7th & 8th February, 2012

The Trident, Bandra Kurla Complex, Mumbai

Post Conference Notes - Day 1

Preface
We present key takeaways from the day 1 of the Mumbai leg of Edelweiss India Conference 2012.
The event is aimed at bringing together over 70 corporates and facilitating over 2,000 one-on-one
meetings between investors and corporates.
The conference is being held in the backdrop of uncertain times, both in India as well as globally.
CY11 was one of the most challenging periods in recent times with the nascent global recovery
faltering on intensifying strains in the euro area and weakness elsewhere. Locally too, sentiments
took a beating as multiplicity of factors, ranging from government policy hurdles to the aggressive
monetary tightening, weighed down on macros. While sentiments have certainly improved since
the December lows, real economy indicators would need to be closely monitored to gauge the
extent of the recovery.
Overall, even as headwinds remain, investors are enthusiastic about India. The likely triggers in
the form of a possible reversal of the rate cycle, fiscal consolidation and traction in basic policy
decisions could provide big boost to investments in FY13. Our interactions with the companies
also point to a gradual recovery in demand. Within the consumer sector, our interactions
suggest that while the overall demand remains healthy, there is some pressure within the
discretionary space. With raw material prices beginning to soften, companies are confident of a
revival in margins. Further, rural markets are a key focus area and hence consumer companies
continue to invest in a robust rural distribution system. Meanwhile, real estate sector companies
are hopeful that as the interest cycle peaks out and policy reforms begin to kick in, risk perception
for the sector is likely to recede. While some concerns remain, a fall in interest rates is expected
to boost volume while recent initiatives to deleverage through asset sales may help spur cash
flows, leading to a reduction in debt levels, going forward. In metals, participants are hopeful of
an uptick in steel demand in FY13. While FY12 demand is expected at 4.5%-5.0%, (below the GDP
growth rate), FY13 could witness a higher demand growth in the range of 7%-8% (at least equal to
the GDP growth). Production cuts worldwide, especially in China (total of ~150mt annualized),
will support steel prices at current levels. Utility companies who attended the conference are
hopeful of speedy approvals from the government and are firmly on track in adding new capacities.
We hope this conference will provide investors with an ideal platform to interact with a crosssection of companies besides giving an insightful perspective on the likely trajectory of India's
growth and investment opportunities that come with it.

Team Edelweiss

1

Edelweiss
Securities Limited
Edelweiss Securities
Limited

Profile of Participating Companies

CONTENTS
Ajanta Pharma .............................................................................................................................................................................................. 4
Axis Bank ....................................................................................................................................................................................................... 6
Bajaj Electricals ............................................................................................................................................................................................ 8
Bhushan Steel ............................................................................................................................................................................................. 10
Cairn India ................................................................................................................................................................................................. 12
Cox & Kings ................................................................................................................................................................................................ 14
Dabur India ................................................................................................................................................................................................ 16
Deepak Fertilizers & Petrochemicals Corp ............................................................................................................................................. 18
Dish TV India .............................................................................................................................................................................................. 20
eClerx Services ........................................................................................................................................................................................... 22
Emami .......................................................................................................................................................................................................... 24
Gail .............................................................................................................................................................................................................. 26
Glenmark Pharmaceuticals ...................................................................................................................................................................... 28
Godrej Consumer Products ....................................................................................................................................................................... 30
Grasim Industries ...................................................................................................................................................................................... 32
Havells India .............................................................................................................................................................................................. 34
HDFC Bank .................................................................................................................................................................................................. 36
Hexaware Technologies ............................................................................................................................................................................ 38
Housing Development Finance Corp ........................................................................................................................................................ 40
ICICI Bank ................................................................................................................................................................................................... 42
IDBI Bank .................................................................................................................................................................................................... 44
Indoco Remedies ........................................................................................................................................................................................ 46
Info Edge India ........................................................................................................................................................................................... 48
Infrastructure Development Finance Co ................................................................................................................................................. 50
JSW Energy .................................................................................................................................................................................................. 52
JSW Steel ..................................................................................................................................................................................................... 54
Jyothy Laboratories ................................................................................................................................................................................... 56
Kajaria Ceramics ....................................................................................................................................................................................... 58

2

Edelweiss
Securities Limited
Edelweiss Securities
Limited

.................................................................................................................................... 90 Torrent Pharmaceuticals ....................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................... 66 Oil & Natural Gas Corp .....................................................................................................................Profile of Participating Companies KEC International ................................................ 88 Titan Industries ......................................................................................................................................... 76 PI Industries ......................................................................................................................................................................... 96 Zuari Industries ............................................................................................................... 68 Pantaloon Retail ..................................................................................................................................................................................................... 78 Reliance Infrastructure ....... 94 Zodiac Clothing ............................................................................................................................................................................................................................................................................................................................. 92 Yes Bank ................................................................. 70 Persistent Systems ................................................................................................................... 82 Shoppers Stop ............ 98 3 Edelweiss Securities Limited Edelweiss Securities Limited ..................................................................................................................................... 84 Sun Pharmaceutical Industries ....................................................................................................................................................................................................... 60 Kotak Mahindra Bank ................................................................................................................................................................................. 80 Reliance Power .............................................................................................................................................................................................................................................................................................................................................................................................................. 62 Larsen & Toubro .. 74 Power Finance Corporation ...................................................................................................................................................................................................................................................................................................................................................... 72 Phoenix Mills ............................................................................................................................................................................................................. 86 Tata Consultancy Services ........................................................................................................................................................................................................... 64 Manappuram Finance ...............

300 registrations in key export markets: Ajanta has developed a robust pipeline of ~1. has improved its ranking by four levels to 14th during Dec 2011.8 771 340 12 28. FIs & Banks : 0.3 17.6 20.garg@edelcap. Ajanta has 5-8 filings under approval in US.4 9.9 MFs.8 18.6 13.300 product registrations (over existing similar base) which will drive future growth in key branded generics markets (Asia. Overall. These segments comprise ~7% of current domestic sales with portfolio of 16 products.092 19.0 49. Growth guidance: Management is confident of delivering 21% growth in FY12 and aims to achieve long term target sales of INR 10 bn (from INR 5 bn).9 5.edelresearch.ali@edelcap. US market to accelerate growth: The key trigger for growth in exports (60% of total sales) will be US where it plans to launch Levetiracetam and Risperdone over the next two months. The products will be supplied from Aurangabad FDA approved facility.2 10.0 Others : 31. Absolute Rating NOT RATED MARKET DATA (R : AJPH.com Edelweiss Securities Limited .8) 99.5 3 months 0. 2012 Pharmaceuticals Key takeaways EDELWEISS RATINGS Focus on differentiated products drives above industry level growth: Ajanta’s focus on differentiated products. through R&D capability. ENT and Gastro will drive higher growth over the next year.5 Edelweiss Research is also available on www. US will be a strategic focus market for Ajanta and will drive higher incremental investment in future.6 24.049 23. Key risks ROCE may dip due to upcoming investments.9 651 254 12 21. BSE/NSE (‘000) : 85. B: AJP IN) CMP : INR 391 Target Price : NA 52-week range (INR) : 421 / 175 Share in issue (mn) : 11. More importantly.com.7 M cap (INR bn/USD mn) : 5 / 94 Avg.6 13.492 12. Manoj Garg +91-22-6623 3302 manoj. Management has confirmed that Bill Gate foundation support of USD200mn will assure continued supply under the programme until FY14.8 963 507 12 43.7 19.5 Financials Year to March FY08 FY09 FY10 FY11 Revenues (INR mn) Rev. Funding under AMFM programme not a concern: Ajanta’s presence in Africa (40% of total exports) largely comprises sales under AMFM programme (INR750mn). Management expects to maintain current growth momentum (~20%) in domestic market.9 514 225 12 18.2 20.6 8.BO. Thomson First Call.8 17.1 6.9 53. Targeting 1. Reuters and Factset.com Perin Ail +91-22-6620 3032 perin.6 13.077 16.7 32.4 Share Holding Pattern (%) Promoters* : 68. Bloomberg EDEL <GO>.7 101. Opthal and Dermatology.9 12 months (1.5 12.1 * Promoters pledged shares (% of share in issue) : 4.Company Profile AJANTA PHARMA Exciting play on specialty branded generics India Equity Research l February 7.6 3.8 33.0 FIIs : 0. Africa and LATAM). Its entry into new segments including Ortho.4 4. Increase in API costs could impact margins in exports business. growth (%) EBITDA (INR mn) Net profit (INR mn) Share outstanding (mn) EPS (INR) EPS growth (%) Diluted P/E (x) EV/EBITDA (x) ROE (%) 3. growing at 32%. Daily Vol. has led to above industry level growth in its focus therapies including Cardio.8 14.7 Relative Performance (%) Sensex Stock Stock over Sensex 1 month 11. Management has planned INR3bn investment into dedicated manufacturing facility for the US market. Its derma portfolio. This pipeline of products will double the existing base business from these markets over next three to four years and largely comprise niche products or segments with less than three or four competitors.

4 49.7 8.6 12 14.5 17.129 1.5 282.8 33.9 46.8 16.7 126.131 1.1 144.6 25.073 1.578 EBITDA 514 Depreciation and amortisation 7 9 EBIT 435 Interest expenses 161 Other income 15 Profit before tax 289 Provision for tax 69 Core profit 220 Extraordinary items (6) Profit after tax 226 Adjusted net profit 225 EPS (INR) basic 18.4 13.685 470 85 1.1 4.5 2.5 13.942 (53) 4.271 427 4.8 1.5 19.6 158.9 4.6 23.Post Conference Notes .228 426 512 1.841 651 142 509 236 25 298 44 254 0 254 254 21.2 280.906 0 4.6 7.735 3 3.0 12.9 3.092 Direct costs 1.0 53.7 Payable days 94.731 1.1 1.3 FY08 FY09 FY10 FY11 19.492 1.087 262 118 1.6 53.129 350 118 2.0 49.306 771 207 564 202 25 388 48 340 0 340 340 28.6 Equity capital Reserves & surplus Shareholders funds Borrowings Minority Interest Sources of funds Net block Capital Work in Progress Investments and goodwill Inventories Sundry debtors Cash and equivalents Other current assets Total current assets Sundry creditors Total CL & provisions Net current assets Net deferred tax Uses of funds Adjusted BV per share (INR) Ratios Year to March Valuation parameters Year to March Diluted EPS (INR) Y-o-Y growth (%) CEPS Diluted P/E (x) Price/BV (x) EV/Sales (x) EV/EBITDA (X) Edelweiss Securities Limited Edelweiss Securities Limited .4 2.8 24.1 1.0 33.040 148 506 2.3 1.349 1.9 29.3 6.9 Diluted equity shares (mn) 12 Tax rate (%) 23.6 159.825 809 918 1.6 1.0 12 10.049 1.4 4.280 0 4.573 455 513 2.7 3.712 693 769 1.8 FY08 FY09 FY10 FY11 19.2 16.4 64.729 637 1.4 Debt/EBITDA 3.9 8.077 1.308 3.5 1.4 Current ratio 4.716 29 3.4 14.Day 1 Financial Statements Balance sheet Income statement Year to March (INR mn) FY08 FY09 FY10 FY11 Income from operations 3.6 18.7 3.6 19.2 24.849 2.9 14.0 10.6 7.383 552 85 1.0 53.907 (109) 4.6 ROACE (%) 16.1 1.4 49.7 43.0 3.001 81 452 2.1 2.2 Cash conversion cycle 210.402 Employee costs 305 R&D Other expenses 872 Total operating expenses 2.170 2.231 1.144 2.6 12.5 5.6 46.3 21.087 1.018 239 85 928 868 58 375 2.2 1.6 5.455 542 5.4 3.5 97.0 49.039 1.1 13.060 (6) 4.453 1.1 5.7 72.5 Inventory days 213.0 0.0 9.571 2.8 12 12. Net profit margins Growth metrics (%) Year to March Revenues EBITDA PBT Net profit EPS Cash flow statement Year to March Net profit Depreciation Gross cash flow Less:Changes in WC Operating cash flow Less: Capex Free cash flow 83.1 33.195 356 FY08 FY09 FY10 FY11 ROAE (%) (on adjusted profits) 17.502 0 4.5 253.0 224.4 FY08 FY09 FY10 (INR mn) FY11 225 79 303 (113) 191 (237) (46) 254 142 396 (50) 346 (509) (163) 340 207 547 404 951 (501) 450 507 247 755 93 848 (405) 443 5 (INR mn) As on 31st March FY08 FY09 FY10 FY11 118 1.7 18.3 88.3 81.1 2.3 80.8 245.6 30.2 13.195 1.5 3.1 10.3 17.288 1.0 1.073 345 118 1.842 470 85 1.085 963 247 716 178 28 566 59 507 0 507 507 43.4 Debt/equity 1.9 18.8 18.6 33.719 4.6 3.7 1.0 Debtors days 91.8 28.196 967 148 400 2.9 26.1 6.0 Common size metrics as % of net revenues Year to March FY08 Operating expenses Depreciation and Amortization Interest expenditure EBITDA margins Adj.3 20.3 FY09 FY10 FY11 81.

com Edelweiss Securities Limited .shah@edelcap. B: AXSB IN) CMP : INR 1. Deterioration of macro environment can result in higher slippages and slow down business growth. On the corporate side. Key risks Change in management may affect the pace of growth and profitability in the near term.151 Avg. it highlighted that this time agri loan proportion will be similar to FY11 (against its guidance of inching it up by 25-30bps every year) and it will have to resort to RIDF investments.509 36. Nilesh Parikh +91-22. PRICE Performance (%) Stock Nifty EW BFSI Index 15.4040 7579 kunal.com Kunal Shah +91-22.267 21.5%.3 3.1 33.564 411 120. Management indicated that government seems to be warming up to take some affirmative action in power sector particularly on the SEB front and fuel linkage issue.5) (7.4 19.171.951 25. Absolute Rating BUY Rating Relative to Sector Outperformer Risk Rating Relative to Sector Medium Sector Relative to Market Equalweight MARKET DATA (R : AXBK.0 49.9 2.143 405 62.3 Edelweiss Research is also available on www. The bank’s strategy of moderating the pace of loan growth is already reflecting in more formidable retail franchise and consistently higher RoA of 1.8 1 month 27.7 9.1 111.0 13.chaudhary@edelcap.0 Will gradually increase share of retail in the overall loan portfolio.25-3.5 2.com Suruchi Chaudhary +91-22-6623 3316 suruchi.1 23. Thomson First Call.9 2. book (x) ROAE (%) FY10 FY11 FY12E FY13E 89.2) Financials Year to March Net revenues (INR mn) Net rev growth (%) Net profit (INR mn) Shares outstanding (mn) Diluted EPS (INR) EPS growth (%) Diluted P/E (x) Price to adj.1 20.9 12 months (16.4 Others : 24. Margins are higher than the guided range and should normalize to 3.7 18. Will further build branch based origination capabilities for retail loans.5 MFs. On non-fund based exposure it reiterated that as a lead syndicator it issues bank guarantees/LCs on behalf of consortium banks with back-to-back arrangements.1) (6.6 10. Daily Vol. Expects credit cost to be around 80bps.2 163. INR70mn of restructured has slipped into NPL in Q3FY12.8 20. In retail.9 19.2 1.5) 0. we anticipate ~21% earnings CAGR over FY12 14E.0 25. secured loans will continue to be a growth driver. growth will be primarily working capital related and draw-downs from past sanctions.Company Profile AXIS BANK Buoyant growth India Equity Research l February 7.6%. FIs & Banks : FIIs : 31.7 41.4 * Promoters pledged shares (% of share in issue) : 6.372 52-week range (INR) : 1. Proposes to open 250 branches in the next 12 months (including RBI’s requirement for Tier 5 and 6 cities).4 9.114 Target Price : INR 1.parikh@edelcap.edelresearch.0 23.4063 5470 nilesh. Bloomberg EDEL <GO>.BO.460 / 784 Share in issue (mn) : 412.874 411 102.com. BSE/NSE (‘000) : 2.880 411 82.502 20.5 33. No chunky or lumpy restructuring pipeline.1 17.3 136.6 M cap (INR bn/USD mn) : 460 / 9. Reuters and Factset. With respect to priority sector lending requirement.7 Nil Investment conclusion Led by a healthy NIM and fee income performance coupled with a benign asset quality (against consensus expectation). 2012 Banking and Financial Services Key takeaways EDELWEISS 4D RATINGS Major discussion has been around its infra and non-fund based exposure.6 3 months (4. Share Holding Pattern (%) Promoters* : 37.

7 FY10 FY11 FY12E FY13E 3.6) (0.335 82.6 7.016 20.865 49.558 . income 2.1 4.5 42.2 5.518 3.5 3.8 2.333 .7 20.916 .0 15.0 4.8 19.6 2.5 14.666 149.626 41.1 23.880 82.1 82.321 45.6 7.Other opex 24.3 74.9 6.105 1.932 73.0 19.Fee & forex income 30.8 13.9 2.431 1.550.5 2.8 9.542 3.7 18.0 5.211 1.0 462.0 35.1 23.655 64.3 21. book value/share (INR) Diluted P/E (x) Price/ BV (x) Price/ ABV (x) Dividend yield (%) 23.4 (2.424.806.2 1.5 6.7) (0.432 94.6) 34.947 93.8 22.570 .335 Net interest income 50.6 20.2 1.7 7.212 61.1 1.013 94.2 26.378 36.619 3.629 3.8 8.1 2.0 18.2 17.548 85.5 65.6 83.287.089 84.0 19.6 (2.6 6.4 5.9 2.593 111.5 1.1 3.8 455.8) (3.7 29.5 33.9 23.2 (2.741 3.7 32.0 23.3 102.5 61.9) (0.2 2.7) (3.4 34.019 20.0 531.576 800 250 62.4 1.393 185.7 1.6 546.951 47.366 128.550.894 2.5 2.500 163.Other provisions 568 PBT 38.9 2.9 41.3) (0.2 5.0 9.045 Non interest income 39.2 49.8 33.137 192.157 12.444 189.6 8.696.2 462.750 136.030 .4 (29.9 41.9 42.979 599.7 20.7 22.686 71.353 PAT 25.9 22.Misc.4 68.5 40.3 28.806.3 0.2 84.988 224.002 1.288 51.065 260.429 23.444 21.1 DPS 12.4 644.564 120.1 38.1 1.8 22.5 19.057 27.375 302.427.8 209.0 23.1 2.Investment depreciation (222) .8 2.134 2.227 76.0 17.2 32.7 34.9 23.0 388.Tier 1 Book value FY11 FY12E FY13E 4.266 500 250 73.5 Yield on advances Yield on investments Yield on assets Net interest margins Cost of funds Cost of deposits Cost of borrowings Spread Cost-income Tax rate 7 (INR mn) As on 31st March FY10 Liabilities Equity capital Reserves Net worth Sub bonds/pref cap Deposits Borrowings Other liabilities Total Assets Loans Investments Gilts Others Cash & equi Fixed assets Other assets Total Balance sheet ratios (%) Credit growth Deposit growth EA growth SLR ratio C-D ratio Low-cost deposits Gross NPA ratio Net NPA ratio Provision coverage Incremental slippage Net NPA / Equity Capital adequacy .964.253 2.509 Operating expense 37.9 2.3 3.139 31.9 1.477 2.874 102.551 993 2.581 160.6 15.719 69.558 69.0 2.1 (2.7 4.321 39.6 8.413.0 546.2 19.211 ROA decomposition (%) Year to March Net interest income/Assets Fees/Assets Investment profits/Assets Net revenues/Assets Operating expense/Assets Provisions/Assets Taxes/Assets Total costs/Assets ROA Equity/Assets ROAE Valuation parameters Year to March Diluted EPS (INR) EPS growth (%) Book value per share (INR) Adj.6) (0.106 156.8) (4.134 2.036 20.050.1 6.465 .7 20.102 Net revenues 89.6 39.6) 1.9 13.7 10.789 277.7 39.9 2.9 13.9 20.Post Conference Notes .937 345.3) (0.259 1.8 43.427.380 Interest expenses 66.918 65.5 31.052 4.Employee exp 12.7 8.4 2.4 Operating ratios (%) Year to March FY10 FY11 FY12E FY13E 8.0 Payout ratio (%) 22.009 46.1 5.2 1.106 4.1 0.794 16.8) 1.224 22.0 0.0 1.6 151.6) 1.5 7.9 34.605 23.5 6.731 80.496 Taxes 13.6 24.673 341.469 12.632 49.8 17.4 4.832 9.4 6.053 421.Loan loss provisions 13.635 55.Day 1 Financial Statements Balance sheet Income statement Year to March (INR mn) FY10 FY11 FY12E FY13E Interest income 116.07 5.7 1.708.4 22.883 220.412 Provisions 13.121 100.7 22.8 11.6 7.3 1.1 0.1 29.171 264.9 19.087 243.2 12.539 Preprovision profit 52.996 39.94 5.0 0.8 20.7 1.3 Growth metrics (%) Year to March FY10 FY11 FY12E FY13E NII growth Fees growth Opex growth PPOP growth PPP growth Provisions growth PAT growth 35.892.8 33.1 0.605 692.1 6.325 17.8 1.8) (3.0 16.378 2.619 3.662 14.0 20.1 396.4 2.502 69.097 .7 16.2 86.6 17.9 26.959 441.Investment profits 7.932 71.782 62.043.048 217.3 FY10 FY11 FY12E FY13E 62.2 4.2 396.4 3.4 0.445 33.8 31.162 41.920 152.7 626.1 0.0) 1.477 2.267 59.6 46.8 644.0 0.932 1.630 46.210 3.0 18.5 9.078 1.3) (0.450 2.2 84.964.686 55.8 Edelweiss Securities Limited Edelweiss Securities Limited .7 48.106 4.9 22.041 428.2) (0.732 22.7 42.143 Diluted EPS 62.064 214.3 3.4 243.3 18.1 5.0 3.746 297.2 2.5 120.2 2.626 13.6 16.

1 * Promoters pledged shares (% of share in issue) : Nil Key risks Overdependence on vendors or vendor buy out. growth (%) EBITDA (INR mn) Net profit (INR mn) Share outstanding (mn) EPS (INR) EPS growth (%) Diluted P/E (x) EV/EBITDA (x) ROE (%) FY10 FY11 FY12E FY13E 22.9 Others : 18.com Amit Mahawar +91-22.com.1) 12 months (24.0 2.4063 5561 rahul.5 6.8 33. Its products like mixers.mahawar@edelcap.com Edelweiss Securities Limited . Daily Vol. the company is now more focused on its E&P division.1 20.408 23. i.2 6.Company Profile BAJAJ ELECTRICALS Domestic consumer play India Equity Research l February 7.4) (7.gajare@edelcap.3 24.451 1.221 98 12. water heaters and room coolers are leading products in their respective product ranges.8 5.edelresearch.5) Financials Year to March Revenues (INR mn) Rev.286 26.0 13.2) 12.e.1) (25. BJE outsources most of its manufacturing.1 (13.com Swarnim Maheshwari +91-22.291 99 13.0 27. FIs & Banks : 9.3 19.475 1.8 8. and has been able to create a niche in the premium segment. the company is able to focus on its core competencies. PRICE Performance (%) Stock Intense competition in the consumer durable segment can squeeze margins.maheshwari@edelcap.2 46.499 1. Moderate growth in fans and luminaries at 10-15%. irons.4040 7451 amit. dating back several decades.488 99 15.3 (7. Reuters and Factset.5 Share Holding Pattern (%) Promoters* : 65.9 31. the company competes with premium players like Philips and Kenstar. Avg. Nifty EW Capital Goods Index 16.8 9.5 26.1 1 month 20.BO. and has exclusive arrangements with 70% vendors. marketing and distribution. B: BJE IN) After sales service is the key differentiator given Bajaj Electricals provides with two years warranty. 2012 Engineering and Capital Goods Key takeaways EDELWEISS 4D RATINGS Management reiterated its view on not splitting the consumer business and engineering and projects business.598 1. Absolute Rating BUY Rating Relative to Sector Outperformer The company indicated that there is no slowdown in the consumer business and estimates growth at 20-25%.778 15.9 7.6 3 months (15. The company’s distribution reach is far wider than its competitors.6 38. It has long-term relations with its vendors. CMP : INR 170 Target Price : INR 240 Investment conclusion 52-week range (INR) : 296 / 132 Share in issue (mn) : 99. Bloomberg EDEL <GO>. Rahul Gajare +91-22. and is efficiently managed in terms of logistics and supply chain.7 3.6 M cap (INR bn/USD mn) : 17 / 336 With its consumer-facing business growing steadily. With such a set up in place.6 MFs.895 99 19.4040 7418 swarnim. Thomson First Call. BSE/NSE (‘000) : 133.2 2.350 20.1 Edelweiss Research is also available on www.9 2. given the synergies. Increase in prices of key raw materials such as steel and zinc can hamper margins of the E&P division.4 FIIs : 6.2 11.. OTG.5 21. By virtue of tie ups with global majors like Morphy Richards (UK) and Nardi (Italy). Risk Rating Relative to Sector Medium Sector Relative to Market Underweight The company is not too worried of the competition as the market itself is expanding. MARKET DATA (R : BJEL.1) 0.

724 1.4 1.9 8.8 90.2 19.646 29.435 11.550 20 9.6 6.583 16.1 99 21.0 3.4 6.063 1.787 EBITDA 2.4 0.8 Depreciation and Amortization 0.8 FY10 FY11 FY12E (INR mn) FY13E 1.465 2.074 Net deferred tax 5 Uses of funds 6.165 9.8 29.616 1.726 998 250 748 9 (INR mn) As on 31st March FY10 FY11 FY12E FY13E Equity capital 195 Reserves & surplus 4.564 52 395 (343) 1.5 8.3 25.561 324 11.3 12.885 7.342 Interest expenses 314 Other income 29 Profit before tax 2.777 Total current assets 11.8 13.055 149 521 2.9 52 136 154 34 1.499 Depreciation & amortisation 157 EBIT 2.239 751 1.700 Depreciation 683 Net block 1.4 91.3 26.4 22.055 2.749 9.749 Shareholders funds 4.370 1.776 149 3.2 46.902 9.990 Sundry creditors and others 6.2 36.290 438 1.9 14.916 Net current assets 5.534 78 198 8.462 Gross block 1.2 5.6 7.9 6.533 366 2.4 1.5 0.055 20.Post Conference Notes .5 32.683 2.598 126 2.0 0.5 Diluted equity shares (mn) 98 Dividend payout (%) 22.8 35.2 11.Day 1 Financial Statements Balance sheet Income statement Year to March (INR mn) FY10 FY11 FY12E FY13E Income from operations 22.583 1.4 Tax rate (%) 40.052 1.057 Provision for tax 835 Core profit 1.8 15.357 20 7.172 7.4 39.017 Investments 366 Inventories 2.4 9.1 21.8 0.6 0.2 27.5 Growth metrics (%) Year to March Revenues EBITDA PBT Net profit EPS Cash flow statement Year to March Net profit Depreciation Deferred tax Others Gross cash flow Less:Changes in WC Operating cash flow Less: Capex Free cash flow FY10 FY11 FY12E FY13E 26.1 16.438 3.302 769 1.016 Capital work in progress 1 Total fixed assets 1.7 Interest expenditure 1.111 483 1.276 52 198 7.106 2.891 2.3 FY10 FY11 FY12E FY13E 12.379 20 11.524 Employee costs 972 Other expenses 2.661 731 10.828 466 55 2.6 0.419 15.1 43 107 127 23 1.1 46.3 Common size metrics as % of net revenues Year to March FY10 Operating expenses 88.9 21.668 15.0 0.408 20.534 2.682 12.0 99 20.3 0.3 9.6 0.1 9.472 291 57 2.848 29.946 10.4 18.8 3.7 6.0 45.5 6.184 2.810 2.856 24.224 2.094 Sundry debtors 7.8 20.1 7.438 15.874 13.161 1.705 541 2.6 7.583 1.7 0.8 13.979 324 13.8 29.583 135 466 2.9 4.6 7.462 Adjusted BV per share (INR) 32 198 5.2) 14.834 19.055 2.0 23.5 21.3 19.5 38.6 27.5 5.303 9.853 24.8 6.221 157 (5) 243 1.7 5.4 30.055 2.2 Net profit margins 5.853 828 1.416 834 1.365 11.729 1.018 22.5 1.5 0.507 Cash and equivalents 612 Loand & Advances 1.0 21.349 35.488 126 (20) 260 1.4 EBITDA margins 11.598 366 3.533 1.518 Sources of funds 6.171 EPS (INR) basic 12.171 PAT after minority interest 1.699 366 4.654 481 1.8 36.488 (50) 1.0 23.8 33.171 Adjusted net profit 1.392 5.5 35.275 2.483 2.7 0.4 8.9 38.2 23.7 0.0 FY11 FY12E FY13E 90.502 904 1.286 Direct costs 16.1 44 121 140 25 1.438 1.806 1.221 Extraordinary items (50) Profit after tax 1.438 1.8 20.5 0.699 1.0 35.025 627 398 1.165 7.944 Secured loans 684 Borrowings 1.0 (13.3 50 133 156 27 1.5 5.3 Ratios Year to March ROAE (%) (on adjusted profits) ROACE (%) Inventory days Debtors days Payable days Cash conversion cycle Current ratio Debt/EBITDA Interest coverage Fixed assets t/o (x) Debt/equity Valuation parameters Year to March Diluted EPS (INR) Y-o-Y growth (%) CEPS Diluted P/E (x) Price/BV (x) EV/Sales (x) EV/EBITDA (X) Edelweiss Securities Limited Edelweiss Securities Limited .465 109 FY10 FY11 FY12E FY13E 33.0 4.627 521 54 3.7 0.273 Provisions 643 Total CL & provisions 6.237 (53) 200 (253) 2.583 1.100 1.660 4.292 Total operating expenses 19.5 13.913 6.963 135 2.8 99 15.752 1.6 21.598 1.5 34.072 3.

546 8. Prasad Baji +91-22-4040 7415 prasad.8mt from this expansion (our assumption is nil). 2012 Metals & Mining Key takeaways EDELWEISS 4D RATINGS Phase III 2.6mtpa over next three years CMP : INR 358 Target Price : INR 382 52-week range (INR) : 530 / 296 Share in issue (mn) : 212. Promoters* : 69.5 96. respectively. Adding downstream capacity of ~2.6 28.8 Others : 27.6 11. growth (%) EBITDA (INR mn) Net profit (INR mn) Share outstanding (mn) EPS (INR) EPS growth (%) Diluted P/E (x) EV/EBITDA (x) ROE (%) FY10 FY11 FY12E FY13E 56. Reuters and Factset.7) (7.7 26.1 20.188 37.Company Profile BHUSHAN STEEL In expansion mode India Equity Research l February 7. Moreover. Avg.com Edelweiss Securities Limited .BO.7 Investment conclusion The expected ramp up of the 2.8 100.com.3 3.7mt. B: BHUS IN) The company guided for FY13 EBITDA of INR40bn (against our INR28.6 9.514 Bhushan Steel has already completed 0. BSE/NSE (‘000) : 439. Stock Nifty EW Metals and Mining Index 10. but with the slow approval process would take 1824 months to commence.com Navin Sahadeo +91-22-6623 3473 navin.3 Edelweiss Research is also available on www. FY13 and FY14 HRC production guidance is 2. respectively Targeting FY13 EBITDA of INR 40 bn.812 212 41.1) 8.9mtpa expansion on track for completion by October 2012 Absolute Rating HOLD Rating Relative to Sector Performer Bhushan Steel reiterated completion of 2.404 13.304 10.8 14. the pure play exposure to the auto/ white goods industry places BSL in a competitive position compared to peers. FIs & Banks : 0.9mtpa (crude steel) steel expansion by October 2012.6 17.0 96. EBITDA expected to grow further to INR60bn led by HRC volumes rising to 4mt. H2FY13E to post volumes of ~0.5bn estimate) led by volume growth from Phase III expansion.4 0. Bloomberg EDEL <GO>.8 7.3 7.5 * Promoters pledged shares (% of share in issue) : 19.430 9.9 MFs.5) Lack of captive raw material.5 (6.005 24.3mtpa steel capacity will drive volumes over the next two years and enable BSL to further strengthen its position in the auto and white goods sectors.8 FIIs : 1.6) 8.437 212 44.458 212 39.1 9. By FY15E.4 28. Financials Year to March Revenues (INR mn) Rev.sahadeo@edelcap. For the thermal coal mine. Thomson First Call.527 8. The backward integration facility right up to the metallic stage will give a fillip to EBITDA margin as dependence on external HR will be eliminated.0 12.5 70.baji@edelcap.35mtpa capacity is expected in Orissa in April 2013 while high-end CR mill of 1.4 M cap (INR bn/USD mn) : 76 / 1.3 18. Daily Vol. CR mill of 0.754 0.051 212 47. land acquisition process has commenced.1) (10.edelresearch.5mtpa ERW pipe plant at Khopoli.9 12.2 15.6 Captive mine commencement ~2 years away Share Holding Pattern (%) The company has been allotted iron ore and thermal coal mines with reserves of 70mt and 325mt.9 9.8 9.35mt and 3.4 (6. PRICE Performance (%) 1 month 3 months Key risks 12 months Delay in ramping up of capacities.1 (14.8 20.8mtpa capacity is likely to be launched for completion in FY15. a ~33% YoY growth Risk Rating Relative to Sector Medium Sector Relative to Market Underweight MARKET DATA (R : BSSL.

4 2.3 1.208 49.294 650 10.1 105.039 256.8 23.5 Dividend payout (%) 1.202 8.047 4.307 23.9) (4.1 26.793 CWIP 111.202 Total current assets 37.4 70.610 13.4 (6.7 7.693 26.8 2.8 0.0 200 20 187 25 7.8 Valuation parameters Year to March FY10 FY11 FY12E FY13E EPS (INR) Y-o-Y growth (%) CEPS (INR) P/E (x) Price/BV(x) Market cap/Sales (x) EV/Sales (x) EV/EBITDA (x) Dividend yield (%) 39.955) Raw material costs 38.Day 1 Financial Statements Balance sheet Income statement Year to March (INR mn) FY10 FY11 FY12E FY13E Net revenue 56.595 2.853 (10.137 31.637 60.1 39.8 100.3 18.2 Ratios Year to March ROAE (%) ROACE (%) Inventory (days) Debtors (days) Payable (days) Cash conversion cycle (days) Debt/EBITDA Current ratio Debt/ Equity Adjusted debt/Equity Edelweiss Securities Limited Edelweiss Securities Limited .220 4.684 4.4 37.0 27.236 2.6 1.7 2.1 1.1 0.613 212.101 Unsecured loans 7.295 Sources of funds 157.507 56.634 6.9 20.874 278 425 687 65.769 2.267 165.0 0.671 Provisions 365 Total CL & provisions 16.7 1.666 Uses of funds 157.359 4.007 8.970 29.1 (20.428 2.983 261.576 Purchase of goods 64 Employee expenses 1.1 11.581 125.464 695 13.7 212.758 8.2 41.429 29.178 Profit before tax 11.9) (4.091 1.307 22.500 9. Operating cash flow Less: Capex Free cash flow FY11 FY12E FY13E 74.3 2.932 228.853 58.213 63.4 Basic EPS 39.624 283 23.702 Sundry creditors and others 15.358 35.4 35.676 28.3) (20.0 71.458 Basic shares outstanding (mn) 212.192 484 22.290 715 10.0 4.284 288.8 8.0 14.9 86.631 2.221 5.501 231.437 9.266 6. PBT Net profit EPS Cash flow statement Year to March Net profit Add:Non cash charge Others Gross cash flow Less: Changes in W.2 10.4 200 20 185 25 7.6 1.264 51.036 Net current assets 21.304 2.339 Cash and equivalents 1.706 10.404 Accretion to stock (2.796 183.4 11.8 2.6 163 44 150 57 7.9 2.756 3.244 6.9 8.642) 7.051 10.8 2.613 6.4 2.8 41.534 Inventories 19.5 9.8 2.066 Net block 20.8 212.4 2.8 12.275 207.778 17.042 (25.Voting shares 425 Preference share capital 367 Reserves & surplus 39.778 4.3 8.3 100.244 18.007 212.910 261.874 144.755 13.721 11.3 0.4 47.051 212.610 13.3) 4.886 Investments 3.3 Tax rate 26.514 Provision for tax 3.1 3.5 1.Post Conference Notes .718) 42.583 12.6 8.7 9.4 37.4 35.575 23.2 2.939 9.8 100.7 25.1 44.956 3.037 2.960 22.8 Dividend per share (INR) 0.005 (4.7 3.093 Total fixed assets 131.133 42.4 47.202 19.393 3.5 18.983 288.355 50.460 (45.0 9.6) 71.1 47.3 12.8 19.876 EBITDA 14.458 Profit after minority interest 8.3 212.125 Shareholders funds 39.3) (20.816 7. C.9 2.964 150.4 7.684 66.003 10.0 1.613 7.945 484 21.4 29.612 9.659) 11 (INR mn) As on 31st March FY10 FY11 FY12E FY13E Equity capital.000 (1.917 Secured loans 106.777 13.8 60.253 BV per share (INR) 188 425 687 57.859 4.917 133.5 (6.953) 8.351 25.3 3.440 6.437 20.360 4.835 351 50.6 2.0 Common size metrics as % of net revenues Year to March FY10 Operating expenses Depreciation Interest expenditure EBITDA margins Net profit margins Growth metrics (%) Year to March Revenues EBITDA.9 2.701 20.091 EBIT 12.150 SGA & other expenses 2.8 15.051 10.007 6.460 108.961 8.3 70.913 315 425 687 73.2 0.8 24.663 73.100 Other income 1.1 27.529 3.9 27.859 Depreciation 16.850 350 FY10 FY11 FY12E FY13E 26.9) FY10 FY11 FY12E (INR mn) FY13E 9.7 0.134 6.2 304 25 172 85 8.409 Power & fuel 2.166 40.644 22.942 18.7 0.968 2.275 188.700 Loans and advances 9.4 29.8 10.926 6.436 Interest expenses 2.913 144.850 155.339 20.056 Core profit 8.4 FY10 FY11 FY12E FY13E 13.8 2.041 Deferred tax liability 3.9 0.072) 11.676 29.192 484 20.8 0.9 7.121 74.932 199.7 9.4 Diluted EPS 39.458 Profit after tax 8.527 Depreciation & amortisation 2.525 4.177 20.613 7.632 Total operating expenses 41.504) 33.627 Sundry debtors 7.8 18.8 30.233 203.8 49.5 70.2 3.8 Diluted shares (mn) 212.307 31.5 9.2 2.007 8.0 7.000 (11.341 35.659 15.244 24.1) 73.815 6.253 Gross block 36.9 9.983 231.0 6.235 11.653 2.251 10.940 Borrowings 114.0 90.4 (4.220 123.784 119.9 1.

8) Financials Year to March Net Revenues(INR Mn) EBITDA (INR Mn) Net profit (INR Mn) EPS (INR) P/E (x) EV/EBITDA (x) ROAE (%) FY10 FY11 FY12E FY13E 16. 40+kbpd – Bhagyam.252 109.Company Profile CAIRN INDIA CY13 exit production guidance at 210-240 kbpd India Equity Research l February 7. CFA +91 22 6623 3315 niraj.8 8.6 3.0 7.9 168. FDP submission and approval for Bhagyam and Aishwarya fields. 20+kbpd – Aishwarya) by CY13 end. Q4FY12 pricing will be better due to better fuel oil cracks. which require less time and capex. 2012 Oil.9 9.3 (1. BSE/NSE (‘000) : 3. Daily Vol. better Q4 pricing Cairn holds cash of USD1.0 FY13E net capex at USD800mn.863 Avg.0 MFs. Triggers to watch out are—Mangala approval for 150 kbpd. It is in final stages DGH approval for consolidation of its foreign subsidiaries. Thomson First Call. Sri Lanka exploration capex at USD200mn (USD150mn spent till date).114 45. Bloomberg EDEL <GO>.903.5 71. Only after the same will it announce the dividend.5 0. Share Holding Pattern (%) Promoters* : 59. Reuters and Factset.1 155.2 11.mansingka@edelcap.1) 12 months 5.2 FIIs : 6.877.230 9.5 66.498 47. Key risks Fall in crude prices or a higher discount to Brent.9 19.BO.9 17.2 Others : 26. Utilization of excess cash. (150+kbpd .1) (5.136 87.5 * Promoters pledged shares (% of share in issue) : Nil PRICE Performance (%) Stock Nifty EW O &G Index 1 month 8. of which 70% for MBA development and balance for Rajasthan exploration.4bn and will be generating ~USD1bn of FCF in FY13.244 89. at 210-240kbpd.0 7. triggers exist FY13 capex guidance of USD800mn (net).Mangala. Risk Rating Relative to Sector Medium Sector Relative to Market Overweight MARKET DATA (R : CAIL. Delay in getting approvals to ramp up Mangala.0 5. Pipeline capacity is not a bottleneck for increasing the production as the same can be managed by increasing the number of pumping stations (required approvals).2 102. Aishwarya FDP approval.344 33.805 10.3 17.8 5.117 63.6 8.5 Edelweiss Research is also available on www.com Edelweiss Securities Limited .367 112.0 (7. CMP : INR 366 Target Price : INR 342 52-week range (INR) : 372 / 250 Share in issue (mn) : 1.779 84. Gas and Services Key takeaways EDELWEISS 4D RATINGS CY13 exit crude oil prodn.0 M cap (INR bn/USD mn) : 697 / 13. FIs & Banks : 8. pipeline not a bottleneck Absolute Rating HOLD Rating Relative to Sector Performer Crude oil production is likely to increase to 210-240kbpd. Niraj Mansingka.com.edelresearch.0 3 months 18. B: CAIR IN) Dividend seems near. but only after consolidation.511 5. Investment conclusion We have a negative view on crude on the back of weakening demand and rising supply from Libya and US and estimate FY13 Brent at USD95/bbl.

214) 1.881) Gross Cash flow 9.2 10./ prior period items 0 Profit after tax 10.129 21.278 39.8 2.basic (INR) 5.9 66.113 0 39.250 338.002 16.885 50.9 30.3 1.113 13 (INR mn) As on 31st March Total equity capital Stock option outstanding Reserves & surplus Shareholder's equity (A) Minority interest (B) Secured loans Unsecured loans Total debt (C) Deferred tax liability (D) Sources of funds (A+B+C+D) Gross fixed assets Depreciation Net fixed assets Capital WIP Total fixed assets (A) Investments (B) Inventories Accounts receivable Cash and cash equivalents Loans and advances Other current assets Current assets (C) Current liabilities Provisions Current lia.0 2.5 0.442 2.102 Total expenses 6.318 145 23.608 12.638 16.0 1.216 63.909 1.3 71.0 3.430 85.358 402.266 50.865 5.000 4.343 943 435.207 1.612 435.424 85.6 0.477) Total tax (348) Core profit 10.596 (11.603 21.900 15.4 4.819 373.683 19.344 0 63.3 757.288 68. & provis.4) (6.0 533.6 11.511 Add: Depreciation 3.5 CEPS 6.8 1.3 52.3 1.625 40.001 (6.3 0.000 4.097 10.928 0 377.734 107.577 12.570 Add: Deferred tax (1.117 13.045 22.196 342.8 FY10 FY11 FY12E FY13E Revenues EBITDA PBT Net profit EPS 13.5 31.779 (264) 9.207 82.Day 1 Financial Statements Balance sheet Income statement Year to March (INR mn) FY10 FY11 FY12E FY13E Net revenues 16.861 61.120 333.450) 86.216 Deferred tax (1.6 1.511 Profit after minority int.6 2.103 22.933 387.1 31.500 26.909 3.717 19.007 4.910 91.281 (12.073 342.027 0 458.8 60.039 12.410 32.055 4.858 279 FY10 FY11 FY12E FY13E 1.282 13.3 7.077 Profit before tax 10.790 0 44.782 5.001 (18.7 FY11 FY12E FY13E 14.3 (1.350 15.3 161.214) 1.086 6.881 35.815 35.9) (7.3 1.087) Other taxes (1.902 33.252 1.0) Cash flow statement Year to March FY10 FY11 FY12E (INR mn) FY13E Net profit 10.1 5.5 2.976 55.549 2.344 63.937 14.869 4.0 45.903 44.556 63.7 43.5 Diluted shares (mn) 1.320 85.335 259.358 45.812 28.357 Opertaing cash flow 757 Less: Capex 31.943 22.940 (11.4 22.144 261.490 58.424 17.791 2.475 91.9 1.1 0.271 5.619 82.791 EBITDAX 9.1 3.056 17.144 169 13.010 81.114 Less: Changes in wor.603 2.489 54.346 18.570 EBIT 6.434 2.858 387.8 37.235 Financing costs 148 Other income 4.0 1.0 18.0 1.6 27.908 33.7 36.3 9 29 22 0.511 Basic shares (mn) 1.092 17.0 0.9 Ratios Year to March ROACE ROAE (%) ROA Current ratio Inventory (days) Payables (days) Cash conversion cycle (days) Debt-equity (x) Debt/EBITDA Adjusted debt/equity Valuation parameters Year to March Diluted EPS (INR) Y-o-Y growth (%) CEPS (INR) Diluted P/E (x) P/BV (x) EV/Sales (x) EV/EBITDA (x) Dividend yield(%) Edelweiss Securities Limited Edelweiss Securities Limited .2 6.453 98.600) 82.734 9.5 7.diluted (INR) 5.596 70.0 33.511 Extraordi.739 44.516 19.457 91.490 477.894 5.823 821 116.0) (7.651 99.495 2.3 81.807 (9. (F) Uses of funds (A+B+E+F) Book value per share FY10 FY11 FY12E FY13E 18.511) (5.6 - 164.398 13.545 67.611 (11.0 0. 10.122 Free Cash flow (30.1 22.805 Recouped costs 3.000 1 10.416 49.911 EPS .127 34.829 44.932 19.6 65 222 (105) 0.759 370.277 14.897 EPS .2 503.448 809 167.007 0 34.759) 480.820 5.527 34.7 9 29 31 0.326 202 10.635 351.8 1.371) (2.3 3.751 1.791 28.098 13.8 6.1 15.0 6.9 20.0 16.159 5.0 0.1 10.441 Other expenses 1.424 1.5 70.365) 63.9 47.8 13.371) 0 6.628 29.9 502.269) 536.163 Current tax 2.903 48.8 Common size metrics as % of net revenues Year to March FY10 Direct costs Other expenses EBITDA margins Depreciation & amortisation Interest Net profit margin Growth metrics (%) Year to March 26.344 1.248 Employee expenses 1.Post Conference Notes .230 Increase/decrease in stocks (366) Statutory levies 1.806 8.9 577.225) 84.8 2.067 9.7 3.521 2.7 50. (D) Net current assets (E) Miscellaneous exp.782 Production expenses 4.6 50.819 0 536.064 20.5 4.326 346.511) 0 6.2 43.9 DPS - 102.170 1.000 1 5.8 4.111 115.087 0 480.6 503.671 12.622 89.6 16.019 555 383.903 44.3 7.1 20.0 17.759 241 5.4 1.9 64.466 Lifting costs 2.9 0.2 34.9 45.409 2.903 48.847 16.053 393.5 5.8 34.1 18.3 44.294 8.9 1.0) (7.0 0.848 29.8 61.925 84.9 1.182 44.2 2.854 17.100 550.2 2.483 79.986 50.424 0 85. capital 8.7 12 45 (1) 0.771 98.1 47.453 377.027 0 531.1 0.207 16.8 8.3 50.269 386 79.376 32.8 59.087) Add: Others (3.1 6.944 3.758 131.8 31.344 13.970 464 319.0 FY10 FY11 FY12E FY13E 5.5 66.453 (12.9 48.622 (11.124 2.

7) (4.7 MFs.com Manav Vijay +91 22 4063 5413 manav. The final pricing will be dependent on a formula based on various factors such as sales achieved. FIs & Banks : Post acquisition of HBR.0 10. MARKET DATA (R : COKI.sarawagi@edelcap. we believe working capital will turn negative in FY13 as operations in UK are mostly retail based. Bloomberg EDEL <GO>.1 1.175 137 8.4) 43. Consistent innovation and the company’s inorganic growth strategy have provided CNK with higher growth rate.BO.com Edelweiss Securities Limited .3 Others : 13.4 2. BSE Midcap Index Stock 6. The company may look for equity dilution to reduce the leverage (~INR33bn post acquisition) as one of the options. BSE/NSE (‘000) : 471.555 154. 2012 Hotels Key takeaways EDELWEISS RATINGS Cox and Kings (CNK) expects synergies in business as combined group buying (~INR65bn) will improve overall margins going forward.864 1.com. Currently. HBR’s educational centers are running at just 30% capacity utilization.1 1.2) (14.301 1.1 20. deployment of further working capital in subsidiaries and other group companies.4) (16.992 39. Purchase could be executed during FY13-14.064 126 8. Absolute Rating HOLD Investment Characteristics Growth Holiday Breaks (HBR) is in talks with public schools to start providing educational tours facility at subsidized rates in UK. Reuters and Factset. Current facilities of government are facing budget cuts.7 4.2 Share Holding Pattern (%) Promoters* : 58. Thomson First Call. unforeseen events like war or disease.4 (4.8) NA (15.779 137 20.edelresearch. From the short-term perspective the company’s goal is proper integration.6) (248.711) 137 (12.vijay@edelcap.2 Nil Stock over Index 1 month 15.145 245.6) 3 months (4.4 26. CNK has the option to purchase the balance 50% stake of Menninger at EUR4050mn.2 NA 9.0 7.9 * Promoters pledged shares (% of share in issue) : Key risks PRICE Performance (%) Investment conclusion CNK’s inability to drive volumes could lower its bargaining power with business partners. B: COXK IN) CMP : INR 185 Target Price : INR 248 52-week range (INR) : 248 / 152 Share in issue (mn) : 136. margins and reduce leverage.4 21.0) (20. Its long-term aim is to introduce HBR educational products in India.8 11. CNK is looking for synergies from HBR in terms of better purchasing power capacity. wider geographical reach and more product offerings.4) 12 months (10.967 24. PAT etc.8 22.5 M cap (INR bn/USD mn) : 25 / 504 Avg.7 17.5) Financials Year to March FY10 FY11 FY12E FY13E Revenues (INR mn) Growth (%) EBIDTA (INR mn) Net profit (INR mn) Share outstanding (mn) EPS (INR) EPS growth (%) Diluted P/E (x) ROAE (%) 3.508 2.2 Edelweiss Research is also available on www.122 (1.5 1.Company Profile COX & KINGS All eyes on HBR India Equity Research l February 7. From the medium-term perspective the aim is to drive synergies. FIIs : 21.2 24. Manish Sarawagi +91 22 4040 7575 manish. Daily Vol.

8 24.3 23.5 Debt/equity 0.2 14.348 Less: Minority interests (10) PAT after minority interest 1.7 93.192 Gross block 1.8) (5.243 641 3.021 Cash and equivalents 3.604 94 FY10 FY11 FY12E FY13E ROAE (%) (on adjusted profits) 20.7 14.931 186 188 1.8 31 0.757 17.3 Payable days 309.338 EPS (INR) basic 8.579 (1.552 17.1 53.5 0.179 406 (9.1 20.8 3.946 Unsecured loans 2.8 3.0) 82.418) 28 43.115 544 230 1.7 ROACE (%) 21.6) (248.3) 0.693 3.2 2.047 350 14.2 6.7 3.9 0.667 2.667 2.5 6.022 1.714 Interest expenses 270 Other income 137 Profit before tax 1.868 1.4 24.031 14.841 819 1.693 91 43.584 Inventories 83 Sundry debtors 3.Day 1 Financial Statements Balance sheet Income statement (INR mn) Year to March FY10 FY11 FY12E FY13E Income from operations 3.687 6.2) 5.9 10.5 (10.127 14.4) 0.5 8.5 8.8 9.Post Conference Notes .755 976 2.755 1.4 10.764 350 19.864 Depreciation and amortisation 151 EBIT 1.079 5.966 1.101 Secured loans 2.5 6.145 2.000 34.112 716 5.301 186 2.711) (15) (1.4 Fixed assets t/o (x) 5.562 300 8.527 36.145) 9.4 9.290 8 137 6.397 (3.9 67.047 7.160 (7.4 26.7 22.137 12.5 3.532 2.6) Current ratio 4.452 Net deferred tax 55 Uses of funds 13.021 641 2.3 3.532 5.001 1.636 28 20.1 4.4 1.693 91 44.4 FY10 FY11 FY12E FY13E 8.7 Ratios Year to March Valuation parameters Year to March Diluted EPS (INR) Y-o-Y growth (%) CEPS (INR) Diluted P/E (x) Price/BV(x) EV/Sales (x) EV/EBITDA (x) EV/EBITDA (x)+1 yr forward Dividend yield (%) Edelweiss Securities Limited Edelweiss Securities Limited 1.467 335 (948) 763 (1.4 Debtors days 244.043 Deferrex tax (net) 48 Sources of funds 13.9 NA NA NA FY10 FY11 FY12E (INR mn) FY13E 1.555 6.9 3.5 5.967 1.305 (15) 1.097 Borrowings 5.715 Total current assets 9.613 88 683 9.8 2.992 Employee cost 994 Advertisement expenditure 357 Other expenditure 776 Total operating expenses 2.5) 0.345 833 512 312 201 1.801 626 1.414 3.127 EBITDA 1.989 75 683 12.011 641 4.4 23.7 26 FY11 FY12E FY13E 53.106 26.113 Net current assets 7.3 49.443 91 20.779 0 2.863 16.0 46.613 1.000 30.2 6.7 (15.301 3.726) (13) 137 NA 33 43.2 32 17.765 815 950 883 67 (948) 938 1.326 14.4 Diluted equity shares (mn) 126 Dividend payout (%) 5.615 395 3.8 4 2.1 1.8 46.7 11.5 (12.5 Tax rate (%) 28 4.5 1.826 11.522 10.819 27.0 21.0 3.7) NA 2.114 (4.396 12.4 245.4 Common size metrics as % of net revenues Year to March FY10 Operating expenses Depreciation and Amortization Interest expenditure EBITDA margins Net profit margins Growth metrics (%) Year to March Revenues EBITDA PBT Net profit EPS Cash flow statement Year to March Net profit Depreciation Others Gross cash flow Less:Changes in WC Operating cash flow Less: Capex Free cash flow 53.6) (248.565 Sundry creditors and others 1.865 151 (87) 1.0 17.1 0.262 15 (INR mn) As on 31st March FY10 FY11 FY12E FY13E Equity capital 629 Reserves & surplus 7.064 Extraordinary items 284 Profit after tax 1.289 16.000 8.0 1.508 1.7 FY10 FY11 FY12E FY13E 39.167 852 4.4 Inventory days 5.472 Shareholders funds 8.693 3.7 3.8 6.291 11.696 18.9 26.8) 154.268 6.764 20 137 5.443 3.2 NA 31.6 6.976 2.270) 28 44.3 Cash conversion cycle (59.826 17.6 (35.604 19.122 938 185 1.581 Provision for tax 517 Core profit 1.9 4.7 26.8 10.112 86 4.1 2.6 4 99 191 (87.5 11.989 19.9 5.779 (15) 2.0 568.2) (152.2 304.142 9.7 Interest coverage 6.984) 8.192 Adjusted BV per share (INR) 64 683 11.3 2.7 4 47 166 (115.7 60.2 263.1 .7 2.6) (245.4 13.337 Depreciation 615 Net block 722 Capital work in progress 204 Investments 2.175 130 1.747 Other current assets 2.5 Debt/EBITDA 2.296 423 948 2.1 (51.711) 0 (1.608) 3.613 3.681 350 3.6 9.6 22.769 Provisions 344 Total CL & provisions 2.204 31.112 282 5.6 11.4 1.

6 41.com Harsh Mehta +91 22 4063 5543 harsh.1 Others : 6.6 3 months (3.8 27.4% YoY during Q3FY12 and was impacted largely by base effect (grew ~44% YoY in Q3FY11).143 20.2) 0.3 0.5 * Promoters pledged shares (% of share in issue) : Nil 5.BO. BSE/NSE (‘000) : 1. Dabur has also demonstrated its ability to make and integrate smart acquisitions (Balsara) that complement its product portfolio and thereby drive inorganic growth. Foods business (operational only in India and Nepal) reported growth of 17.3 Edelweiss Research is also available on www.032 1.000 people outsourced. Each person will be a specialist for a particular rural area. Thomson First Call. backed by its ANH (ayurvedic/ natural/herbal) image is very progressive.741 4.3) (7.742.740 3. Financials Year to March Revenues (INR mn) Rev. Daily Vol. Bloomberg EDEL <GO>.2 7.6 40.1) 20.450 Avg.594 1. Dabur’s positioning on the ‘health and wellness’ platform.414 25.Company Profile DABUR INDIA The health and wellness expert India Equity Research l February 7.244 1.7 30. To increase the company’s rural reach. Further rise in competitive intensity.9 16. It will have ~2. the project is complete in UP and Maharashtra and Dabur aims to roll this out in seven other states soon.7 MFs.734 2. who will be trained specially for rural sales and marketing. Dabur has revamped its distribution strategy.686 1. growth (%) EBITDA (INR mn) Net profit (INR mn) Shares outstanding (mn) Diluted EPS (INR) EPS growth (%) Diluted P/E (x) EV/EBITDA (x) ROAE (%) FY10 FY11 FY12E FY13E 34.1 M cap (INR bn/USD mn) : 173 / 3.625 5.9 6. Currently. Reuters and Factset.045 20.edelresearch.7 57. New launches: Almond Hair Oil is doing well and expected to be in full traction by mid Feb 2012. Investment conclusion Dabur’s broad product portfolio provides a good play on Indian FMCG spend by virtue of its strong presence in less penetrated and high growth categories.3 8.961 16.4 21.3 Share Holding Pattern (%) Promoters* : 68.6 22. Management estimates growth moderation in the coming quarters and expects growth to be in higher teens.3 59. The company plans to launch a few new products in this category.2 51. makes it well-placed to capture lifestyle changes-led growth in the FMCG space. 2012 Consumer Goods Key takeaways EDELWEISS 4D RATINGS Dabur India (Dabur) posted ~8% YoY volume growth in domestic business in Q3FY12.470 5.576. The company believes that margins have bottomed out.5 26.729 6.roy@edelcap.7 PRICE Performance (%) Stock Nifty EW Consumer Goods Index 1 month (8.9 20.7 51.449 7.9 34.7 Key risks A slowdown in rural demand could impact Dabur’s revenues significantly.3 42. This. Nepal had witnessed turmoil in the past and is back on track now.4) 9.6 10. It expects margins to improve 100bps per quarter for the next 2 3 quarters despite maintaining ad spends at ~13-14% of sales.3 12. combined with its demonstrated ability to create new categories and sub-categories. This will help the company focus more intensely on rural areas. B: DABUR IN) CMP : INR 100 Target Price : INR 120 52-week range (INR) : 122 / 89 Share in issue (mn) : 1.com.com Edelweiss Securities Limited (1. FIs & Banks : FIIs : 19.2 12 months (2.6 23. This is likely to benefit the company’s skin care portfolio. Growth in food business in India needs to be monitored.741 3.9 16.6) . Abneesh Roy +91 22 6620 3141 abneesh. Management expects volume growth to be sustained at high single digit in coming quarters.6 9.mehta@edelcap. Management bandwidth post acquisition in international geographies is a concern. Absolute Rating BUY Rating Relative to Sector Performer Risk Rating Relative to Sector Medium Sector Relative to Market Overweight MARKET DATA (R : DABU.

865 3. tax after min.6 19.291 9.466 301 2.450 7.&Ass.447 6.4 4.740 3.908 9.032 697 503 194 5.2 34.338 6.5 13.622 6.9 13.8 18.433 928 505 9.338 4.881 1.623 400 4.2 21 51 65 7 1.3 3.391 6.708 3.6 17.5 35.985 20.669 4.085 3.2 12.4 19.950 1.533 1.010 24.535 358 58.335 49 4. int.010 32.480 (5.651 19. other income 6.3 35.6 14.6 12.0 1.741 6.724 5.010 189 27.274 26.4 FY10 FY11 FY12E FY13E 2.9 19.878 7. af.6 17.807 10.063 864 8.9 33.024 Minority interest 8 Pro.912 6.4 12.741 3.198 1.7 1.1 26.2 21 51 64 8 1.9 16.5 Edelweiss Securities Limited Edelweiss Securities Limited .291 5 1.6 16 43 61 (2) 1.8 13.1 13.3 1.470 Depreciation 503 EBIT 5.280 5.641 11.2 FY10 FY11 FY12E FY13E Revenues EBITDA PBT Net profit EPS 20.2 19.2 DPS 1.689 578 8.354 38 702 1.9 17.8 4.083 13 FY10 FY11 FY12E FY13E 57.2 35.911 41 703 9.274 18.9 22.435 10.8 2.1 1.111 1.694 534 10.7 23.274 21.782 (4) 7.651 8 1.058 4.346 5.2 3.799 7.009 Provision for taxation 985 Core PAT 5.2 40.6 1.7 1.741 4.8 23.2 1.555 7.143 Cost of materials 15.636 Employee costs 2.214 15.5 5.3 1.9 49.254 1.741 16.5 12.769 7.741 4.016 5.9 3.625 624 7.623 928 9.001 17.847 Advertisement & sales costs 4.485 1.010 27.2 17.4 20. 5.526 9.838 5.7 1.778 1.6 9.161 14.773 6.1 28.0 0.6 4.987 430 4.9 14.5 51.4 23.6 0.5 0.822 1.131 25.4 0.857 3.7 4.774 271 41.905 Other operating Income 238 Total operating income 34.6 14.199 490 8.4 0.793 107 11.377 4.485 9.505 5.211 389 8.2 50.9 16.855 27 11.971 2.211 Net int.2 Common size metrics as % of net revenues Year to March FY10 Cost of materials Employee costs Advertising & sales costs Other general expenditure Depreciation Net interest expenditure EBITDA margin EBIT margin Net profit margin Growth metrics (%) Year to March FY11 FY12E FY13E 45.9 37.3 8.7 46.390 5.411 7.686 1.507 Gross profit 18.0 Dividend payout ratio (%) 34.083 22.1 43.677 1.Post Conference Notes .4 7.5 1 .2 12.2 29.141 7.228 501 9.1 27.686 931 624 307 6.5 5.5 0.510 189 24.4 8.0 0.435 3.935 Others 4.382 303 7.857 1.6 21 51 65 7 1.053 21.741 44 4.195 350 4.992 3.750 3.5 40.6 16.042 29.9 Diluted shares (mn) 1.590 5.6 30.1 17.032 Eq.470 7.525 7.7 18.1 18.380 9.9 16.161 15.001 381 7.991 5.143 16.196 311 50.9 Cash flow statement Year to March FY10 FY11 FY12E (INR mn) FY13E 5.1 11.923 3.489 (4) 6.689 (3) 5.351 14.161 14.616 2.1 14.170 13.674 9.2 58.3 21.3 12.3 1.576 7.3 4.741 20.6 1 .734 EPS (INR) basic 2.946 7.045 19.079 1.931 (951) 8.372 Net profit Add: Non cash charge Depreciation Others Gross cash flow Less:Changes in WC Cash from operations Less: Capex Free cash flow 17 (INR mn) As on 31st March Share capital Reserves Shareholders' funds Minority Secured loans Unsecured loans Borrowings Deferred tax liability Sources of funds Gross block Less depreciation Net fixed assets Capital work in progress Investments Current assets Inventories Sundry debtors Cash and bank balance Loans and advances Current liabilities Liabilities Provisions Working capital Misc expenditure Uses of funds BV (INR) Ratios Year to March ROAE (%) ROACE (%) Debtor days Inventory days Payable days Cash conversion cycle (days) Current ratio Debt/EBITDA Debt/Equity Adjusted debt/equity Interest coverage (x) Valuation parameters Year to March Diluted EPS (INR) Y-o-Y growth (%) CEPS (INR) Diluted P/E (x) Price/BV (x) EV/Sales (x) EV/EBITDA (x) Dividend yield (%) FY10 FY11 FY12E FY13E 869 8.0 14.9 CEPS (INR) 3.2 0.0 16.7 16.3 14.741 12.741 3. & Finance charges 202 PBT 6.610 10.5 18.3 0.9 1.778 1.6 1.231 9.334 7.8 8.244 8.262 1.6 0.445 864 582 7.222 5.9 20.851 4.510 189 32.113 3.7 1.9 19.0 17.2 0.506 10.403 5.9 9.7 3.8 49.508 25.572) 6.728 1.435 6.9 1.990 8.8 1.8 0.6 75.0 11.8 37.6 35.5 14.594 22.0 3.5 1.893 29. shares outstanding (mn) 1.091 1.7 12.202 4.985 10 1.968 Other income 244 EBIT incl.9 7.2 48.741 EPS (INR) fully diluted 2.485 1.Day 1 Financial Statements Balance sheet Income statement Year to March (INR mn) FY10 FY11 FY12E FY13E Net revenue 33.729 (127) 5.555 2.383 EBITDA 6.8 3.

com Edelweiss Securities Limited .9 (0.000 MT. the capacity utilisation of Methanol is expected to increase from 12% in FY09 to 80% in FY12.3 MFs.9 3.000 MT/yr plant and displacing the import volumes. Daily Vol. With better gas availability.279 22. Bloomberg EDEL <GO>.0) (11.890 12.3 mn MT in FY13.9 16. Management guides for 75% capacity utilization for the new TAN plant by FY13 end and a total sales volume target of 0. DFPCL posted strong fertiliser performance during 9mFY12 owing to improved capacity utilization of ANP plant coupled with significantly higher proportion of the high margin traded specialty nutrients.2 5.4 Share Holding Pattern (%) Promoters* : 43.5 3.0 23. Thomson First Call.0 4. DFPCL’s TAN sales rose 67% YoY owing to the commissioning of new 300.3 19. KrishnaGodavari (KG) Basin and ONGC. Also.578 1.6 Nil PRICE Performance (%) BSE Midcap Index Stock Stock over Index 1 month 15. at a capex of ~INR 6 bn. 2012 Agriculture Key takeaways EDELWEISS RATINGS While there were margin pressures in the chemicals segment (primarily on higher ammonia prices) over the past two quarters.176 88 24.8 3 months (4. DFPCL is well connected to the National Gas Grid to receive gas from multiple sources like Panna-Mukta-Tapti (PMT) gas field.8 Edelweiss Research is also available on www.guntupalli@edelcap. FIs & Banks : DFPCL is the leader in the Indian Technical Ammonium Nitrate (TAN) market.920 1.9 19.1 21.2 19. Absolute Rating BUY Investment Characteristics Growth MARKET DATA (R : DPFE. Reuters and Factset.293 2. Ammonium Nitrophosphate (ANP) fertiliser capacity utilisation is poised to increase from 25% in FY09 to ~70% in FY12.8 Delay in capacity scale up in new TAN plant.4) 12 months (10.com. Financials Year to March Revenues (INR mn) Rev. CFA +91-22-6623 3362 manoj.2 * Promoters pledged shares (% of share in issue) : Key risks Investment conclusion 9. BSE/NSE (‘000) : 103.973 2.7 14.8 4. FIIs : 12.8 4.9 5.000 MT from 132. During 9mFY12. Any issues on the supply side of raw materials may impact capacity utilizations.2 16. with 30% share.3) 2.894 88 21.9 4.1) 9.1 6. The company has increased its TAN capacity further by 300. Manoj Bahety.edelresearch. while lower coal mining activity resulted in flattish TAN volumes in India. INR volatility may impact the operating margin of the chemicals segment.9 Others : 34. growth (%) EBITDA (INR mn) Net profit (INR mn) Share outstanding (mn) EPS (INR) EPS growth (%) Diluted P/E (x) EV/EBITDA (x) ROE (%) FY10 FY11 FY12E FY13E 13.Company Profile DEEPAK FERTILISERS Chemical and infrastructure play India Equity Research l February 7. Poor monsoon could hit fertiliser demand.BO. Management reiterates that the restructuring of Ishanya Mall in Pune is likely to be finished over the next few quarters and would be eventually looking at hiving it off.com Varun Guntupalli +91-22-6623 3481 varun. Delay in payment of subsidies by GoI could strain the company’s WC cycle.402 88 15.2) (7. With increased capacity.0 15.bahety@edelcap.2 M cap (INR bn/USD mn) : 13 / 256 Avg.162 30.8 0.5) 2. DFPCL’s market share in TAN is estimated to rise to ~70% in FY12 by replacing the cheaper grade TAN imports.293 (10.5 35.9 4.8 20.4) (7.628 88 29. Deepak Fertilisers’ (DFPCL) management guided for a margin improvement going forward. B: DFPC IN) CMP : INR 146 Target Price : INR 220 52-week range (INR) : 186 / 118 Share in issue (mn) : 88. with raw material prices coming off and rupee appreciating.

5 22.708 646 2.154 23.515 10.0 10.190 17.403 3.190 120 882 11.8 1.0 52.7 22.1 40.5 28.1) 22.3 20.207 Interest expenses 464 Other income 356 Profit before tax 2.4 26.6 1.7 2.355 3.697 1.1) (0.987 12.594 1.7 2.8 4.2 1.457 548 2.6 50.994 2.4 1.482 4.099 Provision for tax 697 Core profit 1.5 35.000 839 21.7 21.949 1.5 64.1 16.7 60.8 Common size metrics as % of net revenues Year to March FY10 Operating expenses Depreciation and Amortization Interest expenditure EBITDA margins Net profit margins Growth metrics (%) Year to March Revenues EBITDA PBT Net profit EPS Cash flow statement Year to March Net profit Depreciation Others Gross cash flow Less:Changes in WC Operating cash flow Less: Capex Free cash flow FY11 FY12E FY13E 17.5 88 23.3 30.231 5.8 77.8 88 18.628 29.8 11.7 19.717 13.596 2.2 14.3 29.054 1.5 4.6 2.550 8.909 429 2.021 683 2.387 1.491 8.069 1.8 0.757 839 19.2 2.0 15.757 0 7.257 12.4 20.114 2.2 1.636 1.088 21.3) 0.894 21.9 1.0 20.433 14.9 5.5 18.510 2.0 11.8 42.6 4.6 2.5 4.262 10.637 4.176 24.9 89.942 1.293 994 3.628 1.6 17.3 Edelweiss Securities Limited Edelweiss Securities Limited .7 2.595 7.9 21.8 0.1 65.144 12.362 972 2.9 35.9 15.402 Extraordinary items 250 Profit after tax 1.1 (0.713 1.0 59.210 14.398 (117) 1.578 787 2.875 1.358 9.279 9.Day 1 Financial Statements Balance sheet Income statement (INR mn) Year to March FY10 FY11 FY12E FY13E Income from operations 13.4 6.3 5.2 29.5 1.4 FY10 FY11 FY12E FY13E 15.081 2.4 1.2 6.033 17.208 14.0 16.299 591 399 3.373 12.1 30.0 FY10 FY11 FY12E FY13E (10.7 0.3 55.6 4.0 23.461 Total operating expenses 10.124 5.311 29 2.281 2.973 1.440 16.123 108 3.2 6.7 14.853 7.5 29.094 139 882 13.222 7.020 2.8 2.894 (19) 1.8 20.628 0 2.205 8.7 2.9 0.9 24.6 69.9 0.139 19 (INR mn) As on 31st March Equity capital Reserves & surplus Shareholders funds Secured loans Unsecured loans Borrowings Deferred tax liability (net) Sources of funds Gross block Depreciation Net block Capital work in progress Total fixed assets Investments Inventories Sundry debtors Cash and equivalents Other current assets Total current assets Sundry creditors and others Provisions Total CL & provisions Net current assets Uses of funds Adjusted BV per share (INR) Ratios Year to March ROAE (%) (on adjusted profits) ROACE (%) Inventory days Debtors days Payable days Cash conversion cycle Current ratio Debt/EBITDA Interest coverage Fixed assets t/o (x) Debt/equity Valuation parameters Year to March Diluted EPS (INR) Y-o-Y growth (%) CEPS Diluted P/E (x) Price/BV (x) EV/Sales (x) EV/EBITDA (X) FY10 FY11 FY12E FY13E 882 8.016 9.9 (0.752 18.354 4.134 6.255 8.162 13.1 4.000 Employee costs 912 Other expenses 1.7 2.000 839 21.1 54.9 5.097 1.3 17.8 20.234 944 1.8 20.9 14.731 2.652 Adjusted net profit 1.9 Diluted equity shares (mn) 88 Dividend payout (%) 28.094 21.741 1.312 658 17.402 EPS (INR) basic 15.123 3.154 162 FY10 FY11 FY12E FY13E 16.3 Tax rate (%) 29.176 0 2.000 0 6.1 30.386 737 3.8 19.993 6.515 9.479 1.920 Depreciation and amortisation 714 EBIT 2.090 1.107 931 2.7 0.762 21.0 35.458 2.614 2.7 19.8 1.4 1.509 14.8 FY10 FY11 FY12E (INR mn) FY13E 1.334 19.176 2.791 439 335 2.288 2.7 51.617 1.652 714 (56) 2.686 792 1.850 560 452 3.7 3.713 10.390 2.859 211 3.373 EBITDA 2.9 4.176 994 192 3.869 4.000 0 8.3 10.144 247 2.7 26.6 9.875 787 358 3.090 4.1) 23.8 55.591 2.8 20.9 5.844 548 2.628 2.308 548 1.8 18.917 4.7 16.5 22.452 2.1 0.Post Conference Notes .7 88 20.9 1.581 6.293 Direct costs 8.163 2.701 3.590 1.7 14.9 12.890 14.315 6.1 35.210 105 882 9.380 13.4 3.338 1.1 0.141 1.240 6.648 1.

com Edelweiss Securities Limited . there were no major sporting events during FY12 which resulted in higher churn. of which ~INR7.8 MFs. Sector Relative to Market Equalweight Dish TV has 0.8 * Promoters pledged shares (% of share in issue) : 15.4 2.0mn additional subscribers in Phase 1.0 6. HD subscriber base will increase when major broadcasters start offering HD technology.7 1.3 5.8mn subscribers.5) 75. B: DITV IN) CMP : INR 63 Target Price : INR 90 52-week range (INR) : 94 / 54 Share in issue (mn) : 1.8 30.BO.353 34. The DTH industry is subject to extensive regulations and hence it faces the risk of an unfavorable regulatory environment. MARKET DATA (R : DSTV. Sustained economic slowdown. Bloomberg EDEL <GO>.4 Share Holding Pattern (%) Promoters* : 64.063 (2. The slowdown continues in January as well.380 (1.732 (1.com.5 24.688 18 1.063 (1. 2012 Media Key takeaways EDELWEISS 4D RATINGS Out of the total market of 6.0 101.0 14. Daily Vol.4 M cap (INR bn/USD mn) : 67 / 1. Financials Year to March Revenues (INR mn) Rev.6 Edelweiss Research is also available on www.5bn constitute foreign loans.4 15.920) 1.6) 12 months Competition from other DTH service providers. Competition from alternative technologies especially digital cable.com Alankar Garude +91 22 6623 3301 alankar. the company’s focus remains on digitization and not ARPU. The company believes that churn is high due to lower quality of subscriber addition in earlier quarters because of low entry price of the set top box.3 1 month 3 months Key risks 5. Airtel and Videocon d2h is ~25%. Thomson First Call. Content cost is estimated to rise 15% YoY from Q1FY13 due to renegotiation of deals with broadcaster for the next three years each.edelresearch.1 (7.9 1. growth (%) EBITDA (INR mn) Net profit (INR mn) Share outstanding (mn) EPS (INR) EPS growth (%) EV/EBITDA (x) FY10 FY11 FY12E FY13E 10. FIs & Banks : FIIs : 11.006 24.roy@edelcap.1) 39. Dish TV stands to benefit most from Phase 2.063 (1.7 PRICE Performance (%) Stock Nifty EW Media Index 5.334 Avg.8 9.850 47.908. Absolute Rating BUY Rating Relative to Sector Performer Risk Rating Relative to Sector Medium Incremental market share for Dish TV. Also. Abneesh Roy +91 22 6620 3141 abneesh. Subscriber additions slowed in November and December 2011 primarily due to hike in prices of set top boxes. Going forward.7 4.6 10.6 60. The debt figure is expected to remain stable in the next quarter as well.117 (2. Gross debt stands at INR12bn.163) 1.1) (28.Company Profile DISH TV INDIA Beaming bright India Equity Research l February 7. The company has also managed to cut costs by shifting from variable to fixed-cost content contracts with most broadcasters. Reuters and Factset.6 (15.garude@edelcap.3 19.14mn HD subscribers. BSE/NSE (‘000) : 3. The impact of the INR10 price hike in the base pack in the third week of November 2011 was not felt in Q3FY12 due to lag effect.9-1.7) 0.063 0. It is also expected to benefit from the digitization mandate which will speed up the digitization process.8) 26.0 1. Investment conclusion Dish TV’s first mover advantage and strong distribution network help boost subscriber additions. Dish TV hopes to add 0.367 32.622) 1.064.7 Others : 17.

050 3.903 14.986 2.163) (1.688 (2.021 19.4) 75.4 8.6 0.4 113.7 98.183 21 (INR mn) As on 31st March Equity capital Reserves & surplus Shareholders funds Secured loans Deferred revenues Borrowings Sources of funds Gross block Depreciation Net block Capital work in progress Total fixed assets Investments Inventories Sundry debtors Cash and equivalents Other current assets Total current assets Sundry creditors and others Provisions Total CL & provisions Net current assets Uses of funds Adjusted BV per share (INR) Ratios Year to March ROACE (%) Inventory days Debtors days Payable days Cash conversion cycle Current ratio Debt/EBITDA Interest coverage Fixed assets t/o (x) Debt/equity Valuation parameters Year to March Diluted EPS (INR) Y-o-Y growth (%) CEPS EV/Sales (x) EV/EBITDA (X) FY10 FY11 FY12E FY13E 1.233 6.7 16.768 9.763 11.017 2.6 Edelweiss Securities Limited Edelweiss Securities Limited .4 3.610 16.000 46 394 3.6 7 2 1 (15) 0.926 514 2.000 12.0) 6 2 1 (15) (0.331 3.0) 72.622) (2.7 Interest expenditure 8.920) (1.6 NA NA NA 32.063 (1.560 581 (1. and amortisation EBIT Interest expenses Other income Profit before tax Provision for tax Core profit Profit after tax PAT after minority interest Adjusted net profit EPS (INR) basic Diluted equity shares (mn) (INR mn) FY10 FY11 FY12E FY13E 10.622) (2.920) (1.996 271 2.1 Common size metrics as % of net revenues Year to March FY10 Operating expenses 89.534 1.3 NA NA NA FY10 FY11 FY12E (INR mn) FY13E (2.063 (693) 370 10.920) (1.276 1.3 2.020 (89) 18 5.0 (1.495 720 18 18 18 18 18 0.131 10.940 (1.763 10.5 0.8 15.117 3.6 5.878) (1.353 10.0 30.2) 323 0.063 19.558 6.163) (1.090 18.805 960 4.856) (793) 12.931 7.294 9.021 16.0 10.063 14.Post Conference Notes .163) 4.2 NA NA NA 34.6 6.725 (1) FY10 FY11 FY12E FY13E (29.445 7.063 24.829 (12.344 7.962 4.7 8.298 11.895 775 6.622) 3.8) 26.062 2.725 38.6 (13.1 (2.895 793 1.227 (2.5 3.063 (1.367 7.923) (3) (1.206 (1.808 3.5 25.7 Depreciation and Amortization 29.609) (1.046 3.199) 6.778 19.1 24.500 10.051) 10.544) 9.063 FY11 FY12E FY13E 83.214 13.541 14.243 1.688 5.021 22.207 (0.227 601 1.0 1.615) 1.622) (2.0 190.5 (15.948 7.8) 1.622) (2.8 NA NA NA 24.554 3.142 774 3.8 10.5 29.143 179 9.4 4.5 (17.250 21.318 6.550 4.500 53 489 5.5 1.163) (1.133 0.916 979 4.621 4.274 10.704 14.006 11.207 32.1 24.602) 3.000 44 227 3.884) 11.531 21.6 6.133 25.1) 217 0.1) 39.914) 11.861 761 3.5 (6.580 19.098 (9.732 4.3 Net profit margins (24.Day 1 Financial Statements Balance sheet Income statement Year to March Income from operations Direct costs Employee costs Other expenses Total operating expenses EBITDA Depre.2 27.163) (1.8 2.332 3.077 3.521 4.163) (1.600 21.2) Growth metrics (%) Year to March Revenues EBITDA PBT Net profit EPS Cash flow statement Year to March Net profit Depreciation Others Gross cash flow Less:Changes in WC Operating cash flow Less: Capex Free cash flow FY10 FY11 FY12E FY13E 47.1) 8.3 (1.694 14.561 28 359 5.026 4.838) (775) 11.916 (184) 1.364 11.000 11.7 (14.9 0.0 101.354 (11.322 13.5 213 0.718 15.090 4 1.966 10.706 3.587 3.8) FY10 FY11 FY12E FY13E (2.996 (1.732 (2.380 3.1) 233 0.439 16.628) (6) (2.2 60.3 1.111) 971 453 (2.0 41.505 17.960 (5.500 11.6 3.733 1.0) 15 2 1 2 (2.3) 7 2 1 29 (1.121 2.131 15.5) 75.226 (1.75) 1.385 2.850 6.437 4.5) 1.0 5.057) 13.4 2.1) 1.125) 2.553 17.920) (1.826 (3.4 27.920) 3.346 (1.9 EBITDA margins 10.

004 735 30 24. Promoters* : 54.0 M cap (INR bn/USD mn) : 21 / 421 Avg. Reuters and Factset. Process automation and adverse regulations could impact the existing business.570 30. B: ECLX IN) CMP : INR 729 Target Price : INR 845 52-week range (INR) : 874 / 580 Share in issue (mn) : 29.2 40.0 Supply side pressures could affect client servicing and margins.com.6 12.938 23.6620 3147 omkar.3 62.8 9. strong execution and management are eClerx’s distinctive factors.com Edelweiss Securities Limited .827 41.0) 0. BSE/NSE (‘000) : 42.com Omkar Hadkar +91-22.com Sandip Agarwal +91-22.346 1.6 Currently. Strong financial track record marked by significant profitability and return ratios.2 29.5 Others : 11.6623 3474 sandip.edelresearch. We expect eClerx’s earnings growth at 26% CAGR over FY11-13E.2 * Promoters pledged shares (% of share in issue) : NIL PRICE Performance (%) Stock Nifty EW IT Index (1.6 19.9) Volatility in exchange rates could impact the company’s financials meaningfully. 2012 IT Key takeaways EDELWEISS 4D RATINGS eClerx Services (eClerx) stated that it continues to see traction in SMS segment and the recent marquee client wins will help it post higher growth than Banking Capital Market (BCM) segment.3 55.2 9.956 30 64.7 64.BO.2 3.5) Key risks 1 month 2. it has 15 clients in BCM and ~35 in the SMS segment.6 54.224 30 40.037 1.6 3 months (3.agarwal@edelcap. The company has built a strong and relatively uncontested position in specific high opportunity segments such as data analytics & management and process improvement solutions thus positioning itself as an established provider of specialised services. It is focused on increasing contribution of clients beyond top 5 by dedicated sales efforts and has seen increasing traction from them. FIs & Banks : 10. Share Holding Pattern (%) Investment conclusion eClerx is a strongly differentiated play in India’s burgeoning KPO space and stands out by virtue of its business model.8 Edelweiss Research is also available on www.725 30 57.5 40.9 4.8 MFs. It inks multi-year annuity contracts facilitated by ongoing engagements.1 1. which has helped the company forge a predictable revenue stream leading to attractive profitability.2 5. in the near term Top 5 client contribution will continue to remain at current level as demand from them also continues to be strong. However.3 18. it has not witnessed any scale down in BCM clients led by ongoing macro economic uncertainties.3 4. Daily Vol.sangoi@edelcap. Kunal Sangoi +91-22.8 (7.Company Profile ECLERX SERVICES Going's good India Equity Research l February 7.9 13..438 1.hadkar@edelcap. Financials Year to March FY10 FY11 FY12E FY13E Revenues (INR mn) Growth (%) EBITDA (INR mn) Net profit (INR mn) Shares outstanding (mn) Diluted EPS (INR) EPS growth (%) Diluted P/E (x) EV/EBITDA (x) ROAE (%) 2.4 11. Further. Over the past 18-20 months the company has scaled up its onsite business development team from 23 to 41 and will continue to add further as it intends to mine further its top clients.0 2.421 33. However. Thomson First Call. Absolute Rating BUY Rating Relative to Sector Outperformer Risk Rating Relative to Sector Medium Sector Relative to Market Equalweight MARKET DATA (R : ECLE. 12 months 3.1) (3.3 7.3 1.5 FIIs : 23.1 2.8 14.6623 3370 kunal.0 14. Bloomberg EDEL <GO>. quarterly growth trend could moderate due to uncertainty and delays at clients end.

3 Dividend per share 11.8 1.8 22.9 40.2 96.999 101 446 246 199 22 775 7 472 392 501 1.8 14.Day 1 Financial Statements Balance sheet Income statement Year to March (INR mn) FY10 FY11 FY12E FY13E Revenues 2.Post Conference Notes .6 58.3 41.169 622 547 60 1.1 7.0 13.492 Total SG&A expenses 489 EBITDA 1.5 39.5 13.3 23.0 9.690 1.601 546 1.6 58.255 240 103 1.945 599 1.1 13.300 7 1.3 29.6 23.0 60 32 28 2.224 1.7 11.8 7.139 1.2 42.956 1.3 5.975 132 FY10 FY11 FY12E FY13E 40.3 45.4 3.4 52.1 19.0 39.873 350 795 1.975 3.0 Common size metrics as % of net revenues Year to March FY10 FY11 FY12E FY13E Cost of revenues Gross margin SG&A expenses EBITDA margin EBIT margin Net profit margins 41.156 430 1.1 34.6 7.0 4.384 2.9 12.0 36.6 10.0 5.7 35.275 171 0 2.477 1.956 29 67.425 2.2 40.384 0 639 335 305 65 279 7 1.331 164 (225) 1.6 63.4 72.1 51.914 242 0 2.9 9.004 Depreciation & amortization 70 EBIT 934 Other income (106) Exceptionals 0 Profit before tax 828 Tax 93 Core profit 735 Profit after tax 735 Net profit after minority interest735 Shares outstanding (mn) 28 EPS (INR) basic 25.450 7 1.0 64.1 38.2 56.827 2.953 3.027 2.4 55.5 54.5 50.999 67 292 667 1.956 1.6 Edelweiss Securities Limited Edelweiss Securities Limited .6 3.078 Gross profit 1.725 29 59.8 7.9 14.6 19.8 1.0 1.8 18.7 41.911 3.375 3.9 58.023 926 873 2.366 220 251 471 894 1.144 1.7 18.2 39.009 1.224 1.6 62.4 17.725 1.8 Diluted shares (mn) 30 EPS (INR) diluted 24.007 2.9 13.7 30 40.446 1.163 0 889 458 431 50 1.6 40.4 29.472 3.3 4.7 Dividend pay out (%) 45.421 1.515 659 698 2.6 14.091 3.9 7.224 1.975 0 1.141 3.7 33.820 782 2.144 1.8 41.570 Cost of revenues 1.445 489 1.8 CEPS (INR) 28.5 64.5 1.704 139 1.2 5.3 28.9 13.4 12.5 60 30 30 2.392 168 1.7 FY10 FY11 FY12E FY13E 24.346 91 1.1 12.4 16.7 45.6 50.3 41.938 2.9 40.8 4.8 103.6 1.7 64.1 30 64.2 92.4 3.4 13.4 56 30 26 2.9 72.224 29 42.2 27.0 19.956 70 (53) 753 147 606 84 522 91 (607) 709 (209) 918 237 681 124 (145) 1.1 34.2 63.0 3.163 3.0 19.066 1. depreciation Net fixed assets Capital WIP Investments Deferred tax asset Cash & bank balances Debtors Loans and advances Total current assets Sundry creditors Provisions Total current liabilities Working capital Application of funds BV per share (INR) Ratios Year to March ROAE (%) ROACE (%) Debtors (days) Payable (days) Cash conversion cycle Current ratio Fixed assets turnover (x) Total asset turnover(x) Equity turnover(x) Valuation parameters Year to March Diluted EPS (INR) Y-o-Y growth (%) CEPS (INR) Diluted P/E (x) Price/BV(x) EV/Revenues (x) EV/EBITDA (x) EV/EBITDA (x)+1 yr forward Dividend yield (%) FY10 FY11 FY12E FY13E 193 740 1.9 Growth metrics (%) Year to March FY10 FY11 FY12E FY13E 30.7 63 30 33 2.2 33.3 36.2 28.3 7.4 FY10 FY11 FY12E (INR mn) FY13E 735 1.037 124 1.384 79 295 727 2.1 57.8 17.asset Gross fixed assets Less: Accum.6 53.708 290 1.1 12.4 68.999 1.822 437 1.372 1.725 1.2 18.728 2.163 105 295 727 2.418 Revenues EBITDA EBIT PBT Net profit EPS Cash flow statement Year to March Net profit Add : Non cash charges Depreciation Others Gross cash flow Less:Changes in WC Operating cash flow Less: Capex Free cash flow 23 (INR mn) As on 31st March Equity share capital Share premium account Reserves Total shareholders funds Sources of funds Goodwill & other intan.3 9.3 32.725 1.6 14.466 1.7 35.438 164 2.9 75.895 187 1.4 13.566 235 1.2 30 57.7 54.1 66.5 14.6 43.

3 M cap (INR bn/USD mn) : 55 / 1.783 2. Thomson First Call.8 36. More than 80% of Emami’s products have Ayurvedic base.7 32. Emami expects its organic annual growth to normalize at 18-19% for the next twothree years and PAT growth of ~20% YoY. Daily Vol.4 35. Emami does not compete with any large multinational or domestic player in its key segments.5 22. Bloomberg EDEL <GO>.5 19.8 Others : 8.8 40.0 21.6 3 months (14. Volume growth to be little less than 10% in Q3FY12. growth (%) EBITDA (INR mn) Net profit (INR mn) Shares outstanding (mn) Diluted EPS (INR) EPS growth (%) Diluted P/E (x) EV/EBITDA (x) ROAE (%) FY10 FY11 FY12E FY13E 10. Emami has booked menthol at average price of ~INR1. 2012 Consumer Goods Key takeaways EDELWEISS 4D RATINGS Emami believes the current severe winter will not have a significant impact on volume growth primarily on account of delayed winter.7 22. It is currently trading at INR1.com.6 14. However. Emami has taken 6-7% price hike in FY12 and it will not roll back price hikes once raw material pressure eases.1 34.2 Edelweiss Research is also available on www.8 PRICE Performance (%) Stock Nifty EW Consumer Goods Index 1 month (0. first fairness cream for men in India) and transforming them into blockbusters. Summer products (like talc) and winter products (like Boroplus) sales depend upon weather conditions. Abneesh Roy +91 22 6620 3141 abneesh. Absolute Rating BUY Rating Relative to Sector Outperformer Risk Rating Relative to Sector High Sector Relative to Market Overweight MARKET DATA (R : EMAM.700/kg from INR700/kg a year ago.426 20. The therapeutic usage gives customer loyalty leading to high gross margins.mehta@edelcap.5 2.com Edelweiss Securities Limited (1. Financials Year to March Revenues (INR mn) Rev. is facing severe inflation. Fluctuation in crude-linked prices affect raw material cost for Emami (~50% raw material is crude linked) leading to margin pressure.100 Key raw material. Vasocare body lotion and Boroplus face wash and also smaller size SKU in Zandu balm (INR2) which the company expects to be the next growth drivers.5 17.Company Profile EMAMI Blockbuster player India Equity Research l February 7.600/kg in the current quarter.137 151 20. Introduction of lower SKUs for Zandu balm and rejuvenating more than 200 of Zandu’s Ayurvedicbased prescription products will be another growth driver for Emami.561 151 16. high barriers to entry.8 34.7 Seasonality risk is one of the biggest risks to Emami. The company launched Vasocare lip balm. B: HMN IN) CMP : INR 365 Target Price : INR 530 52-week range (INR) : 545 / 320 Share in issue (mn) : 151.8 15.3 0.2) (7. Reuters and Factset.465 1. Key risks Share Holding Pattern (%) 2.8 24.0 2.7 MFs.2 12 months (15. menthol (18% of COGS). thereby gaining market market share (after five quarters of market share loss).565 3.com Harsh Mehta +91 22 4063 5543 harsh. mass acceptance and superior growth opportunities.2 3.1 21.287 151 15.697 151 11.BO. growth is likely to pick up in Q4FY12 (~1213%).334 20.6) 9.2 69.534 2. FIs & Banks : FIIs : 15.6 12.roy@edelcap.3 Investment conclusion Promoters* : 72.380 35.edelresearch.9 12.6) . strong brand equity.7 * Promoters pledged shares (% of share in issue) : Nil Emami’s product portfolio provides a play on Indian FMCG spend by virtue of its strong presence in less penetrated and high growth categories.778 23.9 18.5) 0. BSE/NSE (‘000) : 100. Boroplus is expected to grow in single digits in Q3FY12. Avg.1 2. Fair and Handsome has performed well to grow at 25% plus YoY. Emami has a superior track record of launching new brands (Fair & Handsome.1) 20.

0 9.211 1.7) 19.244 EBITDA 2.Post Conference Notes .561 151 16.5 8.319 4.270 248 3.687 2.5 FY10 FY11 FY12E (INR mn) FY13E 1.0 9.981 3.3 0.103 6.565 259 3.598 232 2.394 185 2.4 0.187 3.783 185 2.183 475 1.7 5.4 40.5 19.822 8 8.5 22.7 69.310 Other income 70 EBIT incl.287 151 15.391 1. 1.6 18.4 17.635 3.2 16.Day 1 Financial Statements Balance sheet Income statement Year to March (INR mn) FY10 FY11 FY12E FY13E Net revenues 10.7 2.1 34.9 151 16.4) 35.1 16.8 15.2 DPS 3 Dividend payout ratio (%) 31.079 1.395 0.684 10.0 34.027 5.3 0.8 2.346 733 7.4 17.0 1.475 1.2 21.239 7.580 (112) 2.0 FY10 FY11 FY12E FY13E 35.5 3.234 1.261 1.7 12.638 2.354 4.5 22.7 22. af.152 3.133 733 5.6 1.1 9.3 16.305 68 363 1.2 6 41.5 91.8 0.9 12.3 21.8 24.614 1.1 2.0 23.347 0.0 20.697 485 154 331 2.0 24.137 133 259 (126) 3.8 5.9 14.0 1.7 23.997 1.3 12.358 1.778 5.2) FY10 FY11 FY12E FY13E 11.899 1.383 65 66 0 9.0 18.944 Commission and Discount 116 Freight and forwarding 227 Others 1.756 537 2. & sales costs 1.707 571 1.018 5.7) 40.914 0 7.697 Pro.9 17.5 7.148 4.330 46 151 7.7 41.6 6.9 26 28 51 3 2.564 355 1.022 375 2.8 18.845 65 66 0 5.4 12.3 (21.1 0.639 0.137 151 20.105 1.254 1.561 2.4 1.805 Gross profit 6.171 Provision for taxation 352 Extraordinary items (net of tax) 121 Core PAT 1.2 32.288 65 66 0 7.7 151 20.830 (115) 2.098 2.9 42.575 Employee costs 579 Advert.9) 19.993 3.0 12.561 70 185 (115) 2.8 27.8 20. Int.742 1.9 0.760 153 498 1.315 751 1.9 16.4 11.653 8 9.0 16.232 7.1 8.232 1.4 8.7 12.4 18.0 4 27. other income 2.471 8.178 221 645 1.0 10.2 28.7 6.380 Net interest & Finance charges* 210 PBT 2.0 1.3 (22.9 5.260 826 755 1.697 Equity shares outstanding (mn) 151 EPS (INR) basic 11.691 404 0 2.2 69.102 3.608 (126) 3.5 2.1 151 15.570 2.8 34.209 2.7 22.8 18.137 2.647 25 (INR mn) As on 31st March Share capital Reserves Shareholders' funds Secured loans Unsecured loans Borrowings Deferred tax liability Sources of funds Goodwill on consolidation Gross block Less depreciation Net fixed assets Capital work in progress Investments FX translation difference Current assets Inventories Sundry debtors Cash and bank balance Loans and advances Current liabilities Liabilities Provisions Net current assets Misc expenditure Uses of funds BV (INR) Ratios Year to March ROAE (%) ROACE (%) Debtor days Inventory days Payable days Cash conversion cycle (days) Current ratio Debt/EBITDA Debt/Equity Adjusted debt/equity Interest coverage (x) Valuation parameters Year to March Diluted EPS (INR) Y-o-Y growth (%) CEPS (INR) Diluted P/E (x) Price/BV (x) EV/Sales (x) EV/EBITDA (x) Dividend yield (%) FY10 FY11 FY12E FY13E 151 6.2 CEPS (INR) 12.070 8. tax af.294 137 10.3 0. & Asso.7) 18.8 1.8 9.287 28 140 (112) 2.132 0.0 Common size metrics as % of net revenues Year to March FY10 Cost of materials Employee costs Advertising & sales costs Other general expenditure Depreciation Net interest expenditure EBITDA margin EBIT margin Net profit margin Growth metrics (%) Year to March Revenues EBITDA PBT Net profit EPS Cash flow statement Year to March Net profit Add: Non cash charge Depreciation Others Gross cash flow Less:Changes in WC Cash from operations Less: Capex Free cash flow FY11 FY12E FY13E 36.611 62 616 (14) 4.9 0.380 Cost of materials 3.0 Edelweiss Securities Limited Edelweiss Securities Limited .7 22.1 26.651 917 733 4.5 26 29 33 22 4.426 7.756 537 2.4 (0.747 6.534 140 2.294 137 9.4 0.3 17.306 302 3.6 20.137 3.065 1.756 537 2.822 49 151 8.863 981 2.0 125.653 54 FY10 FY11 FY12E FY13E 36.4 22.4 7 41.570 1.6 0.3 10.0 4.3 26 29 33 23 3.0 11.222 1.847 1.3 26 29 33 23 3.621 927 695 2.837 650 2.546 737 2.2 6.6 106.2 (0.0 34.8 16.944 383 0 2.2 32. Min.9 18.6 0.914 41 151 6.294 137 9.734 597 0 3.0 18.867 1.7 17.0 15.465 Depreciation 154 EBIT 2.591 70 8.2 Diluted shares (mn) 151 EPS (INR) fully diluted 11.089 2.8 22.492 1.9 27.3 (26.6 29.632 (205) 2.8 0.570 1.287 2.643 4.539 2.0 12.330 8 7.334 6.1 (0.8 1.

3 MFs.0 20.353 9.2 FIIs : 13. GAIL has tied up for 1.6 54.8) Financials Year to March Net revenues (INR mn) Revenue growth (%) EBITDA (INR mn) Net profit (INR mn) Share outstanding (mn) Diluted EPS (INR) EPS growth (%) Diluted P/E (x) EV/EBITDA (x) ROAE (%) FY10 FY11 FY12E FY13E 270. Thomson First Call.BO. Petchem expansion plan to double capacity to 900KT by Apr 2014. Niraj Mansingka.129 44.268 26. PLNG’s Kochi terminal will be completed by Dec 2012 while GAIL’s Phase-I pipeline servicing the same will be ready by Aug 2012. With increased focus on PNG.210 1. Upstream share in Q4 is expected at 37.edelresearch.2 8.830 1.2 17.5 M cap (INR bn/USD mn) : 481 / 9. and lack of near-term earnings growth. Overweight MARKET DATA (R : GAIL. Key risks Falling domestic gas production.com. FY13E capex at INR85bn (pipelines = INR35bn. Bloomberg EDEL <GO>.5 Share Holding Pattern (%) Promoters* : 57. 40 in FY15 and 80 in FY16.156.564 Avg.0 8. petchem INR35bn). The Marubeni contract will continue for ~2 more years – can increase from current 1 cargo/qtr to 2 cargoes/qtr.8 19.1 74. Cap on marketing margins on domestic gas by PNGRB.278 1.7 14.718 33. Rise in crude prices leading to higher subsidy sharing.8 10. lower subsidy share in Q4 Absolute Rating HOLD Rating Relative to Sector Performer Total LPG/kerosene under-recovery for 9mFY12 is ~INR400bn.1 474.91% (same as 9mFY12). 2012 Oil.941 1. GAIL has reserved ~2.8 12.7 19.981 10. of which GAIL shares INR21. Risk Rating Relative to Sector Low Sector Relative to Market Risks of marketing margins being regulated looks low as marketing margins were earlier decided by a cabinet committee (superior to PNGRB).5 mmscmd gas.3) 0.com Edelweiss Securities Limited .8 (4. B: GAIL IN) CMP : INR 379 Target Price : INR 412 52-week range (INR) : 485 / 360 Share in issue (mn) : 1.9 64.4 8.0 3 months (12. GAIL is currently importing ~16 spot cargos a year and plans to import 20 in FY13/FY14.3 (1.331 35.7 351. PNGRB’s role is to typically regulate transmission charges and has no role in marketing margins. Reuters and Factset.mansingka@edelcap.6 16. Gas and Services Key takeaways EDELWEISS 4D RATINGS Low risks of marketing margins. probable tariff cut.0 mtpa PLNG Dahej expansion. In Kochi.8) (7.6 8.268 31. Tariff reduction in existing pipelines by the regulator.4 11.0 * Promoters pledged shares (% of share in issue) : Nil PRICE Performance (%) Stock Nifty EW O & G Index 1 month (5. incremental marketing margins will be lower as PNG will be competing with subsidized LPG.495 42.970 40.1) (5. This is expected to clock 123 mmscmd in FY13/ FY14.4 522. CFA +91 22 6623 3315 niraj.Company Profile GAIL Muted transmission volume growth India Equity Research l February 7.5 mtpa in the 5.268.5 Others : 4.0) 9.1) 12 months (18. Daily Vol. BSE/NSE (‘000) : 1.3 73. FIs & Banks : 25.7 20.268 35. of which KG-D6 volume is 24 mmscmd (earlier 30 mmscmd). Investment conclusion We remain neutral on GAIL due to decline in Indian gas availability.067 29.2bn. High returns enjoyed by CGD companies so far were due to focus on CNG (ability to pass on costs is higher) and availability of APM gas.3 Edelweiss Research is also available on www. Growth and expansion plans Current transmission volume is ~118 mmscmd.7 7. GAIL’s quality of earnings remains low as the share of gas trading income rises.7) 11.268 33.

8 2.462 61.797 Profit before tax 48.578 15.4 11.148 22.3 18.1 12.988 286.268 35.844 65.9 DPS 7.735 36. shares outstanding (mn) 1.174 4.900 139.9 28.498 (1.586 21.2 17.5 74.3 1.689 Other expenses 29.1 11.0 12.671 57.5 75.0 0.3 1.277 20.0 16.7) (4.4 1.121 5.545 14.3 15.268 EPS (INR) fully diluted 26.803 167 12.135 52.454 212.626 19.483 Interest expense 3.685 232.7) FY10 FY11 FY12E (INR bn) FY13E 33.184 140 12.569 240 185.3 1.574 57.9 9.219 40.410 (G) 0 249.192 17.236 5.880 56.3 1.106 4.179 30.525 66.4 46.559 65.109 103.169 216 181.8 46.0 1.4 10.4 12.277 26.5 1.7 FY10 FY11 FY12E FY13E 26.123 10.8 (4.535 109.431) 42.683 40.1 0.7 19.450 0 303.108 45.5 8.181 39.055 494. (D) Net current assets (E) Miscellaneous expenditure Uses of funds (A+B+E+F+G) Book value per share FY10 FY11 FY12E FY13E 12.033 12.551 275.149 (44.278 Eq.8 8.131) 58.4 11.685 165.287 8.3 (0.129 10.0 2.3 0.268 31.886 15.7 40.7 474.277 (1.0 35.Day 1 Financial Statements Balance sheet Income statement (INR bn) Year to March FY10 FY11 FY12E FY13E Net revenues 270.1 33.683 2.040 432.6 522.6 2.809 401 40.514) 49.0 22.380 111.9) (4.486 76.4 11.331 351.442 5.900 187.773 104.054 10.4 8.486 73.510 6.9 0.090 3.994 4.5 25.4 26.5 1.473 Operating expenses 36.234 EBIT 46.7 3.6 24.800 75.925 400.2 20.626 (471) 58.4 13.276 123. Current liab.162 Total expenditure 215.067 247.2 Ratios Year to March FY11 FY12E FY13E 66.313 Core profit 33.0 7.6 351.705 104 39.175 57.928 61.2 7.363 10.472 132.941 10.Post Conference Notes .586 Deferred tax 727 Total tax 15.830 11.2 CEPS 32.651 8.880 Employee expenses 6.078 11.7 29.5 12.3 21.0 31.675 6.474 40.4 0.302 49.1 14.718 Depreciation & amortisation 8.496 123.7 18.097 64.184 202.923 Share in profits of associates 355 Group profit 33.138 54.7 1.268 35.566 264 42.5 2.7 1.336) 40.9 10.4 1.6 18 14 65 (34) 0.717 25.040 217 FY10 FY11 FY12E FY13E 21.474 Gross profit 90.650 249.808 38.5 21 16 106 (68) 0.928 4.448 41.4 20.635 EBITDA 54.268 33.093 2.106 64.1 18.2 FY10 FY11 FY12E FY13E 9.568 5.7 2.5 1.5 19.268 EPS (INR) basic 26.100 2.6 14.903 126.861 4.492 29.764 103.5 19.8 46.4 17.498 18.853 Other income 5.830 1.4 25.3 19 14 85 (52) 0.2 Common size metrics as % of net revenues Year to March FY10 Growth metrics (%) Year to March Revenues EBITDA PBT Net profit EPS Cash flow statement Year to March Net profit Add: Depreciation Add: Deferred tax Add: Others Gross cash flow Less:Changes in WC Opertaing cash flow Less: Capex Free cash flow Total equity capital Reserves & surplus Shareholder's equity (A) Minority interest (B) Secured loans Unsecured loans Total debt (C) Deferred tax liability (D) Sources of funds (A+B+C+D) Total fixed assets (A) Investments (B) Inventories Accounts receivable Cash and cash equivalents Loans and advances Other current assets Current assets (C) Accounts payable Other current liab. & prov.8 10.913 2.6 11.9 14.3 19.8 5.587 129 123.961 (31.149 56.5 23.140 16.981 396.210 1.357) 44.0 1.828 145 146.640 6.7 2.427 Current tax 14.432 341.168 55.810 (47.437 245.1 8.728 137.432 193 12.5 1.718 85.495 11.0 12.3 1.1 17.119 29.854 0 411.278 8.132 (15.601) 40.5 0.488 42.688 0 44.3 70.4 22.566 0 42.3 21.2 8.8 4.958 8.415 178.451 44.114 Extraord.401 69.8 17 13 63 (34) 0.377 6.688 252 44.610 (30) 494.941 1.583 449.685 199.915 12.7 1.7 32.7) 46.1 10.139 5.2 3.268 31.410 21.462 727 (2.472 62.1 14.602 38.2 0.024 4.414 42.3 19.5 Dividend payout (%) 28.6 1.918 57.151 303.145 59.210 8.2 20.9 18.201 74.046) Cost of goods sold Operating expenses EBITDA margins Depreciation & amortisation Interest Net profit margin (INR bn) As on 31st March 27 ROACE ROAE ROA Current ratio Quick ratio Cash ratio Receivable turnover (x) Inventory turnover (x) Payables turnover (x) Receivables (days) Inventory (days) Payables (days) Cash conversion cycle (days) Debt-equity (x) Debt/EBITDA Adjusted debt/Equity Valuation parameters Year to March Diluted EPS (INR) Y-o-Y growth (%) CEPS (INR) Diluted P/E (x) P/BV (x) EV/Sales (x) EV/EBITDA (x) Dividend yield (%) Edelweiss Securities Limited Edelweiss Securities Limited .1 14.519 (1.2 Diluted shares (mn) 1.041 17.786) 55.054 14.0 2.3 9.990 12.428 411.685 262.4 8.3 1.4 5.4 2.545 15.2 1.779 5.322 48.4 12.4 1.7 20.190 48.023 25.8) (4.201 50.4 1.803 265.8 35.7 14.8 40.161 62.1 0. & prov.353 Raw material costs 179.2 0.8 1./ Prior period items (191) Profit after tax 32.1 2.6 2.604 71.7 2.9 20.268 33.132 14.970 8.304 97.472 180.

9) 28.3 (7.743 12.6 20.491 17.8 20.9 6. Company highlighted that base business has now attained scale and size from where it could be self sustainable. BSE/NSE (‘000) : 675.3 29.3 43. Financials Year to March Revenues (INR mn) Rev growth (%) Operating profit (INR mn) Adj.9 9.2 Others : 12.7 34.806 31. the company’s focus on improving cash cycle should allay concerns on high receivables. PAT (INR mn) Adj.914 12 11.4 (7.573 3. Oncology and CVS.590 Avg.7 9. Margin expansion will be driven by improved traction in India.1 Key risks Disappointments in NCE pipeline. Bloomberg EDEL <GO>.6 21.3 MFs.8 12 months 0. Glenmark continued to invest in NCE/NBE research which demonstrates its conviction in the R&D capabilities. B: GNP IN) Margin to improve going forward: Management has indicated that margins have bottomed out and expects them to head North going forward. Its overall debt and working capital position have improved which has led to higher free cash flows during 9mFY12. niche launches in US and lower R&D cost as percentage of sales.8 38. Glenmark is poised for re-rating.0 15.7 Share Holding Pattern (%) Promoters* : 48.4 * Promoters pledged shares (% of share in issue) : 5. Management indicated positive cash flow of INR2.7 14.3 15.6 10. Respiratory. Investment conclusion Glenmark has made significant investments in base business over FY05-11. 2012 Pharmaceuticals Key takeaways EDELWEISS 4D RATINGS Base business to grow over 20% during FY12-14E: Management is confident of maintaining 20% plus revenue growth in key geographies such as US.Company Profile GLENMARK PHARMACEUTICALS On road to recovery India Equity Research l February 7.862 6.195 2.2 9.287 6.8 26.1 14.4 M cap (INR bn/USD mn) : 80 / 1.995 270 10. CMP : INR 295 Target Price : INR 388 52-week range (INR) : 351 / 241 Share in issue (mn) : 270. SRM and LatAm markets driven by new product launches and streamlining the focus in key therapeutic segments such as Dermatology. Thomson First Call.006 18.com. Absolute Rating BUY Rating Relative to Sector Outperformer Risk Rating Relative to Sector Low Sector Relative to Market Equalweight R&D assets: Best among peers: Despite several setbacks.6 9. FIs & Banks : FIIs : 34. base business has now attained sizeable scale which is self sustainable. MARKET DATA (R : GLEN.1) 15.3 14.113 20 19.5 15.com Edelweiss Securities Limited . We expect margin to improve 200bps over FY14E.701 16 15. India. We expect 19% CAGR in core business over FY12-14E.edelresearch.garg@edelcap.7 12. gearing and return profile.ali@edelcap. better cash conversion cycle.1 Nil PRICE Performance (%) Stock Nifty EW Pharma Index 1 month 12. With strong earnings traction (34% CAGR). largely utilising cash flow from domestic business and R&D income. Improved focus on profitability a positive: Glenmark’s focus on improving cash conversion cycle should allay concerns on high receivables. Reuters and Factset. Manoj Garg +91-22-6623 3302 manoj.4 Edelweiss Research is also available on www.25bn which highlights its focus on profitable growth. Management has highlighted that there are 7-8 important data points which have potential to generate incremental milestone income in FY13E if successful. However.1 20. Daily Vol.3 12. EPS (INR) Recurring EPS (INR) EPS growth (%) P/E (x) EV/EBITDA (x) Core ROE (%) FY10 FY11 FY12E FY13E 25. Also.com Perin Ail +91-22-6620 3032 perin. Regulatory risks in US market.2 6.4 0.3 3 months 3.BO.

0 FY10 FY11 FY12E (INR mn) FY13E 4.071 1.6 23.977 12.0 2.574 1.0 5.2 1.308 1.724 28.0 78.2 32.166 2.372 14.496 123 270 40. 5.590 46.599 Milestone income 892 Total operating expenses 22.081) 267 51.433 0 37.1 5.668 15.708 3.0 270 20.347 32.1 1.5 2.7 11.200 1.449 933 237 9.746 18.2 10.166 29 (INR mn) As on 31st March Equity capital Reserves & surplus Common shareholders eq.189 14.302 2.2 37.8 160 141 122 179 3.4 34.214 8.219 23.972 1.9 3.4 20.6 4.7 12.511 3.7 CEPS (INR) 22.774 42.7 19.5 Dividend payout (%) 3. R & D cost Total operating expenses Depre.7 32.7 25.781 10.916 28.228 Extraordinary items (650) Profit after tax 4.571 11.505 11.724 1.3 27.003 9.924 33.496 2.2 31.802 3.2 2. and amortisation EBITDA margins Net profit margins Growth metrics (%) Year to March Revenues EBITDA Net profit PBT Adj. lia.172 7.500 2.116 (1.3) (8.203 1.3 3.9 33.373 17.1 3. PAT after minority int.675 12.953 6.0 17.111 6.8 0.048 25.255 12.894 1. exp.1 24.3 16.605 21.615 11.116 5.774 0 33. Short term debt Long term debt Borrowings Deferred tax liability (net) Minority interest Sources of funds Gross block Depreciation Net block Capital work in progress Intangible assets & goodwill Inventories Sundry debtors Cash and bank balances Loans and advances Total current assets Current liabilities Provisions Total cur.8 26.9 146 120 115 152 3.310 2.524 7.5 0.9 3.951 7.5 Diluted shares (mn) 270 Recurring EPS (INR) fully diluted 11.680 11.753 43.1 15.9 149 119 118 150 3.433 49.626 Interest expense/(income) 1.802 6.4) (7.7 23.1 Edelweiss Securities Limited Edelweiss Securities Limited .500 3.2 29.9 73.856 0 6.282 63 6.800 27.788 25.753 1.856 69 6.314 17.5 1.195 8.020 3.297 6.002 2.4 14.491 Net revenues 28.906 19.003 69 7.658 7.496) 3.0 28.914 EPS (INR) adjusted 14.4 3.724 7.9 21.983 (3.0 42.6 2.941 10.316 78 9.6 20.Post Conference Notes .893 51.971 688 5.073 7.138 6.9 17. admin and gen.401 9.685 16.6 2.8 76.116 (1.532 947 (1.489 2.1 58.1 14.380 2.219 6.369 15.770 4. 4.802 78 7.918 Employee cost 5.393 1.7 0.103 R&D cost 1.4 2.640 27.282 0 6.7 28.2 13. and amortisation 947 EBIT 5.8 80.5 12. int.194 12.1 27.932 26.4 30. profit after mino. admin and gen.102 20.769 8.410 40.482 22.560 1.8 11.116 6.918 Materials cost 9.6 270 25.081) 267 43.2 150 127 119 158 3.670 17.155 13.2 55.765 1.3 15.3 33.4 15.592 Other expenses 925 EBITDA 6.802 1. and provisions Net current assets Uses of funds Book value per share ( INR) Ratios Year to March Core ROAE (%) Core ROACE (%) Inventory days Debtors days Payable days Cash conversion cycles Current ratio Debt/ EBITDA Debt/equity Valuation parameters Year to March Diluted EPS (INR) Y-o-Y growth (%) CEPS Diluted P/E (x) Price/BV (x) EV/Sales (x) EV/EBITDA (X) FY10 FY11 FY12E FY13E 270 20.859 2.Day 1 Financial Statements Balance sheet Income statement Year to March (INR mn) FY10 FY11 FY12E FY13E Income from operations 29.5 28.9 21.4) 28.070 13.8 19.3 42.8 22.221 5.788 6.302 314 11.3 19.3) 16.081) 267 46.380 Selling.711 10.6 FY10 FY11 FY12E FY13E 17.219 1.9 77.1 45.2 1.1 Common size metrics as % of net revenues Year to March FY10 Cost of revenues Selling.0 0.0 20.9 15.005 8.755 9.5 31.4 (14. exp.152 10.178 2.1 (6.020 5. 3.867 8.405 Profit before tax 5.214 63 7.496 19.5 13.804 2.1 270 15.5 18.513 8.8 15.802 0 7.306 9.5 3.3 FY10 FY11 FY12E FY13E 10.7 Dividend per share (INR) 0.5 6.788 1.539 13.880 7.109 6.0 1.373 100 270 32.675 75 270 26.116 (1.156 1.573 Depre.986 4.638 2.314 21.386 158 7.000 4.9 2.5 9.6 28.818 35.390 1.9 11.532 Adj.3) (8.616 (1.482 151 FY10 FY11 FY12E FY13E 14.119 2.058 2.609 5. EPS Recurring EPS Cash flow statement Year to March Net profit Depreciation Others Gross cash flow Less:Changes in WC Operating cash flow Less: Capex Free cash flow FY11 FY12E FY13E 34.132 176 7.4 3.802 6.528) 7.404 2.935 10.466 Provision for tax 237 Core profit 5.346 1.551 40.5 0.5 49.314 14.566 Other income 1.0 24.081) 267 40.7 2.865 9.236 966 4.214 14.070 11.9 6.337 1.316 10.2 4.932 37.7 34.578 Minority interest & others 46 Rep.6 18.037 5.335 9.6 22.9 17.

com.5 10. Depreciating INR can yield to rise in cost of dollar denominated debt. GCPL will complete the second and third phases of DGH acquisition by September 2012 and September 2013.7 64.2 35.073 3.1 9. The company can be expected to benefit from its new ventures.9 35. growth (%) EBITDA (INR mn) Net profit (INR mn) Shares outstanding (mn) Diluted EPS (INR) EPS growth (%) Diluted P/E (x) EV/EBITDA (x) ROAE (%) FY10 FY11 FY12E FY13E 20. Overweight MARKET DATA (R : GOCP.856 Avg.5 8. Sector Relative to Market Despite growth trailing the hair colour category.6 21. Investment conclusion GCPL boasts of a patented technology for PHDs that has helped it drive usage of hair colours at the lower end of the market. Key risks Integration of recent overseas acquisitions will test the execution capabilities of GCPL management. ITC.2 12 months 12. etc. The entry of new players has put pressure on GCPL’s hair colour business because of which it has been losing market share at the top end of the market.147 324 14. Reuters and Factset. Thomson First Call.5 24.4 10.4 Edelweiss Research is also available on www. Margins in soaps declined YoY but expect them to be better sequentially. GCPL will not be affected. Absolute Rating BUY Rating Relative to Sector Outperformer Risk Rating Relative to Sector High HIT magic paper to be launched in H2FY13.756 324 16.6 3 months 2.620 324 20.com Harsh Mehta +91 22 4063 5543 harsh.4 * Promoters pledged shares (% of share in issue) : 2.5 36. respectively. BSE/NSE (‘000) : 230. management is confident of improving it and plans to support the category with strong marketing initiatives.407 5.5 (7.7 16.1 0.6 28.7 Financials Year to March Revenues (INR mn) Rev. Wipro.6 M cap (INR bn/USD mn) : 144 / 2. FIs & Banks : FIIs : 19. if the government agrees to industry proposals to bar below 50g SKUs.0 40.com Edelweiss Securities Limited (1. B: GCPL IN) CMP : INR 443 Target Price : INR 520 52-week range (INR) : 463 / 326 Share in issue (mn) : 323. GCPL’s ability to gain market share in its soap segment could be adversely affected by the aggression of HUL.BO. Management has hinted at further price hikes. increasing consumer spending and inorganic growth going forward.mehta@edelcap.9 45. However.107 6.2 32.9 Others : 10. it will work towards acquiring the balance 49% stake in DGH. if implemented.3 27. New packaging law.395 308 6.461 24. It plans to launch new hair care products in H1FY13. 2012 Consumer Goods Key takeaways EDELWEISS 4D RATINGS 15-16% volume growth is sustainable in soaps.4 Nil PRICE Performance (%) Stock Nifty EW Consumer Goods Index 1 month 11.8 25.1) 20. Revival was seen in LatAm business. Post this. will affect SKU sales in soaps and eliminate the INR5 and INR10 price points.1 29.3 0.6 56.Company Profile GODREJ CONSUMER PRODUCTS The right hue India Equity Research l February 7.5 4.430 78.roy@edelcap.051 6.3 27.edelresearch. GCPL’s aggressive stance to take its operations to the international platform has resulted in several acquisitions in past three years.5 6. Bloomberg EDEL <GO>.412 46. Abneesh Roy +91 22 6620 3141 abneesh.3 MFs. The company also provides highquality value-for-money soaps which helped it garner larger market share.356 24.6) .9 Share Holding Pattern (%) Promoters* : 67.0 20.9 44. Daily Vol. International sales grew 68% YoY backed by a strong growth of 35% YoY in Indonesia and 251% YoY in Africa (primarily due to DGH merger).

5 25 35 84 (24) 1.4 1.205 19.473 8.8 1.446 22.6 0.3 25 35 84 (23) 1.0 CEPS (INR) 11.0 18.461 26.5 25.125 9.480) 6.3 17.5 24.163 122 4.851 5.9 35.0 Diluted shares (mn) 308 EPS (INR) fully diluted 11.343 EBITDA 4.7 47.320 19.081 6.119 670 9.4 5. & Finance charges 111 PBT 4.310 Net int.437 10.793 8.6 16.7 64.5 20.1 1.7 3.8 33.423 3.0 Common size metrics as % of net revenues Year to March FY10 Cost of materials Employee costs Advertising & sales costs Other general expenditure Depreciation Net interest expenditure EBITDA margin EBIT margin Net profit margin Growth metrics (%) Year to March Revenues EBITDA PBT Net profit EPS Cash flow statement Year to March Net profit Add: Non cash charge Depreciation Others Gross cash flow Less:Changes in WC Cash from operations Less: Capex Free cash flow FY11 FY12E FY13E 46.210 185 15.743 (887) 4.443 (280) 6.3 6.3 11.8 11.4 15.0 56.942 2.3 10.153 3.518 Advt.567 9.186 4.8 11.6 32.7 11.617 8 3.775 15.6 35.437 8.630 779 3.365 892 1.3 1.549 25.3 7.7 DPS 4.6 1.845 4.448 225 6.0 17.4 6.756 324 16.5 43.6 20.239 9.5 2.5 324 20.9 25.016 161 6.269 122 4.269 122 4.5 Edelweiss Securities Limited Edelweiss Securities Limited .096 2.671 5.0 6.644 1.147 4.430 17.379 907 8.316 4.505 22. tax af.404 0 14.8 40.3 4.4 19.4 2 1.177 8.834 1.107 892 9.017 3.568 225 5.118 1.3 24.678 29.395 Extraordinary items (net of tax) 0 Minority interest 0 Pro.8 16.320 53 324 20.659 225 4.2 28.968 0 (348) 6.884 10.af.669 27.1 24.395 347 236 111 3.6 24.1 16.147 324 14.051 671 7.6 24.052 0 2.702 170 15.620 2.4 29.Day 1 Financial Statements Balance sheet Income statement Year to March (INR mn) FY10 FY11 FY12E FY13E Net revenues 20.985 (294) 9.199 Provision for taxation 803 Core PAT 3.4 27.637 519 6.302 4.287 1.532 2.412 Cost of materials 9.590 6.949 Employee costs 1.837 Other income 473 EBIT incl.6 3 1.849 22.095 2.0 31.547 5.015 Others 3.488 18.415 (136) 31 (INR mn) As on 31st March Share capital Reserves Shareholders' funds Minority Secured loans Unsecured loans Borrowings Deferred tax liability Sources of funds Gross block Less depreciation Net fixed assets Capital work in progress Goodwill Investments Current assets Inventories Sundry debtors Cash and bank balance Other Current Asset Loans and advances Current liabilities Liabilities Provisions Working capital Uses of funds BV (INR) Ratios Year to March ROAE (%) ROACE (%) Debtor days Inventory days Payable days Cash conversion cycle (days) Current ratio Debt/EBITDA Debt/Equity Adjusted debt/equity Interest coverage (x) Valuation parameters Year to March Diluted EPS (INR) Y-o-Y growth (%) CEPS (INR) Diluted P/E (x) Price/BV (x) EV/Sales (x) EV/EBITDA (x) Dividend yield (%) FY10 FY11 FY12E FY13E 308 9.252 0 17.0 7. other income 4.981 31 324 16. int.287 (890) 8.054 14 51.0 34.407 499 5.073 Depreciation 236 EBIT 3.348 6.7 5.7 41.0 36.519 14.6 1.037 20.393 43.437 8.8 16.816 331 0 5.4 17.2 14.908 729 6.2 1.838 1.8 35.840 2.099 5.5 7.171 7.205 51.004 78 FY10 FY11 FY12E FY13E 44.3 21.0 0.395 Equity shares outstanding (mn) 308 EPS (INR) basic 11.6 20. min.7 3.308 628 2.215 960 10.0 7.7 96.2 47.404 0 15.0 1.528 5.3 1.544 23.4 10.054 14 37.6 24.023 7.5 24.437 8.0 1.0 8.928 17.7 3.1 16.062 4.4 15.4 25.669 66 324 24.0 16.9 324 14.3 15.9 16.404 0 15.6 FY10 FY11 FY12E (INR mn) FY13E 3.0 78.054 14 43.0 64.247 5.6 2.2 1.0 Dividend payout ratio (%) 37.6 18.264 1.149 1.326 202 3.6 18.9 16.2 0.3 11.4 1.7 45.9 16.3 6.8 8.338 31.756 531 671 (141) 7.076 8. 3.6 100.4 19.5 24.389 37.373 154 15.2 FY10 FY11 FY12E FY13E 11.3 45.369 3.4 9.4 324 16.463 Gross profit 10.4 7.2 13.7 FY10 FY11 FY12E FY13E 46.5 57.9 33.5 25.515 5.0 11. & sales costs 2.147 687 499 188 5.147 3.5 96.050 2.175 1.1 0.3 19.6 48.620 324 20.593 1.9 14.984 25.321 280 2.2 11.Post Conference Notes .089 5.999 (10.356 21.783 4.547 0 369 0 369 66 9.9 0.2 16 39 92 (38) 1.893 10.7 10.394 3.4 27.004 36.812 3.981 4.279 9.673 8.997 21. & Asso.2 25 35 84 (24) 1.

4 233.0 8.5 Edelweiss Research is also available on www.360 9.BO.Company Profile GRASIM INDUSTRIES On terra firma India Equity Research l February 7.7 279.8 57. 2012 Cement Key takeaways EDELWEISS 4D RATINGS Market leadership to be maintained in both Cement and VSF Absolute Rating BUY Rating Relative to Sector Outperformer With capacity expansion of 9.com Prasad Baji +91-22-4040 7415 prasad. Grasim intends to maintain its current market share of 18% and will hence look at further expansions.5 (17.5 Share Holding Pattern (%) Volumes of both VSF and cement are estimated to significantly outperform the industry growth in FY14. Spike in coal and diesel cost will impact margin.517 52-week range (INR) : 2.9 5. Key risks Promoters* : 25.0 5. Bloomberg EDEL <GO>.5 Others : 33.2mtpa (estimated commissioning in Q1FY14) in cement and 156ktpa in VSF (estimated commissioning in Q4FY13) Grasim Industries (Grasim) will maintain its market leadership in both these segments.6 (6. Investment conclusion Risk Rating Relative to Sector Medium Sector Relative to Market Underweight MARKET DATA (R : GRAS.7 301.7 248.832 22.com.com Edelweiss Securities Limited .0 FIIs : 23. The company’s balance sheet continues to remain strong with D/E ratio of just 0. logistic infrastructure and modernisation and upgradation projects.7 262.edelresearch.1) 19.7 M cap (INR bn/USD mn) : 231 / 4.5 5.sahadeo@edelcap.baji@edelcap. growth (%) EBITDA (INR mn) Net profit (INR mn) Share outstanding (mn) EPS (INR) EPS growth (%) Diluted P/E (x) EV/EBITDA (x) ROE (%) FY10 FY11 FY12E FY13E 199.867 27.5 17.3 4.082 91.1) 9. the company’s total cement capacity will increase to 62mtpa (capex outlay INR56bn) and VSF capacity will increase to 490ktpa (capex outlay INR21bn). B: GRASIM IN) CMP : INR 2.70 46.856 25.5 0.19 54.4 3 months 3.595 91.7 259.625 / 1.1 21. Daily Vol.6 12.3 (7. Stock Nifty EW Cement Index 1 month 4.485 Target Price : INR 2.72 53.981 Share in issue (mn) : 91.471 11.5 12 months 9. BSE/NSE (‘000) : 82.588 24.605 Avg.690 6.3x.5 21. aiding gradual improvement in cement realisation.4) 10. Thomson First Call. FIs & Banks : 18.647 91.0 * Promoters pledged shares (% of share in issue) : Nil PRICE Performance (%) Sharp decline in prices of cement and VSF will significantly impact earnings.334 212. Sustainable growth for cement industry Grasim expects cement demand in India to grow at over 8% (in line with GDP growth) over the next few years and believes the current surplus scenario to subside over two-three years. Total capex is ~INR144bn including the capex mentioned above and other capex for power plants.5 MFs. Post completion of the current expansion plan. the company has recently formalised plans to set up 180ktpa greenfield capacity in Turkey in joint venture with group companies. In VSF. Reuters and Factset.3 5. Navin Sahadeo +91-22-6623 3473 navin.4 28.6 2.5 8.790 91.2 9. Over the long term. post completion of the current capex plan.7 Financials Year to March Revenues (INR mn) Rev.

050 4.2 1.9 1.216 14.006 60.566 105.379 Sundry creditors and others 30.508 Unsecured loans 17.333 27.362 Other current assets 10 Total current assets 45.7 19.0 1.4 1.759 Inventories 21.301.439 Depreciation 71.162 22.5 1.1 14.4 21.8 25 1.8 8.360 179.299 35.366 917 377 144.0 4.2 1.7 0.844 14.5 0.370 Provisions 8.883 54.7 248.6 79.858 46.790 11.368 0 0 44.8 1.844 917 377 188.524 15.771 45.5 1.827 19.920 Interest 3.2 FY10 FY11 FY12E FY13E 8.9 22.6 30 8.346 Total other income 5.4 17.4) 9.529 3.241 1.3 4.5 0.8 212.481 67.952 28.734 43.646 Net block 137.8 279.310 39.827 19.691 228.4 1.378 24.1 1.356 Profit before tax 49.2 20 1.9 26.6 233.5 0.481 67.909 8.346 29.384 151 9.000 (14.5 0.4 1.2 14.576 28.3 16.1 23.4 1.0 21.3 1.8 1.7 259.803 Cash and bank balances 2.4 0.6 76.690 165.842 338.2 5.2 1.144 52.368 43.4 1.3 0.4 0.589 917 377 167.856 10.2 5.378 24.4) (17.4 30.631 Core profit after min.316 13.Post Conference Notes .370 Loans and advances 12.8 1.145 274.647 91.809 254.059 0 0 42.346 29.864 31.7 29.916 18.1) FY10 FY11 FY12E (INR mn) FY13E 27.423 44.835 Sundry debtors 8.0 14.3 Common size metrics as % of net revenues Year to March FY10 Operating expenses Depreciation and amortisation Interest expenditure EBITDA margins Net profit margins Growth metrics (%) Year to March Revenues EBITDA PBT Core net profit EPS Cash flow statement Year to March Net profit Depreciation Deferred tax Others Gross cash flow Less:Changes in WC Operating cash flow Less: Capex Free cash flow 71.4 10.012 8.145 7.4 FY10 FY11 FY12E FY13E 301.4 FY11 FY12E FY13E 78.0 1.378 0 64. 27.484 Borrowings 55.Day 1 Financial Statements Balance sheet Income statement (INR mn) Year to March FY10 FY11 FY12E FY13E Income from operations 199.246 Minority interest 37.775) 33 (INR mn) As on 31st March FY10 FY11 FY12E FY13E Equity capital 917 Other Share capital 363 Reserves & surplus 123.223 38.982 14.528 9.3 1. int (INR) basic 301.699 22.531 15.4 0.902 13.891 Net current assets 6.071 Investments 66.5 28.616 276.384 35.300 (6.0) (6.923 2.809 1.4 17.057 Sources of funds 238.177 169.522 Total current liab.332 51.066 83.7 1.734 Intangible assets 20.448 308.4 0.5 12.3) (6.261 276.696 38.827 19.5 (17.7 279.012 10.467 16.566 94.363 38.8 16.2 442.4) 441.782 24.849 169.012 16.389 73.5 1.0 26.947 (3569) 11.3 33.7 (19.6 92 279.364 25.504 53.7 262.832 11.588 11.2 Ratios Year to March ROAE (%) ROACE (%) Debtors (days) Current ratio Debt/EBITDA Interest cover (x) Fixed assets turnover (x) Total asset turnover (x) Equity turnover(x) Debt/Equity (x) Adjusted debt/Equity Valuation parameters Year to March Diluted EPS (INR) Y-o-Y growth (%) CEPS (INR) Diluted P/E (x) Price/BV(x) EV/Sales (x) EV/EBITDA (x) Dividend yield (%) Edelweiss Securities Limited Edelweiss Securities Limited .844 Gross block 209.254 14.0 Dividend per share (INR) 30 Dividend payout (%) 12.378 0 58.271) 48.5 11.7 Core EPS af.2 262.471 204.514 38.6 30 13.439 145.7 15.4 1.641 5.038 31.753 7.380 48 44.9 8.0 5.984 (3.118 160. & prov.911 46.0 16 1.0 12.333 28.9 1.867 Depreciation & amortisation 9.793 Capital work in progress 7.6 20 1.784 35.4 8.616 338.697 7.284 34.3 1.203 54.952 6.616 308.771 47.712 190.947 EBIT 47.2 6.2 248.225 Profit after tax 37.992 Deferred tax (Net) 20.771 43.930 Provision for tax 15.790 91.334 Total operating expenses 141.5 0.8 1.203 79.5 21.584 43.333 32.4 (4.6 92 262.844 Book value per share (BV) 1.555 33.135 38.595 Shares outstanding (mn) 91.012 34.488 Uses of funds 238.346 29.203 67.6 1.1) (22.749 144.5 483.0 5.5 92 248.610 14.6 0.5 20 16.5 0.548 Secured loans 38.758 12.472 5. int.448 38.378 0 64.705 Core profit 34.2 21.0 17.225 55.967 Shareholders funds 125.1) 468.0 9.7 38.467 EBITDA 57. int (INR) dil.0 13.481 67.0 Diluted shares (mn) 92 Core EPS after min.145 2.3 1.3 1.6 (6.968) 31. 38.9 4.678 14.082 91.2 5.691 1.578 24.059 43.488 2.586 Less: Minority interest 6.056 7.864 11.8) (15.346 2. min.699 40.595 9.326 21.864 7.4 19.072 FY10 FY11 FY12E FY13E 28.6 12.449 4.747 34.011 44.

Financials . we believe Sylvania is on track to turnaround business and improve overall margin with growth primarily coming from emerging markets like Latin America and Asia including new markets.0 48.000 retailers. Havells is looking at consolidating its outsourcing from China (currently at 5560%) through its joint venture with a local partner.4040 7451 amit.126 3. Promoters* : 61.8 6.4063 5561 rahul. HAVL is currently one of the fastest growing fans brands in the Indian market with market share at ~14%.222 696 125 5. incremental capex is going to be lower during FY13. The company has launched innovative products with its energy efficient fans (consuming only 50W) making it the largest energy efficient fan in the country.315 (1. Rahul Gajare +91-22.4040 7418 swarnim. growth (%) EBITDA (INR mn) Net profit (INR mn) Share outstanding (mn) EPS (INR) EPS growth (%) Diluted P/E (x) EV/EBITDA (x) ROE (%) FY10 FY11 FY12E FY13E 54.763 125 38. The company is looking at 10-15% growth in Latin America. BSE/NSE (‘000) : 392.8 5.7 12.7 8.2 Edelweiss Research is also available on www.3 19.099 125 24.9 15. B: HAVL IN) CMP : INR 485 Target Price : INR 477 52-week range (INR) : 506 / 290 Share in issue (mn) : 124.maheshwari@edelcap.000 distributors spread across the four regions servicing ~100.101 4.com.2 Nil PRICE Performance (%) Stock Nifty EW Capital Goods Index 1 month 9. It has the second largest CFL manufacturing capacity in India at 50 mn annually.5) Key risks Slowdown in domestic business.3 65.8 8.7 56.com Amit Mahawar +91-22.1 10. profitability dropped due to performance of the European region and this is where restructuring helped.BO.1) 12 months 21.455 10.1 Others : 18.5 Share Holding Pattern (%) Investment conclusion We expect Havells to continue to grow its domestic business on the back of strong product portfolio.8 M cap (INR bn/USD mn) : 61 / 1. Absolute Rating BUY Rating Relative to Sector Outperformer Given that large part of capex is done over the past few years.1 * Promoters pledged shares (% of share in issue) : 1.000 touch points. It is looking at changing the product mix from lamps to fixtures which is expected to help improve margin.1 3 months 18.5 0. 2012 Engineering and Capital Goods Key takeaways EDELWEISS 4D RATINGS Havells India (Havells) reiterated its strategy of being a multi-product company with strong focus on brand strengthening.com Edelweiss Securities Limited . FIs & Banks : FIIs : 19.0 29.Company Profile HAVELLS INDIA Electrifying growth India Equity Research l February 7.571 3.8) 3.976 3.6 341.8 21. In international business.3 (7. the company has a network of ~4.6 MFs. Daily Vol.4 86.346 11.6 13. The company will continue its focus on distributors and have about 5. In the switchgear market.2 9.edelresearch. Any meaningful growth in the European region could provide significant operating leverage.000 distributors with about 100. Slowdown in the international business could put pressure on margins. MARKET DATA (R : HVEL.988 125 32.2 73.5 (7. HAVLS is the market leader in the low voltage segment with ~ 28% share (market size INR 12 bn) with the largest manufacturing facility (48 mn pieces per annum) in the country.6 16.2 19.Consolidated Year to March Revenues (INR mn) Rev.gajare@edelcap. In India. Thomson First Call.4 12. In Sylvania.4 39.6 74.mahawar@edelcap.5 58. Risk Rating Relative to Sector Medium Sector Relative to Market Underweight To focus on new products like appliances and switchgear exports. Bloomberg EDEL <GO>. Reuters and Factset.1) (25.com Swarnim Maheshwari +91-22.204 Avg.

102 804 99 584 4.651 10.019 Total operating expenses 51.500 1.0 80.329 20.219 249 10.210 3.690 4.102 (4) 3.589 2.443 965 132 5.717 28.093 EBITDA 3.5 28.405 8.4 3.3 91 49 166 (26) 1.9 19.537 10.511 10.0 38.4 6.026 108 4.0 341.7 5.766 902 237 4.2 2.204 3.3 6.610 1.459 3.702 3.6 1.7 21.1 5.6 125 11.6 24.702 3.3 125 12.8 108 58 156 10 1.3 28.323 11.722 639 17.7 125 15.315 Direct costs 32.2 19.0 15.117 9.741 10.770 29.556 5.468 3.9 86.4 1.0 29.2 19.099 3.7 98 48 165 (19) 1.126 35.963 18.4 FY11 FY12E FY13E 90.6 1.4 Edelweiss Securities Limited Edelweiss Securities Limited .Post Conference Notes .4 0.938 600 2.998 4.2 0.3 19.7 58.069 6.729 19.543) 2.837 3.3 21.8) 11.9 5.430 Employee costs 7.9 8.862 41.957 2.6 9.1 37.077 16.7 9.250 6.7 27.2 21.873 6 24.571 804 4.233 6.914 6.409 4.955 249 10.5 Interest expenditure 1.8 25.396 13.485 7.770 6.6 11.6 Diluted equity shares (mn) 125 Dividend payout (%) 38.664 2 14.634 1.8 74.5 1.409 4.513 (266) 14.119 45.9 Tax rate (%) 57.628 Provision for tax 932 Core profit 696 Extraordinary items Profit after tax 696 Less: Minority interests PAT after minority interest 696 Adjusted net profit 696 EPS (INR) basic 5.212 8.7 45.243 5.874 336 9.702 3.071 31 3.8 15.530 30.647 929 3.385 Interest expenses 979 Other income 222 Profit before tax 1.089 8.201 4.798 10.499 9.6 10.615 100 22.002 9.914 1.0 FY10 FY11 FY12E FY13E (0.8 FY10 FY11 FY12E FY13E 5.222 Depreciation & amortisation 837 EBIT 2.3 2.1 10.5 20.2 12.5 6.6 89.2 1.5 89.8 15.1 19.2 3.3 72.829 65.338 Common size metrics as % of net revenues Year to March FY10 Operating expenses 94.Consolidated Balance sheet Income statement Year to March (INR mn) FY10 FY11 FY12E FY13E Income from operations 54.698 996 3.013 2.4 6.668 26.021 2.430 59.9 152.1 Depreciation and Amortization 1.899 18.857 (559) 24.841 2.2 56.893 499 19.776 110 26.191 6.354 12.886 12.4 14.8 EBITDA margins 5.860 7.Day 1 Financial Statements .0 1.6 1.7 100.9 1.454 18.1 1.1 1.702 29.5 12.770 78 624 13.982 1.102 1.473 11.0 14.3 2.574 102 18.012 1.493) 371 (2.530 109 FY10 FY11 FY12E FY13E 13.3 17.717 (559) 17.9 Net profit margins 1.2 73.031 3.576 1.409 4.023 6 20.7 14.9 39.3 10.6 20.398 50.628 249 9.629 1.558 3.498 1.191 958 6.361 4.409 1.507 (559) 20.4 47.392 7.099 24.877 3.724 1.0 1.619 2.1 FY10 FY11 FY12E (INR mn) FY13E 696 837 331 (1.3 Growth metrics (%) Year to March Revenues EBITDA PBT Net profit EPS Cash flow statement Year to March Net profit Depreciation Deferred tax Others Gross cash flow Less:Changes in WC Operating cash flow Less: Capex Free cash flow 35 (INR mn) As on 31st March Equity capital Reserves & surplus Shareholders funds Secured loans Borrowings Minority Interest Sources of funds Gross block Depreciation Net block Capital work in progress Total fixed assets Goodwill Inventories Sundry debtors Cash and equivalents Loand & Advances other current assets Total current assets Sundry creditors and others Provisions Total CL & provisions Net current assets Net deferred tax Uses of funds Adjusted BV per share (INR) Ratios Year to March ROAE (%) (on adjusted profits) ROACE (%) Inventory days Debtors days Payable days Cash conversion cycle Current ratio Debt/EBITDA Interest coverage Fixed assets t/o (x) Debt/equity Valuation parameters Year to March Diluted EPS (INR) Y-o-Y growth (%) CEPS Diluted P/E (x) Price/BV (x) EV/Sales (x) EV/EBITDA (X) FY10 FY11 FY12E FY13E 312 3.109 1.668 32 624 5.510 20.6 74.7 7.481 1.717 52 624 9.0 5.409 35.963 10.6 341.1 6.3 31.701 9.154 499 20.4 1.617 1.4 105 49 158 (4) 1.1 65.555 321 15.5 1.4 6.173 6 17.389 15.132 121 32.653 11.7 4.027 13.3 341.645 Other expenses 11.753 6.702 1.173 10.105 2.876 2.012 5.354 10.779 1.4 19.734 11.077 1.5 32.354 14.

288 16. The bank is carefully watching impact of saving bank rate hikes by a few private sector banks before making any changes on the same. Actual losses in retail segment are lower than expected—retail charge-offs are offset by better recoveries as well as normal write-offs.4040 7579 kunal. steady advance growth and benign LLPs.985 2.8 29.7 16.937.942 13. BSE/NSE (‘000) : 3.edelresearch.9 FIIs : 29.com Kunal Shah +91-22. Proportion of sales from DSA is also trending down.6 3 months 2.3 148.2 * Promoters pledged shares (% of share in issue) : Nil Gold loans now constitute 1% of the loan book and likely to touch 4-5% over the next 3-4 years.2 4. Financials Year to March Net revenues (INR mn) Net rev. Daily Vol. SME segment the bank is resorting to relationship banking wherein cash flows indicate any upcoming stress in advance.3% range. Absolute Rating HOLD Rating Relative to Sector Performer Risk Rating Relative to Sector Low Sector Relative to Market Equalweight MARKET DATA (R : HDBK.341. sourcing from branches have gone up.677 2.326 16.289 12. Lower–than-expected asset growth.2) Key risks Higher than expected decline in CASA ratio and change in macro environment may impact cost of funds and consequently margins.4 4.2 MFs.parikh@edelcap.1 50.0 39.783 22.326 26.1 39.487 2.4%.3 3.751 Avg.chaudhary@edelcap. on CV. growth (%) Net profit (INR mn) Shares outstanding (mn) Diluted EPS (INR) EPS growth (%) Diluted PE (x) Price to book (x) ROAE (%) FY10 FY11 FY12E FY13E 121. Moderation in corporate loan book is due to conscious stance to allow some short-term loans to run-off and reduced marginal NIMs being generated on the same.4 16.264 2. Thomson First Call.7 177. B: HDFCB IN) CMP : INR 510 Target Price : INR 504 52-week range (INR) : 519 / 396 Share in issue (mn) : 2.6 22. NIMs to be maintained in the 3.6 207. Unsecured portion is now 19% of the portfolio and continues to do well. CV segment – in value terms.BO.5 19.193 / 23.3 19. 2012 Banking and Financial Services Key takeaways EDELWEISS 4D RATINGS Asset quality continues to be good as in terms of business practices. mix has definitely shifted more towards LCV in the past few quarters as it qualifies for PSL as well.326 21. Also.1 9.1) (6.com Edelweiss Securities Limited .9 22.1 23.1 18.3 Share Holding Pattern (%) Promoters* : 23.com Suruchi Chaudhary +91-22-6623 3316 suruchi.3 M cap (INR bn/USD mn) : 1. PRICE Performance (%) Stock Nifty EW BFSI Index 15. Retail has seen strong growth due to increase in market share in some segments and benefiting from network expansion—CVs.9 12 months 17. MHCV will be higher. With stressed assets (restructured + GNPA) at a mere 1.8 29. Slippages continue to be fairly stable QoQ. Nilesh Parikh +91-22.8 1 month 10. it is best placed to navigate through asset quality pressures.1 3. Reuters and Factset.8 (7. credit cards and personal loans. Investment conclusion Quality of earnings continues to improve given stable NIMs.com.5 5.7 Others : 36. Forex revenues normally grow at 15-20% on annual basis.Company Profile HDFC BANK Quality player India Equity Research l February 7. FIs & Banks : 10.shah@edelcap.250 19.6 0.0 30.4063 5470 nilesh.9 61.9 31. Quarterly volatility is likely. Bloomberg EDEL <GO>.6 Edelweiss Research is also available on www.9-4.

3 7.5 5.3 4.6 8.216 339.Day 1 Financial Statements Balance sheet Income statement Year to March (INR mn) FY10 FY11 FY12E FY13E 161.3 Growth metrics (%) Year to March FY10 FY11 FY12E FY13E NII growth Fees growth Opex growth PPOP growth PPP growth Provisions growth PAT growth 13.623 393.942 57.067 14.0) (0.5 1.5 9.1 15.5 2.4 5.154 29.250 84.645 22.773.6 45.744 53.5) 1.4 15.8 7.159 33.3 1.5 19.158 755 1.4 4.167 183.703 406.3 (3.882 2.9 3.224.288 94.0 17.0 20.0 6.5 109.3 11.1 32.0 24.431 43.187 18.8 24.3 4.4 4.964 180.487 29.531 73.Tier 1 Book value (INR) FY11 FY12E FY13E 4.8 0.6 21.0 6.1 1.0 10.5 1.2 77.5 125.0 18.1 1.7) (0.750 510.9 9.815.6 1.4 4.874 62.7 199.914 59.076 34.7 24.9 22.3 25.406 19.Employee exp .5 1.8 24.9 Edelweiss Securities Limited Edelweiss Securities Limited .Misc.338 21.5 16.081 51.4 17.3 1.827 1.9 16.0 9.3 52.0 7.1 0.3 7.674.424 296.5 13.8 16.9 4.7 4.254 19.2 4.6) 29.2 82.919.8 12.9 21.109 63.443 2.500 207.7 18.866 38.707 23.7 31.487 12.3 78.9 31.652 4.5 12.3 24. income .9 24.0 16.8 4.586 2.864.4) 1.4 3.8 FY10 FY11 FY12E FY13E 4.5 81.352 45.729 77.2 28.3 5.626 70.282 93.652 4.5 47.7 4.864 2.3 146 144 19.8) (4.9 24.2 17.Investment profits Net revenues Operating expense .5 3.5 79.4 1.1 17.2 6.8) (0.037 21.228 21.084 58.792 2.160 289.000 91.3 31.776 166.303.6 4.8 4.504 536.0 8.815.6 21.1 126 124 23.164 128.929 338.140 287.4 2.2 13.013 85.3 75.306 1.9) 33.0 1.552 146.2 0.753 64.851 105.793 292.0 0.085.5 0.8 9.882 19.526 3.Loan loss provisions .Fee & forex income .858 24.4 8.8) (0.006 1.404 29.1 0.985 26.220.6) 1.009 75.9 31.2 1.863 83.7) 1.290) (534) 148.7) (4.0 26.572 172.783 71.6 FY10 FY11 FY12E FY13E 12.8 (0.1 7.3 (3.091 18.264 16.0 18.8) (4.4 0.6 4.5 32.044 2.4 24.506 51.Other provisions PBT Taxes PAT Reported PAT EPS (INR) DPS (INR) Payout ratio (%) Yield on advances Yield on investments Yield on assets Net interest margins Cost of funds Cost of deposits Cost of borrowings Spread Cost-income Tax rate 37 (INR mn) As on 31st March FY10 Liabilities Equity capital Reserves Net worth Sub bonds/pref cap Deposits Borrowings Other liabilities Total Assets Loans Investments Gilts Others Cash & equi Fixed assets Other assets Total Balance sheet ratios (%) Credit growth Deposit growth EA growth SLR ratio C-D ratio Low-cost deposits Gross NPA ratio Net NPA ratio Provision coverage Incremental slippage Net NPA / Equity Capital adequacy .529 28.167 113.952 755 800 177.892 34.7) (0.251 36.0 12.526 3.8 29.5 (2.5 7.618 148.2 5.985 61.7 29.642 2.648 249.2 26.000 74.6 48.017 42.7 9.7 0.928 83.0 Interest income Interest expenses Net Interest income Non interest income .225 253.360 43.3 3.564 334.117 299.408 177 3.229 3.4 1.5 145.1 27.9 77.9 0.7 18.176 (1.4 4.5 32.786 65.652 210.773.491 121.220.6 22.923 39.1 3.8 4.7 47.8 4.0 49.9 22.7 252.891 13.420 123.1 94 93 39.414 60. book value/share (INR) Diluted P/E (x) Price/ BV (x) Price/ ABV (x) Dividend yield (%) 25.688 333.6 20.928 93.823 729.011 162.877 2.586 2.4 17.848 50.3 72.Post Conference Notes .4 1.0) (1.743 144.9 2.5 0.7 1.224.7 4.2 (10.518 613.566 16.229 3.677 50.9 17.2 14.928 1.9 4.457 215.525 23.740 110.9 20.5 11.737 58.0 22.5 94.6 4.0) 6.9 50.419.2 293.0 109 108 30.389 2.3 Operating ratios (%) Year to March FY10 FY11 FY12E FY13E 10.8 26.330 4.6 8.3 16.258.4 21.169 61.5 8.3 (3.264 39.0 11.0 9.297 21.9) (4.677 21.0) (0.169 77.Other opex Preprovision profit Provisions .006 ROA decomposition (%) Year to March Net interest income/Assets Fees/Assets Investment profits/Assets Net revenues/Assets Operating expense/Assets Provisions/Assets Taxes/Assets Total costs/Assets ROA Equity/Assets ROAE Valuation parameters Year to March Diluted EPS EPS growth (%) Book value per share (INR) Adj.0 4.1 4.4 4.566 2.2 13.599.2 (2.1 20.079 93.1) (0.1 7.577 4.6 20.9 52.8 0.740 206.

0 12 months 45.9 145.860 30.4 M cap (INR bn/USD mn) : 30 / 592 Avg. and GBP.0 26.5) 0. (c) strong revenue exit rate posted in Q4CY11.agarwal@edelcap. Inadequate availability of manpower. 9..5) 1 month 8.9 Edelweiss Research is also available on www.6623 3474 sandip. FIs & Banks : FIIs : 41.343 298 4.646 2. BSE/NSE (‘000) : 1.2 9. In addition. Daily Vol.6) 27.545 1.6 (7. Reuters and Factset.9) Key risks Double dip recession in its major market US and prolonged slowdown in Europe. EUR.505 37.edelresearch. 2012 IT Key takeaways EDELWEISS 4D RATINGS Hexaware highlighted its growth confidence for CY12 is emanating from: (a) incremental revenues from ramp up of large deals (USD250mn and USD177mn deal). Kunal Sangoi +91-22.1 9. these are relatively new clients where the competition has been higher.386 (9. Absolute Rating BUY Rating Relative to Sector Outperformer Risk Rating Relative to Sector Medium Sector Relative to Market Equalweight MARKET DATA (R : HEXT.0 Investment conclusion * Promoters pledged shares (% of share in issue) : Over the past one year Hexaware has focused on improving operational efficiencies and re-aligned itself vertically from earlier horizontal sales-based approach. it is in advanced stage of negotiations in two. IMS that now has over 400 people. We see Hexaware fundamentally strengthened with the recent initiatives and with a healthy cash position it is well poised to explore inorganic growth opportunities as well.7 6. utilization. Thomson First Call. Despite EBITDA margin reaching 23% (20% adjusted for currency benefit).3 9.sangoi@edelcap.Company Profile HEXAWARE TECHNOLOGIES Sailing on strong winds India Equity Research l February 7.3 9. Interestingly.g. is now to be extended for the next 10 accounts. broadening of employee pyramid (40% fresher intake). bill rates and G&A leverage.com Omkar Hadkar +91-22. growth (%) EBITDA (INR mn) Net profit (INR mn) Shares outstanding (mn) Diluted EPS (INR) EPS growth (%) Diluted P/E (x) EV/EBITDA (x) ROAE (%) CY09 CY10 CY11E CY12E 10.5 95.3 4.077 297 3.6623 3370 kunal. MFs.4 Others : 21. Multiple margins levers remain.125 299 10. growth from existing large clients is helping it scale younger service lines e.957.4 26. Further.com.023 1.8 22. Its revamped sales (focused on strength areas) and account management structure have driven significant growth from its top 10 clients and increased the wallet share.5 938 1.com Sandip Agarwal +91-22. The account management structure that has been in place for top 25 accounts so far.2 18. strengthening of the sales force with 16 new recruits and new deal wins reported in the past six months are likely to result in improving revenue traction going forward.3 17.1 Share Holding Pattern (%) Promoters* : 28. Hexaware is likely to sustain or improve margins hereon. high US and BFSI exposure should aid growth in an improving macro environment. and (d) pipeline of large deals that it is chasing (while this is not factored in growth guidance). (b) visibility of higher than company growth from 8 of the top 10 clients. Bloomberg EDEL <GO>. Appreciation of INR against USD.8 10.2 Importantly.6 (19.1) (3.8 26. Key margin levers include higher off shoring. Financials Year to December Revenues (INR mn) Rev.5 17.4 Nil PRICE Performance (%) Stock Nifty EW IT Index (1.hadkar@edelcap.4 12.6620 3147 omkar.876 3.7 11.4 14. It is chasing five large deals (TCV > USD25mn) of which.6 3 months (6.BO.8) 2.6 2.0 3.668 299 8. B: HEXW IN) CMP : INR 101 Target Price : INR 115 52-week range (INR) : 103 / 45 Share in issue (mn) : 293.com Edelweiss Securities Limited .

113 5.125 272 (297) 3.160 5.2 19.4 3.6 22.551 43 CY09 CY10 CY11E CY12E 17.404 1.5 0.5 (53.3 26.0 42.3 26.Post Conference Notes .753 (307) 1.8 5.1 3.3 2.774 4.0 10.9 12.8 2.200 8.123 9.840 2.9 43.6 95.5 8.0 199.860 11.514 1.0 10.0 200.482 8.1 20.1 15.2 26.0 1.8 24.160 4.1 Common size metrics as % of net revenues Year to December CY09 CY10 CY11E CY12E Cost of revenues Gross margin G&A expenses SG&A expenses EBITDA margin EBIT margin Net profit margins 54.3 26.899 436 500 162 4.505 8.8 18.6 4.526 1.1 8.6) (60.0 14.479 7.6 3.1 61.511 Less: Capex 82 Free cash flow 1.4 4.4 26.861 1.1 6.3) (34.6) 37.2 26.743 2.343 1.1 18.1 CY10 CY11E (INR mn) CY12E 1.259 947 1.632 7.9 6.269 121 2.6) 3.785 5.6 182.489 528 2.039 3.5 25.309 Less:Changes in working capital (201) Operating cash flow 1.7 2.920 2.7 26.343 Depreciation 270 Others (304) Gross cash flow 1.133 3.0 11.343 286.6 Growth metrics (%) Year to December CY09 CY10 CY11E CY12E (9.767 2.8 3.9 4.9 4.5 95.7 297.369 2.125 3.257 3.1 5.6 1.000 9.329 262 1.8 5.780 33 585 4.720 2.298 1.0 46.473 12.6 0.519 1.630 2.3 10.2 37.566 2.655 112 13 9.668 248 (657) 2.asset Gross fixed assets Less: Accum.326 3.7 299. interest Shares outstanding (mn) EPS (INR) basic Diluted shares (mn) EPS (INR) diluted CEPS (INR) Dividend per share Dividend (%) Dividend pay out (%) (INR mn) CY09 CY10 CY11E CY12E 10.537 13 12.8 27.4 8.0 72.919 1.1 299.6 19.343 1.668 2.9 17.646 248 2.6) (36.4 212.077 242 (634) 685 563 122 (542) 665 2.475 1.724 1.728 7.901 776 3.5) (19.950 969 397 182 4.939 5.667 1.3 17.1 244.3 1.160 3.4 12.7 296.3 45.692 938 242 696 249 945 92 853 224 1.5 Ratios Year to December ROAE (%) ROACE (%) Debtors (days) Payable (days) Cash conversion cycle Current ratio Fixed assets turnover (x) Total asset turnover(x) Equity turnover(x) Valuation parameters Year to December Diluted EPS (INR) Y-o-Y growth (%) CEPS (INR) Diluted P/E (x) Price/BV(x) EV/Revenues (x) EV/EBITDA (x) EV/EBITDA (x)+1 yr forward Dividend yield (%) Edelweiss Securities Limited Edelweiss Securities Limited .077 1.724 37 585 4.5 4.545 6.4 20.2 6.202 6.3 2.3 9.5 225.6 38.8) 57.386 5.668 2.429 39 (INR mn) As on 31st December CY09 CY10 CY11E CY12E Equity share capital Share premium account Reserves Total shareholders funds Borrowings Deferred tax liability Sources of funds Goodwill & other intan.643 4.2 16.5 50.6 3.9 65.309 2.8 145.893 1.5 11.163 1.3 60 60 (0) 2.1 11.780 1.5 17.312 665 647 3.632 1.5 16.0 5.023 270 1.497 163 10 8.2 101.3 9.670 30 291 4.8 17.1 10.961 Revenues EBITDA EBIT PBT Net profit EPS Cash flow statement Year to December CY09 Net profit 1.7 70.709 2.101 2.075 407 2.258 1.590 9.6 (19.1 6.5 1.125 3.479 5.998 710 2.4 1.745 850 2.000 162 5.3 20.4 9.0 2.876 272 3.4 6.6 CY09 CY10 CY11E CY12E 4.5 5.992 1.4 25.Day 1 Financial Statements Balance sheet Income statement Year to December Revenues Cost of revenues Gross profit Total SG&A expenses EBITDA Depreciation & Amortization EBIT Other income Profit before tax Tax Core Profit Extraordinary income/(loss) Profit after tax Net profit after min.9 10.4 1.915 3.7 63 88 (25) 2.1 16.6 9.8 1.1 17.9 145.125 292.5 225.6 8.469 1.100 (389) 3.907 1.7 3.1 1.4 62.5 60 41 20 3.5 18.7 9.604 297 3.551 1.7 30.446 103 1.9 33.711 13 10.077 290.595 5.4 2.207 3.0 4.726 3.7 10.567 10.398 677 3.2 24.923 8.222 980 3. depreciation Net fixed assets Capital WIP Investments Deferred tax asset Cash & bank balances Debtors Loans and advances Total current assets Sundry creditors Provisions Total current liabilities Working capital Application of funds BV per share (INR) 290 4.0 8.9 1.6 34.356 1.1 62 38 23 3.1 1.638 12.1 76.670 1.668 292.4 54.647 10.8 1.

it is being offset by robust demand from other metros and Tier-1 cites. Bloomberg EDEL <GO>.1 * Adj. Higher than expected increase in funding cost and inability to pass the cost to customers in the current tightening monetary environment will adversely affect margins and profitability.7 Share Holding Pattern (%) Promoters* : MFs.3 10.com Edelweiss Securities Limited .8 23.shah@edelcap. Edelweiss Research is also available on www.886 41.597 49.7 FIIs : 59.9 0.471 35.1bn of foreign currency denominated liabilities.1 21.474. 2012. B: HDFC IN) CMP : INR 686 Target Price : INR 647 52-week range (INR) : 736 / 582 Share in issue (mn) : 1.011 /20. While Mumbai and Delhi are seeing some moderation in demand.0 Others : 12. Besides using principal only swaps. FIs & Banks : 28.BO.Company Profile HDFC The big daddy India Equity Research l February 7.875 28. Kunal Shah +91-22.2% spreads and steady asset quality.119 Avg.4 24.0 1 month 4. for subs.8 9. Risk of fraud and NPA accretion due to increase in interest rates and fall in property prices is inherent to the mortgage business.7 50. 2.2) Financials Year to March Net Interest Income(INR mn) Net profit (INR mn) Shares outstanding (mn) EPS (INR) EPS growth (%) PE (x)* Price to book (x)* ROE (%) FY10 FY11 FY12E FY13E 33.4 23.5 18.265 287.858. forward contracts and cross currency swaps for hedging.1 22.452 305. BSE/NSE (‘000) : 2. 2012 Banking and Financial Services Key takeaways EDELWEISS 4D RATINGS HDFC maintains its guidance of 20% loan growth.3 13.3 20.com Suruchi Chaudhary +91-22-6623 3316 suruchi.6 8.6 17. it has build USD denominated assets of USD500 600mn to create a natural hedge against currency movement risk.0 4.0 42.4063 5470 nilesh.3 * Promoters pledged shares (% of share in issue) : Nil PRICE Performance (%) Stock Nifty EW BFSI Index 15.1 (7.7 31. Absolute Rating HOLD Rating Relative to Sector Underperformer Risk Rating Relative to Sector Low Sector Relative to Market Equalweight MARKET DATA (R : HDFC.1 19. HDFC has been carrying zero coupon bonds of ~INR73bn (equivalent to the value of its investments in subsidiaries) and interest on ZCBs of ~INR7bn will be adjusted against its net worth as per its accounting policy. currency option.5 6.7 22.4040 7579 kunal.3 3.chaudhary@edelcap. developer loans account for 12% while lease rental discounting constitutes 13 14%. HDFC has outstanding loans under Dual Rate Home Loan scheme of INR223bn and this entire portfolio will be converted into floating rate loans on April 1.com. Daily Vol.3 28.parikh@edelcap. stable margins (at 3. HDFC had USD1.871 294.5%) and an insignificant stress on asset quality. interest on zero coupon bonds and standard asset provisioning will be adjusted against excess reserves/networth.1 19. which were completely hedged as of FY11.8 Key risks Increase in competition and sustained slack in the mortgage market can lead to lower growth than our estimates.3 60. Reuters and Factset.edelresearch.4 24. Investment conclusion HDFC’s performance in 9mFY12 reinforces our expectation of 20% loan growth. Thomson First Call.9 32.350 293.9 12 months 7. We maintain our estimate of 18% CAGR in PAT over FY11 13E.6 3 months 4. It has entered into USD697mn cross currency swaps and interest rate swap converting its fixed rate INR liability into floating rate forex liability to trim the overall cost of borrowing. Of the 36% lending exposure to the non individual segment.1) (6. 0.2 M cap (INR bn/USD mn) : 1.com Nilesh Parikh +91-22.

2 4.944 74.8 1.327.7 ROA decomposition (%) Year to March FY10 FY11 Net interest income/assets Non interest income/assets Investment gains/assets Net revenues/Assets Operating expense/assets Provisions/assets Taxes/assets Total costs/assets ROA Equity/assets ROAE Valuation parameters Year to March * adjusted for value of investments in subsidiaries Edelweiss Securities Limited Edelweiss Securities Limited .0 3.125 2.2 20.5 7.8 9.8 Price/ BV (x) 6.9 19.6 42.877 3.934 2.640 49.163 213 2.9 10.467 24.7 17.9 2.3 20.1 Sanctions growth (%) 23.535.589 Preprovision profit 37.629 107.1 166.631 Net interest income 33.0 41 FY12E FY13E 2.7 21.160 Taxes 10.9 7.481 5.0 FY12E FY13E 902.811 246.7 17.0 10.931 202 2.871 1.3 8.275 118.904 979.4 0.2 14.3 0.670 13.522 80.811 1.130 Disb.157 4.5 6.7 10.4 0.270 48.6 19.1 1.794 Income from operations 40.092 18.2 4.251 288.6 19.129 151. Earnings (x)* 31.6 0.270 1.898 .857 4.5 3.7 EPS growth (%) 22.6 23. BV (x)* 10.273 6.5 2.5 Price/ Adj.705 90.7 13.6 158 104 21.0 12.8 2.719 242.3 2.597 700 48.309 108.610 98.300 1.7 DPS (INR) 7.1 FY10 FY11 FY12E FY13E Diluted EPS (INR) 19.734 49.664 723.3 0.0 20.681 15.171.3 Dividend yield (%) 1.3 751.500 900 68.776 1.665 2.886 8.113 2.070 75.1 1.644 2.Post Conference Notes .8 27.0 7.237 .1 1.1 9.1 0.0 43.931 3.4 9.186 105.6 6.809.904 15.530 32.6 3.265 Reported PAT 28.6 16.0 27.2 27.906 2.439 101.1 15.6 20.6 20.925 1.059 57.9 13.2 80.117.Depreciation /amortisation 182 .506 Interest expended 70.646 Profit on sale of investments 2. to sanction ratio (%) 83.0 20.0 Growth metrics (%) Year to March Net interest income Net revenues growth Opex growth PPP growth Provisions growth PAT growth Operating ratios (%) Year to March YYield on assets Yield on advances Cost of funds Spread Net interest margins Cost-income Tax rate Sanctions and disbursements Year to March (INR mn) As on 31st March FY10 Liabilities Equity capital Share premium Reserves & surplus Net worth Total deposits Secured Loans Unsecured Loans Total liabilities Assets Loans Investments Current assets Current liabilities Net current assets Fixed assets (net block) Other assets Total assets Balance sheet ratios (%) Loan growth Deposit growth EA growth CAR FY11 FY12E FY13E 10.392 98.4 141.5 18.7 Book value per share (INR) 106 Adj.502 3.4 5.0 1.3 0.082. income 2.209 154.4 FY10 FY11 Sanctions (INR mn) 606.0 17.670 1.008 .375 1.871 41.3 4.393 126.607 30.2 2.6 0.895 PAT 28.4 1.237 2.452 49.327.725 27.1 1.943 3.0 17.977 173.320 35.5 0.148 1.018 111.057 816. number of shares (mn) 1.8 17.4 19.324 122.094 Provisions 580 PBT 39.471 28.589 60.0 19.1 19.6 24.3 11.1 1.1 1.3 1.Income from investments 1.0 14.2 3.265 Basic number of shares (mn) 1.2 4.0 18.1 10.9 11.7 0.3 17.1 24.189 57.270 1.530 32.0 20.3 3.1 FY10 FY11 FY12E FY13E 10.6 0.599 42.2 20.165 186.510 70.350 35.0 15.Employee exp 1.4 2.4 10.9 19.114 339.755 192 1.340 2.104 59.1 17.768 868.646.3 0.796 62.864 45.6 0.3 0.449 98.436 Basic EPS (INR) 19.1 1.5 1.785 91.105 230.073 54.4 23.5 18.220 1.8 7.5 43.630 1.3 Price/ Adj.7 9.7 3.773 3.2 4.7 14.7 25.5 2.917 91.974 636.7 27.819 50.1 18.Day 1 Financial Statements Balance sheet Income statement Year to March (INR mn) FY10 FY11 FY12E FY13E Interest income 104.Misc.5 32.6 0.500 750 57.364 25.871 2.2 Disbursements growth (%) 27.6 7.9 12.206 1.317 .785 67.915 72.7 3.4 21.1 22.8 10.415 959.2 19.884 Operating expenses 3.116.630 1.7 Dil.136 59.452 1.173 2.290 65.809.751 70.859 27.471 7.5 10.Other opex 1.1 1.175 2.0 4.8 25.640 100.1 5.221 2.1 2.350 1.850 603.471 28.136 4.4 19.6 118.2 Dividend pay out (%) 42.875 Non interest income 7.776 1.584 49.140 80.117.597 9.043 126.5 7.467 .110 Disbursements (INR mn) 504.809 41.7 7.1 127 72 24.5 23. book value per share (INR)* 5 2 Diluted P/E (x) 34.157 70.250 2.567 84.204 2.3 13.1 1.535.8 24.6 8.6 6.4 118 64 28.492 3.7 3.436 Diluted EPS (INR) 19.378.584 3.884 Net revenues 40.4 0.9 23.Fee & forex income 2.6 10.560 3.3 28.3 FY10 FY11 FY12E FY13E 3.266 1.7 18.467 24.

801.9 0.4063 5470 nilesh. BSE/NSE (‘000) : 4.1 6.133 75.3 * Promoters pledged shares (% of share in issue) : Nil Investment conclusion Structurally.1) (6.com.1) (7. Opex to increase in line with balance sheet growth and cost/income for FY12 will be similar to run rate as of 9mFY12 level (43.Company Profile ICICI BANK On growth path India Equity Research l February 7.5bn in Q2FY12 and INR1.com Edelweiss Securities Limited .3 1.137 / 641 Share in issue (mn) : 1.parikh@edelcap.0 156.1 17. no impact of savings deposit deregulation as it will be passed on.0 2. we expect core ROA to stabilise at 1.com Kunal Shah +91-22.041 65. +91-22.6% margins.0 9.2 21.3bn in Q3FY12.2bn will be sufficient to meet liability payment of USD2. lower than the initial guidance of 100bps. 2012 Banking and Financial Services Key takeaways EDELWEISS 4D RATINGS Pending restructuring.6 3 months 1.250 36.9 (10. Credit cost guidance for FY12 maintained at 70bps and 75bps for FY13.8 1 month 22. Gross restructuring was INR8. Reuters and Factset. Absolute Rating BUY Rating Relative to Sector Outperformer Risk Rating Relative to Sector Low Sector Relative to Market Equalweight MARKET DATA (R : ICBK.9 26. On a sustainable long term basis. Thomson First Call.0 8.0 FIIs : 34.1 20.6 M cap (INR bn/USD mn) : 1.edelresearch.1 Edelweiss Research is also available on www.shah@edelcap. Key risks PRICE Performance (%) Stock Nifty EW BFSI Index 15.chaudhary@edelcap.7-1.5bn.8% in the medium term.7 177. B: ICICIBC IN) CMP : INR 937 Target Price : INR 1. it is vulnerable to system wide deterioration in the quality of retail assets.GTL has not yet been restructured and will be reported in Q4FY12. drawdown from past corporate sanctions and PSL loan build up) and flat growth in the international business.7 12.152. With ~40% of retail asset book.3 3.910 62. Bloomberg EDEL <GO>.BO.9 216.2) 12 months Main risks for ICICI is NPA risk due to its low cumulative provisions and lumpy corporate exposures. Financials Year to March Net revenues (INR mn) Net profit (INR mn) Diluted EPS (INR) EPS growth (%) Diluted P/E (x) Price to book (x) ROAE (%) Nilesh Parikh FY10 FY11 FY12E FY13E 155. Deterioration in the international liquidity scenario will lead to slowdown in growth rates of the international business. Share Holding Pattern (%) Promoters* : MFs.7 23.7 Others : 37.8 10.5%) and will try to bring it down to 41% in FY13.40% on average basis. ICICI Bank has successfully switched from consolidation to the growth phase with a leaner and robust business model (40% CASA to stay).5bn in Q1FY12. is INR13bn. INR7.648 51.494 Avg.3 14.100 52-week range (INR) : 1.5 2. working capital demand.3 9. Management outlook for FY13: Stable margins from hereon and credit cost at ~75 80bps. Daily Vol.9 0.080 / 21. This includes GTL where their exposure is INR6.com Suruchi Chaudhary +91-22-6623 3316 suruchi.9 21.7% in FY12 with improvement of 10bps expected in FY13 largely on back of improvement in domestic business. which is undergoing CDR mechanism.382 54. To grow loan book by 15% in FY13: driven by 20% growth in domestic business (contributed by retail.7bn. It will target opex to assets at 1.4 1. Led by 18% CAGR in earnings on back of 19% loan growth and 2.4 Margins to be maintained at 2. FIs & Banks : 27.4040 7579 kunal. Will try to sustain CASA at the current level. Asset liability in international business is adequately matched – asset flows of USD3.947 40.5% and core ROE to touch 15%.514 44.0 2.

1 455.414 377.3 6.158.672 86.4 2.769 .388 582.107 100.514 Diluted EPS (INR) 44.5 18.42 14.0 107.953 227.8 6.398 44.333 1.594 145.577 705.256.0 1.6) (0.337 4.545 4.518 539.1 3.226 857.2 2.9 13.5 1.4 16.000 216.9) 1.593.5 108.942 641.740 129.508.2 43.0 7.1 61.173 149.2 23.4) (2.7 23.7 1.Loan loss provisions 19.0 14.9 1.429 340.517 101.8 Growth metrics (%) Year to March FY10 FY11 FY12E FY13E NII growth Fees growth Opex growth PPOP growth PPP growth Provisions growth PAT growth 11.1 8.1 76.8 502.5 620.285 5.0 21.7) 28.50 13.4 7.5 1.062.3 12.508.508.9 2.7 22.7 20.271 728.498 2.0 4.0 25.201 87.5 Operating ratios (%) Year to March FY10 FY11 FY12E FY13E 8.505 33.935 163.133 88.169 Non interest income 66.1 20.365 284.3 1.7) 21.9 45.163.525 3.285 5.1) (54.8 9.5 1.9 4.406 16.662 (2.0 20.561 39.864 193.070 2.846 26.460 6.139 935.0 17.337 4.0 2.1) 4.000 246.2 1.2 12.4 1.2 1.979 525.003 Preprovision profit 90.315 .1 14. book value/share (INR) Diluted P/E (x) Price/ BV (x) Price/ ABV (x) Dividend yield (%) 25.627 3.2 25.5 Yield on advances Yield on investments Yield on assets Net interest margins Cost of funds Cost of deposits Cost of borrowings Spread Cost-income Tax rate 43 (INR mn) As on 31st March FY10 Liabilities Equity capital Reserves Net worth Sub bonds/pref cap Deposits Borrowings Other liabilities Total Assets Loans Investments Gilts Others Cash & equi Fixed assets Other assets Total Balance sheet ratios (%) Credit growth Deposit growth EA growth SLR ratio C-D ratio Low-cost deposits Gross NPA ratio Net NPA ratio Provision coverage Incremental slippage Net NPA / Equity Capital adequacy FY11 FY12E FY13E 11.949 6.9 2.131 8.987 1.3 418.1 15.8 18.6 17.3 16.689 75.3 4.8 10.0 2.861 703.023 69.6 25.435 232.0 Payout ratio (%) 35.060 550.091 PBT 67.3 22.8 (0.846 0 0 100.1 516.446 47.1 24.8) (0.5 4.796 7.022) Net revenues 156.Other provisions 1.697.361 29.710 0 0 116.6 75.5) (2.804 237.062.3 15.518 11.316.588 37.Other opex 38.50 6.3 (1.6 0.5 5.3 41.498 ROA decomposition (%) Year to March Net interest income/Assets Fees/Assets Investment profits/Assets Net revenues/Assets Operating expense/Assets Provisions/Assets Taxes/Assets Total costs/Assets ROA Equity/Assets ROAE Valuation parameters Year to March Diluted EPS (INR) EPS growth (%) Book value per share (INR) Adj.9 77.128 77.6 13.3 15.169 .485 649.3 22.4 54.8 12.7 1.52 11.005 87.949 6.7 6.967 637.8) (0.6 4.572 Net interest income 90.489 285.5 (1.577 Taxes 16.61 5.906 594.7 Edelweiss Securities Limited Edelweiss Securities Limited .8 2.6 1.671 0 0 83.8) (0.8 11.689 86.379 714.0 2.0 24.048 3.744 250.9 15.Investment profits (2.901 378.1 17.1) 4.0 43.2 0.6 18.8 12.6 8.041 75.648 Operating expense 66.816.837 4.1 21.Misc.1 2.7 18.518 11.086.852 53.3 (1.3 4.6) (0.7 7.8 2.5 14.Day 1 Financial Statements Balance sheet Income statement Year to March (INR mn) FY10 FY11 FY12E FY13E Interest income 259.475 Provisions 22.419 31.129.9 12.778 47.427 1.3 15.8 2.671 16.977 48.697.910 77.7 6.7 FY10 FY11 FY12E FY13E 44.518 11.663.1 43.1 15.5 6.4 7.66 5.186 .5 65.0 FY10 FY11 FY12E FY13E 2.7 12.382 54.8) 1.5 8.0 75.0 5.691 159.3 7.173 .2 14.414 382.1 4.572 26.3 (1.6 2.222 768.443 42.0 14.888 74.514 Reported PAT 51.613 796.9 1.5) (2.0 30.0 2.414 2.247 689.4 22.503 443.3 1.2 8.100) 177.5 8.584 127.5 1.0 (15.5 27.8 0.55 12.038 .414 372.9) 1.578 367.316 97.5) (2.4) (0.063 PAT 51.8 18.726 25.1 7.352 62.1 4.0 26. income 4.2 21.735 21.066 103.021 2.7 79.508.898 .475 197.0 4.6 1.2 3.0 42.0 15.0 1.8) 1.1 1.7 13.4 559.091.8 434.5) (0.3 563.1 18.9 478.Investment depreciation 2.2 330.659 2.710 28.2 41.5 43.1 3.1 7.1 379.Post Conference Notes .7 0.1 10.071 28.7 2.332 2.9) (0.9 (0.132 873.3 (7.5 108.0 105.041 65.2 14.678.479 .1 3.121 278.7 1.685 75.4 4.741 Interest expenses 169.Fee & forex income 64.7 DPS (INR) 13.028 3.7 9.382 62.8 11.Employee exp 28.

578 62. In terms of guidance. 2012 Banking and Financial Services Key takeaways EDELWEISS RATINGS On asset quality.1 45.2 28.259 8.1 15.125 40.7 8.edelresearch. B: IDBI IN) Given the experience while the bank was a DFI.shah@edelcap.4) Financials Year to March Revenues (INR mn) Rev growth (%) Net Interest Income (INR mn) Net profit (INR mn) Shares outstanding (mn) EPS (INR) EPS growth (%) PE (x) Price to book (x) Price to PPOP (x) ROE (%) FY08 FY09 FY10 FY11 24. Thomson First Call.2) (18.0 8.com Edelweiss Securities Limited .7 22. Major constituents of the restructured pool in the power segment are Dabhol Ratnagiri and Lanco’s Udupi .3 Nil Key risks Exposure to some of the stressed sector is on the higher side (~45-50% of loans to infra SME/MSME sector) versus sector average of ~30-35%.7 43.1 24.311 724.7 13.8) (20.6 FIIs : Others : 16.561 10.2 0. The government of India has agreed to convert INR21.8 (7.com.2 1.9% in FY13E.564 7.071 Avg.0 13. Daily Vol.0 Share Holding Pattern (%) Promoters* : 65. MARKET DATA (R : IDBI. It highlighted that even for Q3FY12. RoA likely to improve to 0.BO. slippages would have been lower than Q1 and Q2 but for one off large accounts.1 MFs.4063 5470 nilesh. While this will not boost Tier 1 capital since bonds were already a part of Tier 1 it will be beneficial in transition to Basel 3. Absolute Rating NOT RATED Along with reduced slippages. GNPA is likely to touch 2. meeting the priority sector lending norms can be a little difficult.3 11.chaudhary@edelcap.4040 7579 kunal. the bank also expects recoveries to be good from both GNPAs and from written off accounts as well.295 724.com Kunal Shah +91-22.7 1.9 14. With the regulator tightening portfolio buyout guidelines from NBFCs.7 23.8 10.1) (7.289 16.6 M cap (INR bn/USD mn) : 104 /2.3bn of Tier 1 bonds into equity. Reuters and Factset.7 6. Bloomberg EDEL <GO>.585 724.503 985.8 Edelweiss Research is also available on www.8 11. the bank has stayed away from SEB lending and will continue to do so.6 3 months 0.5 15.661.6 16.2 20.9) 12 months (1.9 6.7 10.016 15.1 7.Company Profile IDBI BANK Global aspirations India Equity Research l February 7.0 12. Relative Performance (%) Sensex Stock Stock over Sensex 1 month 11.parikh@edelcap.8 2.1 0.4% and NNPA to clock 1.8 17.com Suruchi Chaudhary +91-22-6623 3316 suruchi. Advances are likely to grow slower than the industry while NIMs are likely to come in flat. the bank is confident that slippages should stabilize going forward.359 41.7 17. BSE/NSE (‘000) : 2.2% by FY13E. Nilesh Parikh +91-22.2 64.1 11.0 * Promoters pledged shares (% of share in issue) : 3.9 3. FIs & Banks : 15. CMP : INR 106 Target Price : NA 52-week range (INR) : 153 / 77 Share in issue (mn) : 984. Restructuring pipeline includes accounts of Air India and 3i Infotech likely to come up in either Q4FY12 or Q1FY13.

9 1.454 1.0 5.6 103 32.5 8.193 145.095 515.017 14.6 4.2 5.9 12.1 98.139 540.126 9.269 8.0 34.314 7.2 27.315 142.547 10.771 6.3 0.804.3 28.981 233.426 82.4 30.573 1.8 17.2 6.676.8 47.3) 17.1 40.9 116.7 4.9 24.0 1.Investment profits Net revenues Operating expense .9) (0.6) 0.9 7.1 26.9 3.5 1.3 10.9) (0.8 0.6) (0.311 10.Post Conference Notes .318.7 8.271 48.8 0.1 113.1 0.3 10.2 7.289 20.2 3.4 94 24.6 1.034.742 14.6 7.7 6.0 113 13.8 FY08 FY09 FY10 FY11 10.564 17.057 13.644 1.7 4.683 24.578 18.447 136 10.0 39.311 14.315 2.8 1.5 8.248 7.2) 43.9 7.8 85.421 44.040 1.704.264 16.416 43.810 6.2 Growth metrics (%) Year to March FY08 FY09 FY10 FY11 NII growth Fees growth Opex growth PPOP growth PPP growth Provisions growth PAT growth (0.830 46.7 6.1 2.6 Yield on advances Yield on investments Yield on assets Net interest margins Cost of funds Cost of deposits Cost of borrowings Spread Cost-income Tax rate 45 (INR mn) As on 31st March FY08 Liabilities Equity capital Reserves Net worth Sub bonds/pref cap Deposits Borrowings Other liabilities Total Assets Loans Investments Gilts Others Cash & equi Fixed Assets Other Assets Total Balance sheet ratios (%) Credit growth Deposit growth EA growth SLR ratio C-D ratio Low-cost deposits Gross NPA ratio Net NPA ratio Provision coverage Incremental Slippage Net NPA / Equity Capital Adequacy .8) 0.0 Operating ratios (%) Year to March FY08 FY09 FY10 FY11 9.613 130.704.248 7.229 0 0 729.8 23.Day 1 Financial Statements Balance sheet Income statement Year to March Interest income Interest expenses Net Interest income Non interest income .180 ROA decomposition (%) Year to March Net Interest Income/Assets Fees/Assets Investment profits/Assets Net revenues/Assets Operating Expense/Assets Provisions/Assets Taxes/Assets Total Costs/Assets ROA Equity/Assets ROAE Valuation parameters Year to March EPS EPS growth (%) Book value per share Adjusted Book Value/share Price/Earnings Price/ BV Price/ ABV Dividend yield (%) 29.225 930 7.9 8.585 8.8 11.7 152.2 84.5 4.0) (0.Tier 1 Book Value FY09 FY10 FY11 7.570.127 1.6 116.0 75.941 477.6 20.0 5.9 1.734 67.503 16.278 69.8 94.5 11.570 10.9 116.863 67.7 70.474 11.315 2.770 11.382.277 5.889 93.2 (27.8 0.052 22.2 37.1 202.127 1.3) (2.708 52.178 75.9 1.828 207.3 88.947 45.547 1.1 14.621 82.2 1.468 11.7 1.2 20.2 (0.202 64.432 1.0 13.295 10.1 49.8 0.8 37.019 1.288.7 15.363 2.0 11.817 2.454 1.2 7.4 17.8 16.8 23.5 20.6 60.295 7.1 39.561 23.8) (0.9 Edelweiss Securities Limited Edelweiss Securities Limited .265 12.Employee exp .697 52.7 93.517.1 1.492 87.9 33.8 1.Fee & forex income .856 60.231 125.0 7.9) (0.2 0.769 3.1 129 FY08 FY09 FY10 FY11 0.1 2.7 102.1 0.0) 0.007 116.8 1.744 27.579 18.6 6.0 24.854 1.4 0.126 394.125 22.719 43.245 608.336 3.228 2.588 112.0 1.644 6.3 7.Misc.008 142.0) (1.318.1 10.0 68.8 12.262 1.124.795 4.6 1.8 23.7 128.1) (1.4 2.4 15.3 7.982 74.5 7.307 16.8 6.208 73.8 6.585 11.980 1.5 156.283 22.7 0.1) (1.446 10.228 2.6 6.638 8.439 8.2 1.Investment depreciation .592 11.858 386.0 13.104 49.3 117.2 7.1 91.2 6.0 33.Loan loss provisions .2 77.7 17.6 0.757 8.644 14.6 1.Other opex Preprovision profit Provisions .8 0.200 94.9 1.1 1.7 52.5 99.354 28.7 93.9 7.9 12.3 9.180 822.7 (1.7 102.595 1.9 0.9) (0.5 14.2 1.7 0.8 83.517.5 15.Other provisions PBT Taxes PAT Reported PAT EPS DPS Payout ratio (%) (INR mn) FY08 FY09 FY10 FY11 80.846 5.9 0.687 1.661 7.680 4.0 22.9 11.1 8.3 (0.8 6.837 18.259 14.316 103.4 1.449 1.3) (0.0 24.282 41.6 12.0 (0.016 13.908 1.359 9.8 1.5 24.588 3.979 10.3) 0.9 16.4 11.4 14.2 0.0 2.716 3.1 15.6) (26.2 0.1 2.4 1.692 7.6 54.6 8.283 1.1 186.2 12.255 126.826 1.2 1.263 61.4 1.249 9.6 8.503 16.288.4) 57.621 6.438 2.1 2.7 35.4 0.6 39.140 407.4 7. income .2 20.7 248.9 (0.3 30.8 2.337 5.010 1.

2 11. US ophthalmic market is estimated to be around USD4bn and dominated by players like Alcon.com.com Edelweiss Securities Limited .3 25.8) 16.6 Edelweiss Research is also available on www. Sensex Stock Stock over Sensex (6.2 10.2 644 511 12.2 3 months 0.com Perin Ail +91-22-6620 3032 perin.6 5.3 12. CMP : INR 418 Target Price : NA 52-week range (INR) : 485 / 360 Share in issue (mn) : 12.5 (0. Santen and Bausch & Lomb. 2012 Pharmaceuticals Key takeaways EDELWEISS RATINGS Domestic formulation market: A key growth driver Absolute Rating NOT RATED Domestic formulation business.3 14.1) Financials Year to March FY08 FY09 FY10 FY11 Revenues (INR mn) Rev. Bloomberg EDEL <GO>.garg@edelcap.6 12.3 M cap (INR bn/USD mn) : 5 / 102 Avg.8 12 months (1.022 13. B: INDR IN) Betting on strategic alliance to tap global opportunities To tap the rowing opportunity in sterile space.3 34.8) 2. Thomson First Call.7 5.8 Nil Over dependency in acute segment in the domestic market. Allegran.ali@edelcap.1 13.3 14. BSE/NSE (‘000) : 4.4 12.edelresearch.3 4.835 20. which contributes 67% to total revenues. the tie up with Aspen is for 30 emerging markets and largely in sterile segment. Key risks Share Holding Pattern (%) Promoters* : 61. Manoj Garg +91-22-6623 3302 manoj.3 34. In addition to tie up with Watson and Aspen. Similarly.BO. has been a key growth driver for the company. Indoco has entered into a strategic alliance with Watson for US market and Aspen for emerging markets.1 9.1 MFs. Indoco has a fairly large presence in the acute segment (antibiotic being the largest segment for the company) and it is expanding presence in high growth chronic segment by venturing into high growth segments of CVS.9 11. 1 month 11. Relative Performance (%) Change in pricing policy could have negative impact.8 NM 16.6 21. FIs & Banks : 14. diabetics and pain management.3 462 314 12. Indoco has identified around 10-12 products in opthal space (USD1bn opportunity) out of which 5-6 ANDAs have already been filed (expect initial launches in FY14E).1 FIIs : Others : 22.6 4.3 41.8 6.0 * Promoters pledged shares (% of share in issue) : 2.551 35.7 Focus on ophthalmic segment Indoco is focusing on the ophthalmic segment in regulated markets as well as emerging markets.Company Profile INDOCO REMEDIES Building blocks for future growth India Equity Research l February 7. Reuters and Factset.9 (1.4 3. MARKET DATA (R : INRM.5) Regulatory risks in the US.3 25.3 537 422 12. the company has also set up a JV with Amneal Pharmaceuticals. Daily Vol. growth (%) EBITDA (INR mn) Net profit (INR mn) Share outstanding (mn) EPS (INR) EPS growth (%) Diluted P/E (x) EV/EBITDA (x) ROE (%) 2.624 NM 409 317 12.

2 FY08 FY09 FY10 (INR mn) FY11 317 78 12 407 (112) 295 (152) 143 314 112 11 436 (59) 377 (302) 76 422 121 13 555 (77) 478 (481) (3) 511 135 15 660 (239) 421 (807) (386) 47 (INR mn) As on 31st March Equity capital Reserves & surplus Shareholders funds Secured loans Borrowings Sources of funds Gross block Depreciation Net block Capital work in progress Total fixed assets Inventories Sundry debtors Cash and equivalents Other current assets Total current assets Sundry creditors and others Provisions Total CL & provisions Net current assets Net deferred tax Uses of funds Adjusted BV per share (INR) Ratios Year to March ROAE (%) (on adjusted profits) ROACE (%) Inventory days Debtors days Payable days Cash conversion cycle Current ratio Debt/EBITDA Interest coverage Fixed assets t/o (x) Debt/equity Valuation parameters Year to March Diluted EPS (INR) Y-o-Y growth (%) CEPS Diluted P/E (x) Price/BV (x) EV/Sales (x) EV/EBITDA (X) FY08 FY09 FY10 FY11 123 2.3 34.3 12.3 FY08 FY09 FY10 FY11 25.3 14.8 NM 32.662 2.5 86.4 12.835 2.8 86.502 2.7 13.5 13.1 1.022 1.9 34.772 533 1.8) 13.1 3.0 12.3 63 82 58 87 3.624 Direct costs 1.922 525 1.126 822 2.2 0.8 0.8 Diluted equity shares (mn) 12 Dividend payout (%) 21.543 221 121 2.6 Common size metrics as % of net revenues Year to March FY08 Operating expenses Depreciation and Amortization Interest expenditure EBITDA margins Net profit margins Growth metrics (%) Year to March Revenues EBITDA PBT Net profit EPS Cash flow statement Year to March Net profit Depreciation Deferred tax Gross cash flow Less:Changes in WC Operating cash flow Less: Capex Free cash flow 84.6 16.684 709 164 873 1.0) (26.2 21.503 920 80 4.886 235 123 2.2 11.3 0.0 0.983 3.6 12 20.6 13.1 9.735 443 1.097 3.8) 34.182 636 1.4 4.2 1.974 305 2.540 452 1.5 1.0 8.0 0.1 1.1 1.8 2.6 25.1 12.2 1.371 (219) 2.3 10.0) 35.1 30.215 EBITDA 409 Depreciation & amortisation 78 EBIT 332 Interest expenses 36 Other income 25 Profit before tax 320 Provision for tax 20 Core profit 301 Extraordinary items (16) Profit after tax 317 PAT after minority interest 317 Adjusted net profit 317 EPS (INR) basic 25.8 1.106 570 91 3.373 4.729 (243) 3.0 5.7 FY09 FY10 FY11 87.5 10.0 2.1 4.4 11.2 20.785 399 158 3.5 12 21.0) (26.511 636 146 782 1.8 0.5 11.1 61 69 54 77 3.279 691 907 376 537 2.3 16.Post Conference Notes .4 15.1 16.5 0.1 31.1 41.650 (230) 3.1 2.6 21.343 2.4 (0.502 366 FY08 FY09 FY10 FY11 11.343 584 1.2 9.181 3.1 2.0 Tax rate (%) 6.233 521 63 583 1.190 644 135 510 24 80 566 55 511 0 511 511 511 41.766 2.2 0.886 2.421 2.078 161 309 1.0 9.343 272 123 2.959 833 2.2 62 150 72 140 3.4 1.991 517 104 621 1.1 1.811 (257) 4.0) (31.7 3.003 290 415 2.6 12.3 34.0 1.2 11.124 Employee costs 325 Other expenses 765 Total operating expenses 2.716 18 1.8) (0.948 804 918 271 691 2.4 1.3 44.190 474 1.1 1.7 2.0) (28.2 0.3 12 21.759 163 1.2 34.0 0.0 3.1 FY08 FY09 FY10 FY11 (19.2 21.551 1.3 20.9 3.380 3.2 52.6 0.7 12.5 54 103 54 104 3.4 3.089 462 112 350 59 39 331 17 314 0 314 314 314 25.3 1.3 10.2 12.676 702 1.0 2.485 537 121 416 29 45 431 10 421 (1) 422 422 422 34.3 Edelweiss Securities Limited Edelweiss Securities Limited .5 (0.Day 1 Financial Statements Balance sheet Income statement (INR mn) Year to March FY08 FY09 FY10 FY11 Income from operations 2.766 306 123 3.

Kunal Sangoi +91-22. BSE/NSE (‘000) : 25.8 4.9 MFs.000 visitors and revenue base of ~INR100mn.2 19.agarwal@edelcap. 2012 IT Key takeaways EDELWEISS 4D RATINGS Info Edge (IEL) highlighted that growth in collections continues to remain weak primarily due to slowdown in the domestic economy as high correlation exists with the absolute GDP growth level and its delta. Shiksha.5) 2.7 20.6623 3370 kunal.Company Profile INFOEDGE INDIA Growth to be impacted in near term India Equity Research l February 7.5 1. It highlighted that the number of registered brokers has doubled over the past two years (healthy sign).362 1. As various businesses come out of the recent slowdown we see recruitment industry to grow significantly as it is highly correlated to the economic health of the growth of domestic corporate sector. With lead in the online recruitment market (through Naukri. IEL highlighted that to improve the realization in Naukri.8 41.684 25. Absolute Rating REDUCE Rating Relative to Sector Underperformer Risk Rating Relative to Sector Medium Sector Relative to Market Equalweight MARKET DATA (R : INED.0 26.com Edelweiss Securities Limited . Financials (Standalone) Year to March FY10 FY11 FY12E FY13E Revenues (INR mn) Rev.4 1.314 54.3 4.2 31. FIs & Banks : Investment conclusion FIIs : 26. Earlier.0 6. Bloomberg EDEL <GO>.8 50.0 17.com) and presence in the online classified space has the potential to establish a market leading position and grab large pie of increasing online adoption.com (Times Group) is also emerging as key competitor here.4 Nifty EW IT Index (1.121 54.9 16.6623 3474 sandip.322 (5.com is gaining increased student acceptance with 500.6 (13. On the education segment.7 21.edelresearch.6620 3147 omkar.936 26.com.1 2.1 Share Holding Pattern (%) Promoters* : 53.6 M cap (INR bn/USD mn) : 35 / 701 Avg.681 1.5 3. licence pricing has time limitation that now has second usage filter. Others : 10. Magicbrick.4 18.1) (3.com Sandip Agarwal +91-22.4 977 840 55 15. 9.5 33.8 (7.5 21.1 IEL is a long term play on the internet space in India.6 22. Management continues to be optimistic on its online real estate business as it has seen stronger adoption of the online medium by broker community.4 49.sangoi@edelcap.5 Edelweiss Research is also available on www.hadkar@edelcap.9 31.7) 0. We expect IEL’s earnings growth at 25% CAGR over FY11-13E.3 (3.9) 12 months Strong profitability from investee companies. Reuters and Factset. It shared that it will continue to invest in marketing 99acres. Daily Vol.com Omkar Hadkar +91-22.400 19.8 24.BO. Thomson First Call.com with budgeted INR100mn-120mn and also add to its 250 people on ground sales team.6 * Promoters pledged shares (% of share in issue) : Key risks 1 month Nil PRICE Performance (%) Stock 3 months Faster than anticipated scale up of non-recruitment segments. B: INFOE IN) CMP : INR 645 Target Price : INR 600 52-week range (INR) : 772 / 460 Share in issue (mn) : 54.7) 62. but IEL believes the scalable revenue model is yet to be proven.3) 666 598 58 10.7 9.com it has also started capping the usage on a per licence basis and adding pay per use revenue model. growth (%) EBITDA (INR mn) Net profit (INR mn) Shares outstanding (mn) Diluted EPS (INR) EPS growth (%) Diluted PE (x) EV/EBITDA (x) ROAE (%) 2.

7 13.445 Total shareholders funds 3.314 54.2 EPS (INR) diluted 10.936 1.7 0.8 0.7 0.2 10.9 5.2 21.9 0.194 Application of funds 3.684 1.374 29 890 332 557 154 2.0 9.787 124 FY10 FY11 FY12E FY13E 18.4 8.796 122 1.9 30.6 2. 598 Shares outstanding (mn) 58.5 6.0 31.3 CEPS (INR) 12.5 41.6 15.649 61 250 2.1 20.1 4.0 24.0 24.0 61.351 7 16 4.6 6 139 (134) 1.4 0. int.8 25. int.121 1.7) 26.787 29 1.4 46.0 23.5 49.188 400 788 52 840 840 54.9 8.1 15.Day 1 Financial Statements Balance sheet (Consolidated) Income statement (Standalone) Year to March (INR mn) FY10 FY11 FY12E FY13E Revenues 2.322 Cost of revenues 960 Gross profit 1.4 15.0 26.474 100 548 31 6.7 20.0 28.281 5.4 20.1 42.1 21.240 554 686 200 4.8 13.8 64. Asset 0 Gross fixed assets 581 Less: Accum.096 49 As on 31st March (INR mn) FY10 FY11 FY12E FY13E Equity share capital 273 Share premium account 28 Reserves 3.551 410 1.3 0.704 380 347 727 977 71 906 1 283 1.5 54.961 647 1.374 80 547 31 4.8 7.2 22.0 13.285 334 1.2 19.4 23.4 7.4 58.4 12.3 (3.6 13.0 10.9 1.076 149 200 2.4 10 145 (134) 1.8 24.7 20.474 29 1.0 11.362 S&M expenses 374 G&A expenses 322 Total SG&A expenses 696 EBITDA 666 Depreciation & Amortization 61 EBIT 605 Interest expense 1 Other income 320 Profit before tax 925 Tax 317 Core profit 607 Extraordinary income/(loss) (38) Profit after tax 569 Min.458 16 5.2 6.121 54.959 1.192 6.7 19.2 35.233 1.437 2.9 16.562 117 1.746 Borrowings 6 Minority interest Sources of funds 3.791 Debtors 80 Loans and advances 219 Total current assets 3.0 16.034 (188) 1.7 22.8 26.8 39.0 4.4 26.6 17.2 Ratios Year to March ROAE (%) ROACE (%) Debtors (days) Payable (days) Cash conversion cycle Current ratio Fixed assets turnover (x) Total asset turnover(x) Equity turnover(x) Valuation parameters Year to March Diluted EPS (INR) Y-o-Y growth (%) CEPS (INR) Diluted P/E (x) Price/BV(x) EV/Revenues (x) Mcap/Revenues (x) EV/EBITDA (x) EV/EBITDA (x)+1 yr forward Dividend yield (%) Edelweiss Securities Limited Edelweiss Securities Limited .717 1.0 Dividend per share 0.314 1.681 130 1.2 17.8 24.8 33.0 54.3 0.9 36.0 14.799 6.7 21.752 Goodwill & Other Intan.355 72 290 3.8 5.426 1.038 429 609 1.7 41.678 1.0 58.4 49.918 1.4 9 119 (110) 3.752 Book value per share (BV) (INR) 64 546 31 3.693 572 440 1.0 10.140 423 716 175 3.880 5.0 17.7 FY10 FY11 FY12E FY13E 10.493 933 4.7 0.5 33.0 Revenues EBITDA EBIT PBT Net profit Diluted EPS Cash flow statement Year to March Net profit Depreciation Others Gross cash flow Less:Changes in WC Operating cash flow Less: Capex Free cash flow FY10 FY11 FY12E (INR mn) FY13E 598 61 (304) 355 (22) 376 44 332 840 71 (413) 498 (540) 1.1 17.4 1.7 0.4 38.0 10.6 21.4 34.5 16.1 30. & others .314 1.0 37.0 26.707 2.5 8.089 271 818 1.8 0.4 Dividend (%) 3.0 62.214 59 2. depreciation 287 Net fixed assets 294 Capital WIP 69 Investments 1.5 21.paid/(recd.0 26.1 6.8 21.2 29.7 49.8 61.358 135 1.641 59 2.9 14 135 (121) 1.0 4.2 EPS (INR) basic 10.9 Growth metrics (%) Year to March FY10 FY11 FY12E FY13E (5.5 0.5 4.774 4.014 59 3.2 24.5 61.771 16 6.0 14.8 10.121 77 (334) 864 (224) 1.5 Dividend pay out (%) 3.619 498 1.5 33.6 6.4 54.2 Common size metrics as % of net revenues Year to March FY10 FY11 FY12E FY13E Cost of revenues Gross margin G&A expenses S&M expenses SG&A expenses EBITDA margin EBIT margin Net profit margins 41.7 0.4 2.247 517 368 885 1.7) 12.9 31.2 50.0 38.5 41.012 1.8 15.162 Deferred tax asset 34 Cash & bank balances 2.1 (3.5 40.400 1.9 4.3 30.0 34.7 26.5 39.7 28.362 77 1.Post Conference Notes .090 Sundry creditors 812 Provisions 84 Total current liabilities 896 Working capital 2.314 130 (410) 1.6 15.3) 2.9 6.3 33.121 1.4 0.1 10.3 Diluted shares (mn) 58.221 125 1.9 3.) (28) Net profit after min.

com Edelweiss Securities Limited .com.shah@edelcap.641.450 12.7 9. Being an NBFC. Investment conclusion Factoring in higher principal investments we have revised up our FY12E earnings 5%.805 9. Thomson First Call. book (x) ROAE (%) FY10 FY11 FY12E FY13E 21.1) (6.212 11. Bloomberg EDEL <GO>. Key risks There are risks of margin compression.4040 7579 kunal.2) (7.180 10. RoE is likely to remain subdued at ~12% due to front-ended capital raising.787 8.751 10.890 17.849 15. Management does not expect GNPL to cross 1% in the worst case scenario over the next 12-18 months.8 Others : 16.5 M cap (INR bn/USD mn) : 199 / 3.4063 5470 nilesh. The stock is currently trading 1. We further lower our loan growth assumption to ~18% CAGR from 21% earlier due to slowdown in fresh sanctions coupled with issues in the power sector and are building in lower fee-based income. Our SOTP fair value for the stock stands at INR153 per share. BSE/NSE (‘000) : 8. Large ticket lending makes IDFC’s loan book riskier than other banks.174 11. Hence. as the infrastructure financing space is keenly contested.6 15. B: IDFC IN) CMP : INR 136 Target Price : INR 153 52-week range (INR) : 167 / 90 Share in issue (mn) : 1.5 1.8 14.edelresearch.0 29.511 12.4 11. Reuters and Factset.1 25. Despite this.9 0.4 33. largely supported by refinancing opportunities and traction in the telecom sector.1 15. IDFC is dependent on wholesale funding.9 Share Holding Pattern (%) Promoters* : MFs. Absolute Rating HOLD Rating Relative to Sector Performer Risk Rating Relative to Sector Medium Sector Relative to Market Equalweight MARKET DATA (R : IDFC. 2012 Banking and Financial Services Key takeaways EDELWEISS 4D RATINGS Loan book growth to be at 20% in FY12 and FY13 higher than the initial guidance of 15%. high interest rates will remain a risk. revenue can be lumpy in nature (especially in investment banking and principal investment book).0 FIIs : 45.8 1 month 35.7 0.2) 12 months Financials Year to March Revenues (INR mn) Rev growth (%) Net int. Management indicated that it will focus on multi-dimensional transactions (spreads+fees) and high yielding non-infra deals which will provide some cushion to earnings.1 24.5 1.com Suruchi Chaudhary +91-22-6623 3316 suruchi.070 35.6 12.Company Profile INFRASTRUCTURE DEVELOPMENT FINANCE Growth focus India Equity Research l February 7.5 11. FIs & Banks : 37.8 16.0 13.9 (12.3 3.9 16. Daily Vol.666 17. NPA occurrence due to large ticket size can dent its future earnings.4 20. Kunal Shah +91-22.3 * Promoters pledged shares (% of share in issue) : Nil PRICE Performance (%) Stock Nifty EW BFSI Index 15.7 Edelweiss Research is also available on www.710 8.8 7.BO.6 3 months 2.parikh@edelcap.4x FY13E (net of subs value of INR19). income (INR mn) Net profit (INR mn) Shares outstanding (mn) Diluted EPS (INR) EPS growth (%) Diluted P/E (x) Price to adj.2 41.4 12. Management expects to report INR800mn in Q3 from the stake sale in the AMC.963 Avg.463. As it now generates more than 40% of non-interest income.6 16.5 1. Margins to be stable to improving as rates cycles reverses and management expects to remain with long term averages.0 16.614 5.728 13.7 2.com Nilesh Parikh +91-22.470 20.chaudhary@edelcap.

8 2.8 1.3 12. BV (x) Dividend yield (%) Edelweiss Securities Limited Edelweiss Securities Limited .5 1.397 803 29.040 35.754 1.889 65 (6) (10) 461.8 16.Employee exp 3.5 40.0 1.4 1.4 16.7 27.2 Dil.0 20.0 3.110 Income from operations 21.072 .277 22 13 0.3 0.666 8.7 0.2 FY10 FY11 FY12E FY13E 3.890 .525 424.1 8.6 47.8 2.9 23.658 24.237 1.6 14.Fee & forex income 2.301 Basic EPS (INR) 8.939 335.6 3.500 2.237 15.3 20.831 1.5 FY10 FY11 FY12E FY13E 9.845 2.1 21.0 6.340 2.8 2.8 1.0 12.849 9.1 10.511 33.1 2.444 249.805 26 12.420 Disbursements (INR mn) 129.1 2.0 35.Investment advisory fee 1.5 1.1 1.393 3.620 Disburs.704 16.291 Taxes 3.0 3.300 2.004 50.2 47.502 28.6 1.8 20.876 5.890 29.108 475.6 6.3 97.7 21.5 FY10 FY11 FY12E FY13E 24.212 26 15.1 76.728 26 17.223 20.8 7.480 883 33.Post Conference Notes .4 0.3 0.560 . book value per share (INR) Diluted P/E (x) Price/ BV (x) Price/ Adj.0 12.599 15.9 22.500 6.2 DPS (INR) 1.085 54. to sanction ratio (%) 43 Disbursements growth (%) 60 Sanctions growth (%) 195 427.748 23.1 8.928 62.561 482 2.509 10.118 1.5 10.8 16.100 2.6 5.3 8.311 46.1 20.6 77.715 Interest expended 19.0 12.931 41.831 12.325 23.084 666.1 27.542 376.677 PAT 10.1 21.557 22.3 0.2 3.0 1.6 8.5 65.070 Operating expenses 5.615 Basic number of shares (mn) 1.2 46.3) 41.535 Net interest income 11.262 12.470 25.461 8.9 14.982 2.4 18 0.948 666.5 13.5 2.7 15.5 97.500 6.5 31.509 11.309 16.4 0.450 9.6 4.754 17.511 7.3 1.500 258.224 26.1 2.5 12.803 4.085 54.1 1.2 50.321 2.Other opex 2.4 1.9 26.277 250.103 14.Asset management fee 2.0 25. interest 1 PAT after minority interest 10.2 23.890 .301 Diluted EPS (INR) 8.611 30.1 0.180 Non interest income 9.6 1.9) 29.7 3.0 76.2 44.265 24.332 299.5 55.740 45.5 11.9 28.006 22.541 3.070 Net revenues 21.4 5.7 9.9 53.963 20.859 527 3.5 Growth metrics (%) Year to March Net interest income Net revenues growth Opex growth PPP growth Provisions growth PAT growth Operating ratios (%) Year to March Yield on assets Yield on advances Cost of funds Net interest margins Cost-income Tax rate (INR mn) As on 31st March Liabilities Equity capital Share premium Reserves & surplus Net worth Preference capital Subordinate debt Secured loans Unsecured loans Total liabilities ASSETS Loans Investments Current assets Current liabilities Net current assets Fixed assets (net block) Total assets Balance sheet ratios (%) Loan growth EA growth Gross NPA ratio Net NPA ratio Provision coverage CAR FY10 FY11 FY12E FY13E 13.8 1.6 1.020 63 106 40 384.4 49. number of shares (mn) 1.460 25.875 16.282 16.4 27.509 11.542 356.509 10.6 16./min.238 44.417 35.830 6.740 2.3 0.7 17.4 12.144 89.2 0.160 267.041 2.Depreciation /amortisation 406 .8 3.614 Share of asso.330 .2 12.298 PBT 14.461 8.525 438.481 .866 65 20 20 51 Diluted EPS (INR) EPS growth (%) Book value per share (INR) Adj.6 (5.8 7.500 6.007 26.5 2.004 Preprovision profit 15.002 512.4) 16.210 564.9 1.480 1.4 1.791 3.5 1.7 FY10 FY11 FY12E FY13E 8.4 13.8 22.7 2.890 6.540 475.928 76.871 112.732 17.2 41.533 19.6 1.5 ROA decomposition (%) Year to March Net interest income/assets Non interest income/assets Investment gains/assets Net revenues/assets Operating expense/Assets Provisions/Assets Taxes/Assets Total costs/Assets ROA Equity/Assets ROAE Valuation parameters Year to March Sanctions and disbursements Year to March FY10 FY11 FY12E FY13E Sanctions (INR mn) 304.8 1.460 6.609 47.1 15.4 42 0.5 26.1 10.5 2.523 69.0 87.310 20.0 53.0 0.5 Dividend pay out (%) 12.3 1.585 132.903 564.9 18 0.926 17.9 13.3 80.644 13.4 1.5 1.149 2.7 12.588 Provisions 1.9 1.2) 18.020 2.5 1.1 4.1 11.109 335.9 (2.905 16.346 17.615 Reported PAT 10.484 15.403 16.998 12.Investment profits 3.9 22.956 402 1.150 81.1 (25.9 87.0 12.6 0.Day 1 Financial Statements Balance sheet Income statement Year to March (INR mn) FY10 FY11 FY12E FY13E Interest income 30.5 10.816 146.057 70.8 18.159 34.1 7.4 3.1 (15.1 3.2 3.665 15.002 534.470 5.3 23.

3 15.com Santosh Hiredesai +91-22-6620 3027 santosh.4) (7.7 12.1 12. Bloomberg EDEL <GO>. Absolute Rating HOLD Rating Relative to Sector Outperformer Risk Rating Relative to Sector High Sector Relative to Market Underweight MARKET DATA (R : JSWE.BO.com Edelweiss Securities Limited .4) 76. The ad-hoc Barmer tariff is ~INR3/kwh which should be ~ INR4/kwh to earn regulated return. Shankar K +91-22-4040 7412 shankar.7 MFs.0 /kwh in phases starting June 2012. HP and Barmer expansion are not expected before FY17/18. Reuters and Factset.8 PRICE Performance (%) Stock Nifty EW Metals and Mining Index 37. and sharp fall in merchant prices.1 10.7 FIIs : 3.1 0.3/kwh from the existing INR4. The company has stopped supplying to TN and UP due to payment related issues. growth (%) EBITDA (INR mn) Net profit (INR mn) Shares outstanding (mn) EPS (INR) EPS growth (%) P/E (x) EV/EBITDA (x) ROAE (%) FY10 FY11 FY12E FY13E 23. 2012 Power Key takeaways EDELWEISS 4D RATINGS Management indicated that Q4FY12 earnings will be better due to capacity addition in Barmer as well as favourable forex movement.5) Financials Year to March Revenue (INR mn) Rev.3 12.com. decline in INR/USD rates as well as higher blending of Indonesian coal ~70% compared to existing ~60%.197 39. Long term merchant prices are expected to trade in the INR4. FIs & Banks : 5. It is not facing any payment issues from Karnataka (despite the state restricting external power sales) and Maharashtra.0 80.3 (3.3 510.745 Avg.062 6.3–5.0 24.6) 11.2 Key risks Adverse regulatory ruling. Bengal. 1 month 3 months 12 months 5.982 1.4 10.640 0.3 9. The JV with Toshiba (20% held by JSW Energy) is expected to start operations in 2013. Post the final tariff approval in Barmer (Rajasthan) apart from 300 MW that is being sold at INR3.25–4.6 14.331.640 4.532 1. BSE/NSE (‘000) : 1. Equipment for further expansions by JSW Energy will be sourced through this JV. Kuter.k@edelcap.1) (14. B: JSW IN) CMP : INR 53 Target Price : INR 51 52-week range (INR) : 87 / 35 Share in issue (mn) : 1. post which there would be a lull for 3-4 years as the expansions at Chattisgarh.7 (86.555 34.6 /kwh to MSEDCL from the Ratnagiri plant the company is making profits in all its other units.5 /kwh range.0 42.Company Profile JSW ENERGY Power play India Equity Research l February 7.418 1.640 5.189 7.642 8.640.6 (9.4 2.0 Edelweiss Research is also available on www.1 12.1 M cap (INR bn/USD mn) : 88 / 1.3 28.509 1.944 82.640 4.2 12.6 6.144 1.9 16.7 12.7 * Promoters pledged shares (% of share in issue) : 21. Daily Vol.9 Others : 13.hiredesai@edelcap.1 57. The only capacity addition will be the 540 MW over the next 6 months.1) (39. Investment conclusion We believe earnings are likely to improve going forward post the regulatory approval.5 Share Holding Pattern (%) Promoters* : 76. In Vijaynagar the tariffs are likely to get revised to INR 5.0 14.551 28. Thomson First Call. sustained higher international coal prices.edelresearch.

0 1.774 164.003 101.733 1.3 28.55 4.0) (86.218 14.224 7.907 166.003 27.5 57.144 1.026 115.842 9.468 8.541 20.6 (9.57 3.272 37.401 47.376 155.817 29.006 78.44 2.4) 4.8 12.852 16.524 1.401 40.144 0 1.006 (2.5 1.8 10.0 65.2 2.0 51.597 452 1.3 2 6.3 1 52 1 (10.4 171.8) 0.708 156.2 5.670 13.189 1.7 1.640 4 1. and Amortisation EBIT Interest Other income PBT Provision for tax Core profit Profit before minority int.622 9.2 12.509 1.640 5 1 19.302 15.072 102.813 486 2.348 7.640 5 1.9 1.714 6.485 148.3 93.173 6.836 6.131 26.135 28.527 6.344 3.6) 5.507) 0 127.468 1.977 43.0 10.080 (6.709 1.368 (19.401 39.2 76.332 9.3 12.2 6.6 16.666 6.1 1.640 1 1 143.837 742 8.1 12.4 2 7.7 (86.985 (23.232 6.418 2.698 1.944 24.290) 20.248 96.842 5.214 77.640 4 1 23.957 37.120 171 155.817 36.829 12.980 1.957 31.802 77.2 9.9 13.551 10.637 9.0 35.295 4.84 6.037 9.4 1.418 8.105 (735) 6.401 43.696 1.499 17.1 16.1 36.233 11.812 52.668 6.4 11.274 13.716 6.9 Equity capital Reserves & surplus Shareholders funds Secured loans Deferred revenues Borrowings Sources of funds Gross block Depreciation Net block Capital work in progress Total fixed assets Investments Inventories Sundry debtors Cash and equivalents Other current assets Total current assets Sundry cred.028 6.1 12.144 1.668 12.640 4.0 8.Day 1 Financial Statements Balance sheet Income statement (INR mn) Year to March Total revenues Cost of Operations Staff cost Other operating expenses Total expenditure EBITDA Depre.2 FY10 FY11 FY12E (INR mn) FY13E 7.183 14.665 1.5 Adjusted Debt/Equity 1.362 12.270 171 166.714 2.0 10. and others Provisions Total CL & provisions Net current assets Net deferred tax Uses of funds Adj.717 151.509 0 7.9 63.741 18.563 8.1 6.459 15.974 4.0 12.842 8.302 15.9 25.714 29.936 35.418 (1) 8.3 510.1 34.679 61.482 19.974 7.892 28.401 31.9 12.1 16.105 6.2 510.3 14.4 (9.640 5 1.981 763 1.4) (86.503 29.048 3.2 137.4 5.980 14.259 3.128 8.030 311 1.2 FY10 FY11 FY12E FY13E ROAE (%) 24.977 36.062 8.640 1 1.774 34.767 64.4 19.020 11.982 0 6.5 Common size metrics as % of net revenues Year to March FY10 FY11 FY12E FY13E 48.080 141.3 129.0 ROACE (%) 11.364 56.3 12. BV per share (INR) Ratios Year to March Valuation parameters Year to March Diluted EPS (INR) Y-o-Y growth (%) CEPS (INR) Diluted P/E (x) Price/BV(x) EV/Sales (x) EV/EBITDA (x) Dividend Yield (%) Edelweiss Securities Limited Edelweiss Securities Limited .470 31.515) 8.982 8.6 1 16.121 1.982 6.958 108. Minority interest Profit after minority interest Shares outstanding ( mn ) EPS (INR) basic Diluted shares (mn) EPS (INR) fully diluted Dividend per share Dividend payout (%) FY10 FY11 FY12E FY13E 23.0 (7.7 FY10 FY11 FY12E FY13E 28.1 9.427 73.982 9.6 Current ratio 1 Debtors (days) 32 Average fixed assets t/o (x) 1 Average working capital t/o (x) (2.990 4.079 96.2 1.1 444.046 915 8.346 (886) 27.5 2 3.954 86.701 127.642 2.765 88.325 1.7 1.425 5.2 Debt / Equity 2 Debt/EBITDA 6.3 80.815 7.828 2.668 2.272 174.669 953 5.7 510.401 44.144 5.957 20.717 7.982 1.3) 0.602 56.6 16.976 23.4) 39.427 34.233 19.197 44.7 1.8 9.0 5.509 1.1) (84.1) 0.370 21.361 6.3 15.4 1.202 6.717 8.703 8.2 10.7 FY10 FY11 FY12E FY13E 4.8 31.Post Conference Notes .079 171 166.682 4.6 6.418 1.9 4.461 12.360 4.779 6.7 2.023 14.1) Average capital employed t/o (x) 0.6 74.476) 1.691 Operating expenses Depreciation and Amortization Interest expenditure EBITDA margins Net profit margins Growth metrics (%) Year to March Revenues EBITDA PBT Net profit EPS Cash flow statement Year to March Net profit Depreciation Others Gross cash flow Less:Changes in WC Operating cash flow Less: Capex Free cash flow 53 (INR mn) As on 31st March FY10 FY11 FY12E FY13E 16.9 0.6) 82.1 12.361 10.532 5.555 36.977 29.485 166.731 154.4 42.6 1.8 1 44 1 (9.509 7.6 1 54 1 (15.

6) 9. JSW Ispat’s EBITDA/t is expected to improve to INR4.000 led by sourcing lower cost power from JSW Energy.002 26.baji@edelcap.4 239. Estimated capex for 3mtpa capacity is USD3bn over three years. Investment conclusion Steel margins expected to expand in FY13E led by declining raw material.5 9. Reuters and Factset.7 160. Financials Year to March Revenues (INR mn) Rev.8 (53.572 19.233 223 90.1 Edelweiss Research is also available on www.4 51.7 0.627 16. West Bengal project to be launched only post raw material security Risk Rating Relative to Sector Medium Sector Relative to Market Underweight MARKET DATA (R : JSTL. 4mtpa pellet plant and 0. 2012 Metals & Mining Key takeaways EDELWEISS 4D RATINGS Expects iron ore mining in Karnataka to restart Absolute Rating BUY Rating Relative to Sector Outperformer JSW Steel (JSW) believes the Supreme Court will allow the first category of mines (no irregularities) to start first with 10-12mtpa iron ore production followed by the second category (minor irregularities) with another 12-15mtpa iron ore production.1) (10.Company Profile JSW STEEL Focused on growth India Equity Research l February 7. FY13E to see pick up with steel demand growing 7% plus (atleast equal to GDP growth). Indian steel demand growth to pick up in FY13 JSW expects Indian steel demand to grow ~5% in FY12E (below GDP growth rate).000-8000/t.1 4.3 19.1 7.2 mtpa completed in Q2FY12.9 285.5) Weakness in global steel demand leading to lower international prices without proportionate decline in input costs.311 21.759 223 34. Expect partial restart of iron ore mining in Karnataka.9 345.5) (7.7) 21. FIs & Banks : FIIs : 20.454 19.2 12 months Stock Nifty EW Metals and Mining Index 30. EBITDA/t is expected to rise to INR7.2 4. Thomson First Call.953 20. Over 18-24 months.5 9. B: JSTL IN) The company plans to launch the West Bengal steel project (3mtpa in Phase I) only post obtaining clearances for its coal mines in West Bengal project and secure linkages for iron ore from Orissa.707 15. post implementation of the 1mtpa coke oven.751 223 75.com Edelweiss Securities Limited .298 Avg. Daily Vol.com Navin Sahadeo +91-22-6623 3473 navin.8 * Promoters pledged shares (% of share in issue) : 18.1 (30.1 13.2 Others : 36.7 MFs.201 187 81.320.0 PRICE Performance (%) 1 month Key risks 3 months Unavailability of iron ore due to current mining ban in Karnataka. JSW Ispat EBITDA to improve going forward CMP : INR 743 Target Price : INR 775 52-week range (INR) : 1.9 6.3 3.com.1 46. growth (%) EBITDA (INR mn) Adjusted net profit (INR mn) Basic shares outstanding (mn) Diluted EPS (INR) EPS growth (%) Diluted P/E (x) EV/EBITDA (x) ROAE (%) FY10 FY11 FY12E FY13E 189.8 8. 5.238 7.0 67.sahadeo@edelcap. Bloomberg EDEL <GO>. JSW’s volumes to increase >25% YoY in FY13E led by capacity expansion of 3.1 (7.3 9.6 17.edelresearch.4 6. Share Holding Pattern (%) Promoters* : 37.3 681.8mtpa CRM. Prasad Baji +91-22-4040 7415 prasad. BSE/NSE (‘000) : 2.015 / 464 Share in issue (mn) : 223. modest uptick of INR 8001.0 40.1 M cap (INR bn/USD mn) : 166 / 3.BO.7 12.6 In the coming two quarters.000/t in steel prices and lower coking coal costs.

568 64.361 38.2 0.660 37.7 1.6 1.842 132.000 Provision for tax 6.233 223 91 223 91 10 14 30.572 Accretion to stock (171) Raw material costs 112.9 0.932 21.3 6. C.0 1.016 164.300 Shareholders funds 92.077 323.976 FCCB interest post-tax 774 Adjusted PAT 15.1 80.358 67.333 20.303 138.282 Total operating expenses 148.7 1.454 0 185.107 65.153 17.360 Profit before tax 22.481 Reserves & surplus 87.1 12.094 163.751 223 75 223 75 12 20 32.896 62.6 0.588 45.841 158.3 21.597 31.868 6.698 24.652 728 2.263 139.835 19.097 357.4 9.201 Basic sha.823 16.979) 1.958 45.749) 58.8 (7.1 (7.8 (53.058 15.0 Valuation parameters Year to March FY10 FY11 FY12E FY13E Diluted EPS (INR) Y-o-Y growth (%) CEPS (INR) Diluted P/E (x) Price/BV(x) Market cap/Sales (x) EV/Sales (x) EV/EBITDA (x) Dividend yield (%) 81.343 234.080 Other income 5.981 23.393 Net block 214.835 46.6 7.090 Investments 6.533 Extraordinary income/(loss) Profit after tax 15.450 (16.4 10.2 80.6 111 13 226 (102) 2.6) 19.617) 5.238 19.921 Depreciation 53.9 4.482 15.0 1.995 20.987 EBIT 27.1 597.Post Conference Notes .888 192.557 11.802 Goodwill 8.4 1.9 1.811 48.138 2.5 11.840 24.4 107 13 230 (110) 3.992 Loans and advances 16.570 426.480 95.676 7.604 2.5 154.7 0.031 6.747 416.0) (53.7 1.473 21.5 6.184 10.540 15.5 0.369 19. Operating cash flow Less: Capex Free cash flow 24.322 4.932 21.8 FY10 FY11 FY12E (INR mn) FY13E 15.649 Total CL & provisions 80.762 10.3 Ratios Year to March ROAE (%) ROACE (%) Inventory (days) Debtors (days) Payable (days) Cash conversion cycle (days) Debt/EBITDA Current ratio Debt/ Equity Adjusted debt/Equity Edelweiss Securities Limited Edelweiss Securities Limited .217 51.2 6.530 55 (INR mn) As on 31st March FY10 FY11 FY12E FY13E Equity capital.085 27.076 17.662 165.019 3.597 8.256 391. and amortisation 12.3 160.587 135.015 53.9 5.417 7.7 539.5 0.095 28.483 Employee expenses 4.181 (26.Day 1 Financial Statements Balance sheet Income statement Year to March (INR mn) FY10 FY11 FY12E FY13E Net revenue 189.3 75.3 1.085 32.533 Minority interest (332) Share of profit of associates 111 Profit after minority int.067 26.368 12.9 1.030 9.403 (16.0 0.0 32.7 160.070 1.7 1.027) Uses of funds 276.014 (10.865 EBITDA 40.0 19.7 6.155 380.6 8.5 6.9 (33.730 Minority interest 2.078 Provisions 2. 15.467 Core profit 15.9 1.475 SGA and other expenses 21.293 121.0 0.485 (181) (4.365) 355.978) 154.1 1.375 46.9 4.1 17.986 121.349 2.439 13.162 23.762 10.645 183.599 140.667 Sundry debtors 6.151 (197) (3.256 372.111 185.953 21.6 19.650 Sources of funds 276.568 44.649 102.8 21.879) 1.568 67.161 123.4 FY11 FY12E FY13E 78.0 0.720 Interest expenses 11.841 175.282 Deferred tax asset 2.911 13.138 Gross block 267.617 60.369 227 7.302 55.311 0 216.976 12.7 1.747 721 2.473 241 20.0 6.631 181.842 159.9 10.5 4.0 86.839 87.9 681.541 Unsecured loans 27.4 239.5 94 11 260 (155) 4.302 41.299 22.147 6.205 1.707 Depr.1 1.570 800 FY10 FY11 FY12E FY13E 19.256 355.816) 391.726 137.266 (9.038 Inventories 28.097 9.193) 20.1 FY10 FY11 FY12E FY13E 19.839 68.323 4.341 14.0 4.022 28.958 45.700 Sundry creditors and others 78.6) 148.138 Book value per share (INR) 480 2.744 2.5 26.613 27.759 223 35 223 35 10 215 27.187 Deferred tax liability 19.118 18.9 1.652 326.8 9.Voting shares 2.358 23.118 15.7) 121.3 4.030 Total current assets 54.762 10.608) 372.528 CWIP 69.7 13.137 28.5 6.020 4.002 (6.731 23.559 12.594 (239) 707 17.190 Borrowings 161.540 277.3 681.5 8.562 Total fixed assets 284.710 33.1 1.8 189.5 9.9 9.1 6.6 375.4 90 12 224 (121) 3.627 15.412 1.183 29.987 9.1 1.950 35.0 Common size metrics as % of net revenues Year to March FY10 Operating expenses Depreciation Interest expenditure EBITDA margins Net profit margins Growth metrics (%) Year to March Revenues EBITDA PBT Net profit EPS Cash flow statement Year to March Net profit Depreciation Others Gross cash flow Less: Changes in W.554 11.1 6.652 317.1 12.187 63.804 4.7 7.3 90.537 6.795 Power and freight 10.6 34.6 115.932 21.2) (69.817 329.1 14.728 43.839 109.485 16.768 (6.727 Net current assets (26.9 82.454 2.outstanding (mn) 187 Basic EPS 81 Diluted shares (mn) 187 Diluted EPS 81 Dividend per share (INR) 10 Dividend payout (%) 15 Tax rate (%) 29.542 2.732 258.964 Cash and equivalents 3.9 345.884 4.540 789 16.5 0.582 16.995 106.594 285.571 Secured loans 134.7) 21.

Company Profile JYOTHY LABORATORIES Pan-India player India Equity Research l February 7.6 3. Normal production was restored post December 27.0 12. Jyothy Laboratories (Jyothy) does not anticipate any rural slowdown in Ujala and expects to grow at ~7% in FY12E and FY13E.5 2.2008 to March31. 2012 Mescellaneous Key takeaways EDELWEISS RATINGS In Ujala volume growth was up ~10% YoY and value growth of 4% YoY. with new campaign spending ~10% on advertisement.8) (17. Jyothy is contemplating ~15% price hike across Henkel products as most of them are under-priced.0 * Promoters pledged shares (% of share in issue) : Nil Relative Performance (%) Key risks Sensex Stock Maxo performance at risk due to stiff competition from market leader.1) (15. Commission savings of 5-7% would accrue due to change in distribution structure.4 22.9 6. growth (%) EBITDA (INR mn) Net profit (INR mn) Share outstanding (mn) EPS (INR) EPS growth (%) Diluted P/E (x) EV/EBITDA (x) ROAE (%) 3. Jyothy being a price follower has risk to its margin. Due to strike at Karaikal plant from September 26 till December 26 the company lost out 62 days of production.edelresearch.3 5.mehta@edelcap. Promoters* : 65.3 15.674 4.1 721 744 73 10. Slowdown in rural demand due to lower government spending or a monsoon failure could impact Jyothy’s revenues significantly. Share Holding Pattern (%) Change in distribution structure: The company has changed its distribution structure from 3 tiered to 2 tiered since the beginning of the current financial year.2009 as the company is about to change its accounting year Edelweiss Research is also available on www.3 779 688 78 8. are likely to be realigned effective from April 1. costing ~INR270mn on topline. Abneesh Roy +91 22 6620 3141 abneesh.roy@edelcap.5 Others : 8.4 FIIs : 12. Also.3) Integration of Henkel takes longer than expected.6 M cap (INR bn/USD mn) : 14 / 275 Entire product portfolio of 10 brands.9 (13.398 66.5 4. BSE/NSE (‘000) : 142. Thomson First Call. the company lost three percentage points in market share on trailing 12months period owing to aggressive competition at the trade level. from July1.e. Daily Vol. MARKET DATA (R : JYOI.976 (5.3 (82. affecting EBITDA of ~INR70mn. the impact of price increase was only ~5%).com Edelweiss Securities Limited . Bloomberg EDEL <GO>. Jyothy has gained some market share and has become leader in Kerala in this segment.7 16. Financials Year to March FY08 FY09* FY10 FY11 Revenues (INR mn) Rev. Avg.2) 5.2 93.7 2. FIs & Banks : 14.2) 506 384 73 5. Stock over Sensex 1 month 11. Absolute Rating NOT RATED In Maxo. sales for first half were tepid as super stockists who held 70-80 days inventory liquidated the same.9 (13.8 13. the company effected 7-8% average price hike across products (however.com.851 (3.BO.4 * The figure of FY09 is for 9 months i. B: JYL IN) CMP : INR 172 Target Price : NA 52-week range (INR) : 254 / 125 Share in issue (mn) : 80.5 In Q3FY12.2 12 months (1. 2012.5) 19.9 16. Reuters and Factset.5 3 months 0.1 MFs.0 3.7 6.0 5. three from Jyothy and seven from Henkel.com Harsh Mehta +91 22 4063 5543 harsh.9) 32.1 6.8) 588 449 15 30. Exo grew 38% YoY contributing ~18% to topline.

097 4.007 (163) 7.345 506 75 431 7 58 482 108 374 374 (10) 384 384 5.4 39 48 73 14 2.7 1.0 16.25 93.239 (55) 199 (255) 57 (INR mn) As on 31st March Equity capital Reserves & surplus Shareholders funds Secured loans Unsecured loans Borrowings Sources of funds Gross block Depreciation Net block Capital work in progress Total fixed assets Investments Inventories Sundry debtors Cash and equivalents Other current assets Total current assets Sundry creditors and others Provisions Total CL & provisions Net current assets Net deferred tax Uses of funds Adj.227 351 3.2 93.9 12.2 2.3 8.0) (11.6 * The figure of FY09 is for 9 months i.Day 1 Financial Statements Balance sheet Income statement Year to March (INR mn) FY08 FY09 FY10 FY11 Income from operations 3.1 Tax rate (%) 25.8 16.9 Diluted equity shares (mn) 15 Dividend payout (%) 29.059 81.4 5.677 721 124 597 17 376 956 215 741 (1) 741 (3) 744 744 10.6 88.8 0.2 0.0 60.6 19.1 22.9 30.809 548 5.94 (13.3 16.464 (105) 3.3 73 3.976 Direct costs 1.9 12.4 12.9) 66.4 13.4 81 6.3 2.1 15.9 1.260 2.311 689 2 691 7.336 41 2.377 0 730 707 1.3 11.1 9.8) 45.878 129 2 131 4.3 98.530 710 1.476 47.0) (13.9) 6.884 368 222 590 1.9 0.0 74.7 1.0 Interest expenditure 0.86 (13.3 73 37.895 779 130 648 22 185 812 154 657 657 (30) 688 688 8.053 2.248 1.9 0.4 0.4 6.114 2 470 429 1.294 (83) 3.4 2.8 15.4 41 30 70 1 3.7 88.3 2.805 3.8 45 32 70 8 3.8 0.0 3.476 429 2.059 3.182 3.2) (3.2) 41.851 2.336 2.8 73 3.957 Employee costs 467 Other expenses 964 Total operating expenses 3.9 Common size metrics as % of net revenues Year to March FY08 Operating expenses 85.7 3.930 547 2.5 5.2) (13.388 EBITDA 588 Depreciation and amortisation 80 EBIT 508 Interest expenses 7 Other income 164 Profit before tax 666 Provision for tax 167 Core profit 499 Extraordinary items (50) Profit after tax 449 Less: Minority interests PAT after minority interest 449 Adjusted net profit 449 EPS (INR) diluted 30.1 (15.396 3.2 Depreciation and Amortization 2.260 224.043 5 479 254 960 191 1.2 (3.768 (133) 4.0 0.114 709 2.4 98.476 2.1 FY08 FY09* FY10 FY11 30.013 53.674 3.0 FY09 FY10 FY11 86.9 0.019 221 2.3 Growth metrics (%) Year to March Revenues EBITDA PBT Net profit EPS Cash flow statement Year to March Net profit Depreciation Deferred tax Others Gross cash flow Less:Changes in WC Operating cash flow Less: Capex Free cash flow FY08 FY09 FY10 FY11 (5.0 3.e.2 13.350 358 1.607 607 694 1.1) (82.310 774 1.437 5.1 42.0 8.28 (82.6) (25.950 94 2.3 11.4 3.405 202 2.0 5.5) 10.469 5 5 3.Post Conference Notes .104 538 559 1.230 6.2 1.6 0.8 22.9 0.5) FY08 FY09 FY10 (INR mn) FY11 449 80 22 13 564 (2) 566 925 (359) 384 75 22 (11) 469 170 299 129 170 744 124 28 (83) 813 304 509 456 53 688 130 30 1.0 22.7 9.398 3.8 Net profit margins 11.6 3.2008 to March31.9 78 58. from July1.9 19.016 786 462 1.3 73 39.811 5. BV per share (INR) Ratios Year to March ROAE (%) (on adjusted profits) ROACE (%) Inventory days Debtors days Payable days Cash conversion cycle Current ratio Debt/EBITDA Interest coverage Fixed assets t/o (x) Debt/equity Valuation parameters Year to March Diluted EPS (INR) Y-o-Y growth (%) CEPS Diluted P/E (x) Price/BV (x) EV/Sales (x) EV/EBITDA (X) FY08 FY09 FY10 FY11 73 3.2) (13.9 34 32 62 4 3.5 0.073 442 830 3.3 11.7 10.2 0.5 6.013 2.184 2.9) (27.7 2.140 422 253 676 1.2009 as the company is about to change its accounting year Edelweiss Securities Limited Edelweiss Securities Limited .2 0.004 110 2.2 35.1 2.6 32.9 4.255 5 5 3.3 FY08 FY09 FY10 FY11 4.1 1.2 EBITDA margins 14.0 2.

B: KJC IN) CMP : INR 139 Target Price : NA 52-week range (INR) : 138 / 60 Share in issue (mn) : 73.com Edelweiss Securities Limited . The company currently has 800 distributors including 100 exclusive kajaria outlets.0 Share Holding Pattern (%) Promoters* : 53.3 949 89 74 1.5 11.4 Edelweiss Research is also available on www. Relative Performance (%) The unorganized tile industry could affect price realizations and reduce market share.8 29.1 6. 2012 Mescellaneous Key takeaways EDELWEISS RATINGS Management expects Kajaria Ceramics (Kajaria) to grow at 25% next year primarily driven by 20% volume growth and better product mix.9 14. 13% from East and 14% from West. FIs & Banks : 8.2 69.0 3 months 0.7 68. Reuters and Factset.2 -40. 55% from North.523 29.5 MFs.Company Profile KAJARIA CERAMICS Adding sheen India Equity Research l February 7.6 FIIs : 7. demonstrating strong pricing power. Daily Vol. The company plans to increase distribution network by 150 outlets every year.9 302. The industry is growing at 16-18% primarily driven by 10-11% volume growth. Financials Year to March Revenues (INR mn) Rev. Thomson First Call.1 16. The company expects standalone volume sales of 27mn sq ft on an installed capacity of 28. growth (%) EBITDA (INR mn) Net profit (INR mn) Share outstanding (mn) EPS (INR) EPS growth (%) Diluted P/E (x) EV/EBITDA (x) ROE (%) FY08 FY09 FY10 FY11 5.7 39.355 10.BO.8 20. Niket Shah +91-22-4063 5421 niket.8) 102. The company has in excess of 700 SKUs currently and sells its products at 5-7% premium to competition.5 1.479 607 74 8.2 Others : 30.1 16. thereby driving growth. increase of share of value-added products and reduction in gas prices.edelresearch.4 9. It derives 18% of sales from South.3 To compete with low-cost Chinese imports.5 819 150 74 2.shah@edelcap.The ratio currently stands at 50:50. Replacement demand contributes around 20% to sales and balance 80% of sales are to new demand.8 28.0 12 months (1. Any slowdown in real estate will directly impact sales volume.6mn sq ft.5 10.8 20.6 7.com.9 28.1 20.5 104.149 359 74 4.649 32.6 1.6 M cap (INR bn/USD mn) : 20 / 203 Avg.0 95.1 5. Kajaria derives 70% of its revenue from retail sales and balance from institutional sales. Kajaria expects to improve the ratio of large size tiles / small sized tiles by 300bpls every year .7 * Promoters pledged shares (% of share in issue) : Nil Key risks Growth in demand is linked to the health of the construction sector. the company will have to reduce margins. Absolute Rating NOT RATED MARKET DATA (R : KAJR. Bloomberg EDEL <GO>. BSE/NSE (‘000) : 233. Including outsourcing and imports the company expects total volume sales at 40mn sq ft in FY12E.8 114. Sensex Stock Stock over Sensex 1 month 11.9 8. The company plans to spend INR500mn in FY12E on advertisement.027 21. which will dent profitability. The company expects margin to improve by 25-50bps every year on account of better product mix.

519 743 5.587.6 2.6 15.2 FY08 FY09 FY10 (INR mn) FY11 NA NA NA NA NA NA NA NA 91.4 11.198 216 1.1 6.7 8.9 77 7.2 14.0 95.001 4.9 11.30 267.2 9.790 1 90 (602) 30 909 1.1 14.385 827 2.0 7.872 5. expenses Total expenditure EBITDA margin EBIT margin Net profit margins Growth metrics (%) Year to March Revenues EBITDA EBIT PBT Net profit EPS Cash flow statement Year to March Net profit Depreciation Others Gross cash flow Less:Changes in WC Cash from operations Less: Capex Free cash flow FY09 FY10 FY11 50.70) 1.210 4. 144 Shares outstanding (mn) 75 EPS (INR) basic 2.8 54.5 25.9 114.4 1.1 8.2 28.9 36 50 (14) 2.0 32 64 (32) 1.0 4.277 0 34 (535) 79 678 1.061 599 168 705 77 6.563 4.8 Common size metrics as % of net revenues Year to March FY08 Materials Power & fuel cost Staff cost Other manufacturing expenses Selling & admin.0 84.2 69.0 15.5 2.9 8.5 302.6 FY08 FY09 FY10 FY11 2.1 13.6 68.5 9.893 2.4 69.130 389 2.6 14.9 28.1 20.319 Materials 2.011 1.4 48.2 68.000 2.8 299.40 (85.414 1.0 2.603 1.0 303.015 1.226 2.90 99.9 7.0 4.2 16.2 85.988 3.672 Power & fuel cost 786 Staff cost 404 Other manufacturing expenses 140 Selling & Admin.6 2.7 73.6 84.0 CEPS (INR) 5.8 ROAE (%) ROACE (%) Debtors (days) Payable (days) Cash conversion cycle Current ratio Fixed assets turnover (x) Total asset turnover(x) Equity turnover(x) Valuation parameters Year to March Diluted EPS (INR) Y-o-Y growth (%) CEPS Diluted P/E (x) Price/BV (x) EV/Sales (x) EV/EBITDA (X) Edelweiss Securities Limited Edelweiss Securities Limited .590 949 249 700 582 10 128 39 89 2 91 91 75 1.2 4.9 14.40 1.519 3.149 267 882 425 57 514 156 359 5 363 363 76 4.9 20.872 21 147 1.522 5.180 331 43 892 285 607 11 618 618 77 7.8 7. depreciation Net fixed assets Capital WIP Investments Deferred tax asset Cash & bank balances Debtors Inventories Loans and advances Total current assets Sundry creditors Provisions Total current liabilities Working capital Application of funds BV per share (INR) Ratios Year to March FY08 FY09 FY10 FY11 147 1.212 1.5 7.535 917 492 134 533 (20) 5.5 14.3 33.7 2.5 1.3 9.60 48 59 (INR mn) As on 31st March Equity share capital Reserves Total shareholders funds Borrowings Sources of funds Gross fixed assets Less: Accum.20 1.402 1.475 295 1.9 4.0 8.6 21.2 29.436 1.539 3.746 1.1 26.5 12.403 756 2.3 4.9 28.486 5.922 4.Day 1 Financial Statements Balance sheet Income statement Year to March (INR mn) FY08 FY09 FY10 FY11 Revenue 5.079 2.1 4.360 940 728 202 754 27 8.4 FY08 FY09 FY10 FY11 NA NA NA NA NA NA 23.738 3.4 2.4 39 44 (5) 3.448 25 34 (549) 45 773 1.5 5. expenses 479 Miscellaneous expenses 18 Total expenditure 4.6 4.901 1.968 830 42 872 2.3 2.5 15.361 3.0 14.4 8.4 6.1 8.252 4.515 808 3.5 10.0 84.7) (41.00 674.1 (36.10 446.0 Diluted shares (mn) 75 EPS (INR) diluted 2.539 460 2.80 295.621 3.4 8.4) (40.373 4.00 631 617.587.90 87.90) 254.20 (804.2 -40.6 9.2 1.10 446.522 25 147 2.8 4.500 EBITDA 819 Depreciation 236 EBIT 583 Interest expense 419 Other income 36 Profit before tax 200 Tax 50 Core profit 150 Extraordinary income/(loss) (7) Profit after tax 144 Net profit after min.70 1.4 18.Post Conference Notes .6 12.3) 12.922 21 147 1.40 249.7 11.3 2.382 26 34 (522) 83 713 1.10 (499.7 76 4.2 75 1.9 302.7 5.7 16.549 3.023 29 FY08 FY09 FY10 FY11 5.2 6.9 56.077.00 254.6 1.1 2.0 1.3 2.4 15.977 1.90 167 363.474 1.077.539.795 748 46 793 2.263 2.40) 1.7 1.023 7.797 5. int.096 4.1 2.9 6.628 4.

Absolute Rating HOLD Rating Relative to Sector Performer Risk Rating Relative to Sector Medium Sector Relative to Market Underweight MARKET DATA (R : KECL.5 17.057 257 8.719 257 6.6 Edelweiss Research is also available on www.0 56. Amit Mahawar +91-22. currently.7 63. B: KECI IN) KEC expects cables margin to improve from 3% to 6% next year as it will shut down its Thane plant and start a new cable plant at Vadodara. It expects new business (water segment) to start contributing from Q4FY12.1) (25. Nil PRICE Performance (%) Key risks Stock Forex fluctuation could potentially impact margins for the company. Further. Key international markets like MENA and US will help optimize overall growth rate. growth (%) EBITDA (INR mn) Net profit (INR mn) Share outstanding (mn) EPS (INR) EPS growth (%) Diluted P/E (x) EV/EBITDA (x) ROE (%) FY10 FY11 FY12E FY13E 39.6 6.817 27.3 24.742 14.1 M cap (INR bn/USD mn) : 16 / 324 Avg.6 5.5) Financials . FIs & Banks : 39.5 9.9 7.3 (7.Company Profile KEC INTERNATIONAL Towering growth India Equity Research l February 7.4 25.625 2. Share Holding Pattern (%) Investment conclusion Promoters* : 42.7 (16. which is currently 10% of sales.mahawar@edelcap.1) (7.8 SAE utilization has increased from 60% to 80% now.com Rahul Gajare +91-22.1 3 months (5.1) 12 months (36.6 16.Consolidated Year to March Revenues (INR mn) Rev.3 5. Guidance for FY13 sales growth stands at 20%.165 257 8. The company stated that 5 business and 5 geographies are helping sustained order intake. 2. Bloomberg EDEL <GO>. However.0% range.4063 5561 rahul.082 14.5-9.4040 7418 swarnim.1) 0.com Edelweiss Securities Limited .4) 9.4 Nifty EW Cpital Goods Index 1 month 41. will rise once the large Kazakhstan order starts executing from Q4FY12. margins are under attack due to increase in competitive intensity and entry into new business vertical.maheshwari@edelcap. Daily Vol.979 14.0 8. it has balanced order mix between international and domestic orders.897 247 7.6 FIIs : Others : 16.gajare@edelcap.0 4. Further the PAT margins are sensitive to interest rates and any increase the same is likely to negatively impact the company.0 MFs.4 5.0 * Promoters pledged shares (% of share in issue) : We believe KEC has a robust order backlog and with higher order flows from Power Grid Corporation (PGCIL) expected. KEC being present in over 20 countries in international geographies.0 4. It expects SAE margins to drop to 13% from 15% now. We believe the company is likely to significantly benefit from increased order flows from PGCIL.6 28. Reuters and Factset.BO. Share in issue (mn) : 257.3 16. 2012 Engineering and Capital Goods Key takeaways EDELWEISS 4D RATINGS KEC International (KEC) expects sales growth improvement to continue on back of strong order book.0 6.com Swarnim Maheshwari +91-22. BSE/NSE (‘000) : 278. is expected to keep international orders flowing in.492 2.4040 7451 amit.069 1.edelresearch.774 1.5 4.6 44.3x to be largely maintained and working capital of 110 days to sustain.1 8.5 64.0 4. It targets margins in the 8. It will grow at a minimum industry growth rate of 10-15%. It expects net debt to equity at 1. SAE sales currently at INR175mn USD. CMP : INR 63 Target Price : INR 66 52-week range (INR) : 95 / 31 Power system. Thomson First Call.com.

6 5.322 15.750 (396) 2.057 2.813 0 4.7 Diluted equity shares (mn) 247 Dividend payout (%) 19.5 20.138 8.063 (497) 23.0 4.544 9.3 257 16.5 Edelweiss Securities Limited Edelweiss Securities Limited .6 3.289 1.798 Interest expenses 865 Other income 0 Profit before tax 2.689 Other expenses 3.3 2.788 10.643 14.0 23.7 9.0 20.543 31 514 8.429 58.5 3.6 27.806 392 10.6 1.142 6.057 8.614 4.132 3.724 44.8 3.5 3.1 FY10 FY11 FY12E FY13E 7.177 1.1 18.7 6.7 63.253 40.7 0.788 37 514 10.497 355 27.750 383 7.489 408 166 929 3.3 19.9 10.746 8.697 1.9 6.6 20.291 1.694 780 914 2.354 1.9 33 186 222 (3) 1.6 90.6 35.742 32.7 0.089 1.645 1.305 392 9.0 Common size metrics as % of net revenues Year to March FY10 Operating expenses Depreciation and Amortization Interest expenditure EBITDA margins Net profit margins Growth metrics (%) Year to March Revenues EBITDA PBT Net profit EPS Cash flow statement Year to March Net profit Depreciation Deferred tax Others Gross cash flow Less:Changes in WC Operating cash flow Less: Capex Free cash flow 89.232 34.6 1.138 2.071 12.513 50.095 5.5 13.760 52 FY10 FY11 FY12E FY13E 28.822 26.245 1.057 2.4 7.075 26 3.6 35.5 11.0 24.158 461 4.322 28.724 38.Post Conference Notes .287 5.4 10.151 2.3 6.926 40.9 90.138 2.6 4.6 0.852 (461) 15.5 5.132 2.992 2.676 7.5 4.1 8.5 9.016 392 8.952 9.813 0 3.681 5.541 6.438 15.4 4.6 1.0 257 17.9 FY10 FY11 FY12E FY13E 14.827 9.297 1.0 64.543 8.0 2.833 4.1 19.0 19.162 7.897 Adjusted net profit 1.544 499 0 0 3.450 678 3.3 44.4 1.408 0 3.144 499 5.382 2.Consolidated Balance sheet Income statement (INR mn) Year to March FY10 FY11 FY12E FY13E Income from operations 39.913 1.5 32 182 211 3 1.8 2.735 11.6 8.1 14.4 25.322 23.4 0.288 355 24.408 2.043 2.0 Tax rate (%) 35.883 1.0 8.598 17.5 9.249 14.6 2.699 24.7 8.934 Provision for tax 1.7 0.069 Depreciation & amortisation 270 EBIT 3.4 0.3 6.155 270 0 440 2.111 2.519 347 588 (242) 2.Day 1 Financial Statements .755 7.897 Profit after tax 1.057 2.697 2.1 63.052 4.357 2.3 3.2 31 179 202 7 1.287 46.7 1.5 65.599 1.466 14.897 PAT after minority interest 1.7 (16.2 8.867 15.897 EPS (INR) basic 7.760 13.2 6.096 27.6 18.724 35.1 29 177 219 (12) 1.5 1.366 8.037 Core profit 1.0 35.3 8.296 4.322 14.000 (455) 61 (INR mn) As on 31st March Equity capital Reserves & surplus Shareholders funds Secured loans Borrowings Sources of funds Gross block Depreciation Net block Capital work in progress Total fixed assets Goodwill Investments Inventories Sundry debtors Cash and equivalents Loand & Advances Total current assets Sundry creditors and others Provisions Total CL & provisions Net current assets Net deferred tax Uses of funds Adjusted BV per share (INR) Ratios Year to March ROAE (%) (on adjusted profits) ROACE (%) Inventory days Debtors days Payable days Cash conversion cycle Current ratio Debt/EBITDA Interest coverage Fixed assets t/o (x) Debt/equity Valuation parameters Year to March Diluted EPS (INR) Y-o-Y growth (%) CEPS Diluted P/E (x) Price/BV (x) EV/Sales (x) EV/EBITDA (X) FY10 FY11 FY12E FY13E 514 7.709 Employee costs 1.1 3.326 9.973 26.544 2.498 545 1.362 4.9 3.116 4.0 63.032 6.3 4.138 2.082 Direct costs 29.9 4.138 461 0 0 2.4) 8.625 408 4.0 FY10 FY11 FY12E (INR mn) FY13E 2.8 8.168 1.852 16.3 20.9 16.245 (497) 28.5 FY11 FY12E FY13E 89.544 2.9 34.924 13.190 556 17.9 3.217 1.701 28.133 0 19 2.873 22.8 2.5 6.071 44 514 12.498 19.248 561 22.340 2.1 55.2 10.813 0 3.2 0.544 2.6 2.762 0 3.1 1.1 0.616 Total operating expenses 35.359 26.9 2.0 10.4 6.7 2.822 14.809 13.9 257 13.198 2.014 EBITDA 4.866 2.057 (497) 26.

5 2. Asset quality continues to be under control and credit cost increase remains capped. However. Financials Year to March Net revenues (INR mn) Net rev growth (%) Net interest income(INR mn) Net profit (INR mn) Shares outstanding (mn) EPS (INR) EPS growth (%) Diluted P/E (x) Price to book (x) ROAE (%) FY10 FY11 FY12E FY13E 44.6x FY13E book and 20.074.1 (7.484 12.2 24.069 16.9 30.chaudhary@edelcap.BO. Capital market related businesses are at lower end of the trough.4040 7579 kunal. Daily Vol.5% of total deposits). Corporate banking loans to wind down in Q4FY12 (as witnessed historically).8 20.com Suruchi Chaudhary +91-22-6623 3316 suruchi. In banking business.8 14. Investment conclusion Financing business has been the key driver of earnings growth led by a robust advance growth. 2012 Banking and Financial Services Key takeaways EDELWEISS 4D RATINGS Consolidated advances to grow at 25-30% in FY12. Kunal Shah +91-22.5x earnings (excluding life insurance) while our SOTP fair value for the stock stands at INR427 per share for FY13E.9 9. we expect the growth to moderate and NIMs to be under pressure due to the recent savings bank deregulation and focus on quality corporate segment.com.4 MFs.892 Avg. Absolute Rating REDUCE Rating Relative to Sector Underperformer Risk Rating Relative to Sector Low Sector Relative to Market Equalweight MARKET DATA (R : KTKM . Has been resorting to forex borrowings where cost post currency hedging and interest rate swap provides benefit of 2.0%. BSE/NSE (‘000) : 1.parikh@edelcap. Retail segment: behavior of consumer is much better than previous cycle (even within secured segment itself).327 348 17. Traction in auto financing business continues. it has exhausted the limit of 50% of networth on the same.112 11.4 3.6 16. The management would continue to focus on low cost deposit base.031 368 21.7%.7 30.com Nilesh Parikh +91-22.2 4.2 14.687 19.edelresearch. Consequently.7%).8 1 month 8.2 53.4 41. Added INR9bn to savings deposit base (to 11.873 7.136 14. Insurance profitability primarily driven by surrender charges.2 Nil PRICE Performance (%) Stock Nifty EW BFSI Index 15.8 25.3 Share Holding Pattern (%) Promoters* : 45.951 368 20.3 14.6 26.3) 0. Will add 30 another branches in Q4FY12 (to 360 branches) and maintain guidance of 500 branches by CY13.8 Edelweiss Research is also available on www. The stock is currently trading at 2. will not see significant slowdown from this level.1) (6.0 Others : 22.257 17. Earnings of capital market related businesses continue to reel under pressure.6 M cap (INR bn/USD mn) : 397 / 7. The structural shift in product portfolio towards quality corporate loans and secured retail loans will continue. Bloomberg EDEL <GO>.6 3. it will either remain flat or will improve.shah@edelcap. Reuters and Factset. CASA deposit inched up 200bps to 28% (excluding sweep deposits of 6.8 7.com Edelweiss Securities Limited . Thomson First Call.848 34. consistently low credit costs and NIMs at 4.7 88.7 17.4063 5470 nilesh.209 368 26. FIs & Banks : FIIs : 27.0 50. on commercial financing side it will be cautious on construction equipment.4 * Promoters pledged shares (% of share in issue) : 5.1 19.5 35.6 3 months (0.Company Profile KOTAK MAHINDRA BANK Lying low India Equity Research l February 7.2) Key risks Growth momentum continues to be buoyant.2 63.9 12 months 26.5-3. B: KMB IN) CMP : INR 536 Target Price : INR 427 52-week range (INR) : 539 / 333 Share in issue (mn) : 739. on wholesale side big ticket loans in some sectors are being closely monitored.3 3.

926 5.4 3.559 (350) 19.3 1.7 14.7 2.603 22.6 20.2 2.2 5.0 5.239 58.3 18.650 19.464 465.8 Net interest income/Assets Fees/Assets Net revenues/Assets Operating expense/Assets Provisions/Assets Taxes/Assets Total costs/Assets ROA Equity/Assets ROAE Valuation parameters Year to March EPS (INR) EPS growth (%) Book value per share (INR) Adjusted Book Value/share Price/Earnings (x) Price/ BV (x) Price/ ABV Dividend yield (%) Price/Earnings (x)* Price/ BV (x)* 63 FY10 FY11 FY12E FY13E 3.4 161.4 6.6 2.3 2.9 14.362 (35) 12.836 80 50.7 2.976 15.Employee exp .6) 21.5 0.128 15.0 1.671 118.5 16.6 14.7 190.552 41.811 5.580 100 63.1 3.718 274.640 28.1 (3.327 17.6 10.3 1.415 196.504 30.Investment profits Net revenues Operating expense .684 119.873 27.798 80 53.136 125.3 2.074 207.481 75.701 141.804 12.029 465.2 5.7 3.650 46.136 19.906 640.570 15.0 4.4 21.782 869.3 16.0 9.3 1.931 869.093 23.4 24.8 144.381 (350) 16.643 18.074 27.2 2.2 5.328 135.4 0.2 2.8 3.Other opex Preprovision profit Provisions PBT Taxes PAT Extraordinaries Reported PAT EPS (INR) DPS (INR) Payout ratio (%) (INR mn) FY10 FY11 FY12E FY13E 45.209 9.5 3.0 4.483 729.0 4.848 21.061 23.446 29.140 27.364 14.5 23.9 17.Fee & forex income .181 (230) 14.537 8.4 (71.8 0.090 26.7 1.563 FY10 FY11 FY12E FY13E 6.8 8.015 151.5 0.7 0.7 3.069 18.9 165.031 21.813 729.893 138.542 396.9 17.3 20.139 178.746 13.470 108.200 11.9 26. income .7 88.7 58.385 169.7 8.2 4.951 20.2 1.3 4.Day 1 Financial Statements Balance sheet Income statement Year to March Interest income Interest expenses Net interest income Non interest income .0 2.098 5.484 19.2 18.807 12.718 27.156 16.0) 7.691 16.966 25.9 113.501 4.3 5.2 19.8 FY10 FY11 FY12E FY13E 17.Post Conference Notes .864 31.687 21.512 2.0 19.2 17.4 7.976 12.241 78.141 167.684 104.8 48.4 30.555 24.Misc.2 0.563 281.2) 6.2 4.058 4.8 100.524 162.5 5.450 19.9 22.168 5.257 31.8 2.0 0.6 146.1 109.7 4.9 5.989 90 44.4 (14.8 26.0 0.559 81.5 5.6 3.309 7.738 596.140 345.736 5.0 28.112 26.5 17.108 15.097 25.912 1.6 (INR mn) As on 31st March Liabilities Equity capital Reserves Net worth Sub bonds/pref cap Deposits Borrowings Other liabilities Total Assets Loans Investments Others Cash & equi Fixed assets Other assets Total assets ROA decomposition (%) Year to March Growth metrics (%) Year to March FY10 FY11 FY12E FY13E NII growth Fees growth Opex growth PPP growth Provisions growth PAT growth 26.0 94.4 20.781 11.1 7.722 3.285 4.890 5.302 29.060 4.8 16.250 3.3 14.0 90.582 35.1 19.155 3.9 0.882 17.865 28.096 514.4 24.368 596.8 9.6 * adj for insurance Edelweiss Securities Limited Edelweiss Securities Limited .209 26.684 137.8 81.1 24.933 29.3 191.2 5.000 30.938 152.5 2.3 28.091 1.566 123.832 185.4 4.6 5.037 8.8 167.1 2.

5 76.299 16.4 25. Larsen & Toubro (L&T) has lost orders such as NMDC coke oven battery due to difficult technology.910 43. bridges. hydrocarbons.8 Others : 48.1 622. IT has invested USD400mb in the shipyard which will be ready in next six months.4 19.698 8. Daily Vol. It has formed a JV with NPCIL for forgings where the company has invested USD400mn.4 15. Financials .0 17.3 0. B: LT IN) CMP : INR 1. but no major order has been booked as yet.3 17. Bloomberg EDEL <GO>. core infrastructure like roads.932 / 971 Share in issue (mn) : 611.4040 7418 swarnim. Godrej and NESCO are two infra projects worth INR10bn that are on hold in the order book and L&T has advances from them.3 10.528 54. BSE/NSE (‘000) : 2.2 (15. It mentioned that Power T&D business is steady in Middle East.4063 5561 rahul.1 Share Holding Pattern (%) Promoters* : MFs.com Edelweiss Securities Limited . It can make vessels upto 200 mtr in length and has tied up with MHI for high end vessels.6 17. Reuters and Factset.6 20.com Swarnim Maheshwari +91-22. Amit Mahawar +91-22. ports.504 52-week range (INR) : 1.8 723.3 9.142 19. The USD100bn Qatar FIFA ordering will start in next year.292.489 Avg.4 / 16.6 3 months 2. growth (%) EBITDA (INR mn) Net profit (INR mn) Share outstanding (mn) EPS (INR) EPS growth (%) Diluted P/E (x) EV/EBITDA (x) ROE (%) FY10 FY11 FY12E FY13E 439.0 13. Raw material cost and execution risk. power development and Larsen Realty.0 9.8 M cap (INR bn/USD mn) : 828.5 64.142 617 78.398 34. IDPL will be the first to hit the market for IPO. It also mentioned that the Hyderabad Metro is stuck in high court and the concession period has not started as yet although L&T has started with the pre-construction design.4 12.edelresearch. PRICE Performance (%) Stock Nifty EW Capital Goods Index 30. FIs & Banks : 37.mahawar@edelcap.5 1 month 34. The Jaypee Group may move the Karchana plant from Karchana to Bina.596 617 88. Diversified business dominance: L&T has a dominant position and market share in most operating verticals. Currently.BO.8 0. It has dedicated key business divisions with skilled manpower.5 Edelweiss Research is also available on www.maheshwari@edelcap.1) (16.4 86.3 98. industrial structures etc.0 520.891 18.5 13. 2012 Engineering and Capital Goods Key takeaways EDELWEISS 4D RATINGS Recently. Thomson First Call. NTPC bulk tenders and USD2bn ONGC order which it lost to NPCC Mc Dermott.7 14.354 Target Price : INR 1. Absolute Rating BUY Rating Relative to Sector Outperformer Risk Rating Relative to Sector Medium Sector Relative to Market Underweight MARKET DATA (R : LART.com Rahul Gajare +91-22.2 19.742 48.9) (7.3 0.4040 7451 amit. The company maintains that it is not qualified for mega billion dollars where margins would be low and focuses on sub billion USD project size where there is a fabrication yard locally available and OPM is in a comfortable range.gajare@edelcap.968 613 57. Aggressive pricing in ONGC tenders in the past nine months by smaller players like NPCC Mc Dermott and not by Samsung & Hyundai. It targets 20-25% of the order book from exports. power.9 23.Company Profile LARSEN & TOUBRO In a class of its own India Equity Research l February 7. INR57bn Karchana order is non-moving order.918 615 71.com.3 * Promoters pledged shares (% of share in issue) : Nil Investment conclusion Best equipped to ride infrastructure capex cycle: L&T is India’s largest infrastructure and EPC company with presence across major verticals like process.0 FIIs : 13. It expects no immediate relief in BTG ordering since coal problem will take more than two years to be resolved. L&T is currently evaluating the stake sale in IDPL.1 15.8) 12 months Key risks Economy slowdown.Consolidated Year to March Revenues (INR mn) Rev.

4 9.121 676.627 535.220 9.4 2.4 33.117 624.2 19.288 250.1 615 19.8 17.490 45.153 67.605 Interest expenses 6.3 23.400 Employee costs 30.656 236.366 121.642 263.508 9.4 7.4 2.117 330.396 281.4 13.1 15.844 47.8 12.600 126.167 411 1.188 28.6 7.109) 724.158 30.300 (52.388 54.9 85.0 FY10 FY11 FY12E FY13E 57.033 50.553 443.6 25.8 8.009 (3.637 43.4 13.585 Profit before tax 55.4 FY10 FY11 FY12E (INR mn) FY13E 54.9 622.8 3.8 3.623 23.1 Diluted equity shares (mn) 613 Dividend payout (%) 21.527 31.7 617 17.318 21.793 EBIT 54.508 Adjusted net profit 34.858 348 1.9 520.270 54.0 1.181 277.1 33.654 Other expenses 21.5 28.396 281.300 EBITDA 64.9 15.4 13.443 (3.2 Common size metrics as % of net revenues Year to March FY10 FY11 FY12E FY13E 85.4 1.6 29 107 146 (10) 1.400 86.5 1.2 Tax rate (%) 36.443 64.467 8.300 (69.534 761.4 31 122 148 4 1.5 1.286 10.8 7.242 11.110 (15.8 26.5 13.642 10.9 34.6 14.388 Core profit 34.8 25.596 17.782 125.347 28.179 208.287) 44.757) 8.3 7.285 11.271 Provision for tax 20.482 (3.109) 634.109) 676.5 FY10 FY11 FY12E FY13E 8.320 (1.596 89.596 54.708 209.324 40.142 48.270 10.637 92.142 79.530) (32.218 288.1 2.8 3.754 96.859 246.309 11.517 24.942) 154.134 129.398 Depreciation & amortisation 9.7 4.995 93.658 41.9 74.761 17.913 141.919 Other income 7.635 (3.1 14.833 719 44.Day 1 Financial Statements .077 303.086 8.247 83.621 36.528 17.540 Profit after tax 54.060 PAT after minority interest 54.142 459.000 23.318 142.Consolidated Balance sheet Income statement (INR mn) Year to March FY10 FY11 FY12E FY13E Income from operations 439.991 364.Post Conference Notes .440 412.299 538.1 617 18.4 78.742 15.4 10.3 2.476) 123.975) 156.0 1.3 2.513 44.3 13.000 9.433 417.506 234.973 54.312 23.4 21.503 32.246 Total operating expenses 375.0 3.1 17.020 30.7 28 100 117 11 1.2 26 95 137 (16) 1.582) 30.771 98.918 72.454 235.2 92.409 38.0 9.605 66.910 12.9 4.242 125.299 74.0 15.4 118.743 71.179 476 1.946 24.9 18.0 13.4 1.2 19.837) (7.280 33.6 13.523 221.2 723.779 47.9 7.9 2.865 48.279 23.7 86.4 86.085 42.942 (84.802 36.142 15.800 (23.270 977 1.658 48.081 (37.6 71.6 19.4 12.479 43.552 786 871 44.100 9.490 45.867) 68.218 249.184 189.216 160.1 14.5 19.7 1.205 402.243 26.755 9.8 6.6 9.6 14.477 25.793 (1.8 3.9 4.6 Ratios Year to March ROAE (%) (on adjusted profits) ROACE (%) Inventory days Debtors days Payable days Cash conversion cycle Current ratio Debt/EBITDA Interest coverage Fixed assets t/o (x) Debt/equity Valuation parameters Year to March Diluted EPS (INR) Y-o-Y growth (%) CEPS Diluted P/E (x) Price/BV (x) EV/Sales (x) EV/EBITDA (X) Edelweiss Securities Limited Edelweiss Securities Limited .637 12.312 224.490 45.312 550 FY10 FY11 FY12E FY13E 20.8 15.124 280.7 1.2 1.594 334.812 238.891 375.3 104.8 1.3 16.439 289.5 13.158 48.117 328.117 332.642 71.2 2.285 10.009 212.6 7.5 13.242 81.7 12.0 88.126 304.423 Less: Minority interests 975 Add: Share in profits of asso.809) 48.7 3.789 99.098 724.403 144.109) (64.689 179.260 634.644 261.195 349.712 355.396 281.285 12.576 667.968 EPS (INR) basic 58.761 Operating expenses Depreciation and Amortization Interest expenditure EBITDA margins Net profit margins Growth metrics (%) Year to March Revenues EBITDA PBT Net profit EPS Cash flow statement Year to March Net profit Depreciation Deferred tax Others Gross cash flow Less:Changes in WC Operating cash flow Less: Capex Free cash flow 65 (INR mn) As on 31st March Equity capital Reserves & surplus Shareholders funds Secured loans Deferred paymet liability Borrowings Minority Interest Sources of funds Gross block Depreciation Net block Capital work in progress Total fixed assets Investments Inventories Sundry debtors Cash and equivalents Loand & Advances Other current assets Total current assets Sundry creditors & others Provisions Total CL & provisions Net current assets Net deferred tax Uses of funds Adjusted BV per share (INR) FY10 FY11 FY12E FY13E 1.873 466.218 333.358 127.4 25.9 4.884 Extraordinary items 19.4 2.0 16.8 7.073 10.3 17.081 73.844 861 1.698 Direct costs 323.701) 155. 1.099 568.388 16.204 208.743 237.227 81.530) 466.131 247.982 76.167 205.216 (48.858 161.303 54.270 43.

1 9.2) Financials Year to March FY10 FY11 FY12E FY13E Net revenues (INR mn) Net rev growth (%) Net interest income(INR mn) Net profit (INR mn) Shares outstanding (mn) Diluted EPS (INR) EPS growth (%) Diluted P/E (x) Price to book (x) ROAE (%) 3.977.chaudhary@edelcap.4 * Promoters pledged shares (% of share in issue) : While we remain positive on its niche business model of collateralised lending. If there is a decline in gold prices.8 8.shah@edelcap.1) (6.parikh@edelcap.726 417 6. Bloomberg EDEL <GO>. Thomson First Call. minimum is 50% and maximum is 85%. regulatory risk. Daily Vol.4063 5470 nilesh. 10% to education and marriage each and 15% to working capital needs.3 0. BSE/NSE (‘000) : 1.2 5.6 15.2 1.827 417 3. volatility in gold prices and most importantly.com Nilesh Parikh +91-22.304 35.6 1.0 306. FIs & Banks : FIIs : 33.3 16.5 22.5mn was lying in escrow with PNB. RBI has raised an issue with respect to INR3mn issued by Manappuram Agro Foods and it will issue clarification in this respect.9 8.9 102.3 3. Kunal Shah +91-22. margin pressure.1 M cap (INR bn/USD mn) : 38 / 762 Avg. 14% as bridge loans for housing.0 22.0 Share Holding Pattern (%) Promoters* : 36.8 13. It will pass on operating leverage and funding cost benefit to customers in terms of lower yields to be equally competitive.9 (7.3 2. Demand and asset quality of gold loans is susceptible to price fluctuations of underlying collateral (gold).2 21.6 25. Reuters and Factset. management clarified that after being classified as a non-deposit taking NBFC in 2011.0 27.0 Others : 29. The company will be more focused on RoA profile.8 (15. Average LTV is 71%.413 96. Manappuram F inance (Manappuram) has not been issuing any public deposit and pending public deposits of INR12. ~30% of gold loans used for agri.173 417 8. Management is maintaining its guidance of INR135bn-140bn AUM by FY12 driven by improved productivity of branches added in the past one year and disbursements per branch can be ramped up to INR50mn as branches mature.Company Profile MANAPPURAM FINANCE Golden opportunity India Equity Research l February 7.7 Edelweiss Research is also available on www.8 3. customers may probably shift to higher LTV products thereby protecting yields to some extent. It terms of customer profile. generating RoEs of 4% plus.3 5.314 2.com.1 22.855 7.1) Competition intensity in gold loan financing is bound to rise .4040 7579 kunal.306 1.6 6.2 16.496 148.7 Nifty EW BFSI Index 14.5) 0. 2012 Banking and Financial Services Key takeaways EDELWEISS 4D RATINGS With respect to deposit issue raised by RBI.498 94. PRICE Performance (%) Key risks 1 month 3 months 12 months (13.197 170 2. Equalweight Stock 1.BO. B: MGFL IN) CMP : INR 46 Target Price : INR 67 52-week range (INR) : 71 / 41 Share in issue (mn) : 841. Investment conclusion Absolute Rating HOLD Rating Relative to Sector Performer Risk Rating Relative to Sector Medium Sector Relative to Market MARKET DATA (R : MNFL.com Suruchi Chaudhary +91-22-6623 3316 suruchi.3 MFs.4 66.com Edelweiss Securities Limited .edelresearch. we believe RoEs will be vulnerable to increased competition.162 5.3 26.6 26.

0 76.3 0.2 Price/ BV (x) 5.455 2.279 143.116 3.9 43.2 33.7) (9.0 61.5 14.038 (87) 11.8 0.1 70.1 17.5 0.759 569 7. BV (x) 5.7 44.8 7.702 2.2 70.6 2.008 18.7 0.4 0.6 13.6 34.054 2.779 43.120 404 17.453 536 57 859 1.4 10.0 FY10 FY11 FY12E FY13E 14. book value per share (INR) 8.6 15.0 6.4 66.7) 4.327 8.6 28.830 5.7 176.6 (21.3 2.8) (7.0 1.0 1.0 Price/ Adj.2 1.605 13.1 7.726 833.0 Adj.5) 5.094 133.1 0.239 1.1 18.0 15.8 7.406 19.4 833.506 63.9 15.6) (2.5 16.1 66.977 159.463 224 4.4) (2.2 0.279 23.1 16.774 1.9 Diluted P/E (x) 22.6 77.9 0.165 16.1 23.872 5.015 3.694 1.9 177.765 6.7 0.8 3.4 14.8 23.0 13. number of shares (mn) Diluted EPS (INR) DPS (INR) Payout ratio (%) Growth metrics (%) Year to March Operating income growth Net revenues growth Opex growth PPP growth Provisions growth PAT growth (INR mn) FY10 FY11 FY12E FY13E 4.3 19.880 826 7.3 35.3 12.448 11.8 14.3 8.506 834 18.5 20.328 4.5 7.7) 4.032 1.0 Dividend yield (%) 1.0 31.9 9.5 23.0 2.9 21.412 2.1 11.848 13.680 192.183 86.8 35.9 136.3 2.911 10.0 FY10 FY11 FY12E FY13E 100.106 0 1.5 98.077 31.171 1.5 6.0 589.8) 3.4) (9.4 0.0 46.250 2.620 282 4.848 404 14.5 33.8) (0.4 (5.3 47.197 1.4 0.9 Liabilities Equity capital Reserves Net worth Preference capital Subordinate debt Secured loans Unsecured loans Deferred tax liability Assignments Total liabilities Assets Loans Investments Current assets Current liabilities Net current assets Fixed assets (net block) Assignments Total assets Balance sheet ratios (%) Loan growth Deposit growth EA growth Gross NPA ratio Net NPA ratio Provision coverage ROA decomposition (%) Year to March Net interest income/Assets Non-interest income/Assets Net revenues/Assets Operating expense/Assets Provisions/Assets Taxes/Assets Total costs/Assets ROA Equity/Assets ROAE Valuation parameters Year to March Operating ratios (%) Year to March Yield on advances Cost of funds Spread Net interest margins Cost-income Tax rate FY10 FY11 FY12E FY13E 24.827 2.3 11.3 33.3 249.7 29.405 34 (285) 17.6 1.077 31.3 14.240 0 2.104 10.818 621 1.3 1.5 151.314 181 8.094 133.634 3.4 67.Day 1 Financial Statements Balance sheet Income statement Year to March Interest income Interest charges Net interest income Fee & other income Net revenues Operating expense .1 115.207 7.501 691 (33) 7.9) (0.723 10.9 FY10 FY11 FY12E FY13E Diluted EPS (INR) 2.214 10.3 11.947 17.306 107 3.4 FY10 FY11 FY12E FY13E 340 5.7 57.3 12.413 1.431 12.0 67 (INR mn) As on 31st March Edelweiss Securities Limited Edelweiss Securities Limited .214 4.6 29.8 5.1) (8.062 27.496 4.0) (0.2 42.008 107.3 96.5 5.0 21.6 82.130 6.7 0.3 55.635 32 (176) 12.6 0.895 0 3.901 425 18.6 25.6 127.960 142 1.320 8.1 Book value per share (INR) 9.407 4.0 833.1 11.9 29.830 833.886 5.2 23.8 5.671 403 12.Other opex Preprovision profit Provisions PBT Taxes PAT Reported PAT Basic number of shares (mn) Basic EPS (INR) Dil.666 4.Post Conference Notes .3 22.1 70.5 148.3 11.210 1.369 3.2 49.977 834 27.8 76.6 22.Depreciation /amortisation .819 224 3.2 75.1 3.0 EPS growth (%) 306.876 108.3 2.6 268.9 54.183 86.827 833.5 212.5 27.508 8.197 585.Employee exp .0 0.563 2.876 834 22.8 3.2 29.1 66.9 22.7 833.7 (6.6 (6.082 1.813 317 14.680 192.2) (0.7 28.0 (5.113 0 3.675 1.349 17.1 0.069 12.0 190.279 95.0 2.8) (2.5 22.9 102.726 4.0 14.4) 150.8 22.6 1.418 8.1 44.9) (1.605 213 2.3 13.

Company Profile

ONGC
Lower provisional subsidies in FY12
India Equity Research

l

February 7, 2012

Oil, Gas and Services

Key takeaways

EDELWEISS 4D RATINGS

Subsidy to remain at 37.91% for upstream for Q4FY12 (provisional estimates)

Absolute Rating

BUY

Rating Relative to Sector

Outperformer

The government has indicated, in a recent communication, that the FY12 upstream
provisional subsidy is likely to be pegged at 37.91% (same as 9mFY12 average),
which will result in net realization at over USD56/bbl. We believe the same is
positive as the consensus has pegged the upstream sharing at ~45%.
Oil production to get a boost in FY14; Daman gas to start from FY17

Risk Rating Relative to Sector Low
Sector Relative to Market

Overweight

MARKET DATA (R : ONGC.BO, B: ONGC IN)

Management guided for FY13/14 crude oil production (including JV) at 28.75/
32.10 mmt. Incremental FY14 production of 3.35 mmt to come from B-22, B-4, B193, Heera and South Heera redevelopment, MHS- redevelopment and MHN –
redevelopment fields. Gas production guidance for FY13/14 stands at 27.0/27.5
bcm. Peak gas production from Daman offshore fields is likely to start in FY17
with 7 mmscmd and finally scale up to ~15 mmscmd.

CMP

: INR 287

Target Price

: INR 379

52-week range (INR)

: 325 / 226

Share in issue (mn)

: 8,555.5

M cap (INR bn/USD mn)

: 2,452 / 48,814

Avg. Daily Vol. BSE/NSE (‘000) : 4,118.6

Capex plans of INR1,450 bn for next 5 years, 100 tcf of shale gas reserves
In its recent five year plan, ONGC has planned a capex of INR1,450bn till FY17.
FY13 planned capex is INR331bn. ONGC awaits DGH’s commerciality approval for
3 large discoveries – Mahanadi basin, KG-98/2 northern area, and KG-98/2 southern
area.

Investment conclusion
Lower subsidy burden and increase in crude production implies better times ahead
for ONGC. We expect the stock to perform well in the near term as we expect lower
sharing of subsidies against Street estimates.

Share Holding Pattern (%)
Promoters*

: 74.1

MFs, FIs & Banks

:

6.8

FIIs

:

5.3

Others

: 13.7

* Promoters pledged shares
(% of share in issue)

:

Nil

PRICE Performance (%)

Key risks
Higher subsidies may limit crude net realizations. Higher-than-expected decline
rates in its existing matured assets could impact production, going forward.
ONGC’s assets in countries like Sudan/Syria face geo-political risks.

Stock

Nifty

EW O & G
Index

1 month

8.6

9.6

8.0

3 months

3.1

0.3

(1.1)

12 months

3.1

(7.1)

(5.8)

Financials
Year to March
Revenues (INR mn)
EBITDA (INR mn)
Net profit (INR mn)
EPS (INR)
Diluted P/E (x)
EV/EBITDA (x)
ROE (%)

FY10

FY11

FY12E

FY13E

1,018
443
194
22.6
12.6
5.1
20.2

1,176
485
225
26.3
10.9
4.6
20.9

1,288
523
263
29.6
9.7
4.4
20.6

1,374
609
296
34.6
8.3
3.8
21.1

Edelweiss Research is also available on www.edelresearch.com,
Bloomberg EDEL <GO>, Thomson First Call, Reuters and Factset.

Niraj Mansingka, CFA
+91 22 6623 3315
niraj.mansingka@edelcap.com

Edelweiss Securities Limited

Post Conference Notes - Day 1

Financial Statements

Balance sheet

Income statement
Year to March

(INR bn)
FY10

FY11

FY12E

FY13E

Net revenues
1,018
Statutory levies
170
Other expenditure
398
Provisions & Write-offs
6
Total expenditure
574
EBITDA
443
Recouped cost
187
EBIT
256
Financing expense
5
Other income
53
Profit before tax
304
Current tax
96
Other taxes
(0)
Deferred tax
12
Total tax
107
Core profit
197
Extraordinary/Prior period items 0
Profit after tax
197
Add: Profit/Loss from asso.
0
Less: Profit/Loss from min. int.
3
Group Profit after tax
194
Eq. shares outstanding (bn)
9
EPS (INR) basic
22.6
Diluted shares (bn)
9
EPS - Diluted (INR)
22.6
CEPS
35.4
DPS
8.2
Dividend payout (%)
36.5

1,176
197
479
16
692
485
206
278
4
69
343
114
(8)
9
115
228
(0)
228
0
4
225
9
26.3
9
26.3
41.6
8.7
33.3

1,288
201
553
12
765
523
215
308
6
86
387
126
(5)
11
132
256
10
266
0
2
263
9
29.6
9
29.6
46.0
9.6
32.5

1,374
209
544
12
765
609
232
377
9
78
446
139
(5)
12
147
299
299
0
3
296
9
34.6
9
34.6
52.9
11.7
33.8

Common size metrics as % of net revenues
Year to March
FY10

FY11

FY12E

FY13E

39.1
39.1
43.6
18.4
0.5
19.3

40.7
40.7
41.2
17.5
0.4
19.4

42.9
42.9
40.6
16.7
0.5
19.9

39.6
39.6
44.3
16.9
0.6
21.8

FY10

FY11

FY12E

FY13E

(2.7)
6.4
(2.2)
(2.0)
(1.8)

15.6
9.3
12.9
16.0
16.0

9.5
7.9
12.9
12.0
12.8

6.6
16.5
15.1
17.0
17.0

FY10

FY11

FY12E

(INR bn)
FY13E

Net profit
194
Add: Depreciation
123
Add: Deferred tax
12
Add: Others
(60)
Gross cash flow
269
Less:Changes in working capital (19)
Opertaing cash flow
288
Less: Capex
213
Free cash flow
75

225
157
9
(41)
349
(69)
418
356
62

263
91
11
(71)
294
54
239
315
(76)

296
104
12
(71)
342
(1)
343
320
23

Cost of goods sold
Operating expenses
EBITDA margins
Depreciation & amortisation
Interest
Net profit margin

Growth metrics (%)
Year to March
Revenues
EBITDA
PBT
Net profit
EPS

Cash flow statement
Year to March

69

(INR bn)

As on 31st March

FY10

FY11

FY12E

FY13E

Total equity capital
21
Reserves & surplus
993
Shareholder's equity (A)
1,014
Minority interest (B)
16
Secured loans
7
Unsecured loans
56
Total debt (C)
63
Deferred tax liability (D)
103
Lia. for abondonment cost (E)
175
Sources of funds (A+B+C+D+E) 1,371
Gross fixed & prod. proper.
2,044
Accumulated DD&A
1,193
Net fixed assets
851
Cap.WIP & Exp. wells in progr.
256
Total fixed assets (A)
1,107
Investments (B)
52
Inventories
82
Accounts receivable
71
Cash and cash equivalents
224
Loans and advances
121
Other current assets
7
Current assets (C)
506
Current liabilities
227
Provisions
75
Current lia. & provisions (D)
302
Net current assets (E)
204
Miscellaneous expenditure (F)
8
Uses of funds (A+B+E+F)
1,371
Book value per share
118.5

43
1,110
1,153
20
7
56
63
112
199
1,546
2,280
1,350
930
376
1,307
34
86
98
287
110
9
589
340
51
391
198
8
1,546
134.8

43
1,281
1,324
21
7
113
120
122
205
1,793
2,524
1,440
1,083
448
1,531
33
94
112
254
128
8
596
318
58
377
220
9
1,793
154.7

43
1,465
1,507
22
7
125
132
135
201
1,997
3,004
1,544
1,460
287
1,747
23
97
109
253
141
6
606
326
63
389
217
9
1,997
176.2

FY10

FY11

FY12E

FY13E

20.1
20.2
14.9
1.7
0.7
26
30
81
(26)
0.1
0.1
0.1

19.7
20.9
15.7
1.5
0.7
26
27
106
(53)
0.1
0.1
0.1

18.8
20.6
15.3
1.6
0.7
30
27
90
(34)
0.1
0.2
0.1

20.2
21.1
15.8
1.6
0.6
29
26
87
(32)
0.1
0.2
0.1

FY10

FY11

FY12E

FY13E

22.6
(1.8)
35.4
12.6
2.4
2.2
5.1
2.9

26.3
16.0
41.6
10.9
2.1
1.9
4.6
3.1

29.6
12.8
46.0
9.7
1.8
1.8
4.4
3.4

34.6
17.0
52.9
8.3
1.6
1.7
3.8
4.1

Ratios
Year to March
ROACE
ROAE (%)
ROA
Current ratio
Cash ratio
Receivables (days)
Inventory (days)
Payables (days)
Cash conversion cycle (days)
Debt-equity (x)
Debt/EBITDA
Adjusted debt/Equity

Valuation parameters
Year to March
EPS - Diluted (INR) - Cons.
Y-o-Y growth (%)
CEPS (INR)
Diluted P/E (x) - Cons.
P/BV (x)
EV/Sales (x)
EV/EBITDAX (x)
Dividend yield( %)

Edelweiss
Securities Limited
Edelweiss Securities
Limited

Company Profile

PANTALOON RETAIL
Growth engine
India Equity Research

l

February 7, 2012

Retail

Key takeaways

EDELWEISS 4D RATINGS

Pantaloon Retail (PRIL) is looking to divest equity stake and raise ~INR10-12bn,
which the company will use to pay back some debt.

Absolute Rating

BUY

Rating Relative to Sector

Performer

The company is committed to calibrated growth by increasing selling space by
2mn sq feet per year in FY12 and FY13.
FDI in multi-brand retail is likely to benefit the company, but currently it is in the
cold storage. B but traction could take place post elections and budget; could take
another 2-3 months.
The JV with a Japanese company is likely to take place by end of FY12 which would
be in the foods category.
Divestment of Future Capital and Future Insurance stake is in progress and the
discussions have reached an advanced stage.
Raw material prices, specially cotton, is seeing a correction from peak prices. The
company might decrease prices only if volumes are being impacted by the earlier
price hikes. PRIL is confident of improving inventory days from 120 to 85-90 days
by the next 3-5 years. PRIL shut down 11 E-Zone stores. The company is also
witnessing severe slowdown in Hometown.

Investment conclusion
The Indian retail landscape is evolving with interplay of several demographic and
economic factors. Despite the slowdown expected in real GDP growth in the near
term, the long term prospects backed by changing consumer behaviour in favour
of larger discretionary spend, has set the stage for a healthy growth in the retail
space over the next five years. The big opportunity lies in the growing share of
organised retail with the growing trend among consumers to allocate a larger
share of income to consumption and gradual improvement in lifestyle. We continue
to remain optimistic about PRIL’s strong presence across multiple consumption
categories and its size. However, burgeoning debt and higher inventory days remain
key concerns and continues to deteriorate.

Risk Rating Relative to Sector High
Sector Relative to Market

Overweight

MARKET DATA (R : PART.BO, B: PF IN)
CMP

: INR 193

Target Price

: INR 290

52-week range (INR)

: 364 / 125

Share in issue (mn)

: 207.5

M cap (INR bn/USD mn)

: 40 / 796

Avg. Daily Vol. BSE/NSE (‘000) : 1,967.3

Share Holding Pattern (%)
Promoters*

: 44.7

MFs, FIs & Banks

: 17.3

FIIs

: 23.4

Others

: 14.6

* Promoters pledged shares
(% of share in issue)

:

Nil

PRICE Performance (%)
Stock

Nifty

EW Retail
Index

1 month

25.6

9.6

10.6

3 months

(6.4)

0.3

(4.2)

12 months

(44.5)

(7.1)

(11.1)

Key risks
Rising share of debt. Pressure on margins due to competition. Macro slowdown.
Financials
Year to March
Revenues (INR mn)
Rev. growth (%)
EBITDA (INR mn)
Net profit (INR mn)
Shares outstanding (mn)
Diluted EPS (INR)
EPS growth (%)
Diluted P/E (x)
EV/EBITDA (x)
ROAE (%)

FY10

FY11

FY12E

FY13E

89,261
40.8
8,191
2,302
206
11.8
59.7
16.4
9.8
9.0

110,123
23.4
9,600
1,897
217
8.7
(25.9)
22.1
12.0
6.3

129,946
18.0
11,175
1,934
217
8.9
2.0
21.7
11.0
6.0

160,054
23.2
13,845
2,482
217
11.4
28.3
16.9
9.5
7.3

Edelweiss Research is also available on www.edelresearch.com,
Bloomberg EDEL <GO>, Thomson First Call, Reuters and Factset.

Abneesh Roy
+91 22 6620 3141
abneesh.roy@edelcap.com

Harsh Mehta
+91 22 4063 5543
harsh.mehta@edelcap.com

Edelweiss Securities Limited

791 5.482 0 2.450 35. & Finance charges 3.7 71.108 27.740 10.964 2.042 13.7 1.5 FY10 FY11 FY12E FY13E 11.6 FY10 FY11 FY12E FY13E 40.044 9.884 402 45.558 45.5 7.275 28.6 14 96 75 35 2.788 32.5 7.122 39.183 8.9 10.2 15 102 84 33 3.202 3.5 15 110 80 45 3.845 4.612 3.032 1.897 2.600 2.442 4.959 76.434 50.4 3.897 217 8.897 0 1.831 7.0 11. & asso.9) 18.0 160.3 8.3 1.555 114.749 145 1.4 2.461 1.5 70.4 28.0 59.175 3.7 6.9) 21.4 0.4 15 110 80 45 3.205 9.104 5.845 948 1.0) (25.3 8.549 Gross profit 25.302 7.5 2.2 (5.940 Advertisement & sales costs 2.706 802 37.133 4.4 1.913 PBT 3.865 157 26.555 132.113 4.182 9.569 140 1.261 Cost of materials 63.260 6.266 5.328 2.675 4.675 6.209 10.315 Others 3.395 5.704 1.5 2.555 121.8 4.764 3.1 4.4 2.0 4.9 9.781 324 8.3 Dividend payout ratio (%) 11.702 65.467 24.170) 2.7 21.1 1.3 2.4 9.2 0.3 1.721 12.102 76.183 32.914 2.191 Depreciation 2.4 1.482 10.461 1.288 8.596 61.750 (2.863 114.5 8.0 23.6 6.313 37.361 2.6 1.3 2.262 37.7 Edelweiss Securities Limited Edelweiss Securities Limited .9 1.7 6.887 953 1.833 EBITDA 8.4 17.5 1.3 1.3 0.6) (22.191 6.482 217 11.0 9.5 21. shares outstanding (mn) 206 EPS (INR) basic 11.9 2.684 5.0 16.260 14.664 2.Day 1 Financial Statements Balance sheet Income statement Year to March (INR mn) FY10 FY11 FY12E FY13E Net revenues 89.7 7.569 30.3 1.4 217.555 (2.967 93.3 8.3 30.644 7.8 0.7 129.967 93.656 28.218 2.2 23.0 Common size metrics as % of net revenues Year to March FY10 Cost of materials Employee costs Advertising & sales costs Electricity expenses Rent and lease expenses Other general expenditure Depreciation Net interest expenditure EBITDA margin EBIT margin Net profit margin Growth metrics (%) Year to March Revenues EBITDA PBT Net profit EPS Cash flow statement Year to March Net profit Add: Non cash charge Depreciation Others Gross cash flow Less: Changes in WC Cash from operations Less: Capex Free cash flow FY11 FY12E FY13E 71.868 4.364 46.013 Provision for taxation 582 Core PAT 2.9 4.0 0.222 2.923 4.046 1.5 11.105 3.182 6.0 24.424 26.967 103.854 92.7 7.5 0.8 CEPS (INR) 22.9 4.397 23.Post Conference Notes .1 7 2.431 Extraordi.750 12.787 33.571 10.923 7.6 6.461 1.6 8.275 33.267 3.9 24.0 7. other income 6.3 28.275 27.6 39.702 69.000 12.420 3.098 58.7 4.0 110.218 10.1 8.8 9.702 64.6 6.3 11.065 78.934 217 8.0 8.4 2.934 0 1. 2.248 2.182 40.446 12.520 1.400 2.0 1.4 2.816 7.287 33.0 12.474 4.8 59.288 2.4 1.8 22.602 31.5 1.392 (6.5 1.1 0.734 26.313 55.434 152 1.6 6.9 28.0 2.8 Diluted shares (mn) 206.162 7.925 Net int.1 22.162 5.508 19.0 0.5 1.964 6.818 29.2 2.904 83.546 3.2 EPS (INR) fully diluted 11.712 Employee costs 3.3 28.523 11.983 132.780) 1.8 4.308 Rent and lease expenses 6.313 41.054 113.260 12.6 4.2 6.934 8.0 1.6 2.068 Other income 857 EBIT incl.5 2.010 31.5 2.4 30.1 DPS 1.608 50.388 121.010) 71 (INR mn) As on 31st March Share capital Reserves Shareholders' funds Minority Secured loans Unsecured loans Borrowings Deferred tax liability Sources of funds Gross block Less depreciation Net fixed assets Capital work in progress Investments Current assets Inventories Sundry debtors Cash and bank balance Other current asset Loans and advances Current liabilities Liabilities Provisions Working capital Uses of funds BV (INR) Ratios Year to March ROAE (%) ROACE (%) Debtor days Inventory days Payable days Cash conversion cycle (days) Current ratio Debt/EBITDA Debt/Equity Adjusted debt/equity Interest coverage (x) Valuation parameters Year to March Diluted EPS (INR) Y-o-Y growth (%) CEPS (INR) Diluted P/E (x) Price/BV (x) EV/Sales (x) EV/EBITDA (x) Dividend yield (%) FY10 FY11 FY12E FY13E 1.126 Electricity expenses 1.520 402 45.1 1.468 3.2 4.949 43.385 9.607 3.818 33.400 26.260 3.298 5.6 3.912 3.1 11.260 10.840 9.1 16.860 6.395 7.612 9.9 217.946 92.721 1.339) 11.7 22.4 4.5 2.4 73.086 1.663 301 9.9 8.9 5.771 48.969 4.7 71.485 1.3 FY10 FY11 FY12E (INR mn) FY13E 2.5 1.596 162 FY10 FY11 FY12E FY13E 9.1 8.295 402 45.1 1.123 79. int.848 2.8 2.749 40.7 23.302 Eq.925 208 7.079 3.9 11.7 217.287 36.7 16.9 8.620 20.238 46.883 2.473 3.123 EBIT 6.4 7 2.123 5.7 1. items (net of tax) (129) PAT after min.7 (25.630 (2.818 31.897 6.

Company Profile

PERSISTENT SYSTEMS
Navigating turbulent times
India Equity Research

l

February 7, 2012

IT

Key takeaways

EDELWEISS RATINGS

The company reiterated that the macro environment continues to remain uncertain
and deal cycles taking longer to close. However, it is seeing traction in smaller
sized deals due to healthy start up activity.
It stated that it will continue to invest in S&M going ahead to scale up its USD1mn
plus accounts and maintained that its margin can sustain at ~ 18% PBT level on
constant currency basis. Further, it believes higher proportion of IP-led revenues
and benefits of “sell-with” strategy will aid margin performance. It expects tax
rate to dip gradually to 26%.
Q4FY12 is likely to witness a volume growth unlike Q3FY12 which saw a volume
decline.
Significant emphasis remains on continuing with its “sell with” strategy and expects
it to be key growth driver inFY13.
The company has formed strategic partnerships in its key focus areas viz., Cloud
Computing, Mobility, Analytics and Collaboration which will drive growth in FY13.
It currently has hedge book of USD102mn at an average price of INR49.59 /USD.

Key risks
Given the high proportion of offshore revenues, significant appreciation of INR
against USD will impact its financials materially
Since Persistent derives more than 80% of its revenue from US, unsustainable
recovery in the geography could hamper the company’s performance

Absolute Rating

NOT RATED

MARKET DATA (R : PERS.BO, B: PSYS IN)
CMP

: INR 323

Target Price

: NA

52-week range (INR)

: 429 / 280

Share in issue (mn)

: 40.0

M cap (INR bn/USD mn)

: 13 / 257

Avg. Daily Vol. BSE/NSE (‘000) : 34.4

Share Holding Pattern (%)
Promoters*

: 38.9

MFs, FIs & Banks

: 27.0

FIIs

:

Others

: 28.2

* Promoters pledged shares
(% of share in issue)

:

5.8
Nil

Relative Performance (%)
Sensex

Stock

Stock over
Sensex
(8.8)

1 month

11.7

2.9

3 months

0.8

2.7

1.9

12 months

(1.8)

(17.7)

(15.9)

Financials
Year to March

FY08

FY09

FY10

FY11

Kunal Sangoi

Revenues (INR mn)
Rev. growth (%)
EBITDA (INR mn)
Net profit (INR mn)
Shares outstanding (mn)
Diluted EPS (INR)
EPS growth (%)
Diluted P/E (x)
EV/EBITDA (x)

4,249
34.6
900
832
34
25.2
73.9
12.8
8.9

5,938
39.8
1787.51
661
35
19.3
(23.5)
16.8
5.1

6,012
1.2
1464
1,150
36
32.1
66.4
10.1
4.8

7,758
29.1
1583
1,398
40
34.9
8.8
9.3
5.5

+91-22- 6623 3370
kunal.sangoi@edelcap.com

Edelweiss Research is also available on www.edelresearch.com,
Bloomberg EDEL <GO>, Thomson First Call, Reuters and Factset.

Sandip Agarwal
+91-22- 6623 3474
sandip.agarwal@edelcap.com

Omkar Hadkar
+91-22- 6620 3147
omkar.hadkar@edelcap.com

Edelweiss Securities Limited

Post Conference Notes - Day 1

Financial Statements

Balance sheet

Income statement
Year to March

(INR mn)
FY08

FY09

FY10

FY11

Revenues
4,249
Personnel expenses
2,711
Gross profit
1,537
SG&A expenses
637
EBITDA
900
Depreciation & amortization
280
EBIT
620
Other income
48
Forex gain/(loss)
222
Profit before tax
889
Tax
22
Core profit
867
Extraordinary income/(loss)
(35)
Profit after tax
832
Shares outstanding (mn)
27
EPS (INR) basic
31.6
Diluted shares (mn)
34.4
EPS (INR) diluted
25.2
CEPS (INR)
41.8
Dividend per share
1.6
Dividend pay out (%)
6.1

5,938
3,036
2,902
1,115
1,788
297
1,491
69
(874)
685
9
676
(15)
661
31
21.6
35.1
19.3
31.1
1.1
6.3

6,012
3,372
2,639
1,176
1,464
335
1,128
81
32
1,241
91
1,150
0
1,150
32
35.7
35.9
32.1
46.2
3.0
10.0

7,758
4,723
3,036
1,453
1,583
423
1,160
171
173
1,504
106
1,398
0
1,398
38
37.0
40.1
34.9
48.3
5.8
18.3

FY09

FY10

FY11

Common size metrics as % of net revenues
Year to March
FY08
Cost of revenues
Gross margin
SG&A expenses
EBITDA margin
EBIT margin
Net profit margins

63.8
36.2
15.0
21.2
14.6
20.4

51.1
48.9
18.8
30.1
25.1
11.4

56.1
43.9
19.6
24.3
18.8
19.1

60.9
39.1
18.7
20.4
14.9
18.0

Growth metrics (%)
Year to March

FY08

FY09

FY10

FY11

34.6
11.7
15.8
60.1
61.4
73.9

39.8
98.7
140.5
(22.9)
(22.0)
(23.5)

1.2
(18.1)
(24.3)
81.0
70.2
66.4

29.1
8.2
2.8
21.2
21.5
8.8

Revenues
EBITDA
EBIT
PBT
Net profit
EPS

Cash flow statement
Year to March

FY08

FY09

FY10

(INR mn)
FY11

Net profit
832
Depreciation
280
Others
(12)
Gross cash flow
1,099
Less:Changes in working capital 9 7
Operating cash flow
1,002
Less: Capex
485
Free cash flow
517

661
297
(65)
893
195
698
474
224

1,150
335
51
1,536
(74)
1,611
475
1,135

1,398
423
199
2,020
445
1,575
970
605

73

(INR mn)

As on 31st March
Equity share capital
Reserves
Total shareholders funds
Minority interest
Sources of funds
Gross fixed assets
Less: Accum. depreciation
Net fixed assets
Capital WIP
Investments
Deferred tax asset
Cash & bank balances
Debtors
Loans and advances
Other current assets
Total current assets
Sundry Creditors
Provisions
Other liabilities
Total current liabilities
Working capital
Application of funds
BV per share (INR)

Ratios
Year to March
ROAE (%)
ROACE (%)
Debtors (days)
Payable (days)
Cash conversion cycle
Current ratio
Fixed assets turnover (x)
Total asset turnover(x)
Equity turnover(x)

Valuation parameters
Year to March
Diluted EPS (INR)
Y-o-Y growth (%)
CEPS (INR)
Diluted P/E (x)
Price/BV(x)
EV/Revenues (x)
EV/EBITDA (x)
EV/EBITDA (x)+1 yr forward
Dividend yield (%)

FY08

FY09

FY10

FY11

359
2,927
3,286
0
3,286
2,928
1,286
1,643
331
692
(3)
113
745
403
89
1,351
244
165
318
727
623
3,286
95

359
3,589
3,948
0
3,948
3,372
1,573
1,800
377
880
20
165
1,034
454
130
1,784
71
170
673
914
870
3,948
113

400
5,990
6,390
45
6,435
3,715
1,881
1,834
485
1,562
7
1,918
1,363
638
340
4,258
313
317
1,080
1,710
2,548
6,435
178

400
7,071
7,471
30
7,501
4,543
2,281
2,261
605
2,500
60
1,000
1,582
869
226
3,677
465
396
741
1,602
2,075
7,501
186

FY08

FY09

FY10

FY11

29.9
25.5
54
19
35
1.9
2.6
1.5
1.5

18.7
52.7
55
10
45
2.0
3.5
1.6
1.6

22.3
28.4
73
12
61
2.5
3.3
1.2
1.2

20.2
23.5
69
18
51
2.3
3.8
1.1
1.1

FY08

FY09

FY10

FY11

25.2
73.9
41.8
12.8
3.4
1.9
8.9
4.5
0.5

19.3
(23.5)
31.1
16.8
2.9
1.5
5.1
6.2
0.4

32.1
66.4
46.2
10.1
1.8
1.2
4.8
4.4
0.9

34.9
8.8
48.3
9.3
1.7
1.1
5.5
3.9
1.8

Edelweiss
Securities Limited
Edelweiss Securities
Limited

Company Profile

PHOENIX MILLS
Real estate play on Indian consumption theme
India Equity Research

l

February 7, 2012

Real Estate

Key takeaways

EDELWEISS 4D RATINGS

HSP anchor rental renegotiations complete, further renegotiations in FY14-15

Absolute Rating

BUY

Rating Relative to Sector

Outperformer

Rental renegotiations for 0.15 msf of HSP anchor space (total HSP area at 0.9msf)
has been completed at a weighted average rent of INR110/sf/month vs. INR64/sf/
month earlier. Further, ~0.50 msf of space is up for rental renegotiations over
FY13-15E (0.27msf in FY14E and 0.17 msf in FY15E). Management also highlighted
that development plans for Phase IV of HSP (0.25 msf) would be firmed up over the
next 6-8 months post which Phoenix Mills (PML) may look at a formal project
launch in CY13.
Shangri-La Hotel to open in June 2012; final approvals awaited

Risk Rating Relative to Sector Medium
Sector Relative to Market

Underweight

MARKET DATA (R : PHOE.BO, B: PHNX IN)
CMP

: INR 188

Target Price

: INR 246

52-week range (INR)

: 229 / 149

The Shangri-La Hotel, which has faced delays, is slated to now open by June 2012
(Edelweiss est. October 2012) as PML awaits final approvals before handing over
the hotel to the Shangri-La operations team in Q4FY12. Further, the hotel which
earlier had an estimated project cost of INR8.35bn may see cost overruns of
~INR0.7bn, taking project costs to ~INR9bn, largely due to additional interest on
construction on account of delayed approvals.

Share in issue (mn)

: 144.8

M cap (INR bn/USD mn)

: 27 / 542

Phase II Market City projects to be launched in FY13; to aid cut debt in SPVs

Promoters*

: 65.9

MFs, FIs & Banks

:

FIIs

: 21.6

Others

:

6.1

* Promoters pledged shares
(% of share in issue)

:

Nil

With Phase I of Market City projects drawing to a close in CY12, PML is embarking
on a strategy of reducing SPV level debt for Market Cities through phased launch of
residential/commercial sale projects in FY13. These include ~0.6 msf f residential
space at Bengaluru (W), 0.3 msf residential space at Pune and ~0.7 msf of commercial
space at Kurla, Mumbai (PML has acquired 0.2 msf of the total 0.9msf commercial
space in Phase II) while the Chennai residential launch in FY12 of 0.25 msf has been
70% pre-sold for ~INR1.1bn at an average realization of INR6,600/sf.

Avg. Daily Vol. BSE/NSE (‘000) : 73.2

Share Holding Pattern (%)

PRICE Performance (%)
Stock

Investment conclusion
Factoring in the recent Phoenix Hospitality Company (PHCPL) acquisition and
rolling our NAV to FY13E basis, we have a NAV of INR246/share. Near term triggers
are the Shangri La Hotel becoming operational in H2FY13 and the commencement
of Chennai Market City mall. We reiterate ‘BUY/SO’ with a target price of INR246/
share at par with FY13E NAV.

6.4

Nifty

EW Real
Estate Index

1 month

6.8

9.6

14.2

3 months

(8.8)

0.3

(4.8)

12 months

(14.2)

(7.1)

(16.9)

Key risks
Slower-than-expected offtake in retail leasing. Cap rate expansion.
Financials - Consolidated
Year to March
Revenues (INR mn)
Rev. growth (%)
EBITDA (INR mn)
Net profit (INR mn)
Share outstanding (mn)
EPS (INR)
EPS growth (%)
Diluted P/E (x)
EV/EBITDA (x)
ROE (%)

FY10

FY11

FY12E

FY13E

1,230
23.5
776
620
145
4.3
(20.9)
44.1
38.5
4.0

2,102
70.8
1,406
842
145
5.8
35.7
32.5
23.6
5.1

3,818
81.7
2,534
1,412
145
9.7
67.7
19.4
14.6
8.2

4,819
26.2
2,909
1,293
145
8.9
(8.4)
21.1
12.6
7.1

Edelweiss Research is also available on www.edelresearch.com,
Bloomberg EDEL <GO>, Thomson First Call, Reuters and Factset.

Aashiesh Agarwaal, CFA
+91-22-4063 5491
aashiesh.agarwaal@edelcap.com

Adhidev Chattopadhyay
+91-22-6623 3358
adhidev.chattopadhyay@edelcap.com

Edelweiss Securities Limited

909 741 2.367 4.269 34.8 44.6 Equity capital Reserves & surplus Shareholders funds Secured loans Unsecured loans Borrowings Minority interest Sources of funds Gross block Depreciation Net block Capital work in progress Total fixed assets Investments Inventories Sundry debtors Cash and equivalents Loans and advances Total current assets Sundry creditors and others Provisions Total CL & provisions Net current assets Net deferred tax Uses of funds Adjusted BV per share (INR) Ratios Year to March Valuation parameters Year to March Diluted EPS (INR) Y-o-Y growth (%) CEPS Diluted P/E (x) Price/BV (x) EV/Sales (x) EV/EBITDA (X) Edelweiss Securities Limited Edelweiss Securities Limited .262 325 937 2.759 16.1 1.166 NM 2.2 (7.341 9 34.932 11.818 16 153 1.723 8.3 38.876 2.1 14.Day 1 Financial Statements .804 686 1.5 39.6 14.021 4.4 Debt/EBITDA 8.718 (460) 2.412 9.603 122 290 18.702 14.764 24 24.103 523 9.2 4.2 32.245 19.970) 1.642 1.4 23.Consolidated Balance sheet Income statement Year to March (INR mn) FY10 FY11 FY12E FY13E Income from operations 1.4 1.8 0.236 Cash conversion cycle NM Current ratio 2.8 66.5 Fixed assets t/o (x) 0.724 244 1.133 2.2 7.321 9.8 81.3 0.7 20.4 31.6 9.839 129 FY10 FY11 FY12E FY13E ROAE (%) (on adjusted profits) 4.694 (1.7 81.515) 830 314 0 118 1.0 49.179 2.700 9.601 3 431 671 3.511 7.261 1.7 FY10 FY11 FY12E FY13E 4.0 7.969 2.353 523 14.1 7.8 3.819 17 145 1.0 63.412 17.9 10.9 (8.4 11.6 8.3 Diluted equity shares (mn) 145 Dividend payout (%) 28.9 10.5 9.8 35.4 35.4 5.168 539 175 1.178 4.887 1.7 29.0) (8.217) 1.202 0 1.8 0.267 121 1.291 8.7 67.182 961 1.645 2.838 467 3.118 0 1.758 (3.187 1.318 9 28.5) (20.965 398 180 1.5 7.725 359 3.406 314 1.516 21.2 Debt/equity 0.211 2.0 ROACE (%) 3.367 0 21.876 0 20.4 35.732 1. 6 PAT after minority interest 620 Adjusted net profit 620 EPS (INR) basic 4.955 633 7.063 1.626 1.366 357 2.7 14.4) 27.747 545 1.402 2.403 250 1.293 8.9 21.190 24.2 51.1 1.398 210 6.4 6.9 0.6 44.284 2.230 Direct costs 12 Employee costs 66 Other expenses 377 Total operating expenses 455 EBITDA 776 Depreciation & amortisation 172 EBIT 603 Interest expenses 86 Other income 243 Profit before tax 760 Provision for tax 147 Core profit 613 Extraordinary items 0 Profit after tax 613 Less: Minority interests (1) Add: Share in profits of asso.6 15.748 1.6 12.695 13.938 11.8 145 31.1 4.9 (20.2 60.2 14.405 18.9 145 20.084 4.153 75 (INR mn) As on 31st March FY10 FY11 FY12E FY13E 290 15.534 569 1.603 22.137 16.839 23.305 8.847 7.8 23.3 NM 94 497 NM 4.3 (20.9) 70.1) (20.4 NM 104 791 NM 3.883 1.0 Common size metrics as % of net revenues Year to March FY10 Operating expenses Depreciation & Amortization Interest expenditure EBITDA margins Net profit margins Growth metrics (%) Year to March Revenues EBITDA PBT Net profit EPS Cash flow statement Year to March Net profit Depreciation Deferred tax Others Gross cash flow Less:Changes in WC Operating cash flow Less: Capex Free cash flow FY11 FY12E FY13E 37.458 5.4 66.7 145 25.353 523 13.910 2.876 5.115 1.188 11.3 0.238 7.7 26.118 741 0 784 2.7 24.491 2.0 3.102 51 141 505 696 1.025 34.847 111 290 16.768 9 34.257 20.7 80.5 1.293 1.6 15.291 115 290 17.5 5.965 28.5 33.4) FY10 FY11 FY12E (INR mn) FY13E 613 172 0 (150) 635 (544) 1.Post Conference Notes .259 2.151 321 830 0 830 (29) (17) 842 842 5.8 33.9 39.0 4.608 2.048 6.9) 13.410 16.8 7.2 0.202 569 0 488 2.2 FY10 FY11 FY12E FY13E 23.118 244 419 1.5 5.0 2.8 67.5 19.907 (1.432 6.239 1.787 1.531 1.876 2.6 8.5 28.628 4.880 948 7.0 14.091 228 287 1.3 51.202 60 270 1.412 1.1 5.2 Inventory days 100 Debtors days 116 Payable days 1.

3 3. BSE/NSE (‘000) : 3.4 25. Daily Vol. Key risks Presence in the power sector exposes PFC to project-specific and general structural risks in power sector.320 29.BO. it indicated that government is keenly looking for participation from some government agency. Absolute Rating BUY Rating Relative to Sector Outperformer Risk Rating Relative to Sector Low Sector Relative to Market Equalweight MARKET DATA (R : PWFC. Rajasthan INR118bn. MP – INR92bn. Exposure breakup: Maharashtra – INR156bn.2 17.5 10.9 M cap (INR bn/USD mn) : 250 / 4. Provided short-term loans (for 3 months with condition to recover the loan atleast in 4 months) to Rajasthan.Company Profile POWER FINANCE CORPORATION Firming up India Equity Research l February 7.1) (6. government support etc).7 38.0 18.com.320 1.8 3 months 13.2 31. Haryana – INR96bn.4063 5470 nilesh.2 21.449 1.2 9.73% which is earning thin spread. It has provided INR175bn to project developers at 9.5 1.3 8. Thomson First Call.8) (7.255 1. PRICE Performance (%) Management has been confident of achieving disbursement target of INR450bn and loan growth of 25%.6 134. Haryana.2 152.320 23.5 7. Kunal Shah +91-22. Any major slippage or ineffective recoveries can raise its NPAs significantly. Building in a loan growth of 18%.6 15.319.229 27.parikh@edelcap.2) Financials Year to March Revenues (INR mn) Rev growth (%) Net profit (INR mn) Shares outstanding (mn) EPS (INR) EPS growth (%) Book value per share (INR) PE (x) Price to book (x) ROE (%) FY10 FY11 FY12E FY13E 30. Current outstanding short-term loans stand at INR30bn.com Nilesh Parikh +91-22.6 174. Critical will be the hearing on February 13 related to financing arrangement and sharing of project risk. some positive developments have taken place for SEBs recently (tariff hikes.9 Investment conclusion * Promoters pledged shares (% of share in issue) : PFC has underperformed the Bankex by 24% in the past one year due to structural issues in the power sector.6 32.com Edelweiss Securities Limited . UP – INR86bn.9 Share Holding Pattern (%) Promoters* : 53. However. NIMs of 3.275 1.0 21.chaudhary@edelcap.7 55.9 12 months (36.148 18.4040 7579 kunal.shah@edelcap.148 22. reversal in the interest rate cycle will provide some kicker to margins.1 17.9% and credit cost of 20bps for FY12-14E. PFC’s gross NPA is at low levels. B: POWF IN) CMP : INR 190 Target Price : INR 220 52-week range (INR) : 281 / 130 Share in issue (mn) : 1. TN – INR55bn.188 26.4 Nil Stock Nifty EW BFSI Index 1 month 23. 6. Bloomberg EDEL <GO>.6 1. it is yet to disburse further INR73bn to these developers. However. 2012 Banking and Financial Services Key takeaways EDELWEISS 4D RATINGS Exposure of INR3.433 22.8 Edelweiss Research is also available on www.1 MFs.6 17. Punjab discoms on 4-5 conditionalities.2 1. WB – INR84bn.7 115.1 6.797 18. Reuters and Factset.9 0.6 45. Management expects recoveries of INR150mn-200mn from Om Shakti (classified as NPL) and R S India (restructured Satara based wind project).485.8 8.6 Others : 20. Even with respect to Maheswar project. adversely affecting its profitability and future growth. FIs & Banks : FIIs : 19.95bn to Konaseema considered as NPL – INR370mn of provisioning and INR190mn of income reversal.com Suruchi Chaudhary +91-22-6623 3316 suruchi.edelresearch. we expect it to generate RoEs in excess of 17%.9 1.2 35.980 Avg.4 17.

9 11.0 26.187 1.314 1.823 PAT 21.802 55. subsidy fund from govern.4 22.0 17.3 3.0 1.Other opex 40 Preprovision profit 29.0 10.148 Basic EPS (INR) 18.0 0.5 11.2 0.Day 1 Financial Statements Balance sheet Income statement Year to March (INR mn) FY10 FY11 FY12E FY13E Interest income 78.035.184 18.791 59.0 1.694 132.9 20. Earnings (x) Price/ Adj.8 0.7 17.5 FY10 FY11 FY12E FY13E 4.6 4.232 12.985 1.3 2.4 25.9 0.3 15.079 Non interest income 521 Income from operations 29.015.706 61.8 10.5 25.188 1.720 71.500 1.0 3.7 27.148 22.320 1.227 19.477 207.487.3 22.8 1.843 25.185 1.1 3.448 82.069 .5 Dividend pay out (%) 28.567 Balance sheet ratios (%) Loan growth 23.7 115.1 1.5 3.779 60.1 1.225.650 53.Investment depreciation 17 PBT 29.325 322.0 1.0 5.302 749 4.4 Disbursements growth (%) 22.8 15.6 18.6 DPS (INR) 4.9 0.658 11.3 98.238 Reported PAT 23.469.9) 28.247.1 0.247.3 1.221 49 45 54.8 15.8 2.805 427.2 18.103) 37.Depreciation /amortisation 44 .614 1.6 21.160 Provisions 17 .876 Net interest income 29.5 10.1 3.0 ROA decomposition (%) Year to March Net interest income/assets Non interest income/assets Net revenues/Assets Operating expense/Assets Provisions/Assets Taxes/Assets Total costs/Assets ROA Equity/Assets ROAE Valuation parameters Year to March Operating ratios (%) Year to March FY11 Diluted EPS (INR) EPS growth (%) Book value per share (INR) Adj.8 0.0 1.2 1.0 (25.6 2.6 134.478 11.8 818.2 29.5 1.449 (1.018 Total liabilities 810.567 Assets Loans 798.6 Provision coverage 50.8 8.2 FY10 FY11 FY12E FY13E 29.6 3.660 Disbursements (INR mn) 258.000 Total assets 810.0 1.3 134.2 4.1 0.776 35.066 5 52.6 2.0) 705.8 FY10 FY11 FY12E FY13E 18.0 Borrowings growth 28.5 25.069 467 35.1 8.6 1.4 26.5 3.845 63.0 17.9 Gross NPA ratio 0.1 0.080 Disburs.4 2.2 (24. currency transaltion diff.487.726 221.6 Edelweiss Securities Limited Edelweiss Securities Limited .8 15.320 23.8 8.173 Current liabilities 37.6 16.8 27.320 Extraordinaries 2.1 8.1 1.Loan loss provisions (0) .6 Sanctions growth (%) 14.7 Net NPA ratio 0.9 17.0 18.1 168.2 4.153 1.707 1.2 152.998 190 45.0 6.048 13.6) 30.339 31.450 1.8 17.6 19.788 11.080 855.081 96. 0 0 6.560 995.275 910 26.1 0. BV per share (INR)* Diluted P/E (x) Price/ BV (x) Price/ Adj.9 1.433 1.202 13.1 0.229 Operating expenses 1.050 Investments 310 538 566 Current assets 48.213 1.320 23.053 1.2 0.121 48 445 34.3 2.6 23.798 1.0 EA growth 25.018 1.557 Basic number of shares (mn) 1.814 Deferred tax liability 485 829 485 Int.2 1.120 48 45 43.5 77 FY12E Liabilities Equity capital 11.6 Growth metrics (%) Year to March Net interest income Net revenues growth Opex growth PPP growth PAT growth Sanctions and disbursements Year to March FY10 FY11 FY12E FY13E Sanctions (INR mn) 654.536 52.119 2.171 144.433 485 3.7 17.0 0.3 2.982 182.0 8.9 14.550 39.3 32.4 150.320 29.8 4.5 125.2 (22.7 17. to sanction ratio (%) 39.4 23.797 1.182 5 42.Employee exp 985 .3 6.233 201 55.148 Diluted EPS (INR) 18.6 1.0 21.031 Reserve for doubtful debts 8. number of shares (mn) 1.2 3.1 21.0 25.6 23.1 1.7 20.5 3.7 23.072 605 88.220 Unsecured loans 671.128 43.534 76.148 22.518 4.249.2 1.089 1.4 1.438 15.831 Net worth 124. 6.4 7.7 8.744 367.2 0.2 2.9 2.421 9.4 51.6 24.793 38.0 613.1 27.9 24.6 Dil.397) 30.975 1.071 2.0 50.6 174.0 0.969 Net current assets 11.536 261 35.5 26.143 Taxes 7.6 32.431 1.7 26.9 0.Post Conference Notes .478 13.183 64 59 5 34.798 1.5 115.0 29.199 Reserves & surplus 112.227 1.460 196.8 6.3 22.640 4.0 0.2 2.5 148.677 44.954 Interest expended 49.144 77.6 1.1 4.320 29.0 1. BV (x) Dividend yield (%) FY13E 13.119 8.255 (1.0 0.450 1.8 8.5 26.0 (INR mn) As on 31st March FY10 Yield on assets Cost of funds Spread Net interest margins Cost-income Tax rate FY10 FY11 FY12E FY13E 10.015.204 Fixed assets (net block) 743 767 747 For.7 3.4 23.4 1.4 2.2 2.0 1.600 Other income 629 Net revenues 30.

7 33.0 (6. coupled with its non-compete and IP driven business model.0 34.com Edelweiss Securities Limited .2) 72.3 Financials Year to March FY10 FY11 FY12E FY13E Revenues (INR mn) Rev.7 Others : 27. custom made India Equity Research l February 7. Capex plan of INR1.0 M cap (INR bn/USD mn) : 13 / 249 Avg.6 FIIs : 7.5 2. Management guided for 40-45% revenue growth in this segment over the next 2-3 years.4 12.8 55.394 1.2 13.3 9. EBITDA margin likely to expand owing to improving product mix.guntupalli@edelcap.1 * Promoters pledged shares (% of share in issue) : Nil PRICE Performance (%) BSE Midcap Index Stock Stock over Index 1 month 15. Poor monsoon could hit agro chemical demand.0) 12 months (10.3 Investment conclusion PI is expected to deliver strong profit CAGR of 47% and robust ROEs of more than 30% over FY11-13.6 30. FIs & Banks : 1.2 871 419 25 16.241 651 25 25.0 82.bahety@edelcap.2 Edelweiss Research is also available on www.Company Profile PI INDUSTRIES Growth. B: PI IN) CMP : INR 500 Target Price : INR 670 52-week range (INR) : 630 / 250 Share in issue (mn) : 25. MARKET DATA (R : PIIL. Key risks Execution delay in setting up new capacities to impact the custom synthesis business.edelresearch.BO. Share Holding Pattern (%) Promoters* : 63.9 50. Daily Vol.6 35.7 MFs.6 45.9 8.4 1.389 30.4 19. USD/INR volatility may impact export revenues as well as margins. CFA +91-22-6623 3362 manoj.9 43.157 29.7 9.0) 3 months (4.787 982 25 38.0 5. 2012 Agriculture Key takeaways EDELWEISS RATINGS Strong visibility in custom synthesis with order book at USD325mn. BSE/NSE (‘000) : 33. The company has built a strong order book of ~USD300mn to be executed within the next 3-4 years and by incurring capex of INR2bn over FY11-13. growth (%) EBITDA (INR mn) Net profit (INR mn) Share outstanding (mn) EPS (INR) EPS growth (%) Diluted P/E (x) EV/EBITDA (x) ROE (%) 5.0) (16.0) (21.8 7.8 1. PI has a robust pipeline of 8-9 products in in-licensed space to be launched over the next 3-4 years and also guided for 25-30% growth in this segment over this period.202 32. the long-term outlook is strong. higher operating leverage and sale of the low-margin polymer business.0) (20. Manoj Bahety.8 33. Absolute Rating BUY Investment Characteristics Growth While the agri-input division had short-term headwinds due to adverse weather conditions causing sub-optimal product mix during FY12.com Varun Guntupalli +91-22-6623 3481 varun. Bloomberg EDEL <GO>. Thomson First Call.425 17.4 10.5bn-1.8bn during FY12 and FY13.com. Contribution of in-licensed products in the agri-input business is currently about 45% (which was ~10% three years ago) and management guided for this to increase to 70-80% over the next 3-4 years.411 25 55. It is a preferred partner for global MNCs for custom synthesis on account of its competencies in process research and manufacturing. Reuters and Factset.9 12.

Day 1 Financial Statements Balance sheet Income statement Year to March (INR mn) FY10 FY11 FY12E FY13E Income from operations 5.9 46.034 54 347 2.2 34.875 5 1.5 1.2 12.219 982 38.7 4.4 3.1 2.816 349 1.787 4.8 9.5 1.3 26.1 12.1 79.4 19.396 1.7 43.189 53 1.0 1.5 9.944 2.076 2.331 227 503 5.2 35.087 5 1.183 Employee costs 445 Other expenses 926 Total operating expenses 4.746 4.410 1.8 119 66 123 62 2.2 2.8 55.6 50.763 1.450 3.506 3.602 1.8 55.0 55.2 6.0 2.844 326 5.191 5.067 843 224 947 (723) 1.9 43.7 11.1 7.1 25 7.4 0.174 2.054 80 3.9 25 4.6 38.7 FY10 FY11 FY12E (INR mn) FY13E 419 129 199 747 (131) 877 363 514 651 153 262 1.9 2.204 566 1.746 142 126 0 4.269 1.Post Conference Notes .7 0.088 181 7 914 263 651 0 651 651 29.1 Common size metrics as % of net revenues Year to March FY10 Operating expenses Depreciation and Amortization Interest expenditure EBITDA margins Net profit margins Growth metrics (%) Year to March Revenues EBITDA PBT Net profit EPS Cash flow statement Year to March Net profit Depreciation Others Gross cash flow Less:Changes in WC Operating cash flow Less: Capex Free cash flow FY11 FY12E FY13E 25.7 30.9 25 6.540 335 2.151 162 0 1.546 1.411 0 1.067 1.790 2.411 244 162 1.924 923 2.0 10.202 4.640 5 2.989 578 1.3 19.384 435 949 845 104 1.576 1.0 35.7 65.617 1.4 55.2 34.554 EBITDA 871 Depreciation and amortisation 129 EBIT 743 Interest expenses 183 Other income 11 Profit before tax 572 Provision for tax 153 Core profit 419 Extraordinary items 0 Profit after tax 419 Adjusted net profit 419 EPS (INR) basic 19.700 144 1.0 6.7 28.7 24.389 5.4 30.8 22.001 86 2.8 10.394 326 6.560 80 3.243 1.391 7.8 42.0 23.411 55.317 1.6 1.250 144 1.0 2.762 2.4 106 71 120 57 2.987 6.941 96 126 0 3.221 3.4 16.3 FY10 FY11 FY12E FY13E 16.6 26.601 216 0 1.411 1.9 50.061 4.385 403 982 237 1.425 Direct costs 3.0 51.313 2.5 33.560 918 2.4 38.7 Diluted equity shares (mn) 25 Dividend payout (%) 3.5 23.463 1.157 6.6 43.6 13.4 5.6 45.4 44.913 1.5 72.5 29.1 5.446 765 1.5 8.4 2.9 45.4 59.498 270 3.241 153 1.633 195 FY10 FY11 FY12E FY13E 33.0 2.2 1.468 750 718 79 (INR mn) As on 31st March Equity capital Preference capital Reserves & surplus Shareholders funds Secured loans Unsecured loans Borrowings Deferred tax liability (net) Sources of funds Gross block Depreciation Net block Capital work in progress Total fixed assets Investments Inventories Sundry debtors Cash and equivalents Other current assets Total current assets Sundry creditors and others Provisions Total CL & provisions Net current assets Uses of funds Adjusted BV per share (INR) Ratios Year to March ROAE (%) (on adjusted profits) ROACE (%) Inventory days Debtors days Payable days Cash conversion cycle Current ratio Debt/EBITDA Interest coverage Fixed assets t/o (x) Debt/equity Valuation parameters Year to March Diluted EPS (INR) Y-o-Y growth (%) CEPS Diluted P/E (x) Price/BV (x) EV/Sales (x) EV/EBITDA (X) FY10 FY11 FY12E FY13E 71 206 1.263 3.478 326 4.4 0.057 195 503 4.3 2.2 1.0 43.394 244 2.941 3.162 2.702 2.9 50.100 74 2.4 29.219 186 (21) 1.6 Tax rate (%) 26.5 17.0 7.1 2.2 9.313 73 112 81 1.568 134 1.9 3.0 102 74 110 67 2.766 84 503 3.100 2.5 34.8 Edelweiss Securities Limited Edelweiss Securities Limited .9 29.641 2.9 1.137 1.961 1.607 5.3 3.0 2.787 186 1.053 444 1.8 98 66 100 64 2.2 13.7 25.633 5.970 986 1.028 1.0 1.6 FY10 FY11 FY12E FY13E 17.807 9.134 5 1.7 7.3 19.0 3.6 32.4 30.4 3.716 74 1.

Bloomberg EDEL <GO>. Thomson First Call.5 MFs.252 52-week range (INR) : 710 / 328 Share in issue (mn) : 263.809 267 40.8 8.7 0.3) 11.906 11. Within the two metro stations (New Delhi railway station and Shivaji Stadium) out of 130.517 245 47.2 3 months 25.1) (14. In Delhi Metro management is targeting daily pax to increase from 18. With this. Absolute Rating BUY Rating Relative to Sector Outperformer Risk Rating Relative to Sector Medium Sector Relative to Market Underweight MARKET DATA (R : RLIN.3 GW.0 8.889 Avg. PRICE Performance (%) Stock Nifty EW Power Index 1 month 43.9 8. Since other income contributes significantly to the total earnings of the company.5) Key risks The scale and timing of projects could expose the company to execution risks. This has been post Delhi government’s commitment of routine tariff increases and regulatory asset creation.6 14. EPC order book is at INR243bn and the execution has picked up starting FY12 and expected to sustain due to the large execution pipeline from captive road and Reliance Power projects. Shankar K +91-22-4040 7412 shankar. B: RELI IN) CMP : INR 552 Target Price : INR 1.5 11.6 0.126 5. 24 hours operational and security arrangement provided by the company. The average fare collected is INR75/pax. The company has contributed its share of the INR5. Management indicated that the price is justified if the same is adjusted for builtup area (as their rates are on carpet).0 * Promoters pledged shares (% of share in issue) : Nil Investment conclusion We expect the execution pick up to regain investor confidence which accompanied by resolution to some of the group related issues should augur well for the stock.5 Others : 16.369 248 49.1) 13.0 134.888 34.2bn equity infusion into discoms.8 16.com Parvez Akhtar Qazi +91-22-4063 5405 parvez. This.9 23.9 Share Holding Pattern (%) Promoters* : 48.Company Profile RELIANCE INFRASTRUCTURE Power packed India Equity Research l February 7.403 12.000 currently to 30.2) (7.6 126.040 12.BO. The company has parked a sizeable part of its investments in group entities and yield bearing instruments.1 4.1) 12 months (25. 2012 Power Key takeaways EDELWEISS 4D RATINGS The regulatory overhang in Delhi has been cleared with IDBI approving INR50bn financial package (80:20 debt:equity) funded.910 248 52.com. could impact valuations.7 18.8 7. BSE/NSE (‘000) : 2.0 FIIs : 14.1 Edelweiss Research is also available on www.393 10.7 0.4 10. in addition to any delay in execution of infrastructure projects. the regulatory overhang on power businesses (including Mumbai) is eliminated.4 (14.com Edelweiss Securities Limited .000 sf of retail space management has leased out 30% area @ INR525-550/sf /month. Reuters and Factset.148 -4. any diminution in the value of the same could impact valuations.qazi@edelcap. Financials Year to March Revenue (INR mn) Rev. EBIT margin guidance of 8-10%.8 6.edelresearch.3 (3.k@edelcap.897 2. Management indicated that over the next 12 months 10 out of 11 road projects and the Mumbai Metro I will be operational. The road traffic growth has been dented due to the depressed industrial growth and weak macro environment.1 0.130. Daily Vol.7 7.000 in FY13.0 (14. The tariff gap in Mumbai has reduced post customer migration to Tata Power as power purchases have reduced to ~950 MW from 1. growth (%) EBITDA (INR mn) Net profit (INR mn) Shares outstanding (mn) EPS (INR) EPS growth (%) P/E (x) P/B(x) ROAE (%) FY10 FY11 FY12E FY13E 98.4 9.0 0.1 M cap (INR bn/USD mn) : 145 / 2. FIs & Banks : 21.5 94.

369 12.6 FY10 FY11 FY12E FY13E 2.593 22.750 Unsecured loans 26.861 135.320 Investments 100.1 11.198 12.232 2.900 12.8 0.7 0.906 Depreciation and amortisation 3.109 7.198 (362) 8.2 7.403 3.693 990 217.101 65. C. Operating cash flow Less: Capex Free cash flow 81 (INR mn) As on 31st March FY10 FY11 FY12E FY13E Equity capital 2.549 Total fixed assets 40.5) (6.134 (587) (732) 13.4 2.1 4.2 2.4 FY10 FY11 FY12E (INR mn) FY13E 13.909 17.317 98.7 0.928) 47.258 2.0 Dividend per share 7.8) (12.9 248 49.313 9.277 15.0 16.232 2.6 11.225 0 0 15.4 Ratios Year to March ROAE (%) ROACE (%) Current ratio Debtors (days) Average fixed assets t/o (x) Av.3 164 2.708 Interest expenses 2.808 6.940 125.4 68.748 193.6 0. capital employed t/o (x) Debt / Equity Debt/EBITDA Adjusted debt/Equity Valuation parameters Year to March Diluted EPS (INR) Y-o-Y growth (%) CEPS (INR) Diluted P/E (x) Price/BV(x) EV/Sales (x) EV/EBITDA (x) Edelweiss Securities Limited Edelweiss Securities Limited .0 2.304 105.3) (14.943 11.7 0.644 12.078 62.073 Shareholders funds 151.479 185.8 0.9 23.938 Profit before min.3 1.712) 10.2 40.455 Profit after min.991 EBITDA 8.254 267 40.1 Common size metrics as % of net revenues Year to March FY10 Operating expenses 91.1 Dividend payout (%) 15.293 85.0 134.6 6.472 2.517 Extraordinary items 1.305 (6.897 Direct costs 79.744 217.5 0.248 Gross block 74.184 Profit before tax 12.254 3.185 105.975 22.030 2.861 137.011 0 0 16.457 Cash and equivalents 3.6 5.453 Core Profit 11.358 661 2.2) (14.137 43.3 2.5 9.6 52.5 1.348 58.888 99.4 4.511 Net block 34.854 39.399 Borrowings 41.820 Total CL & provisions 66.069 (34.9 13.Post Conference Notes . working capital t/o (x) Av.910 0 12.552 125.9 9.313 54.0 FY11 FY12E FY13E 91.7 1.841 2.248 Book value per share (INR) 619 2.7 0.196 Inventories 2.6 0.578 0 16.753 4.517 11.675 15.358 105.479 174.217 15.984 12.9 11.425 8.2 FY10 FY11 FY12E FY13E 47.086 18.369 0 12.1 3.947 122.758 Total operating expenses 89.5 0.493 68.755 8.903 48.148 758 FY10 FY11 FY12E FY13E 8.3 6.2 159 1.265 6.149 Others 1.011 14.960 4.485 16.934 14.3 4.7 126.0 Diluted shares (mn) 245 EPS (INR) fully diluted 47.4 26.6 4.5 6.3) 58.698 105.599 228.5 5.019 Sundry creditors and others 56.240 110.3 16.493 71.4 23.455 Shares outstanding 245 EPS (INR) basic 47.487 12.455 3.910 248 52.2 0.114 12.0 Net profit margins 11.712) 12.577 Sources of funds 194.4 0.287 Net current assets 53.1 8.9 2.302 58.8 (7.850 21.283 Depreciation 39.9 8.584 Employee costs 4.249 990 217.5 62.2 7.1 2.225 13.377 4.649 Other expenses 5.6 0.839 23.493 75.9 11.0 EBITDA margins 9.554 2.134 5.922 Other income 10.Day 1 Financial Statements Balance sheet Income statement Year to March (INR mn) FY10 FY11 FY12E FY13E 94.431 187.748 175.1 0.920 342 16.254 11.2 17.0 Depreciation and amortization 3.732 Uses of funds 194.148 73.5 3.7 86.060 6.6 Growth metrics (%) Year to March Revenues EBITDA PBT Net profit EPS Cash flow statement Year to March Net profit Depreciation Deferred tax Others Gross cash flow Less: Changes in W.926 25.655 5.467 Provisions 9.0 75.399 39.599 116.904 4.5 87.5 2.910 12.4 (14.0 12.4 267 40.861 131.4 7.7 8.328 98.1 248 52.1) 49.8 1.1) (14.711 105.137 50.965 217.522 Secured loans 14.578 Income from operations 98.295 69.9 0.7 10.040 4.065 17.809 445 11.2 2.5 0.198 EBIT 5.760 3.207 16.137 46.692 Sundry debtors 33.1) 34.353 1.969 Provision for tax 1.761 43.126 104.8 0.393 3.3 10.4 183 2. interest 13.369 3.148 105.1 13.835 16.1 3.850 21.8) (5.3 0.8 90 2.351 541 10.2 4.979 4.304 714 2.825 16.5 3.9 49. interest 13.3) (4.910 4.2 12.399 39.586 177.853 Total current assets 120.771 Capital work in progress 5.8 95.579 3.6 8.675 174.6 0.449 Reserves & surplus 149.369 248 49.505 118.0 8.4 4.2 Interest expenditure 3.249 990 228.798 16.000 (16.5 14.179 2.9 2.0 (14.018 Loans and advances 80.001 176.748 160.6 0.996 31.

Share Holding Pattern (%) Out of the INR230bn of capex done so far.com Edelweiss Securities Limited .397 2.805 2.8 (2. MFs.014) 2.k@edelcap. Hence.2 24.5) Financials Year to March Revenue (INR mn) Rev. CMP : INR 99 Target Price : NA 52-week range (INR) : 137 / 68 Share in issue (mn) : 2. The company expects some gas allocation to be approved when EGoM meets to decide on diverting gas from non-core to power sector (to release 18 mmscmd).604 2.Company Profile RELIANCE POWER Powering ahead India Equity Research l February 7.4) (3.8 207 NA (1. all the incremental capex requirement will be debt funded due to low draw down so far. growth (%) EBITDA (INR mn) Net profit (INR mn) Shares outstanding (mn) EPS (INR) EPS growth (%) P/E (x) EV/EBITDA (x) ROAE (%) FY08 FY09 FY10 FY11 NA (350) 854 2. failing which not only earnings are at risk but even capacity addition would be impacted.4) 1.3 • Rosa phase II unit II of 300 MW would be commissioned by April 2012.4 NA 261. Management expects the government to approve sale of coal to power plants at CIL equivalent prices atleast in the interim which will also help addressing India’s coal problem partially. Promoters* : 80.1 M cap (INR bn/USD mn) : 277 / 5.7 FIIs : 4.2) 12 months (1.qazi@edelcap. • Butibori 1x 300 MW to be operationalised in March 2012 and the second unit by Q2FY13. Nil Stock Stock over Sensex 1 month 11. 2012 Power Key takeaways EDELWEISS RATINGS In the operational Rosa project (3x300 MW) the company is earning 25-30% RoEs including efficiency gains from O&M. Shankar K +91-22-4040 7412 shankar.0 96. • The combined cycle 2250 MW at Samalkot by FY13 end as all the 6 gas turbines would be operationalised in the short term.057) 6.397 1. ~INR110-120bn has been equity and the balance is debt.7 4.4 Relative Performance (%) Sensex Key risks Key approvals / policies in the form of utilization of surplus coal (from Sasan’s mines as well as setting up Chitrangi) and the imported coal based projects are critical.BO.0 170.7 36.505 Avg.edelresearch. Reuters and Factset.290 7.com. Bloomberg EDEL <GO>.2 NA (1.8) 4.com Parvez Akhtar Qazi +91-22-4063 5405 parvez.445 2.260 0.5 3 months 0.0) 36. Daily Vol. Thomson First Call.911.9 179. station heat rate and working capital savings.8 10.839 2.9 Edelweiss Research is also available on www.4 119. Management expects the same to be in the 20-25% range going forward with increase in domestic coal supplies.1 (262. BSE/NSE (‘000) : 3.805. FIs & Banks : 1.7 (144.8) 1.7 (5.6 Others : 13. B: RPWR IN) • Sasan UMPP first unit of 660 MW to be commissioned by December 2012. Absolute Rating NOT RATED The company expects power generation capacity to be ~5 GW by FY13 end from the existing ~1 GW comprising: MARKET DATA (R : RPOL.548 4.5 2.7 34.3) (17.6 (168.990.8) (19.2 * Promoters pledged shares (% of share in issue) : Coal production from the Sasan coal mines is expected to commence from Q2FY13 leading to ~ 5 mt of output in the first year.

085) (7.231) 6.231 22.152 487 288 1.952 73 2.9 10.1 (13.0) (2.264 3.7 179.683 38.8 (168.677 Net current assets (1.264 (1.298) 2.057) 57 (1.9 186.672.0 96.282 2.281 (73.528 16.1) 0.8 21.4 32.552) 167.114) 87 8.623.4 261 1.4 0.3 65 0.400) (7. BV per share (BV)(INR) 60 23.4 1.7 72.2) 0.968 120.879 46.604 7.0 EPS (INR) fully diluted 0.334 56.6 42.290 1.7 Ratios Year to March Valuation parameters Year to March Diluted EPS (INR) Y-o-Y growth (%) CEPS (INR) Diluted P/E (x) Price/BV(x) EV/Sales (x) EV/EBITDA (x) Edelweiss Securities Limited Edelweiss Securities Limited .6) 0.839 57 0 (11.9 179.9 2.7 4.014) 2 (1.0 #DIV/0! 4.9 27.6 0.212 3.338 1.172 216 1.817 Gross block 2.839 2.445 2.785 73.623.4 4.4 (12.951 Sundry creditors and others 6. Operating cash flow Less: Capex Free cash flow FY08 FY09 FY10 FY11 (100.5 4.600 Reserves & surplus 112.839 6.405 (41.790 537 3.283 168.234 Inventories Sundry debtors Cash and equivalents 4.595 56.735 Shareholders funds 135.9 2.445 2 0 (1.396.72 (262.63 860.234) (4.1) 0.0) FY08 FY09 FY10 (INR mn) FY11 854 6 (8.111) 41.2 (5.0 170.6) 0.262.257 2.7 2.8 53.726 (9.051 140.968 113.4 170. C.0 Debt/EBITDA (12.418 813 17.406 167.805.780 49.824 137.397 2.338) (2.927 (1.377 6.359 39.325 0 13.8 1.727) Uses of funds 139.6 FY08 FY09 FY10 FY11 0.599 Provisions 79 Total CL & provisions 6.408 68.604 2.225) (6.604 2.996 2.329 PBT 922 Provision for tax 68 Core profit 854 Profit before minority interest 854 Profit after minority interest 854 Shares outstanding ( mn ) 2.633 7.436 79.825) 39.672 255 3.325 151.009 0 (16.Day 1 Financial Statements Balance sheet Income statement (INR mn) Year to March FY08 FY09 FY10 FY11 Total revenues Cost of Operations 0 Staff cost 30 Other operating expenses 320 Total expenditure 350 EBITDA (350) Depreciation & Amortisation EBIT (350) Interest 58 Other income 1.612) 83 As on 31st March (INR mn) FY08 FY09 FY10 FY11 Share capital 22.0 0.0) 0.8 (1.0 (509.397 1.0 0.156 250 22.483 Unsecured loans 0 Borrowings 4.3 9.260.398 8.0 (0.037 23.65 1.2 ROACE (%) (6.4) 2.572 164 23.683 60 FY08 FY09 FY10 FY11 ROAE (%) 1.445 2.068) (332) 73.334 Secured loans 4.483 Sources of funds 139.929 (3.0 1.Post Conference Notes .227 7.990.1 2.116 57 23.131 Capital work in progress 8.0 2.016) 18 3.8) 2.8 178.5 (316.2 173.817 Adj.715) 151.029 91.7 2.013) (7.298 241.2 (21.396.1 1.4 4 239 772 1.4 #DIV/0! 189.4 179.0) 3.979) 7.570 125 2.501 428 6.522) 925 2.037 60 28.719 115 7.9 11.4 Diluted shares (mn) 2.8) Adjusted Debt/Equity 0.805 2.178 Total fixed assets 10.7 FY09 FY10 FY11 609.663 144.750 (1.8) (144.471 19.869 (43.8 (3.300.564 16.228) (2.1 Common size metrics as % of net revenues Year to March FY08 Operating expenses Depreciation & amortization Interest expenditure EBITDA margins Net profit margins Growth metrics (%) Year to March Revenues EBITDA PBT Net profit EPS Cash flow statement Year to March Net profit Depreciation Deferred tax Others Gross cash flow Less: Changes in W.1 36.7 Debtors (days) Average fixed assets t/o (x) Average working capital t/o (x) Average capital employed t/o (x) Debt / Equity 0.7 (5.148 Less : Depreciation 17 Net block 2.0 119.369 126.116 2.348 241.2 4.6 20.64 26.5 254 0.1 0.659 103.9 0.9 34.9) 3.8 2.654 2.286 36.604 7.604 1.270 Loans and advances 681 Total current assets 4.9) Current ratio 0.161 16.0 207 244 433 587 1.631 22.654) (572) 8.792 13.964.009 1.195 8.1 4.090 769 1.227 162.014 (1.7 1.839 6.260 EPS (INR) basic 0.1) 16.7 78.8) 9.445 2.548 6.026 187 6.310 Investments 131.6 1.

2) 85.1) (11.5 M cap (INR bn/USD mn) : 29 / 570 Avg. it is well placed to emerge as a leading departmental store player in the long run. Pick up in apparel volumes is likely to commence from H2FY13. Margin pressure primarily on back of aggressive roll out of new stores which experienced delayed cash generation owing to slowdown in consumer offtake.061 323 79 4.Company Profile SHOPPERS STOP Luxe growth India Equity Research l February 7.092 19.079 79 13. Also. The company indicated that Q1FY13 is likely to see price cuts in apparel (5-10%) across brands.2) 12 months (68.0 16.edelresearch. Promoters* : 67.1 25.com Edelweiss Securities Limited . With its steadfast focus on systems and processes and its ability to attract global brands as venture partners. Thomson First Call.809 22. B: SHOP IN) CMP : INR 347 Target Price : INR 425 52-week range (INR) : 504 / 251 Share in issue (mn) : 82.0 1.6 10.0 (25. FIs & Banks : FIIs : 11.1 101.6 28.0) 64. growth (%) EBITDA (INR mn) Net profit (INR mn) Shares outstanding (mn) Diluted EPS (INR) EPS growth (%) Diluted P/E (x) EV/EBITDA (x) ROAE (%) FY10 FY11 FY12E FY13E 23.3 2. Absolute Rating BUY Rating Relative to Sector Performer Risk Rating Relative to Sector Low Sector Relative to Market Overweight MARKET DATA (R : SHOP.9 MFs. It has assiduously positioned itself as a retailer since 1991 of superior quality products and services.784 650 79 8.5 66. Reuters and Factset. Bloomberg EDEL <GO>.4 (17. Macro concerns could hamper domestic consumption trends and result in lower footfalls. SSL is planning price cuts as COGS pressure has eased significantly which can further boost demand. The HyperCity business is expected to turn around at the PAT level in FY14 and at EBITDA level in FY13.roy@edelcap. SSL is a niche play with strong brand position in the lifestyle space.6 41.284 432 79 5.0 Investment conclusion The Indian retail landscape is evolving with interplay of several demographic and economic factors.6 3 months (40. Financials Year to March Revenues (INR mn) Rev.5 17.0 * Promoters pledged shares (% of share in issue) : 7.com Harsh Mehta +91 22 4063 5543 harsh. Daily Vol.440 19. Sales growth revived in January due to end of season sales (10 days of extra sales to counter slowndown: 18-20% discount).5 6.6 12.3 (4. Share Holding Pattern (%) Key risks Pressure on margins due to cost escalation and competition.0 23.0) 9. Abneesh Roy +91 22 6620 3141 abneesh. 2012 Retail Key takeaways EDELWEISS 4D RATINGS Shoppers Stop (SSL) witnessed a slowdown in the departmental format as LTL volumes were down led by slowdown in apparels. The improving liquidity is also positive as it means better delivery of retail space for expansion. This format posted a strong Diwali season.4 42.7 Edelweiss Research is also available on www.5 1.619 53. The big opportunity lies in the growing share of organised retail with the growing trend among consumers to allocate a larger share of income to consumption and gradual improvement in lifestyle. BSE/NSE (‘000) : 109.BO.4 Nil PRICE Performance (%) Stock Nifty EW Retail Index 1 month (13.1) Escalation in lease rentals and administration expenses can impact margins.0 1. This strong positioning and brand recall gives the company a strategic advantage in the light of increasing competition.mehta@edelcap.496 1. soft month of November followed by pick up in December and January.0 28.3 34.2 11. offering an international shopping experience.0) (7.com.7 Others : 13.7) 0.0 11.

359 Equity shares outstanding (mn) 7 6 EPS (INR) basic 4.5 1. af.093 219 875 196 1.0 1.930 (19) 8.0 1.471 196 339 2.012 2.784 80 1.7 46.3 23.0 5.4 2.4 15.384 8.425 (245) 1.9 4.000 395 605 121 484 245 729 79 9.9 1.6 0.8 5.6 67. other income 776 Net interest & Finance charges 254 PBT 522 Provision for taxation 164 Core PAT 358 Minority interest 1 Pr.5 4.071 831 587 244 1.0 28.6 6.871 1.841 37 411 4.0 1.510 3.884 220 761 2.589 19.9 2.7 12.284 469 815 51 866 295 571 389 182 250 432 79 5.7 Diluted shares (mn) 77.559 10.6 CEPS (INR) 9.573 1.326 9.811 108 1.144 2.2) 8.2 0.612 2.126 2.3 6.469 22.547 9.9 (9.5 - FY11 FY12E FY13E 64.5 2.825 450 991 0 5.146 5.4 FY10 FY11 FY12E FY13E 5.841 5.064 7.042 1.Post Conference Notes .018 2.9 9.0 18.071 79 13.642 7.0 - Edelweiss Securities Limited Edelweiss Securities Limited .5 66.9 FY10 FY11 FY12E (INR mn) FY13E 359 634 381 254 993 (277) 1.456 (1. Int.7 Dividend payout ratio (%) 14.3 68.0 8.5) (126.0 20.8 13.071 221 2.327 5.398 6.5 2.2 FY10 FY11 FY12E FY13E 12.971 3.377 293 1.4) 53.6 EPS (INR) fully diluted 4.9 2.4 17.0 0.5 79.112 4.1 2.6 79.8 2.1 35.3 2.5 1.9 7.9 80.6 3.762 4.088 2.4 5.454 1.2 1.152 4.7 11.5 5.8 17.0 0.2 2 32 54 (20) 1.4 2.468 Employee costs 920 Advertisement & sales costs 347 Electricity expenses 349 Rent and lease expenses 1.559 86 FY10 FY11 FY12E FY13E 13.1 23.2 4.5 - 8.1 - 33.0 1.377 Others 1.8 13.224 4.0 - 13.3 2.9 0.9 8.117 8.4 8.856 2.1 13.4 3.8 14.5 17.8 9.009 22 2.591 122 92 2.8 68.0) (123.874 570 991 0 5.8 0.555 1.523 547 976 24 1.384 72 369 6.482 51 1.6 6.553 561 Common size metrics as % of net revenues Year to March FY10 Cost of materials Employee costs Advertising & sales costs Electricity Rent and lease Other general expenditure Depreciation Net interest expenditure EBITDA margin EBIT margin Net profit margin Growth metrics (%) Year to March Revenues EBITDA PBT Net profit EPS Cash flow statement Year to March Net profit Add: Non cash charge Depreciation Others Gross cash flow Less:Changes in WC Cash from operations Less: Capex Free cash flow 85 (INR mn) As on 31st March Share capital Reserves Shareholders' funds Minority Secured loans Unsecured loans Borrowings Deferred tax liability Sources of funds Gross block Less depreciation Net fixed assets Capital work in progress Goodwill Investments Current assets Inventories Sundry debtors Cash and bank balance Loans and advances Current liabilities Liabilities Provisions Working capital Uses of funds BV (INR) Ratios Year to March ROAE (%) ROACE (%) Debtor days Inventory days Payable days Cash conversion cycle (days) Current ratio Debt/EBITDA Debt/Equity Adjusted debt/equity Interest coverage (x) Valuation parameters Year to March Diluted EPS (INR) Y-o-Y growth (%) CEPS (INR) Diluted P/E (x) Price/BV (x) EV/Sales (x) EV/EBITDA (x) Dividend yield (%) FY10 FY11 FY12E FY13E 349 2.9 2.3 8.5 3.619 16.463 2.2 85.6 12.3 5.2 0.653 108 1.0 2.5 3 32 54 (20) 1.696 (223) 1.4 5.319 1.206 7.Day 1 Financial Statements Balance sheet Income statement Year to March (INR mn) FY10 FY11 FY12E FY13E Net revenues 15.224 4.0 68.474 2.6 15.5 (163.0 (25.5 0.8 DPS 0.0 13.766 (419) 1.3 2.2 0.0 7.1) 21.4) (17.412 EBITDA 1.017 1.5 1.533 440 1.598 5.292 (46) 4.6 5. tax af.965 Gross profit 5.062 Depreciation 381 EBIT 681 Other income 95 EBIT incl. Min.2 79.599 3.2 64.1 3 38 68 (27) 1.0 1.168 462 2.4 18.5 0.1 101.920 3.6 23.5 0.9 17.114 1.734 6.6 2.4 25.1 42.5 9.270 428 842 432 514 469 45 946 (20) 966 2.5 9.505 214 182 2.901 (213) 2.3 28.630 (19) 7.598 10.433 Cost of materials 9.777 3.2 16.3 2.5) (20.3 3.600 4. & Asso.224 3.687 572 543 2.6 6.812 (217) 2.034 1.9 7.975 669 636 2.490) 729 696 547 150 1.903 278 109 399 4.230 (19) 9.5 2 31 54 (20) 1.0 0.4 2.3 513.865 2.0 5.866 375 991 0 6.004 108 1.671 1.4 3.212 2.642 63 369 5.2 4.230 2.115 2.399 504 477 1.8 1.9 46.8 68.069 587 1.1 2.

4 Edelweiss Research is also available on www.3 24.7 38. management focus will be to target niche products with in the acute segment.6 M cap (INR bn/USD mn) : 564 / 11.036 27.194 1.572 1. Bloomberg EDEL <GO>.8 12 months 14. Incrementally. Higher competitive intensity may impact realizations: Management has highlighted that higher competitive intensity in the domestic market as well as limited growth opportunities in the US can impact realization going forward. a favorable outcome will be potentially accretive by ~USD50-60 to sales for FY12-13E.223 Avg. Comptan.215 42.188 1. Thomson First Call.6 23.075 (4.036 22.700 17.633 13. management expects global generics market to grow robustly.786 23. growth within each market could be different. Reuters and Factset. among others.6 20.1 Reducing patent cliff opportunities beyond FY13 could slowdown growth momentum.Company Profile SUN PHARMACEUTICALS In fine fettle India Equity Research l February 7. Key risks PRICE Performance (%) Stock Nifty EW Pharma Index 1 month 5.7 (27.9 31. incrementally management focus will be to develop pipeline of more complex molecules or where company would have advantage in terms of pricing (back ended API).4) 42.3 3 months 5. However. Absolute Rating BUY Rating Relative to Sector Outperformer Risk Rating Relative to Sector Medium Sector Relative to Market Equalweight MARKET DATA (R : SUN. Second. The first priority is to penetrate higher into emerging markets either organically or through acquisitions. B: SUNP IN) CMP : INR 544 Target Price : INR 570 52-week range (INR) : 565 / 392 Share in issue (mn) : 1.8 (7.com Perin Ail +91-22-6620 3032 perin.9 17.2 19. Management also highlighted that it expects to launch generic Clopidagril post Teva exclusivity (May-Oct 2012).7 15.3 19.800 1. export formulations. will be to expand into European markets where markets have evolved in terms of pricing cycles and lastly to target higher growth markets such as Japan.5 75. 2012 Pharmaceuticals Key takeaways EDELWEISS 4D RATINGS Emerging markets focus to drive growth beyond FY13: Sun Pharma (SUNP) has cited a three pronged plan to address growth post patent cliff opportunities in 2012-13. While we do not build in early resumption in Caraco manufacturing sites.ali@edelcap.com Edelweiss Securities Limited .011 28.036 17. Domestic growth to sustain over next two to three years: Domestic (40% of total business) will sustain higher growth. Financials Year to March Revenues (INR mn) Rev. Pricing increases and supply issues in US had disproportionate impact on FY12 profits which is unsustainable.edelresearch.3 Others : 10.923 20.1) 15. Focus on complex products in US: US is likely to remain a key growth driver.com.9 9.5 90. Daily Vol.3 Nil Investment conclusion SUNP’s core earnings from base business are expected to post CAGR of 27% over FY11-13E led by strength in domestic business. FIs & Banks : FIIs : 19.7 22.4 30.7 27.2 34.garg@edelcap. however.036 12. Management expects to maintain market share in key chronic segments and improve market share in underpenetrated segments by addressing product and field force gap. growth (%) EBITDA (INR mn) Net profit (INR mn) Share outstanding (mn) EPS (INR) EPS growth (%) Diluted P/E (x) EV/EBITDA (x) ROE (%) FY10 FY11 FY12E FY13E 40.2) 13.016.1 26. BSE/NSE (‘000) : 1.7 * Promoters pledged shares (% of share in issue) : 6. Some of these molecules include Stalevo.0 0.8 19.5 23.3 33.BO.0 20.035. Manoj Garg +91-22-6623 3302 manoj. Overall.584 32.3 14. new products in US generics space and full year impact of Taro acquisition.2 Share Holding Pattern (%) Promoters* : 63.7 57.7 MFs.

748 6.937 11.2 5.121 2.8 11.289 78.5 Edelweiss Securities Limited Edelweiss Securities Limited .036 132.0 3.036 93.041 1.036 27.758 2.016 23.286 5.2 (0.Post Conference Notes .860 9.286 25.841) 552 27. 8.572 1.0 319 75 85 309 4.6 49.161 17.234 45.140 15.584 0 48.923 Cost of revenues Selling.2 0.920 6.2 38.1 4.932 81.739 11.946 28.172 4.256 (3.310 14.4 25.3 28.036 20.328 1.3 341 94 89 346 4.6 (2.341) 982 19.1) (29.234 2.2) 23.972 146.8 44.6 0.607 6.6 3.543 15.5 37.4 30.1 Common size metrics as % of net revenues Year to March FY10 FY11 FY12E FY13E 27.901 2.488 122.706 7.486 2.3 30.2) (26.9 0.6 (3.1) (31.029 122.786 2.720 22.584 75.073 8.7 3.310 21.448 4. admin & general exp.9) (30.016 27.036 13.412 103.721 129 FY10 FY11 FY12E FY13E 17.6 15.0 19.2 30.110 133.908 92 1.4 32.7 27.7 11.188 1.652) 10.542 81.036 25.572 2.2 13.1 66.205 2.146 133.5 7.3) FY10 FY11 FY12E FY13E 12.8 32.284 18.064 3.072 (3.726 60.036 77.064 111.794 11.729 2.4 19.110) 576 33.815 Provision for tax 679 Core profit 13.3 27.698 376 19.0 5.2 0.523 733 4.981 18.472 103.215 57.761 8.6 55.575 4.8 64.4 6.8 5.2 (3.194 Eq.7 75. PAT after min.675 9.075 4.881 26.100 Interest expense/(income) (1.798 94.716 21.1 (0.8 CEPS (INR) 14.0 34.939 103.215 0 37.8) 34.864 4.9 9.136 Extraordinary items 334 Profit after tax 13.3 44.562 37.090 10.340 8.041 17.056 7.3 19.042 23.7 4.5 42.042 76 1.693 2.011 2.3 19.939 30.0 6.3 23.996 5.939 2.036 22.621 19.543 12.867 13.146 3.0 7.602 86.597 500 7. Net current assets Uses of funds Book value per share ( INR) Ratios Year to March ROAE (%) ROACE (%) Inventory days Debtors days Payable days Cash conversion cycles Current ratio Debt/ EBITDA Net Debt/equity Valuation parameters Year to March Diluted EPS (INR) Y-o-Y growth (%) CEPS Diluted P/E (x) Price/BV (x) EV/Sales (x) EV/EBITDA (X) FY10 FY11 FY12E FY13E 1.188 23.1 (0.3 34.036 EPS (INR) adjusted 12.289 479 1.1) 20.5 34.5 25.693 4.833 94.743 63.8 23.0 276 67 84 259 5.2) 22.924 5.523 733 4.485 28.994 28.138) Other income 576 Profit before tax 13.798 21.0 24.664 10.093 (2.2 57.2 FY10 FY11 FY12E FY13E (4. 6.700 2. 13.850 14.8 (2.4 63.3 25.2 1.533 (469) 14.057 2.281 25.470 Minority interest & others (41) Profit after minority interest 13.4 40.374 6.036 Recurring EPS (INR) fully dil.886 7.205 0 25.911 17.511 1.7 Diluted shares (mn) 1.485 33.8 FY10 FY11 FY12E (INR mn) FY13E 13.556 16.003 4. shares outstanding (mn) 1.Day 1 Financial Statements Balance sheet Income statement (INR mn) Year to March FY10 FY11 FY12E FY13E Income from operations 40.233 1.1 36.720 22.086 Other operating income 1.2 23.094 46.144 14.660 (1.3) 34.3 65.4) 36.806 29.0 4.1 23.116 13.036 110.7 19.346 21.095 9.898 9.693 24.256 (3.982 1.833 3.652) 12.6 23.9 19.157 8.643 76.875 7.0 22.254 78.738 500 7.511 Adj.988 Total operating expenses 26.046 9.977 Employee cost 4.2 22.155 41.873 29.652) 8.013 15.547 16. Total shareholders funds Secured loans Unsecured loans Borrowings Deferred tax liability (net) Minority interest Sources of funds Gross block Depreciation Net block Capital work in progress Intangible assets & goodwill Investments Inventories Sundry debtors Cash and bank balances Loans and advances Total current assets Current liabilities Provisions Total current liab.2 34.4 5.908 45.057 0 31.520 20.075 Net revenues 38. & prov.2 Dividend per share (INR) 3. R & D cost Other expenses Total operating expenses Depreciation and amortisation Interest expenditure EBITDA margins Net profit margins Growth metrics (%) Year to March Revenues EBITDA Net profit PBT EPS Cash flow statement Year to March Net profit Depreciation Others Gross cash flow Less:Changes in WC Operating cash flow Less: Capex Free cash flow 87 (INR mn) As on 31st March Equity capital Reserves & surplus Common shareholders eq.003 19.9 17.1 7.4) 14.029 111.310 18.702 33.060 30.515 14.523 733 4.161 2.155 107 1.015 16.633 Depreciation & amortisation 1.083 Selling.1 31.455 10.454 146.230 EBITDA 13.7 7.2 Dividend payout (%) 25.6 1.5 20.5 17.4 15. admin & general exp.772 5.036 17.3 5.698 3.137 28.080 23.441 Materials cost 10.5 274 70 90 254 6.712 (890) 1.143 Other expenses 3.8) 35.7 (27.923 0 57.721 45.701 31.7 29.572 28.987 3.912 26.8 37.7 5.008 R&D cost 2.151 23.2 (0. int.4 1.256 (3.720 22.2 8.9) 42.3 5.548 533 21.1 90.0 34.6 3.579 29.188 2.2 42.923 90.7 28.533 EBIT 12.800 1.4 33.074 913 18.

It also foresees the telecom vertical to post a better YoY growth in FY13. FIIs : 13.289 8.5 26. Financials Year to March Revenues (INR mn) Rev. 2012 IT Key takeaways EDELWEISS 4D RATINGS Management reiterated its long-term revenue growth target of 20% (CAGR) with 27% sustainable EBIT margin.0 86. TCS has multiple margin levers at its disposal.agarwal@edelcap.247 / 902 Share in issue (mn) : 1.6620 3147 omkar.957 55.4 Others : 4.5 171.738 1.185 52-week range (INR) : 1.1 23. The company also reiterated the fact that the cost cutting pressures have led to increase in outsourcing in Europe which is expected to grow at a faster pace. will sustain its margins.1 MFs.600.9 19. Sandip Agarwal +91-22.Company Profile TATA CONSULTANCY SERVICES Re-iterates its positive stance India Equity Research l February 7. Reuters and Factset. Absolute Rating BUY Rating Relative to Sector Outperformer Risk Rating Relative to Sector Low Sector Relative to Market Equalweight MARKET DATA (R : TCS. Company also expects more clarity on budgets by May /June for FY13 and currently the pipeline remains strong with deal wins in all verticals and across geographies.1 12.0 36.7 18.998 1.edelresearch.800 68.9 26.com Omkar Hadkar +91-22.1) (3. Indore .BO.6 3 months 1. The company has been adding capacity in tier II cities to increase its retention ratio of employees and will be adding sizable capacity in Bhubaneshwar .957 44.6 373.957 35.482 17.com Kunal Sangoi +91-22.2 M cap (INR bn/USD mn) : 2. It is a serious contender for winning large deals. which is expected to dip gradually. and mission-critical projects.1 32.9 33.7 PRICE Performance (%) Stock Nifty EW IT Index (1.957. ability to roll up large acquisitions. End-to-end full services offerings.5 0. and Gandhinagar (Ahmedabad).4 37. shielding it from continued pressures on account of wage increases across the industry.865. BSE/NSE (‘000) : 1. Thomson First Call. which we believe. FIs & Banks : As India’s largest and most-experienced IT services firm.3 111.hadkar@edelcap.199 Target Price : INR 1.164 1.7) 9.7 34. TCS is well-positioned to benefit from the growing demand for offshore IT services.3 4.000 and also maintained its campus offers for FY13 at 43.0 12 months (6. Bloomberg EDEL <GO>.6623 3474 sandip.984 87.6623 3370 kunal.9 Share Holding Pattern (%) Promoters* : 74.sangoi@edelcap. B: TCS IN) CMP : INR 1. growth (%) EBITDA (INR mn) Net profit (INR mn) Shares outstanding (mn) Diluted EPS (INR) EPS growth (%) Diluted P/E (x) EV/EBITDA (x) ROAE (%) FY10 FY11 FY12E FY13E 300. complex.com Edelweiss Securities Limited .7 15.9) Key risks to our investment theme include – (1) double dip recession in major market US and prolonged slowdown in Europe (2) sharp cross currency movements and appreciation of rupee against USD. Daily Vol.8 26.3 Edelweiss Research is also available on www. Euro and GBP (3) pricing pressure and (4) reduction in margins.988 128.9 582.8 149. as it has more experience than peers in implementing large.6 495.6 21. On the operational front TCS expects to end FY12 with gross hire of 65.590 32.753 1. improving sales and marketing prowess and willingness to take multiple big bets (different go-to-market models) are among the key rationales for TCS to sustain its long term hi-growth trajectory.728 Avg.com.957 65.5) 1 month (5.615 107.245 24. TCS expects a capital expenditure of ~INR25bn for FY13 and a tax rate of 25%.4) (7.8 20.5 37. traction in emerging markets.8 * Promoters pledged shares (% of share in issue) : Nil Key risks Investment conclusion 7.348 / 46.

373 173.9 11.834 52.298 160.Post Conference Notes .8 21.859 108.282 269.508 422.745 15.100 22.244 Gross profit 143.299 108.176 128.017 347.945 29.159 33.437 42.120 43. & others .5 17.7 7.549 32.847 Tax 12.1 4.107 130.872 61.9 29.6 1.539 82.0 1.192 401.957 55.2 55.1 1. & Amortization 7.7 44.0 31.6 16.957 65.5 15.5 1.246 EBITDA 86.4 15.245 199.627 31.076 124.996 89.738 7.400.8 9.148 16.405 25.431) 74.3 Common size metrics as % of net revenues Year to March FY10 FY11 FY12E FY13E Cost of revenues Gross margin SG&A expenses EBITDA margin EBIT margin Net profit margins 52.907 330.0 14.641 215.739 88.706 37.957 19.0 1.2 53.6 33.4 1.192 232.384 10.3 22.753 9.3 1.9 71.9 26.8 73 54 19 2.8 1.6 18.7 Revenues EBITDA EBIT PBT Net profit EPS Cash flow statement Year to March Net profit Depreciation Others Gross cash flow Less:Changes in WC Operating cash flow Less: Capex Free cash flow FY10 FY11 FY12E (INR mn) FY13E 68.641 33.191 87.1 5.paid/(recd.738 Shares outstanding (mn) 1.5 26.5 26.6 19.600.2 65.753 1.4 1.3 49.7 18.541 168.2 26.5 15.017 442.0 582.7 34.9 19.029 3.8 12.0 Dividend (%) 2.197 220.026 209.6 59.0 24. int.770 5.9 FY10 FY11 FY12E FY13E 37.1 CEPS (INR) 38.925 18.293 171.225 64.0 25.6 36.541 33.482 306.0 52.878 10.331 69.401 184. 68.998 1.4 47.762 140.8 33.996 47.1 32.6 33.4 69 36 33 2.124 223.571 74.281 104.7 26. asset Net fixed assets Investments Other assets Cash & Bank balances Debtors Unbilled revenue Prepaid & other cur.819 7.204 112.355 1.6 22.042 168.8 33.957 55.174 130.488 10.147 269.7 28.957 19.653 87.816 22.1 59.016 13.590 260.314 107.8 48.232 4.895 254.0 1.759 Min.164 1. intan.429 442.084 88.447 (4.6 1.) 1.3 29.208 (5.6 47.094 21.311 34 50.6 73 25 48 3.000 65.289 Cost of revenues 157.753 149.3 Edelweiss Securities Limited Edelweiss Securities Limited .899 35.375.3 32. assets Total current assets Sundry creditors Provisions Other liabilities Total current liabilities Working capital Application of funds BV per share (INR) Ratios Year to March ROAE (%) ROACE (%) Debtors (days) Payable (days) Cash conversion cycle Current ratio Fixed assets turnover (x) Total asset turnover(x) Equity turnover(x) Valuation parameters Year to March Diluted EPS (INR) Y-o-Y growth (%) CEPS (INR) Diluted PE (x) Price/BV(x) EV/Revenues (x) EV/EBITDA (x) EV/EBITDA (x)+1 yr forward Dividend yield (%) FY10 FY11 FY12E FY13E 1.5 47.7 71.5 20.355 88.0 Dividend pay out (%) 56.214 (4.1 20.5 1.6 30.592 Other income 2.319 88.363 21.316 1.294 13.2 14.7 52.4 17.709 108.0 31.9 55.4 495.5 3.957 EPS (INR) diluted 35.9 24.415 41.651 7.3 Growth metrics (%) Year to March FY10 FY11 FY12E FY13E 8.4 33.888 111.106 107.7 11.Day 1 Financial Statements Balance sheet Income statement Year to March (INR mn) FY10 FY11 FY12E FY13E Revenues 300.5 FY10 FY11 FY12E FY13E 35.409 37.089 18.1 23.476 18.4 46.8 13.5 1.855 23.110 4.002) 125.663 110.549 107.5 1.298 (15.5 1.198) 111.299 (5.9 8.6 1.657 14.089 89 (INR mn) As on 31st March Equity share capital Share premium account Reserves Total shareholders funds Borrowings Minority interest Sources of funds Goodwill & ot.220 129.044 12.591 171.0 28.220 33.5 23.957 EPS (INR) basic 35.697 61.102 292.783 8.299 140.957 44.1 Diluted shares (mn) 1.3 70 24 46 3.988 11.000 65.770 23.011 59.498) 70.791 72.690 10.9 20.192 308.420 218.281 41.208 EBIT 79.481 58. int.1 1.056 223.8 32.2 6.098 12.000.045 Total SG&A expenses 56.7 16.3 30.759 Profit after tax 69.1 7.1 1.0 13.8 1.8 Dividend per share 20.222 235.957 44.882 155.174 1.480 20.249 58.9 29.201 276.512 16.1 23.489 15.000 94.770 128.6 34.6 37.6 51.324 110.984 7.800 Dep.940 8.5 20.957 65.0 20.5 48.9 1.9 38.0 1.4 8.859 1.957 19.843 142.791 51.164 7.623 15.214 104.555 5.2 23.791 65.398 80.9 373.5 19.5 27.910 22.368 85.6 46.256 Profit before tax 81.2 28.089 Core profit 69.9 8.7 26.6 17.615 9.1 23.253 347.998 11.021 Net profit after min.115 38.056 13.7 7.899) 89.957 23.

We believe Titan has the ability to create significant value with its large distribution presence.1 22. The recent hike in import duty on gold will not significantly impact Titan’s jewellery segment’s volumes.9) 0.3 28.6 7.4 49.331 888 4. Investment conclusion Titan has assiduously positioned itself in the premium watch and designer jewellery space.7 5.342 39.1) (11.2) 12 months 15. Most parts of watches are imported by Titan and the INR depreciation thus hit the watches division’s margin.1 28. With constant product innovation it has become the largest organised player in both these segments. Management is targeting 35% YoY topline growth for FY12.1) Deterioration of macro conditions.8 (7.3 70.7 26. Financials Year to March Revenues (INR mn) Rev. Q4FY12 will witness full impact of price hike taken by the company in watch category. At least one large format (company owned) store in Tanishq in every metro.786 22.0 9.528 Avg. Sustained rupee appreciation will aid margins in the longer term.roy@edelcap.com Harsh Mehta +91 22 4063 5543 harsh. Titan’s watches segment’s EBIT margin faced severe strain due to material cost pressure.0 65.0 87.974 2.mehta@edelcap.513 888 2. Titan expects it to break even by FY13 end.4 17.6 3 months (4. Volume growth will continue to be a challenge in coming quarters (though January has seen better sales compared to Q3FY12) as well since volatility in gold prices continues and chances of rise in impulse purchases remain dim.1 Others : 27.0 3.272 33.6 40. Titan is planning capital expenditure of ~INR2bn per annum for next two years primarily directed towards aggressive retail expansion. Abneesh Roy +91 22 6620 3141 abneesh. restricted to marriage season and festivals.6 10. Business seasonal.5 * Promoters pledged shares (% of share in issue) : 5.907 4. Key risks Absolute Rating BUY Rating Relative to Sector Outperformer Risk Rating Relative to Sector Low Sector Relative to Market Overweight MARKET DATA (R : TITN.9 Share Holding Pattern (%) Promoters* : 53. But the recent rupee appreciation will benefit margins to a limited extent as the company has hedged the rupee at 50+ levels. strong brand.6 21. Bloomberg EDEL <GO>.8 M cap (INR bn/USD mn) : 177 / 3. Given its well established brand and sound management we expect Titan to replicate this success in its new eyewear venture as well. Reuters and Factset. However.edelresearch.2 32.3 (4.758 888 7.9 Nil PRICE Performance (%) Stock Nifty EW Retail Index 1 month 18. BSE/NSE (‘000) : 6. Breakeven delayed by a year.1 9.418 5. designing skills and proven execution track record. Volatility in gold prices.5 39. FIs & Banks : FIIs : 13.com Edelweiss Securities Limited . Thomson First Call.8 53.9 72.4 41.com. Eye wear facing severe competition.1 102.5 MFs. growth (%) EBITDA (INR mn) Net profit (INR mn) Shares outstanding (mn) Diluted EPS (INR) EPS growth (%) Diluted P/E (x) EV/EBITDA (x) ROAE (%) FY10 FY11 FY12E FY13E 46.5 Edelweiss Research is also available on www. 2012 Retail Key takeaways EDELWEISS 4D RATINGS Volume growth in jewellery was primarily impacted by volatility in gold prices and weakening consumer sentiment. B: TTAN IN) CMP : INR 200 Target Price : INR 230 52-week range (INR) : 238 / 147 Share in issue (mn) : 887.Company Profile TITAN INDUSTRIES Scaling new heights India Equity Research l February 7.0 45.955 18.9 44.060 6.BO.554 888 6.329. Daily Vol.

4 4.374 3.9 24.8 7.114 82 6.0 Common size metrics as % of net revenues Year to March FY10 Cost of materials Employee costs Advertising & sales costs Other general expenditure Depreciation Net interest expenditure EBITDA margin EBIT margin Net profit margin Growth metrics (%) Year to March Revenues EBITDA PBT Net profit EPS Cash flow statement Year to March Net profit Add: Non cash charge Depreciation Others Gross cash flow Less:Changes in WC Cash from operations Less: Capex Free cash flow FY11 FY12E FY13E 73.2 26.5 45.3 41.608 888 6.4 9.9 4.032 1.7 8.0 8.5 FY10 FY11 FY12E FY13E 2.0 106.3 42.181 5.6 6.8 Diluted shares (mn) 888 EPS (INR) fully diluted 2.1 0.696 2.6 2.9 4.191 888 8.5 21.912 10.2 6.6 6.6 0.894 22 FY10 FY11 FY12E FY13E 39.033 4.342 48.636 378 7.6 5.487 27.586) 10.2 28.0 72.3 53.3 3.507 316 3.789 16 444 18.5 53.5 29.716 7.305 3.3 29.1 67.4 0.319 730 0 730 54 8.924 136 7.391 5.104 6.3 0.331 434 351 82 4.5 7. af.0 0.5 0.647 5.608 515 378 136 6.955 4.0 53.0 58.513 Associate 0 Pr.987 2.6 17.2 5.3 0.6 0.4 0.4 56.3 49.149 4.0 43.1 8.670 20.214 16.8 Dividend payout ratio (%) 26.492 EBITDA 3.093 7.298 2.6 5.788 2.953 11.2.3 3.329 78.1 0.0 8.9 4.367 Other income 113 EBIT incl.0 25.9 888 4.786 Cost of materials 34.210 7.4 12 100 90 22 1.0 106.0 0.4 0.2 28.356 680 0 680 21 11.3 1.7 32.374 (133) 3.974 3.875 7.151 1.8 44.7 0.492 91 (INR mn) As on 31st March Share capital Reserves Shareholders' funds Secured loans Unsecured loans Borrowings Deferred tax liability Sources of funds Gross block Less depreciation Net fixed assets Capital work in progress Investments Current assets Inventories Sundry debtors Cash and bank balance Loans and advances Current liabilities Liabilities Provisions Working capital Uses of funds BV (INR) Ratios Year to March ROAE (%) ROACE (%) Debtor days Inventory days Payable days Cash conversion cycle (days) Current ratio Debt/EBITDA Debt/Equity Adjusted debt/equity Interest coverage (x) Valuation parameters Year to March Diluted EPS (INR) Y-o-Y growth (%) CEPS (INR) Diluted P/E (x) Price/BV (x) EV/Sales (x) EV/EBITDA (x) Dividend yield (%) FY10 FY11 FY12E FY13E 444 6.358 5.9 Edelweiss Securities Limited Edelweiss Securities Limited .214 7.757 3.8 53.235 13.1 13.214 11.225 26.163 2.258 667 7.5 1.405 4.6 87.3 39.591 1.395 15.796 7.894 7.309 1.5 6.6 6.5 0.532 14.5 6.3 9 93 125 (23) 1.1 9.4 72.018 9.6 0.454 947 1. & Asso.331 (0) 4.9 72.8 25.226 Provision for taxation 713 Core PAT 2.3 28.870 5.1 0.6 52.037 17.3 28.192 4.520 19.685 (332) 8. other income 3.122 (502) 6.1 0.7 8.971 2.1 29.860 12.1 0.789 7.465 19.1 12.176 11.3 1.071 6.191 494 408 86 7.9 22.3 6.057 12 444 13.1 17.103 8 444 9.198 150 26 51.4 0.112 Others 3.8 FY10 FY11 FY12E FY13E 22.273 5.513 861 607 254 3.1 5.Day 1 Financial Statements Balance sheet Income statement Year to March (INR mn) FY10 FY11 FY12E FY13E Net revenues 46.5 1.5 DPS 0.019 22.894 14.258 28.1 888 8.556 559 6.2 8.5 8.6 25.338 194 237 430 21 14.443 194 237 430 21 19.6 74.1 9.429 Gross profit 12.6 28.981 1.6 29.593 35.0 0.191 0 7.378 33.2 0.6 21.1 4.855 3.356 Employee costs 2.765 (5.017 525 7.9 5.2 35.973 1. tax after Min.8 CEPS (INR) 3.5 65.272 2.8 6.624 531 6.480 Net interest & Finance charges 254 PBT 3.4 73.145 5.7 1.779 Advertisement & sales costs 2.999 19.484 2.083 2.9 6.5 0.625 22.570 408 9.5 7.3 25.4 0.4 5.285 8.4 33.331 888 4.073 86 9.056 175 26 41.4 73.6 87.2 2.884 194 26 34.608 0 5.162 911 10.7 48.701 4.Post Conference Notes .1 11 93 110 (5) 1.5 70.3 6.907 351 5.349 3.2 FY10 FY11 FY12E (INR mn) FY13E 2.678 123 16 18.949 11.057 6.272 64.513 Equity shares outstanding (mn) 888 EPS (INR) basic 2.974 Depreciation 607 EBIT 3.3 888 6. Int.0 30.9 9 93 125 (23) 1.898 27.512 24.152 29.351 481 9.163 2.

1 30.174 3. Financials Year to March Revenues (INR mn) Rev.087 2.7 22. Reuters and Factset. The company has already taken the corrective action and confident to grow the business going forward Absolute Rating BUY Rating Relative to Sector Performer Risk Rating Relative to Sector Low Sector Relative to Market Equalweight MARKET DATA (R : TORP.1) 15.Company Profile TORRENT PHARMACEUTICALS Domestic revival awaited India Equity Research l February 7. MFs.815 20.7 23. 2012 Pharmaceuticals Key takeaways EDELWEISS 4D RATINGS Domestic growth to return to industry level FY13 onwards: Management has highlighted that though FY12 will be a low growth year in the domestic market.garg@edelcap. B: TRP IN) Brazil to sustain growth momentum: Brazil. domestic business continues to pull down the operating performance of the company.277 85 26.6 M cap (INR bn/USD mn) : 48 / 953 Share Holding Pattern (%) 5.1 Recovery in domestic growth will be lower than anticipated.3 * Promoters pledged shares (% of share in issue) : Investment conclusion Despite a strong performance on the international front. Bloomberg EDEL <GO>.3 29.5 9.com Edelweiss Securities Limited . and (d) capacity ramp-up in Sikkim.8 12 months (6. FIs & Banks : 11. which has been a jewel for Torrent.1 5.2 Promoters* : 71.536 85 41.040 16. Avg.7) (7. However. growth (%) EBITDA (INR mn) Net profit (INR mn) Share outstanding (mn) EPS (INR) EPS growth (%) Diluted P/E (x) EV/EBITDA (x) ROE (%) FY10 FY11 FY12E FY13E 19.156 2.com.374 85 51.3 3 months (5. Daily Vol. (c) new launches in Brazil.5 13. has been showing strong traction and grew over 20% in constant currency over 9mFY12.com Perin Ail +91-22-6620 3032 perin. recovery in domestic growth is a key trigger for valuation re-rating. Domestic business was largely affected by muted growth in anti-infective and gastro (45% of India sales) while chronic is growing in line with the historical trend (15% YoY).8 26. Duloxitine.ali@edelcap. CMP : INR 566 Target Price : INR 760 US business to turn profitable driven by niche launches: The company is confident of maintaining the growth momentum in US (over 50% growth in CER) over the next two years driven by a couple of niche launches such as Quitapine. which limits downside risk. Thomson First Call.6 20. etc. In our view the investment cycle in India as well as the global business has peaked and Torrent will reap benefits over FY13. We expect the domestic business to improve from Q1FY13 as base effect of acute will be behind.7 21.7 11. Management is confident of maintaining growth trajectory driven by new launches (pipeline of 35 products) as well as gaining market shares in the existing portfolio (marketing 29 products).9 5.8 4.6 6.7 17.edelresearch. (b) US turning profitable.0 11.3 14.794 85 33.4 30.2) 0.3 Nil PRICE Performance (%) Stock Nifty EW Pharma Index 1 month 5.7 9.1 26.1 11.5 32.0 7. management has highlighted that US business has already broken even in Q3FY12 and is confident that it will become profitable FY13 onwards.314 4.5 Margins to improve from current level: Torrent expects operating margin to improve going forward driven by: (a) improved traction from India. Moreover.8 FIIs : Others : 11.3 4. Regulatory risk.075 19.329 17.0 22. BSE/NSE (‘000) : 43. it expects to grow in line with the covered market growth (15-16%) starting FY13 onwards.8 Edelweiss Research is also available on www.7 30. Key risks 52-week range (INR) : 686 / 499 Share in issue (mn) : 84.BO. Manoj Garg +91-22-6623 3302 manoj.

329 Other operating income 710 Total operating expenses 14.782 434 1.493 587 1.427 8.541 1.3 68 52 132 (12) 1.334 960 4.346 6.1 1.5 51.131 Cost of revenues Employee cost Selling.224 499 14.6 25.234 3.606 Net Interest expense/(income) 165 Other income 211 Pr.702 626 (29) 3.4 11.631 2.0 24.075 31.435 5.280 5.132 5.052 16.202 Selling.6 26.5 11.479 1.621 480 19.8 6.702 2.8 26.069 1.228 2.277 Extraordinary items (180) Re.293 5.328 5.5 37. admin & general exp.1 0.720 (349) 3.1 0.138 368 11.937 5.7 FY10 FY11 FY12E (INR mn) FY13E 2.4 31.5 2.431 645 25.8 84.111 14.3 13.7 17.536 0 3.7 1.880 6.513 12.7 63.3 FY10 FY11 FY12E FY13E 26.713 3.6 13.9 21.7 40.427 8.801 10.1 51.895 1.217 1.815 25.4 2.5 22.460 4.1 0.108 1.0 5.314 995 5.008 5.Post Conference Notes .012 16. PAT after min.994 485 1.412 3.298 (577) 3.4 8.1 11.5 19.369 737 4.3 78.114 9.8 38.7 84.7 31.121 480 22.718 6.372 22.6 Dividend per share (INR) 6.Day 1 Financial Statements Balance sheet Income statement (INR mn) Year to March FY10 FY11 FY12E FY13E Income from operations 19.048 3.0 31.8 70 55 100 25 2.7 3.196 1.162 R&D cost 1.454 2.000 763 4.7 20.1 0.4 6.174 826 4.961 2.7 1.5 13.529 1.8 17.5 3.391 826 4.7 26.6 30.4 8.454 534 1.496 6.2 26.1 37.109 11.329 21.8 0.957 8.4 41.319 75 90 5.788 1.2 72 55 100 27 2.763 2.312 Adj.6 33.374 4.460 5.721 480 16.0 40.905 4.3 0.907 6.4 32.5 6.0 23.3 0.772 1.601 6.428 678 15. 2.8 51. EPS Cash flow statement Year to March Net profit Depreciation Others Gross cash flow Less: Changes in WC Operating cash flow Less: Capex Free cash flow 93 (INR mn) As on 31st March Equity capital Reserves & surplus Total shareholders funds Borrowings Deferred tax liability (net) Sources of funds Gross block Depreciation Net block Investments Inventories Sundry debtors Cash and bank balances Loans and advances Other current assets Total current assets Sundry creditors Other current liabilities Provisions Total current liab.439 16.0 22.0 2.4 26.391 3.725 Employee cost 3.7 29.6 22.508 9.135 744 3. R & D cost Total operating expenses Depreciation and amortisation Interest expenditure EBITDA margins Net profit margins Growth metrics (%) Year to March Revenues EBITDA Net profit PBT Adj.500 2.7 32.510 1. 4.3 22.348 127 (87) 4.0 23.3 16.8 0.6 6.4 7.033 98 423 9.173 6.6 30.794 85 33.6 41.5 19.878 19.7 23.3 Edelweiss Securities Limited Edelweiss Securities Limited .0 84.5 6.9 CEPS (INR) 32.875 2.7 5.7 33.156 626 3.437 5.870 945 21.053 153 423 16.374 995 0 5. interest 2.607 3.8 16.5 0.1 4.7 63.982 3.052 194 FY10 FY11 FY12E FY13E 30.4 29.415 7.3 17.220 1.9 1.9 5.2 81. profit after min.5 12.224 5. Net current assets Uses of funds Book value per share ( INR) Ratios Year to March ROAE (%) ROACE (%) Inventory days Debtors days Payable days Cash conversion cycles Current ratio Debt/ EBITDA Debt/equity Adjusted debt/Equity Valuation parameters Year to March Diluted EPS (INR) Y-o-Y growth (%) CEPS Diluted P/E (x) Price/BV (x) EV/Sales (x) EV/EBITDA (X) FY10 FY11 FY12E FY13E 423 7.3 1.641 8.2 16.388 5.7 81.3 5.310 5.6 EPS (INR) adjusted 26.7 1.887 8.5 56 54 95 16 2.4 0.428 678 17.883 1.1 1.4 17.033 9.794 (280) 2.5 11. & prov. int.864 EBITDA 4.428 678 15.1 16.277 Equity shares outstanding (mn) 85 EPS (INR) basic 26.1 80.3 3.984 3.053 13.6 51.8 9.160 Core profit 2.641 1.4 0.9 FY10 FY11 FY12E FY13E 16.9 Diluted shares (mn) 84.8 2.) 3. before tax (excl extraord.1 18.1 Common size metrics as % of net revenues Year to March FY10 FY11 FY12E FY13E 30.953 Materials cost 5.087 Depreciation & amortisation 481 EBIT 3.236 2.440 11.652 Provision for tax 1.440 121 423 12.761 10.427 7.7 22.828 4.7 2.404 4.8 36.828 3.374 85 51.707 739 2.393 4.287 8.040 Net revenues 18.703 4.500 830 18.5 26.1 80.1 24.6 0.2 19. admin & general exp.460 5.531 29 205 3.536 85 41.374 0 4.0 Dividend payout (%) 22.808 4.715 1.2 26.636 7.7 42.312 481 (74) 2.6 0.6 21.7 13.

691 41.7 Share Holding Pattern (%) Promoters* : 26. it is likely to close with 9. However. Asset quality will behave cyclically – if there is sharp downturn can see some asset quality pressures.chaudhary@edelcap.0 49. Absolute Rating BUY Rating Relative to Sector Outperformer Risk Rating Relative to Sector Medium Sector Relative to Market Equalweight MARKET DATA (R : YESB.edelresearch.7 (7.9 9.1 3. BSE/NSE (‘000) : 2. Pursuing to complete retail product suite on both the asset as well as liability side.877.593 347 27.1 21.706 36. Restructuring is likely to go up but not beyond manageable levels.3 3. the bank indicated that even an absolute 1% release of CASA by top three banks implies INR350bn opportunity. Financial advisory stream will be sustainable going forward particularly on debt syndication front as there is lot of demand for refinancing in some sectors like infra.5 24.082 22.408 347 32. Nilesh Parikh +91-22.5 22. reimbursement cards.7 20.4040 7579 kunal.4 4.5 Others : 13.0 3.com.0 16.2. has tied up with Dewan Housing for home loans (will be helpful in building PSL book).9 M cap (INR bn/USD mn) : 119 / 2.) has gone up 3-5x.1 37. Traction in savings account (in terms of enquiries.parikh@edelcap. Bloomberg EDEL <GO>. It is getting empanelment every day from large/mid corporate etc.9. B: YES IN) CMP : INR 337 Target Price : INR 335 52-week range (INR) : 354 / 230 Share in issue (mn) : 351. Forecasts SME/retail to grow to 30% by FY15 (from 15% at present). it believes that approximately 50bps can be released by more corporate getting rerated.0 9. Investment conclusion We expect Yes Bank to grow well above the system even if at a slower pace with a well entrenched fee income platform and lower credit costs. 2012 Banking and Financial Services Key takeaways EDELWEISS 4D RATINGS Savings rate deregulation – significant accretion to savings deposits continues.8 1 month 29.com Suruchi Chaudhary +91-22-6623 3316 suruchi.7 11.364 Avg.BO.com Edelweiss Securities Limited .com Kunal Shah +91-22. account opening etc. Also.2 MFs.6 31. cement etc. Cost-to-income increased slightly in Q3 due to higher headcount and branch expansion.6 0.1 Edelweiss Research is also available on www. Even on liability side.9 12.9 10.1 24.9 * Promoters pledged shares (% of share in issue) : Nil PRICE Performance (%) Stock Nifty EW BFSI Index 15. The bank can manage without capital raising in the near term. Reuters and Factset. Also. will be introducing new retail offerings like gold/silver coins.1 22. The bank has launched some basic retail lending product namely auto loans.2 2. it believes non-interest income will be cyclical as it is more transaction oriented. has also started providing dealer financing. Daily Vol.776 340 14. Financials Year to March Net revenues (INR mn) Net rev growth (%) Net profit (INR mn) Shares outstanding (mn) EPS (INR) EPS growth (%) PE (x) Price to book (x) ROE (%) FY10 FY11 FY12E FY13E 13..3% Tier 1.7 30.4 FIIs : 44.9 12 months 22.3 18. Thomson First Call.shah@edelcap.6 3 months 5.Company Profile YES BANK Maintaining momentum India Equity Research l February 7. In event of demand for credit dying lack of pricing power can impact its margin adversely.2) Key risks Lower CASA can be a negative for the bank at this point of time when most banks arebanking on their franchise network.275 347 21.4%/22% by FY13E. FIs & Banks : 15. For FY12.6 7. Management indicated that despite branch expansion C/I ratio will not go beyond 40%.3 2.513 31.9 18.4063 5470 nilesh. delivering superior earnings (~24% CAGR over FY12 14E) and attractive RoA/RoE of 1.1) (6.

466 56.5 6.8 27.5 36.0 1.Investment profits Net revenues Operating expense .9 164.5 91.7 24.710 19.7 26.3 21.472 53.5 40.3 8.6 6.5 6.2 0.706 6.0 162.212 4.812 4.0 109.8 134.474 141.0 109.4 8.3 109.469 6.272 52.3 0.555 145 (464) 18.640 184.7 0.5 10.9 19.7 0.1 18.5 19.4 72.2 54.082 10.9 134.261 15.Fee & forex income .4) (0.907 363.3 33.5 10.182 493.3 6.7) (2.2 58.1 FY10 FY11 FY12E FY13E 14.908 982 914 (72) 140 10.493 11.2 6.7 6.1 2.926 3.0 25.418 27.8 36.7 2.977 67.1 0.6 10.8 16.6 7.1 16.593 9.2) (0.816 34.900 5.1 2.8 20.0 3.8 2.0 3.489 4.1 54.9) (3.8 8.8 5.861 590.883 5.3 10.8) (0.3) (0.070 146.1 (1.0 90.5) (0.3 0.733 1.579 459.324 21.220 740.275 7.6 2.6 164.8 2.798 3.6 92.6 25.0 51.3 33.5 21.2 24.482 41.3 57.267 25.5 0.053 4.9 Operating ratios (%) Year to March FY10 FY11 FY12E FY13E 10.299 2.825 107.2 84.885 740.389 33.6 12.7 0.8 11.1 24.Other opex Preprovision profit Provisions .4 0.5 0.579 532.948 12.792 4.545 20.265 2.825 3.5 0.941 33.1 78.3 4. book value/share (INR) Diluted P/E (x) Price/ BV (x) Price/ ABV (x) Dividend yield (%) FY10 FY11 FY12E FY13E 3.007 2.3 2.317 221.3 0.0 88.1 1.042 78.4 6.6 22.Misc.1 36.4 25.8 (1.5 10.9 65.114 19.865 34.3 22.804 933.3 12.0 66.2) (0.998 222 300 30.6 36.9 91.513 9.0 2.235 26.419 1.8 60.Tier 1 Book value (INR) ROA decomposition (%) Year to March Net interest income/Assets Fees/Assets Investment profits/Assets Net revenues/Assets Operating expense/Assets Provisions/Assets Taxes/Assets Total costs/Assets ROA Equity/Assets ROAE Valuation parameters Year to March Diluted EPS (INR) EPS growth (%) Book value per share (INR) Adj.Loan loss provisions .408 32.5 2.275 21.473 80.691 5.3 0.1 0.6 34.1 37.439 8.472 43.9 18.235 267.1 (27.8 5.7 (1.5 22.8 22.5 1.2 2.0 58.1 3.9 0.0 87.5 12.094 16.1 3.880 5.8 57.125 7.569 2.3) 1.2 16.294 1.0 89.6 24.5 12.248 1.0 83.8 10.8 0.1 81.3 71.6 7.479 15.7 1.5 (0.949 176 0 24.3 20.4 10.199 2.8 7.248 0 0 14.619 9.070 3.593 27.472 34.776 4.2 0.7 37.499 30.2 25.061 46.3) (0.Investment depreciation .330 25.8 (1.5) (0.5 8.397 27.175 11.015 933.3 2.938 78.9 32.7 63.2 7.461 1.896 17.684 49.453 363.6 7.2 32.Day 1 Financial Statements Balance sheet Income statement Year to March (INR mn) FY10 FY11 FY12E FY13E 23.8 1.3 31.7 15.408 11.1) 4.931 343.4 21.Employee exp .0 FY10 FY11 FY12E FY13E 2.831 590.1 10.532 58.9 2.7 32.776 14.4 2.237 6.6 31.3) 1.256 17.0 29.1 8.3 36.4 8.818 7.768 5.8) 52.326 40.3 15.1 2.469 37.7 6.2) 1.8 0.0 133.299 0 0 16.4 21.8 2.6 0.2 10.232 593 986 13.0 0.7 8.2 22.5 Interest income Interest expenses Net interest income Non interest income .0 49.5 8.697 15.7 3.317 71.5) 1.536 1.7 Edelweiss Securities Limited Edelweiss Securities Limited .559 183.7) (2.8 Growth metrics (%) Year to March FY10 FY11 FY12E FY13E NII growth Fees growth Opex growth PPOP growth PPP growth Provisions growth PAT growth 54.1 16.7 27.265 154 0 7.388 8.7 7.8) (2.520 9.8 86.636 395.623 3.986 30.7 1.579 652.5 13.9 35.4 6.155 11.Post Conference Notes .9 2.4 2.Other provisions PBT Taxes PAT Reported PAT EPS DPS Payout ratio (%) Yield on advances Yield on investments Yield on assets Net interest margins Cost of funds Cost of deposits Cost of borrowings Spread Cost-income Tax rate 95 (INR mn) As on 31st March Liabilities Equity capital Reserves Net worth Sub bonds/pref cap Deposits Borrowings Other liabilities Total Assets Loans Investments Gilts Others Cash & equi Fixed assets Other assets Total Balance sheet ratios (%) Credit growth Deposit growth EA growth SLR ratio C-D ratio Low-cost deposits Gross NPA ratio Net NPA ratio Provision coverage Incremental slippage Net NPA / Equity Capital adequacy .9 2. income .267 28.730 116.7 31.562 10.960 1.651 7.684 1.0 3.4 1.4 61.4 20.640 3.1 81.3 0.

FIs & Banks : Excise duty increase will force the company to effect price increases. Reuters and Factset. B: ADC IN) CMP : INR 209 Target Price : NA 52-week range (INR) : 276 / 180 Share in issue (mn) : 19.1 Zodiac is not keen on revenue sharing model with mall developers. The company believes point of inflection is yet to come.6 4.7 2.2 M cap (INR bn/USD mn) : 4 / 80 Best-in-class debt/equity ratio of 0.3 3 months 0.2 (12. Avg. In addition to India.211 13. FIIs : 18.1 15.7 2.3 7.Company Profile ZODIAC CLOTHING The right cut India Equity Research l February 7.6) (7.9 5. the company has manufacturing locations in Dubai to facilitate imports in Europe.0 4.4 3.7) 7. the company insures export receivables. Stock Stock over Sensex (9. Thomson First Call. ~85% of Zodiac’s production is pre-sold. and (g) other brands like Zod and Z3.2 233 249 8 28.8 7. January has been particularly good due to end of season discount sales. growth (%) EBITDA (INR mn) Net profit (INR mn) Share outstanding (mn) EPS (INR) EPS growth (%) Diluted P/E (x) EV/EBITDA (x) ROAE (%) 2.2 Pressure on margins due to competition. However.roy@edelcap.com Harsh Mehta +91 22 4063 5543 harsh.BO.9 12 months (1. Share Holding Pattern (%) Key risks MFs. (d) suits range.6 24.3 Macro slowdown.mehta@edelcap. NOT RATED MARKET DATA (R : ZCCL. (f) focused approach on retailing.8 * Promoters pledged shares (% of share in issue) : 11. The company does not plan to take price cuts despite decline in key raw material (cotton) prices.8 3.4 325 321 8 37.8 16.4) 1 month 11.8 2. (e) shift from unbranded international range to branded clothing.835 9. which can impact volumes.7 229 332 13 26.5 36.edelresearch. Daily Vol. Absolute Rating It expects future growth to come from: (a) store expansion.0 11.9 3.475 10. 2012 Mescellaneous Key takeaways EDELWEISS RATINGS Zodiac Clothing Company (Zodiac) saw severe slowdown in demand in Q3FY11.1 Others : 19.2x. Bloomberg EDEL <GO>. Relative Performance (%) Slow revenue growth due to rollout delays and poor same store growth.2) 281 262 8 30. (c) bespoke luxury tailor range Regale.com.2 16.1 3. Abneesh Roy +91 22 6620 3141 abneesh.com Edelweiss Securities Limited .6 (23. BSE/NSE (‘000) : 4.8) Financials Year to March FY08 FY09 FY10 FY11 Revenues (INR mn) Rev.8) 8.8) (9. It invests ~912% of domestic branded sales into advertising. Sensex Currency exchange risk is another monitorable.0 6. ( b) accessories. Promoters* : 59.7 Edelweiss Research is also available on www.140 (2.

3 FY08 FY09 FY10 FY11 9.0 8.5) (21.488 540 95 635 854 (18) 1.387 610 1.531 1.5) 7.8 59 37 159 (63) 2.4 Dividend payout (%) 16.7) 36.7 (18.18 (12.6 4.1 0.4 8.9 4.2 Edelweiss Securities Limited Edelweiss Securities Limited .0 2.4 3.8 30.Day 1 Financial Statements Balance sheet Income statement Year to March (INR mn) FY08 FY09 FY10 FY11 Income from operations 2.6 9.5 4.245 229 72 158 25 285 418 86 332 332 332 332 26.4 3.1 1.9 43.080 (19) 2.8 91.7) (2.2 0.1 0.573 1.148 547 1.4 0.6 1.087 172 1.6 7.249 3.0 0.9 12.9 19.8) 32.2 16.8 9.5 58 40 149 (51) 2.188 2.1 36.8 0.3 1.3 37.9 7.259 263 733 349 147 427 1.2 0.0 0.8 Tax rate (%) 26.5 11.4 21.0) (23.5 Common size metrics as % of net revenues Year to March FY08 Operating expenses Depreciation & Amortization Interest expenditure EBITDA margins Net profit margins Growth metrics (%) Year to March Revenues EBITDA PBT Net profit EPS Cash flow statement Year to March Net profit Depreciation Deferred tax Others Gross cash flow Less:Changes in WC Operating cash flow Less: Capex Free cash flow 88.5 0.2 15.2) 20.211 1.7) (23.859 281 63 218 28 198 388 126 262 262 262 262 30.6 3.64 (23.670 970 289 681 41 722 228 510 312 103 356 1.7 4.02 4.9 6.8 1.9 0.1 11.8 10.9 13.281 463 82 545 737 (17) 1.53 36.848 321 1 322 2.8 27.Post Conference Notes .112 559 1.0 8.0 0.140 1.8) FY08 FY09 FY10 (INR mn) FY11 321 50 (8) (165) 198 11 187 66 121 249 58 1 167 475 117 358 289 69 262 63 1 50 376 226 150 63 87 332 72 13 (259) 157 3 155 247 (93) 97 (INR mn) As on 31st March FY08 FY09 FY10 FY11 Equity capital Reserves & surplus Shareholders funds Secured loans Unsecured loans Borrowings Sources of funds Gross block Depreciation Net block Capital work in progress Total fixed assets Investments Inventories Sundry debtors Cash and equivalents Loans and Advances Total current assets Sundry creditors and others Provisions Total CL & provisions Net current assets Net deferred tax Uses of funds Adjusted BV per share (INR) 84 1.329 418 911 95 1.2 6.510 EBITDA 325 Depreciation and amortisation 50 EBIT 275 Interest expenses 28 Other income 194 Profit before tax 441 Provision for tax 116 Core profit 324 Extraordinary items 3 Profit after tax 321 PAT after minority interest 321 Adjusted net profit 321 EPS (INR) diluted 37.8 7.282 2.2 7.5 32.8 19 20.8 38.7 7.6 3.9 7.8 1.7 6.615 268 1 269 1.884 1.7 FY09 FY10 FY11 92.978 233 58 175 28 198 345 95 250 0 249 249 249 28.566 479 1.3 4.4 9.053 Employee costs 470 Other expenses 987 Total operating expenses 2.6 5.4 2.4 1.3 0.6 8.0 11.835 Direct costs 1.422 248 248 1.9 9.2 68 36 118 (15) 3.598 422 96 518 1.3 63 39 158 (56) 2.5 6.3 93.1 7.8 28.6 28.8 3.0 1.3 0.2 12.2 (28.170 220 128 2.4 10.573 166 FY08 FY09 FY10 FY11 24.007 102 555 329 292 421 1.2 16.082 (31) 2.3 1.7 26.657 473 101 575 1.884 192 84 1.131 328 115 443 2.670 169 84 1.764 1.4 22.475 1.5 1.002 2.1 26.2 Ratios Year to March ROAE (%) (on adjusted profits) ROACE (%) Inventory days Debtors days Payable days Cash conversion cycle Current ratio Debt/EBITDA Interest coverage Fixed assets t/o (x) Debt/equity Valuation parameters Year to March Diluted EPS (INR) Y-o-Y growth (%) CEPS Diluted P/E (x) Price/BV (x) EV/Sales (x) EV/EBITDA (X) FY08 FY09 FY10 FY11 37.7 11.5 Diluted equity shares (mn) 8.170 1.7 (12.338 1.286 374 912 34 946 102 533 343 271 341 1.

It targets to increase the 2 mn MT fertiliser sales in FY11 to over 3.com. B: ZUAR IN) CMP : INR 453 Target Price : INR 907 52-week range (INR) : 730 / 436 Share in issue (mn) : 29. Demerger of fertiliser entities likely over the next few months.2 3.3 20. Daily Vol. Management pegs EBITDA loss on account of lost volumes during the peak demand season at about INR330mn. Currently.1 17.732 10.7 15.5 mn MT over the next three years. Bloomberg EDEL <GO>.614 29 88.1 5.2) 12 months (10. Zuari’s performance during FY12 was impacted by a fire accident.3 85.5 4.195 29 108.988 23. considering that approval from High Court is the only pending issue. Zuari is also expected to benefit from its holding in PPL. both urea and NPK plants are operating normally.9 Share Holding Pattern (%) Promoters* : 34.0 (1.189 2.com Edelweiss Securities Limited . Manoj Bahety.5mn MT NPK fertilisers at Q3FY12 end.2 mn MT NPK per annum and manufactures ~50% of its phosphoric acid requirement. FIs & Banks : 20.4 M cap (INR bn/USD mn) : 13 / 265 Avg.9 (15.BO. Thomson First Call.7) 2.684 (30.2 94. management guided that it is likely to get gas during H2FY13.com Varun Guntupalli +91-22-6623 3481 varun.536 29 85.2) (20. the company’s complex fertiliser segment is expected to benefit due to margin expansion and lower subsidy receivables.1 Edelweiss Research is also available on www.4) (17.2) Key risks Any execution delay in the change of urea feedstock from naphtha to natural gas.1 3. While the inventory level for Zuari is high at 0. Zuari has announced raw material linkages during Q3FY12.5 22. which will result in working capital efficiency as well as better capacity utilisation for the urea plant. Zuari is likely to expand its complex fertiliser capacity by ~300.745 2.0) (15.edelresearch.2 8.7 mn MT to 1 mn MT is likely by FY13 end. Investment conclusion With a capex outlay of ~INR800mn. Possible delay in payment of fertiliser subsidies by government. Reuters and Factset.3 PRICE Performance (%) BSE Midcap Index Stock Stock over Index 1 month 15.3 16.2) (27.4 75. growth (%) EBITDA (INR mn) Net profit (INR mn) Share outstanding (mn) EPS (INR) EPS growth (%) Diluted P/E (x) EV/EBITDA (x) ROE (%) FY10 FY11 FY12E FY13E 61. that manufactures ~1. Management guided for strong performance from Paradeep phosphates for FY12.9) 3 months (4. With regard to urea feedstock conversion from naphtha to natural gas. Possible misallocation of capital resulting in sub-optimal value realization. They indicated a timeline of 2-3 years for completion of the project. CFA +91-22-6623 3362 manoj. by acquiring a stake in a Peru mine. it guided for most of this to be liquidated in Q4FY12.875 3.1 2.8 2. 2012 Agriculture Key takeaways EDELWEISS 4D RATINGS Zuari is planning to invest ~USD700mn for an integrated facility comprising a phosphoric acid facility and 1 mn MT complex fertiliser granulation facility.0) (24.guntupalli@edelcap. MARKET DATA (R : ZURI.2 4. Absolute Rating BUY Investment Characteristics Value NPK capacity expansion from 0.9 4. On account of lowering of raw material prices.2 5.9 1.556 29 86. Financials Year to March Revenues (INR mn) Rev.4 MFs.8 * Promoters pledged shares (% of share in issue) : 11.000 MT by FY13 end. With implementation of NBS. BSE/NSE (‘000) : 25.762 12.Company Profile ZUARI INDUSTRIES Deep value urea and complex fertiliser play India Equity Research l February 7.2 4.9) 5.645 2. government is likely to lower subsidy under NBS.2 4.5 FIIs : Others : 36.bahety@edelcap.

378 11.475 2.6 1.8 5.775 5.2 104.Day 1 Financial Statements Balance sheet Income statement (INR mn) Year to March Income from operations Direct costs Employee costs Other expenses Total operating expenses EBITDA Dep.200 4.000 9.783 14.560 10.2 4.651 6.2) (24.971 383 3.008 (23) 841 32.3 16.440 28.5 0.7 Debtors days 75.286 900 5.945 6.454 3.585 5.118 886 35.6 5.9 3.875 510 4.6 52.681 152 7 2.3 13.000 (8.188 2.4 Cash conversion cycle (30.415 7.327 5.1 5.475 394 201 3.5 22.7 16.993 31.8 2.5 57.2 3.733 (81) 2.0) (15.1 30.194 4.942 3.039 2.108 1.4 Debt/EBITDA 6.186 3.906 1.614 2.8 50.4 21.0 FY11 FY12E FY13E 18.214 2.8 0.2 30.6 0.521) 622 (9.743 9.982 99 (INR mn) As on 31st March FY10 FY11 FY12E FY13E 294 13.315 31.833 218 0 2.134 4.727 886 34.9 29 5.2 41.708 1.4 Interest coverage 4.3) Current ratio 2.047 1.0 15.479 3.726 13.305 16.681 0 2.422 8.8 2.365 570 1.652 173 (4) 2.302 13.0 94.6 8.3 Equity capital Reserves & surplus Shareholders funds Secured loans Unsecured loans Borrowings Deferred tax liability (net) Minority interest Sources of funds Gross block Depreciation Net block Capital work in progress Total fixed assets Investments Inventories Sundry debtors Cash and equivalents Other current assets Total current assets Sundry creditors and others Provisions Total CL & provisions Net current assets Good will Uses of funds Adjusted BV per share (INR) Ratios Year to March Valuation parameters Year to March Diluted EPS (INR) Y-o-Y growth (%) CEPS Diluted P/E (x) Price/BV (x) EV/Sales (x) EV/EBITDA (X) Edelweiss Securities Limited Edelweiss Securities Limited .890 (135) 744 31.479 11.196 6.5 16.963 4. & amortisation EBIT Interest expenses Other income Profit before tax Provision for tax Core profit Extraordinary items Profit after tax Less: Minority interests Add: Share in profits of asso.877 5.573 4.2 0.3 3.762 69.742 1.833 0 2.396 (1.2 17.492 3.070 1.096 462 294 15.118 11.240 565 1.809 12.2 1.8 0.536 404 (461) 2.4 ROACE (%) 12.9) 23.605 166 2.909 1.243 531 3.2 12.195 510 (308) 3.774 8.459 1.000 4.916 11.Post Conference Notes .1 3.904 1.988 59.732 74.1 15.865 1.003 16.6 58.0 4.1 30.189 16.809 10.9) 87.6 1.223 20.609 624 294 21.6 23.000 2.454 21.9 1.6 0.477 10.347 1.376 8.189 473 3.560 13.339) 4.626 13.711 11.306 10.6 2.1 61.929 1.243 3.195 108.6 2.6 5.9 85.2 0.076 1.253 20.2 13.819 4.000 174 1.7) 4.5 0.143) 2.1 1.0 52.1 0.758 10.2 4.081 18.622 15.1 111.0 0.6 Common size metrics as % of net revenues Year to March FY10 Operating expenses Depreciation and Amortization Interest expenditure EBITDA margins Net profit margins Growth metrics (%) Year to March Revenues EBITDA PBT Net profit EPS Cash flow statement Year to March Net profit Depreciation Others Gross cash flow Less:Changes in WC Operating cash flow Less: Capex Free cash flow FY10 FY11 FY12E FY13E (30.195 3.634 3.735 753 3.225 89.8 7.627 1. PAT after minority interest Adjusted net profit EPS (INR) basic Diluted equity shares (mn) Dividend payout (%) Tax rate (%) FY10 FY11 FY12E FY13E 61.645 404 2.3 56.6 55.536 85.3 4.1 2.299 1.862 72.8 75.614 473 (112) 2.743 541 294 18.963 31.716 863 1.7 0.7 108.9 4.096 8.8 4.4 FY10 FY11 FY12E FY13E 85.121 21.4 Payable days 165.525 10.8 Inventory days 59.7 0.249 6.556 86.980 3.167 836 12.2 125.7 23.362 10.0 Fixed assets t/o (x) 19.6 59.2 2.3 86.2 4.917 1.1 54.771 1.609 10.614 88.9 11.8 29 5.5 1.1 Debt/equity 1.727 6.351 922 1.2 3.1 10.685 5.975 (996) 3.498 9.714 14.3 24.5 29 4.2 25.451 0 3.9 (15.684 47.936 3.5 1.8 0.612 931 2.000 174 1.451 256 0 3.9 1.3 15.588 3.9 3.921 1.7 38.059 31.993 32.032 3.9 29 5.904 11.1 88.2 FY10 FY11 FY12E (INR mn) FY13E 2.904 727 FY10 FY11 FY12E FY13E ROAE (%) (on adjusted profits) 20.4 (21.1 0.213 2.103 33.857 4.9 4.8 22.000 12.6 14.440 1.596 11.940 81.745 394 3.993 31.2 0.536 2.8 21.140 12.3 2.274 59.3 64.809 11.9 3.9 4.

Profile of Participating Companies NOTES 100 Edelweiss Securities Limited Edelweiss Securities Limited .

25 x Sector return Sector Performer (SP) Stock return > 0.75 x Nifty return 101 Edelweiss Securities Limited Edelweiss Securities Limited .25 x Nifty return Underweight (UW) Sector return < 0.75 x Sector return Stock return < 1.75 x Sector return Sector return is market cap weighted average return for the coverage universe within the sector RELATIVE RISK RATING Ratings Criteria Low (L) Bottom 1/3rd percentile in the sector Medium (M) Middle 1/3rd percentile in the sector High (H) Top 1/3rd percentile in the sector Risk ratings are based on Edelweiss risk model SECTOR RATING Ratings Criteria Overweight (OW) Sector return > 1.RATING & INTERPRETATION ABSOLUTE RATING Ratings Expected absolute returns over 12 months Buy More than 15% Hold Between 15% and .25 x Sector return Sector Underperformer (SU) Stock return < 0.25 x Nifty return Equalweight (EW) Sector return > 0.5% Reduce Less than -5% RELATIVE RETURNS RATING Ratings Criteria Sector Outperformer (SO) Stock return > 1.75 x Nifty return Sector return < 1.

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("Marco Polo").com +91 22 6623 3411 Distribution of Ratings / Market Cap Edelweiss Research Coverage Universe Rating Distribution* Buy Hold Reduce Total 119 47 15 184 * 3 stocks under review Market Cap (INR) > 50bn Between 10bn and 50 bn < 10bn 111 57 16 Access the entire repository of Edelweiss Research on www.com +91 22 2286 4206 Nischal Maheshwari Co-Head Institutional Equities & Head Research nischal. All rights reserved 102 Edelweiss Securities Limited Edelweiss Securities Limited .khemani@edelcap. its holding company and associate companies are a full service. copied. and no part of his or her compensation was. group companies. Edelweiss.Profile of Participating Companies Edelweiss Securities Limited. Copyright 2009 Edelweiss Research (Edelweiss Securities Ltd). Board: (91-22) 4009 4400. In order to conduct business with Institutional Investors based in the U. any person or entity who is a citizen or resident of or located in any locality. 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