% -6.71% 24.25% 11.00% 12.00% 1

EBITDA 10482 13462 15668 18359 20951

EBITDA Margin (%) 19.47% 26.80% 25.10% 26.50% 27.00% 2

Net Profit 9622 10867 14788 17156 19638

Net Profit Margin (%) 17.87% 21.63% 23.69% 24.76% 25.31% 2

Net Profit Growth(%) 364.12% 12.94% 36.08% 16.01% 14.47% 1

EPS 15.23 17.20 23.41 27.16 31.09

P/E(x) NA 20.14 14.69 12.90 11.27

P/BV(x) NA 6.28 5.52 4.66 3.96

ROE(%) 35.28% 32.62% 37.69% 36.16% 35.38% 3

EV/EBITDA(x) -1.99 9.57 10.33 8.71 7.36

Exhibit 1. Coal India Ltd Financial Performance (INR in Crore except per share data and %)

Source: Company Data, Microsec Research


6/15

- 1 -

Microsec Re0th January, 2013

We rate EIL a BUY. EIL is a leading engineering consultancy company, principfocused on the oil & gas and petrochemicals industries in India and Overseas. It has

diversified into other sectors including nonferrous mining, metallurgy, infrastruc

fertilizer, power (solar & nuclear), water & waste management etc. EIL currently h

highly skilled & professional employee base of 3,500 people of which 82% are

technical and professional qualifications.

Investment HighlightsLeading Consultancy and EPC Company in Indian hydrocarbon Sector: EIL provengineering consultancy & turnkey project contracting services across hydrocar

value chain. It is the only player in Indian hydrocarbon sector which provides comp

Concept to Commissioning services under one umbrella, through its range of serv

such as feasibility studies, project management, planning & scheduling, process de

& construction management.

Asset light business, cash rich status:EIL has an asset light business, given the natutheir operations, which includes engineering, project management, certifica

process design, and commissioning and construction management services. Their c

requirements are minimal. As a result the company has been able to maintain debt

status, pile up huge cash balance of INR17 Bn.

MOUs and nomination clause with PSUs - a Competitive advantage: EILs advanover other players, specifically in PMC segment, is in its long term relationship thro

MoUs and various agreements with PSUs. Since Government has riding on the ref

bandwagon, we believe that PSUs will significantly increase their capex which

prop up the growth of EIL.

Outlook and Valuations: At CMP of Rs 221, EIL is trading at FY13E and FY14E,multiple of 12.2x and10.2x, respectively. Historically in the last 3 years, EIL has trat 1-year forward P/E band of 15.2x. Governments announcement of Cab

Committee on Infrastructure (CCI) where they are likely to review 47 projects (som

them held by ONGC, RIL, Cairn), indicates that Government has realized the se

slow-down in the capex cycle and the need to revive investment cycle in the Hy

Carbons space. With reform announcements here to stay, increased activity in

Hydro-Carbons vertical and given the strong market position of EIL in this vertical

are confident that for any revival in this space, EIL would be the biggest beneficiary

Key Financials Highlights (Figure in Rs

Engineers India Ltd (EIL)BUY Sector- Consulting Services

[email protected]: Company, Microsec Research, Bloomberg

ent Market Price (INR) 220.90

eek High (INR) 288.50

eek Low (INR) 206.30


Market Data

Promoters, 80%

FII, 5%

Public &

Others, 15%

Shareholding

Code 532178

Code ENGINERSIN

mberg Ticker ENGR.IN

rs Ticker ENGI.BO

Value (INR) 5.00

y Share Capital (In INR Cr) 168

Average P/E 17.2x

vs Sensex 0.48

end Yield (%) 2.36

ge Monthly Volume ('000s) 198.11

STOCK SCAN

29-Feb-12

29-Mar-12

29-Apr-12

29-May-12

29-Jun-12

29-Jul-12

29-Aug-12

29-Sep-12

29-Oct-12

29-Nov-12

29-Dec-12

29-Jan-13

EIL SENS EX

Particulars FY10 FY11 FY12 FY13E FY14E FY15

NetSales 2013.99 2,848 3,723 3,466 3,715 4,Growth

(%) 41.4% 30.7%

6.9% 7.2% 12

EBITDA 501.51 655 716 721 773 EBITDAMargin(%) 24.9% 23.0% 19.2% 20.8% 20.8% 21

NetProfit 440.47 531 644 642 650 NetProfitMargin(%) 21.9% 18.7% 17.3% 18.5% 17.5% 17

DilutedEPS(INR) 13.07 15.77 19.11 19.05 19.29 21P/E 16.91 14.01 11.56 11.60 11.46 10BVPS 34.26 44.22 56.35 56.99 66.49 81P/BV 6.45 5.00 3.92 3.88 3.32 2EV/EBITDA 15.63 10.50 7.36 7.22 7.09 6RoE 34.35 40.19 38.00 29.35 26.21 26


7/15


We recommend Hindustan Unilever LTd. (HUL) a BUY. It has strong rural penetrasustained brand power, strong distribution newtork, continuous product innovation

domestic consumption story. Hindustan Unilever is India's largest fast moving consu

goods company, with leadership in Home & Personal Care Products and Foods & BeverHUL's brands spread across 20 distinct consumer categories.

Investment Highlights

Awake and Firing on all Cylinders: Earlier we have mentioned that HUL has been waup after a long sleep. Now with the growth accelearation and its sustainability in place,

in topline and bottom-line, with the help of its powerful brands like Lux, Dove, PoLakme, Fair & Lovely, Surf Excel Wheel, Rin etc, we think that the company is now Awand is firing on all cylinders in areas of Homecare, Personal care, and Foods & Beverage

Entering into Newer and Different Segments of Consumption with the Extension oEstablished Brands: HUL has been strategically moving its established brands like DPonds, Pears, Vaseline, AXE,etc into newer and different segments as an extension obrands. For Example HUL launched Dove(Soap brand) as hair oil in premium brand ralaunched AXE(deodorants) as Premium Soaps for young male, Vaseline (Lip creamtherapy heel cream, face-washes, body shower gels etc. This helps the company to tapconsumers without incurring extra-expenditure required for building new brands.

Eyeing a long term sustainable growth from Rural India:HUL has a strong association rural india which consumes 40% of its products thorugh its strong distribution netw

covering 1.3 lakh villages. The population of rural india is around 80 crores which prov

an immense opportunity for HUL . FMCG market in rural India is tipped to touch $10

by 2025 on the back of "unrelenting" demand driven by rising income levels - Nielsen.

Strong Brand Leadership:HUL has strong brand leadership with No.1 position in segmlike Soaps, Haircare, Homecare,Laundry, skin care, Deodorants etc. and No.2 positioOral care and Tea which clearly denotes its strong brand leadership.

Fall in Palm Oil prices: Palm oil prices have lost 22% so far this year and is further expeto be weaker because of a record build-up in Malaysian Stocks. This is inturn is expecte

improve the EBITDA margin of HUL going forward.

Exhibit 1. HUL Historical Financials and ProjectionsParticulars FY10A FY11A FY12A FY13E FY14E FY15Net Sales 18,036.0 20,026.0 23,436.0 26,956.0 31,480.0 34,98

Growth (%) 11% 17% 15% 17% 1

EBITDA 2,791 2,712 3,484 4,151 4,879 5,2

EBITDA Margins (%) 15.5% 13.5% 14.9% 15.4% 15.5% 15

Net Profit (Adjusted) 2,084.0 2,075.0 2,686.0 3,269.0 3,857.0 3,96Net Profit Margins (%) 11.6% 10.4% 11.5% 12.1% 12.3% 11

Net Profit Growth (%) 0% 29% 22% 18%

EPS (Adjusted) 9.6 9.6 12.4 15.1 17.8 1

BVPS 12 13 17 22 27

P/E 49.9 49.6 38.4 31.6 26.8 2

P/BV 39.8 36.7 28.1 21.7 17.7 1

RoE 86.7% 77.2% 84.6% 78.2% 73.6% 72

Source: Company, Microsec Research (In INR Crores)

Hindustan Unilever LtdBUY Sector FMCG

Code 500696

Code HINDUNILVR

mberg Ticker HUVR IN

ers Ticker HLL.BO

Value (INR) 1.00

y Share Capital (Rs. cr.) 216.18

age 2 Year P/E 33.5x

vs Sensex 0.4x

age Daily Volmes (6 M) 2,384,000

diend Yield 1.30

Ratio n/a

STOCK SCAN

Shareholdinghers

93%

IIS

02%

Promoters

52.28%

0

0

0

0

0

2/1/2012

3/1/2012

4/1/2012

5/1/2012

6/1/2012

7/1/2012

8/1/2012

9/1/2012

10/1/2012

11/1/2012

12/1/2012

1/1/2013

HUL S ENS EX


8/15

- 1 -


We rate L&T Ltd. a BUY. Larsen and Toubro (LT) is India's largest engineering construction (E&C) company. Apart from its core construction activity, LT is ma

significant inroads into a diverse range of products and services through its subsidi

and manufacturing JVs in power BTG, forging and shipbuilding. The company is

involved in various developmental projects on BOT basis in roads, ports, railways

power. Exports contribute 18% of the order intake.

Investment HighlightsOrder inflow surprises positively:During 3QFY13, order inflow came in at INR 19(up 14%YoY) versus general expectation of INR 152bn, given domestic infrastruc

order wins and overseas diversification initiatives (22% of total inflows for the qtr).

estate orders helped the company in the first half, whereas international buffered

slowdown in 3Q. Domestic orders fell 1% YoY during 3Q off a high base. G

forward, while highway orders will be weak, we expect an improvemen

hydrocarbons, fertiliser, railways and domestic T&D verticals.Management maintains FY13 guidance: The management maintained its guidanc15-20% growth in revenue/order intake and +/-50bp change in E&C EBITDA marg

FY13.Other key positives: (1) no further increase in net working capital, (2) I

equity commitments stayed flat, (3) positive CFO generation (INR 2.4bn versus lo

INR 1.15bn) and (4) pick up in domestic and overseas hydro carbon orders while b

industrial and infra segments stayed sluggish.

Best equipped to ride infrastructure capex cycle: L&T is Indias largest infrastrucand EPC Company with presence across major verticals like process, hydrocarb

power, core infrastructure like roads, ports, bridges, industrial structures etc.Outlook and Valuations:L&T is the best play on domestic industrial and infrastrucrecovery with sustained competitive and scalability advantage that separates it fromrest. While we expect L&T to meet FY13E growth guidance, sale of non-core bus

and revival of non-infrastructure businesses over next 2-3 years would be key v

drivers. The stock currently trades at a P/E of 18.8x &16.1x its FY13E & FY14E earn

respectively on a consolidated basis. With encouraging guidance in its order intake

sales growth for FY13 in this tough market condition, we rate a BUY on the stock.Key Financials Highlights (Figure in Rs

Larsen & Toubro Ltd (L&T)BUY Sector- Engineering

ode 500510

Code LT

mberg Ticker LT IN

rs Ticker LART.BO

Value (INR) 2.00

y Share Capital (In INR CR) 122.50

ge P/E (3 year) 23.0xs Sensex 1.26

ge Daily Volume 2,835,000

end Yield 1.4%

Ratio NA

STOCK SCAN

Shareholding

Promoter

0.00%

FIIs

15.62%

IIs

63%

Others

47.75%

Pa r ticu la rs FY10 FY11 FY12 FY13E FY14E FY1Net Sales 43969.8 52,044 64,313 74,763 85,615 98,

Growth (%) 18.4% 23.6% 16.2% 14.5% 15

EBITDA 6439.81 7,677 8,770 9,933 11,339 13,

EBITDA Margin (%) 14.6% 14.8% 13.6% 13.3% 13.2% 13

Net Profit 5450.74 4,456 4,694 5,158 5,734 6,


Diluted EPS (INR) 90.16 72.45 76.08 83.87 93.52 110

P/E 17.31 21.55 20.52 18.61 16.69 14

BVPS 342.26 403.98 470.33 533.78 624.84 718

P/BV 4.56 3.86 3.32 2.92 2.50 2

EV/EBITDA 12.11 13.74 11.26 13.60 11.91 10

RoE 30.96 19.71 17.57 16.55 16.09 16

ent Market Price (INR) 1,564.00

Week High (INR) 1,719.50

eek Low (INR) 1,106.40


Market Data

29-Feb-12

29-Mar-12

29-Apr-12

29-May-12

29-Jun-12

29-Jul-12

29-Aug-12

29-Sep-12

29-Oct-12

29-Nov-12

29-Dec-12

29-Jan-13

Larsen & Toubro SENSEX

Source: Company, Microsec Research, Bloomberg


9/15


We rate LIC Housing Finance Ltd (LICHFL) a BUY. LICHFL is one of the leading playin the mortgage market. The company which has been in existence since 1989

promoted by Life Insurance Corporation (LIC). The main objective of the company isprovide long term finance to individuals for purchase/construction/repair and renovatiof new/existing flats.

Investment RationaleRobust Business Growth:Despite high inflation coupled with high cost of capital scenario, LIC Housing h

maintained its earnings growth. The companys total income stood at INR6215.12 crores

FY12, registered a YoY growth of 27.65%. LICHF registered CAGR growth of 29.88%

total income over the period of 2008-12. Moreover, the company has reported a Yo

growth of ~23% in the quarter ended September 2012.

Robust Growth in Profitability:LICHFs strong sustainable business structure along with strong parent and thought

business activities has helped the company to absorb the standing opportunity in t

industry, which has boosted its topline and bottomline growth. Operating profit h

grown at a CAGR of 30.08% over the period of 2008-12. Whereas, Profit After Tax (PA

grew at a CAGR of 23.81% over the same period.

Increasing Market Share in Mortgage Market:Despite an overall slowdown in industry due to high mortgage rates and high price lev

specially in Tier 1 cities, LIC Housing has still been able to grow at higher rate th

industry and increased its market share. The outstanding mortgage portfolio of t

company in FY12 was INR63080.15 crores as against INR51089.84 crores in FY1

registered a growth of 23.47%. Moreover, as of Q2FY13, companys individual loportfolio stood INR68077 crores whereas, project loan stood at INR3404 crores, which

in the proportion of 20:01.

Increasing Share of High Yielding Developer Loan:The share of developer loan has declined to 5% in FY12 from 10.9% in FY10. Howev

management expects to bring its loan book back to its historical level. We expe

companys move is likely to improve business margins. Generally, developer loans yie

are 3-4% higher as compared with the individual loans.

A

LIC Housing Finance LtdBUY Sector - NBFC

Source: Microsec Research, Com an Data, All fi ures in INR Cr exce t er share and % data


10/15

30th

January, 2013 Microsec Re

We recommend NMDC a STRONG BUY.NMDC is India's largest iron ore producer and expopresently producing about 27MT of iron ore from its 3 fully mechanized mines in Chattisgarh

Donimalai Iron Ore Mines in Karnataka. With ~40% market share in the iron ore produ

industry, substantial high quality iron ore reserves, addition and expansion of mines leadin

higher volume growth, superior margins backed by low cost of production, foray into value a

projects and improved realization in future, NMDC IS likely to grow at a CAGR of 13.48% in t

of revenue and 12.67% in terms of PAT over FY12-16.Investment Highlights

NMDC LtdSTRONG BUY Sector -Mining

Substantial high quality Iron ore reserves; Mining Capacity to grow at a CAGR of 9.77% to 5over FY12-16E: NMDC is India's single largest iron ore producer, with an annual producapacity of 32 million tonnes per annum (MTPA) and total reserves of 1354.64 million tonnes (

The production capacity is expected to reach 51MTPA by FY16e with opening of two new min

Chattisgarh and Karnataka with mining capacity of 7MTPA each and expansion in existing min

2MTPA. Hence, capacity addition would lead to higher volumes, thus, adding growth significa

to the topline and the bottomline as well.Value addition projects and huge capex to foster growth in revenue over FY14-16e: Besidemining activities in Iron ore, NMDC has forayed into pelletization and steel manufacturin

setting up one steel plant in Chattisgarh and 2 in Karnataka. It has also planned to start produ

coal from its 2 captive mines in Madhya Pradesh to feed these steel plants. It has spent a total c

of INR 35410.67 crores for setting up 3 steel plants and INR1513.42 crores for the pellet plants

expect these projects to add value FY15e onwards.High margins backed by Low Cost of Production: NMDC is one of the low cost producers ofOre in the World, with an average cost of production of US$17/tonne (INR857 crore) in FY1

FY11, the average cost of production stood at INR24/tonne (INR1083 crore), which has dro~20% in FY12. NMDCs low cost production is due to its highly mechanized mines i.e. open

mines, low mining cost on account of its high grade iron ore reserves with Fe content of more

64% and economical/inexpensive labour.

Realizations to grow by 23% over FY12-16E to INR5018/tonne: NMDCs realizations are expeto improve due to its shift to import parity price mechanism from net back pricing mechanis

match the international benchmarked iron ore prices. So far, NMDCs domestic iron ore prices

at more than 100% discount to the international benchmark prices. The difference in both

prices has come down to ~50% at US$80/tonne.

alyst: Neha Majithia

[email protected]

3051 2176

Particulars FY10A FY11A FY12A FY13E FY14E FY1

Net Sales 6230 11369 11262 11516 13554

Growth (%) -19.01% 82.51% -0.94% 2.26% 17.70% 28

EBITDA 4402 8645 8926 9075 10647

EBITDA Margin (%) 70.67% 76.04% 79.26% 78.80% 78.55% 78

Net Profit 3447 6498 7266 7603 8933


Net Profit Growth(%) -21.16% 88.50% 11.81% 4.65% 17.49% 22

EPS 8.69 16.39 18.33 19.18 22.53

P/E(x) 33.83 17.29 8.79 8.18 6.96

P/BV(x) 8.17 5.85 2.62 2.04 1.66

ROE(%) 24.15% 33.82% 29.77% 24.97% 23.80% 23

EV/EBITDA(x) 19.65 9.67 3.99 4.16 3.06

Exhibit 1. NMDC Ltd Financial Performance (INR in Crore except per share data and %)

Source: Company Data, Microsec Research

ent Market Price (CMP) 157

eek High 206

eek Low 150

et Cap (INR in Cr) 62166

Market Data

80%

15.68%

4.32%

ntral Government/State Government Institutions Non-Institutions

15000

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2-Feb-12

2-Mar-12

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2-May-12

2-Jun-12

2-Jul-12

2-Aug-12

2-Sep-12

2-Oct-12

2-Nov-12

2-Dec-12

2-Jan-13

NMDC Ltd Sensex

NMDC Ltd

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ears P/E -

y volume (Last 1 Year) 1,391,021

Sensex 0.9

d Yield 4.50%

Stock Scan


11/15

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12/15

Microsec Re0th anuar , 2013

We rate Tata Consultancy Services Limited (TCS) a BUY. Our rating underpins companys strong growth in business volumes, GNDMTM for better catering of custom

needs, non linear growth drivers, industry low attrition levels, high employee utilizat

and its history of rewarding shareholders. However, recent appreciation of INR vis-

USD could pose near term headwinds for the stock.

Investment HighlightsSustained growth in business volumes strengthens position of industry BellwethDespite higher base, TCS continued to report healthy volumes growth of 1.25% in

FY2013. Furthermore, the companys incremental business volumes came ahead of m

of its peers in last several quarters. This factor helped TCS strengthen its leading posit

in the industry. In addition, the companys diverse service offerings enable it to prov

one stop solutions for all customer needs. Its diverse offerings also place TCS in a bet

position while negotiating for new deals and retaining business from the existing client

GNDMTM, non linear businesses add value:TCS diverse offerings are well complemenby its Global Network Delivery Model (GNDMTM). Under the model, the comp

established delivery centers at different geographical locations across the globe, enablthe company to collaborate on projects and leverage the asset base of different locatio

Moreover, focus on potential non linear businesses such as Financial Solutions, Platfo

based BPO, and iON may also keep driving TCS top line growth, going forward.

Industry low attrition, high utilization supports margins: Key number to pick from TQ3 FY2013 results was the attrition level of 11.2%. The reported attrition level is

lowest in its peer group. Additionally, the company is consistently reporting ex-train

utilization levels of more than 80% since Q3 FY2010. In addition, these factors hel

TCS to sustain its operating margins above 26% levels since then.

Initiatives to reward shareholders bode well: In Q3 FY2013, TCS announced dividenINR3 per share, which was its 34th consecutive quarterly dividend. The compa

initiatives to reward shareholders provide its investors consistent periodical returns.

TCS Financials at a glance (all data in INR Crores unless specified)

Tata Consultancy Services LtdBUY Sector- Information Technology

Source: Company Data, Bloomberg

nt Market Price (INR) 1,343.85

eek High (INR) 1,438.00

eek Low (INR) 1,046.55

et Capitalization (In INR Crs) 263,021.14

Market Data

moter

nd

moter

oup

96%

FII

14.96%

DII

6.45%

Non

Institutions

4.63%

Shareholding

Code 532540

Code TCS

mberg Ticker TCS IB

rs Ticker TCS.BO

Value (INR) 1.00

y Share Capital (In INR Crs) 195.72

ge P/E 24.6x

vs Sensex 0.87

ge Daily Volume 102,836end Yield 1.3%

Ratio 1.16

STOCK SCAN

30

0

30

1-Feb-12 2-May-12 1-Aug-12 31-Oct-12 30-Jan-13

TCS Sensex

Particulars FY2011A FY2012A FY2013E FY2014E FY2015Net Sales 37,324.51 48,893.83 62,988.10 71,092.90 80,257.

Growth (%) 24.30% 31.00% 28.83% 12.87% 12.8

EBITDA 11,179.07 14,456.49 18,249.50 20,426.00 22,650.

EBITDA Margins (%) 29.95% 29.57% 28.97% 28.73% 28.2

Net Profit 9,189.49 10,497.88 13,931.50 15,425.80 17,336.

Net Profit Margins (%) 24.62% 21.47% 22.12% 21.70% 21.6

Net Profit Growth (%) 29.72% 14.24% 32.71% 10.73% 12.3

EPS 46.27 53.07 71.14 78.77 88

BVPS 124.69 150.62 204.01 254.91 313

P/E 26.61 24.34 18.89 17.06 15

P/BV 10.12 9.03 6.59 5.27 4

RoE 42.4% 38.6% 34.9% 30.9% 28

EV/EBITDA 20.31 15.36 13.88 12.40 11


13/15

- 1 -


MicrosecResearch:PhoneNo.: 913330512100 Email:[email protected]

AjayJaiswal:President,InvestmentStrategies,HeadofResearch:[email protected]

FundamentalResearch

Name Sectors Designation EmailID

NitinPrakashDaga IT,Telecom&Entertainment AVPResearch [email protected]

NaveenVyas Midcaps,MarketStrategies AVPResearch [email protected]

GargiDeb Agriculture&Pharma ResearchAnalyst [email protected]

SutapaRoy Economy ResearchAnalyst [email protected]

SanjeevJain BFSI ResearchAnalyst [email protected]

AnikDas MidCap ResearchAnalyst [email protected]

NehaMajithia

Mid

Cap

Research

Analyst

[email protected]

SoumyadipRaha MidCap ExecutiveResearch [email protected]

SarojSingh MidCap ExecutiveResearch [email protected]

Technical&DerivativeResearch

VinitPagaria Derivatives&Technical VP [email protected]

RanajitSaha TechnicalResearch Sr.Manager [email protected]

InstitutionalDesk

DhruvaMittal InstitutionalEquities Sr.Manager [email protected]

PujaShah InstitutionalDesk Dealer [email protected]

PMS

Division

SiddharthSedani PMSResearch AVP [email protected]

KetanMehta PMSSales AVP [email protected]

Research:FinancialPlanningDivision

ShrivardhanKedia FPDProducts ManagerResearch [email protected]

ResearchSupport

SubhabrataBoral ResearchSupport Asst.ManagerTechnology [email protected]

Recommendation

StrongBuy >20%

Buy between10%and20%

Hold between0%and10%

Underperform between0%and 10%

Sell < 10%

Expectedabsolutereturns(%)over12months

MICROSECRESEARCHISALSOACCESSIBLEONBLOOMBERGAT


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Disclaimer:Thisdocument ispreparedby the research teamofMicrosecCapital Ltd. (hereinafter referred as MCL) circulated forpurely informationpurpose toauthorizedrecipientandshouldnotbereplicatedorquotedorcirculatedtoanypersoninanyform.ThisdocumentshouldnotbeinterpretedasanInvestmetaxation/legaladvice.Whiletheinformationcontainedinthereporthasbeenprocuredingoodfaith,fromsourcesconsideredtobereliable,nostatementinreportshouldbeconsideredtobecompleteoraccurate.Therefore,itshouldonlyberelieduponatonesownrisk.

MCL isnot soliciting any actionbasedon the report.No indication is intended from the report that the transactionundertakenbasedon the informacontained in this reportwillbeprofitableor that theywillnot result in losses. Investorsmustmake theirown investmentdecisionsbasedon their speinvestment objectivesandfinancialpositionandusingsuchindependentadvisors,astheybelievenecessary.

Neither the Firm,nor itsdirectors, employees, agentsnor representatives shallbe liable for anydamageswhetherdirector indirect, incidental, speci

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