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Angel Broking Ltd : BSE Sebi Regn No : INB 010996539 / CDSL Regn No: IN - DP - CDSL - 234 - 2004 / PMS Regn Code: PM/INP000001546 Angel Capital & Debt Market Ltd: INB 231279838 / NSE FNO: INF 231279838 / NSE Member code -12798Angel Commodities Broking (P) Ltd: MCX Member ID: 12685 / FMC Regn No: MCX / TCM / CORP / 0037 NCDEX : Member ID 00220 / FMC Regn No: NCDEX / TCM / CORP / 0302
Note: Stock Prices are as on Report release date; Refer all Detailed Reports on Angel website 
Angel Broking
Service Truly Personalized
TM
April 18, 2009
FII activity during the Week 
Rs crore 
AsCashStockIndexNeton(Equity) FuturesFuturesActivity
Apr 09 91 47 614 753Apr 13 642 (69) 466 1,039Apr 15 772 (764) 535 543Apr 16 396 (526) (324) (454)
Net 1,900 (1,312) 1,292 1,881
Mutual Fund activity during the Week 
Rs crore 
As onPurchaseSalesNet Activity (Equity) 
Apr 09 931 572 360Apr 13 700 498 202Apr 15 1,247 839 408
Net 2,878 1,908 970
Markets continue upward momentum
Markets surged for the sixth consecutive week, with the Sensex closing higher by 2.0% and the Nifty by 1.3%.In a majordevelopment this week, Tech Mahindra (TM) was declared the highest bidder (at Rs58 per share) in the battle for the acquisitionof Satyam Computer Services. TM was selected through a competitive bidding process initiated by the government-appointedboard of Satyam. During the week, IT bellwether Infosys also declared its results, which were in line with street expectations.However, what disappointed the markets was the muted guidance given by Infosys for FY2010. Management has guided forRevenues in the range of Rs22,066-22,928cr in FY2010, implying a growth rate of 1.7-5.7% yoy, while EPS is estimated in therange of Rs96.65-101.18, implying a decline of 7.6-3.3% yoy. Thus, the disappointing guidance by Infosys could lead to a similarlypoor outlook for other IT majors as well.The benchmark indices continued their winning streak on the opening day of the week, with the Sensex crossing thepsychological 11,000-mark during late trades. The surge was led by the rally in Metal, Banking and Realty stocks. The Sensexfinally ended the session with gains of 1.5%. On Tuesday, markets were closed on account of
Ambedkar Jayanti 
. Marketstumbled in opening trades on Wednesday on weak global cues and the dismal guidance given by Infosys Technologies. However,expectations of further easing of the Monetary Policy triggered a rebound in the latter half of the session and the bulls tightenedtheir grip as a spectacular rally was witnessed from the lows of the day, leading to the Sensex ending higher for the eighthconsecutive trading session. The BSE Sensex finally ended the day with 2.9% gains.The markets however, witnessed a bout of profit booking on Thursday. A broad-based decline dragged the Sensex below 11,000,as a much-awaited correction set in. Meanwhile, Inflation numbers continued their downward descent, coming in at 0.18%(0.26%) for the week ended April 4, 2009, but this failed to cheer sentiment. Political uncertainty weighed on the market as themonth-long Parliamentary Elections began on Thursday and the Sensex ended in the red, losing 3% for the session.Nonetheless, the markets once again surprised positively on Friday, gaining 0.7% amidst highly choppy trade.
BSE Bankex continues to outperform
The BSE Bankex outperformed the Sensex this week, ending 9.5% up as against the 2.0% rise for the Sensex. The recent bankbailout plan in the US reduced uncertainties regarding the global macro-economic situation and in the ensuing rally, beaten-downsectors with reasonable fundamentals and a strong correlation with the macro-economic revival bounced back the most,including Indian Banking Sector stocks. One of the drivers for this outperformance, in our view, is the expected fall in G-sec yieldsfollowing RBI's announcement of large Open Market Operations. We hold that Monetary softening, strong DomesticSavings and falling Interest rates will help revive domestic demand from late FY2010E. Accordingly, given attractive valuations, webelieve a longer-term investment perspective needs to be adopted to take advantage of the eventual upturn in GDP growth.
OurTop Picks include HDFC Bank and Axis Bank.
IndicesJanAprilAprilWeeklyYTD01, 0910, 0917, 09(% chg)
BSE 309,64710,80411,023 2.0 14.3NSE2,9593,3423,384 1.3 14.4Nasdaq1,5771,6531,673 1.2 6.1DOW8,7768,0838,131 0.6 (7.3)Nikkei8,8608,9648,908 (0.6) 0.5HangSeng14,38814,90115,601 4.7 8.4Straits Times1,7621,8291,897 3.7 7.7Shanghai Composite1,8212,4442,504 2.4 37.5KLSE Composite877941965 2.5 10.1Jakarta Composite1,3551,4661,635 11.5 20.6KOSPI Composite1,1251,3361,329 (0.5) 18.2
Sectoral Indices
BANKEX5,4555,0455,526 9.5 1.3BSE AUTO2,4453,2953,428 4.1 40.2BSE IT2,2282,4992,462 (1.5) 10.5BSE PSU5,2805,6975,941 4.3 12.5
 
Angel Broking Ltd : BSE Sebi Regn No : INB 010996539 / CDSL Regn No: IN - DP - CDSL - 234 - 2004 / PMS Regn Code: PM/INP000001546 Angel Capital & Debt Market Ltd: INB 231279838 / NSE FNO: INF 231279838 / NSE Member code -12798
For Private Circulation Only
Angel Broking
Service Truly Personalized
TM
2Fundamental Focus
Sector Update
Multiplex
- Neutral
'Exhibiting Gloomy Pictures'
Over the last one month, Multiplex stocks have witnessed sharp rally in the range of 35-50% despite looming concerns including lower occupancies and possible delays in handover of properties. Moreover, owing to the upcoming IPL season and the tiff between Multiplex operators and Producers, the Movie pipeline over 1QFY2010 is expected to remain weak. We believe that the slowdown in consumer spends and weak movie pipeline are likely to lead to stagnation in Footfalls and Average Ticket Prices (ATPs).
Overall, we see no near-term catalysts for the Sector and given the recent run up in the stock prices,we recommend a Neutral rating on the Multiplex Sector.
Poor Content, not Slowdown - the key culprit:
Amidst theongoing economic slowdown, it has been observed that thefrequency of theatre visits by moviegoers, especially tomultiplexes, has been affected. Occupancies in mostmultiplexes have declined to as low as 25-30% levels in FY2009.We, however, believe that slowdown is only a certain factorimpacting footfalls, with content being the key culprit keepingaudiences away from the multiplexes. For instance, while
Ghajini 
, released in the midst of slowdown, managed to grossRs100cr+ domestically, a weak movie pipeline particularly inCY2008 (highest number of average and flop movies over thelast three years) was mainly responsible for loweroccupancies during FY2009.
Real Estate slowdown, Funding issues impact Multiplexexpansion plans:
In a scenario where Multiplex operators arefacing funds crunch on one hand and slowdown in the RealEstate Sector on the other, we believe expansion plans of theMultiplexes in terms of property roll outs are likely to suffer, inturn impacting their growth prospects. As a result, while theMultiplex companies had chalked out optimistic expansionplans at the beginning of FY2009, most have fallen short ofmeeting their target rollouts. We believe this scenario will onlyworsen in FY2010. Hence, we have pruned our FY2010estimates to factor in lower capacity addition.
Television emerging as a preferred alternative:
With a widechoice of 500+ channels spanning across genres like GeneralEntertainment, Regional, Movies, Music, News and Sports atan ARPU/Month which is equivalent to an entry fee for a singlepatron at a Multiplex, Television has clearly emerged apreferred alternative for entertainment for the entire family.Interestingly, the current squabble between the Exhibitors andProducers has led to the producers considering DTH as analternative source to reach out to the audiences. ErosInternational, for instance, inked a revenue-sharing deal withDish TV to showcase
Aa Dekhe Zara 
.
Near-term negatives to remain an overhang:
We believethe Multiplex industry is facing several headwinds in the nearterm, which are likely to create an overhang on the Multiplexstocks on the bourses - 1) Delayed Movie releases owing toExhibitor-Producer tiff, 2) Weak movie pipeline in 1QFY2010owing to upcoming IPL season and 3) Stagnation in Footfallsand ATPs due to slowdown in consumer spends. Moreover, ourinteraction with managements indicated that occupanciesduring 4QFY2009 worsened (almost at 20% levels) on bothqoq and yoy basis. Hence, we expect Multiplexes to report poor4QFY2009E results, which would prove to be a dampener forthe Multiplex stocks in the near term.
We have revised our estimates for the Multiplex companiesunder our coverage to discount execution delays in capacityaddition and lower occupancies in the near term. While weremain Neutral on Fame, Inox and Cinemax, we downgradePVR from Buy (Target Achieved) to Neutral.
Continued...
Comparative Valuation
Source: Company, Angel Research; Price as on April 16, 2009 
CompanyCMPMkt CapEPS (Rs)P/E (x)EV/EBITDA (x)RoCE (%)(Rs)(Rs cr)FY08FY09EFY10EFY08FY09EFY10EFY08FY09EFY10EFY08FY09EFY10E
PVR86198 9.0 4.1 7.9 9.5 20.9 10.9 6.5 6.7 4.0 9.1 3.2 6.8Cinemax45127 4.9 4.3 5.0 9.2 10.5 9.0 8.3 6.2 5.5 7.6 6.9 9.0Inox36222 4.3 1.9 2.4 8.4 19.1 15.0 6.4 8.9 7.4 9.6 5.3 6.9Fame1345 4.0 (2.6) 1.4 3.2 - 9.6 7.6 - 8.7 3.2 (6.8) 3.4
 
Angel Commodities Broking (P) Ltd: MCX Member ID: 12685 / FMC Regn No: MCX / TCM / CORP / 0037 NCDEX : Member ID 00220 / FMC Regn No: NCDEX / TCM / CORP / 0302
For Private Circulation Only
Angel Broking
Service Truly Personalized
TM
3
Cinemax has de-risked its business model by diversifying into different Revenue streams. For 9MFY2009, the company posted a strong 44.5% yoy growth in Revenues driven by a robust 33% growth in its core Exhibition business. However, we believe that the company's entry into the low-Margin high-risk Distribution business and its rising Interest costs on account of the high Debt on its books, will continue to be a drag on the stock price.At Rs45, the stock is trading at 9x FY2010E EPS of Rs5.
We maintain a Neutral view on the stock.
Diversifying Revenue streams:
Cinemax has sought tode-risk its business model from being in the core Exhibitionbusiness to venturing into new areas like Food Courts,Production and Distribution along with increasing its presencein the existing Gaming Segment.
Best placed in terms of Profitability…
Cinemax is the onlylisted Multiplex player, which is expected to post growth inBottom-line over FY2008-10E. We expect the company to posta CAGR of 0.6% in Bottomline over FY2008-10E on the back ofrobust Revenue growth of 31.9% and better Operating Margins.
…But rising below EBITDA level costs, delays in newbusinesses breaking even pose major risks:
Cinemax hasfunded its expansion plans through debt consequent to whichits Interest costs spiked by a significant 74% yoy in FY2009E.Depreciation also increased by a whopping 167% yoy inFY2009E partly on account of the high Amortisation chargesprovided for the Distribution rights. Further, we believe that anydelays in the company's new businesses breaking even couldseverely dent its Profitability.
Cinemax
 
- Neutral
Max’ed Out For Now
We believe PVR's superior Management bandwidth,diversified business model and strong set of properties (in terms of location) make it the most preferred play in the Exhibition space. However, initial losses in new ventures (Gaming and Production), lower Consolidated Margins and slow capacity addition are likely to be a drag on PVR's stock price in the near term. At Rs86, PVR is trading at 10.9x FY2010E EPS of Rs7.9.
Given the recent run up in the stock and near-term concerns,we recommend Neutral on PVR.
Diversified Business Model to help combat slowdown:
PVR's diversified Business Model and presence across theMovie value chain (Exhibition-Production-Distribution) places itin a better position than its peers to combat the prevailingeconomic slowdown. We expect its new ventures like FoodCourts and Bowling Alleys to capitalise on large flow of footfallsin multiplexes, thereby aiding Topline growth.
PVR Pictures - The wild card:
During 1QFY2009, PVRdiluted 40% equity stake in PVR Pictures for Rs120cr valuingthe production and distribution businesses at Rs300cr. PVRPictures is still sitting on Rs100cr un-deployed cash and plansto produce/distribute 7-8 movies in FY2010E. We believe bettercost rationalisation and execution in terms of movie selection/ acquisition will remain the key for PVR to make this ventureprofitable.
Losses at Subsidiaries level to be a drag on ConsolidatedMargins:
While entry in new businesses like Gaming (Blu-O)and Production (PVR Pictures) is likely to aid PVR's overallTopline growth, initial investments and a weak macro-economicenvironment are likely to delay breakeven of these ventures.
PVR
- Neutral
New Ventures’ Blues
Fundamental Focus
Source: Company, Angel Research; Price as on April 16, 2009 
Key Financials (Consolidated)
Y/E March (Rs cr)FY2007FY2008FY2009EFY2010ENet Sales177.7265.9345.9397.2
% chg69.449.630.114.8 
Net Profit10.221.69.518.1
% chg92.7112.2(56.2)91.6 
OPM (%)15.418.410.715.3
EPS (Rs)3.99.04.17.9
P/E (x)21.99.520.910.9P/BV (x)1.00.90.70.7RoE (%)5.110.43.46.2RoCE (%)4.89.13.26.8EV/Sales (x)1.31.10.70.6EV/EBITDA (x)9.96.56.74.0
Source: Company, Angel Research; Price as on April 16, 2009.
Key Financials (Consolidated)
Y/E March (Rs cr)FY2007FY2008FY2009EFY2010ENet Sales93.9101.6146.1176.9
% chg -8.343.821.1
Net Profit11.513.812.014.0
% chg -20.1(13.0)16.4 
OPM (%)27.525.424.724.9
EPS (Rs)4.14.94.35.0
P/E (x)11.09.210.59.0P/BV (x)0.90.90.80.8RoE (%)8.49.37.78.5RoCE (%)10.07.66.99.0EV/Sales (x)1.72.01.41.2EV/EBITDA (x)6.78.36.25.5
Continued...
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