BSEIndia: All Stock Market News

Fw: IRFC Tax Free Bonds: Opening on 27 Jan 2012

2012-01-24T21:06:00.001-08:00

Sharekhan Mailer

Indian Railway Finance Corporation Ltd

Issue period: 27 January 2012 to 10 February 2012.
Issue of Tax Free Secured Redeemable Non Convertible Bonds
Basis of allotment: On a first-come-first-serve basis within each category
The income by way of interest on these Bonds is fully exempt from Income Tax and shall not form part of Total Income as per provisions under section 10 (15) (iv) (h) of IT Act, 1961.
Issue size is Rs. 3,000 Crores, with option to retain oversubscription upto Rs. 6,300 Crores.

Investment Opportunity:

Interest rates are at peak level; best time to invest in fixed income tax free instruments.

Interest rate cycle has peaked out
Given the sharp slowdown in the industrial activity and softening of the food inflation, the interest rate cycle has peaked out. Reserve Bank of India has restrained from increasing the interest rates in the last policy review meet and is expected to begin reducing rates in March or April 2012. The bond yields which have increased close to 9% levels have corrected significantly and show easing of pressure on rates.

High post tax yield for triple A rated product
Tax free bond with yield of 8% - 8.30% is comparable with yields offered on government bonds and offer extremely attractive pre-tax yield close to 12% for a long period of time. The bond issue has got AAA (stable) rating from the rating agencies - Crisil, ICRA and CARE. The bonds would also be listed and tradable on NSE/BSE.

Company Overview:

Financing arm of the Indian Railways
Notified as a Public Financial Institution under Section 4A of the Companies Act, 1956
Registered as a NBFC-ND-IFC (Infrastructure Finance Company) with Reserve Bank of India
100% shareholding held by Government of India
Consistently profit making Public Sector Undertaking

Terms of the Issue:

Particulars	Issue details
Face Value per Bond	Rs 1,000
Tenor	10 years	15 years
Minimum Application	Rs 10,000 (in multiples of Rs 5,000 thereafter)	Rs 10,000 (in multiples of Rs 5,000 thereafter)
Interest Rate % p.a. (Category I & II)	8.00	8.10
Interest Rate % p.a. (Category III)	8.15	8.30
Frequency of Interest payment	Annual	Annual
Issuance	demat form or physical form	demat form or physical form
Interest on application % p.a.	8.00
Interest on refund % p.a	4.00

Issue Structure:

Category I	Category II	Category III
Upto 45% of Overall Issue Size*	Upto 25% of Overall Issue Size*	Upto 30% of Overall Issue Size*
QIB & Corporate	Individuals & HUF applying for more than Rs. 5 Lakhs	Individuals & HUF applying for upto Rs. 5 Lakhs
*on first come first serve basis to be determined on the basis of date of receipt of applications duly acknowledged by the Bankers to the Issue.

* The coupon rates of 8.15% p.a. and 8.30% p.a. shall be payable only to the original allottees under Category III for the Tranche 1 and Series I Bonds and Tranche 1 and Series II Bonds respectively and shall not be payable to the transferees in case the Bonds are transferred or sold by the original allottees Please refer to the final prospectus for details.

* For the purpose of information only, invest only after referring to the final prospectus.

Disclaimer: Sharekhan Ltd.: BSE Cash-INB011073351; F&O-INF011073351; NSE - INB/INF231073330; CD - INE231073330; MCX Stock Exchange: CD - INE261073330; United Stock Exchange: CD - INE271073350; DP: NSDL-IN-DP-NSDL-233-2003; CDSL-IN-DP-CDSL-271-2004; PMS INP000000662; Mutual Fund: ARN 20669. Commodity trading through Sharekhan Commodities Pvt. Ltd.: MCX-10080; (MCX/TCM/CORP/0425); NCDEX -00132; (NCDEX/TCM/CORP/0142); National Spot Exchange Ltd :12790; for any complaints email at igc@sharekhan.com; Please carefully read the Risk Disclosure Document issued by SEBI as prescribed by SEBI & relevant exchanges and Do's & Don'ts by NCDEX. & and Do's & Don'ts by NCDEX.Sharekhan Disclaimer: Sharekhan Limited is engaged as a distributor of IPO/Bonds/NCD. Sharekhan or any of its group concerns do not in any manner recommends any product or any of its characteristics. The client is advised to take his / her own independent decisions for investing in any financial product after understanding their respective nature and risk and returns involved. The client may also approach his / her own consultants for investing in financial products or in relation to the tax related aspects. We do not solicit any action based upon this promotional material. Please note that the product does not take into account any particular investment objectives, financial decisions or needs of individual recipients. Neither Sharekhan nor any person connected with Sharekhan accepts any liability arising out of investment suggested in the material above.

Fw: Investor's Eye: Pulse - RBI Monetary policy update; Update - Torrent Pharmaceuticals, Larsen & Toubro, Kewal Kiran Clothing, Yes Bank, Lupin, Federal Bank; Viewpoint - Hero MotoCorp

2012-01-24T21:05:00.001-08:00

Sharekhan Investor's Eye

Investor's Eye
[January 24, 2012]

Sharekhan
www.sharekhan.com

Summary of Contents

PULSE TRACK

RBI Monetary policy update

RBI eases CRR by 50 basis points
In its third quarter review of the monetary policy the Reserve Bank of India (RBI) has surprised the market by easing the cash reserve ratio (CRR) rate by 50 basis points to 5.5 % while the policy rates (repo and reverse repo rates) have been kept unchanged. Apart from addressing the tight systemic liquidity, which has affected the flow of credit, the CRR cut also suggests a change in the RBI's stance on growth which would result in the easing of the rates in the period ahead. Nevertheless, the RBI has again cautioned against the external risks (the euro crisis, geo-political risks etc), the rising fiscal deficit and the high inflation rate which could affect the domestic economy. Though the RBI appears to be in a softening mode, further monetary actions would be guided by the pace of decline in inflation and the government's efforts to rein in the fiscal deficit.

Easing CRR positive for banks
The reduction in the CRR rate is positive for banks as the additional liquidity available would be deployed towards credit and investment. Banks will be cautious in reducing the lending rates immediately as the deposit rates remain high on account of the higher rates offered by alternative instruments (tax-free bond etc). Therefore, we believe the lending rates will decline materially once the deposit rates start trending downwards (which is expected to happen towards the end of the fiscal). However, the reduction in the CRR would lead to a nominal increase (of 4 to 5 basis points) in the margins. Importantly, the reduction of the CRR suggests a change in the RBI's stance, implying willingness on its part to unwind the rates. This augurs well for the banking sector.

STOCK UPDATE

Torrent Pharmaceuticals
Cluster: Ugly Duckling
Recommendation: Buy
Price target: Rs680
Current market price: Rs547

Q3FY2012 results: First-cut analysis

Result highlights

Q3FY2012 results broadly in line with expectations: Torrent Pharmaceuticals (Torrent)'s net sales grew by 21.8% year on year (YoY) to Rs675.5 crore on the back of a 40% YoY rise in international revenues to Rs396 crore. The revenue from the Indian market, which constitutes revenues from the sale of branded formulations and contract manufacturing, grew moderately by 7.7% to Rs292.5 crore. The operating profit margin (OPM) declined by 177 basis points (bps) YoY to 14.9% during the quarter, which led to the net profit recording a restricted growth of 8.2% to Rs83.2 crore. A decline in the operating margin is mainly attributable to higher other expenditure, which may have an element of foreign exchange (forex) loss related to derivative contracts. Despite a sharp fall in the operating margins, the net profit during the quarter was broadly in line with our estimates (Rs85 crore) mainly due to higher other operating income off-setting the impact of fall in margins.
Indian sales pick up; yet underperform the industry: The revenue from the Indian market grew by 7.7% YoY to Rs292.5 crore during the quarter, which is lower than our expectation of Rs314 crore. The branded business grew by 8.8% YoY to Rs230 crore while revenue from contract manufacturing activities posted a 4.2% YoY increase to Rs60.9 crore. The growth achieved during the quarter from the Indian business is better than that in the sequential previous quarter (Q2FY2012), which recorded the slowest growth (5.8% YoY) in the past 8 quarters.
The growth in the Indian market has been mainly impacted due to a slower offtake in acute segments. The growth achieved during the quarter is slower than the industry growth rate of 13% during the quarter. However, we expect the growth to pick up in the subsequent quarters on an increased contribution from the newly added field force.
International business is buoyed by favourable forex: During Q3FY2012, the revenue from the international business jumped by 39.8% YoY to Rs396 crore, thanks to the depreciation of the Indian Rupee (INR) against major international currencies. During the quarter, the rupee depreciated 12% against the US dollar and 11% against the euro, which contributed to the growth in the international business.
Higher material costs and other expenditure impacts margins: The OPM declined during the quarter by 177 basis points YoY to 14.8% against our estimate of 18%. The fall in the margin is mainly due to higher raw material costs and other expenditure during the quarter.

Valuation
We expect the company's strong performance in the international market to continue with increased pace of product launches in the US and Brazil. The performance in the Indian market would strengthen on increased contribution from the newly added field force and higher capacity utilisation of the Sikkim plants. We believe the major capital expenditure (capex) cycle is over for Torrent and the company could be expected to give a better return on investment. We expect a 17% and 23% revenue and profit after tax (PAT) compounded annual growth rate (CAGR) respectively over FY2011-13.
The stock is currently trading at 13.9x and 11.4x FY2012E and FY2013E earnings respectively. We have a Buy recommendation on the stock with a price target of Rs680. We may revisit our earnings estimates post the conference call.

Larsen & Toubro
Cluster: Evergreen
Recommendation: Buy
Price target: Rs1,588
Current market price: Rs1,350

Price target revised to Rs1,588

Result highlights

L&T's Q3FY2012 results were a mixed bag: The revenue of Larsen and Toubro (L&T) exceeded our expectations with strong order execution in the engineering and construction (E&C) division. But the margins were under pressure mainly due to the marked-to-market (MTM) foreign exchange (forex) losses of Rs400 crore on the forward contracts booked by the company. The profit after tax (PAT) was boosted by a strong growth in the other income, mainly dividend from subsidiaries (viz L&T Infotech and L&T Infocity) and treasury income. In Q3FY2012 the order inflow was moderate at Rs17,129 crore (a growth of 28% year on year [YoY], 6% sequentially). The management has maintained its order intake growth guidance at 5% for FY2012 though with the caution that this achievement would depend on a few critical orders in the infrastructure sector. The order inflow in the first nine months of the fiscal was flattish at Rs49,415 crore, requiring a run rate of Rs34,308 crore for Q4FY2012. That is a requirement of a 13% yearly growth on a strong base.
Guidance maintained: The company has maintained its guidance of a year-on-year (Y-o-Y) growth of 25% in revenue for FY2012. In M9FY2012, the company achieved a 21% Y-o-Y growth in the top line, requiring a yearly growth rate of 73% in Q4FY2012. This, we feel, would be quite a difficult task. We have assumed a 20% yearly growth in our FY2012 revenue estimate. The management has also maintained its guidance of margin dip in the E&C division to 75-125 basis points on a yearly basis on account of an increase in the input cost. However, owing to a higher share of overseas revenue and currency fluctuation, there could be more forex gain/loss in the coming quarters.
Estimates fine-tuned: In view of the higher other income and low tax rate we have marginally upgraded our earnings estimates. We have also trimmed our margin assumption to reflect the impending margin pressure particularly in the E&C and the electrical and electronics (E&E) divisions. Our stand-alone estimates for FY2012 and FY2013 have increased by about 5% and 6% respectively and our revised consolidated earnings per share (EPS) estimates for FY2012 and FY2013 stand at Rs81.1 and Rs93.5 respectively. We expect the company's stand-alone earnings to grow at a compounded annual growth rate (CAGR) of 16% over the next two years.
Price target revised to Rs1,588: Overall, though the company reported decent results for the quarter, but the order inflow guidance would be highly subjective to an uptick in infrastructure development activities in the country and in the Middle-East. The slow moving orders' share in the total order book has increased to 11-12% on account of the addition of a power equipment order worth Rs1,400 crore in this category. At the current market price the stock is trading at 14.4x on its FY2013 consolidated estimate. We continue to believe that L&T is the best proxy play on India's infrastructure growth theme and maintain our Buy rating on the stock. We also feel that its diversity continues to cushion its financials in the existing tough business environment. The recent cut in the cash reserve ratio (CRR) would also augur well for the stock in view of the expected uptick in investment sentiments. Our sum-of-the-parts (SOTP) price target for the stock stands revised to Rs1,588. The key positive triggers for the stock remain an uptick in business sentiments, winning of big-ticket orders in the power/infrastructure sector and easing of margin pressure.

Kewal Kiran Clothing
Cluster: Ugly Duckling
Recommendation: Hold
Price target: Rs800
Current market price: Rs644

Price target revised to Rs800

Result highlights

Q3FY2012 results weak and below estimates

Kewal Kiran Clothing Ltd (KKCL)'s Q3FY2012 report card was weak and the results were below our expectation on both revenue (up 2% year on year [YoY]; volumes down 9.6% YoY) and earnings (down 22.4% YoY) fronts. The margin at 18.6% contracted by 850 basis points YoY.
The revenue performance was dismal, with the company reporting flat apparel revenue (a 10.6% increase in the realisation was knocked off by an equal magnitude of volume contraction). Along with the subdued consumer environment in the last two months of the quarter, an early festive season this year led to this soft performance.
The increased cost of goods sold (up 23.5% YoY) coupled with the introductory expense of the newly launched accessories category (other expenses up 60% YoY) played havoc with the margins (down 850 basis points YoY). Consequently the operating profit was down 30% YoY.
A strong other income (up 93.8 YoY) coupled with a reduction in the effective tax rate (down 31.7% vs 33% in Q3FY2011) restricted the earnings contraction to 22%.
The balance sheet continues to be strong with cash and cash equivalents at about Rs107 crore (about Rs88 per share), and return on capital employed (RoCE) and return on equity (RoE) at 25% and 24% respectively.

Downgrading earnings estimates: Incorporating the weak results for Q3FY2012 (on the revenue and margin fronts), we have downgraded our estimates for FY2012 and FY2013 by 7.4% and 4.6% respectively. Our revised earnings per share (EPS) estimates for FY2012 and FY2013 now stand at Rs43.4 and Rs53.6 respectively.

Maintain Hold: KKCL's superior business model (strong portfolio of brands that are sold on outright basis via various distribution channels) coupled with its management's financial acumen (profitable growth approach and superior corporate governance practices) keep us bullish on its business. We ascribe a price/earnings ratio (PER) of 15x our FY2013E EPS of Rs53.6 to arrive at a price target of Rs800. Though we continue to like the business, the near-term sluggishness in the discretionary spent category makes us stick to our Hold rating on the stock.

Yes Bank
Cluster: Emerging Star
Recommendation: Buy
Price target: Rs360
Current market price: Rs319

Strong operating performance, CASA ratio improves

Result highlights

Yes Bank's Q3FY2012 results were largely in line with our estimates at the net profit level as the earnings grew by 32.9% year on year (YoY) and 8.1% quarter on quarter (QoQ) to Rs254 crore. This was driven by a strong growth in the net interest income (NII) and the non interest income.
The NII of the bank grew by 32.3% YoY and 10.9% QoQ on account of strong growth in assets. The bank's advances (including credit substitutes) grew by 28.1% YoY while deposits grew by 18.9% YoY (6.5% QoQ).
The net interest margin (NIM) of the bank dipped by 10 basis points (bps) sequentially to 2.8%. The yields on advances expanded 20bps QoQ, being outpaced by higher borrowings and increase in savings deposits rates. However, the current account savings account (CASA) of the bank increased to 12.6% in the quarter under review from 10.9% in Q2FY2012.
The non interest income grew by 30.8% YoY but remained flat sequentially due to a sequential decline in the financial advisory income. The cost- income ratio of the bank grew to 37.6% in Q3FY2012 as against 35.6% in Q2FY2012.
The asset quality remained stable as the gross and net non performing assets (NPA) were reported at 0.2% and 0.04% respectively, which is in line with Q2FY2012. The specific loan loss coverage ratio stood at 80.4%, also similar to that of Q2FY2012.
Outlook: Yes Bank yet again delivered a strong set of numbers in Q3FY2012 driven by a strong operating performance and healthy asset quality. The bank's margins have declined by 10bps QoQ but have remained stable in the range of 2.8%-3.1% for the past several quarters. In addition, the sharp increase in savings deposits was a positive surprise and the management is confident of achieving a 30% CASA by 2015. On the asset side an increase in the retail book entails some risk but is likely to be in manageable limits. We believe the bank would continue to grow ahead of the industry and is likely to retain its asset quality. We expect the bank's earnings to grow at a compounded annual growth rate (CAGR) of 27% over FY2011-13. We maintain our Buy recommendation with a price target of Rs360 (2x FY2013E book value [BV]) for the stock.

Lupin
Cluster: Apple Green
Recommendation: Buy
Price target: Rs538
Current market price: Rs445

Higher tax rate impacts bottom-line

Result highlights

Q3FY2012 results in line with expectations; higher tax rate impacts net profit: Lupin reported a 22.1% year on year (YoY) rise in its net sales to Rs1,792 crore in Q3FY2012, mainly driven by India sales and favourable currency inflating international sales. The company's operating profit margin (OPM) improved 293 basis points (bps) Y-o-Y to 21.3%, mainly due to lower material costs. The profit before tax jumped 37% Y-o-Y to Rs345 crore during the quarter. However, due to a sharp jump in the effective tax rate (22.5% in Q3FY2012 as compared to 9.4% in Q3FY2011) and Rs34 crore translation foreign exchange (forex) loss during the quarter, the net profit after tax (PAT) recorded a restricted growth of 5% YoY to Rs235.7 crore. However, when adjusted for the forex loss, the PAT grew by 20% YoY to Rs270 crore, which is 5% higher than our estimates of Rs257 crore.
We fine tune our estimates for FY2012 and FY2013: We have fine tuned our estimates for FY2012 and FY2013 in the light of last 9 months' results and drawing cues from management interactions. Accordingly, while we have revised our revenue estimates marginally upward on the back of strong India sales, earning estimates have been revised downward by 3.6% and 3.7% for FY2012 and FY2013 respectively, mainly to factor in a lower interest cost and higher effective tax rates.
We maintain Buy: The stock is currently trading at 16.8x FY2013E earning per share (EPS; revised). We maintain our Buy recommendation on the stock with a target price of Rs538 (20.4x FY2013E EPS).

Federal Bank
Cluster: Ugly Duckling
Recommendation: Buy
Price target: Rs460
Current market price: Rs392

Core income growth improves, asset quality weakens

Result highlights

Federal Bank's Q3FY2012 results came ahead of our estimates as the earnings of the bank grew by 41.1% year on year (YoY) and 5.6% quarter on quarter (QoQ) to Rs202 crore led by a strong growth in the net interest income (NII).
The NII of the bank was also ahead of our estimate as it grew by 18.1% YoY (11.3% QoQ) led by a sequential jump in the margin to 3.94% from 3.77% in Q2FY2012.
The advances of the bank grew by 17.6% YoY but declined by 1.2% QoQ whereas the deposits of the bank grew by 26.6% YoY (but declined by 1.1% QoQ). The current account and savings account (CASA) of the bank stood at 28.2% as against 26.4% in Q2FY2012.
The non-interest income grew by 13.3% YoY and 17.9% QoQ majorly led by a strong growth in the fee income and the foreign exchange (forex) income of the bank.
The asset quality of the bank deteriorated as the gross and net non-performing assets (NPAs) of the bank increased to 3.97% and 0.74% from 3.61% and 0.58% respectively in Q2FY2012. The provision coverage ratio (PCR) of the bank declined to 80.5% from 83% in Q2FY2012.

Outlook
Federal Bank continues to show strength in core operations driven by a steady growth in the advances and high margins. The slippages increased in Q3FY2012 after showing an improvement in Q2FY2012 mainly due to slippages in the corporate segment. However, the recoveries remain strong which mitigates any significant asset quality risks. The stock's valuations are attractive (1x FY2013E book value) considering the return on equity (RoE) and return on asset (RoA) of about 14% and 1.2% respectively expected by FY2013 due to the structural changes undertaken by the new management. We maintain our Buy recommendation on the stock with a price target of Rs460 (1.3x FY2013E book value).

VIEWPOINT

Hero MotoCorp

Currency - A pillion rider for this Hero

Currency to be the key influencer in Hero MotoCorp's earnings and stock performance

We estimate that from hereon the currency will play the biggest role in influencing earnings as well as stock performance of Hero MotoCorp. An appreciation in the rupee would be extremely beneficial for the company and its depreciation would hit the company the most.

The company has amortised a fixed sum of royalty every quarter with currency risk vested on it. The originally estimated quarterly royalty bill at the time of split with Honda was Rs180 crore. However, a sharp depreciation in the rupee has inflated the quarterly bill to Rs228 crore in Q3FY2012. In the month of January 2012, the rupee has appreciated by 5% each against the US dollar and the yen. If the rupee sustains at the current levels, then the royalty benefit under the depreciation head would be to the tune of Rs11-12 crore.

The company has 2% of its imports as dollar denominated and 14% of the imports by vendors are dollar and yen denominated. The rupee's depreciation has a direct bearing on raw material costs. However, the same reverses favourably if the rupee appreciates. We estimate a 0.75% margin impact on every 5% movement in the rupee against the dollar and the yen.

Highlights of the conference call

The company has confirmed of a slowdown and rising inventory levels. The overall growth expectation for Q4FY2012 and FY2013 is modest at 10-12% with rural demand more resilient.
The company also revealed that all the new product launches would attract a royalty of upto 5% and will be paid over and above the fixed charge amortised under depreciation every quarter.
The company is in advanced talks for technology tie-ups with Ricardo and AVL for engine development.
The company targets exports of 1 million units in the next 5 years.

Valuation
We are aligning our earnings estimates at a rupee-dollar rate of Rs50 and a rupee-yen rate of Rs0.64. Every 5% appreciation in the rupee would benefit earnings by 5.5%. Our earnings per share (EPS) for FY2012 and FY2013 are estimated at Rs121 and Rs147.8 respectively. Assuming the rupee sustains at the current levels, then the stock can trade at 13.5x one year forward earnings. However, if the rupee breaches its recent low against the dollar and the yen, then our earnings expectations would require a downward revision. Assuming stable state conditions, we have a positive view on the stock.

Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a postition in the companies mentioned in the article.

Fw: Investor's Eye: Update - Larsen & Toubro, Federal Bank, Godrej Consumer Products, Maruti Suzuki India, UltraTech Cement; Viewpoint - Idea Cellular

2012-01-24T00:26:00.001-08:00

Sharekhan Investor's Eye

Investor's Eye
[January 23, 2012]

Sharekhan
www.sharekhan.com

Summary of Contents

STOCK UPDATE

Larsen & Toubro
Cluster: Evergreen
Recommendation: Buy
Price target: Rs1,523
Current market price: Rs1,278

Q3FY2012 results: First-cut analysis

Result highlights

Q3 results a mixed bag: Larsen and Toubro (L&T)'s Q3FY2012 results were a mixed bag. The revenue exceeded our expectations with strong execution in the engineering and construction (E&C) division but the margins were under pressure mainly due to the mark to market (MTM) forex losses of Rs 400 crore. The margins were the lowest in 13 quarters. The profit after tax (PAT) was boosted by a strong growth in other income, mainly dividend from subsidiaries (mainly L&T Infotech and L&T Infocity), and treasury income. In Q3FY2012 the order inflow was moderate at Rs17,129 crore (a growth of 28% year on year [YoY], 6% sequentially). The management has maintained its order intake growth guidance at 5% for FY2012 though with the caution that this achievement would depend on a few critical orders in the infrastructure sector. The order inflow in the first nine months of the fiscal was flattish at Rs49,415 crore, requiring a run rate of Rs34,308 crore for Q4FY2012. That is a requirement of a 13% yearly growth on a strong base!
Stand-alone sales up 24%: L&T has reported a strong growth in its revenues (stand-alone) for Q3FY2012; the same were higher than our expectation. This was on account of the sound order execution in the E&C division, which reported a 25% revenue growth for the period. However, the business in the machinery and industrial product (MIP) and electrical and electronics (E&E) divisions was sluggish with a year-on-year (Y-o-Y) revenue growth of 6% owing to a lower industrial offtake. The "Others" segment reported a strong 59% growth driven by the integrated engineering business.
OPM under pressure due to forex losses: The overall operating profit margin (OPM) stood at 9.6%, which was lower than our expectation of 10%. The margin was under pressure mainly led by MTM forex losses. There was a forex loss of Rs400 crore in the third quarter shown in other expenses (Rs200 crore on foreign debt and Rs200 crore were translation losses) as compared to Rs50 crore in Q3FY2011.
Net profit up 15%: The depreciation charge increased by 41% on account of the higher capital expenditure (capex) undertaken in recent times. The other income jumped by 32.5% YoY owing to higher dividend from subsidiaries while the net interest charge remained subdued. Further, boosted by a low tax rate the adjusted PAT grew by 23% YoY, which was 13% higher than our expectation.
Order inflow modest: The order inflow for the quarter was moderate at Rs17,129 crore (a growth of 28% YoY, 6% sequentially). The management has maintained its order intake growth guidance at 5% for FY2012 though with the caution that this achievement would highly depend on the winning of a few critical orders in the infrastructure sector. The order inflow in the first nine months of the fiscal was flattish at Rs49,415 crore. This implies a run rate of Rs34,308 crore required for Q4FY2012; that is requirement of a 13% yearly growth on a strong base. The same appears a challenging task given the current slowdown in the economy. The company has an overall order book of around Rs145,768 crore (up 27% YoY and 3% sequentially). Of the total order book, about 88% is from the domestic customers and the remaining 12% comprises overseas orders. The overseas orders' contribution to the overall order inflow increased sharply to around 20% in M9FY2012 from the past level of 10-15%.
Outlook and view: The concerns on the margin front and forex losses aggravated in this quarter whereas the order inflow was decent. At the current levels, the stock is trading at 14.3x our FY2013 consolidated earnings estimates. We maintain our Buy rating on the stock and would soon come out with a detailed note taking a thorough account of the company's Q3 results.

Federal Bank
Cluster: Ugly Duckling
Recommendation: Buy
Price target: Rs460
Current market price: Rs383

Q3FY2012 results: First-cut analysis

Result highlights

Federal Bank's Q3FY2012 results were ahead of our estimates as the net profit expanded by 41% year on year (YoY) to Rs202 crore on account of a strong growth in the net interest income (NII). However, the asset quality disappointed as the gross and the net non-performing assets (NPAs) increased on a sequential basis after showing some improvement in Q2FY2012.
The NII showed a strong growth of 18.1% YoY and that of 11% quarter on quarter (QoQ); the same was higher than our estimate. A growth of around 21% in the advances coupled with an expansion in the margins (calculated) supported the growth in the NII during the quarter.
In Q3FY2012 the non-interest income showed a growth of 13.3% YoY. On a sequential basis the non-interest income expanded by 18% QoQ.
The operating profit (pre-provisional profit [PPP]) increased by 17.4% YoY to Rs419 crore. The operating expenses increased by 16.5% YoY while the cost/income ratio was at 37% compared with 38.9% in Q2FY2012.
The asset quality of the bank deteriorated significantly as its gross and net NPAs increased to 3.97% and 0.74% from 3.61% and 0.58% respectively in Q2FY2012. In absolute terms, the gross NPAs increased 9.1% on a sequential basis.

Outlook: Though in Q3FY2012 the bank showed strength in the core income growth, the deterioration in its asset quality is a cause for concern. The management has shifted focus from growth in advances to improvement in risk management, efficiency and portfolio mix, which is positive for the bank in the medium term. Currently, the stock trades at 1.1x FY2013 book value and we have a Buy recommendation on it. We will come out with a detailed note after attending the bank's conference call scheduled on January 24, 2012.

Godrej Consumer Products
Cluster: Apple Green
Recommendation: Buy
Price target: Rs497
Current market price: Rs418

Price target revised to Rs497

Key points

Q3FY2012 results-a blockbuster performance: For Q3FY2012 Godrej Consumer Products Ltd (GCPL) has reported a blockbuster performance with a sequential improvement of 214 basis points in the operating profit margins (OPMs) and a 50% growth in the bottom line for the quarter. The consolidated net sales grew by 36% year on year (YoY) to Rs1,344.1 crore (which was ahead of our estimate of Rs1,235.4 crore) during the quarter. This growth was driven by a 20.0% year-on-year (Y-o-Y) increase in the domestic business and a 68.2% Y-o-Y growth in the international business. Though the gross profit margin (GPM) remained almost flat but the OPM improved by 292 basis points YoY to 20.2%, largely on account of a 284-basis-point Y-o-Y decline in the advertisement and promotional spend during the quarter. The operating profit grew by 58.9% YoY to Rs272.1 crore and the adjusted profit after tax (PAT; before minority interest) grew by 54.3% YoY to Rs183.1 crore (which was ahead of our expectation of Rs143.2 crore). The foreign exchange (forex) loss due to the rupee's depreciation stood at Rs5.5 crore (in line with our expectation of Rs5 crore).
Raising Rs685 crore through preferential allotment: GCPL is planning to raise Rs685 crore by issuing around 1.67 crore equity shares of Re1 each of the company to Baytree Investments (Mauritius) Pte Ltd (an arm of Singapore-based investment firm Temasek) at a premium of Rs409 per equity share. With this preferential allotment the share capital of the company will go up to 34.0 crore from 32.4 crore currently. The funds thus raised will be utilised largely to reduce the debt on books and to fund acquisitions. The management expects the debt/equity ratio to come down to 0.7x by FY2013 from 1.1x at present.
To acquire 60% stake in Latin American Cosmetica: GCPL has entered into an agreement to acquire a 60% stake in Cosmetica Nacional (Cosmetica), a leading player in Chile's hair colorant and cosmetic markets. The acquisition is in line with GCPL's 3x3 strategy of enhancing presence in the emerging markets. GCPL is likely to pay close to Rs195 crore for its 60% stake in Cosmetica. The acquisition is valued at 9x its enterprise value (EV)/EBIDTA and 1.8x its sales, which is in line with some of the acquisitions done by GCPL recently. The acquisition will be funded through the mix of low cost foreign currency debt and the money raised from the preferential allotment to Temasek. The management of GCPL expects the acquisition to be earnings accretive from the first year of its consolidation. GCPL is planning to buy the remaining 40% stake in the company over a period of the next three to five years.
Revision in earnings estimates: We have factored in the higher than expected operating performance of Q3FY2012 in our estimates for FY2012 and FY2013 and this has resulted in an upward revision of 2.8% and 1.3% in the adjusted PAT estimates for the respective fiscals. However, the equity dilution to result from the preferential allotment to Temasek has caused us to reduce the earnings per share (EPS) estimates for FY2012 and FY2013 by 5% each. We have also not incorporated Cosmetica's numbers in our estimates due to the non-availability of the figures of the key balance sheet items. Nevertheless, a back-of-the-envelope calculation shows that the consolidation of Cosmetica would result in an increase of 5-6% in the FY2013 earnings estimate. However, we will wait for the balance sheet details of Cosmetica before revising our earning estimates.
Outlook and valuation: The integration of the recent acquisitions and the cross pollination strategy would help GCPL to achieve a strong growth in long run. We believe the company is comfortably positioned to achieve a growth of around 20% YoY in the bottom line in the coming years. In addition, the company is focusing on reducing the debt on books to improve the balance sheet at the consolidated level. Hence, we like GCPL in the mid-cap space and maintain our Buy recommendation on the stock. In line with the reduction in the earnings estimates due to the impending equity dilution, our price target for GCPL now stands reduced to Rs497. At the current market price the stock trades at 24.6x its FY2012E EPS of Rs17.0 and 19.4x its FY2013E EPS of Rs21.6.

Maruti Suzuki India
Cluster: Apple Green
Recommendation: Hold
Price target: Rs1,138
Current market price: Rs1,163

Expect a Swift recovery

Realisation expansion a positive surprise in Q3FY2012
During Q3FY2012, Maruti Suzuki (Maruti) reported a 7.1% quarter on quarter (QoQ) increase in net realisations. Lower discounts, price hikes and an improved product mix took the realisation to an all time high. The contribution/vehicle also surprised and reached to its highest level in the last six quarters.

Worst for margins behind; expect gradual improvement from Q4FY2012
The company is expected to see a 100-150 basis points (bps) margin savings on account of favourable operating leverage as production ramps up in Q4FY2012. However, some hit is expected as vendors are compensated for higher costs with a lag. Vendor compensation is expected to have a positive effect of 100bps.

Foreign exchange (forex) related marked to market (MTM) losses in commodities and direct and indirect imports were to the tune of Rs75 crore, thereby impacting margins by 100bps.

In case the currency remains stable, the company may see a 100-250bps margin expansion from Q4FY2012 onwards. FY2013 may see further improvement once the benefit of vendor hedges comes through.

Open positions may cause margin volatility; 100bps Q-o-Q impact felt in Q3FY2012
Maruti saw a 100bps impact on margins on account of adverse forex movement. The company hedged its dollar/ yen as well as dollar/euro exposure for Q4FY2012 while FY2013 exposure is completely open. During Q3FY2012 the dollar appreciated 0.7% against the yen while it appreciated 4.5% against the euro.

While the company hedged stable currencies, it has kept the most volatile dollar/rupee exposure open. An adverse currency movement in the rupee can have a direct bearing on the margins. During Q3FY2012, the pure currency impact on royalty is to the tune of Rs75 crore which includes reinstatement of liabilities of Rs20 crore and Rs19 crore of royalty hit related to H1FY2012.

Valuation
We are marginally cutting our earnings per share (EPS) estimates for the company as we incorporate the management's expectations of the future. Since our last Buy recommendation, the stock has achieved our target price. Our revised target price of Rs1,138 discounts FY2013 expected EPS of Rs81.3 by 14x. We believe that the current price is factoring in the positives. We recommend a Hold on the stock.

UltraTech Cement
Cluster: Ugly Duckling
Recommendation: Hold
Price target: Rs1,275
Current market price: Rs1,209

Price target revised to Rs1,275

Result highlights

Operating profit in line with estimate; PAT ahead of estimate: In Q3FY2012 UltraTech Cement (UltraTech) posted an operating profit of Rs964.9 crore (up 36.3%), which is in line with our estimate. However, on account of a surge in the other income and a decline in the interest cost (due to the subsidies received in the earlier years under the State Investment Promotion Scheme) the net profit of the company grew by 93.4% year on year (YoY) to Rs616.9 crore, which is ahead of our estimate.
Revenue growth largely driven by realisation growth: The revenue growth of 23.1% was supported by an increase of 16.2% in the average blended realisation YoY to Rs4,509 per tonne. On the volume front, the overall sales volume (including cement, clinker, export and white cement volumes) grew by 5.9% on a year-on-year (Y-o-Y) basis to 10.14 million tonne. On a sequential basis, the volume has witnessed sign of post monsoon recovery and grew by 7%. The blended realisation was higher by 9.3% on a quarter-on-quarter (Q-o-Q) basis. Going ahead in Q4FY2012 we believe cement prices will remain strong with a likely increase in the cement offtake.
Expansion in the OPM due to higher realisation: On the margin front, the operating profit margin (OPM) expanded by 205 basis points YoY to 21.1% on account of a 21.2% increase in the realisation. However, on the cost front the key cost elements like the raw material cost, the power & fuel cost and the freight charges continued their upward trend. This increased the overall cost of production by 18.1% to Rs3,618 per tonne. The operating profit increased by 36.3% YoY to Rs964.9 crore and the EBITDA per tonne increased by 28.7% YoY to Rs952.
Surge in other income and decline in interest cost: The other income increased by 156.4% to Rs155.4 crore (which included Rs66.6 crore for the subsidies related to the earlier years availed of under the State Investment Promotion Scheme). Further, the net interest cost declined by 63.9% YoY to Rs29.5 crore on account of the net subsidies of Rs38.4 crore received. Hence, the reported net profit of the company grew by 93.4% YoY to Rs616.9 crore.
Expansion at Chhattisgarh and Karnataka for 9.2mt cement capacity are on track: The company is setting up additional cement clinkerisation plants at Chhattisgarh and Karnataka. Work on both the plants is on track. The company has already placed the orders for the major equipment. The expansion will increase the total cement capacity by 9.2 million tonne and the additional capacities are expected to come on stream by Q1FY2014. After the commissioning of the aforesaid capacities the cement capacity of the company will enhance to 59 million tonne per annum (mtpa).
Oversupply to continue for three years, cost inflation to pressurise margin: As per the management, the oversupply scenario in the domestic cement industry is likely to continue in the coming three years which will have an adverse impact on the cement prices. Further, the sharp increase in the domestic and imported coal prices coupled with a likely increase in the freight cost will keep the margins under pressure.
Upgrading earnings estimates for FY2012 and FY2013: We are upgrading our earnings estimates for FY2012 and FY2013 mainly to factor in the higher than expected blended realisation in Q3FY2012. We are also factoring in some pressure on the power & fuel cost with the change in the pricing mechanism for domestic coal. The revised earnings per share (EPS) estimates work out to Rs72.8 for FY2012 and Rs82.3 for FY2013.
Maintain Hold with a revised price target of Rs1,275: We like UltraTech due to its diversified pan-India presence and strong balance sheet. Further, the company's footprint in the growing markets like Bangladesh, Dubai, Sudan and Bahrain augurs well for its business. However, on account of the pressure expected on the cement prices in the coming one year and the cost inflation in terms of the rising prices of coal (imported as well as domestic) we maintain our Hold recommendation on the stock with a revised price target of Rs1,275 (valued at enterprise value [EV]/tonne of $120). At the current market price the stock trades at a price/earnings (PE) of 14.7x, discounting the FY2013 estimates. On an EV/EBITDA basis, the stock trades at 7x FY2013E.

VIEWPOINT

Idea Cellular

Strong operational performance; but regulatory overhang remains

Idea Cellular (Idea) posted robust Q3FY2012 results, with the revenue (+8.9% quarter on quarter [QoQ]) as well as margin (+100bps QoQ) exceeding our as well as the Street's expectation. The management in its commentary sounded positive on both, the voice as well as the data business, but remained cautious on the regulatory environment.

Read across for Bharti- Traffic growth expected to be strong; we have modeled for 4% sequential volume growth
Reading from Idea's results we believe that Bharti Airtel (Bharti) too is likely to deliver a strong improvement in the volume/traffic movement in the present quarter, and the results are likely to be robust. We have modeled a 4% sequential growth in traffic, with a 2-3% improvement in ARRs and minutes of usage (MoU).

Idea-well placed operationally; but regulatory uncertainty persists
The company has demonstrated its ability and operational efficiency through market share gains (as per Telecom Regulatory Authority of India [TRAI]; Idea's market share has grown from 12.1% in Q1FY2011 to 14% in Q2FY2012) and improvement in margins from the established circles. We believe that with its strong brand equity and sharp focus, Idea is operationally well placed to encash the strong wave of voice as well as data opportunity presented by India. But the persistent regulatory uncertainty (with regards to excess spectrum charges, spectrum refarming, license renewal fee, abolition of roaming charges) will continue to linger the stock. At the current market price the stock is trading at 5.9x its FY2012 enterprise value/earnings before interest, tax, depreciation and amortisation (EV/EBITDA).

Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a postition in the companies mentioned in the article.

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[investwise] Fwd: Stock_for_YOU CARE Research - Monetary Policy Expectation [1 Attachment]

2012-01-23T08:03:00.000-08:00

[Attachment(s) from arun varghese included below]

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Date: 23 January 2012 12:03
Subject: Stock_for_YOU CARE Research - Monetary Policy Expectation
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Fw: Investor's Eye: Update - Sintex Industries (Q3FY2012 results: First-cut analysis), Pratibha Industries (Exit from SAW pipe business to be EPS accretive)

2012-01-16T23:37:00.001-08:00

Sharekhan Investor's Eye

Investor's Eye
[January 13, 2012]

Sharekhan
www.sharekhan.com

Summary of Contents

STOCK UPDATE

Sintex Industries
Cluster: Apple Green
Recommendation: Buy
Price target: Rs120
Current market price: Rs72

Q3FY2012 results: First-cut analysis

Result highlights

For Q3FY2012, Sintex Industries (Sintex) reported weak results that were below our expectation on the revenue (-2.1% year on year [YoY]), operating profit (-17.1% YoY), margin (down 250bps YoY) as well as the earnings front. The adjusted profit for the company came at Rs72.5 crore (down 35.7% YoY) as against our expectation of Rs90.7 crore.

Disruption in monolithic business results in revenue de-growth: The income from operations declined by 2.1% on a year-on-year (Y-o-Y) basis, while the same remained flat on a sequential basis. Normally during the third quarter, the execution and the order booking from the monolithic business is high, but in this quarter due to extra slow clearance of the projects coupled with high blockage of working capital (read increase in debtors days) compelled Sintex to stall the execution. As a result the monolithic business (which has a strong order book at Rs3,000 crore) reported a huge 24.4% Y-o-Y drop in the revenue for the quarter.

Though domestic custom moulding was strong, other businesses posted negative to flat growth: The domestic custom moulding segment stood strong with a revenue of Rs152 crore (+42.1% YoY). But the other segments like the international custom moulding division, textiles, prefab and BT shelter posted flat to single digit negative growth.

Margin contraction across the board spells havoc for consolidated margins: The quarter witnessed margin contraction across all the business segment ranging between 200-300 basis points (bps). The monolithic segment's margin at 16% was 200bps lower than in Q3FY2011, while the overseas custom moulding division (on an aggregate basis) saw the margin falling to single digit at 7.3%. All this led to a 250bps contraction in the consolidated margin from 16.6% in Q3FY2011 to 14.1% in the quarter under consideration, resulting in a 17% Y-o-Y drop in the operating profit.

Reported net profit down 27.1% YoY: A contraction in the operating performance coupled with an increased interest and depreciation charge continued to deteriorate the earnings further. The profit after tax (PAT; before exceptional items) was down 33.5% YoY, which is one of the largest drops in profitability over the last 12 quarters. The adoption of the new AS11 guidelines (announced by the Ministry of Corporate Affairs) resulted in booking Rs13.5 crore of gain for the quarter which restricted the reported profit fall to 27.1% YoY.

But adjusting for the FCCB write back, the adjusted profit de-growth expands: The gains booked by the company (Rs13.5 crore) on account of its outstanding exposure in FCCBs (to the tune of $115 million) is a book entry as per the standard. Due to large scale depreciation of the Indian rupee vis-a-vis the US dollar, which could have resulted in huge volatility of earnings, the government has provided an option to the players to amortise the marked-to-market (MTM) loss on foreign loans over the balance period of such loans, and Sintex has availed of the same. Adjusting for this gain (net of taxes), the net profit for the quarter declined by 35.7% YoY.

Outlook: Dissecting the results we see that these were below our expectations on all parameters, while we believe that a slowdown is imminent and have built the same in our modeling and estimates. But in the wake of a higher than expected slowdown and margin disruption for Q3FY2012 (that resulted in lower than expected earnings) we would interact with the management to review our current estimates. At the current price the stock is ruling at 4.4x; we have a Buy recommendation with a price target of Rs120.

Pratibha Industries
Cluster: Ugly Duckling
Recommendation: Buy
Price target: Rs61
Current market price: Rs40

Exit from SAW pipe business to be EPS accretive

We recently interacted with the chief executive officer of Pratibha Industries, Mr. Yogen Lal, in relation to the saw pipe manufacturing business that has been put on the block. The key takeaways from the meeting are presented below.

Exiting the pipe manufacturing business: Pratibha Industries is searching for buyers for its SAW pipe manufacturing business as it plans to reduce costs and improve the net profit margin. It has already received the board's approval for the same. It had entered into pipe manufacturing in 2007 in order to move up the value chain and gain competitive advantage in its water engineering, procurement and construction (EPC) business. It had also planned to use 50% of the capacity for third-party contracts.

Rationale behind the exit: However, given the competitive scenario in the pipe business, Pratibha Industries has not been able to grab any major third-party contracts for its pipe manufacturing division over the last 12-18 months as it has refrained itself from compromising on margins. The plant has so far been catering to only internal water orders. However, of late even for its internal orders it is finding it cheaper to buy pipes from the third party rather than manufacture them itself. In fact, the company saves 5-7% in cost if it sources saw pipes instead of manufacturing them. This has resulted in the plant running at less than 50% capacity utilisation level. Thus, the cost of running the plant has escalated and instead of giving it competitive edge in its water and oil & gas projects, it is hitting its profitability. However, the management reiterates that this is not a distress sale.

Maintain Buy: The proceeds from the sale of the plant will help the company to reduce its debt, which had become a concern of late. Otherwise, even under the current gloomy industry scenario, the company has managed to bag large orders with better margins which reinforces our confidence in the company. It bagged Rs1,852 crore worth of orders in M9FY2012 (taking its share only) already surpassing the total order inflow of Rs1,425 crore seen in FY2011. The current order book stands at about Rs4,800 crore, 3.8x its FY2011 revenue, providing healthy revenue visibility. The stock currently trades at 5.0x and 4.0x its FY2012E and FY2013E earnings. We maintain our Buy rating on the stock with a price target of Rs61.

Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a postition in the companies mentioned in the article.

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Fw: Quality Company Deposits with Double Digit Return

2012-01-16T23:31:00.001-08:00

Dear Investor,

Greetings from Integrated.

Looking for a "Double Digit Return" in the current scenario ??

That too from reputed Companies with a sound track record ???

We are very happy in providing you with a list of popular FD schemes to suit your requirement.

Company Name	Min. Amount	Rate of Interest (%)						Additional Interest	Rating
Company Name	Min. Amount	1 Year	400 Days	15 Months	2 Years	33 Months	3 Years	Additional Interest	Rating
DHFL AASHRAY Deposit - 400 Days	10000	-	10.75	-	-	-	-	0.50% additional for senior citizens	CARE (AA+FD) BWR FAAA
Elder Pharmaceuticals Ltd	25000	10	-	-	11	-	12	0.50% additional for senior citizens	-
Godrej Properties Ltd	10000	9	-	-	9.50	-	10.50	-	-
Gruh Finance Ltd	2000	9.50	-	-	9.75	-	10	0.25% additional for senior citizens	MAA+ (ICRA) FAA+ (CRISIL)
Godrej & Boyce Mfg. Co. Ltd.	15000	-	-	-	-	-	10	-	-
HDFC Ltd - Platinum Deposits	20000	-	-	10	-	10	-	0.25% additional for senior citizens	FAAA (CRISIL) MAAA (ICRA)
Mahindra Finance Samruddhi	10000	9.50	-	-	10.25	-	10.50	0.25% additional for senior citizens	FAAA (CRISIL)
Plethico Pharmaceuticals Ltd	25000	11	-	-	11.50	-	12	0.50% additional for senior citizens	-
Premier Ltd	25000	11.50	-	-	12	-	12.50	-	-
Shriram Transport Unnati	25000	9.25	-	-	9.75	-	10.75	0.25% additional for senior citizens	FAA+/stable (CRISIL) MAA+/stable (ICRA)
United Spirits Ltd	25000	11	-	-	11.50	-	-	-	-

For further informations and application forms, kindly contact your nearest branch of Integrated.

For list of branches, please visit http://www.iepindia.com/contact.aspx

Regards,
Integrated Enterprises (India) Ltd.,

Fw: L&T Infrastructure Finance Company Ltd - Long Term Infrastructure Bonds 2012A Series (Tranche-2)

2012-01-12T22:40:00.001-08:00

L&T Mailer

If you are unable to see images click here

Avail Triple Benefits

Save Tax (U/S 80 CCF- Maximum deduction is Rs.20,000)
Earn Fixed Income from it (Guaranteed 8.70%)
No paper work. Apply Online through TT Manager.

Following table will illustrate the Tax benefit to various individuals

Taxable Income	Return %	Tax Saving %	Tax Saving on Rs 20,000
Less than 1.80 lakhs*	8.70%	0%	0
1.80 to 5 lakhs		10.30%	2060
5 to 8 lakhs		20.60%	4120
More than 8 lakhs		30.90%	6180

*For women and Senior Citizen exemption limits are Rs. 1,90,000 and Rs. 2,50,000 respectively.

The specific terms of the instrument are set out below:

Series	I	II
Frequency of Interest Payment	Annual,i.e. yearly payment of Interest	Cumulative, i.e. cumulative interest payment at the end of maturity or buyback, as applicable
Face Value per Tranche 2 Bonds	Rs 1,000	Rs 1,000
Buyback Facility	Yes	Yes
Buyback Date	The first Working Day after the expiry of 5 years from the Deemed Date of Allotment and the first Working Day after the expiry of 7 years from the Deemed Date of Allotment.
Buyback Amount	Rs.1,000 at the end of 5 years / Rs. 1,000 at the end of 7 years	Rs. 1,517.57 at the end of 5 years / Rs. 1,793.11 at the end of 7 year
Buyback Intimation Period	The period commencing from 6 months preceding the relevant buyback Date and ending 3 months prior to such Buyback Date.
Maturity Date	10 years from the Deemed Date of Allotment	10 years from the Deemed Date of Allotment
Interest Rate	8.70% p.a.	8.70% p.a., compounded annually
Maturity Amount	Rs.1,000	Rs. 2,303.01
Yield on Maturity*	8.70% p.a.	8.70% p.a., compounded annually
Yield on Buyback*	8.70% p.a.	8.70% p.a., compounded annually
Know More

Who Can Apply?

Only Resident Indian Individuals, HUF through the Karta

Other Details

Cheque has to be made in the favour of "L & T Infra Bonds 2012A".
PAN card is mandatory for subscribing to these bonds.
Demat Account Number for subscribing to these bonds.

Please do not reply to this mail as this is an automated mail service

Disclaimer:

This report is for information purposes only and does not constitute an offer, solicitation or advertisement with respect to the purchase or sale of any security/bonds of L &T Infrastructure Finance Company Ltd ("L &T Infra" / "The Company") and no part of it shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. This report has been prepared from the publicly available information. Any person who subsequently subscribes for any bonds issued by L & T Infra must rely solely on the publicly available information including the Prospectus issued in connection with the Issue on the basis of which alone subscription for the debentures may be made. In addition, investors should pay particular attention to the section of the Prospectus entitled "Risk Factors".

INDIA INFOLINE LTD (Regd. Office) - IIFL House, Sun Infotech Park, Road No. 16V, Plot No. B-23, MIDC, Thane Industrial Area, Wagle Estate, Thane - 400 604. Tel: (91-22) 2580 6650 • Fax: (91-22) 2580 6654 SEBI REGN NO.: BSE (Cash) INB 011097533, BSE (F&O) INF 011097533, NSE (Cash) INB 231097537, NSE (F&O) INF 231097537, NSE (CDS) INE 231097537, DEPOSITORY: IN DP NSDL 185 2000, IN DP CDSL 352 2006 | AMFI REGN NO.: ARN-47791

Fw: Investor's Eye: Update - Cement (Seasonal pick-up in demand), Fertilisers (Consumption shift towards cheap fertilisers)

2012-01-11T23:07:00.001-08:00

Sharekhan Investor's Eye

Investor's Eye
[January 11, 2012]

Sharekhan
www.sharekhan.com

Summary of Contents

SECTOR UPDATE

Cement

Seasonal pick-up in demand

Key points

All India cement dispatches for the month of December grew 15.1% YoY: As per the provisional data released by the Cement Manufacturers Association (CMA), the all India cement dispatches for the month of December 2011 grew by a strong 15.1% on a year-on-year (Y-o-Y) basis to 15.8 million tonne. On a month-on-month (M-o-M) basis, the dispatches during December 2011 have grown by 11.9%. However, on a year till date (YTD) basis (April - December 2011), the all India cement dispatches have grown by 4.5% which is below industry expectations. The volume growth during the month of December 2011 was driven by a pick-up in demand in the western, northern and eastern regions of the country and also on account of inventory pile up at the dealer level.
Among the pan-India players UltraTech takes the lead: The volume growth of the top three domestic cement companies - ACC, Ambuja Cements and UltraTech Cement (UltraTech) for the month of December 2011 was impressive on a Y-o-Y basis on account of a pick-up in the cement offtake in the north, west and the eastern region and inventory pile up at the dealer level. Among the large players UltraTech has taken a lead and posted an impressive dispatches growth of 10.2% year on year (YoY). On the other hand ACC and Ambuja Cements have posted an 8.9% and 6.8% growth respectively in their dispatches. Hence, cumulatively the pan-India players have registered a 9% volume growth. On a sequential basis (compared to November 2011) the cumulative dispatches of pan-India players have increased by 12.8%.
Cement offtake recovered partially; remained sluggish in southern region: In terms of demand, dealers have confirmed that the cement offtake in most parts of the country has recovered partially during the month of December 2011 due to post monsoon pick-up in infrastructure activity. However, the southern region has continued to witness a sluggish demand environment due to political hurdles in Andhra Pradesh which is a crucial state in the southern region for the cement companies. The dealers are expecting momentum in demand to continue in the coming couple of months.
Cement prices corrected in most parts of the country; southern regions remained stable: During the month, the price of cement corrected in the range of Rs5-15 per a bag of 50kg in most parts of the country. The eastern region has witnessed the highest price correction on an M-o-M basis. The price correction is largely on account of an increase in the supply. However, dealers are of the view that the prices may increase in the near term as cement offtake is expected to improve going ahead. Meanwhile, prices in the southern region remained largely unchanged during the month on a sequential basis.
Outlook-We remain bullish on Grasim and Orient Paper: Due to the lower than expected spending on infrastructure projects in the country by the government, the volume growth on a YTD basis was sluggish and below industry expectation. However with the expiry of the monsoon, the cement offtake in Q3FY2012 has gained momentum and we believe it will continue for a coming couple of quarter. Further, the cement prices have remained at a healthy level on account of supply discipline followed by manufacturers. But with an increase in cement offtake, mid sized cement companies might break the supply discipline and this could be a concern on the sustainability of cement price at the higher levels. Hence, we maintain our neutral view on the cement sector but we are positive on select stocks. In the large sized space we prefer Grasim Industries (Grasim) and among the mid sized companies we like Orient Paper & Industries (Orient Paper).

Fertilisers

Consumption shift towards cheap fertilisers

Key points

Shift observed towards consumption of low cost fertilisers: In December 2011, the aggregate sales of domestically produced fertilisers (by 15 leading manufacturers) declined by 8% as compared to that in the same period of the previous year. The diammonium phosphate (DAP) production was hit by a tight supply of phosphoric acid, high cost of other inputs and also lower demand. However, the shortfall was made up by import of low grade complex fertilisers which are cheaper than DAP and muriate of potash (MOP).

Urea offtake increased in the current rabi season: There was an increase of 8% in the consumption of urea in December 2011 mainly due to higher demand as its price is lower than that of other non urea fertilisers. The total of urea consumption has increased from 26.75 lakh tonne to 28.82 lakh tonne in December 2011. Urea is the largest consumed fertiliser in India as its price is still under government control. A shift towards a higher use of urea may again degrade the nutrient ratio of the soil in favour of nitrogen.

Fertilisers dispatched volume remained stagnant in Q3FY2012: During Q3FY2012 consumption and dispatches of fertilisers remained stagnant on a year -on-year (Y-o-Y) basis despite a 25% fall in the production of indigenous DAP and 15% fall in the production of complex fertilisers. The demand for urea increased by 1.2% during the quarter ended December 2011, while consumption of imported complex fertilisers increased by 91.3% due to lower import of single graded fertilisers like DAP and MOP.

Marginal drop in volume growth on YTD basis: For the first three quarters of FY2012, cumulative fertiliser sales (including imports and domestic production) declined slightly in the country. On a year-till-date (YTD) basis, the sale of domestically produced fertilisers has grown by 4.4% whereas the imports have declined by 16%. The decline in imports was on account of higher prices in international markets and low demand for MOP and DAP in the domestic market due to a sharp increase in their price.

Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a postition in the companies mentioned in the article.

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Regards, The Sharekhan Research Team	myaccount@sharekhan.com
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Fw: Investor's Eye: Updates - Eros International Media, IL&FS Transportation Networks, Pharmaceuticals

2012-01-05T00:23:00.001-08:00

Sharekhan Investor's Eye

Investor's Eye
[January 04, 2012] Please see the attachment for details

Sharekhan
www.sharekhan.com

Summary of Contents

STOCK UPDATE

Eros International Media
Cluster: Emerging Star
Recommendation: Buy
Price target: Rs298
Current market price: Rs217

Q3FY2012 earnings preview

Impressive box office performance
The October-December period driven by the festive and holiday season is a seasonally strong quarter for the Indian film industry, with major releases lined up during this time. The quarter gone by saw an impressive performance with major releases grossing Rs700-750 crore of collections at the domestic box office. The quarter saw the release of films like Ra.One, Rockstar, The Dirty Picture, Don 2, Desi Boyz etc hogging the limelight.

Seasonally strong quarter
Eros International Media Ltd (EIML) had three major releases during the quarter namely - Ra.One, Rockstar and Desi Boyz. The three films had a decent run at the domestic box office with gross collections crossing Rs330 crore. However they failed to live up to the heightened box office expectations. For Q3FY2012, we expect EIML to report a revenue growth of 54% year on year (YoY) and 146.5% quarter on quarter (QoQ) to Rs430.8 crore. On the other hand, we expect earnings before interest and tax (EBIT) margins to improve by 161 basis points (bps) YoY and 123bps QoQ to 25.4%. The improvement in the margins would be restricted by expected foreign exchange (forex) losses owing to adverse currency movements. We have built in Rs15 crore of losses for Q3FY2012 as compared to Rs5.86 crore in Q2FY2012 and Rs0.33 crore in Q3FY2011. On a net profit level, we expect EIML to report a growth of 64.9% YoY and 157.4% QoQ to Rs70.5 crore.

Valuation
We continue to view EIML as a pertinent value play on the Indian entertainment sector. With a strong slate of films scheduled over the next two years, coupled with traction in the new media space, EIML has a strong business visibility going forward. We expect EIML's earning to grow at a compounded annual growth rate (CAGR) of 31% over FY2011-13E. At the current market price of Rs217, EIML trades at 13x FY2012E and 9.8x FY2013E earnings. We continue to remain positive on the company and maintain our Buy rating on the stock with a price target of Rs298.

IL&FS Transportation Networks
Cluster: Emerging Star
Recommendation: Buy
Price target: Rs330
Current market price: Rs158

Acquisition is EPS accretive

Acquisition at P/BV of 1.1x
IL&FS Transportation Network Ltd (ITNL) through its subsidiary ITNL International Pvt Ltd (Singapore based) has acquired a 49% equity stake in the Chongqing Yuhe Expressway Co (Chongqing Yuhe), China for $160 million, valuing the asset at 1.1x price to book value (P/BV). The project had been transparently bid out with assistance from the World Bank and the Singapore Government which is what motivated ITNL to enter the bid race along with six other competitors (shortlisted). The deal has been funded via an equity contribution of $30 million through the parent company (ITNL) and a debt of $140 million. It is credible to note that ITNL managed to raise $140 million within 15 days which speaks about the company's strong parentage and management.

Project offers stable revenue with all risks mitigated
The stretch spans across 58kms, of which 27.1kms is tolled at five locations (towards various exits), accounting for nearly 60% of revenues for CY2011. For the remaining 31.6kms, the company would receive an assured subsidy of around $22 million (approximately 40% of the revenues for CY2011) from the Chongqing Municipality with a minimum 5% increment in annuity every year. ITNL has capped its risk by undertaking protection under concession agreement against any reduction in toll rates from the current applicable rates and from capacity augmentation obligations. Also the company would get indemnified for any reduction in assured subsidies and any increase in tax rate from 15% in the next ten years.

Benefits accruing from the project
Being an operational project, the gestation period is reduced significantly. Further the project offers stable revenue visibility with the base capped. It will also result in an improvement of the consolidated EBITDA margins as it is an operational project and enjoys a higher margin of approximately 85%; it will also help in maturing the portfolio faster. Further, the acquisition will increase ITNL's technical qualification for the National Highway Authority of India (NHAI) projects and may also open up avenues for participation in bids in joint ventures with the Chongqing Expressway Group (CEG) in China and elsewhere. In addition the project offers management fee linked to operations and maintenance (O&M), financing, technology sharing, new markets etc and could also provide O&M opportunities for Elsamex, its subsidiary.

Acquisition is EPS accretive, we maintain Buy
As per our estimates the deal works out to be earnings per share (EPS) accretive. It offers a 9% upside in FY2013, the first year of consolidation. However, in FY2012 the EPS will decline by 3% due to a higher interest burden on the $140 million raised to fund the acquisition. The value per share for the project works out to Rs4. However we do not revise our estimates and price target currently and will do so post Q3FY2012 results.

We like ITNL's strategy of inorganic growth and believe that given its strong parentage and scale of operations, the company stands to gain from the expected consolidation in the sector. ITNL had not won any project over the last one year on account of aggressive bidding taking place on the NHAI projects. It did not bid aggressively to increase its portfolio size which we believe will pay off in the long run. Thus it adopted the strategy of inorganic growth as many operational and distressed assets are on sale. Further this acquisition will help ITNL to expand its footage in China and also in other emerging geographies. At the current market price the stock is trading at 6.5x and 5.9x its FY2012E and FY2013E earnings respectively. Hence we maintain our Buy rating on the stock.

SECTOR UPDATE

Pharmaceuticals

Drug shortage surges in US; positive implications for Indian players

Drug shortage surges in the US
The US market is witnessing an increased shortage of new drugs, mainly due to manufacturing delays and higher than expected demand in some segments. We observe that a few Indian players, which have approvals for similar drugs, may find this as an opportunity to improve supplies to the US market. Most of the shortages are being witnessed in sterile and injectible segments where the capacity is limited and stringent manufacturing norms make it difficult for them to be replicated by others.

Positive implications for Indian players
We find Strides Arcolab (through the Sagent Strides joint venture [JV] and Onco Therapies), Sun Pharmaceutical Industries (Sun Pharma; through its US subsidiary) and Claris Life Sciences as being well placed to capitalise on the opportunity arising out of shortage of injectible and sterile products in the USA.

Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a postition in the companies mentioned in the article.

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Regards, The Sharekhan Research Team	myaccount@sharekhan.com
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Fw: Investor's Eye: Special - Q3FY2012 FMCG earnings preview; Update - Power (Limited impact on CESC, NTPC of new coal pricing mechanism)

2012-01-04T00:57:00.001-08:00

Sharekhan Investor's Eye

Investor's Eye
[January 03, 2012]

Sharekhan
www.sharekhan.com

Summary of Contents

SHAREKHAN SPECIAL

Q3FY2012 FMCG earnings preview

Key points

Sturdy double-digit top line growth to sustain: The persistent inflationary environment is yet to have any significant impact on the fast moving consumer goods (FMCG) consumed on a daily basis. Our interaction with the management of the FMCG companies under our coverage indicated that the steady growth in the sales volume of most of the FMCG categories have been sustained in Q3FY2012. Having said that, the offtake of discretionary items (such as paints and consumer durables) and premium/niche FMCG categories might witness some slowdown in Q3FY2012. The steady volume growth and increased sales realisation (due to price increases) would help the FMCG companies to sustain top line growth in high teens in Q3FY2012. Hindustan Unilever Ltd (HUL), ITC, Marico, Godrej Consumer Products Ltd (GCPL), GlaxoSmithKline Consumer Healthcare (GSK Consumer) and Bajaj Corp are some of the FMCG companies that would achieve above 17% top line growth year on year (YoY) in Q3FY2012.
Raw material prices remained firm: The prices of most of the key raw materials (except palm oil, wheat, barley and raw tea) remained higher on a year-on-year (Y-o-Y) basis. However, some of them witnessed a sequential dip or remained flat on a sequential basis. Though the raw material prices dropped sequentially but the depreciating rupee has made imports of some of these raw materials expensive. Palm oil prices declined by 6.1% YoY but remained flat on a quarter-on-quarter (Q-o-Q) basis. On the other hand, copra prices remained higher by 8.1% YoY but declined by about 9% on a sequential basis. Raw tea prices in India remained weak for the second consecutive quarter on the back of better domestic tea production. With the raw material prices remaining firm and the depreciating rupee increasing the importing cost of raw materials, we expect the gross profit margins (GPMs) of most of the FMCG companies to remain under pressure in Q3FY2012.
Better profitability picture through cost rationalisation: We expect the FMCG companies to post better profitability at the operating level in Q3FY2012. This will be mainly on account of rationalising the media and promotional spends and stringently managing their operating cost during the quarter.
Rupee depreciated for second consecutive quarter: The rupee remained weak in Q3FY2012, with a sequential depreciation of around 8% to the dollar. The FMCG companies having dollar-denominated debts adopted adequate hedging mechanism to limit the impact of the depreciating rupee in the near term.
Performance of Sharekhan's FMCG universe: From the Sharekhan's FMCG universe we expect most companies (except Marico and Bajaj Corp) to post higher than 15% Y-o-Y growth in their bottom line during the quarter. Tata Global Beverages Ltd (TGBL) is likely to achieve a robust bottom line growth of around 40.0% YoY, largely on account of a Y-o-Y decline in the interest cost. Despite the strong top line growth, Marico and Bajaj Corp would achieve a moderate growth in their bottom line, as higher raw material prices are expected to put pressure on their margins. Zydus Wellness' bottom line growth would largely be driven by tax benefits accrued from new facility in Sikkim.

Outlook: demand environment has to be keenly monitored in the coming quarters
Though the demand for FMCG items has remained stable in the prevailing inflationary environment, whether it would sustain going ahead is the key thing to watch out for in the coming quarters. We believe the persistent macro-economic uncertainties are weakening the consumer confidence which might lead to downtrading or slowdown in consumer offtake in some of the FMCG categories in the coming quarters. Having said that, the commentary of the FMCG companies on consumer trends will give some indication of the demand environment in the domestic market over the next two quarters.

The volatility in raw material prices has maintained pressure on the margins of the FMCG companies. We expect another round of price hikes by the FMCG companies in the coming months to mitigate the pressure of the rising raw material cost. The FMCG companies are likely to continue with lesser spends on advertisement and promotional activities in the coming quarters.

Valuation: remain selective in the sector
Considered as the safest bet in an uncertain market, most of the FMCG stocks are trading at their peak valuations. We maintain our penchant for companies with strong balance sheet, no or less exposure to currency risk, strong earning visibility over the next two to three years and decent upside from the current levels. Hence, we continue to like ITC and GSK Consumer in the large-cap space. HUL is trading at a 22% premium to its three-year average (one-year forward) price/earnings ratio (PER) of 26.0x and does not provide any upside from the current levels. On the other hand, GCPL is currently trading at a discount to its three-year average (one-year forward) PER of 18.5x. Though the business performance of GCPL has been good over the last few quarters, the company's dollar-denominated debt of above Rs2,000 crore has remained the key overhang on its stock in an environment of weakening rupee.

SECTOR UPDATE

Power

Limited impact on CESC, NTPC of new coal pricing mechanism

Key points

The Event: Coal India having changed the pricing mechanism: From January 1, 2012, Coal India Ltd (CIL) has changed the pricing mechanism of thermal coal from Useful Heat Value (UHV) based grading system to Gross Caloric Value (GCV) based pricing now. According to industry sources, as per the new policy, coal prices could go up by 13-15% effectively on an average. In this note we look at the impact of the same on power generation companies that we cover.

To push power generation cost: While CIL will gain from this new structure, coal consumers would bear the higher cost. If the average price of coal goes up by 13-15% then the cost of power generation would be up by approximately Rs0.50 per unit for an average power producer.

But regulated players like CESC and NTPC could pass on the same: Though the cost of fuel would rise across the board, we see that the regulated players with an ability of passing on the higher cost of fuel would not see an affect on their bottom lines. Our recent interaction with the managements of NTPC and CESC reinstate the same.

Additional 6% levy on ECL; negative surprise over and above the event: Apart from the rise in price as a result of the new pricing mechanism, CIL has indicated that it will levy an additional 6% on all the coal produced by Eastern Coalfields Ltd (ECL). Hence, companies procuring coal from ECL are likely to witness an around 20% hike in the cost of coal. CESC procures linkage coal from ECL, hence it will witness a 20% hike over the current rate.

West Bengal government opposing the move as the region would be impacted the highest: As per media reports, the West Bengal government is opposing CIL's decision to adopt a new pricing formula. It is apparent that while the nationwide impact of the new mechanism would be that of a push in the coal cost by 13-15%, but for West Bengal and other customers of ECL, the increase in the coal cost would be of 20%.

View: NTPC and CESC would be able to pass on the fuel price rise; bottom line impact for them to be limited: The move will push India's domestic coal procurement cost by 13-15%; subsequently it will push power generation cost by Rs0.5 per unit. The adverse impact of the move would be felt the most by companies which are procuring domestic coal and don't have a coal escalation clause. However, regulated power generators like NTPC and CESC could pass on the fuel cost rise into tariffs. On the other hand, state electricity boards would feel the pinch to some extent as they can't revise their tariffs with immediate effect and many of them have already revised tariffs just recently. We reiterate our positive stand on CESC based on its integrated status and attractive valuation. We rate CESC as a Buy with a target price of Rs 413 (based on sum of the parts methodology). We do not have an active coverage on NTPC.

Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a postition in the companies mentioned in the article.

Click here to read report: Investor's Eye

Regards, The Sharekhan Research Team	myaccount@sharekhan.com
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[investwise] Gold In The Next Calendar Year (120102)

2012-01-02T20:24:00.001-08:00

"First, this is a quiet time in the markets. The Dow barely moved yesterday. Gold, however, fell $10 to close under $1,600. You know the drill. Sell stocks on rallies. Buy gold on dips. This formula has worked beautifully for the last 12 years. We don't see any reason to give it up. Has anything important changed? Is there a new man at the Fed who is determined to save the dollar and the bond market? Has Congress suddenly decided to stop spending more than it takes in?...

http://www.stock-investing-software.com/commentary/articles.html?next=17657

Ian

This week's "Tools of the Trade": http://snipr.com/tools-of-the-trade

Explicit NON-commercial advisory: Spot-on, advantageous, no-cost information, products and/or services presented weekly.
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This week's "Tools" topic: Make 2012 YOUR YEAR for successful investing! Learn how to design your trading portfolio to benefit in both up and down markets. Tune into The Market Toolbox. Just click this week's "Tools" link, and catch what you missed. Check out their Livestream channel for additional shows AT NO COST TO YOU. Happy New Year!

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List of BSE Holidays - 2012

2012-01-02T09:31:00.000-08:00

List of Holidays - 2012

	Holidays	Date	Day
1	Republic Day	26th January 2012	Thursday
2	Mahashivratri	20th February 2012	Monday
3	Holi	8th March 2012	Thursday
4	Mahavir Jayanti	5th April 2012	Thursday
5	Good Friday	6th April 2012	Friday
6	Maharashtra Day	1st May 2012	Tuesday
7	Independence Day	15th August 2012	Wednesday
8	Ramzan Id	20th August 2012	Monday
9	Ganesh Chaturthi	19th September 2012	Wednesday
10	Mahatma Gandhi Jayanti	2nd October 2012	Tuesday
11	Dussera - Vijaya Dashmi	24th October 2012	Wednesday
12	Diwali Amavasya (Laxmi Pujan)*	13th November 2012	Tuesday
13	Diwali Balipratipada	14th November 2012	Wednesday
14	Gurunanak Jayanti	28th November 2012	Wednesday
15	Christmas	25th December 2012	Tuesday

Muhurat Trading will be held on Tuesday, November 13, 2012 (Diwali Amavasya – Laxmi Puja)

Fw: Market Outlook: 2012: A year of high volatility

2011-12-31T20:39:00.001-08:00

Sharekhan Investor's Eye

Market Outlook
[December 31, 2011]

Sharekhan
www.sharekhan.com

Summary of Contents

MARKET OUTLOOK

2012: A year of high volatility
Also an opportunity to cherry pick quality stocks

2011-the year of self-inflicted pain: Circa January 2011, the year began with a lot of hope. The global situation was expected to improve with the unleashing of the second round of quantitative easing (QE2) by the USA while at home the government was expected to push forward some of the long awaited reforms and rein in the fiscal deficit. Domestic demand was robust and corporate earnings were expected to grow at compounded annual growth rate (CAGR) of 18-20% over FY2011-13. However, contrary to expectations, India's economic growth moderated sharply in 2011. The Indian currency and the country's stock market were among the worst performers globally. Unfortunately, much of the pain was self-inflicted: the domestic macro-economic environment deteriorated sharply due to continued monetary tightening by the central bank and a lack of resolute policy response from the government even in the face of tough global conditions.

2012-begins on an extremely pessimistic note: Pessimism is written all over. Globally, the economic revival in the USA remains sluggish and the euro zone is on the edge threatening to slip off the cliff. At home, the political logjam has derailed policy decisions and there is no shortage of macro-economic problems. The consensus earnings estimates for FY2012/FY2013 have been revised downwards by 9-10% over the last one year and the CAGR growth estimate for FY2011-13 now stands at 11.5%. What's more, the earnings downgrade cycle is likely to continue on account of the signs of moderation in domestic demand, margin pressure and rising foreign exchange (forex) losses. The emerging markets are underperforming and the Indian equity is out of favour among foreign investors. The retail investor is disillusioned and the proportion of domestic savings flowing into equities is the lowest in a decade.

Rate cuts and resolute policy actions are key triggers for a meaningful revival: Global events would continue to strongly influence foreign inflows and consequently the overall market direction. However, any meaningful revival in the equity market would have to be supported by a reversal in policy rates and resolute government policy actions. The cut in policy rates is inevitable now though the timing of the same has become uncertain due to the stubbornly high core inflation. The situation has been amplified by imported inflationary pressures led by the rupee's depreciation. The more questionable issue is the ability of the ruling United Progressive Alliance (UPA) government to circumvent political logjam and push forward reforms in the areas of pension, land acquisition and retail foreign direction investment (FDI) instead of tilting towards populist schemes like food security bill and farm loan waiver.

Downside risk remains despite supportive valuations: After the correction, the Sensex now trades at 12.0-12.5x FY2013E earnings or at a 26% discount to the mean of the last five years' valuations and at a 17% discount to the mean of the last ten years' valuations. The Sensex' premium over the other Asian peers has also shrunk to 17% compared with the historical average of 25%. But the downside risk remains high due to the rising risk aversion globally that is visible in the record net outflows from the emerging market equity funds this year. Moreover, regulatory uncertainties and policy inaction have created critical issues in some of the index heavyweight sectors/stocks such as banks, infrastructure, power, telecommunications (telecom) and Reliance Industries. Nevertheless, many quality stocks are trading close to their 2009 lows and 2012 could very well turn out to be one of the best years to cherry pick quality stocks for exponential returns over the next few years.

Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a postition in the companies mentioned in the article.

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Regards, The Sharekhan Research Team	myaccount@sharekhan.com
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Fw: PFC Tax-free Bond Issue - Opening on 30 Dec 2011

2011-12-29T02:10:00.000-08:00

Sharekhan Mailer

Power Finance Corporation
Issue of tax-free secured redeemable non-convertible bonds in the nature of debentures

Issue period: Friday, December 30, 2011 to Monday, January 16, 2012
Basis of allotment: On a first-come-first-serve basis within each category
Issue size: Rs1,000 crore with an option to retain an oversubscription up to the shelf limit of Rs4,033.13 crore)

Investment Opportunity:

Interest rates are at peak level; best time to invest in fixed income tax free instruments.

Interest rate cycle has peaked out
Given the sharp slowdown in the industrial activity and softening of the food inflation, the interest rate cycle has peaked out. Reserve Bank of India has restrained from increasing the interest rates in the last policy review meet and is expected to begin reducing rates in March or April 2012. The bond yields which have increased close to 9% levels have corrected significantly and show easing of pressure on rates.

High post tax yield for triple A rated product
Tax free bond with yield of 8.2-8.3% is comparable with yields offered on government bonds and offer extremely attractive pre-tax yield close to 12% for a long period of time. The bond issue has got AAA (stable) rating from the rating agencies -- Crisil and CARE. The bonds would also be listed and tradable on NSE/BSE.

About Power Finance Corporation:

Power Finance Corporation-A Navratna Government of India undertaking (GoI; 73.72% equity stake held by GoI)
Set up in July 1986 as a specialised financial institution dedicated to power sector financing and committed to the integrated development of the power and associated sectors
Classified as infrastructure finance company in July 2010 by the Reserve Bank of India and as a public financial institution u/s 4A of the Companies Act ,1956

Options/Series	Tranche-1 Series I	Tranche-1 Series II
Face value per bond	Rs1,000	Rs1,000
Minimum application size	Rs10,000 (10 bonds)	Rs10,000 (10 bonds)
In Multiples Of	Rs5,000 (5 bonds)	Rs5,000 (5 bonds)
Frequency of interest payment	Payable annually	Payable annually
Interest rate pa (%)	8.20%	8.30%
Interest payment date	Every year on October 15 and on respective maturity
Redemption/Maturity date	10 years	15 years
Redemption amount	Repayment of the face value plus any interest that may have accrued on the redemption date	Repayment of the face value plus any interest that may have accrued on the redemption date

Category	I	II(Above Rs5 lakh)	III (Below and including Rs5 lakh)
Portion	Institutional portion	HNI portion	Retail portion
Size in %	50% of overall issue size on first-come-first-serve basis	25% of overall issue size on first-come-first-serve basis	25% of overall issue size on first-come-first-serve basis

Sharekhan Ltd: BSE Cash-INB/ INF 011073351; NSE - INB/INF /INE 231073330; MCX-SX INE 261073330 DP: NSDL-IN-DP-NSDL-233-2003; CDSL-IN-DP-CDSL-271-2004; PMS INP000000662. Sharekhan Commodities Pvt. Ltd.: MCX-10080; NCDEX-00132; Regd/Admin Add:- Lodha iThink Techno Campus, 10th Floor, Beta Building, Off. JVLR, Opp. Kanjurmarg Station, Kanjurmarg (East), Mumbai 400 042, Maharashtra. for any complaints email at igc@sharekhan.com; Regd/Admin Add:- Lodha iThink Techno Campus, 10th Floor, Beta Building, Off. JVLR, Opp. Kanjurmarg Station, Kanjurmarg (East), Mumbai 400 042, Maharashtra. for any complaints email at igc@sharekhan.com.
Disclaimer: Sharekhan Limited is engaged as a distributor for distribution of IPO/Bonds/NCD. Sharekhan or any of its group concerns do not in any manner recommends any product or any of its characteristics. The client is advised to take his / her own independent decisions for investing in any financial product after understanding their respective nature and risk and returns involved. The client may also approach his / her own consultants for investing in financial products or in relation to the tax related aspects. We do not solicit any action based upon this promotional material. Please note that the product does not take into account any particular investment objectives, financial decisions or needs of individual recipients. Neither Sharekhan nor any person connected with Sharekhan accepts any liability arising out of investment suggested in the material above.

Fw: Investor's Eye: Thematic Report (Speed breaker ahead); Special - Monthly economy review

2011-12-27T21:18:00.001-08:00

Sharekhan Investor's Eye

Investor's Eye
[December 27, 2011]

Sharekhan
www.sharekhan.com

Summary of Contents

THEMATIC REPORT

Speed breaker ahead

Key points

Sharp moderation in IIP growth to restrict auto growth in FY2013: Our analysis reveals that the automobile sector is likely to experience significant moderation in growth during 2012. We have used the long-term Index of Industrial Production (IIP) multiplier methodology (that relates the level of IIP to the volume growth in the automobile sector) to arrive at sustainable growth rates for different automobile segments. The long-term growth potential looks intact but rapid volume expansion in the last two years has now paved the way for a mid-cycle growth moderation or intermediate down cycle during calendar year 2012.

Risk of downgrade of consensus estimate high; outperformance of auto sector unlikely to sustain
Our optimistic estimate of a single-digit volume growth for FY2013 is lower than the consensus estimate. However, even a single-digit volume growth for FY2013 is challenging as the lag effect of a dismal IIP growth and high inflation sets in. The auto index has outperformed the Sensex in the last six months to one year period. However, the outperformance is at risk as the moderation in volume growth across segments exceeds the street's expectations for FY2013.

Return comparison
Particulars	3-month return (%)	6-month return (%)	12-month return (%)
BSE Sensex	-0.5	-12.44	-20.44
Auto Index	0.35	-2.38	-16.58
Bajaj Auto	6.58	16.51	11.45
Hero MotoCorp	-2.89	2.82	-0.55
Maruti Suzuki	-10.2	-13.59	-30.41
Mahindra	-9.15	4.45	-7.71
Ashok Leyland	-9.04	-1.25	-24.03

Downgrading earnings estimates for FY2013: We are downgrading our volume and earnings per share (EPS) estimates for all the automobile companies covered by us due to the challenging operating environment. Automobile companies whose earnings estimates have seen significant downgrades include Maruti Suzuki, Ashok Leyland and Mahindra and Mahindra (M&M).

High risk of disappointment in M&M and Bajaj Auto; switch to Maruti and Hero MotoCorp: Considering the volume growth, margin sustenance, capital expenditure (capex) intensity and cash generation of their respective businesses we have assigned a 15% premium to Bajaj Auto and Hero MotoCorp to their respective mid-term average multiples. On the other hand, we have assigned a 15% discount to Maruti Suzuki, M&M and Ashok Leyland based on their mid-term average multiples. In view of the same, we see a much higher risk of disappointment in M&M and Bajaj Auto. Thus, we recommend switching to Maruti Suzuki and Hero MotoCorp.

Switch from M&M to Maruti Suzuki as we believe that the impact of policy action against diesel vehicles/fuel is inevitable and not yet fully factored. For Maruti Suzuki, a 30% stock price correction in the last one year has priced in most of the negatives.

Switch from Bajaj Auto to Hero MotoCorp based on the 14% outperformance of the former. Hero MotoCorp's market share gains in the domestic market over the last few months have not been fully captured in the stock price nor has the loss of domestic market share affected the Bajaj Auto stock fully.

SHAREKHAN SPECIAL

Monthly economy review

Economy: Industrial growth remains subdued; inflation starts to decline

In October 2011 the Index of Industrial Production (IIP) growth entered the negative territory showing a decline of 5.1%, which was significantly below the market estimate. The October IIP numbers were the weakest in 31 months and a result of a decline in the manufacturing, mining and capital goods output. For the year-till-date (YTD) FY2012, the IIP growth stands at 3.5% as against 8.7% in YTD FY2011. However, the IIP growth number for September has been revised upwards marginally to 2% from 1.9%.
The Wholesale Price Index (WPI)-based inflation for November 2011 came in at 9.11%, in line with the Street's expectations. However, the inflation rate for September 2011 has been revised upwards to 10% from the provisional figure of 9.72%.
The trade deficit for October 2011 came in at $19.6 billion, more than twice the trade deficit level recorded in September 2011. The trade deficit increased by 35.2% year on year (YoY). The growth in exports remained high showing a growth of 21.7% YoY (17.2% in September 2011). The imports grew by 10.8% YoY (up 36.4% in September 2011).

Banking: Rate hike takes a breather; CRR cut expected

The Reserve Bank of India (RBI) has clearly indicated the peaking of rates hikes and articulated the need to support growth. The easing could start sometime in Q4FY2012 by way of a reduction in the cash reserve ratio (CRR) followed by repo rate cuts.
The credit offtake registered a growth of 17.8% YoY (as on December 2, 2011), which was lower than the growth of 18.4% recorded in the previous month (as on November 4, 2011). The credit growth is largely in line with the RBI's expectation.
The deposits registered a significant pick-up as these grew by 18% YoY (as on December 2, 2011); the growth was lower than the 17.5% year-on-year (Y-o-Y) growth seen during the previous month (on November 4, 2011). The growth in the deposits was fuelled mainly by term deposits.
The credit-deposit (CD) ratio was at 74.2% (as on December 2, 2011) as compared to 73.9% as on November 4, 2011. Meanwhile the incremental CD ratio expanded to 73.9% for the period which was lower than the ratio seen during the previous month.
The yield on government securities (G-Secs; of ten-year maturity) stood at 8.33% as in December 2011 and was lower than the previous month's levels. The G-Sec yields across the long-term maturities declined on a month-on-month (M-o-M) basis.

Equity market: FIIs turn buyers

During the month-till-date (MTD) period in December 2011 (December 1-19), the foreign institutional investors (FIIs) were net buyers of equities and the domestic mutual funds were net sellers of equities. For the MTD period in December 2011 (December 1-19), the FIIs bought equities worth Rs175 crore while the mutual funds sold equities worth Rs307 crore.

Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a postition in the companies mentioned in the article.

Click here to read report: Investor's Eye

Regards, The Sharekhan Research Team	myaccount@sharekhan.com
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Fw: Sharekhan Mutual Fund Finder - January 2012

2011-12-27T04:22:00.000-08:00

Sharekhan Mutual Fund Finder

[December 27, 2011] Please see the attachment for details

Sharekhan
www.sharekhan.com

Summary of Contents

Sharekhan Mutual Fund Finder

Top equity picks
Top SIP picks
SIP calculator
Crorepati calculator
Fund of the month: ICICI Prudential Discovery Fund
Performance of debt funds and ETFs

Click here to read report: Mutual Fund Finder

Regards, The Sharekhan Research Team	myaccount@sharekhan.com
www.sharekhan.com to manage your newsletter subscriptions

Fw: Investor's Eye: Update - Sintex Industries (Price target revised to Rs120 ), Real Estate (Bangalore real estate stable now but to edge lower)

2011-12-26T21:17:00.002-08:00

Sharekhan Investor's Eye

Investor's Eye
[December 26, 2011]

Sharekhan
www.sharekhan.com

Summary of Contents

STOCK UPDATE

Sintex Industries
Cluster: Apple Green
Recommendation: Buy
Price target: Rs120
Current market price: Rs71

Price target revised to Rs120

Our interaction with the management of Sintex Industries leads us to believe that the demand in the domestic as well as the international markets is moderating.

Factoring the moderating demand, high crude prices and open forex exposure in the form of foreign currency convertible bonds (FCCBs: $110 million), we have reduced our FY2012 and FY2013 earning per share (EPS) estimate by 26% and 21% respectively. Our revised EPS for the stock is Rs13.5 (Rs18 earlier) and Rs16 (Rs20.3 earlier) respectively.

On the stock performance side, Sintex Industries has underperformed the benchmark indices in the last six months (it has lost 52% while the Sensex has declined 11% in the same period). We believe that this underperformance on account of concerns related to moderating demand, slow execution pace and FCCBs is overdone and is getting reflected in the near bottom valuation of the stock (the stock is ruling at 4.4x its FY2013E earnings). Thus, we believe that this correction provides an attractive entry point for the investors and maintain our Buy rating on the stock with a revised price target of Rs120. Our price target implies an FY2013 price-to-earnings (PE) multiple of 7.5x, which is at a 30% discount to the average PE multiple of the last ten years. We feel this discount is warranted on account of the slower growth, the balance sheet risk and the company's exposure to an uncertain Europe.

SECTOR UPDATE

Real Estate

Bangalore real estate stable now but to edge lower

Residential demand at Bangalore fairly stable in comparison to other markets but might taper off in future
Residential sales have been dropping in the prime cities of India, except for Bangalore, which is seeing somewhat steady sales comparatively. Volume in Bangalore fell by just 7% year on year (YoY) as compared to 23% and 31% fall in Mumbai and Delhi respectively. In fact in Q3CY2011, Bangalore-based developers outperformed peers, with a strong sales volume. However, with the information technology (IT) industry also slowing down, the demand in Bangalore is also expected to be affected going ahead.

Bangalore's commercial market scores better but could edge down
Even Bangalore's commercial market is doing fairly well compared to other markets. While the commercial market in other prime cities is facing heat with commercial leasing touching one-year low in Q3CY2011, the Bangalore market was much better off.

Slower demand from IT/ITES may affect Bangalore developers
The inventory level is already high for Brigade Enterprises (Brigade) and Puravankara Projects (Puravankara). Now if the inventory level rises further, it would further affect the cash flow of the companies, putting strain on their balance sheets. Except for Prestige Estates (Prestige), the net debt to equity for the rest of the southern developers is already in the range of 0.7x to 0.8x. Going ahead, a slowdown in demand, rising working capital pressure and negative free cash flows will result in higher debt requirement. Infact the return on equity (RoE) is very poor across all south based developers except Prestige.

Outlook
The sector has highly underperformed over the last one to two years, making valuations very attractive. However, we are still cautious as the real estate market will take time to revive. Though the interest rates seem to have peaked out, the demand will revive only once the overall economy improves and with the developers adopting meaningful price cuts.

Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a postition in the companies mentioned in the article.

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Regards, The Sharekhan Research Team	myaccount@sharekhan.com
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Fw: NHAI Tax-free Bond Issue - Opening on 28 Dec 2011

2011-12-26T21:17:00.001-08:00

Sharekhan

Investment Opportunity:

Interest rates are at peak level; best time to invest in fixed income tax free instruments.

Interest rate cycle has peaked out
Given the sharp slowdown in the industrial activity and softening of the food inflation, the interest rate cycle has peaked out. Reserve Bank of India has restrained from increasing the interest rates in the last policy review meet and is expected to begin reducing rates in March or April 2012.

Bond yields correct sharply
The bond yields which had increased close to 9% levels have corrected significantly to around 8.3% which shows easing of pressure on rates. The banks have also kept their demand deposit rates stable since past couple of months despite the increasing policy rates.

High post tax yield for triple A rated product
Tax free bond with yield of 8.2-8.3% is comparable with yields offered on government bonds and offer extremely attractive pre-tax yield close to 12% for a long period of time. The bond issue has got AAA (stable) rating from the three agencies -- Crisil, CARE and Fitch. The bonds would also be listed and tradable on NSE/BSE.

About NHAI:
National Highways Authority of India (Authority) is an autonomous organization of Government of India and was constituted mainly to survey, develop, maintain and manage the National Highways, to construct offices or workshops, to establish and maintain hotels, restaurants and rest rooms at or near the highways vested in or entrusted to it, to regulate and control the plying of vehicles, to develop and provide consultancy and construction services and to collect fees for services or benefits rendered in accordance with Section 16 of the NHAI Act. As per NHAI Act, 1988, certain stretches of National Highways have been entrusted to NHAI by the Government for development, maintenance and management.

Tranche

Series-I

Series-II

Tenor

10 Years

15 Years

Face Value

Rs1,000/- per bond

Issue Price

At par i.e. Rs1,000/- per bond

Coupon Rate

8.20% p.a.

8.30% p.a.

Interest Payment

Annual

Put & Call Option

None

Redemption Amount (Rs./ Bond)

Repayment of the Face Value plus any interest that may have accrued at the Redemption Date

Credit Rating

"CRISIL AAA/Stable" by CRISIL, "CARE AAA" by CARE and "Fitch AAA(ind)" by FITCH

Mode of Holding

Dematerialized as well as in physical form

Minimum Application

50 bonds (Rs50,000/-) and in multiples of 1 bonds (Rs1,000/-) thereafter

Listing

Proposed on BSE/ NSE

Who can apply	Category-I	Category II	Category III
Reservation for Categories	40% of overall issue size	30% of overall issue size	30% of overall issue size
Basis of allocation in case of over-subscription	On first-come-first-serve basis	On first-come-first-serve basis	On prorata / proportionate basis

* For more details, please refer to the Terms and Conditions.

Sharekhan Ltd.: BSE Cash-INB011073351; F&O-INF011073351; NSE - INB/INF231073330; MAPIN - 100008375; DP: NSDL-IN-DP-NSDL-233-2003; CDSL-IN-DP-CDSL-271-2004; PMS INP000000662. Sharekhan Commodities Pvt. Ltd.: MCX-10080; NCDEX-00132; MAPIN - 100013912, for any complaints email at igc@sharekhan.com. Regd/Admin Add:- Lodha iThink Techno Campus, 10th Floor, Beta Building, Off. JVLR, Opp. Kanjurmarg Station, Kanjurmarg (East), Mumbai 400 042, Maharashtra. Please carefully read the risk disclosure document as prescribed by SEBI & FMC and Do's & Don'ts by NCDEX.
Disclaimer: Sharekhan Limited is engaged as a distributor for distribution of IPO/Bonds/NCD. Sharekhan or any of its group concerns do not in any manner recommends any product or any of its characteristics. The client is advised to take his / her own independent decisions for investing in any financial product after understanding their respective nature and risk and returns involved. The client may also approach his / her own consultants for investing in financial products or in relation to the tax related aspects. We do not solicit any action based upon this promotional material. Please note that the product does not take into account any particular investment objectives, financial decisions or needs of individual recipients. Neither Sharekhan nor any person connected with Sharekhan accepts any liability arising out of investment suggested in the material above.

Fw: NHAI Tax-free Bond Issue - Opening on 28 Dec 2011

2011-12-24T21:11:00.001-08:00

Sharekhan

Tranche

Series-I

Series-II

Tenor

10 Years

15 Years

Face Value

Rs1,000/- per bond

Issue Price

At par i.e. Rs1,000/- per bond

Coupon Rate

8.20% p.a.

8.30% p.a.

Interest Payment

Annual

Put & Call Option

None

Redemption Amount (Rs./ Bond)

Repayment of the Face Value plus any interest that may have accrued at the Redemption Date

Credit Rating

"CRISIL AAA/Stable" by CRISIL, "CARE AAA" by CARE and "Fitch AAA(ind)" by FITCH

Mode of Holding

Dematerialized as well as in physical form

Minimum Application

50 bonds (Rs50,000/-) and in multiples of 1 bonds (Rs1,000/-) thereafter

Listing

Proposed on BSE/ NSE

Who can apply	Category-I	Category II	Category III
Reservation for Categories	40% of overall issue size	30% of overall issue size	30% of overall issue size
Basis of allocation in case of over-subscription	On first-come-first-serve basis	On first-come-first-serve basis	On prorata / proportionate basis

* For more details, please refer to the Terms and Conditions.

BSEIndia: All Stock Market News

Fw: IRFC Tax Free Bonds: Opening on 27 Jan 2012

Fw: Investor's Eye: Pulse - RBI Monetary policy update; Update - Torrent Pharmaceuticals, Larsen & Toubro, Kewal Kiran Clothing, Yes Bank, Lupin, Federal Bank; Viewpoint - Hero MotoCorp

Fw: Investor's Eye: Update - Larsen & Toubro, Federal Bank, Godrej Consumer Products, Maruti Suzuki India, UltraTech Cement; Viewpoint - Idea Cellular

**[investwise]** Fwd: Stock_for_YOU CARE Research - Monetary Policy Expectation [1 Attachment]

Fw: Investor's Eye: Update - Sintex Industries (Q3FY2012 results: First-cut analysis), Pratibha Industries (Exit from SAW pipe business to be EPS accretive)

Fw: Quality Company Deposits with Double Digit Return

Fw: L&T Infrastructure Finance Company Ltd - Long Term Infrastructure Bonds 2012A Series (Tranche-2)

Fw: Investor's Eye: Update - Cement (Seasonal pick-up in demand), Fertilisers (Consumption shift towards cheap fertilisers)

Fw: Investor's Eye: Updates - Eros International Media, IL&FS Transportation Networks, Pharmaceuticals

Fw: Investor's Eye: Special - Q3FY2012 FMCG earnings preview; Update - Power (Limited impact on CESC, NTPC of new coal pricing mechanism)

**[investwise]** Gold In The Next Calendar Year (120102)

List of BSE Holidays - 2012

Fw: Market Outlook: 2012: A year of high volatility

Fw: PFC Tax-free Bond Issue - Opening on 30 Dec 2011

Fw: Investor's Eye: Thematic Report (Speed breaker ahead); Special - Monthly economy review

Fw: Sharekhan Mutual Fund Finder - January 2012

Fw: Investor's Eye: Update - Sintex Industries (Price target revised to Rs120 ), Real Estate (Bangalore real estate stable now but to edge lower)

Fw: NHAI Tax-free Bond Issue - Opening on 28 Dec 2011

Fw: NHAI Tax-free Bond Issue - Opening on 28 Dec 2011

[investwise] Fwd: Stock_for_YOU CARE Research - Monetary Policy Expectation [1 Attachment]

[investwise] Gold In The Next Calendar Year (120102)